Aug 20, 2024 Board of Directors Meeting

IS AGENDA ITEM THREE, CONSENT AGENDA.

THANKS CHAD.

UH, THE NEXT

[3. Consent Agenda]

I'LL TURN OVER TO CHAD TO PROVIDE THE BUDGET IMPACTS OF THE REVISION REQUEST.

NEXT IS AGENDA ITEM FOUR, THE JUNE 18TH,

ON THE CONSENT AGENDA TODAY ARE NINE REVISION REQUESTS.

THERE ARE NO ERCOT STAFFING IMPACTS ASSOCIATED WITH ANY OF 'EM.

TWO OF THE REVISION REQUESTS HAVE AN ERCOT BUDGET.

IMPACT NPR 1217 HAS AN IMPACT OF 10,000 TO 20,000.

AND NPR 1216, WHICH IS THE IMPLEMENTATION OF THE EMERGENCY PRICE PROGRAM, UM, AS A RESULT OF A PEC RULEMAKING HAS A BUDGET IMPACT OF 175,000 TO 225,000, AND IT WOULD BE IMPLEMENTED IN TWO PHASES.

I'M HAPPY TO ANSWER ANY QUESTIONS.

THANK YOU, JED.

I'M NOT SEEING ANY QUESTIONS.

AND PLANNING, UH, TODAY'S CONSENT AGENDA.

WE'VE REMOVED NPR 1215, UH, CLARIFICATIONS TO THE DAY AHEAD MARKET ENERGY ONLY OFFER CALCULATION, WHICH WILL INSTEAD TAKE UP AS AGENDA ITEM 7.1 0.2 DURING THE TAC REPORT.

IN ADDITION TO REVISION REQUESTS THAT TAC NON UNANIMOUSLY RECOMMENDS FOR APPROVAL TAX REPORT INCLUDES REVISION REQUESTS ATTACK UNANIMOUSLY RECOMMENDED, BUT HAVE BEEN SELECTED FOR ADDITIONAL DISCUSSION, WHICH APPLIES TO NP RRR 1215.

WITH THAT, DOES ANY BOARD MEMBER WISH TO DISCUSS OR REMOVE ANY ADDITIONAL ITEM FROM THE CONSENT AGENDA? THERE, THERE'S NO FURTHER DISCUSSION.

I'LL ENTERTAIN A MOTION TO APPROVE THE CONSENT AGENDA WITH THE EXCEPTION OF NPR R 1250 NPRR 1215 CLARIFICATIONS OF THE DAY AHEAD MARKET ENERGY ONLY CA OFFER CALCULATION.

UH, JOHN MOVES AND CARLOS' SECOND.

IS THAT RIGHT? ALL IN FAVOR? AYE.

ANY OPPOSED? ANY ABSTENTIONS? THAT MOTION IS APPROVED UNANIMOUSLY.

[4. June 18, 2024 General Session Meeting Minutes]

[00:05:01]

UH, 2024, GENERAL SESSION MEETING MINUTES.

THERE'S A DRAFTED AND MEETING MATERIALS.

DOES ANYONE HAVE ANY COMMENTS OR WISH OR QUESTIONS OR WISH TO MAKE A MOTION? I MOVE TO APPROVE.

OKAY, PEGGY, UH, MOVES APPROVAL.

IS THERE A SECOND? CARLOS? A SECOND.

THANK YOU, CARLOS.

ALL IN FAVOR? AYE.

ALLOW, I'D NOW LIKE TO INVITE ERCOT, CEO PABLO VEGA TO PRESENT AGENDA ITEM FIVE, THE CEO UPDATE.

THE MINUTES ARE APPROVED.

I'D

[5. CEO Update]

PABLO, THE FLOOR IS YOURS.

GOOD MORNING AND THANK YOU EVERYBODY FOR YOUR INTEREST IN THE IMPORTANT WORK THAT WE DO HERE AT ERCOT.

UM, IN TODAY'S CEO REPORT, I'M GONNA DISCUSS THE UPCOMING MARKET DESIGN ANALYSIS THAT WE'RE GONNA BE, THAT'S GONNA CONSIDER THE RELIABILITY AND THE RESILIENCY AND EFFICIENCY NEEDS OF THE ERCOT MARKET, AND ASSESS THE EXISTING AND POTENTIAL TOOLS THAT WE HAVE AVAILABLE TO MEET THOSE NEEDS.

I'M ALSO GONNA TOUCH BASE ON THE CURRENT STATE OF MITIGATIONS FOR THE NEW SOUTH TEXAS INTERCONNECTION RELIABILITY OPERATING LIMIT OPERATING THAT WAS CREATED IN, UH, MARCH THIS YEAR.

AND THEN I WANNA GIVE A BRIEF UPDATE ON THE PROGRESS RELATED TO THE PERMIAN RELIABILITY PLAN AND CONSIDERATIONS FOR SOME OF THE LARGER 2024, UH, REGIONAL TRANSMISSION PLAN.

BEFORE I BEGIN IN WITH THAT, THOUGH, I WANT TO ACKNOWLEDGE, UH, TODAY, YOU KNOW, OPERATIONALLY IS A, UH, LIKELY GONNA BE ONE OF THE PEAK DAYS IN THE ERCOT MARKET THIS SUMMER.

WE'VE, UH, HAD A VERY KIND OF DIFFERENT EXPERIENCE OPERATING THE ERCOT GRID THIS SUMMER, FROM LAST SUMMER.

SOME OF THE KEY DIFFERENCES HAS BEEN, OF COURSE, THE WEATHER PROFILE FOR THIS SUMMER WAS DIFFERED SIGNIFICANTLY.

THE HEAT DOME THAT WE EXPERIENCED FOR THE BETTER PART OF THE 2023 SUMMER WAS NOT IN PLACE THIS YEAR.

AND SO THE, THAT'S BEEN A BIG DRIVING CHANGE FROM ONE YEAR TO THE NEXT.

IN ADDITION, WE'VE ALSO SEEN THE RESOURCE MIX CONTINUE TO EVOLVE.

UH, OVER THE LAST YEAR, WE'VE SEEN SIGNIFICANT ADDITIONS OF, UH, ENERGY STORAGE RESOURCES, UH, SOLAR RESOURCES AND WIND RESOURCES WITH, UH, A FEW ADDITIONS ALSO ON THE, UH, THERMAL SIDE, THE GAS SIDE.

ALL OF THAT HAS HELPED TO CONTRIBUTE TO MORE CONSISTENT, UH, I'D SAY LESS SCARCITY CONDITIONS DURING THE PEAK PERIODS OF THE SUMMER, LIKE WE EXPERIENCED, UH, LAST YEAR.

I BRING IT UP TODAY, UH, IN, IN TODAY'S OPERATION.

'CAUSE IT LOOKS LIKE TODAY COULD BE ONE OF THE PEAK PERIODS THAT WE'LL EXPERIENCE THIS SUMMER.

UM, FACTORS FOR A DAY LIKE TODAY ARE, ARE GENERALLY, YOU KNOW, WHAT KIND OF PERFORMANCE WE EXPECT TO SEE FROM THE WIND AS WE HAVE THAT TRANSITION FROM THE PEAK OF THE DAY INTO THE NIGHT.

THE, AS THE SOLAR RAMP COMES DOWN, THE WIND RAMPING BACK UP IS ONE OF THE MORE SIGNIFICANT VARIABLES THAT WE LOOK TO IN ORDER TO HAVE A SMOOTH TRANSITION.

UH, WE'RE ALSO GONNA BE LOOKING CLOSELY AS TO SOME OF THE OTHER ISOS, UH, AROUND US.

AND SO SPP IN PARTICULAR TO THE NORTH OF US, HAS THE POTENTIAL FOR SOME OF THE GENERATING UNITS THAT CAN SERVE EITHER ERCOT OR SPP TO CALL ON THOSE UNITS.

AND SO WHETHER THOSE UNITS ARE REQUIRED IN SPP OR AVAILABLE TO ERCOT CAN MAKE A DIFFERENCE IN THE PERFORMANCE PROFILE FOR THE GRID.

ANOTHER KEY VARIABLE WE'LL BE LOOKING AT TODAY IS THE AVAILABILITY AND PERFORMANCE OF THE THERMAL FLEET.

AND IF WE HAVE ANY UNPLANNED OUTAGES THAT OCCUR DURING THE DAY OR BEFORE THOSE PEAK PERIODS, THAT CAN ALWAYS CHANGE, UH, THE, UH, THE EXPECTATIONS AROUND SCARCITY DURING THE, THE PERIOD OF THE DAY.

SO WE'LL BE KEEPING AN EYE ON ALL OF THOSE FACTORS.

ALL THAT BEING SAID, WE EXPECT TO HAVE ADEQUATE SUPPLY TO MEET DEMAND TODAY, DEMAND TODAY.

UM, AND SO WITH THOSE, UH, WITH THOSE CONDITIONS, YOU KNOW, MAINTAINING WHERE THEY ARE, WE'LL BE KEEPING A CLOSE EYE ON THAT.

AND OF COURSE, IF ANYTHING WERE TO CHANGE, WE WILL COMMUNICATE THAT AS EARLY AND AS TRANSPARENTLY AS WE CAN TO ALL CONSUMERS THROUGH OUR TEXANS, UH, THE TXA AND S PLATFORM ON OUR WEBSITE, AS WELL AS THROUGH OUR NORMAL CHANNELS ON SOCIAL MEDIA AND TRADITIONAL MEDIA.

ALL RIGHT.

SO I WOULD LIKE TO START WITH, UM, A BRIEF DISCUSSION ON OUR FUTURE MARKET DESIGN FRAMEWORK.

SO WE'VE SPENT A LOT OF TIME OVER THE LAST COUPLE OF YEARS DISCUSSING THE MARKET DESIGN IN ERCOT, AND OFTEN WE SPEND THE TIME FOCUSING ON ONE PARTICULAR ATTRIBUTE OR FEATURE THAT WAS RELEVANT TO THE ISSUE THAT WE WERE DISCUSSING.

AND TYPICALLY, WE HAVE DONE THIS WITHOUT EXPLICITLY CONSIDERING HOW THAT ONE FEATURE MIGHT FIT WITHIN A LARGER FRAMEWORK.

MUCH LIKE TALKING ABOUT, YOU KNOW, SPECIFIC TREES WITHOUT NECESSARILY CONSIDERING WHAT THE FOREST LOOKS LIKE OR HOW THE FOREST IS CHANGING.

AS AN EXAMPLE, WHEN WE WERE SPENDING TIME TALKING ABOUT THE PERFORMANCE CREDIT MECHANISM OR PCM, WE WOULD SPEND TIME DISCUSSING RESOURCE AVAILABILITY FOR FUTURE DEMAND OBLIGATIONS.

OR WHEN WE WERE DISCUSSING STATE OF CHARGE ISSUES FOR BATTERIES, WE WOULD SPEND TIME CENTERING AROUND THE FLEXIBILITY AND THE DEPENDABILITY ISSUES RELATED TO ENERGY STORAGE RESOURCES.

SO I THINK IT'S GONNA BE HELPFUL AS WE CONTINUE THE CONVERSATIONS AROUND MARKET DESIGN AND THE CHANGES THAT MAY COME IN THE COMING MONTHS AND YEARS TO HAVE A FRAMEWORK THAT WE CAN USE TO PUT THIS ALL INTO CONTEXT.

THE RELEVANT ATTRIBUTES OR THE RELEVANT FEATURES THAT WE'RE GONNA BE DISCUSSING AND HOW THEY FIT WITHIN

[00:10:01]

A WELL FUNCTIONING MARKET AND HAVING A WELL UNDERSTOOD FRAMEWORK TO DO THIS IS ALSO GONNA HELP KEEP US FROM CO-OPTING ATTRIBUTES THAT MIGHT BE BETTER SUITED FOR ONE FUNCTION AND USING THEM LESS EFFICIENTLY POTENTIALLY TO SERVE A SECONDARY FUNCTION.

WE'VE BEGUN TO DISCUSS THE DEFINITION OF ATTRIBUTES OF A MARKET DESIGN FRAMEWORK THAT WE HOPE WILL BE ABLE TO USE IN BOTH QUALITATIVE AND QUANTITATIVE EVALUATIONS OF THE ERCOT MARKET DESIGN.

THIS IS NOT INTENDED TO PRESENT KIND OF A SINGLE CONSTRUCT THAT WOULD REPRESENT A RIGHT FRAMEWORK OR A SINGULAR ANSWER, BUT RATHER IT'S INTENDED TO HELP PUT INTO CONTEXT THE SPECIFIC SERVICES WITHIN A MARKET DESIGN AND ALLOW FOR DISCUSSION AND FOR DEBATE ON WHICH FRAMEWORK ATTRIBUTES THOSE SERVICES BEST SUPPORT.

AND I WOULD EXPECT DIFFERENT SERVICES TO HAVE MULTIPLE ATTRIBUTES THAT THEY CAN SUPPORT, WHICH IS LOGICAL.

IF YOU THINK ABOUT A SERVICE LIKE ECRS, WHICH WE HAVE SPENT A LOT OF TIME TALKING ABOUT THAT HAVE ATTRIBUTES THAT SUPPORT FLEXIBILITY, DEPENDENCY, AND RESILIENCY, THIS IS STILL A WORK IN PROGRESS.

WE STILL NEED TO MAP EXISTING SERVICES TO THESE ATTRIBUTES AND TO DETERMINE THE BEST WAY TO QUANTIFY AND QUALIFY THE IMPACT THAT THEY ARE GONNA HAVE TO EACH OF THESE ATTRIBUTES, I BELIEVE A FRAMEWORK LIKE THIS COULD BE VERY HELPFUL AS WE GET FURTHER INTO CONVERSATIONS AROUND ANCILLARY SERVICES, THE RELIABILITY STANDARD, THE PERFORMANCE CREDIT MECHANISM, AND DRRS, WE LOOK FORWARD TO WORKING WITH THE BOARD AS WELL AS WITH OUR REGULATORS AND STAKEHOLDERS TO REFINE THIS FRAMEWORK AND TO HELP US DEVELOP AND BUILD A SUCCESSFUL MARKET DESIGN.

SO LET ME PAUSE THERE BEFORE I MOVE ON TO AN OP, MORE OPERATIONAL UPDATES RELATED TO OUR IRL.

IF THERE'S ANY QUESTIONS OR, UH, FEEDBACK, I RECOGNIZE THIS IS VERY EARLY, THIS IS HIGH LEVEL AT THIS POINT.

AS WE CONTINUE THESE CONVERSATIONS, WE'RE GONNA SPEND TIME DOING SOME WORK TO MAP THE VARIOUS FEATURES AND ATTRIBUTES AND WHAT THE KIND OF IMPACTS WE EXPECT THEM TO HAVE AND HOW WE THINK THE MARKET CAN BEST PERFORM UNDER A ROBUST PORTFOLIO OF SERVICES THAT CAN DELIVER ALL OF THE ATTRIBUTES THAT ARE CRITICAL TO A SUCCESSFUL MARKET.

YEAH, PABLO, I'M GONNA HAVE A LITTLE HARD, HARD TIME UNDERSTANDING WHAT THIS IS BE USED FOR AND UNDERSTAND THAT YOU JUST SAID IT'S IN THE EARLY STAGES, BUT IS THIS LIKE A MODEL THAT YOU'RE GONNA OVERLAY TO ALMOST EVERYTHING WE DO? IS THAT WHAT YOU, WHAT THIS IS WHAT I, WHAT I WOULD EXPECT US TO BE ABLE TO DO AS WE DO GO THROUGH THIS WORK, IS TO LAY OUT THIS KIND OF FRAMEWORK OF ATTRIBUTES OVER ALL OF THE FEATURES AND SERVICES THAT ARE IN THE ERCOT MARKET TO ENSURE THAT THERE IS THE ADEQUATE SUPPLY OF CAPABILITIES AND SERVICES TO MEET.

WHAT ARE THE REQUIREMENTS AROUND FLEXIBILITY FOR THE CURRENT OPERATIONAL FLEXIBILITY REQUIREMENTS TO MAKE SURE THAT THERE ARE FEATURES THAT ARE DRIVING AVAILABILITY OF RESOURCES WHEN WE EXPECT THEM, BOTH IN CURRENT PERIODS AND IN FUTURE PERIODS, THAT, YOU KNOW, THE QUALITIES THAT ARE IMPORTANT TO THIS MARKET ARE DEFINED.

IF THOSE QUALITIES EVOLVE OVER TIME TO INCORPORATE CARBON FREE BASE LOAD ENERGY, THAT THAT'S A QUALITY WE WOULD WANT, THEN WOULD WE, DO WE HAVE A CAPABILITY IN THE MARKET TO BE ABLE TO BUILD THAT SERVICE AND FEATURE IN THIS MARKET? THAT WOULD BE, YOU KNOW, SOMETHING ON THE QUALITY SIDE, POTENTIALLY EFFICIENCY, THE COST OF THE MARKET.

ARE WE LOOKING AT WAYS THAT WE OPTIMIZE, BUILD THESE RESOURCES AND SERVICES AMONG EACH OTHER IN ORDER TO DELIVER THE MOST EFFICIENT OUTCOMES? AND WHERE ARE THERE EFFICIENCY OPPORTUNITIES? SO IT IS AN OVERLAY TO THE ERCOT SERVICES AND FUNCTIONS AND FEATURES THAT HELPS TO DEFINE AND DESCRIBE WHAT ARE THE ATTRIBUTES THAT CONTRIBUTE BEST TO A WELL-FUNCTIONING MARKET.

AND THERE'S STILL, LIKE I SAID, THERE'S STILL, I THINK, DEBATE AND DISCUSSION AS TO WHICH OF THESE ATTRIBUTES ARE THE MOST IMPORTANT.

ARE THERE SOME THAT ARE MISSING FROM THIS FRAMEWORK? BUT THE POINT IS THAT AS WE TALK ABOUT AND DIVE INTO SPECIFIC ISSUES, IT'S HELPFUL TO PERIODICALLY BE ABLE TO PULL BACK AND SAY, HERE'S WHAT WE'RE TRYING TO SOLVE HERE.

HERE'S THE ATTRIBUTE OR THE, THE, THE CHARACTERISTIC THAT WE THINK IS LACKING THAT THIS PARTICULAR SERVICE, THIS NPRR, THIS OPERATING GUIDE REVISION IS INTENDED TO ADDRESS.

AND WHILE IT MIGHT ADDRESS SOMETHING ELSE IN PARALLEL, IT MAYBE DOES SO TO A LESSER DEGREE OR LESS EFFICIENTLY.

AND SO WE THINK THAT IT MAY NOT BE THE BEST PLACE TO EMPHASIZE SOMETHING NEW IF IT DOESN'T REALLY HELP TO FILL OUT THE FRAMEWORK FULLY.

THAT'S THE INTENTION OF IT, IS TO CONTEXTUALIZE THE CONVERSATIONS WE'RE HAVING ABOUT THE SPECIFIC MARKET FUNCTIONS AND FEATURES SO THAT WE'RE ALWAYS KEEPING THE HOLE IN MIND AS WE WORK ON THE SPECIFIC PARTS.

PABLO, IF, IF I CAN JUST SUGGEST AN ADDITION HERE, UH, I, THE WORD ECONOMIC IS, IS MISSING FROM THIS CHART.

AND I, AND I THINK MOST PEOPLE WOULD AGREE, IT'S, IT'S A

[00:15:01]

VERY IMPORTANT PART OF OUR MANDATE.

IT'S IMPLIED IN THE EFFICIENCY, BUT I, BUT I THINK YOU WANT TO EMPHASIZE IT MORE STRONGLY THAN, THAN JUST SORT OF HAVING IT AS AN IMPLIED CHARACTERISTIC.

YEAH, THAT'S GOOD FEEDBACK, JOHN.

REALLY THANK THE ERCOT PLANNING TEAM.

ALRIGHT.

I APPRECIATE THE FEEDBACK AND, AND MORE TO COME ON THIS AS WE PROGRESS THIS CONVERSATION.

UM, AND AS WE DELVE INTO THE, UH, SOME OF THE, UH, MARKET DESIGN, UH, CHANGES THAT ARE GONNA BE AHEAD OF US IN THE COMING MONTHS.

SO I WANTED TO SHARE A QUICK UPDATE ON THE NEW SOUTH TEXAS IOLS, THE, UH, INTER-REGIONAL OPERATING LIMITS.

AS A REMINDER, THESE FOUR IOLS, THEY RELATE TO THE IMPORT AND EXPORT OF POWER FROM THE SAN ANTONIO REGION TO AND FROM THE SOUTH TEXAS AREA.

THEY WERE ESTABLISHED IN MARCH OF THIS YEAR.

IN AUGUST OF 2023, THE ERCOT BOARD ENDORSED THE SAN ANTONIO SOUTH RELIABILITY PROJECT, WHICH IS GONNA PROVIDE ADDITIONAL TRANSFER CAPABILITIES IN THE REGION.

AND THEN LESS THAN A YEAR LATER IN APRIL OF THIS YEAR, THE BOARD ENDORSED ANOTHER TRANSMISSION PROJECT, THE SAN ANTONIO SOUTH RELIABILITY TWO PROJECT ONCE COMPLETED, BEGINNING IN THE SUMMER OF 2027 AND CONTINUING ALL THE WAY THROUGH 2029.

THESE TWO PROJECTS ARE EXPECTED TO REDUCE OR ELIMINATE THE NEED FOR THE SOUTH TEXAS EXPORT AND IMPORT GTCS.

SO ERCOT IS WORKING WITH THE UTILITIES RIGHT NOW DEVELOPING THAT THESE PROJECTS TO EVALUATE THE NEED FOR ANY ADDITIONAL LONG-TERM SOLUTIONS FOR THIS AREA.

IN THE NEAR TERM, ERCOT HAS BEEN WORKING WITH THESE UTILITIES TO MAXIMIZE THE CAPABILITY OF THE EXISTING TRANSMISSION SYSTEM TO DELIVER POWER FROM AND TO SOUTH TEXAS BY ALLOWING FOR UPDATES TO FLOW LIMITS ON THE TRANSMISSION LINES BASED ON REAL TIME CONDITIONS.

ERCOT AND THE UTILITIES HAVE ALSO JOINTLY DEVELOPED A PLAN THAT COULD TEMPORARILY RECONFIGURE THE TRANSMISSION SYSTEM TO REROUTE POWER WHEN FLOWS APPROACH IDENTIFIED LIMITS.

IN ADDITION, ERCOT HAS ALSO DEVELOPED A PLAN TO RELEASE ADDITIONAL GENERATION RESERVES THAT'LL REDUCE THE IMPACT OF ANY TRANSMISSION OVERLOADS.

HOWEVER, I WANNA POINT OUT AGAIN, THAT EVEN WITH THESE MITIGATING ACTIONS, IT IS POSSIBLE THAT UNDER CERTAIN EXPORT OR IMPORT SCENARIOS THAT A LIMITED AMOUNT OF CUSTOMER DEMAND MAY HAVE TO BE CURTAILED BY TRANSMISSION OPERATORS IN ORDER TO AVOID TRANSMISSION OVERLOADS AND TO PROTECT THE OVERALL RELIABILITY OF THE GRID.

SO WORK CONTINUES ON THESE RLS IN THE SHORT TERM.

WE HAVE PLANS LONG TERM ALREADY ESTABLISHED AND UNDERWAY, UH, TO COMPLETELY ELIMINATE THE RISKS ASSOCIATED WITH THIS.

BUT AS, UH, WE PROGRESS THROUGH TIME, WE'LL CONTINUE TO GIVE UPDATES ON THE MITIGATING ACTIONS THAT WE'RE TAKING AS IT RELATES TO THIS NEW IROL.

I ALSO WANTED TO PROVIDE AN UPDATE ON THE PERMIAN BASIN RELIABILITY PLAN.

SO PER HOUSE BILL 5 0 6 6, THE PUC DIRECTED ERCOT TO DEVELOP THE PERMIAN BASIN RELIABILITY PLAN AND TO FILE A FINAL PLAN AT THE COMMISSION NO LATER THAN JULY THIS YEAR.

WE SUBMITTED THAT PLAN ON JULY 25TH.

AS A BRIEF REFRESHER, THE LOAD FORECAST THAT PER THAT WAS PROVIDED BY THE TRANSMISSION SERVICE PROVIDERS HAD A STUDY IN A TOTAL PERMIAN BASIN LOAD OF 2030 OF ALMOST 23,000 TO 700 MEGAWATTS, OF WHICH APPROXIMATELY 12,000 WAS OIL AND GAS RELATED AND ALMOST 11,700 MEGAWATTS OF ADDITIONAL NON-OIL AND GAS RELATED LOAD.

THE PLAN THAT WE FILED INCLUDES THE LOCAL TRANSMISSION PROJECTS TO INTERCONNECT AND SERVE THE PROJECTED LOAD, AS WELL AS SOME ADDITIONAL TRANSMISSION CAPACITY THAT IS NEEDED TO IMPORT POWER TO MEET THE FORECASTED DEMAND IN THIS REGION.

THE LOCAL TRANSMISSION PROJECTS NEEDED TO SERVE BOTH THE 2030 AND THE 2038 PERMIAN REGIONAL DEMAND ARE ESTIMATED TO COST AROUND $4 BILLION.

THE PLAN ALSO INCLUDES THREE MUTUALLY EXCLUSIVE IMPORT PATH OPTIONS THAT ARE NEEDED TO TRANSFER POWER INTO THE PERMIAN BASIN TO SERVE THIS DEMAND.

THE COST OF THE IMPORT PATHS IS INCREMENTAL TO THE LOCAL TRANSMISSION CO PROJECT COSTS OF 4 BILLION.

AND THE IMPORT PATH OPTION COSTS VARY DEPENDING ON WHETHER THOSE IMPORT PATHS ARE DEVELOPED.

USING A 345 KV SYSTEM, 500 KV LINES, OR 7 65 KV LINES, THE TOTAL NEW RIGHT OF WAY FOR THOSE IMPORT PATHS RANGES FROM APPROXIMATELY 1,675 MILES DOWN TO ABOUT 1,255 MILES.

THE DIFFERENCE BEING THE HIGHER ONE BEING THE 3 45 KV OPTIONS AND THE LOWER AMOUNT BEING THE 7 65 KV OPTIONS.

SO THE NEXT STEPS ON THIS RELIABILITY PLAN IS RIGHT NOW IT IS BEFORE THE COMMISSION FOR CONSIDERATION AND APPROVAL.

THERE IS AN OPPORTUNITY FOR STAKEHOLDER FEEDBACK TO THE COMMISSION VIA COMMENTS AND A WORKSHOP THAT IS SCHEDULED FOR AUGUST 22ND.

AND THEN ONCE THE COMMISSION COMPLETES THEIR REVIEW AND THE CONSIDERATION PROCESS, THE APPLICABLE TRANSMISSION SERVICE PROVIDERS WILL FILE FOR CERTIFICATES OF CONVENIENCE AND NECESSITY AT THE COMMISSION.

I WANNA TAKE A MOMENT TO

[00:20:01]

ALL THE TRANSMISSION SERVICE PROVIDERS, THE OFFICE OF PUBLIC UTILITY COUNCIL, AND THE PUC AND ITS STAFF FOR THE EXTRAORDINARY WORK THAT IT TOOK TO PUT TOGETHER THIS PERMIAN PLAN IN THE TIMEFRAME THAT IT WAS PUT TOGETHER, IT WAS AN EXTRAORDINARY AREA EFFORT ON EVERYBODY'S PART AND REALLY WAS A, A SIGNIFICANT ACCOMPLISHMENT.

SO A BIG THANKS TO ALL WHO ENABLED THAT AND COMPLEMENTING THE PERMIAN ELITE REGIONAL PLAN IS THE DEVELOPMENT OF THE 2024 REGIONAL TRANSMISSION PLAN.

ONE OF THE CHARACTERISTICS THAT WE'VE TALKED ABOUT IN THE EVOLVING GENERATION MIX THAT'S COMING IS A GENERATION IS CONTINUING TO BE CITED FURTHER FROM WHERE LOAD IS, UH, HISTORICALLY BEEN.

AND WITH THE INCREASE IN LARGE LOADS THAT ARE PROJECTED TO MOVE TO TEXAS, THE PRELIMINARY 2024 RTP STUDY RE RESULTS INDICATE A NEED FOR A SUBSTANTIAL AMOUNT OF NEW TRANSMISSION INFRASTRUCTURE IN ORDER TO BE ABLE TO SERVE THIS FORECASTED LOAD GROWTH.

RIGHT NOW, ERCOT IS CONSIDERING EXTRA HIGH VOLTAGE TRANSMISSION LINES AT EITHER THE 765 KV OR 500 KV, UH, DOUBLE CIRCUIT AS AN ALTERNATIVE TO USING ONLY 3 45 KV IN THE RTP FOR LONG DISTANCE TRANSMISSION.

WHEN YOU'RE TALKING ABOUT TRANSMISSION LINES THAT EXCEED A HUNDRED MILES, 1 7 65 LINE ON A 200 FOOT WIDE RIGHT OF WAY CAN CARRY THE SAME AMOUNT OF ENERGY AS 5 345 KV LINES, EACH ONE OF THEM NEEDING 150 FEET OF RIGHT OF WAY FOR A COMBINED 750 FEET OF RIGHT OF WAY.

SO THERE'S AN EFFICIENCY IN TERMS OF THE LAND MANAGEMENT AND THE RIGHT OF WAY THAT'S REQUIRED AS YOU'RE MOVING LARGE AMOUNTS OF POWER AROUND THE STATE.

SOME OF THE BENEFITS, THIS HIGHER TRANSMISSION, HIGHER VOLTAGE TRANSMISSION CARRIES, INCLUDES THE ABILITY TO TRANS TO TO HAVE A SIGNIFICANTLY INCREASED TRANSFER CAPABILITY TO LOAD CENTERS, WHICH IS GONNA HELP TO SUPPORT THE CONTINUED ECONOMIC DEVELOPMENT.

IT ALSO PROVIDES FOR INCREASED OUTAGE COORDINATION CAPACITY FOR BOTH GENERATION RESOURCES AND FOR TRANSMISSION EQUIPMENT.

THAT'S BECOMING MORE OF AN ISSUE AS WE'RE SEEING EACH OF THE PASSING SUMMERS.

AS THE GRID BECOMES MORE CONGESTED, OF COURSE, THERE'S LESS ROUTE OF WAY IMPACTS TO CONSUMERS BECAUSE OF FEWER LINES THAT ARE NEEDED.

THERE'S ALSO REDUCED LINE LOSSES WHILE INCREASING THE ABILITY TO MOVE POWER OVER LONGER DISTANCES.

IT ALSO OFFERS THE POTENTIAL TO RETIRE SERIOUS COMPENSATION DEVICES, RE REDUCING THE STABILITY RISKS FOR GENERATING RESOURCES ON THE GRID.

AND ONE OF THE BIG BENEFITS IS THAT IT OFFERS ADDITIONAL FLEXIBILITY TO MITIGATE GENERATION RESOURCE SIGHTING UNCERTAINTY, BECAUSE IN TEXAS WE DON'T PRESCRIBE WHERE GENERATING RESOURCES ARE BUILT.

THOSE RESOURCES ARE BUILT WHERE THE DEVELOPERS FIND IT TO BE MOST ECONOMIC AND EFFICIENT FOR THEIR PLANS.

AND SO HAVING MORE FLEXIBILITY IN BOTH WHERE LOAD WILL SITE AND WHERE REGENERATION SITE IS ONE OF THE KEY BENEFITS THAT EXTRA HIGH VOLTAGE TRANSMISSION CAN OFFER.

AND THEN ANOTHER OF COURSE, POTENTIAL BENEFIT IS THE EXIT STRATEGY FOR SOME OF OUR CURRENT MAJOR GENERIC TRANSMISSION CONSTRAINTS, WHICH WILL RESULT IN MAKING MORE GENERATION AVAILABLE TO CONSUMERS.

THE EXTRA HIGH VOLTAGE IMPORT PATHS OF THE NEW TRANSMISSION PROJECT THAT'S PROPOSED FOR THE PERMIAN BASIN IN 2038 IS A SUBSET OF THE HOLISTIC TRANSMISSION EXPANSION THAT WE'RE EVALUATING IN THE 2024 RTP.

SO FROM A TIMING PERSPECTIVE, NO LATER THAN SEPTEMBER, WE WILL PROVIDE AN INITIAL DRAFT OF THAT REGIONAL TRANSMISSION PLAN, INCLUDING THE NEW EXTRA HIGH VOLTAGE OPTIONS AND THE FINAL 2024 PLAN WE EXPECT TO BE COMPLETED NO LATER THAN DECEMBER OF THIS YEAR.

I'LL PAUSE THERE.

ARE THERE ANY QUESTIONS RELATED TO ANY OF THE OPERATIONAL RELATED UPDATES THAT I'VE PROVIDED SO FAR? YEAH, PABLO, REAL QUICK.

UM, SO, YOU KNOW, WHEN WE'VE TALKED ABOUT THE PERMIAN, WE SPENT A LOT OF TIME TALKING ABOUT COST RECENTLY.

I'D SAY THE MAJOR CONCERN I'VE HAD VOICED TO ME ABOUT GOING WITH 7 65 IN THE PERMIAN IS TIMELINE.

SO I THINK IT'D BE HELPFUL FROM ERCOT AND FROM STAKEHOLDERS TO GET A LOT OF DISCUSSION ON TIMELINE BECAUSE, UM, I I THINK THAT'S REALLY IMPORTANT TO THE CUSTOMERS IN THE PERMIAN.

SO KNOWING THE DIFFERENTIAL BETWEEN SAY, A 3 45, UH, TIMELINE AND A 7 65 WOULD BE HELPFUL.

ABSOLUTELY.

AND, AND I, YOU KNOW, I I I THINK THAT, UH, QUESTION IS BEST, YOU KNOW, DISCUSSED.

IF WE CAN BRING TOGETHER THE TRANSMISSION DEVELOPERS WHO ARE GONNA HAVE REALLY GOOD INSIGHTS UNDER THE SUPPLY CHAIN AND THE SERVICE PROVIDERS THAT ARE GONNA HELP TO DEVELOP AND CONSTRUCT WHATEVER THE, YOU KNOW, VOLTAGE SYSTEM IS GOING TO BE FOR THE STATE.

AND, UM, AND THOSE ARE KEY CONSIDERATIONS, YOU KNOW, AS THE SUPPLY CHAIN OF TRANSFORMERS AND BREAKERS, ARE THOSE GONNA BE AVAILABLE ON ANY OF THE DIFFERENT LEVEL VOLTAGES THAT WE'RE LOOKING FOR? UM, THOSE ARE IMPORTANT CONSIDERATIONS.

BUT ALONG THOSE LINES TOO, WHEN YOU THINK ABOUT THE LONG TERM, YOU KNOW, KIND OF BUILD OUT THAT WE'RE TALKING ABOUT, THIS IS A, YOU KNOW, 10 AND 14 YEAR, YOU KNOW, STAGE BUILD OUT, BEING ABLE TO DO RIGHT OF WAY, UH, ACQUISITION.

UH, THE DEALING WITH, UH, THE, THE

[00:25:01]

TIMING THAT IS ASSOCIATED WITH PURCHASING AND DEVELOPING ON LARGER RIGHT OF WAYS, THAT'S A BIG DRIVER OF TIME.

IT NEEDS TO BE FACTORED INTO THIS AS WELL.

THERE'S SIGNIFICANTLY MORE RIGHT OF WAY THAT WOULD BE NECESSARY UNDER A 3 45 THAN UNDER 7 65 PLAN THAT CAN BECOME THE LONG POLE IN THE TENT IN A CONSTRUCTION PROJECT VERY QUICKLY.

SO WE NEED TO LOOK AT ALL THE DIFFERENT FACETS OF THE PROGRAM, AND I THINK IT'S AN EXCELLENT IDEA.

WE SHOULD BRING TOGETHER THE STAKEHOLDERS TOGETHER EARLY ON SO THAT WHEN WE HAVE THIS DATA AVAILABLE TO US, WE CAN MAKE A QUICK EVALUATION OF IT AND DETERMINE DOES IT MAKE SENSE OR NOT TO CONSIDER THE, THE, THE HIGHER VOLTAGE OPTIONS AT THIS STAGE IN THE DEVELOPMENT.

CARLOS PABLO, CAN I FOLLOW UP ON THAT? THIS IS JIMMY.

UM, I, I LOOKED AT, I REACHED OUT TO SIEMENS, UM, TO ASK THEM ABOUT, UH, TIMELINES FOR BREAKERS AND TRANSFORMERS ASSOCIATED WITH 3 45, 507 65, 3 40 FIVES RANGED FROM 38 MONTHS TO 72 MONTHS, DEPENDING UPON WHERE YOU GET IT.

THEY BUILD THEM IN, UH, MEXICO, BRAZIL, CROATIA, AUSTRIA AND CHARLOTTE, NORTH CAROLINA 500 KV BREAKERS AND, AND TRANSFORMERS ARE 4 38 TO 72 MONTHS.

BRAZIL, CROATIA, AUSTRIA, AND CHARLOTTE, AND 7 65 ARE 40 MONTHS TO 72 MONTHS, BRAZIL AND AUSTRIA.

SO, UH, NONE OF THOSE OTHER THAN CHARLOTTE ARE HERE.

UM, BUT THEY ALSO SAID THAT, UH, MANY OF THE 3 45 FACTORIES HAVE A LONGER WAIT TIME THAN THE HIGHER VOLTAGES BECAUSE THOSE LOWER VOLTAGES ARE MORE IN DEMAND.

SO I THINK WE NEED TO, UH, TO TALK TO MORE VENDORS, BUT, UH, THAT COULD BE PART OF THE DISCUSSION.

IF I CAN CHIME IN HERE AS, AND LORI, I'LL RECOGNIZE YOU IN JUST A SECOND, BUT IF I COULD CHIME IN IN HERE AS WELL.

WHEN THOMAS AND I SAT IN TO OUR STAKEHOLDER MEETINGS THIS MORNING, WE HEARD THE SAME THING THAT THE SUPPLY CHAIN, UH, TIMING IS REALLY THE SAME FOR 7 65.

IT IS IT AS IT IS FOR THE LOWER VOLTAGES.

SO I THINK THAT'S SOMETHING THAT WASN'T BA I DON'T THINK WE FELT THAT WHEN WE READ THE ORIGINAL STUDIES.

SO I THINK WE NEED TO MAKE SURE THAT WE'RE DOING AN, AN IN DEPTH DIS DISCUSS, UH, STUDY OF THE SUPPLY CHAIN ON THIS ISSUE.

LORI? YEP.

THANK YOU CHAIR FLORES.

UM, JUST TO KIND OF, UM, ECHO SOME OF THE COMMENTARY HERE.

I I PART OF, I THINK THE TIMELINE THAT, UM, CHAIRMAN GLEASON IS REFERRING TO FROM MY PERSPECTIVE AS WELL, UM, IS NOT JUST THE, THE ACTUAL PROCUREMENT OF EQUIPMENT AND, AND BUILD OUT, BUT ALSO THE, THE REGULATORY PROCESS THAT NEEDS TO BE INVOLVED IS, IS APOLLO, YOU, YOU SAID THAT YOU GUYS WILL HAVE A DRAFT REPORT BY NO LATER THAN SEPTEMBER.

THAT'S RIGHT.

I THINK CHRISTIE SAID THAT THAT REPORT WILL GO TO RPG.

AND I THINK IT'LL BE IMPORTANT TO GET, UM, STAKEHOLDER COMMENT, UM, FILED ON, ON THE DRAFT REPORT AND HAVE SOME WORKSHOPS AND JUST GET TECHNICAL REVIEW ON THE, ON THE REPORT BEFORE IT COMES TO THE COMMISSION.

AND THEN OF COURSE AT THE COMMISSION WE'LL DISCUSS LIKE WHAT THE NEXT STEPS ARE, WHICH, YOU KNOW, THEORETICALLY WOULD MAKE SENSE, COMMENTS IN A WORKSHOP, AND THEN AT A, AT SOME SET TIME MAKING A DECISION ON, YOU KNOW, AFTER WE GET ENOUGH INFORMATION ON WHERE WE GO WITH, WITH VOLTAGE LEVELS.

UM, BUT WITH RESPECT BACK TO THE PROCUREMENT AND EQUIPMENT, UM, IT'S VERY VALUABLE TO HAVE INFORMATION FROM AT LEAST ONE VENDOR.

AND I THINK WE TALKED ABOUT, UM, AS COMMISSIONER FEL TI THINK, UM, IS, IS RECOMMENDING MAYBE DOING LIKE AN OEM SURVEY? MM-HMM.

OF VARIOUS VENDORS TO GET IDEAS OF WHAT, WHAT KIND OF TIMELINES WE'RE LOOKING AT FROM VARIOUS VENDORS, UM, FOR DIFFERENT PARTS OF THAT KIND OF CONSTRUCTION WOULD BE VERY HELPFUL.

THE MORE INFORMATION YOU CAN GET ON THIS NEW VOLTAGE ON EVERY ANGLE FROM, YOU KNOW, PROCUREMENT AND EQUIPMENT TO COST AND TIMELINES IS, IS, IS GOOD BECAUSE IT'S, IT'S A NEW, UM, A NEW PHENOMENON HERE IN ERCOT, RIGHT? AND, AND SO THE MORE INFORMATION, THE BETTER.

UM, AND SO I THINK WITH RESPECT TO THE EHV STUDY, I THINK HAVING THAT ROBUST PROCESS, UM, WILL BE VERY HELPFUL FOR EVERYONE INVOLVED.

AND THEN THE PERMIAN, I THINK, UM, YOU KNOW, WE WILL HAVE TO CONTINUE TO SORT OF MANAGE EXPECTATIONS THERE WITH, WITH THE, YOU KNOW, THE NEED FOR GETTING TRANSMISSION BUILT OUT THERE AND, AND THE, THE COMMUNITY THAT'S BEEN WAITING FOR A WHILE TO GET THAT ENERGIZER OPERATIONS.

AND ALSO, UM, THE REALITY IS THAT THE OIL AND GAS COMMUNITY NEEDS 24 7 POWER, AND MOST OF WHAT'S CURRENTLY CITED OUT THERE IS WIND AND SOLAR AND POTENTIALLY BATTERIES.

SO, AND SOME GAS PLANTS.

BUT AS THE, YOU ADD MORE POWER GENERATION OUT THERE, UM, LATER AS WE GET TF UP AND RUNNING, UM, YOU KNOW, THE, THE FACTORS ARE GONNA CHANGE, BUT AT LEAST AT THE INITIAL OUTSET, I THINK THERE'S GONNA BE A REAL NEED TO IMPORT, UM, ON DAY ONE.

THAT'S RIGHT.

AND SO, YOU KNOW, I JUST CONTINUE TO, YOU KNOW, ENCOURAGE YOU AND ERCOT TO, TO VISIT WITH THE STAKEHOLDERS, UM, TO, TO KIND OF UNDERSTAND, YOU KNOW, THEIR PERSPECTIVES ON, ON THIS MASSIVE INITIATIVE OF THE PERMIAN, WHICH IS, YOU KNOW, THE FIRST LEG OUT OF HOUSE BILL 50 66.

SO, AND, AND THANK YOU TO ERCOT FOR THEIR, UM, STEADFAST WORK ON GETTING THAT PLAN FILED.

[00:30:01]

AND, AND, AND, AND WHAT, AND SOMETHING THAT I THINK IS IMPORTANT TO NOTE THAT, WELL, THE 7 65 AND 500 KV CONSIDERATIONS ARE, ARE NEW IN ERCOT.

THEY ARE NOT NEW IN THE US AND THERE'S A LOT OF EXPERIENCE, IT'S DECADES OF EXPERIENCE THAT EXISTS THROUGHOUT THE COUNTRY WITH DEVELOPERS, THE CONSTRUCTION COMPANIES, THE OPERATORS.

SO IT IS A WELL PROVEN AND WELL ESTABLISHED TECHNOLOGY, AND IT'S REALLY A QUESTION OF WHETHER THE FEATURES OF IT AND THE CHARACTERISTICS OF IT REALLY BENEFIT THE ERCOT MARKET AS WE LOOK TO THIS INCREDIBLE GROWTH STORY THAT'S AHEAD OF TEXAS, AND WHETHER THIS IS THE RIGHT TIME TO CONSIDER STEPPING UP THE CAPABILITIES TO BE ABLE TO, UH, MEET THOSE NEEDS WITH, UM, WITH NEW TECHNOLOGIES.

SO THANK YOU FOR THAT FEEDBACK.

MORE.

SO YEAH, JUST ADDING TO EVERYTHING THAT'S BEEN SAID, AND FIRST OF ALL, WE'RE FAMILIAR WITH THREE 40 FIVES.

WE DO THEM ALL THE TIME, UH, UNDERSTAND THE LOCAL SUPPLY CHAIN AND THE, YOU KNOW, THE SKILL SETS NEEDED TO PUT THAT UP.

BUT, UH, FOR THIS KIND OF NEW PLANNING, UH, I HOPE THAT WE REALLY LOOK AT, UH, YOU KNOW, THE LATEST TECHNOLOGIES AND LATEST DEVELOPMENTS BECAUSE, UM, AGAIN, LONG DISTANCE TRANSMISSION, UH, IS INTRUSIVE IF YOU DON'T PLAN IT CORRECTLY.

AND, UH, THE HIGHER THE KV THE LESS INTRUSIVE YOU ARE IN THE END.

SO IT'S IMPORTANT TO KEEP THAT IN MIND.

UM, I MEAN, OTHER GEOGRAPHIES AROUND THE WORLD, THEY'RE BUILDING ULTRA HIGH VOLTAGE, UH, BOTH HBDC AND, AND, UM, I THINK THAT'S SOMETHING THAT WE SHOULD TAKE ADVANTAGE OF.

ALL THESE THINGS ARE ACTUALLY HAPPENING AS, UH, PABLO WAS SAYING ELSEWHERE AND THAT THEY'RE NEW TO ERCOT DOESN'T MEAN WE CAN'T DO IT.

THANK YOU, CARLOS.

ANY OTHER COMMENTS OR QUESTIONS? WELL THEN, AS I ALWAYS DO, I'D LIKE TO CONCLUDE WITH SOME GRATITUDE.

UM, FIRST, UH, WE'VE LISTED HERE, UM, ALL OF THE, UH, INDIVIDUALS THAT WERE INVOLVED WITH THE VARIOUS RFPS THAT WE HAVE ISSUED FOR THE SUMMER CAPACITY, IF YOU RECALL, WE DID THAT EARLIER, DID AN P FOR SUMMER CAPACITY AND ONE FOR THE RELIABILITY MUST RUN ALTERNATIVES RELATED TO THE, UH, RECENT RMR ANALYSIS.

OUR OPERATIONS ARE LEGAL.

OUR REGULATORY, OUR PLANNING COMMERCIAL TEAMS ALL WORKED ON THESE TWO PROPOSALS.

UH, THE FIRST WAS THE RFP FOR CONTRACTS FOR CAPACITY.

WHILE IN THE END WE DID NOT MOVE FORWARD WITH ANY PROPOSED PROCUREMENT.

I WANNA RECOGNIZE AND THANK ALL THE EMPLOYEES THAT HELPED TO DEVELOP THIS RFP.

IT WAS A RAPID AND QUICKLY EXECUTED PROCESS.

AND THEN THE SECOND IS THE RFP TO SOLICIT PROPOSALS FOR ALTERNATIVE RESOURCES THAT ARE CAPABLE TO PROVIDE AN, AN ACCEPTABLE SOLUTION TO THE RELIABILITY CONCERNS THAT WOULD OTHERWISE HAVE BEEN SOLVED BY THE PROVISION OF A RELIABILITY MUST RUN SERVICE BY ONE OR MORE OF THE CPS, UH, ENERGY BRO GENERATING RESOURCES ERCOT ISS REQUIRED TO CONSIDER MUST RUN ALTERNATIVES WHEN A GENERATION RESOURCES RESOURCE HAS, UM, PROPOSED TO RETIRE OR TO INDEFINITELY SUSPEND OPERATIONS.

AND WE HAVE DETERMINED THAT THERE IS A RELIABILITY NEED FOR GENERATION RESOURCE SUPPORT.

SO I WANNA THANK THE TEAM MEMBERS THAT WORKED ON THIS RFP AS WELL.

AND AS I DID EARLIER ON THE PERMIAN BASIN SLIDE, I LISTED THE, THOSE INTERNAL ORCA EMPLOYEES THAT WORKED ON THAT PERMIAN RELIABILITY PLAN.

AND I WANNA OFFER MY, UH, GRATITUDE FOR THE VERY SHORT TIME LAG THAT WERE SUPPORTED THROUGHOUT THE DEVELOPMENT OF THIS PLAN.

SO THANK YOU VERY MUCH, CHAIR.

THAT, UH, CONCLUDES MY REMARKS FOR TODAY.

UNLESS THERE'S ANY OTHER QUESTIONS OR COMMENTS.

THANK YOU, PABLO.

ANY QUESTIONS FOR PABLO AND PABLO? I ALWAYS APPRECIATE YOU RECOGNIZING THE, UH, MEMBERS THERE, THECUT TEAM THAT, THAT, UH, HELP TO PROVIDE RELIABLE AND COST EFFICIENT POWER FOR TEXAS.

RESOURCES THAT ARE IN PLAY HERE AND THE TOTAL RATING AND SUPPORT OF THOSE RESOURCES.

NO QUESTIONS.

ALRIGHT, LET'S MOVE ON TO AGENDA ITEM 5.1, WHICH IS AN UPDATE ON THE CPS ENERGY RELIABILITY MUST RUN AND MUST RUN ALTERNATIVE PROCESS.

CHAD CELIA AND WOODY RUON WILL JOIN PABLO AS CO-PRESENTERS.

ALL RIGHT, THANK YOU FOR THAT.

SO, GIVE A LITTLE BIT OF BACKGROUND AND CONTEXT HERE.

AS I MENTIONED, YOU KNOW, WE'VE GOT THIS RELIABILITY MUST RUN EVALUATION THAT TOOK PLACE, UH, RELATED TO THE PROPOSED SUSPENSION OF OPERATIONS FOR THE, UH, BRO UNITS THAT ARE OPERATED BY CPS IN SAN ANTONIO.

THIS IS REALLY THE FIRST TIME THAT THIS BOARD HAS DEALT WITH THIS PROCESS AND THERE ARE SOME UNIQUE, UH, ISSUES, UH, RELATED TO THIS SCENARIO THAT ARE DIFFERENT THAN WHAT PRIOR RMR AND RAS HAVE CREATED.

SPECIFICALLY, THERE ARE CONSIDERATIONS AROUND THE INSPECTION AND THE POTENTIAL EARLY REPAIR OF SOME OF THE UNITS PRIOR TO THEIR RETIREMENT DATES THAT MAY BE PRUDENT TO DO THAT WE WANT TO CONSIDER IN ORDER TO BE ABLE TO ENSURE CONTINUED OPERATIONS OF THESE RESOURCES DURING THIS UPCOMING WINTER.

AND THEN THIS SUBSEQUENT SUMMER IN 2025, IF WE COULD GO TO SLIDE THREE TO THE NEXT SLIDE.

THIS SHOWS, UM, THE

[00:35:01]

SO WE RECEIVED THE NOTICE OF SUSPENSION OF OPERATIONS, UH, IN MARCH OF THIS YEAR.

THE PROPOSED, UH, SUSPENSION OF THOSE IS GONNA BE IN, UH, MAY OF NEXT YEAR.

AND SO THIS DID TRIGGER A RELIABILITY ANALYSIS UNDER THE PUBLIC UTILITY COMMISSION RULES.

AND IN DOING SO, IT FOUND THAT THE AIR CUT SYSTEM DID SHOW PERFORMANCE DEFICIENCIES THAT WAS WERE AFFECTED BY THE SUSPENSION OF THESE RESOURCES.

AND SO WHAT I'D LIKE TO DO IS ASK WOODY IF HE COULD EXPLAIN A LITTLE BIT HOW THAT RELIABILITY MUST RUN ANALYSIS WAS DONE.

AND THEN WE'LL TALK A LITTLE BIT ABOUT, CHAD'S GONNA TALK A LITTLE BIT ABOUT SOME OF THE ACTIONS THAT WE'RE GONNA TAKE AND PROPOSE TO TAKE IN THE SHORT TERM AND THE CONSIDERATIONS THAT ARE AHEAD OF US RELATED TO THE MUST RUN ALTERNATIVES AND THE RMR. SO WOODY.

YEAH, SO, UM, ANYTIME A UNIT RETIRES FROM THE ERCOT SYSTEM, IT GOES THROUGH THE RMR ANALYSIS.

SO EVERY RETIRING UNIT GETS THE SAME RMR ANALYSIS TREATMENT.

UM, THE EFFECT THE UNIT HAS ON SOLVING ADVERSE TRANSMISSION ISSUES IS THE KEY ISSUE HERE.

SO THE RMR ANALYSIS ISN'T FOR CAPACITY, IT'S TO GAUGE THE EFFECT IT HAS ON RELY ON ON TRANSMISSION RELIABILITY ISSUES.

UH, WE USE A FUTURE PLANNING CASE BOTH WITH AND WITHOUT THE GENERATION THAT'S TO BE RETIRED.

AND WE LOOK FOR PERFORMANCE, UH, DEFICIENCIES BOTH WITH AND WITHOUT CONTINGENCIES.

THERE'S REALLY LIKE FOUR CRITERIA THAT WE LOOK FOR IN THE ANALYSIS MEETING.

ANY ONE OF THEM WILL QUALIFY THE UNIT FOR AN RMR. UM, AND THOSE WERE LISTED ON THAT PREVIOUS SLIDE, BUT THEY ARE BASICALLY THAT IF, UH, WITHOUT THE GENERATION RESOURCE ONE OR MORE TRANSMISSION FACILITIES ARE LOADED ABOVE THEIR NORMAL RATING, PRE-CON CONTINGENCY, IF THERE'S ANY KIND OF INSTABILITY OR CASCADING FOLLOWING A CONTINGENCY OR IF THERE ARE TRANSMISSION FACILITIES LOADED ABOVE 110% OF THE EMERGENCY RATING FOLLOWING A CONTINGENCY, AND ALSO THE, UH, THE UNIT IN QUESTION OR UNITS IN QUESTION HAVE TO HAVE MORE THAN A 5% UNLOADING IMPACT ON THE, THE TRANSMISSION FACILITY THAT IS OVERLOADED.

SO UNITS THAT MEET THAT WOULD QUALIFY AS AN RMR UNIT, UH, WE WOULD, CHAD WILL TALK ABOUT THIS, BUT WE WOULD CONTRACT WITH THAT RMR UNIT AS A TEMPORARY MEANS, UH, UNTIL TRANSMISSION MITIGATION CAN BE PUT INTO EFFECT NEW TRANSMISSION LINES, RECONDUCTORING, MAYBE A NEW UNIT IS COMING THAT WOULD ALSO TAKE, SO, SO GRID CHANGES THAT WOULD TAKE, UH, THAT CONTINGENCY OVERLOAD OR CASCADING OR WHATEVER, WHATEVER CAUSES THE, THE, THE UNIT TO MEET THAT CRITERIA, WHATEVER MITIGATES THAT.

BUT THE, THE RMR IS MEANT TO BE A TEMPORARY, UH, FIX FOR THOSE FACIL FOR THE, FOR THAT PROBLEM.

THANKS, WOODY.

I'LL JUST CONTINUE WITH A, SO THIS IS A, A VERY UNIQUE AND DIFFICULT SITUATION THAT THE BOARD IS GONNA BE ENCOUNTERED TO DEAL WITH STARTING IN OCTOBER AND PROBABLY DECEMBER.

AND LEMME JUST KIND OF PUT SOME OF THE ADDITIONAL FACTS ON THE GROUND.

SO IT WAS, PABLO INDICATED THE NSOS CAME IN MARCH.

THE THREE CPS UNITS ARE EXPECTED TO RETIRE AT THE END OF MARCH OF 2025.

SO APRIL 1ST IS WHEN THE BOARD WOULD TRADITIONALLY DECIDE EITHER THE RMR OF ONE OR THREE OF THESE UNITS OR ANY OTHER TYPE OF ALTERNATIVES TO REPLACE THAT GOING FORWARD.

AND AS WOODY INDICATED, WE'VE ALREADY DONE THE RELIABILITY ANALYSIS SAYING THAT WE NEED ALL THREE OF THESE UNITS FOR THE FORESEEABLE FUTURE REALLY UNTIL THOSE CPS TRANSMISSION, UH, PROJECTS START TO COME IN PLAY IN THE SUMMER OF 2027.

SO YOU'RE LOOKING AT KIND OF A TWO YEAR WINDOW ACROSS ALL SEASONS WHERE WE NEED CAPACITY TO FILL CERTAIN HOURS IN ORDER TO NOT TO HAVE ONE OF THOSE, UH, LOCALIZED TRANSMISSION, UH, UH, EMERGENCY SITUATIONS TO PLAY OUT.

SO ON ON THIS SLIDE, IT REALLY JUST KIND OF LAYS OUT WHAT'S IN THE PROTOCOLS, THE RMR PROCESS.

AND SO AGAIN, THINKING ABOUT THE TRADITIONAL WAY OF THE RMR WOULD START ON, OR THE MRA WOULD START APRIL 1ST, 2025, ALL THAT'S KIND OF EMBODIED IN THE PROTOCOLS OF WHAT IS ELIGIBLE COST AND HOW WE GO ABOUT DOING THAT PROCESS.

WE WENT OUT IN, UH, EARLY IN, IN JULY FOR THE RFP THAT PABLO INDICATED IN HIS PREVIOUS SLIDE FOR MUST RUN ALTERNATIVES.

SO LOOKING FOR ANY OTHER COST EFFECTIVE SOLUTIONS THAT COULD SOLVE THE LOCAL RELIABILITY ISSUES THAT RFP IS OPEN RIGHT NOW.

UH, WE HAD A WORKSHOP, WE HAD THE ABILITY FOR PARTICIPANTS TO OFFER IN QUESTIONS.

WE ONLY GOT LESS THAN 10 QUESTIONS, WHICH IS NOT A GOOD SIGN AS FAR AS THE INDUSTRY BEING ENGAGED POTENTIALLY TO TRY TO RESPOND TO THIS RELIABILITY

[00:40:01]

SITUATION.

WE DID HAVE A VERY PRODUCTIVE WORKSHOP.

WE'RE GOING TO AMEND THE GOVERNING DOCUMENTS TOMORROW, BUT WE'RE ALSO GOING TO EXTEND THE TIMELINE TO ALLOW MORE FOR THE INDUSTRY TO REACT TO THIS CRITICAL RELIABILITY ISSUE.

WE ANTICIPATE EXTENDING THE TIMELINE FOR THE MRA RESPONSES TO COME IN UNTIL, UH, THE SECOND WEEK OF OCTOBER.

SO THIS IS NEW INFORMATION FOR EVERYONE THAT'S LISTENING.

WE ARE GOING TO AMEND THE GOVERNING DOCUMENTS TOMORROW, WHICH IS CONSISTENT WITH THE SCOPE, BUT ALSO EXTEND THAT OUT BECAUSE WE REALLY ARE LOOKING FOR COST-EFFECTIVE ALTERNATIVES THAT CAN BE COMPETING AGAINST THE RMR RESOURCES.

SO THIS SCHEDULE WILL BE MODIFIED TOMORROW WHEN WE GO OUT WITH, UH, THE AMENDMENTS.

AND THOSE WILL PUSH THOSE RESPONSES INTO THAT SECOND WEEK OF OCTOBER.

SO WHEN THE BOARD COMES BACK TOGETHER IN THE SECOND WEEK OF OCTOBER, YOU WILL HAVE THE INFORMATION IN AGGREGATE FORM OF DID THE INDUSTRY RESPOND OR NOT, SO THAT WE CAN START TO EVALUATE THE RISK PROFILE OF COST-EFFECTIVE SOLUTIONS COMPARED TO THE CPS UNITS.

SO THAT PUSHES ULTIMATELY THE BOARD'S DECISION TO DECEMBER TO MAKE THAT EVALUATION SO THAT WE CAN GET ALL THE DATA THAT THE BOARD NEEDS TO MAKE THIS VERY DIFFICULT DECISION ON ARE THERE GONNA BE THESE THREE CPS UNITS OR ARE THERE GONNA BE ALTERNATIVES TO COMPETE AGAINST? IS THE BOARD IS WEIGHING THAT DECISION RELATIVE TO THE RELIABILITY RISK THAT'LL BE IN THAT TECHNICAL ANALYSIS THAT WILL ALSO PRESENT TO THE BOARD.

SO YES, NO, JUST ONE QUESTION TO ADD.

UM, IF, UM, YOU ACTUALLY ENFORCED THE RMR, WOULD THAT BE FOR ONE YEAR, THEN REVIEWED FOR THE NEXT YEAR AND SO ON AND KEEP THE ALTERNATIVE PROCESS GOING, WE HAVE THE RIGHT TO EXTEND IT.

UH, WE'VE ALREADY IDENTIFIED IN THE, UH, RFP THAT WE NEED CAPACITY ACROSS THE TWO YEARS UNTIL THE SUMMER OF 2027 WHEN THOSE TRANSMISSION PROJECTS START TO COME INTO SERVICE.

CPS GAVE US ONE YEAR AND TWO YEAR BUDGETS.

SO ALL THAT WILL BE PART OF THE, THE BOARD'S CONSIDERATION DEPENDING ON WHAT ALTERNATIVES COME IN AS WELL, RIGHT? SO IT'S OUT THERE FOR A TWO YEAR EXPECTATION.

HOWEVER, IT CAN BE SUSPENDED IF THE RISK IS MITIGATED IN AN, IN, IN AN INTERIM PERIOD DURING THAT TIME.

IS THAT CORRECT? WE CAN CANCEL THE AGREEMENTS AT ANY TIME ONCE THE THE MITIGATION HAS OCCURRED.

SO WE'RE NOT EXPECTING THAT UNTIL THE SUMMER 2027.

BUT IF GENERATION SHOWS UP OR DEMAND RESPONSE STARTS TO SHOW UP AND STARTS TO LEAVE THOSE OVERLOADS, THERE'S FLEXIBILITY IN THOSE AGREEMENTS TO TERMINATE WITH 30 DAY NOTICE.

AND THAT'S ALL BUILT INTO THE PROCESS, OBVIOUSLY TO AVOID ADDITIONAL COSTS UNNECESSARILY BECAUSE LOAD ULTIMATELY PAYS FOR THESE AGREEMENTS.

AT THE END OF THE DAY.

CHAD, IF YOU EXTEND THE, UH, RFP PROCESS AND DELAY THE DECISION FOR RMR TO DECEMBER, DOES THAT LEAVE CPS ENOUGH TIME TO DO ANY REQUIRED MAINTENANCE ON THE UNITS? SO THAT'S THE SECOND ISSUE I'M GONNA TALK ABOUT.

UM, SO JUST KIND OF FOLLOWING THE, THE NORMAL PROCESS RIGHT NOW THAT GETS YOU TO A DECEMBER DECISION, LOOKING AT THAT APRIL 1ST AND BEYOND.

SO WE THINK THAT'S ENOUGH TIME AND WE HAVE BEEN, UH, COORDINATING WITH CPS ON, ON THE TIMING OF ALL THESE ISSUES.

UH, CPS REPRESENTATIVES ARE HERE TODAY, SO IF YOU HAVE SPECIFIC QUESTIONS AROUND, UH, SOME OF THE THINGS I'M GONNA TALK ABOUT THAT THEY'VE REPRESENTED TO US ABOUT THEIR SPECIFIC UNITS, THEN THEY'RE HAPPY TO COME UP TO THE TABLE AND ANSWER THOSE MORE SPECIFIC QUESTIONS.

SO THAT'S THE NORMAL PROCESS.

NOW WHAT CPS HAS COME AND IDENTIFIED TO US THAT WE, WE ALSO HAD A DISCUSSION WITH THE COMMISSION, UH, LAST THURSDAY WAS THE STATE OF THESE THREE UNITS AND, AND BASED UPON KIND OF WHERE THEY WERE IN THEIR MAINTENANCE SCHEDULE THAT CPS WAS NOT ANTICIPATING DOING ANY OTHER MAINTENANCE FOR THE LIFE OF THESE ASSETS.

AND, AND SO BASED UPON THE REPRESENTATIONS IN THE LETTER THAT WE SUBMITTED TO THE COMMISSION, THEY'RE BELIEVE THAT THERE NEEDS TO BE INSPECTION OF ALL THREE OF THESE UNITS BEFORE THEY COULD ADEQUATELY OPERATE AFTER APRIL 1ST, THESE INSPECTIONS.

AND WE CAN GO DOWN.

YEAH, I THINK YOU'RE THERE.

THANKS PENNY.

THE, THESE INSPECTIONS ARE ANTICIPATED TO TAKE 60 DAYS TO DO, AND SO THE BOARD IS KIND OF CONFRONTED WITH ANOTHER DIFFICULT TIMING ISSUE THAT WE'VE BEEN TALKING TO THE COMMISSIONERS AND COMMISSION STAFF ABOUT, WHICH IS DO WE GO AHEAD AND TAKE AN OUTAGE OF ONE OF THE UNITS, THE LARGE UNIT, THE 412 MEGAWATT UNIT TO UNDERSTAND WHAT ARE THE ISSUES ASSOCIATED WITH THAT UNIT, UH, NOW BEFORE THE RMR COMMENCES IN APRIL 1ST.

EVEN IF THE BOARD WAS NOT TO DO THAT, THAT WOULD STILL BE INFORMATION THAT WOULD BE VALUABLE FOR THE BOARD TO HAVE IN ITS FULL CONSIDERATION OF THE R-M-R-M-R-A PROCESS.

SO WE'VE BEEN WORKING WITH, UH, CPS TO TRY TO UNDERSTAND WHAT THOSE PRE

[00:45:01]

RMR OUTAGE COSTS ARE, YOU KNOW, WHAT AN, WHAT THE LIFE EXTENSION COSTS WOULD BE.

BUT THEN THIS OTHER COMPONENT THAT'S REFLECTED HERE ON THE SLIDE, WHICH IS LOSS OPPORTUNITY COST CPS WAS INTENDING TO RUN THESE UNITS THROUGH MARCH AND, UH, WAS EXPECTING TO OFFER THOSE INTO THE MARKET.

AND SO IF WE DID TAKE OUT ONE OF THE UNITS UNIT THREE, THERE WOULD BE THIS COMPONENT OF LOSS OPPORTUNITY COST, WHICH IS NOT RECOGNIZED IN THE PROTOCOLS UNDER THE RMR FRAMEWORK.

THERE ARE OTHER SECTIONS IN THE PROTOCOLS WHERE THE STAKEHOLDERS, UH, HAVE AGREED TO ALLOW LOSS OPPORTUNITY COSTS.

THAT'S PART OF OUR, UH, OUR OUTAGE ACTION NOTICE WHERE IF WE MOVE AN OUTAGE AROUND, UH, THEN THAT ENTITY CAN RECOVER ESSENTIALLY LOSS OPPORTUNITY COSTS.

BUT THE FRAMEWORK FOR LOSS OPPORTUNITY COSTS WAS NOT RECOGNIZED IN THE RMR PROCESS BECAUSE WE'VE NEVER HAD THIS SITUATION BEFORE IN THE RMR PROCESS WHERE THE RESOURCE OWNER HAS COME TO ERCOT AND SAID IT IS NOT SAFE AND RELIABLE TO OPERATE THESE UNITS PAST THE NOTICE OF SUSPENSION DATE.

AND SO IN ORDER FOR THE BOARD TO EFFECTIVELY EVALUATE THE RISK OF THE SYSTEM AND THE CAPABILITY OF THESE ASSETS RELATIVE TO ANY RAS, IT IS APPROPRIATE TO START TO CONSIDER THIS PATH WHERE WE WOULD TAKE ONE OF THE UNITS OUT IN THE FALL TO DO THIS 60 DAY INSPECTION TO UNDERSTAND THE LIFE OF THAT UNIT GOING PAST APRIL.

SO THAT IS GONNA BE ERCOT STAFF'S PROPOSAL.

WE, WE'VE ALREADY HAD ONE DISCUSSION WITH THE COMMISSION.

WE WILL HAVE ANOTHER DISCUSSION NEXT THURSDAY.

WE WILL MAKE A FILING THIS UPCOMING THURSDAY LAYING OUT MORE OF THE, THE DETAILS AND THE FRAMEWORK OF WHAT WOULD BE IN THIS CONTRACT.

THIS IS NOT AN RMR AGREEMENT, THIS IS A SEPARATE AGREEMENT TO DO AN INSPECTION TO UNDERSTAND THE CAPABILITY OF THE UNIT AND WHAT THE COST TO POTENTIALLY FIX IT IF THE BOARD CHOOSES TO MOVE FORWARD WITH IT AS AN RMR THROUGH ITS R-M-R-M-R-A EVALUATION PROCESS.

THE REASON WE'RE DOING THIS IS BECAUSE OF THE RELIABILITY ANALYSIS THAT WOODY SPOKE TO.

THIS IS A CRITICAL RELIABILITY ISSUE FOR THE GRID THAT WE HAVE IDENTIFIED LOSING 859 MEGAWATTS OF DISPATCHABLE CAPACITY OVER THE NEXT TWO YEARS, THE IMPACT TO THE LOCAL REGIONAL AREA.

SO WE ARE CONFRONTED WITH THIS CHALLENGE THAT WE HAVE NOT SEEN BEFORE, AND WE'RE HAVING TO TAKE THIS KIND OF EXTRA STEP TO EVALUATE THAT RISK AND MOVE FORWARD.

I'LL STOP THERE AND SEE IF ANYBODY HAS ANY QUESTIONS.

YEAH, I'VE GOT A COUPLE, A COUPLE, SORRY, SORRY.

UH, THE ESTIMATED LOSS OPPORTUNITY COST THAT CPS CAME UP WITH, HOW WAS THAT CALCULATED? SO IN THEIR FILING, THEY HAVE A METHODOLOGY, IT MIGHT BE BETTER FOR, FOR CPS TO COME UP.

WE, WE, WE ARE STILL WORKING THROUGH THEIR METHODOLOGY FOR LOST OPPORTUNITY COST.

UM, THAT'S ONE OF THE ISSUES.

WE IDENTIFIED THE COMMISSION THAT THEY CAME UP WITH A PROPOSAL, UM, WE'RE, WE'RE ACTIVELY TALKING TO THEM ABOUT THAT METHODOLOGY.

THAT'LL BE SOMETHING THAT WE'LL CONTINUE TO UPDATE THE, THE COMMISSION ON IN THE NEXT FILING, BUT I DON'T WANNA REPRESENT KIND OF THEIR METHODOLOGY THAT THAT'S FINE.

SO THE, THE NUMBERS HERE THOUGH, UH, FOR OUR PURPOSES ARE NOT, WE HAVEN'T SIGNED OFF ON THOSE.

THAT'S WHAT THE NUMBERS SHOULD BE.

YOU'RE THESE NUMBERS ARE, ARE GIVEN TO THEM AS, UH, WERE GIVEN TO US AS THEIR ESTIMATES.

UH, ULTIMATELY THAT IS THE BIG UNKNOWN IS LOST OPPORTUNITY COSTS.

EVERYTHING ELSE IS ACTUALLY BASED UPON KIND OF TRUE UP ACTUAL INVOICES.

SO, YOU KNOW, OBVIOUSLY INVOICES FOR INSPECTION COSTS, IF THERE WAS, UH, A LIFE EXTENSION OF THE UNIT AND REPAIRS DONE, THAT'S ALL TRUED UP THROUGH ACTUAL INVOICES.

IT IS THE LOST OPPORTUNITY COST AS IT'S KIND OF A METHODOLOGY, UH, THAT WE WILL, WE'LL CONTINUE TO WORK WITH CPS ON AND, AND SEE IF WE CAN COME TO AGREEMENT.

WE, WE'VE ALSO REACHED OUT TO THE IMM TO SEE IF THE IMM HAS ANY PERSPECTIVE ON THE METHODOLOGY, SO WE'LL MAKE SURE THAT WE TAKE THAT INTO CONSIDERATION AS WELL.

CHAD, COULD YOU, UH, I'M GONNA ASK YOU TO SPECULATE A LITTLE.

UM, WHAT WOULD YOU ATTRIBUTE THE LACK OF ENGAGEMENT ON THE MRA ALTERNATIVES? IS THIS A LACK OF PROPER ECONOMIC INCENTIVES OR, OR, YOU KNOW, COULD YOU VENTURE A GUESS? FOR US? THAT IS MY GUESS THAT THE MRA FRAMEWORK DOES NOT MOTIVATE THE INDUSTRY TO RESPOND AND BE ESSENTIALLY HELD CAPTIVE AS THE LAST RESORT WHEN THESE TYPE OF TRANSMISSION EMERGENCY SITUATIONS PLAY OUT.

AND THAT THERE MAY BE MORE OPPORTUNITY IN THE MARKET FOR JUST A RESOURCE TO BE THERE AND SELF COMMIT ON THEIR OWN AND SEE HOW SCARCITY PRICING PLAYS OUT THAN THE FRAMEWORK THAT WE BUILT AROUND THAT.

NOW IN THE RFP FOR THE MRA, WE'VE ALLOWED, UH, A LOT MORE FLEXIBILITY AND WE'RE AFFORDED THAT UNDER THE PROTOCOLS FOR ACCELERATION OF PROJECTS

[00:50:01]

THAT MAY BE IN THE QUEUE THAT WERE ANTICIPATED TO COME ON IN 26 OR 27 FOR THEM TO OFFER THOSE COSTS IN AS PART OF THE MRA TO BE THERE IN TIME.

AND SO WE'RE, WE'RE REALLY HOPING THAT THE INDUSTRY RECOGNIZES THE FLEXIBILITY THAT WE'RE OFFERING IN THAT RFP AND THAT THOSE COSTS, UH, CAN BE COMPARED AGAINST THE RMR COST AND MAY BE A MORE COST EFFECTIVE, RELIABLE SOLUTION.

BUT I DO THINK IT'S SOMETHING AS WE GET THROUGH THIS ISSUE AND THE POSSIBILITY OF ADDITIONAL NOTICES OF SUSPENSIONS COMING IN WITH AN AGING FLEET, THAT WE'RE GONNA HAVE TO LOOK AT OUR RMR FRAMEWORK AND START TO DISCUSS WHAT IS APPROPRIATE FOR, FOR THE INDUSTRY.

NOW THE LAST TIME THERE WAS AN RMR WAS WAS IN 2016, SO IT HAS BEEN QUITE SOME TIME.

AND WE DID DO A MUST RUN ALTERNATIVE PROCESS AT THAT TIME.

THERE WAS NOT, UH, THAT WAS KINDA THE FIRST TIME WE HAD DONE THE MRA PROCESS, UH, AND WE ULTIMATELY ENDED UP GOING WITH THE RMR, WHICH WERE THE GREENS BAYOU UNITS IN, IN THE HOUSTON AREA.

UH, SO IT HAS BEEN EIGHT YEARS SINCE THERE'S BEEN AN RMR TRIGGER HERE, BUT IT DOES REQUIRE THE, THE BOARD TO GO THROUGH THAT, UH, DELIBERATIVE PROCESS AND DECIDE WHAT'S MOST COST EFFECTIVE AND RELIABLE FOR THE SYSTEM GOING FORWARD.

DOES IT MAKE, CAN YOU DIFFERENTIATE BETWEEN THE OUTAGE COSTS AND THE LIFE EXTENSION COST? THAT WASN'T CLEAR TO ME.

SO THE OUTAGE COST IS ACTUALLY BRINGING IN THE INSPECTOR AND PULLING APART THE UNIT, PUTTING ON A PLATFORM AND DOING THAT FULL 60 DAY ASSESSMENT.

AND IT'S AN ESTIMATE.

AND THEN THE LIFE EXTENSION COST IS JUST AN ESTIMATE OF EX FIXES AND, AND THE 60 DAYS IS VARIABLE.

THIS IS CP S'S BEST GUESS FOR EACH UNIT WOULD TAKE 60 DAYS AND YOU KNOW THEIR BEST GUESS OF WHAT THOSE LIFE EXTENSION COSTS ARE.

THERE COULD BE A SITUATION WHERE THE INSPECTOR COMES IN AND, AND SAYS IT'S LOWER AND QUICKER TO GET BACK TO SERVICE, WHICH IS SOMETHING THAT WE WOULD STRONGLY CONSIDER.

IT COULD BE A SITUATION WHERE IT'S A LOT MORE COSTLY AND COULD TAKE 18 MONTHS TO DO.

AND THAT'S INFORMATION THAT WE NEED TO KNOW AS FAR AS MAKING THE OVERALL RISK ASSESSMENT ON, ON WHAT THE BOARD WANTS TO DO STARTING IN DECEMBER.

SO TO KIND OF BE CLEAR, MOVING DOWN THIS PATH OF MOVING FORWARD WITH THE UNIT THREE CAN BE A SUNK COST BECAUSE YOU CAN GET A RESULT THAT SAYS IT'S WAY TOO COSTLY AND IT'S GONNA TAKE WAY TOO LONG TO PUT THE UNIT IN A LIFE EXTENSION, SAFE AND RELIABLE OPERATION AFTER APRIL 1ST.

AND SO THERE COULD BE A SITUATION WHERE THE MARKET INCURS THESE COSTS AND WE DON'T HAVE THAT ASSET STARTING IN APRIL OF 2025.

YEAH, I'D ADD TOO THAT, UM, THERE'S AN OUTAGE SEASON THIS FALL AND THERE'S AN OUTAGE SEASON NEXT SPRING, BEFORE THE SUMMER OF 2025.

AND SO ONE OF THE DECISIONS THAT HAS TO BE MADE IS, IS DO YOU DO GO THROUGH THIS EXTRA PROCESS TO TRY TO TAKE ADVANTAGE OF THIS FALL'S OUTAGE SEASON? BECAUSE IF YOU DO, THEN WE CAN HAVE MORE RMR RESOURCE CAPACITY AVAILABLE FOR THE SUMMER OF 2025, OTHERWISE YOU PROBABLY WILL HAVE LESS AVAILABLE.

SO TO MAXIMIZE THE ACCESS WE HAVE TO THAT CAPACITY, IT'S TO OUR ADVANTAGE TO, TO START THE OUTAGES EARLIER.

IT'S JUST NOT IN THE RMR PROCESS.

WOODY, I I HAVE A QUESTION.

WHAT KIND OF UNITS ARE THESE? ARE THESE STEAM THERMAL UNITS? YES.

AND WOODY, UM, JUST HOW LONG WOULD THE CONTRACT BE IF YOU ENTERED INTO AN RMR FOR ONE OF THE PLANTS? TWO YEARS.

TWO YEARS, OKAY.

SO THAT WOULD BE SUMMER OF 25.

IT'D START IN APRIL.

I THINK THAT'S IMPORTANT TO, TO UNDERSTAND BECAUSE I THINK A LOT OF DIFFERENT FACTORS WILL START TO SORT OF APPEAR BY AROUND 2026, RIGHT? YOU, YOU MIGHT SURE, I DUNNO HOW MUCH GENERATION YOU'D ACTUALLY GET ONLINE FROM THE TEF, BUT WE HAVE WHAT PABLO ALLUDED TO EARLIER, THE IMPACTS OF, UM, NEIGHBORING I-S-O-R-T-O REQUIREMENTS THAT COULD IMPACT SWITCHABLE GENERATIONS.

SO THOSE ARE FACTORS RIGHT, TO KIND OF SORT OF CONSIDER IN PARALLEL.

THE ARM R ALLOWS YOU TO LOOK AT THE, THE NEED FOR THE UNIT FROM A TRANSMISSION PERSPECTIVE, BUT NOT FROM A CAPACITY PERSPECTIVE.

AND AFTER, AFTER WE ENTER INTO WHATEVER THE AGREEMENTS ARE, THEY'RE WE'RE OBLIGATED TO COME BACK WITH AN EXIT STRATEGY.

SO THE EXIT STRATEGY COULD BE THOSE, UM, SOUTH TEXAS TRANSMISSION RELIABILITY PROJECTS OR IT COULD BE SOMETHING THAT WE'RE SEEING

[00:55:01]

IN ADVANCE OF THAT.

AND THEN AGAIN, THE FLEXIBILITY IN THE AGREEMENT ALLOWS US TO TERMINATE THE AGREEMENTS WHENEVER WE DEEM THAT'S APPROPRIATE THAT WE'VE MET THAT ACCIDENT STRATEGY.

MM-HMM.

THE ESTIMATED COST, UH, JUST TO MAKE SURE I UNDERSTAND, THAT'S TO EXTEND THE LIFE FOR TWO YEARS, IS THAT RIGHT? I DON'T THINK SO.

OR IS IT A ONE YEAR THE LIFE EXTENSION COSTS? IS THAT WHAT YOU'RE TALKING ABOUT? YEAH, ONE YEAR.

UM, I NEED TO GET, I DON'T KNOW IF CPS WANTS TO CLARIFY THAT I'M NOT EXACTLY, YES.

I WAS GONNA GO OFF SCRIPT FOR A MINUTE AND ASK CPS IF THEY'D LIKE TO MM-HMM.

COME UP TO THE PODIUM AND JOIN THE CONVERSATION.

Y'ALL DO HAVE A STAKE IN THIS .

SO, AND THANK YOU FOR FILING EARLY AND LETTING US KNOW THIS.

I UNDERSTAND THAT YOU NOTIFIED US BEFORE THEY WERE REQUIRED TO NOTIFY US AND GIVING US TIME TO DEAL WITH THIS, SO THANK YOU FOR THAT.

I'M THE VICE PRESIDENT OF GENERATION OPERATIONS.

UH, SO THE LIFE EXTENSION COSTS ARE THOSE EXACTLY HOW IT'S SAID, THOSE, THOSE ACTIVITIES REQUIRED TO EXTEND THE LIFE OF THE UNIT, UH, PAST, UH, THE RETIREMENT DATE.

UM, THESE COSTS THAT, THAT ARE INCLUDED ARE FOR THE TWO YEAR EXTENSION AT THIS POINT.

NOW THOSE COSTS CAN CHANGE BASED ON THE INSPECTION ACTIVITIES THAT OCCUR, UH, IF WE, YOU KNOW, MOVE FORWARD WITH THE OUTAGE.

SO THIS IS SOMEWHERE, SOMEWHERE BETWEEN AN ENGINEERING ESTIMATE AND A SWAG? I WOULD SAY THAT, UH, IT'S BETWEEN AN ENGINEERING ESTIMATE, UM, OUR EXPERTISE AND EXPERIENCE AROUND THE WORK THAT WE'VE DONE IN THE PAST SIMILAR TO WHAT WE HAVE IDENTIFIED AS LIFE EXTENSION COSTS.

SELL IT, I THINK WHEN WE START TALKING ABOUT, UH, CAPACITY FACTOR, WE'RE TALKING ABOUT HOW MUCH ENERGY OR HOW OFTEN THAT UNIT MAY RUN.

BUT THEY ARE ESTIMATES.

ANY, UH, ANY OTHER QUESTIONS FOR CPS? CARLOS? YEAH.

AND IN TERMS OF PLANS OF TAKING ADVANTAGE OF THAT TRANSMISSION CAPACITY, UH, WHAT PLANNING IS IT THAT YOU HAVE FOR THAT ONCE YOU RETIRE THESE UNITS? IS THERE ANY PLANS TO I, I KNOW IT'S PART OF THE ALTERNATIVE ANALYSIS AND SO ON, BUT I'M SURPRISED THAT THERE'S NOT MORE INTEREST IN ACTUALLY TAKING ADVANTAGE OF THAT, UH, AVAILABILITY OF TRANSMISSION.

SO I'M, SO THAT'S A DIFFERENT AREA THAN MINE.

SO I, I KNOW WE ARE WORKING ON TRANSMISSION PROJECTS.

I DON'T HAVE ALL THOSE DETAILS IN FRONT OF ME RIGHT NOW, BUT WE DO HAVE TRANSMISSION PRO PROJECT WORK IN PROGRESS.

UM, BUT WE CAN FOLLOW UP AND PROVIDE MORE INFORMATION RELATED TO THOSE PROJECTS IF YOU WOULD LIKE.

AND DID, DID YOU WANNA JUST SPEAK QUICKLY TO THE LOSS OPPORTUNITY COST, WHICH IS KIND OF THE ESTIMATED GROSS REVENUE AND SURE.

WE CAN TALK THAT OUT.

WE'LL BRING UP, UH, KEVIN PAULO, HE'S OUR VICE PRESIDENT OF ENERGY SUPPLY MARKET OPERATIONS.

THANKS, RUDY.

AND AGAIN, I JUST WANNA HIGHLIGHT THAT, YOU KNOW, THIS IS CP S'S PROPOSED METHODOLOGY.

WE'RE ACTUALLY GONNA HAVE A DISCUSSION WITH THEM LATER IN THE WEEK AROUND THE METHODOLOGY, BUT I THINK IT'S HELPFUL FOR, FOR CPS TO LAY THAT OUT.

GOOD MORNING, KEVIN PAO, VICE PRESIDENT, ENERGY SUPPLY AND MARKET OPERATIONS.

UH, TO ADDRESS THE, THE LOST OPPORTUNITY QUESTION, THE HIGH LEVEL METHODOLOGY, WE CALCULATED GROSS REVENUE BY ASSUMING, UM, WE VALUED THE CAPACITY OF THOSE UNITS.

SO THE UNIT WASN'T, WE VALUED THAT CAPACITY BASED ON JUST AN ON PEAK FIVE BY 16, UH, POWER SALE FOR THOSE, YOU KNOW, THE BUSINESS DAYS ASSOCIATED WITH THE, THE 60 DAY OUTAGE.

AND THAT WAS OFFSET BY ESTIMATED PRODUCTION COSTS.

SO THE HEAT RATE OF THE UNIT TIME TO FORECASTED, UH, NATURAL GAS FUEL PRICE TOOK THE GROSS REVENUE MINUS THAT, UH, ANTICIPATED PRODUCTION COST.

THAT GAVE US THE NET OPPORTUNITY COST THAT YOU SEE ON THE SCREEN.

WHAT'S THE CAPACITY FACTOR OF THESE PLANTS? ? UM, RICK WOULD WANNA TALK ABOUT 30, ABOUT, FOR BRO THREE, ABOUT 30%, BRO.

THREE FOR THE YEAR ROUND IS ABOUT 30%, UH, THAT UNIT, AND ACTUALLY ALL THREE BROING UNITS RUN MUCH MORE HEAVILY, UH, DURING THE SUMMERTIME.

SO WHEN YOU DO YOUR LOST OPPORTUNITY COSTS, YOU'RE USING THE KIND OF HISTORICAL, UH, CAPACITY FACTOR FOR THAT PARTICULAR TIME PERIOD.

OR I, AGAIN, I THINK WE'VE, WE LOOKED AT THE VALUE OF THE CAPACITY, NOT NECESSARILY, UH, THE ENERGY RIGHT CAPACITY FACTOR I THINK GETS INTO HOW MUCH ENERGY IS PRODUCED.

UH, THE INITIAL METHODOLOGY WE USED VALUED THE CAPACITY OF THE UNIT.

SO HELP ME UNDERSTAND THE DIFFERENCE BETWEEN THE TWO.

WELL, I THINK THE CAPACITY, UH, THE CAPACITY HAS A VALUE IN THE MARKET, RIGHT? UH, IF YOU, AS YOU FORWARD

[01:00:01]

UH, SO I THINK THAT'S WHERE WE LOOKED AT THE DIFFERENCE.

SO YOU'RE LOOKING AT KIND OF NAMEPLATE VERSUS CAPACITY FACTOR? YES, SIR.

THAT'S QUITE A DIFFERENCE.

I THINK YOU COULD THINK OF A DIFFERENT METHODOLOGY THAT MIGHT BE MORE INDICATIVE OF THE ACTUAL RUNTIME.

ANY OTHER QUESTION? IS THAT SOMETHING THAT, UH, OBVIOUSLY WE DON'T PAY FOR CAPACITY IN ERCOT WITH A, WITH OUR ENERGY MARKET, BUT HOW DID YOU ALL COME TO THAT DECISION TO MAKE THAT A CAPACITY, VALUE VERSUS AN ENERGY VALUE? OR DO YOU SEE THEM AS KIND OF THE SAME? UH, I, I GUESS I WOULD SEE THAT AS A 400 MEGAWATT UNIT AS THE CAPACITY AND THEN THE 30% CAPACITY FACTOR.

IS THE ENERGY THAT YOU WOULD BE SEEKING THE, THE VALUE, THE, THE LOST VALUE OF, I THINK ONE OF THE REASONS WE TOOK THAT APPROACH WITH THE INITIAL VIEW IS IT IS THERE'S, YOU'RE EASILY, I THINK, ABLE TO GET PRICE ESTIMATES AROUND THAT.

YOU KNOW, THERE IS A, PEOPLE DO, IT'S, IT'S A VERY LIQUID PRODUCT, RIGHT? TO SELL A FIVE BY 16 PRODUCT ACROSS A MONTH.

SO WE TOOK A PRICE MARK ON A GIVEN DATE TO ESTIMATE THE GROSS REVENUE.

I THINK IF YOU LOOK AT TRYING TO VALUE THE ENERGY, IT'S VERY MUCH MORE DIFFICULT TO TRY TO FIGURE OUT WHAT THE DAY AHEAD OF THE REAL TIME PRICE WILL BE.

YOU KNOW, IN A FUTURE MONTH WHERE YOU CAN GET THOSE KIND OF INDUSTRY MARKS OR MARKET PRICE IS ON WHERE THE MARKET IS TRADING FROM A FORWARD SPOT.

SO THAT'S ONE OF THE REASONS WE LOOKED AT, AT THE CAPACITY WAY OF DOING IT, IS BECAUSE THERE'S EASILY, YOU KNOW, WE, WE EASILY, EASILY ABLE TO GET MARKS ON THAT FORWARD PRICE AS OPPOSED TO, I THINK AS YOU LOOK AT DAY AHEAD, REAL TIME AGAIN, YOU'RE, THERE'S MORE ESTIMATES THAT YOU'RE TRYING TO PUT INTO AROUND, YOU KNOW, WHAT, WHAT, WHAT DO YOU ASSUME FOR FORWARD MARKET PRICES WHERE I THINK YOU, WE CAN GO TO A MARKET PRICE INDICATION RIGHT NOW AND, AND GET A VERY CLEAR PICTURE ON WHAT THAT, THAT PRICE FOR THE CAPACITY IS.

I THINK THE ENERGY IS MUCH MORE DIFFICULT TO MEASURE IN ADVANCE WHAT THAT PRICE MIGHT BE.

AND, AND DO YOU THINK THAT THAT A VALUING A FIVE BY 16 PRODUCT IS A FAIR WAY OF DOING IT FOR THE CONSUMERS OF TEXAS THAT WOULD BE PAYING FOR THAT IF IN FACT THE OP THE UNITS DIDN'T RUN THAT MUCH? I THINK THAT AS WE LOOK AT FROM OUR PORTFOLIO, THE FIVE BY 16, UH, MATCHES FAIRLY WELL TO HOW THOSE UNITS WOULD RUN.

AND WE DON'T RUN THEM GENERALLY AROUND THE CLOCK.

SUMMERTIME, AGAIN, THE CAPACITY FACTOR IS HIGHER.

WE DO RUN THOSE UNITS MORE IN THE SUMMER.

UM, AND WE'RE TALKING ABOUT OCTOBER, NOVEMBER, SO IT IS AN OUTAGE SEASON.

SO, YOU KNOW, THERE ARE OTHER PARTS OF OUR FLEET THAT WOULD NOT BE AVAILABLE.

UM, AND SO WE, YOU KNOW, I THINK THAT MATCHES FAIRLY WELL WITH HOW WE THINK THEY WOULD RUN.

I THINK THEY WOULD RUN EVERY DAY, UH, LIKELY NOT.

WE DID USE BASE, THE PRODUCTION COST ON, UH, IN THAT ESTIMATE ON THOSE, THAT PARTICULAR UNIT.

SO TAKE BROING THREE, THE COST YOU SEE ON THE SCREEN, THAT WAS BASED ON BROING THREE'S HEAT RATE, BROING, THREE'S COST, UH, NOT, YOU KNOW, UH, A PORTFOLIO VIEW OF WHAT, WHAT WE MIGHT ACTUALLY SERVE THAT DEAL WITH.

WE ASSUMED IF WE MADE THAT DEAL, WE SOLD IT OR SERVED THAT DEAL OFF OF THOSE PARTICULAR UNITS AND, AND THEIR ASSOCIATED PRODUCTION COST.

WHAT'S THE RAMP TIME ON UNIT THREE? SO IF YOU START FROM COLD TO FULL GENERATION, WHAT'S THE RAMP TIME? UH, COLD START ON, BRO.

THREE IS 12 HOURS.

APPROXIMATELY.

WOODY, CAN I ASK YOU A QUESTION? ARE ARE, ARE THESE UNITS SOUTH OF THE MAJOR CON THE EYE ROLL THAT IS IN SAN ANTONIO? NO, THEY'RE NORTH.

THEY ARE NORTH OF THAT.

SO THEY'RE ON THE RIGHT, THE GOOD SIDE.

UM, SO FROM OUR EXPERIENCE AND EXPERTISE, WE, UM, WE BELIEVE THAT THERE'S POSSIBLY TWO OR THREE CRITICAL PATHS WITH EACH ONE OF THESE OUTAGES.

SO ONE OF THE QUESTIONS I HAD, I KNOW WE'VE TALKED ABOUT LOST OPPORTUNITY COSTS, BUT ONE OF THE WAYS TO, IF YOU WILL, KIND OF REDUCE, UM, YOUR EXPENSE TO GET A, 'CAUSE I GUESS THE WHOLE OBJECTIVE HERE AND WHAT ERCOT WANTS TO SEE IS, UM, YOU KNOW, THE, THE CONDITION OF THE UNIT EARLIER RATHER THAN LATER.

AND SO IS THERE AN OPPORTUNITY TO GO IN, AND I KNOW YOU'RE FOCUSING ON UNIT THREE BECAUSE IT'S THE NEWEST, AND SO THAT WOULD GIVE YOU AN INDICATION, AS I UNDERSTAND IT, OF THE CONDITION OF THE OTHER TWO.

AND YOU CAN ONLY TAKE ONE UNIT AT A TIME.

IS THERE AN OPPORTUNITY, AND AGAIN, BECAUSE YOU HAVE RUN THESE UNITS, YOU KNOW, AND UNDERSTAND THE HISTORY AND THERE, YOU KNOW, UPGRADES OVER TIME TO GO IN AND DO A LOOK, SEE ON UNIT THREE, THAT WOULD BE, THAT TAKE LESS TIME THAN A FULL, UM, INSPECTION OF 60 DAYS.

I MEAN, ARE, THERE'S SOME SPECIFIC THINGS YOU COULD GO IN, DO A CURSORY REVIEW AND SAY, OKAY, PUT POTENTIALLY, ALRIGHT, WE'VE SEEN WHAT WE NEED TO SEE AND THIS IS POTENTIALLY GONNA BE SOMETHING THAT IS MUCH MORE EXPENSIVE AND MUCH MORE COSTLY THAN WHAT WE HAD INITIALLY ANTICIPATED.

YEAH, THANK YOU FOR THAT QUESTION.

SO,

[01:05:01]

AND SO OUR BRO, THREE THOSE CRITICAL PATHS, UH, STEAM TURBINE AND BOILER INSPECTIONS.

SO WHAT WE'RE TRYING TO DO IS WE'RE, WE'RE ACTUALLY STARTING TO, UH, INITIATE THE OUTAGE PLANNING PROCESS.

SO WE'RE TRYING TO SEQUENCE THOSE ACTIVITIES IN A WAY THAT WE'RE ABLE TO EXPEDITE ANY INSPECTION RESULTS AND ESCALATE THOSE TO HOWEVER WE DETERMINE TO ESCALATE AND MAKE A DEC A DECISION ON THE PATH FORWARD.

SO, UH, FOR EXAMPLE, UH, WE PRIORITIZE OUR STEAM TURBINE INSPECTIONS.

WE OPEN UP THAT UNIT IN A, IN AN EXPEDITED WAY, IF AS MUCH AS POSSIBLE, UH, KNOWING THAT THESE ARE OLD UNITS AND SOMETIMES ARE DIFFICULT TO COME APART.

AND THEN, YOU KNOW, WE FOCUS IN ON THOSE TYPES OF NON-DESTRUCTIVE EXAMINATIONS OR INSPECTIONS OF THE TURBINE COMPONENTS TO TRY TO GET TO THAT, YOU KNOW, DECISION POINT OF REPAIR, REPLACE, ET CETERA.

UH, SAME THING WITH THE BOILER.

AND WE CAN WORK OUR BOILER AND STEAM TURBINE INSPECTIONS IN PARALLEL, AND THAT'S WHAT WE'LL WE'LL PLAN TO DO.

AND DOES THAT ANSWER YOUR QUESTION? SO WOULD YOU ANTICIPATE BEING ABLE TO COMPLETE IT PRIOR TO THE 60 DAYS? COULD YOU GET A QUICKER ANSWER UPFRONT THAN THE 60 DAYS POTENTIALLY USING THAT PROCESS? I, I THINK THAT, UH, IT'S, IT'S POSSIBLE TO, TO GET TO THAT INSPECTION DISCOVERY, UH, POINT SOONER THAN 60 DAYS IF WE DON'T RUN INTO OTHER ISSUES DURING, UH, ACTIVITIES SUCH AS DISASSEMBLY INSPECTION.

SO YES, IT'S POSSIBLE.

AND I THINK IN OUR FILING ON THURSDAY, WE'RE, WE'RE HOPING TO LAY OUT MORE OF KIND OF THE, THE PROCESS THAT ERCOT AND CPS WOULD USE DURING THIS INSPECTION PROCESS SO THAT WE'RE GETTING, YOU KNOW, WEEKLY REPORTS THAT KIND OF GOES TO YOUR POINT AND COMMISSIONER JACKSON, SO THAT WE UNDERSTAND WHERE THEY ARE IN THE INSPECTION.

ARE THERE CRITICAL PATHS THAT IF IT'S NOT GONNA BE COST EFFECTIVE AND TIMELY TO REPAIR THAT, THEN TO BE ABLE TO KIND OF SHUT DOWN AND, AND AVOID THOSE ADDITIONAL COSTS.

SO THAT'LL BE PART OF THE, THE FRAMEWORK.

WE'RE ALSO, WE OBVIOUSLY HAVE A, AN INSPECTION TEAM, UH, LED BY DAVID ZEL.

WE'VE REACHED OUT TO THEM.

AND SO THERE'S THE ABILITY FOR THEM TO GO DOWN AND BE ON SITE WITH CPS SO THAT WE'RE SEEING THE SAME THINGS THAT THEY'RE SEEING.

SO ALL THOSE DISCUSSIONS ARE ACTIVE RIGHT NOW WITH CPS AND, UM, YOU KNOW, WE PLAN TO OBVIOUSLY UPDATE THE COMMISSION ON THURSDAY.

AND, AND I WANNA TALK A LITTLE BIT ABOUT THE TIMING BETWEEN NOW IN THE END OF THE MONTH BECAUSE CPS HAS INDICATED THAT THEY NEED TO ENTER INTO AN AGREEMENT WITH THEIR INSPECTOR BY THE END OF THE MONTH IN ORDER TO START THE, UH, THE PROCESS FOR THE UNIT THREE OUTAGE IN OCTOBER, WHICH IS A 60 DAY KIND OF OUTAGE, UH, RIGHT NOW.

SO WE WOULD MAKE THIS FILING WITH THE COMMISSION ON THURSDAY, LAYING OUT AT A HIGH LEVEL THE, THE FRAMEWORK OF WHAT WOULD BE IN THIS AGREEMENT.

UH, THERE'S LIKELY THAT WE'RE GONNA REQUEST A GOOD CAUSE EXCEPTION FOR THE OUTAGE PROCESS IN THE FALL, WHICH IS THE M-D-R-P-O-C PROCESS IN ORDER TO ACCOMMODATE THIS OUTAGE.

AND, AND THEN ULTIMATELY, AS WE CONTINUE TO NEGOTIATE WITH CPS, WE WOULD MAKE A, A SUPPLEMENTAL FILING, PROBABLY THE, THE WEDNESDAY BEFORE THE THURSDAY OPEN MEETING SO THAT YOU HAVE THE BEST INFORMATION GOING INTO THAT LAST DISCUSSION WITH ERCOT AS WE, AS WE MOVE FORWARD.

SO THAT, THAT'S KIND OF OUR PLAN.

AND THEN ULTIMATELY HAVE ANOTHER DISCUSSION WITH THE COMMISSION ON THE, THE 29TH AND MAKE SURE THAT WE'RE ABLE TO ADEQUATELY ADDRESS ANY QUESTIONS OR COMMENTS OR CONCERNS THAT THE COMMISSION HAVE, AND THEN MOVE FORWARD INTO AN EXECUTION MODE, UH, ON THE, THE, THE FRIDAY THEREAFTER, UH, IN ORDER FOR THIS TO BE FACILITATED APPROPRIATELY.

YEAH, I THINK THERE'S, THERE'S ONE OTHER CONSIDERATION TOO, IF YOU DECIDE TO ACCELERATE THE INSPECTION THIS FALL IS THAT THE, THE FALL RESOURCE INSPECTION PROCESS IS FULLY SUBSCRIBED ALREADY.

MM-HMM, .

SO THERE'S A, THERE'S CAPACITY AVAILABLE TO TAKE OUTAGES, AND THOSE HAVE ALL BEEN RESERVED.

SO THERE WOULD BE SOME, SOME RISK ASSOCIATED WITH TAKING ANOTHER 400 MEGAWATTS OR, OR WHATEVER, YOU KNOW, AMOUNT THAT WOULD BE IN ADDITION TO WHAT'S ALREADY BEEN SUBSCRIBED.

CAN I, CAN I ASK ONE MORE QUESTION? I'M SORRY I CAN'T GET MY HEAD AROUND THE LOST OPPORTUNITY.

SO FROM A GENERATION STANDPOINT, THE HEAT RATE OF THESE UNITS ARE UNIT THREE IS WHAT, 15 15,000 HEAT RATE? WHAT'S THE HEAT RATE ON IT?

[01:10:01]

1112, UNIT THREE, ABOUT 11, 11, 12.

HEAT RATE 11.

SO ASSUMING THAT WE DON'T DO AN EARLY OUTAGE, WE, YOU KNOW, PUSH THAT OFF, WE'RE NOT GONNA DO AN OUTAGE IN OCTOBER.

YOU WOULD ACTUALLY THINK YOU WOULD BE RUNNING THESE UNITS ON A FIVE BY 16 WITH A 12 HOUR RAMP.

YOU THINK YOU'D ACTUALLY BE RUNNING THEM IN OCTOBER, NOVEMBER? I THINK THAT, I THINK THAT, I THINK THEY LIKELY WOULDN'T FOR OCTOBER, NOVEMBER WOULD NOT RUN EVERY DAY OF THE WEEK.

I THINK THE CHALLENGE WE HAD WHEN LOOKING AT THE OPPORTUNITY, UM, IS THAT, THAT THAT CAPACITY IS PULLED OUT OF OUR PORTFOLIO.

OR, UM, SOME, THERE COULD BE SOME OTHER CHANGES AS WELL, I GUESS.

I JUST WANNA MAKE SURE COMMISSIONER GL ASKED KIND OF THE QUESTION THAT REALLY I'M JUST GONNA DO IS MAKING SURE WHATEVER WE DO IT'S FAIR TO THE CONSUMERS OF TEXAS.

'CAUSE ON SURFACE IT DOESN'T FEEL THAT WAY TO ME, BUT THAT'S, THAT'S ME.

I DON'T FULLY UNDERSTAND THE CALCULATION OR THE ECONOMICS, BUT IT FEELS A LITTLE DIFFERENT TO ME THAN WHAT I WOULD'VE THOUGHT.

THAT'S ALL.

YEAH, AND I, AND I, I'M GONNA SORT OF ECHO, UH, BOB'S STATEMENTS, AND I SAID THIS AT THE OPEN MEETING.

I THINK IT'S GONNA BE VERY IMPORTANT FOR ERCOT TO CONTINUE TO WORK WITH CPS ON ESTABLISHING A METHODOLOGY, UM, FOR THE LOST OPPORTUNITY COST THAT CAPTURES THE TRUE OPERATIONAL, UM, CHARACTERISTICS AND, AND, AND ECONOMICS ASSOCIATED WITH RUNNING THOSE PLANTS THAT, THAT SUPPOSEDLY THE PLANTS WOULD BE RUNNING AT IN THE FALL.

THAT IS, UM, EQUITABLE FOR THE RATE PAYERS OF TEXAS.

UM, AS WELL AS, YOU KNOW, THE LOAD WILL BE PAYING FOR IT.

AND SO I, I ENCOURAGE TO CONTINUE TO WORK WITH CPS, UM, TO COME UP WITH THE METHODOLOGY THAT'S, THAT'S, UM, REFINED TO CAPTURE THE OPERATIONAL, UH, CHARACTERISTICS OF, OF THE PLANS.

AND, UM, AND THIS IS A QUESTION THAT I HAVE IN THE, IN THE SPIRIT OF REGULATORY SORT OF FACTORS, UM, THAT ARE ASSOCIATED WITH YOUR PLAN.

SO YOUR PLAN WAS TO RETIRE THESE THREE UNITS, UM, THIS NEXT YEAR IN MARCH 25.

WHAT HAP FROM, FROM A LIKE FEDERAL AND STATE AIR PERMITTING PERSPECTIVE, IF ERCOT ULTIMATELY DETERMINES THAT, YOU KNOW, THEY SHOULD ENTER INTO AN RR CONTRACT FOR AT LEAST UNIT THREE ARE, ARE THOSE PERMITS STILL GONNA BE IN PLACE? UM, LIKE HOW DOES THAT WORK IF YOU'VE ALREADY SAID YOU'RE RETIRING A PLAN? UM, THANK YOU.

SO, UH, OUR, UH, COMPLIANCE TEAM HAS, SO WHEN WE STARTED THIS PROCESS A FEW MONTHS AGO, WE STARTED LOOKING AT, AT OUR AIR PERMITTING AND OTHER PERMITTING, YOU KNOW, POSSIBLE, UH, RAMIFICATIONS OF THE RETIREMENT AND THE RMR AND AT THIS POINT, UM, SO, UM, THERE ARE NO ISSUES, UH, MOVING FORWARD WITH AN RMR RIGHT, FROM A PERMIT PERSPECTIVE, BUT WE'LL CONTINUE TO LOOK AT THAT AS WE, IF WE WORK THROUGH, YOU KNOW, TOWARDS AN RMR CONTRACT TO ENSURE THAT, UM, YOU KNOW, NO CHANGES ARE NECESSARY.

BUT RIGHT NOW, AIR PERMITTING IS, UH, SEEMS TO BE OKAY AT THIS POINT.

OKAY, THANK YOU.

CAN I ASK ONE MORE QUESTION? SURE.

MR. CHAIRMAN, WOODY, UM, I, I THINK YOU'VE TOLD ME IN THE PAST THAT ALL THREE UNITS OR ABOUT 800 MEGAWATTS ARE NEEDED.

IS THAT RIGHT? IS THAT THE, THE EXPECTATION OR THE, THE, WHAT THE MODELING SHOWS IS NECESSARY? YES.

HOW, HOW DO WE TAKE, OR DO YOU ALL TAKE INTO CONSIDERATION ADDITIONAL, UH, SOLAR AND BATTERIES AND THINGS THAT ARE BUILT ON THE NORTH SIDE OF THE CONSTRAINT, YOU KNOW, OVER THE NEXT YEAR? HOW DO YOU ALL CONSIDER THAT FACTOR? AND COULD THIS BE REDUCED TO 400 MEGAWATTS IF WE SAW 400 MEGAWATTS OF, OF ALTERNATE RESOURCES GET, GET ADDED TO THE SYSTEM? YEAH.

WELL, FIRST OF ALL, THE ANALYSIS TAKES INTO EFFECT ANYTHING WE KNOW IS GONNA BE THERE.

SO IF THEY'RE FAR ENOUGH ALONG IN THE INTERCONNECTION PROCESS AND WE KNOW THEY'RE GONNA BE THERE, WE INCLUDE 'EM IN THE STUDY.

SO WE ANTICIPATE THAT SOLAR UNITS FOR THE HOURS THAT ARE MOST CRITICAL HERE DON'T HAVE MUCH OF EFFECT.

SO ADDITIONAL SOLAR IN THE NORTH IS NOT GONNA HELP DURING THOSE, YOU KNOW, THE, THE SOLAR DOWN ROUND PERIOD WHEN WE SEE THE, THE OVERLOAD.

SO SOLAR NOT SO MUCH.

IF THERE WAS A NEW BATTERY OR A BUNCH OF BATTERIES OR A NEW SOMETHING ELSE THAT WERE TO BE BUILT NORTH THAT WE DON'T KNOW ABOUT NOW THAT COULD BE BUILT WITHIN BEFORE THE SUMMER OF 2027.

WE COULD CERTAINLY FACTOR THAT IN TO THE, THE OVERALL ASSESSMENT AND POTENTIALLY WE COULD CERTAINLY END THE RMR CONTRACT COMPLETELY.

I DON'T KNOW IF WE CAN PARTIALLY END IT OR NOT.

I'D HAVE TO ASK SOMEBODY ELSE ABOUT THAT, BUT POTENTIALLY WE CAN, WE CAN ALWAYS REEVALUATE AS WE GO THROUGH, THOUGH, AS MORE RESOURCES COME ONLINE

[01:15:01]

AND, AND SO THE MARKET COULD WORK IN PROVIDING A SOLUTION.

UH, NOW THAT WE HAVE THAT YOU ALL HAVE INDICATED THAT THIS IS A BIG PROBLEM, IS THERE A PROCESS TO ALLOW OR, OR SPEED UP THE INTERCONNECTION OF A FACILITY THAT MIGHT SOLVE AN INTERCONNECTION WIDE RELIABILITY PROBLEM? YES.

I MEAN, FROM A, FROM INTERNAL, FROM TO ERCOT, THERE IS, SO, UM, BUT I THINK IT'S A, IT'S A DANCE THAT WE DO WITH THE TSPS AS WELL.

AND SO THERE WOULD BE, THERE'D BE MULTIPLE PLAYERS THAT WOULD HAVE TO ALL WORK TOGETHER IN ORDER TO, TO GET SOMETHING ONLINE FASTER.

WE HAVE PUSHED ON THAT PROCESS A LOT THOUGH, TO TRY TO MAKE IT AS FAST AS POSSIBLE AND AS EFFICIENT AS POSSIBLE NOW.

BUT, UH, YOU KNOW, THERE'S A, THERE'S A, THERE'S A WIDE VARIANCE MM-HMM, , UM, A DEVELOPER THAT COMES IN THAT HAS EVERYTHING IN ORDER, CAN GET THROUGH FAIRLY QUICKLY, LESS THAN A YEAR, MAYBE EVEN FOR A BATTERY.

UM, BUT A, SOME KIND OF HOLD UP IN CERTAIN AREA OR THEY'LL HAVE SOMETHING, A MODEL CORRECT OR THAT KIND OF THING CAN, CAN, CAN SLOW IT DOWN AS WELL.

SO IT'S A, IT'S REALLY A THREE-PART, UH, COORDINATION THAT IT TAKES TO, TO MOVE SOMETHING ALONG QUICKLY.

AND IF SOMETHING LIKE THAT HAPPENED, UH, YOU COULD, WE COULD GET AN RMR CONTRACT, GO THROUGH THE ISSUES THAT WE'RE TRYING TO SOLVE HERE, BUT HAVE AN RMR CONTRACT IN PLACE IN CASE NOTHING HAPPENS, BUT BE ACTIVELY IN DISCUSSIONS WITH THE MARKET TO MAKE SURE THAT SOMETHING COULD HAPPEN.

AND THEREFORE THEN YOU, YOU, YOU LET CPS RETIRE THOSE PLANTS.

THAT'S RIGHT.

I HAVE A FOLLOW UP QUESTION.

DOES, DOES THE MRA, DOESN'T THE MRA CONTEMPLATE, UM, AS ONE OPTION? WHAT, WHAT COMMISSIONER FEL HE, UM, HAS DESCRIBED IS BY GETTING A RESOURCE OUT THAT'S ALREADY FURTHER ENOUGH IN THE GENERATION OR CONNECTION.

YOU COULD SUBSTITUTE THE MRA FOR ONE OR TWO OR THREE OF THE RESOURCES.

YOU COULD ALSO HAVE A SEPARATE CONTRACT FOR EACH RESOURCE POTENTIALLY.

SO THAT YOU COULD, YOU COULD, UH, MAYBE EXIT ONE CONTRACT EARLY AND KEEP THE OTHER TWO OR SOME OTHER COMBINATION.

MM-HMM, .

AND BECAUSE THIS IS A MULTI-YEAR PROBLEM, THE FLEXIBILITY IS THERE THAT FOR THOSE RAS THAT ARE OFFERING, AND IF YOU CAN'T BE THERE APRIL 1ST, BUT YOU CAN BE THERE IN THE SUMMER, THEN WE WANNA HAVE THAT AS AN OPTION.

SO, AND THE ACCELERATION PROCESS IS THERE, THERE'S ENOUGH TIME TO STILL GO THROUGH OUR QUARTERLY STABILITY ASSESSMENT THAT WE HAVE TO OUR QSA PROCESS FOR THOSE THAT WANT TO ACCELERATE.

UH, WE JUST NEED THE INDUSTRY TO KIND OF LOOK AT THAT RFP AND AND OFFER IN SO THAT WE CAN CONSIDER THOSE.

UNITS MAY NOT BE AVAILABLE WHEN YOU NEED THEM IN THE SUMMER, DEPENDING ON WHAT THE INSPECTION RESULT REVEALS.

SO IT SOUNDS SORT OF LIKE A EVOLVING PROCESS ON THAT END THAT, THAT MAYBE ERCOT COULD REMAIN FLEXIBLE IN, IN, IN MONITORING THIS SITUATION, BUT IN THE NEAR TERM, BUT IN THE LONG TERM, IT SOUNDS LIKE WHAT I THINK YOU ALLUDED TO, CHAD WAS GOING BACK AND REVIEWING THE MRA PROCESS TO, TO SEE IF THE RIGHT INCENTIVES ARE THERE, UM, FOR FUTURE MRS. TO HAVE MORE PARTICIPATION IN THE FUTURE.

CORRECT.

JUST, JUST ONE, ONE MORE POINT.

UM, AND I GUESS IT HAS TO DO WITH THE INCENTIVES FOR PEOPLE TO LOOK AT THE ALTERNATIVES.

AS AN EXAMPLE, RA TEXAS BASED IS DOING LARGE DEPLOYMENT BATTERIES IN AT MOSS LANDING IN CALIFORNIA, TAKING ADVANTAGE OF, UH, TRANSMISSION AVAILABILITY.

SO THAT'S WHY CAN THEY DO IT THERE? AND THEY'RE NOT EVEN LOOKING AT IT HERE WHEN THERE'S THIS LIKE A CRITICAL ASSET TO, TO ADDRESS.

THOSE ARE THE, THE FACTORS OF INCENTIVES THAT I HOPE WERE CLEAR.

ALRIGHT.

SO I HOPE THE TIMELINE IS KIND OF CLEAR ON THIS.

OUR FOCUS, AGAIN, IS ON UNIT THREE 'CAUSE IT'S THE BIGGEST UNIT WITH THE MEGAWATTS AND, AND THE NEWEST.

BUT I DO WANNA KINDA MAKE CLEAR THAT UNIT TWO AND UNIT ONE HAVE THE SAME ISSUES, RIGHT? A 60 DAY OUTAGE TO UNDERSTAND ITS LIFE EXTENSION.

SO WE WANNA OBVIOUSLY MOVE FORWARD WITH UNIT THREE TO UNDERSTAND WHAT, WHAT THE POTENTIAL ISSUES ARE WITH IT.

BUT EVEN IF THE BOARD GOT TO A SITUATION IN DECEMBER AND SAID YOU WANTED ALL THREE UNITS BECAUSE WE NEED 850 MEGAWATTS, YOU WOULD STILL HAVE TO GO THROUGH THE 60 DAY INSPECTION PROCESS FOR UNIT TWO AND UNIT ONE.

AND SO THERE'S STILL A SITUATION, THERE'S A LOT OF DECISION POINTS HERE, A LOT OF DECISION TREES THAT THOSE

[01:20:01]

BUT WE FEEL THAT IT'S IMPORTANT TO GO AHEAD AND UNDERSTAND THAT ISSUE NOW AT THE LARGEST UNIT.

AND IF IT'S TRULY NOT AVAILABLE AND THERE'S NOTHING COMPLIMENTARY ON THE MRA PROCESS, THERE'S MORE TIME FOR THE STATE TO BE PREPARED AROUND THE RISK THAT'S COMING WITH THOSE DISPATCHABLE RESOURCES NOT BEING AVAILABLE.

YEAH, I THINK YOU HAVE TO THINK ABOUT THE THREE UNITS.

YOU CAN DO ONE UNIT PER OUTAGE SEASON, AND WE'VE GOT A FALL OUTAGE SEASON, AND THEN WE HAVE A SPRING OUTAGE SEASON BEFORE 2025 AND AFTER APRIL WITHOUT OUTAGES, NONE OF THE UNITS CAN RUN.

SO THOSE ARE KIND OF THE, THE CRITERIA, THE, THE BINDING CRITERIA BEHIND HOW WE GET ROOT, THOSE THAT CAPACITY ONLINE.

CHAD, CAN YOU ADDRESS THE DIS, UM, GOVERNANCE DECISION MAKING PROCESS? IS THIS OUR DECISION TO MAKE THE R-M-R-M-R-A DECISION IS Y'ALL'S DECISION UNDER THE PROTOCOLS, AND THAT'S WHAT WE'RE SLATED FOR FOR DECEMBER TO DO FOR THIS UNIT THREE DECISION.

THERE IS NO PROTOCOL FRAMEWORK AROUND IT.

AND SO WE WILL BE EXPLAINING TO THE COMMISSION THAT WE ARE USING OUR AUTHORITY TO MAINTAIN THE ADEQUACY OF THE SYSTEM TO MOVE FORWARD WITH ENGAGING INTO A CONTRACT WITH CPS.

THE THING THAT'S KIND OF INTERESTING AROUND THIS, A LOT OF THIS IS DRIVEN BY TIMING, RIGHT? BECAUSE OUTAGE COSTS ARE RECOVERABLE AS AN RMR ELIGIBLE COST REPAIRS ARE RECOVERABLE AS AN RMR ELIGIBLE COST UNDER THE PROTOCOLS.

THE, THE DISTINCTION HERE IS THE SAFETY AND RELIABILITY CONCERNS THAT CPS HAS RAISED WITH OUR UNITS THAT IS DRIVING THIS TIMING ISSUE THAT WE HAVE TO KIND OF MAKE THIS DECISION RIGHT NOW AND IN ORDER TO UNDERSTAND IT, TO MANAGE THE LONG-TERM RELIABILITY CONCERN.

AND OF COURSE, THAT BRINGS IN THIS LOSS OPPORTUNITY PIECE, WHICH IS NOT PART OF THE TRADITIONAL RMR. SO THE TIMING AND THE LOSS OPPORTUNITY PIECE ARE THE KIND OF THE, THE TWO THINGS THAT ARE OUTSIDE THE PROTOCOL FRAMEWORK THAT WE'RE GONNA MANAGE FROM, UH, OUR RELIABILITY AUTHORITY TO ENSURE THE ADEQUACY OF THE SYSTEM AND FRAME THAT UP FOR THE COMMISSION.

THAT'S THE NEXT OPEN MEETING DISCUSSION.

I DON'T WANT TO CLOSE THIS CONVERSATION PREMATURELY, BUT DO WE HAVE ANY OTHER QUESTIONS OR COMMENTS? CPS ONE LAST SHOT TO COMMENT? OKAY.

WITH THAT, UH, I THINK WE KNOW WHAT, UH, WE'RE GONNA LOOK FORWARD TO IN OCTOBER.

AND

[6. Board Education – Thermal Generation Development in ERCOT]

THE NEXT ITEM IS AGENDA ITEM NUMBER SIX, BOARD EDUCATION, THERMAL GENERATION DEVELOPMENT.

ERCOT.

DAVE MAGGIO WAS PRESENTING.

DAVE, YOU HAVE THE PODIUM.

ALL RIGHT.

I'M, UH, DAVE MJO.

I'M A PRINCIPAL OF MARKET DESIGN ANALYTICS HERE AT ERCOT.

UH, THANK YOU VERY MUCH, UH, FOR THE TIME THIS MORNING.

UH, THIS IS NOT A, A VOTING ITEM.

THIS PRESENTATION IS REALLY FOR DISCUSSION TODAY, AND THE IDEA IS TO TALK ABOUT INCENTIVES FOR GENERATION DEVELOPMENT AND SPECIFICALLY THINKING ABOUT THERMAL RESOURCES.

AND AS WE KIND OF GO THROUGH THIS MATERIAL, WHAT YOU'LL SEE IS THAT A LOT OF IT'S GONNA FEEL VERY FAMILIAR.

WE'VE TALKED ABOUT IT TO SOME DEGREE AT THE COMMITTEE MEETINGS AND THE, THE MEETINGS TODAY, WE'VE TALKED ABOUT IT IN, UH, JUNE AND AND APRIL OF PREVIOUS, UH, MEETINGS.

BUT THE IDEA IS TO THINK ABOUT THESE TOPICS IN RELATIONSHIP TO, TO ONE ANOTHER, AND SPECIFICALLY MORE DIRECTLY IN THE CONTEXT OF GENERATION DEVELOPMENT.

SO SOME OF THE KEY TAKEAWAYS WE'LL HIT ON IS, AND THIS WILL BE PART OF SORT OF OUR LEVEL SETTING, IS WE HAVE SEEN SOME INCREMENTAL INCREASE IN THE AMOUNT OF GAS TECHNOLOGIES IN THE, IN THE ERCOT MARKET.

UM, BUT REALLY THE FOCUS HAS CONTINUED TO BE RENEWABLES AND STORAGE.

I THINK THAT'S, UH, AGAIN, SOMETHING THAT WE'VE BEEN BEEN TALKING ABOUT AND REALLY THE IMPETUS FOR SOME OF THE DISCUSSION HERE TODAY.

UM, WE'LL BE TALKING ABOUT SOME OF THE FACTORS THAT ARE IMPACTING THE OUTLOOK FOR GENERATION DEVELOPMENT, LOOKING AT BOTH THINGS THAT ARE IMPROVING THE OUTLOOK AS WELL AS IMPAIRING IT.

AND THEN WE'LL TOUCH ON LASTLY, HERE'S SOME SLIDES THAT, THAT PABLO ALREADY SHARED TALKING ABOUT THIS IDEA OF A FRAMEWORK.

SO, UM, AGAIN, I THINK HE LAID OUT VERY WELL.

IT'S, IT IS STILL A WORK IN PROGRESS, BUT AS WE THINK ABOUT THE INCENTIVES THAT ARE OUT THERE, THE ATTRIBUTES WE WANT TO INCENT, THE IDEA OF HAVING THIS FRAMEWORK FOR DOING AN EVALUATION OF MARKET DESIGN IS GONNA BE VERY CRUCIAL.

SO, WE'LL, WE'LL HIT ON THAT A LITTLE BIT MORE, BUT I THINK THAT'S GONNA BE MORE OF A, A FUTURE TOPIC, UH, ON THE INTRO SLIDE HERE.

UH, REALLY COVERED MOST OF THIS IN THE PREVIOUS SLIDE.

THE ONE THING I WANTED TO NOTE IS, AS WE'VE BEEN THINKING ABOUT THIS TOPIC AND PREPARING FOR THE PRESENTATION, THIS HAS NOT NECESSARILY EX EXCLUSIVELY BEEN

[01:25:01]

ERCOT THOUGHTS.

WE'VE HAD A CHANCE TO, TO TALK TO A LOT OF FOLKS.

I KNOW I'VE SPOKEN TO FOLKS, SOME OF THE OTHER LEADERSHIP HAS SPOKEN TO FOLKS, SO WE REALLY APPRECIATE THE FEEDBACK THAT WE'VE GOTTEN ON THIS PARTICULAR TOPIC.

AND THE IDEA WITH THIS PRESENTATION IS TO SHARE SOME OF THE THEMES THAT WE'VE HEARD THROUGHOUT THOSE CONVERSATIONS.

SO, SO FIRST, JUST TO SAY THANK YOU, UH, TO ALL THE FOLKS WHO, WHO DID PROVIDE, UH, THAT, THAT TIME AND EXPERTISE TO, TO HEAR, I FOUND IT VERY HELPFUL AND EDUCATIONAL, UH, AND REALLY WENT A LONG WAY IN TERMS OF PUTTING THIS MATERIAL TOGETHER.

SO FIRST TO, TO SET THE STAGE, UH, I THINK YOU ALL HAVE LIKELY SEEN A GRAPH OR SOMETHING LIKE IT.

THIS IS LOOKING AT THE CHANGE IN THE RESOURCE MIX OVER THE LAST 25 YEARS.

AND, UH, YOU KNOW, MAYBE EVEN BEFORE YOU START THINKING ABOUT RESOURCE MIX, IT, IT JUST STOOD OUT.

THIS, THE OVERALL CHANGE IN THE AMOUNT OF CAPACITY WE'VE SEEN IN THIS TIMEFRAME.

SO I THINK THE, THE STEP, IF YOU LOOK AT IT HERE IS ABOUT A 50% INCREASE IN CAPACITY IN THE ERCOT REGION IN THE LAST 20 YEARS.

AND THAT'S BEFORE WE START LOOKING AT INDIVIDUAL TECHNOLOGY TYPES.

NOW WITHIN THE, THE LAST 20 YEARS WHERE WE'VE SEEN THAT THE GREATEST AMOUNT OF GROWTH IS WIND.

IF YOU GO BACK TO, UH, MORE, WHEN I STARTED AT ERCOT, THERE WAS MAYBE A THOUSAND MEGAWATTS OR SO OF WIND AND, AND NOW IT'S, UH, RIGHT BEHIND, UH, GAS COMBINED CYCLES, UH, UH, IN SECOND PLACE THERE.

IN TERMS OF, AGAIN, THE, THE INSTALLED, UH, NET CAPACITY AVAILABLE, UH, IN MORE RECENT TIMES, UH, THE, YOU'VE SEEN THAT WHERE THE, THE MOST RAPID GROWTH IS HAPPENING IN, IN SOLAR AND, AND STORAGE.

UH, AND AGAIN, THERE HAS BEEN SOME INCREMENT, INCREMENTAL, UH, INCREASES IN THE AMOUNT OF CERTAIN GAS TECHNOLOGIES.

UH, COMBINED CYCLE CONTINUES TO, TO INCREASE SLIGHTLY, UH, YOU SEE A LITTLE MORE STEADY INCREASE WITH THE, THE SMALLER GAS TECHNOLOGIES.

BUT OVERALL, THE MOST RAPID INCREASES, OF COURSE, HAPPENING WITH THOSE, UH, TECHNOLOGIES PREVIOUSLY MENTIONED, THE, THE RENEWABLES AND THE STORAGE TECHNOLOGIES.

SO THAT'S WHAT WE'VE SEEN HISTORICALLY.

LOOKING AT THE QUEUE, THIS IS GONNA BE VERY SIMILAR TO SOME DATA THAT CHRISTIE SHARED.

I, PERHAPS MINE IS A LITTLE BIT MORE DATED THAN HER, UH, BUT THE STORY HERE IS, IS VERY MUCH THE SAME AT THIS POINT.

REALLY WHAT WE SEE IN THE QUEUE IS THOSE SAME TECHNOLOGIES WHERE WE'VE SEEN RAPID GROWTH IN IN THE RECENT YEARS.

SO THAT'S, THAT'S BATTERIES, THAT'S SOLAR, UH, THEN FOLLOWED BY WIND, AND THEN THERE IS SOME AMOUNT OF, OF GAS AND OTHER TECHNOLOGIES IN THERE.

UM, I GUESS ONE THING TO NOTE, AND THIS WAS PART OF CHRISTIE'S PRESENTATION AT ONE OF THE COMMITTEE MEETINGS YESTERDAY, IS THERE HAS BEEN AN UPTICK SPECIFICALLY IN THE AMOUNT OF GAS TECHNOLOGIES THAT WE'VE SEEN IN THE LAST FEW MONTHS.

SO I THINK, UM, AS WE THINK ABOUT THINGS OF THE TEXAS ENERGY FUND AND THINGS OF THAT NATURE, KEEPING AN EYE ON THAT AND OBVIOUSLY PROVIDING THE BOARD AND AND COMMISSION WITH REGULAR UPDATES ON WHAT WE SEE.

NOW, ONE OF THE THINGS WE WANTED TO PROVIDE, AGAIN, IN THINKING ABOUT THE CONTEXT OF THIS DISCUSSION, IS TRYING TO PROVIDE SOME COMPARATIVE COST ACROSS TECHNOLOGIES.

AND SO WHAT WE'RE LOOKING AT HERE IS SOMETHING CALLED THE LEVELIZED COST OF ENERGY.

THIS IS SOMETHING PROVIDED BY LAZARD AND UH, THIS IS JUST ONE OF THE GRAPHICS FROM THE REPORT AND THE FULL REPORTS AVAILABLE THERE AT THE LINK.

BUT THE IDEA HERE IS TO PROVIDE A COMPARISON ACROSS DIFFERENT TECHNOLOGIES, THINKING ABOUT THE, THE CAPITAL COST AND THE OPERATING COST OF THESE TECHNOLOGIES RELATIVE TO THE AMOUNT OF EXPECTED PRODUCTION.

AND TO A LARGE DEGREE, I THINK THIS LINES UP WITH WHAT WE'RE SEEING IN TERMS OF THE QUEUE, UH, MOST RELEVANT.

UH, I THINK IN THIS DISCUSSION, IF YOU LOOK AT THE TOP PART, THE TOP TWO THIRDS OR SO OF THE GRAPH, YOU'LL SEE THE, UH, PV AT THE UTILITY SCALE AS WELL AS WIND ON SHORE.

THOSE ARE THE ONES THAT TEND TO BE FAR LESS TO THE LEFT SHOWING, UH, WITHIN, UH, THE, THE ANALYSIS HERE PUT BY LAZAR IS SOME OF THE, THE LOWER COST TECHNOLOGIES IN TERMS OF THIS LEVELIZED COST OF ENERGY.

AND THEN ON THE BOTTOM PART OF THE GRAPH, YOU SEE THE THERMAL, UH, THE THERMAL, UH, TECHNOLOGIES.

UM, THE, THE LOWEST OF THOSE IS THE, THE GAS COMBINED CYCLE.

UM, BUT, BUT IN GENERAL, THOSE ARE, ARE MUCH, UH, HIGHER THAN WHAT WE SEE FOR THE, THE RURAL RENEWABLE TECHNOLOGIES.

UM, PERHAPS ONE THING TO NOTE ABOUT THIS GRAPH IS, UM, IT DOES NOT INCLUDE SOME OF THE SENSITIVITIES AROUND SUBSIDIES.

SO OF COURSE THAT HAS AN IMPACT.

UH, I THINK THE OTHER THING TO NOTE IS, I MENTIONED IN TERMS OF DOING THIS CALCULATION, IT IS A COST, I'M SORRY, IS A CALCULATION RELATIVE TO PRODUCTION.

SO IT DOESN'T CONSIDER OTHER SORT OF REVENUE STREAMS THAT MIGHT BE PART OF THE EQUATION.

SO FOR EXAMPLE, TO THE DEGREE A, A PLANT IS CONSIDERING, UH, ANSLEY SERVICE REVENUES OR THINGS OF THAT NATURE AS PART OF THEIR THOUGHT PROCESS, THAT WOULD NOT NECESSARILY BE CAPTURED HERE VERY WELL.

UM, THE OTHER THING TO NOTE IS THERE ARE OF COURSE A LOT OF ASSUMPTIONS THAT GO INTO THESE CALCULATIONS.

UM, SO, YOU KNOW, I THINK THERE'S A QUESTION IN TERMS OF, FOR EXAMPLE, THE, THE CAPITAL COST OF COMBINED CYCLES THAT IS USED IN THE ASSUMPTIONS AND THOSE ARE, ARE LAID OUT IN OTHER PARTS OF THE REPORT.

A QUESTION IN TERMS OF IS THAT SORT OF THE COST THAT PEOPLE ACTUALLY ARE, ARE SEEING, IS IT SORT OF THE SAME CONSTRUCTION TIMES THAT PEOPLE ARE SEEING? UM, ANOTHER ITEM THAT CAME UP AS PART OF OUR SORT OF HONOR RELATED DISCUSSION BEFORE, BUT WE WERE TALKING ABOUT CAPACITY FACTOR.

I THINK A LOT OF THESE CALCULATIONS, FOR EXAMPLE, WITH GAS

[01:30:01]

COMBINED CYCLES INCLUDE VERY HIGH CAPACITY FACTORS FOR THAT RESOURCE.

AND I THINK THERE'S SOME REASON TO BE THINKING ABOUT THOSE ASSUMPTIONS A LITTLE BIT.

DAVE, WHAT DO THE FOOTNOTES MEAN? OOPS, SORRY, LET ME GO BACK.

THE, THE FOOTNOTED YOU LITTLE DIAMONDS AND OTHER SAME QUESTION, INTERESTING LOOKING NUMBERS ON THE CHART.

YEAH, THE, THE DIAMONDS AND THE, THE BOTTOM PART OF THE GRAPH, THAT'S THE FULLY DEPRECIATED COST OF THOSE TECHNOLOGIES.

OH, I SEE.

SO ONCE YOU, ONCE YOU ADVERTISE IT OUT, THAT'S WHAT IT, THE THE RUNNING COST IS BASICALLY.

YES, THAT'S RIGHT.

I SEE.

AND THAT, I GUESS THERE AGAIN, THOSE ARE ALSO ARRANGED, THOSE JUST AS A, JUST PRESENT THE AVERAGE WITHIN THE DATA THAT THEY WERE LOOKING AT, BUT THAT THAT'S WHAT REPRESENT.

AND SO THE GREEN ONE MUST BE SOMETHING TO DO WITH THE INITIAL DEPRECIATION PERIOD OR SOMETHING LIKE THAT.

ACTUALLY, THE, THE, THE GREEN ACTUALLY I THINK IS LOOKING AT A SPEC, A SLIGHTLY DIFFERENT VERSION OF TECHNOLOGY.

IF I RECALL.

IT'S SPECIFICALLY FOCUSED ON A, ON A VERSION OF THE COMBINED CYCLE THAT IS, UH, BURNING HYDROGEN.

SO I THINK THAT, THAT THERE IS A SENSITIVITY THERE THAT DESCRIBES IT, BUT I'M, I'M FAIRLY CONFIDENT THAT'S WHAT THE, THAT'S THE DISTINCTION THERE FOR THE, THE GREEN DIAMOND, UH, IN THE LAST ROW THERE BEFORE COMBINED CYCLES.

UH, ONE LAST POINT OF CONTEXT BEFORE WE GET INTO SOME OTHER PARTS OF THE DISCUSSION, UH, THOUGHT IT WAS USEFUL TO TALK ABOUT THE TIMELINE OF PROJECT DEVELOPMENT.

SO AS WE THINK ABOUT WHAT'S DRIVING INVESTMENT, AS WE LOOK AT THE MARKET DESIGN AND WE'RE LOOKING AT REACTIONS, HOW LONG DOES IT ACTUALLY TAKE FOR THESE, UM, THESE PROJECTS THAT ACTUALLY BECOME COMMERCIAL? AND SO WHAT WE'RE LOOKING AT HERE IS SOME DATA PROVIDED BY LAWRENCE BERKLEY NATIONAL LAB IN THE SPECIFIC GRAPH I PICKED HERE.

UH, IT IS COMPARING THE DIFFERENT REGIONS AND SHOWING HOW LONG RESOURCES SPEND IN AT LEAST A PART OF THE PROCESS.

AND THIS IS SPECIFICALLY FOCUSED ON DURATION BETWEEN WHEN A RESOURCE GOES, HAS AN INTERCONNECTION REQUEST AND WHEN IT GETS AN INTERCONNECTION AGREEMENT.

SO THE ONE THING JUST TO KIND OF CALL IT RIGHT NOW IS IT DOES NOT INCLUDE THE TIMEFRAME FOR INTERCONNECTION AGREEMENT TO BECOMING ACTUALLY COMMERCIAL.

UM, I GUESS THE OTHER THING TO NOTE IS, UH, THIS, THEY HAVE INFORMATION IN THE REPORT.

THIS DOESN'T NECESSARILY BREAK IT UP BY TECHNOLOGY, UM, OR BY RESOURCE SIZE, AT LEAST IN, IN THIS SPECIFIC GRAPHIC.

UM, KIND OF THE KEY POINT THAT I WANTED TO SHARE WITH THIS IS, EVEN IN THE CASE WHERE ERCOT IS RELATIVELY FASTER THAN THE OTHER REGIONS, WHAT WE'RE SEEING IN TERMS OF A MEDIAN DURATION FOR THIS PART OF THE PROCESS IS ABOUT TWO YEARS NOW, THERE IS A LOT OF VARIATION IN THAT, BUT JUST TO GET INTO THE QUEUE AND GET AN INTERCONNECTION AGREEMENT ON AVERAGE IS TAKING AROUND THAT, THAT TWO YEAR PERIOD.

UM, IN TERMS OF TECHNOLOGIES, WHAT THE DATA SHOWED IN THE REPORT, AND I THINK THIS IS CONSISTENT WITH OUR OBSERVATIONS, IS THIS PROCESS CAN BE A LITTLE BIT QUICKER FOR STORAGE.

AND I THINK THE OTHER KEY PLACE WHERE THIS CAN BE SHORTER IS FOR THE SMALLER GENERATORS.

AND, AND JUST AS A DATA POINT FOR THAT, THIS WAS SHARED BY, UH, BILL BLEVINS AND OUR RESOURCE INTEGRATION TEAM LOOKING AT JUST THOSE RESOURCES IN THE SMALL GENERATOR INTERCONNECTION PROCESS, THAT'S ACTUALLY TYPICALLY MORE LIKE SEVEN TO NINE MONTHS.

SO SOMETHING MUCH SHORTER THAN THAN THE TWO YEARS I WAS TALKING ABOUT.

UM, BUT AGAIN, WANTED TO HIGHLIGHT AGAIN, THIS IS ONLY THE INTERCONNECTION AGREEMENT PROCESS TO ACTUALLY GO COMMERCIAL.

WE'RE TALKING ABOUT ON AVERAGE, LET'S CALL IT ANOTHER COUPLE YEARS, I BELIEVE IS WHAT THE DATA WAS SHOWING.

SO TO GET INTO THE INTERCONNECTION QUEUE TO BECOMING COMMERCIAL, WE'RE TALKING ABOUT A FOUR YEAR TIMELINE AND THAT THAT'S, IT'S IMPORTANT TO KEEP THESE TIMELINES IN MIND AS WE'RE THINKING ABOUT RESOURCE INCENTIVES, RESOURCE DEVELOPMENT AND, AND HOW WE THINK ABOUT THE MARKET DESIGN.

DAVE, CAN I ASK YOU A QUESTION? SO IF WE HAVE SO FEW DISPATCHABLE RESOURCES AND GAS PLANTS, UH, OVER THE LAST 10 YEARS, IS THE, IS THE THE LBL NUMBER ACTUALLY ACCURATE? UM, YOU KNOW, OBVIOUSLY SOME OF, UH, SOME OF THOSE TIMELINES ON A DEVELOPER'S, IT COULD BE THE DEVELOPER'S CHALLENGE.

YOU KNOW, THEY DON'T WANT TO GO VERY QUICKLY, THEY HAVE TURBINES ON ORDER AND THEY DON'T WANNA HAVE TO PAY PAY TO GO THROUGH THAT PROCESS UNTIL THEY KNOW THAT THE TURBINES ARE UNDER MANUFACTURING AND, AND COMING IN.

IS THERE ANY DISTINGUISHING FACTOR THERE? UH, NO.

I MEAN, I THINK YOUR, I THINK YOUR POINT IS, IS VALID.

I THINK YOU COULD ARGUE FOR ERCOT PARTICULARLY, AND I IMAGINE TO SOME DEGREE THE OTHER REGIONS, THIS IS THIS NUMBER ON AVERAGE, NOT NECESSARILY BREAKING UP BY TECHNOLOGY WOULD BE SKEWED BY THE RESOURCES THAT ARE INTERCONNECTING.

SO THAT, THAT'S CERTAINLY A FAIR POINT.

DAVE, I HATE TO ASK YOU TO DO THIS.

CAN YOU GO BACK TO SLIDE SEVEN FOR A MINUTE? THE LCOE? YES.

THE COST FOR THE RENEWABLES, DOES THAT INCLUDE ALL OF THE OTHER REQUIRED INFRASTRUCTURE COSTS? TRANSMISSION, BECAUSE, YOU KNOW, RENEWABLES, BY THEIR VERY NATURE, I'M TALKING ABOUT UTILITY SCALE RENEWABLES BY THEIR VERY NATURE TYPICALLY REMOTE FROM, FROM LOAD CENTERS.

SO DOES THIS INCLUDE THE COST OF INFRASTRUCTURE REQUIRED FOR TRANSMISSION, THE COST OF STABILIZATION, THE, YOU KNOW, FOR INSTANCE, WE'RE SPENDING, YOU KNOW, WE APPROVED BILLIONS OF DOLLARS CONDENSERS IN WEST TEXAS TO STABILIZE

[01:35:01]

THE GRID OUT THERE.

UH, DOES, DOES THIS ANALYSIS INCLUDE THAT? I, I, NO, I DO NOT BELIEVE IT DOES.

THIS IS REALLY FOCUSED ON, I DON'T THINK IT DOES.

SO I THINK IT'S IMPORTANT FOR THE PUBLIC TO KNOW THAT THIS IS NOT THE TRUE COST OF RENEWABLE ENERGY DELIVERED TO YOUR METER IN HOUSTON OR DALLAS OR AUSTIN.

UH, SO THAT, I JUST THINK THAT'S IMPORTANT FOR US TO RECOGNIZE WE HAVE TO ADD BILLIONS OF DOLLARS OF, UH, TRANSMISSION AND STABILIZATION, UH, TECHNOLOGIES IN ORDER TO MAKE THAT RENEWABLE ENERGY, UH, USEFUL AND, UH, AT THE METER.

YOU CAN CONTINUE NOW.

ALRIGHT, UH, IF THERE ARE NO OTHER QUESTIONS, SO NOW I'M GONNA FOCUS ON A, ON A COUPLE OF AREAS THAT ARE LOOKING AT IMPROVING THE OUTLOOK AND, AND THE, AND THE FIRST ONE HERE WILL REALLY BE NO, UM, NOT NEW TO ANYONE IN THE ROOM.

SO THIS IS LOOKING AT THE, THE TEXAS ENERGY FUND.

SO THIS IS A, A FUND THAT WAS, UH, PUT TOGETHER BY THE LEGISLATURE TO PROVIDE UP TO $10 BILLION IN GRANTS AND LOANS, AND OF COURSE INCLUDES A COMPONENT OF THAT THAT'S IN ERCOT LOANS AND, UH, COMPLETION BONUSES.

I THINK THE, THE LAST TIME WE HAD PRESENTED ON THIS WAS RIGHT AFTER SOME NOTICES OF INTENT HAD COME INTO THE PUBLIC UTILITY COMMISSION.

I THINK THERE WERE OVER 125 OF THOSE MORE RECENTLY WAS THE DEADLINE FOR SUBMITTING APPLICATIONS.

UH, THERE WERE OVER 72 APPLICATIONS THAT CAME IN, UH, TOTALING OVER $24 BILLION AND OVER 38 GIGAWATTS.

UM, AND, AND I GUESS THERE'S ANOTHER KEY PART.

WE TALKED ABOUT THE Q UH, A MOMENT AGO.

ONE OF THE INTERESTING FACTS IS THAT IT DOES APPEAR THAT SOME OF THESE RESOURCES ARE STARTING TO, TO SHOW UP IN THE QUEUE.

I DON'T KNOW IF THAT'S NECESSARILY DIRECTLY THE ONES THAT ARE LINKED TO THAT UPTICK, BUT, BUT IT DOES APPEAR THAT THESE ARE, ARE STARTING TO SHOW UP IN THAT QUEUE PROCESS.

SO THE NEXT STEPS ARE, ARE REALLY LATER THIS MONTH WITH THE PUBLIC UTILITY COMMISSION.

BUT THE, I THINK KEY LOOKING AT THIS JUST FROM THE AMOUNT OF NUMBERS IS CLEARLY THERE'S INTEREST AND THIS IS ATTRACTIVE FOR AT LEAST A SUBSET OF, OF FOLKS WHO ARE LOOKING TO INVEST IN, IN GENERATION RESOURCES IN THE ERCOT REGION.

UH, THE NEXT THING I WANTED TO TALK ABOUT, THIS WAS A THEME THAT CAME UP FROM A FEW FOLKS WAS THE IDEA OF DAVID.

DAVID REAL QUICK.

OH YEAH, SURE.

ON THAT LAST POINT, ON THE PUCT WILL DETERMINE THE PROJECTS FOR DUE DILIGENCE.

SO THE PUCT TAKE A LOOK AT SOMETHING THAT'S STILL WELL IN EXCESS OF 10 BILLION BECAUSE THINGS WILL FALL TO THE WAYSIDE, OR IT'S A KIND OF CAPPED AT, WE DON'T WANT TO OVERCOMMIT, AS I UNDERSTAND IT RIGHT NOW, STAFF'S RECOMMENDATION TO US AT THE NEXT OPEN MEETING WILL NOT EXCEED 10,000 MEGAWATTS.

POTENTIALLY IT COULD.

UM, BUT I THINK, YOU KNOW, GIVEN WHERE WE ARE, THE, THE INSTRUCTION THAT STAFF GOT WAS TO LIMIT IT TO WHAT'S IN THE, IN THE LEGISLATION.

SO I DON'T EXPECT TO GET A RECOMMENDATION AS MORE THAN 10,000 MEGAWATTS OR CO COST MORE THAN PROBABLY AROUND $6 BILLION BECAUSE ONE THING OF NOTE ON THE, UH, ON THE BULLET THERE ABOUT THE 7.2 BILLION, THAT INCLUDES THE, THE GRANTS AND LOANS, BUT IT ALSO INCLUDE, UH, THAT'S THE COMPLETION BONUSES AS WELL.

SO WE HAVE TO HAVE MONEY SET ASIDE FOR THAT.

ALL RIGHT, SO ONE OF THE OTHER THINGS WE WANNA TALK ABOUT AGAIN, WAS IN THESE CONVERSATIONS, THE THEME ABOUT THE RELIABILITY STANDARD.

OF COURSE, THIS HAS AGAIN, BEEN A REGULAR TOPIC WITH THE, WITH YOU ALL OVER THE, THE LAST SEVERAL MONTHS.

AND I THINK, AGAIN, THERE WAS SOME UPDATES ABOUT THIS, UH, ERCOT STAFF HAS BEEN WORKING WITH THE PUBLIC UTILITY COMMISSION ON IT.

UM, I GUESS THE, SOME OF THIS MATERIAL IS A LITTLE DATED.

I KNOW THERE'S BEEN CONTINUED DISCUSSION ON THIS.

I THINK SORT OF THE KEY THING TO CALL OUT THAT, UM, I, I THINK IS VERY NOVEL FOR THE WAY WE ARE THINKING ABOUT IT ALONG WITH THE COMMISSION IS THIS MULTI-PRONGED APPROACH.

SO THAT'S A, THAT IS A MOVE AWAY FROM THE, THE TRADITIONAL WAY THAT THAT FOLKS HAVE BEEN LOOKING AT IT.

BUT KIND OF WHERE THIS COME UP OR WHAT CAME UP WITHIN THE CONVERSATION WAS REGARDLESS OF WHETHER OR NOT YOU HAVE A SPECIFIC MARKET MECHANISM DESIGNED TO ACHIEVE THE RELIABILITY STANDARD, SIMPLY HAVING, SIMPLY THERE BEING VALUE IN HAVING A STANDARD TO PLACE A METRIC THAT IS OUT THERE THAT PEOPLE ARE AWARE OF, THAT WE CAN MEASURE THE MARKET AGAINST.

AND, AND THAT IN ITSELF JUST BEING USEFUL AND VALUABLE AS, AS WE CONTINUE TO LOOK AT THAT.

AND THEN WE CAN DECIDE AS WE SEE WHERE THE MARKET IS RELATIVE, YOU KNOW, IS, IS SOME DESIGN NECESSARY, DO WE WANT TO CONSIDER POTENTIAL CHANGES, ALL THOSE TYPES OF THINGS.

UM, DAVE, I HAVE A QUESTION.

I'LL SEE IF YOU HAVE SOMETHING THERE.

IS, IS, UM, IS ERCOT RECOMMENDATION TO REVIEW THE RELIABILITY STANDARD IN A THREE YEAR CADENCE? I'M SORRY, CAN YOU REPEAT THE QUESTION? ARE Y'ALL RECOMMENDING I I JUST SAW THREE YEARS ON THE REVIEW.

IS THAT SOMETHING THAT Y'ALL ERCOT, UM, WOULD BE RECOMMENDING IN TERMS OF CADENCE? I I THINK Y'ALL ARE PROBABLY FLEXIBLE.

I KNOW WE TALKED ABOUT TWO YEARS, BUT YOU PUT THREE YEARS ON THERE AND I'M JUST KIND OF, I AM SORRY.

AND THAT MAY JUST BE SIMPLY A FUNCTION OF THIS, THIS SLIDE BEING SOME, SOME DATED INFORMATION, BUT CHRISTIE, I'LL,

[01:40:01]

SURE.

AND I THINK WHAT WAS PUT ON THIS SLIDE WAS WHAT WAS IN THE INITIAL STAFF PROPOSAL.

SO IT WAS JUST FOLLOWING IN LINE WITH THAT, BUT WE CAN SUPPORT WHATEVER DIRECTION THE COMMISSION TAKES IN THEIR RULE.

YEAH, AND I THINK IT'S GONNA BE VERY IMPORTANT, UM, AND I'VE TALKED TO SOME OF Y'ALL ABOUT THIS AT ER, AT ERCOT IS, UM, TO UNDERSTAND THE SPECIFIC ANALYSIS THAT ERCOT WILL HAVE TO RUN AT WHATEVER CADENCE.

THE COMMISSION ULTIMATELY SELECTS THE RELIABILITY CENTER TO BE EVALUATED, JUST A SPECIFIC ANALYSIS, WHAT GOES, WHAT WOULD GO INTO IT, WHAT ARE THE TIMELINES FOR GETTING IT DONE, TO REALLY UNDERSTAND WHAT GOES INTO EVERY STANDARD REVIEW PROCESS.

SO IS RAMP UP TIME NOT INCLUDED IN YOUR STANDARD THE AMOUNT OF TIME FOR LIKE A A, A GENERATOR TO RAMP UP? YEAH, NO, THAT'S NOT INCLUDED IN THE, IN THE, THE WAY THE STANDARD'S BEING LOOKED AT.

NOW.

I DO THINK, AGAIN, THAT'S AN IMPORTANT ATTRIBUTE.

SO AS WE THINK ABOUT, YOU KNOW, UM, THINGS THAT THE GRID NEEDS AND, AND HOW WE'RE TRYING TO INCENT THAT THROUGH THE MARKET DESIGN, THAT THAT'S VERY IMPORTANT.

BUT IT HAS NOT BEEN INCORPORATED INTO THE, THE RELIABILITY STANDARD ITSELF.

UH, THE LAST THING I WANTED TO MENTION IN, IN THIS SECTION OF THE, THE PRESENTATION WAS JUST TALK ABOUT THE, THE AMOUNT OF LOAD GROWTH.

THIS WAS A, AGAIN, A REGULAR THEME THAT CAME UP IN THE DISCUSSIONS HAVING OVER THE LAST COUPLE OF MONTHS.

UM, THIS IS AGAIN GONNA FEEL FAMILIAR.

THIS IS MORE OR LESS AN ALIGNMENT WITH WHAT PABLO HAD PRESENTED BACK IN APRIL.

I THINK THE ONLY VALUE THAT'S REALLY CHANGED IT ON CHANGED ON THIS GRAPH IS THE LARGE LOADS IN THE INTERCONNECTION.

I THINK THAT'S INCREASED ABOUT EIGHT GIGAWATTS OR SO SINCE THE, SINCE THE APRIL DATA.

BUT, BUT AS FOLKS KNOW, WE'VE HAD A CHANGE THAT CHANGES HOW WE CONSIDER AND LOOK AT LOAD WITHIN OUR STUDY PROCESSES.

AND OF COURSE THAT'S GIVEN US ADDITIONAL INSIGHTS AND I THINK MORE BROADLY THE WHOLE MARKET, ADDITIONAL INSIGHTS IN TERMS OF WHAT WE'RE SEEING IN THERE IN TERMS OF POTENTIAL GROWTH.

UM, I GUESS INTERESTINGLY I, FOR FOLKS WHO HAPPEN TO LISTEN TO THE COMMITTEE MEETING, UH, THERE WAS A, A WOMAN FROM EPRI WHO WAS TALKING ABOUT UM, THE TRANSMISSION TECHNOLOGIES.

ONE OF THE THINGS THAT SHE HAD TALKED ABOUT WAS THE TREMENDOUS GROWTH THAT BEING SEEN SORT OF ACROSS THE US NOT, NOT JUST SPECIFIC TO ERCOT, BUT OF COURSE THERE IS A LOT OF IT HAPPENING IN ERCOT AS WELL.

AND DAVID, THE ONE 50 GIGAWATTS CORRESPONDS TO WHAT YEAR THAT WAS 2030, I BELIEVE.

THANK YOU CHRISTIE, FOR CONFIRMING.

SO, YOU KNOW, I THINK AS YOU THINK ABOUT THIS, AS PART OF OUR PLANNING PROCESSES, THERE ARE OBVIOUSLY OPEN QUESTIONS IN TERMS OF WHETHER OR NOT THAT EXACT NUMBER OF MEGAWATTS IS GONNA MATERIALIZE IN THAT TIMEFRAME.

BUT IT DOES GIVE A SINGLE IN TERMS OF THE TREMENDOUS AMOUNT OF GROWTH THAT WE'RE SEEING IN ONE FORM OR FASHION.

AND THAT ITSELF OF COURSE CREATES OPPORTUNITIES FOR GENERATION DEVELOPMENT, WHETHER THAT'S INDIRECT THROUGH JUST TRADITIONAL ECONOMIC SINGLES, WE SEE SUPPLY INCREASING AND SO I'M SORRY, WE SEE DEMAND INCREASING.

SO OF COURSE THERE'S SOME INCENTIVE AND SINGLE TO INCREASE SUPPLY.

UH, AND IN ADDITION TO THAT, THERE'S OF COURSE MORE DIRECT WHERE YOU THINK ABOUT, UH, CREATING OPPORTUNITIES FOR, UH, LONG-TERM CONTRACTING TO HELP WITH DEBT AND RISK MANAGEMENT.

BUT I'LL PAUSE THERE.

WHAT DO YOU, YOU HAD, UH, YEAH, AND THAT GRAPH ACTUALLY, OR PICTURE THERE, SOME OF THAT LARGE LOAD IS NOT IN THE ONE 50, SO THAT'S REPRESENTATIVE.

THE STUFF THAT'S OUTSIDE THE, THE RTP LOAD IS STUFF THAT'S NOT INCLUDED IN THE ONE 50.

SO SOME OF IT HAS BEEN REPORTED TO US AS LARGE LOAD THAT COULD INTERCONNECT BUT WASN'T REPORTED IN THE ONE 50.

SO THERE'S SOME UNCERTAINTY ABOUT SOME OF THAT.

SO THAT COULD BE ADDITIVE, YOU'RE SAYING? WOULD HE? IT COULD BE, YEAH.

POWER, UH, IT COULD BE THAT TOO AS WELL.

ABOUT THESE CAPACITY FACTOR COMPONENTS? DOES IT POTENTIALLY CHANGE THEIR MINDSET IN TERMS OF THINKING ABOUT TECHNOLOGIES THAT THEY MAY NOT OTHERWISE THINK ABOUT? UM, YOU KNOW, FOR EXAMPLE, GOING BACK TO THE DATA THAT WE SHARED FROM LAZAR ON THE SORT OF LOW END OF THE COMBINED CYCLE, THE ASSUMPTION WAS, WAS VERY HIGH CAPACITY FACTOR RATES.

ALRIGHT, SO SWITCHING GEARS A LITTLE BIT, LET'S TALK ABOUT SOME OF THE THINGS THAT ARE IMPAIRING THE OUTLOOK.

SO, UM, FIRST I WANTED TO START TALKING ABOUT AT A HIGH LEVEL AROUND THE EPA RULES.

UH, PABLO HAD SHARED SOME MATERIAL WITH YOU ALL ON THE SUBJECT BACK IN JUNE.

AND HE, AS PART OF THAT SLIDE, HE HAD SHARED SOME ANALYSIS THAT WAS FOCUSED ON POTENTIAL RISK TO THE EXISTING FLEET.

OF COURSE, THIS IS GOING TO IMPACT NEW GENERATORS AS WELL AND, AND SIMPLY HAS TO BE PART OF THE, THEIR FRAMEWORK IN TERMS OF BUSINESS DEVELOPMENT, IN TERMS OF WHEN THEY LOOK AT PERMITTING THAT, THAT THESE RULES ARE IN PLACE DESPITE THE FACT THEY'RE BEING CHALLENGED.

AND ONE OF THE THINGS THAT KIND OF CAME OUT OF THE CONVERSATIONS IN PARTICULAR IN THE TABLE IN THE RIGHT, THIS IS FROM THE GREENHOUSE GAS RULE FOCUSED ON JUST THE, THE NEW GENERATION COMPONENT OF IT.

ONE OF THE FACTORS IN TERMS OF THE, UH, COMPLIANCE MEASURES THAT NEED TO BE MET IS A FUNCTION OF CAPACITY FACTOR.

AND SO, YOU KNOW, YOU THINK ABOUT SOME OF THE FOLKS WHO ARE LOOKING TO INVEST IN, IN THERMAL TECHNOLOGIES, HOW DID THEY HAVE TO THINK

[01:45:01]

SO THAT'S WHY I SORT OF RAISED SOME OF THE ASSUMPTION THAT WOULD CLEARLY PUT THEM WELL ABOVE IN THIS EPA RULE ABOVE THAT 40%.

I THINK THE ASSUMPTION WAS SOMETHING ALONG THE LINES OF 90% CAPACITY FACTOR FOR A COMBINED CYCLE.

SO HOW DO THESE RULES POTENTIALLY IMPACT THE, THOSE NUMBERS AS WELL.

UH, FROM THERE I WANTED TO TALK ABOUT THE, THE COST.

DAVID, DAVID, BEFORE YOU, BEFORE YOU JUMP OVER THAT, COULD YOU JUST BRIEFLY TALK ON THAT TO THE CAPACITY FACTOR? GREATER THAN 40%.

SO THIS IS GONNA REQUIRE CARBON CAPTURE GREATER THAN 40%? YES.

THAT, SO THAT THAT IS PART OF, PARTICULARLY IF I RECALL PART OF THE PHASE TWO, AN EXPECTATION THAT IT WOULD HAVE A CARBON CAPTURE INCLUDED.

SO I'M JUST THINKING OF THE TEXAS ENERGY FUND.

SO IF YOU GOT PEOPLE BIDDING IN A COMBINED CYCLE PLANT THAT YOU KNOW TO YOUR EARLIER COMMENTS PROBABLY WOULDN'T BE ONLINE TILL MAYBE 20, 29 OR SO, WOULD THEY BE SUBJECT TO CARBON CAPTURE IF THEY'RE RUNNING OVER 40% OR IS THAT A SECOND PHASE? THAT'S IN THE SECOND PHASE? YEAH, I THINK THAT'D BE AN EXPECTATION THAT THEY WERE ABLE TO DO THAT BY 2032.

SO, YOU KNOW, FOR EXAMPLE, IF FOLKS ARE THINKING ABOUT THAT, ARE THEY THINKING ABOUT BUYING TECHNOLOGIES WHERE THAT CAN AT LEAST BE ADDED TO IT? I THINK THAT'S PART OF THE, PART OF THE THEIR THOUGHT PROCESS.

THOUGHT PROCESS.

SO ANY NEW COMBINED CYCLE PLANT THAT'S BUILT IN TEXAS FOR THE BALANCE OF THIS DECADE, IF IT'S GONNA HAVE A CAPACITY FACTOR GREATER THAN 40%, THEY'VE GOTTA BE PLANNING FOR CARBON CAPTURE AS WELL UNDER THE, THAT'S AN EXPECTATION UNDER THE CURRENT RULES.

SO THEN THE LIBERALIZED COST OF ENTRY NUMBER IS JUST BLOWN RIGHT OFF THE PAGE THERE.

AND IN FACT, THAT'S ACTUALLY MAYBE WHY IT'S USEFUL.

AND, AND THERE WAS THE QUESTION AROUND THE, THE GREEN DIAMOND ACTUALLY TALKING ABOUT THE BURNING HYDROGEN.

I THINK THAT SORT OF TIES IN VERY WELL.

YOU CAN SEE HOW THAT COST INCREASES WITH AT LEAST THAT, THAT COMPONENT OF THE TECHNOLOGY.

THE, THE, THAT'S THE OTHER POINT I WAS GONNA BRING UP.

BURNING HYDROGEN, DO WE HAVE ANY PLANTS IN TEXAS THAT ARE TESTING THAT? 'CAUSE SOME ARE ELSEWHERE, I GUESS, UH, THAT MAY BE TRUE OR IT MAY BE HAPPENING I GUESS.

I DON'T KNOW FOR CERTAIN.

I DUNNO IF ANYONE ELSE THAT HAS ANY INFORMATION ON THAT THAT CAN SHARE.

RIGHT.

AND AND SECOND IS, UH, RETIREMENTS, YOU KNOW, WE'RE TALKING ABOUT 14,000 MEGAWATTS OF COAL FOR YOUR GRAPH.

UM, AND OF COURSE THE STEAM GAS THAT WE'RE TALKING ABOUT BEFORE, IT'S ANOTHER 11,000.

SO IS THAT ALL FACTORED INTO YOUR, I MIGHT HELP TO GO BACK TO THE SLIDE SEVEN IF WE CAN.

I THINK THIS IS WHERE CARLOS'S QUESTIONS COMING IN.

I HOPE I'M NOT BEING PRESUMPTUOUS CARLOS, BUT I, OR ONE MORE SLIDE ACTUALLY, THE, THE ONE THAT HAD ONE MORE ONE TO THE, I THINK IT'S SLIDE SEVEN.

I THINK IT, IT WAS FOUR I THINK.

UH, I'M SORRY, THE GROWTH, YEAH.

SO THE QUESTION IS, ARE YOU, UH, TAKING THESE RETIREMENTS INTO ACCOUNT ITSELF? I GUESS FOR THE, WELL, I GUESS FOR, FOR ANY OF THE ANALYSIS THAT WE'RE LOOKING AT, WE ARE ALSO LOOKING AT THE POTENTIAL RETIREMENTS AS WELL.

SO OBVIOUSLY WOODY HAVE TALKED ABOUT, IN THE OTHER CASE, SOME NEW GENERATION THAT WOULD FACTOR INTO SUPPLY IF WE ARE AWARE OF, OF ANY SORT OF RETIREMENTS THAT WOULD BE AS WELL.

YEAH, SO LIKE THE RELIABILITY STANDARD DOES NOT TAKE INTO ACCOUNT ANY RETIREMENTS THAT WE DON'T KNOW ABOUT.

I HAVE BEEN ANNOUNCED PUBLICLY OR THEY HAVEN'T TOLD US ABOUT.

SO THE FACT THAT YOU'VE GOT A BUNCH OF UNITS OUT THERE THAT WILL LIKELY RETIRE, WE DON'T TRY TO PROJECT THOSE RETIREMENTS IN THE RELIABILITY STANDARD.

WHAT YOU DO SEE IS IN OUR CAPACITY, DEMAND AND RESERVE REPORT, THAT'S LOOKING OUT FIVE TO 10 YEARS IN THE FUTURE IF A COMPANY HAS NOTED PUBLICLY INTENTIONS TO RETIRE, EVEN THOUGH THEY HAVEN'T TOLD US THAT YET.

THOSE DID GET NOTED AND GET HIGHLIGHTED IN THAT, UH, CAPACITY AND DEMAND REPORT.

JUST ONE MORE THING TO ADD, WE DID INCORPORATE THE POTENTIAL RETIREMENT IMPACT IN OUR COMMENTS TO THE EPA IN RESPONSE TO THE IMPACT THAT THOSE RULES COULD HAVE TO THESE RESOURCES IN .

SO THOSE WERE FACTORED INTO THAT IMPACT ANALYSIS AND AND I THINK THAT'S VERY SIMILAR, JUST KIND OF IF MY MEMORY SERVES BACK IN, IN 2016 AND 17 AS WE SAW THAT IMPACT IN THAT SIGNIFICANT DROP OF COAL, THERE WAS, THERE WAS SOME, A SIMILAR ANALYSIS THAT WAS PERFORMED TO PROVIDE SOME INDICATION OF RESOURCES ARE AT RISK AND, AND ALL THOSE TYPES OF THINGS.

YEAH, JUST TO, TO REMIND EVERYBODY OF THAT.

I MEAN, I, THE TOTAL I REMEMBER IS ABOUT 15 GIGAWATTS OF, OF REDUCED CAPACITY FROM THE CURRENT FLEET THAT WE HAVE THE CURRENT DISPATCHABLE FLEET.

SO ON ONE HAND THE EPA RULES COULD KNOCK THAT OFFLINE IN TEXAS AND THE TEXAS ENERGY

[01:50:01]

FUND MAKES UP 10 GIGAWATTS OF THAT.

SO I MEAN IT'S, IT'S SOMETHING THE PUBLIC NEEDS TO BE AWARE OF.

IT COULD, WE STILL COULD FACE A CAPACITY CONSTRAINT THAT'S SIGNIFICANT BECAUSE OF THE EPA RULES.

IF I MAY, I WANTED CARLOS, WE, WE HAVE, UM, HAD SOME UTILITIES OUTSIDE OF ERCOT THAT, UM, HAVE BEEN INTERESTED IN COMBINING GAS WITH HYDROGEN AND, AND EVEN CARBON CAPTURE, BUT NOT, NOT IN ERCOT THAT I'M AWARE OF.

ALRIGHT, THANK YOU.

FROM THERE WE ARE, WE'RE TALKING ABOUT THE COST OF NEW ENTRY.

SO THIS IS ONE OF THE OTHER AREAS THAT WE'VE BEEN WORKING WITH THE COMMISSION ON.

UH, THERE WAS A STUDY PERFORMED BY A CONSULTANT THAT, THAT CAME OUT, UH, I BELIEVE A COUPLE OF MONTHS AGO.

UM, OF COURSE KONA IS A CRITICAL INPUT IN EVALUATING WHAT'S GOING ON IN THE MARKET AND THINKING ABOUT INVESTMENT SINGLES.

UM, ON JULY THE 25TH, THE COMMISSION DID SUPPORT A MOVE TO A COST OF NEW ENTRY OF, OF $140,000 PER MEGAWATT HOUR FOR PLANNING PURPOSES.

AND AS PART OF THIS DISCUSSION, OF COURSE THERE WAS A LOT GOING ON IN TERMS OF REFERENCE TECHNOLOGIES AND, AND OTHER ASSUMPTIONS, UH, THAT WERE INCLUDED.

I THINK THE, THE KEY THING AS WE LOOKED AT THE DATA WAS SORT OF REGARDLESS OF TECHNOLOGY, THIS, THERE IS A SIGNIFICANT INCREASE FROM OUR CURRENT REFERENCE POINT OF $105,000 PER MEGAWATT HOUR.

SO THAT, THAT 105 HAS BEEN OUR REFERENCE POINT FOR, FOR SEVERAL YEARS.

WE SORT OF KNEW IT WAS LIKELY, UH, WELL BEHIND THE TIMES AND, AND, AND I THINK THAT CAME TO FRUITION WITH, WITH THIS STUDY THAT WE HAD PERFORMED.

SO AGAIN, AS WE, AS WE THINK ABOUT THIS NUMBER, AS WE THINK ABOUT INVESTMENT, OBVIOUSLY WE SEE CAPITAL COST INCREASING AND I THINK THERE IS STILL A QUESTION IN TERMS OF THE DEGREE THAT'S BEING INCORPORATED INTO SOME OF THE OTHER OTHER NUMBERS THAT WE WERE SHARING BEFORE.

UH, LASTLY, I I WON'T SPEND TOO MUCH TIME ON IT, I THINK, BUT I, I THINK IT'S IMPORTANT TO NOTE AS WE THINK ABOUT COMPETITION FOR INVESTMENT OF RESOURCES, WE SORT OF INITIALLY AND MAYBE EXCLUSIVELY THINK ABOUT OTHER TECHNOLOGY TYPES.

I, I SORT OF DID THIS MYSELF WITH YOU ALL WHEN I SHARED THE LAZAR DATA, BUT JUST THE, THE KEY TAKEAWAY HERE IS THAT THERE'S A LOT MORE COMPETITION FOR INVESTMENT THAN JUST THINKING ABOUT OTHER TECHNOLOGIES.

SO THAT CAN BE BOTH WITHIN THE SECTOR AND YOU THINK ABOUT PEOPLE INVESTING IN OTHER PARTS OF THEIR BUSINESS.

IT COULD BE PEOPLE INVESTING IN OTHER REGIONS WITHIN THE COUNTRY AND IT COULD ALSO, OF COURSE BE OUTSIDE OF THE ENERGY SECTOR ALTOGETHER.

SO THERE'S PROBABLY LIMITED THINGS THAT WE CAN DO NECESSARILY TO, TO CHANGE THAT.

UM, BUT IT IS JUST SOMETHING THAT WE HAVE TO KEEP IN MIND WHEN WE THINK ABOUT OUR PEOPLE INVESTING IN THESE CERTAIN TECHNOLOGIES WITHIN THE ERCOT REGION.

UH, AND LASTLY, UH, JUST A COUPLE OF TOPICS, UM, TALKING ABOUT MARKET DESIGN EVALUATION.

THE, THE FIRST ONE I WANTED TO TALK ABOUT IS, IS PEAKER NET MARGIN.

THIS WAS A, AGAIN, A REGULAR TOPIC THAT CAME UP WITHIN THE CONVERSATION.

SO, SO PEAKER NET MARGIN IS A METRIC THAT'S USED TO ESTIMATE REAL TIME MARKET ENERGY REVENUES, AND WE DO THIS SORT OF ACCUMULATION ACROSS THE YEAR.

UH, THE GRAPHIC HERE IS SHOWING PEAKER NET MARGIN BY YEAR FOR THE LAST 10 YEARS, UH, IN CASE FOLKS ARE ARE LOOKING FOR IT.

I DID SCALE THE Y AIS, UH, WITH, WITH TWO, WITH 2021 BEING SUCH AN ANOMALY.

I WANTED TO GIVE A LITTLE BIT MORE INSIGHT IN TERMS OF WHAT WE SAW IN THE OTHER YEAR.

SO YOU SEE 2021 SORT OF GO OFF THE, THE CHART HERE AT THE TOP, UH, IN THE FEBRUARY TIMEFRAME.

UM, I THINK PEAK NET MARGIN IS A VERY USEFUL TOOL.

WE, WE'VE HAD IT FOR THE, IN THE MARKET FOR SEVERAL YEARS IN TERMS OF THINKING ABOUT IT IN THE CONTEXT OF LONG-TERM INCENTIVE SIGNALS.

IT, IT DEFINITELY HAS SOME FLAWS THAT, THAT FOLKS NEED TO BE AWARE OF.

NOW, THE FIRST ONE IS, IS PROBABLY FAIRLY OBVIOUS, AND THAT IS THAT IT'S, IT IS PURELY A HISTORICAL LOOK BACK TO SEE WHAT HAPPENED.

SO THERE'S NO COMPONENT OF PEAKER NET MARGIN THAT LOOKS TO SEE WHAT'S, WHAT'S HAPPENING MOVING FORWARD.

THE OTHER THING THAT MAY BE LESS CLEAR TO FOLKS ACTUALLY GETS INTO THE WEEDS OF THE CALCULATION, AND IT, IT'S THAT THE CALCULATION ASSUMES PERFECT PERFORMANCE AND FORESIGHT FOR THE FOLKS THAT ARE OPERATING THE PLAN.

SO, FOR EXAMPLE, IT ASSUMES THAT THESE, THESE CTS ARE ONLY RUNNING WHEN IT'S ECONOMIC TO DO SO BASED ON THEIR FUEL COSTS AND THAT THEY'RE ABSOLUTELY NEVER RUNNING WHEN IT'S NOT ECONOMIC TO DO SO.

AND SO THAT, YOU KNOW, AGAIN, IT'S A USEFUL METRIC, IT'S SIMPLE TO UNDERSTAND, BUT IT DOES HAVE A LOT OF FLAWS.

SO YOU THINK ABOUT, FOR EXAMPLE, SOME OF THESE HIGH PRICE DAYS WE HAVE TO A DEGREE THAT'S AT LEAST IN PART RELATED TO A GENERATOR HAVING ISSUES, WHETHER THAT'S FORCED OR, OR MAINTENANCE ISSUES.

THEY OBVIOUSLY DIDN'T REAP THOSE REVENUES ON THAT PARTICULAR DAY, BUT THAT'S NOT NECESSARILY GONNA BE REFLECTED AT ALL IN THE WAY WE LOOK AT PEAKER NET MARGIN.

SO IT'S JUST THINGS THAT WE NEED TO BE AWARE OF AS WE LOOK AT SORT OF THE, THE FULL SUITE OF THINGS, UH, AS IN AS SINGLES FOR, UH, MARKET, UH, INCENTIVES.

AND DAVID, SHOULD WE COMPARE THAT NUMBER TO THE, THE ONE 40 CONE NUMBER THAT WE TALKED ABOUT A COUPLE SLIDES PREVIOUSLY? I MEAN, THAT'S, THAT'S HISTORICALLY HOW WE'VE LOOKED AT IT.

I MEAN, I THINK THIS IS PART OF A REGULAR PART OF THE STATE OF THE MARKET.

IT LOOKS AT REVENUES ACROSS SOME TECHNOLOGY TYPES, BUT IT, IT OFTEN FOCUSES ON PEAK

[01:55:01]

NET MARGIN AND IT COMPARES THAT TO THAT, THAT COST OF NEW ENTRY.

DAVE, IS IT FAIR TO SAY THAT THE TAKEAWAY FROM THIS SLIDE IS THAT, UH, PEAK NET MARGIN, UH, DOES NOT GUARANTEE THE DEPLOYMENT OF CAPITAL BECAU TO BUILD NEW GENERATION CAPACITY? YES.

I MEAN, I THINK ONE OF THE, AGAIN, THE THEMES WAS, UH, THESE INVESTORS ARE NOT GONNA LOOK AT WHAT HAPPENED IN HISTORY, RIGHT? THEY'RE VERY INTERESTED IN WHAT'S GOING TO HAPPEN FORWARD.

SO, YOU KNOW, PEAKING AND MARGIN IS JUST GOING TO SIMPLY BE FLAWED IN, IN THAT PARTICULAR WAY.

DAVE, I WANNA MAKE SURE I UNDERSTAND THIS.

SO THE GREEN LINE FOR 2024, WE'RE SITTING AT $50,000 A MEGAWATT YEAR.

SO IS THAT AFTER THE COST OF THE ONE 40 OR IS THAT COMPARABLE? SO WE'RE EARNING 50 NOW, BUT YOU GOTTA GET TO ONE 40 TO GET TO REINVESTMENT.

WHICH WAY IS IT? THE IDEA IS COMPARE ANY ONE OF THESE LINES, IF YOU'RE LOOKING AT IT RELATIVE TO CONE, IS TO COMPARE ONE OF THESE VALUES TO WHATEVER THE, THE CONE OF A HUNDRED, $140 PER MEGAWATT YEAR IS.

SO, SO RIGHT NOW IT'S NOT, AND IT'S, OH, I APOLOGIZE, AND YOU SHOULD BE, AND REALLY WHAT, WHAT MATTERS? THE, THE WAY WE DO THE CALCULATION, IT'S ON A HAPPENING ON A ROLLING BASIS, WHAT'S PARTICULARLY IMPORTANT IS WHERE YOU LANDED AT THE END OF THE YEAR.

SO THAT, THAT'S REALLY THE ANNUAL ACCUMULATION TO THINK ABOUT, RIGHT? SO UNTIL WE GET TO ONE FOUR, AND IF, IF THIS YEAR ENDS UP OVER ONE 40, YOU'RE SAYING THAT IT JUSTIFIES THEORETICALLY INVESTMENT.

I THINK THAT THAT'S HOW FOLKS TEND TO TALK ABOUT IT.

I THINK, AGAIN, THE FLAW IN THAT IS IT'S ONLY LOOKING AT WHAT HAPPENED IN HISTORY.

YEP.

AND THAT'S WHERE I WAS GOING BY COMBAT.

BUT EVEN THOUGH WE'VE HAD THREE YEARS OR ABOVE THE ONE 40, THERE'S REALLY BEEN ZERO NET NEW DEPLOYMENT OF CAPITAL FOR GAS PEAKS.

YEP.

DAVE, MAYBE A BETTER TERM NAME FOR THIS TERM WOULD BE PEAK NET OPPORTUNITY FOR MARGIN OR SOMETHING LIKE THAT.

WELL, THAT'S A GOOD, UH, WE'LL HAVE TO THINK ABOUT THE, THE, THE REBRANDING OF IT.

I KNOW IT'S, UH, BEEN A TERMINOLOGY WE USED FOR A LONG TIME, BUT KNOW THAT, THAT'S CERTAINLY FAIR.

AND LASTLY, I PERHAPS I WON'T SPEND AS MUCH TIME ON, I KNOW PABLO TOUCHED ON IT.

YOU KNOW, WE, WE'VE HAD NOW THIS PRESENTATION THINKING ABOUT INCENTIVES AND WHAT'S BEING BUILT NOW, HOW DO WE THINK ABOUT THE MARKET AND WHAT THE, THE GRID ULTIMATELY NEEDS? AND SO THAT'S WHERE THIS FRAMEWORK COMES INTO MIND AS WE, YOU KNOW, DO WE NEED TO TAKE A STEP BACK, THINK ABOUT THE ATTRIBUTES HOLISTICALLY IN TERMS OF EVERYTHING THAT'S NEEDED TO RELIABLY OPERATE THE GRID FROM THAT, DEVELOP A FRAMEWORK AND, AND USE THAT IN THE CONTEXT OF THINKING ABOUT WHAT ARE WE INCENTING? SO AS OF, AS WE THINK OF MAYBE A NEW, A NEW PRODUCT IN THE MARKET, WHAT'S, WHAT'S THE ATTRIBUTE THAT IT LINKS TO IN, IN THE WAY PAOLO WAS DESCRIBING IT? AND IS THAT BEING INCENTED SOMEWHERE IN THE MARKET OR IS IT OVERLAPPING WITH SOME OF OUR EXISTING SERVICES? ALL THOSE TYPES OF THINGS THAT WE NEED TO, TO THINK ABOUT.

UM, SO, AND PROBABLY HAVE TAKEN UP A LITTLE BIT MORE TIME THAN I HAD TODAY ON THE AGENDA, SO I'LL, I'LL STOP THERE UNLESS FOLKS HAVE ANY ADDITIONAL QUESTIONS OR DISCUSSION.

ANY QUESTIONS FOR DAVE? ANY COMMENTS? THIS IS REALLY WELL DONE, DAVID.

THANKS FOR THAT FURTHER DONE.

THAT'S VERY HELPFUL.

I'M GLAD THAT, UH, WE HAD THIS SESSION.

OF COURSE.

I APPRECIATE THE TIME.

THAT TAKES US TO AGENDA ITEM SEVEN, UH, SEVEN AND 7.1.

OKAY, THANK YOU.

UH,

[7. TAC Report]

UH, AGENDA ITEM 7.1, THE SEVEN, THE ATTACK REPORT AND AGENDA ITEM 7.1, THE NON UNANIMOUS AND OTHER SELECTOR PROVISION REQUEST RECOMMENDED BY TAC FOR APPROVAL.

WE'VE NOTICED FOR VOTES, THREE SUB ITEMS ON THE AGENDA THAT ARE NON UNANIMOUS REVISION REQUEST AND ONE SUB ITEM ON THE AGENDA.

THAT IS A REVISION REQUEST THAT THE BOARD HAS SELECTED.

THE REVISION REQUEST ARE AS FOLLOWS, SEQUENTIALLY JUDGE ITEM 7.1, UH, 0.1 IS NPR 1190 HIGH DISPATCH LIMIT OVERRIDE PROVISION FOR INCREASED LOAD SERVING ENTITY COST.

AGENDA ITEM 7.1 0.2 IS NPR 1215 CLARIFICATIONS TO THE DAY AHEAD MARKET ENERGY ONLY OFFER CALCULATION AGENDA ITEM 7.1 0.3 IS NPR 1219 METHODOLOGY REVISIONS AND NEW DEFINITIONS FOR THE REPORT ON CAPACITY, DEMAND, AND RESERVES IN THE ERCOT REGION.

THIS IS AN URGENT, UM, NPRR AGENDA.

ITEM 7.1 0.4 IS NPR 1230 METHODOLOGY FOR SETTING TRANSMISSION SHADOW PRICE CAPS FOR AN EYE ROLL.

AND SC THIS IS ALSO AN URGENT ITEM.

AND SO AT THIS TIME, I'D LIKE TO, UH, WELCOME KAITLYN SMITH, CHAIR OF THE TECHNICAL ADVISORY COMMITTEE, UH, TO WALK US THROUGH THE TAC REPORT, INCLUDING ANY RECENT TAC ACTIVITIES AND ALL FOUR REVISION REQUESTS.

FOLLOWING KAITLIN'S PRESENTATION, I'D LIKE TO TAKE UP THE NEXT AGENDA ITEM, WHICH WILL BE THE RN COMMITTEE RECOMMENDATIONS ON THESE REVISION REQUESTS.

SO KAITLYN, YOU

[02:00:01]

HAVE THE PODIUM.

NPRR 1190 IS REGARDING HIGH DISPATCH LIMIT OVERRIDE PROVISION FOR INCREASED LOAD SERVING ENTITY COSTS.

KAITLYN SMITH, CHAIR OF THE TECHNICAL ADVISORY COMMITTEE.

AS WE DO AT EACH BOARD MEETING, I'LL BE PRESENTING, AS THE CHAIRMAN SAID, A SUMMARY OF THE TECH MEETINGS THAT HAVE OCCURRED SINCE THE LAST BOARD MEETING.

WE MET IN JUNE AND JULY.

WE VOTED UNANIMOUSLY TO RECOMMEND APPROVAL OF 10 REVISION REQUESTS.

THREE OF THOSE HAD OPPOSING VOTES THAT WE WILL DISCUSS TODAY AND DISCUSSED AT R AND M YESTERDAY.

AND, AND ONE WAS UNANIMOUS, BUT THERE WERE ERCOT COMMENTS FILED AFTERWARDS, SO IT IS BEFORE YOU TODAY AS WELL.

SO HERE IS THE, THE, THE TWO LISTS OF THE 10 UNANIMOUS REVISION REQUESTS, AS WELL AS THE THREE REVISION REQUESTS WITH OPPOSING VOTES.

THE JUNE AND JULY TECH HIGHLIGHTS, UH, ENCORE TEMPLE AREA PROJECT ON JULY 31ST, TA UNANIMOUSLY VOTED TO ENDORSE THE ENCORE TEMPLE AREA REGIONAL PLANNING GROUP PROJECT AS RECOMMENDED BY ERCOT.

AND THAT WAS OPTION FIVE A, UH, 2025 ANCILLARY SERVICES METHODOLOGY DISCUSSIONS.

ERCOT HAS INITIATED DISCUSSIONS WITH STAKEHOLDERS ON THE 20 20 20 25 ANCILLARY SERVICE METHODOLOGY.

UH, THIS IS A LITTLE BIT EARLIER THIS YEAR.

THIS IS THE FIRST YEAR WHERE WE HAVE THE COMMISSION APPROVAL REQUIRED.

SO THE REVIEW TIMELINE GOT PUSHED A LITTLE BIT EARLIER.

ERCOT HAS BEEN WORKING WITH TAC.

THEY HAVE COME TO TAC TWICE TO REVIEW THAT TIMELINE.

WE'RE ALL AWARE OF THE APPROVAL DEADLINES AND THE WORKING GROUPS HAVE STARTED REVIEWING.

THE PLAN WOULD BE THAT THAT AS METHODOLOGY WOULD BE UP FOR A VOTE AT THE SUBCOMMITTEES AS WELL AS TAC IN SEPTEMBER.

SO IT CAN COME TO THE OCTOBER BOARD AND I BELIEVE, UH, NOVEMBER, DECEMBER PUC OPEN MEETING AND, AND BE THROUGH THE, BY THE END OF THE YEAR.

I THINK THIS IS A REALLY IMPORTANT ITEM FOR THE THE BOARD AND THE PUC TO BEGIN REVIEWING AND THINKING ABOUT.

WE'VE HAD ECRS BE A, A VERY HOT TOPIC RECENTLY, AND SO I THINK THE ROBUST REVIEW OF THIS ANCILLARY SERVICE PLAN OF THE QUANTITIES THAT, OR CUTS ALREADY PRESENTING, WHAT WILL HELP WITH HAVING PRODUCTIVE TIMELINES ON OR DISCUSS PRODUCTIVE DISCUSSIONS ON THIS TIMELINE.

AN ADDITIONAL NOTE IS THAT WE ARE HAVING A WORKSHOP AFTER OUR AUGUST TECH MEETING, WHICH IS NEXT WEEK ON THE ANCILLARY SERVICES STUDY THAT THE, THE PUC IS CONDUCTING AND WAS IN LEGISLATION, I BELIEVE FROM THE 87TH SESSION.

WE ARE ALSO DISCUSSING STAKEHOLDER PROCESS IMPROVEMENTS.

I WANT TO THANK, UH, CHAIRMAN GLEASON FOR HIS COMMENTS AT THE OPEN MEETING.

UH, THE DISCUSSIONS HE'S HAD WITH TECH LEADERSHIP.

HE HAS GREAT LEADERSHIP ON THIS.

I THINK THE INTENTION IS TO HAVE MORE TRANSPARENCY IN THE STAKEHOLDER PROCESS FROM TAC THROUGHOUT THE BOARD AND PUC DISCUSSIONS SO YOU GUYS DON'T GET NEW INFORMATION OR INFORMATION ISN'T BEING WITHHELD.

AND WE CAN TRY TO TACKLE THE, THE REALLY TOUGH CONTROVERSIAL CONVERSATIONS EARLIER IN THE PROCESS THAT THE TAC POINT OF VIEW IS FOCUSED ON WHAT WE CAN CONTROL.

SO TACK ON DOWN AND THEN TACK DISCUSSIONS TO THE BOARD.

WE'RE NOT GONNA TELL THE, THE BOARD OR THE PC OR THE LEGISLATURE WHAT TO DO.

AND I WOULD SAY FOCUSING ON TRANSPARENCY AND HAVING THE TOUGHER CONVERSATIONS EARLIER.

SO WE ARE DISCUSSING IN DISCUSSION WITH ERCOT AND SUBCOMMITTEE LEADERSHIP ON THIS.

WE PLAN TO HAVE A WORKSHOP ON SEPTEMBER 5TH.

THE LAST ITEM, NOT ON THIS SLIDE, UM, BUT IN FRONT OF YOU TODAY IS NORE 2 45.

THIS ITEM HAS NOT BEEN IN FRONT OF TECH.

UH, WE HAVE RECEIVED UPDATES FROM ERCOT.

ERCOT HELD A WEBEX FOR STAKEHOLDERS.

UH, I DENOTE THAT THE RECOMMENDATION FROM ERCOT INCLUDES, UH, TECH LEADERSHIP PROVIDING UPDATES TO R AND M AND THE BOARD ON THE SUBSEQUENT NOER, WHICH WOULD BE REGARDING HARDWARE.

SO WE WILL BE HERE IN OCTOBER AND DECEMBER TO KEY IN ON ISSUES AHEAD OF THE EXPECTED VOTE IN FEBRUARY.

I DID WANNA DRAW ATTENTION TO THIS NOW.

I THINK IT'S A, A VERY FAST TIMELINE.

WILL TAKE A LOT OF WORK TO GET TO CONSENSUS.

UH, WE'VE BEEN DISCUSSING NOUR 2 45 ATTACK FOR ALMOST A YEAR.

IT WAS IN THE STAKEHOLDER PROCESS FOR MORE THAN A YEAR AND A HALF.

AND SO I THINK WE'RE LOOKING AT MAIN ISSUES OF DEFINING THE PROCESS OF EXEMPTIONS, HOW REQUIREMENTS FOR HARDWARE WILL APPLY AFTER MAXIMIZATION.

I THINK THERE'S SOME FUNDAMENTAL DISAGREEMENTS ON APPLYING, YOU KNOW, THE RELIABILITY RISK SYSTEM-WIDE OR ON A RESOURCE.

I THINK THERE'S SOME REQUESTS FOR, YOU KNOW, REALLY STUDYING.

SO I THINK WE, WE ARE VERY HAPPY TO BRING THE DETAILED UPDATES TO R AND M AND THE BOARD, BUT WE'LL BE LOOKING FOR SOME FEEDBACK TO MAKE SURE WE CAN GET CONSENSUS ON THESE ITEMS FOR YOU ON THAT TIMELINE.

[02:05:05]

THIS MPR ADDS A PROVISION FOR RECOVERY, UH, FINANCIAL LOSS ARISING FROM A MANUAL HIGH DISPATCH LIMIT OVERRIDE TO REDUCE REAL POWER OUTPUT IN THE CASE WHEN THAT OUTPUT IS INTENDED TO MEET QSC LOAD OBLIGATION.

THE CURRENT PROTOCOL LANGUAGE ALLOWS FOR COMPENSATION FOR LOSSES ON DAY, HAD MARKET OBLIGATIONS, AND ON BILATERAL CONTRACTS THAT ARE AFFECTED BY THE HDL OVERRIDE.

BECAUSE THE NOES ARE BOUND TO OBLIGATIONS TO SERVE WITHIN THEIR SERVICE TERRITORIES, THEY'RE, THEY'RE NOT ABLE SOMETIMES TO RECOVER ALL OF THOSE COSTS BECAUSE THEIR ARRANGEMENT IS SORT OF LIKE A SELF ARRANGEMENT.

AND SO THIS NPRR ATTEMPTS TO CORRECT THAT.

UM, TAC VOTED TO APPROVE THIS AT THE JUNE 24TH TAC.

THERE WERE SIX OPPOSING VOTES FROM THE CONSUMER SEGMENT AND ONE ABSTENTION FROM THE INDEPENDENT RETAILER SEGMENT.

OPPOSING VOTES FELT THIS WAS CONTRARY TO THE NODAL MARKET DESIGN AND FELT THIS NPRR WOULD REWARD OVERSCHEDULING OF POWER THAT CAN'T BE DELIVERED AND WOULD BE COUNTER TO SORT OF THE PROPER INCENTIVES IN, IN THE ENERGY ONLY MARKET.

NPR 1215 CLARIFICATION TO THE DAY AHEAD MARKET ENERGY ONLY OFFER CALCULATION.

THIS IS THE NPR THAT WAS UNANIMOUS AT TAC AT THE JUNE T.

IT'S HERE TODAY DUE TO THE ERCOT COMMENTS.

AND THOSE COMMENTS WERE FILED ON AUGUST ONE TO CORRECT A FORMULA ERROR.

ERCOT DID COME TO THE JULY TAC MEETING TO DISCUSS THEIR PLAN TO FILE THESE COMMENTS AND REMAND TO TAC TO CORRECT THE FORMULA.

UH, TACK DIDN'T EXPRESS ANY CONCERNS WITH HIS PLAN NPR 1219 METHODOLOGY REVISIONS AND NEW DEFINITIONS FOR THE REPORT ON CDR, THE CAPACITY, CAPACITY, DEMAND, AND RESERVES REPORT.

THIS NPR CHANGES THE METHODOLOGIES FOR THE PREPARATION OF THE CDR INCORPORATES A RELEASE SCHEDULE.

ONE OF THE BIG THINGS IT DOES IS INCLUDE A CHANGE TO REQUIRE SWITCHABLE GENERATION RESOURCE OWNERS TO PROVIDE INFORMATION ON AN AVAILABLE SWITCHABLE UNITS FOR ALL SEASONS RATHER THAN JUST SUMMER AND WINTER.

IT IS PART OF A LONG REFORM EFFORT ON THE CDR SINCE WINTER STORM URI, IT'S BEEN DISCUSSED AT THE PUBLIC UTILITY COMMISSION, A LOT OF THESE CONCEPTS SUCH AS THE SWITCH TO THE ECCS.

UM, AND SO IT'S CONSISTENT WITH THAT DIRECTION AND WITH OTHER PREVIOUS MARKET PARTICIPANT, UH, DISCUSSIONS.

THERE WERE TWO OPPOSING VOTES ON THIS FROM THE CONSUMER SEGMENT AND FOUR ABSTENTIONS FROM THE CONSUMER INDEPENDENT GENERATOR AND INDEPENDENT POWER MARKETER SEGMENTS.

THE OPPOSING VOTES WERE DUE TO WANTING TO TABLE THE ECCS ARE, ARE COMPLEX, AND THE POLICY ISSUES ALSO ARE RELI RELATED TO THE RELIABILITY STANDARD, UH, PROCESS THAT IS HAPPENING AT THE PUC.

SO THERE WAS SOME SUPPORT TO TABLE THIS, BUT MY UNDERSTANDING IS WE, WE NEEDED THIS URGENCY IN ORDER TO HAVE THIS SUPPLIED TO THE DECEMBER CDR.

AND FINALLY, UM, NPR 1230 METHODOLOGY FOR SETTING TRANSMISSION SHADOW PRICE CAPS FOR AN IROL AND SCED.

UM, THIS WAS AN URGENT NPR AS WELL.

THIS ESTABLISHES A SHADOW PRICE CAP FOR CONGESTION IMPACTING AN INTERCONNECTION.

RELIABILITY OPERATING LIMITS, THE IROL.

UM, THIS WILL ENABLE ERCOT TO MANAGE POWER FLOWS USING THE EXISTING OPERATIONAL AND MARKET TOOLS INSTEAD OF USING, UH, MANUAL INTERVENTION.

AND THE MANUAL INTERVENTION THAT CURRENTLY BEING USED INTRODUCED SOME OPERATIONAL RISK DURING PERIODS OF STRESS SYSTEM CONDITIONS.

THIS WAS A ISSUE LAST SEPTEMBER 6TH DURING THE EEA EVENT.

THERE WERE TWO OPPOSING VOTES ON THIS ONE FROM THE COOPERATIVE AND MUNICIPAL SEGMENTS, AND FOUR ABSTENTIONS FROM THE COOPERATIVE AND INDEPENDENT RETAIL PROVIDER SEGMENTS.

THE OPPOSING VOTES WERE DUE TO THE COSTS THAT WAS SHOWN IN ANALYSIS THAT ERCOT PROVIDED, BASICALLY, UH, A MUCH LARGER COST IN THE CURRENT MANUAL SOLUTION.

AND THEN THE OTHER OPPOSING VOTER CITED INCREASED COST TO SPECIFIC LOAD ZONES.

THAT CONCLUDES MY PRESENTATION, UNLESS SARAH ARE ANY QUESTIONS? ANY QUESTIONS FOR CAITLIN? ANY COMMENTS? UH, CAITLYN ON BEHALF OF THE BOARD, I WANNA THANK YOU AND ALL OF THE STAKEHOLDERS AND ALL OF THE TAC UH, MEMBERSHIP FOR THEIR PARTICIPATION.

WE LOOK FORWARD TO A ROBUST DISCUSSION ON THE STAKEHOLDER IMPROVEMENT PROCESS.

WE, I THINK WE,

[02:10:01]

ALL RIGHT.

WELL, THANK, THANK YOU.

I APPRECIATE THAT.

WE, WE REALLY ENJOY PARTICIPATING IN THE, THE MEETINGS HERE AT THE BOARD AND THE, THE R AND M COMMITTEE AS WELL.

OH, THANK YOU.

WE APPRECIATE IT.

WITH THAT, UH, WE'RE GONNA MOVE, WE'RE GONNA MOVE ON TO AGENDA ITEM 7.2, RELIABILITY AND MARKETS COMMITTEE RECOMMENDATIONS ON YOU, NON NON UNANIMOUS AND OTHER SELECTED REVISION REQUEST.

UH, R AND M CHAIR BOB FLEXON WILL PRESENT THE COMMITTEE'S RECOMMENDATIONS TO THE BOARD ON A REVISION REQUEST AND TAX REPORT.

AND BOB, LET'S START WITH, UH, THE COMMITTEE'S RECOMMENDATION AND ENTERTAIN A MOTION ON NPRR 1215.

GREAT, THANK YOU.

VICE CHAIR.

THIS IS BOB FLEXON, CHAIR OF THE RELIABILITY AND MARKETS COMMITTEE.

THE R AND M COMMITTEE YESTERDAY CONSIDERED NPRR 1215 TACK UNANIMOUSLY, UH, RECOMMENDED NPR 12 15 4 APPROVAL AND WOULD BE ON THE CONSENT AGENDA.

BUT I SELECTED THE REVISION REQUEST FOR CONSIDERATION IN LIGHT OF ERCOT COMMENTS THAT THE NPRR HAS AN INCORRECT CREDIT FORMULA.

THE R AND M COMMITTEE DISCUSSED THAT IT SHOULD GO BACK DOWN TO TAC TO CORRECT THE ISSUE, AND THEREFORE I MOVE THAT THE BOARD REMAN NPRR 1215 TO TAC.

OKAY, IS THERE A SECOND ON BOB'S MOTION? OKAY, CARLOS, ALL IN FAVOR? AYE.

THAT MOTION CARRIES UNANIMOUSLY.

BOB, YOU CAN CONTINUE.

SURE.

THE R AND M COMMITTEE YESTERDAY CONSIDERED THREE REVISION REQUESTS THAT T NON UNANIMOUSLY RECOMMENDED FOR APPROVAL.

IN ADDITION TO THE TAC REPORT, THE COMMITTEE CONSIDERED ERCOT COMMENTS ON EACH REVISION REQUEST.

THERE WERE SIX OPPOSING VOTES ATTACKED BY CONSUMERS ON NPRR 1190, AND THE COMMITTEE WOULD LIKE MORE TIME TO CONSIDER THE QUANTITATIVE DATA IN THE ERCOT COMMENTS PRIOR TO THE OCTOBER BOARD MEETING.

AND SO IT IS RECOMMENDED THAT THE BOARD TABLE THIS NPRR AS SUCH, I MOVE THAT THE BOARD TABLE NPRR 11 9 11 90, THERE'S A MOTION.

IS THERE A SECOND? OKAY, CARLOS? UH, ALL IN FAVOR? UH, ANY OPPOSED? ANY ABSTENTIONS? OKAY, THAT CARRIES UNANIMOUSLY.

THE R AND M COMMITTEE ALSO CONSIDERED NPRR 1219 AND NPRR 1230, INCLUDING THE TAC REPORT AND ERCOT COMMENTS ON EACH REVISION REQUEST.

THE R AND M COMMITTEE UNANIMOUSLY RECOMMENDED APPROVAL OF NPRR 1219 AND NPRR 1230.

SO I MOVE THAT THE BOARD RECOMMEND APPROVAL OF NPRR 1219 AND NPRR 1230 EACH AS RECOMMENDED BY TAC.

OKAY, THANK YOU FOR YOUR MOTIONS.

BOB, DO I HAVE A SECOND, CARLOS? ALL IN FAVOR? AYE.

UH, NEXT I'M GONNA SWITCH GEARS AND PUT ON MY, UM, FINANCE AND AUDIT COMMITTEE CHAIR HAT FOR THE, UH, F AND A COMMITTEE, UH, UH, REPORT.

ANY OPPOSED? ANY ABSTENTIONS? OKAY, THOSE NPRS APPROVED UNANIMOUSLY.

[8. Finance and Audit (F&A) Committee Report]

UH, WE VOTED TO RECOMMEND THE BOARD ACCEPTANCE OF OUR COST 2023 401K SAVINGS PLAN ON IT, WHICH IS A BOARD AGENDA ITEM 8.1.

UH, WE WILL, I'LL MAKE A MOTION ON THAT IN A SECOND.

THERE WERE NO FINDINGS INDICATED.

MATERIAL ISSUE INDICATING MATERIAL ISSUES WITH THE ADMINISTRATION OF THE PLAN.

THE PLAN HAS ABOUT $390 MILLION IN ASSETS RIGHT NOW, WHICH SHOWED SIGNIFICANT GROWTH FROM LAST YEAR.

UH, THE AUDITORS GAVE WHAT I WOULD CALL A CLEAN OPINION.

UH, MAY I HAVE A MOTION THAT THE BOARD, OR LET ME DO THIS ON BEHALF OF THE COMMITTEE, I'LL MOVE THAT THE BOARD ACCEPT THE AUDITED FINANCIAL STATEMENTS OF KOTS 401K SAVINGS PLAN AS OF DECEMBER 31ST, 2023 AS PRESENTED BY BAKER TILLEY.

CAN I HAVE A SECOND? OKAY, JOHN, THANK YOU.

ALL IN FAVOR? AYE.

WITH THAT, LET'S MOVE TO, UM, THE NEXT COMMITTEE REPORT, WHICH IS HR AND G.

THE PLAN IS REPORT FOR 2023 IS APPROVED UNANIMOUSLY.

OTHER DISCUSSIONS FOR BOARD AWARENESS THEY'LL BE DISCUSSED.

THE STANDARD COMMITTEE BRIEFS ON FINANCIAL PERFORMANCE INVESTMENT AND DEBT COMPLIANCE, UH, EXCEPT FOR ONE DAY WHEN THE INVESTMENTS WERE SLIGHTLY OVER 10, UH, PERCENT, UH, ALL THE, THE, UM, UH, REPORTS WERE NOMINAL.

UH, THE BOARD ALSO REVIEWED THE PUC ORDERED OPERATING BUDGET RECONCILIATION, WHICH IS A REMINDER.

THIS IS SOMETHING THE PUCT ASKED, UH, ERCOT TO PROVIDE, UH, FOR CALENDAR YEAR 2024.

UM, ERCOT PLANS TO FILE THE STAFF RECONCILIATION MATERIALS WITH THE, UM, COMMISSION PRIOR TO THE SEPTEMBER 1ST DEADLINE.

UH, THE COMMITTEE REVIEWED THE REPORT AND IT LOOKS, UH, APPROPRIATE TO MEET THE, UH, PUCS, UH, REQUEST AT OUR NEXT SCHEDULED MEETING IN OCTOBER.

IN ADDITION TO OUR REGULAR ITEMS, WE PLAN TO DISCUSS THE COMMITTEE'S ANNUAL SELF EVALUATION AND GO THROUGH THE FIRST, UH, DRAFT OF THE ANNUAL INTERNAL AUDIT PLAN FOR 2025 AS PRESENTED BY THE CHIEF AUDIT EXECUTIVE.

AND THAT INCLUDES BY REPORT FOR THE GENERAL SESSION.

[9. Human Resources and Governance (HR&G) Committee Report]

UH, PENNY

[02:15:01]

HAS AGENDA, EXCUSE ME, PEGGY HAS AGENDA ITEMS NINE AND 9.1.

THANK YOU BILL.

WE HAD A VERY SHORT GENERAL SESSION, UH, HUMAN RESOURCES AND GOVERNANCE COMMITTEE MEETING YESTERDAY.

UH, THE COMMITTEE HAS ONE VOTING ITEM AND WE RECOMMEND, UH, THAT THE BOARD AND I WILL MOVE THAT THE BOARD, UH, RATIFY GILBERT HUGHES AS VICE PRESIDENT, UH, PUBLIC AFFAIRS OF ERCOT EFFECTIVE JULY 2ND, 2024.

AND, UH, JUST JUST TO HIGHLIGHT ISSUES COMING UP, UH, WE'VE GOT COMING UP OVER THE NEXT COUPLE OF MEETINGS, A LOT OF THE, THE ITEMS THAT ARE, UH, YOU KNOW, YEAR END ITEMS LOOKING AT COMPENSATION, LOOKING AT, UH, SUCCESSION PLANNING, THOSE TYPE OF ISSUES.

THANK YOU FOR THE REPORT.

AND DO YOU NEED, DID YOU MAKE THE MOTION I MADE? OH, OKAY.

I'M SORRY.

I HAVE A SECOND ON MOTION.

UH, THE RELIABILITY AND MARKETS COMMITTEE REPORT IS A AGENDA ITEM 10.

WELCOME BOARD GILBERT.

[10. Reliability and Markets (R&M) Committee Report]

UH, BOB IS GONNA WALK US THROUGH THAT.

GREAT, THANK YOU.

IN ADDITION TO THE COMMITTEE'S RECOMMENDATIONS REGARDING THE REVISION REQUEST DISCUSSED EARLIER, THE COMMITTEE YESTERDAY CONSIDERED TWO ADDITIONAL VOTING ITEMS INCLUDED IN YOUR MEETING MATERIALS.

IN JUNE, THE TECHNICAL ADVISORY COMMITTEE RECOMMENDED APPROVAL OF NOGA 2 45 AND FOLLOWING COMMENTS DURING THE RM COMMITTEE MEETING, THE BOARD TABLED NOER 2 45 FOR FURTHER DEVELOPMENT OF CONSENSUS AMONG ERCOT STAFF AND CERTAIN STAKEHOLDERS THAT HAD CONCERNS WITH THE NOER, CHAD SEALEY AND ANDY GALLO YESTERDAY UPDATED THE COMMITTEE ON THE PROGRESS INCLUDING 8 12 24 AND 8 16 24 ERCOT COMMENTS AS WELL AS ERCOT STAFF DISCUSSION OF COST AND BUDGETARY IMPACTS JOINT COMMENTERS WHO PREVIOUSLY RAISED CONCERNS ON THE NOVA.

FILED COMMENTS SUBSEQUENT TO ERCOT COMMENTS ON 8 16 24 WITH NO OBJECT, WITH NO OBJECTION TO THE ERCOT COMMENTS.

AS SUCH, THE COMMITTEE RECOMMENDED APPROVAL OF NORE 2 45 AS MODIFIED BY THE ERCOT COMMENTS AND THEREFORE I MOVE TO RECOMMEND APPROVAL OF NORE 2 45 AS RECOMMENDED BY TAC IN THE 6 7 24 TAC REPORT AS AMENDED BY THE 8 16 24 ERCOT COMMENTS WITH A RECOMMENDED PRIORITY OF 2025 IN RANK OF 35 15.

AND TO DESIGNATE A SUBSEQUENT NODAL OPERATING GUIDE REVISION REQUEST AS A BOARD PRIORITY REVISION REQUEST TO ADDRESS THE REMAINING DETAILS OF THE EXEMPTION PROCESS AND HAVE THE NO GRANT THE BOARD'S FEBRUARY, 2025 MEETINGS FOR CONSIDERATION WITH INSTRUCTION TO TAC LEADERSHIP TO PROVIDE DETAILED REPORTS ON THE SUBSEQUENT NO AT OUR OCTOBER AND DECEMBER MEETINGS.

THANK YOU FOR MOTION.

BOB.

IS THERE A SECOND? OKAY, CARLOS, ALL IN FAVOR? AYE.

UH, BOB'S MOTION REGARDING NOER 2 45 IS APPROVED UNANIMOUSLY.

I THINK CHAIRMAN GLEASON HAS A COUPLE OF COMMENTS REGARDING, UH, NUMBER 2 45.

JIMMY, DID YOU I'M HAPPY TO GO FIRST.

I WAS JUST GONNA SAY, UM, IT MIGHT BE, UH, USEFUL IF AT SOME POINT IN TIME, UH, WOODY AND HIS TEAM GAVE THE ERCOT BOARD, UH, UPDATE ON WHAT NERC IS DOING ON THEIR IBR RULE.

UM, FOR MANDATORY RELIABILITY STANDARDS, THEY, IF WE DON'T DO SOMETHING, THEY'RE GONNA DO SOMETHING.

SO, YOU KNOW, OBVIOUSLY, UH, THEY'RE GONNA GO HAND IN HAND AT SOME POINT IN TIME.

AND WE'LL I'LL LOOK TO STAKEHOLDERS AND OTHERS TO HELP INFORM WHERE WE END ON THIS.

GOOD COMMENT.

SO I JUST WANTED TO LETTER EVERYONE KNOW SOME OF MY THOUGHTS ON 2 45, PARTICULARLY ON THE, ON THE PIECES THAT WERE, UM, SEVERED OUT OF THIS AND ARE GONNA BE TAKEN UP IN A SUBSEQUENT UH, REVISION.

YOU KNOW, I'D SAY PROBABLY FOR THE MOST OF THE TIME I'VE BEEN AT THE COMMISSION DEFINITELY SINCE I WAS EXECUTIVE DIRECTOR.

I THINK BECAUSE OF A, A LACK OF SUFFICIENT RESOURCES AT THE COMMISSION, WE HAVE PUSHED SOME OF THESE LARGER POLICY DISCUSSIONS TO ERCOT AND I THINK THEY'RE MORE APPROPRIATELY DONE AT THE COMMISSION THROUGH RULE.

I THINK 2 45, THE, THE PARTS THAT HAVE BEEN SEVERED OUT I THINK ARE A GOOD CASE FOR THIS.

UM, I'VE TALKED TO PABLO AND CHAD AND I'VE TALKED TO A NUMBER OF BOARD MEMBERS AND, AND TO OUR EXECUTIVE STAFF JUST TO LOOK AT, UM, YOU KNOW, I'M FINE WITH ERCOT MOVING FORWARD WITH URGENT STATUS ON THIS, BUT I THINK WE SHOULD AT THE COMMISSION HAVE A DISCUSSION IF THIS IS MORE SUITABLE TO BE DONE THROUGH A RULEMAKING.

AND, UH, I ALSO TALKED TO CAITLIN.

I I THINK A BROADER DISCUSSION ABOUT HOW WE DECIDE WHAT GETS DONE HERE VERSUS WHAT GETS DONE AT THE COMMISSION NEEDS TO HAPPEN.

AND SO, UM, I DON'T HAVE THE ANSWERS TO THIS AT THIS TIME, BUT UH, I THINK WE NEED TO HAVE THOSE DISCUSSIONS.

'CAUSE I THINK THERE, IT'S DEFINITELY THE CASE THAT SOME OF THE POLICY DECISIONS THAT, THAT GO THROUGH THE ERCOT PROCESS, I THINK ARE MORE APPROPRIATE TO GO THROUGH THE, THE PUC PROCESS.

AND SO I JUST WANT TO LET EVERYONE KNOW WE'VE HAD THOSE CONVERSATIONS IN PRIVATE AND UM,

[02:20:01]

THANK YOU CHAIR.

LISA, LET'S MOVE ON TO AGENDA ITEM 10.2.

THE ENCORE TEMPLE AREA REGIONAL PLANNING GROUP PROJECT.

UH, BOB, YOU STILL HAVE THE FLOOR IN THIS ONE.

THANK YOU BILL.

THE ENCORE TEMPLE AREA REGIONAL PLANNING GROUP PROJECT IS A $272.6 MILLION TIER ONE PROJECT WITH THE EXPECTED IN SERVICE DATE OF DECEMBER, 2028 TO ADDRESS THERMAL OVERLOADS ON TRANSMISSION LINES AND TRANSFORMERS AS WELL AS VOLTAGE VIOLATIONS IN BELL COUNTY TO MEET NERC AND ERCOT RELIABILITY PLANNING CRITERIA.

OPTION FIVE A WAS THE LEAST COST OPTION, WHICH MET THE PLANNING CRITERIA, IMPROVED LONG-TERM LOAD SERVING CAPABILITY FOR FUTURE LOAD GROWTH, AND REQUIRED THE LEAST AMOUNT OF NEEDED CERTIFICATE OF CONVENIENCE AND NECESSITY.

MILES I MOVED TO ENDORSE AS RECOMMENDED BY THE R AND M COMMITTEE.

THE NEED FOR THE TIER ONE ENCORE TEMPLE AREA RPG PROJECT, OPTION FIVE A, WHICH ERCOT STAFF HAS INDEPENDENTLY REVIEWED AND WHICH TAC HAS VOTED UNANIMOUSLY TO ENDORSE BASED ON NERC AND ERCOT RELIABILITY PLANNING CRITERIA.

THERE'S A MOTION ON THE, ON THE FLOOR.

CARLOS A SECOND.

UH, ALL IN FAVOR? AYE.

LET'S NEXT MOVE TO THE TECHNOLOGY AND SECURITY COMMITTEE REPORT.

THE ENCORE AREA PROJECT IS APPROVED.

UH,

[11. Technology and Security (T&S) Committee Report]

AGENDA ITEM 11.

UH, CHAIR JOHN SWENSON IS GONNA PREVENT THIS AND THERE ARE NO VOTING ITEMS TODAY.

JOHN, PLEASE PROVIDE, UH, PROVIDE US WITH YOUR UPDATE.

THANK YOU, MR. CHAIRMAN.

UM, PURSUANT TO THE COMMITTEE'S REQUEST FOR PRESENTATIONS ON EXISTING ON ON EMERGING GRIDED TECHNOLOGIES, WE INVITED GUEST ANNA LANI, UH, OF EPRI TO PRESENT ON GRID ENHANCING TECHNOLOGIES.

UH, AND SHE DISCUSSED THE BENEFITS AND CHALLENGES OF FOUR DIFFERENT TYPES OF GETS, UH, WHICH INCLUDE ADVANCED CONNECTORS, DYNAMIC LINE RATING, ADVANCED POWER FLOW CONTROLLERS, AND TRANSMISSION TOPOLOGY OPTIMIZATION.

I WON'T GO INTO DETAIL ON HER PRESENTATION, BUT WOULD RECOMMEND IT TO ANY OF YOU WHO DID NOT SEE IT.

IT WILL BE AVAILABLE FOR REBROADCAST ON THE WEBSITE.

UM, WE ALSO HAD STAFF UPDATES, UH, ON THE FOLLOWING COMMITTEE BRIEFS.

WE HAD OUR NORMAL PROJECT AND TECHNOLOGY UPDATE FROM JP.

UH, WE HAVE ABOUT 60 PROJECTS CURRENTLY UNDERWAY.

ALL OF THEM ARE ONGOING AND, AND PROCEEDING WITH THE NORMAL, YOU KNOW, BLIPS AND, AND OTHER THINGS.

UM, WE HAD A, A MORE DETAILED UPDATE ON REAL-TIME CO OPTIMIZATION, UM, WHICH IS THE LARGEST PROJECT THAT WE CURRENTLY HAVE UNDERWAY.

UM, I WOULD MAKE A COUPLE OF POINTS ABOUT THIS.

THE PROJECT IS GOING WELL FROM A TECHNOLOGY POINT OF VIEW, FROM AN IT TECHNOLOGY POINT OF VIEW.

WE ARE NEARING COMPLETION OF THAT PROJECT.

UM, WE HAD QUITE A LONG DISCUSSION OF THE RISKS ASSOCIATED WITH CHANGES TO THE METHODOLOGY AT THIS POINT IN THE PROJECT LIFECYCLE.

AND, AND JP HIGHLIGHTED THE FACT THAT MAJOR CHANGES AT THIS POINT WOULD BE VERY DISRUPTIVE TO THE PLANNED IMPLEMENTATION IN 2025 AND COULD PUSH THAT IMPLEMENTATION DATE OUT BY SEVERAL YEARS IF WE WERE TO RE RESTRUCTURE THE WHOLE WAY THAT, UH, RTC IS CURRENTLY OUTLINED.

SO, UM, SO THE EMPHASIS WAS ON, WE HAVE A PROCESS FOR ONGOING CHANGES TO, UM, PROJECTS THROUGH OUR NORMAL NPR PROCESS AND THAT WE SHOULD FOLLOW THAT.

AND SO IF THERE ARE ENHANCEMENTS THAT PEOPLE WANNA LOOK AT AFTER THE INITIAL IMPLEMENTATION, WE SHOULD USE THAT PROCESS, UH, TO DO THAT.

UM, AND THEN WE HAD OUR NORMAL UPDATE ON GRID TRANSFORMATIONAL INITIATIVES BY VENCAT.

UM, HE GAVE US AN UPDATE SPECIFICALLY ON A COUPLE OF, UH, THE PROJECTS THAT ARE CURRENTLY UNDERWAY.

WE HAD A DISCUSSION ABOUT THOSE AND, UH, WE, WE TALKED ABOUT THINGS LIKE TIERED LOAD CATEGORIES AND DEFINITION OF LOADS AND THINGS LIKE THAT, WHICH ARE OBVIOUSLY KEY TO SOME OF THE THINGS THAT WE HEARD ABOUT FROM DAVID EARLIER ON.

UH, AND THAT CONCLUDES MY REPORT.

OKAY, THANK YOU JOHN.

I WANNA CONCUR, I RECOMMEND THE EP REPORT, RI REPORT AS WELL.

IT WAS VERY HELPFUL.

UH, THE LAST ITEM OF, UH, BEFORE WE MOVE INTO EXECUTIVE SESSION AS A GEN ITEM, 12 OTHER BUSINESSES OR ANY OTHER BUSINESS, ANY BOARD MEMBER WISHES TO RAISE? OKAY, I DON'T HEAR ANY.

[Convene Executive Session (Part 1 of 2)]

UH, WE'RE, I'M GONNA CALL AN AUDIBLE.

WE'RE GETTING READY TO MOVE INTO EXECUTIVE SESSION, BUT IN ORDER TO MEET, UH, VOTING MEMBER REQUIREMENTS, WE'RE GONNA SPLIT THE EXECUTIVE SESSION IN TWO PIECES.

WE'RE GONNA HAVE AN EXECUTIVE SESSION TO COVER AREAS THAT ARE GONNA GENERATE VOTING ITEMS FOR GENERAL SESSION.

WE'LL COME BACK INTO GENERAL SESSION, WE'LL VOTE ON THOSE ITEMS AND THEN WE'LL GO INTO EXECUTIVE SESSION AND COVER THE REMAINDER OF THE AGENDA THAT DOESN'T HAVE VOTING ITEMS AND THEN THE MEETING WILL BE CONCLUDED.

DOES THAT MAKE SENSE EVERYBODY? THAT WAY, UH, I DON'T HEAR A LOT OF STOMACH GROWLING THAT WAY THAT WE'LL HAVE LUNCH IN THERE SOMEWHERE AS WELL.

[02:25:01]

AT THIS TIME THE BOARD WILL ADJOURN GENERAL SESSION, CONVENE AN EXECUTIVE SESSION.

THERE WILL BE TWO VOTING ITEMS ANTICIPATED DURING THE EXECUTIVE SESSION.

SO GENERAL SESSION WILL RECONVENE AT THE CONCLUSION OF THE FIRST EXECUTIVE SESSION.

UH, THE GENERAL SESSION IS NOW RECESSED AND THE WEBCAST WILL BE CONCLUDED AFTER CHAIR GLEASON DOES HIS MAGIC WITH THE COMMISSION.

DO WE HAVE PERMISSION TO RUN AND GET LUNCH OR IS THAT NOTED? YEAH, WE'LL HAVE LUNCH AS SOON AS CHAIR GLEASON ADJOURNS OR SUSPENDS HIS MEETING.

THIS MEETING IN THE PUBLIC UTILITY COMMISSION IS IN RECESS.

RECESS, THAT'S THE PROPER WORD.

OKAY, SO LET'S GRAB SOME LUNCH.

WE'LL COME BACK.

ALRIGHT.

GOOD AFTERNOON.

[Reconvene General Session]

THIS IS BILL FLORES, UH, VICE CHAIR OF THE ERUPT BOARD OF DIRECTORS.

AND WE ARE RECONVENING THE GENERAL SESSION OF TODAY'S BOARD MEETING, UH, BEFORE MOVED.

UH, LET'S SEE.

WE HAVE TWO VOTING

[13. Vote on Matters from Executive Session]

ITEMS FROM EXECUTIVE SESSION.

FIRST, I'LL UH, MAKE A MOTION ON BEHALF OF THE F AND A COMMITTEE, UH, TO APPROVE THE SELECTION OF BAKER TILLY AS A 2024 ERCOT 401K SAVINGS PLAN.

AUDITOR, DO I HAVE A SECOND? SECOND.

OKAY, THANKS PEGGY.

ALL IN FAVOR? AYE.

GO BACK INTO EXECUTIVE SESSION TO DISCUSS THE REST OF THE EXECUTIVE SESSION AGENDA.

BAKER TILLY IS APPROVED AS THE 20 24 4 1 K SAVINGS PLAN, AUDITOR, UH, SECOND, I'LL ENTERTAIN A MOTION TO APPROVE THE LITIGATION MATTER, UH, DISCUSSED DURING EXECUTIVE SESSION UNDER AGENDA.

ITEM E IS 3.5.

SO MOVED.

THANK YOU, PEGGY.

IS THERE A SECOND JOHN SECONDS? ALL IN FAVOR? ANY OPPOSED, ANY ABSTENTIONS? OKAY, THE LITIGATION MATTER IS APPROVED.

I WANT TO THANK EVERYBODY FOR THEIR PARTICIPATION TODAY.

THIS MEETING, THE ERCOT BOARD OF DIRECTORS IS NOW THIS GENERAL SESSION, THE ERCOT BOARD OF DIRECTORS MEETING IS NOW ADJOURNED AND THE, UH, WEBCAST WILL BE CONCLUDED.

WE WILL

[Convene Executive Session (Part 2 of 2)]

HOWEVER, THERE ARE NO VOTING ITEMS, SO WE WILL NOT BE RETURNING TO GENERAL SESSION.