WECC RESTRUCTURING PHASE III GNC UPDATE TO BOARD OF DIRECTORS

1. WECC RESTRUCTURING PHASE IIIGNC UPDATE TO BOARD OF DIRECTORS March 14-15, 2013 Salt Lake City, UT

2. Agenda • Review of WECC RE Bylaws • Review of RCCo Bylaws • Discussion and Approval of Board and MAC Transition Plans • WECC to WECC RE • WECC RC/IA to RCCo • Future Activities

3. WECC RE Bylaws

4. WECC RE Bylaws - Background • ACTION: Review proposed bylaws’ amendments for future WECC (RE) • Any amendments to Sections 6.2-6.10 (Governance), 8.4 (Repealed), and 13.1 (Amendments by Board) and Appendix C (WECC Dispute Resolution Procedure) of existing bylaws require prior member approval (NOTE: Existing WECC Bylaws and WECC RE Bylaws have different section numbering. Sections noted in red italics reflect WECC RE Bylaws that would require member approval.) • Board action will be deferred until an April meeting/conference call • Bylaws amendments are based upon the Board approved resolutions developed from the WECC RE Governance White Paper • Sections with significant changes noted with a red asterisk (*)

5. WECC RE Bylaws – Summary of Sections • Mission and Vision* 2. Furtherance of WECC’s Mission 2.1 Activities to Carry Out WECC’s Mission 2.2 Organizational Characteristics 3. Definitions

6. WECC RE Bylaws – Summary of Sections (cont’d) 4. Members and Membership 4.1 Voluntary Membership 4.2 Eligibility for Membership* 4.3 Designation of Membership Class 4.4 Changes in Membership Class 4.5 Affiliates and Distinct Business Entities 4.6 Rights and Obligations of Membership* 4.7 Limitations on Member Obligations 4.8 Compliance and Enforcement 4.9 WECC Structure and Governance Review

7. WECC RE Bylaws – Summary of Sections (cont’d) 5. Procedures for Member Decisions 5.1 Quorum 5.2 General Membership Meetings 5.3 Annual Member Meetings 5.4 Special Member Meetings 5.5 Member Class and Subclass Meetings 5.6 Notice of Member Meetings 5.7 Open Meetings 5.8 Policymaking Authority 5.9 Minimum Participation Requirement

8. WECC RE Bylaws – Summary of Sections (cont’d) 6. Governance* 6.1 Board of Directors 6.2 Composition of the Board and Board Member Qualifications 6.3 Term of Office 6.4 Nomination, Selection and Compensation of Directors 6.5 Removal of Directors 6.6 Resignation 6.7 Procedures for Filling Vacant Director Positions 6.8 Duties of Directors 6.9 Powers of Directors 6.10 Delegation of Board Authority

9. WECC RE Bylaws – Summary of Sections (cont’d) 7. Procedures for Board Decisions 7.1 Quorum* 7.2 Majority Vote* 7.3 Attendance at Board Meetings by Teleconference 7.4 Board Action by Unanimous Consent 7.5 Notice of Board Meetings 7.6 Open Meetings 7.7 Board Committees*

10. WECC RE Bylaws – Summary of Sections (cont’d) 8. Member Committees 8.1 Purpose 8.2 Standing Committees* 8.3 Other Committees 8.4 Committee Assessment and Streamlining 8.5 Procedures for Member Advisory Committee* 8.6 Procedures for Committees Other Than the MAC 8.7 Procedures for Developing and Voting on Reliability Standards 8.8 Notice of Committee Meetings 8.9 Open Meetings*

11. WECC RE Bylaws – Summary of Sections (cont’d) 9. The Chief Executive Officer, Officers, and Employees 9.1 Designation of Officers and Terms of Office 9.2 Chief Executive Officer Qualifications 9.3 Standards Applicable to All Employees 9.4 Employment 9.5 Chief Executive Officer’s Duties 9.6 Secretary’s Duties

12. WECC RE Bylaws – Summary of Sections (cont’d) 10. Dispute Resolution 11. Costs and Finances 11.1 Funding of Reliability Activities 11.2 Dues 11.3 Funding of Non-Statutory Activities • Amendments to these Bylaws* 12.1 Amendment by the Board 12.2 Amendment by the Members 12.3 Amendments in Response to Mandatory Membership 12.4 Amendments proposed by FERC

13. WECC RE Bylaws – Summary of Sections (cont’d) 13. Termination of Organization 14. Miscellaneous Provisions 14.1 Limitation on Liability 14.2 Indemnification 14.3 No Third Party Beneficiaries 14.4 Informal Inquiries for Information 15. Incorporation 16. Governing Law

14. WECC RE Bylaws – Summary of Sections (cont’d) APPENDICES: • Board Member Standards of Conduct • Officers and Employees Standards of Conduct C. WECC Dispute Resolution Procedures

15. WECC RE Bylaws – Outstanding Issues • GNC still reviewing draft; not ready for Board approval • Membership concerns regarding Western Interconnection experience on Board • Membership voting procedure if one class constitutes a majority of members

16. RCCo Bylaws - Background • ACTION: Review proposed bylaws’ for future RCCo • Bylaws are based upon the Board approved resolutions developed from the RCCo Governance White Paper • Approval of RCCo Bylaws is scheduled for the June Board meeting • Sections with significant changes noted with a red asterisk (*)

17. RCCo Bylaws – Summary of Sections • Mission and Vision* 1.1 Vision 1.2 Mission 2. Definitions 3. Board of Directors* 3.1 Independent Director Qualifications 3.2 Independent Director Terms and Election Process 3.3 Independent Director Compensation 3.4 Director Vacancy by Resignation or Removal 3.5 Director Vacancy by Procedure 3.6 Board of Directors Chair and Vice-Chair 3.7 Director Duties 3.8 Powers of Directors 3.9 Delegation of Board Authority

18. RCCo Bylaws – Summary of Sections (cont’d) 4. Procedures for Board Decisions 4.1 Quorum* 4.2 Majority Vote* 4.3 Remote Board Meeting Participation 4.4 Board Action by Unanimous Consent 4.5 Notice 4.6 Open Meetings 4.7 Board Committees

19. RCCo Bylaws – Summary of Sections (cont’d) 5. Members and Membership 5.1 Voluntary Membership 5.2 Eligibility for Membership* 5.3 Subdivision of Membership Classes 5.4 Designation of Membership Class 5.5 Affiliates* 5.6 Application for Membership 5.7 Change in Membership Class 5.8 Appeal of Membership Decisions 5.9 Rights and Obligations of Membership* 5.10 Limitation on Member Obligations 5.11 Membership Agreement 5.12 Active Membership 5.13 Compliance with and Enforcement of Membership Obligations

20. RCCo Bylaws – Summary of Sections (cont’d) 6. Procedures for Member Decisions 6.1 Quorum* 6.2 Annual Member Meetings 6.3 Special Member Meetings 6.4 Member Class Meetings 6.5 Notice of Member Meetings 6.6 Open Meetings 6.7 Meeting and Voting Procedures

21. RCCo Bylaws – Summary of Sections (cont’d) 7. Member Advisory Committee* 7.1 MAC Member Elections 7.2 Quorum 7.3 Terms and Election Cycle 7.4 MAC Member Vacancy by Resignation, Removal or Procedure 7.5 MAC Chair and Vice-Chair 7.6 MAC Member Duties

22. RCCo Bylaws – Summary of Sections (cont’d) 8. Procedures for MAC Decision Making 8.1 Regular and Special Meetings 8.2 Notice 8.3 Quorum 8.4 Majority Vote 8.5 Remote Participation at MAC Meetings 8.6 Reporting to the Board 8.7 Open Meetings* 9. MAC Committees

23. RCCo Bylaws – Summary of Sections (cont’d) 10. Advisory Bodies 10.1 Western Interconnection Regional Advisory Body (WIRAB) 11. Officers and Employees 11.1 Officers 11.2 CEO Qualifications and Employment 11.3 Officer Duties 11.4 Employees 12. RCCO Services 13. Dues, Fees and Special Assessments 14. Penalties

24. RCCo Bylaws – Summary of Sections (cont’d) 15. Amendments to the Bylaws* 15.1 Amendment by the Board 15.2 Limitations 15.3 Amendment by the Membership 15.4 Amendments in Response to Mandatory Membership Requirement 16. Termination of the Organization 17. Miscellaneous 17.1 Limitation on Liability 17.2 Indemnification 17.3 No Third Party Beneficiaries

25. RCCo Bylaws – Summary of Sections (cont’d) 18. Incorporation 19. Governing Law 20. RCCO Structure and Governance Review • Appendices • A- Board of Directors Standards of Conduct • B- Officers and Employees Standards of Conduct • C- Membership Agreement • D- Placeholder for future Services Agreement

26. RCCo Bylaws – Outstanding Issues • Membership concerns regarding Western Interconnection experience on Board • Membership voting procedure if one class constitutes a majority of members

27. MAC and Board Transition Plan – WECC RE • MAC • Use the June WECC Annual Meeting as a venue for electing the Class 1-5 MAC representatives in addition to the member class director elections • Requires communication to, and coordination with, the membership between March and June • Proceed with formation of the MAC in late June-early July with initial goal of identifying Nominating Committee (NC) members to support selection of new Independent Directors during summer of 2013 • Use remaining time in 2013 to develop charter and processes for MAC • Board • NADs elected at June WECC Annual Meeting and any NADs remaining on the WECC Board at the “go-live” of the WECC RE would “port over” to become Directors of the WECC RE and serve out their remaining terms • NC would be formed in summer 2013 in accordance with proposed Bylaws Amendments to select and recommend additional WECC RE Directors for membership vote in fall of 2013 • New WECC RE Directors would take office with “go-live” of WECC RE (~1/1/14)

28. MAC and Board Transition Plan – RCCo • MAC • Use the June WECC Annual Meeting as a venue for electing the Class 1-5 MAC representatives in addition to the member class director elections • Requires communication to, and coordination with, the membership between March and June • Proceed with formation of the MAC in late June-early July with initial goal of identifying Nominating Committee (NC) members to support selection of new Independent Directors during 2nd half of 2013 • Use remaining time in 2013 to develop charter and processes for MAC • Board • Interim Board Committee members selected by WECC Board at March meeting would “port over” as RCCo Directors, each with “one year” initial terms • NC would be formed in summer 2013 in accordance with proposed Bylaws to select and recommend additional RCCo Directors for membership vote in fall of 2013 • RCCo Directors would take office with “go-live” of RCCo (~1/1/14)

29. Future Recommendations for Board Approval • Bylaws amendments for WECC RE – (March Board Meeting and April Meeting/Conference Call) • Proposed bylaws for RCCo – (June Board Meeting) • Plan for transitioning the registered functions from the current WECC to the RCCo –(Transfer responsibility to Interim Board Committee)

30. WECC RE Bylaws – Draft Resolution Option 1 Whereas, The Western Electricity Coordinating Council (WECC) Board of Directors (Board) on December 7, 2012 directed the Governance and Nominating Committee (GNC) to develop a detailed governance proposal for the spinoff of registered functions into a Reliability Coordination Company (RCCo), as well as for the continuing governance of the Remaining WECC Company (WECC RE) which will continue to carry out NERC delegated functions; and whereas the Board on February 22, 2013, approved a set of governance principles for the WECC RE. Therefore, Be It Resolved, that • The WECC Board approves the amendments for the WECC RE Bylaws presented to the Board on March 14, 2013; and • The WECC Board authorizes WECC management to post those sections of the bylaws amendments requiring membership approval by April xx, 2013, to support a membership vote at the June 2013 Annual Meeting.

31. WECC RE Bylaws – Draft Resolution Option 2 Whereas, The Western Electricity Coordinating Council (WECC) Board of Directors (Board) on December 7, 2012 directed the Governance and Nominating Committee (GNC) to develop a detailed governance proposal for the spinoff of registered functions into a Reliability Coordination Company (RCCo), as well as for the continuing governance of the Remaining WECC Company (WECC RE) which will continue to carry out NERC delegated functions; and whereas the Board on February 22, 2013, approved a set of governance principles for the WECC RE. Therefore, Be It Resolved, that • The WECC Board approves the amendments for Sections 6.2-6.9 and 12.1 of the WECC RE Bylaws presented to the Board on March 14, 2013; and • The WECC Board authorizes WECC management to post those sections of the bylaws amendments requiring membership approval by April xx, 2013, to support a membership vote at the June 2013 Annual Meeting.