1. Section 4.9 Review Work Group Town Hall Webinar April 21, 2015

2. Section 4.9 Work Group Members Kris Hafner, Chair Rob Kondziolka, MAC Chair Doug Larson, WIRAB Shelley Longmuir, Governance Committee Joe McArthur, Governance Committee Gary Tarplee, MAC 4.9 Review Task Force, Chair Steve Goodwill, WECC staff

3. From Principles to Priorities Guiding Principles : – WECC’s future success in reliability assurance is our collective interest and shared purpose. – We will exercise informed judgment and fact-based decision- making. – We are committed to a transparent process that fosters constructive sharing of information and consideration of different points of view. – Majority vote is the rule; consensus is our aspiration. Prioritization of 23 potential issues stated in the Section 4.9 Review Charter and Scope

4. W ESTERN E LECTRICITY C OORDINATING C OUNCIL A1. Board operation (meeting schedule/agendas) A2. Board committee organization B1. Member class structure (e.g. Class 1 and 2 delineators) B2. Member dues structure and voting rights B3. WECC’s costs to members (direct & indirect) B4. CMEP benchmarks with Regional Entities C1. Relationship between MAC and members C2. Role of standing committees D1. Effectiveness of WECC dispute resolution procedures D2. Quality of WECC bylaws D3. Bylaws Section 9.5: CEO duties E1. WECC vision/mission E2. WECC strategy in support of the mission E3. WECC name change E4. WECC responsibilities/activities E4a. Activities WECC should not be performing E4b. Activities WECC should perform E5. WECC/Peak Reliability relationship E5a. Proper relationship for future E5b. WECC bylaws/structure aligned? 1. Overlapping services and functions between WECC and Peak 2. Appropriate use of WECC section 215 funding 3. WECC/Peak Reliability bifurcation goals met? 4. Current WECC committee scope and structure 5. Nominating Committee structure

5. Identified 7 potential high priority issues 1.WECC vision, mission, strategy 2.Committee roles, scope, structure a.Responsibilities/activities WECC should perform 3.Relationship between MAC and members 4.WECC/Peak relationship: service overlaps, future relationship, bifurcation goals met 5.Member dues structure and voting rights; WECC’s costs to members 6.Appropriate use of Section 215 funding ______________________________________ = Section 4.9 Review focus; problem statements drafted; 2.a. was incorporated into 2 from a separate statement.

7. Approach for High Priority Issues Section 4.9 Work Group Developed Problem Statements; MAC provided input: – The “ideal” state: what WECC should look like; how it should operate – The specific “problem” that is preventing attainment of the ideal state Formed Work Teams to Develop Issue Papers (with WECC senior staff conveners) – Melanie Frye :Committee roles, scope & structure – Dave Godfrey: WECC’s costs to members – Steve Goodwill : Relationship between MAC, members and WECC

8. Issue Papers - Problem statement to frame the issue - Scope of inquiry to address the problem - Metrics (how WECC will gauge success) - Data collection and analysis (fact-based findings/ observations/conclusions) - Specific stakeholder input required - Draft recommendations for review by the Section 4.9 Review Work Group, the Board and the membership - Required by-law changes

9. Current Timeline - DRAFT March JuneSeptember Annual Meeting Board Meeting Progress report 2/16/15 Launch teams to develop issue papers 3/1/15 Launch teams to develop issue papers 3/1/15 Town Hall Webinar 4/21/15 Board Reviews draft recommendations 6/23/15 Board Reviews draft recommendations 6/23/15 Bylaws work; Public comment; Prepare final report 6/25 thru 8/14/15 Bylaws work; Public comment; Prepare final report 6/25 thru 8/14/15 Board Meeting Approve Recommendations 9/15/15 Approve Recommendations 9/15/15 Post draft recommendations for public comment 6/1 thru 6/24 Post draft recommendations for public comment 6/1 thru 6/24

10. HOW TO PARTICIPATE Open, noticed meetings and related documents posted on WECC 4.9 Work Group page Email input to 4.9Review@wecc.biz4.9Review@wecc.biz Progress reports on the WECC website Work in progress postings – public review and comment Next Meeting dates: ------------------- May 19 call June 22 mtg. July 9 town hall webinar July 14 call August 6 call September 14 mtg.

11. Section 4.9 Problem Work Teams Melanie Frye Steve Goodwill Dave Godfrey W ESTERN E LECTRICITY C OORDINATING C OUNCIL

12. Committee roles, scope, and structure Ideal State: As the Regional Entity responsible for reliability assurance in the Western Interconnection, WECC prioritizes and coordinates its work across the entire organization to foster compliance with standards, promote best reliability practices, evaluate current and future reliability challenges, identify ways to mitigate those challenges, and act to implement mitigating measures. WECC uses committees, task forces, and work groups to effectively and efficiently engage and mobilize the skills of experts in the industry to transparently assist in accomplishing the above. Committees, task forces, and work groups are created with defined accountability, deliverables and budget estimates and are retired as WECC reliability priorities change. WECC staff is responsible for delivering independent reliability analysis that is vetted with and informed by industry subject matter experts (SME).

13. Committee roles, scope, and structure Problem: The 2014 WECC Integrated Reliability Assurance Model (IRAM) was introduced to set priorities and integrate WECC activities to address these priorities. Several issues have arisen during initial deployment: lackluster stakeholder participation; lack of clarity re: the translation of priorities to WECC's annual work plan; and data and information-sharing concerns. WECC lacks a process that allows members to become knowledgeable and participative in the setting of priorities while also allowing management the flexibility to focus resources on emergent issues as appropriate. Likewise, the WECC committee structure lacks a flexible organizational design that effectively incorporates expertise by subject matter experts while retaining WECC's independent perspective. Expertise from energy companies inside/outside the Western Interconnect and among non-company experts is critical to identifying and analyzing reliability challenges and developing mitigating strategies. It is important to optimize the cost-effectiveness of member participation in WECC from the perspective of entity leadership.

14. Committee roles, scope, and structure Team Members – convened by Melanie Frye: Branden Sudduth, WECC Staff Victoria Ravenscroft, WECC Staff Ian McKay, Director Doug Larson, Western Interconnection Regional Advisory Body Maury Galbraith, Western Interconnection Regional Advisory Body Rob Kondziolka, Salt River Project Gary Tarplee, Edison Transmission Brian Keel, Salt River Project Darren Buck, Western Area Power Administration JJ Jamieson, Gridforce

15. Committee roles, scope, and structure Work Plan: Review and understand problem statement Map staff and committee activities to constitutional documents such as Delegation Agreement and WECC Bylaws Create a list of questions associated with problem statement to target issues, identifying gaps between current and ideal state Identify metrics and measures Explore alternatives to more effectively and efficiently engage the expertise of the membership Objective: Deliver draft issues summary paper and recommendations to Work Group by May 12 15 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

16. Relationship between MAC, members & staff 16 W ESTERN E LECTRICITY C OORDINATING C OUNCIL Ideal State: The relationships between the MAC, the membership and WECC staff reflect mutual trust built upon a collective interest in and commitment to advancing the reliability mission of WECC. Respective roles and responsibilities are clearly defined, and supported by effective communications among the entities and with the Board. Problem: There is a need for greater clarity regarding the respective roles, responsibilities and expectations of each group. As a result, these entities are not always well positioned to collaborate effectively or to successfully undertake initiatives within their assumed realm of responsibility. In the absence of a defined framework for assigning both ownership for activities and roles of respective groups within these activities, preoccupations with process can overshadow the urgent need to address the pressing issues facing all WECC constituencies.

17. Relationship between MAC, members & staff 17 W ESTERN E LECTRICITY C OORDINATING C OUNCIL Team Members – convened by Steve Goodwill: Bob Easton, Western Area Power Administration Raj Hundal, Powerex Rob Kondziolka, Salt River Project Doug Larson, Western Interconnection Regional Advisory Body Maury Galbraith, Western Interconnection Regional Advisory Body Jim Robb, WECC CEO Gary Tarplee, Edison Transmission Richard Woodward, Director Richard Ferreira, Transmission Agency of Northern California

18. Relationship between MAC, members & staff 18 W ESTERN E LECTRICITY C OORDINATING C OUNCIL Possible recommendations: Matrix document to define/clarify roles and responsibilities Statement in final draft report stating guiding principles about how various groups work together and communicate More opportunities for the Board to hear from the Standing Committees regarding work being done, issues of concern

19. WECC’s Cost to Members Ideal State: The total cost of participating in WECC activities (including labor, travel and employee expenses to attend and participate in WECC committee work) would be optimized, predictable, and sufficient to meet WECC’s obligations under its delegation agreement with NERC and to achieve WECC’s mission. The WECC assessments would be relatively level over time. There would be an economic and effective way to gather and leverage the expertise within the interconnection to address reliability issues in a meaningful way. There would be an accurate forecasting of future years assessments, with clear and transparent assumptions and a mechanism for member input into the budgeting process 19 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

20. WECC’s Cost to Members Problem: As companies continue to have increasing demands on their resources, we are seeing a negative trend in the participation in committee work, both in terms of the number of people that are available to attend meetings and the time they can dedicate to WECC work activities and assignments. At the same time, there appears to be a proliferation of work groups and task forces without clear sunset guidelines. While the budget has remained relatively flat for the Regional Entity portion of the WECC assessment over the last five years, assessments have had more volatility. This has been driven partially by the reliance on and the variability of penalty sanctions collected that offset future assessments. 20 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

21. WECC’s Cost to Members Team Members – convened by Dave Godfrey: Maude Grantham-Richards, Tri-State Generation and Transmission Scott Waples, Avista Energy Joe McArthur, Director Jillian Lessner, WECC Staff Tim Reynolds, WECC Staff 21 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

22. WECC’s Cost to Members Approach: Collect budget and assessment data from 2010-2016 from WECC and other NERC Regional Entities Collect/estimate labor, travel and other employees expenses required to participate in WECC committee work and activities Explore options to obtain subject matter expertise to ensure the right work is being undertaken and that it includes appropriate “peer reviews” Develop options for reducing the volatility of assessments 22 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

23. WECC’s Cost to Members Timeline: Complete data collection – April 8 Compile and analyze data – April 30 Develop engagement options – May 7 Develop smoothing mechanisms – May 7 Produce issues paper – May 15 23 W ESTERN E LECTRICITY C OORDINATING C OUNCIL

24. HOW TO PARTICIPATE Open, noticed meetings and related documents posted on WECC 4.9 Work Group page Email input to 4.9Review@wecc.biz4.9Review@wecc.biz Progress reports on the WECC website Work in progress postings – public review and comment Next Meeting dates: ------------------- May 19 call June 22 mtg. July 9 town hall webinar July 14 call August 6 call September 14 mtg.