Common use of Budget and Funding for NPCC’s Non Clause in Contracts

Budget and Funding for NPCC’s Non. Statutory Activities In addition to its delegated functions and related activities, as specified in Sections 5, 6 and 7 of the Agreement and in Section 1 of this Exhibit E (such delegated functions and activities referred to in this Section 6 as “statutory activities”), NPCC’s Criteria Services division performs the following other functions and activities (such other functions and activities being referred to in this Section as "non-statutory activities"): NPCC List of Criteria Services Division Functions (Non-Statutory Activities) 1. Regionally-specific Criteria • NPCC develops and maintains Regionally-specific more stringent criteria • NPCC develops and maintains criteria establishing resource adequacy requirements within the region 2. Criteria Compliance Program • NPCC monitors and assesses compliance with its more stringent regional criteria • NPCC conducts a Reliability Compliance and Enforcement Program (RCEP) utilizing non-monetary sanctions NPCC shall employ the following methods and procedures to (i) keep its funding mechanisms for its Regional Entity division (statutory activities) separate from its funding mechanisms for its Criteria Services division (non- statutory activities), and (ii) record the costs it incurs in the performance of its non-statutory functions separately from the costs it incurs in the performance of its statutory functions: 1. Funding of NPCC Criteria Services Division (non-statutory activities). A separate membership based funding mechanism is utilized for non-statutory activities. 2. NPCC procedures for separating funding and expenditures for Regional Entity division (statutory activities) and criteria services division (non-statutory activities) NPCC utilizes the NERC System of Accounts (NSOA) to provide consistency for account codes, divisional separation codes and activity codes. In August of 2007, NPCC CBRE (which prior to the merger performed statutory activities) merged into and with Northeast Power Coordinating Council, Inc. (referred to as NPCC) (which prior to the merger performed non-statutory activities) with the merged corporation having divisional separation for Regional Entity and Criteria Services. As recommended by NERC, NPCC uses the not- for-profit MIP Fund Accounting program by Sage Software to accurately account for income, time and labor. Effective January 1, 2008, with corporate restructuring of NPCC completed in later 2007, 2008 actual program costs are being charged to appropriate program areas. NPCC does not conduct resource or transmission planning, is not an Independent System Operator (ISO), nor does it perform the functions of a Reliability Coordinator (RC). As such, while at this time, there is a breakout for Criteria related activities, all functions performed by NPCC are in the furtherance of NERC’s statutory mission and reliability of the international bulk power system in Northeastern North America. Methodology NPCC’s revenue and expenditure classification methodology identifies appropriate methods of accounting for income, time and costs to ensure that U.S. Federal/statutory and Canadian provincial and/or governmental authorities’ agreed upon revenue and expenses are accounted for separately from NPCC’s Regionally-specific Criteria development and Criteria compliance (non-statutory) income, time and expense. Division Codes There are two division codes that are used by NPCC in accounting for revenues and expenses. The codes are as follows: Division ID Division Name RE Regional Entity – U.S. Statutory and Canadian Regulatory and/or Governmental Authority authorized CSD Criteria Services - Non-Statutory The two division codes allow NPCC to separate Regional Entity statutory activity revenues and expenses from Criteria Services non-statutory activity revenues and expenses. These categories were developed to ensure that non-statutory related revenues and expenses are segregated and accounted for separately from statutory-related revenues and expenses. Program Codes As required by NERC, NPCC adopted a financial accounting system consistent with NERC’s functional categories. At NPCC, functional categories are referred to as Program Codes. There are twelve program codes that are used by NPCC in accounting for expenses. The codes are as follows: Program ID Program Name 300 Reliability Standards 400 Compliance Enforcement and Organization Registration and Certification 800 Reliability Assessment and Performance Analysis 700 Reliability Readiness Evaluation and Improvement 900 Training and Education 1000 Situational Awareness and Infrastructure Security ADMIN General Administration FINANCE Accounting and Finance HR Human Resources IT Information Technology LEGAL Legal and Regulatory MEMBERS Members Forum Program codes are used to further delineate expenses into functional groupings that are assigned to program heads. NPCC staff utilize their assigned program codes (the program where they reside for payroll purposes) when coding expenses, unless otherwise authorized by management. When time is spent in support of both statutory activities and non-statutory activities (applicable to a limited number of employees in the Administrative Services functions of General Administration, Accounting and Finance, Human Resources, Information Technology, Legal and Regulatory and Members Forms), staff members develop accurate timesheet allocations between division codes. Divisional separation with regard to statutory activities (Regional Entity division) and non- statutory activities (Criteria Services division) is reflected in the NPCC balance sheet and general ledger though the MIP Fund Accounting software programs. NPCC shall provide its budget for such non-statutory activities to NERC at the same time that NPCC submits its annual budget request to NERC pursuant to Section 1. NPCC’s budget for non-statutory activities that is provided to NERC shall contain a detailed list of NPCC’s non-statutory activities and a description of the funding sources for the non- statutory activities. NPCC agrees that no costs of non-statutory activities are to be included in the calculation of NPCC’s charges for its activities pursuant to this Agreement.

Budget and Funding for NPCC’s Non. Statutory Activities In addition to its delegated functions and related activities, as specified in Sections 5, 6 and 7 of the Agreement and in Section 1 of this Exhibit E (such delegated functions and activities referred to in this Section 6 as “statutory activities”), NPCC’s Criteria Services division performs the following other functions and activities (such other functions and activities being referred to in this Section as "non-statutory activities"): NPCC List of Criteria Services Division Functions (Non-Statutory Activities) 1. Regionally-specific Criteria • NPCC develops and maintains Regionally-specific more stringent criteria • NPCC develops and maintains criteria establishing resource adequacy requirements within the region 2. Criteria Compliance Program • NPCC monitors and assesses compliance with its more stringent regional criteria • NPCC conducts a Reliability Compliance and Enforcement Program (RCEP) utilizing non-monetary sanctions NPCC shall employ the following methods and procedures to (i) keep its funding mechanisms for its Regional Entity division (statutory activities) separate from its funding mechanisms for its Criteria Services division (non- statutory activities), and (ii) record the costs it incurs in the performance of its non-statutory functions separately from the costs it incurs in the performance of its statutory functions: 1. Funding of NPCC Criteria Services Division (non-statutory activities). A separate membership based funding mechanism is utilized for non-statutory activities. 2. NPCC procedures for separating funding and expenditures for Regional Entity division (statutory activities) and criteria services division (non-statutory activities) NPCC utilizes the NERC System of Accounts (NSOA) to provide consistency for account codes, divisional separation codes and activity codes. In August of 2007, NPCC CBRE (which prior to the merger performed statutory activities) merged into and with Northeast Power Coordinating Council, Inc. (referred to as NPCC) (which prior to the merger performed non-statutory activities) with the merged corporation having divisional separation for Regional Entity and Criteria Services. As recommended by NERC, NPCC uses the not- for-profit MIP Fund Accounting program by Sage Software to accurately account for income, time and labor. Effective January 1, 2008, with corporate restructuring of NPCC completed in later 2007, 2008 actual program costs are being charged to appropriate program areas. NPCC does not conduct resource or transmission planning, is not an Independent System Operator (ISO), nor does it perform the functions of a Reliability Coordinator (RC). As such, while at this time, there is a breakout for Criteria related activities, all functions performed by NPCC are in the furtherance of NERC’s statutory mission and reliability of the international bulk power system in Northeastern North America. Methodology NPCC’s revenue and expenditure classification methodology identifies appropriate methods of accounting for income, time and costs to ensure that U.S. Federal/statutory and Canadian provincial and/or governmental authorities’ agreed upon revenue and expenses are accounted for separately from NPCC’s Regionally-specific Criteria development and Criteria compliance (non-statutory) income, time and expense. Division Codes There are two division codes that are used by NPCC in accounting for revenues and expenses. The codes are as follows: Division ID Division Name RE Regional Entity – U.S. Statutory and Canadian Regulatory and/or Governmental Authority authorized CSD Criteria Services - Non-Statutory The two division codes allow NPCC to separate Regional Entity statutory activity revenues and expenses from Criteria Services non-statutory activity revenues and expenses. These categories were developed to ensure that non-statutory related revenues and expenses are segregated and accounted for separately from statutory-related revenues and expenses. Program Codes As required by NERC, NPCC adopted a financial accounting system consistent with NERC’s functional categories. At NPCC, functional categories are referred to as Program Codes. There are twelve program codes that are used by NPCC in accounting for expenses. The codes are as follows: Program ID Program Name 300 Reliability Standards 400 Compliance Enforcement and Organization Registration and Certification 800 Reliability Assessment and Performance Analysis 700 Reliability Readiness Evaluation and Improvement 900 Training and Education 1000 Situational Awareness and Infrastructure Security ADMIN General Administration FINANCE Accounting and Finance HR Human Resources IT Information Technology LEGAL Legal and Regulatory MEMBERS Members Forum Program codes are used to further delineate expenses into functional groupings that are assigned to program heads. NPCC staff utilize their assigned program codes (the program where they reside for payroll purposes) when coding expenses, unless otherwise authorized by management. When time is spent in support of both statutory activities and non-statutory activities (applicable to a limited number of employees in the Administrative Services functions of General Administration, Accounting and Finance, Human Resourcesresources, Information Technology, Legal and Regulatory and Members Forms), staff members develop accurate timesheet allocations between division codes. Divisional separation with regard to statutory activities (Regional Entity division) and non- statutory activities (Criteria Services division) is reflected in the NPCC balance sheet and general ledger though the MIP Fund Accounting software programs. NPCC shall provide its budget for such non-statutory activities to NERC at the same time that NPCC submits its annual budget request to NERC pursuant to Section 1. NPCC’s budget for non-statutory activities that is provided to NERC shall contain a detailed list of NPCC’s non-statutory activities and a description of the funding sources for the non- statutory activities. NPCC agrees that no costs of non-statutory activities are to be included in the calculation of NPCC’s charges for its activities pursuant to this Agreement.

Budget and Funding for NPCC’s Non. Statutory Activities In addition to its delegated functions and related activities, as specified in Sections 5, 6 and 7 of the Agreement and in Section 1 of this Exhibit E (such delegated functions and activities referred to in this Section 6 as “statutory activities”), NPCC’s Criteria Services division performs the following other functions and activities (such other functions and activities being referred to in this Section 5 as "non-statutory activities"): NPCC List of Criteria Services Division Functions (Non-Statutory Activities) 1. Regionally-specific Criteria • NPCC develops and maintains Regionallyregionally-specific more stringent criteria • NPCC develops and maintains criteria establishing resource adequacy requirements within the regionRegion 2. Criteria Compliance Program • NPCC monitors and assesses compliance with its more stringent regional criteria • NPCC conducts a Reliability Compliance and Enforcement Program (RCEP) utilizing non-monetary sanctions NPCC shall employ the following methods and procedures to (i) keep its funding mechanisms for its Regional Entity regional entity division (statutory activities) separate from its funding mechanisms for its Criteria Services criteria services division (non- non-statutory activities), and (ii) record the costs it incurs in the performance of its non-statutory functions separately from the costs it incurs in the performance of its statutory functions: 1. Funding of NPCC Criteria Services Division (non-statutory activities). activities).- A separate membership based funding mechanism is utilized for non-statutory activities. 2. NPCC procedures for separating funding and expenditures for Regional Entity regional entity division (statutory activities) and criteria services division (non-statutory activities) NPCC utilizes the NERC System of Accounts (NSOA) to provide consistency for account codes, divisional separation codes and activity codes. In August of 2007, NPCC CBRE (which prior to the merger performed statutory activities) merged into and with Northeast Power Coordinating Council, Inc. (referred to as NPCC) (which prior to the merger performed non-statutory activities) with the merged corporation having divisional separation for Regional Entity and Criteria Services. As recommended by NERC, NPCC uses the not- for-profit MIP Fund Accounting program by Sage Software to accurately account for income, time and labor. Effective January 1, 2008, with corporate restructuring of NPCC completed in later 2007, 2008 actual program costs are being charged to appropriate program areas. NPCC does not conduct resource or transmission planning, is not an Independent System Operator (ISO), nor does it perform the functions of a Reliability Coordinator (RC). As such, while at this time, there is a breakout for Criteria related activities, all functions performed by NPCC are in the furtherance of NERC’s statutory mission and reliability of the international bulk power system in Northeastern North America. Methodology NPCC’s revenue and expenditure classification methodology identifies appropriate methods of accounting for income, time and costs to ensure that U.S. Federal/statutory and Canadian provincial and/or governmental authorities’ agreed upon revenue and expenses are accounted for separately from NPCC’s Regionallyregionally-specific Criteria development and Criteria compliance (non-statutory) income, time and expense. Division Codes There are two division codes that are used by NPCC in accounting for revenues and expenses. The codes are as follows: Division ID Division Name RE Regional Entity – U.S. Statutory and Canadian Regulatory and/or Governmental Authority authorized CSD Criteria Services - Non-Statutory The two division codes allow NPCC to separate Regional Entity statutory activity revenues and expenses from Criteria Services non-statutory activity revenues and expenses. These categories were developed to ensure that non-statutory related revenues and expenses are segregated and accounted for separately from statutory-related revenues and expenses. Program Codes As required by NERC, NPCC adopted a financial accounting system consistent with NERC’s functional categories. At NPCC, functional categories are referred to as Program Codes. There are twelve program codes that are used by NPCC in accounting for expenses. The codes are as follows: Program ID Program Name 300 Reliability Standards 400 Compliance Enforcement and Organization Registration and Certification 800 Reliability Assessment and Performance Analysis 700 Reliability Readiness Evaluation and Improvement 900 Training and Education 1000 Situational Awareness and Infrastructure Security ADMIN General Administration FINANCE Accounting and Finance HR Human Resources IT Information Technology LEGAL Legal and Regulatory MEMBERS Members Forum Program codes are used to further delineate expenses into functional groupings that are assigned to program heads. NPCC staff utilize their assigned program codes (the program where they reside for payroll purposes) when coding expenses, unless otherwise authorized by management. When time is spent in support of both statutory activities and non-statutory activities (applicable to a limited number of employees in the Administrative Services functions of General Administration, Accounting and Finance, Human Resourcesresources, Information Technology, Legal and Regulatory and Members Forms), staff members develop accurate timesheet allocations between division codes. Divisional separation with regard to statutory activities (Regional Entity division) and non- statutory activities (( Criteria Services divisionS ervices d ivision) is reflected r eflected in the th e NPCC balance sheet and b xxxxxx x xxxx a nd general ledger though the MIP Fund Accounting software programs. NPCC shall provide its budget for such non-statutory activities to NERC at the same time that NPCC submits its annual budget request to NERC pursuant to Section 1. NPCC’s 's budget for non-statutory activities that is provided to NERC shall contain a detailed list of NPCC’s 's non-statutory activities and a description of the funding sources for the non- non-statutory activities. NPCC agrees that no costs of non-statutory activities are to be included in the calculation of NPCC’s 's charges for its activities pursuant to this Agreement.

Budget and Funding for NPCC’s Non. Statutory Activities In addition to its delegated functions and related activities, as specified in Sections 5, 6 and 7 of the Agreement and in Section 1 of this Exhibit E (such delegated functions and activities referred to in this Section 6 as “statutory activities”), NPCC’s Criteria Services division performs the following other functions and activities (such other functions and activities being referred to in this Section as "non-statutory activities"): NPCC List of Criteria Services Division Functions (Non-Statutory Activities) 1. Regionally-specific Criteria • NPCC develops and maintains Regionally-specific more stringent criteria • NPCC develops and maintains criteria establishing resource adequacy requirements within the region 2. Criteria Compliance Program • NPCC monitors and assesses compliance with its more stringent regional criteria • NPCC conducts a Reliability Compliance and Enforcement Program (RCEP) utilizing non-monetary sanctions NPCC shall employ the following methods and procedures to (i) keep its funding mechanisms for its Regional Entity division (statutory activities) separate from its funding mechanisms for its Criteria Services division (non- statutory activities), and (ii) record the costs it incurs in the performance of its non-statutory functions separately from the costs it incurs in the performance of its statutory functions: 1. Funding of NPCC Criteria Services Division (non-statutory activities). A separate membership based funding mechanism is utilized for non-statutory activities. 2. NPCC procedures for separating funding and expenditures for Regional Entity division (statutory activities) and criteria services division (non-statutory activities) NPCC utilizes the NERC System of Accounts (NSOA) to provide consistency for account codes, divisional separation codes and activity codes. In August of 2007, NPCC CBRE (which prior to the merger performed statutory activities) merged into and with Northeast Power Coordinating Council, Inc. (referred to as NPCC) (which prior to the merger performed non-statutory activities) with the merged corporation having divisional separation for Regional Entity and Criteria Services. As recommended by NERC, NPCC uses the not- for-profit MIP Fund Accounting program by Sage Software to accurately account for income, time and labor. Effective January 1, 2008, with corporate restructuring of NPCC completed in later 2007, 2008 actual program costs are being charged to appropriate program areas. NPCC does not conduct resource or transmission planning, is not an Independent System Operator (ISO), nor does it perform the functions of a Reliability Coordinator (RC). As such, while at this time, there is a breakout for Criteria related activities, all functions performed by NPCC are in the furtherance of NERC’s statutory mission and reliability of the international bulk power system in Northeastern North America. Methodology NPCC’s revenue and expenditure classification methodology identifies appropriate methods of accounting for income, time and costs to ensure that U.S. Federal/statutory and Canadian provincial and/or governmental authorities’ agreed upon revenue and expenses are accounted for separately from NPCC’s Regionally-specific Criteria development and Criteria compliance (non-statutory) income, time and expense. Division Codes There are two division codes that are used by NPCC in accounting for revenues and expenses. The codes are as follows: Division ID Division Name RE Regional Entity – U.S. Statutory and Canadian Regulatory and/or Governmental Authority authorized CSD Criteria Services - Non-Statutory The two division codes allow NPCC to separate Regional Entity statutory activity revenues and expenses from Criteria Services non-statutory activity revenues and expenses. These categories were developed to ensure that non-statutory related revenues and expenses are segregated and accounted for separately from statutory-related revenues and expenses. Program Codes As required by NERC, NPCC adopted a financial accounting system consistent with NERC’s functional categories. At NPCC, functional categories are referred to as Program Codes. There are twelve program codes that are used by NPCC in accounting for expenses. The codes are as follows: Program ID Program Name 300 Reliability Standards 400 Compliance Enforcement and Organization Registration and Certification 800 Reliability Assessment and Performance Analysis 700 Reliability Readiness Evaluation and Improvement 900 Training and Education 1000 Situational Awareness and Infrastructure Security ADMIN General Administration FINANCE Accounting and Finance HR Human Resources IT Information Technology LEGAL Legal and Regulatory MEMBERS Members Forum Program codes are used to further delineate expenses into functional groupings that are assigned to program heads. NPCC staff utilize their assigned program codes (the program where they reside for payroll purposes) when coding expenses, unless otherwise authorized by management. When time is spent in support of both statutory activities and non-statutory activities (applicable to a limited number of employees in the Administrative Services functions of General Administration, Accounting and Finance, Human Resources, Information Technology, Legal and Regulatory and Members Forms), staff members develop accurate timesheet allocations between division codes. Divisional separation with regard to statutory activities (Regional Entity division) and non- statutory activities (Criteria Services division) is reflected in the NPCC balance sheet and general ledger though the MIP Fund Accounting software programs. NPCC shall provide its budget for such non-statutory activities to NERC at the same time that NPCC submits its annual budget request to NERC pursuant to Section 1. NPCC’s budget for non-statutory activities that is provided to NERC shall contain a detailed list of NPCC’s non-statutory activities and a description of the funding sources for the non- statutory activities. NPCC agrees that no costs of non-statutory activities are to be included in the calculation of NPCC’s charges for its activities pursuant to this Agreement.