WECC RESTRUCTURING PHASE III GNC UPDATE TO BOARD OF DIRECTORS January 23-24, 2013 Denver, CO.

WECC RESTRUCTURING PHASE IIIGNC UPDATE TO BOARD OF

DIRECTORS

January 23-24, 2013

Denver, CO

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• Board Direction – Resolutions from 12/6-7/12 meeting• GNC Activities

o Work Plan Scope - Deliverables Schedule Resources

o Member Advisory Working Group (MAWG) Charter

• Current Recommendations for Board Review and Approvalo Functional split between RCCo and Remaining WECCo Governance proposals for RCCo

• Future Recommendations

Agenda

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Board Direction – 12/6-7/12 MeetingSpin Out Reliability Centers ResolutionWhereas,

1. Work to develop the RE and NRE for the purpose of separating registered functions from delegated functions has proceeded on the assumption that the RE would only perform ERO delegated functions under the pro forma delegation agreement and the NRE would assume all remaining WECC functions.

2. An alternative method of separating the registered functions of WECC from the delegated functions is to revise the WECC Mission and Functions to exclude the Reliability Centers and other registered functions, creating a new entity to handle those functions with a strong focus on that aspect of maintaining the reliability of the Western Interconnection.

3. Potential difficulty in providing long-term secure funding for the RC and other registered functions that WECC performs that are important to reliability and the length of time required to develop and receive approval for an effective tariff to achieve this goal has suggested that the spin off of the registered functions to a new entity may be the best and most expeditious way to achieve the separation of functions.

Resolved,

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Spin Out Reliability Centers Resolution4. The Board therefore directs the GNC and Management to develop a detailed proposal for the spin off

of the registered functions that would include bylaws for a new section 501(c)(4) corporation that will provide for the governance of that entity by an independent board with a strong Member Advisory Committee. The Board directs the GNC to bring that detailed proposal to the Board at its March meeting. If approved at that time, the Board anticipates incorporating the new entity and making necessary regulatory filings that would be necessary to ensure secure funding for the new entity prior to completion of the cut-over of these functions from WECC to the new entity.

5. For the remaining WECC, the Board directs the GNC to re-evaluate the governance structure and bring a proposal to the Board for its consideration at the March Board meeting. The Board would like to consider proposed Bylaws amendments that could be voted on by the WECC Membership at its 2013 Annual Meeting to implement an improved governance structure for WECC.

6. The Finance and Audit Committee should focus on retaining Section 215 funding for the remaining WECC, and on an interim basis for the RC, until a tariff and/or bilateral mechanism can be developed.

7. The Board directs the GNC and management to develop and begin the implementation of a transition plan for the RC and other registered functions including separate budgets, development of bylaws, a 501(c)(4) corporation, identifying board members, and developing a leadership structure.

8. The Board directs the GNC and management to recommend policies and procedures for operating the Reliability Centers in a separable and focused manner with distinct budget and resources to facilitate the anticipated cut over to a new company and to expedite progress on the improvement of the Reliability Centers while they remain in WECC.

9. The Board directs the GNC to work with a member advisory group to present their class ideas and majority and minority opinions, and address stakeholder concerns to assess the extent to which members support the GNC’s recommendations.

Board Direction – 12/6-7/12 Meeting

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Board Direction – 12/6-7/12 MeetingWECC & RCCo Class Issues ResolutionResolved,

That the Western Electricity Coordinating Council (WECC) Board of Directors directs the GNC to develop proposed bylaws amendments or other policies that will apply to both WECC and the RCCO that will, following the proposed spin off of the registered functions into the RCCO: (1) Maintain existing classes 1-5; (2) Eliminate Class 7; (3) Modify the definition of Class 3 to include developers, consultants, and members at large with a business interest in WECC; (4) Allow existing Class 7 members to reapply for Class 3 membership; (5) Remove members who are inactive for over 12 months from membership; and (6) Allow access to WECC data by non-members who can demonstrate a legitimate business need for the data, pay the incremental cost of providing the data, and sign a universal Data Access NDA. The Class 6 issues are still under review and will be brought back for discussion at a later date.

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December – organizing Phase III effort• Work Plano 3-Step Approach

• Frame issue and assign white paper development• Post white paper for MAWG review and comment• GNC discussions

• Receive MAWG comments• Develop recommendations for Board consideration

• MAWG formed and charter developed

GNC Activities

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GNC Activities – Work PlanScope (Deliverables) & Schedule

Detailed proposal for the spin-off of the registered functions (RC and IA) in to the RCCo:• Validation of the functions to be included in the new entity: 1/8-15 (January

Board Meeting - approval)

• Bylaws with governance under an independent board with a strong member advisory committee

– Governance Recommendations: 1/8-23 (January Board Meeting - approval)

– Bylaws: 1/23-2/26 (March Board Meeting - approval)

• Plan for operating the registered functions in a separable and focused manner to facilitate the anticipated transition and to expedite progress on the improvement of the RCs while they remain in WECC: 1/15-2/5 (March Board Meeting – status update)

• Plan for transitioning the registered functions from the current WECC to the RCCo, including board selection process and proposed leadership structure: 2/12-2/26 (March Board Meeting - approval)

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Detailed proposal for the re-evaluation of the remaining WECC:o Validation of the functions that would remain with

WECC: 1/8-15 (January Board Meeting)o Proposal on the future governance structure for

the remaining WECC: 1/8-29 (February Board Call)

o Proposal on amendments for existing WECC Bylaws to move to the restructured WECC: 1/23-2/26 (March Board Meeting)


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Development of an open and transparent process for engaging the WECC membership in providing their ideas and opinions (majority and minority) with rationale and to address stakeholder concerns. The process should provide a mechanism to assess membership support for the GNC recommendations: 12/18/12-3/15/13



7 14 21 28 4 11 18 25 4 11 18 25 1 8 15 22 29 6 13 20 27 3 10 17 24 1 8 15 22 29 5 12 19 26 2 9 16 23 30 7 14 21 28 4 11 18 25 2 9 16 23 30 6 13 20 16

RCCo Tasks

Validate functions to be included

Develop Governance StructureBoard approval of functional split and RCCo Governance Model

Interim plan for registered functions

Board approval of Interim Plan

Develop Bylaws

Transition plan for registered functionsBoard approval of RCCo Bylaws and Transition Plans

Implement Interim plan

Implement Transition plan

WECC Membership Vote on RCCo Bylaws

Board approval of ….TBD

Go Live for New RCCo

Remaining WECC Tasks

Validate functions to be included

Develop Governance Structure

Board approval of Remaining WECC Governance Model

Develop Bylaws

Board approval of Remaining WECC Bylaws

Develop transition plan for Remaining WECCWECC Membership Vote on Remaining WECC BylawsBoard approval of Remaining WECC transition plan

Implement Transition plan

Board approval of ….TBD

Go Live for New Remaining WECC Organization

Tasks

20142013May Jul Oct JanAug Sep Nov DecJan Feb Mar Apr Jun

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The current resources identified for this effort include the following:• The GNC• The MAWG modeled along the lines of the group

used for the MAC review• WECC staff support

o Coordination and logistics for GNC and MAWGo Project managemento Operations input

• Legal (internal and external) for bylaws development

GNC Activities – Work PlanResources

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Purpose/Responsibilities

• Conduct outreach and education to all WECC members on bifurcation options and issues

• Provide to the GNC both majority and minority views of each class, and a record of individual MAWG member votes

• Actively participate in GNC meetings to present MAWG member perspectives and provide supporting documentation

• Advise the GNC, but GNC ultimately responsible for making recommendations to Board

Group Composition and Governance

• 2 individuals per class (Class 1-7)

Leadership

• Chair and Vice Chair selected by majority vote of MAWGo Chair: Maude Grantham-Richards (Tri-State G&T)o Vice-chair: Travis Kavulla (Montana Public Service Commission)

Meetings

• Open to the public

GNC Activities – MAWG Charter

Current RecommendationsFunctional Split

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Current RecommendationsFunctional Split – Management Proposal

Organizational Area Function RE RCCO

Compliance Monitoring and Enforcement

Registration XAuditing XEnforcing XTraining/Outreach X

Reliability Coordination

Reliability Coordination XSeasonal Planning Studies XWISP XRestoration training and drills XEMS Engineering XEMS Applications XEMS Information Technology XRegistered Function Compliance X

Interchange Authority Interchange Authority X

Standards

NERC Standards Process X *Regional Business Practice Development X *

Regional Criteria Development X *Regional Standards Development X *

Transmission Expansion Planning

Data and Models XPlanning Studies and Interconnection-wide Plans X

Reliability AssessmentsReliability Assessment and Data Collection X

System Performance Analysis X


Planning Services

Power Flow and Dynamics DataX

Bulk Electric System Exception Processing X

Support for Dynamic Model Development X

Map of Principal Transmission Lines and Planned Facilities Map

X

Planning Coordination and Studies X

Project Coordination and Path Rating Process X

Transmission Planning Oversight X

Operations

Entity Certification (BA/TOP) X *Event Analysis (EA) X *WECC Interchange Tool (WIT) § §

Situational Awareness X XUnscheduled Flow Mitigation Plan (USFMP) and webSAS

§ §

System Operator Training XRemedial Action Scheme Analysis and Database X

Committee Support Member Committees X

General CounselLegal Services X XCorporate Secretary X XCorporate Compliance X X

Corporate Services

Administration X XCommunications X XHuman Resources X XInformation Technology X XAccounting/Finance X X

- Lead role

- Participating as a registered entity

- Both entities have a role

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Current RecommendationsFunctional Split – MAWG Comments*

• Registration• Auditing• Enforcement• Bulk electric system exception processing• Training / outreach on compliance• Standards development (NERC / WECC)• Regional criteria development• Transmission expansion data and models• Planning studies and interconnection wide

plans• Reliability assessments and data collection• System performance analysis• Power flow and dynamic models• Dynamic model development • Maps• Planning coordination and studies > than a

year

* MAWG – consensus recommendations for changes are identified as the elements to be 'added' or 'removed’

WECC RE/ Member Services Functions:

• Project coordination and path rating process

• Transmission planning oversight• Entity certification• Event analysis• RAS analysis and database• System operator training• Committee support– Removed from the WECC RE

functions are:• WECC interchange tool (WIT)• Unscheduled flow mitigation plan

and webSAS

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• Reliability coordination• Interchange authority• Situational awareness and infrastructure security

(added)• WIT (added)• Efficient curtailment calculator (added)• WISP (added)• webSAS and UFAS (added)• RAS schemes (added)• Short term operational studies < 1 year rolling

(added)• Restoration and simulation training (added)• Debriefing and analysis of events with operating

entities (added)• Reliability coordination• Interchange authority• Situational awareness and infrastructure security

(added)• WIT (added)• Efficient curtailment calculator (added)• WISP (added)

* MAWG – consensus recommendations for changes are identified as the elements to be 'added' or 'removed’

Current RecommendationsFunctional Split – MAWG Comments* (2)RCCo Functions:

• webSAS and UFAS (added)• RAS schemes (added)• Short term operational studies < 1 year rolling (added)• Restoration and simulation training (added)• Debriefing and analysis of events with operating

entities (added)• EMS engineering• EMS application• Information technology • Compliance with registered functions • Participate in:

– WECC RE event analysis– Standards development (NERC and WECC RE)– Regional criteria development – Regional business practices– Provide:

• Data to WECC RE / Member services under appropriate agreements

• Provide data to WECC RE for situational awareness (same feed as for NERC / FERC)

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Unresolved• Energy Imbalance Market (EIM): its placement with either

organization should be discussed and reviewed at the time of an EIM decision.

Standing Committees• Not taking a position on the committees being assigned to the

WECC RE versus the RCCo; by-laws should allow standing committees as needed.

Corporate Services• If the services can be shared without jeopardizing the

purpose(s) underlying the bifurcation of WECC, then they should be.

Current RecommendationsFunctional Split – MAWG Comments

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None Identified

Current Recommendations Functional Split – Individual GNC Member Comments

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Consensus recommendation of GNC is to adopt management’s proposed split of functions with the changes proposed by MAWG, except that:• The functions and responsibilities associated with WIT and

webSAS need further discussion and need to be brought back for approval;

• The MAWG comments regarding EIM, Standing Committees, and Corporate Services are noted for information.

Current RecommendationsFunctional Split - GNC Recommendations

Draft Resolution

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Current RecommendationsFunctional Split – Draft ResolutionWhereas, The Western Electricity Coordinating Council (WECC) Board of Directors (Board) on December 7, 2012 directed the Governance and Nominating Committee (GNC) to develop a detailed governance proposal for the spinoff of registered functions into a Reliability Coordination Company (RCCo), as well as for the continuing governance of the Remaining WECC Company which will continue to carry out NERC delegated functions

Therefore, Be It Resolved, that

1. The WECC Board approves the recommended functional split between the RCCo and Remaining WECC companies as outlined in the attached comparison chart, with the attached modifications noted from the January 23, 2013 GNC presentation to the Board; and

2. The WECC Board authorizes the GNC, Finance and Audit Committee, Human Resources and Compensation Committee and WECC management to use this functional split as the basis for development of necessary bylaws and other documents to implement the proposed bifurcation effort.

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Current RecommendationsFunctional Split – Draft Resolution


Compliance Monitoring and Enforcement

Registration XAuditing XEnforcing XTraining/Outreach X

Reliability Coordination

Reliability Coordination XSeasonal Planning Studies XWISP XRestoration training and drills XEMS Engineering XEMS Applications XEMS Information Technology XRegistered Function Compliance X

Interchange Authority Interchange Authority X

Standards

NERC Standards Process X *Regional Business Practice Development X *

Regional Criteria Development X *Regional Standards Development X *

Transmission Expansion Planning

Data and Models XPlanning Studies and Interconnection-wide Plans X

Reliability AssessmentsReliability Assessment and Data Collection X

System Performance Analysis X


Planning Services

Power Flow and Dynamics DataX

Bulk Electric System Exception Processing X

Support for Dynamic Model Development X

Map of Principal Transmission Lines and Planned Facilities Map

X

Planning Coordination and Studies X

Project Coordination and Path Rating Process X

Transmission Planning Oversight X

Operations

Entity Certification (BA/TOP) X *Event Analysis (EA) X *WECC Interchange Tool (WIT) § §

Situational Awareness X XUnscheduled Flow Mitigation Plan (USFMP) and webSAS

§ §

System Operator Training XRemedial Action Scheme Analysis and Database X

Committee Support Member Committees X

General CounselLegal Services X XCorporate Secretary X XCorporate Compliance X X

Corporate Services

Administration X XCommunications X XHuman Resources X XInformation Technology X XAccounting/Finance X X

- Lead role

- Participating as a registered entity

- Both entities have a role

Current RecommendationsRCCo Governance

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Mission Statement - The mission of the Reliability Coordination Company (RCCo) will be to perform:• NERC registered functions of the Reliability

Coordinator (RC) and the Interchange Authority (IA) for the Western Interconnection,

• other NERC registered functions that are agreed to by the RCCo Members and RCCo Board,

• additional functions that promote BES reliability that are agreed to by the RCCo Members and RCCo Board,

• appropriate daily and seasonal system planning studies in coordination with WECC.

Current RecommendationsRCCo Governance – Proposal (1)

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Corporate IRS Structure (approved in December)• IRS 501(c)(4) status as a public welfare corporation.

Funding Mechanism (approved in December)• Initially: Continue to operate under Section 215

funding for the United States portion and existing bilateral contracts for those portions outside the United States

• Long-term: Develop suitable tariff and/or bilateral contract arrangements to ensure a secure source of funding that prevents free riders from avoiding paying a fair share of the cost of operating the RCCo.

Current RecommendationsRCCo Governance - Proposal (2)

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Membership Structure• Membership Classes (approved in December)

– five classes with the same definitions as existing WECC classes 1-5, except that the definition of Class 3 will be altered to include developers, consultants, and members at large with a business interest in the RCCo;

– Members who are classified as inactive for over 12 months will be removed from membership;

– Policies will allow access to RCCo data by non-members who can demonstrate a legitimate business need for the data, pay the incremental cost of providing the data, and sign a Universal Data Access Non-Disclosure Agreement;

– Canadian and Mexican members who participate in the RCCo will qualify for membership in existing classes 1-5. Ongoing negotiations between WECC Management and WECC’s non-U.S. members may provide for different MAC participation.

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Membership Structure (cont’d)• Sub-Class Organization

o Member Classes permitted to divide into as many as three sub-classes for the purpose of electing not more than a total of three Member Advisory Committee (MAC) representatives

o Initiated by petition, signed by a simple majority of class memberso Entire Class will vote on the proposal with a simple majority

required to advance the proposal to the Board of Directors for consideration. The Board will hear both majority and minority opinions from affected members prior to approving or denying the petition.

o No more than one MAC member will be associated with an individual sub-class

o Sub-class designations will automatically expire five years after approval, but may be re-established


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Membership Structure (cont’d)• Member Advisory Committee (MAC) Roles and Responsibilities

• a standing committee reporting directly to the Board of Directors that will advise the Board on any matter the MAC deems appropriate, as well as when required by the Board.

• MAC members vote in the best interests of the public welfare

• MAC chair or designee will sit at the Board table as a non-voting participant to provide advice or clarifications and respond to Director’s questions

• MAC will meet in open session separately from the Board of Directors meeting

• A quorum is required for the MAC to take any action by a simple majority vote

• MAC Members have a responsibility to expose all opinions (both majority and minority) to the Board


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Membership Structure (cont’d)• MAC Composition and Leadership

• Each class will determine the need for diversity (e.g., geographic, stakeholder issues, etc.).

• Leadership will consist of a Chair and Vice Chair whom will be elected by the membership of the MAC. Chair and Vice Chair of the MAC cannot be affiliated with the same Member Class, or be from the same group of affiliated companies.

• Nomination/Election • Nominations can only be made by members of respective classes

/subclass. Member representatives need not be from the class they represent.

• MAC elections will be held at the annual meeting • Each class/subclass will need to have a quorum • MAC members will be elected by

the nominee(s) receiving the most votes


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Membership Structure (cont’d)• Member Advisory Committee (MAC) (cont’d)

o Number and Term• Three members per Member Class serving 3 year staggered

termso Qualifications

• No required qualifications or class affiliation requirements


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Board Governance Structure• Composition

o 7 independent directors.o Gives substantial consideration to MAC recommendations in deciding issues, but

ultimately bases those decisions on what it deems best promotes the public welfare.

• Nomination/Election o Board Chair appoints Nominating Committee of three MAC Members, with at least

one from Member Classes 1 through 3 and at least one from Member Classes 4 or 5, and three Independent Directors not standing for re-election.

o Nominating Committee puts forth two names for each vacant Director position, recommending one of the two nominees to the full Board for consideration; except that the Nominating Committee may elect to put forward only one name for consideration in the case of an existing Independent Director standing for re-election.

o Board will select one candidate for each vacant position and present the membership with a slate of one candidate per vacancy

o Membership will vote on each position separately. Election requires majority vote of the members as a whole, as well as by a majority of the Member Classes.


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• Board Governance Structure (cont’d)o Appointment of CEO to Board of Directors

CEO may be appointed to the Board of Directors provided that the CEO shall not be a member of any Board committee and shall not vote either to make or break a tie vote on the Board.

o Selection of Board Chair Board will elect its own Chair and Vice Chair. If the

CEO is made a member of the Board he or she shall not serve as Chair or Vice Chair.


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Board Governance Structure (cont’d)• Director Qualifications

o Skills/Experience

• comprised of at least three independent directors with each of the three representing a different area of transmission operations, transmission planning, and generation experience. The remaining four independent directors shall be selected to include experience from the following areas, with each of the four representing a different area of experience:

• Regulatory/Legal,• Accounting/Finance/Economics,• Environmental,• Compliance/Standards,• International,• Public Sector,• Distribution/Retail Provider, and• Energy/Commodity Markets;


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Board Governance Structure (cont’d)• Affiliation Restrictions: An independent director may not be a full-time

employee of any Registered Entity in North America, and may not be

affiliated with any Registered Entity registered within the Western

Interconnection. The term “affiliated” means:

• An employee of,

• A contractor for,

• An employee of a contractor for, or

• Equity owner of.

These affiliation restrictions also include the spouse or minor child of the

independent director. (Ownership of broadly based mutual funds not

focused on the energy sector or receipt of pension payments that are not

tied to the financial success of the entity will not cause a disqualifying

affiliation.)


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Approval of By-Laws• Board Approval

o TBD

• Membership Advisory Committee Approvalo TBD

• Membership Approvalo TBD

Role of State Regulatory Authorities • WIRAB will have a strong advisory role to the Board so long as

such role is appropriate under Section 215 of the Federal Power Act.

• If RCCo takes on additional registered functions that do not fall under Section 215, RCCo will invite the states and provinces of the Western Interconnection to form an appropriate advisory body


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Current RecommendationsRCCo Governance – Management Comments

Funding Mechanism (Slide 25)• Any need to state WECC will request bridge funding, recognizing FERC

approval required? Any need to identify a Plan B if not approved?

Membership Structure/Membership Classes (Slide 26)• “Business interest” in point 1 and “inactive” in point 2 need more

definition. Can be addressed in the bylaws.• Point 3 problematic for RC data as the entities that provide data to the RC

are very concerned that this data only be available to reliability entities.

Membership Structure/MAC (Slide 28)• Should it be a standing committee rather than a Board committee?• Clarify that MAC members in addition to the Chair or designee who attend

the Board meeting may be permitted to speak if invited.

Board Governance/Qualifications/Affiliation Restrictions (Slide 34)• Would point four preclude ownership in a mutual fund that owned some

equity interests?

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Company Overview• Mission statement/Daily and seasonal studies

• Clarification required on responsibilities between the RCCo and the WECC

• No opposition from any class

• Corporate IRS structure/501(c)4• Class 1: doesn’t point decision to mission statement; should be about

reliability• Class 5: support the proposal • No opposition from any class

• Funding Mechanism/Initially under Section 215• Support short-term and long-term; no opposition from any class• Class 5: recommend that WECC file request for a Declaratory Order• Question: how does 215 funding address

the “free-rider” issue?

Current RecommendationsRCCo Governance – MAWG Comments

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Company Overview (cont’d)• Bilateral contracts for Canada and Mexico

• Wait on negotiations for specific comments• Concern with substantial impact on finances if Canada and Mexico

don’t participate

• Board Composition – number • Differences of opinions both within and between classes as to

whether there should be 5 or 7 directors• MAWG vote was 7 to 6 favoring 5 directors - only class 3 (one vote)

voted for 7; all other classes with multiple votes, had votes for 5 and 7• 3 years staggered terms

• Acceptable to all• Strong MAC with the board giving substantial consideration to MAC

recommendations• MAWG agrees

Current RecommendationsRCCo Governance – MAWG Comments (2)

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Membership Structure• Membership classes – 5 classes

• Class 1 & 2 minority opinion: 10 sectors (IOU; state / municipal utilities; cooperatives; federal; transmission dependent; ISO / RTO; merchant generator; customers; PUC / PRC; environmental)

• Class 5 supports classes 1- 5• Other classes wanted more time to discuss sectors within their

class

• Members declared inactive after 12 months if not participating in any fashion• if assessment to RCCo is being paid, cannot be declared inactive


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Membership Structure (cont’d)• Membership classes (cont’d)

o Access to RCCo data by non-members • same data available to WECC as it is to FERC / NERC for

situational awareness and to WECC / others for planning studies as long as a need identified and NDA signed - supported by all classes

• Class 5: share data with all system operators, market operators, and researchers (provided there are protections from the disclosure of real-time data)

o Canadians and Mexicans qualify in classes 1 through 5• not discussed but recognition of substantial financial impact on

outcome


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Membership Structure (cont’d)• Sub-class organization (Class 1 member suggested

discussion premature; should be decided once the organization starts to function on its own)o subdivide into 3 sub-classes

• supported by all classes• class 5 – limit to 3 subclasses• class 2 – why not more?

o No more than one vote per subclass; those not assigned select an at-large subclass member Class 2: should not be allowed, each member should fall into one

distinct sub-class. Can’t see why a class can’t sub-divide furthero Expires in 5 years

Class 4 did not see a need to expire; if different then a new petition should be entered to change


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Membership Structure (cont’d)• Member Advisory Committee

o Standing committee or board committee Support for a standing committee; thought to be more

independento Roles and Responsibilities

Vote in the best interest of the public welfare• Class 1: public welfare is nebulous and does not tie back to the vision

statement. Does that mean everyone on the MAC would vote the same?• Class 3: ok• General: Classes believe it needs to be clarified as to voting in the public

interest / welfare or for their own classes / sectors. Otherwise would reduce the number of viewpoints presented to the board.


43

Membership Structure (cont’d)• Member Advisory Committee Roles and Responsibilities (2)

o Meet in open session separately from the board All classes: closed sessions for specific reasons should not be

precludedo Board may attend the MAC meetings

Could MAC meet without any independent board members present?

o MAC will develop its own subcommittees and work groups Class 1: concern about number of subcommittees / work groups

that have to be supported; who pays?


44

Membership Structure (cont’d)• Member Advisory Committee Nomination / election

o Class representation need not be from the same class • Can it be a consultant?

o Number and term 3 members from each class

• Class 1 member: 2 per sectoro Qualifications

No qualifications required • Class 1: no qualifications• Class 2: qualifications as determined by the class• class 6: no qualifications


45

Board Governance Structure • Nomination/election of independent board directors

o NC puts forth two names for each vacant position recommending one for each vacant position Lots of discussion. Most not wanting to limit the number of candidates

for each position. Entire slate going to the membership for election for each open position;

There was a concern in event of death or resignation that the board would be short a position until replaced

o NC may elect to only put forth one name in case of an existing independent director standing for re-election See above comment

o BOD selects one candidate for each vacant position and presents membership a slate of one candidate/vacancy See above comment


46


Board Governance Structure (Cont’d)• Director qualifications – Skills/experience

o 4 board members, each with experience in 1) regulatory / legal 2) accounting / finance / economics 3) environmental 4) compliance standards 5)international 6) public sector 7) distribution / retail provider 8) energy / commodity markets Class 2:

• Expertise listed will be duplicated by full time staff. • Four board members in these categories is overkill. • Dilutes the expertise• Relegates the distribution/retail provider to a minor role. • This category should not be more than 2

Class 5: • Concerned about being so prescriptive and “pigeon-holing”• Majority of the qualifications should be for system operational experience

Class 4: • Recommend the addition of IT and end use customer to desired qualifications

47

Board Governance Structure (Cont’d)• Affiliation restrictions

o The term “Affiliated” means A contractor for

• Class 4: is consultant same as contractor?

• Appointment of CEO to BOD o BOD may appoint the CEO to the board

Class 1, 2, & 6: not on the board Class 3, 4, & 7: ok


48

Approval of By-laws • Class 1 - Final bylaw approval by paying members based

on recommendations from the Board

Role of State Regulatory Authorities • Without 215 funding, no requirement for a state regulatory

authority• Class 5:

o Support a separate state/provincial advisory body to the RCCo. o If allowable under Section 215, this would be WIRAB. If not,

should be a new state/provincial advisory committee to the RCCo


Current RecommendationsRCCo Governance – GNC Minority Opinions

50

• The GNC has consensus on the RCCo governance Proposals 5-7, 11, and 12 and recommends approval by the Board.

• A majority of the GNC supports the RCCo governance Proposals 1, 4, 8, 9, and 10 and recommends approval by the Board, with the minority opinions noted in Slide 49.

Current RecommendationsRCCo Governance - GNC Recommendations

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Current RecommendationsRCCo Governance – Draft Resolution (1)

Whereas, The Western Electricity Coordinating Council (WECC) Board of Directors (Board) on December 7, 2012 directed the Governance and Nominating Committee (GNC) to develop a detailed governance proposal for the spinoff of registered functions into a Reliability Coordination Company (RCCo), as well as for the continuing governance of the Remaining WECC Company which will continue to carry out NERC delegated functions.


1. The WECC Board approves the GNC consensus Proposals 5-7, 11, and 12 on RCCo Governance presented to the Board on January 23, 2013; and

2. The WECC Board authorizes the GNC, Finance and Audit Committee, Human Resources and Compensation Committee and WECC management to use these approved governance proposals as the basis for development of necessary bylaws and other documents to implement the RCCo.

52

Current RecommendationsRCCo Governance – Draft Resolution (2)

Whereas, The Western Electricity Coordinating Council (WECC) Board of Directors (Board) on December 7, 2012 directed the Governance and Nominating Committee (GNC) to develop a detailed governance proposal for the spinoff of registered functions into a Reliability Coordination Company (RCCo), as well as for the continuing governance of the Remaining WECC Company which will continue to carry out NERC delegated functions.


1. The WECC Board approves the GNC majority Proposals 1, 4, 8, 9 and 10 on RCCo Governance presented to the Board on January 23, 2013; and

2. The WECC Board authorizes the GNC, Finance and Audit Committee, Human Resources and Compensation Committee and WECC management to use these approved governance proposals as the basis for development of necessary bylaws and other documents to implement the RCCo.

53

• Remaining WECC governance structure – February Board Call

• Plan for transitioning the registered functions from the current WECC to the RCCo – (March Board Meeting)

• Proposed bylaws for RCCo and bylaws changes for WECC – (March Board Meeting)

Future Recommendations for Board Approval

WECC RESTRUCTURING PHASE III GNC UPDATE TO BOARD OF DIRECTORS January 23-24, 2013 Denver, CO.

Documents

registered functions

board meeting

board members

remaining wecc functions

board review

wecc data

independent board

wecc membership