1. Oversight Update Michael Moon, Vice President Registered Entity Oversight W ESTERN E LECTRICITY C OORDINATING C OUNCIL

2. Compliance: Necessary but Insufficient 2 W ESTERN E LECTRICITY C OORDINATING C OUNCIL Reliability Excellence Engrained behaviors Best practices, benchmarking Compliance margin Continuous improvement Compliance excellence Clear requirements Consistent application Systematic self-evaluation Prompt self-reporting Timely / comprehensive mitigation

3. Where We Were 3 W ESTERN E LECTRICITY C OORDINATING C OUNCIL 0 Defects $$$$$ Backwards looking

4. Where We Were 4 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

5. Where We Must Go 5 W ESTERN E LECTRICITY C OORDINATING C OUNCIL Understand: regional and system risk each entity inter-related entity risk Collaborate with each entity Be forward looking Identify emerging risks Exercise discretion Rigorous event analysis

6. Where we Must Go 6 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

7. Event Investigations and Inquiries 1965 Northeast blackout 1977 New York blackout 1996 Two major blackouts in west 2003 Northeast blackout 2008 Florida blackout 2011 Southern Cold Snap 2011 Southwest blackout 2013 Metcalf Substation attack 7 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

8. Event Analysis (EA) and Compliance Self-Assessment (CA) Entities / Event Reports (since 2010): 47 / 266 Compliance Self-Assessments – Category 2+ Events: 58 Closure Letters: 23 8 W ESTERN E LECTRICITY C OORDINATING C OUNCIL Avista Corporation Black Hills Corporation Bonneville Power Administration California Independent System Operator Colorado Springs Utilities (2 Letters) El Paso Electric Company (2 Letters) Eugene Water & Electric Board Farmington Electric Utility System Imperial Irrigation District NorthWestern Corporation (2 Letters) PacifiCorp Portland General Electric Company Public Utility District No. 2 of Grant County, Washington (2 Letters) Puget Sound Energy, Inc. San Diego Gas & Electric (2 Letters) Sierra Pacific Power Company Southwest Transmission Cooperative, Inc. Western Area Power Administration - Desert Southwest Region

9. Audit Observations Success = fulfillment of obligations Both entity and audit team Characteristics of a successful audit Involved Management Organized Evidence Confident staff 9 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

10. Enforcement Observations Success = fulfillment of obligations Both entity and WECC team Use the various tools appropriately Characteristics of a successful negotiation Accuracy of NOAV Honest dialogue Focus on Reliability Good faith Above and beyond measures – focused on the violation to be mitigated 10 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

11. It’s Not About the $$$$! “Well I just want to stress, the goal here--at least my goal, I would presume my colleagues might agree with me on this--we're not into being a revenue generator for the Federal Government here.” “It definitely is about reliability, not being a revenue generator…” http://www.ferc.gov/CalendarFiles/20140718140816-AD14-9-06-10-14.pdf 11 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

12. WECC Priorities Systematize the IRA process Improve analytical ability and capability Continue process improvement Demonstrate rigor and competency Collaborate with Registered Entities Provide technical support and outreach CIP V5 outreach and support 12 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

13. What the Entity Can Do 13 W ESTERN E LECTRICITY C OORDINATING C OUNCIL Understand ERO processes and programs Use survey and report templates Dialogue with WECC staff Participate in WECC activities and groups Participate in voluntary programs Event analysis and cause coding Compliance self assessments Operational Practices Survey

14. WECC Regulatory Philosophy 14 W ESTERN E LECTRICITY C OORDINATING C OUNCIL Industry is: – Fully committed to reliability – Maintaining and improving reliability – Participating in voluntary programs – Sharing information – Self-identifying possible violations

15. WECC Regulatory Philosophy 15 W ESTERN E LECTRICITY C OORDINATING C OUNCIL Core principles for WECC: – Be an informed regulator – Identify top risks to reliability – Exercise discretion responsibly – Enforce fairly See MAC Meeting 3/8/2016 1:00pm https://www.wecc.biz/Pages/FilteredCalendar.aspx?FilterField1=Co mmittee&FilterValue1=MAC

16. Questions 16 W ESTERN E LECTRICITY C OORDINATING C OUNCIL Michael (Mike) Moon Vice President, Registered Entity Oversight 801-718-2987 mmoon@wecc.biz