Regional Reliability Council Realignment

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• Regional Reliability Council Realignment
• Presented to the Energy Association of PA 2005
  Conference
• Bruce Balmat
• Regional Manager Mid-Atlantic Area Council

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Regional Reliability Councils
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Why?

• Reasons to Consider Realignment of RRC
  Boundaries
• U.S. Canada Task Force Final Report on 2003
  blackout
• Expanded PJM footprint now covers all or parts of
  4 RRCs
• MISO operates in parts of four RRCs
• MAIN members have indicated plans to withdraw as
  of 1/1/06
• NERC Regional Managers report on Future Role of
  the Regions recommended rational boundaries
• Many industry organizations support consolidation
  (NERC Board and Stakeholders, EEI, FERC, Boards
  of MAIN, MAAC, ECAR and MRO)
• MISO PJM Joint and Common Market under
  development

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Fundamental Principles

• Any reliability organization should conform to
  these
• Membership - open inclusive
• Governance fair balanced
• Independence organization personnel
• Compliance universal
• Boundaries effective efficient

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Large Regional Reliability Council
MRO
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Large Regional Reliability Council (LRRC)
MAAC, ECAR, MAIN, MRO

• Boards of these Regions charged Regional Managers
  with beginning discussions regarding formation of
  a Large Regional Reliability Council encompassing
  4 Regions
• Goal, rationale, guiding principles distributed
• Memorandum of Understanding signed in May
• Goal is to consolidate MAAC, ECAR and part of
  MAIN by 1/1/06
• MRO would then begin discussions for
  participation

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Benefits

• Achieve uniformity of standards across a large
  section of North America
• Better alignment of market and reliability
  entities boundaries
• Resolve existing Regional Council issues with
  independence of council from entities it monitors

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How to begin?
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Challenges

• Governance
• Who is on the Board?
• What sectors will there be?
• How will voting be handle
• How will funding be handled?
• Standards
• What happens to existing regional
  criteria?
• How will consistent standards be developed
• and approved?
• What sort of transition period will
  there be?

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Memorandum of Understanding

• Describe basic framework for LRRC
• Outline steps necessary to accomplish LRRC
  formation
• Impose obligation on RRCs to cooperate in good
  faith to work towards achieving the MOU steps
• MOU will not bind any RRC or individual entity to
  ultimately participate
• MRO will to combine at a later date

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LRRO Members - Proposed

• Two Classes of Members
• Regular, Affiliate
• Regular entity eligible for more than one sector
  must designate the sector it wants to participate
  in
• Each affiliate of a Member may separately be a
  Member
• Obligations of Members
• Provide data and information necessary for LRRC
  to perform its functions
• Payment of dues, funding, and penalties resulting
  from non-compliance with LRRC/NERC standards
• Elect Board of Directors
• Approve amendments to bylaws, modification of
  approved budget, termination of LRRC
• Provide qualified people to serve on LRRC working
  groups

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Governance - Proposed

• Composition of Board of Directors (14)
• Five (5) Stakeholder Sectors (8 Directors)
• Three (3) At-Large Directors
• Three (3) Independent Directors
• Stakeholder Sectors
• Suppliers (2 Directors)
• Transmission Companies (3 Directors, 1 of which
  is an RTO)
• Small LSEs (1 Director) (10,000 GWh or less)
• Medium LSEs (1 Director) (10,000-50,000 GWh)
• Large LSEs (1 Director) (gt50,000 GWh)

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Governance - Proposed

• Board of Directors Duties
• Govern LRRO and oversee all activities
• Establish and oversee all organizational groups
• Approve, revise, enforce standards
• Establish compliance program including penalties
  for non-compliance
• Establish and approve annual budget
• Represent LRRO in legal and regulatory
  proceedings
• Hire the President and approve salary
• Establish Board committees as appropriate
• Approve, revise, enforce Member data and
  information requirements and related
  confidentiality requirements
• Terms of Directors
• Staggered 3-year

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Funding Mechanism - Proposed

• 10 Shared Equally by All Members
• 90 Assessed Based on Total System Utilization
  of Members in Prior Calendar Year (load ratio
  share of total)
• MWHr of generation
• MWHr of load
• kv-miles miles of transmission

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LRRC Organization

• Not-for profit corporation
• Organized to meet NERC and proposed reliability
  legislation requirements for Regional Councils
• Members of existing Regional Councils will make
  the decision to join
• Expectation that all entities with impact on bulk
  power system will join a Regional Council

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LRRC Functions - Proposed

• Set Organizational Standards
• Monitor and Enforce Compliance with
  Organizational Standards
• In concert with NERC Compliance Program
• Provide Reliability Education, Training,
  Certification for Members
• Near and Long-Term Assessments, As Appropriate
• Generation and Transmission adequacy
• Monitor and report on operational performance and
  system disturbances
• Coordinate with Other Entities
• Collect and Analyze Reliability Information and
  Data
• Provide for Appeals and Conflict Resolution
• Participate in NERC Activities

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Timeline
November 1, 2005
January 20, 2005
September 1, 2005
January 1, 2006
May 1, 2005
Phase I
Organization structure and transition plan
completed
NERC approval of new RRC
Phase II
New RRC begins operations
Retain Project Manager Establish Executive
Team Develop MOU Revise and finalize bylaws Form
teams to address governance, funding, Day 1
standards, corporate changes, etc. Nominate
initial Directors
Phase III
Phase IV
Corporation formed Seat initial
Directors Finalize organizational structure
Solicit Members Nominate Board members Finalize
staffing and transition plans Hold initial
Members meeting adopt by-laws
MRO integration and coordination plan
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www.maac-rc.org
Workshop to discuss LRRC is scheduled for June
14th in Wilmington, DE
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• Questions???