1. MAC Update WECC 2018 Budget Review
Grace Anderson
MAC Budget Work Group Chair
March 7, 2017

2. Work Group Members Rob Kondziolka, Class 1 Russ Noble Class 2
Gary Tarplee Class 3
Michele Beck Class 4
Grace Anderson Class 5
Diana Wilson International

3. Work Group Activities (1)
MAC Chair identifies Work Group (WG) members
Draft budget and program briefing February 24
Staff posts draft 2018 budget overview February 28
WG members review materials; identify major issues and questions

4. Work Group Activities (2)
WG conference call with Jim Robb 2/28
Draft initial observations prepared
WG meeting refine initial observations (3/2)
WG members (through chair) present to FAC (3/7)
Chair presents first WG Report to MAC (3/7)

5. Highlights: 2018 Proposed Budget
Draft 2018 budget is a $644,000 (2.4%) increase over 2017:
2018 Proposed Budget $27,441,000
2017 Approved Budget $26,797,000
Key Assumptions:
LSE Assessment increases 1%
Major electric/natural gas interface project
Addition of three new FTE
Reserves used in 2017 replenished in 2018

6. Summary: Proposed 2018 Budget (1)
2017 Approved Budget $26,797,000
+ 3% Merit increase, labor float , 3 new positions
+ Increased travel requirements due to CIP V5 and CIP
+ One-time Gas/Electric Interdependence Study
- RAS Modeling, BCCS alternatives, GMD (800)
- Net decrease in Board compensation (47)
+ Other net changes (38)
2018 Proposed Budget $27,441, %
Reference Slides detail Major Drivers by Program (Jillian Lessner materials).

7. Summary: Proposed 2018 Budget (2)
Five WECC Operational Programs: FTE Changes 2017 vs 2018
Reliability Standards
Compliance and Organization Registration and Cert. *
Training and Education (0.7)
Reliability Assessment and Performance Analysis **
Situation Awareness and Infrastructure Security
*Three positions and associated work moved from Corporate Services; one new FTE
**Two new FTE.

8. Workgroup: Initial Observations
Efficient Realignment of Existing Resources: Support realigning resources and for looking at ways to reallocate staff time to areas of greater need; focus on strategic priorities; elimination of duplication.
Assessment Stabilization Policy: Encouraged to see it being implemented and achieving success in avoiding large fluctuations in the assessments; preferable to some would be vigilance in keeping assessment level constant.
Documentation of Need for Expanded FTE: Proposing a permanent increase of over $600,000 (3% merit adjustment and 3 new FTE) requires more justification.
Merit Salary Increase Necessity and Comparability: Request better explanation of how comparability is established and in what way the overall WECC compensation package compares to Canadian and western utility entities and other REs.
Formation of RAC/Creation of ADS: The promises of efficiency made merging TEPPC and PCC into a new Reliability Assessment Committee are not realized, nor are there efficiencies of merging data sets into one Anchor Data Set (ADS). We request improved documentation of efficiencies realized by the PCC/TEPPC merger and the impacts on the 2017 and 2018 budget; and, commitment to track ADR and RAC costs.

9. Workgroup: Initial Observations
Scope and Approval of Electricity/Gas-Electric Interface Study: The scope and cost of this proposed project merits continues scrutiny with focus on an explicit approval process, finding data for analysis that can result in defensible, quantitative conclusions, and evaluating solutions to potential reliability challenges.
Consistency with Strategic Plan Initiative: A cross-check is needed to confirm all items in the Strategic Plan WECC Operating Plan are funded in 2018 budget.
2017 and 2018 Expenditures and Board Reserve Policy: Understanding of reserves drawdown in 2017 and replenishment in 2018 merits preparation of a reserves “summary sheet.”
Schedule: The schedule allows only ten working days for individual member entities to file written comments (BP and B posted May 1/ comments May 12). MAC files comments May 19.
Overall Budget Increase: The overall proposed increase of 2.4% is larger than expected. The team is hopeful that further evaluation and refinement by WECC leadership will identify ways to minimize increases and articulate a stronger justification for those needed.

10. 2018 Budget Milestones (1) Nov. 2 2016 ERO / RE budget kickoff meeting
Feb. 15: WECC Exec Team reviews department drafts
Feb 23: Summary materials provide to MAC WG
Feb. 24: Staff briefing for MAC WG
Feb. 28: MAC WG call with WECC CEO Jim Robb
March: MAC members identify issues
April 3: WECC submits NEL request to Bas
April 19: MAC Monthly Call: review draft comments

11. 2018 Budget Milestones (2)
May 1: Draft 1 of 2018 BP&B posted to website
May 4, 5, 10: WECC BP&B Webinars (member input)
May 12: Stakeholder Comments due on draft BP&B
May 17: MAC considers approval of WG Comments
May 19: MAC submits final Comments to WECC

12. 2018 Budget Milestones (3)
May 25: NERC webinar on NERC, Regional Entity and ERO Enterprise 2018 NERC BP&B
June 6: WECC staff submits final WECC BP&B to FAC for final review with stakeholder comments
June : WECC Board Approval of 2018 BP&B
July 6: Final 2018 budget submittal due to NERC, with list of LSEs and NEL data
Aug - Nov: NERC and FERC review and approval.

13. Reference Slides
Major Drivers: 2017 to 2018 Proposed Budget CMEP and RAPA: Activities and FTE

14. Major Drivers: Proposed Budget (1)
Reliability Assessment and Performance Analysis
Personnel Expenses: Two new positions – a Project Coordinator and a Project Manager to help plan, execute, and close out projects to free up engineering talent and enable them to focus on the more technical requirements of their roles.
Personnel Expenses: 3% merit increase and continued refinement of labor float percentages.
Consulting and Contracts: Elimination of 2017 one-time projects and the addition of new one-time projects such as the Gas/Electric Interdependence Study.
Office Costs: Elimination of license fees for NatureServe’s wildlife database.

15. Major Drivers: Proposed Budget (2)
Compliance and Organization Registration and Certification
Personnel Expenses: Transfer of 3 FTEs from Corporate Services due to 2017 reorganization and to more appropriately align costs with scope of work – 1 FTE transferred from Executive and 2 FTEs transferred from Business Services who are now fully dedicated to registration.
Personnel Expenses: One new position – Compliance Risk Analyst with expertise in internal controls.
Personnel Expenses: 3% merit increase and continued refinement of labor float percentages.
Travel: Increased audits/site visits related to CIP V5 and CIP-014.

16. Major Drivers: Proposed Budget (3)
Corporate Services
Personnel Expenses: Transfer of 3 FTEs to Compliance Transfer of 0.7 FTE from Training and Education
Personnel Expenses: 3% merit increase and refinement of labor float
Conference Calls: Budget moved to and centralized in Corporate Services
Office Costs: New membership in National Association of Corporate Directors and increased fees for forensic capabilities and threat monitoring services in Information Technology
Professional Services: New Board Director compensation structure and lower insurance premiums and outside legal fees

17. Major Drivers: Proposed Budget (4)
Reliability Standards
No major changes
Situation Awareness and Infrastructure Security
Training and Education
Personnel Expenses: Transfer of 0.7 FTE to Corporate Services due to 2017 reorganization and to more appropriately align costs with scope of work
Meeting Expenses: Greater anticipated attendance at compliance workshops
Non-Statutory (WREGIS)
Personnel Expenses: 3% merit increase

18. CMEP Activities and FTE

19. RAPA Activities and FTE