MRO Annual Member and Board Meeting December 5, 2019 1
Agenda 2 (pg. 7) Standards of Conduct and Anti-trust Guidelines Miggie Cramblit, Vice President General Counsel, Corporate Secretary and Director External Affairs 2
Agenda 3 (pg.8) President’s Report Sara Patrick, President and CEO 3
MRO’s Keys To Sustainable Success 4
Agenda 4 (pg. 9) Vice Chair’s Remarks Tom Kent, Board Vice Chair 5
Approve Resolution for Outgoing Board Members WHEREAS, the following individuals have served as members of the Midwest Reliability Organization (MRO) Board of Directors and its committees: • Julius Cox, Independent Director • Krista Tanner, ITC Midwest • Micheline Casey, Independent Director • Ray Wahle, Missouri River Energy Services WHEREAS , Mr. Cox, Ms. Tanner, Ms. Casey, and Mr. Wahle have been strong supporters of reliability of the bulk power system in MRO’s region and have been dedicated and thoughtful leaders; and WHEREAS, these individuals have given wise counsel and advanced the vision and mission of the organization; NOW, THEREFORE, BE IT RESOLVED that the following resolution is adopted and is to be appropriately conveyed to these individuals. RESOLVED that the MRO Board of Directors express its sincere appreciation to Julius Cox, Krista Tanner, Micheline Casey and Ray Wahle for their dedication and service, and for their contributions to the success of MRO and the electric utility industry. 6
Agenda 5 (pg. 10) NERC Board of Trustees’ Chair Remarks Roy Thilly, Chair NERC Board of Trustees 7
Agenda 6 (pg. 11) NERC Staff Remarks Mechelle Thomas, NERC Vice President and Chief Compliance Officer 8
Compliance Oversight Plan Process Enhancements Mechelle Thomas, Vice President and Chief Compliance Officer December 5, 2019
Maturation of Risk-based Assessment Processes 2016 2018 2019 - 2020 IRA Process COP Process Transition Harmonization Harmonization Period 10 RELIABILITY | ACCOUNTABILITY
Updated COP Process Highlights Enhanced Targeted Prioritized Single Report Analysis Oversight Monitoring One report to provide both inherent risk Analysis of inherent Provides Identifies target assessment results and performance data considerations for an interval for oversight, and the compliance provides an entity’s continuous primary monitoring oversight plan understanding of an improvement and a tools, and informs entity’s overall focus to a Regional annual planning inherent risk and Entity for its performance profile compliance monitoring activities 11 RELIABILITY | ACCOUNTABILITY
Contents of the COP Report 1. Purpose 2. Analysis and Results 3. Oversight Strategy 12 RELIABILITY | ACCOUNTABILITY
COP Process Implementation Timeline •Throughout the second half of 2019, Regional Entities will begin implementation of new COP summaries. •Industry outreach will begin in July 2019 and continue through 2020. 13 RELIABILITY | ACCOUNTABILITY
14 RELIABILITY | ACCOUNTABILITY
Agenda 7 (pg. 12) Policy Matters Sara Patrick, President and CEO 15
Agenda 8 (pg. 17) Revised ERO Enterprise Long-Term Strategy Sara Patrick, President and CEO 16
Consider and Endorse Revisions to the ERO Enterprise Long-Term Strategy 17
Agenda 9 (pg. 18) ERO Transformation Jeff Norman, Director of Compliance and Monitoring 18
How We Create Value Why We Exist 19
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The ERO Model is Brilliant How do we implement an How can the model be optimized model? optimized? By improving the By inventing a new effectiveness, efficiency, future. and collaboration of ERO working groups. 21
What The Future Holds Default Future • What’s likely to happen through incremental improvements Invented Future • What is possible through commitment to change 22
Default Future Context Made up of past experiences Familiar box of tricks Results in more of the same Working groups incrementally improve 23
Rackets Drive A Default Future 24
Invented Future Context A shared, owned vision Recognizes new opportunities Working groups solve real problems • Scalable • Repeatable • Sustainable 25
MRO’s Context 26
Intentional Transformation Declare a breakdown (eliminate rackets) • Fact vs. interpretation Listen with purpose • Listen for opportunity • Listen for understanding • Listen with positive intent Leaders across the ERO • Build relationships • Take time to learn • Seek best practices as we work to align 27
Results Accountability Commitment Conflict Tr u s t High Performing Working Groups 28
Committed to Our Collective Success We declare that the ERO Enterprise model is critical to our mission and that NERC and the Regional Entities are partners committed to our collective success. We commit to work together as one team and honor each of our roles. We commit to listen, to actively support ERO Enterprise activities, and to eliminate unnecessary duplication of work. We commit to collaborate in developing clear and consistent guidance across the ERO Enterprise. We commit to be an information, knowledge, and resource sharing ERO Enterprise. We commit to develop and share harmonized messages across ERO Enterprise communications. We support innovation and initiative and the sharing of best practices across the ERO Enterprise. Strong Regions + Strong NERC = Brilliant ERO
Agenda 10 (pg. 19) Consent Agenda Jessie Mitchell, Assistant Corporate Secretary 30
Review and Approve Minutes from the September 19, 2019 board meeting Non-material changes to MRO’s policies and procedures 31
Agenda 11 (pg. 73) Regional Risk Assessment John Seidel, Principal Technical Advisor and Steen Fjalstad, Security and Mitigation Principal 32
A highly reliable and secure North American bulk power system.
Assessing Bulk Power System Risk Multiple ERO-wide reports assess North American bulk power system risk • 2019 ERO Reliability Risk Priorities report (RISC report) • 2020 ERO Compliance Monitoring and Enforcement Program Implementation Plan (CMEP IP report) • 2019 NERC State of Reliability Report (SOR report) • 2019 NERC Long-Term Reliability Assessment (LTRA report)
Assessing Regional Risk MRO staff and industry subject matter experts: • Identify which risks have a higher (or lower) probability of occurrence and/or impact within the MRO region • Identify any other regional risks that may need to be addressed
Assessing Regional Risk Operations and planning risks • Grid transformation • Extreme natural events • Infrastructure interdependencies Physical and cyber security risks CMEP activities to help reduce risk • Summary of high risk requirements • New and existing high risk standards 36
NERC 2019 RISC Priorities Report 37
The arrow direction identifies which risks are higher (or lower) within the MRO footprint. 38
MRO Exposure to Grid Transformation Loss of Situational Awareness • Primary and backup EMS systems and advanced applications of MRO members and the EMS overlap given large RC footprints • Provides robust and high availability of those systems • Risk to MRO footprint is lower than in other regions 39
MRO Exposure to Grid Transformation Changing resource mix and availability • Retirements of conventional synchronous generation ─ No net gain in gas generation; future generation being projected as renewable generation in MRO-US ─ Significant regional impact within 10 years • Existing gas generation: ─ Often non-firm supply/transportation ─ Plant winterization often unknown-winter peak loads higher than forecasts • Risk in the MRO footprint is higher than in other regions 40
MRO Exposure to Extreme Natural Events Severe cold weather events • Occurring more frequently in both upper and southern Midwest • Winter Peak demand is approaching or exceeding summer peak demand during severe cold ─ Forecasting errors can occur • Wind turbine cold weather cutouts can reduce availability • Lack of winterization of gas plants can reduce availability ─ Non-firm transportation and supply can lead to loss of fuel during severe cold weather 41
MRO Exposure to Extreme Natural Events Geomagnetic Disturbance events • Upper Midwest geographically more susceptible to a GMD event than southern portions of US 42
MRO Exposure to Extreme Cold Weather January 30, 2019 Wind Turbine cutout: Also- SF6 Circuit Breakers also can hit critical low pressure where upon they will be blocked from tripping or auto-open 43
MRO Exposure to Infrastructure Interdependencies Natural gas clusters where bulk power system issues were identified: 44
MRO Exposure to Infrastructure Interdependencies However: • Telecommunications : Telecomm companies continue to retire land lines and copper wire--electric utilities rely on copper wire for system protection as well as other data communications • Transportation sector : Electric vehicle charging can significantly impact load magnitude and load profile of electric utilities 45
Trending Misoperations Associated with Event Analysis Reports 46
Misoperation Rates within the MRO Footprint 47
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