Attachment B
SC – Self Audit for the period of
 July 1, 1999 to December 31, 2000

I.	Audit Requirement

The Metering Protocol, states in part, “Section MP 4.2.1 Requirement for Audit and Testing, (a) Audit and Testing by SC:
Each SC shall at least annually conduct (or engage an independent, qualified entity to conduct) audits and tests of the Metering Facilities of the SC Metered Entities that it represents and the Meter Data provided to the SC in order to ensure compliance with all applicable requirements of any relevant Local Regulatory Authority.  SCs shall undertake any other actions that are reasonable (and) necessary to ensure the accuracy and integrity of the Settlement Quality Meter Data provided by them to the ISO.

II.	Audit Scope for Period Covering July 1, 1999 to December 31, 2000:
The audit must evaluate the process flow of meter data from the metering facility and the meter to the SC and then to the ISO.  This audit shall include two components.  The first component is a review of the process controls in place at the Three Levels of Meter Data Processing (defined below). The second component is verification and testing of the process controls only at the Settlement Quality Meter Data Processing level.  This testing shall be done by evaluating an appropriate sample of actual meter data.  

III.	Definitions (For the purpose of the SC – Self Audit requirement, the following definitions                 apply):  

Audit:  
An audit is a planned and documented activity performed, by a qualified independent entity, to determine by a review, evaluation, and test, the adequacy of and compliance with the standards & requirements and the effectiveness of implementation.

Three Levels of Meter Data Processing:

1.	Meter Facility:  Activities include, but not limited to: 
•	Meter installation
•	Maintenance
•	Testing
•	Calibration

2.	Meter Reading:  Activities include but not limited to:  
•	Meter reading
•	Validation, Editing and Estimation (VEE)
•	Posting of meter reads (for direct access loads)
•	Transmitting the meter reads (for all other loads and generators)

3.	Settlement Meter Data Processing: Activities include but not limited to: 
•	Obtaining VEE meter reads for all participants
•	Applying load profiles (LP) (as appropriate)
•	Applying Distribution Loss Factors (DLF) (as appropriate)
•	Estimation (if required)
•	Appropriate documentation in the case of performing estimation 
•	Existing Contracts calculations, performing calculations for logical or pseudo meters
•	Validation and reasonableness checks 
•	Creation of SQMD file, and submitting the SQMD file to the ISO

Test:
The application of processes using known data to validate the implementation of the process and to determine compliance to the appropriate standards.  

Qualified Independent Entity:
An independent consultant with appropriate auditing certifications or a staff member independent of the process implementation with auditing or internal controls systems background.  

SQMD:
Meter Data gathered, edited, validated, and stored in settlement-ready format, for Settlement and auditing purposes.  

IV.	Audit Performance:

1)	Audit Plan – Due to ISO on April 13, 2001

The Audit Plan shall state how the SC intends to perform the audit.  Items to be included are:

a)	A general discussion, and timeline, of the activities the SC represents (i.e. ESPs, QFs, Existing Contracts, new customers, or loss of customers, etc)
b)	A statement of who will conduct the audit and their qualifications
c)	A general discussion on how the audit will be accomplished, activities to be tested, the source of information, and a proposed timeline 
d)	Any additional information believed to be relevant for the ISO’s review of the audit plan. Such as major changes since the last SC – Self Audit, or results of other internal audits or reviews 

ii.	Audit Implementation

a)	Process Controls Review

The Process Controls portion of the audit is intended to evaluate the performance of the systems and controls in place at the three levels of Meter Data Processing (described below).  Included below are some areas for review for each level; however, the review is not limited to these activities.  Each SC must perform the review based on their business practices.  Your audit must include the identification of the controls in the process used to create, collect, validate, and submit SQMD to the ISO.  Additionally, if you identify any controls that are insufficient, please note as a finding and identify your corrective action. 

i)	Meter Facility

The systems and controls in place must be capable of assuring, but are not limited to the following activities:

(1)	Appropriate meter installation
(2)	Meter is programmed correctly
(3)	Meter testing is performed when required
(4)	Meter Multiplier is set appropriately
(5)	Meter maintenance is being performed when required
(6)	Meter calibration is performed as required

ii)	Meter Reading

The systems and controls in place must be capable of assuring, but are not limited to, the following activities:

(1)	Meter reading schedules are being followed
(2)	VEE is being performed per Local Regulatory Authority (LRA) standards
(3)	Record keeping documentation on VEE is being kept per the LRA
(4)	Posting of meter reads (where applicable) or transferring the meter reads are being performed per the LRA standard
(5)	Record keeping documentation on meter data availability are being kept per the LRA

iii)	Settlement Meter Data Processing

The systems and controls in place must be capable of assuring, but are not limited to, the following activities:

(1)	All SC Metered Entities represented are included in the SC’s SQMD file.  If appropriate, this includes the controls in place to assure appropriate reporting of transferred customers, either to or from a new provider, and accepted by the other party for scheduling and reporting of SQMD
(2)	Load Profiles (LP), if applicable, are applied properly (i.e. use of correct profiles, applied to the correct rate class, and with appropriate time shift)
(3)	Distribution Loss Factors (DLF), if applicable, applied properly (i.e. use of correct DLF, and voltage class)
(4)	Aggregation of meter data to the proper scheduling point
(5)	Proper creation of the SQMD file
(6)	Any estimation performed by the SC is documented and controlled
(7)	Any calculations, in order to support Existing Contracts or logical (pseudo) meters, are performed per the contracts. All meter data used in the calculation is reviewed in the same manner as any other load or generation entity 
(8)	Identification of any late meter data submittals and corrective actions
(9)	Validation routines evaluating the appropriateness and reasonableness of the submitted SQMD
(10)	If applicable, corrected meter data submitted after T + 45, and identify the cause of resubmittal and the corrective actions 

b)	Testing and Verification 

i.)	This section of the audit is intended to test, by use of a selected sample of meter data, the Settlement Meter Data Processing level.  The test should include an appropriate sample of data from throughout the audit period; however, the criteria used by the SC to select the sample should be clearly documented in the audit report.   The objective of testing the Settlement Meter Data Processing level is intended to evaluate the performance of the systems and controls in place to assure accurate and correct reporting of SQMD. 

ii.)	Specific Areas to Review

(1)	When reporting SQMD during Daylight Savings Time (DST) it should be taken into account  that SQMD submitted to the ISO must be in PST
(2)	Validate that although different time standards are used for posting of meter data, LPs, and DLFs, that the data reported is representative of when the actual usage occurred
(3)	 If applicable, reviews of any data reconciliation reports provided by the UDCs during the audit period, and any corrective actions taken from the reports
(4)	Review of corrective actions from previous audits, verifying actions were appropriate and still in place
(5)	The process of adding or deleting new customers, and getting agreement from each party in the change over process 

V.	Audit Report:

The audit report, is due to the ISO by September 28, 2001, and must include a clear description of the following:

•	Statement of qualifications of the auditor(s)
•	Description of meter data processes evaluated and controls in place
•	List of objective evidence evaluated (e.g. dates, documents reviewed, etc.)
•	Scope of the testing performed (e.g. systems, types of transactions, practices and procedures, volumes of data tested, etc.) and the dates covered by the testing
•	SC Management’s comments on the audit findings
•	Corrective actions to resolve any findings and a timeline for when the corrections will take place
•	A statement of Compliance, by SC Management, stating if the processes being implemented are capable of creating SQMD that is accurate and complete