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WICF WORKSHOP

WICF WORKSHOP. September 28, 1999 Las Vegas, Nevada. WICF GOALS. Promote Efficient Electric Markets Ensure Reliability of the Western Interconnection Increase Effectiveness of Grid Management Organizations Eliminate Overlap & Duplication of Effort

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WICF WORKSHOP

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  1. WICF WORKSHOP September 28, 1999 Las Vegas, Nevada

  2. WICF GOALS • Promote Efficient Electric Markets • Ensure Reliability of the Western Interconnection • Increase Effectiveness of Grid Management Organizations • Eliminate Overlap & Duplication of Effort • Clear Determination of Authority & Responsibility

  3. WICF PRINCIPLES • Commercial & Reliability Interests are Inextricably Linked • Full & Equal Participation by Canadian & Mexican Members • Provide ADR • Identify Authority & Responsibility at Regional and Interconnection Levels • Minimize Forum Shopping

  4. MORE WICF PRINCIPLES • Fair & balanced Governance Structure • Decision Process Open to All Interested Parties • Decision Procedures are Non-Discriminatory • Accountability is Clear • Minimize Gridlock & Indecision • Decisions Made in a Reasonable Time • No Industry Segment can Unilaterally Make or Veto a Decision

  5. NRTA SWRTA WRTA WSCC CCPG CREPC CAISO NWPP Ken Peterson - Chair Vickie VanZandt Jack Davis Ron Nunnally Frank McElvain Armie Perez Alan Davis Scott Waples Paula Green Mark Mitchell Lloyd Greiner Glen Smyrl Dennis Eyre Jim Byrne Dick Brown Rich Nassief Doug Larson WICFSTEERING COMMITTEE Sets overall policy and directs drafting and legislative strategy groups Alan Davis - Chair Ken Peterson Paul Barber Bill Chamberlain Harlow Peterson Eric Christensen Robin Larson Paula Green Skip Helm Dennis Eyre Rich Nassief Dick Brown Jim Byrne Bud Krogh WICFLEGISLATIVE STRATEGY GROUP Sets legislative strategy: approves key documents WICFLEGISLATIVE ACTION COMMITTEE Clearinghouse for all legislative issues; prepares legislative documents; schedules meetings with D.C. support team; assigns WICF reps to meetings; clears testimony; reports to WICF LSG Dennis Eyre-Chair Ken Peterson Alan Davis Bud Krogh Jim Byrne WICFD.C. LEGISLATIVE SUPPORT TEAM Advises WICFLAC on Congressional strategy; schedules D.C. meetings; secures legislative documentation from WICFLAC; advises as to participation of WICF membership and industry groups Ken Williams - MPC Gary Bachman - PGP Rich Bechtel - WGA Joe Hartsoe - Enron Keith Kennedy - PAC Marshall Faust -PSNM Veronica Gutierrez - SCE Tod Neuenschwander - IPC Cynthia Sandherr - Enron Craig Gannet - Avista Steve Wright - BPA Frank Frisk - DOPD WESTERN INTERCONNECTION LEGISLATIVE EFFORT STRUCTURE WICF Congressional “Gatekeepers” House Senate Rep. Heather Wilson Sen. Slade Gorton (Luke Rose) (Phil Moeller) Protects Western Interconnection interests in delegation and deference. Linda Stuntz - DC Coordinator Coordinator - Linda Stuntz - Powerex / BCH

  6. GOVERNANCEWORK GROUP

  7. GOVERNANCE OPTIONS 1. 9 Member Board - Proportional Voting 2. 17 Member Stakeholder Board - 4 Member Classes 3. 21 Member Stakeholder Board - 4 Member Classes with Regional Diversity 4. 9 Member Non-Affiliated Board 5. 15 Member Stakeholder Board - 5 Member Classes 6. 21 Member Hybrid Board

  8. GENERAL GOVERNANCE CONCEPTS • Functions and Duties • Conduct of Business • Alternative Election Process

  9. BOARD FUNCTIONS AND DUTIES • Electing Officers • Hiring and Firing Key Staff • Adopting WIO Standards and Policies • Assigning Issues to Appropriate Committees • Budget and Accounting Oversight

  10. MORE BOARD FUNCTIONS AND DUTIES • Set Record Date for Director Elections • Amend WIO Charter Documents • Refer Disputes to Appropriate Dispute Resolution Processes

  11. CONDUCT OF BUSINESS • Normal Actions Require Simple Majority Vote • Some Actions Require Higher Standard; e.g. Change to Governance Documents • May desire Member Ratification of Change to Governance Documents

  12. STAKEHOLDER BOARD GWG OPTION 2

  13. STAKEHOLDER BOARD • 17 Directors • 4 Each from 4 Membership Categories • Chief Executive Officer (President) of WIO • Chair and Vice-Chair Selected from Elected Directors • President Votes only to Break Tie • Term of Office: 2 Years

  14. STAKEHOLDER BOARD • Membership Categories • Major Transmission Utilities (MTU) • Non-Utility Suppliers (NUS) • Transmission Dependent Utilities (TDU) • Consumers, Commissioners & Public Interest Groups (CCP)

  15. STAKEHOLDER BOARD • Director Qualifications • Qualified to Serve the Public Interest • Represent Reliability Concerns of WI • Reflect the Business and Geographic Diversity of WI • Consumers, Commissioners & Public Interest Groups (CCP) • Sign Qualification Statement

  16. STAKEHOLDER BOARD • Director Qualification Statement 1. Consent to be Nominated 2. Availability & Willingness to Serve if Elected 3. Willingness & Ability to Abide by a Duty of Loyalty to WIO and Its Members 4. Willingness & Ability to a Duty of Care in Carrying Out the Director’s Responsibilities

  17. STAKEHOLDER BOARD • Nomination Process • Nominating Committee Headed by Vice-Chair • Select One Candidate for Each Vacancy • Slate of Candidates To Reflect the Business, Geographic, and International Diversity of WIO • Additional Nominations • From Member Category - 20% Support

  18. STAKEHOLDER BOARD • Election Process • Members Vote within Member Categories • Highest Number of Votes Wins • Ties Broken By Drawing Lots • International Representation • If Election Does not Provide International Representation, Board Size Increased By One Seat for A Nation’s Representative

  19. PRO Assures Functional Balance Resembles Currently Acceptable Structures Larger Board Offers More Opportunity for Representation CON View That Board May Be Too Large to Manage Effectively Depends on Legal Duty to Assure Independent Action Possible to Not Have Regional Diversity STAKEHOLDER BOARD

  20. PRO No One Group Can Dominate Assures International Membership on Board CON Reflects Existing Functional Categories Minorities Within Groups Might Not Be Represented STAKEHOLDER BOARD

  21. PRO Nominating Process Has Both a Committee Process and Nominations From The Membership Promotes Stability: Compartmentalizes Governance Disagreements CON STAKEHOLDER BOARD

  22. NON-AFFILIATED BOARD GWG OPTION 4

  23. NON-AFFILIATED BOARD • 9 Directors • 8 Elected by Membership • Chief Executive Officer (President) of WIO • Chair Selected from Elected Directors • Chair Votes only to Break Tie • Term of Office: 3 Years

  24. NON-AFFILIATED BOARD • Membership Categories • System Operator Organizations • Transmission Owners • Transmission Dependent Utilities • Load Serving Entities • Generators • Power Marketers/Brokers/Power Exchanges

  25. NON-AFFILIATED BOARD • Membership Categories, cont. • Large Retail Customers • Small Retail Customers • Government Regulators/State/Provinces • Public Interest Groups

  26. NON-AFFILIATED BOARD • Advisory Committee • Two Members from Each Membership Class • Action by Enhanced Majority Vote • Advisory Committee Members Attend Board Meetings

  27. NON-AFFILIATED BOARD • Advisory Committee Duties • Select Slate of Director Candidates • Determine Board Compensation • Input on WIO Annual Budget (Approve Advisory Committee Portion) • Advise Board on Technical, Legal and Oversight Matters Relating to WIO Responsibilities

  28. NON-AFFILIATED BOARD • Director Qualifications • No Affiliation With Existing WI Market Participants • Qualified to Serve the Public Interest • Represent Reliability Concerns of WI • Expertise in Technical Electric Reliability and Legal, Market, Financial & Regulatory Matters • Representative of Geographical Diversity and International Nature of WIO

  29. NON-AFFILIATED BOARD • Director Affiliation Rules • Written Disclosure • Candidate or Household Member May Not Receive Compensation From Entities Associated with WIO

  30. NON-AFFILIATED BOARD • Director Affiliation Rule Examples • Receiving Compensation from WIO Market Participant Disqualifies Candidate • Owning Shares in Mutual Fund with Holdings in WIO-Affiliated Organizations Will Not Disqualify • Potential Affiliation Will be Disclosed by Candidate and Determined by Other Non-Affiliated Directors

  31. NON-AFFILIATED BOARD • Nomination Process • Advisory Committee Selects Slate of Candidates • Election Process • Members Vote En Masse - Highest Vote Totals Are Elected • Ties Broken By Drawing Lots • International Representation • No Special Rules to Guarantee Representation

  32. PRO View That Non-Affiliation Will Produce An Unbiased Result “Non-Affiliation” Screen Could Provide Balance for Both Experience and Objectivity CON Possible Lack of Industry Experience by Directors Candidates Must Be Known to Members and Have Broad Appeal NON-AFFILIATED BOARD

  33. PRO At-Large Voting Requires Candidates Have Broad Appeal Across Functions and Regions View That A Small Board Is Easy to Manage CON Possible Lack of Protection for Minorities Will Require Board Member Compensation NON-AFFILIATED BOARD

  34. HYBRID BOARD GWG OPTION 6

  35. HYBRID BOARD • Combines Positive Features of Stakeholder and Non-Affiliated Board Structures • Technical Expertise • Geographic Diversity & Representation • Guarantee of National Representation

  36. HYBRID BOARD • 21 Directors • 4 Each from 4 Membership Categories • 4 Non-Affiliated Directors • Chief Executive Officer (President) of WIO • Chair and Vice-Chair Selected from Elected Directors • Chair Votes only to Break Tie • Term of Office: 2 Years

  37. HYBRID BOARD • Member-Class Director Qualifications • Qualified to Serve the Public Interest • Represent Reliability Concerns of WI • Reflect the Business and Geographic Diversity of WI • Consumers, Commissioners & Public Interest Groups (CCP) • Sign Qualification Statement

  38. HYBRID BOARD • Non-Affiliated Director Qualifications • No Affiliation With Existing WI Market Participants • Qualified to Serve the Public Interest • Represent Reliability Concerns of WI • Expertise in Technical Electric Reliability and Legal, Market, Financial & Regulatory Matters • Representative of Geographical Diversity and International Nature of WIO

  39. HYBRID BOARD • Director Affiliation Rules • Written Disclosure • Candidate or Household Member May Not Receive Compensation From Entities Associated with WIO

  40. HYBRID BOARD • Nomination Process • Nominating Committee Headed by Vice-Chair • Select One Slate of Candidates for Each Stakeholder Vacancy to Reflect the Business, Geographic, and International Diversity of WIO • Select Second Slate of Non-Affiliated Candidates

  41. HYBRID BOARD • Additional Nominations • From Member Category - 20% Support

  42. HYBRID BOARD • Election Process: Stakeholder Directors • Members Vote within Member Classes • Highest Number of Votes Wins • Ties Broken by Drawing Lots • Election Process: Non-Affiliated Directors • Stakeholder Directors Elect Non-Affiliated Directors • National Representation Guaranteed

  43. PRO Balances Preferences for Stakeholder and Non-Affiliated Members on Board No One Group Can Dominate Assures International Membership on Board CON View That Board May Be Too Large to Manage Effectively Depends Somewhat on Legal Duty to Assure Independent Action Possible to Not Have Regional Diversity HYBRID BOARD

  44. PRO “Non-Affiliation” Screen Could Provide Balance for Both Experience and Objectivity Resembles Currently Acceptable Structures Visible Stakeholder Representation CON Will Require Board Compensation for Non-Affiliated Members Minorities Within Groups Might Not Be Represented HYBRID BOARD

  45. PRO Larger Board Offers More Opportunity for Stakeholder/Regional Representation Assures Functional Balance Relatively Simple Election Procedures CON Partially Reflects Existing Functional Categories HYBRID BOARD

  46. PRO Nominating Process Has Both a Committee Process and Nominations From The Membership Promotes Stability: Compartmentalizes Governance Disagreements CON HYBRID BOARD

  47. GOVERNANCE OPTIONS 2. 17 Member Stakeholder Board - 4 Member Classes 4. 9 Member Non-Affiliated Board 6. 21 Member Hybrid Board

  48. ALTERNATIVE ELECTION PROCESS • Known as the “Hare System” • Ensures a Board Reflecting the Proportional Distribution of Members • Protects Voting Minorities • Could Allow a Small Board With Industry Expertise - No “Independence” Test • Complex Voting Process

  49. REGIONAL RELATIONSHIPS Options for the relationship between the WIO and Regional Entities WICF Workshop September 28, 1999

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