nerc compliance operations - wspp€¦ · nerc compliance operations michael moon. ... nerc...
TRANSCRIPT
NERC NERC Compliance OperationsCompliance Operations
Michael MoonDirector of Compliance OperationsMarch 8 2010
2
AgendaAgenda
Overview and EnvironmentProgram Design and FocusOrganization and FunctionsFocusStatistics and AnalysisCulture of ComplianceIssues
3
Voluntary standards were previously used to review compliance for member companies Many regions allowed flexibility in compliance and assisted the member company to achieve compliance
Volunteers staff from other member companies staffed most audits
In most cases findings of noncompliance resulted in a public posting but no monetary penalties
Compliance Monitoring in the PastCompliance Monitoring in the Past
4
Electric Reliability Organization OverviewElectric Reliability Organization Overview
United StatesFederal Energy
Regulatory Commission
MexicoComision Reguladora
de Energia
CanadaNEB Alberta British
Columbia Manitoba Ontario New Brunswick Nova Scotia
Quebec and Saskatchewan
Electric ReliabilityOrganization
RegionalEntities
Other ERO Members
Other ERO Members Bulk Power System
Owners Operators Users Bulk Power System
Owners Operators Users
ReliabilityStandards
ComplianceEnforcement
Reliability Assessment
Government Oversight
5
Modeled after other industry-based self-regulatory organizations
Regional implementationbull Regional Entities monitor
users owners amp operators
bull Delegation agreements
NERC oversight rolebull Active oversight
Substantive Review
bull Audits of regional implementation
Compliance Program DesignCompliance Program Design
GovrsquotRegulators
NERC
Regional EntitiesFRCC MRO NPCC RFCSERC SPP TRE amp WECC
Users Owners and Operators(Registered Entities)
6
About ComplianceAbout Compliance
Focus on improving bulk power system reliabilitybull Fair consistent approach
bull Prompt reporting
Protects confidentiality of involved parties
Single defined appeals process whereby resolution can be reached
Reports to governmental authorities
7
The ERO Enterprise NERC and the Regional Entities performs compliance monitoring activities
94 NERC standards mandatory in the US
54 actively monitored bull CMEP Implementation Plan updated Feb 12 2010bull httpwwwnerccomfiles20100212_Process20Bulletin_2010-
002_Update_201020Implementation20Planpdf
bull CIP standards in transitional phase
Compliance Monitoring TodayCompliance Monitoring Today
8
ResourcesResources
Compliance Registry
Reliability Standardsbull httpwwwnerccompagephpcid=2|20
Compliance Monitoring amp Enforcement Programbull NERC Rules of Procedure
bull Sanction Guidelines
Reliability Standard Audit Worksheets (RSAW)bull httpwwwnerccompagephpcid=3|22
FERC Policy Statements and Orders
9
ReliabilityCoordinator
TransmissionOperator
GenerationOperator
BalancingAuthority
TransmissionOwner
GenerationOwner
DistributionProvider
Load-ServingEntity
PlanningAuthority
(Coordinator)
Purchasing-SellingEntity
Interchange Authority
ReserveSharingGroup
TransmissionPlanner
TransmissionServiceProvider
ResourcePlanner
Functional ResponsibilitiesFunctional Responsibilities
10
Compliance ProcessCompliance Process
Region notifies NERC (amp entity) of possible alleged violation in 2-5 days ndash NERC notifies govrsquot authority
Periodic Reports
Regions continue review and evaluation
Dismissed Notice of alleged violation amp proposed penalty sent to responsible entity
Entity accepts violation ndash submits mitigation plan Entity Contests
Notice of confirmed violation sent to NERC amp responsible entity
Mitigation Plan Region Review
NERC Review
Govrsquot ReviewNERC BOTCC reviews amp approves
regionrsquos proposed penalty
Notice of penalty or settlement sent to FERC in US amp posted to NERC website (Processes differ in Canada)
5 DAY WAITING PERIOD
Settlement negotiations
Settlement Reached Regional Hearing
Appeals ProcessSettlement Approved by BOTCC
Self- Certification
Exception CVI Spot Check
Audits Self- Report
CO
NFI
DEN
TIA
L
Complaint
11
ComplianceCompliance EnvironmentEnvironment
CCC (SIS)
Investigations
Stakeholders+ EEI APPA
NRECA ELCON EPSA
Board of Trusteesand BOT Compliance Committee
Regulators
NERC Staff
Audits
Compliance
Regions x8
Enforcement
InvestigationsOperations
Board x8
12
NERC Compliance Organization NERC Compliance Organization -- ThenThen
Manager Registration amp CertificationCraig Lawrence
Manager Compliance Violation InvestigationsEarl Shockley
Director of Regional OperationsJoel deJesus
Senior Compliance Investigators
Vice President amp Director of ComplianceDavid Hilt
Regional Compliance Auditors
Manager Enforcement amp Mitigation Tim Kucey
Manager Compliance Analysis Reporting amp Tracking amp TFE Mike DeLaura
Director of Compliance Program Operations amp InterfacesMike Moon
Senior Regional Entity Compliance Program Auditors
Compliance Investigators
AuditsAnnual Plan
InvestigationsInquiries
RegistrationCertification
CEA
Analysis MitigationEnforcement
13
NERC Compliance Organization NERC Compliance Organization -- NowNow
VP amp Director of Operations and
EngineeringDavid Hilt
Enforcement amp Mitigation
Compliance Analysis
Reporting amp Tracking
Director of Compliance OperationsMike Moon
Director of Compliance EnforcementJoel deJesus
Registration amp Certification
Audit Assurance amp
Oversight
Audit Assistance
and Training
Outreach and Standards Interface
Event Analysis and Investigations
Situational Awareness
Planning
Training and Assistance
System Analysis and
Reliability Initiatives
Operations
14
Compliance OperationsCompliance Operations
Realignment as of February 1 2010
Primary Effort help make the regional entities successful
Critical Documentsbull Annual CMEP Implementation Plan and Actively Monitored Listbull Reliability Standards Audit Worksheetbull Audit Observation reportsbull Compliance Registry
Key initiativesbull Publish lessons learnedbest practices to support consistencybull Provided feed back loop to Standards departmentbull Develop Compliance Application of Standards bulletinsbull Assist the regions during auditsbull Leverage experts in the regions to improve trainingconsistency
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
2
AgendaAgenda
Overview and EnvironmentProgram Design and FocusOrganization and FunctionsFocusStatistics and AnalysisCulture of ComplianceIssues
3
Voluntary standards were previously used to review compliance for member companies Many regions allowed flexibility in compliance and assisted the member company to achieve compliance
Volunteers staff from other member companies staffed most audits
In most cases findings of noncompliance resulted in a public posting but no monetary penalties
Compliance Monitoring in the PastCompliance Monitoring in the Past
4
Electric Reliability Organization OverviewElectric Reliability Organization Overview
United StatesFederal Energy
Regulatory Commission
MexicoComision Reguladora
de Energia
CanadaNEB Alberta British
Columbia Manitoba Ontario New Brunswick Nova Scotia
Quebec and Saskatchewan
Electric ReliabilityOrganization
RegionalEntities
Other ERO Members
Other ERO Members Bulk Power System
Owners Operators Users Bulk Power System
Owners Operators Users
ReliabilityStandards
ComplianceEnforcement
Reliability Assessment
Government Oversight
5
Modeled after other industry-based self-regulatory organizations
Regional implementationbull Regional Entities monitor
users owners amp operators
bull Delegation agreements
NERC oversight rolebull Active oversight
Substantive Review
bull Audits of regional implementation
Compliance Program DesignCompliance Program Design
GovrsquotRegulators
NERC
Regional EntitiesFRCC MRO NPCC RFCSERC SPP TRE amp WECC
Users Owners and Operators(Registered Entities)
6
About ComplianceAbout Compliance
Focus on improving bulk power system reliabilitybull Fair consistent approach
bull Prompt reporting
Protects confidentiality of involved parties
Single defined appeals process whereby resolution can be reached
Reports to governmental authorities
7
The ERO Enterprise NERC and the Regional Entities performs compliance monitoring activities
94 NERC standards mandatory in the US
54 actively monitored bull CMEP Implementation Plan updated Feb 12 2010bull httpwwwnerccomfiles20100212_Process20Bulletin_2010-
002_Update_201020Implementation20Planpdf
bull CIP standards in transitional phase
Compliance Monitoring TodayCompliance Monitoring Today
8
ResourcesResources
Compliance Registry
Reliability Standardsbull httpwwwnerccompagephpcid=2|20
Compliance Monitoring amp Enforcement Programbull NERC Rules of Procedure
bull Sanction Guidelines
Reliability Standard Audit Worksheets (RSAW)bull httpwwwnerccompagephpcid=3|22
FERC Policy Statements and Orders
9
ReliabilityCoordinator
TransmissionOperator
GenerationOperator
BalancingAuthority
TransmissionOwner
GenerationOwner
DistributionProvider
Load-ServingEntity
PlanningAuthority
(Coordinator)
Purchasing-SellingEntity
Interchange Authority
ReserveSharingGroup
TransmissionPlanner
TransmissionServiceProvider
ResourcePlanner
Functional ResponsibilitiesFunctional Responsibilities
10
Compliance ProcessCompliance Process
Region notifies NERC (amp entity) of possible alleged violation in 2-5 days ndash NERC notifies govrsquot authority
Periodic Reports
Regions continue review and evaluation
Dismissed Notice of alleged violation amp proposed penalty sent to responsible entity
Entity accepts violation ndash submits mitigation plan Entity Contests
Notice of confirmed violation sent to NERC amp responsible entity
Mitigation Plan Region Review
NERC Review
Govrsquot ReviewNERC BOTCC reviews amp approves
regionrsquos proposed penalty
Notice of penalty or settlement sent to FERC in US amp posted to NERC website (Processes differ in Canada)
5 DAY WAITING PERIOD
Settlement negotiations
Settlement Reached Regional Hearing
Appeals ProcessSettlement Approved by BOTCC
Self- Certification
Exception CVI Spot Check
Audits Self- Report
CO
NFI
DEN
TIA
L
Complaint
11
ComplianceCompliance EnvironmentEnvironment
CCC (SIS)
Investigations
Stakeholders+ EEI APPA
NRECA ELCON EPSA
Board of Trusteesand BOT Compliance Committee
Regulators
NERC Staff
Audits
Compliance
Regions x8
Enforcement
InvestigationsOperations
Board x8
12
NERC Compliance Organization NERC Compliance Organization -- ThenThen
Manager Registration amp CertificationCraig Lawrence
Manager Compliance Violation InvestigationsEarl Shockley
Director of Regional OperationsJoel deJesus
Senior Compliance Investigators
Vice President amp Director of ComplianceDavid Hilt
Regional Compliance Auditors
Manager Enforcement amp Mitigation Tim Kucey
Manager Compliance Analysis Reporting amp Tracking amp TFE Mike DeLaura
Director of Compliance Program Operations amp InterfacesMike Moon
Senior Regional Entity Compliance Program Auditors
Compliance Investigators
AuditsAnnual Plan
InvestigationsInquiries
RegistrationCertification
CEA
Analysis MitigationEnforcement
13
NERC Compliance Organization NERC Compliance Organization -- NowNow
VP amp Director of Operations and
EngineeringDavid Hilt
Enforcement amp Mitigation
Compliance Analysis
Reporting amp Tracking
Director of Compliance OperationsMike Moon
Director of Compliance EnforcementJoel deJesus
Registration amp Certification
Audit Assurance amp
Oversight
Audit Assistance
and Training
Outreach and Standards Interface
Event Analysis and Investigations
Situational Awareness
Planning
Training and Assistance
System Analysis and
Reliability Initiatives
Operations
14
Compliance OperationsCompliance Operations
Realignment as of February 1 2010
Primary Effort help make the regional entities successful
Critical Documentsbull Annual CMEP Implementation Plan and Actively Monitored Listbull Reliability Standards Audit Worksheetbull Audit Observation reportsbull Compliance Registry
Key initiativesbull Publish lessons learnedbest practices to support consistencybull Provided feed back loop to Standards departmentbull Develop Compliance Application of Standards bulletinsbull Assist the regions during auditsbull Leverage experts in the regions to improve trainingconsistency
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
3
Voluntary standards were previously used to review compliance for member companies Many regions allowed flexibility in compliance and assisted the member company to achieve compliance
Volunteers staff from other member companies staffed most audits
In most cases findings of noncompliance resulted in a public posting but no monetary penalties
Compliance Monitoring in the PastCompliance Monitoring in the Past
4
Electric Reliability Organization OverviewElectric Reliability Organization Overview
United StatesFederal Energy
Regulatory Commission
MexicoComision Reguladora
de Energia
CanadaNEB Alberta British
Columbia Manitoba Ontario New Brunswick Nova Scotia
Quebec and Saskatchewan
Electric ReliabilityOrganization
RegionalEntities
Other ERO Members
Other ERO Members Bulk Power System
Owners Operators Users Bulk Power System
Owners Operators Users
ReliabilityStandards
ComplianceEnforcement
Reliability Assessment
Government Oversight
5
Modeled after other industry-based self-regulatory organizations
Regional implementationbull Regional Entities monitor
users owners amp operators
bull Delegation agreements
NERC oversight rolebull Active oversight
Substantive Review
bull Audits of regional implementation
Compliance Program DesignCompliance Program Design
GovrsquotRegulators
NERC
Regional EntitiesFRCC MRO NPCC RFCSERC SPP TRE amp WECC
Users Owners and Operators(Registered Entities)
6
About ComplianceAbout Compliance
Focus on improving bulk power system reliabilitybull Fair consistent approach
bull Prompt reporting
Protects confidentiality of involved parties
Single defined appeals process whereby resolution can be reached
Reports to governmental authorities
7
The ERO Enterprise NERC and the Regional Entities performs compliance monitoring activities
94 NERC standards mandatory in the US
54 actively monitored bull CMEP Implementation Plan updated Feb 12 2010bull httpwwwnerccomfiles20100212_Process20Bulletin_2010-
002_Update_201020Implementation20Planpdf
bull CIP standards in transitional phase
Compliance Monitoring TodayCompliance Monitoring Today
8
ResourcesResources
Compliance Registry
Reliability Standardsbull httpwwwnerccompagephpcid=2|20
Compliance Monitoring amp Enforcement Programbull NERC Rules of Procedure
bull Sanction Guidelines
Reliability Standard Audit Worksheets (RSAW)bull httpwwwnerccompagephpcid=3|22
FERC Policy Statements and Orders
9
ReliabilityCoordinator
TransmissionOperator
GenerationOperator
BalancingAuthority
TransmissionOwner
GenerationOwner
DistributionProvider
Load-ServingEntity
PlanningAuthority
(Coordinator)
Purchasing-SellingEntity
Interchange Authority
ReserveSharingGroup
TransmissionPlanner
TransmissionServiceProvider
ResourcePlanner
Functional ResponsibilitiesFunctional Responsibilities
10
Compliance ProcessCompliance Process
Region notifies NERC (amp entity) of possible alleged violation in 2-5 days ndash NERC notifies govrsquot authority
Periodic Reports
Regions continue review and evaluation
Dismissed Notice of alleged violation amp proposed penalty sent to responsible entity
Entity accepts violation ndash submits mitigation plan Entity Contests
Notice of confirmed violation sent to NERC amp responsible entity
Mitigation Plan Region Review
NERC Review
Govrsquot ReviewNERC BOTCC reviews amp approves
regionrsquos proposed penalty
Notice of penalty or settlement sent to FERC in US amp posted to NERC website (Processes differ in Canada)
5 DAY WAITING PERIOD
Settlement negotiations
Settlement Reached Regional Hearing
Appeals ProcessSettlement Approved by BOTCC
Self- Certification
Exception CVI Spot Check
Audits Self- Report
CO
NFI
DEN
TIA
L
Complaint
11
ComplianceCompliance EnvironmentEnvironment
CCC (SIS)
Investigations
Stakeholders+ EEI APPA
NRECA ELCON EPSA
Board of Trusteesand BOT Compliance Committee
Regulators
NERC Staff
Audits
Compliance
Regions x8
Enforcement
InvestigationsOperations
Board x8
12
NERC Compliance Organization NERC Compliance Organization -- ThenThen
Manager Registration amp CertificationCraig Lawrence
Manager Compliance Violation InvestigationsEarl Shockley
Director of Regional OperationsJoel deJesus
Senior Compliance Investigators
Vice President amp Director of ComplianceDavid Hilt
Regional Compliance Auditors
Manager Enforcement amp Mitigation Tim Kucey
Manager Compliance Analysis Reporting amp Tracking amp TFE Mike DeLaura
Director of Compliance Program Operations amp InterfacesMike Moon
Senior Regional Entity Compliance Program Auditors
Compliance Investigators
AuditsAnnual Plan
InvestigationsInquiries
RegistrationCertification
CEA
Analysis MitigationEnforcement
13
NERC Compliance Organization NERC Compliance Organization -- NowNow
VP amp Director of Operations and
EngineeringDavid Hilt
Enforcement amp Mitigation
Compliance Analysis
Reporting amp Tracking
Director of Compliance OperationsMike Moon
Director of Compliance EnforcementJoel deJesus
Registration amp Certification
Audit Assurance amp
Oversight
Audit Assistance
and Training
Outreach and Standards Interface
Event Analysis and Investigations
Situational Awareness
Planning
Training and Assistance
System Analysis and
Reliability Initiatives
Operations
14
Compliance OperationsCompliance Operations
Realignment as of February 1 2010
Primary Effort help make the regional entities successful
Critical Documentsbull Annual CMEP Implementation Plan and Actively Monitored Listbull Reliability Standards Audit Worksheetbull Audit Observation reportsbull Compliance Registry
Key initiativesbull Publish lessons learnedbest practices to support consistencybull Provided feed back loop to Standards departmentbull Develop Compliance Application of Standards bulletinsbull Assist the regions during auditsbull Leverage experts in the regions to improve trainingconsistency
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
4
Electric Reliability Organization OverviewElectric Reliability Organization Overview
United StatesFederal Energy
Regulatory Commission
MexicoComision Reguladora
de Energia
CanadaNEB Alberta British
Columbia Manitoba Ontario New Brunswick Nova Scotia
Quebec and Saskatchewan
Electric ReliabilityOrganization
RegionalEntities
Other ERO Members
Other ERO Members Bulk Power System
Owners Operators Users Bulk Power System
Owners Operators Users
ReliabilityStandards
ComplianceEnforcement
Reliability Assessment
Government Oversight
5
Modeled after other industry-based self-regulatory organizations
Regional implementationbull Regional Entities monitor
users owners amp operators
bull Delegation agreements
NERC oversight rolebull Active oversight
Substantive Review
bull Audits of regional implementation
Compliance Program DesignCompliance Program Design
GovrsquotRegulators
NERC
Regional EntitiesFRCC MRO NPCC RFCSERC SPP TRE amp WECC
Users Owners and Operators(Registered Entities)
6
About ComplianceAbout Compliance
Focus on improving bulk power system reliabilitybull Fair consistent approach
bull Prompt reporting
Protects confidentiality of involved parties
Single defined appeals process whereby resolution can be reached
Reports to governmental authorities
7
The ERO Enterprise NERC and the Regional Entities performs compliance monitoring activities
94 NERC standards mandatory in the US
54 actively monitored bull CMEP Implementation Plan updated Feb 12 2010bull httpwwwnerccomfiles20100212_Process20Bulletin_2010-
002_Update_201020Implementation20Planpdf
bull CIP standards in transitional phase
Compliance Monitoring TodayCompliance Monitoring Today
8
ResourcesResources
Compliance Registry
Reliability Standardsbull httpwwwnerccompagephpcid=2|20
Compliance Monitoring amp Enforcement Programbull NERC Rules of Procedure
bull Sanction Guidelines
Reliability Standard Audit Worksheets (RSAW)bull httpwwwnerccompagephpcid=3|22
FERC Policy Statements and Orders
9
ReliabilityCoordinator
TransmissionOperator
GenerationOperator
BalancingAuthority
TransmissionOwner
GenerationOwner
DistributionProvider
Load-ServingEntity
PlanningAuthority
(Coordinator)
Purchasing-SellingEntity
Interchange Authority
ReserveSharingGroup
TransmissionPlanner
TransmissionServiceProvider
ResourcePlanner
Functional ResponsibilitiesFunctional Responsibilities
10
Compliance ProcessCompliance Process
Region notifies NERC (amp entity) of possible alleged violation in 2-5 days ndash NERC notifies govrsquot authority
Periodic Reports
Regions continue review and evaluation
Dismissed Notice of alleged violation amp proposed penalty sent to responsible entity
Entity accepts violation ndash submits mitigation plan Entity Contests
Notice of confirmed violation sent to NERC amp responsible entity
Mitigation Plan Region Review
NERC Review
Govrsquot ReviewNERC BOTCC reviews amp approves
regionrsquos proposed penalty
Notice of penalty or settlement sent to FERC in US amp posted to NERC website (Processes differ in Canada)
5 DAY WAITING PERIOD
Settlement negotiations
Settlement Reached Regional Hearing
Appeals ProcessSettlement Approved by BOTCC
Self- Certification
Exception CVI Spot Check
Audits Self- Report
CO
NFI
DEN
TIA
L
Complaint
11
ComplianceCompliance EnvironmentEnvironment
CCC (SIS)
Investigations
Stakeholders+ EEI APPA
NRECA ELCON EPSA
Board of Trusteesand BOT Compliance Committee
Regulators
NERC Staff
Audits
Compliance
Regions x8
Enforcement
InvestigationsOperations
Board x8
12
NERC Compliance Organization NERC Compliance Organization -- ThenThen
Manager Registration amp CertificationCraig Lawrence
Manager Compliance Violation InvestigationsEarl Shockley
Director of Regional OperationsJoel deJesus
Senior Compliance Investigators
Vice President amp Director of ComplianceDavid Hilt
Regional Compliance Auditors
Manager Enforcement amp Mitigation Tim Kucey
Manager Compliance Analysis Reporting amp Tracking amp TFE Mike DeLaura
Director of Compliance Program Operations amp InterfacesMike Moon
Senior Regional Entity Compliance Program Auditors
Compliance Investigators
AuditsAnnual Plan
InvestigationsInquiries
RegistrationCertification
CEA
Analysis MitigationEnforcement
13
NERC Compliance Organization NERC Compliance Organization -- NowNow
VP amp Director of Operations and
EngineeringDavid Hilt
Enforcement amp Mitigation
Compliance Analysis
Reporting amp Tracking
Director of Compliance OperationsMike Moon
Director of Compliance EnforcementJoel deJesus
Registration amp Certification
Audit Assurance amp
Oversight
Audit Assistance
and Training
Outreach and Standards Interface
Event Analysis and Investigations
Situational Awareness
Planning
Training and Assistance
System Analysis and
Reliability Initiatives
Operations
14
Compliance OperationsCompliance Operations
Realignment as of February 1 2010
Primary Effort help make the regional entities successful
Critical Documentsbull Annual CMEP Implementation Plan and Actively Monitored Listbull Reliability Standards Audit Worksheetbull Audit Observation reportsbull Compliance Registry
Key initiativesbull Publish lessons learnedbest practices to support consistencybull Provided feed back loop to Standards departmentbull Develop Compliance Application of Standards bulletinsbull Assist the regions during auditsbull Leverage experts in the regions to improve trainingconsistency
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
5
Modeled after other industry-based self-regulatory organizations
Regional implementationbull Regional Entities monitor
users owners amp operators
bull Delegation agreements
NERC oversight rolebull Active oversight
Substantive Review
bull Audits of regional implementation
Compliance Program DesignCompliance Program Design
GovrsquotRegulators
NERC
Regional EntitiesFRCC MRO NPCC RFCSERC SPP TRE amp WECC
Users Owners and Operators(Registered Entities)
6
About ComplianceAbout Compliance
Focus on improving bulk power system reliabilitybull Fair consistent approach
bull Prompt reporting
Protects confidentiality of involved parties
Single defined appeals process whereby resolution can be reached
Reports to governmental authorities
7
The ERO Enterprise NERC and the Regional Entities performs compliance monitoring activities
94 NERC standards mandatory in the US
54 actively monitored bull CMEP Implementation Plan updated Feb 12 2010bull httpwwwnerccomfiles20100212_Process20Bulletin_2010-
002_Update_201020Implementation20Planpdf
bull CIP standards in transitional phase
Compliance Monitoring TodayCompliance Monitoring Today
8
ResourcesResources
Compliance Registry
Reliability Standardsbull httpwwwnerccompagephpcid=2|20
Compliance Monitoring amp Enforcement Programbull NERC Rules of Procedure
bull Sanction Guidelines
Reliability Standard Audit Worksheets (RSAW)bull httpwwwnerccompagephpcid=3|22
FERC Policy Statements and Orders
9
ReliabilityCoordinator
TransmissionOperator
GenerationOperator
BalancingAuthority
TransmissionOwner
GenerationOwner
DistributionProvider
Load-ServingEntity
PlanningAuthority
(Coordinator)
Purchasing-SellingEntity
Interchange Authority
ReserveSharingGroup
TransmissionPlanner
TransmissionServiceProvider
ResourcePlanner
Functional ResponsibilitiesFunctional Responsibilities
10
Compliance ProcessCompliance Process
Region notifies NERC (amp entity) of possible alleged violation in 2-5 days ndash NERC notifies govrsquot authority
Periodic Reports
Regions continue review and evaluation
Dismissed Notice of alleged violation amp proposed penalty sent to responsible entity
Entity accepts violation ndash submits mitigation plan Entity Contests
Notice of confirmed violation sent to NERC amp responsible entity
Mitigation Plan Region Review
NERC Review
Govrsquot ReviewNERC BOTCC reviews amp approves
regionrsquos proposed penalty
Notice of penalty or settlement sent to FERC in US amp posted to NERC website (Processes differ in Canada)
5 DAY WAITING PERIOD
Settlement negotiations
Settlement Reached Regional Hearing
Appeals ProcessSettlement Approved by BOTCC
Self- Certification
Exception CVI Spot Check
Audits Self- Report
CO
NFI
DEN
TIA
L
Complaint
11
ComplianceCompliance EnvironmentEnvironment
CCC (SIS)
Investigations
Stakeholders+ EEI APPA
NRECA ELCON EPSA
Board of Trusteesand BOT Compliance Committee
Regulators
NERC Staff
Audits
Compliance
Regions x8
Enforcement
InvestigationsOperations
Board x8
12
NERC Compliance Organization NERC Compliance Organization -- ThenThen
Manager Registration amp CertificationCraig Lawrence
Manager Compliance Violation InvestigationsEarl Shockley
Director of Regional OperationsJoel deJesus
Senior Compliance Investigators
Vice President amp Director of ComplianceDavid Hilt
Regional Compliance Auditors
Manager Enforcement amp Mitigation Tim Kucey
Manager Compliance Analysis Reporting amp Tracking amp TFE Mike DeLaura
Director of Compliance Program Operations amp InterfacesMike Moon
Senior Regional Entity Compliance Program Auditors
Compliance Investigators
AuditsAnnual Plan
InvestigationsInquiries
RegistrationCertification
CEA
Analysis MitigationEnforcement
13
NERC Compliance Organization NERC Compliance Organization -- NowNow
VP amp Director of Operations and
EngineeringDavid Hilt
Enforcement amp Mitigation
Compliance Analysis
Reporting amp Tracking
Director of Compliance OperationsMike Moon
Director of Compliance EnforcementJoel deJesus
Registration amp Certification
Audit Assurance amp
Oversight
Audit Assistance
and Training
Outreach and Standards Interface
Event Analysis and Investigations
Situational Awareness
Planning
Training and Assistance
System Analysis and
Reliability Initiatives
Operations
14
Compliance OperationsCompliance Operations
Realignment as of February 1 2010
Primary Effort help make the regional entities successful
Critical Documentsbull Annual CMEP Implementation Plan and Actively Monitored Listbull Reliability Standards Audit Worksheetbull Audit Observation reportsbull Compliance Registry
Key initiativesbull Publish lessons learnedbest practices to support consistencybull Provided feed back loop to Standards departmentbull Develop Compliance Application of Standards bulletinsbull Assist the regions during auditsbull Leverage experts in the regions to improve trainingconsistency
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
6
About ComplianceAbout Compliance
Focus on improving bulk power system reliabilitybull Fair consistent approach
bull Prompt reporting
Protects confidentiality of involved parties
Single defined appeals process whereby resolution can be reached
Reports to governmental authorities
7
The ERO Enterprise NERC and the Regional Entities performs compliance monitoring activities
94 NERC standards mandatory in the US
54 actively monitored bull CMEP Implementation Plan updated Feb 12 2010bull httpwwwnerccomfiles20100212_Process20Bulletin_2010-
002_Update_201020Implementation20Planpdf
bull CIP standards in transitional phase
Compliance Monitoring TodayCompliance Monitoring Today
8
ResourcesResources
Compliance Registry
Reliability Standardsbull httpwwwnerccompagephpcid=2|20
Compliance Monitoring amp Enforcement Programbull NERC Rules of Procedure
bull Sanction Guidelines
Reliability Standard Audit Worksheets (RSAW)bull httpwwwnerccompagephpcid=3|22
FERC Policy Statements and Orders
9
ReliabilityCoordinator
TransmissionOperator
GenerationOperator
BalancingAuthority
TransmissionOwner
GenerationOwner
DistributionProvider
Load-ServingEntity
PlanningAuthority
(Coordinator)
Purchasing-SellingEntity
Interchange Authority
ReserveSharingGroup
TransmissionPlanner
TransmissionServiceProvider
ResourcePlanner
Functional ResponsibilitiesFunctional Responsibilities
10
Compliance ProcessCompliance Process
Region notifies NERC (amp entity) of possible alleged violation in 2-5 days ndash NERC notifies govrsquot authority
Periodic Reports
Regions continue review and evaluation
Dismissed Notice of alleged violation amp proposed penalty sent to responsible entity
Entity accepts violation ndash submits mitigation plan Entity Contests
Notice of confirmed violation sent to NERC amp responsible entity
Mitigation Plan Region Review
NERC Review
Govrsquot ReviewNERC BOTCC reviews amp approves
regionrsquos proposed penalty
Notice of penalty or settlement sent to FERC in US amp posted to NERC website (Processes differ in Canada)
5 DAY WAITING PERIOD
Settlement negotiations
Settlement Reached Regional Hearing
Appeals ProcessSettlement Approved by BOTCC
Self- Certification
Exception CVI Spot Check
Audits Self- Report
CO
NFI
DEN
TIA
L
Complaint
11
ComplianceCompliance EnvironmentEnvironment
CCC (SIS)
Investigations
Stakeholders+ EEI APPA
NRECA ELCON EPSA
Board of Trusteesand BOT Compliance Committee
Regulators
NERC Staff
Audits
Compliance
Regions x8
Enforcement
InvestigationsOperations
Board x8
12
NERC Compliance Organization NERC Compliance Organization -- ThenThen
Manager Registration amp CertificationCraig Lawrence
Manager Compliance Violation InvestigationsEarl Shockley
Director of Regional OperationsJoel deJesus
Senior Compliance Investigators
Vice President amp Director of ComplianceDavid Hilt
Regional Compliance Auditors
Manager Enforcement amp Mitigation Tim Kucey
Manager Compliance Analysis Reporting amp Tracking amp TFE Mike DeLaura
Director of Compliance Program Operations amp InterfacesMike Moon
Senior Regional Entity Compliance Program Auditors
Compliance Investigators
AuditsAnnual Plan
InvestigationsInquiries
RegistrationCertification
CEA
Analysis MitigationEnforcement
13
NERC Compliance Organization NERC Compliance Organization -- NowNow
VP amp Director of Operations and
EngineeringDavid Hilt
Enforcement amp Mitigation
Compliance Analysis
Reporting amp Tracking
Director of Compliance OperationsMike Moon
Director of Compliance EnforcementJoel deJesus
Registration amp Certification
Audit Assurance amp
Oversight
Audit Assistance
and Training
Outreach and Standards Interface
Event Analysis and Investigations
Situational Awareness
Planning
Training and Assistance
System Analysis and
Reliability Initiatives
Operations
14
Compliance OperationsCompliance Operations
Realignment as of February 1 2010
Primary Effort help make the regional entities successful
Critical Documentsbull Annual CMEP Implementation Plan and Actively Monitored Listbull Reliability Standards Audit Worksheetbull Audit Observation reportsbull Compliance Registry
Key initiativesbull Publish lessons learnedbest practices to support consistencybull Provided feed back loop to Standards departmentbull Develop Compliance Application of Standards bulletinsbull Assist the regions during auditsbull Leverage experts in the regions to improve trainingconsistency
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
7
The ERO Enterprise NERC and the Regional Entities performs compliance monitoring activities
94 NERC standards mandatory in the US
54 actively monitored bull CMEP Implementation Plan updated Feb 12 2010bull httpwwwnerccomfiles20100212_Process20Bulletin_2010-
002_Update_201020Implementation20Planpdf
bull CIP standards in transitional phase
Compliance Monitoring TodayCompliance Monitoring Today
8
ResourcesResources
Compliance Registry
Reliability Standardsbull httpwwwnerccompagephpcid=2|20
Compliance Monitoring amp Enforcement Programbull NERC Rules of Procedure
bull Sanction Guidelines
Reliability Standard Audit Worksheets (RSAW)bull httpwwwnerccompagephpcid=3|22
FERC Policy Statements and Orders
9
ReliabilityCoordinator
TransmissionOperator
GenerationOperator
BalancingAuthority
TransmissionOwner
GenerationOwner
DistributionProvider
Load-ServingEntity
PlanningAuthority
(Coordinator)
Purchasing-SellingEntity
Interchange Authority
ReserveSharingGroup
TransmissionPlanner
TransmissionServiceProvider
ResourcePlanner
Functional ResponsibilitiesFunctional Responsibilities
10
Compliance ProcessCompliance Process
Region notifies NERC (amp entity) of possible alleged violation in 2-5 days ndash NERC notifies govrsquot authority
Periodic Reports
Regions continue review and evaluation
Dismissed Notice of alleged violation amp proposed penalty sent to responsible entity
Entity accepts violation ndash submits mitigation plan Entity Contests
Notice of confirmed violation sent to NERC amp responsible entity
Mitigation Plan Region Review
NERC Review
Govrsquot ReviewNERC BOTCC reviews amp approves
regionrsquos proposed penalty
Notice of penalty or settlement sent to FERC in US amp posted to NERC website (Processes differ in Canada)
5 DAY WAITING PERIOD
Settlement negotiations
Settlement Reached Regional Hearing
Appeals ProcessSettlement Approved by BOTCC
Self- Certification
Exception CVI Spot Check
Audits Self- Report
CO
NFI
DEN
TIA
L
Complaint
11
ComplianceCompliance EnvironmentEnvironment
CCC (SIS)
Investigations
Stakeholders+ EEI APPA
NRECA ELCON EPSA
Board of Trusteesand BOT Compliance Committee
Regulators
NERC Staff
Audits
Compliance
Regions x8
Enforcement
InvestigationsOperations
Board x8
12
NERC Compliance Organization NERC Compliance Organization -- ThenThen
Manager Registration amp CertificationCraig Lawrence
Manager Compliance Violation InvestigationsEarl Shockley
Director of Regional OperationsJoel deJesus
Senior Compliance Investigators
Vice President amp Director of ComplianceDavid Hilt
Regional Compliance Auditors
Manager Enforcement amp Mitigation Tim Kucey
Manager Compliance Analysis Reporting amp Tracking amp TFE Mike DeLaura
Director of Compliance Program Operations amp InterfacesMike Moon
Senior Regional Entity Compliance Program Auditors
Compliance Investigators
AuditsAnnual Plan
InvestigationsInquiries
RegistrationCertification
CEA
Analysis MitigationEnforcement
13
NERC Compliance Organization NERC Compliance Organization -- NowNow
VP amp Director of Operations and
EngineeringDavid Hilt
Enforcement amp Mitigation
Compliance Analysis
Reporting amp Tracking
Director of Compliance OperationsMike Moon
Director of Compliance EnforcementJoel deJesus
Registration amp Certification
Audit Assurance amp
Oversight
Audit Assistance
and Training
Outreach and Standards Interface
Event Analysis and Investigations
Situational Awareness
Planning
Training and Assistance
System Analysis and
Reliability Initiatives
Operations
14
Compliance OperationsCompliance Operations
Realignment as of February 1 2010
Primary Effort help make the regional entities successful
Critical Documentsbull Annual CMEP Implementation Plan and Actively Monitored Listbull Reliability Standards Audit Worksheetbull Audit Observation reportsbull Compliance Registry
Key initiativesbull Publish lessons learnedbest practices to support consistencybull Provided feed back loop to Standards departmentbull Develop Compliance Application of Standards bulletinsbull Assist the regions during auditsbull Leverage experts in the regions to improve trainingconsistency
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
8
ResourcesResources
Compliance Registry
Reliability Standardsbull httpwwwnerccompagephpcid=2|20
Compliance Monitoring amp Enforcement Programbull NERC Rules of Procedure
bull Sanction Guidelines
Reliability Standard Audit Worksheets (RSAW)bull httpwwwnerccompagephpcid=3|22
FERC Policy Statements and Orders
9
ReliabilityCoordinator
TransmissionOperator
GenerationOperator
BalancingAuthority
TransmissionOwner
GenerationOwner
DistributionProvider
Load-ServingEntity
PlanningAuthority
(Coordinator)
Purchasing-SellingEntity
Interchange Authority
ReserveSharingGroup
TransmissionPlanner
TransmissionServiceProvider
ResourcePlanner
Functional ResponsibilitiesFunctional Responsibilities
10
Compliance ProcessCompliance Process
Region notifies NERC (amp entity) of possible alleged violation in 2-5 days ndash NERC notifies govrsquot authority
Periodic Reports
Regions continue review and evaluation
Dismissed Notice of alleged violation amp proposed penalty sent to responsible entity
Entity accepts violation ndash submits mitigation plan Entity Contests
Notice of confirmed violation sent to NERC amp responsible entity
Mitigation Plan Region Review
NERC Review
Govrsquot ReviewNERC BOTCC reviews amp approves
regionrsquos proposed penalty
Notice of penalty or settlement sent to FERC in US amp posted to NERC website (Processes differ in Canada)
5 DAY WAITING PERIOD
Settlement negotiations
Settlement Reached Regional Hearing
Appeals ProcessSettlement Approved by BOTCC
Self- Certification
Exception CVI Spot Check
Audits Self- Report
CO
NFI
DEN
TIA
L
Complaint
11
ComplianceCompliance EnvironmentEnvironment
CCC (SIS)
Investigations
Stakeholders+ EEI APPA
NRECA ELCON EPSA
Board of Trusteesand BOT Compliance Committee
Regulators
NERC Staff
Audits
Compliance
Regions x8
Enforcement
InvestigationsOperations
Board x8
12
NERC Compliance Organization NERC Compliance Organization -- ThenThen
Manager Registration amp CertificationCraig Lawrence
Manager Compliance Violation InvestigationsEarl Shockley
Director of Regional OperationsJoel deJesus
Senior Compliance Investigators
Vice President amp Director of ComplianceDavid Hilt
Regional Compliance Auditors
Manager Enforcement amp Mitigation Tim Kucey
Manager Compliance Analysis Reporting amp Tracking amp TFE Mike DeLaura
Director of Compliance Program Operations amp InterfacesMike Moon
Senior Regional Entity Compliance Program Auditors
Compliance Investigators
AuditsAnnual Plan
InvestigationsInquiries
RegistrationCertification
CEA
Analysis MitigationEnforcement
13
NERC Compliance Organization NERC Compliance Organization -- NowNow
VP amp Director of Operations and
EngineeringDavid Hilt
Enforcement amp Mitigation
Compliance Analysis
Reporting amp Tracking
Director of Compliance OperationsMike Moon
Director of Compliance EnforcementJoel deJesus
Registration amp Certification
Audit Assurance amp
Oversight
Audit Assistance
and Training
Outreach and Standards Interface
Event Analysis and Investigations
Situational Awareness
Planning
Training and Assistance
System Analysis and
Reliability Initiatives
Operations
14
Compliance OperationsCompliance Operations
Realignment as of February 1 2010
Primary Effort help make the regional entities successful
Critical Documentsbull Annual CMEP Implementation Plan and Actively Monitored Listbull Reliability Standards Audit Worksheetbull Audit Observation reportsbull Compliance Registry
Key initiativesbull Publish lessons learnedbest practices to support consistencybull Provided feed back loop to Standards departmentbull Develop Compliance Application of Standards bulletinsbull Assist the regions during auditsbull Leverage experts in the regions to improve trainingconsistency
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
9
ReliabilityCoordinator
TransmissionOperator
GenerationOperator
BalancingAuthority
TransmissionOwner
GenerationOwner
DistributionProvider
Load-ServingEntity
PlanningAuthority
(Coordinator)
Purchasing-SellingEntity
Interchange Authority
ReserveSharingGroup
TransmissionPlanner
TransmissionServiceProvider
ResourcePlanner
Functional ResponsibilitiesFunctional Responsibilities
10
Compliance ProcessCompliance Process
Region notifies NERC (amp entity) of possible alleged violation in 2-5 days ndash NERC notifies govrsquot authority
Periodic Reports
Regions continue review and evaluation
Dismissed Notice of alleged violation amp proposed penalty sent to responsible entity
Entity accepts violation ndash submits mitigation plan Entity Contests
Notice of confirmed violation sent to NERC amp responsible entity
Mitigation Plan Region Review
NERC Review
Govrsquot ReviewNERC BOTCC reviews amp approves
regionrsquos proposed penalty
Notice of penalty or settlement sent to FERC in US amp posted to NERC website (Processes differ in Canada)
5 DAY WAITING PERIOD
Settlement negotiations
Settlement Reached Regional Hearing
Appeals ProcessSettlement Approved by BOTCC
Self- Certification
Exception CVI Spot Check
Audits Self- Report
CO
NFI
DEN
TIA
L
Complaint
11
ComplianceCompliance EnvironmentEnvironment
CCC (SIS)
Investigations
Stakeholders+ EEI APPA
NRECA ELCON EPSA
Board of Trusteesand BOT Compliance Committee
Regulators
NERC Staff
Audits
Compliance
Regions x8
Enforcement
InvestigationsOperations
Board x8
12
NERC Compliance Organization NERC Compliance Organization -- ThenThen
Manager Registration amp CertificationCraig Lawrence
Manager Compliance Violation InvestigationsEarl Shockley
Director of Regional OperationsJoel deJesus
Senior Compliance Investigators
Vice President amp Director of ComplianceDavid Hilt
Regional Compliance Auditors
Manager Enforcement amp Mitigation Tim Kucey
Manager Compliance Analysis Reporting amp Tracking amp TFE Mike DeLaura
Director of Compliance Program Operations amp InterfacesMike Moon
Senior Regional Entity Compliance Program Auditors
Compliance Investigators
AuditsAnnual Plan
InvestigationsInquiries
RegistrationCertification
CEA
Analysis MitigationEnforcement
13
NERC Compliance Organization NERC Compliance Organization -- NowNow
VP amp Director of Operations and
EngineeringDavid Hilt
Enforcement amp Mitigation
Compliance Analysis
Reporting amp Tracking
Director of Compliance OperationsMike Moon
Director of Compliance EnforcementJoel deJesus
Registration amp Certification
Audit Assurance amp
Oversight
Audit Assistance
and Training
Outreach and Standards Interface
Event Analysis and Investigations
Situational Awareness
Planning
Training and Assistance
System Analysis and
Reliability Initiatives
Operations
14
Compliance OperationsCompliance Operations
Realignment as of February 1 2010
Primary Effort help make the regional entities successful
Critical Documentsbull Annual CMEP Implementation Plan and Actively Monitored Listbull Reliability Standards Audit Worksheetbull Audit Observation reportsbull Compliance Registry
Key initiativesbull Publish lessons learnedbest practices to support consistencybull Provided feed back loop to Standards departmentbull Develop Compliance Application of Standards bulletinsbull Assist the regions during auditsbull Leverage experts in the regions to improve trainingconsistency
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
10
Compliance ProcessCompliance Process
Region notifies NERC (amp entity) of possible alleged violation in 2-5 days ndash NERC notifies govrsquot authority
Periodic Reports
Regions continue review and evaluation
Dismissed Notice of alleged violation amp proposed penalty sent to responsible entity
Entity accepts violation ndash submits mitigation plan Entity Contests
Notice of confirmed violation sent to NERC amp responsible entity
Mitigation Plan Region Review
NERC Review
Govrsquot ReviewNERC BOTCC reviews amp approves
regionrsquos proposed penalty
Notice of penalty or settlement sent to FERC in US amp posted to NERC website (Processes differ in Canada)
5 DAY WAITING PERIOD
Settlement negotiations
Settlement Reached Regional Hearing
Appeals ProcessSettlement Approved by BOTCC
Self- Certification
Exception CVI Spot Check
Audits Self- Report
CO
NFI
DEN
TIA
L
Complaint
11
ComplianceCompliance EnvironmentEnvironment
CCC (SIS)
Investigations
Stakeholders+ EEI APPA
NRECA ELCON EPSA
Board of Trusteesand BOT Compliance Committee
Regulators
NERC Staff
Audits
Compliance
Regions x8
Enforcement
InvestigationsOperations
Board x8
12
NERC Compliance Organization NERC Compliance Organization -- ThenThen
Manager Registration amp CertificationCraig Lawrence
Manager Compliance Violation InvestigationsEarl Shockley
Director of Regional OperationsJoel deJesus
Senior Compliance Investigators
Vice President amp Director of ComplianceDavid Hilt
Regional Compliance Auditors
Manager Enforcement amp Mitigation Tim Kucey
Manager Compliance Analysis Reporting amp Tracking amp TFE Mike DeLaura
Director of Compliance Program Operations amp InterfacesMike Moon
Senior Regional Entity Compliance Program Auditors
Compliance Investigators
AuditsAnnual Plan
InvestigationsInquiries
RegistrationCertification
CEA
Analysis MitigationEnforcement
13
NERC Compliance Organization NERC Compliance Organization -- NowNow
VP amp Director of Operations and
EngineeringDavid Hilt
Enforcement amp Mitigation
Compliance Analysis
Reporting amp Tracking
Director of Compliance OperationsMike Moon
Director of Compliance EnforcementJoel deJesus
Registration amp Certification
Audit Assurance amp
Oversight
Audit Assistance
and Training
Outreach and Standards Interface
Event Analysis and Investigations
Situational Awareness
Planning
Training and Assistance
System Analysis and
Reliability Initiatives
Operations
14
Compliance OperationsCompliance Operations
Realignment as of February 1 2010
Primary Effort help make the regional entities successful
Critical Documentsbull Annual CMEP Implementation Plan and Actively Monitored Listbull Reliability Standards Audit Worksheetbull Audit Observation reportsbull Compliance Registry
Key initiativesbull Publish lessons learnedbest practices to support consistencybull Provided feed back loop to Standards departmentbull Develop Compliance Application of Standards bulletinsbull Assist the regions during auditsbull Leverage experts in the regions to improve trainingconsistency
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
11
ComplianceCompliance EnvironmentEnvironment
CCC (SIS)
Investigations
Stakeholders+ EEI APPA
NRECA ELCON EPSA
Board of Trusteesand BOT Compliance Committee
Regulators
NERC Staff
Audits
Compliance
Regions x8
Enforcement
InvestigationsOperations
Board x8
12
NERC Compliance Organization NERC Compliance Organization -- ThenThen
Manager Registration amp CertificationCraig Lawrence
Manager Compliance Violation InvestigationsEarl Shockley
Director of Regional OperationsJoel deJesus
Senior Compliance Investigators
Vice President amp Director of ComplianceDavid Hilt
Regional Compliance Auditors
Manager Enforcement amp Mitigation Tim Kucey
Manager Compliance Analysis Reporting amp Tracking amp TFE Mike DeLaura
Director of Compliance Program Operations amp InterfacesMike Moon
Senior Regional Entity Compliance Program Auditors
Compliance Investigators
AuditsAnnual Plan
InvestigationsInquiries
RegistrationCertification
CEA
Analysis MitigationEnforcement
13
NERC Compliance Organization NERC Compliance Organization -- NowNow
VP amp Director of Operations and
EngineeringDavid Hilt
Enforcement amp Mitigation
Compliance Analysis
Reporting amp Tracking
Director of Compliance OperationsMike Moon
Director of Compliance EnforcementJoel deJesus
Registration amp Certification
Audit Assurance amp
Oversight
Audit Assistance
and Training
Outreach and Standards Interface
Event Analysis and Investigations
Situational Awareness
Planning
Training and Assistance
System Analysis and
Reliability Initiatives
Operations
14
Compliance OperationsCompliance Operations
Realignment as of February 1 2010
Primary Effort help make the regional entities successful
Critical Documentsbull Annual CMEP Implementation Plan and Actively Monitored Listbull Reliability Standards Audit Worksheetbull Audit Observation reportsbull Compliance Registry
Key initiativesbull Publish lessons learnedbest practices to support consistencybull Provided feed back loop to Standards departmentbull Develop Compliance Application of Standards bulletinsbull Assist the regions during auditsbull Leverage experts in the regions to improve trainingconsistency
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
12
NERC Compliance Organization NERC Compliance Organization -- ThenThen
Manager Registration amp CertificationCraig Lawrence
Manager Compliance Violation InvestigationsEarl Shockley
Director of Regional OperationsJoel deJesus
Senior Compliance Investigators
Vice President amp Director of ComplianceDavid Hilt
Regional Compliance Auditors
Manager Enforcement amp Mitigation Tim Kucey
Manager Compliance Analysis Reporting amp Tracking amp TFE Mike DeLaura
Director of Compliance Program Operations amp InterfacesMike Moon
Senior Regional Entity Compliance Program Auditors
Compliance Investigators
AuditsAnnual Plan
InvestigationsInquiries
RegistrationCertification
CEA
Analysis MitigationEnforcement
13
NERC Compliance Organization NERC Compliance Organization -- NowNow
VP amp Director of Operations and
EngineeringDavid Hilt
Enforcement amp Mitigation
Compliance Analysis
Reporting amp Tracking
Director of Compliance OperationsMike Moon
Director of Compliance EnforcementJoel deJesus
Registration amp Certification
Audit Assurance amp
Oversight
Audit Assistance
and Training
Outreach and Standards Interface
Event Analysis and Investigations
Situational Awareness
Planning
Training and Assistance
System Analysis and
Reliability Initiatives
Operations
14
Compliance OperationsCompliance Operations
Realignment as of February 1 2010
Primary Effort help make the regional entities successful
Critical Documentsbull Annual CMEP Implementation Plan and Actively Monitored Listbull Reliability Standards Audit Worksheetbull Audit Observation reportsbull Compliance Registry
Key initiativesbull Publish lessons learnedbest practices to support consistencybull Provided feed back loop to Standards departmentbull Develop Compliance Application of Standards bulletinsbull Assist the regions during auditsbull Leverage experts in the regions to improve trainingconsistency
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
13
NERC Compliance Organization NERC Compliance Organization -- NowNow
VP amp Director of Operations and
EngineeringDavid Hilt
Enforcement amp Mitigation
Compliance Analysis
Reporting amp Tracking
Director of Compliance OperationsMike Moon
Director of Compliance EnforcementJoel deJesus
Registration amp Certification
Audit Assurance amp
Oversight
Audit Assistance
and Training
Outreach and Standards Interface
Event Analysis and Investigations
Situational Awareness
Planning
Training and Assistance
System Analysis and
Reliability Initiatives
Operations
14
Compliance OperationsCompliance Operations
Realignment as of February 1 2010
Primary Effort help make the regional entities successful
Critical Documentsbull Annual CMEP Implementation Plan and Actively Monitored Listbull Reliability Standards Audit Worksheetbull Audit Observation reportsbull Compliance Registry
Key initiativesbull Publish lessons learnedbest practices to support consistencybull Provided feed back loop to Standards departmentbull Develop Compliance Application of Standards bulletinsbull Assist the regions during auditsbull Leverage experts in the regions to improve trainingconsistency
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
14
Compliance OperationsCompliance Operations
Realignment as of February 1 2010
Primary Effort help make the regional entities successful
Critical Documentsbull Annual CMEP Implementation Plan and Actively Monitored Listbull Reliability Standards Audit Worksheetbull Audit Observation reportsbull Compliance Registry
Key initiativesbull Publish lessons learnedbest practices to support consistencybull Provided feed back loop to Standards departmentbull Develop Compliance Application of Standards bulletinsbull Assist the regions during auditsbull Leverage experts in the regions to improve trainingconsistency
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
15
Compliance OperationsCompliance Operations
Principal FunctionsRegistration amp Certificationbull Registration Policybull Certification of RC BA and TOPbull Compliance Enforcement Authority
Audit Assurance and Oversightbull Regional entity Audit Programbull Registered entity audit oversight and validation
Audit Assistance and TrainingEducationbull Develop lessons learned and best practicesbull Leverage expertise at Regions to improve trainingconsistency
Outreach and Standards Interface
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
Violations Submitted to NERC by YearViolations Submitted to NERC by Year
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
Violation Status by RegionViolation Status by Region Current as of 12312009Current as of 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards All Time All Time ndashndash 61807 to 1231200961807 to 12312009
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
Top 10 FERC Enforceable StandardsTop 10 FERC Enforceable Standards Rolling 12 Months 1109 to 123109Rolling 12 Months 1109 to 123109
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
Dismissals by Discovery MethodDismissals by Discovery Method 6182007 through 123120096182007 through 12312009
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
Compliance Analysis ProgressCompliance Analysis Progress
Analysis Completed on six (6) of the top 10 standards violated
Two standard analysis posted to the NERC website PRC-005 and CIP-004
Compliance analyses in Process FAC-008 FAC-009 CIP-001 VAR-002 and PER-002
httpwwwnerccompagephpcid=3|329
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
Analysis StatusAnalysis Status
NERC Analysis
NERC Analysis to BOTCC
RCIG Analysis
RCIG Analysis to BOTCC
Posted to NERC Website
PRC-005 Complete Complete Complete Complete Complete
CIP-004 Complete Complete Complete Complete Complete
FAC-008 FAC-009 Complete Complete Complete February
BOTCC
CIP-001 Complete Complete FebruaryBOTCC
VAR-002 Complete Complete FebruaryBOTCC
PER-002 Complete Complete
FAC-003 Initiated
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
CIPCIP--001 Lessons Learned001 Lessons Learned
Entities should prepare one document that contains all requirements of CIP-001-1 and ensure that all employees have access to the document and are made aware of its contents
Entities should clearly indicate the appropriate communications strategy in their Sabotage Reporting plan and ensure its employees are trained to act accordingly
Entities need to ensure that the proper contacts are maintained and updated to report Sabotage Events with appropriate Law Enforcement authorities and regulatory agencies
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
VARVAR--002 Lessons Learned002 Lessons Learned
Entities need to establish robust communication procedures to ensure that the Transmission Operator is notified of any and all changes to elements critical in maintaining reactive power and voltage output
Entities need to use their Automatic Voltage Regulators (AVR) in Automatic mode at all times unless specifically directed by their Transmission Operator
Entities need to notify their Transmission Operator within the specified time frame when taking the Automatic Voltage Regulator (AVR) offline or moving it into manual mode
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
PERPER--002 Lessons Learned002 Lessons Learned
Registered Entities should ensure that the training objectives specified in Requirements 31 through 34 are met on an annual basis to satisfy compliance
Registered Entities should ensure personnel that perform key roles in operation of the real-time Bulk Electric System have been adequately trained in their task or role
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
26
FERC Policy Statement on EnforcementIssued October 20 2005
Internal compliance is an important proactive tool bull Does the company have an established formal program for
internal compliance
bull Is the program supervised by an officer or other high-
ranking official
bull Is compliance fully supported by senior management
bull How has the company responded to prior wrongdoing
Culture of ComplianceCulture of Compliance
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
27
Recent Recent ldquoldquoReport CardsReport Cardsrdquordquo
Recent significant documentsRecent significant documentsbull ERO Effectiveness and Stakeholder Perceptions Surveybull Regional Entity Joint Assessment Reportbull Three Year Assessment Attachment 2 Recommendationsbull Crowe Audit of the NERC Compliance Department
The big recommendationsThe big recommendationsbull clarificationbull consistencybull uniformitybull training education and assistance
Many of the recommendations REQUIRE Compliance and Standards collaboration
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
28
QuestionsQuestions
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
Backup
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
Improving Efficiencies Current Violations Processing Status
Regional EntityNCEAProcessing
1462
NERC EampMProcessing
271
NERC LegalProcessing
59Approved by BOTCC need
final cleanup and filing
Scheduled for BOTCC Consideration
In the Queue
Returned to Region for rework
Various states(have not seen)
0
59
20
Jan 91 (17)Feb 79 (39)Mar 81 (25)
December 31 2009
SA Negotiation 636 NOCV Prep 68
16 (2)
INAV possibly to NAVAPS 742
Total Violations1792
Number in parenthesis = number of actions (SAs amp NOCVs)1 in discussions wRegion 1 Dismissal 18 Omnibus II
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
Active Violations by RegionActive Violations by Region As of 12312009As of 12312009
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
Active + Closed Violations Active + Closed Violations by Discovery Method through 12312009by Discovery Method through 12312009
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
33
Energy Policy Actbull All users owners and operators of the bulk
power system shall comply with reliability standards
FERC Rulebull All entities subject to the Commissionrsquos reliability
jurisdictionhellip (users owners and operators of the bulk power system) shall comply with applicable Reliability Standards hellip
NERC Compliance Registrybull Statement of Compliance Registry Criteria
Provincial Canadian Regulations
Who Must ComplyWho Must Comply
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
34
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
REs to implement the CMEP as they are authorizedand obligated to do in their regionConsistency and uniformity of CMEP implementation
bull RSAWs (Reliability Standards Audit Worksheets)
bull Standardized CMEP process documentsSelf-Reporting FormSelf-Certification FormMitigation Plan submittal forms
bull Formal direction and guidance eg Process Bulletins
bull NERC training Auditor CVI amp CIP training
bull Audits of RE conformance to and performance of the Uniform CMEP
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
35
NERC Compliance Oversight of NERC Compliance Oversight of REsREs
Timelinessbull Violation proceedings
bull Compliance Violation Investigations
Quality and Appropriatenessbull Substantive review and approval of REsrsquo CMEP process
outputseg Violations Mitigation Plans amp Settlements
Direct support and participationbull Lead or participate in CVIs amp CIQs
bull Lead or collaborate regarding Remedial Action Directives (RADs)
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
36
The WSPP exists to provide a catalyst for an efficient and robust wholesale electric power market that allows WSPP members to effectively manage their power deliverability and price risk and create opportunity
The WSPP Agreement is open to power sellers and customers though it provides only for wholesale and not retail sales Currently there are more than 300 members
The Agreement is used to allow transactions to occur without constant renegotiations of contract terms and to standardize terms thereby promoting liquidity in the market Currently the WSPP Agreement is the most commonly used standardized power sales contract in the electric industry
The WSPP membership has devoted much time and resources to continuous updating of the WSPP Agreement to ensure that its terms represent the state-of-the-art terms for power sales contracts
The current version was the result of a consensus reached by a diversified group of power sellers and consumers including most of the major players in the industry Because of the constant changes in the industry this is a continuous process with the WSPP attempting to ensure that its contract stays up to date
The WSPP operates through its committees Each member has one vote on each committee Each member must select one representative and one alternate and make those selections known to the organization
WSPP Overview
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
37
Operating Committee ndash the OC evaluates contract changes in the first instance It also establishes operating procedures and procedures for evaluating membership applications The OC recommendations then are forwarded to the Executive Committee OC officers include a Chairman Vice Chairman and Secretary Executive Committee ndash the EC decides whether to adopt OC recommendations Consensus is required given the 90 percent voting requirement to make changes Any changes to the WSPP documents are filed with FERC and do not take effect until FERC accepts the filing Each member of WSPP is represented on the EC and is considered a board member as defined by law EC officers include a Chairman Vice Chairman and Secretary Administrative Committee ndash the Admin Committee is made up of the Chairman Vice Chairman and Sectretary of the EC and the Chairman and Vice Chairman of the OC Their task is to execute the administrative affairs of the organization including budgeting auditing contract administration financial management and legal management Audit Committee ndash the audit committee is created by the by-laws and includes The duty of the audit committee is to annually review the financial condition and financial systems employed by the organization to ensure compliance Contract Sub-Committee ndash the Contract Sub-Committee was created by the OC and is tasked with entertaining evaluating and codifying proposed changes to the WSPP Agreement Operating Agent ndash the Operating Agent is under contract with the organization to be the central point of contact for WSPP operations Other ad-hoc committees may be created to address specific issues
Organizational Structure
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-
38
The Western Systems Power Pool (WSPP) began as an agreement among a group of utilities in the western states The agreement which was filed with the Federal Energy Regulatory Commission by Pacific Gas and Electric Company on behalf of the group established a multi-state bulk power marketing experiment The agreement was meant to test whether broader pricing flexibility for coordination and transmission services would promote increased efficiency competition and coordination
The WSPP began operations in 1987 first as an experiment allowed by the Federal Energy Regulatory Commission (FERC) and then beginning in 1991 as a more permanent entity Its initial purpose was to allow sales of power for short-term transactions to take place with a maximum of flexibility and minimum of regulatory filings and to test market efficiency and competition
History of WSPP
- NERC Compliance Operations
- Agenda
- Compliance Monitoring in the Past
- Electric Reliability Organization Overview
- Compliance Program Design
- About Compliance
- Compliance Monitoring Today
- Resources
- Functional Responsibilities
- Slide Number 10
- Compliance Environment
- NERC Compliance Organization - Then
- NERC Compliance Organization - Now
- Compliance Operations
- Compliance Operations
- Violations Submitted to NERC by Year
- Violation Status by RegionCurrent as of 12312009
- Top 10 FERC Enforceable StandardsAll Time ndash 61807 to 12312009
- Top 10 FERC Enforceable StandardsRolling 12 Months 1109 to 123109
- Dismissals by Discovery Method6182007 through 12312009
- Compliance Analysis Progress
- Analysis Status
- CIP-001 Lessons Learned
- VAR-002 Lessons Learned
- PER-002 Lessons Learned
- Slide Number 26
- Recent ldquoReport Cardsrdquo
- Questions
- Slide Number 29
- Slide Number 30
- Active Violations by RegionAs of 12312009
- Active + Closed Violations by Discovery Method through 12312009
- Who Must Comply
- NERC Compliance Oversight of REs
- NERC Compliance Oversight of REs
- Slide Number 36
- Slide Number 37
- Slide Number 38
-