ERO Enterprise Strategic Plans

Transcription

1 ERO Enterprise Strategic Plans Goals and Measures through 2016 Gerry Cauley, President and CEO Member Representatives Committee Meeting February 6, 2013

2 Failures of Complex Systems Do They Have to Happen? Financial Crisis Lab Tests Confirm Salmonella Source 2

3 Character of Harms Harms Avoid Pick important problems and fix them. Dr. Malcolm Sparrow John F Kennedy School of Government Severity Learn and Reduce Inverse Cost-Benefit High Impact Low Frequency (e.g. cyber ) Reporting Threshold Frequency 3

4 NERC Reliability Risk Metrics Harms: Load, Line, Generation Loss 2011 major events: February cold weather September southwest October snow event 4

5 Identifying and Prioritizing Risks Regional Entities Compliance Information Cyber Risk Analysis Reliability Assessment Standard Authorization Event Analysis Trending Major Event Findings GADS, TADS, DADS Trends FERC Directives Justification Risk Feeds Analysis Prioritization Portfolio of Risks and Mitigations 5

6 Legal and Expert Models Compliance Reliability 6

7 Doing Risk Mitigation Work Detail/Micro-level Aggregate/Macro-level Internal Production and Operations Management Tailor-made interventions General Theory External Parse the Risk Malcolm K. Sparrow John F. Kennedy School of Government, Harvard University 7

8 Sharing Responsibility with Industry Accountability Electric Reliability Organization Industry Collaborative Problem Solving Risk Identification 8

9 Goals Standards responsive to important identified risks Clear and timely Practical and cost effective Measures Standards Goals and Measures Percent of Board-approved standards that meet quality and resultsbased criteria by 2017 Gaps in standards identified in Category 3 and above events and compared to risk profile High priority standards responsive to risk: one year (two if technical study required) Regulatory directives addressed: current by 2014 and thereafter within one year (two if technical study required) Five year reviews of standards including cost effectiveness assessment Paragraph 81 continuation and cost effectiveness assessment tool 9

10 Goals Compliance Goals and Measures Industry accountable for violations creating serious risk to BPS Timely and transparent compliance actions Industry effectively monitors, detects, corrects, report, and prevents reliability and security issues Efficient processes and effective use of discretion Measures Compliance reform initiative Violations in Category 3 and above events Audit findings: serious findings trending lower Percent of findings self-identified: trending toward or at 80% Mitigation aging: trending favorably or stable Caseload aging: trending favorably or stable 10

11 Goals Registration is flexible and commensurate with risk Registration and Certification Goals and Measures Organization certification ensures entity necessary capabilities Measures Registration tailored to function, assets, requirements, risk Gaps in registration and certification from events Sampling 11

12 Goals Risks identified, prioritized, maintained in a risk profile Select risk control initiatives implemented Industry addressing security vulnerabilities and threats Risks to Reliability Goals and Measures Policy-makers informed by quality and timely reliability assessments Measures Number of Category 3 and above events: trending lower or zero Gaps in standards, compliance, risk mitigation: trending lower or zero State of reliability report: BPS performance trending favorably Risk profile: gaps identified and being addressed Risk control initiatives completed Event reports: quality reports available to industry in secure portal Recommendations tracking: recommendations being tracked to closure 12

13 Goals Acquire and retain quality staff Qualifications programs for key ERO positions Coordination and Collaboration Goals and Measures Secure, reliable infrastructure to support ERO-wide business operations Effective internal risk management and controls Measures Attrition and employee climate surveys: trending favorably Key position qualification metrics: metrics being achieved Infrastructure project plans: milestones met Material internal risk findings: no material findings Consistency across enterprise 13

14 Strategic Planning Process In progress since September NERC and Regional CEOs Common framework and goals Converging on metrics (2013 transition) Vetting of strategy, goals, and measures before developing business plans Next steps 14

15 MRC Adhoc Business Planning and Budget Working Group Recommendations Mike Walker, Chief Financial and Administrative Officer Member Representatives Committee Meeting February 6, 2013

16 Background Focus key input points in the business planning and budget (BP&B) process Relationship to other committee activities Facilitation of information exchange Not exclusive means for input by members 2

17 Recommendation Create small MRC working group Provide input at key points in BP&B process Facilitate information exchange and awareness Update MRC framework for operations 3

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19 Reliability Assurance Initiative Earl Shockley, Senior Director of Compliance Operations Member Representatives Committee February 6, 2013

20 Key Points 1. Find, Fix, Track and Report (FFT) next phase 2. FERC filing strategy 3. Outreach strategy 4. Reliability Assurance Initiative (RAI) program 2

21 Program Stages Conceptual Design Define Work Plan & Quick Wins Pilot Programs & Learning Culture that focuses on critical risks High degree of self reporting 3

22 Q1 Q2 Q3 Q4 FFT filing (proposed incremental improvements) 2013 Key Milestones Phase out the Compliance Application Notice process Communication tools consolidated Deploy re-designed Reliability Standard Auditor Worksheets Deploy re-designed Annual Implementation Plan (2014) Deploy uniform audit planning process Deploy standard criteria for compliance and enforcement staff to address lesser risk issues. 4

23 Next Steps Finalize last two concept papers and publish Finalize program structure around activities Finalize resourcing of teams Conduct outreach and consider feedback Further develop matrix of program benefits 5

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25 Standards Process Reform Mark Lauby, Vice President and Director of Standards Holly Hawkins, Assistant General Counsel Laura Hussey, Director of Standards Development Member Representatives Committee Meeting February 6, 2013

26 Reform Drivers and Enablers Paragraph 81 of FERC Find, Fix, Track order March 2012 Standards Process Input Group (SPIG) May 2012 Reliability Issues Steering Committee established August 2012 Additional SPIG engagement September/October 2012 Resolution by NERC Board of Trustees November

27 Components of Reform Standards department reorganization Revisions to standard development process Standards Committee Reliability Standards Development Plan Strategic Plan and Work Plan Charter 3

28 Standards Committee Strategic Plan Articulates vision, mission, guiding principles Vision Comprehensive set of results-based reliability standards that collectively help ensure the reliable operation of the North American bulk power system 4

29 Standards Committee Work Plan Work Plan tactical implementation of strategic plan Align subcommittees and working groups with strategic plan Stand up Project Management Oversight Subcommittee Collaborate with technical committees and industry groups Appoint agile and focused standard drafting teams 5

30 Standards Committee Charter Summary of Changes Accountable to the Board Duty of care, loyalty, and adherence to high ethical standards Expands authority of Standards Committee Executive Committee Change voting from 2/3 to simple majority, except Charter and Standard Processes Manual 6

31 Standard Processes Manual Revisions Memorialize key aspects of SPIG recommendations Drafting team composition Collaborate with Compliance on Reliability Standard Audit Worksheets Significant changes Streamlined commenting and balloting Treatment of negative votes without comments Limited waiver provision 7

32 Other Process Enhancements Pilot reliability benefit and cost of standard method Enhanced consensus building 8

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34 Paragraph 81 Phase 2 Special Report and Policy Input Laura Hussey, Director of Standards Development Member Representatives Committee February 6, 2013

35 2013 Work Plan Regulatory Obligations Roadmap development for standard transformation Lay foundational preparatory work for 2014 Address all directives and P81 obligations Five-year review required in Rules of Procedure 2

36 2013 P81 Development By Standard Family PER (0) NUC (0) PRC (6) 1 Std 2 Stds TPL (4) VAR (2) BAL (15) 2 Stds 4 Stds 8 Stds 1 Std 10 Stds 17 Stds 8 Stds COM (0) EOP (20) 8 Stds 3 Stds FAC (15) 8 Stds INT (13) MOD (50) IRO (14) Notes: 1. Number of requirements/subrequirements in each family, proposed by stakeholders for future P81 consideration, is shown in parentheses 2. Number of standards under development in 2013 is shown for each standard family. 3

37 Address P81 and Directives PRC

38 Due for Five-Year Review Five-Year Review Outstanding Projects RBS PRC File 5

39 Outstanding Projects Five-Year Review Outstanding Projects RBS PRC File 6

40 P81 Candidate P81 File Five-Year Review Outstanding Projects RBS PRC File 7

41 Directives Associated with the Standard P81 File Five-Year Review Outstanding Projects RBS PRC File File Directives 8

42 Solution P81 Five-Year Review Outstanding Projects Directives RBS PRC File 9

43 Approach for P81, Phase 2 All drafting teams will use P81 criteria in 2013 (and beyond) Drafting teams will record evaluation and recommendation Worksheet captures criteria developed in Phase 1 Results posted with draft standards for industry review Quarterly report of requirements retired, revised, consolidated 10

44 Standard Development Phase 1 Q Q Q Q Q Number of P81 Reqs/Subrequirements Identified By Stakeholders During Phase 1 in Standards Scheduled for BOT Action Number of Standards to BOT (All Projects)

45 Standards Roadmap Project High-level review of the current reliability standards Transform to a sustainable, concise body of standards Conducted by industry executives with industry advisors Completion target: June

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47 Select Standards Projects Status Report and Policy Input Mark Lauby, Vice President and Director of Standards Member Representatives Committee Meeting February 6, 2013

48 COM Operating Personnel Communications Protocols Background COM failed most recent ballot Action Plan Technical conference February 14-15, 2013 Revise standard and ballot Present for adoption by Board of Trustees in May

49 Bulk Electric System Definition Implementation FERC Order No. 773 approved definition July 1, 2013 effective date of definition July 1, 2015 effective date of compliance obligations Entities to prepare database of assets Exception process evaluates asset for exclusion or inclusion 3

50 Status of Phase 2 Bulk Electric System Definition Focus Provide additional clarity to the definition Resolve technical justification for threshold values Scheduled for completion first quarter

51 BAL Operating Reserve Policy Develop and document Operating Reserves policies Complements BAL Issues raised during comment period No need for BAL Overly administrative Schedule for completion: Board action in May

52 Geomagnetic Disturbance Action Plan Technical conference in February Revised Geomagnetic Disturbance (GMD) Task Force work plan Operating procedure template developed from industry practices Assessment tools and initial models being developed 6

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54 RISC Recommendation on ERO Priorities Chris Schwab, RISC Chair VP Chief Compliance and Risk Officer, Dominion Member Representatives Committee Meeting February 6, 2013

55 Prioritization Process Reliability Issues Steering Committee Provides framework for focusing resources on critical BPS reliability issues Triages issues and provides front-end, high-level leadership Helps establish common understanding of issue scope, priority, and goals Recommends solutions, including other than the development of standards Initial Strategic Prioritization NERC Staff identified all ERO activities related to reliability and grouped them into risk areas Asked RISC members to evaluate: o Impact and probability? o Existing controls? o Gaps? o How to address gaps? o Post-control priority? Results correlated with budget exercise 2

56 Process Maturation Maturity We are here Data-driven Analysis, driven by events and experience Performance-driven Analysis, driven by performance goals and objectives Subjective Analysis, driven by expert judgment Time 3

57 Prioritization Results HIGH PRIORITY Issues that affect entire ERO Highest resource allocation Perform complete gap analysis for every category Gaps defined and problem statement written with measurable metrics for success Consider addressing gaps with resources presently utilized for lower priority issues If that is not possible, justify incremental resources MEDIUM PRIORITY Issues that need further definition or may be regional in nature Further analyze to assess if there is a specific issue that needs to be addressed If there are specific issues that need to be addressed, fund from re-allocation of resources from lower priority issues Should not apply incremental resources to this level LOW PRIORITY Monitor and incorporate in periodic review of priorities Use as base to re-allocate resources 4

58 High Priority Issues Cyber Attack Workforce Capability and Human Error Protection Systems Monitoring and Situational Awareness PERFORM COMPLETE GAP ANALYSIS Are the existing efforts sufficient? Are all of the existing efforts needed? Ensure that any new effort is in NERC s scope or appropriately directed to the right organization. What gap was identified that the effort is meant to solve? What data is available to scope new activity? How will we measure performance? What metrics will define and track success? How will we fund the incremental project without increasing the budget? What resources currently directed to lower priority resources will be redirected toward these higher-priority issues? If a budget increase is necessary, justify the increase. 5

59 Medium Priority Issues Operational Modeling and Model Inputs Equipment Maintenance and Management Coordinated Attack on Multiple Facilities Generator Availability Increased Dependence on Natural Gas Generation FURTHER ANALYZE TO DETERMINE SPECIFIC ISSUE What specific areas should we be focusing on? Ensure that any new effort is in NERC s scope or appropriately directed to the right organization. What is the scope of this issue? Are the existing efforts sufficient? Are all of the existing efforts needed? What gap was identified that the effort is meant to solve? What data is available to scope new activity? How will we measure performance? How will we fund the incremental project without increasing the budget? What resources currently directed to lower priority resources will be redirected toward these higher-priority issues? Activities in this area should not necessitate an increase in budget 6

60 Low Priority Issues Generation Resource Adequacy Transmission Right of Way Geomagnetic Disturbance (GMD) Long Term Planning and Modeling Climate Change, Environmental Regulations, Changing Resource Mix due to Environmental or Other Market Conditions, Integration of Variable Gen Integration of New Technologies Extreme Weather/Acts of Nature Demand Response Localized Physical Attack Smart Grid Electro-Magnetic Pulse Post-Recession Demand Growth Pandemic MONITOR and incorporate in periodic review of priorities. Use as base to re-allocate resources to higher priority issues as needed NOTE: Although the RISC has rated GMD a lowpriority item from a reliability risk perspective, this item may change in priority and/or need additional ERO resources allocated, based on future discussions or regulatory directives. 7

61 Recommendations to Board Recommend that the Board adopt the strategic prioritization and direct NERC to incorporate these priority rankings into the development of ERO business plans. Recommend that the Board direct NERC s Committees to incorporate these priority rankings into their work plans including empowering committees to stop or defer lower priority work. Recommend the Board direct the RISC work with NERC staff and Standing Committee leadership to create a results-driven Reliability Strategy development process that integrates with budget development and overall ERO planning. 8

62 Prioritization Must Drive Resource Planning BOT-Approved RISC Strategic Prioritization Feb Common Assumptions Finalized May Draft 1 Posted Jun Draft 2 Posted Aug BOT Approval Aug 23 Filing with Regulators Feb Mar Apr May Jun Jul Aug January Business Plan and Budget Development August Strategy-Based Business Plan and Budget 3 Year RSDP OC Strategic Plan PC Strategic Plan CIPC Strategic Plan CCC Work Plan NERC Goals Reliability Standards Development Plan Standing Committee Plans Department and Employee Goals 9

63 Reliability Issue Nominations Cold Weather Preparedness October 2012 Meeting RISC Recommendation developed, being implemented by Operating Committee and NERC Staff WECC Planning Coordinator October 2012 Meeting Response sent to submitter, advising of alternative courses Geomagnetic Disturbance December 2012 Meeting RISC request sent to Operating Committee, Standard Committee, and Geomagnetic Disturbance Task Force; to be discussed further at January RISC meeting Critical Infrastructure Protection December 2012 Meeting Response sent to submitter, identifying issue as out of scope Under-Voltage Load Shedding January 2013 Meeting Response sent to submitter, advising of alternative course with PC Critical Energy Infrastructure Information January 2013 Meeting Response sent to submitter, identifying issue as out of scope Resolved Out of Scope In Progress Out of Scope Out of Scope Out of Scope 10

64 Questions? 11