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[1. Introduction Julie Gauldin, PUCT Staff]
I'M JULIE GOLDEN WITH, UH, PUC STAFF.WE'RE GONNA GET STARTED WITH OUR WORKSHOP ON A S HI.
ALL RIGHT, SO THANKS FOR COMING.
UM, THE GOAL OF THE WORKSHOP TODAY IS TO SHARE THE CURRENT STATUS OF THE AS STUDY AND PROVIDE A CHANCE FOR STAKEHOLDER QUESTIONS TO BE ANSWERED.
UM, WE HAVE A PRETTY SIMPLE AGENDA TODAY.
WE'LL HAVE A PRESENTATION FROM ERCOT, PRESENTATION FROM THE IMM.
WE'LL DO QUESTIONS AFTER BOTH PRESENTATIONS.
UM, AND WE GOT A, A LOT OF REALLY GOOD QUESTIONS SENT BEFORE.
SO WE'RE GONNA GO THROUGH THOSE FIRST, AND THEN IF WE HAVE TIME, WE'LL GO OVER NEW QUESTIONS.
UM, ALSO JUST KEEP IN MIND THAT WE HAVE A DETAILED SCOPE THAT WE DEVELOPED EARLIER IN THE YEAR WITH THE COMMISSIONER'S INPUT, AND WE'RE GONNA BE LIMITING QUESTIONS AS MUCH AS POSSIBLE TO THAT SCOPE.
UH, SO THANKS AGAIN FOR ALL THE DETAILED AND THOUGHTFUL QUESTIONS.
THEY REALLY DID HELP US PREPARE OUR, WHEN I SAY US ERCOT AND THE IMM PRIMARILY PREPARE FOR THE PRESENTATION AND, UM, IT'LL HELP THE WORKSHOP BE THE MOST USEFUL.
ARE THERE ANY GENERAL KIND OF LOGISTICAL QUESTIONS BEFORE WE GET GOING? AWESOME.
[2. Presentation Nitika Mago, ERCOT]
OKAY, NITKA, KICK US OFF, PLEASE.METCA MARGO FROM ERCOT OPERATIONS.
UH, WE'VE GOT A QUITE A, A HEAVY DECK HERE WITH LOTS OF, UH, WORDS AND CONTENTS, BUT WE'LL TRY TO, UH, GO THROUGH THEM SLOWLY AND TALK THROUGH, UH, WHAT WE'VE, UH, AT LEAST, UH, WHAT THIS ANCILLARY SERVICE STUDY, UH, WORK, UH, HAS BEEN ABOUT AND HOW ERCOT HAS BEEN LOOKING AT IT AND THINKING ABOUT IT.
FIRST OF ALL, LET'S GET THIS WORKING.
ALRIGHT, SO FROM AN OUTLINE PERSPECTIVE, UH, WE'LL SPEND SOME TIME TALKING ABOUT WHAT THE VARIOUS ANCILLARY SERVICE PRODUCTS ARE, UH, IN OUR CURRENT MARKET TODAY.
WHAT ARE THE, SOME OF THE FUTURE ONES THAT WE'VE TEMPLATED, UH, TALK ABOUT, UH, WHAT ARE, WHAT, WHAT IS THE INTENTION OF EACH OF THOSE PRODUCTS? WHAT RISKS THEY ARE BEING PROCURED TO COVER? UM, GET A LITTLE BIT INTO THE, HOW THE QUANTITIES FOR THESE PRODUCTS ARE DETERMINED.
UH, AND OF COURSE, TOUCH UPON THE, THE TWO, UH, UH, CHANGES, UM, THAT ARE RIGHT NOW BEING WORKED UPON.
ONE BEING RTC AND OTHER BEING DRRS.
AND THAT WILL IMPACT AS JUST TOUCH A LITTLE BIT, UH, UH, UH, TALK ABOUT THEM AND, UM, MOVE ON FROM THERE TO GET INTO RECOMMENDATIONS THAT ARCOT HAS COME UP WITH UNDER THIS STUDY.
I EXPECT TO SPEND MORE TIME HERE.
AND OF COURSE, AS A, WHEN WE WORK ON, WHEN WE WORK THROUGH OUR RECOMMENDATIONS, WE'LL ALSO SHARE SOME OF OUR THOUGHTS ON THE ANALYSIS THAT YOU WILL HEAR THE IMM COME AND SPEAK TO, UH, AFTER ME, AND THEN, OF COURSE, SUMMARIZE AND MOVE ON.
SO WITH THAT, UH, JULIE TOUCHED UPON THIS.
UH, THERE IS A, UH, THE PUC HAS POSTED A SCOPE OF THIS STUDY, UH, ON A, UH, AS A PART OF PROJECT 5 5 8, 4 5.
SO YOU CAN CERTAINLY GLANCE THROUGH IT TO GET INTO THE DETAILS OF WHAT THIS, UH, WHAT THIS WORK WE ARE DOING.
COMPRISES OF, UH, THIS ANCILLARY SERVICE STUDY IS INTENDED TO ASSIST THE PUC IN MEETING REQUIREMENTS THAT WERE PLACED UPON THE PUC, UM, UNDER PR THREE FIVE, UH, 35.00 4G.
UH, AND AT A HIGH LEVEL, WHAT THE, THE, THAT REQUIREMENT OR WHAT, UH, THAT ASK FROM THE PUC IS, IS TO REVIEW THE, UH, TYPES OF AS THE VOLUME AND QUANTITY AND COST OF A, THAT, UH, WE PROCURE AND EXPECT TO NEED, UH, FOR THE OT POWER REGION, AND, OF COURSE, EVALUATE ANY ADDITIONAL SERVICES THAT MAY BE NEEDED FOR A LIABILITY.
UH, AS HAS BEEN NOTED, THIS IS A COLLABORATIVE EFFORT THAT OT AND THE IMM ARE WORKING ON WITH THE POC STAFF.
AND, UH, LASTLY, UH, UH, THERE IS A, I THINK THE P C'S TIMELINE RIGHT NOW IS TO FILE A STUDY, UH, UH, FILE THE
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RESULTS OF THE STUDY OR FILE THE, UH, OR FILE THE REPORT ASSOCIATED WITH THE STUDY, UH, BY END OF SEPTEMBER, UM, 2024.SO FAIRLY A SHORT TIMELINE FROM WHERE WE STAND TODAY.
THERE IS A, A WORKSHOP THAT THE POC IS ALSO HOSTING.
UM, THAT WORKSHOP IS ON OCTOBER 31ST, IF MY MEMORY IS RIGHT.
BUT SOME THINGS TO BE TUNED INTO AS FAR AS THIS TOPIC IS CONCERNED.
ALRIGHT, SO WITH THAT, WE'LL SWITCH IN AND START TALKING ABOUT, UH, YOU KNOW, THE FIRST TOPIC UNDER THIS SLIDE DECK, WHICH IS, WHAT ARE THE ANCILLARY, WHAT ARE ANCILLARY SERVICES? WHAT ARE THE PRODUCTS THAT WE HAVE AND WHAT RISKS ARE THEY MITIGATING? SO, I'M, SO, FIRST OFF, ANCILLARY SERVICES ARE IMPORTANT MECHANISMS FOR MAINTAINING RELIABILITY, UH, IMPORTANCE OF AS HAS GROWN AND CONTINUES TO GROW AS THE VARIABILITY AND UNCERTAINTY OF BOTH SUPPLY AND DEMAND, UH, ON THE ACCORD GRID CONTINUES TO INCREASE, UH, AS IS NEEDED TO PROVIDE, UH, SUPPLEMENTAL OPERATIONAL CAPABILITIES THAT WOULD OTHERWISE NOT BE PROVIDED SOLELY OR EXPLICITLY INCENTED BY THE ENERGY MARKET.
THERE ARE, UH, WE PROCURE THESE TO SATISFY TWO PRIMARY TYPE OF PURPOSES.
WE'LL, THERE IS A SLIDE HERE COMING UP RIGHT SHORTLY WHERE WE'LL TALK A LOT MORE ABOUT WHAT THOSE TWO PURPOSES ARE.
UH, ONE AMONGST THEM HAS GOT TO DO WITH MEETING THEIR, UH, THE OBLIGATIONS THAT ARCO HAS UNDER N REQUIREMENTS AND MOSTLY TIED TO FREQUENCY CONTROL RIGHT NOW.
AND OF COURSE, SECOND IS TO REDUCE OPERATIONAL RISKS.
SO TODAY WE, YOU ALL ARE PROBABLY ARE ALL VERY FAMILIAR WITH THIS.
WE HAVE FOUR TYPES OF ANCILLARY SERVICES, UH, IN OUR, IN OUR MARKET.
UH, ERCOT CONTINGENCY RESERVE SERVICE WAS THE LAST ONE THAT WE ADDED, UH, HERE FAIRLY RECENTLY, JUNE OF LAST YEAR.
AS FAR AS OUR, OUR SYSTEM, UH, UH, IMPLEMENTATION IS CONCERNED.
WHAT ARE, WHAT ARE THE FOUR RESERVE PRODUCTS THAT WE HAVE? START OUT WITH REGULATION? UH, THIS IS CAPACITY THAT'S DEPLOYED EVERY FOUR SECONDS TO BALANCE SUPPLY AND DEMAND BETWEEN SCHEDULED RUNS AND TRY TO MAINTAIN FREQUENCY CLOSE TO 60 HERTZ RESPONSIVE RESERVE.
THIS IS CAPACITY WE PROCURE TO ARREST THE DECLINE OF FREQUENCY.
UM, SO AS AN EXAMPLE OF AN EVENT THAT WE HAD, UH, IN ON JUNE 4TH, 2022, UH, WHAT YOU SEE HERE IS A, A DEEP DECLINE IN FREQUENCY.
THIS WAS A, A, A, A TRIP THAT INVOLVED A COMBINATION OF UNITS.
SO WE LOST ABOUT 2,500 MEGAWATTS ON THAT DAY.
UH, FREQUENCY GOT VERY CLOSE TO 59.7 HERTZ.
UH, OUR RRS PROCURED, UH, RESOURCES, UH, ON BOTH THE PFR OF A BUCKET AND THE UFR BUCKET.
UH, WERE ENGAGED TO HELP ARREST THAT FREQUENCY.
UM, AND THEN OF COURSE, THE REST OF THE PRODUCTS WOULD BE USED TO RESTORE FREQUENCY.
SO THERE'S ONE EXAMPLE OF HOW RRS FUNCTIONS IN OUR SYSTEMS. UM, THE NEXT, THE NEXT ONE I'LL TALK ABOUT IS ECRS, OUR CARD CONTINGENCY RESERVE SERVICE.
THIS IS CAPACITY THAT CAN RESPOND IN 10 MINUTES AND, AND CAN HELP RECOVER FREQUENCY, COVER FORECAST ERRORS, OR NET LOAD RAMPS, AND HELP REPLACE DEPLOYED RESERVES.
AS AN EXAMPLE OF A FREQUENCY EVENT WHERE WE USED ECRS TO RECOVER, UH, THE FREQUENCY, UM, TIED TO, UH, OPERATIONS OF A SINGLE OF ONE UNIT, UH, CERTAINLY THAT IT LOOKED LIKE ON THIS DAY THE UNIT WAS STRUGGLING.
UH, SOMETHING WAS GOING ON BEFORE IT FINALLY TRIPPED WHEN IT TRIPPED.
FREQUENCY DROPPED BELOW, UH, 59.90.
59.91 IS THE TRIGGER AT WHICH WE AUTOMATICALLY RELEASE ECRS ON THIS DAY.
WE DID RELEASE ECRS, AND IT TOOK US ABOUT 10 MINUTES TO COME OUT OF, UH, THAT LOW FREQUENCY EVENT AND BACK UP TO 60 HERTZ.
UH, SO THIS IS ESSENTIALLY FUNCTIONALLY HOW ECRS PLAYS OUT.
UH, THIS IS, NOW LET'S TALK ABOUT NONS SPIN.
UH, SO THIS IS CAPACITY THAT CAN BE STARTED IN 30 MINUTES, UH, IS USED TO COVER SUSTAINED FORECAST ERRORS, UH, NET LOAD RAMPS OR OUTAGES, UH, AND OF COURSE, UH, OUR FORCED OUTAGES AND HELPS US REPLACE DEPLOY RESERVES UNTIL ADDITIONAL RESOURCES CAN BE COMMITTED.
SO THE EXAMPLE THAT WE'VE SHARED HERE, UH, IS SOMETHING THAT, UH, UH, OCCURRED ON MAY 13TH, 2022.
YOU'VE PROBABLY HEARD YOU'LL PROB IF YOU LOOK THROUGH OUR REPORT, YOU'LL HEAR US MENTION THIS DATE A FEW TIMES.
I DID LINK IN THE ADDITIONAL DETAILS.
THIS WAS ONE EVENT THAT WE HAD COME AND PRESENTED TO TACK ABOUT.
UH, SO THERE ARE ADDITIONAL DETAILS ON, UH, THE TAX MEETING PAGE, UH, THAT Y'ALL CAN REFER TO.
BUT GENERALLY, THIS WAS A DAY WHEN WE WERE EXPECTING TIGHTER, UH, MARGINS, UH, GOING INTO THE PEAK HOURS.
SO WE HAD BEEN PREPARING FOR THOSE, UH, WELL, UH, CLOSE TO MIDNIGHT ON
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MAY 13TH WHILE TAKING ACTIONS OF COMMITTING UNITS.BUT AS THE DAY STARTED AROUND 11 O 1137, WE STARTED EXPERIENCING FORCED OUTAGE OF RESOURCES.
ROUGHLY ABOUT 2300 MEGAWATTS OF UNIT, UH, OF UNIT CAPACITY WAS STRIPPED BETWEEN 1130 AND, UH, AND 4:00 PM THAT DAY.
UH, SO THIS WAS ONE OF THOSE EVENTS WHERE CUMULATIVELY WE LOST A LOT OF CAPACITY AS WE WERE, UH, STARTING TO OPERATE THE DAY.
FINALLY AT AROUND, UH, UH, CLOSE TO THREE O'CLOCK, JUST BEFORE THREE O'CLOCK.
PRC HAD BEEN, UH, OF COURSE, DECLINING, UH, PRIMARILY BECAUSE OF THE LOAD GROWTH AND OF, AND SOME OF THE UNIT TRIPS.
NOW AS PRC DECLINED AND REACHED THE 3,200 MARK, THAT'S THE TRIGGER FOR RELEASING NONS SPIN.
WE RELEASED NONS SPIN ON THIS DAY, AND WE RELIED ON THAT CAPACITY, UH, PRETTY MUCH TILL 8:00 PM UH, THAT DAY TO GET US THROUGH THE PEAK.
THERE WERE ADDITIONAL ROCKS ALSO, OR UNIT COMMITMENTS ALSO MADE, UH, DURING THE MIDDLE OF THE DAY AND RESPONSE TO THE FIRST OUTAGES THAT WE SAW.
BUT THAT WAS NOT A WHOLE LOT OF CAPACITY BY THE TIME, UH, LEFT ESSENTIALLY TO COMMIT AT THAT TIME.
SO THIS IS, UH, THESE ARE THE TYPE OF EVENTS THAT RESERVES, UH, ARE LIKE NONS SPEND, ARE DESIGNED FOR WHEN THINGS HAPPEN IN REAL TIME, WE NEED ADDITIONAL CAPACITY TO CONTINUE OPERATING THE GRID RELIABILITY AS AN EXAM, A VERY CLEAR EXAMPLE OF AN EVENT WHERE NONS SPEND WAS NEEDED TO GET THROUGH THE DAY.
SO WITH THIS, I'LL COME BACK UP.
I HAD MENTIONED THERE WERE TWO PRIMARY PURPOSES OF ANCILLARY SERVICES, FREQUENCY CONTROL BEING ONE, AND THEN OPERATIONAL RISK OF UNDER COMMITMENT OF RESOURCES TO MEET DEMAND, PLUS ANY UNEXPECTED VARIATIONS.
WE PUT, UH, THE TWO, THE, THE TYPE OF ASS WE PROCURE IN ON THE FREQUENCY SIDE REGULATION, R-R-S-E-C-R-S WOULD BE THE, UH, UH, UH, UH, UH, ARE THE PRODUCTS THAT WE RELY ON TO BALANCE FREQUENCY, UH, BETWEEN SCHEDULE RUNS TO ARREST FREQUENCY TO RECOVER FREQUENCY.
THE REQUIREMENTS FOR OUR FREQUENCY CONTROL RELATED ANCILLARY SERVICE NEEDS ARE GENERALLY DICTATED OR DESIGNED TO MEET, UH, CART'S OBLIGATIONS UNDER THE NERC STANDARDS SPECIFICALLY.
UH, RIGHT NOW, THOSE ARE THOSE, THOSE THREE OTHER STANDARDS THAT WE ARE DESIGNING OUR PRODUCTS TO MEET.
UM, ON THE OPERATIONAL RISK SIDE, UH, THERE IS A PORTION OF ECRS THAT WE PROCURE, UH, TO HELP US RESPOND TO INTRA HOUR NET LOAD FORECAST ERRORS, UH, AND, AND ANY, UH, AND THEN THERE IS NONS SPIN THAT WE PROCURE TO RESPOND TO MULTI-HOUR NET LOAD FORECAST ERRORS.
AND THEN WHAT IS UNDER DEVELOPMENT TODAY IS DRRS.
AND THIS IS WHERE, UH, THIS IS AGAIN, A PRODUCT THAT WE CAN TEMPLATE, UH, BEING TIED TO MULTI-HOUR NET LOAD FORECAST ERROR THAT ARE MUCH LONGER AND SUSTAINED IN DURATION COMPARED TO NONS SPIN.
NOW, THE REQUIREMENTS FOR THESE, UH, NEEDS OR THESE RISKS TODAY IS COVERED THROUGH THE, UH, OR, UH, COVERED THROUGH, UH, THE AS METHODOLOGY THAT WE'VE ESTABLISHED, UH, AND BRING TO FOR TAX REVIEW ON AN ANNUAL BASIS.
SO GENERALLY, THESE ARE COVERED BY, UM, RISK OF NET LOAD FORECAST.
ERRORS AND OUTAGES THAT WE'VE SEEN IN, IN, IN PAST ARE GENERALLY BEING USED TO SET THOSE QUANTITIES.
UM, NOW THINGS THAT HAVE HAPPENED ON THE GRID, UH, AND I TOUCHED UPON IT, FOR US AT LEAST, OUR RESOURCE CAPACITY MIX HAS CHANGED DRASTICALLY SINCE.
IF YOU LOOK AT, SINCE 1919 TO 2023 HERE, AND IT'S NOT NEWS FOR YOU ALL, BUT, UH, WE HAVE INCREASED OUR INSTALL CAPACITY, BUT WE'VE ADDED A LOT OF WIND SOLAR STORAGE INTO OUR, INTO OUR, UH, FOOTPRINT, UH, I, I AND ALL, ALL AND GAS.
UH, ON THE GAS SIDE, WE'VE ADDED A FEW COMBINED CYCLE OR COMBINED CYCLE CAPACITY.
AND CTS WE HAVE BAD WITH, UH, WHAT HAS RETIRED IS COAL AND SOME GAS TEAM RESOURCES.
SO OUR FLEET RIGHT NOW IS VERY HEAVY, UH, CERTAINLY HEAVY ON, UH, UH, CERTAINLY CONTINUING TO SEE CHANGES, PRIMARILY DRIVEN BY GROWTH IN OUR, UH, RENEWABLE RESOURCES.
NOW, HOW HAS THIS MIX IMPACTED OR CHANGE IN MIX IMPACTED RISKS THAT WE SEE? UH, OF COURSE, WE'VE SEEN IMPACTS ON THE INTRA OUR NET LOAD RAMPS THAT, UH, THE GREAT EXPERIENCES IN REAL TIME, WE ARE SEEING A CONSISTENT INCREASE IN THOSE AS INTRA, OUR NET LOAD RAMPS INCREASE THE RISK OF ENCOUNTERING INTRA HOUR ISSUES, UH, FOR WHICH, UH, RESERVES LIKE ECRS AND NONS SPIN MAY BE NEEDED ALSO IS INCREASING, UH, THE MIX CHANGES, CERTAINLY, UH, IMPACTING THE FORECAST ERROR.
SO THE OVERALL NET LOAD FORECAST ERROR THAT, UH, WE ARE, UH, THAT,
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UH, WE MONITOR THE HAS BEEN GROWING WITH THE GROWTH IN OUR INSTALLED, UH, WIND AND SOLAR RESOURCES.UM, THE, THIS GROWTH, UH, UH, INCREASES THE RISK, OR THIS IMPACTS THE VOLUME OF ECRS AND NONS SPEND.
WE NEED, 'CAUSE THEY THESE, UH, WITH THE GROWTH IN THE FLEET AND THE GROWTH IN THE ERROR, MORE, UH, MORE MEGAWATTS MAY BE NEEDED TO MITIGATE THE RISK THAT OCCUR IN REAL TIME.
SOMETHING ELSE THAT WE MONITORED WITH THE RESOURCE MIX IMPACT CHANGES IS AROUND SYSTEM INERTIA.
NOW, IT IS WORTH NOTING, WHILE OUR INSTALLED CAPACITY OF, UH, RENEWABLE RESOURCES HAS TRIPLED, UH, BETWEEN 2013 AND 2020, THE OVERALL RANGE OF INERTIA THAT THE SYSTEM HAS OPERATED UNDER, AND EVEN THE MIN INERTIA, THE LOWEST INERTIA WE'VE ANNUALLY OPERATED HAS, HAS NOT DRASTICALLY CHANGED.
AND, AND THAT'S GOT TO DO WITH SEVERAL REASONS.
PART, PART OF SOME OF WHICH IS TIED TO GROWTH IN THE LOAD THAT WE ARE SEEING IN OUR REGION.
SOME OF IT IS TIED TO, UM, CON, UH, OPERATIONAL CONSTRAINTS, UM, OR OPERATIONAL DECISIONS.
NOW, ALSO WORTH NOTING IS WE HAVE MADE CHANGES, UH, TO ADAPT OUR ANCILLARY SERVICES, UH, UH, TO ACCOUNT TO, UH, TO TAKE INTO ACCOUNT THE IMPACT OF, UH, OUR RESOURCE EXCHANGES ON INERTIA.
UM, SOME, UH, THINGS LIKE THINGS LIKE CHANGING RRS QUANTITIES ON AN HOURLY BASIS, UH, TYING IT TO THE EXPECTED INERTIA, UM, UH, IN THAT HOUR WAS SOMETHING WE ADDED IN 2016.
THIS IS THE PRODUCT THAT HAVE HELPS WIDEN THE OPERATING RANGE.
SO THE LOWEST LEVEL OF INERTIA THAT WE CAN OPERATE AT GETS WIDENED BY HAVING FFR.
THIS WAS ALSO SOMETHING THAT WAS IMPLEMENTED IN 2021 AND WE CONTINUE TO IMPROVE IT.
UM, BUT NOW BEYOND THAT, I WILL, I'LL PROBABLY SHARE IT RIGHT NOW.
SO, WHERE WE ARE RIGHT NOW AND HOW WE'VE SEEN OUR INERTIA CHANGE, WE DON'T SEE THE NEED TO, UH, FOR A NEW, UH, AS PRODUCT AT, AT THIS MOMENT TO ACCOUNT FOR INERTIA OR TO ENSURE CERTAIN, UH, CERTAIN MINIMUM INERTIA BE AVAILABLE ON THE SYSTEM ALL THE TIME.
BUT WE DO THINK IT IS IMPORTANT TO CONTINUE MONITORING TRENDS IN INERTIA, SPECIFICALLY AS OUR RENEWABLE CAPACITY CONTINUES TO GROW AND OUR TRANSMISSION GRID EVOLVES.
SO WE ARE NOT PROPOSING ANY CHANGES RIGHT NOW IN TERMS OF ADDING A NEW PRODUCT FOR INERTIA, BUT IT IS SOMETHING THAT IS, UH, THAT WE RECOMMEND TO CONTINUE MONITORING.
THE NEXT THING THAT HAS IMPACTED, UH, SPECIFICALLY QUANTITIES OF ANCILLARY SERVICES HAS BEEN A CHANGE IN OPERATING POSTURE.
NOW, FOLLOWING MULTIPLE DAYS OF, UH, HIGH AND NET LOAD FORECAST ERRORS, UH, AND, AND FORCED OUTAGES THAT WE SAW IN, IN SPRING AND EARLY SUMMER OF 2021, ACCORD BEGAN OPERATING WITH HIGHER REAL TIME RESERVES.
THE INTENTION OF THIS POSTURE CHANGE WAS TO OPERATE WITH A HIGHER, AT A HIGHER RELIABILITY THRESHOLD.
OUR GOAL WAS, UH, TO ENSURE THAT WE HAD SUFFICIENT RESERVES, NOT ONLY TO AVOID THE NEED FOR A LOAD SHED, BUT ALSO TO DECREASE THE LIKELIHOOD OF, UH, NEEDING EMERGENCY OPERATIONS, UM, DUE TO INSUFFICIENT CAPACITY.
NOW, INITIALLY, WE MADE THIS IMPLEMENTED THIS CHANGE BY USING THE RELIABILITY UNIT COMMITMENT TOOL TO BRING ON ADDITIONAL CAPACITY BASED ON MARKET PARTICIPANT FEEDBACK.
WE TRANSITIONED TO PROCURING ADDITIONAL RESERVES, UH, BEGINNING JULY, 2021.
AND FINALLY WE DID BRING CHANGES INTO THE ANCILLARY SERVICE METHODOLOGY IN JANUARY THAT BECAME EFFECTIVE IN JANUARY, 2022.
SO EFFECTIVELY SINCE 2022, THE, UH, AS METHODOLOGY USES AVOIDING THE NEED FOR EMERGENCY OPERATIONS, BE IT WATCHES, BE IT ES AS ITS EVENT FOR DETERMINING, UH, ES QUANTITIES.
SO REALLY, UH, UH, UH, THERE'S A GRAPHIC HERE WHICH SHOW SHARES AN ACCOUNTING OF, UM, DAYS WITH TIGHT OPERATING RESERVES.
AND WE, WE USE THE THRESHOLD OF PRC DROPPING BELOW 3000, UM, FOR THAT, UH, FOR THAT ASSESSMENT.
AND YOU WILL SEE THE, UH, YOU WILL SEE THE, THE DECREASE, UM, UM, IN VOLUME OF EMERGENCY OPERATIONS OR VOLUME OF TIMES WHEN WE SPENT BELOW 3000 PRC AND DECLARED, UH, AND USED ANY PORTION OF OUR EMERGENCY OPERATIONS PROCEDURES.
SO REALLY, SO NOW FROM A TRENDS IN AS PERSPECTIVE, SO THE QUANTITIES OF A SV PROCURE HAVE INCREASED IN THE RECENT YEARS.
THESE HAVE BEEN INCREASED BOTH TO ACCOUNT FOR INCREASES IN NET LOAD VARIABILITY
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AND UNCERTAINTY THAT WE'VE SEEN AND DUE TO POLICY CHANGES THAT WERE MADE IN 2021 TO MAINTAIN ACCEPTABLE LEVELS OF RELIABILITY RISKS.SO THE GRAPHIC HERE IS SHOWING YOU CUMULATIVE ANCILLARY SERVICES THAT WERE PROCURED IN EACH MONTH, BEGINNING 2016.
UH, WE'VE ALSO SHARE, WE'VE ALSO INCLUDED INSTALL CAPACITIES JUST FOR REFERENCE AND HOW THEY HAVE CHANGED FOR WIND AND SOLAR.
UM, SO WITH THAT, I THINK THERE'S ONE MORE PIECE I'LL CALL OUT WHILE WE ARE STILL ON THE TOPIC OF, UH, AS PRODUCTS.
UM, AND THAT'S IMPACT OF GROWTH IN DEMAND ON FREQUENCY CONTROL.
THIS IS POTENTIALLY ANOTHER TOPIC THAT WE RECOMMEND IS SOMETHING THAT WE SHOULD CONTINUE MONITORING.
ERCOT IS SEEING A SIGNIFICANT GROWTH IN DEMAND WITHIN ITS FOOTPRINT, UH, CAUGHT TRACKING OVER 49,000 MEGAWATTS OF LARGE LOADS.
SO THIS WOULD BE LOADS GREATER THAN 75 MEGAWATTS IN VARIOUS STAGES OF DEVELOPMENT.
UM, WELL, WHAT WE'VE NOTICED IS SOME OF THESE LOADS MAY CHANGE CONSUMPTIONS, UM, IN A MANNER THAT'S NOT COORDINATED WITH SC.
AND, AND, UH, WHEN THAT HAPPENS, IT'S POSSIBLE TO SEE A SIGNIFICANT IMBALANCE BETWEEN FREQUENCY AND, UH, BETWEEN, UH, SIGNIFICANT IMBALANCE IN SUPPLY AND DEMAND CAUSING TO FREQUENCY INSTABILITY.
UM, ALSO, UH, THERE, THERE IS AN IMPACT TO FREQUENCY WHEN SOME OF THESE LARGE LOADS STRIP, UH, DUE TO TRANSMISSION EVENTS ON THE SYSTEM, UM, 'CAUSE OF NOT HAVING SAME CHARACTERISTICS, UH, BECAUSE OF HAVING CHARACTERISTICS, UH, THAT DON'T INCLUDE, UH, ESSENTIALLY BEING ABLE TO, UH, CONTINUE TO RIDE ON WHEN, WHEN THERE ARE TRANSIENT EVENTS ON THE SYSTEM.
NOW, SO FAR WE'VE NOT SEEN ANY SIGNIFICANT RELIABILITY PROBLEM WITH EITHER OF THESE TWO TYPES OF BEHAVIORS, BUT WE DO THINK IT IS IMPORTANT TO CONTINUE TO MONITOR, UH, UH, AS THE FLEET, AS THAT, AS THIS TYPE OF FLEET GROWS, TO CONTINUE TO MONITOR HOW OUR RELIABILITY RISKS MAY EVOLVE, UM, AND, AND, AND TAKE, UH, AND, AND MOVE, UM, AND TAKE OUR DECISIONS AT THAT POINT OF TIME WHEN WE DO SEE RISKS.
SO NO NEW PRODUCT RECOMMENDATIONS RIGHT NOW, OR NO NEW CHANGES IN ANCILLARY SERVICE QUANTITIES RIGHT NOW, BUT THIS ANOTHER ONE OF THOSE EVOLVING TRENDS THAT WE NEED TO CONTINUE TO MONITOR.
QUESTION, OKAY, I CAN PAUSE, I'LL TAKE THE QUESTION.
AND, UH, I, WHO WAS I, SORRY, I DON'T KNOW WHO WAS FIRST E IAN OR BOB? I'LL GO FIRST.
UM, I UNDERSTAND EVERYONE ON THE PHONE, LISTEN, I UNDERSTAND WE'RE NOT FIXING THE PROBLEM ON THE RIGHT SIDE OF THE SCREEN THIS YEAR, RIGHT? IF WE WERE LOOKING FOR A PRODUCT TO FIX THAT, DOES FFR OPERATING IN REVERSE SOLVE THAT
LET ME GIVE YOU A, WE A WORD OUT.
WELL, THE WAY TO SOLVE IT WOULD BE TO PROCURE RESERVES THAT CAN RE THAT CAN RESPOND, UM, AND MAINTAIN A CERTAIN LEVEL OF, UH, LEG ROOM, SO TO SPEAK.
UH, CAN FAST RESPONDING LEG ROOM HELP POTENTIALLY, I SUSPECT, BUT I DON'T THINK, UM, WE'VE NOT SOLUTIONED THIS THING RIGHT NOW.
UH, POTENTIALLY ALL, UH, ALL IDEAS PUT BEYOND THE TABLE IF WE GET INTO THAT.
UM, SO WHEN LOOKING AT THIS SLIDE WITH OUR TEAM, UM, THE CONCERN THAT ACTUALLY POPPED OUT TO ME WAS NOT THE FACT THAT THERE ARE THESE INDIVIDUAL LARGE LOADS, BUT THAT SO MANY OF THEM MAY HAVE THE SAME TRIGGERS, UM, LIKE WE PREVIOUSLY SAW WITH COMMONALITIES IN THE, I BELIEVE IT WAS IN THE WIND, UH, RESOURCES.
UM, I AM CONCERNED WITH, UH, THE FACT THAT WE MAY HAVE A LARGE NUMBER OF SIMILAR LOADS THAT ARE UNDER THE RADAR, BUT ALL WILL CUT OFF BECAUSE OF THE SAME THING.
WHETHER THAT IS A BITCOIN VERSUS ENERGY PRICE OR A DATA CENTER VERSUS ENERGY PRICE.
UM, SO I THINK WE SHOULD ALSO, OR I THINK THIS IS PROBABLY GONNA NEED TO BE ERCOT, BUT LOOK FOR COMMONALITIES OF BEHAVIORS BASED UPON, UM, THINGS THAT WE WOULDN'T HAVE NORMALLY LOOKED AT, RIGHT? RIGHT.
CERTAINLY, UH, APPRECIATE THAT POINT.
AND WE WILL, UH, THE, SO ONE OF THE THINGS WE'VE STARTED DOING, AT LEAST IN CASE OF, UM, THE RIGHT, UH, THE, THE REGULATION OR THE BALANCING IMPACT, BECAUSE THAT'S PROBABLY ONE OF THE PLACES WHERE YOU WOULD SEE, UH, THIS MORE SO IS WE WILL START BRINGING THIS ANALYSIS ON A FREQUENT BASIS TO PDC AND KEEP MONITORING THAT THROUGH THAT LENS.
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YEP.ANY MORE QUESTIONS? ALRIGHT, SO, THANK YOU SO MUCH.
SO NOW, UH, ONE, ONE, UH, LET'S SWITCH TOPICS AND JUST SPEND A LITTLE BIT OF TIME TALKING ABOUT WHAT'S, UH, YOU HEARD THE CHANGES THAT ARE PENDING, UH, AS FAR AS, UH, UM, THAT MAY IMPACT ANCILLARY SERVICES.
AND OF COURSE, RTC, UH, IS ONE WHICH IS EXPECTED TO BE IMPLEMENTED BY EARLY 2026.
UH, RTC HAS SIGNIFICANT IMPACTS AS FAR AS, UH, GAINING EFFICIENCIES IS CONCERNED, A AS WILL BE CO OPTIMIZED WITH ENERGY AND PROCURED IN REAL TIME EVERY FIVE MINUTES COMMITMENT PROCESSES WILL ENSURE SO THAT SUFFICIENT QUALIFIED RESOURCES ARE AVAILABLE TO PROVIDE AS IN REAL TIME.
UM, AND, AND OF COURSE, RTC WILL HELP ENSURE EFFICIENT ALLOCATION OF A SN ENERGY, UH, ACROSS THE QUALIFIED RESOURCES THAT ARE AVAILABLE.
IT'LL IMPACT HOW ANCILLARY SERVICES ARE DEPLOYED, UH, IN SEVERAL CASES.
RTC WILL, UH, MAY MAKE THE TRADE OFF IN BETWEEN PROCURING, UH, A S VERSUS DEPLOYING RE RESERVES OR USING, CONVERTING THAT CAPACITY TO ENERGY ON ITS OWN.
THERE'LL BE A FEW PLACES WHERE THERE WILL STILL BE MANUAL ACTIONS LIKE OFFLINE NONS.
THERE WILL STILL BE AN OPERATOR ACTION INVOLVED IN RELEASING THAT CAPACITY TO SCHEDULE.
UM, ANOTHER THING WORTH NOTICING IS, UH, A NEW PRODUCT AND THAT IS BEING DEVELOPED RIGHT NOW.
DRRS, LIKE I MENTIONED A WHILE AGO, IT IS INTENDED TO COVER RISK ASSOCIATED WITH VARI NECK LOAD VARIABILITY AGAIN.
UM, BUT, BUT THIS WOULD BE LARGE ERRORS THAT ARE SUSTAINED FOR LONG PERIODS OF TIME.
WE WOULD PRESUME, UH, FROM A QUALITY PERSPECTIVE THAT A-D-R-R-S RESOURCE MUST BE CAPABLE OF BEING DISPATCHED AND WITHIN TWO HOURS AND MUST BE ABLE TO MUST BE CAPABLE OF RUNNING AT ITS HSL FOR FOUR HOURS NPRR 1235, UH, TO IMPLEMENT THE DRRS FRAMEWORK IS RIGHT NOW IN THE STAKEHOLDER PROCESS, UH, CART EXPECTS TO START BRINGING DISCUSSIONS AROUND METHODOLOGY FOR COMPUTING DRRS REQUIREMENT ONCE THIS NPRR HAS BEEN APPROVED BY THE POC.
ALRIGHT, SO WITH THIS I WILL SWITCH AND WE'LL SPEND SOME TIME TALKING ABOUT, UH, SUMMARIZING ERCOT RECOMMENDATIONS UNDER THIS STUDY.
MY QUESTION FITS MORE IN THE FIRST PART OF YOUR, OF YOUR PRESENTATION.
UM, JUST IN THE FRAMEWORK THAT YOU LAID OUT, I THINK, ARE THERE OTHER THINGS THAT FIT IN THAT FRAMEWORK, UM, THAT WE DON'T NECESSARILY THINK OF, OF ANCILLARY SERVICES OR MAYBE EXPLICITLY DEFINED AS NOT ANCILLARY SERVICES, UM, SUCH AS THE FIRM FUEL PRODUCT AND ERS THAT YOU USE IN MM-HMM.
I THINK IF WE'RE TRYING TO ESTABLISH A FRAMEWORK FOR WHAT YOU'RE DOING AND WHY, AND HOW IT OFFERS TOGETHER, IT MIGHT BE WORTH INCLUDING THOSE IN THE CONVERSATION.
BECAUSE I THINK THERE'S A TRADE OFF BETWEEN, YOU KNOW, NEEDING NON SPEND IN THE WINTER VERSUS HAVING THE FIRM FUEL SERVICE.
I'LL MAKE NOTE OF THAT, UH, FOR SURE.
ANY OTHER COMMENTS ON THIS FIRST HALF OF THE PRESENTATION? ALL RIGHT, SO WE'LL MOVE ON.
MY, MY COMMENT IS, THE BEST TIME TO IMPLEMENT A NEW ANCILLARY SERVICE IS WHEN IT'S CHEAP.
AND SO, UM, YOUR COMMENT ABOUT INERTIA, UH, IF YOU VALUE THAT, IMPLEMENT IT NOW, WHEN IT'S, WHEN IT'S INEXPENSIVE TO IMPLEMENT, OTHERWISE, IT JUST BECOMES VERY CONTROVERSIAL.
UNDERSTOOD, UNDERSTOOD, UNDERSTOOD.
SO I'LL, I'LL MOVE ON TO THE NEXT SLIDE.
I MEAN, CERTAINLY THERE IS TIME FOR CON QUESTIONS, IF THERE ARE ANY, WE CAN COME BACK TO THE SLIDES.
UM, SO FROM, UH, AT THE HIGH LEVEL, FROM A PRODUCT PERSPECTIVE, THE EXISTING PRODUCTS AND THE FORTHCOMING DRRS RIGHT NOW ARE SUFFICIENT IN MEETING THE SYSTEM RELIABILITY NEEDS AS WE SEE IT.
WE ARE, AND LIKE I MENTIONED, THERE ARE A COUPLE, UH, THE, THE, THE RESOURCE MIX IMPACTS ON SYSTEM INERTIA AND THAT LOAD GROWTH AND HOW IT MAY IMPACT FREQUENCY CONTROL ARE TWO ITEMS THAT WE CON CONTINUE TO RECOMMEND SHOULD BE MONITORED.
AND AS TRENDS EVOLVE, IT'S POSSIBLE THAT WE MAY NEED TO CONSIDER NEW AS OR METHODOLOGY CHANGES.
NOW ON THE, UH, NOW LET'S GETTING BACK TO THE QUANTITY DETERMINATION ASPECT.
[00:30:01]
RECOMMEND ON THE, THAT, THAT REGULATION, RRS AND THE FREQUENCY RE RE RECOVERY OR THE FREQUENCY RESPONSE RELATED, UH, ECRS REQUIREMENTS SHOULD CONTINUE TO USE MECHANISMS THAT BEST QUANTIFY RISK AND MEET APPLICABLE N STANDARDS ON THE, UH, ON THE, ON THE BALANCE.SO NOW THIS WOULD BE THE NON FREQUENCY RECOVERY RELATED ECRS REQUIREMENTS AND NONS SPEND.
WE, WE ARE A POTENTIAL, WE ARE, UH, UH, WE RECOMMEND EXPLORING IMPROVEMENTS SPECIFICALLY.
ITEM ONE SAYS, REVAMP THE METHODOLOGY USED TO CALCULATE THESE TWO TO USE A PROBABILISTIC FRAMEWORK FOR QUANTIFYING RELIABILITY RISKS.
I'VE GOT A COUPLE SLIDES THAT TALK WHAT, WHAT WE MEAN WHEN WE SAY THAT.
AND THE SECOND THING IS MORE, UH, FUNDAMENTALLY REVISIT THE BENEFITS OF DETERMINING PORTION OF AS QUANTITIES CLOSER TO THE OPERATING DAY, UH, BASED OFF OF, UH, UH, THE, YOU KNOW, BASED OFF OF THE FORECASTED CONDITIONS RATHER THAN STRICTLY THROUGH AN ANNUAL CALCULATION.
AND REALLY WHAT THIS MEANS IS, TODAY WE COMPUTE THE QUANTITIES OF OUR RESERVES IN DECEMBER, AND TYPICALLY THOSE STAY ON, WE USUALLY DON'T CHANGE OUR QUANTITIES OR DON'T INCREASE THE QUANTITIES AS MUCH.
UH, THIS APPROACH WOULD BE SAYING, UH, MAYBE WE CAN, UH, SCALE BACK ON THE QUANTITIES THAT WE SET UP IN DECEMBER, BUT THEN REVISIT, UH, CLOSER TO REAL TIME BASED OFF OF FORECASTED CONDITION, WHAT THE QUANTITY OF AS, UH, WHAT THE APPROPRIATE QUANTITY OF AS SHOULD BE TO, TO, TO, TO REFLECT THE AMOUNT OF RISK WE SEE OF OPERATING ON THAT DAY.
AND AGAIN, WE'LL TALK A LITTLE BIT ABOUT THIS ONE.
I ALSO, UM, SO TO THE FIRST, UH, UH, RECOMMENDATION, A FULL STATISTICAL ANALYSIS OF RISK.
UH, YOU, YOU HAVE SEEN THIS SLIDE OR CONTENTS OF THIS SLIDE BEFORE.
TO US, WHAT IT MEANS IS TODAY THE CURRENT METHOD THAT WE USE IS A QUASI STATISTICAL APPROACH THAT IS BASED ON, UM, COMBINED RISKS OF, UH, UH, UH, OF CERTAIN TYPES OF RISKS THAT WE KNOW GAVI CAN QUANTIFY, AND WE STACK THEM ON TOP OF EACH OTHER.
SO, AS AN EXAMPLE, NONS SPIN IS, UH, NET FORECAST ERROR, PLUS THE RISK OF FULL OUTAGES.
A FULL STATISTICAL APPROACH WOULD, UH, UH, UH, WOULD, WOULD NOT, WOULDN'T STACK UP THE RISKS PER SE.
IT IS GOING TO ASSESS THE COMBINED RISK, UH, THAT WE MAY FACE, UH, AT ANY GIVEN PERIOD OF TIME AND LOOK AT HISTORY, UH, OF, UH, OF, OF COURSE STILL LEARN FROM HISTORY.
SO IT'LL STILL HAVE INPUTS FROM OUR FORECASTS.
UH, IT WOULD HAVE IN INPUTS FROM FORCED OUTAGES AND D RATES THAT WE'VE SEEN, UM, AND USE THAT TO ASSESS A, UH, USE THAT TO, UH, UH, USE THAT, UH, THROUGH A, UH, THROUGH A MONTE CARLO PROCESS TO ASSESS A COMBINED RISK OF, UH, OF COMBINED RISK THAT WE MAY NEED RESERVES FOR ON A PARTICULAR DAY.
NOW, UH, NOW, NOW THERE ARE, UH, TO, IN ORDER TO BUILD A MODEL THAT DOES SUCH AN ANALYSIS IN OUR MIND, THERE ARE SEVERAL QUESTIONS THAT NEED TO BE ANSWERED.
QUESTIONS LIKE SHOULD AVAILABLE HEADROOM OR CAPACITY THAT IS NOT PROVIDING AS BE ACCOUNTED IN THIS ANALYSIS.
UM, UM, SHOULD, UH, UH, HOW SHOULD WE TAKE INTO ACCOUNT GROWTH IN OUR NET LOAD FORECAST ERROR? BECAUSE OF THE FOOTPRINT CHANGE, BECAUSE OF INSTALLED CAPACITY CHANGES, HISTORICALLY, OUR CURRENT METHODOLOGY DOES INCLUDE GROWTH.
AND AT LEAST, UH, BY LOOKING AT HOW THE FORECAST, THE MEGAWATT ERROR IN THE FORECAST HAS CHANGED, IT'S SEEN THIS PARTICULAR, UH, ACCOUNTING FOR THIS PARTICULAR ASPECT MAKES SENSE RIGHT NOW.
THE NEXT THING IS WHAT EVENT CRITERIA SHOULD BE USED, UH, UH, SHOULD BE USED TO SET UP, UH, ANCILLARY SERVICE QUANTITIES? IS THIS, IS THE CRITERIA SIMPLY A MATTER OF AVOIDING LOSS OF LOAD? OR SHOULD IT BE RELATED TO AVOID ENTERING AN EMERGENCY ALERT OR A WATCH? UH, SO ESSENTIALLY OUR QUESTION HERE IS, WHAT IS THE CRITERIA? HOW SHOULD THE NEED FOR MANUAL OPERATOR ACTIONS BE INCLUDED IN, IN SETTING UP THIS CRITERIA? HOW SHOULD TEMPORAL CONSTRAINTS, UH, AND CUMULATIVE FACTORS BE ACCOUNTED FOR? THINGS LIKE WHAT HAPPENED ON MAY 13TH WHERE YOU SAW A STACKING OF FORCED OUTAGES OCCUR? HOW SHOULD THAT FORCED OUT? HOW SHOULD THAT RISK BE ACCOUNTED FOR WHEN SETTING UP, UH, UH, WHEN SETTING UP THIS MODEL? UM, WHAT IS THE LENGTH OF THE EVENT? WHAT IS THE DURATION, UH, OF THE, UH, OF A ISSUE THAT WE ARE TRYING TO SET AN UNSPENT QUANTITIES OR AS QUANTITIES TO COVER? SO QUESTIONS LIKE THESE, WE BELIEVE, UH, ARE WORTH HAVING STRONG DISCUSSIONS ON, UH, OF COURSE, WITH STAKEHOLDERS
[00:35:01]
AND WITH POLICY MAKERS TO HELP US, UH, SET THE MODELS UP IN A MANNER THAT REFLECT THE OPERATING POSTURE THAT WE WANT TO MAINTAIN, UH, WHEN OPERATING THIS GRID.UM, AND, AND, AND I'LL ALSO POINT OUT, UH, THEY, THE ANSWERS TO THESE QUESTIONS DIRECTLY IMPACT THE VOLUME OF RESERVES WE PROCURE, UH, AND, AND, AND, AND OPERATIONAL ACTIONS WE MAY NEED TO TAKE.
SO, AS AN EXAMPLE, IF WE SET THE RESERVE QUANTITIES TOO LOW, WE MAY BE LOOKING TO USE TOOLS LIKE RELIABILITY UNIT COMMITMENTS TO COVER THE OVERALL OPERATIONAL RISK ON A PARTICULAR DAY.
SO THERE ARE TRADE OFFS IN EVERY DECISION THAT NEEDS TO BE MADE IN THIS MODEL.
SO FOR PROPER BALANCE, WE DO, UH, WE DO THINK INPUT FROM STAKEHOLDERS AND POLICY MAKERS POTENTIALLY MAY BE NEEDED, UH, AS WE MOVE FORWARD ON A PATH WHICH USES A FULL STATISTICAL ANALYSIS FOR DETERMINING ANCILLARY SERVICE QUANTITIES.
I'LL PAUSE, I'LL SEE IF THERE ARE ANY QUESTIONS ON JUST THIS PARTICULAR RECOMMENDATION, IF THERE IS ANYTHING WE NEED TO SUPPLEMENT.
YES, BRIAN, WHAT, WHAT'S THE FORUM FOR THESE DECISIONS TO BE MADE? FAIR QUESTION.
UM, DISCUSSIONS LIKE THESE, MORE THAN LIKELY, I MEAN, WE WILL PROBABLY NEED TO GO BACK AND THINK THROUGH ALSO WHAT THAT, UH, LAYOUT LOOKS LIKE AS WE WALK DOWN THIS PATH, BUT I SUSPECT IT WOULD INVOLVE WORKSHOPS AND CONVERSATIONS WHERE WE SHARE DATA.
AND I'LL SEE, I'VE GOT MORE, UH, UH, PHONE A FRIEND OPTIONS HERE WITH JEFF AND DAN IF THEY WANT TO SUPPLEMENT THIS ANSWER.
NO, I, I AGREE WITH NKA ON THAT.
I, I THINK, UM, I, I'LL REEMPHASIZE WHAT SHE MENTIONED, THAT I THINK THAT THESE, IF YOU'RE THINKING ABOUT THE QUANTITIES OF ESPECIALLY ECRS AND NONS SPIN THAT WE'RE GETTING, THESE ARE GONNA BE THE CRITICAL QUESTIONS.
IT'S, IT'S, I THINK IT'S NOT SO MUCH THE METHODOLOGY AND, AND THE MATH AS MUCH AS IT IS.
WHAT, WHAT IS THAT CRITERIA? WHAT, WHAT IS OUR OPERATIONAL RELIABILITY STANDARD, IF YOU WILL, THAT WE ARE OPERATING, THAT WE'RE, THAT WE'RE PROCURING RESERVES FOR, THAT WE'RE OPERATING TO? I THINK THAT THAT IS GOING TO BE A CRITICAL QUESTION WHEN WE'RE TRYING TO DETERMINE WHAT THOSE, UH, QUANTITIES ARE, UH, BECAUSE THAT, THAT'S GONNA IMPACT HOW YOU SET UP YOUR, YOUR, YOUR MATH EQUATIONS.
AND, AND, UH, I, I THINK WE, WE NEED TO MAKE SURE THAT WE ALL ARE UNDERSTANDING, UH, I THINK WE NEED TO HAVE GOOD STAKEHOLDER DISCUSSION.
UH, WE, WE, YOU KNOW, MAY LOOK TO THE COMMISSION TO, UH, FOR GUIDANCE ON THAT.
UH, WE, WE ALL NEED TO MAKE SURE THAT WE'RE UNDERSTANDING WHAT THOSE DECISIONS ARE, UH, SO THAT WE CAN SET THOSE QUANTITIES UP TO MEET WHATEVER STANDARD THAT WE, WE ALL AGREE THAT WE NEED TO BE MEETING.
SO I THINK MORE, MORE DISCUSSION TO COME ON THAT.
ASHLEY, UH, WHAT'S THE TIMELINE YOU GUYS ARE THINKING ABOUT FOR THESE DECISION? BECAUSE THERE IS SOME STUDY RESULTS COMING AND SOME DECISIONS BEING MADE, AND IS THERE AIR COURT RECOMMENDATIONS FOR THIS
WE HAVE, UH, WE HAVE USED, UH, CERTAINLY WE'VE BEEN INFLUENCED BY SOME OF THE ANALYSIS THAT WE'VE SEEN IN, IN SOME, IN THE RECOMMENDATION THAT YOU WILL HEAR US TALK ABOUT FOR 2025.
UM, SO AS FAR AS 20 26, 27, 27 GO, UH, WE WILL, UH, WE WILL START, UH, THE NEXT PHASE FOR US IN THIS PROCESS AT LEAST, WILL BE TO START BUILDING OUR OWN MODELS TO DO THIS ANALYSIS.
AND I, I SUSPECT SOMETIME NEXT YEAR IS WHEN WE WILL START SEEING RESULTS FROM THOSE AND START SHARING THOSE.
SO I WOULD SUSPECT 2026 AND BEYOND RIGHT NOW, UH, AT LEAST 2026 AND BEYOND FOR THE EFFECT OF THAT RESULT.
BUT THE STUDY WILL BE IN 2025.
WELL, EVEN THE STUDY, AT LEAST AS FAR AS THE METHODOLOGY CHANGES ARE CONCERNED, WE WILL LIKELY NOT COVER THEM THIS YEAR.
SO IT'LL, IT'LL PROBABLY BE IN 2026 THAT WE EVEN START THOSE DISCUSSIONS, START SHARING RESULTS OF WHAT ARE THE MODELING CHANGES, WHAT, UH, WHAT A DIFFERENT ANSWER ON EVERY PARAMETER COULD, HOW IT COULD INFLUENCE, UH, THE QUANTITIES ITSELF.
I SUSPECT WE WILL START THAT DISCUSSION IN 2026, BUT I'LL ALSO TELL YOU TAKE IT WITH A GRAIN OF SALT.
WE ARE STILL THINKING THROUGH OUR TIMELINE ON HOW THIS WILL WORK.
MY BEST ESTIMATE IS, UH, THIS STARTS IMPACTING NOT NEXT YEAR.
IT MAY IMPACT 2026, CERTAINTY OF 2027 MAY BE HIGHER, AND JEFF, UH, IS ON GREEN.
SO MAYBE LET, HE MIGHT LET HIM ANSWER.
[00:40:01]
I WOULD SAY ALSO, UH, IF YOU'VE FOLLOWED AT, AT THE WORKING GROUP LEVEL, IF YOU FOLLOWED THE 2025 AS METHODOLOGY, I, I THINK SOME OF WHAT WE HAVE LEARNED HAS INFLUENCED, UH, HOW, HOW WE'VE PERFORMED BOTH NON SPEN AND ECRS CALCULATIONS FOR 2025 AS METHODOLOGY.IT'S, IS IT THE FALSE STATISTICAL APPROACH? UH, NO.
UH, I, I THINK WE'RE, WE'RE NOT THERE YET.
UM, AND, AND AGAIN, I, I THINK SOME, SOME OF THESE KEY DECISIONS THAT THAT'S GOING TO, THOSE ARE GOING TO INFLUENCE QUANTITIES MORE SO THAN THAT STATISTICAL METHODOLOGY.
I THINK THAT STATISTICAL METHODOLOGY THINK OF THAT IS WE'RE GONNA SHARPEN THE PENCIL BETTER.
UH, WE'RE, WE'RE GONNA BE ABLE TO GET MORE ACCURATE AND, AND HAVE A, UH, HOPEFULLY AN OB OBJECTIVE STANDARD THAT, THAT WE'RE PROCURING THAT THOSE QUANTITIES, UH, THAT WE'RE PROCURING FOR.
BUT, UM, THE KEY DRIVERS FOR HOW MUCH WE'RE GOING TO GET, I, I THINK ARE GONNA BE, UH, WE'VE GOTTA, WE'VE GOTTA ANSWER THESE QUESTIONS FIRST.
THESE, THESE QUESTIONS WILL SIGNIFICANTLY IMPACT THE MEGAWATT AMOUNT.
AND SO THAT'S KIND OF WHAT I WAS TRYING TO UNDERSTAND IS THE TIMELINE FOR DETERMINING THESE, UH, THESE QUESTIONS AND WHETHER THERE WILL BE A COURT RECOMMENDATION AND STUDIES BASED ON THAT.
MAYBE THE OTHER WAY TO ANSWER YOUR QUESTION IS IT'S, I DON'T KNOW THAT IT'S TO BE DETERMINED IS THE SHORT ANSWER.
THERE IS MORE WORK FOR US TO DO TOGETHER, SO IT WILL TAKE US TIME TO GET THERE.
AND THE, THE YEARS I RELAYED ARE MY SUSPICION ON WHEN OUR BEST GUESS RIGHT NOW WHEN THE WORK WE NEED TO DO COLLECTIVELY COULD POTENTIALLY HAVE IMPACT.
I, I SEE THERE IS A CUE HERE ON ONLINE AS WELL.
IS IT? OKAY, I'M GONNA TAKE SHAMS FIRST, ERIC, AND THEN SHAMS YOU, YOU'VE BEEN WAITING PATIENTLY.
SO, UM, YOU KNOW, WE'VE SEEN A LOT OF STUDIES RECENTLY ON IMPACT OF ANCILLARY SERVICE QUANTITIES ON ENERGY MARKET PRICES, AND THAT SORT OF IMPACTS A COMMITMENT AND HEADROOM.
SO I'M WONDERING IN YOUR, IN LOOKING AT THE AVAILABLE HEADROOM, YOU'D SORT OF HAVE TO TAKE INTO ACCOUNT THE IMPACT OF REDUCING ANCILLARY SERVICE QUANTITIES ON DEPRESSING MARKET PRICES AND LEADING TO LESS COMMITMENT.
YOU KNOW, SO I'M WONDERING HOW YOU WOULD THINK OF INCORPORATING THAT KIND OF A, A CORRELATION YEAH.
BETWEEN THOSE, UM, THOSE ITEMS. SHAMS, YOU ARE ECHOING SOME OF THE CONCERNS OR SOME OF THE QUESTIONS EVEN WE HAVE ON THAT PARTICULAR TOPIC.
IT IS, IT SEEMS LIKE BY HISTORIC HEADROOM IS TIED TO BEHAVIOR THAT BEHAVIOR BEHAVIORS CAN CHANGE BASED OFF OF ACTIONS WE TAKE.
AND THAT'S PARTLY WHY WE ARE, UH, WE ARE, UH, WE, WE, WE, WE HIGHLIGHTED THIS, UH, PARTICULAR ASPECT AS BEING A QUESTION THAT'S WORTH THINKING THROUGH.
THERE IS POTENTIALLY SOME BENEFITS WE CAN GAIN, IF YOU'VE NOTICED, UH, UH, IN NONS SPEND, WE'VE, WE'VE BEEN DOING THIS FOR SOME TIME IN THE NIGHTTIME HOURS, WE'VE BEEN REDUCING THE PERCENTILE RISK COVERAGE, UH, BASED OFF OF, UH, BASED OFF OF SOME ASSESSMENTS THAT SHOW THERE IS DECENT HEADROOM AVAILABLE OR ABILITY TO BRING, UH, RESOURCES ONLINE.
SO THERE ARE, UH, TO US, THERE MAY BE OFFS OR THERE MAY BE WAYS TO CONSIDER HOW THIS, UH, UH, HEADROOM CAN BE REASONABLY ACCOUNTED FOR.
BUT WE CERTAINLY RECOGNIZE, UH, THE BEHAVIOR WE SAW IN THE PAST MAY NOT, UH, MAY BE INFLUENCED BY WHAT CHANGES WE ARE MAKING.
SO, SO IT'S, IT'S, UH, IT'S A COMPLEX QUESTION THAT NEEDS ANSWERS, RIGHT.
EVEN FOR THE ECRS CHANGES AND STUFF WE MADE THIS YEAR MM-HMM.
AND, AND IF I COULD ADD TO THAT, IT, IT'S NOT JUST THAT.
SO, SO OBVIOUSLY WE HAVE TO TAKE THAT INTO ACCOUNT, SO I, I AGREE WITH YOU, BUT IT'S ALSO WHAT, WHAT ARE THE OTHER CHANGES THAT ARE HAPPENING IS HOW, HOW IS RTC GOING TO IMPACT COMMITMENT PATTERNS? HOW IS, AS WE GET TO, UH, YOU KNOW, NEXT YEAR, 30 40 GIGAWATTS OF SOLAR, HOW'S THAT GOING TO IMPACT, UH, COMMITMENT PATTERNS? SO I THINK YOU CAN'T JUST LOOK HISTORICALLY, YOU HAVE TO BE THINKING AHEAD.
UM, AND, AND THERE'S SOME CHALLENGES WITH THAT, BUT ALL, ALL THAT TO SAY, YEAH, I, I AGREE WITH THAT AND WE, WE NEED TO THINK MORE ABOUT THAT, ERIC.
SO I THINK MAYBE IN ADDITION TO THESE QUESTIONS WE SHOULD BE ASKING, UM, QUESTIONING MAYBE SOME OF THE ASSUMPTIONS OR EXPANDING YOUR POINTS ABOUT WHAT ARE THE ANCILLARY SERVICES FOR AND, AND HOW DO WE USE THEM.
[00:45:01]
WAS, UM, INTERESTING WAS, UM, PABLO VEGA'S PRESENTATION TO THE BOARD MEETING ABOUT ATTRIBUTES OF, OF SERVICES THAT ERCOT WANTS.AND I, I THINK IT MIGHT BE HELPFUL TO, TO DIG A LITTLE BIT DEEPER THAN THAT PRESENTATION DID, UH, AS WE THINK ABOUT DESIGNING THINGS.
SO, UM, TO BRIAN'S POINT EARLIER ON INERTIA, UM, YOU KNOW, IT'S JUST LIKE YOU HAVE CHANGES FOR, UM, FREQUENCY DEVIATIONS.
AT SOME POINT, MAYBE WE NEED THE RATE OF CHANGE OR FREQUENCY PRODUCT, RIGHT? UM, AND, UM, ARE THERE OTHER ATTRIBUTES THAT WE WANT ARE CHARACTERISTICS OR CAPABILITIES THAT WE WANT TO BUY? I, THE REASON I BROUGHT UP, UH, FIRM FUEL IS 'CAUSE WHILE WE DID THAT, BECAUSE THE LEGISLATION SAID TO, YOU KNOW, IF WE WERE TO THINK ABOUT IT AGAIN, UM, MAYBE WE WOULD THINK ABOUT, IT'S LIKE THE CAPABILITY TO GET THROUGH A MULTI-DAY WINTER EVENT, RIGHT? UM, SO THINKING ABOUT WHAT ATTRIBUTES WE NEED FROM OUR RESOURCE MIX, I THINK IT'S A MAYBE AN INTERESTING AND PRODUCTIVE WAY TO THINK THROUGH, UM, YOU KNOW, WHAT ANCILLARY SERVICES WE NEED IN WHAT QUANTITIES.
AND THEN THE SECOND SET THAT YOU TALKED ABOUT, I THINK THE IMM IS REFERRED TO THAT IN THEIR, UH, STATE STATES OF THE MARKET REPORTS AS, UM, UM, UNCERTAINTY.
AND SO AGAIN, WE'RE DOING SOMETHING UNCERTAINTY RELATED BECAUSE THE LEGISLATURE TOLD US TWO.
UM, BUT, UM, YOU KNOW, IF WE'RE TRYING TO MANAGE A LEVEL OF UNCERTAINTY, I THINK ONE OF THE WAYS THAT I WOULD LIKE TO THINK ABOUT IT IS WHAT'S THE MOST COST EFFECTIVE WAY TO DO THAT? UM, SO, UM, RATHER THAN, UM, YOU KNOW, SAYING WE NEED THIS QUANTITY OF THIS SERVICE, UM, THINK ABOUT IT FROM THE, THE NEED PERSPECTIVE TO SAY, WHAT LEVEL OF UNCERTAINTY DO WE HAVE WITHIN A 30 MINUTE TIMEFRAME VERSUS A DAY AHEAD TIMEFRAME VERSUS A FIVE DAY AHEAD TIMEFRAME? AND CAN IT BE CHEAPER TO MANAGE SOMETHING ON DIFFERENT TIMESCALES? UM, I DON'T KNOW IF THAT'S TRUE OR NOT, BUT I THINK THAT WOULD BE A HELPFUL WAY TO THINK IT THROUGH.
UM, AND I DON'T HAVE ANSWERS TO THESE QUESTIONS WITH INTENTION BECAUSE I THINK WE NEED TO ASK SOME OF THESE QUESTIONS IN ORDER TO GET TO INSIGHTS TO ANSWER SOME OF THESE QUESTIONS.
UM, SO MAYBE THEIR FIRST ORDER QUESTIONS.
UM, I, I THINK THE COMMISSION ASKING SOME OF THOSE QUESTIONS MIGHT BE HELPFUL, UM, ESPECIALLY AS THEY'RE THINKING THROUGH WHAT TO DO ABOUT THE RELIABILITY STANDARD.
I HAVE FOUR COMMENTS, UM, WE'LL TAKE NOTE OF IT.
DAVIDA, I THINK YOU'RE IN THE QUEUE NEXT.
SO THIS CONVERSATION IS GREAT.
THANK YOU ALL FOR BEING SO INTERESTED IN ASKING SUCH GOOD QUESTIONS.
ON THE QUESTIONS ABOUT TIMING AND FORUM.
ONE OF THE THINGS THAT I THOUGHT IT MIGHT BE HELPFUL FOR EVERYBODY TO BE REMINDED OF IS, UM, NOW ABSENT SOMEBODY SEEKING JUDICIAL REVIEW, THE ULTIMATE ARBITER ABOUT ANCILLARY SERVICE METHODOLOGY, WHICH DRIVES THE AMOUNTS PROCURED IS, IS THE PUC.
SO IF WE'RE TALKING ABOUT CHANGES MADE TO THE ANNUAL METHODOLOGY, OR, YOU KNOW, BIGGER CHANGES TO HOW TO DO THIS, INCLUDING PROTOCOL OR OTHER GUIDE REVISIONS, THOSE WILL GO TO THE PUC.
SO THAT'S SOMETHING TO KEEP IN MIND WHEN THINKING ABOUT WHAT'S THE FORUM.
WE'VE ALSO HEARD FROM, FROM THE CHAIRMAN AND OTHER COMMISSIONERS, THAT THERE'S A DESIRE TO, YOU KNOW, REALLY USE THE POWER OF ALL OF THE BIG BRAINS AND THE DIVERSE INTERESTS THAT ARE AVAILABLE THROUGH THE STAKEHOLDER PROCESS.
AND TO THE EXTENT POSSIBLE, BRING SOMETHING WITH SOME LEVEL OF, UM, CONSENSUS.
SO I THINK THAT THIS, THESE ARE BIG QUESTIONS AND, AND THEY ARE GONNA TAKE TIME.
AND, AND THAT'S ALSO PART OF WHY WE THINK THAT, YOU KNOW, THIS CAN'T BE JUST ADOPTED IN THE 2025 METHODOLOGY.
'CAUSE REMEMBER, THE GOAL IS TO TAKE THAT TO THE PUC IN OCTOBER SO THAT IF THEY HAVE ANY ISSUES OR CONCERNS AND REMAND IT, TECH CAN STILL ADDRESS, THE BOARD CAN STILL ADDRESS, AND IT WOULD STILL BE DONE BY JANUARY OF NEXT YEAR.
SO THAT'S PART OF THE, THE TIMING CONSIDERATIONS THAT WE'RE FACING.
BOB HILTON, YOU'RE IN THE QUEUE.
[00:50:01]
ALL THESE DECISIONS WE'RE SPENDING A LOT OF TIME, WHICH IS OF COURSE APPROPRIATE, TALKING ABOUT THE EFFECTS ON THE HOTEL MARKET AND HOW THAT GOES.UH, AND TRADITIONALLY THAT'S PRETTY MUCH IN THE METHODOLOGY LOOKED AT 'CAUSE OF THE WAY WE DO IT, IT, BUT HOWEVER, WHAT WE'RE MAKING THESE DECISIONS NOW WITH SOME OF THE PROPOSALS I SEE ON THE TABLE, THEY COULD HAVE A PROFOUND EFFECT ON THE RETAIL MARKET.
AND THE REASON I SAY THAT IS I LOOK AT RETAIL PROVIDERS AS BASICALLY INSURANCE COMPANIES.
THEY PROVIDE RISK ASSESSMENT, RISK RISK INSTEAD OF REALLY SELLING ELECTRICITY IN MY MIND.
BUT, UH, WITH BASICALLY GOING BACK AND LEANING ON R WHICH EVEN DRRS WAS DESIGNED TO GET AWAY FROM THAT TO REDUCE SOME OF THE RISK.
BUT MORE IMPORTANTLY, BY TRYING TO LOWER WHAT YOU'RE BUYING THAT YOU'RE, SAY YOU'RE BUYING AT THE BEGINNING OF THE YEAR AND INCREASING THE RISK THROUGHOUT THE YEAR OF WHAT YOU'RE BUYING COULD HAVE PROFOUND EFFECTS ON THE RISK PROFILE THAT EPS WOULD HAVE, WHICH WOULD TURN INTO, UH, POTENTIAL, UH, INCREASES IN THE, THE, UH, FIXED PRICE CONTRACTS THAT'S GOING ON.
SO I THINK THAT WE NEED TO LOOK AT THIS IN THOSE ASPECTS MORE HOLISTIC, AND I WAS CURIOUS ON HOW YOU'RE GONNA THINK ABOUT THAT AS WE MOVE THROUGH THIS PROCESS.
BOB, UH, YOU BRING UP A A A FAIR POINT.
THIS HAS BEEN SOMETHING IN THE BACK OF OUR MINDS ALSO, UH, WHEN WE, UH, UH, AS WE TALK THROUGH, UH, THIS PARTICULAR RECOMMENDATION.
AND PARTLY THAT'S WHY WHEN I, MAYBE I'LL SWITCH.
WHEN, WHEN YOU SEE ME TALK ABOUT THIS NEXT SLIDE, YOU WILL FIRST HEAR ME SAY, THIS IS ANOTHER ONE WHERE WE DO THINK WE NEED TO EXAMINE THE TRADEOFFS VERY CAREFULLY BETWEEN, UH, UH, BETWEEN WHAT THE, HOW WE CAN IM, UH, UH, SET THE, AS QUANTITIES THAT APPROPRIATELY REFLECT THE RELIABILITY RISKS.
AND, UH, AND, UH, AND WE OUT SOME OF THESE OTHER IMPACTS THAT YOU MENTIONED, UH, THAT MAY POTENTIALLY OCCUR TO THE RETAIL MARKET, UH, AS A RESULT, UH, OF NOT CLEARLY KNOWING WHAT IS THE QUANTITY OF AS WE'LL BE PROCURING.
SO, SO THERE IS DEFINITELY A A, THAT IS ANOTHER ONE OF THOSE TOPICS THAT WE DO WANT TO COME AND HAVE A, A, A, A DISCUSSION ON TO US, WHAT WE ARE SEEING, AT LEAST FROM OUR LENSES AS OUR FLEET OF, UH, REALLY RIGHT NOW, SOLAR, UH, IS GROWING.
THE, UH, AS THE WEATHER FRONTS MOVE THROUGH ANCILLARY SERVICE REQUIREMENT NEEDS ON CERTAIN DAYS CAN BE DRASTICALLY DIFFERENT FROM THE REST OF THE MONTH.
AND HOW DO WE CAPTURE THAT RISK APPROPRIATELY, UH, IN THE, IN THE METHODOLOGY THAT WE SET OUT IN DECEMBER IS A QUESTION, UH, THAT, THAT BROUGHT US TO THIS, UH, UH, TO THIS SORT OF, UH, UH, RECOMMENDATION.
UH, ESSENTIALLY WE'RE TRYING TO POINT OUT THAT, UH, AS OUR FOOTPRINT'S CHANGING, AS THE RISKS ARE EVOLVING, UH, THE RISKS ON CERTAIN DAYS ARE DRASTICALLY DIFFERENT, HOW DO WE ACCOUNT FOR, HOW DO WE SET UP OUR METHODOLOGY TO ACCOUNT FOR THOSE, UM, UH, AND POTENTIALLY, UH, HOW DO WE GET EFFICIENT ABOUT SETTING OUR QUANTITIES? SO I'LL PAUSE WITH THAT.
YEAH, ERIC, YOU WANNA FOLLOW UP? SURE.
SO I THINK THIS IS A GOOD IDEA ON ITS FACE, AND IT COULD LEAD TO A LOW, LOWER OVERALL COST TO THE MARKET BECAUSE YOU'RE NOT TRYING TO COVER THINGS EVERY DAY THAT YOU MIGHT HAVE TO ON AN ANNUAL BASIS.
UM, TO BOB'S POINT EARLIER, I CAN SEE THIS BEING A POTENTIAL IMPACT ON THE RETAIL MARKET.
AND SO IF THE DYNAMIC METHODOLOGY WAS SOMETHING THAT WAS DETERMINED ON, YOU KNOW, AN ANNUAL BASIS MM-HMM,
UNDERSTOOD THAT, THAT SEEMS FAIR.
THERE IS A CUE I JUMPED OVER NED TO GET ERIC IN.
SO MAYBE LET'S START WITH NED AND THEN I'LL TAKE YOU, UH, BLAKE.
UM, SO I, I WANT TO ECHO SOME OF THE COMMENTS THAT I'VE HEARD ABOUT, UM, YOU KNOW, THE IMPORTANCE OF BEING FORWARD LOOKING AND NOT OVERLYING ON HISTORICAL ANALYSIS BECAUSE, YOU KNOW, I THINK WE'VE, THIS IS PROBABLY A BROKEN RECORD FOR THIS GROUP, BUT YOU KNOW, YOU DON'T, YOU KNOW, YOU DON'T DRIVE LOOKING OUT THE BACK, UH, THE REAR VIEW WINDOW.
YOU DON'T INVEST IN POWER PLANTS BASED ON THE PEAKER NET MARGIN, UH, INDICATORS, RIGHT? YOU KNOW, BACKWARDS LOOKING IS A, IS A GOOD INDICATOR, IT'S A GOOD IN, UH, INDICATOR TO SEE, BUT IT'S NOT SOMETHING TO, YOU KNOW, TO MANAGE BASED OFF OF.
SO, UM, YOU KNOW, I THINK THAT'S A REALLY IMPORTANT CONSIDERATION, UH, IN, IN, YOU KNOW, KIND OF CAVEATING THAT I AM CURIOUS HOW, YOU KNOW, HOW YOU WOULD THINK ABOUT ADDRESSING THAT.
IS IT A STATISTICAL ADJUSTMENT OR IS IT MORE OF A MANAGERIAL INSIGHT AND KIND OF SEEING DIFFERENT TRENDS AND HOW DO YOU PUT THOSE TOGETHER? PERHAPS THE FRAMEWORK THAT ARCOT IS, IS DEVELOPING WILL, WILL HELP ALONG THOSE LINES.
UM, BUT THE, YOU KNOW, WHEN WE START THINKING
[00:55:01]
ABOUT WHAT ATTRIBUTES WE WANT THE FLEET TO HAVE TO, TO ERIC'S COMMENT EARLIER AND, AND ALSO TO THAT FRAMEWORK QUESTION, YOU KNOW, IT, IT DOES ALSO RAISE BROADER QUESTIONS ABOUT JUST RESOURCE ADEQUACY.WHAT DO YOU WANT THE TOTAL FLEET TO BE ABLE TO, TO PROVIDE, AND NOT JUST, YOU KNOW, WHAT ARE THE OPERATING RESERVES THAT YOU NEED FOR INDIVIDUAL CONTINGENCIES? YOU KNOW, YOU START TALKING ABOUT WHAT KIND OF, UH, QUALITIES DO YOU NEED FOR THE TIMES WHEN THE ZERO MARGINAL COST RESOURCES DON'T ALIGN WITH THE MARKET DEMAND? UH, BUT YOU KNOW, THEY MAY, YOU KNOW, THEY MAY CREATE DISINCENTIVES FOR DISPATCHABLE GENERATION THROUGHOUT THE, THE REST OF THE YEAR, RIGHT? BECAUSE THEY HAVE LOWER COSTS AND SO SCED FAVORS THEM.
UM, PURE CHAPTER 35 HAS A, A SECTION THAT, OR A COMMAND THAT, YOU KNOW, THE ANCILLARY SERVICES LOOK AT HOW THEY'RE ABLE TO PROVIDE THE ADEQUATE INCENTIVES TO DISPATCHABLE GENERATION.
SO I THINK THAT'S ANOTHER THING TO WORK INTO THIS ANALYSIS IS HOW DO THOSE THINGS ALL WORK TOGETHER? AND OBVIOUSLY THE PUC IS, IS, YOU KNOW, DISCUSSING THEIR RELIABILITY STANDARD RULE MAKING TOMORROW.
SO THAT'S GONNA, UH, PLAY INTO THIS, UH, AS WELL CRITICALLY AND CREATE SOME, SOME FRAMEWORK AND PROCESS AROUND IT.
UM, BUT IT JUST, IT SEEMS LIKE ALL THESE DIFFERENT, UH, UH, TOPICS KIND OF COALESCE.
APPRECIATE THE FEEDBACK AND COMMENTS.
I WAS INITIALLY GONNA COMMENT ON THIS SLIDE, BUT WANNA SAY PLUS ONE TO, TO NED THERE, UH, SLIDES 10 AND 11 IN THIS DECK.
FORWARD LOOKING RISK IS SOMETHING THAT WE DEFINITELY NEED TO INCORPORATE.
UH, AND JUST AT A HIGH LEVEL, SOLVING FOR SYSTEM NEED FIRST AND COST AS A SECOND, SECOND ORDER TYPE OF DECISION IS, IS SOMETHING WE WOULD SUPPORT AS WELL.
BUT GETTING TO, UH, THIS RECOMMENDATION TOO, IN TERMS OF, UH, A MORE REAL TIME APPROACH OF DETERMINING, UM, THE AS PLAN, I THINK WHAT WOULD BE INFORMATIVE TO US IS UNDERSTANDING HOW WIDE THAT BAND WOULD BE IN TERMS OF MINIMUM MAXIMUM.
AND THEN ALSO, ARE WE NORMALLY SOLVING FOR EXPECTED, WHICH I WOULD, I IMAGINE WOULD BE SOMEWHERE IN THE MIDDLE, OR ARE WE NORMALLY SOLVING FOR MINIMUM MM-HMM,
I THINK THAT WOULD BE INFORMATIVE FOR US.
I, I THINK AT, AT THE HIGHEST LEVEL, UH, YOU KNOW, CLOSE THE REAL TIME THAT YOU'RE DETERMINING THAT IS, IS MORE RISK, UH, THAT WE'RE HAVING TO CONSIDER.
AND SO TAILORING THOSE AMOUNTS OR MAKING THEM A CLOSER BAND WOULD, WOULD MINIMIZE THAT RISK.
THANKS, WE APPRECIATE THAT FEEDBACK.
CERTAINLY THINGS WE CAN, UH, ACCOUNT FOR AS WE GO FURTHER ON THIS.
UM, SO I WANT TO ECHO WHAT BOB HAD SAID AND ERIC HAD SAID ABOUT THE, UM, CERTAINTY THAT YOU PROVIDE FOR THE RETAILERS.
UM, THERE IS, UH, A LOT OF, UM, TROUBLE FOR RETAILERS IF THE, UH, AS QUANTITY CHANGES QUITE A BIT AND IT IS MUCH CLOSER TO REAL TIME, IT'S HARDER TO, UH, SO, BUT I ALSO SEE THE NEED FOR LOOKING AT, UH, THE REDUCING THE COST.
SO INSTEAD OF JUST LOOKING AT THE TOTAL MEGAWATT REDUCTION, UH, LIKE WHEN YOU ARE BUYING LOT OF MEGAWATTS IN THE NIGHT, THE PRICE OF DAN SOLAR SERVICE IS ALSO NOTHING.
SO MAYBE ANOTHER WAY TO LOOK AT IT IS THE, UH, WHERE IS IT IMPACTING THE MOST AND THEN REDUCE IT THAT WAY.
IT, YOU DON'T NECESSARILY NEED TO REDUCE THE AMOUNT AND COST THAT DRASTIC VARIATION, THE REPS CAN HAVE BLOCK PROCUREMENTS.
UH, ANOTHER, UH, CONSIDERATION FOR THIS IS, UM, IT'S, IT'S, YOU ARE ACCURATELY IDENTIFYING THAT THE EXCEPTIONAL EVENTS CAN DRIVE, UM, UH, PROCUREMENT QUITE A BIT.
UH, SO, UH, ONE WAY TO CONSIDER THAT IS TO SAY, LOOK AT 90TH PERCENTILE EVENTS AND OR LOOK ONLY BELOW 90TH PERCENTILE EVENTS AND, UH, DETERMINE THE QUANTITY BASED ON THAT.
AND THEN UPDATE, UH, IT MAYBE THREE DAYS BEFORE, FOUR DAYS BEFORE OR A WEEK BEFORE FOR THE LAST 10 PERCENTILE.
THAT WAY, UH, YOU ARE NOT LIKE CAUSING A BIG VARIATION BETWEEN 60 PERCENTAGE AND A HUNDRED PERCENTAGE, BUT MORE LIKE REASONABLE DIFFERENCE.
SO WHAT YOU'RE SAYING IS THAT SORT OF AN APPROACH MEANS YOU ARE STILL, YOU MAY BE ADJUSTING QUANTITIES AND BUYING MORE ON A FEW DAYS.
NOT AS LOW AS WHAT WE DO TODAY ON A FEW DAYS, BUT I, YOU MAY, YOU WOULD LIKELY PREFER THAT OVER CHANGING QUANTITIES ON ALMOST DAILY BASIS.
NOW WE'VE EXPLICITLY, AT LEAST IN OUR MIND WHEN WE'VE BEEN THINKING ABOUT THIS FRAMEWORK, COST OF AS HAS NOT BEEN OUR, OUR PRIMARY CONCERN,
[01:00:01]
THE RISKS THAT WE SEE FOR WHICH WE NEED THIS CAPACITY IS WHAT'S BEEN DRIVING ALL OF THE ANALYSIS.JUST SOMETHING I WANTED TO CLARIFY, UH, AT LEAST, UH, ECHO WHAT YOU WERE SAYING, BLAKE AS WELL, IS IN THE BACK OF OUR MINDS RIGHT NOW, IT IS MORE TIED TO WHAT OPERATIONAL RISKS AND WE SEE AND WHAT RESERVES WE MAY NEED.
ERIC, YOUR NEXT, I'M SORRY, BEFORE WE GO TO ANOTHER QUESTION I WANNA POINT OUT ABOUT THE TIME.
UM, I THINK YOU COULD HAVE ABOUT 10 MORE MINUTES AND THEN WE CAN GO TO IMM.
SO IT'S KIND OF UP TO YOU HOW YOU WANT TO USE IT, I GUESS.
AND WE CAN, WE HAVE TIME FOR QUESTIONS? WE CAN HOLD IT.
I'VE GOT TWO MORE PEOPLE IN THE QUEUE.
LET'S TAKE YOU ALL, 'CAUSE I THINK I JUST HAVE TWO MORE SLIDES IF I'M CORRECT.
JUST THINKING THROUGH THE RETAIL QUESTION ON THIS SLIDE, YOU KNOW, IF I WAS MANAGING A RETAIL PORTFOLIO, MAYBE I WOULD WANT TO TRY TO COVER THIS DYNAMIC QUANTITY WITH SOME SORT OF CALL OPTION.
AND I WONDER IF THAT'S, UH, SOMETHING SIMILAR TO HOW ERCOT COULD STRUCTURE THIS AS WELL AND MAYBE A, A NEW WAY TO PROCURE THE DYNAMIC ANSWERING SERVICES.
I'M JUST, JUST A THOUGHT IT MIGHT BE A WAY TO LINE UP THE WHOLESALE AND RETAIL INCENTIVES IF WE WERE TO THINK THROUGH PROCUREMENT IN A DIFFERENT WAY.
PROBABLY I WILL TAKE THAT AND DO FOLLOW UPS WITH YOU, ERIC, UH, BRIAN, YOUR NEXT, UH, THIS COMMENT IS ABOUT CREDIT.
I'M JUST CURIOUS IF YOU'RE WAITING TO, UH, STATE THE AMOUNT OF ANCILLARY SERVICES TO SOMETHING THAT'S CLOSER TO REAL TIME AND YOU'RE INCREASING, IT'S GONNA HAVE A CREDIT IMPACT AND JUST TO, TO MAKE SURE YOU'RE EVALUATING THAT, UH, AS YOU'RE THINKING ABOUT SOMETHING THAT'S MORE DYNAMIC.
SO I'LL HOLD THE CON THE QUESTIONS RIGHT HERE.
WE'VE SORT OF ALREADY DISCUSSED A LOT, UH, ON THE SLIDE.
SO, UH, REALLY THERE IS, UH, I THINK THE ROOM AT LEAST, UH, DOES UNDERSTAND WHAT, UH, WHAT WE ARE LOOKING TO SUGGEST HERE.
SO I'M GONNA KEEP MOVING FORWARD 'CAUSE I, I THINK THAT, LIKE I SAID, MY NEXT TWO SLIDES WERE MOSTLY ABOUT, UH, THE NEXT PRESENTATION THAT YOU WILL HEAR.
AND, UH, WE WANTED TO CALL OUT A FEW THINGS, UH, AS YOU GET INTO START, UH, CONSIDERING THE, THE WORK THAT THE IMMM IS ABOUT TO SHARE WITH YOU.
UH, THE, THE, THE GIST OF THE WORK, UH, CERTAINLY SEEMS TO BE THAT THERE ARE WAYS, UH, WHERE WE COULD USE A PROBABILISTIC APPROACH AND REDUCE THE QUANTITIES OF AS WE PROCURE.
WE DO WANT TO NOTE THAT MUCH OF THE REDUCTION IN THE AS QUANTITIES THAT YOU WILL SEE IN THE IMMS ANALYSIS ARE NOT DUE TO BETTER ANALYTICS, BUT DUE TO MODIFYING SOME OF THE POLICY DECISIONS, UH, IN A WAY THAT END UP DRIVING LOWER, UH, COSTS.
SO IF WE USE THOSE SAME, UH, UH, POLICY DECISION, MODIFIED POLICY DECISIONS IN OUR CURRENT METHODOLOGY, LIKELY YOU WOULD SEE LOWER QUANTITIES EVEN RIGHT NOW.
NOW WHAT ARE THOSE SPECIFIC POLICY DECISIONS? UH, ONE IS, UH, UH, UH, THAT, UH, UH, THAT, UH, IS AROUND EXPECT PERIODIC EMERGENCY OPERATIONS.
SO THE FUNDAMENTAL CRITERIA THAT THE IMM IS USING TO DETERMINE AS QUANTITIES IS TIED TO AVOIDING LOAD SHED, WHEREAS AS, AS I NOTED EARLIER, ERHART INTENTIONALLY INCREASED IT'S SAY AS QUANTITIES, UH, TO USE A CRITERIA OF AVOIDING THE POTENTIAL OF ENTERING AN EMERGENCY OPERATIONS CONDITIONS.
SO IF, IF YOU CHANGE THE CRITERIA, UH, YOU DO RISK, UH, UH, GETTING MORE, UH, GETTING CLOSER TO THAT, UH, EMERGENCY OPERATIONS PERIOD MORE SO.
NEXT ONE IS INCREASE THE USE OF R RATHER THAN PROCURING AS.
UH, SO IF YOU LOOK AT THE METHODOLOGY THAT THE IMM IS PROPOSING, SPECIFICALLY LOOKING INTO NONS SPIN, UH, THEY DO SUGGEST COVER THE RISK OF ONE HOUR TIMEFRAME, UH, UH, OF NETWORK FORECAST ERRORS THAT OCCUR WITHIN THE ONE HOUR PERIOD.
IN THE AS METHODOLOGY, UH, CONTRAST IS WE ARE THE CURRENT METHODOLOGIES AT SIX HOUR LEAD TIME.
THE, UH, BUT THE IMM SUGGESTS IF YOU HAVE, UH, UH, PROLONGED EVENTS, YOU CAN USE A R TO COVER THE, UH, COVER THE, UH, COVER THE CAPACITY NEEDS, UH, THAT YOU MAY HAVE.
AND LASTLY, RELY ON NON-ED RESOURCES FOR RELIABILITY SERVICES.
ANOTHER THING THAT IS STRONGLY EMBEDDED INTO THAT ANALYSIS IS TAKING ADVANTAGE OF HEADROOM FROM ALL RESOURCES THAT DON'T HAVE OBLIGATION TO BE AVAILABLE.
NOW, HISTORICALLY, AS I'VE MENTIONED, ERCOT HAS SET AS QUANTITIES BASED OFF AN ESTIMATION OF RISK.
THIS APPROACH TO US GUARANTEES THAT THE RIGHT OPERATIONAL CHARACTERISTICS WILL BE AVAILABLE, UH, AND WE DON'T RELY ON PAST ACTION OR BEHAVIORS, UH, BECAUSE WE DON'T KNOW IF THEY WILL OR WILL NOT CONTINUE.
SO, SO AS NED PUT IT, WE, WE ARE NOT, WE ARE NOT LEARNING FROM STRICTLY FROM THE, UM, HINDSIGHT, UH, SO TO OUR, IN OUR MINDS, ANY, UH, ANY POLICY DECISION, UH, BE IT, UH, UH, UH, TIED TO ANY OF THESE THREE
[01:05:01]
ASPECTS, BE IT INCREASING EMERGENCY OPERATIONS, THE USE OF RAC OR THE USE OF, UH, HISTORIC HEADROOM SHOULD BE, UH, SHOULD BE SOMETHING THAT MUST BE EXPLICITLY CONSIDERED AND AND DECIDED UPON BY STAKEHOLDERS AND POLICY MAKERS.UH, AND THAT'S WHAT WE ADVOCATE IN ALL OF THE WORK THAT WE ARE DOING, UH, IN, IN OUR, IN OUR RECOMMENDATIONS.
UH, THERE ARE, I MEAN, I'VE, I'VE GOT CALL OUTS TO SPECIFIC PLACES.
UH, I MEAN, THERE CERTAINLY YOU WILL SEE, UH, UH, THE, THE IMMS PROPOSING TO USE A PROBABILISTIC ANALYSIS OF RISK, AND WE AGREE WITH THEM.
WE ARE GENERALLY SUPPORTIVE OF THAT IDEA.
BUT WE DO THINK THERE ARE QUESTIONS, UH, AROUND THE MODELING ITSELF THAT REQUIRE CAREFUL CONSIDERATION AND DIRECTION.
UM, AND WE CAN'T IN, UH, AND WE DON'T, UH, THINK IT'S APPROPRIATE TO INTRINSICALLY ASSUME A, A PARTICULAR ANSWER, UM, UH, IN THOSE REGARDS, UH, THAT, UH, THE EVENT CRITERIA THAT THE IMMS USING IS FIRM BLOOD SHARED.
UH, UH, AGAIN, TO US THAT'S AN OPEN QUESTION.
UH, WE AGREE WITH, UH, I THINK THE IMM AND US ARE ON THE SAME PAGE THAT WE MAY BE ABLE TO, UH, WE MAY BE ABLE TO, UH, GET MORE BENEFITS, UH, BY PROCURING QUANTITIES CLOSER TO REAL TIME.
UH, I, I THINK WE'VE SPENT A LOT OF TIME TALKING ABOUT THAT PARTICULAR TOPIC HERE AS WELL.
IT'S A, IT'S A POINT THAT WE WERE, WE, THAT WE SHOULD CONTINUE DISCUSSING ON BEFORE WE MAKE ANY RECOMMENDATIONS OR TRANSITIONS TO CHANGE.
THERE IS A, UH, THE IMM DOES COMMENT ON THE DURATION REQUIREMENTS FOR ENERGY STORAGE.
WE CONSIDER THAT, UH, WE ALSO, WE AGREE THAT DURATION IS A IMPORTANT TOPIC THAT TO TALK THROUGH, UM, CERTAINLY IN THE LIGHT OF THE SYSTEM CHANGES THAT ARE BEING TEED UP.
UH, AND WE THINK IT SHOULD BE THAT ANSWERING THAT QUESTION IS SOMETHING THAT WE SHOULD ALL TAKE UP, UH, AT THE APPROPRIATE TIME.
UH, AND I THINK SOME OF THESE ARE, AGAIN, UH, ITERATING THE SAME POINTS.
IF YOU START LOOKING AT THEIR METHODOLOGY, UM, IT, THEY, THEIR APPROACH OF HOW FORCED OUTAGES SHOULD BE ACCOUNTED FOR SEEMS TO BE LIMITED TO OUTAGES THAT OCCUR WITHIN THE REAL TIME.
AND, AND THEY, I DON'T THINK THEY SEE A NEED FOR, UH, ACCOUNTING FOR CUMULATIVE, UH, EVENTS THAT MAY IMPACT OVERALL CAPACITY NEEDS.
UM, TO US, THOSE ARE TYPES OF QUESTIONS THAT SHOULD BE CAREFULLY CONSIDERED, UM, IN THIS MODELING ASSUMPTION AND ARE OPEN QUESTIONS.
UH, LET ME SEE IF THERE'S ANY OTHER THAT IS WORTH HIGHLIGHTING.
YEAH, SO THE, CERTAINLY ONE OTHER PLACE WHERE WE ARE DRASTICALLY DIFFERENT IS THE IDEA OF COVERING ONLY ONE HOUR AHEAD RISK, UH, UNDER ANNOUNCEMENT.
UM, TO US, THE, THE SIX HOUR AHEAD CAME FROM THE LAST TIME THE CONTROL ROOM HAD, UH, TWO, UH, RA UNIT ON DURING TIGHT OPERATING CONDITIONS.
UH, IT IS A, UH, WE UNDERSTAND THE PERSPECTIVE THE IMM IS MAKING, BUT WE THINK THERE IS A, UH, THAT, UH, WE, THE IMPLICATIONS OF MAKING SUCH A CHANGE SHOULD BE CAREFULLY CONSIDERED.
AND I WILL ACTUALLY SWITCH TO SUMMARY WITH THAT.
HOPEFULLY I DID IT WITHIN MY 10 MINUTES.
UH, THERE'S NOT MUCH NEW HERE, UH, IN TERMS OF MY SUMMARIES.
WE ARE NOT, AT THIS TIME, AT LEAST, WE WERE NOT RECOMMENDING ANY NEW ADDITIONAL PRODUCTS.
WE CONTINUE TO, UH, RECOMMEND MONITORING SOME, UH, SOME KEY TRENDS IN CASE OF INERTIA AND, UH, LOAD GROWTH.
UM, WE ALSO CONTINUE TO RECOMMEND THAT THE FREQUENCY CONTROL RELATED AS SHOULD BE, UH, SET QUANTITIES FOR THOSE SHOULD BE SET BASED OFF OF, UH, THE, UH,
BUT WE SHOULD RE UH, WE SHOULD CONSIDER EXPLORING, UH, FULL STATISTICAL ANALYSIS FOR SETTING, UH, QUANTITIES RELATED TO THE NON FREQUENCY RECOVERY PORTION OF ECRS AND NONS SPIN.
UH, WE'VE TALKED ABOUT THIS ALREADY FROM A TIMELINE PERSPECTIVE.
UH, THIS PARTICULAR, UH, ANY CHANGE, UH, UH, IN THE QUANTITY DETERMINATION METHODOLOGY WILL REQUIRE SOFTWARE DEVELOPMENT AND AT OUR END AND ANSWERING OF QUESTIONS, UH, AROUND POLICY DECISIONS, UH, AND APPROACHES, UH, IN CASE OF GROWTH, UH, TYPE ISSUES.
SO WE DEFINITELY DON'T SEE BEING ABLE TO INCORPORATE THAT IN 2025.
UH, REGARDING THE IMS ANALYSIS, UH, COURT AGREES WITH THEM, UH, UH, ON A, USING A PROBABILISTIC FRAMEWORK, UH, BUT NOTES THAT THE, THE MUCH OF THE REDUCTION IS TIED TO, UH, TIED TO POLICY DECISION, UH, ALTERING, UH, UH, OUTCOMES OF THE POLICY DECISIONS, UH, OR DEVIATING FROM POLICY DECISIONS AS WE UNDERSTAND THEM TODAY.
UM, WE SHOULD, UH, IN OUR PERSPECTIVE, THOSE SHOULD BE EXPLICITLY CONSIDERED AND DISCUSSED WITH STAKEHOLDERS, SO I'LL AND POLICY MAKERS.
[01:10:01]
QUESTIONS? YES, BRIAN, I, I, I THINK OF, UM, ERS AS BEING A QUASI ANCILLARY SERVICE, AND I JUST, I DIDN'T SEE ANY, UM, DISCUSSION OF THE USE OF IT IN THIS DECK.YEAH, WE, UH, EVERYTHING THAT'S NOT PROCURED BY DAM AND OUR PERSPECTIVE CONTINUES TO BE AS IS, UH, AND ERS SORT OF FELL IN THAT BUCKET, BUT WE'LL CERTAINLY GO BACK AND THINK THROUGH AS WE THINK ABOUT OUR STUDY WORK, IF WE SHOULD MENTION, UM, PERSPECTIVES ON HOW THOSE PRODUCTS CAN HELP.
I THINK IT JUST KIND OF TIES TO THE POINT ABOUT, UM, WHEN IT'S DEPLOYED AND HOW IT'S USED AND HOW YOU CREDIT IT.
ANY OTHER THOUGHTS OR FEEDBACK FOR US? AWESOME.
[3. Presentation Andrew Reimers, IMM]
YOU ARE UP.HOW'S EVERYBODY DOING? WELL, I GUESS IT'S OUR TURN.
AND, UH, SO YEAH, WE'LL BE PRESENTING ON OUR, UH, CO COLLABORATION, OUR CONTRIBUTION TO THE ANCILLARY SERVICE STUDY.
FOR THOSE OF YOU WHO HAVEN'T MET ME BEFORE, I'M ANDREW REIMERS.
I'M THE DEPUTY DIRECTOR OF THE ERCOT IMM.
SO A LOT OF THIS WILL BE STUFF THAT WAS ALREADY COVERED BY ERCOT.
THE MAIN THING TO ADD HERE IS THAT THE MAIN CONTRIBUTION WE'RE TRYING TO BRING TO THE, UH, ANCILLARY SERVICE STUDY THAT IS COLLABORATION BETWEEN ERCOT, THE PUC AND THE IMM IS A KIND OF STOCHASTIC FRAMEWORK, UH, FOR EVALUATING THE PROCUREMENT VOLUMES FOR THE DIFFERENT ANCILLARY SERVICE PRODUCTS THAT TAKES INTO ACCOUNT THE KIND OF RANDOM AND PROBABILISTIC NATURE OF THE RISKS THAT THE DIFFERENT PRODUCTS ARE MEANT TO ADDRESS.
UH, AS NITKA MENTIONED, THERE ARE ALSO SOME DIFFERENCES IN PERSPECTIVE ON, UH, YOU COULD SAY POLICY QUESTIONS RELATED TO WHAT THE ANCILLARY SERVICE PRODUCTS ARE MEANT TO ADDRESS.
AND WE'LL DISCUSS ALL OF THAT IN THIS PRESENTATION.
UH, SO WHAT IS, WHAT ARE THESE DIFFERENT ANCILLARY SERVICES? WHAT DO THEY DO? NATIKA COVERED MOST OF THIS, BUT I'LL REITERATE OUR PERSPECTIVE, PARTICULARLY ON ECRS AND NONS SPIN.
OUR, OUR ANALYSIS HERE ONLY REALLY COVERS ECRS AND NONS SPIN ECRS IS A 10 MINUTE RESERVE PRODUCT.
THAT MEANS IT HAS TO GO FROM BEING RESERVES TO BEING ENERGY WITHIN 10 MINUTES.
NONS SPIN IS SIMILAR AND IT IS A 30 MINUTE PRODUCT.
AND BOTH THESE PRODUCTS, MORE OR LESS ON DIFFERENT TIMESCALES ARE MEANT TO ADDRESS, UH, THE PROBABILITY OF FORCED OUTAGES OR NET LOAD FORECAST UNCERTAINTY AND THE KIND OF RISKS, UH, INHERENT IN BOTH OF THOSE TYPES OF UNCERTAINTIES.
THE MAIN PROPOSITION THAT WE'RE MAKING WITH REGARD TO THE ANCILLARY SERVICE METHODOLOGY HERE IS THAT SINCE THE RISKS THAT THESE PRODUCTS ARE MEANT TO ADDRESS ARE THEMSELVES RANDOM AND PROBABILISTIC, A STOCHASTIC METHODOLOGY MIGHT DO A BETTER JOB AT EFFICIENTLY SETTING THE PROCUREMENT VOLUMES FOR ADDRESSING THESE ERRORS.
AND, UH, IN CONTRAST TO ERCOT CURRENT METHODOLOGY, WHICH IS A DETERMINISTIC METHODOLOGY AND IS PRIMARILY BASED ON THE NET LOAD FORECAST ERROR, WE'RE ALSO INCLUDING KIND OF THE EXPECTED VALUE OF RISK ASSOCIATED WITH FORCED OUTAGES.
AND SO IN THAT RESPECT, IT ACTUALLY IS A LITTLE LESS CONSERVATIVE THAN THE ERCOT METHODOLOGY, BUT LIKE A LOT OF THE THINGS SHE REFERENCED, THERE ARE OTHER WAYS IN WHICH IT IS MAYBE, UH, LESS CONSERVATIVE.
SO TO START WITH THE RESULTS AND THEN DIG INTO THE DETAILS, UH, WE AGREE WITH ERCOT THAT ONE OF THE GOALS OF ALL OF THIS IS TO INCORPORATE A MORE PROBABILISTIC, UH, METHODOLOGY INTO THE AS PROCUREMENT POLICIES.
UH, WE WOULD ARGUE THAT IF THAT WAS DONE AND ON TOP OF, UH, MAYBE REDEFINING KIND OF THE TIME HORIZONS OVER WHICH THE RISKS ARE MEANT TO BE ADDRESSED OR WHAT HAVE YOU, YOU CAN END UP WITH A PRETTY SUBSTANTIAL REDUCTION IN THE AMOUNT OF ECRS AND NONS SPIN THAT THE METHODOLOGY RECOMMENDS TO PROCURE.
[01:15:01]
SEEING THAT YOU COULD MAINTAIN A ONE IN 10 RELIABILITY STANDARD WITH AS MUCH AS A 50% REDUCTION IN ECRS AND A 35% REDUCTION IN NONS SPIND.UH, RECALL THAT SINCE 2021, THERE'S BEEN A PRETTY SIZABLE INCREASE IN THE TOTAL AMOUNT OF RESERVES BEING PROCURED BY ERCOT.
SO THESE NUMBERS MIGHT SOUND PRETTY LARGE, BUT WHEN COMPARED TO HOW MUCH OF AN INCREASE IN PROCUREMENT THERE HAS BEEN, THAT SORT OF SPLITS THE DIFFERENCE SOMEWHAT.
AND LIKE NETIKA SAID, SOME OF THAT INCREASE HAS BEEN DUE TO INCREASES IN SYSTEM CONDITIONS.
SO THE GEN MIX HAS CHANGED, THE LOAD HAS GROWN.
SO THOSE ARE BOTH THE REASONS WHY YOU WOULD EXPECT THE AS VOLUMES TO GO UP.
FUNDAMENTALLY, UH, THE METHODOLOGY ITSELF HAS ALSO LED TO A LOT OF THAT INCREASE.
IF WE WANTED TO MAINTAIN A MORE CONSERVATIVE RELIABILITY STANDARD, SO SAY A ONE IN 20 LOLP, WE COULD STILL DO SO WITH A PRETTY SIGNIFICANT REDUCTION IN ECRS AND NONS SPIN 40% AND 20% RESPECTIVELY.
OF COURSE, THESE ARE A BACKCAST, UH, WE'RE LOOKING AT HISTORICAL CONDITIONS AND THEN SEEING WHAT THE RELIABILITY IMPACT WOULD'VE BEEN HAD THE, AS PROCUREMENT TARGET BEEN SOMEWHAT LOWER.
WE RECOGNIZE THAT FOR PRODUCING A FUTURE LOOKING AS METHODOLOGY, WE WOULD NEED TO, UH, INCORPORATE HOW THE GIN MIX AND LOAD AND THINGS LIKE THAT ARE EXPECTED TO CHANGE OVER TIME.
AND SO WE'RE STILL WORKING ON HOW WE CAN USE OUR METHODOLOGY, BUT INCORPORATE SOME OF THOSE CHANGES.
UH, WE AGREE WITH ERCOT THAT POTENTIALLY MOVING TO A MORE DYNAMIC AS METHODOLOGY WHERE MORE OF THE AS PLAN IS DETERMINED CLOSER TO REAL TIME COULD UNLOCK A LOT OF EFFICIENCY GAINS.
AND THEN ONE AREA WHERE WE HAVE KIND OF A DIFFERENCE IN PERSPECTIVE THAN ERCOT IS THAT WE REALLY THINK THAT THE DURATION REQUIREMENTS FOR BATTERIES ARE CURRENTLY SET HIGHER THAN THEY MAYBE SHOULD BE.
AND WE WOULD RECOMMEND THAT THEY BE REDUCED TO SOMETHING CLOSER TO AN HOUR.
AND SO I THINK I SEE BRIAN WITH A QUESTION.
UM, THANK YOU, UH, BRIAN SAMS CALPINE, I, I, I LOOKED AT THIS SLIDE AND I HAVE TO JUST TELL YOU I'M CONFUSED.
UM, ESPECIALLY, UH, REGARDING THE COMMENTS THAT YOU COULD, UH, REDUCE THE ANCILLARY SERVICES AND HAVE A ONE IN, UH, 20 OR ONE IN 10 ANCILLARY, I MEAN, UH, ONE IN 10 OR ONE IN, YOU COULD MEET EITHER OF THOSE STANDARDS.
BUT THEN I WAS READING SOME IMM COMMENTS IN THIS DOCKET, 5, 4, 5, 8, 4, AND IT, IT SAYS, THIS IS YOU ALL SAYING THAT IT'S EXTREMELY UNLIKELY THAT AN ENERGY ONLY MARKET CAN SATISFY THE ONE IN 10 RELIABILITY STANDARDS.
SO WE'RE, WE HAVE THIS ENERGY ONLY MARKET AND YOU'RE TRYING TO ALSO REDUCE THE CAPACITY OF, OF THE ANCILLARY SERVICES, BUT YOU'RE SAYING YOU CAN MEET THE STANDARD, BUT OVER IN THIS FILING, YOU'RE SAYING THAT WE'RE NOT LIKELY TO MEET THE STANDARD.
SO I'M JUST, I'M LEGITIMATELY CONFUSED.
I DON'T KNOW ANYTHING ABOUT THE FILING YOU'RE TALKING ABOUT, TO BE HONEST.
AND SO JEFF MIGHT HAVE A COMMENT ON THAT ITEM 91, AND SIR, THIS IS JEFF MCDONALD, UH, DIRECTOR OF IM SO THE, THE COMMENTS ARE IN THE RELIABILITY STANDARD.
YEAH, SO, SO THAT COMMENT WAS SPECIFIC TO A FORWARD STANDARD THAT ISN'T WHERE WE'RE LIVING TODAY.
SO WE CAN OBVIOUSLY MEET THE ONE IN 10 STANDARD TODAY IF IT REQUIRES A LOT OF, UM, ADDITIONAL CAPITAL INVESTMENT FOR NEW STEEL ON THE GROUND, YOU KNOW, TO TRY AND KEEP PACE WITH, WITH THE PROJECTED LOAD GROWTH THAT ERCOT IS LOOKING AT.
THAT'S WHERE WE THINK THAT THE SPOT MARKET ONLY MIGHT HAVE A DIFFICULT TIME MEETING A ONE IN 10.
SO THERE, THERE'RE TWO DIFFERENT PROBLEMS. WE'RE, WE'RE ALREADY IN A SPACE RIGHT NOW WHERE WE, WHERE ERCOT CAN MEET THE ONE IN 10.
IT'S LOOKING FORWARD, YOU KNOW, DEPENDING ON A RELIABILITY STANDARD.
SO, SO IT'S, SO IT'S NEW CAPITAL INVEST.
SO THE COMMENT IS REALLY SPECIFIC TO THE EXTENT TO WHICH NEW CAPITAL INVESTMENT IS REQUIRED AND REQUIRED TO BE FUNDED FROM, UH, SPOT MARKET REVENUES TO MEET A ONE IN 10.
THAT, THAT'S HELPFUL, I GUESS.
UM, WELL, I GUESS THAT I'M GOING TO MOVE ON TO THE NEXT SLIDE.
YEAH, I GUESS, UM, MY COMMENTS WERE KIND OF IN LINE WITH BRIAN WAS SAYING THE ONE IN 10 STANDARD THAT'S, UH, CAPACITY SORT OF, UH, LOLE STANDARD, WHICH IS NOT DRIVEN THAT MUCH BY ANSLEY SERVICES, BUT IT'S DRIVEN BY TOTAL CAPACITY AND, UM, YOU KNOW, LOAD ON THE SYSTEM.
[01:20:01]
SO I MEAN, CURRENTLY, YEAH, THE SYSTEM MEETS IT, UH, THAT STANDARD.SO EVEN IF YOU REDUCE, OR EVEN IF YOU DO AWAY WITH ALL THE ANSI SERVICES, YOU'D STILL SEE THAT THE SYSTEM MEETS IT.
BUT THE ANSLEY SERVICES ARE PRIMARILY FOR OPERATIONAL RELIABILITY.
AND THIS ONE INSTANCE, 10 STANDARD, YOU HAVE TO LOOK AT IT OVER SEVERAL YEARS.
SO IF YOU REDUCE THE QUANTITIES AND YOU'RE SAYING THAT THE ENERGY ONLY MARKET LOOKING FORWARD DOESN'T MEET THE ONE IN 10 STANDARD, THEN REDUCING THESE ANSARY SERVICE QUANTITIES ON THE LONGER TERM, NOT THIS YEAR.
'CAUSE THIS YEAR DOESN'T MAKE A DIFFERENCE ON THE LONGER TERM, IT WOULD NOT MEET THE ONE IN 10, UH, IF IT ISN'T MEETING IT, EVEN WITH OUR CURRENT, UH, PROCUREMENT OF NON SPIN AND, AND ECRS.
SO I JUST FIND THIS VERY CONFUSING TO TIE THE TWO TOGETHER WHERE WE ARE LOOKING AT, YOU KNOW, UM, LOOKING AT SORT OF OPERATIONAL RELIABILITY AND THIS ONE IN 10 STANDARD, TYING IT TO THE CURRENT SITUATION, I DON'T THINK IS HELPFUL.
YOU HAVE TO LOOK AT THE RELIABILITY STANDARD OVER FUTURE YEARS.
YOU COMMENT ON THAT, I THINK I SEE YOUR POINT AND YOU MIGHT, UH, DECIDE THAT THE RELIABILITY STANDARD YOU WOULD USE TO DETERMINE THAT YOU HAVE SUFFICIENT OPERATIONAL RESERVES MIGHT BE DIFFERENT FROM WHAT YOU WOULD LOOK AT FOR A RESOURCE ADEQUACY, UH, ANALYSIS.
AND SO I DON'T THINK THAT IT'S INHERENTLY INAPPROPRIATE TO DO THAT.
IF WE'RE SAYING THAT PROBABILISTICALLY WE HAVE A ONE IN 10 CHANCE OF EXPERIENCING AN OUTAGE IN A YEAR, I WOULD SAY THAT'S A ONE IN 10 LOLP.
AND IF YOU'RE SAYING THAT'S YOUR LOLP BASED ON YOUR OPERATIONAL SITUATION, BUT ACCORDING TO A RESOURCE ADE UH, ADEQUACY PERSPECTIVE, YOU'RE GETTING A DIFFERENT RESULT.
YOU, YOU KNOW, MAYBE IT'S SIMILAR TO HOW WE USE VOL DIFFERENTLY FOR DIFFERENT ANALYSIS.
I THINK IT'S A, IT'S A VALID ENOUGH POINT THOUGH.
OKAY, SO I'M GONNA, I'M GONNA PULL IN THE STRING A LITTLE BIT MORE JUST BECAUSE I'M, I I, I THOUGHT I HAD FOLLOWED IT, BUT NOW I THINK I'M, I'M CONFUSED AGAIN.
UM, SO IS THE, THE, THE ONE IN 10 RELIABILITY STANDARD THAT Y'ALL ARE REFERRING TO AS YOU KNOW, THE STATE OF THE WORLD TODAY, IS THAT BECAUSE WE HAVE EXPERIENCED LOSS OF LOAD EVENTS EVERY 10 YEARS, SO THAT'S THE HISTORICAL EXPERIENCE OR IS THAT ON THAT THAT'S NOT THE FORWARD LOOKING BASIS? NO, IT IS A BACKWARD LOOKING BASIS.
AND WHAT IT IS, IS IF WE RUN OUR PROBABILISTIC ANALYSIS FOR A RANGE OF RESERVE SCENARIOS, UH, WE CAN DETERMINE THE PROBABILITY OF EXPERIENCING AN OUTAGE ON AN ANNUAL BASIS BY DOING THAT.
AND SO IF WE LOOK AT THE RESULTS THAT WE PRODUCE IN THIS STUDY, WE DON'T START SEEING A 10% LIKELIHOOD OF AN OUTAGE UNTIL WE REDUCE THE ECRS QUANTITY BY SOMETHING LIKE 50%.
SECOND QUESTION THEN IS WHEN YOU, WHEN YOU SAY THAT YOU'RE REDUCING THE ECRS SPEND BY 50% AND NONS SPEND BY 35%, IS THE LOSS OF LOAD PROBABILITY DRIVEN BY HAVING LOAD EXCEED THE REMAINING, UH, OR HAVING DEMAND EXCEED OR DEMAND EXCEED SUPPLY WITH THE CHANGE IN RESERVES? SO YOU'RE KEEPING TOTAL CAPACITY THE SAME, IT'S JUST WHAT RESERVES ARE AVAILABLE? YEAH, YOU'RE REDUCING THE RESERVES TO THE POINT WHERE THE DIFFERENCE BETWEEN DEMAND AND RESERVES IS LESS THAN OR EQUAL TO 1500 MEGAWATTS, WHICH IS THE POINT AT WHICH THE SYSTEM WOULD START SHEDDING LOAD, BUT THAT'S RIGHT.
SO IT'S NOT, IT'S, I THINK THAT'S PROBABLY, IT'S A NUANCE, BUT AN IMPORTANT NUANCE.
IT'S NOT THAT THE, UH, SAY THE REVENUE EXPECTATIONS RELATIVE TO CONE CORRECT.
AND ARE SUFFICIENT TO HAVE TOTAL CAPACITY THAT CAN, THAT STANDARD.
WE DID NOT DO A, THIS IS NOT AN, A FORWARD-LOOKING ECONOMIC ANALYSIS OF HOW MUCH REVENUE WOULD BE IN THE MARKET IF WE SET THESE RESERVE TARGETS.
AND SO TO THE EXTENT THAT YOU'RE THINKING ABOUT THIS IN TERMS OF LIKE, UH, LONG-TERM RESOURCE ADEQUACY TARGETS, I CAN UNDERSTAND WHY MAYBE THIS IS CONFUSING.
SO WHAT WE ARE REFERRING TO BY A ONE IN 10 LLP IS THAT, UH, THE ACTUAL PROBABILITY OF EXPERIENCING ANY LOAD SHED IN A GIVEN YEAR BASED ON OPERATIONAL RESERVES IS EITHER ONE IN 10 OR ONE IN 20 AT THESE LEVELS.
SO REVENUE, UH, ADEQUACY I THINK IS A, UH, A DIFFERENT QUESTION THAT WOULD BE RELATED TO, YOU KNOW, IT'S NOT JUST THE LEVEL OF RESERVES, BUT THE TYPE, THE SHAPE OF THE CURVES, FOR EXAMPLE, AND, AND PRICE FORMATION AND THINGS LIKE THAT WOULD ALL FACTOR INTO THAT.
AND YOU'D NEED TO DO MORE OF A, LIKE PRODUCTION COST MODELING EXERCISE TO DO THAT.
THAT, THAT'S REALLY HELPFUL TO PICK THAT APART.
WE'VE SPENT SO MUCH TIME TALK, YOU KNOW, GOING THROUGH LIKE THE S MODELS
[01:25:01]
AND EVERYTHING OVER THE LAST FEW MONTHS AND, AND YEARS THAT, THAT'S HARD TO PIVOT.UH, AND I THINK ONE OF THE POINTS I WOULD MAKE ABOUT THIS ANALYSIS IS, UH, WE HAVE TO SETTLE ON SOME METRICS TO USE TO COMMUNICATE ABOUT THIS.
AND WE ARE OPEN TO USING DIFFERENT METRICS IF, UH, THEY WOULD BE EASIER TO UNDERSTAND OR MORE APPROPRIATE FOR DOING THIS KIND OF ANALYSIS, EXPECTED UNSERVED ENERGY OR SOMETHING LIKE THAT MIGHT BE MORE APPROPRIATE.
BUT WE'RE TRYING TO QUANTIFY THIS IN KIND OF MORE CONCRETE TERMS AS FAR AS WHAT ARE WE, WHAT ARE WE LOOKING AT HERE AS FAR AS THE RELIABILITY SITUATION ON THE SYSTEM FROM AN OP OPERATIONAL STANDPOINT? NOT FROM A RESOURCE ADEQUACY STANDPOINT.
IT LOOKS LIKE, UH, MR. HILTON
YEAH, I'M A LITTLE CONFUSED MYSELF.
UH, 'CAUSE WE'RE MIXING, LIKE YOU SAID, OPERATIONAL RESERVES AND UH, AND LONG TERM, UH, YOU KNOW, SYSTEM ADEQUACY.
AND IF YOU'RE LOOKING AT THE OPERATIONAL RESERVES AND YOU'RE SAYING A ONE IN 10 OR A ONE IN 20, YOU CAN REDUCE BY SO MUCH.
THAT'S ASSUMING THAT THAT'S THE WAY THE SYSTEM'S BEING OPERATED IN THE OPERATION SIDE, WHICH ISN'T CURRENTLY BEING DONE.
IT'S BEING OPERATED TO KEEP OUT OF AN EEA OR SOME KIND OF AN ALERT.
HAVE YOU DONE ANY ANALYSIS, UH, BASED ON THE WAY THE GRID IS OPERATED TODAY WITH KEEPING OUT OF AN EEA RATHER THAN A LOSS OF LOAD TO SEE WHAT THAT REDUCTION WOULD BE? YEAH, SO I WAS HOPING TO GET TO THIS POINT AT THE END, UH, BUT MAYBE WHILE ERCOT PRESENTATION IS FRESH IN OUR MIND, IT MIGHT MAKE MORE SENSE TO TALK ABOUT IT NOW.
UH, THE CONCEPT OF, YOU KNOW, OPERATING TO AVOID GOING INTO AN EEA OR TO AVOID A WATCH OR WHAT IS GENERALLY CALLED CONSERVATIVE OPERATIONS WAS BROUGHT UP A LOT DURING OUR INTERACTIONS WITH ERCOT.
AND PART OF THE REASON WE DIDN'T EXPLICITLY ACCOUNT FOR THIS IN OUR STUDY IS THAT IT'S REALLY UNCLEAR TO US WHAT THE KIND OF QUANTITATIVE RELIABILITY METRICS ARE ASSOCIATED WITH ANY OF THOSE CONCEPTS.
AND SO OSTENSIBLY CONSERVATIVE OPERATIONS IS MEANT TO ACHIEVE SOME KIND OF RELIABILITY GOAL, BUT THERE ISN'T ANY KIND OF CLEARLY DEFINED PARAMETERS THAT CONSERVATIVE OPERATIONS ARE TRYING TO MEET.
AND SO WHERE I THINK WE ARE IN AGREEMENT WITH ERCOT IS WE NEED TO SETTLE ON WHAT IS THE RELIABILITY STANDARD WE'RE TRYING TO ACHIEVE, AND THEN WE CAN DESIGN OUR OPERATIONAL KIND OF PORTFOLIO AROUND THAT STANDARD.
AND SO, YOU KNOW, I DON'T KNOW WHAT, YOU KNOW, AVOIDING GOING INTO AN EEA EARNS YOU IN TERMS OF RELIABILITY.
I WOULD ARGUE THAT THE PREOCCUPATION WITH AVOIDING GOING INTO A EEA EEAS ARE ONLY INTERESTING INSOFAR AS THEY RELATE TO A HEIGHTENED PROBABILITIES OF A LOAD SHED.
AND SO WE'RE STILL KIND OF DANCING AROUND THE FACT THAT WHAT WE'RE DESIGNING AROUND IS AVOIDING GOING INTO A LOAD SHE EVENT.
WHETHER THAT, YOU KNOW, MEANS THAT ALONG THE WAY WE'RE AVOIDING GOING INTO AN EEA BECAUSE WE WANNA OPERATE EVEN MORE CONSERVATIVELY.
YOU KNOW, THAT'S AN OPEN QUESTION AND THAT'S WITHOUT EVEN GETTING INTO ANY OF THE QUESTIONS ABOUT HOW MUCH, HOW MUCH IS IT GOING TO COST TO GET WHATEVER MARGINAL BENEFIT AND RELIABILITY YOU'RE TRYING TO GET.
AND SO, UH, I DON'T KNOW IF THAT REALLY ANSWERS YOUR QUESTION, BUT THAT'S BASICALLY MY RESPONSE.
YOU KNOW, I WAS JUST TRYING TO SEE IF YOU'VE DONE ANY ANALYSIS.
'CAUSE THAT'S GONNA BE A POLICY CUT THAT'S MADE ABOVE OUR PAY GRADE OVER IN A PINK BUILDING.
SO, UH, THAT'S WHY I WAS ASKING THOSE QUESTIONS.
YEAH, THAT'S HOW IT'S BEEN DESCRIBED TO ME AS WELL.
AND YOU KNOW, AS FAR AS POLICY MAKING IN THE PINK BUILDING, UH, YOU KNOW, I THINK THEY WOULD BE OPEN TO SEEING SOME COST BENEFIT ANALYSIS AT THE END OF THE DAY.
YOU KNOW, THERE'S A, THERE'S A QUESTION ABOUT HOW MUCH EXTRA RELIABILITY WE WANT TO GET OR WHAT OUR RELIABILITY GOALS EVEN ARE, AND THEN THERE'S A QUESTION ABOUT HOW MUCH IT'S GONNA COST.
AND, UH, I DON'T THINK I DEFAULTING TO HAVING REALLY HIGH HEADROOM TARGETS WITHOUT SEEING HOW IT IMPACTS SOME KIND OF RELIABILITY GOAL.
I, YEAH, I'M TRYING TO UNDERSTAND HOW PROCURING LESS NONS SPIN AND ECRS IMPACTS RELIABILITY
[01:30:01]
BECAUSE, UM, PROCURING LESS OF THAT WILL SUPPRESS MARKET PRICES WILL MEAN LESS SELF-COMMITMENT, BUT ERCOT STILL HAS ACCESS TO THE CAPACITY THROUGH R SO WOULDN'T THEY JUST ROCK THAT CAPACITY AND YOU'D HAVE THE SAME RELIABILITY OUTCOME AND JUST MOVING FROM THESE ANSARY SERVICES TO R I'M JUST, UH, WONDERING HOW IT IMPACTS THIS ONE IN 10 ANALYSIS OR ARE YOU ASSUMING ERCOT CANNOT ROCK AND WHAT THE IMPACT WOULD BE? YEAH, WE ARE, UH, WE ARE JUMPING TO ALL THE GOOD STUFF RIGHT OFF THE BAT, UH,SO THE COMMENT ABOUT RUCKING VERSUS PROCURING THROUGH NONS SPIN, LET ME JUST GIVE YOU MY, UH, YOU KNOW, I WAS WORKING AT A, A WEIRD CRYPTO STARTUP THE LAST FEW YEARS, SO I'VE HAD TO DIG INTO THE ANNALS TO FIGURE OUT THE HISTORY OF ALL OF THIS.
UH, YOU KNOW, AFTER WINTER STORM URI, SPRING AND SUMMER 21 STARTED COMING AROUND AND EVERYONE WAS REALLY ANXIOUS ABOUT RELIABILITY.
YOU KNOW, WE HAD HAD THIS BIG WINTER COLD SNAP WHERE THE GAS SYSTEM REALLY FELL FAILED AND WIND TURBINES WERE ICING UP.
AND THEN WE GET TO THE SUMMER WHERE THERE'S THIS CONCERN ABOUT, UH, THE EVENING DOWN RAMP AND LIMITED CAPACITY, UH, WHEN NET PEAK LOAD WAS HAPPENING.
AND WE DECIDED THAT THE WAY WE NEEDED TO ADDRESS THAT WAS BY COMMITTING ALL SORTS OF EXTRA CAPACITY SO THAT WE HAD THESE BIGGER CAPACITY MARGINS.
SO AS FAR AS I'M CONCERNED, THAT'S ALREADY KIND OF A NON SEQUITUR.
SO I'M NOT REALLY SURE WHAT THE RELIABILITY RATIONALE IS FOR THAT DECISION.
AND THEN MARKET PARTICIPANT GUIDANCE SUBSEQUENT TO THAT WAS IF WE'RE GOING TO BE OPERATING WITH THIS MUCH CAPACITY IN EXCESS, WE SHOULD BE PROCURING IT THROUGH NONS SPIN.
I CAN AT LEAST SEE THE CONNECTION FROM THE SUMMER OF RUCKS TO NOW WE'RE DRAMATICALLY INCREASING HOW MUCH CAPACITY WE'RE PROCURING THROUGH NONS SPEND.
I'M SUGGESTING THAT THE ENTIRE IDEA THAT WE NEED TO OPERATE WITH THAT MUCH HEADROOM, THE MARGINAL RELIABILITY BENEFIT OF OPERATING WITH THAT MUCH HEADROOM IS JUST REALLY UNCLEAR BASED ON OUR ANALYSIS.
AND SO WE WOULD SUGGEST THAT YOU'RE NOT REALLY GETTING A LOT OF EXTRA RELIABILITY FOR THE AMOUNT OF CAPACITY YOU'RE COMMITTING, AND IT'S COMING AT THE COST OF A LOT OF EXTRA, YOU KNOW, COST ON PEOPLE'S ELECTRICITY BILLS.
AND SO WE SHOULD RECONSIDER THE WHOLE COST BENEFIT ANALYSIS OF THIS SITUATION IN TERMS OF HOW MUCH IS IT GOING TO COST AND HOW MUCH RELIABILITY ARE WE GETTING? YEP.
UH, I GUESS MY QUESTION WAS DOES IT REALLY CHANGE THE RELI, IT, IT CHANGES THE, THE AMOUNT OF RUG VERSUS NONS SPIN THAT TRADE OFF CHANGES OR ECRS, BUT THE RELIABILITY STANDARD IOLE WISE, DOES IT MAKE ANY DIFFERENCE WHETHER YOU RUCK IT ON OR IT COMES THROUGH NONS SPIN ISN'T THE OUTCOME, THE RELIABILITY STAND OUTCOME IS REALLY TIED TO HOW MUCH CAPACITY THERE'S ON THE SYSTEM.
AND I'M SUGGESTING THAT WE WOULDN'T NEED TO R THOSE UNITS IF THERE WASN'T A PERCEIVED IMPERATIVE TO HAVE SO MUCH HEADROOM ONLINE.
AND THE ACTUAL RELIABILITY VALUE OF HAVING ALL THAT HEADROOM ONLINE VERSUS THE, UH, YOU KNOW, RELIABILITY OF HAVING LESS HEADROOM ONLINE, YOU'RE NOT, THE MARGINAL BENEFIT THERE IS NOT VERY HIGH, AND IT IS COSTING THE MARKET A LOT.
AND SO THE ARGUMENT WOULD BE WE WERE PROBABLY COMMITTING MORE RESOURCES THAN STRICTLY NECESSARY IN SUMMER 21.
AND THEN INSTEAD OF HAVING IT BE OUT OF MARKET COMMITMENTS, WE STARTED DOING IT BY NONS SPEND WHEN INSTEAD WE COULD OPERATE WITHOUT AS MUCH EXCESS HEADROOM IN THE FIRST PLACE.
I THINK THAT MIGHT BE A GOOD, LIKE INSTEAD OF THE RELIABLE, LET'S NOT EVEN TALK ABOUT THE RELIABILITY STANDARD, BUT PROCURING LESS NONS SPIN, YOU KNOW, 50% OR 50% ECRS AND 35% NON SPIN WILL RESULT JUST IN 10% MORE RUCK OR SOMETHING LIKE THAT.
YOU KNOW, SOME TRADE OFF THERE OR NO INCREASED RUCK AND STILL WITH THAT RELIABLE, THAT WOULD, THAT WOULD BE MORE HELPFUL, I THINK.
UH, THAT IS THE SUMMARY OF OUR RESULTS.
NOW I'D LIKE TO KIND OF DIG INTO WHAT THE MODEL ACTUALLY DOES.
UH, MORE OR LESS WE'RE TRYING TO ESTABLISH A RELATIONSHIP BETWEEN THE LEVEL OF RESERVES AND THE LOSS OF LOAD PROBABILITY GRANTING EVERYONE'S POINTS ABOUT HOW THAT TERM MIGHT BE USED IN A RESOURCE ADEQUACY CONSTRUCT AS OPPOSED TO A OPERATIONAL RESERVES CONSTRUCT.
SO HOW DO RESERVE LEVELS CORRELATE WITH LOSS OF LOAD PROBABILITY? WELL, YOU HAVE REALLY
[01:35:01]
TWO RELATED BUT DIFFERENT SITUATIONS, UH, THAT YOU'RE TRYING TO ADDRESS BY, WITH RESERVES.ONE IS FORCED GENERATOR OUTAGES.
WHEN A GENERATOR GOES OUT, RESERVES HAVE TO VERY QUICKLY CONVERT INTO ENERGY TO FILL THE GAP LEFT BY THE OUTAGE GENERATOR, AND THEN UNDER FORECASTS OF NET LOAD CREATE BAD SIGNALS TO THERMAL RESOURCES AS FAR AS THEIR COMMITMENT DECISIONS.
AND SO YOU CAN END UP IN A SITUATION WHERE YOU DON'T HAVE SUFFICIENT CAPACITY COMMITTED AND YOU NEED TO RELY ON THE RESERVES THAT YOU PROCURED TO ADDRESS LOAD THAT IS HIGHER THAN YOU EXPECTED IT TO BE, OR RENEWABLE OUTPUT THAT IS LOWER THAN YOU EXPECTED IT TO BE.
SO WHAT WE DO HERE IS WE HAVE A MONTE CARLO MODEL WHERE WE TAKE HISTORICAL HOURS.
WE'RE BASICALLY STARTING WITH JUNE 23 WHEN ECRS WAS ROLLED OUT AND LOOKING AT ALL OF THE HOURS FROM JUNE 23 THROUGH SOMETIME THIS SUMMER, I FORGET EXACTLY THE END POINT IN OUR DATA SET.
AND FOR EACH OF THOSE HOURS, WE START WITH THE SYSTEM CONDITIONS AS THEY EXISTED.
SO WE HAVE THE EXISTING COMMITMENT DECISIONS, THE EXISTING RENEWABLE OUTPUT, UH, EXISTING DEMAND, AND THEN WE RUN 10,000 ITERATIONS WHERE WE APPLY KIND OF A RANDOM DISTRIBUTION OF FOUR OUTAGES OR NET LOAD FORECAST ERROR THAT TELLS US IN EACH OF THOSE ITERATIONS HOW MUCH LOAD WE HAVE AT RISK.
AND THEN WE COMPARE THAT LOAD AT RISK TO THE RESERVE CAPACITY THAT WE HAVE IN THE SYSTEM.
AND IF THESE NUMBERS ARE WITHIN 1500 MEGAWATTS OF EACH OTHER, WE CONSIDER THAT A OUTAGE EVENT.
AND THEN HOW MANY OUTAGE EVENTS WE HAVE FOR THAT HOUR.
AND OVER THE COURSE OF THE YEAR IS HOW WE GO ABOUT CALCULATING OUR LOLP.
SO THAT'S THE LONG AND SHORT OF HOW THIS MODEL WORKS.
SO FOR A LITTLE MORE CLARITY, JUST TO EXPLAIN KIND OF HOW THE RESERVE SCENARIOS WORK, WE'RE TAKING THOSE HISTORIC HOURS, WE START WITH THE RESERVE LEVELS AS THEY WERE PRESENT IN THE SYSTEM, AND THEN WE DECREMENT IT ACCORDING TO THE AS PLAN DEPENDING ON WHICH OF THESE PRODUCTS WE'RE EVALUATING.
SO LET'S ASSUME WE'RE TALKING ABOUT OUR ECRS ANALYSIS.
IF WE'RE LOOKING AT A HISTORICAL HOUR WHERE THE, UH, AS PLAN FOR ECRS WAS 2,500 MEGAWATTS, WE WOULD START WITH THE AMOUNT OF RESERVES IN THE SYSTEM THAT WE HAD, THEN WE WOULD RUN IT ALL OVER AGAIN WITH 250 MEGAWATTS OF RESERVES REMOVED FROM THE SYSTEM.
AND THEN WE WOULD KEEP DOING THIS IN DECREMENTS OF 250 MEGAWATTS UNTIL WE'VE REMOVED ALL OF THE ECRS PLAN FROM THE RESERVE STACK.
WE DO THAT FOR ALL OF THOSE, AND WE END UP WITH A CURVE WHERE THE X AXIS IS ESSENTIALLY HOW MUCH ARE WE REDUCING THE AS PLAN BY.
AND THE Y AXIS IS THE LOLP FOR A YEAR.
OUR KINDA, UH, METAPHYSICAL POSITION ON ALL THIS AND A POSITION THAT, UH, ERCOT HAS SUGGESTED WE MIGHT HAVE SOME DIFFERENCE OF, UH, PERSPECTIVE ON, WE ARE LOOKING AT ALL OF THE AVAILABLE REVER RESERVE CAPACITY THAT WOULD BE USED TO AVOID SHEDDING LOAD IN THE EVENT OF ONE OF THESE RISKS.
SO OF COURSE, THAT'S ALL OF THE HEADROOM ON THERMAL RESOURCES THAT CAN BE CONVERTED TO ENERGY IN 10 TO 30 MINUTES.
WE'RE LOOKING AT OFFLINE RESOURCES PROVIDING ECRS AND OR NON SPEND, WE'RE LOOKING AT QUICK STARTS SCALED FOR THEIR START TIME LOAD RESOURCES, PARTICULARLY LARGE FLEXIBLE LOADS, WHICH PROVIDE A LOT OF ANCILLARY SERVICES, BUT MORE IMPORTANTLY ARE PREDICTABLY TURNING THEMSELVES OFFLINE WHEN CONDITIONS ARE TIGHT.
UH, WE HAVE A LOT TO SAY ABOUT DURATION LIMITED BATTERIES.
AND THEN WE'RE ALSO LOOKING INTO, UH, HOW UP CONFIGURATIONS FOR COMBINED CYCLES COULD CONTRIBUTE TO RESERVES.
SO WITHOUT ANY FURTHER ADO, WE CAN JUMP INTO HOW THIS ALL KINDA WORKS OUT.
UH, SO WHEN YOU ARE DOING THIS ANALYSIS, YOU ARE DOING IT EVERY, FOR EVERY FIVE, FIVE MINUTE JUST, UH, IT'S EVERY HOUR.
SO VARIOUS THINGS ARE AGGREGATED UP TO AN HOURLY BASIS.
SO ESR YOU ARE LOOKING AT LIKE CONTINUOUSLY THAT THEY HAVE THAT MUCH CAPACITY? WE ARE LOOKING AT THE AMOUNT OF CAPACITY THEY COULD CONTINUOUSLY GENERATE FOR AN HOUR.
AND, UH, WHEN YOU ARE LOOKING AT THE OUTAGE FOR THE FORCED OUTAGE GENERATION, YOU, YOU ARE LOOKING AT LIKE A, A SET OR, OR LIKE, NOT SINGLE OUTAGE, BUT LIKE EACH GENERATOR CAN HAVE A ION ONE OF ZERO BASED ON, SO IT CAN BE MULTIPLE GENERATION OUTAGES TOGETHER.
SO THE WAY GENERATOR OUTAGES ARE MODELED, UH, THESE ARE GOOD QUESTIONS.
UH, EACH GENERATOR WE HAVE DATA ON THE MEANTIME, IT RUNS BETWEEN OUTAGES.
[01:40:01]
THAT TELLS YOU THE PROBABILITY OF IT HAVING OUTAGE IN OUTAGE IN ANY 30 MINUTES OR AN HOUR.AND WE'RE TRACKING KIND OF HOW LONG IT'S BEEN RUNNING TOO, UH, TO GET US A BETTER SENSE OF WHAT'S THE PROBABILITY THAT THIS, AND ONCE ONE OUTAGE HAPPENS, THEN YOU, IT THEN CONTINUES FOR THEN THE, WELL, NO, THE SUBSEQUENT HOUR WE TREAT INDEPENDENTLY, SO WE'RE NOT TAKING RESULTS FROM ONE HOUR AND PASSING THEM INTO THE NEXT STEP.
SO THERE COULD BE SOME, UM, THEN FOR THE FORCED OUT, UH, NOT THE FORCED OUTAGE, UH, THE FORECAST ERROR.
UM, SO HOW, UH, ARE YOU CONSIDERING THE, UM, LIKE THE, THE, THE MM-HMM
AND THE RISK ANALYSIS IS BASED ON THAT.
SO HOW ARE YOU CONSIDERING THAT DIFFERENTIATION? YEAH, SO WE USE 30 MINUTES FOR ECRS, WHICH I THINK IS THE SAME AS ERCO.
AND THEN THE BIGGEST DIFFERENCE IN OUR METHODOLOGY HERE IS THAT WE'RE ONLY USING ONE HOUR AHEAD FOR NONS SPIN.
AND OUR RATIONALE FOR THAT IS THAT IF YOU'RE, IF YOU'RE TRYING TO COMMIT LONGER LEAD TIME UNITS, IT MAKES MORE SENSE TO USE SOMETHING LIKE RUCK OR MAYBE DRRS EVENTUALLY COULD FILL THAT GAP WHERE IF WE SEE SIX HOURS AHEAD, WE THINK WE'RE GOING TO BE UPSIDE DOWN IN TERMS OF COMMITMENTS.
IT REALLY MAKES MORE SENSE TO USE SOMETHING LIKE RUCK.
I UNDERSTAND THAT THE REASON WE WANTED TO ROLL ALL THAT INTO AS PROCUREMENT WAS BECAUSE THE SYSTEM WAS RUCKING A LOT OF THINGS, BUT THERE'S AN OPEN QUESTION ABOUT THE RELIABILITY BENEFIT OF COMMITTING THAT MUCH CAPACITY TO HAVE A LOT OF EXCESS HEADROOM, BASICALLY.
AND I MAY BE MISTAKEN, I THINK THE, AND THE RATIONALE WAS TO LOOK AT HOW MUCH CAPACITY THAT IS AVAILABLE THAT THEY CAN START.
AND SO THEY, THEY NEEDED THE SIX HOUR LEAD TIME OR SOMETHING LIKE THAT, SO THEY NEEDED TO LOOK AT THAT DURATION.
AND THE RISK IS SIGNIFICANTLY DIFFERENT WHEN YOU AT ONE HOUR VERSUS SIX HOURS.
AND, UM, YEAH, SO IT DEPENDS ON WHAT RISK YOU ARE LOOKING AT, RIGHT? UH, IF YOU WANT TO, I HAVE IN MARKET COMMITMENTS FOR NET LOAD FORECAST ERROR ON THE ORDER OF FOUR TO SIX HOURS, YOU KNOW, THAT'S A LOT MORE RISK.
AND IF YOU WANT TO COMMIT ALL THAT, THE AS METHODOLOGY FOR NONS SPEND USING FOUR TO SIX HOURS IS GOING TO PROCURE A LOT MORE CAPACITY AND END UP WITH A LOT MORE COMMITMENTS.
AND SO WE ARE ARGUING THAT YOU'RE NOT NECESSARILY GETTING AS MUCH RELIABILITY BENEFIT FOR ALL OF THAT AS IT MIGHT COST YOU.
AND ON THE OCCASIONS WHERE YOU ACTUALLY REALLY NEED THOSE FOUR OR SIX HOUR LEAD TIME UNITS, YOU CAN STILL RUCK THEM IF YOU NEED TO.
AND IF ARE ROCKING THINGS LIKE WE WERE IN 2019 OR 2020 RATHER THAN IN SUMMER 21, THEN WE DON'T HAVE SO MUCH OF AN OBJECTION TO THAT KIND OF OPERATIONAL PARADIGM.
AND YOU ARE CONSIDERING ALL FORECAST ERROR OR ONLY LOAD FORECAST ERROR.
IT'S NET LOAD FORECASTERS, NET LOAD FORECAST.
SO IT INCLUDES, AND THIS WAS A WHOLE TOPIC OF DISCUSSION IN OUR COLLABORATIONS WITH ERCOT, WE ARE KIND OF TREATING THE RANDOM VARIATION AND NET LOAD FORECAST ERROR ALTOGETHER BECAUSE THERE'S KIND OF A INHERENT CORRELATION BETWEEN YEAH.
WEATHER AND LOAD AND RENEWABLE OUTPUT.
AND ARE YOU CONSIDERING THE CORRELATION WEATHER RELATED CORRELATION? MM-HMM.
AND I THINK THAT THAT'S MOSTLY A DATA PROBLEM, WHICH IS JUST THAT THE, UH, YOU KNOW, YOU'RE, YOU HAVE LESS DATA IF YOU DICE IT UP INTO SMALLER PIECES, BASICALLY.
AND SO THE PROBABILITY OF HAVING OUTAGES FOUR OUTAGES AREN'T THAT FREQUENT FOR ANY GIVEN RESOURCE TO BEGIN WITH.
AND SO IT'S A RELATIVELY SMALL DATA SET TO START WITH, BUT THAT IS A TOTALLY VALID POINT AS FAR AS, UH, YOU KNOW, UH, WHEN IT'S HOTTER AND THINGS LIKE THAT, MAYBE THINGS ARE MORE LIKELY TO BREAK.
THAT SAID, IT IS SORT OF ACCOUNTED FOR IN THE MEANTIME UNTIL OUTAGES BECAUSE, UH, THESE RESOURCES ARE RUNNING A LOT IN THE SUMMER.
SO PART OF WHAT CONTRIBUTES TO THEIR, UH, OUTAGE RATE IN THE SUMMER IS THE FACT THAT THEY'RE GETTING A LOT OF THAT RUNNING TIME.
AND SO THE PROBABILITY THAT THEY'RE GOING TO GO OUT IS, YOU KNOW, HIGHER BECAUSE OF HOW FREQUENTLY THEY'RE RUNNING.
SO WE'RE GONNA JUMP INTO KIND OF SPECIFICALLY HOW THE ECRS ANALYSIS WORKED OUT.
THE MAIN POINTS TO REITERATE, THIS IS A 10 MINUTE RESERVE.
UH, BUT IT'S COVERING RISKS ESSENTIALLY UP TO 30 MINUTES WITH THE, UH, KIND OF PREMISE THAT ANYTHING THAT HAPPENS BETWEEN
[01:45:01]
ZERO AND 30 MINUTES CAN REALLY ONLY BE ADDRESSED BY 10 MINUTE RESERVES.AND SO WE'RE LOOKING AT THE 30 MINUTE NET LOAD FORECAST ERROR AND THE PROBABILITY OF FORCED OUTAGES OCCURRING OVER THE COURSE OF 30 MINUTES.
AND ALL OF THIS OTHER DETAIL I'VE KIND OF ALREADY EXPRESSED THIS IS JUST EXPLAINING HOW DO WE ACCOUNT FOR THE RISK? HOW DO WE MODEL THE RISK? WHAT RESERVES ARE WE USING AND WHAT COUNTS AS AN OUTAGE? THIS ANALYSIS RESULTS IN THE FOLLOWING CURVE WHERE WE'RE, UH, IDENTIFYING THAT WE COULD REDUCE ECRS PROCUREMENT BY AS MUCH AS A LITTLE MORE THAN 50% AND STILL MAINTAIN A ONE IN 10 LOLP FOR A YEAR.
UH, A LITTLE MORE THAN 40% CLOSER TO 45% OF REDUCTION WOULD STILL GET YOU A ONE IN 20 LOLP.
SO THAT IS WHAT WE'RE LOOKING AT.
I WOULD ALSO LIKE TO POINT OUT THE RIGHT TAIL HERE.
SO FROM ZERO TO 20% ON THE RIGHT HERE, WE'RE SEEING VERY LITTLE DIFFERENCE IN RELIABILITY VALUE AS FAR AS THE ECRS PROCUREMENT.
SO THAT WOULD SUGGEST THAT AT THE VERY LEAST, THERE'S NOT MUCH TO BE GAINED BY THAT LAST 20 MIN, UH, 20% OF ECRS IN TERMS OF RELIABILITY.
AND SO WHATEVER OUR, UH, RELIABILITY STANDARD MAY BE, YOU KNOW, WE'RE NOT, WE DON'T APPEAR TO BE GETTING ALL THAT MUCH EXTRA BENEFIT FOR WHATEVER THE EXTRA COST IS TO PROCURE THAT LAST 20% OF ECRS.
UH, AND YOU KNOW, I'VE ALREADY COVERED A LOT OF THIS.
ONE POINT THAT I JUST WANT TO EMPHASIZE HERE IS THAT THESE CURVES ARE BASED ON UNIFORMLY REDUCING THE AS PLAN, UH, ON A PERCENTAGE BASIS FOR EVERY HOUR IN THE YEAR.
ALTERNATIVELY, WE COULD SKEW HOW MUCH WE'RE ADJUSTING THE AS PLAN, UH, WHERE WE'RE ADJUSTING IT MORE OFF PEAK THAN WE ARE ON PEAK, ESSENTIALLY.
SO OUR ANALYSIS WOULD SUGGEST THAT WE CAN REDUCE ECRS PROCUREMENTS BY A LOT MORE DURING THE OFF PEAK HOURS THAN WE DO BY, UH, DURING THE ON PEAK HOURS.
AND IF WE DO SOMETHING LIKE THAT, WE CAN ON AVERAGE REDUCE OUR ECS PROCUREMENT ECRS PROCUREMENT EVEN MORE THAN IF WE'RE REDUCING ALL OF THE HOURS THE SAME.
UH, I GRANT ANOTHER ONE OF ER COTS POINTS HERE.
A LOT OF THIS DOES HAVE TO DO WITH JUST HOW MUCH RESERVE CAPACITY YOU TEND TO HAVE ONLINE ALREADY IN A LOT OF THOSE OFF PEAK HOURS.
LIKE IF YOU HAVE THERMAL RESOURCES THAT ARE ONLINE AND RUNNING AT THEIR MINIMUM LEVEL AND THEY JUST HAVE ALL THAT HEADROOM AVAILABLE, AND OF COURSE THAT COULD BE DIFFERENT IN THE FUTURE DEPENDING ON HOW THEIR COMMITMENT DECISIONS CHANGE FOR ONE REASON OR ANOTHER.
AND SO WE HAVE A, UH, OH, I SEE.
AND SMI, I DON'T KNOW IF YOU'VE ALREADY ASKED YOUR QUESTION, IT'S A DIFFERENT QUESTION.
SO I GUESS SHAMS IS AHEAD IN THE QUEUE.
SO IN YOUR ANALYSIS, UH, WHEN YOU REDUCE THE ECRS QUANTITY, YOU KNOW, YOU GUYS HAVE SAID THAT, UH, REDUCING THAT QUANTITY WILL GREATLY REDUCE MARKET PRICES, ENERGY PRICES.
SO DID YOUR, UH, ANALYSIS TAKE INTO ACCOUNT THE REDUCTION IN SELF-COMMITMENT, UH, DUE TO THAT AND THE IMPACT ON THAT, ON THAT, ON THE RELIABILITY, IF YOU CAN'T ROCK IT IN TIME? NO, WE DIDN'T, WE DIDN'T DO ANY, UH, ADJUSTMENT TO THE COMMITMENT DECISIONS.
THAT'S A, THAT'S A HUGE ISSUE BECAUSE THAT'S ONE OF THE THINGS YOU GUYS POINTED OUT IS THAT THE IMPACT ON ENERGY PRICES IS PRETTY LARGE.
WELL, THE COMMITMENT IN THE ECRS CASE GOES IN BOTH DIRECTIONS BECAUSE IT'S TRUE.
I'M SURE SOME LONGER LEAD TIME RESOURCES WERE COMMITTED BECAUSE ENERGY PRICES WERE SO HIGH, BUT A LOT OF QUICK STARTS COULD NOT SELF COMMIT BECAUSE THEY WERE WHOLLY OBLIGATED TO PROVIDE ECRS AND SO THEY WERE KEPT OFFLINE TO PROVIDE ECRS.
AND SO IT'S A PERFECTLY VALID POINT, BUT IT COULD GO IN EITHER DIRECTION DEPENDING ON YOUR MARGIN.
AND WHEN YOU DO THE ECRS AND NONS SPEND ANALYSIS, ARE YOU DOING IT ONE AT A TIME OR DID YOU LOOK AT THE COMBINED IMPACT OF BOTH OF THEM TOGETHER? YEAH, GOOD QUESTION.
SO WE ARE DOING THEM ONE AT A TIME.
SO 10 MINUTE RESERVES WOULD LOOK AT THE ENERGY YOU CAN GET IN 10 MINUTES, IT'S 30 MINUTES.
RESERVES WOULD LOOK AT THE ENERGY YOU CAN GET IN 30 MINUTES, 10 MINUTE RESERVES ARE INHERENTLY KIND OF A SUBSET OF 30 MINUTE RESERVES IN THAT, UH, WAY OF DOING THE ANALYSIS.
OKAY, REMI? UM, MINE WAS SIMILAR TO THAT.
LIKE, UH, DO YOU HAVE A ROUGH IDEA OF HOW MUCH, UH, IS THAT, UM, REDUCTION BASED ON THE EXISTING HEADROOM? OH, THAT'S A GOOD QUESTION.
AND UH, I WOULD NEED TO LOOK AT OUR DATA TO GET A MORE CLEAR ANSWER TO THAT.
[01:50:04]
OKAY.MOVING ALONG, 30 MINUTE RESERVES, UH, VERY SIMILAR TO THE ECRS ANALYSIS.
BIGGEST DIFFERENCE, LIKE WE SAID, IS, UH, WE ARE ONLY, WE ARE TREATING NONS SPIN AS IF IT'S MEANT TO ACCOUNT FOR RISKS THAT CAN OCCUR OVER A ONE HOUR TIME HORIZON AS OPPOSED TO A FOUR OR SIX HOUR TIME HORIZON THAT ERCOT METHODOLOGY CURRENTLY USES.
OUR ARGUMENT FOR THIS IS THAT UP UNTIL ONE HOUR OUT, THERE'S STILL JUST A LOT OF CAPACITY THAT CAN BE COMMITTED UNDER AN HOUR IN LEAD TIME, PARTICULARLY, THERE ARE A LOT OF LIKE 30 MINUTE TURBINES IN ERCOT.
AND SO, YOU KNOW, THIS IS ANOTHER ASSERTION THAT IS BASED LARGELY ON THE SYSTEM AS IT EXISTS TODAY AND HOW MUCH, UH, 30 MINUTE CAPACITY IS ONLINE IN ERCOT.
BUT, UH, YOU KNOW, IN THE FUTURE THAT MAY NOT BE THE CASE AND THAT MIGHT CHANGE HOW WE NEED TO DO THIS ANALYSIS.
UH, YOU'LL SEE THOUGH THAT THE RESULTS FOR OUR NONS SPIND ANALYSIS ARE NOT QUITE AS SEVERE AS WHAT WE PRODUCED FOR ECRS.
WE DON'T, UH, TARGET, UH, WE DON'T ESTIMATE NEARLY AS MUCH OF A REDUCTION AS WE DO FOR ECRS.
SO SOMETHING LIKE A 35% REDUCTION IN NONS, SPIND COULD MAINTAIN A ONE IN 10 LOLP OR A LITTLE MORE THAN A 20% REDUCTION COULD MAINTAIN A ONE IN 20 LOLP.
SO, UH, AND THE TAIL IS STILL DECREASING AS YOU GET TO 0%.
SO WE'RE NOT QUITE AT THE NO MARGINAL RELIABILITY BENEFIT LIKE WE SEE WITH ECRS.
SO THOSE ARE SOME INTERESTING DISTINCTIONS.
UH, SO ONLINE NONS SPIN IS ALWAYS, DOESN'T MATTER YOU OR NON SPIN OR NOT, IS THIS REDUCTION IN NONS SPIN FOR ALL NONS SPIN.
THAT MEANS IF 50% WAS OFFLINE, YOU'RE ALMOST REDUCING ALMOST ALL OF THE OFFLINE NONS SPIND.
THIS REDUCTION DOES NOT MAKE A DISTINCTION BETWEEN ONLINE OR OFFLINE NONS SPIND, BUT ONLINE NONS, SPIND, I MEAN, EVEN IF YOU PROCURE NONE OF THAT, YOU KNOW, IT DOESN'T HAVE ANY RELIABILITY IMPACT IF YOU ASSUME THAT THAT RESOURCE IS COMMITTED.
I THINK IT MIGHT BE HELPFUL TO EXPLAIN AGAIN, HOW WE ACCOUNT FOR THE RESERVES IN THE STARTING POINT, AND THEN HOW WE DECREMENT THE RESERVES.
SO WE'RE LOOKING AT THE HISTORICAL HOURS AND THE TOTAL AMOUNT OF CAPACITY THAT COULD BE CONVERTED TO ENERGY OR LOAD THAT COULD BE CURTAILED BASED ON THEIR 30 MINUTE RAMPING ABILITY.
AND SO IT MIGHT NOT BE RESOURCES THAT ARE CARRYING NONS SPIN EXPLICITLY, IT'S JUST THE CAPACITY OF RESERVES THAT CAN REACT IN 30 MINUTES TO A CONTINGENCY.
BUT THE CAPACITY THAT'S PROVIDING NONS SPIN CAN RESPOND IN 30 MINUTES.
SO IF THEY'RE PROVIDING ONLINE NONS SPIN, AND THEN IF YOU DON'T AWARD THEM ONLINE NONS SPIN AND YOU'RE NOT DECOMMIT THEM, THEN I DON'T SEE ANY RELIABILITY IMPACT.
WE ARE REMOVING THE MEGAWATTS ENTIRELY.
AND SO IT'S NOT THAT WE'RE JUST NOT AWARDING IT NONS SPIN, WE ARE SAYING IT'S NO LONGER PART OF THE SUPPLY STACK.
OH, SO THE RESOURCES BEING DECOMMITTED ESSENTIALLY? WELL, NOT QUITE MECHANICALLY.
SO WE DON'T ACTUALLY DECOMMIT RESOURCES, LIKE IF WE REMOVE 250 MEGAWATTS OF NONS SPEND, THAT DOESN'T COME FROM ANY SPECIFIC RESOURCE.
IT'S A, A, IT'S A PROBABILISTIC, LIKE WE'RE REMOVING IT IN AGGREGATE FROM THE SYSTEM SUPPLY STACK.
'CAUSE I'D HAVE TO UNDERSTAND THAT BETTER.
NED, APOLOGIES IF YOU, IF YOU'VE COVERED THIS EARLIER, BUT, UH, WHEN YOU ARE SHOWING THIS REDUCTION IN NONS SPIND VOLUMES, IS THIS COMPLETELY INDEPENDENT OF THE REDUCTION IN ECRS VOLUMES? SO THE, THE LOSS OF LOAD PROBABILITY, IF YOU WERE TO FOLLOW BOTH WOULD BE, I'M ASSUMING THAT WOULD BE HIGHER IF YOU WERE TO REDUCE BOTH BY SAY, 40%? IS THAT FAIR? YEAH, SO I THINK VERY GOOD POINT, AND I HAVE STRUGGLED WITH HOW TO COMMUNICATE THAT MYSELF.
IF YOU WERE TO REDUCE THE ECRS BY AS MUCH AS WE ARE DESCRIBING, IT WOULD RESULT IN SOME AMOUNT OF REDUCTION IN THE AVAILABLE NONS SPEND CAPACITY.
AND SO THAT WOULD TEND TO CHANGE THE RESULTS.
SO IF YOU DID, IF YOU REDUCED THE ECRS CAPACITY BY 50%, THAT'S GOING TO EQUATE TO A CERTAIN REDUCTION IN HOW MUCH CAPACITY IS AVAILABLE FOR 30 MINUTE RESERVES.
AND SO THAT WOULD ALREADY PUT YOU SOMEWHERE ON THIS CURVE.
SO THERE, THERE'S NOT A, THERE IS SOME LINKAGE
[01:55:01]
BETWEEN THE TWO, BUT IT'S NOT, UM, IT'S IMPLICIT AND NOT EXPLICIT.AND I'M OPEN TO SUGGESTIONS ABOUT HOW TO, UH, BETTER PRESENT THAT.
YEAH, IT MIGHT NEED TO BE A 3D GRAPH.
UH, JEFF TAUGHT ME THE WORD ISOLINE AND I THINK THOSE COULD BE USEFUL.
UM, SO
WE'RE NOT ACCOUNTING FOR TRANSMISSION.
THIS ISN'T A PRODUCTION COST MODELING TOOL.
THIS IS, UH, A LITTLE DUMBER THAN THAT.
IT IS THE MUSTACHE IS ALL IT IS.
SIMILAR CONCEPT TO WHAT I SAID BEFORE WITH THE ECRS.
IF YOU KIND OF SKEWED WHERE YOU REMOVED THE NONS SPIND PROCUREMENTS FROM AND WHERE YOU KEPT MORE OF THEM, YOU'D BE KEEPING A LOT OF THE NONS SPEND REALLY 90% OF IT IN PEAK HOURS AND YOU COULD PRODUCE HOW MUCH OF IT WE'RE PROCURING IN A LOT OF THE OTHER HOURS.
YOU KNOW, ANOTHER POINT THAT'S WORTH MAKING AS FAR AS HOW MUCH WE'RE ACTUALLY SAVING BY ALL OF THESE REDUCTIONS IN A LOT OF THOSE OFF PEAK HOURS, THE PRICES FOR ECRS AND NONS SPEND HAVEN'T BEEN VERY HIGH.
SO IT MIGHT SOUND LIKE A LOT TO REDUCE NONS SPEND PROCUREMENTS BY 75%, BUT IT WOULD BE WORTH DOING MORE ANALYSIS ON HOW MUCH ACTUAL COST SAVINGS YOU'RE GETTING OUTTA THAT.
UH, SO MOVING ON THERE, THE NEXT KIND OF MAJOR TOPIC THAT WE'RE STILL TRYING TO GET OUR ARMS AROUND IS FIGURING OUT APPROPRIATE, UH, DURATION REQUIREMENTS FOR BATTERIES TO PROVIDE THESE ANCILLARY SERVICES.
UH, THIS IS A DESIGN DECISION THAT IS, UH, TAKING UP A LOT OF SPACE AT A LOT OF THE ISOS BECAUSE IT'S, UH, VERY IMPORTANT.
UH, WE'VE IDENTIFIED A FEW DIFFERENT REASONS TO BE CONCERNED THAT THE TARGETS OR THE DURATION REQUIREMENTS THAT AT ERCOT MIGHT BE HIGHER THAN THEY SHOULD BE.
UH, FOR ONE THING, IT WILL TEND TO MAKE THE SYSTEM THINK THAT IT IS MORE SHORT ON RESERVES THAN IT ACTUALLY IS.
SO FOR EXAMPLE, IN LIKE AN RTC UH, FRAMEWORK, IF THE SYSTEM'S TRYING TO PROCURE MORE RESERVES AND IT CAN ONLY GET AT A QUARTER OF THE BATTERY CAPACITY, WE MIGHT START GOING UP THE NONS SPIN A CD, UH, AS DEMAND CURVE SOONER THAN IS APPROPRIATE.
IT COULD ALSO RESULT IN, UH, UH, INCENTIVES FOR BEHAVIOR THAT AREN'T RELIABILITY MAXIMIZING.
SO FOR EXAMPLE, IT COULD, UH, COMPEL BATTERIES TO DISCHARGE BECAUSE THEIR INDIFFERENCE POINT FOR SELLING ENERGY IS LOWER THAN FOR CARRYING RESERVES IF THEY CAN ONLY CARRY RESERVES ON A QUARTER OF THEIR CAPACITY.
AND SO NOW YOU HAVE BATTERIES DISCHARGING AND LOWERING THEIR, UH, STATE OF CHARGE.
AND THEN AT THE SAME TIME YOU'RE INCENTIVIZING, UH, GAS GENERATORS TO STAY OFFLINE AND END RESERVE RATHER THAN SELLING ENERGY.
AND THIS JUST SEEMS UPSIDE DOWN FROM A RELIABILITY STANDPOINT.
SO THOSE ARE OUR KINDA EXTERNALITY CONCERNS.
AND THEN WE DON'T NECESSARILY AGREE THAT THE RISKS THAT BATTERIES ARE INTENDED TO COVER REQUIRE THEM TO HAVE FOUR HOURS OF DURATION.
AND SO WE HAVE SOME ANALYSIS TRYING TO MAKE THAT POINT, AND I'LL EXPLAIN THAT ANALYSIS AND THEN EXPLAIN WHY IT IS STILL INCONCLUSIVE.
UH, BASICALLY IF YOU START AT A POINT IN TIME AND LOOK AT YOUR NET LOAD FORECASTS FOR A CERTAIN AMOUNT OF TIME AND CAN IDENTIFY CHUNKS OF TIME WITHIN THAT FORECAST WINDOW WHERE WE WERE UNDER FORECASTING BY AT LEAST A THOUSAND MEGAWATTS OF NET LOAD, AND YOU TRY TO TAKE THE DISTRIBUTION OF HOW LONG THOSE UNDER FORECASTS LAST, YOU CAN GET A SENSE OF HOW LONG ARE WE LIKELY TO NEED TO RELY ON BATTERIES TO COVER VARIOUS RISKS.
AND THEN WE CORRELATE THAT WITH PRC TO SEE HOW THOSE DISTRIBUTIONS LOOK WHEN SYSTEM CONDITIONS ARE TIGHT.
UH, AND WHAT WE GET IS SOMETHING LIKE THIS.
SO FOR ECRS, WE'RE SEEING ALL OF THESE KIND OF FORECAST EVENTS, UH, BETWEEN FIVE MINUTES AND TWO HOURS.
MOST OF THESE UNDER FORECASTS ARE, YOU KNOW, LESS THAN HALF AN HOUR, AND AT MOST THEY'RE MORE LIKE AN HOUR.
[02:00:01]
MEGAWATTS OF PRC, WHICH IS WHAT ERCOT USES, WE'RE GETTING SOMETHING THAT I THINK STRONGLY SUGGESTS THAT THE DURATION REQUIREMENT SHOULDN'T BE MORE THAN AN HOUR.UH, IT LOOKS A LITTLE DIFFERENT IF WE GO TO NONS, BUT IT PARTICULARLY LOOKS DIFFERENT IF YOUR PRC THRESHOLD IS HIGHER THAN 5,000 MEGAWATTS.
SO, UH, IT KIND OF DEPENDS ON WHAT CONSTITUTES TIGHT SYSTEM CONDITIONS THAT IS, UH, A LEGITIMATE MOVING TARGET.
IT'S NOT JUST A POLICY MOVING TARGET.
ONE THING THAT COMPLICATES THESE RESULTS THAT WE'VE DISCUSSED WITH ERCOT IS THAT BATTERIES THEMSELVES CONTRIBUTE TO PRC.
AND SO THE PRC LEVEL AT WHICH YOU ARE RELYING ON BATTERIES FOR RESERVES AND ENERGY IS I THINK CONSTANTLY GOING UP.
UH, YOU KNOW, RIGHT NOW WE HAVE SEVEN OR 8,000 MEGAWATTS OF BATTERIES IN THE SYSTEM.
WE'LL HAVE 20,000 MEGAWATTS OF BATTERIES BY THE END OF NEXT YEAR.
AND THE PRC LEVEL IN TOTAL THAT'S GOING TO CORRESPOND TO, WELL NOW THE BATTERIES ARE HAVING TO DISCHARGE TO SERVE LOAD, UH, IS GOING TO CONTINUE TO GO UP.
AND SO THAT'S A, THAT'S A CONCEPT THAT WE ARE STILL KIND OF TRYING TO FIGURE OUT HOW WE WANT TO, UH, EVALUATE.
SO LONG STORY SHORT, THOUGH, THESE RESULTS AT LEAST STEER IN THE DIRECTION OF SUGGESTING THAT THE DURATION REQUIREMENTS DON'T NEED TO BE LONGER THAN AN HOUR.
UH, NUMEROUS CAVEATS, THIS IS A DETERMINISTIC ANALYSIS SIMILAR TO ERCOT OWN, UH, METHODOLOGY.
IT'S REALLY NOT THAT DIFFERENT, UH, FROM THE METHODOLOGY ERCOT USED TO SET THEIR DURATION REQUIREMENTS.
SO, YOU KNOW, UH, NUMBERS, WHAT'S THE, WHAT'S THE QUOTE? UH, NUMBERS NEVER LIE, BUT STATISTICIANS DO OR SOMETHING LIKE THAT.
UH, AND THEN, UH, SO A MORE PROBABILISTIC APPROACH WOULD BE BETTER.
IT DOESN'T ACCOUNT FOR THE RISK OF FORCED OUTAGES LIKE THE REST OF OUR ANALYSIS.
SO THAT'S ANOTHER SHORTCOMING.
MORE IMPORTANTLY, I THINK BOTH OUR ANALYSIS AND ERCOT ANALYSIS IS MISSING THAT WE'RE TALKING ABOUT AN ENERGY PROBLEM AND NOT A DURATION PROBLEM.
SO THE REAL METRIC WE'RE LOOKING AT SHOULD BE BASED ON MEGAWATT HOURS AND NOT JUST HOURS.
SO FOR EXAMPLE, IF WE HAD A FOUR HOUR EVENT WHERE 100 MEGAWATTS OR 100 TO A THOUSAND MEGAWATTS OF LOAD NEEDED TO BE SERVED BY BATTERIES, THAT DOESN'T NECESSARILY IMPLY THAT YOU NEED A FOUR HOUR DURATION REQUIREMENT FOR THE BATTERIES BECAUSE THERE'S MORE THAN ENOUGH BATTERIES IN THE SYSTEM THAT EVEN IF SOME OF THEM RAN OUT OF CHARGE, YOU WOULD BE ABLE TO MEET THAT, UH, ENERGY REQUIREMENT OVER THAT FOUR HOURS OF TIME.
AND SO THIS IS ALL JUST A LONG-WINDED WAY OF SAYING THIS WASN'T IMPORTANT ENOUGH CONCEPT THAT WE WANTED TO DO SOMETHING TO TRY TO ADDRESS IT, BUT WE'RE STILL, UH, UH, JURY'S STILL OUT ON THE FINAL RESULTS HERE.
SO I THINK SEAN SAYS ANOTHER QUESTION.
UM, SO THESE CHANGES WE ARE LOOKING AT IN THROUGH THE STUDY IS FOR 2026 ONWARD.
SO WE'LL HAVE, UH, REALTIME COOP OPTIMIZATION BY THEN.
SO WITH REALTIME COOP OPTIMIZATION, THERE'S A MUCH STRONGER ARGUMENT FOR REDUCING THE DURATION SINCE, UH, ANSARY SERVICES ARE AWARDED FOR EACH FIVE MINUTES, UM, SEPARATELY, AND YOU CAN AWARD IT TO A DIFFERENT, UM, ESR, YOU KNOW, ONCE YOU SEE THE DURATION IS BELOW LET'S SAY 15 MINUTES OR, OR SOMETHING TO THAT EFFECT, NOT EVEN AN HOUR, IT SHOULD BE LOWER THAN THAT.
SO WAS THIS ANALYSIS TAKING INTO ACCOUNT REAL TIME COOP OPTIMIZATION OR IS THIS MORE IN THE CURRENT MARKET CONCEPTUALLY? I COMPLETELY AGREE WITH YOU AND I THINK AT LEAST OUR DISCUSSIONS, I WAS THINKING OF IT IN TERMS OF, UH, RTC.
SO YOU KNOW, IN THE CURRENT MARKET PARADIGM WHERE, UH, NONS SPIN IS ALWAYS DEPLOYED, AND SO IT'S NOT UNCOMMON FOR US TO START EXHAUSTING NONS SPIN, YOU KNOW, IN THAT SITUATION UNDER R-T-C-R-T-C WOULD START TRYING TO PROCURE MORE NONS SPIND.
AND IF YOU THINK ABOUT HOW THAT WOULD WORK, IF YOU PUT IN A FOUR HOUR, UH, DURATION REQUIREMENT FOR BATTERIES, WE WOULD PROBABLY START MOVING UP THE AS DEMAND CURVE FOR NONS SPINS.
SO IF YOU THINK ABOUT A, YOU KNOW, RELATIVELY MILD RELIABILITY SITUATION DAY FROM THE SUMMER WHERE WE'VE EXHAUSTED, YOU KNOW, SEVERAL HUNDRED MEGAWATTS OF NONS SPIN, BUT EVERYTHING'S FINE AND THERE ISN'T REALLY AN ELEVATED RISK OF LOAD SHED THAT COULD LOOK A LOT WORSE IN A SITUATION WHERE SCED PERCEIVES ITSELF AS HAVING A NONS SPIND SHORTAGE BECAUSE IT'S ONLY ABLE TO AWARD NONS SPIND TO A QUARTER OF THE BATTERY CAPACITY.
AND SO WE DID NOT EXPLICITLY MODEL RTC
[02:05:01]
UNDER ANY OF THIS, BUT I DO THINK THE MECHANICS OF RTC WERE A BIG PART OF HOW WE THOUGHT ABOUT THIS PROBLEM.AND I, WE TOTALLY AGREE THAT WE UNDER RTC, HAVING SMALLER DURATION REQUIREMENTS FOR THESE ANCILLARY SERVICES MAKES A LOT MORE SENSE.
YEAH, I REALLY THINK WE NEED TO LOOK AT RTC BECAUSE I THINK EVEN ERCOT SAID THEY WERE OPEN TO REDUCING THE DURATION REQUIREMENTS WITH RTC, GIVEN THAT ANSARY SERVICE AWARDS ARE JUST FIVE MINUTES EACH OH, THANKS.
AND THAT'S BEEN MY EXPERIENCE AS WELL.
UH, SO THAT IS AN ONGOING CONVERSATION.
SO, UH, I THINK REMI, UH, CAN YOU, UH, EXPLAIN A LITTLE BIT MORE HOW YOU UTILIZE THE FIVE TO ONE 20 MINUTE NET NET LOAD FORECASTER? YEAH, SO WE LOOKED AT, SO THAT WOULD BE LIKE THE SHORT TERM LOAD FORECAST, UH, WHICH PRODUCES FIVE MINUTE FORECASTS FOR UP TO TWO HOURS.
AND SO WHAT WE DID WAS, FOR EACH HOUR WE LOOKED AT THE SUBSEQUENT FIVE MINUTES THROUGH THE SUBSEQUENT TWO HOURS AND TRIED TO FIND WHAT ARE THE CONSECUTIVE INTERVALS WHERE WE HAVE A NET LOAD FORECAST OF THAT WAS OFF BY AT LEAST A THOUSAND MEGAWATTS OF UNDER FORECAST.
AND THEN WE, WE IDENTIFY ALL OF THOSE EVENTS AND THEN TAKE THE LENGTH OF THAT EVENT AND PUT THAT INTO OUR DISTRIBUTION.
AND THAT'S WHERE WE'RE TRYING TO GET A SENSE OF WHAT'S THE DURATION OF TIME THAT BATTERIES MIGHT BE RELIED UPON TO PROVIDE ENERGY BECAUSE OF RESOURCE UNDER COMMITMENT OR SOMETHING LIKE THAT.
NED? SO ON THE DURATION QUESTION, UM, THIS IS SOMETHING I'VE, I'VE BEEN TRYING TO GRAPPLE WITH, I THINK A LOT OF US HAVE BEEN TRYING TO GRAPPLE WITH FOR, FOR SOME TIME.
UM, YOU KNOW, I CAN UNDERSTAND FROM A, YOU KNOW, A, A, A VERY, YOU KNOW, STRAIGHTFORWARD, UM, YOU KNOW, SYSTEM OPERATIONS STANDPOINT UNDER REAL-TIME IZATION, YOU KNOW, YOU MOVE FROM ONE INTERVAL TO THE NEXT AND YOU HAVE A CHANCE TO RESET THE SYSTEM.
UM, BUT THERE'S ALSO A, IT SEEMS LIKE THAT ALSO PUTS YOU IN A SITUATION WHERE IN A LOT OF SCENARIOS YOU MIGHT HAVE, UM, RELATIVELY LESS SCARCITY, BUT THEN WHEN YOU DO START TO RUN OUT OF THAT BATTERY STATE OF CHARGE, YOU GET IN THE THICK OF IT REAL FAST.
AND SO, YOU KNOW, THAT'S, UM, THAT'S A SITUATION THAT WE'VE, AS A MARKET HAVE STRUGGLED WITH, UH, I THINK SINCE THE INCEPTION OF THE ENERGY ONLY MARKET.
UM, BUT IN PARTICULAR SINCE WINTER STORM YEAR.
AND THAT GETS BACK TO THE CONSERVATIVE OPERATIONS QUESTION IS LIKE, HOW MUCH, HOW MUCH SAFETY NET, HOW CLOSE TO THE EDGE, I THINK IS SOMETIMES THE, THE, THE ANALYSIS, THE ANALOGY THAT'S USED, HOW CLOSE TO THE EDGE DO YOU KNOW? IS ERCOT COMFORTABLE OPERATING THIS, THE SYSTEM? HOW COMFORTABLE OR HOW CLOSE TO THE EDGE ARE POLICY MAKERS COMFORTABLE WITH ERCOT OPERATING? UM, AND THAT'S THE, THAT'S THE, THE STRUGGLE TO, TO CO OPTIMIZE, UM, NOT TO MIX METAPHORS.
UM, SO I GUESS I SEE JEFF, YOU'RE NEXT IN THE QUEUE.
SO RATHER THAN, UH,
SO I'LL, I'LL START AND MAYBE NIKA MAY NEED TO JUMP IN AND HELP ME OUT.
UM, SO I, I THINK, UM, WHAT, WHAT I THINK FIRST TO SHAMAN'S POINT WITH RTC, UM, I, I DON'T THINK THAT WE HAVE SAID THAT WE ARE GOING TO REDUCE THE DURATION REQUIREMENTS IN RTC.
UH, I, I THINK THAT THIS IS, UM, THAT THE CHANGES IN HOW WE THINK ABOUT BATTERY STATE OF CHARGE AND RTC, THIS IS AN ONGOING INTERNAL DISCUSSION.
UH, I, I THINK IN THE SPIRIT OF WE, WE ARE ALWAYS TRYING TO SHARPEN THE PENCIL AND, AND DO THINGS BETTER, UM, THAT THAT COULD BE PART OF THAT CONVERSATION THAT I DON'T THINK THAT WE'RE AT THAT POINT TODAY WHERE WE WOULD SAY, YEAH, WE, WE CAN REDUCE THE DURATION REQUIREMENTS.
UM, YEAH, MAYBE I'LL LEAVE IT.
DO YOU WANNA ADD ANYTHING TO THAT SKA? FINE.
I THINK, I THINK WHAT YOU SAID IS FAIR.
I THINK WHAT WE SAID IS WE ARE OPEN TO
[02:10:01]
REVISITING THE QUESTION ALONG WITH RTCA BECAUSE IT MAKES, WITH THE SYSTEM CHANGES THAT ARE BEING TEED UP, IT MAKES FAIR SENSE TO ASK WHAT IS, UH, WHAT IS THAT ENERGY A PROCUREMENT THAT WE NEED? AND SOME OF THE POINTS YOU RAISED ABOUT, UM, HOW MUCH ENERGY IS THERE IN THE A S YOU ARE PROCURING AT THAT INSTANT ARE PART OF THOSE INTERNAL CONVERSATIONS THAT WE ARE THINKING THROUGH RIGHT NOW AS WELL.SO WE DO THINK IT'S APPROPRIATE TO TALK ABOUT THAT CONVERSATION AND LIKELY RTC IS THE PLACE TO TALK ABOUT THAT CONVERSATION.
SO, UH, WE ARE ALSO GETTING READY TO TEE THAT UP, I GUESS.
AND, UM, THE, THE OTHER POINT I WAS GONNA MAKE IS, ANDREW, I I APPRECIATE YOUR CAVEATS, UH, IN, IN HERE.
UM, THE, THE ONLY OTHER THING I WOULD ADD, UH, AND I AGREE WITH, YOU KNOW, KIND OF HOW YOU LAID THAT OUT IN THOSE CAVEATS.
UM, THE ONLY THING I WOULD ADD IS, UM, UH, AND, AND I, I THINK I SAID THIS TO YOU PREVIOUSLY IS, UM, THE, THE OTHER CONCERN I HAVE WITH THIS IS, UM, WE, WE HAVE HAD IN RECENT HISTORY EVENTS WHERE WE HAVE, UH, RELEASED OR DEPLOYED NONS SPIN FOR LONGER THAN ONE HOUR FOR, FOR MULTI HOURS.
AND, AND SO THAT, SO, SO SAYING, WELL, YOU, YOU ONLY NEED IT FOR ONE HOUR.
IT DOESN'T, THAT DOESN'T PASS THE SMALL TEST TO ME.
SO YEP, ALL THAT'S WELL TAKEN.
UH, I JUST WANNA REITERATE A POINT BEFORE, UH, GOING ON, BECAUSE I THINK NED'S POINT, NED'S COMMENTS KIND OF REMINDED ME OF THIS, AND I'VE KIND OF MADE THIS COMMENT AND I'LL, I'LL KIND OF GO BACK HERE WHERE I EXPRESS IT.
UM, YOU MIGHT MAKE A DECISION WITH A PERFECTLY PLAUSIBLE RELIABILITY BASIS, BUT THEN THE WAY IT'S GOING TO MANIFEST ITSELF AS FAR AS MARKET BEHAVIOR COULD BE ADVERSE TO THAT.
AND EXACTLY SOMETHING YOU SAID AS FAR AS LIKE, ONCE YOU START GETTING TO THE END OF THAT STATE OF CHARGE AND YOU'RE IN THE THICK OF IT, LIKE THIS COULD BE A SERIOUS PROBLEM.
I DO THINK IT MAKES SENSE TO, UH, ONCE BATTERIES ARE OUTTA THEIR STATE OF CHARGE, THEY'RE NOT RECHARGING UNTIL THE EVENT IS OVER.
AND SO CREATING A SITUATION WHERE DURATION LIMITED RESOURCES ARE PROVIDING ENERGY BEFORE ALL OF THE, LIKE AVAILABLE DURATION, INFINITE RESOURCES ARE PROVIDING ENERGY, I THINK IS JUST UPSIDE DOWN FROM A, UH, RELIABILITY ORDER OF OPERATIONS STANDPOINT.
AND SO, UH, PART OF THE PROBLEM WITH IMPOSING A DURATION REQUIREMENT ON THESE BATTERIES IS THAT IT WOULD TEND TO INCENTIVIZE THAT KIND OF BEHAVIOR.
AND THERE'S ALSO, IT JUST GETS REALLY WEIRD TO THINK ABOUT, YOU COULD HAVE SERIES OF BATTERIES PROVIDING THESE RESERVES ONE AFTER ONE HOUR AFTER THE NEXT, ESPECIALLY IN THE WORLD WE'RE MOVING INTO, I MEAN, 20,000 MEGAWATTS OF BATTERIES, PEOPLE LIKE THIS IS SERIOUSLY TOTALLY DIFFERENT THAN, YOU KNOW, ANYTHING THAT'S EVER HAPPENED.
AND SO, UH, I DON'T, I DON'T REALLY THINK ANYONE HAS THAT FULLY, UH, INTERNALIZED YET.
BUT, UH, REQUIRING THEM TO KEEP FOUR HOURS OF STATE OF CHARGE PROVIDE AS I THINK WILL TEND TO MAKE WORSE INCENTIVES THAN IT DOES PROMOTE RELIABILITY.
SMI, UM, YEAH, I HAVE A QUESTION FOR
UM, SO THE, THE, THE ONE, THE THOUSAND, UH, NO THOUSAND WHATEVER THE ANALYSIS THAT YOU SHOWED, THE, UM, UH, HOW DID YOU GUYS, UH, LOOK AT THE ANALYSIS TO COME UP WITH THE TWO HOUR AND THE FOUR HOURS? LIKE, UH, I, I THOUGHT IT WAS BASED ON ACTUAL EVENT DURATION, UH, AND SEEING LIKE, UH, YOU HAVE SEEN LIKE 99 PERCENTAGE OF THE EVENTS WITHIN FOUR HOURS.
UM, SO I'M TRYING TO RELATE OR TRYING TO UNDERSTAND THE DIFFERENCE.
IF YOU STILL HAVE MY SLIDE DECK UP, LOOK AT THE APPENDIX.
UH, WE DID ALSO LOOK AT NET LOAD FORECAST ERRORS, BUT WHAT WE ENDED UP DOING, UH, WAS I THINK OUR THRESHOLDS WERE CERTAINLY HIGHER.
WE WERE LOOKING FOR MORE EXTREME EVENTS.
THOUSAND THRESHOLD ITSELF MIGHT BE A BIT LOWER RIGHT NOW, AT LEAST, UH, BETWEEN THEIRS AND OURS.
ANDREW, I READ YOUR APPENDIX SO I KNOW WHERE IT IS.
SO, SO THIS IS, UH, SO THERE ARE TWO FILTERS HERE.
WE ARE LOOKING AT 4,000 MEGAWATT OR MORE NET LOAD UNDER FORECAST ERRORS WHERE HE REAL TIME HEADROOM IS LOW.
I THINK THE HEADROOM LOW BEING, WE HAD USED, UH, TH 5,000 MEGAWATTS OF PRC, SO WE FILTERED FOR TIMES WHEN PRC WAS LOWER THAN 5,000.
AND THEN WE LOOKED AT CONSECUTIVE, UH, TIMES WHEN
[02:15:01]
THE FORECAST WE UNDER FORECASTED NET LOAD BY 4,000 MEGAWATTS OR MORE, 4,500 MEGAWATTS OR MORE, AND 6,250 MEGAWATTS OR MORE.SO WE CERTAINLY, WE WERE LOOKING FOR MORE EXTREME EVENTS THAT THAT WOULD BE MORE CONSERVATIVE.
BUT THIS IS, UH, YOU, YOU ARE ONLY LOOKING AT A THOUSAND MEGAWATTS, SO YOURS SHOULD COME OUT TO BE EVEN MORE, RIGHT? NO, YES.
I THINK THE DIFFERENCE IS, UH, OKAY.
CAMERON, I MIGHT NEED YOU TO PINCH IT HERE.
BECAUSE WE TALKED ABOUT THIS AND I THINK YOU HAVE YOUR HEAD MORE STRAIGHT ON IT.
YEAH, SORRY, THIS IS CAMERON RADDY WITH, UH, POTOMAC AS WELL.
UM, I WOULDN'T SAY IT INHERENTLY WOULD, BUT IN PRELIMINARY LOOKING AT IT, YEAH, IT, IT DOES SEEM TO FOLLOW THAT TREND WHERE WE'RE STARTING WITH A THOUSAND, IF WE WERE TO ONLY LOOK AT 4,000, THAT JUST REDUCES THE NUMBER OF CASES AND THOSE CASES MIGHT BE MORE INTERMITTENT THAN SOME OF THE CONSECUTIVE CASES WE FOUND WITH, UH, THIS THRESHOLD OR THE THOUSAND MEGAWATT THRESHOLD.
AND ALSO BECAUSE THIS SLIDE IS UP, WE HAVE NOT REFRESHED THIS ANALYSIS YET.
OKAY, SEAN? YEAH, I GUESS I WANTED TO ANSWER THOSE QUESTIONS ABOUT, YOU KNOW, CONCERNS WITH, UH, REDUCING THE DURATION REQUIREMENT ON BATTERIES AND MAYBE EVEN VIRTUAL AS, UH, I JUST WANTED TO POINT OUT THAT THE RR IN RTC IS VERY DIFFERENT THAN R TODAY, THE ROCK AND RTC LOOKS INTO, YOU KNOW, STATE OF CHARGE, EVERYTHING IN DETERMINING WHETHER TO COMMIT AND WHO TO ASSIGN COSTS TO.
SO THERE'S DEFINITELY A, A CARROT AND STICK THERE TO KEEP MARKET IN CHECK.
IT'S VERY DIFFERENT THAN THE ROCK TODAY.
AND I THINK THAT SHOULD ADDRESS A LOT OF THE RELIABILITY CONCERNS OF REDUCING THE DURATION.
UH, IN, IN MY CONVERSATIONS WITH
IS THAT, IS THE CL Q CLEAR OR DO YOU HAVE, UH, ADDITIONAL COMMENTS, JEFF? ALL GOOD.
DO WE NEED A SEVENTH INNING STRETCH? LET'S SEE.
UH, KIND OF MOVING INTO THE, UH, END GAME HERE AND JUST SOME COMMENTARY.
UH, WE RECOGNIZE THAT IF WE WERE TO TRY TO APPLY THIS FOR A FUTURE YEAR AS STUDY, WE WOULD NEED TO ACCOUNT FOR, UH, HOW THE GIN MIX IS GONNA CHANGE, HOW LOAD IS GONNA CHANGE, PARTICULARLY THINGS LIKE ALL THE LARGE FLEXIBLE LOAD BEING BUILT ON THE SYSTEM.
I ALSO TOTALLY GRANT THE POINTS ABOUT SELF-COMMITMENT, THAT THIS TYPE OF ANALYSIS ONLY GETS YOU SO FAR IF YOU DON'T HAVE A KIND OF PRODUCTION COST, UNIT COMMITMENT CONSTRUCT, THAT WOULD GIVE YOU A BETTER SENSE OF HOW MUCH RESERVE CAPACITY ARE YOU LIKELY TO GET JUST BASED ON SELF COMMITMENT.
YOU KNOW, YOU NEED TO DO SOME KIND OF, UH, ANALYSIS TO GET YOUR HANDS ON THAT.
AND SO ALL OF THAT'S WILL TAKEN AND WE'RE CONTINUING TO WORK ON THAT.
LASTLY, WE HAVE SOME THOUGHTS ON DRRS, UH, WHICH WE'VE BEEN RECOMMENDING A, UH, UNCERTAINTY PRODUCT IN OUR STATE OF THE MARKET REPORTS.
UH, AND WE THINK THAT SOMETHING LIKE DRS COULD BE REALLY HELPFUL.
IT COULD RESOLVE A LOT OF THE ISSUES WITH OVER PROCURING RUCK OR OVER PROCURING NONS SPIN.
AND THEN WE WOULDN'T NECESSARILY HAVE TO RELY ON OUT OF MARKET UNIT COMMITMENTS.
AND SO DEPENDING ON HOW IT'S DESIGNED, THAT COULD ALL BE TO THE BENEFIT.
UH, IT COULD ALSO BE CO OPTIMIZED, AND SO THE MARKET PRICES WOULD BE MORE EFFICIENTLY REFLECTING THE SCARCITY OF RESERVES.
UH, THERE ARE SOME CONCERNS, UH, IF DRS IS REQUIRED TO REMAIN OUT OF MARKET, AND IF TOO MUCH OF IT IS PROCURED, THEN WE COULD JUST BE SETTING OURSELVES UP FOR MORE, UH, ARTIFICIAL SCARCITY LIKE WE EXPERIENCED WITH ECRS OVER THE LAST YEAR.
AND SO LONG STORY SHORT, THE DEVIL IS IN THE DETAILS.
AND SO I THINK THAT IS MY LAST SLIDE.
I'LL TAKE ANY FURTHER QUESTIONS.
SO ON ON THAT LAST COMMENT ABOUT DRS, AND I THINK YOU WERE, YOU'RE HEARKENING BACK TO OUR, OUR, OUR DISCUSSION ON NPR 1224 AND, AND THE ECRS EARLY RELEASE.
SO I THINK THERE'S A, A, AN IMPORTANT DISTINCTION TO DRAW.
UM, YOU KNOW, AT LEAST WITH ECRS, THAT WAS ALL IT WAS DESIGNED, YOU KNOW,
[02:20:01]
PRE YURI, FRANKLY.UM, AND, YOU KNOW, WITH A, WITH AN OPERATIONAL DESIGN, UM, DRRS ON THE OTHER HAND, THAT CAME OUT OF A, A VERY EXPLICIT DISCUSSION ABOUT RESOURCE ADEQUACY AND, AND NEEDING TO MEET THE RELIABILITY NEEDS OF THE SYSTEM.
UM, IT WAS PRESENTED, UH, SPECIFICALLY AS AN ALTERNATIVE TO THE PCM, UH, AND, YOU KNOW, THE ADVOCACY AROUND IT WAS EXPLICITLY ROOTED IN PROVIDING, UH, INVESTMENT INCENTIVES FOR DISPATCHABLE GENERATION TO MEET THE RELIABILITY NEEDS OF THE SYSTEM.
SO I, WHILE I RECOGNIZE THAT FOLKS ARE GONNA HAVE THAT, YOU KNOW, RAISE THAT CONCERN, I ALSO THINK WE NEED TO BE VERY CLEAR AS A STAKEHOLDER BODY THAT THAT IS PART OF THE FEATURE, THE PART OF THE DESIGN OF DRS FROM THE OUTSET, THAT HAS ALWAYS BEEN PART OF THE FRAMEWORK, AND THAT'S ONE OF THE OBJECTIVES.
IT'S NOT JUST TO ADDRESS UNCERTAINTY, IT IS ALSO THERE TO HELP MEET THE RELIABILITY NEEDS OF THE SYSTEM.
WHETHER OR NOT IT'S THE MOST EFFICIENT ROUTE, I WOULD, I WOULD PERSONALLY SAY THAT THE PCM WOULD BE THE MOST EFFICIENT ROUTE TO GET THERE.
BUT, YOU KNOW, WE HAVE MULTIPLE TOOLS AND, UH, YOU KNOW, DRS IS, IS ONE OF THEM.
SO I I, I WANT US TO KEEP THAT, UH, THAT CONCEPT FRONT AND CENTER AND ON THE TABLE.
I WAS TOLD TO EXPECT THAT YOU MIGHT SAY SOMETHING LIKE THAT.
SO I, UH, SUPPOSE THE IMM MIGHT NEED TO BE MAKING SOME MORE APPEARANCES AT SOG MEETINGS.
CARRIE, DO Y'ALL INTEND TO FILE ANY COMMENTS ON THE NPR OR YOUR CONCERNS HERE ABOUT IMPLEMENTATION DETAILS? IS THAT GONNA BE MORE AROUND THE METHODOLOGY WHENEVER THAT TIME COMES? GREAT QUESTION.
UH, WE SHOULD PROBABLY FIGURE THAT OUT.
BILL BARNES? YEAH, TO NED'S POINT, I, I THINK WE'RE STILL SEARCHING FOR WHAT OUR RESOURCE ADEQUACY SOLUTION IS IN THIS MARKET, UM, PARTICULARLY GIVEN A COST CAP ON PCM AND WHAT DRS IS REALLY INTENDED TO DO.
BUT I, I THINK IT IS CLEAR, UM, IN STATUTE AND IN, UM, THE NPRS THAT ERTA FILED, PARTICULARLY THE MOST RECENT 1 12 35, THAT ONE OF THE BENEFITS OF DRS IS INTENDED TO BE A REDUCTION IN, UH, OUT OF MARKET COMMITMENT TO DO THE RUCK PROCESS.
AND I KNOW WE'VE GRAPPLED WITH, UM, HOW TO POTENTIALLY INCLUDE ESRS IN THE DRS PRODUCT.
AND IT SEEMS THAT IN THE NEXT PHASE OF DRS, UM, THE ONLY WAY THAT WE COULD DO THAT IS IF THERE WAS A CLEAR REDUCTION IN RUCK NEED BY INCLUDING ESRS, WHICH WOULD POTENTIALLY MEAN OPENING UP, UH, ESR CAPACITY THAT HAS AVAILABLE STATE OF CHARGE TO THE RUCK ENGINE, WHICH WOULD OBVIOUSLY THEN INCLUDE ESRS IN RUCK DISPATCH POTENTIALLY, BUT WOULD ALSO ALLOW THE RUCK ENGINE TO REDUCE THE NEED, UH, FOR RUCKS THROUGH DRS PROVIDED BY ESR.
SO I'M JUST WONDERING, ANDREW, IF YOU'VE THOUGHT THROUGH THAT ESR, UH, PHASE OF DR DRS AND HOW THAT COULD WORK? NOT COMPREHENSIVELY.
UH, I HAVE, I MEAN, SO IS IT 1235? UH, I HAVE, WE HAVE THOUGHT ABOUT IT A LITTLE BIT, BUT, UH, WE MIGHT BE BEHIND THE EIGHT BALL ON THAT A LITTLE BIT.
I THINK WE HAVE TIME TO THINK ABOUT THAT PART SINCE PHASE ONE IS GONNA BE OFFLINE, UH, THERMAL GENERATION, BUT WE WOULD BE LOOKING FOR ANY SECOND PHASE THAT INCLUDES ESRS TO HAVE A CLEAR REDUCTION IN NEED FOR RUCK.
UM, UH, AGAIN, BACK TO THE, THE PREVIOUS QUESTION, UH, OF THAT, UH, DURATION, UH, SUBSET, CAN YOU TELL ME ROUGHLY WHAT'S THE SAMPLE SIZE LIKE? I THINK YOUR SAMPLE SIZE IS BIGGER THAN THEIR SAMPLE SIZE.
SO YOUR, UH, IT MIGHT BE THAT THE EXCEPTIONAL EVENTS THAT YOU ARE SAYING, OH, IT'S O 95 IS WHERE ALL THE PROBLEM IS.
SO THAT MAY BE THE REASON I CAN TELL YOU TO START THAT THERE HAVE NOT BEEN THAT MANY SITUATIONS WHERE PRC GOT BELOW 5,000 IN THE LAST YEAR.
UH, AUGUST 20TH WAS THE FIRST TIME IN A WHILE.
AND SO CAMERON MAY HAVE MORE DETAIL ON THAT THOUGH.
[02:25:01]
TO YOU SEPARATELY.SO THANK YOU ALL FOR YOUR TIME.
UH, I'D PARTICULARLY LIKE TO THANK, UH, THE, MY COLLABORATORS AT ERCOT.
I LEARNED A LOT OVER THIS PROCESS AND MAY HAVE LEARNED EVEN MORE IF I WOULD, UH, JUST SHUT UP AND LISTEN A LITTLE MORE.
SO THIS HAS BEEN A GOOD EXPERIENCE FOR ME, AND I HOPE WE ALL, UH, FIGURE OUT WHAT WE WANNA DO WITH THIS AS METHODOLOGY STUFF.
[4. Q&A • Review previously submitted questions • New questions]
NOTED, I WENT THROUGH WHILE WE WERE TALKING AND, UM, MARKED OFF SOME OF THE QUESTIONS THAT WERE PRE-SUBMITTED THAT I THINK WERE ALREADY ANSWERED, BUT I THINK WE CAN GO THROUGH THE REST OF THOSE.UM, ARE YOU OKAY COMING UP AND HELPING WITH THAT NATIKA? THANKS.
ERCOT TOOK THE TIME TO RESPOND TO EVERY SINGLE QUESTION THAT TAX SUBMITTED IN A LOT OF DETAILS, SO MADE, UH, SHOULD MAKE THIS MORE EFFICIENT, WHICH IS AN AWESOME THING.
CAN YOU PLEASE PUT THE ERCOT PRESENTATION BACK? MM-HMM.
SO, UH, IN MY SLIDE DECK WE ALSO INSERTED THE SET OF QUESTIONS THAT WERE ASKED, AND THERE IS A QUITE A FEW OF THESE HERE.
UM, AND, AND REALLY, UH, WE MAY, LIKE JULIE MENTIONED, WE MAY HAVE COVERED, UH, SEVERAL OF THESE ALREADY.
UH, SOME, WHAT I MAY END UP DOING IS I MAY END UP PICKING SOME KEY ONES FROM HERE.
AND IF YOU ARE, IF, UH, ANYBODY SEES A QUESTION THAT THEY WANT TO PICK UP OR PROMPT ME TO DO.
SO THERE WAS ONE QUESTION HERE THAT I THOUGHT WAS INTERESTING, WHICH WAS AROUND, UM, UM, UH, IF YOU'RE LOOKING AT SETTING THE QUANTITIES USING A PORTFOLIO APPROACH, 'CAUSE IT SEEMS LIKE PORTFOLIO APPROACH ENSURES OVERLAP BETWEEN PRODUCT ARE MINIMIZED.
SO I DID WANT TO CALL OUT EVERYTHING YOU'VE HEARD US TALK ABOUT BETWEEN US AND THE IMM SO FAR.
WE'VE, WE DID NOT SEND, UH, SET AN INTENTIONAL OR AN EXPLICIT GOAL TO LOOK AT THE, THE OVERALL RISK AS A A PORTFOLIO RISK, BUT WE ARE STILL LOOKING AT SETTING UP MODELING OF ECRS AND NONS SPIN TO COVER THE INDIVIDUAL, UH, RISK.
SO AN INTERVAL RISK WOULD BE AN, UH, THE ECRS PORTFOLIO AND, UH, UH, INTERRA RISK WOULD BE WHAT WE WOULD COVER THROUGH THE NONS SPIN, UM, MODELING METHODOLOGY.
I MEAN, AT LEAST THAT'S WHERE WE ARE RIGHT NOW IN TERMS OF THE MODELS AND THE RISK ASSESSMENTS THAT WE ARE THINKING.
UH, SO WE'VE TALKED ABOUT DRRS ALREADY, UH, TO US.
DRRS IS STILL BEING THOUGHT THROUGH HERE.
THE QUESTION WAS, HOW DO YOU ENSURE THAT YOU'RE DESIGNING DRRS SO THAT IT DOESN'T HAVE SIMILAR ISSUES AT ECRS? UM, IT'S IN THE PROCESS OF BEING DISCUSSED RIGHT NOW.
UH, FEW THINGS THAT ARE DIFFERENT ABOUT IT IS, UH, UH, IT'S, UH, IT'LL BE IMPLEMENTED ON TOP OF RTC, UH, A, IT'LL, SO IT'LL, IT'LL USE DAM TO PROCURE AND, UH, WILL BE DEPLOYED VIA ROCK.
UH, BUT WE ALSO THINK, UH, CONVERSATIONS AROUND THE DEMAND CURVE FOR DRRS WILL BE IMPORTANT.
SO PROVIDING INPUTS TO THE, THE 1235 DEVELOPMENT PROCESS WILL BE HELPFUL TO CONTINUE THINKING THROUGH THIS PARTICULAR ISSUE.
UM, THERE WAS A QUESTION ABOUT IF WE CAN DO BACKCAST AND YEAH, YOU, YOU'RE RIGHT.
WE WILL BE HAPPY TO SHARE BACKCAST WHEN WE HAVE, UH, INFORMATION READY FOR IT.
UM, DOES POTOMAC WANNA ADD ANYTHING TO THAT ABOUT THE BACK CAST? I DON'T THINK WE HAVE ANYTHING TO ADD OTHER THAN WHAT WE'VE ALREADY SAID.
I THINK, UH, YOU KNOW, THERE ARE INHERENT LIMITATIONS TO DOING A BACK CAST, AND SO ULTIMATELY WE'LL WANT TO DO A MORE FORWARD LOOKING ANALYSIS IF WE'RE TRYING TO SET AS TARGETS FOR A FUTURE YEAR.
WE'LL MOVE PAGES TO THE NEXT SET OF SLIDES.
UM, AGAIN, THE QUESTION ON DRRS, UH, QUESTION ON HOW DO YOU ACCOUNT FOR THE POLICY OPERATING POLICY, UH, APPROACHES THAT WE HAVE IN PLACE RIGHT NOW? I THINK WE'VE COVERED THOSE IN OUR SLIDE DECK.
UH, COVERED THOUGHTS, OUR THOUGHTS ON THAT PARTICULAR ISSUE AND THE SLIDE DECK ALREADY.
DO YOU ANTICIPATE HAVING DURATION REQUIREMENTS AND STATE OF CHARGE REQUIREMENTS? I THINK THERE'S BEEN A LOT OF DISCUSSION ON THAT ALREADY.
[02:30:01]
SHOULD BE CONTINUED TO DISCUSSED POTENTIALLY AT THE RTC TASK FORCE.I, THERE'S A QUESTION AGAIN AROUND THE APPROACH TOO, IF WE COULD PROVIDE RANGE.
AND I THINK WE'VE GENERALLY SAID, WHENEVER WE'VE TALKED, UH, WHENEVER WE'VE SEEN QUESTIONS AROUND THE DYNAMIC APPROACH, I THINK WE ARE GENERALLY SUPPORTIVE ABOUT SOME OF THE IDEAS AND THE REQUESTS THAT ARE BEING MADE.
I THINK WE SHOULD CONTINUE DISCUSSING THOSE, UH, AS WE DEVELOP, UH, CONCEPT, THAT CONCEPT FURTHER.
UM, SO THERE WAS SOME CAUTION, UH, GIVEN TO US AROUND ENSURING THAT WE ARE NOT, UH, UH, OVERLAPPING OUR USE CASES BETWEEN THE PRODUCTS.
UM, SO WE'VE, UH, CERTAINLY TO US RRS, UH, IS MORE SO FOR RESTING FREQUENCY.
UM, AS FAR AS, UH, ECRS, NONS SPIN AND THE FUTURE TEMPLATED DRRS IS CONCERNED, WE'VE SPENT SOME TIME TALKING ABOUT HOW THEY ARE DIFFERENT IN OUR PREVIOUS SLIDES.
SO I WILL AGAIN POINT YOU BACK TO THOSE RIGHT NOW.
UM, UM, SO THERE WAS A, AGAIN, CON CON CONVERSATIONS AROUND THE, THE DYNAMIC FRAMEWORKS OR RECOMMENDATION TOOL.
UH, UH, THERE WAS A CONVERSATION, THERE WAS A QUESTION AROUND LONG TERM A AUCTION.
WE ARE OPEN TO TALKING ABOUT THAT.
UH, WE DON'T HAVE ANY SPECIFIC RECOMMENDATION RIGHT NOW.
AND THEN HERE'S THE NEXT SET OF QUESTIONS.
UM, UM, LET'S SEE, ANYTHING HERE THAT STANDS OUT? UH, THERE WAS A QUESTION AROUND IF WE ARE INCORPORATING RELIABILITY STANDARD REQUIREMENTS.
UM, QUESTION AROUND DRRS METHODOLOGY.
AGAIN, UH, WE'VE MENTIONED THIS.
OUR INTENTION IS TO PICK THAT UP, UH, ONCE THE NPRR HAS PASSED THROUGH THE STAKEHOLDER PROCESS AND BEEN APPROVED BY PUC.
UM, WE ARE, THERE WAS A QUESTION AROUND ANCILLARY SERVICE COST ALLOCATION THAT'S OUTTA SCOPE AS FAR AS THIS STUDY EFFORT IS CONCERNED.
AND I, THERE WAS A EXPLICIT QUESTION AROUND HOW THAT SECOND RECOMMENDATION AROUND DYNAMIC PROCUREMENT WOULD WORK.
I, I WILL NOT GO INTO MY RESPONSE, BUT I TRIED TO EXPLAIN THE SUBTLE DIFFERENCES BETWEEN WHAT WE ARE DOING TODAY VERSUS WHAT THIS WOULD LOOK LIKE.
SO HAPPY TO TAKE ANY FOLLOW UPS ON THAT ONE OFFLINE.
YEAH, THERE WERE, UH, THERE WERE SEVERAL SPECIFIC DATA REQUESTS IN THIS PARTICULAR, UH, IN, IN, UH, ON, ON THIS SLIDE THAT WE RECEIVED.
IF YOU ALL ARE INTERESTED IN THEM, PLEASE REACH OUT TO ME.
THERE MAY BE ANOTHER WAY TO WORK ON IT.
WE'VE NOT, UH, EXPLICITLY, UH, PUBLISHED ANY PARTICIPATION DATA AS WITHIN OUR, AS A PART OF THIS STUDY EFFORT.
ALRIGHT, I THINK THAT'S THE END.
JULIE, YOU MAY WANNA TAKE OVER AGAIN.
WELL, ARE THERE OTHER QUESTIONS OR DID EVERYBODY GET A CHANCE TO ASK THEM WHILE WE WENT THROUGH THE PRESENTATIONS? I THINK SHAMS AS A QUESTION.
OKAY, GO AHEAD, SHAMS. YEAH, I GUESS I WAS THINKING THAT THIS STUDY WOULD BE MORE COMPREHENSIVE.
IT SEEMS LIKE IT'S FOCUSING ON ECRS AND
AND NOW THAT WE HAVE ECRS, DO WE KEEP, UH, ALIGN THOSE RESOURCES TO PROVIDE RRS AND THAT'S COSTING CONSUMERS MONEY, YOU KNOW, BECAUSE YOU'RE HAVING TO RECURE THAT.
UM, AND THEN ALSO, YOU KNOW, DURING CERTAINLY INERTIA, LOWER INERTIA CONDITIONS IS 20% REALLY GOOD FOR ALL THERMAL RESOURCES, OR HAVE WE SEEN WHERE WE MIGHT NEED TO TIGHTEN THAT, UM, PERCENTAGE BASED ON ACTUAL PERFORMANCE AND STUFF.
SO I WAS HOPING THAT THE STUDY WOULD SORT OF LOOK INTO RS AND, YOU KNOW, UM, INTO, IN MORE DETAIL.
BUT ANY THOUGHTS ON THAT? I MEAN, I GUESS THE IMM SHOULD BE CONCERNED ABOUT, UM, YOU KNOW, RS BEING PROVIDED BY A RESOURCE THAT DOESN'T RESPOND IN TIME AND STUFF, YOU KNOW, THAT'S COSTING MONEY TO THE MARKET.
[02:35:10]
UH, SHAMS, THIS IS JEFF MCDONALD.UM, SO, YOU KNOW, REGARDING CONCERNS IS, IS I THINK WAS EVIDENCED BY BOTH PRESENTATIONS.
THERE'S A LOT OF COMPLEXITY AND INTERACTION WITH, UH, THE DIFFERENT RESERVE PRODUCTS, UH, THE RESERVE PRODUCTS THAT ARE ACTUALLY TRANSACTED AND INTERACT WITH SCED, UH, VERSUS, UH, YOU KNOW, UH, RESERVE PRODUCTS OUTSIDE OF THAT.
I, I'M NOT SURE I FULLY COMPREHEND YOUR QUESTION, BUT, BUT MAYBE, MAYBE THERE'S SOME AFFIRMATION THAT, THAT WE ARE CONCERNED WITH THE INTERACTIONS.
WE, WE DO APPRECIATE THAT MORE TIME AND MORE STUDY WOULD GIVE US A BETTER COMPREHENSIVE LOOK, BUT I, I DON'T, I DON'T KNOW THAT I APPRECIATE FULLY THE CON THE SPECIFIC CONCERN THAT YOU'RE RELATING.
BUT AS ANDREW MENTIONED, YOU KNOW, THIS IS SOMETHING THAT WE'LL CONSIDER OR CONTINUE TO CONSIDER, UH, AND IMPROVE ON GOING FORWARD, UM, ESPECIALLY AS RESERVE PRODUCTS, UH, DEVELOP FURTHER AND AS WE GET INTO RTC AS WELL.
I GUESS TIKA PROBABLY KNOWS EXACTLY WHAT I'M SORT OF DESCRIBING.
ANY FEEDBACK NETHA ON THAT? YEAH.
THANK YOU FOR CALLING ME OUT, UH,
SO, UH, AT LEAST AS FAR AS WHO CAN PROVIDE RRS IS CONCERNED, UH, UH, SHAMS, WE DIDN'T EXPLICITLY SEE A NEED TO, UH, REVISIT, UH, WHAT'S ALREADY OUTLINED IN THE PROTOCOLS, UM, AS FAR AS, UH, AND SO THAT'S WHY YOU DON'T SEE US TALK MUCH ABOUT, UH, THAT, UH, AT LEAST, UH, IN THE CONVERSATION THAT YOU HEARD, UH, FROM US TODAY, YOU ARE RIGHT.
THERE IS A, UM, UH, THERE IS AN INCENTIVE FOR, UH, SOME OF THOSE RESOURCES TO ALSO PARTICIPATE IN ECRS.
NOW, THE SECOND THING WAS MORE AROUND RRS LIMITS, UH, AND IF THERE SHOULD BE A DIFFERENT RRS LIMIT DURING LOW INERTIA CONDITIONS VERSUS NOT.
SO WE DID, UH, IF YOU RECOLLECT, UH, AGAIN, WE CONSIDER THAT OUT OF SCOPE AS FAR AS THIS CONVERSATION IS CONCERNED, BUT THERE IS A SEPARATE ACTIVE CONVERSATION THAT WE ARE ENGAGING WITH THE PDC IN, UH, AS AN OUTCOME OF SOME WORK THAT GE DID ON THIS TOPIC.
SO I THINK AS WE, AS WE START UNDERSTANDING SOME OF THE STUDY RESULTS WE SAW FROM GE AND, UM, UH, CONSIDERING THOSE IN THE LIGHT OF THE OPERATING RISKS WE SEE, THAT MAY BE A MORE APPROPRIATE VENUE TO THINK THROUGH IF RRS LIMIT CHANGES ARE NEEDED.
YEAH, AND MAYBE I'LL ADD THE FIRST ISSUE FOR THE FIRST ISSUE, YOU KNOW, UM, THE FACT THAT, I MEAN, WHEN WE LAST DISCUSSED THIS IN YOUR AS METHODOLOGY, I BELIEVE YOU SAID, THAT YOU DO ACTUALLY DISCOUNT THAT RESOURCE, THOSE KIND OF RESOURCES, AND ACTUALLY PROCURE MORE OF IRS BECAUSE THAT RES THOSE KIND OF RESOURCES CAN'T PROVIDE THE SERVICE IN TIME.
SO IT'S ALMOST LIKE YOU'RE DOUBLE PROCURING.
I MEAN, IT'S COSTING THE MARKET MONEY.
AND THAT'S SOMETHING I THINK YOU SHOULD BRING TO THE ATTENTION OF THE IMM.
AND JUST BECAUSE IT'S IN THE PROTOCOLS NOW DOESN'T MEAN WE SHOULDN'T CHANGE IT IF IT'S MORE EFFICIENT AND, UH, YOU KNOW, AND NOW THAT ECRS IS A PRODUCT THAT PAYS AS MUCH OR MORE ALL THAT CAPACITY SHOULD TRANSITION TO ECRS.
THEY'RE VERY GOOD AT ECRS PROVIDING ECRS, BUT NOT GOOD AT PROVIDING RRS.
IT, IT, I WANNA ADD SOMETHING THAT, UM, I, I THINK IT DIDN'T MAKE AN END TO THE SLIDE DECK, BUT, UH, I THINK NKA OR LUIS PUT TOGETHER A TABLE OF ALL OF THE CHANGES THAT WE HAVE MADE IN THE LAST 10 YEARS, AND IT'S A PRETTY EXTENSIVE LIST OF CHANGES THAT, THAT WE HAVE MADE.
AND SO I, I WOULD NOT WALK AWAY FROM THIS, UH, CONVERSATION THINKING THAT OKAY, AN ANCILLARY SERVICES, WE, WE'VE GOT THESE IMM AND ERCOT RECOMMENDED CHANGES AND NOTHING ELSE IS GONNA CHANGE IN THE NEXT 10 YEARS.
UH, I, I THINK THAT WE ARE ALWAYS GOING TO HAVE THAT MINDSET OF CONTINUOUS IMPROVEMENT, AND WE'RE ALWAYS GOING TO BE LOOKING AT WAYS TO, UH, IMPROVE THE, UH, RELIABILITY AND EFFICIENCY, UH, OF THE ANCILLARY SERVICES.
AND, AND YOU KNOW, I THINK THAT THAT CERTAINLY, I THINK WHAT YOU BRING UP, SEAN, IS, IS CERTAINLY A CONVERSATION THAT, THAT WE CAN CONTINUE TO HAVE THAT.
I THINK THERE ARE THINGS LIKE THAT THAT WILL CONTINUE TO, UH, EVOLVE AS WE, UH, GO FORWARD THAT THE SYSTEM IS, UH, CERTAINLY NOT, UH, THAT, THAT THE CHANGES AREN'T STOPPING, RIGHT? THE SYSTEM'S CONTINUING TO CHANGE.
I THINK WE ALSO NEED TO CONTINUE TO EVOLVE AND CHANGE.
UM, I THINK, UH, MICHELLE, YOU HAD A QUESTION OR COMMENT? YEAH, I, I REALLY JUST,
[02:40:01]
UM, THERE WERE A COUPLE OF QUESTIONS IN ATTACK FEEDBACK THAT HAD NOTES THAT SAID THAT, UH, ERCOT WAS EXPECTING THE IMM TO ANSWER.AND SO I WANTED TO KNOW IF WE COULD GET THE I'S RESPONSE TO THOSE.
UM, I THINK THERE WAS ONE THAT THEY GENERALLY RESPONDED TO IN TALKING ABOUT THE BACK CASTS AND, AND THE MONTE CARLO MODEL AND, AND ANSWERING SOME OF NED'S QUESTIONS.
BUT THERE WERE A COUPLE ON PAGE, OR I GUESS ON, ON SLIDE 26, UM, TOWARDS THE TOP QUESTIONS FIVE AND SIX, THERE'S A NOTE ON ERCOT PERSPECTIVE THAT SAYS EXPECT IMM TO ANSWER.
ONE IS ABOUT THE VIEW OF ANCILLARY SERVICES.
AND THE OTHER IS, UM, ABOUT ANCILLARY SERVICES BEING EXPECTED TO PROVIDE RESOURCE ACT ADEQUACY IN THE MARKET.
AND SO I WAS HOPING THAT SINCE IT'S ON PAGE, IT'S ON THE PREVIOUS, THERE YOU GO.
SORRY, THOSE WERE TWO WHERE OUR COT DIDN'T HAVE ANYTHING BUT SAID THAT THEY WOULD EXPECT THE IMM TO ANSWER.
SO I WAS JUST HOPING WE COULD GET AN IMM RESPONSE.
SO THAT'S FIVE AND SIX ON THE FIRST BLOCK.
I DON'T THINK I WOULD CHARACTERIZE THE I'S OPINION, UH, OF THE SITUATION IS THAT AS R THE PROBLEM TO BE SOLVED? UH, SO I DON'T THINK OUR DIFFERENCE WITH ERCOT IS THAT SEVERE.
I DO THINK THERE IS A DIFFERENCE OF PERSPECTIVE ON THE COST BENEFIT RATIO OF OVER PROCURING, UH, ANCILLARY SERVICE AND MORE SO IN THE LAST YEAR, MOST OF OUR CRITIQUES ON SOMETHING LIKE ECRS HAVE RELATED TO, UH, DEPLOYMENT PRACTICES AS MUCH AS PROCUREMENT VOLUMES.
AND SO THERE ARE A LOT OF DIFFERENT THINGS GOING ON THERE, BUT I DON'T THINK THAT THE CONCEPT OF ANCILLARY SERVICES IS, UH, SOMETHING THAT WE HAVE MUCH OF A DISPUTE WITH.
UH, AS FOR RESOURCE ADEQUACY, YOU KNOW, THE PERSONALLY, YOU KNOW, COMING FROM FORMERLY BEING, YOU KNOW, WORKING FOR A BIG PROJECT DEVELOPER, UH, THERE'S REVENUE IN THE MARKET, WHETHER IT'S FROM ENERGY OR IT'S FROM ANCILLARY SERVICES OR IT'S FROM SOME KIND OF RESOURCE ADEQUACY CAPACITY PRODUCT.
SO I KNOW THE DISTINCTION PEOPLE ARE TRYING TO DRAW WHEN THEY SAY LIKE, OUR ANCILLARY SERVICES FOR RESOURCE ADEQUACY OR ARE THEY NOT? AND UH, THEY'RE FOR OPERATIONAL RESERVES, BUT THEY PROVIDE REVENUE IN THE MARKET AND YOU NEED A CERTAIN AMOUNT OF REVENUE IN THE MARKET TO SUPPORT A CERTAIN AMOUNT OF RESOURCES IN THE MARKET.
AND SO I I, YOU KNOW, ON SOME LEVEL THERE'S A DISTINCTION WITHOUT A DIFFERENCE, BUT I KNOW THE POINT PEOPLE ARE TRYING TO MAKE AND AM JUST NOT, UH, THAT, THAT'S ABOUT AS MUCH AS I THINK WE NEED TO SAY ABOUT IT RIGHT NOW.
CAN, CAN I JUST FOLLOW UP QUICKLY? MM-HMM.
UM, AND IT'S HELPFUL IF YOU'RE BOTH COMING AT THE ANALYSIS FROM THE SAME PERSPECTIVE OF WHAT NEEDS TO HAPPEN, I GUESS IS, IS WHAT I'M TRYING TO ASK.
SO ARE YOU LOOKING AT IT FROM THE VERY DIFFERENT VIEWPOINTS OR ARE YOU LOOKING AT IT FROM A SAME POINT OF VIEW? YES.
SO, SO THE, YOU KNOW, AND WITHOUT STARTING A, A DEBATE, UH, YOU KNOW, I I, WE SPENT QUITE A BIT OF TIME WORKING DIRECTLY AND IN PERSON WITH ERCOT STAFF, AND I THINK GENERALLY SPEAKING, WE HAVE A SIMILAR VIEWPOINT OF THE ROLE OF ANCILLARY SERVICES.
IF, IF YOU'RE, IF YOU'RE REFERRING TO OPERATIONAL VERSUS PLANNING SLASH RESOURCE ADEQUACY, UM, PERSPECTIVE, I, I CAN SAY OUR PERSPECTIVE, YOU KNOW, WITH RESPECT TO THIS STUDY IN PARTICULAR WAS ON A, ON OPERATIONAL RELIABILITY AND NOT ON A PLANNING PERSPECTIVE TO, TO, TO WEAVE THAT IN.
AND, AND I, I DIDN'T GET THE SENSE FROM WORKING WITH ERCOT STAFF THAT THEY WERE VIEWING THIS FROM A PLANNING OR, UM,
[02:45:01]
RESOURCE ADEQUACY PERSPECTIVE.I, THEY CAN, THEY CAN CORRECT ME IF I'M WRONG, BUT THAT REALLY WASN'T PART OF OUR DISCUSSION.
UM, AND, AND YOU KNOW, SORT OF TO GET TO YOUR POINT OF THE ROLE OF ANCILLARY SERVICES AND RESOURCE ADEQUACY, AND I I'VE CERTAINLY BEEN IN SEVERAL DISCUSSIONS, I'M SORRY, EVERYBODY IN THIS ROOM HAS, UH, ON THAT VERY TOPIC.
SO, SO WHEN YOU HAVE, WHEN YOU HAVE LARGE AND QUICK PROJECTED LOAD GROWTH, IN ORDER TO GET RESOURCE ADEQUACY INTO A SPOT MARKET, YOU HAVE TO, IN SOME WAY REFLECT THE FUTURE NEED INTO THE CURRENT PROCUREMENT AND PRICE FORMATION.
AND THAT WASN'T PART OF THIS DISCUSSION.
AND THAT'S ACTUALLY A COMPLICATED TOPIC.
UM, AND IT'S A LOT OF GUESSWORK IF YOU'RE JUST THROWING MONEY, UM, INTO THE SPOT MARKET, HOPING THAT THAT WILL PRODUCE, UH, THE, THE, THE REVENUE INCENTIVE TO, TO BUILD NEW GENERATION TO MEET YOUR LOAD GROWTH.
I, I THINK TUNING A SPOT MARKET TO PROVIDE RESOURCE ADEQUACY UNDER A EXTREME LOAD GROWTH SCENARIO IS A MUCH MORE COMPLICATED MATTER, UM, THAN THAT.
SO, AND, AND IT'S NOT SOMETHING THAT THAT CAME UP AS PART OF THE AS STUDY.
SO I, I, I HOPE, UH, I HOPE THAT ANSWERS YOUR QUESTION.
THANKS FOR THE, FOR THE CLARITY.
YEAH, AND I, I'LL JUST, UM, AGREE WITH WHAT JEFF SAID.
I THINK, UH, HISTORICALLY, UP UP UNTIL THIS POINT, THE WAY THAT WE CALCULATE ANCILLARY SERVICE QUANTITIES IS STRICTLY BASED ON OUR VIEW OF WHAT THE OPERATIONAL RISKS ARE OR WHAT WILL BE, UH, FOR THE NEXT YEAR.
SO, SO THAT, THAT IS, THAT, THAT, THAT IS WHAT WE'RE BASING OUR QUANTITIES ON IS WHAT, WHAT, WHAT DO WE THINK THOSE OPERATIONAL RISKS ARE.
WE, WE HAVE MAYBE A DIFFERENT VIEWPOINT FROM IMM IS MAYBE WHAT, WHAT'S THE CRITERIA WE WE SHOULD BE USING IN THAT ASSESSMENT? BUT THAT, THAT IS HOW WE HAVE VIEWED IT NOW, UH, IT IS WITHIN POLICYMAKERS PURVIEW TO TELL US TO DO SOMETHING DIFFERENT, BUT, UH, BUT, UH, UH, UP UNTIL THIS POINT THAT THAT'S WHAT WE HAVE BEEN DOING.
NO, THAT'S VERY, THAT'S VERY HELPFUL.
SO I MEAN, IF, IF ANYONE WANTED TO LOOK AT THE INFORMATION THAT'S GONNA BE PROVIDED IN THIS STUDY, THEN THEY NEED TO BE VERY CLEAR THAT THIS IS BASED ON WHAT THE OPERATIONAL NEEDS ARE IN THE SHORT TERM.
AND THAT THE, THE PERSPECTIVE ON THIS IS NOT FROM THE STANDPOINT OF HOW COULD THIS BE USED AS A RESOURCE ADEQUACY TOOL OR TO PROVIDE AN INCENTIVE TO HAVE INVESTMENT IN THE MARKET.
IS THAT PRETTY ACCURATE? I, I JUST WANNA KIND OF GET A LEVEL SET ON, ON WHAT THIS SHOULD BE USED FOR AND NOT USED FOR.
'CAUSE I THINK THAT'LL HELP JUST IN, IN WORKING THROUGH THE PROCESS.
AND, AND I APPRECIATE THE CLARIFICATION.
YEAH, I, I THINK I AGREE WITH THAT.
UH, NED, SO, SO I'M GONNA, I'M GONNA TAKE US ACTUALLY A, A STEP BACK IN THAT DIRECTION.
UM, AND I, I, I APOLOGIZE, BUT, UM, YOU KNOW, THE REASON WHY I, I, I WANT TO ASK THIS IS BECAUSE THERE ARE PROVISIONS IN PRA IN LAW THAT SAY THAT, WELL, IT SAYS THAT THE COMMISSION SHALL, UM, YOU KNOW, REVIEW THE TYPES OF ANCILLARY SERVICES, WHETHER THEY MEET THE NEEDS OF ELECTRICITY IN THE AIRCRAFT POWER MARKET REGION, AND EVALUATE WHETHER ADDITIONAL SERVICES ARE NEEDED FOR RELIABILITY, UH, IN THE ERCOT POWER REGION WHILE PROVIDING ADEQUATE INCENTIVES FOR DISPATCHABLE GENERATION.
THAT'S PURE 35 0 4 G ONE AND TWO.
UM, AND THEN THERE'S ALSO PROVISIONS IN, UM, PURE CHAPTER 39, SECTION 1 59, UH, WHICH IS POWER REGION RELIABILITY AND DISPATCHABLE GENERATION.
AND THAT HAS MORE THAN, I'M GONNA READ
BUT, UM, YOU KNOW, THERE ARE A NUMBER OF PROVISIONS THAT SAY, YOU KNOW, THE ANCILLARY SERVICES AND RELIABILITY SERVICES HAVE TO ALSO WORK TOWARDS THIS OUTCOME, RIGHT? THE, THE, THE, THE OVERARCHING QUESTION WAS WHAT, WHAT DOES IT TAKE TO SUPPORT INVESTMENT IN DISPATCHABLE GENERATION? AND, YOU KNOW, THERE ARE A NUMBER OF POLICIES THAT HAVE, YOU KNOW, BEEN AIMED AT THAT OUTCOME.
AND WHILE, YOU KNOW, THE WORDS AND STATUTES SAY THE COMMISSION HAS TO COME UP WITH THAT, THE FACT THAT WE'RE, WE'RE ALL TALKING ABOUT IT, IT SEEMS LIKE IT WOULD BE HELPFUL TO THE COMMISSION FOR US TO HELP ADDRESS THAT AND BUILD SOME RECORD THAT THEY CAN, YOU KNOW, LOOK AT FOR, YOU KNOW, MEETING THAT STATUTORY OBLIGATION.
SO, YOU KNOW, UNDERSTANDING THAT HISTORICALLY WE'VE ALWAYS THOUGHT OF ANCILLARY SERVICES BEING, YOU KNOW, PURELY AN OPERATIONAL RISK MANAGEMENT TOOL.
AND SO IT IS INCUMBENT ON US TO, TO AT LEAST ASK THE QUESTION AND, AND, YOU KNOW, TRY TO HAVE SOME WAY TO INFORM THAT.
[02:50:01]
DOWN TO, YOU KNOW, THE, THE PROCUREMENT QUANTITIES.IT MAY COME, IT'S GONNA COME DOWN TO THE COMMISSION'S RELIABILITY, STANDARD RULEMAKING AND THE PROCESS THAT THEY HAVE ESTABLISHED THERE TO, TO EVALUATE OUTCOMES AND THEN DETERMINE CHANGES.
BUT I THINK AT THIS JUNCTURE, IT IS IMPORTANT FOR US TO RECOGNIZE THAT, THAT THERE IS A ROLE FOR THE ANSARY SERVICES TO PLAY IN MEETING RESOURCE ADEQUACY, RELIABILITY, STANDARD CONCERNS.
UM, AND THAT IT, THE POLICY HAS SHIFTED REGARDLESS OF WHAT IT'S BEEN IN THE PAST, THAT THAT HAS TO BE ONE OF THE CONSIDERATIONS, UH, IN THE, IN THE FRAMEWORK.
SO, UM, TOO DANGEROUS TO HAVE, UH, AN, AN ENGINEER TO START TALKING ABOUT PURE.
SO I MIGHT, UH, SEE IF, IF ONE OF MY, UH, LEGAL FOLKS WANTS TO CHIME IN ON THAT OR, OR NOT RESPOND TO THAT, SURE, THIS IS DAVITA WITH ERCOT.
SO CERTAINLY IF THE COMMISSION WERE TO INTERPRET PIRA AND TELL US THAT THERE NEEDS TO BE A NEW APPROACH, WE'D, WE'D FOLLOW THAT, THAT GUIDANCE FROM THE COMMISSION.
UM, I THINK YOU'RE MAKING GOOD POINTS OF, AS ALWAYS, NED.
UM, ONE OF THE THINGS TO, TO CONSIDER, UM, IS PIRA 39, 1 50, SORRY, PIRA 35 0 0 4 G, WHICH I THINK WAS ONE OF YOUR CITATIONS, WAS, UM, IT, UM, INCLUDES THE GUIDANCE THAT WE NEED TO, THE COMMISSION NEEDS TO BE EVALUATING WHETHER ADDITIONAL SERVICES ARE NEEDED FOR RELIABILITY.
AND IN THE EXACT, IMMEDIATELY PRIOR SUBSECTION, THEY'RE TALKING ABOUT ANCILLARY SERVICES.
SO ONE OF THE THINGS THAT I THINK FOLKS HAVE RAISED IS, UM, THERE ARE OTHER SERVICES THAT CAN AND ARE PROCURED THAT AREN'T, YOU KNOW, THROUGH THE DAM AND THE DAY AHEAD.
AND SO ARE RELIABILITY SERVICES, BUT NOT NECESSARILY ANCILLARY SERVICES.
SO THAT'S ANOTHER PLACE TO LOOK FOR WHETHER OR NOT THERE'S OTHER, UM, SERVICES THAT ARE NEEDED.
UM, AND THEN ON, ON THE POINT OF ANCILLARY SERVICES, I'D SAY, YOU KNOW, IF THE COMMISSION THINKS THAT WE'RE, WE NEED TO TAKE INTO CONSIDERATION SOME SORT OF RESOURCE ADEQUACY AS WELL IN DESIGNING ANCILLARY SERVICES, THEY'LL, THEY'LL LET US KNOW.
I THINK PART OF THE PURPOSE OF THEIR STUDY IS TO SAY, WHAT ARE THE PURPOSES OF ANCILLARY SERVICES? AND WE'VE TOLD THEM HOW WE'VE USED THEM HISTORICALLY, AND THEY CAN DECIDE IF THAT NEEDS TO CHANGE IN THE FUTURE.
AND JEFF NATIKA, PLEASE FEEL FREE TO, TO SUPPLEMENT MORE.
YOU KNOW, I, I DON'T HAVE ANYTHING TO ADD.
YEAH, AND, UH, FOR THE RECORD, I DON'T DISAGREE THAT THOSE ARE THINGS FOR THE COMMISSION TO DECIDE AND, AND INTERPRET PIRA AND, AND GIVE US DIRECTION ON I, BUT I AM THINKING BACK TO THE DISCUSSION WE HAD THIS MORNING, AND WE'LL HAVE, YOU KNOW, NEXT WEEK AND PROBABLY AGAIN ON THE STAKEHOLDER PROCESS AND HOW DO WE HELP, YOU KNOW, PROVIDE INPUT THAT IS HELPFUL TO THE COMMISSION IN, IN EXECUTING ON THAT, UH, THAT FUNCTION.
SO, UM, IF, IF I CAN WEIGH IN ON THAT, OF COURSE, QUICK, UM, YOU'RE, I EXPECTED WE'D GET TO THIS POINT OF THE CONVERSATION, WHICH IS WHY EARLIER I TALKED ABOUT DIFFERENT APPROACHES TO SOLVING UNCERTAINTY, RIGHT? SO HYPOTHETICALLY, YOU KNOW, I, I DON'T THINK I WOULD AGREE WITH THIS, BUT HYPOTHETICALLY IT COULD SAY, HERE'S THE MISSING MONEY THAT WE NEED TO GET FROM ANCILLARY SERVICES, AND THEREFORE WE BUY THIS QUANTITY BASED ON THIS MODEL IN A VERY SIMILAR WAY TO HOW, YOU KNOW, PEOPLE TALK ABOUT THE PCM OR, OR WE COULD SAY, WHAT OPERATIONAL CONCERNS DO WE HAVE? AND THEN HOW DO WE MAKE SURE WE HAVE THAT, HOW DO WE MEET THOSE CONCERNS AND MAYBE THE LEAST COST WAY, OR A WAY THAT, YOU KNOW, RESOLVES, YOU KNOW, FUTURE ANTICIPATED OPERATIONAL RISKS.
AND SO I THINK THERE ARE A NUMBER OF DIFFERENT APPROACHES TO GET THERE IF WE DECIDE TO GO ABOVE AND BEYOND WHAT OUR CUT'S DOING NOW.
AND IT'S A CONVERSATION WORTH HAVING.
UM, BUT I, I DON'T THINK IT NECESSARILY MEANS, YOU KNOW, A ONE-TO-ONE MAPPING OF HOW PEOPLE THINK ABOUT THE PCM REVENUE TO ANCILLARY SERVICES.
UM, SO I, I THINK THAT THAT JUST, I, I DON'T KNOW WHETHER WE NECESSARILY GET INTO ALL OF THAT, BUT IF WE DO, IF WE DO DECIDE TO DO THIS, THE COMMISSION DECIDES TO DO THIS.
I, I THINK THERE ARE TWO DIFFERENT APPROACHES TO, TO HOW YOU HANDLE IT OR MAYBE A MIX OF APPROACHES TO HOW YOU HANDLE IT.
UH, ERIC SCHUBERT? YES, THE FOLLOW UP ON ERIC'S COMMENTS, UH, AS WELL.
UM, ONE, WE HAVE THE TEF RIGHT NOW.
WE HAVE $5 BILLION IN THERE THAT IS DIRECTLY SUPPORTING
[02:55:01]
POTENTIAL DISPATCHABLE RESOURCES.THE LEGISLATURE MAY DOUBLE THAT.
SO THAT ISSUE IS BEING ADDRESSED, BUT I WOULD SAY MORE BROADLY THAT IF YOU SOLVE THE OPERATIONAL ISSUES WITH THE APPROPRIATE AMOUNT AND TYPES OF RESOURCE ADEQUACIES, UH, OF, OF THE LIABILITY PRODUCTS, THE ANCILLARY SERVICES YOU SOLVE, THE VAST MAJORITY, I MEAN THE VAST MAJORITY OF YOUR RESOURCE ADEQUACY CONCERNS.
SO, BECAUSE IF YOU GET MORE INTERMITTENT RESOURCES AND YOU, AND THERE'S SOME QUESTION WHERE THEY'LL BE THERE, GUESS WHAT? YOU HAVE MORE BACKUP POWER TO ADDRESS THAT.
OKAY? THE COMMISSION IS ALSO ADDRESSING THIS IN ANOTHER POLICY WAY WHERE THEY'RE LOOKING TO EXPAND DEMAND RESPONSE TO RESIDENTIAL CUSTOMERS.
SO THERE ARE A LOT OF LEVERS THERE AVAILABLE TO SUPPLEMENT ANCILLARY SERVICES.
AND I THINK WE JUST NEED TO FOCUS ON THE OPERATIONAL ASPECTS, WHICH WILL GET THE VAST MAJORITY OF THE WORK DONE.
AND IF THERE ARE SUPPLEMENTS WE'VE ALREADY SEEN THROUGH THE LEGISLATURE AND THROUGH THE COMMISSION ALTERNATIVES THAT WOULD, WOULD GET THOSE DISPATCH OF RESOURCES PASSED THE FINISH LINE.
SO I DON'T THINK WE SHOULD CONFLATE THE TWO ISSUES IN THIS PARTICULAR STUDY AND JUST LET THE COMMISSION WITH ALL THE ADVOCACY AND INPUT THAT YOU HAVE TO ADDRESS IT THERE.
I, I DON'T THINK, YOU KNOW, FORCING DEMAND RESPONSE REQUIREMENTS ON RESIDENTIAL CUSTOMERS IS, IS, YOU KNOW, DIRECTLY RESPONSIVE TO THE, THE POLICY INTEREST IN SUPPORTING INVESTMENT AND DISPATCHABLE GENERATION.
I DO AGREE THAT TEF IS, UM, YOU KNOW, IS CERTAINLY AN INCENTIVE TO TRY TO SUPPORT THAT INVESTMENT.
BUT YOU KNOW, THAT IS, UH, THAT'S HELPING REDUCE PART OF THE, THE, YOU KNOW, THE COST STRUCTURE.
IT DOES NOTHING FOR THE REVENUE.
UH, YOU KNOW, THE REVENUE NEEDS TO, TO SUPPORT THAT DEBT, FRANKLY, NOT LET ALONE, UH, UH, YOU KNOW, ANY RETURN ON EQUITY.
WELL, IT REDUCES THE REVENUE NEEDS.
OBVIOUSLY IF YOU'RE BORROWING LESS, IF YOU'RE BORROWING AT LOWER RATES AT FAVORABLE TERMS, YOU NEED LESS REVENUE TO BRING THE RESOURCE ON.
AND UNLIKE OTHER PLACES IN THE COUNTRY WHERE YOU HAVE COST OF SERVICE REGULATION OR SOME OTHER GATEKEEPER, AND I APOLOGIZE FOR MY DOGS IN THE BACKGROUND, UM, THERE IS A WHOLE RANGE OF RISK, UM, PREFERENCES.
SO SOME PEOPLE WILL JUMP IN NEW TECHNOLOGIES.
WE'VE SEEN THIS TIME AND TIME AGAIN, WE'VE SEEN A BOOM IN COMBINED CYCLES.
WE'VE SEEN THE BOOM AND WIND, WE'VE SEEN A BOOM IN SOLAR, NOW WE'RE SEEING A, A BOOM IN, IN SHORT TERM B, SHORT DURATION BATTERIES.
SO THERE ARE, THERE IS NO SHORTAGE OF OPPORTUNITIES FOR, UM, UH, INVESTMENT IN THIS MARKET.
SO I, AGAIN, FOCUS ANCILLARY SERVICES ON THE OPERATIONAL SIDE OF THINGS, AND IF THERE NEEDS TO BE SOME TWEAKS, DEBATE THAT AT THE COMMISSION AND DEBATE THAT AT THE LEGISLATURE, AND THAT'S A MORE LONG-TERM POLICY THING.
THIS IS DEALING WITH DAY TO DAY, LET'S KEEP THE LIGHTS ON TYPE OF THING.
AND I, AGAIN, UM, YOU KNOW, THERE ARE WAYS OF MITIGATING THE RISK, BUT YOU'RE NEVER GOING TO ELIMINATE THE RISK FOR INVESTMENT.
BUT THAT'S ALSO WHAT LEADS TO LOWER PRICES FOR US THAN OTHER JURISDICTIONS AT HIGH, HIGH PRICES AND SHORTAGES.
I MEAN, YOU CAN JUST LOOK WITH PGMS GOING THROUGH RIGHT NOW, RIGHT? THAT WAS SUPPOSED TO SOLVE THE CAPACITY ISSUE.
SO, UH, PERHAPS LOW INTEREST LOANS IS THE WAY TO GO IN THIS SITUATION IN TEF, MAYBE SOME OTHER THINGS THAT THE COMMISSION CAN THINK OF CAN DO SO AS WELL.
BUT LET'S JUST FOCUS ON THE OPERATIONAL ASPECTS OF THIS WHILE WE'RE GOING FORWARD.
I CAN APPRECIATE THAT THAT IS THE HISTORICAL PERSPECTIVE.
UM, TO MY COMMENT EARLIER THOUGH, THAT'S NOT EXACTLY WHAT IS WRITTEN IN LAW.
AND SO I DON'T WANT US TO IGNORE THAT, THAT DIRECTIVE IN THIS ANALYSIS.
YOU KNOW, WHETHER OR NOT THERE'S ANY ACTION TAKEN ON IT, THE MARKET WILL REACT.
AND YEAH, MAYBE YOU DO GET IN, INVEST PLENTY OF INVESTMENT INCENTIVES.
UM, YOU KNOW, IF WE ARE CONCERNED ABOUT THE, THE RELIABILITY IMPACTS, UM, YOU KNOW, WE'LL, WE'LL WANT TO EVALUATE THAT AND, AND PERHAPS COME BACK TO IT.
MY MY POINT WAS THAT WE JUST SHOULD NOT IGNORE THOSE OTHER CONSIDERATIONS AT THIS POINT IN THE STUDY.
AT LEAST RECOGNIZE THAT THAT'S A, THAT'S AN, THAT IS A POLICY OBJECTIVE THAT HAS BEEN MAPPED OVER IT REGARDLESS OF HISTORICALLY WHAT WE'VE DONE AND WELL, NOT JUST HISTORICALLY.
I THINK THAT THE BETTER VENUE IS, UH, IS, IS THE PECT 'CAUSE THEY DEAL WITH POLICY ISSUES HERE.
ERCOT IS ESSENTIALLY REPORTING TO THE PUC TEAM AND THE PTC HAS TO INTERPRET AND ENFORCE THE, THE LAWS THAT THE LEGISLATURE DOES.
SO LET'S NOT, LET'S NOT ABSORB THE ROLE OF THE COMMISSION IN THIS SITUATION.
FEEL FREE TO, I'M SURE YOU HAVE, TALK TO ALL FIVE COMMISSIONERS ABOUT YOUR CONCERNS, RAISE THAT ISSUE.
YOU CAN RAISE THAT ISSUE THERE DURING WHATEVER WORKSHOPS THERE ARE OR COMMENTS
[03:00:01]
FOR, UM, STAKEHOLDERS.BUT I THINK THIS STUDY NEEDS TO BE MORE TECHNICAL AT THE LEVEL WE'RE AT, WHICH IS AT
WELL, WE DEFINITELY APPRECIATE THE INPUT ALSO, ERIC.
UM, ANY OTHER QUESTIONS? WE DON'T HAVE ANYTHING ELSE IN THE QUEUE RIGHT NOW.
LET ME COME UP AND GIVE MY LITTLE WRAP UP AND THEN WE'LL BE ABLE TO GET ON OUR DAY.
[5. Conclusions & Next Steps Julie Gauldin, PUCT Staff]
LIKE I SAID, REALLY IMPORTANT TOPICS.THANK YOU VERY MUCH FOR YOUR PARTICIPATION.
UM, COUPLE OF THINGS, JUST NEXT STEPS.
UH, I THINK NETIKA MENTIONED THAT THERE'LL BE ANOTHER WORKSHOP HALLOWEEN DAY, SO I EXPECT EVERYONE TO SHOW UP IN COSTUME.
I'LL GIVE JUST A QUICK UPDATE ON THIS WORKSHOP BY THE END OF SEPTEMBER.
WE WILL FILE A DRAFT REPORT SO THAT, UM, A DRAFT STUDY REPORT SHORTLY AFTER THAT.
WE'LL PROVIDE AS MUCH TIME AS POSSIBLE AFTER THE QUESTIONS TO GET THE ANSWERS, UM, PRIOR TO THE WORKSHOP.
AND THEN DURING NOVEMBER, DECEMBER, STAFF'S PLAN IS THAT WE WILL DISCUSS THE STUDY AT AT LEAST TWO OPEN MEETINGS BEFORE IT'S FINALIZED, AND IT WILL BE SUBMITTED TO THE LEGISLATURE AS PART OF OUR, UM, REPORT TO THE LEGISLATURE, OUR AGENCY REPORT.
ANY QUESTIONS ON NEXT STEPS? AWESOME.
SO, UH, IKA, ANYTHING YOU WANNA ADD? COOL.
SO I GUESS THE LAST THING IS JUST A BIG THANK YOU TO ERCOT STAFF, POTOMAC STAFF, UM, FOR ALL YOUR HARD WORK, AND I'M LOOKING FORWARD TO CONTINUING THE CONVERSATIONS.