Board of Directors MeetingSeptember 2010

EnforcementProcess Update

Robert K. WargoManager of Enforcement

2

Step 1

ReceiptOf

Violation

Step 2

InitialReliability

Assessment

Step 3

InitialInformationDeveloped

Step 4

DetailedInformationDeveloped

Step 5

SettlementOr

NAVAP/NOCV

Mitigation Plan Submittal, Review, Acceptance, Tracking & Verification

GoForward

InitialRisk

Mitigated

Scope/BreadthOf

Violation(s)Penalty

Proposed

FiledWith NERC

Enforcement Process

TypicalDurations

InCalendar

Days

1 Day 1 to 3 Days

0 to 21 Days

0 to 90 Days

10 to 90 Days

Actual processing times from receipt to filing of settlement with NERC has ranged from 30 Days [Simple/Already Fixed Matters] to 300 Days [Complex/Controversial Matters]

Enforcement Efficiency Initiatives

Enforcement Staff Generated 51 Efficiency Improvement Ideas During Brainstorming Session

Fully Implemented 23 Ideas Partially Implemented 6 Ideas Tabled 7 Ideas Rejected 15 Ideas

Adopted a “Reengineered” Enforcement Process Immediate “Triage” of Violations – Identification of Low Effort/Rapid Filing

Candidates Immediate Issuance of “Stock” Request For Information Documents Assignment of Appropriate Personnel by Skill Level/Experience to Specific Tasks Synchronization Established Between Mitigation Plan Review & Verification

Activities & Anticipated Filing Dates Elimination of Some Internal Documents [3 Documents Combined Into 1] Institution of Weekly Docket Lists & Projections Elimination of Multiple Layers of Review & Sign Off

3

Enforcement Staff2010

PREVIOUS 2010 ADDS

Jason BlakeVimarie Luna

STARTED AUGUST 23

Kristina SimsDavid RosenfeldtAmanda FriedTheresa Cunniff

4

Enforcement NEW Initiatives & Developments

NERC led Streamlining Initiative Activities in Compliance Monitoring & Lessons Learned to reduce # of

violations Providing a path for less serious violations to be processed at Regional

level with only minimal reporting to NERC and FERC Specific handling options for CIP violations

Developments in Opposition to Streamlining FERC directed analysis and treatment of repeat violations FERC and NERC directed corporate affiliate analysis Continued increase in violation volume Increase in FERC activity in extending review of NOPs in order to ask

Regions questions CIP matters are still matters of “first impression”

5

6

S O N D J F M A M J J A S O N D J F M A M J J A0

20

40

60

80

100

120

140

160

180

200NEW Possible Violations Reported/Uncovered by ReliabilityFirst During Month

[INPUT]

# of

Vio

latio

ns

2009As of August 31, 2010 20102008

6 MonthMoving Average

=50 per month

[600 per Year Rate]

72007 2008 2009 2010 (YTD)

0

50

100

150

200

250

300

350

400

450

4166

102

163

0

7

30

221

CIP Non-CIPNumber of Violations Enforced

Violations YTD 2010 384

ALL Violations from 2007, 2008 & 2009

246

Budgeted for Only 170 Violations for En-

tire 2010 Year

As of August 30, 2010

QUESTIONS?

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