FRCC s Enforcement and More! (Revised with Information from the 2/19/15 FERC Order on RAI) FRCC Webinar

Transcription

1 FRCC s Enforcement and More! (Revised with Information from the 2/19/15 FERC Order on RAI) FRCC Webinar February 19 & 26, 2015

2 Ground Rules All participants have been muted upon sign-on Please keep your phone on mute Do not place the WebEx call on hold if there is a music feature on your phone system If you have questions during the WebEx, please submit a chat to the host with the question Some questions may require us to give you an answer at a later date 2

3 Roll Call Process We will start with a roll call of all registered participants to record attendance FRCC will un-mute your telephones one-by-one and call out your name When your name is called, please respond with your name and number of participants with you (including yourself) If your name has not been called, please announce yourself when prompted after the roll call 3

4 Disclaimer This material presented by the FRCC is accurate to the best of our understanding, and all the information is provided in good faith. If any of the information presented is in conflict with NERC, FERC, or other statutory requirements, the NERC Standards and Rules of Procedure take precedence over any material or information provided in this presentation. Before relying on the material, users should independently verify its accuracy, completeness, and relevance for their purposes and that it is upto-date. 4

5 Purpose To describe FRCC s Enforcement Process, as performed by the FRCC Enforcement staff, so that the Registered Entity can better understand how the enforcement process works 5

6 Acronyms used in this Presentation Bulk Electric System (BES) Compliance Exception (CE) Compliance Monitoring and Enforcement Program (CMEP) Compliance Oversight Plans (COPs) Electric Reliability Organization (ERO) Find, Fix, Track and Report (FFT) Internal Controls Evaluations (ICEs) Inherent Risk Assessments (IRAs) 6

7 Acronyms used in this Presentation (cont.) Notice of Alleged Violation Penalty and Sanction (NOAV) Notice of Confirmed Violation (NOCV) Notice of Penalty (NOP) Spreadsheet Notice of Penalty (SNOP) Reliability Assurance Initiative (RAI) Risk Assessment and Mitigation (RAM) Rules of Procedure (ROP) Violation Risk Factor (VRF) 7

8 Acronyms (cont.) Acronyms (with Definitions) not specifically in the slides but I may use in the discussion are: Compliance Tracking System (CTS) the front facing entity portal where the entity submits specific information and data to the FRCC Compliance Information Tracking System (CITS) the FRCC Compliance facing backend where FRCC Compliance staff receives specific entity information and data Dropbox Folders or FTP site the location on the FRCC website where notifications are transferred between entity folders and FRCC Compliance staff 8

9 FRCC Compliance Reorganization 9

10 FRCC Compliance Reorganization In 2014, FRCC Compliance reorganized to create the Risk Assessment and Mitigation (RAM) Group in response to NERC s Reliability Assurance Initiative (RAI) The change was designed to quickly implement RAI by assigning team members already trained and knowledgeable in assessing risk to the reliability of the Bulk Electric System (BES) 10

11 FRCC Compliance Reorganization (cont.) The RAM Group includes prior Enforcement Team Members Rick Dodd and Patrick VanGuilder RAM is managed by Chris Holmquest. Mark Rogers joined the team in late 2014 Orlando Brandon joined FRCC Enforcement as an Enforcement Specialist in late

12 Compliance Table of Organization 12

13 RAM Group Responsibilities 13

14 RAM Responsibilities RAM members perform Entity related Inherent Risk Assessments (IRAs), Internal Controls Evaluations (ICEs) and manage Mitigation Plans/Activities The RAM assessments created in the IRA and ICE processes are used to develop the Monitoring Group s Compliance Oversight Plans (COPs) COPs are the action plans by which FRCC may monitor entity compliance (whether by Audit, Guided Self Certification, Spot Check, etc.) 14

15 RAM Responsibilities (cont.) RAM assesses the risks of noncompliances RAM manages the Self-Logging program o Information regarding the Self-Logging program is located on the FRCC website, Compliance Tab, Self Logging link on menu on left (screen shot on next slide) 15

16 RAM Responsibilities (cont.) 16

17 Enforcement Group Responsibilities 17

18 Enforcement Responsibilities Perform determinations of noncompliance Request and review evidence from the Registered Entity to complete determinations Assess risk to the reliability of the Bulk Electric System Process dispositions and dismissals 18

19 Enforcement Responsibilities (cont.) Perform settlement negotiations Prepare filings to NERC/FERC Prepare Notices of Penalty Payment Due and Invoices (if monetary penalties are applicable) Develop and track performance metrics Conduct Outreach Activities Participate in Electric Reliability Organization (ERO) forums to foster Regional consistency 19

20 Enforcement Determinations 20

21 Determinations FRCC Enforcement performs a review of the facts and circumstances surrounding a noncompliance and determines if it should be: Dismissed, as it does not constitute a violation of a Reliability Standard; or Disposed of by the most appropriate disposition method 21

22 Evolution of Dispositions Early disposition processes were lengthy and burdensome no matter how risky the noncompliance actually was NERC and the Regions desired to refocus Regional and industry efforts on reliability excellence by: o Eliminating undue regulatory burdens o Streamlining paperwork requirements o Encouraging continued timely and thorough self-reporting and mitigation 22

23 Evolution of Dispositions (cont.) Other disposition types were developed as a result of the streamlining efforts: o Compliance Exception o Find, Fix, Track and Report o Spreadsheet Notice of Penalty o Notice of Penalty 23

24 Risk During the determination phase: FRCC Enforcement will review risk assessments developed by RAM Risk assessments are used in determining appropriate disposition methods Risk is categorized as minimal, moderate or serious/substantial This assessment of Risk is not the same as the Violation Risk Factor(VRF) 24

25 Risk (cont.) Factors considered when determining risk: Potential risk and actual harm to the reliability of the BES Mitigating and aggravating factors present System conditions Size, nature, and location of the facilities affected 25

26 Triage FRCC Enforcement follows a Triage process: An entity will be informed of the disposition method (Dismissal, CE, FFT, or SNOP/NOP) within 60 days (on average) of the reported date of the noncompliance to the FRCC 26

27 Disposition Method Pocket Guide 27

28 Disposition Methods using Risk Disposition Method Compliance Exception Find, Fix, Track and Report Spreadsheet Notice of Penalty Full Notice of Penalty Risk to the BES at the Time of the Noncompliance Minimal Risk Moderate Risk Minimal or Moderate Risk; with a Penalty or Sanction Serious to Substantial Risk 28

29 It s Not Just About Risk 29

30 Factors Considered in Disposition Method Decisions Associated Risk and Harm to BES Underlying facts and circumstances Duration of noncompliance Registered Entity s compliance program, including preventive and corrective processes and procedures, internal controls and culture of compliance Registered Entity history of Self-Reporting and voluntary corrective actions made 30

31 Factors Considered in Disposition Method Decisions (cont.) Degree and quality of cooperation by the Registered Entity in the audit or investigation process, and in any remedial action Attempts to conceal the violation or any related information Whether the violation was intentional Relevant information or extenuating circumstances 31

32 Disposition Methods 32

33 Compliance Exception (CE) CEs: Minimal risk to the reliability of the Bulk Electric System at the time of the noncompliance Mitigating Activities must either be completed or will be completed within 12 months of the public posting FERC has a 60 day comment period after the posting Benefits: No penalty assigned Not used to aggravate the penalty of future noncompliances, unless: a. When the failure to fully remediate the underlying compliance matter contributes to a subsequent serious and/or substantial noncompliance matter; and b. When determining whether an entity should continue to qualify for compliance exception treatment. 33

34 Find, Fix, Track and Report (FFT) FFTs: Moderate risk to the reliability of the Bulk Power System Mitigating Activities must either be completed or will be completed within 12 months of the public posting FERC has a 60 day comment period after the posting Benefits: Considered an remediated issue instead of a violation No penalty assigned 34

35 Special Documents Related to CEs and FFTs 35

36 Opt-Outs for CEs and FFTs Neither the Compliance Exception (CE) or the Find, Fix, Track and Report (FFT) disposition methods are expressly described in the NERC Rules of Procedure (ROP) or the Compliance Monitoring and Enforcement Program (CMEP) Therefore the entity will be allowed the option to Opt-Out of CE and FFT processing If an entity chooses to opt-out, the noncompliance will instead be processed as a Notice of Penalty (SNOP or NOP) 36

37 Affidavits for CEs The CE process requires that a knowledgeable individual from the Registered Entity notify FRCC that mitigation of the noncompliance is complete During the Opt-Out process the entity will receive an Affidavit template to complete and return at the completion of the CE s mitigation 37

38 Affidavits for FFTs The FFT process requires that Registered Entity Senior Management affirm they were aware of the mitigation of the noncompliance For the purposes of FFT Affidavits, FRCC considers Vice-President level and above as Entity Senior Management For entities with different management structures than above, please contact FRCC Enforcement to identify the appropriate signatory During the Opt-Out process the entity will receive an Affidavit template to complete and return at the completion of the FFT s mitigation 38

39 CE and FFT References 39

40 FERC Orders regarding FFTs and CEs Issued March 15, 2012: Issued June 20, 2013: Issued September 18, 2014: 004_ pdf Issued February 19, 2015: 40

41 Notice of Penalty Disposition Types 41

42 Spreadsheet Notice of Penalty (SNOP) SNOP: Minimal or Moderate risk to the reliability of the Bulk Electric System resulting in a penalty or sanction Benefits: Less documentation than a Full Notice of Penalty (NOP) Faster to process than a Full Notice of Penalty (NOP) Can utilize the settlement process 42

43 Full Notice of Penalty (NOP) NOP: Serious or Substantial risk to the reliability of the Bulk Electric System resulting in a penalty or sanction Benefits: Can utilize the settlement process 43

44 Penalty Considerations Comparable to remedies levied for similar violations (NOP research) Reflect the risk posed by the unique facts and circumstances regarding the specific violation Consider the compliance culture of the Registered Entity Commensurate and fair compared to the reliability impact of the violation 44

45 Notice of Penalty References 45

46 FERC Policy Statements on Enforcement Issued October 20, 2005: Issued May 15, 2008: 46

47 NERC Sanction Guidelines CMEP Appendix 4B Effective July 1, L/Appendix_4B_SanctionGuidelines_ pdf 47

48 Disposition Rules Pocket Guide 48

49 Disposition Business Rules Disposition Type Opt Out letter Req? Confirmation of Sr. Management involvement? Affidavit Req? CE Y N N, but completion of mitigation must be communicated by an authorized representative of the registered entity Allowable Mitigation timeline Formal MP req? Mitigation Verification Req? 12 mos N Region Discretion FFT Y Y Y 12 mos N Region Discretion SNOP N N N nego N Y, but not required prior to filing with FERC NOP N N N nego N Y, but not required prior to filing with FERC FERC Review Timeline 60 days N 60 days N 30 days Y 30 days Y Notify Entity FERC review complete? 49

50 Settlement Process 50

51 Settlement Settlement negotiations can be scheduled for noncompliances that cannot be disposed of as CEs, FFTs, or by Dismissal FRCC encourages a formal request for the settlement process The settlement process can be requested even prior to determination Settlement discussions can be face to face or via WebEx/telephone FRCC will provide a Determination of Noncompliance Summary Document prior to the settlement meeting Entities may offer Above and Beyond measures that improve compliance/reliability 51

52 Settlement (cont.) Once settlement takes place: A settlement agreement will be developed and signed by the entity and FRCC A Notice of Penalty (NOP) is developed by FRCC and NERC Enforcement Staff The NOP package will be filed with FERC 52

53 Settlement (cont.) Once NERC has reviewed and approved, NERC will file with FERC FERC will have 30 days to comment after the filing Once FERC provides notice that it will take no further action, FRCC will issue a penalty invoice allowing the entity thirty (30) days for payment 53

54 Notice of Alleged Violation (NOAV) Process 54

55 NOAV Process If the entity chooses not to settle, FRCC Enforcement Staff can issue a Notice of Alleged Violation Penalty and Sanction (NOAV) Letter to the entity with the penalty and sanction amounts for the Alleged Violation(s) The entity has 30 days to elect to pay the penalty or request a hearing Hearing Procedures are located in the NERC Rules of Procedure 55

56 NOAV Process (cont.) Settlement negotiations may be entered into at any time provided, that: The Compliance Enforcement Authority may decline to engage in or continue settlement negotiations after a Possible Violation or Alleged Violation becomes a Confirmed Violation In other words, the Region may decline negotiating a settlement after the entity has received a Notice of Confirmed Violation (NOCV) The Compliance Enforcement Authority, the Registered Entity or any other Participant may terminate settlement negotiations at any time 56

57 Things to Know: Regional Consistency 57

58 Regional Consistency Reporting Tool The ERO is committed to ensuring and promoting consistency among the Regional Entities and with applicable published processes, procedures, and rules To improve consistency among the Regional Entities and drive continuous improvement in day-to-day operations, the Regional Entities created the Regional Consistency Reporting Tool Registered entities or other relevant industry stakeholders can report any perceived inconsistency in the methods, practices, or tools of two or more Regional Entities through the Regional Consistency Reporting Tool 58

59 What the Regional Consistency Reporting Tool Is Not What the Regional Consistency Tool is not used for: The Tool does not function as an appeal of a Regional Entity action or decision It does not replace the NERC or Regional Hotlines for complaint reporting 59

60 Link to Regional Consistency Reporting Tool Document from NERC Website 60

61 Regional Consistency Reporting Tool Information Document 61

62 Regional Consistency Reporting Tool Access 62

63 Feedback 63

64 Let us know how we are doing! The FRCC Compliance Administrators will be sending requests for your feedback on this webinar Please let us know if this webinar was helpful to you, if there are any changes you d like to see, or any topics you would like covered in future webinars or workshops 64

65 Let us know how we are doing! (cont.) Your feedback is very important to us and the quality of our outreach to you is a #1 priority! 65

66 Questions? Thank you for attending today s Webinar At this time we welcome any additional questions via the Chat Feature We will also provide you with the dates and times of some upcoming events after the final questions 66

67 Future Webinar Schedule Check the FRCC Compliance Home page for upcoming FRCC Compliance Webinars 67

68 2015 Workshop Schedule Spring Compliance Workshop, Apr 14, 15, 16 (Three one-day workshops from which to choose) CIP Compliance Workshop, May 11, 12, 13 (Three one-day sessions from which to choose) Fall Compliance Workshop, week of Nov 9 (Likely to also be three one-day sessions from which to choose) 68

69 Additional Questions or Comments Please send any additional questions or comments to the Enforcement staff at: 69