1. Standards Development: Update to IMO Regulatory Standing Committee May 14, 2003

2. 2 Purpose Today To inform you of recent developments in reliability and business practice standards having potential impact on stakeholders

3. 3 The standards development landscape Standards development is driven by the changes to industry framework. Major developmental activity in industry framework and structure (FERC, ISOs/RTOs) and reliability and business practice standards (NERC and NAESB) Scale of planned standards development is unprecedented - substantial pressure on resources

4. 4 Reliability standards What: Standards specify performance outcomes and processes impacting grid reliability Importance: IMO is committed to comply with industry standards Organizations: NERC and NPCC Status: Major redevelopment of NERC standards IMO, OPG and Hydro One are involved Others will be impacted (information and procedures)

5. 5 NERC overview Open: Balanced balloting - ANSI certified Committees: 8 + numerous sub-committees Active SARs: 15 + 2 approved for drafting RRCs (NPCC et al) are likely to get a role in certification and compliance of NERC standards IMO, OPG and Hydro One involved FERC will mandate for U.S.; NERC will enforce compliance

6. 6 Business practice standards What: Standards specify parameters for commercial wholesale electricity transactions Importance: Ontario not committed to compliance; but adoption in US will make it attractive to comply Organizations: NAESB Wholesale Electricity Quadrant (WEQ); also ESC and OSC Status: Major development of NAESB standards IMO, OPG and Hydro One are involved Others may be impacted (information and procedures)

7. 7 NAESB overview Open: Balanced balloting - ANSI certified ISOs/RTOs don’t have an explicit segment and have chosen not to be part of the transmission segment. May have a advisory role Committees: Board; WEQ Executive; 3 operating committees; many sub-committees Active Requests for Standards: 2 FERC, not NAESB, will likely enforce compliance

8. 8 ISO/RTO Council overview Membership: the 8 ISOs/RTOs (CEOs) Committees: Working Group (ad hoc); Standards Review Committee (SRC); IT. Addresses policies in concert with FERC - influences standards but doesn’t develop them. Forum for sharing/joint action re software, processes, and participation in NAESB/NERC matters.

9. 9 Boundaries and relationships MOU signed by NERC, NAESB and the ISO/RTO Council defines boundaries and process of inter- organization coordination Proposed standards are directed to the appropriate party by the tripartite Joint Implementation Committee (JIC) JIC directs policy matters to ISO/RTO Council; reliability standards matters to NERC and business practice standards to NAESB Dispute resolution; review of annual plans

10. 10 Boundaries and relationships

11. 11 NERC Functional Model

12. 12 ISSUE: Who is to be the Transmission Operator within the NERC Functional Model? ISSUE: A single entity or class of entities should be assigned However, the current functional definition involves two: IMO (local reliability) and Ontario transmitters (switching) The IMO believes it must be the Transmission Operator Manage switching “off-line” via Licence and Operating Agreements

13. 13 On the Radar NERC - Cyber Security standard NERC - MISO/PJM congestion management coordination NAESB - Inadvertent Exchange standard NAESB - standard trading day NAESB - standards to resolve seams issues ISO Council - SRC and JIC participation

14. 14 Abbreviations NERC: North American Electric Reliability Council FERC: Federal Energy Regulatory Commission NAESB: North American Energy Standards Board NPCC: Northeast Power Coordinating Council ANSI: American National Standards Institute RRC: Regional Reliability Council ESC: Electronic Scheduling Collaborative OSC: OASIS Standards Collaborative SAR: Standard Authorization Request (NERC)

15. 15 Reference websites NERC.com NERC News (monthly email)NERC News (monthly email) NERC Bulletin Board (developments; on website)NERC Bulletin Board (developments; on website) NERC Standards Development Bulletin - May 2003: http://www.nerc.com/~filez/standards/standards- bulletin.htmNERC Standards Development Bulletin - May 2003: http://www.nerc.com/~filez/standards/standards- bulletin.htm NAESB.orgNAESB.org NPCC.orgNPCC.org IMO?IMO?

16. 16 Appendix

17. 17 (p 33 of ftp://www.nerc.com/pub/sys/all_updl/sac/jic/jic0303a.pdf) NERC draft plan (p 33 of ftp://www.nerc.com/pub/sys/all_updl/sac/jic/jic0303a.pdf) Balance Resources and Demand ---- [SAR completed] 1st Qtr 2003 2nd Qtr 2003 Monitor and Assess Short-term Trans Reliability – [SAR completed] Operate Within Limits ---- 2nd Qtr 2003 2nd Qtr 2003 Determine Facility Ratings, Operating Limits and Transfer Capabilities 1st Qtr 2003 3rd Qtr 2003 4th Qtr 2003 Coordinate Interchange 1st Qtr 2003 3rd Qtr 2003 4th Qtr 2003 Certification of Reliability Authority 2nd Qtr 2003 4th Qtr 2003 4th Qtr 2003 Certification of Balancing Authority 2nd Qtr 2003 4th Qtr 2003 4th Qtr 2003 Certification of Interchange Authority 2nd Qtr 2003 4th Qtr 2003 4th Qtr 2003 Certification of Transmission Operator 2nd Qtr 2003 4th Qtr 2003 4th Qtr 2003 Revise Reliability Standards Process Manual – Step 2 1st Qtr 2003 1st Qtr 2003 2nd Qtr 2003 Coordinate Operations 2nd Qtr 2003 4th Qtr 2003 1st Qtr 2004 Prepare for and Respond to Abnormal or Emergency Conditions 1st Qtr 2004 2nd Qtr 2004 3rd Qtr 2004 Prepare for and Respond to Blackout or Island Conditions 1st Qtr 2004 2nd Qtr 2004 3rd Qtr 2004 Monitor and Analyze Disturbances, Events, and Conditions 1st Qtr 2004 2nd Qtr 2004 4th Qtr 2004 Assess Transmission Future Needs and Develop Transmission Plans 2nd Qtr 2004 3rd Qtr 2004 1st Qtr 2005 Design, Install and Coordinate Control and Protection Systems 2nd Qtr 2004 3rd Qtr 2004 1st Qtr 2005 Define (Physical) Connection Requirements 2nd Qtr 2004 3rd Qtr 2004 1st Qtr 2005

18. 18 (2003 02 18 http://www.naesb.org/pdf/weq_annual_plan.pdf) NAESB draft plan (2003 02 18 http://www.naesb.org/pdf/weq_annual_plan.pdf) 1.Develop business practices and standards as needed to complement reliability standards. 2.Develop Business Practice Standards for OASIS and Electronic Scheduling 3.Develop Standards and Model Business Practices in Support of a Standard Market 4.Develop Business Practices and Standards to Improve the Current Operation of the Wholesale Electric Market 5.Develop standardized contracts [SAR to extend funds transfer agreement submitted to JIC] 6.Develop standards for Inadvertent Interchange Payback Practice. [SAR submitted to JIC] 7.Develop business processes related to FERC’s forthcoming generation interconnection orders

19. 19 NERC SARs submitted to March 19 http://www.nerc.com/~filez/sar-approved.html ansmission Future Needs and Develop Transmission Plans Assess Transmission Future Needs and Develop Transmission Plans Balance Resources and Demand (approved for drafting) Certification of the Balancing Authority Function Certification of the Interchange Authority Function Certification of the Reliability Authority Function Certification of the Transmission Operator Function Coordinate Interchange Coordinate Operations Define (Physical) Connection Requirements Design, Install, and Coordinate Control and Protection System Determine Facility Ratings, Operating Limits, and Transfer Capabilities Monitor and Analyze Disturbances, Events, and Conditions Monitor and Assess Short-term Reliability - Operate Within Transmission System Limits (approved for drafting) Prepare for and Respond to Abnormal or Emergency Conditions Prepare for and Respond to Blackout or Island Conditions Reliability Standards Process Manual - Revisions