WECC Board of Directors GNC Presentation December 5, 2012 Draft

WECC Board of Directors GNC Presentation December 5, 2012 Draft

Board of Director Meetings
Technical Session – 12/5 Just the facts and collected information No debate Q&A for clarification Strategic Planning Session – 12/6-7 Director debate Resolutions Next Steps

Previously Approved Resolutions

Previously Approved Resolution – Regional Entity Governance
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) directs the Chief Executive Officer to work with staff, the Governance and Nominating Committee, the Finance and Audit Committee, and the Human Resources and Compensation Committee to complete work on a governance model for the new Regional Entity Company based on an Independent Board with a strong Member Advisory Committee. Work should commence immediately and advance so that sufficient details of this governance structure are available to the Board at the December 2012 Board meeting to permit further approvals and actions which would lead to final work products needed for membership approval at the 2013 Annual Meeting.

Previously Approved Resolution – Non-Regional Entity Governance
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) directs the Chief Executive Officer to work with staff, the Governance and Nominating Committee, the Finance and Audit Committee, and the Human Resources and Compensation Committee to complete work on a governance model based on a Hybrid Board with one vote per Member Class, said Board and voting to be structured so that the Independent Director votes comprise a majority of the total number of votes eligible to be cast. Work should commence immediately and advance so that sufficient details of this governance structure are available to the Board at the December 2012 Board meeting to permit further approvals and actions which would lead to final work products needed for membership approval at the 2013 Annual Meeting. The intent of this motion is that prior to the December 2012 Board meeting, the GNC will make a recommendation to the Board on either a hybrid or independent board structure based on then-current information.

Previously Approved Resolution – Structure
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) determines that WECC should pursue bifurcation into two separate and distinct companies – one Regional Entity Company containing Regional Entity functions (for example, Compliance Monitoring and Enforcement, Standards Development, and Event Analysis) and other functions as appropriate to the mission of that company as a Regional Entity, and a second Registered Entity Company containing the current WECC Registered Entity functions (Reliability Coordinator and Interchange Authority) and other functions as appropriate to the mission of that company. The Board directs the Chief Executive Officer to work with staff, the Governance and Nominating Committee, the Finance and Audit Committee, and the Human Resources and Compensation Committee to take all necessary action so that full details regarding the mission, functional allocation and organizational structure of both companies are available to the Board at the December 2012 Board meeting to permit further approvals and actions which would lead to final work products needed for membership approval at the 2013 Annual Meeting.

GNC Process - 1 GNC held 12 meetings since Sept 7 – focus has been on the Board delegation Outreach All meetings open to all Open invitation to all to comment Alternative recommendations heard by GNC All call listeners asked to comment Library of public comments available Ad hoc Member Advisory Group input Members presentations to members organizations (e.g. CREPC) Options/Issues Structure Documented existing processes Secured Management recommendations Consumed all inputs from all sources New Resolutions based on GNC majority vote

GNC Process - 2 Discussion including majority and minority opinions Paper Discussion and observations related to pending Board decisions Minority GNC opinions noted in slides and discussed more fully in the White paper Cut and paste this to your browser - Or right-click here - and select “Open Hyperlink” It is important for each Board member to have read the White paper prior to any debate as some of the Resolutions have elements that have less than total support and the Board may want to consider modifications to the proposed Resolutions included in this presentation.

GNC Process - 3 The role of the GNC is to process all available information related to decision points and then to make recommendations to the Board, with associated information to assist the Board in final decision making. GNC members reserve the privilege of altering their recommendations should new information or insight surface in the Board discussion GNC members will participate as individual Board members in decision point debate.

Credits and Blame Project Management: John Stout, David Godfrey, Kwin Peterson Management: Mark Maher, Steve Goodwill, many others GNC: Keith Casey, Bill Chamberlain, Paul Feldman, Nancy Kelly, Les MacLaren, Jim Shetler, John Stout, Member Recommendations Group: Laura Beane, Michele Beck, Ric Campbell, Robert Dintelman, Daniel Froetscher, Michael Gianunzio, Maude Grantham-Richards, Tim Haines, Martin Huang, Russell Noble, Diana Pommen, Julia Prochnik, Stewart Ramsay, John Savage, Gary Tarplee, Brian Theaker Comments by other interested parties: some, but not as many as we would have liked

Other Governance Related Initiatives
GNC heard alternative NRE proposals and will leave further action up to the Board: Selected Class Members – alternative proposal for a member driven process For information on this, right-click here Joint Guidance Committee team – trifurcation and other options For information on this, right-click here

Definitions HB – Hybrid Board
MAC – Members Advisory Committee – members only class structured advisory group to the Board of Directors RE – Regional Entity – NERC functions, plus… NRE – Non-regional Entity – Reliability Centers, plus…

RE MAC – Workgroup The GNC requested input from the Membership as to MAC structure, governance, etc. A Workgroup was formed: GNC solicited a group consisting of 2 members representing each current class The Workgroup “owns” the Workgroup slides.

Recommendations spanning RE / NRE scenarios

Board of Director Functions and Responsibilities
Establish strategy and policy, track implementation & progress Budget approval, ensuring adequate finances CEO selection and performance review Accountability to the goal of “pubic welfare” Accountability to the organization’s membership Maintenance of the organization’s bylaws General organization oversight Paul: Not for use in developing the bylaws – but rather to keep us on track regarding our thinking and decisions. We are still in transition from a Board that runs the Company to a more traditional structure where the Board oversees the Company which is run by Management.

Corporate Form Considerations - 1

Corporate Form Considerations - 2
RE – GNC Unanimous Recommendation – 501(c)(4) – to promote social welfare in the region. * NRE – GNC Unanimous Recommendation – 501(c)(4) – to promote social welfare in the region. * Note – current corporate form = 501(c)(6)

Class Issues (apply to RE & NRE)
Maintain Classes GNC Unanimous Recommendation * Delay discussion of Class 6 pending Management discussions with involved entities (Resolutions assume Class 6 in the RE and Class 6 folded into the other Classes as a placeholder)

Class 7 Representation – RE & NRE GNC Unanimous Recommendation
Eliminate Class 7 as a member class Modify the definition of Class 3 to include developers, consultants, and members at large with a business interest in WECC Existing class 7 members would reapply for Class 3 membership Modify WECC bylaws to state that members who are classified as inactive for over 12 months will be removed from membership Allow access to WECC data by non-members who can demonstrate a legitimate business need for the data, pay the incremental cost of providing the data, and sign a universal Data Access NDA

Member Sub-Classes – MAC only GNC Consensus Recommendation - 1
The purpose of providing a process for establishing sub-classes is to allow a WECC member class to designate slots for directors or MAC members that reflect a specific intra-class perspectives. If a class elects to establish subclasses, only members of the applicable subclass will vote for the director/MAC member associated with that subclass. The process will be initiated by a petition of class member representatives. A simple majority of the class is needed to validate the petition. The petition will specify in detail the proposed qualifications of membership for each proposed subclass. The maximum number of subclasses is 3. Not more than one director/MAC member will be assigned per subclass, leaving the possibility open for “member-at-large” directors or MRC members to be elected by members of the class not assigned to a subclass. If all members of the Class are included in one of two subclasses, then the entire class may elect a third member-at-large to the MAC. JHS Comment: I have specified that when you end up with less than 3 subclasses, such that some directors/MAC reps are elected “at large”. Those who are members of subclasses do not get to vote for the “at large” positions… otherwise subclass members would be getting an unfair voting advantage over other class members. This limitation is similar to how our Canadian members get to vote in class 6 but not in classes 1-5.

Member Sub-Classes – MAC only GNC Consensus Recommendation - 2
The petition will include the breakdown of the existing class membership into each proposed sub-class. Sub-classes must have a minimum of 3 members to qualify as a valid sub-class. This petition will be sent to all members of the class as notification of the proposal. WECC staff will conduct a vote of that class to determine support for the proposal. Voters will be encouraged to submit their reasons for supporting or not supporting the proposal. Simple majority quorum and approval are required to move the proposal forward for Board consideration. If the class votes to approve the proposal, it will be submitted to the board for final approval, where affected members will be entitled to state their positions directly to the board. Sub-Class designations will automatically expire 5 years after approval, but may be reestablished using this process. JHS Comment: The original proposal left the minimum number of subclass members open for discussion. I have specified 3 as the minimum number, which I believe was originally suggested by Nancy

Member Sub-Classes – MAC only GNC Consensus Recommendation alternate
Each Class may sub-divide for the purpose of selecting MAC members and member voting. Each Class electing to sub-divide may choose its own methodology for doing so. The method of sub-Class determination will be by Class majority vote. Any group within the total class of that represents at least 33.3% of the Class may not be denied sub-Class status. The GNC will maintain a set of methodologies for sub-class definition based on inputs from the Classes – for use by any Class as desired. The GNC will be the final arbiter of appeals from Class members regarding sub-Class definition, elections, and voting. Above process hard-wired into bylaws. Another approach for GNC consideration based on recent exchanges.

Sub-Class Resolution GNC Individual Recommendations
Casey, Chamberlain, Shetler(#), Kelly, McLaren(#), Stout: support codification of the described process (slides 20, 21) into the Bylaws Feldman, McLaren(#), Shetler(#), Stout: support codification of the described process (slide 22) into the Bylaws Both Resolutions are included for Board consideration

Class 6 Status WECC Current Process
Bylaws 4.3, 6.2.1, and 7.7.1 Consistent with bilateral principles underpinning NERC as ERO, Class 6 selects 4 directors, at least 1 from Classes 1, 3, and 5 Class 6 does not vote in selection of other member class directors 5th Class 6 director if no Canadian NAD Class 6 director on GNC

Class 6 Status WECC Current Funding
AESO and BC Hydro pay assessments based on NEL However, AESO receives a credit against its NEL assessment resulting in a lower net payment, due to the fact that Alberta does not rely on WECC for enforcement of its standards. Audit and mitigation plan review is however provided by WECC staff. The total compliance cost included in the WECC wide NEL allocations is approximately $12.6M. AESO’s NEL share is approximately 6.9%, resulting in an NEL based assessment for compliance cost of $866K. AESO receives a credit of approximately 93.5% ($810K) of the Compliance related costs included in their original NEL assessment, resulting in a net compliance payment of approximately $56K. NERC WECC/WIRAB Total AESO .5 2.2 2.7 BC Hydro .7 3.2 3.9 2013 NERC and RE/WIRAB Assessments ($M)

Class 6 Status Management Recommendations
Class 6 on MAC NRE Management currently in discussion with Canadian members regarding future of Class 6 and Canadian participation in the NRE

Class 6 Status Canadian Member Recommendations
Bifurcation provides opportunity to review business arrangements and jurisdictional fit with WECC Continue to support/enhance reliability in the WI More information/discussion required Current thinking – RE Governance frameworks and standards in place in BC and AB RE will not have jurisdiction in Canada Value in participation in reliability standards development and opportunity to follow changes in US compliance management framework Funding on fee-for-service, not NEL Participate on RE MAC Current thinking – NRE Concerns on risk/liability vs benefits and tariff/jurisdictional issues Other Canadian regions have own RC function with compatible systems and information sharing agreements Opportunities for fee-for-service in parallel with the tariff Slide 25--This slide raises more questions than it answers, particularly relating to what level of funding and participation the Canadians will provide in the NRE--given that, I'm surprised that Management is still recommending, on Slide 24, eliminating Class 6 in the NRE--how does that help us achieve an improved focus on reliability for the entire Interconnection? Does this slide simply reflect posturing by two sides in an incomplete negotiation?

Class 6 GNC Recommendations
GNC directed WECC Management to seek legal advice on how the 2005 arrangements between Canada and the US on formation of the ERO impact WECC bifurcation, including whether there are requirements for Canadian independent director(s) on the RE and NRE. GNC recommends that the Board Chair appoint a small team of directors and WECC Management to engage with Class 6 members to develop structures for continued Canadian participation in enhancing reliability in the Western Interconnection under a bifurcated model. Slide 26--I agree that for the RE, Class 6 should participate in the MAC--in addition, there should be a requirement that at least one of the independent Board members be a Canadian based on the Canadian proportion of NEL within the Interconnection--For the NRE, I would do everything we can to keep the Canadians engaged in the NRE--Anything that encourages them to establish their own RCs fundamentally harms Interconnection reliability--While I agree that they are not subject to the U.S. tariff or, for that matter, any U.S. enforcement of reliability standards, they have thus far worked with WECC to establish a roughly similar set of standards and a compliance regime in which WECC plays a role, thus maintaining a level of consistency between U.S. and Canadian enforcement of standards--They have also shared in the cost of the Interconnection-wide RC based on NEL--their reassessment of the need to do this is a major blow to the long term reliability of the Interconnection--Why are we just shrugging our shoulders about this? It calls into question the value of the entire bifurcation effort--How can GNC make a sensible recommendation when it has not even participated in the incomplete negotiations that thus far have failed to provide a useful answer to this problem?

Dec 2012 Resolution 1a Sub-Class Option 1
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors determines that, following the proposed bifurcation into regional (RE) and non-regional (NRE) entities, the Member Classes of the RE and NRE should be permitted to divide into up to three (3) sub-classes for the purpose of electing not more than three (3) Member Advisory Committee (MAC) members to represent their respective sub-class perspectives. The creation of sub-classes will be initiated by petition, signed by a simple majority of class members; said petition must specify proposed qualifications for membership in each proposed sub-class and a breakdown of existing class membership into each proposed sub-class. Each sub-class must have a minimum of three (3) members. This petition will be sent to all members of the Class as notification of the proposal. For all resolutions, right-click here

Dec 2012 Resolution 1a Sub-Class Option 1 - Continued
The entire Class will vote on the proposal with a simple majority required to advance the proposal to the Board of Directors (Board) for consideration. The vote will be conducted by the RE and NRE staffs, respectively. The notice of the vote will encourage voters to submit their reasoning in support of or in opposition to the proposal. The Board will hear both majority and minority opinions from affected members prior to approving or denying the petition. No more than one MAC member will be associated with an individual sub- class. Class members not assigned to a sub-class will vote to select an at- large MAC member for that Member Class. If all members of the Class are included in one of two subclasses, then the entire Class may elect a third member-at-large to the MAC. Only members of the applicable sub-class will vote for the MAC member associated with that sub-class. Sub-class designations will automatically expire five (5) years after approval, but may be re-established using the process described above. For all resolutions, right-click here

Dec 2012 Resolution 1b Sub-Class Option 2
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) directs that the bylaws of the regional (RE) and non-regional (NRE) entities should include the following provisions for allowing their respective Member Classes to divide into sub-classes for the purposes of voting at the Member Advisory Committee (MAC) and electing MAC members: Each Class electing to sub-divide may choose its own methodology for doing so. The method of sub-division will be determined by majority vote of the Class. Any group within the Class that represents at least 33.3% of the Class shall be entitled to sub-Class status. For all resolutions, right-click here

Dec 2012 Resolution 1b Sub-Class Option 2 - Continued
The Governance and Nominating Committee (GNC) will maintain a set of methodologies for sub-class definition based on inputs from the Classes – for use by any Class as desired. The GNC will be the final arbiter of appeals from Class members regarding sub-Class definition, elections, and voting. Sub-class designations will automatically expire five (5) years after approval, but may be re-established using the process described above. For all resolutions, right-click here

RE & NRE - CEO on the Board WECC Current Process
Bylaws Recently revised to permit the Board to make the CEO a member of the Board Intended to attract more qualified candidates, enable more effective leadership CEO may not cast tie-making or tie-breaking vote, may not be a member of Board Committees

RE & NRE - CEO on the Board Management Recommendations
Management Considerations Same as those that led to revision of WECC Bylaws Desire to attract most qualified CEO candidates, provide CEO effective voice at Board level, enhance CEO leadership role Preserve independence of Board decisions Management Recommendation Board retain authority to make the CEO a member of the Board, subject to voting and committee membership limitations current within WECC

RE & NRE - CEO on the Board GNC Individual Recommendations
Board retains authority to make the CEO a member of the board, subject to voting and committee membership limitations * Casey, Chamberlain, MacLaren: support for consistency with the NERC structure Feldman, Stout: supports because it may be helpful in attracting a good CEO candidate and clears the way for peer participation CEO not permitted to be on board Kelly, Shetler: - do not support board membership for CEO due to belief that the CEO should not be on a board he/she reports to.

Regulators Advisory Board
States/provinces are considering options for a State-Provincial Advisory Board to the NRE (WIRAB is the State-Provincial Advisory Committee to the RE under Section 215) Options appear to be – WIRAB (may be able to advise the NRE on some 215-related topics, subject to FERC’s approval of the WIRAB budget) A committee analogous to state advisory committees to Eastern RTOs (e.g., OMS, SPP’s RSC, OPSI, NESCOE)

Recommendation Portability
Some governance areas are conceptually equivalent between the RE and NRE companies, and GNC Recommendations and Dissenting opinions apply in both: Independent Board items, except Director qualification pools MAC items except for certain matters concerning Independent Director elections if there is a MAC in the NRE Hybrid Structure

Resolutions Structured into debatable, semi-autonomous chunks
GNC majority vote drives published Resolution wording Discussion including majority and minority opinions in GNC White Paper – right-click here - and select “Open Hyperlink” All Resolutions in Paper – right-click here – and select “Open Hyperlink”

Regional Entity = NERC +

Previously Approved Resolution – Regional Entity Governance
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) directs the Chief Executive Officer to work with staff, the Governance and Nominating Committee, the Finance and Audit Committee, and the Human Resources and Compensation Committee to complete work on a governance model for the new Regional Entity Company based on an Independent Board with a strong Member Advisory Committee. Work should commence immediately and advance so that sufficient details of this governance structure are available to the Board at the December 2012 Board meeting to permit further approvals and actions which would lead to final work products needed for membership approval at the 2013 Annual Meeting.

RE - Aspirations Management Recommendation
Reliability through independent, unbiased oversight aligned with FERC, NERC and other jurisdictional requirements and expectations Consistent, fair monitoring and enforcement activities Focus on results and outcomes High performance organization Clear responsibility and accountability Robust stakeholder input Efficient decision making Balance budget control with getting the job done appropriately

RE - Mission Statement Management Recommendation
[Regional Entity Name] is the steward of reliability for the Western Interconnection. To accomplish this role, [Regional Entity Name] will: Provide impartial and independent review and analysis, Incorporate system experience and knowledge into standards development, Ensure the delivery of consistent and fair monitoring and enforcement activities, and Identify root causes and lessons learned from system events.

Re - Functions Management Recommendation

RE - Committees Management Recommendation
Governance and Nominating Finance and Audit Human Resources and Compensation Standards Compliance Reliability Policy Issues Member Representatives

RE – Functions – Management Recommendation - 1
Feldman: Slides and Functional White paper to be updated to reflect NRE involvement in System Performance Analysis and Situational Awareness – and probably Event Analysis. See Management Paper

RE – Functions – Management Recommendation - 1
See Management Paper

RE & NRE – Company functions Member Workgroup input
Place holder for the Member Workgroup comments on allocation of functions. Dave is meeting this Thursday and will have an update to insert in the deck.

RE & NRE – Company functions GNC Individual Recommendations
We will re-engage in a discussion of this item on 12/3/2012 where we will have input from the Members Workgroup. Placeholder slide for GNC recommendations

Dec 2012 Resolution 2 RE Corporate Matters
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) determines that, following the proposed bifurcation into regional (RE) and non-regional (NRE) entities, the RE should be structured and governed such that it may qualify for IRS 501(c)(4) status as a public welfare corporation, acting as the steward of reliability in the Western Interconnection. The mission of the RE will be to: Provide impartial and independent review and analysis. Incorporate system experience and knowledge into standards development. Ensure the delivery of consistent and fair monitoring and enforcement activities. Identify root causes and lessons learned for major system events. The RE Board of Directors (REBOD) will create committees of the REBOD as determined by the REBOD, and these shall address: Governance and Nominating; Finance and Audit; Human Resources and Compensation; Standards; Compliance; and Reliability Policy Issues. The functions of the RE will be those described in Slides of the 12/5/12 GNC Presentation to the Board. For all resolutions, right-click here

RE - Nomination/Election of Directors WECC Current Process
Bylaws —Candidates nominated by GNC Bylaws —Candidates may also be nominated “upon the submittal of a nomination to the Chief Executive Officer signed by no fewer than 10 Members, including at least 3 from each of two different Member Classes. The Chief Executive Officer must receive such nomination at least thirty (30) days before the Annual Meeting.” Bylaws NADs elected by members at Annual Meeting Management believes this process has been efficient, successful in obtaining qualified NADs for the Board

RE - Nomination/Election of Directors Management Recommendations
Management Considerations Efficiency—nomination and election processes should not be burdensome to administer Consistency—maintaining process similar to WECC’s deemed beneficial given the pace/scope of organizational change; but must recognize MAC role/task force recommendation Quality—current WECC process results in high-quality NADs Management Recommendations Committee of Board and MAC members nominates slate of Independent Director candidates MAC votes on slate of candidates for membership vote Elected by membership at Annual Meeting

RE MAC Workgroup Recommendations
Nomination of Directors The MAC will be heavily involved in the nomination process MAC members will comprise 50% of nomination committee Election of Directors The slate of candidates can have more than one qualified candidate per open slot The MAC will vote on slate of candidates, with the ability to remand the slate to the nomination committee The entire membership will elect individual directors by those candidates receiving the most votes Bylaws Changes The MAC will approve changes to the bylaws prior to Board approval

RE (& NRE) - Nomination of Directors GNC Unanimous Recommendation
Nominating Committee consisting of Board and MAC members * Board Chair appoints X (5 or 6 tbd) members to the Nominating Committee * At least 1 MAC member from Classes 1 or 2 or 3 At least 1 MAC member from Classes 4 or 5 Nominating Committee may put forward 1 candidate to the Board if in the case of an existing Director, otherwise 2 candidates. The Board will select 1 candidate for each opening to put before the Membership for a vote. * Membership will vote on each Director opening individually Slide 49--If we retain Class 6, which I believe we should, the second sub-bullet should read "At least 1 MAC member from a non-industry class"--the purpose here was to ensure some diversity in the MAC membership of the nominating committee--as the slide now reads, the Chair could appoint three MAC members from utilities--note that this would still allow a Class 6 MAC member to satisfy this requirement, but only if that person came from a non-industry background (like Les)

RE (& NRE) - Nomination of Directors GNC Individual Recommendations
Nominating Committee: 3 Independents + 3 MAC * Committee must break its own ties Casey, Chamberlain, Shetler, Kelly, MacLaren, Stout, support to promote consensus and electability Nominating Committee: 3 Independents + 2 MAC Feldman supports to optimize board productivity; and observes this model is successfully used; and provides deference to the Board who has superior information on individual member performance. See white paper page 5 - right-click here - and select “Open Hyperlink” Paul: “Superior Information” comment – a Board will quickly migrate to where well more than 50% of the heavy lifting is done in Committees. Observing other organizations with an Independent Board and a MAC shows that MAC attendance at Board Committee meetings can be small – if any. Also, approximately 20% of Board work can be done in Executive Session where the MAC is not able to observe Board performance. Therefore, the Independent Directors are in the best position to evaluate the performance of fellow Directors.

RE - Election of Directors GNC Unanimous Recommendation
Directors elected directly by the Membership as a whole – each opening separate voting: * GNC unanimous recommendation based on: MAC is represented on the Nominating Committee; avoids a potential cycle of vetoes by MAC; MAC can express their view by holding an advisory vote; and reinforces MAC as an advisory role No MAC remand authority on proposed slate The MAC is free to take and issue an advisory vote.

RE - Number and Term of Directors Management Recommendations
Management Considerations Efficiency/Expertise—balance between efficient Board operations and breadth of Director expertise Cost—smaller size results in less Director expense Board Committees—ensure sufficient number of Directors to populate Board Committees; don’t spread Directors too thin Term rotation/overlap—adequate number and term to maintain experienced Board Management Recommendation 7 Independent Directors GNC, FAC, HRCC, WSC & WCC – each with 3 Directors, no Director having to serve on more than 2 committees 3-year terms After initial election cycle, permits at least 2 Director vacancies/elections per year, while retaining at least 2 Directors with two years’ experience, and 4 Directors with one year’s experience

RE - Number of Directors GNC Unanimous Recommendation
Nine Directors *

Dec 2012 Resolution 3 RE Director Items
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) determines that, following the proposed bifurcation into regional (RE) and non-regional (NRE) entities, the RE Board of Directors (REBOD) will be comprised of nine (9) Independent Directors with three-year staggered terms. The REBOD may appoint the RE Chief Executive Officer to the REBOD in a manner similar to that described and conditioned by the current WECC Bylaws. Election of Directors: The REBOD Chair will appoint a Nominating Committee consisting of three (3) Member Advisory Committee (MAC) members, with at least one (1) from Member Classes 1 through 3 and at least one (1) from Member Classes 4 or 5, and three (3) Independent Directors not standing for re-election. For all resolutions, right-click here

Dec 2012 Resolution 3 RE Director Items – Continued
The Nominating Committee will put forth two (2) names for each vacant Director position, recommending one (1) of the two (2) nominees to the full REBOD for consideration; except that the Nominating Committee may elect to put forward only one (1) name for consideration in the case of an existing Independent Director standing for re-election. The REBOD will select one candidate for each vacant position and present the Membership with a slate of one (1) candidate per vacancy. The membership will vote on each position separately. A nominee will be elected to the REBOD upon majority vote of the members as a whole, as well as by a majority of the RE Member Classes. For all resolutions, right-click here

RE – Director Qualifications WECC Current Process
Bylaws may not be affiliated with any Entity that is a Member of WECC or is eligible for membership in Classes 1 through 3 of WECC; will not be qualified to serve as a Director if the candidate, or the spouse or a minor child of the candidate, derives any of his or her annual income from a Member of WECC, an Entity that is eligible for membership in Classes 1 through 3, or a bulk power user in the Western Interconnection.

Re - Director Qualifications WECC Current Process
Bylaws objective of having at least one Non-Affiliated Director with expertise in electric transmission operations and planning; also, 1) experience in corporate leadership at the senior management or board of directors level; 2) leadership experience in law, finance, economics, accounting, engineering, regulation, natural resources or commercial commodity markets and associated risk management; 3) experience representing a substantial number of end users or a substantial number of persons interested in the impacts of electric systems on the public or the environment; 4) a well-developed understanding of the distinct operational, resource, political, and interest-based characteristics of various regions within the Western Interconnection; and 5) a well-developed understanding of Canadian power systems or Canadian regulatory issues.

RE - Director Qualifications Management Recommendations
Management Considerations Achieve strict independence to avoid any conflict of interest concerns Maintain sufficient breadth/depth of Director expertise/experience Management Recommendation Adopt current WECC NAD qualifications as a starting point WECC experience shows these qualification guidelines have produced qualified candidates/Directors No affiliation with a Registered Entity for whom WECC serves as Compliance Enforcement Authority COI concerns are a primary driver for bifurcation; RE will primarily be a regulatory body; regulator should not be governed by Directors affiliated with regulated entities

RE - Director Qualifications GNC Unanimous Recommendation
Mandatory Qualifications: 4 Directors with Transmission Planning, Transmission Operations, or Generation experience, and each qualification category represented by at least one director Desirable Qualifications: Regulatory/Legal; Accounting/Finance/Economics; Environmental; Compliance/Standards; International; Public Sector Rep; Distribution/Retail Provider; Energy/Commodity Markets See white paper page 2 – right-click here - and select “Open Hyperlink” Shetler / Feldman – OK to delete from White paper Slide 53--First bullet should include Shetler and not Stout Slide 59--The phrase "Today’s process + exclude any full-time employee of any Registered Entity" may not be clear--I think what we are trying to say is that we agree with staff's recommendation that there be no affiliation with any Registered Entity for whom the RE serves as the compliance enforcement authority but we would also exclude any full time employee of any other Registered Entity as well--Also, at one time we agreed that affiliation with an end user organization or a state or provincial entity would not disqualify a potential director, yet the phrase "Today's process" does disqualify such a person if they have any income from a WECC Member organization whether they are a Registered Entity or not--I think we need to clarify our thinking as a committee and make this slide clearer

RE - Director Qualifications GNC Unanimous Recommendation
With respect to allowed affiliations: Exclude any full-time employee of any Registered Entity. Include others previously excluded that are not associated with a WECC registered entity. Shetler / Feldman – OK to delete from White paper Slide 53--First bullet should include Shetler and not Stout Slide 59--The phrase "Today’s process + exclude any full-time employee of any Registered Entity" may not be clear--I think what we are trying to say is that we agree with staff's recommendation that there be no affiliation with any Registered Entity for whom the RE serves as the compliance enforcement authority but we would also exclude any full time employee of any other Registered Entity as well--Also, at one time we agreed that affiliation with an end user organization or a state or provincial entity would not disqualify a potential director, yet the phrase "Today's process" does disqualify such a person if they have any income from a WECC Member organization whether they are a Registered Entity or not--I think we need to clarify our thinking as a committee and make this slide clearer

Dec 2012 Resolution 4 RE Director Qualifications
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) determines that, following the proposed bifurcation into regional (RE) and non-regional (NRE) entities, an RE Independent Director may not be affiliated with any Registered Entity registered within the Western Interconnection or be an employee of any Registered Entity in North America. The term “affiliated” means: 1) An employee of, 2) a contractor for, 3) an employee of a contractor for, or 4) an equity owner of. These affiliation restrictions also include the spouse or minor child of the RE Independent Director. For all resolutions, right-click here

Dec 2012 Resolution 4 RE Director Qualifications – Continued
The Board of Directors shall ensure that the RE Board includes at least four (4) Directors with transmission operations, transmission planning, and generation experience. The remaining five (5) directors shall be selected to include experience from the areas of Regulatory/Legal, Accounting/Finance/Economics, Environmental, Compliance/Standards, International, Public Sector, Distribution/Retail Provider, and Energy/Commodity Markets; with each of the five (5) representing a different area of experience. For all resolutions, right-click here

RE MAC - Roles and Responsibilities – 1 Workgroup Recommendations
Relationship to the Board The MAC will be a committee that reports to the Board Board members are encouraged to attend MAC meetings The MAC will advise and offer recommendations to the Board on: Program priorities Budget Standards and Criteria Compliance activities Policy The MAC will meet separately from the Board A quorum is required for the MAC to take any action The MAC will vote on recommendations, by a simple majority, and then pass those recommendations to the Board The Chair or Vice-chair of the MAC will sit at the table with the Board, as a non-voting participant, to give advice and clarification Others MAC members may be invited to Board meetings to give advice and clarification

RE MAC - Roles and Responsibilities – 2 Workgroup Recommendations
Relationship to Members Member Committees The MAC will develop a member committee structure as needed The MAC will act as a liaison between the Board and member committees General Membership The MAC will act as a liaison to member classes Members of the MAC will represent the best interest of the Interconnection from their class perspective

RE MAC - Roles and Responsibilities GNC Individual Recommendations - 1
MAC and not the membership as a whole will vote on certain bylaws changes * Kelly, Stout: supports because the MAC is a balanced voting body…a single member class cannot control the outcome as they could in a membership vote Chamberlain: support with the proviso that organization is chartered for public good rather than as a trade organization Casey, Kelly, MacLaren, Shetler support with the proviso that members have a path to petition the board regarding bylaws changes Feldman: Does not support: The MAC is an advisory body and should not have approval authorities and should not displace the membership in bylaws changes. Shetler -- Need to clarify our position: Are we saying that the MAC will review and approve certain bylaws changes or are we saying that we have yet to decide between Board/MAC/membership?

RE MAC - Roles and Responsibilities GNC Individual Recommendations - 2
However, which Bylaws can be approved by which group (Board, MAC, Membership) is work in process MAC chair or designee will sit at the Board table as a non-voting participant to provide advice or clarification *

RE MAC - Roles and Responsibilities GNC Individual Recommendations
GNC Unanimous recommendation: MAC Members have a responsibility to expose all minority opinions to the Board Note: MAC votes signal the degree of MAC support for a recommendation to Management or the Board. Supported by: Casey, Chamberlain, Kelly, McLaren, Shetler, Members of the MAC will vote according to their own judgment as to what is in the best interest of the public good Supported by Feldman; Stout Members of the MAC will vote as a representative of the Class they represent. See White Paper page 11- JHS: Looks like we still need the rest of the GNC to weigh in.

RE MAC - Composition and Leadership Workgroup Recommendations
Class representation The MAC will be structured to align with the existing classes 1-7 There will be three (3) representatives from each class Diversity Each class will determine the need for diversity, e.g., geographic, stakeholder issues, etc. Leadership The leadership of the MAC will consist of a Chair and Vice-chair The MAC leadership will be elected by the membership of the MAC The Chair and Vice-chair of the MAC cannot be from the same class or company

RE MAC – Roles and Responsibilities GNC Unanimous Recommendation
GNC agrees with workgroup recommendations except that the GNC recommends no Class 7.

RE MAC - Nomination/Election of Members Workgroup Recommendations
Nominating members to the MAC Nominations can only be made by members of their respective classes Member representatives will be from the class they represent Term of MAC members Each representative will serve for a 3-year term Terms will be staggered No term limits Elections Each class will have a quorum to elect MAC representatives MAC elections will be held at the annual meeting (in person or by electronic means) MAC members will be elected by the nominee(s) receiving the most votes Members of each class will elect their MAC member

RE MAC - Nomination/Election of Members GNC Unanimous Recommendation
Regarding affiliation of a MAC member with the class they represent: GNC recommends that each Class nominate and elect their members to the MAC as they see fit. Shetler: I agree with Bill that we need to better define “affiliation”. I would suggest it means either a past or current employee or a current contractor of a class member.

Dec 2012 Resolution 5 RE MAC Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) determines that, following the proposed bifurcation into regional (RE) and non-regional (NRE) entities, the Member Advisory Committee (MAC) will be a Committee reporting to the RE Board of Directors (REBOD). The MAC will advise the REBOD on any matter the MAC deems appropriate, as well as when requested by the Board. MAC members will vote in the best interests of the public welfare. The MAC will have three (3) members per Member Class, elected by their respective Class without limitation as to affiliation or qualification. The MAC will elect a Chair and Vice-Chair, provided that the serving Chair and Vice Chair may not be affiliated with the same Member Class. For all resolutions, right-click here

Dec 2012 Resolution 5 RE MAC – Continued
The MAC will meet in open session separately from the REBOD; REBOD members may attend and participate. The MAC will develop its own subcommittees and work groups as needed. The MAC is expected to liaise with the membership to ensure majority and minority opinions are available to the REBOD. It is expected that the MAC will vote on certain (yet to be determined) bylaws amendments much as the WECC Membership votes on certain Bylaws amendments today. The MAC Chair or designees will sit at the REBOD table to provide advice on matters before the REBOD and respond to Director questions. For all resolutions, right-click here

(NRE) = Reliability Centers +
Non-Regional Entity (NRE) = Reliability Centers +

Previously Approved Resolution – Non-Regional Entity Governance
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) directs the Chief Executive Officer to work with staff, the Governance and Nominating Committee, the Finance and Audit Committee, and the Human Resources and Compensation Committee to complete work on a governance model based on a Hybrid Board with one vote per Member Class, said Board and voting to be structured so that the Independent Director votes comprise a majority of the total number of votes eligible to be cast. Work should commence immediately and advance so that sufficient details of this governance structure are available to the Board at the December 2012 Board meeting to permit further approvals and actions which would lead to final work products needed for membership approval at the 2013 Annual Meeting. The intent of this motion is that prior to the December 2012 Board meeting, the GNC will make a recommendation to the Board on either a hybrid or independent board structure based on then-current information.

NRE - Opportunity Statements Management Aspirations
Reliability through planning and operations Pursue tasks that can be performed at a lower cost centrally that relate to appropriate reliability Focus on results and outcomes High performance organization Clear responsibility and accountability Robust stakeholder input Efficient decision making Business Case focus and Benefit/Cost ratios drive budget

NRE - Mission Statement Management Recommendations
[Non-regional Entity Name]’s mission is to ensure reliability in the Western Interconnection and create value for its membership through cost-effective and efficient services and practices including: Real-time, interconnection-wide independent oversight* of the BES Coordinated system planning and modeling in all time-horizons, Secure sharing of critical data, and Robust stakeholder forums. * e.g., the Reliability Coordinator function.

NRE - Functions Management Recommendations
plus WREGIS

NRE - Committees Management Recommendations
Governance and Nominating Finance and Audit Human Resources and Compensation Transmission Expansion Planning Policy Reliability Practices Issues Market Interface Planning Coordination Operating Western Renewable Energy Generation Information System

Dec 2012 Resolution 6 NRE Corporate Matters
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) determines that, following the proposed bifurcation into regional (RE) and non-regional (NRE) entities, the NRE should be structured and governed such that it may qualify for IRS 501(c)(4) status as a public welfare corporation. The NRE Mission is to ensure reliability in the Western Interconnection and create value for its membership through cost-effective and efficient services and practices including: real-time, interconnection-wide independent oversight of the Bulk Electric System through such activities as its Reliability Coordinator Function; coordinated system planning and modeling in all time horizons; secure sharing of critical reliability data, and robust stakeholder forums. The NRE Board of Directors (NREBOD) will create committees of the NREBOD as determined by the NREBOD, but these shall address: Governance and Nominating; Finance and Audit; Human Resources and Compensation; Transmission Expansion Planning Policy; Reliability Practices and Issues; Market Interface, Planning Coordination; Operating, and the Western Renewable Electric Generation Information System. For all resolutions, right-click here

GNC agreed to evaluate an Independent only Board for the NRE
NRE - Independent Board vs. Hybrid Board GNC Individual Recommendations GNC agreed to evaluate an Independent only Board for the NRE No declared support yet: Hybrid ... Feldman, McLaren, Stout: Independent Board preferred - the RCs are an organization overseeing Member operations. Etc. Chamberlain will decide 12/3/12 or before Casey, Kelly, Shetler: withholding opinion until full Board discussion on all options, including member proposals See White Paper page

Dec 2012 Resolution 7a – NRE Board Structure and Direction – Hybrid
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board), having reconsidered the option of establishing an Independent Board for the non-regional entity (NRE) as a component of the proposed bifurcation into regional (RE) and non-regional entities, reaffirms its support for a Hybrid Board governance model for the NRE. To effectuate the proposed bifurcation in accordance with this and other Board resolutions, the Board directs WECC management and the appropriate Board Committees to complete WECC Bylaws revisions and any other necessary actions requiring Member approval prior to the 2013 Annual Membership Meeting, and to update the Board and seek necessary Board approvals on any substantive matters at each Board Meeting or in Special Board Meetings prior to the 2013 Annual Membership Meeting, as necessary and determined by the Board Chair or respective Board Committee Chairs. For all resolutions, right-click here

Dec 2012 Resolution 7b – NRE Board Structure and Direction – Independent
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board), having reconsidered the option of establishing an Independent Board for the non-regional entity (NRE) as a component of the proposed bifurcation into regional (RE) and non-regional entities, supports the implementation of an Independent Board governance model for the NRE. To effectuate the proposed bifurcation in accordance with this and other Board resolutions, the Board directs WECC management and the appropriate Board Committees to complete WECC Bylaws revisions and any other necessary actions requiring Member approval prior to the 2013 Annual Membership Meeting, and to update the Board and seek necessary Board approvals on any substantive matters at each Board Meeting or in Special Board Meetings prior to the 2013 Annual Membership Meeting, as necessary and determined by the Board Chair or respective Board Committee Chairs. For all resolutions, right-click here

NRE Hybrid Board Option

Dec 2012 Resolution 8a NRE Director Items – Hybrid
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) determines that, following the proposed bifurcation into regional (RE) and non-regional (NRE) entities, the NRE Board of Directors (NREBOD) will be comprised of Independent Directors and member class directors with three-year staggered terms. The number of independent directors will equal the number of member classes plus one (1). The NREBOD may appoint the NRE Chief Executive Officer to the NREBOD in a manner similar to that described and conditioned by the current WECC Bylaws. Election of Directors: The NREBOD Chair will appoint a Nominating Committee consisting of three (3) Member Class Directors, with at least one (1) from Member Classes 1 through 3 and at least one (1) from Member Classes 4 or 5, and three (3) Independent Directors not standing for re-election. For all resolutions, right-click here

Dec 2012 Resolution 8a NRE Director Items – Hybrid - Continued
The Nominating Committee will put forth two (2) names for each vacant Director position, recommending one (1) of the two (2) nominees to the full NREBOD for consideration; except that the Nominating Committee may elect to put forward only one (1) name for consideration in the case of an existing Independent Director standing for re-election. The NREBOD will select one candidate for each vacant position and present the Membership with a slate of one (1) candidate per vacancy. The membership will vote on each position separately. A nominee will be elected to the NREBOD upon majority vote of the members as a whole, as well as by a majority of the NRE Member Classes. For all resolutions, right-click here

NRE HB – Chair Election GNC Recommendations
GNC unanimous recommendation The Board will elect its own chair * Chair can be selected from all Directors Casey, Chamberlain, Kelly, Stout, Shetler support: and observe no reason to limit pool to just Independents. Chair must be selected from Independents Feldman, MacLaren support: and observe it is a governance best practice and good optics See White Paper page 9 -

RE Hybrid – Director Qualifications GNC Unanimous Recommendation
Mandatory Qualifications: 3 Directors with Transmission Planning, Transmission Operations, or Generation experience, and each qualification category represented by at least one director Desirable Qualifications: Regulatory/Legal; Accounting/Finance/Economics; Environmental; Compliance/Standards; International; Public Sector Rep; Distribution/Retail Provider; Energy/Commodity Markets See white paper page 2 – right-click here - and select “Open Hyperlink” Shetler / Feldman – OK to delete from White paper Slide 53--First bullet should include Shetler and not Stout Slide 59--The phrase "Today’s process + exclude any full-time employee of any Registered Entity" may not be clear--I think what we are trying to say is that we agree with staff's recommendation that there be no affiliation with any Registered Entity for whom the RE serves as the compliance enforcement authority but we would also exclude any full time employee of any other Registered Entity as well--Also, at one time we agreed that affiliation with an end user organization or a state or provincial entity would not disqualify a potential director, yet the phrase "Today's process" does disqualify such a person if they have any income from a WECC Member organization whether they are a Registered Entity or not--I think we need to clarify our thinking as a committee and make this slide clearer

Dec 2012 Resolution 9a NRE Director Qualifications – Hybrid
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) determines that, following the proposed bifurcation into regional (RE) and non-regional (NRE) entities, an NRE Independent Director may not be affiliated with any member of the NRE or any entity eligible for membership in classes 1, 2, or 3 of the NRE. The term “affiliated” means: 1) An employee of, 2) a contractor for, 3) an employee of a contractor for, or 4) an equity owner of. These affiliation restrictions also include the spouse or minor child of the NRE Independent Director. The Board of Directors shall ensure that the NRE Board includes at least three (3) Directors with transmission operations, transmission planning, and generation experience. The remaining four (4) directors shall be selected to include experience from the areas of Regulatory/Legal, Accounting/Finance/Economics, Environmental, Compliance/Standards, International, Public Sector, Distribution/Retail Provider, and Energy/Commodity Markets; with each of the four (4) representing a different area of experience. For all resolutions, right-click here

NRE Hybrid – Member Class Structure – 1 Management Recommendations
Management Considerations Stability/familiarity Adequate stakeholder representation in Member Class/governance structure Management Recommendations NRE membership comprised of current WECC Member Classes 1-4 & 7 Retention of most WECC Member Classes enables smooth transition, ensures familiar Member roles State/Provincial interest represented by advisory committee Canadian interest represented by other Member Classes Result: Hybrid Board w/5 Mbr Classes

NRE HB - Member Class Structure – 2 Management Recommendations
Canadian and Mexican entities represented through other classes, not as a separate class.

NRE HB - Nomination of Member Class Directors WECC Current Process
Bylaws 6.4.1 Nominated by member class or GNC; additional candidates upon submittal to the CEO signed by three (3) Members of the Class, or ten percent (10%) of the total number of Members of the Class, whichever is greater. The CEO must receive such nominations at least thirty (30) days before the Member Class Meeting. Elected by member class

Management Considerations
NRE Hybrid – Nomination of Member Class Directors Management Recommendations Management Considerations Mitigate conflict of interest concerns Current WECC practice can create perceived/potential conflict of interest between Member interests and WECC interests Ensure member class input & representation Management Recommendation Member class submit candidate pool to “GNC” Ensures all candidates originate from member class “GNC” nominate slate of candidates for each member class Provides “external” review of slate; broadens responsibility for nominations Directors elected by membership as a whole Mitigates COI concerns by removing direct election by member class

Member classes nominate and elect their own directors *
NRE Hybrid – Nomination of Member Class Directors GNC Unanimous Recommendation Member classes nominate and elect their own directors *

NRE RE - Member Class Director Rep & Voting WECC Current Process
Bylaws 6.2 – 4 Directors per member Classes 1-6 One vote per Member Class Director

Board Resolution: one vote per member class Options
NRE Hybrid – Member Class Director Rep & Voting Management Recommendations Board Resolution: one vote per member class Options One Director – One Vote Multiple Directors – One Vote Multiple Directors – Fractional Vote Management Considerations Efficiency – maintain a reasonable Board size Practicality – ensure Board voting process that is manageable, relatively easy to record Informed decisions – Director decisions appropriately based on Board discussion Member Class representation – ensure sufficient representation of member class views at Director level

NRE HB - Member Class Director Rep & Voting Management Recommendations
One Director per Member Class Maintains reasonable Board size Director responsible for obtaining/representing all member class viewpoints One Vote per Director Ease of conducting, recording votes One Alternate Director per Member Class Provides for member class representation when primary Director is unavailable Result: 5 Member Class Directors, 5 Alternate Member Class Directors

NRE HB - Member Class Director Rep & Voting GNC Individual Recommendations
One director option with MAC * Stout, MacLaren, Casey, Chamberlain, Shetler support to eliminate fractional voting and provide a wide range of member inputs Kelly supports if multiple director option rejected Multiple directors per vote option without MAC Kelly: allows entire view of the class to be represented One Director option without a MAC Feldman: a Hybrid Board has members on the Board and does not need a MAC reporting to the board. I recommend a members committee to advice the Member Directors however. See White Paper page 7 -

NRE HB - Member Class Director Qualifications WECC Current Process
Bylaws may elect any person as a Member Class Director, provided that no Member or group of Affiliated Members may have more than one Director associated with them. No other specified qualifications

Management Considerations
NRE Hybrid – Member Class Director Qualifications Management Recommendations Management Considerations Only one director per member class Demonstrated ability/expertise Management Recommendation Candidates must be employed by an entity eligible for membership in the Class they seek to represent Ensure adequate familiarity with/attachment to the member class Demonstrated experience – for example, executive management/Board level, law, finance, economics, accounting, engineering, operations Ensure adequate and representative member class director experience/expertise

NRE Hybrid – Member Class Director Qualifications GNC Unanimous Recommendation
GNC supports the WECC current process - may elect any person as a Member Class Director, provided that no Member or group of Affiliated Members may have more than one Director associated with them. * No other specified qualifications

RE Member Directors – Voting Expectations GNC Unanimous Recommendation
GNC Unanimous recommendation: Member Directors are expected to vote based on their perception of the best choice for the public good, without regard to Company or Class affiliation. *

Dec 2012 Resolution 10a – NRE Member Class Directors/MAC – Hybrid
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) determines that, following the proposed bifurcation into regional (RE) and non-regional (NRE) entities, the Member Classes of the NRE will nominate and select their respective Class Director for the NRE Board of Directors (NREBOD) in a manner similar to that used by WECC to select Member Class Directors, except that only one (1) Director per Member Class will serve on the NREBOD at any time. There should be no affiliation or qualification requirements for Member Class Directors. The NREBOD will have a Member Advisory Committee (MAC) similar to that envisioned for the RE, except that the duties assigned to the MAC related to election of RE Independent Directors will be carried out for the NRE by the Member Class Directors. For all resolutions, right-click here

NRE Independent Board Option

Dec 2012 Resolution 8b – NRE Director Items – Independent
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) determines that, following the proposed bifurcation into regional (RE) and non-regional (NRE) entities, the NRE Board of Directors (NREBOD) will be comprised of nine (9) Independent Directors with three-year staggered terms. The NREBOD may appoint the RE Chief Executive Officer to the NREBOD in a manner similar to that described and conditioned by the current WECC Bylaws. Election of Directors: The NREBOD Chair will appoint a Nominating Committee consisting of three (3) Member Advisory Committee (MAC) members, with at least one (1) from Member Classes 1 through 3 and at least one (1) from Member Classes 4 or 5, and three (3) Independent Directors not standing for re-election. For all resolutions, right-click here

Dec 2012 Resolution 8b – NRE Director Items – Independent – Continued
The Nominating Committee will put forth two (2) names for each vacant Director position, recommending one (1) of the two (2) nominees to the full NREBOD for consideration; except that the Nominating Committee may elect to put forward only one (1) name for consideration in the case of an existing Independent Director standing for re-election. The NREBOD will select one candidate for each vacant position and present the Membership with a slate of one (1) candidate per vacancy. The membership will vote on each position separately. A nominee will be elected to the NREBOD upon majority vote of the members as a whole, as well as by a majority of the NRE Member Classes. For all resolutions, right-click here

Dec 2012 Resolution 9b – NRE Director Qualifications – Independent
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) determines that, following the proposed bifurcation into regional (RE) and non-regional (NRE) entities, an NRE Independent Director may not be affiliated with any member of the NRE or any entity eligible for membership in classes 1, 2, or 3 of the NRE. The term “affiliated” means: 1) An employee of, 2) a contractor for, 3) an employee of a contractor for, or 4) an equity owner of. These affiliation restrictions also include the spouse or minor child of the NRE Independent Director. For all resolutions, right-click here

Dec 2012 Resolution 9b – NRE Director Qualifications – Independent – Continued
The Board of Directors shall ensure that the NRE Board includes at least four (4) Directors with transmission operations, transmission planning, and generation experience. The remaining five (5) directors shall be selected to include experience from the areas of Regulatory/Legal, Accounting/Finance/Economics, Environmental, Compliance/Standards, International, Public Sector, Distribution/Retail Provider, and Energy/Commodity Markets; with each of the five (5) representing a different area of experience. For all resolutions, right-click here

Dec 2012 Resolution 10b NRE MAC – Independent
Resolved, That the Western Electricity Coordinating Council (WECC) Board of Directors (Board) determines that, following the proposed bifurcation into regional (RE) and non-regional (NRE) entities, the NREBOD will have a Member Advisory Committee (MAC) similar to that envisioned for the RE. For all resolutions, right-click here

GNC items delayed until after Dec Board Meeting
Bylaw change authority buckets: Board, MAC, Members. Definition of “Majority of Classes” in Director elections – depending on # of Classes Process for removal of Directors

Reference Material

GNC Schedule (all times Mountain)
Dec 3: Another GNC call Dec 5: GNC meeting in the morning – finalize deck Dec 5: Afternoon – Technical Session

Member Classes Class 1 – Electric line of business entity > 1000 circuit mile of transmission line – 23 members (6%) Class 2 – Electric line of business entity < 1000 circuit mile of transmission line – 54 members (15%) Class 3 – Electric line of business entity without any distribution or transmission lines – 71 members (20%) Class 4 – End-users of significant amount of electricity, as well as organizations that represent end-users or persons interested in the impact of electric system on the public or environment. – 17 members (5%) Class 5 – State and Provincial representatives 22 members (6%) Class 6 – Canadian members – 19 members (5%) Class 7 – Member at large – 153 members (43%) Total members 359

Cross Reference to Existing Operation & Planning Functions
Chamberlain: While this matrix, which was discussed on October 8th, is a big improvement over what had existed at the time of the September Board meeting, I believe we should expect further improvement in clarity before December—as I recall, we left the October 8th meeting with Mark Maher recognizing that further work was needed to decide how the RE would exercise its planning oversight function. Delete after M

Cross Reference to Existing Operation & Planning Functions
Delete after Monday

Canada Info

Bifurcation and Governance Required Approvals
Approval Required by Document or Action WECC Board WECC Members NERC FERC Bifurcation1 X RE Bylaws Amendments2, 3 Delegation Agreement3 NPCC CEA Agreement Termination Canada & Mexico MOAs NRE Bylaws NRE Tariff4 TBD NRE Functional Registration NRE RC Certification5

Bifurcation and Governance Required Approvals Notes
NERC and FERC approval are not required for the decision to bifurcate. However, NERC and FERC retain the ability to terminate WECC’s delegated authority so any action that impacts WECC’s ability to carry out its delegated responsibilities, or its budget for doing so, is subject to NERC and FERC review. WECC Bylaws section 13.1 requires Member approval ONLY for Bylaws sections (Board composition, selection, qualifications and duties), section 8.4 (has been repealed), Appendix C (Dispute Resolution Procedures), and section 13.1 itself. WECC Bylaws are contained at Exhibit B to the Delegation Agreement so RE Bylaws amendments will likely be forwarded for approval as part of a revised Delegation Agreement package. The process for development and approval of the NRE Regional Tariff has not yet been developed. This will likely be a broad, open, participatory process. It may culminate in an effort to obtain stakeholder approval, although formal approval would not be required. The WECC Board may also want to approve the tariff prior to authorizing its filing for FERC approval. Because the RC will be transferring to a new legal entity, NERC may require a new certification effort. Alternately, as it has done for other entities, NERC may view bifurcation as resulting in only an organizational name change since facilities, personnel and RC footprint will remain unchanged. Staff will explore this issue going forward.

To Discuss

Open Requests to Management
GNC directed WECC Management to seek legal advice on how the 2005 arrangements between Canada and the US on formation of the ERO impact WECC bifurcation, including whether there are requirements for Canadian independent director(s) on the RE. GNC recommends that the Board appoint a small team of directors and WECC Management to engage with Class 6 members to develop structures for continued Canadian participation in enhancing reliability in the Western Interconnection under a bifurcated model.

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WECC Board of Directors GNC Presentation December 5, 2012 Draft

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WECC Board of Directors GNC Presentation December 5, 2012 Draft

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