From the Board Chair and President and CEO

Dear Members and Stakeholders:

As we celebrate the twentieth anniversary of the Energy Policy Act (EPA) of 2005, we reflect on the significant progress made in strengthening reliability, security, and resilience of the bulk power system. This important legislation strengthened oversight of our energy systems and laid the groundwork for a more reliable, modern, and robust energy system. The electricity sector risk landscape has evolved significantly in the two decades since its passing.

We reflected on this evolution at the recent third-quarter MRO Board meetings, where NERC Trustee Ken DeFontes, and FERC Director of the Office of Electric Reliability (OER) Kal Ayoub, joined us. Both guests highlighted the importance of collaboration and coordination across the industry and within the ERO Enterprise. DeFontes emphasized that the amount of ERO Enterprise collaboration has been one of the most notable advances in his two decades of experience in the enterprise. He noted the importance of the new NERC Board committee on engagement and outreach focused on advancing strategic engagement. He also highlighted critical work being done by the NERC Modernization of Standards Processes and Procedure Task Force to modernize standards to keep pace with rapid changes in risk.

Ayoub underscored that coordination, collaboration, and consistency are primary focus areas for FERC. He stressed that no single entity could solve the complex challenges facing our sector and that technical dialogue outside of formal standards is essential for addressing emerging risks. Ayoub expressed appreciation for the work of MRO and the ERO Enterprise to collaboratively address large load and inverter-based resource risks.

MRO’s Director of Reliability Analysis Bryan Clark, and Director of Enforcement and Senior Counsel Tasha Ward, shared the semiannual Organization Registration and Certification Program and Compliance Monitoring and Enforcement Program Report. The report highlights considerable progress, including MRO’s role in the ERO Enterprise initiative to register inverter-based resources and reduce non-compliance backlogs.

In closed session, the board discussed the rapid advancement of Artificial Intelligence (AI). We heard from MRO staff, along with NERC’s Vice President of Business Technology Todd Carter, and SERC’s Director of Cyber and Physical Security Stephen Brown, about the collaborative, enterprise-wide effort to establish foundation principles for the use of AI. The goal is to develop common guardrails that provide a prudent path to leveraging the power and potential efficiency gains of AI, while prioritizing data security in the face of an increasingly complex landscape.

Additionally, the board’s Organizational Group Oversight Committee (OGOC) held a closed risk roundtable to discuss the significant challenge of assessing adequate energy supply in the region and across North America. As the grid has evolved, the current capacity-based methods used to evaluate resource adequacy are no longer adequate. MRO’s Director of Power System Risk Management, Mark Tiemeier, provided an overview of work by the NERC-established think tank of industry experts focused on evolving planning criteria to more accurately measure the frequency, duration, and magnitude of reliability risks.

In addition to hearing board committee updates, the board approved Policy and Procedure 4: MRO Antitrust Policy and Standards of Conduct, with an effective date of August 22, 2025. This policy was significantly revised to align with ERO Enterprise Antitrust policies and procedures—a collaborative effort across the regions and NERC this year.

The full meeting minutes, detailing the discussions and actions, will be available soon on MRO’s website.

In Summary

Uncertainty was a consistent theme throughout the meeting and in NERC’s recent Reliability Risk Priorities Report. Leading risk areas in the report include grid transformation (including new large loads), resilience to extreme events, critical infrastructure interdependencies, security and supply chain issues, and volatile energy policy. These risk areas represent future focus areas for the ERO Enterprise and MRO.

As we navigate uncertainty, we must remember we have made great progress. Our commitment to a resilient energy future is evident in MRO’s people first, mission always philosophy and our strategic priorities of people, processes, and partnerships. As we look forward, we must be prepared to pivot from reactive compliance to proactive readiness.

In the book HOW: Why HOW We Do Anything Means Everything, author Dov Seidman provides a unique perspective on how values, trust, and reputation are key drivers of efficiency, innovation and business success. We can be guided by Seidman’s principles of TRIP:

• Trust is our currency; it requires credibility, independence, and objectivity. Without it, coordination fractures.
• Risk is our unwavering focus; it cannot be eliminated but it can be understood and managed. Resilience is the result of clarity and wise action on risk.
• Innovation is not optional; new technologies must be embedded in core planning, operations, and governance.
• Progress should not be measured by completed tasks but rather by whether our grid is more reliable and resilient today than it was yesterday.

TRIP is another way of expressing the same forward movement of our strategic priorities and how we will earn trust, manage risk, embrace innovation, and measure progress.

Speaking of progress, what we accomplished in the first half of 2025 is a testament to the hard work and dedication of the entire MRO team, our advisory council members, and the board of directors. We are confident that we will continue this forward momentum in the second half of the year, building on our achievements and working together to ensure a reliable and secure regional power grid.

As always, we believe we are stronger together and that our future remains very, very bright!

Sincerely,

Dr. Dana Born, Board Chair Sara Patrick, President and CEO