Recent NERC Standards Activities RSC – Jan. 5, 2011 NSRS Update Date Meeting Title (optional)

2 Introduction ●NSRS Meetings ●NERC Standards Activity NSRS Update January 5, 2011

3 NSRS Meetings ●NSRS Meetings since November:  Face-to-face November 3  Teleconferences Nov. 22, Dec. 13, and Jan. 3 ●Upcoming Meetings  Jan. 24, Feb. 7, Feb. 28  May have face-to-face on Mar. 2 after RSC NSRS Update January 5, 2011

Standards Process Manual The Standard Processes Manual was approved by FERC with a single directive to make a modification to the “Elements of a Reliability Standard” section of the manual. The proposed revision was approved by ballot and is awaiting NERC Board approval. ●The initial ballot received 93.72% affirmative votes.  The Quorum was reached with 81.60% participation  Since there were negative ballots that included a comment, these results were not final. ●The standard proceeded to a recirculation ballot which passed with 92.88% affirmative votes.  The Quorum was reached with 87.00% participation NSRS Update January 5, 2011

5 Project Revisions to Relay Loadability for Order 733 PRC addresses the Phase I directives from Order 733 including a process for use in determining which facilities (transmission lines operated below 200 kV and transformers with low voltage terminals connected below 200 kV) must meet specific relay loadability criteria. The Phase I directives must be incorporated into PRC-023 and filed with the Commission by March 18, 2011 ●The initial ballot failed with 51.51% affirmative votes.  The Quorum was reached with 88.00% participation ●Next steps: The standard will proceed to a recirculation ballot. NSRS Update January 5, 2011

Expedited Revisions to CIP-005 The team has been working to revise CIP-002 – Identification of Critical Assets, with the goal of establishing bright line criteria for the identification of critical assets ●The initial ballot failed with 42.89% affirmative votes.  The Quorum was reached with 84.46% participation ●Next Steps: The drafting team will post its consideration of all comments (those submitted with a comment form), and a successive ballot will be conducted. We expect the next draft to be posted in the next month. NSRS Update January 5, 2011

7 Project Interpretation of PRC-004 and PRC-005 (Revision 2) An interpretation was requested of the term "transmission Protection System" as used in requirements R1 and R3 of PRC and requirements R1 and R2 of PRC Specifically, the interpretation seeks to clarify whether protection for a radially-connected transformer protection system energized from the BES is considered a transmission Protection System and is subject to these standards. The balloted interpretation states: “A Protection System for a radially connected transformer energized from the BES would be considered a transmission Protection System and subject to these standards only if the protection trips an interrupting device that interrupts current supplied directly from the BES and the transformer is a BES element.” ●The recirculation ballot passed with 82.41% affirmative votes.  The Quorum was reached with 87.81% participation ●Next Steps: The interpretation will be submitted to the NERC Board of Trustees for approval NSRS Update January 5, 2011

8 Project Cyber Security 706 (Version 4 CIP Standards) This revision to CIP-002 adds a specific list of “Critical Asset Criteria” and removes the reference to “risk based assessment methodology” for identifying critical assets. ●The initial ballot passed with 77.06% affirmative votes.  The Quorum was reached with 87.07% participation  Since there were negative ballots that included a comment, these results were not final. ●The drafting team posted its consideration of all comments (those submitted with a comment form, and those submitted with a ballot) and the standard proceeded to a recirculation ballot which ended on December 30, ●Next Steps: NERC will post the results of the recirculation ballot and proceed from there. NSRS Update January 5, 2011

9 Project – Certifying System Operators – PER-003 This standard requires each Reliability Coordinator, Balancing Authority and Transmission Operator to staff its real-time operating positions with personnel that have NERC certification in specified subject areas. The standard is being revised to address the directives from FERC Order 693 and industry comments. ●The recirculation ballot passed with 86.91% affirmative votes.  The Quorum was reached with 95.50% participation. ●Next Steps: The standard, VRFs and VSLs, and associated implementation plan will be submitted to NERC’s Board of Trustees for approval. NSRS Update January 5, 2011

10 Recent NERC Activity Current Ballot: ●Project ― TPL Table 1, Footnote b  Initial Ballot and comments close today, January 5, 2011 ●Project ― FAC Order 729  In Order 729, FERC ruled that the MOD standards developed in Project did not completely address the topics covered in FAC-012 and -013, and that they did not fully address the associated directives from Order 693. Accordingly, FERC directed NERC to use the standards development process to make certain changes to the FAC standards.  Ballot and Comment Period ends on January 8, 2011 Posted for Comments: ●Project ― Definition of Bulk Electric System  On November 18, 2010 FERC issued Order 743 and directed NERC to revise the definition of Bulk Electric System so that the definition encompasses all Elements and Facilities necessary for the reliable operation and planning of the interconnected bulk power system. Additional specificity will reduce ambiguity and establish consistency across all Regions in distinguishing between BES and non-BES Elements and Facilities.  Comment Period ends on January 21, 2011 NSRS Update January 5, 2011