Reliability Coordination Strategy Analysis and

Recommendations

Board of Director’s Meeting

December 6, 2007

Topics Proposed Board Motions Strategy Objectives WSM Integration WSM and RC Hosting Strategies Governance and Facility Options Budget Implications Termination of Funding Agreements

RC Strategy Proposed Motions

WECC Reliability Coordination Strategy Governance Motion Approve the proposed Charter of the

Reliability Coordination Committee (RCC) and request that the Chair of the Board of Directors provide recommendations for the members of the RCC as soon as practical.

WECC Reliability Coordination Strategy Facility Motion The two Reliability Coordination Center

facilities shall be leased and operated by the WECC and be separate and independent from any WECC member. The two Centers shall each include: RC Control Room Data center to house the Westwide System

Model and other operating tools Offices for RC support staff

WECC Reliability Coordination Strategy Facility Location Motion One of the two Reliability Centers will be

located in the Vancouver, Washington/Portland Oregon area. The second Center location will be located in the greater Denver, Colorado area.

WECC Reliability Coordination Strategy 2008 Budget Motion The WECC CEO is authorized to borrow

up to $6,000,000 to fund the Reliability Coordination Strategy during the 2008 Budget Year. Said funds will be borrowed incrementally on an as needed basis. The borrowed funds will be paid back during Budget Years 2009 and 2010 unless otherwise determined by the WECC Board of Directors.

WECC Reliability Coordination Strategy Termination of Funding Agreements The WECC CEO is authorized to provide

notice to the three current hosts of the WECC Reliability Coordination Centers that the Reliability Coordination funding agreements will be terminated. The date of termination shall be determined by the WECC CEO based on the implementation schedule of the WECC Reliability Coordination Strategy.

RC Strategy Objectives

Strategy Objectives WECC-Wide RC Function Comply With All NERC & WECC Criteria 2 Centers, 2 Teams, Geographically

Separated Center Redundancy (Mutual Backup)

Common Tools Common Training

Separation and Independence from any Host

Strategy Objectives Focus on Reliability, Not Enforcement RCs Report to the WECC Director of

Reliability Coordination Recommended Minimum Staffing

Configuration Shift Consists of Operator and Operating

Engineer at Each Center 2 Teams = 34 FTEs Total

RCSTF Objectives Provide Cost-Effective RC Tools and

Facilities without “Gold Plating” Create an RC Platform That Can Expand as

Necessary to Meet Future Requirements Establish a Flexible RC Culture Retain, Hire, and Train the Best Staff

Obtainable with Competitive Compensation Packages

RC Sites/Team Configuration

Number of RC Sites / Team Configuration Components Summary

1. 2 RC Sites, Geographically Separated

2. One RC Team per Site (17 FTEs)

3. Defined Minimum Staffing Level (34)

4. Each Team Responsible for a Specific Geographical Sub-Region but Both Can Monitor and Study the Entire Western Interconnection

VOTING CLASS YES NO ABSTAIN

TRANSMISSIONPROVIDERS 22 0 0

TRANSMISSIONCUSTOMERS 20 0 0

STATE andPROVINCIAL 2 0 0

TOTALS 44 0 0

OC Voting Record – Number of RC Sites/Team Configuration

Integration of WSM into the RC Strategy

Board RC Motions – WSM & Tools Merge the application tools proposed in

the West-wide System Model (WSM) and the operating tools defined in the Reliability Center Strategic Principles (RCSP).

Provide for the procurement of bids and recommendation of a vendor to provide the IT/communications infrastructure for support of the RC’s.

Status of Westwide System Model Host RCSTF Developed and Issued an RFP

for the WSM Host and RC Team Hosts in February 2007

Electronic Data Systems (EDS) Was the Winning Bidder for WSM Hosting WECC Board Directed RCSTF to Begin

Negotiations WECC and EDS Have Not Come to

Agreement on Specific Issues Legal, Technical, and Cost

WECC WSM Host Option In September 2007, RCSTF Requested

WECC Staff to Investigate Option of WECC Hosting WSM & RC Tools

Facilities Would Include: (2) Data Centers for WSM and RC Tools Offices for WSM and RC Tools Support Staff

WSM & Tools Support Staff The WSM is an Energy Management

System (EMS) WECC is Currently Authorized to Hire 3

EMS Positions Eric Whitley – EMS Manager Hired Sept ’07

WECC is Currently Proposing 14 Total EMS Staff if WECC Hosts and 12 EMS Staff if EDS Hosts

Office Facilities for the EMS Team will be Required

WSM NetApps Support Understanding Operational Reality Makes

Network Applications Relevant EMS Support Staff Need to Understand the

Product the Operators Require Operators Get a Better Understanding of

How the Applications Work and Receive Exceptional Training

Common EMS Tools Improve Situational Awareness for Both Centers

A Well Designed RC Control Center is Key to Fostering a Professional and Credible RC Role

RC & WSMHosting Scenarios

Hosting Scenarios as Presented to the OC in October 2007

Option WSM Host RC HostEMS Office

Host

1 WECC WECC WECC

2 WECCBPA + CAISO WECC

3 VendorBPA + CAISO WECC

New Information BPA’s Attorneys Have Liability Concerns

These Concerns Must Be Addressed Prior to BPA Becoming a Long Term RC Center Host

CAISO Has Reported That it Will Not Host Non-CAISO RC Employees

WAPA is Not Interested in Hosting an RC in the Future and is Currently Working with WECC to allow the RDRC to Vacate their Facilities as soon as Practical

Potential layout of RC Control Centers

Reliability Coordination Governance

RC Governance OptionsA. WECC Management Model

B. Contract Corporate Provider Governance Model

C. Host Organization Model

D. WECC RC Governance Committee Model (RCGC)

RC Strategy WECC Management Model

RC Function

RC Director

WECC MembershipF

undi

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Reliability Coordination

Subcommittee

Oversight

Man

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Operating Committee

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WECC Board

WECC Management

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Fun

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RC Strategy Contract Corporate Provider Governance Model

Governance Board

RC Director

WECC Membership

Fun

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WECC BoardF

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Contract

RC Function

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Fun

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Fun

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Man

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Oversight OC/RCS

Responsibility for Sanctions

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RC Strategy Host Organization Model

Host Management

RC Director

WECC Membership

Fun

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WECC BoardF

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Contract

RC Function

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Fun

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Fun

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Man

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Oversight OC/RCS

Responsibility for Sanctions

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RC Strategy WECC Committee Governance Model

RC Function

RC Director

WECC Membership

Fun

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Reliability Coordination Governance Committee

Ove

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Man

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WECC BoardF

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WECC Management Model Direct Management of RC Function by

WECC Management Combining WECC EMS Staff, WSM, and

RC Staff in Same Facility More Flexibility to React In Dynamic

Circumstances There are No Perfect Contracts

Corporate Provider Model “PNSC Model” Single Separate Corporation Provides RC

Services through Contract with WECC Contract Determines Obligation of All

Parties Governed by a Board of Directors Reliability Coordinators are Employees of

the Corporation

Corporate Provider Model Benefits Independence of RC Functions from

Compliance Monitoring Focus Entirely on Reliability Bridge Current Reliability Coordinators Board of Directors Experience and

Obligations to the Corporation Separate Funding – No Competition with

other Efforts or Budget Constraints

Corporate Provider Model Benefits Potential for Audit to be Led by WECC

Instead of NERC Smaller Organization More Flexible and

Employees Feel Ownership Option to Contract with a Host Site

Corporate Provider Model Cons

Need for Liability Protection Requires Contract Development Between

Entities Contract May Reduces Ability to Make

Quick Changes Smaller Staff – Less Assistance to Address

Short-Term Needs

Host Organization Model Host Provides Access to Knowledgeable

Staff and Engineering Expertise WECC Hosting Option is a Duplication of

Efforts with Communication Systems, Security and other Services Provided by the Host

Contractor Model would Allow the CMRC Operators to be CISO Employees.

Host Organization Model Large Organization Allows More

Opportunities for RC Employees

WECC Committee Governance Model

Places all RCs Under WECC Umbrella No Contract to Negotiate with

Independent Host Oversight and Management by

Independent Board Committee Reporting Directly to the Board

RC Governance Motion Approve the Reliability Coordination

Governance Committee (RCGC) Concept that Included the Following Principles:

Devoted to Reliability and Management of the Reliability Coordination Function of the Western Interconnection

The RCGC Includes Highly Technical Experts In System Operations.

The RCGC Has A Fiduciary Responsibility For the Effective Operation of the RCS.

RC Governance Motion Includes the Duties of Loyalty and Care for

the RC Function Independence and Separation From Other

WECC Functions All Decisions Made By the RCGC and The

RCs Would Be Transparent Except for Those Requiring Confidentiality Such As: Personnel Actions, Legal And Critical Infrastructure Issues

All RC Staff Would Be WECC Employees

OC Vote – RC GovernanceVOTING CLASS YES NO ABSTAIN

TRANSMISSIONPROVIDERS

13 11 0

TRANSMISSIONCUSTOMERS

11 5 1

STATE andPROVINCIAL

1 0 1

TOTALS 25 16 2

Minority Opinions The language “All RC staff would be

WECC employees” was not stricken Would like to have voted on the Option 2

which is the complete independent corporation instead of this option

Do not understand how the Board is responsible to regulate [mandatory compliance] and at the same time will separate the RC function

Minority Opinions If the Board goes forward with this option

all RC staff will be forced to be WECC employees which could lead to losing the current RC operators

With this governance model WECC’s ability to recruit RC operators maybe reduced

Board RC StrategyGovernance Motion

WECC Reliability Coordination Strategy Governance Motion Approve the GNC’s proposed

Charter of the Reliability Coordination Committee (RCC) and request that the Chair of the Board of Directors provide recommendations for the members of the RCC as soon as practical.

RC Facility Options

RC Facility Options

A. Vendor Turn-Key Facility

B. Existing Hosts (BPA and CAISO)

C. WECC-Leased and Operated Facility

Vendor Turn Key Option Pros:

Fewer WECC Resources Vendor Takes Responsibility for Locating

Facility and Completing Installation Cons:

Cost Contract Development Timing

Existing Host Option Assumption:

Rules Of Conduct Prevent Discriminatory Influence Over A Reliability Coordinators

Pros: Informal (Non-decisional) Interaction Increases Grid

Awareness Large Grid Operator Host Has Extensive And

Unique Technical Expertise in Grid Operation Increased Hedge Against Risk Of Major Power

System Disturbances Cons:

Concern With Potential Conflict Of Interest. Potential Increased Host Liability

Existing Host Option Advantage of large grid operator

environment, infrastructure and expertise. Direct participation in RC decisions and

responses would be highly restricted. Generic discussions with host on all

general issues of grid reliability and characteristics encouraged.

Provides additional layer of infrastructure backup and expertise in unanticipated emergency situations.

WECC Host Facility: Pros Physical Independence from Utility Host RC1: 7,500 SF Facility for Data Center,

RC, & EMS Office RC2: 6,000 SF Facility for Data Center &

RC State of the Art Control Room Large Conference Room for Staff,

Committee, Task Force, & Work Group Meetings

WECC Host Facility: Pros Room for Expansion Attractive Locations with Freeway and

Airport Access Data Center and Control Room

Construction would be Contracted Out to Expert Vendors

WECC Host Facility: Cons Expertise Required in Managing a Data

Center

RC Facility Option Motion To Approve the Option Where the Two

RC Host Sites Would be WECC Operated

OC Vote – RC Facility OptionVOTING CLASS YES NO ABSTAIN

TRANSMISSIONPROVIDERS

14 5 3

TRANSMISSIONCUSTOMERS

13 0 2

STATE andPROVINCIAL

2 0 0

TOTALS 29 5 5

Minority Opinions RC Staff Retention Concerns Option Does Not Leave an Option for a

Large Grid Operator to Host the RC Centers

Board RC StrategyFacility Motion

WECC Reliability Coordination Strategy Facility Motion The Two Reliability Coordination Center

facilities shall be leased and operated by the WECC and be separate and independent from any WECC member. The two centers shall each include: RC Control Room Data center to house the Westwide System

Model and other operating tools Offices for RC support staff

RC Facility Locations

RC Facility Location Motion The WECC Operating Committee Directs The

Reliability Coordination Strategy Task Force To Identify the Best RC Facility Locations These Location Choices Will Be Based On:

Retention Of Employees Availability Of A Skilled Labor Pool Geographic Separation Cost Quality Of Life Easy Access

OC Vote – RC Facility LocationVOTING CLASS YES NO ABSTAIN

TRANSMISSIONPROVIDERS

21 0 0

TRANSMISSIONCUSTOMERS

12 0 0

STATE andPROVINCIAL

2 0 0

TOTALS 35 0 0

RCSTF Selection - Facility Location The Majority of the RCSTF Selected:

Vancouver, Washington Loveland, Colorado

An In Depth Analysis Was Not Performed Decision was Primarily Determined Based

on Staff Retention, Costs, and Availability of Candidates

Board RC StrategyFacility Location Motion

WECC Reliability Coordination Strategy Facility Location Motion One of the two Reliability Centers will be

located in the Vancouver, Washington/Portland Oregon area. The second Center location will be located in the greater Denver, Colorado area.

2008 WECC Budget Implications

WECC Operated Facility Option Saves $11M over 5 Year Period Versus

EDS WSM Host Option WECC Option Represents a Front

Loaded Capital Investment $5.9M Over 2008 RC Budget

EDS Option Cost Can Be Spread Easier to Meet WECC Budget Constraints

RC Strategy Cost Comparison - Summary - All In

Description 2008 2009Total 2008-2012

Initial Board Proposal - July 2006 $13,389 $11,800 $60,601

Current Approved 2008 Budget (2009-12 Estimates) $12,155 $16,571 $64,700

Projected Estimate - WECC Option - November 2007 $18,008 $13,975 $62,227

Projected Estimate - EDS WSM Host - November 2007 $20,694 $16,051 $73,525

In Thousands $

WECC Budget Impact – All In ($1,000)

Description  2008

Projected Estimate WECC Option $18,008

Current Approved RC Budget $12,155

Current Approved Statutory WECC Budget $26,819

Cost Increase to Membership $5,853

% Increase to Statutory Budget 22%

48%

-16% -15% -16% -17%

-4%

-20%

-10%

0%

10%

20%

30%

40%

50%

2008 2009 2010 2011 2012 Total

% Differential WECC Option Over Current Budget Projections

Description 2008 2009 2010Total

2008-2012

Westwide System Model - Areva $1,639 $100 $104 $2,051

Infrastructure - Data Center and RC Tools, EMS Office and EMS salaries $4,740 $3,058 $2,578 $15,535

Staffing - travel, training, total RC staffing $7,845 $6,103 $6,103 $32,261

Transition - relocation, retention, overlapping $0 $3,417 $0 $3,417

RC Site - control room $3,783 $1,294 $1,294 $8,962

Total $18,007 $13,974 $10,081 $62,226

RC Budget Costs by Category($1,000s)

0%

3%

14%

-16% -17%

-3%

-20%

-15%

-10%

-5%

0%

5%

10%

15%

2008 2009 2010 2011 2012 Total

% Differential WECC Option Over Current Budget Projections

RC Budget 2008 Financing Option

Board RC StrategyFacility Motion

WECC Reliability Coordination Strategy 2008 Budget Motion The WECC CEO is authorized to borrow

up to $6,000,000 to fund the Reliability Coordination Strategy during the 2008 Budget Year. Said funds will be borrowed incrementally on an as needed basis. The borrowed funds will be paid back during Budget Years 2009 and 2010 unless otherwise determined by the WECC Board of Directors.

Board RC StrategyTermination of

Funding Agreements

WECC Reliability Coordination Strategy Termination of Funding Agreements The WECC CEO is authorized to provide

notice to the three current hosts of the WECC Reliability Coordination Centers that the Reliability Coordination funding agreements will be terminated. The date of termination shall be determined by the WECC CEO based on the implementation schedule of the WECC Reliability Coordination Strategy.