agenda corporate governance and human resources committee of trustees governance... ·...

Agenda Corporate Governance and Human Resources Committee August 13, 2014 | 7:30 a.m. – 8:30 a.m. Pacific The Westin Bayshore 1601 Bayshore Drive Vancouver BC V6G 2V4 Phone: +1 604-682-3377 Introductions and Chair’s Remarks NERC Antitrust Compliance Guidelines Agenda 1. Minutes* — Approve

a. May 1, 2014

2. Standards Oversight and Technology Committee Mandate* — Approve

3. Savings and Investment Plan Audit* — Review

4. Annual Board Assessment* — Review

a. Status of 2013 Board Focus Items

b. Draft 2014 Evaluation Materials

5. Criteria for Board Composition* — Review

6. Employee Reporting and Document Retention Policies* — Review

7. ERO Enterprise and Corporate Performance Metrics* — Review

8. Staffing and Recruiting Update* — Review

9. Adjournment

*Background materials included.

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

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

• Discussions of a participant’s marketing strategies.

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

• Discussions concerning the exclusion of competitors from markets.

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

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 Corporate Governance and Human Resources Committee May 1, 2014 | 2:00 p.m. - 3:00 p.m. Eastern

Conference Call

Introductions and Chair’s Remarks Jan Schori, Chair, convened a duly noticed open meeting of the Corporate Governance and Human Resources Committee (the “Committee”) of the North American Electric Reliability Corporation (“NERC”) on May 1, 2014 at 2:04 p.m. Eastern, and a quorum was declared present. The agenda is attached as Exhibit A.

Present at the meeting were:

Committee Members: Board of Trustees members: Jan Schori, Chair Gerald W. Cauley, President and Chief Executive Officer Robert G. Clarke David Goulding Frederick W. Gorbet Kenneth G. Peterson Bruce Scherr

NERC Staff: Charles A. Berardesco, Senior Vice President, General Counsel, and Corporate Secretary Damon Epperson, Director of Human Resources Mark Lauby, Senior Vice President and Chief Reliability Officer 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

NERC Antitrust Compliance Guidelines Ms. Schori directed the participants’ attention to the NERC Antitrust Compliance Guidelines included in the agenda, and advised that any questions regarding these guidelines should be directed to Mr. Berardesco.

Minutes Upon motion duly made and seconded, the Committee approved the March 20, 2014 meeting minutes in the form as presented to the Committee at the meeting.

Agenda Item 1.a

Report of Items Covered in Closed Session Ms. Schori reported on the items that were discussed during a closed session meeting of the Committee held on April 23, 2014. She stated that the Committee met to review management compensation and benefits, and to consider a deferred benefit plan for senior executives and other key employees. Ms. Schori indicated that the Committee took no action on the plan and will consider the issue further. Form 990 Mr. Walker provided an overview of NERC’s IRS Form 990. He stated the filing contains updated disclosure information regarding certain personnel based on IRS guidelines. Mr. Walker noted that the Form 990 will be made available to the public once filed with the IRS. Committee members engaged in a discussion of the Form 990. 2014 Corporate Goals Update Mr. Cauley provided an overview of NERC’s performance measured against the corporate goals. He stated that the emphasis continues to be on the risk mitigation projects and that progress is proceeding as predicted in most areas. Mr. Cauley highlighted work so far on cold weather protection and 345kV circuit breaker remediation efforts. He indicated that NERC management is continuing to focus on the system protection and right of way clearance projects. Compliance Committee Mandate Mr. Berardesco summarized the proposed revisions to the Board of Trustees Compliance Committee mandate. He indicated that, once approved, the Compliance Committee would meet in executive session on a quarterly basis and in open and closed sessions, and in executive session as necessary, in conjunction with NERC’s quarterly Board meetings. Committee members engaged in a discussion of the revisions. Upon a motion duly made and seconded, the Committee approved the Compliance Committee mandate in the form as presented to the Committee at the meeting and recommended approval by the Board. Staffing and Recruiting Update Mr. Epperson provided a summary of the staffing and recruiting update, which had been included in the advance Committee materials. Adjournment There being no further business, and upon motion duly made and seconded, the meeting was adjourned at 2:37 p.m. Eastern. Submitted by,

Charles A. Berardesco Corporate Secretary

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Agenda Item 2

Corporate Governance and Human Resources Committee Meeting

August 13, 2014

Revisions to Standards Oversight and Technology Committee Mandate Action Approve Summary The Board of Trustees Standards Oversight and Technology Committee (SOTC) requests revisions to its mandate to formalize the role of the SOTC and its Chair regarding any stakeholder comments on proposed revisions to existing Reliability Standard Audit Worksheets (RSAW) in accordance with the recently approved RSAW Review and Revision Process, along with other ministerial revisions. The CGHRC is responsible for recommending Board approval of the revised SOTC mandate. Additional Information Reliability Standard Audit Worksheet Review and Revision Process

http://www.nerc.com/pa/comp/Reliability%20Standard%20Audits%20Worksheets%20DL/NERC%20Reliability%20Standard%20Audit%20Worksheet%20(RSAW)%20Review%20and%20Revision%20Process.pdf

Standards Oversight and Technology Committee Mandate Approved by Board of Trustees: November 7, 2012

1. The Standards Oversight and Technology Committee (SOTC) shall be composed of not less than three and not more than six members of the Board of Trustees (the Board) of the North American Electric Reliability Corporation (NERC).

2. The members of the SOTC shall be appointed or reappointed by the Board at the regular

Meeting of the Board immediately following each Annual Meeting of the NERC Member Representatives Committee. Each member of the SOTC shall continue to be a member thereof until his/her successor is appointed, unless he/she shall resign or be removed by the Board or shall cease to be a member of the Board. When a vacancy occurs at any time in the membership of the SOTC, it may be filled by the Board of Trustees.

3. The Board of Trustees or, in the event of their failure to do so, the members of the SOTC,

shall appoint a Chair from among their members. The SOTC shall also appoint a Secretary who need not be a Trustee.

4. The place of meeting of the SOTC and the procedures at such meeting shall be the same as

for regular Board meetings of the Corporation, or as determined by the Chair of the SOTC or the members of the SOTC, provided that:

a. A quorum for meetings shall be a majority of the number of members of the SOTC; and

b. The SOTC shall meet as required and at least twice a year.

5. In connection with technology related issues, the SOTC shall: a. As part of the annual business plan and budgeting process, provide the Finance and

Audit Committee and Board with recommendations regarding management proposed resource requirements and funding for (i) the design, procurement, installation, operation and maintain information technology hardware, software and applications, including hardware, software and applications hosted by third parties, supporting NERC’s operations and Program Area initiatives and (ii) investments in or supporting the development of new technology to improve and ensure the reliability of the bulk power system in North America, historic examples of which included funding for the development of transmission system awareness tools, synchrophaser technology, technology used to monitor and manage transmission congestion, data reporting tools providing information regarding generator, transmission system and demand side resource availability and performance.

b. Review with management NERC’s overall computer systems environment, including procedures to keep the systems secure and contingency plans developed to deal with possible computer failures.

c. Respond to the Board’s requests for advice and recommendations on any technology-related issues referred to it by the Board.

6. In connection with the standards development program, the SOTC shall:

a. In collaboration with the NERC Reliability Issues Steering Committee, work with management to identify strategic priorities for reliability standards development and provide feedback to NERC Standards Committee, Board and management on the annual standards development work plan.

b. Monitor overall results of the standards development process, including quality and timeliness of standards development work, and make recommendations to the NERC Standards Committee, Board and management regarding potential improvements.

c. In collaboration with the NERC Reliability Issues Steering Committee and management, assess emerging reliability risks affecting standards and make recommendations as appropriate.

d. Monitor progress in addressing regulatory mandates and directives related to standards.

e. Serve as the Level 2 Appeals Panel as set forth in the NERC Standards Process Manual, Appendix 3A to the NERC Rules of Procedure.

f. Periodically review NERC’s status with the American National Standards Institute. g. Respond to the Board’s requests for advice and recommendations on any standards-

related referred to it by the Board.

7. In connection with NERC’s Reliability Standard Audit Worksheet Revision Process (“RSAW Revision Process”), the SOTC Chair and SOTC shall take the actions contemplated by the RSAW Revision Process, as such Process is amended from time to time.

7.8. The SOTC shall also:

a. Review this mandate on an annual basis and recommend to the Board Corporate Governance and Human Resources Committee any changes to itrevisions that the SOTC considers advisable.

b. Complete a self-assessment annually to determine how effectivelywhether the SOTC is meeting its responsibilities.

c. Perform such other functions as may be delegated from time to time by the Board.

Standards Oversight and Technology Committee Mandate Board of Trustees Approved: November 7, 2012

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Agenda Item 3 Corporate Governance and

Human Resources Committee Meeting August 13, 2014

Review of 2013 NERC Savings and Investment Plan Audit

Action Review Background Due to the number of participants in NERC’s Savings and Investment Plan (“Plan”), NERC is required to have the Plan audited annually. NERC’s outside auditor, Grant Thornton, was retained to perform the audit. A copy of the Plan financial statements, together with a summary report prepared by Grant Thornton, is attached. The findings by Grant Thornton were favorable with respect to the limited scope of their engagement, which was to report on whether the form and content of the information included in the financial statements and any required supplemental schedules, other than that derived from the information certified by the Plan trustee, are presented in compliance with the Department of Labor's Rules and Regulations for Reporting and Disclosure. In addition to the limited scope audit performed by Grant Thornton, Vanguard, the Plan trustee, prepares the Annual Plan-level Financial Reporting Package. That package includes preliminary financial reports, supplementary financial information, and the preliminary Plan tax returns (Form 5500) for filing by NERC. In addition, Vanguard performs annual Plan compliance testing and prepares the Summary Annual Report that is distributed to all participants in the Plan following the filing of the Form 5500. The financial reports, supplementary information, and Form 5500 are also reviewed by NERC management and by NERC’s outside auditors.

Vanguard’s compliance testing includes: (i) a comparison of current year compensation to the prior year eligible compensation with explanations required for significant differences; (ii) submission of the number of hours worked to validate eligibility for the discretionary employer contribution; and (iii) a reconciliation of eligible compensation, pre-entry compensation, and excluded compensation. From this data, Vanguard tests the actual match contributions and discretionary employer contributions received to determine if NERC has administered the Plan properly. If there are variances between the actual contributions received and the calculated required contributions, NERC is required to explain the differences. Upon completion, Vanguard issues the ‘Final Results Letter’ that includes a summary of the Coverage and Non-Discrimination Tests and the Compliance and Plan Limit Tests. Compliance testing for 2013 has not been completed due to the delay in completion of the IRS review of NERC’s 2012 Form 5500. Management delayed submission of 2013 testing data to Vanguard in anticipation that the IRS review would be complete and that if corrections were

1

necessary, the corrections could be made prior to submitting 2013 testing data. Testing data was submitted to Vanguard when it became clear that the IRS review would not be completed prior to the latest deadline for data submission, which was July 15, 2014. Compliance testing will be completed by October 15, 2014.

2

Financial Statements, Supplemental Schedule and

Report of Independent Certified Public Accountants

North American Electric Reliability Corporation Savings and Investment Plan

As of December 31, 2013 and 2012, and for the

Year Ended December 31, 2013

North American Electric Reliability Corporation Savings and Investment Plan

Table of contents

Report of Independent Certified Public Accountants 1

Financial statements:

Statements of net assets available for benefits 3

Statement of changes in net assets available for benefits 4

Notes to financial statements 5

Supplemental schedule:

Schedule of assets (held at end of year) 11

Note: All other schedules required by Section 2520.103-10 of the Department of Labor’s Rules and Regulations for Reporting and Disclosure under the Employee Retirement Income Security Act of 1974 have been omitted because they are not applicable.

Audit Tax Advisory

Grant Thornton LLP 1100 Peachtree Street, NE, Suite 1200 Atlanta, GA 30309-4504 T 404.330.2000 F 404.330.2047 www.GrantThornton.com

Grant Thornton LLP U.S. member firm of Grant Thornton International Ltd

Report of Independent Certified Public Accountants

To the Plan Administrator North American Electric Reliability Corporation Savings and Investment Plan

Report on the financial statements

We were engaged to audit the accompanying financial statements of North American Electric

Reliability Corporation Savings and Investment Plan (the “Plan”), which comprise the

statements of net assets available for benefits as of December 31, 2013 and 2012, and the related

statement of changes in net assets available for benefits for the year ended December 31, 2013,

and the related notes to the financial statements.

Management's responsibility for the financial statements

Management is responsible for the preparation and fair presentation of these financial statements

in accordance with accounting principles generally accepted in the United States of America; this

includes the design, implementation, and maintenance of internal control relevant to the

preparation and fair presentation of financial statements that are free from material misstatement,

whether due to fraud or error.

Auditor’s responsibility

Our responsibility is to express an opinion on these financial statements based on conducting the

audit in accordance with auditing standards generally accepted in the United States of America.

Because of the matter described in the Basis for Disclaimer of Opinion paragraph, however, we

were not able to obtain sufficient appropriate audit evidence to provide a basis for an audit opinion.

Basis for disclaimer of opinion

As permitted by 29 CFR 2520.103-8 of the Department of Labor’s Rules and Regulations for

Reporting and Disclosure under the Employee Retirement Income Security Act of 1974, the Plan

administrator instructed us not to perform, and we did not perform, any auditing procedures with

respect to the certified information described in Note 6, except for comparing such information

with the related information included in the financial statements. We have been informed by the

Plan administrator that the certifying entity meets the requirements of 29 CFR 2520.103-8. The

Plan administrator obtained a certification from the entity as of December 31, 2013 and 2012, and

for the year ended December 31, 2013, stating that the certified information provided to the Plan

administrator is complete and accurate.

Grant Thornton LLP U.S. member firm of Grant Thornton International Ltd

2

Disclaimer of opinion

Because of the significance of the matter described in the Basis for Disclaimer of Opinion

paragraph, we have not been able to obtain sufficient appropriate audit evidence to provide a basis

for an audit opinion. Accordingly, we do not express an opinion on these financial statements.

Supplementary information

The supplemental schedule of assets (held at end of year) is presented for purposes of additional

analysis and is not a required part of the financial statements, but is supplementary information

required by the Department of Labor’s Rules and Regulations for Reporting and Disclosure under

the Employee Retirement Income Security Act of 1974. Because of the significance of the matter

described in the Basis for Disclaimer of Opinion paragraph, we do not express an opinion on the

supplemental schedule.

Report on form and content in compliance with DOL rules and regulations

The form and content of the information included in the financial statements and supplemental

schedule, other than that derived from the certified information described in Note 6, have been

audited by us in accordance with auditing standards generally accepted in the United States of

America and, in our opinion, are presented in compliance with the Department of Labor’s Rules

and Regulations for Reporting and Disclosure under the Employee Retirement Income Security

Act of 1974.

Atlanta, Georgia July 25, 2014

North American Electric Reliability Corporation Savings and Investment Plan 3

Statements of net assets available for benefits

The accompanying notes are an integral part of these financial statements.

December 31 2013 2012

Assets:

Investments, at fair value $ 28,955,803 $ 23,986,976 Participant contributions receivable 57,730 53,711 Employer contributions receivable 1,616,974 1,331,628 Notes receivable from participants 294,799 206,622 Net assets available for benefits $ 30,925,306 $ 25,578,937


Statement of changes in net assets available for benefits

The accompanying notes are an integral part of this financial statement.

For the year ended December 31 2013

Additions to net assets attributed to:

Investment earnings:Net appreciation in fair value of investments 4,204,956$

Interest and dividends 814,027

Total investment earnings 5,018,983

Interest income on notes receivable from participants 11,063

Contributions: Employer 2,108,007

Participant 1,674,151

Rollovers 396,561

Total contributions 4,178,719

Other additions 43

Total additions 9,208,808

Deductions from net assets attributed to:

Benefits paid to participants 3,862,139

Administrative expenses 300

Total deductions 3,862,439

Net increase 5,346,369

Net assets available for benefits, beginning of year 25,578,937

Net assets available for benefits, end of year 30,925,306$


Notes to financial statements

1 Description of Plan

The following description of the North American Electric Reliability Corporation Savings and Investment Plan (the Plan) provides only general information. Participants should refer to the Plan document for a more complete description of the Plan’s provisions.

General

The Plan was established in January 1984 and was restated and amended effective January 1, 2012 to incorporate amendments to change the Discretionary Profit Sharing Contribution formula from a specified fixed 10% to a discretionary formula set by the Board of Trustees, and to change the definition of eligible compensation for the purposes of calculating the Discretionary Profit Sharing Contribution to exclude bonus pay. The Plan is a defined contribution plan covering all eligible employees of North American Electric Reliability Corporation (the "Company" or "Plan Sponsor") and is subject to the provisions of the Employee Retirement Income Security Act of 1974 (ERISA).

Vanguard Fiduciary Trust Company (the "Trustee") holds the funds, executes investment transactions, and makes

distributions, as directed by the plan administrator, to the participants or their beneficiaries. The Vanguard Group

serves as the Plan's recordkeeper, allocating net assets to individual participant accounts.

Eligibility

All employees who are at least 21 years of age are eligible to participate in the Plan on the first day of the quarter after the completion of three months of employment, unless specifically excluded. Excluded employees consist of the following:

Leased employees

An employee whose employment is governed by a collective bargaining agreement with the Company and the agreement does not call for participation in the Plan

Contributions

Participants may make elective salary deferral contributions to the Plan, which are not to exceed statutory limits. Contributions may be made using pre-tax and, potentially, after-tax compensation according to the provisions of the Plan document. Participants who have attained age 50 before the end of the Plan year are eligible to make catch-up contributions. Participants may also contribute amounts representing distributions from other qualified retirement plans. The Company makes matching contributions equal to 75% of each participant's salary deferral contributions limited to 75% of 6% of the participant's eligible compensation. Matching contributions were $581,650 for the year ended December 31, 2013, net of forfeitures. The Company may also make an additional contribution at the sole discretion of the Company’s Board of Trustees to qualified participants, provided that the participant worked 1,000 hours in the Plan year. For the year ended December 31, 2013, the additional discretionary contribution was 8% of eligible compensation or $1,426,357, net of forfeitures, and was a receivable to the Plan as of year-end.


Participant Accounts

Participant accounts may be invested in one or more of the investment funds available under the Plan at the direction of the participant. Each participant’s account is credited with (a) participant’s contributions, (b) an allocation of employer contributions and (c) an allocation of investment earnings, and is charged with (a) withdrawals, (b) an allocation of investment losses and (c) certain administrative expenses. Allocations are based on participant earnings or account balances, as defined. The benefit to which a participant is entitled is the benefit that can be provided from the participant’s vested account.

Vesting

Participants are immediately vested in their rollover contributions, regular contributions, employer matching contributions and any earnings thereon. Vesting in the Company’s discretionary contributions plus earnings thereon is based on years of service.

Forfeitures

The following table presents the activity within the forfeiture account during the Plan year:

Notes Receivable from Participants

Participants may borrow from their accounts up to the lesser of $50,000 or 50% of their vested interest in the Plan. Loans currently bear a minimum interest rate of 1% over the prime interest rate and are repayable by monthly payroll deductions for a period not to exceed five years, except principal residence loan terms may extend to 30 years. The interest rate at December 31, 2013 and 2012 was 4.25%. Interest on loans amounted to $11,063 for the year ended December 31, 2013. Outstanding notes receivable from participants (the "Loan Fund") and related transactions are maintained and managed by the Trustee.

Benefit Payments

Upon termination of service due to death, disability, retirement, or termination, a lump-sum amount equal to the value of the participant’s vested interest in his or her account may be requested. Participants may request an in-service withdrawal if they have an immediate financial hardship, as defined by the Plan.

2 Summary of Significant Accounting Policies

Basis of Accounting

The financial statements of the Plan are prepared under the accrual method of accounting.

Completed Years of Service

Percentage of Employer

Contributions Vested

Less than 2 0%2 25%3 50%4 75%5 100%

For the year ended December 31 2013

Forfeited nonvested accounts as of beginning of year 1,602$ Participant forfeitures during year 297,370 Investment earnings 3 Other receipts 43 Forfeitures used to offset employer contributions (298,921) Forfeited nonvested accounts (available to reduce future employer contributions) as of end of year 97$


Use of Estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires the plan administrator to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes. Actual results could differ from those estimates.

Administrative Expenses

The Company pays the majority of administrative expenses for the Plan. These costs include legal, accounting, and certain administrative fees.

Investment Valuation and Income Recognition

Investments of the Plan are reported at fair value. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. See Note 3 for description of fair value measurements.

Purchases and sales of securities are recorded on a trade-date basis. Interest income is recorded on the accrual basis. Dividends are recorded on the ex-dividend date. Net appreciation (depreciation) in fair value of investments includes the Plan’s gains and losses on investments bought and sold as well as held during the year.

Notes Receivable from Participants

Notes receivable from participants are measured at their unpaid principal balance plus any accrued but unpaid

interest. Delinquent participant loans are reclassified as distributions based upon the terms of the Plan document.

Benefit Payments

Benefits are recorded when paid.

Risks and Uncertainties

Investment securities are exposed to various risks, such as interest rate and market risks. Due to the level of risk associated with certain investments and the level of uncertainty related to changes in the value of investments, it is at least reasonably possible that changes in risk in the near term could materially affect participants’ account balances and the amounts reported in the statements of net assets available for benefits and the statement of changes in net assets available for benefits.

Subsequent Events

The Plan has evaluated subsequent events through July 25, 2014, the date the financial statements were available to be issued.

3 Fair Value Measurements

The FASB Accounting Standards Codification Topic 820 – Fair Value Measurements and Disclosures (ASC 820) establishes a single authoritative definition of fair value, sets out a framework for measuring fair value and requires disclosures about fair value measurement. That framework provides a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).

The three levels of the fair value hierarchy under ASC 820 are described as follows:

Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities that the reporting entity has the ability to access at the measurement date.

Level 2: Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly.


Level 3: Unobservable inputs developed using the Company’s estimates and assumptions which reflect those that market participants would use.

The asset or liability’s fair value measurement level within the fair value hierarchy is based on the lowest level of any input that is significant to the fair value measurement. Valuation techniques used need to maximize the use of observable inputs and minimize the use of unobservable inputs.

Following is a description of the valuation methodologies used for assets measured at fair value. There have been no changes in the methodologies used at December 31, 2013 and 2012.

Mutual funds: valued at the net asset value of shares held by the Plan at year-end.

The valuation methodologies described may produce a fair value calculation that may not be indicative of net realizable value or reflective of future fair values. Furthermore, although the Plan believes its valuation methodologies are appropriate and consistent with other market participants, the use of different methodologies or assumptions to determine the fair value of certain financial instruments could result in a different fair value measurement at the reporting date.

The following table sets forth by level, within the fair value hierarchy, the Plan’s assets as of December 31, 2013:

The following table sets forth by level, within the fair value hierarchy, the Plan’s assets as of December 31, 2012:

Changes in Fair Value Levels

The availability of observable market data is monitored to assess the appropriate classification of financial instruments within the fair value hierarchy. Changes in economic conditions or model-based valuation techniques may require the transfer of financial instruments from one fair value level to another. In such instances, the transfer is reported at the beginning of the reporting period.

Plan management has evaluated the significance of transfers between levels based upon the nature of the financial instrument and size of the transfer relative to total net assets available for benefits. For the year ended December 31, 2013, there were no significant transfers in or out of levels 1, 2 or 3.

December 31, 2013 Level 1 Level 2 Level 3 Total

Mutual Funds:

Money market funds 1,751,050$ -$ -$ 1,751,050$ Domestic balanced 9,270,589 - - 9,270,589 Bond 2,442,771 - - 2,442,771 Large-cap 8,934,626 - - 8,934,626 Mid-cap 1,827,433 - - 1,827,433 Small-cap 2,024,035 - - 2,024,035 Foreign large-cap 2,705,299 - - 2,705,299 Total investments, at fair value 28,955,803$ -$ -$ 28,955,803$

December 31, 2012 Level 1 Level 2 Level 3 Total

Mutual Funds:

Money market funds 1,135,798$ -$ -$ 1,135,798$ Domestic balanced 5,953,082 - - 5,953,082 Bond 4,250,077 - - 4,250,077 Large-cap 8,015,306 - - 8,015,306 Mid-cap 1,133,841 - - 1,133,841 Small-cap 1,138,788 - - 1,138,788 Foreign large-cap 2,360,084 - - 2,360,084 Total investments, at fair value 23,986,976$ -$ -$ 23,986,976$


4 Investments

The following presents investments, at fair value, that represent 5 percent or more of the Plan's net assets at December 31, 2013, and 2012:

During the year ended December 31, 2013, the Plan’s mutual fund investments (including gains and losses on investments bought and sold, as well as held during the year) appreciated in value by $4,204,956.

5 Party-In-Interest Transactions

Certain Plan investments are shares of mutual funds managed by The Vanguard Group or an affiliate. Vanguard Fiduciary Trust Company is the Trustee as defined by the Plan. Therefore, these transactions, as well as notes receivable from participants, qualify as party-in-interest transactions. These transactions are not, however, considered prohibited transactions under Section 408(b) of the ERISA regulations.

6 Information Certified By Trustee

The plan administrator has elected the method of annual reporting compliance permitted by 29 CFR 2520.103-8 of the Department of Labor's (“DOL”) Rules and Regulations for Reporting and Disclosure under ERISA. Accordingly, Vanguard Fiduciary Trust Company, the Trustee of the Plan, has certified that the following data included in the accompanying financial statements and supplemental schedule is complete and accurate:

Investments and notes receivable from participants, as shown in the statements of net assets available for

benefits as of December 31, 2013 and 2012.

Total investment earnings and interest income on notes receivable from participants, as shown in the

statement of changes in net assets available for benefits for the year ended December 31, 2013.

Schedule H, line 4i – schedule of assets (held at end of year) as of December 31, 2013.

December 31 2013 2012

Mutual funds:

Vanguard 500 Index Inv 2,963,080$ 2,245,839$ Vanguard Prime Money Mkt 1,751,050 1,135,798 Vanguard Tgt Retirement 2025 2,244,560 1,635,582 Vanguard Tgt Retirement 2035 2,071,582 1,426,887 Vanguard Total Bd Mkt Indx Inv 2,185,822 3,146,644 Vanguard Total Int'l Stock Idx ** 1,214,803 Vanguard Wellington Inv ** 1,474,260 Vanguard Windsor II Fund Inv ** 1,318,117 Vanguard Windsor Inv 1,801,391 1,951,552 Individually less than 5% of net assets 15,938,318 8,437,494 Total Investments 28,955,803$ 23,986,976$

** Amount is less than 5% as of December 31, 2013


7 Federal Income Tax Status

The Plan is a non-standardized prototype plan sponsored by the Trustee or by an affiliate of the Trustee that has been adopted by the Company. The prototype plan obtained its latest opinion letter on March 31, 2008, in which the Internal Revenue Service (IRS) stated that the prototype plan, as then designed, was in compliance with the applicable requirements of the Internal Revenue Code ("IRC"). The Plan has not requested its own determination letter from the IRS. The Plan administrator believes that the Plan is currently designed and being operated in compliance with the applicable requirements of the IRC. The Plan administrator believes that the Plan was qualified and the related trust was tax exempt as of the financial statement date.

Accounting principles generally accepted in the United States of America require Plan management to evaluate tax positions taken by the Plan and recognize a tax liability if the Plan has taken an uncertain position that more likely than not would not be sustained upon examination by the IRS. The Plan administrator has analyzed the tax positions taken by the Plan, and has concluded that as of December 31, 2013, there are no uncertain positions taken or expected to be taken that would require recognition of a liability or disclosure in the financial statements. The Plan is subject to routine audits by taxing jurisdictions. GT notes that the Plan is currently undergoing an IRS examination for Plan Year 2012.

During 2013, Plan management identified operational errors in contributions based on certain types of participant compensation as defined by the Plan. The Company is in the process of correcting these operational errors in accordance with applicable IRS guidelines in order to maintain the Plan’s continued qualified status. Plan management has estimated the impact of the correction, which is recorded as an employer contribution receivable of $100,000 in the statement of net assets available for benefits as of December 31, 2013.

8 Plan Termination

Although it has not expressed any intent to do so, the Company has the right under the Plan to discontinue its contributions at any time and to terminate the Plan subject to the provisions of ERISA. In the event of Plan termination, participants would become 100% vested in Company contributions.

North American Electric Reliability Corporation Savings and Investment Plan 11 Form 5500, Schedule H, Part IV – Line 4i EIN: 20-4821888 Plan Number: 002

Schedule of assets (held at end of year)

(a) (b) (c) (e)

Identity of Issuer, Borrower, Lessor or Similar

Party Current value

* CRM Sm/Mid Cap Value-Inv Registered Investment Company 161,660$ * Heartland Value Plus Registered Investment Company 216,785 * Marshall Mid Cap Value Cl Y Registered Investment Company 40,573 * Vanguard Mid-Cap Grw Idx Inv Registered Investment Company 196,526 * NB Genesis Fund Registered Investment Company 206,799 * Vanguard 500 Index Inv Registered Investment Company 2,963,080 * Vanguard Explorer Fund Inv Registered Investment Company 1,210,799 * Vanguard Extend Mkt Index Inv Registered Investment Company 863,603 * Vanguard GNMA Investor Shares Registered Investment Company 256,949 * Vanguard Int'l Growth Fund Inv Registered Investment Company 1,357,066 * Vanguard Mid-Cap Index Fd Inv Registered Investment Company 77,837 * Vanguard Morgan Growth Inv Registered Investment Company 1,205,765 * Vanguard Prime Money Mkt Registered Investment Company 1,751,050 * Vanguard Selected Value Registered Investment Company 280,435 * Vanguard Sm-Cap Growth Index Registered Investment Company 271,843 * Vanguard Sm-Cap Index Inv Registered Investment Company 233,432 * Vanguard Sm-Cap Value Index Registered Investment Company 91,176 * Vanguard Target Retirement Inc Registered Investment Company 761,548 * Vanguard Tgt Retirement 2010 Registered Investment Company 137,695 * Vanguard Tgt Retirement 2015 Registered Investment Company 1,323,497 * Vanguard Tgt Retirement 2020 Registered Investment Company 78,150 * Vanguard Tgt Retirement 2025 Registered Investment Company 2,244,560 * Vanguard Tgt Retirement 2030 Registered Investment Company 802,649 * Vanguard Tgt Retirement 2035 Registered Investment Company 2,071,582 * Vanguard Tgt Retirement 2040 Registered Investment Company 293,713 * Vanguard Tgt Retirement 2045 Registered Investment Company 1,299,564 * Vanguard Tgt Retirement 2050 Registered Investment Company 186,305 * Vanguard Tgt Retirement 2055 Registered Investment Company 71,326 * Vanguard Total Bd Mkt Indx Inv Registered Investment Company 2,185,822 * Vanguard Total Int'l Stock Idx Registered Investment Company 1,348,233 * Vanguard Wellington Inv Registered Investment Company 1,497,033 * Vanguard Windsor II Fund Inv Registered Investment Company 1,467,357 * Vanguard Windsor Inv Registered Investment Company 1,801,391 * Loan Fund 4.25% - 4.25% 294,799

Total assets held at end of year $ 29,250,602

December 31, 2013

Description of Investment

*Represents a party-in-interest.



Annual Board Assessment

Action Review Summary In connection with the 2014 Board assessment, NERC management has prepared a draft of the proposed surveys, a copy of which is included in the materials for Committee review. NERC management is not recommending any revisions to the assessments from 2013. Management recommends that the Committee provide any comments, with the goal of approving the final survey at the November 2014 Committee meeting which will allow for a prompt release of the assessment after the November meeting.

Board of Trustees/Member Representatives Committee Proposed 2014 Survey Questions

Levels of Effectiveness 1 = Below Expectations (“performance area with opportunity for improvement”) 2 = Meets Expectations (“meets the required standard of performance”) 3 = Above Expectations (“exceeds the required standard of performance”)

The survey will include a prompt requiring comment for any item rated “No” in response to a “Yes/No” item or a “Below Expectations” in response to the 3-point levels of effectiveness scale. Optional comments may be provided for items rated “Yes” in response to a “Yes/No” item or “Meets Expectations” or “Above Expectations” on the 3-point levels of effectiveness scale.

2014 BOT & MRC Proposed Questions BOT MRC Strategy The Board has knowledge of and familiarity with NERC’s corporate values, mission, vision, strategic plan, and business plan and reflects this understanding in evaluating key issues. X X The Board effectively works with management to establish NERC’s strategic and business plans. X X Board members stay abreast of issues and trends affecting NERC and the industry and use this information to assess and guide NERC performance. X X The Board effectively sets priorities through the strategic plan. X X The Board takes appropriate account of the international charter of the North American bulk power system. X X Observation and Opportunities for Improvement: X X Oversight The Board is sufficiently involved in the ERO (NERC and the Regions) annual business planning and budgeting process. X X The Board sufficiently ensures that the ERO (NERC and the Regions) business plan and budget appropriately balance the cost concerns of stakeholders with the need to meet the ERO’s responsibilities. X X

The Board is sufficiently involved in monitoring the corporation’s compliance with regulatory requirements and directives.

X X Observation and Opportunities for Improvement: X X Stakeholder Relations The Board works and communicates effectively with stakeholders in the prioritization of NERC work efforts, striking an appropriate balance between the expectations of regulators and expectations and capabilities of stakeholders. X X The Board establishes a positive and cooperative dialogue with U.S. federal and state regulators. X X The Board establishes a positive and cooperative dialogue with Canadian federal and provincial regulators. X X

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Agenda Item 4.b

Observation and Opportunities for Improvement: X X Composition/Structure The Board's size is appropriate and effective. X X Board members reflect broad diversity of competency strengths and professional experience. X X The Board's Committees have suitable mandates and membership. X Observation and Opportunities for Improvement: X X Board Functioning The Board has established procedures that ensure Board members receive written meeting notices, agendas and appropriate background material in time to prepare in advance of meetings, are presented meaningful information during meetings, and receive timely and accurate minutes. X

The number of Committee meetings is appropriate. X X The Chair of the Board effectively oversees and facilitates Board activities and direction. X X The Chair manages meetings efficiently to allow for sufficient discussion and constructive input on important issues and provides appropriate allocation of time to agenda items. X X Board goals, expectations, and concerns are effectively communicated with the CEO and other senior management through sufficient, meaningful dialog during Board meetings or otherwise. X

Board members participate as equals and communicate openly. X X The Board functions and makes decisions independently of management, as appropriate. X X Observation and Opportunities for Improvement: X X NERC Management The Board has appropriate access to management. X The Board avoids excessive involvement in detail and day-to-day management. X

The Board is sufficiently involved in ensuring competent and well-motivated senior management and ensuring that proper development and succession plans are in place for CEO and other senior management. X Observation and Opportunities for Improvement: X X Other Factors I feel I am personally making a meaningful contribution to the corporation by my attendance and participation at the Board, committee meetings, and other activities. X

I feel my peers are personally making a meaningful contribution to the corporation by their attendance and participation at the Board, committee meetings, and other activities. X Observation and Opportunities for Improvement: X X

2

Finance and Audit Committee Proposed 2014 Self-Assessment Questions

Corporation Annual Financial Statement Review

The Committee effectively ensures that management maintains the quality, credibility, and the objectivity of the corporation's financial reports.

The Committee effectively reviews with the external auditor any significant emerging accounting and reporting issues and their potential impact on the corporation's financial statements.

The Committee effectively reviews and approves changes in accounting policies after considering the appropriateness of such selections and changes. The Committee effectively reviews with management, the external auditor and legal counsel the corporation’s procedures to ensure compliance with applicable laws and regulations. The Committee effectively reviews with management, the external auditor and legal counsel any significant litigation, claim, or other contingency, including tax assessments, that would have a material effect upon the financial position or operating results of the corporation, together with related financial disclosures. The Committee effectively determines, based on its review and discussion thereof with management and the external auditor, whether to recommend the acceptance by the Board of the audited financial statements.

Monitoring Relationship with External Auditor

The Committee effectively evaluates the performance of the external auditor and the auditor’s estimated annual audit fees and reappoints, or, if necessary, takes steps to replace the external auditor. The Committee effectively meets privately with the external auditor to ascertain the level of access and cooperation received from management during the course of the audit. Adequacy and Integrity of Internal Accounting Controls

Effective follow-up is performed by management with regard to any recommendations from the external auditor or the committee relating to internal accounting controls. Annual Business Plan and Budget The Committee effectively reviews the annual ERO (NERC and the Regional Entities) Business Plan and Budget preparation and approval, including associated assessments, as well as any other special budget and assessments of the corporation or a Regional Entity, and such other matters as are deemed necessary. The Committee effectively reviews and reports to the Board quarterly on actual unaudited quarterly results versus approved budgets of NERC and the Regional Entities.

Other Responsibilities The Committee effectively reviews the policies for approval of senior management expenses, including those of the chief executive officer. The Committee effectively reviews the financial aspects of the corporation's Form 990 prior to it being filed with the Internal Revenue Service. The Committee effectively reviews the investment policy governing the investment of funds held by the corporation.

3

Committee Functioning

The number of Committee meetings is appropriate.

The size of the Committee is appropriate.

The information provided in support of the agenda is appropriate and available in a timely manner in advance of Committee meetings. The Committee Chair manages meetings efficiently to allow for open, equal, and sufficient discussion and constructive input on important issues.

Open-ended Question

Observation and Opportunities for Improvement

4

Corporate Governance and Human Resources Proposed 2014 Self-Assessment Questions Committee Responsibilities The Committee effectively develops criteria governing overall composition of the Board for recommendation to the Board. The Committee effectively monitors the members of the Board to ensure, per bylaws, their independence and qualifications are maintained and have no conflicts of interest. The Committee effectively develops recommendations for the Board regarding the Trustee Succession Policy. The Committee ensures the meaningfulness and timeliness of support, information, and documentation from management to the Board. The Committee effectively coordinates an annual effectiveness evaluation of the Board, its structure, and processes.

The Committee effectively annually reviews the compensation plan for members of the Board.

The Committee effectively approves the metrics related to the corporation’s annual performance goals for use in calculating incentive compensation. The Committee effectively reviews the Trustee Code of Conduct, recommending changes to the Board as appropriate. The Committee effectively reviews the structure and mandates of the Committees, recommending changes to the Board as appropriate. The Committee effectively completes annual self-assessment, reviews the self-assessments of the other Board committees and reports the results thereof to the Board. The Committee effectively reviews the CEO’s performance, recommends to the Board the compensation, including salary and bonus, and provides feedback, as appropriate. The Committee effectively approves the hiring or promotion of officers. The Committee effectively reviews and approves the remuneration of all officers, including salaries and bonuses as recommended by the CEO. The Committee effectively reviews and approves a general salary structure for the officers and management of the corporation. The Committee effectively reviews overall staffing levels and management’s plans and activities for the development and improvement of key personnel. The Committee effectively reviews with the CEO essential elements of senior management succession planning.

The Committee effectively reviews and approves, as appropriate, an employee manual.

The Committee effectively recommends to the Board the appointment of Board members to each of the committees. New Board member orientation and education is comprehensive and meaningful. Plan Oversight The Committee effectively reviews significant benefit plans (including the corporation’s retirement plans) and make recommendations and provide feedback to the Board. The Committee effectively provides oversight of the corporation’s Savings and Investment Plan through actions it deems prudent in connection with its oversight responsibilities and otherwise consistent with applicable law. The Committee effectively reviews the corporate governance aspects of the corporation’s Form

5

990 prior to it being filed with the Internal Revenue Service.

Committee Functioning



The information provided in support of the agenda is appropriate and available in a timely manner in advance of Committee meetings. The Committee Chair manages meetings efficiently to allow for open, equal, and sufficient discussion and constructive input on important issues. Open-ended Question Observation and Opportunities for Improvement

6

Standards Oversight and Technology Committee Proposed 2014 Self-Assessment Questions Committee Standards Oversight Responsibilities The Committee effectively evaluates the strategic direction of NERC’s standards development program. The Committee effectively identifies strategic priorities for reliability standards development. The Committee effectively monitors overall results, including quality and timeliness of standards development work. The Committee effectively assesses emerging reliability risks affecting standards, making recommendations as appropriate. The Committee effectively monitors progress in addressing regulatory mandates and directives related to standards. The Committee effectively serves as the Level 2 Appeals Panel as set forth in the NERC Standard Processes Manual, Appendix 3A to the NERC Rules of Procedure. The Committee effectively periodically reviews NERC’s status with the American National Standards Institute. The Committee effectively reviews and provides oversight regarding the corporation's long-term technology strategy and budget. The Committee effectively provides recommendations for action regarding the strategic direction of NERC’s standards development program to the Board and NERC Standards Committee. The Committee effectively provides advice and recommendations to the Board on any standards-related issues referred to it by the Board. The Committee effectively makes recommendations to NERC Standards Committee and Board regarding needed improvements in the quality and timeliness of standards development work. Committee Technology Oversight Responsibilities The Committee effectively reviews annually the resource requirements and funding for IT-related investments and costs under the company’s business plan and budget and provides recommendations to the Finance and Audit Committee and Board. The Committee effectively provides the Board with recommendations for action on proposed NERC projects that employ new technology. The Committee effectively reviews with management company computer systems environment, security procedures, and contingency plans. The Committee effectively provides advice and recommendations to the Board on any technology-related issues referred to it by the Board. Committee Functioning

The number of Committee meetings is appropriate. The size of the Committee is appropriate. The information provided in support of the agenda is appropriate and available in a timely manner in advance of Committee meetings. The Committee Chair manages meetings efficiently to allow for open, equal, and sufficient discussion and constructive input on important issues. Open-ended Question Observation and Opportunities for Improvement

7

Nominating Committee Proposed 2014 Self-Assessment Questions Committee Responsibilities The Committee effectively communicates to all stakeholders clear process and steps in Board candidate selection. The Committee effectively communicates Board and MRC best practice guidelines to field candidate slate. The Committee effectively develops clear, relevant and complete candidate specifications. The Committee effectively utilizes vetting process to select qualified search consultant. The Committee effectively provides opportunity for full and fair evaluation of incumbents and candidates. The Committee effectively applies Board composition provisions of the bylaws in making its recommendations. The Committee effectively applies the Board’s Conflict of Interest Policy in making its recommendations. The Committee effectively applies the Trustee Succession Policy in making its recommendations. The director/trustee nomination process is effective. Committee Functioning




8

Compliance Committee Proposed 2014 Self-Assessment Questions

Committee Responsibilities The Committee effectively reviews violations, regardless of their status, of the most recent month known to the Compliance Monitoring and Enforcement Program staff. The Committee effectively reviews the progress of individual operating entities in mitigating confirmed violations. The Committee effectively reviews the progress of regional entities in processing all allegations of violations of NERC reliability standards to ensure accordance with the NERC Rules of Procedure. The Committee effectively hears and addresses appeals of compliance violations, penalties, or sanctions. The Committee effectively hears and addresses appeals of findings resulting from audits of the Regional Entity implementation of the NERC CMEP heard by the NERC Compliance and Certification Committee. The Committee effectively hears and addresses challenges by candidates for inclusion on the compliance registry. The Committee effectively reviews and oversees the filing of Notice of Penalty or Sanction, Settlement Agreement, and Remedial Action Directive documents with FERC and other governmental authorities or remand to the appropriate regional entity. The Committee effectively advises the Board on the progress of individual operating entities in mitigating confirmed violations. The Committee, as necessary, effectively considers such actions that may further the purposes of the NERC Compliance Monitoring and Enforcement and Organization Registration and Certification Programs. Committee Functioning




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Agenda Item 5

Corporate Governance and Human Resources Committee Meeting

August 13, 2014

Criteria for Board Composition Action Review Summary Pursuant to Article III of the NERC Bylaws, the Board has the authority to review the criteria for Board composition, and the CGHRC undertakes an annual review of the various requirements. NERC legal has reviewed the criteria for Board composition and does not recommend any changes at this time.

Bylaws of the North American Electric Reliability Corporation 1 Effective October 14, 2009

ARTICLE III

Board of Trustees Section 1 — Board of Trustees — The business and affairs of the Corporation shall be managed by a Board of Trustees. The board shall consist of eleven members (the “trustees”), unless it is increased to twelve members pursuant to Section 1a of this Article III. All but one of the trustees shall be “independent” trustees nominated and elected in accordance with the requirements and procedures specified in Sections 2, 3, 4, 5, and 6 of this Article III (the “independent trustees”). The remaining trustee shall be the person elected by the board, in accordance with Article VI, Section 1, of these Bylaws, to serve as president of the Corporation (the “management trustee”). Each trustee, including the management trustee, shall have one (1) vote on any matter brought before the board for a vote. All trustees are expected to serve the public interest and to represent the reliability concerns of the entire North American bulk power system. Section 1a — Increase in number of trustees — The board shall have the authority, by resolution, to increase the number of trustees from eleven to twelve, of which eleven trustees shall be independent trustees, with such increase to be effective as of the date of an annual election of independent trustees pursuant to Section 6 of this Article III. In order for the board to exercise this authority, the resolution increasing the number of trustees from eleven to twelve must be adopted by the board no later than December 1 immediately preceding the date of the annual election of independent trustees at which the increase is to be effective, and shall state a determination by the board that the increase is in the best interests of the Corporation and its Members. If the board adopts a resolution increasing the number of trustees from eleven to twelve, the nominating committee appointed pursuant to Section 5 of this Article III shall nominate a candidate to stand for election to the newly-created independent trustee position at the next annual election of independent trustees, along with candidates for the positions of independent trustees whose terms are expiring as of such election. T he newly-created independent trustee position shall be filled by election in accordance with Section 6 of this Article III. Upon election of a trustee to the newly-created independent trustee position, the board shall thereafter consist of twelve trustees, of whom eleven shall be independent trustees and one shall be the management trustee provided for in Section 1 of this Article III, unless the board decreases the number of trustees in accordance with Section 1b of this Article III. Section 1b — Decrease in number of trustees — If the board has previously increased the number of trustees under Section 1a of this Section III, the board shall have the authority, by resolution, to decrease the number of trustees from twelve to eleven, of which ten trustees shall be independent trustees, with such decrease to be effective as of the date of an annual election of independent trustees pursuant to Section 6 of this Article III. T he decrease in number of trustees shall be effected by eliminating one of the independent trustee positions whose term is expiring as of the date of such annual election of trustees, in which case no election shall be held to replace such trustee. In order for the board to exercise this authority, the resolution decreasing the number of trustees from twelve to eleven must be adopted by the board no l ater than September 1 i mmediately preceding the date of the annual election of


independent trustees at which the decrease is to be effective; shall identify the independent trustee position expiring at the date of such annual election that shall be eliminated; and shall state a determination by the board that the decrease is in the best interests of the Corporation and its Members. Section 2 — Composition of Board Based on Country Participation

a. The board shall consist of a number of trustees from the United States and from Canada. The number of trustees from Canada shall not be less than the percentage of the NEL of Canada to the total NEL of the United States and Canada, times eleven (or times twelve if the number of trustees has been increased to twelve pursuant to Section 1a of this Article III), rounded up to the nearest whole number. For purposes of this board composition requirement, the management trustee shall be counted as a trustee from Canada if he or she is a Canadian citizen.

b. When the Corporation receives recognition by appropriate regulatory authorities in

Mexico as its electric reliability organization, the number of independent trustees will be increased by at least one, and the board composition requirement in subsection (a) will be expanded to include Mexico.

Section 3 — Independent Board Members — The independent trustees shall be elected, shall have the qualifications specified, and shall serve in the manner provided in this section.

a. An independent trustee is a person (i) who is not an officer or employee of the Corporation, a member or an officer, director, or employee of a member of the Corporation, or an officer, director, or employee of any entity that would reasonably be perceived as having a direct financial interest in the outcome of board decisions and (ii) who does not have any other relationship that would interfere with the exercise of independent judgment in carrying out the responsibilities of a trustee. Provided, that upon initial election to the board, an independent trustee shall within ten (10) days terminate any employee, officer, or director position that conflicts with this subparagraph and shall within sixty (60) days terminate any financial interest or other relationship that conflicts with this subparagraph, and prior to such termination shall not participate in discussion of or voting on any matter involving the entity of which the trustee is an employee, officer or director or in which the trustee has the financial interest or other relationship giving rise to the conflict.

b. Independent trustees shall be elected to terms expiring at the annual election of

independent trustees occurring in the third year after their election. As of the original effective date of these Bylaws, the independent trustees of the Corporation and the date the term of each independent trustee expires were as follows:

Name Term Expires

John Q. Anderson 2007 Paul F. Barber 2008


Thomas W. Berry 2007 Richard Drouin 2009 James M. Goodrich 2008 Donald P. Hodel 2008 Sharon L. Nelson 2007 Bruce A. Scherr 2009 Kenneth G. Peterson 2009 Fred Gorbet 2008

c. Independent trustees shall be nominated and elected pursuant to the nomination and

election procedures specified in Sections 4, 5, and 6 of this Article III. Section 4 — Vacancies on the Board —Should any vacancy on the board arise from the death, resignation, retirement, disqualification, or removal from office of any independent trustee, or from any other cause, such vacancy shall be filled by electing a trustee at the next annual election of trustees to fill the remainder, if any, of the term of the departed trustee. Provided, that the board by resolution may in its discretion call a special election to fill any such vacancy for the remainder, if any, of the term of the departed trustee. Any vacancy shall be filled so as to maintain the composition of the board in accordance with country participation pursuant to Section 2 of this Article III. Section 5 — Nominating Committee — The board shall appoint, on an annual basis, or more frequently if needed in the event of a special election pursuant to Article III, Section 4, a nominating committee (the “nominating committee”) to recommend candidates (i) to succeed the independent trustees whose terms expire during the current year and (ii) to serve the remainder of the term of any independent trustee who ceased to serve as a trustee subsequent to the last annual election of trustees. The nominating committee shall consist of those independent trustees whose terms do not expire during the current year and such number of other persons with such qualifications as the board shall specify, provided, that the nominating committee shall be chaired by an independent trustee whose term does not expire during the current year and shall include at least three persons who are also members of the Member Representatives Committee, and provided further, that the nominating committee formed for the purpose of recommending candidates to stand for election as trustees at the election to be held on or about February 1, 2007, pursuant to Article III, Section 6 shall not include any members of the Member Representatives Committee but shall include three persons each of whom at the time of his or her appointment by the chair of the Stakeholders Committee of the North American Electric Reliability Council to the nominating committee shall be a member of that Stakeholders Committee. The board shall establish, by resolution, the procedures to be followed by the nominating committee in identifying and recommending candidates to serve as independent trustees; provided, however, that such procedures shall include a means of permitting members of the Corporation to recommend to the nominating committee candidates for consideration as nominees for independent trustees. The nominating committee shall nominate candidates for election to the board consistent with the requirements of Article III, Section 2 for board composition by country participation, and shall also endeavor to nominate candidates for election to the board consistent with the objectives that the board as an entirety reflects expertise in the areas of technical electric


operations and reliability, legal, market, financial, and regulatory matters, and familiarity with regional system operation issues; and reflects geographic diversity. Section 6 — Election of Independent Trustees — The Member Representatives Committee of the Corporation shall elect the persons (i) to succeed those independent trustees whose terms expire each year and (ii) to serve the remainder of the term of any independent trustee who ceased to serve as a trustee subsequent to the last annual election of independent trustees. The annual election of independent trustees shall be scheduled to be conducted on or about February 1 of each year or as soon thereafter as is reasonably possible. Any special election pursuant to Article III, Section 2 shall be held as expeditiously as possible consistent with the time required for a nominating committee to be appointed and to nominate one or more candidates for the special election. All independent trustees shall be elected from nominees proposed by the nominating committee. A nominee shall be elected an independent trustee if such person receives the affirmative vote of two-thirds of the members of the Member Representatives Committee. Each nominee receiving the necessary two-thirds vote of the Member Representatives Committee shall take office immediately upon election. In the event that the voting fails to elect a nominee to fill any of the positions of independent trustee to be filled in an annual election of independent trustees, the nominating committee shall as promptly as reasonably possible consider and propose one or more additional nominee or nominees for that position, and a vote by the Member Representatives Committee on the election of such nominee or nominees shall be conducted as quickly as possible. For avoidance of doubt, the independent trustees shall be elected by the Member Representatives Committee in accordance with this Section 6 and shall not be elected by vote of the members of the Corporation. Section 7 — Management Trustee — The president of the Corporation shall be, ex officio, the management trustee of the Corporation, effective as of the date of his or her election by the board as president of the Corporation in accordance with Article VI, Section 1, of these Bylaws, to serve until such time that he or she ceases to hold the position of president. Section 8 Committees of the Board The board shall by resolution create and appoint all committees of the board as the board deems necessary to perform its responsibilities; provided, that the management trustee shall not be a member of the audit committee or of the human resources committee, if any. All committees of the board shall have such duties as are prescribed by the board. Notice to the public of the dates, places, and times of meetings of board committees, and all nonconfidential material provided to committee members, shall be posted on the Corporation’s Web site within 24 hours of the time that notice is given to committee members. Meetings of board committees shall be open to the public, subject to reasonable limitations due to the availability and size of meeting facilities; provided, that the meeting may be held in or adjourn to closed session to discuss matters of a confidential nature, including but not limited to personnel matters, compliance and enforcement matters, litigation, or commercially sensitive or critical infrastructure information of any entity.



Employee Reporting and Document Retention Policies Action Review Summary In an effort to create a single employee reporting and document retention policy that would apply across the enterprise, NERC legal reviewed and updated the existing NERC employee reporting and document retention policies. NERC legal revised the existing policy to reflect newly enacted statutory and FERC obligations, and broadened the policy to reflect retention requirements for corporate, finance, and human resources records. The updated policy also tracks retention requirements set forth in certain Reliability Standards. In addition to providing a schedule for document retention, the updated policy provides employees with guidance regarding management of electronic records, media storage, and destruction of documents. The updated policy has been distributed to and discussed with senior staff in each of the departments with the understanding that the policy serves as a baseline for compliance. It is recognized that certain departments may have more stringent retention requirements with which they must comply. The revised document retention policy is attached as Exhibit 1. NERC legal has reviewed the current NERC employee reporting policy and has concluded that this policy meets all applicable legal requirements. The employee reporting policy is attached as Exhibit 2.

POLICY ON REPORTING COMPLAINTS REGARDING ACCOUNTING

AND CODE OF CONDUCT MATTERS

The North American Electric Reliability Corporation and its predecessor, the North American

Electric Reliability Council, have a long-standing policy that NERC and its employees will observe the

highest personal and corporate standards of business conduct and ethics, as now memorialized in the

Trustee Code of Conduct and Employee Code of Conduct.

NERC’s employees are encouraged to report evidence of fraud, unethical business conduct, questionable

accounting, problems with internal accounting controls, financial reporting or auditing, violations of

NERC’s codes of conduct for trustees and employees, and violations of law occurring within NERC

(collectively, “accounting or code of conduct complaints”). NERC will promptly investigate all

accounting or code of conduct complaints. Employees who wish to submit accounting or code of conduct

complaints should do so in writing either to NERC’s general counsel at the following address:

General Counsel

North American Electric Reliability Corporation

1325 G Street NW

Suite 600

Washington DC 20005

or to the chair of the Finance and Audit Committee at the following address:

Chair, Finance and Audit Committee

North American Electric Reliability Corporation

1325 G Street NW

Suite 600

Washington DC 20005

In the event that any supervisor, manager, or executive officer receives an accounting or code of conduct

complaint, he or she is required to communicate such complaint to the general counsel immediately.

Employees are encouraged to provide as much specific information as possible when submitting

accounting or code of conduct complaints. Employees may submit such complaints anonymously. All

such complaints will be handled confidentially to the extent possible to permit necessary investigation and

compliance with applicable laws and regulations. Documentation relating to all complaints and their

resolution shall be kept and maintained in accordance with

NERC’s general record retention practices.

NERC prohibits retaliation against employees who submit accounting or code of conduct complaints in

good faith. NERC will not discharge, demote, suspend, threaten, harass, or in any manner discriminate

against any employee in the terms or conditions of his or her employment based on any lawful actions

taken by such employee with respect to the good faith submission of accounting or code of conduct

complaints. Any employee who believes he or she has been so retaliated against must immediately notify

the chair of the Finance and Audit Committee.

Approved by Board of Trustees: October 15, 2004

Technical Revision: May 21, 2014

NERC Records Retention and Destruction Policy and Procedures

1. Overview: Purpose and Scope

This records retention policy (this “Policy”) sets forth the policy and procedures of the North American Electric Reliability Corporation and has been adopted for the purpose of achieving a consistent, organized and effective approach to manage the creation, active use, maintenance, storage and disposal of Records (as defined below). This Policy applies to all NERC personnel including employees (whether full-time, part-time or temporary), and on-site and remote contractors. The law requires NERC to maintain certain types of corporate records for a specified period of time. Failure to retain records for the time period specified in the attached Retention Schedule could subject the Company to penalties or fines or could disadvantage NERC in litigation. Moreover, violations of this Policy by employees may result in disciplinary action, as well as potential civil and criminal liability. This Policy replaces and supersedes any previous NERC policies or procedures relating to Records retention.

Records are valuable assets of NERC. NERC intends to achieve several purposes through

adoption of and compliance with this Policy, including:

• Facilitating the day-to-day operation of business in the ordinary course, and maintaining those Records that are necessary to NERC’s business interest;

• Uniformly preserving, maintaining and safeguarding the confidentiality, privacy and security of Records;

• Encouraging personnel to responsibly use, preserve and dispose of Records; • Complying with applicable legal and regulatory recordkeeping requirements; • Maintaining well-organized Records and ensuring availability of Records when

reasonably requested; • Establishing retention periods for storage and disposal of Records; • Avoiding unnecessary duplication or mistaken use of superseded Records; • Efficiently managing storage space and costs; • Preparing for the efficient gathering of Records in response to any litigation or

governmental investigation, audit or proceeding; and • Establishing consistency, efficiency and productivity throughout NERC.

If there is any conflict between this Policy, including but not limited to any Retention Period (as

defined below), and any applicable U.S. or foreign law, regulation or contractual or other requirement (“Other Requirement”), then the Other Requirement supersedes this Policy and should be followed. In such event, please notify the NERC Legal Department. This Policy is not intended to limit any contractual obligation of NERC to return or not retain confidential information that third parties provide in the course of its business. Moreover, there may be additional record keeping requirements that apply to records maintained by specific departments that are not reflected in the attached Retention Schedule. To that end, individual departments may implement additional policies that are not inconsistent with this Policy. 2. Definition of Records

The term records (“Records”) means all materials created or used by personnel in transacting official business for NERC which contain information of value for any period of time, including but not

1

limited to: documents, papers, maps, photographs, tapes, correspondence, memoranda, drafts, electronic mail, and electronic files. Records may be developed, maintained, or transmitted using various media, such as paper, electronic mail, digital/electronic storage device (e.g., floppy discs, hard discs, DVD/CD ROM, magnetic tape, microfilm), audio recording, and video recording. All Records are owned by NERC, unless otherwise indicated. Personnel should create and maintain Records in a reasonably complete, accurate, usable and legible manner, and personnel should not make, or cause others to make, false, fictitious, deceptive or misleading entries in any Record. Personnel are not required to retain any records which are personal, have no business value, or have a limited or transitory value (e.g., notes, drafts, routine replies and messages) and personnel should retain such records for only as long as necessary for operational purposes. 3. Electronic Records Storage

This Policy applies to all Records which are in electronic format, including but not limited to electronic mail, electronic databases, electronic files and documents, computer hard drives, mainframes, and other digital and electronic media (“Electronic Format”).

NERC encourages personnel to retain Records in Electronic Format rather than paper where

practical, cost-effective and permitted by law. If converting a Record from one medium to another (such as from paper to Electronic Format), personnel must ensure the reasonably equivalent quality, readability, and completeness of the original. 4. Retention Periods

Records should be retained, according to the type of Record (“Record Type”), for a period of time during which such Records are required to be maintained by all applicable laws and regulations plus any additional period as desirable for business reasons, as set forth in the list of retention periods in Exhibit A (“Retention Periods”). Unless otherwise noted or apparent, a Retention Period begins upon the creation of the Record. If a Record falls under more than one type of Record, then it should follow the type of Record with the longest retention period. A longer Retention Period shall apply if (a) a Record itself contains a requirement to maintain it for longer than the Retention Period, or (b) a Record contains terms (such as indemnification and confidentiality) that require the record to be kept for a duration longer than the Retention Period. Personnel should contact the NERC Legal Department with any questions.

5. Media Storage

Records should be stored on media that, under normal conditions, have a life expectancy equal to at least the Retention Period. Media may be changed if deemed reasonably appropriate.

Records should be stored in reasonably safe and secure facilities that are appropriate to such

Records, taking reasonable measures to avoid damage, disposal or security breach caused by (1) unauthorized use or disclosure, (2) natural conditions (e.g., temperature, humidity, light exposure, fire, floods, water leaks, dryness, mildew, no ventilation, rodents and insects), (3) man-made hazards (e.g., theft, accidental loss, sabotage, commercial espionage), and (4) technological failures (e.g., disk crash or corruption). Such facilities may include: desks, shelves, cabinets, boxes, closets, electronic storage facilities, fire-proof and other safes, safe deposit boxes, and off-site storage facilities.

2

Actively Used Records should be stored and managed in the immediate area of responsibility. All Records that are not Actively Used Records should be stored and managed by all personnel under the guidance of the department heads or managers in compliance with this Policy generally. 6. Disposition Procedures

A Record should be disposed of upon the expiration of and not prior to its Retention Period. If a Record contains any confidential, proprietary or sensitive information, or it is unclear whether or not a Record contains such information, then such Record should be disposed of by shredding or other mutilation or destruction. If a Record does not contain any confidential, proprietary or sensitive information, then such Record may be recycled.

Individual departments may implement a Records management system that provides

organization and tracking of Records, including alerts upon the expiration of the applicable Retention Periods, to facilitate the disposition process.

Personnel should take reasonable measures to avoid any accidental disposal of Records prior to

the applicable Retention Period. 7. Litigation and Governmental Investigation, Audit or Proceeding

Immediately upon learning of an investigation or court proceeding involving a particular NERC

matter or subject, NERC shall notify all employees to preserve all documents and records, both hard copy and electronic, pertaining to that matter or subject and to cease and avoid any destruction of the documents and records pertaining to that matter or subject that would otherwise be authorized by this record retention and destruction policy.

It is an obstruction of justice to destroy, falsify, or alter any records or documents in order to impede a federal investigation. It is also unlawful to destroy, falsify, or alter any documents or records needed for a federal or state court or administrative proceeding. If any NERC employee is asked to falsify, alter, or destroy any records, he or she should immediately inform senior management (or the chairman of the Board of Trustees’ Finance and Audit Committee if a member of senior management is involved in the offense).

Failure to comply with this Records Retention and Destruction Policy may result in disciplinary action against the employee, including suspension or termination. Questions about this policy should be referred to the NERC Legal Department. 8. Destruction Policy

There are certain documents that must be destroyed after the retention period has expired. After the retention period has expired, electronic records should be destroyed in a way that removes all entity-specific information. Paper records and data should be rendered illegible and destroyed. Record-specific document disposal requirements are set forth in Exhibit B. 9. Review

This Policy, including the Retention Periods, should be reviewed periodically to ensure compliance with applicable laws and regulations and for business reasons.

3

Exhibit A

Retention Schedule Section Type of Record

A. Accounting and Finance B. Contracts, Invoices and Purchase Orders C. Corporate Records D. Correspondence and Internal Memoranda E. Employer Records F. Other

RECORD TYPE RETENTION PERIOD APPLICABLE LAW, REGULATION,

FERC ORDER OR NERC RULE OF PROCEDURE

A. Accounting and Finance

1. Accounts Payable Ledgers and Schedules

7 Years 121 FERC ¶ 61,057

2. Accounts Receivable Ledgers and Schedules

7 Years 121 FERC ¶ 61,057

3. General Ledgers: Year End Trial Balances

5 Years1 121 FERC ¶ 61,057

4. Subsidiary Ledgers 5 Years2 121 FERC ¶ 61,057 5. Bank Statements 5 Years3 121 FERC ¶ 61,057 6. Bank Reconciliations 5 Years4 121 FERC ¶ 61,057 7. Cancelled Checks 5 Years5 121 FERC ¶ 61,057 8. Chart of Accounts Permanent 121 FERC ¶ 61,057 9. Depreciation Schedules Permanent 121 FERC ¶ 61,057 10. Election Records Permanent 121 FERC ¶ 61,057 11. Financial Statements: Year-

End Permanent 121 FERC ¶ 61,057

12. Insurance Policies (including expired policies)

Permanent 121 FERC ¶ 61,057

13. Payroll: Records and Summaries

7 Years 121 FERC ¶ 61,057

14. Payroll: Time Sheets 7 Years 121 FERC ¶ 61,057 15. Pension Documents and

Records Permanent 121 FERC ¶ 61,057

16. Tax Returns and the Financial Records/


1 In its 2008 Budget Order, FERC directed NERC to retain records of this type for the longer of five years or until a final Commission order is issued

regarding the performance assessment. 2 Id.

3 Id.

4 Id.

5 Id.

4

Schedules Used in Preparation of Tax Returns

B. Contracts, Invoices and Purchase Orders

17. Current Contracts Permanent 121 FERC ¶ 61,057 18. Expired Contracts 7 Years 121 FERC ¶ 61,057 19. Inventories 5 Years6 121 FERC ¶ 61,057 20. Invoices From Vendors 5 Years7 121 FERC ¶ 61,057 21. Invoices To Customers 5 Years8 121 FERC ¶ 61,057 22. Ownership of Property,

Real Estate, Patents, Trademarks, Copyrighted Documents

7 Years from Date of Ownership

121 FERC ¶ 61,057

23. Petty Cash Vouchers 5 Years9 121 FERC ¶ 61,057 24. Purchase Orders 5 Years10 121 FERC ¶ 61,057 25. Receipt Records (Sales,

etc.) 5 Years11 121 FERC ¶ 61,057

26. Sales Records and Journals 5 Years12 121 FERC ¶ 61,057 27. Vouchers for Payments to

Employees for Reimbursements and Allowances, etc.

7 Years 121 FERC ¶ 61,057

C. Corporate Records 28. Corporate Entity Records

(e.g., Charter, Bylaws, etc.) Permanent 121 FERC ¶ 61,057

29. Corporate Policy and practice manuals


D. Correspondence and Internal Memoranda

30. Contributions 5 Years 121 FERC ¶ 61,057 31. General Correspondence 5 Years 121 FERC ¶ 61,057 32. Legal and Important Matters Permanent 121 FERC ¶ 61,057 33. Routine Vendor 1 Year 121 FERC ¶ 61,057

E. Employer Records 34. Employee Personnel

Records (after termination) 7 Years 121 FERC ¶ 61,057

35. Employee W-2 and Payroll Tax Return

7 Years 121 FERC ¶ 61,057

36. Employment Applications 2 Years 121 FERC ¶ 61,057

6 Id.

7 Id.

8 Id.

9 Id.

10 Id.

11 Id.

12 Id.

5

37. Records Relating to Promotion, Demotion, Transfer, Selection for Training, Layoff, Recall or Discharge of an Employee

1 Year 29 CFR 1627.3

38. Health and Welfare Benefit Claims Files (Including Life and Disability)

6 Years From the Date the Approved or Denied Claim is Final

ERISA §§ 107, 209

39. COBRA Notices, Elections, Waivers, and Records of Premium Payments

6 Years After Qualifying Event

Pub. L. No. 99-272 (1985)

40. HIPAA Records (Including Notices, Certifications, and Waivers)

As Long as Participant or Beneficiary Has a Benefit Under the Plan, and 6 Years Thereafter

45 C.F.R. §164.530

41. Identifying Records Containing Employee’s Name, Address, Sex, Occupation or Work Classification, and Social Security Number (and Date of Birth if Under 19 Years Old)

3 Years from Date of Entry

29 CFR § 1627.3(a)(1)-(4)

42. Pre-Employment Records Such As Reference Checks, Results of Tests (Including Physical Examinations), and Job Postings, Advertisements and Notices

1 Year from Making of Record, or Within 1 Year of Termination or Other Personnel Action Based on the Records, or Until Final Disposition of Any Discrimination Action, Whichever Is Later

29 CFR §1602.14, 29 CFR §1627.3(b)(1)(i)(iv) & (vi)

43. Records Relating to Promotion, Demotion, Transfer, Recall, Layoff, Discharge, Unemployment Compensation, and Selection for Training/Education

1 Year from Making of Record, or Within One Year of Termination, or Until Final Disposition of Any Discrimination Action, Whichever Is Later

29 CFR §1602.14, 29 CFR §1627.3(b)(1)(ii)

44. Job Advertisements, Including Correspondence With Employment Agencies

1 Year from the Date of the Personnel Action to Which the Records Relate; But If An Enforcement Action Has Been Filed, the Records Must Be Kept Until Final Disposition of the Action

29 CFR §1627.3

45. INS I-9 Forms New Employee: 3 8 CFR §274a.2(c)(2) and

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Years After the Date of Hire or 1 Year After the Date of Termination, Whichever is Later. Previously Hired Employee (If Within 3 Years of Initial Employment): 3 Years After Execution of Form or 1 Year After Termination of Employment, Whichever Is Later.

274a.2(b)(2)(i)(A)

46. Records of Physical Examinations Used in Employment Decision

1 Year from Making of Record, or Within One Year of Termination or Other Personnel Action Based on the Records, or Until Final Disposition of Any Discrimination Action, Whichever Is Later

29 CFR §1627.3(b)(v)

47. Requests for Medical Accommodations and Accompanying Documentation

1 Year from Making of Record, or Within One Year of Termination or Other Personnel Action Based on the Records, or until Final Disposition of Any Discrimination Action, Whichever Is Later

29 CFR §1602.14

F. Other 48. Audit Information13 (all

information and data generated or received pursuant to spot checks, self-reports, and compliance audits)

5 Years from the conclusion of the Audit

Appendix 4C to the Rules of Procedure -- Compliance Monitoring and Enforcement Program (CMEP) Section 9.0

49. Archived Reliability Standards Information

5 Years NERC Rule of Procedure Section 319

50. Compliance Enforcement Authority records including information and data

5 Years Appendix 4C to the Rules of Procedure -- Compliance Monitoring and Enforcement Program (CMEP) Section 9.0 - Data

13 As indicated below, there are certain Reliability Standards that require a specific retention period for audit documents. Auditors should refer to the relevant Reliability Standard to confirm whether or not a specific retention period applies.

7

generated or received pursuant to Compliance Program activities such as Periodic Data Submittals, Exception Reporting, and Complaints, as well as documents related to the Hearing Process

Retention and Confidentiality

51. Compliance Investigations Information

5 Years from the conclusion of the Investigation

Appendix 4C to the Rules of Procedure -- Compliance Monitoring and Enforcement Program (CMEP) Section 9.0

52. Documentation used to substantiate the conclusions of the Regional Entity / NERC regarding registration / certification

6 Years NERC Rule of Procedure Sections 501-502

53. Organization Registration & Certification Policies and Procedures

6 Years NERC Rule of Procedure Sections 501-502

54. Records of all Preliminary Screens which determine whether there is a Possible Violation

5 Years Appendix 4C to the Rules of Procedure -- Compliance Monitoring and Enforcement Program (CMEP) Section 3.7.1 - Complaint Process Steps; Section 5.0 - Enforcement Actions

55. Audit records pertaining to enforcement of certain CIP Reliability Standards

5 Years CIP-002-4a (Cyber Security) (Critical Cyber Asset Identification); CIP-003-3 (Security Management Controls); CIP-003-4 (Security Management Controls); CIP-004-3 & 3a & 004-4, 004-4a (Personnel and Training); CIP-005-3a, CIP-005-4a (Cyber Security - Electronic Security Perimeters); CIP-006-3c, CIP-006-3d, CIP-006-4c, CIP-006-4d (Cyber Security - Physical Security); CIP-007-3 & 4 (Cyber Security - Systems Security Management); CIP-008-3 & 4 (Cyber Security - Incident Reporting and Response Planning); CIP-009-3 & 4 (Cyber Security - Recovery Plans for Critical Cyber Assets); FAC-001-1 (Facility Connection Requirements); IRO-008-1 (Reliability Coordinator Operational Analyses and Real-Time Assessments); IRO-009-1 (Reliability Coordinator Actions to Operate within IROLs); IRO-010-1a (Reliability Coordinator Data Specification and Collection); IRO-014-2 (Coordinator Among Reliability Coordinators); PER-

8

003-1 (Operating Personnel Credentials Standard); PER-004-1 (Reliability Coordination - Staffing); PRC-001-1.1 (System Protection Coordination)

56. Audit records pertaining to enforcement of certain FAC Reliability Standards

5 Years FAC-003-1 (Transmission Vegetation Management Program)

57. Audit records pertaining to enforcement of certain MOD Reliability Standards

5 Years MOD-016-1.1 (Actual and Forecast Demands, Net Energy for Load, Controllable DSM) MOD-024-1 (Verification of Generator Gross and Net Real Power Capability); MOD-025-1 (Verification of Generator Gross and Net Reactive Power Capability)

58. Audit records pertaining to enforcement of certain PRC Reliability Standards

3 Years PRC-002-1 (Define Regional Disturbance Monitoring and Reporting Requirements); PRC-003-1 (Regional Procedure for Analysis of Misoperations of Transmission and Generation Protection Systems); PRC-005-1b & 1.1b (Transmission and Generation Protection System Maintenance and Testing); PRC-020-1 (Under-Voltage Shedding Program Database)

9

Exhibit B Document Destruction Schedule

RECORD TYPE DISPOSAL REQUIREMENT APPLICABLE LAW, REGULATION, FERC ORDER OR NERC RULE OF PROCEDURE

1 Copies of notes, draft reports, and other interim documents developed or used during an entity Certification evaluation or program audit.

Shall be destroyed after the public posting of a final, uncontested report

NERC Rule of Procedure 2.2.4

2 Copies of notes, draft reports, and other interim documents developed or used during an entity Certification evaluation or program audit.

Shall be destroyed after the public posting of a final, uncontested report

NERC Rule of Procedure 701.2

3 Sensitive cyber security or reliability data

Prior to the disposal of such [cyber] assets, the Responsible Entity shall destroy or erase the data storage media to prevent unauthorized retrieval.

Reliability Standard CIP-007-3a R7.1. Cyber Security — Systems Security Management

4 BES Cyber System Information

Prior to the release for reuse of such Cyber Assets, the Responsible Entity shall take action to prevent the unauthorized retrieval of BES Cyber System Information from the Cyber Asset data storage media.

CIP-011‐1 Table R2 – BES Cyber Asset Reuse and Disposal

10

REVISION HISTORY

Rev. Date Reviewers Revision Description

0 September 2013 Rebecca Michael, Charlie Berardesco

11



ERO Enterprise and Corporate Performance Metrics – Quarter 2 Status

Action Review Background On February 6, 2014 the NERC Board of Trustees approved the ERO Enterprise Strategic Plan for the 2014-2017 planning period. On March 20, 2014, the Corporate Governance and Human Resources Committee (CGHRC) approved four overarching ERO Enterprise Performance Metrics designed to assess the overall effectiveness of the enterprise in addressing risk to the Bulk Electric System (BES) and improving BES reliability. Each quarter, NERC staff provides a summary of its activities towards achievement of each metric. These activities are reviewed and verified by NERC management as well as internal audit staff, and given a colored status depicting progress: a scheme of three colors are assigned based on progress towards or completion of meeting Target or Threshold values of the ERO Enterprise Performance Metrics:

1. Target (green), 2. Threshold with additional monitoring to reach Target (yellow), or 3. Deviation from Threshold with the concern of missing Target by yearend (red).

The quarterly status report is provided as an informational update to the CGHRC. Summary Mark Lauby, Senior Vice President and Chief Reliability Officer of NERC, will provide a summary of the second quarter results of the CGHRC-approved performance metrics. Attachments

1. 2014 ERO Enterprise and Corporate Metrics – Quarter 2 Status Report 2. Corporate Performance Metrics – Quarter 2 CGHRC Report presentation

http://www.nerc.com/gov/bot/FINANCE/Hidden%20Documents/Electric%20Reliability%20Organization%20Enterprise%20Strategic%20Plan%202014%E2%80%932017.pdf

http://www.nerc.com/gov/bot/FINANCE/Hidden%20Documents/ERO%20Enterprise%20Performance%20Metrics%20-%20Board%20Approved%2005%2007%202014.pdf

Corporate Governance and Human Resources Committee 2014 Quarter 2 Status ERO Enterprise Metric 1: Reliability Results

Measure of success Threshold Target Status of Key Activities at Q2

Determine the frequency and severity of BPS events, excluding weather, flood, or earthquake. The target is fewer, less severe events during 2014-2017; no Category 4 and 5 events and Category 1-3 events are trending down.

No Category 4 or 5 events (10%);

The cumulative trend line in the composite Daily “event Severity Risk Index” (eSRI) for Category 1-3 events remains flat or negative.* (10%)

*Measured for the period beginning 1/1/2011 to-date, includes days with zero events, and excludes: category 4 and 5 events, events caused by natural phenomenon, and AESO islanding.

No Category 4 or 5 events occurred.

Composite Category 1-3 events trend line slope has decreased slightly (data currently in second and independent review).

ERO Enterprise Metric 2: Assurance Effectiveness Measure of success Threshold Target Status of Key Activities at Q2

Assess all Category 3 and above events. The target is to reach zero gaps in Reliability Standards and compliance monitoring by 2017.

Gap analysis of standards and ERO compliance monitoring implementation complete and recommendations identified within 90 days.

Zero gaps, or closure of any standards or compliance gaps identified within one year of event unless a technical study is needed.

Category 3 event occurred on May 25. A Brief Report, in accordance with the Events Analysis Process, and a Gap Analysis are expected in Q3.

ERO Enterprise Metric 3: Risk Mitigation Effectiveness Measure of success Threshold Target Status of Key Activities at Q2

Review the BES risk profile each year to determine actual and potential risks. The target is to identify, select and mitigate the high priority risks (and issue specific metrics for each established project).

Stated threshold deliverables achieved for each risk project.

Stated target deliverables achieved for each risk project.

See individual project status below.

1 07.2014

Corporate Governance and Human Resources Committee Measure of success Threshold Target Status of Key Activities at Q2

1. Changing Resource Mix Publish Essential Reliability Services whitepaper and deliver Phase 1 Special Assessment of Essential Reliability Services to executive management before yearend 2014.

Board approval of Phase 1 Special Assessment of Essential Reliability Services before yearend 2014.

Essential Reliability Services Tutorial developed in May 2014 and presented at the Planning Committee and ERS Task Force meetings. Final comments are being incorporated into the document during Q3.

2. Extreme Physical Events GMD Stage 2 Standard (Project 2013-03, TPL standard) approved by industry ballot before yearend 2014.

• GMD Stage 2 Standard (Project 2013-03, TPL standard) approved by Board and filed with regulators by yearend 2014.

• Physical security standard, if directed by FERC, approved by Board and filed with regulators by directive deadline.

GMD Stage 2 Standard posted for Initial Comment Period and Ballot (6/13-7/30/2014).

Physical Security Standard approved by NERC Board and filed with FERC prior to deadline.

3. Protection System Misoperations

• PRC-004-3 Protection System Misoperations (Project 2010-05.1) approved by industry ballot before the end of 2014.

• Work with North American Transmission Forum to identify 2 major contributors to misoperations that lead to system events before yearend 2014.

• PRC-004-3 Protection System Misoperations (Project 2010-05.1) approved by Board and filed with regulators before yearend 2014.

• Develop composite long-term metric and develop industry actions to address identified contributors to misoperations that lead to system events.

PRC-004-3 (Misops) posted for additional Comment Period and Ballot (5/16-7/2/2014).

Performance Analysis staff is preparing a Misoperations report that identifies trends in misoperations and suggests additional data that should be gathered for a few regions/entities. NATF is scheduled to complete their misoperations report soon and provide a progress update during the August BOT meeting in Q3.

4. Cold Weather Preparedness

Review effectiveness of 2011 cold snap recommendations, lessons learned, and related Operating Committee guidelines, prepare a report on any remaining gaps.

Perform analysis, including the use of GADS data, to evaluate industry performance during 2012-2014 cold weather events and identify further recommendations for cold weather response, if applicable.

NERC released the survey to gather information on cold weather preparation to benchmark and assess how lessons learned, recommendations, training material and the Reliability Guideline from the 2011 cold snap are being implemented. Additional data beyond the initial GADs submissions (April 2014) has been collected for the Polar Vortex Phenomena, performance and analysis continues.

2 07.2014

http://www.nerc.com/comm/Other/essntlrlbltysrvcstskfrcDL/ERS%20Draft%20NERC%20Staff%20Report.pdf

http://www.nerc.com/pa/Stand/Pages/Project-2013-03-Geomagnetic-Disturbance-Mitigation.aspx

http://www.nerc.com/FilingsOrders/us/Pages/NERCFilings2014.aspx

http://www.nerc.com/pa/Stand/Pages/Project2010-05_Protection_System_Misoperations.aspx

http://www.nerc.com/pa/rrm/ea/ColdWeatherTrainingMaterials/Survey_Announcement_Winter_Prep_Materials.pdf

http://www.nerc.com/comm/OC/Reliability%20Guideline%20DL/Generating_Unit_Winter_Weather_Readiness_final.pdf


5. Right of Way Clearances • Complete analysis of facility ratings data reported and identify gaps.

• Develop site visit plan and initiate site visits to assess clearance mitigation.

• Complete a report, jointly with NATF, detailing an approach for developing best practices and a sustainable program for maintaining right-of-way clearances.

• Complete site visit assessments for entities with significant high and medium priority line discrepancies

A project plan and assurance plan are both completed. Site visit assessments are on schedule to be conducted in Q3 and Q4 with a report on assurance activities. NERC issued the Facility Ratings Alert (FAC Alert) as a recommendation to industry to determine the extent of the condition and address and mitigate issues with transmission line clearances.

6. 345 kV Breaker Failures Reports to NERC board at February and August 2014 meetings showing mitigation efforts, joint with NATF, NAGF, and others.

Mean time to failure trending longer for failure of 345 kV HPI Series “single break” SF6 gas circuit breakers due to separation of the Teflon nozzle caused by incorrect torqueing of hardware.

• NATF and NAGF presented reports to the NERC BOT on May 7 in Q2.

• As of July 7, 972 of 1003 breakers have been accounted for, with all 944 under some type of remediation plan.

• The current time between any failures since the alert is 10 months.

ERO Enterprise Metric 4: Program Execution Effectiveness Measure of success Threshold Target Status of Key Activities at Q2

Sum of the weighted sub-metrics.

See individual sub-metric status below.

3 07.2014

http://www.nerc.com/pa/rrm/bpsa/Pages/Facility-Ratings-Alert.aspx

http://www.nerc.com/gov/bot/Agenda%20highlights%20and%20Mintues%202013/board_agenda_package_May_2014.pdf

http://www.nerc.com/gov/bot/Agenda%20highlights%20and%20Mintues%202013/board_agenda_package_May_2014.pdf

Corporate Governance and Human Resources Committee

1 Regional standards are not included, this applies to NERC only.


Sub-metric A

(Primary NERC) - Percent of all board-approved standards1 meet quality criteria and results-based construct

• Continued application of the 2014-2016 Reliability Standards Development Plan during 2014: Board adopted Reliability Standards for GMD (Stage 2)*, COM-002-4, and Stable Power Swings.

* Credit will be counted in Metric 3, Item 2

• The approach for the periodic review of steady state Reliability Standards is developed by NERC Staff and the Standards Committee and reviewed with stakeholders.

• Threshold met plus Final Ballot reached for two of the following: PRC-004-3, TOP/IRO, and CIP (two time-sensitive directives).

• The approach and any needed changes to the Standard Processes Manual (SPM) required for the periodic review of steady state Reliability Standards developed by NERC Staff and the Standards Committee, with stakeholder input, ready for Board approval in the fourth quarter of 2014.

GMD Stage 2 Standard posted for Initial Comment Period and Ballot (6/13 7/30/2014). COM-002-4 was filed with FERC on 5/15/2014. Stable Power Swings completed its initial Comment Period and Ballot on 6/9/2014 with a 17.02% approval rating. Work is being intensified on this project. PRC-004-3 (Misops) posted for additional Comment Period and Ballot (5/16-7/2/2014). As of 7/3, quorum has not been met, so ballot still open. TOP/IRO Revisions posted for its initial Comment Period and Ballot (5/19-7/2/2014). CIP V5 Revisions posted for Initial Comment Period and Ballot (6/2-7/16/2014). The Enhanced Periodic Review (along with RSDP) posted for industry comments (6/20-7/21/2014). There are no SPM changes necessary to implement as currently designed. IT has been reviewed by the SC (5/14/2014) and RISC (6/17/2014).

Sub-metric B

(Primary NERC) - Quality, up-to-date Reliability Standard Audit Worksheets, or any successor guidance, developed for board-approved Reliability Standards

70% of Target complete. Every standard that goes to ballot will have a posted RSAW alongside. Every standard that is reviewed as part of the 5 year review cycle will have a current up-to-date RSAW or successor.

Balloted Standards with RSAWs is 97%. A total of 28 standards (10 projects) were posted during Q2 with RSAWs: 1. CIP V5 2. TOP/IRO Revisions 3. Physical Security 4. GMD Stage 2 5. NUC 6. Stable Power Swings 7. FAC 8. Misops (PRC-004-3) 9. Disturbance Monitoring 10. DGR

4 07.2014


http://www.nerc.com/FilingsOrders/us/NERC%20Filings%20to%20FERC%20DL/COM%20Petition%20Errata.pdf

http://www.nerc.com/pa/Stand/Pages/Project2010133Phase3of-RelayLoadabilityStablePowerSwings.aspx

http://www.nerc.com/pa/Stand/Project%202010133%20Phase%203%20of%20Relay%20Loadability%20stabl/2010-13.3_PRC-026-1_B_NBP_Results_Announc_06132014.pdf


http://www.nerc.com/pa/Stand/Pages/Project-2014-03-Revisions-to-TOP-and-IRO-Standards.aspx

http://www.nerc.com/pa/Stand/Pages/Project-2014-XX-Critical-Infrastructure-Protection-Version-5-Revisions.aspx

http://www.nerc.com/pa/Stand/Pages/ReliabilityStandardsDevelopmentPlan.aspx

http://www.nerc.com/pa/Stand/Pages/ReliabilityStandardsDevelopmentPlan.aspx

http://www.nerc.com/comm/SC/Agenda%20Highlights%20and%20Minutes/SC_May_14_2014_agenda_package.pdf


http://www.nerc.com/comm/RISC/Agenda%20Highlights%20and%20Minutes/RISC%20Meeting%20Agenda%20June%202014.pdf

http://www.nerc.com/pa/Stand/Pages/Project-2014-XX-Critical-Infrastructure-Protection-Version-5-Revisions.aspx

http://www.nerc.com/pa/Stand/Pages/Project-2014-03-Revisions-to-TOP-and-IRO-Standards.aspx

http://www.nerc.com/pa/Stand/Pages/Project-2014-04-Physical-Security.aspx


http://www.nerc.com/pa/Stand/Pages/Project2012-13NUC.aspx

http://www.nerc.com/pa/Stand/Pages/Project2010133Phase3of-RelayLoadabilityStablePowerSwings.aspx

http://www.nerc.com/pa/Stand/Pages/FACFiveYearReviewTeam.aspx



http://www.nerc.com/pa/Stand/Pages/Project-2014-01-Standards-Applicability-for-Dispersed-Generation-Resources.aspx


2 ERO Enterprise Caseload Index is the rate at which the ERO processes violations and is defined as the annual ERO Inventory (defined as Active violations that have not been filed with FERC multiplied by 12) divided by the total number of violations completely processed (NOPs, SNOPs, FFTs and Dismissals) over the previous 12-months.


Sub-metric C

(Joint ERO Enterprise) – Implementation of risk-based registration criteria to achieve efficient and effective allocation of compliance obligations. Registration is commensurate with risk and RAI and in light of new BES definition and is implemented

Assessment complete with recommended framework and registration criteria. Implementation plan complete. Both documents presented to the Board by yearend 2014.

Assessment complete with recommended framework and registration criteria. Implementation plan complete. Both documents approved by the Board by yearend 2014.

• The RBR Advisory Group and Task Force completed initial framework and registration criteria to the MRC in May.

• Design Framework included recommendations for MW threshold for Distribution Providers, the removal of the PSE, IA, and LSE functions from the Registry Criteria, and a draft implementation plan in Appendix B.

• All RBR documents are posted along with an industry survey (released in June). Assessments (studies), an enhanced/revised Design Framework and implementation plan are expected to be submitted to the MRC in Q3.

Sub-metric D

(Joint ERO Enterprise) – Timeliness and transparency of compliance results: 12 month rolling average of the ERO Enterprise caseload index trending favorably.2 Maximum age of unclosed cases is less than 24 months and improving

• ERO Enterprise caseload index less than or equal to 8 months;

• Number of active possible violations preceding January 1, 2013 is 65, excluding those held by appeal, regulator, or court

Baseline 2013 = Caseload index = 7.3 months

• ERO Enterprise caseload index less than or equal to 7 months, with all Regional Entities above average trending downward.

• Number of active possible violations preceding January 1, 2013 is 0, excluding those held by appeal, regulator, or court

• ERO caseload index is 9.5 months. • Pre-2013 caseload includes 273 active

violations (excludes violations on hold by appeal, regulator or court).

Sub-metric E

(Joint ERO Enterprise) - Percent of self-identified non-compliances (includes self-reports and self-certifications)

70% 75% 78% (for 2014 discovered noncompliance)

5 07.2014

http://www.nerc.com/gov/bot/MRC/Agenda%20Highlights%20nad%20Minutes%202013/mrc_presentation_May_2014.pdf

http://www.nerc.com/pa/comp/CAC/Pages/Risk-Based%20Registration.aspx


Sub-metric F

(Joint ERO Enterprise) - Mitigation aging curve improving

Percentage of the noncompliance items discovered in that year that are mitigated (as of December 31, 2014)

• 2013: 75% • 2012: 90% • 2011: 95% • 2010 (and older): 98%

Percentage of the noncompliance items discovered in that year that are mitigated (as of December 31, 2014)

• 2013: 80% • 2012: 95% • 2011: 98% • 2010 (and older): 100%

• 2013: 56%, • 2012: 87%; • 2011: 94%; • 2010: 99%

Sub-metric G

(Joint ERO Enterprise) - RAI reforms

• ERO auditor handbook training completed;

• RAI compliance design completed;

• RAI enforcement pilots completed and analysis completed; and

• Average time from discovery to decision to enforce or not (i.e. the triage process) is 75 days

__________________________

• Train at least one partner entity to complete maturity model assessments and complete either directly or through trained partners 15 maturity model assessments.

• ERO auditor handbook deployment;

• RAI compliance design complete and reflected in the CMEP implementation plan for 2015;

• RAI enforcement pilots completed and FERC filings made, if required;

• Average time from discovery to decision to enforce or not (i.e. the triage process) is 60 days; and ____________________________

• Train at least two partner entities to complete maturity model assessments and complete either directly or through trained partners 20 maturity model assessments.

• ERO Auditor Handbook published and some training modules delivered to ERO Enterprise staff.

• RAI compliance design framework completed. Design includes risk elements scheduled for Q3 and Q4. CMEP implementation plan is part of the risk elements.

• RAI pilots completed and single compliance framework presented at May BOTCC meeting.

• Average time from discovery to decision to enforce or not is approximately 60 -75 days.

_____________________________

• ES-ISAC onsite engagements and CRPA activities encompass the maturity model assessments (as an effort to educate, inform and mature security practices). NERC continues to coordinate with partners such as NATF to meet this metric, but zero assessments have been conducted to-date; three are scheduled for Q3. Zero partner entities have been trained.

6 07.2014

http://www.nerc.com/pa/comp/ERO%20Enterprise%20Compliance%20Auditor%20Manual%20DL/ERO_Enterprise_Compliance_Auditor_Manual_version_1.pdf

http://www.nerc.com/gov/bot/BOTCC/Compliance%20Committee%202013/botcc_presentations_May_2014.pdf


Sub-metric H

(Primary NERC) - Participation in ES-ISAC increased (2013 statistics used as Baseline)

• 85% of all RCs and TO/TOPs; • 5% increase in enrollment of all

other registered entities; • 5% in information share activity

level (baseline 2013 uploads figures); and

• Develop an ES-ISAC mission performance program, including Key Performance Indicators (KPIs) and benchmarks, by EOY.

Baseline 2013 = • 80% of RCs and TO/TOPs. • 51% of all other registered

entities.

• 90% of all RCs and TO/TOPs; • 10% increase in enrollment of all other

registered entities; • 20% increase in information share

activity on portal (baseline 2013 uploads figures); and

• Develop an ES-ISAC mission performance program, including KPIs and benchmarks, by end of Q3.

• 431 RC/TO/TOP on portal representing approximately 84% of total.

• 1884 users representing just under a 9% increase

• 63% information share increase (average 20/month)

• KPI delivery slated for Q3.

Sub-metric I

(Joint ERO Enterprise) – Assessment of quality and availability of planning and engineering models and data

Develop metric to evaluate the accuracy of power flow and dynamic models.

Evaluate the draft metric using actual models from at least two interconnections by yearend and recommend changes, if needed.

• Model Validation: Modeling Working Group is working with NATF to field trial entities participating. Feedback is expected to guide improvements to procedure.

• Metric: A draft metric for power flow

and dynamics case quality and accuracy, was reviewed by the MWG during Q2 and an initial evaluation of the Eastern Interconnection 2014 summer base case was performed using the draft metric.

Sub-metric J

(Joint ERO Enterprise) – Achieving transition laid out in oversight model regarding ERO Enterprise personnel and ERO Enterprise (NERC and Regional Entity) infrastructure and applications

Report quarterly progress and achieve 20% of the total action items set forth in the oversight model whitepaper.

Report quarterly progress on achieving the following in 2014, which represents 25% of the total action items set forth in the oversight model whitepaper:

i. ERO EMG develops a roadmap to implement an oversight model that is consistent with the principles set forth in the white paper [Action Item (AI) #1]

ii. ERO EMG endorses auditor qualifications and competency

Oversight “Operating Model” whitepaper status: i. Roadmap: Presentation of 11

Operating Model Action Items and plan for tracking and reporting progress was shared with NERC and Regional Entity Boards in May.

ii. Auditor qualifications and competency guidelines approved by ERO EMG and posted. Timetable

7 07.2014

http://www.nerc.com/comm/PC/Pages/Model-Working-Group-(MWG)-2013.aspx

http://www.nerc.com/comm/PC/Pages/Model-Working-Group-(MWG)-2013.aspx

http://www.nerc.com/AboutNERC/keyplayers/Documents/ERO_Enterprise_Operating_Model_Feb2014.pdf




guidelines and timetable for implementation [AI #1]

iii. ERO EMG develops a plan to review the Regional Delegation Agreements, including a timetable and potential areas that may require amendment [AI #3]

iv. ERO EMG reviews strategic plan and endorses performance metrics for 2015 by year end [AI #4 and #5]

v. RAI design is completed and an implementation timetable is finalized [AI #8]

vi. ERO EMG approves an updated ERO Enterprise technology roadmap to meet its needs over the next 5 years. [AI #9]

vii. ERO EMG develops and implements an intra-ERO communication plan to improve staff communications regarding ERO Enterprise initiatives and to manage communications during critical events [AI #10]

for implementation under development and integrated into auditor workshops.

iii. RDA Review: timeline developed

and will be presented to Board at in August meeting. Work begins in Q3.

iv. ERO EMG Strategic Plan development in Q3

v. RAI Design: See sub metric G RAI

Reforms

vi. ERO Enterprise technology roadmap developed and will be presented to Board at August meeting.

vii. Intra-ERO Communications tool:

monthly staff communications tool developed.

Sub-metric K

(Joint ERO Enterprise) –Stakeholder annual satisfaction/perception survey of the ERO’s effectiveness to manage risk, budget and stewardship

Develop questionnaire with stakeholder input and vetting but not implemented and benchmarked.

Develop questionnaire with stakeholder input and vetting. Survey complete and benchmarks established.

Preliminary plan was initiated in Q2. A questionnaire will be shared with NERC management, ERO Enterprise staff and stakeholders in Q3.

8 07.2014



Staffing and Recruiting Update

Action Review Background Talent acquisition remains a core priority for the Human Resources (HR) department and a significant opportunity to augment the enterprise with hires with industry-leading technical competency and close alignment to NERC’s mission, core values, and consequent ability to make sustained contributions towards long-term objectives. Through use of best practices, HR continues to significantly enhance the quality and fit of talent while not exceeding approved budget for headcount. The period of April through June 2014 saw the exit of seven (7) and hiring of nine (9) employees. Open, approved headcount in the 2014 budget remains a priority, and HR anticipates filling these roles with top talent in 2014 at or under budget. Below are descriptions of the nine (9) hires that have been completed from April 1 through June 30, 2014. Compliance Enforcement Analyst Aaron Hornick joined NERC in April as a Compliance Enforcement Analyst reporting to Ed Kichline. Aaron served in the U.S. Air Force as an Airborne Signals Analyst collecting and analyzing signals intelligence (SIGINT). He was later placed in charge of the Ground Analysis program as Chief Signals Analyst with the 97th Intelligence Squadron. Since leaving the Air Force, he has worked as a Senior Investigative Analyst in the White Collar Division of a private investigation firm in New York. Aaron completed his Bachelor’s degree at Boston University and an MBA at UMUC. He is currently pursuing a Master’s Certificate in Information Systems Security at Villanova University. Administrative Assistant Tiffani Gollihue joined NERC in May as an Administrative Assistant reporting to Earl Shockley. Tiffani worked for the Environmental Restoration Department at Battelle Memorial Institute as an Administrative Assistant for ten years.

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Tiffani has a Bachelor’s degree in Sports Marketing from The Ohio State University and an Associate of Science degree in Graphic and Digital Design from Columbus State Community College. Senior Engineer Charles Aderholdt joined NERC in May as Senior Engineer reporting to Howard Gugel. Charles was formerly with Worley Parsons Corporation as an Engineering Supervisor in the Network Analysis Group. He has spent the majority of his career with the Tennessee Valley Authority (TVA) in the Interconnections and Reliability Studies Section of the Transmission Planning Department. In addition, Charles served as TVA representative to SERC as a member of the Reliability Review Subcommittee. Charles holds a Bachelor of Electrical Engineering degree from Auburn University. Standards Developer Katherine Street joined NERC in May as a Standards Developer reporting to Laura Hussey. Katherine is a recent graduate of the University of North Carolina School of Law. While a student at UNC, she worked as a Legal Extern in the Criminal Division of the U.S. Attorney's Office for the Eastern District of North Carolina and as a Summer Associate for Kilpatrick Townsend & Stockton LLP, Thomas│Horstemeyer LLP, and Withrow & Terranova PLLC. Before pursuing her Juris Doctor degree, Katherine worked as the Operations Manager of the North Carolina Eastern Municipal Power Agency for ElectriCites of North Carolina and as a Distribution Design Engineer for the Reliability and Power Quality Department of Memphis Light, Gas and Water Division in Memphis, Tennessee. Katherine earned her Bachelor’s of Science degree in Electrical Engineering from the University of Memphis while working with UPS in Memphis, Tennessee after serving in the U.S. Marine Corps for several years as an Avionics Instructor and Technician. Technical Publications Specialist Alex Carlson joined NERC in May as a Technical Publications Specialist reporting to Caroline Clouse. Alex worked at Harold Washington Community college under the umbrella of City Colleges of Chicago (CCC) for the past two years, first as an instructor teaching English to inner city college students and then as a tutor afterwards. Prior to this, he worked as a clerk for the United States Census Bureau. Alex has a Master's degree in Writing and Publishing from DePaul University in Chicago, and a Bachelor's degree in Graphic Design from Bradley University in Peoria, IL. Engineer II Amir Najafzadeh joined NERC in June as an Engineer II reporting to John Moura. Amir comes to us from SERC Reliability Corporation as a Reliability Engineer. While at SERC, he was involved in various SERC technical committees as well as NERC subcommittees and working groups. Prior, he worked for Powertech Labs, (A Wholly Owned Subsidiary of BC-Hydro), where he was involved in Generator Model Validation and Testing as part of WECC generator interconnection

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requirement, as well as power system studies, transmission planning and energy transfer limitations. He was also involved in green energy and smart grid projects. Amir received a Bachelor’s of Micro-Electronics and Electrical Engineering from Simon Fraser University in Vancouver, British Colombia, Canada. Communications Coordinator Marty Coyne joined NERC in June as a Communications Coordinator reporting to Kimberly Mielcarek. Marty most recently worked for McGraw Hill Financial--Platts as an Associate Editor. Prior to his role at Platts, he was with Strategic Communications, LLC as a Senior Consultant. Marty has experience analyzing power markets for daily assessments of wholesale electricity prices and has produced articles for a number of media outlets. Marty attended Buffalo State College, where he studied journalism and political science. Senior Manager of Reliability Assessments Ganesh Velummylum joined NERC in June as Senior Manager of Reliability Assessments reporting to John Moura. Ganesh comes to NERC with 15 years of experience in systems planning, running load flow, short circuit and stability studies. Ganesh worked for Northern Indiana Public Service Company as Manager of Electric System Planning, where he oversaw Transmission Planning, Distribution Planning and System Protection. During his time at NIPSCO he served on the NERC standards drafting team for FAC standards. Prior, he worked for Lakeland Electric in Florida as the Manager of System Planning. In this role, he was responsible for Transmission and Distribution Planning, Resource Adequacy, and Load Forecasting. Ganesh also has several years of planning experience working for PJM Interconnection, where he performed interconnections studies and developed planning models. Ganesh earned his Bachelor’s and Master’s in Electrical Engineering from Oklahoma State University. ES-ISAC Cyber Security Specialist Philip Daigle joined NERC in June as an ES-ISAC Cyber Security Specialist reporting to Tim Roxey. Philip comes to NERC from Exelon Corporation where he served as Security Analyst. Prior, he worked for Constellation Energy Group as a Network Analyst. He has also served in the United States Navy where he served as an Intelligence Specialist. Philip attended Louisiana State University where he majored in Industrial Engineering.

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