1. Notice of Proposed Rulemaking on Standards WECC Board of Directors Meeting December 7-8, 2006

2. Presentation Overview NOPR Review Identify Policy Issues for Board Discussion Review of WECC Comments

3. Standards-Three Categories Approved (28) Acceptable in submitted form Includes six regional differences Approved – Direct Modification (61) 83 of 107 Standards approved Pending (24) None Remanded

4. Approved -- Direct Modification 61 Standards and the Glossary Accepted for the purpose of being improved – would be mandatory FERC identified what needs to be fixed or modified Follow NERC Process May lack measures and/or levels of non- compliance Contain clear and enforceable requirements?? Include high priority standards that should be fixed in one year

5. High Priority Standards COM-001-0Telecommunications COM-002-1Communications and Coordination EOP-002-0Capacity and Energy Emergency EOP-003-0Load Shedding Plans EOP-008-0Plans for Loss of Control Center Functionality FAC-003-1Vegetation Management Program FAC-008-1Facility Ratings Methodology IRO-003-1 Reliability Coordination – Wide Area View IRO-006-3 Reliability Coordination – Transmission Loading Relief PER-002-0Operating Personnel Training PER-003-0Operating Personnel Credentials PER-004-0 Reliability Coordination – Staffing PRC-006-0Development and Documentation of Regional UFLS Programs PRC-020-1Under-Voltage Load Shedding Program Database TOP-006-0Monitoring System Conditions VAR-001-1Voltage and Reactive Control

6. Pending -- Good Utility Practice 24 Standards, two Regional Differences NERC is Requesting additional information

7. Other Items NERC to develop a continent-wide contingency reserve policy ¶156 Should there be continent-wide standards based on WECCs Automatic Time-Error Correction and inadvertent interchange policy? ¶182 USFMP has additional items (governance, costs, etc.) ¶564

8. Comments Comments are due January 3, 2007 WECC schedule is to have comments prepared and submitted by December 20, 2006 Seeking BOD input on Policy Issues and approval or agreement on comment items

9. Policy Issues Standard Validation and Improvement Period (Trial Period) Less Subjective Penalty process Compliance through education and outreach vs. process Clarification of Standards applicable to Reliability Coordinators Collaboration with Canada and Mexico

10. Standard Validation and Improvement Period All or some of the approved standards All approved standards Only for 61 approved: direct modification standards Ambiguities exist (61 standards) How do we enforce Allow for development of necessary documentation Public disclosure Reduce appeals Consistency

11. Approved -- Direct Modification 61 Standards and the Glossary Accepted for the purpose of being improved – would be mandatory FERC identified what needs to be fixed or modified Follow NERC process May lack measures and/or levels of non- compliance Contain clear and enforceable requirements?? Include high priority standards that should be fixed in one year

12. Less Subjective Penalty Matrix Current process is very cumbersome Many components to consider in determining a penalty Subjectivity called for on aspects that the information may not be readily available More time consuming than compliance assessment Subject to many more appeals Has this train already left the station?

13. Compliance through Outreach and Education Focus on Compliance and Mitigation Dont Zap entities for an initial non- compliance Minimize initial penalty unless flagrant No penalties during approved mitigation periods No surprises! Goal is compliance, not collection of dollars

14. Clarification of Standards Applicable to Reliability Coordinators Some standards applicable to RC call for the RC to complete a task not currently done by RCs in the west Task is being done by someone else Need formal agreements Not the way business arrangements were developed in the west Clarification of Standard or Regional Difference

15. Collaboration with Mexico and Canada Standard Development Standard Remand Process Standard Implementation Standard Enforcement Comments to NERC need to ensure NERC understands that the ERO has to address Canadian and Mexican interests in all actions

16. NOPR Comments Agree with FERC No Remands 22 approved standards are complete Standard Validation and Improvement Period Difficult to ensure consistency between Regions Should Regions be given discretion over which entities standards are applicable too

17. NOPR Comments Implementation in Canada Due to regulatory/legislative requirements, standards may be implemented differently in Canada Agree that the ERO should submit future changes to the Functional Model to FERC, but any changes should go through NERC Due Process first NEED for RRO as well as RE

18. NOPR Comments Vegetation Management standard should be incorporated in federal agencies construction operation maintenance plans Deviation from minimum requirements should not be permitted

19. FERC NOPR on Standards WECC Board of Directors Meeting December 7-8, 2006 Questions?