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Zarin Imam
Iberdrola Energy Holdings, LLC Chief Compliance Officer
Date: January 6, 2016
RE: 2015 Report on Ethics and Compliance
This report describes actions taken by the Iberdrola Energy Holdings, LLC (“Company” or “IEH”) Compliance Division and management in connection with delivering the Company’s Ethics and Compliance Program and 2015 Master Plan.
On 16 December 2015, the Company’s parent, Iberdrola USA, Inc., completed a merger with UIL Holdings, Corp. (“UIL”) and changed its name to Avangrid, Inc. (“AVANGRID”). AVANGRID’s operating subsidiaries include the Company, UIL, Iberdrola Energy Holdings, Inc., and Iberdrola Renewables. Effective as of date of the merger, the Company adopted a new Code of Business Conduct and Ethics, which replaced the Iberdrola Code of Ethics and Annex to the Code of Ethics. The new Code of Business Conduct and Ethics is substantially similar to the prior Iberdrola Code of Ethics.1
Based on the overall results of the Compliance Plan and other compliance-related initiatives taken by the Company in 2015 including, without limitation, those reflected in this report, the Iberdrola Energy Holdings Chief Compliance Officer certified to members of the IEH Board of Managers, at its February 2016 meeting, that the Compliance Program is effective and complies in all material respects with applicable legal and regulatory requirements. The
following is a summary of the some of the actions, taken in 2015 that support the certification made by the Chief Compliance Officer of the Company. The following pages of this report summarize how the IEH Compliance Division is achieving these requirements.
1. Online Training of Iberdrola Code of Ethics and IEH Annex to the Code of Ethics The Company’s online Code of Ethics training was launched in July of 2015. The completion rate was 100%, excluding certain employees unable to take the training due to reasons such as disability leave or retirement. The following are notable features of the Company’s Code of Ethics training:
. The substantive training materials is based on a global training module developed by Iberdrola, S.A, with a supplemental module to reflect U.S.-specific concepts,
including those in the IEH Annex to the Code of Ethics. Examples include state law regarding weapons and gift and hospitality restrictions applicable to government employees.
. An interactive format is used to stimulate trainee attention and learning.
. A quiz is included at the end of the training to confirm retention of key concepts. . A statement regarding the reporting of potential violations and compliance with the
Code of Ethics must be confirmed by trainees to complete the training.
2. Summary of Helpline Activities
The following section summarizes ethics and compliance complaints and reports made directly or indirectly to the Compliance Division during 2015, including those made using The Network Helpline (the “Helpline”). The Compliance Division has been appointed as the first point of contact when a complaint is submitted. The Compliance Division receives notice of the complaint and determines next steps and follows through with a confidential investigation. In each case, the Compliance Division received the support necessary from Company’s management, Legal and Human Resources group to ensure an appropriate investigation of each reported matter.
During 2015, there was only one formal report made through the Company Helpline which was related to a potential Conflict of Interest Activity. The complaint was investigated by Compliance Division in consultation with Legal Services. The claim was not substantiated.
3. Conflict of Interest Survey
The annual conflict of interest survey (the “Survey”) was distributed to 8 Directors in September of 2015. The Survey completion rate was 100%, excluding certain employees unable to take the training due to reasons such as disability leave or retirement.
The first four questions of the Survey were intended to facilitate disclosure of outside activities and potential conflicts of interests. A fifth question was intended to facilitate disclosure of potential violations of the Iberdrola Code of Ethics, the Annex, or a company policy, that had not previously been reported to the Compliance Division, Human Resources, or other appropriate Company management. Each response to a
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question in the affirmative was reviewed by the IEH Compliance Division to identify potential conflicts of interest and other compliance issues. The Survey also reminded respondents of their obligations under the Code of Ethics with respect to outside interests and potential conflicts of interest (e.g., disclosure and abstention). At the end of the Survey, respondents confirmed a statement regarding their obligation as IEH employees to comply with the Code of Ethics and applicable Company policies and procedures.
Based on the review of Survey responses, and follow-up inquiry where appropriate, no material conflicts of interest or violations of company policy were identified.
4. Action Taken by the Board of Managers
The IEH Board of Managers approved a number of new or amended policies, codes, and procedures in 2015 in support of the Compliance Program. Updated copies of certain of these documents are publicly-available on the Company’s website. Actions taken by the Board of Managers are supported by operational policies and procedures established by Company management.
In 2015 the Compliance Division provided updates on activities and to discuss the status of the Compliance Plan and other compliance-related matters with the Board of Managers.
5. Crime Prevention Program
The Compliance Division, pursuant to direction from its Board of Managers, has implemented a Crime Prevention Program intended to enhance and support IEH’s Compliance Program. This program is in furtherance of the Crime Prevention and Anti-Fraud Policy adopted by the Board of Managers, which requires the Company to implement an effective program for the prevention of criminal offenses.
In a company-wide collaboration including Legal Services, outside consultants, affected Business Areas, and the IEH Compliance Division, certain criminal laws applicable to the Company’s activities were identified, with Business Areas within the Company designated as responsible for ensuring compliance. These Business Areas then underwent a process of identifying controls applicable to these laws. Upon completion of this process, the IEH Chief Compliance Officer certified to the Board of Managers that the Company had implemented internal controls, policies and procedures designed to
ensure the Company’s material compliance with these laws. This process is the subject of continuous improvement and refinement efforts, as are other elements of the
Company’s Compliance Program. 6. Communication
The Compliance Division continued its communication plan intended to provide guidance and raise awareness among employees on common ethics and compliance issues. This plan included monthly articles disseminated by newsletter and email. Examples of topics included:
Vendor gifts and hospitality
Conflicts of interest
Workplace harassment
Helpline reporting and retaliation
Political activity in the workplace
Additional communications were disseminated throughout the year as
opportunities arose to improve employee awareness of the Program. Subjects included, without limitation, publication of the Company’s annual Ethics and Compliance and Separation of Activities reports, celebration of National Cyber Security Day, and videos emphasizing the importance of ethics.
7. Gifts & Hospitality Registry
In 2015, IEH provided additional guidance, including a form to be completed, for its gifts and hospitality registry as a means for employees to report gifts and hospitality offered by or to third parties. The Compliance Division requires that gifts and hospitality valued in excess of $100 be reported, although the registry may be used to report lesser amounts. Employees remain obligated to avoid prohibited gifts and hospitality,
regardless of value.
8. Background check screening of new employees, persons promoted to Director-level or higher, and third-party contractors.
Pursuant to Company policy, all persons promoted or hired into a Director-level or higher position are subject to both criminal and civil background checks. Such persons are considered by IEH to be “substantial authority personnel” under the U.S. Federal Sentencing Guidelines. In addition, all prospective employees are subject to a criminal background check prior to being hired. Human Resources is responsible for
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ensuring that background checks are initiated and processed in compliance with Company policies and applicable law.
9. Additional Training
Iberdrola Energy Holdings and its operating subsidiaries conduct periodic trainings for compliance regarding certain regulations applicable to their industries, including anti-market manipulation rules, CFTC rules, and FERC rules, including the standards of conduct rules and affiliate transactions. Numerous other compliance-related trainings on particular subjects were conducted during the year for managers and
employees.
10. Creation of Senior Management Compliance Committee
IEH is committed to the ethical business conduct and compliance with all applicable laws, federal and state regulations, and the Iberdrola Code of Ethics. In support of these commitments, the Company’s Chief Compliance Officer (the “CCO”) has appointed a Senior Management Compliance Committee (the “Committee”) composed of members of senior management to advise, inform, support and provide feedback to the CCO in maintaining and effective ethics and compliance program (the “E&C Program”).
This committee was created in the 2nd Quarter of 2015 and held quarterly
meetings to discuss concerns and educate senior management of the Federal Sentencing Guidelines.
This concludes the Iberdrola Energy Holdings Annual Report on Ethics and Compliance.
1 The Code of Business Conduct and Ethics, and other governance documents, are publicly available at: