Reliability Assurance Initiative ATC s Participation as a MRO Pilot

Transcription

1 Reliability Assurance Initiative ATC s Participation as a MRO Pilot Doug Johnson Manager of Operational Compliance American Transmission Company LLC (ATC) atcllc.com

2 MRO Pilot Project American Transmission Company LLC (ATC) welcomes the opportunity to participate as a MRO pilot company. The pilot is focused on ATC s scheduled November 2013 compliance audit. ATC anticipates that the MRO pilot project will help to advance the successful implementation of the RAI concepts and to specifically aid in developing and testing new compliance and enforcement practices. atcllc.com 2

3 Overview of the RAI American Transmission Company LLC (ATC) supports the concepts postulated by the Reliability Assurance Initiative (RAI). Existing practices and protocols used by NERC and the Regional Entities do not efficiently support reliability and are not sustainable as currently defined and executed. ATC encourages a transition to a new compliance and enforcement model as quickly as possible. atcllc.com 3

4 ATC s Perspective on the RAI As the industry s regulatory protocols shift to risk-based approaches, ATC believes it is appropriate for the ERO to begin to expect effective compliance, internal control and corrective action programs. Such programs all serve to sustain reliability. However, the expectations for companies to have such programs must be accompanied by a substantial paradigm shift in the execution of the compliance and enforcement practices. If NERC proposes to increase regulatory scrutiny by judging risk and evaluating the strength of programs, ATC believes that this expanded program oversight should result in greater Regional Entity monitoring flexibility and discretion. Simply proposing a revised compliance model which reduces the scope of an audit is not a sufficient paradigm shift. Today s defined 3 or 6 year audit cycles should not remain the centerpiece of the ERO s Compliance and Enforcement Program. atcllc.com 4

5 ATC s Perspective on the RAI Migrating to a risk-based model should permit Regional Entities to customize oversight programs and to utilize the most effective monitoring tools for assessing compliance based upon a determination of a company s risk and control practices. The RAI should also result in revised enforcement practices that assure that resources used to process and disposition potential violations by the companies, Regional Entities, and NERC are commensurate with the risk of the violation. Enforcement proceedings should be reserved for most significant risks. An alternative path needs to be created for non-material or low-risk matters which does not involve enforcement. This new path may ultimately allow companies to process non-material and low-risk violations internally using the company s corrective action program. atcllc.com 5

6 ATC s Participation as a Pilot ATC seeks the following outcomes from the RAI A stable, predictable, clear, and consistent regulatory environment A clear and unambiguous set of regulations Compliance and enforcement practices which effectively utilize resources based upon risk Going Forward Although the RAI practices and procedures have not been fully developed, ATC believes this is an instance where conducting pilot projects concurrent with the development of the practices and protocols makes sense. Base upon the results of the pilot projects, the concepts can be refined and the practices and protocols further developed. atcllc.com 6

7 Input from Stakeholders MRO, in collaboration with the other Regional Entities, has established a vision for the RAI and a roadmap for the pilot project. Input from MRO member companies is important to the success of the MRO pilot project. MRO has established processes which will allow input, not just from ATC as the pilot company, but from all MRO member companies. As the pilot project advances, ATC looks forward to reviewing and commenting on the process documents which MRO has drafted to support the pilot. atcllc.com 7

8 ATC s Participation as a Pilot ATC has provided the following information to MRO in support of the pilot project: SCADA Network Security System Summary Internal Compliance Program Pre-Audit Survey Operating Guides System Diagrams Internal Controls Survey In mid-august, ATC anticipates receiving the formal audit notification which will define the scope of our November compliance audit. This notification is also expected to include the standard set of audit requests for information. atcllc.com 8

9 Internal Controls ATC, like all companies, utilizes internal controls (management practices) to assure safe and reliable operations. During the third quarter of 2012, ATC began the process of inventorying and matching our existing internal controls to the NERC Reliability Standards. ATC essentially utilized the COSO model as the foundation for performing this work. ATC continues to develop our program by evaluating the maturity and effectiveness of the internal controls and by eliminating any identified gaps. atcllc.com 9

10 Internal Controls In support of ATC s participation as a pilot company, ATC assembled and provided to MRO a spreadsheet of internal controls during the second quarter of The scope of this submittal included internal controls for the some 38 Reliability Standards which are to form the base audit scope for ATC s scheduled November compliance audit. ATC s submittal was intended to provide MRO a large enough population of internal controls to allow MRO to test their internal controls review and testing process. atcllc.com 10

11 Internal Controls ATC has organized our internal controls on a requirement-by-requirement basis. ATC s internal controls spreadsheet submittal to MRO consisted of 99 pages and some 1000 line items. ATC has identified preventive and detective controls. ATC is in the process of responding to an MRO Request for Information which has asked for evidence that a sampling of ATC s internal controls are effective and successfully implemented. atcllc.com 11

12 Results of the Pilot By supporting the MRO pilot project, ATC believes that our participation will contribute to aiding in developing the following: Entity Risk Assessment Process Internal Controls Review and Testing Processes Audit Scoping Procedures Practices to Customize Compliance Oversight Monitoring Tools Based Upon Risk An Alternative Path for Administering Lower Risk violations. ATC looks forward to sharing our perspectives and lessons-learned. atcllc.com 12

13 Summary Overview As the industry and regulators discuss and postulate a new compliance and enforcement model, we often pay little attention to the fact that companies that own and operate the BES are in the business of reliability. Understanding our risks and operating reliably are our core business functions. Companies are incented to operate reliably due to our need to serve our owners, investors, stakeholders, ratepayers and our need to meet our obligation to serve the public. Our regulators play an obvious role in contributing to reliable operations. But ultimately, it is the companies which must assure reliability. ATC needs a regulatory environment which supports our obligation to assure reliability and not an environment which distracts from meeting this obligation. Although progress is being made to advance the RAI, it is ATC s opinion that the end-state of the Reliability Assurance Initiative is not yet clearly defined. To create regulatory stability and predictability, the ERO and the industry must focus on defining answers to the following question: How will the industry be regulated 3 years from now? atcllc.com 13

14 Contact Information Doug Johnson American Transmission Company LLC atcllc.com 14