The 8 Compliance Monitoring Processes & Mitigation of Violations

1. The 8 Compliance Monitoring Processes & Mitigation of Violations 2007 FRCC Compliance Workshop

2. Compliance Monitoring Processes The FRCC will use eight (8) monitoring processes to collect information in order to make assessments of compliance: • Compliance Audits • Self-Certifications • Spot Checking • Compliance Violation Investigations • Self-Reporting • Periodic Data Submittals • Exception Reporting • Complaints

3. Compliance Audits • The on-site compliance audit scope will include all Reliability Standards applicable to the Registered Entity monitored in the NERC Implementation Plans in the current and three previous years. • It may also include other Reliability Standards and FRCC Regional Reliability Standards that have been approved by FERC. • If the data retention requirements of a Reliability Standard does not cover the full period of the on-site compliance audit, the audit will only be applicable to the data retention period specified in the Reliability Standard.

4. Compliance Audits • Audit Team members are required to sign and return FRCC Confidentiality Agreements. • FRCC Compliance Staff notifies the Registered Entity of the audit, identifies the Audit Team members, and sends the Pre-Audit Questionnaire and request for data. • The Registered Entity completes and returns Pre-Audit Questionnaire and requested documentation to the FRCC by the required date.

5. Compliance Audits • FRCC Compliance Staff distributes completed Pre-Audit Questionnaire and documentation to the Audit Team for review. • Onsite audit is conducted • Audit team drafts report, sends to Registered Entity for review; submits final audit report to FRCC Compliance Staff • FRCC Compliance Staff determines alleged violations and applicable penalties and/or sanctions • FRCC Compliance Committee (CC) reviews FRCC Compliance Staff determination • Notice of violation and penalty and/or sanctions sent to Registered Entity

6. Self Certifications • FRCC Requires all Registered Entities to Self-Certify annually. • FRCC sends the Self-Certification forms to the Registered Entities generally in the first week in November. • FRCC Compliance Staff reviews the information provided by the Registered Entity to determine compliance with the Reliability Standards and may request additional data and/or information if necessary. • FRCC Compliance Staff will provide a summary report of the Self Certification results and any applicable penalty and/or sanction determination to the FRCC CC for review.

7. Spot Checks • Spot Checks may be initiated at any time to verify or confirm compliance status • FRCC Compliance Staff sends notice of Spot Check and data request to the Registered Entity. • Registered Entity returns requested documentation to the FRCC Compliance Staff. • FRCC Compliance Staff selects the Spot Check Review Team Members and schedules the review. Spot Check reviews are normally conducted at the FRCC office.

8. Spot Checks • The Spot Check review team will provide a report of findings to FRCC Compliance Staff • Registered Entities will have opportunity to review draft report to correct any errors • FRCC Compliance Staff will provide report and determination of alleged violations and applicable penalties and/or sanctions to FRCC Compliance Committee • Same process for final determination of alleged violation and applicable penalty and/or sanction

9. Compliance Violation Investigations • Can be initiated at any time in response to a disturbance, complaint or notification of possible violation • FRCC Compliance Staff selects the Investigation Review Team Members. • FRCC Compliance Staff will notify the Registered Entity and NERC within 2 business days of the decision to conduct a Compliance Violation Investigation. • FRCC will provide at least 20 calendar days notice for data request • The Investigation Review Team Members will review preliminary information or data and determine if additional data or on-site inspections are needed.

10. Compliance Violation Investigations • On-site inspection is scheduled if needed. • Registered Entity returns requested data in the required format to the FRCC Compliance Staff. • Investigation Review Team identifies a finding of compliance or non-compliance • Investigation Review Team provides a report of the findings to FRCC Compliance Staff • FRCC Compliance Staff will send report with determination of alleged violation and applicable penalty and/or sanction to the FRCC CC. • Same process for final determination of alleged violation and applicable penalty and/or sanction

11. Self Reporting • Self Reporting is encouraged any time a Registered Entity becomes aware: • Of their violation of a Reliability Standard, or • A change in the violation severity level of a previously reported violation • Self Reporting may be considered as a mitigating factor during the determination of a penalty and/or sanction

12. Self Reporting The process steps for Self-Reporting are as follows: • Download the Self-Reporting submittal form from the FRCC website. http://www.frcc.com/ • Fill out the Self-Reporting information and forward the applicable mitigation plan to the FRCC Compliance Manager at compliancemanager@frcc.com. • The FRCC Compliance Staff will review the information to determine compliance and may request the Registered Entity to provide clarification or additional data and/or information. • The FRCC Compliance Staff completes the assessment of the Registered Entity and sends the determination of violation and applicable penalty and/or sanction to the FRCC CC for review. • Same process for final determination of alleged violation and applicable penalty and/or sanction.

13. Periodic Data Submittals In 2007, the FRCC requires monthly reporting for the following standards: • Monthly reports: BAL 001-0, BAL 002-0, FAC 003-1, INT 001-0, IRO 004-0, IRO 006-3, PER 003-0, PER 004-1, PRC 004-1, PRC 016-0, TOP 005-1, TOP-007-0 • Monthly reporting forms are located on the FRCC compliance website. • Reports are due to the FRCC by the 10th of each month. Submit to compliancemanger@frcc.com • Each report will be for the calendar month preceding the 10th of the month that it is submitted

14. Periodic Data Submittals • Not applicable, fully compliant, or a violation severity level (level of non-compliance) must be indicated for each standard and requirement. • For standard FAC 003-1, requirement 3 requires reporting of vegetation caused outages. • If during the reporting period you had an actual reportable vegetation caused outage, complete the Vegetation Management Report and the outage details. • For ALL reports of Non-Compliance, a Mitigation Plan is required. Please submit the mitigation plan to FRCC along with the monthly report.

15. Exception Reporting • Some Reliability Standards require reporting of exceptions to compliance with the Reliability Standard as a form of compliance monitoring. • FRCC requires Registered Entities to provide reports identifying any exceptions to the extent required by any Reliability Standard. • FRCC requires Registered Entities to confirm the number of exceptions that have occurred in a given time period identified by NERC, even if the number of exceptions is zero.

16. Complaints Either NERC or FRCC may receive Complaints alleging violations of a Reliability Standard. • FRCC will conduct a review of each Complaint it receives to determine if the Complaint provides sufficient basis for a Compliance Violation Investigation. • NERC will conduct a review of each Complaint: • That is related to FRCC • Where the FRCC determines it cannot conduct the review • If the complainant wishes to remain anonymous • If the complainant specifically requests NERC to conduct a review of a Complaint

17. Complaints • The complainant notifies NERC or the FRCC by using the NERC hotline, submitting a NERC complaint reporting form, or by other means. • A link to the complaint reporting form is posted on the NERC and FRCC web sites. • The Complaint should include sufficient information to enable NERC or the FRCC to make an assessment of whether the initiation of a Compliance Violation Investigation is warranted. • NERC or the FRCC may not act on a Complaint if the Complaint is incomplete and does not include sufficient information.

18. Mitigation of Violations • A Registered Entity found to be in violation of a Reliability Standard shall file with the FRCC: • A proposed Mitigation Plan to correct the violation, or • A description of how the violation has already been mitigated, or • Any request for extensions of previously submitted Mitigation Plans, or • A report of a completed Mitigation Plan

19. Mitigation of Violations • The Mitigation Plan shall include the following information: • The Registered Entity’s point of contact for the Mitigation Plan • The alleged or confirmed violation(s) of Reliability Standard(s) that the Mitigation Plan will correct. • The cause of the alleged or confirmed violation(s). • The Registered Entity’s action plan to correct the alleged or confirmed violation(s).

20. Mitigation of Violations • The Mitigation Plan shall include the following information: • The anticipated impact of the Mitigation Plan on the bulk power system reliability and an action plan to mitigate any enhanced risk to the reliability of the bulk power-system while the Mitigation Plan is being implemented. • A timetable for completion of the Mitigation Plan, including the completion date by which the Mitigation Plan will be fully implemented. • Implementation milestones no more than 3 months apart.

21. Mitigation of Violations • A Mitigation Plan shall be submitted by the Registered Entity within 30 days after being served the notice of alleged violation or penalty or sanction, if the Registered Entity does not contest the violation and penalty or sanction. • If the notice of alleged violation or penalty or sanction is disputed, the Mitigation Plan must be submitted within 10 business days following the issuance of the written decision of the hearing body.

22. Mitigation of Violations • FRCC Compliance Staff will initially review all Mitigation Plans for completeness and to see if it adequately resolves the compliance violation. • FRCC CC will either, accept or reject the Mitigation Plan, within 30 days of receiving it from Compliance Staff. • If rejected, a written statement describing the reasons for the rejection along with a request to submit a revised Mitigation Plan will be sent. • The FRCC will accept or reject the revised Mitigation Plan within 10 business days of receipt. • If a second revised Mitigation Plan is rejected, the Registered Entity may submit a request for a hearing to the FRCC.

23. Mitigation of Violations • The Registered Entity shall provide updates at least quarterly to the FRCC on the progress of the Mitigation Plan. • The FRCC will track the Mitigation Plan to completion and may conduct on-site visits and review status during audits to monitor Mitigation Plan implementation. • Upon completion of the Mitigation Plan, the Registered Entity shall provide to the FRCC certification, signed by the Registered Entity’s officer or equivalent responsible for the plan, that all required actions have been completed and shall include data or information sufficient for the FRCC to verify completion.

24. Mitigation of Violations • A request for an extension of any milestone or the completion date of the accepted Mitigation Plan must be received by the FRCC at least 5 business days before the original milestone or completion date. • The FRCC may accept a request for an extension or modification of a Mitigation Plan if the FRCC determines the request is justified, and shall notify NERC of the extension or modification within 5 business days.

25. QUESTIONS