Matthew Moore Manager of Enforcement

1. Matthew MooreManager of Enforcement RAI and Enforcement Initiatives June 3, 2014 CUG Meeting, Salt Lake City

2. Agenda • Refresher: Evolution of Enforcement • Disposition Methods Past and Present • Updates on RAI Activities • What’s Next for RAI? • What Should Registered Entities Expect? • Other Enforcement Updates • The Enforcement Analyst Team • Reliability-focused Settlement Proposals

3. Enforcement The Evolution of …A Brief History

4. A Brief History • Notice of Alleged Violation • Zero dollar or monetary penalties • Administrative Citation Process • Zero dollar and nominal penalties • Expedited Settlement Agreement • Reduced monetary penalty, reduced administrative burden • Notice of Find, Fix, and Track • No monetary penalty

5. RAI* Update on Activities Reliability Assurance Initiative *

6. RAI Enforcement Activities • Self-Report Aggregation – Pilot • Discretion not to Pursue – Pilot

7. Self-Report Aggregation • Similar to a Self-Certification • Allows Entities to detect, log, and report minimal risk issues over a period time • Spreadsheet tracking and reporting • Region to review all issues once reported

8. Self-Report Aggregation – Pilot • Five Regions Involved (WECC is not involved) • Pilot Phase I: Mixed Results • October 2013 – April 2014 • Will Remain Pilot • Regions need to see benefits, collect more data • Pilot extended an additional six months

9. Compliance Exception • “Decline to pursue Enforcement action” or “Enforcement Discretion” • Evolution of FFT • Similar criteria to FFT • Still a Pilot • Not FERC approved

10. Compliance Exceptions – Pilot • All Regions Involved • Pilot Phase I: Identified Compliance Exceptions • October 2013 – April 2014 • WECC identified two in Pilot Phase I • One Self-Report • One Audit Finding • All Regions identified ~20 combined

11. RAI* What’s Next for and what do you need to know? Reliability Assurance Initiative *

12. Further implementing a risk-based approach to enforcement to continually fine tune and improve regulatory strategy.

13. Compliance Exception • Requires Same Information as FFT • Must be mitigated and minimal risk • Must generally adhere to FERC’s definition of minimal risk • Must exhibit strong controls through WECC evaluation • Still a Pilot Program • Select Entities

14. Compliance Exception – Familiar Look • Description of Issue • Description of Risk Assessment • Description of Mitigating Activities • Information supporting use of discretion • Strong Internal Controls • Effective Internal Compliance Program • (AND) No Negative Compliance History

15. Compliance Exception – Next Steps • Regions may increase candidate pool over the next nine months • NERC Filing with FERC – October 2014? • FERC response is key for next steps • WECC is participating cautiously until FERC Response • Few additional Entities

16. Ifthe Compliance Exception Pilot is not supported by FERC, issue will likely be processed as FFT.

17. UPDATES Final Enforcement

18. The Enforcement Analyst Team • Toni Sharp, Senior Enforcement Analyst • DJ McCarty, Enforcement Analyst • Haley Sousa, Enforcement Analyst • Carmelina Spina, Enforcement Analyst • One Vacant Position

19. Enhanced Settlement Update • Reliability-Focused proposals • Most Settlements have penalty andadditional terms • Designed to positively influence reliability • Strengthen weak controls • Collaborative solutions

20. Where are we going? • Compliance Exception process is a work in progress, but it is progress • Expect settlements with monetary penalties and reliability-focused terms • Implement internal controls/RAI concept in Enforcement Further integrate risk-based approach to Enforcement

21. Matthew Moore Manager of Enforcement mmoore@wecc.biz 801-819-7617 Questions?