Agenda

Board of Trustees August 14, 2014 | 8:30 a.m. – 12:00 p.m. Pacific The Westin Bayshore 1601 Bayshore Drive Vancouver, BC V6G 2V4 Canada +1 604-682-3377 Call to Order NERC Antitrust Compliance Guidelines and Public Announcement Consent Agenda — Approve

1. Minutes*

a. May 7, 2014 Meeting

b. May 13, 2014 Meeting

2. Committee Membership and Charter Changes* — Approve

a. Critical Infrastructure Protection Committee

b. Operating Committee

c. Planning Committee

d. Compliance and Certification Committee

3. Future Meetings*

Regular Agenda

4. Opening Remarks by Board Chair

5. Remarks by Ken Quesnelle, Chair, CAMPUT

6. Remarks by Len Kelsey, Chair, British Columbia Utilities Commission

7. Remarks by David Erickson, CEO, Alberta Electric System Operator

8. President’s Report

9. Standards*

a. Connecting New Facilities to the Grid—FAC-001-2 and FAC-002-2 — Adopt

b. Nuclear Plant Interface Coordination—NUC-001-3 — Adopt

c. Protection System (Misoperations)—PRC-004-3 — Adopt

d. Section 1600 Misoperations Data Request — Approve

e. Section 1600 Critical Infrastructure Protection Data Request — Approve

f. NPCC Standards Process Manual Revisions — Approve

g. WECC Standards Process Manual Revisions — Approve

10. Florida Reliability Coordinating Council Bylaws* ― Approve

11. Western Electricity Coordinating Council*

a. Bylaws ― Approve

b. Data Request Process ― Approve

12. Cyber Risk Information Sharing Program (“CRISP”)* ― Authorize

13. ERO Enterprise Operating Model Action Items* ― Update

14. NATF Reliability Activities**

a. 345kV Breaker Alert ― Update

b. Effort to Address Misoperations ― Information

15. GridSecCon 2014* ― Information

16. Intentionally Omitted

17. Canadian Affairs – Jim Burpee ― Information

18. Committee Reports* ― Information

a. Operating Committee

b. Planning Committee

c. Critical Infrastructure Protection Committee

d. Member Representatives Committee

e. Personnel Certification Governance Committee

f. Standards Committee

g. Reliability Issues Steering Committee

h. Compliance and Certification Committee

i. Electricity Sub-Sector Coordinating Council

Board of Trustees Agenda

August 14, 2014

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19. Forum and Group Reports*

a. North American Energy Standards Board

b. Regional Entity Management Group

c. North American Transmission Forum

d. North American Generator Forum 20. Board Committee Reports

a. Corporate Governance and Human Resources b. Compliance c. Finance and Audit

i. Second Quarter Statement of Activities – Accept ii. NERC 2015 Business Plan and Budget and Regional Entities’ and WIRAB 2015 Business Plans

and Budgets – Approve d. Enterprise-wide Risk

e. Standards Oversight and Technology

*Background materials included.

**See Item 19.c materials.

Board of Trustees Agenda

August 14, 2014

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Antitrust Compliance Guidelines

I. General It is NERC’s policy and practice to obey the antitrust laws and to avoid all conduct that unreasonably restrains competition. This policy requires the avoidance of any conduct that violates, or that might appear to violate, the antitrust laws. Among other things, the antitrust laws forbid any agreement between or among competitors regarding prices, availability of service, product design, terms of sale, division of markets, allocation of customers or any other activity that unreasonably restrains competition.

It is the responsibility of every NERC participant and employee who may in any way affect NERC’s compliance with the antitrust laws to carry out this commitment.

Antitrust laws are complex and subject to court interpretation that can vary over time and from one court to another. The purpose of these guidelines is to alert NERC participants and employees to potential antitrust problems and to set forth policies to be followed with respect to activities that may involve antitrust considerations. In some instances, the NERC policy contained in these guidelines is stricter than the applicable antitrust laws. Any NERC participant or employee who is uncertain about the legal ramifications of a particular course of conduct or who has doubts or concerns about whether NERC’s antitrust compliance policy is implicated in any situation should consult NERC’s General Counsel immediately.

II. Prohibited ActivitiesParticipants in NERC activities (including those of its committees and subgroups) should refrain from the following when acting in their capacity as participants in NERC activities (e.g., at NERC meetings, conference calls and in informal discussions):

• Discussions involving pricing information, especially margin (profit) and internal costinformation and participants’ expectations as to their future prices or internal costs.

• Discussions of a participant’s marketing strategies.

• Discussions regarding how customers and geographical areas are to be divided amongcompetitors.

• Discussions concerning the exclusion of competitors from markets.

• Discussions concerning boycotting or group refusals to deal with competitors, vendors orsuppliers.

NERC Antitrust Compliance Guidelines 2

• Any other matters that do not clearly fall within these guidelines should be reviewed with NERC’s General Counsel before being discussed.

III. Activities That Are Permitted From time to time decisions or actions of NERC (including those of its committees and subgroups) may have a negative impact on particular entities and thus in that sense adversely impact competition. Decisions and actions by NERC (including its committees and subgroups) should only be undertaken for the purpose of promoting and maintaining the reliability and adequacy of the bulk power system. If you do not have a legitimate purpose consistent with this objective for discussing a matter, please refrain from discussing the matter during NERC meetings and in other NERC-related communications. You should also ensure that NERC procedures, including those set forth in NERC’s Certificate of Incorporation, Bylaws, and Rules of Procedure are followed in conducting NERC business. In addition, all discussions in NERC meetings and other NERC-related communications should be within the scope of the mandate for or assignment to the particular NERC committee or subgroup, as well as within the scope of the published agenda for the meeting. No decisions should be made nor any actions taken in NERC activities for the purpose of giving an industry participant or group of participants a competitive advantage over other participants. In particular, decisions with respect to setting, revising, or assessing compliance with NERC reliability standards should not be influenced by anti-competitive motivations. Subject to the foregoing restrictions, participants in NERC activities may discuss:

• Reliability matters relating to the bulk power system, including operation and planning matters such as establishing or revising reliability standards, special operating procedures, operating transfer capabilities, and plans for new facilities.

• Matters relating to the impact of reliability standards for the bulk power system on electricity markets, and the impact of electricity market operations on the reliability of the bulk power system.

• Proposed filings or other communications with state or federal regulatory authorities or other governmental entities.

Matters relating to the internal governance, management and operation of NERC, such as nominations for vacant committee positions, budgeting and assessments, and employment matters; and procedural matters such as planning and scheduling meetings.

Draft Minutes Board of Trustees May 7, 2014 | 8:30 a.m.-12:00 p.m. Eastern

Hyatt Regency Philadelphia at Penn’s Landing 201 S. Columbus Blvd. Philadelphia, PA 19106

Call to Order and Chair’s Remarks Mr. Frederick W. Gorbet, chair, called to order the duly noticed open meeting of the Board of Trustees (“Board”) of the North American Electric Reliability Corporation (“NERC”) on May 7, 2014, at 8:30 a.m. Eastern, and a quorum was declared present. The agenda is attached as Exhibit A.

Present at the meeting were:

Board Members: Frederick W. Gorbet, Chair Paul F. Barber Janice B. Case Gerald W. Cauley, President and Chief Executive Officer Robert G. Clarke David Goulding Douglas Jaeger Kenneth G. Peterson Bruce A. Scherr Jan Schori Roy Thilly

NERC Staff Charles A. Berardesco, Senior Vice President, General Counsel, and Corporate Secretary Thomas Burgess, Vice President and Director of Reliability Assessment and Performance Analysis Howard Gugel, Director of Performance Analysis Mark G. Lauby, Senior Vice President and Chief Reliability Officer John Moura, Director of Reliability Assessment Steven Noess, Associate Director of Standards Development Janet Sena, Senior Vice President and Director of Policy and External Affairs Brady Walker, Associate Counsel Michael Walker, Senior Vice President, Chief Financial and Administrative Officer, and Corporate Treasurer

A listing of industry attendees is attached as Exhibit B.

Agenda Item 1.a

Mr. Gorbet acknowledged and welcomed Mr. John R. Norris, Commissioner, Federal Energy Regulatory Commission (“FERC”), and Mr. Denis O’Brien, Chief Executive Officer of Exelon Utilities. He expressed regrets on behalf of Mr. Ken Quesnelle, Chair of the Canadian Association of Members of Public Utility Tribunals, who was not able to attend the meeting.

NERC Antitrust Compliance Guidelines Mr. Berardesco directed the participants’ attention to the NERC Antitrust Compliance Guidelines included in the agenda, and offered to answer any additional questions the participants had at any time regarding antitrust compliance or other matters.

Consent Agenda Upon motion duly made and seconded, the Board approved the consent agenda as follows:

Minutes The draft minutes for the February 6, 2014 Board meeting were approved in the form as presented to the Board at the meeting.

Compliance Processes and Procedures Subcommittee Formation

RESOLVED, that the Board hereby approves the elimination of the Compliance and Certification Committee’s Standards Interface Subcommittee and Procedures Subcommittee.

FURTHER RESOLVED, that the Board hereby approves the formation of the Compliance Processes and Procedures Subcommittee.

Committee Membership Appointments

Critical Infrastructure Protection Committee

RESOLVED, that the Board hereby approves the appointment of the following individuals to the Critical Infrastructure Protection Committee (“CIPC”) for a term of at least two years:

• Gary Mayfield of the Western Area Power Administration• Ed Goff of Duke Energy

RESOLVED, that the Board hereby approves the election of the following individual to the Executive Committee of the CIPC for a term commencing May 7, 2014 and concluding December 31, 2015:

• David Revill of Georgia Transmission

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Compliance and Certification Committee

RESOLVED, that the Board hereby appoints the following individuals to the Compliance and Certification Committee, each for a term of three years, effective May 7, 2014:

• Rick Terrill of Luminant Mining• Caroline Dupuis of Hydro-Québec TransÉnergie• William Temple of Northeast Utilities• Jennifer Flandermeyer of Kansas City Power & Light

FURTHER RESOLVED, that the Board hereby appoints the following individuals as officers, each for a term of two years, effective July 1, 2014.

• Patti Metro of the National Rural Electric Cooperative Association, chair• Jennifer Flandermeyer of Kansas City Power & Light, vice chair

Personnel Certification Governance Committee

RESOLVED, that the Board hereby appoints the following individual to the Personnel Certification Governance Committee for a term beginning May 7, 2014 and concluding December 31, 2015:

• Michael Hoke of PJM Interconnection

Executive Session Mr. Gorbet reported that before the open meeting, as is its custom, the Board met in closed session with NERC management, and subsequently in executive session without NERC management, to review NERC management activities.

Mr. Gorbet also reported that on Monday, May 5, 2014, the Board met with the leadership of the Boards of the Regional Entities with Regional Entity chief executive officers present, and then without the CEOs in a subsequent executive session. Mr. Gorbet summarized the discussion and reported that these meetings have helped to improve communication at the governance level within the ERO Enterprise.

Welcoming Remarks Mr. Gorbet welcomed and introduced Mr. Norris and Mr. O’Brien.

Remarks by John R. Norris Mr. Norris remarked on the evolution of the relationship between FERC and NERC and stated he believed interactions between the two organizations had improved significantly. He praised the quality of NERC’s work and commented on the overall positive direction of the organization. Mr. Norris thanked NERC leadership and staff for their response to and work on the Physical Security Order and the related proposed Reliability Standard. He noted that caution should be exercised when responding

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to political pressures to act, both now and in the future, and encouraged NERC to continue to take action in the interest of reliability. Mr. Norris stated he was looking forward to continuing a productive working relationship with NERC.

Remarks by Denis O’Brien Mr. Cauley provided a brief introduction of Mr. O’Brien.

Mr. O’Brien provided the Board with an overview of Exelon’s investments in infrastructure and commitment to reliability. He highlighted the positive effects of NERC’s outreach to and collaboration with the electric industry.

President’s Report Mr. Cauley provided comments on the evolution of the standards development process. He stated that the process has matured over the years and has benefited from the high quality of FERC orders that allow industry to work collaboratively to arrive at the best and most efficient solutions for reliability. Mr. Cauley highlighted the flexibility and adaptability of the standards development process and cited the development of the proposed Physical Security Reliability Standard as an example of NERC’s and industry’s ability to respond to urgent issues. He praised the hard work of the standard drafting team members.

Mr. Cauley stated that the standards development process is working as it was envisioned with broad oversight from FERC, leadership from NERC’s Board, and the effective application of technical expertise that leads to improved reliability, avoids undue compliance burdens, and serves the public interest.

Standards Mr. Lauby provided an overview of the Reliability Standards program and presented the following items for Board action. After discussion, and upon motions duly made and seconded, the Board approved the following resolutions:

Demand Data (MOD C)—MOD-031-1

RESOLVED, that the Board hereby adopts proposed Reliability Standard MOD-031-1, as presented to the Board at this meeting.

FURTHER RESOLVED, that the Board hereby approves the associated implementation plan, as presented to the Board at this meeting.

FURTHER RESOLVED, that the Board hereby approves the revised and new NERC Glossary definitions, as presented to the Board at this meeting.

FURTHER RESOLVED, that the Board hereby approves the Violation Risk Factors and Violation Severity Levels for the proposed Reliability Standard, as presented to the Board at this meeting.

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FURTHER RESOLVED, that the Board hereby approves the Reliability Standards proposed for retirement, as presented to the Board at this meeting.

FURTHER RESOLVED, that NERC management is hereby authorized to make the appropriate filings with ERO governmental authorities and take such further actions and make such further filings as are necessary and appropriate to effectuate the intent of the foregoing resolutions.

Voltage and Reactive Control—VAR-002-3

RESOLVED, that the Board hereby adopts proposed Reliability Standard VAR-002-3, as presented to the Board at this meeting.

FURTHER RESOLVED, that the Board hereby approves the associated implementation plan, as presented to the Board at this meeting.

FURTHER RESOLVED, that the Board hereby approves the Violation Risk Factors and Violation Severity Levels for the proposed Reliability Standard, as presented to the Board at this meeting.

FURTHER RESOLVED, that the Board hereby approves the Reliability Standard proposed for retirement, as presented to the Board at this meeting.

FURTHER RESOLVED, that NERC management is hereby authorized to make the appropriate filings with ERO governmental authorities and take such further actions and make such further filings as are necessary and appropriate to effectuate the intent of the foregoing resolutions.

Operating Personnel Communications Protocols—COM-002-4

RESOLVED, that the Board hereby adopts proposed Reliability Standard COM-002-4, as presented to the Board at this meeting.

FURTHER RESOLVED, that the Board hereby approves the associated implementation plan, as presented to the Board at this meeting.

FURTHER RESOLVED, that the Board hereby approves the new NERC Glossary definition, as presented to the Board at this meeting.

FURTHER RESOLVED, that the Board hereby approves the Violation Risk Factors and Violation Severity Levels for the proposed Reliability Standard, as presented to the Board at this meeting.

FURTHER RESOLVED, that the Board hereby approves the Requirement and Reliability Standards proposed for retirement, as presented to the Board at this meeting.

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FURTHER RESOLVED, that the Board hereby rescinds its February 9, 2012 approval of the Interpretation of COM-002-2, effective (i) for U.S. registered entities upon implementation of COM-002-4 in substantially the form approved by the Board and (ii) for Canadian entities, effective upon implementation of COM-002-4 in substantially the form approved by the Board.

FURTHER RESOLVED, that NERC management is hereby authorized to make the appropriate filings with ERO governmental authorities and take such further actions and make such further filings as are necessary and appropriate to effectuate the intent of the foregoing resolutions.

Violation Risk Factor/Violation Severity Level Revisions

RESOLVED, that the Board hereby adopts proposed Violation Risk Factor and Violation Severity Level Modifications for the following Reliability Standards, as presented to the Board at this meeting:

• TPL-001-4—Transmission System Planning Performance Requirements• CIP-003-5—Cyber Security—System Management Controls• CIP-004-5.1—Cyber Security—Personnel and Training• CIP-006-5—Cyber Security—Physical Security of BES Cyber Systems• CIP-008-5—Cyber Security—Incident Reporting and Response Planning• CIP-009-5—Cyber Security—Recovery Plans for BES Cyber Systems• MOD-026-1—Verification of Models and Data for Generator Excitation Control System or Plant

Volt/Var Control Functions• MOD-027-1—Verification of Models and Data for Turbine/Governor and Load Control or Active

Power/Frequency Control Functions• PRC-005-2—Protection System Maintenance• PRC-005-3—Protection System and Automatic Reclosing Maintenance• BAL-003-1—Frequency Response and Frequency Bias Setting

FURTHER RESOLVED, that NERC management is hereby authorized to make the appropriate filings with ERO governmental authorities and take such further actions and make such further filings as are necessary and appropriate to effectuate the intent of the foregoing resolutions.

Physical Security Reliability Standard Development Mr. Lauby introduced Mr. Noess who announced that the proposed Physical Security Reliability Standard had received final industry approval. He thanked the standard drafting team, the Standards Committee, and industry stakeholders for their collaborative efforts on this project. Mr. Noess indicated that NERC staff would begin to prepare the proposed Reliability Standard for approval by the NERC Board at a future meeting.

Mr. Brian Murphy, chair of the Standards Committee (“SC”), praised the collaborative nature of the development process and stated that the approach to development on this project could benefit all future standards development projects.

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Amendments to SERC Bylaws Mr. Berardesco presented a set of proposed amendments to the SERC Reliability Corporation Bylaws. He stated that the amendments reflect a decision made by SERC regarding its tax status and that these changes do not impact SERC’s ability to operate as a Regional Entity. Mr. Berardesco indicated Board approval was required because the Bylaws are an exhibit to the delegation agreement and noted that FERC will also need to approve the amendments.

Upon motion duly made and seconded, the Board approved the following resolution:

WHEREAS, the SERC Board of Directors has proposed amendments to the Delegation Agreement between NERC and SERC (“Delegation Agreement”) by amending Exhibit B – the SERC Bylaws.

WHEREAS, the proposed amendments do not affect SERC’s Regional Entity functions.

WHEREAS, the proposed amendments continue to satisfy the governance criteria specified in the Delegation Agreement.

RESOLVED, that the Board hereby approves the proposed amendments to NERC’s Delegation Agreement with SERC, consisting of amendments to Exhibit B – the SERC Bylaws, in the form as presented to the Board at this meeting.

FURTHER RESOLVED, that NERC management is hereby authorized to make the appropriate filings with ERO governmental authorities.

State of Reliability Report Mr. Burgess provided an introduction to the State of Reliability Report (“SORR”). He explained that the SORR is developed by NERC’s Reliability Assessment and Performance Analysis group, stakeholders, and regional assessment groups. Mr. Burgess stated the SORR utilizes a variety of data, event analyses, and historical performance information to identify trends and indicators related to Bulk-Power System performance and reliability. With that information, NERC and stakeholders are able to take proactive steps to focus on key areas of reliability performance.

Mr. Gugel provided an overview of the 2014 SORR. He stated the SORR represents NERC’s independent view of ongoing Bulk-Power System trends through an objective analysis of the state of reliability. The SORR’s key findings serve as guide to risk assessment, reliability standards development project prioritization, compliance and enforcement process improvement, event analysis, and critical infrastructure protection. Mr. Gugel presented a summary of the keys findings and recommendations, a copy of which was included with the advance meeting materials.

Summer Reliability Assessment Mr. Burgess provided an overview of the Summer Reliability Assessment. He indicated that NERC provides seasonal assessments that describe anticipated conditions and key areas for focus and

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attention during upcoming summer seasonal conditions. Mr. Moura presented a summary of the key findings and recommendations, a copy of which was included with the advance meeting materials.

ERO Strategic Plan Metrics Mr. Cauley provided an overview of the Three-Year ERO Strategic Plan approval process. He noted that the Board approved the Strategic Plan without the plan metrics at its February 2014 meeting, so as to allow management to refine a few of the metrics to reflect industry comments. Mr. Cauley presented a summary of the revisions and indicated that the metrics are intended to provide guidance for achieving the goals outlined in the Strategic Plan. He stated that both the Strategic Plan and metrics will be updated as necessary.

Upon motion duly made and seconded, the Board approved the following resolution:

RESOLVED, that the Board hereby approves the metrics for use with the ERO Strategic Plan, as presented to the Board at this meeting.

Canadian Affairs Mr. James Burpee, President and CEO of the Canadian Electricity Association, presented an update on current Canadian reliability-related initiatives.

Standing Committee Reports Representatives of the Standing Committees provided reports to the Board highlighting items from their written reports as contained within the agenda package.

Operating Committee Mr. James D. Castle, chair, highlighted some of the Operating Committee’s (“OC”) activities since the last Board meeting. He thanked Trustees Jaeger and Barber for their attendance at the OC’s March meeting and stated the OC is looking forward to welcoming Ms. Case and Mr. Gorbet at future meetings. Mr. Castle praised the Board for their commitment to engaging with the OC. He also provided updates on the OC’s work on (i) the Essential Reliability Services Taskforce, (ii) the cold weather preparedness reliability guideline, (iii) the independent experts’ report, and (iv) improvements to the organization and structure of the OC.

Planning Committee Mr. Benjamin Crisp, chair, reviewed progress on some of the Planning Committee’s (“PC”) key initiatives. He outlined the PC’s work in helping to develop the Summer Reliability Assessment and State of Reliability Report. Mr. Crisp also summarized the PC’s work with the GMD task force and efforts to provide technical basis and justification to that project’s standard drafting team. He provided an overview of the PC’s process changes which are intended to allow for more feedback from the regions and an increased ability to reprioritize projects within the PC as necessary. Mr. Crisp thanked the Trustees for their active participation with the PC.

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Critical Infrastructure Protection Committee Mr. Charles F. Abell, chair, briefly summarized the ongoing work of the CIPC. He highlighted the issuance of two reports related to NERC’s GridEx II, one for the distributed play exercise and one for the executive table top exercise. Mr. Abell stated that the CIPC was actively engaged in implementing the recommendations and addressing the concerns identified in the reports. He also highlighted the strong attendance at and feedback from the CIPC technical workshops and stated that planning was underway for another workshop in June focusing on physical security issues.

Member Representatives Committee Mr. John A. Anderson, chair, thanked Mr. Gorbet and the Board for the continued use of the Member Representatives Committee’s (“MRC”) policy input, and summarized the issues that had been discussed at the MRC meeting the previous day. He stated he was appreciative of new meeting structure and recognized MRC members for attending Board Committee meetings.

Personnel Certification Governance Committee Mr. Brett Hallborg, chair, was not in attendance. Mr. Gorbet referred the meeting participants to the written report of the Personnel Certification and Governance Committee, located in the agenda package.

Standards Committee Mr. Murphy expressed his gratitude for the good working relationship between the SC and the Board, NERC staff, industry, and the staff of FERC. He outlined work that was ongoing on a number of projects and initiatives including (i) coordination between the SC and the Reliability Issues Steering Committee (“RISC”), (ii) the Reliability Standards Development Plan and its relation to the newly approved ERO Strategic Plan metrics, and (iii) the development of an evaluation framework to be used in conjunction with the metrics.

Reliability Issues Steering Committee Mr. Robert A. Schaffeld, chair, outlined some of the recent activities of the Reliability Issues Steering Committee (“RISC”) including (i) several process improvements intended to assist with the delivery of clear recommendations to Board, (ii) revisions to the RISC charter that are intended to provide clarity on the role of the RISC, and (iii) the completion of an effort to extend and expand committee membership. Mr. Schaffeld also made mention of the RISC’s upcoming Reliability Leadership Summit, scheduled to take place in September 2014. He thanked the Board for their continued involvement with RISC activities.

Upon motions duly made and seconded, the Board approved the following resolutions:

RISC Charter Amendments

RESOLVED, that the Board hereby approves the amended Reliability Issues Steering Committee (RISC) Charter, substantially in the form presented to the Board at this meeting, to replace the RISC Charter approved by the Board on August 16, 2012.

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RISC Committee Membership Appointments

RESOLVED, that the Board hereby approves extensions to the current Reliability Issues Steering Committee (RISC) members’ terms, as follows:

• MRC representative Scott Helyer, through May 2015• MRC representative Jason Marshall, through May 2015• At-large member and RISC chair Bob Schaffeld, through May 2016• MRC representative John Twitty, through May 2015

FURTHER RESOLVED, that the Board hereby approves the following new members to the RISC:

Name Title Type of Membership Term Daniel Froetscher

Senior Vice President, Transmission, Distribution, and Customers, Arizona Public Service Company

At-Large Member Two-year term ending May 2016

Ray Gorman Chairman, New Brunswick Energy and Utilities Board At-Large Member Two-year term ending May 2016

Scot Hathaway Vice President – Transmission, Dominion Virginia Power

At-Large Member Two-year term ending May 2016

Duane Highley President and CEO, Arkansas Electric Cooperative At-Large Member Two-year term ending May 2016

Nabil Hitti Vice President, Transmission Network Operations, National Grid

Member Representatives Committee member to the RISC

Two-year term ending May 2016

Steve Whitley President and CEO, New York ISO At-Large Member Two-year term ending May 2016

Terry Bilke Consulting Advisor, Compliance Services, Midcontinent ISO

Compliance and Certification Committee member to the RISC

Two-year term ending May 2016

Compliance and Certification Committee Mr. Terry Bilke, chair, reported on the activities of the three Compliance and Certification Committee (“CCC”) subcommittees which included (i) involvement in the upcoming independent audit process, (ii) participation in the development of the Reliability Assurance Initiative (“RAI”), and (iii) monitoring of the ongoing risk-based registration project. He also thanked FERC staff for their involvement with the enforcement report. Mr. Bilke presented the 2014-2016 CCC Work Plan for Board approval, as well as the 2013 Stakeholder Perception Survey Report for Board acceptance.

Mr. Gorbet recognized that this is Mr. Bilke’s last report to the Board as chair of the CCC and thanked him for his work. Mr. Gorbet welcomed the incoming CCC chair, Ms. Patti Metro.

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Upon motions duly made and seconded, the Board approved the following resolutions:

CCC 2014-2016 Work Plan

RESOLVED, that the Board hereby approves the 2014-2016 Compliance and Certification Committee Work Plan, substantially in the form as presented to the Board at this meeting.

CCC 2013 Stakeholder Perception Survey Results and Report Recommendations

RESOLVED, that the Board hereby accepts the 2013 ERO Effectiveness and Stakeholder Perceptions Survey report, substantially in the form as presented to the Board at this meeting.

Electricity Sub-Sector Coordination Council

Mr. Cauley, executive committee member, reported on the recent activities of the Electricity Sub-Sector Coordination Council (“ESCC”), and some of its key focus areas. He described the committee’s membership and structure, and stated that the committee is functioning as envisioned. Mr. Cauley also noted the involvement of Mr. Barber with the ESCC.

Forum and Group Reports

North American Energy Standards Board Mr. Michael Desselle, chair, updated the Board on three matters: (i) the progress of the coordinated effort to retire Reliability Standards that contain commercial aspects, (ii) the development of the Parallel Flow Visualization Project, and (iii) the collaborative effort of North American Energy Standards Board (“NAESB”) and NERC staff to support the implementation of the NAESB Electric Industry Registry.

Regional Entity Management Group Mr. Scott Henry, chair, summarized the current key focus areas for the Regional Entity Management Group: (i) the Five-Year ERO assessment, (ii) the implementation of reforms to RAI and the associated training, (iii) work to fully implement the compliance auditor manual, and (iv) implementation of the new Bulk Electric System (“BES”) definition and BES exception processes. Mr. Henry also stated that he appreciates the collaborative process that resulted in the successful development of common metrics but that more work must be done to track and trend their effectiveness. He noted that the joint meeting of the leadership of the regional Boards, the regional CEOs, and the NERC Board was a success, and thanked Mr. Gorbet for hosting the joint meeting.

North American Transmission Forum Mr. Galloway, president and CEO, summarized key collaborative efforts between NERC and the North American Transmission Forum, including an update on the 345kV breaker inspection, maintenance, and tracking process and preliminary work on the development of best practices regarding protection system misoperations. He also noted progress on ongoing work with the Electric Power Research

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Institute on resiliency and with an effort to promote improved reliability of off-site power sources for nuclear power plants.

North American Generator Forum Mr. Allen D. Schriver, chair, stated that in addition to the North American Generator Forum’s (“NAGF”) written report, the increased interactions between NAGF, NERC Staff, and the regions had led to the strengthening of processes and an increase in the quality of feedback received.

Board Committee Reports

Corporate Governance and Human Resources Committee Ms. Schori, chair, summarized the recent meetings of the Corporate Governance and Human Resources Committee (“CGHRC”). She stated that the CGHRC met in closed session on April 23, 2014 to review management compensation and benefits, and to consider a deferred compensation plan for certain executives and other key employees. Ms. Schori noted that no action had been taken at the meeting and that the committee would continue to consider such a plan.

She reported also that the CGHRC met in open session on May 1, 2014. At that meeting, the committee reviewed a draft of the IRS Form 990, and received updates on both the 2014 corporate goals and NERC staffing. In addition, the committee recommended Board approval of proposed revisions to the Board of Trustees Compliance Committee mandate.

Upon motion duly made and seconded, the Board approved the following resolution:

Compliance Committee Mandate Amendments

RESOLVED, that the Board, upon recommendation of the Corporate Governance and Human Resources Committee, hereby approves the Compliance Committee Mandate, as presented to the Board at this meeting, to replace the Compliance Committee Mandate approved by the Board on May 9, 2012.

Board of Trustees Compliance Committee Mr. Scherr reported that the Compliance Committee met in executive session on May 5, 2014, and in subsequent open session on May 6, 2014. He reported on some of the issues covered during those meetings, including (i) progress on RAI, (ii) the new processes for revising existing Reliability Standard Audit Worksheets (“RSAW”) and management’s work to finalize the document, and (iii) consideration of Compliance caseload statistics.

Finance and Audit Committee Mr. Thilly, chair, reported that on May 6, 2014, the Finance and Audit Committee met in closed and open sessions. He reported that the committee reviewed and recommended Board acceptance of both the 2013 Audit Financial Statements and the First Quarter 2014 Unaudited Statement of Activities for NERC and the Regions. Mr. Thilly also provided an update on the development of the 2015

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Business Plans and Budgets for NERC and the Regions and stated that the process has been refined to allow more time for stakeholder review and comment.

Upon motions duly made and seconded, the Board approved the following resolutions:

2013 Audit Financial Statements

RESOLVED, that the Board, upon recommendation of the Finance and Audit Committee, hereby accepts the 2013 Audit Financial Statements, as presented to the Board at this meeting.

First Quarter Unaudited Statement of Activities

RESOLVED, that the Board, upon recommendation of the Finance and Audit Committee, hereby accepts the NERC First Quarter 2014 Unaudited Statement of Activities, as presented to the Board at this meeting.

Enterprise-wide Risk Committee Mr. Goulding, chair, reported that the first meeting of the Enterprise-wide Risk Committee took place in closed session on May 5, 2014. He indicated that the committee reviewed the 2014 Audit Plan, received an update on risk management activities, and reviewed the CCC’s 2014-2016 Work Plan.

Standards Oversight and Technology Committee Mr. Peterson, chair, stated that the Standards Oversight and Technology Committee met in open session on May 6, 2014. He reported that the committee received an update on the CIP Version 5 transition and that committee members engaged in an active discussion of issues and concerns raised with regard to ERO Enterprise IT Applications. Mr. Peterson indicated that committee members had taken a more active oversight role on those projects. He noted also that he believes there has been a significant improvement in the quality of NERC’s work with regard to standards development over the last several years.

Closing Remarks of Chair Gorbet Mr. Gorbet expressed his appreciation on behalf of the Board to all of those individuals who had made the Board meeting successful. He again thanked Commissioner Norris for attending and offering supportive and encouraging comments. Mr. Gorbet stated that NERC has grappled with many difficult issues at once, has been able to come to a successful resolution to many, and is well positioned for success when confronted with the challenges that are ahead. He commended the work of the NERC standing committees and expressed his satisfaction that Board members have and are continuing to become more involved with the work of the standing committees. Mr. Gorbet reiterated the importance of the MRC policy input process and indicated that the process would continue to be used and refined.

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Adjournment There being no further business, and upon motion duly made and seconded, the meeting was adjourned at 11:42 a.m. Eastern.

Submitted by,

Charles A. Berardesco Corporate Secretary

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DRAFT Minutes Board of Trustees May 13, 2014 | 2:00 p.m. - 3:00 p.m. Eastern

Conference Call

Call to Order and Chair’s Remarks Frederick W. Gorbet, Chair, called to order the duly noticed open meeting of the Board of Trustees (“Board”) of the North American Electric Reliability Corporation (“NERC”) on May 13, 2014, at 2:01 p.m. Eastern, and a quorum was declared present. The agenda is attached as Exhibit A.

Present at the meeting were:

Board Members: Paul Barber Frederick W. Gorbet, Chair Janice B. Case Gerald W. Cauley, President and Chief Executive Officer Robert G. Clarke David Goulding Douglas Jaeger Kenneth G. Peterson Bruce Scherr Jan Schori Roy Thilly

NERC Staff Valerie Agnew, Director of Standards Charles A. Berardesco, Senior Vice President, General Counsel, and Corporate Secretary Thomas Burgess, Vice President and Director of Reliability Assessment and Performance Analysis\ Holly Hawkins, Associate General Counsel Howard Gugel, Director of Performance Analysis Mark G. Lauby, Senior Vice President and Chief Reliability Officer Steven Noess, Associate Director of Standards Development Janet Sena, Senior Vice President and Director of Policy and External Affairs Brady Walker, Associate Counsel Michael Walker, Senior Vice President, Chief Financial and Administrative Officer, and Corporate Treasurer

Agenda Item 1.b

Other Brian Murphy, Chair, Standards Committee Sue Ivey, Chair, Standard Drafting Team Lou Oberski, Vice Chair, Standard Drafting Team NERC Antitrust Compliance Guidelines Mr. Gorbet directed the participants’ attention to the NERC Antitrust Compliance Guidelines included in the agenda, and directed any questions regarding antitrust compliance or other matters to Mr. Berardesco. Minutes Upon motion duly made and seconded, the Board approved the April 23, 2014 meeting minutes in the form as presented to the Board at the meeting. Proposed Reliability Standard CIP-014-1—Physical Security Mr. Cauley provided a summary of the physical security Reliability Standard project history. He praised the efforts of both NERC staff and industry stakeholders to work collaboratively to develop a quality proposed Reliability Standard in a condensed timeframe. Mr. Cauley emphasized that NERC’s and industry’s work on physical security did not begin with the proposed Reliability Standard and will not end with regulatory approval of the proposed Reliability Standard. He stated that the timing and substance of the proposed Reliability Standard reflects the high priority placed on acting in the public interest. Mr. Gorbet thanked the Standards Committee and the standard drafting team for their work and reiterated that work on the issue of physical security will be ongoing. He discussed stakeholder comments and requested that Mr. Cauley provide the Board with an update on this issue at the November 2014 Board meeting. Trustees engaged in an active discussion. Upon motion duly made and seconded, the Board adopted proposed Reliability Standard CIP-014-1, the associated implementation plan, and the Violation Risk Factors and Violation Severity Levels, all as presented to the Board at the meeting. The Board authorized NERC management to make the appropriate filings with ERO governmental authorities and take such further actions and make such further filings as are necessary and appropriate to effectuate the intent of the Board’s adoption. 2014 State of Reliability Report Mr. Burgess introduced the 2014 State of Reliability Report (“SORR”) and provided an overview of the report’s purpose. Mr. Gugel reviewed the SORR’s key findings and recommendations. Trustees engaged in an active discussion of the SORR. Upon motion duly made and seconded, the Board accepted the 2014 State of Reliability Report as presented to the Board at the meeting. The SORR will be made available to the public on NERC’s website.

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2014 Summer Reliability Assessment Mr. Burgess introduced the 2014 Summer Reliability Assessment (“SRA”) and provided an overview of the development process. Mr. Moura reviewed the SRA’s key findings and projections for the upcoming summer season. Trustees engaged in an active discussion of the SRA. Upon motion duly made and seconded, the Board accepted the 2014 Summer Reliability Assessment as presented to the Board at the meeting. The SRA will be made available to the public on NERC’s website. Nominating Committee Membership Ms. Case provided an overview of the structure and mission of the Board of Trustees Nominating Committee. She reviewed a proposed timeline for the Committee’s activities. Upon motion duly made and seconded, the Board appointed, in addition to the independent Trustee members, the following members to the Board of Trustees Nominating Committee:

• John A. Anderson, Chair, MRC • Sylvain Clermont, Vice-Chair, MRC • Nick Brown • Bill Gallagher • Steve Nauman

Adjournment There being no further business, and upon motion duly made and seconded, the meeting was adjourned at 2:50 p.m. Eastern. Submitted by,

Charles A. Berardesco Corporate Secretary

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Agenda Item 2.a Board of Trustees Meeting

August 14, 2014

Critical Infrastructure Protection Committee

Action Approve

Background Mr. Benoit Tardif of Hydro-Québec resigned from the CIPC in December 2013 due to his planned retirement. The CIPC is recommending that the Board of Trustees approve the appointment of the following technical expert as a member of the CIPC, to replace Mr. Benoit:

• Mr. Rick Twigg, Velco, representing the Northeast Power Coordinating Council

Agenda Item 2.b Board of Trustees Meeting

August 14, 2014

Operating Committee Membership Changes Action Approve Operating Committee Election Results — Term 2014–2016

Sector Elected Member

1. Investor-owned utility Todd Lucas, Southern Company

2. State/municipal utility Richard Kinas, Orlando Utilities Commission

3. Cooperative utility Jeff Harrison, 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 Thomas Leeming, Exelon

7. Electricity Marketer No nominations received.

8. Large end-use electricity customer Tom Siegrist, Brickfield, Burchette, Ritts and Stone

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

10. Independent system operator/ regional transmission organization

David Souder, PJM Interconnection Leonard Kula, Independent Electricity System Operator

11. Regional Reliability Organization None – All members are appointed by their Region.

12. State Government William Chambliss, Virginia State Corporation Commission

Agenda Item 2.c Board of Trustees Meeting

August 14, 2014

Planning Committee Membership Changes Action Approve Planning Committee Election Results — Term 2014–2016 Sector Elected Member

1. Investor-owned utility Gary Thomas Brownfield, Ameren

2. State/Municipal Utility Stuart Nelson, Lower Colorado River Authority (2 years) Andrew Wade Tudor, Municipal Energy Agency of Nebraska (1 year)

3. Cooperative utility Russ Schussler, Georgia Transmission Corporation

4. Federal or provincial utility/Federal Power Marketing Administration

Serge Fortin, Hydro-Québec TransEnergie David Jacobson, Manitoba Hydro

5. Transmission dependent utility Brian Evans-Mongeon, Utility Services, Inc. (2 years) Carl Turner, Florida Municipal Power Agency (1 year)

6. Merchant electricity generator Robert Ramaekers, Tenaska, Inc. (2 years) Michael Goggin, American Wind Energy Association (1 year)

7. Electricity marketer Steven Huber, PSEG Services Corporation

8. Large end-use electricity customer John Hughes, Electricity Consumers Resource Council

9. Small end-use electricity customer Herb Schrayshuen, Self-as Small End-User

10. ISO/RTO Mark Sims, PJM

Agenda Item 2.d Board of Trustees Meeting

August 14, 2014

Compliance and Certification Committee Membership Action Approve Background The CCC is recommending that the Board of Trustees reappoint two current CCC members, and appoint three new CCC members. Member Reappointments:

• Mr. John Hairston, BPA, representing Federal Utility • Mr. Kevin Conway, Intelliblind, representing Small End-use Customer

New Member Appointments: • Mr. Lee Xanthakos, South Carolina Electric and Gas, representing Regional Entity-SERC • Ms. Marion Lucas, Alcoa Inc., representing Large End-use Customer • Mr. Ben Engelby, ACES, representing Electricity Marketer

Future Meetings Member Representatives Committee and Board of Trustees

2014 February 5-6 — Phoenix, AZ – Arizona Grand Resort May 6-7 — Philadelphia, PA – Hyatt Regency August 13-14 — Vancouver, Canada – Westin Bayshore November 12-13 — Atlanta, GA – Westin Buckhead

2015 February 11-12 — San Diego, CA – Westin San Diego May 6-7 — Washington, DC – Ritz Carlton Pentagon City August 12-13 —Toronto, Canada – Ritz Carlton Toronto November 4-5 — Atlanta, GA – Westin Buckhead

Agenda Item 3

Agenda Item 9.a Board of Trustees Meeting

August 14, 2014

Connecting New Facilities to the Grid—FAC-001-2 and FAC-002-2

Actions Adopt the following standard documents and authorize staff to file with applicable regulatory authorities:

• Reliability Standards—FAC-001-2—Facility Interconnection Requirements and FAC-002-2—Facility Interconnection Studies

[FAC-001-2 - Clean] [FAC-001-2 - Redline to last approved]

[FAC-002-2 - Clean] [FAC-002-2 - Redline to last approved]

• Violation Risk Factors (VRFs) and Violation Severity Levels (VSLs) for FAC-001-2 andFAC-002-2—Connecting New Facilities to the Grid

[VRFs and VSLs]

• Implementation Plan for FAC-001-2—Facility Interconnection Requirements and FAC-002-2—Facility Interconnection Studies

[FAC-001-2 and FAC-002-2 Implementation Plan]

Both FAC-001-2 and FAC-002-2 shall become effective as follows:

The first day of the first calendar quarter that is one year after the date that thisstandard is approved by an applicable governmental authority or as otherwiseprovided for in a jurisdiction where approval by an applicable governmentalauthority is required for a standard to go into effect. Where approval by anapplicable governmental authority is not required, the standard shall becomeeffective on the first day of the first calendar quarter that is one year after thedate this standard is adopted by the NERC Board of Trustees or as otherwiseprovided for in that jurisdiction.

• RetirementsFAC-001-1 and FAC-002-1 shall be retired at midnight of the day immediately prior tothe effective date of FAC-001-2 and FAC-002-2 in the particular jurisdiction in which thenew standard is becoming effective.

Background Project 2010-02 Connecting New Facilities to the Grid implements the recommendations that the FAC Five-Year Review Team made regarding FAC-001 and FAC-002. The changes are focused on adding clarity, removing redundancy, retiring requirements with little impact on the reliable operation of the Bulk Electric System, and bringing compliance elements into accordance with NERC guidelines. The changes should not require significant adjustment in practice for entities, but because some entities have lengthy approval processes for interconnection handbook or procedure revisions, the implementation plan provides for a one-year implementation period

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to provide time for all applicable entities to implement the standards and revisions to internal documents or procedures. Pertinent FERC Order No. 693 Directives There is one outstanding directive and one guidance from FERC Order No. 693 that applies to FAC-002. Paragraph 692 of Order No. 693 directs NERC to consider incorporating a reference to TPL-004-0 in FAC-002-0. The standard drafting team (SDT) considered this reference, but determined it is not necessary given intervening events. Since this directive was issued, FERC approved TPL-001-4, which will become enforceable on January 1, 2015, and which retires TPL-004-0. Further, a reference to the TPL standards would be redundant with the FAC-002-2, R1, Part 1.2 requirement to study adherence with all NERC Reliability Standards, and could therefore lead to multiple violations for the same action. For these reasons, the SDT did not adopt this reference. The guidance related to FAC-002-0 asked NERC to consider the comments of various entities asking for clarification of Requirement R1.

For ease of review, the Project 2010-02 SDT

summaries of comments of the various entities, along with its responses to those comments, may be accessed via the link below.

• Consideration of Issues and Directives [FAC-002-2]

Standard Development Process FAC-001-2 and FAC-002-2 were balloted through the normal standard development process, with an initial ballot and final ballot. The initial ballots concluded on May 15, 2014, and each standard achieved quorum and received sufficient affirmative votes for approval. The standards were subsequently posted for a final ballot from June 12 through June 23, 2014. In the final ballot, FAC-001-2 achieved a quorum of 88.78 percent and approval of 86.23 percent, and FAC-002-2 achieved a quorum of 89.03 percent and an approval of 83.46 percent. Minority Issues Some stakeholders recommended that FAC-001 and FAC-002 be retired, arguing that the standards duplicate requirements under other regulatory frameworks or are covered by other means, specifically FERC tariffs or similar mechanisms in Canadian provinces. The SDT responded that Facility interconnection requirements are necessary for reliability and must not be premised on transactional agreements, but rather, should be addressed through Reliability Standards. As NERC’s jurisdiction includes entities that may not be fully subject to FERC tariffs, such as municipalities, cooperatives, federal entities (e.g. the Bonneville Power Administration and the Tennessee Valley Authority), and entities governed by other sovereignties (e.g. Canadian entities), Facility interconnection standards provide consistency necessary to maintain reliability throughout NERC’s jurisdiction.

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Additional Information A link to the project history and files is included here for reference:

[Project 2010-02 Connecting New Facilities to the Grid]

• Reliability Standard Audit Worksheet (RSAW) [FAC-001-2 Draft RSAW] [FAC-002-2 Draft RSAW]

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Agenda Item 9.b Board of Trustees Meeting

August 14, 2014

Implementation of NUC Five-Year Review Recommendations

Actions Adopt the following standard documents and authorize staff to file with applicable regulatory authorities:

• Reliability Standard NUC-001-3—Nuclear Plant Interface Coordination

[NUC-001-3 – Clean] [NUC-001-3 – Redline to last approved]

• Violation Risk Factors (VRFs) and Violation Severity Levels (VSLs)

[VRFs and VSLs]

• Implementation Plan

[NUC-001-3 Implementation Plan]

Background The purpose of Project 2012-13 Nuclear Power Interface Coordination is to implement the recommendations of the NUC Five-Year Review Team (NUC FYRT). A five-year review of NUC-001-2.1 was initiated in 2013, and the NUC FYRT identified opportunities to streamline and clarify the standard. The NUC FYRT posted its recommendation to revise NUC-001-2.1 for industry comment as required in the NERC Standard Processes Manual, and on October 17, 2013, after considering stakeholder comments, submitted its final recommendations to revise NUC-001-2.1, along with a Standards Authorization Request, to the Standards Committee (SC). The SC accepted the recommendation of the NUC FYRT and appointed the NUC FYRT as the standard drafting team (SDT) assigned to implement the recommendations.

Standard Development Process NUC-001-3 was posted for stakeholder comment and ballot from April 8 to May 22, 2014. The ballot achieved quorum with 80.6 percent participation and a weighted segment approval of 97.36 percent. In the final balloted version and in response to stakeholder comments, the NUC SDT made minor, non-substantive revisions to the standard. A final ballot concluded on July 3, 2014, and achieved quorum with 88.63 percent participation and weighted segment approval of 97.23 percent.

Additional Information A link to the project history and files is included here for reference:

[Project 2012-13 Nuclear Plant Interface Coordination]

• Reliability Standard Audit Worksheet (RSAW)[NUC-001-3 Draft RSAW]

Twenty-six entities submitted comments on the data request. A majority of commenters support the data request noting that the requested data is reasonable, attainable, and similar in substance and form to the data presently collected pursuant to Reliability Standard PRC-004-2.1a. A majority of commenters also indicate no or minimal incremental effort necessary to comply, and that the implementation schedule is reasonable. Where some entities have expressed concerns, these concerns have been addressed or mitigated by:

• Revisions to the definition of Misoperation balloted in Project 2010-05.1 – Protection Systems: Phase 1 (Misoperations) – particularly as it pertains to the “slow trip” category.

• Revisions proposed for applicability to dispersed power producing resources, presently under development in Project 2014-01 – Standards Applicability for Dispersed Generation Resources.

• Revisions to the schedule necessary to maintain coordination of the effective dates of the data request and PRC-004-3.

• Clarification that NERC will provide training on webTADS – the system that will be used by entities to submit their data.

• Confirmation that NERC will engage the System Protection and Control Subcommittee and other industry subject matter expert groups to support analysis of data and identification of remediation techniques.

NERC staff evaluated comments and made revisions to the data request based on stakeholder comments, which can be located on the project page [Consideration of Comments]. The changes address the following concerns:

• Clarify that evidence retention in PRC-004-3 is related only to compliance with the standard, and will not require retention of data or evidence associated with reporting under the Section 1600 data request.

• Correct references to other documents, such as the NERC Protection System Misoperations Task Force report.

• Clarify that data reporting is requested for Protection System Misoperations identified pursuant to PRC-004, and clarify reporting obligations in cases where multiple entities own a Protection System.

• Clarify that the data request preserves the role of the Regional Entities by providing a review period for Regional Entities to review data submitted by the registered entities in their Region, and that Regional Entities will have the ability to utilize their existing processes or similar processes for review of data and closure of the data submission.

• Align the data request and the reporting template where discrepancies were identified. • Identify data fields in the template that are applicable only to Transmission Owners

(TADS-related data) or Generator Owners (GADS-related data). • Clarify that mitigation information is not required when an entity declares that no

further corrective actions will be taken pursuant to PRC-004. • Provide additional information on the need for and intended use of Protection System

Misoperations data.

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• Add submission of Corrective Action Plans to the data request to continue the reporting of this information for analysis.

• Changes to the reporting schedule to align with the retirement of PRC-004-2.1a.

A link to the project history and files is included here for reference:

[Protection System Misoperations Section 1600 Data Request] [Project 2010-05.1—Protection System (Misoperations)] [Final Data Request]

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Agenda Item 9.c Board of Trustees Meeting

August 14, 2014

Protection System Misoperation Identification and Correction—PRC-004-3

Action Adopt the following standard documents and authorize staff to file with applicable regulatory authorities:

• Reliability Standard PRC-004-3 – Protection System Misoperation Identification and Correction

[PRC-004-3 - Clean] [PRC-004-3 – Redline to last approved]

• Violation Risk Factors (VRFs) and Violation Severity Levels (VSLs)

[VRFs and VSLs]

• Implementation Plan

[PRC-004-3 Implementation Plan]

The standard, the revised definition of “Misoperation,” and the new definition of “Composite Protection System” shall become effective on the first day of the first calendar quarter that is twelve months after the date that the standard is approved by an applicable governmental authority or as otherwise provided for in a jurisdiction where approval by an applicable governmental authority is required for a standard to go into effect. Where approval by an applicable governmental authority is not required, the standard, the revised definition of “Misoperation,” and the new definition of “Composite Protection System” shall become effective on the first day of the first calendar quarter that is twelve months after the date the standard is adopted by the NERC Board of Trustees (Board), or as otherwise provided for in that jurisdiction.

• Definitions

Composite Protection System: The total complement of Protection System(s) that function collectively to protect an Element. Backup protection provided to a remote Protection System is included.

Misoperation: The failure of a Composite Protection System to operate as intended for protection purposes. Any of the following is a Misoperation:

1. Failure to Trip – During Fault – A failure of a Composite Protection System to operate for a Fault condition for which it is designed. The failure of a Protection System component is not a Misoperation as long as the performance of the Composite Protection System is correct.

2. Failure to Trip – Other Than Fault – A failure of a Composite Protection System to operate for a non-Fault condition for which it is designed, such as a power swing, undervoltage, overexcitation, or loss of excitation. The failure of a Protection System component is not a Misoperation as long as the performance of the Composite Protection System is correct.

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3. Slow Trip – During Fault – A Composite Protection System operation that is slower

than required for a Fault condition if the duration of its operating time resulted in the operation of at least one other Element’s Composite Protection System.

4. Slow Trip – Other Than Fault – A Composite Protection System operation that is slower than required for a non-Fault condition, such as a power swing, undervoltage, overexcitation, or loss of excitation, if the duration of its operating time resulted in the operation of at least one other Element’s Composite Protection System.

5. Unnecessary Trip – During Fault – An unnecessary Composite Protection System operation for a Fault condition on another Element.

6. Unnecessary Trip – Other Than Fault – An unnecessary Composite Protection System operation for a non-Fault condition. A Composite Protection System operation that is caused by personnel during on-site maintenance, testing, inspection, construction, or commissioning activities is not a Misoperation.

• Retirements

PRC-003-1 – Regional Procedure for Analysis of Misoperations of Transmission and Generation Protection System [PRC-003-1]

PRC-004-2.1a – Analysis and Mitigation of Transmission and Generation Protection System Misoperations [PRC-004-2.1a]

Background Proposed Reliability Standard PRC-004-3 replaces Reliability Standards PRC-004-2.1a – Analysis and Mitigation of Transmission and Generation Protection System Misoperations and PRC-003-1 – Regional Procedure for Analysis of Misoperations of Transmission and Generation Protection Systems. PRC-003-1 required Regional Entities to establish procedures for analysis of Misoperations. However, in FERC Order No. 693, FERC identified PRC-003-1 as a “fill-in-the-blank” standard. The Order stated that because the regional procedures had not been submitted, FERC did not approve or remand PRC-003-1. Because PRC-003-1 is not enforceable, there are no mandatory requirements for Regional Entity procedures to support the requirements of the mandatory and effective PRC-004-2.1a. PRC-004-3 combines the reliability intent of the two legacy standards PRC-003-1 and PRC-004-2.1a. PRC-004-3 also addresses two FERC directives. Reliability Standard PRC-004-3 – Protection System Misoperation Identification and Correction is designed to identify and correct the causes of Misoperations of Protection Systems for Bulk Electric System Elements. In NERC’s State of Reliability 2013 report, one key finding identified that Protection System Misoperations are a significant contributor to disturbance events and automatic transmission outage severity. Records collected from January 1, 2011 to June 30, 2012 revealed that approximately 65 percent of misoperations have one or more of the following three causes:

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• Incorrect settings/logic/design errors

• Relay failures/malfunctions

• Communication failures

Similar to the key finding in the State of Reliability 2013 report, the State of Reliability 2014 report continued to identify Protection System Misoperations as a significant contributor to automatic transmission outage severity. The report recommended completion of the development of PRC-004-3 as part of the solution to address Protection System Misoperations. The periodic reporting of Misoperations has not been included in PRC-004-3. It has been included in a separate Request for Data pursuant to Section 1600 of the NERC Rules of Procedure. The data request is presented for approval by the Board as Agenda Item 8d. Pertinent FERC Order No. 693 Directives Paragraph 1460 For the reasons stated in the NOPR, the Commission will not approve or remand PRC-003-1. Paragraph 1461 We agree with APPA that the ERO should consider whether greater consistency can be achieved in this Reliability Standard. In Order No. 672, the Commission also encouraged greater uniformity in the development of Reliability Standards. Consistent with that goal, the Commission directs the ERO to consider APPA’s suggestions in the Reliability Standards development process as it modifies PRC-003-1 to provide missing information needed for the Commission to act on this Reliability Standard.

Paragraph 1469 We direct the ERO to consider ISO-NE’s suggestion that LSEs and transmission operators should be included in the applicability section, in the Reliability Standards development process as it modifies PRC-004-1. Standard Development Process Drafts of Reliability Standard PRC-004-3 were posted for comment and ballot five times in accordance with NERC’s standard development process. Draft one of the standard was posted for a 30-day formal comment period from June 10–July 11, 2011. Draft two was posted for a 45-day comment period from July 25–September 7, 2012 and for an initial ballot in the last ten days of the comment period from August 29–September 7, 2012. The initial ballot achieved quorum and received an insufficient number of affirmative votes for approval (37.68 percent). Draft three of the standard was posted for a 30-day formal comment period from January 22–February 20, 2013, with a successive ballot in the last ten days of the comment period from February 11–20, 2013. The successive ballot achieved quorum and received an insufficient number of affirmative votes for approval (50.66 percent). Draft four of the standard was posted for a 45-day additional comment period from January 17–March 11, 2014 and an additional ballot in the last ten days of the comment period from February 2–March 11, 2014, under the new Standards Process Manual (Effective: June 26, 2013). The additional ballot achieved

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quorum and received an insufficient number of affirmative votes for approval (62.63 percent). Draft five of the standard was posted for a 45-day additional comment period from May 16–June 30, 2014, and an additional ballot in the last ten days of the comment period from June 20–30, 2014. The ballot was extended to reach quorum. It closed on July 9, 2014 with a quorum of 76.98 percent and an approval of 74.53 percent. The proposed standard will be posted for final ballot July 25, 2014. The results of that ballot were not available at the time this document was prepared. NERC staff will provide an update of the results at the Board meeting on August 14, 2014. Minority Issues None. Additional Information A link to the project history and files is included here for reference:

[2010-05.1 Protection System (Misoperations)—PRC-004-3]

• Reliability Standard Audit Worksheet (RSAW)

[RSAW]

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Agenda Item 9.d Board of Trustees Meeting

August 14, 2014

Section 1600 Misoperations Data Request

Action Approve

Background The Protection System Misoperations standard drafting team has proposed to remove the Misoperations reporting obligation included in Reliability Standard PRC-004-2.1a1 and proposes instead that NERC obtain such data required for performance analysis purposes pursuant to a request for information under Section 1600 of the NERC Rules of Procedure. The revised Reliability Standard PRC-004-3 proposed for adoption by the NERC Board of Trustees (Board) in Agenda Item 8c will continue to require retention of data or evidence of compliance. The purpose of this proposed data request is to continue consistent reporting of Misoperation data to NERC through a standardized template for performance analysis. NERC will analyze the data to:

• Develop meaningful metrics to assess Protection System performance;

• Identify trends in Protection System performance that negatively impact reliability;

• Identify remediation techniques to reduce the rate of occurrence and severity of Misoperations;

• Provide focused assistance to entities in need of guidance; and

• Publicize lessons learned to the industry.

Misoperations data collection provides several benefits to Bulk Electric System reliability and supports NERC’s mission of ensuring the reliability of the Bulk-Power System in North America. The proposed data request will make available the information necessary for NERC to provide high value risk analysis. This data will also allow NERC to identify areas for improvement in Misoperations rates through quantitative data analysis. For these reasons, NERC is proposing to continue collection of the data immediately upon the retirement of the data reporting obligation in Reliability Standard PRC-004-2a. Additional Information On July 23, 2013, NERC provided this proposed data request to FERC for review as required by Section 1602 of the NERC Rules of Procedure. The data request was posted for industry stakeholder comment from August 8, 2013 to September 23, 2013.

1 Requirement R3 of PRC-004-2.1a requires Transmission Owners, any Distribution Providers that own a transmission Protection System, and Generator Owners to provide to its Regional Entity documentation of its Misoperations analyses and Corrective Action Plans according to the Regional Entity’s procedures.

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Twenty-six entities submitted comments on the data request. A majority of commenters support the data request noting that the requested data is reasonable, attainable, and similar in substance and form to the data presently collected pursuant to Reliability Standard PRC-004-2.1a. A majority of commenters also indicate no or minimal incremental effort necessary to comply, and that the implementation schedule is reasonable. Where some entities have expressed concerns, these concerns have been addressed or mitigated by:

• Revisions to the definition of Misoperation balloted in Project 2010-05.1 – Protection Systems: Phase 1 (Misoperations) – particularly as it pertains to the “slow trip” category.

• Revisions proposed for applicability to dispersed power producing resources, presently under development in Project 2014-01 – Standards Applicability for Dispersed Generation Resources.

• Revisions to the schedule necessary to maintain coordination of the effective dates of the data request and PRC-004-3.

• Clarification that NERC will provide training on webTADS – the system that will be used by entities to submit their data.

• Confirmation that NERC will engage the System Protection and Control Subcommittee and other industry subject matter expert groups to support analysis of data and identification of remediation techniques.

NERC staff evaluated comments and made revisions to the data request based on stakeholder comments, which can be located on the project page [Consideration of Comments]. The changes address the following concerns:

• Clarify that evidence retention in PRC-004-3 is related only to compliance with the standard, and will not require retention of data or evidence associated with reporting under the Section 1600 data request.

• Correct references to other documents, such as the NERC Protection System Misoperations Task Force report.

• Clarify that data reporting is requested for Protection System Misoperations identified pursuant to PRC-004, and clarify reporting obligations in cases where multiple entities own a Protection System.

• Clarify that the data request preserves the role of the Regional Entities by providing a review period for Regional Entities to review data submitted by the registered entities in their Region, and that Regional Entities will have the ability to utilize their existing processes or similar processes for review of data and closure of the data submission.

• Align the data request and the reporting template where discrepancies were identified. • Identify data fields in the template that are applicable only to Transmission Owners

(TADS-related data) or Generator Owners (GADS-related data). • Clarify that mitigation information is not required when an entity declares that no

further corrective actions will be taken pursuant to PRC-004. • Provide additional information on the need for and intended use of Protection System

Misoperations data.

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• Add submission of Corrective Action Plans to the data request to continue the reporting of this information for analysis.

• Changes to the reporting schedule to align with the retirement of PRC-004-2.1a.

A link to the project history and files is included here for reference:

[Protection System Misoperations Section 1600 Data Request] [Project 2010-05.1—Protection System (Misoperations)] [Final Data Request]

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Agenda Item 9.e Board of Trustees Meeting

August 14, 2014

Section 1600 Critical Infrastructure Protection Data Request Action Approve Background On November 22, 2013, the Federal Energy Regulatory Commission (FERC) issued Order No. 791,1 approving new and modified Critical Infrastructure Protection (CIP) Reliability Standards, referred to as the CIP Version 5 Reliability Standards, as well as new and modified terms to be incorporated into the Glossary of Terms Used in NERC Reliability Standards. Among other things, Order No. 791 included a directive for NERC to conduct a survey of responsible entities during the implementation period for the CIP Version 5 Reliability Standards to determine the types of Cyber Assets that are included or excluded under the definition of “BES Cyber Asset.” Specifically, FERC approved the following definition for the NERC Glossary term “BES Cyber Asset”:

A Cyber Asset that if rendered unavailable, degraded, or misused would, within 15 minutes of its required operation, misoperation, or non-operation, adversely impact one or more Facilities, systems, or equipment, which, if destroyed, degraded, or otherwise rendered unavailable when needed, would affect the reliable operation of the Bulk Electric System. Redundancy of affected Facilities, systems, and equipment shall not be considered when determining adverse impact. Each BES Cyber Asset is included in one or more BES Cyber Systems.

To better understand the scope and reach of the term “BES Cyber Asset,” FERC directed NERC to conduct a survey of responsible entities to determine the types of Cyber Assets that are included or excluded under the definition of “BES Cyber Asset.”2 FERC also directed NERC to submit an informational filing, based on the survey data, by February 3, 2015. The informational filing must detail, among other things, the ways in which entities determine whether a Cyber Asset is a BES Cyber Asset, and the types and functions of Cyber Assets excluded from being designated as a BES Cyber Asset. Proposed Data Request To comply with the FERC directive, NERC staff is proposing to conduct a data request pursuant to Section 1600 of the NERC Rules of Procedure. The proposed data request is designed to collect data necessary for the informational filing while minimizing entities’ reporting burden as

1 Version 5 Critical Infrastructure Protection Reliability Standards, Order No. 791, 145 FERC ¶ 61,160 (2013). 2 Id. at PP 123-125.

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they focus on transitioning to the CIP Version 5 Reliability Standards. The survey is divided into two parts:

(1) Entities must first identify the types and approximate number, based on their best estimate as of September 1, 2014, of the Cyber Assets at their Control Centers, Transmission stations or substations, and generation plants as well as identify whether those Cyber Assets are excluded or included under the definition of BES Cyber Asset. If the Cyber Asset is excluded, the entity must provide a rationale for the exclusion.

(2) Entities must then describe their process for determining whether a Cyber Asset is a BES Cyber Asset.

Responses to these questions will aid NERC staff in determining: (1) specific ways in which entities determine which Cyber Assets meet the 15-minute parameter; (2) types or functions of Cyber Assets that are excluded from being designated as BES Cyber Assets and the rationale as to why; and (3) common problem areas with entities improperly designating BES Cyber Assets. In addition to the survey responses, NERC staff will also use the information learned during its CIP Version 5 transition studies for the informational filing due at FERC. NERC staff is proposing to provide entities 70 days to complete the survey. This timeframe should provide entities sufficient time to complete the survey while providing NERC staff enough time to analyze the results and prepare an informational filing to FERC by February 3, 2015. Consistent with Section 1600 of the Rules of Procedure, the proposed data request was posted for a 45-day comment period, which ended on July 14, 2014. Entities provided valuable input on the format, content, timing, and scope of the survey.3 Based on the comments received, NERC modified the survey to clarify certain questions and reduce the reporting burden on respondents. Among other things, the survey was modified as follows:

• Instead of collecting facility specific data for each Control Center, Medium Impact Transmission substation and substation, and generating plant, the survey now requests aggregated data for such facilities, similar to the initial proposal for the collection of data on Low Impact Transmission stations and substations. Many entities were concerned that the survey was too long and would be overly burdensome to provide data on a facility-by-facility basis. Because aggregated data would provide the necessary information, NERC staff modified the survey to reduce the reporting burden.

• In response to concerns that entities are still in the process of identifying their Cyber Assets and should not be required to have an inventory of Low Impact BES Cyber Assets, the instructions to the survey were modified to clarify that entities need only provide an approximate number range of Cyber Assets based on their best estimate as of September 1, 2014. To complete Part 1 of the survey an entity need only identify, to the

3 The entire set of comments are available at : http://www.nerc.com/pa/Stand/Prjct2014XXCrtclInfraPrtctnVr5RvnsRF/All_Survey_Comments.pdf.

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best of its ability, the types of Cyber Assets at certain types of facilities and provide an approximate number of those assets.

• The survey was modified to clarify that the data request is mandatory for all entities listed in the Applicability Section of the CIP Version 5 Reliability Standards for the facilities located in the United States and within the scope of NERC’s jurisdiction.

• The format of the survey was improved to prompt entities to provide a rationale for Cyber Assets not included under the BES Cyber Asset.

• Types of Cyber Assets that would clearly not be included as BES Cyber Assets (e.g., Physical Access Control Systems and Locally Mounted Physical Security) were removed from the survey to reduce the reporting burden.

• The description of certain categories of Cyber Assets were modified to provide additional clarity.

As revised, the data request strikes an appropriate balance between limiting entities’ reporting burden while ensuring that NERC collects the data and information necessary to understand what is excluded or included under the definition of BES Cyber Asset and meet its obligations under Order No. 791. Additional comments were received and addressed as follows:

• A number of comments also questioned whether certain types of Cyber Assets should be included in the survey. Because the purpose of the survey is to help determine the types of Cyber Assets that are included or excluded under the definition of BES Cyber Asset, NERC staff only modified its initial list of Cyber Assets when it was absolutely clear such that the type of Cyber Assets would not be identified as a BES Cyber Asset.

• Further, some commenters suggested that the survey be qualitative rather than quantitative while other suggested it only be quantitative. The survey contains both quantitative and qualitative questions. Both are necessary to provide the complete picture of what is or is not a BES Cyber Asset.

• Several commenters commented that the survey requires entities to comply with CIP-002-5.1, Requirement R1 prior to the effective date. Consistent with the implementation plan for the CIP Version 5 Reliability Standards, however, entities are not required to implement CIP-002-5.1 prior to April 1, 2016. The survey does not change this effective date. Rather, the proposed survey is a one-time data request for information that applicable entities should already be reviewing as part of their transition to compliance with the CIP Version 5 Reliability Standards. To ensure compliance with CIP-002-5.1 upon its effective date, it is essential that entities take steps before that date to ensure they are able to review, identify, and categorize their assets according to the requirements in CIP-002-5.1 by the effective date.

• Lastly, certain commenters requested that NERC provide more than 70 days to respond to the survey. NERC staff determined that given the revisions to the survey, a 70-day timeframe is appropriate. Additionally, entities, through general inventory

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management processes, should be able to provide the type of information requested by this survey in the timeframe provided.

NERC prepared a Frequently Asked Questions document to answer questions raised in the comments submitted on the survey,4 providing additional clarity to industry and address concerns raised by commenters. Summary NERC staff believes that understanding the scope and reach of the term “BES Cyber Asset” is an important step in ensuring that Responsible Entities are properly and consistently determining the types of Cyber Assets that are included or excluded under the definition.5 Accordingly, NERC management recommends approval of this Section 1600 Data Request to become mandatory and enforceable upon approval by the NERC Board of Trustees. A link to the data request is included here for reference: Order No. 791 Data Request

4 The Frequently Asked Questions document is available at http://www.nerc.com/pa/Stand/Prjct2014XXCrtclInfraPrtctnVr5RvnsRF/BES%20Cyber%20Asset%20Survey%20Frequently%20Asked%20Questions%20FINAL.pdf. 5 Id. at PP 123-125.

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Agenda Item 9.f Board of Trustees Meeting

August 14, 2014

Northeast Power Coordinating Council Regional Standards Process Manual Revisions

Action Approve the following standard documents and authorize staff to file with applicable regulatory authorities:

• Regional Standards Process Manual (RSPM)

[NPCC Process Manual - Clean] [NPCC Process Manual - Redline]

Background The Northeast Power Coordinating Council (NPCC) RSPM was originally adopted by the NPCC Board of Directors on September 19, 2007. The NPCC Reliability Standards Staff, in concert with the NPCC Regional Standards Committee (RSC) has completed a revision to the RSPM to incorporate process improvements, provide greater clarity, and reflect the new NPCC Cost Effectiveness Analysis Procedure (CEAP). Key changes addressed in this revision include:

• Expanding the Interpretation Section narrative into process steps and including an associated flowchart;

• Creating separate sections for: 1) Withdrawal Of A Regional Standard Pending Approval; 2) Retirement Of An Approved NPCC Regional Standard; 3) Approval Of Process Waiver; and 4) Process For Correcting Errata;

• Recognizing the new NPCC Cost Effectiveness Analysis Procedure (CEAP);

• Identifying the Reliability Standard Audit Worksheet (RSAW) as a companion document to a regional standard that needs to be collaboratively developed by the drafting team and NPCC Compliance Staff; and

• Creating three new appendices: 1) Appendix A: Regional Standard Authorization Request (RSAR) Completion Guidelines and Form; 2) Appendix B: Selection Of Drafting Team Members and Nomination Form; and 3) Appendix C: Maintenance Of Regional Standards and Process.

As required by the Section 311 of the NERC Rules of Procedure, NERC Staff conducted a careful review of the RSPM and concluded that it meets all of the evaluation criteria. Additionally, the RSPM was posted on the NERC website for a 45-day stakeholder comment period from March 24 to May 7, 2014. With respect to unresolved issues, a commentor noted that the RSPM differs from the NERC Standard Process Manual. Additional Information A link to the project history and files is included here for reference:

[Northeast Power Coordinating Council Regional Standards Process Manual Project Page]

Agenda Item 9.g Board of Trustees Meeting

August 14, 2014

Western Electricity Coordinating Council Standards Process Manual Revisions

Actions Approve the following standard documents and authorize staff to file with applicable regulatory authorities:

• WECC Reliability Standards Development Procedures[WECC Reliability Standards Development Procedures - Clean][WECC Reliability Standards Development Procedures - Redline]

• WECC Exhibit C: Common Attributes[WECC Exhibit C: Common Attributes - Clean][WECC Exhibit C: Common Attributes - Redline]

Background Western Electricity Coordinating Council (WECC) has completed a revision to its Standards Development Procedures and Exhibit C: Common Attributes. The revisions include expanded and revised definitions, revised table of contents, separate sections for normal development procedures and expedited actions, and timeline changes in the Common Attributes.

As required by the Section 311 of the NERC Rules of Procedure, NERC Staff conducted a careful review of WECC’s Reliability Standards Development Procedures and Exhibit C: Common Attributes and concluded the documents meet all of the evaluation criteria. The Reliability Standards Development Procedures and Exhibit C: Common Attributes were posted on the NERC website for industry stakeholder comment from April 29 to June 12, 2014. There were no unresolved issues.

Additional Information A link to the project history and files is included here for reference:

[Western Electricity Coordinating Council Standards Process Manual Revisions]

Agenda Item 10 Board of Trustees Meeting

August 14, 2014

Proposed Amendments to the Delegation Agreement with Florida Reliability Coordinating Council, Inc. – Amended Exhibit B – the Florida Reliability Coordinating

Council, Inc. Bylaws

Action Approve

Background The proposed amendments to Exhibit B largely concern FRCC-specific corporate governance matters, align the Bylaws with current practices, and make stylistic edits and conformities. Major substantive changes include:

1. Addition of the Corporate Compliance Finance and Audit Committee (CCFAC) –The FRCC Board approved the formation of the CCFAC in the fall of 2013, and Section 4.2 has been added to the Bylaws to reflect the addition of this FRCC Board-level committee.

2. Addition of Personnel and Compensation Committee (PCC) –The PCC has always existed, but was not formally described in the Bylaws. Section 4.3 was added to reflect the existence of this committee and its responsibilities.

3. Reorganization of FRCC’s Standing Committee Structure –Changes to FRCC’s standing committee structure were implemented in March 2014, and the amendments to Article 6 of the Bylaws reflect those changes. Previously, FRCC had six standing committee meetings:

i. the Member Services Planning Committee (MS-PC)ii. the Regional Entity Planning Committee (RE-PC)

iii. the Member Services Operating Committee (MS-OC)iv. the Regional Entity Operating Committee (RE-OC)v. the Member Services Compliance Committee (MS-CC)

vi. the Regional Entity Compliance Committee (RE-CC)

FRCC identified restructuring of this format as a means of improving standing committee efficiency. FRCC restructured to eliminate its Compliance Committee entirely (both the Member Services and Regional Entity), and replaced it with the Regional Entity Committee and Compliance Forum, which has an exclusive focus on Regional Entity activities. FRCC’s Planning Committee and Operating Committee were correspondingly refocused to only address Member Services activities.

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4. Addition of Confidentiality Provision –Section 11.5 was added to emphasize the importance of maintaining the confidentiality of information received through the activities of the FRCC. Confidentiality practices and procedures have always existed at FRCC, however the FRCC Board felt that it was important to recognize this obligation formally within the Bylaws. This amendment contains an explicit reference to Section 1500 of the NERC Rules of Procedure.

5. Revisions to Board Voting –Section 3.2(e)(3) was amended to eliminate the requirement that a “majority” of the voting members of a sector be Services Members in order to elect Services Members Directors. This amendment allows for any director who has paid the Services Members fees to be classified as a Services Members Director, and vote on services issues.

Accordingly, FRCC requests that the NERC Board approve the amended Bylaws and forward to FERC for approval and adoption as a replacement for Exhibit B to the NERC-FRCC RDA.

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EXHIBIT B TO PRO FORMA DELEGATION AGREEMENT

BYLAWS

Florida Reliability Coordinating Council, Inc.

Amended October 25, 2011TBDMay 22, 2014

DRAFT GTF 04-15-14 Revisions –

Phase I

1408 N. Westshore Blvd., Suite 1002, Tampa, Florida 33607-45123000 Bayport Drive, Suite 600, Tampa, Florida

33607-8407

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Phone 813.289-5644 * Fax 813.289-5646

www.frcc.com

TABLE OF CONTENTS AARTICLE I Membership .................................................................................1

Section 1.1 Eligibility. ............................................................................................................1

Section 1.2 Voting Member. ..................................................................................................2

Section 1.3 Affiliate Member. .............................................................................................3

Section 1.4 Adjunct Member. ..............................................................................................3

Section 1.5 New Members. ..................................................................................................3

Section 1.6 Membership Commitment. .............................................................................3

Section 1.7 Obligations. .................................................................................................3343

Section 1.8 Participation. .....................................................................................................4

ARTICLE II Meetings of Voting Members.................................................................................4

Section 2.1 Annual Meeting of Voting Members. .................................................................4

Section 2.2 Special Meetings. ................................................................................................5

Section 2.3 Place of Meeting..................................................................................................5

Section 2.4 Notice of Meetings. .............................................................................................5 Section 2.5 Quorum..........................................................................................................6565

Section 2.6 Voting. .................................................................................................................6

Section 2.7 Action without Meeting. .....................................................................................6

Section 2.8 Remote Attendance. ............................................................................................6

Section 2.9 Termination of Members. ..........................................................................6676

Section 2.10 Withdrawal. .................................................................................................7676

Section 2.11 Reinstatement. .............................................................................................8776

Section 2.12 Property Ownership and Control. .................................................................87

ARTICLE III Board of Directors ............................................................................................87

Section 3.1 Powers. .............................................................................................................87

Section 3.2 Number, Election, Tenure and Governance. ............................................8787

Section 3.3 Meetings. ...................................................................................................119109

Section 3.4 Notice of Meetings. ...................................................................................119119

Section 3.5 Quorum. ................................................................................................12101110

Section 3.6 Voting. ..................................................................................................12101110

Section 3.7 Remote Attendance. .............................................................................12101110

Section 3.8 Action without Meeting. .....................................................................12101110

Section 3.9 Vacancies and Removal. .....................................................................12101210

Section 3.10 Officers. ................................................................................................13111211

Section 3.11 Responsibilities of Board of Director Officers .....................................13111211

Section 3.12 Vacancy. ................................................................................................14121312

ARTICLE IV Board Committees ...................................................................................14121312

Section 4.1 Board Compliance Committee ..............................................................14121312

Section 4.2 Corporate Compliance Finance and Audit Committee .........................15131413

Section 4.3 Personnel and Compensation Committee .............................................16131513

ARTICLE V Chief Executive Officer ............................................................................16131513

Section 5.1 CEO. ......................................................................................................16131513

ARTICLE VI Standing Committees ..............................................................................16141513

Section 6.1 Standing Committees. ...........................................................................16141513

Section 6.2 Planning Committee. ..........................................................................17141614

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Section 6.3 Operating Committee. .........................................................................17141614

Section 6.4 Regional Entity Comm7ittee and Compliance Forum. ...................18151714

Section 6.5 Quorum.................................................................................................20161815

Section 6.6 Voting. Voting is by Sector. .................................................................21161815

Section 6.7 Meetings. ...............................................................................................22161916

ARTICLE VII General Provisions .................................................................................22172016

Section 7.1 Budget. ..................................................................................................22172016

Section 7.2 Funding..................................................................................................23172016

Section 7.3 Fees........................................................................................................24182218

Section 7.4 Staff. ......................................................................................................24192218

Section 7.5 Expenses. ...............................................................................................25192218

Section 7.6 Minimum Sector Membership. .............................................................25192218

Section 7.7 Indemnification. ....................................................................................25192218

Section 7.8 Fiscal Year.............................................................................................25192319

Section 7.9 Depositories. ..........................................................................................25192319

ARTICLE VIII Amendments ........................................................................................26202319

Section 8.1 Amendments. .......................................................................................26202319

Section 8.2 Review of Governance. .......................................................................26202419

ARTICLE IX Observers of the Board ...........................................................................27212420

Section 9.1 Observers of the Board. .........................................................................27212420

RTICLE X Audit..................................................................................................................282620

Section 10.1 Audit. ........................................................................................................282620 ARTICLE XI Dispute Resolution Procedures ..............................................................28212620

Section 101.1 Dispute Resolution. ...............................................................................28212620

Section 101.2 Initiation. ...............................................................................................29212721

Section 101.3 Dispute Resolution Process. ..................................................................30222721

Section 101.4 Resolution Steps. ...................................................................................30222722

Section 101.5 Administration. ......................................................................................32253024

Section 101.6 Expenses. ...............................................................................................33253125

ARTICLE XII Miscellaneous Provisions.......................................................................33263125

Section 112.1 Headings. ...............................................................................................33263125

Section 112.2 Number and Gender. .............................................................................33263125

Section 112.3 Parties Bound. .......................................................................................33263125

Section 112.4 Minority Positions. ................................................................................34263125

Section 112.5 Confidentiality of Information ..............................................................34263125

APPENDIX A .................................................................................................................35273327

Voting Member Agreement ........................................................................................35273327

Affiliate Member Agreement Division ........................................................................36283428

Adjunct Member Agreement Division .........................................................................37293529

HISTORY OF REVISIONS ...........................................................................................38303630

ARTICLE I Membership .................................................................................................................1

Section 1.1 Eligibility. ............................................................................................................1

Section 1.2 Voting Member. ..................................................................................................2

Section 1.3 Affiliate Member. .............................................................................................3

Section 1.4 Adjunct Member. ..............................................................................................3

Section 1.5 New Members. ..................................................................................................3

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Section 1.6 Membership Commitment. .............................................................................3

Section 1.7 Obligations. .......................................................................................................3

Section 1.8 Participation. .....................................................................................................4

ARTICLE II Meetings of Voting Members.....................................................................................4

Section 2.1 Annual Meeting of Voting Members. .................................................................4

Section 2.2 Special Meetings. ................................................................................................5

Section 2.3 Place of Meeting..................................................................................................5

Section 2.4 Notice of Meetings. .............................................................................................5

Section 2.5 Quorum................................................................................................................6

Section 2.6 Voting. .................................................................................................................6

Section 2.7 Action without Meeting. .....................................................................................6

Section 2.8 Remote Attendance. ............................................................................................6

Section 2.9 Termination of Members. ................................................................................6

Section 2.10 Withdrawal. .......................................................................................................6

Section 2.11 Reinstatement. ...................................................................................................7

Section 2.12 Property Ownership and Control. ...................................................................7

ARTICLE III Board of Directors .................................................................................................7

Section 3.1 Powers. ...............................................................................................................7

Section 3.2 Number, Election, Tenure and Governance. ..................................................7

Section 3.3 Meetings. .............................................................................................................9

Section 3.4 Notice of Meetings. ...........................................................................................10

Section 3.5 Quorum. ............................................................................................................10

Section 3.6 Voting. ..............................................................................................................10

Section 3.7 Remote Attendance. .........................................................................................10

Section 3.8 Action without Meeting. .................................................................................10

Section 3.9 Vacancies and Removal. .................................................................................11

Section 3.10 Officers. ............................................................................................................11

Section 3.11 Responsibilities of Board of Director Officers .................................................11

Section 3.12 Vacancy. ............................................................................................................12

ARTICLE IV Chief Executive Officer ..........................................................................................12

Section 4.1 CEO. ..................................................................................................................12

ARTICLE V Standing Committees ...............................................................................................12

Section 5.1 Standing Committees. .......................................................................................12

Section 5.2 Planning Committee. ......................................................................................13

Section 5.3 Operating Committee. .....................................................................................13

Section 5.4 Compliance Committee. .................................................................................13

Section 5.5 Rules of Procedure. .........................................................................................13

Section 5.6 Quorum.............................................................................................................14

Section 5.7 Voting. Voting is by Sector. .............................................................................14

Section 5.8 Meetings. ...........................................................................................................14

ARTICLE VI General Provisions ..................................................................................................15

Section 6.1 Budget. ..............................................................................................................15

Section 6.2 Funding..............................................................................................................15

Section 6.3 Fees....................................................................................................................16

Section 6.4 Staff. ..................................................................................................................17

Section 6.5 Expenses. ...........................................................................................................17

Section 6.6 Minimum Sector Membership. .........................................................................17

Section 6.7 Indemnification. ................................................................................................17

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Section 6.8 Fiscal Year.........................................................................................................17

Section 6.9 Depositories. ......................................................................................................17

ARTICLE VII Amendments .......................................................................................................18

Section 7.1 Amendments. ...................................................................................................18

Section 7.2 Review of Governance. ...................................................................................18

ARTICLE VIII Observers of the Board.........................................................................................19

Section 8.1 Observers of the Board. .....................................................................................19

ARTICLE IX Board Compliance Committee................................................................................19

Section 9.1 Board Compliance Committee. .........................................................................19

ARTICLE X Audit .........................................................................................................................20

Section 10.1 Audit. .................................................................................................................20

ARTICLE XI Dispute Resolution Procedures ...............................................................................20

Section 11.1 Dispute Resolution. ...........................................................................................20

Section 11.2 Initiation. ...........................................................................................................21

Section 11.3 Dispute Resolution Process. ..............................................................................21

Section 11.4 Resolution Steps. ...............................................................................................21

Section 11.5 Administration. ..................................................................................................24

Section 11.6 Expenses. ...........................................................................................................24

ARTICLE XII Miscellaneous Provisions ......................................................................................25

Section 12.1 Headings. ...........................................................................................................25

Section 12.2 Number and Gender. .........................................................................................25

Section 12.3 Parties Bound. ...................................................................................................25

Section 12.4 Minority Positions. ............................................................................................25

APPENDIX A .............................................................................................................................26

Voting Member Agreement - ___________Division ..............................................................26

Affiliate Member Agreement – ___________Division ...........................................................27

Adjunct Member Agreement –_______________Division.....................................................28

HISTORY OF REVISIONS ..........................................................................................................29

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BYLAWS OF

FLORIDA RELIABILITY COORDINATING COUNCIL, INC.

ARTICLE I

Membership

Section 1.1 Eligibility.

(a) “Membership” in the Florida Reliability Coordinating Council, Inc. (“FRCC”) is

open to any entity, without cost, that: (i) has a material interest in the reliability of the bulk power

system in the FRCC region; (ii) satisfies the criteria for membership specified in this Section 1.1;

(iii) qualifies for eligibility in one or more of the “Sectors” identified in Section 1.2; (iv) submits

a written request for membership; and (v) agrees to comply with and be bound by these FRCC

Bylaws (“Bylaws”) and other rules and regulations adopted by the FRCC Board of Directors, by

execution of the appropriate form of Member Agreement set forth in Appendix A to these Bylaws

(“Member Agreement”). Any person or entity that meets the foregoing requirements shall

become a “Member” of FRCC.

(b) FRCC shall engage in two categories of activities:

(i) FRCC shall engage in the “Regional Entity Activities” specified in Section

1 of Exhibit E of the Delegation Agreement between FRCC and the North American Electric

Reliability Corporation (“NERC”) dated May 2, 2007, as amended from time to time, with the

agreement of NERC and the approval of the Federal Energy Regulatory Commission (“Delegation

Agreement”). Under the Delegation Agreement, FRCC is the Regional Entity, as defined in

Section. 215 of the Federal Power Act, with delegated authority to propose and enforce Reliability

Standards for the bulk power system in the FRCC Region. The “FRCC Region” is defined as the

geographic area of Florida east of the Apalachicola River.

(ii) FRCC shall engage in certain “Member Services Activities,” under which

it provides, coordinates, or administers a variety of services relating to the planning and operation

of the bulk power system in the FRCC Region for or on behalf of its Members, and entities meeting

the criteria in Section 1.1(c)() (ii) and participatesing in the funding of such services as specified in

these Bylaws. The “Member Services Activities” are specified in the “bBusiness pPlan and

bBudget” approved by the Board of Directors in accordance with these Bylaws for submission to

NERC under the Delegation Agreement, and as approved by NERC and the Federal Energy

Regulatory Commission (“Business Plan and BudgetFERC”). Member Services are funded as

specified in Section 67.2 of these Bylaws.

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(c) (c) FRCC shall have two types of Members:

(i) All Members of FRCC shall be “Regional Entity Members.” Regional

Entity Members shall be eligible to participate in t”“he Regional Entity Activities” of FRCC. Such

participation shall be in accordance with these Bylaws, the Member Agreement, and the Delegation

Agreement, as from time to time adopted or amended and approved, and such other requirements

as govern FRCC as a Regional Entity.

(ii) All Members that participate in the generation, marketing, transmission or

purchaseor purchase for resale of electric energy, ancillary services or capacity on, from or to the

bulk power system in the FRCC Region may choose to be “Services Members,” and who may

participate in =FRCC Member Services Activities as specified in these Bylaws. Subject to the

requirements of Section 1.2, only Members that are Services Members shall be eligible to

participate in decisions governing the Member Services of Activities of FRCC, or the voting rights

and funding obligations of Services Members.

Section 1.2 Voting Member.

A “Voting Member” is a Member that is not an Affiliate Member or an Adjunct Member,

as defined in this Article. All Voting Members shall be eligible to vote on questions governing

Regional Entity Activities. Only Voting Members that are Services Members shall be eligible to

vote on questions governing Member Services or Member Services Activities. For purposes of

the following Sector classifications, “Load Serving Entity,” whether standing alone or as part of

another specified term, shall mean an entity that provides electric service to persons or entities

other than the Load Serving Entity itself that purchase such service for their own use and not for

resale. Voting Members shall be classified into one of the following Sectors, based on the primary

nature of its activities in the FRCC Region relevant to Regional Entity Activities:

(a) “Suppliers Sector” - any Any entity engaged in wholesale power marketing

transactions in the FRCC Region,; or a generating entity that is included in the NERC Compliance

Registry as a generation owner or generation operator for a facility in the FRCC Region, or that

owns or is developing generation greater than 20 MW located within the FRCC Region, and meets

any of the following: (1) an entity with FERC-approved market-based rate authority, or (2) an

exempt wholesale generator, or (3) a facility selling any output pursuant to a power purchase

agreement (including fuel conversion arrangements), or (4) a FERC approved Qualifying Facility.

(b) “Non-Investor Owned Utility Wholesale Sector” - generation Generation and

transmission cooperatives and municipal joint action agencies that sell electricity to non-investor

owned Load Serving Entities with native load in the FRCC Region.

(c) “Load Serving Entity Sector” - any Any Load Serving Entity that is not investor

owned and that generates less than 25% of its energy requirements for retail sales or has an annual

Full Requirements Energy for Load (FREL) of 1800 GWH or less in the FRCC Region.

(d) “Generating Load Serving Entity Sector” - any Any Load Serving Entity that is

not investor owned and that generates at least 25% of its energy requirements for retail sales, and

that has an annual Full Requirements Energy for Load (FREL) greater than 1800 GWH in the

FRCC Region.

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(e) “Investor Owned Utility Sector” - investor Investor owned utilities generating

and serving retail native load greater than 15,000 GWH in the FRCC Region.

(f) “General Sector” - persons Persons or entities that take delivery of energy within

the FRCC Region that is not purchased for resale; agents or associations representing groups of

such entities that are commercial or industrial entities; agents or advocate groups representing

small customers; and other persons or entities owning assets or engaging in commercial activities

in the FRCC Region.

Section 1.3 Affiliate Member.

An “Affiliate Member” is defined as an entity that (i) otherwise qualifies as a Voting

Member pursuant to Section 1.1 and 1.2, and (ii) is an Affiliate of a Voting Member. For purposes

of these Bylaws, being an “Affiliate” shall mean that (1) a Voting Member controls, is controlled

by or is under common control with, such Affiliate Member, and (2) for any exempt wholesale

generator, as defined the Public Utility Holding Company Act of 2005, as amended, the meaning

provided in Section 214 of the Federal Power Act. Affiliate Members shall have no right to vote

on any matter, nor any right to be elected or appointed to the Board. Except as to funding, Affiliate

Members shall be bound by the same obligations as Voting Members and Adjunct Members of

FRCC. Questions as to whether an entity is an Affiliate of a Voting Member shall be resolved by

the Board.

Section 1.4 Adjunct Member.

A person or entity may be approved as an “Adjunct Member” by the Board if such person

or entity has a material interest in the reliability of the bulk power system in the FRCC region but

does not meet the definitions and requirements to join as a Voting Member or Affiliate Member.

Adjunct Members shall have no right to vote on any matter, nor any right to be elected or appointed

to the Board. Except as to funding, Adjunct Members shall be bound by the same obligations as

Voting Members and Affiliate Members of FRCC.

Section 1.5 New Members.

The Board shall review and act upon membership applications for Membership. Prior to

approving membershipMembership, the Board shall certify that an the applicant complies with the

eligibility requirements.

Section 1.6 Membership Commitment.

Each Member of the FRCC shall be required to execute, in counterpart, a Member

Agreement, as applicable, in the form shown in Appendix A to these Bylaws.

Section 1.7 Obligations.

(a) Each Member of the FRCC shall promote, support, and comply with the purposes

and policies of the FRCC as set forth in its Certificate of Incorporation, and Bylaws, and the other

documents governing the activities of FRCC identified in the Bylaws.

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(b) Each Member of the FRCC shall appoint a representative as provided herein to

receive notices from the FRCC and shall give to the FRCC Chief Executive Officer (“CEO”) in

writing (signed by a duly authorized representative of the Member) the name, business address

and electronic address of the person thus appointed. An appointed representative of a Member

who is unable to attend a meeting may designate, in writing, an aalternate(s) or a proxy to act on

behalf of the Member, as authorized in these Bylaws.

Section 1.8 Participation.

(a) For purposes of these Bylaws, an entity and all of its Affiliates shall be considered

one ”one “Entity.” No Entity shall simultaneously hold more than one Voting Member status, or

have more than one voting representative on a Standing Committee, or fill more than one seat on

the Board.

(b) An Entity may join FRCC in any Sector in which it qualifies for Membership,

provided that an Entity may join as a Voting Member in only one Sector. In the event that an

Entity qualifies for more than one Sector, such Entity may join such other Sectors as an Affiliate

Member upon payment of any applicable Affiliate Member Annual Fees in accordance with

Article VII, Section 67.2(b)(ii) for each Sector in which such Entity desires to participate as an

Affiliate Member. Once an Entity has elected to be a Voting Member of one Sector, the Entity

must continue to vote in that Sector for a minimum of one (1) year. If, at any point, it is determined

that an Entity no longer meets the qualifications for the Sector it selected, the Entity may not vote

in that Sector; however, that Entity may then immediately elect to become a Voting Member in

any Sector for which it does qualify. Questions as to whether an Entity meets the qualifications

of a Sector shall be resolved by the Board.

(c) Subject to the requirements of these Bylaws and the Articles of Incorporation, each

Voting Member in good standing is entitled to vote on each matter submitted to a vote of the

Voting Members. A Member in good standing is one that (i) meets all qualifications for

membership Membership as provided in these Bylaws, (ii) is not in arrears for payment of any

applicable annual fees for membership Membership or payment of any other fees owed to FRCC

(unless such payment is being disputed in good faith), and (iii) has not been found by a court to be

in breach of any contract with FRCC. Voting Members that are not in good standing are not entitled

to vote on any matter until they have regained good standing.

ARTICLE II

Meetings of Voting Members

Section 2.1 Annual Meeting of Voting Members.

Voting Members shall meet at least annually on a date and at a place to be established by

the Board (“Annual Meeting”). The Voting Members from each Sector shall elect, by majority

vote and with, each Voting Member having one (1) vote, Directors and, if desired, Alternate

Directors, to the Board who will represent their Sector on the Board. The Voting Members shall

conduct such other business as may be properly brought before them. Meetings may be held by

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telephone conferencing, video conferencing or by other means enabling all participants in the

meeting to communicate with each other. The Annual Meeting shall be open to Affiliate Members

and Adjunct Members, and such other invitees as the Board may deem appropriate, provided that

the Services Members, along with Affiliate and Adjunct Members that have paid the fees specified

in Section 67.2(b)(ii) or (iii), may meet separately to consider matters relating to Member Services.

Section 2.2 Special Meetings.

A “Special meetings Meeting” of the Voting Members, for any purpose or purposes,

unless otherwise prescribed by the laws of the State of Florida, or by the Articles of Incorporation,

may be called by the Chair of the Board for any purpose or purposes. Special meetings Meetings

of the Regional Entity Members shall be called upon request of six (6) or more Voting Members

who are Regional Entity Members representing three (3) or more Sectors. Special meetings

Meetings of the Services Members shall be called upon request of six (6) or more Voting Members

that are Services Members representing three (3) or more Sectors.

Notice of a special meeting stating the place, date, hour, and agenda for the special Special

meeting Meeting shall be shall be sent not less than three (3) business days before the meeting by

electronic means to all eligible to attend using the electronic address specified in accordance with

Section 1.7(b)given to the Voting Members not less than three (3) business days before the

meeting. The notice Such request for a special meeting shall also state the purpose or purposes of

the proposed sSpecial mMeeting, which shall be included as part of an agenda to be distributed

with the Notice. to the Voting Members not less than three (3) business days before the meeting.

Meetings may be held by telephone conferencing, video conferencing or by other means enabling

all participants in the meeting to communicate with each other.

Section 2.3 Place and Manner of Meetings.

All meetings shall be held at or near the principal office of the FRCC in Tampa, Florida,

or at such other place within or outside the State of Florida as shall be determined from time to

time by the Board. Meetings may be held in-person, by telephone conferencing, video

conferencing, or by other means enabling all participants in the meeting to communicate with each

other. All in-person meetings shall be held at or near the principal office of the FRCC in Tampa,

Florida, or at such other place within or outside the State of Florida as shall be determined from

time to time by the Board.

Section 2.4 Notice of Meetings.

(a) Notice of the Annual Meeting or any rregular or special mmeeting of the Voting

Members shall be sent by mail or electronic means to each Member’s representative at the business

or electronic address specified in accordance with Section 1.7(b) at least ten (10) business days

before the date of the meeting. The notice shall set forth a proposed agenda for the meeting, but

any matter may be considered and acted upon at any meeting, whether or not the matter was listed

in the proposed agenda, if addition of the item to the agenda is approved at the meeting by the vote

of the eligible Voting Members whose votes equal sixty percent (60%) or more of the total

weighted sector vote of the eligible Voting Members; provided, however, that at least three (3)

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Sectors are represented in the affirmative. Meetings may be held at any time without notice if all

of the eligible Voting Members are present, or if those not present waive notice in writing either

before or after the meeting.

(b) The record date for determining Members entitled to notice shall be one (1) month

prior to the meeting date.

Section 2.5 Quorum.

Representation at any meeting of the Regional Entity Members of more than 50% of the

Voting Members, or representation at any meeting of the Services Members of more than 50% of

the Voting Members that are Services Members, shall constitute a quorum for the transaction of

business at such meeting; provided, however, that in each case at least four (4) eligible Sectors are

represented.

Section 2.6 Voting.

Voting by Voting Members shall be by the six (6) Sectors as defined in Section 1.2, except

as otherwise provided herein. Each Voting Member within a Sector has one non-divisible vote.

Each Sector shall have a “Sector Vote” in proportion to the voting rights specified in Section

3.2(e), which is to be split into an affirmative and a negative component, in the proportion that

each component bears to the total votes of the Voting Members within that Sector. Action by the

Voting Members shall require affirmative Sector Votes greater than 6.50.

If the number of Voting Members of a Sector is not greater than one (1), such Sector shall

not be entitled to a vote at the Voting Members meetings.

.

Section 2.7 Action without Meeting.

Any action that may be taken at a meeting of the Regional Entity Members or the Services

Members may be taken without a meeting if consent in writing, setting forth the action so to be

taken, shall be signed by all Voting Members eligible to vote in such meeting before the action is

taken.

Section 2.8 Remote Attendance.

Any Member otherwise eligible may participate in any meeting by telephone,

videoconference communications equipment, or other means enabling all persons participating in

the meeting to communicate with each other. A Member participating in a meeting by such means

shall be deemed present in person at such meeting.

Section 2.9 Termination of Members.

(a) A Member may be terminated for non-payment of fees or monies due FRCC as

provided in Section 67.3, or for a significant violation of obligations as set forth in Section 1.7.

The Board may, by resolution, establish a fair and reasonable procedure to terminate a Member.

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(b) A Member whose membership has been terminated shall be liable to FRCC for fees

and any other monies due FRCC as a result of obligations incurred or commitments made prior to

termination.

Section 2.10 Withdrawal.

Any other provision of these Bylaws notwithstanding, any Member may withdraw from

participation in the activities of FRCC at any time upon written notice to the CEO, whereupon it

shall cease to be a Member and shall cease to be entitled or obligated to participate in the activities

of the Board, Standing Committees, or any subcommittees, and shall have no further obligations

as a Member; provided, however, that if such notice is given more than thirty (30) days after such

Member's receipt of its statement of fees and expenses for a fiscal year, the Member shall be

obligated to pay its fees and other monies due to FRCC for the full fiscal year within which such

termination is effective.

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Section 2.11 Reinstatement.

A former Member shall be required to apply for Membership as set forth in Section 1.1.

The Board may reinstate Membership on any reasonable terms that the Board deems appropriate.

Section 2.12 Property Ownership and Control.

Subject to applicable laws, rules, regulations, agreements, and FRCC protocols, each

Member shall retain sole control of its own facilities and the use thereof, and nothing in these

Bylaws shall require a Member to construct or dedicate facilities for the benefit of any other

electric system or allow its facilities to be used by any other Member or to construct or provide

any facilities for its own use, and nothing herein shall be deemed to impair the ability or right of

any Member to take such actions or to fail to act, as it deems necessary or desirable, with respect

to the management, extension, construction, maintenance and operation of its own facilities,

present and future. A Member has no interest in the property of FRCC and waives the right to

require a partition of any FRCC property.

Board of Directors

Section 3.1 Powers.

The affairs of FRCC shall be managed by the Board of Directors (the “Board”). The

Board may exercise all such powers of the FRCC and do all such lawful acts and things as are not

prohibited by the laws of the State of Florida, by the Federal Power Act, by the Articles of

Incorporation, or by these Bylaws.

Section 3.2 Number, Election, Tenure, and Governance.

(a) Number. The number of “Directors” shall be not less than sixteen (16), not

including those additional Directors that who may be elected pursuant to the third sentence of

Section 3.2(b)(1). Directors shall be allocated among the Sectors as follows:

DIRECTORS by SECTOR

1 Suppliers Sector 3 Directors

2 Non-Investor Owned Utility Wholesale Sector 2 Directors

3 Load Serving Entity Sector:

Municipal

Cooperative

1 Director

1 Director

4 Generating Load Serving Entity Sector 3 Directors

5 Investor Owned Utility Sector 3 Directors

6 General Sector 2 Directors

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7 The CEO of FRCC Ex-officio non-voting

Director

(1) Suppliers Sector- three (3) Directors

(2) Non-Investor Owned Utility Wholesale Sector - two (2) Directors

(3) Load Serving Entity Sector-

- Municipal - one (1) Director

- Cooperative - one (1) Director

(4) Generating Load Serving Entity Sector - three (3) Directors

(5) Investor Owned Utility Sector - Three (3) Directors

(6) General Sector - Two (2) Directors

(7) The CEO of FRCC - an ex-officio non-voting Director.

(b) Election.

(1) Directors, with the exception of the CEO, shall be elected as described

herein. Directors allocated to a particular Sector shall be elected by the Voting Members

of such Sector, by majority vote. In addition, within each Sector, Voting Members from

that Sector may, by majority vote, elect additional Directors, subject to a maximum of five

(5) Directors representing such Sector. Finally, the Voting Members in a Sector may elect,

by majority vote, an “Alternate Director” for each Director. Each Alternate Director shall

be designated as an alternate for a particular elected Director of that Sector. To be eligible,

an Alternate Director shall either be a direct report to the Director for which that person is

the designated Alternate Director, or a senior officer or manager of the Voting Member

represented by the Alternate Director. Notwithstanding the foregoing, under no

circumstance shall the total votes of the Directors or their Alternate Directors for a Sector

exceed the total votes of the Directors of such Sector specified in Section 3.2(e).

(2) Within each Sector, only Voting Members from a given Sector may elect

Directors or Alternate Directors forDirectors for that Sector.

(3) Within the Load Serving Entity Sector, Director(s) representing 0.5 votes

shall all be from a municipal and Director(s) representing 0.5 votes shall be from a

cooperative.

(c) Alternate Director. In the event that a Director or the Voting Member represented

by a Director is unable to attend a Board meeting, Each his or her Aalternate Director shall be

vested with all the powers and duties of the Director for which he or she serves as an alternate in

the event that such Director or the Voting Member represented by such Director when notifies

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FRCC in writing (by letter, email or facsimile) in advance that the Director is unable to attend a

particular Board meeting or Board committee meeting. Unless otherwise specified, references in

these Bylaws to the powers, duties, or responsibilities of Directors shall include any Alternate

Director acting in place of a Director. If the related Director is present at a Board meeting or Board

committee meeting, the Alternate Director may attend such meeting, but shall not have any vote,

nor have any authority to speak on any issue, absent recognition by the chair of the meeting.

(d) Term. The term for all Directors and Alternate Directors shall be two (2) years.

Any Director or Alternate Director may be reelected for consecutive terms, without limitation.

Directors and Alternate Directors within a Sector shall have staggered terms as determined by the

Sector.

(e) Voting Rights.

(1) Except as provided for in subsections (2) and through (5)(3) below, each

Sector shall have the number of votes as specified below:

BOARD VOTES by SECTOR:

1 Suppliers Sector 2.5 Votes

2 Non-Investor Owned Utility Wholesale Sector 2.0 Votes

3 Load Serving Entity Sector:

Municipal

Cooperative

0.5 Vote

0.5 Vote

4 Generating Load Serving Entity Sector 3.0 Votes

5 Investor Owned Utility Sector 3.5 Votes

6 General Sector 1.0 Vote

TOTAL 13.0 Votes

Suppliers Sector 2.5 Votes

Non-Investor Owned Utility Wholesale Sector 2.0 Votes

Load Serving Entity Sector

- Municipal 0.5 Votes

- Cooperative 0.5 Votes

Generating Load Serving Entity Sector 3.0 Votes

Investor Owned Utility Sector 3.5 Votes

General Sector 1.0 Vote

Total 13.0 Votes

(2) Each Director, as defined in Section 3.2(a) and 3.2 (b), shall have an equal

proportional vote of that Sector's total voting strength. This provision shall

apply separately to the municipal and cooperative Directors of the Load

Serving Entity Sector.

(3) If the majority of the Voting Members of a Sector are Services Members,

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Directors elected by that sector shall be deemed “Services Member

Directors.” Only Services Member Directors shall be eligible to vote on

questions governing Member Services or Member Services Activities.

Deliberations on such matters may beare limited to Services Member

Directors, Voting Members that are Services Members, and Affiliate and

Adjunct Members that have paid the fees specified in Section 67.2(b)(ii) or

(iii), upon the vote of the Services Member Directors.

(4) The CEO of FRCC shall not have a vote.

(5) If the number of Voting Members of a Sector is not greater than one (1),

such Sector shall not be entitled to a vote at the Board meetings.

(f) Limitations. Each Director or Alternate Director serving on the Board shall be an

officer, employee, or agent representative of a Voting Member. Unless otherwise provided in

these Bylaws, a Director or Alternate Director if a representative of a Voting Member is elected to

serve on the Board, such person shall only be eligible to serve in such capacity so long as such

person remains the officer, employee, or agent representative of said Voting Member. A Voting

Member shall not have more than one (1) officer, employee or agent serving as a Director, but

each Director may have an Alternate Director. Each Director orand Alternate Director serving on

the Board shall be required to sign and adhere to the FRCC Board Code of Conduct.

Section 3.3 Board Meetings.

Regular meetings of the Board shall be held at such times and places, within or outside the

State of Florida, as may be determined by the Board. Special meetings of the Board may be called

by the Chair of the Board. Special meetings shall be called upon request of six (6) or more

Directors. Regular or Special special Meetings meetings may be held by telephone conferencing,

video conferencing, or by other means enabling all participants in the meeting to communicate

with each other. Except as specified in Section 3.2(e)() (3), the meetings of the Board shall be

open to all Members,Members and such other invitees as the Board may deem appropriate. The

Board may meet in closed session to discuss matters of a confidential nature, including but not

limited to personnel matters, litigation, or commercially sensitive information of any person or

entity.

Section 3.4 Notice of Board Meetings.

Notice of any regular or special meeting of the Board shall be sent by mail or electronic

means to each Director, and to each Member, at such Director's and Member's usual place of

business at least (ten) (10) business days, in the case of a regular meeting, or (five) (5) business

days, in the case of a special meeting, before the date of the meeting. Such notice shall also be

sent to the observers of the Board specified in Section 89.1. The notice shall set forth a proposed

agenda for the meeting. Subject to the requirements of Section 3.2(e)(3), no agenda item may be

added to the agenda at any meeting of the Board which requires action by the Board unless all

Directors are present and all agree to allow such an item to be put to a vote. Meetings may be held

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at any time without notice if all of the Directors of the Board (or the Alternate Directors for absent

Directors) are present, or if those not present waive notice in writing either before or after the

meeting.

Section 3.5 Quorum.

The presence at a meeting of the Directors or Alternate Directors whose votes equal sixty

percent (60%) or more of the total voting strength of the Board, or in the case of matters governed

by Section 3.2(e)(3), votes equal to sixty percent (60%) or more of the total voting strength of the

Directors or Alternate Directors eligible to vote, shall constitute a quorum for any action of the

Board, provided, however, that in each case at least one Director or Alternate Director from at

least four (4) Sectors is present. If at any meeting a quorum shall fail to attend, a majority of those

Directors or Alternate Directors present at the meeting may adjourn that meeting without further

notice until a quorum shall attend. Once a quorum is present, any business may be transacted

which might have been transacted at the meeting as originally called.

Section 3.6 Voting.

Action by the Board shall require approval of sixty percent (60%) or more of the total

eligible voting strength of the Board.

Section 3.7 Remote Attendance.

Directors or Alternate Directors shall be deemed present and voting at a meeting of the

Board if participating in the meeting by means of a conference telephone, video conferencing, or

other means enabling all persons participating in the meeting to communicate with each other.

Section 3.8 Action without Meeting.

Any action that may be taken at a meeting of the Board may be taken without a meeting if

consent is given prior to the taking of the action in a writingin writing, which setting sets forth the

action so to be taken, shall be and is signed before the action by by all of the Directors (not the

Alternate Directors) eligible to participate in such action.

Section 3.9 Vacancies and Removal.

A Director or Alternate Director may be removed with cause at any time by an affirmative

vote of 60% of the Voting Members of the Sector that elected that Director or Alternate Director.

In addition, the Board may remove a Director or Alternate Director for cause, upon at least seventy-

five percent (75%) affirmative votes of the remaining total voting strength of the Board. A

Director or Alternate Director may resign from the Board upon provision of written notice to the

Secretary-Treasurer; such written notice shall be effective if provided by the Director, Alternate

Director, or any officer of the Voting Member. The right to elect Directors or Alternate Directors

may not be assigned, sold, pledged, or transferred in any manner. A vacancy may be filled only

by the Voting Members of the Sector in which the vacancy occurs. Any Director or Alternate

Director so chosen shall hold office until his or her successor is duly elected and qualified or until

his or her earlier resignation, ineligibility or removal.

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Section 3.10 Officers.

At the Board of Directors meeting that immediately followsing the Annual Meeting of the

Voting Members (or, at any Regular or Special Meeting, with respect to election of a replacement

officer pursuant to Section 3.12, at any regular or special meeting described in Section 3.3), the

Board shall elect from the Directors (excluding for these purposes the Alternate Directors) a Chair,

Vice- Chair, and Secretary-Treasurer, all of whom shall be the officers of the FRCC. No two (2)

officers of FRCC shall be officers, employees, or agents of Voting Members of the same Sector

or its Affiliates. The CEO of FRCC may not be elected to act as Chair, Vice-Chair, or Secretary/-

Treasurer.

(a) Term of Office. Each officer of the Board of Directors (other than a replacement

officer pursuant to Section 3.12, who shall be elected to complete the term of the officer he or she

is replacing) shall hold office for two (2) fiscal years,years and until his or her successor is duly

elected and qualified.

(b) Removal of Officers. Any officer of the Board of Directors may be removed

from office with or without cause at any time by the affirmative vote of seventy percent (70%) of

the total voting strength of the Board.

(c) Compensation. There shall be no compensation paid to any officer of the Board

of Directors of FRCC, provided that an officer serving on the staff of FRCC may be compensated

for his or her services on the staff of FRCC.

Section 3.11 Responsibilities of Board of Director Officers

(a) “Chair.” The Chair shall serve as the Chair of the Board. The Chair shall preside

at all meetings of the Members and Board, provided that, if the Chair is not eligible to vote in a

meeting governed by Section 3.2(e)(3), the Directors or Alternate Directors that who are eligible

shall select one of their number to preside at such meeting. The Chair shall be responsible for the

preparation of the agenda for all meetings of the Members and Board. The Chair shall also be a

member of, and preside over, a the Personnel and Compensation Committee described in Section

4.3, which shall have responsibilities for such matters relating to staff. .

(b) “Vice Chair.” The Vice Chair shall, in the absence or disability of the Chair,

perform the duties and exercise the powers of the Chair, subject to the provisions of Section

3.11(a), and shall perform such other duties and have such other powers as the Board may from

time to time prescribe. The Vice Chair shall be a member of a the Personnel and Compensation

Committee described in Section 4.3, which shall have responsibilities for such matters relating to

staff. .

(c) “Secretary-Treasurer.” The Secretary-Treasurer shall be responsible to assure

that the FRCC staff has adequate procedures to distribute the agenda of the meetings of the Voting

Members and the Board, keep the minutes of the proceedings of said meetings, and maintain the

financial books and records of the FRCC, including disbursement of the funds of the FRCC in

accordance with the authorized annual budget. The Secretary-Treasurer shall be a member of the

Personnel and Compensation Committee described in Section 4.3, which shall have

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responsibilities for such matters relating to staff. . The Secretary-Treasurer shall also serve as

Chair of the Corporate Compliance, Finance, and Audit Committee described in Section 4.2.

Section 3.12 Vacancy.

Any vacancy in a Board of Director officer occurring for any reason shall be filled as

specified in Section 3.10.

ARTICLE IV

Board Committees

Section 4.1 Board Compliance Committee

(a) FRCC shall establish and maintain a hearing body with authority to conduct and

render decisions in compliance hearings in which a Registered Entity may contest a finding of

alleged violation, proposed penalty or sanction, or a proposed mitigation plan, which shall be the

FRCC Board Compliance Committee (“BCC”), a balanced compliance panel reporting directly to

the FRCC’s Board of Directors.

(b) The BCC will consist of one (1) representative of a Voting Member from each of

the six (6) sectors in the FRCC, who shall be a member of the Board of Directors. Each year, two

(2) Directors (includingor Alternate Directors) from each Sector shall be asked to will volunteer

to serve in a “BCC Candidate Ppool.” There is no limit to the number of times a Director or

Alternate Director may volunteer for the BCC Candidate Pool. Each member of the BCC

Candidate Pool shall be a Voting Member.

(c) At the timeWhen a hearing request is received, the Chair of the FRCC Board of

Directors, or the Vice-Chair of the Board if the Chair is conflicted out, shall will appoint from the

BCC Candidate Pool one (1) member from each Sector to form the BCC for that hearing, as

follows:.

One (1) Director from the Investor Owned Utility Sector;

One (1) Director from the Suppliers Sector;

One (1) Director from the Non-Investor Owned Utility Wholesale Sector;

One (1) Director from the Load Serving Entity Sector;

One (1) Director from the Generating Load Serving Entity Sector;

One (1) Director from the General Sector.

The BCC Candidate Pool member(s) from the Registered Entity that has requested

the hearing shall not be selected for that BCC. There shall be no proxies permitted for the BCC.

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Commented [RG1]: New section created per Stacy.

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Commented [RG2]: Moved the ‘Board Compliance Committee’ section (in its entirety) from Article IX to new Article IV –Board Committees (02/26/2014)

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(d) The Board Member from the Registered Entity that has requested the hearing will

not be selected for that BCC. In the event one (1) Sector of the FRCC declines to participate on

the BCC, the Chair of the Board of Directors, or the Vice-Chair of the Board if the Chair is

conflicted out, shall randomly select one (1) additional member BCC member from the remaining

five (5) Sectors in the BCC Candidate Pool to constitute the BCC, and shall . The Chair of the

FRCC Board of Directors will also appoint a Chair and Vice-Chair of the BCC. Terms of BCC

members shall will be equivalent to the time it takes to complete the hearing for which they were

selected. Should the BCC member be removed from, become ineligible for, or otherwise cease

serving as either a Director or Alternate Director of the Board, the Chair of the Board (or Vice-

Chair, if the Chair is conflicted out) shall have discretion as to the member’s continued service on

the BCC and/or his or her replacement. Members may be re-appointed to subsequent terms without

any limits to the number of terms they serve.

FRCC Industry Sectors are as follows:

One (1) Member from the Investor Owned Utility Sector

One (1) Member from the Suppliers Sector

One (1) Member from the Non-Investor Owned Utility Wholesale Sector

One(1) Member from the Load Serving Entity Sector

One (1) Member from the Generating Load Serving Entity Sector

One (1) Member from the General Sector

(e) Each member of the BCC shall be a full voting member. There will be no proxies

for the BCC members. Decisions of the BCC shall require (i) a quorum to be present requiring at

least fifty (50) percent50% of the number of members assigned to the BCC provided, however,

that in each case at least four (4) eligible Sectors are represented, and (ii) a majority vote of the

members of the BCC voting on the decision.

Section 4.2 Corporate Compliance Finance and Audit Committee

There shall be a “Corporate Compliance, Finance and Audit Committee” with

thewhose purpose of shall be to to assisting the Board of Directors in fulfilling its oversight

responsibilities concerning (1) the integrity of theFRCC’s financial statements of the Company,

(2) the annual independent audit process, (3) the Company’s FRCC’s systems of disclosure

controls and procedures and internal accounting and financial controls, (4) the qualifications,

independence, and performance of the Company’sFRCC’s internal and independent external

auditors, (5) the Company’s FRCC’s compliance with legal and regulatory financial requirements,

(6) the Company’s FRCC’s policies and procedures for risk assessment and risk management, (7)

the Company’sFRCC’s ethics policy, and (8) the Company’sFRCC’s budget process. Attendance

by proxy at a meeting of the Corporate Compliance, Finance and Audit Committee shall be

permitted so long as:

Any such proxy is either a Director or Alternate Director of the Board; and

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Notice of the proxy’s attendance is provided to the CEO in writing in advance of

the meeting.

The Corporate Compliance, Finance and Audit Committee shall engage a certified public

accounting firm to audit the books and accounts of the FRCC for each fiscal year.

Section 4.3 Personnel and Compensation Committee

There shall be a “Personnel and Compensation Committee” (“PCC”) with the whose

purpose of shall be to overseeing the compensation of the the CompanyFRCC officersCEO and

vice-presidents. The Personnel and Compensation Committee PCC shall be composed of the

Oofficers of the Board. There willshall be no proxies permitted for the Personnel and

Compensation Committee PCC members.

ARTICLE V

ARTICLE IV Chief Executive Officer

Section 4.1Section 5.1 CEO.

The Board shall hire the a CEO who, under the Board's direction, shall carry on the general

affairs of the FRCC. The CEO shall be a member of the staff of FRCC and shall be a non-voting

Director. It shall be the CEO's duty to approve the expenditure of the monies appropriated by the

Board in accordance with the Budget approved by the Board. The CEO shall make an annual

report and periodic reports to the Board concerning the activities of FRCC. The CEO shall serve

as President president of FRCC. The CEO shall comply with all directives of the Board. All

agents and employees shall report, and be responsible, to the CEO. The CEO shall perform such

other duties as may be determined from time to time by the Board.

ARTICLE VARTICLE VI

Standing Committees

Section 5.1Section 6.1 Standing Committees.

There shall be a Planning Committee, an Operating Committee, and a Compliance

CommitteeRegional Entity Committee and Compliance Forum (collectively, “Standing

Committees”), and such other committees, subcommittees, and task forces as the Board may

appoint, when deemed necessary to carry out the purposes of the FRCC. Unless otherwise

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specified by the Board, neither the Standing Committees nor none of the Planning Committee,

Operating Committee, Regional Entity Committee and Compliance ForumCompliance

Committee, or such any other committee(s), subcommittee(s), and/or task force(s)s shall be a

committees of the Board, and no such committee they shall have no any authority to take action

otherwise reserved to the Board by statute.

Section 5.2Section 6.2 Planning Committee.

The “Planning Committee” is a Standing Committee that shall carryies out “Member

Services Activities,” on behalf of the Members. The Planning Committee shall report directly to

the Board and is charged with the responsibility of promoting the reliability of the bulk power

system in the FRCC Region, and assessing and encouraging generation and transmission

adequacy. The Planning Committee may establish subcommittees, working groups, and task

forces as directed by the Amended Rules of Procedure for FRCC Standing Committees.

Each Services Member may appoint one (1) representative, plus one or more alternate

representatives, who shall, without any further action required by the Services Member or

representative, be empowered to serve on the Planning Committee and vote on behalf of the

Services Member. Each Services Member shall be entitled to only one vote, even if the Services

Member has more than one alternate representative designated and/or in attendance at any meeting

of the Planning Committee. Where there is more than one alternate representative designated

and/or in attendance at a meeting of the Planning Committee, the alternates shall be responsible to

identify to the Chair of the Planning Ccommittee, in advance of the meeting, which of the alternates

shall be entitled to vote.

Each Voting Member may appoint one (1) representative, empowered to vote on behalf of

the Voting Member, to serve on the Planning Committee. A representative may, if unable to attend

a meeting, designate, in writing, an alternate to act on behalf of the representative. The meetings

of the Planning Committee shall be open to all Services Members and such other invitees as the

Planning Committee may deem appropriate.

Affiliate Members and Adjunct Members may appoint a non-voting representative to serve

on the Planning Committee. Quorum and Voting Rights shall be as defined in Sections 5.76.5 and

5.86.6. The Planning Committee shall report directly to the Board and is charged with the

responsibility of promoting the reliability of the bulk power system in the FRCC Region, and

assessing and encouraging generation and transmission adequacy. The Planning Committee may

establish subcommittees and task forces as deemed necessary by its membership.

Section 5.3Section 6.3 Operating Committee.

The “Operating Committee” is a Standing Committee that shall carryies out “Member

Services Activities,” on behalf of the Members. The Operating Committee shall report directly to

the Board and is charged with responsibility for the reliable operations of the bulk power system

in the FRCC Region through coordination activities of operations and maintenance. The Operating

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Committee may establish subcommittees, working groups, and task forces as directed by the

Amended Rules of Procedure for FRCC Standing Committees.

Each Services Member may appoint one (1) representative, plus one or more alternate

representatives, who shall, without any further action required by the Services Member or

representative, be empowered to serve on the Operating Committee and vote on behalf of the

Services Member. Each Services Member shall be entitled to only one vote, even if the Services

Member has more than one alternate representative designated and/or in attendance at any meeting

of the Operating Committee. Where there is more than one alternate representative designated

and/or in attendance at a meeting of the Operating Committee, the alternates shall be responsible

to identify to the Chair of the Operating Committee, in advance of the meeting, which of the

alternates shall be entitled to vote.

Each Voting Member may appoint one (1) representative, empowered to vote on behalf of

the Voting Member, to serve on the Operating Committee. A representative may, if unable to

attend a meeting, designate, in writing, an alternate to act on behalf of the representative. The

meetings of the Operating Committee shall be open to all Services Members and such other

invitees as the Operating Committee may deem appropriate.

Affiliate Members and Adjunct Members may appoint a non-voting representative to serve

on the Operating Committee. Quorum and Voting Rights shall be as defined in Sections 5.76.5

and 5.86.6. The Operating Committee shall report directly to the Board and is charged with

responsibility for the coordination, operations planning, operation and maintenance of the bulk

power system in the FRCC Regionreliable operations of the bulk power system in the FRCC

Region through coordination activities of operations and maintenance. The Operating Committee

may establish subcommittees and task forces as deemed necessary by its membership.

Section 5.4Section 6.4 Compliance CommitteeRegional Entity Committee

and Compliance Forum.

The “Regional Entity Committee and Compliance Forum” is a Standing Committee

that shall carry carries out “Regional Entity Activities,” on behalf of the Members. The Regional

Entity Committee and Compliance Forum shall report directly to the Board and is charged with

supporting the functions performed by FRCC in its delegated responsibility pursuant to the

approved Delegation Agreement with NERC. The Regional Entity Committee and Compliance

Forum also provides a forum for FRCC Members and invited FRCC staff to discuss issues and

share ideas related to changing reliability standards and NERC programs. The Regional Entity

Committee and Compliance Forum may establish subcommittees, working groups, and task forces

as directed by the Amended Rules of Procedure for FRCC Standing Committees.

Each Voting Member may appoint one (1) representative, plus one or more alternate

representatives, who shall, without any further action required by the Voting Member or

representative, be empowered to serve on the Regional Entity Committee and Compliance Forum

and vote on behalf of the Voting Member. Each Voting Member shall be entitled to only one vote,

even if the Voting Member has more than one alternate representative designated and/or in

attendance at any meeting of the Regional Entity Committee and Compliance Forum. Where there

is more than one alternate representative designated and/or in attendance at a meeting of the

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Regional Entity Committee and Compliance Forum, the alternates shall be responsible to identify

to the Chair of the committee, in advance of the meeting, which of the alternates shall be entitled

to vote.

Each Voting Member may appoint one (1) representative, empowered to vote on behalf of

the Voting Member, to serve on the Regional Entity Committee and Compliance Forum. A

representative may, if unable to attend a meeting, designate, in writing, an alternate to act on behalf

of the representative.The FRCC Regional Entity compliance staff is responsible for the

effective and efficient implementation of the NERC Compliance Monitoring and

Enforcement Program to meet the guidance of NERC and FERC. The meetings of the

Regional Entity Committee and Compliance Forum shall be open to all Members and such other

invitees as the Regional Entity Committee and Compliance Forum may deem appropriate.

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Affiliate Members and Adjunct Members may appoint a non-voting representative to serve

on the Regional Entity Committee and Compliance Forum. Quorum and Voting Rights shall be

as defined in Sections 6.5 and 6.6. The Regional Entity Committee and Compliance Forum shall

report directly to the Board and is charged with supporting the functions performed by FRCC in

its delegated responsibility pursuant to the approved Regional Delegation Agreement with NERC.

Regional Entity Committee and Compliance Forum provides a forum for FRCC Members and

invited FRCC staff to discuss issues and share ideas related to changing reliability standards and

NERC programs. The Regional Entity Committee and Compliance Forum may establish

subcommittees and task forces as deemed necessary by its membership.

Section 6.5 The Compliance Committee is charged with the

responsibility of promoting reliability of the bulk power system within the FRCC

region through compliance related activities. Each Voting Member may appoint one

(1) representative, empowered to vote on behalf of the Voting Member, to serve on

the Compliance Committee. A representative may, if unable to attend a meeting,

designate, in writing, an alternate to act on behalf of the representative. Quorum and

Voting Rights shall be as defined in Sections 5.7 and 5.8. The Compliance Committee

shall report directly to the Board and is separate and distinct from the Board

Compliance Committee which is primarily a “hearing body” and has a different

voting structure as outlined in Exhibit D of the Delegation Agreement between the

North American Electric Reliability Corporation and FRCC. The Compliance

Committee may establish subcommittees and task forces as deemed necessary by its

membership.

Rules of Procedure.

Each The Standing Committees shall set its rules Rules of procedureProcedure, provided

that quorum, voting rights, and voting shall be as specified in Sections 5.76.56 and 5.86.67. Such

Rules of Procedure shall be as approved by the Board. All action by any Standing Committee

shall be reported as prescribed herein and shall be subject to revision, alteration, and approval by

the Board.

Section 5.5 Section 6.6 Quorum.

Representation at any Standing Committee meeting by at least three (3) Sectors,

comprising of a Standing Committee of sixty percent (60%) or more of the total voting strength of

the Standing Committee shall constitute a quorum for the transaction of business at such meeting.;

provided, however, that action on matters dealing with the scope or funding of Member Services

shall require sixty percent (60%) or more of the total voting strength of members of the Standing

Committee representing Voting Members that are Services Members; and provided further that a

quorum shall require that at least three (3) Sectors are represented, all three of which shall be

Sectors a majority of the members of which are Services Members in the case of a quorum for

action on matters governing Member Services.

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Section 5.6 Section 6.7 Voting. Voting is by Sector. .

Each voting representative present at a any Standing Committee meeting is shall be

assigned a vote equal to the voting strength of his or her Sector, as provided in this sectionSector

Votes chart below, divided by the number of voting representatives present in that Sector, as

follows:

(

, except that nNo voting representative present at a meeting shall have hold more than one

(1) vote, regardless of the number of voting representatives absent from his or her Sector; , except

an except that a voting representative of the Investor Owned Utility Sector voting representative

who may have up to 1.167 votes. Action by a Standing Committee shall require an affirmative

vote equal to or greater than sixty percent (60%) of the total eligible voting strength of the Standing

Committee.

Sector Votes

(1) Suppliers Sector 2.5 Votes

(2) Non-Investor Owned Utility Wholesale Sector 2.0 Votes

(3) Load Serving Entity Sector

STANDING COMMITTEE VOTES by SECTOR:

1 Suppliers Sector 2.5 Votes

2 Non-Investor Owned Utility Wholesale Sector 2.0 Votes

3 Load Serving Entity Sector:

Municipal

Cooperative

0.5 Vote

0.5 Vote

4 Generating Load Serving Entity Sector 3.0 Votes

5 Investor Owned Utility Sector 3.5 Votes

6 General Sector 1.0 Vote

TOTAL 13.0 Votes

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Municipal 0.5 Vote

Cooperative 0.5 Vote

(4) Generating Load Serving Entity Sector 3.0 Votes

(5) Investor Owned Utility Sector 3.5 Votes

(6) General Sector 1.0 Vote

Total 13.0 Votes

Only representatives of Voting Members that are Services Members shall be eligible to

vote on questions governing Member Services. Any action by a Standing Committee shall require

an affirmative vote equal to or greater than 60% of the total eligible voting strength of the Standing

Committee.

If the number of Voting Members of a Sector is not greater than one (1), such Sector shall

not be entitled to a vote at the Standing Committee meetings.

Section 5.7Section 6.8 Meetings.

Regular meetings of the Standing Committees shall be held at such times and places, within

or outside the State of Florida, as may be determined by the Standing Committees. Special

meetings of the Standing Committees may be called by the Chair or upon the request of

representatives from three (3) different Sectors. Regular or Special special Meetings meetings

may be held by telephone conferencing, video conferencing, or by other means enabling all

participants in the meeting to communicate with each other. The meetings of the Standing

Committees shall be open to all Members,Members and such other invitees as the Board may deem

appropriate.

ARTICLE VIARTICLE VII

General Provisions

Section 6.1Section 7.1 Budget.

The Board shall annually adopt a budget for the FRCC for administrative expenses of the

FRCC, including salaries, and for the costs associated with the various committees,

subcommittees, professional services, projects, and studies. The budget may be amended from

time to time during the fiscal year as determined by the Board, subject to the filing and approval

requirements applicable to FRCC as a Regional Entity under the Delegation Agreement.

The Board shall approve the scope and funding of Member Services, in accordance with

the provisions of these Bylaws. The funding for Member Services special projects approved by

the Board may be based on a special funding, with an equitable allocation of the costs for the

special project as approved by the Board. The budget may be amended from time to time during

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the fiscal year as determined by the Board, subject to the filing and approval requirements

applicable to FRCC as a Regional Entity under the Delegation Agreement.

Section 6.2Section 7.2 Funding.

(a) The funding of FRCC’s Regional Entity Activities shall be in accordance with the

provisions of Exhibit E and the section numbered eight (8) of the Delegation Agreement at Section

89 and Exhibit E.

(b) The Member Services of FRCC shall be funded through an allocation of their costs

to all Members that are Services Members in accordance with the provisions of subsections

Sections 67.2(b)() (i) - (iii) belowherein. The funding of all Member Services shall be kept

separate from the funding of Regional Entity Activities as specified in the Business Plan and

Budget.

(i) Services Members. The allocation for Voting Members that are Services

Members shall be based on the following calculation: Services Member Allocation = 0.25 (l/N) +

0.25 (B/C) + 0.25 (D/E) + 0.25 (F/G). For the purposes of this calculation, the following factors

and definitions shall apply:

(i) ; provided, however, that in no event shall the allocation be less than

$20,000 per annum.

Services Member Allocation = 0.25 (l/N) + 0.25 (B/C) + 0.25 (D/E) + 0.25

(F/G)

N = Total number of voting Services Members;

B = Voting Services Member's previous-year Full Requirements Energy for

Load* (FREL) within the FRCC;

C = Total of Ffactor B for all voting Services Members;

D = Voting Services Member's Net Summer Generating Capacity** within

the e FRCC Region as of December 31 of the previous year, as defined in the

FRCC Load and Resource Plan;

E = Total of Ffactor D for all voting Services Members;

F = Sum of Circuit Miles of Transmission Facilities*** (69kV and above) of

voting Services Members within the FRCC Region times the respective operating

voltage as of December 31 of the previous year; and

G = Total of Ffactor F for all voting Services Members;

provided, however, that in no event shall any Services Member Allocation be less than $20,000

per annum.

*Full Requirements Energy for Load (“FREL”) The net electrical energy

requirements of the Services Member's electric system, and the net electric

energy requirements of all full requirements customers of the Services

Member, except if a full requirements customer of a Services Member joins

FRCC. In such case, the electrical energy requirements of such full

requirements customer will only be counted for the funding calculation for

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that Services Member who is the full requirements customer, and not for the

Services Member who is the supplier of the full requirements. There should

be no double counting of FREL between Services Members.

**Net Summer Generating Capacity The maximum summer rated capacity,

modified for ambient limitations, thatlimitations that a generating unit can

sustain over a specified period, less the capacity used to supply the demand

of station service or auxiliary needs. For jointly owned units, the Net

Capacity will be allocated based on the ownership share of each Services

Member who is a joint owner, unless otherwise mutually agreed by the joint

owner Services Members.

***Circuit Miles of Transmission Facilities The distance (following the path

of transmission facility) in miles between substations or switching stations

times the number of circuits at the same voltage level. For jointly owned

transmission facilities, the Circuit Miles of Transmission Facilities will be

allocated based on the ownership share of each Services Member who is a

joint owner, unless otherwise mutually agreed by the joint owner Services

Members.

(ii) Affiliate Members. The fee for an Affiliate Member that wishes to

participate in Member Services activities shall be $5,000 per annum. The fee for an Affiliate

Member, only participating in Regional Entity Activities, shall be waived.

(iii) Adjunct Members. The fees for an Adjunct Member that wishes to

participate in Member Services activities shall be $5,000 per annum. The fee for an Adjunct

Member, only participating in Regional Entity Activities, shall be waived.

Section 6.3Section 7.3 Payment of Fees.

The Member Services membership fee shall be due and payable concurrent with the

submission of the written application for membership. The initial membership fee will shall be

prorated on an annual basis depending upon the quarter in which a Member joins. Thereafter,

membership fees shall be due and payable on or before January 1st of each year or in installments

as determined by the Board. The FRCC shall notify, in writing, any Member who is delinquent in

the payment of any applicable membership fee. The notice shall provide a time certain, not to

exceed thirty days (30) days from the date of the written notice, during which any such delinquency

may be cured. Failure to cure a delinquency within the stated time will result in the loss of all

membership rights and designations. In the event of an uncured lapse in the payment of a fee,

membership in the FRCC shall be terminated.

Section 6.4Section 7.4 Staff.

The FRCC shall employ a staff, including the CEO, to carry out the objectives of the

organization. The CEO shall be a non-voting Director of the Board. The duties of the CEO are as

defined in Article IVV, Section 45.1.

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Section 6.5Section 7.5 Expenses.

The personal expenses of each Member, Director, and Alternate Director participating in

the activities of the FRCC and its committees and subcommittees shall be borne by the Member

on whose behalf such person is acting, unless determined otherwise by the Board.

Section 6.6 Minimum Sector Membership.

If the number of Voting Members of a Sector is not greater than one (1), such Sector shall

not be entitled to a vote at the Voting Members meetings, Board of Directors meetings, or the

Standing Committee meetings.

Section 6.7Section 7.6 Indemnification.

The FRCC shall indemnify and hold harmless, to the maximum extent permitted by law,

any Member, Director, Alternate Director, Member representative, agent, officer or employee of

the FRCC and the heirs, estates, successors or assigns of any of them, from any and all claims or

liabilities, including costs or attorneys' fees for defending against assertion of any such claim or

liability, arising from any act or failure to act of such person for, on behalf of, or at the direction

of the FRCC, unless such act or failure to act constituted a willful violation of state, federal or

local law, willful misconduct, or gross negligence. With the approval of the Board, the FRCC may

reimburse costs, attorneysattorneys’ fees, and other expenses for defending against assertions of

any such claims or liabilities prior to the final disposition of any such proceeding. The foregoing

rights to be indemnified, held harmless, or reimbursed shall not operate in derogation or

prohibition of any other rights which the person indemnified, held harmless or reimbursed may

have. The FRCC, by vote of the Board, shall purchase insurance against all or any part of the

liabilities which may be incurred by the FRCC and may cause the FRCC to indemnify and hold

harmless as and to the extent it may deem appropriate such other person or persons as it may deem

appropriate.

Section 6.8Section 7.7 Fiscal Year.

The fiscal year of the FRCC shall be the twelve (12) month period of January 1st through

December 31st.

Section 6.9Section 7.8 Depositories.

All funds of the FRCC shall be deposited in the name of the FRCC in such bank(s), banks

or other financial institutions as the CEO shall from time to time designate and shall be drawn out

on checks, drafts or other orders signed on behalf of the FRCC by such person or persons as the

Board shall from time to time designate.

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Amendments

Section 7.1Section 8.1 Amendments.

Subject to the provision that no amendment to these Bylaws may limit the rights of a

Member to resign from Membership, subject to the provisions of Section 1.212.21, and subject to

the requirements for approval by NERC and the Federal Energy Regulatory Commission

applicable to the FRCC as a Regional Entity, these Bylaws may be amended, altered, or repealed

through the following procedure:

(a) Any Voting Member, Director, or Alternate Director may suggest amendments to

these Bylaws. Such suggestions must include a proposed amendment, and any necessary

supporting documents. They should be sent to the CEO of FRCC for placement on the agenda for

a Board meeting in the time and manner prescribed by the Board.

(b) If the proposal is approved by the Board of Directors, the Board shall place the

proposal on the agenda of either the next Annual Meeting of the Voting Members, or, pursuant at

theto Board’s discretion, at a Special Special Meeting Meeting of the Voting Members called for

that the purpose of considering amendments to these Bylaws.

(c) Voting Members shall vote to enact the Board-approved amendment in accordance

with Sections 2.5 and 2.6these Bylaws, and subject to the provisions of Section 1.2 of the Bylaws.

(c)(d) Nothing stated herein shall be deemed to waive or excuse any requirements by

NERC and FERC, which relate to the approval of Bylaws and are applicable to the FRCC as a

Regional Entity.

Section 7.2Section 8.2 Review of Governance.

The Board shall appoint a task force to review these Bylaws,Bylaws and to submit

recommendations to the Board on necessary amendments, at the discretion of the Board, or if any

of the following events occurs:. Such task force shall include representation from each Sector.

(a) The number of Voting Members in a Sector is not greater than one (1).

(b) FERC approves aA Regional Transmission Organization of any type is approved

by the Federal Energy Regulatory Commission to operate in the FRCC Region.

(c) Any federal or state legislation or regulatory action that significantly alters the

functions of the FRCC.

(d) Any new entity that has or is expected to have financial transactions in the

wholesale electric market in the FRCC Region wishes to join the FRCC, and does not otherwise

meet the membership requirements as then defined in these Bylaws.

Any task force assembled pursuant to this Section shall include representation from each Sector.

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ARTICLE VIIIARTICLE IX

Observers of the Board

Section 8.1Section 9.1 Observers of the Board.

The Chairman of the Florida Public Service Commission, or designee, shall be invited to

attend meetings of the Board. The Board shall invite other observers as the Board deems

appropriate.

ARTICLE IX

Board Compliance Committee

Section 9.1 Board Compliance Committee.

(a) FRCC shall establish and maintain a hearing body with authority to conduct

and render decisions in compliance hearings in which a Registered Entity may contest a

finding of alleged violation, proposed penalty or sanction, or a proposed mitigation plan,

which shall be the FRCC Board Compliance Committee (BCC), a balanced compliance panel

reporting directly to the FRCC’s Board of Directors.

(b) The BCC will consist of one (1) representative of a Voting Member from each

of the six (6) sectors in the FRCC, who shall be a member of the Board of Directors. Each

year, two (2) Directors (including Alternate Directors) from each Sector will volunteer to

serve in a BCC pool. At the time a hearing request is received, the Chair of the FRCC Board

of Directors will appoint one member from each Sector to form the BCC for that hearing.

The Board Member from the Registered Entity that has requested the hearing will not be

selected for that BCC. In the event one (1) Sector of the FRCC declines to participate on the

BCC, the Chair of the Board of Directors shall randomly select one (1) additional BCC

member from the remaining five (5) Sectors to constitute the BCC. The Chair of the FRCC

Board of Directors will appoint a Chair and Vice-Chair of the BCC. Terms of BCC members

will be equivalent to the time it takes to complete the hearing for which they were selected.

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Members may be re-appointed to subsequent terms without any limits to the number of

terms they serve.

(c) FRCC Industry Sectors are as follows:

One (1) Member from the Investor Owned Utility Sector

One (1) Member from the Suppliers Sector

One (1) Member from the Non-Investor Owned Utility Wholesale Sector

One(1) Member from the Load Serving Entity Sector

One (1) Member from the Generating Load Serving Entity Sector

One (1) Member from the General Sector

Each member of the BCC shall be a full voting member. There will be no

proxies for the BCC members. Decisions of the BCC shall require (i) a quorum to be present

requiring at least fifty (50) percent of the number of members assigned to the BCC provided,

however, that in each case at least four (4) eligible Sectors are represented and (ii) a majority

vote of the members of the BCC voting on the decision.

ARTICLE X

Audit

Section 10.1 Audit.

The Board shall engage a certified public accounting firm to audit the books and accounts

of the FRCC for each fiscal year.

ARTICLE XIARTICLE X

Dispute Resolution Procedures

Section 11.1Section 10.1 Dispute Resolution.

These procedures are established for the equitable, efficient, and expeditious resolution of

disputes. Except as stated in the next sentence, these procedures shall be used to resolve disputes

between Members, between a Member and a consenting non-member, or between FRCC and any

Member or consenting non-member (any of the foregoing being referred to hereinafter as a

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“party”), arising from an act or omission by FRCC, or from an act or omission by a party in its

capacity as a FRCC member.

These procedures do not apply to disputes that are covered by the dispute resolution

provisions of the FRCC Compliance Monitoring and Enforcement Program ( Exhibit D to the

Delegation Agreement between FRCC and NERC) or other NERC dispute resolution provisions,

and doand do not supersede, unless agreed to by the parties, any dispute resolution agreement

between the parties applicable to the dispute, including, without limitation, dispute resolution

procedures set forth in Members' Open Access Transmission Tariffs.

These procedures supersede the dispute resolution provisions in the FRCC Regional

Transmission Planning Process. Multiple parties with the same or substantially similar interests

may be joined in the same proceeding. The parties are strongly encouraged take part in the

complete process described in this Article XII prior to initiation of judicial proceedings or the

utilization of other external dispute resolution processes, but the use of any of the steps of the

process in this Article XII shall not be a required condition for the initiation of judicial or

regulatory proceedings or the utilization of other external dispute resolution processes. FRCC

shall be involved in the administration of a proceeding as provided in section 311.5 to coordinate

with the parties to facilitate the resolution of the dispute, and to provide personnel, coordination,

and meeting and other facilities as specified herein.

Section 11.2Section 10.2 Initiation.

Any Member or FRCC (the “Invoking Party”) may initiate these dispute resolution

procedures by making a request in writing to the President with a copy to all other parties to the

dispute; provided, however, that if FRCC initiates the dispute, FRCC shall make a request in

writing to the Chair, with a copy to the Vice Chair and all other parties. The copy of the dispute

resolution request for each party shall be sent to and accepted by the Member representative

appointed in accordance with Section 1.7 of these Bbylaws. The President will inform the Board

of Directors of the initiation of any dispute resolution proceedings, and the docket number, and

title assigned to the dispute. The request must contain:

(a) a statement of the issues in dispute;

(b) the position of the party on each of the issues;

(c) the relief sought by the party;

(d) an explanation of the asserted right to such relief under an applicable tariff, contract,

or other legal standard or obligation;

(e) the dispute resolution step under Section 3110.4 3 at which the party proposes to

begin; and

(f) any proposed modifications or specific additions to the proceedings described in

these Bylaws by which the dispute may be resolved.

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Each person or entity identified as party to the dispute (a “Noticed Party”) shall submit a response

to the request to the President, the Chair and Vice Chair, and each other party to the dispute (the

“Dispute Response”). Each response shall set forth the position of the party on each of the points

identified above. A party shall have 20 business days from its receipt of the request to submit its

Dispute Response.

Section 11.3Section 10.3 Dispute Resolution Process.

The dispute resolution process described herein shall be conducted and administered in

accordance with these Bylaws and such other FRCC governing documents as may be

relevant to the proceedings. These dispute resolution procedures outline a step-by-step

process for the resolution of disputes. Parties are permitted to skip steps in the dispute

resolution process described in Section 3.4 by mutual agreement, or as specified in the

procedures for each step.

Section 11.4 Resolution StepsProcess.

Section 10.4 Resolution Steps.

The four steps in the dispute resolution process are:

(a) Step 1—Settlement Proceeding: (i) Step 1 is a proceeding in which the parties

shall meet in a good faith effort to resolve the dispute by mutual agreement (“Settlement

Proceeding”). FRCC shall provide administrative support, such as making available meeting

space, as requested by the parties. The parties shall be represented at settlement discussions by a

person with full authority to resolve the dispute. A final resolution may be subject to corporate or

regulatory or other government approvals, the requirements for which shall be disclosed by any

party subject to an approval prior to agreement on a final resolution.

(ii) (ii)

In the event that the parties cannot resolve their dispute in ninety (90) days from

the submission of the dispute resolution request, or such later date as may be agreed to by the

parties, the dispute shall proceed to the next step in the dispute resolution process. At any time

after thirty (30) days from the submission of the dispute resolution request the parties may mutually

agree to end the process. Any statement relating to the dispute by any party during the course of

or relating to the Settlement Proceeding may not be cited or offered into evidence for any purpose

in any external proceeding by any party.

(b) Step 2—Mediation Proceeding: (i) Step 2 is a proceeding to assist the parties

through active participation by a mediator in joint discussions and negotiations through which the

parties attempt to resolve the dispute by mutual agreement (“Mediation Proceeding”). The

Mediation Proceeding shall be conducted by an independent mediator selected and mutually

agreed upon by the parties (“Mediator”). A Mediator shall have no affiliation with, financial or

other interest in, or prior employment with any party or any of their parents, subsidiaries or

affiliates, and shall have knowledge and experience relevant to the subject matter of the dispute.

In the event that the parties cannot agree on a Mediator within 10 days following the termination

of the Settlement Proceeding, the President of FRCC shall select a Mediator; provided, however,

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that if FRCC is a party the Mediator shall be selected by the Chair, unless the Chair is an officer

or employee of a party, in which case the selection shall be made by the Vice Chair. At the request

of the Mediator, the parties shall be represented at a mediation session by a person with full

authority to resolve the dispute. A final resolution may be subject to corporate or regulatory or

other government approvals, the requirements for which shall be disclosed by any party subject to

an approval prior to agreement on a final resolution.

(ii) The Mediator shall not issue specific recommendations on resolution of the

dispute or otherwise opine on the merits of the dispute except at the request of the parties. A party

may request the Mediator to offer his or her views on the merits or any other aspect of the dispute

to that party individually on a confidential basis. Any recommendation, opinion or other statement

expressed by the Mediator or any party relating to the dispute during the course of or relating to

the Mediation Proceeding shall be offered solely for purposes of resolution of the Mediation

Proceeding, and may not be cited or offered into evidence for any purpose in any external

proceeding by any party.

(iii) In the event that the parties cannotparties cannot resolve their dispute in ninety

(90) days from the selection of the Mediator, or such later date as may be agreed to by the parties

with the concurrence of the Mediator, the dispute shall then proceed to the next step in the dispute

resolution process. At any time after sixty (60) days from selection of the Mediator, the parties

may mutually agree to end the process, or a party may request the Mediator to determine and

declare that the Mediation Proceeding is at an impasse. If the Mediator determines that the

Mediation Proceeding is not likely to result in a resolution of the dispute, the Mediator shall declare

the Mediation Proceeding at an impasse, and if so the dispute shall proceed to the next step in the

dispute resolution process.

(c) Step 3—Arbitration Proceeding: (i) Step 3 is a non-binding arbitration in which

an arbitrator or an arbitration panel shall receive evidence from each disputing party on factual

matters, and hear arguments, relating to the issues in dispute, make written findings and

conclusions of fact and law, and issue specific recommendations, based on those findings and

conclusions, for resolution of each issue in dispute (“Arbitration Proceeding”). Initiation of an

Arbitration Proceeding shall require the mutual agreement of the parties. The Arbitration

Proceeding shall be conducted before a single arbitrator selected by the parties. Alternatively, the

parties may agree to have the Arbitration Proceeding conducted by a panel of three arbitrators,

with one designated by the Invoking Party or Parties, one designated by the Noticed Party or

Parties, and a third selected by the two arbitrators designated by the parties. The parties may by

mutual agreement engage a firm specializing in alternative dispute resolution to administer the

Arbitration Proceeding, or may invoke the assistance of the Federal Energy Regulatory

Commission’s Dispute Resolution Service. Arbitrators shall have no affiliation with, financial or

other interest in, or prior employment with any party or any of their parents, subsidiaries or

affiliates, and shall have knowledge and experience relevant to the subject matter of the dispute.

The parties shall have 10 business days after conclusion of or agreement to skip the Mediation

Proceeding to select a single arbitrator, or to agree on the use of an arbitration panel and to make

their respective arbitrator designations and to so notify the opposing party or parties, with the

arbitrators so designated selecting the third arbitrator not later than five days after the last such

designation. If the parties cannot agree on the selection of a single arbitrator, unless the parties

agree otherwise the President of FRCC shall provide the parties with a list of not less than five

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candidates meeting the qualifications set forth above. The list shall summarize the qualifications

of the candidates, by experience and education, to resolve the matters at issue. The parties shall

convene a meeting or telephone conference call during which the parties shall alternate striking

names from the list until a single name remains, the party with the first strike to be chosen by lot.

If any person so selected is or becomes unwilling or unable to serve, the last person struck from

the list shall be requested to serve. Subsequent procedures shall be determined by the arbitrator or

arbitration panel, upon consideration of the recommendations of the parties, who shall seek to

agree on a location for the arbitration and other procedures.

(ii) The arbitrator or arbitration panel shall issue findings of fact and law and

recommendations for resolution of the dispute within ninety (90) days of appointment , unless a

longer period shall be agreed to by the parties with the concurrence of the arbitrator or arbitration

panel.

(d) Step 4—Board Proceeding: (i) Step 4 is a proceeding conducted by the FRCC

Board (Board Proceeding) to hear formal evidence on factual matters related to the issues

submitted, make written findings of fact and conclusions of law, and issue a recommended award

or other resolution for each issue in dispute; provided, however, that if the parties have completed

an Arbitration Proceeding as specified in Step 3, the Board shall accept the arbitrator’s findings of

fact except to the extent that a party demonstrates to the satisfaction of the Board that one or more

findings of fact are erroneous. A party shall have 30 days from the completion of the Arbitration

Proceeding to make a submission to the Board, with copies to all parties, contending that any of

the findings of fact by the Arbitrator are erroneous, and any other party shall have 15 days from

its receipt of the submission to respond to any such submission. Other procedures and schedules

for the Board Proceeding shall be established by the FRCC Board.

(ii) The Board shall vote on the appropriate resolution of the dispute in accordance

with the voting procedures described in these Bylaws. The Board shall publish the results of the

vote and issue recommendations for resolution of the issues in dispute within ninety (90) days of

initiation of the Board Proceeding, or such longer period as may be agreed to by the parties, with

the concurrence of the Board.

(e) Further Proceedings. After 30 days from completion of the dispute resolution steps

described above, to the extent that the parties have not agreed to resolution of any issue in dispute

a party may seek resolution of the dispute through one of the following proceedings:

(i) By agreement of the parties, binding arbitration.

(ii) A regulatory proceeding before a state or federal regulatory agency having

jurisdiction of all parties and the subject matter of the dispute.

(iii) A judicial proceeding before a court of competent jurisdiction.

Section 11.5Section 10.5 Administration.

The following administrative procedures apply to the dispute resolution procedures

described in Section 0Section 10.54Section 11.Section 11.4(a)-(d):

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At each step in the process, unless the parties otherwise agree the neutral person or

persons conducting the dispute resolution process shall determine meeting arrangements and

formats necessary to efficiently expedite the resolution of the dispute, and shall notify the parties

of these details. The parties shall seek to agree on such matters, but if after endeavoring in good

faith they are unable to agree, or if they request it, the neutral authority for the proceeding shall

make decisions regarding such details. The President shall assign a member of the FRCC staff to

assist those responsible for conducting the dispute resolution with the administration of the

process. If the parties resolve their dispute in a proceeding prior to the Board Proceeding, the

person or persons responsible for conducting the dispute resolution process shall notify the

President and the Chair of its outcome. After consultation with the parties and the individuals

responsible for conducting the dispute resolution process to confirm the completion of the process

described in that step, the President, with the concurrence of the Chair if the FRCC initiated the

dispute, shall discharge the persons responsible for conducting the dispute resolution process, and

notify the Board of the results.

Section 11.6Section 10.6 Expenses.

The parties to the dispute shall share equally all costs for meeting locations, administrative

costs, and travel and related expenses of FRCC staff members, Mediators or arbitrators

administering or conducting the dispute resolution process. The parties to the dispute shall also

share equally all charges for time and expenses of a Mediator, an arbitrator(s). or an arbitration

panel. The FRCC Controller shall, with the assistance of the FRCC staff members assigned to

assist in the administration of the proceedings, account for these expenses. Each party to the

dispute shall be responsible for its own costs and fees, including attorney fees, associated with

participation in any of the proceedings described herein.

ARTICLE XIIARTICLE XI

Miscellaneous Provisions

Section 12.1Section 11.1 Headings.

The headings used in these Bylaws are for convenience and may not be considered in

construing these Bylaws.

Section 12.2Section 11.2 Number and Gender.

All singular words include the plural, and all plural words include the singular. All

pronouns of one gender include reference to the other gender.

Section 12.3Section 11.3 Parties Bound.

These Bylaws will bind and inure to the benefit of FRCC, any Members, Director, Member

representative, agent, officer, or employee, as well as of the FRCC and their respective

administrators, legal representatives, successors, and assigns, except as these Bylaws otherwise

provided herein.

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Section 12.4Section 11.4 Minority Positions.

Any Voting Member or Standing Committee Representative who has a minority opinion

on any significant issue may present the minority opinion to the Board in a manner as prescribed

by the Board.

Section 11.5 Confidentiality of Information

To the extent permitted by law, each FRCC participant (Members, Directors, Member

Representatives, agents, officers or employees) must maintain the confidentiality of (1) any

confidential or proprietary FRCC information disclosed or available to the participant; (2) any

confidential or proprietary information of FRCC members or market participants to which the

participant has access by virtue of his or her position with FRCC; and (3) any confidential or

proprietary information of others that has been provided to FRCC on condition of confidentiality;

and (4) any information required to be held confidential per Section 1500 of theNERC’s Rules of

Procedure. Public information developed or acquired by an Entity shall be excluded from this

provision.

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APPENDIX A

Voting Member Agreement - ___________Division

__________________________________, hereby, hereby agrees to comply with and be bound

by, and to

(Voting Member)

promote and support, the Florida Reliability Coordinating Council Articles of Incorporation and

Bylawsand Bylaws, and all acts, decisions or obligations of the Florida Reliability Coordinating

Council applicable to Voting Member taken or entered into in accordance with the foregoing

documents.

________________________________

(Name)

DATE: __________________________

WITNESS:

________________________________

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APPENDIX A

Affiliate Member Agreement – ___________Division

__________________________________, hereby, hereby agrees to comply with and be bound

by, and to

(Affiliate Member)

promote and support, the Florida Reliability Coordinating Council Articles of Incorporation and

Bylawsand Bylaws, and all acts, decisions or obligations of the Florida Reliability Coordinating

Council applicable to Affiliate Member taken or entered into in accordance with the foregoing

documents.

________________________________

(Name)

DATE: __________________________

WITNESS:

______________________________

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APPENDIX A

Adjunct Member Agreement –_______________Division

__________________________________, hereby, hereby agrees to comply with and be bound

by, and to

(Adjunct Member)

promote and support, the Florida Reliability Coordinating Council Articles of Incorporation and

Bylawsand Bylaws, and all acts, decisions or obligations of the Florida Reliability Coordinating

Council applicable to Adjunct Member taken or entered into in accordance with the foregoing

documents.

________________________________

(Name)

DATE: __________________________

WITNESS:

________________________________

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HISTORY OF REVISIONS

January, 1998

Amended December 19, 2001

Amended March 2, 2006

Amended September 25, 2007

Amended June 27, 2008

Amended February 6, 2009

Amended February 10, 2010

Amended May 5, 2010

Amended July 26, 2011

Amended October 25, 2011

Amended TBD, 2014

55135.000004 EMF_US 35770967v5

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Agenda Item 11.a Board of Trustees Meeting

August 14, 2014

Proposed Amendments to the Delegation Agreement with Western Electricity Coordinating Council – Amended Exhibit B – the Western Electricity

Coordinating Council Bylaws

Action Approve

Background WECC is proposing three sets of amendments to its bylaws for approval by NERC and the Federal Energy Regulatory Commission. First, WECC is proposing to revise the WECC Reliability Standards Development Procedures in light of changes to WECC’s corporate structure and Bylaws. Second, WECC is proposing to change the definition of the term “Regional Criteria” in its Bylaws to be consistent with the NERC Rules of Procedure (NERC ROP). Finally, the WECC Bylaws are amended to allow the WECC Board of Directors to schedule and conduct a review of the structure and governance of WECC after the first full year of operation following its bifurcation. This review will be done with the assistance of the WECC Member Advisory Committee (MAC) and in cooperation, to the greatest extent practicable, with Peak Reliability.

Summary Below is a detailed summary of the amendments to the WECC Bylaws. All items were approved by the WECC board of directors in: (1) December 2013 and March 2014; (2) May 2014; and (3) September 2013, respectively

Item 1: WECC Reliability Standards Development Procedures The WECC Standards Committee (WSC) is charged with overseeing the WECC process for developing and balloting documents developed under the Reliability Standards Development Procedures (Procedures) and with the maintenance of the Procedures. After implementing the Procedures for 20 months, and in light of changes to WECC’s corporate structure and Bylaws, WECC is now requesting approval of these changes from the NERC Board of Trustees.

The proposed changes to the Procedures include lessons learned from 20 months of implementation, comments received during the August 13, 2013 through September 12, 2013 posting period, and inclusion of standard-related verbiage currently resident in the Bylaws.

An overview of proposed changes is as follows: • Inclusion of standards-related verbiage currently resident in the Bylaws;• Reduction in the ballot window length;• Extension of time for the WSC to act on a standards authorization request (SAR);• Change in time windows affecting remand and remediation of a SAR;

1

• Allowance of concurrent board and ballot windows to streamline the process;• Transfer to the drafting teams the task of developing responses to comments and

modification of proposed documents;• Expressly authorize the WSC to review a drafting team’s work product and take actions

to ensure the work product stays within the scope of the SAR;• Change the required window for response to comments to a 30-day target as opposed

to a 30-day mandate; and• Allow the WSC to postpone development based on priorities.

On November 1, 2013, the WSC accepted the proposed revisions to the Reliability Standards Development Procedures and forwarded the proposed Procedures for disposition by the WECC Board of Directors, NERC, and FERC.

Item 2: Regional Criteria WECC proposes to amend Section 3.25 of the WECC Bylaws, thereby adopting the NERC ROP definition of the term “Regional Criteria.”

Item 3: Changed role of the governance committee also affects the governance committee charter The WECC board of directors approved the attached amendment to Section 4.9 of the June 2013 version of the WECC Bylaws to include a structure and governance review to commence after the first full year of operations following bifurcation. In support of this change, the WECC board of directors also approved the deletion of Section 8.4 of the WECC Bylaws as being redundant with Section 4.9.

There are no proposed revisions to any other portions of the WECC Delegation Agreement; therefore, only the redlined version of the proposed revisions to Exhibit B is being provided with this agenda item. NERC Board of Trustees approval of the revisions to Exhibit B will also constitute approval of the amendments to the WECC Bylaws as a “Regional Entity rule.” The amended WECC Bylaws continue to meet the governance criteria described in Exhibit B. The amendments to the WECC Bylaws do not affect WECC’s qualifications to serve as a Regional Entity with delegated authority from NERC and do not adversely impact the ability of WECC to function as a Regional Entity under the Delegation Agreement. Accordingly, WECC requests that the NERC Board of Trustees approve the amended Bylaws and forward to FERC for approval and adoption as a replacement for Exhibit B to the NERC-WECC Delegation Agreement.

2

BYLAWS

OF

THE

WESTERN ELECTRICITY COORDINATING COUNCIL

Agenda Item 11.a

i

TABLE OF CONTENTS 1. Vision and Mission. .........................................................................................................................1

1.1 Vision............................................................................................................................................. 1

1.2 Mission .......................................................................................................................................... 1

2. Furtherance of WECC’s Mission .....................................................................................................1

2.1 Activities to Carry Out WECC’s Mission. .................................................................................... 1

2.2 Organizational Characteristics. ...................................................................................................... 3

3. Definitions........................................................................................................................................4

3.1 Affiliate. ......................................................................................................................................... 4

3.2 Annual Meeting. ............................................................................................................................ 4

3.3 Applicable Regulatory Authority. ................................................................................................. 4

3.4 Backstop Authority. ....................................................................................................................... 4

3.5 Balancing Authority. ..................................................................................................................... 5

3.6 Ballot Body. ................................................................................................................................... 5

3.7 Ballot Pool. .................................................................................................................................... 5

3.87 Board of Directors (Board). ........................................................................................................... 5

3.98 Class............................................................................................................................................... 5

3.910 Commercial Practices. ................................................................................................................... 5

3.101 Compliance Hearing Body. ........................................................................................................... 5

3.112 Delegation Agreement. .................................................................................................................. 5

3.123 Director. ....................................................................................................................................... 65

3.134 Electric Line of Business. .............................................................................................................. 6

3.145 Electric Reliability Organization (ERO). ...................................................................................... 6

3.156 Entity. ............................................................................................................................................ 6

3.167 FERC. ............................................................................................................................................ 6

3.178 Grid Operating Entity. ................................................................................................................... 6

3.189 International Reliability Agreement. ............................................................................................. 6

3.1920 .............................................................................................................................. Local Regional Entity.

6

3.201 Market Interface. ........................................................................................................................... 6

ii

3.212 Material External Impacts (MEI). ............................................................................................... 76

3.223 Member. ....................................................................................................................................... 76

3.234 Participating Stakeholder. .............................................................................................................. 7

3.245 Primary Authority. ......................................................................................................................... 7

3.256 Regional Criteria............................................................................................................................ 7

3.267 Regional Entity (RE). .................................................................................................................... 7

3.278 Registered Entity. .......................................................................................................................... 7

3.289 Reliability Management System .................................................................................................... 7

3.2930 ..................................................................................................................................Reliability Standard.

7

3.301 Reliability Standards Development Procedures. ......................................................................... 87

3.312 Transmission Facilities. ............................................................................................................... 87

3.323 Western Interconnection. ............................................................................................................... 8

4. Members and Membership. .............................................................................................................8

4.1 Voluntary Membership. ................................................................................................................. 8

4.2 Eligibility for Membership. ........................................................................................................... 8

4.3 Designation of Membership Class. ................................................................................................ 9

4.4 Changes in Membership Class. ..................................................................................................... 9

4.5 Affiliates and Distinct Business Entities. ...................................................................................... 9

4.6 Rights and Obligations of Membership. ...................................................................................... 10

4.7 Limitations on Member Obligations............................................................................................ 11

4.8 Compliance and Enforcement. .................................................................................................... 12

4.9 WECC Structure and Governance Review. ............................................................................... 132

5. Procedures for Member Decisions. ................................................................................................13

5.1 Quorum and Alternative Voting. ................................................................................................. 13

5.2 General Membership Meetings. ................................................................................................ 143

5.3 Annual Member Meetings. .......................................................................................................... 14

5.4 Special Member Meetings. .......................................................................................................... 14

5.5 Member Class and Subclass Meetings ........................................................................................ 14

5.6 Notice of Member Meetings. ....................................................................................................... 14

5.7 Open Meetings. ............................................................................................................................ 15

iii

5.8 Policymaking Authority. ............................................................................................................. 15

5.9 Minimum Participation Requirement. ......................................................................................... 15

6. Governance. ...................................................................................................................................15

6.1 Board of Directors. ...................................................................................................................... 16

6.2 Composition of the Board and Board Member Qualifications. ................................................. 165

6.3 Term of Office. ............................................................................................................................ 18

6.4 Nomination, Selection and Compensation of Directors. ........................................................... 198

6.5 Removal of Directors. ................................................................................................................ 210

6.6 Resignation. ................................................................................................................................. 21

6.7 Procedures for Filling Vacant Director Positions. ....................................................................... 21

6.8 Duties of Directors....................................................................................................................... 22

6.9 Powers of Directors. .................................................................................................................... 22

6.10 Delegation of Board Authority. ................................................................................................... 23

7. Procedures for Board Decisions.....................................................................................................23

7.1 Quorum. ....................................................................................................................................... 23

7.2 Majority Vote. ............................................................................................................................. 24

7.3 Attendance at Board Meetings by Teleconference. ................................................................... 243

7.4 Board Action by Unanimous Consent. ...................................................................................... 243

7.5 Notice of Board Meetings............................................................................................................ 25

7.6 Open Meetings. ............................................................................................................................ 25

7.7 Board Committees. ...................................................................................................................... 26

8. Member Committees. .....................................................................................................................27

8.1 Purpose. ..................................................................................................................................... 276

8.2 Standing Committees. ................................................................................................................ 276

8.3 Other Committees. ....................................................................................................................... 28

8.4 [Repealed]. ................................................................................................................................... 28

8.4 Assessment of Standing Committee Activities. .......................................................................... 28

8.5 Procedures for Committee Decision-Making. ............................................................................. 29

8.6 Procedures for Committees other than the Member Advisory Committee. .............................. 343

8.7 Procedures for Developing and Voting on Reliability Standards.............................................. 386

8.8 Notice of Committee Meetings................................................................................................ 4037

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8.9 Open Meetings. ........................................................................................................................ 4037

9. The Chief Executive Officer, Officers, and Employees. ...........................................................4137

9.1 Designation of Officers and Terms of Office. ......................................................................... 4137

9.2 Chief Executive Officer Qualifications. .................................................................................. 4138

9.3 Standards Applicable to All Employees. ................................................................................. 4138

9.4 Employment............................................................................................................................. 4238

9.5 Chief Executive Officer’s Duties. ........................................................................................... 4238

9.6 Secretary’s Duties. ................................................................................................................... 4239

10. Dispute Resolution. ....................................................................................................................4239

11. Costs and Finances. ....................................................................................................................4339

11.1 Funding of Reliability Activities. ............................................................................................ 4339

11.2 Dues. ........................................................................................................................................ 4340

11.3 Funding of Non-Statutory Activities. ...................................................................................... 4441

12. Amendments to these Bylaws. ...................................................................................................4441

12.1 Amendment by the Board. ....................................................................................................... 4441

12.2 Amendment by the Members. ................................................................................................. 4541

12.3 Amendments in Response to Mandatory Membership............................................................ 4542

12.4 Amendments proposed by FERC. ........................................................................................... 4542

13. Termination of Organization......................................................................................................4542

14. Miscellaneous Provisions...........................................................................................................4542

14.1 Limitation on Liability............................................................................................................. 4542

14.2 Indemnification. ....................................................................................................................... 4642

14.3 No Third Party Beneficiaries. .................................................................................................. 4643

14.4 Informal Inquiries for Information. ......................................................................................... 4643

15. Incorporation. .............................................................................................................................4643

16. Governing Law. .........................................................................................................................4643

17. WECC Transition.......................................................................................................................4743

17.1 Board of Directors transition. .................................................................................................. 4744

17.2 Transition Exceptions .............................................................................................................. 4744

17.3 Member Advisory Committee transition ................................................................................. 4844

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APPENDICES: A. Board Member Standards of Conduct

B. Officers and Employees Standards of Conduct

C. WECC Dispute Resolution Procedures

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BYLAWS

Of

The

WESTERN ELECTRICITY COORDINATING COUNCIL 1. Vision and Mission.

1.1 Vision. The Western Electricity Coordinating Council (“WECC”) shall seek to achieve the appropriate level of Bulk Electric System reliability at least cost considering all costs throughout the economy.

1.2 Mission

WECC is a Utah nonprofit corporation with the mission to foster and promote reliability and efficient coordination in the Western Interconnection. WECC will lead the stakeholders in the Western Interconnection to achieve appropriate system reliability, be the premier source of unbiased information, and serve as the trusted thought leader for the Western Interconnection by providing, consistent with these Bylaws: 1) impartial independent review and analysis of reliability issues impacting the Western Interconnection 2) development of electric reliability standards incorporating Western Interconnection experience and knowledge; 3) consistent and fair monitoring and enforcement activities for compliance with reliability standards; 4) event analysis and lessons-learned from system events; and 5) value for its membership through cost effective and efficient services and practices through: a) being a centralized repository of reliable information relating to the planning and operation of the Bulk Electric System in the Western Interconnection, b) coordinating system planning and modeling, c) sharing of, and providing comment on adherence to, recognized industry best practices, d) facilitating resolution of market seams and coordination issues, e) secure sharing of critical reliability data, and f) providing a robust stakeholder forum.

2. Furtherance of WECC’s Mission

2.1 Activities to Carry Out WECC’s Mission.

2.1.1 Compliance with the Federal Power Act. WECC will carry out responsibilities and exercise rights of a Regional Entity organized on an interconnection-wide basis pursuant to Section 215 of the Federal Power Act, including any responsibilities and rights delegated to it by the ERO pursuant to a Delegation Agreement.

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2.1.2 Agreements with Canada and Mexico. WECC will carry out responsibilities and exercise rights pursuant to International Reliability Agreements with Canadian or Mexican authorities.

2.1.3 Regional Coordination. WECC will act as a coordinating entity for the entire

Western Interconnection for activities of regional organizations with responsibilities for reliability and market functions.

2.1.4 Standard Setting. WECC will develop and adopt reliability, operating, and

planning standards, criteria and guidelines necessary to maintain the reliable operation of the Western Interconnection’s interconnected Bulk Electric System, including seeking, as appropriate, variances from standards of the ERO (or any successor organization which may be created by legislation or otherwise), as well as providing a process for regional variances.

2.1.5 Certification of Grid Operating Entities. WECC will assist in certifying Grid

Operating Entities in the Western Interconnection. 2.1.6 Reliability Assessment. WECC will ensure that interconnected Bulk Electric

System reliability assessments are conducted as needed. WECC will do this work in conjunction with the Regional Entities to the greatest extent possible. WECC will also facilitate coordinated reliability assessments among Regional Entities.

2.1.7 Compliance Activities. With respect to enforcement of reliability standards,

WECC will:

2.1.7.1 implement the Reliability Management System in effect as of WECC’s formation and as the Reliability Management System may be subsequently modified in accordance with its terms;

2.1.7.2 implement any monitoring and enforcement mechanisms delegated to it

pursuant to Section 215 of the Federal Power Act and any Delegation Agreement with the ERO, or required by any International Reliability Agreement with a Canadian or Mexican authority; and

2.1.7.3 administer any other monitoring and enforcement mechanisms where

WECC is designated to perform administration.

2.1.8 Coordinated Regional Planning. With respect to the coordination of regional planning activities, WECC:

2.1.8.1 will develop coordinated planning policies and procedures for the Western

Interconnection, including facilitation of market-based solutions, consistent with WECC/ERO standards and FERC policy.

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2.1.8.2 will review and assess Local Regional Entity planning processes to determine whether WECC planning procedures have been satisfied;

2.1.8.3 will refer planning matters back to the originating Local Regional Entity

for revision or other corrective actions when the WECC Board determines that WECC planning procedures have not been satisfied; and

2.1.8.4 may perform other interconnection-wide studies as needed.

2.1.9 Coordinated Operations. With respect to coordinating reliable operating activities

within the Western Interconnection, WECC will develop, coordinate and promote consistent interregional operating policies and procedures for the Western Interconnection, consistent with WECC/ERO standards and FERC policy.

2.1.10 Market Interface Issues. With respect to Market Interface issues WECC will:

2.1.10.1 facilitate development of compatible and efficient practices across the

Western Interconnection; and 2.1.10.2 exercise Backstop Authority where an unresolved Market Interface issue

will cause Material External Impacts by taking some or all of the following actions: 1) providing a forum for and coordinating voluntary solutions among Members; 2) recommending specific solutions for voluntary adoption by Members; and 3) if necessary, proposing solutions to an Applicable Regulatory Authority.

2.1.11 Dispute Resolution. WECC will provide a process for the timely resolution of

disputes between WECC Members as set forth in Section 11.

2.2 Organizational Characteristics.

As WECC carries out activities to fulfill its mission, it will seek to develop and maintain the following characteristics:

2.2.1 dedication to serving the individuals, businesses, and other organizations that

generate, transmit, distribute, market, and use electrical energy in the Western Interconnection;

2.2.2 efficiency in its administration, decision-making, policy and standards

development, and dispute resolution processes; 2.2.3 the ability to maintain status as an Interconnection-wide regional reliability entity

and be afforded deference and delegation by ERO (or successor organization); and

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2.2.4 fair and open processes through which practices, policies, and standards are developed and implemented based on sound technical and policy analysis.

2.2.5 Promote an efficient western electric market by reducing or eliminating conflict,

duplication and overlap among electric organizations in the Western Interconnection.

2.2.6 Allow access to WECC data by individuals who can demonstrate a legitimate

business need for the data, provided such individuals agree to such protections and non-disclosure restrictions which may be necessary due to the nature of the data sought to be accessed and agree to pay the incremental costs of providing the data which may be requested.

3. Definitions.

The capitalized terms used in these Bylaws shall have the meanings set forth below, or if not set forth below, shall have the meanings given them in the NERC Glossary of Terms Used in NERC Reliability Standards.

3.1 Affiliate.

An Entity that directly or indirectly through one (1) or more intermediaries, controls, or is controlled by, or is under common control with, another Entity. An Entity “controls” any Entity in which it has the power to vote, directly or indirectly, 5% or more of the voting interests in such entity or, in the case of a partnership, if it is a general partner. Notwithstanding the foregoing definition, for purposes of these Bylaws: 1) electric distribution cooperatives that are member-owners of a generation and transmission cooperative are not Affiliates of the generation and transmission cooperative or of each other; 2) an entity controlled by or operating as a unit, agency, or subdivision of a local, state, provincial, or U.S. federal or Canadian or Mexican national government will not be considered an Affiliate of any other entity controlled by or operating as a unit, agency, or subdivision of a local, state, provincial, or federal government; 3) separate agencies of a single state or province, or of the U.S. federal or Canadian or Mexican national government will not be considered Affiliates of each other, regardless of any commonality of political control; 4) members of any joint powers authority, and such joint powers authority, will not be considered Affiliates of each other; and 5) members of an RTO will not be considered Affiliates of such RTO or of each other solely as a result of such membership.

3.2 Annual Meeting.

The annual membership meeting of WECC, as described in Section 5.3.

3.3 Applicable Regulatory Authority. The FERC or any state or provincial government agency with jurisdiction to regulate or

directly affect the transmission of electricity within the Western Interconnection.

3.4 Backstop Authority.

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The ability, obligation, or responsibility of WECC to address an issue when the WECC Board determines that a Local Regional Entity(ies) holding Primary Authority has not resolved an issue, has created incompatible resolutions or has not acted. In each case where these Bylaws authorize WECC to exercise Backstop Authority, the provisions that authorize Backstop Authority will also specify the conditions necessary to trigger Backstop Authority and the actions that fall within WECC’s exercise of Backstop Authority.

3.5 Balancing Authority. The responsible entity that integrates resource plans ahead of time, maintains load-

interchange-generation balance within a Balancing Authority Area, and supports Interconnection frequency in real time.

3.6 Ballot Body. The Ballot Body consists of WECC members and non-members that have been

determined eligible for the voting sectors described in 8.6.5.2the Reliability Standards Development Procedures and may, therefore, vote on Regional Criteria and Regional Reliability Standards.

Ballot Pool. A Ballot Pool consists of a self-selected set of members of the Ballot Body who join the

Ballot Pool for a given Regional Criterion or Regional Reliability Standard during a designated window of opportunity provided by WECC either prior to balloting or prior to the close of balloting.

3.7 Board of Directors (Board). WECC Board of Directors, collectively, as described in Section 6.

3.8 Class. A grouping of Members described in Sections 4.2.1 through 4.2.7 and 4.3.

3.9 Commercial Practices. The products and practices involved in trading electricity. The term “Commercial

Practices” only refers to an interaction among market entities that does not affect or require assistance from Grid Operating Entities that have grid reliability responsibilities.

3.10 Compliance Hearing Body. The hearing body used for the purpose of providing a balanced compliance panel to

conduct hearings for the resolution of disputes concerning compliance with or enforcement of Reliability Standards that may arise between WECC (acting as Compliance Enforcement Authority for the Western Interconnection) and a Registered Entity.

3.11 Delegation Agreement. An agreement between the ERO and WECC pursuant to Section 215 of the Federal

Power Act by which the ERO delegates to WECC designated powers, rights and

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responsibilities regarding the administration within the Western Interconnection of electric Reliability Standards adopted or approved by the ERO and the FERC.

3.12 Director. An individual member of the WECC’s Board of Directors.

3.13 Electric Line of Business. The generation, transmission, distribution, or trading of electricity or the provision of

related energy services in the Western Interconnection.

3.14 Electric Reliability Organization (ERO). The organization certified by FERC under 18 C.F.R. §39.3, the purpose of which is to

establish and enforce Reliability Standards for the Bulk-Electric System in the United States, subject to FERC review.

3.15 Entity. Any individual, person, corporation, partnership, association, governmental body or

organization of any kind.

3.16 FERC. The Federal Energy Regulatory Commission or any successor.

3.17 Grid Operating Entity. Any operating entity, such as a Balancing Authority, that is certified pursuant to Section

2.1.5 of these Bylaws to be responsible for reliable operation of a portion of the Western Interconnection.

3.18 International Reliability Agreement. An agreement between WECC and any appropriate Canadian or Mexican authority

related to WECC’s powers, rights and responsibilities regarding the administration of electric reliability standards applicable within such authority’s geographic area of the Western Interconnection.

3.19 Local Regional Entity. A regional transmission organization or some other formally or informally constituted

regional organization or group within the Western Interconnection, including but not limited to a Balancing Authority, a group of Balancing Authorities acting in concert, or a group of Entities that own or operate Transmission Facilities acting in concert. These Local Regional Entity boundaries can be reevaluated or modified over time.

3.20 Market Interface. Market Interface involves all interactions among market entities and Grid Operating

Entities related to transmission service and physical delivery.

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3.21 Material External Impacts (MEI). Significant effects on another Local Regional Entity or market within the Western

Interconnection but outside of the Local Regional Entity or market adopting a policy, standard, practice or procedure, or implementing an action.

3.22 Member. Any entity that has applied and been accepted for membership in WECC and is current in

the payment of dues.

3.23 Participating Stakeholder. Any person or entity that is not a WECC Member, but is an interested stakeholder and

has applied and been granted, pursuant to Section 8.7.2, the participation and voting rights set forth in Section 8.7.1.

3.24 Primary Authority. The ability, obligation, or responsibility of an entity to address an issue in the first

instance.

3.25 Regional Criteria A WECC Board Approved document created to establish requirements to address NERC

“fill-in-the-blank” reliability standards necessary to implement, to augment, or to comply with NERC or Regional Reliability Standards and any other documents that may precipitate attendant monitoring and compliance through the Compliance Monitoring and Enforcement Program in the United States, or by programs established by the Applicable Governmental Authority in Canada and Mexico, as applicable. New and revised Regional Criteria shall be established using the WECC Standards Development Procedures. The term Regional Criteria shall have the definition set forth in the NERC Rules of Procedure as may be amended from time to time.

3.26 Regional Entity (RE). An entity having enforcement authority pursuant to 18 C.F.R. §39.8.

3.27 Registered Entity. An owner, operator, or user of the Bulk-Electric System or the entities registered as their

delegates for the purpose of compliance in the North American Electric Reliability Corporation Compliance Registry or similar Entity operating in Canada or Mexico and which could be registered in the Compliance Registry if it operated in the United States.

3.28 Reliability Management System The contracts, separate from these Bylaws, by which Members and other parties agree to

certain procedures and sanctions intended to enforce specified Reliability Practices to maintain reliable electric service throughout the Western Interconnection.

3.29 Reliability Standard. A requirement approved by FERC under section 215 of the Federal Power Act, to

provide for reliable operation of the Bulk-Electric System in the United States. Regional

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Reliability Standards are specific to the Western Interconnection and shall be established using the WECC Standards Development Procedures.

3.30 Reliability Standards Development Procedures. The process for developing and approving WECC Regional Reliability Standards (or its

successor) attached as Exhibit C to the Delegation Agreement between WECC and North American Electric Reliability Corporation.

3.31 Transmission Facilities. Those facilities that are defined as “transmission facilities” by FERC for purposes of the

open access requirements of Section 210 and 211 of the Federal Power Act or any facilities which would be so defined if the Member were subject to FERC jurisdiction.

3.32 Western Interconnection. The geographic area containing the synchronously operated electric transmission grid in

the western part of North America, which includes in the United States Arizona, California, Idaho, Nevada, Oregon, Utah, and Washington, as well as parts of Montana, Nebraska, New Mexico, South Dakota, Texas, Wyoming, and Colorado; parts of the Canadian Provinces of British Columbia and Alberta; and Baja California Norte, Mexico.

4. Members and Membership.

4.1 Voluntary Membership. Except as otherwise may be required by applicable authority, membership in WECC is voluntary. A Member may withdraw upon giving the Secretary thirty (30) days’ advance written notice. Notwithstanding such notice of withdrawal, all contracts, FERC orders, unpaid Member costs, and decisions of arbitration in effect or pending as of the date of the written notice of withdrawal will be followed through to completion, pursuant to these Bylaws, by the withdrawing Member; however. Nothing herein will relieve any Member withdrawing from WECC from any obligation it may have under applicable law including, but not limited to, Section 215 of the Federal Power Act. A Member that withdraws is obligated to pay any unpaid dues owed through the remainder of the fiscal year in which its withdrawal becomes effective.

4.2 Eligibility for Membership.

Subject to Section 4.5, any Entity that is an interested stakeholder or that meets the criteria for membership in the membership classes described in Sections 4.2.1 through 4.2.5 may be a Member of WECC:

4.2.1 Class 1. Electric Line of Business Entities owning, controlling or operating more

than 1000 circuit miles of transmission lines of 115 kV and higher voltages within the Western Interconnection.

4.2.2 Class 2. Electric Line of Business Entities owning, controlling or operating

transmission or distribution lines, but not more than 1,000 circuit miles of transmission lines of 115 kV or greater, within the Western Interconnection.

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4.2.3 Class 3. Electric Line of Business Entities doing business in the Western

Interconnection that do not own, control or operate transmission or distribution lines in the Western Interconnection, including power marketers, independent power producers, load serving entities, any other Entities whose primary business is the provision of energy services, and those Entities that are not eligible for membership in the other Member Classes and who have a substantial interest in the purposes of WECC.

4.2.4 Class 4. End users of significant amounts of electricity in the Western

Interconnection, including industrial, agricultural, commercial and retail entities as well as organizations in the Western Interconnection that represent the interests of a substantial number of end users or a substantial number of persons interested in the impacts of electric systems on the public or the environment.

4.2.5 Class 5. Representatives of states and provinces in the Western Interconnection,

provided that such representatives will have policy or regulatory roles and do not represent state or provincial agencies and departments whose function involves significant direct participation in the market as end users or in Electric Line of Business activities.

4.2.6 Sub-Class Organization. A Member Class may subdivide in up to three

subclasses based on a majority desire within that class for purposes of electing Member Advisory Committee representation.

4.3 Designation of Membership Class. A Member of WECC may not belong to more than one Class. An applicant for

membership will designate the Class for which it qualifies based upon the criteria for membership set forth in Section 4.2, however any Member owning, controlling or operating Transmission Facilities or distribution facilities must belong to Class 1 or 2 unless the Board grants the Member’s petition for a change in Member Class pursuant to the provisions of Section 4.4 of these Bylaws. Applications for membership will be submitted to WECC. WECC staff will review the application to verify eligibility for membership and Member Class designation. An applicant whose application has been rejected or any Member who disputes the WECC staff’s determination regarding the appropriate Member Class designation may request review by the Governance Committee. If the applicant or any Member disagrees with the Governance Committee’s decision, the applicant or such Member may appeal this decision to the Board.

4.4 Changes in Membership Class. Notwithstanding any other provision of these Bylaws, upon a petition from a Member,

the WECC staff (subject to review by the Governance Committee and appeal to the Board) may allow the Member to change Member Class if the interest of the Member is more closely aligned with the proposed Class than the Member’s current Class.

4.5 Affiliates and Distinct Business Entities.

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An Affiliate of a Member that satisfies the membership qualifications may also become a Member provided:

4.5.1 The Affiliate applying for membership and the Member disclose to the Chief

Executive Officer all Affiliates that are WECC Members and the Classes to which the Affiliates belong. Every Member will promptly notify the Chief Executive Officer whenever it becomes, or ceases to be, an Affiliate of any other Member.

4.5.2 Affiliates may be members of the same Class; provided, however, a group of

Affiliates within a single Class may only have one vote in any WECC forum. Except as set forth in Section 8.7.6, Aa group of Affiliates within a single Class may, by providing, at least three (3) business days, advance written notice to the Chief Executive Officer, split their single vote equally amongst all Affiliates or designate a single Affiliate as the group’s voting Member.

4.5.3 For good cause shown and with the express approval of the Board, a company or

organization containing functionally distinct entities within it may obtain separate memberships for such entities; provided that such entities will be considered Affiliates.

4.5.4 The Board may adopt a policy regarding whether Members may share the benefits

of membership (including the right to receive information that is only available to Members) with a non-member Affiliate.

Upon receiving applications from non-WECC members to join the Ballot Body,

WECC staff shall require such non-WECC members to identify their affiliations with other Ballot Body members in their applications to join the Ballot Body. WECC staff shall limit voting of affiliated non-WECC members in the same manner that would be used to limit voting by WECC member organizations.

4.6 Rights and Obligations of Membership.

Except as otherwise provided in these Bylaws or other applicable authority, Members of WECC have the following general rights and obligations:

4.6.1 The right to elect and remove Directors as described in Section 6.5; 4.6.2 The right to amend these Bylaws, and to review and rescind any Board

amendment of these Bylaws, in accordance with Section 12; 4.6.3 The right to receive appropriate meeting notices, as well as reports and

information produced by WECC; 4.6.4 The right to attend, participate and vote in all WECC Member meetings and the

right to attend Board meetings (other than closed sessions of Board meetings) and to comment upon all matters considered in such meetings;

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4.6.5 The right to be a member of, attend meetings of, and to introduce motions, debate and to vote in the deliberations of WECC committees, subject to the limitations of these Bylaws and such other reasonable limitations as the Board may adopt from time to time;

4.6.6 The right to invoke the dispute resolution provisions of these Bylaws; 4.6.7 The right to petition the Board to take any action consistent with applicable law

(including Section 215 of the Federal Power Act and implementing orders and regulations), these Bylaws and the articles of incorporation and to have such petition voted upon in a reasonable and timely manner;

4.6.8 The obligation to abide by these Bylaws, decisions resulting from the dispute

resolution process, and all standards or decisions of WECC, subject to the exceptions set forth in Section 4.7 and the enforcement provisions of Section 4.8.

4.6.9 The obligation to notify the Chief Executive Officer promptly of changes with

respect to Affiliates as provided in Section 4.5.1 of these Bylaws; and 4.6.10 The obligation to pay in a timely manner the membership dues pursuant to

Section 11. 4.6.11 The obligation to provide system data that the Board has determined is necessary

for WECC functions and does not impose an undue burden on the Members; provided, however, that the Board shall adopt appropriate limitations on this obligation or procedures that protect and avoid unnecessary collection of confidential, privileged, trade secret, cybersecurity or critical energy infrastructure information or other information that the Board determines merits such protection consistent with applicable law.

4.6.12 The obligation to support surfacing minority and majority opinions or views

within their Member Class, along with supporting rationale to enable the Board of Directors to make decisions based on informed judgment aligned with WECC’s vision, mission and these Bylaws.

4.7 Limitations on Member Obligations.

4.7.1 The obligation of Members pursuant to Section 4.6.8 will not require any Member

to take any action which the Member in good faith determines: 1) would exceed the physical capabilities of the Member’s electric system (or any part of another’s electric system that the Member has the legal right to cause to comply with a WECC action governed by Section 4.6.8); 2) would create serious and immediate risks to public health or safety (provided, however, that the shedding of load shall not in and of itself be deemed a serious and immediate risk to public health and safety for the purpose of this section); 3) would create an immediate risk of serious damage to facilities or equipment within its electric system or cause it to

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operate any of its electric facilities or equipment in an unsafe manner; 4) would cause the Member to violate or improperly implement an applicable law, regulation, rule, order, FERC license provision or other legal obligation; or 5) would conflict with any non-power requirement applicable to the Member (including without limitation any obligation under environmental laws, regulations, court and administrative decisions or biological opinions).

4.7.2 Each Member shall retain sole control of its facilities and the use thereof, and a

Member shall not be required to construct or dedicate facilities for the benefit of any other Member, or be required to take action, or refrain from action, as may be deemed necessary to maintain reliable service to its own customers and/or to fulfill its obligations to third parties; provided, that a Member shall comply with duly-adopted reliability standards applicable to its system and shall comply with any directives under existing security coordination agreements. Nothing in these Bylaws is intended to preclude application of Section 210 or 211 of the Federal Power Act. The above limitations shall not be construed as altering a Member’s obligation to comply with applicable Reliability Standards or enforcement orders, or any other obligation arising under 18 C.F.R. Part 39.

4.8 Compliance and Enforcement.

The power of WECC to enforce Member obligations other than compliance with Reliability Standards and other obligations arising under 18 C.F.R. Part 39 and applicable Canadian and Mexican regulatory requirements is limited to suspension or termination of membership as set forth in this Section; provided, however, that: 1) nothing in this Section will limit the power of Members to agree to additional enforcement provisions in separate contracts (such as contracts pursuant to the Reliability Management System); 2) nothing in this Section will limit the power of WECC to propose solutions regarding Market Interface issues to any Applicable Regulatory Authority as described in Section 2.1.10; and 3) nothing in this Section will limit WECC’s delegated authority under Section 215 of the Federal Power Act and 18 C.F.R. Part 39 and applicable Canadian and Mexican regulatory requirements to enforce reliability standards and perform other delegated or contractual functions within the Western Interconnection. The Board may suspend or, to the extent consistent with applicable law, terminate the membership of any Member for a material failure to meet any obligation of membership set forth in these Bylaws, including, but not limited to: 1) non-payment of dues sixty (60) days after the dues become delinquent; 2) intentionally or repeatedly violating any WECC Bylaw; 3) materially breaching or intentionally violating any FERC order or arbitration decision issued pursuant to these Bylaws; 4) willfully obstructing any lawful purpose or activity of WECC; or 5) remaining inactive as described in Section 5.9. The Board will give the affected Member not less than twenty-one (21) days prior written notice of any proposed suspension or termination, which will include the specific basis for the proposed action and, if applicable, instructions on curing the problem. Prior to terminating a membership, the Board will consider any information provided by the Member in response to the notice described herein.

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4.8.1 Suspension. The suspension of a Member will not affect the Member’s rights and obligations other than that the Member will not be entitled to vote at any meeting of the Members, Classes, subclasses, or any committee until the suspension is removed except that a suspended Member may participate in the WECC proposed Reliability Standards Development Procedure.

4.8.2 Termination. The termination of membership will have the same effect, and be

subject to the same continuing obligations, as such Member’s withdrawal pursuant to Section 4.1, except that it will be effective as of the issuance date of the notice provided pursuant to Section 4.8.

4.9 WECC Structure and Governance Review.

At least each five years, the Board of Directors will conduct a thorough assessment of whether WECC is fulfilling its purposes in a manner that is consistent with: 1) the provisions of Section 2.2 of these Bylaws; and 2) the then-current state and the expected future evolution of the electric power industry within the Western Interconnection. Unless determined otherwise by a majority vote of both the Board of Directors and the Members Advisory Committee (MAC), the initial review required under this Section 4.9 will commence after the completion of the first full year of operation under these Bylaws as amended in June 2013 and will be done collaboratively with the MAC and to the extent practical, will be coordinated with any similar structure and governance reviews being conducted by Peak Reliability. In particular, the Board will focus on whether the standards, obligations, processes, and decisions WECC imposes on its Members are timely, fair, effective, and reasonable in view of the commercial, legal, regulatory, and economic needs and objectives of the affected Members. The Board will evaluate WECC’s Board composition, Member Class structure, committee structure and activities, and staff responsibilities as they relate to the foregoing considerations. The assessment required by this Section 4.9 will be accompanied by Board recommendations for any changes the Board determines are warranted by the assessment. The assessment and recommendations prepared by the Board in accordance with this Section 4.9 will be submitted in writing to the Members at the first annual Member meeting held after they are completed.

5. Procedures for Member Decisions.

5.1 Quorum and Alternative Voting. With the exception of voting on Regional Reliability Standards and Regional Criteria under the oversight of the WECC Standards Committee, members may conduct business and take votes only at duly noticed Member meetings. Members may not conduct any business of the membership as a whole at any meeting unless a quorum is first established. 5.1.1 Quorum. A majority of all Members, including a majority in at least three (3)

Classes, will constitute a quorum for all meetings of the membership as a whole. A majority of the members of a Class or subclass will constitute a quorum for all Member Class or subclass meetings. Members participating through a designated alternative representative or through submission of an absentee ballot will be

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counted in determination of a quorum. Inactive Members, as defined in Section 5.9 of these Bylaws, will not be counted in determining a quorum at Member, Member Class or subclass meetings. A quorum, once established, will be deemed to continue for the balance of any Member, Member Class, or subclass meeting, except that no election of Directors may occur without a quorum being present. Members may designate an alternate representative or submit an absentee ballot in a form consistent with Section 5.1.2 for any Member, Member Class, or subclass meeting.

5.1.2 Alternate or Absentee Voting: In the event that a Member’s designated voting

representative cannot attend a meeting of the Membership or a Member Class meeting where Directors are being elected or amendments to these Bylaws are considered, a Member may designate an alternate voting Member representative, with two (2) days written notice to the Corporate Secretary, or a Member may cast an absentee ballot pursuant to the procedures established by the Corporate Secretary.

5.2 General Membership Meetings.

All business of the Members acting as a whole will be conducted at meetings called by advance notice to all WECC Members provided in accordance with Section 5.5. Unless stated otherwise in these Bylaws, decisions at all meetings of the Members, Member Classes, or subclasses will be by simple majority vote of the Members present or otherwise represented in accordance with these Bylaws, with each Member having one vote, unless other Bylaw provisions provide for the allocation of the Member’s vote. The Chair of the Board will preside over all Members acting-as-a-whole meetings.

5.3 Annual Member Meetings.

WECC will hold an Annual Meeting of all Members at a time and place determined by the Board. At the Annual Meeting, and at other times as provided for in these Bylaws, in addition to such other actions the Members may take, Member Classes will elect Directors for vacant director positions.

5.4 Special Member Meetings.

Members may hold special meetings whenever called by the Board. The Board will call special Member meetings whenever a majority of the Members of any Class request a special meeting or at such other times as it deems appropriate. The Chair of the Board will preside over all special Member meetings.

5.5 Member Class and Subclass Meetings

An individual WECC Member Class or subclass may hold a meeting for any purpose relevant to the interests of Class or subclass Members. Such meeting will be initiated by request by one or more Class or subclass Member(s), and agreement by at least fifty percent (50%) of Class or subclass Members.

5.6 Notice of Member Meetings.

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5.6.1 Annual Meeting. The Chief Executive Officer will provide at least thirty (30) days’ advance notice to all Members and the Board of the date, place and time of the Annual Meeting of the Members and an agenda of the business to be conducted at such meeting.

5.6.2 Other Member Meetings. The Chief Executive Officer will provide notice of

regularly scheduled and special meetings of the Members to the Members not less than fifteen (15) days before the meeting if delivered by first-class mail, or not less than ten (10) days before the meeting if the notice is delivered personally, by telephone, by facsimile, electronic mail or express mail. If mailed, such notice will be deemed given when deposited in the United States mail, with first-class postage thereon prepaid, addressed to a Member. Such notice will state the date, time and place of the meeting and the meeting agenda.

5.6.3 Public and Website Notice. Public notice of each meeting of the Members will be

placed on WECC’s website at least ten (10) days before such meeting. In addition, the Chief Executive Officer will provide notice in the same manner and time as set forth in Section 5.6.2 of each meeting to each member of the public who so requests and who has provided appropriate information regarding delivery of notice.

5.7 Open Meetings.

All Membership meetings are open to observation by the public.

5.8 Policymaking Authority. The Board of Directors may adopt policies for the interpretation and implementation of the meeting and voting procedures established in this Section 5.

5.9 Minimum Participation Requirement. In order to be counted for quorum purposes at a meeting of the membership as a whole, Class, or subclass meeting, a WECC Member must actively participate (by attending in person, sending an alternate, or voting absentee) in at least one WECC meeting (including meetings of the Board, committees and subcommittees) each year. If the Member does not meet this minimum participation requirement, the Member will be considered an “inactive” Member until its active status is restored by participation in at least one WECC meeting (including meetings of the Board, committees and subcommittees) by attending in person, sending an alternate, or voting absentee. An inactive Member will not be counted toward establishing a quorum of the membership as a whole, of a Class, or of a subclass. An applicant for WECC membership or a WECC Member may at any time self-designate itself an inactive Member. Such designation will be effective until the Member is reinstated to “active” status. If a Member does not participate for twenty four (24) consecutive months, the Member’s membership will be terminated. If a Member’s membership is so terminated, reapplication for membership may be made at any subsequent time.

6. Governance.

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6.1 Board of Directors. Subject to those matters expressly requiring approval of the Membership, a Board of Directors elected by the Members will govern WECC. The Board of Directors will elect its own Chair and Vice-Chair from those individuals serving as Directors.

6.2 Composition of the Board and Board Member Qualifications.

6.2.1 The Board of Directors shall consist of nine (9) Directors. At all times, subject to

temporary vacancies, the Board of Directors shall include at least three directors who have at least ten years of experience in the utility industry, preferably in the Western Interconnection, including at least one director who has transmission operations experience, at least one director who has transmission planning experience, and at least one director who has generation operations experience. At any time where the membership of the Member Advisory Committee (MAC) is modified, as may be provided in other provisions of these bylaws, to include representation for Entities of the two Canadian Provinces of British Columbia and Alberta and the Mexican State of Baja California, at least one Director, elected subsequent to such MAC representation, shall have international experience corresponding to such geographic area(s) and/or representation in the MAC.

6.2.2 The remaining members of the Board of Directors shall be selected in an effort to

ensure diversity of background and experience. Desirable categories of experience may include: regulatory or legal; accounting, finance or economics; environmental; end-user advocacy; information technology; compliance or standards; public sector; and international.

6.2.2.1 Transmission operations experience shall preferably include experience

in control center operations at the senior management or officer level. 6.2.2.2 Transmission planning experience shall preferably include experience in

modeling and/or planning transmission facilities, including economic and reliability modeling at the senior management or officer level.

6.2.2.3 Generation operations experience shall preferably include experience in

development or operation of generation facilities, including economic and reliability modeling at the senior management or officer level.

6.2.2.4 Regulatory or legal experience shall preferably include at least one of the

following types of experience: state, provincial or federal industry regulation; significant litigation experience ideally at the appellate level; evaluation of complex legal arguments; and advising clients with respect to settlements.

6.2.2.5 Accounting, finance or economic experience shall preferably include

experience as a Chief Financial Officer, a Chief Account Officer, a

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Corporate Risk Officer, a Certified Public Accountant, or the equivalent thereof.

6.2.2.6 Environmental experience shall preferably include experience advocating

environmental interests before local, state or federal agencies or boards, and/or leadership experience in representing environmental interests in relation to energy issues.

6.2.2.7 End-user advocacy experience shall preferably include experience

advocating end-user economic interests before local, state or federal ratemaking agencies or boards.

6.2.2.8 Information technology experience shall preferably include experience as

a senior level manager responsible for integrating information technology services with organizational needs in areas such as capacity planning, budget and finance, acquisition and deployment, operations, change management, application development, trade ally relationships, user support, data quality, security and similar areas.

6.2.2.9 Compliance or standards experience shall preferably include experience

as a senior level officer or manager for corporate compliance with internally and/or externally imposed requirements, rules or standards.

6.2.2.10 Public sector experience shall preferably include experience representing

the public interests with respect to energy issues. 6.2.2.11 International experience shall preferably include experience as described

in the previously listed experience categories, but in the Canadian provinces of British Columbia or Alberta, or the Mexican state of Baja California.

6.2.3 Director Affiliation Restrictions. A Director may not be a full time employee of a

Registered Entity. Nor may a Director be affiliated with any Member or Registered Entity operating in the Western Interconnection, nor a Director of an entity performing the function of Reliability Coordinator in the Western Interconnection.

6.2.3.1 For the purposes of this section, “affiliated” shall mean (1) an employee

of, (2) a contractor for, (3) an employee of a contractor for, or (4) an equity owner of Registered Entity or Member. For purposes of determining whether a Director is “affiliated” the term “Director” shall include a spouse and/or minor child of the Director.

6.2.3.2 A Director with an equity interest in private or publicly traded companies

that are end-users of electricity in the Western Interconnection but are not

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otherwise “affiliated” pursuant to the restrictions set forth in Section 6.2.2 shall not be considered to be “affiliated”.

6.2.3.3 A Director with an equity ownership in a broadly diversified mutual fund

which may from time to time include interests in one of the types of organizations described in Section 6.2.2, shall “not be considered to be “affiliated, provided that such equity interest cannot confer a controlling interest in a Member or Registered Entity within the Western Interconnection.

6.2.3.4 A Director receiving post-employment compensation, which

compensation is not indexed to the success of the disbursing entity shall not be considered “affiliated”.

6.2.3.5 A Director shall not be considered “affiliated” solely by having a

contractual relationship with a state government that has one or more agencies that are Members, provided that the Director cannot be affiliated with the Member agency or agencies.

6.2.3.6 A Director shall not be considered “affiliated” for being a residential or

small business end-user of electricity or for being affiliated with, a member of, or a contributor to an organization that represents a substantial number of end users or a substantial number of persons interested in the impacts of electric systems on the public interests or the environment, but a Director shall be considered “affiliated” if the Director is an employee of, or serves as a director, trustee, or officer or in any other policy-setting capacity with respect to any such organization.

6.2.3.7 The affiliation restrictions set forth in this Section are not all

encompassing. Candidates and Board members are expected to disclose all known potential financial or relationship conflicts, including any known relationships between companies they have affiliation with and/or entities described in Section 6.2.2. Furthermore, any Nominating Committee will be expected to investigate and evaluate all potential conflicts, whether financial or otherwise.

6.2.4 In addition, the Board may provide for the Chief Executive Officer (“CEO”) of

WECC to be a voting, additional tenth, member of the Board through the inclusion of such a provision in the resolution the Board adopts appointing WECC’s CEO. Such provision shall not permit the CEO to be a member of a Board committee or to cast either a tie-breaking vote or a vote that creates a tie. The CEO may not serve as the Chair or Vice-Chair of the Board.

6.3 Term of Office.

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Directors will hold office for staggered terms of three (3) years, three Directors’ terms ending each year. Each three (3) year term shall commence upon the adjournment of the portion of the Annual Member Meeting provided for in Section 5.3, in which all Members are counted for purposes of determining a quorum. Similarly, the three year terms of outgoing Directors shall end upon the adjournment of that portion of the Annual Member Meeting in which all Members are counted for purposes of determining a quorum, whether that results in a longer or shorter term than exactly three years.

6.4 Nomination, Selection and Compensation of Directors.

6.4.1 Nominating Committee. Candidates for a Director position shall be nominated by

a Nominating Committee. The Nominating Committee shall consist of seven members. Three members shall be Directors, not standing for re-election, designated by the Board Chair. The remaining four Nominating Committee members shall be designated by the Member Advisory Committee and come from individuals serving on the Member Advisory Committee, with two (2) members being from Classes 1, 2, and/or 3, and two (2) members being from Classes 4 and/or 5.

6.4.1.1 If the Member Advisory Committee does not designate MAC members to

serve on the Nominating Committee within 30 days of being notified of the Board Chair’s designation of the three Directors to serve on the Nominating Committee, the Board Chair may designate MAC members to serve.

6.4.1.2 A Nominating Committee shall be formed each year not less than 180 days prior to the Annual Meeting. A Nominating Committee will continue to function until a replacement Nominating Committee is formed, but may not continue for a period longer than twelve (12) months from its creation, provided however, that the Board, by resolution, may authorize a Nominating Committee to function beyond twelve (12) months as the Board may determine is necessary.

6.4.2 Director Candidate Nominations.

6.4.2.1 The Nominating Committee shall develop candidate pools and make

candidate nominations to the Members. The Nominating Committee may consider any qualified applicant in developing the candidate pool, and may identify applicants through the following process: (1) selecting and utilizing an independent search firm to provide the Nominating Committee with a list of qualified applicants for each Director position subject to election; (2) consider an incumbent Director who is willing to stand for reelection, including a review of such Director’s tenure on the Board of Directors; (3) consider external nominations.

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6.4.2.2 External parties, including but not limited to Members and Western Interconnection stakeholders, may recommend candidates (self- recommendations and third party recommendations) to the Nominating Committee for consideration, by submitting the following: the candidate’s resume, a summary of the candidate’s relevant experience, a disclosure statement from the candidate, and a letter of interest from the candidate. All recommendations from external parties must be submitted to the Nominating Committee within sufficient time for the Nominating Committee to evaluate the candidate prior to the notification required in Section 6.4.2.5.

6.4.2.3 The Nominating Committee shall review the qualifications of the potential

candidates and put forth one nominee for each Director position up for election.

6.4.2.4 Five (5) affirmative votes of the Nominating Committee shall be necessary

to put forth a nominee to the Members. 6.4.2.5 At least sixty (60) days in advance of the Annual Meeting, the Nominating

Committee shall notify the Board Chair whether or not it has finalized all Director nominations. If the Committee fails to put forth a nomination for an open position, then the Board Chair may form a new Nominating Committee with different Board and Member Advisory Committee members, who shall be tasked with developing any remaining nominations for open Director positions.

6.4.2.6 Each nominee, put forth by the Nominating Committee, shall be presented

for separate election by the Members.

6.4.3 Director Elections. Members will vote for each vacant Director position separately. A candidate will be elected to the Board upon majority vote of the Members as a whole in addition to a majority of the Classes (three of the five) having a majority vote from the Members of the individual Class.

6.4.4 Should a candidate fail to receive the required vote of the Members or Member Classes, the Board may:

6.4.4.1 conduct a new election of an alternate candidate put forward by the

Nominating Committee, if any, or the Board may ask the Chair to establish a new Nominating Committee to recommence the nomination and election process. Where a candidate has not received the required vote of the Members and Member Classes, the director position shall remain vacant until a candidate is elected, except as provided in Section 6.7.2.

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6.4.5 Annual Compensation of Directors. Every two years, or sooner if, in the discretion of the CEO, a new survey is required, the CEO shall contract with an appropriate firm to conduct a national compensation survey, which shall provide an independent review of the compensation paid independent directors. The latest survey so procured shall be used by the Nominating Committee to make an annual recommendation for the compensation of Directors for the following year. Any such recommendation shall require five (5) affirmative votes of Nominating Committee members. This recommendation shall be presented to the MAC no later than one hundred fifty (150) days prior to the Annual Meeting. The MAC shall set the compensation for the Directors at least one hundred and twenty (120) days prior to the Annual Meeting. When making this decision, the MAC shall consider the recommendation of the Nominating Committee and any other material relevant to setting Director compensation. If the Nominating Committee is unable to reach the five (5) vote majority necessary to make a compensation recommendation, the MAC shall make no changes to the compensation paid Directors for the following year.

6.5 Removal of Directors.

The Members or the Board may remove a Director before completion of the Director’s term of office pursuant to the following provisions. 6.5.1 Removal by the Members. Directors may be removed only for gross negligence,

violation of local, state, provincial, or federal laws, gross misconduct, or failure to meet the fiduciary obligations of Directors.

6.5.1.1 Removal of a Director will be by a vote of a majority of all the WECC Members, not just those Members voting, in addition to a majority of the Classes (three of the five) having a majority vote from the Members of the individual Class. Removal may only take place at a meeting called for that purpose by notice provided in accordance with the notice requirements for member meetings. A vote, by all Members, to consider removal of a Director will occur based upon a petition, for such an all-Member vote, supported by twenty percent (20%), each, of the Members of three of the five Member Classes.

6.5.2 Removal by the Board. The Board may remove any Director for gross

negligence, violation of local, state, provincial, or federal laws, gross misconduct, or failure to meet the fiduciary obligations of Directors. Such removal will only occur upon the affirmative vote of not less than six (6) Directors.

6.6 Resignation.

Any Director may resign from their position at any time by written notice to the Board by delivery to the Chair. The acceptance of a resignation will not be required to make it effective.

6.7 Procedures for Filling Vacant Director Positions.

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6.7.1 Director Vacancies. If the position of any Director becomes vacant prior to its normal term expiration, the remaining Directors may charge the Nominating Committee with selecting a successor immediately. The Nominating Committee will follow the requirements set out in Sections 6.2.1 and 6.2.2 in its selection of any successor Director. Alternatively, if less than one (1) year remains in the term of that Director, the remaining Directors may choose to leave the position vacant for the remainder of the term.

6.7.2 Holdover to Cure Procedural Vacancies. Whenever an incumbent Director is a

candidate for a Director position and a vacancy would be created due to expiration of the Director’s term , the Director may continue to serve, for up to an additional 12 months, until such time as an election of the Director’s position can be conducted, provided the vacancy arises from a lack of quorum or other procedural inability to elect a candidate for the Director position.

6.7.3 Should the number of serving Directors fall below seven (7), the Board may

appoint one or more individuals to serve as temporary Directors until such time as replacement Directors can be elected by the Members.

6.7.3.1 In appointing temporary Directors, the Board shall select individuals who

meet the requirements of Section 6.2.

6.8 Duties of Directors. The Directors will have the following duties:

6.8.1 Fiduciary Obligation to WECC: All Directors, will have a fiduciary obligation to

WECC consistent with the requirements for Directors of Utah non-profit corporations. Members of the Board will at all times act in conformance with such requirements, these Bylaws and the Standards of Conduct set forth in Appendix A.

6.8.2 Preserve Non-Affiliated Status: Throughout their terms, Directors will have a

duty to avoid any affiliation that is inconsistent with the qualifications for Directors in Section 6.2.2 of these Bylaws. If a Director becomes aware of any intervening disqualification, he/she must either resign or eliminate the disqualification (e.g., dispose of securities) within sixty (60) days.

6.9 Powers of Directors.

The management of all the property and affairs of WECC will be vested in the Board of Directors. The Board will hold annual elections to select a Board Chair and to fill any other Board officer positions that may be created by the Board or required by applicable law. The Board may exercise all the powers of WECC and do all lawful acts and things (including the adoption of such rules and regulations for the conduct of its meetings, the exercise of its powers and the management of WECC) as are consistent with these Bylaws and the Articles of Incorporation. The Board will give serious consideration to the Member Advisory Committee’s and the Western Interconnection Regional Advisory Board’s (or any successor) recommendations. The Board will respond to Member

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Advisory Committee and Western Interconnection Regional Advisory Board recommendations through a means which the Board determines appropriate.

6.10 Delegation of Board Authority.

The Board may delegate to the Chief Executive Officer or to any Board Committee formed pursuant to Section 7.7.3 any or all of its powers and authority except: 1) any power which it may not delegate pursuant to applicable Utah law; 2) the power to adopt any reliability standard; 3) the power to determine when to exercise the Backstop Authority of WECC; 4) the power to approve budgets; 5) the power to form committees; 6) the power to amend the Bylaws; 7) the power to elect the Chair and other officers of the Board; and 8) the power to hire, fire or set the terms of employment of the Chief Executive Officer. The Board may also delegate to any Member committee the power to make specific decisions, subject to the right of any Member to appeal any of such decisions to the Board within 30 days of the committee vote on the decision by writing a letter to the Chief Executive Officer that describes in reasonable detail the grounds for appeal, and requests that the appeal be considered by the Board at its next regularly scheduled meeting, subject to applicable notice requirements. Delegation will be by express decision and will require the affirmative vote of not less than a majority of the Directors. Any Director may call for a vote to rescind such delegation at any time and such delegation will be rescinded if a majority of the Directors vote to do so. 6.10.1 Notice to Members. Within seven (7) days of any decision delegated pursuant to

Section 6.10, except for routine decisions of the Chief Executive Officer, Members will be notified of the decision by electronic mail, posting on the WECC website and any other means determined appropriate by the Board. Routine decisions of the Chief Executive Officer will be noticed in periodic reports to the Board and Members as determined by the Board, which will be sent to Members by electronic mail and posted on the WECC website.

6.10.2 Board Review of Delegated Decisions. Decisions delegated pursuant to Section

6.10 will be reviewed by the Board at the request of any Director, provided such request is lodged with the Secretary within thirty (30) days of the notice. Whenever it determines that a matter requires an urgent decision, the Board may shorten the deadline for requests for review, provided that: 1) the notice and opportunity for review will be reasonable under the circumstances; and 2) notices to Members will always contain clear notification of the procedures and deadlines for Board review. A request for review of a decision will stay the effect of the decision pending review unless the Board in making the delegation expressly determines otherwise.

7. Procedures for Board Decisions.

7.1 Quorum. No business will be conducted by the Board unless at least five (5) Directors are present, or six (6) Directors if the CEO is counted to determine a Board quorum.

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7.2 Majority Vote. A decision of the Board will require an affirmative vote of a majority of Directors present and not abstaining; provided that no decision of the Board shall be made with fewer than three (3) affirmative votes, or four (4) affirmative votes if the CEO is counted to determine a Board quorum. Directors may not vote by proxy or by absentee ballot, but Directors may participate in Board meetings by telephone as provided in Section 7.3 of these Bylaws.

7.3 Attendance at Board Meetings by Teleconference.

Any or all of WECC’s Directors may participate in any meeting of the Board by telephone conference or any other means of communication that enable all Directors participating in the meeting to simultaneously hear one another. Every Director participating in a meeting in the manner described in the preceding sentence will be deemed to be present in person at that meeting.

7.4 Board Action by Unanimous Consent.

7.4.1 Action Without a Meeting. Unless WECC’s Articles of Incorporation or applicable law provides otherwise, action required or permitted to be taken at a meeting of the Board may be taken without a meeting through one or more written consents describing the action taken. Any Board action taken by written consent must be signed by all Directors in office at the time the action is taken. Such actions must be noticed to Members in accordance with Section 7.5 and Members must be given an opportunity to comment prior to the Board taking such actions through electronic mail, comments on the website or other appropriate means. The required notice of such meeting may generally describe the arrangements (rather than the place) for the holding of the meeting. All other provisions herein contained or referred to will apply to such meeting as though it were physically held at a single place. All Board actions by written consent must be filed with WECC’s Board meeting minutes. Action taken under this Section is effective when the last Director signs the consent, unless the consent specifies an earlier or later effective date. Any action by written consent has the same effect as a meeting vote and may be described as such in any document.

7.4.2 Waiver of Procedures. For any specific action at any noticed meeting of the

Board, and under exigent or unusual circumstances, the Board by unanimous vote of those present may waive any procedural requirement applicable to Board decision-making, including any requirement for notice of a specific potential action, except for the following: 1) the requirement for notice of the time and place of the meeting pursuant to Section 7.5; 2) the quorum and voting requirements of Sections 7.1 and 7.2; and 3) any non-procedural limitation on the power of the Board to make a decision, including, but not limited to, those restrictions in Sections 6.10 (limiting the power to delegate) and 12.1 (limiting the power to amend the Bylaws). Whenever such action is taken, a statement describing the action, the exigent or unusual circumstances, the specific procedure waived, the basis for the waiver and the votes of all Directors present shall be

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posted on the website and communicated in writing or by e-mail to all Members within five (5) days.

7.5 Notice of Board Meetings.

7.5.1 Regular Meetings. Except as set forth in Section 7.5.2 regarding urgent business,

all regular business of the Board will occur at the Board meetings, at least twenty-one (21) days’ advance notice of which has been provided by the Chief Executive Officer to all Directors and all Members. Notice will include an agenda that will identify those matters on which a vote will be taken at the meeting. The foregoing requirement shall not preclude the Board from taking an action that is different from the specific proposed action identified in the agenda, as long as the relevant subject matter has been reasonably identified in the agenda. The Directors will establish a regular meeting schedule that will be made available to the Members. The schedule will include not less than two meetings of the Board annually.

7.5.2 Special Meetings. Whenever the Chair of the Board or any three (3) Directors find

that there is urgent business requiring Board action before the next regular Board meeting, a special meeting of the Board may be called. Such special meetings will be held upon as much written notice to each Board Member and all Members as is possible under the circumstances, which will not be less than three (3) days. However, this notice of special meetings may be waived if: 1) the waiver is by a writing signed by a quorum of Board members; and 2) as much notice of the meeting as practicable has been given to WECC Members via e-mail and posting on the WECC website.

7.5.3 Public and Website Notice. Public notice of each meeting of the Board will be

placed on WECC’s website at least ten (10) days before such meeting (or such lesser time as provided pursuant to Section 7.5.2). In addition, the Chief Executive Officer will provide notice of each meeting by first-class mail, facsimile or electronic mail to each member of the public who so requests and who has provided appropriate information regarding delivery of notice.

7.6 Open Meetings.

Except as provided in Section 7.6.1, all regular and special meetings of the Board will be open to observation by any Member and any member of the public.

7.6.1 Closed Session. Notwithstanding the provisions of Section 7.6, upon an

affirmative vote of two-thirds (2/3) of the Directors present, the Board may meet in closed session: 1) to consider the employment, evaluation of performance, or dismissal of an employee of WECC and to deliberate regarding decisions the Board may be called upon to make regarding the nomination, qualification, appointment, or removal of a member of the Board of Directors; 2) to discuss pending or proposed litigation and to receive confidential attorney-client communications from legal counsel; and 3) to receive and discuss any

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information that is privileged, trade secret, cybersecurity, critical energy infrastructure information (as defined by the FERC), protected from public disclosure by law or that the Board determines should be confidential in order to protect a legitimate public interest.

7.6.1.1 Attendance by an Affected Director. Closed sessions of the Board may not

be attended by a Director under the following circumstances: 1) where the qualifications or performance of the Director or the Director’s spouse or children are being discussed; 2) where the Director is employed by an entity that is or is likely to become a party to the litigation being discussed; and 3) where the Director or the Board determines that the Director would have a serious and substantial conflict of interest by becoming privy to confidential attorney-client or trade secret information that is to be presented to the Board in closed session.

7.6.1.2 Announcement of Closed Session. Before adjourning into closed session,

the Chair of the Board will announce the purpose of the closed session in a manner that provides the public an understanding of the general subject matter to be discussed but which does not reveal sensitive or personal information. The Board will not discuss additional items outside the scope of this description.

7.6.1.3 Confidentiality of Closed Session. All Directors and others present will

maintain the confidentiality of discussions and decisions made in closed session. The Board will appoint a secretary for closed session to keep a minute book for the purpose of recording the subject matter discussed in closed session and any actions taken in closed session. After a closed session has ended, the Board Chair shall provide the public a general description of the business conducted during the closed session, without breaching the confidentiality of the information used in the session.

7.7 Board Committees.

7.7.1 Governance Committee. The Chair will appoint a Governance Committee that

shall: oversee implementation and amendment of these Bylaws and address such other issues pertinent to Governance as the Board may choose to delegate to it. The Chair will designate one of the appointed Directors to be the Chair of the Governance Committee.

7.7.2 Nominating Committee. Constituted as described in Section 6.4.1 of these

Bylaws. 7.7.3 Other Board Committees. The Board may appoint such Board committees as it

deems necessary from time to time to carry out its business affairs. In appointing such committees, the Board will specify their purpose, membership, voting, notice and meeting procedures and such other direction as the Board may deem

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appropriate. The Board may appoint one or more Members or other persons to participate in Board committees as full voting members or as non-voting advisory members.

7.7.4 Standards of Conduct for Board Committee Members. Members of Board

committees shall comply with the Board Member Standards of Conduct set forth in Appendix A.

8. Member Committees.

8.1 Purpose. WECC will have committees composed of its Members to advise and make recommendations to the Board. Such committees will include both standing committees required by these Bylaws and such other committees as the Board may choose to create.

8.2 Standing Committees.

WECC will have the following standing committees:

8.2.1 Member Advisory Committee. This committee is comprised of Member representatives elected by the Member Classes, or subclasses, as set forth herein.

8.2.1.1 The committee shall advise the Board on any matters the Board requests

the committee to evaluate or consider; and advise the Board on matters as the committee deems appropriate.

8.2.1.2 The committee’s Chair or designee will attend the Board’s meetings to

provide advice, clarifications or respond to Directors’ questions. The Board Chair and committee Chair shall develop guiding principles and procedures as necessary, to ensure open, effective, and efficient dialog between the MAC and Board. Such guiding principles and procedures may be amended by the Board and committee’s Chairs.

8.2.2 WECC Standards Committee. This committee will oversee the process for

responding to requests for Regional Reliability Standards and Regional Criteria in accordance with the Reliability Standards Development Procedures. The WECC Standards Committee is responsible for determining if a request for a Regional Reliability Standard or a Regional Criteria is within the scope of WECC’s activities, and for overseeing the drafting, comment and voting process for a Regional Reliability Standard or Regional Criteria. The WECC Standards Committee shall also oversee the process for responding to requests for interpretations of Regional Reliability Standards and Regional Criteria. The WECC Standards Committee shall consist of one member from each of the WECC Standards Voting Sectors set forth in Section 8.6.5.2the Reliability Standard Development Procedures, and a member of the WECC Board who shall act as chair of this committee. The WECC Board shall approve a Charter for the

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WECC Standards Committee that describes the WECC Standards Committee membership selection process.

8.2.3 Planning Coordination Committee. This committee will advise and make

recommendations to the Board on all matters within the jurisdiction of WECC pertaining to maintaining reliability through evaluating generation and load balance and the adequacy of the physical infrastructure of the interconnected Bulk Electric System within the Western Interconnection.

8.2.4 Operating Committee. This committee will advise and make recommendations

to the Board on all matters within the jurisdiction of WECC pertaining to maintaining reliability through the operation and security of the interconnected Bulk Electric System in the Western Interconnection.

8.2.5 Market Interface Committee. This committee will advise and make

recommendations to the Board on the development of consistent Market Interface practices and compatible commercial practices within the Western Interconnection. It will consider matters pertaining to the impact of WECC’s reliability standards, practices, and procedures on the commercial electricity market in the Western Interconnection, and facilitate analysis of the impact of electricity market practices on electric system reliability.

8.3 Other Committees.

8.3.1 The Board may create such other committees as it may desire from time to time.

The Board will specify the functions, duties and responsibilities of any such committee at the time of its creation. The Board will also specify the membership rules, quorum requirements, voting levels and meeting and notice requirements at the time of creation. Any changes in the membership rules, quorum requirements, or voting levels of a committee, once established by the Board, will require a seventy-five percent (75%) vote of the Board to alter. The specific function or sunset date for a committee will be designated by the Board at the time of the committee’s creation. The committee will terminate its activities upon the completion of its function or the expiration of the date set by the Board.

8.4 Assessment of Standing Committee Activities. [Repealed] Within eighteen months of the Federal Energy Regulatory Commission (FERC)

approval of Section 6 establishing an independent Board, and, thereafter, within no longer than a five year period after the previous review, the Board of Directors will conduct a thorough review of the activities of each of WECC’s standing committees to assess whether they are effectively furthering WECC’s purposes in a manner that is consistent with: 1) the provisions of Section 2.2 of these Bylaws; and 2) the then-current state and the expected future evolution of the electric power industry within the Western Interconnection. The Board’s review will assess whether there are any aspects of the standing committees’ functions or

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procedures that impede development of WECC standards, obligations, processes, and decisions that are timely, fair, effective, and reasonable in view of the commercial, legal, regulatory, and economic needs and objectives of the affected Members. The Board will propose to the membership, at the Members’ annual meeting held after completion of a review required by this Section 8.4, any changes to standing committee structures, functions, or procedures that the Board determines are warranted by its review.

8.5 Procedures for Member Advisory Committee Decision-Making.

8.5.1 Member Advisory Committee (MAC). The committee shall be comprised of

three representatives from each of the five (5) Member Classes, for a total of fifteen (15) members.

8.5.1.1 The Board, by resolution, may create up to three additional representative

positions on the MAC, to include representation for Entities of the Canadian Provinces of British Columbia, and/or Alberta, and/or the Mexican State of Baja California. The Board resolution shall set forth the terms through which Canadian or Mexican representatives shall be selected and serve.

8.5.2 MAC Member Elections. At the Annual Members Meeting, each Member Class shall conduct elections to elect Class member representatives for the committee. As set forth herein, each Class may subdivide into up to three subclasses for purposes of electing a Class’ MAC members.

8.5.2.1 Committee member terms. Each committee member will serve a three

year term. Terms shall be staggered such that one of each Class’ representative committee member’s terms ends each year. Class committee members may have term limits as determined appropriate by the Class or subclass electing such committee member.

8.5.2.2 Subclasses. Each Class will determine the need for diversity within the

Class (e.g., geographic, stakeholder issues, etc.) which may lead to the establishment of subclasses. A Class may subdivide into up to three subclasses. Each Class shall determine to establish or discontinue its subclasses, if any, by majority vote of the members in the Class.

8.5.2.3 Committee member nominations and elections. Only members of each

Class, or subclass, if applicable, may nominate and vote on candidates for election as a MAC member representative for their respective Class or subclass.

8.5.2.3.1 A Class or subclass candidate need not be a member of the Class

or subclass, neither an employee of a Class or subclass member.

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8.5.2.3.2 A quorum of a majority of the members of a Class or subclass must be present in order to elect a MAC member for the Class or subclass; election shall be by simple majority of votes cast.

8.5.2.3.3 Where there are more candidates for election than positions to

fill, absentee ballots shall allow voters to order the candidates by order of preference so that their wishes may be honored in case a runoff is required. Absentee ballots shall be counted in the first ballot based on the top choice, or the top two or three choices if more than one seat is being filled. In any runoff election, absentee ballots shall be counted based on the highest preferences indicated for the candidates who remain in the runoff election.

8.5.2.3.4 Other nomination and election procedures, beyond those

contained in these bylaws, may be proposed for a Class or subclass. Contingent upon their approval, by the General Counsel, for their submission to Members, they may be adopted for implementation by majority vote of the Member Class or subclass.

8.5.3 MAC Member Vacancy by Resignation or Removal

8.5.3.1 Resignation. At any time, any MAC member may resign from their

position by providing written notice of resignation to the MAC Chair. Such notice shall be effective as of the date the notice is submitted to the MAC chair.

8.5.3.2 Removal. The MAC or the Member Class or subclass which elected a

MAC member may remove the MAC member prior to completion of the Mac member’s term of office as set forth herein:

8.5.3.2.1 Removal by the MAC. The MAC may remove any MAC

member for gross negligence, gross misconduct, violation of local, state, provincial, or federal law, or gross failure to carry out the duties of a MAC member. Such removal will only occur after the affirmative vote of at least two-thirds (2/3) of the MAC members.

8.5.3.2.2 Removal by the Electing Class or Subclass. The electing

Member Class or subclass may remove any MAC member representing that respective Class or subclass. Such removal will occur after the affirmative vote of a majority of the Members of the electing Class or subclass.

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8.5.3.3 Vacancy. Whenever a MAC vacancy occurs, the MAC Chair shall conduct a proper and effective election, allowing for a reasonable period to select candidates and to organize such an election.

8.5.3.3.1 Whenever a MAC vacancy occurs, the MAC Chair shall, as

promptly as feasible, conduct an election consistent with these Bylaws for the Member Class or subclass from which the vacancy arose, allowing for a reasonable period to select candidates and to organize such an election.

8.5.3.3.2 Until an election can be held, the MAC Chair may appoint an

interim MAC member to fill the vacancy as may be required to meet the MAC quorum requirements of 8.5.8. The appointee shall serve until an effective election can be held. Any interim appointment must come from Members of the same Class or subclass from which the vacancy arose.

8.5.4 MAC officers. At the Annual Meeting, after incoming MAC members have been

duly elected by the Member Classes or subclasses, if applicable, the MAC will elect the MAC Chair and MAC Vice-Chair from the MAC members. The Chair and Vice-Chair must represent different Classes, and shall serve one year terms, measured from the Annual Meeting to the next Annual Meeting. In the event of the resignation or removal of the Chair or Vice-Chair, the MAC members shall, at their next regular or special meeting, whichever is sooner, elect a new MAC Chair or MAC Vice-Chair, respectively.

8.5.5 MAC Member Duties. All MAC members shall have a duty to represent the

interests of their Member Class or subclass. All MAC members shall maintain regular contact with the members of their Member Class as issues are considered by the MAC, and shall make reasonable good faith efforts to present and discuss both majority and minority opinions from their Member Class on matters before the MAC.

8.5.6 Regular and Special Meetings.

8.5.6.1 Regular meetings. All regular business of the MAC shall occur at MAC

meetings which are noticed pursuant to Section 8.5.7. The MAC shall meet in person not less than two times per year, including once in conjunction with the Annual Meeting. The MAC shall establish a regular meeting schedule, which will be made available to the Members and Directors electronically, and available to the public through posting on the WECC website.

8.5.6.2 Special Meetings. Whenever the MAC Chair finds, or upon request to the

MAC Chair from any five (5) MAC Members, that there is urgent business requiring MAC consideration or action prior to the next regularly

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scheduled meeting, then a special meeting shall be called with notice given in accordance with Section 8.5.7.

8.5.7 Notice.

8.5.7.1 Regular Meetings. All regular meetings of the MAC shall require at least twenty-one (21) days written notice to the MAC members, the Directors, and the Members. Such notice shall specify the time and place of the meeting, and an agenda of the business to be conducted including those matters upon which a vote will be taken. Notice of regular MAC meetings shall be effective upon electronic distribution, and shall be posted to the WECC website within one (1) business day of electronic distribution.

8.5.7.2 Special Meetings. Any special meetings of the MAC shall require at least

ten (10) days written notice to the MAC members, the Directors, and the Members. Such notice shall specify the time and place of the meeting, and an agenda of the business to be conducted, including those matters upon which a vote will be taken. Notice of special MAC meetings shall be effective upon electronic distribution, and shall be posted to the WECC website within one (1) business day of electronic distribution.

8.5.8 Quorum. No business shall be conducted by the MAC unless a majority of the

MAC members is present, including at least one MAC member from each Member Class which elects MAC members (not including subclass designations).

8.5.9 Majority Vote. A decision of the MAC shall be upon a simple majority vote of

committee members voting unless otherwise required in other bylaw provisions. 8.5.10 Remote Participation at MAC Meetings. Any or all of the MAC members may

participate in any meeting of the MAC electronically or by telephone, or by any other means of communications which enables the MAC members to simultaneously hear one another. Every MAC member participating in a meeting in this manner will be deemed to be present in person at the meeting.

8.5.11 Reporting to the Board. The MAC Chair, or designee, shall provide a report to

the Board at each Board meeting detailing the business carried out by the MAC, and advising the Board of MAC recommendations on matters as set forth in Section 8.2.1 herein. In the event that there are dissenting MAC member opinions regarding a matter on which the MAC is advising or providing recommendations to the Board, the MAC Chair, or designee, shall present dissenting opinions and rationales in conjunction with the respective MAC advice or recommendations.

8.5.12 Open Meetings. Except as provided in Section 8.5.13, all regular and special

meetings of the MAC will be open to observation by any Member, Director, and/or any member of the public.

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8.5.13 Closed Session. Notwithstanding the provisions of Section 8.5.12, after a quorum has been established at any MAC meeting and upon an affirmative vote of two-thirds (2/3) of the MAC members present, the MAC may close an open meeting and reconvene in closed session in the following instances: (1) to receive and/or discuss confidential attorney-client privileged information from WECC’s counsel; or (2) to receive and discuss any other information which is privileged, confidential, proprietary, trade secret, or otherwise protected from public disclosure by law.

8.5.13.1 Attendance by an Affected MAC Member. Closed sessions of the MAC

may not be attended by a MAC member under the following circumstances: (1) when the qualification or performance of the MAC member is being discussed; (2) when the MAC member is employed by an entity that is or is likely to become a party to the litigation or legal issue being discussed; or (3) when the MAC Chair determines that the MAC member would have a conflict of interest by becoming privy to the privileged or confidential information that is to be presented to or discussed by the MAC in closed session.

8.5.13.2 Attendance by Directors. Any member of the Board may attend a closed

session of the MAC unless the topic considered by the MAC concerns the Director.

8.5.13.3 Announcement and Adjournment of Closed Session. Prior to adjourning

to a closed session, the MAC Chair will announce the purpose of the closed session in a manner that provides the public an understanding of the general subject matter to be discussed, but which does not reveal privileged, confidential or otherwise sensitive personal information. The closed session then shall be limited in scope to the publicly stated purpose of the closed session. After the closed session has ended, the MAC Chair shall provide the public a general description of the business conducted during the closed session, without breaching the confidentiality of the information used in the session.

8.5.13.4 Confidentiality of Closed Session. All MAC members and any others

present at a closed session shall maintain the confidentiality of the information, discussions, and decisions made in closed session. Unless otherwise required, all MAC members and closed session attendees shall execute an appropriate confidentiality agreement provided by WECC’s General Counsel. The MAC Chair will appoint a secretary for the closed session to take minutes of the closed session, which shall be delivered to the WECC Corporate Secretary. Minutes of the closed session will be maintained confidential by the Corporate Secretary.

8.5.14 MAC Committees. The MAC may appoint such subcommittees and working

groups as it deems necessary from time to time to carry out its business affairs. In

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appointing such subcommittees or working groups, the MAC will specify, in a charter, their purpose, membership, voting, notice and meeting procedures, and other such direction as the MAC deems appropriate. The MAC may appoint one or more MAC members or other persons to participate in MAC subcommittees or working groups as full voting members or as non-voting advisory members.

8.5.15 MAC meetings and activities will be self- funded by Members with respect to

labor and travel expenses. However, WECC and WECC staff will provide facilitation and coordination support, including payment for the expenses of meeting facilities. A MAC member may seek reimbursement, from WECC, for reasonable and actual travel expenses arising from attendance at MAC meetings, consistent with WECC employee travel expense reimbursements, where such MAC member’s travel expenses are not reimbursed by any Member or other source.

8.6 Procedures for Committees other than the Member Advisory Committee.

8.6.1 Reports to Board of Directors. Action by a committee will be in the form of a

recommendation for Board action except in those instances in which the Board has, by resolution, specifically delegated to a committee the power to take action subject to an appeal to the Board by any Member. The recommendation of a committee must be forwarded to the Board for its action along with any minority or dissenting reports filed with the committee Chair or Vice-Chair.

8.6.2 Subcommittees, Task Forces and Ad Hoc Groups. Any Board or member

committee may create such subcommittees, task forces or other ad hoc groups (“subcommittee”) as it deems appropriate to carry out the committee’s responsibilities consistent with these Bylaws and the direction of the Board. The composition, responsibilities and procedures of such groups shall be specified by the committee as appropriate; provided, however that: 1) the committee may only delegate to such subcommittee responsibilities that are within the scope of the committee’s responsibilities pursuant to these Bylaws and direction of the Board; and 2) the subcommittee may only make recommendations to the committee. A committee may create a subcommittee without prior approval of the Board; provided, however, that the committee shall promptly inform the Board in writing and at the next Board meeting regarding the creation of the subcommittee. The notification to the Board shall include a charter for the subcommittee that describes how members of the subcommittee will be selected, the duties of the subcommittee, and whether the committee has established a sunset date for review of (1) the need for the subcommittee and (2) the charter of the subcommittee.

8.6.3 Committee Officers. The Board will appoint the Chair and Vice-Chair of each

committee. The Committee Chair or Vice-Chair will preside over all meetings of the committee and will report recommendations of the committee to the Board of Directors. The Chair and Vice-Chair will be responsible for informing the Board regarding minority opinions and other information required by the Board along

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with overall committee recommendations. Whenever the committee elects to form a subcommittee to represent regions or address specific tasks, the Chair (or in the absence of the Chair, the Vice-Chair) will have the power to appoint the members of such subcommittee from both members of the committees and non-members. Upon resignation of the Committee Chair, the Vice Chair shall serve as Chair until the Board appoints a replacement. Upon resignation of the Vice Chair, the Chair may appoint a temporary Vice Chair to serve until the Board appoints a replacement. Upon resignation of both the Chair and Vice Chair, the Chair of the Board may appoint one or more temporary replacements to serve until the Board appoints permanent replacements.

8.6.4 Committee Membership. Except as provided in Sections 8.2.2 and 8.6.4.1, any

Member of WECC may designate one representative as its committee member to any standing committee or other committee. The WECC Member will have one vote at any committee meeting through that committee member. Any number of other persons may attend a committee meeting, but such persons will have no right to vote without a prior designation of representation by a WECC Member., except that interested stakeholders may, under Section 8.6, vote on proposed Reliability Standards or revisions to Reliability Standards.

8.6.4.1 Dual Representation for Functionally-Separated Members. A Member

which has distinct and functionally-separated interests as both a transmission provider and a transmission customer may designate two representatives as committee members to any standing committee, one to represent each functionally separate interest. Each such committee member will have one vote. The privilege granted by this Section is subject to revocation by the Board on a case-by-case basis or generally whenever the Board finds, upon petition from any Member or its own motion, that such dual representation creates unfairness or imbalance within a committee.

8.6.5 Committee Voting and Classes.

8.6.5.1 Classes. For purposes of voting, committees, excluding the WECC

Standards Committee and the Member Advisory Committee, will have three classes of membership:

8.6.5.1.1 Transmission Provider Members; 8.6.5.1.2 Transmission Customer Members; and 8.6.5.1.3 States and Provincial Members (Member Class 5).

8.6.5.2 WECC Standards Voting Sectors. For purposes of voting on Regional

Reliability Standards and Regional Criteria, a Ballot Body consisting of five registered sectors (8.6.5.2.1 through 8.6.5.2.5) and three non-

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registered sectors (8.5.5.2.6 through 8.6.5.2.8) shall be established. If an Entity is eligible for a registered sector, then that Entity may be eligible for more than one registered sector. An Entity can only be in one non-registered sector. An Entity cannot be in both a registered and a non-registered sector. The first five sectors (8.6.5.2.1 through 8.6.5.2.5) shall be limited to Entities which are listed in the North American Electric Reliability Corporation (“NERC”) compliance registry and to those Canadian and Mexican Entities that perform functions that, if performed in the United States, would allow these Entities to be registered for compliance in the NERC compliance registry. A WECC member or Participating Stakeholder who wishes to participate in voting on Reliability Standards and Regional Criteria shall apply for membership in the Ballot Body in any or all of the registered WECC Standards Voting Sector(s) for which it believes it is eligible, or one of the three non-registered sectors. WECC staff shall confirm Participating Stakeholder’s eligibility for such Sector(s). Decisions of the staff to approve, deny, or restrict the admission of an entity to a voting sector may be appealed to the Governance and Nominating Committee. Decisions of the Governance and Nominating Committee to affirm or reverse such decisions of staff may be appealed to the Board. The following sectors are established: 8.6.5.4.0 Transmission Sector. This sector consists of Western

Interconnection Entities registered in the NERC compliance registry as transmission owners, transmission operators, transmission service providers, or transmission planners;

8.6.5.6.0 Generation Sector. This sector consists of Western

Interconnection Entities registered in the NERC compliance registry as generation owners or generation operators;

8.6.5.8.0 Marketers and Brokers Sector. This sector consists of Western

Interconnection Entities registered in the NERC compliance registry as purchasing-selling Entities;

8.6.5.10.0 Distribution Sector. This sector consists of Western

Interconnection Entities registered in the NERC compliance registry as distribution providers or load-serving Entities;

8.6.5.12.0 System Coordination Sector. This sector consists of Western

Interconnection Entities registered in the NERC compliance registry as balancing authorities, reserve sharing groups, planning authorities, resource planners, interchange authorities, or reliability coordinators. WECC may cast a vote in this sector;

8.6.5.14.0 End Use Representative Sector. This sector consists of non-

registered members of WECC Member Class Four;

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8.6.5.16.0 State and Provincial Representatives Sector. This sector

consists of non-registered WECC members of WECC Member Class Five;

8.6.5.18.0 Other non-registered WECC Members and Participating

Stakeholders Sector. This sector consists of consultants and other members of WECC Member Class Three, or interested stakeholders who qualify for Participating Stakeholder status but are not registered in the NERC compliance registry.

8.6.5.208.6.5.2 Voting. Except as provided in Section 4.5.2 and 8.6.5.4,

each committee member will have one vote. In order for a recommendation to be made to the Board, such recommendation must receive a simple majority vote of both: 1) committee members present and voting from the Transmission Provider Class; and 2) committee members present and voting from Transmission Customer Class. The Board will adopt voting and record-keeping procedures to ensure that committee voting is conducted consistent with these Bylaws. This requirement will also apply where decision making power has been delegated to a committee pursuant to Section 6.9.1.

8.6.5.20.18.6.5.2.1 State and Provincial Votes. The position of the state

and provincial Class committee members must be recorded, but the failure of a proposed recommendation or decision to obtain a simple majority vote of the state and provincial committee members will not prevent the recommendation or decision from being posted for due process comment or sent to the Board of Directors.

Voting on Regional Reliability Standards and Regional Criteria.

Whenever the WECC Standards Committee determines that a draft Regional Reliability Standard or Regional Criteria is ready for consideration by the Ballot Body, it shall be presented for a vote. Members of the Ballot Body shall be provided an opportunity to opt into a Ballot Pool formed for purposes of voting on each of the proposed Regional Reliability Standards or Regional Criteria as described in the Reliability Standards Development Procedures. A two-thirds quorum of the specially formed Ballot Pool is required for a valid vote. Members of the Ballot Pool shall cast their vote in the WECC Standard Voting Sectors listed in 8.6.5.2. When members of the Ballot Body who are eligible to vote in more than one of the sectors defined in 8.6.5.2 join the Ballot Pool, they may cast one vote in each voting sector in which they are eligible. Calculation of the vote by the WECC Standard Voting Sectors will be pursuant to a weighted sector voting formula as described in the Reliability Standards Development Procedures. If the Ballot Pool

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approves a proposed Regional Reliability Standard or Regional Criteria, then that proposed Regional Reliability Standard or Regional Criteria will be recommended to the WECC Board. The process of approving proposed Regional Reliability Standards and Regional Criteria is further guided by the Reliability Standards Development Procedures.

8.6.6 Notice and Review of Committee Recommendations and Decisions (Due

Process). Committee recommendations or decisions delegated to a committee pursuant to Section 6.9.1 will be subject to the due process provisions of this Section. Following a committee’s development of a proposed recommendation or decision, the committee will post the proposed recommendation or decision on the WECC website for review and comment by other WECC Members, and other interested parties. The committee will provide all Members e-mail notification of the posting and will allow at least thirty (30) days for comment on the proposal. The committee will consider all such additional input before reaching its final recommendation or decision. If the committee’s recommendation or decision changes significantly as a result of comment received, the committee will post the revised recommendation or decision on the website, provide e-mail notification to Members and provide no less than ten (10) days for additional comment before reaching its final recommendation or decision. Upon reaching its final recommendation or decision, the committee will forward it to the Board. Whenever it determines that a matter requires an urgent decision, the Board may shorten any time period set forth in this Section, provided that: 1) notice and opportunity for comment on recommendations or decisions will be reasonable under the circumstances; and 2) notices to Members will always contain clear notification of the procedures and deadlines for comment.

8.7 Procedures for Developing and Voting on Reliability Standards.

8.7.1 Rights and Obligations of WECC Members and Participating Stakeholders. All

WECC Members and Participating stakeholders are entitled to participate in the development of and to vote on Reliability Standards, Regional Criteria or revisions, subject to any applicable obligations, limitations and conditions set forth in these Bylaws, and in accordance with the WECC Reliability Standards Development Procedures.

8.7.1.1 Participation. The right to participate in Reliability Standards and

Regional Criteria development and voting includes the right to request the development or revision of a Reliability Standard, the right to receive notice of, attend and participate in related WECC discussions, the right to review information relevant to a Reliability Standard or revision, the right to provide written comments on a proposed Reliability Standard, Regional Criteria, or revision, the right to participate in voting on a Reliability Standard, Regional Criteria, or revision and the right to file an appeal requesting review of any decision on a Reliability Standard, Regional Criteria, or revision.

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8.7.2 Voting. The procedures and conditions for voting by WECC Members and

Participating Stakeholders are set forth in the Reliability Standards Development Procedures. and in Sections 8.6.5.2 and 8.6.5.4 of these Bylaws. A Participating Stakeholder may only vote on a proposed Reliability Standard or revision if they have applied for and been granted Participating Stakeholder status in accordance with Section 8.7.2 below. A Participating Stakeholder is only entitled to vote on Reliability Standards and revisions, and may only vote on Regional Criteria if the proposed Regional Criteria could result in sanctions to a non-WECC member. A Participating Stakeholder is not entitled to vote in any other WECC committee balloting process or in elections for WECC Directors.

8.7.3 Special ProceduresBoard Authority to Address Regulatory Directives. The Board shall have backstop authority to address regulatory directives as described in the Reliability Standards Development Procedures. If the Board determines that the procedures for drafting and voting on Reliability Standards did not result in a proposed Reliability Standard that addresses a directive issued by an Applicable Regulatory Authority, the Board shall have authority to take certain actions as described in the Reliability Standards Development Procedures to ensure that a Reliability Standard responsive to an Applicable Regulatory Authority’s directive is drafted, approved and/or submitted to the Applicable Regulatory Authority. In the event that a Reliability Standard or revision that is proposed in response to an Applicable Regulatory Authority’s directive fails to achieve a majority vote of the Ballot Pool, or if a quorum of the Ballot Pool was not established upon re-ballot of a proposed Reliability Standard, then the Board has the authority to take appropriate actions, as described in the Reliability Standards Development Procedures, to ensure that a Reliability Standard responsive to a regulatory directive can be submitted to NERC and FERC with a request that it be made effective. To exercise such authority, the Board must find that the proposed Reliability Standard or revision is just, reasonable, not unduly discriminatory or preferential, and in the public interest, considering (among other things) whether it is helpful to reliability, practical, technically sound, technically feasible, and cost-justified. If the Board is unable to make this finding, then the Board may direct that the proposed Reliability Standard be filed with the Applicable Regulatory Authority as a compliance filing in response to the regulatory directive, along with a recommendation that the standard not be made effective and an explanation of the basis for the recommendation.

8.7.4 Participating Stakeholder Application Process. Any person or entity that is an

interested stakeholder may apply to WECC for Participating Stakeholder status and, upon WECC’s acceptance of such application, acquire the participation and voting rights set forth above in Section 8.7.1. WECC staff, under the direction of the CEO, will process applications and make the initial determination of eligibility for Participating Stakeholder status. Denial of Participating Stakeholder status may be appealed to the WECC Governance and Nominating Committee and, if denied by the Governance and Nominating Committee, to the

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WECC Board. A person or entity’s Participating Stakeholder status will be maintained so long as the Participating Stakeholder continues to meet the requirements set forth in Section 3.24 and participates in at least one WECC meeting per year at which a Reliability Standard or revision is discussed. In the event a person or entity’s Participating Stakeholder status lapses due to failure to meet the above minimum participation requirement, the person or entity may restore Participating Stakeholder status by re-applying for Participating Stakeholder status and attending a WECC meeting at which a Reliability Standard is discussed.

8.7.5 WECC Standards Voting Sectors. WECC staff shall confirm eligibility for the

WECC Standards Voting Sectors set forth in the Reliability Standards Development Procedures. Decisions of the staff to approve, deny, or restrict the admission of an entity to a voting sector may be appealed to the Governance Committee. Decisions of the Governance Committee to affirm or reverse such decisions of staff may be appealed to the Board.

8.7.6 WECC staff shall require Ballot Body members to identify their affiliations with

other Ballot Body members. Affiliates within a single Standards Voting Sector may only have one vote in that Standards Voting Sector. Affiliates within a single Standards Voting Sector must designate a single Affiliate as the group’s Ballot Pool member to vote in that Standards Voting Sector.

8.8 Notice of Committee Meetings.

8.8.1 Standing Committees. The committee Chair, with the assistance of the Chief

Executive Officer, will ensure that not less than ten (10) days’ notice of all standing committee meetings is posted on the WECC website and is also provided to: 1) members of the committee; 2) Participating Stakeholders (if the meeting concerns development or approval of a Reliability Standard or revision); and 3) any WECC Member or member of the public requesting notice. A committee may take up any matter at a duly noticed meeting including matters not expressly identified in the notice; provided, however, that a final recommendation to the Board must be made in accordance with Section 8.6.1.

8.8.2 Other Committees. Notice of other committee meetings will be provided in the

manner adopted for such notice by the affected Members and in accordance with the requirements of Section 8.8.1.

8.9 Open Meetings.

All committee meetings of WECC will be open to any WECC Member, Director and for observation by any member of the public, except as set forth in these bylaws or in policies on closed sessions that the Board may adopt for the purpose of preventing public disclosure of information that the Board might more appropriately discussed in closed session.

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9. The Chief Executive Officer, Officers, and Employees.

9.1 Designation of Officers and Terms of Office. WECC will have a Chief Executive Officer, a Secretary, and any other officers specified by the Board from time to time. The Chief Executive Officer will also hold the title of President of WECC if applicable law requires WECC to have a President. Each officer will be appointed by the Board and will serve for the term of office specified in the Board action appointing the officer and until his or her successor is appointed. Any two or more offices may be held by the same person except the offices of Chief Executive Officer and Secretary.

9.2 Chief Executive Officer Qualifications.

The Chief Executive Officer will be a person with senior management level experience and knowledge of bulk power electric transmission systems reliability, planning and operations.

9.3 Standards Applicable to All Employees.

A person may not be an officer or employee of WECC if: 1) the person is also the employee of or has a contractual relationship with any Entity, or any Affiliate of any Entity, that is eligible for membership in WECC; or 2) the person has a financial interest that, in the judgment of the Board or the Chief Executive Officer, creates the fact or appearance of bias, undue influence or lack of objectivity regarding any action or decision of WECC. The Board will adopt Standards of Conduct for officers and employees setting forth their duty of care, duty of loyalty, duty to avoid conflicts of interest and related matters intended to promote their neutrality, objectivity and professionalism. Upon adoption, such standards shall be attached hereto as Appendix B.

9.3.1 Exemptions from the disqualification criteria found in Section 9.3 are as follows:

9.3.1.1 Status as a residential electricity customer will not disqualify a person

from employment with WECC. 9.3.1.2 A candidate for Chief Executive Officer or employee of WECC will not

be disqualified for owning shares in a mutual fund because the mutual fund owns an interest in a Member or an Affiliate of a Member.

9.3.1.3 The disqualification standards described in Section 9.3 will not apply to

disqualify a candidate who is receiving payments from a pension plan of a Member or an Affiliate of a Member in a form other than securities of such Member or Affiliate if the pension plan payments bear no relationship to the economic performance of the Member or Affiliate.

9.3.2 If an officer or employee receives a gift or inheritance of securities in any

Member or Affiliate, he/she must resign or dispose of such securities within six (6) months of the date of receipt. Within six (6) months of the time a new

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Member is added in which an officer or employee owns securities, the officer or employee will resign or dispose of those securities.

9.4 Employment.

The Chief Executive Officer will be employed by the Board of Directors and will serve at the Board’s pleasure. Any contract of employment with a Chief Executive Officer will permit the Board to dismiss the officer with or without cause.

9.5 Chief Executive Officer’s Duties.

Subject to the Board’s direction, the Chief Executive Officer or his/her designees will have the following duties, among others:

9.5.1 Execute policies at the direction of the Board and be responsible to the Board for

the performance of the WECC functions described in Section 2; 9.5.2 Hire and fire staff within the constraints of the annual budget; 9.5.3 Perform administrative duties, such as preparing annual budgets for the approval

of the Board, making employment decisions and ensuring conformance with regulatory requirements;

9.5.4 Develop and implement employment policies and standards of conduct; and 9.5.5 Accept or reject membership applications in accordance with the criteria of these

Bylaws.

9.6 Secretary’s Duties.

9.6.1 Maintain Member and Affiliates Lists. The Secretary will maintain continuously updated lists of all Members and Affiliates.

9.6.2 Maintain Official Records. The Secretary will keep minutes of all WECC Board

and Member meetings and will receive and maintain minutes of committee meetings and all other official records of WECC. Within five (5) business days after any vote taken by Members, the Board, a Class or any committee, the Secretary will provide notice to all Members and Participating Stakeholders (if applicable) of the results of such a vote through postings on the website, email and/or other means of communication.

9.6.3 Maintain Website. The Secretary will oversee the creation, maintenance, and

updating of the WECC’s website and the information published through it. 10. Dispute Resolution.

Except as may be otherwise provided herein, and subject to the conditions set forth in Appendix C, Section A.1, disputes between Members and/or WECC will be resolved pursuant to the WECC Dispute Resolution Procedures set forth in Appendix C. Matters subject to the

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jurisdiction of the WECC Compliance Hearing Body are not subject to the procedures in Appendix C.

11. Costs and Finances.

11.1 Funding of Reliability Activities.

11.1.1 U.S. Statutory Funding. WECC shall fund all activities undertaken pursuant to Section 215 of the Federal Power Act in accordance with the funding provisions and procedures of that law and related FERC regulations and orders. The Board shall approve a budget for such activities in time for submission to the ERO and to the FERC for approval of such funding in accordance with applicable requirements.

11.1.2 International Funding. WECC shall fund reliability activities undertaken in

accordance with any agreements it enters into with Canadian or Mexican Entities. Specifically:

(a) Subject to (b), in the event that a Canadian or Mexican Entity seeks membership in the WECC, that Entity may elect to negotiate an agreement with WECC that provides the terms upon which that Entity will become a Member and, among other things, participate in and/or fund WECC. In such a case and unless agreed otherwise, the Canadian or Mexican Entity shall not be a Member of WECC and shall not have an obligation to fund activities undertaken by the WECC until the terms of such agreement are executed.

(b) Section 11.1.2(a) shall not apply to any Canadian or Mexican Entity that is a Member as of the date of the approval of these WECC Bylaws. Existing Canadian or Mexican Members shall continue as Members in accordance with the terms and conditions of their membership as of the date of the approval of the WECC Bylaws, including the terms and conditions of any agreements in place as of the date of the approval of these WECC Bylaws. Nothing in the Section precludes existing Canadian or Mexican Members from negotiating an agreement with WECC that modifies the terms of its participation in and funding of WECC at any time.

11.1.3 Equitable Allocation of Funding. In adopting budgets for the costs of reliability

activities, the Board shall endeavor to achieve an equitable allocation as between funding through Sections 11.1.1 and 11.1.2 based upon the net energy to load and other relevant factors consistent with applicable law, the Delegation Agreement and any International Reliability Agreements.

11.2 Dues.

The Board may require Members and Participating Stakeholders to pay nominal annual dues consistent with applicable FERC requirements (or those of International Reliability Agreements as applicable) to cover reasonable costs of membership and/or participation

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in standards development that are not funded through Sections 11.1.1 or 11.1.2. Initial dues of a Member or Participating Stakeholder will be submitted with a completed application for membership or Participating Stakeholder status and will be for the prorated share of the full annual amount based on the Member’s or Participating Stakeholder’s actual months of membership or participation in the calendar year. In determining nominal dues, the Board may consider all relevant factors including, but not limited to, the ability of different classes of membership or Participating Stakeholders to pay such dues. The Board may also reduce, defer or eliminate the dues obligation of an individual Member or Participating Stakeholder for good cause shown.

11.3 Funding of Non-Statutory Activities.

To the extent that WECC elects to fund any activities not eligible for funding pursuant to Sections 11.1.1 and 11.1.2, it shall do so through the use of service fees, charges or dues applicable to the persons or entities that voluntarily participate in such activities. Participation in or funding of such activities shall not be a condition of membership in WECC.

12. Amendments to these Bylaws.

These Bylaws may be amended by either the Board or by the Members in accordance with the following procedures. 12.1 Amendment by the Board.

Except for those provisions described below, the Board may approve an amendment of the Bylaws after providing not less than thirty (30) days’ notice of the proposed amendment to all Members. Approval of such an amendment requires the affirmative votes of not less than two-thirds (2/3) of the Directors in office. Such amendment will become effective sixty (60) days after its approval by the Board (1) unless the vote is appealed to the Members prior to the sixtieth day, or (2) subsequent regulatory approval is required. A Member appeal shall be sufficient to hold implementation of an amendment if a majority of any Class files a petition with the Secretary seeking appeal of such amendment. If such an appeal is received, the membership will vote on whether to rescind the Board approved amendment at the next Annual Meeting unless the Board calls a special meeting of the Members beforehand. An appeal will only be successful if a majority of all Members and a majority (three of five) of Member Classes vote to rescind the amendment. If the appeal vote is not successful, then the amendment will be deemed approved as of the day of the failed Membership vote. If subsequent regulatory approval is required for the amendment, then the amendment shall be effective upon the effective date of such approval. 12.1.1 Notwithstanding the foregoing, both Board and Member approval is required to

amend provisions of these Bylaws concerning Sections 1.1 and 1.2; Section 4.2; Sections 6.2 through 6.8, inclusive; Section 7.2; Section 10; Sections 12.1 through 12.4, inclusive; Appendix C, and any other sections as may be required by Utah law. In such case, the Board shall first vote on the proposed amendment. If approved by the Board by the majority specified in Section 12.1 necessary to attain Board approval, the amendment must then be noticed to Members at least sixty (60) days prior to the Annual Meeting or a Special Member Meeting at

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which the Member vote will occur. The amendment will then be approved if approved by two thirds (2/3) or more of the Members who vote upon such amendment.

12.2 Amendment by the Members.

Upon petition filed with the Secretary by any Member or Director, at any Annual Meeting the Members may amend any provision of these Bylaws; provided: 1) the proposed amendment has first been presented to the Board and not adopted (this provision will not apply to amendments which the Board is prohibited from adopting); 2) Members have received not less than sixty (60) days’ notice of the proposed amendment, the reasons there for and a statement of the Board’s position regarding it; and 3) the amendment receives the affirmative votes of not less than two-thirds (2/3) of all Members and a majority of Member Classes.

12.3 Amendments in Response to Mandatory Membership.

If at any time, pursuant to legislation or otherwise, membership becomes mandatory for some or all Members, upon the request of the affected Member(s) the Board will consider amendments to these Bylaws appropriate to such mandatory membership.

12.4 Amendments proposed by FERC.

FERC, upon its own motion or upon complaint, may propose an amendment to these Bylaws pursuant to 18 C.F.R. § 39.10(b).

13. Termination of Organization.

WECC may be terminated upon a vote of a majority of the Members in accordance with the provisions of Utah law, the Federal Power Act and the requirements of the Delegation Agreement and applicable International Reliability Agreements. Immediately upon such a vote, the Board will, after paying all debts of WECC, distribute any remaining assets in accordance with the requirements of Utah law, the Internal Revenue Code and these Bylaws.

14. Miscellaneous Provisions.

14.1 Limitation on Liability. It is the express intent, understanding and agreement of the Members that the remedies for nonperformance expressly included in Section 4.8 hereof shall be the sole and exclusive remedies available hereunder for any nonperformance of obligations under these Bylaws. Subject to any applicable state or federal law which may specifically limit a Member’s ability to limit its liability, no Member, its directors, members of its governing bodies, officers or employees shall be liable to any other Member or Members or to third parties for any loss or damage to property, loss of earnings or revenues, personal injury, or any other direct, indirect, or consequential damages or injury which may occur or result from the performance or nonperformance of these Bylaws, including any negligence, gross negligence, or willful misconduct arising hereunder. This Section 14.1 of these Bylaws applies to such liability as might arise between Members under these Bylaws. This Section 14.1 does not apply to parties to the Agreement Limiting Liability Among Western Interconnected Systems (“WIS Agreement”) with respect to matters covered by the WIS Agreement and does not apply to any liability provision in any other agreement.

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14.2 Indemnification.

WECC shall indemnify and hold harmless its Directors, officers, employees, agents and advisors against any and all damages, losses, fines, costs and expenses (including attorneys’ fees and disbursements), resulting from or relating to, in any way, any claim, action, proceeding or investigation, instituted or threatened, arising out of or in any way relating to any action taken or omitted to have been taken (or alleged to have been taken or omitted to have been taken) by such person in connection with actions on behalf of WECC, and against any and all damages, losses, fines, costs and expenses (including attorneys’ fees and disbursements) incurred in connection with any settlement of any such claim, action, proceeding or investigation unless such action of such person is determined to constitute fraud, gross negligence, bad faith or willful misconduct with respect to the matter or matters as to which indemnity is sought.

14.3 No Third Party Beneficiaries.

Nothing in these Bylaws shall be construed to create any duty to, any standard of care with reference to or any liability to any third party.

14.4 Informal Inquiries for Information.

Nothing in these Bylaws shall preclude: 1) a Member from making an informal inquiry for information outside of the procedures outlined in Section 4.6.11 hereof to another Member and 2) that other Member from responding voluntarily to that informal inquiry, provided, however, that any such response to an informal inquiry for information shall not be binding upon that other Member and shall be used by the Member making the informal inquiry for informational purposes only.

15. Incorporation.

WECC shall organize itself as a non-profit corporation pursuant to the laws of the state of Utah regarding non-profit corporations under the name “Western Electricity Coordinating Council.” All Members agree to take no actions that would contravene the ability of WECC to maintain its status as a non-profit corporation existing pursuant to the Utah Act. The Board shall adopt these Bylaws as the Bylaws of WECC as a non-profit corporation. WECC is intended to qualify as an organization described in Section 501(c)(4) of the Internal Revenue Code. No part of any net earnings of WECC shall inure to the benefit of any Member or individual. Upon liquidation, to the extent consistent with the Internal Revenue Code and Utah law, any monies remaining from assessments paid by Members for the costs of WECC shall be rebated to Members in proportion to their payments. Any remaining assets of WECC shall be transferred to another organization exempt from tax under Section 501(a) of the Internal Revenue Code, or government agency, promoting the same purposes as WECC, as designated by the Board.

16. Governing Law.

Unless otherwise agreed, if any conflict of law arises under these Bylaws among the Members, the laws of the United States of America shall govern, as applicable. The venue for any legal

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action initiated under these Bylaws shall be the city and state (or province) in which the headquarters of WECC is located.

17. WECC Transition The provisions of this Section shall apply to that period of time and activities associated with the transition of WECC from a hybrid Board of Directors to an independent Board of Directors with a Member Advisory Committee.

17.1 Board of Directors transition.

17.1.1 The transition of WECC governance from a hybrid Board to an independent

Board of Directors will be effective upon the effective date of Federal Energy Regulatory Commission approval of Section 6.1 establishing an independent Board (“Effective Date”). The non-affiliated directors of WECC, whose terms extend past the Effective Date, so willing to continue to serve, shall form part of the initial cadre of independent Directors. These continuing Directors shall be entitled to serve the remainder of their respective three-year terms of office.

17.2 Transition Exceptions

The nomination, election and term of additional independent Directors shall be in conformance with the requirements of these bylaws, as amended, except: 17.2.1 The requirement that the Nominating Committee notify the Board Chair of the

committee’s nominations sixty (60) days prior to an Annual Meeting shall not apply.

17.2.2 Appointments of Member Advisory Committee members to the Nominating

Committee shall be made such that no one class can occupy more than one seat at a time and cannot have a representative on the committee more than two years in a row.

17.2.3 Director positions of non-affiliated directors of WECC, whose terms extend

beyond the Effective Date, but whose directors resign or indicate they will resign prior to the Effective Date, will be filled through the same nomination and election process used to select additional independent directors as provided above.

17.2.4 Those Directors first elected as a result of this transition from a hybrid to an

independent Board will draw lots to determine their term length determined to achieve the staggered terms required by Section 6.3.

17.2.5 The nomination and election of a number of additional Directors needed to seat

the entire Independent Board as described in section 6.4 as of the Effective Date may occur prior to the Effective Date. While the nomination and election of an individual to a director position may occur prior to the Effective Date, such nomination and election shall have the full force and effect of these bylaws after the Effective Date.

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17.3 Member Advisory Committee transition

17.3.1 Initial Formation. When there is a meeting where Members vote to amend the

WECC bylaws to provide for a Member Advisory Committee (MAC), the MAC will initially be constituted through elections conducted in conjunction with the same meeting.

17.3.2 Election of the initial MAC member representatives shall be as provided in these

bylaws, as amended, except: 17.3.3 Where what had been the Class Seven membership category is combined with the

Class Three membership category, Class Seven Members will indicate, prior to the meeting, whether they intend to continue participation in WECC as a member of the newly combined Class Three category. Entities so indicating will be considered members of Class Three for purposes of the initial formation of the MAC and shall be entitled to participate in elections for Class Three member representatives of the MAC.

17.3.4 Member Classes will not be allowed to subdivide into subclasses for purposes of

electing class representative MAC members at the meeting where the MAC is initially formed and where initial MAC member elections are conducted.

17.3.5 The terms of each Class’ three (3) initial Class representative members on the

MAC shall be allocated, by the drawing of lots, such that the intended staggered terms for MAC members will be obtained, with one of a Class’ initial MAC member representatives serving an initial term of one year, another two years, and another three years.

APPENDICES A. Board Member Standards of Conduct B. Officers and Employees Standards of Conduct C. WECC Dispute Resolution Procedures

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Appendix A Standards of Conduct for

Members of the WECC Board of Directors By accepting appointment to the Board of Directors (the “Board”) of the Western Electricity Coordinating Council (“WECC”), a Director agrees to abide by the duties required of corporate directors and trustees. Utah law (and similar law in other states) imposes quasi-fiduciary duties of care and loyalty on all corporate directors or trustees, including directors and trustees of nonprofit corporations. For as long as he or she remains a member of the Board of Directors of WECC, a Director will abide by the following standards of conduct. I. Duty of care. The Directors of a corporation are bound to use due care and to be diligent in

respect to the management and administration of the affairs of the corporation. This duty of care is generally thought to have two components: the time and attention devoted to corporate affairs and the skill and judgment reflected in business decisions.

A. Each Director will regularly attend Board of Directors meetings, digest the materials sent

to him or her, participate in Board discussions and make independent inquiries as needed.

B. In voting on any matter before the Board or otherwise acting in his or her capacity as a Director, each Director will:

1. make reasonable inquiry to inform himself or herself of the nature and

consequences of the matter or action at issue;

2. exercise, at a minimum, the degree of care, skill, and diligence that an ordinarily prudent business person would exercise under similar circumstances; and

3. act in a manner the Director, in the exercise of his or her independent judgment,

believes to be in the best interests of WECC and the membership of WECC, taken as a whole.

C. In exercising the duty of care described in paragraphs IA and B above, a Director has the

right to rely on statements by the persons immediately in charge of business areas of WECC, to rely on professionals and experts (such as engineers, accountants and lawyers) and to rely on committees of WECC, unless facts or circumstances appear which would prompt further concerns of the ordinarily prudent person.

II. Duty of loyalty. The duty of loyalty imposes on a Director the obligation to remain loyal to

WECC, acting at all times in the best interests of WECC and its Members as a whole and unhampered by any personal pecuniary gain. This duty does not preclude a Director from being employed in a competing or related business so long as the Director acts in good faith and does not interfere with the business of WECC.

A. Each Director will carry out his or her duties as a Director in good faith.

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B. Each Director will refrain from using any influence, access, or information gained through his or her service as a Director to confer any improper personal benefit (financial or otherwise) upon himself or herself, any family member, or any person living in the Director’s household.

C. Each Director will refrain from using any influence, access, or information gained

through his or her service as a Director to confer an improper benefit (financial or otherwise) on any organization:

1. for which the Director serves as an officer, director, employee, consultant, or in

any other compensated or management position; or

2. in which the Director or any family member or person living in the Director’s household has a material financial interest (whether as a shareholder, partner, or otherwise).

D. To the extent permitted by law, each Director will maintain the confidentiality of:

1. any confidential or proprietary information of WECC disclosed or available to the

Director;

2. any confidential or proprietary information of WECC Member(s) to which the Director has access by virtue of his or her status as Director; and

3. any confidential or proprietary information of third parties that has been provided

to WECC or the Board on condition of confidentiality.

E. Conflicts of Interest. Because conflicts of interest may arise from time to time, specific guidelines are provided. In general, conflicts of interest involving a Director are not inherently illegal nor are they to be regarded as a reflection on the integrity of the Board or of the Director. It is the manner in which the Director and the Board deal with a disclosed conflict that determines the propriety of the transaction.

Directors of nonprofit corporations may have interests in conflict with those of the corporation. The duty of loyalty requires that a Director be conscious of the potential for such conflicts and act with candor and care in dealing with these situations.

The following are guidelines for Directors with actual or potential conflicts of interest:

1. Each Director has a responsibility to recognize potential conflicts of interest and

to be guided when acting as a Director by his or her independent judgment of what is in the best interests of WECC and the membership of WECC, taken as a whole. If any Director has questions about whether a conflict of interest exists, he or she may make inquiry to the Chief Executive Officer of WECC for advice.

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2. Potential conflicts of interest may arise because of a Director’s private, individual interests (personal conflicts of interest) or because of relationships the Director may have with other organizations or interest groups (organizational conflicts of interest). Current or past employment or other compensation-based relationships with one or more WECC Members are examples of potential organizational conflicts of interest. Whether a potential conflict of interest is personal or organizational, in all cases involving WECC affairs a Director’s conflicting interests are subordinate to those of WECC and the membership of WECC, taken as a whole.

3. Personal conflicts of interest.

a. Personal conflicts of interest exist if a Director, a member of the

Director’s family, or a person sharing the Director’s household: 1) has a material financial interest in a matter or transaction that comes before the Board for action; or 2) stands to receive a benefit (in money, property, or services) from a transaction involving WECC to which the person is not legally entitled.

b. In cases of personal conflicts of interest, the affected Director’s

obligations are to:

(1) disclose to the Board, before the Board acts with respect to that matter, the material facts concerning the Director’s personal conflict of interest; and

(2) refrain from voting, and from attempting to influence the vote of

any other Director(s), in those matters in which the Director has a personal conflict of interest.

4. Organizational conflicts of interest.

a. An organization has a “direct” conflict of interest if a decision by the

Board would confer material benefits on that organization that other WECC Members would not share, or impose material detriments or costs on that organization that other WECC Members would not share. The fact that many if not all Members are affected to some extent by Board decisions on core issues such as standards, new transmission lines and their ratings, does not create or constitute a “direct” conflict of interest.

b. It is not a “direct” conflict of interest for a Director to be associated with

an organization or an interest group that may stand to benefit from decisions made or actions taken by the Board, so long as the Director does not attempt to use his or her position as a Director to confer special

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benefits on associated organizations or interest groups when other WECC Members would not share in those benefits.

c. In cases of potential “direct” organizational conflicts of interest, the

affected Director’s obligations are to:

(1) disclose to the Board, before the Board acts with respect to the matter, the material facts concerning the organizational conflict of interest; and

(2) refrain from voting and from attempting to influence the vote of

any other Director(s) with respect to the proposed action or decision.

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Appendix B Officers and Employee Standards of Conduct

By accepting employment with the Western Electricity Coordinating Council (“WECC”), an Employee agrees to abide by these Standards of Conduct. For the purpose of these Standards, an Employee includes each and all officers, employees and substantially full-time consultants and contractors of WECC. I. Duty of care. The Employees of WECC are bound to use due care and to be diligent in respect

to the management and administration of the affairs of the corporation. This duty of care is generally thought to have two components: the time and attention devoted to corporate affairs and the skill and judgment reflected in business decisions.

Employees shall not have any outside employment that limits in any way their ability to fulfill

their employment responsibilities to WECC. If an Employee has any question about whether outside employment is consistent with this standard, they should consult with their supervisor.

II. Duty of loyalty. The duty of loyalty imposes on an Employee the obligation to remain loyal to

the WECC, acting at all times in the best interests of WECC and its Members as a whole and unhampered by any personal pecuniary gain. WECC expects all Employees to avoid adversely affecting the public’s confidence in the integrity and reputation of WECC. Any conduct or activities of any Employee should be capable of being justified and withstanding public scrutiny.

A. Each Employee will carry out his or her duties as an Employee in good faith, with

integrity and in a manner consistent with these Standards and all applicable laws governing WECC.

B. Each Employee will refrain from using, or creating the appearance of using, any influence, access, or information gained through his or her service as an Employee to confer any improper personal benefit (financial or otherwise) upon himself or herself, or Family Member.1 Employees shall not accept gifts or entertainment that would tend to affect, or give the appearance of affecting, the performance of their duties; provided, however, that Employees may accept de minimus food or entertainment or non-cash gifts received as part of a social or special occasion in amounts not to exceed $1000 per source per year.

C. Each Employee will refrain from using, or creating the appearance of using, any

influence, access, funds or information gained through his or her service as an Employee to confer an improper benefit (financial or otherwise) on any organization. The obligation to avoid the appearance of impropriety shall apply in particular to any organization:

1 For purposes of these Standards, a Family Member includes a spouse, domestic partner, child of the Employee, or a relative living in the same home as the Employee.

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1. for which the Employee is serving or has in the past served as an officer, director,

employee, consultant, or in any other compensated or management position; or

2. in which the Employee, or Family Member has a material financial interest known to the Employee (whether as a shareholder, partner, or otherwise).

D. Employees shall not use their WECC position, WECC funds or WECC resources to

support any political party, candidate or proposition except as expressly authorized by the Board.

E. To the extent permitted by law, each Employee shall maintain the confidentiality of:

1. any confidential or proprietary information of WECC disclosed or available to the

Employee;

2. any confidential or proprietary information of WECC Member(s) to which the Employee has access by virtue of his or her status as Employee; and

3. any confidential or proprietary information of third parties that has been provided

to WECC or the Board on condition of confidentiality.

F. Conflicts of Interest. The following conflicts of interest policy shall apply to all WECC Employees. Conflicts of interest may arise from time to time. In general, conflicts of interest involving an Employee are not inherently illegal, nor are they to be regarded as a reflection on the integrity of WECC or of the Employee. It is the manner in which the Employee and WECC deal with a disclosed conflict that determines the propriety of the transaction. The following are guidelines for Employees with actual or potential conflicts of interest:

1. In general, personal conflicts of interest exist if an Employee, or a Family

Member, has a material financial interest in a matter or transaction that comes before WECC for action, or stands to receive a benefit (in money, property, or services) from a transaction involving WECC to which the person is not legally entitled. For purposes of determining whether stock constitutes a material financial interest, see Paragraph F(6) below.

2. Organizational conflicts of interest exist if an Employee, or a Family Member, has a relationship with an organization or interest group that would cause a reasonable person to believe such Employee’s judgment, loyalty, or objectivity might be influenced in a way that is adverse to the interests of WECC.

3. Where there is any question about potential conflicts of interest, the Employee shall disclose to the Chief Executive Officer as soon as possible and prior to when WECC takes action with respect to that matter, the material facts concerning the Employee’s personal conflict of interest, and refrain from participating in, or from

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attempting to influence the action of any Directors or Employee(s) of WECC regarding those matters in which the Employee has a conflict of interest.

4. No Employee may be an employee, director of, or consultant to or provide services to or be associated in any way with any WECC Member without full disclosure to, and written consent of, the Chief Executive Officer. To the extent that an Employee becomes aware that a Family Member is or will in the future be engaged in activity described in this Paragraph F(4), the Employee shall promptly notify the Chief Executive Officer, who shall review all the material facts and determine whether they constitute a conflict of interest pursuant to Paragraphs F(1) and F(2), above.

5. No Employee shall participate in any electric energy transaction other than for ordinary personal use except to the extent necessary to, and consistent with, the functions of WECC. Participation in an energy transaction includes, but is not limited to, purchasing, selling, marketing, or brokering of electricity, ancillary services, electricity transmission or electricity distribution. To the extent that an Employee becomes aware that a Family Member is or will in the future be engaged in activity described in this Paragraph F(5), the Employee shall promptly notify the Chief Executive Officer who shall review all the material facts and determine whether they constitute a conflict of interest pursuant to Paragraphs F(1) and F(2), above.

6. All Employees shall promptly disclose to the CEO and the Chair of the Board any

direct or indirect financial interest in excess of $5,000 (including the direct or indirect ownership of securities) held by the Employee or a Family Member living with the Employee2 in any Electric Line of Business entity as defined in Section 3.15 of the Bylaws doing business in the Western Interconnection. Upon such disclosure, the CEO and the Chair of the Board shall determine whether such financial interest constitutes a conflict of interest, or the appearance thereof, in light of the duties of the Employee, the ability to divest such financial interest without undue hardship and the totality of the circumstances. In response to such disclosure, the CEO and the Chair may impose such remedies as are reasonable under the circumstances and consistent with section 9.3 of the Bylaws. Such remedies may include, but are not limited to, restrictions on the Employee’s duties or involvement in certain matters, transfer of the Employee to another position, broader disclosure of the financial interest, voluntary or mandatory divestiture of the interest (in whole or in part) or other remedies. Pursuant to section 9.3.2 of the Bylaws, if an Employee (not a Family Member) receives a gift or inheritance of securities of a Member of WECC, or if a new Member joins WECC in which the

2 Nothing in this section shall require an Employee to investigate the financial interests of Family Members not living with the Employee. However, to the extent known to the Employee, the financial interests of a Family Member not living with the Employee may create a potential conflict of interest (or appearance thereof) subject to Sections II(B) and/or II(F)(1) of these standards, in which case disclosure pursuant to Section II(F)(3) is appropriate.

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Employee (not a Family Member) holds securities, the Employee must resign or divest such securities within six months thereafter. For the purposes of this section, none of the following shall constitute a direct or indirect financial interest:

a. An interest that exists through diversified mutual funds; b. An interest that exists for six months following receipt of a gift or

inheritance of securities of a Market Participant or acceptance of employment with WECC, whichever is later (provided that employees of the WSCC shall have two years from WECC organizational meeting to divest securities in their possession as of that date);

c. An interest that exists through a pre-existing participation in a qualified

defined benefits pension plan or health benefits plan of a Market Participant so long as the benefits under such plan do not vary with the economic performance or value of the securities of such Market Participant.

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Appendix C

WECC Dispute Resolution Procedures

C. DISPUTE RESOLUTION.

C.1 Obligation To Comply with Dispute Resolution Procedures. If any dispute concerning

one or more issues identified in Section C.2 below arises between a Member and one or

more other Members, or between one or more Members and WECC, all of the parties to

the dispute shall, to the extent permitted by law, be obligated to comply with the dispute

resolution procedures specified in these Bylaws (except to the extent all of the parties to

the dispute may agree otherwise as provided in Section C.4 below). Only Members and

WECC have the right to invoke the provisions of this Appendix C and, except where all

affected parties have separately agreed otherwise with respect to a particular dispute, only

Members and WECC are obligated to carry out the dispute resolution procedures set forth

herein. Any dispute subject to the provisions of this Appendix C to which WECC is

made a party shall be subject to the additional requirements specified in Section C.3

below if the dispute is initiated by a party other than WECC. To the extent permitted by

law (and except as otherwise permitted by the provisions of Section C.6.3), no party to a

dispute subject to the provisions of this Appendix C may pursue any other available

remedy with respect to the dispute until all of the parties to the dispute have fully

complied with the dispute resolution procedures specified herein, provided, however, that

if any party to a dispute subject to the provisions of this Appendix C refuses to comply

with the dispute resolution procedures specified herein, all other parties to the dispute

shall subsequently be relieved of any further obligation to comply with these dispute

resolution procedures before pursuing other remedies in connection with that dispute.

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C.2 Issues Subject to Dispute Resolution Procedures. Any dispute between or among the

parties identified in Section C.1 above (that the parties to the dispute do not resolve

through negotiations between or among themselves) shall be subject to the dispute

resolution procedures set forth in this Appendix C if the dispute concerns: (i) the

application, implementation, interpretation, or fulfillment of any guidelines, criteria,

policies, procedures, or Bylaws of WECC or the North American Electric Reliability

Council (or any successor organization); or (ii) any matter specified in Section C.6.2

below; except that any matter that is subject to the jurisdiction of the WECC Compliance

Hearing Body is not subject to the requirements of this Appendix C. Notwithstanding the

foregoing provisions of this Section C.2, however, neither WECC nor any Member shall

be obligated to comply with the dispute resolution procedures of these Bylaws if: (a) the

dispute is between two or more Members (or WECC), all of which, at the time of the

dispute, are parties to the WECC Reliability Management System Agreement and the

matter is within the scope of the dispute resolution procedures set forth in that agreement;

or (b) the dispute is between two or more Members, all of which, at the time of the

dispute, are parties to a separate agreement or treaty or where an applicable tariff, rate

schedule, or other legal obligation of one of the parties provides for the parties to resolve

the dispute in a manner other than in accordance with the provisions of this Appendix C

of the Bylaws.

C.3 Limitations on Members’ Rights To Make WECC a Party to a Dispute. In addition to the

other provisions of this Appendix C of the Bylaws, any dispute (other than a dispute

initiated by WECC) to which WECC is made a party shall be subject to the limitations set

forth in Sections C.3.1 and C.3.2 below.

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C.3.1 Bases for Using Dispute Resolution Procedures To Challenge WECC Action.

Subject to any limitation set forth in these Bylaws or in applicable statute,

regulation or FERC order, one or more Members may use the dispute resolution

procedures specified in this Appendix C to challenge any final action of WECC

only on one or more of the following bases: (i) the action is contrary to applicable

law or regulation; (ii) the action is contrary to WECC’s Articles of Incorporation

or these Bylaws (including WECC’s purposes as set forth in those documents);

(iii) the action was taken in violation of applicable procedures of WECC

governing that action; or (iv) the action encompasses a decision in which there

was plain error material to the decision. For purposes of this Appendix C, action

taken by WECC shall be deemed final if: (a) the action has been taken or adopted

or approved or accepted by WECC’s Board of Directors (other than by a motion

specifically providing that the action is conditional or will have temporary

application not to exceed six months); (b) all conditions specified to make any

conditional action of WECC’s Board of Directors effective have been fulfilled; or

(c) the action has been taken or adopted or approved or accepted by a committee,

subcommittee, task force, or other group or person acting under authority of

WECC without any provision making the action subject to further approval or

adoption or acceptance by the Board of Directors. Nothing contained in this

Appendix C shall limit any rights any Member (or any other party) may have

under applicable law or regulation to initiate or participate in an administrative or

legal action to which WECC is made a party in accordance with applicable

provisions of law or regulation.

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C.3.2 Obligation to Bear WECC’s Share of Facilitator Costs. If one or more Members

initiate a dispute under this Appendix C to challenge an action of WECC, the

Member(s) initiating the challenge shall be obligated to bear all of the costs of

facilitators’ services incurred to comply with the requirement of Section C.5

below, except to the extent WECC agrees to pay a share of the costs of

facilitators’ services.

C.4 Ability to Modify Dispute Resolution Procedures by Agreement. Any provision of the

dispute resolution procedures set forth in this Appendix C may be modified, waived, or

omitted by agreement of all of the parties to the dispute. Parties to a dispute subject to

these provisions are obligated to comply with its procedures unless all of the parties to

the dispute agree to do otherwise. The manner in which the dispute resolution procedures

set forth in this Appendix C may be varied include (by way of example and not as

limitation): the manner of selecting a facilitator or arbitrator; the procedures or time lines

to be followed during mediation or arbitration; the grounds or forum or right to appeal an

arbitrator’s decision; the manner of allocating fees and costs associated with the dispute;

whether the parties are obligated to proceed to arbitration if the dispute is not resolved

through mediation; and whether a decision rendered through arbitration is binding on the

parties. In addition, any dispute that does not fall within the scope specified in Section

C.2 above may be resolved according to the procedures set forth in Appendix C of these

Bylaws if all of the parties to the dispute agree to do so.

C.5 Mediation.

C.5.1 Notice to Other Parties and WECC’s Chief Executive Officer. To initiate the

dispute resolution process with respect to a dispute governed by the provisions of

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this Appendix C, the Member or WECC that has elected to initiate the dispute

shall deliver to all other parties to the dispute and to WECC’s Chief Executive

Officer (whether or not WECC is a party to the dispute) written notice invoking

the dispute resolution procedures set forth in this Appendix C (a “Dispute

Notice”).

C.5.1.1 The Dispute Notice shall: (i) include a brief, general description of the

matter(s) in dispute; (ii) include a complete list of all other Members the

party submitting the Dispute Notice intends to make a party to the

dispute; and (iii) state whether or not WECC is to be made a party to the

dispute.

C.5.1.2 Within five business days of receiving a Dispute Notice, any party to the

dispute may elect to deliver a brief supplemental description of the

dispute to WECC’s Chief Executive Officer.

C.5.1.3 Within 10 business days of receiving an initial Dispute Notice, WECC’s

Chief Executive Officer shall: (a) publish (or cause to be published) in

WECC’s newsletter or on its electronic bulletin board a notice

containing a list of the parties to the dispute and a summary of the

descriptions of the matter(s) in dispute provided by the parties to the

dispute; and (b) deliver to each party to the dispute a copy of WECC’s

then-current standing list of qualified facilitators, knowledgeable in the

matters addressed by WECC (as approved by the Board of Directors).

C.5.1.4 No person may be listed on WECC’s standing list of qualified

facilitators unless the person has agreed to: (i) disclose, at any time the

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person is selected to serve as a facilitator under this Appendix C, any

personal or financial interest the facilitator may have with respect to the

matter(s) in dispute (including any indirect personal or financial interest

that could arise because of interests or relationships affecting any of the

facilitator’s immediate family members); (ii) disclose any relationship

the facilitator may have with any party to the dispute that is not

permitted under Section C.5.2 below; and (iii) abide by all applicable

provisions of these Bylaws, including restrictions on disclosure of

matters discussed and information exchanged during mediation as

provided in Section C.5.3 below.

C.5.2 Selection of a Facilitator. Within 10 calendar days after the delivery of a Dispute

Notice, the parties to the dispute shall select a neutral facilitator by mutual

agreement. If the parties to the dispute cannot agree on a facilitator within 10

calendar days after delivery of a Dispute Notice, the facilitator shall be selected

from WECC’s standing list of qualified facilitators as follows: The parties to the

dispute shall take turns striking names from WECC’s standing list of qualified

facilitators until there is only one name remaining. (The parties to the dispute

shall draw lots to determine the order in which they take turns striking names.)

The last person whose name remains on the list shall serve as the facilitator. No

facilitator other than a facilitator chosen by agreement of all the parties to the

dispute may (i) have a personal or financial interest in the matter(s) in dispute

(including any indirect personal or financial interest that could arise because of

interests or relationships affecting any of the facilitator’s immediate family

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members); or (ii) be (or have an immediate family member who is) a past or

present director, commissioner, officer, employee, consultant, agent, or other

representative of any of the parties to the dispute. If the facilitator selected

through the process of striking names specified above is disqualified under the

preceding sentence, the facilitator whose name was stricken last shall serve in his

or her place. In addition, if WECC is a party to a dispute initiated by one or more

Members, turns striking names from the standing list of qualified facilitators shall

alternate between WECC on the one hand and all other parties to the dispute on

the other.

C.5.3 Mediation Process. The facilitator and representatives of all of the parties to the

dispute shall meet within 14 calendar days after the facilitator has been selected

and attempt in good faith to negotiate a resolution to the dispute. Each party’s

representative designated to participate in the mediation process must have the

authority to settle the dispute (or, at a minimum, be authorized to negotiate on

behalf of the party and make recommendations with respect to settlement of the

dispute if final authority to approve a settlement is reserved to a party’s board,

executive committee, commission, or other governing body). At the parties’

initial meeting with the facilitator, the facilitator shall, after soliciting input from

the parties to the dispute, set the schedule for further meetings among the parties

to the dispute (subject to the 60-day maximum mediation period specified in

Section C.5.6 below). The parties to the dispute shall comply with the schedule

set by the facilitator and attempt in good faith at every meeting to negotiate a

resolution to the dispute. To the extent permitted by law, neither the facilitator

nor any party to the dispute may publicly disclose, rely on, or introduce as

evidence in any subsequent arbitration, FERC proceeding, Canadian Regulatory

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Authority proceeding, proceeding before a Mexican Regulatory Authority, appeal,

or litigation concerning the same or any related dispute: (i) any views expressed

or suggestions made by another party to the dispute with respect to a possible

settlement of the dispute; (ii) admissions made by another party to the dispute in

the course of the mediation proceedings; (iii) proposals made or views expressed

by the facilitator; or (iv) the fact that another party to the dispute has or has not

indicated willingness to accept a proposal for settlement made by the facilitator.

In those cases in which a party to a dispute subject to the provisions of this

Appendix C of the Bylaws is a membership organization (including WECC, if

applicable), nothing in the preceding sentence shall prohibit that organization

from reasonably communicating with its members and governing body to share

general information about the dispute, such as the parties, status, disputed issues,

and positions of each of the parties with respect to the disputed issues.

C.5.4 Referral for Resolution. With the consent of all parties to the dispute, a resolution

may include referring the matter to a technical body (such as a technical advisory

panel of WECC) for resolution or an advisory opinion, to arbitration, directly to

FERC or, in a dispute involving a Canadian Member, directly to the appropriate

Canadian Regulatory Authority, or, in a dispute involving a Mexican Member,

directly to the appropriate Mexican Regulatory Authority.

C.5.5 Mediation Participation by WECC Staff When WECC Not a Party. If, during the

course of mediation to which WECC is not a party, the facilitator or any party to

the dispute wishes to solicit the views of WECC concerning the application,

implementation, interpretation, or fulfillment of any guidelines, criteria,

standards, policies, or procedures of WECC, the facilitator may request or permit

the submission of WECC staff views only if: (i) any participation by WECC staff

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takes place exclusively in the presence of all parties to the dispute; (ii)

participating WECC staff members agree to be equally available upon request to

all parties to the dispute; and (iii) participating WECC staff members agree to

comply with the restrictions on disclosure contained in Section C.5.3.

C.5.6 Mediation Deemed at Impasse After 60 Days. If the parties to the dispute have

met and negotiated in good faith in accordance with the schedule set by the

facilitator but have not succeeded in negotiating a resolution of the dispute within

60 calendar days after the first meeting with the facilitator pursuant to Section

C.5.3 above, the parties to the dispute shall be deemed to be at impasse and,

except as otherwise provided in Section C.5.6.2 below, shall also be deemed to

have fulfilled their obligations under Section C.1 of these Bylaws to fully comply

with the dispute resolution provisions before pursuing any other available remedy.

If any party participating in the mediation process is subject to a contractual or

statutory limitations period with respect to the matter in dispute, and the

limitations period will expire before the 60-day period for mediation under this

Section C.5.6 is completed, then the parties shall be deemed at impasse on the

seventh calendar day preceding the expiration of the shortest applicable

limitations period.

C.5.6.1 Disputes Not Subject to Provisions of Section C.6.2. Unless the matter

in dispute is subject to the provisions of Section C.6.2 below, at any time

after the parties to the dispute are deemed at impasse, the dispute may be

submitted to binding arbitration in accordance with the procedures set

forth in Section C.7 of these Bylaws (but only by agreement of all of the

parties to the dispute). If the matter in dispute is subject to the

provisions of Section C.6.2 below, the parties’ obligations with respect

to submitting the matter to binding arbitration under Sections C.6 and

C.7 of these Bylaws shall be as specified in Section C.5.6.2 below. In

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all other cases, if the parties to the dispute do not agree to submit the

dispute to binding arbitration in accordance with the procedures set forth

in Section C.7 of these Bylaws, any party to the dispute may at any time

thereafter pursue any other remedy available under regulation, law, or

equity (subject to the restrictions on disclosure set forth in Section C.5.3

above).

C.5.6.2 Disputes Covered by Section C.6.2. If the parties to a dispute

concerning a matter subject to the provisions of Section C.6.2 either: (i)

are deemed at impasse after attempting to resolve the matter through

mediation as provided in Sections C.5.1 through C.5.6 above; or (ii)

have agreed to submit the matter directly to binding arbitration without

attempting to resolve the matter through mediation as provided in

Sections C.5.1 through C.5.6 above, the parties to the dispute shall

submit the matter to binding arbitration in accordance with the

procedures set forth in Sections C.6 and C.7 of these Bylaws.

C.5.7 Costs of Facilitator’s Services. Except as otherwise provided under Section

C.3.2, the costs of the facilitator’s services shall be born equally by all parties to

the dispute unless the parties to the dispute agree otherwise, but the parties also

intend that the costs of mediation should be taken into account in any resolution

proposed through the mediation process.

C.5.8 Notice to WECC of Completion of Mediation. Within 10 calendar days after

either: (i) reaching a negotiated resolution through the mediation process set forth

in Section C.5; or (ii) reaching deemed impasse in accordance with Section C.5.6

above, the parties to the dispute shall jointly deliver to WECC’s Chief Executive

Officer a written notice briefly describing the outcome of the mediation process.

Promptly after receiving written notice describing the outcome of a mediation

conducted in accordance with Section C.5, WECC’s Chief Executive Officer shall

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publish (or cause to be published) in WECC’s newsletter or on its electronic

bulletin board a brief description of the outcome of the mediation, together with a

list of all of the parties to the dispute.

C.6 General Provisions Relating to Binding Arbitration.

C.6.1 Matters for Which Binding Arbitration is Elective. Except with respect to any

dispute that concerns one or more matters specified in Section C.6.2 below, the

binding arbitration procedures set forth in Section C.7 may be invoked only by

agreement of all of the parties to the dispute to be arbitrated and are solely for the

convenience of WECC and its Members. If a dispute governed by this Appendix

C does not concern a matter specified in Section C.6.2 below, a party to the

dispute shall be deemed to have fulfilled its obligations to comply with Appendix

C of these Bylaws (irrespective of whether the parties to the dispute agree to

proceed with binding arbitration) to the extent that either: (i) that party has fully

performed the obligations set forth in Sections C.1 through C.5.8; or (ii) all of the

parties to the dispute have agreed to a different process for resolving the dispute

and the agreed-upon process has been fully carried out.

C.6.2 Matters for Which Binding Arbitration Is Obligatory. If a dispute is governed by

Appendix C of these Bylaws and is not resolved through the process of mediation

in accordance with Sections C.5.1 through C.5.6 above, the parties shall be

obligated to submit the matter to binding arbitration in accordance with the

procedures set forth in Section C.7 (subject to the limitations on the arbitrator’s

authority set forth in Section C.6.3 below) if the dispute concerns one or more of

the following matters:

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C.6.2.1 a decision of WECC’s Board of Directors or a Committee of the Board

acting on the recommendation of, or on a matter within the jurisdiction

of, the Operating Transfer Capability Policy Group (“OTCPG”) or

successor;

C.6.2.2 a transmission path rating, or a modification to a transmission path

rating, assigned to one or more transmission paths operated by a

Member (or jointly operated by more than one Member);

C.6.2.3 transmission access, pursuant to Sections 10.1.2, 10.1.3, and 10.5; or

C.6.2.4 any matter that, by vote of both WECC’s Board of Directors and

WECC’s Membership, is designated as a matter to be subject to the

provisions of Section C.6.2 of these Bylaws, provided that any matter

submitted to WECC’s Membership pursuant to this provision must be

approved by at least the number of votes required to amend these

Bylaws under Section 13.2.

C.6.3 Limitations on Arbitrator’s Authority with Respect to Matters Specified in

Section C.6.2. Unless all of the parties to a dispute agree otherwise, an arbitrator

rendering a decision with respect to any matter specified in Section C.6.2 above

shall have no authority to consider or award remedies for past economic harm or

damages of any kind, including without limitation actual or direct damages;

indirect, consequential, or incidental damages; or exemplary or punitive damages.

Nothing in this Section C.6.3 shall: (i) limit any rights that a party to a dispute

concerning a matter specified in Section C.6.2 above may have to pursue legal

claims for damages or other economic remedies after the arbitrator has rendered

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his or her decision on that matter (within the scope of his or her authority under

this Section C.6.3); or (ii) limit an arbitrator’s authority under Section C.8 below

to shift costs or impose monetary sanctions for “good cause” (as that term is

defined in Section C.8).

C.6.4 Arbitration Decisions Not To Modify Underlying Rights and Obligations. Unless

all of the parties to a dispute agree otherwise, the resolution through binding

arbitration of any dispute governed by this Appendix C shall not have the effect of

increasing, decreasing, or otherwise modifying WECC’s or any Member’s

obligation to abide by, or ability to enforce or impose penalties or sanctions with

respect to, any guidelines, criteria, standards, policies, procedures, decisions, or

Bylaws of WECC or any limitation on the foregoing, whether established by law;

regulation; judicial, executive, or administrative order, decree, or decision; tariff;

contract; course of performance; treaty; or otherwise.

C.6.5 Laws Relating to Binding Arbitration. WECC and its Members recognize that

some Members may be subject to laws (including without limitation United States

federal or state laws, Canadian or provincial laws, or Mexican laws) that limit or

define those Members’ ability to agree in advance to be subject to binding

arbitration. If a Member has the right or obligation under applicable law to refuse

to submit to binding arbitration in connection with any dispute that would

otherwise be subject to binding arbitration under Section C.6.2 of these Bylaws,

that Member shall not be obligated to comply with the binding arbitration

procedures set forth in Sections C.6 and C.7. Any Member subject to any law or

other legally binding authority that may limit (or permit the Member to limit) its

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obligation to comply with the provisions requiring binding arbitration under

Sections C.6 and C.7 or to fully comply with a valid arbitrator’s decision rendered

in accordance with this Appendix C shall provide notice to this effect to all other

disputing parties and WECC’s Chief Executive Officer upon initiation of any

dispute involving that Member if the dispute is subject to Section C.6.2. Upon

receiving a notice under Section C.6.5, any other party to the dispute shall

thereafter be relieved of any obligation to comply with the provisions Sections

C.6 and C.7 in connection with that dispute, except to the extent that the Member

giving notice agrees to be fully bound by procedures governing and results of any

arbitration proceeding. If there are more than two parties to a dispute covered by

the preceding sentence, however, then all parties to the dispute other than the

party giving notice under Section C.6.5 shall make good faith efforts to establish a

mutually acceptable approach for resolving among themselves whatever aspects

of the dispute can reasonably be resolved through the procedures set forth in this

Appendix C without the participation of the party giving notice under Section

C.6.5. If any Member fails to submit to binding arbitration, or fails to abide by a

valid arbitrator’s decision rendered in accordance with this Appendix C, that

Member shall thereafter have no right to enforce any of the provisions of Section

C.6.2 (concerning obligations to submit specified disputes to binding arbitration)

against any other Member or WECC until such time as the WECC Board of

Directors, or a delegate designated by the Board, determines that it is appropriate

to restore the Member’s ability to enforce the provisions of Section C.6.2.

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C.6.6 Consistency with Laws, Regulatory Jurisdiction and Orders, Etc. Nothing

contained in this Appendix C and no arbitrator’s decision rendered in accordance

with Section C.7 shall be construed to require or shall otherwise operate to cause

any Member or WECC to incur any obligation or take any action that is contrary

to: (i) any applicable law or regulation; (ii) any applicable authority, order,

decree, rule, or decision of a regulatory, judicial, administrative, executive, or

other governmental body having jurisdiction over one or more of the matters or

parties subject to this Appendix C or covered by an arbitrator’s decision; or (iii)

any applicable rate schedule, tariff, treaty, or valid, pre-existing contractual

obligation with which any party subject to this Appendix C or covered by an

arbitrator’s decision is legally obligated to comply.

C.7 Arbitration Procedures.

C.7.1 Notice to WECC of Initiation of Binding Arbitration. Within 10 calendar days

after all of the parties to a dispute have agreed (or become obligated under Section

C.6.2 above) to submit the dispute to binding arbitration under Sections C.6 and

C.7, the parties to the dispute shall deliver written notice to WECC’s Chief

Executive Officer (an “Arbitration Notice”).

C.7.1.1 The Arbitration Notice shall: (i) include a brief, general description of the

issues to be arbitrated; and (ii) identify all parties who have agreed (or

become obligated) to submit the dispute to binding arbitration under

Sections C.6 and C.7.

C.7.1.2 Within five business days of receiving an Arbitration Notice, WECC’s

Chief Executive Officer shall: (a) publish (or cause to be published) in

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WECC’s newsletter or on its electronic bulletin board a notice containing

a list of the parties to the arbitration and the parties’ brief, general

description of the issues to be arbitrated; and (b) deliver to each party to

the dispute a copy of WECC’s then-current standing list of qualified

arbitrators, knowledgeable in matters addressed by WECC (as approved

by the Board of Directors).

C.7.1.3 No person may be listed on WECC’s standing list of qualified arbitrators

unless the person has agreed to: (a) disclose, at any time the person is

selected to serve as a arbitrator under this Appendix C, any personal or

financial interest the arbitrator may have with respect to the matter(s) in

dispute (including any indirect personal or financial interest that could

arise because of interests or relationships affecting any of the arbitrator’s

immediate family members); (b) disclose any relationship the arbitrator

may have with any party to the dispute that is not permitted under Section

C.7.2 below; (c) assemble a complete record of the arbitration process and

the materials received as evidence by the arbitrator if any of the parties to

the dispute elect to appeal or contest the arbitrator’s decision; and (d)

abide by all applicable provisions of and procedures specified by Sections

C.6 and C.7.

C.7.2 Selection of an Arbitrator. Within 10 calendar days after all of the parties to a

dispute have agreed (or become obligated) to submit the dispute to binding

arbitration under Sections C.6 and C.7, the parties to the dispute shall select an

arbitrator by mutual agreement. If the parties cannot agree on an arbitrator within

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10 calendar days after agreeing to arbitrate their dispute, the arbitrator shall be

selected from WECC’s standing list of qualified arbitrators as follows: The

parties to the dispute shall take turns striking names from WECC’s standing list of

qualified arbitrators until there is only one name remaining. (The parties to the

dispute shall draw lots to determine the order in which they take turns striking

names.) The last person whose name remains on the list shall serve as the

arbitrator. No arbitrator other than an arbitrator chosen by agreement of all the

parties to the dispute may (i) have a personal or financial interest in the matter(s)

in dispute (including any indirect personal or financial interest that could arise

because of interests or relationships affecting any of the arbitrator’s immediate

family members); or (ii) be (or have an immediate family member who is) a past

or present director, commissioner, officer, employee, consultant, agent, or other

representative of any of the parties to the dispute. If the arbitrator selected

through the process of striking names specified above is disqualified under the

preceding sentence, the arbitrator whose name was stricken last shall serve in his

or her place.

C.7.3 Initial Statements and Proposed Arbitration Decisions. Within 10 calendar days

after the selection of an arbitrator under Section C.7.2 above, each party to the

dispute shall submit a statement in writing to all other parties to the dispute and to

the arbitrator. Each disputing party’s statement shall set forth in reasonable detail

the nature of the dispute, the issues to be arbitrated, and the party’s reasonable,

good faith proposal for resolving the dispute. As provided in Section C.5.3

above, to the extent permitted by law, no party to an arbitration conducted under

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Sections C.6 and C.7 shall publicly disclose, rely on, or introduce as evidence in

any arbitration, FERC proceeding, Canadian Regulatory Authority proceeding,

proceeding before a Mexican Regulatory Authority, appeal, or litigation

concerning the same or any related dispute any information required to be kept

confidential by the terms of Section C.5.3.

C.7.4 Procedural Matters. The arbitrator shall determine discovery procedures, how

evidence shall be taken, what written submittals may be made, and other such

procedural matters, taking into account the complexity of the issues involved, the

extent to which factual matters are disputed and the extent to which the credibility

of witnesses is relevant to a resolution. Each party to the dispute shall produce all

evidence determined by the arbitrator to be relevant and material to the issues

presented. If such evidence involves proprietary or confidential information, the

party submitting the evidence shall petition the arbitrator for a protective order,

and to the extent the arbitrator determines there is good cause the arbitrator shall

issue an appropriate protective order and all parties to the dispute shall comply

with the protective order. The arbitrator may elect to resolve the arbitration

matter solely on the basis of written evidence and arguments.

C.7.5 Out-of-Court Sworn Testimony. At the request of any disputing party, the

arbitrator shall have the discretion to allow that party to examine witnesses

through sworn out-of-court testimony (referred to in the United States as

“deposition” and in Canada as “discovery”) to the extent the arbitrator deems the

evidence sought to be relevant and appropriate. In general, out-of-court witness

examinations shall be limited to a maximum of three per party and shall be held

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within 30 calendar days after the making of a request. Each witness examination

shall be limited to a maximum of three hours’ duration. The arbitrator shall have

the discretion to permit the number and duration of examination sessions allowed

under this Section C.7.5 to be increased, and to extend the 30-day time limit, upon

request for good cause shown. All objections are reserved for the arbitration

hearing except for objections based on privilege and proprietary or confidential

information.

C.7.6 Intervention by Other Parties. Unless all of the parties to the dispute agree

otherwise, no one (whether a Member, WECC, or any other entity or person) that

is not a party to a dispute at the initiation of arbitration under Sections C.6 and

C.7 shall have the right to intervene in the arbitration. Any party wishing to

intervene in an arbitration under Sections C.6 and C.7 may petition the arbitrator

for permission to intervene, provided that the petition is submitted to the arbitrator

not more than 30 calendar days after notice of the arbitration is posted by

WECC’s Chief Executive Officer in accordance with Section C.7.1. The

arbitrator shall have the discretion to permit a party to intervene if the arbitrator

determines that the party petitioning to intervene has a direct and substantial

interest in the outcome of the arbitration. In exercising his or her discretion

concerning a requested intervention, the arbitrator shall also consider any

additional complexity or delay that may be caused by allowing the intervention

and also any other remedies available to the party requesting intervention. Any

party that is granted the privilege of intervening in an arbitration under Sections

C.6 and C.7 shall be permitted to intervene subject to the same terms, conditions,

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limitations, rights, and obligations of all other parties to the dispute, including

without limitation the binding effect of arbitrator’s decision, limitations on rights

of appeal, the obligation to share equally in the costs of the arbitrator, and the

obligation to be subject to the provisions of Section C.8.

C.7.7 Consideration of WECC Criteria, Etc. The Arbitrator shall give due consideration

to the reliability criteria, standards, guidelines, policies, and procedures of WECC

and the North American Electric Reliability Council (or any successor

organization) to the extent they are relevant to resolution of the matter(s) in

dispute. If the arbitrator’s decision will include interpretation of any of WECC’s

reliability criteria, standards, guidelines, policies, and procedures, (and WECC is

not a party to the arbitration), the arbitrator shall, before rendering his or her

decision, consult with WECC (subject to the provisions of Section C.7.10 below)

concerning the interpretation of WECC’s applicable reliability criteria, standards,

guidelines, policies, and procedures.

C.7.8 Evidence and Rebuttal. The arbitrator shall consider all issues material to the

matter(s) in dispute. The arbitrator shall take evidence submitted by the parties to

the dispute in accordance with procedures established by the arbitrator and may

request additional information the arbitrator deems material to the resolution of

the dispute. With the consent of all parties to the dispute, the arbitrator’s request

for additional information may include the opinion of any individual or

organization with recognized expertise in the matter(s) in dispute, subject to the

following conditions: (i) any verbal communication with an expert consulted by

the arbitrator must take place exclusively in the presence of all parties to the

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dispute and copies of any written communications must be provided to all parties

to the dispute; (ii) any expert consulted by the arbitrator must agree to be equally

available upon request to all of the parties to the dispute; (iii) any expert consulted

by the arbitrator must agree to comply with the restrictions on disclosure

contained in Section C.5.3; and (iv) all parties to the dispute shall be afforded a

reasonable opportunity to question the expert and to rebut any additional

information submitted by the expert at the request of the arbitrator.

C.7.9 Arbitrator’s Decision. The arbitrator shall make all reasonable efforts to complete

hearings (if applicable) and submissions of written evidence not more than 90

calendar days after receiving initial statements submitted under Section C.7.3

above. As soon as practicable, but in no event more than 30 calendar days after

the completion of hearings and evidence submittals, the arbitrator shall render his

or her final decision for resolving the dispute. By agreement of all of the parties

to the dispute or at the discretion of the arbitrator for good cause, the foregoing

deadline for delivery of the arbitrator’s decision may be extended. The

arbitrator’s decision shall be based on the arbitrator’s good faith determination of

a resolution that will: (i) be consistent with any laws, rules, and regulations

applicable to the matter(s) in dispute; (ii) be consistent with any valid pre-existing

agreements among the parties to the dispute that bear on the matter(s) in dispute;

(iii) not require any party to the dispute to take action that is not in compliance

with any of WECC’s reliability criteria, standards, guidelines, policies, and

procedures; and (iv) best serve to promote or maintain reliable operation of the

interconnected Bulk Electric System of the Western Interconnection, without

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imposing inequitable burdens or benefits on any of the parties to the dispute or

others that may be affected by implementation of the arbitrator’s decision. The

arbitrator shall deliver to each of the parties to the dispute, along with his or her

decision, a written statement including specific findings of fact, conclusions of

law (if applicable), and an explanation of the arbitrator’s basis for rendering his or

her decision. Subject to any protective order that may have been issued under

Section C.7.4 above, WECC’s Chief Executive Officer shall publish (or cause to

be published) in WECC’s newsletter or electronic bulletin board a brief summary

of the arbitrator’s decision. An arbitrator’s decision that is not appealed shall not

be deemed to be precedential in any other arbitration related to a different dispute.

C.7.10 WECC Staff Participation in Arbitration When WECC Not a Party. If, during the

course of binding arbitration conducted under Sections C.6 and C.7 (in which

WECC is not a party) the arbitrator or any party to the dispute wishes to solicit the

views of WECC staff concerning the application, implementation, interpretation,

or fulfillment of any guidelines, criteria, standards, policies, or procedures of

WECC, the arbitrator may request or permit the submission of WECC staff views

only with the consent of all of the parties to the dispute and only if: (i) any

participation by WECC staff takes place exclusively in the presence of all parties

to the dispute; (ii) participating WECC staff members agree to be equally

available upon request to all parties to the dispute; and (iii) participating WECC

staff members agree to comply with the restrictions on disclosure contained in

Section C.5.3.

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C.7.11 Compliance and Costs. Unless one or more of the parties to the dispute initiates

and notifies all other parties to the dispute that it has initiated a process to contest

or appeal the arbitrator’s decision under Sections C.9 through C.13, upon the

decision by the arbitrator, the parties to the dispute shall, within the time frame

specified by the arbitrator, and, subject to Section C.6.6 above, take whatever

action is required to comply with the arbitrator’s decision to the extent the

arbitrator’s decision does not require regulatory action. To the extent the

arbitrator’s decision affects jurisdictional rates, terms and conditions of service, or

facilities or otherwise requires local, state, federal, or provincial approval or

regulatory action, or a FERC filing or a Canadian Regulatory Authority filing by a

Canadian Member or a Mexican Regulatory Authority filing by a Mexican

Member, the affected Member (or WECC, if WECC is the party with the

obligation to seek regulatory action) shall, within the time frame specified by the

arbitrator, submit the arbitrator’s decision or an appropriate filing to implement

the arbitrator’s decision and support the appropriate authority’s acceptance or

approval of the arbitrator’s decision or implementation filing, except in cases

where any party to the dispute has given notice of its intent to contest or appeal

the arbitrator’s decision. All costs associated with the arbitration (not including

costs associated with attorney and expert witness fees incurred by the parties to

the dispute) shall be divided equally among the parties to the dispute unless: (i)

all of the parties to the dispute agree to an alternate method of allocating costs; or

(ii) in rendering his or her decision, the arbitrator exercises his or her discretion

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under Section C.8 below to assess fees, costs, or other monetary sanctions against

one or more of the parties to the dispute for good cause.

C.7.12 Entry of Judgment. At any time after an arbitrator has rendered his or her

decision in an arbitration conducted under Sections C.6 and C.7 (provided that the

time provided for initiating an appeal under Sections C.11.1 and C.12 below has

expired and no appeal or other means of contesting the arbitrator’s decision has

been initiated), judgment on the decision rendered by the arbitrator may be

entered by any court of competent jurisdiction (subject to the provisions of

Sections C.6.3, C.6.4, and C.6.6 above). If the award is against the United States,

a party to the arbitration may apply to the United States District Court for the

district in which the principal office of the applicable United States department or

agency is located for an order confirming the award pursuant to 5 U.S.C. § 580.

C.8 Arbitrator’s Discretion to Shift Costs or Impose Sanctions for Cause. Each party to any

dispute submitted to arbitration under Sections C.6 and C.7 shall bear its own costs and

fees associated with representation and participation in the arbitration process, and shall

share equally in the arbitrator’s fees except that the arbitrator shall have the discretion, to

the extent permitted by law, to require one or more of the parties to the dispute to pay

part or all of the costs and fees (including without limitation attorneys’ and arbitrator’s

fees) of one or more other parties to the dispute, or to impose monetary sanctions on

some other basis that is reasonable under the circumstances, for good cause. As used in

this Section C.8, “good cause” means conduct involving serious abuse of or failure to

comply with the dispute resolution process set forth in this Appendix C, willfully

undertaken to harass or delay other parties to the dispute or to substantially impede the

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arbitrator’s ability to render a decision consistent with the provisions set forth in Section

C.7.9.

C.9 Rights to Appeal Arbitration Decisions. Except to the extent otherwise provided by

applicable United States state or federal law, applicable Canadian or provincial law, or

applicable Mexican law, a party to a dispute resolved by arbitration under Sections C.6

and C.7 may appeal or contest the arbitrator’s decision only on one or more of the bases

specified in Section C.9.1 below and only in accordance with the procedures set forth in

Sections C.9.2 through C.13.

C.9.1 Grounds for Appealing Arbitration Decisions. A party to a dispute resolved by

arbitration under Sections C.6 and C.7 may contest or appeal the arbitrator’s

decision only on the basis that: (i) the arbitrator’s decision is contrary to

applicable law or regulation (including without limitation the FPA or FERC’s

then-applicable standards or policies, or comparable types of provisions that may

apply under applicable Canadian, provincial, Mexican, or other laws and

regulations); (ii) the arbitrator’s decision is demonstrably arbitrary and capricious

and without support in the record assembled during the arbitration; (iii) the

arbitrator failed to afford one or more parties to the dispute an opportunity for a

fair and meaningful hearing; (iv) the arbitrator engaged in serious misconduct in

connection with the arbitration; (v) the arbitrator exceeded the authority conferred

upon him or her under this Appendix C or as otherwise established by agreement

of all the parties to the dispute; or (vi) the arbitrator’s decision is contrary to the

provisions of Section C.6.6.

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C.9.2 Matter and One or More Parties to Dispute Subject to FERC Jurisdiction. If (i)

the subject matter of a dispute arbitrated under Sections C.6 and C.7 is within the

jurisdiction of FERC, and (ii) the conditions specified in Section C.12.1 or C.12.2

are satisfied, the rights of the parties to contest or appeal the arbitrator’s decision

shall be as set forth in Sections C.10 and C.12 below (subject also to the

provisions of Section C.9.1 above). Notwithstanding the foregoing, nothing

herein shall be construed or operate to require any Canadian or Mexican party or

any other party that is not a “public utility” within the meaning of the FPA to

make any filing with FERC under Sections 205 or 206 of the FPA.

C.9.3 All Parties and Matters in Dispute Subject to Jurisdiction of a Canadian

Regulatory Authority. If all of the parties to an arbitrated dispute are subject to

the jurisdiction of a particular Canadian Regulatory Authority, and if all matters

in dispute are also subject to the jurisdiction of the same Canadian Regulatory

Authority, any disputing party may appeal an arbitrator’s decision to that

Canadian Regulatory Authority, where such Canadian Regulatory Authority has

jurisdiction to hear the appeal, or to the appropriate Canadian court. Any appeal

to a Canadian Regulatory Authority or Canadian court shall be subject to the

provisions set forth in Sections C.10 and C.11 below.

C.9.4 All Parties and the Matter in Dispute Subject to Jurisdiction of a Mexican

Regulatory Authority. If all of the parties to an arbitrated dispute are subject to

the jurisdiction of a particular Mexican Regulatory Authority, and if all matters in

dispute are also subject to the jurisdiction of the same Mexican Regulatory

Authority, any disputing party may appeal an arbitrator’s decision to the

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appropriate Mexican Regulatory Authority, subject to the provisions set forth in

Sections C.10 and C.11 below.

C.9.5 Appeal to Court. If none of the preceding provisions concerning appealing or

contesting an arbitrator’s decision before FERC, a Canadian Regulatory

Authority, or a Mexican Regulatory Authority apply to an arbitrated dispute, any

party to an arbitrator’s decision rendered in accordance with the provisions of

Sections C.6 and C.7 may appeal the arbitrator’s decision to a court of competent

jurisdiction as provided under Section C.13 below.

C.10 Appealing or Contesting Arbitrator’s Decision to FERC or a Presiding Authority.

Subject to the conditions specified in Sections C.9.1 through C.9.5 above, any disputing

party may appeal or contest an arbitrator’s decision to FERC or an appropriate Presiding

Authority as follows:

C.10.1 Record on Appeal. Except as otherwise provided in Section C.10.3 below, any

appeal or action to contest an arbitrator’s decision to FERC or a Presiding

Authority shall be based solely upon the record assembled by the arbitrator. All

parties to arbitrations conducted under Sections C.6 and C.7 intend that: (i) the

FERC or other Presiding Authority should afford substantial deference to the

factual findings of the arbitrator; (ii) the portion, if any, of the arbitrator’s

decision relating to issues not of first impression (i.e., matters previously decided

by the FERC or other Presiding Authority or a court of competent jurisdiction in

cases involving comparable facts and circumstances) should be afforded

appropriate deference by the FERC or other Presiding Authority; and (iii) the

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portion, if any, of the arbitrator’s decision relating to issues of first impression

should be afforded no deference by the FERC or other Presiding Authority.

C.10.2 No Expansion of Record on Appeal. Except as otherwise provided in Section

C.10.3 below, no Member, non-Member, or WECC that has been a party to an

arbitration under Sections C.6 and C.7 shall seek to expand the factual record

before FERC or a Presiding Authority beyond that assembled by the arbitrator.

C.10.3 Exceptions to Limitations on Record on Appeal. If the arbitrator fails to assemble

a complete record of the evidence submitted with respect to an arbitrated decision

that is appealed pursuant to Sections C.9 through C.13, the parties to the appeal

shall, notwithstanding the provisions of Sections C.10.1 and C.10.2 above, have

the right to supplement the arbitrator’s record before FERC or the Presiding

Authority with any materials received into evidence by the arbitrator but omitted

from the record assembled by the arbitrator. If an arbitrator’s decision is appealed

under Section C.9.1(iii) or (iv) above on the grounds that the arbitrator improperly

excluded evidence so as to materially prejudice the outcome of the arbitration

with respect to one or more of the parties to the dispute, any party to the appeal

may submit the evidence asserted to be improperly excluded, but only as a basis

to request that FERC or the Presiding Authority vacate the arbitrator’s decision

and remand the matter to the arbitrator (or, if FERC or the Presiding Authority

determines that the arbitrator engaged in serious misconduct, to a newly selected

arbitrator) for reconsideration of the matter with inclusion of the improperly

excluded evidence. If an arbitrator’s decision is appealed under Section C.9.1(iv)

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above on the grounds of serious misconduct by the arbitrator, any party to the

appeal may offer new evidence relating to the arbitrator’s alleged misconduct.

C.11 Procedures for Appeals to Presiding Authority. If any party to an arbitration under

Sections C.6 and C.7 desires to appeal an arbitrator’s decision to an appropriate Presiding

Authority, it shall provide written notice to that effect to all other parties to the

arbitration, the arbitrator, and WECC’s Chief Executive Officer within 14 calendar days

following the date of the arbitrator’s decision. If notice of appeal is timely provided:

C.11.1 Within 30 calendar days after the date of the appealing party’s first notice of

appeal, the party providing notice of appeal shall file its statement of position

regarding the appeal with the Presiding Authority, together with the complete

evidentiary record of the arbitration and a copy of the arbitrator’s decision. The

statement of position shall state that the appeal requested has been the subject of

an arbitration pursuant to this Agreement.

C.11.2 Within 30 calendar days after the date of the appealing party’s first notice of

appeal, any other party that was a party to the arbitration may file its statement of

position regarding the appeal with the Presiding Authority.

C.11.3 Copies of all materials filed with the Presiding Authority by any party during the

course of an appeal shall be delivered to all other parties to the arbitration and to

WECC’s Chief Executive Officer.

C.11.4 Implementation of the arbitrator’s decision shall be deemed stayed pending an

appeal unless and until, at the request of a disputing party, the Presiding Authority

issues an order shortening or extending the stay of implementation.

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C.11.5 WECC’s Chief Executive Officer shall publish (or cause to be published) a

summary of each appeal in WECC’s newsletter or electronic bulletin board.

C.11.6 The Members and WECC intend that any Presiding Authority’s order resulting

from an appeal under Sections C.9 and C.11 shall be subject to judicial review

pursuant to laws governing the Presiding Authority and the matter in dispute that

provide for judicial review of Presiding Authority action.

C.12 Procedures for Contesting or Appealing Arbitrator’s Decision Before FERC. If any party

to a dispute arbitrated under Sections C.6 and C.7 elects, subject to the limitations set

forth in Sections C.9.1 through C.9.5 above, to contest or appeal an arbitrator’s decision

before FERC, the party so electing shall provide written notice to that effect to all other

parties to the arbitration, the arbitrator, and WECC’s Chief Executive Officer within 14

calendar days following the date of the arbitrator’s decision. The provisions contained in

Sections C.10.1, C.10.2, and C.10.3 above shall apply with respect to the record of the

arbitration submitted to FERC. In addition, the following provisions shall apply:

C.12.1 FERC Filing by Prevailing Party. If the arbitrator’s decision requires the

prevailing party to take action that must have FERC approval or involves the

provision of FERC-jurisdictional service by the prevailing party, the prevailing

party shall file the arbitrator’s decision or make an appropriate filing with FERC

to implement the arbitrator’s decision. Provided that it has given notice as

required under Section C.12 above, any non-prevailing party may contest the

prevailing party’s filing in accordance’s with FERC’s applicable rules and

regulations.

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C.12.2 Complaint to FERC by Prevailing Party. If the arbitrator’s decision requires a

non-prevailing party to take action that must have FERC approval or involves the

provision of FERC-jurisdictional service by any non-prevailing party, then, if the

non-prevailing party has given notice as required under Section C.12 above, the

prevailing party may submit the arbitrator’s decision to FERC in the form of a

complaint.

C.13 Appeal to Court. If none of the provisions that govern appealing or contesting an

arbitrator’s decision before FERC, a Canadian Regulatory Authority, or a Mexican

Regulatory Authority as set forth in Sections C.9.2, C.9.3, or C.9.4 above apply, any

disputing party may appeal an arbitrator’s decision to any court of competent jurisdiction,

subject to the conditions specified in Section C.9.1 above. Except as otherwise provided

in Section C.10.3 above (substituting the words “court of competent jurisdiction” for

“FERC or the Presiding Authority”), any appeal to a court shall be based solely upon the

record assembled by the arbitrator, and no Member, non-Member, or WECC who is a

party to an arbitration under Sections C.6 and C.7 shall seek to expand the factual record

before the court beyond that assembled by the arbitrator.

Appendix of Additional Definitions Relating to Alternative Dispute Resolution Provisions

Arbitration Notice has the meaning specified in Section C.7.1 of these Bylaws. Canadian Regulatory Authority. The agency or agencies established under the laws of Canada or the applicable Provinces of Canada and having jurisdiction over facilities, interconnections, transmission rates, charges, terms, and conditions of service of a Canadian Member. Dispute Notice has the meaning specified in Section C.5.1 of these Bylaws. FERC. The Federal Energy Regulatory Commission or a successor agency. FPA. The Federal Power Act (16 U.S.C. §§ 824 et. seq.), as it may be amended from time to time. Mexican Regulatory Authority. The agency or agencies established under the laws of Mexico or the applicable states of Mexico and having jurisdiction over facilities, interconnections, transmission rates, charges, terms, and conditions of service of a Mexican Member. Presiding Authority. As used in Sections C.10 and C.11, the term “Presiding Authority” has the following meanings: with respect to an appeal to an appropriate Canadian Regulatory Authority, “Presiding Authority” means the presiding Canadian Regulatory Authority or Canadian court with jurisdiction to hear the appeal; and with respect to an appeal to an appropriate Mexican Regulatory Authority, “Presiding Authority” means the presiding Mexican Regulatory Authority or Mexican court with jurisdiction to hear the appeal.

Agenda Item 11.b Board of Trustees Meeting

August 14, 2014 Western Electricity Coordinating Council Data Request Process

Action Approve Background Section 1600 of the NERC Rules of Procedure (NERC ROP) governs NERC and Regional Entity requests for data or information from owners, operators, and users of the Bulk-Power System to meet obligations under Section 215 of the Federal Power Act. NERC ROP Section 1600 does not apply to Requirements contained in any Reliability Standard to provide data or information. In addition, Section 1600 does not apply to data or information requested in connection with a compliance or enforcement action. Section 1600 also requires NERC to provide a proposed data request to FERC’s Office of Electric Reliability twenty-one days prior to posting the data request for public comment. NERC is not required to receive any approval from FERC prior to posting the proposed request for public comment following approval by the NERC Board of Trustees (NERC Board). With respect to Regional Entity data requests, NERC ROP Section 1604 provides that a Regional Entity may develop its own procedures for requesting data or information, so long as any such procedures include at least the same procedural elements as are included in Section 1600. Such Regional Entity procedures must also be submitted to NERC for approval and, upon approval, NERC must file the proposed procedures for approval by FERC and any other applicable governmental authorities applicable to the Regional Entity. On May 15, 2014, the Western Electricity Coordinating Council (WECC) Board of Directors reviewed the proposed WECC Data Request Process that was written to permit WECC staff to issue mandatory data requests for reliability data to entities in the Western Interconnection. WECC’s Board of Directors deferred a decision on implementing the process in order to allow its Member Advisory Committee (MAC) to review and provide input. On June 25, 2014, the WECC Board of Directors approved the attached WECC Data Request Process, including amendments made by MAC during the review period. The proposed amendments to the WECC Data Request Process added a provision to clarify that the process is not binding on entities outside of the United States. However, WECC may request comparable data or information from those entities on a voluntary basis. On June 30, 2014, WECC submitted the proposed process to the NERC Board of Trustees for approval. Accordingly, WECC requests that the NERC Board of Trustees approve the WECC Data Request Process and forward to FERC for approval, in accordance with NERC ROP Section 1604.2. NERC staff has reviewed the proposed WECC Data Request Process and recommends that the NERC Board approve.

WECC Data Request Process

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INTRODUCTION Pursuant to Section 215 of the Federal Power Act and Section 1600 of the North American Electric Reliability Corporation (“NERC”) Rules of Procedure, Western Electricity Coordinating Council (“WECC”) has the authority to request data or information that is necessary to meet its obligations as a Regional Entity from owners, operators, and users of the Bulk Power System in the United States. This process is not binding on entities outside of the United States. However, WECC may request comparable data or information from those entities on a voluntary basis.

SCOPE This WECC Data Request Process (“Process”) shall not apply to or interfere with Requirements contained in any Reliability Standard to provide data or information. This Process shall also not apply to data or information requested in connection with a compliance or enforcement action or any procedures adopted applicable to such compliance or enforcement actions.

PROCESS 1. Submission to NERC and FERC: WECC shall provide a proposed request for data or

information or a proposed modification to a previously-authorized request, including theinformation specified in Section 2 below as applicable, to NERC and the Federal EnergyRegulatory Commission’s (“FERC” or “Commission”) Office of Electric Reliability (“Officeof Electric Reliability”) at least twenty-one (21) days prior to initially posting the requestor modification for public comment. Submission of the proposed request or modificationto NERC and the FERC Office of Electric Reliability is for the information of NERC andthe Commission. WECC is not required to receive any approval from NERC or theCommission prior to posting the proposed request or modification for public comment inaccordance with Section 2 below or issuing the request or modification to ReportingEntities following approval by the WECC Board of Directors.

2. Posting for Comment: WECC shall post a proposed request for data or information or aproposed modification to a previously authorized request for data or information for aforty-five (45) day public comment period.

a. A proposed request for data or information shall contain, at a minimum, thefollowing information:

i. a description of the data or information to be requested;ii. how the data or information will be used;iii. how the availability of the data or information is necessary for WECC to

meet its obligations as a Regional Entity;iv. a description of how the data or information will be collected and

validated;v. a description of the entities (by functional class and jurisdiction) that will

be required to provide the data or information (“Reporting Entities”);vi. the schedule or due date for the data or information;

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vii. a description of any restrictions on WECC’s dissemination of the data or information; and

viii. an estimate of the relative burden imposed on the Reporting Entities to accommodate the data or information request.

b. A proposed modification to a previously authorized request for data or information shall explain:

i. the nature of the modifications; ii. an estimate of the burden imposed on the Reporting Entities to

accommodate the modified data or information request; and iii. any other items from Section 2.a above that require updating as a result

of the modifications.

3. Submission to the WECC Board of Directors: After the close of the comment period, WECC shall make any revisions it deems appropriate to the proposed request for data or information in light of the comments received. WECC shall submit the proposed request for data or information, as revised, along with the comments received, and an evaluation of the comments and revisions, to the WECC Board of Directors.

4. WECC Board of Directors Determination: In acting on the proposed request for data or information, the WECC Board of Directors may authorize WECC to issue it, modify it, or remand it for further consideration.

5. Minor Revisions to Data Requests: WECC may make minor changes to an authorized request for data or information without WECC Board of Director approval. However, if a Reporting Entity objects in writing to such changes to WECC within 21 days of issuance of the modified request, such changes shall require WECC Board of Director approval before they are implemented.

6. Authorization and Appeals: Authorization of a request for data or information shall be final unless, within thirty (30) days of the decision by the WECC Board of Directors, an affected party appeals the authorization to the NERC Board of Trustees. Determinations of the NERC Board of Trustees may be appealed to the Commission.

7. Owners, Operators and Users to Comply: Owners, operators, and users of the Bulk Power System registered on the NERC Compliance Registry shall comply with authorized requests for data and information. In the event a Reporting Entity within the United States fails to comply with an authorized request for data or information under this Process, WECC may request that NERC request the Commission to exercise its enforcement authority to require the Reporting Entity to comply with the request for data or information and for other appropriate enforcement action by the Commission. Such requests shall be made through non-public submissions to NERC and the Commission.

8. Confidentiality: If the approved data or information request includes a statement that the requested data or information will be treated as confidential, then the applicable

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provisions of Section 1500 of the NERC Rules of Procedure will apply without further action by a Submitting Entity. A Submitting Entity may designate any other data or information in the request as Confidential Information pursuant to the provisions of Section 1500. WECC shall treat all such data or information in accordance with Section 1500.

APPROVAL AND ADOPTION WECC BOARD OF DIRECTORS EFFECTIVE ________________

Custodian General Counsel

Review Cycle 2 years

Last Reviewed Date [Date]

Agenda Item 12 Board of Trustees Meeting

August 14, 2014

Cyber Security Risk Information Sharing Program (CRISP)

Action Authorize Introduction and Executive Summary This document provides additional background on CRISP, NERC’s proposed role, budget and funding requirements. The authorization requested herein would include full funding by the utility participants for NERC’s activities during fiscal 2014. The funding for 2015, including projected impacts on NERC’s assessments to load serving entities, is included in the 2015 business plan and budget information that will be considered by the Board. Background CRISP is a voluntary program to facilitate the exchange of detailed cybersecurity information between electric utilities, the Electricity Sector Information Sharing and Analysis Center (ES-ISAC), the US Department of Energy (DOE), and Pacific Northwest National Laboratory (PNNL), to enable electric power critical infrastructure operators to better protect their networks from sophisticated cyber threats. The program uses passive sensors called Information Sharing Devices (“ISDs”) to collect and transmit cybersecurity information from each site for analysis. CRISP also incorporates additional information exchange capabilities that permit some outputs from the analysis to be shared more broadly with the entire electricity sector, improving the overall sector cybersecurity posture. CRISP has two differentiators from other commercially available cyber risk monitoring services. The first is the intent and ability to integrate other cyber related threat information provided through governmental sources with the cyber threat information gathered from the ISDs installed at the participant’s sites. Second is the ability of the program to look across organizations within the electricity subsector, identifying correlation and trends. Scope The CRISP technology was deployed across the DOE networks over ten years ago. During the past several years, the technology has been deployed across five electric utilities through a DOE pilot program. Under the direction of DOE and in coordination with the Electricity Subsector Coordinating Council (ESCC), the deployment of CRISP is now transitioning from a pilot to broader deployment. While it will still only deployed to a small subset of the industry, information derived from this program will be disseminated broadly to registered users of the ES-ISAC, enhancing the entire industry’s cybersecurity posture. The ESCC has endorsed this program and its members have taken a leadership role in advocating industry participation and funding support. Twenty-eight (28) electric utility organizations have been preliminarily identified for deployment of the CRISP capability, requiring an estimated 68 ISDs to be installed at the various sites.

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Roles and Responsibilities ES-ISAC Under the contemplated structure, the ES-ISAC would assume the role of program manager for CRISP and would be responsible for providing certain agreed upon services to the participating electric utilities, including the oversight of the installation of the ISDs and associated analytical services. The ES-ISAC would provide a central point for coordination and be the hub for collaborative analysis of CRISP data. Additionally, unattributed CRISP reporting and data would be shared with registered users of the ES-ISAC portal providing more widespread benefits to industry. Initially, NERC would subcontract substantially all of these services to PNNL. The ES-ISAC would then work with PNNL and utility participants to evaluate the costs and benefits of NERC developing the capability to either performing these services in-house without PNNL support, with reduced PNNL support or through a combination of in-house and other commercially available subcontractor capabilities. This would be a major undertaking and require significant planning and investments by NERC in additional ES-ISAC personnel, software, hardware, equipment and services, as well as the receipt of additional corporate, budget and regulatory approvals. PNNL and Argonne National Labs PNNL is a United States Department of Energy National Laboratory, operated by Battelle with oversight by the Department of Energy. The main campus of the laboratory is in Richland, Washington. PNNL was the federal government’s primary technical partner in establishing CRISP and would be the primary subcontractor to NERC in connection with the provision of CRISP services to participating utilities, subject to the potential use of different subcontractors in the future and NERC building additional internal capabilities to provide the services which would initially be provided by PNNL. Pursuant to its subcontract with NERC, PNNL would be responsible for the deployment of the required technology, supporting infrastructure, analysis, and the technical capabilities. Argonne National Lab (ANL) supports and maintains certain core components necessary for CRISP and would provide this support through an inter-lab agreement with PNNL. Technology CRISP has three main technology elements. Together these elements provide the site with analysis of cybersecurity information, the ability to exchange cybersecurity threat information, and a means for secure data and voice communications across all CRISP participants. CRISP supplements a site’s existing cybersecurity program and enables a level of collaboration that does not currently exist in the sector. These three technology elements are:

• Information Sharing Device (ISD) Hardware installed at the site that captures cybersecurity threat information for transmission to PNNL for analysis.

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• Cyber Fed Model (CFM) Software that enable the secure communication of cybersecurity threat information between PNNL, ANL, ES-ISAC, sites, and other participating organizations (government and non-government)

• Contested Operations Network for Reporting and Detection (CONRAD) A secure communications device comprised of hardware and software that enables the secure voice and data transmission.

Technical Overview Information Sharing Devices (ISD) The CRISP ISD is a network device which uses commercial off the shelf hardware. It’s placed at the transmitting site’s (e.g. utility) network border, just outside the corporate firewall. Once the ISD is configured and activated, the data is encrypted and transmitted to PNNL for analysis. The ISD is not an intrusion prevention or detection system. It is a completely passive device that gathers cyber threat information necessary to understand the cyber threat tactics, techniques and procedures, and correlate information from across the CRISP sites with other cyber threat information made available by the government and other sources. PNNL, with assistance from utility site personnel, will be responsible for the installation of the ISD, which will be owned and operated by the participating utility. ES-ISAC personnel also plan to be present on-site during these installations. PNNL will provide technical support to maintain the sensor operations and ensure proper communications with the ISD data repository. PNNL has already installed a number of ISDs at utilities which are planning to participate in the program, including utilities who participated in the DOE pilot program. Cyber Fed Model (CFM) Developed and operated by ANL, CFM is a software program that is installed on the site’s computer and enables the exchange of cyber threat information with other CFM sites. ANL will support CFM installation at the sites through an inter-lab agreement with PNNL and can be done in conjunction with ISD installation. CFM provides a near real-time exchange of cyber threat information to and from participating organizations. It includes an encryption-based information-exchange protocol that allows the site to specifically determine who receives its data. Along with reports, and other situational-analysis information generated through CRISP, the data shared includes information regarding a combination of hostile IP addresses, DNS domains, and other threat indicators. This actionable data is provided to sites automatically (machine to machine) every 5-15 minutes. The ES-ISAC has already established a CFM node at the NERC Washington office. Given the proposed change in NERC and the ES-ISAC’s role in overseeing CRISP, NERC has deferred making a decision regarding the installation of an ISD on its network and, assuming receipt of all necessary corporate and regulatory authorizations to proceed with the program, will instead focus on overseeing installation of the ISDs at

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participating utility sites and performing the other functions and service described herein. In the future, NERC may decide to install an ISD on its network. Contested Operations Network for Reporting and Detection (CONRAD) The CONRAD device and communications network allows a compromised site to collaborate and coordinate with other sites to mitigate the threat without the perpetrating actor monitoring the communications. This secure network uses technologies which are approved by the National Security Agency and are commercially available. CONRAD requires the installation of a network device at the site to encrypt and decrypt communications. CONRAD enables both data and voice communications. Installation of CONRAD can occur in conjunction with ISD installation. Overview of Contract Structure Implementation of CRISP by NERC would be governed pursuant to a master agreement (“Master Agreement”) between NERC and the participating utilities. NERC would in-turn subcontract the majority of the services and obligations under the Master Agreement to PNNL pursuant to the terms of a subcontract (“PNNL Contract”) which would be executed contemporaneously with the execution of the Master Agreement. The terms and conditions of the Master Agreement and PNNL Contract are largely finalized at this point. CRISP Budget and Funding For 2014, NERC’s projected CRISP costs, including any amounts payable to PNNL under the PNNL Agreement, will be paid by the utility participants. The projected costs for 2015, will include two major categories of expense (1) the projected PNNL subcontract costs and (2) incremental ES-ISAC personnel, hardware, software, meeting, travel, legal, insurance and indirect expenses associated with NERC’s management and administration of CRISP and sharing of CRISP derived information through the ES-ISAC portal, and are discussed as part of NERC’s overall 2015 business plan and budget information. Management will update the Board during the meeting on the expected 2014 CRISP related costs that will be paid by the utility participants.

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Agenda Item 13 Board of Trustees Meeting

August 14, 2014

ERO Operating Model Action Items

Action Update

Background The ERO Enterprise Operating Model1 white paper outlines how the ERO Enterprise (NERC and the Regional Entities) achieves excellence in the oversight and execution of statutory functions by collaborating and working together towards the common goal of mitigating reliability risks. The paper identifies key goals and action items that must be met in order to implement long-term effective and coordinated operations across the ERO Enterprise.

Summary On August 14, 2014 NERC staff will report to the Board and stakeholders the status of implementation of the ERO Enterprise Operating Model and eleven associated action items.

The action items are grouped into three categories for enterprise tracking and communication purposes: 1) periodic activities (e.g. action item one = annual business plan and budget review); 2) development activities (e.g. action item eight = develop a core set of methods, practices,procedures, tools); and 3) relationship activities (e.g. action item ten = conveying a shared message). Within each group or category, the individual action items are being managed to a desired end-state based on the accomplishment of specific milestones. Relationship activities will also include a measure or gauge of maturity for reaching achievement and sustaining a high level of productivity once achieved.

The implementation of these action items will be a multiyear process and are embedded in the ERO Enterprise Strategic Plan as sub-metric J: Achieving transition laid out in oversight model regarding ERO Enterprise personnel and ERO Enterprise (NERC and Regional Entity) infrastructure and applications.

1 The ERO Enterprise Operating Model is available on the NERC website at: http://www.nerc.com/AboutNERC/keyplayers/Documents/ERO_Enterprise_Operating_Model_Feb2014.pdf

Agenda Item 15 Board of Trustees Meeting

August 14, 2014

GridSecCon 2014 Fourth Annual Grid Security Conference

Action Information

Background The North American Electric Reliability Corporation (NERC) launched its yearly Grid Security Conference in 2011 to bring together experts in the United States and Canada on cyber and physical threats and vulnerabilities facing the Bulk-Power System (BPS). The dialogue between the industry and the government that began at the 2011 conference has included emerging security trends, policy advancements, and lessons learned. NERC will host GridSecCon 2014 on Oct. 14-17 in San Antonio, Texas.

Summary GridSecCon 2014 At-A-Glance:

• The conference has three objectives: promote BPS reliability through training andeducation; deliver discussions on the latest critical infrastructure threats, vulnerabilities,and lessons learned; and impart to the electricity sector best practices on physicalsecurity and cybersecurity.

• The conference keynote address will be given by Admiral Michael S. Rogers, director ofthe National Security Agency.

• Participants will have access to a range of cybersecurity and physical security trainingcourses on Tuesday, October 14, 2014. Training tracks include: Physical Security byLawrence Livermore National Laboratory; Physical Surveillance Detection Course byTrapwire; Security Awareness Training for Electric Entities via SANS presentation; SneakPeak at the SANS ICS 500 Level Course via SANS class; and Control System DefensiveExercise by Cybati.

• The host utility tours by CPS Energy are available on Friday, October 17, 2014.

• For more information, visit the GridSecCon 2014 website.

Agenda Item 18.a Board of Trustees Meeting

August 14, 2014

Operating Committee Report

Action Information

Operating Committee’s (OC) Major Accomplishments for 2014 (Year-to-date) 1. Reliability Guidelines – The OC is currently addressing two reliability guidelines.

a. In March 2013, the OC approved the Reliability Guideline: Generating Unit WinterWeather Readiness – Current Industry Practices. This guideline provides a generalframework for developing an effective winter weather readiness program for generatingunits throughout North America. The focus is on maintaining individual unit reliabilityand preventing future cold weather related events. At its March 2014 meeting, the OCreviewed the impacts to the Bulk Electric System (BES) of the Polar Vortex weatherphenomenon. As a result of that review, the OC tasked its Event Analysis Subcommitteewith conducting a review of the Generating Unit Winter Weather Readiness reliabilityguideline and recommend enhancements based on lessons learned from the polarvortex experiences.

b. At its June 2014 meeting, the OC approved the Reliability Guideline: Generating UnitOperations during Complete Loss of Communications following a lengthy technicaldiscussion. This guideline provides a strategy for power plant operations in the case ofcomplete loss of communications (both data and voice) between the on-site generatingunit(s) operator and the System Operator for the Balancing Authority Area,Transmission Operator (TOP) and Reliability Coordinator (RC). The Operating Committeetasked the Resources Subcommittee to enhance the guideline to address issues such astransmission impacts identified in the OC’s technical discussion.

2. OC Realignment of Activities and Organization – At its June 2014 meeting, the OC approvedrevised scope documents for its Event Analysis, Resources, Operating Reliability, andPersonnel subcommittees. The realignment of scope responsibilities allowed the OC todecommission its Interchange Subcommittee.

3. NERCnet (ISN) – NERC is in the process of transitioning NERCnet to the EasternInterconnection Data Sharing Network, Inc. (EIDSN). The EIDSN is a consortium of reliabilitycoordinators in the Eastern Interconnection that has been formed to manage the currentNERCnet. In addition, the EIDSN intends to issue a Request for Proposals for a replacementnetwork in the third quarter of 2014.

4. Independent Experts Review of the Reliability Standards – The OC engaged in a discussion ofthe reliability gaps (outage coordination, generator frequency response, and EMS real timecontingency analysis models) identified by the independent experts in their report. The OCdeveloped a response, which was submitted to the Standards Committee and the ReliabilityIssues Steering Committee on April 3, 2014.

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5. Essential Reliability Services Task Force (ERSTF) – At its March 2014 meeting, the OC approved the scoping document for the ERSTF. The scoping document provides that essential reliability services (ERS), in addition to capacity and energy characteristics, must be maintained across a given system to ensure reliable operation. Inertia, frequency response, and voltage control are key ERS. Analysis may determine that other characteristics or functions could be included within the suite of ERS.

OC’s Major Initiatives for 2014 1. Event Analysis Subcommittee (EAS) – Following an excellent start-up in 2012, the OC and

the EAS continue to work jointly with the NERC Events Analysis (EA) program to further enhance the EA process and to enhance the identification and publication of lessons learned and event reports. In addition, the NERC EA program is beginning to develop and analyze event related metrics to identify trends, reliability gaps, and opportunities for industry improvement.

2. Annual State of Reliability Report – The OC’s Event Analysis Subcommittee partnered with the Planning Committee’s Performance Analysis Subcommittee to review and develop the 2014 State of Reliability (SOR) report. The OC approved the draft 2014 SOR report in April 2014.

June 2014 Meeting Summary: The following is a summary of the OC’s June 2014 meeting, which highlights the latest activities of the OC and its associated subcommittees in support of the NERC or OC mission and corporate goals. The June 2014 OC Meeting Minutes are posted on the NERC website. 1. Reliability Issues Steering Committee (RISC) – On behalf of the RISC, OC Vice Chair Jim Case,

briefed the OC on the development of the ERO Top Priority Reliability Risks. In addition, he provided an overview of his work with the Personnel Subcommittee regarding ageing workforce and his work with the Operating Reliability Subcommittee regarding EMS modeling and situation awareness tools.

2. Eastern Interconnection Frequency Initiative – The Resources Subcommittee briefed the OC on an Eastern Interconnection initiative to improve Eastern Interconnection frequency response. The current initiative focuses on the existing generator fleet with respect to the completeness and accuracy of the data provided in the 2010 NERC generator survey and improving their frequency response capabilities. The initiative will be conducted in two phases, with the first phase of collecting data from generators sized at 400 MW and above completed on June 1, 2014. The second phase, which will collect data from generators sized at 100–400 MW, is expected to be completed by November 1, 2014.

3. Polar Vortex Weather Phenomenon – James Merlo reported that efforts to improve the accuracy of the generator outage data is slowing down completion of the Phase 1 Polar Vortex report. It is now estimated that that report will be available in mid-August 2014.

4. Electric/Natural Gas Coordination – During the OC’s discussion of the Polar Vortex weather phenomenon at its March 2014 meeting, industry identified a concern regarding fuel availability during cold weather extremes. More specifically, the availability of natural gas when competing usage for heating diminishes its supply for generation. The OC was provided additional insights into industry’s issues and concerns by Wes Yeomans, NYISO’s

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Operations Vice President. Mr. Yeomans is also Chair of the ISO/RTO Council’s Electric and Gas Coordination Task Force.

5. System Events – The OC was briefed by Hydro Quebec on BES outages caused by the July 3, 2013 forest fires and by Hydro One on BES outages caused by a severe rainstorm that impacted the Toronto area on July 8, 2013. During the July 3 event, Hydro Quebec lost approximately 3,950 MWs of internal demand, five high-voltage DC lines, and 3,510 MWs of generation at the La Grande Plant. Toronto’s July 8 event resulted in severe flooding that impacted approximately 500,000 customers and tripped 26 230 kV and 8 115 kV transmission circuits.

6. Lessons Learned – The OC was briefed by Westar Energy on the sequence of events related to a splice failure on a start-up transformer current transformer block. The resultant lessons learned from this event relate to inadequate handling of emergent work and unclear responsibilities and monitoring of contractor work practices.

7. Essential Reliability Services Task Force (ERSTF) – Ken McIntyre, co-chair of the ERSTF, reported that the task force was created in response to a recommendation from NERC’s Long-Term Reliability Assessment to develop a primer on essential reliability services. The primer would address operational requirements needed to ensure bulk power system reliability. The task force’s first deliverable, an ERS tutorial, is currently in the final commenting phase. The tutorial will identify each essential reliability service and discuss the importance of those services to BES reliability. The target audience for the tutorial is regulators, policy makers, and industry leadership. Thus far the task force has identified operating reserves, frequency response, ramping capability, active power control, reactive power and voltage control and disturbance performance as the universe of essential reliability services. Based on discussions at the MRC and Board, the ERSTF was also asked to consider fuel mix as an item to be studied.

8. Revised MISO Reliability Plan – James Merlo informed the OC that NERC had received inquiries from the State of Michigan, including a letter from the governor, which communicated concerns that there were potential issues that may not have been addressed, associated with the bifurcation of the Local Balancing Authority in the Upper Michigan area. Mr. Merlo stated that NERC is gathering information and would request that the Michigan Public Service Commission provide additional information pertaining to this issue so that the OC’s Operating Reliability Subcommittee could review those concerns as part of the revised MISO reliability plan approval process. He also stated that NERC would be looking across all of the associated processes that could affect this plan such as registration and certification of the two LBAs. He also noted that he was concerned that NERC would not be able to have this resolved within the short timeline that NERC is under based on MISO’s modeling needs by June 15, but that NERC felt it was important to slow this down to make sure all concerns and issues are being considered.

9. Oncor Voltage Reduction Program – Oncor provided the OC an overview of its voltage reduction program. Voltage reduction is one technique used to reduce end-use loads during peak conditions and in ERCOT, voltage reduction is initiated voluntarily as a final back-stop prior to initiating firm load shed. Oncor’s voltage reduction program relies on transformer load tap changers/regulators.

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10. Reliability Standards – The OC was briefed on Reliability Standard Development Projects 2014-04 (Physical Security) and 2014-03 (Revisions to TOP/IRO Reliability Standards).

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Agenda Item 18.b Board of Trustees Meeting

August 14, 2014

Planning Committee Status Update

Action Information

Status Update Significant tasks have been undertaken in 2014 that support the NERC Planning Committee’s (PC) long-term vision, as well as the Electric Reliability Organization’s (ERO) overall reliability mission. The PC periodically provides reliability updates to the Board of Trustees (Board) and Member Representatives Committee (MRC) that align with the annual plan and the strategic deliverables including reliability assessments. The NERC PC is actively engaged in a number of technical areas which are important to maintain the reliability of the Bulk-Power System (BPS) of North America.

Planning Committee's Major Recent Accomplishments for 2014 Below is a list of reports issued by the PC and approved by the Board.

• 2014 Summer Reliability Assessment – Annual report on resource adequacy andindustry preparations to maintain reliability for the upcoming summer season wasapproved and issued in May 2014.

• 2014 State of Reliability Report – Annual report representing NERC’s independent viewof ongoing BPS trends to objectively provide an integrated view of reliabilityperformance. This report was approved and issued in May 2014.

Planning Committee's Major Initiatives for 2014

• 2014 Reliability Assessment Reports – The PC expects to submit two additional annualassessment reports to the Board for their consideration: (1) the 2014 Long-TermReliability Assessment currently under development; and (2) the 2014/2015 WinterReliability Assessment, which is beginning development.

• Support of Standards Development – The PC continues to support the NERC StandardsDevelopment process with subcommittees of the PC conducting essential technicalresearch into current and proposed areas of reliability issues to either highlight on-goingissues or improve the industry’s body of knowledge relating to system planning andreliable operation of the BPS.

• NERC staff continue to provide support for drafting of the Protection and Control (PRC)Reliability standards in particular Reliability Standard PRC-025-1, Generator RelayLoadability. The PC members have identified the System Protection and ControlSubcommittee (SPCS) as the appropriate group to further study the reliability benefits ofthis standard.

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Additionally, subject-matter experts from the PC and its technical groups will continue to support the informal development of several Modeling, Data and Analysis (MOD) Reliability Standards. The PC is also engaged with the Standards Committee on technical discussions regarding the BPS reliability impacts of demand response and distributed resources—highlighted as emerging long-term reliability challenges in numerous NERC assessments.

• Completion of the Integration of Variable Generation Task Force (IVGTF) Work Plan – In response to the NERC 2009 Summary Report on Accommodating High-Levels of Variable Generation, the IVGTF has been addressing the recommendations through a series of 12 efforts leading to reports addressing specific aspects such as wind forecasting, distributed variable resources, and capacity contributions of variable generation. A final report has been completed and issued in June 2014 representing the culmination of the task force’s work to address the reliability challenges of integrating large amounts of variable generation. The objective of this report is to incorporate previous recommendations, summarize the potential challenges faced on power system operating and planning decision problems associated with increased uncertainty caused by high variable generation penetration, and presents a game plan to move forward to complete remaining recommendations. Also, the report describes the role that probabilistic methods can play in improving the basis on which the various operational and long range planning decisions are made, as well as summarizing the findings from the multi-year IVGTF effort. NERC PC members voted to approve the final report.

• "Essential Reliability Services" Task Force (ERSTF) – The PC has formed a task force as a follow-on action to the recommendations from the 2013 Long-Term Reliability Assessment. The task force will focus on expanding NERC's methodology for reliability assessment. The ERS has drafted a tutorial document addressing one of the key findings and recommendations of NERC’s 2013 Long Term Reliability Assessment, as a reference guide for the industry, regulators and policy makers. The task force had its first face-to-face meeting in June 2014 following the Operating Committee (OC)/PC meetings. It was determined to form 3 technical subgroups and 1 policy/advisory subgroup, each with their respective leads and members, in order to focus on each ERS that falls into a broader area of reliability. These 4 subgroups are: (1) Load and Resource Balance, (2) Voltage Support, (3) Frequency Support, and (4) Policy and Advisory Group. Work is well under way for each subgroup, and draft technical reference materials and a framework for conducting a set of focused assessments are being created at the present time.

• Geomagnetic Disturbance Task Force – The Project 2013-03 standard drafting team has developed draft TPL-007-1 – Transmission System Planned Performance during Geomagnetic Disturbances (GMD) to address the stage 2 directives (FERC Order No. 779 for planning requirements). The proposed standard establishes planned performance requirements during a benchmark GMD event and is applicable to Planning Coordinators, Transmission Planners, Transmission Owners, and Generation Owners with grounded transformers connected at 200 kV or higher. The initial draft was

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provided for informal comment period April 22 – May 21. The drafting team met June 2-4 to revise the standard in preparation for posting for formal comment and ballot by mid-June.

• 2014 Probabilistic Assessment (ProbA) Update – The Probabilistic Assessment (ProbA) Report is to complement the LTRA by providing additional probabilistic statistics of Loss of Load Hours and Expected Unserved Energy. A scenario assessed by each region, will calculate Loss of Load while maintaining the operating reserves, without incorporating the emergency operating procedures effect to address concerns surrounding available resources to respond to contingencies. According to the schedule, the final report is expected to be provided to the PC in February 2015, and will be presented for approval in March 2015.

• System Protection and Control Subcommittee (SPCS) Update – In response to the FERC Order No. 754 data request, the SPCS and the System Analysis and Modeling Subcommittee (SAMS) have completed preliminary review of 200 kV and above data on busses, with data for 100-199 kV due by October 2014. The review has indicated that reliability risk warrants consideration and the potential path forward expected to include expanding the study of relay failure to include protection system failure for a broader range of components, and increasing emphasis on study of three-phase faults accompanied by a protection system failure. A final report along with recommendations will be presented in the December PC meeting.

• Project 2010-13.2 – Phase 2 Relay Loadability: Generation (Unit Auxiliary Transformer) – NERC Staff presented to the PC, a Board question concerning whether Reliability Standard PRC-025-1, Generator Relay Loadability, should address load-responsive protective relays on the low-voltage side of a generating station unit auxiliary transformer (UAT). The drafting team after studying computer simulation validations with recorded event data and analyzing GADS data believes that a reliability gap does not exist; however, variations in industry practices and potential inaccuracies in relay settings may create risks to reliability.

The plan is to establish a guideline for setting load-responsive UAT low-side protective relays to account for increased loading during depressed voltages, through soliciting industry input utilizing an appropriate technical PC subcommittee. The PC members believe that SPCS would be the appropriate group to further study the benefits of this effort. NERC and SPCS’ future efforts include gathering more information, collaborating with NAGF and drafting a findings assessment report to be presented to PC in December 2014.

• Seasonal Assessments and Modeling of Sub-100 kV Elements (Southwest Outage Recommendations) – SAMS and Modeling Working Group (MWG) recommendation includes Southwest Outage recommendations 5, 6, and 7 focused on transmission operations and a recommendation from the WECC Report in Response to the Southwest Outage Report, WECC NERC2, which is focused on modeling of sub-100 kV elements. Although many current and proposed NERC standards already address issues raised in the Southwest Outage Report recommendations, following SAMS’ and MWG’s

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recommendations described in the report provide further enhancements. In some areas the findings and recommendations cover operational time horizons, and SAMS recommends that the OC review these areas. The PC has approved a proposal to address Southwest Outage Recommendations 5, 6, and 7, and WECC NERC2. This recommendation addresses tools for determining phase angle differences and mitigation plans to reclose lines with large phase angle differences. The PC Chair issued a letter to the OC Chair recommending that this task be forwarded to the OC and Operating Reliability Subcommittee, as the recommendation is oriented towards operations standards TOP and IRO which are currently in development.

• Environmental Protection Agency (EPA) 316b Final Regulations – EPA 316b – regulations govern cooling water intake structures requirements. This regulation will require certain electric power plants to implement best technology available option to reduce fish impingement, potentially resulting in switching current industrial power sources (for instance pulp and paper manufacturers) from onsite to purchased power.

• EPA CO2 Section 111(d) Regulations - The EPA released draft regulations for greenhouse gas emission for existing power plants which would require them to reduce CO2 emissions rates by 2030. The regulations would cut carbon emission from the power sector by 30 percent nationwide below 2005 levels. An estimated 3,104 existing (started construction prior to 1/8/2014) fossil fired power units (702,381 MW) will be subject to CO2 emission regulations by 2030.

It was recommended that the NERC Reliability Assessment Subcommittee assess the cumulative reliability impact of multiple new regulations on power industry resource mix, potentially resulting in earlier than anticipated plant retirements, as well as increasing dependence on natural gas with available supply and deliverability infrastructure.

Future Meetings The PC future meetings are scheduled as follows:

• September 16-17, 2014 – Vancouver, BC

• December 9-10, 2014 – Atlanta, GA

• March 3-4, 2015 – West Coast Location TBD

• June 9-10, 2015 – Atlanta, GA

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Agenda Item 18.c Board of Trustees Meeting

August 14, 2014

Critical Infrastructure Protection Committee (CIPC) Report

Action Information

Summary GridEx II Response and Assignments

• In addition to the four GridEx II related assignments given to the Critical InfrastructureProtection Committee (CIPC) task forces and working groups, a new GridEx II Response Joint Task Force is being formed to coordinate the efforts between these groups and provide a centralized reporting structure on progress to the CIPC Executive Committee. The GridEx Working Group will begin preparations for GridEx III later this year.

June CIPC Meeting Highlights • CIPC Technical Workshop – CIPC sponsored a “Security Technology Awareness Workshop”

that focused on physical security and featured state-of-the-art advanced laser detection systems being used by BC Hydro in substations.

• CIPC was honored to have NERC Trustee Ms. Janice Case attend and address the meeting.• Mikhail Falkovich (PSEG) has been appointed the new chair of the Control System Security

Working Group.• The CIPC covered current critical infrastructure protection related issues with active

discussions on topics such as what constitutes a valid third party review under therecently approved CIP-014-1, as well as several issues emerging from the CriticalInfrastructure Protection Version 5 Transition Study.

CIPC Workshops and Webinars The Security Training Working Group developed and delivered several webinars over

the past several months on a variety of cyber and physical security topics such as the “Active Shooter” covering the following: Actions to take when confronted with an active shooter and how to assist law

enforcement officials; Recognize potential workplace violence indicators; Actions to take to prevent and prepare for potential active shooter incidents; and How to manage the consequences of an active shooter incident.

• “Physical Security Management and Programs,” with a panel of industry securitydirectors covering their perspectives. The challenges in maintaining and developinginitiatives for an evolving security program.

• “Physical Security Assessments, Design, and Protection Strategies” was focused on thefollowing topics: Protection planning for strategic operational protocols and response planning, as

well as testing and maintenance.

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Fundamental principles of timely detection, adequate delay, and effective response.• At the September CIPC meeting a cyber security based “Preparation for a Cyber Event”

workshop will be offered in a “Train-the-Trainer” format on incorporating cyber eventawareness training for operation personnel. This will deliver on the High-Impact, Low-Frequency recommendation to augment operator training to raise situational awarenesson indicators of cyber attacks on the Bulk Electric System. NERC staff will be developingand delivering much of the content.

Future Meetings The CIPC future meetings are scheduled as follows:

• September 16-17, 2014 – Vancouver, BC• September 17-18, 2014 – CIPC Executive Committee Planning Meeting• December 9-10, 2014 – Atlanta, GA• December 9, 2014 – Department of Homeland Security Sponsored Energy Sector

Classified Briefing

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Agenda Item 18.e Board of Trustees Meeting

August 14, 2014

Personnel Certification Governance Committee Board of Trustees Update Report

Action Information Background This report highlights the key activities of the Personnel Certification Governance Committee (PCGC) during the second quarter 2014. The PCGC meets four times per year. Task force meetings are held as needed. The second quarter 2014 meeting minutes are under review and pending approval. Draft minutes were posted to the NERC website during second quarter in 2014. Quarterly Metrics There are several metrics tracked by the NERC Personnel Certification Governance Committee that are used to evaluate the efficacy of the SOC program. Following is an overview of key metrics for the second quarter 2014. SOC Exam Development The SOC Exam Development Metric (Figure 1) is used to track the development of SOC exams during the 36 month development cycle. During each development cycle, the Exam Development and Delivery TaskForce works with the Exam Working Group (EWG) and the Psychometric Consulting and Test Delivery vendor to ensure the exams are timely developed and delivered. As the metric below demonstrates, the PCGC is currently on track to deliver the next set of SOC exams by January 2015.

Figure 1: SOC Exam Development Timeline

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System Operator Certification and Continuing Education Database (SOCCED) Availability Metric The SOCCED Availability Metric is used to track the availability of the SOCCED Database. The metric reports the percentage of time both the website and SQL server, used to support the database, are available. As the metric below demonstrates, both the website and SQL server were available 100% during the first quarter of 2014.

Objective Goal Actual Timeframe Website Availability 99% 100% 2nd Quarter 2014

SQL Server Availability

99% 100% 2nd Quarter 2014

SOC Examination Pass Rate The SOC Exam Pass Rate Metric is used to track the pass rate of the SOC exam for the period 2010-2014. Figure 2 compares the number of exams taken to the number of exams passed and Figure 3 compares the current year-to-date breakdown of exams based on the type of System Operator credential. There are four Certified System Operator exams:

• RC: Reliability Coordinator

• BT: Balancing, Interchange, and Transmission

• BI: Balancing and Interchange

• TO: Transmission Operator

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Figure 2: SOC Exam Pass Rate by Exam 2010-2014 The average overall pass rate for all exams for 2010 – 2013 is 68%. In January 2014, the exams were transitioned to a new vendor and no exams were given during the transition period. The number of exams taken during 1st and 2nd quarter are only 64% of the projected number for 2014. As more data points are captured in 2014 and a pass rate is identified, the pass rate is expected to remain in the mid to high 60th percentile. The projection for new exams taken in 2014 is 900 (Figure 6).

Figure 3: Exams Taken by Type – 2nd Quarter 2014

The RC exam continues to dominate as the exam taken more than the other System Operator exams. The RC credential gives the system operator more flexibility in potential jobs. Also, the RC credential is attractive to support functions within the utility industry such Planners and EMS Engineers.

Active Credentials The Active Credentials Metric details the number of active certificates per credential from 2004 through current 1st quarter 2014. Some operators hold multiple credentials.

System Operator Credential Total Reliability Coordinator 4206 Transmission Operator 983 Balancing, Interchange and Transmission Operator 569 Balancing and Interchange Operator 317 Total 6075

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SOC Program Budget Under Section 602.4.10 of the NERC Rules of Procedure, the PCGC shall have control over the matters related to the Personnel Certification and re-Certification Programs, without being subject to approval by any other body. Section 602.4.10 further states that financial matters related to the operation of the program shall be segregated from other NERC activities. The Program Budget Metric tracks the SOC Program budget. While the financials for the SOC Program were not available in time for publication of this report, the 1st Quarter-2014 Funding – Actual vs. Budget (Figure 4) details the revenue received from SOC Exams taken and SOC Certifications renewed as compared to the budget allocated for these items. The number of exams taken is lower than expected for this time period. However, the entire month of January was used to transition from the former test center vendor to a new vendor. The number of credential renewals were higher than projected for 1st quarter of 2014; therefore, the Actual funding is slightly under (6%) the Budgeted funding.

Figure 4: PCGC 2014 1st Quarter Funding The 1st Quarter-2014 Expenses – Actual vs. Budget depicted in Figure 5 details the expenses of operating the program in comparison to the budget from the service providers used to administer the program. In the MCG column which depicts the Actual vs. Budget expenses (Figure 5) for the vendor MCG, the difference includes costs for the SOCCED Upgrade Plan. The Upgrade costs are not directly reflected in the PCGC “fixed costs” budget, rather they are covered under the PCGC Capital Fund.

- 20,000 40,000 60,000 80,000

100,000 120,000 140,000 160,000 180,000

Exams Taken Certificate Renwal Income

2014 -1st Quarter FundingActual vs. Budget

2014 - 1st Qtr Actual 2014 - 1st Qtr Budget

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In the PSI column which depicts the Actual vs. Budget expenses (Figure 5) for the vendor PSI, the difference is the result of a credit and the delay of the Item Writing Workshop to 2nd quarter instead of 1st quarter. In the Telephone/Office/Computer Supplies Costs column which depicts the Actual vs. Budget expenses (Figure 5), the expenses are 82% of the projected budget. In the Total Meeting Expenses column which depicts the Actual vs. Budget expenses (Figure 5), the expenses are 58% of the projected budget. In the Merchant Credit Card Fee column which depicts the Actual vs. Budget expenses (Figure 5), the expenses are 85% of the projected budget.

Figure 5: PCGC 2014 1st Qtr Expenses

Figure 6 and Figure 7 detail the Exams Taken and Renewals (2012-YTD2014) which can affect the Actual vs. Budget for revenue.

(10,000)

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PCGC 2014 1st Qtr ExpensesActual vs. Budget

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Figure 6: Exams Taken Projected vs. Actual

The number of exams taken is currently 31% below projection. As candidates become more familiar with the new test center vendor, the number of exams taken is expected to closer to the projected budget. System operator credential renewals are 58% of the budgeted projection for 2014.

Figure 7: Credential Renewals Projected vs. Actual

Accomplishments

• The EWG and PSI reviewed a total of 207 items from the Item Writing Workshop.

30% of the total items were discarded as duplicates or not applicable.

750

850900893

943

286

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2012 2013 2014

Exams TakenProjected Actual

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79% of the items were approved for pre-testing in current exam developmentcycle.

21% of the items need further review.

• Updated test vendor information is System Operator Certification Program manual.

Future Tasks

• Vetting of newly developed exams by EWG members.

• Development of Job Task Analysis (JTA) for future (beyond 2015) exams. The EWG willwork with the test development vendor, PSI, to determine the questions for the JTAsurvey. The expected roll out date for the JTA is 2nd quarter 2015.

• Standing task forces have been created to deliver on each of the metrics included in thisreport. Each task force meets, outside of the quarterly meetings, as needed to addressissues within their scope.

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Agenda Item 18.f Board of Trustees Meeting

August 14, 2014

Standards Committee Report

Action Information

Background and Summary

Draft 2015-2017 Reliability Standards Development Plan (RSDP) The draft 2015-2017 RSDP was reviewed by the Standards Committee (SC) and the Reliability Issues Steering Committee (particularly on the prioritization of standard projects) prior to posting for stakeholder comment on June 20, 2014.

In summary, the draft 2015-2017 RSDP is another bold step toward transforming the NERC Reliability Standards to “steady-state” (for purposes of this plan, that term means a stable set of clear, concise, high-quality, and technically sound Reliability Standards that are results-based, including retirement of requirements that do little to promote reliability). During 2015, the NERC Reliability Standards will reach steady-state and the number of active projects will dramatically decrease. Following the completion of the work to achieve steady-state, the Reliability Standards will continue to be assessed for quality, content or alignment with other standards through enhanced periodic reviews.

Draft Enhanced Periodic Review Process/Standards Metric for 2016 and Beyond Based on discussions with the Board of Trustees (Board) and NERC Management on a standards metric for 2016 and beyond, a draft enhanced periodic review process was developed by NERC staff and the SC, and posted for stakeholder comment on June 20, 2014. Some keys elements of the draft periodic review includes a cross-functional Review Team consisting of two subgroups: (i) a standing review team, which is appointed annually by the SC for periodic reviews; and (ii) a stakeholder Subject Matter Expert (SME) team, solicited and appointed by the SC for expertise specific to the standards being reviewed. The standing review team will be comprised of the chairs of the SC, Operating Committee and Planning Committee (for non CIP-Standards), and Critical Infrastructure Protection Committee (for CIP cyber security standards), NERC management of Standards and Reliability Assessment and Performance Analysis programs, and NERC SMEs familiar with the standard(s) to be reviewed.

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The Review Team will use the background information and uniform questions, along with any associated worksheets or reference documents, to guide a comprehensive review that results in a recommendation from one of the following three choices and grading:

1. Recommend reaffirming the standard as steady state (Green); or

2. Recommend reaffirming the standard because it is sufficient to protect reliability and meet the reliability objective of the standard; however, there may be future opportunity to improve a non-substantive or insignificant quality and content issue, i.e., continue to monitor (Yellow); or

3. Recommend that the standard needs revision or retirement (Red). The Green, Yellow, Red grading system is proposed to be the basis of a standards metric for 2016 and beyond. If the team recommends a revision to or a retirement of the Reliability Standard (Red), it must also submit a Standard Authorization Request outlining the proposed scope and technical justification for the revision or retirement. At this time, both the draft 2015-2017 RSDP and enhanced periodic review process are due to be approved by the SC in time for these documents to be submitted to the Board at its November 2014 meeting.

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Agenda Item 18.g Board of Trustees Meeting

August 14, 2014

Reliability Issues Steering Committee Report

Action Information

Background The Reliability Issues Steering Committee (RISC) is an advisory committee that reports directly to the NERC Board of Trustees (Board), and 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 reliability risks to the Bulk Electric System (BES). To carry out its responsibility to provide a framework for steering, developing, formalizing and organizing recommendations to help NERC and the industry effectively focus resources on addressing critical issues to improve the overall reliability of the BES, the RISC presented an initial report to the Board in February 2013. The report provided a prioritization of reliability risk areas, categorizing each area as High, Medium, or Low priority. Specific analytical steps were recommended for assessing each risk area, and thoughts regarding the allocation of resources were offered. An update to the report was presented to the Board in August 2013.

The RISC has been working closely with NERC staff to develop an ERO business planning process that incorporates the work products of the RISC into a broad, risk-informed strategy for maintaining reliability around which staff and committees can align their work efforts. The update report to the Board served as valuable input in the development of the 2014-17 ERO Strategic Plan. It also served as important input to the development of corporate metrics for 2014 which provided focused attention on select risk control projects representing feasible and measureable efforts where reliability risks could be addressed. Further, the 2015 ERO Business Plan and Budget includes greater transparency among risk control projects and associated resources needed to address those areas and provides focus on the identified risk areas to manage the greatest risks to reliability. The RISC continues its work this year to better refine the reliability risk areas, ascertain whether other previously unidentified high risks exist, determine areas warranting further risk management efforts, and update the risk prioritization report for the Board.

Additionally, the RISC is hosting the second annual Reliability Leadership Summit in Washington DC at the Marriott at Metro Center on September 11. Panels will focus on the changing resource mix, resource adequacy, resiliency and recovery, and on important next steps for enhancing reliability.

Bob Schaffeld, chair of the RISC, will provide an update on the development of the 2014 RISC Top Priority Recommendations and key next steps for the RISC.

Agenda Item 18.h Board of Trustees Meeting

August 14, 2014

Compliance and Certification Committee

Action Information

Background The Compliance and Certification Committee (CCC) has been continuing work and activities identified in its 2014 Annual Work Plan. Specific activities conducted between May and August 2014 include:

1. Support for Independent Audit of Standards Applicable to NERC (SAN) and theStandards Process Manual

2. Review and resolution of a proposed reliability issue submitted to the NERC ReliabilityIssue Steering Committee (RISC)

3. Support to Risk-based Registration activities;4. Review and feedback to the Reliability Assurance Initiative (RAI) Inherent Risk

Assessment (IRA) Guide5. Transmittal of 2013 Self Certification Forms for Compliance Monitoring and

Enforcement Program (CMEP) and Organization Registration and Certification Procedure(ORCP)

6. Development of the CCC 2015 Annual Work Plan

Status At the time of the posting of these materials, in July 2014, the status of CCC activities is as follows:

1. Independent Audit of SAN and the Standards Process ManualCCC members worked with Ms. Mechelle Ferguson, NERC Director, Internal Audit andCorporate Risk Management, to develop audit criteria. The CCC provided observers foron-site audit activities that began in July 2014. NERC and the CCC anticipate a draft auditreport will be available for review by NERC and CCC Observers in mid-August 2014.

2. RISC proposed reliability issueA proposed reliability issue was submitted to the NERC Reliability Issues SteeringCommittee (RISC) through the Reliability Issues Nomination Form. The proposed issueaddresses the registration and scope of the Planning Coordinator (PC) function, alsoknown as the Planning Authority (PA) function, specifically in the WesternInterconnection. The RISC assigned the review and resolution of this issue to theCompliance and Certification Committee (CCC), among others. The CCC developed adiscussion document that was transmitted in July 2014 to the RISC. The document

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included the questions raised, provided additional background on the issue, and offered recommendations for resolution of the issue. See RISC discussion document attached.

3. Risk-based Registration (RBR) The Chair and Vice-chair of the CCC Organization Registration and Certification Subcommittee (ORCS) are members of the Risk-based Registration Advisory Group. ORCS submitted comments on behalf of the CCC to the first posting of the RBR documents. ORCS is working with NERC to incorporate RBR recommendations and Compliance Registry Criteria changes to Section 500, Appendix 5A to the NERC Rules of Procedure.

4. RAI Inherent Risk Assessment Guide

CCC members are assisting the RAI team responsible for the Inherent Risk Assessment (IRA) Guide by reviewing and providing comments to the draft IRA Guide.

5. Self Certification Forms for Compliance Monitoring and Enforcement Program (CMEP) and Organization Registration and Certification Procedure (ORCP) The CCC developed and transmitted 2013 Self Certification Forms for the Compliance Monitoring and Enforcement Program (CMEP) and the Organization Registration and Certification Program (ORCP) among the CCC. The CCC will present NERC with the Self Certification Forms at the September 2014 CCC meeting.

6. CCC 2015 Annual Work Plan The CCC continues to work with NERC Staff and the Board to evaluate the role of the CCC to support the Strategic Initiatives of the ERO. The CCC plans to deliver the draft 2015 Work Plan to NERC for review in late August 2014. The CCC plans to submit the final Work Plan for approval at the November 2014 Board meeting.

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NERC Reliability Issues Steering Committee Nomination on Planning Coordinator Function Introduction A proposed reliability issue was submitted to the NERC Reliability Issues Steering Committee (RISC) through the Reliability Issues Nomination Form. The proposed issue addresses the registration and scope of the Planning Coordinator function, also known as the Planning Authority (PA) function, specifically in the Western Interconnection. The RISC assigned the review and resolution of this issue to the Compliance and Certification Committee (CCC), among others.

This discussion document presents the questions raised, provides additional background on the issues, and offers some initial recommendations.

The CCC had been working with NERC Compliance Analysis and Certification management to evaluate the issues and understand a potential solutions set prior to initiation of the Risk-Based Registration (RBR) initiative. Since late February the CCC has been working with the Advisory Group assigned to RBR. We submit this response to complete our response to the RISC.

Issues The proposed reliability issue raised the following questions and concerns.

1. Who should register as a Planning Coordinator?

2. What constitutes a Planning Coordinator’s area?

3. What is the distinction between the role of the Planning Coordinator and the roles of theTransmission Planner (TP), Resource Planner (RP), and Balancing Authority (BA)?

4. Can the registration process be modified so that entities must identify their hierarchical relationshipwith other entities?

5. A large number of entities registered as TPs and/or RPs do not know who their Planning Coordinatoris.

6. The Planning Coordinator is the responsible entity for many standard requirements and the fear isthat these activities may not be completed, resulting in a gap in reliability.

The questions and concerns listed above exist for the Eastern Interconnection as well as the Western Interconnection.

Background The purpose of the Planning Coordinator function, as its name suggests, is to coordinate and integrate transmission and resource plans in a given area. Further, Planning Coordinators are to work with other Planning Coordinators in neighboring areas to ensure an integrated plan for the Bulk Electric System (BES). As stated in the NERC Reliability Functional Model Technical Document – Version 5, the Planning Coordinator “helps to facilitate the process whereby adequate resources and transmission facilities are placed into service in a timely manner through the RP, TP, and possibly others through the coordinated planning process.” In Version 3 of the NERC Reliability Functional Model and Technical Document, the PA was renamed the Planning Coordinator. This change was a result of a hierarchy issue with the PA as the title suggested the ability of to force an entity to build additional infrastructure. Many entities had self-registered as the PA, now Planning Coordinator, function rather than designating an entity that did not have statutory authority over them. Further, it is the current understanding that due to the fact the Regional Entities (REs) did not take on the Planning Coordinator role, individual entities registered. However, it appears that transmission coordination is still performed at the RE level through established planning processes. When Version 5 of the NERC Reliability Functional Model was developed, a subgroup reviewed the Planning Reliability, Transmission Planning, and Resource Planning functions and the respective responsible entities, the Planning Coordinator, TP, and RP. The subgroup found four constructs of registration: (1) a Planning Coordinator covering a very large area (e.g., an independent system operator [ISO]/regional transmission organization [RTO]), (2) a Planning Coordinator covering a small area with only one TP and one RP, (3) a group of TPs forming a regional analysis group to fulfill the Planning Reliability function, and (4) a RE forming a regional analysis group to fulfill the Planning Reliability function. Currently, there are 80 entities registered as a Planning Coordinator, ranging from municipals to ISOs/RTOs. A review of the registered Planning Coordinator in the NERC Registry shows that the 80 are dispersed among the Regions in the following way: SPP – 1; TRE – 1; RFC – 3; NPCC – 6; MRO – 6; FRCC – 13; SERC – 21; and WECC – 29. A concern is that a gap in reliability may exist because there are Reliability Standard requirements that apply solely to the Planning Coordinator and in some Regions, there appears to be no clear understanding as to which entities should be registered as the Planning Coordinator. Further, in some Regions, it is almost certain that there are gaps where no Planning Coordinator exists. Due to the inconsistencies in Planning Coordinator registrations in each of the eight Regions, it is unclear if a distinct gap exists or if this is a Regional issue. The Planning Coordinator function is intended to be wide-area in nature and/or cross multiple planning areas. Each Planning Coordinator is responsible for “assessing the longer-term reliability of its Planning Coordinator area.” (NERC Reliability Functional Model – Version 5). The question becomes, how are Planning Coordinator areas determined? There is the possibility that the facilities of a single Transmission Operator (TOP) may fall into different Planning Coordinator areas in some Regions. Therefore, the Planning

RISC Nomination on Planning Coordinator Function 2

Coordinator Area is not confined to a reliability coordination area. The NERC Reliability Functional Model Technical Document – Version 5 states, “[T]he Planning Coordinator area must cover at least one TP Area and one Resource Planner area, or part thereof if either both of these planner areas is larger than the Planning Coordinator area. On the other hand, there is the possibility that a Planning Coordinator area could be nested inside an even larger Planning Coordinator area provided the smaller Planning Coordinator does in fact perform the appropriate system assessments.” The Technical Document goes on to explain the roles of the Planning Coordinator, TP, and RP in these special cases. However, the definition of a Planning Coordinator’s area is not clearly and sufficiently defined to prevent reliability issues. The relationships of the functional entities identified and defined by NERC are hierarchical in nature. For example:

• All facilities should be under the purview of a TP and a RP.

• All RPs and TPs should be affiliated with one or more Planning Coordinator(s). Since some planning requirements only apply to the Planning Coordinator, and since there are likely areas where no Planning Coordinator exists, there would be gaps in the coverage of the Reliability Standards. While there may be geographic proximity between a facility owner and Planning Coordinator, there are cases where no business relationship exists between the facility owner and Planning Coordinator. Further, the current registration process does not require entities to identify their hierarchical relationship with other entities. This could lead to a gap in registration and a potential gap in reliability. The Planning Coordinator issue is taking on an additional dimension as there is movement to convert Reliability Standards that formerly applied to Regional Reliability Organizations (RRO) and make them applicable to the Planning Coordinator. The reality is that the processes defined in the RRO “fill in the blank” standards have generally functioned effectively since 2007 without enforcement. Expectations for coordination efforts between registered Planning Coordinators is not well defined and clarity of that function in combination with other existing regulations may be duplicative, or in the worst case scenario, contradictory. Performance criteria should be clearly defined for all parties involved. Issues Summary

• The Functional Model does not clearly define the role of the Planning Coordinator.

• Some Reliability Standards are ambiguous as to the roles of the planners (e.g. there are standard requirements applicable to both the TP and Planning Coordinator and there are standard requirements applicable to the TP or the Planning Coordinator).

• There are almost certainly gaps in some Regions where there is no hierarchical relationship between facilities, Resource and TPs, and Planning Coordinators.

RISC Nomination on Planning Coordinator Function 3

• There are 80 Planning Coordinators compared to eight Regions. Moving former RRO standards responsibilities to the Planning Coordinator without thought to process adds significant complexity, particularly when the end product is assembling models or information at the Interconnection level.

• There may be limited value in arbitrarily creating standards when Regional Administrative procedures supplemented by a Rules of Procedure (ROP) obligation to provide data may suffice.

• Some end-state planning outcomes occur at the Interconnection level, yet there is no straightforward way to do this if a standard requires 80 different entities to coordinate a single answer.

Proposed Answers to the RISC Nomination Questions and Issues

1. Who should register as a Planning Coordinator?

The entity that performs planning on a wide area and/or multiple TP and RP areas should be registered as the Planning Coordinator. However, there needs to be a business relationship (membership, coordination agreement, etc.) between an entity and its Planning Coordinator. If no Planning Coordinator can be identified and/or no business relationship exists, the TP should be registered as the Planning Coordinator.

2. What constitutes a Planning Coordinator’s area?

The answer to question 1 is the ideal state. Presently it is the area defined by the set of TPs and RPs that are hierarchically affiliated with the Planning Coordinator. If the TPs and RPs have no business arrangement with a Planning Coordinator, there is a geographic registration gap.

3. What is the distinction between the role of the Planning Coordinator and the roles of the TP, RP, and BA?

There is a relationship that exists between the Planning Coordinator, TP, and RP. The BA is a real-time role, not a planning role. As it stands today, the distinction in these roles is most clearly defined by the body of standards applicable to each function. We recommend that further detail be provided in the functional model and that ambiguity in the standards be removed over time. It would be beneficial to define which BA areas are under each RP, TP, and Planning Coordinator area for those Regions where there is uncertainty about responsibility. Additionally, if the outcome of the standard is an Interconnection-level product, we believe audit guidance should allow the task to be accomplished by participation in an Interconnection-wide planning effort.

4. Can the registration process be modified so that entities must identify their hierarchical relationship with other entities?

We agree this should occur for new registrations. Additionally we recommend NERC initiate a mapping effort to confirm relationships of existing registrants.

RISC Nomination on Planning Coordinator Function 4

5. A large number of entities registered as TPs and/or RPs do not know who their Planning Coordinator is.

We believe the mapping effort described above would confirm the assumption that there is no known Planning Coordinator for every given Resource or TP. Similarly, there may be the same issue with facility owners and Planners and Coordinators.

6. The Planning Coordinator is the responsible entity for many Reliability Standard requirements and the fear is that these activities may not be completed, resulting in a gap in reliability. Although this issue may appear to be or is Region-specific, given the Interconnect – there may or could be national impacts.

We agree that this is a possibility and believe that the evaluation that is done as part of this process looks at not only the mapping, but also process efficiency and whether all existing requirements should stay in the standards or if some should be administrative procedures with a backstop for data provision in the ROP. In some cases, a Coordinated Functional Registration has helped define relationships and responsibilities.

Recommendations

1. Map the current entity registrations to:

a. Identify who is performing the Planning Reliability function in an area and which of these entities are registered as a Planning Coordinator. If there is a gap in registration, it must be addressed.

b. Identify which facilities are associated with each TP and RP;

c. Identify which TPs and RPs are associated with which Planning Coordinator;

d. Have TPs and RPs confirm the subordinate relationship.

2. For Interconnection-level outcomes, allow Planning Coordinators to demonstrate compliance via participation in a collaboration group (e.g. a NERC program area, RRO working groups).

3. Review current “fill in the blank” RRO standards and consider doing one of the following:

a. Converting RRO Standards to administrative procedures with an obligation to provide data outlined in the ROP.

b. For those RRO standards where there is a decision to ultimately move the responsibility from the Regions to the Planning Coordinator (such as modeling), the proposed process should be tested in a field-trial before codifying it in a standard to ensure success. The end-state planning standards should represent efficient processes (such as submitting data to a central site, or posting information rather than trading and saving emails to provide evidence of coordination).

4. Modify the NERC Reliability Functional Model and the NERC Reliability Functional Model Technical Document to:

a. Better define what constitutes a Planning Coordinator’s area;

RISC Nomination on Planning Coordinator Function 5

b. Specify what actions require Planning Coordinators to collaborate; and

c. Delineate the roles and responsibilities between the Planning Coordinator, TP, and RP.

5. Modify the registration process and require NERC to identify hierarchical relationships between entities. This change will keep the mapping effort up to date. Further, if a TP or RP does not know who their Planning Coordinator is or does not have a Planning Coordinator, they should be given a reasonable time to make arrangements with a Planning Coordinator. The “orphaned” entity should be given a set period of time to procure/negotiate a relationship with a Planning Coordinator. If the entity does not establish a relationship by the end of the period, the entity shall then be required to file a report with NERC and/or the Region on its status, actions taken, actions planned, etc. If good faith efforts have been made and the entity is still not able to form a relationship with a Planning Coordinator, then NERC or the Region should step in to facilitate a resolution. At this point, NERC could move forward with a forced registration. Forcing entities to register as their own Planning Coordinator without an analysis of the situation will not further the goal of ensuring reliability.

Related potential issues for consideration

• Does the Functional Model address merchant generation or transmission projects whose sponsors are not currently registered? Many of these projects may span several existing TP and Planning Coordinator areas. This question likely should be a question of registry criteria versus the functional model. How does this work together with FERC Order 1000?

• Does NERC force an entity to be a Planning Coordinator for facilities that they do not own?

• How many Planning Coordinators in a Region is too many? Is there a limit or balance? Is coordination of that many entities practical to ensure reliability?

• Is the coverage gap only with the Planning Coordinator? Will the mapping effort confirm this if only focused on the Planning Coordinator function?

• Clarity of expectations and roles must be determined before the decision of modification to registry criteria can be addressed.

• Does the issue relate to cost recovery, additions to infrastructure, and organizational authority? How does this relate to transmission coordination for regional planning processes? Have these issues been settled based on precedent in FERC orders?

• NERC ROP (Section 501.1.4 and 501.1.4.3) state it is the responsibility of the electric reliability organization (ERO) to identify and address registration gaps. Is this a NERC obligation or RE obligation as the organization and registration functions have been delegated to the Regional organizations? Or both?

• Several Regions are doing planning coordination efforts potentially effectively. Is this simply a Regional inconsistency?

RISC Nomination on Planning Coordinator Function 6

• Should this be a bottom-up assessment? For example, in Operations each asset is expected to have a transmission owner (TO), TOP and reliability coordinator. NERC should require the asset owner to accept those assignments or identify through contract, agreement or other binding document identifying the TP or RC for that asset. A similar approach should be taken for planning. Asset owners should be obligated to identify who the TP and Planning Coordinator are to be assigned the registration.

• This arguably makes sense as other FERC action – Order 1000 – requires many inter-Regional planning activities, but again, what scenarios does the Paper envision multiple Planning Coordinators coordinating activities in order to comply on an ‘interconnection level outcome?’

As these issues have been discussed, hopefully it is clear with this communication that more information is necessary to determine appropriate next steps and some items may be addressed by the RBR Advisory Group currently in process. Ultimately the identified issues warrant formulation of action plans to both confirm the reliability gap if one exists and address the issue in a timely manner.

RISC Nomination on Planning Coordinator Function 7

REMGREGIONAL ENTITY MANAGEMENT GROUP

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

DAN SKAAR – MRO TIM GALLAGHER – RFC RON CIESIEL – SPP JIM ROBB – WECC

3701 Arco Corporate Drive, Suite 300, Charlotte, NC 28273, Phone: 704.357.7372, Fax: 704.357.7914

REPORT TO NERC BOARD OF TRUSTEES OF REGIONAL ACTIVITIES IN SUPPORT OF THE ERO ENTERPRISE

July 16, 2014

Since the last report, the Regional Entities have continued to work together and with NERC staff on ERO Enterprise level activities aimed at continued improvement. Below are highlights of some of the efforts:

Progress on the common set of ERO Enterprise performance metrics - These metrics areintended as indicators of the overall effectiveness of the ERO Enterprise in achieving its missionand the goals and objectives outlined in the ERO Enterprise Strategic Plan, 2014-2017. Webelieve that the set of initial thresholds and targets will need refinements as more information isderived from discussions around enterprise performance and that NERC and the RegionalEntities need to work on delivering these refinements earlier in the cycle to assure the relevantmetrics are accurately reflected in annual performance management programs and can betracked and reported in a way that is meaningful to enterprise performance.

Operationalizing the 11 Action Items - Described in Improving Coordinated Operations AcrossThe Electric Reliability Organization (ERO) Enterprise, these will require close collaboration onmethods, practices, and procedures across the Enterprise. We have already moved in thisdirection with the Auditor Handbook, BES Exceptions process, and the consolidated annualCMEP Implementation Plan as examples. However, the challenge is to maintain current levelsof performance on on-going business, while delivering improvements to existing methods,practices, and procedures. This will require clear communications on the decision-makingprocess for changes, desired end-state, why the end state is an improvement over the statusquo, and identification of any potential rule changes. Risk Based Registration is an example ofwhere close collaboration on the implementing methods, practices, and procedure revisionsneeds to occur.

Multiple Regional Registered Entity (MRRE) - Regional staff have developed draft criteria,templates, and procedures for handling Registered Entities across multiple Regional Entities.The draft criteria, templates, and procedures build from the current practices employed byRegional Entities. Regional Entities understand that this has been an important priority forMRRE’s and are working to finalize a rational and balanced approach. Rollout of informationshould occur during the 4th quarter with implementation beginning early 2015.

ERO-wide IT efforts - Three regional executives serve with the NERC CEO and NERC CIO on aTechnology Leadership Team that drives the direction of the ERO Enterprise IT environment.Among the benefits of this approach is more structure and discipline around identifying,selecting and executing ERO-wide enterprise IT projects

Regional Executive Engagement- Regional Entities are leveraging their leadership expertise byassigning executives to sponsor key initiatives (ex. high impact, high priority) which include theReliability Assurance Initiative (RAI), ERO Enterprise IT efforts, CIPv5 Transition, Multi-Regional Registered Entity, and Risk-Based Registration initiatives.

Agenda Item 9.b

OPEN DISTRIBUTION 

July9,2014

North American Transmission Forum, Inc. www.natf.net 

TO: NERCBoardofTrustees(BOT)

FROM: T.J.Galloway,NATFPresidentandCEO

SUBJECT: NATFPeriodicUpdatetotheNERCBOT–August2014

Attachments: 1. SummaryofNATF/NERCCoordinationTopics2. NATFneartermfocusandactivities3. 345kVBreakerStatusDetails(datedJuly7,2014)

TheNorthAmericanTransmissionForum(NATF)missionistopromoteexcellenceinthereliableoperationoftheelectrictransmissionsystem,withthevisiontoseereliabilitycontinuouslyimprove.Assuch,theNATFsharesmanycommonobjectiveswithNERC.Toadvancethesecommonobjectives,andavoidredundantorconflictingefforts,wehaveundertakenperiodic(roughlyquarterly)strategiccoordinationmeetingsbetweentheseniorleadershipofbothorganizations.ThelastsuchmeetingwascompletedJune13,2014.AsummaryofthecoordinationtopicsandNATFstatus/actionsarepresentedasattachment1.

Inadditiontospecificpointsofcoordination,theNATFhasanumberofactivitiesunderwaythatbenefitreliability,security,andresiliencythatarelikelyofinteresttotheNERCBOT.Theseactivitiesandinitiativesaredetailedinattachment2.

Lastly,NERChadrequestedsupportandcoordinationwiththeNATFandotherorganizationsfollowingissuanceoftheOctober2013Advisory(HitachiHVB345kVbreakers).Perthatrequest,theNATFhascoordinatedwithourmembersandotherorganizationstopromoteawarenessoftheissueandtoprovidedetailedstatusofthesubjectbreakers.Thiseffortwasextremelysuccessful,resultinginidentificationofover97%ofthesubjectbreakers.Detailedresultsarecontainedunderattachment3.

cc:

NERC:G.Cauley,NERCPresidentandCEO;M.Moon,SeniorDirectorNATF:R.Carter,K.Berent,C.Sills,LetterLog

Agenda Item 9.c

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North American Transmission Forum, Inc. www.natf.net 

Attachment1‐SummaryNATF/NERCStrategicCoordinationTopics

Topic NATFStatus/Details

345kVBreakerAlertandfollowupactivities

CoordinationwithNATFmembersandvariousothergroupstopromoteawarenessofNERC345kVbreakerAdvisoryandrelatedindustrystatus.Seedetailsunderattachment3.

ProtectionSystemMisoperations

NATFhasalongstandingsystemprotectionpracticesgroup. A2013NATFinitiativewascreatedspecificallytohelpreducemisoperations

byperformingdetailedanalysisofdatafromamembersubset. PrinciplecausesidentifiedmatchedthoseoftheMisOptaskforce.Namely:

1. Relaysettingerrors2. Communicationchannelproblems3. Relayfailures

Severalcontributorswereidentifiedtothesecausesincluding:o ApplicationandsettingofDirectionalComparisonBlockingSchemeso Failureratesofelectro‐mechanicalrelayso Complexity,knowledge/skillsgapsregardingmicro‐processorsettingso Impedancemodeling,qualitychecksandlackofrelaysettingtemplates

NATFhascreatedandisreinforcinga“superiorpractices”documentsforrelaysettingandtesting.Separatepracticedocumentscoveringothermisoperationaspectsarebeingdeveloped.AcomprehensiveNATFworkshopfocusedontheabovetopicsisplannedforcompletionby1Q15.

CriticalInfrastructureProtection(CIP)

Longstanding,active,andwell‐attendedsecuritypracticesgroup. InOctober2013weaddedphysicalsecurityworkgroup. Cyber/Physicalarebothstandardpartsofourpeerreviewscope. ProjectteameffortsproducedacomprehensiveCIPV5implementationguide. ActivemembercoordinationisongoingforCIP‐014implementation. SignificantincreasesplannedregardingNATFsecurityrelatedassistancevisits

ReliabilityAssuranceInitiative(RAI)

Risk/Controlshasbeenatopicofheavyfocusforaboutlasttwoyears. Risk/Controlswereaddedasastandardpeerreviewelementin2013. R/CfocushasevolvedtoabroaderfocusofGovernance,Risk,andControls. NATFevaluating“endorsing”certainaspectsofmembersGRCprograms.

Modeling TwoNATFModelingpracticesweresharedwithNERC(January2014)toprecludetheneedforNERC/TechnicalCommitteestogeneratesimilardocuments.Thesedocumentsare:

o Generatorspecificationsforplanning,Ops,andreal‐timeo Powerflowmodelingreferencedocument

GeomagneticDisturbance(GMD)

NATFadministereddetailedmembersurveystobettergaugememberunderstandingofGMDandactionstowardsmitigation.GenericresultsweresharedwithNERCGMDTFtohelphonefocus.

ConductedtwoGMDworkshops(October2013andFebruary2014). Ongoing,periodiccoordinationwiththeGMDTFtoprecludeduplication.

FacilitiesRatingAlertfollow‐upactivities

WorkingonsuperiorpracticesforongoingROWmaintenance.

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North American Transmission Forum, Inc. www.natf.net 

Attachment2‐OtherNATFFocusandActivities

NATF/EPRICollaborations

o Resiliency:Organizingacomprehensive,“allhazards”approach. SevereWeather PhysicalSecurity, GMDWorkshop(s), EMPWorkshop, ResiliencyCapstone(Oct2014)

o EquipmentPerformanceandMaintenance Sharedinsightsonfailurerates,causes,andcorrectiveactions

o StrategySessions:GridOperationsandPlanningSynergies

NATF/INPOCollaborations

SharedOperatingExperience/LOOPReductions(IER13‐53) Nuclearplantswitchyardself‐assessmenttools Emergencypowerruntime/fuelsupplyreplenishmentOther/General SystematicInteractionwithMembers/EROonReliabilityAssuranceInitiative(RAI)

o SharingofKeyPrinciplesandLessonsLearnedo StrongRisk/ControlsfocusinPeerReviewso PreparingMembersforrisk‐focusedauditso InteractingwithEROStaff(workshops,etc.)

NATF2014PeerReviewProgramFullyIntegrates:

o RiskAssessmentandInternalControlso HumanPerformanceErrorReductiono OperatingExperienceExchangeo PhysicalSecurity

OtherRecentlyCompleted/NearTermActivities

o CompliancePracticesWorkshop(focusonRisk/Controls)o HumanPerformanceSymposiumo SystemOperations–EMSfocus

Implementationofacomprehensivepeerchallengeboardconceptformemberevents

      

                                                   OPEN Distribution July7,2014

 

Mr.MichaelMoonSeniorDirector,NERCAttachments:1.NATFJuly2014UpdateonHVB345kVBreakers,datedJuly7,2014References: 1.NATFLetter,datedDecember31,2013–InitialUpdate345kVBreakers

2.NERCLetter,datedAugust27,2013–“345kVHVBBreakerAdvisory”DearMr.Moon,InresponsetoNERC’srequestforcooperation,theNATFisprovidingthe2ndoftwoHVB345kVbreakerupdatesinadvanceofNERC’sAugust2014BOTmeeting.InadditiontoNATFdata,thisreportincorporatesavailablebreakerinformationfromtheNorthAmericanGeneratorForum(NAGF),AmericanPublicPowerAssociation(APPA),andtheNationalRuralElectricCooperativeAssociation(NRECA)onbehalfoftheirrespectivemembers.Thereportandassociateddevelopmentactivitieshasservedtopromoteheightenedindustryawarenessofthesubjectadvisoryandanaccurateandcomprehensivecharacterizationofcurrentfieldconditions.Todate,theNATFinconjunctionwiththeabovementionedorganizations,hasaccountedforover97%oftherelevantHVBbreakers(972ofthenominally1,000breakers). Ourattachedreportdetailsentities’breakerperformancehistory,pastandcurrentactionstoaddressrelatedmanufacturermaintenanceadvisories,andsomeconsiderationsforfutureactionstominimizereliabilityrisks.WeappreciatethecollaborativeapproachbyNERCwithrespecttothisissue.Welookforwardtofurtherdialogueonhowtoevolvefuturesimilarinteractionstoadvanceourmutualreliabilityobjectives.Sincerely,T.J.GallowayPresidentandCEO,NATFcc: G.Cauley(NERC),P.Metro(NRECA),A.Mosher(APPA),andA.Shriver(NAGF)

NATF:R.Carter,K.Berent,C.Sills  

      

                                                   OPEN Distribution July7,2014

NATF July 2014 Update on Hitachi 345kV HPI Circuit Breakers 

 

Introduction  

In August 2013 NERC issued a Level 1 Alert (Advisory) on Hitachi’s HVB (hereafter HVB) 345kV HPI single‐break SF6 breakers, centering on a 2010 manufacturer maintenance advisory about loose hardware with the potential for breaker (nozzle) failures. Concurrent with issuing their August 2013 Alert (Advisory), NERC contacted the North American Transmission Forum (NATF), North American Generator Forum (NAGF), and certain Trade organizations to promote awareness and request assistance in evaluating and addressing reliability risks associated with this topic. Specifically, NERC requested those groups interact with respective members to ensure awareness of the issues described by the advisories and provide aggregated information back to NERC to help characterize actions taken and the current field conditions.  Shortly after NERC’s request, NATF staff formed a team of relevant member subject matter experts (SMEs) and commenced periodic, formal interactions to share detailed information including breaker operating history, completed inspections and maintenance, lessons learned, and future plans. NATF’s team took a comprehensive approach, reviewing member operational experiences with the subject breakers from multiple perspectives, starting from initial breaker in‐service in 1988.  The NATF team quickly leveraged strong relationships from past and continuing efforts by and between Individual members, groups of members, and the vendor (HVB) to gain a representative picture of historical breaker performance, actions related to the advisory, and appropriate future steps.  The NATF submitted the first of two requested updates to NERC on December 31st, 2013 and included 345kV breaker information from not only NATF members but also from the NAGF members. Beginning in February 2014, the NATF began working closely with the APPA and the NRECA to obtain operational experiences from their members and have included that information in this report.  Background 

HVB began selling the single‐break HPI model SF6 345kV class breakers to customers around 1988.  In the subsequent 25 years, HVB issued five (5) separate HVB advisories related to this type of 345kV breaker.  The NATF advisory team focused on the three most relevant HVB advisories based on member applicability and prospective reliability impact.   

2003 / Missing Loctite.  The first relevant HVB advisory involved a limited number of pre‐insertion resistors with set screws that were missing the required Loctite (prevents loosening of bolt).  Affected customers were notified and HVB has since worked with these members to correct the issue.  

2004 / Hardware Dimensions.  The second HVB advisory involved a batch of contact/nozzle retaining ring hardware with incorrect dimensions (e.g., bolt length and/or washer diameter differed from specifications).  Affected customers were notified and HVB has since worked with them to correct the issues. The condition originated when HVB shifted sourcing of some of its parts to suppliers whose dimensional tolerances were less stringent than original suppliers.  

      

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2010 / Loose Hardware, New Torque Values. The third HVB advisory (addressed in NERC’s 2013 Alert Advisory) was issued in 2010 for loose hardware with the potential for breaker (nozzle) failure. HVB notified and continues to work with affected customers to address the issue. HVB had determined that design safety factors related to hardware torque and nozzle weight needed adjustment. As a result, HVB recommended that breakers made from 1988 to 2007 (with the exception of the 40kA model produced from 1988 to 19921) be replaced with a newly designed nozzle to reduce overall nozzle weight. HVB also recommended that all HPI single‐break SF6 models have their hardware replaced (including replacement of stainless steel bolts with black iron to increase strength) to accommodate increased torque. HVB has been extremely responsive to the NATF team, answering multiple added detailed questions with respect to the breaker design, performance, and appropriate actions.   NATF members that experienced a breaker failure have since inspected and performed HVB‐recommended maintenance on those breakers. Most have completed replacing the original nozzle with the newer design.  A few members who own this breaker type have not experienced any failures or reliability issues. These members are assessing various approaches to optimize the balance between risks cited in the advisory with those related to breaker removal from service / performing field maintenance.  Assessment considerations include specific breaker application and service conditions, optimal integration with maintenance schedules, and evaluation of alternative, non‐intrusive means of breaker inspection (e.g., X‐Ray technology rather than opening the breaker exposing it to risks associated with external/outside elements and potential human error).  

Summary  NATF has worked with its members in an expeditious manner since October 2013 to obtain information on their operating experiences with the breaker. We also began collaborating and working closely with the NAGF in November 2013 and with the APPA and NRECA organizations in February 2014. The NAGF, APPA, and NRECA members polled are in some cases also NATF members. Consequently, the NATF has carefully coordinated with these organizations to ensure the information obtained is not duplicative between any two organizations.  For NERC’s convenience, and for the purpose of including NATF, NAGF, APPA, and NRECA information in a single update for the upcoming August 2014 NERC Board meeting, information received from these organizations to date are being provided in this document.   _________________________ 

1 The HPI breakers rated at 40kA interrupting current manufactured from 1988 to 1992 have a different type nozzle and did not need to be replaced.  

 

 

      

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Operational Experience 

The following information are key highlights of the operational experiences and actions collected from NATF members as of June, 2014. 

1. The NATF has accounted for 972 HPI SF6 breakers (includes NAGF, APPA, and NRECA member information) that are applicable to the three HVB maintenance advisories and the 2013 NERC Level 1 Alert (Advisory). 

2. 725 of the 972 applicable breakers have been inspected and 490 have had recommended maintenance procedures performed (e.g., increase torque on M8 socket head hardware from 8‐10 ft. lbs. to 18 ft. lbs.).  

3. Approximately 433 of the breakers have had their nozzles replaced with the newer design. 4. Of the 972 breakers that are applicable to the three HVB advisories, 35 have failed. Of those, 

only 11 breakers actually failed due to the nozzle and torqueing issues addressed in the 2013 NERC alert advisory and the 2010 HVB maintenance advisory. 

5. Entities have experienced and addressed reliability issues on more than 60 breakers unrelated to the 2010 HVB maintenance advisory. Those issues include: wrong hardware (e.g., bolts to be the wrong type or size), loose and smaller diameter washers, excessive lubrication in nozzle, inadequate Loctite (some breakers had none), operating pin preventing close, and oil low in dashpot. 

6. NATF reviewed both the year the breakers were manufactured and the year they failed and have not determined any trending or found any particular year that stands out as a concern over another. 

7. Some entities have already completed the HVB‐recommended inspections, maintenance and nozzle replacement work. Others have indicated they will complete maintenance and replacement work by the end of 2014, while the remaining entities will optimally incorporate this work into their normal equipment maintenance schedule.  

8. For those entities who have experienced failures, the number of operations at the time of failure varied from as few as 14 operations to more than 1000 indicating there is no certain threshold whereby exceeding it would cause certain failures to occur. 

9. HVB believes inspections, maintenance and replacement of hardware and nozzles as prescribed in the manufacturer maintenance advisories are sufficient to preclude added failures associated with those advisories. 

 

 

 

 

 

      

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The timelines and charts below provide summary information collected from NATF members and HVB representatives: 

 

 

 

 

      

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NUMBER  OWNED INSPECTED MAINTA INED NOZZLE  REPLACED

345KV  BREAKDOWN  INFORMATIONAS  OF  JULY  2014

NATF NAGF APPA NRECA

870

76

197

671

436

409

47

7N/A

47

7N/A

N/A17

Total Breakers Accounted For = 972Breakers Inspected = 725Breakers Maintained = 490Nozzles Replaced = 433

7

      

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972

3511

Total Breakers

Failures relatedto Alert

Total BreakersOwned

Total # of HPIBreakers Failed

# HPI BreakersFailed related to Mfg 2010

345kV HPI  Breakers That Failed

1

TO: NERC Board of Trustees Gerry Cauley, NERC President and CEO

FROM: Allen D. Schriver Chair, North American Generator Forum (NAGF)

DATE: July 21, 2014

SUBJECT: NAGF 2014 Summer Report

------------------------------------------------------------------------------------------------------------

1. On Thursday July 10, 2014, the NAGF participated in a Polar Vortexconference call with Mr. James Merlo and the NERC staff writing the PolarVortex Report. During the call, members of the NAGF and NERC staffdiscussed generator challenges during the severe cold including:

A. Issues with the availability and cost of natural gasB. Gas pipeline pressureC. Air permit issues with excessive NOX emissions due to the severe cold

intake air

2. The NAGF Standards Review Team collaborated with the followingStandards Drafting Teams to provide feedback and gather information todistribute to the NAGF:

A. Project 2007-11 Disturbance Monitoring B. Project 2010-13.3 Phase 3 of Relay Loadability: Stable Swings

3. The NAGF will be supporting a NERC Webinar on BAL-003 and FrequencyResponse to be held on September 12, 2014. The NAGF will assist with thediscussion on Governor Response and resources available to help generatorowners/operators provide frequency response.

Agenda Item 19.d

2

4. The North American Generator Forum (NAGF) is planning its 4th Annual Meeting to be held on October 7th through 9th at NERC’s Atlanta Office. Topics to be discussed at the meeting are: Cyber Security Long Range Outlook Issues Facing Generators – Cold Weather Events, Fuels, Emissions Modeling Gas/Electric Coordination The Future Of Generation Including Essential Reliability Services SPP CIP Version 5 Workshop

The NAGF would like to thank Gerry Cauley and the NERC staff for providing a meeting space and also thank James Merlo for his assistance in planning the meeting.