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Thank you very much for your comments/questions. 1. Personnel Wage Increases: NERC plans for “average salary increases below industry average.” How does RFC compare with NERC in this area? ReliabilityFirst is using a 3% general wage increase for the 2104 budget. This percentage was recommended by our compensation committee based upon the results of an external compensation 2. IT Budget: NERC does not expect the Regions to incur any expenses in 2014 for the NERT IT Project. Please confirm that the 2014 budgeted expenses do not include any costs associated with ReliabilityFirst did not include any expenses in the 2014 budget associated with any of the NERC IT 3. Office Costs: On page 72, the second bullet in the Explanation of Significant Variances section attributes the increase in Internet Costs to the continued use of the high bandwidth data line through October 2014, which was anticipated to have been cancel ed by the end of 2012. It that is correct, then please explain why there is an increase shown from both the 2013 budget and the 2013 projection. Is the 2013 projection correct? Also, the third bullet in that same section explains that the increase in Computer Supplies and Maintenance Costs is due to scheduled hardware replacement of user systems along with maintenance agreements for Open Access Technology International’s compliance portal and the MKInsight’s audit management tool. Please provide a When creating the 2013 budget in March – June 2012 we expected that the internet high bandwidth data line contract would be canceled by the end of 2012. Therefore, we did not include money in the budget for this line item. We were unable to cancel this contract, and therefore we have an obligation to pay for it through October 2014. Due to the timing of the creation of the first draft of the 2014 budget and projections there is only one quarter worth of data available to make accurate projection estimates, so the projections are equal to the budget amounts. The projections will be updated for the final draft. The breakdown of the Computer Supplies and Maintenance cost is as follows: $162,500 was included in the budget for replacement of laptop systems; $216,000 was included for the monthly maintenance and change orders for the Open Access Technology International’s compliance portal; and $70,000 was included for maintenance for the MKInsight’s audit management tool. All of these items have been revisited and reduced to reflect any updated information that has been received 4. Overall Increase: We understand based on the posted materials for the May 23, 2013 Board of Directors meeting that the overal increase from the 2013 budget has been reduced from 4.37% to 3.8%. Exelon encourages RFC to continue to pursue further reductions so the overall increase is more aligned with Board’s concurrence of a target level increase of 3.5% for the 2014 budget ReliabilityFirst wil work very diligently to get the 2014 Business Plan and Budget down to an acceptable level to assure continued, effective operation. Thanks again for your comments/questions.
Jill S. Lewton


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