Overview of Tampa Overview of Tampa Electric’s Compliance Electric’s Compliance

ProgramProgramFRCC’s Compliance Enforcement and FRCC’s Compliance Enforcement and

Monitoring ProgramMonitoring ProgramApril 4 and 11, 2007April 4 and 11, 2007

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Key Elements of Compliance Key Elements of Compliance FrameworkFramework Design of program will be in the context of Design of program will be in the context of

Federal regulatory and legal precedent on Federal regulatory and legal precedent on compliance compliance

Program framework will be consistent with Program framework will be consistent with other compliance programsother compliance programs

In most cases, business unit has In most cases, business unit has responsibility and accountability for responsibility and accountability for managing programmanaging program

Independent oversight of program by Independent oversight of program by Regulatory Compliance Officer responsible Regulatory Compliance Officer responsible for all compliance programsfor all compliance programs

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FERC – Transitioning from Regulation FERC – Transitioning from Regulation of of Services Services to Regulation ofto Regulation of Behavior Behavior FERC has begun discharging their legal FERC has begun discharging their legal

duties by setting rules of general duties by setting rules of general application (behavior) application (behavior)

EPAct of 2005 and enabling FERC EPAct of 2005 and enabling FERC regulations regulations Expanded FERC’s Civil penalty to cover Expanded FERC’s Civil penalty to cover

violations over any provision of Part II of the violations over any provision of Part II of the FPAFPA

Increased civil penalty authority to $1M/dayIncreased civil penalty authority to $1M/day Policy Statement on Enforcement Policy Statement on Enforcement December 21, 2006 Administrative PolicyDecember 21, 2006 Administrative Policy

Clear message – enhancement & creation Clear message – enhancement & creation of compliance programs based on FERC of compliance programs based on FERC Enforcement Policy & the Federal Enforcement Policy & the Federal Sentencing GuidelinesSentencing Guidelines

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FERC Policy Statement on FERC Policy Statement on EnforcementEnforcement Factors guiding the selection of Factors guiding the selection of

enforcement remediesenforcement remedies Credit for internal compliance, self-Credit for internal compliance, self-

reporting & cooperationreporting & cooperation Adopts or references enforcement policies Adopts or references enforcement policies

of other agenciesof other agencies DOJ Federal Sentencing GuidelinesDOJ Federal Sentencing Guidelines Commodity Futures Trading Commission Commodity Futures Trading Commission

(CFTC)(CFTC) Securities & Exchange Commission (SEC)Securities & Exchange Commission (SEC)

Evolution of FERC enforcement rulesEvolution of FERC enforcement rules A journey but FERC will use existing A journey but FERC will use existing

enforcement policies of the above agencies as a enforcement policies of the above agencies as a benchmark benchmark

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Federal Sentencing Federal Sentencing GuidelinesGuidelines No established body of law interpreting No established body of law interpreting

FERC’s new policyFERC’s new policy Guidelines represent critical history to Guidelines represent critical history to

benchmark FERC compliance programsbenchmark FERC compliance programs Incorporates U.S. Sentencing Commission Incorporates U.S. Sentencing Commission

premise that it would not be fair to impose premise that it would not be fair to impose harsh fines on organizations that had taken all harsh fines on organizations that had taken all reasonable steps to prevent criminal conductreasonable steps to prevent criminal conduct

Guidelines establish criteria for an Guidelines establish criteria for an effective compliance programeffective compliance program

Guidelines are currently used in the Guidelines are currently used in the industry as the basis for Corporate industry as the basis for Corporate Compliance ProgramsCompliance Programs

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TieTie to Corporate Compliance to Corporate Compliance ProgramProgram Antitrust Company Information and Records Credit, Collection, Customer Service

and Purchasing Electric and Gas Economic Regulation Energy Risk Management Environmental General Risk Management and Safety Government Affairs Labor, Benefits and Employment Securities Taxes

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Federal Sentencing Guidelines – Federal Sentencing Guidelines – Compliance Program CriteriaCompliance Program Criteria Periodic risk assessmentsPeriodic risk assessments Standards & procedures to prevent/detect unlawful Standards & procedures to prevent/detect unlawful

conductconduct Directors’ program oversight responsibilityDirectors’ program oversight responsibility Senior officer(s) program responsibilitySenior officer(s) program responsibility Specific individual delegated day-to-day operational Specific individual delegated day-to-day operational

responsibilityresponsibility Background checks at hire & promotionBackground checks at hire & promotion Communication of standards & proceduresCommunication of standards & procedures Auditing & monitoring, including internal reporting Auditing & monitoring, including internal reporting

mechanismsmechanisms Periodic evaluation of the programPeriodic evaluation of the program Promote and enforce the program consistentlyPromote and enforce the program consistently Respond appropriately to violations to prevent Respond appropriately to violations to prevent

future occurrences future occurrences

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Compliance ProgramsCompliance Programs

Standards of Conduct (SOC)Standards of Conduct (SOC) Open Access Transmission Tariff Open Access Transmission Tariff

(OATT)(OATT) Reliability StandardsReliability Standards Marketing & Trading Rules (M&TR)Marketing & Trading Rules (M&TR)

Anti-Manipulation Regulations Anti-Manipulation Regulations Market Based Rate TariffMarket Based Rate Tariff OATT related trading proceduresOATT related trading procedures Price reportingPrice reporting

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Compliance ProgramsCompliance Programs

North American Energy Standards North American Energy Standards Board (NAESB)Board (NAESB) NERC cousin - business practicesNERC cousin - business practices

Tariff and Other MattersTariff and Other Matters MBR & Cost Based TariffsMBR & Cost Based Tariffs PUHCA Section 203PUHCA Section 203 Interlocking DirectoratesInterlocking Directorates Periodic Reports & FilingsPeriodic Reports & Filings

Regulatory Compliance FrameworkRegulatory Compliance FrameworkRegulatory Compliance Officer

Regulatory Compliance Administrator

Specific Compliance Program Administrators & Support

SOCOATT

NAESB

Reliability

Transmission & Generation Standards

Cyber-security Standards

M&TR Compliance Counsel

Tariff & Other Matters

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Implementing the Regulatory Implementing the Regulatory Compliance ProgramCompliance Program Written delegation from Compliance Officer Written delegation from Compliance Officer

to specific program administrators (job to specific program administrators (job descriptions)descriptions) Each Program Administrator will have primary Each Program Administrator will have primary

responsibility and accountability for managing responsibility and accountability for managing their compliance areatheir compliance area

Common template for each compliance Common template for each compliance area area Written proceduresWritten procedures Audit & MonitoringAudit & Monitoring TrainingTraining Above items developed, revised and maintained Above items developed, revised and maintained

by Program Administrators by Program Administrators

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Regulatory Compliance Regulatory Compliance Program ProcessProgram Process

Quarterly reports developed for Quarterly reports developed for Regulatory Compliance OfficerRegulatory Compliance Officer

Coordination with TECO Energy Coordination with TECO Energy Corporate Compliance Program Corporate Compliance Program

Administration of compliance Administration of compliance programs overseen by programs overseen by Regulatory Compliance Regulatory Compliance AdministratorAdministrator

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Reliability Program Next Steps Reliability Program Next Steps – “Devil in the Detail”– “Devil in the Detail”• Integrate into existing company compliance Integrate into existing company compliance

structures as previously discussedstructures as previously discussed• Outreach and educationOutreach and education• Make individual employees accountable for Make individual employees accountable for

each requirementeach requirement• Determining what standards are applicable Determining what standards are applicable

- NERC functional model registration- NERC functional model registration• Identifying what constitutes compliance for Identifying what constitutes compliance for

each standard and requirement each standard and requirement • 118 standards, 1234 requirements!118 standards, 1234 requirements!

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The Details – EducationThe Details – Education

Director/Manager level trainingDirector/Manager level training TopicsTopics

Roles of NERC & FERCRoles of NERC & FERC EPACT 2005EPACT 2005 Compliance Enforcement & AuditsCompliance Enforcement & Audits Standards 101Standards 101 Corporate Compliance PlanCorporate Compliance Plan Compliance DocumentationCompliance Documentation Standards Development ProcessStandards Development Process

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The Details – AccountabilityThe Details – Accountability Each Requirement and Sub-Each Requirement and Sub-

Requirement is assigned to a Requirement is assigned to a managermanager

The Violation Risk Factor matrix The Violation Risk Factor matrix was used as a templatewas used as a template

Emergency Operations Planning

EOP-001-0 R1. Balancing Authorities shall have operating agreements with adjacent Balancing Authorities that shall, at a minimum, contain provisions for emergency assistance, including provisions to obtain emergency assistance from remote Balancing Authorities.

HIGH Donahey/Nordlinger

  EOP-001-0 R2. The Transmission Operator shall have an emergency load reduction plan for all identified IROLs. The plan shall include the details on how the Transmission Operator will implement load reduction in sufficient amount and time to mitigate the IROL violation before system separation or collapse would occur. The load reduction plan must be capable of being implemented within 30 minutes.

MEDIUM Davis/Busot

  EOP-001-0 R3. Each Transmission Operator and Balancing Authority shall: MEDIUM Heading

  EOP-001-0 R3.1. Develop, maintain, and implement a set of plans to mitigate operating emergencies for insufficient generating capacity.

MEDIUM Davis/Busot

  EOP-001-0 R3.2. Develop, maintain, and implement a set of plans to mitigate operating emergencies on the transmission system.

MEDIUM Davis/Busot

  EOP-001-0 R3.3. Develop, maintain, and implement a set of plans for load shedding.

MEDIUM Davis/Busot

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The Details - DocumentationThe Details - Documentation Compliance Template for Each Compliance Template for Each

RequirementRequirementTampa Electric CompanyTampa Electric Company

NERC Reliability Standard Compliance TemplateNERC Reliability Standard Compliance Template

File Name: Compliance Template ABC-XXX-X RX[-RX]File Name: Compliance Template ABC-XXX-X RX[-RX]

Standard Name & Number:Standard Name & Number:

Requirement Number(s):Requirement Number(s):

Business Unit(s):Business Unit(s):

Responsible Department(s):Responsible Department(s):

Date Completed:Date Completed:

Next Review Date:Next Review Date:

Requirement:Requirement:

Violation Risk Factor:Violation Risk Factor:

Compliance Statement: Compliance Statement:

Compliance Documents & Location: Compliance Documents & Location:

Training Requirements (if applicable): Training Requirements (if applicable):

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Tampa Electric CompanyNERC Reliability Standard Compliance Template

File Name: Compliance Template EOP-001-0 R1Standard Name & Number: EOP-001-0 Emergency Operations PlanningRequirement Number(s): R1Business Unit(s): Energy DeliveryResponsible Department(s): Transmission Tariff & ContractsDate Completed: February 16, 2007Next Review Date: February 16, 2010

Requirement: Balancing Authorities shall have operating agreements with adjacent Balancing Authorities that shall, at a minimum, contain provisions for emergency assistance, including provisions to obtain emergency assistance from remote Balancing Authorities.

Violation Risk Factor: High

Compliance Statement: Tampa Electric has three types of operating agreements that include provisions to obtain emergency assistance from other Balancing Authorities. First, …

Compliance Documents & Location:FRCC Operating Reserve Policy – FRCC web siteTampa Electric Interchange Agreements – located at the Energy Control Center, Interchange Billing Department and online at \\TECO_TREE\.PLAZA6_SYS....\CONTRACTS

Training Requirements (if applicable): None Required

Additional Comments:

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The Details – Document The Details – Document MaintenanceMaintenance

All Compliance Templates and All Compliance Templates and as many related documents as as many related documents as possible to be stored on a possible to be stored on a SharePoint siteSharePoint site

Documents are uploaded by the Documents are uploaded by the responsible managersresponsible managers

The Compliance Manager The Compliance Manager approves all submissionsapproves all submissions

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QUESTIONS?QUESTIONS?Greg Ramon

gjramon@tecoenergy.com

813-228-4469

Art Nordlinger

alnordlinger@tecoenergy.com

813-630-6203