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Minutes Member Representatives Committee February 5, 2014 | 1:00–5:00 p.m. Mountain Arizona Grand Resort & Spa 8000 S. Arizona Grand Parkway Phoenix, AZ 85044 602-659-6356 Outgoing Chair Carol Chinn, with incoming Chair John Anderson and incoming Vice Chair Sylvain Clermont present, called to order the North American Electric Reliability Corporation (NERC) Member Representatives Committee (MRC) meeting on February 5, 2014, at 1:00 p.m., Mountain. The meeting announcement, agenda, and list of attendees are attached as Exhibits A, B and C, respectively. Introductions and Chair’s Remarks Mr. Anderson welcomed attendees and acknowledged the attendance of FERC staff, the NERC Board of Trustees (Board), Ken Quesnelle of the Canadian Association of Members of Public Utility Tribunals, and State Commissioners Asim Haque and David Clark. Mr. Anderson recognized the MRC responses to the January 8, 2014 policy input request from Fred Gorbet, chairman of the Board. He reminded attendees that full presentations were conducted at the committee meetings and will not be repeated during the MRC meeting. NERC Antitrust Compliance Guidelines and Public Announcement Kristin Iwanechko, committee secretary, called attention to the NERC antitrust compliance guidelines and the public meeting notice. Any questions should be addressed to NERC’s general counsel, Charles Berardesco. Ms. Iwanechko declared a quorum present with the following recognized proxies:

• Barry Lawson for Michael L. Smith – Cooperative Utility

• Ayesha Sabouba for Lam Chung – Federal/Provincial

• Martin Huang for Mike Penstone – Federal/Provincial

• Marion Lucas for Thomas Gianneschi – Large End-Use Electricity Customer

• Charles Acquard for Lawrence Nordell – Small End-Use Electricity Customer

• Asim Haque for Todd A. Snitchler – State Government

Minutes The MRC approved, on a motion by Scott Helyer and seconded by Bruce Campbell, the draft minutes of its January 8, 2014 conference call and the draft minutes of its November 6, 2013 meeting in Atlanta (Exhibits D and E, respectively). Election, Board of Trustees Dave Goulding, chair of the Board’s Nominating Committee, provided a report and recommendation for the election of four Board members for the class of 2017. The MRC approved, on a motion by Steve Whitley and seconded by Bill Gallagher, the re-election of Paul Barber, Janice Case, Fred Gorbet, and Roy Thilly for the class of 2017. Mr. Goulding also noted that there have been questions regarding whether there should be more specific criteria for the nomination of Board members. Any comments should be provided to the next nominating committee. Request for MRC Members to Serve on Nominating Committee for RISC Membership Bob Schaffeld, chair of the Reliability Issues Steering Committee (RISC), noted that the RISC charter states that the Board and MRC would form a nominating committee to solicit a pool of candidates for membership in the RISC, and recommend a slate of members to the RISC for the Board's approval at the May meeting. Mr. Anderson asked for volunteers from the MRC interested in serving on the nominating committee or as a member of the RISC. Mr. Schaffeld also noted that he would be asking the Board to approve the RISC’s review of its charter and MRC input would be requested through the charter review process. ERO Enterprise Three-Year Strategic Plan and 2014 Performance Metrics Mr. Anderson reminded the MRC of the discussion on this item during the Corporate Governance and Human Resources Committee (CGHRC). Gerry Cauley, president and chief executive officer of NERC, noted that the metrics are an effort to define quantitative and measurable performance measures for the organization that will help drive the desired performance and outcomes. He highlighted the following takeaways on the metrics from the morning discussion and suggested to bring revised metrics to the CGHRC for approval during its March conference call:

1. The metric on Bulk Power System (BPS) outages should be better quantified.

2. The first metric should be reconciled with the comments submitted by the Standards Committee, and supported by many others, in response to the policy input letter.

3. The list of metrics regarding specific reliability risk initiatives should be revised to have more tangible and quantifiable outcomes.

Mr. Cauley suggested that the strategic plan be approved at the February meeting, recognizing that it will continue to be worked on based on inputs received. He recognized the collaborative effort with the Regional Executives and noted that it is an improvement from past strategic plans. He also proposed to create an accountability matrix to identify how comments are being considered and

Member Representatives Committee Minutes February 5, 2014

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addressed, and present the matrix at the May meetings. Mr. Cauley recognized that one of the challenges is showing clear prioritization and cost efficiencies. Attendees shared comments related to this update:

• Many noted that a well-defined de-registration process should be identified in the strategic plan.

• Some MRC members are concerned over the interchangeable use of Bulk Power System and Bulk Electric System and requested that all instances in the strategic plan refer to the same term.

• An MRC member asked about the meaning of ‘threshold’ and ‘target’ and what is the unacceptable level. Mr. Cauley clarified that not meeting the threshold is the unacceptable level and partial credit is given for anything between threshold and target.

• NERC is urged to ensure transparency of the accountability matrix with industry. 2015 Business Plan and Budget Schedule Mike Walker, senior vice president and chief financial and administrative officer at NERC, reported that a concerted effort is being made early in the process in coordination with the Regional Entities to draft the Business Plans and Budgets in a way to show a better linkage between the activities being undertaken to the strategic plan and the priorities set forth in the plan. He noted that there is a discussion on roles and responsibilities between NERC and the regions, with a clearer allocation of resources to accomplish the items set forth in the plan. There will also be a very clear focus on costs at the regional and NERC levels and a focus on forecasting capabilities. Further, Mr. Walker highlighted the following changes to the schedule:

• More opportunities for input prior to posting the initial draft.

• Posting will be delayed to May 16, 2014, to provide more time for review and provide a complete picture so stakeholders are in a better position to provide informed feedback.

• Increased the time provided for comment on the initial draft to 45 days. Many MRC members believe this schedule is a significant improvement from past schedules. Responses to the Board’s Request for Policy Input Mr. Anderson acknowledged the MRC’s responses to Fred Gorbet’s January 8, 2014 letter requesting policy input on the operating personnel communication protocols standard development, 2014-2017 ERO Enterprise Strategic Plan and 2015 Business Plan and Budget Schedule, and critical infrastructure protection (CIP) Version 5 Order 791 Response Plan. The discussion on the 2014-2017 ERO Enterprise Strategic Plan and 2015 Business Plan and Budget Schedule took place during the previous agenda item. The following comments on the other two policy input topics are not all inclusive, but provide the general tenor and scope of the discussion:


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Operating Personnel Communication Protocols Standard Development

• Some MRC members recommended that the applicability of COM-002-4 to the Distribution Provider function be restricted the same way as in the Version 4 and 5 Critical Infrastructure Protection standards.

• Fred Gorbet reiterated that this standard has been an important issue for the Board and they are pleased with the current status of the standard. He noted that if the standard drafting team determines that changes are needed in response to comments, the process should run its course.

Critical Infrastructure Protection (CIP) Version 5 Order 791 Response Plan

• MRC members recognized that the Reliability Assurance Initiative (RAI) is intended to be broad enough to cover all Reliability Standards, but one member suggested that there may be an opportunity with the CIP Version 5 standards to have a practical test on how RAI would be applied in place of the “identify, assess, and correct” language.

• Gerry Cauley noted that NERC recognizes the need for clarity and certainty on the transition and the need to demonstrate what success looks like with respect to RAI.

• Some MRC members are concerned that there will not be a clear enough understanding of RAI by the time the CIP standards are balloted.

• In response to questions from MRC members, it was clarified that the reference to the C2M2 model is meant only as a possible tool for industry to use and is not required for compliance.

Additional Policy Discussion from Board Committee Meetings Attendees shared comments in response to the discussions from the Board committee meetings: Finance and Audit Committee

• MRC members support the 2015 Business Plan and Budget schedule.

• A tentative meeting is scheduled with the MRC Business Plan and Budget Input Group in April and the group welcomes any comments in advance of that meeting.

Standards Oversight and Technology Committee

• MRC members suggested developing a process for revisions to Reliability Standard Audit Worksheets (RSAW) to be posted for industry comment and if adverse comments are submitted, the RSAW could be submitted to a Board committee for review.

• A small sub-group was formed with representation from the MRC, NERC staff, and the NERC Board to develop a proposal for an RSAW revision process to be presented at the May meetings. The scope of the sub-group is for revisions made, after a standard has been approved, to RSAWs that were posted concurrently with the standard.


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• MRC members asked that the sub-group consider the effective date of RSAW changes and whether they would be applied retroactively or prospectively.

• Some MRC members are concerned that standards may be interpreted differently amongst industry and suggested that the sub-group could evaluate options to address those types of questions.

Corporate Governance and Human Resources Committee

• For the MRC Assessment of Board of Trustees Effectiveness, an MRC member suggested having the ability to review or edit comments prior to submitting in future surveys.

Compliance Committee

• A great deal of progress has been made on RAI, but it may be useful to provide a case study and to define some of the commonly used terms.

• MRC members raised questions about whether the controls would be entity specific and changed over time. They also raised questions about the timing of the FFT triage process.

Risk-based Registration Assessment Project Mr. Cauley provided some history on the development of the current registration criteria, noting that the current registration framework does not differentiate between entities that present different levels of risk. He noted that, overall, the desire is to get the scope of work and programs so they can be efficiently applied to get reliability benefit without creating excess burden. The objective of this initiative is to gain clarity on whether there is a better design that will allow scope to be tailored based on risk and to benefit reliability. This initiative was introduced at the January MRC Informational Session. A survey was distributed to industry with responses due by February 28, 2014. The near-term objective is to develop a whitepaper to be presented at the May meeting, which would identify the issues and lay out a potential framework. At the November meetings, a final proposal and transition plan would be presented. Attendees shared comments related to this update:

• Industry strongly supports this initiative and how to address smaller entities that have minimal, if any, impact on the BPS in order to determine actual vulnerability. It was recommended to define minimal impact.

• Some suggested changes to the compliance registry document include consistent use of BES, BPS, or greater than 100 kV, define terms that may be interpreted differently across the regions, and include a formal de-registration process.

• NERC is recommended to review the applicability in all Reliability Standards to ensure appropriate applicability.


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• NERC is encouraged to ensure that this initiative does not become too complex and tie up too many resources.

• A suggestion was made to do a search on whether there are good risk models used in other industries that could be used with this initiative.

Definition of BES Implementation Discussion Tom Burgess provided a brief overview of this item, specifically the three-step process of applying the definition, considering inclusions, and considering exclusions, and processes for making exception requests and self-notifications. He noted that it is a bright-line approach and the goal is to have a stable foundation of understanding what the BES elements are to know standard applicability, compliance, and other functions that are important to ensure reliability. NERC staff is working towards making several reference documents available in a common location to address questions that have been raised and to assist industry in the implementation. Mr. Burgess noted that questions were raised during the MRC informational session regarding dispersed generation individual units and large end-use customers. He noted that a Standard Authorization Request has been received that is directed at helping to provide long term certainty around the applicability of standards in the dispersed generation setting. With respect to large end-use customers, additional information was provided about how the 50kV threshold came about and what the implications are in terms of considering either industrial facilities or other situations where there are radials connected by systems that are below 100 kV. The transition from work underway to deployment and implementation will be completed by July 1, 2014. NERC staff is conducting significant outreach and will make information available on processes and tools to reach consistent and uniform determinations on BES elements. NERC and ERO staff will receive training to ensure there is a common perspective, and Registered Entities will receive training to provide a good understanding of how to use the various reference materials and tools. NERC staff expects to complete most of the training for ERO staff in March and expects to begin training for industry in April. Mr. Burgess reminded industry that the new definition becomes effective on July 1, 2014, and newly identified elements need to be in compliance by July 1, 2016. Attendees shared comments related to this update:

• NERC is urged to be very clear on the expectations of the process for reporting self-determinations, including the expectations of the Regional Entities. Further, clarification is needed regarding the compliance status of an element that a Registered Entity submits as an exclusion where the Regional Entity disagrees with that determination.

• Clarification was given that notifications are required for any newly identified elements as a result of the new definition. For situations where more information is needed about particular application of the definition, there are specific provisions in the various processes to handle


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these and it is expected that Regional Entities will work with the Registered Entities to resolve questions.

• There are some entities that don’t know NERC and may have facilities that will get swept in with the bright-line definition. If any of these entities become registered, applicability begins at the time of registration and not retroactively.

• Some stakeholders asked for clarity on when the two-year “clock” begins. Mr. Burgess clarified that the two-year clock begins on July 1, 2014, for newly identified elements.

• There may be situations where an element that was previously classified as a BES element is determined to be excluded under the new definition and there is a question regarding how granular the support for the excluded element would need to be. This information will be included in the reference documents and in the various training sessions.

• An MRC member noted that dispersed power producing resources are not determined to be BES unless they aggregate to over 75 MW.

Five-Year Performance Assessment Update Rebecca Michael, associate general counsel at NERC, reported that with respect to the instant survey the number of responses doubled as compared to responses for the previous performance assessment report. For this second performance assessment report, the survey was issued first and there will be an opportunity for industry to provide comments on the report, which will be due in April. The draft report will be reviewed at the May MRC and Board meetings with the final report expected to be filed with FERC in July. Ms. Michael reported on the highest and lowest average scores with respect to various areas, the lowest averages for enforcement, registration and certification, reliability assessments, and critical infrastructure protection. She highlighted nine overarching themes that will be addressed in the report. Regulatory Update Charles Berardesco, senior vice president and general counsel at NERC, invited questions or comments regarding the regulatory report which highlights Canadian affairs as well as past and future significant FERC filings. Future Meetings The following are future dates for the MRC Pre-Meeting and Informational Sessions:

• July 16, 2014

• October 15, 2014 The following are future NERC Board and MRC meeting dates and locations:

• May 6-7, 2014 – Philadelphia, PA

• August 13-14, 2014 – Vancouver, Canada

• November 12-13, 2014 – Atlanta, GA


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• February 11-12, 2015 – San Diego, CA

• May 6-7, 2015 – Pentagon City, VA

• August 12-13, 2015 – Toronto, Canada

• November 4-5, 2015 – Atlanta, GA Adjournment There being no further business, the meeting terminated at 4:36 p.m., Mountain. Submitted by,

Kristin Iwanechko Secretary


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Kristin Iwanechko

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Agenda Member Representatives Committee February 5, 2014 | 1:00–5:00 p.m. Mountain

Arizona Grand Resort & Spa 8000 S. Arizona Grand Parkway Phoenix, AZ 85044 602-659-6356 Introductions and Chair’s Remarks

NERC Antitrust Compliance Guidelines and Public Announcement*

Consent Agenda

1. Minutes* — Approve

a. January 8, 2014 Conference Call

b. November 6, 2013 Meeting

2. Future Meetings*

Regular Agenda

3. Election, Board of Trustees* — Elect

4. Request for MRC Members to Serve on Nominating Committee for RISC Membership*

5. ERO Enterprise Three-Year Strategic Plan and 2014 Performance Metrics*

a. 2015 Business Plan and Budget Schedule*

6. Responses to the Board’s Request for Policy Input*

a. Operating Personnel Communication Protocols Standard Development

b. Critical Infrastructure Protection (CIP) Version 5 Order 791 Response Plan

7. Additional Policy Discussion from Board Committee Meetings*

a. Finance and Audit Committee

b. Standards Oversight and Technology Committee

i. Actions in Response to TOP/IRO NOPR

ii. Assessment of 2013 Process Reforms and Resolution to August 9, 2013 Appeal

iii. Status of Reliability Standard Audit Worksheet (RSAW) Development

Member Representatives Committee Agenda February 5, 2014

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c. Corporate Governance and Human Resources Committee

i. Board and Board Committees’ Self-Assessments

ii. MRC Assessment of Board of Trustees Effectiveness

d. Compliance Committee

i. Reliability Assurance Initiative (RAI) Progress Report

e. Other

8. Risk-based Registration Assessment Project*

9. Definition of BES Implementation Discussion*

10. Five-Year Performance Assessment Update*

11. Regulatory Update*

*Background materials include

First Name Last Name Sector John Anderson ChairSylvain Clermont Vice ChairSteven Naumann 1. Investor-Owned UtilityNabil Hitti 1. Investor-Owned UtilityJohn DiStasio 2. State/Municipal UtilityCarol Chinn 2. State/Municipal UtilityJay Bartlett 3. Cooperative UtilityBarry Lawson 3. Cooperative Utility - Proxy for Michael Smith Anthony Montoya 4. Federal/ProvincialMartin Huang 4. Federal/Provincial - Proxy for Mike Penstone Ayesha Sabouba 4. Federal/Provincial - Proxy for Lam ChungWilliam Gallagher 5. Transmission Dependent UtilityJohn Twitty 5. Transmission Dependent UtilityScott Helyer 6. Merchant Electricity Generator John Seelke 6. Merchant Electricity Generator Jack Cashin 7. Electric MarketerJason Marshall 7. Electric MarketerMarion Lucas 8. Large End-Use Electricity Customer - Thomas GianneschiMichelle D'Antuono 8. Large End-Use Electricity CustomerCharles Acquard 9. Small End-Use Electriciy Customer - Also Proxy for Lawrence NordellSteve Whitley 10. ISO/RTONick Brown 10. ISO/RTOBruce Campbell 10. ISO/RTODennie Hamilton 11. Regional Entity - FRCC Jim Robb 11 Regional Entity - WECCAsim Haque 12. State Government - Proxy Todd A. SnitchlerDavid Clark 12. State Government

First Name Last Name Sector Ken Quesnelle Canadian Provincial Amitabha Gangopadhyay Canadian Federal

Member Representatives Committee - Attendance (February 5, 2014)Voting Members

Non-Voting Members

David Ortiz U. S. — FederalMichael Bardee U. S. — FederalRay Phillips Regional Entity - SERC Ken Capps Regional Entity - RFCHarvey Reed Regional Entity - NPCCLane Lanford Regional Entity - Texas RETeresa Mogensen Regional Entity - MROKristin Iwanechko Secretary

First Name Last Name Title CompanyFred Gorbet Chair, Board of Trustees North American Electric Reliability Corporation Janice Case Vice Chair, Board of Trustees North American Electric Reliability Corporation Gerry Cauley President and Chief Executive Officer, Trustee North American Electric Reliability Corporation Paul Barber Trustee North American Electric Reliability Corporation Robert Clarke Trustee North American Electric Reliability Corporation David Goulding Trustee North American Electric Reliability Corporation Douglas Jaeger Trustee North American Electric Reliability Corporation Kenneth Peterson Trustee North American Electric Reliability Corporation Bruce Scherr Trustee North American Electric Reliability Corporation Jan Schori Trustee North American Electric Reliability Corporation Roy Thilly Trustee North American Electric Reliability Corporation Charles Berardesco Senior Vice President, General Counsel, and Corporate Secretary North American Electric Reliability Corporation

First Name Last Name Title CompanyVal Agnew Director of Standards Development North American Electric Reliability CorporationMatt Blizard Director of Critical Infrastructure Protection North American Electric Reliability CorporationTom Burgess Vice President and Director of Reliability Assessment and Performance Analysis North American Electric Reliability CorporationDamon Epperson Director of Human Resources North American Electric Reliability CorporationHolly Hawkins Assistant General Counsel North American Electric Reliability CorporationJerry Hedrick Associate Director of Compliance Operations and Regional Entity Oversight North American Electric Reliability CorporationKristen Iwanechko Associate Director of Member Relations and MRC Secretary North American Electric Reliability CorporationSonia Mendonca Assistant General Counsel and Director of Enforcement North American Electric Reliability Corporation

Board of Trustees

Staff

Rebecca Michael Associate General Counsel North American Electric Reliability CorporationKim Mielcarek Associate Director of Communications North American Electric Reliability CorporationMichael Moon Senior Driector of Reliability Risk Management North American Electric Reliability CorporationLacey Ourso Associate Director of Regional Relations North American Electric Reliability CorporationWanda Peoples Meeting Planner North American Electric Reliability CorporationEarl Shockley Senior Director of Compliance Operations North American Electric Reliability CorporationSuzanne Smith-Wigfall Executive Assistant to the Board North American Electric Reliability CorporationMechelle Thomas Director of Internal Audit and Corporate Risk Management North American Electric Reliability Corporation

First Name Last Name Title CompanyCharles Abell Supervising Engineer, Transmission Technical Support AmerenCharles Acquard Executive Director NASUCAJim Albright VP & Chief Program Officer Texas RECaren Anders SVP and Chief Transmission Officer Duke EnergyJohn Anderson President & CEO ELCONMatt Barbera Manager Deloitte & Touche LLPMichael Bardee Director, Office of Electric Reliability Federal Energy Regulatory CommissionJay Bartlett President & CEO Prairie Power, Inc.Terry Bilke Consulting Advisor MISOJason Blake General Counsel ReliabilityFirstDavid Boguslawski Vice President Northeast UtilitiesMaureen Borkowski President & CEO Ameren Transmission CompanyDmitriy Borovik Director Deloitte & Touche LLPJohn Brockhan Director, Policy and Compliance CenterPoint Energy Houston ElectricPatrick Brown Director, U.S. Affairs Canadian Electricity AssociationNick Brown President & CEO SPPJennifer Budd-Mattiello Vice President & COO Northeast Power Coordinating Council, Inc.Tom Burgess VP & Director RAPA NERCJames Burley VP Risk,Mitigation&Standards Midwest Reliability OrganizationJim Burpee President & CEO Canadian Electricity AssociationLinda Campbell VP Standards & Compliance FRCCBruce Campbell President & CEO Independent Electricity System OperatorKenneth Capps Senior Vice President & COO Southern Maryland Electric Cooperative

General Registration

James Case Director, Operations Engineering EntergyJim Castle Mgr. RCIA NYISOLam Chung Reliability Compliance Department Manager Manitoba HydroRon Ciesiel General Manager Southwest Power Pool Regional EntityAnthony Clark Division Manager TSO Manitoba HydroDavid Clark Commissioner Public Service Commission of UtahSylvain Clermont Manager Transmission Services Hydro-Quebec TransEnergieTammy Cooper General Counsel Texas Reliability Entity, Inc.Miggie Cramble Vice President General Counsel Corporate Secretary and Director of External Affairs Midwest Reliability OrganizationRandy Crissman Vice President Technical Compliance New York Power AuthorityMichelle D'Antuono Manager - Energy Occidental Chemical CorporationBill Dearing Consultant Northwest Public Power AssociationKatie Detweiler Supervisor Federal Energy Regulatory CommissionJohn DiStasio General Manager and Chief Executive Officer Sacramento Municipal Utility District (SMUD)Stacy Dochoda President and CEO FRCCDavid Dworzak Director Edison Electric InstituteCarter Edge Director of Coordinated Activities Regional Entity Management GroupDaniel Elmore Director, Critical Infrastructure Protection Idaho National LaboratoryDelores Etter Vice Chairman Texas REBrian Evans-Mongeon President and CEO Utility ServicesJim Fama Vice President, Energy Delivery Edison Electric InstituteJen Fiegel Sr Director Risk Management Oncor Electric Delivery Company LLCJonathan First Special Reliability Counsel Federal Energy Regulatory CommissionPeter Flynn SVP and Deputy General Counsel National GridGreg Froehling Compliance Officer Rayburn Country Electric CooperativeMelanie Frye VP Planning and Operations Western Electricity Coordinating CouncilTim Gallagher President and CEO ReliabilityFirst CorporationWilliam Gallagher Special Projects Chief Vermont Public Power supply AuthorityTab Gangopadhyay Technical Specialist Power System The National Energy BoardMichael Godbout Specialist in economic regulation Régie de l’énergieDave Godfrey VP and Chief Adminsistrative Officer Western Electricity Coordinating CouncilSteve Goodwill Vice President and General Counsel Western Electricity Coordinating CouncilJeff Gust Vice-President, Compliance & Standards MidAmerican Energy CompanyBrenda Hampton Director NERC & TRE Affairs Energy Future Holdings (Luminant)

Asim Haque Commissioner Public Utilities Commiission of OhioWilliam Harrelson Associate General Counsel Golden Spread Electric Cooperative Inc.Peter Heidrich Manager of Reliability Standards Florida Reliability Coordinating Council, Inc.Scott Helyer Vice President, Transmission Tenaska, Inc.Scott Henry CEO/President SERC Reliability CorporationDavid Hilt Vice President - Transmission & Regulatory Quanta TechnologyBarbara Hindin Associate General Counsel Edison Electric InsituteDon Holdsworth Director NERC Compliance PSEGRobert Hoopes Sr. Director-FERC/NERC Compliance PPL CorporationMartin Huang VP, Grid Operations BC HydroMartin Huang VP, Grid Operations BC HydroDoug Johnson Manager Operational Compliance American Transmission Company LLCHardev Juj VP Transmision Planning and Asset Management Bonneville Power AdministrationJim Keller Director-Federal Regulatory Affairs & Policy We EnergiesTrey Kirkpatrick VP, Compliance Services AssurX, Inc.Martin Kirkwood Federal Energy Regulatory CommissionKent Kujala Senior Manger DTE ElectricLane Lanford President & CEO Texas Reliability Entity, Inc.Chris Lang Manager, Risk & Compliance Golden Spread Electric Cooperative, Inc.Barry Lawson Associate Director, Power Delivery & Reliability NRECAMarion Lucas Compliance Manager Alcoa Power Generating Inc.Marion Lucas VP, Marketing & Trade Alcoa Power Generating Inc.Chuck Manning VP of HR & CCO ERCOTJason Marshall Director, Reliability Compliance ACESJason Marshall Director, Reliability Compliance ACESScott McBride Program Manager Idaho National LaboratoryJoseph McClelland Office Director, OEIS Federal Energy Regulatory CommissionPatti Metro Manager, Transmission & Reliability Standards NRECAScott Miller Manager, Corporate Affairs MEAG PowerTeresa Mogensen Vice President Transmission Xcel EnergyTeresa Mogensen Vice President Transmission Xcel EnergyAnthony Montoya Chief Operating Officer Western Area Power AdministrationMatt Morais Director, Federal Policy ERCOTAllen Mosher Vice Pres., Policy Analysis & Reliability Standards American Public Power Association

Jeffrey Mueller Manager - Nerc Policy & Standards PSE&GBrian Murphy Manager, Rel Stds NextEra EnergySteven Naumann VP, Transmission and NERC Policy ExelonGary Nolan Regulatory Compliance Advisor Arizona Public ServiceLou Oberski Managing Director DominionDavid Ortiz Deputy Assistant Secretary U.S. Department of EnergyDavid Ortiz Deputy Assistant Secretary US Department Of EnergyVohn Peeler VP, Transmission System Operations Duke EnergyMike Penstone Vice President, Network Development and Regional Planning Hydro One Networks Inc.Ray Phillips Director of Compliance and Distribution Services Alabama Municipal Electric AuthorityRay Phillips Director of Compliance and Distribution Services Alabama Municipal Electric AuthorityHarvey Reed Chairman of the Board NPCCJames Robb CEO Western Electricity Coordinating CouncilAileen Roder Legal Advisor Federal Energy Regulatory CommissionAyesha Sabouba Hydro One Networks Inc.Bob Schaffeld Vice President Southern CompanyKatie Schnider Senior Communications Specialist Schweitzer Engineering LaboratoriesKatie Schnider Senior Communications Specialist Schweitzer Engineering LaboratoriesHerb Schrayshuen Prinicpal Power Advisors, LLCAllen Schriver PGD General Manager of Compliance/NAGF Chair NextEra Energy inc.Edward Schwerdt President & CEO Northeast Power Coordinating Council, Inc.Eric Scott Director, Reliability Standards Compliance AmerenJohn Seelke NERC Standards Development & Advocacy Manager Public Service Enterprise GroupCorey Sellers Transmission Policy Manager Southern Company TransmissionHertzel Shamash Vice President Dayton Power and Light Hertzel Shamash Vice President Dayton Power and LightNeil Shockey Operations Manager Southern California EdisonEarl Shockley Senior Director, Compliance Operations NERCMarisa Sifontes SERC Reliability CorpDan Skaar President and CEO Midwest Reliability OrganizationDan Skaar President and CEO Midwest Reliability OrganizationClay Smith Executive Vice President Georgia System Operations CorpDavid Souder Director, Operations Planning PJM Interconnection, LLCDaniel Soulier Director Electricity Transmission RÃ©gie de l'Ã‰nergie

Lori Spence Executive Director, Deputy General Counsel Compliance Services MISOMike Spoor VP Transmission & Substation Florida Power & LightJennifer Sterling Director, NERC Compliance Program ExelonJoe Tarantino Regulatory Compliance Coordinator Sacramento Municipal Utility DistrictThomas Tierney Director of Compliance Midwest Reliability OrganizationScott Tomashefsky Regulatory Affairs Manager Northern California Power AgencyJohn Twitty Executive Director TAPSDeAnn Walker Associate General Counsel CenterPoint EnergyRobert Wargo Director Analytics & Enforcement ReliabilityFirst CorporationDebra WarnerConstance White Vice President of Compliance Western Electricity Coordinating CouncilStephen Whitley President & CEO NYISOCharles Yeung Executive Director Interregionl Affairs Southwest Power Pool

Minutes Member Representatives Committee Pre-Meeting Informational Session Conference Call and Webinar January 8, 2014 | 11:00 a.m. Eastern Introductions and Chair’s Remarks

Chair Carol Chinn, with Chair elect John Anderson and Vice Chair elect Sylvain Clermont present, convened a duly-noticed open meeting by conference call and webinar of the North American Electric Reliability Corporation (NERC) Member Representatives Committee (MRC) on January 8, 2014, at 11:03 a.m., Eastern. The meeting provided the MRC and other stakeholders an opportunity to preview proposed agenda topics for the MRC Board of Trustees (Board) and Board committee meetings scheduled to be held February 5-6, 2014, in Phoenix, AZ. The meeting announcement, agenda, and list of attendees are attached as Exhibits A, B, and C, respectively.

NERC Antitrust Compliance Guidelines and Public Meeting Notice

Kristin Iwanechko, committee secretary, directed the participants’ attention to the NERC Antitrust Compliance Guidelines and the public meeting notice included in the agenda. Schedule of Quarterly NERC Meetings and Conference Calls

The draft schedule of events for the upcoming meetings in Phoenix was included in the agenda package for today’s meeting. The MRC meeting is scheduled to begin at 1:00 p.m. Mountain, on February 5, 2014. Policy Input Reminder

Ms. Chinn announced that the Board’s request for policy input is scheduled to be released today and responses are due by Wednesday, January 29, 2014, to Kristin Iwanechko, committee secretary. Review of Proposed Board and Board Committees’ Meeting Agenda Items

NERC staff reviewed the preliminary agenda items, via a slide presentation, for the Board of Trustees and Board committee meetings scheduled for February 5-6, 2014, in Phoenix (Exhibit D). Mr. Anderson encouraged MRC members to review all agenda materials for the Board and Board committee meetings, once posted and available on January 22, 2014, and attend as many of these meetings as possible, in advance of the MRC’s meeting on February 5. Review of Proposed MRC Agenda Items for February 5

Mr. Anderson reviewed the preliminary MRC agenda items, via a slide presentation, for the upcoming February 5 meeting in Phoenix (Exhibit D). Topics include:

MRC Informational Session Minutes, January 8, 2014 2

Board of Trustees election;

Review of the ERO Enterprise Three-Year Strategic Plan and Metrics;

Discussion of the responses submitted to the policy input request from the Board;

Additional discussion of the issues presented at the Board committee meetings on February 5;

Discussion on the BES implementation; and

Update on five-year ERO assessments. Informational Items

NERC staff provided updates on the following topics: ERO Enterprise Three-Year Strategic Plan and metrics and the 2015 Business Plan and Budget schedule; Operating Personnel Communication Protocols standard development; Critical Infrastructure Protection (CIP) Version 5 Order 791 response plan; Reliability Assurance Initiative (RAI) and Find, Fix, Report and Track (FFT) progress; approach to developing a risk-based compliance registration framework; and the implementation for the definition of Bulk Electric System (BES). Proxy Reminder

Proxy notifications for the February 5, 2014 meetings must be submitted in writing to Kristin Iwanechko, committee secretary. Meeting Adjourned

There being no further business, the call was terminated at 12:47 p.m., Eastern. Submitted by,

Kristin Iwanechko Secretary

Minutes Member Representatives Committee November 6, 2013 | 1:30-5:30 p.m. Eastern The Westin Buckhead 3391 Peachtree Road, N.E. Atlanta, GA 30326

Chair Carol Chinn, with Vice Chair John Anderson present, called to order the North American Electric Reliability Corporation (NERC) Member Representatives Committee (MRC) meeting on November 6, 2013, at 1:30 p.m., Eastern. The meeting announcement, agenda, and list of attendees are attached as Exhibits A, B and C, respectively.

NERC Antitrust Compliance Guidelines and Public Meeting Notice

Holly Mann, committee secretary, called attention to the NERC antitrust compliance guidelines and the public meeting notice. Any questions should be addressed to NERC’s general counsel, Charles Berardesco. Ms. Mann declared a quorum present with the following recognized proxies:

Nabil Hitti for Steve Naumann – Investor-Owned Utility

Allen Mosher for Tim Arlt – State/Municipal Utility

Barry Lawson for Jay Bartlett – Cooperative Utility

Angie Sheffield for Mike Smith – Cooperative Utility

Lam Chung for Lorne Midford – Federal/Provincial

Donald Holdsworth for John Seelke – Merchant Electricity Generator

Charles Acquard for Larry Nordell – Small End-Use Electricity Customer

James Castle for Steve Whitley – ISO/RTO

Scott Henry for Ray Phillips – Regional Entity

David Clark for Thomas Dvorsky – State Government

Stacy Dochoda for Robert Hunzinger – Regional Entity, non-voting

Mike Bardee for Joe McClelland – U.S. Federal, non-voting

David Ortiz for Pat Hoffman – U.S. Federal, non-voting

Member Representatives Committee Minutes November 6, 2013

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Introductions and Chair’s Remarks

Ms. Chinn welcomed attendees and acknowledged the attendance of Commissioner Cheryl LaFleur from the Federal Energy Regulatory Commission (FERC), FERC staff, David Ortiz from the U.S. Department of Energy, State Commissioners Todd Snitchler and David Clark, and the NERC Board of Trustees (Board). Ms. Chinn recognized the MRC responses to the October 9, 2013 policy input request from Fred Gorbet, chairman of the Board, and acknowledged the productive discussions surrounding the way forward for the communication protocols standards.

Minutes

The MRC approved, on a motion by Bob Schaffeld and seconded by Sylvain Clermont, the draft minutes of its October 9, 2013 conference call and the amended minutes of its August 14, 2013 meeting in Montreal (Exhibits D and E, respectively). Election of Committee Officers for 2014

Ms. Mann announced the nominations of John Anderson for chair and Sylvain Clermont for vice chair of the MRC for 2014. Ms. Chinn called for a motion to elect Messrs. Anderson and Clermont. The motion was moved by Bill Gallagher, seconded by Bob Schaffeld, and approved with no negative votes. Messrs. Anderson and Clermont will assume their newly appointed positions at the start of the February 2014 MRC meeting in Phoenix, Arizona.

Status of MRC Sector Nominations

Ms. Chinn announced the sector nomination period will close November 12, 2013, and the election period, which will be administered electronically, will open December 2, 2013, and close December 12, 2013. Update from the Board of Trustees Nominating Committee (BOTNC) Dave Goulding, chair of the BOTNC, informed the MRC that it will be sent a report in December 2013 that contains a brief biography of each nominee that the BOTNC is proposing for re-election to the Board in February 2014. The nominees for the Class of 2017 are the following current Trustees: Paul Barber, Janice Case, Fred Gorbet and Roy Thilly. Mr. Goulding noted that if re-elected to the Board, this will be the final term for Paul Barber. Mr. Goulding also noted that the BOTNC would also look at potential criteria for use by future BOTNCs. The BOTNC includes five members of the MRC:

1. Carol Chinn - MRC Chair

2. John Anderson - MRC Vice Chair

3. Bob Schaffeld – Investor-Owned Utility Sector

4. Todd Snitchler – State Government Sector

5. Scott Helyer – Merchant Electricity Generator Sector


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Remarks from Gerry Cauley, NERC President and CEO

Mr. Cauley acknowledged Ken Quesnelle as the new chair of the Canadian Association of Members of Public Utility Tribunals (CAMPUT) and recognized the past service of Ray Gorman as the non-voting Canadian Provincial member of the MRC. Mr. Cauley recognized a number of Ms. Chinn’s accomplishments as chair of the MRC for 2013. Ms. Chinn successfully influenced greater stakeholder engagement with the Board and its committees, improved the preparation of the policy input requests to the MRC and assisted with streamlining the dialogue shared during these quarterly meetings. Mr. Cauley also expressed his appreciation of Mark Maher, who is retiring as the chief executive officer of WECC in December 2013. Responses to the Board’s Request for Policy Input

Ms. Chinn acknowledged the MRC’s responses to Fred Gorbet’s October 9, 2013, letter requesting policy input on the communication protocols standards. Attendees shared comments and expanded on some of the MRC responses to the Board. The following comments are not all inclusive, but provide the general tenor and scope of the discussion: Operating Personnel Communication Protocols – COM-003-1

Although some believe that there may not be a need for this standard, many support the progress of the Standards Oversight and Technology Committee (SOTC) and the Standards Committee (SC) and their efforts to refine and develop a combined COM-002 and COM-003 standard.

Caution should be exercised to ensure the standards development process that is in place is not being bypassed or disregarded under the current circumstances.

There is concern about the compliance expectations and the calibrated enforcement policy associated with this standard. The Reliability Assurance Initiative (RAI) approach is still unclear and the Reliability Standard Audit Worksheet (RSAW)-style language is not easily understood.

One of the policy inputs provided to the Board included a proposal that NERC lead a single pilot with a few Regions and their Registered Entities to develop and implement a holistic and repeatable methodology to govern the monitoring and enforcement of the COM Reliability Standards. This pilot effort could lend itself to an RAI-type of approach to determine if an entity has effective procedures and programs in place and is able to sufficiently train and audit its staff related to the COM standards. The Board is encouraged to consider the benefits of initiating this type of pilot approach.

Another compliance model was shared during the meeting in support of the COM-002-4 draft that encourages a clear breakaway from zero tolerance and shifts the responsibility away from the operator to the organization itself. The model includes hardwiring the breakaway from zero tolerance into the requirements so that the standard is more performance-based and clearly identifies essential elements expected in a quality communications protocol. The model requires that the entity has a communications protocol that meets the established criteria, trains its operators based on that criteria, has a program in place to assess its effectiveness, and sets an expectation for communicating during emergencies. The Board is encouraged to consider this model when taking action on the COM Reliability Standards.


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There is agreement that the combined standard should be more performance-based, but recognition that the current focus on this effort should not take industry, stakeholders or NERC in a backward direction.

A small technical team is recommended to assist the SC and possibly develop a conceptual whitepaper that clarifies the reliability objectives and how they will be accomplished prior to drafting the requirements that will be put into place. There is support for the MRC’s involvement in the technical discussions of the SC as the new standard is being refined and developed by February 2014.

Additional Policy Discussion from Board Committee Meetings Attendees shared comments in response to the discussions from the Board committee meetings: Corporate Governance and Human Resources Committee

During the past year, there have been changes and improvements made to the way the quarterly meetings are coordinated, structured and conducted. These improvements were largely based on feedback received from the MRC’s annual effectiveness survey of the Board. The member representatives are encouraged to participate in this year’s survey and contribute to the ongoing success among the Board, its committees and the MRC.

The business planning and budget (BP&B) input group is a subset of the MRC and is already working with NERC and Regional staffs to address the development of ERO Enterprise goals and objectives for 2014 and beyond. The input group will be reaching out to the full committee throughout 2014 to encourage MRC review and comment on the 2015 BP&B timeline and activities.

Compliance Committee

Industry continues to support RAI, but recognizes there are still ways to improve communications regarding its ongoing success and underlying principles. Reaching regional consistency is an essential element to success. There needs to be opportunities for registered entities to provide early input, feedback and share best practices.

Transparency of RAI activities among the various Regions is important. The diverse pilots need to be evaluated against a set of common criteria to identify the best components for integration into one ERO-wide RAI program.

It is desired that NERC and the Regions reach common agreement on how to conduct a risk assessment and address reliability risk. Even though a single methodology is applied, it may yield different results per Region based on the facts and circumstances that may be present.

NERC is recommended to share RAI progress with FERC staff to build awareness, especially if there is interest to file compliance related materials in the future.

More value could be extracted from industry’s involvement in the RAI pilots if moderate and minor risks were addressed simultaneously.


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Additional focus should be given to when an entity should self-report and when it should wait to provide information during an audit.

Review of the Standards Process Input Group (SPIG) Implementation Scott Helyer reviewed the 2012 recommendations of SPIG that were endorsed by the Board to improve upon the standards development process. Chris Schwab, chair of the Reliability Issues Steering Committee (RISC); Janet Sena, senior vice president and director of external affairs, NERC; and Brian Murphy, chair of the SC shared the implementation status of the various activities associated with each recommendation. Attendees shared comments related to this review:

NERC’s outreach efforts related to SPIG’s recommendation #3 have been appreciated. There is interest to know whether governmental and provincial regulators are satisfied with the progress identified to-date. Canadian regulators remain interested in gaining a better understanding of the expectations for their involvement in the standards development process.

The yellow status related to cost and benefit is appropriate and may never be considered green in status. Nevertheless, NERC is encouraged to continue to evaluate the standards for cost benefit going forward.

There is concern for the recent trend involving the liberal use and broad interpretation of the wavier provision, as related to recommendations #1 and #5. NERC is urged to be more judicial in its use of the provision going forward.

The SPIG recommendations, as a whole, have improved the standards development process. Maintaining ANSI accreditation has been positive and the added expertise to support the standard drafting teams has been a significant improvement. Industry is still encouraged to engage even further with NERC to expand the regulatory interface.

The output from the RISC needs to be better integrated into NERC goals and priorities and better coordinated with the Board and standing committees.

The creation of RSAWs and the communication of compliance expectations, at the same time that standards are being developed, has not been implemented as intended. The informal standards process could be improved upon going forward.

It is appropriate to revisit the progress and implementation of the SPIG recommendations, especially the role that industry and the Board serve in some of these areas. There needs to be a deeper discussion regarding RSAWs and the balance that should be reached in terms of transparency, flexibility and adaptability.

Bulk Electric System Implementation Team Status Update

Tom Burgess, vice president and director of reliability assessment and performance analysis and Laura Hussey, director of standards development, NERC, provided an update on the status and implementation of the Bulk Electric System (BES) definition project. A team of NERC and Regional staffs are developing reference material and guidance to assist entities in understanding how to apply the BES definition and determine the potential aspects related to registration, the exception process


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and standards applicability. To help facilitate consistency of the implementation, a BES exception tool has been completed and will be ready to utilize in 2014. Attendees shared comments related to this update:

It is unclear how much influence and risk the BES implementation may have on the manufacturing and industrial realms. The energy intensive needs of manufacturers and industrials may force a compliance situation that did not previously exist and the public policy implications may be contrary to what is sought by the implementation process.

Additional clarity is needed to fully understand the issues that are expected to be addressed in the BES guidance material related to: (1) the BES evaluation process and procedure; (2) evidentiary requirements for BES determinations; (3) appeal mechanisms; (4) registration issues; (5) standard applicability; and (6) compliance and enforcement monitoring.

Individual units or assets may have a collective, aggregate impact on the BES and the guidance material should reflect how the relevant set of standards will be applied to aggregate situations.

It is unknown how the BES team’s effort and project plan fits together with the Standards Authorization Request (SAR) that has been developed for dispersed generation. The SAR will hopefully address the minority issues that could not easily be dealt with through the BES definition. Industry is encouraged to stay involved in the SAR process and contribute to a sound technical basis to address the applicability of standards.

Overview of the Long Term Reliability Assessment Report (LTRA) and Winter Assessment Conclusions

John Moura, director of reliability assessment, NERC, provided a preliminary review of the conclusions from the 2013 LTRA and seasonal winter assessment reports. Attendees shared comments related to this issue:

There seems to be growing concern that the large amount of variable generation may not deliver the necessary reliability services. It is unclear if there is an expectation for what the BES needs relative to those reliability services.

The “reliability” world should get in front of the “marketing” world and the ERO is encouraged to define what reliability services are and what is needed for an adequate level of reliability (ALR) so that market structures will have a base to create an efficient market.

Legal Update

Rebecca Michael, associate general counsel for corporate and regulatory matters, NERC, reviewed proposed amendments to the Rules of Procedure (ROP) regarding the Technical Feasibility Exception (TFE) Process and provided an update on the status of potential revisions related to ROP Section 500 and Appendix 5A. Additionally, Ms. Michael announced the recent distribution of the ERO Five-Year Performance Assessment Survey to the primary compliance contacts at the registered entity level. Comments received from the survey, related to the performance of the ERO and Regional Entities, will be shared in advance of the MRC’s quarterly meeting in May 2014.


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Attendees shared the following comment related to these issues:

a. NERC’s request for comments regarding these amendments and the flexibility shown to make these adjustments and improvements to the ROP has been appreciated.

Future Meetings

The following are future NERC Board and MRC meeting dates and locations:

February 5-6, 2014 – Phoenix, AZ

May 6-7, 2014 – Philadelphia, PA

August 13-14, 2014 – Vancouver, Canada

November 12-13, 2014 – Chicago or St. Louis (final site to be determined)

February 11-12, 2015 – San Francisco or San Diego, CA (final site to be determined)

May 6-7, 2015 – Washington, DC

August 12-13, 2015 – Toronto, Canada

November 4-5, 2015 – Atlanta, GA

Update on Regulatory Matters

Charles Berardesco, senior vice president and general counsel, NERC, invited questions or comments regarding the regulatory report which highlights Canadian affairs as well as past and future significant FERC filings.

Adjournment

There being no further business, the meeting terminated at 5:30 p.m., Eastern. Submitted by,

Holly Mann Secretary

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