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[00:00:02]

WELL,

[1. Call General Session to Order]

GOOD AFTERNOON, MEMBERS OF THE RELIABILITY AND MARKETS COMMITTEE AND GUESTS.

THIS IS BOB FLEXON, COMMITTEE CHAIR.

WELCOME TO THE FEBRUARY 26TH, 2024 RELIABILITY AND MARKETS COMMITTEE MEETING.

I'VE CONFIRMED A QUORUM IS PRESENT AND HEREBY CALL THIS MEETING TO ORDER.

THIS MEETING IS BEING WEBCAST LIVE TO THE PUBLIC ON OUR COS WEBSITE.

WE DO NOT HAVE A QUORUM FOR THE PUBLIC UTILITY COMMISSION, SO I'LL JUST MOVE ON TO THE FIRST ORDER OF BUSINESS.

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 FEBRUARY 19TH AND PROVIDED INSTRUCTIONS TO THE PUBLIC FOR COMMENTING IN PERSON.

TO DATE, NO ONE HAS EXPRESSED AN INTEREST IN COMMENTING.

IS THAT STILL CORRECT, JOHN? YES.

[3. December 18-19, 2023 General Session Meeting Minutes]

SO NEXT IS AGENDA ITEM THREE.

DECEMBER 18TH AND 19TH 2023.

GENERAL SESSION MEETING MINUTES.

THERE'S A DRAFT.

IF THERE'S A DRAFT IN THE MEETING MATERIALS.

AND DOES ANYONE HAVE ANY COMMENTS OR WISH TO MAKE A MOTION TO APPROVE THE MINUTES? SO MOVED, MR. CHAIRMAN.

SECOND.

SECOND BY CARLOS.

ALL IN FAVOR? AYE.

AYE.

ANY OPPOSED OR ABSTENTIONS? NONE HEARD.

[4. Review of Committee Charter]

MOVE ON TO AGENDA ITEM NUMBER FOUR, WHICH IS REVIEW OF THE COMMITTEE.

CHARTER REVISIONS ARE PROPOSED TO THE CHARTER AND INCLUDED IN THE MEETING MATERIALS ALONG WITH MY MEMO THAT THE PROPOSED REVISIONS WOULD CLARIFY THE COMMITTEE'S CURRENT PRACTICES AND ADD REFERENCE TO THE BOARD POLICIES AND PROCEDURES.

A VOTE ON THE REVISIONS IS RECOMMENDED FOR THE APRIL 22ND COMMITTEE MEETING TO COINCIDE WITH PROPOSED UPDATES TO THE BOARD POLICIES AND PROCEDURES.

WOULD ANY COMMITTEE MEMBER LIKE TO FURTHER DISCUSS THE COMMITTEE CHARTER AT THIS TIME? HEARING? NO COMMENT.

I'LL

[5. Recommendation regarding Market Credit Risk Corporate Standard]

MOVE TO AGENDA ITEM NUMBER FIVE.

ANNUALLY THE COMMITTEE REVIEWS THE COMPANY'S MARKET CREDIT RISK CORPORATE STANDARD.

THIS IS A VOTING ITEM AND KAN GELMAN WILL PRESENT THIS YEAR'S RECOMMENDATION.

SO, CANAN, PLEASE PROCEED AS CANAN HERE.

HUH? SORRY.

YOU, I CAN, YOU'RE PINCH HITTING FOR CANON IF YOU WANT.

OR WE CAN WAIT IF YOU, YOU'RE COMFORTABLE.

I'M COMFORTABLE.

OKAY.

SORRY ABOUT THAT.

I KNOW KAON IS HERE.

I'M NOT SURE WHAT'S GOT HIM TIED UP, BUT MY NAME IS AUSTIN ROSE.

I'M DIRECTOR OF SETTLEMENTS RETAIL AND CREDIT .

SO IF IT'S OKAY WITH YOU, I CAN FILL IN FOR HIM FOR THIS ITEM.

'CAUSE THIS IS, PLEASE DO VERY CLOSE TO, UH, THIS IS WHAT I DO.

SO I PRESUME YOU DID ALL THE WORK ANYWAY.

.

OKAY.

SO WHAT'S BEING PRESENTED TODAY? YOU KNOW, THIS IS AN ANNUAL UPDATE FOR THE, UH, THE STANDARD THAT WE HAVE.

UM, SO, UH, THE BOARD OF DIRECTORS ESTABLISHES MARKET, UH, CORPORATE RISK STANDARD, UM, AND REVIEWS IT EACH YEAR.

WE HAVE SOME SLIGHT EDITS FOR YOU TO LOOK AT AND HOPEFULLY APPROVE TODAY.

THERE'S BEEN REAL NO SUBSTANTIVE CHANGES TO THE STANDARD.

UM, THERE HAS JUST BEEN SOME CHANGES TO STRIKE REFERENCES TO THE CREDIT WORK GROUP, WHICH USED TO REPORT DIRECTLY TO THE BOARD.

UM, NOW IT HAS BEEN REPLACED WITH THE CREDIT FINANCE SUBGROUP, WHICH REPORTS TO TAC.

SO, UM, THAT'S, THAT'S THE ONLY CHANGES THAT WE WE'RE BRINGING TO YOU TODAY.

UM, SO WE RECOMMEND THAT YOU RE REVIEW AND APPROVE THE STANDARD AS DEVI AS, UH, REVISED.

UM, SORRY, I GOT AHEAD OF MYSELF ON THIS SLIDE.

THE BOTTOM OF THIS SLIDE, THE KEY TAKEAWAY IS WHAT I JUST TRIED TO PARAPHRASE BEFORE.

SO, UM, IF THERE'S, I GUESS I'LL JUST STOP AND IF THERE'S ANY QUESTIONS? YEAH.

ANY, ANY QUESTIONS.

SO THERE'S NO FURTHER COMMENTS.

I'LL ENTERTAIN A MOTION TO RECOMMEND THE BOARD APPROVE THE REVISED MARKET CREDIT RISK CORPORATE STANDARD AS JUST PRESENTED.

CARLOS MOVES SECOND.

JULIE SECONDS.

ALL IN FAVOR? AYE.

ANY OPPOSED OR ABSTENTIONS? WE'RE ALL SET.

SO OUR NEXT VOTING

[6. Recommendations regarding R&M Charter Revision Requests]

ITEM FALLS UNDER AGENDA ITEM SIX, RECOMMENDATIONS REGARDING R AND M COMMITTEE CHARTER REVISION REQUESTS FOR BOARD APPROVAL.

UNDER THIS ITEM, WE HAVE AGENDA

[6.1 PUCT Remand of NPRR1186, Improvements Prior to the RTC+B Project for Better ESR State of Charge Awareness, Accounting and Monitoring]

ITEM 6.1, THE PUCT, UH, REMAND OF NODAL PROTOCOL REVISION REQUEST 1186 IMPROVEMENTS PRIOR TO THE RTC PLUS B PROJECT FOR BETTER ESR STATE OF CHARGE AWARENESS ACCOUNTING AND MONITORING.

IN JANUARY, THE PC REMANDED THIS NPRR

[00:05:01]

TO THE BOARD WITH SUGGESTED MODIFICATIONS AND ERCOT LATER FILED COMMENTS TO REFLECT THE COMMISSION'S INPUT.

DAN WOODFIN WILL PRESENT ERCOT RECOMMENDATION.

SO, SO DAN, THANK YOU.

SO AS YOU RECALL, NPR 1186 WE'VE GONE, HAS ACTUALLY BEEN BEFORE THE RMM AND THE BOARD A COUPLE OF TIMES ALREADY.

WE SUBMITTED IT BACK IN JUNE OF LAST YEAR.

UH, WE PRESENTED IT TO THE BOARD.

THERE WERE SOME ISSUES THAT CAME UP THAT WE REVISED THAT, UH, THE BOARD SENT IT BACK TO TAC AND WE, WE REVISED THAT IN AUGUST.

CAME BACK TO THE BOARD IN OCTOBER, UH, FOR APPROVAL.

AND THE BOARD ALSO DIRECTED US TO FILE A, A BOARD PRIORITY NPRR THAT WOULD, UH, STRENGTHEN THE KIND OF, BECAUSE OF SOME OF THE COMPROMISES WE'D MADE, UH, IN THAT, THAT VERSION THAT WE WOULD ALSO FILE WHAT BECAME NPR 1209 TO, UH, STRENGTHEN SOME OF THE COMPLIANCE AND FINANCIAL PENALTIES.

AND THEN WE, UM, SUBSEQUENTLY SUBMITTED THIS, THIS NVR 1209 TO DO THAT.

IT'S CURRENTLY TABLED.

IT'S NOT, UM, UH, IT HASN'T GONE TO THE PUC YET, UM, BECAUSE IT HADN'T MADE IT THROUGH THE STAKEHOLDER PROCESS.

UM, BUT WHEN, UM, NPR 1186 WENT TO THE PUC AS APPROVED BY THE BOARD, IT WAS, THEY REMANDED IT BACK TO THE ERUPT BOARD AND SUGGESTED CERTAIN MODIFICATIONS, UH, INCLUDING THAT WE WOULD STRIKE, UH, SECTION EIGHT POINT ALL THE CHANGES IN SECTION 8.1, WHICH REALLY WHERE ALL WHAT THAT HOUSED, ALL OF THE COM KIND OF COMPLIANCE AND, UH, UM, PENALTY REQUIREMENTS IS ASSOCIATED WITH, WITH THIS NPRR.

UM, SO 1186, WE, AS, AS THE CHAIR MENTIONED, WE'VE, WE'VE SUBMITTED COMMENTS TO 1186 THAT TAKE THAT PART OUT.

UH, IT RETAINS SEVERAL IMPORTANT THINGS, UH, THAT ARE, UH, FOR OPERATING THE SYSTEM WITH, UH, LIMITED DURATION RESOURCES, INCLUDING TAKING STATE OF CHARGE INTO ACCOUNT IN, UH, THE, FOR RESOURCES THAT ARE PROVIDING ANCILLARY SERVICES.

WE TAKE THAT INTO ACCOUNT IN THE SECURITY CONSTRAINT ECONOMIC DISPATCH.

SO IF THE QSE IS POINTING TO A, A RESOURCE AS BEING THE, THE WHAT THEY'RE USING FOR THE ANCILLARY SERVICE, THEN SCED WON'T DISPATCH THAT ENERGY AWAY AND MAKE IT WORSE IF THEY, UH, UM, STILL HAVE ENOUGH.

AND THEN IT ALSO HAS SOME MECHANISM FOR INCLUDING THE CONSIDERATION OF STATE OF CHARGE IN THE RELIABILITY UNIT COMMITMENT PROCESS.

SO IT STILL HAS, UH, IMPORTANT, UH, ASPECTS THAT WE NEED.

UM, AS PART OF THE DISCUSSION AT THE PUC, THEY REQUESTED, UH, THAT WE REGULARLY REPORT, UH, KIND OF WHAT'S GOING ON WITH THIS, UH, SO THAT WE COULD MAKE SURE THAT WE IDENTIFY ANY, ANY SUBSEQUENT THINGS THAT ARE, UH, NEEDED TO MAINTAIN, UH, RELIABILITY WITH LIMITED DURATION RESOURCES.

UM, WE ABSOLUTELY ARE INTENDING TO DO THAT.

WE'RE GONNA, WE'RE DEVELOPING A METHODOLOGY FOR WHAT WE WOULD REPORT BACK TO THE PUC PRESUMABLY.

ALSO, WE'LL INCLUDE THAT IN THE OPERATIONS REPORT TO R AND M.

AND THEN WE'RE PROBABLY GONNA BE WORKING WITH THE STAKEHOLDER PROCESS TO PERHAPS INCLUDE SOMETHING ABOUT THAT IN SOME OF OUR SUBCOMMITTEE REPORTS.

AS I MENTIONED EARLIER, NPR 1209 WAS ONE WHERE WE, UH, HAD DONE THAT AS A FILED THAT AS A RESULT OF SOME OF THE COMPROMISES WE'D MADE.

BUT WHAT, UM, KIND OF THE, THE PART THAT, UH, THE PUC IS RECOMMENDING TAKING OUT OF 1186 IS KIND OF THE SAME, UH, QUESTION AS WHAT WE WOULD BE DOING WITH 1209.

SO IT DOESN'T MAKE SENSE TO CONTINUE FORWARD WITH 1209, UH, IF YOU'RE GONNA TAKE THAT PART OUT OF 1186.

AND SO WE'RE, UH, ALTHOUGH THE BOARD HAD TOLD US TO DO THIS, WE'RE RECOMMENDING THAT WE, WE PULL 1209, SO WE'LL BE ASKING FOR YOUR, UH, APPROVAL TO DO THAT.

THERE IS STILL SOME COMPLIANCE, UH, FRAMEWORK THAT IS IN PLACE, UH, EVEN UNDER THE REVISED, UH, 1186 AND 1209 AND WITHOUT 1209 IN THAT, UH, THEY, THEY WOULD, THE, THERE WOULD STILL BE CONSIDERATION OF WHETHER THE, THE BATTERIES HAD SUFFICIENT CAPACITY.

DOESN'T TELL US HOW LONG THAT CAPACITY'S GONNA BE THERE, BUT IF THEY HAVEN'T, DON'T HAVE ENOUGH CAPACITY WHEN THEY'RE CALLED UPON, THEN THERE'S A-A-N-P-R-R THAT'S ALREADY BEEN APPROVED, AND WE'RE PUTTING IN PLACE THE SYSTEMS TO DO THAT FOR ALL RESOURCES TO

[00:10:01]

REPORT, UH, THEM FROM A COMPLIANCE PERSPECTIVE IF THEY DON'T HAVE THOSE, THOSE MEGAWATTS.

SO THERE IS STILL SOME COMPLIANCE IN PLACE, UH, EVEN, UH, WITH THIS REVISION, UH, TO WHAT OR THE, WITH UNDER THIS REMAND.

AND SO OUR REQUEST IS, UH, CONSISTENT WITH THE PC'S ORDER THAT, THAT THE BOARD APPROVE NPR 1186 WITH THE REVISIONS THAT WE FILED ON FEBRUARY 12TH, AND THEN ALSO INSTRUCT ERCOT TO, UH, WITHDRAW NPR 1209.

HAPPY TO ANSWER QUESTIONS.

QUESTIONS FOR DAN.

SO DAN, I'LL START FIRST THEN.

SO I JUST WANNA MAKE SURE I'M FOLLOWING THE BOUNCING BALL ON THIS ONE.

.

SO THE PRIOR VERSION OF 1186, WE WOULD HAD, THERE WOULD'VE BEEN A REQUIREMENT TO SEE STATE OF CHARGE FOR ANY, UH, ENERGY STORAGE RESOURCE THAT BID INTO THE MARKET.

NOW, UNDER THE REVISION, WE WON'T HAVE THAT VISIBILITY.

WE'LL FIND OUT IF THEY DID NOT HAVE SUFFICIENT CAPACITY IN, IN THE ANCILLARY MARKET THAT THEY BID INTO IF THEY DON'T COMPLY.

AND THEN THERE'S OTHER COMPLIANCE FACTORS TO DEAL WITH THAT.

UNDER THE NEW REQUIREMENT, WE WON'T HAVE THAT VISIBILITY.

WE, WE WILL, WE STILL WILL HAVE VISIBILITY INTO THE STATE OF CHARGE.

UM, WHAT, WHAT 1186 AND 1209 WOULD'VE DONE IS, IS SAY, IF THEY ARE AREN'T MAIN, REMEMBER WE HAD THIS DISCUSSION AT ONE OF THE PREVIOUS BOARD MEETINGS ABOUT DO THEY HAVE TO MAINTAIN THIS STATE OF CHARGE SUFFICIENT TO SUPPLY THAT OVER THE WHOLE, IF IT'S ONE MEGAWATT AND THEY'VE GOTTA HAVE ONE MEGAWATT HOUR WORTH OF STATE OF CHARGE, WE LET THAT DECLINE DURING THE HOUR SO THAT THEY ONLY HAD TO HAVE THAT MEGAWATT FOR THE REMAINDER OF THE HOUR SCHEDULE IS STILL GONNA MAINTAIN THAT.

SO THEY'LL, THEY WON'T, IT WON'T DISPATCH THE ENERGY OUT OF THAT BATTERY IF THEY'VE JUST GOT ENOUGH TO MEET THAT TRIANGLE.

UM, AND SO THAT SHOULD ALLOW THEM TO STILL HAVE THE CAPACITY, UH, DURING THAT TIME.

AND SO IT'S ONLY IF THEY DON'T HAVE THE CAPACITY THAT THEY WOULD BE IN THE KIND OF COMPLIANCE, UM, LAND, UM, THE, UH, SO WE SHOULD BE ABLE TO SEE THE STATE OF CHARGE, BUT THERE'S JUST NO, UH, CONSIDERATION OF THAT IN WHETHER THEY'RE HAVING ENOUGH TO, TO MEET THEIR ANCILLARY SERVICE OBLIGATIONS.

JULIE, THIS WHOLE DISCUSSION ABOUT COMPLIANCE OF ONE GENERATION SOURCE ACTUALLY TRIGGERS THE QUESTION ABOUT ALL GENERATION RESOURCES.

WE YOU BE SHOWING US IN THE FUTURE HOW ALL GENERATORS COMPLY OR NOT TO THEIR BIDS, ESPECIALLY ON ANCILLARY SERVICES.

UM, SO FROM, FROM A CAPACITY PERSPECTIVE, YES.

I MEAN THAT THERE'S, THERE WAS AN NPR CALLED 1149, THAT WAS THE NUMBER THAT THAT WILL BE, UH, BASICALLY CLAWING BACK IF THEY DON'T HAVE ENOUGH CAPACITY.

AND, UH, GENERAL, THAT DOESN'T HAPPEN VERY OFTEN WITH, UH, UH, A LOT OF THE, THE CONVENTIONAL RESOURCES, AT LEAST FROM A FUEL PERSPECTIVE.

UH, BUT WHAT WE WILL REPORT ON THAT AND HOW OFTEN WILL WE TAKE A LOOK AT THAT? LIKE EVERY QUARTER, EVERY SIX MONTHS.

UM, IF YOU HAVE A RECOMMENDATION, WE'D BE HAPPY TO DO THAT.

I GUESS WHAT WE WERE THINKING IS WE'D JUST PUT THAT INTO THE STANDARD KIND OF, UH, MONTHLY REPORT.

PERFECT.

SOUNDS GOOD.

OKAY.

ANY OTHER QUESTIONS OR GO? CARLOS, DID YOU HAVE SOMETHING OR, YEAH, YEAH, I SEE YOU, UH, FINGERS ON THE BUTTON.

YES.

UM, COUPLE COMMENTS.

I MEAN, FIRST, UH, I THINK BECAUSE OF THE VALUE THAT WE GET FROM SKE AND BROCK, UH, AWARENESS, YOU KNOW, IT'S LOGICAL TO, TO APPROVE THIS, UM, DON'T THINK THE OTHER PROVISIONS, YOU KNOW, HAD IMPACTS, UH, AS YOU KNOW, SUGGESTED.

BUT THAT'S IT.

I, I, I THINK WITHOUT THIS, UM, KIND OF THE, THE, THE FINANCIAL, UM, CONTROLS AROUND THIS, WE'LL HAVE TO PUT IN PLACE MORE MONITORING KIND OF IN REAL TIME TO MAKE SURE THAT WE'RE, UH, WE RECOGNIZE WHEN THERE IS, YOU KNOW, THE ANALOGY I'VE USED IN OTHER PLACES, I'VE GOT A LOT OF FLACK FOR THIS, BUT THE, UH, THE, IT, IT'S, IF, IF WE'VE GOT A, A SPARE TIRE ON OUR CAR, WE NEED TO FIND OUT IF IT'S GOT AIR IN IT OR NOT.

WE NEED TO KNOW ALL THE TIME, IS IT A FLAT SPARE

[00:15:01]

TIRE OR IS IT NOT? BECAUSE YOU DON'T WANT TO GET CAUGHT OUT IN THE MIDDLE OF WEST TEXAS AND HAVE A FLAT, AND THAT'S WHEN YOU FIND OUT THAT THE TIRE DOESN'T HAVE ANY AIR IN IT.

THIS MONITORING THAT I WAS TALKING ABOUT UNDER 1149 REALLY IS MORE ABOUT WHEN YOU HAVE THE FLAT AND YOU PULL IT OUT.

IF THERE'S NO AIR IN IT, THEN THERE'S A COMPLIANCE PENALTY.

SO I THINK WE'LL HAVE TO PUT IN PLACE MORE TOOLS, MORE KIND MONITORING TO MAKE SURE THAT WHILE THERE'S NO FINANCIAL PENALTIES OR ANYTHING AROUND THAT, WE WE'RE AWARE OF IT IN REAL TIME AND CAN TAKE OTHER ACTIONS TO, TO PRESERVE THE RELIABILITY OF THE SYSTEM.

SO ON THAT SAME NOTE, WE'RE GONNA TALK ABOUT A DERS LATER.

THE COMPLIANCE OF A D ERS IS GONNA BE SOMEWHAT SIMILAR IN NATURE, CORRECT? BECAUSE THEY COULD HAVE MIXED MODE GENERATION FROM BATTERIES TO CHARGING WALLS.

YEAH.

SO BROADLY THE ANSWER IS YES, BUT THERE ARE, UH, UNIQUE FEATURES TO THE PILOT THAT, THAT MAY MAKE THAT SLIGHTLY DIFFERENT BECAUSE IT IS A PILOT PROGRAM.

UM, BEFORE WE WOULD MOVE THAT INTO A FULL FLEDGED PROGRAM, WE WOULD MAKE SURE ALL EVERYTHING WAS ALIGNED.

UNDERSTOOD, YES.

OKAY.

SO NO FURTHER COMMENTS.

I'LL ENTERTAIN A MOTION TO RECOMMEND THAT THE BOARD RECOMMEND APPROVAL OF NPRR 1186 IS AMENDED BY THE 2 12 24 ERCOT COMMENTS AND DIRECT ERCOT TO ERCOT STAFF TO WITHDRAW NPRR 1209.

SO I WOULD NEED A MOTION FOR THAT.

COURTNEY.

MOTIONS SECOND.

JULIE SECOND.

ALL IN FAVOR? AYE.

AYE.

ANY OPPOSED OR ABSTENTIONS? OKAY.

WELL, UNTIL WE MEET AGAIN, I'M SURE WE'LL SEE 1186.

SO

[7. Recommendation regarding TNMP Pecos County Transmission Improvement Regional Planning Group (RPG) Project]

NEXT STEP FOR A VOTE IS AGENDA ITEM SEVEN RECOMMENDATION REGARDING THE TNMP PICOS COUNTY TRANSMISSION IMPROVEMENT REGIONAL PLANNING GROUP PROJECT.

ERCOT STAFF'S RECOMMENDATION TO APPROVE THE PROJECT INCLUDES A RECOMMENDATION FOR THE BOARD TO DESIGNATE THE PROJECT IS CRITICAL FOR RELIABILITY.

AND CHRISTIE HOBBS WILL PRESENT THE REC THE RECOMMENDATION.

ALL RIGHT, GOOD AFTERNOON.

SO THIS AFTERNOON, UH, WHAT I'D LIKE TO DO IS SHARE WITH YOU THE PROPOSED, UH, PROJECT FROM TEXAS NEW MEXICO POWER FOR THE PECOS COUNTY TRANSMISSION RELIABILITY PROJECT.

WHAT WE'LL BE ASKING FOR YOU AT THE END OF THIS PRESENTATION, UH, ARE TWO ITEMS AN ENDORSEMENT FOR THE NEED FOR THIS RELIABILITY PROJECT AND TO DESIGNATE IT AS CRITICAL PER THE PUC GUIDELINES.

SO WHY IS THIS PROJECT IN FRONT OF YOU THIS AFTERNOON? WE'VE GOT A PROTOCOL REQUIREMENT, UM, THAT LISTS OUT THE DIFFERENT TIERS OF TRANSMISSION LEVEL PROJECTS AND PROJECTS THAT ARE OVER $1 MILLION, OR EXCUSE ME, A HUNDRED MILLION DOLLARS HAVE TO COME TO THE BOARD FOR ENDORSEMENT.

A LITTLE BIT ABOUT THIS PROJECT, IT WAS SUBMITTED AGAIN BY TEXAS NEW MEXICO POWER FOR, UH, CONSIDERATION BACK IN AUGUST OF 2003.

THE PURPOSE OF IT IS TO LOOK AND TO ADDRESS RELIABILITY ISSUES IN TWO COUNTIES, REEVES AND WARD IN FAR WEST TEXAS, OR EXCUSE ME, IN THE FAR WEST WEATHER ZONE FOR PLANNED MAINTENANCE OUTAGE CONDITIONS.

WE PERFORMED OUR INDEPENDENT REVIEW, WHICH, UM, LED TO OUR ENDORSEMENT.

OUR ENDORSEMENT IS BASED ON RELIABILITY NEEDS FROM RELIEVING THERMAL OVERLOADS THAT WE SAW VOLTAGE VIOLATIONS AND INSTANCES OF VOLTAGE INSTABILITY.

THE PROPOSED OPTION WAS TAKEN BEFORE THE TECHNICAL ADVISORY COMMITTEE AT THEIR JANUARY MEETING AND WAS UNANIMOUSLY ENDORSED BY THE T.

SO AGAIN, OUR BASIS, UH, FOR THIS TRANSMISSION PROJECT, AFTER OUR INDEPENDENT REVIEW, WE SAW THAT THIS PROJECT WOULD RELIEVE THOSE RELIABILITY VIOLATIONS.

UM, IT WOULD HELP SYSTEM IMPROVEMENTS THAT ARE NEEDED, UM, TO MEET RELIABILITY PLANNING CRITERIA UNDER MAINTENANCE OUTAGE CONDITIONS.

SO THE OPTION ONE RECOMMENDATIONS, WHAT DO THESE TECHNICAL DETAILS DO? THEY DO THREE KEY THINGS.

THEY ADDRESS THE RELIABILITY VIOLATION, THEY IMPROVE, UH, LOAD TRANSFER, UH, SERVING CAPABILITY OVER THE LONG TERM, AND THEY APPROVE OPERATIONAL

[00:20:01]

FLEXIBILITY.

SO OUR RECOMMENDATION AND REQUEST OF YOU IS FOR ONE, ENDORSING THIS RECOMMENDATION AS A NEEDED RELIABILITY PROJECT, AND THEN TO DESIGNATE IT AS CRITICAL TO THE RELIABILITY OF SERVING, UH, THE TRANSMISSION SYSTEM.

WHAT WE'LL DO IS THIS PROJECT IS NEEDED BY AUGUST OF 2026, UM, AND BY DESIGNATED AS CRITICAL, WE'LL HELP IT MOVE THROUGH THE PROCESS FASTER.

YES, SIR? YEAH.

ONE QUESTION HAVING TO DO WITH, I I LOOKED AT, YOU HAD LIKE EIGHT OPTIONS FOR THIS ONE.

UM, AND, UH, WHAT CONSIDERATIONS IS THAT YIELDED THIS OPTION? ONE IS THE, THE SELECTION.

THIS ONE WAS 800, I MEAN 108 MILLION I BELIEVE IN THAT COST RANGE.

UM, I DON'T HAVE THE SLIDE IN FRONT OF ME, BUT WHAT WE DID THERE WAS, UH, SEVERAL OPTIONS.

AS YOU NOTED.

WE HAD NARROWED THEM DOWN, UM, TO THREE DIFFERENT OPTIONS.

YEAH.

UM, AND THE REASON THAT WE CHOSE OPTION ONE, UH, YES, IT WAS, UM, 114.8 MILLION.

AND IF I RE RECOMMEND, THE OTHER OPTION WAS LIKE 113 MILLION.

THE, THE, THE COSTS WERE FAIRLY, RELATIVELY CLOSE, UH, IN NATURE.

WHAT PUT THIS ONE ABOVE, UM, WAS REALLY THOSE THREE THINGS, UM, THAT I HIT ON.

NOT ONLY DID IT, UH, ADDRESS THE RELIABILITY, UH, VIOLATIONS, UM, BUT THE KEY THING IS THAT IT GAVE US LONG-TERM LOW TRANSFER SERVING CAPABILITY.

AS WE KNOW THE TEXAS ECONOMY IS GROWING AND WE NEED TO DO WHATEVER WE CAN TO BE HELPING ADVANCE, UH, HAVING THE TRANSMISSION SYSTEM READY, UH, FOR THAT ECONOMIC LOAD THAT'S COMING TO THE SYSTEM.

CHRISTIE, ON THE MAP, CAN YOU POINT OUT WHERE THE RIGHT OF WAY 31 MILES OF RIGHT AWAY IS BEING TAKEN OVER? OR AM I MISSING THE LEGEND? I DON'T KNOW IF I CAN DO THAT FROM, ARE THERE ANY CONTENTIOUS ISSUES AROUND THE 31 MILE RIGHT AWAY? YOU KNOW, I THINK THAT'S A PROCESS THAT THEN GETS HASHED OUT AT THE PUBLIC UTILITY COMMISSION AS, UH, THE TRANSMISSION SERVICE PROVIDERS COME FOR THEIR CCN PROCEEDINGS OR THEY'LL WORK THROUGH THAT RIGHT OF WAY AND THEY MAY HAVE TO ADJUST IT A LITTLE BIT BASED OFF OF THAT PROCEEDING AND WHAT THE OPTIONS ARE.

IT'S, IT'S ROUGHLY THE DASH LINE THERE, BUT THE ROUTING MAY BE WHO KNOWS WHAT THE ROUTING WILL LOOK LIKE.

OKAY.

ANY FURTHER QUESTIONS OR COMMENTS FOR CHRISTIE? OKAY.

IF THERE'S NO FURTHER COMMENTS, I'LL ENTERTAIN A MOTION TO RECOMMEND THAT THE BOARD WON ENDORSE THE TNP PECOS COUNTY TRANSMISSION IMPROVEMENT REGIONAL PLANNING GROUP PROJECT BASED ON NERC AND ERCOT RELIABILITY PLANNING CRITERIA, AND DESIGNATE THE PROJECT AS CRITICAL TO THE RELIABILITY OF THE ERCOT SYSTEM PURSUANT TO PUC TO SUBSTANTIVE RULE 25.

SO YOU MOTION TO APPROVE CARLOS? SECOND.

SECOND, JULIE, ALL IN FAVOR? AYE.

AYE.

ANYBODY OPPOSED? OR ABSTENTIONS? HEARING NONE.

THANK YOU, CHRISTIE.

THANK YOU.

AGENDA

[8. Recommendation regarding Aggregate Distributed Energy Resource (DER) Pilot Project – Phase 2]

ITEM MADE IS A RECOMMENDATION REGARDING THE AGGREGATE DISTRIBUTED ENERGY RESOURCE PILOT PROJECT PHASE TWO, CANAN GELMAN WILL PRESENT HER CO STAFF'S RECOMMENDATION.

AND THIS IS A VOTING ITEM ON A COMMITTEE RECOMMENDATION TO THE BOARD.

SO CANAN, PLEASE PROCEED.

THANK YOU.

SO, UM, AS FAR AS BACKGROUND FOR THIS, UH, ITEM GOES, UH, YOU MAY RECALL, UM, WE WERE HAVING, UH, DIFFICULTY QUALIFYING A DERS FOR THE PILOT.

UH, MAINLY BECAUSE WE WERE KIND OF POLLING THEIR PERFORMANCE IN HOURS WHERE THEY HAD NO PERFORMANCE.

SO ANY DEVIATION, UM, UH, IMPACTED VERY HIGHLY, UH, THEIR, THEIR QUALIFICATION.

AND IF YOU MAY RECALL, WE CHANGED THOSE, THE TIME PERIOD THAT WE LOOKED AT TO MORE FOCUS ON THE HOURS WHERE THEY WERE ACTUALLY, UH, DOING, DOING SOMETHING.

AND ULTIMATELY WHAT WE'RE ASKING IS FOR, UH, A CHANGE IN THE GOVERNING DOCUMENT TO ALLOW FOR WHAT WE'VE BEEN DOING.

THE GOVERNING DOCUMENT DOES ALLOW US THE FLEXIBILITY TO DO THE CHANGES THAT

[00:25:01]

WE MADE TO QUALIFY THESE RESOURCES, AND WE DID UPDATE THE BOARD WHEN WE MADE THE THE PIVOT.

UM, BUT, UH, WE ALSO WANNA CODIFY THAT IN THE RULES SO IT'S CLEAR TO EVERYBODY THAT'S READING THE PILOT RULES, UH, HOW, HOW THE SYSTEM WORKS.

SO, UM, BROADLY, UM, WE'RE ASKING YOU TO APPROVE THAT CHANGE.

BUT I DID ALSO WANNA GIVE YOU, UM, SOME ADDITIONAL DETAIL THAT, UM, IS ALSO IN, IN MY, UH, OTHER PRESENTATION ABOUT, UH, ADDITIONAL WORK THAT, UM, WE'VE BEEN, WE'VE BEEN WORKING ON IN TERMS OF NEXT STEPS OR PHASE TWO AS WELL.

UM, AND THAT INCLUDES, UM, ADDITIONAL ANCILLARY SERVICES TO QUALIFY THE AGGREGATE DISTRIBUTED ENERGY RESOURCES FOR AS WELL AS LOOKING AT POTENTIALLY, UM, MORE BLOCKY TYPES OF RESOURCES TO QUALIFY.

SO BY BLOCKY WHAT I MEAN IS CURRENTLY THE, UH, THIS PROGRAM REQUIRES THAT THE RESOURCE FOLLOW FIVE MINUTE BASE POINTS, WHICH IS A, A SIGNIFICANT LIFT IN TERMS OF BOTH DATA AND PERFORMANCE.

HOWEVER, THERE COULD BE, FOR EXAMPLE, LOAD RESOURCES THAT CAN RESPOND EXTREMELY QUICKLY, UM, BUT, UH, THEN HAVE TO STAY OFFLINE FOR, UH, MORE THAN FIVE MINUTES AND WOULD SLOWLY RETURN.

UM, AND THE WAY WE HAVE THIS PROGRAM STRUCTURED, IT WOULD NOT ALLOW FOR THOSE TYPES OF AGGREGATIONS TO HAPPEN.

SO WE'RE GONNA WORK WITH THE TASK FORCE THAT THE COMMISSION HAS TO SEE IF THERE'S, UM, ROOM TO INCORPORATE THEM AS WELL IN, UH, THIS TYPE OF AGGREGATION.

UM, BUT THE VOTE THAT WE'RE ASKING FOR YOU FROM YOU TODAY IS PURELY AROUND THIS QUALIFICATION STANDARD, UM, THAT, THAT WE'VE HAD.

UM, THE OTHER THING THAT, UH, WE DID WANNA UPDATE YOU ON IS THAT, UM, WE HAVE NOW GATHERED, UH, QUITE A BIT OF DATA AND, UH, HAVE KIND OF VALIDATED THAT THIS CHANGE THAT, THAT WE PROPOSE SHOULD GO INTO THE OTHER OTHER BINDING DOCUMENTS.

UM, ALL OF THIS INFORMATION I'M GONNA GO OVER AGAIN IN, UH, IN, IN MY COMMERCIAL MARKETS UPDATE.

SO, UH, I GUESS MY QUESTION WOULD BE, WOULD YOU RATHER GO OVER IT HERE OR IN, IN THE OTHER PRESENTATION? I THINK YOU SHOULD JUST CONTINUE ON WITH.

OKAY.

UM, SO JUST AS BACKGROUND, WE UH, CURRENTLY HAVE TWO A DERS, UH, THAT ARE QUALIFIED TO PARTICIPATE IN THE, IN THE MARKET.

UM, THEY REPRESENT ABOUT, UH, 9.4 MEGAWATTS OF TOTAL CAPACITY AND 3.1 MEGAWATTS OF THAT IS, UH, QUALIFIED TO PROVIDE NONS SPIN.

UM, THE BREAKDOWN OF THE 9.4 IS, UH, SHOWN HERE ON THE MAP WITH, UH, SEVEN MEGAWATTS BEING IN THE HOUSTON ZONE.

AND THOSE ARE, UH, SIX RESOURCES.

UM, THERE IS ONE RESOURCE THAT'S IN THE NORTH ZONE AND THAT'S 4.3 MEGAWATTS.

AND LASTLY, THERE'S TWO RESOURCES CONSTITUTING 1.4 MEGAWATTS IN THE SOUTH ZONE.

UM, WE'VE KIND OF BROKEN DOWN, UH, HOW MUCH IS, UH, HOW MUCH, UH, IS IN ENERGY VERSUS, UH, PROVIDING NONS SPEND.

AS YOU CAN SEE, THE, UM, THE NONS SPIND AMOUNT IS, IS SUBSTANTIALLY SMALLER.

SOME OF THAT HAS TO DO WITH, UM, UH, A LOT OF THESE ARE BATTERIES AND WHAT THEY CAN QUALIFY FOR.

NONS, SPIND IS, UH, A, A SUBSET OF THEIR TOTAL CAPACITY BECAUSE OF THE PERFORMANCE DURATION, UH, UH, REQUIREMENTS.

AS FAR AS QUALIFICATION GOES, UM, I THINK THE KEY THING THAT THE TEAM WANTS TO SHARE IS THAT WE ARE MAKING PROGRESS ON THE PILOT.

WE EXPECT TO MAKE MORE IN THE, UH, IN THIS ENSUING YEAR.

UM, AND, UH, WE'RE HOPING TO SEE MORE RESOURCES, UH, QUALIFY AS WE WORK WITH THE COMMISSION TO IDENTIFY HOW WE CAN GROW THE PROGRAM AND, AND POTENTIAL RESOURCES.

CAN I, COULD YOU COMMENT ABOUT THE MAIN TOP TWO OR THREE REASONS WHY RESOURCES DO NOT QUALIFY? YEAH.

SO, UM, UH, AS I WAS MENTIONING BEFORE, THERE IS THIS, UM, KIND OF TO FOLLOW FIVE MINUTE BASE POINTS.

WHAT I NEED TO DO DO IS KNOW EXACTLY BOTH WHAT MY POTENTIAL

[00:30:01]

IS AND WHAT I'VE, UH, UH, COMMITTED.

AND THEN I NEED TO GIVE THOSE INSTRUCTIONS EVERY FIVE MINUTES TO MOVE TO A DIFFERENT, UM, PERFORMANCE POINT.

THAT'S A SOFTWARE HEAVY LIFT.

SO, UM, THERE'S SOME FOLKS THAT ARE FIGURED IT OUT AND THERE'S SOME FOLKS THAT ARE STILL WORKING ON, UH, FIGURING THAT OUT.

UM, BUT, UH, THE OTHER THING I WOULD SAY IS LIKE, THESE BLOCKY LOADS WOULD NOT BE ABLE TO KIND OF FOLLOW THOSE FIVE MINUTE BASE POINTS.

AND THAT'S WHY WE'RE THINKING ABOUT OR WORKING ON EXPANDING THE PILOT TO POSSIBLY, UH, INCORPORATE THESE LOADS THAT, UM, LIKE I SAID, CAN DEFINITELY RESPOND WITHIN THE TIME PERIOD THAT WE WANT, BUT THEN CAN'T RETURN TO CONSUMING POSSIBLY EVERY FIVE MINUTES.

CARLOS.

YEAH.

SO YOU HAVE A TOTAL OF NINE RESOURCES YES.

IN THE PROGRAM.

UH, WHAT ARE YOUR, WERE YOUR AIMS FOR THE FIRST PHASE IN TERMS OF NUMBER OF PARTICIPANTS? AND ALSO WHAT IS YOUR GOAL FOR THE SECOND PHASE? SO, UM, THE, WE DID NOT HAVE A GOAL FOR A NUMBER OF PARTICIPANTS.

UM, WE, WE WOULD LIKE TO SEE, UH, AS THE, UH, UM, THE EXCEPTION ALLOWS, UH, UP TO 80 MEGAWATTS.

UM, SO WE WOULD LIKE TO SEE US GET THERE, BUT THIS, UH, INITIAL PHASE WAS MORE ABOUT UNDERSTANDING WHAT THE BARRIERS WERE AND, UM, WHAT MIGHT BE AN ACCEPTABLE COMPROMISE AND WHAT FROM A RELIABILITY OR ANCILLARY SERVICE, UH, PERSPECTIVE IS NOT A ACCEPTABLE COMPROMISE IN TERMS OF PERFORMANCE.

I THINK, UM, WE WANT TO QUALIFY THEM THIS YEAR FOR MORE DIFFERENT TYPES OF ANCILLARY SERVICES AND EXAMINE FROM THAT SAME PERSPECTIVE HOW WE MIGHT, UH, GROW THAT INTO THE, UH, 80 THAT'S, THAT'S BEING WAS, WAS CONTEMPLATED AT ONE POINT.

UM, ULTIMATELY, UH, UH, I THINK FOR US, THE, AT THIS POINT I WOULD SAY THE NUMBERS AREN'T AS IMPORTANT AS DIGESTING THE CAPABILITIES AND ACCURATELY INCORPORATING THAT INTO THE ANCILLARY SERVICE SUITE.

THE OTHER THING, UM, I THINK THAT WE ARE VERY INTERESTED IN IS CONTINUING TO REMOVE BARRIERS TO ENTRY.

UM, SO THAT USUALLY IS AN EXCHANGE BETWEEN THE RESOURCE OWNERS AND THEM TELLING US WHAT WORKS AND DOESN'T WORK ON THEIR END.

AND US SEEING IF WE CAN, UM, CHANGE RULES, REQUIREMENTS, MAINTAIN RELIABILITY, AND, UH, INCORPORATE MORE TYPES OF RESOURCES.

UM, I WOULD JUST PROVIDE ADDITIONAL FEEDBACK THAT ULTIMATELY IF OTHER GOALS, UH, ARE NEEDED, WE ARE HAPPY TO INCORPORATE THOSE INTO THE PROCESS AND WOULD WELCOME FEEDBACK ON ON THAT.

JUST A FOLLOW UP QUESTION, IN TERMS OF THE GRID PREPAREDNESS TO BE ABLE TO RECEIVE SOME OF THOSE RESOURCES AS WELL.

FOR EXAMPLE, ELECTRIC TRAINS IN EUROPE, UH, ABOUT 8% OF THE ENERGY CONSUMPTION IS, IS ACTUALLY RECOVERED THROUGH BREAKING, BUT THE GRID HAS TO BE READY TO RECEIVE IT OR ELSE THERE'S NO NET GAIN.

UH, SO THESE KINDS OF ADJUSTMENTS ARE THOSE NEEDED.

SO, UH, THAT ISSUE WE, WE DO NEED TO RECOGNIZE, UM, I WOULD NOT PUT THAT THE, THE, THE QUANTITY OF, UH, CAPACITY MAY OR MAY NOT BE A GOOD FIT FOR THIS PROGRAM.

UH, AND, AND THERE'S SOME OTHER INTERESTING THINGS AS THE TRAIN MOVES BETWEEN ERCOT JURISDICTION AND, AND NON ERCOT JURISDICTION OR SOMETHING LIKE THAT.

THERE, THERE MIGHT BE SOME CHALLENGES.

SO, UM, I, I THINK THESE ARE ALL, UH, ISSUES THAT WE WOULD WANT TO ADDRESS.

UM, BUT IT MIGHT NOT BE IN THE A DER UH, PILOT.

IT MIGHT BE IN A DIFFERENT VENUE.

SO CAN ON, SO SOMEWHERE THERE'S AN AGGREGATOR THAT'S TAKING MULTIPLE SOURCES OF EITHER SUPPLY OR LOAD AND BIDDING THAT INTO THE MARKET.

IS THAT THE WAY THAT'S FUNCTIONING? YES, THEY ARE, UM, UH, AGGREGATING A SET OF, UH, RESOURCES, I WOULD DESCRIBE THEM AS KIND OF HOMES BY AND LARGE.

UM, THEY ARE, UH, SERVING AS

[00:35:01]

THE RETAIL ELECTRIC PROVIDER FOR THESE, UH, AS WELL, THEY ARE COORDINATING WITH THE TRANSMISSION AND DISTRIBUTION UTILITIES TO MAKE SURE THIS CAN BE ACCOMPLISHED, UH, THAT, THAT SOMEBODY MIGHT BE INJECTING INTO THE DISTRIBUTION SYSTEM SAFELY.

AND, UM, THEN THEY ARE ALSO EITHER WORKING WITH A QUALIFIED SCHEDULING ENTITY OR ARE A QUALIFIED SCHEDULING ENTITY TO OFFER THESE INTO THE ER ERCOT PROGRAMS. OKAY.

IS THERE ANY FURTHER COMMENTS, QUESTIONS? UM, YEAH, I, I THINK OUR, UH, ONLY THE THING WOULD BE THAT, UH, I, I DO WANNA GET TO THE VOTING.

SO, UH, WE ARE LOOKING FOR, UH, A VOTE FROM THE OR OR RECOMMENDATION FROM R AND M FOR THE BOARD TO APPROVE, UH, THE CHANGES TO THE, UH, TO THE PILOT PROJECT.

OKAY.

DO I HAVE A MOTION TO APPROVE? SO MOVED.

JULIE SECOND, COURTNEY SECOND.

ALL IN FAVOR? AYE.

AYE.

OKAY, THANKS KENAN.

[9. Independent Market Monitor (IMM) Report]

SO NOW TAKE UP AGENDA ITEM NINE, WHICH IS THE INDEPENDENT MARKET MONITOR REPORT.

SO WHEN ZANG WILL PRESENT, DID I PRONOUNCE THAT RIGHT, Z? YES.

YEAH.

OKAY.

OKAY.

YOU CAN JUST USE, HI, UH, WE ZANG WITH THE POTOMAC ECONOMICS.

I'M HERE TODAY TO PRESENT THE INDEPENDENT MARKET MONITOR REPORT.

UH, SO STARTING OFF WITH THE REVIEW OF THE ALL IN WHOLESALE ELECTRICITY PRICE FOR 2023 AND 2022.

SO THIS IS A SLIDE THAT WE HAD PRESENTED PREVIOUSLY AT THE LAST BOARD MEETING, BUT NOW WITH A FULL YEAR OUTCOMES, UH, HAVING ADDED IN NOVEMBER AND DECEMBER.

SO THAT'S THE MAJOR CHANGE SINCE THE LAST TIME WE PRESENTED THIS.

AND SO, UM, PRICES WERE LOWER IN THE LAST QUARTER OF 2023, LARGELY DUE TO MILD SYSTEM CONDITIONS AS WELL AS, UM, DECREASING GAS PRICES, UH, AFTER ADJUSTING THE 2022, UH, ENERGY PRICING OUTCOMES WITH A FUEL ADJUSTMENT, UH, WITH A FUEL PRICE THAT WAS MORE IN LINE WITH WHAT WE SAW IN 2023.

UM, AND YOU CAN SEE FROM THE GREEN THAT'S, UH, THE FUEL PRICES IN 2022 WERE MORE THAN DOUBLE WHAT THEY WERE IN 2023.

SO WITH THAT ADJUSTMENT, WE CAN SEE SORT OF A STARK CONTRAST BETWEEN 2022 AND 2023.

UM, AND SO OVERALL, WE CONTINUE TO BELIEVE THAT THIS LEVEL OF MARKET OUTCOME THAT WE SAW IN 2023, UH, WAS LARGELY DRIVEN BY E-C-R-R-S, BOTH BECAUSE OF THE EXCESS AMOUNT THAT WAS BEING PROCURED, UH, AS WELL AS THE FACT THAT THAT AMOUNT OF MEGAWATTS IS HELD BEHIND A MARGIN AND NOT AVAILABLE FOR REAL TIME DISPATCH.

AND SO OUR, UH, NEXT FEW SLIDES WILL, WILL FURTHER HIGHLIGHT THAT POINT.

UM, THIS PEAKER NET MARGIN SLIDE IS ALSO ONE THAT WE HAD PRESENTED PREVIOUSLY, SIMILAR TO THE PREVIOUS ONE WHERE, UH, NOW COMPLETE WITH OUTCOMES FROM NOVEMBER AND DECEMBER.

AND SO, UM, THE GREEN BARS HERE ARE IS THE PEAKER NET MARGIN ACCUMULATION FOR 2023.

THE BLUE TREND IS, UH, 2022, AND THE DASH LINE IS THE CURRENTLY SET COST OF NEW ENTRY OR, OR CONE VALUE IN ERCOT.

UM, AND WE CAN SEE THAT P AND M WAS MORE THAN DOUBLE, UH, CONE IN 2023 AND ABOUT A 60% INCREASE, UH, FROM 2024, UH, 2022.

AND SO ASIDE FROM 2021, THIS IS THE LARGEST AMOUNT OF ANNUAL PEAKER NET MARGIN ACCUMULATION THAT WE'VE SEEN SINCE, WELL, SINCE WE HAVE HISTORICAL DATA FOR, BUT ARE WE SEEN A LOT OF PEAKERS BEING BID INTO RELEASED NEW PEAKER PROJECTS STARTING TO SHOW UP? SO SINCE APRIL OF LAST YEAR, THERE HAS BEEN AN INCREASE IN THE GAS PEAKING UNITS IN THE, UH, INTERCONNECTION QUEUE.

YEAH.

GOING BACK TO THE LAST SLIDE, COULD YOU JUST SUMMARIZE FOR US THE AVERAGE ELECTRICITY COST FOR 2022 COMPARED TO 2023? 'CAUSE SURE.

YEAH.

SO HERE WE HAVE AN INSET TABLE SHOWING THAT AMOUNT.

SO THE, UH, AVERAGE 2022

[00:40:01]

VALUE WAS ABOUT $39, AND THEN THE AVERAGE FOR 2023 IS $73.

OKAY.

THAT'S FUEL PRICE ADJUSTED ELECTRICITY COST.

OKAY.

WASN'T SURE FROM THAT HEADER IF THAT'S THE TAKEAWAY FROM THAT SLIDE OR NOT.

YES.

YEAH.

SO MUCH HIGHER OUTCOMES IN 2023.

HOW MANY ADJUST GRAPHS LIKE THIS TO ACCOMMODATE, UH, SUPPLY DEMAND GOING ON IN THE MARKETPLACE, NOT JUST LOOKING AT THIS COST BASE APPROACH? SURE.

YEAH.

AND THIS IS SOMETHING THAT WE HIGHLIGHT IN FUTURE, UH, SLIDES, BUT WE DID HAVE OVERALL HIGHER ONLINE RESERVE IN 2023 THAN IN 2022.

SO EVEN GIVEN THE HIGHER AMOUNT OF LOAD GROWTH, WHICH WE WILL SHOW IN A FUTURE SLIDE, OVERALL, THE AMOUNT OF RESERVES, UM, WERE HIGHER IN 2023.

AND SO THAT IS ALSO ONE OF THE REASONS THAT WE'RE SEEING SORT OF, UM, THE, A DIVERGENCE BETWEEN WHAT SCARCITY WAS ON THE SYSTEM AS WELL AS THE LEVEL OF PRICING OUTCOME THAT WE SAW.

ARE, ARE YOU GONNA SHOW US SOME ANALYSIS VERSUS JUST DRAWING THESE CONCLUSIONS? YES.

SOME OF THE FUTURE SLIDES WILL OUTLINE IN THAT POINT.

OKAY.

SO WHEN THE PEAKER MARGIN SEEMS TO HAVE SOME SEASONALITY BUILT INTO IT, I GUESS IF YOU LOOK AT 2022 AND 2023, IT'S KIND OF THE LAST FIVE MONTHS OF THE YEAR TENDS TO GO ABOVE CONE.

IS THAT, IS THAT TYPICAL OR IS THAT JUST, I MEAN, OBVIOUSLY AUGUST IS A PEAKING MONTH AND YOU NEVER KNOW WHAT YOU'RE GONNA GET IN DECEMBER.

SURE, YEAH.

UM, SO WE, WE DID SEE THAT TYPE OF OUTCOME WITH SUMMER MONTHS RAISING THE PEAKER NET MARGIN ACCUMULATION FOR 2019 FOR 2022, AS WELL AS FOR 2023.

AND SO THAT'S IN LINE WITH RIGHT TIGHTER SYSTEM CONDITIONS IN THE SUMMER AND, UH, THEY'RE BEING RESULT IN HIGHER PRICING.

YEAH.

'CAUSE I MEAN, IF, IF IT'S ABOVE CONE FOR SEVERAL MONTHS OF THE YEAR, BUT NOT EVERY MONTH DURING THE YEAR, SO DOES THIS JUSTIFY, LIKE JUST SAY JUST BECAUSE IT'S ABOVE THE, UH, ABOVE CONE IN, IN SAY THE FOURTH QUARTER, THIRD AND FOURTH QUARTER DOESN'T MEAN YOU'RE REACHING REINVESTMENT ECONOMICS, DOES IT, IF IT'S BASICALLY SITTING IDLE THE OTHER SEVEN MONTHS OF THE YEAR, IS THAT THE RIGHT WAY TO THINK ABOUT THAT OR IS THAT SURE.

YEAH.

AND SO I THINK, YOU KNOW, THE, THE VERY DEFINITION OF A PEAKER, IT'S A RESOURCE, A PEAKING RESOURCE THAT TYPICALLY OPERATES DURING PERIODS OF PEAK DEMAND.

AND SO, UH, I THINK, YOU KNOW WHAT, WHAT THIS SHOWS IS IF THEY HAD PARTICIPATED IN THE MARKET DURING THE SUMMER, UM, THEY LIKELY WOULD'VE CAPTURED A LOT OF THE REVENUES THAT BUMPED THEM UP, UH, TO A POINT THAT'S HIGHER THAN COST.

YEAH.

THEY JUST CAN'T TELL OVER THE LIFE OF THE PROJECT WHETHER IT WOULD PENCIL OUT OR NOT.

IF YOU INTEGRATE UNDER THE CURVE, WHAT DOES IT FIT UNDER THE DASH BLACK LINE IS, I THINK THE QUESTION.

SURE.

YEAH.

SO THE CONE VALUE ITSELF IS A DOLLAR PER KILOWATT YEAR VALUE.

AND SO THE, UM, I I GUESS YOUR QUESTION IS, IF WE WERE TO TAKE AWAY ALL OTHER MONTHS, JANUARY, FEBRUARY, MARCH, APRIL AND OCTOBER, NOVEMBER AND DECEMBER, IF THEY HAD ONLY OPERATED IN THE FOUR SUMMER MONTHS, IF THEY HAD BEEN ABLE TO REACH THE, NO, MY QUESTION IS IF THE BLACK LINE IS AN ANNUAL RATE AND WE INTEGRATE ALL THE GREEN BARS, DOES IT FIT UNDER THE BLACK LINE? YEAH, THAT'S, THAT'S SIMILAR WHAT I WAS ASKING YOU BOB'S QUESTION MATHEMATICALLY, AREN'T WE LOOKING AT A SUM THAT'S ROUGHLY EQUAL TO THE BLACK DESK LINE? IT WOULD BE HIGHER, YES.

BY HOW MUCH BY THE GREEN BAR? THAT IS THE ACCUMULATION, THAT'S THE INTEGRATION.

WOULD, WOULD IT BE FAIR TO SAY, FOR EXAMPLE, UM, THE MOST RECENT YEAR WAS 200% OF WHAT IS NEEDED FOR A SINGLE YEAR? YES.

OKAY.

SO, BUT I GUESS WHEN YOU'RE TRYING TO BUILD THESE THINGS, YOU'RE, YOU'RE THINKING ABOUT A 30 YEAR LIFESPAN OR, OR SOMETHING LIKE THAT, WHICH I THINK IS YEAH.

IN SOME WAYS I DON'T FIND THIS UNUSUAL SINCE WE KNOW WE NEED MORE RESOURCES ON THE GRID.

SO WE WOULD WANT SOME ECONOMIC SIGNALS THAT SAY, YES, IT'S TIME TO INVEST.

CORRECT.

YES.

SURE.

YES.

THE MARKET IS INDICATING THAT.

YES.

AND SO THAT'S A GOOD THING.

UH, WELL, I THINK, YOU KNOW, WE'LL, WE'LL ALSO STILL GO OVER THIS IN, IN THE FUTURE SLIDES.

UM, WE THINK THIS LARGE DEPARTURE FROM 2022, UM, IS A SIGNAL OF SOME INEFFICIENT PRICING THAT HAS OCCURRED IN 2023 WHEN, AND CHAIRMAN FLEXON, IF I MAY, HOW MANY YEARS IN A ROW? AND I THINK YOU'RE GONNA PROBABLY SET OUT, SET ASIDE 2021, BUT HOW MANY YEARS IN A ROW HAVE WE EXCEEDED THE COST OF NEW ENTRY NOW? SURE.

UH, 20 19, 20 22, AND NOW 2023.

AND THEORETICALLY 2021 TOO AS WELL, BUT IT WAS KIND OF AN ANOMALY.

[00:45:01]

SO FOUR YEARS IN A ROW, UH, I GUESS, UH, WITH THE EXCLUSION OF 2022, UH, 2020, WHICH SAW NATURALLY LOW LOAD LEVELS BECAUSE OF WHAT OCCURRED IN THAT YEAR, THE PANDEMIC.

RIGHT.

OKAY.

AND SO I THINK IT'S ALSO FAIR TO, UM, NOTE THAT ERCOT ISS IN THE PROCESS OF CONDUCTING AN EXTENSIVE COST OF NEW INTEREST, COST OF NEW ENTRY STUDY, UM, THAT'S IMPORTANT TO UPDATE THE CONE FIGURE THAT DRIVES A P AND M AND HAS HIRED A CONSULTANT, THE RATTLE GROUP, TO RUN AN EXTENSIVE CONE STUDY THAT I THINK IS IMPORTANT, UM, TO MAKE SURE THAT THE CONE FIGURE IS UPDATED, UM, TO REFLECT THE TRUE COST OF NEW ENTRY.

AND SO, UM, I KNOW THAT THIS IS THE FIRST TIME THAT ERCOT WILL CONDUCT SUCH AN EXTENSIVE DETAILED STUDY, AND IT'S CRITICALLY IMPORTANT BECAUSE THAT COMB FIGURE, UM, IS OBVIOUSLY A SIGNAL, UH, A PRICE SIGNAL, AN ECONOMIC SIGNAL FOR NEW DISPATCHABLE GENERATION INVESTMENT, BUT WILL ALSO DRIVE OTHER MARKET DESIGN CHANGES THAT WE'LL BE LOOKING AT IMPLEMENTING IN THE COMING YEARS.

BUT I, I APPRECIATE THE INFORMATION.

I JUST KIND OF WANTED TO SORT OF PROVIDE THE ADDITIONAL INFORMATION FOR JUST BROADER PERSPECTIVE.

THANK YOU.

YEAH, ABSOLUTELY.

THANK YOU VERY MUCH FOR THAT.

AND I, I WILL SAY, I THINK EVEN SOME OF THE HIGHER ESTIMATES FOR CONE, MAYBE IN THE ONE 40 OR ONE 50 VALUE THAT STILL COMES, UM, THE PEAKER NET MARGIN ACCUMULATION FOR 2022 AND 2023 BOTH EXCEED THAT STILL.

OKAY.

SO, UH, ON THIS SLIDE, UH, WE ARE COMP, UH, COMPARING THE IMPLIED HEAT RATE FOR 2023 AND 2022.

AND SO A QUICK EXPLANATION OF WHAT IMPLIED HEAT RATE IS, YOU CAN THINK OF IT AS THE LEVEL OF OPERATING HEAT RATE, UH, THAT IS THE BREAK EVEN POINT FOR A, A GENERATOR FUELED BY NATURAL GAS.

UM, SO A ANY GENERATOR BELOW, OR WITH A HEAT RATE BELOW THAT IMPLIED HEAT RATE, UM, HAD THEY OPERATED, UH, THEY LIKELY WOULD'VE MADE MONEY GIVEN WHAT GAS PRICES AND, UM, WHAT THE REAL-TIME MARKET OUTCOMES WERE.

AND SO HERE THE BLUE BARS ARE THE 2023 IMPLIED HEAT RATE OUTCOME ACROSS THE ZONES, UH, HOUSTON, NORTH, SOUTH AND WEST.

AND THEN THE BLACK MARKERS ARE THE OUTCOMES FROM 2022.

AND SO, UH, WE CAN SEE THAT PARTICULARLY IN THE SUMMER, UH, MUCH HIGHER IMPLIED HEAT RATE OUTCOMES FOR 2023.

AND AGAIN, WE BELIEVE THIS WAS LARGELY DRIVEN BY ECRS, ESPECIALLY SINCE WE SAW HIGHER OVERALL ONLINE RESERVES IN 2023 THAN WE DID IN 2022, THAT COMBINED WITH MUCH LOWER NATURAL GAS PRICES.

AND ADDITIONALLY, WE DO HAVE A TABLE HERE, UH, THAT FURTHER COMPARES THE ANNUAL IMPLIED HEAT RATES.

SO THE, THE BARS ARE ON A MONTHLY LEVEL, BUT THE ANNUAL IMPLIED HEAT RATES BETWEEN 20 23, 20 22, AND 2021 WITH THE ANNUAL RATE IN 2023, UM, BEING MUCH HIGHER THAN WHAT WAS SEEN IN 2022 AS WELL AS 2021.

YES.

I'M MISSING SOMETHING.

THERE'S SO MANY VARIABLES GOING ON, I DON'T KNOW HOW WE CAN ASSIGN THIS RESULT TO ONE THING.

SO CAN YOU HELP US UNDERSTAND HOW YOU'RE DRAWING THAT CONCLUSION? SURE.

YEAH.

SO, UH, YOU KNOW, IT'S, AGAIN, DRAWING ON THOSE TWO POINTS OF LOWER NATURAL GAS PRICES.

UM, FOR MANY OF THE MONTHS, UH, IN COMPARING TO 2022, LESS THAN HALF OF WHAT NATURAL GAS PRICE WAS THAT THAT WAS SEEN IN 2022 AS WELL AS THERE WAS HIGHER ONLINE RESERVES.

SO WE DIDN'T REALLY SEE SCARCITY PRICING AS WHAT'S BEING, AS WHAT'S DRIVING THIS REAL-TIME MARKET OUTCOME.

AND SO WITH SOME OF THE ANALYSIS THAT WE HAD PRESENTED BEFORE, WHAT WE SAW WAS, UM, THAT AMOUNT OF HELD ECRS DRIVING UP WHOLESALE ENERGY COSTS, UH, SIGNIFICANTLY.

AND SO WE, WE BELIEVE THAT'S THE DRIVER FOR SOME OF THESE OUTCOMES.

AND A QUESTION LIKE, KIND OF PIGGYBACKING ON JULIE, THERE'S OTHER FACTORS.

HAVE Y'ALL DONE ANYTHING TO SAY, YOU BRING IN ALL THE INTERMITTENT RESOURCES AS WELL, AND THAT DAY WE THOUGHT WIND WAS GONNA SHOW UP AND IT DIDN'T.

SO DO YOU HAVE ANY DATA THAT COMPARES ALL OF THAT AS WELL? SURE, YEAH.

SO WHEN WE HAD DONE THAT ANALYSIS FOR ECRS, THEY WERE USING WHAT SYSTEM CONDITIONS WERE, WE DIDN'T ADJUST LOW, WE DIDN'T ADJUST THE AMOUNT OF OUTAGES.

IT WAS WHATEVER WAS SEEN ON THAT DAY, ALL WE DID WAS, UH, INCREASE THE, OR SORT OF PRE-RELEASE, ECRS HAVE THE REAL TIME DISPATCH ENGINE, HAVE MORE ACCESS TO SOME OF THOSE MEGAWATTS.

AND SO, UM, THAT'S WHAT'S DRIVING THAT SORT OF WHOLESALE ENERGY COST REDUCTION.

AND IN THIS LAST SLIDE IN THIS DECK,

[00:50:01]

I CAN SORT OF WALK THROUGH WHAT EXACTLY THAT LOOKS LIKE AS WELL FOR A PARTICULAR DAY.

CARLOS, UM, JUST A QUESTION.

ARE YOU ALSO SAYING THAT APART FROM JUNE, AUGUST AND SEPTEMBER, WHICH IS WHERE YOU HAD, YOU KNOW, INCREASING PEAKS AND UNCERTAINTY, UM, THE REST OF THE YEAR IS RELATIVELY IN LINE WITH WHAT YOU EXPECTED? YEAH, I THINK, YOU KNOW, JANUARY THROUGH MAY FAIRLY CLOSE TO WHAT WE EXPECTED.

UM, AND THEN, UH, WITH, YOU KNOW, VERY MILD SYSTEM CONDITIONS IN OCTOBER, NOVEMBER, DECEMBER, UM, ABOUT MAYBE A LITTLE HIGHER THAN WHAT WE EXPECTED, BUT ABOUT WHAT WE EXPECTED, ESPECIALLY GIVEN, AGAIN, UH, EVEN GAS PRICING WAS MUCH LOWER FOR THE LAST QUARTER OF THE YEAR.

UH, BUT YES, THE, THE OUTCOMES IN JUNE, AUGUST AND SEPTEMBER, UM, QUITE HIGH.

AND I GUESS THE POINT TO BE MADE IS, UH, AGAIN, LOOKING AT ALL THE VARIABLES AND THE COST OF NON-AVAILABILITY, WHICH IS INFINITE, RIGHT? IF YOU CAN'T GENERATE, YOU HAVE A PROBLEM.

UM, THOSE THREE MONTHS WERE ATYPICAL.

THERE WERE PEAK DEMAND, WE HAD, YOU KNOW, VERY TIGHT CONDITIONS SINCE SEPTEMBER FOR AT LEAST ONE DAY WHERE WE WERE VERY, VERY CLOSE RIGHT TO, TO MATCHING AVAILABLE SUPPLY TO DEMAND, AND, UH, AGAIN, CONTINUING PEAKS IN, IN JUNE AND THEN IN AUGUST.

SO AGAIN, HOW DO YOU ACCOUNT FOR THAT EXPOSED ANALYSIS? I GET RIGHT? BUT, UH, PREDICTING HOW YOU MANAGE A SYSTEM ON THE BASIS OF SCARCITY, UH, WITH INFINITE COST, UH, AS A POTENTIAL OUTCOME IS ANOTHER THING TO CONSIDER, RIGHT? YEAH.

IF I'M UNDERSTANDING THE QUESTION RIGHT, UH, SORT OF HOW DO WE TAKE INTO ACCOUNT ALL THE OTHER FACTORS AND, UM, MAYBE THE NEXT SLIDE WILL HELP WITH THAT.

SO WE DID DO AN ANNUAL LOAD COMPARISON, UM, BETWEEN 2023 AS WELL AS 2022.

SO HERE THE BLUE BARS ARE THE, UH, AVERAGE REAL TIME LOAD FOR THE YEAR, UH, FOR THE VARIOUS ZONES.

AND THEN THE RED, UM, ARE THE, UH, INCREASES OR, OR DECREASE IN THE, UH, BUT WE DIDN'T SEE DECREASE OF THE REAL-TIME PEAK LOAD ACROSS THE ZONES.

SO WE DID LOOK AT THAT AND LOAD IS GROWING IN TEXAS, PARTICULARLY IN THE WEST, BUT AGAIN, WE'RE FALLING BACK ON THAT POINT OF THERE WERE MORE RESERVES IN 2023, AND SO THAT THAT'S, UM, OUR INDICATOR.

THERE'S SOMETHING ELSE THAT'S DRIVING THIS HIGHER PRICING OUTCOME.

IF IT'S NOT SCARCITY PRICING, THEN YOU KNOW, WHAT IS IT? AND IT'S THE REAL TIME ENERGY PRICE.

AND, UM, A LOT OF, FROM OUR ANALYSIS FROM THOSE SIMULATIONS, WHAT WE SAW WAS BECAUSE OF THE MARGIN OF, UM, MEGAWATTS THAT WE'RE HELD.

SO I'D LIKE TO GO BACK TO SLIDE FOUR BECAUSE THESE BLANKET STATEMENTS I DON'T THINK ARE FAIR TO THE OPERATION OF THE GRID.

OBVI LOOKS TO ME, OCTOBER, NOVEMBER, DECEMBER ARE, WELL-BEHAVED ECRS WAS AVAILABLE TO US AND BEING USED, THERE ARE TWO MONTHS, THE MOST STRESSFUL MONTHS ON THE GRID, AUGUST AND SEPTEMBER AT THE PEAK OF THE SUMMER WHERE YES, COSTS ARE HIGHER, MAYBE FOR A LOT OF DIFFERENT REASONS.

SO I DON'T UNDERSTAND DRAWING THE CONCLUSION THAT IT'S ALL DUE TO ECRS WHEN WE CAN SEE MULTIPLE MONTHS OF GOOD BEHAVIOR HERE.

SO WE SHOULD, I DON'T UNDERSTAND WHY YOU'RE SAYING THE ENTIRE YEAR WAS AFFECTED BY ECRS WHEN THERE ARE INDIVIDUAL MONTHS THAT ARE VERY WELL BEHAVED.

COULD YOU ELABORATE ON THAT PLEASE? SURE.

YEAH.

SO I, I WOULD LIKE TO MAKE A CLARIFICATION.

WE'RE, WE'RE NOT SAYING THAT HAVING RELEASED ECRS, WE WOULDN'T STILL HAVE HAD HIGH PRICING OUTCOMES IN JUNE, AUGUST AND SEPTEMBER.

WE, WE LIKELY STILL WOULD HAVE, AND THAT'S SHOWN, UH, I THINK IN, IN PREVIOUS ANALYSIS THAT WE'VE GIVEN.

THERE'S JUST, UM, I THINK A UTILIZATION OF THOSE MEGAWATTS THAT, THAT WASN'T EFFICIENT, THAT LARGELY DROVE ENERGY PRICES HIGHER THAN WHAT THE EFFICIENT PRICE WOULD HAVE BEEN, IF THAT MAKES SENSE.

WELL, IT MAKES SENSE FOR TWO MONTHS OUTTA 12 MONTHS, BUT I DON'T UNDERSTAND THE BLANKET STATEMENTS THAT IT DROVE UP THE ENTIRE YEAR'S WORTH OF COST.

THAT'S WHERE I'M, I'M STRUGGLING TO ACCEPT WHAT YOU'RE SAYING.

SURE.

YEAH.

SO, UM, THE, A LOT THESE MONTHS CONTRIBUTED VERY GREATLY TO THE PREVIOUS SLIDES THAT WE SEE.

WE SAW, YOU KNOW, THE, UM, PEAKER NET MARGIN AS WELL AS THE ANNUAL, UH, ALL IN ENERGY PRICE.

AND SO, UH, WELL THEN WOULD IT NOT BE MORE APPROPRIATE TO SAY HOW WE USE ECRS DURING THE HOT SUMMER MONTHS OF AUGUST AND SEPTEMBER MIGHT NEED TO BE LOOKED AT? YES.

AND THAT BLANKET STATEMENTS THAT ECRS IS NOT BEING USED PROPERLY, WE BELIEVE

[00:55:01]

THAT THE AMOUNT OF ECRS THAT'S BEING PROCURED AS WELL AS THE UTILIZATION OF ECRS, UM, BOTH OF THOSE ARE SOMETHING THAT WE ARE IN DISCUSSION WITH OUR CUT ABOUT EXAMINING FOR THE FUTURE.

AND WHEN I THINK THE WAY THAT I THINK ABOUT IT, IT, IT HAS AN IMPACT THE WAY THE AMOUNT OF MEGAWATTS WE KEEP IN ECRS THAT HAS A IMPACT ON THE MARKET IN THOSE HIGH DEMAND PERIODS.

'CAUSE YOU GOT LESS BIDDING IN.

SO I THINK TO COURTNEY'S POINT EARLIER AS WELL, WHEN YOU LOOK AT JUNE, AUGUST, AND YOU KNOW, PARTICULARLY THOSE MONTH IN SEPTEMBER WHEN YOU HAVE A HIGH DEMAND PERIOD, YOU HAVE LESS MEGAWATTS BEING BID IN FOR, COULD BE DIFFERENT REASONS, COULD BE A LOW WIND DAY, COULD BE BECAUSE WE FOLD, YOU KNOW, COMPARED TO THE PRIOR YEAR, MORE MEGAWATTS INTO ECRS FOR EMERGENCY DISPATCH RATES.

SO THAT'S GOING TO DRIVE THE PRICE.

SO FOR THOSE MONTHS, ECRS HAS AN IMPACT ON THE PRICING FOR THOSE HIGH DEMAND PERIODS.

THE OTHER MONTHS DURING THE YEAR, WE HAVE SUFFICIENT RESERVES.

IT'S NOT GOING TO SO MUCH AFFECT THE PRICE.

THAT'S KIND OF MY TAKEAWAY FROM THIS, UH, FROM THE SLIDE AND FROM WHAT YOU'RE SAYING.

SURE.

I THINK THAT'S AN ACCURATE REPRESENTATION AND, YOU KNOW, FOR A LOT OF THOSE PEAK DEMAND PERIODS, UM, ALSO LIKELY THE AMOUNT OF, AND AGAIN, I THINK IN OUR ANALYSIS, WE'RE NOT SAYING THERE WOULDN'T HAVE BEEN HIGH PRICES IN THE SUMMER, JUST THE LEVEL OF HIGH PRICING THAT WE SAW WAS INEFFICIENT WHEN COMPARING THE LEVEL OF RESERVES THAT WERE ON THE SYSTEM AS WELL AS WHAT COSTS FOR RESOURCES TO GENERATE.

WERE, AND THESE ARE THE DISCUSSIONS THAT ARE CONTINUING ON WITH THE ERCOT STAFF ON THE AMOUNT OF WE'RE UTILIZING ECRS AND ANCILLARY SERVICES IN GENERAL.

SO, UH, YEAH, I MEAN, SO WE'RE, WE'RE SPEAKING BOTH, NOT JUST ABOUT AMOUNT, BUT ALSO ABOUT WHEN TO RELEASE ECRS, WHICH WOULD HAVE AN IMPACT ON, ON THE PRICING OUTCOME.

SO, UM, YOU KNOW, THE, THE IDEA IS THAT WE'RE TRYING TO BALANCE THIS NEED FOR THE RETAIL MARKET TO KNOW MINIMUM AMOUNTS OF THINGS THAT WE BUY VERSUS WHEN THE CONTINGENCIES OCCUR, AND WE MIGHT BE ABLE TO RELEASE ECRS EARLIER, OR BASED ON A, A PRICE TYPE VALUE THAT WOULD ALSO REDUCE THE, UM, THE PRICING IMPACT ON, ON THE SYSTEM.

SO IT'S QUANTITIES, BUT ALSO HOW WE RELEASE, UH, ECRS AND DAN, I DON'T KNOW IF YOU WANT ADD THAT'S A GREAT POINT.

THAT'S RIGHT ON, ON MOST OF THOSE DAYS OF TIGHT DAYS DURING THE SUMMER, WE RELEASED THE ECRS SO THAT IT COULD BE USED AS ENERGY, BUT WE WAITED UNTIL WE WERE NEARLY OUT TO DO IT.

AND IT MAY BE THAT WE COULD, WE COULD HOLD IT FOR THE REASONS THAT WE BUY THE ECRS TO COVER, UH, YOU KNOW, RELIABILITY ISSUES LIKE FORECAST ERRORS AND UNIT TRIPS AND THOSE KIND OF THINGS FOR MOST OF THAT TIMEFRAME.

BUT IF IT'S ON A DAY THAT WE'RE GONNA HAVE TO RELEASE IT ANYWAY, RELEASING IT EARLIER AND COMING UP WITH A, A MECHANISM FOR DOING THAT ON THOSE DAYS ANYWAY, MAYBE THE, THE RIGHT SOLUTION WITHOUT EVEN CHANGING THE QUANTITIES A LOT.

THAT'S A GOOD POINT.

YEAH, IT MAKES SENSE.

RIGHT.

YEAH.

OKAY, WHEN, YEAH.

SO THESE LAST COUPLE OF SLIDES ARE, UM, SOME OF OUR OBSERVATIONS OF WINTER STORM HEATHER.

AND SO, UH, THIS FIRST ONE IS DISPATCHED BY GENERATION TYPE.

UH, DURING THE PERIOD OF JANUARY 14TH AND JANUARY 17TH, UH, WE CAN SEE THAT GAS, FIRE RESOURCES AND WIND PLAYED A KEY ROLE SYSTEM CONDITIONS WERE NOT, UH, TIGHTEST WHEN WE SAW PEAK LOAD, UH, BUT RATHER WHEN, UH, WE, WE HAD DECREASING WIND OUTPUT, UH, THE EVENING OF JANUARY 16TH.

AND SO THE, THE WAY TO, I GUESS LOOK AT THIS GRAPH, THE TOP PORTIONS ARE, UM, RIGHT IN LINE WITH WHAT LOAD EXPECTATION WAS, BUT THEN THE TOP OF THE, UH, PURPLE OR THE ORANGE, UM, WOULD BE WHAT NET PEAK LOAD WAS.

AND SO, UM, YEAH, AND WE CAN ALSO SEE I HAD MENTIONED THE PURPLE, BUT ENERGY STORAGE RESOURCES, UH, WERE UTILIZED TO MANAGE SOME OF THOSE RAMP NEEDS AS RENEWABLES WERE COMING OFF OR, OR RIGHT BEFORE RENEW, UH, SOLAR WAS COMING IN, UH, IN THE MORNING AND THE EVENING IN PARTICULAR ON THE 16TH AND THE 15TH.

AND HERE WE'RE EXAMINING THE, UH, REAL TIME PRICING AND RESERVE LEVELS, UH, PARTICULARLY FOR, UH, THE PERIODS WHEN WE WERE EXPECTING THE TUS SYSTEM CONDITIONS.

THE TOP TREND, UH, SHOWS THE RESERVES ON THE SYSTEM, SO TWO DIFFERENT TYPES OF RESERVES, THE REAL TIME ONLINE ORDC

[01:00:01]

RESERVES AND THE DARK BLUE LINE, AND THEN THE PHYSICAL RESPONSIVE CAPABILITY OR PRC, UH, IN THE LIGHTER BLUE.

AND, UM, AS YOU KNOW, THE ORDC RESERVES VALUE IS WHAT DRIVES SCARCITY PRICING.

AND THEN THE LIGHTER BLUE IS THE, THE VALUE THAT ERCOT USES TO GAUGE SYSTEM RESERVE HEALTH AND WHETHER OR NOT WE'RE APPROACHING EMERGENCY CONDITIONS.

AND SO HERE, UH, THE GRAY REGION IS THE LEVEL OF RESERVES WHERE WE WOULD TYPICALLY SEE SCARCITY PRICING.

AND SO YOU CAN SEE, UM, WHEN THE DARKER BLUE DIPS INTO THAT GRAY REGION, UH, WE HAVE SOME SCARCITY PRICING IN THE BOTTOM GRAPH.

AND THEN WE'VE ALSO HIGHLIGHTED HERE IN THE RED DASH LINE, UH, THE LEVEL OF PRC WHEN ERCOT WOULD CALL FOR, UH, EMERGENCY.

AND UH, WE DO THINK THAT ERCOT MANAGED THE SYSTEM VERY RELIABLY, BOTH IN PREPARING FOR THE EVENT AS WELL AS DURING THE EVENT.

THERE WAS VERY TRANSPARENT COMMUNICATION ABOUT EXPECTATIONS AS WELL AS OPERATIONAL OUTLOOK, UM, DURING THE EVENT.

AND THEN IN THE BOTTOM GRAPH, UH, THESE ARE THE REALTIME PRICING OUTCOMES.

SO THE GREEN IS THE DEPLOYMENT PRICE ADDER, THE ORANGE IS THE ORDC ONLINE PRICE ADDER, AND THEN THE RED IS THE SUM OF THE SYSTEM-WIDE PRICE, AS WELL AS THOSE TWO PRICE ADDERS.

UM, THE MAXIMUM TOTAL PRICE WAS $1,200 PER MEGAWATT HOUR ON THE EVENING OF JANUARY 16TH.

AND THE HIGHEST THAT THE SCARCITY PRICE WAS, UH, WAS $90 OCCURRING AROUND THAT SAME TIME PERIOD.

SO AFTER REVIEWING THAT PRICING OUTCOME, UM, WHAT WE SAW WAS LARGE AMOUNTS OF HELD ECRS, UH, LIKELY DROVE SOME OF THAT HIGHER REAL-TIME PRICING, PARTICULARLY IN, UH, ON JANUARY 16TH.

SO HERE THE BLUE LINE IS, UH, AN INDICATION OF WHAT WE BELIEVE TO BE EFFICIENT PRICING.

UM, DURING WINTER STORM, HEATHER AND THE, UH, WE ESTIMATE THAT EFFICIENT PRICES COULD HAVE LOWERED THE WHOLESALE ENERGY COSTS BY ABOUT $90 MILLION.

UM, THIS INDICATES THAT THE CONCERNS THAT WE RAISED, UH, ABOUT ECRS ARE STILL PRESENT AND WE STILL BELIEVE IT'S AN ISSUE NEEDING TO BE ADDRESSED, ESPECIALLY BEFORE MORE MODERATE SYSTEM CONDITIONS COME AROUND.

AND, UM, AS MENTIONED BEFORE, WE ARE IN DISCUSSIONS WITH OUR CO TO TRY TO ACHIEVE THAT OBJECTIVE.

WHEN IN YOUR CALCULATION DID YOU STILL RETAIN SOME LEVEL OF RESERVES AND ECRS? YES, THIS IS A REPRESENTATIVE, UH, OF 75% RELEASE OF ECRS THAT WAS HELD BY GENERATIONAL RESOURCES.

IS THERE SOME RATIONALE FOR CHOOSING 75% RELEASE? YEAH, I THINK, UM, BASED ON SOME OF THE VALUES THAT WE HAD LOOKED AT ALL DURING THE AS METHODOLOGY DEBATE THAT HAD OCCURRED LAST YEAR, THAT WAS CLOSER I THINK TO THE LEVEL OF RESERVES THAT WE THOUGHT SHOULD BE HELPFUL FOR YOU.

I LIKE YOUR ANALYSIS, BUT IT WOULD HELP IF YOU WOULD BACK UP YOUR ANALYSIS AND SHOW US SOME OF THE ASSUMPTIONS YOU'RE MAKING TO JUST PRESENT THE GRAPHS WITHOUT THE CONTEXT OF THE ASSUMPTIONS IS SOMEWHAT MISLEADING TO A VIEWER LIKE ME.

SO I WOULD APPRECIATE MORE UNDERSTANDING OF YOUR ASSUMPTIONS TO DRAW THESE CONCLUSIONS.

SURE.

AND WE'LL PREPARE THAT, UM, BOTH FOR THE UPCOMING ANCILLARY SERVICE STUDY AS WELL AS, UH, AND CONTINUED DISCUSSIONS WITH AKAT AND DURING THOSE MILESTONES, PRESENT THAT TO THE, BOTH THE BOARD AS WELL AS TO THE MARKET.

AND TO PIGGYBACK OFF WHAT JULIE SAID, REALLY JUST FOLLOWING YOU, JULIE, SORRY, UM, WHAT THE IMM PRESENTS FROM THE CONSUMER PERSPECTIVE, I ABSOLUTELY LOVE, BUT WHEN YOU'RE LOOKING AT STUFF, YOU ARE JUST SIMPLY LOOKING AT THE MARKET AND HOW IT'S PLAYING IN ERCOT HAS THE JOB OF MAKING SURE IT'S THERE AND RELIABLE AND CAN ACTUALLY RUN.

CORRECT.

YOU'RE NOT HAVING THAT PART IN YOUR ANALYSIS.

SURE.

SO, UM, PART OF WHAT, UH, GOES INTO OUR ESTIMATION OF THE VALID AMOUNTS OF ECRS, WE'RE USING A A TYPE, THIS WILL BE EXPLAINED ALSO IN THE, IN THE FUTURE.

UH, AND DAVID HAD WENT OVER THIS, OR DR. PATTON HAD WENT OVER THIS AT THE LAST BOARD MEETING, AS WELL AS ATTACK, UH, SORT OF A RELIABILITY RISK MODEL, SORT OF WHAT IS YOUR IMPROVEMENT IN RELIABILITY RISK.

AT THAT TIME, WE HAD USED LOSS OF LOAD EXPECTATION AS OUR MEASURE GIVEN THE AMOUNTS OF RESERVES THAT YOU'RE HOLDING.

AND SO FOR THAT, WE, WE ARE LOOKING AT, YOU KNOW, IMPROVEMENT IN LOSS OF LOAD PROBABILITY TO GAUGE THE RIGHT AMOUNT OF RESERVES TO HOLD.

ALRIGHT.

ANY FURTHER QUESTIONS? THANK YOU.

WE THANK YOU VERY MUCH.

SO WE'LL NOW TAKE UP AGENDA ITEM 10, WHICH IS THE COMMITTEE BRIEFS AND CHRISTIE HOBBS PRESENTATION OF THE SYSTEM PLANNING AND WEATHERIZATION UPDATE AGENDA

[10.1 System Planning and Weatherization Update]

ITEM 10.1, WHICH I'VE NOTED TO INCLUDE AN

[01:05:01]

UPDATE ON RELIABILITY STANDARD STUDY RESULTS.

CHRISTIE.

ALL RIGHT, I HAVE A LITTLE BIT OF A FEW EXTRA SLIDES, UH, FOR YOU THIS AFTERNOON.

UM, THEN I WANNA SHARE SOME UPDATES, UM, FROM THE DIFFERENT AREAS OF RESPONSIBILITY.

UM, MAINLY BECAUSE AS, AS WE STARTED TAKING A LOOK BACK AT 2023, I THOUGHT, UM, AS THE TEAM WAS BRINGING ME SOME OF THEIR STATISTICS, THOUGHT YOU MIGHT FIND THEM OF INTEREST TO SEE HOW WE CONTINUE TO EVOLVE.

I WANNA KICK OFF, UH, WITH THE WEATHERIZATION UPDATE.

UM, WE'RE GETTING, IT'S HARD TO BELIEVE WE'RE STILL IN WINTER, UM, WHEN IT'S, YOU KNOW, IN THE NINETIES OUTSIDE TODAY.

UH, BUT WE ARE, YOU KNOW, WRAPPING UP OUR WINTER, UH, INSPECTIONS AS WE SPEAK.

UM, SOME OF THE HIGHLIGHTS FROM THE TEAM, IF YOU RECALL, BACK IN DECEMBER, WE HAD CERTIFIED FIVE OF OUR INTERNAL INSPECTORS.

IT WAS A REAL RIGOROUS MULTI-MONTH PROGRAM WHERE OUR, UM, CURRENT FTES THAT ARE INSPECTORS, WE PUT 'EM THROUGH A TRAINING PROGRAM, THEY GO THROUGH ORAL EXAMINATION TO BECOME, YOU KNOW, ERCOT CERTIFIED, UM, THAT HELPS THEM WHILE THEY'RE OUT IN THE FIELD AND GOING AND DOING THEIR INSPECTIONS.

WE HAD ONE ADDITIONAL INSPECTOR COMPLETE HIS, AND THAT LEAVES JUST ONE MORE, UM, THAT NEEDS TO COMPLETE THEIR CERTIFICATION, BUT THAT WAS AN INSPECTOR THAT JOINED US LATE LAST YEAR.

SO, UM, DOING WELL, UH, IN ADVANCING THAT.

WE, UM, AS OF THE TIME OF THIS UPDATE THROUGH THE END OF JANUARY, WE HAD COMPLETED 248 GENERATION AND 66 TRANSMISSION INSPECTIONS, AND WE ARE ON TARGET.

UM, RIGHT NOW THIS SAYS ABOUT 300 OR UH, 350 GENERATION AND A HUNDRED TSP, BUT WE'RE LOOKING AT A TOTAL OF ABOUT 460 THAT WE'LL HAVE COMPLETE, UM, BY THE END OF THIS MONTH.

SO WE'LL BE WELL IN ADVANCE OF MEETING THE GOAL THAT WAS SET OUT FOR US AND, AND THE COMMISSION'S, UH, WEATHERIZATION STANDARD FOR WHAT WE NEEDED TO COMPLETE ON A THREE YEAR ROLLING PERIOD.

WE'RE ALSO LOOKING TO PUT TOGETHER, UM, SOME STATS FROM WHAT WE SAW FROM THE EFFECTIVENESS OF, UH, DURING WINTER STORM.

HEATHER, BACK IN JANUARY.

UM, WE'RE STILL WORKING WITH MARKET PARTICIPANTS THROUGH SOME RFIS TO GET SOME ADDITIONAL INFORMATION ON THE OUTAGES THAT THEY DID REPORT.

SO I DON'T KNOW THAT WE'LL HAVE THE MATERIALS TOGETHER IN TIME FOR THE APRIL MEETING.

UM, BUT WHEN WE DO GET THAT, WE'LL SHARE THAT WITH YOU AS WELL TO SHOW HOW THE PROGRAM IS WORKING TO HELP CONTINUE TO EVOLVE RELIABILITY.

ALL RIGHT.

HOT TOPIC OF WHAT IS NEW IN THE QUEUE.

UM, AS YOU CAN SEE, WE CONTINUE TO TRACK A LARGE NUMBER OF INTERCONNECTION REQUEST AT ERCOT.

UM, JUST FOR THOSE THAT ARE MAYBE WATCHING AT HOME, THAT DOESN'T MEAN THAT WE'RE GONNA SEE ALL OF THESE PROJECTS COME TO FRUITION.

UM, A LOT OF THESE ARE LOOKING AT MAYBE WHERE IS A GOOD PLACE TO SITE.

UM, AND SO THEY'RE JUST TESTING AND GOING THROUGH, UM, THE DIFFERENT STUDIES.

BUT IT'S, AS YOU CAN SEE, WE CONTINUE TO SEE A LARGE AMOUNT OF SOLAR AND BATTERIES COMING TO THE SYSTEM.

THAT ACCOUNTS FOR ABOUT 84% OF THE REQUESTS THAT WE SEE IN THE QUEUE.

11% OF THAT IS WIND, SO THAT MEANS LESS THAN 5%, UM, IS GAS.

NOW, UH, THE QUESTION THAT YOU ASKED EARLIER, CHAIR FLEXON ABOUT, UM, ARE WE SEEING NEW GAS COMING TO THE SYSTEM? AND WOODY WAS RIGHT.

UM, THE STATS THAT WE STARTED TO PULL, WE STARTED LOOKING ABOUT THE APRIL TIMEFRAME OF LAST YEAR WHEN WE STARTED SEEING NEW NATURAL GAS COMING INTO THE SYSTEM.

SINCE THEN, UM, IN THOSE THE LAST 11 MONTHS, WE'VE HAD 7,800 MEGAWATTS OF NATURAL GAS THAT HAVE ENTERED THE QUEUE.

NOW, TO PUT THAT IN PERSPECTIVE FOR YOU, IF YOU LOOK BACK AT THE YEAR 2022, WHAT DID WE SEE COMING ONTO THE OR INTERCONNECTION REQUEST IN THE SYSTEM? WE ONLY SAW ABOUT 2,900 MEGAWATTS.

UM, SO WE ARE SEEING, STARTING TO SEE AN INCREASE, UM, AT LEAST IN THE INTEREST OF POTENTIALLY SIDING ON THE GRID.

AND CHRIS, DO YOU THINK SOME OF THAT'S THROUGH THE LOAN LOAN ASSISTANCE AS WELL, OR? UM, I WOULD SAY ANECDOTALLY, YES.

WE STARTED TO SEE THAT PICK UP AS THAT DISCUSSION, UM, WAS GOING THROUGH THE SESSION.

UM, WE, WE HEAR, UH, YOU KNOW, A LOT OF PEOPLE CONTACTING US, TRYING TO GET INFORMATION WITH INTEREST OF TRYING TO, UM, UTILIZE THAT.

THEY'RE WAITING TO SEE ON HOW THE COMMISSION FINALIZES THE RULES OF ENGAGEMENT, UM, FOR BEING ELIGIBLE FOR THAT.

UM, SO I THINK, I THINK IT PROBABLY IS.

CARLOS.

HOW DOES THAT COMPARE TO THE RETIREMENTS OF THERMAL? UH, WHAT'S THE, WHAT HAVE HISTORICALLY I HAVE THAT NUMBER OFF THE TOP OF MY HEAD.

IS IT? I'LL GET THAT FOR YOU IF, IF WOODY DOESN'T HAVE IT OFF THE TOP OF HIS HEAD.

'CAUSE I KNOW I

[01:10:01]

JUST SAW IT IN ANOTHER PRESENTATION.

I DON'T HAVE THAT NUMBER EITHER, BUT IT'S MORE THAN THE RETIREMENTS.

THERE'S MORE COMING THAN WHAT'S RETIRED IN THE LAST COUPLE YEARS.

I'LL GET THAT NUMBER FOR YOU WHEN WE WRAP UP.

'CAUSE I ACTUALLY HAVE THE SLIDE UP ON MY, ON MY DECK.

IF THE EPA STUFF WERE TO KICK IN, LIKE SOME EXPECT, THEN IT COULD VERY WELL OUTSTRIP THAT 7,000.

ALL RIGHT.

SO JUST AS WE'RE GETTING NEW REQUESTS FOR GENERATION CONNECTING TO THE SYSTEM, WE'RE ALSO SEEING A LOT OF REQUESTS FOR CONTINUED LARGE LOADS INTERCONNECTING TO THE SYSTEM, AND WE CONTINUE TO TRACK, UM, OR IT BALANCES AROUND 39.

I HEARD FROM THE TEAM WHO LAST WEEK WE'RE, WE'RE BUMPING UP CLOSE TO 40,000 GIGAWATTS OF LARGE LOAD, UM, SINCE JANUARY OF 2022.

WHY JANUARY OF 2022? THAT'S WHEN WE STARTED THIS INTERIM PROCESS FOR GETTING INFORMATION FROM LARGE LOADS CONNECTING TO THE SYSTEM.

UH, THERE HAVE BEEN ALMOST 4,500 MEGAWATTS THAT HAVE BEEN APPROVED TO ENERGIZE.

UM, BUT I WOULD HIGHLIGHT, UM, THAT RIGHT NOW, FROM WHAT WE CAN OBSERVE FROM THE INFORMATION THAT WE DO HAVE ON THESE LARGE LOADS, ONLY ABOUT 2,600 OF THOSE MEGAWATTS HAVE ACTUALLY, UH, BECOME OPERATIONAL.

SO THAT MEANS ABOUT 1900, THEY DO HAVE APPROVED STUDIES, UM, AND COULD BECOME OPERATIONAL IN THE NEAR TERM.

UM, THERE'S CURRENTLY, BY THE END OF NEXT YEAR, AS YOU CAN SEE IN THAT ONE COLUMN, JUST OVER 6,500 THAT HAD BEEN APPROVED TO ENERGIZE, UH, ON TOP OF THOSE NUMBERS WE'VE ALREADY TALKED ABOUT.

THIS IS A NEW SLIDE.

UM, THIS IS THE FIRST TIME WE'VE INCLUDED.

I JUST THOUGHT YOU MIGHT FIND IT INTERESTING TO SEE OF THOSE LOADS THAT WERE APPROVED TO ENERGIZE LAST YEAR, THOSE LARGE LOADS, WHERE ARE THEY SHOWING UP ON THE SYSTEM? UM, THE MAJORITY OF 'EM ARE COMING IN THE, THE WEST ZONE.

UM, THERE IS SOME THAT ARE COMING IN THE SOUTH ZONE.

I DO REPORT ZERO FOR HOUSTON AND NORTH.

THERE MAY BE SOME NUMBERS THERE, BUT WE HAVE TO BE, UM, COGNIZANT OF, UH, NOT SHARING INFORMATION.

SO IF MAYBE IT'S ONLY ONE LOAD, WE DON'T WANNA GIVE THAT INFORMATION AWAY.

SO ONCE WE REACH OUR THRESHOLD FOR REPORTING, THEN WE CAN START SHARING THAT AS WELL.

BUT WE'LL KEEP THIS IN HERE PERIODICALLY SO YOU CAN SEE WHERE WE'RE SEEING THOSE LARGE LOADS INTERCONNECT TO THE SYSTEM.

ALL RIGHT.

UM, THIS IS JUST A NEW SLIDE.

WE'LL TRY TO PUT IT IN HERE A COUPLE TIMES A YEAR.

UH, THE NETWORK OPERATIONS MODELING GROUP, UM, THEY DO A LOT OF WORK, WHAT I KIND OF CALL THE HEARTBEAT, PREPARING THE HEARTBEAT OF THE SYSTEM, WORKING THROUGH THOSE, UM, NETWORK OPERATION MODEL CHANGES SO THAT WE MAKE SURE THAT THE OPERATIONS TEAM, UM, THAT THE PLANNING TEAMS, UM, THAT THE MODELS THAT ARE NEEDED FOR, FOR CRR AUCTIONS, THEY'RE GETTING GOOD INFORMATION AND THEY DO A LOT OF BEHIND THE SCENES WORK.

AND IT'S KIND OF HARD TO QUANTIFY THE AMOUNT OF WORK THAT THEY PUT IN, BUT SOMETIMES THE PICTURE'S WORTH A THOUSAND WORDS.

SO WHAT YOU'LL SEE HERE, THE, THE REPRESENTATION ON THE LEFT IS KIND OF A, A TRANSMISSION LEVEL REPRESENTATION OF THE ERCOT SYSTEM AT THE END OF LAST YEAR.

SO YOU CAN SEE MANY MILES OF TRANSMISSIONS AND CIRCUITS, UH, THAT ARE IN PLACE.

THE SLIDE ON THE RIGHT SHOWS, UM, THE EXISTING LOCATIONS THAT HAD MODEL CHANGES THROUGHOUT 2023.

SO ACROSS THE SYSTEM, A VAST NUMBER OF CHANGES, WHETHER THOSE WERE NEW LINES THAT WERE ADDED, UH, RE CIRCUITS, UM, YOU KNOW, NEW TRANSFORMERS, NEW BREAKERS, THOSE DIFFERENT TYPES OF CHANGES THAT HAD TO BE PROCESSED, UH, TO GET INTO THE NETWORK MODEL SO THAT WE HAVE A GOOD REPRESENTATION FOR OPERATING THE SYSTEM, WHICH TAKES A LARGE VOLUME OF WORK ON THE TEAM.

AND THOSE WERE JUST ON EXISTING.

THESE ARE, AND THIS ONE IS A REPRESENTATION OF WHERE WE'VE SEEN NEW THINGS.

SO NEW LINES BEING BUILT TO THE SYSTEM AND ADDED, UM, AS YOU CAN SEE, YOU KNOW, VOLUMES OF SUBSTATIONS, TRANSFORMERS, AND OVER 400 MILES OF TRANSMISSION LEVEL VOLTAGE, UH, TRANSMISSION BEING ADDED TO THE SYSTEM, UM, TO HELP CONTINUE TO SUPPORT, UM, THE GROWING ECONOMY, UH, THAT WE SEE IN THOSE LARGE LOADS.

UM, AND NEW GENERATION THAT ARE COMING TO THE SYSTEM.

ALWAYS LIKE TO GIVE YOU A QUICK LOOK BACK OF THE, UM, MONTHLY OUTLOOK ON RESOURCE ADEQUACY REPORTS THAT WE'VE PUT OUT.

SO SINCE OUR LAST MEETING, WE'VE PUT OUT TWO NEW REPORTS, UH, THE MARCH AND APRIL.

IT'S JUST AS A REMINDER.

UM, WE USE PROBABILISTIC ANALYSIS TO HELP PROVIDE AN INDICATOR, UM, OF WHERE WE MAY HAVE A RISK OF GOING INTO AN EMERGENCY EVENT ON A SYSTEM.

AS YOU CAN SEE FOR THE MONTHS OF MARCH AND APRIL, A RELATIVELY LOW RISK OF

[01:15:01]

ENTERING INTO THOSE EMERGENCY OPERATIONS ON THE GRID.

UM, FOR COMPARISON, UH, THE, OUR, OUR, OUR RISKIEST HOURS ARE IN THE EVENING HOURS AS WE START TO SEE SOLAR RAMPING DOWN, UM, AND THAT IMPACT ON THE SYSTEM, BUT IT'S ONLY 0.2%, 0.26% AND 2.3%, UH, A CHANCE DURING THOSE NORMAL CONDITIONS.

AND THAT WAS COMPARED, UM, IF YOU RECALL, OVER THE WINTER MONTHS, UM, CLOSER TO THE, THE 10% RANGE, EIGHT AND 10% RANGE.

WE ALSO, UM, DO, UM, ONE WHERE WE, WE KIND OF, UM, LOOK AT MAYBE MORE EXTREME SCENARIOS AND WHAT ARE THE PROBABILITIES OF GOING INTO AN EMERGENCY DURING THOSE EXTREME SCENARIOS, WHAT WE'VE BEEN USING, UM, WE CONTINUE TO THINK THE POSSIBILITY OF LOW WIND, UH, GENERATION ON THE SYSTEM REMAINS, YOU KNOW, ONE OF OUR HIGHEST RISKS FOR MAINTAINING ADEQUATE RESERVES.

AGAIN, YOU'LL SEE, UH, WHAT COMES INTO PLAY IS THOSE EVENING HOURS, BUT EVEN THEN, UH, WE REMAIN UNDER THE 10% LEVEL, WHICH IS KIND OF OUR THRESHOLD FOR, FOR, UM, CONSIDERATION OF, OF BEING SOMETHING THAT WE NEED TO START PAYING CLOSER ATTENTION TO, LIKE WE DID IN THE WINTER MONTHS.

OKAY, QUICK UPDATE, UM, ON ONE OF, UM, SOME OF THE MOST IMPORTANT WORK THAT WE'RE WORKING ON, UH, THIS YEAR.

SO THE RELIABILITY STANDARD, UM, AS YOU REMEMBER, WE'VE BEEN WORKING ON WITH THE COMMISSION TO HELP, UH, THEM IN ESTABLISHING A CRITERIA FOR THE NEXT RELIABILITY STANDARD.

THE WORK THAT WE'VE BEEN FOCUSED ON SINCE OUR LAST FILING AT THE COMMISSION, WHICH WAS BACK IN JANUARY WHERE THEY GAVE US DIRECTIONS ON THE NEXT SET OF RUNS AND RESULTS THEY'D LIKE TO SEE.

WHAT WE'VE REALLY BEEN FOCUSING ON IS GIVING THEM, UM, THE NECESSARY COST IMPACT, UM, THAT SO THEY CAN START TO WEIGH IN ON WHAT ARE THOSE RIGHT RELIABILITY CRITERIA STANDARDS THAT THEY WANT TO USE, UH, FOR FREQUENCY, MAGNITUDE, AND DURATION.

UH, SOME OF THE, THE THINGS YOU'LL SEE IN OUR NEXT RESULTS, WHICH WE'RE TARGETING, UM, FILING EARLY IN MARCH SO THAT THE COMMISSION WILL HAVE IT AVAILABLE, UH, FOR DISCUSSION AT THEIR SECOND MARCH OPEN MEETING IS DETERMINING THE OPTIMAL FREQUENCY, UM, BASED ON INCREMENTAL SOCIETAL COST FOR, UM, IMPROVING RELIABILITY, AND THEN ALSO DETERMINING WHAT'S THAT INCREMENTAL SOCIETAL COST FOR GETTING TO, UM, SETTING THAT MAX DURATION OR MAGNITUDE LEVELS OF WHERE THEY WANT TO BE.

UH, FOR THE RELIABILITY STANDARD, GREAT AMOUNT OF WORK IS GOING INTO THE VALUE OF LOST LOAD, AND WE'VE BEEN, AGAIN, PARTNERING WITH THE COMMISSION.

UM, A, A STUDY, A LITERATURE STUDY REVIEW WAS COMPLETED AT THE END OF DECEMBER, AND WE'RE ALSO WORKING WITH THEM TO DETERMINE WHETHER OR NOT A SURVEY, UH, WE WILL BE ROLLED OUT IN MARCH TO GET INPUT FROM CONSUMERS RELATED TO THE VALUE OF LOSS LOAD.

THEN FINALLY, A COST OF NEW ENTRY.

THIS IS SOMETHING WE'RE WORKING ON WITH BRATTLE AND SERGEANT AND LUNDY.

THEY WERE SELECTED AS OUR CONSULTING TEAM.

THAT PROJECT WORK KICKED OFF IN JANUARY.

UM, KEY STEPS THAT HAVE BEEN COMPLETED, UM, SINCE THAT PROJECT KICKED OFF WAS DETERMINING, UM, THE RELATIVE, UM, COMPARISON, WHAT WE'LL USE FOR COST OF NEW ENTRY.

UM, WE'RE FOCUSING ON AN AERO DERIVATIVE GAS TURBINE AS THAT TYPE.

UM, AND SO THAT'LL BE USED, AND THAT'S BASED OFF OF LOOKING OF THE DIFFERENT, UH, GENERATION RESOURCE TYPES IN THE QUEUE.

SO THAT WILL BE THE FOCUS OF THAT WE'RE TARGETING HAVING, UM, THAT COMPLETED, UH, OUT FOR DISCUSSION, UH, LATER IN TO SECOND QUARTER.

UM, SO THAT FINAL STUDY CAN BE SHARED IN JUNE WITH THE COMMISSION.

THEN LAST BUT NOT LEAST, UM, WANTED TO GIVE YOU AN UPDATE ON THE PERMIAN BASIN RELIABILITY PLAN STUDY.

UM, THIS WAS A KEY DIRECTIVE THAT CAME OUT OF THE LAST LEGISLATIVE SESSION AT HB 50 66.

SO AS WE CONTINUE TO THINK ABOUT HOW DO WE EVOLVE OUR TRANSMISSION PLANNING CRITERIA, UM, YOU KNOW, WE NOW HAVE A SYSTEM WHERE, UM, LOAD IS ABLE TO COME ONTO THE SYSTEM A LOT FASTER.

WE'VE GOT A LOT OF LOAD GROWTH PEOPLE MOVING INTO TEXAS, AND HOW DO WE CONTINUE TO EVOLVE OUR TRANSMISSION PLANNING CRITERIA TO EVOLVE TO BE READY FOR THAT? AND SO THE KEY KIND OF CONCEPT OUT OF HB 50 66 WAS THE ACCEPTANCE OF HOW WE TAKE AND FORECASTED LOAD INTO OUR STUDIES.

HISTORICALLY, WE WOULD FOCUS ON JUST LOAD THAT HAD BEEN SIGNED AND COMMITTED TO, WITH THE TSP, THAT LEGISLATIVE,

[01:20:01]

UM, GUIDANCE PROVIDED US AN OPPORTUNITY TO TAKE IN ADDITIONAL FORECASTED LOAD INTO OUR STUDIES IF THE TDSP BELIEVES IT'S REASONABLE.

AND SO WE'VE BEEN WORKING WITH THEM ON SETTING UP, UM, THE PROPER WAY TO GET THAT INFORMATION IN.

BUT THAT'S A KEY PART.

ANOTHER PART OF HB 50 66, AND WE WERE ALSO DIRECTED BY THE COMMISSION TO DO A, A STUDY FOCUSED SPECIFICALLY ON THE, UH, THE PERMIAN BASIN AREA BECAUSE OF THE LARGE AMOUNT OF GROWTH IN THAT PARTICULAR REGION.

SO SINCE, UM, THE DIRECTION THAT WE GOT FROM THE COMMISSION IN LATE DECEMBER, WE WORKED WITH THE TRANSMISSION AND SER TRANSMISSION SERVICE PROVIDERS TO GET THAT FORECASTED LOAD.

THEY'VE PROVIDED US LOAD THAT CAME FROM A PREVIOUS PERMIAN BASIN OIL AND GAS, UM, LOAD STUDY, AND ADDITIONAL LOAD.

AND SO WHAT I REALLY WANTED TO POINT OUT TO YOU, UM, IF YOU CAN FOCUS IN ON THOSE MIDDLE, MIDDLE COLUMNS.

SO EACH YEAR WE DO AN ANNUAL TRANSMISSION PLAN STUDY.

UH, THE LAST ONE WE COMPLETED, UH, WAS AVAILABLE TO THE PUBLIC IN DECEMBER OF 2023.

THAT OLD STUDY CASE USED OUR, OUR, OUR METHODOLOGY, AND WE WERE LOOKING OUT FOR 2029, AND IT ONLY INCLUDED LOAD THAT HAD CURRENTLY SIGNED WITH THE TRANSMISSION SERVICE PROVIDERS.

AND WE WERE PLANNING A TRANSMISSION SYSTEM FOR JUST OVER 16 OR 16, 5, 7, 7 MEGAWATTS OF LOAD IN THAT REGION.

WORKING WITH THE TSPS IN THE MONTH OF JANUARY, THEY'VE PROVIDED US ADDITIONAL LOAD INFORMATION.

SO AGAIN, ADDITIONAL LOAD THAT WAS SIGNED, THAT'S GROWN COME IN SINCE WE STARTED OUR STUDIES LAST YEAR.

BUT LOAD THAT THE TSPS BELIEVE IS REASONABLE AND IS ACTUALLY COMING TO THIS REGION, THAT NUMBER WENT FROM 16 577 TO WHAT WE'RE STUDYING NOW IS ALMOST 24,000 MEGAWATTS, WHICH IS A 44.5% INCREASE, UM, IN THE AMOUNT OF LOAD THAT WILL NEED TO BE SERVED.

SO IT'S GONNA BE A VERY COMPLEX STUDY.

UH, WE'LL BE WORKING WITH THE TRANSMISSION SERVICE PROVIDERS.

UM, YOU KNOW, ANOTHER COMPARISON POINT JUST TO SHARE WITH YOU, TO GIVE YOU REFERENCE THE, FOR OUR 2023, UH, REGIONAL TRANSMISSION PLAN CASE FOR 29, UM, FOR THE COAST WEATHER ZONE WAS 29.8 GIGAWATTS, AND FOR THE NORTH CENTRAL WEATHER ZONE WAS 32 AND A HALF.

AND, YOU KNOW, IT'S, IT'S HARD TO BELIEVE THAT, UH, FAR WEST TEXAS THAT MUCH LOAD, UM, COMPARED TO, YOU KNOW, THE, THE DALLAS AREA.

UM, THE OTHER DIFFERENCE THAT WE'LL BE WORKING THROUGH AS WE WORK THROUGH THOSE PLANS IS IF YOU THINK ABOUT THOSE REGIONS, THERE'S A LOT OF, UM, CONVENTIONAL GENERATION THAT ARE LOCATED NEAR THOSE LOAD CENTERS.

UM, SO WE'LL BE WORKING THROUGH ASSUMPTIONS BECAUSE THERE, THERE'S A LACK OF THAT CONVENTIONAL GENERATION OUT IN FAR WEST TEXAS.

SO AS WE GO THROUGH THE REMAINDER OF THIS QUARTER, UM, WE'LL BE WORKING ON THE SCOPING, UH, AND STARTING THE WORK, UM, TO MAKE SURE THAT WE ARE ABLE TO MEET OUR TIMELINES, UH, TO GET A PLAN TO THE COMMISSION, I BELIEVE, UH, BY JULY OF 2024.

SO, YOU KNOW, TYPICAL STUDY LIKE THIS, UM, TAKES MANY MONTHS.

SO DEDICATING RESOURCES TO MAKE SURE WE GET A GOOD, RELIABLE PLAN, UH, FOR THOSE CONSUMERS IN THAT REGION.

ANY QUESTIONS? NOPE.

ALL RIGHT.

TURN IT OVER TO THANKS CHRISTINE.

SO NOW DAN WOODFIN WILL PRESENT THE SYSTEM OPERATIONS UPDATE, WHICH IS

[10.2 System Operations Update]

AGENDA ITEM 10.2, WHICH I'VE NOTED TO INCLUDE AN UPDATE ON THE PROGRESS OF DISCUSSIONS REGARDING THE AN ANSWER RELEASE SERVICES AMONG THE IMM ERCOT STAFF AND THE PUCT.

ALRIGHT, SO, UM, AS FAR AS THE, UH, KIND OF THE STANDARD MONTHLY SLIDES, I DON'T HAVE ANYTHING REALLY TO HIGHLIGHT THERE.

DECEMBER WAS A VERY MILD MONTH, AS I POINTED OUT EARLIER.

YOU NEVER KNOW WHAT YOU'RE GONNA GET WITH DECEMBER, AND WE HAD A VERY MILD, UH, TIME, UM, FORECAST PERFORMANCE STILL LOOKS GOOD.

WE HAD A LITTLE BIT OF AN UPTICK IN JANUARY, BUT THAT HAPPENED LAST YEAR TOO BECAUSE JANUARY IS VERY KIND OF TRANSITIONAL MONTH.

UM, FREQUENCY CONTROL IS STILL LOOKING GOOD ON THE C PS ONE MEASURE THAT WE USE FOR THAT, UH, TRANSMISSION LIMIT CONTROL.

UH, WE HAVEN'T HAD ANY, UH, IRL, UH, EXCEEDANCES SINCE, UH, MARCH OF LAST YEAR, SO, SO NO ISSUES THERE.

UM, FROM AN ANCILLARY SERVICE PERSPECTIVE, UM, REGULATION DEPLOYMENTS WORKED WELL.

UM, NOTHING REALLY OUT OF THE ORDINARY THERE.

NONS SPEND, WE HAD, UH, THREE DIFFERENT DEPLOYMENTS, UM, AND EVERYTHING WORKED WELL DURING THOSE DEPLOYMENTS.

[01:25:02]

ECRS, UH, WE HAD, UH, FIVE DEPLOYMENTS SINCE NOVEMBER.

AND, UH, FOUR OF THOSE WERE DUE TO FREQUENCY, UH, WHERE WE HAD A UNIT TRIP AND THEN WE HAD TO REPLACE THE RESERVES USING ECRS.

ONE WAS ON, UH, JANUARY 16TH DURING, UH, WINTER STORM HEATHER, AND WE'LL TALK MORE ABOUT THAT IN A MINUTE.

UM, BUT EVERYTHING WORKED WELL THERE.

AND RESPONSIVE RESERVE NORMALLY JUST GETS, UH, RELEASED BY OUR, OUR SYSTEMS, BUT SOMETIMES IF WE GET INTO SCARCITY CONDITIONS, WE RELEASE IT FOR, UH, MANUALLY.

WE DIDN'T HAVE ANY MANUAL RELEASES, UH, THIS, THIS TIME DURING THAT NOVEMBER TO JANUARY PERIOD.

SO THE SPECIFIC THINGS I WANTED TO HIGHLIGHT THIS AFTERNOON, UH, THREE THINGS, ONE'S ANCILLARY SERVICE INITIATIVES IS THE SECOND IS THE UPCOMING SOLAR ECLIPSE.

AND THEN, UH, KIND OF A REVIEW OF OF WINTER STORM HEATHER.

SO THERE'S, THERE'S BEEN A LOT, THERE ARE A LOT OF THINGS GOING ON, UH, THAT, UH, RELATED TO ANCILLARY SERVICES.

AND WHAT WE HAVE RECOGNIZED IS THAT PEOPLE ARE KIND OF TALKING ABOUT THEM IN A DIFFERENT WAY AND THEY'RE, THEY'RE GETTING CONFUSED BETWEEN THEM.

AND SO WE PUT TOGETHER THIS SLIDE TO, TO KIND OF DESCRIBE THE DIFFERENT EFFORTS.

SO THE FIRST EFFORT IS, IS THAT PROMISE THAT WE MADE WHEN WE WERE WORKING ON THE, THE, UH, APPROVAL OF THE 2024 ANCILLARY SERVICE METHODOLOGY THAT WE WOULD REVISIT, UH, ECRS BEFORE SUMMER.

AND SO THAT IS WHEN REFERRED TO A WHILE AGO, WE'VE BEEN WORKING WITH THE IMM TO TALK ABOUT PRIMARILY, UH, HOW WE WOULD RELEASE, UM, UM, ECRS EARLIER ON THOSE DAYS THAT WE WOULD BE RELEASING IT ANYWAY, UM, OUR INTENT IS TO GET A PROPOSAL OUT ABOUT THAT, UM, OVER THE NEXT, THEN GET THAT FINALIZED BY APRIL.

WE HAVE A WORKSHOP SET UP IN THE NEXT FEW WEEKS ON, UH, ECRS AND, UH, TO TALK THROUGH THAT WITH STAKEHOLDERS.

AND THE INTENT IS TO GET IT WHERE WE WOULD HAVE AN UPDATE TO THAT BY, BY SUMMER.

UM, SKIPPING TO THE THIRD THING, THE, UH, WE'RE WORKING ON A, THE PC HAS A REQUIREMENT TO DO AN ANCILLARY SERVICE REVIEW BY, UM, FOR THE LEGISLATURE FOR THE NEXT LEGISLATIVE SESSION.

AND SO PC ERCOT AND THE IMM ARE WORKING TOGETHER ON A PAPER.

THE PC, UH, APPROVED THE, UM, THE OUTLINE OF THAT, I THINK, UH, FORGOTTEN NOW IF IT, I GUESS IT WAS TWO WEEKS AGO.

AND, UM, SO WE, WE WILL BE WORKING WITH THE IMM AND PEC STAFF ON THAT.

THE INTENT IS TO GET THAT DONE BY SEPTEMBER.

IT REALLY, THE, THE, THE IMPLEMENTATION OF THAT IS MORE AS A LEGISLATIVE, UM, UH, IS INFORM TO INFORM THE, THE LEGISLATURE FOR THINGS THAT THEY MAY WANT TO TAKE ACTION ON, UH, IN THE NEXT SESSION.

AND SO REALLY THAT HAS KIND OF A LONGER TERM, UH, UM, WHERE IT WILL HAVE AN IMPACT.

UM, AND SO THEN THE, THE MIDDLE KIND OF SWIM LANE IS, IS REALLY WHAT WE'RE GONNA BE DOING FOR 2025.

SO WE'LL BE DOING AN UPDATE AS WE DO EVERY YEAR FOR THE 2025, UH, METHODOLOGY ON ANCILLARY SERVICES.

UM, PART OF THAT IS THAT WE WILL BE INCLUDING THE PUC IN THE REVIEW, IN THE APPROVAL PROCESS, THEY WILL BE THE ULTIMATE, UH, APPROVAL FOR THE ANCILLARY SERVICE METHODOLOGY, WHEREAS IN YEARS PAST THAT, UH, KIND OF FINAL APPROVAL HAS BEEN WITH THE ERCOT BOARD.

UM, AND SO WE HAVE TO GET THAT UPDATE TO THE METHODOLOGY DONE EARLIER IN THE YEAR IN ORDER TO HAVE THE TIME FOR THE PEC TO APPROVE IT SO THAT IT CAN GO IN PLACE IN JANUARY.

UM, AND SO THE TIMING OF IT, AS YOU LAY IT OUT, OBVIOUSLY THE, THE WORK THAT WE WILL BE DOING, THINKING ABOUT THE LONGER TERM STUDY CAN INFORM WHAT'S GOING ON FOR 2025 TO THE EXTENT THAT THERE ARE THING CHANGES THAT ARE NEEDED AND ARE WITHIN KIND OF THE, THE ANNUAL SCOPE OF THAT, UH, CHANGING ANNUAL METHODOLOGY.

IT WOULDN'T BE ANY MAJOR CHANGES TO THE KIND OF WHAT THE PRODUCTS ARE OR THOSE KIND OF THINGS, BUT THAT IF THERE THINGS ON LIKE THE RELEASE OF AS OR SOMETHING LIKE THAT, THAT THAT CAN BE TAKEN INTO ACCOUNT IN THAT, UH, MIDDLE SWIM LANE WORK.

SO ANY QUESTIONS ON THAT ONE, DAN? HI.

THE CHANGES TO THE METHODOLOGY APPROVAL PROCESS IS, ARE THOSE BEING ENCAPSULATED LIKE IN AN NPRR, THE APPROVAL PROCESS? YEAH, THEY WILL.

THEY'LL HAVE TO BE THAT, UH, IS IN THE, THE, I DON'T THINK WE FILED IT YET, BUT IT WILL HAVE TO BE 'CAUSE THAT'S IN THE, THE, UH, THERE'S LANGUAGE ABOUT THAT IN THE PROTOCOLS.

OKAY, THANK YOU.

[01:30:02]

OKAY.

OKAY.

UM, THERE'S ANOTHER SOLAR ECLIPSE COMING.

UM, WE HAD ONE, UH, LAST YEAR.

THERE'S ANOTHER ONE COMING ON APRIL 8TH.

AND IT IS A, A, A TOTAL ECLIPSE.

UM, WE'RE ALREADY DOING KIND OF THE SAME PROCESSES THAT WE DID, UH, IN PREPARATION FOR THE ONE IN 2023, UH, BECAUSE OF THIS IS A TOTAL ECLIPSE.

YOU CAN SEE IN KIND OF THE BOTTOM RIGHT HAND SIDE THERE.

IT ACTUALLY, IF, IF IT WAS A CLEAR SKY DAY, IF THERE WAS NO CONGESTION, IF THE, THE SOLAR WAS AT FULL OUTPUT, UH, IT WOULD HAVE A, UM, PRETTY SIGNIFICANT IMPACT ON THE AMOUNT OF SOLAR OUTPUT AND, UM, DOWN RAMP.

NOW, WHAT WE SAW, UH, DURING THE, THE ONE LAST YEAR IS THAT WE DID LOTS OF, UH, MARKET NOTICES AND MARKET PARTICIPANTS WERE REALLY PREPARED FOR IT.

THERE WAS A LOT OF GENERATION ONLINE.

WE HAD PLENTY OF RAMPING CAPABILITY.

AND NOT ONLY THAT, THERE WAS ENOUGH GENERATION ONLINE.

WE WERE ACTUALLY CURTAILING, UH, SOLAR THROUGH THE MARKET AHEAD OF TIME.

NOT, NOT THROUGH MANUAL ACTION, BUT THAT WAS JUST THE OUTCOME OF THE MARKET THAT IT WAS, IT WAS BEING BACKED OFF, UH, OF ITS OUTPUT.

AND SO IT REALLY DIDN'T GO DOWN ANYWHERE NEAR AS FAR AS WHAT WE, UH, SAW AND RAINS BE SEEN AT THIS POINT.

UH, WHAT THAT WILL HAPPEN.

BUT WE'RE MAKING SURE THAT WE'RE PUTTING THAT, UH, SOLAR OUR VENDORS TO PROVIDE SOLAR FORECAST OR PUTTING THAT INTO THE MODELS SO THAT THE MARKET PARTICIPANTS WILL, UH, KNOW WELL IN ADVANCE, UH, WHAT THE, WHAT WE'RE EXPECTING.

SO WE'RE, WE'RE GETTING PREPARED, I GUESS IS THE MESSAGE.

IT'S APRIL RAINY TIME OF YEAR.

IT'S TEXAS.

SO SHE ASK IF IT'S, IF IT'S A RAINY TIME OF YEAR IN APRIL, AND, AND IT'S, IT'S HARD TO TELL IT, IT COULD BE A SUNNY DAY.

IT COULD BE A CLOUDY DAY.

YEAH.

WE REALLY DON'T KNOW TEXAS.

YEAH.

SO WINTER STORM, HEATHER, UH, SO HEATHER, WHICH, WHICH OCCURRED, UM, UM, IN JANUARY WAS REALLY THE 15TH, 16TH, 17TH OR SO OF JANUARY WAS, UM, WE'VE GONE BACK AND LOOKED AT KIND OF HOW LONG WAS IT BELOW FREEZING AND HOW SEVERE WERE THE COLDEST TEMPERATURES DURING THAT STORM? AND FOR THE LAST 15 YEARS, BASIC, UM, IT WAS THE KIND OF THE, THE SECOND LONGEST, BUT IT DID NOT GET AS COLD.

IT WAS A COUPLE OF DEGREES WARMER THAN, UH, ELLIOT THAT HAPPENED IN DECEMBER OF, OF, OF LAST YEAR, OF, OF 22.

AND SO, UM, THAT KIND OF IS HOW IT RANKS.

BUT IT WAS DEFINITELY ONE OF THE, THE MOST SEVERE ONES DURING THIS TIME PERIOD.

AND OF COURSE, YOU CAN SEE YURI IS WAY OUT ON THE LONG, MUCH LONGER AND MUCH COLDER, UH, THAN WHAT WE SAW WITH HEATHER.

OKAY.

UM, WE SAW A PEAK DEMAND DURING HEATHER OF, OF ABOUT A LITTLE OVER 78,000 MEGAWATTS, UM, THAT COMPARES TO ELLIOT, WHICH WAS ONLY ABOUT 74,000.

SO BASICALLY 4,000 MEGAWATTS HIGHER DEMAND SINCE BASICALLY CHRISTMAS OF THE, THE PREVIOUS YEAR.

SO ONE WHEN ONE YEAR, UM, UM, IF YOU FOCUS IN ON THE KIND OF THE THREE SETS OF, OF BARS ON, ON THE, UH, RIGHT THERE, THAT'S KIND OF THE, THE, AT THE, UH, PEAK DEMAND TIME, WHAT WAS THE WIND SOLAR, UM, HOW MANY OUTAGE THERMAL UNIT OUTAGES DID WE HAVE? AND YOU CAN SEE THAT, THAT, UH, THE TIGHTEST TIME WAS REALLY ON THE MORNING OF THE 16TH BECAUSE WE HAD SIGNIFICANTLY LESS, UH, OF THE PURPLE BAR OR, UM, THE, SORRY, THE, THE WIND, THE, THE BLUE BAR THERE IS THE WIND.

AND SO ON THE MORNING OF THE 15TH, WE HAD, OR THE EVENING OF THE 15TH, WE HAD 21,000 MEGAWATTS.

THE MORNING OF THE 17TH, WE HAD 18 GIGAWATTS, AND WE ONLY HAD NINE GIGAWATTS.

SO THAT WAS KIND OF THE BIGGEST DIFFERENCE BETWEEN THOSE DAYS AND WHY THE MORNING OF THE 16TH WOUND UP BEING THE TIGHTEST TIME.

UM, WE'VE, UM, LOOKED AT THE DIFFERENCE BETWEEN THOSE TWO STORMS OVER THE COURSE OF THE YEAR BY CUSTOMER CLASS.

AND WHAT WE SEE IS THAT COMPARING WHAT, WHAT THE ACTUAL, UH, LOADS WERE, RESIDENTIAL LOAD WAS A LITTLE LESS, UH, IN HEATHER THAN IT HAD BEEN IN ELLIOT.

THE COMMERCIAL LOAD WAS LESS THAN WHAT WE SAW, UH, DURING THE PREVIOUS CHRISTMAS STORM.

THE INDUSTRIAL LOAD WAS SIGNIFICANTLY HIGHER.

UM, AND THEN THE N-O-E-N-O-I-E,

[01:35:01]

THE NON OPT-IN ENTITIES, UH, LOAD THAT DON'T HAVE RETAIL COMPETITION, BECAUSE SOME OF THOSE ENTITIES WAS A LITTLE HIGHER.

UM, BUT THE BIG, THE BIG DIFFERENCE BETWEEN THEM WAS, WAS IN THE INDUSTRIAL SECTOR, EVEN THOUGH, UH, AND, AND, AND THIS OBVIOUSLY PLAYS INTO THIS, THAT IT WAS A COUPLE OF DEGREES ON A LOAD WEIGHTED AVERAGE TEMPERATURE BASIS ACROSS ERCOT.

UH, IT WAS A LITTLE, A COUPLE OF DEGREES WARMER DURING, DURING HEATHER.

SO THAT MAY TAKE INTO ACCOUNT THAT MAY EXPLAIN, ESPECIALLY FOR THE RESIDENTIAL COMMERCIAL THAT ARE MORE DRIVEN BY, BY TEMPERATURE, UH, WHY, WHY THEY WERE A LITTLE LOWER.

UM, THERE'S BEEN A LOT OF DISCUSSION ABOUT LOAD FORECASTING, UH, DURING HEATHER, UM, AND OUR FORECAST, THIS, THIS SHOW'S KIND OF FOR THE DAYS GOING INTO AN OPERATING DAY.

THE 15TH IS IN THE UPPER, UH, LEFT, AND THEN GOING ACROSS THE 16TH DOWN TO THE 17TH, AND THEN WHAT THE ACTUAL PEAK DEMANDS WERE THERE.

AND YOU CAN SEE, UH, ESPECIALLY ON THE, ON, ON THE, THE, THE 15TH IN THE EVENING, WE'RE PRETTY CLOSE TO BEING RIGHT ON THE FORECAST.

WE'RE SIGNIFICANTLY OVER FORECASTING ON, ON THE 16TH AND THE 17TH.

AND I JUST WANNA POINT OUT THAT WHEN WE FORECAST, ESPECIALLY WHEN WE'RE TRYING TO DECIDE, OKAY, DO WE NEED TO ASK FOR CONSERVATION? DO, HOW DO WE SIGNAL TO THE MARKET YOU NEED TO BE READY TO RESPOND? AND THOSE KIND OF THINGS WE'RE FORECASTING THE GROSS DEMAND, NOT THE, WE'RE NOT FORECASTING THE IMPACTS OF ANY DEMAND RESPONSE IN THO THOSE FORECASTS.

AND WE'VE GONE BACK AND LOOKED AT KIND OF, BECAUSE WE DID ASK FOR CONSERVATION ON A COUPLE OF THOSE DAYS, HOW MUCH DEMAND RESPONSE DID WE GET? AND THIS IS KIND OF THE AGGREGATE OF, UM, ANYTHING THAT WE MIGHT CALL DEMAND RESPONSE.

SO IT COULD BE LARGE FLEXIBLE LOADS THAT TURNED OFF.

IT COULD BE, UH, CONSERVATION PRO, THE JUST CONSERVATION BY, UH, CONSUMERS.

IT COULD BE PROGRAMS, DEMAND RESPONSE PROGRAMS THAT EITHER THE RETAILERS OR THE, THE NON-OP ENTITIES, UH, HAVE IN PLACE.

AND FOCUSING IN ON THE 16TH, WHICH WAS THE HIGHEST, UH, RESPONSE THAT WE SAW, WE GOT ALMOST SEVEN GIGAWATTS OF DEMAND RESPONSE.

WELL, IF, IF YOU ADD THAT BACK TO THE, UH, THE LOAD ON, UH, THE MORNING OF THE 16TH THERE, YOU CAN SEE THAT WE WERE PRETTY MUCH RIGHT ON THE GROSS FORECAST.

IF WE HADN'T HAD THAT DEMAND RESPONSE, WE MIGHT HAVE SEEN THAT KIND OF MORE EXTREME, UH, DEMAND.

BUT BECAUSE WE ASKED FOR CONSERVATION, BECAUSE THE MARKET PARTICIPANTS RESPONDED, BECAUSE CONSUMERS RESPONDED, WE DID SEE A SIGNIFICANTLY, UM, LOWER DEMAND.

AND YOU CAN SEE THAT THAT WAS SPREAD ACROSS THE CUSTOMER CLASSES.

WE GOT 500 LITTLE OVER 500 MEGAWATTS FROM THE RESIDENTIALS.

UH, OUR ESTIMATES ARE, ARE, I GUESS I'M LOOKING AT THE BLUE BARS.

SO THAT'S THE MORNING, UH, WE GOT, UM, UH, ALMOST 1500 MEGAWATTS FROM COMMERCIAL AND THEN, YOU KNOW, ALMOST FOUR GIGAWATTS FROM THE INDUSTRIAL SECTOR AND SOME FROM, UM, THE, UM, A LITTLE OVER A THOUSAND FROM THE NON OPTIN ENTITY.

SO YOU CAN SEE THAT IT WAS SPREAD ACROSS, UH, MULTIPLE SECTORS FROM A, UH, THERMAL UNIT OUTAGE PERSPECTIVE.

SO THIS IS NOT THE RENEWABLES, THIS IS THE, THE CONVENTIONAL GENERATION.

UM, THESE THREE GRAPHS SHOW KIND OF THE AGGREGATE OUTAGES THAT OCCURRED AF AFTER A POINT IN TIME FOR, UH, YURI, FOR ELLIOT, AND FOR HEATHER.

AND ONE OF THE THINGS YOU NOTICE THERE IS THAT YOU CAN SEE THAT, UH, YOU KNOW, WHEN THE COLD FRONT BLEW THROUGH URI, OUTAGES WENT KIND OF THROUGH THE ROOF.

UH, WE ALSO HAD, UH, A SIGNIFICANT INCREASE IN THE, UH, DURING ELLIOT.

YOU DON'T SEE THE SAME INCREASE DURING THIS STORM.

UM, IT, THERE DOES GO UP A LITTLE BIT AS WE HAD HIGH LOADS FOR A LONG PERIOD OF TIME AND A LOT OF GENERATION RUNNING, BUT YOU DON'T SEE THAT SIGNIFICANT INCREASE, UH, LIKE WHAT WE SAW IN THE, IN THE PREVIOUS WINTER STORMS. AND SO THAT, UM, SOME EXTENT EXPLAINS, IS EXPLAINED BY THE FACT THAT WE'VE GOT THE WEATHERIZATION PROGRAM IN PLACE AND THE RULES WHERE THE, UM, HOW THAT'S WORKED.

UM, THIS GRAPH SHOWS THE, THE KIND OF THE INTERACTION BETWEEN BATTERIES OVER THE COURSE OF THAT, UH, UM, SEVERAL DAYS THERE AND, UH, AND SOLAR.

AND YOU CAN SEE THAT BASICALLY THE BATTERIES WERE, WERE DISCHARGING IN THE MORNINGS, UH, AND THE EVENINGS.

AND THEN THEY WERE ABLE TO CHARGE UP DURING THE DAY WHEN WE HAD A LOT OF, UH, SOLAR CAPACITY.

AND THAT'S REALLY KIND OF THE MESSAGE IS

[01:40:01]

THOSE TWO, EVEN THOUGH THE BATTERIES ARE MUCH SMALLER AMOUNT THAN WHAT WE HAVE IN, IN SOLAR, YOU CAN SEE THAT THOSE TWO ARE KIND OF PLAYING OFF EACH OTHER.

AND WE THOUGHT THAT WAS AN INTERESTING KIND OF HOW, HOW THIS IS EVOLVING EVEN DURING THE WINTER.

AND FINALLY, THE, THE LARGE FLEXIBLE LOADS WE SAW, UH, ON THE, ON MONDAY MORNING AND THEN ON, UH, TUESDAY MORNING WHEN WE HAD THE, THE KIND OF THE HIGHEST LOADS DURING THAT PERIOD, THE, UH, WE SAW THE LARGE FLEXIBLE LOADS SIGNIFICANTLY LOWER THEIR, THEIR CONSUMPTION, ALTHOUGH IT WASN'T CONSISTENT BETWEEN, BETWEEN THE DAYS.

UM, AND SO, UM, THEY DO SEEM TO BE RESPONDING, UH, IN TI IN TIMES OF HIGH SYSTEM-WIDE PRICES OR WHEN WE, WE APPEAL FOR CONSERVATION, WHATEVER'S DRIVING THAT, WE ARE SEEING THE RESPONSE.

AND I THINK THAT'S ALL I'VE GOT.

HAPPY TO ANSWER QUESTIONS.

ALRIGHT, ANY QUESTIONS FOR DAN HERE? ALRIGHT, THANK YOU DAN.

SO NEXT WE'LL

[10.3 Commercial Markets Update]

HAVE KENNAN GELMAN PRESENT ITEM 10.3 COMMERCIAL MARKETS UPDATE, WHICH I BELIEVE INCLUDES AN UPDATE ON POTENTIAL PRICE CORRECTIONS KENAN.

YES.

THANK YOU.

UM, SO THERE ARE NO VOTING ITEMS, UM, AND WE'VE KIND OF WALKED THROUGH THE A DER ITEM.

UH, I DO HAVE, UH, A ITEM ON SOME PRICE CORRECTIONS AND, UM, ALSO SOME REVIEW OF THE MARKET, UH, PERFORMANCE DURING THE WINTER STORM.

UM, I AM HAPPY TO ANSWER QUESTIONS, UH, AROUND KIND OF THE PRICE FORMATION OF ECRS, BUT I KNEW THAT WAS ALREADY IN THE I'S PROPOSAL, OR I'M SORRY, PROPOSAL IS NOT THE RIGHT WORD, BUT PRESENTATION.

SO I DID NOT KIND OF DUPLICATE THAT, BUT HAPPY TO TAKE QUESTIONS ON THAT AS WELL.

UM, SO, UM, AS AS I WALK THROUGH, UH, KIND OF THE, THE WINTER STORM, UH, I THINK THE KEY OBSERVATIONS I WOULD WANNA SHARE WITH, UH, UH, THE, THE GROUP IS THAT, UM, OVERALL MARKET OUTCOMES SUPPORTED THE RELIABILITY NEEDS, UH, OF THE SYSTEM, UM, BOTH DAY AHEAD.

MARKET PRICES AND REALTIME PRICES WERE ELEVATED DURING THE MORNING AND PEAK HOURS.

UM, FOR THE DAM PRICES, UM, THERE WAS A PARTICULARLY PRONOUNCED, UH, UH, INCREASE THE HIGHEST DAM HOURLY, UH, PRICE SETTLEMENT POINT PRICE THAT WE SAW WAS AT HOUR ENDING EIGHT FOR OPERATING DAY ONE 16, WHICH WAS, UH, AT $1,869 A A MEGAWATT HOUR.

THE HIGHEST REAL TIME PRICE, UM, WAS ACTUALLY AT, UH, INTERVAL ENDING AT, UH, 1815.

SO IN THE EVENING, UH, SAME, SAME DAY, AND A PRICE OF $1,175.

UM, THE, UH, RESERVES THAT WE HAD, UM, WERE ACTUALLY RELATIVELY HIGH DURING THE ENTIRE EVENT, UM, WITH THE LOWEST VALUE BEING AROUND, UH, 5,000, UH, 414 MEGAWATTS.

UM, SO IF YOU THINK ABOUT KIND OF WHAT THE ORDC CURVES LOOKS LIKE, THAT'S NOT GONNA REALLY AT THOSE LEVEL OF RESERVES, IT'S NOT GONNA REALLY DRIVE, UM, THAT MUCH ON THE PRICE FORMATION SIDE, GIVEN THE WAY IT'S DESIGNED AND, AND, AND SET UP.

UM, THE ORDC FLOORS IMPLEMENTED LAST FALL DID, UH, IMPACT SIX SC INTERVALS.

SO I DID WANNA UPDATE THE BOARD ON, ON THAT SINCE THAT WAS BOTH SOMETHING THAT THE COMMISSION RECOMMENDED AS A INTERIM SOLUTION AND, UM, THAT Y'ALL HAD VOTED ON.

UH, SO I'LL SPEND A LITTLE BIT MORE TIME ON THAT.

UM, AND THEN LAST, UH, THE LAST FEW THINGS I WANT TO TALK ABOUT IS FIRM FUEL SERVICE.

UM, WE DEPLOYED 10 RESOURCES, A TOTAL OF 915, UH, MEGAWATTS.

UM, WE HAD TWO RESOURCES RECEIVE RUCK RELIABILITY UNIT COMMITMENT INSTRUCTIONS, UM, AND, UH, IT WAS, UH, MORE A MATTER OF TRYING TO KEEP THEM ONLINE, BUT THEIR, UH, IMPACT ON THE MARKET WAS, UH, FAIRLY SMALL AS THEY WERE.

UH, ALSO SMALL, SMALLER RESOURCES.

UM, 400 MEGAWATTS OF ECRS

[01:45:01]

OR THE ERCOT CONTINGENCY RESERVE SERVICE WAS RELEASED TO SCED, UM, ON THE 16TH BETWEEN, UH, UH, THE INTER BETWEEN 1825 AND 1907.

AND THAT WAS DUE TO, UH, CAPACITY INSUFFICIENCY FOR PROJECTED NET LOAD.

SO THAT'S, THAT'S, UM, KIND OF AN INTRODUCTION TO THE SLIDES THAT I'M GONNA, UH, BRING FORTH, UH, TO FOLLOW UP.

UM, BUT THAT, THAT'S KIND OF A SUMMARY OF WHAT WE SAW.

SO, UM, THE, THE FIRST THING THAT I WANTED TO SHARE IS, UM, THERE WERE ELEVATED PRICES BOTH IN THE DAY AHEAD AND, UM, IN, IN REAL TIME.

SO THIS TOP GRAPH SHOWS THE DAY AHEAD INFORMATION, AND THE BOTTOM IS THE, THE REAL TIME INFORMATION, UM, THE DAY AHEAD MARKET PRICE, UH, GENERALLY PRICED OUT HIGHER THAN REAL TIME DID THIS TO ME.

UM, AND, AND TO THE TEAM.

MAKES SENSE, UH, DAY AHEAD, THE LOAD FORECAST, ESPECIALLY WHEN FRONTS ARE MOVING THROUGH AND, AND YOU DON'T KNOW EXACTLY WHAT THE LOAD FORECAST IS GONNA BE LIKE, TENDS TO, UM, DRIVE, UM, UH, A DESIRE TO CLEAR WITH A RISK PREMIUM INVOLVED AND LOAD WOULD BE WILLING TO PAY THAT RISK PREMIUM GENERATION ONCE, UH, ONCE THAT ADDITIONAL PRICING TO PROTECT ITSELF IN CASE IT CAN'T PERFORM IN REAL TIME.

SO, UM, BY AND LARGE, UM, THOSE THINGS MADE SENSE, BUT, UH, WE ALWAYS LIKE TO LOOK AT HOW DAY AHEAD IN REAL TIME ARE CONVERGING AND MAKING SURE SOME OF THE, THIS ACTIVITY DOES MAKE SENSE.

BUT, UM, UM, I, I THINK, UH, THE LOAD FORECAST AND THE, THE UNCERTAINTY AROUND THE LOAD FORECAST DAY AHEAD, UH, ALSO CONTRIBUTED TO, TO SOME OF THIS ACTIVITY.

UM, CANON, YES, TURBINE FLEXING.

CAN I, WITH RESPECT TO THE DAY AHEAD PRICES, CAN YOU TALK A LITTLE BIT MORE ABOUT HOW ERCOT LOW FORECAST IMPACTED THIS PRICES? UM, BECAUSE I THINK THERE WAS SOME, YOU KNOW, PRETTY LARGE DISCREPANCIES BETWEEN WHAT THE LOADS THAT THE LOW FORECAST THAT ERCOT WAS PROJECTING VERSUS WHAT ACTUALLY MATERIALIZED.

SO I, I WOULD FOCUS MOSTLY ON THE UNCERTAINTY, UM, BOTH AS A RESOURCE AND A LOAD, UM, AS YOU'RE LOOKING AT VARIOUS FORECASTS THAT INTRODUCES SOME UNCERTAINTY ABOUT WHAT'S GOING TO HAPPEN, BUT BY AND LARGE, I WOULD WANNA, UH, MANAGE THE RISK OF THAT ON UNCERTAINTY AND BE WILLING TO PAY A PREMIUM.

UM, AND AS A GENERATOR, I WOULD, YOU KNOW, ONLY BE WILLING TO SELL AT A PREMIUM BECAUSE REAL-TIME PRICES COULD END UP MUCH HIGHER.

AND THEN I'VE TAKEN ON ALL, ALL THAT RISK, SO I DON'T WANNA SELL FORWARD AND NOT KIND OF COVER THE RISKS THAT MAY MATERIALIZE AND AS LOAD, I'M WILLING TO, UM, YOU KNOW, PAY FOR COVERAGE OF THAT RISK.

SO AS THE BUYER WILLING BUYERS AND SELLERS, UH, MET IN THE MARKET, THE THESE WERE, THEY WERE WILLING TO SETTLE ON A HIGHER PRICE, THEN THEY MIGHT WITH MORE CERTAINTY GOING INTO REAL TIME.

OKAY.

AND, AND I ASK BECAUSE I'VE HAD A VARIETY OF STAKEHOLDERS, UM, RAISE CONCERNS ABOUT THE HUGE DISCREPANCY BETWEEN THE PROJECTED VERSUS ACTUAL LOAD FORECAST, UM, THAT ERCOT HAD DURING THIS WINTER STORM.

AND, AND, YOU KNOW, HIGHLIGHTING, YOU KNOW, SOMETIMES THERE WAS LIKE 10,000 TO 6,000, 7,000 DIFFERENCE BETWEEN ACTUAL OR PROJECTED VERSUS ACTUAL.

AND, AND OBVIOUSLY THAT HAS SOME IMPACT ON DAY AHEAD PRICING.

SO HOW DO WE GET TO A PLACE WHERE THE LOW FORECAST, UM, WE UNDERSTAND A LITTLE BIT MORE ON, ON, OBVIOUSLY WE WANT TO BE COGNIZANT OF THE RISKS THAT HIGHER LOW CAN HAVE ON THE SYSTEM, BUT REACHING A BALANCE BETWEEN WHAT THE LOW FORECASTS ARE SHOWING, UM, AND THE IMPACT ON DAY AHEAD PRICING, BECAUSE THERE SEEMS TO BE A CONNECTION THERE THAT I'M IDENTIFYING, AND, UM, I DON'T WANT TO JUST MOVE FORWARD WITHOUT HIGHLIGHTING THAT I, YOU KNOW, THAT THE ISSUE WITH THE LOAD FORECAST AND, AND THE LARGE DIFFERENCES BETWEEN ACTUAL VERSUS PROJECTED.

UH, CERTAINLY.

SO, UM, I, I, I DO WANNA BE KINDA TELL BOTH SIDES OF THE, THE STORY, RIGHT? SO AS WE, AS WE'RE FORECASTING, UM, UH,

[01:50:01]

THERE IS ALSO, UH, A CHANCE THAT YOU WOULD, UH, UNDER FORECAST AND THAT ACTUALLY HAS POTENTIALLY EVEN EVEN MORE ADVERSE OR EQUALLY ADVERSE, UH, CIRCUMSTANCES.

UM, SO, UH, I MEAN, TO ME, I, I'D GET BACK AND, UH, REEMPHASIZE THAT KIND OF UNCERTAINTY STANDPOINT, BUT I WOULD, UM, I WOULD REALLY BE CAREFUL ABOUT, UM, WANTING, I MEAN, YOU ALWAYS WANT TO IMPROVE THE FORECAST, BUT AS A FRONT IS MOVING THROUGH AND YOU'RE NOT SURE HOW FAR IT'S GOING TO GO OR WHEN IT'S GOING TO COVER CERTAIN POPULATION, UH, CENTERS, YOU REALLY WANT TO BE, UM, UH, YOU KNOW, UH, YOU, YOU I GUESS HAVE TO ACCEPT SOME LEVEL OF, UH, OF VARIANCE OR, UH, UH, DIFFERENCES BETWEEN VARIOUS LOAD FORECASTS.

SO, UM, CERTAINLY, UH, YOU KNOW, WE, WE LOOK AT THIS, WE, WE, WE HAVE METRICS TO TRACK IT, BUT, UM, JUST AS EASILY, UM, ON A DIFFERENT, UH, IN A DIFFERENT STORM, YOU MIGHT HAVE, UH, UNDER FORECAST, UH, THE, THE LOAD AS WELL.

SO, UM, I, I BELIEVE, UH, PARTIES, IF THEY HAD PERFECT KNOWLEDGE, UH, ABOUT WHAT WAS GONNA HAPPEN IN REAL TIME, WOULD'VE BOUGHT AND SOLD AT DIFFERENT PRICES, WHICH I THINK IS ONE OF YOUR KEY POINTS.

UM, BUT, UH, AGAIN, IT, IT IS A FORECAST WITH, WITH VARIANTS AND THESE FRONTS ARE SOME OF THE KIND OF HIGHEST VARIANTS INTRODUCING EVENTS THAT, THAT WE EXPERIENCE.

SO, UH, I MEAN, I, I WOULD SAY THE TEAM, UH, AND, UH, DAN, IF YOU WANNA WEIGH IN, THE TEAM IS GOING BACK AND LOOKING AT THAT AND WE'RE ALWAYS, UH, CHALLENGING OURSELVES WITH THE METRICS ON FORECASTING, AND WE'LL CONTINUE TO DO SO AND, AND, UM, AND LOOK AT IMPROVING, UH, OUR LOAD FORECAST.

YEAH.

AND LIKE I POINTED OUT WHILE AGO THAT, THAT ONCE YOU ADD BACK ALL THE DIFFERENT TYPES OF DEMAND RESPONSE AND, AND THE FACT THAT SCHOOLS AFTER OUR DAY AHEAD FORECAST CAME OUT, THEY DECIDED TO DELAY THE START OF SCHOOLS AND SOME MANY GOT CANCELED.

AND THEN THAT HAS LIKE A DIRECT IMPACT ON THE LOADS OF THE SCHOOLS, BUT IT ALSO HAS IMPACT ON, ON CONSUMERS NOT GETTING UP AS EARLY AND THOSE KIND OF THINGS IN A LOT OF CASES.

AND SO IT HAS IMPACT THERE.

THERE ARE A LOT OF THINGS LIKE THAT.

ONCE WE KIND OF ESTIMATE WHAT THOSE WERE AND THEN ADD THEM BACK, OUR FORECASTS ACTUALLY WEREN'T THAT FAR OFF.

SO IT'S, IT'S A, BUT FOR THING, IF WE HAD, IF WE HAD NOT FORECAST HIGHER AND THEN CERTAIN THINGS HADN'T HAPPENED, WE MIGHT HAVE SEEN THOSE KIND OF LOADS.

YOU KNOW, SOMETHING THAT, THAT I LEARNED DURING THIS WINTER STORM THAT I HADN'T REALLY NOTICED BEFORE IS THE LONGER OR THE LONGER YOU CAN WAIT FOR PEOPLE TO COOK THEIR BREAKFAST OR HEAT THEIR HOUSE, THE BETTER IT WORKS FOR US BECAUSE THE SUN COMES UP.

SO IF WE CAN PUSH ANY OF THAT PEAK LOAD THAT MORNING, PEAK LOAD INTO HOURS WORTH OF SOLAR, THAT'S, UH, IT'S A LOT BETTER FOR RELIABILITY.

IT'S IF THAT PEAK, UH, PEAK LOAD OCCURRED BEFORE THE SUN COMES UP, THEN IT WOULD BE A LOT HARDER TO SERVE THAN IT DOES AFTER YOU START GETTING SOME OF THAT SOLAR ON THE SYSTEM.

MM-HMM, .

SO IT SOUNDS LIKE THE LOAD FORECAST IS COMPLICATED BY FACTORS LIKE HOLIDAY WEEKEND, UM, THE ACTUAL, UM, MATERIALIZATION OF DEMAND RESPONSE AND VARIETY OF FACTORS UNDERLYING THERE.

SO I JUST WANTED TO KIND OF HIGHLIGHT IT 'CAUSE I'VE HEARD THE ISSUE RAISED AND WANTED TO HAVE THAT DISCUSSION.

THANK YOU.

CERTAINLY.

AND, AND I HAD, I'VE HEARD ALL THE SAME, UM, ISSUES AND, AND, AND IT IS, IT'S, IT'S MATERIAL, UM, YOU KNOW, IT, IT IMPACTS PRICES AND, AND, UH, ACTIVITY.

SO I UNDERSTAND THE INTEREST, UH, IN, IN THE, AND ONE, ONE OTHER THING IS THIS IS THE FIRST WINTER STORM WHERE THAT WAS IN EFFECT TO A LARGE EXTENT WHERE WE HAD THAT MUCH SOLAR THAT MADE THAT MUCH DIFFERENCE.

UM, IN THE FUTURE THOUGH, IT'S GONNA CHANGE AGAIN, AS WE HAVE MORE BATTERIES ON THE SYSTEM, IT WILL BE AN EVEN DIFFERENT DYNAMIC.

AND SO WE'RE GONNA GO THROUGH A SERIES OF WINTERS WHERE WINTER STORMS, WHERE THE DYNAMIC WILL BE DIFFERENT EACH TIME.

AND AS THAT RATIO OF, OF GENERATION MIX CONTINUES TO CHANGE, WE'LL HAVE A DIFFERENT DYNAMIC FOR THE NEXT FEW WINTER STORMS THAT WE SEE.

AND SO, LIKE I SAID, THIS IS THE FIRST TIME THAT THIS HAS BEEN AS SIGNIFICANT AS IT WAS, UM, BUT WE'RE GONNA HAVE TWICE AS MUCH SOLAR

[01:55:01]

AND THREE OR FOUR TIMES AS MUCH BATTERIES MAYBE FOR THE NEXT WINTER STORM.

SO IT'LL BE AN EVEN DIFFERENT, UH, SCENARIO IN THE FUTURE.

UH, CARLOS, DID I SEE YOUR HAND HAND UP? UH, I GUESS JUST A COMMENT, A COUPLE COMMENTS.

ONE IS, UH, THE VARIANCE IN YOUR FORECASTS VERSUS ACTUAL, I THINK BOTH VERSUS SUMMER AND WINTER, WITHIN FIVE TO 10%, NO MORE VARIANCE IN THAT.

BUT AGAIN, HOW DO YOU ACCOUNT FOR RESPONSE TO THE DEMAND? YOU KNOW, CONSERVATION CALLS, UM, SPEED OF A STORM, YOU KNOW, THE, THE QUICK ONSET AND LONG DURATION IS THE WORD STUCK, AND FOR EXAMPLE, AND THAT'S VERY DIFFICULT TO PREDICT.

UM, SO A BIT DEFENDING YOUR, YOUR THOUGHT PROCESS HERE.

OF COURSE, WE'RE ALL CONCERNED ABOUT HIGH PRICES AND HOW TO TRY TO ADDRESS THEM, BUT AGAIN, SCARCITY HAS A COST.

AND, UH, THE QUESTION IS HOW YOU BALANCE THE TWO.

UH, AND AGAIN, THE VARIANCE THAT I SEE IS FIVE TO 10%, IT'S NO MORE.

ABSOLUTELY.

I THINK THE KEY FOR US, UM, AND, AND, UH, WOODY WOULD ECHO THIS, IS THAT WE JUST NEED TO CHALLENGE OURSELVES TO CONSTANTLY IMPROVE AND, AND ADAPT TO, TO THE CHANGING CIRCUMSTANCES BECAUSE IT, IT DOES HAVE AN IMPACT, UH, GOING FORWARD.

OKAY.

SO, UM, UH, THIS, THIS IS, UH, UM, ONE OF THE KIND OF, UH, I WANT TO TALK ABOUT OR HIGHLIGHT, EVEN THOUGH IT IS RELATIVELY MINOR, THE ORDC FLOOR IMPACT.

UM, IT IS A INTERIM SOLUTION, UH, THAT, UH, UH, THE COMMISSION, UH, APPROVED.

UH, ULTIMATELY WE FOUND SIX SC INTERVALS THAT, THAT WERE, UH, IMPACTED.

AND THE MAGNITUDE OF THAT IMPACT WAS, UH, IN THE $200,000 RANGE.

UM, SO, UH, THAT THE, THE INTERVALS ARE LISTED HERE, THE, IT'S VERY DIFFICULT TO SEE, BUT IT'S THAT, UH, GOLD PART, UH, THIS, UH, TO ME IS, IS NOT MUCH OF A SURPRISE WHEN YOU'RE HAVING A SCARCE, UH, TIME PERIOD.

UH, YOU'RE GONNA GET MOST OF THE PRICE FORMATION FROM OTHER ASPECTS IN THE MARKET.

AND, UM, AND THANKS AND, AND, UH, IT IS ACTUALLY THESE FLOORS ARE MORE LIKELY TO COME INTO PLAY, UM, IN, IN LESS, UH, SCARCE CIRCUMSTANCES, BUT WHEN WE'RE, YOU KNOW, SOMEWHAT LOW ON, ON RESERVES.

SO, UM, THIS, THIS OUTCOME IS NOT A SURPRISE, BUT, UH, I, I THINK, UH, AGAIN, THE TEAM THOUGHT IT WAS IMPORTANT TO SHARE THIS SINCE THIS WAS AN ACTION THAT, THAT WE HAD TAKEN.

UM, ANY OTHER QUESTIONS AROUND THE, THE WINTER STORM BEFORE I MOVE ON? WELL, DID YOU OR DAN HAVE ANY OTHER, LIKE, LESSONS LEARNED OR TAKEAWAYS THAT YOU JUST WANT TO CONCLUDE WITH FOR THE NEXT WINTER STORM? I, UH, SO I WOULD JUST, UH, KIND OF ECHO SOMETHING THAT WOODY POINTED OUT, WHICH IS THE MARKET AND THE GRID IS EVOLVING WITH DIFFERENT RESOURCES BECOMING, UH, MORE SIGNIFICANT PLAYERS WITHIN THE GRID.

SO EVERY ONE OF THESE EVENTS IN THE NEAR FUTURE IS GONNA HAVE SOME DIFFERENT FLAVORS, NEED A LOT OF ANALYSIS AND, AND FOLLOW UP, UH, ON, ON OUR SIDE.

UM, BUT, UH, THE NEXT, UH, WINTER EVENT IS LIKELY TO SHOW MORE DEPENDENCE ON, UH, BATTERIES.

UM, AND YOU KNOW, HOW LOAD MATCHES UP WITH SOLAR OUTPUT MATTERS AS IT DOES WITH WIND OUTPUT.

THE, THE ONE OTHER THING I WOULD HIGHLIGHT IS THAT 915 MEGAWATTS THAT WE GOT FROM THE FIRM FUEL SERVICE THAT IS 915 MEGAWATTS OF DISPATCHABLE GENERATION THAT WE WOULD NOT HAVE HAD IN PLACE.

UH, AND TO ME THAT, UH, ESPECIALLY WHEN, UM, THE INFRASTRUCTURE IN CERTAIN PARTS OF THE STATE CAN'T SUPPORT ALL THE RETAIL LOAD AND THE, UH, ELECTRIC GENERATION LOAD ON THE SYSTEM, THAT THAT PROGRAM IS PROVIDING VALUE, UH, DURING

[02:00:01]

THE WINTER TIME PERIODS.

THAT'D BE THE ONE OTHER THING I MAY NOT HAVE EMPHASIZED ENOUGH.

DURING, DURING MY PRESENTATION, I, UH, BACK ON THE LOAD FORECAST ISSUE, I HAD ONE MORE THOUGHT THAT WE ARE ACTUALLY, UM, HAVE SEVERAL INITIATIVES THAT ARE FOCUSED AT TRYING TO IDENTIFY, UM, WHAT WE CAN FOR, I MEAN, WE'RE NOT GONNA BE ABLE TO FORECAST SCHOOL CLOSURES AND THAT, THOSE KIND OF THINGS IN ADVANCE.

BUT LFL PERFORMANCE, UH, SOME OF THE MORE OF THE, THE PRICE SENSITIVE DEMAND, SOME OF THOSE KIND OF THINGS, WE'VE GOT SEVERAL INITIATIVES GOING ON TO TRY TO GET DISCREET FORECASTS OF THOSE SO THAT WITH THE GOAL OF AS MUCH AS POSSIBLE BEING ABLE TO FORECAST BOTH THE GROSS AND THE NET, BUT THEN WE STILL HAVE TO SAY, MAKE CONSERVATION DECISIONS AND THOSE KIND OF THINGS BASED ON THE GROSS, BECAUSE IT'S A, UM, UM, CIRCULAR SYSTEM KIND OF, IF WHAT YOU DO HAS AN IMPACT ON HOW MUCH RESPONSE YOU ACTUALLY GET.

AND SO WE NEED TO BE ABLE TO FORECAST AS MUCH AS WE CAN TRY TO QUANTIFY BOTH OF THOSE THINGS.

YEAH, I THINK ONE THING I NOTICED, IF YOU'LL GO BACK AND THE IMM ACTUALLY HAD A GOOD SLIDE, UH, SLIDE NUMBER SIX THAT SHOWED ALL THE DIFFERENT, UH, GENERATION THAT WAS RUNNING DURING THE STORM.

AND IF YOU LOOK AT THOSE PEAK, THE JANUARY 15TH MORNING PEAK, THE JANUARY 16TH MORNING PEAK, AND THE EVENING PEAK, YOU CAN JUST SEE A SLIVER OF BATTERY ENERGY STORAGE.

AND THAT'S GONNA CHANGE.

I MEAN, IT'S JUST BARELY SHOWS UP ON THE GRAPH TODAY, BUT IN THE FUTURE, YOU'RE GONNA SEE THAT BE A MUCH MORE SIGNIFICANT PIECE OF THIS TOO.

AND SO THAT'S GONNA CHANGE THE DYNAMIC A LOT.

THAT'S, THAT'S SOMETHING I THINK WE'RE GONNA HAVE TO ANTICIPATE TOO WHEN WE, WHEN WE TALK ABOUT RELIABILITY AND CONSERVATION CALLS AND THINGS LIKE THAT, WE'RE GONNA HAVE TO CONTINUE TO INCORPORATE THAT AND, AND THAT MAKES DURATION MORE AND MORE SIGNIFICANT, UH, IN TERMS OF HOW LONG EVENTS LAST OR SCARCE, UH, INSTANCES LAST.

ALRIGHT.

UM, SO THE, THE NEXT THING I, I DID WANNA SHARE IS, UM, THE PRICE CORRECTION ACTIVITY FROM JANUARY.

THERE WERE, UM, THERE WAS, UH, SOME NOTABLE ACTIVITY.

UM, NONE OF, UH, NONE OF THE FIRST, UH, UH, KIND OF TWO CATEGORIES HERE THAT I HAVE ARE GONNA REQUIRE, UH, BOARD ACTION.

UH, BUT I STILL WANTED TO DOCUMENT THAT, UH, WE, WE DO, UH, KIND OF ONGOING TRACKING AROUND THAT.

UM, SO WE FOUND, UH, ON JANUARY 18TH AND THE 23RD, SOME OPERATING DAYS, NOT MEETING THE SIGNIFICANCE CRITERIA, BUT, BUT WE DID STUDY THAT.

UM, THERE WAS ALSO, UH, ONE DATE ON JANUARY 20TH WHERE IT MET THE SIGNIFICANCE CRITERIA.

BUT IF YOU RECALL, UH, ERCOT STAFF HAS A WINDOW OF TWO DAYS TO CORRECT ON ITS OWN BEFORE IT WOULD NEED TO BRING SOMETHING TO THE BOARD.

WE EXERCISE THAT, UH, ACTIVITY.

THERE IS, UM, ONGOING PRICE CORRECTION ANALYSIS HAPPENING RIGHT NOW OVER A, A SLIGHTLY LONGER RANGE, UH, WHERE, UM, SOME PARAMETERS AROUND, UH, LINE RATINGS AND, AND EQUIPMENT RATINGS MAY NOT HAVE BEEN AT IN THE RIGHT STATUS.

UM, WE ANTICIPATE THAT THAT WILL, UH, REQUIRE A PRICE CORRECTION TO BRING TO THE BOARD IN A APRIL.

UM, BUT WE ARE STILL GOING THROUGH THE ANALYSIS, SO IF YOU RECALL, YOU KNOW, WE CAN IDENTIFY SOMETHING GOING WRONG, THEN THE NEXT STEP IS WE HAVE TO BE ABLE TO IDENTIFY THAT WE CAN CORRECT, UM, THAT, THAT THERE'S A, SOMETHING WE CAN CORRECT THE PRICE TO.

THAT'S THE, THAT'S THE WORK THAT'S GOING ON ON RIGHT NOW.

UM, BUT OUR, UH, EXPECTATION IS THAT WE WOULD BE BRINGING SOMETHING TO THE BOARD IN APRIL.

SO I WANTED TO MAKE SURE AND, AND GIVE A HEADS UP ON, ON THAT ISSUE.

UM, THE OTHER LAST THING I WOULD JUST SAY AROUND THIS IS THIS, UH, JANUARY 29TH EVENT IS SOMETHING WE'VE ESCALATED, UH, UH, TO ADAM AND HIS TEAM AS, UM, THE GROUP THAT IS LOOKING AT, UH, CONTINUOUS, UH, IMPROVEMENT AND QUALITY IMPROVEMENT.

UH, SO THAT IS SOMETHING THAT THE TEAM'S GONNA STUDY, UH, TO SEE WHERE WE CAN DO, UH, ADDITIONAL IMPROVEMENTS, UH, GOING FORWARD.

UM, HAPPY TO ANSWER ANY QUESTIONS ON, ON THIS, UH, SET OF, UH, PRICE CORRECTIONS THAT YOU MAY HAVE.

I HAVE A QUESTION.

I MEAN, THE BOARD TENDS TO SEE EXCEPTIONS THAT CROSS A CERTAIN THRESHOLD, WHICH IS KIND OF A COMPLIANCE WAY TO DEAL WITH ISSUES.

I'M MORE INTERESTED IN,

[02:05:01]

YOU KNOW, THIS IS AN OPERATION, WE HAVE OPERATIONAL QUALITY, WE HAVE OPERATIONAL ERRORS, OR THAT'S PART OF EVERYBODY'S OPERATION.

THAT'S JUST THE WAY THE WORLD WORKS.

DO YOU HAVE SOME TREND CHARTS TRACKING THE NUMBER OF PRICING ERRORS PER DAY, BOTH IN QUANTITY AND LIKE MAGNITUDE OF DOLLARS? SO WE, UM, IN, IN THE MONTHLY REPORTS PUT IN, UM, A PRICE CORRECTION TRACKING WHETHER IT COMES TO THE BOARD OR NOT.

WE, UM, SORRY, THIS IS MOVING A LITTLE ON THE SLOW SIDE, BUT I, I DO WANNA BRING THIS UP.

WELL, UM, IS THERE SOME STATISTICS BEING RUN ON THAT SO WE KNOW WHEN IT'S GOING OUT OF CONTROL OR NOT? SO WE, WE ARE TRACKING IT, YES.

UM, AND, UM, UH, THE, THE, THIS IS THE, THE ANALYSIS.

HOWEVER, UM, IN CONSULTATION WITH PABLO, UH, WOODY AND ADAM, WE BELIEVE THAT ONLY TRACKING THE PRICE CORRECTION ERRORS IS INSUFFICIENT.

AND WE'RE WORKING ON A DIFFERENT DASHBOARD THAT IS MORE, UH, FOR LACK OF A BETTER WAY, UH, HOLISTICALLY LOOKING AT, UH, QUALITY AND, UH, DELIVERY OF THINGS WITHOUT ERROR.

SO LET, JUST TO GIVE YOU AN EXAMPLE, THIS WAS DIS DISCUSSED AT, UH, FINANCE AND AUDIT, BUT THERE WAS A MISTAKE AROUND THE, UM, ERCOT FEE THAT DOES NOT WARRANT A PRICE CORRECTION, HOWEVER IT SHOULD BE TRACKED AND DOCUMENTED AND, AND, UH, AND UH, KIND OF MAINTAINED AS A, AS AS A TRACKING MECHANISM.

SO IT'S THOSE KIND OF GAPS THAT WE REALLY WANT TO CLOSE, UM, AND NOT JUST BE STILL KEEP REPORTING THE PRICE CORRECTIONS, BUT CAPTURE THESE OTHER AREAS AS WELL.

UH, ADAM, I DON'T KNOW IF YOU WANT TO ADD ANYTHING TO THAT.

THE, THE TOPIC OF QUALITY ASSURANCE CONTINUOUS IMPROVEMENT ALSO CAME UP AT THE HRNG SUBCOMMITTEE.

UM, IT IS ONE OF OUR 2024 OKRS, AND THAT IS TO DEVELOP A PLAN AND A STRATEGY FOR HOW WE ADDRESS AT THE ENTERPRISE LEVEL ONGOING CONTINUOUS IMPROVEMENT AND QUALITY ASSURANCE FOCUS AND DEVELOP A TIMELINE THAT THE SECOND HALF OF THE YEAR WE CAN START DELIVERING AGAINST.

AND SO IT IS THE FOCUS OF THIS EFFORT IS REALLY TO, UM, BRING THE QUALITY DISCUSSION TO THE ENTERPRISE LEVEL AND LOOK AT OPPORTUNITIES FOR CONTINUOUS IMPROVEMENT ACROSS THE ORGANIZATION, NOT JUST SPECIFICALLY PRICE CORRECTIONS OR, UM, SOFTWARE QUALITY, FOR INSTANCE.

YES, I AGREE THE MAIN BUSINESS PROCESSES NEED QUALITY MANAGEMENT AND I'M GLAD TO SEE THAT BEING TAKEN MORE SERIOUSLY IN 2024.

THANK YOU.

UM, THANKS KENAN.

THAT CONCLUDES MY PRESENTATION.

GREAT.

SO NOW WE'LL GO TO 10.3

[10.3.1 Real-Time Co-optimization Update]

0.1, WHICH IS MATT NESS IS NEXT WITH AGENDA ITEM 10.3 0.1, REAL TIME CO-OP OPTIMIZATION UPDATE.

ALL RIGHT, GOOD AFTERNOON.

THANKS FOR HAVING ME.

UM, JUST TO INTRODUCE MYSELF, I HAVEN'T BEEN HERE BEFORE.

MY NAME'S MATT MARINAS, I'VE BEEN WITH ERCOT 20 YEARS.

UM, MY TWO JOBS THAT I HAVE IS, I WORK FOR CANON.

IT'S AN HONOR TO WORK FOR HIM AND LEAD OUR FORWARD MARKETS TEAMS. THAT'S OUR DAY AHEAD MARKET AND OUR CR AUCTIONS, UH, AS WELL AS OUR DEMAND SIDE TEAM.

SO FROM AN OPERATIONAL PERSPECTIVE, THAT'S MY PURVIEW.

UH, THE STUFF THAT I ALSO WORK ON THAT I ENJOY IS PROGRAM WORK.

UM, AND SO I'VE BEEN INVOLVED OVER THE PAST FEW YEARS WITH HELPING, KEEPING THINGS ON TRACK, UH, LIKE THE FAST FREQUENCY RESPONSE ADVANCEMENT, ESPECIALLY IN THE MARKET RIGHT IN SIDE AROUND THAT, UH, AS WELL AS THE ECRS AND GETTING THAT UP AND OFF THE GROUND.

AND SO IT'S BEEN AMAZING, UH, RUN IN TERMS OF DELIVERY FOR ERTA THE LAST COUPLE YEARS.

GETTING THOSE OFF.

UH, THIS IS A BIG ONE, SO IT'S HAPPY TO BE HERE FOR IT.

SO KAN, ASK ME JUST TO PROVIDE THE UPDATE ON HIS BEHALF, AND JP GAVE AN UPDATE THAT HAD SIMILAR FLAVORS TO THE TECHNOLOGY AND SECURITY WORKING GROUP.

AND MY IDEA OR MY, WHAT I'M HERE TO SHARE TODAY IS JUST KIND OF THE WHAT'S INSIDE OF OUR COTTON AND WHAT'S OUTSIDE OF OUR CO IN TERMS OF DEVELOPING AND DELIVERING.

AND SO THE FIRST PART I WANTED TO SAY WAS JUST THANK YOU FOR, UM, ADOPTING

[02:10:01]

NPR 1204.

THAT WAS THE LAST KEY DESIGN ELEMENT THAT WE NEED FOR REALTIME CO OPTIMIZATION.

UH, I WILL PUT IN A PLUG JUST REALTIME CO OPTIMIZATION AS WE DID THE WORK, 500 PAGES OF PROTOCOLS.

IT WAS A $45 MILLION LIFT.

A VERY COMPLICATED PIECE WITH RIPPLE EFFECTS.

IT'S BEEN DONE ON A LOT OF OTHER ISOS.

UH, WHAT IS NEW ABOUT, AND MAYBE EVEN THE OTHER PIECE OF RISK FOR REAL-TIME CLOUD OPTIMIZATION IS THE PLUS BATTERIES PART.

SO BATTERIES IS SOMETHING THAT, UM, WHEN YOU INTRODUCE A NEW RESOURCE TYPE, THAT'S NOT SOMETHING WE DO VERY OFTEN AT ERCOT AND ALSO STARTS TO ROPE IN THE ENTIRE COMMUNITY OF ERCOT TO ADAPT TO THAT.

SO IT BRINGS THE INTEGRATION PUZZLE BECOMES A BIGGER, UH, SOLUTION TO SOLVE.

SO THANK YOU FOR THE STATE OF CHARGE PIECE, THAT'S THE OTHER PIECE THAT'S NOT REALLY BEEN DONE AND OTHER ISOS THAT WILL BE, UH, GETTING OUR HEAD AROUND TO GET THAT IN.

SO IN TERMS OF INTERNAL ENGAGEMENT ON JANUARY 9TH, WE HAD OUR FIRST ALL HANDS MEETING ABOUT THIS WITH REGARDS TO THE PROJECT TEAM.

UH, SO WE HAD A HUNDRED PEOPLE, UM, IN THE ROOM TO KICK IT OFF AND SAY IT'S REAL.

WE ARE NOW DOING IT.

WE'VE GONE FROM 20 SOMETHING PEOPLE WORKING ON BUSINESS REQUIREMENTS TO THE A HUNDRED PLUS PEOPLE THAT WE NEED TO BILL OUT THE SOFTWARE, THE HARDWARE, AND DELIVER THIS OVER THE NEXT COUPLE OF YEARS.

AND SO THAT'S THE DAILY STANDUP AND PROJECT TEAMWORK THAT'S GOING ON.

THE OTHER KEY PIECE IS ON THE REAL TIME CO OPTIMIZATION TASK FORCE.

UH, THAT'S A TASK FORCE THAT I'VE CHAIRED ALSO.

IT'S PREDECESSOR, THE R THE OTHER RTC TASK FORCE.

AND I WANNA SHOW A PICTURE OF WHAT THAT GROUP IS ENGAGED IN WITHOUT GOING THROUGH THE LITTLE FONT.

UM, WHAT WE'VE DONE IS A TEAM, UH, THAT'S BEEN EXTREMELY EFFECTIVE IS THE IDEA OF DISCUSSING SOMETHING THREE TIMES AND GET IT OUT THE DOOR.

DON'T GET STUCK.

AND SO WHAT WE DO IS A LOT OF UPFRONT WORK ON THAT FIRST MEETING IS THE ERCOT HEAVY LIFT TO TRAIN, DESCRIBE THE PROBLEM AND PROVIDE A SOLUTION THE SECOND MEETING AND TO DISCUSS AT THE FIRST MEETING.

AND SO WE HAD A MEETING LAST WEEK AND WE HAD THE, UM, ANCILLARY SERVICE DEMAND CURVES COME UP AGAIN.

AND WHAT WE DID THREE OR FOUR YEARS AGO, PEOPLE STARTED TO SAY, WHY DID WE DO THAT? IS THIS THE RIGHT SOLUTION AND WHAT ARE THE IMPLICATIONS OF IT? SO YOU START TO ASK THE QUESTIONS OF WHY DO WE DO IT THIS WAY? AND SO THE NEXT MEETING WILL BE THE CONFIRMING WHAT WE DO AND WHY THIS IS THE DESIGN, AND THEN ULTIMATELY, UH, TO COMPLETE IT.

SO AS A TASK FORCE, WE REPORT UP TO TAC AS A WORKING, UH, AS A WORKING GROUP.

IF WE DON'T ACHIEVE CONSENSUS OR GET TO WHERE WE NEED, TAC IS A DECISION MAKER FOR US.

AND NO NEWS IS GOOD NEWS FROM YOUR PERSPECTIVE.

IF YOU DON'T HEAR ANYTHING FROM TAC, THAT MEANS WE'RE GETTING ALONG GREAT AND GETTING IT DONE.

UH, BUT THERE IS GONNA BE TENSION OVER THIS YEAR.

IT WILL BE THE IDEA THAT ERCOT NEEDS TO DELIVER A DESIGN.

AND THERE'S THE IDEA OF HOW TO MAKE IT PERFECT.

AND ONE OF THE BIG LESSONS LEARNED FROM NODAL, WE WERE TALKING ABOUT THIS, UM, THIS PAST WEEK WITH KANON.

WE HAD A BASELINE ONE AND A BASELINE TWO IS WHERE ERCOT GOT CAUGHT IN THE SPOT OF DRIFT ON SCOPE TO WHERE IT DIDN'T GET DELIVERED, UH, BECAUSE WE WERE TRYING TO ADAPT TO AND KEEP UP WITH ALL THE IMPROVEMENTS ALONG THE WAY.

BUT THIS IS DEFINITELY A HARD LINE OF REQUIREMENTS AND THAT'S WHAT WE NEED THE BOARD SUPPORT ON.

AND THE PUC HAS DONE A GREAT JOB OF THIS IS WHAT WE'RE DELIVERING.

AND WITH THAT, THE OTHER PART OF THE ENGAGEMENT WITH THE MARKET IS WHAT ARE THE THINGS THAT WE HAVEN'T QUITE FIGURED OUT YET? UH, THERE'S SOME POLICY DECISIONS SUCH AS THE, UM, ANCILLARY SERVICE PROXY OFFER CURVE, UH, OFFER PRICE.

IF A QUEASY, IF A MARKET PARTICIPANT DOES NOT OFFER A PRICE FOR THE ANCILLARY SERVICE ON THE RESOURCE, HOW DO WE FILL IN THE BLANK? WHAT'S THE RIGHT NUMBER? IS IT ZERO OR IS IT THE OFFER CAP? SO IT'S THAT TYPE OF DECISION.

UH, THE OTHER PIECE IS DEFINING ANALYSIS FRAMEWORK.

LET'S RUN JANUARY 16TH BACK THROUGH AN RTC SYSTEM.

AND SO ERCOT WILL BE DOING SOME IN-HOUSE ANALYSIS TO SAY, IF RTC HAD BEEN IN EFFECT, WHAT KIND OF FRAMEWORK CAN WE RUN THAT THROUGH TO PROVIDE WHAT PRICES WOULD LOOK LIKE? BECAUSE WE NOW CONTROL AS ON EVERY RESOURCE AND WE SEE THE FULL RANGE OF THE RESOURCE.

SO IT'S A LITTLE BIT MORE OF A PLAY IN THIS.

AND SO THOSE ARE THE TYPES OF ANALYSIS TO GET OUT THE DOOR.

AND THEN THE LAST THING THAT WE'RE REALLY, UM, PASSIONATE ABOUT IS GETTING THE MARKET PARTICIPANTS AND THE VENDORS THE DATA THEY NEED TO DEVELOP THEIR SYSTEMS. AND SO WE'RE OFF AND RUNNING AS QUICKLY AS WE CAN AND WE'RE PIVOTING FROM BUSINESS REQUIREMENTS IS TO UNDERSTAND WHAT WE NEED TO TRANSLATE THOSE INTO INTEGRATION REQUIREMENTS WITH THE MARKET PARTICIPANTS AND HAVE THOSE OUT THE DOOR IN THE COMING MONTHS AS SOON AS POSSIBLE.

AND SO THAT'S JUST THE, THE RUNWAY THAT WE'RE ON AND JUST WANTED TO SHARE FOR TRANSPARENCY, THIS IS THE, UM, THE TASK LIST.

IT WILL GROW OVER TIME.

WE HOPE THAT WE, WE WILL CLOSE 'EM OFF AS FAST AS OR FASTER THAN THEY COME IN AS THE PLAN.

SO AS WE GET READY FOR GO LIVE AND MARKET TRIALS THAT WE'VE, UM, LINED UP WITH THE MARKET.

SO THAT'LL OPEN UP FOR ANY QUESTIONS.

MATT? I'VE GOT A QUESTION.

YES.

HOW DO YOU, UH, FIND OUT WHAT THE TIMELINE FOR MEMBERS TO BE READY ACTUALLY IS AND IF, WHAT'S THE LIKELIHOOD ONE OF THEIR TIMELINES PUSHES OUT THE ACTUAL GO LIVE DATE FOR THE WHOLE SYSTEM?

[02:15:01]

YES.

UM, WELL, WHAT WE LEARNED FROM ECRS AND JP AND VENCAT CAN WEIGH IN ON THIS IS A COUPLE OF THINGS.

ONE IS WE'RE FINDING A NINE MONTH LEAD IS WHAT THEY NEED FOR THEIR SYSTEMS TO GET UP AND DEVELOP THEIR CO CODE.

UM, THIS ONE IS A LITTLE BIGGER BECAUSE IT'S NOT JUST THE INTERFACE AND OFFERING OUR PROXY FOR THAT IS ECRS.

THAT'S A NEW ANCILLARY SERVICE.

IT'S NEW TELEMETRY THINGS WE HAVEN'T DONE BEFORE.

THEY GOT UP AND RUNNING AND IT WAS THE NINE MONTH LEAD TIME THAT THEY ASKED FOR.

WE'VE ALSO BEEN WORKING WITH THE TECHNOLOGY WORKING GROUP TO SAY, HEY, IN SEPTEMBER OF THIS YEAR, WE WILL RELEASE THE SPECS, YOU, THE COMPANIES AT TAC YOU, THE VENDORS AT TWG NEED TO BE READY TO HIT THE GROUND RUNNING ON DEVELOPING THIS AND RENDEZVOUS WITH US IN, WE'RE STILL GUESSING, BUT MAYBE MAY OF 2025 TO START OUR INITIAL SMOKE TEST WITH YOU TO WHERE YOU SUBMIT THINGS AND THEN WE START TO RUN AN OPEN LOOP MARKET TEST AND THEN ULTIMATELY A CLOSED LOOP MARKET TEST.

SO THAT'S OUR EVOLUTION.

WE HOPE THAT THAT EVOLUTION AND WHAT I'VE DONE BEFORE WITH ECRS IS A DASHBOARD TO ATTACK OF WHICH IES HAVE DEMONSTRATED THEIR SUBMISSIONS AND WHICH ONES ARE BEHIND.

SO WE CAN USE THINGS LIKE OUTREACH AND, UM, ATTESTATIONS IS THE EARLY OUT AND THEN THERE'S THE PROOF IN THE PUDDING WHO'S ACTUALLY SUBMITTING THINGS.

BUT AGAIN, IT'S, WE'RE GOING EARLY AND FAST ON THE INTERFACE REQUIREMENTS WHERE WE CAN.

THANK YOU.

GOOD QUESTION.

OTHER QUESTIONS FOR MATT? ALRIGHT.

ALRIGHT, WELL THANK YOU MATT FOR OUR FINAL MARKETS DISCUSSION.

ON TODAY'S AGENDA, CANAN WILL PRESENT ITEM

[10.4 Market Credit Update]

10.4, THE MARKET CREDIT UPDATE.

THANK YOU.

UM, AGAIN, UH, I THINK THE ONE THING ON THE CHARTER THAT WE NEEDED, UH, APPROVED, YOU'VE ALREADY, UH, VOTED, VOTED OUT.

UM, SO THERE'S NO ACTION REQUESTED.

UM, AND THIS IS FOR DISCUSSION ONLY.

UH, THE KEY TAKEAWAYS ARE, UH, BETWEEN, UH, THE 1ST OF JANUARY AND THE 12TH, ERCOT ISSUED 71 COLLATERAL REQUESTS TO 40, UH, COUNTERPARTIES, UM, ONE TRADE ONLY ENTITY DEFAULTED IN THIS TIME PERIOD.

UM, MARKET-WIDE, TPE OR TOTAL POTENTIAL EXPOSURE, UH, ACTUALLY, UH, DECREASED, UM, IN THE OCTOBER TO DECEMBER TIMEFRAME.

UM, AND THE AVERAGE DIS DISCRETIONARY COLLATERAL, UH, ALSO, UH, DECREASED IN IN, IN THE TIMEFRAME IN IN QUESTION THROUGH DECEMBER.

UM, SOME OF THOSE TRENDS ARE, UH, REVERSED A LITTLE IN THE JANUARY TIME PERIOD.

UH, BUT, UH, THE OVERALL REPORTING KIND OF TIMELINE THAT WE HAVE, UH, EXTENDS THROUGH, UH, THE END OF LAST YEAR.

UM, WE DID WANT TO, UH, HIGHLIGHT, UH, SOME CREDIT NPR R THERE'S NPRR 1184, UH, WHICH UPDATES THE PROCEDURES FOR MANAGING INTEREST ON CASH AND COLLATERAL.

THIS WAS APPROVED.

UM, AND, UH, ERCOT IS, UH, PLANNING ON BEING ABLE TO REPORT INTEREST EARNED AND THE CALCULATIONS OF INTEREST PER THE, UH, NPRR.

UM, THERE'S IN ADDITION TO THAT NPRR 1205, WHICH MAKES REVISIONS TO THE CREDIT QUALIFICATION REQUIREMENTS OF BANKS AND INSURANCE COMPANIES.

YOU MAY RECALL, I HAVE RAISED THIS ISSUE, UH, TO YOU IN THE PAST, UM, AS WE HAVE KIND OF, UH, BEEN, UH, STRENGTHENING OR, UH, BEING MORE, UH, CONSERVATIVE ON UNSECURED COLLATERAL AND THINGS LIKE THAT.

UM, MORE PEOPLE HAVE TO GO OUT INTO THE MARKET AND, AND SECURE COLLATERAL.

WE HAD LIMITS PER BANK ON HOW MUCH, UH, COULD BE SECURED.

AND THIS, UH, NPRR WOULD INCREASE THE LIMITS PER BANK THAT THAT FOLKS COULD GET SO THAT THERE IS MORE TO BE, UH, UH, HAD OUT THERE IN, IN THE MARKET IN TERMS OF SECURING COLLATERAL.

AND THO THOSE ARE THE HIGHLIGHTS OF, OF, AS FAR AS THE MARKET CREDIT UPDATE GOES.

I'M HAPPY TO ANSWER ANY QUESTIONS THAT YOU MIGHT HAVE.

KENAN FOR THE ONE DEFAULT THAT WE EXPERIENCED, AND IT SEEMS LIKE IT WAS FULLY COLLATERALIZED, SO THERE'S NO IMPACT.

UM, WOULD THAT HAVE BEEN THE CASE BEFORE WE CHANGED THE COLLATERAL REQUIREMENTS OR WOULD THEY HAVE BEEN FULLY COLLATERALIZED ANYWAY IN, IN THAT INSTANCE? BECAUSE IT,

[02:20:01]

IT WAS A, UM, A NON LOAD ENTITY THERE, IT WAS NO DIFFERENCE BEFORE WE ELIMINATED UNSECURED COLLATERAL VERSUS, VERSUS THE PRESENT IN, IN THIS CASE.

OKAY.

SO THAT WAS ALREADY, THEY HAD ALREADY POSTED COLLATERAL.

YES.

WOULD'VE BEEN REQUIRED ANYWAY.

OKAY.

OTHER QUESTIONS FOR KAAN? WELL, GREAT.

THANK YOU KAAN.

SURE.

SO NEXT, JONATHAN'S GONNA PRESENT AGENDA 10.5

[10.5 Revision Request Status Update]

REVISION REQUEST STATUS UPDATE.

THANK YOU JONATHAN LEVINE, ASSISTANT GENERAL COUNSEL, PINCH HITTING FOR CHAD HERE.

UH, THIS WILL BE REAL QUICK.

I JUST WANNA HIGHLIGHT THE KEY TAKEAWAYS HERE.

THERE AREN'T MANY CHANGES FROM, UH, THE LAST MEETING IN TERMS OF, UH, REVISION REQUESTS AND PROCESS.

UH, WE HAVE 19 UP FOR BOARD CONSIDERATION TOMORROW.

MOST OF THOSE ARE ON THE CONSENT AGENDA.

THE OTHER IS, UH, NPR 1186, WHICH YOU HEARD ABOUT TODAY.

UH, I THINK THE IMPACTS ARE IN THE RANGE OF 500, UH, 500 MILLION TO 750 AND CHAD WILL GO OVER THAT AT THE BOARD MEETING TOMORROW.

UM, LIKE I SAID, THE, UM, THE NUMBERS HERE ARE PRETTY, UH, PRETTY MUCH CONSISTENT WITH LAST YEAR, SO I'M JUST GONNA TAKE QUESTIONS IF ANYONE HAS ANY, LEAVE IT AT THAT.

QUESTIONS FOR JOHN? NO.

ALRIGHT.

THANKS JOHN.

THANK YOU.

SO AGENDA ITEM

[11. Future Agenda Items]

11 IS WOODY RICHARDSON'S PRESENTATION OF FUTURE AGENDA ITEMS. YEAH, THIS IS, UM, I JUST HAD, UH, THREE THINGS HERE TO LOOK AT.

ON LINE NINE, THERE'S THIS RECOMMENDED METHODOLOGIES FOR DETERMINING, UH, MINIMUM AS REQUIREMENTS.

SO THE DUE DATE FOR THAT IS THE END OF APRIL.

THERE'S A 4 22 BOARD MEETING.

SO THE SIX 17 BOARD MEETING IS PROBABLY WHERE THAT'LL GET TALKED ABOUT, BUT IT COULD BE RESOLVED EARLY AND IT MIGHT NEED TO BE MOVED UNTIL APRIL, APRIL BOARD MEETING.

SO THAT'S, THAT'S ONE THING TO THINK ABOUT.

UM, LINE NUMBER 10, THE REVIEW COMPANY OPERATIONS AND PLANNING REPORTS.

SO ERCOT PUTS OUT SEVERAL REPORTS AT THE END OF THE YEAR.

UM, THEY WON'T BE FINALIZED FOR THE, UH, 12 TWO BOARD MEETING, BUT YOU MAY WANT TO HAVE SOME PREVIEW OF WHAT'S IN THOSE.

THERE'S SOME PRETTY IMPORTANT, UH, REPORTS THAT COME OUT BOTH OPERATIONS AND PLANNING THAT, UH, THEY TEND TO NOT GET LOOKED AT BECAUSE ONCE THEY'RE, THEY'RE OUT AND YOU COME BACK IN FEBRUARY, IT'S, IT'S KIND OF OLD NEWS AT THAT POINT, BUT IT WOULD BE MORE RELEVANT MAYBE IN DECEMBER TO, TO MAYBE THINK ABOUT HAVING A PREVIEW OF WHAT THOSE ARE.

AND THEN ON LINE 13, YOU'VE HEARD SOME ABOUT THE EMS, UH, NOT HOLDING THE, THE RATINGS CHANGE AND THAT, UH, THE REVIEW OF THE WHOLESALE MARKET PRICE CORRECTIONS.

THAT WILL DEFINITELY BE IN APRIL.

SO THOSE ARE THE THREE THAT, UH, BRING UP.

THANK YOU WOODY.

SO THE FINAL AGENDA ITEM BEFORE

[12. Other Business]

WE ADJOURN IS AGENDA ITEM 12, WHICH IS OTHER BUSINESS.

ALSO, I'D LIKE TO DIRECT THE COMMITTEE'S SECRETARY TO FINALIZE THE JUNE 19TH, 2023 EXECUTIVE SESSION MEETING MINUTES WITHOUT A VOTE, WE WILL LESS, WE WILL LIKELY LESS FREQUENTLY NEED EXECUTIVE SESSIONS FOR THE R AND M COMMITTEE.

SINCE MOST RISK MANAGEMENT MATTERS ARE MOVED TO THE TECHNOLOGY AND SECURITY COMMITTEE.

SO I'D LIKE TO FINALIZE THAT SET OF MINUTES WITHOUT A VOTE TO AVOID CREATING A NEW SET OF EXECUTIVE SESSION MINUTES.

AND IS THERE ANY OTHER BUSINESS, ANY COMMITTEE MEMBER WOULD WISH TO RAISE AT THIS POINT? SO HEARING THAT NO FURTHER BUSINESS, UH, THE MEETING IS NOW ADJOURNED.

THE.