By Rich Heidorn Jr.

QUEBEC CITY, Quebec — NERC’s Board of Trustees on Thursday approved the Electric Reliability Organization’s 2020 budgets and a data request on supply chain issues before saying goodbye to retiring General Counsel Charles “Charlie” Berardesco. Officials also announced two executive appointments and the successor to Chair Roy Thilly during their two-day quarterly meetings in Quebec.

$207M Budget Approved

The board approved the 2020 ERO Enterprise business plan and budgets, which will be submitted for FERC approval later this month.

NERC and the REs are increasing spending by 3.9% to $207 million, with total assessments projected to increase by 2.9%.

NERC’s $83.4 million budget is a 4.5% increase over 2019 and will be mostly funded by $72 million in assessments, also up 4.5%. Canada (+7.3% to $0.013/MWh) and Mexico (+6.0% to $0.016/MWh) face bigger assessment increases than the U.S. (+4.3% to $0.016/MWh).

NERC’s budget includes $500,000 for modifications to its Atlanta headquarters to provide more meeting space. “We expect to save $150,000 a year” in meeting costs after the renovations, Controller Andy Sharp said.

NERC is projecting an additional 5.6% increase in assessments for 2021 and 5.9% for 2022, but those amounts could be reduced by releases from its assessment stabilization reserve.

The increases are being driven by the five-year expansion plan for the Electricity Information Sharing and Analysis Center (E-ISAC), which added nine full-time equivalent employees this year and plans to add seven in 2020 and 14 through 2022.

Excluding the 13.3% increase for the E-ISAC, ERO spending will increase by 2.2%.

Thilly acknowledged the ISAC budget increase “is significant and will continue to be,” thanking stakeholders for their “strong support” for the spending boost.

The Canadian Electricity Association and Ontario’s Independent Electricity System Operator had questioned the increase in the E-ISAC, with the CEA expressing skepticism over the ISAC’s “value proposition” to Canada. (See ERO Budget Nears OK Despite Canada’s Concerns.)

At the board meeting, CEA CEO Francis Bradley commended NERC for “working to be more aligned with the fiscal and regulatory realities faced by electric utilities” but expressed concern that spending is projected to exceed inflation for the next several years.

“The magnitude of the ISAC budget increases are substantial, and, as such, it is essential there is corresponding value for all the stakeholders.” Bradley said.

In its comments on the budget, the CEA said the E-ISAC should take advantage of capabilities already available from other agencies, including the Canadian Cyber Centre, to avoid unnecessary duplication and spending.

“We see ourselves as never having enough expertise to do it on our own,” Chief Security Officer and E-ISAC Director Bill Lawrence told the Technology and Security Committee meeting on Wednesday. “Efficiency in an area like this is very hard … because if something happens, you never spent enough and never did enough.”

NERC CEO Jim Robb noted the memorandum of understanding the E-ISAC signed with IESO this summer. “We’re very optimistic about benefits to come from that. We’re going to focus on that with great vigor in the coming year.”

Robb said although the E-ISAC has had success in hiring good talent and increasing its capabilities, it remains limited by the data flowing into it from industry.

“How do we get more information flowing voluntarily into the E-ISAC? … That’s going to be one of our big pushes this year in outreach,” he said.

Supply Chain Data Request

The board approved a data request on the “the nature and number” of low impact bulk electric system (BES) cyber systems. The data request was a recommendation of the staff supply chain report approved by the board in May. (See “Supply Chain Report Recommends Expanding Standards” in NERC Standards News Briefs: May 8-9, 2019.)

NERC said the information will help it understand the risks associated with low impact systems with external routable connectivity and determine whether to modify the supply chain standards to include them.

“We’re not looking for an exact count of low impact BES assets. Instead, it’s a count of locations,” Director of Engineering and Standards Howard Gugel told the Member Representatives Committee (MRC) Wednesday.

The request is expected to be issued this week, with responses due in early October. NERC will schedule a webinar to address questions from recipients of the request. A summary of the responses will be presented to the board at its November meeting.

Gugel said NERC received 35 sets of comments on the request. Some commenters thought the request should be expanded to include vendors.

Gugel said although NERC does not consider the results confidential, it will only share results in the aggregate; no individual entities will be identified.

New Format for Q4 Meeting

Thilly said the board will experiment with an abbreviated open meeting immediately after the MRC meeting on Nov. 5 in Atlanta rather than the normal schedule of a half-day meeting the day after the MRC.

The open board meeting will be limited to action items, with committee meetings done in advance as conference calls.

The board will also meet with the regional entity boards and hold a closed strategic session. The MRC meeting schedule will not change.

Thilly said the new schedule will be a trial that may be used for future fourth quarter meetings, which he said “seem to have least essential things” on the agenda.

“As long as I can remember, we’ve had an internal debate about whether we should continue with four meetings a year or three meetings,” Thilly explained during the MRC meeting Wednesday. “On the one hand, you can see [from] all the people here how important these meetings are … On the other hand, sometimes we feel like the day after this meeting, staff [are] spending a lot of time preparing for the next meeting, and that has an opportunity cost associated with it.”

“That’s what we intend to try in November. We’ll see how it works and what feedback we get,” he said.

Executive Appointments

Robb announced the appointment of Deputy General Counsel Sonia Mendonca as interim general counsel and corporate secretary, replacing Berardesco, who is retiring at the end of this month.

In addition, the Board of Trustees promoted Sharp to vice president. Sharp will also continue as the interim chief financial officer, a role he has served since the May departure of former CFO Scott Jones, who also served as chief administrative officer.

“Since Scott Jones left NERC after Memorial Day, Andy Sharp has effectively been our top financial executive,” Robb said. “I really appreciate him stepping in and stabilizing this organization.”

NERC last month hired an executive search firm to find permanent replacements for general counsel and chief administrative officer. (See NERC Leadership Search Announced.)

Farewell to Berardesco

Stakeholders gave Berardesco a standing ovation for his seven years as general counsel and his nearly seven-month stint as acting CEO after the resignation of Gerry Cauley.

“He has been extremely dedicated to this organization,” Thilly said. “As everyone knows, he stepped into the breach in November [2017] as acting CEO. [He] really held everything together in a way that was quite seamless. No gaps. We will be forever grateful.”

Robb read a proclamation praising Berardesco, and SERC Reliability CEO Jason Blake thanked him for his mentorship.

“Charlie has meant a lot to me personally through his wise counsel,” Blake said. “One of the things he shared with me one time that really stuck with me was to do things with intention in all that you do. What is the purpose? That’s something that resonated with me. Something that I will take with me.”

Berardesco said it was an “overwhelming honor … to be able to spend this last part of my active career working on the other side” after almost 10 years at Constellation Energy.

He thanked the board members and his NERC colleagues and his “marvelous” deputy, Mendonca.

Succession Plan

The board also announced Ken DeFontes will become chairman when Thilly’s term ends in February 2021. Thilly will remain on the board.

NERC also will be seeking a replacement for Janice Case, who will end her final term in February 2020. (The board increased to 12 members with the election in February of Colleen Sidford, representing Canada. It will drop back to 11 in February 2020 following the departure of Case and Frederick W. Gorbet.)

Nominating Committee Chair George Hawkins said the committee will meet in September to narrow the candidates to a short list to be interviewed in person.

Robb Honors LaFleur, Assante

At the board meeting Thursday, Robb asked ERO Insider to note he was wearing Boston Red Sox cufflinks and a New England Patriots tie in honor of departing FERC Commissioner Cheryl LaFleur. “We didn’t always agree on everything but always had a great opportunity for exchange,” he said.

Robb also noted the passing of Mike Assante, the head of SANS Institute’s industrial control system and SCADA security operations, who died July 5 of cancer. A former naval officer, he was NERC’s first chief security officer.

“We probably wouldn’t have the E-ISAC without Michael Assante,” Robb said.

He “left some big shoes to fill,” said Bill Lawrence, the E-ISAC director and current chief security officer.

Other Actions

The board also approved:

• BAL-002-WECC-3 (Contingency Reserve): Replaces the Western Electricity Coordinating Council’s BAL-002-WECC-2a, Requirement R2, which became redundant with the implementation of BAL-003-1.1, Requirement R1 on April 1, 2016. WECC conducted a field test that concluded the retirement of the old requirement would not harm reliability.
• Amendments to ReliabilityFirst’s bylaws to incorporate NERC’s Consolidated Hearing Process (Section 403.15 of NERC’s Rules of Procedure) and replace RF’s regional hearing process.
• An update to the Compliance and Certification Committee’s (CCC) program for monitoring adherence to NERC’s Rules of Procedure for compliance monitoring and enforcement, which was last revised in 2015.
• An update to the CCC’s procedure for qualifying for eligibility to submit implementation guidance to the ERO, last revised in 2016.