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Agenda Member Representatives Committee August 10, 2016 | 1:00
5:00 p.m. Atlantic Halifax Marriott Harbourfront Hotel 1919 Upper
Water Street Halifax, NS B3J 3J5, Canada Introduction and Chairs
Remarks NERC Antitrust Compliance Guidelines and Public
Announcement* Consent Agenda
1. Minutes* - (Approve) a. May 4, 2016 Meeting
b. July 13, 2016 Conference Call
2. Future Meetings* 3. Schedule for MRC Officer and Sector
Elections*
Regular Agenda
4. Update from Board of Trustees Nominating Committee* 5.
Responses to the Board of Trustees Request for Policy Input*
a. Reliability Assessments Planning and Review Process*
b. Scope and Plans for Distributed Energy Resources Task
Force*
c. ERO Enterprise Strategic Planning and Metrics*
6. Additional Policy Discussion from Board Committee Meetings*
a. Standards Oversight and Technology Committee (August 4,
2016)
i. NERC and ERO Enterprise IT Projects Update
ii. Reliability Standards Quarterly Status Report
b. Corporate Governance and Human Resources Committee
i. 2016 ERO Enterprise and Corporate Performance Metrics
ii. Annual Board Effectiveness Assessments
iii. ERO Enterprise Effectiveness Survey Results and Action
Plans
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Agenda Member Representatives Committee August 10, 2016 2
c. Compliance Committee
i. Consolidated Hearing Process
ii. Update on Handling Critical Infrastructure Protection
Compliance Evidence
iii. Compliance Monitoring and Enforcement Program Quarterly
Report
d. Finance and Audit Committee
i. Second Quarter Unaudited Statement of Activities for NERC and
the Regional Entities
ii. NERC and Regional Entity Proposed 2017 Business Plans and
Budgets and Associated Assessments
iii. Extension of capital financing program
iv. Audio visual project implementation
7. Reliability Assessments a. Aliso Canyon Facility Status and
Continuing ERO Assessments*
b. Short-Term Special Assessment: Single Points of Disruption on
Natural Gas Infrastructure*
8. Update on FERC Reliability Matters* 9. Accountability Matrix*
10. Regulatory Update*
*Background materials included.
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Antitrust Compliance Guidelines I. General It is NERCs policy
and practice to obey the antitrust laws and to avoid all conduct
that unreasonably restrains competition. This policy requires the
avoidance of any conduct that violates, or that might appear to
violate, the antitrust laws. Among other things, the antitrust laws
forbid any agreement between or among competitors regarding prices,
availability of service, product design, terms of sale, division of
markets, allocation of customers or any other activity that
unreasonably restrains competition. It is the responsibility of
every NERC participant and employee who may in any way affect NERCs
compliance with the antitrust laws to carry out this commitment.
Antitrust laws are complex and subject to court interpretation that
can vary over time and from one court to another. The purpose of
these guidelines is to alert NERC participants and employees to
potential antitrust problems and to set forth policies to be
followed with respect to activities that may involve antitrust
considerations. In some instances, the NERC policy contained in
these guidelines is stricter than the applicable antitrust laws.
Any NERC participant or employee who is uncertain about the legal
ramifications of a particular course of conduct or who has doubts
or concerns about whether NERCs antitrust compliance policy is
implicated in any situation should consult NERCs General Counsel
immediately. II. Prohibited Activities Participants in NERC
activities (including those of its committees and subgroups) should
refrain from the following when acting in their capacity as
participants in NERC activities (e.g., at NERC meetings, conference
calls and in informal discussions):
Discussions involving pricing information, especially margin
(profit) and internal cost information and participants
expectations as to their future prices or internal costs.
Discussions of a participants marketing strategies.
Discussions regarding how customers and geographical areas are
to be divided among competitors.
Discussions concerning the exclusion of competitors from
markets.
Discussions concerning boycotting or group refusals to deal with
competitors, vendors or suppliers.
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NERC Antitrust Compliance Guidelines 2
Any other matters that do not clearly fall within these
guidelines should be reviewed with NERCs General Counsel before
being discussed.
III. Activities That Are Permitted From time to time decisions
or actions of NERC (including those of its committees and
subgroups) may have a negative impact on particular entities and
thus in that sense adversely impact competition. Decisions and
actions by NERC (including its committees and subgroups) should
only be undertaken for the purpose of promoting and maintaining the
reliability and adequacy of the bulk power system. If you do not
have a legitimate purpose consistent with this objective for
discussing a matter, please refrain from discussing the matter
during NERC meetings and in other NERC-related communications. You
should also ensure that NERC procedures, including those set forth
in NERCs Certificate of Incorporation, Bylaws, and Rules of
Procedure are followed in conducting NERC business. In addition,
all discussions in NERC meetings and other NERC-related
communications should be within the scope of the mandate for or
assignment to the particular NERC committee or subgroup, as well as
within the scope of the published agenda for the meeting. No
decisions should be made nor any actions taken in NERC activities
for the purpose of giving an industry participant or group of
participants a competitive advantage over other participants. In
particular, decisions with respect to setting, revising, or
assessing compliance with NERC reliability standards should not be
influenced by anti-competitive motivations. Subject to the
foregoing restrictions, participants in NERC activities may
discuss:
Reliability matters relating to the bulk power system, including
operation and planning matters such as establishing or revising
reliability standards, special operating procedures, operating
transfer capabilities, and plans for new facilities.
Matters relating to the impact of reliability standards for the
bulk power system on electricity markets, and the impact of
electricity market operations on the reliability of the bulk power
system.
Proposed filings or other communications with state or federal
regulatory authorities or other governmental entities.
Matters relating to the internal governance, management and
operation of NERC, such as nominations for vacant committee
positions, budgeting and assessments, and employment matters; and
procedural matters such as planning and scheduling meetings.
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Draft Minutes Member Representatives Committee May 4, 2016 |
1:005:00 p.m. Central The Westin Chicago River North 320 North
Dearborn Street Chicago, IL 60654 Chair Nabil Hitti, with Vice
Chair John Twitty present, called to order the North American
Electric Reliability Corporation (NERC) Member Representatives
Committee (MRC) meeting on May 4, 2016, at 1:02 p.m., Central. The
meeting announcement, agenda, and list of MRC members in attendance
are attached as Exhibits A, B and C, respectively. Introduction and
Chairs Remarks Mr. Hitti welcomed new MRC members and attendees,
and acknowledged the attendance of the Board, Commissioner Cheryl
LaFleur from the Federal Energy Regulatory Commission (FERC),
Michael Bardee and others from FERC, Liz Barton from the Department
of Energy (DOE), and State Commissioner David Clark, and Tab
Gangopadhyay from the National Energy Board. Mr. Hitti recognized
the MRC responses to the April 6, 2016 policy input request from
Fred Gorbet, chairman of the Board. He reminded attendees that full
presentations were conducted at the committee meetings and will not
be repeated during the MRC meeting. NERC Antitrust Compliance
Guidelines and Public Announcement Kristin Iwanechko, committee
secretary, called attention to the NERC antitrust compliance
guidelines and the public meeting notice. Any questions should be
addressed to NERCs general counsel, Charles Berardesco. Ms.
Iwanechko declared a quorum present with the following recognized
proxies:
Anthony Montoya for Sylvain Clermont Federal/Provincial
Fred Plett for Jacqueline Roberts Small End-Use Electricity
Customer
Peter Brandien for Gordon van Welie ISO/RTO
David Clark for Asim Haque State Government
Minutes The MRC approved, on a motion by Jason Marshall and
seconded by Bill Gallagher, the draft minutes of its February 10,
2016 meeting in Sarasota and its April 6, 2016 conference call.
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Minutes Member Representatives Committee May 4, 2016 2
Board of Trustees Nominating Committee Update Ken Peterson,
chair of the Board of Trustees Nominating Committee (BOTNC),
provided an update on the BOTNC. He noted that three Trustees are
up for re-election and one Trustee is term limited, creating a
vacancy. The BOTNC unanimously chose a search firm to assist with
filling the vacancy and is on track to review nominees in August
and interview candidates in November. The BOTNC includes five MRC
members:
Nabil Hitti MRC Chair
John Twitty MRC Vice Chair
Michelle DAntuono Large End-Use Electricity Customer
Tony Montoya Federal/Provincial Utility
Nelson Peeler Investor-Owned Utility Responses to the Boards
Request for Policy Input Mr. Hitti acknowledged the MRCs responses
to Fred Gorbets April 6, 2016, letter requesting policy input on
assessing reliability for an evolving bulk power system and the ERO
Enterprise strategic planning framework. The following comments on
the policy input topics are not all inclusive, but provide the
general tenor and scope of the discussion: Assessing Reliability
for an Evolving Bulk Power System Thomas Coleman, director of
Reliability Assessments at NERC, highlighted the areas identified
for focus in the 2016-2018 ERO Enterprise Strategic Plan (NERCs
capability, robust and independent reliability assessments focused
on the changing resource mix and the Clean Power Plan, and the
integration of new technologies and resources). Mr. Coleman
provided an overview of the analysis and assessments that NERC,
working with the Regional Entities and the technical stakeholder
committees, intends to begin addressing the changing resource mix.
Mr. Coleman provided a summary of the policy input received, noting
that a number of comments focused on avoiding duplication of work
and leveraging regional assessments, the need for
interconnection-wide analysis, and the amount of time being
provided to review the reports. Mr. Coleman noted that NERC is
focused on avoiding duplication of work and plans to do an
interconnection-wide analysis. He also stated that NERC is very
cognizant of the desire for more time to review the assessments and
is working to improve that. Mr. Coleman also highlighted the
short-term deliverables for this year, which include the 2016
Long-term Reliability Assessment (December 2016), 2016 Summer
Reliability Assessment condensed report (May 2016), 2016/17 Winter
Reliability Assessment condensed report (November 2016), 2016
Probabilistic Reliability Assessment (Q1 2017), Clean Power Plan
phase II assessment (May 2016), 2016 Short-term Reliability
Assessment on gas-electric interdependency (May 2016), 2016
short-term reliability assessment (topic and release date to be
determined), Distributed Energy Resources Task Force final report
(December 2016), and Frequency Response for the Eastern
Interconnection (end of year). He also highlighted three special
reliability assessment pilots focusing on short-circuit strength,
inter-area
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Minutes Member Representatives Committee May 4, 2016 3
oscillation baselining analysis, and probabilistic assessment of
severe impact to natural gas supply and transportation.
An MRC member asked about what else could be done to gather data
in a more safe and secure way to ensure that the data does not get
into the wrong hands. Marc Sachs, senior vice president and chief
security officer at NERC, noted that NERC is working to ensure that
data is secure and has internal processes for protecting this
information.
An MRC member asked about the process being used to ensure the
assumptions are accurate. Mr. Coleman stated that stakeholder
groups with subject matter experts and peer reviews are used to
help validate data and assumptions.
MRC members and attendees raised concerns about the large number
of assessments to be completed in 2016, the different types of
assessments being conducted, the Planning Committees role in the
assessments, and how stakeholders provide input.
Mr. Cauley noted that reliability assessments is a critical role
for the ERO Enterprise and is more important now than ever with the
changing resources. He summarized the following key takeaways to be
addressed: (1) review the planned assessments and ensure all
reports are essential, with a clear plan for 2016 and 2017; and (2)
think about how to communicate better with stakeholders in terms of
the plan, processes, and expectations of stakeholders.
ERO Enterprise Strategic Planning Framework Mark Lauby, senior
vice president and chief reliability officer at NERC, noted that
the focus of the policy input request was on the template and not
necessarily the content. He noted that there are currently three
strategic planning documents and the proposed framework
consolidates the three documents and enhances the linkages among
goals, metrics, risk priority recommendations identified by the
Reliability Issues Steering Committee (RISC), and longer-term
considerations. In addition, the schedule for the development of
the business plan and budget is included as an appendix to the
framework. Mr. Lauby also noted that during the strategic planning
process this year, the ERO Enterprise will develop a reduced set of
metrics for 2017 and refine them to be outcome-based. He reviewed
the timeline, noting that the FERC technical conference is on June
1 and pulse point interviews will be conducted. He also noted that
stakeholder input will be requested on content in July and input on
the draft strategic plan will be requested in October, with the
strategic plan being presented to the Board in November for
approval. Mr. Lauby added that the ERO Enterprise plans on shifting
the process over time for better alignment and a proposed timeline
for this shift will be provided in the near future. Mr. Lauby
highlighted the following comments received in response to the
policy input letter: (1) some of the goals did not have a tie to
risk areas and were more operational; (2) better mapping of high,
medium, and low risk priorities is desired; (3) more transparency
around prioritization is desired; and (4) some areas are too
tactical.
An MRC member noted that the RISC identified five areas for
strategic focus but it was not clear within the strategic plan if
it was focusing on the top five areas or looking at all the areas.
Mr. Lauby stated that NERC would clarify this when developing the
content of the strategic plan.
An MRC member suggested increased transparency into
prioritization.
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Minutes Member Representatives Committee May 4, 2016 4
Additional Policy Discussion of Key Items from Board Committee
Meetings Attendees did not have any additional comments in response
to the discussions from the Corporate Governance and Human
Resources Committee or the Standards Oversight and Technology
Committee meetings. Attendees shared the following comments in
response to the discussions at the Compliance Committee and Finance
and Audit Committee meetings. Compliance Committee
i. CIP Implementation
An attendee stated that there are a number of concerns about
inconsistent audit approaches given the July 1 enforcement date.
Ms. Agnew stated that the Regional Entities are working together to
ensure monitoring approaches are generally consistent, but there is
not one definitive answer as determinations for compliance are
based on the registered entitys specific facts and circumstances.
However, if there are specific instances of inconsistent
approaches, entities are encouraged to report the details to NERC
to be investigated.
A Board member encouraged attendees to use the Regional Entity
Consistency Tool to address consistency concerns.
ii. Compliance Guidance Implementation
An attendee suggested adding a how to document to the compliance
guidance webpage for submitting implementation guidance.
iii. Compliance Monitoring and Enforcement Program Quarterly
Report
An MRC member noted that it seems there are still a large number
of inherent risk assessments (IRA) to be completed and asked if
there was a plan to ensure the IRAs are completed. Ms. Agnew noted
that there are two ERO Enterprise metrics on this topic and the
majority of the regions have a schedule to complete all IRAs this
year. She also noted that Regional Entities are not conducting
audits without an IRA completed.
An MRC member asked about the status of internal controls
evaluations. An update will be provided at a future Board of
Trustees Compliance Committee meeting.
An MRC member noted confusion regarding internal controls
evaluations (ICE), stating that it appears there are requests for
internal controls without having an ICE in place. Ms. Agnew stated
that ICE is voluntary and while a region will ask an entity about
the existence and functioning of any internal controls as part of
its standard audit process, registered entities do not need to
submit internal controls as part of an ICE.
Finance and Audit Committee
i. 2017 Business Plan and Budget Update
Some MRC members expressed concern about the size of the budget
increase.
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Minutes Member Representatives Committee May 4, 2016 5
A Board member noted that this is the first year there is an
assessment stabilization reserve and the goal over time should be
to have an assessment increase close to the actual budget level and
increase. The Board member noted that any concerns should be raised
by stakeholders.
An MRC member suggested that, now that the ERO is mature, it may
make sense to discuss whether a routine penalty amount should be
added into the budget.
An MRC member suggest that, when looking at the IT budget, there
should be corresponding savings at the regions given the work taken
on by NERC.
Cost-Effectiveness Approach and Pilot Howard Gugel, director of
standards at NERC, recognized that stakeholders have asked about
lessons learned from previous pilots regarding cost effectiveness
and what the Standards Committee is doing to address the issue of
cost during standards development. Mr. Gugel provided an overview
of the NPCC pilot on PRC-002-NPCC-01 and the subsequent
continent-wide pilot, called the Cost Effective Analysis Process
(CEAP), developed by the Standards Committee. The continent-wide
pilot consisted of two phases, cost impact analysis and cost
effectiveness analysis, and was used on PRC-025-1 and PRC-002-2.
Mr. Gugel provided an overview of the lessons learned from these
pilots, which included the following: (1) the more detailed the
data requested, the fewer the responses; (2) the CEAP pilot did not
address whether probability of a risk was low or high; (3) the CEAP
questions were not specific enough to receive consistent and
concise responses; (4) some stakeholders felt that the CEAP should
identify the value of the benefit of the standard, both from
reliability and societal perspectives; (5) societal costs of not
addressing risk was desired but not considered in the pilot; (6)
scope and cost estimates varied widely across participants; (7)
CEAP questions needed to be very clear and concise to yield
measurable and comparable answers; and (8) some expressed interest
in an off ramp from the standards approach and wanted projects with
low probability risk and higher costs to be considered for
guidelines instead of standards. Brian Murphy, chair of the
Standards Committee, spoke in support of the previous pilots and
the ongoing effort to consider cost-effectiveness in the
development of standards. He noted that the approach has been
revised based on the previous lessons learned and a pilot is being
conducted. Mr. Gugel noted that the pilot of the revised approach
was being conducted with TPL-001-4, which includes two FERC
directives. He noted that a survey was developed and posted on
April 27 for a 30-day comment period. In addition, a webinar was
conducted at the beginning of the week. The responses to the survey
will be posted and provided to the drafting team as they consider
changes to the standard. Depending on the outcome of the drafting
teams work, phase 2 questions will be developed that are more
specific and posted at a later time.
An MRC member noted that TPL-001-4 does not apply to the
majority of registered entities and many small entities might not
be able to respond to the questionnaire. The member suggested also
using the approach with standards that apply to a broader set of
entities. Mr. Gugel stated that TPL-001-4 was chosen because it was
the only one at the pre-SAR stage at the time, but cost-
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Minutes Member Representatives Committee May 4, 2016 6
effectiveness is an evolving process and NERC expects to use the
approach on other projects that may come up as well.
An MRC member noted support for this effort and encouraged all
entities from whom the data is requested to participate as
completely as possible.
An MRC member asked about the next steps after receiving the
comments and whether there is a plan to respond back to
stakeholders on their comments. Mr. Gugel noted that comments and a
summary of responses would be posted on the website and, if
desired, a webinar could be scheduled to review the comments and
responses.
Clean Power Plan: Phase II Assessment Mr. Coleman provided an
overview of the phase II assessment of the Clean Power Plan (CPP),
which follows up on NERCs initial reliability review, reliability
considerations, and phase I assessment. He noted three primary
objectives of the assessment: (1) provide an independent assessment
of reliability; (2) provide a range of resource adequacy
evaluations; and (3) provide an additional framework for further
analysis. Mr. Coleman reviewed the following five scenarios: (1)
reference case; (2) CPP base case; (3) national trading case; (4)
high renewable penetration case; and (5) accelerated nuclear
retirements case. He also provided some highlights of the findings:
(1) wind and solar experience large increases in capacity with or
without the CPP; (2) coal declines from 270 GW to 220 GW in the
reference case; (3) natural gas prices increase over time; (4)
energy efficiency is increased through demand side programs; and
(5) natural gas capacity increases from 235 GW to 280 GW. Mr.
Coleman compared the reference case with the CPP base case, noting
a significant change on wind and solar, a significant decline in
coal, and a marginal difference in natural gas. He reviewed the
following recommendations: (1) planning processes should already be
underway; (2) Planning Coordinators should conduct system
reliability evaluations using the NERC report as a framework; (3)
the Reliability Considerations for CPP Development should be used;
(4) agencies must continue to work together to ensure reliability;
(5) planners must ensure adequate levels of essential reliability
services; and (6) NERC should continue its work around sufficiency
guidelines for essential reliability services. Mr. Coleman noted
that the report is expected to be provided to the Board and MRC by
the end of the week with a targeted release date of May 17.
An MRC member asked how much actual curtailments were modeled.
Mr. Coleman noted that he would follow up on this question.
An MRC member asked whether demand response resources were
attributed to anything in the study. Mr. Coleman stated that demand
response resources were included in the energy efficiency
study.
An MRC member asked whether there are any assumptions from a
distributed generation perspective. Mr. Coleman stated that the
only incorporation of distributed generation is around demand and
the growth in demand is coming from the findings in the LTRA.
An MRC member noted that in California, there are a lot of
studies that include curtailment, and in peak curtailment, the
other critical assumption is how much they can provide load
following down capability. Mr. Coleman stated that the issue of
curtailments has come up and is a potential subject matter piece
for a short-term special assessment.
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Minutes Member Representatives Committee May 4, 2016 7
An MRC member asked what transmission expansion assumption was
used. Mr. Coleman stated that existing transmission was used, and
did not include transmission already approved to be built.
An MRC member asked to what extent NERC is recommending that the
planning process should already be underway, considering the final
rule has been stayed. Mr. Coleman noted that NERC is aware that
some states have stopped the process for right now, but the
transformation is taking place outside of Clean Power Plan and that
planning should be occurring now.
An MRC member asked why there isnt a larger increase in natural
gas. Mr. Coleman noted that natural gas will help compliance with
the Clean Power Plan and increasing natural gas prices will keep it
relatively the same.
An MRC member asked how reliability is affected by the CPP. Mr.
Coleman stated that one of the recommendations is to continue to
develop sufficiency guidelines around essential reliability
services to see if it is a reliability concern.
An MRC member suggested that it would be helpful to include a
description of the models used in the final report.
An MRC member raised a concern that NERCs focus on assessments
is supposed to be on reliability, but the report uses production
cost models. Mr. Coleman noted that the value is not to look at
economics, but to look at available resources and the reliability
implications. He noted that NERC is not taking a stand
economically, but has to consider economics as part of its
analysis.
A Board member stressed that there must be identified decision
points along the way.
An MRC member asked whether NERC was also looking at how the
individual classes of generation might be affected by CPP. Mr.
Coleman stated that NERC did take into account various operational
characteristics.
Gas-Electric Interdependency Special Assessment Mr. Coleman
provided an overview of the new short-term special assessments
which will be topic-oriented reliability evaluations. The purpose
of these evaluations are to provide details on potential
reliability risks and emerging issues, with topics selected by NERC
and the Regional Entities. Mr. Coleman noted that the first
short-term special assessment is on gas-electric interdependency.
He noted that when looking at the long-term projections of natural
gas, NERC identified several areas that have greater than 40%
natural gas generation penetration. Mr. Coleman reviewed the
following key findings of the assessment: (1) single-fuel
dependency increases the risk of BPS-impairing common-mode
failures; (2) there are risks to natural gas generation during the
summer season; (3) gas-electric planning and coordination should be
expanded; and (4) operational coordination between gas and electric
industries decreases the likelihood of a wide-spread outage. He
also reviewed the timeline, noting that it would be provided to the
Board and MRC by the end of the week with a targeted release date
of May 17. Jim Robb, president and CEO of WECC, provided an
overview of Aliso Canyon, a critical element of the Los Angeles
Basin natural gas delivery system, where a gas leak was discovered
in late 2015. He stated that the key challenge with the natural gas
system is that it has always been built on an economic basis so it
tends to be built around very large scale assets as opposed to the
electric system. He noted that Aliso
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Minutes Member Representatives Committee May 4, 2016 8
Canyon currently has about 15 Bcf of working gas out of a total
capacity of 86 Bcf and that injections will not resume until safety
testing or isolation of remaining 114 wells is completed. Mr. Robb
identified the reliability concerns of Aliso Canyon, which are
around fuel availability for local generation, generation resource
adequacy, electric import capacity (transmission), and operational
realities. He also noted concern around interconnection-wide
implications. 2016 State of Reliability Report James Merlo, senior
director of reliability risk management at NERC, provided an
overview of the following key findings of the 2016 State of
Reliability report, which looks retrospectively over the past five
years: (1) BPS resiliency to severe weather has improved; (2) event
severity started to decrease; (3) the event analysis process is
capturing lessons learned; (4) average transmission outage severity
continued to decline; (5) misoperations rates are beginning to
decline; and (6) frequency response trend varies by
interconnection. He noted that the 2016 State of Reliability report
would be shared with the Board and MRC by the end of the week with
a targeted release date of May 19.
An MRC member asked how the definition of adequate level of
reliability (ALR) drives the report. Mr. Merlo noted that chapter 4
of the report includes reliability indicator trends that tie the
performance of the BPS to a set of reliability performance
objectives included in the approved 2012 ALR definition.
An MRC member asked if there were any factors that contributed
to protection system misoperations. Mr. Merlo stated that the
report includes the top three contributors.
Current FERC Reliability Activities Michael Bardee, director of
the office of electric reliability at FERC, provided an overview of
several FERC reliability activities. Exemption for Wind Generators
from Providing Reactive Power Mr. Bardee provided an overview of
the Notice of Proposed Rulemaking (NOPR) proposing to revise two
pro forma interconnection agreements, the large generator
interconnection agreement and the small generator interconnection
agreement, to eliminate the current exemption for new wind
generators, noting that since the exemption started, costs have
declined. He noted that comments were filed in January and most
were supportive, but there were some issues to figure out before
FERC issues a final rule. Proposal and Compensation of Primary
Frequency Response Notice of Inquiry Mr. Bardee provided an
overview of the Notice of Inquiry on primary frequency response,
which requested comments on who should provide primary frequency
response and how compensation should work. He noted that comments
were filed in April and there was a lot of support for new
facilities to have the capability to provide the service but less
support for existing facilities. He noted that the comments on
compensation included a wide range of views, but a number of
commenters supported the use of market mechanisms. Mr. Bardee noted
that the next step is for the Commission to issue a NOPR after
reviewing the filed comments.
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Minutes Member Representatives Committee May 4, 2016 9
Ride-Through Requirements for Small Generators Mr. Bardee
provided an overview of the NOPR on ride-through requirements for
small generators, which proposed to impose requirements for small
generators that match those that currently exist for large
generators. He noted that comments are due on May 23. Geomagnetic
Disturbance Mitigation Mr. Bardee provided an overview of the NOPR
on TPL-007-1, the proposed standard on geomagnetic disturbance
mitigation (GMD). In the NOPR, FERC proposed to generally accept
the standard, but required some changes. Specifically, FERC
proposed to require NERC to modify the benchmark for assessing the
vulnerability to GMD and a work plan by NERC to continue on the
research on various aspects of this issue. Mr. Bardee noted that
comments reflected a wide range of views, with some supportive of
the standard as filed and some suggesting that FERC should go
further. He noted that FERC held a technical conference on March 1
and the remarks at the conference generally reflected the comments
received. Supply Chain Management Mr. Bardee provided an overview
of the NOPR related to supply chain management, noting that it
focused on the risk to the cyber systems. He noted that many
comments opposed the proposal saying there was enough guidance and
this issue is already addressed by standards. FERC held a technical
conference on January 28 and comments are still being received on
this docket. Mr. Bardee noted that some issues that need to be
addressed before proceeding include identifying the risks to be
addressed and what a standard would need to accomplish. Restoration
and Recovery Report Mr. Bardee provided an overview of the
restoration and recovery report, issued in January 2016, which
resulted from a joint review by FERC, NERC, and the Regional
Entities. For the review, the team reviewed restoration and
recovery plans after a major event from a sample of nine utilities.
He stated that plans were generally thorough and highly-detailed.
Mr. Bardee stated that he believes the report laid the foundation
for future improvements. Data Sharing Mr. Bardee provided an
overview of the NOPR on the availability of certain databases,
which proposed to require that NERC provide FERC with non-public
access to these databases, limited to data regarding U.S. entities.
He noted that when the NOPR was issued, FERC outlined a need for
enhanced access in order to improve its ability to identify the
need for new or modified standards and to better understand NERCs
periodic reliability and adequacy assessments. Mr. Bardee noted
that most comments opposed the proposal, while some comments were
supportive. There were some concerns raised about confidentiality
of data. He also noted that there were concerns about data that is
submitted voluntarily and if access was required, it would reduce
the amount of data entities were willing to voluntarily
provide.
An attendee noted that one of the topics during the recent
technical conference on Geomagnetic Disturbance Mitigation (GMD)
was around providing confidential data to academic participants and
asked whether the data sharing legislation will address this
concern. Mr. Bardee stated that he does not think that the
legislation will have a big impact on access to GMD data.
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Minutes Member Representatives Committee May 4, 2016 10
Mr. Cauley thanked FERC for its action on essential reliability
services and frequency response, and recognizing the early work
being done and the recommendations being made to policymakers.
Mr. Cauley suggested additional focus on planning regulatory
initiatives around priorities, as well as timelines to achieve
balance over time through considering the whole life cycle of
initiatives.
Accountability Matrix Ms. Iwanechko noted that NERC has been
maintaining an accountability matrix to track all policy input and
responses. The matrix has been modified to be more high level,
rolling up the input into themes that NERC is committed to
addressing. She noted that the matrix will be included in the MRC
agenda packages going forward for increased transparency and is
also posted on the Board agenda page on the NERC website.
Regulatory Update Mr. Berardesco invited questions or comments
regarding the regulatory report, which highlights Canadian and
Mexican affairs, as well as past and future significant FERC
filings. Future Meetings The following are future dates for the MRC
Pre-Meeting and Informational Sessions:
July 13, 2016
October 4, 2016 The following are future NERC Board and MRC
meetings dates and locations:
August 10-11, 2016 Halifax, Canada
November 1-2, 2016 Atlanta, GA Adjournment There being no
further business, the meeting terminated at 5:01 p.m., Central.
Submitted by,
Kristin Iwanechko Secretary
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Draft Minutes Member Representatives Committee Pre-Meeting
Informational Session Conference Call and Webinar July 13, 2016 |
11:00 a.m. 12:30 p.m. Eastern Introduction and Chairs Remarks Chair
Nabil Hitti, with Vice Chair John Twitty present, convened a
duly-noticed open meeting by conference call and webinar of the
North American Electric Reliability Corporation (NERC) Member
Representatives Committee (MRC) on July 13, 2016, at 11:03 a.m.,
Eastern. The meeting provided the MRC and other stakeholders an
opportunity to preview proposed agenda topics for the MRC, Board of
Trustees (Board) and Board Committee meetings scheduled to be held
August 10-11, 2016, in Halifax, Nova Scotia, Canada. The meeting
announcement, agenda, and list of attendees are attached as
Exhibits A, B, and C, respectively. NERC Antitrust Compliance
Guidelines and Public Announcement Kristin Iwanechko, committee
secretary, directed the participants attention to the NERC
Antitrust Compliance Guidelines and the public meeting notice
included in the agenda. Schedule of Quarterly NERC Meetings and
Conference Calls The draft schedule of events for the upcoming
meetings in Halifax was included in the agenda package. Review of
Proposed Board and Board Committees Meeting Agenda Items Charlie
Berardesco reviewed the preliminary agenda items for the Board and
Board Committee meetings scheduled for August 10-11, 2016, in
Halifax identified in the slide presentation included in the
informational session agenda package (Exhibit D). Mr. Hitti
encouraged MRC members to review all agenda materials for the Board
and Board Committee meetings, once posted and available on July 27,
2016, and attend as many of these meetings as possible, in advance
of the MRCs meeting on August 10, 2016. Review of Proposed MRC
Agenda Items for August 10 Mr. Hitti reviewed the preliminary MRC
agenda items for the upcoming August 10, 2016, meeting in Halifax
identified in the slide presentation included in the informational
session agenda package (Exhibit D). Topics include:
Schedule for MRC officer and sector elections;
Board of Trustees Nominating Committee update;
Discussion of the responses submitted to the policy input
request from the Board;
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Agenda Name of Meeting - Date 2
Additional discussion of the issues presented at the Board
Committee meetings on August 4 and August 10;
Reliability assessments:
Aliso Canyon facility status and continuing ERO assessments;
Short-term special assessment: single points of disruption on
natural gas infrastructure;
Update on FERC reliability matters:
Accountability Matrix; and
Regulatory update. Policy Input Reminder Mr. Hitti announced
that the Boards request for policy input is scheduled to be
released on July 13, 2016, and responses are due by Wednesday,
August 3, 2016, to Ms. Iwanechko. NERC staff provided updates on
the following topics included in the policy input letter:
Reliability assessments planning and review process;
Scope and plans for Distributed Energy Resources Task Force;
and
ERO Enterprise strategic planning and metrics. Informational
Items NERC staff provided updates on compliance guidance
implementation and the 2017 business plan and budget. Proxy
Reminder Proxy notifications for the August 10, 2016, meeting must
be submitted in writing to Ms. Iwanechko. Meeting Adjourned There
being no further business, the call was terminated at 11:56 p.m.,
Eastern. Submitted by,
Kristin Iwanechko Secretary
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Agenda Item 2 MRC Meeting August 10, 2016
Future Meetings
Action Information Summary The following are the future meeting
dates for 2016 and 2017. The dates for the 2016 pre-meeting and
informational webinars are also included below. 2016 Dates
October 4 Pre-Meeting and Informational Session
November 1-2 Atlanta, GA 2017 Dates
February 8-9 San Diego, CA
May 10-11 TBD
August 9-10 Ottawa, Canada
November 7-8 New Orleans, LA
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Agenda Item 3 MRC Meeting August 10, 2016
Schedule for MRC Officer and Sector Elections
Action Information Background Chair Nabil Hitti will announce
the upcoming nomination and election cycle for the Member
Representatives Committee (MRC) officers and those members whose
terms expire in February 2017. The tentative schedule is shown
below. MRC Officer Elections Wednesday, August 31 nomination period
opens Friday, September 30 nomination period closes Tuesday,
November 1 election of officers for following year by current MRC
members MRC Member Sector Nominations and Elections Friday,
September 9 nomination period opens Tuesday, November 8 nomination
period closes Friday, December 2 election begins Monday, December
12 election ends Reference Links Membership of the MRC for
2016-2018 NERC Bylaws
http://www.nerc.com/gov/bot/MRC/Nominations%20and%20Elections/Membership_of_MRC_2016-2018.pdfhttp://www.nerc.com/gov/Annual%20Reports/NERC_Bylaws-Effective-10142009.pdf
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Agenda Item 4 MRC Meeting August 10, 2016
Update from the Board of Trustees Nominating Committee
Action Information Background On February 10, 2016, Chair Nabil
Hitti invited Member Representatives Committee (MRC) members to
volunteer to serve on the Board of Trustees Nominating Committee
(BOTNC) and the following MRC members were named by the Board of
Trustees to the BOTNC:
1. Nabil Hitti MRC Chair
2. John Twitty MRC Vice Chair
3. Michelle DAntuono Large End-Use Electricity Customer
4. Tony Montoya Federal/Provincial Utility
5. Nelson Peeler Investor-Owned Utility Ken Peterson, chair of
the BOTNC, will provide a status report on the planned activities
and schedule for the BOTNC.
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Agenda Item 5 MRC Meeting August 10, 2016
Responses to the Board of Trustees Request for Policy Input
Action Discussion Background The policy input letter is issued
by the Chair of the NERC Board of Trustees (Board) four weeks in
advance of the quarterly meetings and includes relevant materials
necessary to inform discussion. Written input from the Member
Representatives Committee (MRC) and stakeholders is due one week
before the meetings and is then revisited during a dedicated
discussion time on the MRCs agenda, in the presence of the Board.
Summary On August 10, 2016, MRC can expect presentations with
additional information on the three policy input items at the MRC
meeting: (1) the reliability assessements planning and review
process; (2) scope and plans for the Distributed Energy Resources
Task Force; and (3) ERO Enterprise strategic planning and metrics.
The MRC can expect to participate in further discussion of the
responses received to the policy input request that was distributed
on July 13, 2016, and of the presentations given on the policy
input items at the MRC meeting. The items included in the policy
input letter were presented at the MRC Pre-Meeting and
Informational Session webinar on July 13, 2016. Additional
background information on each of the policy input items are
included in the agenda package for the webinar. Deadline for
submitting policy input responses is August 3, 2016, and should be
sent to [email protected]. Attachment July 13, 2016,
Boards Letter Requesting Policy Input
http://www.nerc.com/gov/bot/MRC/Agenda%20Highlights%20nad%20Minutes%202013/MRC_Informational_Session_Agenda_07-13-16.pdfmailto:[email protected]
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July 13, 2016 Mr. Nabil Hitti, Chair NERC Member Representatives
Committee Dear Nabil: I invite the Member Representatives Committee
(MRC) to provide policy input on three issues of particular
interest to the NERC Board of Trustees (Board) as it prepares for
its August 10-11, 2016, meetings in Halifax, Nova Scotia, Canada.
Additional background information is included in the July 13, 2016
MRC Informational Session agenda package to help MRC members
solicit inputs from their sectors. As a reminder, please include a
summary of your comments in your response (i.e., a bulleted list of
key points) for NERC to compile into a single summary document to
be provided to the Board for reference. Item 1: Reliability
Assessments Planning and Review Process During the July 13 MRC
Informational Session (see Item 3a), NERC staff provided an
overview of the annual assessments that are developed under Section
800 of the NERC Rules of Procedure. These consist of one Long-Term
Reliability Assessment, two Seasonal Assessments, one State of
Reliability Report, two to three Special Assessments per year, for
a total of six to seven reports per year. It is the ERO Enterprises
objective to have a robust, but efficient planning and review
process for Reliability Assessments. The assessment planning
process includes scoping, identification of objectives, data
collection, analysis, and developing conclusions and
recommendations; work and scheduling actively coordinated with ERO
staff and technical committees; and ensuring assessments and
technical reports are properly staged for review periods and
acceptance processes. As presented during the MRC Informational
Session, ERO Enterprise reliability assessment leadership provides
direct guidance on what assessments should be performed leveraging
existing data and analysis, prioritizing emerging issues, and
directing work to the technical committees. This group relies
heavily on the findings of a variety of technical stakeholder
groups, the Reliability Issues Steering Committee (RISC), regional
technical groups, and the Board. NERC technical committees, the
MRC, and the Board have an opportunity to review these reports as
identified in the MRC Informational Session background materials.
The Board requests MRC input on whether the presented framework
(see Attachment A) provides sufficient clarity around the planning
and review process for reliability assessments. Item 2: Scope and
Plans for Distributed Energy Resources Task Force The Distributed
Energy Resources Task Force (DERTF) has been established in
response to Recommendation 4 of the Essential Reliability Services
Task Force Measures Framework Report and a scope for the task
force
3353 Peachtree Road NE Suite 600, North Tower
Atlanta, GA 30326 404-446-2560 | www.nerc.com
http://www.nerc.com/gov/bot/MRC/Agenda%20Highlights%20nad%20Minutes%202013/MRC_Informational_Session_Agenda_07-13-16.pdfhttp://www.nerc.com/gov/bot/MRC/Agenda%20Highlights%20nad%20Minutes%202013/MRC_Informational_Session_Agenda_07-13-16.pdfhttp://www.nerc.com/gov/bot/MRC/Agenda%20Highlights%20nad%20Minutes%202013/MRC_Informational_Session_Agenda_07-13-16.pdfhttp://www.nerc.com/comm/Other/essntlrlbltysrvcstskfrcDL/ERSTF%20Framework%20Report%20-%20Final.pdfhttp://www.nerc.com/comm/Other/essntlrlbltysrvcstskfrcDL/DERTF_Scope_Final.pdf
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is posted on the NERC website. This task force will develop a
report focused specifically on operational and planning impacts of
Distributed Energy Resources (DERs) and examine potential
reliability implications. This report will also explore existing
policies oriented to support the reliable integration of DERs on
the bulk power system and further examine the interplay with other
essential reliability services. In developing this report, the task
force will review the NERC Functional Model, existing NERC
Reliability Standards, and coordinate with IEEE standard 1547
related efforts. Additionally, the task force will review
definitions for Behind-the-Meter Generation (BTMG), Distributed
Generation (DG), and other related terms to provide clear
distinctions between each category for inclusion in the report. The
DERTF will terminate upon finalization of a DER report, which will
be submitted to the Board in early 2017. The Board requests MRC
input on whether the scope of the DERTF reflects suitable focus
areas for evaluation and recommendation development. Item 3: ERO
Enterprise Strategic Planning and Metrics As noted during the July
13, 2016, MRC Informational Session, the existing ERO Enterprise
strategic planning documents were consolidated to create a single
document that integrates the ERO Enterprises goals, metrics,
longer-term strategic planning considerations, and the risk
priorities from the RISC. NERC is requesting MRC policy input on
the content of the ERO Enterprise Strategic Plan and supporting
activities for 2017-2020. The ERO Enterprise Strategic Plan has
been updated to incorporate the following:
RISCs proposed risk profiles for 2016 (see Appendix 3this
includes a brief description of the risk and the recommendations;
the full risk profiles are available, which contain additional
details on the risk descriptions);
Existing ERO Enterprise longer-term planning considerations (see
Appendix 2);
ERO Enterprise strategic goals and associated contributing
activities for the 20162019 planning period (see pp. 49); and
Proposed ERO Enterprise results-based reliability metrics, which
measure desired outcomes (see Appendix 1). These metrics are
intended to be measured and trended over time, with the
sub-components for metric 3 evaluated annually to target key
reliability risks. The proposed metrics are preliminary, and will
continue to be developed over the next few months.
The Board requests MRC input on the following to inform the ERO
Enterprise Strategic Plan for 20172020:
1. Do the RISCs risk profiles identify the most important
emerging risks to reliability?
2. Are the longer-term considerations addressing key emerging
risks to reliability?
3. Do the strategic goals and their current contributing
activities focus on the right priorities for 20172020?
http://www.nerc.com/gov/bot/MRC/Agenda%20Highlights%20nad%20Minutes%202013/MRC_Informational_Session_Agenda_07-13-16.pdfhttp://www.nerc.com/gov/bot/MRC/Documents/Draft%20ERO%20Enterprise%20Strategic%20Plan_07%2012%2016.pdfhttp://www.nerc.com/comm/RISC/Documents/All%20profiles.pdf
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4. Do the proposed metrics focus on, and drive mitigation for
the most important risks to provide more enduring, measurable
progress in improving and maintaining reliability?
As a reminder, the full agenda packages for the Board, Board
Committees and MRC meetings will be available on July 27, 2016. I
encourage the MRC to review the agenda materials for the August
2016 Board and MRC meetings, once available, and offer any
additional input that is meaningful and timely to industry and
stakeholders. Written comments should be sent to Kristin Iwanechko,
MRC Secretary ([email protected]) by August 3, 2016, for
the Board to review in advance of the meetings scheduled for
Halifax. Sincerely,
Fred W. Gorbet, Chair NERC Board of Trustees cc: NERC Board of
Trustees Member Representatives Committee
mailto:[email protected]
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Attachment A Policy Input Letter July 13, 2016
Reliability Assessments Framework
The ERO Reliability Assessment program has established a
framework for its core reliability assessments, as provided in the
table below:
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Agenda Item 5a MRC Meeting August 10, 2016
Reliability Assessments Planning and Review Process
Action Discussion Background It is North American Electric
Reliability Corporation (NERC) and the Electric Reliability
Organizations (EROs) objective to have an expeditious and efficient
planning and review process for Reliability Assessments. In the
planning and review process, it is important that the process
provide for administrative preparation and adequate review time by
relevant participants and contributors, including NERC Management
and staff, stakeholder groups, NERC Technical Committees, the
Member Representatives Committee (MRC), and the Board of Trustees
(Board). The ERO Reliability Assessment program has established a
framework for its core reliability assessments, as provided in the
table below:
In terms of annual production, the NERC Reliability Assessment
team will develop work and review plans that do not overlap and
achieve a balance of providing adequate technical and
policy-oriented stakeholder reviews and delivering timely
information to industry and policy makers. The ERO expects to
publish a total of six to seven reports per year under Section 800
of the NERC Rules of Procedure. These include one Long-Term
Reliability Assessment, two Seasonal Assessments, one State of
Reliability Report, and two to three Special Assessments. Special
Assessments can be short-term (similar to the recent assessment on
natural gas and operational risk) or they can be longer-term
assessments on a specific topic (similar to NERCs
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Clean Power Plan analysis, essential reliability services report
and the upcoming Distributed Energy Resources Task Force final
report). Additional information on short-term special assessments
is included in the scoping document on the NERC website. In
addition, providing front-end input into selection of special
reliability assessments (e.g., short-term assessment) and other
assessment reports is important to the ERO. A group of ERO
Enterprise reliability assessment and performance analysis
leadership provides direct guidance on what assessments should be
performed leveraging existing data and analysis, prioritizing
emerging issues, and directing work to the technical committees.
This group relies heavily on the findings of a variety of technical
stakeholder groups, the Reliability Issues Steering Committee,
regional technical groups, and the Board. Additional efforts are
underway through the ERO Enterprise reliability assessment and
system analysis leadership to improve visibility and ensure that
there are no duplicative efforts between NERC and the Regions. NERC
will continue to work with the Regions to promote alignment for
developing and implementing assessment activities that are most
aligned with the highest priority reliability issues. This
alignment will also extend to NERCs Stakeholder Committees,
enabling a uniform approach for report development, providing input
into assessments, and reviewing and endorsing final reports.
http://www.nerc.com/comm/PC/Reliability%20Assessment%20Subcommittee%20RAS%202013/Short-Term%20Special%20Assessments%20Overview.pdf
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Agenda Item 5b MRC Meeting August 10, 2016
Scope and Plans for Distributed Energy Resources Task Force
Action Discussion Background The Distributed Energy Resources
Task Force (DERTF) was established in response to Recommendation #4
of the Essential Reliability Services Task Force (ERSTF) Measures
Framework Report. This task force will develop a report focused
specifically on operational and planning impacts of Distributed
Energy Resources (DERs) and examine potential reliability
implications. This report will also explore existing policies
oriented to support the reliable integration of DERs on the bulk
power system (BPS) and further examine the interplay with other
Essential Reliability Services (ERSs). In developing this report,
the task force will review the NERC Functional Model, existing NERC
Reliability Standards, and coordinate with the Institute of
Electrical and Electronics Engineers (IEEE) standard 1547 related
efforts. Additionally, the task force will review definitions for
Behind-the-Meter Generation (BTMG), Distributed Generation (DG),
and other related terms to provide clear distinctions between each
category. The scope for the DERTF is posted on the NERC website.
Summary The DERTF will examine existing practices for incorporating
DERs into planning models and studies, identify operational impacts
to the BPS, and review existing NERC standards to ensure that DERs
can be integrated reliably on the BPS. In addition, the task force
is coordinating efforts with the IEEE standard 1547 group to ensure
essential services such as voltage and frequency support are
maintained. Lastly, the DERTF will review the NERC Functional Model
in comparison to definitions of DERs. A final report is expected to
be accepted by the Planning and Operating Committees by the end of
this year. Final stakeholder review will occur in January 2017, and
the report will be sent to the NERC Board of Trustees in February
2017. The MRC is encouraged to submit comments through policy input
to support the development of the report. NERC is also hosting a
DER workshop that will invite participation from industry,
stakeholders, and regulatory entities to discuss four specific
topics in relation to DERs. The topics are:
1. Aligning the definitions of DERs
2. Load and Generation Modeling
3. Voltage, Frequency Performance, and ERSs
4. Observability and Control More information on the workshop to
be held on August 2-3, 2016, in Atlanta, GA can be obtained on NERC
Website.
http://www.nerc.com/comm/Other/essntlrlbltysrvcstskfrcDL/ERSTF%20Framework%20Report%20-%20Final.pdfhttp://www.nerc.com/comm/Other/essntlrlbltysrvcstskfrcDL/ERSTF%20Framework%20Report%20-%20Final.pdfhttp://www.nerc.com/comm/Other/essntlrlbltysrvcstskfrcDL/DERTF_Scope_Final.pdfhttp://www.nerc.com/news/Pages/Make-Plans-to-Attend-Distributed-Energy-Resources-Workshop.aspx
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Agenda Item 5c MRC Meeting August 10, 2016
ERO Enterprise Strategic Planning and Metrics
Action Discussion Background During the May 2016 Member
Representatives Committee (MRC) meeting, NERC presented an ERO
Enterprise Strategic Plan document that integrates the ERO
Enterprises goals, metrics, longer-term strategic planning
considerations, and the risk priorities from the Reliability Issues
Steering Committee (RISC). On July 13, 2016, NERC requested MRC
policy input on content for the ERO Enterprise Strategic Plan. This
included input on the following:
The RISCs proposed risk profiles for the 2016 ERO Reliability
Risk Priorities Report, which set forth the most pressing risks to
reliability. Currently, there are nine risk profiles with
accompanying proposed recommendations;
The existing ERO Enterprise longer-term planning
considerations;
The ERO Enterprise strategic goals and associated contributing
activities for the 20162019 planning period, and whether they focus
on the right priorities for 20172020; and
Proposed ERO Enterprise results-based reliability metrics, which
are intended to be trended over time to measure progress on
reliability improvement to inform the goals and activities in the
strategic plan. Metric 3 is designed to adjust annually to address
trends in current risks, and contains five sub-metrics for
2017.
The development schedule for the 2017 Business Plan and Budget
(BP&B) is also included in the ERO Enterprise Strategic Plan.
While the ERO Enterprise continually reviews priorities and
resource allocations in response to the strategic plan, in 2017 the
ERO Enterprise will more closely align the 2018 BP&B
development, strategic plan annual review, and metrics adjustments.
An enhanced schedule for the 2018 BP&B and 20182021 Strategic
Plan will be included with the final 20172020 ERO Enterprise
Strategic Plan provided in November. The MRC comments, along with
contributions from the NERC Board of Trustees (Board), Regional
Entity Boards, and ERO Enterprise senior leadership, will be used
to update the ERO Enterprise Strategic Plan and associated
activities for the 20172020 planning period. The MRC will have the
opportunity to provide additional feedback on the finalized draft
prior to Board approval in November.
http://www.nerc.com/gov/bot/MRC/Documents/Draft%20ERO%20Enterprise%20Strategic%20Plan_07%2012%2016.pdfhttp://www.nerc.com/gov/bot/MRC/Documents/Draft%20ERO%20Enterprise%20Strategic%20Plan_07%2012%2016.pdfhttp://www.nerc.com/comm/RISC/Documents/All%20profiles.pdf
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Agenda Item 6 MRC Meeting August 10, 2016
Additional Policy Discussion of Key Items from Board Committee
Meetings
Action Discussion of specific items presented at the Board of
Trustees (Board) Committee meetings. Staff presentations made at
the Board Committee meetings will not be duplicated at the Member
Representatives Committee (MRC) meeting. Summary On August 10,
2016, the MRC can expect to continue its increased participation
and dialogue during the Board Committee meetings in Halifax. The
MRC will have additional time for policy discussion, as part of its
own agenda, to respond to the information that is presented during
the Committee meetings. The Standards Oversight and Technology
Committee will hold its open meeting via conference call on August
4, 2016, instead of meeting in-person in Halifax. The agendas and
associated background materials are posted approximately one week
in advance of the meetings on the following webpages: Standards
Oversight and Technology Committee The August 10, 2016, Board
committee agendas and associated background materials are posted on
the following webpages: Corporate Governance and Human Resources
Committee Compliance Committee Finance and Audit Committee
http://www.nerc.com/gov/bot/BOTSOTC/Pages/StandardsOversightandTechnologyCommittee(BOTSOTC).aspxhttp://www.nerc.com/gov/bot/GOV/Pages/CorporateGovernanceandHumanResourcesCommittee(GOVERNANCE).aspxhttp://www.nerc.com/gov/bot/BOTCC/Pages/ComplianceCommittee(BOTCC).aspxhttp://www.nerc.com/gov/bot/FINANCE/Pages/2013FinanceandAuditCommittee.aspx
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Agenda Item 7a MRC Meeting August 10, 2016
Aliso Canyon Facility Status and Continuing ERO Assessments
Action Update Aliso Canyon Facility Status Update The Aliso
Canyon Storage closure in Southern California has underscored the
risk of increasing natural gas and electricity interdependency with
significant reliance on gas-fired electric generating capacity, as
well as increasing solar generation. This single point of
disruption directly impacts 9,800 MWs of electric generation in
Southern California. Jim Robb, Chief Executive Officer at the
Western Electricity Coordinating Council (WECC), will briefly
highlight the status of the storage facility closure, recent
observations, mitigation measures employed, and the need to shift
focus to the winter season when core loads will compete for natural
gas. Update on Continuing ERO Assessments In consideration of the
identified risk as it relates to future bulk power system (BPS)
reliability, three focus areas are relevant:
1. WECC Independent Assessment (Completed) WECCs review of
generation availability, transmission capability, and voltage
stability provides baseline and scenario assessment.
2. Short-Term Special Assessment: Single Points of Disruption on
Natural Gas Infrastructure (In-Progress, To be released in Q2 2017)
Identification of other Aliso Canyon-like natural gas
infrastructure that may potentially pose risks to generator
availability and operational reliability. This assessment may
include a post-seasonal evaluation of summer 2016 and winter
2016/2017 operations in WECC as a result of the Aliso Canyon
storage facility outage.
3. Long-Term Natural Gas Assessment in the Western
Interconnection (Conceptual stage) North American Electric
Reliability Corporation (NERC) and WECC are considering an
assessment. Conceptually, this assessment would provide insights on
the trend of increasing natural gas-fired generation, identify
threats, and determine what infrastructure or enhancements are
needed to maintain BPS reliability.
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Agenda Item 7b MRC Meeting August 10, 2016
Short-Term Special Assessment: Single Points of Disruption on
Natural Gas
Infrastructure Action Update Background The North American bulk
power system is undergoing an unprecedented change in the
composition of the resource mix. Coal units are retiring at an
unprecedented rate and are being replaced largely by natural gas
and renewable energy resources. Environmental regulatory rulings
are driving the rapid growth of renewable energy resources, while
historically low natural gas prices are further creating incentives
for new natural gas-fired generating facilities to replace retiring
baseload capacity. Given these trends, NERC has increased its
attention to assess and address the key risks associated with the
increasing dependency on natural gas. As highlighted in numerous
NERC reliability assessments, the increasing reliance on a single
fuel type can lead to potential single points of disruption,
exposing reliability risks that may not be studied or expected.
Single points of disruption associated with natural gas
infrastructure can range from disruptions with natural gas
pipelines, a disruption of liquefied natural gas (LNG) transport
operations, or natural gas storage disruptions. The Aliso Canyon
Storage closure in Southern California has underscored this risk
with significant reliance on gas-fired electric generating
capacity, as well as increasing solar generation. This single point
of disruption directly impacts 9,800 MW of electric generation in
Southern California. Whereas resource adequacy assessments may show
satisfactory reserve margins, one single point of disruption can
lead to significant losses of generation and create wider-spread
reliability issues on the transmission system. Scope of Short-Term
Special Assessment Single points of failure associated with natural
gas infrastructure can range from disruptions with natural gas
pipelines, a disruption of LNG transport operations, or natural gas
storage disruptions. The NERC short-term assessment will broadly
evaluate natural gas infrastructure that could pose reliability
risks should an outage occur. NERC staff is working closely with
Argonne National Laboratory to leverage on-going and related
evaluations. At the time of preparing this background document, ERO
Enterprise Staff and the Reliability Assessment Subcommittee have
not yet endorsed or approved a final scope for this short-term
special assessment; however, the topic has been selected and the
assessment approach is currently being evaluated. Additionally, the
assessment will provide an update on the Aliso Canyon Storage
outage, the mitigation measures implemented, and an evaluation of
the impacts, should they occur during the upcoming summer or winter
periods.
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NERCs Reliability Assessment staff will be working with the
Reliability Assessment Subcommittee to refine and finalize the
scope and to gather the pertinent data for the assessment. A report
will be developed and submitted for acceptance by the NERC Planning
Committee in Q2 of 2017. The report is expected to be released at
the end of second quarter of 2017 following acceptance from the
NERC Board of Trustees.
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1
Agenda Item 8 MRC Meeting August 10, 2016
Summary of Current FERC Reliability Activities
Action Information Background Provided below is a summary of
current activity of the Federal Energy Regulatory Commission (FERC
or the Commission) impacting NERC matters. A presentation of these
items will be given by Michael Bardee, Director, Office of Electric
Reliability, FERC, during the August 10, 2016 MRC meeting. Summary
Essential Reliability Services Reactive Power Requirements for
Non-Synchronous Generation (Order No. 827) On November 19, 2015,
FERC issued a Notice of Proposed Rulemaking (NOPR) proposing to
revise the pro forma Large Generator Interconnection Agreement and
Small Generator Interconnection Agreement (Interconnection
Agreements) to eliminate exemptions for wind generators from the
requirement to provide reactive power and impose reactive power
requirements on non-synchronous generators. The Commission stated
that its proposal would create comparable reactive power
requirements for non-synchronous and synchronous generators and
ensure sufficient reactive power is available on the electric grid
as more non-synchronous generators seek to interconnect.
On June 16, 2016, the Commission issued Order No. 827, approving
the elimination of the exemption for wind generators to provide
reactive power requirements and establishing reactive power
requirements for all newly interconnecting non-synchronous
generation. The order takes effect 90 days after publication in the
Federal Register. Ride-Through Requirements for Small Generators On
March 17, 2016, FERC issued a NOPR under section 206 of the Federal
Power Act (FPA) proposing to revise the pro forma Small Generator
Interconnection Agreement (SGIA) to require new small generation
facilities to ride through and stay connected during abnormal
frequency and voltage events. In particular, the Commission
proposed to add new Section 1.5.7 to the SGIA to require that (i)
interconnection customers maintain frequency and voltage ride
through capability and not disconnect after a frequency or voltage
event; and (ii) transmission providers coordinate the small
generating facilitys protective equipment settings with any
automatic load shedding program. On July 21, 2016, FERC issued a
final rule revising the pro forma SGIA to include a requirement
that small generating facilities ride through frequency and voltage
disturbances. In addition, the
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2
final rule requires that the transmission provider coordinate
the small generating facilitys protective equipment settings with
any automatic load shedding program. The order takes effect 65 days
after publication in the Federal Register. Security of Grid Order
Denying Rehearing of Order No. 822 On January 21, 2016, the
Commission issued Order No. 822 approving seven CIP Reliability
Standards and several new and modified definitions.1 The Commission
also directed NERC to develop certain modifications to those
standards. On February 22, 2016, the Foundation for Resilient
Societies and Isologic LLC separately filed requests for rehearing
of Order No. 822. The requests for rehearing raised issues
regarding (1) development of a definition for the term
communications network for inclusion in the NERC Glossary, (2)
excluding substations from the CIP standards, and (3) requiring
removal of cyber malware embedded in the Bulk-Power System based on
concerns related to the Ukraine incident. The Foundation also
requested modification of Order No. 822 to clarify that it is not
the intent to preclude complementary operational cybersecurity
programs. On July 21, 2016, the Commission issued Order No. 822-A,
denying the requests for rehearing. The Commission stated that
there is no support for the assertion that section 215 of the FPA
requires the development of a NERC Glossary definition of
communication networks. The Commission also rejected the claim that
substations are excluded from protection under the CIP Reliability
Standards as bulk electric system substations within the
Commissions jurisdiction are protected under the CIP standards. As
to the concern regarding the Ukraine incident, the Commission noted
that it ordered NERC to study remote access issues and is
concurrently issuing a Notice of Inquiry (NOI), discussed below.
Lastly, the Commission stated that nothing precludes entities from
implementing additional measures to address cybersecurity threats.
Order No. 822-A takes effect 60 days after publication in the
Federal Register.
Supply Chain Management (Order No. 829) On July 16, 2015, FERC
issued a NOPR related to proposed revisions to the cybersecurity
Critical Infrastructure Protection Reliability Standards (CIP
Revisions NOPR). While proposing to approve the revisions to the
CIP standards, the Commission, among other things, proposed to
direct NERC to develop a new or modified Reliability Standard to
provide security controls for supply chain management for
industrial control system hardware and software, and computing and
networking services associated with Bulk Electric Systems
operations. On January 21, 2016, the Commission issued Order No.
822, approving the revisions to the CIP standards and directing
NERC to make certain modifications to those standards. Order No.
822, however, did not address the proposed supply chain management
directive as, based on the comments on the NOPR, the Commission
scheduled a staff-led technical conference for later in the month
to facilitate a structured dialogue on supply chain risk management
issues prior to making any determination on the proposal. On
January 28, 2016, the Commission hosted the supply chain management
technical conference.
1 The seven standards are CIP-003-6, CIP-004-6, CIP-006-6,
CIP-007-6, CIP-009-6, CIP-010-2, and CIP-011-2.
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3
On July 21, 2016, the Commission issued Order No. 829, directing
NERC to develop a forward-looking, objective-based Reliability
Standard that addresses supply chain management for industrial
control system hardware, software, and services associated with
bulk electric system operations within one year of the effective
date of the order. More specifically, the order explains that the
new or modified Reliability Standard should require each affected
entity to develop and implement a plan that includes security
controls to address the following security objectives related to
supply chain management: (1) software integrity and authenticity;
(2) vendor remote access; (3) information system planning; and (4)
vendor risk management and procurement controls. The order does not
require NERC to impose specific controls, nor mandate a
one-size-fits-all approach. Instead, the order allows for the
standard to provide flexibility to responsible entities as to how
they meet the four supply chain security objectives articulated in
the order. The order also states that NERCs response to this
directive should (a) respect section 215 jurisdiction by only
addressing the obligations of responsible entities and (b) not
directly impose obligations on suppliers, vendors, or other
entities that provide products and services to responsible
entities. Commissioner LaFleur dissented from the Commissions
order, arguing that the record does not support issuance of the
final rule at this time. She expressed concern that, due to the
complexity of the issues, the Commission has not adequately
considered or vetted the Final Rule, which could hamper the
development and implementation of an effective, auditable, and
enforceable standard. For instance, she noted that the four
security objectives discussed in the order were not identified in
the NOPR and could benefit from stakeholder comment. In her
presentation at the open meeting, Commission LaFleur asserted that
the order lacks clear and structured guidance to result in timely
development and implementation. Commissioner LaFleur stated that
the more prudent course of action would be to issue Order No. 829
as a Supplemental Notice of Proposed Rulemaking (Supplemental
NOPR), which would provide NERC, industry, and stakeholders the
opportunity to comment on the Commissions proposed directives.
Order No. 829 takes effect 60 days after publication in the
Federal Register.
NOI on Cyber Systems in Control Centers (Docket No. RM16-18-000)
On July 21, 2016, the Commission also issued an NOI requesting
comment on the need to modify the CIP standards to address certain
issues related to the protection of cyber systems in control
centers. Specifically, the Commission requests comment on possible
modifications regarding: (1) isolation between the internet and
cyber systems in control centers performing transmission operator
functions; and (2) mandatory application whitelisting for all cyber
systems in control centers. One of the impetuses for this NOI is
the 2015 cyberattack in Ukraine, which is an example of how cyber
systems used to operate and maintain interconnected networks more
efficiently can have the unintended effect of creating cyber
vulnerabilities. The Commission stated that [w]hile certain
controls in the CIP Reliability Standards may reduce the risk of
such attacks, the Commission seeks comment on whether additional
controls should be required. The issues in the NOI also relate to
issues raised in the requests for rehearing of Order No. 822.
Comments are due 60 days after publication of the NOI in the
Federal Register.
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4
Data Sharing Data Sharing Order On September 17, 2015, FERC
issued a NOPR to require that NERC make its Transmission
Availability Data System (TADS), Generating Availability Data
System (GADS), and protection system misoperations databases
available for review by FERC and its staff (Database NOPR).
Specifically, FERC proposed to require that NERC provide FERC with
access (i.e., view and download data), on an ongoing and non-public
basis, to the TADS, GADS, and protection system misoperations
databases. FERC stated that its proposed access, limited to data
regarding U.S. facilities, is necessary for FERC (1) to evaluate
the need to direct new or modified Reliability Standards; and (2)
to better understand NERCs periodic assessments and reports. NERC
filed comments in response to the Database NOPR on December 15,
2015, proposing an alternative that would provide the Commission
with anonymized versions of TADS, GADS, and protection system
misoperations data under a two-phase approach facilitated by a
Commission and NERC staff Information Sharing Working Group
established within 90 days of the Commissions order on the NOPR. On
June 16, 2016, the Commission issued Order No. 824, approving
Availability of Certain North American Electric Reliability
Corporation Databases to the Commission. Order No. 824 requires
that NERC provide the Commission and its staff with access to TADS,
GADS, and protection system misoperations databases. New regulation
18 C.F.R. 39.11(c) now expressly clarifies that, [s]uch access will
be limited to: (1) data regarding U.S. facilities and (2) data that
is required to be provided to the ERO. The Commission determined
that its approach to limit access to data that is related to U.S.
facilities and provided on a mandatory basis should mitigate
concerns raised by NERC and other commenters regarding potential
impacts on the level and quality of voluntary
information-sharing.
Finally, to address concerns regarding confidentiality, the
Commission noted that its final rule will not become effective
until implementation of provisions under the FAST Act (Regulations
Implementing FAST Act Section 61003 - Critical Electric
Infrastructure Security and Amending Critical Energy Infrastructure
Information) to secure sensitive energy infrastructure information.
Simultaneous with Order No. 824, the Commission issued the FAST Act
NOPR (discussed immediately below).2
The order will take effect upon a final rule implementing the
FAST Act procedures.
2 Regulations Implementing FAST Act Section 61003 Critical
Electric Infrastructure Security and Amending Critical Energy
Infrastructure Information, 155 FERC 61,278, at n. 13 (2016) (FAST
Act NOPR) (noting, Information downloaded by Commission staff from
private databases that are accessed pursuant to Commission order or
regulation will be maintained as non-public information consistent
with the Commissions internal controls. [citing Order No. 824] If
the commission receives a request for access to downloaded
information, the Commission will evaluate whether the information
meets the definition of CEII or is proprietary information or
otherwise privileged or non-public and will provide the
owneropportunity to comment.).
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5
NOPR on Regulations Implementing FAST Act Section 61003 Critical
Electric Infrastructure Security and Amending Critical Energy
Infrastructure Information On June 16, 2016, the Commission issued
a NOPR proposing to implement provisions of the FAST Act related to
designation, protection, and sharing of CEII. The NOPR proposes to
amend the Commissions CEII regulations by (i) establishing criteria
and procedures for designating information as CEII, (ii)
prohibiting unauthorized disclosure of CEII, (iii) establishing
sanctions for FERC employees and certain other individuals who
knowingly and willfully make unauthorized disclosures, and (iv)
facilitating voluntary sharing of CEII among federal, state,
political subdivision, tribal authorities, NERC, Regional Entities,
owners, operators, and users of CEII, and other entities deemed
appropriate by the Commission. Comments are due 45 days after
publication of the NOPR in the Federal Register. Reliability
Standards
NOPR on Disturbance Control Standard-Contingency Reserve for
Recovery from a Balancing Contingency Event Reliability Standard On
January 29, 2016, NERC filed a petition for approval of proposed
Reliability Standard BAL-002-2 (Disturbance Control
Standard-Contingency Reserve for Recovery from a Balancing
Contingency Event Reliability Standard). Proposed Reliability
Standard BAL-002-2 is designed to ensure that these entities are
able to recover from system contingencies by deploying adequate
reserves to return their Area Control Error (ACE) to defined values
and by replacing the capacity and energy lost due to generation or
transmission equipment outages. On February 12 and March 31 2016,
NERC filed clarifying supplemental information to the petition. On
May 19, 2016, the Commission issued a NOPR proposing to approve
Reliability Standard BAL-002-2 and eight new and revised NERC
Glossary definitions.
The Commission states in the
NOPR that the standard improves upon currently-effective
Reliability Standard BAL-002-1 by consolidating the number of
requirements to streamline and clarify the obligations related to
maintaining adequate reserves. In proposing to approve BAL-002-2,
the Commission proposes to direct NERC to develop modifications
regarding the 15-minute ACE recovery period in Requirement R1 and
the 90-minute Contingency Reserve Restoration Period in Requirement
R3. In addition, the Commission proposes to direct NERC to develop
a new or modified Reliability Standard that addresses the
reliability impact of megawatt losses above a responsible entitys
Most Severe Single Contingency (MSSC). Finally, the Commission
proposes to direct NERC to assign a high Violation Risk Factor to
proposed Reliability Standard BAL-002-2, Requirements R1 and R2. In
addition to seeking comments on each of its proposals, the
Commission seeks comment on whether the definition of Contingency
Reserve should reference the NERC Glossary definition for the term
Demand-Side Management.
Comments on the NOPR are due sixty days (60) after publication
in the Federal Register.
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Agenda Item 9 MRC Meeting August 10, 2016
Accountability Matrix
Action Information Background The Accountability Matrix tracks
key action items resulting from the quarterly MRC and Board of
Trustee meetings and the policy input letter responses. The
Accountability Matrix is updated quarterly and posted on the NERC
website. Attachment
1. Accountability Matrix July 27, 2016
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Accountability MatrixJuly 27, 2016
Identifier Topic Summary of Commitment Comments/Status
Open/Closed
2016-01
ERO Enterprise Strategic Planning
Redesign and Metrics
(1) Consolidate strategic planning documents to ensure clearer
linkages to the various inputs.
(2) There should be a reduced set of metrics that are outcome
and results-based.
In May 2016, NERC presented a consolidated ERO Enterprise
Strategic Plan document that integrates the ERO Enterprise's goals,
metrics, longer-term strategic planning considerations, and the
risk priorities from the RISC. In July 2016, policy input on the
content for the strategic plan, including draft outcome and
results-based metrics for 2017 was requested. Input will then be
requested on the proposed strategic plan and metrics in October
before submitting to the Board for approval in November. Open
2016-02
2017 Business Plan and Budget
Linkage to Strategic Plan
Include clearer linkages in the 2017 BP&B to the strategic
plan goals.
Additional documentation has been included in the 2017 BP&B
and associated presentation materials regarding the alignment
between departmental activities and the strategic plan, as well as
RISC priorities. Management will continue to review incorporating
additional enhancements in future business plans and budgets.
Open
2016-03
Efficiences from Program Area
Transformations in 2017 Business Plan and Budget
The 2017 BP&B should identify efficiences gained from the
maturation and transformation of various program areas (i.e.,
risk-based CMEP, standards).
The 2017 BP&B includes comments about steady state and
efficiencies in several areas. The standards (draft 1, page 24) and
compliance (draft 1, page 28) sections note the departments have
achieved, or are moving toward the achievement of, stability. Both
departments reflect a decline in allocated FTEs. Comments related
to budget assumptions, including the prioritization of resources
for efficiency, is also included (draft 1, page 12) and extensive
discussion of efficiencies gained through new technology is found
in the Information Technology section (draft 1, page 70). Open
2016-04
Communication of Action Plans in
Response to Survey Results
Provide more clarity around action items from survey
results.
NERC revisited the 2015 survey results and developed action
plans to address concerns regarding regional consistency in
registration and in compliance monitoring and enforcement. NERC is
also analyzing the 2016 survey results to identify any additional
themes and develop action plans to address those. The 2015 and 2016
action plans, as well as a final report of the survey results, will
be presented at the August 10 CGHRC meeting. Open
2016-05Internal Controls Evaluations (ICE)
Increase registered entity engagement with internal controls
evaluations.
The ERO Enterprise is working to enhance the evaluation of
internal controls to increase the benefit to registered entities.
Open
2016-06
Review and Timeline of Reliability
Assessments
Review the plan for reliability assessments planned for 2016 and
2017 and develop a timeline for each assessment that includes
industry touchpoints and sufficient time for industry review.
Ensure that the schedule stages the release of assessments so
multiple reports are not being reviewed at the same time. Leverage
work already being conducted by industry to avoid duplication.
NERC has reviewed its existing timelines to refine the timing of
delivery of assessments to ensure that adequate time has been
provided for stakeholder review as well as MRC and Board review and
approval. NERC intends to more fully leverage its stakeholder
committees, such as the Planning Committee, Reliability Assessment
Subcommittee, and ERO Enterprise leadership, to ensure that the
right studies are being conducted that most effectively drive BPS
reliability. This involves coordination between RISC, MRC, Board,
technical committees, and the ERO Enterprise leadership. Open
2016-07MRRE Program
ConsistencyDevelop follow-up actions to ensure consistency and
address lessons learned from the MRRE program.
In the first quarter of 2016, NERC and Regional Entity
executives approved a task force, made up of representatives from
NERC and each of the Regional Entities, focused on coordinated
oversight to enhance the Multi-Region Registered Entity (MRRE)
process. The task force, in conjunction with ERO Enterprise
compliance leadership, provides outreach to MRREs participating in
the Coordinated Oversight Program and develops procedures for use
throughout the ERO Enterprise. The task force issued a survey in
June 2016 to seek MRRE feedback on the program. Survey results will
be presented to ERO Enterprise compliance leadership in the third
quarter of 2016. The task force will use the survey results and
other inputs to inform process improvements that optimize
efficiency of, and consistency in, coordinated oversight
activities. Implementation of communication and training for new
coordinated oversight of MRRE ERO Enterprise Procedure will occur
in the first quarter of 2017. Open
2016-08Confidentiality of
InformationEnsure that controls are in place within the ERO
Enterprise on handling sen