1. Standards Development MARC Conference June 21, 2006 Tim Gallagher President, ReliabilityFirst Corporation

3. In The Beginning • There were 3 Regions (MAIN, ECAR, MAAC) • There were 3 sets of rules & guides • There were 3 cultures NOW We work together to put ReliabilityFirst

4. Governance • Organization designed with energy legislation in mind • Supports strong, centralized, top-down ERO • Hybrid Board with balanced sector representation • Organization open to all who benefit from bulk electric system • All meetings public

5. Hybrid Board • Sector representatives elected by sector • Composition • 3 Independent Directors • 3 Transmission Company Directors (one from RTOs) • 2 Supplier Directors • 3 LSE Directors (Small, Medium, Large) • 3 At large Directors

6. Standards • Inclusive, fair, balanced process • Mirrors the current NERC process but is streamlined somewhat • Using the process to combine three legacy sets of regional standards into one • Definite need for regional standards • Must examine and combine three sets of legacy standards into one • GOAL: CONSISTENCY AND UNIFORMITY

7. Need for Day One Operation • Teams began work months before 1/1/06 • 6 ReliabilityFirst standards approved 12/12/05 • Follow NERC format for reliability standard • Used volunteer drafting teams from 4 Regions • Comments by open process • Expedited timeline • Approved by ReliabilityFirst Board of Directors

8. Need for Day One Operation • Standard Development Process Manual approved 12/12/05 (Based on NERC Standards Process Manual) • Updated 1/19/06 to revise RFC committee references (already dog-eared after 3 months) • Process already used to complete approval of Resource Planning Reserve RequirementsStandard • Established & set 5 SDTs in action • Processing 3 more SARs • Used for Interpretation

9. How Are RFC & NERC Similar • Start process with a SAR • Use RFC Standards Committee & Standards Process Manager (comparable to NERC SAC) • Select drafting teams - self nominations (encourage other Regions participation) • Public posting for comments & consensus • Post responses • Ballot by RFC membership • Submit to RFC Board

10. How Do RFC & NERC Differ • Need specific support statement by RFC Reliability and Interim Compliance Committee • Possible revision – Committees’ comments submitted along with others during public posting – similar to NERC • Membership ballot • One vote per “regular RFC Member” – not weighted • Negative vote with comment does not cause 2nd ballot • Advisory vote for RFC Board approval

11. How Do RFC & NERC Differ • If 2/3 affirmative membership votes, RFC Board will: • Approve Standard action (as opposed to adopt) • Remand to Standards Committee with comments and instructions, or • Disapprove proposed Standard action without recourse.

12. How Do RFC & NERC Differ • If less than 2/3 membership vote, Standards Committee will: • Recommend termination of all work, inform Board • Revisethe SAR, remand to SDT for further development • DirectSDT reconsider/modify certain aspects & post for 2nd membership vote

13. How Do RFC & NERC Differ • If less than 2/3 affirmative vote on 2nd ballot, Standards Committee will: • Forward to Board with recommendation • Board will then: • Approve with or without modifications • Remand to Standards Committee with instructions • Disapprove without recourse

14. What About Interpretations? • Any Standard, regardless of effort put in, may not be perfectly clear • Directly & materially effected person may request interpretation • Drafting team assembled (Makeup based on subject area and expertise) • Interpretation to Reliability & Compliance Committees for review • Forward to Board for concurrence

15. Other Items Related to Process • Continually collect Process Manual improvements based on high level of activity • Joint drafting team participation with other Regions, specifically MRO • RFC Standards staff active with NERC Standards process for input/feedback • Keep all RFC members informed on NERC Standards issues, key RFC Standards due dates (balloting, commenting, etc.) • RFC compliance staff on every drafting team

16. What Do We See In Near Term • Based on current SARs, expect 7 SDTs working by 3rd quarter 2006 • Cross referencing (currently underway) of 3 “legacy” documents with current NERC standards and NERC “fill-in the blanks” effort will definitely create need for more drafting teams (prioritization clearly needed) • Based on lessons learned, expect more detailed Process Manual approved mid year 2006

17. Approved Standards • Resource Adequacy • Automatic Reserve Sharing • Emergency Operations • Regional Transmission Loading Relief • System Restoration • Operating Reserves

18. Standards Under Development • Fill in the blank standards • 23 Standards that require regions to_____ • CBM • Operating Reserves • UFLS • Sub-regional adequacy • Blackstart capability plans • Generator testing • Disturbance monitoring • Special protection systems

19. Want to Learn More? • Subscribe to our newsletter • We can add you to our Standards distribution list • General Seminar • July 28 – Columbus, Ohio www.rfirst.org 330-456-2488