FRCC Registration and Compliance Overview

1. FRCCRegistration and Compliance Overview Linda Campbell FRCC Director of Reliability and Compliance

2. FRCCEntity RegistrationOverview

3. BA, Balancing Authority DP, Distribution Provider GOP, Generator Operator GO, Generator Owner LSE, Load Serving Entity PA, Planning Authority PSE, Purchasing-Selling Entity RC, Reliability Coordinator RSG, Reserve Sharing Group RP, Resource Planner TO, Transmission Owner TOP, Transmission Operator TP, Transmission Planner TSP, Transmission Service Provider Registered Functions

4. Registration Criteria • Load Serving Entities (LSE) • Peak Load > 25 MW or, • Responsible for UFLS facilities or, • Responsible for UVLS facilities

5. Registration Criteria • Distribution Provider (DP) • System serving > 25 MW or, • Responsible for UFLS facilities or, • Responsible for UVLS facilities or, • Responsible for required SPS

6. Registration Criteria • Generator Owner/Operator (GO or GOP) • Individual Generating Unit > 20 MVA • Generating Plant/Facility > 75 MVA • Any blackstart unit that is part of entities restoration plan • Any generator, regardless of size that is material to reliability

7. Registration Criteria • Transmission Owner/Operator (TO or TOP) • Owns or operates transmission element 100 KV or above, or lower voltage defined by FRCC as necessary for reliable operation of the grid, or that is included on a critical facilities list defined by FRCC.

8. Registration Criteria • Joint Action Agency or Similar Organization • May register on behalf of one or more of its members • Must accept compliance reporting responsibility for all standards applicable to the members • Shall provide FRCC with an annual “Agency Member Registry”

9. Registration Timeline • December 14, 2006 – NERC implements Revision 2 to Registry Criteria • December 20, 2006 – FRCC submitted update of “non-binding” compliance registry • January 10, 2007 – Review of “non-binding” registry by NERC and Regional Compliance Managers

10. Registration Timeline (con’t) • Late January, 2007 FRCC initiate final update of Compliance Registry • March 2, 2007 – FRCC to submit to NERC a final Compliance Registry • March 12, 2007 – Final review of Compliance Registry by NERC and Regional Compliance Managers

11. FRCCCompliance ProgramOverview

12. What is Compliance Monitoring? • Process by which a Registered Entity’s performance is measured against: • NERC Reliability Standards • FRCC Regional Reliability Standards • Does not review anything that is not included in the standards

13. Who does Compliance Monitoring? • FRCC will be a Regional Entity with delegated responsibility and authority from NERC and FERC • FRCC monitors registered entities in our region • NERC provides oversight of FRCC compliance program • FERC provides oversight of both NERC and FRCC

14. What are Violations? • Violations occur when a Registered Entity does not comply with a requirement of a Reliability Standard that is applicable to that entity • Alleged violations are required to be reported to NERC and FERC • Confidentiality of the entity will be maintained until the alleged violation is confirmed

15. Sources of Violations • On-site Compliance Audits • Annual Self Certification • Spot Audits • Compliance Violation Investigations • Complaints • Self-Reporting • Periodic Data Submittal • Exception Reporting

16. Processing Alleged Violations • Entity provided with written notice of alleged violation • Entity can accept or object to the alleged violation • Accept : Reported to NERC, Mitigation Plan prepared by entity • Contest : Entity request FRCC Hearing Process be initiated

17. What are Sanctions and Penalties? • FERC has identified June 2007 as the time period for which compliance with Reliability Standards will be mandatory and enforceable • Sanctions (Non-Monetary) • Letters to company officers • Require actions to be taken • Placement on “watch list” • Penalties (Monetary Fines) • Calculated by FRCC Compliance Staff • Base penalty adjusted by mitigating or aggravating factors

18. How are Sanctions and Penalties determined? • Example in current standard

19. BASE PENALTY TABLE • Future

20. On-Site Compliance Audits • Audits are performed by the FRCC • Based on “pro-forma” program developed by NERC • Performed every three years for RC, BA and TOP, others to be on a schedule determined by NERC • Will include all standards applicable to entity that were monitored in the annual implementation plans since last audit

21. Audit Report • A Final Report of the audit will be prepared by the audit team • Audited entity will review and provide factual or technical corrections • Submit to the FRCC Compliance Committee for review • Final Report will be posted on the FRCC website

22. Mitigation Plans • Mitigation Plans are required for every confirmed violation • Must identify how the entity plans to come into compliance with the requirement • Will be approved by the FRCC Compliance Committee • Must include milestones if longer than 3 months to correct.

23. FRCC Hearing Process • Registered Entity must contest or respond to notice of violation within 30 days. • If no response, violation is considered to be accepted • If objection not resolved with 40 days of entity response, must request hearing • Hearing Body is the FRCC Board Compliance Committee • If Registered Entity does not agree with outcome of FRCC Hearing, may appeal at NERC.

24. Questions?