1. IMO Compliance Process

2. Compliance Market Rules and Standards Chapter 3: Empowers and obligates IMO “Enforcement” Section 6.1.1: “monitor, assess and enforce” Section 6.1.2: IMO monitoring “as it considers necessary” Section 6.2.3: - If a breach established, consequences or sanctions may apply - If sanctions appropriate, IMO notifies the market participant with details of breach, time to remedy, evidence, etc.

3. Compliance Market Rules TERMINOLOGY Compliance: Ensure that the obligations under the Market Rules are met Monitor: Maintain regular surveillance Surveillance: Protect against inappropriate or anomalous conduct or design flaws Breach: Break or Neglect (of rule, obligation, contract) Sanction: Penalty

4. Non-Compliance Identification The identification of instances of non- compliance and the resolution of such situations are a joint function of: IMO Line Units - Settlements Wholesale Metering The Market Assessment and Compliance Division (MACD)

5. Metering Deficiency Letter Wholesale Metering (line unit) issues deficiency letter to MMP. Progressive process, technically related. Failed meter communications - persistent < 0.5 Amp sustained operation Failed Engineering Units Report Time clock drift

6. IMO Investigates Alleged Breaches MACD (Compliance Unit) issues Notice of Alleged Breach (NAB) letter to MP including: details of breach and evidence time for remedy details of potential sanctions time window for MP response MP’s right to a meeting

7. IMO Decides Breach Occurred IMO may issue an order which may: direct MP to comply within specified timeframe impose increased record keeping requirement impose financial or non-financial penalties include plan for bringing the MP into compliance

8. Penalties If discussion and letter not sufficient, MACD can resort to penalties. Discussion Non-Compliance Letters Penalties and directions (L1, L2, L3, L4 non- compliances) (i.e. $6,000/breach established for L3) Suspension/Termination Sanctions are posted to IMO website

9. Top 3 Metering Breaches Un-registered Metering Installation (aka Un-metered power) Metering wiring breach Un-registered Metering Service Provider