Agenda Standards Oversight and Technology Committee May 8, 2013 | 11:00 a.m.-Noon Eastern Sheraton Boston Hotel 39 Dalton Street Boston, MA 02199 617-236-2000 Introductions and Chair’s Remarks NERC Antitrust Compliance Guidelines Agenda

1. Minutes* — Approve

a. February 6, 2013 Meeting

2. Update of Key Projects* — Review

a. 2013 Planned Results in Follow-Up to Paragraph 81

b. Operating Personnel Communications Protocols – COM-003-1

c. Adequate Level of Reliability (ALR) Definition

d. Independent Standards Review Panel Evaluation Criteria

e. Informal Standard Development: Approach and Status

3. Reliability Standards Status Report (including Standards Committee Report)* — Review

4. ERO Enterprise Application and Infrastructure Strategy Update* —Review *Background materials included.

Antitrust Compliance Guidelines I. General It is NERC’s policy and practice to obey the antitrust laws and to avoid all conduct that unreasonably restrains competition. This policy requires the avoidance of any conduct that violates, or that might appear to violate, the antitrust laws. Among other things, the antitrust laws forbid any agreement between or among competitors regarding prices, availability of service, product design, terms of sale, division of markets, allocation of customers or any other activity that unreasonably restrains competition. It is the responsibility of every NERC participant and employee who may in any way affect NERC’s compliance with the antitrust laws to carry out this commitment. Antitrust laws are complex and subject to court interpretation that can vary over time and from one court to another. The purpose of these guidelines is to alert NERC participants and employees to potential antitrust problems and to set forth policies to be followed with respect to activities that may involve antitrust considerations. In some instances, the NERC policy contained in these guidelines is stricter than the applicable antitrust laws. Any NERC participant or employee who is uncertain about the legal ramifications of a particular course of conduct or who has doubts or concerns about whether NERC’s antitrust compliance policy is implicated in any situation should consult NERC’s General Counsel immediately. II. Prohibited Activities Participants in NERC activities (including those of its committees and subgroups) should refrain from the following when acting in their capacity as participants in NERC activities (e.g., at NERC meetings, conference calls and in informal discussions):

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

• Discussions of a participant’s marketing strategies.

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

• Discussions concerning the exclusion of competitors from markets.

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

NERC Antitrust Compliance Guidelines 2

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

III. Activities That Are Permitted From time to time decisions or actions of NERC (including those of its committees and subgroups) may have a negative impact on particular entities and thus in that sense adversely impact competition. Decisions and actions by NERC (including its committees and subgroups) should only be undertaken for the purpose of promoting and maintaining the reliability and adequacy of the bulk power system. If you do not have a legitimate purpose consistent with this objective for discussing a matter, please refrain from discussing the matter during NERC meetings and in other NERC-related communications. You should also ensure that NERC procedures, including those set forth in NERC’s Certificate of Incorporation, Bylaws, and Rules of Procedure are followed in conducting NERC business. In addition, all discussions in NERC meetings and other NERC-related communications should be within the scope of the mandate for or assignment to the particular NERC committee or subgroup, as well as within the scope of the published agenda for the meeting. No decisions should be made nor any actions taken in NERC activities for the purpose of giving an industry participant or group of participants a competitive advantage over other participants. In particular, decisions with respect to setting, revising, or assessing compliance with NERC reliability standards should not be influenced by anti-competitive motivations. Subject to the foregoing restrictions, participants in NERC activities may discuss:

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

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

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

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

Draft Minutes Standards Oversight and Technology Committee February 6, 2013 | 9:00 a.m. local time Hotel del Coronado 1500 Orange Avenue Coronado, CA 92118 800-468-3533 Chair Ken Peterson convened a duly noticed open meeting of the Standards Oversight and Technology Committee (the Committee) of the North American Electric Reliability Corporation on February 6, 2013 at 9:00 a.m. local time, and a quorum was declared present. The agenda is attached as Exhibit A. Present at the meeting were: All Committee members, being Ken Peterson, Chair, David Goulding, Paul Barber, Tom Berry, Bruce Scherr and John Q. Anderson; Board members Fred Gorbet, Jan Schori, Janice Case, Roy Thilly, and Gerry Cauley; and NERC staff members Michael Walker, Mark Lauby, Marvin Santerfeit, Charlie Berardesco, Holly Hawkins, Laura Hussey, and Tina Buzzard. A listing of industry attendees is attached as Exhibit B. NERC Antitrust Compliance Guidelines Mr. Peterson directed the participants’ attention to the NERC Antitrust Compliance Guidelines. Minutes The Committee approved the November 6, 2012 meeting minutes as presented at the meeting. Standards Oversight and Technology Committee Self-Assessment Results Mr. Peterson reviewed the Committee’s self-assessment results for 2012, noting the Committee self-assessments were positive overall, and that areas of improvement would be a focus in the coming year. Reliability Standards Status Report Mr. Lauby provided an overview of the status of the Standards Process Reform program, which encompasses work completed on the Standards Committee Strategic Plan, Work Plan and Charter, and Standard Processes Manual, all in response to the recommendations of the Standards Process Improvement Group and the resolutions adopted by the NERC Board of Trustees in November 2012, and are to be presented for approval as part of the Board of Trustees February 7 meeting agenda. Mr. Lauby concluded his report by introducing and welcoming the newly elected Chair and Vice Chair of the Standards Committee, Brian Murphy and Scott Miller, respectively. Ms. Hawkins and Ms. Hussey provided an overview of the high priority projects, including status updates on COM-003-1 Operating Personnel Communications Protocols, TPL Table 1, Footnote b, and Paragraph 81.

Standards Oversight and Technology Committee Draft Minutes – February 6, 2013

Standards Committee Report Mr. Mosher’s report provided a review of the accomplishments by the Standards Committee in 2012, most notably the Bulk Electric System Definition approval by FERC, CIP v5 standards approval by the Board and filing with FERC, and the completion and approval of the first results-based standard. Mr. Peterson acknowledged the accomplishments and offered, on behalf of the Committee, his appreciation to Mr. Mosher on his leadership. Messrs. Murphy and Miller also offered appreciation to Mr. Mosher for his leadership, and acknowledged the signification work ahead necessary to complete the items addressed in the Standards Process Reform as presented earlier in the meeting. NERC Technology Update Mr. Santerfeit presented highlights from his Information Technology report as contained in the Agenda package, specifically addressing the approval by the ERO Executive Management Group in advancing three enterprise applications: Bulk Electric System, Event Information Data System (EIDS), and the Reliability Assessment Database System (RADS). In addition, he updated the Committee on the status of NERC’s new website, stating work is progressing and the go live date is scheduled for April 15, 2013. There being no further business, upon motion duly made and seconded, the meeting was adjourned at 10:15 a.m. local time. Submitted by,

Charles A. Berardesco Secretary

Agenda Item 2a SOTC Meeting May 8, 2013

2013 Planned Results in Follow-Up to Paragraph 81

Action None Background At the February 2013 Member Representatives Committee (MRC) meeting, NERC staff committed to provide quarterly reports on progress in retiring or modifying requirements that do not contribute significantly to reliability. Staff further committed to provide a baseline set of data on the number of requirements in NERC Reliability Standards to facilitate discussions and understanding of future progress in implementing Paragraph 811

.

Establishing a Baseline Table 1 includes baseline data intended to serve as a reference point against which progress in implementing Paragraph 81, as well as NERC’s broader goal of developing a concise set of high-quality standards, may be evaluated. Included in Table 1 are reference points for continent-wide and regional standards, as well as interpretations and errata of those standards.2

Table 1: Numbers of Standards and Requirements Enforceable in the United States 2007- 2013

Date Requirements

Became Enforceable

Number of Standards

that Became

Enforceable During Year

Number of Requirements that Became Enforceable During Year

Number of

Standards Retired During

Year

Number of Requirements

Retired During Year

Number of Standards

Enforceable at Year End

Number of Requirements Enforceable at Year End

2007 91 352 0 0 91 352 2008 19 90 9 39 101 403 2009 28 166 26 157 103 412 2010 26 125 24 111 105 426 2011 44 244 34 180 115 490 2012 14 108 13 85 116 518

2013 (through second

quarter) 2 14 1 2 117 525 The table provides the number of continent-wide and regional standards and requirements that:

• Became enforceable in the U.S. from 2007 through the second quarter of 2013

• Were retired in the U.S. during each year

• Were enforceable in the U.S. on December 31 of each year (except 2013, which is calculated through the second quarter)

1 Paragraph 81 refers to the Federal Energy Regulatory Commission’s (FERC) March 2012 Order on Find, Fix, and Track. In that paragraph, FERC

indicated a willingness to consider proposals to retire requirements that do not contribute significantly to reliability. 2 An interpretation or errata of a standard is included in these data as an entirely new version of a standard. For example, an interpretation of a

standard containing four requirements, when it either becomes enforceable or is retired, counts as one standard and four requirements in the appropriate column.

Measuring Future Progress During Phase 1 of Paragraph 81, an industry-wide collaborative effort was launched to identify candidate requirements that did not contribute significantly to reliability and should be considered for retirement or modification. This effort resulted in the identification of 297 requirements in 131 standards. A number of these were proposed for retirement in Phase 1, which was adopted by the Board at its February 2013 meeting, including all or parts of 21 requirements (34 requirements and sub-requirements) in 19 standards. Of the remaining 276 requirements for review, 58 requirements in 20 standards are no longer subject to enforcement as the standards have been retired. The remaining 218 requirements have been assigned for consideration by drafting teams in projects that are active in 2013.

Agenda Item 2b SOTC Meeting May 8, 2013

Operating Personnel Communications Protocols – COM-003-1

Action None Background The NERC Board of Trustees (Board), during its February 9, 2012 meeting, was presented with an Interpretation of the word “directive” as it is used in COM-002-2 Requirement R2. After considerable discussion, the Board expressed concern about a potential gap in critical communications between entities. To address this concern, the Board resolved the following:

RESOLVED, that the Board approves the proposed Interpretation of COM-002-2 and directs that it be filed with Electric Reliability Organization (ERO) governmental authorities; FURTHER RESOLVED, that the Board directs the Standards Committee to complete developmental activities on proposed Reliability Standard COM-003 on a high priority basis; and FURTHER RESOLVED, that the Board directs that NERC management, working with stakeholders, prepare a memorandum describing best communications practices, including appropriate use of three-step communications, to be sent to registered entities promptly.

Summary Pertinent FERC Order 693 Directives Paragraph 540 While the Commission identified concerns regarding COM-002-2, the proposed reliability standard serves an important purpose by requiring users, owners and operators to implement the necessary communications and coordination among entities. Accordingly, the Commission approves Reliability Standard COM-002-2 as mandatory and enforceable. In addition, pursuant to section 215(d)(5) of the FPA and § 39.5(f) of our regulations, the Commission directs the ERO to develop a modification to COM-002-2 through the Reliability Standards development process that: (1) expands the applicability to include distribution providers as applicable entities; (2) includes a new Requirement for the reliability coordinator to assess and approve actions that have impacts beyond the area view of a transmission operator or balancing authority and (3) requires tightened communications protocols, especially for communications during alerts and emergencies. Alternatively, with respect to this final issue, the ERO may develop a new Reliability Standard that responds to Blackout Report Recommendation No. 26 in the manner described above.

Finally, we direct the ERO to include APPA’s suggestions to complete the Measures and Levels of Non-Compliance in its modification of COM-002-2 through the Reliability Standards development process. (emphasis added)

Discussion The COM-003-1 standard, which is the draft standard that is intended to respond to the directives in Paragraph 540, was posted five times for comment and ballot. In late 2012 it was not clear whether the path of development would result in a standard that was acceptable to stakeholders and met the outstanding FERC directives. After careful consideration of available options and in consultation with the Standards Committee, NERC staff convened a conference on February 14-15, 2013 with the drafting team and industry to discuss comments, develop solutions, and build industry consensus. The meeting included presentations on: (1) the issues identified by industry comments; (2) the FERC directives; and (3) the August 2003 Blackout report recommendations. At the meeting a course of action for COM-003-1 was developed which was supported by the participants and the drafting team. The resulting standard was posted for industry comment from March 27 to April 8, 2013 with a ballot held during the last 10 days of this period. The standard received a 57.50 percent affirmative vote, thereby not achieving industry approval. The standards drafting team will enhance the draft standard based on comments received from the last posting, reach out to industry to ensure that their comments are addressed and post the standard for another successive ballot.

Agenda Item 2c SOTC Meeting May 8, 2013

Adequate Level of Reliability (ALR) Definition

Action Review the following documents provided to the Board of Trustees (Board) for approval:

• Definition of Adequate Level of Reliability:

[Clean] [Redline to Version Last Presented to the MRC]

• Technical Report Supporting Definition of Adequate Level of Reliability:

[Clean] [Redline to Version Last Presented to the MRC] Summary The definition developed by the Adequate Level of Reliability Task Force (ALRTF) identifies and defines reliability performance objectives that drive the activities of system planners and operators to ensure that the Bulk Electric System (BES) is reliable. Further, the enhanced definition outlines reliability assessment objectives that identify risks to system reliability. When the proposed ALR definition and supporting technical report are filed with FERC for information, they will replace the existing ALR definition filed for information on May 5, 2008. Background The ALRTF was formed in May 2011 under the auspices of the Standing Committees Coordination Group (SCCG) to address concerns expressed by the Board of Trustees (Board), the Member Representatives Committee (MRC), and stakeholders about NERC’s current definition of ALR.1 An MRC task force provided policy input to guide the ALRTF in the development of a white paper on cost/benefit, load loss, and the definition of Cascading.2

The ALRTF’s goal3

1. Steady State

was to develop a definition of ALR that encompasses NERC’s responsibility to ensure reliable planning and operation of the BES, along with the obligation to assess the capability of the BES. The revised definition includes detail that incorporates performance or assessment outcomes in four different time periods:

2. Transient

3. Operations Response

4. Recovery and System Restoration Most recently, the supporting technical report was revised to address concerns identified during the November 2012 MRC and Board meetings focused on the handling of the process by which the industry and regulators may reach consensus on the need to mitigate high-impact, low-frequency events. Edits made in response to these concerns are indicated in the posted redline version of the supporting technical report. The ALRTF also made minor clarifying

1 NERC’s current definition of Adequate Level of Reliability is available at:

http://www.nerc.com/docs/standards/Adequate_Level_of_Reliability_Defintion_05052008.pdf. 2 http://www.nerc.com/docs/standards/AgendaItem_13-attach-1.pdf. 3 Draft scope at http://www.nerc.com/docs/standards/Attachment%202_ALR%20TF_DRAFT_Scope%20-V5_Clean.pdf.

changes to the ALR definition from the version last presented to the MRC, and the SCCG supported moving forward with both the definition and the supporting technical report during its April 3, 2013 conference call. NERC management supports this revised definition. Additional Information A link to the project history and files, including responses to stakeholder comments from two stakeholder comment periods and a document with final remarks from the ALRTF, is included here for reference: Adequate Level of Reliability Task Force Project Page.

Agenda Item 2d SOTC Meeting May 8, 2013

Independent Standards Review Panel Evaluation Criteria

Action None

Background The 2013-2015 Reliability Standards Development Plan set forth an aggressive plan to accomplish NERC obligations that include conducting five-year reviews, completing existing projects and resolving FERC directives. Completion of this work paves the way for the next step in transforming the current set of NERC Reliability Standards to a sustainable, stable body of standards. An Independent Standards Review Panel, which is a panel of industry experts conducting an independent review of the NERC Reliability Standards and their requirements, is laying the foundation for development of a roadmap to steady-state, which will be outlined in the 2014-2016 Reliability Standards Development Plan. The project is being conducted by a small group of five industry experts (i.e., the Independent Standards Review Panel) that NERC has contracted to analyze and evaluate each of the requirements in its reliability standards for both content and quality. Their findings will identify where further modifications should be made to transform the current body of reliability standards to results-based requirements that directly affect reliability. Evaluation Flow Diagram The Independent Standards Review Panel’s evaluation flow diagram (attached) provides an overview of how the Panel is assessing each requirement. As shown, their evaluation begins with an initial determination of whether a requirement should be eliminated because it:

• Does not support a Reliability Principle1

• Meets the Paragraph 81 criteria, or

• Is better suited as a guideline Requirements that pass these tests are evaluated for content and quality. The Panel identified three criteria for content and twelve criteria for quality, which were derived from the Ten Benchmarks for an Excellent Reliability Standard2

, as follows:

Content

1. Is the content technically correct?

a. Including identifying who does what and when?

2. Are the correct functional entities identified?

3. Are the appropriate (results-based) actions for which there should be accountability included or is there a gap?

1 Located at http://www.nerc.com/files/Reliability_Principles.pdf 2 Located at http://www.nerc.com/files/10_Benchmarks_of_Excellent_Reliability_Standards.pdf

Quality

1. Should the requirement stand alone as is or should it be consolidated with other standards?

2. Is it drafted as a Results-Based Standard (RBS) requirement (performance, risk (prevention) or capability)?

a. Including whether the format follows the RBS format (e.g., sub-requirement structure)?

3. Is it technologically neutral?

4. Are the expectations for each function clear?

5. Does the requirement align with the purpose?

6. Is it a higher solution than the lowest common denominator?

7. Is it measureable?

8. Does it have a technical basis in engineering and operations?

9. Is it complete and self-contained?

10. Is the language clear and does not contain ambiguous or outdated terms?

11. Can it be practically implemented?

12. Does it use consistent terminology? Each requirement or sub-requirement is given a score of zero to three for content and zero to 12 for quality, with zero being the lowest score. Finally, each requirement is evaluated for risk to reliability, considering the prioritization developed by the Reliability Issues Steering Committee (RISC) Recommendations on ERO Priorities,3

the associated risk to reliability addressed by each requirement, and the Panel’s experience.

The Independent Standards Review Panel has developed an approach to score or grade the composite quality and content ratings. The current approach is based on plotting of the two scores, with an overlay risk to reliability. Scores will be plotted using content on the X-axis and quality on the Y-axis. Standards or requirements that fall into the upper right section (appropriate, results-based content, and high quality) will be considered “steady-state” with other portions of the chart indicating opportunities for improving the standard or requirement. Any requirement with a score of “0” in either content or quality would receive a one-star rating. The overlay of risk into each of the standards will provide an overall indication of prioritization for modification. This analysis and corresponding chart is under development by the Independent Standards Review Panel. On the table below entitled “Example of Grading” a one-star rating indicates the lowest score and the highest rating is five stars, which indicates that a standard or requirement has reached steady-state. Risk will be indicated by applying a color code to the standard or requirement indicating the level of impact to bulk-power system reliability (high, medium or low).

3 http://www.nerc.com/docs/risc/12-RISC%20Recommendation_Final_20130118_1213.pdf

Example of Grading Preliminary and subject to change

Quality 12

8 - 11

4 - 7

0 - 3

0 1 2 3

Content

The Independent Standards Review Panel has also developed an evaluation method4

which has been reviewed and endorsed by the Standards Committee. Separate from providing an evaluation for each requirement, the Independent Standards Review Panel will provide recommendations for consolidation to create a concise body of reliability standards and will offer other general observations on the NERC Reliability Standards based on its review and assessment.

4 See http://www.nerc.com/docs/standards/sc/SC_Action_without_a_meeting_040313_package.pdf

* ** *** ***** * ** *** **** * ** ** *** * * * *

Agenda Item 2e SOTC Meeting May 8, 2013

Informal Standard Development: Approach and Status

Action None

Background One of the enhancements recommended by the Standards Process Improvement Group (SPIG) was to obtain more industry consensus prior to a standard project entering the formal Reliability Standard development process. Further, the Standards Committee’s (SC’s) Charter, and the recently enhanced Standard Processes Manual (SPM) enumerates one of the SC’s duties as: “Establishes and facilitates the informal and formal collaborative consensus building processes with stakeholder groups and NERC standing, technical and regional committees throughout all stages of Reliability Standards development.” In this context, the current application of informal standards development is to understand industry considerations that are vital to support approval of a final standard. The 2013-2015 Reliability Standards Development Plan (RSDP) set forth a work plan to resolve current obligations (i.e., resolve FERC directives, conduct five-year reviews, complete ongoing projects). To expedite completion and reduce industry burden in the formal development of these standard enhancements, informal development approaches are being used. This includes industry communication to build consensus and understanding before a project enters formal development – conducting early outreach to determine what the issues are and possible ways to resolve them. These activities provide opportunities for consensus building accomplished through conversation and information sharing, rather than through the balloting process. These informal development efforts can support the transition to a formal standard development project, which includes the formal comment and ballot processes. With early engagement, communications, and outreach among industry professionals, the breadth of issues requiring significant comment and resolution during the formal development stage are anticipated to be reduced, resulting in faster consensus during balloting, saving significant industry time and reducing the long-term need for industry resources. There are currently five informal development efforts ongoing:

• MOD A: (ATC, TTC, CBM)

MOD-001, MOD-004, MOD-008, MOD-028, MOD-029 and MOD-030 –Ryan Stewart

• MOD B: (modeling data)

MOD-010 through MOD-015 – Steve Noess

• MOD C: (demand data)

MOD-016 through MOD-021 – Darrel Richardson

• PER: (Training)

PER-002 and PER-005 – Jordan Mallory

• VAR: (Reactive Resources)

VAR-001 and VAR-002 – Soo Jin Kim The results from the standards informal development projects will be presented to the SC later this spring. Participation in the informal development process is encouraged and appreciated.

NERC | Report Title | Report Date 1 of 9

Re lia b ilit y St a n d a rd s Standards Oversight and Technology Committee Quarterly Status Report

May 8, 2013

3353 Peachtree Road NE Suite 600, North Tower

Atlanta, GA 30326 404-446-2560 | www.nerc.com

NERC | Report Title | Report Date 2 of 9

Table of Contents

Table of Contents ......................................................................................................................................................................... 2

2012 Board Resolution and SPIG Recommendations Response .................................................................................................. 3

Addressing the SPIG Recommendations .................................................................................................................................. 3

Addressing the Board‘s November 2012 Resolution ............................................................................................................... 3

Standards Development Forecast (Continent-wide) ................................................................................................................... 4

Board Forecast For Standard Projects in Active Development ................................................................................................ 4

May 2013 ............................................................................................................................................................................. 4

August 2013 ......................................................................................................................................................................... 4

November 2013 ................................................................................................................................................................... 4

2013 Work Plan Status: Quarterly Summary Spreadsheet .......................................................................................................... 5

Regulatory Directives — Update ................................................................................................................................................. 6

Summary of Directives ............................................................................................................................................................. 6

Standards Committee Report ...................................................................................................................................................... 8

2013-2015 Work Plan Tasks ..................................................................................................................................................... 8

New Standards Committee Members ..................................................................................................................................... 9

Additional Standards Committee Activities ............................................................................................................................. 9

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2012 Board Resolution and SPIG Recommendations Response The Standards Committee (SC) and NERC Standards staff are addressing the November 2012 Board of Trustees’ (Board) Resolutions as well as completing the implementation of Recommendations 1, 4, and 5 of the Member Representatives Committee’s (MRC) Standards Process Input Group (SPIG).

Addressing the SPIG Recommendations Proposed revisions to NERC’s standards development processes were developed in response to recommendations made to the Board by the MRC’s SPIG in May 2012, specifically Recommendations 1, 4, and 5. The revisions to the Standard Processes Manual (SPM) were approved by the Board in February 2013 and filed with the Federal Energy Regulatory Commission (FERC or Commission) for approval on February 28, 2013.

Addressing the Board‘s November 2012 Resolution To address the Board’s November 2012 resolution, which called for improvements to the Reliability Standards development process, the SC developed a five-year strategic plan and work plan, as well as developed modifications to its charter. The strategic plan aligns the SC work with the electric reliability organization’s (ERO’s) strategic direction, while the work plan includes specific actions, tasks, milestones, and committee structure for executing the plan. Based on these documents, the SC made revisions to enhance its charter. The Board approved the strategic plan, work plan, and charter in February 2013. These documents set forth reforms and an aggressive schedule to enhance and transform the current set of NERC Reliability Standards into high quality, technically sound and clear reliability standards, applying results-based and Paragraph 81 (P81) concepts.

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Standards Development Forecast (Continent-wide)

Board Forecast for Standard Projects in Active Development1

May 2013

• Project 2007-09 Generator Verification – PRC-024-1

• Project 2012-08.1 Phase 1 of Glossary Updates: Statutory Definitions

• Other: Adequate Level of Reliability (ALR) Definition

• Other: FAC-003-2 R2 Revised Violation Risk Factor August 2013

• Project 2007-02 Operating Personnel Communications Protocols - COM-0032

• Project 2010-13.2 Phase 2 of Relay Loadability: Generation

• Project 2010-14.1 Phase 1 of Balancing Authority Reliability-Based Controls: Reserves3

• Project 2007-06 System Protection Coordination – PRC-027

4

• Project 2010-05.1 Phase 1 of Protection Systems: Misoperations

5

• Project 2012-INT-04 Interpretation of CIP-007 for ITC

• Project 2012-INT-06 Interpretation of CIP-003 for Consumer’s Energy November 2013

• 2014-2016 Reliability Standards Development Plan

• Projects currently in informal development

MOD A (MOD-001, MOD-004, MOD-028, MOD-029, MOD-030): Available Transfer Capability, Total Transfer Capabilities, and Capacity Benefit Margin

MOD B (MOD-010, MOD-011, MOD-012, MOD-013, MOD-014, MOD-015): Modeling Data

MOD C (MOD-016, MOD-017, MOD-018, MOD-019, MOD-020, MOD-021): Demand Data

VAR (VAR-001, VAR-002): Reactive Resources

PER (PER-002, PER-005): Training

• Revised INT standards

1 Note that the 2013-2015 Reliability Standards Development Plan calls for a number of projects to be initiated in early 2013, and other projects that have

been in informal development to be ramped up. Those projects are not included in this forecast. Please refer to the tables for the Outstanding Directives, Five-Year Reviews, and Projects Teams in Addendum 1 to this document for initial projections for each of those work areas.

2 Rescheduled to the August Board meeting to address comments received during the formal comment period and successive ballot that ended on April 8, 2013 with a 57.50 percent approval rating.

3 Rescheduled to the August Board meeting, due to industry rejection of proposed standard BAL-012-1. The drafting team refocused its efforts on the use of modifications to BAL-001 and BAL-002 to meet the reliability objectives of the project.

4 Rescheduled to the August Board meeting to address comments received during the formal comment period and successive ballot that ended on December 17, 2012 with a 33.23 percent approval rating.

5 Rescheduled to the August Board meeting to address comments received during the formal comment period and successive ballot that ended on February 20, 2013 with a 50.66 percent approval rating.

NERC | Report Title | Report Date 5 of 9

2013 Work Plan Status: Quarterly Summary Spreadsheet The 2013-2015 RSDP was developed by NERC staff working with select SC members, and was approved by the full SC and Board in December 2012. For 2013, the RSDP sets out an aggressive plan to address three major work areas (current projects and emerging issues, outstanding directives, and five-year reviews). Together, these work areas will achieve the goal of transforming the current body of standards to a stable body of world-class standards.

NERC staff and the Project Management and Oversight Subcommittee have worked together to develop a quarterly spreadsheet that provides the planned projects for 2013-2014 and the projected and actual status of each project with color codes indicating if a project is delayed. Further, an indication of the number of directives and industry recommended P81 requirements is also provided. The spreadsheet is being used as an enhanced project management tool and is posted on the NERC website.

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Regulatory Directives — Update

Summary of Directives At year end 2012, there were 191 directives to be resolved. In Q1 2013, nine directives were filed with FERC. Of these:

• There are 126 directives assigned to current projects

• Forty-six directives have been approved by the Board and are pending regulatory filing

• There are 23 directives that are not yet assigned to a current project and are under review.

Activity/Project Deliverable # of Directives # of Guidance

Directives Projects

MOD A-ATC/TTC/CBM-Project 2012-05 ATC Revisions Order 729

MOD-001, MOD-004, MOD-028, MOD-029, MOD-030 17 3

MOD B- Project 2010-03 Modeling Data MOD-010, MOD-011, MOD-012, MOD-013, MOD-014, MOD-015 16 1

MOD C-Project 2010-04 Demand Data MOD-016, MOD-017, MOD-018, MOD-019, MOD-020, MOD-021 10 4

PER Directives-Project 2010-01 Support Personnel Training PER-002, PER-005 4 3

NERC Glossary-Project 2012-08 Definitions - phase I (3 definitions)

Add statutory definitions of Bulk Power System, Reliable Operation, and Reliability Standard to NERC Glossary 3 0

NERC Glossary-Project 2012-08 Definitions - phase II (2 definitions) 2 0

VAR Directives- Project 2008-01 VAR-001, VAR-002 6 5

Sub-total 58 16

Five-Year Review Projects

Project 2007-09 Generator Verification MOD-024, MOD-025, MOD-026, MOD-027, PRC-019, PRC-024 4 2

Project 2008-12 Coordinate Interchange Standards

INT-001-3, INT-003-3, INT-004-2, INT-005-3 INT-006-3, INT-007-1, INT-008-3, INT-009-1, INT-010-1 2 8

Project 2009-02 Real-time Reliability Monitoring and Analysis Capabilities New Standards 2 0

Project 2009-03 Emergency Operations

EOP-001-2b, EOP-002-3, EOP-003-1, EOP-004-2 (P81, RBS), EOP-005-2 (P81, RBS), EOP-006-2 (RBS), EOP-008-1 (RBS), EOP-009-1, IRO-001-5 3 1

Project 2010-02 Connecting new facilities to the grid 1 1

Sub-total 12 12

Projects and Emerging Issues Projects Project 2007-02 Operating Personnel Communication Protocols COM-003 2 1

BARC Directives and Issues-Project 2010-14.1 Balancing Authority Reliability-based Controls BAL-001, BAL-002, BAL-013 4 0

Project 2007-06 System Protection Coordination PRC-001, PRC-027 1 0

Project 2007-11 Disturbance Monitoring PRC-002, PRC-018 0 1 Project 2007-17.2 Protection System Maintenance and Testing PRC-005 1 0

Project 2008-02 Undervoltage Load Shedding PRC-010, PRC-022 1 1

NERC | Report Title | Report Date 7 of 9

Activity/Project Deliverable # of Directives # of Guidance Project 2010-05.1 Phase 1 of Protection Systems: Misoperations PRC-003, PRC-004 0 2

Project 2010-13.2 Generator Relay Loadability PRC-025 0 1 Project 2010-14.2 Phase 2 of Balancing Authority Reliability-based Control; Time Error, AGC, and Inadvertent BAL-004, BAL-005-0.1b, BAL-006-2 7 6

Sub-total 16 12

Projects pending regulatory filing

46 Directives not assigned to one of the above projects 23

Sub-total 69 0

Total: 155 40

In 2013, one of NERC’s strategic goals calls for resolution of outstanding directives (191) for standards or, for those directives that cannot be resolved in 2013 due to their complexity or need for additional technical committee research, to provide a project plan to close the directives by the end of 2014. FERC issued 13 additional directives as of March 31, 2013. Some of these relate to the Standards Department, while some are being handled by other NERC departments. Standards will monitor and integrate the directives applicable to NERC Reliability Standards into the current work plan and respond to specific deadlines as required.

NERC | Report Title | Report Date 8 of 9

Standards Committee Report This report highlights key activities of the SC and its associated subcommittees.

2013-2015 Work Plan Tasks The 2013-2015 SC Strategic Work Plan includes tasks to implement reforms and support the aggressive schedule to transform the NERC Reliability Standards. The following provides the Board with the status of completing each task. Task No. 1: SC Accountability – Review of the SC Charter At its February 7, 2013 meeting, the Board approved the reforms set forth in the SC Strategic Plan, Work Plan and Charter, subject to the SC evaluating the effectiveness of these reforms and reporting on the need for implementation of additional reforms at the Board’s February 2014 meeting. This task is complete, subject to a review for effectiveness and additional reforms in the fourth quarter of 2013. Task No. 2: Review of the Standards Processes and Procedures With the understanding that significant reforms were accomplished through the efforts of the SPIG and SC, the SC is surveying standard drafting teams to determine whether additional reforms to the SPM or procedures would be helpful and constructive. A small team from the Standards Committee Process Subcommittee (SCPS) initiated a survey to existing standard drafting teams, including chairs and vice chairs, to request input on other areas of the process that can be further enhanced. This task is in progress. Task No. 3: Reliability Standard Development Plan (RSDP) Work Areas The 2013-2015 RSDP was approved by the SC on December 13, 2012, approved by the Board on December 19, 2012, and filed with FERC as an informational filing on December 31, 2012. This task is complete. The 2014-2016 RSDP will be developed and presented to the Board for approval at the end of 2013 and will be filed with FERC as an informational filing by year-end. Task No. 4: Interaction with Reliability Issues Steering Committee The chairs of the SC and RISC have collaborated on the need to clarify coordination activities between the SC and RISC. Based on these discussions, the SC approved a set of guidelines for its coordination of activities with the RISC. These guidelines were also presented at the March 12, 2013 meeting of RISC. This task is complete. Task No. 5: Training and Outreach In support of the aggressive schedule to develop standards and the application of P81 and results based concepts, NERC staff, SC members and the Standards Committee Communication and Planning Subcommittee (SCCPS) developed a training plan and presentation that is being delivered to the informal ad hoc groups and standard drafting team members. The SCCPS has also worked with NERC Staff to develop strategies to inform stakeholders through webinars and workshops of the new upfront, informal process and aggressive schedule to develop standards. This task is complete. Task No. 6: Review of SC and its Subcommittees and Affiliated Working Groups Part 1: The Standards Committee Executive Committee (SCEC) reviewed the membership composition of the SC and the responsibilities and authority of the SCEC and its role in relation to the SC. The SCEC reviewed the recently approved SC Charter and concluded that no additional reforms are needed at this time to complete Part 1 of this task. Part 2: The SCPS reviewed its charter and will re-visit this task after all three SC subcommittee charters are aligned.

Standards Committee Report

NERC | Report Title | Report Date 9 of 9

Part 3: The Functional Model Working Group (FMWG) has two outstanding projects that need to be completed. After these projects are completed, the FMWG will revisit this task and make a recommendation to the SC on whether or not the group should be disbanded. Part 1 is complete. Part 2 is scheduled to come before the SC at its June meeting and Part 3 will be reviewed during the May and June meetings. Task No. 7: Increased Access to Subject Matter Experts At the SC’s March 7, 2013 meeting, Scott Miller, vice chair of the SC, reported that he is reaching out to the trades to request their assistance with soliciting subject matter experts (SMEs) to form a SME pool that the standard drafting teams can contact for assistance on particular issues. This task is in progress. Task No. 8: Increase Collaboration The chair and vice chair of the SC have been in contact with the leadership of the Operating Committee, Planning Committee, Critical Infrastructure Protection Committee, RISC, and Compliance and Certification Committee to develop strategies and approaches to enhance coordination and involvement of these committees in the informal development stage, among other things. The leadership of the SC has also increased collaboration with standard drafting teams through attendance at ad hoc group and standard drafting team meetings and by proposing approaches to resolve any impasses. SC leadership has also developed, with the help of NERC staff, facilitator training to enhance the collaborative environment in the ad hoc groups and standard drafting teams. SC leadership and NERC staff is also promoting the incorporation of the Project Management and Oversight Subcommittee (PMOS) members as SC liaisons to each of the ad hoc groups and standard drafting teams. This task is complete. Task No. 9: Project Management and Oversight Subcommittee PMOS was established to work with NERC staff and the standard drafting teams to ensure the timely completion of high quality, technically sound, clear and results-based reliability standards. In addition to assigning a PMOS member as an SC advisor to each of the ad hoc groups and standard drafting teams, the PMOS has worked with NERC Staff to develop a quarterly spreadsheet to track the progress of each ad hoc group and standard drafting team, including a dashboard and progress on P81 requirements. This task is complete.

New Standards Committee Members In a nomination and election period in January–March 2013, the following individuals were elected to represent their segments on the SC for the terms stated:

• Ben Li – Segment 2 (2013)

• Charles Yeung – Segment 2 (2013-2014)

• Randy Crissman – Segment 5 (2013)

• Andrew Gallo – Segment 6 (2013)

• Brenda Hampton – Segment 6 (2013-2014)

Additional Standards Committee Activities In March 2013, the SC appointed seven SC members as advisors to work with the independent standards review panel conducting the review of NERC’s Reliability Standards (Standards Overview Project). The seven advisors are Brian Murphy, Scott Miller, Lou Oberski, Ben Li, Steve Rueckert, Joe Tarantino, and Gary Kruempel.

Agenda Item 4 SOTC Meeting May 8, 2013

ERO Enterprise Application and Infrastructure Strategy Update Action Review Summary At the February 2013 committee meeting, Marvin Santerfeit, NERC’s director of information technology, provided the committee with a brief overview of some of the work that was being done to develop a long-term ERO Enterprise strategy for the development, hosting and maintenance of software applications supporting certain ERO operations. At the May 8 committee meeting, management will provide the committee and stakeholders with an update regarding this initiative and associated resource requirements which will be presented and reviewed as part of NERC’s draft 2014 Business Plan and Budget. This update will describe the current state of the ERO enterprise systems and the burdens of this current architecture to registered entities, Regional Entities and NERC, especially in connection with the multiple user interfaces and use of disparate applications supporting NERC and Regional Entity operations. An overview of a proposed enterprise information system strategy and a high level timeline will be discussed. Potential benefits of this approach are to improve user experiences, reduce user resource requirements, streamline applications, improve data submittal and validation processes, and reduce long-term software and hardware maintenance expenses.