Problem Areas Updates Penalties

Problem Areas Updates Penalties FRCC Compliance WorkshopSeptember / October 2008

Problem Areas • NERC Top Violations since 6/18/2007 • FRCC Top Violations since 6/18/2007 • NERC Examples - PER-003, PRC-005, CIP-001, EOP-005, FAC-008, FAC-009

Problem Areas -NERC Top Violations

Problem Areas –FRCC Possible Violations Reported Since June 18, 2007 • PER-003 – Operating Personnel Credentials • PRC-005 –Transmission & Generation Protection System Maintenance & Testing • CIP-001 – Sabotage Reporting • EOP-005 – System Restoration Plans • FAC-008 – Facility Ratings Methodology • FAC-009 – Establish & Communicate Facility Ratings

Problem Areas The following are examples of non-compliance problems found throughout NERC for specific Standards.

Problem Areas – PER-003 • Having NERC Certified Operators on duty at all times. Operating Personnel Credentials

Problem Areas – PRC-005 • The Protection System Maintenance and Testing Program does NOT exist • The documentation of the maintenance and testing plan/program has not been maintained according to standard requirements (i.e. within specified intervals and their basis) • Testing records of all Protection System devices have not been maintained Transmission & Generation Protection System Maintenance and Testing

Problem Areas – CIP-001 • Incomplete documentation • The document doesn’t exist • The document does not define or provide examples of what sabotage is • Reporting Plan is not included in the document • including specific contact information for local, state, federal enforcement agencies and the region • Sabotage Reporting

Problem Areas – EOP-005 • Incomplete Documentation • The System Restoration Plan document does not exist • The System Restoration Plan is out of date • Evidence that the restoration plan is reviewed annually • Evidence that the System Restoration Plan is being coordinated with the entity’s neighbors • Evidence that training on the System Restoration Plan has taken place • Evidence that the System Restoration Plan is being tested through actual testing or simulation • System Restoration Plans

Problem Areas – FAC-008 • Facility Rating Methodology is not documented or incomplete • The Facility Ratings Methodology did not contain a statement that a Facility Rating shall equal the most limiting element • Not all of the component equipment ratings were included when the overall Facility Rating is determined • Facility Ratings Methodology

Problem Areas – FAC-009 • Ratings were inconsistent with the associated Facility Ratings Methodology document. (FAC-008) • Lack of Evidence that ratings have been communicated to the RC, PA, TP, TOP • Establish and Communicate Facility Ratings

Problem Areas – Lessons Learned • Read the standards - including the RSAWs • What are the standards asking for? • Talk with others, what did they do? • Ask questions, the FRCC Compliance staff will help as much as we can • Good documentation is critical • Make sure you have what is needed • If not, create what is needed • Maintain it once its in place • Update it as required • Management approval, with effective date • Educate and Train your employees and management • Have good quality up-to-date procedures

UPDATES

Updates • 2009 FRCC Compliance Activities • FAQ – Frequently Asked Questions

Updates – 2009 Activities • 19 On-Site Audits • CIP-002 through CIP-009 Self Certification • CIP-002 through CIP-009 Spot Checks will be done On-Site (starting in July) • BAs & TOPs under UA-1200 • Annual Compliance Workshop (1 or 2)

Updates – 2009 Activities • Annual Self Certification • CTS – Adding Features • User Group • Annual Spot Check

Updates – FAQ FAQ • Expand the Frequently Asked Compliance Related Questions section on the FRCC Website • Important information related to specific Standards and Requirements

AVOIDING OR REDUCING PENALTIES

PENALTIES • Penalty Calculation • Reducing Penalties • Avoiding Penalties

PENALTIES - Calculation

PENALTIES - Calculation • FERC expects penalty to be calculated on a per day per violation basis • This could be from $1,000 up to a $1,000,000per day, per violation • Final Penalty Assessment can ratchet up or down pending on the entities actions

PENALTIES – Reducing (or Increasing) • Adjustment Factors per Violation / Violator • Repetitive Violations • Violator’s Compliance History • Failure to Comply with Compliance Directives • Degree and Quality of Cooperation • Compliance Program Quality • Attempt to Conceal the Violation • Intentional Violation • Extenuating Circumstances

PENALTIES - Reducing • Settlements preferred • Can occur anytime up to the filing of the Notice of Penalty to FERC!

PENALTIES - Reducing • Mitigation Plan submittals and timeliness • Every violation of a standard requires mitigation • Mitigation should begin when a possible violation is identified • FRCC accepts the Mitigation Plan • NERC approves the Mitigation Plan

PENALTIES - Reducing • Mitigation Plan submittals and timeliness (continued) • Follow the Standard • Accurate and Complete • Measureable milestone dates • Reasonable completion date

PENALTIES - Reducing • Mitigation Plan submittals and timeliness (continued) • Must submit evidence with completion form for FRCC Compliance staff to verify MP completed and in compliance • A Request for an extension (at least 5 days prior)

AVOIDING PENALTIES

PENALTIES - Avoiding • Reliability Standards – Linda • Understand the Standards • Identify the Standards that are applicable to you • Participate in the Standards process both with NERC and FRCC

PENALTIES - Avoiding • Audit Preparation – Barry • Determine what you are responsible for • Establish / Assign Ownership • Organize your Evidence

PENALTIES - Avoiding • Quality of Evidence – Jim • Appropriate and Sufficient to meet the requirement and standard • All evidence needs to be basedonfacts • Quality not necessarily Quantity

Q & A’s • Final Questions and Answer Session • Topics for 2009 Compliance Workshop

Thank You for Your Attendance!

Problem Areas Updates Penalties