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Agenda Member Representatives Committee Pre-Meeting Informational Session Conference Call and Webinar April 6, 2016 | 11:00 a.m. – 1:00 p.m. Eastern Conference Line: 1-877-724-2799 | Conference ID: 67651794 Click here for: Webinar Registration Introduction and Chair’s Remarks NERC Antitrust Compliance Guidelines and Public Announcement* Agenda Items

1. Schedule of Quarterly NERC Meetings and Conference Calls*

2. Topics for the Board of Trustees, Board Committees, and MRC Meetings* - May 4-5, 2016

3. Overview of Items Included in the Policy Input Letter

a. Assessing Reliability for an Evolving Bulk Power System*

b. ERO Enterprise Strategic Planning Framework*

4. Informational Items

a. Critical Infrastructure Protection Standards and Compliance Update*

b. Primary Frequency Response Notice of Inquiry*

c. ERO Enterprise Effectiveness Survey Update*

*Background materials included.

https://cc.readytalk.com/cc/s/registrations/new?cid=2ea7dugbztag

Antitrust Compliance Guidelines I. General It is NERC’s policy and practice to obey the antitrust laws and to avoid all conduct that unreasonably restrains competition. This policy requires the avoidance of any conduct that violates, or that might appear to violate, the antitrust laws. Among other things, the antitrust laws forbid any agreement between or among competitors regarding prices, availability of service, product design, terms of sale, division of markets, allocation of customers or any other activity that unreasonably restrains competition.

It is the responsibility of every NERC participant and employee who may in any way affect NERC’s compliance with the antitrust laws to carry out this commitment.

Antitrust laws are complex and subject to court interpretation that can vary over time and from one court to another. The purpose of these guidelines is to alert NERC participants and employees to potential antitrust problems and to set forth policies to be followed with respect to activities that may involve antitrust considerations. In some instances, the NERC policy contained in these guidelines is stricter than the applicable antitrust laws. Any NERC participant or employee who is uncertain about the legal ramifications of a particular course of conduct or who has doubts or concerns about whether NERC’s antitrust compliance policy is implicated in any situation should consult NERC’s General Counsel immediately.

II. Prohibited Activities Participants in NERC activities (including those of its committees and subgroups) should refrain from the following when acting in their capacity as participants in NERC activities (e.g., at NERC meetings, conference calls and in informal discussions):

· Discussions involving pricing information, especially margin (profit) and internal cost information and participants’ expectations as to their future prices or internal costs.

· Discussions of a participant’s marketing strategies.

· Discussions regarding how customers and geographical areas are to be divided among competitors.

· Discussions concerning the exclusion of competitors from markets.

· Discussions concerning boycotting or group refusals to deal with competitors, vendors or suppliers.

· Any other matters that do not clearly fall within these guidelines should be reviewed with NERC’s General Counsel before being discussed.

III. Activities That Are Permitted From time to time decisions or actions of NERC (including those of its committees and subgroups) may have a negative impact on particular entities and thus in that sense adversely impact competition. Decisions and actions by NERC (including its committees and subgroups) should only be undertaken for the purpose of promoting and maintaining the reliability and adequacy of the bulk power system. If you do not have a legitimate purpose consistent with this objective for discussing a matter, please refrain from discussing the matter during NERC meetings and in other NERC-related communications.

You should also ensure that NERC procedures, including those set forth in NERC’s Certificate of Incorporation, Bylaws, and Rules of Procedure are followed in conducting NERC business.

In addition, all discussions in NERC meetings and other NERC-related communications should be within the scope of the mandate for or assignment to the particular NERC committee or subgroup, as well as within the scope of the published agenda for the meeting.

No decisions should be made nor any actions taken in NERC activities for the purpose of giving an industry participant or group of participants a competitive advantage over other participants. In particular, decisions with respect to setting, revising, or assessing compliance with NERC reliability standards should not be influenced by anti-competitive motivations.

Subject to the foregoing restrictions, participants in NERC activities may discuss:

· Reliability matters relating to the bulk power system, including operation and planning matters such as establishing or revising reliability standards, special operating procedures, operating transfer capabilities, and plans for new facilities.

· Matters relating to the impact of reliability standards for the bulk power system on electricity markets, and the impact of electricity market operations on the reliability of the bulk power system.

· Proposed filings or other communications with state or federal regulatory authorities or other governmental entities.

· Matters relating to the internal governance, management and operation of NERC, such as nominations for vacant committee positions, budgeting and assessments, and employment matters; and procedural matters such as planning and scheduling meetings.

NERC Antitrust Compliance Guidelines 2

NERC Second Quarter 2016 Meetings The Westin Chicago River North Schedule of Events—Public 320 North Dearborn Street May 4-5, 2016 Chicago, IL 60654 All times are Central.

Conference Calls Before Meetings

April 6 11:00 a.m.-1:00 p.m.

MRC Pre-Meeting Informational Session Conference Call and Webinar

April 27 2:00-3:00 p.m.

Corporate Governance and Human Resources Committee Open Conference Call

Wednesday, May 4, 2016

7:30-8:30 a.m. Breakfast

8:30–9:30 a.m. Room name:

Standards Oversight and Technology Committee —Open

9:45-10:45 a.m. Room name:

Compliance Committee Meeting—Open

11:00 a.m. -12:00 p.m. Room name:

Finance and Audit Committee Meeting—Open

12:00–1:00 p.m. Room Name:

Lunch

1:00–5:00 p.m. Room name:

Member Representatives Committee Meeting—Open

5:30 p.m. Room name:

Reception

Thursday, May 5, 2016

8:00–9:00 a.m. Room name:

Breakfast

9:00–12:00 p.m. Room name:

Board of Trustees Meeting—Open

Member Representatives Committee (MRC)

Pre-Meeting and Informational WebinarApril 6, 2016

RELIABILITY | ACCOUNTABILITY2

• Review preliminary agenda topics for May 4 MRC meeting• Review preliminary agenda topics for Board of Trustees (Board)

and Board Committee meetings (May 4-5)• Receive updates on emerging and informational issues as part of

today’s webinar

Objectives – Pre-Meeting and Informational Session


Schedule of Quarterly NERC Meetings and Conference Calls


• Corporate Governance and Human Resources Committee, April 27 (2:00 p.m., Eastern) 2016 Quarter 1 corporate goals 2017 metric development process NERC Governance Guidelines annual review Staffing and recruiting update

Conference Calls, Prior to Chicago


• Major initiatives for 2017 and preliminary budget• NERC and ERO Enterprise projects update• Registered Ballot Body update• Reliability Standards quarterly status report

Standards Oversight and Technology Committee8:30–9:30 a.m., May 4


• CIP implementation• Compliance guidance implementation• Coordinated oversight of multi-region registered entities• Compliance monitoring and enforcement program quarterly

report

Compliance Committee9:45–10:45 a.m., May 4


• 2015 audited financial statement: review audit findings and recommendations

• First quarter unaudited statement of activities (NERC and Regional Entities)

• Procedures for approval of senior management expenses• 2017 Business Plan and Budget update

Finance and Audit Committee11:00 a.m. – 12:00 p.m., May 4


• Board of Trustees Nominating Committee update• Overview of policy input letter items Assessing reliability for an evolving bulk power system ERO Enterprise strategic planning framework

• Additional policy discussion from Board Committee meetings• Cost-effectiveness approach and pilot• Reliability assessments and performance analysis Clean Power Plan: Phase II Assessment Gas-electric Interdependency Special Assessment 2016 State of Reliability Report

Member Representatives Committee1:00–5:00 p.m., May 4


• Current FERC activity Essential reliability services Security of the grid Data sharing

• Accountability matrix• Regulatory update

Member Representatives Committee1:00–5:00 p.m., May 4


• Committee membership and charter changes• Standards items Adopt IRO-018-1, TOP-010-1, and PRC-012-2 Retire BAL-004 and PRC-002-NPCC-01

• Approve seasonal assessment delegated authority to NERC management

• ERO Enterprise strategic planning framework• Right-of-Way update• E-ISAC quarterly update• Committee, forum, and group reports Accept 2015 audited financial statement Accept first quarter 2016 unaudited statement of activities

Board of Trustees9:00 a.m., May 5


• Overview of policy input letter items Assessing reliability for an evolving bulk power system ERO Enterprise strategic planning framework

• Critical infrastructure protection standards and compliance update

• Primary frequency response notice of inquiry• ERO Enterprise Effectiveness Survey update

April 6 – MRC Informational Session


• April 6: Policy Input Letter issued• April 20: May Board and MRC agenda packages posted• April 27: Policy Input Letter responses due• April 28: May Board and MRC presentations and policy input

responses posted

Upcoming Dates


Agenda Item 3a MRC Informational Session April 6, 2016

Assessing Reliability for an Evolving Bulk Power System

Action Information Background NERC reliability assessments, since the late 1960s, have been a source of credible, independent information on the reliability of the bulk power system over a 10-year horizon. Reliability assessments focused historically on measuring reserve margins, calculated by the amount of generating capacity higher than the total peak demand, normalized by the peak demand, with weight given to the projected resources based on their level of certainty of availability. This assessment approach uses normalized weather conditions at daily peak load conditions and, in most cases, relies on a probabilistic-based adequacy criterion using a percent target capacity reserve margin. Traditionally, reliability assessment of reserve margins are compared to these targets to assure sufficient projected resources are available to meet forecast demand. However, the resources mix is now undergoing a metamorphous from large, remotely located coal and nuclear-fired power plants, towards gas-fired and renewable energy-limited resources. An increasing amount of resources are expected on the distribution system, which creates both challenges and opportunities for operators who need to be able to observe, control, and dispatch resources, balance generation and demand, and ensures a stable bulk power system. This transformation of the resource mix and change in the potential risks from man-made threats, requires a re-evaluation of reliability assessment methods and scope to ensure their continued value in determining if the projected path forward will have the characteristics needed to support the reliable operation of the bulk power system. Plan for Enhancing NERC’s Analyses for Reliability Assessments Currently, market forces and regulatory actions are driving unprecedented changes in the way electricity is produced and delivered. The changing resource mix, increases in distributed generation and load management require a re-evaluation of reliability assessment approaches and tools is needed to ensure that they continue to provide the insights required to independently assess and make recommendations in support of projected system performance to assure the reliable operation of the projected future bulk power system. Methods of analysis, measurement processes, reliability criteria and analytical tools should all be advanced to provide better and timely assessments of the reliability of the current and future bulk power system, as well as to identify risks to reliability and how they might best be managed. In order to meet the goals and objectives for independent reliability assessments, they should extend beyond supply adequacy. In addition to current capabilities, NERC, working with the Regional Entities and the technical stakeholder committees, intends to perform the following analysis and assessment to begin addressing this transformation:

1. Increased statistical analysis to identify and recognize ongoing trends and risks to reliability.

2. Advancement of interconnection-wide analysis and development of technical studies and practices to use them.

3. Analysis and incorporation of cyber and physical considerations on electric system planning and operation.

4. Incorporating probabilistic, scenario analysis, and transmission adequacy assessment techniques to measure evolving system characteristics.

5. Using tools for assessing reliability risks of natural gas infrastructure, including gas storage and pipeline delivery.

6. Increased analytical understanding the interface of distribution-centric resources and their importance to bulk power system reliability.

Assessing Reliability for an Evolving Bulk Power System

John Moura, Director of Reliability Assessment and System Analysis, NERCMRC Informational SessionApril 6, 2016


• NERC’s Capability Probabilistic Assessment Interconnection-Wide Assessment Essential Reliability Services (ERS)

• Robust and Independent Reliability Assessments Resource Mix Change/Clean Power Plan Increasing Dependency on Natural Gas Accommodating Large Amounts of Distributed Resources

• Integration of New Technologies and Resources Reliability Guidelines for Planning and Operations Sufficiency Guidelines for ERS Support for Standards Development

NERC Strategic Plan 2016-2018


• Increased statistical analysis to identify and recognize ongoing trends and risks to reliability

• Advancement of interconnection-wide analysis and development of technical studies and practices to use them

• Analysis of cyber and physical considerations on electric system planning and operation

Analyses to Address Emerging Risks to the Bulk Power System


• Incorporating probabilistic, scenario analysis, and transmission adequacy assessment techniques to measure evolving system characteristics

• Using tools for assessing reliability risks of natural gas infrastructure, including gas storage and pipeline delivery

• Increased analytical understanding of distribution systems and the interface to bulk power system reliability

Analyses to Address Emerging Risks to the Bulk Power System


• Whether proposed enhancements reflect an appropriate approach for assessing reliability given the evolving bulk power system

• Additional emerging risks to be considered for enhancing reliability assessments

Policy Input Requested



• 2016 Long-Term Reliability Assessment MRC review – November Board approval and publish – December

• 2016 Summer Reliability Assessment – condensed report Publish – May

• 2016/17 Winter Reliability Assessment – condensed report Publish – November

• 2016 Probabilistic Reliability Assessment Results published in 2016 Long-Term Reliability Assessment Final report published in Q1 2017

2016 Annual Reliability Assessments


• 2016 Special Reliability Assessment on the Clean Power Plan, Phase II MRC review – Late April Board approval and publish – May

• 2016 Short-Term Reliability Assessment: Increased Reliance on Natural Gas for Electric Power MRC review – Late April Board approval and publish – May

• 2016 Short-Term Reliability Assessment Topic yet to be selected by ERO-RAPA

2016 Special Reliability Assessments


• Distributed Energy Resources Task Force Final Report MRC review – Late November Board approval and publish – December

• Frequency Response for the Eastern Interconnection: A Scenario Analysis of the Changing Resource Mix Stemming from ERSTF recommendations First forward-looking study for the ERO on this topic Complete reference and scenario case analysis by end of year

2016 Special Reliability Assessments


• Short-Circuit Strength Stemming from ERS Task Force recommendations Evaluate short circuit current and ratios Developing framework for continued assessment

• Inter-Area Oscillation Baselining Analysis Utilizes phasor measurements to enhance model validation and

understand operating limits Developing framework for continued assessment

• Probabilistic Assessment of Severe Impact to Natural Gas Supply and Transportation Coordinated analysis with NPCC

2016 Special Reliability AssessmentsPilots


Agenda Item 3b MRC Informational Session April 6, 2016

ERO Enterprise Strategic Planning Framework

Action Information Background In recent years, the annual Electric Reliability Organization (ERO) Enterprise strategic planning process has resulted in the following documents (links to the current versions are provided):

1. ERO Enterprise Longer-term Strategic Planning Considerations – Discusses Bulk Electric System reliability issues for the 5 to 15-year horizon

2. ERO Enterprise Strategic Plan – Includes strategic goals for the next three years

3. ERO Enterprise and Corporate Metrics – Provides annual metrics to measure the ERO Enterprise’s progress in attaining the strategic goals

As part of ongoing Member Representatives Committee (MRC) policy input on these documents, greater alignment was desired among the longer-term strategic planning considerations, three-year strategic plan goals, and annual metrics. Input has also included requests for increased visibility as to how the longer-term strategic planning considerations and risks identified in the Reliability Issues Steering Committee’s (RISC’s) annual ERO Reliability Risk Priorities Report inform the strategic plan goals and metrics. In response, a draft redesigned strategic plan framework has been created to consolidate and align the documents. The proposed framework integrates the items discussed above by listing the associated metrics, risk profiles from the ERO Reliability Risk Priorities Report, and longer-term strategic planning considerations for each strategic plan goal, as appropriate. As these associated items are listed at a high level for each strategic goal, the details for each of these elements are provided for reference in respective appendices. NERC is requesting MRC policy input on the draft strategic plan framework. To provide a better picture of the approach of the proposed framework, the draft has been populated with the content from the current strategic planning documents (2016–2019 cycle). Input is desired only on whether the document format conveys a clearer, more streamlined view of the ERO Enterprise’s strategic planning approach, including providing clear linkages among the ERO Enterprise’s goals, metrics, longer-term strategic planning considerations, and risk priorities. The finalized framework will be used for the 2017–2020 strategic plan, which will include reduced and refined metrics that are outcome-based and are more clearly linked to the strategic goals. The MRC and Board will have opportunities to provide input on the content for the 2017–2020 strategic plan, both before and after the content is developed.

http://www.nerc.com/AboutNERC/Documents/Longer-term%20Strategic%20Planning%20Considerations_November%202015.pdf

http://www.nerc.com/AboutNERC/Documents/ERO%20Enterprise%20Strategic%20Plan%202016%E2%80%932019.pdf

http://www.nerc.com/AboutNERC/Documents/Final-2016%20ERO%20Enterprise%20Metrics_Feb_23_2016_no_weights_public_posting.pdf

ERO Enterprise Strategic Planning FrameworkAndrea Koch, Senior Director, ERO Enterprise Operations and Strategic PlanningMRC Informational Session April 6, 2016


• Current ERO Enterprise strategic planning documents: Three-year ERO Enterprise Strategic Plan ERO Enterprise and Corporate Metrics ERO Enterprise Longer-term Strategic Planning Considerations

• Proposed strategic planning framework: Consolidates and integrates the documents Associates each strategic plan goal with the following, as appropriate: o Metricso Risk profiles from the ERO Reliability Risk Priorities Reporto Longer-term strategic planning considerations

Incorporates input from NERC Board of Trustees (Board), Regional Entity leadership, and Reliability Issues Steering Committee

Strategic Planning Framework


• April 2016: policy input to Board on proposed framework Input on document format Framework will be populated with 2016–2019 content to support the

proposed approach

• July and October 2016: policy input to Board on 2017–2020 strategic plan Input on strategic plan content Metrics will be reduced, refined, and outcome-based

• August 2016: Board strategic planning session ERO Enterprise strategic planning session

• November 2016: 2017–2020 strategic planning documents to Board

Next Steps


Agenda Item 4a MRC Informational Session April 6, 2016

Critical Infrastructure Protection Standards and Compliance Update

Action Information Background In the first quarter of 2016 and moving into the second quarter, NERC has focused on preparations that will enable the ERO Enterprise to carry out its obligation of Critical Infrastructure Protection (CIP) Standards oversight, per the Compliance Monitoring and Enforcement Program (CMEP), for the CIP-014-2 Physical Security and CIP Version 5 Cyber Security Standards. Summary

CIP-014-2 Activities NERC continues to work closely with the Regional Entities and industry representatives to address the effective implementation of CIP-014-2. As part of these activities, NERC and the Regional Entities are having on-site collaborative discussions with registered entities. January through March 2016: CIP-014-2 NERC Oversight Monitoring and implementation outreach activities have also been conducted with five Regional Entities while visiting with 17 responsible entities. These site visits have provided opportunities for meaningful dialogue regarding security plans/measures and challenges for the implementation of CIP-014-2. A primary focus is to understand how industry stakeholders have developed security plans to mitigate risks of specific threats. These outreach visits have revealed remarkable progress in industry’s implementation of CIP-014-2. Some of the recurring challenges include:

• Timelines for implementing security and resiliency measures

• Confidentiality of CIP-014 sites and information

• Multiple owners of critical sub stations On March 15, 2016, a CIP-014-2 self-certification was issued by the Regional Entities that focused on R1, R2, and R3. The responses are due on May 2, 2016. To assist industry with completing the self-certification, NERC conducted a CIP-014-2 self-certification webinar on March 17, 2016 that was attended by over 200 participants. CIP Version 5 NERC continues to work closely with the Regional Entities and industry representatives to address any issues prior to the enforcement date of CIP Version 5. As part of these activities, NERC is prioritizing coordination among industry, standards development, and compliance assurance activities to support enhancements to the standards, resolve Requests for Interpretation, perform outreach activities, and conduct compliance oversight.

With the deferment of the CIP Version 5 Standards enforceable date to July 1, 2016, as discussed below, NERC will maintain its focus on activities similar to those undertaken in the first quarter of 2016. January 2016: FERC Order 822 On January 21, 2016 FERC ruled on the Revised Critical Infrastructure Protection Reliability Standards. In its ruling, the Commission approved seven CIP Standards (CIP-003-6, CIP-004-6, CIP-006-6, CIP-007-6, CIP-009-6, CIP-010-2, and CIP-011-2). The Commission also approved the Implementation Plan, violation risk factor assignments, violation severity level assignments, and the revised Glossary of Terms. In addition, the Commission approved the retirement of CIP-003-5, CIP-004-5.1, CIP-006-5, CIP-007-5, CIP-009-5, CIP-010-1, and CIP-011-1. Finally, the Commission directed NERC to make modifications to the CIP Standards and directed NERC to perform a study, as discussed below:

• Modifications – The Commission directs NERC to develop modifications to:

Address the protection of transient electronic devices used at Low Impact BES Cyber Systems

CIP-006-6 to require protections for communication network components and data communicated between all Bulk Electric Systems Control Centers according to the risk posed to the bulk electric system

The definition for Low Impact External Routable Connectivity

• Study

NERC must conduct a comprehensive study that identifies the strength of the CIP Version 5 remote access controls, the risks posed by remote access-related threats and vulnerabilities, and appropriate mitigating controls

Based on the date of the order, its publication in the Federal Register, and the Implementation Plan approved by FERC, the compliance date for the Revised CIP Version 5 Standards is July 1, 2016. January 2016: Technical Conference: Supply Chain On January 28, 2016, FERC held its technical conference on Critical Infrastructure Protection for Supply Chain risks. Mr. Marcus Sachs, NERC Senior Vice President and Chief Security Officer, represented NERC on a panel. Over the course of the day, three panels that consisted of industry representatives, standards development bodies, cybersecurity experts, and representatives of the vendor community provided their expertise and viewpoints on securing the supply chain to FERC staff and the FERC Commissioners. Potential future work on supply chain is pending FERC action to its technical conference. February 2016: FERC Post Order 822 Meeting On February 17, 2016 the CIP Version 5 Revisions Standards Drafting Team co-chairs (Phil Huff and Maggie Powell) and NERC staff met with FERC staff to discuss Order 822 and clarify our collective understanding of the order. Additionally, the group discussed the proposed changes to the CIP Version 5 Standards that were identified by the CIP Version 5 Transition Advisory

Group (V5TAG) and agreed to revisit the topic once a Standard Authorization Request (SAR) has been developed. February 2016: Order Granting Extension of Time On February 25, 2016 FERC issued its Order Granting Extension of Time for the CIP Version 5 Standards from April 1, 2016 to July 1. 2016 to alleviate potential burden to industry of complying with two versions of the CIP Standards. The extension defers the compliance date for a number of CIP Version 5 standards which are replaced by the enhanced version from April 1, 2016 to July 1, 2016, thereby ensuring these older standards will never be in effect. Additionally, three additional active standards were also deferred until July 1, 2016. March 2016: CIP V5 Standards Implementation Dates Since the original CIP Version 5 Standards were approved, there have been numerous modifications and updates that have made it difficult to calculate the compliance dates for the CIP Version 5 Standards. To provide transparency and clarity around these dates, NERC will issue an authoritative spreadsheet that outlines all of the compliance dates for each standard, requirement, part, and subpart of the CIP Standards. This document will enable a consistent understanding of the applicable dates. April 2016: ERO Enterprise CMEP Staff Workshop The week of April 4, 2016, NERC will hold its workshop with ERO Enterprise’s CMEP staff. Consistent with NERC’s goals to train and work toward better consistency within the ERO, NERC will hold several training sessions during the workshop to highlight approaches developed collaboratively within the ERO Enterprise. Training will also be provided to enhance the skillsets of the CMEP staff. July 2016: Self-Certification to CIP Version 5 Since FERC deferred the implementation date of the CIP Version 5 Standards to July 1, 2016, the May 2, 2016 self-certification to CIP Version 5 Standards has also been postponed to July 1, 2016.

Critical Infrastructure Protection Standards and Compliance UpdateCarl Herron, Principal Critical Infrastructure Physical AdvisorTobias Whitney, CIP Compliance ManagerMRC Informational SessionApril 6, 2016


• CIP-014-2 – Physical Security CIP-014-2 Oversight Collaborative preparation discussions with industry

• CIP Version 5 (CIP V5) – Cyber Security January - Supply Chain Technical Conference FERC Order No. 822 and New Directives Post Order Meeting with FERC FERC Order Granting the Extension of Time CMEP Staff Training: Integrated Approaches Self-Certification of CIP V5

2016 Key Activities


• Approved revisions to seven CIP Reliability Standards• Directed NERC to develop modifications to address: Transient electronic devices Communication network components between control centers Low-impact external routable connectivity

• Effectiveness of remote access controls• Does not address supply chain management

FERC Order No. 822


• NERC-led technical conference to be held on April 19, 2016• Drafting team appointments to be made April 20, 2016• Team will review SAR comments and make necessary revisions• First drafting team meeting planned for end of May• Team will develop a communication and outreach plan similar to

what was created for the CIP V5 revisions work

Standards Development


• Activities and clarifications: NERC has published a detailed set of effective dates reflecting FERC Orders Webinar focused on new dates and compliance expectations High and Medium impact requirements become effective on July 1, 2016 Low impact requirements have no change to effective date: April 1, 2017

New Effective Date for CIP V5


Standards Revisions

Supply Chain

NERC Coordination Outreach

FERC-led Audits

V5

ERO Monitoring

CIP-014

CIP V5 and CIP-014-2 Related Parts

ERO Monitoring

V5

FERC Order No. 822 and New

DirectivesStandards

ComplianceFERC-ledAudits

CIP-014

Oversight and Consistency


Compliance

Coordination andOversight

Standards

NERC’s Coordinated Approach

SDT REs

NERC

“aware, informed and engaged”


Agenda Item 4b MRC Informational Session April 6, 2016

Overview of FERC Notice of Inquiry on Essential Reliability Services and Evolving

Bulk-Power System—Primary Frequency Response Action Information

Background On February 18, 2016, the Federal Energy Regulatory Commission (“FERC”) issued a Notice of Inquiry (Docket No. RM16-6-000) seeking comment whether to reform its rules and regulations regarding primary Frequency Response (“NOI”). Significantly relying on recent NERC analyses, FERC stated that it seeks comment on possible actions to ensure that the provision of primary Frequency Response continues to remain at levels adequate to maintain the reliability of the Bulk-Power System in light of the ongoing transformation of the nation’s generation resource mix. Comments on the NOI are due on April 25, 2016. Summary The NOI stems from FERC’s concern that not all generation resources provide primary Frequency Response, and that Generator Owners and Operators can independently decide whether units should provide primary Frequency Response. FERC noted that Reliability Standard BAL-003-1 requires sufficient Frequency Response from Balancing Authorities without imposing Frequency Response requirements on Generator Owners and Operators, and that FERC’s pro forma interconnection agreements do not require generators to provide primary Frequency Response. FERC’s NOI requests comment on: (i) whether the pro forma Large Generator Interconnection Agreement and Small Generator Interconnection Agreement should be amended to require that new generation resources have Frequency Response capabilities as a precondition for interconnection; (ii) the performance of existing resources and whether to impose primary Frequency Response requirements on existing resources (in Reliability Standards, tariffs, or other formats); and (iii) requirements related to procuring and compensating primary Frequency Response. In the NOI, FERC referenced its Order No. 794, which approved the BAL-003-1 standard and directed NERC to submit two reports addressing: (1) an evaluation of the use of the linear regression methodology to calculate Frequency Response; and (2) the availability of resources for applicable entities to meet the Frequency Response Obligation. NERC was directed in Order No. 794 to submit these reports to FERC no later than 27 months after implementation of the BAL-003-1 standard (i.e., by July 2018 and September 2018, respectively). In the NOI, FERC noted that, while these reports should provide insight on the effectiveness of the BAL-003-1 standard and whether further refinements might be warranted, based on recent developments such as the changing resource mix and NERC’s studies, FERC is proceeding with the NOI at this time rather than waiting until NERC submits its reports in 2018. NERC is continuing to evaluate the NOI, and plans on submitting comments to FERC by the April 25, 2016 due date.

http://www.nerc.com/FilingsOrders/us/FERCOrdersRules/NOI_Prim_Freq_Resp_20160218_RM16-6.pdf

http://www.nerc.com/FilingsOrders/us/FERCOrdersRules/NOI_Prim_Freq_Resp_20160218_RM16-6.pdf

FERC Notice of Inquiry on Essential Reliability Services and Evolving Bulk-Power System-

Holly A. Hawkins, Associate General CounselMRC Informational SessionApril 6, 2016


• Overview: FERC seeking comment on possible actions to ensure that the provision of

primary Frequency Response continues to remain at levels adequate to maintain the reliability of the Bulk-Power System in light of the ongoing transformation of the nation’s generation resource mix.

FERC notes that there are no current requirements for generation resources to provide Frequency Response.

Notice of Inquiry Overview


• FERC requesting comments on: Whether the pro forma Large Generator Interconnection Agreement and

Small Generator Interconnection Agreement should be amended to require Frequency Response capabilities;

Whether to impose primary Frequency Response on existing resources (Reliability Standards, Tariffs, or other formats); and

Requirements related to procuring and compensating primary Frequency Response.

Notice of Inquiry Overview (Cont’d.)


• NERC is continuing to evaluate and prepare comments on the Notice of Inquiry.

• Comments on the Notice of Inquiry are due April 25, 2016.

Notice of Inquiry Next Steps


Agenda Item 4c MRC Informational Session April 6, 2016

ERO Enterprise Effectiveness Survey

Action Information Summary In 2014, an ad hoc group, consisting of ERO Enterprise staff and stakeholders, developed a survey to measure stakeholders’ perceptions of the ERO Enterprise’s effectiveness of its execution of program activities. The survey results are used to continuously improve the ERO Enterprise’s execution of its work. The initial survey was issued in January 2015, with high level action plans for identified areas of focus presented to the NERC Board of Trustees (Board) throughout 2015. In the third quarter of 2015, the ad hoc group began reviewing the survey for improvements based on lessons learned from the initial survey. Improvements to the survey include:

• Frequency of future surveys – After the upcoming survey is issued in May 2016, the survey will be issued every two years instead of every year.

• Distribution – The survey will be distributed to a broader audience, using NERC’s general distribution list.

• Targeted questions – Each section includes an initial question that asks respondents to rate the questions in each section only if they are familiar with that particular area; otherwise, they will skip to the next section.

• Refinement of questions – The ad hoc group reviewed each question and edited for clarity and removed unnecessary or duplicative questions.

• Additional questions – Questions around the E-ISAC were added to be answered by E-ISAC members. A question on International ERO recognition was also added to be answered by those in either Canada or Mexico.

• Analysis of data – Future reports will include more favorability analyses, and fewer averages, to provide a deeper understanding of the data.

• User-friendliness of survey tool – TalentQuest is working to improve the user experience for the online survey to be less burdensome and easier to navigate.

Areas for Focus and Resulting Action Plans A number of areas were identified for focus as a result of the responses to the survey that was issued in 2015. NERC reported on actions taken to improve those areas and will be revisiting the results from last year’s survey to identify any additional actions to be taken. Once the results from this year’s survey are received, NERC will also review those results to identify additional areas for focus and develop action plans to improve upon those areas. The results from this year’s survey, as well as the identified areas for focus and related action plans for both last year’s and this year’s surveys, will be presented to the Board in August 2016.

ERO Enterprise Effectiveness SurveyKristin Iwanechko, Associate Director, Member Relations and MRC SecretaryMRC Informational SessionApril 6, 2016


• Metric 4: Program Execution Effectiveness Sub-metric F

• Developed by ad hoc group• Measure stakeholders’ perceptions of ERO Enterprise’s

effectiveness in executing its program activities• Results used to continuously improve operations

Overview


• Issued every two years• Distributed to broader audience• Content Questions to guide respondents to answer only applicable questions Refined applicability Edited for clarity as necessary Removed unnecessary or duplicative questions Added E-ISAC questions Added question on recognition as international ERO

• Improved online survey tool interface and functionality• More favorability analyses

Survey Changes


• May 10, 2016 – survey issued• June 8, 2016 – survey responses due• August 2016 – present results, focus areas, and action plans to

NERC Board of Trustees

Schedule
