MRO Annual Member and Board Meeting December 5, 2019 1 Agenda 2 - - PowerPoint PPT Presentation

MRO Annual Member and Board Meeting

December 5, 2019

1

Standards of Conduct and Anti-trust Guidelines

Agenda 2 (pg. 7) Miggie Cramblit, Vice President General Counsel, Corporate Secretary and Director External Affairs

2

President’s Report

Agenda 3 (pg.8) Sara Patrick, President and CEO

3

4

MRO’s Keys To Sustainable Success

Vice Chair’s Remarks

Agenda 4 (pg. 9) Tom Kent, Board Vice Chair

5

Approve Resolution for Outgoing Board Members

6

WHEREAS, the following individuals have served as members of the Midwest Reliability Organization (MRO) Board of Directors and its committees:

• Julius Cox, Independent Director
• Krista Tanner, ITC Midwest
• Micheline Casey, Independent Director
• Ray Wahle, Missouri River Energy Services

WHEREAS, Mr. Cox, Ms. Tanner, Ms. Casey, and Mr. Wahle have been strong supporters of reliability of the bulk power system in MRO’s region and have been dedicated and thoughtful leaders; and WHEREAS, these individuals have given wise counsel and advanced the vision and mission of the

• rganization;

NOW, THEREFORE, BE IT RESOLVED that the following resolution is adopted and is to be appropriately conveyed to these individuals. RESOLVED that the MRO Board of Directors express its sincere appreciation to Julius Cox, Krista Tanner, Micheline Casey and Ray Wahle for their dedication and service, and for their contributions to the success

• f MRO and the electric utility industry.

NERC Board of Trustees’ Chair Remarks

Agenda 5 (pg. 10) Roy Thilly, Chair NERC Board of Trustees

7

NERC Staff Remarks

Agenda 6 (pg. 11) Mechelle Thomas, NERC Vice President and Chief Compliance Officer

8

Compliance Oversight Plan Process Enhancements

Mechelle Thomas, Vice President and Chief Compliance Officer December 5, 2019

RELIABILITY | ACCOUNTABILITY 10

Maturation of Risk-based Assessment Processes 2016 2018 2019 - 2020 IRA Process Harmonization COP Process Harmonization Transition Period

RELIABILITY | ACCOUNTABILITY 11

Updated COP Process Highlights

Enhanced Analysis

Analysis of inherent and performance data provides an understanding of an entity’s overall inherent risk and performance profile

Targeted Oversight

Provides considerations for an entity’s continuous improvement and a focus to a Regional Entity for its compliance monitoring activities

Prioritized Monitoring

Identifies target interval for oversight, primary monitoring tools, and informs annual planning

Single Report

One report to provide both inherent risk assessment results and the compliance

• versight plan

RELIABILITY | ACCOUNTABILITY 12

Contents of the COP Report

• 1. Purpose
• 2. Analysis and Results
• 3. Oversight Strategy

RELIABILITY | ACCOUNTABILITY 13

COP Process Implementation Timeline

• Throughout the second half of 2019, Regional

Entities will begin implementation of new COP summaries.

• Industry outreach will begin in July 2019 and

continue through 2020.

RELIABILITY | ACCOUNTABILITY 14

Policy Matters

Agenda 7 (pg. 12) Sara Patrick, President and CEO

15

Revised ERO Enterprise Long-Term Strategy

Agenda 8 (pg. 17) Sara Patrick, President and CEO

16

Consider and Endorse

17

Revisions to the ERO Enterprise Long-Term Strategy

ERO Transformation

Agenda 9 (pg. 18) Jeff Norman, Director of Compliance and Monitoring

18

How We Create Value

Why We Exist

19

20

The ERO Model is Brilliant

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How can the model be

• ptimized?

By inventing a new future.

How do we implement an

• ptimized model?

By improving the effectiveness, efficiency, and collaboration of ERO working groups.

What The Future Holds

Default Future

• What’s likely to happen

through incremental improvements

Invented Future

• What is possible

through commitment to change

22

Default Future Context

Made up of past experiences Familiar box of tricks Results in more of the same Working groups incrementally improve

23

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Rackets Drive A Default Future

Invented Future Context

A shared, owned vision Recognizes new

• pportunities

Working groups solve real problems

• Scalable
• Repeatable
• Sustainable

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MRO’s Context

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Intentional Transformation

Declare a breakdown (eliminate rackets)

• Fact vs. interpretation

Listen with purpose

• Listen for opportunity
• Listen for understanding
• Listen with positive intent

Leaders across the ERO

• Build relationships
• Take time to learn
• Seek best practices as we work to align

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High Performing Working Groups

Results

Accountability

Commitment

Conflict

Tr u s t

Strong Regions + Strong NERC = Brilliant ERO Committed to Our Collective Success

We declare that the ERO Enterprise model is critical to our mission and that NERC and the Regional Entities are partners committed to our collective success.

• We commit to work together as one team and honor each of our roles.
• We commit to listen, to actively support ERO Enterprise activities, and to eliminate unnecessary

duplication of work.

• We commit to collaborate in developing clear and consistent guidance across the ERO Enterprise.
• We commit to be an information, knowledge, and resource sharing ERO Enterprise.
• We commit to develop and share harmonized messages across ERO Enterprise communications.
• We support innovation and initiative and the sharing of best practices across the ERO Enterprise.

Consent Agenda

Agenda 10 (pg. 19) Jessie Mitchell, Assistant Corporate Secretary

30

Review and Approve

31

Minutes from the September 19, 2019 board meeting Non-material changes to MRO’s policies and procedures

Regional Risk Assessment

Agenda 11 (pg. 73) John Seidel, Principal Technical Advisor and Steen Fjalstad, Security and Mitigation Principal

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A highly reliable and secure North American bulk power system.

Assessing Bulk Power System Risk

Multiple ERO-wide reports assess North American bulk power system risk

• 2019 ERO Reliability Risk Priorities report (RISC report)
• 2020 ERO Compliance Monitoring and Enforcement

Program Implementation Plan (CMEP IP report)

• 2019 NERC State of Reliability Report (SOR report)
• 2019 NERC Long-Term Reliability Assessment (LTRA

report)

Assessing Regional Risk

MRO staff and industry subject matter experts:

• Identify which risks have a higher (or lower) probability
• f occurrence and/or impact within the MRO region
• Identify any other regional risks that may need to be

addressed

Assessing Regional Risk

Operations and planning risks

• Grid transformation
• Extreme natural events
• Infrastructure interdependencies

Physical and cyber security risks CMEP activities to help reduce risk

• Summary of high risk requirements
• New and existing high risk standards

36

NERC 2019 RISC Priorities Report

37

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The arrow direction identifies which risks are higher (or lower) within the MRO footprint.

MRO Exposure to Grid Transformation

Loss of Situational Awareness

• Primary and backup EMS systems and advanced

applications of MRO members and the EMS overlap given large RC footprints

• Provides robust and high availability of those systems
• Risk to MRO footprint is lower than in other regions

39

MRO Exposure to Grid Transformation

Changing resource mix and availability

• Retirements of conventional synchronous generation

─ No net gain in gas generation; future generation being projected as

renewable generation in MRO-US

─ Significant regional impact within 10 years

• Existing gas generation:

─ Often non-firm supply/transportation ─ Plant winterization often unknown-winter peak loads higher than

forecasts

• Risk in the MRO footprint is higher than in other regions

40

MRO Exposure to Extreme Natural Events

Severe cold weather events

• Occurring more frequently in both upper and southern

Midwest

• Winter Peak demand is approaching or exceeding summer

peak demand during severe cold

─ Forecasting errors can occur

• Wind turbine cold weather cutouts can reduce availability
• Lack of winterization of gas plants can reduce availability

─ Non-firm transportation and supply can lead to loss of fuel during

severe cold weather

41

MRO Exposure to Extreme Natural Events

Geomagnetic Disturbance events

42

• Upper Midwest

geographically more susceptible to a GMD event than southern portions of US

MRO Exposure to Extreme Cold Weather

January 30, 2019 Wind Turbine cutout: Also- SF6 Circuit Breakers also can hit critical low pressure where upon they will be blocked from tripping or auto-open

43

MRO Exposure to Infrastructure Interdependencies

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Natural gas clusters where bulk power system issues were identified:

MRO Exposure to Infrastructure Interdependencies

However:

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• Telecommunications: Telecomm companies continue to retire

land lines and copper wire--electric utilities rely on copper wire for system protection as well as other data communications

• Transportation sector: Electric vehicle charging can

significantly impact load magnitude and load profile of electric utilities

Trending Misoperations Associated with Event Analysis Reports

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Misoperation Rates within the MRO Footprint

Long-Term Reliability Assessment

48

Nameplate Capacity of Solar (MW) Nameplate Capacity of Wind (MW) Assessment Area Existing Tier 1 Tier 2 Tier 3 Total Existing Tier 1 Tier 2 Tier 3 Total MISO 280 2,040 60,125 640 63,084 19,172 7,598 27,468 5,714 59,953 Manitoba Hydro 259 259 SaskPower 10 20 50 80 242 400 642 SPP 276 650 25,307 26,233 20,486 300 2,500 31,905 55,191 ERCOT 1,857 7,699 27,376 26,155 63,087 22,090 14,457 15,191 5,864 57,602 MISO Conventional Generation Capacity Resources (MW) 2020 2029 % Diff Coal 56,795 51,839

• 8.7%

Petroleum 2,982 2,668

• 10.5%

Natural Gas 61,526 61,564 0.1% Nuclear 12,433 11,620

• 6.5%

Total 133,736 127,692

• 4.5%

SPP Conventional Generation Capacity Resources (MW) 2020 2029 % Diff: Coal 23,985 22,840

• 4.8%

Petroleum 1,446 1,325

• 8.4%

Natural Gas and Other Gases 29,583 27,776

• 6.1%

Nuclear 1,944 1,944 0.0% Total 56,958 53,885

• 5.4%

Conventional synchronous generation is disappearing. Interconnection queues contain wind and solar exclusively.

Additional Operational and Planning Risks Identified for the MRO Region

Wide disparity in overhead conductor ratings

• Lack of winter seasonal ratings that reflect winter ambient conditions and

lack of emergency ratings

• Can cause undue risk to the bulk power system as identified in the FERC

January 17, 2018 Inquiry Report

Reactive resources and voltage stability in the operating horizon

• January 17, 2018 event identified long-distance heavy transfers serving

remote load during widespread generation outages can cause precarious voltage stability conditions

• RCs will need to assess voltage stability in the operating horizon under

these conditions

49

Additional Operational and Planning Risks Identified for the MRO Region

Reactive capability of renewable generation

• Future generation likely to consist of renewable/variable

resources

─ Plants will need to supply and absorb MVARs under a variety of

system conditions to hold voltage schedules

─ Will also need to supply quick MVAR support (dynamic reactive

support) during a system disturbance to help arrest a voltage collapse

• r frequency drop
• These types of essential reliability services will need

accurate planning models to assure the bulk power system remains secure

50

John A. Seidel Principal Technical Advisor Office: 651-855-1716 John.Seidel@mro.net

MRO 2020 Regional Security Risk Assessment

Steen Fjalstad

Security and Mitigation Principal

MRO Exposure to Physical and Cyber Security

The following risks were identified during the Security Advisory Council’s 2019 Regional Security Risk Assessment:

53

• Adequate Security Staffing
• Asset Inventory
• Cloud Storage
• Connectivity
• Copper Theft and Vandalism
• Insider Threat
• Mitigating System Vulnerabilities
• Saboteurs
• Security Visibility, Monitoring, and

Incident Response

• Spear Phishing
• Supply Chain
• Unmanned Aerial Systems (UAS)

Adequate Security Staffing

Inadequately trained security staff Retirement, part-time, automation Compliance focused (introduces weak link concept – low/non-CIP)

54

Asset Inventory

Reduced ability to manage and monitor Rogue devices and unknown remote access points Legacy equipment

55

Cloud Storage

Unknown attack surface Unknown compliance implications Third party security controls

56

Connectivity

Disrupt operations or gain remote control capability Corporate, Vendor, Operational Technology sharing Availability (redundancy)

57

Copper Theft and Vandalism

Safety hazards Shared facilities Situational awareness

58

Insider Threat

Trusted access Physical, cyber (and people) impacts Nation State

59

Mitigating System Vulnerabilities

Legacy and remote assets Increased attack surface via unpatched system Awareness

60

Saboteurs

Physical, financial, reputational impacts Remote locations Situational awareness

61

Security Visibility, Monitoring, and Incident Response

People, process, and technology Awareness Cyber and physical

62

Spear Phishing

Very common Becoming more complex Desktop, mobile, corporate, personal attack surface

63

Supply Chain

Large impact Goes beyond the direct vendor (downstream supplier) Hard to analyze

64

Unmanned Aerial Systems (UAS)

Sensitive information leakage (network compromise) Physical impacts Inability to respond (report to Law Enforcement)

65

Estee Kolles Security Administrator Office: 651-256-1755 Estee.Kolles@mro.net Steen Fjalstad Security & Mitigation Principal Office: 651-855-1715 Steen.Fjalstad@mro.net

Finance and Audit Committee

Agenda 12a (pg. 74) Tom Kent, Chair

67

Consider and Approve

68

The Finance and Audit Committee (FAC) recommends the following actions by the board:

• Approve the written resolution to appoint Lam Chung

as Treasurer, Thrift Savings Plan Trustee, and Corporate Compliance Officer

• Approve the written resolution to amend the line of

credit, extending the maturity date of the current line

• f credit to February 26, 2023

Governance and Personnel Committee

Agenda 12b (pg. 87)

• Dr. Paul Barber, Chair

69

Consider and Approve

The Governance and Personnel Committee (GPC) recommends the following actions by the board:

• Approve Policy and Procedure 1: MRO Board of Directors,

and Policy and Policy and Procedure 12: General Finance Policies

• Approve revisions to the GPC, OGOC, and FAC charters
• Approve revised Independent Director Profile
• Approve revised Board Guiding Principles

70

Organizational Group Oversight Committee

Agenda 12c (pg. 157) Lloyd Linke, Chair

71

Joint Advisory Councils and OGOC Strategic Planning Meeting Report

Agenda 13 (pg. 158) Lloyd Linke, OGOC Chair

72

MRO Operational Activities Report

Agenda 14 (pg. 159) Richard Burt, Senior Vice President and Chief Operating Officer

73

Mitigate Risk Webinars

Newsletters Conference and Training Roundtables

Threat Forum

Regional Risk Assessment

Briefings Surveys

Canadian Matters

Agenda 15 (pg. 160) Lam Chung, Vice President and Engineer for Strategy, Innovation and Finance

75

External Affairs

Agenda 16 (pg. 161) Miggie Cramblit, Vice President, General Counsel and Director External Affairs

76

Other Business and Adjourn

Agenda 17 (pg. 162)

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Meeting Adjourned

Future Board Meeting Dates:

• April 1-2, 2020
• June 24-25, 2020
• September 16-17, 2020
• December 2-3, 2020

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