Compliance Monitoring Strategy Kim Israelsson Manager, Compliance Program Coordination and Process Integration

Western Electricity Coordinating Council Overview How will Reliability Assurance Initiative (RAI) impact WECC’s Annual Audit Plan? What does this mean to my Entity? How and when will Entities be notified of an upcoming audit? Western Electricity Coordinating Council

How RAI Impacts WECC’s Annual Audit Plan WECC will identify which Registered Entities are subject to compliance monitoring activities (including Inherent Risk Assessment) in a given year based on NERC IRA Guidance: Not applicable to Registered Entities required to be audited at a three-year interval per the NERC Rules of Procedure (BA, RC, TOP) Moving away from traditional 6 year audit schedule Provide flexibility to address emerging issues Allow WECC to engage in a collaborative dialogue with each Registered Entity and focus efforts where needed Western Electricity Coordinating Council

What does this mean to my Entity? WECC will use an Inherent Risk Assessment to determine type and frequency of monitoring method for each entity audit, spot-check, self-certification, etc. WECC will focus efforts on Registered Entities with higher impact on Bulk Power System (BPS) and/or registered entities that pose a high risk to BPS Western Electricity Coordinating Council

Western Electricity Coordinating Council How/when will my Entity be notified of an upcoming monitoring activities? WECC will post the Annual Audit Plan the first business day in August With the exception of BA, TOP, RC functions, entities will be sorted quarterly Entities included in the WECC Annual Audit Plan will be notified of impending IRA and/or audit deadlines approximately 280 days prior to start of audit engagement Western Electricity Coordinating Council

Western Electricity Coordinating Council References WECC encourages Registered Entities to review the following NERC Guidance materials: ERO Enterprise Inherent Risk Assessment Guide http://www.nerc.com/pa/comp/Reliability%20Assurance%20Initiative/ERO_Enterprise_Inherent_Risk_Assessment_Guide_20141010.pdf Overview of ERO Enterprise’s Risk-Based Compliance Monitoring and Enforcement Program http://www.nerc.com/pa/comp/Reliability%20Assurance%20Initiative/Overview%20of%20the%20ERO%20Enterprise%E2%80%99s%20Risk-Based%20CMEP.pdf 2015 ERO Compliance Monitoring and Enforcement Implementation Plan http://www.nerc.com/pa/comp/Reliability%20Assurance%20Initiative/Final_2015%20CMEP%20IP_V_1.1%20%28Posted_05052015%29.pdf Western Electricity Coordinating Council

Western Electricity Coordinating Council Questions Kim Israelsson 801.819.7613 kisraelsson@wecc.biz REoversight@wecc.biz Western Electricity Coordinating Council