AgendaOperating CommitteeSeptember 10, 2008 | 1–5 p.m.September 11, 2008 | 8 a.m.–noonDoubletree Hotel Seattle Airport18740 International BoulevardSeattle, Washington 206-246-9600

Item Leader Action1. Administration Secretary

a. Quorumb. Proceduresc. Introduction of Members and Guestsd. Agenda Chairman Approve

2. Consent Agenda Chairman Approvea. Minutes of June 45, 2008 meeting

3. FYIa. NERC Board of Trustees Chairmanb. Reliability Fundamentals Working Group Mark Fidrych

4. Committee Charter Revisions Secretary Approve5. NERC Budget – Impact of Committee and

Subgroup MeetingsChairman Discussion

6. Operating Committee Work Plan Vice Chairman

Discussion

7. Long-Term Reliability Assessment William Bojorquez and Mark Lauby

Approve

116-390 Village Blvd.Princeton, NJ 08540

609.452.8060 | www.nerc.com

continued…

Item Leader Action8. Functional Model Version 4.0 Jim

Cyrulewski and Mark Fidrych

Approve

9. Integration of Variable Generation Task Force Report – Operational Perspective

Warren Frost Discussion

10. Future Path of Transmission Loading Relief Tom Mallinger Discussion11. Reliability Readiness Program Jessica Bian

and Kevin Conway

Discussion

12. Reliability Metrics Working Group Jason Shaver and Jessica Bian

Discussion

13. Continuing Education Program Martin Sidor Information14. System Personnel Training Standard

Drafting TeamPatricia Metro Discussion

15. WECC Reliability Plan Linda Perez Approve16. Events Analysis Bob

CummingsDiscussion

17. Resources Subcommittee Terry Bilkea. Frequency Trends Informationb. NAESB Time and Inadvertent

Interchange ManagementInformation

c. Performance Standards Reference Document

Approvel

18. Underfrequency Loading Shedding Relays Vice Chairman

Discussion

19. Next meeting – December 3–4, 2008 (Orlando, FL)

Secretary

116-390 Village Blvd.Princeton, NJ 08540

609.452.8060 | www.nerc.com

Item 1. Administration

Item 1.aAnnouncement of QuorumThe secretary will announce whether a quorum (two-thirds of the voting members) is in place. NOTE: The committee cannot conduct business without a quorum. Please be prepared to stay for the entire meeting.

Item 1.bProceduresThe NERC Antitrust Compliance Guidelines, Operating Committee charter, and a summary of Parliamentary Procedures are attached for reference. The secretary will answer questions regarding these procedures.

Attachments1) Antitrust Guidelines

2) Operating Committee Charter

3) Parliamentary Procedures

Item 1.c Introduction of Members and GuestsThe chairman will introduce the following new committee members:

Paul Johnson – American Electric Power (IOU sector)

Chris Bolick – Associated Electric Cooperative (Cooperative sector)

Louis-Omer Rioux – Hydro Québec TransÉnergie (Federal/Provincial Utility sector)

David Cleaver – Office of the Ohio Consumers Energy (State Government sector)

The chairman will announce proxies and will ask the committee members and guests to introduce themselves.

AttachmentOperating Committee roster

Item 1.dApproval of AgendaAction

Approve meeting agenda.

BackgroundThe chairman will review the agenda, ask for amendments, and then approval.

Item 2. Consent AgendaThe consent agenda allows the Operating Committee to approve routine items that would not normally need discussion. Any OC member may ask the chairman to remove an item from the consent agenda for formal discussion and action.

Item 2.aMinutes of June 4–5, 2008 MeetingActionApprove the attached document

AttachmentMinutes of June 45, 2008 Operating Committee meeting

Item 3. FYIThese items are for the committee’s information. The committee is free to raise any of these items for discussion.

Item 3.aNERC Board of TrusteesChairman Mayo will provide an overview of the July 30, 2008 Board of Trustees meeting.

Item 3.bReliability Fundamentals Working GroupMark Fidrych, chairman of the nominating subcommittee, will provide an update related to the formation of the Reliability Fundamentals Working Group (RFWG). To date the nominating committee recommends appointing Stephen Lee (EPRI), Steve Myers (ERCOT), Francis Halpin (BPA), Ali Chowdhury (University of Missouri – Rolla), Peter Brandien (ISO-NE), and Jerry Rust (Northwest Power Pool) to the working group.

As stated in its scope, the purpose of the working group is:

“Oversee the maintenance the Reliability Concepts document and assigned chapters and provide subject matter expertise to standard drafting teams and NERC committees and subcommittees as requested.”

AttachmentScope – Reliability Fundamentals Working Group

Item 4. Committee Charter RevisionsDiscussionThe secretary will review the committee’s charter and suggest areas where revision(s) may be necessary.

AttachmentOperating Committee Charter, draft dated August 15, 2008

Item 5. NERC Budget – Impact of Committee and Subgroup Meetings

DiscussionThe chairman will review discussions of the Standing Committees Coordinating Group, the committee’s executive committee, and NERC staff related to the location and frequency of committee and its subgroups meetings. Discussion topics may include, but is not limited to:

Frequency of Standing Committee meetings? The Operating Committee currently meets four times per year, could it reduce the number of meetings per year?

Cost reductions How can NERC reduce its meeting costs and travel expenses?

o Encourage subcommittee and working group meetings to meet at non-hotel locations (e.g., Regional Entity office).

o Reduce the number of joint meetings at the standing committee meetings. Consider conducting the joint meeting by WebEx a week or so before the standing committee meetings.

o Meetings at NERC-approved cities at NERC-approved hotel chains.

Modify the NERC accounting system to more accurately track meeting expenses.

Address incremental cost savings (e.g., NERC staff attendance at meetings).

Merger of the Planning and Operating Committees.

Other suggestions?

Item 6. Operating Committee Work PlanDiscussionSam Holeman will lead a discussion of the committee’s work plan. The chairman may appoint a task force to review and revise the work plan for the committee’s consideration and approval at its December 2008 meeting.

AttachmentOperating Committee Three-Year Plan (2008–2010)

Item 7. Long-Term Reliability AssessmentApprovalWilliam Bojorquez, chairman of the Planning Committee’s Reliability Assessment Subcommittee, and Mark Lauby, manager – reliability assessments, will lead a discussion of the Operational Reliability section of the Long-Term Reliability Assessment.

BackgroundRegarding the committee’s role in NERC’s Reliability Assessment and Performance Analysis program, the functions section of the committee’s charter states:

Reliability assessments and performance analysis. Review reliability assessments and recommend topics that need additional investigation. These include:

1. Future adequacy

2. Event analysis

3. Benchmarking

Excerpts from Version 3.0 of NERC 2009 Business PlanReliability Assessments and Performance Analysis ProgramBackground The ERO is required to “conduct periodic assessments of the reliability and adequacy of the bulk-power system in North America.” In accordance with this responsibility and NERC’s responsibility to support the reliability of the North American bulk power system, NERC intends to prepare three reliability assessments each year: a long-term reliability assessment report; a summer assessment report; and a winter assessment report. These reports will analyze electricity demand and the adequacy of supply throughout the North American bulk power system, as well as examine the adequacy of the transmission system. NERC will also prepare special reliability assessment reports as conditions warrant or as directed by the Board of Trustees. Copies of all reliability assessment reports will be submitted to FERC, the U.S. Department of Energy (DOE), the applicable governmental authorities in Canada, regional advisory boards, and be made publicly available. Further, NERC will analyze significant system events that

Secretary’s Note: Due to the sensitivity of the Long-Term Reliability Assessment, Mark Lauby will provide committee members access to the Operational Reliability section of the report by separate email. That section of the report will not be included in the committee’s agenda or meeting minutes.

occur on the bulk power systems, identify the causes of such events, assess past reliability performance, disseminate its findings to the electric industry, and develop reliability performance benchmarks.

Reliability Assessment Program Objectives In conjunction with Canadian authorities and Regional Entities, to avoid

duplication of efforts, conduct and report the results of independent assessments of the overall reliability and adequacy of the interconnected North American bulk power system for the summer of 2009, the winter of 2009/2010, and the period of 2009–2018.

Assess and report on the key issues, risks, and uncertainties that affect or have the potential to affect the reliability of the existing and future bulk power system (supply shortages, generating unit shutdowns, fuel supply and transportation disruptions, droughts, floods, strikes, extreme weather, etc.).

Address potentially negative impacts on bulk power system reliability or adequacy due to the operation and planning of gas supply, transportation, and storage, on the operation and planning of electric systems. Review the impact of potential fuel supply or transportation infrastructure interruptions in reliability assessments. Maintain a continuing working dialog on bulk power system reliability and adequacy issues with natural gas supply and transportation industry representatives.

Investigate, assess, and report on the potential impacts of demand response initiatives, and introduction of renewable energy sources on the adequacy and operating reliability of the bulk power systems.

Establish and maintain relationships with industry, regulatory, and governmental organizations involved with or having an interest in bulk power system reliability (e.g., DOE, FERC, Energy Information Administration (EIA), RTOs/ISOs, Electric Power Research Institute (EPRI), National Energy Board (NEB), Canadian provincial governmental agencies, etc.).

Review international practices on emerging issues and incorporate them into the reliability assessment reports.

Review regional reliability assessment processes, criteria, and methods for consistency, and understand their interdependency and impact on neighboring regions.

Develop white papers on key emerging issues with associated metrics and industry action plans.

Develop and submit standards authorization requests (SARs), as required, for any deficiencies or needs revealed by reliability assessments, and solicit industry subject matter experts to serve on standards drafting teams.

Item 8. Functional Model Version 4.0ApprovalJim Cyrulewski and Mark Fidrych, chairman and vice chairman of the Functional Model Working Group, respectively, will provide an overview of Version 4.0 of the NERC Functional Model and of the NERC Functional Model Technical Document. The clean and red-line versions of the NERC Functional Model Version 4.0 and the NERC Functional Model Technical Document are posted at http://www.nerc.com/page.php?cid=2|247|108.

Item 9. Integration of Variable Generation Task Force Report – Operational PerspectiveDiscussionWarren Frost, chairman of the Integration Variable Generation Task Force, will provide an overview of task force’s preliminary conclusions and actions.

AttachmentIVGTF Conclusions and Actions, draft dated August 21, 2008

Item 10. Future Path of Transmission Loading ReliefDiscussionTom Mallinger, MISO, will lead a discussion of a proposal related to a potential future path for transmission loading relief (TLR). As stated in the purpose section of the proposed standard authorization request:

The requested enhancements to the TLR procedure in the Eastern Interconnection will improve the wide-area view of reliability coordinators such that they better understand the current operating state of the bulk electric system and will result in the assignment of relief obligations during periods of congestion that are more representative of those actually contributing to the congestion.

BackgroundTLR is the primary congestion management procedure used in certain portions of the Eastern Interconnection during the last 10 years. In those areas of the Eastern Interconnection where TLR is not the primary congestion management mechanism, it has been utilized as a reliability backstop when significant, externally induced parallel flows make localized congestion management procedures insufficient to control facility loadings. There have been only minor modifications to the procedure during this time period.

Historically, reliability coordinators have relied on tags to curtail non-firm usage and a combination of tags and network/native load relief obligations to curtail firm usage. These curtailments are considered a “share the pain” approach to managing congestion.

Item 11. Reliability Readiness ProgramDiscussionJessica Bian, director of Reliability Readiness and Benchmarking, and Kevin Conway, reliability readiness evaluator, will provide a status report of the Readiness Evaluation and Improvement Program.  The program has reduced the remaining 2008 evaluations scheduled based on a criteria developed to bring the program to a close by the end of the first quarter of 2009. 

Background (Excerpt from the Board of Trustees Approved 2009 NERC Business Plan and Budget)The NERC Readiness Evaluation and Improvement Program began in response to FERC directives following the August 14, 2003 blackout. The goal was to increase transparency on operating practices and to assess the industry’s overall preparedness to minimize the likelihood of another major blackout.

When FERC approved NERC as the electric reliability organization and began adopting NERC standards as mandatory in the United States, NERC created an associated compliance audit program (Compliance Monitoring and Enforcement Program — CMEP). The readiness program, which had been asking compliance-type questions, shifted its full effort to encouraging entities to improve reliability performance and achieve excellence in their assigned functions and responsibilities.

The readiness program has been working with industry experts to conduct on-site evaluations of all balancing authorities, transmission operators, reliability coordinators, and other entities that support the reliable operation of the bulk power system in North America to determine their readiness to maintain safe and reliable operations.

While feedback from entities that have participated in readiness evaluations has generally been favorable, industry comments on the first draft of the NERC 2009 Business Plan and Budget suggest that: (1) the value of the readiness program is diminishing; (2) the focus and resources of NERC should be squarely on standards and compliance particularly during this critical time; and (3) the mandatory enforcement role at NERC creates a conflicted environment for the readiness program, suggesting the role can be better undertaken by others (such as the Transmission Owners and Operators Forum). This leads to the overall conclusion that the assessment-oriented evaluation process in its current form be discontinued.

Based on the direction provided by the NERC Board’s Finance and Audit Committee, the readiness evaluation program will complete the remaining scheduled readiness reviews and close at the end of the first quarter of 2009.

Item 12. Reliability Metrics Working GroupDiscussionJason Shaver, chairman of the Reliability Metrics Working Group, and Jessica Bian, director of Reliability Readiness and Benchmarking, will respond to questions resulting from their presentation at the joint meeting. That presentation focused primarily on metrics related to the Long-Term Reliability Assessment.

Ms. Bian will also review the implementation of the NERC Benchmarking Dashboard (http://www.nerc.com/page.php?cid=4|37).

Item 13. Continuing Education ProgramInformationMartin Sidor, director of Training, Education, and Personnel Certification, will present proposed improvements to the Continuing Education Program developed by the Personnel Subcommittee before the manual is posted for industry comment.

Two major changes are to 1) more clearly define criteria for qualifying continuing education activities, and 2) upgrade the criteria for training providers to become “NERC-approved providers.”

Item 14. System Personnel Training Standard Drafting TeamDiscussionPatricia Metro, chairman of the System Personnel Training Standard Drafting Team, will provide a status report of this standard development effort. The drafting team posted its fourth draft of PER-004-2 (Reliability Coordination – Staffing) and PER-005-1 (System Personnel Training) along with an implementation plan and a reference to aid in implementing the standards for a 30-day comment period from June 18 through July 17, 2008.

The purpose of the standard is to help ensure that that system operators performing real-time, reliability-related tasks on the North American bulk electric system are competent to perform those reliability-related tasks. The proposed standard is applicable to reliability coordinators, balancing authorities, and transmission operators.

Attachments1) PER-004-2 (Reliability Coordination – Staffing)2) PER-005-1 (System Personnel Training)3) PER-005 System Personnel Training Reference Document

Item 15. WECC Reliability PlanApprovalLinda Perez, WECC director of Reliability Coordination, will provide an overview of the revised WECC Reliability Coordinator Plan.

BackgroundThe Operating Reliability Subcommittee (ORS) met by conference call on August 20, 2008 to review the revised WECC Reliability Coordinator Plan. The revised plan was approved by the WECC Board on August 14–15, 2008. Following its discussion of the revised WECC Reliability Coordinator Plan, the ORS approved the following motion:

Moved to endorse the WECC Reliability Coordinator Plan for presentation to the Operating Committee, contingent upon WECC receiving NERC reliability coordinator certification prior to the expected January 1, 2009 startup.

AttachmentWECC Reliability Coordinator Plan

Item 16. Events AnalysisDiscussionBob Cummings, director of Events Analysis and Information Exchange, will update the committee on the “lessons learned” from the event analyses NERC is conducting and provide summaries of the following events:

1) Eastern Interconnection Frequency Disturbance – August 4, 2007

2) MRO System Separation – September 18, 2007

3) FRCC South Florida Disturbance – February 26, 2008

4) RFC PEPCO Disturbance – June 13, 2008

Item 17. Resources SubcommitteeTerry Bilke, chairman of the Resources Subcommittee, will provide a status report of subcommittee activities. He will also ask for committee approval of Version 3 of the Performance Standards Reference Document.

Item 17.a Frequency TrendsInformationFrequency excursions occur for numerous reasons. The most common cause is due to scheduling changes, particularly at the “shoulder” transition between on and off peak. Loss of large generators also cause excursions. The magnitude of the excursions for the same events increases with a decline in governor response.

The Resources Subcommittee monitors and discusses the interconnection frequency performance and trends. Mr. Bilke will present an overview of interconnection frequency data

Item 17.b NAESB Time and Inadvertent Interchange Management

InformationMr. Bilke is also chairman of the NAESB Time and Inadvertent Management Business Practice Standard Task Force. He will provide an overview of the Time and Inadvertent Management business practice standard, share the progress made by the task force, and detail the associated field trial.

BackgroundThe North American Energy Standards Board (NAESB) announced the formation of the Time and Inadvertent Management Task Force to address issues which include manual time error correction (TEC) and inadvertent interchange payback. The task force was created on June 4, 2008.

The Time and Inadvertent Interchange Management Task Force will develop and draft language for a NAESB business practice standard. The purpose of the business practice standard is to develop additional inadvertent payback options and improve time control. Since there are NAESB business practices standards and NERC reliability standards, development will be coordinated between NERC and NAESB.

The NAESB business practice standard will address concerns specific to NERC BAL-004 (Time Error Correction), BAL-005 (Automatic Generation Control), and BAL-006 (Inadvertent Interchange). Nearly 50% of the identified frequency excursions happen during TECs even though TECs occur only 15% of the time. With the proposed business practice standard in place, it is anticipated that fewer TECs will result in a smaller number of frequency excursions.

Inadvertent interchange and frequency performance are closely linked. If frequency is high due to over-generation by one or more balancing authorities, other balancing authorities will receive inadvertent because of the frequency bias term in their area control error (ACE). In FERC Order No. 693, FERC asked NERC to implement standards to control the size of the inadvertent interchange balances. There are limited tools presently available to balancing authorities to reduce inadvertent interchange balances. The primary existing tool (unilateral payback by controlling to a non-zero ACE) hurts the control performance standard of those balancing authorities that have received inadvertent interchange caused by others. FERC was also concerned about the number of frequency excursions. Nearly half of the frequency excursions beyond the frequency trigger limit (+/- 0.05 Hz from 60 Hz) occur during TECs. This is because frequency is moved closer to the frequency trigger limits during TECs and normal variation pushes it beyond the edge.

Related to BAL-004, performing clock-day TEC with a wider window will reduce confusion about start and stop times and will enable a simple measurement on the efficiency of each TEC.

Related to BAL-006, it is expected that the business practice standard will provide additional tools to allow balancing authorities to pay back or recover inadvertent interchange.

The task force will develop the Time and Inadvertent Management business practice standard within clear boundaries. The task force does not intend to revisit the work completed by the Inadvertent Interchange Payback Task Force; it does not intend to draft standards for the evaluation of and financial settlement of inadvertent interchange payback; it is not an exercise to re-evaluate the split of business practice and reliability standards for WEQ-005 ACE Equations Special Cases, WEQ-006 Manual Time Error Correction, or WEQ-007 Inadvertent Interchange Payback. With these boundaries, the task force will focus on the task at hand without veering into topics that could consume considerable time without meeting the scope of this task.

With the implementation of the Time and Inadvertent Management business practice standard, the task force anticipates that there will be fewer time error corrections, fewer frequency excursions, smaller inadvertent interchange balances, and more efficient time error corrections.

The business practice will not affect practices in the WECC and ERCOT Interconnections unless they so choose.

Item 17.c Performance Standards Reference Document

ApprovalMr. Bilke will review revisions to the Performance Standards Reference Document (PSRD) and request committee approval.

BackgroundVersion 2 of the PSRD is currently posted in the NERC Operating Manual. The Resources Subcommittee revised version 2 and following its approval posted version 3 to its Web site. The Resources Subcommittee is seeking committee approval of version 3, which will then be posted to the Operating Manual.

In addition, a number of Resource and Demand Balancing (BAL) standard drafting teams are addressing technical issues related to balancing authority ACE limits, frequency response, control performance measures, and revisions to the current BAL standards. The Resources Subcommittee requested the chairman of the standard drafting teams to prepare sections to add to the PSRD when their proposed standards are successfully balloted.

AttachmentPerformance Standards Reference Document, Version 3

Item 18. Underfrequency Load Shedding RelaysDiscussionVice Chairman Holeman will discuss concerns related to underfrequency load shedding programs and, more specifically, the relays used to implement those programs.

Item 19. Next Meetings OC Meetings in 2008

December 3, 2008

December 4, 2008

1–5 p.m.

8 a.m.–12 p.m.

Orlando, FL

Proposed OC Meetings in 2009

March 18, 2009

March 19, 2009

1–5 p.m.

8 a.m.– 12 p.m.

Phoenix, AZ

June 10, 2009

June 11, 2009

1–5 p.m.

8 a.m.– 12 p.m.

Toronto, Ontario

September 16, 2009

September 17, 2009

1–5 p.m.

8 a.m.– 12 p.m.

Dallas, TX

December 9, 2009

December 10, 2009

1–5 p.m.

8 a.m.–12 p.m.

Atlanta, GA