per day per violation... GEnERAl InfoRMATIon

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1 GEnERAl InfoRMATIon Congress recently gave the federal Energy Regulatory Commission ( ferc ) broad new civil authority for violations of the federal Power Act up to $1 million per day per violation... Training is becoming an increasingly important part of every electric and natural gas company s compliance program. In the Energy Policy Act of 2005 Congress gave the Federal Energy Regulatory Commission ( FERC ) broad new civil penalty authority for violations of the Federal Power Act up to $1 million per day per violation as well as new authority to regulate reliability, also potentially subject to these penalties. FERC was also given broad new authority to regulate reliability. Energy companies have paid millions of dollars as a result of Commodity Futures Trading Commission ( CFTC ) investigations. If you are audited by FERC, or face an investigation by FERC or the CFTC, one of the questions the auditor is very likely to ask is how you train your employees on regulatory requirements such as the prohibitions on market manipulation, the standards of conduct and compliance with NERC reliability standards. Additionally FERC has said that it will give mitigation credit and reduce penalties for violations for companies with stong compliance programs that include training. As a service to its members, the Edison Electric Institute has developed three standardized online training programs that allow your employees to train from an internet-based program when it is most convenient to them. In addition to being convenient for busy employees, the programs make it easy for compliance officers and training administrators to keep training records. The content of the training materials on the anti-manipulation and standards of conduct programs was developed by compliance experts at Skadden, Arps, Slate, Meagher & Flom LLP. The reliability training was developed by Balch & Bingham LLP, a leader in this area. Standards of Conduct: The Standards of Conduct training was launched in In 2008, FERC issued its revised order on Standards of Conduct, Order No The EEI training has been fully revised to be in compliance with Order No FERC audits of companies using the training program have found the EEI training program to be an acceptable form of training.

2 TRAInInG PRoGRAMS Anti-Manipulation: Pursuant to its new authority under the Energy Policy Act of 2005, FERC has established broad prohibitions on manipulation in markets subject to its jurisdiction. Generally, these rules, known as the Anti-Manipulation Rules, apply to wholesale sales and purchases of natural gas and electricity, or sales and purchases of gas transportation and electric transmission services. The CFTC may also initiate investigations and enforcement proceedings against natural gas and electric power marketers. Similarly, the Antitrust Division of the Department of Justice and the Federal Trade Commission enforce federal antitrust laws, including unlawful collusion that results in energy market manipulation. The EEI Anti-Manipulation Training is a web-based course that covers these requirements for electric and natural gas companies. Reliability: The Energy Policy Act of 2005 added Section 215 to the Federal Power Act, which set the stage for the development and enforcement of mandatory reliability standards under FERC. The North American Electric Reliability Corporation (NERC) has been certified as the Electric Reliability Organization in the United States to develop and enforce the standards. Subsequent FERC orders have defined the structure and processes to be used by NERC, approved a broad range of standards, and set the framework for compliance enforcement programs. Formal compliance audits and investigations are now taking place, and penalties are beginning to be assessed, and filed at FERC. FERC may also conduct investigations on its own. The EEI training gives employees an overview of FERC and NERC requirements and highlights the importance of all employees having an awareness of these requirements. The programs are available through annual subscriptions. The cost for a one-year site license for the first year of participation is $20,000 for each program for EEI members and $25,000 for nonmembers. Renewal fees are set annually and are less than the first year fees. Site customizations requiring additional work are priced on request. There is also a one-time website set-up fee. EEI is hoping to launch other programs to add to its suite of on-line training.

3 CoMMon QuESTIonS 1) Who created the program? The content for the training programs was developed by experts from the Edison Electric Institute and expert outside attorneys. The technology behind the system was developed by The Bivings Group. 2) How many of my employees can be trained through this tool? As many as need to be trained. There is no limit to the number of employees that you can trai through the system under your company s site license. 3) How do employees access the system? The EEI programs are entirely web-based. Employees will be given a URL through which they can access their company s training program. 4) How will my employees obtain accounts to access the system? Each employee will have a distinct system account. Following is a breakdown of the options for registering employees to take the training: Companies can choose to have each of their employees register themselves. If this option is chosen, employees will be required to enter a company-wide password to gain access to the registration screen. From there, they will fill out all required personal and company information, and choose a specific username and password for themselves to log in with. Companies may alternatively provide EEI with a spreadsheet containing a list of all employees designated to take the training. This spreadsheet can be uploaded to the system, and all employees will be able to automatically log in upon visiting the site. This provides the compliance officer with an easy way to track whether employees designated to take the training have done so.

4 CoMMon QuESTIonS continued The training program has an extensive Administrative section, which can be used to track the progress of all employees taking the training. 5) Can the training modules/slides be customized? There is a standard amount of company-specific customizations included in the subscription fee of the training, such as company logo and contact information. Additional customizations are available upon request at an added cost. 6) What happens when the employee completes the training? Upon completion of the training, employees are provided with a printable certificate which shows that they have taken all required modules and quizzes. If requested, we can also provide a link for them to click on, which will take them to a verification page within your own Company Management System. An electronic record is also maintained. 7) What happens if employees experience problems while taking the training? As a part of the package, we offer technical assistance via telephone helpline, as well as a support address to which users can send questions. 8) How will Company Administrators be able to track employee progress? The training program has an extensive Administrative section, which can be used to track the progress of all employees taking the training. This section can also be used to generate companywide progress reports, which can be downloaded into CSV spreadsheets. 9) once our site is set up, how can I become better acquainted with the Administrative section? All Compliance Contacts and Company Administrators will be offered a demonstration of the Administrative section upon request. 10) How can we request site updates? The Administrative section also offers a contact field through which Company Administrators can request site updates to any company information.

5 CoMMon QuESTIonS continued 11) What happens after the initial training is complete? All companies implementing the training will be offered yearly renewal packages at a reduced fee. Training can serve as both a refresher course for previously trained employees, as well as an initial training course for any new employees. Employees can access the site and review the training materials as often as they like. 12) Are there quiz questions? In each training module, employees are required to answer questions. 13) Will there be an opportunity to give feedback once employees have completed the training? We can provide a process for employees and/or administrators who have completed EEI Compliance Training to make suggestions on the content or format of the training process. This process can include a comment form or a phone number to call EEI. This would enable companies who have been audited by the FERC to share valuable suggestions and information with everyone. 14) Are the training modules SCoRM compliant? The EEI Standards of Conduct training program is SCORM 2004 compliant. By following this standard, the training program can interact directly with other SCORM 2004 software packages -- including some learning management systems (LMS). This enables the training program and LMS to seamlessly share data about employee enrollment and training data so that company administrators only have to use their LMS without having to use the training program as well. This reduces the amount of work involved in transferring data from program to program as well as lessening the chance of human error. 15) Does the site license include our subsidiary companies? Yes, all subsidiary companies under your holding company are covered by a single site license fee.

6 ConTACT InfoRMATIon If you are interested in subscribing to any of the training programs, or have any questions, please contact us. for information on Standards of Conduct and Anti-Manipulation training please contact: Jamila Atkinson (202) for information on the Reliability training please contact: Ethan P. Holmes (202) or surf our compliance training website