Load Settlement Business Advisory Committee Meeting #8

1. Load Settlement Business Advisory CommitteeMeeting #8 October 5th, 2006 AESO Boardroom

2. LSBAC Agenda (DRAFT)October 5th, 2006, 9:00 am – 11:30 am • Welcome and introductions • Administrative matters • Settlement Zone Accuracy Working Group (Bob Deyl) • File Transfer Mechanism Risk Assessment (Blair Morton) • File Transfer Mechanism Backup Plan (Blair Morton) • Roles and Mandates (DOE) • Other (all)

3. Settlement Zone Accuracy Working Group(Presenter: Bob Deyl)

4. File Transfer Mechanism (FTM) WorkgroupRisk Assessment (Presenter: Blair Morton) Blair Morton, ATCO Electric Kathryn Wood, DOE David Strayer, EPCOR Kathy McCollum, ATCO Gas Doug Coreman, ENMAX Peter Graham, ENMAX Fino Tiberi, EUB Peter Wong, AESO Ilgi Sultanoglu, ENMAX

5. Introduction • The File Transfer Risk Assessment Workgroup was charged with reviewing the independent assessment done by CGI. • The following slides summarize the workgroup’s recommendations based on CGI’s final report.

6. Recommendation #1: • The workgroup and the independent consultant do not support replacing DC at this time. From the risk perspective, the workgroup believes that DC can be made acceptable through additional operational monitoring, controls, and processes. This can be achieved through manual intervention, awareness, and avoidance of problematic features. The workgroup does expect that a replacement will be required in 2-3 years. • Should new risks emerge from anticipated new requirements or changes in use that cannot be mitigated, seeking a replacement solution should be accelerated. An example may be where automated meter reading volumes are anticipated to exceed capabilities of Dropchute, or a significant number of market participants experiencing data transfer problems. • From the operational perspective, the workgroup recognizes that there are limitations in the product that do not fulfill some business needs and operational challenges that impact reliability that the industry is being asked to accept. These are issues that must be considered in defining future requirements for a replacement solution. Report Recommendation: • ‘Maintain current DropChute environment, but invest in a second FTM option. Keeping the DropChute environment, allows stakeholders to keep costs low and provides fair access for smaller organizations. Investing in another FTM option provides choice for larger organizations but keeps complexity to a minimum and solves the ‘orphan’ product problem for DropChute.’

7. Recommendation #2: • The workgroup recommends that market participants individually address the top ten risks identified (see sub-recommendations). By being more aware of the weaker areas and features in DC, market participants can tailor their processes and add controls to avoid or minimize risks related to those areas. Report Recommendation: • ‘Mitigation plans should continue to be implemented at the individual stakeholder level. Based on the overall industry risk being acceptable and that mitigations are currently being deployed for most of the top ten risks, CGI recommends a continuation of the current DropChute mitigation approach.’

8. Recommendation #2a: • Provide detailed clarity in enforcement for data non-compliance. Addressing this issue allows market participants to have a more comprehensive understanding of the penalties (financial risks) related to non-compliance. Currently the enforcement penalties are broadly defined.

9. Recommendation #2b: • There are a number of limitations in the DC application, which do not address some requirements related to CSOX. The workgroup acknowledges these limitations and recommends that market participants accept the product limitations. The lack of functionality can be addressed by developing additional functionality outside of the DC product. The workgroup recommends that these limitations be addressed in the specifications for a future replacement mechanism.

10. Recommendation #2c: • The workgroup recommends that the industry support development of confirmation transactions, and include requirements for confirmation transactions in any future replacement solution. For the short term, the workgroup agrees that the mitigation is to increase awareness of problem areas, avoid those operational features, increase monitoring, and put processes in place to correct situations where those problems emerge. Note that some market participants have already addressed some or all of these problem areas.

11. Recommendation #2d: • For the short term, accept that the current DC platform provides an outdated level of security that poses a risk to the data. Migration to a newer platform may appear to resolve the problem, but may not as the DC product being unsupported on the newer platform may not utilize any of the newer security features. • The workgroup recommends that the industry specifically monitor and assess the severity of security risks resulting from remaining on an unsupported platform where new patches cannot be installed. If a market participant identifies an unacceptable risk (i.e. unable to install a security patch), they are asked to report this situation to the EUB. (See Recommendation #5 for EUB follow up)

12. Recommendation #3: • The workgroup proposes that all market participants review the findings in the report and be aware of the issues pertaining to the DC product and features; refine their own processes to avoid features that result in identified problems; continue to monitor areas where these problems have been identified; and report those problems to the EUB. The workgroup recommends that this action be carried out immediately. Report Recommendation: • ‘Inform Stakeholders of DropChute behaviors identified in Lab and evaluate fine tuning recommendations. Awareness of specific behavior areas are the Data Persistence Delay, Script Execution, DropChute Files, Error Dialogs and Database Size. Please refer to the Fine tunings list in the Appendix.’

13. Recommendation #4: • Proceed with developing a backup plan for disaster situations. Currently the industry does not have a comprehensive or well coordinated plan for handling failures in the data communications infrastructure. The FTM workgroup is currently developing a plan for industry. The workgroup recommends that the plan be ready for use by the end of 1Q 2007.

14. Recommendation #5: • The workgroup recommends that the industry should continue to monitor for any new risks (or problems) or increases in the known risks with Dropchute every 4 months. The monitoring should be established under the EUB, who is currently collecting data on Dropchute problems related to TBC. Report Recommendation: • ‘Continue to Monitor and Report - Use this risk assessment as a baseline. It is important to monitor the effectiveness of the risk mitigation plans and the factors that may affect probabilities or impact.’

15. Recommendation #6: • The report recommends an overall ‘Privacy Impact Assessment’ be done. The workgroup agrees that this assessment should be completed and coordinated between the EUB and DOE. Report Recommendation: • ‘The only other next step to consider, based on R6, unless already completed, is the recommendation for an overall Privacy Impact Assessment (PIA). The probability and impact of personal information being disclosed to another party without consent or being used for other purposes should be reviewed. The Alberta PIPA (Personal Information Protection Act) and Federal PIPEDA (Personal Information Protection and Electronic Documents Act) are the relevant acts. Although information is encrypted enroute, between DropChute boxes, there is the risk a wrong destination organization could receive and interpret personal information like addresses. A PIA was out of scope for this report but should be considered as a next step.’

16. Additional Workgroup Comments: • The workgroup agrees with the report recommendations that there are no immediate risks that require urgent mitigation. The industry was concerned that with additional TBC volumes commencing in July 2006, that there was a risk of DC failure. Testing conducted in the review has shown there is capacity in DC to handle additional volumes from the TBC. No further mitigating actions are required.

17. Additional Workgroup Comments: • The report recommended that a second FTM solution be selected and offered concurrently to DC, to reduce transition for smaller market participants. The workgroup believes that this would introduce complexities for the industry and did not support that direction.

18. Additional Workgroup Comments: • The workgroup determined that recommendations pertaining to the top 10 identified risks would be the area of focus in this review. The industry should proceed to looking at mitigation of the lesser priority risks after the top 10 recommendations have been addressed.

19. Questions?

20. File Transfer Mechanism (FTM) WorkgroupBackup Plan (Presenter: Blair Morton) Blair Morton, ATCO Electric Kathryn Wood, DOE David Strayer, EPCOR Kathy McCollum, ATCO Gas Doug Coreman, ENMAX Peter Graham, ENMAX Fino Tiberi, EUB Peter Wong, AESO Ilgi Sultanoglu, ENMAX

21. Introduction • Industry raised concern that if TBC volume risks were uncovered in risk assessment, there would not be sufficient time to mitigate them • Workgroup proceeded to develop a backup plan, using DVDs as the preferred data transport method • Risk assessment review identified that TBC volume risks are not as significant a concern as first thought. Additional concerns around congestion were also dismissed through industry tests. • Workgroup continued to develop plan, but with less urgency. Need for an industry backup plan is a recommendation from the independent review • Recommendations of the workgroup on a backup plan are presented here. Further design is required before implementation

22. Workgroup Process • Defined applicable scenarios • Validated preferred DVD alternative with other alternatives • Investigated factors that need to be considered • Made recommendations where appropriate • Present recommendations to industry

23. What is being backed up? • Two scenarios are considered • Failure of communications system infrastructure (internet) • Failure of Dropchute application • Other more disastrous situations (eg. epidemics) can occur, but are not considered, as data transfer would be pretty unimportant relative to other services and functions • Scenarios assume failure of other mitigation plans • Some industry parties have other risk mitigation plan in place (service providers have backup systems, alternative providers in place, etc) • Impact of failures may be mitigated by business continuity plans in some organizations

24. Communications System Failure Scenario • Internet is not available to industry – may be due to viruses or physical problems. Industry impact - Market participants cannot transfer data through the internet infrastructure. • Invoked when failure is expected to be for days, not hours • Not designed for long term failures, over 3 weeks • Assumes all other support (non-communications) infrastructure is in place (eg. resources available, settlement systems working, power available, etc) • What backup should industry have in place?

25. R1 – Validate Use of DVDs • Supported as an industry preference as a backup. Some organizations have adopted this as their own solution • Workgroup validated the DVD option with: • Dedicated services should be used as primary, not a backup. Also quite costly to have as a backup, especially for smaller market participants • Dialup solutions do not have the capacity and may not be available if the internet is down • Redundant service providers are viable for larger organizations, but may also not be available in an internet outage • The workgroup recommended that DVDs be looked at as the primary backup solution for this scenario and pursued the option further.

26. R2 – Industry Wide Implementation • The backup plan is intended to address industry wide problems and not for single part problems with internet infrastructure • Partial use would create concurrent data paths for industry, leading to confusion and complexity • Single party is responsible for localized issues through corporate business continuity plans

27. R3 – Develop Business Standards and Requirements • Business standards are required to reduce confusion in this manual process. The simpler the rules and process, the less likelihood errors will occur. The workgroup recommends that, • All data (of one type) for the day to be burned onto a single DVD • DVDs be sent only once per day to parties where data exchange is required • DVD labeling standards be developed (type, to, from, date, etc) • Files naming rules be followed – file naming rules are defined in the code, and should apply in the backup situation to allow integration with downstream processes and applications • Process to maintain contact information – who to send DVD to, address, etc. • Review need for delivery standards – difficult to impose, if courier services are impacted

28. R4 – Develop Technical Standards and Requirements • Workgroup identified areas that require further work by technical experts • Technical standards • Standardize on the type/format of DVDs to be used • Hardware standards – commercial requirements? • Encryption standards • Validation standards to check that DVD contains the data expected

29. R5 – Decision Criteria • Workgroup concluded that the EUB is in the best position to decide when to invoke a backup plan • Communications failures will impact 3 areas (load settlement, tariff, gas settlement) under oversight by the EUB • Single party needs to be making decisions to invoke the plan • A simple prescriptive criteria for invoking a backup plan is difficult to define • Decision to invoke depends upon the circumstances • Judgment on the deciding party is needed is needed to account for the situation • EUB may have other similar processes as regulators for the energy industry. This process may tie into an already established one.

30. R6 – Transaction Timing/Backdating • Using DVDs introduces a delay in receiving transactions and creates problems for processing transactions which are time sensitive (enrollments) • Some systems do not have backdating capabilities and cannot pre-date to when the transaction should have been processed • The workgroup supports relaxation of timing rules, suspension of enrolment timing rules, and the processing on enrolment transactions on a ‘when received basis’. • There will be a slight impact on accuracy of results • Enrolments may not occur on the expected date, which may impact retailers

31. R7 – Communications Process • Where there is a communications infrastructure failure, it may also affect other types of communication that would make it difficult or impossible for the EUB to communicate that the backup plan is invoked • One solution supported by the workgroup is where there has a failure, and there is no communication with the EUB, the backup plan is ‘assumed’ to be in effect after a period of time (24 hours). • The process and plan should be included in the codes or rules

32. Summary of Recommendations • Workgroup supports the DVD backup solution and does not see any major impediments to implementation at this time. More detailed work is required in various areas and will confirm this. The workgroup has provided its recommendations on the direction for these areas. • Use simple DVD process, and invoke on industry wide basis • Detail technical and business requirements, under the EUB • Develop decision criteria for invoking backup under EUB • Relax transaction timing rules to avoid backdating • The workgroup Target completion of the work by end 1Q 2007

33. Dropchute Application Failure Scenario • Dropchute application fails but the internet infrastructure remains in place – may be due to limitations in the application, application/platform specific virus, platform/application incompatibility. Industry impact - Market participants cannot transfer data through the internet infrastructure. • Industry wide, this scenario is highly unlikely • Failure at one installation is more likely • DVD backup scenario may also work for this type of failure

34. Options Considered • Workgroup considered various options that continue to use the internet for data exchange. • Files via email, secure FTP pickup, redundant Dropchute, and managing transfers using Dropchute. • Industry has provided strong support for the secure FTP option • The workgroup concurs with the industry and proceeded to investigate the option further

35. Secure FTP Option • Pros: • Uses existing communication infrastructure • Minimal disruption and cost to client sites • Similar transfer solution as Dropchute - mailbox setups • Volumes and capacity issues are easily addressed • More automated than DVD solutions • Cons: • Requires infrastructure to be in place • Requires ongoing maintenance for infrastructure and process

36. Costs • Cost estimates for two types of secure FTP installations were obtained, to provide a sense of the magnitude of the costs. • Wire Owner/LSA Hosted sites (each site): • $62,400 for UNIX Server (Approx same for Windows w/Security) • $50,000 per year maintenance (1/2 man-year) • Based on typical server setups • Externally Hosted site (one site for industry): • $22,100 capital costs (UNIX) • $32,000 per year maintenance costs • Based on minimal specifications, costs will vary depending on arrangements and requirements

37. Issues to be Considered • Cost sharing arrangements need to be worked out for externally hosted site configuration • Wire Owner/LSA hosted sites can be used for localized backup situations and may be combined with other backup functions • Need a process to invoke this plan – should be called by a regulating agency (EUB)

38. Summary of Recommendations • Workgroup summary: • Secure FTP solutions are viable with little impediment to implementation, but require an initial investment of capital and continued maintenance costs. • A DVD solution is also viable to address this situation, but would be much more cumbersome and manual if called upon. • The workgroup sees both approaches fairly even, and seeks further feedback on industry preferences.

39. Questions?

40. Next Steps – Working Groups • Request written comments on Workgroup Report recommendations • Agencies will consider recommendations in report and input from industry • Announce decision to proceed and next steps

41. Roles and MandatesTransition of Rule Making Authority for SSC(DOE)

42. Other Topics

43. Closing Out