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Agenda Board of Directors • Compliance Committee March 18, 2020 • 1:00 PM – 3:00 PM (ET)

Click Here to Attend Meeting Password: 03182020

Open Agenda

1. Call to Order and Appoint Secretary to Record Minutes 1:00 PM Presenter: Brenton Greene, Chair

2. Antitrust Statement 1:05 PM Presenter: Brenton Greene, Chair

3. Approve Compliance Committee Meeting Minutes 1:10 PM Presenter: Brenton Greene, Chair Reference: Draft Minutes for the November 20, 2019 Compliance

Committee Meeting.

Action: Approve Minutes

4. Review of 2019 CMEP Activities and Performance 1:15 PM Presenter: Kristen Senk Description: Ms. Senk will provide an overview of 2019 enforcement data,

including violation trends, and an update on recent enforcement-related activity with FERC.

Reference: Presentation Action: Information and Discussion

5. Misoperations Update 1:40 PM Presenter: Jeff Mitchell

Description: Mr. Mitchell will review trends in Misoperations and Lessons Learned.

Reference: Presentation Action: Information and Discussion

6. Next Meeting and Adjourn Open Session 2:00 PM June 3, 2020 • Cleveland, OH

https://reliabilityfirst.webex.com/reliabilityfirst/j.php?MTID=m01be0bdf7df8fb54ac5d2f0c4831d1cc

Compliance Committee • Agenda

March 18, 2020

2

Roster • Compliance Committee

Brenton Greene, Chair • Independent (2022) Patrick Cass • Vice Chair • Independent (2020) Lisa Barton • AEP (2020) Scott Etnoyer • Talen Energy (2020) Larry Irving • Independent (2021)

Draft Minutes for the November 20, 2019 Compliance

Committee Meeting.

Separator Page

DRAFT Minutes Board of Directors • Compliance Committee November 20, 2019 • Washington, DC

St. Regis Hotel 923 16th and K Street NW • Washington, DC 20006

Open Session

Call to Order – Chair Brenton Greene called to order a duly noticed open meeting of the Compliance Committee on November 20, 2019 at 1:02 PM (ET). A quorum was present, consisting of the following members of the Compliance Committee: Brenton Greene, Chair; Pat Cass, Vice Chair; Kenneth Capps; Larry Irving; and Lou Oberski. A list of others present during the Compliance Committee meeting is set forth in Attachment A. Appoint Secretary to Record Minutes – Chair Greene designated Rob Eckenrod as the secretary to record the meeting minutes. Antitrust Statement – Chair Greene advised all present that this meeting is subject to, and all attendees must adhere to, ReliabilityFirst’s Antitrust Compliance Guidelines. Approve Compliance Committee Meeting Minutes – Chair Greene presented draft minutes for the August 21, 2019 Compliance Committee meeting, which were included with the agenda package. Upon a motion duly made and seconded, the Compliance Committee approved the minutes as presented. Overview of the 2020 ERO Compliance Monitoring and Enforcement Program Implementation Plan – Jim Uhrin led a discussion on the 2020 CMEP Implementation Plan (IP), which will inform ReliabilityFirst’s monitoring activities for 2020. He noted that the ERO Enterprise is using a single CMEP IP this year without Regional appendices. The 2020 CMEP IP describes: (1) the process used to identify the 2020 Risk Elements (i.e., high-level risk priorities), (2) the 2020 Risk Elements; and (3) the Areas of Focus and Reliability Standards associated with the 2020 Risk Elements. Mr. Uhrin discussed changes in the Risk Elements and Areas of Focus from the 2019 CMEP IP to the 2020 CMEP IP, including an increased focus on resource adequacy issues. He also discussed enhancements to the compliance oversight process, which now includes more targeted oversight and enhanced analysis of an entity’s inherent risk and performance profile.

Enforcement Activities – Kristen Senk presented and led a discussion on 2019 enforcement activities and trends, and the focus for 2020. She reported that ReliabilityFirst continues to receive a high volume of violations; a majority of which are self-reported and involve CIP-related issues. She stated that there is a continuing trend of minimal risk

Compliance Committee Minutes November 20, 2019

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noncompliances, the bulk of which are processed as compliance exceptions. Ms. Senk noted that ReliabilityFirst is on track to process over 400 violations in 2019. She discussed the enforcement group’s actions to support risk identification, mitigation, and outreach across the organization and the ERO Enterprise. She then presented the 2020 focus areas, including: (1) an enhanced noncompliance communication strategy to align with FERC policies regarding violation postings; (2) ensuring ERO alignment on enforcement practices and strategies; (3) identifying violation processing improvements and efficiencies; and (4) continuing open dialogue and targeted training with entities. FOIA Requests – Ms. Senk provided an update on recent Freedom of Information Act (FOIA) requests relating to CIP violations filed with FERC. She reported that FERC issued a Joint Staff White Paper (in conjunction with NERC and the Regions) on August 27, 2019, which proposed a new format for CIP disposition filings. Specifically, the White Paper proposed that CIP filings should include a public cover letter noting the name of the violator, the applicable Reliability Standard violated (but not the Requirement), and the penalty amount. A separate confidential attachment would contain details regarding the violation and proposed mitigation plan. Several entities submitted comments on the White Paper, most of which generally supported the proposals. Ms. Senk reported that it is expected that FERC will adopt the new process in 2020. Evaluation of the Committee’s Charter and Performance – Mr. Eckenrod led the annual review of the Compliance Committee’s Charter. Aside from fixing small typographical errors, the Compliance Committee identified no changes to the Charter at this time. Mr. Eckenrod also led the annual evaluation of the Compliance Committee’s performance of its duties set forth in the Charter.

CIP-014 Update – Matt Thomas provided an update on ReliabilityFirst’s CIP-014-2 activities. He noted that ReliabilityFirst’s initial assessment of CIP-014 compliance activities included entity CIP-014-2 self-certifications, staff internal analysis, and CIP-014 engagements with entities. Mr. Thomas discussed expectations regarding specific requirements of CIP-014-2, and trends ReliabilityFirst has identified during CIP-014-2 compliance activities. He also highlighted logistical challenges associated with CIP-014-2 audits given the heightened sensitivity of the information, and potential solutions to address these challenges. Regional Risk Assessment – Mr. Sefchik provided an overview of the development and content of the 2019 Reliability Regional Risk Assessment (RRA). He noted that staff focused on making the 2019 RRA report more usable by making the report’s information more concise and relevant for ReliabilityFirst’s day-to-day work. Mr. Sefchik discussed the latest additions and changes to the RRA risk categories, including new resilience and human performance risk categories, and an update to the cyber/physical security risk category.


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Registration Trends, Align and CORES Updates – Mr. Sefchik provided an overview of registration trends and the status of the ERO Enterprise-wide CORES and Align tools. He noted that there are 243 entities registered in ReliabilityFirst, and the majority of registered entities are generator owners and operators. Mr. Sefchik also reported on the progress of registration and certification initiatives, including the development of the CORES tool and collaborating with stakeholder groups on NERC Rules of Procedure modifications relative to registration activities. He reported that the CORES tool, which provides greater alignment across the ERO for registration activities, went live in July 2019 with pilot registered entities. To date, approximately 25% of ReliabilityFirst registered entities have deployed CORES or are near deployment. Mr. Sefchik noted that NERC plans to release new version updates and offer CORES to additional registered entities in the coming months. He then provided an update on the Align project, which provides a common portal for registered entities to submit and obtain information related to compliance and risk activities. Mr. Sefchik reported that while the Align project is still moving forward, release 1 of the tool has been delayed until 2020 to ensure data security, refine business processes, and address stakeholder concerns.

Next Meeting – Chair Greene noted that the next Compliance Committee meeting will occur in March 2020, at the ReliabilityFirst offices. At 2:38 pm, Chair Greene moved the Compliance Committee into closed session. All guests recused themselves at this time.

Closed Session

Confidential Compliance & Enforcement Matters – Jeff Craigo led a discussion on confidential Compliance and Enforcement matters.

Adjourn – Upon a motion duly made and seconded, Chair Greene adjourned the Compliance Committee meeting at 3:17 pm (ET).

As approved on this xxx day of March, 2020 by the Compliance Committee, Robert V. Eckenrod Vice President General Counsel & Corporate Secretary


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Attachment A

Others Present During the Compliance Committee Meeting Kevin Ball • DTE Energy Carol Baskey • ReliabilityFirst Lisa Barton • AEP Larry Bugh • ReliabilityFirst Robert Clarke • NERC Board of Trustees Jeff Craigo • ReliabilityFirst, Vice President Jennifer Curran • MISO Michael Del Viscio • PJM Rob Eckenrod • ReliabilityFirst, VP and General Counsel Scott Etnoyer • Talen Energy Ben Felton • DTE Energy Dwayne Fewless • ReliabilityFirst Tim Gallagher • ReliabilityFirst, President & CEO Rich Heidorn • ERO Insider Nick Henery • FERC Deandra Williams-Lewis • ReliabilityFirst Bob Mattiuz • FirstEnergy Jeff Mitchell • ReliabilityFirst Lou Oberski • Dominion Ray Palmieri • ReliabilityFirst, Senior Vice President and Treasurer Chris Scanlon • Exelon Ray Sefchik • ReliabilityFirst Kirsten Senk • ReliabilityFirst Susan Sosbe • Wabash Valley Power Association Jennifer Sterling • Exelon Matt Thomas • ReliabilityFirst Jody Tortora • ReliabilityFirst Jim Uhrin • ReliabilityFirst Wendy Weaver • ReliabilityFirst Becky Webb • ReliabilityFirst Simon Whitelocke • ITC Lynnae Wilson • CenterPoint Energy

Presentation

Separator Page

Enforcement Activity Update

Kristen Senk, Managing Enforcement Counsel

March 18, 2020

Cleveland, OH

Forward Together • ReliabilityFirst

RF Annual Violation Intake

2

0

100

200

300

400

500

600

2016 2017 2018 2019

Annual Violation Intake

Self-Report/Log Audit/Spot

• Continued high volume of identified noncompliance (425 in 2019)

• Majority of the issues were self-reported, but there were more audit findings in 2019

than in prior years

• RF continues to process high volume to keep up with intake (processed 418 in 2019

(compared to 329 in 2018 and 369 in 2017))


RF 2019 Intake by Type

3

0

50

100

150

200

250

300

350

CIP Ops

CIP/OPS Violations

Self-Report/Log Audit/Spot Check

• 72% of the noncompliance identified in 2019 was CIP

• Audit findings increased for both CIP and OPS Requirements


Most Violated CIP Requirements in 2019

4

0

5

10

15

20

25

30

35

CIP-004R4

CIP-004R5

CIP-007R2

CIP-007R4

CIP-007R5

CIP-007R10

CIP-010R1

CIP-011R1

Self-Reports and Self-Logs

0

2

4

6

8

10

CIP-004R2

CIP-004R4

CIP-004R5

CIP-006R2

CIP-007R1

CIP-007R2

CIP-010R1

Audit and Spot Check Findings


Most Violated Ops Requirements in 2019

5

0

2

4

6

8

MOD-025 R1 MOD-025 R2 PRC-005 R3 PRC-019 R1

Audit and Spot-Check Findings

0

5

10

15

20

MOD-025 R1 MOD-025 R2 PRC-005 R3 VAR-003 R2

Self-Reports and Self-Logs


2019 Risk Allocation

6

0

10

20

30

40

50

60

70

CIP-002 CIP-003 CIP-004 CIP-006 CIP-007 CIP-010 CIP-011 MOD-025 PRC-005 PRC-019 PRC-024 VAR-002 Other

Risk for Violations Processed in 2019

Minimal Moderate Serious

• Majority of violations posed minimal risk to the BES

• Only 2 serious risk violations processed in 2019 (number is projected to increase in 2020 based

on inventory)

• In 2019, 66 violations were resolved through settlements and 352 resolved through

CEs/FFTs/Dismissals.


Other Enforcement Activity

FOIA Activity Update

• District Court case

• Joint White Paper

FERC Order on Five-Year Performance Assessment

• Revisions to NERC Sanction Guidelines

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Questions & Answers

Forward Together ReliabilityFirst

Presentation

Separator Page

Misoperations Risk Management

Jeff Mitchell, Director Reliability Assessment & Performance Analysis

March 18, 2020

Cleveland, OH


NERC and Regions 5-year Misoperation Rate

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Misoperation = Number of Misoperations

Rate Number of Protection

System Operations

NERC metric threshold of less than 7.5%

misoperation rate, and a target of <7%

For the Misoperation Rate

• Five Regions and NERC are above

the threshold (including RF)

• One Region is between threshold

and target

• One Region is below the target


ERO Misoperation Rate - Regional Comparison

3


RF Misoperation Rate by Calendar Year

4

Even though the Misoperation rate marginally declined,

the Misoperation count continued its steady decline.

2013 2014 2015 2016 2017 2018

Misoperations 371 398 361 282 266 258

Operations 2679 2916 2270 2398 2257 2269

Misoperation Rate 13.85% 13.65% 15.90% 11.76% 11.79% 11.46%

0

500

1000

1500

2000

2500

3000

3500

0.00%

2.00%

4.00%

6.00%

8.00%

10.00%

12.00%

14.00%

16.00%

18.00%

Misoperation Count vs Misoperation Rate2013-2018

Misoperations Operations Misoperation Rate


RF Misoperations Cause and Equipment Type

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Capacitors show a marked increase in 2018

(29 reported).

Top causes in 2018 are Design/Logic/Settings (80),

relay failures (51), and AC system (34).

Communications failures has dropped out of the top

three causes for the first time (26).

The rise in AC system Misoperations is directly related

to the increase in capacitor Misoperations.


ERO Capacitor Bank Protection Issue Uncovered

6

FRCC MRO NPCC RF SERC SPP TRE WECC Total

2014 3 17 6 11 7 2 3 5 54

2015 0 14 5 28 3 4 5 5 64

2016 1 26 5 12 18 4 3 6 75

2017 1 13 6 12 26 0 7 1 66

2018 0 19 11 29 55 0 4 12 130

0

20

40

60

80

100

120

140

ERO Capacitor Misoperation Countby Region2014-2018

2014 2015 2016 2017 2018


Capacitor Bank Protection Summary

Five of the six NERC regions had a significant statistical increase

in capacitor Misoperations in 2018.

AC System Misoperations included corrosion issues and Voltage

Transformer failures that caused voltage differential trips.

Voltage differential protection settings may be too sensitive.

‘Unknown’ cause records seemed to lack detail;

seemed to be a lack of expertise or rigor in analysis.

Only 10-20% of TOs reported capacitor Misoperations;

less than 10% of TOs seem to have issues with repeat

Misoperations.

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RF Human Performance Related to Misoperations

8

Human Performance Related

Cause Codes

As-left Personnel Errors

Design Errors

Incorrect Settings

Logic Errors

0

50

100

150

200

250

300

2013 2014 2015 2016 2017 2018

RF Number of MisoperationsNon HP vs HP

Non HP HP


RF Transmission Exposure by Entity

9

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

414 502 801 802 109 118 427 108 112 113 454 106 111 102 105 439 433 107 101 446 120 431

Percentage of RF Transmission Miles and Circuits

% of RF Ckts % of RF Miles


RF Entity Protection System Operations/Misoperations/Rate

10

113 111 107 502 433 446 454 127 439 102 106 112 427 801 414 118 105 101 120 108 431 802 109 422

Operations 25 9 14 338 22 19 28 22 22 32 24 42 145 252 857 141 29 15 31 50 17 157 107 61

Misoperations 11 3 4 70 4 3 4 3 3 4 3 5 16 23 73 10 2 1 2 3 1 9 6 2

Misoperation Rate 44.0% 33.3% 28.6% 20.7% 18.2% 15.8% 14.3% 13.6% 13.6% 12.5% 12.5% 11.9% 11.0% 9.1% 8.5% 7.1% 6.9% 6.7% 6.5% 6.0% 5.9% 5.7% 5.6% 3.3%

0.0%

5.0%

10.0%

15.0%

20.0%

25.0%

30.0%

35.0%

40.0%

45.0%

50.0%

0

100

200

300

400

500

600

700

800

900

RF Operations, Misoperations,and Misoperation Rate by TO

2018

Operations Misoperations Misoperation Rate

Goal


RF Protection Subcommittee Efforts

Voluntary Misoperation peer review process implemented in

2016. Participation has increased since then.

Provided annual training sessions by

Schweitzer Engineering Laboratories University (SELU)

on line protection techniques. Will be addressing capacitor

protection design and settings in 2020.

Engage field personnel and relay engineers at annual

protection workshop, which will focus on capacitor bank

protection in 2020.

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Questions & Answers

Forward Together ReliabilityFirst

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