MEETING AGENDA. Compliance Committee Meeting. May 2, :00 a.m. 1:00 p.m. Via WebEx Only

Transcription

1 MEETING AGENDA Compliance Committee Meeting 9:00 a.m. 1:00 p.m. Via WebEx Only 380 St. Peter Street #800 Saint Paul, MN P F W. MidwestReliability.org CLARITY ASSURANCE CLARITY RESULTS ASSURANCE RESULTS Page 1 of 38

2 VIDEO AND AUDIO RECORDING Please note that Midwest Reliability Organization (MRO) may make a video and/or an audio recording of this MRO Compliance Committee (CC) meeting for the purposes of making this information available to board members, members, stakeholders, and the general public who are unable to attend the meeting. By attending this meeting, I grant MRO: 1. Permission to video and/or audio record the MRO CC meeting including me; and 2. The right to edit, use and publish the video and/or audio recording. 3. I understand that neither I nor my employer has any right to be compensated in connection with the video and/or audio recording or the granting of this consent. Page 2 of 38

3 MEETING AGENDA MRO Compliance Committee Meeting - 9:00 a.m. to 1:00 p.m. WebEx Only AGENDA ITEM 1 Call to Order and Introductions Mahmood Safi, Chair a. Determination of Quorum b. Standards of Conduct and Anti-Trust Guidelines c. Review of Robert s Rules of Order 2 Consent Agenda Mahmood Safi, Chair a. Approve agenda 3 Action Item Review Desirée Sawyer, MRO Compliance Monitoring Coordinator 4 Compliance Monitoring Update Desirée Sawyer, MRO Compliance Monitoring Coordinator a. Compliance Oversight Plan Development Update b CMEP Implementation Plan Updated c Audit Schedule 5 Enforcement Update a. CMEP Report Val Agnew, MRO Vice President of Enforcement b. Self-Log Template Jackson Evans, MRO Enforcement Attorney 6 Status of SPP RE Dissolution Sara Patrick, MRO Interim President and CEO 7 Organizational Group Reorganization Discussion Sara Patrick, MRO Interim President and CEO 8 PROS Internal Controls Training/Presentation Update Joe DePoorter, PROS Chair 9 Root Cause Template/Guidance Terry Bilke, Member ACTION Information Discussion and Action Item Discussion and Action Item Information Information Information Information Information and Discussion Information and Discussion 10 Reports Information a. First Quarter Letter to MRO Members f/k/a MRO Board Highlights b. NERC CCC Report Terry Bilke, MRO Representative c. Performance and Risk Oversight Subcommittee Joe DePoorter, PROS Chair d. Mid-Continent Compliance Forum Mark Buchholz, MRO CC and MCCF Member e. SPP Reliability Compliance Workgroup Mark Buchholz, MRO CC and SPPRCWG Member 11 Other Business Information 12 Adjourn Page 3 of 38

4 AGENDA 1 Call to Order and Introductions a. Determination of Quorum Mahmood Safi, Chair 2018 MRO Compliance Committee Roster Name Sector Term End Mahmood Safi, Chair Cooperative 12/31/2018 Terry Harbour, Vice Chair Investor Owned Utility 12/31/2019 Karen Demos Generator and/or Power Marketer 12/31/2018 Mike Smith Canadian Utility 12/31/2019 Terry Bilke Transmission System Operator 12/31/2020 Mark Buchholz Federal Power Marketing Agency 12/31/2019 Janell Johnson Municipal Utility 12/31/2018 Page 4 of 38

5 AGENDA 1 Call to Order and Introductions b. Standards of Conduct and Anti-Trust Guidelines Mahmood Safi, Chair Standards of Conduct Reminder: Standards of Conduct prohibit MRO staff, committee, subcommittee, and task force members from sharing non-public transmission sensitive information with anyone who is either an affiliate merchant or could be a conduit of information to an affiliate merchant. Anti-trust Reminder: Participants in Midwest Reliability Organization meeting activities must refrain from the following when acting in their capacity as participants in Midwest Reliability Organization activities (i.e. meetings, conference calls, and informal discussions): Discussions involving pricing information; and Discussions of a participants marketing strategies; and Discussions regarding how customers and geographical areas are to be divided among competitors; and Discussions concerning the exclusion of competitors from markets; and Discussions concerning boycotting or group refusals to deal with competitors, vendors, or suppliers. Page 5 of 38

6 AGENDA 1 Call to Order and Introductions c. Review of Robert s Rules of Order Mahmood Safi, Chair Parliamentary Procedures. Based on Robert s Rules of Order, Newly Revised, 10 th Edition Establishing a Quorum. In order to make efficient use of time at MRO Committee meetings, once a quorum is established, the meeting will continue, however, no votes will be taken unless a quorum is present at the time any vote is taken. Motions. Unless noted otherwise, all procedures require a second to enable discussion. When you want to Procedure Debatable Comments Raise an issue for discussion Move Yes The main action that begins a debate. Revise a Motion currently under discussion Reconsider a Motion already resolved End debate Record each member s vote on a Motion Postpone discussion until later in the meeting Postpone discussion until a future date Remove the motion for any further consideration Request a review of procedure Amend Yes Takes precedence over discussion of main motion. Motions to amend an amendment are allowed, but not any further. The amendment must be germane to the main motion, and cannot reverse the intent of the main motion. Reconsider Yes Allowed only by member who voted on the prevailing side of the original motion. Second by anyone. Call for the Question or End Debate No If the Chair senses that the committee is ready to vote, he may say if there are no objections, we will now vote on the Motion. Otherwise, this motion is not debatable and subject to majority approval. Request a Roll Call Vote No Takes precedence over main motion. No debate allowed, but the members must approve by majority. Lay on the Table Yes Takes precedence over main motion. Used only to postpone discussion until later in the meeting. Postpone until Yes Takes precedence over main motion. Debatable only regarding the date (and time) at which to bring the Motion back for further discussion. Postpone indefinitely Yes Takes precedence over main motion. Debate can extend to the discussion of the main motion. If approved, it effectively kills the motion. Useful for disposing of a badly chosen motion that cannot be adopted or rejected without undesirable consequences. Point of order No Second not required. The Chair or secretary shall review the parliamentary procedure used during the discussion of the Motion. Page 6 of 38

7 Notes on Motions Seconds. A Motion must have a second to ensure that at least two members wish to discuss the issue. The seconder is not required to be recorded in the minutes. Neither are motions that do not receive a second. Announcement by the Chair. The Chair should announce the Motion before debate begins. This ensures that the wording is understood by the membership. Once the Motion is announced and seconded, the Committee owns the motion, and must deal with it according to parliamentary procedure. Voting Voting Method When Used How Recorded in Minutes When the Chair senses that the Committee is substantially in agreement, and the Motion needed little or no debate. No actual vote is taken. The minutes show by unanimous consent. Vote by Voice The standard practice. The minutes show Approved or Not Approved (or Failed). Vote by Show of Hands (tally) Vote by Roll Call To record the number of votes on each side when an issue has engendered substantial debate or appears to be divisive. Also used when a Voice Vote is inconclusive. (The Chair should ask for a Vote by Show of Hands when requested by a member). To record each member s vote. Each member is called upon by the Secretary, and the member indicates either Yes, No, or Present if abstaining. The minutes show both vote totals, and then Approved or Not Approved (or Failed). The minutes will include the list of members, how each voted or abstained, and the vote totals. Those members for which a Yes, No, or Present is not shown are considered absent for the vote. Notes on Voting. Abstentions. When a member abstains, he/she is not voting on the Motion, and his/her abstention is not counted in determining the results of the vote. The Chair should not ask for a tally of those who abstained. Determining the results. A simple majority of the votes cast is required to approve an organizational group recommendations or decision. Unanimous Approval. Can only be determined by a Roll Call vote because the other methods do not determine whether every member attending the meeting was actually present when the vote was taken, or whether there were abstentions. Electronic Votes For an vote to pass, the requirement is a simple majority of the votes cast during the time-period of the vote as established by the Committee Chair. Majorities. Per Robert s Rules, as well as MRO Policy and Procedure 3, a simple majority (one more than half) is required to pass motions. Page 7 of 38

8 AGENDA 2 Consent Agenda a. Approve agenda Mahmood Safi, Chair Page 8 of 38

9 AGENDA 3 Action Item Review Desirée Sawyer, Compliance Administrator Action Item Number Date Responsible Party Description of Action Item Brief Description of Action Taken Status Date Closed /13/2013 MRO CC MROCC to give MRO a list of items related to CMEP that can be done to reduce entity s cost. (Ongoing effort) Open /13/2013 MRO CC MROCC to share information of what CC does either by article or direct communication meeting, while letting people know they can attend. (Ongoing effort) Open /28/2015 MRO CC MRO CC to review the MRO s draft appendix to the CMEP Implementation Plan on an annual basis. (Ongoing effort) Open /17/2016 MROCC MRO CC Chair Safi and Buchholz to reach out to SPP RTO Reliability Compliance Working Group (RCWG) and Western Interconnection Compliance Forum (WICF) regarding collaboration, or information sharing, with the MRO CC. Member Buchholz has not been able to attend a WICF meeting in This item will remain open, per discussion at 10/31/2017 meeting. Open /26/2017 PROS PROS to review its Governance Risk document based on the review of the DOJ Evaluation. The PROS submitted their proposed changes to the Governance Risk document based upon the review of the DOJ Evaluation of Corporate Compliance Programs to the MRO CC on June 1, Open /21/2018 MRO Staff MRO Staff to send the link to the MRO case notes and dismissal notes spreadsheet to the MRO CC. Desirée Sawyer sent the link to the MRO CC on 2/22/2018. Complete 2/22/2018 Page 9 of 38

10 /21/2018 MRO Staff MRO Staff will do a newsletter article regarding the modification to the case notes and dismissal notes spreadsheet. "Searchable Case and Dismissal Notes: New and Imporved!" was published in the March/April issue of Midwest ReliabilityMatters. Complete 3/28/ /21/2018 MRO Staff Jess Syring to share the NERC CIP Evidence Request Tool with the MRO CC for feedback. The CIP Evidence Request Tool was provided to the MRO CC and PROS for feedback on 3/20/2018 via . Complete 3/20/ /21/2018 MRO Staff MRO Staff to host a webinar on the finalized CIP Evidence Request Tool The CIP ERT has not be finalized. Once it has been a webinar will be scheduled /21/2018 MRO Staff MRO Staff to share a link to the RISC presentation shared at the February 8, 2018 NERC BOT regarding a resiliency framework. Desirée Sawyer sent the link to the MRO CC on 2/22/2018. Complete 2/22/ /21/2018 MROCC/ PROS PROS Chair Joe DePoorter to work with MRO CC members Karen Demos (also PROS member) and Mike Smith to develop a highlevel internal controls 101 presentation /21/2018 MRO Staff MRO Staff to share with the MRO Risk Assessment and Mitigation department that 45% of the PCC Survey respondents would like more information on IRAs. Desirée Sawyer sent the survey feedback to MRO Vice President of Risk Assessment, Mitigation, and Standards Richard Burt on 2/22/2018. Complete 2/22/ /21/2018 MRO CC Chair Safi and PROS Chair DePoorter to write a newsletter article regarding what the MRO CC and PROS have to offer and what tools and resources are available on the MRO s website /21/2018 MRO Staff MRO staff to consider webinar or class on selflogging /21/2018 MRO CC Chair Safi to send the MRO CC s 2018 proposed goals out to the MRO CC for approval. The goals were sent out to the committee for approval on 3/27/2018. The goals were approved by unanimous vote. Complete 4/2/2018 Page 10 of 38

11 AGENDA 4 Compliance Monitoring Update a. Compliance Oversight Plan Development Update b CMEP Implementation Plan Updated c Audit Schedule Desirée Sawyer, MRO Compliance Monitoring Coordinator Desirée Sawyer will lead these discussions at the meeting. Page 11 of 38

12 AGENDA 5 Enforcement Update a. CMEP Report Val Agnew, Vice President of Enforcement The following document has been inserted: MRO CC_CMEP Report_April 2018.pdf Page 12 of 38

13 Update to the MRO CC, April 2018 Monthly CMEP Summary Report Midwest Reliability Organization (MRO) March 31, 2018 This document was prepared for the Midwest Reliability Organization Compliance Committee (CC) to provide a summary of areas addressing key issues, trends, and significant events in MRO related to its delegated authorities set forth in the Compliance Monitoring and Enforcement Program (CMEP). I. Key Issues in Compliance, Risk Assessment and Mitigation, and Enforcement a. Major Highlights. Compliance Oversight Plans (COP). The MRO Compliance Department is developing multi-year COPs for all registered entities. COPs for all RCs, TOPs and BAs have been shared with these entities. Other registered entities will receive a multi-year COP in HEROs Update. The MRO Risk Assessment and Mitigation (RAM) Department continues to answer questions from registered entities. MRO staff is also closely following the CIP V5 revisions, CIP-012 (Communications between Control Centers), and work being done to clarify SOLs and IROLs. MRO continues to encourage registered entities to submit technical questions via to MRO at: HEROS@midwestreliability.org. SPP RE registered entities that will be transferring to MRO may also submit technical questions and MRO staff will coordinate with SPP RE staff and NERC staff as appropriate. Evidence Request Tool Task Force (ERTTF). This task force has been working on an ERO-wide Evidence Request Tool (Tool) since Fall of Recently, the MRO Compliance Committee and Performance Risk Oversight Subcommittee were asked to, and did, provide feedback on the Tool. The first phase of this project, which established a baseline Tool, will be complete in time to be presented at the NERC CMEP Conference in April of A second phase of this project is planned where the ERTTF will meet to further advance the Tool. 1 P age Page 13 of 38

14 Update to the MRO CC, April 2018 Revisions to Hearing Procedures. On February 27, 2018, NERC amended its December 9, 2016 petition requesting approval of proposed revisions to the NERC Rules of Procedure related to the Hearing Procedures. NERC s December 2016 Petition proposed revisions to the ROP that incorporate the Consolidated Hearing Process, which would provide Regional Entities an option to select NERC to manage the hearing process. The amendment addresses FERC staff questions relating to the Hearing Officer having the ability to cast the deciding vote in the event of a tie by proposing five members instead of four, and consistency in the use of terms by proposing replacing the term segment with the term sector. The February 2018 amendment was filed following a public comment period that ended on January 14, 2018 and the NERC Board of Trustees approval at its February meeting. A copy of the petition is available here. b. Compliance Audits. MRO has completed two of 12 Audits scheduled in MRO will also participate in Multi-Regional Registered Entity coordinated oversight as an Affected Regional Entity in five Compliance Audits in Additionally, MRO is providing resources to assist SPP RE with three audits, which is down one audit from the last report as SPP RE canceled one of its audits that was scheduled to occur prior to July 1, MRO will be assisting with one NERC-led audit. MRO will be leading one audit for a SPP RE registered entity, which will increase the number of MRO scheduled audits to 13 for Please visit MRO s website to view the MRO 2018 Audit Schedule. c. Self-Certifications. MRO has canceled the following self-certifications for the third and fourth quarter of The changes have been submitted to NERC to update the MRO Appendix to the ERO CMEP IP. o Q3: MOD R4 o Q3: MOD R1, R2, R3 o Q4: FAC R6, R7 d. Risk Assessment and Mitigation Trends. Compliance Severity Index. In order to evaluate its progress toward a key reliability goal of less severe events and violations, MRO uses the Compliance Severity Index (CSI) to represent the total risk that all instances of noncompliance present to the reliability or security of the bulk power system (BPS) in the MRO Region. The CSI is calculated using the Risk Determination and Discovery Method for each noncompliance. MRO also tracks any repeat violations within one year of a previous moderate or serious risk violation. There have been no such repeat violations in the past four years. 2 P age Page 14 of 38

15 Update to the MRO CC, April 2018 Compliance Trend Index Total Compliance Severity Index by Discovery Year Minimal Moderate Serious % 100% 100% 100% 100% 100% 100% 100% 100% 77% 34% 1% % of Risk Determinations Completed Highest Risk Noncompliances. The following graph provides the 15 highest risk requirements that have a history of noncompliance, based on the Total CSI. 15 Highest Risk Requirements based on Total Compliance Severity Index (2007-March 31, 2018) Compliance Severity Index Minimal Moderate Serious NERC Reliability Standards and Requirements 3 P age Page 15 of 38

16 Update to the MRO CC, April 2018 Risk Determinations of all Instances of Noncompliance. o Eighty-one percent of all instances of noncompliance processed by MRO from 2007 to March 31, 2018 were minimal risk. Risk Determinations for Instances of Noncompliance (2007- March 31, 2018) CIP vs Ops/Planning Risk Determinations ( March 31, 2018) 3% 1% 15% 18% Moderate 17% Minimal 81% Serious 2% 82% 80% Operations & Planning Standards (322 Risk Determinations) CIP Standards (404 Risk Determinations) MRO Performance Areas. In accordance with the Regional Risk Assessment, MRO has developed a set of 26 Performance Areas to help analyze and organize the Reliability Standards and Requirements in a way that enables MRO staff to determine which requirements to consider for compliance monitoring. o Since January 1, 2016, ninety-four percent of instances of noncompliance reported to NERC were for Requirements associated with an MRO Performance Area 1. Self-Identified 2 Instances of Noncompliance and Associated Risk Determinations. o Self-Logging. All instances of noncompliance self-logged by registered entities and evaluated by MRO staff have been processed as Compliance Exceptions. o Self-Reports. Eighty-three percent of all instances of noncompliance self-reported to MRO since 2007 have been determined to be minimal risk. This is slightly higher than the eighty-one percent of all noncompliance processed by MRO, regardless of discovery method, which was determined to be minimal risk. o Moderate and Serious Risk. Fifty-five percent of moderate and serious risk instances of noncompliance were self-identified by registered entities. 1 Burt, Richard. Assessing Risks in the MRO Region MRO 2015 Annual Report. 2 Self-Identified instances referenced in this report include instances reported to MRO by Self-Report, Self-Certification, and/or Self-Log. 4 Page Page 16 of 38

17 Update to the MRO CC, April 2018 o Risk Determinations. Since January 2015, risk determinations from registered entities (provided in Self-Reports as well as some Self-Certifications) have been in alignment with MRO staff Risk determinations eighty-four percent of the time. However, this alignment is less for moderate and serious risk violations, which occur much less frequently. II. Breakdown of all CIP vs. Non-CIP Possible Instances of Noncompliance by Year Discovered and Reported to NERC as of March 31, a. Noncompliance Statistics. XXX b. Noncompliance Trends Total Total Total Total Total Total Total Total Total Total Total Total Operations & Planning Standards CIP Standards CIP Standards Operations & Planning Standards Total P age Page 17 of 38

18 Update to the MRO CC, April 2018 c. Registered Entity Responsibility. MRO staff trends Self-Reports and registered entities acceptance of responsibility for noncompliance. Of all violations filed with regulatory authorities, registered entities have accepted responsibility for the noncompliances ninety-three percent of the time. This, combined with the percentages of Self-Identified noncompliances, points to a strong compliance commitment among registered entities in the region. Compliance culture, including accepting responsibility, is an important aspect in overall governance of effective compliance. MRO staff believes that the compliance culture is strong for registered entities in the MRO region and is demonstrated by the MRO entities willingness to accept, and learn from, discovered noncompliances in order to prevent future noncompliance. Self-Identified Noncompliance 100% 80% 60% 40% 20% 0% Since 2007, registered entities: i) accepted responsibility for approximately ninety-three percent of instances of noncompliance filed with NERC; ii) did not contest responsibility for six percent of cases; and iii) neither admitted nor denied responsibility with regard to noncompliance for one percent of cases. Registered Entity Acceptance of Responsibility (June 18, March 31, 2018) Registered Entity Acceptance of Responsibility (January 1, March 31, 2018) Accepts 93% 6% 1% Does Not Contest Neither Admits nor Denies 100% Accepts 6 P age Page 18 of 38

19 Update to the MRO CC, April 2018 d. Noncompliance Processing. The following charts show the status of noncompliance processing using the composition of processing methods, the average age of open noncompliances, and the closure percentage for each year. Together they indicate progress towards simpler, more expedited processing due to the increased use of CEs to process noncompliance, maintaining a low average age of open noncompliances, and the percentage of older violations that have been filed or dismissed. All Processing Method Percentagess (June 18, March 31, 2018) All Processing Method Percentages (January 1, March 31, 2018) 20% 11% 23% 19% 27% Compliance Exception Dismissed Find Fix Track Report Notice of Confirmed Violation Settlement Agreement 4% 9% 14% 73% Compliance Exception Dismissed Find Fix Track Report Notice of Confirmed Violation Average Aging for Noncompliance Reported to NERC and Currently in Process Number of Days January 31, 2018 February 28, 2018 March 31, P age Page 19 of 38

20 Update to the MRO CC, April 2018 Discovery and Processing Activity (Based on Discovery Date & Reported to NERC) # Year # Filed or % Filed/ Reported Discovered Dismissed Dismissed to NERC % % % % % % % % % % % % % Completed 12% In Process Compliance Exceptions (CEs). MRO processed 200 findings as CEs from July 1, 2014, the date on which CEs became eligible for filing, to March 31, 2018, (117- CIP and 83-Ops and Planning); of the 200 CEs, 145 were Self-Identified. For 2018, MRO processed 16 CEs (13-CIP and three Ops and Planning); of the 16 CEs, 14 were Self-Identified. Compliance Exceptions Processed (July 1, March 31, 2018) MRO Discovered 28 MRO Discovered 27 Self-Identified 89 Self-Identified 56 CIP Standards Operations & Planning Standards 8 P age Page 20 of 38

21 Update to the MRO CC, April 2018 III. Outreach / Training / Education a. Workshops/Training Seminars/Webinars/Outreach Completed. On May 22, 2018, MRO will host an Introduction to MRO Workshop at 11:30 a.m. at MRO s office in Saint Paul, Minnesota. This workshop will also be available via a live WebEx stream. The purpose of this workshop is to provide SPP RE registered entities, which upon FERC approval will soon be registered in MRO, with an overview of the organization, an update on transition efforts, an opportunity to meet MRO staff, and a tour of the MRO office. The workshop will be followed by an evening reception at 5:30 p.m. at the Hampton Inn and Suites. MRO is also hosting its Spring Reliability Conference at MRO s office in Saint Paul on May 23, This one-day conference is designed to promote bulk power system regional reliability through information and awareness of trending reliability risks. Technical staff, subject matter experts, and system engineers from entities in the MRO Region are welcome to attend this free conference in person or via WebEx. b. Workshops/Training Seminars/Webinars/Outreach Scheduled. The MRO SAC will continue 30-minute weekly threat calls for entities within the MRO region until the next SAC meeting on May 31, At that time, a determination will be made on whether to continue the calls going forward. The goal of this call is to create a venue for registered entities to share threat and risk information for cyber, physical and operational security, and to allow larger entities with mature threat hunting operations to share information with smaller entities. The calls so far have been well received, with about 30 participants joining each week. For questions, please contact the following individuals: Compliance Monitoring and Interim President: Sara Patrick at or at se.patrick@midwestreliability.org Risk Assessment and Mitigation: Richard Burt at or at rb.burt@midwestreliability.org Enforcement: Valerie Agnew at or vl.agnew@midwestreliability.org 9 P age Page 21 of 38

22 AGENDA 5 Enforcement Update b. Self-Log Template Jackson Evans, MRO Enforcement Attorney Jackson Evans will lead this discussion at the meeting. Page 22 of 38

23 AGENDA 6 Status of SPP RE Dissolution Sara Patrick, MRO Interim President and CEO Sara Patrick will lead this discussion at the meeting. Page 23 of 38

24 AGENDA 7 Organizational Group Reorganization Discussion Sara Patrick, MRO Interim President and CEO Sara Patrick will lead this discussion at the meeting. Page 24 of 38

25 AGENDA 8 PROS Internal Controls Training/Presentation Update Joe DePoorter, PROS Chair Joe DePoorter will lead this discussion at the meeting. Page 25 of 38

26 AGENDA 9 Root Cause Template/Guidance Terry Bilke, MRO CC Member Terry Bilke will lead this discussion at the meeting. Page 26 of 38

27 AGENDA 10 Reports a. First Quarter Letter to MRO Members April 15, 2018 Silvia Parada Mitchell NextEra Energy, Senior Director NERC Standards & Compliance and MRO Board Chair Sara Patrick MRO Interim President and CEO From the Board Chair Dear Members and Stakeholders: The Midwest Reliability Organization (MRO) Board of Directors held its first meeting of the year on April 5, 2018, at the MRO office in Saint Paul, Minnesota. At this meeting, we welcomed new board member Krista Tanner, Vice President of ITC Holdings and President of ITC Midwest. Tanner has several years of leadership experience in regulatory policy, operations, and financial performance, and we are looking forward to her participation on the board. We were also pleased to have NERC s Interim President and CEO Charlie Berardesco in attendance. Berardesco was responsible for leading the efforts for the NERC Board of Trustees to approve the realigned regional boundaries and transition 123 Southwest Power Pool Regional Entity (SPP RE) registered entities to MRO and SERC. It was very helpful to gain his insights on the transition and future initiatives for the ERO. This was my first meeting as board chair, and I am grateful for the support of previous chair Richard Doying, my vice chair Tom Kent, and fellow board members as I take on this role. In my opening remarks, I reflected on change, and how change is the only certainty we have in life. As such, we need to embrace it and thrive with the opportunities that change brings. Winston Churchill said that A pessimist sees the difficulty in every opportunity; an optimist sees the opportunity in every difficulty. As an optimist, I see the coming year as one full of opportunities for MRO. Page 27 of 38

28 With FERC s approval, we will soon welcome new members to the organization and to the MRO Board. I am looking forward to these changes and becoming one, larger region. While I believe the integration of new entities will be challenging, it provides us the opportunity to assess our existing processes, to see our work with fresh eyes, and to identify areas for improvement that will benefit us all. I am proud of the tremendous progress that MRO staff has made since the NERC Board approval in February, and am confident that MRO is well prepared to address future challenges. In the true spirit of collaboration, I look forward to continuing to work together towards a common ERO goal, listening to each other s views, and agreeing on a path we all will follow. From the Interim President and CEO The April board meeting was my first meeting as interim President and CEO. In my opening address, I shared with attendees how the seasonal change from winter to spring has an energizing effect on those of us in the upper Midwest. When I first began at MRO ten years ago, I experienced a similar transition. I was fortunate enough to be in a position to help shape regulatory oversight for newly-mandatory Reliability Standards this was an exciting and energizing time in my career. Now with the soon-to-be expanded MRO regional boundaries and the transition of 109 new entities, we at MRO are experiencing spring fever -type emotions, finding this change to be both invigorating and exciting! When Southwest Power Pool originally announced the dissolution of the SPP RE in July 2017, the anticipated deadline for transitioning oversight responsibilities to other Regional Entities was no later than December 31, As transition planning progressed, that deadline was moved up to July 1, In February, the NERC Board of Trustees approved the dissolution of SPP RE and the transfer of SPP RE registered entities to MRO and SERC through revised delegation agreements. NERC, MRO and SERC made a joint filing at FERC requesting an Order in early May with an effective date of July 1, Once approved by FERC, MRO s expanded region will include more than 220 registered entities and all or part of the states of Arkansas, Illinois, Iowa, Kansas, Louisiana, Michigan, Minnesota, Missouri, Montana, Nebraska, New Mexico, North Dakota, Oklahoma, South Dakota, Texas and Wisconsin, and the Canadian provinces of Manitoba and Saskatchewan. There is an incredible amount of work associated with an integration of this nature, and MRO is working closely with SPP RE, NERC and SERC to ensure a seamless transition for the affected entities. Because of the shortened timeframe, MRO began participating on SPP RE audits and in knowledge transfer sessions with SPP RE staff, and SPP RE has begun transferring historical compliance data. This work will continue through July 1, 2018, when MRO anticipates we will have oversight responsibilities of the expanded region. To accommodate the additional workload, MRO plans to add 12 new positions in 2018, one of which has already been filled by an SPP RE staff person. Two additional positions will be added in 2019, and later in the year we will reassess our resources and work demands. You might wonder what impact this additional work will have on MRO s 2018 budget. The Page 28 of 38

29 transition-related costs, which are estimated to be $1.5 million, are not included in the approved 2018 Business Plan and Budget and will not be assessed to MRO entities in MRO is working with NERC on how these costs will be recovered, with a number of viable options under consideration. The 2019 budget will see a reduction in assessments for all load-serving entities in the expanded footprint. I provided these transition details to attendees at the board meeting and also highlighted MRO s efforts related to stakeholder outreach, facilities, and other transition-related matters. Several good questions were raised during the meeting, for example how MRO plans to structure its committees to allow SPP RE entity participation. MRO wants to leverage the insight and experience of entities in the expanded region - this is very important to us and is a significant part of our work. The MRO Board and members recently approved revisions to MRO s bylaws that will add four new directors to the board: two independent and two regional directors, pending approval by the NERC Board of Trustees and by FERC, and conditioned on FERC s approval of the revised delegation agreement and the bylaws, These new directors will be nominated by the board and elected by all members, and the board will focus its nominations on adding representation from the SPP RE footprint. The board is also considering changes to MRO s organizational group structure this topic was discussed in depth at the board s executive session and will be on the agenda for the Introduction to MRO workshop planned for May 22, The workshop is shaping up to be a very informative and educational event! Agenda topics will include a transition status update, information on participating in MRO, an overview of MRO s event analysis and CMEP processes, and most importantly, the work our organizational groups do to address regional risk. For example, MRO s Security Advisory Council (SAC) recently implemented a weekly threat call for entities to share information about regional security threats. I am extremely proud of the entire MRO team and the progress made towards a successful integration of SPP RE entities in such a short period of time. So many staff members have demonstrated their devotion to our shared success, either through tackling their existing tasks with renewed vigor, knowing that more is headed our way, or taking on additional responsibilities to assist with the integration efforts. The feedback we have received so far from SPP RE registered entities has been overwhelming positive, which I attribute to the talent and skill of our staff and leadership team. I am grateful for the opportunity to lead MRO during this critical time, and for the support I ve received from the board, staff, and member entities. We are up to the challenge, and our future looks bright! First Quarter Board Meeting Action Items In addition to discussing important policy and operational matters, the board heard reports at the April 5 board meeting from each board and technical committee. As a result, the board took the following actions: Approved the consent agenda, which included: o Minutes from November 30, 2017 Annual Member and Board Meeting and Annual Board-Only Meeting Page 29 of 38

30 o New organizational group appointments o Revisions to the Protective Relay Subcommittee Charter o Security Advisory Council chair and vice chair appointments o A resolution ratifying the establishment of a Board Special Oversight Committee o MRO s revised Strategic Plan Approved revised independent director compensation for 2019 Accepted Baker Tilly s independent audit report of MRO s 2017 Financial Statements a. Additional information on these and other reports to the board can be found in the full draft meeting minutes, which will be available soon on MRO s website. MRO s next regularly scheduled board meeting is Thursday, June 21, 2018, in Saint Paul, Minnesota. MRO Board meetings are open to the public and the board encourages your attendance. Page 30 of 38

31 AGENDA 10 Reports b. NERC CCC Report Terry Bilke, MRO CC Member Date: April 25, 2018 To: From: Subject: Action: Mahmood Safi, MRO Compliance Committee Chair Terry Bilke, MISO NERC Compliance and Certification Committee Report Discussion Only The North American Electric Reliability Corporation (NERC) Compliance and Certification Committee (CCC) met at NERC s offices in Atlanta March 20-21, The complete meeting packages are posted on the CCC website. The following are the highlights: The CCC endorsed Jennifer Flandermeyer (KCPL) and Scott Tomashefsky (Northern California Power Agency) as prospective CCC chair and vice chair. The endorsement will be presented at the next NERC Board meeting. The CCC has openings in the following sectors: US Federal, Canada Federal, Large End User, Merchant Generator, and Cooperative. The CCC s ERO Monitoring Subcommittee (EROMS) is working on the 2018 ERO Enterprise Survey. About half the survey is questions from the CCC, asking for stakeholders perception of NERC and the Regions handling of compliance, while the remaining questions are provided by NERC and the Regions. The next survey is expected to be issued in August. Future surveys will be on a two-year cycle. The CCC s Organizational Registration and Certification Subcommittee (ORCS) is providing input on the NERC-led Panel process. Under this process, registered entities can request to be de-registered or to be subject to a reduced list of requirements (sub-set list) for compliance. Once an entity is granted either a de-registration or a reduced set of requirements for compliance, the ORCS is concerned with how the Regions will know if the entity s situation changes in the future and how future registration changes should be made. NERC is seeking comment on its Directly Connected Reference Document. The document is intended to clarify the role of the Distribution Provider. There was a webinar on March 22, 2018 and the document is posted on the NERC website (Organizational Registration page). Page 31 of 38

32 This is not a formal comment period, however NERC would like feedback. NERC is asking for comments as soon as possible but before mid-april. The CCC discussed proposed revisions to the CCC hearing procedure. Pursuant to the NERC Rules of Procedure 404.3, and 408, the CCC is the hearing body for appeals in cases where NERC is the Compliance Enforcement Authority (CEA). Most of the changes discussed are to align with NERC s hearing procedures. Given NERC will be the CEA for Southwest Power Pool for the next two years, there is increased likelihood the CCC would need to support a hearing. Proposed changes to the procedure will be posted for industry comment. The CCC will be asked to comment on NERC s revised Post Audit Survey given to all audited registered entities. It is expected the new survey will be used in the latter part of The CCC received an update on the NERC CMEP Technology Project, which is intended to better manage the Compliance Monitoring and Enforcement Program. According to the Business Case, the software should enable efficiencies and consistency among the Regions, as well as bring benefits to registered entities. However, how this would happen was not clear in the update. Most of NERC s update related to benefits to NERC and the Regions. The update did not provide a clear view of what will be delivered, how it would affect registered entities, and if the new software will bring benefits to registered entities. I requested that NERC share a high level plan outlining the timing and objectives of the project modules. More information on the CMEP software can be found on NERC s website. There still are various approaches among the Regions on internal control evaluations and how they fit into the CMEP. The CCC was asked to assist NERC on outreach in 2018 related to internal controls. In support of the NERC s compliance guidance effort, the CCC approved EnergySec as an entity preauthorized to submit compliance implementation guidance. NERC is retiring legacy compliance bulletins and compliance application notices (CANs). The CCC provided feedback on which of these documents still have value such that they can be converted to CMEP Practice Guides (auditor guidance). As the CCC s outgoing representative on the Reliability Issues Steering Committee (RISC), I provided an update on RISC activities: o The RISC updated its ERO Reliability Risk Priorities Report, which the NERC Board accepted on February 8, The majority of the risks remain the same, but recommendations were consolidated. Future reports will be on a 2-year cycle. o I am working with CCC members to provide comments on the RISC s proposed framework regarding Resilience. o At its February 2018 meeting, the NERC Board approved Patti Metro as the new CCC representative on the RISC. The next CCC meeting will be March 13-14, 2018 in Folsom, CA at California ISO s offices. Page 32 of 38

33 AGENDA 10 Reports c. Performance and Risk Oversight Subcommittee Joe DePoorter, PROS Chair To: Mahmood Safi, Chair MRO Compliance Committee From: Joseph DePoorter, Chair, MRO Performance and Risk Oversight Sub-committee (PROS) Date: April 25, 2018 RE: Performance Risk Oversight Subcommittee Report The PROS team has two open tasks at this time. The first task is to jointly write a Midwest ReliabilityMatters article with the Chair of the Compliance Committee presenting an overview of the PROS to all (new) MRO members. I have forwarded my portion of the joint article to the Chair of the Compliance Committee. Our second task, based on the 2017 CMEP member survey, is to design and develop additional Internal Control training. Our second task is currently be worked on by the PROS. Currently the PROS link is: where anyone can review our past projects approved by the MRO management. Currently all 12 authorized positions are filled with MRO members. The PROS looks forward to the challenges that await the PROS team in The PROS look forward to this future endeavor. /S/ Joseph DePoorter Page 33 of 38

34 AGENDA 10 Reports d. Mid-Continent Compliance Forum Mark Buchholz, MCCF Member To: Mahmood Safi, Chair MRO Compliance Committee From: Mark Buchholz, MRO CC Member, MCCF Member Date: April 25, 2018 RE: MCCF Steering Committee Report The Mid-Continent Compliance Forum (MCCF) provides Registered Entities in the MRO footprint of the Eastern Interconnection a venue to share knowledge, lessons learned and best practices regarding compliance matters. The MCCF Steering Committee is established to coordinate MCCF meetings, develop meetings agendas, and communicate on compliance matters and actions by MCCF members. MCCF Steering Committee meets monthly via conference call or WebEx. Since the last MRO Committee Meeting, the MCCF Steering Committee met on February 7, 2018, March 7, 2018, and April 11, Meeting topics included review of the MCCF Charter and planning for the Spring MCCF Forum Meeting to be held on May 22, 2018 at the Embassy Suites Bloomington. Mahmood Safi provided an overview of the MCCF and the MRO Compliance Committee to attendees of the SPP RCWG Meeting held in Little Rock, AR on March 29, Discussion within the MCCF continues regarding SPP RE members transferring to the MRO Region. Respectfully Submitted, Mark E. Buchholz Western Area Power Administration Page 34 of 38

35 AGENDA 10 Reports e. SPP Reliability Compliance Workgroup Report Mark Buchholz, SPP-RCWG Member To: Mahmood Safi, Chair MRO Compliance Committee From: Mark Buchholz, MRO CC Member, SPP-RCWG Member Date: April 25, 2018 RE: SPP Reliability Compliance Workgroup Report The SPP Reliability Compliance Workgroup (RCWG) provides guidance on policy issues to the SPP RTO on reliability compliance activities of federal or regional regulators, or committees. It also provides expertise to other SPP Working Groups on membership issues related to regional compliance matters specific to execution, interpretation or implementation of federal or regional regulatory requirements. The RCWG provides a stakeholder forum to encourage membership discussion of regional compliance issues and provide a means to communicate collectively membership concerns or issues with SPP RTO Compliance staff on matters of NERC Reliability Standards Compliance. The SPP RCWG last met on March 12, 2018 via WebEx and March 29, 2018 at SPP Headquarters in Little Rock, AR. Topics included: Revisions to the SPP Market Protocols regarding the generation interconnection process (RR267). Revisions to the SPP Planning Criteria (RR237). RCWG will be working with the SPP Transmission Working to further review language in the revision request. Concerns on the RR included: Use of terms not being consistent when referring to NERC terms and SPP Tariff terms, and references to NERC Reliability Standards within the document Engineering Planning Data Request Update to the RCWG on the Phasor Measurement Unit (PMU) project per a standing action item from the RCWG. The update included a summary of the Ops Log reports, status of RR162, and Shift Engineer training. Page 35 of 38

36 Update to the RCWG on the Standards Efficiency Review (SER) project at NERC. It was discussed that the sub teams at NERC had three categories (buckets) the revisions could fall under, with the end goal being SARs presented to the Standards Committee in July The three categories include: No reliability risk and can be retired Is a reliability risk and needs work on the language. Is a reliability risk and needs other options to resolve. (Certification program might be a potential solution) (Operator certification) (Section 1600 data request) (RTO criteria, protocols could cover) The next SER face-to-face meeting, is planned to be in Kansas City, MO at the end of May. SPP Spring RE Workshop and RCWG Meeting was held March 27-29, 2018 at SPP Corporate Offices in Little Rock, AR. Mahmood Safi provided an overview of the MCCF and the MRO Compliance Committee to attendees of the SPP RCWG Meeting held in Little Rock, AR on March 29, Respectfully Submitted, Mark E. Buchholz Western Area Power Administration Page 36 of 38

37 AGENDA 11 Other Business Page 37 of 38

38 AGENDA 13 Adjourn Page 38 of 38