To: Member Advisory Committee

From: Michele Beck, Chair, Bylaw Work Group

Date: February 27, 2018

Re: Proposed MAC Comments on the Bucket 4 Bylaw Changes

On January 9, 2018 the Bylaw Work Group provided a white paper to the MAC identifying nine substantive changes to the bucket 4 bylaw changes and several technical edits along with a recommendation that the MAC endorse those proposed changes.

At the January 17, 2018 telephonic meeting of the MAC, it approved the following resolution:

The MAC resolves to endorse the recommendations contained in the Bylaw Work Group white paper “Proposed MAC Comments on the Bucket 4 Bylaw Changes” dated January 9th 2018 and forward them to the Board for consideration by the Governance Committee as the MAC’s formal submission of comments on the proposed Bucket 4 Bylaw amendments.

The Governance Committee considered the MAC’s recommendations, along with those made by other commenting parties, at its January 22, 2018 meeting. On February 5, 2018, WECC posted the version of bylaws that the Board of Directors will consider at its March 2018 meeting. This version incorporates the majority of the changes recommended by the MAC. The attached white paper is the same as the one presented on January 9th with additional “outcome” sections added in blue font at the end of each recommendation.

This information is provided to inform a discussion at next week’s MAC meeting, which will include a resolution to support all or part of the proposed bylaw changes.

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SUBSTANTIVE CHANGE #1

1.1 Vision

The Current draft reads as follows:

Description of Issue: The Work Group is concerned about some of the wording included in the current version of the vision of the organization.

Potential Resolution: The Work Group proposes the following changes shown in redline.

Section 1.1 Vision

A highly reliable, and secure and cost effective Bulk-Power System in the Western Interconnection.

Rationale Justifying Change: Despite the NERC strategic plan’s reference to a “highly reliable and secure North American Bulk Power System,” the Work Group is concerned that the word “highly” is unnecessary and very subjective. It could put WECC in a compromising position of trying to explain what it means and when the interconnection would meet that requirement. Adding the words “cost effective” is consistent with the WECC Operating Plan and an important focus of customers in the Western Interconnection.

Outcome: The recommendation to delete the word “highly” was accepted, but the recommendation to insert “cost effective” was not accepted. The GC indicated it felt that the concept of cost effective was captured in the mission statement.

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SUBSTANTIVE CHANGE #2

1.2 Mission

The current draft reads as follows:

Description of issue: The current version of the bylaws has the mission addressed in two sections.

Potential Resolution: The Work Group proposes a more concise combining of section 1.2 and 2.1 as follows:

Section 1.2 Mission To effectively and efficiently mitigate risks to reliability and security of the Western Interconnection Bulk-Power System while carrying out the responsibilities of the Regional Entity.[2.1 is no longer necessary]

Rationale Justifying Change: This proposed mission statement is clear, concise, and simplifies the existing language in 1.2 and 2.1. In addition, it eliminates the “exercise rights” language in 2.1.1 and 2.1.2 which is a repeat of the “carrying out the responsibilities” language and could be taken as offensive to some of the membership. Adding the words “while carrying out the responsibilities of the Regional Entity” is important to help clarify and distinguish WECC’s role from Peak’s role.

Outcome: The recommended language and changes are included in the February 5 version.

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SUBSTANTIVE CHANGE #3

3.14 (removes option for written and electronic ballots for committees)

The current draft reads as follows:

Description: This may be an unintended consequence of the proposed language. The language as proposed would preclude written or electronic ballots for any committees. (The bylaws do allow for written or electronic ballots for director elections and bylaw amendments.) Past practice at times has included written or electronic ballots for voting on certain committee business, which has aided in those committee’s efficient conduct of business.

Potential Resolution: Add some text to the last sentence in 3.14 to reference the second alternative of written or electronic ballots.

Votes, decisions and actions by any Reliability West group can only be taken during meetings held in accordance with the requirements contained in these Bylaws or by following the requirements for written and electronic ballots.

Rationale Justifying Change: While written or electronic ballots at the committee level may not have been common, removing the ability to conduct that type of balloting would have a negative impact on how committees conduct their business. Committees should be allowed to include specific procedures for written and electronic ballots in their charters. Such procedures could define limited circumstances under which such ballots are allowed. Precluding this balloting at the bylaw level is unnecessarily restrictive.

Outcome: The recommended language addition is included with slight modification. The new proposed language reads as follows:

Votes, decisions and actions by any Reliability West group can only be taken during meetings held in accordance with the requirements contained in these Bylaws or by following the requirements for written and electronic ballots as approved by the Board of Directors.

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SUBSTANTIVE CHANGE #4

4.9 Changes to the scope of future comprehensive reviews

The current language (of the middle portion of 4.9) reads as follows:

Description: The proposed new language removes “standards” from the list of items that the Board will consider in future 4.9 reviews.

Potential Resolution: Add “standards” back into the list of items considered.

Rationale Justifying Change: Standards is a significant obligation of WECC, is part of the delegation agreements, represents a significant part of WECC’s overall budget and should be included in any comprehensive review. One of WECC’s Dual Value Proposition focuses directly on standards when it states, “Providing effective and efficient risk-based Compliance Monitoring and Enforcement of Reliability Standards through risk identification, tailored entity oversight plans, and objective enforcement.”

Outcome: The current version adds “standards” back into the list as requested.

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SUBSTANTIVE CHANGE #5

6.2 Composition of the Board and Board Member Qualifications.

Current language is as follows:

Description of Issues:

1) Preserve flexibility of international representation on the Board for each of the three (3) jurisdictions of British Columbia (BC), Alberta, and Mexico.

2) The requirement for citizenship from Canada and Mexico seems unduly stringent. The requirement for international and non-international members should be comparable.

Potential Resolution: Provide flexibility to international representatives, as set out below. In addition, change the word “citizen” to “resident.”

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“At all times when the membership of the Member Advisory Committee provides representation of Members from the Canadian Provinces of British Columbia and/or Alberta and/or the Mexican State of Baja California, at least one Director shall possess experience in the represented jurisdiction, or in at least one of the represented jurisdictions if there are more than one jurisdiction represented on the Member Advisory Committee, and also be a citizen resident of the respective country. ….”

Rationale Justifying Change: The international connection and collaboration should be strengthened, which we believe is accomplished with the proposed revised language.

It is important that international representatives not be diluted with contractors or consultants that have performed work in, or for, Canada and Mexico but reside in a different country. Being a resident, as opposed to a citizen, of Canada or Mexico seems to achieve the rigor that is being sought. The proof of residency, whatever that may be as WECC deems enforceable, should be required for both the international and non-international members for uniformity.

Outcome: The addition of “and/or” was not found to be necessary. The recommendation to use “resident” instead of “citizen” was accepted. In addition, the language was changed to be an absolute requirement (reflecting the current international membership) rather than being dependent on international representation on the MAC.

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SUBSTANTIVE CHANGE #6

8.1 MAC (add another paragraph from initial bylaw language)

Current language is as follows:

Description of Issue:

1) The above section is all that remains from the initial bylaws. Several pages of other material were removed.

2) The word “may” does not preclude the Board from excluding international representation on the MAC. We want to preserve the international voice by changing the word “may” to “shall”.

Potential Resolution: Recommend that 8.5.11 be reinstated and amended as set out below. The proper numbering would now be 8.1.2. It is important to the membership to have the concept of reporting both majority and minority opinions codified in the bylaws rather than left for inclusion in the charter. After having several pages of bylaws related to the MAC removed, we think it is reasonable to have one paragraph reinstated. The new MAC section (8.1) would read as follows:

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8.1 Member Advisory Committee.

The Member Advisory Committee (MAC) shall be constituted and operated in accordance with a charter approved by the Board. In accordance with its charter, the MAC shall advise the Board on any matters the Board requests the committee to evaluate or consider; and advise the Board on policy, business planning, and budgetary matters as the committee deems appropriate.

8.1.1 The committee shall be comprised of three representatives from each of the five (5) Member Classes, for a total of fifteen (15) members.

8.1.1.1 The Board, by resolution, mayshall create up to three additional representative positions on the MAC, to include one representative for Entities of the Canadian Provinces of British Columbia, and/or Alberta, and/or the Mexican State of Baja California. The Board resolution shall set forth the terms through which Canadian or Mexican representatives shall be selected and serve.

8.1.2 (formerly 8.5.11) Reporting to the Board.

The MAC Chair, or designee, shall provide a report to the Board at each Board meeting detailing the business carried out by the MAC, and advising the Board of MAC recommendations on matters as set forth in Section 8.1 herein. In the event that there are dissenting MAC member opinions regarding a matter on which the MAC is advising or providing recommendations to the Board, the MAC Chair, or designee, shall present dissenting opinions and rationales in conjunction with the respective MAC advice or recommendations.

[Note: the reference to 8.1 is updated from the original 8.5.11]

Rationale Justifying Change:

It’s important to solidify a partnership between the international and non-international MAC representatives. Thus, ensuring there are international seats on the MAC if there is international participation in the organization reinforces the collaboration that currently exists.

The reporting requirements to the Board was an important initial consideration of the membership during bifurcation and remains a key element that deserves treatment in the bylaws rather than being subject to easier modification by moving it to the MAC’s charter. It is vitally important that all voices, both majority and dissenting opinions, be presented to the Board.

Outcome: The current version includes the recommended additional language in new 8.1.2, formerly 8.5.11.

The concept of saying “shall” rather than “may” include international representation was incorporated by amending 8.1.1 to reflect the current representation of the MAC, not tying it to different conditions of international participation. HOWEVER, this change mistakenly also kept 8.1.1.1 intact, which essentially results in double representation for the international sector.

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SUBSTANTIVE CHANGE #7

7. Dispute Resolution

The current draft reads as follows:

Description of Issue: Dispute resolution was previously addressed in detail in Appendix C of the bylaws. It is proposed to have all detail deleted and allow the board to adopt dispute resolution procedures if it deems appropriate. The Work Group has concerns that the only criteria for future dispute resolution procedures is whether the Board “deems appropriate” such procedures.

Potential Resolution: The Work Group proposes changes as shown below in redline:

The Board may adopt reasonable dispute resolution procedures applicable to Reliability West members and staff as it deems appropriate.

Rationale Justifying Change: Other sections of the bylaws have relied on the “reasonable” standard. The Work Group recommends that “reasonable” is the better standard to use in this instance, rather than rely upon what the Board “deems appropriate.”

Outcome: The current version incorporates the MAC’s recommended changes.

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SUBSTANTIVE CHANGE #8

12.1.1 (potentially expand the bylaw sections requiring both member and bylaw approval)

The current draft reads as follows:

Description of Issue: Currently member committees are not included in the bylaw sections requiring member approval and the Board could continue to make any changes it prefers without member support.

Potential Solution: Add section 8 to the list of bylaws requiring both member and board approval as follows:

Notwithstanding the foregoing, both Board and Member approvals are required to amend provisions of the Bylaws concerning Sections 1.1 and 1.2; Section 4.2; Sections 6.2 through 6.8 inclusive; Section 7.2; Section 8; Section 10; Sections 12.1 through 12. 4 inclusive; and any other sections as may be required by Utah law.

Rationale Justifying Change: The Work Group believes that changes to member committees are core to the rights and interests of members and, therefore, should require both Board and Member approvals. The Work Group further notes that Section 6.9 includes the obligation to give serious consideration to MAC recommendations, which is additional reason to require member approval for changes to the bylaws defining the MAC.

Outcome: The current version adds Section 8 into the list as requested.

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NON-SUBSTANTIVE TECHNICAL AND EDITORIAL SUGGESTIONS

1. (Throughout document): Make sure defined terms are capitalized. [One example is the definition of Reliability Standards (Section 3.21) that should be capitalized in Sections 4.7.2, 4.8b, 6.10b

2. (Throughout document): Make sure terms that are not defined terms are not capitalized. [One example is in 5.1.2 where both Membership and Class Meetings are capitalized despite not being defined terms.]

3. Definition of Bulk Power System (3.5): In the heading, Bulk Power System is not hyphenated, but in the definition it is hyphenated. This should be consistent.

Outcome: definition is now consistent.

4. Confusing language in 5.1.2

Description: Sentence is unclear and awkward by use of “in person” twice in close proximity and needs to be edited.

Outcome: the language was appropriately edited.

5. Consistent use of “and/or” in 6.2.1.4 with 6.2.1 and 8.1.1.1.

Outcome: The inconsistency was not fixed.

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6. Clarification regarding timeline of director vacancies may be helpful.

Description: According to this process, if more than a year remains in a vacant Director’s term, then a search commences. If after 6 months the search is not complete, a new NC is seated and a second search commences. However, if less than one year remains in a vacant Director’s term, the seat remains vacant or a temporary Director is seated. What isn’t clear is whether the second process kicks in if after 6 months the search is not complete, if at that point less than one year remains in the term.

Outcome: No change, but no specific change was requested.

7. Inconsistent use of “International Reliability Agreements”

The words “International Reliability Agreements” has been replaced with “applicable agreements” in 11.1.3, whereas section 13 retains “International Reliability agreements” but removes the capitalization of “agreements.”

For consistency, we recommend that both sections should reference “applicable agreements.”

Outcome: Section 13 now reads: “applicable International Reliability agreements with Canadian and Mexican authorities.” Thus, the change does not remedy the inconsistency.

8. Note regarding 3.16:

Upon further review, this language does not appear to have any impact on the ability of the MAC or the MAC members to represent the views of the membership in aggregate or by class.

Outcome: No change requested.

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