Agenda Board of Directors Compliance Committee of Directors Library/2018-05-23... · 23/05/2018 · strategies related to compliance with the CIP Standards. She discussed the genesis

Agenda Board of Directors • Compliance Committee May 23, 2018 • 1:00 PM – 3:00 PM (ET)

ReliabilityFirst Corporation 3 Summit Park Drive, Suite 600 • Cleveland, OH 44131 Room: 5th Floor Conference Center Attire: Business Casual

Open Agenda

1. Call to Order and Appoint Secretary to Record MinutesPresenter: Brenton Greene, Chair

2. Antitrust StatementPresenter: Brenton Greene, Chair

3. Approve Compliance Committee Meeting MinutesPresenter: Brenton Greene, Chair Reference: Draft Minutes for the March 14, 2018 Compliance Committee Meeting Action: Approve Minutes

4. PJM CIP Security SegmentationPresenter: Bryon Koskela and Steve McElwee, PJM Interconnection, LLC

Description: RF has presented its approach to risk-based monitoring and enforcement to ensure the reliability and security of the RF footprint and drive continuous improvement for stakeholders. In this context, PJM will provide the Compliance Committee with a presentation on a particular effort to continuously improve the security and compliance of its operations.

Reference: Presentation Action: Information and Discussion

5. 2017 RF Regional Risk Assessment

Presenter: Ray Sefchik Description: Mr. Sefchik will provide an overview of the 2017 RF Regional Risk

Assessment (RRA) and the RRA process. Reference: Presentation Action: Information and Discussion

Compliance Committee • Agenda

May 23, 2018

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6. Implementation of the ERO CMEP ToolPresenter: Tony Jablonski Description: Mr. Jablonski will provide an overview of the implementation of the ERO

Compliance Monitoring and Enforcement Program tool. This will include objectives, milestones, and challenges/ considerations.


7. Hearing UpdatePresenter: Patrick O’Connor Description: Mr. O’Connor will provide a status update regarding NERC’s proposed

revisions to the Hearing Procedures. This will include the intent of the proposed revisions and recent updates to further improve NERC’s prior proposal.


8. Next MeetingAugust 29, 2018 • Cleveland, OH

Closed Agenda

9. Confidential Compliance and Enforcement MattersPresenter: Description: Reference: Action:

Jeff Craigo and Jason Blake Mr. Craigo and Mr. Blake will present confidential matters. Confidential Documents Information and Discussion

10. Adjourn

Roster • Compliance Committee

Brenton Greene, Chair • Independent (2019) Larry Irving, Vice Chair • Independent (2018) Ken Capps • At-Large (2019) Patrick Cass, • Independent (2020) Michael Bryson • RTO (2018)

Draft Minutes for the March 14, 2018 Compliance

Committee Meeting

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DRAFT Minutes Board of Directors • Compliance Committee March 14, 2018 • Cleveland, OH

ReliabilityFirst Corporation 3 Summit Park Drive • Cleveland, OH 44131

Open Session

Call to Order – Chair Brenton Greene called to order a duly noticed open meeting of the Compliance Committee on March 14, 2018 at 1:00 pm (ET). A quorum was present, consisting of the following members of the Compliance Committee: Brenton Greene, Chair; Michael Bryson; Ken Capps; and Patrick Cass. A list of others present during the Compliance Committee meeting is set forth in Attachment A. Appoint Secretary to Record Minutes – Chair Greene designated Jason Blake as the secretary to record the meeting minutes. Antitrust Statement – Chair Greene advised all present that this meeting is subject to, and all attendees must adhere to, ReliabilityFirst’s Antitrust Compliance Guidelines. Approve Compliance Committee Meeting Minutes – Chair Greene presented draft minutes for the November 29, 2017 Compliance Committee meeting, which were included with the agenda package. Upon a motion duly made and seconded, the Compliance Committee approved the minutes as presented.

Supply Chain Risk Management Standard Update – Matt Thomas provided an update on the development of the new CIP-013-1 Supply Chain Risk Management Standard (Standard). He discussed FERC’s Notice of Proposed Rulemaking for the Standard, including FERC’s proposed modifications to the Standard and NERC’s responses to the modifications. Mr. Thomas discussed ReliabilityFirst’s coordination efforts with NERC and the other Regions to drive consistency in monitoring and enforcement of the Standard. He also discussed ReliabilityFirst’s outreach efforts to ensure entities understand the objectives and requirements of the Standard. CIP Themes Report - David Godfrey, Vice President of Entity Oversight for WECC, and Kristen Senk, Senior Counsel for ReliabilityFirst, discussed the second edition of the CIP Themes Report (Report). Ms. Senk explained that the Report is a joint effort of ReliabilityFirst, WECC, and SERC to identify themes in deficiencies and mitigation strategies related to compliance with the CIP Standards. She discussed the genesis of the Report and the collaboration with stakeholders on its content. Ms. Senk then led a discussion on the CIP themes of: (1) organizational silos (i.e., lack of coordination between

Compliance Committee Minutes March 14, 2018

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departments, business units, and levels of management) and (2) lack of awareness of the entity’s capabilities deficiencies, systems, and processes. Mr. Godfrey provided WECC’s perspective on the Report, and noted that the CIP themes present in ReliabilityFirst’s footprint are also present in WECC’s footprint. He led a discussion on the CIP themes of: (1) disassociating compliance from security and (2) inadequate tools, ineffective tools, and overreliance on automation. The Committee then discussed Regional outreach efforts to ensure entity awareness of the Report and the CIP themes, and to help entities share strategies to address them. Review of 2017 Performance - Jim Uhrin provided an overview of ReliabilityFirst’s 2017 Compliance Monitoring and Enforcement Program activities. He provided metrics on the most frequently violated Reliability Standards; method of discovery of noncompliances, and risk profile of noncompliances. Mr. Uhrin noted that these metrics are positive and demonstrate entities’ use of effective internal controls. He then provided metrics on the assist visit program, and discussed the positive impacts of the program. For example, the rate of misoperations in the ReliabilityFirst footprint has significantly decreased, and Mr. Uhrin attributed this to focused entity assist visits on protection systems and misoperations.

Next Meeting – Chair Greene noted that the next Compliance Committee meeting will occur on May 23, 2018, in Cleveland, Ohio. At 2:30 pm, Chair Greene moved the Compliance Committee into closed session. All guests recused themselves at this time.

Closed Session

Confidential Compliance & Enforcement Matters – Jeff Craigo and Jason Blake led a discussion on confidential Compliance and Enforcement matters. Adjourn – Upon a motion duly made and seconded, Chair Greene adjourned the Compliance Committee meeting at 3:13 pm (ET).

As approved on this __ day of May, 2018, by the Compliance Committee,

Jason Blake Vice President General Counsel & Corporate Secretary

Compliance Committee Minutes March 14, 2018

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Attachment A

Others Present During the Compliance Committee Meeting Lisa Barton • American Electric Power Jason Blake • ReliabilityFirst, Vice President, General Counsel & Corporate Secretary Thomas Breene • WEC Energy Group Larry Bugh • ReliabilityFirst Jeff Craigo • ReliabilityFirst Rob Eckenrod • PJM Scott Etnoyer • Talen Energy Tim Gallagher • ReliabilityFirst, President & CEO David Godfrey • WECC Jim Haney • FirstEnergy Deandra Williams-Lewis • ReliabilityFirst Mark Holman • PJM Bob Mattiuz • FirstEnergy Charles Milliken • WEC Energy Group Jeff Mitchell • ReliabilityFirst Lou Oberski • Dominion Ray Palmieri • ReliabilityFirst, Senior Vice President Matt Paul • DTE Energy Joe Robinson • DTE Energy Ray Sefchik • ReliabilityFirst Kristen Senk • ReliabilityFirst Susan Sosbe • Wabash Valley Power Association Jennifer Sterling • Exelon Matt Thomas • ReliabilityFirst Jody Tortora • ReliabilityFirst Jim Uhrin • ReliabilityFirst Simon Whitelock • ITC Holding Lynnae Wilson • Vectren

Presentation

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PJM©2018

PJM’s Network Segmentation Project

Bryon Koskela, Senior Director – IT

Business Solutions

Steve McElwee, Director – IT

Compliance & Enterprise Info Security

May 23, 2018

PJM©20182

Background

Current network equipment in place from AC² project

(2008 – 2009)

Planning for lifecycle replacements provided the opportunity to take

a step back

Accounted for changing landscape of security and

technology

Multi-year project to fully redesign the network

• Started in 2016

• 2017 firewall refresh

• User network segmentation

PJM©20183

Drivers for Network Segmentation

Desire to further segment network zones

Physically separate equipment in certain

zones

Used software defined networking capability to

enforce ports and services white listing

Simplify firewall rule sets

Major vendors shifting network architecture to

spine-leaf recommendation

Consistent configuration across a large amount of

network devices

Ease of patching (many small ports switches vs. few large port switches)

PJM©20184

Process

RFP process initiated

Multiple vendors reviewed

Finalist

Arista CISCO

CISCO ACI and Nexus 9000

switches winning bid

PJM©20185

Datacenter Switch Replacement – Zone Architecture

Spine

Leaf

Controller

PJM©20186

High-Level Zone Design

PJM©20187

Compliance Implications

• Firewall remains the Electronic Access Point

• CIP DMZ subzone allows for multi-factor authentication and protocol break for interactive access

• Within the zone the policy set at the controller defines allowable traffic (deny by default), enforcement of authorized ports and services

• May change evidence for ports services (no UDP scans) and baselines –controller policy

• Controllers potentially EACMS for CIP zone

PJM©20188

Compliance Implications

• PJM design has separate physical hardware and controllers in each zone (additional cost)Capability exists to virtualize

• Routing within zones, no firewall traffic flowPorts and Services enforced

Presentation

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2017 Regional Risk Assessment

Update

Ray Sefchik,

Director, Reliability Assurance & Monitoring

May 23, 2018

Cleveland, OH

Forward Together • ReliabilityFirst

Regional Risk Assessment - Development

Identified Risks

Emerging Risks

Inherent Risks

2


Inherent Risks

3

• Potential Noncompliances

• Outages (Transmission,

Generation, EMS)• Misoperations

• Cybersecurity

• Physical Security

HistoricalReliability and Compliance Performance


Identified Risks

4

• Critical Infrastructure Protection

• Protection Systems

• Monitoring and Situational Awareness

• Supply Chain

• Human Performance

Key Risk Areas


Emerging Risks

5

• Cyber

• Predicting Transmission Availability Data System (TADS) Outages

• Renewables

• Fuel Diversity Impacts to Grid Resiliency

• Crime, Unemployment, and Demographics

• Technology and Aging Workforce

• Assessing Low Probability-High Impact Events

• Data Disparity

2018 Risk Outlook


2018 ERO Risk Elements

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• Critical Infrastructure Protection

• Extreme Physical Events

• Maintenance and Management of the Bulk Power System Assets

• Protection System Failures

• Monitoring and Situational Awareness

• Event Response/Recovery

• Planning and System Analysis

• Human Performance

• Cyber Security Supply Chain Risk Management

ERO & RF

Risk Elements


Conclusion

For the 2017 RRA, ReliabilityFirst focused

efforts on key risks identified in previous RRAs

• Included extensive efforts in mitigation of misoperations,

as well as cybersecurity and other CIP related issues

After review of the 2018 NERC ERO Risk

Elements and the ReliabilityFirst Risk Elements,

ReliabilityFirst identified associated Standards

and Requirements for increased compliance

monitoring focus in 2018

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Regional Risk Assessment - Results

Identified Risks

Emerging Risks

Inherent Risks

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Inherent Risk Assessments

Compliance Monitoring

Scope & Method

Input

Inform

Compliance Oversight

PlansInform Inform

&

Develop

Risk Communication

Plan(s)

Inform

&

Develop

Develop


Regional Risk Assessment - Coordination

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RAM

RAPA

Entity Dev

&

EASACompliance

Monitoring

&

Enforcement


Questions & Answers

Forward Together ReliabilityFirst

Presentation

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ERO CMEP Tool Update

Anthony Jablonski – Manager Risk Analysis & Mitigation

May 23, 2018

Cleveland, OH


Objectives

• Increase efficiency of compliance work activities through the use of

workflows and collaboration tools.

• Improve effectiveness by improving ability to share and analyze reliability

risk and compliance information.

• Ensure consistency in practices and data gathering by aligning common

CMEP business processes across the ERO Enterprise.

• Reduce total combined NERC and Regional Entity IT capital investments

and maintenance costs for CMEP-related applications.

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What does the CMEP Tool include?

3

CMEP Tool

TFE’s

Compliance Planning

Audit & Spot

Check

Self-Certs

Self-Reports

Data Submittals

Enforcement Processing

Mitigation

Security

Complaints Process

InvestigationsCFR/JRO

Processing

Registration Processing

Does not include:


RF Team Members

Jeff Craigo – ERO Steering Committee

Anthony Jablonski – RF Coordinator

• SME Group - Standards

Dirk Baker

• SME Group – Risk Assessment

Denise Hunter

• SME Group - Compliance

Kristen Senk

• SME Group - Enforcement

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Completed Milestones

5

Task Completed

SME Group Questionnaires June 2017

SME Group Workshop August 2017

Vendor Demos (BWise, MetricStream and OATI) October 2017

Vendor Scoring Cards November 2017

BWise Chosen as Vendor February 2018


Upcoming Milestones

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Process Harmonization Start End

Self-Reports and Self-Logging March June

Enforcement Processing May July

Mitigation Plan Creation and Tracking July September

Self-Certification, Periodic Data Submittals, Technical Feasibility

Exceptions (TFE)

September November

Compliance Audit and Spot Check; Compliance Investigations,

Complaints

October March 2019

Compliance Planning November April 2019

• Training and deployment schedule in progress and will be announced


Challenges and Considerations

Compromises and consensus needed across the ERO

Timely execution of critical path predecessors efforts (e.g., Entity

Registration)

Balance between current processes and out-of-the-box features

Data conversion from legacy systems

Registered entity engagement

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Questions & Answers


Presentation

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Update on Proposed Revisions

to Rules of Procedure

Patrick O’Connor, Counsel

May 23, 2018

Cleveland, OH


Purpose of Revisions

Option to move hearing process to NERC

• Region can change its mind after 6 months

NERC’s stated goals:

• Streamline costs and promote efficiency

• Enhance consistency

• Eliminate ex parte concerns

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Hearing ProcessF

ER

C

Proposed

3

FERC

HEARING

OFFICER

HEARING

BODY

HEARING

OFFICER

HEARING

BODY

BOTCCBOTCC

FERC

Current

NE

RC

RF


Change to Hearing Officer’s Role

4

Current

• RF Hearing Body

• 5 Compliance Committee Members

• Hearing Officer

• Selected by Hearing Body

2016 Draft

• Hearing Body

• 5 members, including Hearing Officer

• 2 appointed by RE

• 2 appointed by NERC BOTCC

• Hearing Officer

• Selected by 4 Hearing Body members

• Tie-breaking vote

2018 Proposal

• Hearing Body

• 5 members, excluding Hearing Officer

• 5th member appointed by 4 other members

• Hearing Officer

• Selected by Hearing Body

• Does not vote on any matter before Hearing Body


Next Steps

No action needed now

• Amended petition pending with FERC

FERC staff has signaled likely approval

Once FERC approves, we would seek

Compliance Committee’s endorsement to go to

full board for approval

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Questions & Answers


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