[00:00:03]
[1. Call General Session to Order]
OF THE ERCOT FINANCE AUDIT COMMITTEE AND GUEST, I'M BILL FLORES AND I WANNA WELCOME YOU TO THE, UH, JUNE 19TH, 2023 FINANCE AND AUDIT COMMITTEE MEETING.I HEREBY CALL THIS MEETING TO ORDER.
THIS MEETING IS BEING WEBCAST LIVE TO THE PUBLIC ON ERCOT WEBSITE.
THERE ARE, UH, ONLY, THERE IS ONLY ONE COMMISSIONER HERE, UH, FROM THE PUBLIC UTILITY COMMISSIONER OF TEXAS.
WE WILL NOT BE, UH, ASKING THEM TO, UH, CONVENE AN OPEN MEETING OF THE COMMISSION.
UH, BEFORE WE PROCEED, I'D LIKE TO HIGHLIGHT TO COMMITTEE MEMBERS THAT THE ANTITRUST ADMONITION A SECURITY MAP ARE INCLUDED WITH THE POSTING MEETING MATERIALS.
[2. Notice of Public Comment, if Any Discussion]
OF BUSINESS ON TODAY'S AGENDA IS ITEM TWO.NOTICE OF PUBLIC COMMENT, IF ANY.
UH, TODAY'S MEETING AGENDA WAS POSTED PUBLICLY ON JUNE 12TH AND PROVIDED INSTRUCTIONS FOR THE PUBLIC FOR COMMENTING IN PERSON.
AS I UNDERSTAND IT, THERE ARE NO, UH, NO ONE HAS ASKED TO COMMENT.
HAS, HAS THERE BEEN ANY CHANGE TO THAT CHAD? NO, THAT'S CORRECT.
[3. April 18, 2023 General Session Meeting Minutes]
UH, ITEM IS AGENDA ITEM THREE, THE APRIL 18TH, 2023, GENERAL SESSION MEETING MINUTES.THERE'S A DRAFT IN THE MEETING MATERIALS.
DOES ANYONE HAVE ANY COMMENTS OR WISH TO MAKE A MOTION FOR APPROVAL? OKAY, BOB HAS MOVED APPROVAL A SECOND.
ANY OPPOSED? ANY ABSTENTIONS? OKAY.
THE MEETING, UH, MINUTES ARE APPROVED.
NEXT WE'LL MOVE INTO COMMITTEE BRIEFS.
SEAN TAYLOR'S GONNA PRESENT AGENDA ITEMS 4.1 TO FOUR 4.3, UH, STARTING WITH THE 2023 FINANCIAL SUMMARIES FOLLOWED BY THE PERIODIC REPORT ON INVESTMENTS AND THE PERIODIC REPORT ON DEBT COMPLIANCE.
[4.1 Review 2023 Financial Summary]
GOOD MORNING EVERYONE.STARTING WITH OUR FINANCIAL SUMMARY.
ALL OF OUR MAJOR POINTS ARE CONSISTENT WITH WHAT YOU'D PREVIOUSLY SEEN THIS YEAR.
TO START WITH, UH, WE HAVE A COUPLE OF CHANGES ON THE REVENUE SIDE FROM A SYSTEM ADMINISTRATION FEE SH REVENUE SHIFT RELATIVE TO WHAT YOU SAW LAST TIME FOR THE FORECAST FOR THE FULL YEAR, AS WELL AS INTEREST INCOME CONTINUING TO GROW.
OVERALL, OUR NET AVAILABLE YEAR END FORECAST IMPROVED ABOUT FOUR AND A HALF MILLION DOLLARS VERSUS THE LAST TIME YOU SAW IT UP TO ALMOST 37 MILLION AT THIS POINT.
FROM REVENUE PERSPECTIVE, THAT WENT UP ABOUT $700,000 VERSUS THE LAST TIME THE SYSTEM ADMINISTRATION FEE REVENUES ACTUALLY DECREASED.
LAST TIME YOU SAW THAT IT WAS ABOUT 5 MILLION FAVORABLE FORECAST FOR THE YEAR THAT DROPPED TO 0.3 MILLION.
THAT IS BECAUSE OF APRIL AND MAY COMING IN UNDERNEATH THE FORECAST.
AND WE'LL SEE THAT WHEN WE LOOK AT THE SLIDE THAT SHOWS THE REVENUE BY MONTH OFFSETTING THAT WE'RE INTERESTED.
INTEREST INCOME AND INTEREST INCOME ACTUALLY INCREASED APPROXIMATELY 5 MILLION WAS THE LAST TIME YOU SAW IT.
AS WE CONTINUED TO SEE THOSE INTEREST RATES INCREASE ON THE EXPENDITURE SIDE, THAT'S ACTUALLY ABOUT 4 MILLION FAVORABLE VERSUS THE LAST TIME YOU SAW IT.
AND THAT IS SPLIT BETWEEN PROJECT SPEND BEING ABOUT A MILLION AND A HALF LESS UNFAVORABLE THAN PREVIOUSLY SEEN.
AND STAFFING MANAGEMENT AND RESOURCE MANAGEMENT BEING ABOUT 2 MILLION LESS UNFAVORABLE THAN THE LAST TIME YOU SAW IT.
WE DID ADD THE SLIDE THAT WAS ASKED FOR LAST TIME ADDITIONAL INFORMATION.
AND SO I'M GONNA FLIP TO THAT BRIEFLY ABOUT RESOURCE MANAGEMENT.
AND THAT IS RESOURCE MANAGEMENT.
AND THAT IS BACK IN THE APPENDIX ON SLIDE 12 OF THE PRESENTATION.
SO THIS SLIDE SHOWS THE DETAIL OF THAT CHANGE IN RESOURCE MANAGEMENT.
THE, AS WE GO ACROSS THESE COLUMNS, IT BREAKS IT OUT BETWEEN THE COMPONENTS THAT THE BOARD WAS FAMILIAR WITH PREVIOUSLY APPROVED.
WE HAVE THE FIRST COLUMN CHANGE COLUMN, WHICH REPRESENTS THE DOLLARS ATTRIBUTED TO THE SHORT TERM INCENTIVE PLANS THAT ARE BEING ACCRUED.
THE SECOND HAS THE LONG TERM INCENTIVE AND RETENTION PLANS.
THE THIRD IS THE ALL EMPLOYEE ADJUSTMENT THAT TOOK PLACE LAST NOVEMBER, SO THAT WAS NOT IN THE BUDGET.
THE FOURTH THERE CHANGES TO THE MERIT RELATIVE TO WHAT WAS BUDGETED.
SO INCREASES IN THOSE SALARY ADJUSTMENTS.
THEN WE HAVE WHAT'S REFERRED TO AS UNFUNDED POSITIONS AND WE TEND TO TALK
[00:05:01]
ABOUT THIS MORE LATER.AND SO THE BUDGET, WHEN WE TALK ABOUT THAT IN THE FUTURE TODAY, WE'LL SEE THAT WE BUDGET A CERTAIN NUMBER OF POSITIONS.
WE ASSUME A CERTAIN VACANCY RATE.
SO THIS REPRESENTS THE NUMBER OF POSITIONS THAT WE HAVE THAT WE'RE FORECASTING AVERAGE FOR THE YEAR THAT EXCEED THAT FUNDED AMOUNT, WHICH IS THE TOTAL AMOUNT OF POSITIONS, LESS THE VACANCY BUDGETS.
AND SO THAT'S WHAT THAT 4.6 MILLION REPRESENTS.
4.8 COVERS ALL OTHER CHANGES THAT ARE ASSOCIATED WITH EMPLOYEE SALARY AND BENEFITS.
AND SO IT INCLUDES PAY RATE DIFFERENTIALS, UH, KNOWLEDGE TRANSFER PROGRAM THAT WAS, UH, POSTPONED INDEFINITELY, UH, HEALTHCARE, VACATION LIABILITY, ET CETERA, ITEMS LIKE THAT.
SO THAT'S ACTUALLY FAVORABLE RIGHT NOW OFFSETTING SOME OF THOSE OTHER INCREASES.
AND THE LAST COLUMN IS THE 3.9 MILLION FOR CONTINUED LABOR.
WE'LL CONTINUE TO INCLUDE THIS WATERFALL AND THE APPENDIX FOR THE REST OF THIS YEAR.
CAUSE WE EXPECT TO CONTINUE TO HAVE THIS VARIANCE REMAINER OF THIS YEAR.
OBVIOUSLY, WE WOULD THEN PLAN TO REMOVE IT FOR NEXT YEAR WHEN WE WOULDN'T EXPECT TO SEE ALL THESE VARIANCES LIKE THIS CAUSE THOSE WILL BE INCLUDED IN THE BUDGET ALREADY.
MOVING ON TO THE NEXT SLIDE, WE'RE TALKING ABOUT THE REVENUES BY MONTH.
AND AS I MENTIONED, AND YOU CAN SEE ON HERE IN THE GREEN VERSUS THE BLUE COLUMNS, APRIL AND MAY CAME IN UNDER BUDGET ACTUALLY, AND THE FORECAST FOR BOTH WERE HIGHER THAN BUDGET WHEN YOU SAW THEM PREVIOUSLY.
SO LAST TIME YOU SAW THIS, THE APRIL APRIL ACTUALLY DECREASED BY 3.3 TERAWATT HOURS AND MAY DECREASED BY 5.2.
AND THE TOTAL IMPACT OF THAT WAS THAT 4.7 MILLION THAT YOU SAW ON THE PREVIOUS SLIDE.
NOW, IF WE WERE TO TAKE THAT YEAR TO DATE, MAY NUMBER OF 3.8% ON THE VERY BOTTOM OF THE CUMULATIVE VARIANCE IN SYSTEM ADMINISTRATION FEE REVENUES AND CONSERVATIVELY EXTRAPOLATE THAT OUT FOR THE REMAINDER OF THE YEAR, WHICH IS NOT WHAT WE'RE FORECASTING, BUT JUST FOR YOUR PERSPECTIVE, IF WE'RE TO TAKE THAT AND APPLY THAT 3.8% TO THE FULL BUDGET, THAT'D ENDED UP WITH A 9 MILLION UNDER BUDGET BY THE END OF YEAR FROM A SYSTEM ADMINISTRATION FEE REVENUE PERSPECTIVE, THAT'S NOT WHAT WE'RE EXPECTING TO HAPPEN.
BUT JUST SO THAT YOU'RE AWARE OF WHAT THE NUMBER LOOKS LIKE.
MOVING ON TO THE BALANCE SHEET, THIS ALSO IS CONSISTENT WITH WHAT YOU PREVIOUSLY SEEN VERSUS OUR LAST MEETING.
FROM AN ERCOT PERSPECTIVE, EXCLUDING THE SPECIAL PURPOSE ENTITIES HAVE COUP COUPLE OF MAJOR CHANGES.
OUR TOTAL ASSETS ACTUALLY DECREASED BY 132 MILLION.
THAT'S DRIVEN BY A DECREASE IN THE CASH SECURITY DEPOSITS THAT WERE HELD BY ABOUT 200 MILLION.
AND THAT WAS PARTIALLY OFFSET BY AN INCREASE IN OUR CONGESTION REVENUE RIGHTS AUCTION RECEIPTS THAT WERE HOLDING OF ABOUT 65 MILLION.
THE OTHER CHANGES ARE CONSISTENT WITH WHAT YOU HAD PREVIOUSLY SEEN ON THE INCOME STATEMENT SIDE.
THIS ALSO IS FAIRLY CONSISTENT WITH WHAT YOU SAW AT OUR LAST MEETING.
YOU CAN SEE NOW THAT THE OPERATING REVENUES YEAR OVER YEAR ARE VERY FLAT FROM OPERATING EXPENSES SIDE.
THEN YOU'LL NOTICE THAT IT'S THE SAME ITEMS THAT WE ARE TALKING ABOUT AND THAT WE'RE FORECASTING.
YOU HAVE THE SALARIES AND RELATED BENEFITS HAVE THE INCREASE IN DEPRECIATION EXPENSE WITH THOSE ADDITIONAL PROJECTS BEING DONE.
UH, ADDITIONAL HARDWARE, SOFTWARE, MAINTENANCE EXPENSE.
YOU'LL SEE ALL THIS FLOW THROUGH TO THE BUDGET PRESENTATION.
AND FINALLY, WE HAVE A DECREASE IN THE OUTSIDE SERVICES EXPENSE.
AND ADDITIONALLY, THE OTHER ITEM ON HERE THAT IS THE ITEM THAT WILL CONSISTENTLY BE VERY HIGH FOR THIS YEAR IS THE INTEREST INCOME.
AND WE'LL SEE THAT AS WE LOOK AT THE BUDGET FORECAST AGAIN AS WELL.
FROM THE CONGESTION, REVENUE RIGHTS, AUCTION RECEIPTS THAT WE'RE HOLDING PERSPECTIVE AT THE END OF APRIL, WE WERE A LITTLE BIT OVER 2.1 BILLION OF AUCTION RECEIPTS HELD, AND THEN WE WERE USING APPROXIMATELY 20 MILLION OF THOSE FOR, UH, CASH SOURCE INSTEAD OF USING OUR REVOLVER.
AND THAT WAS DOWN FROM EARLY IN THE YEAR, WHEREIN IN FEBRUARY IT WAS UP TO $31 MILLION.
WE EXPECT TO HAVE A CASH BALANCE BY THE END OF THIS YEAR AS WELL AS PAYING THIS BACK.
AND THAT TOO IS, AS YOU REMEMBER, WHEN WE TALK ABOUT THE BUDGET LATER, IS A FOCAL POINT TO SEE WHAT THAT USE OF THAT CASH, UH, THOSE CONGESTION, REVENUE RIGHTS, AUCTION RECEIPTS OR THAT CASH BALANCE IS AS WE LOOK OUT FOR THE MULTI-YEAR FOR CASH FOR BUDGETING AS SYSTEM ADMINISTRATION FEE RATE.
BEFORE WE MOVE ON TO THE NEXT ITEM,
[00:10:03]
ANY ADDITIONAL QUESTIONS? ANY QUESTIONS FOR SEAN ON THE FINANCIAL REPORT?[4.2 Periodic Report on Investments]
OKAY, LET'S TALK ABOUT THE INVESTMENTS.MOVING ON TO OUR INVESTMENT REPORT THEN ERCOT IS IN COMPLIANCE WITH ALL OF OUR INVESTMENT REQUIREMENTS, AS WE'VE TALKED ABOUT IN PREVIOUS MEETINGS AS WELL AS I JUST REFERENCED A FEW MINUTES AGO, AND WE'LL TALK ABOUT AGAIN IN THE BUDGET MEETING.
ERCOT IS CONTINUING TO SEE THOSE INVESTMENT YIELDS RISE AS WE INVEST IN THOSE SHORT TERM MONEY MARKET MUTUAL FUNDS WAS UP TO, AT THE END OF APRIL WAS UP TO ABOUT 4.66%, AND THEN CURRENTLY AS OF LAST WEEK, IT WAS CLOSER TO 5%.
AND AS YOU'RE PROBABLY AWARE, THE FED MEETING LAST WEEK, THEY LEFT THE RATES UNCHANGED.
WE ARE IN THE PROCESS OF REVAMPING, AS LESLIE HAD MENTIONED PREVIOUSLY WHEN SHE SPOKE TO YOU ABOUT SHIFTING TO SOME LONGER TERM INVESTMENTS AS WELL TO LOCK IN SOME OF THOSE OUT YEAR RETURNS AS THE BOARD HAS REQUESTED US TO DO.
YOU'LL SEE THAT LATER ON THIS YEAR WHEN WE COME BACK TO THIS.
ANY QUESTIONS ON INVESTMENTS BEFORE WE MOVE ON TO THE DEBT COMPLIANCE?
[4.3 Periodic Report on Debt Compliance D]
FROM DEBT COMPLIANCE PERSPECTIVE, WE ARE IN COMPLIANCE WITH ALL OF OUR DEBT REQUIREMENTS AND SUING SECURITIZATION.UH, AS A REMINDER, IN DECEMBER, MOODY'S REAFFIRMED ERCOT A ONE RATING AND CHANGED OUR OUTLOOK TO STABLE.
WE ARE EXPECTING TO SEE A, A REPORT OF SOME SORT FROM THEM IN THE NEAR FUTURE.
THEY CONTACTED US AND ASKED A FEW QUESTIONS ABOUT OUR FINANCIALS, BUT THAT WAS IT.
JUST GETTING CLARIFICATION ON THE 2022 FINANCIALS.
ONCE WE RECEIVED THAT, WE'LL FORWARD IT ONTO THE BOARD AS WELL, SO YOU CAN SEE WHAT THEY HAVE TO SAY ON THIS SLIDE TOWARD THE BOTTOM.
SINCE THE LAST TIME WE MET, WE DID PROVIDE SECOND LINE FROM THE BOTTOM.
WE DID PROVIDE THE, THE ANNUAL FINANCIAL STATEMENTS AFTER THEY WERE ACCEPTED AT THE LAST BOARD MEETING.
AND THEN ADDITIONALLY, WE HAVE ON THE BOTTOM ROW WE HAVE PROVIDED THE QUARTERLY FINANCIAL STATEMENTS AS REQUIRED FROM OUR PRIVATE PLACEMENT DEBT.
AND THAT IS ALL I HAVE BEFORE WE MOVE ON TO THE MAJOR TOPIC OF THE MORNING.
ANY QUESTIONS ON DEBT COMPLIANCE? OKAY, SHAWN IS
[5. Recommendation regarding 2024-2025 Budget and Fee]
GOING TO, UH, CONTINUE TO PRESENT.THE NEXT ITEM IS AGENDA ITEM FIVE, RECOMMENDATION REGARDING THE 24 25, UH, BUDGET AND SYSTEM ADMIN FEE.
UH, WE HAVE RESERVED APPROXIMATELY TWO HOURS FOR THIS DISCUSSION BECAUSE IT, AS YOU'VE SEEN IN YOUR MATERIALS, THERE ARE SUBSTANTIAL CHANGES IN OUR FORECAST IN ERCOT FORECAST.
AND SO I'VE ALLOWED PLENTY OF TIME FOR US TO DO A DEEP DIVE.
UH, WE'RE GONNA ASK, UH, EACH OF THE, UH, SECTION LEADS TO COME IN AND PRESENT FOR 15 MINUTES ON THEIR RESPECTIVE AREAS AFTER SEAN DOES THE OVERVIEW AND AFTER PABLO MAKES HIS COMMENTS.
AND, UM, WE CAN MODIFY THESE TIMES HOWEVER WE SEE FIT.
SO WE DON'T, EVEN THOUGH WE BUDGET 15 MINUTES PER, UH, MAJOR AREA, WE CAN, WE CAN USE WHATEVER TIME THAT WE THINK IS APPROPRIATE.
UH, AS A REMINDER, AGAIN, THIS IS A REQUEST FOR A VOTE WE'LL HAVE FOR YOU TODAY.
VOTE FROM THE COMMITTEE TO MOVE IT TO THE BOARD TOMORROW FOR A VOTE FROM THE BOARD TOMORROW TO APPROVE THIS BUDGET TO THEN SEND TO THE PUC.
AND IT DOESN'T CONTAIN THE SAME HIGH LEVEL RECOMMENDATION THAT WE PROVIDED AT OUR APRIL MEETING.
AND THE MATERIALS ARE STRUCTURED VERY SIMILARLY, SO WE DON'T PLAN TO COVER EVERY PAGE IN HERE BECAUSE WE COVERED IT SUBSTANTIALLY AT THE LAST MEETING.
WE REALLY PLAN TO FOCUS ON THE PIECE THAT BILL JUST MENTIONED IN GOING THROUGH THE EXPENDITURE SECTION OF THIS.
I WILL ALSO HIGHLIGHT SOME ADDITIONAL PAGES, WHICH ARE, THE ITEM IS COVERING THE OPTIONS THEMSELVES AS FAR AS LOOKING AT WHAT WE COULD DO WITH THE SYSTEM ADMINISTRATION FEE RATE INCREASE AND HOW TO DO IT.
WE DO HAVE THE SAME RECOMMENDATION WE HAD BEFORE, WHICH IS ESTABLISHING A RATE, WHICH WOULD WE PROJECT BE GOOD FOR FOUR YEARS.
WE, I WILL ALSO COVER THE TWO SLIDES THAT ARE INCLUDED WITH THE BOARD DECISION TEMPLATES, THE ACTUAL SYSTEM ADMINISTRATION, FREE RATE CALCULATION, BUDGET SUMMARY SLIDE, AS WELL AS THE SOURCES AND USES SLIDE.
AND THEN ADDED FOR THIS TIME IS THE FINANCIAL RATIO CALCULATION SLIDE, WHICH IS REQUIRED TO SHOW OUR DEBT SERVICE COVERAGE RATIO, CALCULATIONS, PROJECTIONS, AS
[00:15:01]
WELL AS OUR LIQUIDITY PROJECTIONS AS INTO THE FUTURE.THERE HAVE BEEN A COUPLE OF, THERE HAVE BEEN SEVERAL CHANGES THAT WE'VE INCORPORATED TO THESE MATERIALS VERSUS LAST TIME YOU SAW IT, THE TWO MAJOR ONES THAT DRIVING EXPENDITURES DOWN ARE A DECREASE IN THE, UH, PROJECTED COST OF REALTIME CO OPTIMIZATION PROJECT ACROSS MULTIPLE YEARS.
IT ACTUALLY INCREASED THE EXPENDITURES IN 2024, BUT THE OVERALL COST OF THE PROJECT HAS DECREASED SINCE THE LAST TIME YOU SAW IT.
ADDITIONALLY, WE'VE INCLUDED AMOUNTS FOR ESTIMATED INSURANCE RECOVERIES OF OUTSIDE LEGAL FEES, AND THAT HAS NETTED AGAINST THOSE LEGAL FEES.
THE COMBINATION OF ALL OF THESE ITEMS AND CHANGES TO THESE PROJECTIONS RESULTS IN CHANGING, EVEN THOUGH WE'RE KEEPING THE SYSTEM ADMINISTRATION FEE RATE.
THE SAME RESULTS IN CHANGING THE 2027 ENDING CASH BALANCE, WHICH IS THE AMOUNT THAT WE'VE TARGETED WITH THE BOARD TO MAKE SURE THAT WE'RE NOT USING CONGESTION REVENUE RIGHTS AUCTION RECEIPTS FOR FUNDING AT THAT POINT.
THEY'VE CHANGED THAT FROM A LITTLE BIT OVER A MILLION DOLLARS LAST TIME YOU SAW IT TO APPROXIMATELY 20 MILLION THIS TIME ACROSS THOSE FOUR YEARS.
SO WHAT DOES THIS BUDGET ACTUALLY CONTAIN? SO IT HAS THE APPROPRIATE FUNDS AND STAFF TO ADDRESS OUR STRATEGIC OBJECTIVES, AND YOU'LL GET THE HIGHLIGHTS OF THAT TOMORROW.
AS WE GO THROUGH THE RE FULL REVIEW OF THAT.
IN H R AND G, WE HAVE THE COMPLIANCE WITH THE FINANCIAL PERFORMANCE MEASURES AS APPROVED BY THE BOARD, HAVE FUNDING FOR THE INDEPENDENT MARKET MONITOR, THE PUBLIC UTILITY REGULATORY ACT, AND NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION COMPLIANCE FUNCTIONS.
WE HAVE THE AUTHORIZED SPEND OF APPROXIMATELY 425 MILLION IN BOTH 24 AND 25.
THEN WE HAVE THE INCREASE IN THE SYSTEM ADMINISTRATION FEE RATE TO 71 CENTS PER MEGAWATT HOUR TO BE EFFECTIVE JANUARY 1ST, 2024.
SO THAT IS THE FIRST INCREASE IN THAT RATE SINCE 2016, AND THAT REPRESENTS APPROXIMATELY A 3% COMPOUND ANNUAL GROWTH RATE ACROSS THOSE EIGHT YEARS.
SO THE DECISION TEMPLATE ATTACHED TO THIS INCLUDES THREE ITEMS THAT THE WE'RE ASKING THE BOARD TO APPROVE.
THE FIRST IS THAT AUTHORIZED SPEND AMOUNT, THE SECOND IS THAT SYSTEM ADMINISTRATION FEE RATE AMOUNT, AND THE THIRD IS AUTHORIZATION FOR ERCOT LEGAL TO FILE THE BUDGET WOULD THE P U C.
SO THAT IS WHAT THE DECISION TEMPLATE SUMMARY OF WHAT THE DECISION TEMPLATE ASKED YOU TO DO.
THIS SHOWS THE CONTENTS OF THIS PRESENTATION OUTLINE OF ALL THE MATERIALS THAT ARE IN IT.
WE CAN DISCUSS ANY OF THIS THAT YOU WANT.
OBVIOUSLY ANY QUESTIONS THAT YOU HAVE, WE WANNA MAKE SURE ARE FULLY ANSWERED.
WE ADDRESSED MANY OF THESE LAST TIMES.
I DON'T WANNA BE COMPLETELY REPETITIVE OF WHAT WE DID BEFORE.
THE CHANGES TO THE NUMBERS IN HERE WERE NOT HUGE.
SO A LOT OF THE MATERIALS JUST HAVE MINOR CHANGES TO WHAT YOU SAW BEFORE.
OUR FOCUS TODAY IS GOING TO BE THE FIRST ITEM UNDER NUMBER THREE, THAT BUDGET DRIVER'S EXPENDITURES PIECE.
THEN AS I MENTIONED ITEM FOUR WHERE IT SAYS THE OPTION SUMMARY, I'LL SHOW THAT PAGE.
THEN UNDER FIVE HAVE THE BUDGET SUMMARY PIECE, WHICH SHOWS THAT SYSTEM ADMIN FEE RATE CALCULATION, OUR SOURCES AND USES.
AND THEN THE LAST ITEM, WHICH IS THAT FINANCIAL RATIO.
SO THOSE ARE THE ITEMS THAT WE PLAN TO COVER DURING TODAY.
AS BILL MENTIONED, WE'LL HAVE EACH EXECUTIVE SPEAK TO THEIR AREAS UNDER THAT EXPENDITURE SECTION.
AGAIN, IF THERE'S ANYTHING ELSE THAT YOU HAVE QUESTIONS ON, OF COURSE WE CAN GO TO THAT.
SO WITH THAT, I'M GOING TO MOVE TO SLIDE NINE IN THE BUDGET DRIVER'S EXPENDITURE SECTION.
AND NOW I'M GONNA TURN IT OVER TO PABLO TO PROVIDE A OVERVIEW OF THIS.
ALL RIGHT, THANKS VERY MUCH, SEAN.
SO I JUST WANNA MAKE A FEW OPENING COMMENTS BEFORE WE JUMP INTO THE MEAT OF EACH OF THE, UM, DEPARTMENTAL, UM, BUDGET INCREASES AND, AND ALLOW FOR THE DEEP DIVES INTO WHAT'S DRIVING THE BUDGET.
BUT ON A, ON A MACRO LEVEL, THIS, THIS SLIDE REALLY HELPED, UH, ME TO VISUALIZE WHAT ARE SOME OF THE SIGNIFICANT CHANGES THAT HAVE OCCURRED IN THE OPERATIONS AT ERCOT SINCE THIS BUDGET WAS LAST SET.
SO THIS IS A TIMELINE GOING BACK, UM, 70 YEARS, BUT WHAT'S REALLY I THINK MOST RELEVANT IS IF YOU LOOK BACK TO WHEN THIS BUDGET WAS, UH, LAST ESTABLISHED, WHICH WAS AROUND 2016, THE 20 15 20 16 PERIOD.
AND WHEN YOU LOOK AT WHAT WAS HAPPENING ON THE ER, ERCOT GRID AT THAT POINT IN TIME, WE HAD, UM, WE WERE OPERATING IN A, IN A NODAL MARKET AT THAT TIME, NEWLY NODAL MARKET.
OBVIOUSLY DEREGULATION HAD BEEN IN PLACE FOR QUITE A WHILE.
UH, WE WERE COMPLYING WITH AND CONTINUED TO A LOT OF THE NERC STANDARDS THAT ARE OUT THERE AS WELL AS THE CYBERSECURITY STANDARDS.
[00:20:01]
WAS HAPPENING IN THE REGULATORY ENVIRONMENT HAD BEEN FAIRLY CONSISTENT AND REMAINS FAIRLY CONSISTENT IN A LOT OF WAYS SINCE THAT PERIOD OF TIME.HOWEVER, WHAT'S CHANGED MEANINGFULLY WHEN YOU LOOK AT THAT PERIOD OF TIME IN THE TOP SECTION IS HOW THE RESOURCE MIX ON THE GRID HAS EVOLVED.
AND FROM THAT 2015 PERIOD TO TODAY, YOU ARE SEEING A SIGNIFICANT GROWTH IN SOLAR BATTERIES, RENEWABLES WITH BATTERIES, DISTRIBUTED ENERGY RESOURCES, THE INTRODUCTION OF LARGE FLEXIBLE LOADS AND NEW TYPE OF A CUSTOMER NETTED LOADS.
AND NOW AGGREGATED, DISTRIBUTE DISTRIBUTED ENERGY RESOURCES.
AND THIS HELPS TO ALIGN, I THINK, VERY WELL WITH WHAT WE'RE SEEING IN THE BUDGET ITSELF, WHICH IS THE MAJORITY OF THE CHANGES IN THE BUDGET ARE IN, UH, HEADCOUNT.
AND THAT IS THE BULK OF WHAT ERCOT IS.
ERCOT IS, UH, PEOPLE RESOURCES.
THAT'S THE BULK OF THE BULK OF OUR DOLLARS, AND THE BULK OF THOSE ARE ALIGNED INTO TWO AREAS OF THE ORGANIZATION IN OUR SYSTEM PLANNING AND IN OUR SYSTEM OPERATIONS.
THOSE TWO AREAS MAKE UP ALMOST TWO THIRDS OF ALL OF THE RESOURCE INCREASES THAT WE'RE ASKING FOR IN THE BUDGET.
AND THOSE ARE THE AREAS THAT ARE MOST SIGNIFICANTLY IMPACTED BY THE CHANGE IN THE RESOURCE MIX THAT WERE SEEN ON THIS SLIDE.
THEY ARE HAVING TO RESPOND TO AND DO MULTIPLE AND DIFFERENT TYPES OF STUDIES AND MODELING IN ORDER TO BE ABLE TO ACCOMMODATE THE DIFFERENT TYPES OF RESOURCES THAT ARE COMING ON THE GRID.
IN ADDITION, THE NUMBER OF RESOURCES THAT ARE ACTUALLY OUT THERE THAT WE'RE NOW INTER INTERFACING WITH HAVE INCREASED DOUBLE, TRIPLE, QUADRUPLE OVER THIS PERIOD OF TIME.
AND THAT VOLUME DRIVES VOLUME OF CHANGES THAT HAVE TO BE DEALT WITH IN TERMS OF INTERCONNECTIONS, RUNNING STUDIES EVERY TIME SOMETHING NEEDS TO CONNECT INTO THE GRID.
AND SO THE VOLUME OF OF ACTUAL WORK IN THE OPERATIONS AND PLANNING TEAM HAS CHANGED MEANINGFULLY OVER THIS PERIOD OF TIME.
SO I THINK THERE'S, THERE'S A GOOD ALIGNMENT FOR WHAT, WHAT YOU ARE GOING TO HEAR WHEN WOODY AND DAN TALK ABOUT WHAT'S DRIVING THE CHANGES IN THEIR ORGANIZATION.
I WANTED TO ILLUSTRATE THAT A LITTLE BIT WITH THIS PICTURE HERE.
ADDITIONALLY, I WANTED TO JUST COVER A COUPLE OF QUESTIONS THAT HAVE COME UP IN ADVANCE THAT I THINK ARE GOOD QUESTIONS THAT'LL BE HELPFUL TO CLEAR UP AT THE FRONT END OF THIS.
ONE OF THEM IS, UM, THERE'S A DELTA BETWEEN WHAT THE ORIGINAL AMOUNT THAT WE HAVE BEEN COMMUNICATING FOR PCM AND VERSUS WHAT WE'RE SEEING IN THE PRESENTATION HERE AROUND MARKET REDESIGN.
SO WHAT WE HAVE COMMUNICATED FOR THE PCM WAS SPECIFICALLY A PROJECT ESTIMATE TO DEVELOP THE TECHNOLOGY IN ORDER TO BE ABLE TO RUN THE PERFORMANCE CREDIT MECHANISM.
WHEN WE TALK ABOUT THE MARKET REDESIGN IN THIS SCOPE AND IN THIS PRESENTATION, WE ARE INCLUDING THAT IN ADDITION TO ALL OF THE MARKET REDESIGN WORK THAT'S GONNA GO WITH THAT, WHICH INCLUDES REAL-TIME CO-OP OPTIMIZATION AND ANY OTHER MARKET REDESIGN EFFORTS THAT ARE GONNA BE PART OF THE NEXT SEVERAL YEAR DEVELOPMENT.
AND WE'RE ALSO LOOKING AT IT FROM THE PERSPECTIVE OF A BROAD HOLISTIC, TOTAL ENTERPRISE COMMITMENT AND DOLLARS THAT GO INTO THOSE PROJECTS, NOT JUST INCREMENTAL TECHNOLOGY DOLLARS ALONE.
AND SO THAT DIFFERENCE IS JUMPING UP TO ABOUT 19 MILLION FROM THE TWO TO 4 MILLION RANGE THAT WAS COMMUNICATED FOR PCM.
THAT'S THE DELTA BETWEEN THOSE TWO IS THE INCLUSIVENESS OF, UH, THE INCLUSION OF THESE ADDITIONAL PROJECTS AS WELL AS THE BROADER COUNTING OF ALL OF THE RESOURCE DOLLARS THAT ARE GONNA GO INTO THOSE PROJECTS.
AND THEN, YOU KNOW, LASTLY, UM, ONE OF THE THINGS THAT WE'VE TALKED ABOUT IS, YOU KNOW, DOES THE NEW LEGISLATION THAT HAS PASSED HAS THAT BEEN CONTEMPLATED IN THIS BUDGET? AND I WOULD SAY FOR THE MOST PART THE ANSWER IS YES.
WE HAD ANTICIPATED WHAT WE WERE SEEING COMING THROUGH THE LEGISLATURE DURING THE SESSION AND HAD BUILT IN THE RESOURCES AND SOME, YOU KNOW, ADDITIONAL FUNDING TO BE ABLE TO ACCOMMODATE THE, WHAT WE EXPECTED TO COME THROUGH.
NOW, RECOGNIZING THAT WE DIDN'T KNOW EXACTLY HOW EVERYTHING WAS GOING TO FINISH AT THE END OF SESSION, THERE ARE SOME ELEMENTS IN THE NEW LEGISLATION THAT ARE NOT EXPLICITLY PLANNED FOR IN THIS BUDGET AT A LINE ITEM LEVEL.
HOWEVER, WE DID PLAN FOR POTENTIAL GROWTH AND ADDITIONAL INVESTMENTS OVER THE NEXT SEVERAL YEARS.
AND THIS IS DESIGNED TO BE A BUDGET THAT WOULD HOLD THE SYSTEM ADMINISTRATIVE FEE FOR FOUR YEARS.
SO WE BUILT IN SOME CAPACITY IN ORDER TO BE ABLE TO, UH, ACCOMMODATE WITH FLEXIBILITY THINGS THAT WOULD COME INTO THE BUDGET OVER THAT PERIOD OF TIME.
AND SO WHAT I WOULD SAY IS THAT WE ARE GOING TO HAVE TO, LIKE ANY BUSINESS WOULD DO PLAN AND ACCOMMODATE CHANGES THAT OCCUR IN THE BUSINESS INTO THE BUDGET THAT WE'RE GOING TO BE ASKING FOR APPROVAL.
AND WE BELIEVE WE'VE GOT THE FLEXIBILITY AND THE RESOURCE CAPACITY TO BE ABLE TO MEET THE REQUIREMENTS OF THE LEGISLATIVE OUTPUTS IN THIS BUDGET THAT WE'RE ASKING FOR APPROVAL TODAY.
SO I'LL PAUSE THERE AND SEE IF THERE'S ANY UPFRONT QUESTIONS BEFORE WE JUMP INTO SOME OF THE DETAILS.
UM, PREVIOUSLY YOU'VE PUSHED BACK A GOOD NUMBER OF PROJECTS BECAUSE OF BUDGETARY CONSTRAINTS.
DID YOU BUILD THAT IN AS WELL? SO WE DON'T SEE YOU CONTINUALLY PUSHING PROJECTS BACK, LIKE GO OPTIMIZATION AND WHATNOT? YES, WE, UM,
[00:25:01]
WE, SO IN THIS BUDGET WE HAVE NOT PUSHED BACK PROJECTS THAT WE ARE EXPECTING TO DELIVER IN THE, UM, STRATEGIC PLAN TIMEFRAME AS WELL AS IN THE IMMEDIATE TWO YEAR HORIZON, WHICH INCLUDES REALTIME CO-OP OPTIMIZATION.SO WE HAVE ALREADY FORMALLY KICKED OFF THE REALTIME CO-OP OPTIMIZATION PROJECT.
WE ARE NOW WORKING ON FIGURING OUT HOW TO ACCOMMODATE THE RESOURCE MIX ALONG WITH WHAT IS THE NEW MIX OF LEGISLATIVE REQUIREMENTS THAT HAVE COME OUT OF THE, THIS LAST SESSION.
BUT WE ARE ANTICIPATING CONTINUING TO MOVE FORWARD WITH REAL-TIME CO-OP OPTIMIZATION AS WE DISCUSSED IN OUR LAST MEETING, AS WELL AS THE OTHER PROJECTS THAT ARE ON OUR PLANNING HORIZON, WHICH INCLUDE THE CONTINUED EVOLUTION OF OUR DATA CENTER, THE, THE EVOLUTION OF THE DATA CENTER, THE NEXT CYCLE OF, UH, EMS UPGRADES, ALL OF THAT ARE STILL EXPECTED TO BE EXECUTED ON TIME AND, AND, AND BASED ON THE PLAN.
ANY OTHER QUESTIONS FOR PAPA COMMENTS? OKAY, COMMISSIONER MCASS, UH, PABLO, UH, JUST A QUESTION.
MUCH OF THE LEGISLATION, UM, CONTEMPLATED STUDIES ON THE PART OF ERCOT STUDIES AND ANALYSIS, AND I BELIEVE THAT IMPACTED SYSTEM PLANNING, UH, PROBABLY MORE THAN OTHER DIVISIONS, BUT IN TERMS OF, UH, THE, THE HUMAN RESOURCES NEEDS, THE, THE LABOR THAT YOU NEED TO CONDUCT THOSE STUDIES, UH, MUCH OF IT'S IN PARALLEL TO WHAT THE IMM WILL BE DOING AS WELL AS SOME OF THE, UH, SYSTEM RESILIENCY STUDIES THAT ARE NOW, UH, REQUIRED.
IS WAS THAT ALREADY PLANNED FOR OR ARE YOU GONNA HAVE TO AUGMENT STAFF TO DO THAT? SO I'D SAY THAT FOR THE MOST PART, WE DID ANTICIPATE AN INCREASE IN SOME OF THESE STUDY ACTIVITIES.
AND SO THOSE, SO THE STAFFING NUMBERS THAT YOU'VE GOT ON INTERNAL HEADCOUNT ACCOMMODATE AN EXPECTED INCREASE IN, UH, IN SOME OF THESE MODELS AND STUDIES THAT WE'RE GONNA HAVE TO DO.
BUT I WOULD SAY THAT IT'S LIKELY WE WILL LEAN ON OUTSIDE HELP TO, UM, TO PARTNER WITH US AND TO BRING ADDITIONAL RESOURCES AND EXPERTISE IN ORDER TO BE ABLE TO ACCOMMODATE THE, THE TOTAL NUMBER OF STUDIES THAT CAME THROUGH THE LEGISLATION.
I THINK WHAT CAME THROUGH IS PROBABLY A LITTLE BIT MORE THAN WHAT WE HAD EXPECTED, BUT I'LL, I'LL LET WOODY IF YOU, IF YOU WANT TO ADD TO THAT, BUT, BUT I THINK WE'VE GOT OUR INTERNAL HEADCOUNT PLAN FOR WHAT'S EXPECTED WILL ACCOMMODATE WHAT'S ASKED AND WE'RE GONNA, WE'RE GONNA LEVERAGE OUTSIDE RESOURCES TO SUPPLEMENT THAT.
SO MOVING ON TO THE NEXT SLIDE, WHICH PROVIDES AN OVERVIEW OF THE EXPENDITURE ASSUMPTIONS.
SO OUR UNDERLYING ASSUMPTIONS IN THE WAY THAT WE APPROACH THEM HAVE NOT CHANGED SINCE THE LAST TIME YOU SAW THIS PRESENTATION.
WE DID, OF COURSE REFINE OUR ESTIMATES AND OUR PROJECTIONS AS WE GAIN NEW INFORMATION.
ONE OF THE RECOMMENDATIONS FROM THE COMMITTEE LAST TIME WAS TO GROUP OUR INCREASES IN DEPARTMENT NET EXPENDITURES AND PROJECT EXPENDITURES BY STRATEGIC OBJECTIVE.
AGAIN, REFERRING TO THE INFORMATION YOU'LL BE COVERING TOMORROW MORNING IN HR AND G.
AND THAT'S WHAT THIS SLIDE DOES.
NOW, PREVIOUSLY IT WAS BROKEN DOWN INTO SIX DIFFERENT CATEGORIES.
NOW IT'S BY THE STRATEGIC OBJECTIVES.
THERE ARE A FEW THINGS THAT I WANT TO NOTE ON THIS PAGE FROM A KEY TAKEAWAY PERSPECTIVE.
AS YOU CAN SEE IN THE SLIDE OVER THERE, WE ARE ALREADY INCREASING OUR COST AND HEADCOUNT IN 2023 SAW THAT IN THAT FORECAST AND THAT'S WHY THAT FORECAST IS SO MUCH HIGHER THAN WHAT YOU WOULD NORMALLY EXPECT TO SEE FOR A VARIANCE IN THAT POINT.
SO OF THIS 115 MILLION INCREASE OF THESE BUDGETED NUMBERS, THEN F APPROXIMATELY 41 OF THAT AC INCREASE ACTUALLY OCCURS IN 2023.
SO WE ARE ALREADY RAMPING THESE ITEMS UP.
AND THE 24 REQUEST INCREASE FROM THE 23 FORECAST IS THEN ABOUT 75 MILLION.
SO THIS, AS WE LOOK AT THESE COLUMNS, WE HAVE THE STRATEGIC OBJECTIVE NUMBER ONE, WHICH IS THE, THE INDUSTRY LEADER FOR GRID RELIABILITY AND RESILIENCY.
STRATEGIC OBJECTIVE NUMBER TWO, WHICH HAS ENHANCED ERCOT REGION'S ECONOMIC COMPETITIVENESS AND STRATEGIC OBJECTIVE NUMBER THREE, WHICH IS ADVANCE ERCOT AS AN INDEPENDENT LEADING INDUSTRY EXPERT AND EMPLOYER OF CHOICE.
THOSE THESE COLUMN WEIGHTINGS MAY LOOK SLIGHTLY DIFFERENT THAN YOU MIGHT EXPECT THEM TO SEE.
AND THERE'S A COUPLE OF REASONS FOR THAT.
SO THE FIRST IS THAT ALL THE SALARY STUFF THAT WE TALKED ABOUT IN THE FINANCIAL SUMMARY EARLIER WHERE IT WAS ABOUT 30 MILLION OVER WHAT'S OVER BUDGET, THEN THAT IS ALL INCLUDED IN THIS PRESENTATION ON THIS PAGE.
AND WHEN WE GO THROUGH EACH OF THE EXECUTIVES UNDER STRATEGIC OBJECTIVE NUMBER THREE, SO THAT 30 MILLION, IF YOU TAKE THAT OUT OF THERE AND REDISTRIBUTE IT OF WHERE THOSE PEOPLE ARE WORKING, THEN IT WOULD MAKE THIS CHART LOOK DIFFERENT.
BUT WE'VE INCLUDED ALL OF THOSE INCREASES
[00:30:01]
IN UNDER STRATEGIC OBJECTION NUMBER THREE FOR THIS PART THAT WOULD LOWER THAT 46 DOWN TO 16 AND INCREASE THE OTHERS.ANOTHER COMPONENT OF THIS TO REMEMBER, AND YOU'LL ESPECIALLY SEE THIS WHEN WE START TALKING ABOUT WOODY'S AREA, YOU'LL ALSO SEE ABOUT SECURITIZATION IS THAT THESE ARE NET OF THE DEPARTMENT REVENUES.
SO THESE NUMBERS ARE NET OF THE NON-SYSTEM ADMINISTRATION FEE RATE REVENUES, WHICH IS THIS IS FOCUSING ON.
SO IN THE CASE OF SECURITIZATION, WE'VE ADDED BODIES TO AND EXPENSES ASSOCIATED WITH THAT, BUT THAT IS OFFSET BY REVENUES THAT WE'RE BRINGING IN.
SIMILARLY, IF WEATHERIZATION INSPECTIONS HAVE THEIR OWN REVENUES, THE ADDITIONAL HEADCOUNT AND FOR THE GENERATION INTERCONNECTIONS ARE OFFSET BY REVENUES.
SO IF YOU TOOK THOSE OUT, THOSE WOULD CHANGE THESE NUMBERS AS WELL.
AND THAT WOULD PROBABLY INTO MORE WITH WHAT YOU WOULD EXPECT TO SEE WITH THOSE COUPLE OF MAJOR CHANGES POTENTIALLY EXPECT TO SEE DEPENDING ON WHAT YOU'RE LOOKING AT.
THIS NEXT SLIDE BREAKS US OUT A LITTLE BIT FURTHER AS FAR AS PROJECTS VERSUS DEPARTMENT NET EXPENDITURES.
SO OF THAT 75 MILLION THAT MENTIONED ON THE PREVIOUS SLIDE OF THAT INCREASE FROM THE 23 FORECAST TO THE 24 BUDGET, THEN ABOUT 30 MILLION OF THAT IS AN INCREASE IN PROJECT SPEND.
AND SO THAT LEAVES UH, THE REMAINING AMOUNT THAT'S ASSOCIATED AFTER YOU TAKE OUT MERIT COMPONENTS, REMAINING AMOUNT ASSOCIATED WITH ALL THESE OTHER INCREASES THAT WE'RE TALKING ABOUT.
SO AS WE LOOK AT THIS AND BREAK THIS OUT, YOU SEE WE HAVE THE DEPARTMENT HEAD EXPENDITURES AND THAT HEADCOUNT THAT PABLO WAS MENTIONING IS ABOUT 86 MILLION INCREASE.
THEN WE HAVE THESE PROJECT COMPONENTS OF IT, WHICH ARE REALLY DRIVEN BY TWO MAJOR EFFORTS.
THE SECOND EYE TEST ENVIRONMENT, WHICH JP WILL TALK ABOUT, WHICH IS ABOUT 12 MILLION ESTIMATED FOR 2024.
AND THEN THE MARKET DESIGN, WHICH PABLO ALREADY REFERENCED, AND THAT'S A 19.2 MILLION, WHICH IS THE INCREMENT OVER THE 2.4 THAT HE ALSO REFERENCED.
THE REST OF THE PROJECTS THAT ARE INCLUDED IN HERE NET TO ALMOST ZERO, SO ABOUT EVENLY.
SO THOSE TWO MAJOR DRIVING MAJOR EFFORTS DRIVING THE CHANGES IN THESE EXPENDITURES ALSO INCLUDED IN HERE A SUMMARY.
IF YOU LOOK AT THE APPENDIX, YOU CAN SEE ALL THE PROJECTS THAT ARE CURRENTLY ON THE LIST TO BE DELIVERED IN 24 AND 25.
WE'VE TAKEN AND PULLED UP THE PROJECTS THAT HAVE AT LEAST A $1 MILLION SPEND FOR 24 AND 25 COMBINED.
AGAIN, IF YOU LOOK AT THESE TOP THREE, YOU'LL SEE THOSE ARE THE MATERIAL ONES.
THE TOP TWO ARE THE ONES THAT WE JUST MENTIONED ON THE PREVIOUS SLIDE.
AND THEN THE THIRD BEING THE DATA CENTER, FIVE REFRESHES THAT IS WINDING DOWN AND COMING TO COMPLETION.
SO THIS IS MY LAST SLIDE BEFORE WE MOVE INTO THE INDIVIDUAL AREAS.
AND SO I WANNA PROVIDE AN OVERVIEW OF WHAT THE INCREMENTAL DOLLARS AND EMPLOYEES BY OFFICE AND STRATEGIC OBJECTIVE LOOK LIKE TO PROVIDE YOU A SCALE WHERE THOSE LARGEST CHANGES ARE.
AND WE'LL GO THROUGH THESE OFFICES IN THIS ORDER THAT'S ON THIS PAGE.
AND WHEN YOU LOOK AT THIS, YOU CAN SEE THE TOTAL INCREMENTAL DOLLAR CHANGES AND EMPLOYEES, WHICH GETS TO THAT NUMBER WE SAW ON THE PREVIOUS SLIDE THE 115 MILLION AND THIS IS THE CHANGE OF 171 EMPLOYEES WHEN PABLO IS REFERENCING THE INCREASE IN EMPLOYEES.
AND THIS IS BROKEN OUT BY STRATEGIC OBJECTIVE, THE STRATEGIC OBJECTIVES ONE, TWO, AND THREE AND SHOWING WHERE THESE SPLITS ARE AND SOME OF THOSE THINGS THAT I MENTIONED ON THOSE PREVIOUS SLIDES EXPLAIN WHY SOME OF THESE NUMBERS LOOK A LITTLE BIT SKEWED BECAUSE THEY'RE OFFSET BY REVENUES IN SOME CASES.
AND THEN ALSO ALL OF THOSE ADDITIONAL LABOR INCREASES THAT YOU'LL SEE IN STRATEGIC OBJECTIVE.
NUMBER THREE ITEM THAT MIGHT POP OUT ON HERE, WHICH JAN WE'LL TALK TO AS WELL AS YOU'LL SEE A NEGATIVE NUMBER ON HERE ACTUALLY UNDER CHIEF ADMINISTRATIVE OFFICE FOR STRATEGIC OBJECTIVE NUMBER ONE.
AND THAT'S ASSOCIATED WITH THE BRINGING THE RELIABILITY MONITOR IN-HOUSE THOSE FUNCTIONS AND PROJECTS AS WELL THAT HAVE DECREASED, BUT BRINGING THAT RELIABILITY MONITOR IN-HOUSE CHANGED THE DEPARTMENT THAT IT WAS HOUSED IN AND LOWERED THE OVERALL COST.
AND SO THIS IS SHOWING SOME OF THE EFFECTS OF THAT DIFFERENCE.
UH, ONE OF THE OTHER THINGS THAT SEAN, QUICK QUESTION.
YES, OF THE 171 INCREMENTAL EMPLOYEES, HOW MANY HAVE BEEN HIRED TO DATE? AND SOME OF THAT WOULD INCLUDE THE 2023 IF I UNDERSTAND IT CORRECTLY.
AND SO WHEN WE LOOK AT WHERE WE ARE RIGHT NOW, SO AS OF THE END OF MAY, WE ARE AT 800, AND I BELIEVE YOU'LL SAY THIS TOMORROW MORNING AS WELL.
WE'RE AT ABOUT 836 EMPLOYEES AT THE END OF DECEMBER.
WE ARE AT 790, SO WE'VE HAD ABOUT 46 EMPLOYEE NET INCREASE FROM DECEMBER TO MAY.
OUR FORECAST SHOWS THAT AT THE, BY THE END OF THE YEAR WITH THE PROJECTIONS WE'RE
[00:35:01]
CURRENTLY USING THAT, WE EXPECT TO GET THAT NUMBER UP TO 892 BY THE END OF DECEMBER.SO ADDING ANOTHER 56 PEOPLE NET THROUGHOUT THE REMAINDER OF THIS YEAR.
SO REALLY TALKING ABOUT HUGE INCREASES CONSIDERING THAT FUNDED PIECE THAT WE WOULD EXPECT TO HAVE IS ONLY 818 FROM OUR LAST BUDGET CYCLE.
SO THE DIFFERENCE BETWEEN THOSE IS BRINGING UP THAT OF THOSE ITEMS THAT HAVE, OR THOSE PEOPLE THAT ARE ALREADY BREWING BROUGHT ON BOARD.
AND WHEN WE GO THROUGH SOME OF THE AREAS, ESPECIALLY WOODY'S TO BE ABLE TO TELL YOU ABOUT SOME OF THE SPECIFIC PEOPLE AS WELL, THEN WHAT WE PROJECT RIGHT NOW TO GET TO, IF YOU WERE TO GET TO A FULLY FUNDED AMOUNT BY THE END OF DECEMBER 24, THEN THAT WOULD BE AN INCREASE OF 92 PEOPLE IN THE NET IN THE YEAR 2024 TO GET TO WHERE WE WOULD BE FULLY FUNDED AT THE VACANCY RATE THAT WE'VE PROJECTED.
AND THAT BRINGS US TO A, TO A REALLY GOOD POINT AS WELL THAT YOU'LL HEAR SOME PEOPLE REFERENCE TOO.
AND I WAS ALREADY ASKED ABOUT DO WE HAVE THE RESOURCES THAT WE NEED TO DELIVER? SO RESOURCES CAN BE INTERPRETED MULTIPLE WAYS.
SO THIS BUDGET PROVIDES US WITH THE FUNDING TO DO THESE THINGS.
IT DOESN'T NECESSARILY PROVIDE US WITH THE QUOTE UNQUOTE RESOURCES FROM THE PERSPECTIVE OF HAVING AN EMPLOYEE SITTING HERE DOING THE WORK OR HAVING THE TECHNICAL EXPERTISE OR HAVING THE CONSULTANTS COME IN AT THE SAME TIME.
YOU KNOW, EVERYBODY IN HERE KNOWS THAT YOU CAN'T MAGICALLY THROW MONEY AT A PROBLEM AND MAKE IT DISAPPEAR.
AND SO THERE IS THAT ONBOARDING PERIOD OF TIME THAT WE'RE TALKING ABOUT THAT HAS ALREADY STARTED.
IT'S BEEN RAMPING UP QUITE A BIT AS YOU MENTIONED, NUMBERS I JUST REFERENCED SHOW AND WE PLAN TO CONTINUE TO DO THAT.
SO IT DOESN'T HAPPEN OVERNIGHT, BUT WE HAVE A PLAN IN PLACE TO MAKE IT HAPPEN.
AND OF COURSE, DURING THAT COURSE OF TIME, IF YOU HAVE MAJOR TURNOVER IN AREA, WE HAVE HAD SOME AREAS WHERE WE HAVE BEEN SINGLE THREADED FOR A WHILE, SO GETTING BACKUPS IN PLACE, ALL THAT KNOWLEDGE TRANSFER, ALL THAT DOES TAKE TIME, BUT THAT WORK HAS ALREADY STARTED AND IS ONGOING.
SEAN, I THINK QUICK QUESTION TOO, SO ON THE PEOPLE THAT WE HIRE, DO WE ALSO BUDGET FOR RELOCATION AND THINGS LIKE SIGNING BONUSES? YES, WE HAVE BUDGETED AMOUNTS FOR ALL THOSE.
AND THAT'S RELOCATION IS, FOR EXAMPLE, IS ONE OF THE ITEMS THAT WAS IN THAT OTHER BUCKET WHEN WE WERE LOOKING AT THAT DETAILS, SALARY RESOURCE MANAGEMENT COMPONENT.
SO RELOCATION, ALL THOSE ITEMS ARE BUDGETED FOR CARLOS.
YEAH, ONE, I GUESS MORE GENERAL QUESTION IS ABOUT CONTINGENCY, UH, FOLLOWING WHAT WILL WAS TALKING ABOUT THE IMPACT OF THE LEGISLATIVE SESSION, SOME OF THE ACTIONS I SEE AS NOT FULLY DEFINED, LET'S PUT IT THAT WAY, FROM 15, UH, SB 1500 FOR EXAMPLE, AND OTHERS.
SO DO, DO YOU HAVE CONTINGENCY WITHIN THE BUDGET TO REALLOCATE AS AS THAT IS NEEDED OR AGAIN, BE CAUTIOUS ABOUT FURTHER APPROVALS IF THEY'RE NEEDED IN THE INTERIM PERIOD? THERE IS, THERE IS ROOM IN THE BUDGET TO TAKE ON SOME ADDITIONAL WORK DEPENDING ON THE SIZE OF IT, BUT EVERYTHING COMES AT A TRADE OFF.
SO SOME OF THE THINGS TO BE MET IN THIS STRATEGIC OBJECTIVES AND WE'LL TALK ABOUT EACH EXECUTIVE WILL GO THROUGH ONE OF THE ITEMS THAT THEY'LL MENTION ARE THE ITEMS IN THEIR BUDGET THAT THEY SAY, WELL IF, IF I REALLY NEED TO GET RID OF SOMETHING THAT'S IN HERE, THEN THIS WOULD BE THE FIRST THING THAT I WOULD TRY TO OFFSET WITH KNOWING THAT IT WILL LIKELY IMPACT THE ABILITY TO DELIVER FULLY ON THE STRATEGIC OBJECTIVES.
ANY OTHER QUESTIONS BEFORE WE GO TO THE, UH, DIVISION LEADS? UH, I, I JUST WOULD LIKE TO MAKE THE COMMENT THAT, UM, CAN YOU PULL IT CLOSER, PEGGY? I'M SORRY.
JUST LIKE TO MAKE THE COMMENT THAT THIS SLIDE IN PARTICULAR IS VERY HELPFUL TO MAN THAT HAD A CONVERSATION WITH PABLO ABOUT THE HUGE HEAD COUNT INCREASE AND UH, THIS HE POINTED OUT EARLIER, TWO THIRDS OF IT BEING IN PLANNING AND OPERATIONS, UH, HELPED ME GET MORE COMFORTABLE WITH IT.
AND I'M LOOKING FORWARD TO HEARING FROM THE EXECUTIVES EXACTLY, ESPECIALLY IN THOSE AREAS.
UH, YOU KNOW, WHAT THAT HEADCOUNT WILL BE USED FOR.
ALL RIGHT, BEF, BEFORE I TRANSITION TO JP THEN I JUST WANNA PROVIDE A BRIEF OVERVIEW AS WE LOOK AT EACH EXECUTIVE.
THESE ARE SET UP IN THREE SEPARATE, THERE'S BASICALLY THREE SEPARATE SECTIONS FOR EACH EXECUTIVE.
SOME EXECUTIVES ARE LONGER THAN ANY OTHERS IN CERTAIN CASES THEY MAY SPAN MULTIPLE PAGES, BUT THERE ARE THREE MAIN COMPONENTS.
THE FIRST IS THE TABLE AT THE TOP OF JPS PAGE, WHICH SHOWS
[00:40:01]
THE PINCHABLE BUDGET PRINCIPLE BUDGET DRIVERS.THESE ARE ORGANIZED BY STRATEGIC OBJECTIVES, ONE, TWO, AND THREE.
THE LINE NUMBERS ARE SIMPLY THERE FOR EASE OF REFERENCE, NOT MENTIONING, NOT INDICATIVE OF PRIORITIES.
THESE ARE RANKED WITHIN EACH STRATEGIC OBJECTIVE ON A DOLLAR, INCREMENTAL DOLLAR BASIS.
AGAIN, THESE INCREMENTAL DOLLARS DON'T NECESSARILY ALWAYS EVEN OUT DEPENDING ON IF THEY'RE LABOR OR NON-LABOR RELATIVE TO THE HEADCOUNT.
THE BASELINE AND CURRENT SHOW, WHERE WE WERE AND WHERE WE'RE GOING AND WHAT THE DRIVER FOR THE NEED FOR THE CHANGE IS.
THE SECOND TABLE IS A HIGH LEVEL OVERVIEW, SPLITTING LABOR VERSUS NON-LABOR AND REVENUES FOR THE NET EXPENDITURES AND THEN ALSO SHOWS PROJECT EXPENDITURES AND EMPLOYEE COUNTS.
AND THEN THE LAST ITEM IS A SECTION THAT SOWS A SOME DESCRIPTIVE TEXT ABOUT, UH, THE EFFICIENCIES AND SAVINGS AS WERE REQUESTED, DEFERRALS FROM THE PRIOR BUDGET CYCLE, UH, ITEMS THAT WERE PREVIOUSLY CUT IN THIS CYCLE TO THE POINT THAT WAS RAISED BEFORE ABOUT DOING A BOTTOMS UP BUDGET.
AND FINALLY THE ITEM THAT I JUST MENTIONED ABOUT THE, THE PLAN IMPROVEMENTS AND RISK MANAGEMENT, WHICH WOULD BE THE ITEMS WHERE WE WOULD POTENTIALLY REPRIORITIZE FIRST.
SO WITH THAT, I WILL TURN IT OVER TO JP, SEAN IS SO MUCH TALLER THAN ME.
UM, MY NAME IS JAL PARK AND I GO BY JPS.
UH, SEAN REFERENCED ME A FEW TIMES.
UM, I'M THE CHIEF INFORMATION OFFICER OFFICER AT ERCOT.
SO I WILL EXPLAIN IN DETAIL THE LINE ITEM ONE.
LEMME JUST USE THIS LINE ITEM ONE HERE, OKAY, FROM THE PREVIOUS SLIDES THAT SHOWS THE INCREMENTAL 24 EMPLOYEE HEADCOUNT INCREASE AND THE 29 MILLION BUDGET INCREASE, THAT IS THE DELTA BETWEEN THE 23 BUDGET AND THE 24 BUDGET REQUEST.
AS I GO TO THE NEXT SLIDE, YOU WILL NOTICE THAT THESE NUMBERS, UM, ARE CARRIED FORWARD TO THE LAST FOUR COLUMNS IN MY NEXT SHEET.
SO LEMME JUST GO THERE AND, AND YOU SEE, NOTICE THAT THOSE ARE THE NUMBERS THAT ARE HERE.
AND SAME THING HERE FOR THE TOTAL EXPENDITURES.
OKAY, SO, SO TO MAINTAIN CONTINUITY BETWEEN WHAT, UM, SEAN WAS PRESENTING.
SO LET ME JUST SPEND A LITTLE BIT MORE TIME.
I KNOW SEAN UM, TALKED ABOUT THIS, BUT I JUST GO OVER THIS VERY QUICKLY TOO.
SO THIS SLIDE HAS TWO SECTIONS, AND THE TOP IS THE PRINCIPLE DRIVERS THAT LEAD EITHER TO A HEADCOUNT INCREASE ON THIS COLUMN OR SIMPLY A DOLLAR INCREASE.
AND THE BOTTOM IS, UM, UM, YOU KNOW, UH, BUDGET LAYOUT OF WHAT THAT LOOKS LIKE.
SO FROM A A BUDGET DRIVER PERSPECTIVE, WE ALSO HAVE A BASELINE HERE IN THIS COLUMN THAT SHOWS WHAT WAS THE ASSUMPTIONS THAT WENT INTO THE PREVIOUS BUDGET.
AND IN THIS COLUMN WE ARE TRYING TO INDICATE WHAT ARE THE ASSUMPTIONS GOING IN INTO THE 24 BUDGET.
OKAY? UM, THIS 29 MILLION EXPENDITURE IS SPLIT ALONG THESE FOUR MAIN EXPENDITURE CATEGORIES, WHICH ARE EITHER THE DEPARTMENT LABOR THAT IS PRIMARILY DRIVEN BY THE HEADCOUNT, THE NON-LABOR, WHICH IN CASE OF IT IS MORE DRIVEN BY THE HARDWARE AND SOFTWARE LICENSES AND INFRASTRUCTURE, THOSE KIND OF PIECES.
UM, SOME DEPARTMENTS HAVE REVENUES.
IN MY CASE I HAVE, UM, THE VAN NETWORK THAT OUR MARKET, UH, PARTICIPANTS ALSO CONNECT TO AND IT'S A, UM, THAT EXPENSES A PASS THROUGH, BUT, BUT THAT SHOWS A REVENUE FOR ME.
AND LASTLY, THE PROJECT EXPENDITURES.
AND THESE ARE PROJECTS THAT ARE SPONSORED BY IT, OKAY? AND YOU CAN SEE THE SPLIT IN THIS COLUMN, WHICH IS SHOWING THE DELTA INCREASE.
NOW IN TERMS OF PERCENTAGES, THIS 24 HEADCOUNT INCREASE IS ABOUT AN 8% INCREASE FROM MY DEPARTMENT.
OKAY? GIVEN, UM, UH, THAT'S MY, UH, SIZE OF MY DEPARTMENT FOR, IN TERMS OF LABOR, THAT'S A 25% INCREASE, 23% INCREASE FOR THE NON-LABOR.
[00:45:01]
TO THE PROJECTS, THIS DELTA IS ACTUALLY A 60% INCREASE, SIX 0% INCREASE IN PROJECT EXPENDITURE.AND I'LL TALK MORE ABOUT THAT TOO.
SO I'LL FIRST GO OVER THE HEADCOUNT INCREASE AND THEN GO OVER OVER THE EXPENDITURE, OKAY? AND WE WILL TALK ABOUT ALL OF THESE, UM, IN RELATIONS WITH THE STRATEGIC OBJECTIVES THAT WERE LAID OUT.
SO THE MAIN DRIVER FOR HEADCOUNT, AND YOU'LL SEE THAT UNDER EACH OF THE CATEGORIES, OKAY, IS THE INCREASED NUMBER OF PROJECTS THAT WE ARE DOING IN A YEAR, WHICH MEANS THAT WE HAVE MORE PROJECTS RUNNING IN PARALLEL AND WE WANT TO GET MORE THROUGHPUT BECAUSE WE CAN'T WAIT FOR SERIALLY TO COMPLETE THE PROJECTS.
SO UNDER THAT OBJECTIVE, UM, FOR OBJECTIVE ONE, WE HAVE A HEADCOUNT INCREASE OF FIVE AND THREE OF THOSE HEADCOUNT INCREASE ARE TO SUPPORT A NEW SYSTEM CALLED RIO WITH DEALS WITH INTERCONNECTION STUDIES.
AND I THINK WOODY HAS TALKED ABOUT THAT SYSTEM A FEW TIMES IN THIS FORUM.
SO I WOULDN'T GO INTO THE DETAILS OF THAT.
NOW THAT SYSTEM WENT LIVE, UM, LATE LAST YEAR, BUT WE STILL CONTINUE TO HAVE WORK AS WE ADD MORE TECHNOLOGIES FOR INTERCONNECTION, INCLUDING LARGE FLEXIBLE LOADS, WHICH PABLO ALLUDED TO, UM, MODELING STORAGE DEVICE AS A SINGLE MODEL VERSUS A GENERATOR AND LOAD COMBO THAT WE HAVE TODAY.
THE REMAINING TWO POSITIONS HERE ARE TO TAKE ON ADDITIONAL WORK IN THE ENERGY MANAGEMENT SYSTEM OR EMS, AS WE CALL IT, ARE THE OPERATOR TRAINING SIMULATOR.
NOW THIS FIVE INCREASE CONTRIBUTE TO THIS 0.4 MILLION.
IN TERMS OF DOLLARS, RIGHT? THAT'S WHAT THOSE FIVE HEADCOUNT IS TRANSLATING TO.
SO SIMILARLY, WHEN I GO TO OBJECTIVE TWO, I HAVE A HEADCOUNT INCREASE OF EIGHT THAT CONTRIBUTES TO 1.8 MILLION.
NOW SIX OF THIS EIGHT HEADCOUNT INCREASE ARE IN THE AREA OF SETTLEMENTS AND CREDIT, AND THEY'RE DISTRIBUTED BETWEEN DEVELOPMENT AND QA.
NOW, THIS IS THE AREA WHERE WE FEEL WE HAVE THE MOST NEED FOR HEADCOUNT AS WE TAKE ON WORK IN RTC WITH PCM AS WELL AS MAINTENANCE WORK IN THIS AREA.
AND THE REMAINING TWO OUT OF THIS EIGHT ARE IN THE AREA OF OUR MARKET MANAGEMENT SYSTEMS. NOW IF YOU NOTICE, UM, I SAID WE ARE ADDING FIVE HEADCOUNT AT 0.4 MILLION AND EIGHT HEADCOUNT AT 1.8 MILLION.
AND YOU MAY ASK, WHAT KIND OF MATH IS THAT? SO TO EXPLAIN THIS MATH, I WANT TO ADD THAT WHEN WE HAVE A RESOURCE AND THEY WORK ON A PROJECT, THE DEPARTMENT GETS CREDIT FOR THAT PROJECT WORK FOR THE WORK THAT WAS ACCOMPLISHED ON THE PROJECT.
UH, IN THE CASE OF OBJECTIVE ONE, WE PLAN THOSE RESOURCES TO WORK MORE ON THE PROJECT MORE SOONER, AND THEREFORE THERE IS MORE CREDIT.
AND THE NET IS THIS 0.4, OKAY? WHEREAS IN OBJECTIVE FOUR, OBJECTIVE TWO, WE HAVE, UM, MORE TRAINING, MORE COMING UP TO SPEED AND UM, WE'LL PROBABLY WORK ON MORE Y AND M WORK AND I GET LESS CREDIT IMMEDIATELY, SO, SO I HAVE A HIGHER COST.
UM, BUT BY CREDIT DO YOU MEAN IT'S BOOKED BACK TO OTHER DEPARTMENTS? IS THAT WHAT YOU'RE SAYING? UH, CREDIT FROM THE PROJECT, THERE'LL BE A PROJECT EXPENDITURE THAT YOU SHOW, AND WHEN WE CHARGE TO THE PROJECT, THE MONEY GETS FUNDED TO MY DEPARTMENT.
OKAY? SO UNDER OBJECTIVE THREE, WE ADDED 11 POSITIONS AT A COST OF 2 MILLION.
AND I'LL COME TO WHAT THIS 9.1 IS, OKAY? ALRIGHT, I'LL COME TO TAR A MINUTE.
SIX OF THIS 11 RELATE TO A NEW DEVELOPMENT PROGRAM THAT WE CREATED, UH, CALLED GDP.
UM, AND WHAT WE ARE TRYING TO DO HERE IS TO HIRE GOOD TALENT STRAIGHT OUT OF COLLEGE.
AND THIS IS TO ADDRESS THE DIFFICULTY THAT WE ARE HAVING TO HIRE AND FIND QUALIFIED AND EXPERIENCED PEOPLE, ESPECIALLY IN THE POWER SYSTEM SPACE.
SO THE IDEA HERE IS TO, YOU KNOW, INSTEAD OF TRYING TO FIND THEM, WE HIRE GOOD CANDIDATES OUT OF COLLEGE AND WE TEACH THEM WHAT THEY NEED TO DO SO THAT THEY'RE PRODUCTIVE IN THE, IN THE COUPLE OF YEARS.
AND THIS IS, UH, WE HAVE A GOOD MODEL UNDER WOODY'S TEAM WHERE WE HAVE A PROGRAM LIKE THIS.
SO IT'S MODELED RIGHT AFTER THAT.
SO WE ARE LOOKING TO REPLICATE THE SUCCESS THAT HE'S HAD IN HIS GROUP.
NOW, THE FIVE REMAINING POSITIONS, WE HAVE THREE THAT ARE MORE IT CENTRIC, DRIVEN BY THE INCREASE IN THE IT FOOTPRINT AS WELL AS THE INCREASE IN THE ORGANIZATION
[00:50:01]
SIZE.UM, SO, SO I WANT TO COME BACK TO THIS 9.1.
SO LIKE I SAID, WE HAD 0.4 MILLION FOR OBJECTIVE ONE, 1.8 MILLION FOR OBJECTIVE TWO, AND ABOUT 2 MILLION FOR OBJECTIVE THREE.
THE BALANCE, THE 7.1 MILLION HERE REFLECTS THE COMPENSATION INCREASE SINCE THE LAST BUDGET, AND THAT'S DRIVEN BY RETENTION AS WELL AS INFLATIONARY PR PRESSURES.
OKAY? AND THIS 7.1 IS THE SECOND LARGEST INCREASE IN EXPENDITURE THAT I HAVE.
NOW I WANT TO TALK A BIT ABOUT THE NON-LABOR INCREASE ON THIS LINE.
CAN I, CAN I ASK YOU A QUESTION ON THAT JIMMY? YES, PLEASE.
OH, UH, SO ARE, ARE YOU SAYING THAT THAT 7.1 IS EFFECTIVELY RAISES FOR ALL OF THE EXISTING EMPLOYEES THAT ARE HERE? CORRECT.
AND YOU SHOULD SEE THAT'S SIMILAR IN EVERYBODY'S SLIDE, AND THAT'S WHAT I THINK SEAN WAS ALSO TALKING ABOUT.
UM, SO UNDER THE NON-LABOR, UH, SO FOR OBJECTIVE ONE, THE INCREASE IN VMS THAT WE HAVE, OKAY, YOU CAN, YOU CAN SEE THE INCREASE SINCE 21 UNDER EACH OF THE OBJECTIVES, OKAY? AND TH THIS INCREASE REFLECTS PARALLEL ENVIRONMENTS THAT WE HAVE SO THAT WE CAN EXECUTE PROJECTS IN PARALLEL, RIGHT? AND SO THAT WE DON'T HAVE DEPENDENCIES.
UM, AND ALSO SOMETIMES BUSINESS UNITS WANT ENVIRONMENT SO THAT THEY CAN DO THEIR OWN ANALYSIS OR STUDIES.
SO AND SO WE HAVE A LOT OF THESE ENVIRONMENTS AND THAT'S ONE DRIVER THAT'S THAT WE ARE SHOWING HERE.
THE THROUGHPUT INCREASE FOR PROJECTS IS FINANCED BY 1.1 MILLION IN SOFTWARE INCREASE AND 0.7 MILLION IN CONTINGENT LABOR.
0.9 MILLION OF OUR HARDWARE AND SOFTWARE LICENSES ARE COMING SIMPLY OUT OF THIS INFLATION ASSUMPTION.
EARLIER IN, IN YOUR LAST BUDGET CYCLE, WE WERE ASSUMING AN INFLATION PERCENTAGE OF 3%.
UNFORTUNATELY, WHAT WE ARE SEEING NOW FROM OUR VENDORS, AND WE SEE THIS WHEN YOU GO BUY MILK, RIGHT, THAT OUR INFLATION ASSUMPTIONS NEED TO BE ADJUSTED TO 10% AND THERE IS A COST COMING STRAIGHT OUT OF THAT, OKAY? UM, THE INCREASE IN, UM, MARKET PARTICIPANTS ASSOCIATES THAT WE NEED TO INVEST IN A NEW TRADE OF PHONES FOR OUR HOTLINES FOR OUR CONTROLLED ROOM OPERATORS.
AND THAT HAS A 0.5 MILLION INCREASE IN PATRICK.
SO ALONG THE SAME LINES, IF I GO LOOK AT OBJECTIVE TWO, UM, I HAVE, YOU KNOW, THE INCREASE OF VMS THAT COSTS A SIMILAR INCREASE HAVE 1.1 MILLION INCREASE HERE.
AND SAME THING WITH THE THROUGHPUT AND PROJECTS WHERE I HAVE ABOUT A 900 K INCREASE JUST IN THE MARKET SYSTEMS. AND SIMILARLY 0.7 MILLION INCREASE FOR CONTINGENT LABOR.
UM, SIMILARLY BREAKING THAT OBJECTIVE, UH, BREAKING THAT INCREASE UNDER OBJECTIVE THREE.
I ALSO HAVE A SIMILAR INCREASE IN VMS WHERE I HAVE COSTS ASSOCIATED WITH THAT.
UM, ALSO WITH THE INCREASE OF EMPLOYEES I HAVE, I HAVE AN ADDITIONAL IT HARDWARE AND IT PERIPHERAL INCREASE OF ABOUT 300 K.
LASTLY, ON THIS PAGE I WANNA TALK ABOUT THE PROJECT EXPENDITURE.
NOW THIS IS WHERE I MENTIONED WE HAVE A 60% INCREASE SINCE THE LAST BUDGET.
NOW IF I GO BY OBJECTIVE, UNDER OBJECTIVE ONE, I ACTUALLY HAVE A REDUCTION BY 5.4 MILLION.
AND THIS IS PRIMARILY DUE TO THE DECREASE IN THE DATA CENTER UPGRADE COST AS THE PROJECT REACHES ITS CONCLUSION.
SO THAT'S WHERE THAT DECREASE IS.
NOW UNDER OBJECTIVE TWO, I HAVE 13.6 MILLION AND MOST OF THIS IS COMING FROM THE SINGLE LARGER DRIVER, LARGEST DRIVER IN IT, WHICH IS THE PROJECT FOR A SECOND, UH, TEST ENVIRONMENT.
UH, AND THAT'S FEELS APPROXIMATELY COST ABOUT $12 MILLION.
AND NOW THIS ALSO ALLOWS FOR AN EXPANSION OF THE NUMBER OF PROJECTS.
SO RIGHT NOW WHEN I'VE SAID I HAVE ALL THIS ENVIRONMENTS THAT I DO MULTIPLE PROJECTS, THEY STILL CONVERGE
[00:55:01]
INTO ONE PRODUCTION SYSTEM.I HAVE ONE PRODUCTION SYSTEM IN THE END, RIGHT? AND SIMILARLY, I ONLY HAVE ONE TEST SYSTEM.
SO WHICH MEANS THAT WHEN SOMETHING IS UNDER TEST, I HAVE TO WAIT TILL THAT'S DONE BEFORE I START THE NEXT ONE.
SO HAVING ANOTHER EYE TEST GIVES ME MORE THROUGHPUT, RIGHT? WHILE I CAN'T HAVE MULTIPLE PRODUCTION, BUT I CAN STILL HAVE A PLACE WHERE SOMETHING CAN BAKE MORE IN TESTING WITHOUT WORRYING ABOUT ROLLING THINGS BACK AND THINGS LIKE THAT.
OR ALSO OUR PRODUCTION SYSTEM SPANS, OR TWO SITES, TWO GEOGRAPHICALLY SEPARATED SITES, WHEREAS OUR CURRENT EYE TEST ONLY REPLICATES THE PRODUCTION SYSTEM ON THAT SITE.
WHICH MEANS THAT IF FOR WHATEVER REASON I LOSE THAT SITE, YES I CAN HAVE A PRODUCTION SYSTEM FAIL OVER TO A NEW SITE, BUT I WON'T HAVE A TEST SYSTEM.
AND I FEEL HAVING THAT SECOND SYSTEM, UM, HELPS US GET OVER THAT RISK AS WELL AS PROVIDE PROJECT THROUGHPUT.
NOW, IN ADDITION, BECAUSE I DON'T HAVE A GEOGRAPH GEOGRAPHICALLY DISPERSED, I TEST, I CAN'T DO TESTING ABOUT IMPROVEMENT OF SITE FAILOVERS, FOR EXAMPLE.
THERE'S NO PLACE TO TEST THAT EXCEPT IN PRODUCTION.
SO WE ARE VERY CONSERVATIVE ON TAKING CHANGES IN THAT AREA.
SO THAT'S ANOTHER REASON WHY WE FEEL THIS IS, UH, IMPORTANT.
UNDER OBJECTIVE THREE, I HAVE UH, A SMALL INCREASE 0.1 MILLION UNDER THIS CATEGORY.
SO AS YOU CAN SEE, THE BULK OF THIS 60% INCREASE COMES FROM THE SINGLE PROJECT FOR THE SECOND EYE TEST.
NOW IF I ACTUALLY TAKE IT OUT, I CAN SUBTRACT THIS 12 MILLION FROM THIS 8.3 AND I'LL ACTUALLY HAVE A REDUCTION OF 26%, BUT THEN WE WOULD'VE KICKED THIS I THINK, IMPORTANT PROJECT DOWN THE ROAD YET AGAIN.
JP, BEFORE WE MOVE ON, UM, JUST FOR THE PURPOSES OF CONTINGENCY PLANNING, IF A D R PILOT SCALES UP ITERATIVELY OVER THE NEXT THREE YEARS IN, IN THIS BUDGET CYCLE, DO YOU FEEL CONFIDENT IN TERMS OF YOUR DIVISION THAT WHAT DOES THE COMMISSION NEED TO WATCH OUT FOR IN TERMS OF WHAT WE MAKE YOU DO THAT MAY NECESSITATE A CHANGE TO, TO YOUR STAFFING LEVELS FOR THE PURPOSES OF ADR MANAGEMENT AND THE DATA MANAGEMENT? YEAH, JIVA.
SO, YOU KNOW, WE ARE WATCHING THAT PILOT VERY CAREFULLY.
NOW FOR THE PURPOSE OF THE PILOT, WE ARE OKAY, RIGHT? BUT THE QUESTION IS WHAT HAPPENS WHEN THE PILOT IS SUCCESSFUL, RIGHT? AND WE WANT THE PILOT TO BE SUCCESSFUL.
AND THEN THE QUESTION IS CAN WE SCALE UP, RIGHT? WHAT THE NUMBERS FOR THE PILOT IS GOING TO BE VERY DRAMATIC.
THEN WHAT WOULD ACTUALLY HAPPEN WHEN WE SCALE UP? AND, AND, AND ONE CHALLENGE HERE IS WE ARE TALKING DISTRIBUTION WHERE THEY MAY BE SMALL, BUT THEY'RE LARGE IN TERMS OF NUMBERS, RIGHT? SO I'M GOING TO TAKE SOME MORE TIME TO LOOK AT HOW THIS PILOT IS PROGRESSING, BUT IF I SAY, UM, FOR EXAMPLE, I THINK WE ARE USING AN EXCEL SHEET, I THINK WITH THE PARTICIPANTS TO FILL OUT SOME OF THE DETAILS TO GET BACK IN.
RIGHT NOW, THE CLOSEST TO THAT IS RIO, THE SYSTEM I JUST TALKED ABOUT, RIGHT? BUT NOWHERE IN RIO DID WE ANTICIPATE THAT WE'LL SCALE UP FROM HUNDREDS OF MARKET PARTICIPANTS TO PROBABLY, YOU KNOW, HUNDRED THOUSAND PEOPLE ENTERING DATA, RIGHT? OR IF THEY'RE DIRECTLY ENTERING DATA OR I DON'T KNOW HOW MANY UMPS WILL BE THERE.
SO WHAT'S YOUR POWER PLAN FOR THE LARGER AUDIENCE? UM, SO, SO I THINK I'LL HAVE TO LOOK AT THAT, BUT THAT IS AN INVESTMENT LIKELY THAT YOU'LL HAVE TO MAKE WHEN THE PILOT CONCLUDES.
I DON'T KNOW IF THAT ANSWERED YOUR QUESTION, COMMISSIONER.
BUT ISN'T THE ANSWER TO WILL'S QUESTION DEPENDS ON THE LEVEL OF AGGREGATION THAT HAPPENS.
I MEAN, I MEAN IF, IF HE HAS TO DEAL WITH HUNDREDS OF THOUSANDS, THAT'S, THAT'S SORT OF A MIND BOGGLING BIG NUMBER.
IF HE HAS TO DEAL WITH A HUNDRED AGGREGATORS, YEAH, MAYBE IT'S MORE IN THE LINE OF WHAT HE'S, IT'LL DEPEND ON HOW SUCCESSFUL WE ARE, BUT IT, IT'S AN IMPORTANT FACTOR FOR THE COMMISSION TO, TO KEEP IN MIND WHEN WE ORDER YOU TO EXPAND OR WHATEVER WE NEED TO YES.
JP? YES, AT THE TOP, I THINK HOW MANY PEOPLE IN, UH, THE FIRST STRATEGIC OBJECTIVE DID YOU SAY WERE FOR RIO? OF THE FIVE, HOW MANY PEOPLE WORK ON RIO? NO, OF THE FIVE INCREASED, DIDN'T YOU SAY THERE WAS AN INCREASE FOR RIO? OH, UM, I THINK THERE ARE THREE INCREASE THREE PEOPLE IN RIO, I THINK TWO IN THE DEPARTMENT AND ONE FOR QA OKAY.
PUTTING ASIDE THE AGGREGATION ISSUE, WHICH IS SOMETHING THAT'S REAL THAT WE NEED TO
[01:00:01]
KEEP A EYE EYE ON, ONE OF THE THINGS WE'VE BEEN TOLD EVERY TIME RIO'S COME UP IS IT'S GONNA RESULT IN A REDUCTION IN HEADCOUNT.SO IF YOU LOOK ACROSS HER COURT, RIGHT, THERE'S A REDUCTION AND I'M GOING TO PASS THAT TO WOODY TO ANSWER THAT BECAUSE ALL THE REDUCTIONS ARE COMING IN HIS DEPARTMENT.
YEAH, THAT'S WHAT I, SO WOODY, DO YOU WANNA TAKE THAT QUESTION? SHE'S ASKING, SHE'S HEARD THAT THERE'S A REDUCTION EFFICIENCY BECAUSE OF RIO AND THERE'S A HEADCOUNT REDUCTION? YEAH, WE THINK WE HAVE ABOUT A FIVE PERSON REDUCTION.
YEAH, IF THERE ARE NO MORE QUESTIONS, I'LL GO TO THE NEXT SLIDE.
SO ON THIS SLIDE, AS UH, SEAN MENTIONED, YOU KNOW, WE HAVE THIS, UH, FOUR CATEGORIES WE GO OVER EACH OF THESE.
UM, THE FIRST IS WHAT ARE THE EFFICIENCIES AND SAVINGS SINCE THIS LAST BUDGET CYCLE? OKAY.
AND ONE THING THAT WE HAVE DONE IN IT IS CONSOLIDATING OUR HARDWARE AND SOFTWARE PLATFORM.
AND YOU CAN SEE SOME OF THE BENEFIT SHOW UP IN RTC FOR EXAMPLE, RIGHT? THE MAJOR REASON FOR SOME OF THE SAVINGS IS OUR SHIFT IN THE HARDWARE PLATFORM AS WELL AS OUR LICENSING MODEL THAT WE ARE DOING.
SO I THINK THAT'S A THING, A CLEAR TANGIBLE BENEFIT THAT WE CAN SEE, UM, TO TACKLE SOME OF THESE THINGS WITH INFLATION COSTS.
WE ARE TRYING TO LOCK IN, UH, LICENSES FOR A LONGER PERIOD.
SO THAT'S ONE WAY WE ARE TRYING TO ALLEVIATE THAT.
UM, AND WE ARE ALSO IMPROVING OUR DEVELOPMENT TESTING PROCESSES.
SO THAT'S, THOSE ARE EFFICIENCY SAVINGS THAT WE ARE SEEING NOW.
WHAT HAVE WE DEFERRED FROM THE PREVIOUS BUDGET CYCLE? UM, THE SECOND I TEST ENVIRONMENT THAT WE TALKED ABOUT THAT I JUST TALKED ABOUT IS SOMETHING THAT WAS DEFERRED AND IT'S ALWAYS SEEMS LIKE AN EASY THING, A BIG CHUNK TO DIFFER RIGHT AWAY.
IT'S CONVENIENT BUT WE KEEP DEFERRING IT AS OUR POINT, RIGHT? UM, WE ALSO DEFERRED TO EMPLOYEE POSITIONS FROM THAT CYCLE.
UM, IN THIS BUDGET CYCLE REVIEW, UM, WE CUT 22 POSITIONS AND I'M NOT GOING TO READ THROUGH WHAT THOSE ARE, BUT, BUT WE DID CUT THEM.
UM, ONE OTHER THING THAT WE DID CUT IS INVESTMENTS IN AI, WHICH SEEMS ODD GIVEN THAT THE WORLD IS GOING THERE, BUT WE THINK WE CAN DO THINGS WITHIN OUR BUDGET, BUT AT THE SAME TIME DO INVESTMENT IN THINGS LIKE OUR APIS AND OTHER THINGS THAT FACILITATE THE AI DEVELOPMENT.
SO WE'LL FOCUS ON THAT THIS TIME AND WE'LL TALK ABOUT MORE OF THOSE KIND OF THINGS IN OUR STRATEGY SESSIONS.
AND UH, JP CAN YOU EXPLAIN THAT THE 22 AGAIN.
SO WERE THESE PEOPLE REDEPLOYED TO NEW POSITIONS OR WERE THESE VACANT POSITIONS OR WERE THESE PREVIOUSLY BUDGET POSITIONS? NO, THESE WERE REQUESTS THAT CAME TO ME, RIGHT.
AND WE SAID THIS WAS OKAY, THAT'S TOO MUCH TO ASK FOR AND LET'S TRY TO MANAGE WITHIN OUR BUDGET.
MAYBE IT MEANS THAT SOME EMPLOYEES WILL HAVE SOME MORE LOAD, BUT IT'S PROBABLY EASIER TO MANAGE THAT, MANAGE IT THAT WAY THAN TO ASK FOR THESE HEADCOUNT.
AND IF NECESSARY, MAYBE SOME OF THIS WILL COME UP IN THE NEXT BUDGET CYCLE, BUT IN THIS BUDGET CYCLE, UM, WE CUT DOWN.
SO IF I HAD NOT, MY REQUEST WOULD'VE BEEN 24 PLUS 22.
AND LASTLY, YOU KNOW, IF YOU HAD TO SAY WHAT CAN YOU CUT FROM OUR BUDGET? I'M, I'M GONNA OFFER BACK THE SECOND EYE TEST CUZ THAT'S PROBABLY THE EASIER CAUSE WE ARE MANAGING WITHOUT THAT.
BUT LIKE I SAID, THERE'S ONLY SO MANY TIMES YOU SHOULD KICK SOMETHING DOWN THE ROAD.
UM, I'LL HAND OUT TO THE NEXT SPEAKER.
IF YOU HAVE ANY QUESTIONS, LET ME KNOW.
ANY OTHER QUESTIONS OR COMMENTS FOR JP? WELL, I, I'D LIKE TO ASK ABOUT SOFTWARE QUALITY.
UM, I, IN THE 22 THAT WERE CUT, I SEE TWO QUALITY ASSURANCE ANALYST.
BUT IN THE PRIOR SLIDE, IN, IN THE PLAN THAT IS PROPOSED, COULD YOU, IS THERE AN INVESTMENT TO FURTHER IMPROVE SOFTWARE QUALITY? YES.
SO WE EXPLICITLY ARE INVESTING IN SOFTWARE AUTOMATION.
SO THAT IS A CLEAR SHIFT, RIGHT? WE ARE, INSTEAD OF HIRING JUST, UH, QA PEOPLE WHO ARE DOING, UM, JUST MANUAL TESTING, WE HAVE SHIFTED OUR INVESTMENT TO HIRING PEOPLE WHO CAN HELP WITH TEST AUTOMATION.
BECAUSE THOSE TESTS, ONCE IT'S WRITTEN, YOU CAN KEEP RUNNING AS MANY TIMES AS WE CAN.
AND IT'S NOT JUST THE QA PEOPLE WHO CAN RUN IT, BUT ALSO OTHER DEVELOPERS CAN RUN IT.
SO THERE'S A LOT MORE VALUE IN THAT.
SO THAT'S DEFINITELY A SHIFT IN HOW WE ARE INVESTING IN THE
[01:05:01]
QA PEOPLE.SO, SO, YOU KNOW, IN THIS SLIDE YOU SEE THERE'S TWO QA CUT, BUT IT ALSO MEANS THAT AT SOME PLACE WE HAVE CHANGED OUR STRATEGY TO SAY, NO, WE WILL HIRE MORE AUTOMATION DEVELOPERS.
CAUSE THERE'S MORE VALUE WE HIRED TO PICK.
I HOPE THAT ANSWERS YOUR QUESTION.
I'M GOING TO HAND OFF TO JAN, BUT BEFORE THAT I'M GOING TO PUT THE SLIDES BACK TO HOWEVER YOU LIKE.
UM, I AM THE CHIEF ADMINISTRATIVE OFFICER.
UM, MY ROLE IS KIND OF TO ENSURE OVERALL SUCCESS AT ERCOT, BUT THERE ARE THREE SPECIFIC TEAMS THAT, UH, THAT ARE PART OF, UH, LET'S SAY THEY ARE DIRECTLY THE ONES THAT I MANAGE AND I WANT TO MAKE SURE THAT THEY ARE SUCCESSFUL.
UM, I'M NOT GOING TO TALK TO THE SLIDES, BUT I KINDA MADE A STORY UP SO THAT I'M ABLE TO DEFEND, UH, MY REQUEST.
UH, SO THE THREE TEAMS THAT I MANAGE ARE THE FIRST ONE IS LED BY SEAN TAYLOR, THE FINANCE TEAM.
HE COVERS, UH, TREASURY, FINANCIAL PLANNING, ACCOUNTING, AND SUPPLY CHAIN.
MARA P MANAGES, UH, THE HR TEAM.
UH, CHRISTIE MANAGES, UH, THE STRATEGY TEAM AND IT COVERS, UH, STRATEGIC PLANNING PORTFOLIO AND PROJECT MANAGEMENT, ENTERPRISE ARCHITECTURE, ENTERPRISE RISK MANAGEMENT, AND BUSINESS CONTINUITY.
UM, RELATIVE TO THE 2023 BUDGET, MY REQUEST FOR 24 25 CALLS FOR AN INCREASE IN 7 MILLION IN DEPARTMENT LABOR, 4.8 MILLION IN DEPARTMENT NON-LABOR, AND 18 ADDITIONAL, UH, EMPLOYEE POSITIONS.
SO IF YOU ASK ME AGAIN, WHAT IS IT THAT WE HAVE MANAGED IN THE PAST COUPLE OF YEARS, AND WHAT IS IT THAT WE NEED TO MANAGE IN THE NEXT COUPLE OF YEARS, UM, IN ORDER TO MEET OUR STRATEGIC OBJECTIVES, UH, THE, THE MAIN CHANGES, I THINK THAT WE HAVE TO, WE HAVE EITHER MANAGED OR WE HAVE TO CONTINUE TO MANAGE AS SECURITIZATION.
UH, THE SPECIAL PURPOSE ENTITIES FOR M AND N INCREASE IN TREASURY ACTIVITIES, TRANSACTIONS, AS WELL AS, UH, VOLUMES INCREASE IN PROCUREMENT ACTIVITIES FOR VOLUME COMPLEXITY.
THERE HAVE BEEN SEVERAL CHANGES IN NERC ZIP REQUIREMENTS AND TRADE LAWS.
UH, THE HIGH VOLUNTARY ATTRITION THAT WE HAVE, UH, EXPERIENCED IN THE PAST COUPLE OF YEARS, INCREASE IN HEADCOUNT.
AS YOU SAW, WE ARE GOING UP FROM 8 43 TO 1014, UH, AS A RESULT OF ADDITIONAL AND MORE COMPLEX RESPONSIBILITIES THAT WE HAVE BEEN ASSIGNED, UM, COMPETITIVE COMP COMPENSATION, UH, WE HAVE INCREASED OUR, UM, THE LEVEL OF COMPETITIVENESS IN OUR COMPENSATION.
UM, SEVERAL, SEVERAL CHANGES WERE MADE LAST YEAR, INCREASE IN THE NUMBER OF ACTIVE PROJECTS BEING MANAGED.
UH, THERE'S AN INCREASE OF ABOUT 20%.
AND, UH, ADDITIONAL EFFORTS IN MANAGING STAKEHOLDER MEETINGS.
UM, YOU KNOW, WE ARE MANAGING MEETINGS MORE COMMONS AS WELL AS, UH, WE HAVE TO MANAGE IN-PERSON AND VIRTUAL MEETINGS AS WELL.
SO IF I NOW FOCUS ON WHAT CHANGES, UH, WE HAVE ASKED, UH, IN SEAN'S AREA, UM, THE ADDITIONAL RESOURCES FOR SECURITIZATION.
WE HAVE ASKED FOR TWO TREASURY ANALYSTS AND ONE ACCOUNTANT.
UM, AND THESE COSTS ARE OFFSET BY, UM, SECURITIZATION REVENUES, UH, TO MANAGE THE HIGH GROWTH IN TREASURY TRANSACTIONS AND WIRES, UH, PROCUREMENT COMPLEXITIES DUE TO REGULATORY CHANGES.
AND TO SUPPORT OUR GROWING ASSET BASE, WE HAVE HIRED, OR WE NEED TO HIRE A, UH, FINANCIAL SYSTEM ANALYST, A TREASURY ANALYST, AND A PROCUREMENT SPECIALIST.
SO THAT'S THREE ADDITIONAL POSITIONS IN SEAN'S AREA, THE 700 K INCREASE IN PROPERTY TAXES, AND WE HAVE ALLOCATED ABOUT 600 K FOR, UM, A PROJECT IN THE TREASURY RISK MANAGEMENT AREA.
UM, AS YOU KNOW, THE RELIABILITY MONITOR FUNCTION, WHICH WE USED TO OUTSOURCE, IS NOW BEING HANDLED BY THE GENERAL COUNCIL.
AND THIS BUDGET WAS IN FI IN THE FINANCE AREA, AND WE HAVE MOVED PART OF THAT BUDGET TO, TO THE GENERAL COUNCIL FOR MANAGING THE EXPENSES.
[01:10:01]
THERE'S A 700 K SAVINGS IN THE FINANCE AREA.UM, MOVING ON TO HR, UM, AS YOU KNOW, WE HAVE SIGNIFICANT, UH, CHANGES IN TERMS OF THE NUMBER OF PEOPLE THAT WE NEED TO HIRE.
YOU KNOW, THERE'S 171 INCREASE THAT WE ARE LOOKING TO THE FUTURE IN HEADCOUNT, BUT, BUT ALSO THAT ATTRITION MAKES US REQUIRE THAT WE REFILL THOSE POSITIONS.
SO THAT'S, UH, IN THE PAST, IT'S BEEN, LAST YEAR, I THINK IT WAS AROUND 13%, IT'S ABOUT A HUNDRED PEOPLE.
UM, SO WE HAVE A RECRUITING MANAGER.
WE HAVE ONBOARDED AND A HR RECRUITER IN ADDITION TO WHAT WE USED TO HAVE.
AND WE ARE LOOKING AT, I THINK WE HAVE THREE CONTINGENT WORKER RECRUITERS RIGHT NOW, BUT WE ARE GOING TO GO TO FIVE.
UM, BECAUSE REALLY TO FILL UP ALL THESE POSITIONS, IT TAKES A SIGNIFICANT EFFORT.
UH, JUST THIS YEAR, I THINK WE HAVE ONBOARDED ABOUT 77 FTES, UH, AS OF A FEW, UH, AS OF A FEW DAYS AGO.
UM, BUT UNFORTUNATELY APPROXIMATELY 27 HAVE LEFT US AS WELL.
SO THE NET CHANGES MORE IN THE 50 RANGE.
UM, BECAUSE WE HAVE SUCH AN INCREASED HEADCOUNT.
UH, WE ARE REQUESTING FOR FOUR HR, UH, SPECIALISTS, ONE IN THE COMPLIANCE AREA, ONE IN THE HR, UH, UM, SUPPORT AREA FOR, FOR THE STAFF, A CULTURE SPECIALIST AND A TRAINER.
UM, THE COMPETITIVE COMPENSATION CHANGES THAT WE MADE LAST YEAR COST ABOUT 2.8 MILLION, UH, FOR THE 2023 BUDGETED POSITIONS.
THE INCREASED COST OF HR PROGRAMS, UH, FOR THE TO MANAGE THE HIGHER HEADCOUNT IS ABOUT 1.8 MILLION.
AND THIS COVERS RELOCATION, LABOR ADJUSTMENTS, PRE-EMPLOYMENT COSTS, DATA SUBSCRIPTIONS, AND IMMIGRATION SUPPORT.
UM, THE HR PROGRAMS, UH, THAT, THAT HELP US WITH HIGHER ATTRITION OR RATHER, YOU KNOW, TO COUNTER HIGHER ATTRITION, IS ABOUT 2.2 MILLION.
AND THAT'S DUE TO HIGH POTENTIAL PROGRAMS. UH, EMPLOYEE ENGAGEMENT SURVEYS, EXECUTIVE COACHING, PROFESSIONAL TRAINING, AND CORPORATE EVENTS.
IN, UH, CHRISTIE'S AREA, WE ARE ADDING FIVE PROJECT MANAGERS AND ONE BUSINESS ANALYST.
THAT'S TO HANDLE THE 20% INCREASE IN ACTIVE PROJECTS.
THESE COSTS ARE OFFSET BY, UM, BY PROJECT FUNDED LABOR, THE SAME AS WHAT JP EXPLAINED.
AND TO HANDLE THE ADDITIONAL SUPPORT THAT WE NEED FOR STAKEHOLDER MEETINGS, WE ARE ADDING A, UM, MARKET RULES ANALYST.
SO THAT KIND OF SUMMARIZES WHAT WE HAVE ON THIS SLIDE.
MOVING TO THE NEXT ONE, HOW DO I GO TO THE NEXT SLIDE HERE?
SO IN TERMS OF, UM, EFFICIENCY AND SAVINGS, SINCE THE LAST BUDGET, WE PUR REPURPOSED FOUR POSITIONS.
WE, WE EXPANDED THE ENGINEER DEVELOPMENT PROGRAM UNDER, UH, WOODY, AND WE HAVE RECENTLY STARTED A OPERATOR DEVELOPMENT PROGRAM AND A GRID AND MARKET SOLUTIONS DEVELOPMENT PROGRAM.
SEE, THESE, THESE PROGRAMS ACTUALLY HELP US TO ONBOARD PEOPLE WITH LESS EXPERIENCE AND DEVELOP THEM INTO, UH, FUTURE HIRES FOR US.
AND WE HAVE HAD SIGNIFICANT SUCCESS WITH, UH, WITH THE E DP PROGRAM, AND THAT'S WHY WE ARE EXPANDING INTO OTHER AREAS.
UH, WE DEPLOYED A PROJECT AND PORTFOLIO MANAGEMENT TOOL THAT HELPED US TO REDUCE MANUAL PROCESSES, HAVE BETTER BUSINESS CONTINUITY AND MORE DATA DRIVEN, UM, PLANNING.
UH, THERE WERE, THERE WERE SOME REQUESTS IN THE 2023 BUDGET, 22, 23 BUDGET, UM, THAT WE DID NOT ACTUALLY MAKE IT PART OF THE PREVIOUS BUDGET AND HAVE ADDED THOSE REQUESTS TO THE CURRENT BUDGET.
[01:15:01]
EMPLOYEE POSITIONS, UM, AND SOME OF THE, UH, EMPLOYEE DEVELOPMENT AND EXPERIENCE PROGRAMS THAT WE TURNED DOWN LAST TIME.AND WE HAVE ADDED IN THIS TIME TO BE ABLE TO MANAGE ATTRITION AND, AND RECRUITMENT BETTER.
UH, SOME ITEMS THAT WE CUT IN THE CURRENT CYCLE, THIS IS, YOU KNOW, THE UNCONSTRAINED REQUEST THAT COME IN, AND THEN WE CAN, UH, DO A TOP DOWN, UH, CHANGE.
THE, THE PRIMARY ONE THERE IS WE, WE WERE THINKING IN 2023 AND WE ACTUALLY HAD IT IN THE BUDGET, UH, 840 K FOR A VOLUNTARY KNOWLEDGE TRANSFER PROGRAM.
AND WE REMOVED THAT, UH, THAT ONE, AND IT'S NOT THERE IN THE CURRENT BUDGET.
UM, IN TERMS OF THE CURRENT BUDGET ITSELF, WHAT WE ARE PROPOSING FOR 24 25, UH, IF YOU ASK ME WHAT IS IT THAT WE CAN POTENTIALLY REDUCE, UH, I WOULD FIRST WANT TO POINT OUT THAT IF YOU REDUCE SOMETHING, THEN THERE WILL BE AN IMPACT BECAUSE THERE ISN'T MUCH IN THE BUDGET THAT IS JUST KINDA, YOU KNOW, THIS IS GONNA COST ME, UM, A HUNDRED DOLLARS, SO LET'S JUST ADD, UH, 10% MORE.
THERE'S NO SUCH THING IN THE BUDGET.
UH, IF IT IS THERE, IT IS BECAUSE THERE IS A REASON AND THERE IS A NEED AND WE HAVE PLANNED, UH, THAT THIS IS THE WAY THAT WE SHOULD HANDLE IT.
SO WE COULD REDUCE BY TWO PROJECT MANAGERS, UH, AND IF WE DID THAT, THAT COULD RESULT IN POTENTIAL PROJECT DELAYS.
UM, WE COULD GIVE UP ON THE HR CULTURE SPECIALISTS, BUT WE FEEL THAT WE NEED THAT, UH, ESPECIALLY IN AN ENVIRONMENT WHERE, UH, WE HAVE REMOTE WORK.
SO IT'S IMPORTANT FOR US TO, TO DYNAMICALLY MANAGE THE CULTURE.
UH, WE HAVE TRAINING AND ENGAGEMENT, UH, PROGRAMS AND EMPLOYEE EXPENSES, WHICH HELP US TO REDUCE ATTRITION.
AND WE HAVE CURRENTLY PLANNED INTERNAL ENHANCEMENT PROJECTS, AND THESE OF COURSE COULD BE DELAYED, UM, BUT THERE WOULD BE CONSEQUENCES OF THOSE AS WELL.
UM, SO IF YOU HAVE ANY QUESTIONS, I CAN ADDRESS THEM.
JULIE, JP, I GOT A QUESTION, BUT IT'S NOT DIRECTLY RELATED.
UM, IS IN THIS BUDGET, IS THERE A SUMMARY OF HOW THE NUMBER OF ERCOT MEMBERS AND STAKEHOLDERS HAS GROWN DURING THIS TIME PERIOD AND HOW WE'RE HAVING TO INTERACT WITH MORE PEOPLE IN OUR ECOSYSTEM? KRISTY, DO YOU WANT TO TAKE THAT ONE? SURE.
SO WE COULD PULL SOME NUMBERS FOR YOU, BUT, UM, I THINK FROM THE PERSPECTIVE OF WHAT WE WERE LOOKING AT FOR NEEDING THE INCREASE IS REALLY THE AMOUNT OF MEETINGS THAT HAVE INCREASED AND THE COMPLEXITY OF THE ISSUES.
JUST FOR EXAMPLE, JUST SINCE THE LAST BOARD MEETING THERE WAS 24 NEW REVISION REQUESTS FILED INTO THE PROCESS.
AND SO, YOU KNOW, THAT TAKES A LEVEL OF EFFORT TO WORK AND PROCESS THOSE IN THE STAKEHOLDER MEETINGS THAT ARE NEEDED TO SUPPORT THEM.
SO I WOULDN'T SAY IT'S AS MUCH ABOUT THE NUMBER OF PARTICIPANTS FROM THE MARKET RULES PERSPECTIVE, BUT ABOUT THE NUMBER OF MEETINGS AND THE COMPLEXITY OF THE ISSUES WE'RE WORKING THROUGH.
SO MEETINGS AND NPRS ARE DRIVING THE ACTIVITY LEVELS.
ANY OTHER QUESTIONS OR COMMENTS? NO.
ALRIGHT, GOOD MORNING, CHAD SEALY, SENIOR VICE PRESIDENT GENERAL COUNSEL FOR ERCOT.
JUST TO KIND OF LEVEL SET WHAT'S UNDER MY SPAN OF CONTROL, OBVIOUSLY IT'S THE CORE LEGAL FUNCTION, THE INFORMATION GOVERNANCE PROGRAM, THE RELIABILITY MONITOR PROGRAM THAT'S BEEN REFERENCED A COUPLE TIMES.
UH, BETTY DAY ORGANIZATION, WHICH IS COMPLIANCE AND SECURITY AND FACILITIES AND INTERNAL AUDIT.
SO THAT'S WHY YOU SEE 107 EMPLOYEES IN THE 2023 BUDGET INCREASING TO 121 EMPLOYEES IN THE 2024 REQUEST.
SO WHEN WE LOOK AT SLIDE 19 HERE, THE PRINCIPAL BUDGET DRIVERS ARE MANAGED WITH WITHIN STRATEGIC OBJECTIVES ONE AND THREE AND RESULT IN A 6.8 MILLION DEPARTMENT LABOR AND AN 8.8 MILLION DEPARTMENT NON-LABOR SPEND AND AN INCREASE OF 14 EMPLOYEE POSITIONS FOR STREET.
UH, STRATEGIC OBJECTIVE ONE, UH, WE ADDED SIX POSITIONS AT A COST OF 1.1 MILLION.
THAT'S TO REFLECT THAT, UH, INCREASE IN THE RELIABILITY MONITOR RESPONSIBILITIES, AND ALSO AN INCREASE IN CYBER STAFFING DEMANDS.
[01:20:01]
CYBERSECURITY ARE TO ADDRESS THE GROWTH AND TECHNOLOGY SOLUTIONS EMPLOYED BY ERCOT DEALING WITH CYBER THREAT OPERATIONS AND SECURITY ARCHITECTURE.PHENOMENAL LABOR COST FELL INTO TWO BUCKETS, FACILITIES AND CYBER RELATED ASSETS OF 2.3 MILLION.
THAT'S REPLACING THE END OF LIFE CHILLERS, WHICH ARE GREATER THAN 20 YEARS OUT IN THE TAYLOR FACILITY, UH, AT 1.6 MILLION AND REFRESHING OUT OF DATE CYBER ASSETS AT 700,000.
THERE'S ALSO A FACILITY IMPROVEMENT WITH THE SECURITY FENCE HERE AT THIS LOCATION AND SPACE ADJUSTMENTS TO MODIFY AND REPLACE AGING FURNITURE IN TAYLOR, BUT ALSO SPACE ADJUSTMENTS HERE IN AUSTIN AS WELL AT 600,000.
WHEN YOU LOOK AT STRATEGIC OBJECTIVE THREE, YOU'LL SEE AN INCREASE OBVIOUSLY IN LITIGATION, BANKRUPTCIES AND REGULATORY WORK.
UH, SIX EMPLOYEE HEADCOUNTS TO DEAL WITH COMPLEX REGULATORY WORK GOING FORWARD.
OBVIOUSLY WE'RE DEALING A LOT WITH ENVIRONMENTAL REGULATIONS AND JUST GENERAL LITIGATION AND THE CHANGING MARKET DESIGN, AN INCREASE IN COST TO MANAGE ALL THOSE INITIATIVES AS WELL.
AND THAT'S THE 6 MILLION INCREMENTAL DOLLARS INCREASE.
NOW, AS SEAN INDICATED, WE DO ANTICIPATE SOME INSURANCE RECOVERIES OVER THE NEXT COUPLE OF YEARS.
WE'RE ACTIVELY WORKING WITH OUR INSURANCE CARRIERS AND SO WE'VE FORECASTED A CONSERVATIVE OFFSET ABOUT 2.5 MILLION, UH, IN THOSE ANTICIPATED INSURANCE RECOVERIES.
ANOTHER COMPONENT, UH, ITEM 11 THERE I WOULD HIGHLIGHT IS THE, UH, COMPENSATION OF THE ERCOT DIRECTORS, WHICH IS UP FOR CONSIDERATION TOMORROW.
AND, UH, PC APPROVAL AT A FUTURE OPEN MEETING.
THERE'S 600,000 IN BOARD COMPENSATION INCREASE.
UH, THIS IS RELATED OBVIOUSLY TO INCREASING THE BOARD'S COMPENSATION, BUT ALSO BECAUSE WE HAVE THREE ADDITIONAL INDEPENDENT DIRECTORS AS A RESULT OF SENATE BILL TWO.
PRIOR TO SENATE BILL TWO, THERE WAS FIVE UNAFFILIATED DIRECTORS.
NOW WE HAVE EIGHT THAT WERE PROVIDING COMPENSATION FOR.
SO THAT'S BEEN ACCOUNTED FOR IN THIS BUDGET AS WELL.
AND THEN WHEN WE LOOK AT LABOR SPEND, UH, JUST AS EVERYBODY'S INDICATED, UH, WE'VE INCREASED COMPENSATION THAT'S REFLECTED ABOUT 3.7 MILLION IN COSTS, WHICH IS THE SECOND LARGEST DRIVER BY DOLLARS.
AND THOSE ADDED EIGHT POSITIONS THAT REFLECT THE COST OF 2 MILLION, THE SIX LEGAL STAFF, UH, AN ADDITIONAL PERSON IN INFORMATION GOVERNANCE.
WE'VE TALKED TO THIS BOARD ABOUT INFORMATION GOVERNANCE AND EXPANDING HOW WE HANDLE LIFECYCLE MANAGEMENT ACROSS THE COMPANY.
THAT INVOLVES AN ADDITIONAL EMPLOYEE TO WORK ON THOSE INITIATIVES ACROSS THE ENTERPRISE TO MANAGE OUR DATA.
AND THEN ONE ADDITIONAL INTERNAL AUDIT POSITION ADDRESSING THE SIGNIFICANT EXPANSION AND ADDITIONAL AUDITS, BOTH IN DEPTH AUDITS AND WORKING ON SECURITIZATION RELATED CONSULTING INITIATIVES.
ARE THERE ANY QUESTIONS ON SLIDE 19? CHAD, HOW ARE YOU DOING THE RELIABILITY MONITORING RESPONSIBILITIES NOW? IF YOU NEED FOUR PEOPLE TO DO THAT GOING FORWARD, HOW'S IT BEING DONE TODAY? YEAH, SO WE OBVIOUSLY HAVE RAMPED UP THAT PROGRAM SINCE UH, Q4 OF LAST YEAR WITH BOTH RESOURCES ON THE LEGAL SIDE AND THE COMPLIANCE SIDE.
AND RIGHT NOW WE HAVE OVER A HUNDRED ACTIVE CASES THAT WE'RE WORKING.
SO I THINK IT SHOWED TREMENDOUS VALUE TAKEN ON THIS PROGRAM INSIDE ERCOT, BUT IT'S ALSO A LOT OF WORK AS WELL.
SO WE'VE ANTICIPATED FORECASTING ADDED ADDITIONAL EMPLOYEES THIS YEAR, UH, GOING THROUGH 2025.
WE THINK ONCE WE GET TO 2025, WE WILL HAVE KIND OF A STEADY STATE THE AMOUNT OF RESOURCES ON COMPLIANCE ILLEGAL TO MANAGE THAT WORK GOING FORWARD.
OKAY, ON SLIDE 20, I'M NOT GONNA GO THROUGH ALL THE CATEGORIES HERE CUZ I THINK THEY'RE PRETTY SELF-EVIDENT.
UM, THERE'S A COUPLE INTERESTING ONES I DID WANNA HIGHLIGHT, WHICH IS WHEN YOU LOOK AT THE EFFICIENCIES AND SAVINGS YOU, WHICH I FOUND INTERESTING TALKING TO BETTY, WAS REDUCING THE ENERGY COSTS BY CHANGING OUT THE FLUORESCENT LIGHTING TO LEDS.
THAT'S A $200,000 COST SAVINGS AND ENERGY PER YEAR BY DOING THAT.
AND SO I APPLAUD BETTY AND HER FACILITIES TEAM FOR MOVING FORWARD WITH THAT BECAUSE THAT'S A SIGNIFICANT SAVINGS IN THIS CATEGORY.
UH, FROM THE LAST BUDGET CYCLE, WE OBVIOUSLY HAVE BEEN DEFERRING FACILITY EQUIPMENT REPLACEMENT.
UM, WHEN WE BUILT THIS FACILITY, WE HAD ANTICIPATED PUTTING A SECURITY FENCE AROUND THE PROPERTY, BUT THE COST FOR STEEL WAS VERY HIGH AT THAT TIME.
SO WE DEFERRED THAT FROM THE PREVIOUS BUDGET.
AS THOSE COSTS START TO COME DOWN, WE DO WANT TO PUT A FENCE AROUND THIS FACILITY BASED UPON OUR LOCATION AND THE HIGH RELIABILITY ORGANIZATION THAT WE ARE TO BETTER MANAGE SECURITY.
[01:25:01]
THAT'S SOMETHING THAT WE'VE DEFERRED.AND THEN OBVIOUSLY AS WE'VE MANAGED THE CYCLE IN THE PAST, UH, WE DID DEFER ONE EMPLOYEE POSITION, UM, AGAIN, THE TAYLOR SECURITY GATE REPLACEMENT, UH, SPACE AND FURNITURE EFFICIENCIES THROUGH THE FACILITIES MANAGEMENT.
WHEN YOU GET DOWN TO PLANNED IMPROVEMENTS IN RISK MANAGEMENT, WHAT COULD BE DEFERRED.
UH, OBVIOUSLY WE COULD DEFER PUTTING ADDITIONAL STRATEGIC INITIATIVES INTO OUR INFORMATION GOVERNANCE LIFECYCLE MANAGEMENT, UM, THE OUTSIDE COUNCIL ASSISTANCE, YOU KNOW, THAT'S BEEN TREMENDOUS RIGHT NOW WITH, UH, THE BRIDGE BETWEEN INTERNAL AND EXTERNAL RESOURCES.
UH, YOU COULD OBVIOUSLY DEFER SOME OF THAT AND TAKE SOME MORE OF THAT INTERNALLY.
UH, BUT I DON'T RECOMMEND THAT SIEBEL INFORMATION LIFECYCLE MANAGEMENT ASSET IS REALLY A CUSTOMER INFORMATION TOOL.
AND THIS FEEDS INTO OUR INFORMATION GOVERNANCE PROGRAM.
WE DO HAVE A PROJECT SCOPED ON HOW TO MANAGE THAT DATA.
THAT'S HOW ALL THE REGISTRATION INFORMATION FROM OUR, OUR PARTICIPANTS ULTIMATELY GETS CAPTURED INTO OUR SYSTEMS AND THEN SOME OF THESE OTHER DEFERRALS AS WELL.
SO I'LL STOP THERE AND SEE IF ANYBODY HAS ANY QUESTIONS OR COMMENTS FOR ME.
ANY QUESTIONS FOR CHAD? THANKS, CHAD.
DAN WOODMAN, VP OF SYSTEM OPERATIONS.
UM, AS PABLO MENTIONED EARLIER, A LOT OF THOSE INCREASES IN CHANGES TO REGULATIONS, THINGS THAT, UH, THE NEW RESOURCE TYPES THAT, UH, WE'RE SEEING ON THE SYSTEM ARE IMPACTING BOTH OPERATIONS AND PLANNING, UH, SIGNIFICANTLY.
AND I GUESS ONE OF THE THINGS I WANTED TO POINT OUT IS, IF YOU LOOK AT THAT SLIDE, THE GROWTH IN THOSE THINGS DOESN'T START TOMORROW.
IT STARTED YESTERDAY OR SEVERAL YEARS AGO.
AND SO THE, A LOT OF WHAT'S BAKED INTO THE, THE BUDGET REQUEST, ESPECIALLY FOR OPERATIONS, IS NOT ONLY, UH, GROWING FROM HERE WHERE WE CAN FORESEE THAT WE'RE GONNA, WHAT WE'RE GONNA FORESEE THAT WE'RE GONNA NEED BY 2025, BUT IT'S CATCHING UP WITH THE FACT THAT WE HAVEN'T ADDED MANY PEOPLE OVER THE LAST SEVERAL YEARS TO, COMPARED TO THE MASSIVE INCREASE IN, IN DIFFERENT RESOURCE TYPES AND THE MASSIVE INCREASE IN COMPLEXITY THAT WE'VE SEEN.
AND SO YOUR QUESTION'S, OBVIOUSLY, WELL, HOW ARE YOU GETTING BY TODAY? WELL, WE'VE GOT A LOT OF REALLY SMART, DEDICATED PEOPLE THAT ARE TRIAGING.
WE'VE GOTTEN REALLY GOOD AT TRIAGING, PRIORITIZING, DOING THE HIGH, UH, IMPACT THINGS AND MAYBE NOT DOING SOME THINGS THAT ARE IMPORTANT.
AND WE ALL ARE FRUSTRATED BY THE FACT THAT WE'RE NOT DOING THEM, BUT WE, UM, UH, HAVE LEARNED TO, TO DO THE MORE IMPORTANT ONES AND THEN TRY TO GET THE OTHER ONES IN WHEN WE CAN.
AND SO WHAT YOU SEE IN THIS WOULD ACTUALLY GET US UP TO THE POINT THAT WE'RE NOT ONLY ABLE TO DO THE HIGH PRIORITY THINGS, BUT THE, THE, THE OTHER THINGS THAT WE KNOW NEED TO BE DONE TO MAINTAIN.
AND THIS IS ALL IN STRATEGIC DRIVER ONE, MAINTAIN THE RELIABILITY OF THE SYSTEM, UH, ADEQUATELY NOW AND GOING FORWARD.
UM, THE OTHER THING YOU'LL SEE IN HERE IS THAT I, I KNOW AS JP WAS GOING THROUGH HIS, SOME OF SOME OF HIS TIED, THIS, THIS ITEM FITS WITH THIS PARTICULAR DEPARTMENT IN MY GROUP.
UH, SOME OF THE INCREASES BECAUSE WE DO NOT ONLY REAL TIME OPERATIONS, BUT WE ALSO DO PREPARATIONS FOR REAL-TIME OPERATIONS FORECASTING, DOING STUDIES, OFFLINE STUDIES AHEAD OF TIME, EVALUATING WHAT THE, THE, THE, UH, HOW THE CHANGES ARE GOING TO IMPACT OPERATIONS AND ALSO EVALUATING THINGS AFTER THE FACT EVENT ANALYSIS, UH, PROCESS IMPROVEMENT AND THOSE KIND OF THINGS.
AND SO SOME OF THESE ITEMS FIT ACROSS ALL THOSE DIFFERENT GROUPS.
WE'VE, UH, FOR SOME OF THE ITEMS, AND I'LL POINT THESE OUT, WE, UH, ARE ADDING ONE NEW DESK ON THE CONTROL IN THE CONTROL ROOM.
AND THEY'LL NOT JUST BE DOING ONE THING, BUT IT PROVIDE BY ADDING ONE EXTRA DESK, IT PROVIDES THE BANDWIDTH TO DO SEVERAL OF THESE THINGS THAT WE WILL REDISTRIBUTE OUT AMONGST THE, THE EXISTING DESKS AND SORT THINGS OUT A LITTLE DIFFERENTLY.
AND THEN WE ALSO HAVE ADDITIONAL ENGINEERS AND WE'RE ALSO ASKING FOR, FOR, FOR, UH, EVENT ANALYSIS AND PROCESS IMPROVEMENT FOLKS TO ACTUALLY IMPROVE THAT PROCESS.
SO AS I GO THROUGH THIS, UH, FORECASTING US, OBVIOUSLY BECOMING MUCH MORE COMPLEX.
UH, IT USED TO BE THAT WHEN WE FORECAST LOAD, WE WERE FORECASTING, WE WERE LOOKING AT THE WEATHER FORECAST AND USING MODELS THAT FORECASTED WHAT THE INCREASE WOULD BE DUE TO TEMPERATURES AND, AND HUMIDITY AND THOSE KIND OF THINGS, AND LONG-TERM FORECAST, THEN WE'D LOOK AT CERTAIN ECONOMIC DRIVERS AND, AND THE EXPECTED WEATHER.
NOW THERE ARE A LOT MORE MOVING PARTS.
[01:30:01]
UM, UH, PRICE RESPONSIVE DEMAND.WE'VE GOT UPCOMING INCREASES IN ELECTRIC VEHICLES.
WE'VE GOT DISTRIBUTED ENERGY RESOURCES, WE'VE GOT RESOURCES BEHIND THE METER THAT TURN ON, TURN OFF DRAMATICALLY AFFECTING THE AMOUNT OF LOAD THAT THAT FOLKS ARE CONSUMING.
AND SO FORECASTING HAS BECOME MUCH MORE COMPLEX.
AND SO WE'VE GOT FIVE ADDITIONAL PEOPLE, UH, IN KIND OF SEVERAL DIFFERENT AREAS THAT WOULD IMPROVE FORECASTING IN ADDITION TO ALL THE INCREASE IN RENEWABLES.
SO OBVIOUSLY FORECASTING WIND AND SOLAR RESOURCES IS BECOMING MUCH MORE OF A, UH, ISSUE.
WE'VE ABSORBED THAT ALREADY, BUT THERE ARE ADDITIONAL THINGS THAT WE'D LIKE TO DO THERE.
UM, CAN YOU EXPLAIN TO ME THE LINKAGE BETWEEN JUST THE ACTUAL NUMBER OF RESOURCES OR THE NUMBER OF MEGAWATTS TO YOUR STAFF? UM, CAUSE THERE SEEM LIKE, I'M SORRY, THERE'S NOT A REAL DIRECT CORRELATION.
IT WAS MORE TO ILLUSTRATE THAT, YOU KNOW, WE DIDN'T HAVE MANY, WE'VE GOT A LOT MORE NOW OF THESE THINGS.
AND IT KIND OF SWAMPS THE INCREASE IN THE STAFF THAT WE'VE ADDED.
UM, THERE ARE SEVERAL ITEMS, UH, STARTING WITH ROW THREE THERE THAT, THAT, UM, IMPACT THE, THE STUDY THAT I'LL BE, OR THE ANALYSIS I'LL BE TALKING ABOUT TOMORROW RELATED TO STABILITY LIMITS AND THE ODESSA EVENT.
THERE'S SEVERAL OF THE ITEMS ON HERE THAT ARE DRIVEN BY TRYING TO DO MORE ANALYTICS AND SOLVE THOSE, INCLUDING THE, UH, ITEM THREE, THE NUMBER OF STABILITY LIMITS.
SO WE'RE ADDING MORE PEOPLE TO DO STABILITY STUDIES.
COUPLE, UH, COUPLE OF FTES WORTH OF THAT ADDITIONAL OPERATIONS, UH, OPERATORS IN THE CONTROL ROOM WILL BE WATCHING OVER THOSE, THOSE GENERIC TRANSMISSION LIMITS, THOSE, THOSE CONSTRAINTS THAT WE PUT ON THE SYSTEM TO LIMIT THE AMOUNT OF FLOWS IN ORDER TO MAINTAIN STABILITY.
WE'LL HAVE A PORTION OF THAT AS ADDITIONAL OPERATORS ARE DUE TO THAT, PLUS ADDITIONAL ENGINEERS DOING STUDIES, UH, AHEAD OF TIME.
UM, THE INVERTER BASED RESOURCES ON LINE FIVE ALSO FITS INTO THAT SAME BUCKET.
AND THE LARGE FLEXIBLE LOADS, UH, ACTUALLY AS WE'LL TALK ABOUT TOMORROW, IMPACT THOSE AS WELL.
AND SO WE ARE ALL OF THOSE ITEMS DOWN.
ALL THOSE AFFECT KIND OF THIS BROAD AREA THAT WE'LL BE TALKING ABOUT TOMORROW.
ENERGY STORAGE RESOURCES, UH, WE DIDN'T HAVE ANY BACK IN 2014.
NOW WE'VE GOT MORE AND MORE COMING, WHICH IS A GOOD THING.
BUT THERE'S ADDITIONAL COMPLEXITY IN TERMS OF ANALYZING WHAT'S NEEDED AND WHAT, WHAT, UH, WE, UH, HOW THEY PERFORMED WHEN THEY'RE MEETING OUR ANCILLARY, WHEN THEY'RE SERVING OUR ANCILLARY SERVICE REQUIREMENTS, WHAT, UH, INCREASES THEY'LL HAVE TO DO.
AND SO WE'VE GOT, UH, FOUR ADDITIONAL FOLKS FOR BASICALLY, UH, ANALYZING AHEAD OF TIME AND AFTER THE FACT, THE PERFORMANCE OF ESRS.
UM, THERE'S THE FUEL EMISSIONS TRACKING.
UH, THERE ARE THINGS THAT WE TALKED ABOUT AT THE LAST BOARD MEETING THAT WE'RE GONNA HAVE TO DO THERE.
UH, WE'VE ADDED A COUPLE OF EXTRA FOLKS ON INTO THE DAY TYPE OPERATIONS, UM, TO WATCH OVER FUEL, UH, LIMITATIONS AND ALSO POTENTIAL EMISSIONS LIMITATIONS.
UM, THERE'LL BE PARTIAL ONE PERSON WORTH OF, UH, THAT ADDITIONAL CONTROL ROOM STAFF THAT'LL BE MANAGING THAT OR THAT WATCHING OVER THAT.
UM, THE, UM, I MENTIONED EARLIER THAT WE, THE OPERATIONS IMPROVEMENT AND LESSON LEARNED ON LINE EIGHT.
UH, WE HAVE A PROGRAM TODAY THAT LOOKS AT THE, UH, IMPROVEMENTS IN OPERATIONS.
SO WHEN SOMETHING HAPPENS OR WE HAVE A NEAR MISS, WE ANALYZE IT, UH, WE DO A REPORT, WE FIGURE OUT WHAT IS NEEDED TO SOLVE THAT PROBLEM, ARE THE THINGS WE CAN DO TO IMPROVE.
UM, WE'VE GOT A PROGRAM FOR DOING THAT TODAY, BUT IT'S SIGNIFICANTLY UNDERSTAFFED AND WE'D LIKE TO ADD, UH, MORE, ESPECIALLY WITH ALL THE ADDITIONAL REPORTS WE'VE BEEN DOING.
WHEN SOMETHING COMES ALONG LIKE THE ODESSA EVENT REPORT, IT SUCKS UP LOTS OF PEOPLE ACROSS MULTIPLE DEPARTMENTS AND, AND YOU'VE GOT SOMEBODY THAT HAS TO COORDINATE THAT.
AND SO ADDING TO THAT SO THAT WE CAN DO THAT, NOT JUST FOR BIG EVENTS THAT ARE AN ACTUAL PROBLEM, BUT MORE FOR, FOR NEAR MISSES AND OTHER JUST GENERAL PROCESS IMPROVEMENTS, UH, IS BAKED INTO THAT ONE.
UM, UM, THERE'S A COUPLE OF FOLKS IN THE CONTROL ROOM THAT, THAT, THAT WILL BE AT, UM, FOCUSED ON VOLTAGE VIOLATIONS.
SO WHEN WE DO AN ANALYSIS AND WE SEE IF A CONTINGENCY HAPPENS, THERE COULD BE LOWER OR HIGH VOLTAGES IN THE AREA.
WORKING WITH THE TRANSMISSION OPERATORS TO SOLVE THOSE PROBLEMS IS SOMETHING THAT WE WERE, WILL HAVE A COUPLE OF THE, YOU KNOW, THE ADDITIONAL DESK
[01:35:01]
IN THE CONTROL ROOM WILL BE WORKING ON THAT.AND THERE'S TWO OUT OF THE SIX THAT'LL PROBABLY BANDWIDTH WISE BE ADDED FOR THAT PURPOSE.
UM, ADRS TO, TO PER PERFECT TIMING, UH, IS WE'RE LOOKING AHEAD TO, EVEN WITH THE PILOT PROGRAM, WE NEED TO BE THINKING ABOUT WHAT, WHAT IS, WHAT, WHAT ARE WE SEEING FROM THAT PROGRAM? WHAT'S NEEDED NEXT? I DON'T KNOW THAT THIS IS ENOUGH.
IF WE HAVE, AS JP WENT THROUGH, IF WE HAVE LOTS AND LOTS OF THESE, UH, I DON'T KNOW IF THIS IS ENOUGH, BUT AT LEAST IT'S GIVES US A FOOT ON THE BEACH TO BE ABLE TO ANALYZE, UH, HOW THEY RESPOND, SET UP WHAT THE NEXT PHASE OF THE PROGRAM IS, AND THEN ULTIMATELY WHAT THE, UH, ULTIMATE, UH, UH, SOLUTION NEEDS TO BE.
SO SOMETHING IN OPERATIONS, OBVIOUSLY THE MARKETS GROUP, THE IT GROUP, IT'LL BE A BROAD BASED EFFORT, BUT THIS IS KIND OF THE SUBSET JUST FOR, FOR MY GROUP, SO, SO DAN ON THAT.
UH, AND I WAS A LIBERAL ARTS MAJOR IN COLLEGE, SO MATH WAS NOT MY STRONG SUIT.
UM, BUT SO IF WE'RE DEALING WITH ON A PREMISE BASIS, SUB ONE MEGAWATT, UH, UH, AGGREGATIONS WELL AND AN 80 GIGAWATTS, OR I'M SORRY, 80 MEGAWATTS THAT WE'VE ESTABLISHED, THAT'S A LOT OF PREMISE BASED REGISTRATION.
SO YOU BELIEVE YOUR GROUP IS ADEQUATELY STAFFED IN CONJUNCTION WITH JP TO MANAGE THE FULL COMPLIMENT OF THE FIRST ITERATION OF THE 80 MEGAWATTS, WHICH MAY BE TENS OF THOUSANDS OF PREMISES THAT YOU'LL HAVE TO TRACK.
I, I THINK WE'RE, WE'RE, THIS GIVES US A KIND OF, LIKE I SAID, A FOOT FOOTHOLD ON THE BEACH, AND THEN WE CAN SEE WHERE IT GOES NEXT.
UM, THE, UH, TRANSMISSION CONES, CONGESTION, WE'RE ADDING A COUPLE OF EXTRA VOTES YOU CAN TRANSMISSION CONGESTION WHERE WE'RE UNABLE TO USE THE CHEAPEST GENERATION ON THE SYSTEM TO SERVE THE LOAD.
BUT BECAUSE OF TRANSMISSION LIMITATIONS, WE'RE HAVING TO REDUCE THE, UH, AMOUNT OF, UH, WE'RE HAVING TO RUN MORE EXPENSIVE GENERATION TO SERVE THE LOAD RATHER THAN THE CHEAPEST.
THERE ARE THINGS THAT WE COULD DO TO IMPROVE THAT OPERATIONALLY, IN ADDITION TO SOME OF WHAT WOODY WILL TALK ABOUT, IMPROVING IT, UH, FROM A TRANSMISSION PLANNING PERSPECTIVE, WE ADDING, THIS IS ONE OF THE ITEMS THAT WE'VE REALLY NOT BEEN DOING AS MUCH OF COMPARED TO WHAT WE HAD DONE IN THE PAST, UH, PRIOR TOREZ.
AND SO WE'RE ADDING BACK A COUPLE OF FOLKS TO DO THAT.
UM, I MENTIONED EVENT ANALYSIS.
THIS IS, FITS IN WITH THE ONE ABOVE.
AND THEN JUST IN GENERAL, THE SIZE OF THE SYSTEM IS BIGGER.
WE'VE GOT MORE ELEMENTS ON THE SYSTEM.
ALL OF THOSE TRANSMISSION ELEMENTS AND GENERATION RESOURCES THAT ARE GOING TO TAKE PLANNED OUTAGES HAVE TO SUBMIT THOSE OUTAGES TO US, AND WE HAVE TO DO ANALYSIS TO MAKE SURE IT WORKS.
THE NUMBER OF ELEMENTS HAS GROWN SIGNIFICANTLY, BUT THE NUMBER OF FOLKS DOING THAT OUTAGE COORDINATION HASN'T GROWN.
AND SO WE'RE JUST ADDING AN EXTRA PERSON TO DO THAT.
AND SO THEN FINALLY, THE, THE SALARY AND BENEFITS, UH, ARE A SLIGHT INCREASE, UH, DUE TO THE, AS AS WE'VE ALREADY BEEN DISCUSSED.
AND THIS JUST IS THE OVERALL, BECAUSE IT DIDN'T FIT ON THE PAGE, THE OVERALL DOLLAR NUMBERS ASSOCIATED WITH THAT.
SO WE, WE HAVE LOOKED AT SOME EFFICIENCIES.
WE'VE, WE'VE REALLOCATE AS I MENTIONED, WE'RE NOT HAVING A SINGLE DESK TO DO, UH, UH, ANY ONE ITEM, BUT WE WILL REALLOCATE THINGS ACROSS THE DIFFERENT DESKS IN THE CONTROL ROOM SO THAT WE CAN PUT THE RIGHT AMOUNT OF RESOURCE INTO, TO THE WORK, UM, THAT THEY'LL BE DOING.
UM, THERE WAS SOME ORIGINAL DISCUSSION ABOUT HAVING A SEPARATE RESEARCH AND COORDINATION GROUP, BUT WE'RE KIND OF FOLDING THAT INTO OTHER RESPONSIBILITIES, SO WE CAN EITHER SCALE IT UP OR SCALE IT BACK DEPENDING ON WHAT, WHAT ELSE WE HAVE GOING ON.
UH, THERE'S A LOT OF STUFF, AS I MENTIONED, WE'VE GOTTEN REALLY GOOD AT SQUEEZING BLOOD OUT OF THE TURNIP IN TERMS OF PRIORITIZING AND TRIAGING WHAT NEEDS TO BE DONE.
AND SO THERE'S A, THERE'S A LOT OF, UH, UM, THINGS THAT WE HAVE DEFERRED OVER THE PAST EIGHT YEARS AND NOT DONE.
I'M NOT GONNA READ THE WHOLE LIST THERE.
UM, WE'VE ALREADY, UH, IMPROVED OUR SEASONAL TRANSMISSION ANALYSIS THAT WE'D CUT IN THAT CYCLE.
WE SAID WE WEREN'T GONNA DO THAT.
WE'RE ADDING THAT BACK END TO SOME EXTENT.
THAT'S THAT CONGESTION REDUCTION THING THAT WE TALKED ABOUT.
AND THERE WAS A MAJOR PROJECT THAT WE ASKED FOR THIS FLOAT PROJECT.
WE, UH, ARE CUTTING THAT AND DOING IT ON A KIND OF MORE PIECEMEAL BASIS, UH, TO TRY TO FIT IT IN AMONGST ALL THE OTHER THINGS THAT WE'RE DOING, THE, THE MOST IMPORTANT PARTS OF IT.
AND THEN ON THAT NOTE, WHICH, WHICH NEW OPERATIONS TOOL IS MOST, UH, IMPORTANT TO THE FUTURE OF ERCOT?
[01:40:03]
YEAH, SO I, I THINK ONE OF THE, THE, THE, PROBABLY THE BIGGEST ONE IS ONE THAT WE'LL TALK, THAT'S THIS TRANSIENT STABILITY TOOL THAT WE'LL PUT IN PLACE ONLINE TO BE ABLE TO CALCULATE THOSE LIMITS BASED ON THE CURRENT TE UM, WE'VE BEEN WORKING ON THAT FOR, UH, A COUPLE OF YEARS NOW.I THINK FROM A SOFTWARE PERSPECTIVE, IT'S READY TO GO.
WE'RE STILL LOOKING FOR MODELS FROM, UH, SOME OF THE GENERATORS TO BE ABLE TO, TO START USING THAT IN REAL TIME.
AND THEN, UH, THINGS THAT WE COULD POTENTIALLY, I MEAN, BASICALLY IF WE HAD TO CUT SOMETHING, WE DO, THERE ARE THINGS THAT WE WOULDN'T BE ABLE TO DO.
UH, AND WE'VE MENTIONED, AS OTHERS HAVE MENTIONED, WE, IT BASICALLY WOULD BE SCALING BACK SOME OF THESE THINGS AND BEING LESS COMFORTABLE THAT WE'VE COVERED, UH, THE DIFFERENT RISKS AND CONTINGENCIES.
SO WITH THAT, I WILL TURN IT OVER TO WOODY, NO, CANAN.
CANNA GALMAN, UH, VICE PRESIDENT OF COMMERCIAL OPERATIONS.
UM, SO IF, IF YOU LOOK AT, UH, MY PORTION OF THE BUDGET, WHAT YOU WILL SEE IS, UM, THERE IS, UH, INCREASE IN HEADCOUNT.
UM, THAT IS, UH, ONE OF THE MAJOR DRIVERS OF, UH, THE DELTA BETWEEN 2023 AND 2024.
UH, THAT IS, UH, 13 ADDITIONAL HEADCOUNT, UH, THAT'S REQUESTED THERE.
UM, AND THAT'S PRIMARILY FOCUSED ON, UH, MARKET DESIGN IMPROVEMENTS.
UM, THE OTHER BIG DRIVER THAT I WOULD HIGHLIGHT TO YOU FROM HERE IS THE, UH, PROJECT EXPENDITURES WHERE YOU SEE A LARGE INCREASE.
AND PABLO ACTUALLY COVERED THIS WHEN, UH, HE WAS ASKED ABOUT THE MARKET DESIGN ITEMS. THAT'S PRIMARILY, UM, THE COST OF, UH, THE MARKET DESIGN IMPROVEMENTS THAT, THAT WE HAVE, WHICH INCLUDE REAL-TIME CO-OP OPTIMIZATION, UH, UH, PCM, UH, AND I WOULD SAY THINGS LIKE, UH, THE FIRM FUEL PROGRAM, UH, AND THE ENHANCEMENT OF, OF THE FUEL FIRM, FUEL PROGRAM, AS WELL AS MAINTAINING THE EMERGENCY RESPONSE PROGRAMS AND, AND, UH, THOSE, THOSE ACTIVITIES.
SO, UM, THOSE ARE KIND OF THE MAIN DRIVERS, IF YOU LOOK AT MY BUDGET AND, UM, WHAT, WHAT I'M ASKING FOR.
UM, I'M GONNA GO TO THE NEXT SLIDE UNLESS, UH, THERE'S SOME QUESTIONS ON, ON THIS ONE.
CANAN ONE, ONE CLEANUP QUESTION.
IN TERMS OF THE MARKET DESIGN IMPACTS, THAT INCLUDES ALL OF THE PHASE ONE, UH, BLUEPRINT IMPLEMENTATION ASPECTS AS WELL, RIGHT? SO THAT WAS ALREADY BAKED INTO YOUR NUMBER.
UM, SO PHASE ONE'S INTERESTING BECAUSE THERE'S SOME THINGS THAT WERE AUTOMATED THAT REALLY, UM, WERE PROJECTS THAT, THAT DON'T KIND OF REALLY CREATE THAT MUCH ONGOING COST.
EASIEST ONE TO PROBABLY SHARE WITH YOU WOULD BE THE O R D C CHANGES.
UM, BUT THEN THERE ARE THINGS LIKE FIRM FUEL BECAUSE WE'RE DOING THAT MANUALLY THAT, UH, HAVE ONGOING COSTS IN TERMS OF, UH, HEADCOUNT AND RESOURCES.
SO I WOULD SAY IT'S A LITTLE BIT OF A MIXED BAG.
UH, IN TERM, I WOULDN'T ASSUME EVERY ITEM IN PHASE ONE, UH, KIND OF CARRIES ON THROUGH AS A, AS, AS AN ONGOING EXPENSE.
SO, SO JUST A, AS AN ANECDOTE, IF WE WERE TO MOVE FORWARD ON RMR FOR CAPACITY AND NOT JUST TRANSMISSION STABILITY, WHICH WAS A COMPONENT OF PHASE ONE AND MAYBE A A, A PRIORITY DEPENDING ON EPA REGULATIONS AND THE EFFECTS THAT THAT HAS ON THE FLEET, IS THAT BAKED INTO THE MARKET DESIGN ELEMENT? SO, UM, RMR FOR CAPACITY, THE PROCESS, WHICH WITH WHICH WE WOULD GO THROUGH IS, IS TECHNICALLY ALREADY BAKED IN.
THERE'S A LOT OF MANUAL PROCESSES THERE, AND IF THE VOLUMETRICALLY IT WAS, UM, EXTREMELY LARGE, I MIGHT HAVE TO MOVE RESOURCES AROUND OR DAN MIGHT NEED TO, UH, UH, MOVE RESOURCES AROUND TO HELP WITH THE ANALYSIS.
BUT THE PROTOCOL AND THE, THE CODING AND THOSE TYPES OF THINGS, UH, ARE, UH, KINDA LEGACY ITEMS. THE ONE THING I WOULD SHARE WITH YOU THAT IS IN THE PRO PROTOCOLS AND SUBSTANTIVE RULES IS THIS ALTERNATIVE METH METHODOLOGY FOR RMR. UM, AND
[01:45:01]
THAT, UH, UH, HAS NOT BEEN, UH, DELIVERED.SO THERE'S THIS, UH, REQUIREMENT THAT WE HAVE TO LOOK FOR ALTERNATIVES AND THINGS LIKE THAT.
IT IS NOT SOMETHING THAT'S AUTOMATED, UH, CURRENTLY.
YEAH, I WAS JUST GONNA MENTION THAT THE RMR PROCESS IS VERY LABOR INTENSIVE.
I MEAN, THEY'RE ALL THE VERIFIABLE COSTS AND THE CONTRACTS.
I MEAN, LAST TIME WE WENT THROUGH THAT, IT WAS SURPRISINGLY, UH, LABOR INTENSIVE AND TO HAVE MULTIPLE ONES GOING AT THE SAME TIME.
I DON'T THINK THAT'S IN MY BUDGET.
I, I DIDN'T HEAR YOU VERY WELL, WOODY.
I DON'T KNOW IF YOUR MIC'S ON OR NO, JUST SAID IT TOOK A LOT OF PEOPLE TO DO RMR. OKAY.
ANY OTHER QUESTIONS ON THIS? OKAY, LET ME, ALL RIGHT.
SO, UM, THE EFFICIENCY SAVINGS SINCE THE LAST, UH, BUDGET CYCLE, UH, ESSENTIALLY, UH, TO MANAGE, UH, WORKLOAD ON AREAS LIKE FIRM FUEL AND THINGS LIKE THAT, I, I DID REPURPOSE, UH, TWO POSITIONS.
UM, AND IT WAS, UH, MOVEMENT KIND OF FROM MORE THE, UH, STRATEGIC SIDE AND THINKING ABOUT, UH, FUTURE MARKET DESIGN TO, UH, MA MAKING SURE WE COULD DELIVER PROJECTS THAT WERE PART OF, UH, PHASE ONE OF THE COMMISSION, MARKET DESIGN, ROAD ROADMAP, UM, UH, THINGS THAT, UH, COULD BE DEFERRED FROM THE PRIOR BUDGET CYCLE.
THERE WERE, THERE ARE FOUR EMPLOYEE POSITIONS, UH, THERE, UM, THERE, UH, THERE'S AN EMPHASIS ON, UH, SOME OF THE CONGESTION, REVENUE RIGHTS ENGINEERS.
THAT TEAM IS, UM, KIND OF, UH, EXTREMELY, UH, STRESSED.
SO, UH, MORE RESOURCES THERE ARE, IS, IS A PRIORITY FOR ME.
UM, UH, THERE'S ALSO ONE DAY AHEAD, UH, MARKET SHIFT ENGINEER AND ONE PRINCIPLE THAT, UM, UH, I WOULD LIKE TO FILL THAT I WON'T FILL UNTIL, UH, UH, THE NEXT BUDGET CYCLE.
UM, IN ADDITION, UH, THERE ARE CONSULTING SERVICES AND AN EPRI MEMBERSHIP THAT, THAT IS IN MY BUDGET, THAT ARE DEFERRED FROM PRIOR, UH, BUDGET CYCLES.
UM, ITEMS THAT I, THAT WERE PREVIOUSLY CUT IN THIS CYCLE, UH, INCLUDE TWO EMPLOYEE POSITIONS, UM, AND THAT WAS IN THE DESIGN AND STRATEGY SIDE AS WELL.
UH, PLANNED IMPROVEMENTS IN RISK MANAGEMENT.
UH, SO DEFINITELY, UH, THERE'S EMPLOYEE TRAINING THAT COULD BE, UH, ADJUSTED ONE WAY OR THE OTHER.
AND LASTLY, UH, AS A BACKSTOP FOR, UH, SOME OF THE REQUESTS THAT ARE COMING FROM THE LEGISLATURE AND NOT SOME OF THE OTHER WORK THAT WE'VE DONE, THERE'S CONSULTING ENGAGEMENTS THAT, UM, UH, ARE, ARE, ARE VARIABLES, FOR LACK OF A BETTER WAY TO DESCRIBE IT.
HAPPY TO ANSWER ANY, UH, ANY QUESTIONS THAT YOU HAVE.
ANY QUESTIONS FOR CON COMMENTS? OKAY, WOODY, I GUESS YOU'RE UP.
GOOD MORNING, WOODY RICKSON SYSTEM PLANNING AND WEATHERIZATION.
SO I'D LIKE TO, UH, KINDA RE REITERATE SOME OF THE THINGS THAT DAN SAID REAL QUICKLY.
I MEAN, WE'RE SEEING THINGS GOING ON ON THE GRID RIGHT NOW.
WE HAVEN'T SEEN EVER, THIS IS UNUSUAL TIMES GRID IS GROWING.
UM, I THINK WE'RE ONE OF THE FEW GRIDS THAT'S ACTUALLY GROWING, BUT ON TOP OF THAT, JUST THE DIVERSITY OF WHAT WE'RE SEEING ON THE GRID IS VERY DIFFERENT.
AND THAT DIVERSITY OF WHAT WE'RE SEEING ON THE GRID IS GONNA DRIVE A LOT MORE WORK FOR ERCOT.
AND THERE'S JUST NO OTHER WAY AROUND THAT.
AND, UH, WE CAN COMPENSATE FOR SOME OF THAT WITH, WITH PROGRAMS AND WITH SYSTEMS, BUT A LOT OF WHAT WE HAVE TO DO IS JUST WITH PEOPLE.
IT JUST TAKES EYES ON THE MATERIAL TO MAKE THIS WORK.
SO, UM, WHAT I HAVE HERE ARE, IT SAYS 17 HERE.
SO THERE'S REALLY 15 DRIVERS HERE THAT, THAT I'VE LISTED.
THESE ARE THE 15 DRIVERS, I THINK IMPACT ME THE MOST.
UH, THE GOOD NEWS IS IF YOU LOOK AT DRIVERS NUMBER TWO AND NUMBER THREE, AND REALLY NUMBER, UM, NUMBER 10 AS WELL, SO THAT'S, UH, 24, 27
[01:50:05]
POSITIONS.SO THE, THE, THE, UH, NUMBER TWO THERE, THE NUMBER OF GENERATION INTERCONNECT REQUESTS, UM, TREMENDOUS GROWTH THERE.
IN, UH, 2020 WE SAW 421 INTERCONNECTION REQUESTS.
2025, WE ANTICIPATE THAT'S GONNA BE 770.
AND EACH ONE OF THOSE HAS TO BE LOOKED AT.
YOU HAVE TO DEAL WITH THE DEVELOPER, DO THE STUDIES, WORK WITH THE TSPS.
LOT OF, UH, YOU KNOW, WE HAVE ENGINEERS WITH CASELOADS RIGHT NOW, OVER A HUNDRED INTERCONNECTION REQUESTS IN THEIR CASELOAD.
SO, UH, BUT THOSE GENERATION INTERCONNECTION REQUESTS PAY FOR THE EMPLOYEES.
SO AS THEY COME IN, THEY PAY A INTERCONNECTION REQUEST.
AND SO THAT GROUP IS ACTUALLY, WE CAN EXPAND THAT UP OR DOWN AND USE CONTRACTORS AND, AND PAY FOR THAT.
SO THOSE, THOSE 13 ARE PRETTY MUCH BUDGET NEUTRAL.
THE SECOND AREA THERE, YOU SEE IS THE PC MANDATED INSPECTIONS OF RESOURCE AND TRANSMISSION FACILITIES.
AND THEN IF YOU LOOK DOWN ON, UM, NUMBER 10, THE DECLARATION OF WEATHER PREPAREDNESS TO EVALUATE, THOSE ARE ALL WEATHER RELATED.
THOSE ARE ALSO BUDGET NEUTRAL.
THOSE INSPECTIONS ARE, ARE FUNDED TO, UH, WITH FEES TO PAY FOR THAT STAFF.
SO THOSE, THOSE TOP 20 SOMETHING EMPLOYEES, THERE ARE, ARE POSITIONS ARE, ARE BUDGET NEUTRAL.
UH, THE NEXT ONE, THIS, UM, LARGE FLEXIBLE LOAD.
BACK IN, UH, 2020, WE HAD MAYBE ONE PROJECT, ONE THAT WAS OUT THERE.
NOW WE'VE GOT 88 SEPARATE PROJECTS, UH, 41,000 MEGAWATT HOUR OF, UH, OF, OF POTENTIAL INTERCONNECTIONS THERE.
UH, WE STILL DON'T FOR SURE KNOW WHAT THAT GROUP'S GONNA LOOK LIKE, THOUGH.
WE'VE GOT SIX PEOPLE IN THE BUDGET.
WE'VE GOT FOUR WORKING THERE NOW, BUT THERE'S STILL, STILL REMAINS TO BE SEEN WHAT THAT, UH, WHAT THAT GROUP IS GONNA LOOK LIKE.
AND IF THAT DEMAND SLOWS DOWN, THAT'S A VERY EASY GROUP TO TRANSFER INTO OTHER AREAS AS WELL.
SO THOSE ENGINEERS IN THAT GROUP COULD VERY WELL GO IN AND DO TRANSMISSION PLANNING OR, OR SOMETHING ELSE.
SO THAT'S A, THAT'S A GROUP THAT WE CAN MOVE AROUND VERY EASILY.
UM, NUMBER SIX IS OUR EDP PROGRAM.
IN, UH, 2020, WE WERE GRADUATING ABOUT SIX PEOPLE A YEAR.
WE HAVE IN THE BUDGET TO EXPAND THAT TO 10.
SO THAT EXPANSION TAKES, TAKES, UH, SOME, OBVIOUSLY MORE PEOPLE ON THE PAYROLL IN ORDER TO DO THAT.
AND SO THE, THE IDEA THERE IS THAT EVERY YEAR THE EDP WOULD PROVIDE 10 ENGINEERS INTO CANON'S ORGANIZATION, DAN'S ORGANIZATION, AND MY ORGANIZATION.
WHEREAS WE CURRENTLY ARE STAFFED TO DO ABOUT SIX.
WE HAVE, UH, AS YOU MOVE ON DOWN THE LIST THERE, YOU'LL SEE, UH, NUMBER SEVEN HAS TO DO WITH TRANSMISSION PLANNING.
JUST THE NUMBER OF CRITERIA WE'RE USING TO JUSTIFY NEW TRANSMISSION PROJECTS.
WE'VE TRADITIONALLY RUN WITH ONE OR TWO, UH, THE RELIABILITY AND THE PRODUCTION COST.
WE'RE MOVING THAT NOW TO INCLUDE A CONGESTION REDUCTION AND ALSO RESILIENCY.
AND SO, UM, USING THOSE CRITERIA IN THE TRANSMISSION PLANNING WORLD TAKES MORE PEOPLE, TAKES MORE TIME, MORE ROBUST STUDIES.
UM, THERE'S SEVERAL HERE ABOUT, UH, MEGAWATT HOURS OF ENERGY STORAGE RESOURCES, STABILITY LIMITS, UM, THOSE, THOSE ARE ALL RELATED.
THEY ALL HIT THE, UH, THEY HIT SEVERAL GROUPS.
THERE'S SEVEN PEOPLE THERE ASSOCIATED WITH THE FACT THAT BRINGING BATTERIES ON THE SYSTEM, HAVING MORE IVR RELATED RESOURCES.
THOSE ARE ALL MORE, MORE, UH, LABOR INTENSIVE EFFORTS NOW.
UM, NUMBER 11, UH, THE NUMBER OF DATA ELEMENTS, DAN BROUGHT THIS UP.
UH, WE ANTICIPATE, I MEAN, IF YOU LOOK AT THE, UH, 20, 24 0.1 MILLION DATA ELEMENTS IN THE MODEL, SO THAT'S A, THAT'S A VIEW OF HOW BIG YOUR GRID IS.
THAT'S WHAT GOT MODELED 4.1 MILLION DATA ELEMENTS.
UM, IN 2023 OR 2025, WE ANTICIPATE THAT TO BE 5.3 MILLION.
SO GRID IS JUST GETTING BIGGER, AND NOT ONLY IS IT GETTING BIGGER, IT'S GETTING MORE COMPLEX AND MORE DIVERSE.
SO THAT, UH, THAT'S JUST A MODELING EFFORT.
EVERY ONE OF THOSE CHANGES THAT COMES IN, AN ENGINEER LOOKS AT AND VALIDATES, PUTS IN A MODEL AND TESTS, AND THEN WE BUILD MODELS FOR DIFFERENT POINTS IN THE FUTURE.
SO IF, UH, IF DAN NEEDS A MODEL FOR A WEEK FROM NOW, WE BUILD THAT MODEL.
IF CANON'S C R R TEAM NEEDS A MODEL FOR A MONTH FROM NOW, THAT
[01:55:01]
MODEL, IF WE NEED A PLANNING MODEL FOR THREE YEARS FROM NOW, THAT MODEL GETS BUILT.AND ALL THAT 5.3 MILLION, DO MILLION DATA ELEMENTS GET INCORPORATED IN THOSE MODELS.
UM, NUMBER 13 THERE, THE NUMBER OF RESOURCE ADEQUACY REPORTS ARE INCREASING.
UM, SO THIS IS THE SARAH, THE CDR, AND, UH, WE ARE CHANGING SOME OF THOSE REPORTS.
CDR IS GOING FROM TWICE A YEAR TO FOUR TIMES A YEAR.
THE SARAH IS GONNA GO TO A FROM FOUR MONTH, FOUR SEASONS TO 12 MONTHS.
UM, THERE ARE ALSO, UM, SOME CHANGES IN WHAT NERS REQUIRING, NERS REQUIRING MORE ASSESSMENTS.
AND SO ALL THOSE THINGS ADD UP AND, UH, THERE'S, THERE'S, THERE'S A DEMAND IMPACT THERE OF TWO PEOPLE AS WELL.
HEY, WOODY, THE, THE LEGISLATURE ALSO HAD SOME REPORTING REQUIREMENTS.
ARE THOSE IN THAT NUMBER AS WELL? THEY ARE, UM, NOT IN THAT NUMBER, BUT THEY ARE IN THE TRANSMISSION NUMBERS.
THEY INCLUDED ANOTHER RESILIENCY REPORT.
UM, NUMBER OF UNITS ON THE SYSTEM.
THIS HITS, YOU KNOW, I THINK THIS IS DURING WINTER STORM YEAR, WE HAD 850 UNITS, 850 UNITS.
UM, BY 2025, WE ESTIMATE THAT'S GONNA BE 1300 UNITS ON THE SYSTEM.
GENERATION UNITS, THAT'S RIGHT.
UM, EACH ONE OF THOSE UNITS HAS LIMITS, STABILITY MODELS, MODELING.
UM, WE WOULDN'T BE ABLE TO DO ANY OF THIS WITHOUT THAT RIO SYSTEM, FIRST OF ALL.
BUT THAT'S JUST A LOT MORE WORK STILL.
UM, OUR SUB SUB SYNCHRONOUS RESONANCE SCREENINGS, THIS IS THE STUFF THAT, UH, THE STUDIES YOU HAVE TO DO WITH SERIES CAPACITORS.
EVERY ONE OF THOSE UNITS, YOU'VE GOTTA DO THE SUB SYNCHRONOUS RESIDENT SCREENINGS.
AND THOSE ARE SOME OF THE MOST COMPLEX ENGINEERING STUDIES THAT WE DO.
UM, SO THE, THAT'S THE, THE, THE 15 DRIVERS FROM MOST IMPACTFUL TO LEAST IMPACTFUL.
LIKE I SAID, THE FIRST TWO ARE PRETTY MUCH BUDGET NEUTRAL, AND THEN THEY GO DOWN.
SO ANY, ANY QUESTIONS ABOUT THOSE, WOODY, ON THE, UM, LINE ITEM NUMBER TWO, WHEN YOU MENTIONED ABOUT THE INTERCONNECTION REQUEST AND HOW YOU CAN FLEX IT UP AND DOWN.
I, YOU LEFT ME WITH THE IMPRESSION YOU WERE TALKING ABOUT HIRING CONTRACTORS FOR THAT POSITION.
IS THAT RIGHT? OR IS IT YOU'RE DOING THAT'S RIGHT.
SO WHAT WE'VE TRADITIONALLY DONE IS WE'VE HAD ABOUT 20% OF THAT DEPARTMENT BE CONTRACTORS.
AND IF THE CONTRACTORS STAY MORE THAN ABOUT 18 MONTHS, WE HIRE 'EM FULL TIME AND HIRE MORE CONTRACTORS.
SO THIS HAS BEEN INCREASING FOR ABOUT FOUR YEARS NOW.
AND SO WE'LL HIRE CONTRACTORS IN TO MEET THE MARGIN, AND IF THE, IF WE, IF THE DEMAND STAYS, WE'LL MAKE THEM PERMANENT AND WE'LL HIRE MORE CONTRACTORS.
AND SO OF THOSE, UH, ADDITIONAL ASK THERE, SOME OF THOSE HAVE ALREADY BEEN HIRED AND SOME OF THEM ARE BEING TAKEN BY, BY CONTRACTORS RIGHT NOW.
UM, SIX OF THOSE 13 WERE ARE ALREADY HIRED.
ACTUALLY, TWO OF THEM ARE CONTRACTORS.
AND THE NICE THING ABOUT, UH, THE GENERATION INTERCONNECTION PROCESS IS IT'S KIND OF AN ENTRY LEVEL PROCESS FOR A LOT OF ENGINEERS COMING INTO ERCOT.
AND SO IT'S PROBABLY ONE OF OUR HIGHEST TURNOVER GROUPS IN THAT THOSE ENGINEERS END UP GOING INTO TRANSMISSION PLANNING OR INTO OPERATIONS.
SO IT'S A, IT'S A SOMEWHAT OF A TRAINING GROUP, UNFORTUNATELY, IT'S ALSO ONE OF THE DEPARTMENTS THAT PEOPLE RECRUIT FROM, FROM OUTSIDE OF ERCOT A LOT TOO, BECAUSE THOSE GUYS ARE DEALING WITH THE DEVELOPERS, DEALING WITH PEOPLE FROM OUTSIDE ERCOT.
AND SO A LOT OF THOSE GUYS GET PULLED FROM MURCOTT AS WELL.
MAYBE JUST A FOLLOW UP QUESTION, WOODY, THAT, UM, REALLY APPLIES TO EVERYONE, BUT BUT YOUR GROUP MAYBE A LITTLE MORE SO, BUT WITH SAY, NEARLY 50% OF YOUR FUTURE EMPLOYEES BEING NEW, HOW DO YOU TRAIN SUCH A LARGE NUMBER OF EMPLOYEES AND HAVE YOUR EXISTING EMPLOYEES STILL MEET THEIR DAILY REQUIREMENTS? IT SEEMS LIKE A MASSIVE TASK TO HAVE 50% OF YOUR DEPARTMENT NEW.
IT IS, UH, WE WERE LOOKING AT OUR TRANSMISSION, JUST OUR TRANSMISSION STAFF.
SO IT'S A, IT'S A TREMENDOUS TURNOVER.
ONE OF THE THINGS WE'RE DOING, UM, WE'RE ASKING PEOPLE TO COME IN TO WORK, WORK BESIDE SIDE BY SIDE WITH EACH OTHER, UM, THAT HAS A, UH, A BENEFIT FOR, FOR TRAINING.
BUT THAT'S A, THAT'S A REAL CHALLENGE IS, IS GETTING NEW EMPLOYEES IN, CONNECTING THEM, HELPING THEM UNDERSTAND THE WORKFLOW PROCESS.
[02:00:02]
UM, AND THAT'S, THAT, YOU'RE RIGHT, THAT THAT'S A BIG CHALLENGE.UH, THE EDP HELPS, UH, BECAUSE A LOT OF THE EDP PEOPLE THAT COME IN WILL SPEND A YEAR BASICALLY HELPING THEM UNDERSTAND WHAT EVERYONE ELSE IN ERCOT DOES.
AND SO THOSE EMPLOYEES YOU PLUG IN ARE, ARE PRETTY WELL INTEGRATED, BUT OTHER WORDS THAT YOU BRING IN, IT'S A LITTLE HARDER.
UH, THE ONLY THING I'LL POINT OUT HERE IS, UM, IN 2023, WE HAD THE WEATHERIZATION PROGRAM FUNDED WITH CONTRACTORS.
AND SO WHEN WE TOOK THAT MONEY OUT AND PUT IT IN THE REGULAR BUDGET, YOU'LL SEE SOME OF THESE NUMBERS LOOK KINDA STRANGE FOR, UH, LIKE NON-LABOR HIRE IN 2023 THAN IT WAS IN 2024.
FUNCTIONALLY, IF YOU DON'T HAVE THAT DRIVER IN THERE, EVERYTHING'S ABOUT THE SAME.
BUT BECAUSE WE HAD, I THINK, A 10 MILLION PLACEHOLDER FOR WEATHERIZATION BEFORE WE HAD A STAFF TO DO WEATHERIZATION, THAT'S MIS, THAT'S MAKE, MAKES THESE NUMBERS LOOK KINDA STRANGE.
FIRST THING I WANNA TALK ABOUT IS RIO.
UH, I THINK WE'VE SAVED ESTIMATED FIVE PEOPLE JUST IN, IN OUR AREA WITH, WITH RIO.
UH, WE COULD NOT HANDLE THE NUMBER OF INTERCONNECTION REQUESTS THAT WE HAVE WITHOUT IT, AND THOSE NUMBERS ARE GOING UP AND THE IMPROVEMENTS THAT WE HAVE COMING FORWARD WILL ALSO BE NEEDED.
SO RIO IS A DELIVERED SYSTEM, WE'RE USING IT, BUT THERE ARE ADDITIONAL IMPROVEMENTS THAT THAT NEED TO BE MADE, AND YOU'LL BE SEEING THOSE IN, IN BUDGET REQUESTS IN THE FUTURE AS WELL.
AND, UH, I DO THINK THAT, UH, I DUNNO IF THIS IS THE TIME OR NOT, BUT WE ARE GETTING A LOT OF RECOGNITION FOR OUR INTERCONNECTION PROCESS ACROSS THE COUNTRY.
UH, WE, WE GET REQUESTS TO FROM PEOPLE TO HOW, HOW ARE YOU MAKING THIS WORK? UH, HOW CAN YOU DO THIS FASTER THAN EVERYONE ELSE? AND SO, UM, THAT RIO IS A BIG PART OF THAT AND BEING ABLE TO KEEP THAT, UH, GENERATION INTERCONNECTION TEAM STAFFED TO THE RIGHT LEVEL IS ALSO A BIG PART OF THAT.
UH, WHAT DO YOU, IF I COULD GO AHEAD AND ASK, WHAT, WHAT IS OUR INTERCONNECTION PROCESS TIMING VIS-A-VIS THE AVERAGE FOR THE REST OF THE COUNTRY? SO LARGE GENERATORS, TWO TO THREE YEARS AND SMALL GENERATORS, WHICH WE'RE SEEING A LOT OF, CAN BE DONE AS FAST AS FOUR MONTHS COM COMPARED TO WHAT FOR THE REST OF THE COUNTRY.
I HEAR STORIES OF SIX AND SEVEN, EIGHT YEARS IN, IN OTHER AREAS FOR LARGE GENERATORS.
THOSE MAY BE WORST CASE NUMBERS, BUT WHEN WE GO TALK, THAT'S WHAT THAT'S WHAT WE HEAR.
THERE WAS AN ARTICLE IN ONE OF THE TRADE RAGS ABOUT PGM HAVING 1100 BACKLOGS.
UM, WE ALSO PUT IN PLACE A SMALL INTERCONNECTION PROCESS THAT HELPS STREAMLINE THAT UNDER EFFICIENCIES.
UH, WE AUTOMATED, UH, SOME OF THE, UH, I C C P MODELING AND SAVED A PERSON THERE, IMPLEMENTED DATA COLLECTION SYSTEM FOR THE WEATHERIZATION PROCESS THAT WE EXPECT TO SAVE A POSITION.
UM, GOT TOOLS AND PLANNING THAT THAT WE'VE BUILT OUT THAT HAVE SAVED SOME POSITIONS.
WE'VE USING OUR WEATHERIZATION INSPECTORS THAT ARE ALREADY IN THE FIELD TO DO BLACK START TESTING, WHICH REQUIRES FIELD WORK.
THAT'S, THAT'S CREATED SOME SAVINGS.
UM, AND WE'VE ALSO DECIDED NOT TO FILL ONE OF THE, THE TRANSMISSION INSPECTION POSITIONS IN WEATHERIZATION THAT WE INITIALLY SCOPED OUT.
WE'RE KIND OF HOLDING BACK ON THAT BECAUSE I DON'T THINK IT MAY BE NEEDED.
WE SEEM TO BE MANAGING WITHOUT THAT POSITION, SO WE'RE NOT FILLING THAT ONE RIGHT NOW, WHICH IS ALREADY IN THE BUDGET.
UM, THIS PARTICULAR BUDGET WAS, WE CALLED 19 DIFFERENT POSITIONS FROM THIS BUDGET.
SO EVEN THOUGH YOU SEE A LOT OF, A LOT OF NAMES HERE, A LOT OF PLACES, UH, THERE ARE 19 THAT WEREN'T ASKED FOR THAT, WE CALLED OUT AND YOU'LL SEE THOSE POSITIONS THERE.
UH, THE PREVIOUS BUD BUDGET CYCLE, UM, WE CALLED OUT, UH, THERE WERE SEVEN POSITIONS THAT WERE, THAT WERE, THAT WERE CUT FROM THAT CYCLE.
UM, UH, PLANNED IMPROVEMENTS IN RISK MANAGEMENT.
I THINK IF WE NEEDED FLEXIBILITY IN SOME OF THESE ASKS.
I THINK THE LARGE FLEXIBLE LOAD GROUP, WE JUST DON'T KNOW WHAT THAT'S GONNA LOOK LIKE YET.
SO THOSE POSITIONS THAT WE ASK FOR THERE, UM, THERE'S A LOT OF VARIABILITY THERE.
WE DON'T KNOW WHAT THAT'S GONNA BE YET.
AND THE, UH, THE OTHER PLACE WE COULD CUT BACK IF WE NEEDED TO WOULD BE THE, UH, THE EDP EXPANSION.
AND SO THAT WOULD BE A PLACE THAT, UH, I WILL SAY THOUGH THAT, UH, AND YOU'LL HEAR THIS IN THE R AND M REPORT LATER, UH, WE'RE HAVING A HARD TIME FINDING PEOPLE.
WE CAN'T FIND PEOPLE, AND I THINK THE ANSWER
[02:05:01]
IS DEVELOPING OUR OWN.WE'LL BRING 'EM IN, WE'LL TEACH 'EM, WE'LL TRAIN THEM AND WE'LL PLUG THEM IN AND TRY TO KEEP 'EM BECAUSE THEY'RE NOT OUT THERE RIGHT NOW TO FIND.
SO ANY QUESTIONS? WHEN YOU SAY THEY'RE NOT OUT THERE, IS THAT BECAUSE WE'RE NOT PRODUCING ENOUGH OF THAT TYPE OF TRAINED PERSON IN THE COUNTRY OR IN THE STATE? OR IS IT THEY DON'T WANNA WORK AT ERCOT OR THEY DON'T WANNA WORK IN THE INDUSTRY AT LARGE? WHAT, WHAT, WHAT'S THE, I THINK IT'S A COMBINATION OF ALL THREE OF THOSE THINGS.
UM, THE UNIVERSITY SYSTEM RIGHT NOW IS PRODUCING A LOT OF PEOPLE THAT ARE VERY INTERESTED IN GREEN POWER.
SO IF YOU TALK ABOUT WIND TURBINES AND SOLAR AND BATTERIES, THERE'S A LOT OF INTEREST IN THAT.
AND THAT'S A LITTLE BIT DIFFERENT THAN THE HARDCORE PLANNING ENGINEER THAT WE USED TO HIRE.
THAT'S NOT EXACTLY A POWER SYSTEM ENGINEER.
UM, THOSE, THE, THE, THE TRAINING AND THE, AND THE, AND THE, UH, THE CLASSROOM WORK THAT THEY GET, UH, MAY NOT HAVE A MOTORS CLASS IN IT
AND SO WE'RE NOT SEEING THE HARDCORE POWER SYSTEM ENGINEER NUMBERS LIKE WE USED TO.
UM, I THINK THE OTHER THING IS THEY'RE WORKING AT ERCOT MAYBE IS, UM, WE'RE NOT DOING MAYBE AS GOOD A JOB OF SELLING THAT AS WE COULD.
I THINK, I THINK ERCOT IS A GREAT PLACE FOR A POWER PERSON TO COME WORK, BUT I THINK WE'RE, THERE'S A LOT MORE COMPETITION NOW THAN, THAN WHAT WE'VE HAD IN THE PAST.
UM, I, AND THEN JUST THE, THE NUMBERS OF OF PEOPLE I THINK ARE, ARE PROBABLY A LITTLE BIT DOWN AS WELL VERSUS THE DEMAND.
CAN I, UH, SUPPLEMENT THAT WITH ONE THING THAT I THINK FROM A MORE EXPERIENCED PEOPLE PERSPECTIVE, I THINK WE'VE, UM, I, WE'VE DONE THINGS IN THE LAST YEAR TO INCREASE KIND OF THE COMPETITIVENESS OF ERCOT FROM A SALARY PERSPECTIVE AND BENEFITS PERSPECTIVE.
UM, AND THAT HAS HELPED STOP THE BLEEDING.
SO WE HAVEN'T SEEN AS MANY PEOPLE LEAVING, BUT I DON'T THINK WE'VE, UH, YET GOTTEN THE WORD OUT THERE.
AND THAT'S THE REASON I DECIDED TO SPEAK UP HERE, THAT, THAT WE ARE PAYING WELL AND, UH, OUGHT TO BE ABLE TO RECRUIT MORE FOLKS FROM OUTSIDE OF
BUT WE, WE NEED TO GET THE WORD OUT ON THAT.
YEAH, I THINK HR HAS MADE SOME CHANGES THAT ARE GONNA HELP, BUT, UH, WE WERE GOING IN THE WRONG DIRECTION AND MAKING THOSE CHANGES IS GONNA TURN US AROUND, BUT I THINK WE'RE STILL IN THE TURNAROUND STAGE RIGHT NOW.
ANY OTHER QUESTIONS? I THINK THE, THE ADR IS GONNA HIT THE MODELING GROUP AS HARD AS ANY GROUP, AND THERE'S A, THERE IS A, THERE IS A POTENTIAL FOR VERY IMPACTFUL ADDITIONS DEPENDING ON HOW IT'S DONE.
WHAT WOODY, I, I WORRY BECAUSE IT'S A, IT'S A THREE YEAR PROGRAM.
WE'RE DEALING WITH A TWO YEAR, UH, BUDGET THAT YOU'RE, YOU'RE TRYING TO BUILD IN HERE, AND THEN IT'S AN 80 MEGAWATT, YOU KNOW, WITH A SMALL PREMISE IMPACT.
I, I JUST FEEL LIKE WE MAY BE OUT OF SYNC THERE AND IT MAY HIT US.
BUT YOU GUYS ARE GOOD AT FILLING IN GAPS, SO GOOD LUCK.
ANY OTHER QUESTIONS? THANKS, WOODY.
SO ROBERT, YOU'RE UP NEXT, I THINK.
ROBERT BLACK WITH PUBLIC AFFAIRS.
UM, I BELIEVE I AM THE LAST ONE TO GO.
I'M PROBABLY THE SHORTEST ONE AS WELL, SO THAT'S GOOD.
UM, I THINK, UH, IT KINDA GOES WITHOUT SAYING THAT POST URI, THERE WAS AN EXTRAORDINARY INCREASE IN THE EXPECTATIONS OF COMMUNICATIONS FROM ERCOT FOR BOTH LEADERSHIP, UH, IN THE, IN THE PINK BUILDING, IN THE, IN THE CAPITOL, UM, LEADERSHIP AROUND THE STATE, UH, OUR MARKET PARTICIPANTS, UM, THE PRESS, THE PUBLIC, AND THAT IS PARTICULARLY WHAT'S DRIVING, UH, THE MODEST INCREASES IN OUR BUDGET.
UM, IN THE LAST SIX MONTHS, WE HAVE OVERTAKEN A COMPLETE, UH, REORGANIZATION OF THE COMMUNICATIONS DEPARTMENT UNDER PUBLIC AFFAIRS.
UM, WE HAVE INCREASED, UH, THE STAFFING BY TWO PEOPLE AND FILLED A, A POSITION THAT HAD BEEN, UM, LONG EMPTY.
UM, WE HAVE, UH, LOOKED AT, UM, INCREASING THE COMMUNICATION, THE TRANSPARENCY, THE EDUCATION OF WHAT WE'RE PUTTING OUT.
[02:10:01]
UH, STARTED, UH, DEDICATING INDIVIDUALS IN MY ORGANIZATION TO BOTH INTERNAL AND EXTERNAL SOCIAL GRAPHICS VIDEO, UM, REALLY BEEFING UP, UM, OUR CAPABILITIES TO BETTER DELIVER CONTENT TO THE PUBLIC, UH, TO THE PRESS, AND THEN, AND TRY TO MEET THOSE VERY, VERY HIGH EXPECTATIONS FOR HOW ERCOT IS GONNA COMMUNICATE GOING FORWARD.AND I THINK YOU'VE SEEN SOME OF THAT IN JUST THE SHORT TIME THAT WE'VE STARTED THIS WITH, UH, THE NEW DASHBOARDS, UH, THE INCREASED CAPABILITY OF SOME OF THE DASHBOARDS.
UH, WE'VE LAUNCHED, UM, A NEW COMMUNICATIONS PLATFORM IN TEXANS.
IN FACT, WE ISSUED OUR FIRST WEATHER WATCH LAST WEEK, AND, UH, WE NOW HAVE ON THE INTERNAL SIDE AND INTRANET FOR THE FIRST TIME, UM, SINCE, UH, WITH, WITH ERCOT HERE.
SO, UM, LIKE I SAID, THE, THE INCREASE HAVE BEEN MODEST.
WE'VE, WE'VE KIND OF CHANGED, UM, UH, PRIOR TO, UH, ME GETTING HERE, THERE WAS A HEAVY RELIANCE ON EXTERNAL CONTRACTORS FOR COMMUNICATIONS.
UM, WE'VE CUT A LOT OF THAT OUT AND BROUGHT IN, UM, MORE FOLKS INTERNALLY AND GROWN OUR INTERNAL TALENT.
THAT'S ONE OF OUR FOCUS IS GOING FORWARD, IS TO GROW THE CAPABILITIES OF OUR INTERNAL FOLKS.
UH, SO, UH, LIKE I SAID, THERE'S A HUGE INCREASE IN EXPECTATIONS ON, ON WHAT WE DO ON THE COMM SIDE.
THAT'S GONNA BE, THAT'S WHAT YOU SEE HERE, DRIVING MY BUDGET INCREASE ASKS.
AND, UH, I THINK, UM, I FEEL VERY CONFIDENT IN THE NUMBER OF FOLKS THAT WE HAVE NOW AND THE CAPABILITIES WE'VE PUT IN PLACE TO MEET THOSE EXPECTATIONS.
HAPPY TO ANSWER ANY QUESTIONS.
HEY, ROBERT, IF, IF SOMEONE UNRELATED ASKED ME HOW MANY, HOW MANY PEOPLE ARE IN PUBLIC AFFAIRS AT ERCOT? I'D SAY, I DON'T KNOW, MAYBE FIVE, BUT YOU'VE GOT LIKE 40.
WHERE, WHERE ARE ALL THESE PEOPLE? WHAT DO THEY DO? SO IN CORP COMM, WE'VE GOT, IT'S A BIG NUMBER.
I'M NOT USED TO SUCH A BIG NUMBER IN PUBLIC AFFAIRS.
WELL, PUBLIC AFFAIRS ISN'T JUST CORP COMM.
THERE IS, UM, 12 FOLKS IN THE ACTUAL CORPORATE COMMUNICATIONS DEPARTMENT, UH, AND CLIENT SERVICES, WHICH IS RUN BY TED HILU.
AND IS OUR INTERFACE CONSIDERED KINDA LIKE ACCOUNT MANAGERS FOR ALL OF OUR MARKET PARTICIPANTS.
THAT'S ACTUALLY THE BIGGEST PART OF, UH, PUBLIC AFFAIRS.
THERE'S 27 FOLKS THERE AND, UM, AND THEN GOVERNMENT AFFAIRS, THERE'S TWO PLUS ME.
UM, SO THAT'S KIND OF WHAT THE BREAKDOWN IS.
BUT CLIENT SERVICES ACTUALLY HAS, UM, THE BIGGEST PORTION OF THAT.
AND THOSE ARE THE, UM, THOSE OF OUR, OUR FOLKS WHO ARE THE, I CONSIDER 'EM KINDA LIKE THE EDUCATORS AND THE PROBLEM SOLVERS.
UH, THEY'RE THE SINGLE POINT OF CONTACT FOR ALL OF OUR MARKET PARTICIPANTS.
SO ALL THE HUNDRED HUNDREDS OF FOLKS THAT DO BUSINESS WITH ERCOT, THEY HAVE SOMEONE THAT THEY CAN CALL, UM, TO HELP THEM UNDERSTAND HOW WE WORK, UH, HELP THEM, UH, WORK THROUGH THE, OUR PROCESS, HELP SOLVE PROBLEMS WHEN THEY HAVE 'EM.
UM, THOSE ARE, THOSE ARE THE FOLKS THAT THE EDUCATORS AND THEY'RE THE PROBLEM SOLVERS.
THEY HAVE TONS OF EXPERIENCE, UM, IN ALL FACETS OF ERCOT AND, UH, THEY'RE KIND OF QUIET GROUP BEHIND THE SCENES.
BUT, UH, THEY'RE INDISPENSABLE IF YOU ASK ME.
ANYONE ELSE? OKAY, THANKS ROBERT.
THAT COVERS THE FUNCTIONAL AREA PRESENTATION.
SEAN'S GONNA DO A WRAP UP WHEN WE COMPLETE, UM, UH, SEAN'S PART OF THIS, UH, DISCUSSION.
WE'LL BE LOOKING AT A RESOLUTION TO MAKE A RECOMMENDATION TO THE BOARD TO APPROVE THE, UH, SYSTEM ADMIN FEE AND ALSO THE BUDGET FOR 20 24, 20 25.
OVER THE LAST FEW SLIDES I PROMISED YOU EARLIER START ON SLIDE 41.
THIS IS SET UP THE SAME WAY THAT YOU SAW LAST TIME, SHOWING THE OPTIONS OF WHETHER WE GO THE ROUTE OF OPTION ONE ON HERE, WHICH SHOWS A FOUR YEAR RATE INCREASE, TAKING US THROUGH THE END OF 2027.
AND IN ROW 10 YOU CAN SEE THE HIGHLIGHTED $20 MILLION.
THAT'S THE NUMBER THAT I MENTIONED EARLIER THAT WENT UP FROM THE ONE IN CHANGE BEFORE BECAUSE THE CHANGES WE'VE MADE AND COMPARING THAT TO OPTION TWO AND OPTION THREE IN ROSE 11 AND 16, STARTING IN ROSE 11 AND 16, WHICH ARE TALKING ABOUT A TWO YEAR INCREASE CONSIST RELATIVELY CONSISTENT.
AND A THREE YEAR OPTION THREE, WHICH IS INCREASE EVERY YEAR OF APPROXIMATELY 10%.
AND AS YOU CAN SEE IN ROWS 15 AND 20, BOTH OF THOSE RESULT IN POTENTIAL USES OF C R R FUNDS AND LIQUIDITY ISSUES RELATIVE TO THE FOUR YEAR RATE INCREASE, WHICH ADDRESSES THAT CONCERN.
THE NEXT TWO SLIDES ARE THE TWO THAT ARE ASSOCIATED WITH THE DECISION TEMPLATE AND INCLUDED IN THAT PACKET AS ATTACHMENTS A AND B ON SLIDE 43.
HOW WE SAW IT BEFORE INCLUDES ALL THE INFORMATION TAKEN US FROM THE SYSTEM ADMINISTRATION FEE
[02:15:01]
RATE IN LINE ONE OF 71 CENTS ALL THE WAY DOWN TO THAT ROW 17 SHOWING THAT CASH BALANCE AGAIN.AND THAT TARGET IN 2027 OF 20 MILLION.
OUR SOURCES AND USES SLIDE COVERS THE SAME INFORMATION AND TALKS ABOUT THE OTHER TARGET NUMBER THAT WE HAVE THAT YOU WILL BE APPROVING, WHICH IS THE TOTAL USES OF FUNDS DOWN IN ROW 17.
THAT'S THAT FOUR 24 MILLION IN 2024 AND FOUR 26 MILLION IN 2025.
AND THEN THE FINAL SLIDE I'LL TAKE YOU TO IS SLIDE 48, WHICH IS THE FINANCIAL RATIO SLIDE.
AND THIS SLIDE DOES TWO THINGS THAT ARE REQUIRED FOR THE BUDGETS THAT WE TAKE TO YOU FOR APPROVAL.
IT CALCULATES OUR DEBT SERVICE COVERAGE RATIO AT THE TOP THAT TAKES THE REVENUES IN, INCLUDED IN THE BUDGET PRESENTATION, SUBTRACTS OUT THE NON-PROJECT EXPENDITURES TO GET US A NET REVENUES AVAILABLE FOR DEBT SERVICE IN ROW 10.
AND THEN OUR TOTAL DEBT SERVICE IN ROW 1314 IS THEN OUR CALCULATED DEBT SERVICE COVERAGE RATIO.
AND OUR TARGET REQUIREMENT PER OUR NOTES PAYABLE AGREEMENT IS A 1.1 TO ONE AND WE FAR EXCEED THAT IN ALL OF THESE PROJECTED YEARS.
THE BOTTOM CALCULATION IS OUR LIQUIDITY RATIO.
THIS IS AS DEFINED BY THE CORPORATE STANDARD THAT YOU APPROVE.
THIS IS A CONSERVATIVE CALCULATION BECAUSE IT DOES NOT INCLUDE ANY REVENUES.
SO WHAT THIS SHOWS IS IN ROW 15, WE HAVE OUR DEPARTMENT EXPENDITURES FOR A TWO MONTH AVERAGE, OUR DEBT SERVICE TAKING THE SIX MONTH AVERAGE, OUR PROJECT EXPENDITURES, ANOTHER TWO MONTH AVERAGE CALCULATION TO SHOW THE AMOUNT OF MONEY THAT WE WOULD HAVE TO PAY OUT TO GO THROUGH TWO MONTHS OF NO REVENUES COMING IN.
AND THEN WE COMPARE THAT TO THE UNDRAWN BORROWING CAPACITY OF OUR REVOLVING LINE OF CREDIT, WHICH IS LIMITED TO A HUNDRED MILLION DOLLARS TO GIVE US THAT LIQUIDITY RATIO CALCULATION.
AND AS YOU CAN SEE, WE COULD SURVIVE THROUGH THE TWO MONTHS, ASSUMING NO CASH COMING INTO ERCOT AND ACTUALLY MORE LIKE THREE MONTH TIMEFRAME.
AND WITH THAT TAKE ALL THE WAY THROUGH TO THE REQUEST THAT BILL JUST MENTIONED AND DECISION TEMPLATE.
AND SO A REQUEST FOR A VOTE TO PASS THIS ON TO THE BOARD.
WELL, WE HAVE SPENT, UH, AS A BOARD AND AS A COMMITTEE, UH, THE LAST TWO MEETINGS PRIOR TO THIS MEETING LOOKING AT, UH, THE BUDGET.
NOW, LET ME SUMMARIZE WHAT I HEARD TODAY, UH, AS WELL AS OUR PREVIOUS CONVERSATIONS ON HOW TO SET THE SYSTEM ADMINISTRATION FEE AND HOW TO PROPERLY RESOURCE THE ORGANIZATION.
SO I HEARD SORT OF FIVE THEMES.
FIRST OF ALL, OUR GREAT COMPLEXITY AND DYNAMICS AND DIVERSITY HAVE REALLY EXPLODED COMPARED TO WHAT THEY HAVE BEEN HISTORICALLY.
IF YOU LOOK AT SOME OF THE METRICS IN THE PRESENTATION OF 2014 VERSUS TODAY WHEN WE HAD OUR LAST SYSTEM, OR 2014 WHEN WE HAD OUR LAST SYSTEM ADMIN FEE INCREASED TO TODAY, THE GRID IS TOTALLY DIFFERENT THAN WHAT IT WAS THEN.
UH, WE'VE GOT REGULATORY, LEGISLATIVE, UM, UH, REQUIREMENTS THAT HAVE CHANGED DRAMATICALLY, INCLUDING POST URI REQUIREMENTS THAT HAVE COME UP.
UH, IN MY VIEW, WE'VE HAD A HISTORICAL UNDERINVESTMENT AND OUR HUMAN CAPITAL HERE, WE HAVE, WE AS A BOARD HAVE MADE, UH, BIG DECISIONS TO CATCH THAT UP AND IT'S HAD A COST TO US.
AND WE'RE SEEING THAT IN THIS BUDGET.
UH, THERE HAS BEEN SOME, UH, WE HAVE RESTORED SOME DEFERRED PROJECTS, UH, THAT HAVE BEEN DEFERRED, UM, BY PREVIOUS BOARDS OR, OR FOR WHATEVER REASON IN THE PAST.
AND THEN LASTLY, AN INCREASE IN, UH, INSURANCE COST AND LITIGATION.
SO WHAT I'D LOOK AT, UNLESS PABLO OR SEAN OR CHAD OR ANY OF THE FUNCTIONAL LEADERS HAVE A A DIFFERENT OPINION, THAT'S SORT OF WHAT I HEARD TODAY.
AND SO WHEN YOU LOOK AT THE BUDGET, YES, BIG INCREASE IN DOLLARS RESOURCES, BIG INCREASE IN PEOPLE, UH, BUT IT'S ALL BEEN DONE, UH, BY KEEPING THE SYSTEM ADMIN FEE TO A 3% ANNUAL INCREASE FROM WHEN IT WAS LAST INCREASE.
SO THAT'S, THAT'S MY VIEWPOINT ON WHERE WE ARE.
I'D BE CURIOUS IF ANYBODY HAS ANY OTHER COMMENTS OR IF ANYBODY WANTS TO GO AHEAD AND MAKE THE, UH, THE MOTION, THE RESOLUTIONS THAT ARE THE MOTION TO APPROVE THE RESOLUTIONS ARE INCLUDED ON PAGE 72.
JOHN, YOU LOOK LIKE YOU'RE READY TO TALK.
I WAS JUST GONNA MAKE A COMMENT THAT HEIGHTENED DEGREE OF SENSITIVITY ABOUT RELIABILITY AS WELL TO TO YOUR FIVE POINTS.
I MEAN ALL DON'T DISAGREE WITH ANYTHING YOU SAID, BUT I THINK WE SHOULD MAKE THE POINT THAT, YOU KNOW, RELIABILITY HAS JUST GONE UP IN, IN
[02:20:01]
THE PUBLIC'S VIEW AND IN THE LEGISLATURE'S VIEW AND IN OUR VIEW, UH, TO BE MUCH MORE IMPORTANT AND THAT THAT TOO REFLECTS ITSELF IN THE ADDITIONAL BUDGET.RELIABILITY HAS A COST AND SO DOES THE LACK OF RELIABILITY.
SO I THINK WE, WE ARE, WE ARE PUSHING TO HAVE TO PAY THE COST OF RELIABILITY, UH, SO THAT WE DON'T INCUR THE COST OF LACK OF RELIABILITY.
BOB, DID YOU WANNA SAY SOMETHING? SURE.
I THINK ONE THING, JUST AS A WORD OF CAUTION, I THINK WHEN YOU INCREASE AN ORGANIZATION BY THE MAGNITUDE, WHICH WE'RE PROPOSING, HOPEFULLY IT'S DONE IN A KIND OF A PHASED WAY WHERE IT'S NOT LIKE WE'RE GONNA RUN OUT AND HIRE 171 PEOPLE OR WHATEVER THE NUMBER IS.
CAUSE IN THIS WORLD OF REMOTE WORKING, THE, THE ONBOARDING, THE TRAINING IS AN INTENSIVE PROCESS AND I WOULD HOPE THAT YOU KIND OF PRIORITIZE WHICH ONES YOU WANT TO BRING IN FIRST VERSUS JUST OPENING THE FLOODGATES AND HAVING EVERYBODY RUSH IN BECAUSE I THINK YOU CAN LOSE CONTROL BY DOING THAT.
I TRUST THAT MANAGEMENT'S GETTING THAT MESSAGE.
JULIE, DID YOU HAVE ANYTHING YOU WANNA ADD? WELL, IT IS A DRAMATIC INCREASE.
UM, I THINK THE JUSTIFICATION IS THERE, THE TIMING OF IMPLEMENTATION HAS BEEN COMMENTED ON AND I'M GLAD THAT YOU ACTUALLY STARTED THE RAMP IN 2023.
YEAH, ONE OF THE POINTS I LEFT OUT IS THE NUMBER, THE INCREASE IN NUMBER OF INDUSTRY PARTICIPANTS, THE NUMBER OF DATA SETS THAT ARE, YOU KNOW, WE'VE GONE FROM 4 MILLION DATA SETS HEADING UP TO 5 MILLION, UH, DATA POINTS.
I MEAN IT'S PRETTY COMPLEX SYSTEM.
PABLO, DO YOU WANT TO ADD ANYTHING? I THINK COMMISSIONER GLAD I WAS JUST GONNA ASK, UM, ARE THERE THINGS THAT YOU DID NOT FUND, UH, IN THIS BIENNIAL BUDGET CYCLE THAT YOU'RE RECOMMENDING, UH, THAT YOU WISH YOU COULD HAVE FUNDED IN THE 24 25? YES, SIR.
UM, AND I DIDN'T HEAR ANY OF THE FUNCTIONAL HEADS BRING ANY UP.
AND I THINK THAT'S A GOOD QUESTION, COMMISSIONER, AND, AND I WOULD SAY THAT WE TRIED TO ANTICIPATE AS MUCH UNCERTAINTY AS POSSIBLE IN ESTABLISHING THIS BUDGET, BUT STILL BUILDING IT WITH A BOTTOMS UP LEVEL OF SPECIFICITY AND RIGOR SO THAT WE COULD CONFIDENTLY POINT TO WHERE EACH RESOURCE AND EACH DEPARTMENT WAS GONNA UTILIZE THE INCREASES THAT THEY'RE ASKING FOR.
SO THERE'S A BIT OF A FINE LINE THAT WE'RE TRYING TO WALK, WHICH IS RECOGNIZING GROWTH AND UNCERTAINTY IS IN OUR FUTURE, CONTINUED DEMANDS AND FLEXIBILITY WILL BE REQUIRED, BUT WE HAVE TO BE PRUDENT AND WE HAVE TO MAKE SURE THAT THE DOLLARS WE'RE ASKING FOR ARE UTILIZED IN A VERY CLEAR, TRANSPARENT WAY.
AND SO I THINK THIS BUDGET STRUCK THAT BALANCE FAIRLY, AND I THINK WE WILL HAVE TO MAKE TRADEOFFS AND COMPROMISES IN THE FUTURE AS, UH, THINGS CHANGE AND ARE, ARE CERTAIN TO CHANGE.
BUT I THINK WE HAVE BUILT A BUDGET THAT GIVES US THE ABILITY TO DO THAT IN A WAY THAT WILL CONTINUE TO ENABLE US TO MEET OUR OBLIGATIONS FOR RELIABILITY AS WELL AS TO MEET THE OBLIGATIONS ON THE REGULATORY AND LEGISLATIVE FRONTS.
UH, JIMMY, FOR WHAT IT'S WORTH, I, I THINK THE AREAS WHERE WE COULD HAVE SOME UNDER RESOURCE RISK, IF YOU WILL, ARE IN THE A DERS THAT, THAT, UH, COMMISSIONER MCADAMS BROUGHT UP.
UM, I WORRY ABOUT THE IMPACT OF THE I, THE INFLATION REDUCTION ACT IN TERMS OF CRAMMING A BUNCH MORE, UH, RENEWABLES INTO THE SYSTEM AND, AND STRESSING OUR, OUR ABILITY TO COVER ALL THOSE INTERCONNECT STUDIES.
UH, AND THEN I THINK FINALLY THE EPA HAS BEEN HYPER AGGRESSIVE AND TERMS OF ITS FOCUS ON, UH, FOSSIL FUEL GENERATION AND THEN ON ONE HAND, SO WHICH REDUCES SUPPLY OF DISPATCHABLE.
ON THE OTHER HAND, YOU'VE GOT THEM PUSHING, UH, EVS, WHICH INCREASES DEMAND.
SO THOSE, THAT'S KIND OF THE WRONG WAY TO TREAT THE SUPPLY DEMAND CURVE.
SO I THINK THOSE ARE AREAS WHERE WE WILL, WE AS AN ORGANIZATION, I THINK WE'LL HAVE TO ADJUST, BUT WE'RE ALL GONNA BE SITTING AROUND THE TABLE TALKING ABOUT THAT AS, AS THOSE THINGS COME UP.
SO I HAVE TWO QUESTIONS FROM THE CONSUMER SIDE.
UM, WHEN WAS THE LAST INCREASE PRIOR TO 2016 AND HOW DO Y'ALL COMMUNICATE TO THE GENERAL PUBLIC THAT THAT'S OCCURRING OTHER THAN JUST SHOWING UP ON THEIR BILL? YES, WE HAD A INCREASED TWO YEARS BEFORE THAT.
WE WENT FROM 41 71 TO 46 50, AND THEN WE WENT TO 55 50, 55 5 AFTER THAT.
SO THAT WAS ONLY A TWO YEAR PERIOD AND WE COMMUNICATE THAT, UH, ANTICIPATED INCREASE THROUGH THIS BOARD MEETING.
AND THEN WE ALSO DO THE ANNOUNCEMENTS WHEN WE'VE, AFTER WE HAVE THE APPROVAL FROM THE PUC AND THE FILING OF THAT, THERE WILL BE A PUBLIC HEARING AT THE PUC FOR THIS AS WELL.
SO 41 75 TO 55, IS THAT RIGHT? 41 71.
[02:25:01]
THE 41 71 WAS AT THAT RATE FOR SEVERAL YEARS, BUT IT WAS ALSO AUGMENTED BY THE NODAL IMPLEMENTATION SURCHARGE.YEAH, DURING THAT PERIOD, THEN WE HAD IT AT 46 AND A HALF CENTS FOR A TWO YEAR PERIOD AND THEN WE INCREASED IT TO THE 55 AND A HALF CENTS.
COURTNEY, I THINK YOU RAISED AN IMPORTANT ISSUE, AND THAT IS, I THINK ROBERT BLACK AND HIS TEAM NEED TO HAVE A REALLY GOOD COMPELLING, SUCCINCT MESSAGE TO, TO BE READY TO PROMULGATE ABOUT, YOU KNOW, THIS FEE IS ONLY A 3% ANNUAL INCREASE AND WE'VE GOT ALL THE OTHER CHALLENGES FOR THE, ALL THE OTHER REQUIREMENTS FOR THE GRID THAT WE, WE'VE TALKED ABOUT IN THE LAST FEW MINUTES.
WE'LL BE SURE TO HAVE A ROBUST COMMUNICATION PLAN THAT WOULD FOLLOW THE PC'S ACTION WHEN, UH, WHEN THIS IS PUT FORWARD.
FIRST I WANT TO THANK YOU AND BOB AND SEAN AND ALL THE MANAGEMENT TEAM FOR REALLY WORKING ON THIS PRESENTATION SINCE, SINCE THE LAST MEETING BECAUSE THE, THE MAGNITUDE OF THE BUDGET INCREASE THE HEAD COUNT INCREASE, ESPECIALLY, AND, UH, THE SYSTEM ADMINISTRATION FEE IS QUITE SHOCKING AT FIRST.
SO, UH, IT'S BEEN IMPORTANT TO GO THROUGH THIS PROCESS AND APPRECIATE WHAT YOU'VE DONE ON THAT.
UH, I'VE COME TO THE CONCLUSION FOR THE REASONS EVERYONE SAID THAT THE GROWTH, THE COMPLEXITY OF THE SYSTEMS, THE RESOURCE MIX THAT IT'S NECESSARY.
I ALSO ECHO THAT, UH, I THINK A LOT OF THE, SOME OF THE THINGS MAY HAVE BEEN, I WOULDN'T SAY IGNORED, BUT SHOULD HAVE DONE, BEEN DONE PRIOR.
AND, UH, THE, THE MAGNITUDE OF THE SYSTEM ADMINISTRATION FEE IS IN, HAS THE, THE TIMING OF INCREASES, IMPACTS THE SIZE, AND I JUST HOPE WE GET TO A POINT WHERE WE DON'T PUT OFF THINGS, UH, FOR SO LONG.
AND SO THAT THE, THE SIZE IS NOT SO SHOCKING.
AND I'D LIKE TO, UH, REITERATE A POINT BOB MADE, UH, AND I THINK IT WAS WOODY ADDRESS ABOUT THE SIZE OF THE EMPLOYEES THAT WE'RE TARGETING AND HOW YOU'RE GONNA INTEGRATE THEM WITH REMOTE WORKING.
I THINK WOODY SUGGESTED THAT THEY'RE GONNA BE THERE.
UH, I THINK WE NEED TO LOOK AT ALL THAT, UH, BECAUSE IT, IT COULD, CAN BE VERY DISRUPTIVE, UH, TO THE ORGANIZATION EVEN WHEN YOU BRING THAT THE MANY PEOPLE IN, EVEN IF YOU'RE DOING IT OVER TIME.
BUT IF THEY'RE NOT BEING INTEGRATED IN PROPERLY BECAUSE, UH, THEY'RE NOT THERE, THE CHALLENGES ARE EVEN GREATER.
SO I HOPE ENCOURAGE MANAGEMENT TO LOOK AT THOSE ISSUES.
AND WITH THAT, YOU, YOU HAVE COMMENT, CARLOS, OR I WAS GONNA MAKE A MOTION.
SO I WILL MOVE TO APPROVE THE BUDGET AND THE SYSTEM ADMINISTRATION OKAY.
OR RECOMMEND THAT WE DO THE BOARD, APPROVE THAT.
WE HAVE A MOTION TO RECOMMEND TO THE BOARD THE SYSTEM ADMIN FEE AND THE BUDGET FOR 24 25.
DO I HAVE A SECOND, CARLOS? I SECOND IT.
ANY, ANY DISCUSSION? ALL IN FAVOR? AYE.
ANY OPPOSED? ANY ABSTENTIONS? OKAY.
WE WILL, UH, MAKE THAT RECOMMENDATION TO THE BOARD TOMORROW.
UM, AND I THANK YOU FOR YOUR PATIENCE AS WE WENT THROUGH THIS LONG CONVERSATION TODAY AS WELL AS THE LAST SEVERAL MONTHS OF CONVERSATIONS ABOUT THIS ISSUE.
I WANT TO THANK MANAGEMENT AND ALL OF THE ERCOT TEAM FOR THE GREAT WORK THEY'VE DONE.
DID YOU HAVE SOMETHING YOU WANNA SAY? I WAS JUST GONNA ADD, I I JUST APPRECIATE THAT THE, THE PROCESS WE WENT THROUGH OVER THE LAST COUPLE OF BOARD CYCLES AND THE RIGOR THAT WAS, UM, ADDED INTO THE PROCESS AS WE STARTED THE DISCUSSION THROUGH THE POINT THAT WE ARE TODAY, I THINK MADE THE OVERALL, UM, BUDGETING CYCLE BETTER THAN IT'S BEEN HISTORICALLY.
AND THIS WILL BE, UH, I THINK A GOOD TEMPLATE THAT WE'LL USE GOING FORWARD AS WE LOOK AHEAD TO FUTURE BUDGET CYCLES AND LOOK AHEAD TO THE NEEDS OF THE ORGANIZATION.
I THINK THIS KIND OF RIGOR AND CLARITY AND SPECIFICITY IS EXACTLY WHAT'S EXPECTED AND NEEDED AND SO APPRECIATE THE, THE WORK OF THIS COMMITTEE AND THE BOARD AT LARGE IN HELPING US TO GET TO A BETTER PRODUCT AS A RESULT OF THIS.
AND ALRIGHT, WITH THAT WE HAVE CONCLUDED AGENDA ITEM NUMBER FIVE.
[6. Future Agenda Items]
TO AGENDA ITEM NUMBER SIX, THAT'S FUTURE AGENDA ITEMS AND SEAN IS GOING TO LEAD THIS DISCUSSION.AS WE LOOK TOWARD AUGUST, THERE'S A COUPLE OF ITEMS I'D LIKE TO HIGHLIGHT FOR THE COMMITTEE.
FIRST ROW 17, WE'LL BE TALKING ABOUT THE INSURANCE RENEWALS.
AS A REMINDER, WE PUSHED OUR RENEWAL DATE FROM JUNE TO
[02:30:01]
SEPTEMBER.THOSE POLICIES HAVE ALL BEEN EXTENDED THROUGH AUGUST.
SO WE'LL BRING BACK TO THIS COMMITTEE THE INSURANCE AT THE END OF AUGUST, OF WHICH WE'LL GO INTO EFFECT ON IN SEPTEMBER ROW 26, WE'LL HAVE THE INTERNAL AUDIT PLAN DEVELOPMENT UPDATE, AND ADDITIONALLY, IN ROW 29 WE'LL HAVE BAKER TILLY, OUR EXTERNAL FINANCIAL AUDITORS COME IN FOR THE PERIODIC MEETING AND PROVIDE AN UPDATE ON THEIR PLANNING FOR THE NEXT YEAR'S AUDIT.
AND FINALLY, IN 33 THROUGH 35, WE'LL HAVE THE 401K SAVINGS PLAN.
AUDITORS COME IN WITH ALL OF THEIR UH, AUDIT REPORT AND UPDATES.
ANY QUESTIONS FOR SEAN ON FUTURE GEN ITEMS? ALRIGHT, UH, LET'S MOVE ON TO AGENDA ITEM NUMBER SEVEN, WHICH IS OTHER BUSINESS.
DOES ANYBODY HAVE ANY OTHER BUSINESS TO RAISE? OKAY,
[Convene Executive Session]
I THINK THIS, UH, WILL TRANSITION TO EXECUTIVE SESSION.UH, WE'RE GOING TO ADJOURN THE GENERAL SESSION AND CONVENIENT EXECUTIVE SESSION.
I DON'T EXPECT THAT WE WILL HAVE ANY VOTING ITEMS, UH, DURING THE EXECUTIVE SESSION THAT WILL REQUIRE A, UH, UH, RESTARTING THE GENERAL SESSION, UH, AND THAT BECAUSE OF THAT THE GENERAL SESSION WILL NOT RECONVENE.
A GENERAL SESSION IS NOW ADJOURNED AND THE WEBCAST WILL BE CONCLUDED.
LET'S TAKE A FIVE MINUTE BREAK BEFORE WE START THE EXECUTIVE SESSION.