April 18, 2016 North American Electric Reliability Corporation 3353 Peachtree Road NE Suite 600, North Tower Atlanta, GA 30326 Attention: Mr. Michael Walker Subject: NPCC Regional Entity Division Variance Comparison and First Quarter 2016 Statement of Activities Dear Michael: The variance comparison for the period ended March 31st, 2016 is included along with Northeast Power Coordinating Council, Inc.’s unaudited First Quarter 2016 Statement of Activities. Please do not hesitate to contact me via email at jhala@npcc.org or via telephone at (212) 840-1070 should you have any comments or questions with regard to the materials provided. Sincerely,

Jessica Hala Jessica Hala Manager, Finance and Accounting Enclosures cc: Mr. Christopher Weir, CPA – NPCC Treasurer Mr. Edward A. Schwerdt – NPCC President & CEO Ms. Jennifer Budd Mattiello – NPCC Vice President & COO ERO Finance Group

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NPCC Regional Entity Division Budget to Actual

Variance Comparison as of March 31, 2016

INCOME

• Penalty Sanctions (Actual income of $67k remitted to NPCC as of June 30, 2015 has been applied to reduce 2016 assessments to NPCC U.S. load serving entity designees.) All penalty sanctions remitted from July 1, 2015 through June 30, 2016 will be included in the NPCC 2017 Business Plan and Budget and applied to reduce 2017 assessments to NPCC U.S. load serving entity designees.

• Interest Income (Actual income of $1k year-to-date not included in budget)

NPCC accounts for but has not budgeted for interest income for operating fund investment as returns on U.S. treasury securities fund are negligible and corporate money market fund returns are minimal.

o NPCC allocated $1k as a portion of total interest income (93%) to the Regional Entity Division

consistent with the ratio of Regional Entity (RE) to Criteria Services (CS) Division 2016 funding. A common system of accounts, with divisional separation, is used for both RE and CS revenue tracking and financial reporting.

EXPENSES

• Personnel Expenses (Variance of $113k under budget year-to-date and as budgeted FYP) o As of April 11th NPCC filled its one vacancy and is back to being fully staffed. Medical insurance

coverage is currently waived by 25% of NPCC employees who have superior coverage from a former employer. Additionally, medical insurance premiums are currently lower than budgeted.

• Meetings and Conference Calls (Variance of $110k under budget year-to-date and as budgeted FYP) o Continued efforts to limit the number of attendees sent to off-site meetings, and to hold more meetings

onsite or via webinar where effective, have kept meeting and conference call expenses under budget. Current underage is primarily due to timing of planned meetings, with the heaviest meeting schedule occurring later in the year.

• Consultants and Contracts (Variance of $146k under budget year-to-date and as budgeted FYP) o Year-to-date under budget is due to the timing of the use of independent contractors for compliance

audits. Inherent Risk Assessments and Internal Control Evaluations are planned such that the full year projection continues to be as budgeted.

• Professional Services (Variance of $65k under budget year-to-date and as budgeted FYP)

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o Underage in legal fees is due to timing of Board Committee meetings supported by outside counsel and additional workload taken on by General Counsel. Additionally, total remuneration study and NPCC Board Independent Director search efforts have yet to be initiated.

FIXED ASSETS

• Computer & Software (Variance of $68k under budget year-to-date and as budgeted FYP)

o Current underage is due to timing. The scope of work for CDAA and CITS software development is projected to be as budgeted.

(Unaudited) Submitted April 18th, 2016

2016 YTD Actual

2016 YTD Budget

2016 YTD Actual

Variance from Budget %

2016 Projection

2016 Annual Budget

2016 Projection

Variance from Budget %

Funding Assessments 3,587,299 3,587,299 - 14,349,196 14,349,196 - Penalties 67,000 67,000 - 67,000 67,000 - Testing - - - - - - Services & Software - - - - - - Workshop Fees 17,180 16,000 1,180 64,000 64,000 - Interest 1,109 - 1,109 1,109 - 1,109 Miscellaneous - - - - - - Total Funding 3,672,588 3,670,299 2,289 0.06% 14,481,305 14,480,196 1,109 0.01%

Expenses Personnel Expenses Salaries 1,571,882 1,640,368 (68,485) 6,561,471 6,561,471 - Payroll Taxes 183,034 179,576 3,458 399,057 399,057 - Employee Benefits 313,897 341,200 (27,303) 1,364,799 1,364,799 - Savings & Retirement 186,918 208,279 (21,361) 833,118 833,118 - Total Personnel Expenses 2,255,732 2,369,423 (113,691) -4.80% 9,158,445 9,158,445 - 0.00% Meeting Expenses Meetings 16,019 48,800 (32,781) 394,000 394,000 - Travel 108,343 181,420 (73,077) 907,100 907,100 - Conference Calls 7,800 11,750 (3,950) 47,000 47,000 - Total Meeting Expenses 132,162 241,970 (109,808) -45.38% 1,348,100 1,348,100 - 0.00% Operating Expenses Consultants & Contracts 336,191 482,625 (146,434) 2,223,500 2,223,500 - Rent & Improvements 169,677 198,625 (28,948) 802,500 802,500 - Office Costs 113,628 159,875 (46,247) 639,500 639,500 - Professional Services 156,555 221,250 (64,695) 1,011,000 1,011,000 - Miscellaneous 6,500 10,250 (3,750) 41,000 41,000 - Depreciation 55,891 57,955 (2,064) 231,821 231,821 - Total Operating Expenses 838,442 1,130,580 (292,138) -25.84% 4,949,321 4,949,321 - 0.00%

Indirect Expense Allocation (69,682) (106,762) 37,080 -34.73% (427,047) (427,047) - 0.00%

Other Non-Operating Expenses - - - n/a - - - n/a

Total Expenses 3,156,654 3,635,211 (478,557) -13.16% 15,028,818 15,028,818 - 0.00%Net Change in Assets 515,934 35,088 480,846 1370.40% (547,513) (548,622) 1,109 -0.20%

Fixed Assets Depreciation (55,891) (57,955) 2,064 (231,821) (231,821) - Computer & Software CapEx 991 69,000 (68,009) 276,000 276,000 - Furniture & Fixtures CapEx - - - - - - Equipment CapEx - - - - - - Leasehold Improvements - - - - - - Incr(Dec) in Fixed Assets (54,900) 11,045 (65,945) -597.07% 44,179 44,179 - 0.00%

Total Budget (Expenses plus Incr(Dec) in Fixed Assets) 3,101,754 3,646,256 (544,502) -14.93% 15,072,997 15,072,997 - 0.00%Change in Working Capital (Total Funding less Total Budget) 570,835 24,043 546,791 2274.19% (591,692) (592,801) 1,109 -0.19%

Equivalent Full Time Employees 35.86 36.86 (1.00) 36.86 36.86 - Headcount 37.00 38.00 (1.00) 38.00 38.00 -

Beginning Total Reserves - 1/1/16 4,489,880 3,932,546 557,334 4,489,880 3,932,546 557,334 Change to Reserves - YTD 2016 570,835 24,043 546,791 (591,692) (592,801) 1,109

Projected Total Reserves at 12/31/16 5,060,715 3,956,589 1,104,125 3,898,188 3,339,745 558,443

Northeast Power Coordinating Council, Inc. - Regional Entity DivisionStatement of Activities, Fixed Assets and Change in Working Capital

(Unaudited)For the Period Ended March 31, 2016