Report on Ethics and Compliance for 2016

Transcription

1 Avangrid Renewables, LLC Compliance Office 18 January 2017 Report on Ethics and Compliance for 2016

2 This report describes actions taken by the Avangrid Renewables (the Company or AGRR ) Compliance Unit and management in connection with delivering the Company s Ethics and Compliance Program for The 2016 Compliance Plan was approved in January 2016 by the Audit and Compliance Committee of the Avangrid Renewables Board of Managers (the ACC ). This report is made annually pursuant to the Compliance Unit Regulations adopted by the Company s Board of Managers. On 16 December 2015, Iberdrola USA, Inc. completed its merger with UIL Holdings, Corp. ( UIL ) and changed its name to Avangrid, Inc. ( Avangrid ). Avangrid s Head of Business subsidiaries are: Avangrid Networks, Inc. (the Company ) and Avangrid Renewables, LLC. Avangrid also owns a gas storage and energy services subsidiary, Enstor Gas, LLC. Effective as of the date of the merger, the Company also adopted a new Code of Business Conduct and Ethics, which replaced the Iberdrola Code of Ethics and the Company s Annex to the Code of Ethics. The new Code of Business Conduct and Ethics is substantially similar to the prior Code of Ethics with respect to its standards for separation of activities compliance Based on the overall results of this Compliance Plan and other compliance-related initiatives taken by the Company in 2016, including, without limitation, those reflected in this report, the Avangrid Renewables Chief Compliance Office (CCO) certified to the Avangrid Renewables Board of Managers at its January 2017 meeting that the Compliance Program is effective and complies in all material respects with applicable legal and regulatory requirements. The following is a summary of the main actions taken in 2016 that support the compliance program. 1. Audit Committee and Board Interactions During the first quarter of 2016, the ACC received a presentation of the 2016 Avangrid Renewables Budget and Compliance Plan. This was subsequently approved by the Avangrid Renewables Board. A compliance update was provided at each of the Page 2

3 quarterly ACC meetings during the year (prior to its elimination) and to the Board (once the ACC was removed) In line with the 2015 Compliance Plan, the Avangrid Renewables Board received training from the General Counsel related to areas of legal compliance. Ongoing communication and compliance awareness training on key issues such as health and safety and environmental occurred during Board reviews of the relevant areas. 2. Meet Periodically with Management on Compliance Activities In summary, the compliance office operates an open door policy for employees and managers to come and discuss compliance related matters. Ongoing discussions occurred during the year on high risk areas such as energy management. From a formal review perspective, Avangrid Renewables operates a number of compliance forums with the consolidated executive meeting being the Senior Management Compliance Council ( SMCC ). The principal purpose of the SMCC is to serve as an active forum for senior managers of the Company, and for the Chief Compliance Officer, to discuss oversight and coordination of, and key issues, policies and developments relating to the Company s compliance activities. These include, but are not limited to (1) compliance with the laws and regulations relating to its various business activities and internal codes of conduct and (2) identifying and evaluating, on an ongoing basis, material compliance risks facing the Company. The SMCC was initially established by the Chief Executive Officer of the Company. During 2014, the governance structure, in connection with the establishment of the Compliance Unit, was modified to move the Chairman role from the Chief Risk Officer to the Chief Compliance Officer. As a fixed agenda item of the meeting, the Chief Compliance Officer has accountability to update the members of the SMCC on progress relating to delivery of the Company s ethics compliance program. The members of the SMCC, in turn, are expected to assist the Chief Compliance Officer in developing, reviewing and implementing all aspects of, the Company s broader compliance plans. Page 3

4 The SMCC met quarterly during 2016 and actively discussed compliance issues. In summary, the SMCC is a vital tool in helping deliver the Compliance Plan objective around managing high risk compliance areas during the year. 3. Determination of High Risk Compliance Areas During the first quarter of 2014, Avangrid Renewables, as part of a Group exercise, completed a compliance risk map that attempted to look at Any situation, act or omission than can expose Avangrid to a potential negative impact as a result of noncompliance of applicable laws/regulations. From this exercise a number of areas were highlighted as requiring particular compliance emphasis given the Company s operational and business footprint and the potential impacts of noncompliance. This process was refreshed during 2015 and Annual Fraud Risk Assessment During 2016, the Compliance Function oversaw the annual fraud risk assessment this year. This review is part of a global fraud risk assessment undertaken by Iberdrola S.A. s Compliance Unit. Questionnaires were distributed to a selection of executives and completed during the second half of Preliminary conclusions did not show any significant deficiencies in the fraud prevention framework and final conclusions are expected in early 2017 Criminal Risk Assessment At the beginning of 2014, the Compliance Unit requested Legal Services assist in the preparation of a Criminal Risk Map and analysis of Criminal Prevention practices in order to establish a formal Crime Prevention Program. During June 2014, the Avangrid Renewables Chief Compliance Officer adopted a business-specific Legal Risk Map and an annual certification as part of the Avangrid Renewables Crime Prevention Program. This was presented to the Avangrid Renewables ACC and Board in July Page 4

5 Following its adoption, an annual certification process has been put in place. This certification process means that accountable individuals have to certify that, to the best of their knowledge, controls are in place within their areas that are designed to minimize material non- compliance risk. This process is now updated annually and was independently audited by both Bracewell and Giuliani (2015) and Hogan Lovells (2016). The summary findings of the final external audit, issued in 2016, were that the Crime Prevention Program meets and exceeds the requirements of the U.S. Sentencing Guidelines, upon which their standards of assessment were based, and demonstrates that the Company has effective controls in place designed to ensure that it is materially in compliance with applicable laws and regulations 4. Background Checks Pursuant to Company policy, all prospective employees are subject to a criminal background check prior to being hired. To align policies across Avangrid USA, during 2014, Avangrid Renewables expanded this control to include persons promoted or hired into a Director-level or higher. Such persons are considered by to be substantial authority personnel under the U.S. Federal Sentencing Guidelines. The background checks process was further enhanced during 2015, when it was agreed that all current employees would receive a criminal background check to ensure that the full employee population records were up to date following the earlier legal separation from PacifiCorp. New hires and director and above appointments have continued to subject to background checks during Summary of Helpline Activities The Company offers a toll-free 24/7 Ethics and Compliance Helpline (the Helpline ) to its employees and third parties for purposes of reporting suspected or actual ethics and compliance violations. Contact information for the Helpline is communicated to Page 5

6 employees and available on the Company s public website. The Helpline allows callers to make anonymous reports, and is administered by an outside service provider. During the course of 2016, the Avangrid Renewables received reports regarding ethics and compliance concerns outside of the Helpline. Such reports were received directly or indirectly through other departments. In addition, the Compliance Division serves as a resource for employees who are seeking ethics and compliance guidance. The Compliance Division received, and responded to, various inquiries for such guidance during Annual Conflict of Interest Survey and Compliance Statement To align practices with Avangrid USA Networks, the Renewables Business has adopted an annual conflict of interest survey and compliance statement for business directors and above. Following the survey undertaken in 2016, based on replies received, the employee responses were reviewed by the Compliance Division to identify potential conflicts of interest and other compliance issues. At the end of the Survey, respondents were required to execute a statement confirming their obligation as managers to comply with the Code of Ethics and applicable Company policies and procedures. 7. Employee Training Compliance related training programs are a key aspect of ongoing compliance activities. Training remains one of the most important controls in ensuring the company remains in compliance with laws and regulations. In summary, and excluding areas of operational training, some of the key areas that groups of employees received training on included: NERC and Cyber security FERC and CFTC Harassment Diversity Page 6

7 The Company s annual Code of Ethics training was launched to all Avangrid Renewables employees during All employees were required to take the training, unless excused due to reasons such as extended sickness or disability, leave or retirement. The following are notable features of the Company s Code of Ethics training: The substantive training materials are based on a global training module developed by Iberdrola, S.A, with a supplemental module to reflect U.S.-specific concepts, including those in the IUSA Networks Annex to the Code of Ethics. Examples include restrictions on affiliate transactions and state law gift and hospitality restrictions applicable to government employees. An interactive format is used to stimulate trainee attention and learning. A quiz is included at the end of the training to confirm retention of key concepts 8. Communications In addition to training, employee communication remains a key element of compliance reinforcement. During 2016 alone, employee communications included the following: Code of Ethics training Invitations to Vendors Political campaigns and the workplace Corporate responsibility in the Community Adoption of Avangrid Code of Conduct Avoiding conflicts of interest Gift and Hospitality Rule and Registry. 9. Ethisphere Award In 2016, the Company s global parent, Iberdrola S.A., was recognized for a third consecutive year by the Ethisphere Institute was one of the world s most ethical companies. The Ethisphere Page 7

8 Institute is an internationally recognized thought leader in the field of corporate ethics and compliance. This accomplishment was shared with all employees through the Company s newsletter and by . This concludes the 2016 Avangrid Renewables Report on Ethics and Compliance. Page 8