FERC Standards of Conduct

1. FERC Standards of Conduct

2. FERC Standards of Conduct

3. Overview • FERC Standards of Conduct are intended to ensure that transmission providers do not give their affiliates a competitive advantage — • Through preferential treatment • By providing access to information denied to non-affiliates • Standards impose the following rules and requirements: • Non-Discrimination Requirements • Independent Functioning Rule • No Conduit Rule • Transparency Rule

4. Overview (Cont’d) • FERC Standards of Conduct are intended to ensure that transmission providers do not give their affiliates a competitive advantage — • Through preferential treatment • By providing access to information denied to non-affiliates • Standards impose the following rules and requirements: • Non-Discrimination Requirements • Independent Functioning Rule • No Conduit Rule • Transparency Rule

5. Non-Discrimination Requirements • In any sale or purchase of transmission service, we must — • Not give undue preference to any customer with regard to rates, terms or conditions • Strictly enforce all non-discretionary tariff provisions • Apply discretionary tariff provisions fairly and impartially • Apply any discounts equitably • Process all similar requests for service similarly

6. Transmission-Function Information • Standards restrict our handling of non-public transmission-function information • Transmission-function information includes information regarding — • Transmission flows or equipment status • Scheduled or unscheduled transmission outages • Available transmission capacity • Curtailment or maintenance activity • Information about or from third-party transmission customers Any transmission-function information that is not included on our website is non-public

7. FERC Is Fair But Not Feckless • Congress Greatly Enhances FERC’s Ability to Levy Huge Fines • Congress gave the Federal Energy Regulatory Commission (FERC) a shot in the arm recently by (1) expanding its authority to levy fines and (2) increasing the maximum penalty to $1 million per day per violation. Congress also increased the maximum imprisonment time when FERC refers a case to the U.S. Department of Justice for criminal prosecution. In the wake of these changes, FERC issued new penalty guidelines that it says will "ensure fairness, consistency and transparency in all FERC civil penalty decisions."

8. Independent Functioning Rule • Requires transmission-function employees (TFEs) to work independently of marketing-function employees (MFEs) • We enable independent functioning through — • Separate physical facilities, business records and computer databases • Restricted access to facilities and resources Independent-functioning guidelines: • If an MFE, never attempt to gain access to transmission facilities, systems or transmission-function information • If a TFE, never attempt to gain access to marketing facilities, records or computer systems • If you receive restricted information in error, do not use it and report it immediately • If you divulge any restricted information in error, report it immediately

9. Independent Functioning Rule (Cont’d) • Requires transmission-function employees (TFEs) to work independently of marketing-function employees (MFEs) • We enable independent functioning through — • Separate physical facilities, business records and computer databases • Restricted access to facilities and resources Independent-functioning guidelines: • If an MFE, never attempt to gain access to transmission facilities, systems or transmission-function information • If a TFE, never attempt to gain access to marketing facilities, records or computer systems • If you receive restricted information in error, do not use it and report it immediately • If you divulge any restricted information in error, report it immediately

10. Independent Functioning Rule (Cont’d) • Requires transmission-function employees (TFEs) to work independently of marketing-function employees (MFEs) • We enable independent functioning through — • Separate physical facilities, business records and computer databases • Restricted access to facilities and resources Independent-functioning guidelines: • If an MFE, never attempt to gain access to transmission facilities, systems or transmission-function information • If a TFE, never attempt to gain access to marketing facilities, records or computer systems • If you receive restricted information in error, do not use it and report it immediately • If you divulge any restricted information in error, report it immediately

11. Independent Functioning Rule (Cont’d) • Requires transmission-function employees (TFEs) to work independently of marketing-function employees (MFEs) • We enable independent functioning through — • Separate physical facilities, business records and computer databases • Restricted access to facilities and resources Independent-functioning guidelines: • If an MFE, never attempt to gain access to transmission facilities, systems or transmission-function information • If a TFE, never attempt to gain access to marketing facilities, records or computer systems • If you receive restricted information in error, do not use it and report it immediately • If you divulge any restricted information in error, report it immediately

12. Pop Quiz! Sally, a project manager, wanted to have a meeting of TFEs and invited Jason, a marketing consultant, and Pearl, a sales contractor, to attend. Does either of these invitations violate the Independent Functioning Rule? • No, neither of them. • Yes, the invitation to Pearl. • Yes, both of them.

13. No Conduit Rule • No Conduit Rule prohibits — • Disclosing non-public transmission-function information to MFEs • Using anyone as a conduit to do so Prevent inappropriate disclosures by — • Using strong passwords for electronic files and documents • Never sharing your personal user ID or password • Keeping your work area secure • Using caution and good judgment when discussing any aspect of our business Report any improper disclosures you become aware of to your supervisor immediately

14. No Conduit Rule (Cont’d) • No Conduit Rule prohibits — • Disclosing non-public transmission-function information to MFEs • Using anyone as a conduit to do so Prevent inappropriate disclosures by — • Using strong passwords for electronic files and documents • Never sharing your personal user ID or password • Keeping your work area secure • Using caution and good judgment when discussing any aspect of our business Report any improper disclosures you become aware of to your supervisor immediately

15. No Conduit Rule (Cont’d) • No Conduit Rule prohibits — • Disclosing non-public transmission-function information to MFEs • Using anyone as a conduit to do so Prevent inappropriate disclosures by — • Using strong passwords for electronic files and documents • Never sharing your personal user ID or password • Keeping your work area secure • Using caution and good judgment when discussing any aspect of our business Report any improper disclosures you become aware of to your supervisor immediately

16. No Conduit Rule (Cont’d) • No Conduit Rule prohibits — • Disclosing non-public transmission-function information to MFEs • Using anyone as a conduit to do so Prevent inappropriate disclosures by — • Using strong passwords for electronic files and documents • Never sharing your personal user ID or password • Keeping your work area secure • Using caution and good judgment when discussing any aspect of our business Report any improper disclosures you become aware of to your supervisor immediately

17. FAQs • Exceptions to the Independent Functioning and No Conduit Rules • There are limited exceptions to the Independent Functioning and No Conduit Rules. We may share non-public transmission-function information with an MFE if it is — • In response to that MFE's own request for transmission service; • About another customer, and we obtain and post to our website (a) that customer's written consent and (b) a confirmation that the consenting customer did not agree to the disclosure in exchange for preferential treatment; • Necessary either to (a) perform generation dispatch or (b) maintain or restore operation of the transmission system or generating units; or • Furnished to comply with FERC reliability standards. • Whenever we share information with an MFE under (3) or (4) above, we must make a contemporaneous record of any information we exchange — except in an emergency, in which case we must make a record of information shared as soon as practicable after the fact.

18. Transparency Rule • Requires that we post any non-public transmission-function information — • Disclosed in violation of the No Conduit Rule, or • Supplied in an emergency • You must report prohibited disclosures you learn of to your supervisor immediately • Also requires us to post — • Names and addresses of affiliates that employ or retain MFEs • Job titles and descriptions of all TFEs • A list of any facilities shared by TFEs and MFEs • Our written procedures related to the Standards

19. In Conclusion... • Standards obligate us to — • Treat all customers equitably • Maintain separate marketing and transmission functions • Prevent inappropriate disclosures of non-public transmission-function information Align your conduct with the Standards by — • Avoiding preferential dealings among transmission customers • Respecting separation of transmission and marketing functions • Protecting the security of the information you handle Report any conduct that violates these obligations to your supervisor or the Legal Department immediately

20. Final Quiz

21. Questions?

22. Thank you for participating! This course and the related materials were developed by WeComply, Inc. and the Association of Corporate Counsel.