Evolving NERC Standards Processes and Practices Paradigm Shift

2 Key Documents ●Standards Committee Strategic Plan ●Standards Committee Strategic Work Plan ●Reliability Standards Development Plan

3 Standards Reform Ultimate goal ●Focus on reliability - ensure that industry resources invested to develop standards are worthy of the output: a stable body of world class reliability standards NERC implemented changes: ●Leadership and staff changes  Standards department reorganization ●Assessing compliance – Coordination with Standards  Reliability Assessment Initiative (RAI)  Drafting RSAWs during standards development ●Standing up RISC

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5 Standards Reform ●NERC Board resolution – November 2012  Accountability  Drafting Team composition  Workflow/process  Work Plan (Reliability Standards Development Plan) ●Additional changes being considered by SPIG  SPIG has been reconvened to assess status

6 Areas of Strategic Focus From Standards Committee Strategic Plan (Draft): ●Transition the current body of standards – Complete the transition to a stable, world-class set of clear, concise results-based standards that ensure the reliability of the bulk power system. ●FERC Directives and Recommendations from the 2003 Blackout Report – Target a filing to resolve all currently outstanding FERC directives by the end of ●Five Year Review of Reliability Standards – Complete any outstanding 5-year reviews of Reliability Standards. ●Finish remaining open Standard projects – Focus project management on active and inactive Standard development projects to bring closure to these projects by the end of Closure in some instances may involve a recommendation to stop some projects, consolidate projects or roll them into the Directives project. Projects that cannot be completed by end of 2013 will have a specified completion date agreed to by the SC.

7... continued ●Paragraph 81 and Results-Based Standards concepts – Apply Paragraph 81 (retire or modify FERC-approved Reliability Standard requirements that as FERC noted, "provide little protection to the reliable operations of the BES", are redundant or unnecessary) and Results-Based Standards concepts across the above mentioned major work areas during their completion. ●Existing or Emerging Issues and Reliability Risks – Address emerging risks to the bulk power system by developing high quality and technically sound Reliability Standards, as needed, and in a timely manner. ●Maintenance of Existing Reliability Standards – Continue to review existing Reliability Standards to ensure the standards remain up-to-date. Provide interpretations on Reliability Standards as required in the Standards Process Manual. ●Compliance Input – Provide technical expertise and feedback on NERC’s compliance program, including Compliance Application Notices (CANs), Compliance Analysis Reports (CARs) and Reliability Standards Audit Worksheets (RSAW), etc.

8 RISC ●RISC committee formed and now active.  “Reliability Issues Steering Committee”  Reports to NERC Board of Trustees  Identify and triage reliability issues ●RISC solicits “nominations” of reliability issues  Can initiate a range of reliability solutions: Standards, Guidelines, NERC policies, etc.  Considers findings from system events, lessons learned, risk trends  Includes consideration of scope, prioritization, cost v. benefit, etc.

9 RISC Membership ●12 Members  4 from MRC  2 at-large (stakeholders)  5 from committees SC, OC, PC, CIPC and CCC  Senior NERC staff (non-voting) ●Geographic and sector diversity

10 Standards Committee Strategic Work Plan Key tactical recommendations: ●SC is accountable to NERC BOT  Deliver high-quality and timely standards  Effective management of process  Term limits on SC leaders ●Smaller, more agile, committed SDTs  No more than 10 people  Facilitator/project manager, SMEs, technical writer/lawyer  Form pool of SMEs for each standards category  NERC staff or writer “holds the pen” and consults with SDT; SDT approves draft

11... continued ●Aggressively oversee and manage the workflow and effective use of the Standards development process  Address directives  Satisfy 5-year review requirement  Prioritize existing projects and emerging issues  Integrate with RISC efforts  Engage NERC technical committees  Enhanced consensus-building  New SC Project Management/Oversight committee  Address training, processes and procedures (including subgroups)  Collaborate with NERC Compliance staff

12 Reliability Standards Development Plan ●Approved by BOD on 12/19/12. ●Significant revision of NERC’s approach to managing the standards development workload. ●Initiatives:  Paragraph 81 phase 2  Results-based Standards  Internal Controls integration/eliminate zero-defect requirements  Concurrent development of Compliance tools, such as RSAWs

13 NERC Technical Committees ●Increased engagement between the Standards Committee and the NERC technical committees  ensure that reliability standards are technically sound  build industry consensus as NERC accelerates the transformation of the current standards to a body of world-class standards  ensure the reliability of the bulk power system.

14 Standard Processes Manual ●Revisions based on SPIG and Board recommendations.  Standards Process Improvement Group ●SPM Revisions passed ballot in December.

15 Standard Processes Manual Key Revisions: ●Streamline the work of drafting teams in responding to comments ●Negative ballots without comments (submitted either individually or as part of a group) count toward quorum but not consensus ●Emphasis on developing informal consensus prior to formal balloting ●Clarification of the handling and purpose of interpretations ●Limited waiver provision

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17 Questions?