[00:00:01]
OKAY.[1. Call General Session to Order]
OF THE FINANCE AND AUDIT COMMITTEE AND GUEST, I'M BILL FLORES, THE CHAIR OF THE COMMITTEE, AND I WANNA WELCOME EACH OF YOU TO THE DECEMBER 18TH, 2023 FINANCE AND AUDIT COMMITTEE MEETING.WE ARE, I HEREBY CALL THIS MEETING TO ORDER.
THIS MEETING IS BEING WEBCAST LIVE TO THE PUBLIC ON ERCOT WEBSITE COMMITTEE MEMBER BOB FLEXON IS JOINING TODAY'S MEETING BY TELECONFERENCE AND ERCOT LEGAL HAS CONFIRMED THAT A QUORUM IS PRESENT AND IN PERSON BEFORE MOVING ON TO TODAY'S BUSINESS.
I'LL HIGHLIGHT TO THE COMMITTEE'S MEMBERS THAT THE ANTITRUST ADMONITION THE SECURITY MAP ARE INCLUDED WITH POSTED MEETING MATERIALS.
[2. Notice of Public Comment, if Any]
BUSINESS ON TODAY'S AGENDA IS ITEM TWO.NOTICE OF PUBLIC COMMENT, IF ANY.
TODAY'S MEETING AGENDA WAS POSTED PUBLICLY ON DECEMBER THE 11TH AND PROVIDED INSTRUCTIONS FOR THE PUBLIC FOR COMMENTING IN PERSON.
TO DATE, NO ONE HAS EXPRESSED INTEREST IN COMMENT.
IS THAT STILL CORRECT, CHAD? YES, SIR.
WE'LL MOVE ON TO THE NEXT AGENDA ITEM THEN.
[3. October 16, 2023 General Session Meeting Minutes]
ITEM THREE, IS THE OCTOBER 16TH, 2023.GENERAL SESSION MEETING MINUTES IF THERE'S DRAFTED A MEETING MATERIAL.
DOES ANYONE HAVE ANY COMMENTS OR WISH TO MAKE A MOTION? I MOVE TO APPROVE.
ANY OPPOSED? ANY ABSTENTIONS MEETING MINUTES ARE APPROVED.
[4. Annual Committee Self-Evaluation Survey Results]
FOUR, THE ANNUAL COMMITTEE SELF-EVALUATION SURVEY RESULTS FOLLOWING THE OCTOBER MEETING BOARD MEMBERS WHO SERVED ON THE F AND A COMMITTEE DURING 2023 WERE ASKED TO COMPLETE A COMMITTEE SELF-EVALUATION SURVEY.THE RESULTS HAVE BEEN COMPILED AND ARE INCLUDED IN MEETING MATERIALS.
TO FACILITATE TODAY'S DISCUSSION, WOULD ANYONE LIKE TO COMMENT ON THE SURVEY RESULTS? I THOUGHT THEY WERE PRETTY GOOD.
SO, SO, ALRIGHT, ANY OTHER COMMENTS? ALRIGHT, LET'S MOVE TO AGENDA ITEM FIVE.
THE SYSTEM AND, UH, ORGANIZATION CONTROL AUDIT, WHICH INCLUDES THREE SUB ITEMS. FIRST BETTY DAY WILL PRESENT A REVIEW OF THE REQUIREMENTS FOR THE ANNUAL SOC AUDIT.
NEXT WE WERE IN TIDWELL WILL PRESENT THE RESULTS OF THE EXAMINATION AND THE INDEPENDENCE RESORT REPORT FROM THE SYSTEM CONTROL AUDITOR.
AND THEY'RE GONNA DO THAT REMOTELY, BY THE WAY.
AND THEN, UH, THAT WILL BE FOLLOWED BY A VOTE OF THE COMMITTEE RECOMMENDATION REGARDING THE SOC AUDIT REPORT.
A DRAFT OF THE CONFIDENTIAL REPORT IS INCLUDED IN THE EXECUTIVE SESSION MEETING MATERIALS.
[5.1 Review of Requirements for Annual System and Organization Control Audit]
IS YOURS.LET'S SEE, THIS IS BACKWARDS FOR ME FROM THE OTHER ROOM, SO I'VE GOTTA GET ADJUSTED HERE AND I'M GONNA ASK YOU TO KEEP THE MICROPHONE CLOSE IF YOU CAN.
AND MOVE IT TO THIS OTHER SIDE BECAUSE I NEED TO LOOK THIS WAY TO SEE THE SLIDE.
SO WE'LL GET STARTED HERE WITH THE SOC AUDIT.
UM, THE REASON WE'RE HERE TODAY IS WE ANNUALLY PERFORM THE SOC AUDIT.
IT IS REQUIRED BY PROTOCOL SECTION ONE.
UM, YOU'LL HEAR FROM OUR AUDITOR AFTER, UM, I SPEAK HERE IN A MINUTE, BUT RESULTS, UH, ARE AN UN UNMODIFIED, UH, OPINION, WHICH IS BASICALLY A CLEAN AUDIT.
AND WE HAD ZERO TESTING EXCEPTIONS AT THE END OF THE PRESENTATIONS TODAY.
UM, I'LL BE ASKING FOR AN F AND A VOTE IN ITEM 5.2 TO RECOMMEND TO THE BOARD TOMORROW THAT THEY ACCEPT THIS AUDIT REPORT.
A LITTLE BIT OF BACKGROUND ON A SOC AUDIT, THE STATEMENT ON STANDARDS FOR ATTESTATION AND ENGAGEMENT NUMBER 21, REFERRED TO AS SSAE 21 IS THE AUDIT STANDARD FOR CONTROLS AT SERVICE ORGANIZATIONS.
UM, INDEPENDENT AUDITORS EVALUATE THE DESIGN AND OPERATIONAL EFFECTIVENESS OF OUR CONTROLS RELATED TO FINANCIAL REPORTING.
OUR MARKET PARTICIPANTS RELY ON ERCOT FOR FINANCIAL STATEMENTS, WHICH IMPACT THEIR FINANCIAL STATEMENTS, AND THIS REPORT IS KEY FOR THEIR AUDITORS, UM, FOR REPORTING THEIR FINANCIAL, UH, STATEMENTS.
WE HAVE THE REPORT AND AUDIT OPINION THAT'S BEEN MADE AVAILABLE TO YOU.
ONCE THE BOARD ACCEPTS THIS, UM, AUDIT, WE WILL BE MAKING THIS AVAILABLE TO MARKET PARTICIPANTS.
THE SCOPE OF THE AUDIT, UM, WE HAVE 22 CONTROL OBJECTIVES AND 113 CONTROLS.
THEY'RE RELATED TO MARKET SETTLEMENTS AND BILLING.
THESE CONTROLS, UM, COVER A VARIETY OF AREAS THAT YOU CAN SEE HERE ON THE SLIDE ON THE BUSINESS SIDE, AS WELL AS SOME IT, UH, SUPPORT TYPE ROLES FOR ACCESS, CHANGE, MANAGEMENT, PROCESSING, BACKUP AND RECOVERY.
WEAVER AND TIDWELL IS OUR SOC AUDITOR, AND THEY WILL BE, UH, THIS IS THEIR SECOND YEAR PERFORMING THE STOCK AUDIT.
AND AT THIS TIME, I THINK BRITTANY, GEORGE AND MELANIE TOLL WITH WEAVER ARE ON THE LINE.
AND I BELIEVE MELANIE WILL BE GIVING THIS PRESENTATION
[00:05:01]
AND AS I SAID, AFTER SHE'S FINISHED, I'LL BE ASKING FOR A VOTE.SO WITH THAT, I WILL TURN IT OVER TO YOU.
[5.2 Results of Examination and Independence Report from the System and Organization Control Auditor]
HI, I'M, UM, UH, BRITTANY.I'M ACTUALLY GOING TO START THE PRESENTATION AND LET MELANIE FILL IN IN A COUPLE OF SLIDES HERE.
I AM THE PARTNER ON THE ENGAGEMENT, UH, BASED OUT OF OUR DALLAS OFFICE, AND WE'LL BE GOING THROUGH THE RESULTS OF THE EXAMINATION.
SO THE SOC ONE EXAMINATION THAT WE PERFORMED, UH, THE, THE STANDARD AND GUIDANCE WITH WHICH WE FOLLOW IN ORDER TO, TO TEST AND ISSUE THIS REPORT IS UNDER THE A-I-C-P-A, SPECIFICALLY THE STATEMENT ON STANDARDS FOR A TEST STATION, WHICH IS SSAE 21.
UH, THIS IS RELEVANT TO THE CONTROLS AT SERVICE ORGANIZATIONS THAT ARE RELEVANT TO THE USER ENTITIES INTERNAL CONTROL OVER FINANCIAL REPORTING.
UH, AS YOU STATED, THE SCOPE IS OVER THE SETTLEMENTS AND BILLING OPERATIONS AND THE SUPPORTING APPLICATIONS AND SYSTEMS THEREOF FOR THE PERIOD FROM OCTOBER 1ST, 2022 THROUGH SEPTEMBER 30TH, 2023, UH, 22 CONTROL OBJECTIVES AND 113 CONTROLS.
THERE WERE TWO NEW CONTROLS ADDED THIS YEAR AROUND THE SECURITIZATION DEFAULT CHARGES.
THE PROCESS THAT WE FOLLOW IN ORDER TO PERFORM THIS EXAMINATION INCLUDE COLLECTION OF DOCUMENTATION, WHICH WE TYPICALLY DO DURING THE SUMMER MONTHS OF JUNE AND JULY.
WE THEN PROCEED TO THE ACTUAL TESTING OF THE CONTROLS, WHICH OCCURS IN THE JULY AND AUGUST TIMEFRAME.
AND OUR REPORTING BEGINS REALLY AS WE'RE WRAPPING UP TESTING, BUT, UH, VERY CONCENTRATED IN THE SEPTEMBER AND OCTOBER TIMEFRAME.
LIKE YOU MENTIONED, THE RESULTS, UH, WERE AN UNMODIFIED OPINION CLEAN REPORT, AND THERE WERE NO REPORTABLE EXCEPTIONS FOR THIS REPORTING PERIOD.
ELLIE'S GONNA GO OVER THE AUDIT
[5.3 Recommendation regarding Acceptance of 2023 System and Organization Control Audit Report]
APPROACH WITH YOU ALL.UM, SO THE AUDIT TEAM COMPOSITION CONSISTS OF ABOUT FOUR DIFFERENT LAYERS.
SO WE HAVE A RISK QUALITY CONTROL PARTNER THAT COMES IN AND REVIEWS THE ENTIRE ENGAGEMENT FROM START TO FINISH AND JUST MAKING SURE THAT WE ARE ABIDING BY ALL THE QUALITY STANDARDS AND GUIDANCE THAT HAVE BEEN ISSUED BY THE A-I-C-P-A.
WE ALSO THEN HAVE THE PARTNER AND THE SENIOR MANAGER ON THE ENGAGEMENT WHO WILL BE SUPERVISING THE INDIVIDUALS WHO ARE PERFORMING THE AUDIT AND EXAMINATION, DOING REALLY THE CONTROL TESTING.
AND THEN WE WILL ALSO BE MAKING SURE THAT ANY SORT OF PROFESSIONAL JUDGMENT OR ANYTHING THAT MAY NEED PROBLEM SOLVING, UM, IS EVALUATED AND, AND MEETS THE GUIDANCE AND STANDARDS.
AND THEN WE WILL HAVE SENIOR ASSOCIATES AND ASSOCIATES WHO ARE, WHO ARE REALLY KIND OF WORKING ON THE DAY-TO-DAY CONTROL TESTING AND ASSESSMENT.
THE SOC ONE EXAMINATION IS A RISK-BASED APPROACH AND REALLY FOCUSING ON THE RISK TO THE USER ENTITY'S FINANCIAL REPORTING, UM, AND ENSURING THAT THOSE RISKS ARE ADDRESSED BY CONTROLS AND CONTROL OBJECTIVES THAT ARE STATED WITHIN THE SOC ONE, UM, CONTROL MAKEUP.
UM, THOSE KEY CONTROLS ARE DEFINED BY ERCOT, AND THEN WE ENSURE THAT THEY ARE DIRECTLY TYING TO THOSE RISKS AND THAT THEY, UH, MEET THE OVERALL GUIDANCE AND REQUIREMENTS OF THE A-I-C-P-A AND WHAT IS EXPECTED IN THE INDUSTRY FROM AN APPLICATION AND, AND SYSTEM SCOPING STANDPOINT.
ERCOT SCOPES THOSE SYSTEMS AND EVALUATES WHAT APPLICATIONS ARE DIRECTLY IMPACTING THE INTERNAL CONTROLS OR FINANCIAL REPORTING AS IT RELATES TO THE USER ENTITIES.
THEY EVALUATE THAT ON AN ANNUAL CADENCE AND SEND THAT OVER TO US, AND THEN WE CONFIRM THAT THOSE SYSTEMS AND APPLICATIONS THAT HAVE BEEN IDENTIFIED ARE APPROPRIATE TO ADDRESS THOSE RISKS.
FROM A CONTROL TESTING APPROACH AND PERSPECTIVE, WE REALLY FOCUS ON DESIGN EVALUATION AND IMPLEMENTATION.
SO REALLY, UH, CONFIRMING THAT THE CONTROLS ARE IN PLACE AND DESIGNED APPROPRIATELY.
AND THEN WE GO INTO OPERATING EFFECTIVENESS TESTING, WHICH IS ESSENTIALLY LOOKING AT MULTIPLE OCCURRENCES AND ENSURING THAT THE CONTROL IS OPERATING CONSISTENTLY ACROSS THE PERIOD THAT WE'RE LOOKING AT.
[00:10:01]
TO SEPTEMBER 30TH, 2023, THAT ALL CONTROLS ARE BEING EXECUTED CONSISTENTLY.UM, THROUGHOUT THAT TIME, THOSE PROCEDURES CONSIST OF INQUIRY, OBSERVATION, INSPECTION OF DOCUMENTS AND RECORDS AND CONFIGURATIONS, AND THEN EVEN REPERFORMANCE AND RECALCULATION OF THOSE TRANSACTIONAL CONTROLS.
OUR SAMPLING APPROACH AND UH, AND SAMPLING APPROACH AND METHOD IS IN ACCORDANCE WITH THE A I CPAS A UC SECTION FIVE, UH, 530.
AND AS YOU KNOW, I KIND OF STATED A LITTLE BIT IN THE BEGINNING, WE HAVE A QUALITY ASSURANCE PROCESS WHERE ALL TESTING PROCEDURES AND THE SOC ONE RE SOC ONE REPORT AND QUALITY DOCUMENTATION IS REVIEWED BY FOUR LAYERS OF REVIEW.
FIRST, THE SENIOR ASSOCIATE, THEN THE SENIOR MANAGER THAN THE PARTNER, AND THIS THEN THE RISK MANAGEMENT PARTNER.
SO MULTIPLE LAYERS OF REVIEW TO ENSURE THAT WE ARE MEETING ALL REQUIREMENTS.
AS FAR AS SOME OF OUR INTERNAL POLICIES AROUND AUDITOR INDEPENDENCE, THAT IS SOMETHING THAT THE FIRM, UM, AND THE PROFESSION ACTUALLY REQUIRE OF US.
THE ACTUAL RULE, UH, THE INDEPENDENCE RULE STATES THAT A MEMBER IN PUBLIC PRACTICE SHALL BE INDEPENDENT IN THE PERFORMANCE OF PROFESSIONAL SERVICES AS REQUIRED BY STANDARDS, PROMULGATED BY BODIES DESIGNATED BY THE COUNCIL.
AND THIS HELPS ENSURE A, THE DIVIDING LINES AND THE ETHICAL RESPONSIBILITIES IN PERFORMING ENGAGEMENT SUCH AS SOC REPORTS AND EXAMINATIONS.
UM, WE ACTUALLY INTERNALLY HAVE OUR OWN POLICIES AND PROCEDURES, UH, RELATED TO INDEPENDENCE WHERE WE MUST DO TRAINING FOR, UM, THE ENTIRE PROFESSIONAL PRACTICE EVERY THREE YEARS.
NEW HIRES ALSO MUST GET, UM, SOME INDEPENDENCE TRAINING UPON HIRE.
AND THIS IS ALL COVERED BY OUR INTERNAL QC POLICIES AND PROCEDURES.
UM, ANY PERSONNEL, UM, THAT ARE WORKING ON PROFESSIONAL SERVICE ENGAGEMENTS ARE REQUIRED TO COMPLETE THIS TRAINING AND THE CONFIRMATION OF THIS TRAINING, UM, AND CONFIRM OUR UNDERSTANDING OF THE FIRM'S POLICIES FOR THE ETHICAL AND INDEPENDENCE REQUIREMENTS.
WE ARE ALSO REQUIRED TO, UH, AS A FIRM, UM, ENSURE THAT OUR INTERNAL QUALITY CONTROL SYSTEM FOR THE ACCOUNTING AND AUDITING PRACTICE, UM, ARE INDEPENDENTLY EVALUATED EVERY THREE YEARS THROUGH PEER REVIEW.
AND THIS IS CONDUCTED UNDER THE REQUIREMENTS OF THE A I CPA'S NATIONAL PEER REVIEW COMMITTEE, AND THE RESULTS OF THAT PEER REVIEW IS PUBLICLY AVAILABLE AND WE HAVE HAD NO, NO NOTABLE FINDINGS.
THAT CONCLUDES OUR PRESENTATION OF THE SOC EXAMINATION PROCEDURES THAT WE PERFORMED FOR ERCOT.
THE TEAM WAS EXTREMELY HELPFUL.
WE WERE ABLE TO VERY EFFICIENTLY GET THROUGH THIS AUDIT AGAIN THIS YEAR FOR THE SECOND YEAR IN A ROW AND LOOK FORWARD TO OUR, OUR NEXT CYCLE.
UM, IF ANYBODY HAS ANY QUESTIONS, WE ARE HAPPY TO TAKE THOSE.
DOES ANYONE TO HAVE ANY QUESTIONS FOR WEAVER AND TIBBLE? ANY QUESTIONS FOR BETTY, UH, REGARDING THIS, THE, UH, SOC AUDIT OVERALL? OKAY.
I WANT TO THANK EACH OF YOU FOR, UM, THE PRESENTATION.
I'M GLAD THE REPORT CAME OUT THE WAY IT DID.
UM, THE, UH, FOR AGENDA ITEM 5.3, WHICH IS RELATED TO THIS ISSUE, UH, REGARDING ACCEPTANCE OF THE 2023 SYSTEM AND ORGANIZATION CONTROL AUDIT REPORT, UM, I'LL ASK FOR GENERAL COMMENTS AGAIN, IF NOT, DOES ANYONE WISH TO MAKE A MOTION TO ACCEPT THE REPORT? TO RECOMMEND TO THE BOARD THAT WE ACCEPT THE REPORT? SO MOVED TO ACCEPT.
ANY OPPOSED? ANY ABSTENTIONS? OKAY.
WE'RE GOING TO RECOMMEND TO THE BOARD TO ACCEPT THE OPERATION AND UH, ORGANIZATION CONTROL REPORT.
NEXT, WE'RE GONNA GO INTO COMMITTEE BRIEFS.
SEAN TAYLOR IS GONNA PRESENT ITEM AGENDA ITEM 6.13.
[6.1 Review 2023 Financial Summary]
6.3, STARTING WITH THE 2023 FINANCIAL SUMMARY, UH, FOLLOWED BY THE PERIODIC REPORT ON INVESTMENTS.AND FINALLY, THE PERIODIC REPORT ON DEBT COMPLIANCE.
[00:15:11]
GOOD MORNING EVERYONE.SO WE LOOKED TO, AT THE FINANCIAL SUMMARY THROUGH THE END OF OCTOBER FOR ACTUALS AND THE FORECAST REMAINDER OF THE YEAR, WE'RE SEEING CONSISTENT STORY TO WHAT WE'VE BEEN SEEING MOST OF THE YEAR.
DO WANNA HIGHLIGHT A FEW ITEMS ON THIS PAGE? THE FIRST IS THAT THE OVERALL FINANCIAL VARIANCE THAT WE'RE EXPENDING EXPECTING FOR THE END OF THE YEAR IS UP ABOUT $7 MILLION VERSUS THE LAST TIME YOU SAW IT.
MOST OF THAT IS ASSOCIATED WITH TIMING ON THE EXPENDITURE SIDE.
SO SOME OF THAT WILL, WE THOUGHT WE WERE GOING TO FIT INTO 2023 AND WE'LL CARRY FORWARD TO 2024 BECAUSE OF TIMING DIFFERENCES.
AT THE END OF THE YEAR, OF THAT $7 MILLION, ABOUT A MILLION OF IT'S ASSOCIATED WITH THE REVENUE VARIANCE ON THE REVENUE SIDE.
THE SYSTEM ADMINISTRATION FEE IS ONLY A HUNDRED THOUSAND DOLLARS DIFFERENT FORECAST IN THE LAST TIME YOU SAW IT AND IT'S UP A HUNDRED THOUSAND DOLLARS FROM A DEPARTMENT REVENUE PERSPECTIVE, THEN THAT'S ACTUALLY DOWN ABOUT A MILLION AND A HALF.
THAT'S PRIMARILY DRIVEN BY TWO THINGS.
THE FIRST ARE INSPECTION FEE REVENUES AND WE'LL SEE IT OFFSET TO THAT.
NUMBERS WERE A LITTLE BIT LOWER THAN WE'RE EXPECTING BY ABOUT $600,000.
SIMILAR STORY ON THE WAN REVENUE.
THAT'S DOWN BY ABOUT 700,000 FROM THE LAST TIME YOU SAW IT AS WELL.
AND THAT'LL BE OFFSET BY THE, ON THE EXPENDITURE SIDE TOO IS BOTH OF THOSE ARE IN EFFECT PASS THROUGHS THE WAY WE'RE TREATING THEM, THE INTEREST INCOME, SIMILAR TO WHAT WE SAW BEFORE, WE EXPECT THAT TO BE A LITTLE BIT HIGHER THAN IT EVEN SHOWN ON THIS PAGE AT THIS POINT, BUT IT'S UP ABOUT TWO AND A HALF MILLION DOLLARS SINCE THE LAST TIME YOU SAW IT.
AND THAT HAS TO DO WITH THE CHANGES THAT WE MADE IN THE INVESTING IN THE LONGER TERM, UH, FUNDS, WHICH WE'RE RECEIVING HIGHER RATES ON.
I'LL TALK ABOUT THAT IN THE INVESTMENT REPORT AS WE MOVE FORWARD IN 2024, WE'RE GOING TO START PROVIDING A LITTLE MORE INFORMATION ON THAT.
SO THE COMMITTEE HAS VISIBILITY TO THE AMOUNTS OF MONEY THAT WE HAVE LOCKED IN, SO TO SPEAK, ASSUMING THAT WE HOLD ALL THOSE INVESTMENTS TO MATURITY AND THE AMOUNT THAT'S STILL AT RISK.
THAT'S FOR UNINVESTED AMOUNTS OR REINVESTMENT RISK OR JUST THE VARIABILITY IN THE MONEY MARKET.
MUTUAL FUNDS FOR THE AMOUNTS THAT ARE INVESTED IN THAT.
ON THE EXPENDITURE SIDE, THAT'S FAVORABLE BY ABOUT $6 MILLION, SEEING ABOUT A MILLION DOLLARS OF THAT IN PROJECT SPEND.
AS WE'VE SEEN SOME OF THAT PUSHED TO THE NEXT YEAR.
THE RESOURCE MANAGEMENT'S ABOUT A MILLION DOLLARS MORE FAVORABLE AND THAT'S DRIVEN BY ACTUAL MORE PROJECT FUNDED LABOR.
SO THE AMOUNT THAT'S BEING FUNDED OUT OF THE PROJECT SIDE AS OPPOSED TO THE OPERATIONS SIDE.
AND THE BIG CHANGE IS IN, UH, THE OTHER EXPENDITURES ABOUT $4 MILLION MENTIONED BOTH THE INSPECTION COSTS AND THE WAN COSTS ARE OFFSET BY THAT DECREASE IN REVENUE.
SO IT'S A DECREASE IN THE EXPENDITURES.
SO IT SHOWS UP MORE FAVORABLY ON THIS PAGE.
IN ADDITION TO THAT, WE HAVE SOME OTHER TIMING ISSUES OR DIFFERENCES ASSOCIATED WITH, UH, SOME EQUIPMENT, MAINTENANCE EXPENDITURES.
AND THEN OUTSIDE LEGAL SERVICES WERE ALSO FAVORABLE, MORE FAVORABLE THAN WE WERE EXPECTING TO SEE EARLIER IN THE YEAR.
NEXT SLIDE WHERE WE HAVE OUR SYSTEM ADMINISTRATION FEE REVENUE COMPARISON MONTH OVER MONTH AND YEAR OVER YEAR.
YOU SEE THAT NOVEMBER CAME IN THESE, UH, SHOWN ON HERE AS A FORECAST, BUT IT'S WHERE THE ACTUALS CAME IN WAS ABOUT FLAT.
IT'S ABOUT A 300 UM, OR 0.3 TERAWATT HOUR DIFFERENCE.
AND THEN DECEMBER RIGHT NOW IS FORECASTED TO BE A LITTLE BIT UNDER AS WELL.
WE STILL EXPECT TO FINISH THE YEAR JUST UNDER A 3% FAVORABLE VARIANCE OVER WHAT WAS BUDGETED.
MOVING ON TO THE BALANCE SHEET, THIS IS CONSISTENT WITH WHAT WE'VE BEEN SEEING ALL YEAR.
THERE IS ONE VERY LARGE CHANGE AND THAT'S ASSOCIATED WITH THEIR CHANGE IN HOW WE'RE INVESTING AND IT'S THE MOVE FROM THE CASH AND THE MONEY MARKET MUTUAL FUNDS TO THE BOND INVESTMENTS.
YOU CAN SEE THAT AT THE TOP OF THE ERCOT COLUMN WHERE YOU SEE THE LARGE DROP IN UNRESTRICTED CASH THAT'S JUST MOVING THAT TO THOSE BONDS, WHICH IS IN THAT NEXT ROW.
OVERALL, THE UNRESTRICTED CASH AND BOND INVESTMENTS ARE UP ABOUT $600 MILLION YEAR OVER YEAR, WHICH IS SIMILAR TO WHAT WE SAW BEFORE.
AND THAT'S DRIVEN BY THAT CHANGE IN MARKET SETTLEMENT LIABILITIES AT THE BOTTOM WHERE WE HAD THE $225 MILLION RECOVERY FROM BRAZOS OF THE CRS USED FOR MARKET LIQUIDITY.
IN ADDITION, WE'VE SEEN THE CRR AUCTION LIABILITIES GROW FOR BOTH THE CURRENT AND THE LONG TERM IS PRETTY FLAT.
THE OVER A YEAR IS ACTUALLY DOWN VERSUS WHAT WE HAD SEEN IT BEFORE.
AND WE'LL SEE THAT ON THE CRR CHART IS HOW THAT'S SORT OF LEVELED OFF IN THE PAST FEW MONTHS AS WELL.
THE OTHER LARGE INCREASE IN HERE THAT INCREASES
[00:20:01]
THE TOTAL ASSETS IS THE, SORRY ABOUT THAT, IS THE RESTRICTED CASH AND INTEREST RECEIVABLE, AND THAT'S PRIMARILY THE COLLATERAL THAT WE'RE HOLDING.SO WE WERE HOLDING MORE CASH COLLATERAL THAN WE WERE LAST YEAR BY ABOUT $170 MILLION.
MOVING ON TO THE SECOND SET OF COLUMNS FOR THE SPECIAL PURPOSE ENTITY, THAT'S FOR THE FUNDING FOR SUBCHAPTER M THEN THAT IS, THOSE ARE DECREASES AS WE HAD SEEN BEFORE DUE TO THE PAY DOWN IN DEBT THAT WE HAD WAY BACK IN FEBRUARY.
AND THEN THE OTHER ONE, THE SUBCHAPTER N, IS BASICALLY FLAT AND CONSISTENT WITH WHAT WE EXPECTED TO SEE ON THE INCOME STATEMENT SIDE.
UH, THIS IS MOSTLY CONSISTENT WHAT WE SAW BEFORE AS WELL, STARTING WITH ERCOT IN THE FIRST SET OF COLUMNS, THE OPERATING REVENUES ARE UP ABOUT EIGHT AND A HALF MILLION DOLLARS YEAR OVER YEAR.
SEVEN OF THAT'S FROM THE SYSTEM ADMINISTRATION FEE REVENUES WITH THE HIGHER LOAD.
AND THEN ON THE NON-SYSTEM ADMINISTRATION FEES SIDE OF THINGS, WE HAD AN INCREASE IN INSPECTION REVENUES BY ABOUT $2 MILLION AND WE HAD SPECIAL PURPOSE ENTITY REVENUES INCREASING BY ABOUT 600,000.
AND THOSE ARE OFFSET BY DECREASES IN GINNER AND WAN REVENUES.
ON THE OPERATING EXPENDITURE SIDE, THAT'S EXPENSES SIDE, THAT'S CONSISTENT WITH WHAT WE'VE SEEN ALL YEAR WITH THE 34 AND A HALF MILLION DOLLARS INCREASE DRIVEN BY LABOR AND DEPRECIATION AND OTHER INCOME IS WHERE WE'RE GETTING THAT HUGE INCREASE OF ABOUT $75 MILLION YEAR OVER YEAR FROM INTEREST INCOME, WHICH ALL LEADS TO A TOTAL CHANGE IN NET ASSETS OF ABOUT $50 MILLION A YEAR OVER YEAR FROM SUB CHAPTER M IN THE MIDDLE.
AND WE SEE THE DECREASES IN THOSE NUMBERS.
THAT'S JUST DIRECT RESULT OF THE PAY DOWN.
AND THEN ON SUB CHAPTER N, WE ACTUALLY SEE INCREASES IN THE NUMBER, AND THAT'S BECAUSE THIS WAS THE FIRST FULL YEAR OF THOSE TRANSACTIONS IS THE CRR SLIDE THAT I MENTIONED BEFORE.
YOU'RE USED TO SEEING AND YOU CAN SEE SINCE AROUND THE APRIL TIMEFRAME, IT'S MOSTLY BEEN FLAT FOR A TOTAL BALANCE THAT WE'RE HOLDING.
AND AT THE BOTTOM YOU CAN SEE THAT WE HAVE OUR LARGEST SURPLUS FOR UNRESTRICTED CASH AND BOND INVESTMENTS EXCEEDING OUR MARKET LIABILITIES.
AND THAT'S UP TO BY ABOUT $55 MILLION, WHICH WE'LL THEN USE AND DID USE WHEN WE WENT THROUGH AND DID THE BUDGET FILING WITH THE PUC AND THE ADJUSTMENTS TO THAT BUDGET FILING, INCORPORATED THOSE CHANGES IN IT.
ANY QUESTIONS ON THIS BEFORE I MOVE ON TO INVESTMENTS? SEAN, CAN YOU EXPLAIN THAT LAST POINT A LITTLE MORE? THE LAST PART A LITTLE MORE? AS FAR AS THE $55 MILLION.
SO THAT IS THE AMOUNT OF WHEN WE LOOK AT WHETHER WE HAVE AN OPERATING CASH BALANCE OR WE'RE ACTUALLY USING CRR FUNDS OR WE WOULD BE USING THE REVOLVER.
SO AT THIS POINT, ERCOT IS HOLDING APPROXIMATELY AT THE END OF OCTOBER, WE'RE HOLDING APPROXIMATELY $55 MILLION OF CASH.
THAT AMOUNT WE THEN ROLL FORWARD IN OUR BUDGETING TO LOOK AT TO SAY HOW MUCH SYSTEM ADMINISTRATION FEE INCREASE DO WE NEED? THAT'S ALSO TIED TO WHEN WE WENT BACK AND DID THE FILING AND CHANGED IT FROM ONE 71 CENTS TO 69 CENTS.
AND I'LL GET INTO THAT WHEN WE TALK ABOUT THE BUDGET AS WELL.
SO THIS IS THE CASH THAT WE'RE HOLDING IN EXCESS OF THE EXPENDITURE.
SO GOING ALL THE WAY BACK IS, DID YOU SAY WE CHANGED THE WAY WE WERE DOING IT IN RESPONSE TO THE PUC RULING? NO, NO, SORRY, SORRY.
WE CHANGED OUR, WE CHANGED OUR FILING.
WE UPDATED OUR FILING TO REPRESENT THIS ADDITIONAL SURPLUS AND THAT RESULTED IN A LOWER SYSTEM ADMINISTRATION FEE RATE REQUEST.
SO MOVING ON TO THE PERIODIC REPORT ON
[6.2 Periodic Report on Investments]
INVESTMENTS.SO ERCOT IS IN COMPLIANCE WITH ALL OF OUR INVESTMENT REQUIREMENTS.
THE MONEY MARKET MUTUAL FUND INVESTMENT YIELDS WE RECEIVED, UH, THROUGH OCTOBER.
AT THE END OF OCTOBER, WE'RE CONSISTENT WITH WHAT WE SAW IN AUGUST, THE END OF OCTOBER.
IT'S ABOUT 5.24% AT THE END OF AUGUST, ABOUT 5.21.
AND AS I MENTIONED BEFORE, THE PURCHASE YIELD ON THE TREASURY OBLIGATIONS, THAT ON THE OTHER HAND HAS INCREASED.
UH, VERSUS WHEN WE HAD THE SMALLER BALANCES IN THERE AND THE OLDER INVESTMENTS, IT WAS ONLY ABOUT 4.8%.
SO THAT WAS A LARGE INCREASE THERE.
[00:25:01]
AS YOU MAY HAVE HEARD LAST WEEK, THE FED MADE THEIR ANNOUNCEMENT ABOUT WHAT THE FUTURE LOOKS LIKE AND STABILIZATION, SOME PEOPLE INTERPRETING THAT THAT WILL RESULT IN MULTIPLE DECREASES NEXT YEAR, UH, AS YET TO BE SEEN, OF COURSE.BUT WHEN WE LOOK AT THAT FORWARD CURVE THAT WE SHOWED YOU DURING THE BUDGET PROCESS, THAT HAS ACTUALLY DECREASED BY ABOUT A FULL PERCENT SINCE THE, WE SAW IT IN OCTOBER WHEN WE TOOK IT TO THE COMMISSION, WHEN WE DID THE BUDGET ADJUSTMENTS THEN, AND IT HAD ALL THOSE CONVERSATIONS ABOUT THE IMPACT OF IT.
SO IT DOESN'T TAKE TOO LONG FOR THOSE THINGS TO ACTUALLY MOVE SUBSTANTIALLY.
AND JUST FOR THE, UH, BENEFIT OF THE COMMITTEE AND THE AUDIENCE, WHAT DOES EACH PERCENT REPRESENT IN TERMS OF ANNUAL, UH, INTEREST INCOME IMPACT? APPROXIMATELY $20 MILLION.
ASSUMING OUR $2 BILLION BALANCE, RIGHT? I THINK THAT'S IMPORTANT FOR EVERYBODY TO REMEMBER.
AND THAT EQUATES TO APPROXIMATELY 4 CENTS ON THE FEE AS EACH PENNY ON THE FEES, DEPENDING ON WHICH YEAR YOU'RE LOOKING AT IS BETWEEN 4.6 TO OVER THE NEXT FEW YEARS, BUT NEXT YEAR IT'D BE 4.6.
SO MENTIONED WE'RE IN COMPLIANCE.
UH, WE DO WANNA HIGHLIGHT A FEW THINGS IN HERE.
SO BECAUSE THEY HAVE CHANGED SUBSTANTIALLY BECAUSE OF THIS BOND INVESTMENT, THE BOND INVESTMENTS THAT WE'RE DOING, SO ON THIS PAGE YOU CAN SEE AS WE LOOK AT THE TOP ROW ON HERE WHERE WE TALK ABOUT ERCO INC.
UNRESTRICTED MONEY MARKET MUTUAL FUNDS, IT'S AT ABOUT FOUR $50 MILLION ON THIS PAGE.
WHEN WE SAW IT PRIOR TO THOSE OTHER BOND INVESTMENTS, IT WAS AT TWO AND A HALF BILLION.
ABOUT SIMILARLY AT THE VERY, THE LOWEST LINE UNDER US TREASURY OBLIGATION PORTFOLIO, IT'S AT ABOUT 1.8, 1.9 BILLION.
THAT WAS AT LITTLE OVER 500 MILLION BEFORE WE MADE THOSE ADDITIONAL INVESTMENTS OF THAT $1.3 BILLION.
SO OVERALL, THOSE COMBINED IS ABOUT 2.3 BILLION VERSUS WE THOUGHT A LITTLE BIT OVER 3 BILLION LAST TIME WE SAW IT.
THAT $700 MILLION DECREASE IS THE AMOUNT THAT WE HAD TALKED ABOUT LAST TIME, WHERE AT THE END OF AUGUST WE'D HAD A SUBSTANTIAL AMOUNT OF MARKET LIABILITIES THAT WERE OUTSTANDING BECAUSE OF THE WAY THE SETTLEMENT CYCLE WORKED.
SO IT WASN'T A REALLY SOLID NUMBER TO SAY THAT THIS IS OUR BALANCE GOING FORWARD.
IT WAS REALLY JUST AN ANOMALY AND WE SEE IT'S THAT SAW THAT CORRECT ITSELF IN THESE MATERIALS.
THE LAST PAGE I WANNA GO TO IN THIS SECTION IS ACTUALLY IN THE APPENDIX.
IT'LL BE THE LAST PAGE OF THESE MATERIALS, PAGE 69.
AND THAT'S BECAUSE THESE ARE THE BOND INVESTMENTS NOW.
SO AS WE LOOK AT THIS PAGE, MUCH, MUCH MORE SUBSTANTIVE THAN IT WAS HISTORICALLY.
AND YOU CAN SEE THAT WE HAVE MATURITIES AND BASICALLY EVERY MONTH AS WE MOVE FORWARD AND WE'RE TALKING ABOUT HOW WE INVEST THIS MONEY RELATIVE TO THE CONGESTION REVENUE RIGHTS AUCTIONS AND THE FLOW OUT OF THOSE MONIES IN THE FUTURE WHERE WE'RE GETTING THOSE TO MATURE APPROXIMATELY THREE MONTHS BEFORE THEY'RE DUE TO BE PAID OUT.
SO THIS SHOWS OUR INVESTMENT PORTFOLIO AT THE END OF OCTOBER.
WE HAVE THE MATURITY, THEN WE HAVE THE POWER INFORMATION FOR THE POWER VALUE AND THE COUPON RATE.
THEN WE HAVE THE CURRENT MARKET INFORMATION FOR THE MARKET VALUE AND THE MARKET YIELD, AND WE HAVE THE PURCHASE PRICE, THE DISCOUNT OR PREMIUM.
ALL OF THESE WERE AT DISCOUNTS SO FAR AND THE PURCHASE YIELD.
THEN ON THE FAR RIGHT WE HAVE THE MONTHLY INVESTMENT INCOME AND THEN THE DURATION AS WELL.
PROB TO THIS SLIDE, WE'RE GONNA FIGURE OUT EXACTLY WHAT IT'LL LOOK LIKE, BUT WE ADDING REALIZED AND UNREALIZED GAINS THAT ARE EITHER EXIST OR WE'RE FORECASTED, ASSUMING THAT WE HOLD THESE TO MATURITY, WE'LL HAVE THAT ON HERE FOR 2024.
AND 2025 IS, THAT IS SUCH A SUBSTANTIAL, UM, PART OF OUR BUDGET AS WE MOVE FORWARD FAR MORE THAN IT HAS BEEN HISTORICALLY.
SO WE'LL PROVIDE THAT INFORMATION AS WELL.
ALSO PUT SOME HORIZONTAL LINES IN HERE SO IT'S EASIER TO FOLLOW THIS ACROSS.
UH, ONE OTHER THING THAT I HIGHLIGHT JUST FOR, UH, INTEREST PURPOSES, I THINK IT'S A GOOD EXAMPLE OF SOME QUESTIONS THAT WERE RAISED BEFORE BY SOME PEOPLE.
IF WE GO ALL THE WAY DOWN AND WE LOOK AT A HANDFUL OF ROWS UP FROM THE BOTTOM AND THE DURATION SIDE, YOU CAN SEE THAT THE DURATION BASICALLY INCREASES.
AS WE GO FARTHER OUT, YOU'LL SEE ONE ANOMALY IN HERE TO THAT.
AND IF WE GO UP SEVERAL ROWS TO NOVEMBER AND DECEMBER OF 25, YOU'LL SEE THAT IT GOES FROM 1.94 IN OCTOBER TO 2.01 IN NOVEMBER AND 1.97 IN DECEMBER.
SO IT LOOKS LIKE THERE'S AN ANOMALY THERE AS WE'RE LOOKING AT THESE.
BUT AS YOU LOOK AT THOSE, THE DURATION HAS TO DO WITH WHEN YOU RECOVER YOUR CASH INVESTMENT.
IF YOU LOOK AT THOSE BONDS AT THEIR COUPON RATES, YOU'LL SEE WHY THAT IS.
AND THAT'S BECAUSE THAT NOVEMBER COUPON RATE IS ONLY 0.375.
DECEMBER HAS THE LARGEST COUPON RATE OF ANYTHING WE HAVE.
SO YOU'RE ACTUALLY RECOVERING THAT CASH SOONER THROUGH THAT COUPON INSTEAD OF WAITING FOR THE FULL MATURITY OF THAT BOND TO GET THAT CASH IN.
[00:30:01]
THAT'S WHY IT SHOWS UP AND IT LOOKS A LITTLE BIT OF ANOMALY ON THERE.ANY QUESTIONS ON THE INVESTMENTS BEFORE I MOVE ON TO DEBT? ALRIGHT, ON THE DEBT SIDE OF THINGS,
[6.3 Periodic Report on Debt Compliance]
AGAIN, WE ARE IN COMPLIANCE WITH ALL OF OUR DEBT REQUIREMENTS, INCLUDING SECURITIZATION.AS WE LOOK AT THE PRIVATE PLACEMENT WE DID PROVIDE AT THE VERY BOTTOM SINCE THE LAST TIME WE MET, PROVIDED THE FINANCIAL STATEMENTS QUARTERLY.
SO PROVIDED THE Q3 STATEMENTS OF THOSE, THOSE WENT ON AT THE END OF NOVEMBER.
ON THE SECURITIZATION SIDE OF THINGS, WE HAVEN'T HAD ANY CHANGES TO THE WAY THE INFORMATION THAT'S PRESENTED ON THIS PAGE HAVE ANY DEBT PAYMENTS SINCE THEN.
WE STILL ARE COLLECTING, WE'RE DOING TRUE UPS AS REQUIRED, SO WE'RE IN COMPLIANCE WITH ALL OF THAT INFORMATION.
NEXT YEAR WE'LL BE COMING BACK TO THE COMMITTEES, START TALKING MORE AND MORE ABOUT THE ISSUANCE OF SUBCHAPTER M DEBT TO REPLACE THE EXISTING DEBT THAT IS OUT THERE.
THE COMPTROLLER AGREEMENT WITH THE COMPTROLLER WAS FOR THEM TO HOLD IT FOR THREE YEARS.
THE INTEREST RATE RESETS AFTER THREE YEARS TO A MUCH LARGER RATE AS IT'S SHOWN IN THE DETAIL AND WE'VE DISCUSSED BEFORE.
SO WE HAVE MUCH MORE EXTENSIVE CONVERSATIONS AND BRINGING MORE ACTION ITEMS BACK TO THE BOARD NEXT YEAR.
AS WE MOVE FORWARD IN THAT PROCESS.
WE'VE ALREADY ENGAGED WITH THE FINANCIAL ADVISOR AND OUR AND OUTSIDE COUNSEL AND DEBT COUNSEL, AND WE'RE MOVING FORWARD WITH THE OPTIONS TO BRING BACK TO THE COMMITTEE AND WE'LL BE ASKING FOR A SUBSET OF BOARD MEMBERS TO HELP ADVISE US ALONG THE WAY.
AGAIN, AND THAT'S ALL I HAVE FOR THE COMMITTEE UPDATES UNLESS THERE'S ANY ADDITIONAL QUESTIONS.
ANY QUESTIONS FOR SEAN? HOW DO I SWITCH? OKAY, THANK YOU SEAN.
[7. Recommendation regarding Acceptance, Adoption and Approval of 2024-2025 Budget and Fee]
TO AGENDA ITEM SEVEN, WHICH IS, UH, RELATED TO THE RECOMMENDATION, UH, REGARDING ACCEPTANCE, ADOPTION AND APPROVAL OF THE 20 24, 20 25 BUDGET AND THE SYSTEM ADMIN ADMINISTRATION FEE.AS I THINK ALL OF US ARE AWARE, THE BYLAWS REQUIRE BOARD APPROVAL OF KOTS BUDGET AND THE BOARD POLICIES AND PROCEDURES REQUIRE ADOPTION OF THE BUDGET BY THE BOARD AND AS APPROVED BY THE PUCT TO AUTHORIZE THE CEO TO COMPLETE WORK PLANS AND MAKE ASSOCIATED EXPENDITURES.
IN THIS AGENDA ITEM, WE NOTICED A VOTE FOR A COMMITTEE RECOMMENDATION TO THE BOARD REGARDING THE ACCEPTANCE, ADOPTION AND APPROVAL OF THE 2024 BUDGET, EXCUSE ME, 2024.
IN NOVEMBER, THE PUBLIC UTILITY COMMISSION APPROVED TOTAL SPENDING AUTHORIZATION FOR OPERATING EXPENSES, PROJECT SPENDING AND DEBT SERVICE OBLIGATIONS IN THE AMOUNTS OF $405,700,000 FOR 2024 AND $414,300,000 FOR 2025.
IT ALSO APPROVED A ERCOT SYSTEM ADMINISTRATION FEE OF 63 CENTS PER MEGAWATT HOUR, EFFECTIVE JANUARY THE FIRST, 2024.
I WE'VE TALKED ABOUT THIS, BUT I'D LIKE TO REITERATE THAT THE BUDGET RISK INCLUDED LOWER THAN PROJECTED INTEREST RATES AND ALSO THE INTERGENERATIONAL INEQUITY BETWEEN THE 20 24, 20 25 TIME PERIOD AND 20 26, 20 27 TIME PERIOD.
UM, BECAUSE OF THE, THE DIFFERENCES BETWEEN THE, WHO GETS THE BENEFIT OF THE EXPENDITURES AMONG THOSE TWO, UH, PAIRS OF YEARS.
UM, BECAUSE THE BUDGET AND FEE APPROVED BY THE PUCT DIFFER FROM THE BUDGET AND THE FEE APPROVED BY THE BOARD IN JUNE, THE BOARD SHOULD ADOPT AND APPROVE THE BUDGET AND FEE IS APPROVED BY THE PUCT CONSISTENT WITH THE REQUIREMENTS I OUTLINED EARLIER.
DOES ANYONE HAVE ANY COMMENTS REGARDING THIS PARTICULAR ISSUE? AND I WANT TO, BEFORE WE, UH, ASK FOR COMMENTS, I'D LIKE TO THANK, UH, CHAIRMAN JACKSON AND THE STAFF OF THE PUCT, AS WELL AS THE OTHER COMMISSIONERS REALLY DIGGING INTO THIS ISSUE.
UH, AND AS WELL AS, UH, THE PRESENTATIONS AND, UH, THE BACKGROUND WORK THAT WERE DONE BY THE TEAM AT ERCOT, UH, TO HELP COME UP WITH THE BEST POSSIBLE OUTCOME, UH, FOR TEXAS RATE PAYERS.
SO I THANK EVERYONE FOR THEIR WORK ON THAT.
UH, WITH THAT, UM, ANY COMMENTS OR QUESTIONS REGARDING, UH, THIS PARTICULAR SUBJECT? OR DOES ANYONE WISH TO MAKE A MOTION TO RECOMMEND THAT THE BOARD ACCEPT THE BUDGET, APPROVE THE BUDGET, AND THE, UH, SYSTEM ADMIN FEE FOR 20 24, 20 25, INCLUDING THE EXPENDITURES? I MOVE THAT WE ADOPT THE BUDGET AS PRESENTED.
THANK YOU FOR THE, UH, MOTION.
SECOND, UH, SECOND FROM, FROM PEGGY.
ANY OPPOSED? ANY ABSTENTIONS? OKAY.
WE'RE GOING TO RECOMMEND TO THE BOARD THAT, UH, THE BOARD, UH, ACCEPT AND APPROVE THE BUDGET FOR 20 24, 20 25, AS WELL AS THE SYSTEM BAN MAN FEE OF
[00:35:01]
63 CENTS PER MEGAWATT HOUR.I'M GLAD YOU ASKED THE QUESTION ABOUT THE 1% INTEREST RATE AND THE 20 MILLION DIFFERENCE, UH, WHAT $20 MILLION WOULD MEAN AS FAR AS THE RATE.
UH, AND I THINK IT'S IMPORTANT THAT WE KEEP THOSE FIGURES IN MIND, MAYBE ON OUR MATERIALS AND MAKE SURE WE KEEP THE PUC UPDATED ON, ON THAT SO THAT THEY UNDERSTAND.
'CAUSE WE'RE PROBABLY GONNA BE IN A PERIOD OF VOLATILITY AND IT COULD, IT ADDS UP QUICKLY.
UH, THAT'S AN IMPORTANT POINT, PEGGY, THAT, UH, UH, BOTH ERCOT, THE ERCOT TEAM AND THE PUCD MAY HAVE TO DEAL WITH THIS AGAIN, UM, AS WE GET INTO 20 24, 20 25, AND THE INDICATIVE RATES FOR THE, THE RATE WOULD BE 74 CENTS FOR A SYSTEM ADMIN, ADMIN MEN FEE, INCLUDING ASSUMING NO CHANGES IN INTEREST RATES FROM WHERE THEY ARE BEFORE, WHEN THE, WHEN THE PUCT APPROVED THE BUDGET LAST MONTH.
SO, SO AGAIN, CHAIRMAN JACKSON, THANK YOU FOR ALL THE WORK THAT YOU ALL DID AND, AND, UH, UH, WE'RE GOING TO, UH, I'M SURE WE'LL ALL STAY CLOSELY IN TUNE ON THIS PARTICULAR ISSUE.
UM, THE NEXT AGENDA ITEM IS A FUTURE AGENDA ITEMS.
[8. Future Agenda Items]
SEAN, THAT BELONGS TO YOU AS WELL.NOTICE THAT THERE'S SOME ADDITIONAL COLUMNS ON HERE AS WE LOOK TO BOTH THE CURRENT AND THE NEXT YEAR AND THE ITEMS THAT WE HAVE COVERED.
AND WE'LL PLAN TO COVER A COUPLE OF KEY TAKEAWAYS.
WE HAVE ACCOMPLISHED EVERYTHING ON OUR LIST FOR 2023 THROUGH THIS MEETING.
UH, FEBRUARY WHEN WE COME BACK, YOU'LL NOTICE HAS A LOT OF ADMINISTRATIVE ITEMS AS IT ALWAYS DOES EVERY FEBRUARY.
ADDITIONALLY, WE'LL HAVE THE START HAVING THE CONVERSATIONS ABOUT THAT REFINANCING OF THAT SUB CHAPTER M DEBT.
ONE THING I WANT TO HIGHLIGHT, OR THE LAST THING I WANNA HIGHLIGHT IS A NEW ROW THAT'S BEEN ADDED, AND IT HAS TO DO WITH THE PC'S APPROVAL OF ERCOT BUDGET, AND THAT'S ROW 19.
SO IT'S A REVIEW COMMISSION ORDERED OPERATING BUDGET RECONCILIATION.
THERE WERE MULTIPLE REQUIREMENTS AS SHOWN IN THE MATERIAL THAT THE PUC ADDED TO THE APPROVAL PROCESS THAT WEREN'T NECESSARILY SPECIFICALLY THE BUDGET, BUT ONE OF THOSE WAS TO BRING BACK A BUDGET RECONCILIATION SIMILAR TO WHAT THE STATE DOES THAT WILL REPRESENT THE 12 MONTHS ENDING JUNE 30TH, 2024.
AND WE HAVE TO FILE THAT WITH THE PUC BY SEPTEMBER 1ST, 2024 TO SHOW HOW WE'RE, HOW OUR, WE'RE STACKING UP RELATIVE TO THE BUDGET IN THAT INTERIM PERIOD.
AND SO IT'LL BRING THAT ITEM BACK IN AUGUST.
ANY OTHER QUESTIONS ON WHAT WE'LL BE DOING MOVING FORWARD? OKAY.
UH, THE, THE, UH, LAST GEN ITEM
[9. Other Business]
IS, UH, OTHER BUSINESS BEFORE WE, OR EXCUSE ME, LAST AGENDA ITEM BEFORE WE MOVE INTO EXECUTIVE SESSION.IS THERE ANY OTHER BUSINESS THAT ANY OTHER COMMITTEE MEMBER WISHES TO THAT ANY COMMITTEE MEMBER WISHES TO RAISE? OKAY, I DON'T HEAR ANY.
SO WE'RE GONNA TRANSITION TO EXECUTIVE
[Convene Executive Session]
SESSION.UH, THE COMMITTEE WILL RECESS GENERAL SESSION AND CONVENE AN EXECUTIVE SESSION.
THERE ARE TWO VOTING ITEMS THAT ARE ANTICIPATED FROM EXECUTIVE SESSION.
SO THE GENERAL SESSION WILL RECONVENE AFTER THE CONCLUSION OF THE EXECUTIVE SESSION.
THE GENERAL SESSION IS NOW RECESSED AND THE WEBCAST WILL BE CONCLUDED.
[Reconvene General Session]
THIS IS BILL FLORES, UH, FINANCE AUDIT COMMITTEE.CHAIR OF THE GENERAL SESSION OF THIS MEETING IS NOW RECONVENED, UH, AT THE BEGINNING OF THE FIRST GENERAL SESSION.
I DIDN'T RECOGNIZE CHAIR KATHLEEN JACKSON OF THE PUCT.
UM, THERE IS NO QUORUM OF, UH, COMMISSIONERS HERE, SO THERE'S NO NEED TO CALL AN, AN OPEN MEETING OF THE, UH, COMMISSION, BUT I'M GLAD YOU'RE HERE.
SO, UH, WE HAVE TWO VOTING ITEMS FROM
[10. Vote on Matters from Executive Session]
THE EXECUTIVE SESSION.FIRST, I'LL ENTERTAIN A MOTION TO RECOMMEND THAT THE BOARD SELECT THE AUDITOR DISCUSS DURING THE EXECUTIVE SESSION UNDER AGENDA ITEM E ES 2.5 AS A 2024 INDEPENDENT SYSTEM AND ORGANIZATION CONTROL AUDITOR.
I MOVE THAT WE HAVE A MOTION FROM PEGGY SECOND AND A SECOND FROM COURTNEY.
UH, IF THERE'S NO DISCUSSION, WE'LL, UH, I HAVE ALL THOSE, UH, IN FAVOR, AYE.
ANY OPPOSED? ANY ABSTENTIONS? OKAY.
UH, THAT WE WILL MAKE THAT RECOMMENDATION TO THE BOARD TOMORROW.
UH, NEXT I'LL ENTERTAIN A MOTION TO APPROVE THE 2024 INTERNAL AUDIT PLAN DISCUSSED DURING EXECUTIVE SESSION UNDER AGENDA ITEM ES 2.6 0.2.
[00:40:02]
I MOVE FOR ADOPTION.ANY OPPOSED? ANY ABSTENTIONS? OKAY.
WE ARE GOING TO MAKE THE RECOMMENDATION TO THE BOARD TOMORROW TO APPROVE THE 2024 AUDIT PLAN.
WE, WE JUST APPROVED THE AUDIT PLAN.
THE, UH, THIS MEETING OF THE FINANCE AND AUDIT COMMITTEE IS NOW ADJOURNED AND THE WEBCAST WILL BE CONCLUDED.