12. State of the Interconnection Report—Branden Sudduth
13. Stakeholder Engagement Task Force—Jordan White
14. Potential Peak Reliability Refund to WECC—Steven Goodwill
Possible Approval Item: Peak Reliability Refund to WECC
15. Board Committee Reports
Finance and Audit Committee—Joe McArthur
Nominating Committee—Shelley Longmuir
Human Resources and Compensation Committee—Richard Woodward
Governance Committee—Gary Leidich
Standards Committee—Jim Avery
16. Technical Committee Reports
Joint Guidance Committee—Branden Sudduth
Market Interface Committee—Layne Brown
Reliability Assessment Committee—Dave Angell
Operating Committee—Jonathan Aust
17. Review of New Action Items
18. Review Upcoming Meetings
December 8-9, 2020...................................................................................Virtual
March 16-17, 2021 .....................................................................................Salt Lake City, UT*
June 15-16, 2021.........................................................................................Salt Lake City, UT*
*Meeting may be virtual due to the COVID-19 pandemic.
19. Adjourn
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September 11, 2020Board of Directors Meeting
Approval Item
Consent Agenda
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
Background
The consent agenda for this meeting consists of:
Approve Meeting Minutes from June 17, 2020WECC’s technical editor, the CEO, and the corporate secretary have reviewed the draft minutes. They have been distributed to each director; corrections and suggestions have been incorporated. A copy of the minutes follows.
Appoint Charles Faust and Kevin Cardoza as, respectively, Market Interface Committee (MIC) Chair and Vice Chair
The MIC elected new leadership at its July 15, 2020, meeting. Biographies of Mr. Faust and Mr. Cardoza follow.
Approve Charter of the MICThe MIC approved revisions to its charter at its meeting on July 15, 2020. A redline version follows.
Approve Charter of the Human Resources Compensation Committee (HRCC)The HRCC expects to approve charter revisions at its September 10, 2020, meeting.
Recommendation
Staff believes that each of these items is non-controversial and appropriate for this consent agenda.
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Board of Directors
DRAFT Meeting Minutes
June 17, 2020
Webinar
1. Welcome, Call to Order, Introductions
Kris Hafner, Board of Directors (Board) Chair, called the meeting to order at 9:16 a.m. on June
17, 2020. All Board members were present. Megan Naylor, WECC staff, read a list of all other
attendees. A list of attendees is attached as Exhibit A.
2. Review WECC Antitrust Policy
Steven Goodwill, Senior Vice President of Reliability and Security Oversight, General Counsel
and Secretary, read aloud the WECC Antitrust Policy statement. The meeting agenda included a
link to the posted policy.
3. Approve Agenda
Ms. Hafner introduced the proposed meeting agenda.
On a motion by Richard Woodward, the Board approved the agenda.
4. Consent Agenda
Ms. Hafner introduced the consent agenda, which consisted of:
• Approve Meeting Minutes from March 11, 2020;• Approve Charter of the Finance and Audit Committee;• Approve Charter of the Operating Committee;• Appoint Jonathan Aust and Margaret Albright as, respectively, OC Chair and Vice Chair;• Approve Charter of the Reliability Assessment Committee; and• Retire the Generating Unit Model Validation Policy.
On a motion by Shelley Longmuir, the Board approved the consent agenda.
5. Review of Closed Session
Ms. Hafner reported that, during the March 11 closed session, the Board held a discussion withNERC CEO Jim Robb about WECC, NERC, and ERO Enterprise issues and received reportsfrom WECC executive staff on data security, enterprise risk, compliance efforts, reliabilitycoordination, resource adequacy, and CEO goals.
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Board Meeting Minutes—June 17, 2020
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6. Remarks and Reports
a. WECC CEO Report*
Melanie Frye, WECC President and Chief Executive Officer, reviewed new management hires since the March meeting and reported on the activation of WECC’s business continuity plan and COVID-19 response. She reviewed the state of the industry relative to COVID-19. She updated the Board on regional, national, and international matters affecting WECC. She described WECC outreach and education activities, summarized the summer reliability outlook, and provided the current status of the corporate scorecard metrics.Directors asked about ERO benchmarks for the amount of time to discover noncompliance and whether Ms. Frye had any concerns about WECC functions being accomplished under the work-from-home order. Ms. Frye indicated that all WECC functions are being completed at home but that she is concerned about the general well-being of WECC employees dealing with the challenges of working remotely. She referred to the Human Resources and Compensation Committee (HRCC) presentation describing the numerous efforts WECC has initiated to stay connected to staff. Mr. Goodwill will look into ERO compliance benchmarks.
b. Reliability and Security Oversight Report*
Mr. Goodwill reviewed a new open enforcement process; a reorganization of the
department; and WECC, NERC, FERC, and international partner activities in response
to COVID-19.
In response to a Director’s question, Mr. Goodwill reported there are remote auditing
workarounds for all standards except CIP-14 (physical security), which requires in-
person auditing. Mr. Woodward suggested WECC explore potential options to use
technology to audit physical security standards.
c. Member Advisory Committee Report*
Russ Noble, Member Advisory Committee (MAC) Chair, reviewed MAC activities and
issues.
* Report was accompanied by slides. The slides are kept with the minutes book for this meeting in the office of theCorporate Secretary.
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Board Meeting Minutes—June 17, 2020
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d. WIRAB Update*
Kara Fornstrom, Chair of the Western Interconnection Regional Advisory Body(WIRAB), reviewed WIRAB advice on WECC’s 2021 Business Plan and Budget, theSection 4.9 review, and the Near-Term Priorities.
7. Public Comment
Ms. Hafner opened the meeting for public comment. No comments were offered.
8. September 2020 Annual Member Meeting Location
Ms. Hafner noted that there has been a lot of discussion about the wisdom and possibility of an
in-person meeting in September. She asked Ms. Frye for a recommendation about this matter.
Ms. Frye reviewed the reasons for not holding an in-person meeting and suggested that the
Board change the meeting location to a virtual setting.
On a motion by Ms. Hafner, the Board voted to move the Annual Meeting to a virtual format.
9. Resource Adequacy UpdateBranden Sudduth, Vice President of Reliability Planning and Performance Analysis, addressed four action items assigned by the Board in March 2020. He described how WECC does and will add value to resource adequacy work, how the various technical committees participate in resource adequacy, what issues have been identified and how they will be resolved, and how WECC is working to engage stakeholders.Directors were complimentary about WECC’s resource adequacy activities and noted that they expect WECC to continue leading on this issue. Directors asked questions about feedback from the Resource Adequacy Forum and how WECC plans to identify and communicate with policymakers and influencers at all levels.
10. Near-Term Priorities Workshop Report
Mr. Sudduth reviewed the development of the Near-Term Priorities and summarized changes
coming out of the Board workshop. He reviewed comments received from stakeholders during
the public comment period.
On a motion by Ian McKay, the Board approved the following resolution:
Resolved, that the WECC Board of Directors (Board), acting at the meeting of the Board on June 17, 2020, approves the WECC Near-Term Priorities as presented and attached.
Mr. Sudduth also pointed out that the board materials contained a reconciliation of terminology if the board approves the Section 4.9 Committee Report. Upon approval of the Section 4.9
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Board Meeting Minutes—June 17, 2020
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Report, the Near-Term Priorities will be known as WECC Reliability Risk Priorities. Additional information is attached as Exhibit B.
11. NERC-WECC Delegation Agreement
Mr. Goodwill reviewed the development of a new Delegation Agreement between NERC andWECC. He noted that, after approval by the WECC Board, the Agreement will be sent to theNERC Board of Trustees for its approval.
On a motion by Ms. Longmuir, the Board approved the following resolution:
Resolved, that the WECC Board of Directors (Board), acting on the recommendation of the WECC General Counsel at the meeting of the Board on June 17, 2020, approves the NERC-WECC Delegation Agreement as presented and attached.
Further resolved, that the Board authorizes the CEO to execute and file the Agreement for regulatory approval, and to make any necessary non-material changes to the Agreement prior to seeking said approval.
Additional information is attached as Exhibit C.
12. Board Committee Reports
a. Section 4.9 Review Committee*
Ric Campbell, Section 4.9 Review Committee Chair, reviewed the membership of thecommittees and the work groups. He provided an overview of the findings, conclusions,and recommendations. He reviewed a proposed resolution about the committee’srecommendation and described the Board’s view that subject matter expertise is criticalto WECC’s success. Several Board members spoke in support of the proposed resolutionand affirmed the Board’s view about the need for subject matter expertise.
On a motion by Mr. Campbell, the Board approved the following resolution:
Resolved, that the WECC Board of Directors (Board), having reviewed the Section 4.9 Committee Final Report and Recommendations (Report), dated May 29, 2020, hereby thanks the members of the Section 4.9 Review Committee, the Strategic Planning Work Group, and the Stakeholder Engagement Work Group for their dedication, time, and effort, and accepts the Report and approves its recommendations.
* Report was accompanied by slides. The slides are kept with the minutes book for this meeting in the office of theCorporate Secretary.
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Board Meeting Minutes—June 17, 2020
5
Further resolved, that, based on the information contained in the Report, the Board finds:
• Access to stakeholder subject matter expertise is critical to WECC’s ability tofulfill its reliability and security responsibilities;
• The existing stakeholder engagement structure and processes are not wellsuited to enable WECC to marshal that expertise to identify and analyzeemerging reliability and security issues in a timely manner; and
• Further examination and change are required to streamline the existingcommittee structure and to create new structures and processes so thatstakeholders can more effectively and efficiently support WECC’s reliabilityand security activities.
Therefore, be it resolved, that the Board directs the Chief Executive Officer (CEO) to create a Stakeholder Engagement Task Force to address the Report’s recommendations and the findings of the Board above. The CEO shall:
• Report on the task force’s progress at the September 2020 Board meeting; and• Present preliminary findings and recommendations based on the work of the
task force at the December 2020 Board meeting; and
Be it finally resolved, that the Board directs the CEO to implement the strategic planning recommendations contained in the Report. Specifically, the CEO shall:
• Initiate a process to develop a WECC Long-Term Strategy and ReliabilityRisk Priorities and present these for approval at the September 2020 Boardmeeting;
• Develop a Communications and Outreach plan for the Strategy andPriorities; and
• Increase engagement and understanding of the Strategy through two-waycommunication, including an interactive forum at the September 2020Annual Meeting and subsequent annual meetings.
b. Finance and Audit Committee
Joe McArthur, FAC Chair, reviewed the previous day’s FAC meeting and commendedWECC for its efforts on the 2021 Business Plan and Budget.
On a motion by Mr. McArthur, the Board approved the following resolution:
Resolved, that the WECC Board of Directors, acting upon the recommendation of the Finance and Audit Committee (FAC) at the meeting of the Board on June 17, 2020,
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Board Meeting Minutes—June 17, 2020
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hereby approves the 2021 Business Plan and Budget (BP&B), as presented and attached hereto.
Further resolved, that the Board authorizes the CEO to file the BP&B for regulatory approval when appropriate and to make changes to the BP&B as deemed necessary:
• Based on Near-Term Priorities approved by the Board on June 17, 2020;• Based on the Section 4.9 Review Committee recommendations approved by
the Board on June 17, 2020;• To prepare the BP&B for regulatory filing and approval.
Additional information is attached as Exhibit D.
On a motion by Mr. McArthur, the Board approved the following resolution:
Resolved, that the WECC Board of Directors (Board), acting on the recommendation of the Finance and Audit Committee (FAC) at the meeting of the Board on June 17, 2020, accepts the 2019 Audited Financial Statements as presented and attached.
Additional information is attached as Exhibit E.
c. Nominating CommitteeMs. Longmuir, Nominating Committee (NC) Chair, reviewed the membership of the NC. She provided an overview of the work of the committee and reported that the NC completed its work and unanimously nominated incumbent Directors Woodward and McKay and new Director candidate Dr. Dan Arvizu. She described the background of the new director candidate, Dr. Dan Arvizu. Mr. Goodwill reported that the 2020 Director election is now open.
d. Human Resources and Compensation Committee
Mr. Woodward, HRCC Chair, reviewed the previous day’s HRCC meeting.
e. Governance Committee
Gary Leidich, Governance Committee (GC) Chair, provided an overview of the previous
day’s GC meeting.
On a motion by Mr. Leidich, the Board approved the following resolution:
Resolved, that the WECC Board of Directors (Board), acting on the recommendation of the Governance Committee (GC) at the meeting of the Board on June 17, 2020, approves the Information Sharing Policy and the Information Reporting Policy as presented and attached.
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Board Meeting Minutes—June 17, 2020
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Additional information is attached as Exhibit F.
f. WECC Standards Committee
James Avery, WECC Standards Committee Chair, reported on recent activities of thecommittee. He described a recent FERC data request and WECC’s response to it.
13. Review of New Action Items
There were no new action items created during this meeting.
14. Upcoming Meetings
September 10–11, 2020 .............................................................................Webinar
December 8–9, 2020 ..................................................................................Salt Lake City, UT
March 16–17, 2020 .....................................................................................Salt Lake City, UT
15. Closed Session
On a motion by Mr. McArthur, the Board unanimously voted to go into closed session.
16. Adjourn
Ms. Hafner adjourned the meeting without objection.
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Board Meeting Minutes—June 17, 2020
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Exhibit A: Attendance List
Members in Attendance
James Avery, Ric Campbell, Melanie Frye, Kris Hafner, Gary Leidich, Shelley Longmuir, Ian McKay, Joe McArthur, Richard Woodward
Others in Attendance
Chris Albrecht ................................................................................................................................................ WECC
Meg Albright .................................................................................................. Bonneville Power Administration
Taylor Allred ................................................................................................................................................. sPower
Brenda Ambrosi ....................................................................................................................................... BC Hydro
Grace Anderson ..................................................................................... California Public Utilities Commission
David Angell ....................................................................................................................................... Idaho Power
Steve Ashbaker .............................................................................................................................................. WECC
Jonathan Aust ............................................................................................ Western Area Power Administration
Eric Baran ...................................................................................................................................................... WIRAB
Michele Beck ................................................................................................... Utah Office of Consumer Services
Shannon Black ................................................................................................................................................ WECC
Duncan Brown ................................................................................................................................. WECC Class 3
Deane Burke .................................................................................... California Department of Water Resources
Dana Cabbell .............................................................................................................. Southern California Edison
Keith Carman ........................................................................................ Tri-State Generation and Transmission
Mike Connelly ................................................................................................................................................ WECC
Travis English ................................................................................................................................................. WECC
Brian Evans-Mongeon .................................................................................................................... Utility Services
Dick Ferreira ................................................................................ Transmission Agency of Northern California
Kara Fornstrom ....................................................................................... Wyoming Public Service Commission
Brett Gall ............................................................................................................................. Sammons Corporation
Steven Goodwill ............................................................................................................................................. WECC
Ray Grippo ........................................................................................................................... Pacific Gas & Electric
Stephanie Imamovic ............................................................................................................. Puget Sound Energy
Kim Israelsson ................................................................................................................................................ WECC
Linda Jacobson-Quinn ................................................................................. Farmington Electric Utility Service
Colby Johnson ................................................................................................................................................ WECC
David Krause .....................................................................................................................................................CEM
Thad LeVar ....................................................................................................... Utah Public Service Commission
Eddie Lim ......................................................................................................................................................... FERC
Saad Malik ...................................................................................................................................................... WECC
Andy Meyers .................................................................................................. Bonneville Power Administration
Russell Noble...................................................................................................................................... Cowlitz PUD
Gary Nolan ......................................................................................................................... Arizona Public Service
Bert Peters ........................................................................................................................... Arizona Public Service
Cherilyn Randall ............................................................................................ Bonneville Power Administration
Victoria Ravenscroft ...................................................................................................................................... WECC
Mike Rein ...............................................................................................................................................Xcel Energy
Bruce Rew ............................................................................................................................................................ SPP
Tim Reynolds ................................................................................................................................................. WECC
Dena Richins ................................................................................................................................................... WECC
Jennifer Rodgers ....................................................................................... Western Area Power Administration
Steve Rueckert ................................................................................................................................................ WECC
Ruchi Shah ...................................................................................................................................................... WECC
Amy Shaw ......................................................................................................................... Idaho Power Company
Holly Taylor ................................................................................................................................................. WIRAB
Brian Theaker ......................................................................................................................... Middle River Power
Chifong Thomas ............................................................................................................................ Smartwire Grid
Eric Weston ..................................................................................................................................................... WECC
Jordan White .................................................................................................................................................. WECC
Diana Wilson .................................................................................................... Alberta Electric System Operator
Scott Winner ................................................................................................... Bonneville Power Administration
Tino Zaragoza ............................................................................................................. Imperial Irrigation District
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EXHIBIT B
2020 Near-Term Priorities
June 17, 2020
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EXHIBIT B — 2020 Near-Term Priorities
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Introduction
The Western Interconnection is experiencing unprecedented change. This change is due to several factors:
• Environmental regulations, economics, technology, and customer demands driving the resource mix from large, baseload units, like coal and nuclear, to more distributed, variable energy resources;
• Extreme natural events forcing entities to plan and operate the grid in new ways; and • An increasing impact from distribution-level resources and customer loads on the bulk power
system (BPS).
WECC must use a careful approach to decide the best way to use its resources on emerging reliability risks.
This document identifies four WECC Near-Term Priorities, background information on each of the priorities, and recommendations for how to address them. The Near-Term Priorities will serve as input to update committee and program-area work plans scheduled for late 2020. The work plans will include detailed information for each Near-Term Priority, such as who will be responsible for addressing each activity, when the activity is expected to be complete, and what the work product(s) will be.
Background
On February 20, 2020, WECC hosted the Reliability Workshop in conjunction with the Standing Committee meetings. This provided an opportunity for the Member Advisory Committee (MAC), Western Interconnection Regional Advisory Body (WIRAB), and the Standing Committees to discuss the NERC Reliability Issues Steering Committee (RISC) Electric Reliability Organization (ERO) Reliability Risk Priorities Report1 (RISC Report) and provide input on reliability risks facing the Western Interconnection.
During the workshop, attendees discussed workshop presentations covering NERC’s and WECC’s Strategic Planning Processes, the RISC Report, and the MAC’s and WIRAB’s recommendations about reliability risk priorities specific to the Western Interconnection.
WECC used the outcomes of the Reliability Workshop to create four Near-Term Priorities. These issues have a unique impact or importance to the Western Interconnection, or show areas in which WECC can make a material contribution and on which it should focus over the next few years. These proposed Near-Term Priorities were discussed at the May 5, 2020, Board Workshop and recommendations stemming from that workshop were incorporated into the proposed Near-Term Priorities posted for
1 ERO Reliability Risk Priorities Report, November 2019.
stakeholder comment from May 22 through June 5, 2020. Comments received during the stakeholder comment period have been considered and incorporated where appropriate in the following Near-Term Priorities.
Near-Term Priorities
Based on input received at the Reliability Workshop, the Board Workshop, and during the stakeholder comment period, WECC adopts the following Near-Term Priorities.
1) Resource Adequacy and Performance Study interconnection-wide future resource adequacy and performance considering:
a. The importance of working with resource planners and decision-makers, b. Benefits of resource diversity (geographical and resource type), c. Technology performance during various conditions (e.g., solar during extreme heat), and d. Near-term and longer-term time frames.
Background: With the retirement or planned retirement of considerable amounts of nuclear and coal-fired generation, and an increase in variable energy resources, the need to ensure sufficient capacity to reliably meet electricity demand at any given hour within the Western Interconnection is becoming more significant. Additionally, in regions with high penetrations of solar generation, capacity shortfalls are likely to occur in the hours after the peak demand, which makes traditional methods of determining resource adequacy insufficient.
Recommendations: As the Regional Entity with an independent and interconnection-wide perspective, WECC is uniquely positioned to evaluate multiple scenarios using probabilistic methods and to provide the stakeholders with a clear picture of the risk of resource shortfalls in the future. WECC staff should continue to work with the MAC Resource Adequacy Task Force to identify opportunities to improve assessment and stakeholder engagement. It is also recommended that WECC develop its own Western Interconnection resource adequacy assessment (in addition to the assessment provided for the development of the NERC Long-Term Reliability Assessment) that looks at a broad range of potential futures. WECC should work with resource planners and decision-makers to host a forum focused on resource adequacy issues and use input from the forum to inform WECC resource adequacy assessments. Finally, WECC should expand the capabilities of the Generator Resource Adequacy Forecast (GRAF) tool and continue to educate stakeholders on its value and use.
2) Changing Resource Mix Evaluate the impacts of the changing resource mix considering:
a. Large amounts of coal and nuclear plant retirements, b. High use of inverter-based resources,
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EXHIBIT B — 2020 Near-Term Priorities
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c. Transmission congestion and other deliverability challenges, d. Changes to capacity factors of natural gas resources, e. Market trends and market impacts, f. System stability and voltage challenges, and g. The benefits and challenges associated with energy storage and hybrid resources.
Background: The changing resource mix continues to be a focus for industry stakeholders in the West and was a common theme at the February workshop. As the system continues to change and new technologies like battery storage are being used more broadly, rigorous analysis should be performed to ensure that BPS is able to meet future power demands and other essential reliability services (e.g., frequency response, voltage support, ramping) needed to maintain system reliability.
Recommendations: With the increasing amount of the resource mix changes planned over the next 10 to 20 years, the RAC should continue to devote a large part of its study program to assessing various resource mixes under different loading conditions. As part of this effort, the RAC should also modify its data requirements and reporting procedures for collecting power flow and production cost modeling data to ensure it is receiving necessary generator retirement and new variable energy resource information. The Energy Storage Task Force should continue working with a focus on the reliable integration of large numbers of energy storage devices on the grid and should work closely with the RAC to mitigate any deficiencies in energy storage data and modeling.
3) Distribution System and Customer Load Impacts on the BPS Investigate and develop recommendations to limit the reliability risk to the BPS caused by changes to the distribution system (e.g., growth of distributed energy resources and behind-the-meter storage) and customer loads. This should include operational and planning activities.
Background: Growing amounts of distributed energy resources, such as rooftop solar and behind-the-meter energy storage, continue to pose challenges to BPS system operators and planners who have limited visibility into the amounts of these resources on the system. Additionally, mass electrification of loads that traditionally use a fuel source other than electricity (e.g., buildings and transportation) could significantly alter load profiles and how the system is operated. As the distinction between the transmission system and distribution system continues to blur, the impact that distribution system resources and load have on BPS reliability will continue to grow.
Recommendations: Working with the MAC, the Standing Committees should increase engagement of distribution providers in pertinent committee activities like planning model development. Also, WECC should develop a survey to identify what distribution system and load information utilities have access to, and the RAC should use this information to modify data requirements and reporting procedures for collecting modeling information. WECC staff should study trends of changes in load shapes across the interconnection and evaluate the impacts of the COVID-19
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EXHIBIT B — 2020 Near-Term Priorities
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pandemic on load patterns. This information should be used to develop alternate load patterns used in resource adequacy assessments and other reliability analyses. Finally, WECC should monitor NERC’s activities to address any applicability gaps in Reliability Standards to assure that Registered Entities can access distribution-level data needed to study BPS reliability.
4) Extreme Natural Events Prepare for and evaluate impacts on the BPS caused by extreme natural events (e.g., wildfires, drought, heavy rain, flooding, extreme cold, pandemics, earthquakes). Share best practices and lessons learned from individual state and utility experiences across the Interconnection.
Background: At the February workshop, many groups discussed the unique natural events that occur in the West. While many other regions around the country focus on system resilience to events like hurricanes, the West has unique risks like droughts, wildfires, and earthquakes. Although the operational challenges associated with the COVID-19 global pandemic are not unique to the West, it has become clear that further study, planning, and the sharing of best practices related to pandemics is critical for the reliability and security of the Interconnection.
Recommendations: WECC can use the expertise of its stakeholders to understand the reliability risks associated with extreme natural events and to develop industry guidance on preparation. The Operating Committee (OC) should host forums on preparing for extreme natural disasters to share information and lessons learned and develop reliability guidelines to help entities develop preparedness plans. The Reliability Assessment Committee (RAC) should develop studies looking at extreme natural event scenarios in the future (including geomagnetic disturbances) to determine system impacts. The RAC should identify mitigating measures to lessen reliability risk. WECC staff, through performance analysis, should correlate weather patterns to generator and transmission outages to identify any existing reliability trends due to weather extremes. Finally, WECC staff, through its event analysis and situation awareness, should work closely with NERC and established industry groups to track wildfire preparedness activities and potential threats to the BPS resulting from public safety power shutoffs or wildfires.
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Exhibit C — Delegation Agreement
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EXECUTION VERSION
Amended and Restated WECC Regional Delegation Agreement
AMENDED AND RESTATED DELEGATION AGREEMENT BETWEEN NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION
AND WESTERN ELECTRICITY COORDINATING COUNCIL
AMENDED AND RESTATED DELEGATION AGREEMENT (“Agreement”)
Effective as of January 1, 20162021, between the North American Electric Reliability
Corporation (“NERC”), an organization certified by the Federal Energy Regulatory Commission
(“Commission”) pursuant to Section 215(c) of the Federal Power Act to establish and enforce
Reliability Standards for the Bulk-Power System, and the Western Electricity Coordinating
Council (“WECC”), an organization established to develop and enforce Reliability Standards
within the geographic boundaries identifieddescribed in Exhibit A to this Agreement, and for
other purposes. NERC and WECC may be individually referred to herein as “Party” or
collectively as “Parties.”
WITNESSETH
WHEREAS, Subtitle A of the Electricity Modernization Act of 2005 added Section 215
to the Federal Power Act (16 U.S.C. § 824o) (hereafter “the Act”), which, among other things,
provides for the establishment of an Electric Reliability Organization (“ERO”) to develop and
enforce Reliability Standards applicable to all owners, operators, and users of the Bulk-Power
System;
WHEREAS, the Commission has adopted regulations for the implementation of the
Act, which are set forth at Chapter I, Title 18, Code of Federal Regulations, Part 39 (the “ERO
Regulations”);
WHEREAS, the Commission has certified NERC as the ERO that will, in accordance
with the Act, establish and enforce Reliability Standards for the Bulk-Power System, subject to
certain delegation provisions described below;
WHEREAS, the Act recognizes the international interdependency of electric reliability
within North America and envisions the ERO and such applicable Regional Entities as
international organizations;
WHEREAS, the Act and Section 39.8 of the ERO Regulations provide for the
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Amended and Restated WECC Regional Delegation Agreement page 2 of 25
delegation by the ERO of authority to propose and enforce Reliability Standards to regional
entities (“Regional Entities”) such as WECC, provided that:
(A) The Regional Entity is governed by —
(i) an independent board;
(ii)(i) a balanced stakeholder board; or
(iii)(ii) a hybrid board consisting of a combination of independent and
balanced stakeholder boardmembers.
(B) The Regional Entity otherwise satisfies the provisions of Section 215(c)(1) and (2)
of the Act; and
(C) The agreement promotes effective and efficient administration of Bulk-Power
System reliability;
WHEREAS, certain Regional Entities are organized on an Interconnection-wide basis
and are therefore entitled to the presumption set forth in the Act that: “[t]he ERO and the
Commission shall rebuttably presume that a proposal for delegation to a Regional Entity
organized on an Interconnection-wide basis promotes effective and efficient administration of
bulk power system reliability and should be approved”;
WHEREAS, the Act further provides that the ERO shall rebuttably presume that a
proposal from a Regional Entity organized on an Interconnection-wide basis for a Reliability
Standard or modification to a Reliability Standard to be applicable on an Interconnection-wide
basis is just, reasonable, and not unduly discriminatory or preferential, and in the public interest;
WHEREAS, WECC is organized on an Interconnection-wide basis and therefore is
entitled to the rebuttable presumptions accorded such an entity;
WHEREAS, NERC will work through WECC to carry out certain of its activities in
furtherance of its responsibilities as the ERO under the Act;
WHEREAS, NERC has concluded that WECC meets all requirements of the Act, the
ERO Regulations, and the NERC Rules of Procedure as approved by the Commission (“NERC
Rules of Procedure”) necessary to qualify for delegation; and
WHEREAS, NERC and WECC, having operated under a predecessor agreement to
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Amended and Restated WECC Regional Delegation Agreement page 3 of 25
this Agreement, have negotiated this amended and restated Agreement so as to incorporate
the benefits of their mutual experience and lessons learned while operating under the
predecessor agreement and thereby provide for the more efficient and effective execution of
their respective responsibilities in a transparent manner that is pursuant to Section 215 of the
Act and the ERO Regulations;
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained, NERC and WECC agree as follows:
1. Definitions. The capitalized terms used in this Agreement shall be defined as set forth
in the Act, the ERO Regulations, the NERC Rules of Procedure, or the NERC Glossary of
Terms Used in Reliability Standards, or, if not so defined, shall be defined as set forth in this
Section 1 or elsewhere in the text of this Agreement:
(a) Breach means (i) the failure of a Party to perform or observe any material term,
condition or covenant of the Agreement or (ii) a representation in Section 2 of the Agreement
shall have become materially untrue.
(b) Cross-Border Regional Entity means a Regional Entity that encompasses a part of
the United States and a part of Canada or Mexico.
(c) Delegated Authority means the authority delegated by NERC to WECC to propose
and enforce Reliability Standards, consistent with Section 4(d) and the boundaries identified in
Exhibit A pursuant to the Act and to undertake related activities set forth in this Agreement in
furtherance of these delegated functions in accordance with the Act, the ERO Regulations and
this Agreement.
2. Representations.
(a) For purposes of its Delegated Authority, WECC hereby represents and warrants to
NERC that:
(i) WECC is and shall remain during the term of this Agreement validly
existing and in good standing pursuant to all applicable laws relevant to this Agreement and that
no applicable law, contract or other legal obligation prevents it from executing this Agreement
and fulfilling its obligations hereunder. WECC is governed in accordance with its bylaws by an
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Amended and Restated WECC Regional Delegation Agreement page 4 of 25
independent Board. Pursuant to these bylaws, no two industry sectors can control any WECC
decision and no single industry sector can veto any WECC decision. The relevant criteria for
the establishment of such bylaws are attached hereto in Exhibit B. No other WECC corporate
governance documents shall be inconsistent with the criteria in Exhibit B.
(i)(ii) WECC has and shall retain during the term of this Agreement a governing
board with a sufficient number of independent members to perform certain oversight
obligations, including those relating to: (A) nomination of independent governing board
members, (B) compensation for the Regional Entity chief executive officer, and, (C)
compliance monitoring and enforcement program implementation. WECC has and shall retain,
during the term of this agreement, fair and reasonable compensation for independent governing
board members. WECC has and shall retain, during the term of this agreement, appropriate
conflict of interest and recusal policies with respect to their employees, nonindependent and
independent governing board members and will avoid any conflicts of interest, including but
not limited to, significant commercial relationships with registered entities. Each Regional
Entity’s implementation of these requirements has been documented and accepted by NERC
based on principles developed in consultation with the Regional Entities and such
implementation will be reviewed in connection with renewal of this Agreement.
(ii)(iii) WECC has developed a standards development procedure, which
provides the process that WECC may use to develop Regional Reliability Standards and
Regional Variances that are proposed to NERC for adoption.
(iii)(iv) As set forth in Exhibit D hereto, WECC has adopted the NERC
Compliance Monitoring and Enforcement Program, Appendix 4C to the NERC Rules of
Procedure, which provides for the enforcement of Reliability Standards for the registered
entities assigned to within WECC as reflected on NERC’s geographic boundaries as shown in
Exhibit ACompliance Registry.
(b) NERC hereby represents and warrants to WECC that:
(i) NERC is and shall remain during the term of this Agreement validly
existing and in good standing pursuant to all applicable laws relevant to this Agreement and that
no applicable law, contract or other legal obligation prevents it from executing this Agreement
and fulfilling its obligations hereunder; and
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(ii) NERC has been certified as the ERO by the Commission pursuant to the
Act.
(iii) NERC shall comply with its Certificate of Incorporation, Bylaws and
Rules of Procedure, as from time to time adopted, approved or amended.
3. General Covenants.
(a) During the term of this Agreement, WECC shall maintain and preserve its
qualifications for delegation pursuant to the Act and shall not amend its Regional Entity Rules
without NERC approval, which shall not be unreasonably withheld or delayed and which shall,
in the case of a Regional Entity organized on an Interconnection-wide basis, be governed by the
presumptions provided for in Section 215(d)(2) and (e)(4)(C) of the Act, and be subject to any
required Commission approval.
(b) WECC shall provide NERC with a copy of its Regional Entity Rules upon request
by NERC. NERC shall maintain on its public website the currently effective versions of all
Regional Entity bylaws and Regional Entity standard development procedures.
(c) During the term of this Agreement, NERC shall maintain its qualification and
status as the ERO pursuant to the Act and, subject to the provisions of Sections 17 and 18 of this
Agreement, NERC shall not adopt amendments to the NERC Rules of Procedure that conflict
with the rights, obligations or programs of WECC under this Agreement without first obtaining
the consent of WECC, which consent shall not be unreasonably withheld or delayed.
(d) During the term of this Agreement, NERC and WECC shall adhere to and require
that all participants in their respective activities under this Agreement follow and comply with
the NERC Antitrust Compliance Guidelines.
(e) For purposes of this Agreement, NERC shall collaborate with the Regional Entities
in the development of guidance, policies and procedures, and oversight parameters as
contemplated by this Agreement. In the event that collaboration is not successful on any such
matter, the NERC President may issue a directive with respect to such matter pursuant to Section
8 herein, and such directive shall be binding upon WECC.
4. Delegation of Authority.
(a) Based upon the representations, warranties and covenants of WECC in this
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Agreement, WECC’s corporate governance documents, WECC’s standards development
process, and the compliance monitoring and enforcement program set forth in Exhibit D, NERC
hereby delegates authority, pursuant to Section 215(e)(4) of the Act, to WECC for the purpose of
proposing Reliability Standards to NERC, as set forth in Section 5 of this Agreement, and
enforcing Reliability Standards, as set forth in Section 6 of this Agreement, within the
geographic boundaries and such other scope set forth in Exhibit A., provided, that WECC shall
not monitor and enforce compliance with Reliability Standards for WECC or an affiliated entity
with respect to reliability functions for which WECC or an affiliate is a Registered Entity. For
avoidance of doubt, Peak Reliability (or its successor) is not an affiliated entity of WECC for
purposes of this Section 4(a). Any exclusions from this delegation of authority to WECC within,
or additions to this delegation of authority to WECC beyond, the geographic boundaries set forth
in Exhibit A are stated in Exhibit A.
(b) In circumstances where WECC or an affiliated entity is a Registered Entity,
WECC shall enter into an agreement with another Regional Entity or NERC for the other
Regional Entity or NERC to monitor and enforce WECC’s or affiliate’s compliance with
Reliability Standards. Such agreements are subject to NERC and Commission approval.
(c)(b) Nothing in this Agreement shall prohibit WECC from entering into an
arrangement between one or more other Regional Entities to perform compliance monitoring and
enforcement activities outside of its region, on behalf of NERC and/or other Regional Entities,
for Registered Entities that have registered functions monitored by more than one Regional
Entity, subject to approval by NERC.
(d)(c) For Cross-Border Regional Entities, the authority delegated by this Agreement
shall extend only to the portion of the region identified in Exhibit A that is within the United
States. Any delegation of authority by Applicable Governmental Authorities in Canada or
Mexico shall be governed by the law of such authority or a separate agreement and is outside the
scope of this Agreement; provided, however, that both WECC and NERC shall endeavor to
ensure that this Agreement and any such separate agreement are compatible.
(e)(d) As a condition to this delegation of authority and subject to the provisions of
Section 17 of this Agreement, WECC shall comply with the applicable provisions of NERC’s
Certificate of Incorporation, Bylaws, Rules of Procedure, and Reliability Standards, as from time
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to time adopted, approved, or amended.
5. Development and Proposal of Reliability Standards.
(a) In connection with its Delegated Authority, WECC shall be entitled to:
(i) propose Reliability Standards, Regional Variances, or modifications
thereof to NERC, which shall be considered by NERC through an open and inclusive process
for proposing and adopting Reliability Standards that affords WECC reasonable notice and
opportunity to be heard; and
(ii) develop Regional Reliability Standards and Regional Variances through
WECC’s process. WECC’s process shall be consistent with the NERC Rules of Procedure and
Commission directives. Any changes to WECC’s process shall be submitted to the NERC
Board of Trustees for approval and upon approval, be submitted to the Commission for
approval. Proposals approved through WECC’s process shall be reviewed by the NERC Board
of Trustees after NERC provides notice and an opportunity for interested persons to comment.
In the case of a proposal from a Regional Entity organized on an Interconnection-wide basis,
comments shall be limited to the factors identified in NERC Rule of Procedure 312.3 as it may
be amended from time to time. The NERC Board of Trustees shall promptly thereafter
consider such proposed Regional Reliability Standard or Regional Variance, applying the
rebuttable presumption described in subsection 5(b) of this Agreement if the proposed Regional
Reliability Standard or Regional Variance is from a Regional Entity organized on an
Interconnection-wide basis, and either approve the proposed Regional Reliability Standard or
Regional Variance and submit it to the Commission for approval, or disapprove it in writing
setting forth its reasons. WECC may appeal any disapproval of a proposed Regional Reliability
Standard or Regional Variance to the Commission.
(b) Pursuant to Section 215(d)(3) of the Act, NERC shall rebuttably presume that a
proposal from a Regional Entity organized on an Interconnection-wide basis for a Regional
Reliability Standard or Regional Variance or modification thereof to be applicable on an
Interconnection-wide basis is just, reasonable, and not unduly discriminatory or preferential,
and in the public interest. Any person challenging such proposal from the Regional Entity
organized on an Interconnection-wide basis shall have the burden of proof. NERC shall not find
that this presumption has been rebutted except based upon substantial evidence that has been
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disclosed to, and been subject to comment by, the Interconnection-wide Regional Entity during
NERC’s review of the proposal.
6. Enforcement of Compliance with Reliability Standards.
(a) In connection with its delegated authority pursuant to this Agreement, WECC shall
enforce Reliability Standards (including Regional Reliability Standards and Regional Variances)
within the boundaries set forth in Exhibit A through the compliance monitoring and enforcement
program set forth in Exhibit D. NERC and WECC agree that this compliance monitoring and
enforcement program meets all applicable requirements of the Act, Order No. 672 of the
Commission, and the ERO Regulations, including, inter alia, the requirement for an audit
program pursuant to Section 39.7(a) of the ERO Regulations, the assessment of penalties
pursuant to Section 39.7(c) through 39.7(g) of the ERO Regulations and the requirements for due
process. WECC may not change its compliance monitoring and enforcement program set forth
in Exhibit D absent NERC’s approval, which shall not be unreasonably withheld or delayed, and
the approval of the Commission. Subject to the rights and limitations specified in Sections 17
and 18 of this Agreement, WECC agrees to comply with the NERC Rules of Procedure, with any
directives issued pursuant to Section 8(c) of this Agreement, and with any guidance and
directions issued by the NERC Board of Trustees or a Board committee pursuant to Section 8(d)
of this Agreement, in implementing this program.
(b) WECC shall maintain a program of proactive monitoring and enforcement of
compliance with Reliability Standards, in accordance with the NERC Compliance Monitoring
and Enforcement Program and the annual ERO Compliance Monitoring and Enforcement
Program Implementation Plan.
(c) WECC shall report promptly to NERC information regarding noncompliance with
a Reliability Standard, and its eventual disposition by WECC, as set forth in, and subject to the
confidentiality and disclosure provisions of, the NERC Rules of Procedure, the NERC
Compliance Monitoring and Enforcement Program, this Agreement, compliance and
enforcement program procedures and guidance that NERC may from time to time develop and
the ERO Regulations. NERC shall promptly forward such report to the Commission, as required
by the ERO Regulations, or as the Commission shall from time to time direct. NERC and
WECC shall cooperate in filing such periodic summary reports and analyses as the Commission
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shall from time to time direct.
(d) All dispositions by WECC of noncompliance with Reliability Standards shall be
reported to NERC for review. NERC shall develop and implement policies and procedures for
the review and, where appropriate, approval of dispositions of noncompliance.
(e) As part of its compliance monitoring and enforcement program, WECC shall
maintain a conflict of interest policy that assures the integrity and independence of such
program, including the integrity and independence of the persons or decision-making bodies
making final determinations in compliance enforcement actions under Section 5.0 of the NERC
Compliance Monitoring and Enforcement Program. Subject to Section 2. (a) (i), WECC may
have stakeholders lead or participate in its board compliance committee so long as integrity and
independence are assured through reasonable and appropriate recusal procedures.
7. Delegation-Related Activities.
NERC will engage WECC on its behalf to carry out certain of its activities that are in
furtherance of Bulk-Power System reliability and NERC’s responsibilities as the ERO under the
Act or in support of the Delegated Authority, as specified in the NERC Rules of Procedure and
listed in Exhibit E. NERC may from time to time develop policies or procedures, which shall
be used by WECC in the performance of the delegation-related activities. These delegation-
related activities shall include, but are not limited to, those described in subsections (a) through
(g), each of which shall be considered a statutory activity:
(a) Certification of Bulk-Power System Entities. The NERC Board of Trustees
shall set criteria for certification in accordance with the NERC Rules of Procedure.
Certifications shall be issued in accordance with the NERC Rules of Procedure.
(b) Registration of owners, operators, and users of the Bulk-Power System as
responsible for compliance with requirements of Reliability Standards.
(i) The NERC Board of Trustees shall develop criteria for registration of
owners, operators, and users of the Bulk-Power System as Registered Entities in the NERC
Rules of Procedure and shall apply the registration criteria to register owners, operators and
users of the Bulk-Power System as Registered Entities.
(ii) NERC shall maintain a registration database of Registered Entities, based
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on data and information provided by WECC and other Regional Entities. WECC shall provide
timely and accurate information relating to registrations to NERC, as needed, to enable NERC
to maintain a registration database that is accurate and up-to-date and to enable NERC to satisfy
its monthly reporting obligation.
(iii) The NERC Board of Trustees Compliance Committee shall hear and
decide appeals from owners, operators and users of the Bulk-Power System contesting
registration, in accordance with the NERC Rules of Procedure. If the NERC Board of Trustees
Compliance Committee upholds the decision to register an owner, operator, or user, NERC
shall defend the decision in any subsequent appeal of the decision by the Registered Entity to
the Commission.
(c) Reliability Assessment and Performance Analysis. WECC shall develop
assessments of the reliability of the Bulk-Power System, or ensure that data and information are
collected, analyzed and provided to NERC in support of the development of reliability
assessments, in accordance with the NERC Rules of Procedure. WECC shall also develop and
maintain, and collect data in support of the development and maintenance of, reliability
performance metrics and assessments of risks to the Reliable Operation of the Bulk-Power
System, in accordance with the NERC Rules of Procedure and NERC directives, and policies
and procedures related to data-gathering, quality control, forms, and reporting mechanisms that
NERC may from time to time develop.
(d) Event Analysis and Reliability Improvement. WECC shall conduct event
analysis pursuant to the NERC Rules of Procedure, applicable governmental regulations, and
policies and procedures that NERC may from time to time develop. NERC and WECC shall
coordinate event analysis to support the effective and efficient use of their collective resources,
consistency in event analysis, and timely delivery of event analysis reports. In collaboration
with NERC, WECC shall disseminate to the electric industry lessons learned and other
information obtained or resulting from event analysis.
(e) Training and Education. WECC may provide training and education to
Registered Entities, as it deems necessary, in support of its performance of delegated functions
and related activities under this Agreement. NERC may also provide training and education
programs to Registered Entities on topics relating to NERC’s responsibilities as the ERO.
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(f) Situation Awareness. WECC shall gather and assess situation awareness
information provided by Registered Entities pursuant to the NERC Rules of Procedure,
applicable governmental regulations, and policies and procedures that NERC may from time to
time develop, and shall provide other data, information and assistance to NERC in support of
NERC’s activities in monitoring present conditions, and responding to events, on the Bulk-
Power System.
(g) Critical Infrastructure Security. WECC shall collaborate with NERC in its
efforts to coordinate electric industry activities to promote critical infrastructure protection of
the Bulk-Power System in North America.
8. Oversight of Performance of Delegated Functions and Related Activities.
This Section 8 sets forth processes and procedures which the Parties intend shall be used
in NERC’s oversight of WECC’s performance of its Delegated Authority and related activities
pursuant to this Agreement. It is the intent of NERC and WECC that matters relating to
NERC’s oversight of WECC’s performance of its Delegated Authority and related activities
shall be established or resolved by collaboration between NERC and WECC and, where
applicable, other Regional Entities, to the maximum extent possible, consistent with the
construct that NERC and the Regional Entities are operating together in a collaborative manner
to carry out the responsibilities of the ERO under Section 215 of the Act and the ERO
Regulations.
(a) (i) NERC shall develop, in collaboration with WECC and other Regional
Entities, performance goals, performance reports, measures and other parameters (including,
without limiting the scope of such goals, financial performance goals), which shall be used to
measure NERC’s and WECC’s performance of their respective functions and related activities.
The performance goals, measures and parameters and the form of performance reports shall be
approved by the NERC President and shall be made public. WECC shall provide data,
information and reports to NERC, in accordance with established schedules, to enable NERC to
calculate WECC’s performance to the agreed-upon goals, measures and parameters.
(ii) NERC shall use the performance goals, measures and parameters, and
performance reports to evaluate WECC’s performance of its delegated functions and related
activities and to provide advice and direction to WECC on performance improvements. The
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performance goals, measures and other parameters, and the values of such goals, measures and
parameters, shall be reviewed by NERC, WECC and the other Regional Entities, revised if
appropriate, and made public, on the same timeline as the annual business planning and
budgeting process described in Section 9 of this Agreement.
(iii) At the request of the President of NERC, WECC shall be required to
develop, submit for NERC approval, and implement action plans to address, areas of its
performance that are reasonably determined by NERC, based on analysis of WECC’s
performance against the performance goals, measures and parameters, or performance of
specific activities, to be unsatisfactory, provided, that prior to requiring WECC to adopt and
implement an action plan or other remedial action, NERC shall issue a notice to WECC of the
need and basis for an action plan or other remedial action and provide an opportunity for WECC
to submit a written response contesting NERC’s evaluation of WECC’s performance and the
need for an action plan. WECC may request that the President of NERC reconsider the request,
and thereafter may request that the NERC Board of Trustees review and reconsider the request.
NERC and WECC shall work collaboratively as needed in the development and implementation
of WECC’s action plan. A final action plan submitted by WECC to NERC shall be made
public unless the President of NERC makes a written determination that the action plan or
specific portions of the plan should be maintained as non-public.
(b) NERC shall make available to WECC standardized training and education
programs, which shall be designed taking into account input from WECC and other Regional
Entities, for WECC personnel on topics relating to the delegated functions and related activities.
(c) (i) NERC may issue directives to WECC concerning the manner in which
WECC shall perform its delegated functions and related activities under this Agreement. The
NERC Rules of Procedure, or any other ERO Rule requiring approval of the Commission, shall
not be considered “directives.” NERC shall initiate the development of a directive through a
collaborative process with WECC and, if applicable, other Regional Entities to which the
directive will apply. Any directive developed through the collaborative process shall be
approved by, and issued under the signature of, the NERC President.
(ii) If after a period of time that is reasonable under the circumstances, NERC
and WECC and, if applicable, other Regional Entities, are unable to reach agreement on the
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contents of the directive, NERC may issue the directive with the approval of and under the
signature of the NERC President.
(iii) Upon issuance of a directive by the NERC President, it shall be binding
upon, and shall be complied with by, WECC, subject to reasonable time periods for adoption,
implementation, and funding of any necessary resources. Upon request by WECC, the NERC
Board of Trustees (or a committee of the Board to which the Board delegates appropriate
authority) shall review and shall confirm, revise or revoke any directive that was issued by the
NERC President without WECC’s agreement, provided, that WECC shall request such review
within thirty (30) days following issuance of the directive by the NERC President unless good
cause can be shown for a later request.
(iv) NERC and WECC and, if applicable, other Regional Entities, shall
collaborate in deciding whether a directive (whether issued pursuant to paragraph (ii) or
paragraph (iii)) shall be made public. If no agreement is reached by the date of issuance as to
whether the directive shall be made public, the NERC President shall decide whether the
directive will be made public, provided, that it is the intent of the Parties that the NERC
President shall apply a presumption that directives should be made public, unless the NERC
President makes a written determination stating a specific reason for maintaining a particular
directive as non-public.
(d) In addition to the issuance of directives pursuant to subsection (c), the NERC
Board of Trustees (or a Board committee to which the Board has delegated authority) may issue
guidance or directions as to the manner in which WECC, and, if applicable, other Regional
Entities, shall perform delegated functions and related activities. The NERC Board of Trustees
or Board committee shall also establish reasonable time periods for the implementation of any
such guidance or directions, taking into account the impact on the reliability of the Bulk-Power
System and the need for funding of additional resources. Any such guidance or directions shall
be stated in writing and shall be public, unless the NERC Board of Trustees or Board committee
makes a written determination stating a specific reason for maintaining particular guidance or
directions as non-public. WECC, either individually or in conjunction with other Regional
Entities, may request that the NERC Board of Trustees or Board committee reconsider or revise
the guidance or direction.
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(e) NERC shall conduct collaborative reviews with WECC, either individually or in
conjunction with one or more other Regional Entities, that provide for the exchange of
information on practices, experiences, and lessons learned in the implementation of the
delegated functions.
(f) NERC shall perform reviews and audits of WECC on a reasonable periodicity to
determine WECC’s compliance with this Agreement, any policies or procedures established by
NERC, NERC’s Rules of Procedure, the Compliance Monitoring and Enforcement Program,
Commission requirements, and directives that are in effect pursuant to Section 8(c) and to
monitor the implementation of guidance and directions issued by the NERC Board of Trustees
pursuant to Section 8(d). All such periodic reviews and audits shall comply with the NERC
Rules of Procedure and Commission directives.
(g) The Commission and the Commission staff shall have full access to action plans
and remedial actions, directives, directions and guidance, and audits and reviews issued or
conducted pursuant to subsections (a)(iii), (c)(iv), (d), and (f), respectively, that are maintained
as non-public.
9. Funding. WECC and NERC shall ensure, subject to Commission approval in
accordance with the ERO Regulations, that the delegated functions and related activities
described in Sections 5, 6 and 7 and listed in Exhibit E have reasonable and adequate funding
and resources by undertaking the following:
(a) WECC shall develop, through a collaborative process with NERC, and propose,
an annual business plan and budget, in accordance with ERO Regulations, Commission orders
and NERC business planning and budgeting policies and instructions. WECC’s proposed
business plan and budget shall describe the activities necessary for, and provide a budget with
adequate resources for, WECC to carry out its Delegated Authority under this Agreement,
including the functions and activities described in Sections 5, 6 and 7 and listed in Exhibit E.
WECC’s business plan and budget shall show the funding sources and amounts to fund the
proposed budget, including as applicable assessments to end users, penalty monies, and other
sources of funds.
(b) WECC and NERC agree that the portion of WECC’s approved budget for the
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functions and activities described in Sections 5, 6 and 7 and listed in Exhibit E that is to be
funded by assessments, will be equitably allocated among end users within the geographic
boundaries described in Exhibit A and recovered through a formula based on Net Energy for
Load, or through such other formula as is proposed by WECC and approved by NERC and the
Commission. If WECC proposes to use a formula other than Net Energy for Load beginning in
the following year, WECC shall submit the proposed formula to NERC in sufficient time that
NERC may review and approve the proposed formula and file it with the Commission by May
15 for approval, and the proposed formula shall be effective for the following year if approved
by the Commission on or before the date the Commission approves the annual business plan
and budget submitted by NERC and WECC to the Commission pursuant to the ERO
Regulations for such year.
(c) NERC shall determine that the assessments to fund the costs for its statutory
functions in its Commission-approved budget are first allocated fairly among the
Interconnections and regions according to the applicability of this work to those
Interconnections and regions, and then equitably among the end users of the applicable
interconnections and regions as appropriate. Allocation on a Net Energy for Load basis will be
presumed to satisfy this equitability requirement.
(d) NERC shall provide WECC with the form or forms for business plan and budget
submittal, and any accompanying instructions, in accordance with the schedule for preparation
of the business plan and budget developed by NERC and the Regional Entities.
(e) WECC shall submit its proposed annual business plan and budget for carrying out
its Delegated Authority functions and related activities described in Sections 5, 6 and 7 and
listed in Exhibit E, as well as for all other activities of WECC, to NERC for review and
approval in accordance with the annual schedule for the preparation of business plans and
budgets which shall be developed collaboratively by NERC and the Regional Entities, as more
fully described in Exhibit E.
(f) NERC shall fund WECC’s performance of its Delegated Authority and related
activities in accordance with WECC’s Commission- approved business plan and budget, in the
amount of WECC’s assessments to end users approved by the Commission. Exhibit E sets
forth the procedures and timing for billing and collecting WECC’s approved assessments from
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end users and other entities and payment of the approved assessment amount to WECC, unless
otherwise modified and approved by NERC and the Commission. NERC shall not impose any
material obligation or requirement regarding the Delegated Authority upon WECC that has not
been provided for in an approved business plan and budget or an approved amended or
supplemental business plan and budget, without WECC’s consent.
(g) NERC shall develop, in consultation with the Regional Entities, a reasonable and
consistent system of accounts, with a level of detail and record keeping comparable to the
Commission’s Uniform System of Accounts and sufficient to allow the Commission to compare
each Commission-approved NERC and WECC fiscal year budget with the actual results at the
NERC and Regional Entity levels. WECC shall follow NERC’s prescribed system of accounts
except to the extent that NERC permits a departure from the prescribed system of accounts.
NERC shall make an informational filing with the Commission describing any such waiver it
permits and providing an explanation supporting the permitted departure.
(h) WECC shall submit unaudited quarterly interim financial statements in form
provided by NERC no later than 20 days after the end of the fiscal quarter (March 31, June 30,
September 30, and December 31).
(i) WECC shall submit audited financial statements annually, including supporting
materials, in a form provided by NERC, by no later than the date reasonably required and
designated in writing by NERC to enable NERC to assemble and file the required annual budget
to actual true up filing with the Commission.
(j) Exhibit E to this Agreement sets forth the mechanism through which WECC
shall offset penalty monies it receives (other than penalty monies received from an operational
function or division or affiliated entity of WECC) against its next year’s annual budget for
carrying out functions under this Agreement, and the mechanism by which WECC shall
transmit to NERC any penalty monies received from an operational function or division or
affiliated entity of WECC. Provided, that, subject to approval by NERC and the Commission,
WECC may propose and implement an alternative use of penalty monies to that set forth in
Exhibit E.
10. Assignment. This Agreement may be assigned by either Party only with the prior
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written consent of the other, which consent shall be granted or withheld in such non-assigning
Party’s sole discretion, subject to approval by the Commission. Any assignment under this
Agreement shall not relieve a Party of its obligations, nor shall a Party's obligations be enlarged,
in whole or in part, by reason thereof. WECC may not delegate in whole or in part its Delegated
Authority to any other entity without NERC’s express consent; provided, however, that nothing
in this provision shall prohibit WECC from contracting with other entities to assist it in carrying
out its Delegated Authority, provided WECC retains control and responsibility for such
Delegated Authority.
11. Default and Cure. Upon a Breach, the non-breaching Party shall give written notice
of such Breach to the breaching Party (the “Default Notice”). Subject to a suspension of the
following deadlines as specified below, the breaching Party shall have thirty (30) calendar days
from receipt of the Default Notice within which to cure such Breach; provided however, that if
such Breach is not capable of cure within thirty (30) calendar days, the breaching Party shall
commence such cure within thirty (30) calendar days after notice and continuously and
diligently complete such cure within ninety (90) calendar days from receipt of the Default
Notice; and, if cured within such time, the Breach specified in such notice shall cease to exist.
Subject to the limitation specified in the following sentence, if a Breach is not cured as provided
in this Section 11, or if a Breach is not capable of being cured within the period provided for
herein, the nonbreaching Party shall have the right to declare a default and terminate this
Agreement by written notice at any time until cure occurs, and be relieved of any further
obligation hereunder. The deadlines for cure and the right to declare a default and terminate this
Agreement shall be suspended during the pendency of any efforts or proceedings in accordance
with Section 18 of this Agreement to resolve a dispute as to whether a Breach has occurred or
been cured. The provisions of this Section 11 will survive termination of this Agreement.
12. Term and Termination.
(a) This Agreement shall become effective on January 1, 20162021 (the “Effective
Date”).
(b) The term of this Agreement shall be five (5) years from the Effective Date
(“Term”), prior to which time NERC shall conduct an audit pursuant to the audit requirements
of the NERC Rules of Procedure to ensure that WECC continues to meet all applicable statutory
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and regulatory requirements necessary to maintain its eligibility for delegation. If WECC meets
such requirements, this Agreement may be renewed for another five (5) year term with
Commission approval. This Agreement may be renewed for successive additional five (5) year
renewal terms, with Commission approval, provided that prior to the end of each renewal term,
NERC shall conduct an audit pursuant to the audit requirements of the NERC Rules of
Procedure to ensure that WECC continues to meet all applicable statutory and regulatory
requirements necessary to maintain its eligibility for delegation. Provided, that either Party may
terminate this Agreement as of the end of a term by providing written notice to terminate no
later than one year prior to the then effective expiration of the Term. In such event, this
Agreement shall terminate upon the expiration of then effective Term, unless otherwise
mutually agreed to by the Parties.
(c) In the event of the termination of this Agreement, the Parties shall work to
provide for a transition of WECC’s Delegated Authority to NERC or to another eligible entity
and to provide for the resolution of any wind-up costs associated with termination of this
Agreement.
(d) If any provision of this Agreement, or the application thereof to any person, entity
or circumstance, is held by a court or regulatory authority of competent jurisdiction to be
invalid, void, or unenforceable, or if a modification or condition to this Agreement is imposed
by a regulatory authority exercising jurisdiction over this Agreement, the Parties shall endeavor
in good faith to negotiate such amendment or amendments to this Agreement as will restore the
relative benefits and obligations of the signatories under this Agreement immediately prior to
such holding, modification or condition. If either Party finds such holding, modification or
condition unacceptable and the Parties are unable to renegotiate a mutually acceptable
resolution, either Party may unilaterally terminate this Agreement. Such termination shall be
effective one year following written notice by either Party to the other Party and to the
Commission, or at such other time as may be mutually agreed by WECC and NERC.
(e) Notwithstanding any termination of this Agreement, provisions contained in
Limitation of Liability (Section 13), No Third Party Beneficiaries (Section 14) and
Confidentiality (Section 15) shall survive this Agreement in accordance with their terms until
sixty (60) days following the expiration of any applicable statute of limitations.
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13. Limitation of Liability. WECC and NERC agree not to sue each other or their
directors, officers, employees, and persons serving on their committees and subgroups based on
any act or omission of any of the foregoing in the performance of duties pursuant to this
Agreement or in conducting activities under the authority of Section 215 of the Act, other than
seeking a review of such action or inaction by the Commission. NERC and WECC shall not be
liable to one another for any damages whatsoever, including without limitation, direct, indirect,
incidental, special, multiple, consequential (including attorneys’ fees and litigation costs),
exemplary, or punitive damages arising out of or resulting from any act or omission associated
with the performance of WECC’s or NERC’s responsibilities under this Agreement or in
conducting activities under the authority of Section 215 of the Act, except to the extent that
WECC or NERC is found liable for gross negligence or intentional misconduct, in which case
WECC or NERC shall not be liable for any indirect, incidental, special, multiple, consequential
(including without limitation attorneys’ fees and litigation costs), exemplary, or punitive
damages.
14. No Third Party Beneficiaries. Nothing in this Agreement shall be construed to create
any duty to, any standard of care with reference to, or any liability to, any third party, except as
otherwise specifically provided herein and in Section 15(c).
15. Confidentiality.
(a) During the course of the Parties’ performance under this Agreement, a Party may
receive proprietary, business sensitive, or critical infrastructure information (“Confidential
Information”) necessary to fulfill its respective obligations in connection with this Agreement.
The Parties agree that their mutual objective under this provision is to provide appropriate
protection for Confidential Information, while maintaining the ability to conduct their
respective business activities.
(b) No obligation of confidentiality shall apply to any information that the recipient:
(i) already possesses without obligation of confidentiality; (ii) develops independently; or (iii)
rightfully receives without any obligation of confidentiality from a third party.
(c) The Parties may transfer or exchange such Confidential Information with and
between the other Regional Entities as third-party beneficiaries of the terms of this Agreement,
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provided the Parties and the other Regional Entities as third-party beneficiaries continue to
maintain the confidentiality of such information.
(d) Except as set forth herein and within the NERC Rules of Procedure, the Parties
agree to keep in confidence and not to copy, disclose, or distribute any Confidential Information
or any part thereof, without the prior written permission of the issuing Party or specified third-
party beneficiary of this Agreement, unless disclosure is required by subpoena, law, or other
directive of a court, administrative agency, or arbitration panel. Unless prohibited from doing so
under the NERC Rules of Procedure, the recipient shall provide the Party or specified third-
party beneficiary of this Agreement that provided the Confidential Information with prompt
notice of a request or requirement for disclosure of the Confidential Information in order to
enable such issuing Party or specified third-party beneficiary of this Agreement to (a) seek an
appropriate protective order or other remedy, (b) consult with the recipient with respect to
taking steps to resist or narrow the scope of such request or legal process, or (c) waive
compliance, in whole or in part, with the terms of this Section. In the event a protective order
or other remedy is not obtained or the issuing Party or specified third-party beneficiary of this
Agreement waives compliance with the provisions, the recipient agrees to furnish only that
portion of the Confidential Information which the recipient’s counsel advises is legally required
and to exercise best efforts to obtain assurance that confidential treatment will be accorded to
such Confidential Information. In the event of any inconsistency or conflict between the
provisions of this Section 15 and the provisions of Section 1500 of the NERC Rules of
Procedure, the provisions of Section 1500 of the NERC Rules of Procedure shall control.
(e) Each Party shall ensure that its officers, trustees, directors, employees,
subcontractors and subcontractors’ employees, and agents to whom Confidential Information is
exposed are under obligations of confidentiality that are at least as restrictive as those contained
herein.
(f) This confidentiality provision does not prohibit reporting and disclosure as
directed by NERC, as set forth in Section 6 of this Agreement, nor does it prohibit permitted
disclosures as set forth in the NERC Rules of Procedure.
16. Amendment. Neither this Agreement nor any of the terms hereof, may be amended
unless such amendment is made in writing, signed by the Parties, and filed with and approved
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by the Commission.
17. Amendments to the NERC Rules of Procedure. NERC shall not adopt amendments to
the NERC Rules of Procedure that conflict with the rights, obligations, or programs of WECC
under this Agreement without first obtaining the consent of WECC, which consent shall not be
unreasonably withheld or delayed. To the extent WECC does not consent, NERC shall have the
right to invoke the dispute resolution provisions of Section 18 and, if such effort fails to resolve
the dispute, to petition the Commission to adopt the amendment to the NERC Rules of
Procedure. To the extent that the Commission issues an order amending or materially affecting
the rights or obligations of WECC under this Agreement, WECC shall have the option,
exercisable no later than 60 days after issuance of such order, to terminate this Agreement.
Such termination shall be effective one year following written notice by WECC to NERC and
the Commission, or at such other time as may be mutually agreed by WECC and NERC.
18. Dispute Resolution. In the event a dispute arises under this Agreement between NERC
and WECC (including disputes relating to NERC’s performance of its obligations under this
Agreement and/or disputes relating to WECC’s performance of its obligations under this
Agreement) which cannot be resolved through discussions between representatives of the
Parties in the normal course of operations, the Parties shall use the following procedures
(“Dispute Resolution”) to attempt to resolve the dispute. WECC shall not suspend performance
of any delegated function, and the Parties shall continue to make reasonable, good faith efforts
to comply with their obligations under this Agreement, during the pendency of Dispute
Resolution. All notices required to be sent pursuant to this Dispute Resolution procedure shall
be sent in accordance with Section 19 of this Agreement. This Dispute Resolution procedure is
separate from and in addition to all other processes provided for in this Agreement.
(a) The Party invoking Dispute Resolution shall send a notice to the other Party
describing the dispute, stating the invoking Party’s position with respect to the dispute, stating
that the Party is invoking Dispute Resolution, and naming the Party’s designated representative
for negotiating a resolution of the dispute. The designated representative shall have authority to
resolve the dispute on behalf of the invoking Party.
(b) Within three (3) business days after receipt of the notice invoking Dispute
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Resolution, the receiving Party shall send a notice to the invoking Party acknowledging receipt
of the notice invoking Dispute Resolution, stating the receiving Party’s position with respect to
the dispute, and naming the Party’s designated representative for negotiating a resolution of the
dispute. The designated representative shall have authority to resolve the dispute on behalf of
the receiving Party.
(c) During the period commencing three (3) business days and ending twenty (20)
business days after the date of the receiving Party’s notice, the designated representatives shall
engage in good faith negotiations to attempt to resolve the dispute, provided, that the designated
representatives may agree prior to the end of such twenty (20) business day period that the
process should move to the next step of Dispute Resolution.
(d) If the designated representatives are unable to arrive at a resolution of the dispute
by the end of the time period described in subsection (c), they shall notify the chief executive
officers of their respective Parties. The chief executive officers of the Parties shall thereafter
engage in good faith negotiations to attempt to resolve the dispute during the period of twenty
(20) business days immediately following the time period described in subsection (c), provided,
that the chief executive officers may agree prior to the end of such twenty (20) business day
period that negotiations are at impasse and the process may move to the next step as described
in subsection (f). Upon mutual agreement of the Parties, the twenty (20) business day period
may be extended to pursue ongoing good faith negotiations.
(e) If a resolution of the dispute is achieved by the Parties, it shall be memorialized in
a writing that is acceptable in form and substance to each party and is signed by the designated
representative or chief executive officer on behalf of each Party.
(f) If the Parties are unable to resolve the dispute pursuant to the process described in
subsections (a) through (e), then either Party may invoke any other available dispute resolution
mechanism, including, without limitation, filing a complaint or petition with the Commission
requesting resolution of the dispute by the Commission, or filing a complaint for relief in a
court having jurisdiction over Parties and the subject matter of the dispute in accordance with
Section 20. Provided, however, that: (i) it is the intent of the Parties that unresolved disputes
shall be presented to and resolved by the Commission if the Commission has and accepts
jurisdiction over the subject matter of the dispute, (ii) the Parties may, by mutual agreement,
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attempt to resolve the dispute through arbitration, mediation, or other process involving resort to
an impartial neutral, and (iii) it is the intent of the Parties that resolution of disputes through
Commission proceedings, arbitration, mediation, or other use of an impartial neutral, is
preferred over resort to judicial proceedings.
(g) This Section 18 shall not apply to compliance enforcement actions against
individual Registered Entities.
19. Notice. All notices, demands, requests, and other communications required, permitted
by, or provided for in this Agreement shall be given in writing to a Party at the address set forth
below, or at such other address as a Party shall designate for itself in writing in accordance with
this Section, and shall be delivered by hand, email or overnight courier:
If to NERC: If to WECC:
North American Electric Reliability Western Electricity Coordinating Council
Reliability Standards Program ....................................................................................................................... 11
Compliance Monitoring and Enforcement ................................................................................................... 15
Reliability Assessment and Performance Analysis ..................................................................................... 21
Training and Outreach .................................................................................................................................... 27
Situation Awareness and Infrastructure Security ....................................................................................... 31
Appendix C—Adjustment to the Alberta Electric System Operator (AESO) Assessment ........................ 75
Appendix D—Statutory and Non-Statutory Budget History Charts ............................................................ 76
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Introduction
Organizational Overview
WECC is a 501(c)(4) social welfare organization funded through Load-Serving Entity (LSE) assessments authorized by the Federal Energy Regulatory Commission (FERC) under Section 215 of the Federal Power Act. WECC’s mission is to effectively and efficiently reduce risks to the reliability and security of the Western Interconnection’s bulk power system (BPS), while carrying out the responsibilities of the Regional Entity. WECC operates under a delegation agreement with the North American Electric Reliability Corporation (NERC) and according to its Bylaws. WECC executes its mission while working with a broad community consisting of industry stakeholders and two advisory bodies—the Member Advisory Committee (MAC) and the Western Interconnection Regional Advisory Body (WIRAB).
The Western Interconnection is a geographic area in which the use and generation of electricity is synchronized. This area includes all or part of 14 Western states in the United States, the Canadian provinces of British Columbia and Alberta, and a portion of Baja California Norte, Mexico.
2021 Budget U.S. Canada Mexico
Statutory FTEs* 148.5
Non-statutory FTEs 7.0 Total FTEs 155.5
Statutory Expenses 28,575,154$ Non-Statutory Expenses 2,022,455$ Total Expenses 30,597,609$
Statutory Incr(Decr) in Fixed Assets 98,527$ Non-Statutory Incr(Decr) in Fixed Assets 6,473$ Total Inc(Dec) in Fixed Assets 105,000$ Statutory Working Capital Requirement** 71,319$
Non-Statutory Working Capital Requirement*** 598,904$ Total Working Capital Requirement 670,223$
Total Statutory Funding Requirement 28,745,000$ Total Non-Statutory Funding Requirement 2,627,832$ Total Funding Requirement 31,372,832$
• Effective risk-based monitoring and enforcement of Reliability Standards through standards development, entity registration, compliance risk assessment, and audits and investigations;
• Informed actions, practices, and decisions of industry participants, regulators, and policymakers through reliability planning, performance analysis, situation awareness, and event analysis; and
• Targeted training and outreach to build a culture of reliability and security throughout the West.
WECC’s business philosophy is guided by three principles:
Independence—We serve the public interest and represent what is best for reliability and security within the Western Interconnection with an impartial and unbiased voice.
Perspective—With the purview of the entire Western Interconnection, we are uniquely situated to develop comprehensive and influential work products to assess the reliability and security of the Western Interconnection.
Partnership—We collaborate with industry and other organizations to reduce risks to the reliability and security of the Western Interconnection.
WECC’s culture enables us to deliver on our critical reliability mission and provide personal and professional fulfillment for our employees. We are transforming the organization to deliver increased value to stakeholders by:
• Increasing our relevance through thought leadership, proactive efforts, and technical competence and credibility;
• Building strong and constructive relationships with NERC and our regional partners, members, and stakeholders;
• Implementing risk-based concepts to provide consistency for industry, and increased flexibility within a rigid framework; and
• Moving the industry toward reliability beyond compliance to promote forward-looking reliability.
Membership and Governance
WECC has 288 members1 divided into the following five Membership Classes:
1. Large Transmission Owners; 2. Small Transmission Owners;
1 As of May 25, 2020.
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3. Electric Line of Business Entities doing business in the Western Interconnection that do not own, control, or operate transmission or distribution lines in the Western Interconnection;
4. End users and entities that represent the interests of end users; and 5. Representatives of state and provincial governments.
WECC membership is open to any person or entity that has an interest in the reliable operation of the Western Interconnection BPS. WECC membership is not required for participation in the WECC Standards Development process.2
WECC is governed by a Board of Directors (Board) composed of nine independent Directors elected by the WECC membership, and WECC’s president and CEO as appointed by the Board. The nine Directors are compensated by WECC for their governance and oversight activities.
Four governance committees provide functional oversight of WECC operations:
• Finance and Audit Committee (FAC); • Governance Committee (GC); • Human Resources and Compensation Committee (HRCC); and • Nominating Committee (NC).
Under the direction of the Board, other committees provide technical advice and policy recommendations to the Board:
The Board recognizes the electric industry is undergoing profound changes nationally, and especially in the West, and other institutions are involved in furthering the understanding of these changes. While WECC tries not to duplicate the efforts of other qualified entities, the Board believes WECC should proactively address issues for which the impacts to the Western Interconnection’s reliability are less understood (e.g., the risk is unique to the Western Interconnection) or for which WECC and its committees can make a significant contribution to Western BPS reliability and security.
2 Non-WECC members may participate in standards drafting teams and may vote on Regional Reliability Standards. See WECC’s Reliability Standards Development Procedures.
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In 2016, the Board established strategic priorities as set forth in the Strategic Direction Outline. These, coupled with the Electric Reliability Organization (ERO) Enterprise-driven programs and Long-term Strategy, guide the work of WECC.
• Monitor progress as proposals are developed for structural changes in the West and beprepared to evaluate potential impacts on reliability.
• Assess the reliability implications of the changing load composition and resource mix in theWestern Interconnection, as well as fuel security, resource and transmission adequacy, and BPSstability.
• Identify key vulnerability issues and work with stakeholders to address them.• Maximize sharing of operating and system data (within agreed parameters) and insights from
event analysis including, to the extent possible, near-misses.• Focus reliability assessment efforts on identifying the impacts and possible mitigation efforts
surrounding a handful of future industry evolution scenarios or high-impact, low-probabilityevents.
Additionally, through WECC’s Strategic and Operating Planning Process, the Board approved the following Near-Term Priorities at its June 2020 meeting. These Near-Term Priorities serve as input to update committee and program area 2021–2023 work plans. Much of the work related to the Near-Term Priorities involves staff time; examples of activities supporting these priorities are noted in the appropriate statutory program area sections of the business plan.
Representation of Inverter-Based Resources
Improve the representation of inverter-based resources in WECC’s base cases, with a focus on data collection for utility-scale photovoltaic resources, battery storage, and distributed energy resources (DER).
Impacts of the Changing Resource Mix
Evaluate the impacts of the changing resource mix on: • Existing path ratings;• Remedial Action Scheme (RAS) effectiveness;• The expansion of utility-scale energy storage devices;• Protection system settings (based on fault duty);• Resource adequacy and the advantages of alternatives for determining resource adequacy;• The interface between the transmission and distribution systems due to DER, with a focus on
modeling techniques that can be used as DER penetration increases; and• Essential reliability services specific to the Western Interconnection.
To be updated pending June Board approval of Near-Term Priorities.
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Expansion of RC and Market Service Providers
Evaluate potential reliability risks and mitigating measures, including consideration of Regional Reliability Standards (RRS), caused by the expansion of Reliability Coordinators (RC) and market service providers in the Western Interconnection.
Clarify Roles in BPS Planning
Improve coordination by clarifying the roles, responsibilities, and relationships among WECC, the Regional Planning Groups, International Planning Groups, Planning Coordinators, Transmission Planners, and other stakeholders involved in BPS planning.
ERO Enterprise Model and Transformation
The ERO Enterprise strives for consistency when appropriate and recognizes that each Regional Entity addresses reliability in unique ways based on its own challenges and stakeholder needs. The ERO Enterprise model allows Regional Entities to address these unique reliability risks and challenges locally using innovative and distinctive approaches. As the ERO Enterprise continues to mature, it is working on a transformation initiative to further capitalize on resources, enhance communication and collaboration, and ensure grid reliability. A set of declarations was established in 2019, committing the ERO Enterprise to:
• Work together as one team and honor each of its roles;• Actively support ERO Enterprise activities while eliminating unnecessary duplication of work;• Collaborate to develop clear and consistent guidance across the ERO Enterprise;• Share information, knowledge, and resources across the ERO Enterprise;• Develop and share harmonized messages across ERO Enterprise communications; and• Support innovation, initiatives, and the sharing of best practices across the ERO Enterprise.
NERC and the Regional Entities coordinate activities to identify, prioritize, and address risks to reliability. The Regional Entities have similar responsibilities within the ERO Enterprise model:
• Providing input to the overall development of each EROprogram area;
• Providing training and development to meet EROqualifications; and
• Ensuring delegated responsibilities are completed.
Regional Entities also have an obligation to meet professional standards of independence and objectivity and provide the best available expertise for addressing regional risks. This new way of working is encapsulated in the visual.
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ERO Enterprise Long-Term Strategy
In 2019, ERO Enterprise leadership came together to revise the ERO Enterprise Long-Term Strategy as part of an effort to streamline its strategic and operational documents and ensure alignment with the NERC Reliability Issues Steering Committee’s (RISC) currently identified BPS risks. This strategy was acknowledged by the Board on December 4, 2019, as a valuable input to the WECC strategic planning process and recognizes the strategy as a fruitful collaboration by NERC and the Regional Entities.
As part of the business planning and budgeting process, NERC and the Regional Entities identify and discuss program area goals and activities to ensure alignment with the long-term strategy and harmonization across the ERO Enterprise where appropriate. WECC acknowledges and supports the long-term strategy as well as deliverables specific to WECC that are described in each statutory program area in Section A.
2021 Overview of Cost Impacts
WECC’s proposed 2021 statutory budget is $28,674,000, a $918,000 (3.3%) increase from the 2020 statutory budget. The net increase is mainly due to changes in consulting requirements, decreases in anticipated meeting and travel requirements and costs (with some of the decrease directly related to anticipated reductions in travel due to the COVID-19 pandemic and increased effectiveness of technology use), increases in rent due to a new lease for the Salt Lake City office, new positions, changes in position levels, a 3% merit pool, and labor float assumption changes based on actual turnover and vacancy rates.
Full-time equivalents (FTE) represent the fractional allocation of a full-time position’s cost to one or more functional areas. Headcount (HC) represents either vacant or filled positions. Major drivers of the change between the 2021 and 2020 statutory budgets are as follows:
• Personnel Expenses increase by $1,124,000 primarily due to new FTEs, changes in position levels, a budgeted 3% merit pool, continued refinement of labor float percentages, and the refinement of payroll tax and benefits rates.
• Meeting Expenses decrease by $317,000 primarily due to an anticipated increase in remote meetings due to the COVID-19 pandemic and resulting increased effectiveness of technology use, and a reduction in anticipated travel and the cost of Standing Committee meetings.
• Office Rent increases by $124,000 primarily due to a full year of the new lease rate for the Salt Lake City office.
The following table and graphs present a summary of funding requirements for WECC’s primary statutory program areas:
Program
Budget2020
Projection2020
Budget 2021
Variance2020
Budget v 2021
Budget Variance %
Reliability Standards 837,662$ 846,582$ 864,920$ 27,258$ 3.3%Compliance Monitoring and Enforcement and Organization Registration and Certification
15,558,674 16,052,183 16,430,491 871,817 5.6%
Reliability Assessment and Performance Analysis 10,329,057 9,740,029 10,024,579 (304,478) (2.9%)
Training and Outreach 794,057 629,067 874,783 80,726 10.2%
Situation Awareness and Infrastructure Security 236,639 400,562 478,908 242,269 102.4%
Total By Program 27,756,089$ 27,668,423$ 28,673,681$ 917,592$ 3.3%
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Personnel Overview
In the 2021 budget, WECC is adding 5.5 FTEs and realigning some positions within program areas due to evolving organizational needs and priorities. Due to efficiencies gained and an open position in Reliability Assessment and Performance Analysis, one position is redeployed to Situation Awareness and Infrastructure Security as an infrastructure security specialist to meet growing cyber and physical security needs. One auditor is added to Compliance Monitoring and Enforcement to address skills gaps and emerging risks due to decreased reliance on contract labor. One external affairs analyst is added to Legal and Regulatory to stay abreast of state and policy issues and decisions that may have an impact on reliability in the Western Interconnection and WECC studies. Two enterprise security positions are added to General and Administrative and one information security specialist is added to Information Technology to bolster and formalize WECC’s security program and posture. One part-time corporate services administrative assistant is added to Human Resources to free up staff time for more complex tasks and issues.
Details of the additions, transfers, and allocations are discussed in the respective program area sections of the Business Plan and Budget.
Total FTEs by Program AreaBudget 2020
Projection 2020
Direct FTEs 2021
Budget
Shared FTEs* 2021
Budget
Total FTEs 2021
Budget
Change from 2020
Budget
Operational Programs
Reliability Standards 3.0 3.0 3.0 - 3.0 - Compliance Monitoring and Enforcement and Organization Registration and Certification 61.0 62.8 62.8 - 62.8 1.8 Reliability Assessment and Performance Analysis 38.0 37.5 37.3 - 37.3 (0.7) Training and Outreach 1.5 1.5 1.5 - 1.5 - Situation Awareness and Infrastructure Security 1.0 2.0 2.0 - 2.0 1.0
Total FTEs Operational Programs 104.5 106.8 106.6 - 106.6 2.1
Corporate ServicesTechnical Committees and Member Forums - - - - - - General and Administrative 16.50 17.5 18.7 - 18.7 2.20 Legal and Regulatory 7.0 7.3 7.3 - 7.3 0.3 Information Technology 8.0 9.0 9.0 - 9.0 1.0 Human Resources 4.0 5.0 4.0 - 4.0 - Finance and Accounting 3.00 3.0 3.0 - 3.0 -
Total FTEs Corporate Services 38.5 41.8 42.0 - 42.0 3.5
Total FTEs 143.0 148.5 148.5 - 148.5 5.5
*A shared FTE is defined as an employee who performs both Statutory and Non-Statutory functions.
STATUTORY
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2020 Statutory Budget and Projection and 2021 Budget Comparisons
Total Expenses (B) 27,704,075$ 27,549,129$ (154,946)$ 28,575,154$ 871,079$
Change in Net Assets (=A-B) 980,175$ (1,261,549)$ (2,241,724)$ 169,846$ (810,329)$
Fixed Asset Additions, excluding Right of Use Assets (C) 52,014$ 119,293$ (67,279)$ 98,527$ 46,513$
TOTAL BUDGET (B+C) 27,756,089$ 27,668,423$ (222,225)$ 28,673,681$ 917,592$ TOTAL CHANGE IN WORKING CAPITAL (A-B-C) 928,161$ (1,380,842)$ (2,174,445)$ 71,319$ (856,842)$
Statement of Activities, Fixed Assets Expenditures, and Change in Working Capital2020 Budget & Projection, and 2021 Budget
STATUTORY
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Section A
Statutory Programs
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Section A—Statutory Programs
Reliability Standards Program
Program Scope and Functional Description
The Reliability Standards Program supports the NERC Reliability Standards Program and aids the development of RRSs, Regional Variances to NERC Reliability Standards, and Regional Criteria.
The Reliability Standards Program also conducts a five-year review of each current RRS, Regional Variance to NERC Reliability Standards, and Regional Criterion. These reviews can result in revisions to the document, retirement of the document, or a finding that no changes are necessary if the document is no longer needed for reliability.
WECC supports the development of Regional Variances to NERC Reliability Standards when it is necessary to address Western Interconnection reliability issues. The variances are necessitated by a physical difference in the BPS or instances in which Western stakeholders want a more stringent performance. WECC will only develop an RRS, rather than a variance, when no NERC Reliability Standard exists to address a reliability issue.
Regional Criteria may be necessary to implement, augment, or comply with NERC Reliability Standards, but they are not Reliability Standards themselves and are not enforceable. Regional Criteria may include acceptable operating or planning parameters, guides, or other documents used to enhance BPS reliability.
As part of the business planning and budgeting process, NERC and the Regional Entities ensure alignment with the ERO Enterprise Long-Term Strategy and harmonization across the ERO Enterprise where appropriate. WECC supports the long-term strategy and deliverables specific to WECC in this program area that support the ERO Enterprise Value Drivers and Long-Term Focus Areas.
2020 Budget 2021 Budget
Increase(Decrease)
Total FTEs 3.0 3.0 - Direct Expenses 552,536$ 567,386$ 14,850$ Indirect Expenses 283,633$ 294,759$ 11,126$ Other Non-Operating Expenses -$ -$ -$ Inc(Dec) in Fixed Assets 1,493$ 2,775$ 1,282$ Total Funding Requirement 837,662$ 864,920$ 27,258$
Reliability Standards Program (in whole dollars)
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2021 Key Assumptions
• The number of RRS projects will remain low, with most focusing on potential retirement ofexisting RRSs, due to the subject matter being included in NERC Continent-wide Standards. Itis possible, but not likely, that regulatory directives could result in RRS projects.
• Much of the work needed to develop RRSs, Regional Variances to NERC Reliability Standards,and Regional Criteria will continue to be performed by stakeholder volunteers.
• Continued reliance on stakeholder volunteers to staff most NERC Standards drafting teams.WECC employees may, at times, participate as drafting team members or observers.
• Integration of renewable resources and related energy storage devices may require new ormodified NERC Reliability Standards or RRSs. WECC supports, and will participate in, theenhanced periodic reviews of NERC Reliability Standards and the NERC Standards Gradingeffort, when appropriate.
• Inverter-based resource growth may determine the need for a new RRS or a Regional Varianceto NERC Reliability Standards.
• Increases in the effective use of technology in response to the COVID-19 pandemic will result ina slight decrease in travel for in-person meetings.
2021 Goals and Deliverables
• Represent the perspective of the Western Interconnection in NERC Continent-wide ReliabilityStandards or, if necessary, through the development of Regional Variances or RRSs if a NERCContinent-wide Standard addressing a Western Interconnection reliability issue does not exist.
• Ensure the RRSs and Regional Criteria developed using the WECC Reliability StandardsDevelopment Procedures meet the needs of the Western stakeholders.
• Ensure development of RRSs and Regional Criteria is performed according to the most recentWECC Reliability Standards Development Procedures.
• Actively participate in the communication of NERC Standards drafting teams’ activities to theWestern stakeholders.
• Continue to review existing RRSs to determine whether any are candidates for incorporation asa Regional Variance to a NERC Continent-wide Reliability Standard and, if so, coordinate withNERC to address the incorporation during NERC’s next enhanced periodic review of the NERCReliability Standard(s).
• Conduct periodic reviews of existing RRSs and Regional Criteria to improve their content andquality.
• Evaluate information obtained from audit and enforcement experiences and informationlearned through event analysis to determine whether any new RRSs or revisions to existingRRSs are necessary.
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Resource Requirements/Explanation of Significant Changes
Personnel Expenses
• Personnel Expenses increase by a net of $15,000 primarily due to a budgeted 3% merit pool, continued refinement of labor float percentages, and the refinement of payroll tax and benefits rates.
Meeting Expenses
• No significant changes.
Operating Expenses
• No significant changes.
Fixed Assets
• No significant changes.
See Section B—Supplemental Financial Information for explanations of other variances between the 2020 and 2021 budgets.
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Reliability Standards Program Funding Sources and Expenditures
Total Expenses (B) 836,169$ 849,919$ 13,750$ 862,145$ 25,976$
Change in Net Assets (=A-B) 29,504$ (45,969)$ (75,473)$ 4,926$ (24,578)$
Fixed Assets, excluding Right of Use Assets (C) 1,493$ (3,336)$ (4,829)$ 2,775$ 1,282$
TOTAL BUDGET (B+C) 837,662$ 846,582$ 8,920$ 864,920$ 27,258$ TOTAL CHANGE IN WORKING CAPITAL (A-B-C) 28,011$ (42,633)$ (70,644)$ 2,151$ (25,860)$
FTEs 3.0 3.0 - 3.0 - HC 3.0 3.0 - 3.0 -
Statement of Activities, Fixed Assets Expenditures, and Change in Working Capital2020 Budget & Projection, and 2021 Budget
RELIABILITY STANDARDS
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Compliance Monitoring and Enforcement
and Organization Registration and Certification Program
Program Scope and Functional Description
The Compliance Monitoring and Enforcement and Organization Registration and Certification Program (CMEP) is implemented by Reliability and Security Oversight staff, who are independent of all users, owners, and operators of the BPS.
To accomplish its objectives, staff is divided into five main areas:
• Organization Registration;• Entity Risk Assessment;• Entity Monitoring;• Enforcement and Mitigation; and• Program Analysis and Administration.
WECC will continue to conduct its monitoring and enforcement activities according to the Board-endorsed Regulatory Philosophy, the key tenets of which are:
• Be an informed regulator;• Identify top risks to reliability and security;• Exercise discretion responsibly; and• Enforce fairly.
Staff monitors and enforces the FERC-approved NERC Reliability Standards across 3923 registered owners, operators, and users of the BPS through a variety of risk-based activities.
3 As of May 25, 2020.
2020 Budget 2021 BudgetIncrease
(Decrease)
Total FTEs 61.0 62.8 1.8 Direct Expenses 9,761,102$ 10,207,096$ 445,994$ Indirect Expenses 5,767,210$ 6,165,370$ 398,160$ Other Non-Operating Expenses -$ -$ -$ Inc(Dec) in Fixed Assets 30,362$ 58,025$ 27,663$ Total Funding Requirement 15,558,674$ 16,430,491$ 871,817$
Compliance Monitoring and Enforcement and Organization Registration and Certification Program
(in whole dollars)
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Staff will support ERO Enterprise-level initiatives, which include the following activities:
• Regional Reliability Risk Assessments; • Compliance Oversight Plan (COP) and Inherent Risk Assessments (IRA); • Organization Registration; • Mitigation plan reviews, acceptance, approvals, and verification; • Review of potential noncompliance to assess root cause and risk to BPS; • Processing and disposition of self-logged, minimal-risk issues; • Enforcement activities according to established risk-based approaches; • Review and validation of periodic data submittals; • Internal compliance program assessments; • Compliance monitoring activities, such as audits, spot-checks, self-certifications, investigations,
and assessments of complaints; and • Bulk Electric System (BES) Exception request activities.
As part of the business planning and budgeting process, NERC and the Regional Entities ensure alignment with the ERO Enterprise Long-Term Strategy and harmonization across the ERO Enterprise where appropriate. WECC supports the long-term strategy as well as deliverables specific to WECC in this program area that support the ERO Enterprise Value Drivers and Long-Term Focus Areas.
Compliance in Alberta, British Columbia, and Mexico
Alberta and British Columbia, Canada, and a portion of Baja California Norte, Mexico, are all part of the Western Interconnection and have adopted or are adopting mandatory Reliability Standards based on FERC-approved Standards. WECC has entered into agreements with the Alberta Market Surveillance Administrator (MSA), the British Columbia Utilities Commission (BCUC), and Mexico’s Comisión Reguladora de Energía (CRE), under which WECC performs various compliance monitoring and enforcement activities to help ensure reliability across international borders within the Western Interconnection.
2021 Key Assumptions
The CMEP incorporates the following assumptions:
• Address known and future reliability risks by monitoring the FERC-approved NERC Reliability Standards for applicable entities through audits, investigations, self-certifications, or spot-checks. Apply a risk-based approach that covers and ensures all audit, on-site and off-site, and post-audit activities are completed according to the NERC Rules of Procedure and the CMEP within the United States. With respect to non-U.S. jurisdictions, monitor compliance according to the approved agreements and applicable compliance monitoring programs with Canadian and Mexican authorities.
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• Develop and implement compliance oversight plans for registered entities. The plans focus onrelevant risks, including consideration of IRAs, entity performance history, other operationalrisks based on performance considerations, and the effectiveness of internal controls.
• Continue working in consultation with the international compliance enforcement authorities todetermine which elements of the risk-based CMEP should be incorporated in the respectiveprograms for international entities. Currently, WECC does not conduct IRAs or develop COPsfor international entities.
• Allocate resources and provide support for the implementation of cybersecurity ReliabilityStandards for CIP low-impact training, coordination, and facilitation of ERO Enterprise effortsand initiatives.
• Resource allocation will continue for activities associated with registration. Participate inNERC-led, centralized review panel sessions as part of the application process for materialitytests of the risk-based registration process outlined in Appendix 5A of the NERC Rules ofProcedure. Continue to review, assess, validate, and submit registration recommendations toNERC for new registrations, partial deactivations, transfer of access, and full deregistrationchanges affecting the NERC Compliance Registry (NCR).
• Fully support ERO Enterprise efforts and activities to evaluate business practices, tools,consistency, implementation, and guidance within the risk-based CMEP. Provide feedback tothe ERO Enterprise on emerging and existing risks, with an emphasis on standardsdevelopment, standards modification, audit and monitoring approaches, and potential gaps.
• Use the results of the Regional Risk Assessment (RRA) to provide input in building areas offocus in the ERO CMEP Implementation Plan.
• Any costs related to a hearing that may occur will be funded through working capital reserves.• WECC does not foresee any new or revised Standards in 2021 that would require increased
resources.• Align implementation will occur throughout 2021. This will be a significant effort for all CMEP
staff. However, WECC does not foresee this effort requiring additional resources in 2021.• One new auditor position is added, to address skills gaps and emerging risks, due to decreased
reliance on contract labor.• 0.75 FTE is transferred from Legal and Regulatory due to organizational realignment and
changes in Executive Team responsibilities and focus.• Increases in the effective use of technology in response to the COVID-19 pandemic will result in
a slight decrease in travel for in-person meetings.
2021 Goals and Deliverables
• Continue to support the transition to Align by providing outreach and training to staff andregistered entities.
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• Process and complete organization registration request reviews, validations, andrecommendations to NERC according to risk-based registration activities and initiatives.
• Process all BES Exception submittals.• Participate in ERO Enterprise working groups to ensure consistency in processing registration
requests according to the NERC Rules of Procedure outlined in Appendix 5B (Statement ofCompliance Registry Criteria).
• Monitor and enforce compliance with mandatory standards according to the WECC-NERCDelegation Agreement, including the Rules of Procedure and the CMEP within the U.S. Withrespect to non-U.S. jurisdictions, monitor compliance according to the approved agreementsand applicable compliance monitoring programs with Canadian and Mexican authorities.
• Complete 17 audits with an on-site component, as required by the NERC Rules of Procedureand agreements with Canadian jurisdictions. Additional monitoring activities (e.g., audits, spot-checks, self-certifications with supporting evidence) will be scheduled based on risk to the BES.
• Complete initial IRAs and COPs for all new registrations in 2021.• Participate in ERO Enterprise working groups to build consistency in long term planning and
risk-based monitoring.• Gather and review risk reports and operations information to update WECC’s RRA of the
Western Interconnection.• Work with registered entities in the Western Interconnection to promote a strong culture of
reliability and security by focusing on known and future risks.• Promote the benefits of internal controls programs and their impact on BPS reliability with
registered entities.• Represent the Western Interconnection in the development of NERC and regional initiatives.• Conduct industry outreach in various forums—webinars, conferences, and entity-specific
engagements—to support ERO Enterprise activities and priorities.• Monitor and manage enforcement measures and metrics in support of the ERO Enterprise
Strategic Plan, including caseload index, violation aging, and mitigation plan aging; andcollaborate with the ERO Enterprise to develop better measures of program effectiveness.
• Continue working with NERC and the other Regional Entities to shape and refine the EROEnterprise enforcement philosophy that supports uniform, repeatable, transparent, andreliability-focused approaches.
• Conduct initial evaluation of any new noncompliance, and the resulting resolution ofenforcement actions, in a timely manner using a reliability risk-based focus. Ensure enforcementdiscretion is consistent with NERC directives and FERC Orders, rules, and regulations.
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Resource Requirements/Explanation of Significant Changes
Personnel Expenses
• Personnel Expenses increase by a net of $512,000 primarily due to one new auditor position, 0.75 FTE transferred from Legal and Regulatory, a budgeted 3% merit pool, continued refinement of labor float percentages, changes in position levels, and the refinement of payroll tax and benefits rates.
Meeting Expenses
• Travel decreases by $157,000 primarily due to planned reductions in travel requirements for audit teams and support staff and the anticipated reduction in in-person meeting attendance because of the COVID-19 pandemic and resulting increases in effective technology use.
Operating Expenses
• Office Costs increase by a net of $89,000 primarily due to the delay in the implementation of Align and the resulting extension of webCDMS licensing fees.
Fixed Assets
• Fixed Assets increase by a net of $28,000 primarily due to fixed asset additions in Corporate Services. Corporate Services expenses are allocated to statutory and non-statutory program areas based on FTEs.
See Section B—Supplemental Financial Information for explanations of other variances between the 2020 and 2021 budgets.
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Compliance Monitoring and Enforcement and Organization Registration and Certification Program Funding Sources and Expenditures
Total Expenses (B) 15,528,312$ 16,121,967$ 593,655$ 16,372,466$ 844,154$
Change in Net Assets (=A-B) 550,643$ (1,284,736)$ (1,835,378)$ 98,892$ (451,751)$
Fixed Assets, excluding Right of Use Assets (C) 30,362$ (69,784)$ (100,146)$ 58,025$ 27,663$
TOTAL BUDGET (B+C) 15,558,674$ 16,052,183$ 493,509$ 16,430,491$ 871,817$ TOTAL CHANGE IN WORKING CAPITAL (A-B-C) 520,281$ 520,281$ (1,735,232)$ 40,867$ (479,414)$
Statement of Activities, Fixed Assets Expenditures, and Change in Working Capital2020 Budget & Projection, and 2021 Budget
COMPLIANCE MONITORING AND ENFORCEMENT AND ORGANIZATION REGISTRATION AND CERTIFICATION
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Reliability Assessment and Performance Analysis
Program Scope and Functional Description
Staff conducts a variety of assessments, analyses, and studies essential to the reliable planning and operation of the BPS in the Western Interconnection. Staff also compiles and distributes data and information used by stakeholders to help with regional and local planning studies. These integrated assessment and planning efforts enhance WECC’s overall ability to assess potential reliability risks in the Western Interconnection.
The Reliability Assessment and Performance Analysis (RAPA) Program is organized into three departments:
1. The Performance Analysis and Resource Adequacy Department conducts robust analyses on the historical operation and performance of the Western Interconnection. These analyses are building blocks to assess interconnection-wide risks and vulnerabilities. The information produced helps to identify best practices and mitigate potential risk. The department also conducts forward-looking resource adequacy assessments using both deterministic and probabilistic methods.
2. The Events Analysis Department analyzes system conditions and events that affect or have the potential to affect the reliable operation of the BPS. The department’s activities ensure that stakeholders, NERC, and FERC are well-informed of system events, emerging trends, lessons learned, and expected actions affecting BPS reliability.
2020 Budget 2021 BudgetIncrease
(Decrease)
Total FTEs 38.0 37.3 (0.7) Direct Expenses 6,717,454$ 6,325,255$ (392,199)$ Indirect Expenses 3,592,689$ 3,664,833$ 72,144$ Other Non-Operating Expenses -$ -$ -$ Inc(Dec) in Fixed Assets 18,914$ 34,491$ 15,577$
Total Funding Requirement 10,329,057$ 10,024,579$ (304,478)$
Reliability Assessment and Performance Analysis (in whole dollars)
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3. The Reliability Planning Department develops and maintains WECC’s integrated capability to study Western Interconnection reliability issues for the near- and long-term planning horizon. The group is the NERC-designated, interconnection-wide model builder under the MOD-032 Reliability Standard. The department develops the planning tools and datasets that support transmission planning and performs special studies on priority reliability issues as they are identified. The studies, performed in close collaboration with the technical committees, consider both system adequacy and system stability.
The RAPA Program also supports the development of NERC’s RAPA activities through targeted data gathering and participation in the Summer, Winter, Long-Term Reliability, and Special Assessments.
As part of the business planning and budgeting process, NERC and the Regional Entities ensure alignment with the ERO Enterprise Long-Term Strategy and harmonization across the ERO Enterprise where appropriate. WECC supports the long-term strategy and deliverables specific to WECC in this program area that support the ERO Enterprise Value Drivers and Long-Term Focus Areas.
2021 Key Assumptions
The RAPA Program includes the following assumptions:
• Staff and technical committees continue to focus on assessment activities that address the strategic priority areas identified by the Board in December 2016 and the Near-Term Priorities approved by the Board in June 2018 and to be updated in June 2020.
• WECC will implement the recommendations from the Section 4.9 Review Stakeholder Engagement Work Group, which will increase subject matter expert engagement at technical committees and for staff-led assessments.
• Building on the NERC RISC Report, staff and stakeholders will continue to play a leadership role in identifying reliability challenges specific to the Western Interconnection.
• In 2019, the RAC re-envisioned its assessment process and moved toward issue-based assessments. Staff will refine the approach in 2021 and work with stakeholders and policymakers to identify key vulnerabilities.
• New grid technologies and power system changes will create a need for modeling enhancements and data collection.
• One FTE is transferred to Situation Awareness and Infrastructure Security to enhance externally facing infrastructure, physical security and cybersecurity expertise; and support the ERO Enterprise Security Initiative.
• 0.5 FTE is transferred from Human Resources to assist with knowledge transfer from seasoned engineers who are close to retirement age to others in the program area.
• 0.2 FTE is transferred to General and Administrative due to organizational realignment and a change in administrative support supervisory responsibilities.
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• Increases in the effective use of technology in response to the COVID-19 pandemic will result in a slight decrease in travel for in-person meetings.
2021 Goals and Deliverables
• Continue the three-year planning cycle in conjunction with the JGC to align staff and technical committee work plans in support of the Board-approved Near-Term Priorities.
• Coordinate with stakeholders and NERC to ensure that emerging reliability challenges are identified and addressed.
• Prepare interconnection-wide power flow and stability base cases and conduct studies to address key reliability challenges facing the Western Interconnection.
• Provide technical oversight, insight, and guidance to analyze the effects of the changing resource mix and recommend any actions to minimize reliability risks or improve modeling capabilities.
• Create and model alternate plausible futures for the Western Interconnection, considering technical, economic, policy, and other drivers.
• Identify and apply lessons learned from the development of the 2030 Anchor Data Set (ADS). • Facilitate dynamic model development, focusing on new technology resources like energy
storage. • Continue to develop and maintain databases for production cost and other models. • Enhance tools and capabilities used for probabilistic planning and analysis. • Enhance tools to study the impact of changing load characteristics and integration of new
technology resources. • Conduct reliability assessments that evaluate the adequacy and security of the BPS in the
planning horizon, including supporting the NERC Long-Term Reliability Assessment and incorporated probabilistic assessment, Summer Reliability Assessment, and Winter Reliability Assessment.
• Conduct Special Reliability Assessments as needed for high-impact, low-frequency events such as geomagnetic disturbances or prolonged droughts and to study the impacts of integrating new technology resources.
• Use data from actual system disturbances to validate power flow and stability base-case models.
• Publish transmission maps of the Western Interconnection. • Facilitate the Project Coordination and Project Rating Review Process. • Collect and make short-circuit models available for industry coordination. • Verify and submit NERC Transmission Availability Data System (TADS), Generator
Availability Data System (GADS), Demand-Response Availability Data System (DADS), and Misoperation Information Data Analysis System (MIDAS) filings.
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• Analyze trends in historical system performance and resource and load composition. Publish them in reports like the annual State of the Interconnection report.
• Assess entity performance through site visits or short surveys regarding key operational practices to identify and share best practices and potential risks to reliability.
• Evaluate historical system performance trends to identify reliability risk metrics, key indicators, and potential improvement strategies. Work with technical committees to engage in proactive reliability improvement activities.
• Enhance risk analysis capabilities through increased analysis of risk data sources such as event analysis reports, TADS, GADS, and protection system misoperations.
• Identify key vulnerability issues and work with stakeholders to address them (e.g., physical and cybersecurity, situation awareness and coordination across neighboring systems, human performance, and equipment misoperations or failures).
• Complete event analysis reports and develop lessons learned to minimize the possibility and reoccurrence of significant events.
• Educate stakeholders about event analysis work and specific events on the system. • Develop reliability guidelines, technical white papers and reports, and reference documents to
address emerging issues, operational risks, and industry concerns related to system operations. • Ensure the Western Interconnection is represented in reliability matters by participating in
regional and national stakeholder forums.
Resource Requirements/Explanation of Significant Changes
Personnel Expenses
• Personnel Expenses decrease by a net of $94,000 primarily due to a net of one FTE transferred to Situation Awareness and Infrastructure Security, 0.5 FTE transferred from Human Resources, 0.2 FTE transferred to General and Administrative, a budgeted 3% merit pool, continued refinement of labor float percentages, changes in position levels, and the refinement of payroll tax and benefits rates.
Meeting Expenses
• Meetings & Conference Calls decrease by a net of $133,000 primarily due to the anticipated reduction in in-person meetings because of the COVID-19 pandemic and resulting increases in the effective use of technology, continued refinement of meeting attendance and costs, and the restructuring of the RAC in 2020.
• Travel decreases by a net of $35,000 primarily due to the anticipated reduction in in-person meeting attendance because of the COVID-19 pandemic and resulting increases in the effective use of technology, and refinement of travel cost assumptions.
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Operating Expenses
• Consultants & Contracts decrease by a net of $250,000 primarily due to the completion of one-time 2020 study work.
• Office Costs increase by a net of $19,000 primarily due to the addition of a PowerWorld software license.
Fixed Assets
• Fixed Assets increase by a net of $16,000 primarily due to fixed asset additions in Corporate Services. Corporate Services expenses are allocated to statutory and non-statutory program areas based on FTEs.
See Section B—Supplemental Financial Information for explanations of other variances between the 2020 and 2021 budgets.
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Reliability Assessment and Performance Analysis Program Funding Sources and Expenditures
Total Expenses (B) 10,310,143$ 9,781,732$ (528,411)$ 9,990,088$ (320,055)$
Change in Net Assets (=A-B) 364,317$ 107,097$ 558,644$ 59,425$ (304,892)$
Fixed Assets, excluding Right of Use Assets (C) 18,914$ (41,704)$ (60,618)$ 34,491$ 15,577$
TOTAL BUDGET (B+C) 10,329,057$ 9,740,029$ (589,028)$ 10,024,579$ (304,478)$ TOTAL CHANGE IN WORKING CAPITAL (A-B-C) 345,403$ 148,801$ 619,261$ 24,934$ (320,469)$
Statement of Activities, Fixed Assets Expenditures, and Change in Working Capital2020 Budget & Projection, and 2021 Budget
RELIABILITY ASSESSMENT AND PERFORMANCE ANALYSIS
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Training and Outreach
Program Scope and Functional Description
The Training and Outreach Program provides outreach, education, and training on the application of Reliability Standards, compliance topics, improvement of compliance programs, reliability planning and performance analysis, grid operations, and human performance.
As part of the business planning and budgeting process, NERC and the Regional Entities ensure alignment with the ERO Enterprise Long-Term Strategy and harmonization across the ERO Enterprise where appropriate. WECC supports the long-term strategy as well as deliverables specific to WECC in this program area that support the ERO Enterprise Value Drivers and Long-Term Focus Areas.
2021 Key Assumptions
The Training and Outreach Program incorporates the following assumptions:
• Deliver two Reliability and Security Workshops to provide in-depth education and training about: o Lessons learned and process improvement for implementation of risk-based concepts in the
CMEP; o Enforcement trends and statistics; and o Information on audit approach for upcoming standards changes and transitions.
• Conduct webinars and workshops to expand awareness of reliability planning tools, modeling capabilities, and study results.
• Partner with the ERO Enterprise and engage Western subject matter experts to deliver a continent-wide Human Performance conference every three years. The next WECC-NERC Human Performance conference will be held in 2023.
• Partner with the ERO Enterprise to deliver a continent-wide Grid Security Conference every six years. The next WECC-NERC Grid Security Conference will be in 2024.
2020 Budget 2021 BudgetIncrease
(Decrease)
Total FTEs 1.5 1.5 - Direct Expenses 651,493$ 726,017$ 74,524$ Indirect Expenses 141,817$ 147,379$ 5,562$ Other Non-Operating Expenses -$ -$ -$ Inc(Dec) in Fixed Assets 747$ 1,387$ 640$ Total Funding Requirement 794,057$ 874,783$ 80,726$
Training and Outreach (in whole dollars)
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• Conduct one Western Reliability Summit in 2021 as an opportunity for senior leaders in the industry to share thoughts and participate in discussions that will help shape and influence the direction of WECC’s work and products over the coming years.
2021 Goals and Deliverables
• Deliver monthly Compliance Open Webinars to educate stakeholders on various oversight activities.
• Deliver quarterly Grid Fundamentals Workshops to teach people who are new to the industry how the electric power system works, how it is managed, and how to better understand reliability issues.
• Deliver two Reliability and Security Workshops to provide targeted and in-depth, risk-based outreach to address and mitigate key risks to reliability and security in the Western Interconnection.
• Host a Western Reliability Summit to gather input that will help identify risks and challenges to the reliability of the BPS.
• Deliver educational webinars and workshops to further enhance reliability of the Western Interconnection. Topics include: o An Internal Controls Practice Group; o Reliability planning tools and modeling capabilities, including base-case and common-case
studies; o Contingency studies and analyses; o RAC studies; o Scenario planning and regulatory issues and trends; and o Event analysis.
Resource Requirements/Explanation of Significant Changes
Personnel Expenses
• No significant changes.
Meeting Expenses
• Meetings & Conference Calls increase by a net of $65,000 primarily due to the addition of the Western Reliability Summit, which is held every other year, in odd years.
Operating Expenses
• No significant changes.
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Fixed Assets
• No significant changes.
See Section B—Supplemental Financial Information for explanations of other variances between the 2020 and 2021 budgets.
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Training and Outreach Program Funding Sources and Expenditures
Total Expenses (B) 793,310$ 630,735$ (162,575)$ 873,396$ 80,086$
Change in Net Assets (=A-B) 27,300$ (104,751)$ (132,051)$ 3,563$ (23,737)$
Fixed Assets, excluding Right of Use Assets (C) 747$ (1,668)$ (2,415)$ 1,387$ 640$
TOTAL BUDGET (B+C) 794,057$ 629,067$ (164,990)$ 874,783$ 80,726$ TOTAL CHANGE IN WORKING CAPITAL (A-B-C) 26,553$ (103,083)$ (129,636)$ 2,176$ (24,377)$
FTEs 1.5 1.5 - 1.5 - HC 1.0 1.0 - 1.0 -
Statement of Activities, Fixed Assets Expenditures, and Change in Working Capital2020 Budget & Projection, and 2021 Budget
TRAINING AND OUTREACH
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Situation Awareness and Infrastructure Security
Program Scope and Functional Description
The Situation Awareness and Infrastructure Security (SAIS) Program maintains near-real-time awareness about the conditions and significant occurrences on the BPS in the Western Interconnection, with the objective of recognizing conditions and situations that could impact the reliability and security of the BPS. WECC has access to limited near-real-time data through the Situation Awareness for FERC, NERC, and the Regions (SAFNR) tool, Genscape Real-time Power Application, and the University of Tennessee Frequency Monitoring NETwork (FNET).
The SAIS Program is part of WECC’s delegation-related accountabilities to NERC and does not in any way duplicate the real-time situation awareness and operating coordination provided by other entities within the Western Interconnection. WECC’s role is to understand system issues when they emerge and coordinate with relevant parties (typically NERC and FERC) about the conditions of the BPS. Through this coordination, WECC identifies patterns and trends that will help build a stronger and more resilient system. Staff responds to events by providing coordination, assistance, and communication with the RCs, stakeholders, and NERC SAIS personnel. SAIS work also feeds into event analysis capabilities.
As part of the business planning and budgeting process, NERC and the Regional Entities ensure alignment with the ERO Enterprise Long-Term Strategy and harmonization across the ERO Enterprise where appropriate. WECC supports the long-term strategy as well as deliverables specific to WECC in this program area that support the ERO Enterprise Value Drivers and Long-Term Focus Areas.
2020 Budget 2021 BudgetIncrease
(Decrease)
Total FTEs 1.0 2.0 1.0 Direct Expenses 141,597$ 280,553$ 138,956$ Indirect Expenses 94,544$ 196,506$ 101,962$ Other Non-Operating Expenses -$ -$ -$ Inc(Dec) in Fixed Assets 498$ 1,849$ 1,351$ Total Funding Requirement 236,639$ 478,908$ 242,269$
Situation Awareness and Infrastructure Security (in whole dollars)
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2021 Key Assumptions
The SAIS Program includes the following assumptions.
• Cyber and physical security threats will continue to increase as the grid evolves. WECC will work with stakeholders and support the ERO Enterprise Security Initiative to focus on security outreach and education.
• Continue using the SAFNR tool and Genscape Real-time Power Application to provide situation awareness capabilities.
• Support NERC and FERC’s efforts for situation awareness of current system conditions. • Maximize sharing of reliability and security data, within agreed parameters, and insights from
Events Analysis, including near-misses, to optimize understanding of reliability and security issues, promote operational excellence, promptly share best practices and lessons learned, and engage third-party experts to expand capabilities and resources applied to critical reliability and security issues.
• Collaborate with specific stakeholder groups to develop lessons learned and recommendations from events and identified reliability and security risks.
• One FTE is transferred from RAPA to enhance externally facing infrastructure and physical security and cybersecurity expertise; and support the ERO Enterprise Security Initiative.
2021 Goals and Deliverables
• Monitor system events, collect information, and coordinate prompt distribution of updates on system events to industry stakeholders and NERC SAIS personnel.
• Work with NERC to monitor system data, weather, and technological developments to understand trends that affect reliability for the near- and long-term horizons.
• Participate in daily NERC SAIS calls to coordinate the communication of critical information. • Support efforts and work to develop and enhance ways to improve the use of SAFNR and
Genscape Real-time Power Application data to further support SAIS. • Represent the Western Interconnection in reliability and security matters by participating in
various NERC committees and industry forums. • Participate, as appropriate, in periodic wide-area security exercises (e.g., GridEx, Monitoring
and Situation Awareness Workshop, NERC Human Performance Conference). • Promote rapid and appropriate sharing of situation awareness information to support critical
infrastructure security. • Work with stakeholders, government agencies, NERC, and the E-ISAC to ensure appropriate
reliability and security event information is promptly disseminated to industry entities.
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Resource Requirements/Explanation of Significant Changes
Personnel Expenses
• Personnel Expenses increase by a net of $139,000 primarily due to one FTE transferred from RAPA, a budgeted 3% merit pool, continued refinement of labor float percentages, and the refinement of payroll tax and benefits rates.
Meeting Expenses
• No significant changes.
Operating Expenses
• No significant changes.
Fixed Assets
• No significant changes.
See Section B—Supplemental Financial Information for explanations of other variances between the 2020 and 2021 budgets.
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Situation Awareness and Infrastructure Security Program Funding Sources and Expenditures
Total Expenses (B) 236,141$ 402,786$ 166,645$ 477,059$ 240,918$
Change in Net Assets (=A-B) 8,411$ (171,202)$ (179,613)$ 3,040$ (5,371)$
Fixed Assets, excluding Right of Use Assets (C) 498$ (2,224)$ (2,722)$ 1,849$ 1,351$
TOTAL BUDGET (B+C) 236,639$ 400,562$ 163,923$ 478,908$ 242,269$ TOTAL CHANGE IN WORKING CAPITAL (A-B-C) 7,913$ (168,978)$ (176,891)$ 1,191$ (6,722)$
FTEs 1.0 2.0 1.0 2.0 1.0 HC - 1.0 1.0 1.0 1.0
Statement of Activities, Fixed Assets Expenditures, and Change in Working Capital2020 Budget & Projection, and 2021 Budget
SITUATION AWARENESS AND INFRASTRUCTURE SECURITY
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Corporate Services
Program Scope and Functional Description
Corporate Services encompasses the following program areas and includes all business and administrative functions of the organization:
• Technical Committees and Member Forums; • General and Administrative; • Legal and Regulatory; • Information Technology; • Human Resources; and • Finance and Accounting.
These functions are necessary for the existence and operation of the organization and support the performance of statutory activities. This area provides executive leadership; communications and external affairs; and administrative support for staff, committees, and members.
As part of the business planning and budgeting process, NERC and the Regional Entities ensure alignment with the ERO Enterprise Long-Term Strategy and harmonization across the ERO Enterprise where appropriate. WECC supports the long-term strategy as well as deliverables specific to WECC in this program area that support the ERO Enterprise Value Drivers and Long-Term Focus Areas.
Method for Allocation of Corporate Services Expenses to Programs
Corporate Services expenses are allocated to statutory and non-statutory program areas based on FTEs.
2020 Budget 2021 Budget
Increase (Decrease)
FTEs2020
Budget
FTEs2021
BudgetIncrease
(Decrease)
Committee and Member Forums 77,350$ 7,300$ (70,050)$ - - - General and Administrative 5,364,402$ 5,862,853$ 498,451$ 16.50 18.70 2.20 Legal and Regulatory 1,531,728$ 1,405,140$ (126,588)$ 7.00 7.25 0.25 Information Technology 1,806,959$ 2,209,527$ 402,568$ 8.00 9.00 1.00 Human Resources 1,232,509$ 1,235,141$ 2,632$ 4.00 4.00 - Accounting and Finance 489,212$ 541,656$ 52,444$ 3.00 3.00 - Total Corporate Services* 10,502,160$ 11,261,617$ 759,457$ 38.50 41.95 3.45
Corporate Services
(in whole dollars)
*WECC’s 2021 Corporate Services budget (expenses plus fixed assets) is $11,261,617, of which $694,243 is allocated to non-statutory activities. As a result of the allocation to the non-statutory function, the Corporate Services expenses included in the 2021 statutory budget are $10,567,374, which is a $635,467 increase from the 2020 budget.
Direct Expenses and Fixed Assets
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Technical Committees and Member Forums
Program Scope and Functional Description
The Standing Committees (OC, MIC, and RAC) and the JGC provide forums for members and other interested stakeholders to identify, assess, and mitigate reliability risks and operating concerns.
2021 Key Assumptions
• The Standing Committees meet three times each year. The Standing Committees meet off-site once every other year, in even years. In 2021, all three meetings will be hosted in Salt Lake City.
2021 Goals and Deliverables
• Support and coordinate the meeting logistics for the Standing Committees.
Resource Requirements/Explanation of Significant Changes
Personnel Expenses
• No significant changes.
Meeting Expenses
• Meetings & Conference Calls decrease by $68,000 due to all Standing Committee meetings being held in Salt Lake City.
Operating Expenses
• No significant changes.
Fixed Assets
• No significant changes.
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General and Administrative
Program Scope and Functional Description
The General and Administrative Program provides executive leadership; enterprise security; communications; and administrative support for staff, committees, and members; as well as logistics support of the Salt Lake City office and meeting facilities, and the Vancouver office. In addition, indirect costs such as Office Rent that benefit multiple functional areas are accounted for in this program.
2021 Key Assumptions
• Provide the same level of meetings and meeting support for the Board of Directors and Board Committees in 2021.
• Hold the 2021 Annual Meeting in Newport Beach, California. • Compensate Directors for meeting participation according to the current Board compensation
structure. • Two new enterprise security positions are added to bolster and improve WECC’s internal
security program and posture due to the critical nature of some of WECC’s data and increasing cybersecurity risks.
• 0.2 FTE is transferred from RAPA due to organizational realignment and a change in administrative support supervisory responsibilities.
2021 Goals and Deliverables
• Provide excellent executive leadership and strong strategic guidance for the activities undertaken by WECC and ensure that WECC supports the ERO Enterprise Long-Term Strategy and meets the expectations of the Regional Delegation Agreement.
• Support and coordinate the logistics for the Board and Board committees. • Continue to enhance the meetings team and stakeholder services groups by identifying
efficiencies and more effective services. • Continue to enhance external relations and outreach programs. • Upgrade the Salt Lake City office space, funded partially by the landlord through a negotiated
Resource Requirements/Explanation of Significant Changes
Personnel Expenses
• Personnel Expenses increase by a net of $505,000 primarily due to a net of two new enterprise security positions, 0.2 FTE transferred from RAPA, a budgeted 3% merit pool, continued refinement of labor float percentages, and the refinement of payroll tax and benefits rates.
Meeting Expenses
• Meetings & Conference Calls decrease by a net of $34,000 primarily due to the negotiation of an ERO Enterprise-wide WebEx contract to take advantage of volume pricing discounts.
• Travel decreases by a net of $26,000 primarily due to all Standing Committee meetings being held in Salt Lake City and a decrease in anticipated executive travel to align the budget with historical spending in 2019 and the 2020 outreach calendar.
Operating Expenses
• Consultants & Contracts increase by a net of $27,000 primarily due to anticipated increases in the cost of a Board compensation study and a Board Director search.
• Office Rent increases by a net of $125,000 primarily due to the remainder of the new lease for the Salt Lake City office.
• Office Costs decrease by a net of $76,000 primarily due to the completion of upgrades to the Salt Lake City meeting space.
• Professional Services decrease by a net of $23,000 primarily due to the correction of budgeted Board of Director retainers.4
Fixed Assets
• No significant changes.
4 Board of Director retainer fees were overbudgeted for by $45,000 in the 2020 Business Plan and Budget.
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Legal and Regulatory
Program Scope and Functional Description
The Legal and Regulatory Program provides coordinated legal services and subject matter expertise to the Board, committees, and staff, in addition to consistent legal interpretations of relevant statutes, regulations, court opinions, and regulatory decisions. On occasion, major efforts may be outsourced to select law firms, but the responsibility for all legal matters remains with the Legal and Regulatory Program. The program also coordinates external affairs and outreach at the federal, state, and regional level.
WECC’s broad scope of activities requires significant legal support and review. Arranging for legal support is complicated by the technical nature of this developing area of law, and there are many potential areas of conflict prohibiting the use of law firms with energy practices.
2021 Key Assumptions
• Maintain the scope of current operations and contribute positively to ERO Enterprise activities. • One new external affairs analyst is added to stay abreast of state and policy issues and decisions
that may impact reliability in the Western Interconnection and WECC studies. • 0.75 FTE is transferred to CMEP due to organizational realignment and changes in Executive
Team responsibilities and focus. • Increases in the effective use of technology in response to the COVID-19 pandemic will result in
a slight decrease in travel for in-person meetings.
2021 Goals and Deliverables
• Provide efficient, cost-effective legal support to the Board, committees, and staff through a combination of in-house and outside resources.
• Advise staff on legal matters. • Bolster and expand external affairs activities to:
o Appropriately inform executive leadership about key national and Western policy and legislative initiatives;
o Increase engagement with policymakers, regulators, and legislators in the West; and o Ensure analytical work products are shared in a targeted manner to appropriate audiences,
including policy and regulatory audiences.
Resource Requirements/Explanation of Significant Changes
Personnel Expenses
• Personnel Expenses decrease by a net of $154,000 primarily due to a new external affairs analyst position, 0.75 FTE transferred to CMEP, a budgeted 3% merit pool, continued refinement of
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labor float percentages, changes in position levels, and the refinement of payroll tax and benefits rates.
Meeting Expenses
• Travel decreases by a net of $16,000 primarily due to the anticipated reduction in in-person meeting attendance because of the COVID-19 pandemic and the resulting increase in the effective use of technology.
Operating Expenses
• Office Costs increase by a net of $20,000 primarily due to Meltwater media monitoring and EnerKnol policy data subscriptions.
• Professional Services increase by $24,000 primarily due to a new cybersecurity insurance policy.
Fixed Assets
• No significant changes.
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Information Technology
Program Scope and Functional Description
The Information Technology (IT) Program provides systems and security support. This includes hardware, software, data, system administration, data center operations, email, and telephony. IT implements new technology solutions, using both staff and external service providers to improve the security, effectiveness, and efficiency of business processes and operations. IT provides resources and tools to enable the organization to meet evolving requirements to support activities and responsibilities as directed by NERC and FERC.
2021 Key Assumptions
The IT Program includes the following assumptions:
• Use consultants for project-based work to augment staff skill sets instead of increasing headcount.
• Achieve long-term levelized costs by obtaining subscription services for software and infrastructure when practical.
• Replace computer equipment on a three-year refresh cycle, refresh servers every five years, and replace network equipment every seven to 10 years.
• Support the ERO Enterprise IT Strategy and continue working collaboratively to minimize duplication of effort and investments and improve operational efficiency.
• Migrate customer relationship management software to the cloud. • Upgrade and refresh wecc.org. • One new information security specialist is added to help bolster and formalize WECC’s internal
security program and posture due to the critical nature of some of WECC’s data and increasing cybersecurity risks.
2021 Goals and Deliverables
• Provide data support, analysis, and communication. • Create centralized databases, automated processes, and tools to organize a growing volume of
electronic data. • Increase security capabilities with more authentication controls and enhanced threat
monitoring, detection, and reporting. • Enhance the capabilities and security controls for mobile devices and remote workers. • Adopt a service provider organization model for IT.
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Resource Requirements/Explanation of Significant Changes
Personnel Expenses
• Personnel Expenses increase by a net of $145,000 primarily due to a new information security specialist, a budgeted 3% merit pool, continued refinement of labor float percentages, and the refinement of payroll tax and benefits rates.
Meeting Expenses
• No significant changes.
Operating Expenses
• Consultants & Contracts increase by a net of $205,000 primarily due to a SharePoint upgrade for the wecc.org website, a CRM cloud migration, and IT service alignment consulting.
Fixed Assets
• Computer & Software CapEx increases by a net of $50,000 primarily due to planned 2021 equipment refreshes of storage drives and blade servers.
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Human Resources
Program Scope and Functional Description
The Human Resources (HR) Program is responsible for the delivery of all HR functions, including recruitment, staffing, compensation, benefits, safety, health and wellness, employee relations, performance management, succession planning, knowledge transfer, and employee training and development. HR maintains and supports employee-related systems and ensures compliance with all federal and state requirements.
2021 Key Assumptions
• Total WECC headcount increases in 2021. • Maintain current benefit levels and negotiate minimal premium increases. • Minimize skills gaps through training, development, and targeted hiring practices. • 0.5 FTE is transferred to RAPA to assist with knowledge transfer from seasoned engineers who
are close to retirement age to others in the program area. • One new part-time corporate services administrative assistant is added to free up staff time for
more complex tasks and issues.
2021 Goals and Deliverables
• Increase the effectiveness of performance management processes through manager training and development.
• Conduct harassment prevention training for all employees and managers. • Enhance the scope of succession planning and employee development and training, which are
vital to maintaining a highly skilled, qualified, and diverse workforce. • Deliver an attractive benefits package to retain current employees and attract potential
employees. • Manage benefits package costs and minimize premium increases. • Expand recruiting efforts through college campus outreach, social media platforms, and
employee referral programs. • Offer one technical writing course. • Provide access for all employees to the NERC Learning Management System and develop
learning plans for employee training using computer-based training modules and classroom training.
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Resource Requirements/Explanation of Significant Changes
Personnel Expenses
• Personnel Expenses increase by a net of $23,000 primarily due to a new part-time corporate services administrative assistant, 0.5 FTE transferred to RAPA, a budgeted 3% merit pool, continued refinement of labor float percentages, and the refinement of payroll tax and benefits rates.
Meeting Expenses
• No significant changes.
Operating Expenses
• Consultants & Contracts decrease by a net of $25,000 primarily due to the completion of a 2020 compensation study.
• Office Costs increase by $13,000 primarily due to increased HR employee file management costs and to align the budget with historical costs for the HR information system.
Fixed Assets
• No significant changes.
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Finance and Accounting
Program Scope and Functional Description
The Finance and Accounting Program provides accounting and financial analysis support. The program is responsible for payroll, accounts payable, accounts receivable, budgeting, fixed assets management, banking, cash management, tax filings, and financial reporting.
• Help departments efficiently and effectively manage resources and operate within approved budgets.
• Identify and implement efficiencies in financial processes. • Ensure WECC has effective financial controls. • Provide quality reporting and financial analysis to managers, the FAC, and the Board.
Resource Requirements/Explanation of Significant Changes
Personnel Expenses
• Personnel Expenses increase by a net of $24,000 primarily due to a budgeted 3% merit pool, continued refinement of labor float percentages, and the refinement of payroll tax and benefits rates.
Meeting Expenses
• No significant changes.
Operating Expenses
• Office Costs increase by a net of $28,000 primarily due to the shift of the accounting system to a cloud-based service.
Fixed Assets
• No significant changes.
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Corporate Services Funding Sources and Expenditures
Statement of Activities, Fixed Assets Expenditures, and Change in Working Capital2020 Budget & Projection, and 2021 Budget
CORPORATE SERVICES
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Section B
Supplemental Financial Information
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Section B—Supplemental Financial Information
Reserve Analysis
WECC’s Board has approved a Working Capital Reserve balance equal to one to three months of Personnel, Meeting, and Operating Expenses per its Reserve Policy, approved by the FAC on June 19, 2018.
Beginning Working Capital Reserve (Deficit), December 31, 20191 7,339,150$
Plus: 2020 Funding (from Load-Serving Entities (LSE) or designees) 28,027,000Plus: 2020 Other funding sources 486,580
Less: 2020 Projected expenses & capital expenditures (27,668,423)
Projected Working Capital Reserve (Deficit), December 31, 2020 8,184,307$
Projected Working Capital Reserve, December 31, 20212 8,255,626$
Less: Projected Working Capital Reserve, December 31, 2020 (8,184,307)
Increase(Decrease) in Assessments to Achieve Projected Working Capital Reserve 71,319$
2021 Expenses and Capital Expenditures 28,673,681$ Less: Penalty Sanctions3 (3,115,000)Less: Other Funding Sources (630,000)Adjustment to achieve desired Working Capital Reserve 71,319
2021 WECC Assessment 25,000,000$
1 - Beginning Working Capital Reserve excludes penalties collected to offset assessments in future budget years.2 - On June XX, 2020, the WECC Board of Directors approved this reserve level.3 - Represents collections of Penalty Sanctions from July 1, 2019 through June 30, 2020. See page 49 for full disclosure.
Working Capital Reserve Analysis 2020-2021STATUTORY
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Breakdown of Statement of Activities
The following detailed schedules are in support of the Statutory Statement of Activities and Capital Expenditures on page 9.
Monetary Penalties
As documented in the NERC Policy Accounting, Financial Statement and Budgetary Treatment of Penalties Imposed and Received for Violations of Reliability Standards, penalty monies received on or before June 30, 2020, will be used to offset assessments in the 2021 WECC budget.
All penalty monies received on or before June 30, 2020, are listed in Table B-2, including the amount and the date received.
Allocation Method: Penalty monies received have been allocated to the following Statutory Programs to reduce assessments:
• Reliability Standards; • Compliance Monitoring and Enforcement and Organization Registration and Certification; • Reliability Assessment and Performance Analysis; • Training and Outreach; and • Situation Awareness and Infrastructure Security.
Penalty monies are allocated based on the number of FTEs in the functional areas divided by the aggregate total FTEs in the programs receiving the allocation.
Total 3,115,000 2,564,000 5,160,000 519,000 (B) (D)
* Penalty revenue has been recognized but payment has not been received. The penalty will offset assessments in a future budget year.** Penalties collected between July 1, 20X1 and June 30, 20X2 will offset assessments in budget year 20X3.*** Penalties are recognized for financial reporting purposes when they are approved by FERC and invoiced.
Business Plan & Budget**
(Year to Offset Assessments)
Financial Statements***
(Year Recognized)Penalty Information
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Supplemental Funding
Table B-3
Explanation of Significant Variances—2021 Budget versus 2020 Budget
WECC anticipates its investments will earn interest of approximately $200,000 in 2021. This revenue is allocated to the Statutory Programs based on FTEs.
Reliability Standards
• No significant changes.
Compliance Monitoring and Enforcement and Organization Registration and Certification
• No significant changes.
Reliability Assessment and Performance Analysis
• No significant changes.
Supplemental Revenue Breakdown By Program(Excludes Assessments & Penalty Sanctions)
Reliability Assessment and Performance AnalysisInterest 72,727$ 102,960$ 70,014$ (2,713)$
Total 72,727$ 102,960$ 70,014$ (2,713)$
Training and OutreachWorkshops & Miscellaneous 457,250$ 193,486$ 430,000$ (27,250)$ Interest 2,871 4,118 2,816 (55)
Total 460,121$ 197,604$ 432,816$ (27,305)$
Situation Awareness and Infrastructure SecurityInterest 1,914$ 5,491$ 3,754$ 1,840$
Total 1,914$ 5,491$ 3,754$ 1,840$
Corporate ServicesInterest -$ -$ -$ -$
Total -$ -$ -$ -$
Total Supplemental Funding 657,250$ 486,579$ 630,000$ (27,250)$
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Training and Outreach
• Workshops & Miscellaneous decreases by a net of $27,000 primarily due to the hosting of one Grid Fundamentals class by a stakeholder and a reduction in registration fees for outreach events to align revenue with anticipated costs.
Situation Awareness and Infrastructure Security
• No significant changes.
Corporate Services
• No significant changes.
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Personnel Expenses
Table B-4
Explanation of Significant Variances—2021 Budget versus 2020 Budget
Salaries
• Salaries increase by a net of $949,000 primarily due to 5.5 additional FTEs, budgeted 3% merit pool, continued refinement of labor float percentages, and changes in position levels.
• Employment Agency Fees increase by $23,000 due to anticipated recruitment in a tight labor market.
Payroll Taxes
• Payroll Taxes increase by a net of $70,000 primarily due to increases in salaries.
Total Cost per FTE 149,356$ 144,858$ 151,393$ 2,037$ 1.4%
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Benefits
• Medical Insurance increases by a net of $103,000 primarily due to additional FTEs, changes in participation levels, and increases in the cost of premiums.
• Education decreases by $45,000 due to the anticipated reduction in travel to in-person trainings because of the COVID-19 pandemic, and to align the budget with historical spending in 2019.
• Relocation decreases by a net of $50,000 due to tax law changes for relocation benefits. The benefit is now included in Salaries.
Retirement
• Discretionary 401k Contribution increases by a net of $68,000 primarily due to increases in salaries.
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Meeting Expenses
Table B-5
Explanation of Significant Variances—2021 Budget versus 2020 Budget
Meeting & Conference Call Expense
• RAPA decreases by a net of $33,000 primarily due to the anticipated reduction in in-person meetings because of the COVID-19 pandemic and resulting increases in the effective use of technology, the refinement of meeting attendance and costs, and the restructuring of the RAC in 2020.
• Training and Outreach increases by a net of $65,000 primarily due to the addition of the Western Reliability Summit, which is held in odd-numbered years.
• Corporate Services decreases by a net of $103,000 primarily due to all Standing Committee meetings being held in Salt Lake City, and the negotiation of an ERO Enterprise-wide WebEx contract to take advantage of volume pricing discounts.
Travel Expense
• CMEP decreases by a net of $157,000 primarily due to the anticipated reduction in in-person meeting attendance because of the COVID-19 pandemic and resulting increases in the effective
Meeting & Conference Call ExpenseBudget2020
Projection2020
Budget 2021
Variance 2020 Budget v 2021 Budget Variance %
Reliability Standards -$ -$ -$ -$ Compliance Monitoring and Enforcement and Organization Registration and Certification
Total Travel Expenses 1,401,818$ 695,628$ 1,153,873$ (247,945)$ (17.7%)
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use of technology and planned reductions in travel requirements for audit teams and support staff.
• RAPA decreases by a net of $35,000 primarily due to the anticipated reduction in in-person meeting attendance because of the COVID-19 pandemic and resulting increases in the effective use of technology, and the refinement of travel cost assumptions.
• Corporate Services decreases by a net of $57,000 primarily due to all Standing Committee meetings being held in Salt Lake City, a decrease in anticipated executive travel to align the budget with historical spending in 2019 and the 2020 outreach calendar, and the refinement of travel cost assumptions.
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Consultants and Contracts
Table B-6
Explanation of Significant Variances—2021 Budget versus 2020 Budget
Consultants
• RAPA decreases by a net of $250,000 primarily due to the completion of one-time 2020 studies. • Corporate Services increases by a net of $207,000 primarily due to a SharePoint upgrade for the
wecc.org website, a CRM cloud migration, and IT service model consulting.
Contracts
• No significant changes.
ConsultantsBudget2020
Projection2020
Budget 2021
Variance 2020 Budget v 2021 Budget Variance %
ConsultantsReliability Standards -$ -$ -$ -$ Compliance Monitoring and Enforcement and Organization Registration and Certification
Total Office Rent 1,248,251$ 1,254,521$ 1,372,346$ 124,095$ 9.9%
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Office Costs
Table B-8
Explanation of Significant Variances—2021 Budget versus 2020 Budget
• Telephone increases by a net of $16,000 primarily due to the realignment of budgeted amounts with historical spending.
• Office Supplies decrease by $19,000 primarily due to the realignment of budgeted office expenses with historical spending.
• Computer Supplies and Maintenance increases by $57,000 primarily due to the delay in the implementation of Align and the resulting extension of webCDMS licensing fees.
• Publications & Subscriptions increase by $30,000 primarily due to Meltwater media monitoring and EnerKnol policy data subscriptions.
• Dues and Fees increase by $35,000 primarily due to increased HR employee file management costs, to align the budget with historical costs for the HR information system, and an external network penetration test.
The Western Renewable Energy Generation Information System (WREGIS) is an independent, renewable energy database for the Western Interconnection. WREGIS creates renewable energy certificates (REC) for verifiable renewable generation from units that are registered in the database.
WREGIS was developed by the Western Governors’ Association, the Western Regional Air Partnership, and the California Energy Commission (CEC). This development was further guided by stakeholder input from more than 400 participants for more than three years.
The program was integrated into WECC on March 31, 2012, following the expiration of the contract between WECC and the CEC that provided for backstop funding. WREGIS is advised by two committees: 1) the Stakeholder Advisory Committee, which is open to all interested participants, and 2) the WREGIS Committee, which is open to members and various stakeholder groups.
WREGIS costs fall outside Section 215 of the Federal Power Act. Participants fund WREGIS through registration and transaction fees. To avoid any crossover of Section 215 dollars, a portion of WECC’s overhead costs are allocated to the program based on a formula implemented following a FERC audit.
WREGIS consists of two parts: 1) the information system software, and 2) administrative operations. Staff coordinates with the software contractor and performs all the administrative tasks, including:
• Registering account holders and generation units; • Training users; • Auditing generation and other data; and • Managing the budgeting, billing, and financial reporting.
2021 Key Assumptions
WREGIS is funded entirely by user fees and is not subsidized by Section 215 funding. There are several types of user fees. Annual fees are paid by all users and are based on size (generation capacity) and
2020 Budget 2021 Budget
Increase (Decrease)
Total FTEs 6.0 7.0 1.0 Direct Expenses 1,261,282$ 1,334,685$ 73,403$ Indirect Expenses 567,267$ 687,770$ 120,503$ Inc(Dec) in Fixed Assets 2,986$ 6,473$ 3,487$ Total Funding Requirement 352,946$ 598,904$ 245,958$
Western Renewable Energy Generation Information System (in whole dollars)
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user type. Usage fees are paid by all but micro, small, and medium generation owners. WREGIS also charges ad hoc reporting fees.
• User fees are based on size (generation capacity) and user type. o Approximately 4% of revenues are based on annual fees. o Approximately 92% of revenues are based on usage fees, which can depend on factors like
weather (wind and solar generation levels) and state regulatory policies (retirement, transfers, etc.).
o Approximately 4% of revenues are attributable to fees for specific, requested functions such as tracking e-Tags.
• Revenues can vary greatly from year to year; therefore, large WREGIS reserves are held to allow for normal operations during years in which fee levels are low and to fund large, non-recurring expenditures such as major software upgrades.
• Perform six account holder audits. • Deliver two account holder training sessions. • One new program analyst position is added.
2021 Goals and Key Deliverables
• Maintain compliance with the participating states’, provinces’, and voluntary programs. • Register program participants. • Maintain program software to ensure the best performance both in terms of efficiency and ease
of use for account holders. • Refine and improve data collection to ensure high-quality data. • Keep abreast of possible needs to increase system functionality.
Resource Requirements/Explanation of Significant Changes
Funding Sources (other than ERO Assessments)
• Membership Fees increase by $388,000 primarily due to anticipated increases in account holders and certificate volumes.
• Interest increases by $55,000 primarily due to realigning budgeted amounts with historical returns on investments.
Personnel Expenses
• Personnel Expenses increase by a net of $98,000 primarily due to a new program analyst, a budgeted 3% merit pool, continued refinement of labor float percentages, and the refinement of payroll tax and benefits rates.
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Meeting Expenses
• No significant changes.
Operating Expenses
• Office Costs decrease by $25,000 primarily due to reduced maintenance costs for the information system software.
Fixed Assets
• Fixed Assets increase by a net of $3,500 primarily due to fixed asset additions in Corporate Services. Corporate Services expenses are allocated to statutory and non-statutory program areas based on FTEs.
Indirect Expenses
• Indirect Expenses increase by a net of $121,000 primarily due to the addition of a program analyst and an increase in Corporate Services expenses. Corporate Services expenses are allocated to statutory and non-statutory program areas based on FTEs.
Total Expenses (B) 1,828,549$ 1,869,126$ 40,577$ 2,022,455$ 193,906$
Change in Net Assets (=A-B) 355,932$ 359,566$ 3,634$ 605,377$ 249,445$
Fixed Assets, excluding Right of Use Assets (C) 2,986$ (7,785)$ (10,771)$ 6,473$ 3,487$
TOTAL BUDGET (=B+C) 1,831,535$ 1,861,341$ 29,806$ 2,028,928$ 197,393$ TOTAL CHANGE IN WORKING CAPITAL (=A-B-C) 352,946$ 367,351$ 14,405$ 598,904$ 245,958$
FTEs 6.0 7.0 1.0 7.0 1.0 HC 6.0 7.0 1.0 7.0 1.0
Statement of Activities, Fixed Assets Expenditures, and Change in Working Capital2020 Budget & Projection, and 2021 Budget
NON-STATUTORY
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Personnel Analysis
FTEs are defined as full-time equivalent employees only. Fractional FTEs reflect part-time employees or employees who worked in fewer than all four quarters of the year.
Reserve Analysis
Total FTEs by Program AreaBudget 2020
Projection 2020
Direct FTEs 2021
Budget
Shared FTEs* 2021
Budget
Total FTEs 2021
Budget
Change from 2020
Budget
Operational Programs
Total FTEs Operational Programs 0.0 0.0 0.0 0.0 0.0 0.0
Statements of Financial Position ............................................................................................................................ 3 Statements of Activities ......................................................................................................................................... 4 Statements of Functional Expenses ....................................................................................................................... 5 Statements of Cash Flows ...................................................................................................................................... 7 Notes to Financial Statements ............................................................................................................................... 8
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Independent Auditor’s Report The Board of Directors Western Electricity Coordinating Council Salt Lake City, Utah Report on the Financial Statements We have audited the accompanying financial statements of Western Electricity Coordinating Council, which comprise the statements of financial position as of December 31, 2019 and 2018, and the related statements of activities, functional expenses, and cash flows for the years then ended, and the related notes to the financial statements. Management’s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal controls relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor’s Responsibility Our responsibility is to express an opinion on these financial statements based on our audits. We conducted our audits in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor’s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity’s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity’s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion.
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Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Western Electricity Coordinating Council as of December 31, 2019 and 2018, and the changes in its net assets and its cash flows for the years then ended in accordance with accounting principles generally accepted in the United States of America.
Emphasis of Matter As discussed in Note 1 and Note 9 to the financial statements, Western Electricity Coordinating Council has adopted the provisions of Financial Accounting Standards Board Accounting Standards Codification Topic 606, Revenue from Contracts with Customers (Topic 606), as of January 1, 2019 with retrospective application to the prior periods presented. Accordingly, the 2018 financial statements have been adjusted to be in accordance with the provisions of Topic 606. Our opinion is not modified with respect to this matter.
Salt Lake City, Utah April 30, 2020
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See Notes to Financial Statements 3
Western Electricity Coordinating Council Statements of Financial Position
December 31, 2019 and 2018
(As Restated)2019 2018
AssetsCash and cash equivalents 25,456,435$ 29,343,247$ Contractually restricted cash and cash equivalents 5,818,562 3,380,466Certificates of deposit 5,416,154 4,508,812Investments 3,975,625 1,809,495Accounts receivable, net 5,448,118 360,735Prepaid expenses and other assets 406,112 480,695 Property and equipment, net 426,181 368,135
46,947,187$ 40,251,585$
Liabilities and Net AssetsAccounts payable 5,017,875$ 5,133,913$ Accrued expenses 3,311,835 2,319,155Deferred revenue 15,667,577 15,185,890Other liabilities 145,113 405,099
Total liabilities 24,142,400 23,044,057
Net AssetsWithout donor restrictions 22,804,787 17,207,528
46,947,187$ 40,251,585$
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See Notes to Financial Statements 4
Western Electricity Coordinating Council Statements of Activities
Years Ended December 31, 2019 and 2018
(As Restated)2019 2018
RevenuesElectric Reliability Organization funding 30,442,000$ 30,127,000$ Western Renewable Energy Generation Information System (WREGIS) 2,361,424 2,117,182Meetings and workshops 518,952 403,406Net investment return 474,967 428,656
Total expenses included in thestatement of activities 17,664,273$ 1,181,259$ 18,845,532$ 10,022,643$ 28,868,175$
Program Services
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See Notes to Financial Statements 7
Western Electricity Coordinating Council Statements of Cash Flows
Years Ended December 31, 2019 and 2018
(As Restated)2019 2018
Operating ActivitiesChange in net assets 5,597,259$ 4,208,069$ Adjustments to reconcile change in net assets to
net cash from operating activitiesDepreciation and amortization 246,918 264,354 Bad debt expense 7,000 (7,000) Amortization of discounts and premiums on operating investments (2,578) 19,000 Realized and unrealized loss on operating investments (28,041) 13,380
Changes in assets and liabilitiesAccounts receivable (5,094,383) 2,718,733 Prepaid expenses and other assets 74,583 158,263 Accounts payable (116,038) (4,786,833) Accrued expenses 992,680 489,444 Deferred revenue 481,687 (666,842) Other liabilities (259,986) (224,808)
Net Cash from Operating Activities 1,899,101 2,185,760
Investing ActivitiesPurchases of property and equipment (304,964) (92,137) Purchases of investments and certificates of deposit (9,169,617) (5,971,495) Proceeds from sale of investments and certificates of deposit 6,126,764 6,137,286
Net Cash from (used for) Investing Activities (3,347,817) 73,654
Net Change in Cash and Cash Equivalents (1,448,716) 2,259,414
Cash and Cash Equivalents, Beginning of Year 32,723,713 30,464,299
Cash and Cash Equivalents, End of Year 31,274,997$ 32,723,713$
Cash and Cash Equivalents are presented as follows on the statement of financial position:
Cash and cash equivalents 25,456,435$ 29,343,247$ Contractually restricted cash and cash equivalents 5,818,562 3,380,466
31,274,997$ 32,723,713$
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Western Electricity Coordinating Council Notes to Financial Statements December 31, 2019 and 2018
Note 1 ‐ Summary of Significant Accounting Policies
Organization
Western Electricity Coordinating Council (WECC) is a not‐for‐profit organization whose primary mission is to effectively and efficiently mitigate risks to the reliability and security of the Western Interconnection’s Bulk Power System (Western Interconnection). The Western Interconnection extends from Canada to Mexico and includes the Canadian provinces of Alberta and British Columbia, the northern part of Baja California in Mexico, and all or part of the 14 Western states in between. WECC’s revenues are generated through performance of statutory and non‐statutory activities.
WECC performs statutory activities pursuant to the Delegation Agreement effective October 2007 and Amended and Restated Delegation Agreement effective January 2016 with North American Electric Reliability Corporation (NERC). NERC is the Electric Reliability Organization (ERO) certified by the Federal Energy Regulatory Commission (FERC) to establish and enforce reliability standards for the bulk power system. Statutory activities authorize WECC to develop, monitor, assess, and enforce compliance with NERC reliability standards and regional standards within the United States portion of the geographic boundaries of the Western Interconnection. Statutory revenues are derived from WECC’s statutory funding from NERC, which NERC has delegated WECC to collect through assessments to Load‐Serving Entities (LSEs) within the Western Interconnection.
Non‐statutory activities include oversight of the operations of a component of WECC “doing business as” Western Renewable Energy Generation Information System (WREGIS). WREGIS is an independent, renewable energy tracking system within the Western Interconnection. WECC funds its non‐statutory activities though annual and other activity‐based fees.
Cash and Cash Equivalents
For the purpose of the statement of cash flows, cash and cash equivalents consists of highly liquid investments with an original maturity of three months or less, including contractually restricted cash and cash equivalents.
Pursuant to the Delegation Agreement with NERC, contractually restricted cash and cash equivalents as of December 31, 2019 and 2018, were $5,818,562 and $3,380,466, respectively.
Certificates of Deposit
Certificates of deposit held by WECC that are not classified as debt securities have original maturities greater than three months. Certificates of deposit are reported at amortized cost.
Investments
WECC records investment purchases at cost. Thereafter, investments are reported at their fair values in the statements of financial position. Net investment return is reported in the statements of activities and consists of interest and dividend income, realized and unrealized capital gains and losses, less investment management and custodial fees.
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Western Electricity Coordinating Council Notes to Financial Statements December 31, 2019 and 2018
Receivables and Credit Policies Accounts receivable consist primarily of noninterest‐bearing amounts due for statutory funding and other fees receivable. WECC determines the allowance for uncollectable accounts receivable based on historical experience, credit risk, an assessment of economic conditions, and a review of subsequent collections. Accounts receivable are written off when deemed uncollectable. At December 31, 2019 and 2018, the allowance was $17,972 and $19,122, respectively. Property and Equipment WECC records property and equipment additions over $5,000. Depreciation is computed using the straight‐line method over the estimated useful lives of the assets ranging from three to five years or, in the case of leasehold improvements, the lesser of the useful life of the asset or the lease term. When assets are sold or otherwise disposed of, the cost and related depreciation or amortization are removed from the accounts, and any resulting gain or loss is included in the statements of activities. Costs of maintenance and repairs that do not improve or extend the useful lives of the respective assets are expensed when incurred. WECC reviews the carrying values of property and equipment for impairment whenever events or circumstances indicate that the carrying value of an asset may not be recoverable from the estimated future cash flows expected to result from its use and eventual disposition. When considered impaired, an impairment loss is recognized to the extent carrying value exceeds the fair value of the asset. There were no indicators of asset impairment during the years ended December 31, 2019 and 2018. Net Assets Net assets, revenues, gains, and losses are classified based on the existence or absence of donor‐ or grantor‐ imposed restrictions. Accordingly, net assets and changes therein are classified and reported as follows: Net Assets Without Donor Restrictions – Net assets available for use in general operations and not subject to donor‐ (or certain grantor‐) restrictions. Net Assets With Donor Restrictions – Net assets subject to donor‐ (or certain grantor‐) imposed restrictions. Donor‐imposed restrictions are released when a restriction expires, that is, when the stipulated time has elapsed, when the stipulated purpose for which the resource was restricted has been fulfilled, or both. As of December 31, 2019 and 2018, WECC did not have any net assets with donor restrictions.
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Western Electricity Coordinating Council Notes to Financial Statements December 31, 2019 and 2018
Revenue Recognition
WECC recognizes revenue from the statutory funding provided by NERC for performing the statutory activities that have been delegated to WECC. Statutory funding consists of annual assessments and penalty sanction revenue.
The annual assessments are collected by WECC, remitted first to NERC and then are returned to WECC within a few days. WECC generally receives assessment payments in advance of the assessment period and records it as assessment payable or as deferred revenue after it has been remitted to NERC and returned to WECC. Assessments are recognized as revenue in the year they are intended to fund.
Penalty sanctions are assessed and approved by FERC for violations to the Reliability Standards. Once FERC has approved the penalty sanction, WECC has satisfied all performance obligations related to the penalty. Therefore, WECC recognizes penalty sanction revenue when it is approved by FERC.
Other types of revenues, such as non‐statutory revenue, are recognized when the services or products have been provided.
For the years ended December 31, 2019 and 2018, all revenue was recognized at a point in time. There were no contract assets outstanding as of December 31, 2019 and 2018.
Deferred revenue consists of advance payments form customers, in the form of cash, for revenue to be recognized in the following years. The Company’s deferred revenue balance as restated at the beginning of 2018 was $13,836,732.
Functional Allocation of Expenses
The costs of programs and supporting services activities have been summarized on a functional basis in the statements of activities. WECC’s expenses are classified as Statutory Expenses or Non‐statutory Expenses as the majority of expenses incurred fulfill the purposes or mission for which WECC exists. Furthermore, the statutory expenses are classified according to the statutory functions WECC performs pursuant to the Delegation Agreement with NERC. All direct costs are charged to the functional area to which they pertain. Indirect costs are charged to programs and supporting services based on estimates made by management, taking into account the nature of the expense and how it relates to the functional area.
Income Taxes
WECC is organized as a Utah nonprofit corporation and has been recognized by the Internal Revenue Service (IRS) as exempt from federal income taxes under Section 501(a) of the Internal Revenue Code as an organization described in Section 501(c)(4). WECC is annually required to file a Return of Organization Exempt from Income Tax (Form 990) with the IRS. In addition, WECC is subject to income tax on net income that is derived from business activities that are unrelated to their exempt purposes. WECC files an Exempt Organization Business Income Tax Return (Form 990‐T) with the IRS to report its unrelated business taxable income.
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Western Electricity Coordinating Council Notes to Financial Statements December 31, 2019 and 2018
WECC believes that it has appropriate support for any tax positions taken affecting its annual filing requirements and, as such, does not have any uncertain tax positions that are material to the financial statements. WECC would recognize future accrued interest and penalties related to unrecognized tax benefits and liabilities in income tax expense if such interest and penalties are incurred.
Estimates
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates and those differences could be material.
Financial Instruments and Credit Risk
WECC manages deposit concentration risk by placing cash, money market accounts, and certificates of deposit with financial institutions believed by us to be creditworthy. At times, amounts on deposit may exceed insured limits or include uninsured investments in money market mutual funds. To date, WECC has not experienced losses in any of these accounts. Although the fair values of investments are subject to fluctuation on a year‐to‐year basis, management and the Finance and Audit Committee believe that the investment policies and guidelines are prudent for the long‐term welfare of the organization. Credit risk associated with accounts receivable is considered to be limited due to high historical collection rates and because substantial portions of the outstanding amounts NERC has delegated WECC to collect through assessments to LSEs within the Western Interconnection. Investments are made by diversified investment managers whose performance is monitored by management and the Finance and Audit Committee of the Board of Directors.
Change in Accounting Principle
As of January 1, 2019, WECC adopted the provisions of FASB Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, which provides a comprehensive revenue recognition model for all contracts with customers. The new model requires revenue recognition to depict the transfer of promised goods or services to customers at an amount that reflects the consideration expected to be received in exchange for those goods or services. The Company has adopted Topic 606 using the full retrospective approach and adjusted all prior periods presented. See Note 9 for the adjustment of the prior year financial statements.
Recent Accounting Guidance
In February 2016, FASB issued ASU No. 2016‐02, Leases. The standard will require recognition of lease assets and liabilities for most leases, including leases that were previously considered operating leases. The FASB is considering delaying the amendment to be effective for WECC beginning with the year ending December 31, 2021. WECC has not yet determined what effect this standard will have on the results of its operations.
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Western Electricity Coordinating Council Notes to Financial Statements December 31, 2019 and 2018
Subsequent Events
WECC has evaluated subsequent events through April 30, 2020, the date the financial statements were available to be issued.
Note 2 ‐ Liquidity and Availability
Financial assets available for general expenditure, that is, without donor or other restrictions limiting their use, within one year of the statement of financial position date, comprise the following:
2019 2018
Cash and cash equivalents 25,456,435$ 29,343,247$ Certificates of deposit 5,416,154 4,508,812 Investments 3,975,625 1,809,495 Accounts receivable 5,448,118 360,735
40,296,332$ 36,022,289$
As part of a liquidity management plan, cash in excess of daily requirements is invested in short‐term investments, certificates of deposit, and money market funds.
Note 3 ‐ Fair Value Measurements and Disclosures
WECC reports certain assets and liabilities at fair value in the financial statements. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction in the principal, or most advantageous, market at the measurement date under current market conditions regardless of whether that price is directly observable or estimated using another valuation technique. Inputs used to determine fair value refer broadly to the assumptions that market participants would use in pricing the asset or liability, including assumptions about risk. Inputs may be observable or unobservable. Observable inputs are inputs that reflect the assumptions market participants would use in pricing the asset or liability based on market data obtained from sources independent of the reporting entity. Unobservable inputs are inputs that reflect the reporting entity’s own assumptions about the assumptions market participants would use in pricing the asset or liability based on the best information available. A three‐tier hierarchy categorizes the inputs as follows:
Level 1 – Quoted prices (unadjusted) in active markets for identical assets or liabilities that we can access at the measurement date.
Level 2 – Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly or indirectly. These include quoted prices for similar assets or liabilities in active markets, quoted prices for identical or similar assets or liabilities in markets that are not active, inputs other than quoted prices that are observable for the asset or liability, and market‐corroborated inputs.
Level 3 – Unobservable inputs for the asset or liability. In these situations, inputs are developed using the best information available in the circumstances.
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Western Electricity Coordinating Council Notes to Financial Statements December 31, 2019 and 2018
In some cases, the inputs used to measure the fair value of an asset or a liability might be categorized within different levels of the fair value hierarchy. In those cases, the fair value measurement is categorized in its entirety in the same level of the fair value hierarchy as the lowest level input that is significant to the entire measurement. Assessing the significance of a particular input to entire measurement requires judgment, taking into account factors specific to the asset or liability. The categorization of an asset within the hierarchy is based upon the pricing transparency of the asset and does not necessarily correspond to the assessment of the quality, risk or liquidity profile of the asset or liability.
WECC invests in U.S. Government obligations that are valued by the custodians of the securities using pricing models based on credit quality, time to maturity, stated interest rates and market‐rate assumptions, and are classified within Level 2.
The following table presents assets measured at fair value on a recurring basis at December 31, 2019:
QuotedPrices in Significant
Active Markets Other Significantfor Identical Observable Unobservable
Subsequent to year‐end, the United States and global markets experienced significant declines in value resulting from uncertainty caused by the world‐wide coronavirus pandemic. WECC is closely monitoring its investment portfolio and is actively working to minimize the impact of these declines. WECC’s financial statements do not include adjustments to fair value that have resulted from these declines.
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Western Electricity Coordinating Council Notes to Financial Statements December 31, 2019 and 2018
Note 4 ‐ Net Investment Return
Net investment return consists of the following for the years ended December 31, 2019 and 2018:
2019 2018
Operating investmentsInterest and dividends 446,926$ 442,036$ Net realized and unrealized gain (loss) 28,041 (13,380)
474,967$ 428,656$
Note 5 ‐ Property and Equipment
Property and equipment consists of the following at December 31, 2019 and 2018:
3,913,258 3,608,294 Less accumulated depreciation (3,487,077) (3,240,159)
426,181$ 368,135$
Note 6 ‐ Net Assets
WECC reports information regarding Statutory and Non‐statutory earnings to the FERC in accordance with its Delegation Agreement with NERC dated October 16, 2007, as amended, and restated January 1, 2016. As of December 31, 2019 and 2018, the breakdown of such earnings included in net assets without donor restrictions consisted of the following:
Western Electricity Coordinating Council Notes to Financial Statements December 31, 2019 and 2018
Note 7 ‐ Leases
WECC leases office space and equipment under various operating leases expiring at various dates through 2031. Future minimum lease payments are as follows:
Rent expense for the years ended December 31, 2019 and 2018, totaled $1,006,236 and $984,807, respectively.
Note 8 ‐ Employee Benefits
WECC sponsors a 401(k) Retirement Savings Plan (the Plan) for eligible employees. The Plan requires WECC to make matching contributions equal to 50% of the first 6% of eligible compensation of the participating employees’ contributions to the Plan. WECC may also make, at its discretion, supplemental contributions for eligible employees. The Plan expense reflected in the accompanying statements of activities was $1,330,137 and $1,362,134 for the years ended December 31, 2019 and 2018, respectively. In 2006, WECC adopted an elective 457(b) deferred compensation plan to provide certain employees of WECC with the benefit of additional tax‐deferred retirement savings opportunities. The annual 457(b) deferral limitation for 2019 and 2018 was $19,000 and $18,500, respectively. The Plan is entirely funded by elective employee salary deferrals.
Years Ending December 31,
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Western Electricity Coordinating Council Notes to Financial Statements December 31, 2019 and 2018
Note 9 ‐ Adjustments Resulting from Change in Accounting Policy As disclosed in Note 1, WECC adopted the provisions of FASB Accounting Standards Codification Topic 606, Revenue from Contracts with Customers, as of January 1, 2019, with retrospective application to the prior periods presented. Following is a summary of the effects of the change in accounting policy in WECC’s December 31, 2018, financial statements. Statement of Financial Position
Change inAs Previously AccountingReported Principle As Adjusted
As of December 31, 2018Deferred revenue 18,518,576$ (3,332,686)$ 15,185,890$ Total liabilities 26,376,743 (3,332,686) 23,044,057 Net assets without donor restrictions 13,874,842 3,332,686 17,207,528 Total liabilities and net assets 40,251,585 ‐ 40,251,585
Statement of Activities
Change inAs Previously AccountingReported Principle As Adjusted
Year ended December 31, 2018Electric Reliability Organization Funding 27,382,000$ 2,745,000$ 30,127,000$ Total revenue 30,331,244 2,745,000 33,076,244 Change in net assests without donor restrictions 1,463,069 2,745,000 4,208,069 Net assets without donor restrictions,
beginning of year 12,411,773 587,686 12,999,459
Statement of Cash Flows
Change inAs Previously AccountingReported Principle As Adjusted
Year ended December 31, 2018Change in net assets 1,463,069$ 2,745,000$ 4,208,069$ Deferred revenue 2,078,158 (2,745,000) (666,842)
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Exhibit F — Information Sharing and Reporting Policies
2.1 Public Information ...................................................................................................................................3
2.2 Confidential Information ........................................................................................................................5
2.3 Market Sensitive Information ................................................................................................................6
2.4 Western Interconnection Data Sharing Agreement (WIDSA) ...........................................................6
2.5 Information Not Shared ..........................................................................................................................6
2.6 Other ..........................................................................................................................................................7
The purpose of this policy is to set forth Western Electricity Coordinating Council (WECC) policies for the sharing of certain data, reports, maps, or other types of information. This policy:
• Provides direction to WECC staff regarding the sharing of information; • Describes whether and how persons can obtain access to specific types of information; and • Makes clear to those who provide information to WECC the conditions under which the
information is made available to others.
1.1 Notice
This policy constitutes WECC’s notice to submitting entities under Section 1503.3 of the North American Electric Reliability Corporation (NERC) Rules of Procedure that WECC intends to share Confidential Information as set forth in this policy. This policy also constitutes WECC’s notice to submitting entities under Section 1505 of the NERC Rules of Procedure that WECC may share information with the Federal Energy Regulatory Commission (FERC) in accordance with the terms herein.
1.2 Document Owner
The owner of this document is the WECC General Counsel.
1.3 Scope
This policy applies to employees, the Board of Directors, and Members.
Nothing in this policy is intended to apply to or restrict how WECC Members or other submitting entities receive their own information or share their own information directly with others.
1.4 Review Cycle
This policy will be reviewed every two years or as needed.
2 Policy
This policy categorizes information into the following different Information Access Categories which set forth how information may be shared.
2.1 Public Information
The following types of information are not restricted and may be made publicly available.
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Information Sharing Policy
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2.1.1 General
• Charters, meeting agendas, open meeting materials and minutes
• Reliability Standards, Regional Criteria, Policies, and Guidelines
• Principal transmission and planned facilities maps
i. Will not be posted on public portions of WECC website
• Latitude, longitude, line and two-dimensional data
i. Will not be posted on public portions of WECC website
2.1.5 System Adequacy Planning
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Information Sharing Policy
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• Production Cost Models and data not integrated with power flow, detailed transmission topology or other restricted information
• Long term planning tool data (not otherwise restricted by Section 2.6).
• Path descriptions, planned ratings, system conditions, allocation and interactions with other transfer paths from the WECC Path Rating Catalog
2.2 Confidential Information
The following types of information will be treated as Confidential Information under Section 1500 of the NERC Rules of Procedure and may only be shared with persons who (1) at the discretion of WECC have demonstrated a legitimate need, and (2) have executed a non-disclosure agreement (NDA).
2.2.1 Event Analysis and Situational Awareness
• Transmission and generation protection system misoperations reports (Critical Energy Infrastructure Information or CEII)
• Event analysis reports and brief reports (CEII)
• Resolved and unresolved disturbance logs (CEII)
• RAS database and RAS database summaries (Operating Procedures) (CEII)
2.2.2 System Stability Planning
• Base-case data (power flow and dynamics data) including Geomagnetic Induced Current (GIC) and Remedial Action Scheme (RAS) models (CEII)
• Under-Frequency Load Shedding (UFLS) data required to be provided by PRC Reliability Standards and Regional Criteria (CEII)
• Under-Voltage Load Shedding (UVLS) data required to be provided by PRC Reliability Standards (CEII)
• Comprehensive progress reports provided pursuant to the WECC Path Rating Process (CEII)
• WECC Path Rating Catalog (CEII)
• Generator model data validation test reports (CEII)
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Information Sharing Policy
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• Short circuit models (CEII)
i. These models will only be shared with NERC Registered Entities and non-U.S. entities in the Western Interconnection who perform similar functions.
2.2.3 System Adequacy Planning
• Complete Production Cost Model cases that include power flow, detailed system topology or other restricted information (CEII)
2.3 Market Sensitive Information
The following types of information will be treated as Confidential Business and Market Information under Section 1500 of the NERC Rules of Procedure and may only be shared with persons who (1) are not (a) Market Function Employees as defined by FERC, nor (b) actively and personally engaged in day-to-day sales of electric power or other marketing functions, (2) at the discretion of WECC, have demonstrated a legitimate need, and (3) have executed an NDA.
2.4 Western Interconnection Data Sharing Agreement (WIDSA)
Notwithstanding anything to the contrary contained in this policy, information WECC receives that is subject to the Western Interconnection Data Sharing Agreement (WIDSA) may only be shared in accordance with the terms therein.
2.5 Information Not Shared
Due to the nature of the following types of information and/or any applicable restrictions, this information may not be shared outside the Electric Reliability Organization (ERO) Enterprise (NERC and the Regional Entities). The WECC Chief Executive Officer (CEO) can approve exceptions allowing for the sharing of this data unless otherwise prohibited. Exceptions approved by the CEO require execution of an NDA by the requester, notice to submitting entities, and consent from any applicable non-U.S. entity, prior to sharing the information.
2.5.1 Compliance
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• Control performance data (CPS1 and CPS2 scores) collected under BAL-001
• Disturbance control performance data collected under BAL-002
• Operating reserve data collected under BAL-STD-002/BAL-002-WECC
• Frequency response data provided to NERC under BAL-003
• Transmission vegetation outage data collected under FAC-003
• Automatic voltage regulator data collected under VAR-002-WECC
• Power system stabilizer operating status data collected under VAR-051-WECC
• Compliance Monitoring and Enforcement Program (CMEP) information and documentation, such as, violation information, Self-Reports, Audit Reports, Notices of Alleged Violation, Settlement Agreements, etc.
2.5.2 General
• Closed session presentations and minutes
2.5.3 System Stability Planning
• Transmission planning system performance assessments required to be provided by TPL Reliability Standards
2.6 Other
The following types of information are not treated in accordance with an Information Access Category set forth above and may be shared as specified.
• Proprietary vendor, contractor or consultant information may only be shared as permitted by the applicable request for proposals, contract or agreement.
• WECC reports and white papers will be shared in accordance with the Information Access Category pertaining to the information contained therein.
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Information Sharing Policy
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3 Administration
3.1 Applicable Laws, Agreements, and Policies or Processes
Nothing in this policy shall be read as authorizing the release or restriction of information in a manner contrary to (1) applicable law, such as the NERC Rules of Procedure, the FERC Standards of Conduct and Reliability Standards, (2) applicable agreements, such as the NERC/WECC Regional Delegation Agreement and the WIDSA, or (3) rules in other applicable policies or process documents, such as the WECC Confidentiality Policy.
3.2 Unrestricted Information
Information in any Information Access Category may, at the discretion of WECC, be made publicly available by WECC if it has lawfully been made public by another source or the information was obtained by WECC from the owner of the information without restriction.
3.3 Information from Multiple Sources
Identical data sets received from multiple sources may be treated in accordance with the restrictions that allow the broadest sharing of the data.
3.4 Redacted or Aggregated Information
Information in any Information Access Category may, at the discretion of WECC, be made publicly available by WECC if it has been aggregated and/or redacted to eliminate the confidential or restricted nature of the information.
3.5 Availability of Information Internally
All information addressed herein may, subject to applicable restrictions above, be made available to the following persons for internal WECC purposes:
• WECC staff;
• Contractors doing work for WECC who have executed an NDA; and
• WECC member committees, subcommittees, task forces and working groups who at the discretion of WECC have demonstrated a legitimate need and upon execution of an NDA.
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3.6 Availability of Information to NERC, FERC and Other Governmental Entities
WECC may share information in any Information Access Category, including non-U.S. entity data, with NERC, as the Electric Reliability Organization, pursuant to the confidentiality provisions in the NERC/WECC Regional Delegation Agreement approved by FERC, unless otherwise prohibited by applicable law or agreement.
A request from FERC for reliability information with respect to owners, operators, and users of the bulk power system within the United States is authorized by Section 215 of the Federal Power Act. Accordingly, WECC may share information in any Information Access Category from such entities with FERC.
When providing non-public information to FERC or other governmental authorities or entities, WECC will preserve any mark of confidentiality, inform the governmental authority or entity that the information is non-public, and consider the need for notice to submitting entities. WECC will also take precautions to protect the information from disclosure under applicable freedom of information or sunshine laws. Such precautions may include terms in an agreement and/or asserting exemptions to disclosure under applicable laws.
3.7 Legitimate Need
Persons in the Electric Line of Business, as defined in the WECC Bylaws, and persons doing work set forth in writing for such persons, may, at the discretion of WECC, be presumed as having a legitimate need for non-public information, subject to applicable restrictions above.
Other persons will be determined to have a legitimate need for information if their need for the information relates to: (i) directly maintaining and improving the operational performance and reliability of the Bulk Power System or reducing Bulk Power System operating costs; (ii) analysis for better theoretical or actual understanding of the operation and reliability of the Bulk Power System; or (iii) development of new technologies and applications to directly support the safe, reliable, and efficient operation of the Bulk Power System.
3.8 Requests for Information
Public Information will generally be posted on the WECC website. Requests for Public Information not posted on the WECC website may be submitted to [email protected].
Requests for Confidential Information and Market Sensitive Information shall describe the requester’s legitimate need for the information and shall be sent to [email protected]. Persons whose requests are approved and who have executed an NDA shall be given access to
the requested information, which may include a login and password to restricted portions of the WECC website which may contain similarly restricted information.
In responding to requests for non-public information, WECC will consider providing the least amount of non-public information needed, whether aggregated and/or redacted information should be provided in lieu of non-public information, and/or whether information can simply be shown, rather than transferred, to the requester.
3.9 Protection of Information
Any person provided access to information under this policy shall take all reasonable precautions to preserve and protect the information from unauthorized disclosure.
3.10 Information Not Addressed
WECC may treat other types of information not specifically addressed herein pursuant to an Information Access Category listed above or in another manner as appropriate at the discretion of WECC.
Persons seeking to have information not listed herein included in and treated pursuant to an Information Access Category may submit a request to WECC at [email protected]. WECC may ask the requester to provide information justifying the request.
3.11 Categorization Changes
WECC staff may categorize or change the categorization of information without Board approval. Prior to categorizing or changing the categorization of any information, WECC shall (1) post the proposed categorization on the WECC website including reasons and rationale for the change, (2) notify submitting entities, the Governance Committee, the Member Advisory Committee, and all Standing Committees, and (3) provide an opportunity for comments. Posting and notification shall be done at least twenty-one (21) days prior to the change becoming effective. WECC will treat as confidential any public information it proposes for recategorization as confidential during this outreach and any appeal.
4 Dispute Resolution
Disputes regarding denied requests for information or the categorization of information may be appealed in writing to the WECC CEO within 30 days of the determination. The appeal will follow a process similar to the process described in Section 1503.5 of the NERC Rules of Procedure. The outcome of this appeal may be appealed in writing to the WECC Board of Directors within 30 days.
2 Determining Information Reporting Requirements ...............................................................................3
3 Petition for Relief...........................................................................................................................................4
4 Protection and Sharing .................................................................................................................................4
The purpose of this policy is to establish procedures associated with WECC Board of Director (“Board”) requests for information; submission of that information by WECC Members (“Members”); avoidance of undue burden on Members; and the treatment of the requested information.
1.1 Governing Authority
WECC Bylaws (“Bylaws”) Section 4.6.11 provides that, except as otherwise provided in the Bylaws or other applicable authority, Members have an obligation “to provide system data that the Board has determined is necessary for WECC functions and does not impose an undue burden on the Members; provided, however, that the Board shall adopt appropriate limitations on this obligation or procedures that protect, and avoid the unnecessary collection of, confidential, privileged, trade secret or critical energy infrastructure information or other information that the Board determines merits such protection consistent with applicable law.”
1.2 Document Owner
The document owner is the WECC General Counsel. The document owner, or designee, is responsible for:
• Reviewing the policy within the review cycle
• Making any needed revisions to the policy
• Obtaining Board approval of any revisions
• Ensuring the policy is appropriately distributed, posted and communicated
1.3 Scope
This policy applies to employees, the Board of Directors, and Members.
1.4 Review Cycle
This policy will be reviewed every two years or as needed.
2 Determining Information Reporting Requirements
Reporting requirements are contained in Exhibits to this policy. Exhibits are developed by WECC staff, taking into consideration the burden to Members and making reasonable efforts to avoid imposing obligations under this policy that conflict with Members’ existing regulatory or contractual obligations, and shall identify at a minimum: (i) the information to be supplied to WECC, and (ii) the Members required to supply such information.
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Exhibits will be reviewed and updated by WECC staff as necessary. WECC shall provide applicable Members notice of and an opportunity to comment on all new Exhibits and all revisions to existing Exhibits. Exhibits become effective upon approval by WECC. WECC’s approval of Exhibits may be appealed in accordance with Section 5.
3 Petition for Relief
Any Member seeking exemption from or modification of its obligation to provide information under this policy may submit a written Petition for Relief. Petitions for Relief must be submitted to the WECC CEO within 30 days of the date of the applicable information request. The Petition for Relief must contain a detailed description of the need for relief and specify any relief short of complete waiver that would satisfy the Member’s concerns while at the same time meeting the needs of WECC.
WECC staff will issue a written decision explaining why and to what extent the requested relief is granted or denied. This decision may be appealed in accordance with Section 5.
If a Member files a Petition for Relief under this Section 3, the Member shall be temporarily exempt from its obligation to provide the information subject to such Petition for Relief. Such temporary exemption will expire five (5) business days following final action on the Petition for Relief.
4 Protection and Sharing
Information collected under this policy shall be protected and shared by WECC in accordance with the Confidentiality Policy and the Information Sharing Policy.
5 Dispute Resolution
Disputes regarding Exhibits and Petitions for Relief may be appealed in writing to the WECC CEO within 30 days of the determination. The appeal will follow a process similar to the process described in Section 1503.5 of the NERC Rules of Procedure. The outcome of this appeal may be appealed in writing to the WECC Board of Directors within 30 days.
6 Approval
Approval Date
Board of Directors
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Exhibit A – Loads and Resources Data
A. Overview and Background
WECC oversees loads and resources data collection and related activities, including the annual Power Supply Assessment of resource adequacy in the Western Interconnection, and participates in loads and resources activities at NERC. WECC also disseminates loads and resources information to parties throughout the Western Interconnection. Loads and resources data collected by WECC may also be used in other WECC assessments, models and studies.
B. Identification of Data Collected
In accordance with the Information Reporting Policy, WECC Balancing Authorities (BA) are required to provide, and update as necessary, the data listed below:
• Actual year hourly demand data. • Existing generation; • Planned generation; • Projected and actual demand reduction data; • Projected peak demand • Projected energy forecasts • Scheduled peak hour generation outages • Actual year peak hour generation outages; • Actual historic hourly wind, solar and hydro generation (aggregated at the BA or BA area level) • Transfer Capability
Data listed as required in this Exhibit will be identified more specifically, including additional generator and path specifications, in the “WECC Data Collection Manual” that is provided annually by WECC.
C. Sharing of Data Collected
The following information shall be Public Information under the WECC Information Sharing Policy:
Public Information
• Existing generation list; • Planned generation list; • Actual year hourly demand data • Projected and actual demand reduction data; • Projected peak demand (years 4-10) • Projected energy forecasts (years 4-10) • Scheduled peak hour generation outages (years 4-10) • Actual year peak hour generation outages; • Actual historic hourly wind, solar and hydro generation (aggregated at the BA or BA area level) • Transfer Capability
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The following information shall be non-public and shall be shared in accordance with the following categories in the WECC Information Sharing Policy:
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
March 8–9, 2022June 14–15, 2022 September 13–14, 2022, Henderson, Nevada (includes Annual Meeting)December 6–7, 2022
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Market Interface Committee Leadership
Chair and Vice Chair Bios
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
MIC Chair: Charles Faust
Charles J. Faust has 35 years of experience in the energy industry. He has held multiple positions at Western Area Power Administration (WAPA) and at FERC. Currently he works as a Real-Time Energy Management and Marketing Specialist Manager for the Sierra Nevada Region of WAPA in its Folsom, California, office.
Before WAPA, Faust was with FERC where he worked for over 20 years holding various positions. In the Office of Market Oversight and Investigations, his accomplishments included the establishment of FERC’s first market monitoring presence in the West. He was selected as the Western Regional Representative for FERC located in Folsom, CA. He opened and established that office, which was the first new regional office for FERC to address market monitoring. He worked as FERC’s liaison and contact point for matters affecting the electric power market between the western entities and the Commission. Focus was on market oversight of the Western Region, with specific concentration on the California market. In the Office of Markets, Tariffs and Rates, he worked as a Budget Analyst and an Energy Industry Analyst (EIA). In the Office of Electric Power Regulation, he was a Section Chief in Rates, and worked as a Financial Analyst in Litigation where he worked as a FERC expert witness on rate of return for over 10 years.
MIC Vice Chair: Kevin Cardoza
Kevin J. Cardoza has over 33 years of experience in the energy industry. He has held multiple positions at Pasadena Water and Power, Springfield Utility Board, and Eugene Water & Electric Board (EWEB). For the last 10 years, he has supervised EWEB’s trading floor, which includes day-ahead traders, day-ahead schedulers, and real-time traders in Eugene, Oregon.
Before moving to the trading floor, all of Kevin’s experience was in electrical operations. Kevin started his electrical work in 1987 at Pasadena Water and Power in its Electrical Test division. He then did his apprenticeship to become a lineman and, in 1990, he became a Journeyman Lineman. He continued to work there as a lineman for five more years. In March of 1995, he moved to the Pacific Northwest to be a lineman at Springfield Utility Board, where he spent three years. Kevin then moved to EWEB in January of 1998 as a lineman and became a troubleshooter.
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Market Interface Committee
Charter
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
Formatted: Centered, Space Before: 0 pt, Border: Top:(Single solid line, Accent 1, 4.5 pt Line width), Bottom:(Single solid line, Accent 1, 4.5 pt Line width), Pattern:Clear (Accent 1)
Establishment and Authority
The Market Interface Committee (MIC) was established by the Board of Directors (Board).
Purpose and /Responsibilities
The purpose of the MIC is to advise and make recommendations to the Board and WECC CEO on the development of consistent market interface practices and compatible commercial practices related to reliability within the Western Interconnection. Market interface involves all interactions among market entities and entities responsible for reliable grid operation related to transmission service and physical delivery. Commercial practices include the products and practices involved in trading electricity, as well as implementation of standards approved by the Federal Energy Regulatory Commission (FERC), the North American Electric Reliability Corporation (NERC), and the North American Energy Standards Board (NAESB) approved standards, including the interaction among market entities that does not affect or require assistance from entities responsible for reliable grid operation.
The MIC will:
1. Coordinate and communicate with the Operating Committee, the Reliability Assessment Committee, appropriate WECC groups, and other organizations active within the Western Interconnection in fulfilling its responsibilities.
2. Evaluate the impact of relevant Reliability Standards, criteriaon, guidelines, practices, and procedures on the commercial electricity market in the Western Interconnection; d. Develop recommendations as necessary concerning the Reliability Standards, criteria, practices, and procedures in a manner way that recognizes commercial sensitivity and does not unnecessarily inhibit the efficient, competitive electricity marketplace.
3. Evaluate the impact of relevant commercial practices on electric system reliability; d. Develop recommendations as necessary to address commercial practices that pose reliability concerns within the Western Interconnection.
4. Facilitate discussion and training for entities within the Western Interconnection on NERC, NAESB, WECC, regulatory, and commercial entity standards, criteria, guidelines, and practices.
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5. Provide a forum through which WECC members can be informed of and participate in NAESB Business Practice Standards development.
6. Identify issues and develop recommendations for regional criteria, guidelines, practices, or procedures to establish consistent regional market interface and commercial practices where needed; for example, scheduling, e-Tagging, and the Open Access Same-time Information System (OASIS).
7. Identify potential seams issues between Independent System Operators/Regional Transmission Organizations (ISO/RTO), Reliability Coordinators (RC), other market operators, and other entities in the Western Interconnection;, and develop recommendations to address these issues.
8. Administer programs and procedures assigned to the MIC.
9. Provide a forum for parties to discuss market interface and commercial practice issues affecting the reliability of the Western Interconnection, and develop recommendations to address these issues.
10. Perform other tasks as appointed by the WECC Board.
Committee Composition and Governance
1. Membership
a. The MIC may be composed of members and alternates representing three voting categories—; Transmission Service Provider (TSP), Transmission Customer (TC), and States and Provincial (SP).1
i. An individual may not represent more than one WECC member /or voting category.
ii. A WECC member organization which has distinct and functionally -separated interests as both a TP and TC may designate two individuals as committee members.
b. Members will be selected by the organization’s WECC Member Representative.
c. Members will serve until they resign or a successor has been selected.
d. MIC members and alternates will be appointed by email notice to the chair (or designee) no later than 48 hours prior tobefore a meeting.
2. Leadership
a. The Board will appoint one of the MIC members to serve as the chair.
b. The Board will appoint one of the MIC members to serve as the vice chair.
1 As defined in the NERC Glossary of Terms and WECC Bylaws.
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c. The chair and vice chair will each hold office for a term of one year, or until they resign, or until a successor chair or vice chair is duly appointed.
d. The MIC chair will manage the committee and its meetings.
e. The vice chair will perform the duties of the chair in the chair’s absence or in the case of a vacancy in the office of chair.
f. The chair will assign a committee member or WECC staff member to prepare minutes of MIC meetings for the committee’s approval.
g. The committee chair may appoint a steering committee, which may include the vice chair, subcommittee chairs,; and the immediate past chair or other members. The steering committee will assist with meeting agendas, action recommendations, and presentation of proposals and such other actions as it deems appropriate to the committee.
h. The MIC may establish subcommittees, work groups, and task forces to carry out duties and responsibilities within the scope of the committee.
3. Meetings
a. The MIC will meet at least twice each year and as often as required to carry out its responsibilities. Meetings will be held according to the WECC Meeting Policy.
b. A quorum for meetings will be representation from both TP and TC voting categories.
c. All decisions of the MIC will be made during noticed meetings.
c.d.Action taken by the MIC will require a majority vote of both TP and TC members present (in person or remotely). SP votes are recorded for informational purposes, but do not count toward approval. Voting may be by any means the chair determines appropriate. MIC members may not vote by proxy or absentee ballot.
i. A record of each vote will be documented in the meeting minutes. The record will indicate the number of yes votes and the number of no votes from each voting category.
d.e.MIC meetings may be in- person, by webinar, or by conference call, as determined by the chair.
e.f. The chair (or designee) will give notice by email to each member of the MIC of the time and place of all meetings, and will post notice of all meetings on the WECC website. Notice willbe given no less than:
∑ 30 days before in-person meetings.∑ 10 days before a webinar.
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f.g. An agenda, containing the items for which action may be taken, will be included with the notice.
g.h. Any person who wants notice of MIC meetings may notify the chair by email. The chair (or designee) will then email a copy of the notice and agenda of future meetings to that person when the notice and agenda are given to the committee members.
Reporting
The MIC will report to the Board on its activities and any recommendations.
The MIC will annually review each subcommittee, task force, or work group that reports to the MIC to determine whether that group is still necessary or should be dissolved.
Review and Changes to the Charter
The MIC will review this charter annually and recommend any changes to the Board.
Approved by the Board: September 11, 2019
Reviewed by the MIC: July 15, 2020
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Human Resources and Compensation Committee
Charter
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
Establishment and Authority
The Human Resources and Compensation Committee (HRCC) was established by the WECC Board of Directors (Board).
Purpose and Responsibilities
The purpose of the HRCC is to report to and assist the Board by overseeing the policies, plans, and programs of Human Resources, including employee compensation and benefit plans, officer compensation plans, personnel development, and succession plans for key positions, as well as other matters as directed by the Board or this charter.
To carry out its oversight responsibilities, the HRCC will:
1. Review and advise the Board on risks to WECC including:
a. Compliance with HR corporate policies;
b. Compensation and benefit programs;
c. Senior succession planning;
d. Workforce diversity, staffing, and retention;
e. Training and development;
f. Occupational health and safety; and
g. Respect in the workplace.
2. Review and monitor the management of the 401(k) plan by the CEO and General Counsel, trustees of WECC’s 401(k) plan.
3. Recruit and recommend for Board approval, the selection and compensation of a new CEO and,afterward, conduct the ongoing performance reviews and recommend CEO compensationadjustments for Board approval.
4. Review and recommend for Board approval, after consultation with the CEO, the selection and compensation of new corporate officers, then conduct annual compensation reviews of current corporate officers.
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5. Review and recommend for Board approval:
a. Executive compensation plans, including incentive and at-risk-pay plans;
b. Corporate and individual CEO goals;
c. Corporate officer employment agreements, special compensation awards, retention bonus agreements, or severance agreements after consultation with the CEO. (The CEO will inform the HRCC of retention bonus agreements that the CEO has approved for employees below the corporate officer level.); and
d. Removal of the CEO or any corporate officer if it serves the best interests of the company.
6. The HRCC will have the sole authority and responsibility to appoint, retain, compensate, evaluate and, when appropriate, terminate the business relationship with external legal, compensation, leadership development, or other consultants who—in the opinion of the HRCC—are necessary to assist the HRCC in conducting its business. The HRCC oversees the contract management, qualifications, independence, and performance of external consultantsengaged on behalf of the HRCC. Perform other duties as requested by the Board.
Committee Composition and Governance
1. Membership
a. The HRCC will be composed of not fewer than three members of the Board, appointed by the chair of the Board, and in consultation with the Board.
b. Each member of the HRCC will serve until a successor is appointed, unless the memberresigns or is removed by the Board. If a vacancy occurs at any time, the Board chair may fill the position.
c. No member of the HRCC may participate as an HRCC member at any time that the HRCC may consider any recommendation to the Board that would directly affect the continued service of that Director as a member of the Board of Directors. The Board chair may appoint a temporary alternate member to serve on the HRCC in place of any Director who is recused from participation under this paragraph.
2. Leadership
a. The chair of the Board, in consultation with the Board and with consideration of a Director’s interest and expertise, will appoint one HRCC member to serve as the committee chair. The chair will assign a committee member or a member of the WECC staff to prepare HRCC meeting minutes for legal review followed by the committee’s approval.
b. The HRCC chair will manage the HRCC and its meetings.
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c. The HRCC chair may appoint a steering committee to address specific assignments as necessary.
3. Meetings
a. The HRCC must meet a minimum of twice per year or as often as required to carry out its responsibilities. Meetings will be held according to the WECC Meeting Policy and may be in person or by telephone or web conference, as determined by the chair.
b. The HRCC will determine the procedures for its meetings, except:
i. A quorum for meetings is a majority of members of the committee.
ii. Action taken by the HRCC requires a majority of assigned HRCC members.
iii. HRCC members may not vote by proxy or absentee ballot.
c. The HRCC chair will provide (or cause to be provided) email notice of the time and place of all meetings to each member of the HRCC and to the Board, no later than three days before the meeting. An agenda of the items for which action may be taken will be made available at that time. Notice of meetings and the agenda will also be posted on the WECC website.
d. The HRCC chair may call for a closed session of the HRCC when necessary to protect sensitive or confidential information or to receive attorney-client communications. TheHRCC chair will permit any Director, except those Directors who are conflicted in accordance with sections 7.6.1.1 of the Bylaws or where the HRCC determines that a Director would have a perceived or actual conflict of interest, to monitor such closed sessions.
e. The HRCC chair will provide (or cause to be provided) email notice of the time and place of all closed session meetings to each member of the HRCC and to the Board, no later than three days before the meeting or upon as much notice as is reasonable under the circumstances, as approved in writing by a quorum of the committee. This notice will include an agenda of the items for which action may be taken.
f. The HRCC may meet in closed session to:
i. Consider the employment, evaluation of performance, or dismissal of an employee of WECC;
ii. Discuss pending or proposed litigation and to receive confidential attorney-client communications from legal counsel; and
iii. Receive and discuss any information that is privileged, trade secret, cybersecurity, critical energy infrastructure information (as defined by FERC), protected from public
disclosure by law, or that the committee determines should be confidential to protect a legitimate public interest.
Reporting
The HRCC will report to the Board on its activities and any recommendations.
Review and Changes to the Charter
The HRCC will review this charter annually and recommend any changes to the Board.
Approved by the WECC Board of Directors:
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Human Resources and Compensation Committee
Charter
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
Establishment and Authority
The Human Resources and Compensation Committee (HRCC) was established by the WECC Board of Directors (Board).
Purpose and Responsibilities
The purpose of the HRCC is to report to and assist the Board by overseeing the policies, plans, and programs of Human Resources, including employee compensation and benefit plans, officer compensation plans, personnel development, and succession plans for key positions, as well as other matters as directed by the Board or this charter.
To carry out its oversight responsibilities, the HRCC will:
1. Review and advise the Board on risks to WECC including:
a. Compliance with HR corporate policies;
b. Compensation and benefit programs;
c. Senior succession planning;
d. Workforce diversity, staffing, and retention;
e. Training and development;
f. Occupational health and safety; and
g. Respect in the workplace.
2. Review and monitor the management of the 401(k) plan by the CEO and General Counsel, trustees of WECC’s 401(k) plan.
3. Recruit and recommend for Board approval, the selection and compensation of a new CEO and,afterward, conduct the ongoing performance reviews and recommend CEO compensationadjustments for Board approval.
4. Review and recommend for Board approval, after consultation with the CEO, the selection and compensation of new corporate officers, then conduct annual compensation reviews of current corporate officers.
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5. Review and recommend for Board approval:
a. Executive compensation plans, including incentive and at-risk-pay plans;
b. Corporate and individual CEO goals;
c. Corporate officer employment agreements, special compensation awards, retention bonus agreements, or severance agreements after consultation with the CEO. (The CEO will inform the HRCC of retention bonus agreements that the CEO has approved for employees below the corporate officer level.); and
d. Removal of the CEO or any corporate officer if it serves the best interests of the company.
6. The HRCC will have the sole authority and responsibility to appoint, retain, compensate, evaluate and, when appropriate, terminate the business relationship with external legal, compensation, leadership development, or other consultants who—in the opinion of the HRCC—are necessary to assist the HRCC in conducting its business. The HRCC oversees the contract management, qualifications, independence, and performance of external consultantsengaged on behalf of the HRCC. Perform other duties as requested by the Board.
Committee Composition and Governance
1. Membership
a. The HRCC will be composed of at leanot fewer thanst three members of the Board, appointed by the chair of the Board, and in consultation with the Board.
b. Each member of the HRCC members will serve until a successor has beenis appointed,unless the member resigns or is removed by the Board. Ifn the case of a vacancy occurs at any time, the chair of the Board chair may fill the position.
b.c. No member of the HRCC may participate as an HRCC member at any time that the HRCC may consider any recommendation to the Board that would directly affect the continued service of that Director as a member of the Board of Directors. The Board chair may appoint a temporary alternate member to serve on the HRCC in place of any Director who is recused from participation under this paragraph.
2. Leadership
a. The chair of the Board, in consultation with the Board and with consideration of a Director’s interest and expertise, will appoint one of the HRCC members to serve as the HRCC’s committee chair. The chair will assign a committee member or a member of the WECC staff to prepare HRCC meeting minutes for legal review followed by the committee’s approval.
b. The HRCC chair will manage the HRCCcommittee and its meetings.
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c. The chair will assign the duties of the chair to any member of the HRCC in the case of the chair’s absence.
3. Meetings
a. The HRCC must meet at leasta minimum of twice two times per year or as often as required to needed to carry out its responsibilities. Meetings will be held according to the WECC Policy and may be in person or by telephone or web conference, as determined by the chair.
b. The HRCC will determine the procedures for its meetings, except:
b.i. A quorum for meetings will beis a majority of members of the committee members.
ii. Action taken by the HRCC requireswill require a majority vote of the assigned HRCC members present. Voting may be by any means the chair determines appropriate.
c.iii. HRCC members may not vote by proxy or absentee ballot.
d. HRCC meetings may be in person, by webinar, or by conference call, as determined by the chair.
f. The chair may call, and the HRCC may hold, a special meeting to conduct urgent business that
d. The HRCC chair may call for a closed session of the HRCC when necessary to protect sensitive or confidential information or to receive attorney-client communications. The HRCC chair will permit any Director, except those Directors who are conflicted in accordance with sections 7.6.1.1 of the Bylaws or where the HRCC determines that a Director would have a perceived or actual conflict of interest, to monitor such closed sessions.
e. The HRCC chair will provide (or cause to be provided) email notice of the time and place of all closed session meetings to each member of the HRCC and to the Board, no later than three days before the meeting or upon as much notice as is reasonable under the circumstances, as approved in writing by a quorum of the committee. This notice will include an agenda of the items for which action may be taken. Closed sessions must be held according to the procedures and requirements in the Board Policy on Closed Sessions. The
g.f. The HRCC may meet in closed session to:
i. Consider the employment, evaluation of performance, or dismissal of an employee of WECC;
ii. Discuss pending or proposed litigation and to receive confidential attorney-client communications from legal counsel; and
iii. Receive and discuss any information that is privileged, trade secret, cybersecurity, critical energy infrastructure information (as defined by FERC), protected from public
disclosure by law, or that the committee determines should be confidential to protect a legitimate public interest.
Reporting
The HRCC will report to the Board on its activities and any recommendations.
Review and Changes to the Charter
The HRCC will review this charter annually and recommend any changes to the Board.
Approved by the WECC Board of Directors:
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About the Presenter
Rob Manning
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
Robin E. Manning was elected to the Board of Trustees of the North American Electric Reliability Corporation in February 2018. Mr. Manning is the liaison to the Standards Committee and serves on the Compliance, Enterprise-wide Risk, Finance and Audit, and the Technology and Security committees.
Prior to joining the Board, Mr. Manning served as vice president of Transmission and Distribution Infrastructure for the Power Delivery and Utilization research sector at the Electric Power Research Institute (EPRI). He had overall management and technical responsibility for the annual research activities conducted by EPRI’s transmission and distribution programs in collaboration with its global membership.
Prior to joining EPRI, Mr. Manning served as an executive vice president with the Tennessee Valley Authority (TVA) from 2008 to 2014, where he was responsible at different times during his tenure for external relations, shared services, and power systems operations, and served as Chief Energy Delivery Officer. Previously, he had been a vice president at Duke Energy, with responsibility for power delivery and gas transmission.
Mr. Manning served on the University of Houston Engineering Leadership Board and serves as immediate past president of the North Carolina State Engineering Foundation Board. He is also the president of One Heart Global Ministries, a non-profit ministry organization.
Mr. Manning received a bachelor's degree in Electrical Engineering from North Carolina State University where he was recently named to the NC State Electrical and Computer Engineering Hall of Fame. He also holds a master's degree in Business Administration from Queens College in Charlotte, North Carolina.
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About the Presenter
Manny Cancel
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
Manny Cancel assumed the role as NERC senior vice president and chief executive officer of the Electricity Information Sharing and Analysis Center (E-ISAC) in January 2020. He is responsible for the management and oversight of the E-ISAC and leading security operations and information sharing, threat intelligence and analysis, and stakeholder engagement initiatives designed to protect critical electricity infrastructure in North America. Mr. Cancel also serves as the E-ISAC’s key representative to important constituencies, such as the Electricity Subsector Coordinating Council (ESCC), government partners, and key industry groups and leads the E-ISAC’s strategic planning initiatives.
Prior to joining NERC, Mr. Cancel served as Con Edison’s chief information officer (CIO) leading all aspects of information technology, including cyber security initiatives. In this capacity, he also supported various industry initiatives, serving as chair of the sector’s Cyber Mutual Assistance Program and supporting the Member Executive Committee (MEC), an advisory group formed out of the ESCC that provides guidance to the E-ISAC.
Prior to assuming the role of CIO at Con Edison, Mr. Cancel held various roles over his 39-year career, including leadership roles in operations, customer service, audit, and information technology.
Mr. Cancel earned a bachelor’s degree in Business Administration from Baruch College and a master’s degree in Business Administration from the Johnson School at Cornell University.
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1 RELIABILITY | RESILIENCE | SECURITY
RELIABILITY | RESILIENCE | SECURITY
E-ISAC Strategic Plan Update
Manny Cancel, NERC SVP and CEO of the E-ISACWECC Board of Directors – Open SessionSeptember 11, 2020
TLP:GREEN
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2 RELIABILITY | RESILIENCE | SECURITY
• E-ISAC Focus Areas and Objectives
• Refinements
• Resource Plan
• Member Engagement
• Partnerships
• CRISP and Other Technology Investments
• Policy Feedback and Next Steps
Agenda
TLP:GREEN
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3 RELIABILITY | RESILIENCE | SECURITY
Focus areas and objectives remain unchanged• Providing members with timely and actionable information• Value-added analysis on security threats and mitigation strategies• Facilitating collaboration among industry, U.S. and Canadian government
partners, and other stakeholders•
E-ISAC Focus Areasand Objectives
TLP:GREEN
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4 RELIABILITY | RESILIENCE | SECURITY
• No significant changes
• Refinementsß Recognizes E-ISAC role and value in supporting both the ESCC and key
government agencies
ß Acknowledges member service needs vary and importance of ongoing stakeholder guidance
ß Clarifies intelligence role as leveraging government and private sector threat and intelligence information (rather than performing an intelligence function)
ß Highlights considerations for evaluating extending services to downstream natural gas sector
Refinements
TLP:GREEN
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5 RELIABILITY | RESILIENCE | SECURITY
• Maximize use and effectiveness of existing resources
ß No significant personnel increases in 2021 or projected over near term
• Prioritize and ensure value from strategic relationships
• Define role regarding OT initiatives
• Invest in cost effective technology solutions
• Factors that could affect future resource requirements
ß Increased information sharing
ß Large scale OT initiative
ß Extending services to other organizations
Resource Plan
TLP:GREEN
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6 RELIABILITY | RESILIENCE | SECURITY
• Additional engagement opportunitiesß Expand and diversify outreach to regions and small/mid-size utilities
ß Collect and respond to member feedback
ß Participate in online speaking engagements
• Enhance new member onboarding experience
• Promote information sharingß Provide members with specific guidance to enhance information sharing
ß Promote 24x7 security operations staffing
ß Showcase analytical products and other tools
Member Engagement
TLP:GREEN
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7 RELIABILITY | RESILIENCE | SECURITY
• Partnership goalsß Align goals and strategies to provide timely, actionable information
ß Facilitate enhanced intelligence between government and industry
ß Collaborate on OT security initiatives
• COVID-19 has required us to reprioritize our efforts and timelines with our key partnershipsß Limited availability of personnel
ß Challenges conducting classified briefings
• Continue support of National Infrastructure Advisory Council and Cyberspace Solarium initiatives
Partnerships
TLP:GREEN
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8 RELIABILITY | RESILIENCE | SECURITY
CRISP OT Pilot
TLP:GREEN
• Objective: ß Capture raw and refined (i.e., analyzed) OT data, compare to CRISP data, generate
processes and playbooks to address threats and vulnerabilities identified in OT and IT data
• Proposals received from Dragos, Pacific Northwest National Lab, and National Rural Electric Cooperative Association/Essence
ß All proposals are technically feasible but offer different features, cost models and implementation challenges
ß Several discussions with CRISP Governance Committee and DOE have taken place
• E-ISAC Recommendation:
ß Proceed with two pilots – Dragos and Essence
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9 RELIABILITY | RESILIENCE | SECURITY
• Investments to improve the efficiency of operations, enhance analytical capabilities, and member servicesß Data platform enhancements
ß Portal efficiency enhancements, including Salesforce integration work
ß ThreatConnect enrichment (Threat Intelligence Platform)ß Open source information gathering tools (Recorded Future and Dataminr)ß Automated data integration pilot
Technology
TLP:GREEN
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10 RELIABILITY | RESILIENCE | SECURITY
• Stakeholders are generally supportive of strategy • Maintain engagement with Canadian partners• Avoid duplication of efforts with other sector and/or
government initiatives/programs• Clarify objectives and deliverables of major programs • Ensure extension of services does not erode services to
electricity sector or increase costs• Detailed review of feedback and concluded no material change
to strategy required but plan will be updated to address feedback
• Outreach to Trade Associations on 10/15, MEC on 10/27, and NERC BOT in
Policy Feedbackand Next Steps
TLP:GREEN
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11 RELIABILITY | RESILIENCE | SECURITYTLP:GREEN
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September 11, 2020
Melanie M. FryePresident and CEO
CEO Report
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COVID-19 Internal Response
ß First priority—continued health and safety of our teamß Extended office closures until further notice—no specific date ß Incident Response Team reviews situation biweeklyß Developing detailed office reopening plans and protocolsß Regular communications with all employees via weekly letter, frequent
all-hands meetings, team meetings, skip-level meetingsß Encouraging virtual engagement via virtual lunch partiesß Regular webinars from Employee Assistance Provider on a variety of
topics
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Silver Linings
ß Team has shown incredible resilience in quickly transitioning to WFHß Credit cultural transformation and leadership training as foundation to
sustain relationshipsß Early adoption of Microsoft Teams, a collaboration platform, key to our
successß Largely successful in completing critical work remotely, using
technology and innovationß However, in-person collaboration and communication are still essential
to our work
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Planning for Office Reopening
ß Initial “soft” reopening, with occupancy restrictions and daily health status checks
ß Guidance to stay home when sick, follow all CDC safety guidanceß PPE required in common areas ß Enhanced daily and weekly cleaningß Office space modifications to maintain physical distancingß Tenant improvement work will be complete in 2020
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FERC and NERC Update
ß FERC Commissioner McNamee departure—September 4, 2020ß Two nominees to fill vacant FERC Commissioner seats• Allison Clements (democrat)• Mark Christie (republican)
ß NERC and Regional Entity budgets filed with FERC—August 24; Order expected late October or early November
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International UpdateBritish Columbia ß WECC continues to work with BCUC on various monitoring activitiesß BCUC issued guidance similar to the FERC/NERC guidance regarding COVID-19 impactAlberta ß 2021 Implementation Plan for monitoring AESO was approved by MSA in Julyß MSA issued guidance similar to the FERC/NERC guidance regarding COVID-19 impactMexico ß WECC continues discussions with CRE on the draft Services Contract for 2020. WECC
expects to receive the first draft soonß CENACE issued an operational protocol letter after the FERC/NERC guidance regarding
COVID-19 impact
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Training, Education, and Outreach
ß June• Compliance Open Mic Webinar (240 a endees) • WECC monthly update to WIRAB • CNEE WIRED Resource Adequacy and Reliability Working Group
ß July• Compliance Open Mic Webinar (215 attendees)• Grid Fundamentals• WECC monthly update to WIRAB • CNEE WIRED Resource Adequacy and Reliability Working Group
ß August• Western Power Trading Forum D.C. Roundtable• WECC monthly update to WIRAB • CNEE WIRED Resource Adequacy and Reliability Working Group• CNEE WIRED Transmission Working Group• Three Wildfire Webinar Series (660 a endees)
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California August 14–15 Event
ß WECC Situation Awareness role during the event• Real-time monitoring
o Forecasts and actualso Significant stages and energy emergencieso Wildfires
• Stay connected with entitieso Maintained almost constant contact with CAISO BA throughouto Attended daily calls and received important updates directly from CAISO
• Inform WECC and NERC of significant stages
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Inverter-Based Resource Modeling
ß Current State• Incorrect modeling data:
o Wind (63%)o Solar (69%)o Battery storage (59%)
ß Next steps• Step 1: Fix solar plants > 75 MW• Step 2: Fix all other plants
(Wind/Solar/Battery)ß Challenges
• Non-BES facilities• GO lack of familiarity with modeling data
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WECC Resource Adequacy Work
ß Western Interconnection Resource Adequacy Assessment• Builds on the NERC Long-Term Reliability Assessment (LTRA)• Explores multiple scenarios• Expect to publish by early December
ß Resource Adequacy Forum• November 18 (virtual)
ß NERC Probabilistic Assessment and LTRA• Preliminary assessment: hours of possible loss of load over the next 10
years present throughout the interconnection
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2020 Scorecard Legend
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The goal has been fully achieved
The goal has been partially achieved and is on track for 2020 completion
The goal is behind schedule or is at risk of not being completed in 2020
The goal will not be completed in 2020
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Impact Measures
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Objective Metrics 2020 Target Status
“What we want to accomplish” “How it is measured” Green – Yellow – Red
Reduce the risk to the reliability and security of the Bulk Power System (BPS) in the Western Interconnection
Trend of the reliability and security index
Performance drivers are understood and addressed by WECC programs
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Index Components
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Program MeasuresObjective Metrics 2020 Target Status
“What we want to accomplish” “How it is measured” Green – Yellow – Red
Standards Development Risk-responsiveness of standards and requirements
Complete the Standards website dashboard
Risk-informed CMEP Reduction of entity’s residual risk Increased effectiveness of internal controls program, tailor compliance monitoring, reduce likelihood of noncompliance, reduce processing time for PNCs by 50%, triage process that provides risk assessment and assigns the correct processing path, communication to entity
Reliability Assessments Key decisions informed by WECC models & assessments
Identify near- and long-term reliability and develop recommendations, complete 2030 ADS by June 30, develop two disturbance validation cases using information from RCs
Performance Analysis Recommendations delivered to industry that address vulnerability trends
Incorporate performance metrics and key takeaways into State of the Interconnection
Situation Awareness and Event Analysis
Improved system operations Assurance visits, develop risk-based approach for future work, develop SA dashboard
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Program Measures continued
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Objective Metrics 2020 Target Status
“What we want to accomplish” “How it is measured” Green – Yellow – Red
Training and Education Engaged participation Implement CRM, use data to determine touch points and topics for outreach, enhance event format to increase adult learning
Communication and Outreach WECC’s strategy and near-term priorities are supported by stakeholders
Develop annual calendar for outreach, share major analytical work with stakeholders
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Capacity MeasuresObjective Metrics 2020 Target Status
“What we want to accomplish” “How it is measured” Green – Yellow – Red
Management Expenditures are within delegated parameters
Actuals less than or equal to $27.76 million (FERC-approved statutory budget)
Leadership Leadership principles are widely used
Outcomes from 2019 breakthrough projects implemented, change reliability and security conversations in the Western Interconnection to reduction of known and future risks, instead of just being compliant
Operational Bench strength is present for critical roles
Implement knowledge transfer plans to maintain critical knowledge and skills, strengthen WECC’s HR function, create employee development plans
Adaptive Ability to take on emergent work Develop relationships with state PUCs and Energy offices by visiting at least eight PUCs, build out external affairs functions to enable identification of emerging policy issues
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Contact:
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Melanie Frye,President and CEO
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Reliability and Security OversightReport to the WECC Board of Directors
Steven Goodwill, Senior Vice President of Reliability and Security Oversight, General Counsel and Secretary
September 11, 2020
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Oversight Report to the Board—September 11, 2020
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CMEP Priorities
WECC has named four priorities for the Compliance Monitoring and Enforcement Program (CMEP). These priorities support and are informed by WECC’s corporate goals.
Activities for 2020 are divided into objectives aligned with each CMEP priority. WECC will track the status of these activities quarterly through this report. WECC may augment these activities and objectives during the year as it begins new areas of work.
CMEP Priority 2020 Objective
1. Known and Future Risks Evaluate entity inherent risk early in the oversight process
Ensure oversight planning responds to changes in entity risk profiles
2. Tailored Monitoring Build a nimble, long-term monitoring strategy
Expand monitoring activities to match risks with the right tools
3. Culture of Reliability and Security Work with entities to strengthen internal controls that address priority risks
Help entities fix gaps and overlaps in functional relationships
4. Enforcement Processing Refine enforcement process based on risk
Increase communication with entities during enforcement process
Progress on each activity will be shown in these reports using these icons:
Activity is complete.
Activity is on track for on-time completion.
Activity is behind schedule and may not be completed on time.
Activity will not be completed in 2020.
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1. Known and Future Risks
Evaluate entity inherent risk early in the oversight process
WECC is unifying data collection for registration and oversight planning, including the use of a shared survey. This will allow WECC to conduct risk assessment of new entities and produce a Compliance Oversight Plan (COP) generally within six months of registration. Reorganization in May of the compliance monitoring and enforcement functions brought registration and risk analysis into a single department, which supports process integration.
Key activities
Develop an intake process for initial oversight planning at registration by Q3 2020
Apply the process to newly registered entities by Q4 2020
Ensure oversight planning responds to changes in entity risk profiles
Transition to the ERO Enterprise COP framework is complete. WECC and NERC reached out to entities about changes in the new framework. WECC is also rolling out a new process to review and revise entity COPs. Beginning in July, updates are no longer tied exclusively to monitoring engagements. Instead, engagements represent one of several potential update triggers in the form of after-monitoring reviews. WECC is refining other triggers with a goal of implementation by the end of 2020.
Key Activities
Develop and apply a new process to re-evaluate COPs as risks change by Q4 2020
2. Tailored Monitoring
Build a nimble, long-term monitoring strategy
In June, WECC completed a draft schedule of monitoring activities for 2021. Schedule development included several process improvements, including planning follow-up after certain engagements (e.g.,guided self-certification, spot-checks) and varying duration based on entity inherent risk. WECC is identifying risk focus and monitoring priorities for 2021, which will be used to refine the schedule and manage resources.
In July, WECC implemented a new strategy to determine risk-based scopes while developing the 2021 audit schedule. This includes identifying scopes further in advance to allow for better resource planning and the ability to incorporate additional monitoring activities into the schedule.
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Key activities
Introduce new strategies for determining frequency, duration, and scope in developing the 2021 audit schedule by Q2 2020
Produce a five-year monitoring framework by Q4 2020
Expand monitoring activities to match risks with the right tools
In response to the public health emergency, suspension of on-site monitoring activities has been extended through the end of 2020. WECC has decided to proceed later in 2020 with the guided self-certification on facility ratings originally scheduled for Q2 2020. This will help entities conduct internal compliance reviews and inform guidance and lessons learned that WECC can share with industry in the future. A similar activity on supply-chain risk management planned for Q4 has been postponed to 2021 because of the delayed implementation of CIP-013-1 (Supply Chain Risk Management).
Key activities
Conduct guided self-certification for facility ratings by Q2 2020
Conduct guided self-certification for supply-chain risk management by Q4 2020
3. Culture of Reliability and Security
Work with entities to strengthen internal controls that address priority risks
Two virtual meetings to help entities develop internal controls are in the planning stages for later in 2020. These meetings will be a collaborative effort between the compliance monitoring and risk assessment functions. Compared to previous efforts, WECC will expand the intent of the outreach beyond failure points to sharing best practices and lessons learned by working with registered entities. The outreach will continue to focus on high-priority risks.
To strengthen focus on internal controls in monitoring activities, WECC is identifying operational concerns that could present a risk to reliability. These concerns will be highlighted in COPs and monitoring scopes to improve outreach opportunities. WECC will discuss controls and mitigating procedures to address the concerns during engagements. This effort complements failure points outreach and helps WECC and entities build a common language for internal controls.
Key activities
Hold two internal controls practices group meetings by Q4 2020
Incorporate new breadth and depth on controls in audit approaches by Q4 2020
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Help entities fix gaps and overlaps in functional relationships
Functional mapping activities this year have focused on gaps for three entities that present particular reliability challenges. Key relationships have been mapped for two of the entities; the third is on track to complete mapping during Q3 2020.
As part of revamping the registration processes, WECC now performs mapping for new entities at registration. The mapping is based on information collected during the registration process. This prevents mapping gaps.
Key activities
Resolve the most substantial gaps in functional mapping by Q3 2020
Perform functional mapping at registration by Q4 2020
4. Enforcement Processing
Refine enforcement process based on risk
The rollout of the revised enforcement process is complete. To ensure the process supports WECC’s goals, implementation and refinement will continue through the rest of the year. The reorganization in May of the enforcement and mitigation functions supports the process. WECC is already seeing benefits from the reorganization, including helping the new team maintain cohesion in an all-virtual environment.
WECC is developing mitigation assistance engagements for later in 2020 and beyond. This is a new type of enforcement activity conducted with monitoring staff and entities to address programmatic failures and other systemic problems. Depending on the risks and concerns, this may include helpingdevelop mitigation plans, reviewing processes and procedures, reviewing internal controls, and analyzing gaps in internal compliance programs.
Key activities
Introduce refined enforcement processes by Q1 2020
Apply triage process by Q1 2020
Review and revise process throughout 2020
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Increase communication with entities during enforcement process
WECC continues to track communication with entities about potential noncompliance (PNC)processing to ensure entities receive updates at least once every 30 days. This communication allows WECC to build relationships with entities at the right levels: among executives, management, and subject matter experts. A key focus of communications are regular discussions with entities on complex and high-priority cases.
Key activities
Apply process for regular communication with entities by Q1 2020
Communicate with entities every 30 days regarding PNCs received in 2020
Program Updates
Oversight Activities
FERC staff observed one audit during Q2 2020. NERC completed the Registration Oversight Review begun in December 2019 with no recommendations. In June, NERC and FERC provided feedback from their joint annual review of the Find, Fix, and Track (FFT) and Compliance Exception (CE) programs for 2019. WECC has made minor adjustments to its processes based on this feedback. NERC also asked WECC to provide information in support of annual self-certification to the Compliance and Certification Committee (CCC) on adherence to the Rules of Procedure (ROP).
CORES
WECC continues to transition registration activities to the Centralized Organization Registration ERO System (CORES), including data collection and process workflows. After the transition is complete in October, entities in the U.S. will submit registration changes through the new system.
Align
NERC has delayed the first release of Align to 2021 to allow for approval of the ERO Secure Evidence Locker and potential supply-chain disruption due to COVID-19. WECC continues to participate in development, testing, and training activities in support of the tool.
British Columbia
The British Columbia Utilities Commission (BCUC) continues to monitor the COVID-19 situation and generally applies NERC compliance guidance as applicable in BC. One BC compliance audit scheduled for September of 2020 has been postponed to 2021 due to COVID-19. In addition, the BCUC has delayed the effective date of six standards from Q4 2020 to 2021, similar to actions by FERC in the U.S.
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WECC continues to provide updates to BC regarding the impacts of COVID-19 to the compliance and enforcement program.
WECC participated in a call with NERC and the applicable Regional Entities with ties to Canada regarding the status of the Align platform as it applies to BC. WECC provides information regarding Align as updates are available.
Alberta
In July 2020, the Market Surveillance Administrator (MSA) approved the 2021 Implementation Plan for WECC’s compliance monitoring activities.
The MSA continues to monitor the COVID-19 situation and generally applies NERC-related compliance guidance as applicable in Alberta. WECC’s monitoring engagements scheduled for 2020 has been postponed to 2021 due to impacts of COVID-19. WECC continues to provide updates to the MSA regarding the impacts of COVID-19 to the compliance and enforcement program.
As mentioned above, WECC participated in a call with NERC and the applicable regional entities with ties to Canada regarding the status of the Align platform as it applies to Alberta. WECC provides information regarding Align as updates are available.
Mexico
WECC has been working with Comisión Reguladora de Energía (CRE) to obtain a first draft of a services contract for 2020. In the meantime, WECC continues to carry out activities in Baja California Norte to support grid reliability and security.
CRE continues to monitor the COVID-19 situation in Mexico and applies operational changes as applicable to Mexico. There are no audits scheduled for Mexico in 2020. WECC continues to provide updates to CRE regarding the impacts of COVID-19 to the compliance and enforcement program.
WECC is working with Centro Nacional de Control de Energía (CENACE), an entity in Mexico, to provide future outreach designed specifically for entities. While an in-person workshop would be ideal, until staff is able to travel and meet safely in person, WECC will be proposing an initial webinar to take place, possibly in 2021.
WECC provides information regarding Align as updates are available.
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CMEP Metrics
PNC Inventory
Inventory size increased slightly during Q2 2020. This was due to more self-reports and a decrease in processing compared to the previous two quarters. Implementation of the revised enforcement process will raise productivity and reduce inventory size.
Processing Time
Processing time remained flat during Q2 2020, down 10% from the beginning of the year. WECC has set a goal of a 50% reduction by the end of 2020.
The time required to process a PNC depends on the disposition method.Compliance Exceptions and dismissalshave been issued to the entity in a median of 415 days and 170 days, respectively. Together these made up 70% of processing in the last year.
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Mitigation Completion
Mitigation includes remediation—returning to compliance—and implementation of preventive controls. Mitigation is complete and verified for 70% of PNCs identified in the last three years.
Entities remediate and return to compliance in a median of 10 days after discovering an issue, so the focus of mitigation is generally on preventive controls. Typical time to complete mitigation varies from 60 days for minimal-risk issues to one year for serious-risk issues.
Entity Discovery of Noncompliance
The proportion of self-reports discovered by the entity within 90 days of when noncompliance began continued to decrease in Q2 2020.
The requirements with the longest delays address system access control, access management programs, and cybersecurity training programs. WECC will provide outreach on detective controls for some of these requirements later in 2020, including through the internal controls practices group. Delays tend to be much shorter for requirements addressing access revocation and configuration change management.
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Most-Reported Requirements
The most-reported requirements are time-based, zero-defect, or phased-implementation. Together they represent nearly half of all PNCs. In addition to requiring mitigation of issues as they occur, WECC provides outreach on preventive controls through the internal controls practices group and other venues. Guided self-certification planned for 2020 and future years will also help entities conduct internal reviews and more readily identify compliance issues.
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Requirement Description
CIP-004-6 R5. Access revocation
CIP-010-2 R1. Configuration change management
CIP-007-6 R2. Security patch management
CIP-004-6 R4. Access management programs
CIP-007-6 R5. System access control
PRC-005-6 R3. Protection system maintenance intervals
CIP-003-8 R2. Cybersecurity plans for low-impact BES Cyber Systems
FAC-008-3 R6. Consistent implementation of facility ratings
CIP-004-6 R2. Cybersecurity training programs
CIP-010-2 R2. Configuration monitoring
CIP-007-6 R1. Ports and services
CIP-011-2 R1. Information protection
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September 11, 2020
Steve GoodwillSr. Vice President
Reliability and Security Oversight, General Counsel and Secretary
Reliability and Security Oversight
Report to the Board
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R&S Oversight Update
ß ALIGNß OEA Processing—Progress and Challenges
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ALIGN
ß Began as the “CMEP Technology Project” in 2017• Led by NERC in cooperation with Regional Entities
ß Objectives• Enterprise-wide consistency in practices and data gathering• Improved effectiveness and efficiency
ß Two Components• Violation/mitigation processing/tracking tool (ALIGN)• Secure Evidence Locker
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Timeline
Validation(April – May)
Regional SMEs validate
standards and entity data
Evidence Locker Process Harmonization (April – June)
Process harmonization
exercise focused on the evidence
locker
of R2 Functional
Design(April – June)
Development of R2 design
documentation
Technical Report Training
(June)Technical
training on how to develop
reports in Align
R1 Registered Entity Testing
(June – July)Select registered
entities test entity
functionality
R1 Regional Adoption
Workshops(August –
September)Workshops focused on
preparing the regions for R1
R1 Train the Trainer (TTT)(September –
October)Training SMEs are prepared to
conduct training for staff and registered
entities
R1 Regional Training
(October –December)
Regions conduct training for staff and registered
entities
R1 Go/No-Go Process
(December –January)Series of
checkpoints to validate
production readiness
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ERO Enterprise Staff
Registered Entities
AUDIENCE IMPACT KEY
Note: Parallel activities occurring between R1 and R2
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ALIGN
Our Challenge—
Engage registered entities to create an implementation partnership such that, by the end of 2021, registered entities are complimentary, if not enthusiastic, about their interactions with WECC Our Opportunity—
Use Align implementation to build relationships and advance reliability and security conversations across the West
This is Change Leadership in Action
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OEA Processing—Progress and Challenges
ß 2020• Leadership transition• Implementation of major process revision• Pandemic—WFH• Significant reorganization to align staff to processes
ß Overall, we have become more efficient and more productiveß Despite improvement, we will very likely not meet our Scorecard
goal of a 50% reduction in mean processing time
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Processing Time
ß 2020 median processing time of 364 days
ß Down 20% from 2019
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Excludes two PNCs with processing time > 1,200 days
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Age of Inventory
65% of inventory is 230+ days old
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Enforcement Metrics
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Metric 2019 2020 % Change
Inventory size 762 PNCs 687 PNCs -10%
Median age of inventory 307 days 379 days +23%
30-day processing rate 52 PNCs 35 PNCs -33%
Median processing time 457 days 364 days -20%
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Contact:
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Steve GoodwillSr. Vice PresidentReliability and Security Oversight, General Counsel and Secretary
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Member Advisory Committee (MAC)
Report to the WECC Board of Directors
Oral Report
Russ Noble, Chair
September 11, 2020
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WIRAB Advice to the WECC Board of Directors on a
Western Focused Long-Term Reliability Assessment
September 4, 2020
Background:
The NERC Long Term Reliability Assessment (LTRA) is an annual report produced by NERC with data and analysis provided by WECC that focuses on resource availability to meet planning reserve margins. There is nothing inherently wrong with the LTRA framework, although the results are largely determined by NERC’s data collection protocols. WECC’s analysis of the Western Interconnection tends to get lost in the national level assessment, therefore WECC is proposing to create a document that focuses on the long-term reliability of the Western Interconnection. The WECC Member Advisory Committee (MAC) created a task force to inform WECC on development of that Western Focused LTRA. WIRAB provides the following comments to the WECC Board on the development of a Western Focused LTRA. WIRAB emphasizes the regional importance of resource adequacy and hopes that the WECC MAC effort can inform the on-going resource adequacy efforts at the Northwest Power Pool, the Northwest Power and
Conservation Council, and the Center for the New Energy Economy.
Problem Statement:
Western utilities have been relying on market purchases (i.e., Front Office Transactions) to meet resource adequacy requirements. Reliance on Front Office Transactions without an accurate accounting of regional resource adequacy can threaten reliability. If multiple utilities rely on the same market supply for resource adequacy, then one or more utilities may be left short when supply and demand conditions are tight across the West.
The NERC LTRA has contributed to the perception that there are significant surpluses of capacity in the Western Interconnection. For example, the 2019 NERC LTRA shows a prospective reserve margin of 21 percent in California in summer 2020. The methodology used to calculate the LTRA reserve margins includes “firm” transfers from neighboring regions, conservative resource retirement assumptions, and aggressive resource addition assumptions. This results in the NERC LTRA reporting artificially high reserves margins for the assessment areas in the West. The analysis in the NERC LTRA makes it more difficult to achieve real resource adequacy in the West.
Steps Towards an Improved Assessment of Regional Resource Adequacy in the West:
1. Calculate and show capacity surpluses/deficits prior to net firm imports. o This will reveal what happens when each region is forced to rely on its internal
resources. 2. Show and communicate capacity surpluses/deficits in megawatts, instead of reserve margin
percentages. o This will reveal the size and magnitude of the surpluses or deficits.
Alberta Arizona Baja California British Columbia California Colorado Idaho Montana Nebraska Nevada New Mexico Oregon South Dakota Texas Utah Washington Wyoming Kara Fornstrom Chair Janea Scott Vice Chair Maury Galbraith Executive Director
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WIRAB Advice on Western Focused LTRA September 4, 2020
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3. Create a scenario based on the least favorable resource assumptions. o Include known resource retirements and when a resource retirement is speculative err
on the side of the capacity not being available. o Include known resource additions and when a resource addition is speculative err on
the side of the capacity not being available. o This least favorable or “Pessimistic” resource scenario should be a complement to the
“Anticipated” and “Prospective” resource scenarios currently included in the NERC LTRA.
o The Western Focused LTRA should be an early warning system for resource adequacy problems in the West.
4. Provide detailed graphical displays and tables of data to inform public decision making. o Share information regarding the regional load forecast, regional resource retirements,
and regional resource additions. o Err on the side of publicly sharing too much information.
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Regional Advisory Body
WIRAB Update to theWECC Board of Directors
Kara FornstromWIRAB Chair
September 11, 2020
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Outline
• WIRAB Advice to WECC— WECC’s Report on Reliability Benefits and Risks of Expanding the EIM— WECC’s Long-Term Strategy— WECC’s Board Effectiveness Survey— WECC’s Reliability Assessment Committee 2020 Study Program— Western Focused Long-Term Reliability Assessment
• WIRAB Activities— Upcoming Meetings
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WECC’s Report on Reliability Benefits and Risks of Expanding the EIM
• Expanding the CAISO’s EIM to include day-ahead market services is currently under consideration.
• WECC’s Market Interface Committee (MIC) undertook a qualitative assessment of the potential reliability benefits and risks of expanding the EIM.
• This important report should be presented to the WECC Board, policy makers, regulators, and key stakeholders.
• WIRAB offers its assistance.
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WECC’s Long-Term Strategy
• Proposed five strategic focus areas that align with the NERC strategies.
• WIRAB looks forward to partnering with WECC to continue striving to improve reliability in the Western Interconnection.
• The WECC Board should approve the Long-Term Strategy because it will help WECC strive to be an independent leader on reliability matters in the West.
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WECC’s Board Effectiveness Survey
• WIRAB ranked the Board “Above Expectations” in all Strategic Activities categories for the past year.
• Good job!
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WECC’s Reliability Assessment Committee 2020 Study Program
• WIRAB developed WIRAB advice, including proposed studies WECC should consider in the 2020 RAC Study Program.
• Proposed Study Topics:— Weather-Induced Loss-of-Load Risk Study— Essential Reliability Services from Distributed Energy Resources
(DERs) Study— Weak Grid, System Stability, and Path Limit Study— Transmission Expansion Reliability Investigation Study— Resilience Study
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Western Focused LTRA – Problem Statement
• Western utilities have been relying on market purchases (i.e., Front Office Transactions) to meet resource adequacy requirements.
• If multiple utilities rely on the same market supply for resource adequacy, then one or more utilities may be left short when supply and demand conditions are tight across the West.
• The NERC LTRA has contributed to the perception that there are significant surpluses of capacity in the Western Interconnection.
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With Firm Transfers Without Firm TransfersSummer Peaking Assessment Areas
* Revisualization of Risk Determinations in NERC 2019 LTRA (Table 1 at page 12).
Reliance on Net Firm Transfers - 2024
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Four Steps to Improved Western LTRA
1. Calculate and show capacity surpluses/deficits prior to net firm imports.
2. Show and communicate capacity surpluses/deficits in megawatts, instead of reserve margin percentages.
3. Use the least favorable resource assumptions. The Western Focused LTRA should be and early warning system.
4. Provided detailed tables to inform public decision making.
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Upcoming Meetings
WIRAB Monthly Teleconference MeetingFirst Thursday of every month at 11:00 AM MT
Next Meeting: October 1, 2020 at 11:00 AM MT
Fall 2020 Joint CREPC-WIRAB MeetingIn-Person Meeting Cancelled
Virtual Sessions TBA
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Regional Advisory Body
Thank You
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September 11, 2020Board of Directors Meeting
Approval Item
Long-Term Strategy
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
Board Resolution
Resolved, that the WECC Board of Directors (Board), acting at the meeting of the Board on September 11, 2020, approves the WECC Long-Term Strategy (LTS) as presented and attached.
Background
In 2019, the Board directed the Section 4.9 Review Committee to review WECC’s strategic planning process. The committee formed the Strategic Planning Process Work Group (SPWG) to consider the issue in detail and make recommendations to the committee. After approving the committee’s recommendations in June 2020, the Board directed WECC management to develop an LTS for approval at the September 2020 Board meeting.
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Long-Term Strategy Background
Board of Directors Meeting
September 2020
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
Background
In 2019, the WECC Board of Directors (Board) created the Section 4.9 Review Committee (Committee) to conduct the five-year Section 4.9 Structure and Governance review as required by the WECC Bylaws. The Board selected WECC’s strategic planning process as one of the two topics for review.1 The Committee formed the Strategic Planning Process Work Group (SPWG) to consider the issue in detailand make recommendations to the Committee. After approving the Committee’s recommendations in June 2020, the Board directed WECC management to develop a Long-Term Strategy (LTS) for approval at the September 2020 Board Meeting.
The Reliability Risk Priorities were approved by the Board in June 2020. The LTS has been prepared for approval at the September Board meeting.
1 The second topic was stakeholder engagement. As of September 2020, this work is ongoing. See the Section 4.9 Committee Final Report and Recommendations for more information.
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Development of the LTS centered on creating a strategy, anchored in WECC’s vision and mission, that recognizes and addresses issues in the Western Interconnection and harmonizes with the ERO Enterprise Long-Term Strategy (ERO LTS). Using the ERO LTS as a starting point allowed WECC to create its LTS specifically focused on the unique characteristics, risks, operating challenges, and needs of the West, while participating in reliability and security initiatives across the continent. From there, WECC built out five focus areas that address how it will accomplish its mission through effective regulatory practices, analytical work, relationships, business management, technical capabilities, and culture.
Stakeholder engagement in the development process and understanding the resulting LTS is critical to its success. The June 2020 Board resolution directing the development of the LTS also directs WECC management to develop a communication and outreach plan to increase engagement and understanding of the LTS through two-way communication, including an interactive forum at the 2020Annual Meeting and subsequent annual meetings. After receiving input from the Board on the LTS development, WECC solicited input from stakeholders. Key outreach activities in the initial development of the LTS included:
∑ August 5: Member Advisory Committee (MAC) meeting∑ August 6: Western Interconnection Regional Advisory Board (WIRAB) meeting∑ August 7: Draft LTS posted for public comment on the new Strategy page on wecc.org∑ August 11: Public webinar to discuss the LTS and solicit feedback ∑ August 26: Internal WECC webinar with employees on the LTS∑ September 10: Interactive discussion at 2020 Annual Meeting
These activities are the beginning of a comprehensive, multi-year plan that allows stakeholders to helpcreate and review the LTS. WECC will informally review the LTS every other year (in even years) during the May Board Reliability Workshop to ensure it still meets WECC’s and its stakeholders’ needs. Every five to seven years, WECC will formally review and update the LTS.
Overview of the Strategy
The LTS has five focus areas, each with associated outcomes:
Focus Area 1: Innovate and expand risk-based focus in all standards, compliance monitoring, and enforcement actions.
This focus area addresses WECC’s work to identify, prioritize, and address risks and tailor its monitoring of registered entities. It captures WECC’s intent to partner with registered entities to build a culture of risk identification and mitigation, rather than one of mere compliance. It also sharpens
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WECC’s focus on coordinating with stakeholders, the ERO, and other parties in the standards development process. Success in this focus area means:
∑ Western viewpoints are represented and incorporated in the development of NERC Reliability Standards, Regional Standards, and Regional Variances; and
∑ Implementation of risk-based monitoring and enforcement activities is effective and efficient.
Focus Area 2: Assess and initiate action to mitigate known and emerging risks to reliability and security.
Work in this area focuses WECC’s planning and assessment activities to deliver quality work, credible information, and influential analyses to keep the western bulk power system (BPS) reliable and secure.This area includes WECC efforts to progress its reputation as a trusted source for actionable information. Success in this focus area means:
∑ Emerging risks to the BPS and associated mitigation strategies, particularly for WECC Reliability Risk Priorities, are clearly understood;
∑ Reliability assessments use high-precision models and information; and∑ WECC uses advanced tools, techniques, and subject matter experts to identify system
performance trends and vulnerabilities.
Focus Area 3: Strengthen engagement with the reliability and security community in the Western Interconnection.
Through this focus area, WECC addresses how it maintains and builds partnerships with members, policymakers, NERC, FERC, and other parties. It focuses on the need to incorporate stakeholder input to improve WECC’s perspective in risk identification and mitigation. This area includes WECC’s efforts to be a trusted resource for reliability and security matters and increase its relevance. Success in this focus area means:
∑ WECC has effective relationships with industry groups and technical committees; and∑ WECC has effective relationships with the ERO Enterprise, federal, state, and provincial
regulators, policymakers, national labs and educational institutions, and the broader reliability and security community.
Focus Area 4: Seize opportunities for effectiveness, efficiency, and continuous improvement.
Work in Focus Area 4 keeps WECC fiscally sound. It focuses the organization on being nimble and able to adapt to changes in the industry and supports the production of quality and timely work products. It also helps WECC work with the ERO Enterprise to make the most of the collective intelligence,experience, and best practices. Success in this focus area means:
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∑ WECC develops methods and metrics to evaluate effectiveness and efficiency and tracks its performance through its corporate scorecard; and
∑ WECC continuously improves processes and tools to adapt to change.
Focus Area 5: Build the capability and culture that enable WECC to deliver on its critical reliability mission.
This focus area centers on activities that enable WECC to become a high-performing, knowledge-based organization that attracts excellent people. Work in this area builds WECC’s culture to attract people who believe in our important mission, rather than people just looking for a job. In turn, this helps WECC create partnerships with industry that allow it to achieve BPS reliability and security in the West. Success in this focus area means:
∑ WECC is considered an employer of choice, with highly skilled, collaborative, and engagedemployees who are committed to WECC’s mission; and
∑ WECC is a respected partner, trusted by stakeholders, NERC, and FERC to produce high-quality, credible, and influential work.
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August 28, 2020
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
Introduction and Background
Electricity is an integral part of the fabric of modern life. WECC strengthens that fabric to preserve and improve society’s future. As the Regional Entity responsible for assuring the reliability and security of the Western Interconnection, WECC’s work benefits more than 80 million people in the western United States and parts of Canada and Mexico. Through its independence, interconnection-wide perspective, and strong partnerships, WECC delivers on its mission to effectively and efficiently mitigate risks to the reliability and security of the Western Interconnection’s Bulk Power System (BPS).
WECC’s Value Proposition
Independence: WECC serves the public interest and promotes what is best for the reliability and security of the Western Interconnection with an impartial and unbiased voice. WECC strives to be thetrusted resource in the Western Interconnection by delivering relevant insight and continuously building credibility in the analytical, oversight, and planning work it does.
Perspective: WECC is uniquely situated to develop comprehensive and influential work products thatbenefit reliability and security. WECC’s interconnection-wide view, access to a wide variety of data, and analytical capability allow it to identify broad risks to reliability and security, share insights and actionable recommendations, and implement risk-based concepts to address them.
Partnership: WECC works with industry and other organizations to identify, evaluate, and reduce risks to the reliability and security of the Western Interconnection. WECC’s partners include users, owners, operators, policymakers, government entities, ERO Enterprise entities,1 and other stakeholdersand participants. Together, WECC and its partners work toward a vision of a reliable and secure BPS in the Western Interconnection.
WECC’s Strategic Planning Process
WECC’s strategic planning process has evolved over the years including recent efforts to align WECC’sstrategic planning with the ERO Enterprise. During 2019, the ERO Enterprise Executive Committee (EC) updated the ERO Enterprise Long-Term Strategy (ERO LTS), which now represents continent-
1 The ERO Enterprise is comprised of NERC and the six Regional Entities, which collectively bring together their leadership, experience, judgment, skills, and supporting technologies to mitigate reliability and security risks and assure the reliability of the BPS in North America. Executives from NERC and the six Regional Entities work together in the ERO Enterprise Executive Committee to guide the ERO Enterprise.
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wide reliability and security risks vetted through a stakeholder process, including many WECC stakeholders. In December 2019, the NERC Board of Trustees approved the ERO LTS, and all Regional Entity boards have acknowledged or endorsed the ERO LTS as a common starting point for their respective strategic planning efforts. Using the ERO LTS as a starting point allows WECC to create its Long-Term Strategy (LTS) specifically focused on the unique characteristics, risks, operating challenges, and needs of the West, while participating in reliability and security initiatives across the continent.
Long-Term Strategy Development
In 2019, the WECC Board of Directors (Board) created the Section 4.9 Review Committee (Committee) to conduct the five-year Section 4.9 Structure and Governance review as required by the WECC Bylaws. The Board selected WECC’s strategic planning process as one of the two topics for review.2 The Committee formed the Strategic Planning Process Work Group (SPWG) to consider the issue in detailand make recommendations to the Committee. After approving the Committee’s recommendations in June 2020, the Board directed WECC management to develop an LTS for approval at the September 2020 Board Meeting.
Aligning with the ERO Enterprise Model
The ERO Enterprise is committed to its shared vision of a reliable and secure North American BPS. Since being created nearly 15 years ago, the ERO Enterprise has matured significantly and now recognizes the different yet critical roles of NERC and the Regional Entities in carrying out thisimportant mission on a national level. The partnership between NERC and the Regional Entities is critical to the success of the ERO Enterprise, which is committed to—
∑ Working together as one team and honoring each of its roles;∑ Actively supporting ERO Enterprise activities while eliminating unnecessary duplication of
work; ∑ Collaborating in developing clear and consistent guidance across the ERO Enterprise;∑ Sharing information, knowledge, and resources across the ERO Enterprise; ∑ Developing and sharing harmonized messages across ERO Enterprise communications; and ∑ Supporting innovation, initiative, and the sharing of best practices across the ERO Enterprise.
WECC Focus Areas and Desired Outcomes
The Western Interconnection is experiencing unprecedented change driven by many factors, including policy, technological advancement, and natural forces. These factors continue to change how the
2 The second topic was stakeholder engagement. As of September 2020, this work is ongoing. See the Section 4.9 Committee Final Report and Recommendations for more information.
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system is designed, planned, operated, and secured. With these changes in mind, WECC has adapted the ERO Enterprise long-term focus areas to address the reliability and security needs of the Western Interconnection while supporting reliability and security across North America. WECC has adopted five strategic focus areas and desired outcomes for the coming years:
Table 1: WECC Focus Areas and Desired Outcomes
Focus Area Outcome
1. Innovate and expand risk-based focus in all standards, compliance monitoring, and enforcement actions.
Western viewpoints represented and incorporated in the development of NERC Reliability Standards, Regional Standards, and Regional Variances. Effective and efficient implementation of risk-based monitoring and enforcement activities.
2. Assess and initiate action to mitigate known and emerging risks to reliability and security.
Clear understanding of emerging risks to the BPS and associated mitigation strategies, particularly for WECC Reliability Risk Priorities. High precision of information and models used to assess the reliability of the BPS. Use of advanced tools, techniques, and industry subjectmatter experts to identify system performance trends and vulnerabilities.
3. Strengthen engagement with the reliability and security community in the Western Interconnection.
Effective relationships with industry groups, WECC technical committees, ERO Enterprise, federal, state, and provincial regulators, policymakers and decision-makers, national labs and educational institutions, and the broader reliability and security community.
4. Seize opportunities for effectiveness, efficiency, and continuous improvement.
Quantitative and qualitative results for performance of WECC scorecard items, and development of methods and metrics for ongoing evaluation of effectiveness and efficiency. Continuous improvement of organizational processes and tools to adapt to changes in the industry.
5. Build the capability and culture that enable WECC to deliver on its critical reliability mission.
WECC considered an employer of choice, with highly skilled, collaborative, and engaged employees who are committed to WECC’s mission. Respected as a partner and trusted by stakeholders, NERC, and FERC to produce high-quality, credible, and influential work.
More detail on each of these focus areas follows.
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Focus Area 1: Innovate and expand risk-based focus in all standards, compliance monitoring, and enforcement actions.
NERC enables the development of Reliability Standards that establish threshold reliability, resilience, and security requirements. These requirements assure the bulk electric system (BES) is planned, operated, maintained, and secured to minimize risks of cascading failures, avoid damage to major equipment, and limit interruptions. The ERO Enterprise assures that owners and operators of the BES comply with the Reliability Standards. It does this through registration, certification, compliance monitoring, mitigation, and enforcement activities that are part of the Compliance Monitoring and Enforcement Program (CMEP). Over the past several years, the ERO Enterprise has shifted to a risk-based approach for standards and CMEP activities, prioritizing and focusing resources on significant reliability risks. To uphold and expand this risk-based focus, WECC will—
∑ Provide leadership and expertise in its continued participation in the ERO standardsdevelopment and review process to ensure Reliability Standards are clear, timely, considerate of costs, effective in mitigating material risks, and do not unnecessarily burden industry with administrative requirements or detract from reliability or security. Use the rich stakeholder expertise in the West to evaluate, and, if necessary, develop or revise WECC regional reliability standards or variances to assure they carefully consider the unique characteristics of the Western Interconnection;
∑ Identify and implement innovative tactics, techniques, and procedures to increase the effectiveness of WECC’s CMEP processes and provide clear and consistent guidance to assist registered entities as they evaluate and mitigate risk through reliable and secure operations;
∑ Continue to improve the quality and consistency of risk assessments and internal controls evaluations and ensure Compliance Oversight Plans for registered entities use the appropriate set of tools (audits, certifications, spot-checks, etc.) at the appropriate frequency to (1) support a culture of reliability and security and (2) provide reasonable assurance that entities are in compliance with applicable Reliability Standards;
∑ Focus enforcement efforts on highest-risk violations and continue to find ways to efficiently process and close lower-risk violations; and
∑ Embrace and support the alignment of practices and coordination of outcomes across all EROCMEP efforts.
Focus Area 2: Assess and initiate action to mitigate known and emerging risks to the reliability and security of the Western Interconnection.
Using its interconnection-wide perspective, WECC provides valuable information and insights on reliability and security risks to decision-makers, subject matter experts, regulators, policymakers, the ERO Enterprise, advisory bodies, and other industry stakeholders. To do this, WECC relies on information and modeling data, study tools, subject matter expertise, and robust analysis. Working
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through its various program areas (performance analysis, event analysis, situation awareness, reliability planning, risk assessment, and strategic engagement), WECC is poised to initiate activities to identify, evaluate, and address known and emerging risks to reliability and security.
The biennial development of WECC’s Reliability Risk Priorities is a cornerstone of WECC’s work to identify known and emerging reliability and security risks. The Reliability Risk Priorities process begins with the issuance of NERC’s Reliability Issues Steering Committee (RISC) ERO Risk Priorities Report, which includes risk prioritization and mitigation recommendations from an ERO Enterprise perspective. WECC subject matter experts and stakeholders review these risks, along with risks unique to the Western Interconnection. This collaborative process identifies issues of specific importance to the Western Interconnection that WECC is uniquely situated to address. Once approved by the WECC Board, the Reliability Risk Priorities are used to focus development of program area and committee work plans and define new initiatives and activities.
WECC applies its analytical capabilities and subject matter expertise to help develop and initiate action to mitigate risks to the interconnection. Risk mitigation activities require cooperation, coordination, and communication across WECC’s stakeholder community. Often, mitigation activities call for improved operational and planning processes, tools, information, and analysis. Information sharing and feedback systems are necessary to continuously improve risk mitigation and keep up with the changing risk landscape. Once developed, WECC works with stakeholders to measure the effectiveness of mitigation activities.
To be a trusted and independent resource for risk identification, analysis, and mitigation activities, WECC will—
∑ Demonstrate its independence by proactively identifying emerging reliability risks to the Western Interconnection and urging industry to create mitigation strategies to address the emerging risks;
∑ Use a variety of stakeholder engagement mechanisms to identify, gather information on, and understand existing and emerging risks, concerns, and perspectives. This includes maximizing the effectiveness of current WECC activities such as assurance visits and event and system performance analysis, as well as developing new activities to gather information promptly and effeciently;
∑ Collaborate with subject matter experts and simulation software vendors to improve modeling accuracy and program capabilities;
∑ Continuously develop and improve analytical products such as the State of the Interconnection and Generator Resource Adequacy Forecast tools;
∑ Continue to collaborate with the ERO Enterprise in special assessments and studies, minimizing duplication of effort while ensuring western viewpoints and unique reliability risks are
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considered. Supplement ERO Enterprise-wide assessments with western-focused work where necessary;
∑ Partner with industry stakeholders to identify actionable risk mitigation strategies, make recommendations, and follow up to assess implementation;
∑ Turn assessment results into useful insights for stakeholders and assure that communication methods are tailored to appropriate audiences;
∑ Engage in strategic outreach—through regular conversations, best practices webinars and forums, white papers, workshops, lessons learned, and guidelines—to share practices that enhance reliability and security and reduce risks.
∑ Reinforce ERO Enterprise-wide cybersecurity risk mitigation by participating in the Cybersecurity Risk Information Sharing Program, educating registered entities about cybersecurity risks, and emphasizing critical security messages to executive leadership across the interconnection; and
∑ Support the E-ISAC in its role in cybersecurity risk identification and mitigation; and encourage registered entities in the West to participate and provide information on cyber threat activity directly to the E-ISAC.
Focus Area 3: Strengthen engagement with the reliability and security community in the Western Interconnection.
WECC has an expansive and diverse stakeholder community. This community provides invaluable input to WECC’s work and in turn relies on WECC’s analysis and information. As a leader in the reliability and security community, WECC’s interactions include—
∑ Partnering with industry subject matter experts, consultants, universities, and national laboratories to analyze reliability and security risks;
∑ Collaborating with trade associations and forums, vendors, and equipment manufacturers to share and gather input on key reliability and security risks;
∑ Considering advice and input from the Western Interconnection Regional Advisory Body (WIRAB) on important reliability and security risks; and
∑ Being a trusted source of insight and analysis for policymakers, regulators, and other government bodies to inform regulatory and policy decisions.
To ensure WECC’s work serves the reliability and security of the Western Interconnection, WECC must maintain strong engagement with its stakeholders to access critical stakeholder expertise, information, context, and input to deliver analysis that is informed and relevant. In addition, WECC’s stakeholder engagement model must be able to evolve with the organization through periodic evaluation and course correction. The most recent version of this evaluation is the stakeholder engagement work completed as part of the 2020 Section 4.9 Structure and Governance review. Results of that work will
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shape a stakeholder engagement model that is flexible, nimble, risk-responsive, and capable of carrying WECC into its future.
To be successful, WECC must understand the drivers and influences in the interconnection and usetechnical and subject matter expertise to evaluate and analyze them. Through its strategic engagement structure WECC maintains the relevance of its work by gathering information on the issues, decisions, and policies that drive change in the interconnection. WECC’s access to a broad spectrum of stakeholder subject matter expertise provides a wealth of knowledge and experience that is critical to developing insightful and impactful work. Through strategic engagement, WECC will—
∑ Strengthen proactive outreach and communications with state and provincial regulatory, legislative, and policy bodies and industry to identify drivers of change. Policy is changing the Western Interconnection at an incredible pace. To remain relevant, WECC must understand what influences policy and how policy and regulatory decisions affect reliability and security today and in the future;
∑ Continue to build relationships with industry decision-makers to share important information and insights so they may consider impacts to reliability and security as they drive change in their organizations and across the West;
∑ Coordinate with NERC and the other Regional Entities on communications with federal, state, and provincial legislative, regulatory, and policy bodies. A strength of the ERO Enterprise model is its ability to funnel information and communication through appropriate channels. WECC will focus its engagement at the state, provincial, and local levels and coordinate with NERC on engagement at the federal level;
∑ Share the Western Interconnection’s specialized and localized point of view on reliability and security matters of national importance;
∑ Facilitate and encourage entities to share critical information on reliability and security with each other. One of WECC’s strengths is its convening power. WECC can use this ability to spur conversations and information sharing about critical reliability issues;
∑ Seek out and work with representatives of academia, representatives of critical infrastructures, and international experts to broaden WECC’s collective knowledge and awareness of current and unknown risks and strategies to address them;
∑ Nurture relationships with western industry trade associations, as well as those associations representing technology, affiliated sectors, and end users to understand context and take advantage of their experience and reach; and
∑ Communicate its work to the right audiences in a timely manner. To maximize its relevance and effectiveness, WECC must communicate key messages and actionable information to decision-makers, including executive leadership and policy and regulatory bodies. This requires WECC to construct its communications in a strategic and targeted manner.
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Focus Area 4: Seize opportunities for effectiveness, efficiency, and continuous improvement.
WECC embraces quality, timeliness, efficiency, and consistency of results. WECC recognizes that improving efficiency is essential to mitigating the ongoing cost of business operations. Additionally, increasing operational effectiveness is critical to producing quality work. To that end, WECC understands it must routinely and systematically review major processes to promote excellence and identify and implement improvements. WECC will—
∑ Ensure it has the capacity (i.e., budget, staff, access to subject matter expertise) to deliver on its reliability and security mission;
∑ Continuously evaluate budgetary processes and needs to ensure the organization is effectively delivering on its mission;
∑ Pursue continuous improvements to WECC’s business processes and the effectiveness of its stakeholder engagement;
∑ Establish annual goals for organizational performance and track and share progress through the corporate scorecard; and
∑ Support ERO Enterprise-wide efforts to improve processes through tools such as Align and the Secure Evidence Locker.
Focus Area 5: Build the capability and culture that enable WECC to deliver on itscritical reliability mission
WECC recognizes that it is an intellectual capital business and its success is dependent on attractingand retaining the right talent to deliver on its performance objectives. An organization’s health is critical to its performance, and a strong culture creates organizational health.
WECC will continue its cultural transformation through resolute focus on achieving its invented future—a future in which WECC increases its relevance by building strong and constructive relationships that help it implement risk-based concepts and move the industry to focus on reliabilityand security, beyond simply complying with the Standards.
As WECC continues to build its technical capabilities and a strong culture, it will be an employer of choice that attracts and retains highly skilled employees who collaborate and focus on reliability rather than process. As WECC produces high-quality, credible, and influential work, it earns the respect of decision-makers as a trusted source of information. Through professionalism and leadership, WECC earns the respect of industry as a valued partner.
To support its cultural growth, WECC will—
∑ Provide robust leadership training across the organization;∑ Encourage innovation and creative problem solving;∑ Maintain a high degree of professionalism;
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∑ Incorporate a “breakthrough” approach in work across the organization;∑ Develop professionals in both technical and professional skills; and∑ Nurture an atmosphere of teamwork and partnership.
Conclusion
Electricity is an inextricable part of the fabric of modern society. WECC is dedicated to strengtheningthat fabric by working toward a reliable and secure Western Interconnection, an increasingly complex challenge given the rapidly changing landscape. Navigating this dynamic landscape requires a strong and nimble leader. WECC embraces its role as a leader and welcomes the challenge.
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September 11, 2020
Melanie FryePresident and CEO
Long-Term Strategy
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Background
June 2020 Board Resolution directed WECC management to ß Develop WECC Long-Term Strategy for approval at the September
2020 Board meetingß Develop a communications and outreach plan ß Increase engagement and understanding through two-way
communication• Including an interactive forum at the September 2020 Annual Meeting and
subsequent annual meetings
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Development
Goal: develop a Long-Term Strategy anchored in WECC’s vision and mission and aligned with the ERO Enterprise Long-Term Strategy.ß June–July: Management and Board discussion ß August: • Stakeholder input and feedback • Refinement of LTS• Discussed at MAC and WIRAB meetings• Posted for public comment• Discussed on public webinar
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Communications and Outreach
ß Developed a comprehensive multi-year communications and outreach plan
ß Socialized the draft strategy with stakeholders and solicited input:• MAC and WIRAB meetings• Public stakeholder webinar• Public comment period
ß Plan covers outreach on future review and revision of the strategy
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Comments
ß Comment period in Augustß Generally positive and supportive commentsß Minor changes suggested, covering• Importance of independence• Emphasis on policy and regulatory considerations• Focus on providing actionable information to decisionmakers, including
executive leadership• Need for innovation and adaptability• Expanded collaboration with various groups• Metric for measuring performance
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Five Focus Areas
1. Innovate and expand risk-based focus in all standards, compliance monitoring, and enforcement actions.
2. Assess and initiate action to mitigate known and emerging risks to reliability and security.
3. Strengthen engagement with the reliability and security community in the Western Interconnection.
4. Seize opportunities for effectiveness, efficiency, and continuous improvement.
5. Build the capability and culture that enable WECC to deliver on its critical reliability mission.
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September 11, 2020Board of Directors Meeting
Information Item
State of the Interconnection
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
Background
For several years, the annual WECC State of the Interconnection online data portal has provided industry stakeholders with a summary of historical performance information of the bulk power system.The State of the Interconnection includes information such as system demand totals, yearly net generation by fuel type, generation and transmission outages, protection system misoperations, and reliability standards noncompliance statistics.
As part of its 2020 corporate goals, WECC has expanded the online data portal to include year-over-year trending information and has developed a stand-alone report to highlight key reliability and security takeaways from the previous year.
The presentation at the September Board meeting will highlight the changes made to the State of the Interconnection in 2020 and will address the key reliability and security takeaways from 2019.
The 2020 State of the Interconnection online data portal can be accessed here, and the report is attached.
Open Session Board Meeting Book - State of the Interconnection Report
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
Introduction
The State of the Interconnection report and accompanying online data portal provide a high-level look at historical conditions and performance of the Western Interconnection. The State of the Interconnection is one tool WECC uses to educate, inform, and share data with stakeholders. This year, the State of the Interconnection is provided in two products: the online data portal and this summary report. This format allows WECC to maximize the effectiveness of the information by elaborating on key insights and ensure that information is shared effectively with a range of audiences.
In 2019, the Western Interconnection operated at a high level of reliability despite continuing changes to the resource mix, challenging wildfires, and a changing Reliability Coordinator (RC) landscape. The impacts of strong renewable and clean energy policies in places such as California were evident across the interconnection as rooftop solar reduced interconnection-wide demand. The combined capacity of wind and solar far eclipsed that of coal, though coal still produced almost twice as much energy. Outages on the Bulk Power System (BPS) in the West due to wildfires increased in frequency and duration, and in 2019 there were 17 Public Safety Power Shutoff (PSPS) events in California. Amidst these changes, the Western Interconnection, through a coordinated effort, successfully and without incident, transitioned from one RC to four. In addition, human-caused transmission outages and protection system misoperations continued to decrease steadily.
This summary describes the state of the Western Interconnection in terms of:
∑ System drivers: Conditions created by external drivers, under which the system must operate;e.g., clean energy initiatives, wildfire activity.
∑ System characteristics: Reliability-neutral system characteristics; e.g., load and resource mix.∑ System performance: Trends in key measures of system reliability; e.g., generation outages,
entity compliance.
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State of the Interconnection—Insights and Takeaways
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A Look Forward—Reliability Considerations and Recommendations
Resource Adequacy and PerformanceAs the resource mix continues to change under drivers such as clean energy policies, decisions about resource adequacy and reliability of the Western Interconnection will grow more complex. Meeting clean energy goals while maintaining the reliability of the BPS will require new operational and planning approaches. Addressing changes on the system will require investment in existing and as-yet-unknown solutions. This means regulators, policymakers, and industry need to gain a common understanding of how reliability will be affected with investment decisions. WECC is uniquely positioned to cultivate this understanding and use historical analysis as one way to demonstrate how changes on the system affect system performance and, in turn, BPS reliability.
Changing Resource MixHistorical data shows the extent to which the resource mix has changed over the last decade. What is not clear, and merits additional analysis, is how these changes affect system performance and whether these impacts exacerbate existing or create new risks to reliability. If links between the changing resource mix, system performance, and reliability risks can be identified, system performance metrics can be used to track and measure reliability risks. These metrics may serve as early indicators of emerging reliability challenges.
Distribution System and Customer Load Impacts on the BPSThe data indicates rooftop solar penetration has affected interconnection-wide annual demand, but details about the extent of that impact and potential reliability risks is not clear. Information about the impacts of customer load changes is more uncertain. WECC and its industry and ERO Enterprise partners have committed to gathering information to better understand these issues. WECC can also use this information to develop system performance metrics to measure the impact of distributed generation and customer load changes on the reliability of the system.
Extreme Natural EventsFrom the wildfires that plague California and the West Coast, to the long-term drought, to the global COVID-19 pandemic, extreme natural events affect the reliability and security of the BPS. As the industry copes with the operational and planning implications of these challenges, and new policies and laws are drafted in response to them, lessons emerge, and best practices are created. WECC can use its interconnection-wide perspective and ability to convene groups to advance conversations about lessons learned and best practices for preparedness and mitigation of the impacts. WECC can partner with stakeholders to facilitate ongoing discussions that bring together subject matter experts, decision-makers and policymakers, and industry leaders to focus the dialogue on reliability and security. In particular, WECC can use its historical data analysis of past events to illustrate and share information on how the system might perform in the future.
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System Drivers
There are several drivers that shape the backdrop against which the BPS in the Western Interconnection must be planned and operated.
Clean Energy Initiatives
Five states have committed to clean energy targets by the middle of the century. In addition, several utilities, cities, and counties have made their own commitments. Over 80% of the population in the Western Interconnection lives in a city, state, or utility footprint with a 100% clean energy commitment by the middle of the century. While not all states have or will have clean energy policies, these commitments will drive changes in resource mix, technology, operations, planning, and investment across the interconnection for the next 20 to 30 years. WECC will continue to follow and analyze the reliability impacts from the complex and dynamic policy landscape.
Reliability Coordinator Transition
In 2019, the Western Interconnection transitioned from one registered RC to four. Three new RCs operated by the California Independent System Operator (CAISO), Southwest Power Pool (SPP) and British Columbia Hydro and Power Authority (BC Hydro) replaced Peak Reliability. The Alberta Electric System Operator continues to perform RC services for the province. A dedicated and coordinated effort across the Western Interconnection ensured a smooth transition to the new RC landscape. Peak Reliability ended operations on December 3, 2020, and the West has operated under the new RC structure for less than one year.
Wildfires
In 2019, U.S. and Canadian parts of the Western Interconnection experienced a total of 21,787 wildfires, which burned 2.5 million acres of land. One of the largest fires was the Chuckegg Creek fire, which burned 865,202 acres in Alberta, Canada. California had 8,194 fires in 2019, with 17 related Public Safety Power Shutoff events that affected the power supply to tens of thousands of people. Entities are applying lessons learned from the 2019 fires to the 2020 fire season, but wildfires remain a high risk to the reliable operation of the BPS throughout the Western Interconnection.
Figure 1: State Clean and Renewable Energy Commitments
100% Clean Energy CommitmentRenewable Portfolio Standard
*Committed by Governor’s energy plan
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Impacts of COVID-19
The global pandemic, which began in the United States in early 2020, has changed system operations and elevated some risks to the system, including workforce disruptions, supply chain interruptions, and increased cybersecurity threats. Preliminary information indicates that 1) stay-at-home orders and other measures to stem the spread of the virus depressed load across the interconnection, and 2) utilities have executed emergency and crisis plans and are protecting essential personnel while maintaining reliable and secure grid operations. WECC continues to assess conditions across the system and potential reliability risks of the pandemic. More information on system impacts of COVID-19 will be included in the 2021 State of the Interconnection Report.
System Characteristics
The electric system consists of the infrastructure necessary to produce and deliver power, and includes generation resources, transmission infrastructure, and load. Information about system characteristics, such as demand, capacity, and generation, provide insight into how the system changes year over year. While these measures alone do not tell us whether the system is more or less reliable, they help us monitor existing risks and identify emerging risks to the reliability of the system.
Demand
Takeaway: Due to an increase in rooftop solar, net demand across the interconnection has declinedand the peak hour in parts of California has shifted to later in the day.
∑ Interconnection-wide net demand has decreased from its peak in 2015 of about 895 million MWh to just over 872 million MWh in 2019. The increase in behind-the-meter rooftop solar accounts for much of this decrease.
∑ In 2018, rooftop solar capacity across all end-use sectors (residential, commercial, industrial) was close to 10,000 MW, of which 6,700 MW were in the residential sector.
∑ Commercial rooftop solar grew by almost 20% from 2017 to 2018.
Looking Ahead: Battery Storage
From a historical perspective, battery storage has not had a large effect on the system. However, data submitted to WECC indicates that over the next 10 years, entities plan to add 6,900 MW of battery storage.
Unit of Measure
A megawatt (MW) is a unit of generation capacity, or how much a given generation unit can produce at any moment. A megawatt-hour is a unit of electric energy representing the amount of energy generated by one MW over one hour.
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Capacity
Takeaway: The evolution of the interconnection’s resource mix continues to shift with the expansion of wind and solar and reduction of coal capacity. In the coming years, coal capacity will fall below the individual capacity of wind and solar resources.
∑ In 2019, total installed capacity for all generation types was about 276,000 MW, two-thirds of which are gas and hydro.
∑ Together, wind, solar, and hydro resources account for 46% of installed capacity.
∑ Installed coal capacity was 34 GW, compared to roughly 29 GW of wind and 23 GW of solar.
∑ Wind and solar account for over half of the capacity additions in the last five years.
Generation
Takeaway: Energy generated by baseload resources (coal, geothermal, natural gas, nuclear) has decreased almost 19% from 2013 to 2018.1 Energy generated by renewable resources such as wind, solar, and hydro accounted for almost 40% of all energy generated in 2018.
∑ Since 2013, annual energy generation has decreased from 911,000 GWh to 854,000 GWh. The largest decrease has been in baseload resources.
∑ Baseload energy generation peaked in 2013 at close to 640,000 GWh. In 2018, baseload energy generation was approximately 521,000 GWh.
1 2018 generation data is the most recent data WECC has validated on interconnection-wide generation.
Coal12.10%
Geothermal1.47%Hydro
26.09%
Natural Gas35.78%
Nuclear2.91% Solar
8.96%
Wind10.65%
Figure 2: Current Capacity by Fuel Type (MW)
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Figure 3: 2012-2018 Net Generation by Fuel Type
Baseload Hydro Solar Wind
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Takeaway: While the resource mix is changing, with wind and solar eclipsing coal in installed capacity, coal still generates almost twice as much power as wind and solar combined.
∑ Coal accounted for roughly 22% (~188,000 MWh) of generation in the interconnection, while solar and wind combined accounted for nearly 12% (~101,000 MWh).
System Performance
The performance of the BPS in the West is gauged by factors that include system events, protection system misoperations, and generation and transmission outages.
Events
Takeaway: The number of reportable events in the Western Interconnection remained steady. However, Remedial Action Scheme (RAS) misoperations have increased by an average of one event per year for the last five years. Because RAS are relied on to detect predetermined system conditions and automatically take corrective actions to preserve system reliability, an increase in RAS misoperations should be monitored.
∑ In 2019 there were seven RAS misoperations.∑ In 2019 the Western Interconnection experienced no reportable loss-of-load events.2
∑ Loss of BES facilities (category 1a) and loss of monitoring or control (category 1h) made up most events.
2 An event is reportable under the NERC Events Analysis Process when it meets certain criteria. A loss-of-load event is a reportable Category 2 or 3 event when firm load exceeding a specific threshold is lost for 15 minutes or more. For more information on the Event Analysis process, visit https://www.nerc.com/pa/rrm/ea/Pages/EA-Program.aspx.
Capacity Factor
The nameplate capacity (also “installed capacity”) of a generator represents its highest energy output (MW). However, factors such as losses, environment, and use patterns reduce the amount of power a generator actually produces (MWh). The ratio of the energy actually produced to the energy that could have been produced over a period is called the capacity factor. Over time, wind and solar plants have much lower capacity factors than coal, meaning it takes many more installed megawatts of wind and solar to make up for the energy produced by an equal number of installed megawatts of coal. Put another way, one MW of installed capacity of coal produces more energy than one MW of installed capacity of solar or wind.
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Takeaway: In 2019, the Western Interconnection experienced significantly more EEA Level 3 events than previous years and accounted for 70% of EEA Level 3 alerts nationwide. Most of the EEAs issued were due to the need to recover reserves. Only two of the EEA Level 3 events in the Western Interconnection resulted in firm load shedding. NERC and WECC created a Lessons Learned in response to these events to share insights on how they may have been prevented. This information was shared with industry to help reduce the number of EEA Level 3 events going forward. In general, the lessons cover improvements in processes and tools, training, and communication.
Misoperations
Takeaway: Misoperations have decreased steadily since 2016, a result of a concerted effort across the ERO Enterprise to reduce misoperations of protection systems.
∑ Compared to 2016, when the ERO Enterprise launched its effort to reduce misoperations, the misoperations rate has decreased from 6.67% in Q2 2016 to 4.9% in Q4 2019.
Takeaway: By far, most misoperations occur on microprocessor-based protections systems, and of these misoperations, over half are human-caused, e.g., incorrect settings. This number has decreased over the last five years even as the number of microprocessor relays has grown. This may indicate that entities are identifying and addressing issues with microprocessor relays more effectively.3
3 For more information on misoperations, visit https://www.wecc.org/PerformanceAnalysis/Pages/Misoperations.aspx.
Energy Emergency Alert (EEA) Level 3
An EEA 3 is an Energy Emergency Alert that is shared between BAs and RCs. An EEA Level 3 indicates that firm load interruption is imminent or in progress due to the inability to meet minimum contingency reserve requirements. Not all EEA Level 3 alerts lead to operator controlled firm load interruption.
Misoperations Reduction Strategies
Protection systems safeguard sensitive equipment and help support overall reliability of the BPS. A protection system misoperates by either failing to operate or operating incorrectly. When a protection system misoperates, the system is in a less reliable state. In 2016, the ERO Enterprise committed to reducing the rate of misoperations. To reduce the misoperations rate in the Western Interconnection, WECC partnered with stakeholders to create the Misoperations Reduction Strategies to help operating entities improve their practices, systems, and performance.
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Transmission Outages
Takeaway: The number of unplanned, human-caused, and weather-related transmission outages has decreased over the last five years. Human-caused unplanned outages have decreased 10% annually since 2015. Weather-related unplanned outages have decreased by 6% annually over the same time.
Takeaway: Wildfires have driven a sharp increase in the frequency of outages on 200-299 kV elements and an increase in the duration of AC-circuit outages at the 300-399 kV level.
∑ The number of outages per element on 200-299 kV elements has increased by about 9%.∑ The duration of outages on AC-circuit elements at the 300-399 kV level has increased 6%.
Takeaway: Outages caused by power system conditions such as instability, overload trip, out-of-step, abnormal voltage, abnormal frequency, or unique system configurations have also increased. These types of outages may be increasing because the configuration of the system is changing as the resource mix changes. More analysis is necessary to understand the connection between increases in transmission outages and changes to the resource mix.
Takeaway: Overall, the duration of outages has decreased significantly over the last five years. This means it takes less time to recover from an unplanned transmission outage. This may be due to improved effectiveness of efforts to bring the elements back on-line.
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Figure 4: Power System Condition Outages for 200-299 kV Elements
Transmission Impacts of the Changing Resource Mix
In the last century, the electric system in the West was built to carry large amounts of energy long distances from remote generation to load. This unique characteristic of the Western Interconnection defined how the system has been planned and operated. Changes to the resource mix include changes to the size, type, and location of resources. Power is moving in different patterns than in the past, and we use the transmission system differently. Additional analysis will help determine whether changes in how we operate the system to account for the changing resource mix affect reliability.
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Generation Outages
Takeaway: Over the last four years, the average number of hours that coal resources have generated has decreased. The decrease has occurred most often in the winter and shoulder months, with only a slight decrease in the summer.As a result, planned and maintenance outages have increased in duration over the last four years. This likely reflects the fact that solar and wind energy are available at zero variable cost, leading to coal resources being backed down. The increase in the number of non-curtailing events for coal generators (similar to natural gas “reserve shutdown”) supports this.
Conclusion
WECC uses historical data to monitor system performance and identify potential issues. This summary provides a high-level review of WECC’s analysis. To explore more information on the takeaways summarized in this report, visit the State of the Interconnection interactive data portal, available at https://www.wecc.org/epubs/StateOfTheInterconnection.
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Figure 5: Percent of Available Hours Operating per Unit
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What’s New?
ß Two tools: Online Data Portal and Reportß Online Data Portal (www.wecc.org/epubs/StateOfTheInterconnection)• Reformatting to include descriptors and page tips• Trend lines for year-over-year comparisons
ß Report• Key takeaways• Reliability considerations and recommendations
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Key Takeaways—System Drivers
ß Clean energy initiatives driving the changing resource mixß Reliability Coordinator transition ß Wildfiresß Impacts of COVID-19
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Key Takeaways—System Characteristics
ß Net demand dropping as we see rapid increase in rooftop solarß Resource capacity and generation
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Figure 2: 2012-2018 Net Generation by Fuel Type
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Key Takeaways—System Performance
ß Significantly more Energy Emergency Alert Level 3 events in 2019ß Protection system misoperations rates decliningß Frequency and duration of transmission and generation outages
have changed
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Stakeholder Engagement Task Force
Overview
July 2020
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
Background
After approving the Section 4.9 Review Committee’s recommendations in June 2020, the Board directed WECC management to establish a Stakeholder Engagement Task Force (SETF) to address the Stakeholder Engagement Work Group’s (SEWG) recommendations. The Board also directed WECC’s CEO to:
∑ Report on the SETF’s progress at the September 2020 Board meeting; and∑ Present preliminary findings and recommendations based on the work of the task force at the
December 2020 Board meeting.
Based on the work of the SEWG, the Board found WECC’s existing stakeholder engagement structure and processes are not well suited to enable WECC to marshal expertise to identify and analyze emerging reliability and security issues in a timely manner. Recognizing the importance of stakeholder input and expertise, the Board found that further examination and change are required so stakeholders can more effectively and efficiently support WECC’s reliability and security activities.
The SEWG outlined four guiding principles for this work:
∑ Ensure stakeholder experience, knowledge, and expertise are available in a timely, efficient, and cost-effective way to help deliver on WECC’s reliability and security mission;
∑ Foster collaboration, cooperation, and a common commitment to reliability and security;∑ Engage stakeholders as partners; and∑ Provide a “safe space” for discussing issues and education.
Stakeholder Engagement Task Force
Using the work of the SEWG, as well as broad stakeholder input, the SETF is charged with developing:
1) New or changed structures for stakeholder engagement (including what to do with groups when no work is needed);
2) Methods and solutions for WECC subject matter expert (SME) involvement and partnership; and
3) Metrics to measure the success of implemented changes.
Open Session Board Meeting Book - Stakeholder Engagement Task Force
To succeed, the SETF will need to reimagine how WECC engages with stakeholders in our shared invented future, i.e., the future we choose to create. Once we have a shared idea of where we are going, the task force can use the SEWG’s work to identify where we are now and what needs to change.
Membership
The SEWG represented a reasonable cross-section of stakeholder groups; however, the SEWG was a small group that had limited engagement on this topic with the broader stakeholder community, numbering in the thousands. Therefore, the SETF has been assembled with the broad stakeholder community in mind. In forming the task force, WECC reached out to people involved directly with WECC stakeholder groups, people in the policy and regulatory community, and people involved with the electric industry, but not necessarily with WECC groups, e.g., non-governmental organizations, private firms. This resulted in the following members (and alternates where applicable):
∑ Brenda Ambrosi (Market Policy and Operations Manager, BC Hydro and MAC Vice Chair)∑ Johnathan Aust (VP, Power Operations, WAPA and OC Chair)∑ Megan Decker (Chair, Oregon PUC)
o JP Batmale (Administrator of Energy Resources and Planning, Oregon PUC)∑ Sarah Edmonds (Director, Transmission Services, PGE)∑ Kara Fornstrom (Chairman, Wyoming PSC)
o James Branscomb (Senior Technical Engineer, Wyoming PSC)∑ Maury Galbraith (Executive Director, WIRAB)∑ Jennifer Gardner (Senior Staff Attorney, Western Resource Advocates and MIC)∑ Therese Hampton (Executive Director, Public Generating Pool)
o Lea Fisher (Senior Policy Analyst, Public Generating Pool)∑ Thad LeVar (Chair, Utah PSC and MAC)∑ Caitlin Liotoris (Principal, Energy Strategies)∑ Etta Lockey (VP, Regulation, PacifiCorp)∑ Lisa Milanes (Director of Compliance and Corporate Affairs, CAISO and WICF)∑ Victoria Ravenscroft (Senior Policy and External Affairs Manager, WECC)∑ Jordan White (VP of Strategic Engagement and Deputy General Counsel, WECC)∑ Hayley Williamson (Chair, Nevada PUC)
o Karen Olesky (Economist, Nevada PUC)
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SETF Overview
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Approach
1. Invent our future stakeholder engagement
The SEWG started this work by creating a vision, guideposts, and themes to frame the future. The task force will use this work to define stakeholder engagement in the future. In doing so, the task force will consider questions like—
∑ What structure(s) will ensure WECC has access to stakeholder experience, knowledge, and expertise in a timely, efficient, and cost-effective way?
∑ What structure(s) will provide a place for discussion and idea sharing as well as technical work? ∑ How do we ensure stakeholder work supports WECC’s mission and spurs innovation?∑ How do we build excitement to participate among the stakeholder community?∑ How do we address ongoing work without letting it grow stale and lose relevance? How do we
address new issues and issues that require quick action?∑ What is WECC staff’s role in stakeholder engagement? What does ownership look like?∑ What processes will help us ensure high-quality, relevant work is produced through the
stakeholder engagement model? ∑ What kind of stakeholder engagement culture do we need to make WECC the home for
reliability and security in the Western Interconnection?
2. Identify gaps between our invented future and current state
The task force will conduct a gap analysis to determine which elements of our current stakeholder engagement structure will serve us in the future, and which will not.
3. Develop proposed structure(s)
Once we understand where we want to be, and where we are, the task force will develop proposed structure(s) to fill the gaps. The proposals will synthesize the guideposts, vision, and invented future into specific, tangible recommendations for stakeholder engagement structures that can be shared with and commented on by stakeholders.
4. Get stakeholder feedback
It is critical that the WECC stakeholder community be involved in this process. The task force will determine appropriate places and methods to seek input from the broader stakeholder communitythroughout its work.
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September 11, 2020
Jordan WhiteVice President, Strategic Engagement & Deputy
General Counsel
Stakeholder Engagement
Task Force Update
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Section 4.9—SEWG Recommendation
Create the Stakeholder Engagement Task Force (SETF) to—• Develop structures that will improve stakeholder engagement• Present the structures for member feedback• Consider how WECC SMEs should engage stakeholders to improve
WECC’s ownership in products• Consider whether stakeholder groups should disband or go on hiatus if no
work is needed• Develop metrics to track implemented changes
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Activity to Date
ß July• Assembled the task force• Held kickoff meeting
ß August • Held “WECC 101” webinar• Shared perspectives on WECC’s committee structure• Set up page on WECC.org
ß September• Two meetings to discuss desired future
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ß Expand participant poolß Balance representation across • Stakeholder interest areas and backgrounds • Roles and responsibilities• Geographic areas• Familiarity and experience with WECC
ß Encourage new and diverse perspectivesß Engage members who are excited to share thoughts and
ideas
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Task Force Member Selection
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Guiding Principles
ß Ensure access to stakeholder subject matter expertiseß Foster collaboration, cooperation, and common commitmentß Engage stakeholders as partnersß Provide a “safe space” for discussing issues and education
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Approach: Focus on Desired Outcomes
ß “Invent” WECC’s future stakeholder engagement• Rather than merely “tweaking the past”
ß “What do we want our stakeholder engagement to achieve?” • vs. “Here is what we currently have; how can we make it better?”
ß Honor and learn from WECC’s history as we identify new possibilities
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Approach Breakdown
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1 Invent WECC’s future stakeholder engagement
2 Identify gaps between invented future and current state
3 Develop proposed structures to fill the gaps
4 Get stakeholder feedback
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Contact:
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Jordan WhiteVice President, Strategic Engagement & Deputy General [email protected]
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September 11, 2020 Board of Directors Meeting
Proposed Peak Reliability Refund to WECC
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103www.wecc.org
Board Resolution
Resolved, that the WECC Board of Directors, (1) having discussed the proposed Peak Reliability (Peak) partial refund to WECC of funds provided by WECC when it created Peak, as well as the request from Peak that WECC retain a portion of the refund for a period of three years to pay any Peak trailing accounts payable following Peak’s dissolution at the end of 2020; (2) having reviewed the draft WECC-Peak agreement provided to the Board; and (3) having considered the recommendation of the CEO to approve the proposal, hereby approves the proposal and authorizes the CEO, following receipt of any required regulatory approval, to accept the refund on behalf of WECC by executing an agreement between WECC and Peak substantially similar to the draft reviewed by the Board that, in the opinion of the WECC General Counsel, adequately describes the transfer of funds and protects WECC’s interests.
Background
Peak Reliability (Peak) dissolved as a corporate entity and ceased all Reliability Coordinator operations in December 2019. As it winds down its finances and seeks to close its books, Peak proposes to give WECC approximately $3.85 million of its remaining funds. From these funds, Peak requests that WECC hold $300,000 for a period of three years to pay any Peak bills that may be presented following Peak’s formal closure on December 31, 2020.
Background: Peak ceased Reliability Coordinator operations on December 3, 2019 and dissolved as a corporate entity on December 12, 2019. It is now in the process of closing its books by the end of 2020. As a result, Peak has already returned $13 million to its Funding Parties. Peak’s governing documents require Peak to give any funds not returned to the Funding Parties to a non-profit and the Peak Board has identified WECC, with its reliability and security mission, as the best candidate to receive these funds, anticipated to be approximately $3.85 million. From these funds, Peak requests that WECC hold back $300,000 for a period of three years to pay any trailing accounts payable not identified or paid by Peak prior to the December 31, 2020 closing date. At the end of the three-year period, any remaining funds would become WECC property.
When WECC created Peak in 2013, WECC provided Peak approximately $6 million to $7 million in startup capital. WECC had obtained these funds through its annual, FERC-approved budgeting process which assesses load serving entities on a net energy for load basis under the auspices of Section 215 of the Federal Power Act. Hence, these funds are referred to as “Section 215 funds” or “statutory funds”. As such, $3.55 million of the proposed gift from Peak to WECC represents a refund of these Section 215
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start-up funds, and the funds may ultimately be used, following any necessary regulatory approvals, for any reasonable statutory activity. However, the $300,000 proposed holdback represents funds Peak obtained through its operations following its creation and would therefore transfer to WECC as non-Section 215 funds. Any funds remaining from this holdback at the end of the three-year period would therefore transfer to WECC’s non-statutory account.
Following recent contact with Peak’s wind-down agent to discuss this proposal, WECC’s General Counsel conferred with Peak outside legal counsel and collaborated on a draft proposed agreement to effect the transfer and holdback. WECC’s General Counsel has also spoken to NERC’s General Counsel about this proposal, and WECC’s CFO has conferred with WECC’s accounting firm and the NERCCFO. To date, neither WECC nor NERC has identified any regulatory or financial bar to the proposed transfer of funds. WECC has also held an initial discussion with FERC legal staff who indicated that receipt of these funds appears permissible and reasonable.
The draft “Donation Holdback Agreement” has been forwarded to the WECC Board of Directors for its information and review. The WECC General Counsel has reviewed this draft and concluded the agreement effects the proposed transfer and provides WECC reasonable protection from liability.
Peak desires to transfer all funds by December 31, 2020. WECC must therefore notify Peak during September 2020 if it agrees to the proposed transfer. If it does not, Peak has indicated it will look for an alternate non-profit to which to transfer these funds. For this reason, this matter is being brought to the Board for discussion and approval at its meeting on September 11, 2020.
To perform to this timeline and focus on the transfer process, WECC has deferred to a later date discussion of how the $3.55 million in statutory funds will be spent. At the appropriate time, WECC will engage in an open and transparent process, which will include the Board and stakeholders, to determine how the funds will be used.
Recommendation
That the Board approve the proposed transfer of funds from Peak to WECC. Delaying consideration of this proposal could result in Peak seeking other organizations to which to transfer the subject funds.
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Finance and Audit Committee (FAC)
Report to the WECC Board of Directors
Oral Report
Joe McArthur, Chair
September 11, 2020
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July 2020 Financial Results
Jillian Lessner
September 11, 2020
155 North 400 West | Suite 200 | Salt Lake City, Utah 84103 www.wecc.org
Summary
As of July 31, 2020, statutory programs were over budget by a net of $1,676,000. The non-statutory program was under budget by a net of $21,000. The main driver of the net statutory over run relates to a change in Generally Accepted Accounting Principles (GAAP) regarding the timing of penalty revenue recognition. For purposes of financial reporting, WECC now recognizes penalties when FERC approves them, rather than in the year in which the penalties offset assessments. Penalties revenue is less than budget by $2,114,000 due to the accounting change and is the major driver of the over run; additionally, expenditures are $597,000 under budget through July 31. A reconciliation of penalties can be found on Page 6.
Variances greater than $100,000 are explained in subsequent sections. Two versions of the statutory year-to-date results and the year-end forecast are provided. The first table (Figures 1 and 3) in each section represents GAAP reporting, with the penalty revenue recognition changes included. The second table (Figures 2 and 4) represents results without the penalty variance, to isolate other and more relevant variances.
Statutory Program Statement of Activities
Major Drivers of Statutory Program Variances (Greater than $100,000)
Total Expenses 14,922,868 15,721,257 798,389 Fixed Assets 256,508 55,000 (201,508)
Total Expenditures 15,179,376 15,776,257 596,881 Funding Less Expenditures 13,001,754 12,563,404 438,350
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July 2020 Financial Results
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Year-to-Date (GAAP)
• ERO Funding: $2,114,000 under budget due to: o A change in the revenue recognition of penalty funding per GAAP. The underrun
represents the net of: $2,745,000 in penalties recognized as revenue in 2018 for financial reporting purposes,
but budgeted to offset assessments in the 2020 Business Plan and Budget; and $631,000 in penalties recognized as revenue in 2020 for financial reporting purposes, to
be used to offset assessments in the 2021 Business Plan and Budget. • Other Funding: $159,000 under budget due to the net of:
o The cancellation of the in-person March Reliability and Security Workshop due to the COVID-19 pandemic; and
o Higher-than-anticipated returns on investments. • Personnel Expenses: $618,000 under budget primarily due to:
o A tight labor market for unique skill sets, which has led to higher-than-anticipated vacancies throughout the organization.
• Meeting & Travel Expenses: $824,000 under budget primarily due to: o The cancellation of the in-person March Reliability and Security Workshop due to the
COVID-19 pandemic; and o The cancellation of all other in-person meetings and travel due to the COVID-19 pandemic.
• Operating Expenses: $635,000 over budget primarily due to: o Unbudgeted information technology consulting; o Unbudgeted legal fees associated with unanticipated regulatory activities; o The elimination of RAPA consulting for a study of the changing resource mix; and o Meeting space tables and chairs that were replaced in 2019 but were budgeted to be
replaced in January 2020. • Fixed Assets: $202,000 over budget primarily due to:
o Updates to the Salt Lake City meeting space, a portion of which (yet to be determined) will be reimbursed by the landlord later in 2020.
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• ERO Funding: $2,114,000 under budget due to: o A change in the revenue recognition of penalty funding per GAAP. The underrun
represents the net of: $2,745,000 in penalties recognized as revenue in 2018 for financial reporting purposes,
but budgeted to offset assessments in the 2020 Business Plan and Budget; and $631,000 in penalties recognized as revenue in 2020 for financial reporting purposes, to
be used to offset assessments in the 2021 Business Plan and Budget. • Other Funding: $435,000 under budget due to the net of:
o The cancellation the in-person March and October Reliability and Security Workshops due to the COVID-19 pandemic;
o Higher-than-anticipated returns on investments; and o The cancellation of two Grid Fundamentals classes.
• Personnel Expenses: $377,000 under budget primarily due to: o A tight labor market for unique skill sets, which has led to higher-than-anticipated vacancies
throughout the organization. • Meeting & Travel Expenses: $1,727,000 under budget primarily due to:
o The cancellation of the in-person March and October Reliability and Security Workshops due to the COVID-19 pandemic;
o The cancellation of all other in-person meetings and travel due to the COVID-19 pandemic; and
o The cancellation of two Grid Fundamentals classes, one of which was due to the COVID-19 pandemic.
Forecast 2020
Budget2020
Variance(over)/ under
FundingERO Funding 25,913,000 28,027,000 (2,114,000) Other Funding 221,807 657,250 (435,443)
Total Funding 26,134,807 28,684,250 (2,549,443) Expenses
Total Expenses 26,225,504 27,704,075 1,478,571 Fixed Assets 131,508 52,014 (79,494)
Total Expenditures 26,357,012 27,756,089 1,399,077 Funding Less Expenditures 1,891,795 928,161 963,634
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• Operating Expenses: $622,000 over budget primarily due to the net of: o Unbudgeted information technology consulting; o Unbudgeted legal fees associated with unanticipated regulatory activities; o The elimination of RAPA consulting for a study of the changing resource mix; o Unbudgeted webCDMS licensing fees due to delay of the Align tool; o Unbudgeted implementation of new accounting software; and o Meeting space tables and chairs that were replaced in 2019 but were budgeted to be
replaced in January 2020.
Non-Statutory Program Statement of Activities
Major Drivers of Non-Statutory Program Variances (Greater than $100,000)
Figure 3: Non-Statutory Year-to-Date Results
Year-to-Date
• No significant variances.
Actual YTD 2020
Budget YTD 2020
Variance(over)/ under
FundingERO Funding - - - Other Funding 1,358,455 1,433,660 (75,205)
Total Funding 1,358,455 1,433,660 (75,205) Expenses
Total 2,745,000 3,499,000 2,180,000 5,160,000 631,000 (A) (B) (B)
* Penalty revenue has been recognized but payment has not been received as of July 31, 2020. The penalty will offset assessments in a future budget year.** Penalties collected between July 1, 20X1 and June 30, 20X2 will offset assessments in budget year 20X3.*** Penalties are recognized for financial reporting purposes when they are approved by FERC and invoiced.
Business Plan & Budget**(Year to Offset Assessments)
Financial Statements***
(Year Recognized)Penalty Information
2020 Penalty Revenue Variance
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Nominating Committee (NC)
Report to the WECC Board of Directors
Oral Report
Shelley Longmuir, Chair
September 11, 2020
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Human Resources and Compensation Committee (HRCC)
Report to the WECC Board of Directors
Oral Report
Richard Woodward, Chair
September 11, 2020
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Governance Committee (GC)
Report to the WECC Board of Directors
Oral Report
Gary Leidich, Chair
September 11, 2020
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WECC Standards Committee (WSC)
Report to the WECC Board of Directors
James Avery, Chair
Steve Rueckert, Director of Standards
September 11, 2020
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WSC Report to the Board—September 11, 2020
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Highlights
∑ WECC drafting team activities—page 3.
Strategic Purpose
The WSC oversees the implementation of the WECC Reliability Standards Development Procedures (Procedures).
The WSC will—
1. Maintain and administer the Procedures, including:a. Due process,b. Balloting,c. Annual review of the WECC Glossary of Terms and Naming Conventions, andd. Meeting the quality control attributes of FERC Order 672.
2. Administer each Standard Authorization Request (SAR) to ensure the project is—a. Within WECC’s authority to develop,b. Appropriate for development by WECC, and c. Within the scope of the SAR, as may be changed by the WSC.
3. Monitor and manage drafting team activities, including:a. Team selection, andb. Provision of general oversight and guidance to include a description and explanation of
the project to be drafted and time prioritization where needed.4. Monitor and manage the projects created under the Procedures, including prioritization.5. Perform other duties assigned by the Board.
WECC Board Action Items
The WSC is not requesting Board action on any items at the September 11, 2020, meeting.
Current Year Goals
∑ Keep the WECC Standards Development Process moving forward by overseeing the draftingteams.
∑ Act on requests and recommendations from the drafting teams.∑ Review the WSC Charter and WECC Procedures to revise and improve them.
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WSC Report to the Board—September 11, 2020
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Major Accomplishments and Planned Activities
1. July 8, 2020—WECC-0140 Reliability Standards Development Procedures Update
On July 8, 2020, the WECC-0140 drafting team agreed by unanimous consent to post the proposed revisions to the WECC Reliability Standards Development Procedures (Procedures) for a 30-day comment period. In March 2018, the WSC approved WECC Guideline—Responses to Comments Received During Ballot, and in April 2019, the WSC approved WECC Guideline—Drafting Team Assignments for later incorporation into the Procedures. The proposed revisions incorporate these two guidelines into the Procedures and update the Procedures to conform to the existing WECC templates. The comment window is open from August 12 to September 12, 2020. The drafting team will reconvene after the comment window closes to review comments received and prepare responses.
2. July 15, 2020—WECC-0141 FAC-501-WECC-2 Update to Attachment B
On July 15, 2020, after several drafting team meetings, the WECC-0141 drafting team agreed by unanimous consent to post the results of the drafting team efforts for a 30-day comment period.The SAR that initiated the project called for modification of Attachment B of the standard, Major WECC Transfer Paths in the Bulk Electric System, to remove several paths from the table. The list of paths was initially developed as part of the WECC Reliability Management System in the late 1990s. A thorough review of historical documents did not identify a technical justification for the inclusion of paths in the table. The drafting team concluded that there were at least two options moving forward. The first option is to create a set of criteria for inclusion of paths on the table. The second option is to petition for retirement of the standard. If the second option is pursued, it may be difficult to provide justification for retirement of the standard. A 30-day comment window seeking feedback from industry is open from August 12 to September 12, 2020.
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Joint Guidance Committee (JGC)
Report to the WECC Board of Directors
Jonathan Aust, Co-Chair
Branden Sudduth Co-Chair
September 11, 2020
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JGC Report to the Board—September 11, 2020
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Strategic Purpose
The JGC—
1. Ensures alignment of priorities and work plans of the Market Interface Committee (MIC), Operating Committee (OC), and Reliability Assessment Committee (RAC), collectively theStanding Committees, with the strategic intent and priorities approved by the Board of Directors (Board);
2. Identifies reliability assurance issues that require cross-functional or cross-committee strategies to address;
3. Ensures overall communication and collaboration among the Standing Committees; and4. Performs other duties as assigned by the Board or the WECC CEO.
WECC Board Action Items
The JGC has no items for Board action.
Current Year Goals
∑ Develop the method for revising and drafting committee work plans, including the display options;
∑ Plan and carry out the joint sessions of the Standing Committees and Committee Leadership Training;
∑ Maintain coordination among the Standing Committees, MAC, and WECC leadership; ∑ Carry out directives from the Section 4.9 Review pertaining to the Standing Committees; and ∑ Develop collaborative action plans to address emerging reliability risks.
Major Accomplishments and Planned Activities
1. Co-Chair Succession
Robert Follini has stepped down from his role as JGC Co-Chair. Jonathan Aust, OC Chair, will take the role for the next year.
2. June Joint Session
The JGC hosted its first webinar-only joint session of the Standing Committees. There were 55 attendees. Discussions from the joint session led to:
∑ Proposed revisions to the Underfrequency Load Shedding Work Group (UFLSWG) Charter to include cross committee collaboration; and
∑ Initiation of a cross-functional task force to clarify and document the role of paths, path total transfer capability (TTC), and WECC Path Ratings in the operations horizon.
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JGC Report to the Board—September 11, 2020
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3. Revised Three-Year Work Plan Layout
The JGC is revising the layout for the Three-Year Work Plans to address some reporting and updating needs. The new layout will include a dashboard view for updating the Board on major initiatives.
4. Committee Leadership Training
The Committee Leadership Training will be held by webinar this fall in two parts. One part will be specific to new chairs and vice chairs, while the other will be more in-depth information for all chairs and vice chairs. These two webinars will be held separately from the Standing Committee meetings in October.
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September 11, 2020
Jonathan AustBranden Sudduth
Co-chairs
Joint Guidance Committee Report to the Board
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2020 Goals
ß Develop the method to revise and draft committee work plans, including the display options;
ß Plan and carry out the joint sessions of the Standing Committees and committee leadership training;
ß Maintain coordination among the Standing Committees, MAC, and WECC leadership;
ß Carry out directives from the Section 4.9 Review pertaining to the Standing Committees; and
ß Develop collaborative action plans to address emerging reliability risks.
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Co-Chair Rotation
ß Robert Follini • Stepped down as MIC chair and JGC co-chair
ß Jonathan Aust, OC Chair• OC is next in the rotation
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Accomplishments
ß Outcomes of joint session of the Standing Committees in June:• UFLSWG Charter edits
o Cross-committee worko Joint reporting of StS (RAC) and OC
• Path Rating Task Force proposedo Clarify and document the role of paths, total transfer capability, and path ratings
ß Revised Three-Year Work Plan layout• Easier updates and reporting
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Planned Activities
ß Committee Leadership Training• Held by webinar• Two parts:
o New chairs and vice chairso In-depth information for all leaders
ß Coordinate the development of committee three-year work plans
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Market Interface Committee (MIC)Report to the WECC Board of Directors
Robert Follini, MIC Chair
September 11, 2020
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MIC Report to the Board—September 11, 2020
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Strategic Purpose
The purpose of the MIC is to advise and make recommendations to the WECC Board of Directors (Board) on the development of consistent market interface practices and compatible commercial practices within the Western Interconnection. Market interface involves all interactions among market entities and entities responsible for reliable grid operation related to transmission service and physical delivery. Commercial practices include the products and processes involved in trading electricity, and the interaction among market entities that does not affect or require assistance from entities responsible for reliable grid operation.
WECC Board Action Items
∑ Approve updated MIC Charter.∑ Approve Charles Faust, Western Area Power Administration (WAPA) Sierra Nevada Region
(WASN), as MIC Chair.∑ Approve Kevin Cardoza, Eugene Water & Electric Board (EWEB), as MIC Vice Chair.
Current Year Goals
∑ MIC EIM Day-Ahead Market Expansion Risk paper. ∑ Monitor development of California Independent System Operator (CAISO) Extended Day-
Ahead Market (EDAM) and the Day-Ahead Market Enhancements (DAME).
Major Accomplishments and Planned Activities
1. MIC EIM Day-Ahead Market Expansion Risk Paper
The MIC work plan includes an item to perform a qualitative assessment of the potential reliability impacts of expanding the Western EIM to include Day-Ahead Market Services (DAMS). The work group consists of MIC leadership, MIC members, and FERC staff. The work group has worked with WECC staff to review and revise the paper for context and content, including an executive summary. The final paper was posted in August.
Potential benefits of the proposed market include:
∑ Improved reliability through resource coordination over a broader footprint;∑ Uniform application of tools, information, and processes; and∑ Enhanced ability to manage resource variability.
Potential risks associated with the proposed market include:
∑ Increased operational complexity;∑ Reduced liquidity in the bilateral markets; and
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MIC Report to the Board—September 11, 2020
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∑ Gas-electric coordination.
The paper also has recommended actions for WECC as the market continues to develop. The actions included:
∑ Monitor the development of the EDAM; and∑ Monitor the effectiveness of reserve requirements.
The paper was discussed at the July MIC meeting and was finalized and approved in the third quarter of 2020. The executive summary from the MIC EIM paper is attached to this report.
2. Three-Year Work Plan
All 2020 Work Plan items are in progress and on schedule.
3. MIC and ISAS Leadership Team
The chair and vice chair of the MIC are appointed to serve one-year leadership terms beginning in October of each year. Charles Faust from WASN has moved from the vice chair position to the chair position. Candidates to serve as the vice chair were solicited at the past MIC meeting, and Kevin Cardoza from EWEB volunteered for the vice chair role effective immediately. The Interchange Scheduling and Accounting Subcommittee (ISAS) Chair, Danielle Smith, has changed organizations and is now working for Sacramento Municipal Utility District (SMUD). SMUD agreed to allow her to continue as the chair. John Fulkerson, Portland General Electric (PGE), continues as the vice chair.
4. ISAS Subcommittee
The ISAS last met in July. In that meeting, ISAS members approved the Prescheduling Calendar for 2021. The calendar establishes how power will be scheduled around NERC holidays and new months. In addition, the calendar included a Schedulers Meeting to be held in May. This meeting is an opportunity for Preschedule staff to meet with their peers from other entities to keep up on what happens in the power industry and to receive Continuing Education hours for maintaining NERC certification.
5. Meetings
∑ The MIC last met on July 15 and 16 by webinar, the second meeting during 2020.∑ The next meeting is scheduled for October 14, with the meeting method to be
determined. This is the third scheduled meeting for 2020.
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Attachment A
Reliability Implications of Expanding the EIM to Include Day-Ahead Market Services: A Qualitative Assessment—Executive
Summary
WECC MIC MEA Working Group
August 2020
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Executive Summary
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Introduction
In 2019, the California ISO (CAISO) initiated a process to explore offering its day-ahead market to entities participating in the Energy Imbalance Market (EIM). This extended day-ahead market (EDAM), if implemented, will enable Balancing Authorities (BA) outside the CAISO footprint to participate in the day-ahead wholesale energy market without requiring full integration into the CAISO BA.
WECC’s mission is to ensure the reliability and security of the Bulk Power System (BPS) in the Western Interconnection. Markets are economic tools that can increase operational efficiencies and unlock financial benefits. That said, WECC recognizes that electricity markets may also affect reliability. The purpose of this qualitative assessment is to explore the potential reliability impacts of extending day-ahead market services to EIM participants. A work group of subject matter experts of the MICconducted the assessment. The report provides high-level reliability considerations that can inform future reliability evaluations of market expansion in the West.
When this assessment was conducted, no EDAM market design existed. Therefore, the workgroup made assumptions about market design elements based on publicly available information. The market design described by the work group’s assumptions is collectively referred to as the EIM + DAMS to distinguish it from the CAISO’s ongoing EDAM stakeholder initiative. These assumptions are outlined in full in the report. The assessment evaluated potential reliability impacts in five areas:
This assessment describes reliability considerations, including some potential benefits and potential challenges or risks associated with extending CAISO’s day-ahead market to EIM participants. Ingeneral, the potential benefits and risks are influenced by many factors, including the size of the market footprint and the level of participation. The workgroup assumed full participation by all existing and planned EIM participants. Moreover, the reliability impacts of an EIM + DAMS will be highly dependent on implementation specifics.
Potential Benefits
The potential reliability benefits of an EIM + DAMS fall into three general themes:
1. Coordination across a broad footprint;2. Uniform application of market tools; and
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Executive Summary
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3. Enhanced ability to manage variability.
Coordination across a broad footprint
Generally, electric reliability is enhanced when operations are coordinated across larger footprints. The EIM + DAMS footprint would be larger and more diverse than the individual BA footprints of the market’s participants and could take advantage of the following reliability benefits:
∑ A larger geographic footprint, a broader pool of resources, and the use of automated processes may reduce the impact of contingencies and may improve the speed and quality of contingency response. Additional avenues to manage contingencies may include additional generation, more transmission solutions, and increased demand response solutions.
∑ In an EIM+DAMS, the central market operator will have visibility over all BPS elements, as well as an enhanced ability to manage any resulting congestion. This means that many of the day-ahead BA-to-BA seams issues seen today could be more effectively managed or even eliminated under an EIM + DAMS market scenario.
Uniform application of tools, information, and processes
The EIM + DAMS market operator, as well as the market’s participants, will have access to an advanced set of operational tools, supported by extensive information and coordinated processes. Uniform application of these tools, information, and processes across the entire market footprint may provide several reliability benefits.
∑ Proactively position resources to better balance supply and demand across the footprint, which could aid congestion management, help identify and alleviate seams issues, and improve BA-to-BA coordination.
∑ Co-optimize all resources with ancillary services and transmission constraints simultaneously to develop day-ahead commitment plans that allow the market operator to anticipate future problems and position resources more accurately to effectively address reliability issues.
∑ Calculate and use the transmission system through system-wide flow-based modeling and application of locational marginal pricing (LMP)-based optimization to improve congestion management.
Enhanced Ability to Manage Variability
As Variable Energy Resource (VER) penetration continues to increase across the West, the importance of managing operational uncertainty grows. Coordination across a diverse and broad footprint will be increasingly important. In an organized market with a larger geographic footprint like the EIM + DAMS, there are more resources available to address reliability needs, including uncertainty related to VER output.
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Executive Summary
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∑ The variability of net load increases as VER penetrations grow. Complementary climate, weather, and load diversity may decrease net load variability. For example, weather conditions in one part of the market footprint may offset conditions in another, reducing the need for flexible resources.
∑ Coordinating all resources in the market footprint can decrease net load variability, and, in turn, overall flexibility (also known as balancing) needs decrease. Capturing complementary diversity in the day-ahead commitment process allows the market operator to identify potential transmission issues that could arise and can be mitigated with a coordinated commitment of resources.
Potential Risks
The work group also identified some issues that could present challenges or become risks. As the EDAM market design is under development, these issues represent areas that need to be addressed during that process.
Increased operational complexity
Expanding the EIM to include day-ahead market services could increase its complexity and require better coordination. Examples of increased complexity include:
∑ Managing different seams between organized markets.∑ Ensuring reliability in a system that may operate closer to system operating limits. ∑ Analyzing deliverability when the provision of transmission would be voluntary.
Reduced bilateral market liquidity and the day-ahead resource sufficiency test
It is anticipated that, as participants turn over their unit commitment to the day-ahead market, liquidity in the bilateral market could decline. This could affect both EIM + DAMS participants and non-participants. Specifically, there could be fewer options for bilateral purchases of power for reserves and to serve load. We assume there will be a resource sufficiency evaluation in the day-ahead time frame. The purpose of the test is to ensure each participating BA has enough resource capacity and flexibility to meet its BA obligations.
Gas-electric coordination
If electricity optimization and gas trading take place on different schedules in the day-ahead, EIM + DAMS participants may need to modify their operational practices and risk assessment tools to accommodate this scheduling mismatch. Otherwise, there is the potential for fuel-under procurement which could affect market participation and, if widespread, reliability.
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Executive Summary
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Recommendations
This assessment provides a first step in understanding the reliability implications of expanding the EIM to include a day-ahead market. Additional analysis will require specific market design details. Based on the assessment, WECC should:
∑ Continue to monitor the development of the EDAM, specifically: o The design for transmission operations including coordination plans and agreements
among and between BAs and markets (i.e., the CAISO EDAM and the Southwest Power Pool’s Western Energy Imbalance Service);
o The design for the resource sufficiency evaluation; ando How day-ahead market timelines could affect gas scheduling including business practices
and tools that could be employed to offset potential reliability impacts. ∑ Continue to monitor the effectiveness of reserve requirements as market constructs are
designed and operated. It is possible that market operations may encourage the BAs to carry only the required amount of reserves, which, if sufficient, will not affect reliability. However, reduced reserves carried by BAs (when day-ahead market operations begin) may require re-evaluation of reserve requirements. A reduced reserves carried by BAs is not a market design issue; the assumption is that reserve requirements would be met in an organized.
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September 11, 2020
Robert Follini, MIC ChairLayne Brown, WECC Staff
Market Interface Committee
Report to the Board
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MIC Report
ß Met by webinar July 15 and 16, 2020ß Charles Faust, WASN, to become new MIC chairß Approved new MIC vice-chair, Kevin Cardoza, Eugene Water and Electric
Boardß Topics covered—
• Western Energy Imbalance Service (WEIS)• CAISO EIM extended day-ahead market• Western resource retirements• Approved updated MIC Charter• NW Resource Adequacy service update
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Market Expansion Assessment Work Group
ß Members of teamß Status of the projectß Analytic premiseß Potential benefits and risksß Recommendations for WECC
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Team Members
Alaine Ginocchio,• Western Interconnection Regional Advisory Body (co-lead)
Robert Follini,• Avista (co-lead)
Andrew Meyers,• Bonneville Power Administration
Angela Amos,• FERC
Ben Foster,• FERC
Charles Faust• Western Area Power Administration, Sierra Nevada Region
Darren Lamb• California ISO
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Dillon Kolkmann•FERC
Jamie Austin•PacifiCorp
Jason Smith•Lincoln Clean Energy
Jennifer Gardner•Western Resource Advocates
Jomo Richardson•FERC
Layne Brown•WECC
Monica Taba•FERC
Vijay Satyal•Western Resource Advocates
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Project Status
ß Work completedß Approved by WECC managementß Approved by MICß Implementing communication plan
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Analytic Premise
ß There is no market design for the Extended Day-Ahead Market (EDAM)• Currently in CAISO Stakeholder Process and expected to continue through
2021
ß The workgroup made market design assumptions to facilitate the analysis, actual impacts will depend on the final market design• First step in understanding the reliability implications of the potential
market design• Provides sign-posts for more detailed analyses
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Target Audience
ß Board members, regulators, and policymakersß Report includes description and comparison of day-ahead
processes in the bilateral market and CAISO organized market ß Level set for discussions to come as the EDAM market design
develops
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Potential Benefits
ß Coordination across a broad footprintß Uniform application of tools, information, and processesß Enhanced ability to manage variability
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Potential Risks
ß Increased operational complexityß Reduced bilateral market liquidity and the day-ahead resource
sufficiency testß Gas-electric coordination
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Recommendations for WECC
Continue to monitor—ß Development of the EDAMß Effectiveness of reserve requirements
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ISAS
ß Danielle Smith moved to SMUD but will remain ISAS chair—Thank you, Danielle and SMUD
ß ISAS Updated Prescheduling Calendar Guidelineß Continues to track transition of RC tools:• WIT• ECC
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2020–2022 MIC Work Plan Update
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Reliability Assessment Committee (RAC)
Report to the WECC Board of Directors
Dave Angell, Chair
September 11, 2020
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Highlights
∑ 2030 Anchor Data Set (ADS) Development∑ Bulk Power System Planning Roles Task Force∑ 2019 RAC Study Program∑ 2020-2021 RAC Study Program∑ Underfrequency Load Shedding (UFLS) Assessment∑ Solar Modeling Improvement Initiative∑ 2021-2023 RAC Three-Year Work Plan
Strategic Purpose
The RAC provides coordinated reliability assessments of the Western Interconnection’s bulk powersystem (BPS) over the planning horizon and gives related advice and recommendations to the WECC CEO and Board of Directors (Board).
WECC Board Action Items
The RAC is not seeking Board approval for any action items at the September 11, 2020, meeting.
Current Year Goals
∑ Facilitate a collaborative project to define planning roles and responsibilities for the BPS;
∑ Make improvements to the RAC based on the recommendations in the final version of the proposal;
∑ Set the scope for, then complete and report on assessments of priority for potential reliability risks to the BPS;
∑ Create the 2030 ADS; and
∑ Complete ongoing work within the purview of the RAC.
Major Accomplishments and Planned Activities
1. 2030 ADS Development
On June 30, 2020, WECC posted the 2030 ADS Production Cost Model (PCM) as scheduled. The RAC’s Production Cost Data Subcommittee (PCDS) is correcting and updating the dataset,including:
∑ Reflecting the forecast generation retirements and additions in the member 2030 load and resource submissions;
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∑ Continuing to improve generating resource mapping;
∑ Adding flexibility reserves that were not available for the initial release of the PCM; and
∑ Adjusting heat rates for natural gas, combined-cycle generating units.
WECC staff has identified possible improvements to the ADS PCM development process and will be working with stakeholders to find ways to make the process more efficient in 2022 for the 2032 ADS.
2. Bulk Power System Planning Roles Task Force (BPSPRTF)
The BPSPRTF is reviewing WECC’s planning activities to find opportunities for planning entities to work together. WECC staff is reviewing planning activities identified during RAC development through the Joint PCC-TEPPC Review Task Force (JPTRTF) to ensure that the BPSPRTF considers all potential opportunities for collaboration. The RAC will include a final report on the BPSPRTF project in its report to the Board in December 2020.
3. 2019 RAC Study Program
On August 6, 2020, WECC presented to the Western Interconnection Regional Advisory Body (WIRAB) the results of three of the RAC’s 2019 reliability assessments: high electrification, changes to system inertia, and the El Paso Natural Gas Pipeline disruption. The webinar was part of WECC’s communication process to inform policymakers in the Western Interconnection of the results and observations of its reliability assessments.
4. 2020-2021 RAC Study Program
On August 6, the Studies Subcommittee (StS) chair asked that stakeholders submit recommendations for reliability assessments to be included in its 2020-2021 Study Program, thus beginning development of the study program. Recommendations were due August 28.After that, the StS and stakeholders will prioritize candidate assessments and develop scopes for assessments selected for the 2020-2021 Study Program. The study program is scheduled to be complete by December 31, 2021.
5. UFLS Assessment
On July 17, 2020, at the Joint Standing Committee meeting, Steve Ashbaker, WECC Director of Reliability Initiatives, and Saad Malik, WECC Director of Reliability Planning, presented WECC’s UFLS Plan Policy issue. Currently, the plan is categorized as a Board policy document. Since the plan is actually a technical document, it was proposed that it be retired as a policy document and adopted as a technical document by one (or more) of the relevant technical committees.
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Mr. Malik presented three options for revising the USLFWG structure for consideration at the Joint Guidance Committee (JGC) meeting on August 7, 2020. After reviewing the options, the JGC decided to expand UFLSWG membership to include both RAC and OC members. Under the new proposed structure:
1. The UFLSWG would report to both RAC StS and OC;
2. The UFLSWG would be responsible for updating the plan and would continue to perform assessments;
3. The RAC StS would approve the plan and assessment; and
4. The OC would approve the plan and monitor its implementation.
6. Solar Modeling Improvement Initiative
At the RAC meeting on July 15, 2020, Ryan Quint, Senior Manager, BPS Security and Grid Transformation at NERC, reviewed the initial findings of a joint NERC and WECC report on the quality of Inverter-Based Resource (IBR) modeling in WECC’s power flow dynamics models. Most IBR models are not consistent with WECC’s Data Preparation Manual and, while accurately modeling these types of units is possible, most facilities are not modeling accurately. Facilities need to increase the focus on accurately representing IBR in the models. Improving the solar plant models will be the highest priority. Once they are represented correctly, the focus will shift to the other IBR resources. In addition, the Modeling and Validation Subcommittee (MVS) is moving the renewable energy plant models from first generation to second generation IBR models.
7. 2021-2023 RAC Three-Year Work Plan
The RAC and its subcommittee, work groups, and task forces are developing the RAC 2021-2023 Three-Year Work Plan. The RAC will develop the work plan over the next three months and will inform the Board on the work plan at its December 9, 2020, meeting.
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Operating Committee (OC)
Report to the WECC Board of Directors
Jonathan Aust, Chair
September 11, 2020
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Highlights
The OC met via webinar on July 13 and 14.
WECC Board Action Items
The OC has no Board action items.
Current Year Goals
∑ Continue working on the activities and tasks in the Three-year Work Plan.∑ Update work plan to include the new Reliability Risk Priorities as approved by the Board.∑ Further collaborate and coordinate with the RAC on planning processes across the Western
Interconnection.∑ Provide support where applicable to the Stakeholder Engagement Task Force.
Major Accomplishments and Planned Activities
1. July 13 and 14, 2020, OC meeting
∑ The OC approved the Remedial Action Scheme Reliability Subcommittee (RASRS) paper on the Impact of Inverter-Based Resources on RAS Effectiveness.
∑ A presentation was provided on a NERC project to update the Facilities (FAC-011 and FAC-014) standards to establish and communicate Interconnection Reliability Operating Limits (IROL) and System Operating Limits (SOL).
∑ An update on the biannual assessment of the WECC Off-Nominal Load Shedding Plan was provided from the Underfrequency Load Shedding Work Group (UFLSWG). This generated further discussion on the importance of coordinating future reviews and update of the plan between the OC and the RAC.
∑ As part of an ongoing activity in the OC Three-year Work Plan, PacifiCorp provided presentations on the Jim Bridger Event, which occurred during a switching procedure while commissioning new equipment, and a presentation on an islanding event that occurred as a result of a line fault and subsequent protection system misconfiguration.
∑ A presentation on the calculation of Total Transfer Capability (TTC) and how those calculations relate to the Three-Phase Path Ratings was provided by the Western AreaPower Administration (WAPA). This presentation raised further discussions related to various Path-focused activities across the interconnection, and the potential for WECC to create a task force to explore these activities (see item 4 below).
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2. Survey created and issued to track actions taken on recommendations from the March 2019 Mid-C Price Spike Event
In collaboration with the Market Interface Committee (MIC), a survey was developed and issued to the OC members on July 22. This survey is intended to track what actions entities have taken to address the issues noted in the four recommendations from the March 2019 Mid-C Price Spike Event Report.
3. Survey created and issued to track actions taken on recommendations from the IBR Events
The Event and Performance Analysis Subcommittee (EPAS) developed and initiated a survey to track activities WECC entities have taken to address the recommendations from the April and May 2018 IBR Event Reports. Survey results will be presented to the OC at the October 2020Standing Committee Meetings.
4. Participate in a joint RAC, MIC, OC task force to review the relevance of the WECC Path Rating process and to review the impacts of the changing landscape on path management in the West
The primary objectives of the task force would be to clarify and document the role of Paths, Path TTCs, and WECC Path Ratings in the operations horizon; and to examine the relevance and determine the role of WECC Path Ratings and the Path Rating process in the planning horizon. Additionally, this task force will include representation from the Unscheduled Flow Committee and Qualified Owners and Operators of controllable devices to ensure any issuesassociated with Path Ratings and the Qualified Paths are addressed. The task force will report findings and conclusions to the JGC and make any subsequent recommendations to the JGC based on those conclusions.
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September 11, 2020
Jonathan Aust, Chair
Operating Committee Report to the Board
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OC Meeting July 13 and 14
ß The Operating Committee (OC) met via webinar• Event presentations• Reliability Coordinator updates• Underfrequency Load Shedding Work Group (UFLSWG) and the UFLS
plan update• Presentation from members on new technology for near-real-time TTC
calculations• Discussion on future of Path Rating process
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OC Steering Committee
ß The OC Steering Committee met via webinar on September 3, 2020• OC work plan planning and updates• Developing October 2020 OC meeting agenda• Developing survey to solicit feedback on OC engagement• Review subcommittee and work group priorities and links to the work
plan
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Accomplishments
ß OC approved RASRS report—Impact of Inverter-Based Resources on RAS Effectiveness
ß Survey issued by EPAS to track actions taken on recommendations from the April and May 2018 IBR Event Reports• Results presented to the OC in October
ß OC and MIC survey to track actions taken to address recommendations from the March 2019 MID-C Price Spike Event (results reported to the OC and MIC)
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Planned Activities
ß Participate in RAC/MIC/OC task force to review—• Relevance of WECC Path Rating Process in operations and planning• Impacts of the changing landscape on path management in the West
ß Participate in an effort with staff, JGC, and RAC in future assessments, reviews, and updating of Off-Nominal Frequency Load Shed Plan
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Planned Activities
ß Update work plan to include the new Reliability Risk Priorities as approved by the Board
ß The Relay Work Group is working with NERC on a technical paper about IBR impacts to protection systems (paper to be finalized Q4 2020)
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