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OF THE ERCOT BOARD[1. Call General Session to Order]
OF DIRECTORS AND GUESTS.I'M PAUL FOSTER ERCOT, BOARD CHAIR.
WELCOME TO THE OCTOBER 17TH, 2023 BOARD OF DIRECTORS MEETING.
I HEREBY CALL THIS MEETING TO ORDER.
THIS MEETING IS BEING WEBCAST LIVE TO THE PUBLIC ON ERCOT WEBSITE.
BEFORE WE BEGIN, I'D LIKE TO ASK INTERIM, P U C CHAIR KATHLEEN JACKSON IF SHE WOULD LIKE TO CALL AN OPEN MEETING OF THE PUBLIC UTILITY COMMISSION OF TEXAS TO ORDER THANK YOU.
THIS MEETING OF THE PUBLIC UTILITY COMMISSION OF TEXAS WILL COME TO ORDER TO CONSIDER MATTERS THAT HAVE BEEN DULY POSTED WITH THE SECRETARY OF STATE FOR OCTOBER 17TH, 2023.
I'M KATHLEEN JACKSON AND I'M JOINED TODAY BY COMMERS WILL MCADAMS AND LORI KOBOS.
UM, COMMISSIONER JIMMY GL FELTY IS JOINING US ONLINE.
UH, BEFORE MOVING ON TO TODAY'S BUSINESS, I WANNA REPORT THAT NARA RE OF THE OFFICE OF PUBLIC UTILITY COMMISSION IS ATTENDING AS ALTERNATE ALTERNATE REPRESENTATIVE IN THE ABSENCE OF BOARD MEMBER COURTNEY ALTMAN.
IN ACCORDANCE WITH BYLAWS SECTION 4.3 D I WOULD ALSO LIKE TO HIGHLIGHT TO COMMITTEE MEMBERS THAT THE ANTITRUST ADMONITION AND SECURITY MAP ARE INCLUDED WITH POST POSTED MEETING MATERIALS.
THE FIRST ORDER OF BUSINESS ON TODAY'S AGENDA IS ITEM TWO.
NOTICE OF PUBLIC COMMENT, IF ANY.
TODAY'S MEETING AGENDA WAS POSTED PUBLICLY ON OCTOBER 10TH AND PROVIDED INSTRUCTIONS FOR THE PUBLIC FOR COMMENTING IN PERSON.
TO DATE, NO ONE HAS EXPRESSED INTEREST IN COMMENTING.
IS THAT STILL THE CASE, CHAD? THAT IS CORRECT, CHAIR.
[3. Consent Agenda]
TO AGENDA ITEM THREE, THE CONSENT AGENDA.I'LL TURN IT OVER TO CHAD TO PROVIDE THE BUDGET IMPACTS OF THE REVISION REQUESTS.
ON THE CONSENT AGENDA THIS MORNING, YOU HAVE TWO ITEMS ON THE LIST.
NEITHER ONE HAS AN ERCOT STAFF IMPACT, HOWEVER, BOTH DO HAVE A BUDGET IMPACT.
SO N P R 1184 IS BROKEN INTO TWO PHASES.
THE FIRST PHASE IS LESS THAN 10,000, AND THE SECOND PHAGE RANGES FROM A HUNDRED THOUSAND TO 150,000 AND WILL TAKE SIX TO NINE MONTHS TO IMPLEMENT AFTER P A C APPROVAL.
THE S C R HAS A SMALL BUDGET IMPACT OF LESS THAN 10,000.
WE'LL BE HAPPY TO ANSWER ANY QUESTIONS.
UH, WITH THAT, DOES ANY BOARD MEMBER WISH TO DISCUSS OR REMOVE ANY ITEM FROM THE CONSENT AGENDA? UH, HEARING NONE.
IF THERE'S NO FURTHER DISCUSSION, I'LL ENTERTAIN A MOTION TO APPROVE THE CONSENT AGENDA AS PRESENTED.
ANY OPPOSED? THAT MOTION PASSES.
[4. August 31, 2023 General Session Meeting Minutes]
AUGUST 31ST, 2023.GENERAL SESSION MEETING MINUTES.
THERE'S A DRAFT IN THE MEETING MATERIALS.
DOES ANYONE HAVE ANY COMMENTS OR WISH TO MAKE A MOTION? I MOVE TO APPROVE.
[5. CEO Update]
IS THE C E O UPDATE AND PABLO IS UPFRONT.THANK YOU, UH, VERY MUCH FOR JOINING, UH, TO DISCUSS THE IMPORTANT WORK THAT WE ARE DOING AT ERCOT.
UH, SO MY, MY COMMENTS TODAY, UH, REGARDS TO THE SUMMER OPERATIONS ARE GONNA BE SOMEWHAT BRIEF BECAUSE WE'RE GONNA HAVE A DETAILED REVIEW OF THE, UH, DETAILED OPERATIONAL REVIEW A LITTLE BIT LATER IN THE AGENDA TODAY.
SO TODAY I'M GONNA JUST COVER SOME BRIEF HIGHLIGHTS FROM THE SUMMER, UH, INCLUDING A PERSPECTIVE ON SOME OF THE HIGHER PRICING THAT WE SAW IN THE WHOLESALE MARKET THIS SUMMER.
I'M GONNA BRIEFLY REVIEW OUR PROGRESS ON SOME OF THE MARKET, UH, KEY MARKET AND PROTOCOL FOCUS AREAS THAT OUR TEAM ARE, ARE WORKING ON.
I'M GONNA REVIEW OUR CURRENT ACTIVITIES AS WE'RE PREPARING FOR OUR NEXT WINTER PEAK SEASON.
AND, UH, AS ALWAYS, I'D LIKE TO CLOSE WITH THANK YOUS TO OUR MEMBERS OF OUR TEAM THAT HAVE BEEN REALLY WORKING AND, AND MAKING TREMENDOUS PROGRESS ON KEY ISSUES.
SO THE, THE SUMMER WAS REALLY BOOK ENDED WITH, WITH CHALLENGES THIS YEAR, UM, THE JUNE SUMMER BOARD MEETING WHEN WE MET, ACTUALLY MARKED THE FIRST OF 11 CONSERVATION TYPE OF CALLS THAT WE MADE ALL SUMMER, AND IT WAS BOOKENDED AT THE END WITH TOWARDS THE LAST HALF OF AUGUST AND INTO SEPTEMBER WITH 10 ADDITIONAL CONSERVATION CALLS.
THE PEAK HEAT THAT WE EXPERIENCED THIS SUMMER DURING JULY AND DURING AUGUST WHEN WE SET 10 NEW RECORDS ON THE SYSTEM, WAS MANAGED VERY WELL BECAUSE WE HAD REALLY GREAT STRONG AND CONSISTENT PERFORMANCE FROM THERMAL GENERATORS,
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FROM SOLAR RESOURCES, AS WELL AS FROM WIND RESOURCES AND OUR ENERGY STORAGE RESOURCES THROUGHOUT THOSE PERIODS.AND IN FACT, WHEN WE HAD OUR PEAK, MOST OF OUR PEAKS, THOSE WERE NOT DAYS THAT WE HAD CONSERVATION CALLS.
IF, UH, WE HAD THE PERFORMANCE OF ALL OF THOSE RESOURCES WORKING WELL THIS SUMMER, WE EXPERIENCED SOME MEANINGFUL CHANGE IN TERMS OF WHEN THE SCARCITY PERIOD, UH, SHIFTED FROM JUST A YEAR AGO THAT THE SAME TIME LAST YEAR, THE, THE SCARCEST PERIOD OF TIME DURING THE SUMMER WAS DURING THE GROSS PEAK ON THE SYSTEM, WHICH IS AROUND THREE OR 4:00 PM IN THE AFTERNOONS IN THE SUMMER WHEN THE HEAT IS AT ITS MAXIMUM AND DEMAND IS AT ITS HIGHEST.
WE SAW A CHANGE THIS YEAR WHERE THAT SCARCEST AND TIGHTEST PERIOD ACTUALLY SHIFTED TO LATER IN THE DAY TO SEVEN OR EIGHT O'CLOCK AT NIGHT AS WE WERE GOING THROUGH THE SOLAR RAMP.
AND THE REASON BEING IS THAT BECAUSE DURING THE GROSS PEAK, WE SAW SO MUCH ADDITION OF SOLAR RESOURCES THIS FROM THIS YEAR COMPARED TO LAST YEAR, THAT THOSE ADDITIONAL SOLAR RESOURCES WERE ABLE TO PICK UP THE ENERGY REQUIREMENTS DURING THE PEAKS IN THE AFTERNOON.
AND SO WE DIDN'T HAVE SCARCITY DURING THOSE PERIODS, BUT WE ENDED UP HAVING SCARCITY LATER IN THE DAY ON THE HOT DAYS WHEN THE HEAT REMAINED INTO THE EVENING, AND WE STARTED TO LOSE THE ENERGY FROM SOLAR RESOURCES.
THAT BECAME THE NEW SCARCE SYSTEM TITUS PERIOD ON THE ERCOT GRID.
AND THAT SHIFT OCCURRED FOR THE FIRST TIME THIS YEAR.
THE INTENSE HEAT THAT PERSISTED THIS YEAR WAS RECORD SETTING THROUGH MANY PARTS OF TEXAS.
HERE IN AUSTIN, WE HAD 42 DEGREE, UH, 42 DAYS WHERE WE WERE ABOVE 105 DEGREES.
THAT BREAKS A RECORD THAT WAS SET BACK IN 2011 WHEN IT WAS ONLY 26 DAYS.
BACK THEN, IN 2021, WE HAD ZERO DAYS WHERE LOAD ON THE SYSTEM WAS OVER 80 GIGAWATTS.
IN 2022, WE HAD ONE DAY WHERE WE HIT 80 GIGAWATTS.
AND THIS SUMMER WE HAD 49 DAYS THAT WE WERE OVER 80 GIGAWATTS.
THE SYSTEM WAS CLEARLY STRESSED AND STRETCHED, BUT IT HELD, I WANNA ACKNOWLEDGE THE EMERGENCY OPERATIONS THAT OCCURRED ON SEPTEMBER 6TH DUE TO A COMBINATION OF EXTREME HEAT THAT DAY, LOW WIND, AND AN UNUSUAL WIND CONDITION WHERE THE WEST WIND WAS LESS INTENSE THAN THE WIND COMING UP FROM THE COASTAL BEND AREA, WHICH SET UP FOR TRANSMISSION CONSTRAINT BETWEEN THE SAN ANTONIO AREA AND THE COASTAL BEND AREA, WHERE IT WAS TRYING TO GET THE WIND GENERATION RESOURCES UP TO MEET THE HIGH DEMANDS IN THE CENTRAL AND NORTHERN PARTS OF TEXAS.
THIS LED TO SOME GENERATION NEEDING TO BE CURTAILED IN ORDER TO MANAGE THAT TRANSMISSION CONGESTION CONSTRAINT.
AND, UH, WHICH ALSO LED TO AN ACCELERATING OF LOWERING P R C AND FREQUENCY DECLINE THAT THE CONTROL ROOM WAS ABLE TO MANAGE VERY SKILLFULLY BY ENTERING INTO EEA TWO OPERATIONS IN ORDER TO ACCESS NEEDED LOAD RESPONSE RESOURCES THAT ARE IN OUR R R SS SERVICE.
TO TOUCH BRIEFLY ON THE COST THIS SUMMER, THERE'S BEEN A LOT OF DISCUSSION ABOUT THE, UM, HIGHER PRICES, UH, THAT HAVE BEEN OBSERVED IN THE MARKET THIS YEAR.
DAN AND AND KENNAN ARE GONNA COVER THAT A LITTLE BIT IN, UH, DETAIL THIS, UH, AF LATER IN THE BOARD MEETING AS WELL.
BUT WHAT I, WHAT I WANTED TO DO IS SHARE A COUPLE OF PERSPECTIVES ON THOSE PRICES.
SO TOP LEFT SHOWS THE, THE, THE, THE GROWTH AND DEMAND.
I THINK WE'VE COVERED THAT PRETTY WELL.
YOU CAN SEE FROM THE AQUA CHARTS 2021, THE GRAY 2022, AND THE, AND THE PURPLE 2023, THE, THE PEAK DEMANDS IN EACH OF THE MONTHS FOR THE LAST FEW YEARS.
SO YOU CAN SEE STRONG DEMAND AS, AS WE'VE JUST DISCUSSED, WHAT HASN'T BEEN DISCUSSED AS MUCH AS THE FACT THAT WE ARE ALSO INCREASING THE AMOUNT OF ANCILLARY SERVICES THAT WE PROCURE IN ORDER TO MANAGE THE REAL TIME OPERATIONAL RISK OF OPERATING THE CURRENT MARKET.
AND AS YOU LOOK AT THE GRAPH ON THE TOP RIGHT, YOU CAN SEE THE AMOUNT, UH, THE INCREASE AMOUNT, UH, THAT IS BEING PAID FOR ANCILLARY SERVICES, UH, FROM 2021 TO 2022 AND 2023.
IT'S BEEN REPORTED THAT WELL BEFORE THAT.
UM, I WANNA MAKE SURE IT'S CLEAR THAT BECAUSE MORE AND MORE ENERGY IS BEING SERVED BY INTERMITTENT RESOURCES, THE RISK OF A FORECAST MISS, UH, IN ANY GIVEN HOUR IS INCREASING.
AND ADDITIONALLY, PRICE RESPONSIVE LOADS ARE GROWING ON THE GRID AND CAN MOVE THEIR DEMAND VERY QUICKLY UP AND DOWN AS WELL IN RESPONSE TO A VARIETY OF INPUTS.
AND WE DON'T NECESSARILY CONTROL THOSE INPUTS, WE JUST HAVE TO BE READY TO MANAGE THE IMPACT OF THOSE CHANGES.
SO THE ANCILLARY SERVICES THAT WE PROCURE HAVE VERY SPECIFIC OPERATIONAL PURPOSES, AND WE BUY THEM IN AN AMOUNT IN ORDER TO MANAGE THOSE OPERATIONAL RISKS.
WE DO IT TO MANAGE FREQUENCY, TO RECOVER VOLTAGE AND FREQUENCY, SHOULD A LARGE UNIT OR LARGE LOAD INSTANTLY COME OFFLINE AND THEY'RE UTILIZED BY THE CONTROL ROOM IN ORDER TO MANAGE THE OPERATIONAL RISKS ON THE GRID AND TO ANTICIPATE FUTURE OPERATIONAL RISKS THAT MAY OCCUR DURING A GIVING OPERATING DAY.
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PURCHASED OR DEPLOYED SPECIFICALLY TO INFLUENCE WHOLESALE PRICES.THEY ARE RELIABILITY TOOLS AND THEY'RE DEPLOYED WHEN THEY'RE NEEDED IN ORDER TO MITIGATE RELIABILITY RISKS ON THE SYSTEMS. SO IT'S BEEN REPORTED THAT PRICES HAD INCREASED, UH, BY $8 BILLION THIS SUMMER, AND ATTRIBUTED LARGELY TO THE INCREMENTAL ANCILLARY SERVICES.
AND IN PARTICULAR THE E C R S SERVICE THAT WE, UH, THAT WE DEPLOYED THIS SUMMER.
WHOLESALE PRICES ARE REALLY A FUNCTION OF THE QUANTITY OF SUPPLY THAT IS AVAILABLE TO SERVE DEMAND AND THE PRICE BIDS THAT ARE OFFERED BY SUPPLIERS AND BY CONTROLLABLE LOAD RESOURCES, WHOLESALE PRICES ARE NOT A GOOD PROXY FOR THE RETAIL COSTS THAT CUSTOMERS PAY FOR ELECTRICITY.
IN FACT, IN AUGUST, WE COULD SEE THAT NEARLY 75% OF ALL ELECTRIC PURCHASES AND SALES WERE TRANSACTED IN ADVANCE IN THE DAY AHEAD MARKET.
IN ADDITION, WE DON'T GET VISIBILITY TO ALL BILATERAL CONTRACTS AND TRANSACTIONS THAT TAKE PLACE BETWEEN SUPPLIERS AND PURCHASERS.
AND WE GENERALLY ESTIMATE THAT ON AVERAGE, 90 TO 95% OF ALL ENERGY TRANSACTIONS ARE HEDGED OR PURCHASED IN ADVANCE AT A PREFIXED PRICE.
SO TO CONCLUDE THAT COSTS HAVE INCREASED BY $8 BILLION AND ASSUMES THAT SOMEBODY IS PAYING FOR THAT $8 BILLION.
AND THAT IS AN INACCURATE WAY OR AN INACCURATE CONCLUSION TO DRAW FROM THE FACT THAT WHOLESALE PRICES WERE HIGHER THIS SUMMER.
THE ACTUAL COST ASSOCIATED WITH THE INCREASED ANCILLARY SERVICES, AS SHOWN ON THE TOP RIGHT ON THIS SLIDE, AN INCREMENTAL COST OF 567 MILLION THIS SUMMER.
THAT'S ACTUAL COST THAT WAS PASSED ON TO LOAD AND PAID FOR BY LOAD DIRECTLY THE DRIVERS OF PRICE, QU OF PRICES.
QUANTITIES IS ONE OF THOSE KEY DRIVERS.
AND THE BOTTOM LEFT SHOWS A PAT NEW PATTERN OF INCREASINGLY HIGHER PRICE BIDS BY RESOURCES THAT ARE ABLE TO BUILD IN OPPORTUNITY COSTS INTO THEIR PRICE BIDS.
AND YOU'LL SEE IN 2021, WE DID NOT HAVE ANY PRICE BIDS THAT WERE OVER THE $4,900 A MEGAWATT HOUR LEVEL IN 2022.
WE STARTED TO SEE SOME THROUGH JUNE, JULY, AND AUGUST.
AND IN 2023, WE SAW QUITE A BIT MORE, ESPECIALLY AS WE GOT INTO AUGUST DURING THE VERY HIGH SCARCITY PERIODS OF TIME THAT LED TO SOME OF THE HIGHER PRICING.
THE MARKET IS RESPONDING TO THE OPERATIONAL CONDITIONS AS IT IS DESIGNED TO DO WHEN THERE IS SCARCITY.
AS WE EXPERIENCE THIS SUMMER DUE TO EXTREME WEATHER DUE TO ECONOMIC LOAD GROWTH, WE'RE GONNA SEE HIGHER PRICES IN AN ENERGY ONLY MARKET, WHICH IS DESIGNED TO INCENTIVIZE THE DEVELOPMENT OF NEW RESOURCES IN ORDER TO MEET THOSE DEMANDS.
SO I'LL PAUSE ON HERE IF THERE'S ANY QUESTIONS BEFORE MOVING ON TO MY NEXT SEGMENT.
UM, DO YOU HAVE A SENSE OF HOW RESPONSIVE, UH, LOAD WAS TO HIGHER PRICING? AND I KNOW THAT'S A VERY DIFFICULT THING TO MEASURE, BUT CAN CAN YOU COMMENT A LITTLE BIT ON WHAT HAPPENED WHEN YOU ISSUED THESE, UH, UH, REQUESTS, REQUESTS FOR CONSERVATION? YEAH.
WE, WE SAW REALLY, I THINK, VERY STRONG RESPONSE FROM LOAD DURING THE CONSERVATION PERIODS THIS SUMMER.
WE CAN LOOK AT IT, WE CAN MEASURE SOME OF THEM VERY CLEARLY, AND SPECIFICALLY WE HAVE THE ABILITY TO SEE SOME OF THE ONLINE ENERGY USES OF SOME OF THE LARGER INDUSTRIAL LOADS ON THE SYSTEM.
AND WE COULD SEE THEM RESPOND WHEN THOSE CONSERVATION CALLS AS WELL AS WHEN PRICES WOULD GET HIGH.
WHAT ON THE CONSUMER LEVEL, THE WAY THAT WE TYPICALLY MEASURE AND ASSESS THE PERFORMANCE OF THOSE RESPONSES, WE LOOK AT THE EXPECTED FORECAST FOR ENERGY USAGE DURING PERIODS OF TIME IN THE AFTERNOON IN ADVANCE.
WE LOOK AT WHAT THAT FORECAST LOOKED LIKE BEFORE THE CALL, AND THEN WE LOOK AT HOW THAT CURVE CHANGES IN REAL TIME.
AND WE CAN ATTRIBUTE A SIGNIFICANT PORTION OF THAT TO THE RESPONSE.
AND THAT CAN BE FROM A VARIETY OF REASONS.
IT CAN BE FROM THE ERCOT RESPONSE THAT PEOPLE ARE RESPONDING TO, BUT ALSO A LOT OF THE RETAIL ELECTRIC PROVIDERS AND TRANSMISSION DISTRIBUTION COMPANIES HAVE LOAD MANAGEMENT PROGRAMS OR DEMAND RESPONSE PROGRAMS THAT CUSTOMERS CAN AVAIL THEMSELVES OF.
AND THEY LEVERAGED THOSE THROUGHOUT THE SUMMER, DURING THE PEAK PERIODS.
AND SO WE SAW REALLY STRONG PERFORMANCE AND BENEFIT FROM THOSE AND WE HAD TO USE THEM.
CAN WE QUANTIFY THAT AT ALL? IT'S, UH, WE'VE SEEN, YOU KNOW, ON, ON AVERAGE, SO ANYWHERE BETWEEN 500 MEGAWATTS TO 1500 MEGAWATTS OKAY.
IS, UH, A GENERAL KIND OF A RANGE THAT WE EXPERIENCE WHEN WE, UH, HAVE ONE OF THOSE CONSERVATION CALLS.
SO A COUPLE OF PERCENT THAT'S RIGHT.
AND THAT'S JUST ON THE CONSUMER SIDE.
ON THE, ON THE INDUSTRIAL LOAD, IT, IT'S A LITTLE BIT STRONGER.
WE SEE BETWEEN TWO AND 3000 MEGAWATTS SOMETIMES ON THE INDUSTRIAL SIDE.
UM, IN THE LOWER LEFT HAND CHART HERE, CAN YOU CHARACTERIZE WHO IS, UM, BIDDING, UH, THAT DISPATCHABLE ENERGY AT THE 4,900 AND ABOVE MEGAWATT HOUR LEVEL? YEAH.
THE, THE TYPE OF RESOURCES THAT ARE ABLE TO BUILD IN AN OPPORTUNITY COST INTO THEIR BIDDING STRATEGY ARE THOSE THAT HAVE TIME OR DURATION LIMITED, UH, ELEMENTS TO THEIR, UH, TO THEIR ENERGY SUPPLY.
SO ENERGY STORAGE RESOURCES AND BATTERIES ARE ABLE TO DO BIDDING OF THAT NATURE.
I BELIEVE PUMPED HYDRO STORAGE IS ALSO
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ABLE TO DO THE SAME FOR THE SAME REASONS.BILL PABLO, I APPRECIATE THE DEEP DIVE ON THIS AND I THINK IT'S REALLY, UH, BENEFICIAL FOR THE AUDIENCE.
IT'S WATCHING THIS TO, TO SEE THE REAL DATA FROM THIS SUMMER.
UH, JUST TO CLARIFY AND REITERATE, THE TOTAL COST OF ANCILLARY SERVICES THIS SUMMER WAS JUST UNDER $600 MILLION.
THAT WAS THE INCREMENTAL COST.
SO IF YOU LOOK AT THE CHART, IT'S WHERE ABOUT 1.2 BILLION TOTAL IN 2023.
AND THE INCREMENT OVER LAST YEAR WAS 567 MILLION.
SO THAT'S THE INCREMENTAL COST THIS SUMMER OF ANCILLARY SERVICES.
AND SO WHEN YOU LOOK AT THIS, THE REAL NUMBERS COMPARED TO THE $8 BILLION HEADLINE, UH, AND ALL THE UNDERLYING DATA THAT DROVE THAT $8 BILLION HEADLINE, THAT WAS INACCURATE.
THE, THE $8 BILLION IS JUST WHAT THE PRICE OF ENERGY IN THE WHOLESALE MARKET WAS.
IT WAS BASICALLY THE PRICE TIMES THE AMOUNT OF ENERGY BEING SERVED, BUT IS NOT, THAT IS NOT THE COST THAT PEOPLE WERE PAYING NECESSARILY AT DILU GLUCOSE PERIODS IN TIME.
AND, AND THAT'S WHY THE DATA THAT I SHARED AROUND HOW MUCH OF THE ENERGY TRANSACTIONS ARE HEDGED AND ADVANCED ARE DONE IN THE DAY AHEAD MARKET OR OUTSIDE OF THAT, THOSE ARE THE ACTUAL COSTS THAT ARE BEING PAID FOR BY, BY, UH, BY CUST BY BASICALLY RETAILERS WHO ARE PURCHASING AND BY AND, AND HOW THE SUPPLIERS ARE GETTING PAID.
I THINK THAT'S IMPORTANT THAT THE PUBLIC KNOWS THAT THERE IS NO $8 BILLION COST ANCHOR INCREMENT.
IF, IF THAT MAY UM, YES, GO AHEAD.
UM, SO IT, IT'S IMPORTANT FOR THE COMMISSION TO, TO ASK SOME QUESTIONS AND WE CAN EITHER DO IT HERE IN FRONT OF THE FULL COMMISSION, BUT, UH, AFFORDABILITY OF ENERGY IS ONE OF OUR PRIMARY RESPONSIBILITIES NEXT TO RELIABILITY.
AND, UM, AND WE'VE, WE'VE GOTTA START DIGGING INTO THESE NUMBERS, BUT, UH, ON AUGUST 25TH, I WAS UP AT 11:00 PM AND I TOOK A SCREENSHOT OF MARKET PRICES AT THAT TIME.
AND MARKET PRICES IN THE DAY AHEAD, UH, AVERAGED AT $3,800 A MEGAWATT HOUR FROM 4:00 PM IN THE AFTERNOON TO 10:00 PM IN THE EVENING.
AND SO THESE HEDGES YOU'RE TALKING ABOUT, WERE HAVING TO BE PROCURED BECAUSE OF THE UNCERTAINTY ON HOW THE MARKET WOULD REACT TO, UH, AS COMPARED TO SYSTEM FORECAST, BUT ALSO HOW ANCILLARIES WOULD BE DEPLOYED THE NEXT DAY.
AND THAT'S WHERE WE GET INTO METHODOLOGIES USED BY THE SYSTEM TO BOTH PROCURE ANCILLARIES AND HOW THEY'RE USED.
AND I, I THINK WE WOULD ALL RECOGNIZE THAT THE SYSTEM IS SHORT OF NECESSARY CAPACITY THAT WE NEED TO MANAGE THROUGH A MORE VOLATILE SYSTEM, WHICH IS MORE DEPENDENT ON INTERMITTENT RESOURCES.
BUT IT'S THE UNCERTAINTY ON, ON HOW WE'RE GOING TO MANAGE THROUGH THAT ON A DAY-TO-DAY BASIS THAT WILL DRIVE, DRIVE UP, UH, DAY AHEAD COSTS.
AND, AND AGAIN, THAT WILL NOT INFLUENCE PRICE RESPONSIVE BEHAVIOR TO THE DEGREE THAT IS DESIRABLE TO US, BECAUSE WE WANT THEM TO RESPOND IN REAL TIME TO REAL TIME PRICES.
SO IF THEY TURN DOWN THEIR CONSUMPTION, THAT'S RIGHT.
BUT IF THEY'VE ALREADY LOCKED IN THEIR ENERGY AT ALMOST $4,000 A MEGAWATT, THEN THEN THEY'RE GOING, THEY'RE NOT GONNA BE AS RESPONSIVE TO REAL-TIME PRICES 'CAUSE THEY'VE ALREADY BOOKED THAT COST.
SO MY QUESTION IS, AND AND, AND WE'VE TALKED ABOUT THIS AT THE COMMISSION, IT, IT'S IMPORTANT TO RECOGNIZE HOW THE SYSTEM IS GOING TO OPERATE IN A HIGH INTERMITTENT ENVIRONMENT.
AND THAT'S WHAT YOU AND YOUR OPERATORS ARE DEALING WITH ON A DAY-TO-DAY BASIS.
DO WE THINK WE COULD ISSUE SOME TYPE OR DEVELOP SOME TYPE OF GUIDANCE TO THE, THE MARKET AND THE SYSTEM ON HOW, GIVEN THE PENETRATION OF RENEWABLES, UH, YOU, UH, BELIEVE YOU WILL NEED TO OPERATE MOVING FORWARD IN PROPORTION TO THAT PENETRATION WITH ANCILLARIES MM-HMM.
YEAH, I, I THINK I, I UNDERSTAND WHAT YOU'RE ASKING AND, AND IT, AND IT MAKES A LOT OF SENSE.
UM, WE WANNA TRY TO SIGNAL TO THE MARKET AS CLEARLY AND AS CLOSE TO REAL TIME AS POSSIBLE, WHAT THE EXPECTATIONS ARE IN ORDER TO HELP THEM MAKE THE RIGHT DECISIONS IN TERMS OF HOW THEY WANNA OPERATE THEIR ASSETS,
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HOW THEY WANT TO MANAGE THEIR PORTFOLIO OF, UM, OF, UH, OF SUPPLY AND DEMAND.AND SO I THINK, I THINK WHAT YOU'RE, WHAT YOU'RE ASKING FOR IS VERY REASONABLE.
AND WE DESIRE TO TRY TO DO THAT AT ERCOT TO TRY TO HELP THE MARKET BECAUSE ESSENTIALLY IF WE CAN BE VERY CLEAR AND TRANSPARENT IN WHAT THOSE EXPECTATIONS ARE IN TERMS OF HOW MANY ANCILLARY SERVICES AND OF WHAT TYPE AND FOR WHAT REASONS, AND KIND OF LAY OUT KIND OF A, A FORECAST OF HERE'S WHAT WE EXPECT TO DO BECAUSE THIS IS THE KIND OF VARIABILITY WE WANNA MANAGE, THE SIZE OF THE VARIABILITY THAT WE EXPECT AT DIFFERING POINTS IN TIME THROUGHOUT THE YEAR, AND THEN THE ASSOCIATED PRODUCTS THAT WE INTEND TO PURCHASE IN ORDER TO MANAGE THAT THE MARKET CAN ANTICIPATE THAT AND START TO BRING TO BEAR THE RESOURCES THAT ARE GONNA MOST EFFICIENTLY DELIVER THE SERVICES OF THOSE PRODUCTS.
'CAUSE THE PRODUCTS THAT WE, THAT I TALKED ABOUT THAT MANAGE REGULATION VERSUS THOSE THAT MANAGE THE RISK OF A, OF A, A UNIT TRIPPING VERSUS THOSE THAT MIGHT MANAGE A FORECAST RISK, HAVE DIFFERENT CHARACTERISTICS AND DIFFERENT COST PROFILES.
AND WITH THE RIGHT INFORMATION IN ADVANCE, OR THE BEST INFORMATION IN ADVANCE TO TRY TO OPTIMIZE, WE CAN BE MUCH MORE EFFICIENT IN THE COST OF PROCURING THOSE ANCILLARY SERVICES AND THAT BENEFITS THE WHOLE MARKET.
AND SO I, I AGREE WHOLEHEARTEDLY WITH WHAT YOU'RE ASKING OUR, AND, AND IT IS OUR INTENTION TO CONTINUE TO IMPROVE THE CLARITY AROUND WHAT WE'RE GONNA DO IN OUR ANCILLARY SERVICES TO PROVIDE THAT CLARITY TO THE MARKET.
JULIE, I GUESS JULIE, I WOULD LIKE TO FOLLOW WILL'S QUESTION WITH SOMETHING A LITTLE BIT MORE SPECIFIC.
IN TERMS OF FORECASTING ANCILLARY SERVICES FOR THIS SUMMER OR NEXT SUMMER.
CAN YOU SHED SOME COLOR ON THE DRIVERS? LIKE HOW MUCH WAS THE EXCESSIVE HEAT IN COMPARISON TO TRUE INCREASED LOAD BECAUSE OF THAT ECONOMIC GROWTH IN TEXAS, FOR EXAMPLE? AND I MAY, I MAY, I'LL START AN ANSWER AND I MAY ASK DAN TO WEIGH IN ON THIS AS WELL.
SO IN GENERAL, WHAT WE DO, WE SET THE METHODOLOGY AT THE START OF THE YEAR LOOKING AHEAD AT THE NEXT YEAR WITH AN ANTICIPATION OF THE KIND OF RESOURCES THAT WE EXPECT TO BE ON THE GRID THROUGHOUT DIFFERENT PARTS OF THE SEASON.
AND, AND REALLY LOOKING AT KIND OF THE EXPECTED LOAD CARRYING CAPACITIES DURING VARIOUS SEASONS.
AND SO THEN WE SET OUT A METHOD, THE METHODOLOGY WE USE SAYS, HERE'S HOW MUCH RISK OR OR FORECAST RISK THAT WE EXPECT TO TRY TO MANAGE AND PROCURE THROUGH ANCILLARY SERVICES.
AND WE ESSENTIALLY SET, UH, KIND OF A FLOOR ON HERE.
YOU KNOW, WE DON'T EXPECT IT TO BE BELOW THIS, BUT IT CAN BE HIGHER.
AND THOSE DECISIONS ARE THEN MADE IN MORE, IN A REAL TIME FASHION.
AND DAN MAY, THAT'S WHERE YOU COULD JUMP IN AND HELP HERE.
HOW WE MAKE THOSE DECISIONS THROUGHOUT THE YEAR IN TERMS OF WHAT TO BUY ON A GIVEN DAY AND WHAT IS THE DRIVERS OF THOSE DECISIONS.
SO WE, UH, BASICALLY THIS, THIS ANCILLARY SERVICE METHODOLOGY DOCUMENT THAT, THAT DEFINES THIS MINIMAL AMOUNT THAT WE'RE GONNA BUY FOR EACH HOUR OF THE YEAR.
UM, WE VERY RARELY BUY MORE THAN THE AMOUNT THAT THAT IS DESIGNATED IN THAT DOCUMENT.
AND SO EACH ANCILLARY SERVICE HAS CERTAIN DRIVERS BECAUSE THEY, EACH ANCILLARY SERVICE HAS, HAS TO BE PROVIDED BY RESOURCES WITH CERTAIN CHARACTERISTICS.
AND SO WE BUY A CERTAIN AMOUNT OF EACH ONE BASED ON THE RISKS THAT THOSE UNIQUE CHARACTERISTICS ARE NEEDED TO, TO, TO COVER.
AND SO WE, BUT WE VERY RARELY INCREASE IT MORE THAN THOSE MINIMAL AMOUNTS THAT ARE PUBLISHED IN TYPICALLY, UH, DECEMBER TYPE TIMEFRAME.
IS THAT A PUBLIC DOCUMENT THEN, OR IS THAT YES.
AND IT, IT, IT WILL COME TO THE BOARD IN DECEMBER FOR APPROVAL ACTUALLY.
UM, PABLO, FOLLOWING UP ON, I GUESS EVERYTHING THAT'S BEEN ASKED, UM, ONE, FIRST OF ALL, IT'S GREAT TO HAVE THE I M M LOOK AT, YOU KNOW, WHAT'S HAPPENED AND BASED ON THAT, LOOK AT THEIR ADVICE AND TO HOPEFULLY IMPLEMENT WHAT WE CAN.
E C R S IS IDENTIFIED AS AN ISSUE IN, IN THEIR ANALYSIS AS, UH, A DISTORTION IN TERMS OF WHEN, UH, THE ANCILLARY SERVICE CAME IN AND THEREFORE, UM, THE PRICES THAT WERE PAID FOR IT.
THAT'S ONE SECOND, THE ANALYSIS REALLY EXPOSED ALWAYS WHAT HAPPENED.
AND, UH, IN THE ABSENCE OF A CRISIS, THEN YOU LOOK AT PRICING AND AFFORDABILITY, AND OF COURSE THAT'S A BIG ISSUE.
'CAUSE THE COST OF 4,900, UH, DOLLARS PER MEGAWATT HOUR IS VERY HIGH, BUT THE COST OF NOT HAVING POWER IS INFINITE.
SO THAT HAZOP TYPE ANALYSIS THAT, FOR EXAMPLE, IN MY INDUSTRY WE DO ALL THE TIME, UH, IS VERY IMPORTANT.
'CAUSE THE ALTERNATIVE IS CATASTROPHIC.
SO, UM, MAYBE PUT THOSE ELEMENTS INTO THE ANALYSIS TO UNDERSTAND RELIABILITY AND AFFORDABILITY AS SOMETHING THAT'S ACTUALLY CONNECTED.
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THAT'S EXACTLY RIGHT.THEY'RE INTRINSICALLY CONNECTED AND UNDERSTAND, TRYING TO ASSESS THE ECONOMICS WITHOUT UNDERSTANDING THE UNDERLYING OPERATIONAL RISKS THAT ARE BEING MANAGED AND THE DECISIONS THAT ARE BEING MADE IN REAL TIME TO MANAGE THOSE RISKS DOESN'T REALLY DO JUSTICE TO THE OVERALL PICTURE OF WHY THE MARKET IS COSTING AND PRICING THE WAY THAT IT IS.
THAT'S A VERY, THAT'S AN EXCELLENT POINT, CARLOS.
WE'LL WORK TO TRY TO AUGMENT AND SUPPLEMENT SOME OF THE ANALYSIS THAT COMES OUT FROM AN ECONOMIC PERSPECTIVE TO HELP TIE THAT TO THE REAL TIME OPERATIONAL RISKS THAT ARE BEING MANAGED DURING THOSE PERIODS IN ORDER TO HELP BETTER QUANTIFY AND QUALIFY THE IMPACTS THAT THE MARKET HAS SEEN.
AND OF COURSE, REVIEW HOW THE, YOU KNOW, ANCILLARY SERVICES WORK AND BASED ON THAT, TRY TO ADJUST AS WE GO.
I MEAN, THIS IS A, A SYSTEM THAT'S HAS SO MANY VARIABLES.
IT'S NOT, UH, SIT AS PARAS AND ECONOMIST WOULD LOOK AT IT, RIGHT? IT'S NOT LIKE STEADY STATE AND THINGS ARE, ARE NORMAL.
NO, WE'RE BURSTING IN TERMS OF DEMAND, THE ECONOMIC GROWTH, RECORD HEAT, I MEAN, JUST OLD, YOU KNOW, INSTALLED CAPACITY.
IT'S JUST TOO MANY FACTORS THAT ARE WORKING, UH, IN THE SYSTEM.
THAT'S WHY I WAS SAYING MATCH AFFORDABILITY AND RELIABILITY TOGETHER INTO THE SAME EQUATION.
THAT'S AN, THAT'S AN EXCELLENT POINT, CARLOS.
AND FIRST YOU CAN CORRECT ME IF MY STATEMENT IS WRONG 'CAUSE I'M NOT SURE IT'S ENTIRELY RIGHT.
BUT I VIEW INS THE ANCILLARY SERVICES AS KIND OF A BACKSTOP FOR UNDERLYING WEAKNESS IN OUR MARKET DESIGN, RIGHT? AND WHICH IS WHY WE'RE PROCURING MORE OF 'EM, MAYBE NOT ALL ANCILLARY ANCILLARY SERVICES, BUT THE FACT THAT WE'RE CREATING MORE AND MORE ANCILLARY SERVICES TO ME IS INDICATIVE THAT THE FUNDAMENTAL MARKET DESIGN IS NOT WORKING.
AND HOW DO WE GET BEYOND THAT? I KNOW WE TALKED A LOT ABOUT P C M, EVERYTHING SEEMS TO BE KIND OF ON HOLD.
WHAT'S, FIRST OF ALL, DO YOU AGREE WITH MY PREMISE? AND THEN SECOND OF ALL, HOW, HOW DO WE FIX THE UNDERLYING MARKET SO WE RELY LESS ON ANCILLARY SERVICES? YEAH, I, I THINK THE, I I, I AGREE WITH THE PREMISE THAT THE UNDERLYING MARKET DESIGN HASN'T RECENTLY BEEN INCENTIVIZING A BALANCED MIX OF ADDITIONAL RESOURCES ONTO THE GRID.
AND THAT HAS LED TO A GRID THAT HAS EVOLVED TO BE MORE VOLATILE AND HAVE MORE OPERATIONAL RISK, BECAUSE THE TYPE OF RESOURCES THAT ARE BEING INCENTIVIZED ARE INTERMITTENT RESOURCES AND THOSE WITH SHORTER DURATIONS.
AND SO THE COMPLEXITIES OF MANAGING A GROWING DEMAND, UM, AND A VERY DYNAMIC LOAD ENVIRONMENT WITH THOSE TYPES OF RESOURCES BECOMES MORE AND MORE CHALLENGING.
SO TO MANAGE THAT RISK, WE DO HAVE TO INCREASE THE PORTFOLIO OF ANCILLARY SERVICES IN ORDER TO ANTICIPATE ANY VARIATION OF THE ISSUE THAT COULD HAPPEN ACROSS ALL OF THOSE FACTORS.
SO I THINK, SO I, I WOULD AGREE THAT, THAT THAT ONE LEADS TO THE CONCLUSION THAT THAT, UH, THAT YOU PUT FORTH.
I, I THINK THE ANSWER, THERE'S, THERE'S A SUITE OF, OF, OF, UH, SOLUTIONS THAT ARE BEING DEVELOPED TODAY THAT ARE INTENDED TO START TO ADDRESS THIS.
P C M IS CLEARLY ONE OF THOSE P C M AS A, IT'S THE PERFORMANCE CREDIT MECHANISM IS A MECHANISM THAT'S DESIGNED TO PROVIDE A REVENUE, A CONSISTENT REVENUE STREAM DURING THE TIGHTEST PERIODS ON THE GRID THROUGHOUT THE YEAR TO, UH, GENERATORS OR TO LOAD THAT CAN PROVIDE THAT AT THAT POINT IN TIME.
AND SO WITH THE, THE, THE KEY BEHIND IT IS THAT IT'S CONSISTENT, A CONSISTENT REVENUE RELIABILITY STREAM THAT COULD BE PLANNED ON FOR MANY YEARS.
AND IT'S NOT SUBJECT JUST TO THE VOLATILITY OF A ENERGY ONLY MARKET PRICING MODEL.
SO P C M CERTAINLY IS PART OF THAT SOLUTION, AND WE'RE GONNA BE CONTINUING TO ADVANCE P C M AGGRESSIVELY IN ORDER TO TRY TO INCORPORATE THE BENEFITS.
IT SHOULD BRING THE, UH, THE LEGISLATURE, UH, PUT FORTH LEGISLATION TO INCENTIVIZE DISPATCHABLE GENERATION DEVELOPMENT, SPECIFICALLY IN SENATE BILL 26 27.
THAT IS GOING TO GO BEFORE THE PUBLIC FOR A VOTE THIS NOVEMBER BECAUSE THERE'S A PORTION THAT REQUIRES A CONSTITUTIONAL APPRO AMENDMENT TO, TO DO.
AND WITH THE STRONG, WITH SUPPORT THAT WILL INCENTIVIZE THROUGH LOW INTEREST LOANS AND COMPLETION BONUSES, THE DEVELOPMENT OF DISPATCHABLE GENERATION RESOURCES, WHICH ARE THE ONES THAT WE'RE NOT SEEING ENOUGH REALLY COME ONTO THE GRID IN RECENT YEARS.
AND THEN THE CHANGES THAT WE'RE GONNA PUT FORTH, THE OPERATING RESERVE DEMAND CURVE, FLOOR ADDER, UH, CHANGE, WHICH IS GONNA BRING UP THE FLOOR ADDERS DURING TIMES OF SCARCITY THAT'S INTENDED TO ALSO PROVIDE REVENUE TO THE TYPES OF RESOURCES THAT ARE OPERATING DURING SCARCITY PERIODS, WHICH LARGELY ARE DISPATCHABLE TYPE RESOURCES IN ORDER TO HELP GIVE THEM REVENUE TO STAY OPERATING AND TO STAY ACTIVE IN THE MARKET, VERSUS IF THOUGH THEY'RE CONSIDERING POTENTIALLY RETIRING OR MOTHBALLING.
THE IDEA IS PROVIDE THE REVENUE TO INCENTIVIZE AND TO STAY IN THE MARKET.
SO WE'RE DOING A VARIETY, UH, ACROSS THE BOARD BETWEEN SHORT TERM CHANGES IN THE ENERGY ONLY THE P C M, WHICH IS A LONGER TERM RELIABILITY SIGNAL.
AND THEN HOPEFULLY WITH THE PASSING OF THE, OF THE, UH, PROPOSITION
[00:30:01]
SEVEN ON THE, ON THE BALLOT, THIS, THIS NOVEMBER, WE'LL SEE THOSE INCENTIVES COMBINE TO INCENTIVIZE A, A MORE BALANCED DEVELOPMENT STRATEGY GOING FORWARD.AND THAT'S, THAT'S WHAT WE'RE LOOKING FORWARD TO AND WHAT WE'RE BUILDING TOWARDS.
UH, MR. CHAIRMAN, UM, PARDON ME, JUST KIND OF, UM, SORT OF OBSERVATION FROM BOB'S STATEMENT.
UM, YOU KNOW, I THINK, UM, ALL MARKETS ACROSS THE COUNTRY ARE EXPERIENCING THE SAME ISSUES WE ARE WITH RESPECT TO HIGHER PENETRATION, RENEWABLE ENERGY AND LESS DISPATCHABLE GENERATION BEING BUILT.
SO WHETHER THAT'S AN ENERGY ONLY MARKET OR A CAPACITY MARKET, ALL MARKETS ARE DEALING WITH THE SAME ISSUES.
SO I'M NOT SURE THAT IT'S A SIGN OF ONE SPECIFIC MARKET STRUCTURE FAILURE.
UM, JUST CASE IN POINT, UM, NUMBER TWO, I THINK WHAT I'VE HEARD AND AND I IS, YOU KNOW, THE ANCILLARY SERVICE METHODOLOGY NEEDS TO BE CLEARLY SET FORTH SO THAT THE LSCS AND EVERYBODY CAN PLAN FORWARD AND HEDGE AND TO CREATE SOME FORWARD PRICE STABILITY.
I THINK, YOU KNOW, WITH, WITH THE ANCILLARY SERVICE METHODOLOGY BEING APPROVED IN EVERY YEAR ON IN DECEMBER, I, I DON'T KNOW THAT THE MARKET COULD REALLY ANTICIPATE, UM, WHEN AND HOW MUCH E C R S WAS GOING TO BE PURCHASED.
AND SO NOW GOING FORWARD, YOU KNOW, THAT, THAT, UH, PROCUREMENT SHOULD BECOME MORE STABLE AND TRANSPARENT.
BUT WE ALSO HAVE D R R S COMING UP RIGHT BEHIND THAT.
AND SO UNDERSTANDING, YOU KNOW, THAT ERCOT GIVE THE MARKET AS MUCH ADVANCED NOTICE AS POSSIBLE ON HOW MUCH D R S IS GONNA BE PROCURED, UM, THROUGH THAT ANCILLARY SERVICE METHODOLOGY IS REALLY IMPORTANT BECAUSE WHETHER IT'S THE ANCILLARY SERVICE METHODOLOGY THAT SETS FORTH WHAT AND HOW MUCH ERCOT ISS PURCHASING PER YEAR TO MAINTAIN RELIABILITY, UM, IT OR IT'S OTHER COSTS THAT ERCOT IS, UM, YOU KNOW, PA YOU KNOW, WE'RE GONNA, YOU'RE GONNA TALK ABOUT CAPACITY CON CONTRACTS LATER.
IT'S REALLY IMPORTANT FOR THE MARKET TO UNDERSTAND WHAT THESE COSTS ARE GONNA BE, BECAUSE IF THEY CAN'T HEDGE AGAINST THEM AND PLAN FORWARD, THEN THOSE COSTS WILL BE PASSED THROUGH TO CONSUMERS AND, AND ESPECIALLY WITH LSCS LIKE MUNIS AND CO-OPS THAT DIRECTLY SERVE THE, UM, CONSUMERS AND, AND RETAILERS THAT HAVE TO BAKE THOSE PRICES INTO THEIR ELECTRICITY BILLS.
SO THE MORE IN ADVANCE AND TRANSPARENT ERCOT CAN BE THROUGH THE ANCILLARY SERVICE METHODOLOGY AND OTHER MARKET MECHANISMS, THE BETTER FOR EVERYONE IN TERMS OF CONSUMER COST AND WEIGHING IN WITH RELIABILITY.
YES, I, I AGREE COMPLETELY, COMMISSIONER, I THINK THAT'S, THAT'S OUR GOAL AS WELL.
AND THE D THE D R R S SERVICE IS GONNA BE ONE THAT WILL BE COMPLETED NEXT DECEMBER, SO IT'LL BE LARGELY LEVERAGED INTO 2025.
SO WE'LL HAVE AN OPPORTUNITY AS WE WORK THROUGH SOME OF THE ANCILLARY SERVICE METHODOLOGY CHANGES THIS YEAR THAT'S ALREADY STARTED DISCUSSION AT THE PUBLIC UTILITY COMMISSION.
THAT'LL BE PART OF THE FACTORING FOR THE INCORPORATION OF THAT NEW PRODUCT AS IT COMES ONLINE.
UH, SO IF I RECALL CORRECTLY, THIS, THIS, THIS SLIDE SAYS THAT, YOU KNOW, WE HAD THE 10 PEAK DEMANDS IN 2023, IF I RECALL FROM THE LAST MEETING, WE HAD 10 IN 2020 SUMMER OF 2022.
UH, WE HAD 1111 NEW PEAKS SET LAST YEAR AND 10 PEAKS AT THIS YEAR.
THAT'S A LOT OF GROWTH, A LOT OF GROWTH.
AND, UH, WHAT ARE WE PROJECTING OR DO WE HAVE GOOD NUMBERS TO PROJECT OF LIKE THE NEXT TWO YEARS OUT ON THE ECONOMIC GROWTH PIECE? IS IT, IS IT GONNA CONTINUE? SO OUR ESTIMATES, UM, HAVE, UH, AT, WHEN WE DISAGGREGATED THE DEMAND GROWTH THAT WE SAW THIS SUMMER, WE ESTIMATED APPROXIMATELY 60% OF THE DEMAND GROWTH TO BE COMING FROM ECONOMIC GROWTH AND ROUGHLY 40% COMING FROM THE HIGHER EXTREME HEAT THAT WE EXPERIENCED THIS SUMMER.
AND SO IF YOU LOOK AT THAT KIND OF, THAT 60% OF THAT DEMAND GROWTH, THAT'S AROUND 3000 MEGAWATTS OF INCREMENTAL GROWTH FROM LAST YEAR'S PEAK.
AND SO IF WE SEE SOMETHING, I MEAN, WHAT WE ARE ANTICIPATING IS THAT THE PACE OF GROWTH IN TEXAS WILL CONTINUE TO AT, AT A, AT A SIMILAR PACE AS IT HAS IN THE LAST FEW YEARS.
THERE'S REALLY NO ECONOMIC SIGNALS TO INDICATE THAT THAT'S GONNA CHANGE MEANINGFULLY.
SO WE'RE ANTICIPATING THAT THAT KIND OF GROWTH IS GONNA CONTINUE GOING FORWARD.
ANY OTHER QUESTIONS? JUST ONE OH ING UM, ONE OF THE THINGS THAT I NOTICED, UM, YOU KNOW, DURING, DURING THE SUMMER, PARTICULARLY FROM AN OPERATIONAL STANDPOINT, IS, YOU KNOW, HOW IMPORTANT IT WAS TO HAVE ALL THE TOOLS IN THE TOOLBOX, BUT ALSO THE FLEXIBILITY FROM AN OPERATING STANDPOINT TO BE ABLE TO UTILIZE THOSE ANCILLARY, ANCILLARY SERVICES WHEN THEY WERE NEEDED.
UM, COULD YOU JUST MAYBE COMMENT ON KIND OF GOING FORWARD WHAT YOUR VISION IS FOR MAINTAINING FLEXIBILITY AND, YOU KNOW, MEETING ALL OF THE CHALLENGES THAT WE ARE TRYING TO KIND OF MANAGE THROUGH THIS MANAGEMENT OF CHANGE AND, AND ALSO TO
[00:35:01]
ADDRESS IT FROM A RISK STANDPOINT? YES, IT, IT'S, UM, I THINK THAT'S A REALLY GOOD, UM, WAY TO DESCRIBE IT.AND, AND FLEXIBILITY IS BECOMING THE MOST, ONE OF THE MOST IMPORTANT ATTRIBUTES OF A RELIABLE GRID IN TODAY'S CONSTRUCT.
IT'S ALL THROUGHOUT THE US AND THROUGHOUT THE WORLD, BECAUSE FLEXIBILITY IS CRITICAL TO MANAGE THE DIFFERENT DRIVERS OF CHANGE THAT ARE GOING ON, ON THE GRID.
AND IT'S NOT, IT'S NOT JUST THE INTERMITTENCY OF CERTAIN, YOU KNOW, RENEWABLE SOURCES.
IT'S NOT JUST THE DYNAMIC NATURE OF THE TYPES OF LOADS AND LARGE LOADS THAT ARE COMING ONTO THE SYSTEM.
IT IS ALL OF THOSE FACTORS, YOU KNOW, COMBINED TOGETHER.
AND IN ADDITION, A GROWING RESOURCE AND ENERGY STORAGE RESOURCES, WHICH ARE A TREMENDOUS VALUE TO THE GRID, AND THAT WE ARE LEARNING HOW TO LEVERAGE MORE EFFECTIVELY.
AND, AND I THINK OF THE 1186, WHICH IS A GOOD EXAMPLE OF TRYING TO MAXIMIZE THE FLEXIBILITY THAT WE CAN GET FROM ALL OF THE RESOURCES AND HARVESTING THE ENERGY AND ENERGY STORAGE RESOURCES FULLY.
THAT'S SOMETHING THAT IS IMPORTANT AS WE LOOK FORWARD TO NEEDING MORE AND MORE FLEXIBILITY ON THE GRID GOING FORWARD.
SO THAT, THAT'S, THAT WILL BE SOMETHING THAT WE'LL TRY TO DESCRIBE AS WE LAY OUT THE ANCILLARY SERVICES, THE CHARACTERISTICS OF FLEXIBILITY THAT THEY'RE PROVIDING US UNDER AND THE KINDS OF VARIABILITY THAT THEY'RE HELPING US MANAGE THROUGH.
AND OUR INTENTION IS TO CONTINUE TO USE THAT PORTFOLIO FULLY IN ORDER TO BE ABLE TO MANAGE ALL THOSE ISSUES.
AND I, AND THEN I THINK IT'S IMPORTANT TO NOTE THAT DURING THE SCARCITY PERIODS AND WHEN WE GET TO THE, THE, THE ACTUAL TIGHTEST PERIODS ON THE GRID, WE DEPLOYED ALL OF THOSE RESOURCES.
SO WE GET TO PROGRESSIVE POINTS AS WE GET TO BEING MORE AND MORE SCARCE AS THE DEMAND GETS, UH, GETS CLOSER TO THE SUPPLY LEVELS, AND WE START TO, YOU KNOW, RELEASE AND UTILIZE ALL OF THOSE RESOURCES TO MEET THE CAPACITY NEEDS OF THE, OF THE, OF THE MOMENT.
THEY'RE REALLY NOT DESIGNED TO BE CAPACITY, YOU KNOW, RESERVES, THEY'RE DESIGNED TO MEET SPECIFIC OPERATIONAL FLEXIBILITY NEEDS, BUT WHEN YOU GET TO A PLACE WHERE IT'S THE ONLY ENERGY THAT'S AVAILABLE, WE USE IT.
AND WE USED ALL OF THE ANCILLARY SERVICES THAT WERE AVAILABLE TO US ON MULTIPLE OCCASIONS IN ORDER TO MAINTAIN RELIABILITY ON THE GRID.
AND SO IT'S CRITICAL THAT WE THINK ABOUT THEM THROUGH THAT LENS OF FLEXIBILITY, BUT IN, IN, IN THE END, WE WILL USE ALL OF THEM AS NEEDED IN ORDER TO SERVE THE ENERGY NEEDS OF THE GRID.
PABLO JUST ONE FOLLOW UP COMMENT FROM, FROM EARLIER, AND COMMISSIONER COBO IS CORRECT THAT ALTHOUGH THE MARKETS ARE, ALL MARKETS ARE STRUGGLING WITH THE IMPACT OF INTERMITTENT AND THE LIKE, AND THE FUNDAMENTAL PROBLEM FROM ALL RTOS AND ISOS IS NO ONE HAS TAKEN ON THE IMPACT OF WHAT SUBSIDIES DO TO A MARKET, RIGHT? AND WE TRY TO BACKFILL IT WITH ANCILLARY SERVICES RATHER THAN DESIGNING A MARKET THAT COMPENSATES BASED ON DIFFERENT CHARACTERISTICS, RIGHT? SO AS LONG AS SUBSIDIES ARE OUT THERE AND THEY'RE OUT THERE IN A MASSIVE WAY, AS LONG AS WE IGNORE THAT FROM A MARKET DESIGN STANDPOINT, THIS IS WHAT WE'RE GONNA HAVE YEAR AFTER YEAR, MORE AND MORE ANCILLARY SERVICES.
SO UNTIL WE DESIGN A MARKET STRUCTURE THAT REWARDS FOR CHARACTERISTICS, WE'RE GONNA CONTINUE TO HAVE THIS PROBLEM.
I THINK, I THINK THAT'S AN EXCELLENT POINT.
I THINK THE SUBSIDIES DISTORT ALL OF THE MARKETS, UM, THROUGH THE LENS THAT YOU'RE DESCRIBING.
AND IN ADDITION, THERE IS E P A REGULATION THAT CREATES A LOT OF UNCERTAINTY.
AND THAT UNCERTAINTY MAKES IT VERY DIFFICULT FOR THOSE WHO ARE TRYING TO PLAN MEANINGFULLY LARGE INVESTMENTS AND DISPATCHABLE GENERATION THAT WOULD LAST FOR 30 TO 40 YEARS.
THE ECONOMICS OF HOW THOSE UNITS COULD RUN UNDER DIFFERING SCENARIOS OF E P A THAT WE TALKED ABOUT IN OUR AUGUST MEETING, I THINK IS ANOTHER FACTOR THAT'S ALSO SLOWING DOWN THE BALANCED GROWTH OF, OF RESOURCES ON THE GRID IN THE US IN TEXAS, AS WELL AS THROUGHOUT THE REST OF THE COUNTRY.
MR. CHAIRMAN, JUST ONE FOLLOW UP THOUGHT FOR PABLO, IF I MAY.
UM, WE, WE'VE BEEN WRESTLING WITH THIS AT THE COMMISSION FOR, FOR SOME TIME, AND I KNOW IT'S BEEN DISCUSSED AROUND THE BOARDROOM.
UM, WE'RE, WE'RE TRYING TO, TO MAKE MARKET BEHAVIOR RESPOND, UM, AS EXPECTED IN THE WAY THE ERCOT SYSTEM IS BEING MANAGED, UH, AND, AND, AND TO RESPOND IN CONCERT WITH THE WAY THE ERCOT SYSTEM IS BEING MANAGED.
AND, AND THE ERCOT SYSTEM CAN ONLY BE MANAGED ACCORDING TO WHAT THE OPERATORS ARE SEEING IN REAL TIME.
UM, AND WITHOUT SUFFICIENT CAPACITY, UH, THE FLEXIBILITY IS LACKING FOR, UM, THE GRID ADMINISTRATOR TO BE CONFIDENT THAT THEY CAN MEET, UH, MINUTE BY MINUTE NEEDS OF THE SYSTEM, UM, ON ANY GIVEN DAY.
AND I THINK PART OF THE CHALLENGE IS, AND I THINK WHAT WE'RE SEEING IN THE NUMBERS AND MAYBE THE DISCREPANCY BETWEEN WHAT THE I M M UH, PUBLISHES AND WHAT ERCOT SEES FROM THEIR MARKET ANALYTICS IS THE MARKET IS HAVING TROUBLE ANTICIPATING, UH, WHAT THE GRID ADMINISTRATOR BELIEVES THEY'RE GONNA NEED ON ANY GIVEN MINUTE ON ANY GIVEN DAY.
[00:40:01]
IS IMPORTANT TO, TO HAVE THAT TRANSPARENT FORECASTING, BUT FORECAST CAN BE WRONG, UH, METHODOLOGIES CAN BE WRONG, AND IT'S, WE'RE UN UNCHARTED WATERS BECAUSE WE ARE CONSTRAINED BY, UH, LAWS, UH, SUBSTANTIVE RULES OF THE COMMISSION AND ERCOT PROTOCOLS, WHICH HAVE FORCE IN TERMS OF ALLOWING THE ADMINISTRATOR THE FLEXIBILITY TO ADJUST IN REAL TIME AND THEN GIVING GUIDANCE TO THE MARKET SO THAT THEY CAN ANTICIPATE HOW THE CONTROL ROOM WILL REACT.AND I THINK THAT'S WHAT WE'RE STRUGGLING WITH, UM, AT EACH ONE OF THESE MEETINGS.
AND SO, UH, ALL I CAN SAY IS PABLO, DO YOU BELIEVE IN THE NEAR TERM AND, AND ALL THIS IS BASED AROUND MARKET FORCES, AND THAT'S WHAT ALL OF THE MARKETS, P J M MIS, O S P P, EVEN THOUGH THOSE ARE FILLED WITH VERTICALLY INTEGRATED UTILITIES, THOSE ARE STILL PREDICATED ON MARKET FORCES, UH, NOT CONTROLLED BY THE, THE REGULATORS OF THOSE INDIVIDUAL STATES.
THE MARKET DICTATES HOW THEY RESPOND.
DO YOU BELIEVE, UM, THAT WE CAN START PUBLISHING SOME, SOME TYPE OF GUIDANCE OUTSIDE OF OUR, OUR PROTOCOLS TO GIVE THE MARKET A LITTLE BIT MORE SIGNALS, UH, FROM WHAT, BECAUSE ERCOT IS FARTHER AHEAD OF EVERY OTHER SYSTEM IN THE COUNTRY, AND FRANKLY EVERY OTHER, EVERY OTHER SYSTEM ON THE PLANET IN TERMS OF DEALING WITH A HIGH INTERMITTENT RESOURCE MIX.
DO YOU THINK WE CAN START PUBLISHING THAT TYPE OF GUIDANCE IN THE NEXT YEAR TO GIVE A LITTLE BIT MORE INSIGHT IN HOW YOU BELIEVE YOU'LL NEED TO MANAGE THROUGH THE SYSTEM AS THESE, UH, PRESSURES ONLY INCREASE? AND THE REASON I KEEP STRESSING THAT IS BECAUSE WE'RE THE TEST CASE FOR THE COUNTRY.
I MEAN, FERC IS LOOKING TO US.
D O E IS LOOKING TO US, EVERYBODY'S LOOKING TO TEXAS TO SORT OF MANAGE THROUGH THIS.
UM, AND EVERYTHING YOU PRINT IS GONNA BE IMPORTANT.
AND I KNOW THAT'S A LOT TO LAY ON YOU, AND THAT'S A LOT TO LAY ON YOUR CONTROL ROOM, BUT DO YOU THINK WE CAN START PUBLISHING THAT SO THAT IT HELPS SMOOTH OUT THE EFFECTS, LIKE I DESCRIBED ON THAT AUGUST 25TH DAY WHERE WE WANT PRICE RESPONSIVE BEHAVIOR IN REAL TIME, BUT THE UNCERTAINTY IS DRIVING EVERYBODY JUST TO SECURE THEMSELVES ON PRICE WELL IN ADVANCE? I, I WILL CERTAINLY COMMIT TO FOLLOWING UP ON THAT QUESTION, COMMISSIONER.
I'D LOVE TO TALK WITH THE TEAM SURE.
AND THE CONTROL ROOM, AND TO GET A SENSE FOR WHAT WE COULD PUT FORWARD THAT WOULD BE HELPFUL AND CONTINUE TO TRY TO COMMUNICATE OPENLY WHAT OUR INTENTIONS, OUR ACTIONS, OUR FORECASTS AND, AND WHAT OUR PLANS ARE IN ORDER TO HELP THE MARKET BE BETTER RESPONSIVE AND TO BE BETTER ABLE TO, TO UNDERSTAND WHAT TO EXPECT.
SO, UM, I THINK IT'S AN EXCELLENT QUESTION.
I I DON'T WANNA, I DON'T WANNA GO DEEP TOO DEEP RIGHT HERE WITHOUT HAVING AN OPPORTUNITY TO REALLY WORK WITH THE OPERATIONS TEAM, AND, BUT I'D LOVE TO, I'D LOVE TO EXPLORE THAT QUESTION FURTHER.
I GOT, I JUST HAVE ONE QUICK QUESTION IN THAT, OR REALLY COMMENT, AND THAT IS ON THE, THE WHERE THE 8 BILLION WAS ERRONEOUSLY REPORTED.
UM, I DON'T THINK ANYBODY DID THAT DELIBERATELY, THAT SOMEHOW THEY HAD, THEY MISINTERPRETED INFORMATION THAT THEY GOT FROM ERCOT.
IS THERE SOMETHING THAT WE CAN DO TO BETTER COMMUNICATE THAT DATA, THAT INFORMATION SO THAT IT GETS REPORTED CORRECTLY, UH, IN THE FUTURE? YEAH, I, I THINK THERE IS AN OPPORTUNITY WHEN WE START TO LOOK AT THE OPERATIONAL DATA AND THE ECONOMIC DATA THAT GETS PUBLISHED, I THINK THERE'S A GOOD OPPORTUNITY TO TRY TO ADD TO IT AN EXPLANATION OF WHAT IT MEANS BEYOND JUST WHAT THE NUMBERS ARE.
BECAUSE THE PRICING, THE PRICING DATA IS THE PRICING DATA.
THE $8 BILLION EXISTED IN THE MARKET, BUT THE INTERPRETATION OF THAT, WHAT IT MEANS WAS MISINTERPRETED AND, AND, AND PUBLISHED IN MANY HEADLINES TO SAY, COST WENT UP IN THE TEXAS MARKET BY $8 BILLION.
AND THAT IT'S, THAT WHAT THAT THEN DRAWS PEOPLE TO CONCLUDE IS THAT CONSUMERS AND BUSINESSES PAID $8 BILLION MORE THIS SUMMER.
AND THAT WAS AN INCORRECT CONCLUSION TO DRAW FROM THAT DATA.
SO I THINK THERE'S A DEFINITELY AN OPPORTUNITY AS WE PUBLISH THIS INFORMATION TO REALLY ADD TO THE ANALYSIS, WHAT IS THE INTERPRETATION, WHAT ARE THE CONCLUSIONS THAT WE AS ERCOT AND AS A COMMISSION DRAW FROM THIS INFORMATION AND BE HELPFUL TO THE AUDIENCE, TO THE, THE GENERAL PUBLIC WHO REALLY WANTS TO UNDERSTAND WHAT'S HAPPENING ON THE ELECTRIC GRID AND WHAT'S HAPPENING IN THE ERCOT MARKET.
I THINK IT'S AN EXCELLENT POINT, PAUL.
PABLO, I'D LIKE TO, UH, I KNOW YOU'VE GOT MORE FOR YOUR REPORT, BUT I'D LIKE TO TRY TO PUT A BOW ON THIS PART OF THE DISCUSSION.
UH, THE BIG PROBLEM HERE IS, I MEAN, IS IS COMMISSIONER MCADAM SAID ERCOT ISS TRYING TO MANAGE THROUGH MASSIVE UNCERTAINTY.
AND THAT'S THE REASON IT HAS ALL THESE PRODUCTS THAT HAVE A COST IS TRYING TO MAKE SURE THAT WE DON'T EXPERIENCE THE COST OF A
[00:45:01]
LACK OF RELIABILITY.SO WE'RE PAYING FOR RELIABILITY IN ADDITION TO ENERGY.
AND THE REASON WE'RE HAVING TO DO THAT IS WE HAVE GALE FORCE WINDS COMING FROM THE FEDERAL GOVERNMENT PRIMARILY, THAT HAVE HEAVY SUBSIDIES FOR INTERMITTENT POWER, WHICH IS HARD TO DISPATCH, AND IT'S, IT'S IRREGULAR IN TERMS OF ITS PERFORMANCE.
THE SECOND THING IS WE'VE GOT THE E P A WITH FOUR NEW RULES OUT THAT IMPEDE THE DEVELOPMENT, THE CONTINUED OPERATION OF LEGACY DISPATCHABLE ASSETS, AND ALSO IMPEDE THE CONSTRUCTION OF NEW DISPATCHABLE ASSETS, WHICH WOULD SOLVE A LOT OF THIS PROBLEM.
YOU'VE GOT AN E P A RULE THAT INCREASES DEMAND ON THE GRID, OR THAT COULD INCREASE DEMAND ON THE GRID.
AT THE SAME TIME, THE OTHER FOUR RULES ARE DESTROYING THE SUPPLY OF, UH, POWER AVAILABLE ON THE GRID.
AND THEN YOU'VE GOT A MARKET CONSTRUCT HERE IN TEXAS THAT REALLY DOESN'T QUITE GET US TO THE POINT WHERE WE CAN INCENTIVIZE, UH, THE, UH, CONSTRUCTION OF NEW DISPATCHABLE GENERATION TO OFFSET ALL THOSE SCALE FORCE WINDS.
UH, BILL, I THINK THAT CHARACTERIZES THE SUPPLY SIDE OF THE STORY VERY WELL.
I THINK THAT DESCRIBES THE, THE, THE GALE FORCE WINDS THAT WE'RE TRYING TO WORK OUR WAY THROUGH, AND THAT INVESTORS AND OPERATORS ARE TRYING TO MANAGE THEIR WAY THROUGH IN TERMS OF WHAT'S POSSIBLE GIVEN ALL OF THOSE CONDITIONS.
I THINK WHEN WE TALK ABOUT THE LONG-TERM FUTURE FOR ERCOT, WE HAVE TO TALK ABOUT THE SUPPLY AS WE ARE IN THIS CONVERSATION, BUT THEN WE ALSO HAVE TO LOOK AT THE ROLE THAT TRANSMISSION IS GONNA PLAY TO HELP TO POTENTIALLY ALLEVIATE SOME OF THE PRESSURES, UH, AND THE NEEDS IN THE SYSTEM, AND THEN ALSO LOOK AT THE DEMAND SIDE AND SEE WHAT WE CAN DO IN TERMS OF A MORE ROBUST AND HOLISTIC DEMAND SIDE CAPABILITY THAT INCLUDES ENGAGING CONSUMERS MORE IN DEMAND RESPONSE PROGRAMS, LEVERAGING THE, THE POTENTIAL OF LARGE INDUSTRIALS THAT HAVE TREMENDOUS OPPORTUNITY TO, TO REALLY MANAGE THEIR ELECTRIC USAGE CLOSELY WITH ERCOT.
AND, UM, AND THEN ALSO OF COURSE, YOU KNOW, LOW HANGING FRUIT AROUND ENERGY EFFICIENCY AND, YOU KNOW, SMART INVESTMENTS ON THAT FRONT.
I THINK WE, WE REALLY NEED TO LOOK AT THE PORTFOLIO OVER THE NEXT FEW YEARS IN ORDER TO TRY TO MANAGE THIS BECAUSE AS YOU KNOW, TO BUILD THE POWER PLANT, YOU START THE, THE CONCEPT TODAY AND IN, YOU KNOW, TWO TO FOUR TO FIVE YEARS, DEPENDING ON THE TYPE OF POWER PLANT, YOU'LL HAVE SOMETHING COME ONLINE.
AND SO WE REALLY NEED TO BE THINKING ABOUT WHAT'S THE HOLISTIC SET OF SOLUTIONS THAT WE HAVE AVAILABLE TO US TO MANAGE THIS GROWING RISK PROFILE.
THANK YOU FOR THE, FOR THE ROBUST DISCUSSION AND THE QUESTIONS.
AND OBVIOUSLY THIS IS VERY IMPORTANT TO US.
THE ECONOMICS OF THE ERCOT MARKET ARE CRITICAL, THE REFLECTED IN OUR STRATEGIC PRIORITIES, AND IT'S SOMETHING THAT WE WANNA MAKE SURE WE'RE ALWAYS AS CLEAR AND AS TRANSPARENT AS WE CAN BE AS TO WHAT'S HAPPENING AND WHY THE PRICING IS WHAT IT IS.
UH, FUNDAMENTALLY, I HAVE JUST A COUPLE MORE SLIDES.
UM, I WANTED TO JUST TOUCH BRIEFLY, REALLY A REMINDER OF KIND OF THE KEY DEVELOPMENT AND FOCUS AREAS THAT WE ARE WORKING ON.
WE WENT THROUGH MANY OF THESE IN DETAIL, UH, UH, IN THE AUGUST MEETING.
SO I JUST WANNA REFRESH FOLKS THAT THE, THE O R D C CURVE, WHICH I TALKED ABOUT, THAT'S ACTUALLY GONNA BE COMING ONLINE HERE IN NOVEMBER.
AND SO THAT WILL BE, UH, A NEW, UH, ADDED, UH, REVENUE STREAM TO, TO TRY TO INCENTIVIZE AND, AND, AND SUPPORT RELIABILITY IN THE, IN THE ENERGY ONLY MARKET.
THE D R R SS, UH, UH, NEW ANCILLARY SERVICE IS WORKING THROUGH THE TAC DESIGN PROCESS RIGHT NOW.
WE'VE HAD WORKSHOPS ON THAT WE INTEND TO BE COMMUNICATING WITH P U C T STAFF AND COMMISSIONERS, THE INTENDED DESIGN AND CONSTRUCT FOR THAT, BRING IT BACK TO THE BOARD IN DECEMBER ON, HERE'S THE APPROACH WE'RE GONNA TAKE, AND THEN WE'LL START WORKING FERVENTLY ON THE, ON THE ACTUAL DEVELOPMENT AND CODING OF THIS TO HAVE IT READY TO GO NEXT DECEMBER.
P C M AS I TALKED ABOUT, IS, UH, GOING THROUGH A SCOPING PROCESS RIGHT NOW.
WE PLAN TO REVIEW THAT WITH THE P U C T IN NOVEMBER, AND THEN HAVE A STRAW MAN DESIGN APPROACH TO BRING BACK TO THE P U C T.
AND WE'RE WORKING WITH, UH, MARKET PARTICIPANTS IN JANUARY AND FEBRUARY TO REALLY EARNESTLY START THE DESIGN WORK OF P C M.
UH, OUR GOAL IS TO HAVE THAT DESIGN COMPLETED IN 2024 AND THEN THE, UH, REAL-TIME CO-OP OPTIMIZATION INITIATIVE.
UM, IT'S, IT SHOULD BE THE R T C PLUS B BECAUSE WE'RE INCORPORATING THE MANAGEMENT OF, OF BATTERIES AND THE STATE OF CHARGE INSIDE OF THE REAL-TIME CO-OP OPTIMIZATION ENGINE THAT IS PROGRESSING, UH, FORWARD AS WELL.
WE'VE RECENTLY BEEN FOCUSED ON THE INTERIM STATE OF CHARGE, UH, ISSUE IN, IN N P R 1186, AND ASSUMING IF THAT GETS APPROVED BY THE BOARD, OR I THINK THAT WAS JUST APPROVED THIS MORNING, THAT WILL NOW GO, GO FORWARD AND, UH, AND BE DEVELOPED.
AND THEN THE RELIABILITY STANDARD WORK IS PROGRESSING VERY WELL.
WE'VE BROUGHT TWO DIFFERENT ITERATIONS OF RELIABILITY STANDARDS, UH, TO THE COMMISSION FOR DISCUSSION.
UH, WE FILED AND RAN 48 DIFFERENT SCENARIOS, HAVE A FEW ADDITIONAL PROPOSED, UH, SCENARIOS THAT WE'RE GONNA BE RUNNING THROUGH THAT ADD MORE INVERTER BASED RESOURCES INTO SOME OF THE ASSUMPTIONS TO SEE HOW THE SYSTEM WOULD PERFORM
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IN THAT REGARD.UM, THERE WAS AN ERCOT AND P U C STAFF, UH, WORKSHOP THIS PAST FRIDAY TO REVIEW THAT CURRENT ANALYSIS AND FUTURE WORK RELATED TO THIS IS GONNA BE INCORPORATING THE VALUE OF LOST LOAD AS WELL AS DEVELOPING A NEW COST OF NEW ENTRY STUDY SO THAT THE COSTING SIDE, UH, OF THIS OVERALL, UH, RELIABILITY STANDARD PROCESS IS AS ACCURATE AND CURRENT AS IT, UH, NEEDS TO BE.
AND THEN, UH, WITH REGARD TO SOME OF THE KIND OF, UH, OPERATING INITIATIVES YOU'VE BEEN WORKING ON, UH, NODAL OPERATING GUIDE REVISION REQUEST 2 45, THIS IS A REVISION REQUEST THAT'S FOCUSED ON OPERATING REQUIREMENTS FOR INVERTER BASED RESOURCES, WHICH ARE WIND, SOLAR, AND BATTERY RESOURCES.
THE I E E ORGANIZATION, THE NATIONAL ENGINEERING STANDARDS ORGANIZATION, HAS DEVELOPED A STANDARD CALLED I E E E 2,800, WHICH SETS ESSENTIALLY A UNIFORM SET OF TECHNICAL MINIMUM REQUIREMENTS FOR THE INTERCONNECTION, THE CAPABILITY, AND THE PERFORMANCE OF INVERTER BASED RESOURCES THAT ARE CONNECTED TO TRANSMISSION AND SUB TRANSMISSION SYSTEMS. AND THIS IS A RECOMMENDED STANDARD THAT THEY HAVE PRODUCED.
IT IS NOT REQUIRED IN ANY REGULATION OR POLICY IN TEXAS OR OUTSIDE OF TEXAS AT THIS POINT.
SO WE ARE WORKING THROUGH HOW TO TAKE ELEMENTS OF THOSE STANDARDS AND BRING THOSE INTO THE OPERATING GUIDE REQUIREMENTS IN TEXAS IN ORDER TO HELP MANAGE THE STABILITY AND THE INCREASING RISKS OF STABILITY THAT HAPPEN AS MORE AND MORE INVERTER BASED RESOURCES ARE RUNNING ON THE GRID.
WE'RE WORKING WITH THE OPERATORS OF THOSE RESOURCES AS WELL AS WITH THE OEMS THAT ACTUALLY MANUFACTURE THE UNDERLYING ASSETS.
AND THEN LARGE FLEXIBLE LOADS, AS I'VE TALKED ABOUT.
YOU KNOW, THIS ISN'T, UH, YOU KNOW, A GROWING, UH, DEMAND AREA ON OUR SYSTEM.
IT'S SOMETHING THAT WE HAVE TO PAY VERY CLOSE ATTENTION TO.
UH, WE'RE TRYING TO ALSO COME UP WITH REQUIREMENTS THAT ENSURE THAT LARGE AND FLEXIBLE LOADS CAN RIDE THROUGH STABILITY EVENTS ON THE GRID BECAUSE THE LOSS OF A LARGE LOAD IS VERY SIMILAR TO THE LOSS OF A GENERATION SUPPLY.
AND SO WE REALLY WANT TO MAKE SURE THAT AS WE HAVE MORE AND MORE INVERTER BASED RESOURCES AND MORE AND MORE LARGE FLEXIBLE LOADS, THE STANDARDS AND THE EXPECTATIONS AROUND HOW TO OPERATE ON THE ERCOT GRID ARE CLEAR.
AND SO THAT'S SOMETHING THAT WE'RE WORKING VERY CLOSELY, UH, WITH THE, UM, WITH THE, UH, THE DEVELOPERS OF THOSE, UH, OF THOSE ASSETS AND WITH THE OWNERS OF THOSE BUSINESSES.
SO LET ME MOVE AHEAD INTO OUR WINTER PREPAREDNESS ACTIVITIES.
WELL, I'LL PAUSE IF THERE'S ANY QUESTIONS ON OUR CURRENT AND, AND THERE'S MUCH MORE THAT'S GOING ON BEYOND THESE.
THESE ARE THE KIND OF THE TOP MARKET, UH, FOCUSED INITIATIVES, UH, THAT WE'RE GONNA KEEP IN FRONT OF THE BOARD AND ON A REGULAR BASIS, AS WELL AS A FEW OF THE PROTOCOL DRIVEN, UH, MORE PROTOCOL AND OPERATING GUIDE, UH, IMPORTANT ISSUES THAT WE'RE FOCUSED ON.
MR. CHAIRMAN, UH, PABLO, THIS IS A REALLY GOOD LOOK FORWARD LIST.
COULD YOU JUST QUICKLY TELL US WHICH OF THOSE MIGHT BE IMPLEMENTED IN 2024 AND WHICH ONES ARE LONGER TERM OR INTERMEDIATE TERM? YES.
THE O R D C WILL BE IMPLEMENTED THIS YEAR.
THE D R R S WILL BE IMPLEMENTED AT THE END OF NEXT YEAR.
PERFORMANCE CREDIT MECHANISM IS, IS TRACKING TOWARDS A 2026 COMPLETION DATE.
REALTIME CO-OP OPTIMIZATION IS TRACKING TOWARDS 2026 COMPLETION.
THE RELIABILITY STANDARD SHOULD BE COMPLETED IN 2024, SOMETIME IN MID 2024.
THE, UH, NOER 2 45, WE'RE HOPING TO SET STANDARDS RELATED TO THAT, UM, NEAR THE END OF THIS YEAR TO THE BEGINNING OF NEXT YEAR.
AND THEN THE, UH, COMPLIANCE DATES GO OUT INTO THE FUTURE.
AND SO WE'LL COME BACK WITH MORE DATA ON, ON EXACTLY HOW THAT IS LAYING OUT.
BUT THAT HAS, UH, FURTHER OUT COMPLIANCE REQUIREMENTS BECAUSE OF THE NATURE OF POTENTIAL CHANGES THAT WOULD BE NEEDED TO EXISTING ASSETS TO, TO MEET THE REQUIREMENTS AS WELL AS CONSIDERATIONS FOR NEW ASSETS THAT ARE CONNECTING AND THE REQUIREMENTS FOR THOSE.
SO THAT HAS LONGER TERM COMPLIANCE STATES.
SO THE REASON I'M ASKING IS AS OF THIS MEETING, WE HAVE ANOTHER BOARD COMMITTEE TECHNOLOGY AND SECURITY.
AND I WAS WONDERING WHICH OF THESE MIGHT, IN, IN OFFLINE WE COULD DISCUSS WHICH OF THESE TOPICS MIGHT BETTER FIT UNDER TECHNOLOGY AND SECURITY? THAT THAT'S AN EXCELLENT POINT, EXCELLENT POINT.
AND THEN IDEALLY WE'D COME TO SOME AGREEMENT ON THE LARGE FLEXIBLE LOADS ON WHAT THOSE KIND OF STANDARDS WOULD BE SOMETIME IN 2024 AS WELL.
I, I DID WANNA MENTION THAT ONE OF THE THINGS THAT ERCOT DID WAS PUT TOGETHER ON THOSE TOP FIVE, THE BIG FIVE, I GUESS YOU'D CALL IT, UH, A WORKFLOW DIAGRAM AS WELL AS YOU CAME TO THE COMMISSION AND GAVE SUMMARIES ON EACH OF THOSE INITIATIVES.
AND SO IT'S SOMETHING THAT YOU HAVE, UM, ALREADY KIND OF PUT IN PLACE, IF YOU WILL, MILESTONES AND YOU ARE TRACKING.
AND THAT IS OF COURSE, SOMETHING THAT WAS FILED WITH THE COMMISSION AND IT CONTINUES TO BE UPDATED BY ERCOT.
SO VERY MUCH, UM, YOU KNOW, I THINK A, A, A GOOD WORK EFFORT IN ORDER TO KEEP, YOU KNOW, THE COMMISSION INFORMED AS WELL AS THE PUBLIC INFORMED IN TERMS OF THE PROGRESS THAT WE'RE MAKING AND THE MILESTONES THAT WE'RE MEETING ON THOSE VERY, YOU KNOW, IMPORTANT FIVE TOP OBJECTIVES.
UH, THAT, THAT CHAIR JACKSON, THAT'S, UH, THAT'S
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EXACTLY RIGHT.