Compliance Monitoring Processes WECC Compliance Committee March 14, 2012

1. Compliance Monitoring ProcessesWECC Compliance CommitteeMarch 14, 2012 Taud Olsen Managing Director of Compliance

2. Authority for Compliance Monitoring • Energy Policy Act of 2005 • Section 215 of the Federal Power Act • FERC Order 672 • Responsibility and oversight assigned to FERC • FERC designated NERC as Electric Reliability Organization • NERC has delegation agreement with WECC and seven other regions

3. Mandatory Reliability Standards • Effective June 18, 2007 (Order 693) • Operations and Planning Standards • Often referred to as O&P • Effective April 7, 2008 (Order 706) • Critical Infrastructure Protection • Often referred to as CIP

4. WECC Compliance • Registration • Owners, Users, Operators of the Bulk Electric System are registered by function, which determines applicable standards • Compliance Monitoring • Audits, Investigations, Self-Reports, Self-Certifications • Enforcement • Violation mitigation and settlement negotiation • Representation of WECC in any hearing or appeal

5. Registration – WECC Statistics by Function -US • Total Number of Entities: 464 • Total Number of Registered Functions: 1220 • Balancing Authority 33 • Distribution Provider 171 • Generator Operator 207 • Generator Owner 212 • Interchange Authority 1 • Load-Serving Entity 146 • Planning Authority 29 • Purchasing-Selling Entity 146 • Reliability Coordinator 1 • Reserve Sharing Group 3 • Resource Planner 55 • Transmission Operator 53 • Transmission Owner 85 • Transmission Planner 44 • Transmission Service Provider 34

6. Compliance Monitoring Activities • Onsite Audit • Offsite Audit • Self Reports • Self Certifications • Exception Reporting • Spot Checks • Compliance Violation Investigations • Complaints

7. Compliance Audits and Investigations

8. Compliance Audits • A systematic, objective review and examination of records and activities to determine whether a Registered Entity meets the requirements of applicable Reliability Standards. • Audits of Balancing Authorities and Transmission Operators – each 3 years. • Includes an On-Site visit to the entity location.

9. Compliance Audits • Audits of all entities not registered as a Balancing Authority and/or Transmission Operator – each 6 years. • May include an On-Site visit to the entity location if entity has Critical Cyber Assets. • Programmable electronic devices and communication networks including hardware, software, and data that are essential to the reliable operation of Critical Assets.

10. 2011 Completed Audits • In 2011 WECC conducted 103 Compliance Audits, including International Audits. • U.S. Audits • 34 onsite • 60 offsite • (48 O&P and 46 CIP) • International Audits • 3 onsite • 6 offsite • (6 O&P and 3 CIP)

11. Self Reporting • A report by a Registered Entity stating • (1) that the Registered Entity believes it has violated a Reliability Standard, and • (2) the actions that have been taken or will be taken to resolve the violation.

12. Self Certification • Attestation by a Registered Entity of compliance or non-compliance with a Reliability Standard for which Self-Certification is required by the Compliance Enforcement Authority and that is included for monitoring in the Regional Implementation Plan.

13. Exception Reporting • Some Reliability Standards require reporting of exceptions to compliance with the Reliability Standards as a form of compliance monitoring. Additionally, Registered Entities are required to confirm the number of exceptions that have occurred in a given time period identified by NERC, even if that number is zero. WECC processes these exception reports and reports violations to NERC accordingly.

14. Spot Check • A process in which the Compliance Enforcement Authority requests a Registered Entity to provide information (1) to support the Registered Entity’s Self-Certification, Self-Reporting, or Periodic Data Submittal and to assess whether the Registered Entity complies with Reliability Standards, or (2) as a random check, or (3) in response to events, as described in the Reliability Standards or based on operating problems or system events.

15. Compliance Investigations • A comprehensive investigation, which may include an on-site visit with interviews of the appropriate personnel, to determine if a violation of a Reliability Standard has occurred.

16. Complaint • An allegation that a Registered Entity violated a Reliability Standard.

17. Periodic Data Submittal Modeling, studies, analyses, documents, procedures, methodologies, operating data, process information or other information to demonstrate compliance with Reliability Standards and provided by Registered Entities to the Compliance Enforcement Authority on a time frame required by a Reliability Standard or an ad hoc basis.

18. Violation Reporting Method Enforceable violations (Reviewed violations that are not dismissed) * "Other" includes Spot Check, Exception Report, Periodic Data Submittal, Compliance Investigation and Complaint ** Year-to-date

19. Violation Reporting Method Enforceable violations (Reviewed violations that are not dismissed) * "Other" includes Spot Check, Exception Report, Periodic Data Submittal, Compliance Investigation and Complaint ** Year-to-date

20. Next Step in Compliance Process Enforcement

21. Questions? Taud Olsen Managing Director of Compliance Western Electricity Coordinating Council tolsen@wecc.biz