Enforcement 101

1. Enforcement 101 Garret Story, Enforcement Analyst

2. The Hand-Off

3. Primary Role: Determining Violation Disposition (Disposition Analysis) • Violation disposition • Case analysis • Policy analysis • Assess penalties • Conduct settlements • Be a point of contact for the Entity WECC Enforcement Analysts

4. Dismissal Compliance Exception (“CE”) Find, Fix and Track (“FFT”) Notice of Alleged Violation (“NOAV”) Expedited Settlement Agreement (“ESA”) Disposition Methods

5. Disposition method used when the Enforcement Analyst determines the possible violation is not enforceable • For Example… • Standard Requirement does not apply to Entity • Facts and circumstances warrant a violation of a different Standard Requirement • Entity produced additional evidence demonstrating compliance Dismissal

6. Enforcement Analyst will issue a “Notice of Dismissal and Completion of Enforcement Action” • WECC: • Withdraws the Possible Violation from Entity’s compliance record • Any data retention directives relating to the possible violation are released • Entity: • Does not need to respond to notice • Questions/concerns contact Enforcement Analyst What does a dismissal look like?

7. CEs are the exercise of Enforcement discretion WECC reviews all PVs for CE treatment • Requirements of a CE: • Must be a Minimal risk issue • Additional Factors considered during CE analysis: • The quality of an RE’s internal compliance program (ICP) • Aggravating factors, such as repeat or repetitive noncompliance • Whether the issue reveals programmatic or systematic shortcomings • Whether the issue was submitted through the Self-Logging Process Compliance Exceptions

8. WECC Enforcement will issue a “Notice of Compliance Exception” • No Penalty or sanction • CE is filed with NERC but does not become a “confirmed violation” • Must be mitigated within 12 months of CE notification • A CE is part of an entity’s compliance history only to inform of potential risk. • A CE is not part of an entity’s violation history for purposes of aggravation of penalties. What does a CE look like?

9. FFTs are similar in concept to the CE Differences between processing an FFT and CE: • Moderate risk issues may be considered for FFT treatment • FFTs contain an Affidavit to be returned by the Entity • FFTs will only be used in rare occurrences Find, Fix and Track (“FFT”)

10. WECC Enforcement will issue a “Notice of Find, Fix and Track” • Remediation Required • No Penalty or sanction • FFT is filed with NERC but does not become a “confirmed violation” • FFT will become part of an Entity’s compliance history What does an FFT look like?

11. Issued in circumstances that do not warrant Dismissal, CE, FFT, or ESA treatment. A notice issued by the Compliance Enforcement Authority to a Registered Entity pursuant to Section 5.3 of Appendix 4C. (CMEP) Notice of Alleged Violation (“NOAV”)

12. NERC Rules of Procedure, Appendix 4C §5.3 (“CMEP”) • Alleged Violation Facts • Mitigation Plan Summary (if applicable) • Enforcement Violation Determinations • BES Impact Statement • Minimal • Moderate • Severe • Violation Severity Level (“VSL”) • Violation Risk Factor (“VRF”) • Penalty What does a NOAV look like?

13. Submit a NOAV Response within 30 days • The NOAV Response must conform to one of three options • Agree with the violation AND penalty • Agree with the violation, but contest penalty • Contest both the violation AND penalty • Failure to submit a NOAV Response within 30 days will automatically result in confirmed violations with penalties What to do with a NOAV?

14. Reaching Settlement

15. ESA: Expedited Settlement Process Settlement Agreement ESA

16. Expedites Formal Settlement Negotiations • The ESA will contain • Facts and circumstances of the violation • Mitigation Plan Summary • Risk Assessment Summary • VSL and VRF determinations • Penalty determination What does an ESA look like?

17. Entity will have 15 days to review the ESA… • The Entity will contact the Enforcement Analyst with questions or concerns. • If the Entity accepts the terms of the ESA… • The Entity must submit a signed copy of the ESA to WECC within 15 days of receipt of the ESA issuance. • If the Entity rejects the ESA or does not respond within 15 days… • WECC will issue a Notice of Alleged Violation and Proposed Penalty and Sanction. What to do with an ESA?

18. Attached to violations disposed of using the NOAV or ESA processes • Based on: • NERC Sanction Guidelines (January 31, 2012) • Penalty Range • Penalty range depends upon Violation Severity Level (“VSL”) and Violation Risk Factor (“VRF”) • Penalties are then adjusted for either Mitigating or Aggravating Factors Penalties

19. Enforcement Process WECCNERCFERCWECC *Dismissal could happen at any point prior to filing with NERC

20. A penalty from a NOAV Settlement or ESA becomes effective after a review by NERC and FERC At this time, WECC issues a “Payment Due Notice” The Penalty will be due thirty (30) days from the date the Notice is issued Payment & Closure of Enforcement Actions CASE CLOSED

21. Enforcement Process Summary • Lifecycle of a Possible Violation • Best Compliance Practices • http://www.wecc.biz/compliance/Pages/Best-Practices.aspx • Possible Violation Disposition and Entity Responses