Compliance Audit Report Public Version - NERC

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Compliance Audit Report

Public Version

Oncor Electric Delivery Company LLC

NERC ID # NCR04109

Confidential Information

(Including Privileged and Critical Energy

Infrastructure Information)

Has Been Removed

Audit Date: September 14-17, 2010

Audit Location: Oncor Electric Delivery Company LLC Offices, Dallas, TX

Report Date: August 23, 2012

Prepared By: Dan Kueker, Audit Team Leader

Confidential Information (Including Privileged and Critical Energy Infrastructure Information) Has Been Removed

Page 2 of 14 ONCOR Compliance Audit Report August 23, 2012

TABLE OF CONTENTS

1.0 Executive Summary ................................................................................... 3

2.0 Audit Process ............................................................................................. 3

2.1 Objectives .................................................................................................. 4

2.2 Scope ......................................................................................................... 4

2.3 Methodology .............................................................................................. 5

2.4 Company Profile ........................................................................................ 5

2.5 Audit Specifics ........................................................................................... 6

3.0 Audit Results .............................................................................................. 7

3.1 Audit Findings ............................................................................................ 7

3.2 Mitigation Plan Findings ........................................................................... 10

3.3 Conclusion ............................................................................................... 10

3.4. Compliance Culture ................................................................................. 11

Appendix A Possible Violation Dismissal Detail .......................................................... 12



1.0 EXECUTIVE SUMMARY The On-Site compliance audit of Oncor Electric Delivery Company LLC (Oncor), NERC ID # NCR04109, was conducted on September 14-17, 2010. The NERC Reliability Standards that are being actively monitored for 2010 were reviewed based on Oncor’s registration as a Distribution Provider, Transmission Owner, and Transmission Planner. The audit team reviewed the NERC Reliability Standards for the period of time identified in the scope of the audit. The audit team consisted of five representatives from Texas Reliability Entity, Inc. (Texas RE), one representative from North American Electric Reliability Corporation (NERC), and four representatives from the Federal Energy Regulatory Commission (FERC). The audit team reviewed the evidence and documentation provided by Oncor and conducted interviews with Oncor’s personnel to assess compliance with standards applicable to Oncor at this time. There were a total of seventeen (17) reliability standards included in the scope of this audit, consisting of fifty-seven (57) requirements. Based on the information and documentation provided by Oncor, the audit team found Oncor to be compliant with thirty-two (32) applicable requirements. The audit team determined that seventeen (17) requirements were not applicable to Oncor. The audit team identified eight (8) possible alleged violations during the audit. These audit results are further explained in the Audit Results Findings section of this report which includes detailed information of the audit team’s findings of applicability and compliance for the NERC Reliability Standards within the scope of the compliance audit. This audit report includes information regarding the possible alleged violations. This information will be used to help determine the severity level of sanctions and penalties. The possible alleged violations will be processed through the Texas RE’s NERC Compliance Monitoring and Enforcement Program. Any further actions related to possible alleged violations will follow the same process. Any Possible Alleged Violations (PAVs) will be processed through the NERC and Texas RE CMEP. There were no ongoing or recently completed mitigation plans for the NERC registered functions included in the scope of this audit and therefore none were reviewed by the audit team. The eight (8) PAVs were processed through the NERC and Texas RE CMEP. Five (5) of the eight (8) PAVs were dismissed1 by Texas RE on December 12, 2011. The NERC Notice of Penalty (NOP) for the remaining three (3) PAVs is posted on the NERC website at the following URL: http://www.nerc.com/filez/enforcement/FinalFiled_April_Spreadsheet_NOP_20120430.pdf

2.0 AUDIT PROCESS The compliance audit process is detailed in the NERC Compliance Monitoring and Enforcement Program (CMEP), available at www.nerc.com. The NERC CMEP generally conforms to the United States Government Accountability Office Government Auditing Standards and other generally accepted audit practices.

1 The following five (5) PAVs were dismissed by Texas RE:

PRC-005-1 R1, PRC-008-0 R1, PRC-011-0 R1, PRC-011-0 R2, PRC-017-0 R1

http://www.nerc.com/filez/enforcement/FinalFiled_April_Spreadsheet_NOP_20120430.pdf

http://www.nerc.com/



2.1 Objectives All registered entities are subject to audit for compliance with all reliability standards applicable to the functions for which the registered entity is registered.2 The audit objectives are:

Independently review Oncor’s compliance with the requirements of the reliability standards that are applicable to Oncor based on the Oncor registered functions included in the scope of this audit.

Validate compliance with applicable reliability standards from the NERC 2010 CMEP Implementation Plan list of actively monitored standards.

Validate evidence of self-reported violations and previous self-certifications, confirm compliance with other requirements of the reliability standards, and review the status of associated mitigation plans.

Document Oncor’s compliance culture.

2.2 Scope The scope of this compliance audit is inclusive of all requirements of the NERC Reliability Standards that are being actively monitored in 2010 and any others that may be identified by the audit team at the time of the audit applicable to a Distribution Provider, Transmission Owner, and Transmission Planner. The audit was performed by five members of Texas RE, one NERC representative, and four FERC representatives. There were no ongoing or recently completed mitigation plans for the NERC registered functions included in the scope of this audit that had not been previously validated by Texas RE’s compliance staff for Oncor Electric Delivery Company LLC and therefore none were reviewed by the audit team. Note: For the 2010 compliance program, the monitoring period for the compliance audit will generally be the last three years based the Oncor’s registration as a Distribution Provider, Transmission Owner, and Transmission Planner, or periods specified in individual reliability standards. At the time of the audit, Oncor was registered as a Distribution Provider, Transmission Owner, and Transmission Planner. The audit team evaluated Oncor for compliance during the specific period of Oncor’s last audit on June 28, 2007 to September 17, 2010.

2.2.1 Confidentiality and Conflict of Interest Confidentiality agreements and code of conduct documentation for the regional entity staff were provided to Oncor prior to the audit. Work history and conflict of interest forms submitted for each audit team member were provided to Oncor. Oncor was given an opportunity to object to an audit team member on the basis of a possible conflict of interest or the existence of other circumstances that could interfere with the audit team member’s impartial performance of duties. Oncor had not submitted any objections by the stated fifteen day objection due date and accepted the audit team member participants with no objections. There have been no denials of or access limitations placed upon this audit team by Oncor.

2 North American Electric Reliability Corporation CMEP, paragraph 3.1, Compliance Audits



2.3 Methodology Once an audit date was set by Texas RE, Oncor was sent Reliability Standard Audit Work Sheets (RSAWs) for the list of actively monitored NERC Standards. The audit team reviewed the completed RSAWs, information, data, and evidence submitted by Oncor and assessed compliance with requirements of the applicable reliability standards. Initial submittal of information and data were sent to Texas RE on or before the scheduled due date for the submittal. Additional information relevant to the audit could be requested by Texas RE and submitted by Oncor until the last day of the review at the audit site. During the audit, Texas RE reviewed the responses to the RSAWs and auditor questions with Oncor’s management and supervisors. The audit team reviewed documentation provided by Oncor that included data, information and evidence submitted in the form of policies, procedures, emails, logs, studies, data sheets, etc. which were validated, substantiated and cross checked for accuracy as appropriate. Requirements which required a sampling to be conducted were developed based upon the significance of the sampling to the reliability of the Bulk Electrical System (BES). The Texas RE audit team interviewed operations personnel and reviewed documents to substantiate that the operations personnel were trained and capable of following the procedures to ensure reliable operations from that entity. The audit team also interviewed IT, communications, and planning personnel as necessary to clarify or stack the evidence provided by Oncor and verify documentation. Findings were based on the audit team’s knowledge of the BES, the NERC Reliability Standards and their professional judgment. All findings were developed based upon the consensus of the audit team. There were no ongoing or recently completed mitigation plans for the NERC registered functions included in the scope of this audit that had not been previously validated by Texas RE’s compliance staff for Oncor Electric Delivery Company LLC and therefore none were reviewed by the audit team. The audit team conducted an exit briefing immediately following the audit with Oncor. The audit team verbally shared its preliminary results with Oncor’s management.

2.4 Company Profile Oncor is a transmission and distribution utility that operates the largest transmission and distribution system in Texas, delivering power to approximately 3 million meters serving approximately 7 million consumers. Oncor operates approximately 117,000 miles of distribution and transmission lines throughout the state of Texas. The company is the nation's sixth-largest transmission and distribution company, operating in east, west and north central Texas covering 91 counties. The company serves 401 municipalities, including Dallas, Fort Worth, cities surrounding Dallas and Fort Worth, Odessa, Midland, Killeen, Waco, Wichita Falls, and Tyler. Oncor and its predecessor companies have served the energy needs of Texans for over 100 years. The current Oncor evolved from the combination a number of electrical utilities including Dallas Power & Light (DP&L), Texas Power & Light (TP&L), Texas Electric Service Company (TESCO), and



Southwestern Electric Service Company (SESCO). In 1984, DP&L, TP&L, and TESCO merged to become a new integrated utility, under a principal subsidiary called Texas Utilities Electric Company. SESCO merged into that utility in 2001. With the implementation of retail competition starting in 2002, the integrated utility was unbundled into a power generation company, a retail electric provider, and a transmission and distribution utility. Oncor is the transmission and distribution utility that is the regulated company resulting from that unbundling. Oncor was previously known as TXU Electric Delivery. Oncor is registered with NERC as a Transmission Owner (TO), Transmission Operator (TOP), Load Serving Entity (LSE), Transmission Planner (TP) and Distribution Provider (DP).

2.5 Audit Specifics

Audit Date: September 14-17, 2010 Audit Location: Oncor Electric Delivery Company LLC Offices, Dallas, TX Texas RE Audit Team:

Company/Title Audit Team Role

Texas RE/Compliance Engineer II Audit Team Leader

Texas RE/Compliance Engineer, Sr. Auditor

Texas RE/Compliance Engineer III Auditor

Texas RE/Compliance Analyst III Auditor

Texas RE/Compliance Engineer III Auditor

NERC/Assurance & Oversight Auditor Observer

FERC Observer

FERC Observer

FERC Observer

FERC Observer

Oncor’s Audit Participants:

Company Title

Oncor Manager, Transmission Grid Operations

Oncor Control Center Engineering Services

Oncor Transmission Grid Management / Shift Supervisor

Oncor System Forester

Oncor Region Forester

Oncor Engineering Analyst

Oncor NERC Technical Specialist

Oncor Chief Operating Officer

Oncor Engineering Analyst

Vinson & Elkins Partner

Oncor

Oncor Manager, Transmission Planning

Oncor Transmission Planning

Oncor Director, Transmission Services

Oncor

Oncor



Company Title

Oncor

Oncor

Oncor VP System Operations

Oncor VP Transmission

Oncor VP Transmission Grid Management

Oncor Director, NERC Compliance

Oncor Glen Rose/Comanche Manager

Oncor Sr. Engineer

Oncor Manager, Transmission Grid Operations

Oncor Manager, T&D Services/SCADA

Oncor Co-op/Intern

Oncor T&D Services Manager

Oncor Sr. Engineer

Oncor Training Coordinator

Oncor T&D Services Manager

Oncor Sr. Director, Transmission Operations

Oncor T&D Services Director

Oncor Manager, T&D Services – Network

Oncor Transmission Services

Oncor VM

3.0 AUDIT RESULTS 3.1 Audit Findings The Compliance Audit Team found that Oncor was non-compliant with the following standards and requirements:

Reliability Standard & Requirement

PRC-005-1; R1.

PRC-005-1; R2.

PRC-008-0; R1.

PRC-008-0; R2.

PRC-011-0; R1.

PRC-011-0; R2.

PRC-017-0; R1.

PRC-017-0; R2.

Oncor was found compliant with all other applicable requirements and standards that were included in the scope of this audit. The following table is a summary of the auditor’s findings for those NERC standards reviewed during the audit:



Reliability Standard

Requirement Finding

FAC-001-0 R1. Compliant








FAC-003-1 R4. Not

Applicable






FAC-014-2 R1. Not

Applicable

FAC-014-2 R2. Not

Applicable

FAC-014-2 R3. Not

Applicable



FAC-014-2 R6. Not

Applicable

IRO-004-1 R1. Not

Applicable

IRO-004-1 R2. Not

Applicable

IRO-004-1 R3. Not

Applicable

IRO-004-1 R4. Compliant




Requirement Finding

IRO-004-1 R5. Not

Applicable

IRO-004-1 R6. Not

Applicable

IRO-004-1 R7. Not

Applicable

PRC-004-1 R1. Compliant

PRC-004-1 R2. Not

Applicable


PRC-005-1 R1. Possible Violation










TOP-001-1 R1. Not

Applicable

TOP-001-1 R2. Not

Applicable

TOP-001-1 R3. Not

Applicable

TOP-001-1 R4. Compliant

TOP-001-1 R5. Not

Applicable




Requirement Finding

TOP-001-1 R6. Not

Applicable

TOP-001-1 R7. Not

Applicable

TOP-001-1 R8. Not

Applicable

TPL-001-0.1

R1. Compliant

TPL-001-0.1

R2. Compliant

TPL-001-0.1

R3. Compliant

TPL-002-0 R1. Compliant






3.2 Mitigation Plan Findings There were no ongoing or recently completed mitigation plans for the NERC registered functions included in the scope of this audit that had not been previously validated by Texas RE’s compliance staff and therefore none were reviewed by the audit team.

3.3 Conclusion The compliance audit team found that Oncor was non-compliant with the following standards and requirements:

Reliability Standard & Requirement

PRC-005-1; R1.3

PRC-005-1; R2. (Self-report after audit notification)

PRC-008-0; R1.3

PRC-008-0; R2. (Self-report after audit notification)

PRC-011-0; R1.3

PRC-011-0; R2.3

PRC-017-0; R1. (Self-report after audit notification)3

PRC-017-0; R2.

3 Dismissed by Texas RE



The possible alleged violations along with this compliance report will be provided to Texas RE’s compliance staff for processing through the NERC CMEP. Any further actions related to possible alleged violations will be through that process. Oncor was found compliant with all other applicable requirements and standards that were included in the scope of this audit. There were no ongoing or recently completed mitigation plans and therefore none were reviewed by the audit team.

3.4. Compliance Culture

Oncor’s compliance culture survey was reviewed by the audit team. Oncor was cooperative with the audit team’s needs and information requests throughout the entire audit process. The organizational structure of Oncor, the extensive participation during the audit by Oncor’s personnel, the responses provided to the compliance culture survey, the detailed documentation of procedures and records, the demonstrated level of compliance and the direct observations made by the audit team confirmed a strong commitment by Oncor to promote a healthy compliance culture within the organization. The NERC Compliance Director’s efforts for this audit were extremely helpful and were well supported by the other Oncor managers and SMEs who prepared for and participated in the audit process. Additional detailed information pertaining to the compliance culture of Oncor can be found in the Internal Compliance Survey.



APPENDIX A POSSIBLE VIOLATION DISMISSAL DETAIL Summary of Dismissals The Texas RE dismissed the following violation(s) associated with this Audit.

Standard Req’t Violation # Date of Dismissal

PRC-005-1 R1 TRE201000279 December 12, 2011





Dismissal Details:

Notice of Dismissal

December 12, 2011

Oncor Electric Delivery Company LLC Alan Bern Director Reliability Standards Compliance 2233-B Mountain Creek Parkway Dallas, Texas 75211 NERC Registry ID: NCR04109 Re: Dismissal of TRE201000279 (PRC-005-1, R1)

TRE201000281 (PRC-008-0, R1) TRE201000283 (PRC-011-0, R1) TRE201000284 (PRC-011-0, R2) TRE201000285 (PRC-017-0, R1)

Texas Reliability Entity (Texas RE) has reviewed Oncor Electric Deliver Company LLC’s (“Oncor”) violations associated with NERC Reliability Standard PRC-005-1, R1; PRC-008-0, R1; PRC-011-0, R1; PRC-011-0, R2; and PRC-017-0, R1 and has determined no finding of non-compliance for Oncor with the above-mentioned Standards and Requirements. PRC-005-1 requires the following: R1. Each Transmission Owner and any Distribution Provider that owns a transmission Protection System and each Generator Owner that owns a generation Protection System shall have a Protection System maintenance and testing program for Protection Systems that affect the reliability of the BES. The program shall include:

R1.1. Maintenance and testing intervals and their basis. R1.2. Summary of maintenance and testing procedures.



PRC-008-0 requires the following: R1. The Transmission Owner and Distribution Provider with a UFLS program (as required by its Regional Reliability Organization) shall have a UFLS equipment maintenance and testing program in place. This UFLS equipment maintenance and testing program shall include UFLS equipment identification, the schedule for UFLS equipment testing, and the schedule for UFLS equipment maintenance. PRC-011-0 requires the following: R1. The Transmission Owner and Distribution Provider that owns a UVLS system shall have a UVLS equipment maintenance and testing program in place. This program shall include:

R1.1. The UVLS system identification which shall include but is not limited to: R1.1.1. Relays. R1.1.2. Instrument transformers. R1.1.3. Communications systems, where appropriate. R1.1.4. Batteries. R1.2. Documentation of maintenance and testing intervals and their basis. R1.3. Summary of testing procedure. R1.4. Schedule for system testing. R1.5. Schedule for system maintenance. R1.6. Date last tested/maintained.

R2. The Transmission Owner and Distribution Provider that owns a UVLS system shall provide documentation of its UVLS equipment maintenance and testing program and the implementation of that UVLS equipment maintenance and testing program to its Regional Reliability Organization and NERC on request (within 30 calendar days). PRC-017-0 requires the following: R1. The Transmission Owner, Generator Owner, and Distribution Provider that owns an SPS shall have a system maintenance and testing program(s) in place. The program(s) shall include:

R1.1. SPS identification shall include but is not limited to: R1.1.1. Relays. R1.1.2. Instrument transformers. R1.1.3. Communications systems, where appropriate. R1.1.4. Batteries.

R1.2. Documentation of maintenance and their basis. R1.3. Summary of testing procedure. R1.4. Schedule for system testing. R1.5. Schedule for system maintenance. R1.6. Date last tested/maintained.

On September 17, 2010, Texas RE conducted an Audit of Oncor, resulting in possible non-compliances with the above Reliability Standards and Requirements. As discovered during the Audit, Oncor has a unified maintenance and testing program for transmission protection relays, underfrequency load shed relays, undervoltage load shed relays, and special protection system relays. The Oncor Program documentation schedules and tracks test and maintenance activities at the level of relay panels and their substation location. The audit team could not find maintenance and testing Program documentation that contained an overview description of how the specific equipment types are addressed, and could not establish consistent audit trails from any specific relay panel to test and maintenance records for the Protection Systems, UFLS, UVLS, and SPS components associated with that panel.



Regarding Oncor’s Protection Systems, the audit team found that Oncor’s maintenance and testing intervals and their basis were not defined in program documentation for instrument transformers and communication systems. As a result, Texas RE initially determined Oncor was in possible violation with PRC-005-1, R1. Regarding Oncor’s UFLS System, the audit team found that Oncor failed to identify all the equipment components for its UFLS systems, and it failed to provide the intervals for its UFLS instrument transformers or communications systems. As a result, Texas RE initially determined Oncor was in possible violation with PRC-008-0, R1 Regarding Oncor’s UVLS System, the audit team could not find maintenance and testing Program documentation that contained an overview description of how the UVLS equipment types are addressed. Furthermore, the audit team found that Oncor’s UVLS maintenance and testing intervals and their basis were not defined in program documentation for instrument transformers and communication systems. As a result, Texas RE initially determined Oncor was in possible violation with PRC-011-0, R1. Additionally, the audit team found that documentation for the implementation of the program was also insufficient in documents which were provided in response to audit team sampling requests for the UVLS test and maintenance records. The spreadsheets provided did not identify all the UVLS system equipment (e.g. the equipment specified in the R1 sub-requirements). As a result, Texas RE initially determined Oncor was in possible violation with PRC-011-0, R2. Regarding Oncor’s UVLS System the audit team found that Oncor’s SPS maintenance program did not sufficiently address “SPS equipment identification”. As a result, Texas RE initially determined Oncor was in possible violation with PRC-017-0, R1. Following the Audit, Oncor presented Texas RE with a more organized and detailed demonstration of the materials it presented to Texas RE during the Audit. From this, Texas RE was able to verify that Oncor’s Maintenance and Testing Program met the requirements defined under PRC-005-1, R1; PRC-008-0, R1; PRC-011-0, R1 and R2; and PRC-017-0, R1. While the missed testing and maintenance of Oncor’s equipment represents a violation of PRC-005-1 R2, Texas RE considers these instances a failure to properly implement Oncor’s documented program. Oncor was able to demonstrate, after the completion of the audit, that instrument transformers and communication systems are addressed in the program. Upon review of this evidence, Texas RE determined that Oncor had no finding of non-compliance with PRC-005-1, R1; PRC-008-0, R1; PRC-011-0, R1 and R2; and PRC-017-0, R1. Please be advised that Texas RE has completed the Enforcement process for the above possible violations. Accordingly, Texas RE is dismissing Oncor’s violations of PRC-005-1, R1; PRC-008-0, R1; PRC-011-0, R1; PRC-011-0, R2; and PRC-017-0, R1. In accordance with NERC’s Compliance Monitoring and Enforcement Program, Texas RE hereby releases all data retention directives as they apply to the previously mentioned violation(s).

Documents

Compliance Audit Report Public Version - NERC