WHAT YOU NEED TO KNOW ABOUT NERC ERO COMPLIANCE Louise McCarren Chief Executive Officer – WECC APPA National Conference June 16, 2009 Salt Lake City, Utah

3 WECC Compliance Goals ● Improve Reliability for the Western Interconnection ● Transparency ● Consistency ● Professionalism ● Communications

CMEP Roles ● Registration ● Compliance Monitoring ● Mitigation Tracking ● Enforcement 4

Compliance Monitoring ● Work with registered entities to resolve violations once identified through one of the eight doors into Compliance Self Reports Self Certifications Exception Reporting On-site Audit Off-site Audit Spot Checks CVIs Complaints 5

WECC Compliance Update Audits and Spot-Checks ● On-Site Audits  Balancing Authorities and Transmission Operators  Three-year cycle ● Off-Site Audits  All other entities  Six-year cycle ● CIP Spot Checks (beginning July 2009)  Depending on region, may double audit work load 6

Violation Resolution Processes ● Which process best suits circumstances  NAVAPS (NOAV)  NOCV  Settlement  Hearing 7

Notice of Alleged Violation and Penalty or Sanction (NAVAPS) ● Formerly referred to as a Notice of Alleged Violation (NOAV) ● Letter that contains:  Violations facts  Recitation of the record  Determination of penalties/sanctions  Justification for penalties  Notice to registered entity of its options 8

Notice of Confirmed Violation (NOCV) ● Can be used rather than a NAVAPS if entity doesn’t contest violation or penalty; or ● May supplement a NAVAPS with any updates to the record 9

Notice of Confirmed Violation (continued) ● Contains same level of factual data as NAVAPS  Violation facts  Recitation of the record  Determination of penalties/sanctions  Justification for penalties/sanctions  PLUS – the statement that entity is not contesting the violations 10

Settlement ● Can be requested at anytime ● Going directly to settlement (skipping NAVAPS and/or NOAV) has proven to be most expeditious route ● End result – a settlement agreement that contains the factual history and the terms of the settlement ● NERC and FERC approval required 11

Hearing ● Process spelled out in CMEP ● If parties cannot reach settlement, entities can request hearing ● Formal adjudicative proceeding before hearing officer 12

Penalty Determination ● Determine fair and consistent penalties and/or sanctions  Risk Factor  Severity Level  Impact of violation on BES  Mitigating/aggravating factors  Penalties assessed in similar cases  Unique circumstances 13

In Summary ● Complex process ● Many moving parts ● Analogy to concurrent engineer/build ● Changes/improvements as we learn ● Commitment to keeping interested stakeholders informed 14

15 WECC Compliance Continued Outreach Taud Olsen, WECC Director of Stakeholder Relations and Outreach ● Compliance User Group (CUG) ● CIP User Group (CIPUG) ● Open Mic – Monthly ● Compliance Questions Inbox

16 WECC Compliance Update Questions Louise McCarren Chief Executive Officer Western Electricity Coordinating Council 615 Arapeen Drive, Suite 210 Salt Lake City, Utah