An Effective Model for Regulation An Effective Model for Regulation - PowerPoint PPT Presentation

An Effective Model for Regulation An Effective Model for Regulation An Effective Model for Regulation An Effective Model for Regulation of Bulk Power System Reliability of Bulk Power System Reliability Gerry Cauley P President and CEO id t d CEO

ERO Five Key Success Factors ERO Five Key Success Factors Gerry Cauley President and CEO President and CEO  Risk-based approach with reliability performance measurably improving performance measurably improving  Reliability-learning, self-correcting industry  Culture of compliance, enforcement backstop  Commitment to security/resilience of grid  Commitment to security/resilience of grid  Positive relationships and reputation • Leading expert organization for grid reliability • Trusted leader and advocate for reliability • Effective relations with U.S. and Canadian authorities

ERO is a Unique Form of Regulation ERO is a Unique Form of Regulation Different than purely government or self Different than purely government or self-regulation p p y g y g regulation g  Unique industry perspective Unique industry perspective • Real-time interconnectedness of power systems • Cost of unreliable service affects all C t f li bl i ff t ll • Active industry involvement in solving problems  Unique regulatory model • Independent board governance at ERO p g • Mandatory standards set by industry • Rigorous monitoring/audit program Rigorous monitoring/audit program • Oversight by U.S. and Canadian authorities

Reliability Risk Management Concepts Reliability Risk Management Concepts

Sample Historical Data with Actual Events Sample Historical Data with 4.50 4.00 2003 Eastern Interconnection Blackout 1996 Western – August 10 3.50 10) 1989 Quebec – Solar Geomagnetic Disturbance Log Base 1 3.00 2008 South Florida 2.50 Severity ( 2.00 2007 – August 4 Disturbance 2007 – August 25 Disturbance 1.50 T loss =4 circuits G loss =5 units 1.00 0.00 0.10 0.20 0.30 0.40 0.50 C Cumulative Normalized Occurrences/Year l ti N li d O /Y

NERC CEO Current Risk Priorities NERC CEO Current Risk Priorities  Misoperations of relay and controls systems Misoperations of relay and controls systems  Human errors by field personnel  Ambiguous, incomplete voice communications  Right-of-way maintenance and clearances g y  Changing resource mix  Integration of new technologies  High impact, low frequency events g p , q y

Reliability Standards Reliability Standards Gerry Cauley President and CEO President and CEO  CIP-002 determining cyber critical assets  Process changes to address standards directives  Results – based standards Results based standards  Standards process timeliness and accountability • Process improvements • Governance  Standards clarifications and interpretations

FERC March 2010 Orders on Standards FERC March 2010 Orders on Standards Gerry Cauley President and CEO President and CEO  Success of July FERC technical conference  Specific directives, proposed rulemakings: S ifi di ti d l ki • BAL-003 frequency response 1% of peak load • TPL-002 primary relay protection failure must be included in first contingency • TPL-002 no load curtailment for first contingency • BAL-004 time error correction required • 100 kV standard for bulk electric system

Compliance Compliance Gerry Cauley President and CEO President and CEO  Compliance program alignment • Compliance operations : work with regions on consistency, Compliance operations : work with regions on consistency transparency, compliance culture • Enforcement : process violations, settlements, mitigation plans Enforcement : process violations, settlements, mitigation plans  Risk-based approaches • Risk drivers for monitoring (audits) and enforcement Ri k d i f it i ( dit ) d f t • Penalties, remediation, record proportional to seriousness • Effective incentives to promote compliant behaviors/culture Eff ti i ti t t li t b h i / lt  Transparency of process and expectations  Timeliness, efficiency, and proportionality

Compliance Case Load Trend Compliance Case Load Trend Gerry Cauley President and CEO President and CEO 3000 2500 ns 2000 2000 mber of Violation 1500 Nu 1000 500 0 A-09 S-09 O-09 N-09 D-09 J-10 F-10 M-10 A-10 M-10 J-10 J-10 A-10 Month and Year Active NERC Work UnMitigated Mitigated September 3, 2010 10

Violation In/Out Trend Violation In/Out Trend Gerry Cauley President and CEO President and CEO BOTCC Approves Omnibus Filing 800 700 Omnibus Filing made at FERC 600 ons umber of Violatio 500 500 400 300 Nu 200 100 0 A-09 S-09 O-09 N-09 D-09 J-10 F-10 M-10 A-10 M-10 J-10 J-10 A-10 Month and Year Violations Received Violations Received BOTCC Approved + Dismissed BOTCC Approved + Dismissed Dismissed + Violations Closed Dismissed + Violations Closed September 3, 2010 11

Deem Dates from August 2010 Violations Deem Dates from August 2010 Violations (242 Violations) (242 Violations) ( ( ) ) Gerry Cauley President and CEO President and CEO 70 Nearly one third deemed to have started in June 2007 60 (legacy compliance (legacy compliance issues) 50 ions All 35 violations were All 31 violations were All 31 violations were Number of Violati CIP-002 thru CIP- 40 CIP-002 thru CIP- 009 009 30 N 15 of 17 violations were 20 CIP-002 thru CIP-009 10 0 J-07 J-07 A-07 S-07 O-07 N-07 D-07 J-08 F-08 M-08 A-08 M-08 J-08 J-08 A-08 S-08 O-08 N-08 D-08 J-09 F-09 M-09 A-09 M-09 J-09 J-09 A-09 S-09 O-09 N-09 D-09 J-10 F-10 M-10 A-10 M-10 J-10 J-10 A-10 Month and Year of Deem Date September 3, 2010 12

CIP versus Non CIP versus Non- -CIP Violation Trend CIP Violation Trend Gerry Cauley President and CEO President and CEO 200 180 160 140 ons Number of Violatio 120 120 100 80 N 60 40 20 20 0 F-09 M-09 A-09 M-09 J-09 J-09 A-09 S-09 O-09 N-09 D-09 J-10 F-10 M-10 A-10 M-10 J-10 J-10 A-10 Month and Year of Violation Submission Non-CIP Violations CIP Violations September 3, 2010 13

Mitigation Status Mitigation Status Gerry Cauley President and CEO President and CEO 900 800 700 ions 600 Number of Violati 500 400 300 300 N 200 100 0 A-09 S-09 O-09 N-09 D-09 J-10 F-10 M-10 A-10 M-10 J-10 J-10 A-09 Month and Year Region Awaiting MP (A) Region Awaiting MP (A) Entity Implementation (E) Entity Implementation (E) MP Validated Complete (G) MP Validated Complete (G) September 3, 2010 14

Event Analysis and Investigations Event Analysis and Investigations Gerry Cauley President and CEO President and CEO  Process-driven event review Process driven event review What happened? • Screening and triage Why (root cause)? • What happened? Wh t h d? Compliance gaps? • Why did it happen (root cause analysis)? • Lessons learned made transparent  Regions and registered entities part of process g g p p and key to success • Learning, self-correcting industry g g y • Correct incentives

Critical Infrastructure Resilience Critical Infrastructure Resilience Gerry Cauley President and CEO President and CEO  Multifaceted approach to mitigate risk Multifaceted approach to mitigate risk • Protection measures for critical assets • Rapid response and impact mitigation R id d i t iti ti • Preparedness and recovery • Long-term design, hardening solutions  Develop government interface to produce p g p actionable information for industry  Communicate results to government and public Communicate results to government and public

President and CEO President and CEO Gerry Cauley  Right-of-way clearances Recent Alerts Recent Alerts  Stuxnet  Aurora Aurora

Contributions Needed from Industry Contributions Needed from Industry Gerry Cauley President and CEO President and CEO  Bright-line criteria for critical assets Bright line criteria for critical assets  Delivery of priority, results-based standards  Strive for compliance excellence (lean in)  Engage in event analysis and lessons learned g g y  Promote/support risk-based, learning approach  CEO/executive engagement