[1. Call General Session to Order]
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GOOD AFTERNOON, MEMBERS OF THE ERCOT BOARD OF DIRECTORS AND GUESTS.
I'M BILL FLORES ERCOT, BOARD CHAIR.
WELCOME TO THE APRIL 7TH AND EIGHTH 2025 BOARD OF DIRECTORS MEETINGS.
I'VE CONFIRMED THAT A QUORUM IS PRESENT IN PERSON AND HEREBY CALL THIS MEETING THE ORDER OF THE ERCOT BOARD OF DIRECTORS.
THIS MEETING IS BEING WEBCAST LIVE TO THE PUBLIC ON ERCOT WEBSITE.
AT THIS TIME, I'D LIKE TO ASK PUC CHAIR THOMAS GLEASON IF HE WOULD LIKE TO CALL AN OPEN MEETING OF THE PUBLIC UTILITY COMMISSION OF TEXAS TO ORDER.
THIS MEETING, THE PUBLIC UTILITY COMMISSION OF TEXAS WILL COME TO ORDER TO CONSIDER MATTERS THAT HAVE BEEN DULY POSTED WITH THE SECRETARY OF STATE FOR APRIL 7TH, 2025.
THE ANTITRUST ADMONITION SECURITY MAP ARE EACH INCLUDED WITH THE POSTED MEETING MATERIALS.
UH, BEFORE WE PROCEED, I'D LIKE TO RECOGNIZE FORMER BOARD MEMBER CARLOS AGUILAR, WHO RECENTLY RESIGNED FROM THE BOARD OF DIRECTORS TO MANAGE OTHER EXISTING OPPORTUNITIES.
CARLOS WAS ONE OF THE FIRST TWO BOARD MEMBERS BACK IN OCTOBER OF 2021 UNDER THE NEW SB TWO FRAMEWORK WITH JUST HIM AND FORMER BOARD MEMBER, UH, FORMER BOARD CHAIR PAUL FOSTER.
HIS EXPERTISE AND GUIDANCE HAVE BEEN INSTRUMENTAL IN THE THIS BOARD'S DECISION MAKING.
THE BOARD APPRECIATES HIS SERVICE TO ERCOT AND TO THE TEXANS AND TO TEXANS, AND WE WISH HIM THE BEST.
I FURTHER NOTIFIED THE BOARD SELECTION COMMITTEE, UH, LAST WEEK THAT OF THIS VACANCY, AND THEY WILL BEGIN THE SELECTION PROCESS TO REPLACE CARLOS IN THE COMING WEEKS.
ALSO, FOR STAKEHOLDERS AND PUBLIC GENERAL AWARENESS, I'D LIKE TO POINT OUT THAT WE WILL LIKELY HAVE TWO DAY BOARD MEETINGS GOING FORWARD WITH THE GOVERNANCE CHANGE OF MOVING THE RELIABILITY AND MARKETS COMMITTEE MATTERS TO THE FULL BOARD TO MANAGE OUR, UH, BUSINESS MORE EFFICIENTLY.
THERE MAY BE TIMES WHEN I MOVE A DISCUSSION ITEM FROM ONE DAY TO THE NEXT, BUT I DO NOT ANTICIPATE MOVING VOTING ITEMS WHEN THEY'RE REFLECTED ON THE AGENDA FOR A SPECIFIC DAY.
THIS IS TO ENSURE THAT ANYONE WANTS, THAT ANYONE WHO WANTS TO SPEAK ON A VOTING ITEM HAS A CERTAINTY AS TO WHICH DAY THAT WILL OCCUR.
THE FIRST ORDER OF BUSINESS ON TODAY'S AGENDA IS ITEM TWO POINT IS ITEM TWO.
NOTICE OF PUBLIC COMMENT, IF ANY.
TODAY'S MEETING AGENDA WAS POSTED PUBLICLY ON MARCH 31ST, 2025, AND, UH, PROVIDE INSTRUCTION FOR THE PUBLIC FOR COMMENTING IN PERSON TO DATE.
IS WE AWARE NO ONE HAS EXPRESSED INTEREST IN COMMENTING? IS THAT STILL CORRECT, CHAD? THAT IS CORRECT.
[3. Dissolve Establishment and Appointment of Reliability and Markets (R&M) Committee]
THREE, DISSOLVE ESTABLISHMENT EMPLOYMENT OF THE RELIABILITY AND MARKETS COMMITTEE.DURING THE SPECIAL MEETING OF THE BOARD ON FEBRUARY THE 25TH, 2025, I MOVED THE JURISDICTION R AND M COMMITTEE BACK TO THE FULL BOARD TO ALLOW ALL BOARD MEMBERS TO BOARD DIRECT, UH, TO ALLOW THEM TO HAVE MORE DIRECT PARTICIPATION AND THE POLICY MATTERS ASSOCIATED WITH THE CORE FUNCTIONS OF OPERATIONS, PLANNING AND MARKETS, AND THE MISSION OF ERCOT.
AS SUCH, I WILL ENTERTAIN A MOTION TO DISSOLVE THE ESTABLISHMENT AND APPOINTMENT OF THE R AND M COMMITTEE.
UH, ANY DISCUSSION? ALL IN FAVOR? ANY OPPOSED, ANY ABSTENTIONS? OKAY.
THE MOTION IS APPROVED UNANIMOUSLY.
[4. February 3, 2025 Reliability and Markets Committee General Session Meeting Minutes]
IS AGENDA ITEM FOUR, THE FEBRUARY 3RD, 2025, RELIABILITY AT MARKETS, UH, COMMITTEE, GENERAL SESSION MEETING MINUTES.THERE'S A DRAFT IN THE MEETING MATERIALS.
DOES ANYONE HAVE ANY CORRECTIONS? OKAY, HEARING NO OBJECTIONS AND CONSISTENT SINCE THAT COMMITTEE NO LONGER EXISTS, UH, CONSISTENT WITH ROBERT'S RULES OF ORDER ON APPROVAL OF MINUTES, THE FEBRUARY 3RD, 2025 OR LIABILITY AND MARKETS COMMITTEE, GENERAL SESSION MEETING MINUTES ARE DEEMED APPROVED.
[5. Commercial Markets]
AGENDA ITEM FIVE, COMMERCIAL MARKETS, AND THERE ARE FOUR SUB ITEMS. THE FIRST SUB ITEM IS AGENDA ITEM 5.1, RECOMMENDATION REGARDING REAL TIME MARKET PRICE CORRECTION, INCORRECT RESOURCE TELEMETRY MW VALUES WHEN QSE SINCE SUSPECT QUALITY TELEMETRY, GORDON DRAKE IS GOING TO BE MAKING THIS PRESENTATION.THANK YOU MR. CHAIRMAN, AND, UH, PLEASURE TO BE HERE, UH, MAKING THIS RECOMMENDATION TO THE BOARD TODAY.
UM, WHAT I HOPE TO DO IS TO PROVIDE SOME BACKGROUND AND, AND, AND CONTEXT TO THE, THE ROOT CAUSE OF THE ISSUE THAT LED TO THE, THE NEED TO CONSIDER A POTENTIAL PRICE CORRECTION TODAY.
SPEAK TO THE SPECIFIC EVENT AND, AND SEQUENCE OF EVENTS AND ACTIONS TAKEN BY ERCOT AND THEN SPEAK TO THE, UH, IMPACT TO, UH, COUNTERPARTIES, UH, AS, UH, AS DETAILED IN THE, IN THE PRESENTATION AGAINST THE, UH, ESTABLISHED BOARD CRITERIA AND PROTOCOLS.
AND, UH, AND THEN, UH, ALSO SPEAK TO A, UH, A REFINEMENT ENHANCEMENT TO THE METHODOLOGY THAT WE EMPLOY, UH, WHEN PERFORMING THESE PRICE CORRECTIONS TO, UH, ENSURE THAT WE ARE, UH, UH, THAT THE, THAT, THAT WE ARE LIMITING
[00:05:01]
ANY, UH, POTENTIAL UNWARRANTED PAYMENTS THAT MAY HAVE, UH, OTHERWISE ARISEN THROUGH, UH, PREVIOUS METHODOLOGY.AND WE ARE REQUESTING THE OF THE BOARD TO APPROVE THE, UH, POTENTIAL PRICE CORRECTION TODAY, UH, FOR OPERATING DAYS BETWEEN AUGUST 12TH AND SEPTEMBER 11TH.
SO, AT THE, THE, THE ROOT CAUSE OF WHAT LED TO THE, THE, THE POTENTIAL PRICE CORRECTION EVENT, UH, HAS TO DO WITH, UH, HOW THE, UH, OUR ENERGY MANAGEMENT SYSTEM RECEIVES AND, AND PROCESSES, UH, TO TELEMETRY FROM, UH, RESOURCES IN THE FIELD, WHICH IS THE WAY IN WHICH WE, UH, HAVE AN UNDERSTANDING OF THE REAL TIME CONDITIONS OF, OF WHAT'S ACTUALLY HAPPENING ON THE POWER SYSTEM AS A RESULT OF, UH, WHAT IS SENT TO US VIA TELEMETRY FROM QUALIFIED SCHEDULING ENTITIES ABOUT THEIR RESOURCES.
UM, AS YOU CAN IMAGINE, THERE ARE QUITE A SIGNIFICANT NUMBER OF THESE, UH, TELEMETRY POINTS OUT ON THE GRID MONITORING REAL TIME CONDITIONS.
AND FROM TIME TO TIME FOR A VARIETY OF REASONS, UH, THOSE DATA QUANTITIES CAN BECOME STALE OR INCORRECT.
AND WHEN THAT HAPPENS, WE RELY ON QUALIFIED SCHEDULING ENTITIES TO NOTIFY US, UH, BY FLAGGING THAT TELEMETRY AS SUSPECT.
WHEN WE RECEIVE THAT FLAG OF SUSPECT TELEMETRY, OUR, UH, ENERGY MANAGEMENT SYSTEM, UH, DEFAULTS TO THE LAST KNOWN GOOD QUANTITY THAT HAD BEEN TELEMETRY.
THE UNDERSTANDING BEING THAT THE, THE BEST EXPECTATION OF WHAT'S HAPPENING NOW IS WHAT WAS JUST HAPPENING.
AND SO IT, IT, IT REVERTS TO THAT LAST KNOWN, UH, GOOD TELEMETRY MEGAWATT VALUE.
IN NOVEMBER OF 2023, UH, DURING A, UH, AN UPDATE TO OUR ENERGY MANAGEMENT SYSTEM, THERE WAS A, UH, A DEFECT THAT WAS INTRODUCED THAT, UH, INADVERTENTLY INTRODUCED A FIXED VALUE THAT WOULD BE SUBSTITUTED FOR THAT MEGAWATT QUANTITY, UH, INSTEAD OF THE LAST KNOWN GOOD TELEMETRY QUANTITY FROM THAT RESOURCE.
UM, AND, UM, THAT DATA POINT AND, AND THAT, UM, THAT THE TER MEGAWATT VALUE THAT IN THIS CASE WAS BEING SUBSTITUTED WITH A STALE VALUE IS IMPORTANT BECAUSE OUR MARKET MANAGEMENT SYSTEM USES THAT IN THE DETERMINATION OF DISPATCH SCHEDULES, BASE POINTS, AND PRICES WHEN, UH, THIS STATIC MEGAWATT VALUE IS, IS BEING USED.
SO WE HAVE A, A SUSPECT, UH, TELEMETRY FLAG AND THE, UH, ENERGY MANAGEMENT SYSTEM REVERTED TO, TO THE STALE VALUE.
UM, THIS CAN HAVE AN IMPACT ON PRICES AND, AND DISPATCH IF THREE CONDITIONS ARE MET.
THE FIRST BEING, IF WE HAVE, WE HAVE THAT SUSPECT, UH, DATA QUALITY, THE, THE CURRENT OUTPUT AND MEGAWATT OUTPUT OF THAT FACILITY IS SIGNIFICANTLY DIFFERENT THAN WHAT IS HAPPENING IN REALITY.
SO THE, THE, THE, THE CURRENT OUTPUT AND THE THE STALE VALUE ARE QUITE IN SIGNIFICANTLY DIFFERENT.
AND IF THAT RESOURCE HAS A SIGNIFICANT SHIFT FACTOR ASSOCIATED WITH A BINDING OR VIOLATED CONSTRAINT, SO IN, IF THOSE ALL, THOSE THREE CONDITIONS ARE TRUE, THEN THIS SOFTWARE DEFECT CAN, UM, AND IN THAT VALUE BEING PASSED FROM THE ENERGY MANAGEMENT SYSTEM TO THE MMS, UH, CAN HAVE A SIGNIFICANT IMPACT ON, ON PRICING.
ON SEPTEMBER 5TH, 2024, UH, DURING THE, THE MORNING RAMPING PERIOD, THERE WERE MULTIPLE RESOURCES REPRESENTED BY A SINGLE QUALIFIED SCHEDULING, UH, SORRY, QUALIFIED SCHEDULING ENTITY THAT HAD TELEMETRY, UH, SUSPECT QUALITY, UH, AND STATUS ON THEIR MEASUREMENTS FOR THEIR MEGAWATT TELEMETRY.
UH, AND AS A RESULT, EMS, UH, OUR, OUR ENERGY MANAGEMENT SYSTEM PICKED UP THAT, UH, THAT STALE MEGAWATT VALUE AND PASSED IT TO OUR MARKET MANAGEMENT SYSTEM.
WHEN, UH, WHEN S SCED RAN TO DETERMINE BASE POINTS, UM, AT 8 35 IN THE MORNING, BECAUSE WE, WE SAW THE, THE COMBINATION OF THOSE, THOSE THREE CONDITIONS MET THE, UH, THE OPTIMIZATION USING THOSE, UH, STALE MEGAWATT QUANTITIES, UH, LED TO PRICES SPIKING FROM JUST, JUST BELOW $21, A MEGA ANT HOUR TO NEARLY $200 A MEGAWATT HOUR IN THE NEXT SC INTERVAL, AFTER THE SUSPECT TELEMETRY HAD BEEN CORRECTED AND OUR EMS AND MMS REVERTED TO USING ACTUAL DATA FROM THE FIELD, THE PRICE DROPPED TO NEARLY $28 A MEGAWATT HOUR.
THIS UNUSUAL SPIKE IN SYSTEM LAMBDA, IT'S NOT SOMETHING WE TYPICALLY SEE AT THAT TIME OF YEAR IN THOSE MORNING RAMPS IS WHAT ATTRACTED OUR ATTENTION TO INVESTIGATE FURTHER AND, AND SEEK OUT THE ROOT CAUSE OF THE PRICE SPIKE.
UM, AND IT THAT LED TO THE DISCOVERY OF THE SOFTWARE DEFECT, UM, THAT WAS NOTED ON THE PREVIOUS SLIDE.
AND ON SEPTEMBER 11TH, UH, OF 2024, WE IMPLEMENTED A FIX TO CORRECT THE DEFECT AND RETURN IT TO THE EXPECTED BEHAVIOR OF REVERTING TO THE LAST KNOWN GOOD TELEMETRY VALUE.
ALSO, ON SEPTEMBER 11TH, WE ISSUED A MARKET NOTICE NOTIFYING THE MARKET OF THE ISSUE AND OUR INTENT, UH, UPON COMPLETION OF OUR IMPACT ANALYSIS TO SEEK, UH, BOARD OF DIRECTORS APPROVAL TO CORRECT PRICES,
[00:10:01]
UH, AS SPECIFIED IN THE PROTOCOL SECTIONS NOTED THERE, UM, AND ALSO TO PRESERVE THE, UH, ELIGIBILITY OF UP TO 30 DAYS OF, UM, UH, POTENTIAL PRICE CORRECTION FOR OUR ABILITY TO REVIEW, WHICH IS WHAT THE PROTOCOLS SPECIFY IN TERMS OF THE DURATION THAT WE CAN GO BACK IN TIME TO PERFORM THIS PRICE CORRECTION.UH, SO THOUGH THE ISSUE FIRST, UH, APPEARED IN NOVEMBER OF 2023, UH, WE ARE ONLY ABLE TO REQUEST CORRECTION FOR A 30 DAY WINDOW.
UM, AND THAT IS THE REASON WHY THE PRICE CORRECTION WE BROUGHT FOR YOU TODAY SPANS FROM AUGUST 12TH TO SEPTEMBER 11TH, 2024.
UM, IN TERMS OF THE IMPACT THIS HAD ON THE REAL-TIME MARKET, UH, WE EVALUATE THE IMPACT OF THESE EVENTS AGAINST TWO CRITERIA SPECIFIED IN THE PROTOCOLS, UH, WHICH WE, UH, DEEM OUR SIGNIFICANCE CRITERIA.
SO BEFORE SEEKING BOARD APPROVAL, UH, THE IMPACT TO ANY SINGLE COUNTERPARTY MUST BE EITHER, UH, AN IMPACT OF 2% AND ALSO, UH, $20,000, UM, ABSOLUTE IMPACT OR A 20% IMPACT, UH, TO THEIR SETTLEMENTS, UH, AND ALSO GREATER THAN $2,000.
SO THOSE ARE THE TWO SIGNIFICANCE CRITERIA THAT WE, WE TEST THE IMPACT TO GET AGAINST.
AND USING THOSE CRITERIA, IT WAS DETERMINED THAT 27 OF THE DAYS BETWEEN AUGUST 12TH AND SEPTEMBER 11TH MET THE SIGNIFICANCE CRITERIA IN TERMS OF A, UH, A, A DOLLAR IMPACT, UH, AND THE MAXIMUM ESTIMATED ABSOLUTE VALUE IMPACT TO COUNTERPARTIES SHOWS FOR THOSE 27 IMPACTED OPERATING DAYS.
UH, THE, THAT, THE AMOUNT THAT, UH, IN DOLLARS AS WELL AS THE EVALUATION OF THE CRITERIA, UM, CRITERIA ONE AND CRITERIA TWO, THE THE DOLLARS AND PERCENTAGES THAT MET THOSE, UH, THOSE SIGNIFICANCE CRITERIA, UH, THAT WERE SPECIFIED IN THE PREVIOUS SLIDE.
IN TERMS OF THE TOTAL IMPACT TO THE MARKET OVER THOSE 27 OPERATING DAYS, UH, THE TOTAL IMPACT TO STATEMENT CHARGES DUE TO ERCOT WAS $3,324,370.
UM, AND, UH, SO THAT IS, UM, IN, IN SOME, WHEN YOU LOOK AT THE, THE, THE, THE TABLES THERE FOR THE 27 OPTUM DAYS, THEY, THEY SUM TO $3 MILLION, UH, TO BE COLLECTED FROM RATE PARIS.
THE, UM, I I MENTIONED THAT THERE WAS A CHANGE IN OUR, UH, REFINEMENT AND ENHANCEMENT TO OUR, OUR METHODOLOGY.
UM, IT, WE WERE LOOKING OVER A SIGNIFICANT DATA SET, A SIGNIFICANT PERIOD OF TIME, UM, AND THAT EXPLAINS WHY IT IS APRIL AND, AND WE'RE TALKING ABOUT A PRICE CORRECTION EVENT, UH, GOING BACK TO AUGUST AND SEPTEMBER OF LAST YEAR.
BUT THROUGHOUT THE COURSE OF OUR ANALYSIS, IT WAS DISCOVERED THAT OUR EXISTING METHODOLOGY FOR CALCULATING THE IMPACT TO COUNTERPARTIES, UH, WOULD'VE RESULTED IN UNWARRANTED PAYMENTS TO, TO CERTAIN RESOURCES.
AND WHERE THIS, UH, ARISES FROM IS FROM, UM, UH, A RECALCULATION OF THE PRICES, BUT IN PARTICULAR, UM, MAKE HOLD PAYMENTS FOR, UH, RESOURCES THAT WERE DISPATCHED TO BE ONLINE.
BUT WITH THE, UM, UH, WITH THE DETERMINATION NEW PRICES THEY OTHERWISE WOULD NOT HAVE BEEN ECONOMIC TO, TO RUN, HAD THE, UM, HAD THE INTRODUCTION OF THE STALE MEGAWATTS NOT BEEN, UH, NOT BEEN INTRODUCED.
AND SO IN UPON DISCOVERY OF THOSE UNWARRANTED PAYMENTS, UH, WE UNDERTOOK SOME ANALYSIS.
AGAIN, SORT OF WE UNDERTAKE THE ANALYSIS AGAIN, UM, CONSIDERING SETTLEMENT CHARGES AND, AND CHANGES ONLY FOR THOSE FOR WHOM WAS, UH, APPROPRIATE TO BE HELD WHOLE UNDER WHAT WE CALL OUR EMERGENCY SETTLEMENT PROCESS.
SO AS WE CORRECT THE PRICES, UH, THAT APPLIES TO E EVERY RESOURCE, UM, BUT THIS SUBSET OF RESOURCES WHO ARE ELIGIBLE FOR THOSE, THOSE MAKE WHOLE PAYMENTS, UH, IS WHERE THE, THE REFINEMENT TO OUR METHODOLOGY, UH, LED TO A REDUCTION IN THE TOTAL COST TO CONSUMERS.
UM, GOING FORWARD, UM, ERCOT IS GOING TO EMPLOY THIS REFINED AND ENHANCED METHODOLOGY.
WE WILL ALSO BE GOING TO THE WHOLESALE MARKET WORKING GROUP, AND PROVIDING SOME EDUCATION TO MARKET PARTICIPANTS AND STAKEHOLDERS ABOUT THE PRICE CORRECTION PROCESS, UH, AS A WHOLE, AS WELL AS THE SPECIFICS OF THE, UH, THE, THE METHODOLOGY ENHANCEMENT.
SO THAT IS, IT'S WELL UNDERSTOOD.
GORDON, BEFORE YOU LEAVE THAT PAGE YES.
UM,
SO THAT'S NOT ONE OF THE UNWARRANTED PAYMENTS? NO, THE UNWARRANTED, I DIDN'T THINK SO.
NO, THE UNWARRANTED PAYMENTS WOULD BE AN EXAMPLE WHERE A, UM, A RESOURCE WAS INDICATING THAT
[00:15:01]
THEY WERE ESSENTIALLY A PRICE TAKER, SO THEY WERE INSENSITIVE TO WHAT THE PRI THE, UM, THE PRICE WOULD'VE BEEN IN THE MARKET THEY WERE GOING TO INJECT OR CONSUME AT A FIXED MEGAWATT QUANTITY.AND THOSE ARE THE ONES THAT, THAT WE WOULD SAY AS THE PRICE CHANGES, THEY DON'T NEED TO BE HELD WHOLE BECAUSE THEY WERE, THEY WERE GONNA BE OPERATING, UH, REGARDLESS.
DOES THE ENHANCED METHODOLOGY REQUIRE ANY SORT OF A PROTOCOL CHANGE? IT'S COVERED UNDER EXISTING PROTOCOL LANGUAGE.
AND WITH THAT, UH, WE CAN PROCEED WITH THE, WITH OUR RECOMMENDATION TO CORRECT PRICES, UM, AND FOR, UH, AUGUST 12TH TO SEPTEMBER 11TH, 2024 AS A RESULT OF THIS ISSUE.
DOES ANYONE HAVE ANY QUESTIONS FOR GORDON OR, UH, WISH TO DISCUSS THIS MATTER? OKAY, IF NOT, I'LL ENTERTAIN A MOTION TO APPROVE THE RECOMMENDATION REGARDING REAL TIME MARKET PRICE CORRECTION, INCORRECT RESOURCES TO TELEMETRY MW VALUES.
WOULD QSE SEND SUSPECT QUALITY TELEMETRY AS PRESENTED? UM, IS THERE A MOTION? SURE.
ANY OPPOSED? ANY ABSTENTIONS? OKAY.
THAT PRICE CORRECTION IS APPROVED.
NEXT IS THE AGENDA ITEM 5.2, INDEPENDENT MARKET MONITOR.
IMM DIRECTOR JEFF MCDONALD IS PRESENTING.
JEFF, THANK YOU ARROW BUTTONS.
UM, I, UH, SO I ONLY SUBMITTED TWO SLIDES.
I HAD A, A NICE CONVERSATION WITH, UH, DIRECTOR ENGLAND A FEW WEEKS AGO.
AND, AND MY QUESTION TO HER WAS, WHAT WOULD, UH, THE BOARD LIKE TO SEE FROM ME RATHER THAN COME UP? YOU, YOU GET A FANTASTIC PALETTE OF MARKET PERFORMANCE METRICS.
IF, IF THERE ARE INTERESTING THINGS THAT, UH, IN MARKET OUTCOMES, I'M, I'M HAPPY TO BRING THAT FORWARD TO YOU DURING MEETINGS, BUT I DIDN'T WANNA, UH, TAKE UP YOUR TIME WITH, UH, EIGHT SLIDES OF, THERE WASN'T REALLY ANYTHING INTERESTING IN THE LAST TWO MONTHS.
SO, SO DIRECTOR ENGLAND, UH, MENTIONED THAT THERE MIGHT BE SOME INTEREST IN, YOU KNOW, GETTING THE, I'S PERSPECTIVE, UH, ON MARKET DESIGN IN GENERAL, SOME OF THE CHALLENGES THAT, UH, ERCOT AND TEXAS ARE FACING RIGHT NOW, AND PROVIDE A LITTLE BIT MORE OF A FORWARD-LOOKING, UH, PERSPECTIVE RATHER THAN A RETROSPECTIVE, UH, ASPECT OF A CONVERSATION.
SO, SO WITH THAT IN MIND, UM, IN MY ONE YEAR HERE, I'VE HAD QUITE A FEW CONVERSATIONS WITH DIFFERENT MARKET PARTICIPANTS ABOUT DIFFERENT, I, I WON'T CALL THEM SMALLER, BUT, BUT SPECIFIC MARKET DESIGN ASPECTS.
HOW DO WE ACHIEVE, UM, RESOURCE ADEQUACY, OF COURSE HAS BEEN A TOPIC FOR EVERYBODY, PROBABLY, UH, PREDATING MY YEAR HERE.
AND, UH, UM, AS, AS YOU KNOW, ER CUT'S, GOT A LOAD FORECAST THAT SHOWS A TREMENDOUS AMOUNT OF LOAD GROWTH, UH, OVER THE NEXT FIVE YEARS.
AND THE QUESTIONS OF HOW, HOW DO WE MEET THAT AS A, AS AN RTO, UM, SUCCESSFULLY, AND HOW DO, CAN WE DO THAT THROUGH THE MARKET OR ARE THERE OTHER MEANS? AND SO I JUST THOUGHT I WOULD PROVIDE MY PERSPECTIVE.
UM, AGAIN, I ONLY PUT TOGETHER TWO SLIDES.
I KNOW THERE'S ONLY PROBABLY 10 OR 15 MINUTES, UH, SLOTTED FOR THIS DISCUSSION, SO I DIDN'T WANNA, UM, DO A FULL BRAIN DUMP ON ALL THE OPTIONS, BUT, BUT HOPEFULLY IT WILL BE AN INTERESTING DISCUSSION.
UM, AND, AND PART OF, HOPEFULLY WHAT YOU'LL TAKE AWAY FROM THIS IS FROM A, FROM A MARKETS AND AN ECONOMIST'S PERSPECTIVE, WE LIKE TO SEE, UH, VERY DELIBERATE ACTIONS TAKEN.
AND SO IF THERE'S A NEED THAT, THAT NEED IS EXPRESSLY, UM, WRITTEN OUT AND UNDERSTOOD, A PRODUCT IS DESIGNED, UH, TO MEET THAT NEED, AND THAT THE PAYMENT STRUCTURE OR PRICE FORMATION IS CALIBRATED IN SUCH A WAY THAT AS THE MARKET EXECUTES, YOU WOULD EXPECT TO MEET YOUR NEED THROUGH THAT MARKET WHEN THE NEED AROSE.
SO, SO, AND, AND A LOT OF THIS ISN'T NEWS, IT'S, IT'S A LITTLE BIT OF FUNDAMENTAL BACKGROUND, BUT, BUT I THOUGHT IT WAS IMPORTANT TO UNDERSTANDING, UH, MY PERSPECTIVE AND HOW MYSELF AND MY TEAM APPROACH SOME OF THE MARKET DESIGN ISSUES THAT COME UP, UH, IN THE STAKEHOLDER PROCESS.
SO, SO AT A VERY HIGH LEVEL, ER IDENTIFIED BOTH SHORT TERM AND MEDIA
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TERM, UM, CONCERNS, UH, REGARDING RESOURCE ADEQUACY.IN THE SHORT TERM, YOU KNOW, THERE ARE SOME MORE EXTREME, UH, CONDITIONS THAT CAN PRODUCE, UH, LOWER RELIABILITY.
AND IN THE MEDIUM TERM, OF COURSE, THERE'S THE PROJECTED LOAD GROWTH OUT THROUGH 20 29, 20 30, UH, THAT HAS A CONSIDERABLE AMOUNT OF LOAD COMING IN TO, UH, THE ERCOT CONTROL AREA OR, OR PROJECTED OR ANTICIPATED TO COME IN.
AND SO THOSE, THOSE ARE TWO DIFFERENT PROBLEMS IN MY VIEW.
AND ONE OF THE PUNCHLINES, I THINK FROM THIS DISCUSSION, OTHER THAN A, A VERY DELIBERATE PRODUCT DESIGN FOR MARKETS TO MEET SPECIFIC NEEDS IS IN ANY OF THESE MARKETS, WHETHER IT'S A SPOT MARKET LIKE ERCOT OR MARKETS THAT HAVE A VERY, YOU KNOW, SOME VARIANT OF A CAPACITY CONSTRUCT, WHETHER IT BE PROMPT OR A FORWARD CAPACITY CONSTRUCT, THE MARKET, THE MARKET THAT WE OBSERVE, UH, WHERE PRICES FORM WON'T SIGNAL FOR NEW INVESTMENT UNTIL IT EXPERIENCES THE SHORTAGE THAT CREATES THE PRICING.
I KNOW EVERYBODY KNOWS THAT, BUT IT IS, UH, JUST AN ABSOLUTE FUNDAMENTAL ATTRIBUTE OF A MARKET MECHANISM.
SO, SO PART OF THE ISSUE, YOU KNOW, THAT WE SEE GETTING BACK TO ERCOT IDENTIFIED POTENTIAL SHORT-TERM DEFICIENCIES, IS THAT WE'RE NOT SEEING A LOT OF, UM, SHORTAGE CONDITIONS PRICED INTO THE MARKET.
WE DO SEE SOME, UH, I KNOW THIS LAST, YOU KNOW, IN THE 12 MONTHS THAT I'VE BEEN HERE, UM, WE HAVEN'T HAD, WE DIDN'T HAVE A SEVERE SUMMER, UH, AND I DON'T BELIEVE IT WAS A VERY SEVERE WINTER, THIS WINTER THAT WE'RE WRAPPING UP NOW, OR MAYBE IN TEXAS, WE'VE ALREADY WRAPPED IT UP.
SO, SO PART OF THE CONSTERNATION, I THINK, IS THAT THERE'S DISCUSSION ABOUT SHORT, SHORT TERM AND MEDIUM TERM RESOURCE ADEQUACY OR RELIABILITY ISSUES, BUT WE'RE NOT SEEING THE MARKET PRICES IN.
SO IF, IF WE DON'T SEE THE PRICES FORM IN THE MARKET REFLECTING THOSE SHORTAGES AND THE VALUE TO RELIABILITY OF HAVING ADDITIONAL, UH, RELIABLE CAPACITY, THEN THERE'S NOT GOING TO BE ANY TYPE OF PRICE SIGNAL OR REVENUE STREAM TO INCENT EITHER BETTER PERFORMANCE OR NEW INVESTMENT IN UPGRADING EXISTING FACILITIES OR BUILDING NEW, UM, GENERATION OF FACILITIES.
SO, SO FROM, AND, AND I KNOW FOLKS IN THIS ROOM HAVE BEEN IN A LOT OF CONVERSATIONS ABOUT RESOURCE ADEQUACY AND EVEN SHORTER TERM RELIABILITY.
I'M, I'M NOT CALIBRATING MY OBSERVATION JUST ON THE 12 MONTHS THAT I'VE BEEN HERE, BUT, BUT EVEN IN THE LAST THREE YEARS, E EVER SINCE 2021, WE REALLY HAVEN'T SEEN THAT MUCH IN THE WAY OF, UH, GENUINE SHORTAGE CONDITIONS PROVIDING REVENUE STREAMS. SO THE QUESTION IS, DO WE HAVE A PROBLEM IN THE SHORT RUN? UM, AND THE, THE MEDIUM RUNS A A DIFFERENT QUESTION THAT I'LL GET TO IN A MINUTE, BUT, YOU KNOW, WEATHER AND TEMPERATURE VARY FROM YEAR TO YEAR.
UH, THIS NEXT 12 MONTHS MIGHT PRODUCE A VERY DIFFERENT SET OF OUTCOMES.
WE MIGHT HAVE A HOT SUMMER, WE MIGHT HAVE SOME VERY SEVERE WINTER, UH, CONDITIONS THAT WOULD PRODUCE GREATER SHORTAGE CONDITIONS THAT WOULD BE PRICED IN, UH, OR, OR EVIDENT THROUGH PRICE FORMATION AND PROVIDE, UH, A SIGNAL THAT SOME ADDITIONAL, UH, REVENUE, OR EXCUSE ME, SOME ADDITIONAL CAPACITY OR BETTER PERFORMANCE WERE NEEDED.
SO IN THE SHORT TERM, I THINK I, I VIEW THE SHORT TERM CONCERN AS BEING MORE OF A PRICE FORMATION.
AND ARE WE, ARE WE ACTUALLY OBSERVING TIGHT CONDITIONS OR NOT TYPE OF ISSUE AND MORE OF A EXISTING RESOURCE PERFORMANCE ISSUE IN THE MEDIUM TERM WITH THIS LARGE LOAD GROWTH THAT'S PROJECTED IN TEXAS, IT'S A DIFFERENT MATTER ALTOGETHER.
SO FOR THE MEDIUM TERM, UH, YOU KNOW, YOU'VE, AS I MENTIONED WHEN I STARTED THERE, THERE IS NO REVENUE STREAM THROUGH PRICE FORMATION.
IF YOU DON'T OBSERVE THE SHORTAGE CONDITIONS THAT YOU WOULD EXPECT TO CREATE HIGHER PRICES IN THE MEDIUM TERM.
YOU KNOW, JEFF, MAY, MAY I ASK YOU JUST A CLARIFYING POINT? 'CAUSE WE KEEP USING THE TERM OVER AND OVER THAT YOU WERE USING THE SECOND BULLET POINT, YOU SAY THAT, UH, WE NEED TO EXPERIENCE
[00:25:01]
SHORTAGE IN ORDER TO PRO PROVIDE THE PROPER PRICE SIGNALS, RIGHT? ARE YOU TALKING ABOUT ACTUAL PHYSICAL SHORTAGE? YEAH,WELL, SO, SO THE TERMS ARE TRICKY.
THANK YOU FOR ASKING THAT QUESTION.
SO I USE SHORTAGE BECAUSE HISTORICALLY I'VE, I'VE SPOKE OF RELATIVE SHORTAGE, MEANING YOU, YOU, YOU'RE, YOU ARE NOT SHORT TO THE POINT WHERE YOU'RE EXPERIENCING INVOLUNTARY LOAD SHED, BUT YOU ARE SHORT ENOUGH THAT YOU ARE HAVING TO DISPATCH MUCH HIGHER COST UNITS OR, OR MAYBE EVEN GETTING INTO, UM, ERCOT SCARCITY PRICING WHERE YOU DON'T HAVE THE LEVEL OF RESERVES THAT ARE PRESCRIBED, AND SO YOU'RE SEEING A HIGHER PRICE AS A RESULT OF THAT RESERVE SHORTAGE.
SO WHEN I TALK ABOUT SHORTAGES, I'M NOT TALKING ABOUT INVOLUNTARY LOAD SHED, I'M TALKING ABOUT TIGHTER CONDITIONS, UM, HAVING TO DISPATCH HIGHER COST UNITS AND WINDING UP IN A CIRCUMSTANCE WHERE YOU EITHER HAVE OPERATING RESERVE SHORTAGE OR EVEN A POWER BALANCE CONSTRAINT VIOLATION, WHERE THERE JUST FOR, FOR SOME PERIOD OF TIME, THERE'S NOT ENOUGH ENERGY TO MEET DEMAND, BUT IT ISN'T SO SEVERE THAT YOU WIND UP CURTAILING LOAD.
DOES, DOES THAT HELP? IT DOES.
THAT'D BE HELPFUL AS WE MOVE ALONG.
YEAH, SO, SO ANYWAY, THE MARKET NEEDS TO EXPERIENCE THE SHORTAGE IN ORDER TO SEE THE SHORTAGE PRICING IN ORDER TO PROVIDE THE REVENUE, IN ORDER TO GET THE GREATER PERFORMANCE OR THE NEW INVESTMENT.
AND SO THAT'S, THAT'S THE DEBATE SINCE I'VE BEEN HERE.
MU MUCH OF THE CONVERSATION CONVERSATIONS THAT I'VE BEEN IN HAVE BEEN AROUND HOW DO WE GET MORE REVENUE IN THE MARKET? DO WE NEED NEW PRODUCTS? DO WE NEED TO ADJUST THE OPERATING RESERVE DEMAND CURVE SO THAT WE GET HIGHER SHORTAGE PRICING? UM, THOSE ARE TO THE PRIMARY CONVERSATIONS THAT I'VE HAD, AND I'VE SPOKEN WITH A LOT OF STAKEHOLDERS WHO HAVE BROUGHT THESE ISSUES UP WITH ME, AND THOSE ARE REASONABLE WAYS TO GO ABOUT INJECTING MORE REVENUE.
BUT THE SECOND SLIDE THAT I HAVE, UM, WELL, ACTUALLY BEFORE I GET TO THE SECOND SLIDE, I'LL GET BACK TO THAT IN A SECOND.
UM, ONE OF THE THINGS THAT I MENTIONED FIRST WAS YOU HAVE TO HAVE A, A WELL-DEFINED NEED.
YOU HAVE TO HAVE A WELL-DEFINED PRODUCT, AND IT'S GOTTA BE SET UP OR CALIBRATED SUCH THAT IT PROVIDES WHAT YOU KNOW, THE REVENUE STREAM TO GIVE YOU THE PERFORMANCE OR THE NEW INVESTMENT THAT YOU NEED.
SO ONE OF THE THINGS THAT, THAT I NOTICED WHEN WE STARTED TALKING ABOUT THE RELIABILITY STANDARD, UH, LAST SUMMER AND THE VALUE OF LOSS LOAD THAT'S APPROVED FOR PLANNING PURPOSES IS IN ERCOT WE'VE CALIBRATED TO SOME, TO SOME DEGREE, WE'VE CALIBRATED THE OPERATING RESERVE DEMAND CURVE TO A VALUE OF LOSS LOAD THAT IS MUCH LOWER THAN WHAT WHAT WE HAVE APPROVED FOR A PLANNING PURPOSE.
SO ON THE ONE HAND, WE'VE APPROVED, UH, $35,000 FOR THE VALUE OF LOSS LOAD FOR PLANNING PURPOSES, AND AN EQUIVALENT MEASURE OF THAT FOR THE OPERATING RESERVE DEMAND CURVE WOULD BE ABOUT $5,000.
SO THE DEMAND CURVE IS CALIBRATED TO VALUE LOSING LOAD AT JUST $5,000.
THEREFORE, WHEN YOU GET THESE SHORTAGE CONDITIONS THAT, THAT CAUSE PRICE FORMATION AND SHORTAGE PRICING, YOU'RE GONNA GET A REVENUE STREAM FOR NEW INVESTMENT OR BETTER PERFORMANCE THAT ONLY REFLECTS $5,000 FOR THE VALUE OF LOSS LOAD.
YOU'RE NOT GOING TO GET A, A REVENUE STREAM THAT WOULD REFLECT A HIGHER VALUE OF LOSS LOAD.
THAT MIGHT INDUCE ADDITIONAL INVESTMENT TO HELP YOU IN THE SHORTER TERM, UH, OVERCOME SHORT TERM RELIABILITY ISSUES, AND IN THE MEDIUM TERM, HELP GET ENOUGH NEW INVESTMENT IN ORDER TO MEET YOUR RESOURCE ADEQUACY REQUIREMENTS.
SO, SO THAT IS ONE EXAMPLE OF, I THINK AN OPERATING RESERVE DEMAND CURVE IS A FANTASTIC TOOL FOR SENDING SIGNALS TO THE MARKET, BUT THERE'S A DISCONNECT BETWEEN HOW WE VALUE LOSING LOAD AT A PLANNING LEVEL AND HOW WE VALUE IT AT THE OPERATIONAL LEVEL.
SO, UM, THAT'S AN INTERESTING POINT AND ONE AREA WHERE, UH, SOME DIFFERENT CALIBRATION COULD PROVIDE A BETTER INCENTIVE TO ACHIEVE THE GOALS.
SO, MOVING TO THE NEXT SLIDE, I MENTIONED I'VE HAD, YOU KNOW, DOZENS OF CONVERSATIONS WITH MARKET PARTICIPANTS ABOUT HOW TO GET MORE REVENUE INTO THE MARKET, UH, IN ORDER TO HELP MEET, UH, RESOURCE ADEQUACY GOALS.
ONE OF THE THINGS I'D LIKE TO HIGHLIGHT, AND, AND I'M SURE EVERYBODY HERE KNOWS IT, BUT IT'S, IT'S WORTH STATING
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THE REVENUE REQUIREMENT IN ORDER TO, TO AVERT RETIREMENT IS MUCH LOWER FOR EXISTING RESOURCES THAN THE REVENUE REQUIREMENT IN ORDER TO INCENT NEW INVESTMENT AND NEW GENERATION RESOURCES.SO IF YOU ARE CHOOSING TO TWEAK MARKET DESIGN OR CREATE NEW PRODUCTS JUST TO TRY AND MOVE MORE MONEY INTO THE MARKET, YOU MAY BE ACHIEVING STAVING OFF SOME RETIREMENT, WHICH HELPS WITH YOUR RESOURCE ADEQUACY GOAL, BUT YOU MAY NOT BE GETTING ANYWHERE NEAR WHERE YOU NEED TO BE IN ORDER TO INCENT NEW INVESTMENT.
THE MARKET SIGNAL JUST ISN'T THERE FOR NEW INVESTMENT.
AND BECAUSE OF THE GAP BETWEEN, UH, STAVING OFF RETIREMENT AND ACHIEVING REVENUE, THAT, AND SINCE NEW INVESTMENT, YOU COULD EASILY WIND UP PUSHING AN AMOUNT OF MONEY OR REVENUE, UM, OR RATE PAYER MONEY INTO THE MARKET THAT IS WELL ABOVE WHAT YOU NEED IN ORDER TO STAVE OFF RETIREMENT, BUT NOT NEARLY CLOSE ENOUGH TO INCENT NEW INVESTMENT IS THAT, YOU KNOW, I FORGET WHICH TERM I USE IN HERE, EXCESS COST.
SO THAT WOULD BE AN EXAMPLE OF EXCESS COST, AND THAT WOULD COME ABOUT BY NOT HAVING A VERY TARGETED MARKET INSTRUMENT THAT WAS CALIBRATED TO PRODUCE A LEVEL OF REVENUE THAT WOULD, WHERE YOU WOULD ACHIEVE WHAT YOU WANTED, IF WHAT YOU WANT IS NEW INVESTMENT.
SO I WANTED TO HIGHLIGHT THAT BECAUSE A LOT OF THE CONVERSATIONS THAT I'VE BEEN IN HAVE BEEN ABOUT JUST TRYING TO PUSH SOME MORE MONEY INTO, UM, THE, THE SPOT MARKET.
AND I DON'T, I DON'T FAVOR THAT APPROACH.
I LIKE A MORE STRUCTURED APPROACH, BUT I WANTED TO HIGHLIGHT THE POTENTIAL EXCESS COST TO TAKING THAT APPROACH.
IF YOU DON'T KNOW WHAT IT IS THAT YOU'RE TRYING TO ACHIEVE AND YOU DON'T KNOW HOW MUCH EXTRA REVENUE YOU NEED TO GET IT, THERE COULD BE A CONSIDERABLE AMOUNT OF EXCESS COST, UM, BY TAKING MORE OF A PATCHWORK APPROACH, JUST TRYING TO MOVE MONEY INTO THE MARKET.
SO I, I WANTED TO SHARE THAT PERSPECTIVE WITH YOU.
UH, I GAVE SOME THOUGHT TO, YOU KNOW, WHAT MIGHT BE VALUABLE TO YOU.
I'VE BEEN IN SO MANY OF THESE CONVERSATIONS, I THOUGHT THAT THIS CONCEPT WAS AT LEAST WORTH DISCUSSING, AND I'D BE HAPPY TO ANSWER ANY QUESTIONS.
I HAVE ANOTHER QUESTION IF YOU WANT.
SO IF I UNDERSTAND WHAT YOU'RE SAYING CORRECTLY IS THAT THERE'S A DISCONNECT BETWEEN VALUE OF LOSS LOAD AT 35,000 AND WHAT WE'RE USING FOR OPERATING PER PURPOSES, UH, AND THAT WE SHOULD NEED THE ORDC WOULD NEED TO BE INCREASED.
UH, DO WE HAVE THE AUTHORITY TO DO THAT, OR IS THAT A LEGISLATOR CHANGE? UM, I DON'T HAVE THE ANSWER TO THAT.
MY, MY HUNCH IS THAT'S A PUC YEAH.
SO I, I BELIEVE THAT'S A PUC MATTER.
SO DO YOU HAVE A QUESTION? THAT'S CORRECT.
IT'S A, IT'S, IT'S A PUC DECISION.
ANY OTHER QUESTION? I HAVE ONE.
YOUR LAST LINE REVENUE SOURCE SHOULD BE TIED TO A RELIABILITY GOAL.
WHAT, WHAT DO YOU MEAN THERE? SO, SO I PHRASED IT THAT WAY BECAUSE IN THE SHORT TERM, IT'S USUALLY A RELIABILITY ISSUE.
SO, UH, TAKE DRRS FOR EXAMPLE.
SO THERE, THERE'S A IDENTIFIED GAP, UH, FOR FORECAST ERROR FAR ENOUGH OUT THAT, THAT YOU WOULDN'T EXPECT YOUR NONS SPIN PROCUREMENT TO COVER IT.
SO THERE WAS A VERY SPECIFIC GAP IN RELIABILITY.
UM, ERCOT WILL GO THROUGH A PROCESS OF DETERMINING, YOU KNOW, THROUGH, THROUGH ENGINEERING ANALYSIS, DETERMINING HOW MUCH TO PROCURE TO FILL THAT GAP, HOW IT'S INTEGRATED IN WITH ENERGY AND RESERVES WILL DETERMINE, UM, HOW PRICES ARE FORMED.
BUT IT'S A VERY SPECIFIC RELIABILITY ISSUE THAT'S BEING ADDRESSED WITH DRRS.
THE MEDIUM TERM EXAMPLE IS YOUR RESOURCE ADEQUACY.
SO IF THE GOAL IS TO MEET THE RELIABILITY STANDARD, THEN WE NEED TO HAVE A LOOK AT WHAT THE RELIABILITY STANDARD PRESCRIBES IN TERMS OF A CURRENT DEFICIENCY.
WE HAVE TO UNDERSTAND WHAT THAT MEANS IN TERMS OF HOW MANY MORE MEGAWATTS NEED TO BE BUILT TO MEET THAT.
AND THEN THAT TELLS US HOW MUCH REVENUE WE NEED TO INJECT INTO THE MARKET.
AND SO IF A NEW PRODUCT IS INTENDED TO MEET THE RELIABILITY STANDARD OR A RELIABILITY STANDARD, YOU HAVE TO WORK FROM THERE BACK AS YOU DESIGN A PRODUCT
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THAT WILL HELP YOU MEET THAT.SO YOU UNDERSTAND HOW MUCH REVENUE THAT PRODUCT HAS TO PRODUCE IN ORDER TO GET YOU TO YOUR GOAL.
IF YOU ONLY GET HALFWAY TO YOUR GOAL, BUT YOU SPEND, UM, I, I'LL MAKE UP A NUMBER $5 BILLION, UH, BUT YOU ONLY GET HALFWAY TO YOUR GOAL.
THAT COULD BE FOR A COUPLE OF REASONS.
ONE IS THE MARKET MAY JUST NOT HAVE SIGNALED ENOUGH NEED IN THE, IN THE FIVE YEARS THAT WE MIGHT BE TALKING ABOUT HYPOTHETICALLY, BUT IT ALSO MIGHT BE THAT, THAT, YOU KNOW, THE DESIGNERS DID NOT CALIBRATE THE REVENUE THAT THEY WOULD EXPECT FROM THAT PRODUCT TO MEET THE NEED.
IS THAT I'D BE, I'D BE HAPPY IF YOU HAVE A FOLLOW UP QUESTION OR IF, IF PART OF THAT WASN'T CLEAR, I'D BE HAPPY TO CLARIFY.
LET, LET ME SORT OF EXPAND ON THAT, UH, WITH A LITTLE DI GOING A LITTLE BIT DIFFERENT DIRECTION.
I MEAN, YOU TALKED ABOUT THE CONCEPT OF SHORTAGE, UM, SIGNALS SETTING PRI OR SHORTAGES, SENDING PRICING, MARKET PRICE SIGNALS, UM, ALSO TALKED ABOUT RELIABILITY, UH, HAS REVENUE VALUE.
I YOU DIDN'T SAY THAT, I'M SAYING THAT, BUT I'M READING BETWEEN THE LINES.
BUT WHEN YOU LOOK AT RESOURCE MIXES, UH, DOES, DOES THE GROWTH IN CERTAIN TYPES OF RESOURCE, UH, TYPES, LET'S SAY INTERMITTENT RESOURCES IN PARTICULAR, POTENTIALLY MASK THE SHORTAGE SIGNALS, UH, THAT WOULD OTHERWISE BE PRESENT, UH, FOR SCENARIOS WHEN THEY'RE NOT, WHEN THOSE INTERMITTENT RESOURCES AREN'T AVAILABLE? YEAH, SO THAT'S A GREAT QUESTION AND, AND THERE'S PROBABLY TWO PARTS TO MY ANSWER TO THAT.
ONE IS, UH, THIS CONCEPT OF EFFECTIVE LOAD CARRYING CAPACITY OR ELCC IS INTENDED TO ADDRESS THAT IN A, IN A PLANNING SPACE.
SO WITH RESPECT TO YOUR RA GOAL, UM, YOU, YOU WOULD WANT TO FACTOR IN HOW MUCH CONTRIBUTION TO YOUR RELIABILITY EACH OF THOSE DIFFERENT TYPES OF RESOURCES MAKES, BECAUSE AS YOU POINT OUT, IT IS DIFFERENT.
SO, UM, RECENTLY WITH THE FFSS PROGRAM, YOU KNOW, THE IT PART, PART OF THE DISCUSSION THERE HAS BEEN, CAN, CAN WE PUT NATURAL GAS RESOURCES WITH, WITH VERY FIRM, UH, EXPECTATIONS OF DELIVERY OF FUEL? CAN WE ADD THOSE IN WITH THE OIL STORAGE OR, OR, OR CAN WE NOT? BECAUSE THE DIFFERENTIAL IN RELIABILITY BETWEEN THE TWO IS SUFFICIENT THAT THEY DON'T BELONG TOGETHER IN THE SAME SERVICE.
SO, SO, YOU KNOW, I THINK, I THINK AT LEAST FROM A PLANNING PERSPECTIVE, AND, AND OF COURSE YOUR PLANNING IS FORWARD LOOKING IF YOU GET YOUR PLANNING PERSPECTIVE CORRECT, AND YOUR ELCC, CORRECT FOR THE DIFFERENT RESOURCES WHEN YOU MOVE FORWARD IN TIME AND YOU GET TO THAT POINT IN TIME WHERE YOU'RE UTILIZING THEM IN AN OPERATIONAL SPACE, HOPEFULLY THE WORLD UNFOLDS SUCH THAT YOUR ANALYSIS WAS ACCURATE AND YOU DISCOUNTED RELIABILITY FROM INTERMITTENT RESOURCES APPROPRIATELY.
AND WHAT THAT WOULD ALSO MEAN IS THAT WITH A RELIABILITY PRODUCT THAT YOU DEVELOP TO HELP MEET THOSE GOALS, UM, THE OTHER RESOURCES THAT WERE LESS INTERMITTENT AND MORE RELIABLE WOULD HAVE A GREATER REVENUE SOURCE OR STREAM.
AND JUST TO TALK ABOUT ELCC FOR A MINUTE, SO YOU, UM, DIM M SUPPORTS THE ELCC CONCEPT THAT, THAT THAT IS A RELIABLE WAY TO VALUE THE, UH, CAPACITY OF RENEWABLE RESOURCES OR, OR INTERMITTENT RESOURCES? YES.
AND, AND IN FACT, UM, YOU KNOW, IN, IN NEW ENGLAND, THEY MOVED INTO E-L-C-C-A FEW YEARS AGO, AND THE ISSUE OF, UM, PIPELINE CURTAILMENTS CAME UP, UH, AS WELL, BECAUSE THAT IS A FORM OF INTERMITTENCY, ESPECIALLY WHEN YOU NEED THEM.
SO IT'S NOT JUST FOR TRADITIONALLY INTERMITTENT OR RENEWABLE RESOURCES, IT'S A GENERIC CONCEPT THAT THAT SHOULD APPLY TO ALL RESOURCES.
WELL, I HADN'T THOUGHT ABOUT THAT.
ANY OTHER QUESTIONS, COMMENTS? OKAY.
WELL, ANY CLOSING COMMENTS, JEFF? NOPE.
THANKS FOR, UH, YOUR REPORT AND, UH, WE LOOK FORWARD TO, UH, SEEING YOU IN THE FUTURE.
UH, WE'RE NEXT GONNA MOVE TO AGENDA ITEM, UH, ES EXCUSE ME, 5.3 COMMERCIAL MARKETS UPDATE, UH, KEITH COLLINS IS GOING TO PRESENT.
HAPPY TO TO, TO PRESENT TO YOU TODAY THE COMMERCIAL MARKET UPDATE.
UH, WE'RE GONNA COVER THREE ITEMS TODAY.
THE FIRST ONE IS INTRODUCED TO YOU,
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UH, A NEW, UM, INITIATIVE WE'RE WORKING ON, WHICH IS RESIDENTIAL DEMAND RESPONSE.UH, WE DID TALK AT THE LAST R AND M, UH, MEETING ABOUT THE IMPORTANCE OF DEMAND RESPONSE.
AND SO, UH, WE WILL SORT OF OUTLINE WHAT WE'RE WE'RE PLANNING TO WORK ON THIS YEAR.
THE SECOND ITEM IS, UH, RELATED TO, UH, CREDIT.
UH, WE, WE DO, UM, WE'VE SORT OF ROLLED, UH, OUR, OUR PRESENTATIONS TOGETHER HERE FOR THE, THE, THE FULL BOARD.
UM, AND SO I'LL BE COVERING SOME WORK WE'RE DOING ON CREDIT.
AND THEN FINALLY, UH, END WITH SOME DISCUSSION AROUND, UH, PRICING OUTCOMES DURING THE, UH, FEBRUARY'S WINTER WEATHER EVENT.
ALRIGHT, SO I'LL, I'LL START HERE WITH OUR, UH, NEW NEW RESIDENTIAL DEMAND RESPONSE, UH, PROGRAM.
UH, WE DO HAVE SOME IDEAS THAT, UH, WE ARE GONNA BE WORKING THROUGH THE STAKEHOLDER PROCESS ON.
WE'VE, WE'VE REACHED OUT TO COMMISSION STAFF AS WELL.
AND ULTIMATELY, UM, THIS PROGRAM, WHEN WE THINK OF THE, THE EFFORTS WE'RE DOING ON DEMAND RESPONSE, UH, THERE'S SORT OF, WE WE'RE HITTING DIFFERENT ELEMENTS, UH, WHETHER IT'S IN, IN SOME, SOME PROGRAMS. IT, IT, IT ALLOWS FOR, UH, AGGREGATED RESOURCES, UH, INDUSTRIAL RESOURCES.
UH, BUT WE DO THINK THAT THERE'S A, AN OPPORTUNITY IN TERMS OF SMART DEVICES, THERMOSTATS, POOL PUMPS, UH, WATER HEATERS, THINGS ALONG THAT LINE, AND, AND TO ALLOW FOR A PROGRAM THAT, THAT FOCUS ON THOSE TYPES OF RESOURCES.
AND, AND I'LL SORT OF NOTE THAT WHEN WE LOOK AT OUR, OUR CORPORATE, UH, PRIORITIES FOR, FOR 2025, UH, DEMAND RESPONSE IS, IS A, IS A PRIORITY FOR US.
AND, AND, UH, WE'RE WORKING ON THIS TO, TO HELP MEET THOSE NEEDS.
AND, AND ULTIMATELY, UH, AND, AND EVEN BASED ON SOME OF JEFF'S COMMENTS A MINUTE AGO IS, YOU KNOW, WHAT ARE THE SHORT TERM RELIABILITY CHALLENGES AND HOW DO WE MEET THEM IN THE SHORT RUN IF, IF IT TAKES A WHILE TO BUILD NEW RESOURCES? AND, UM, THERE'S PERHAPS SOME UNCERTAINTIES ON, ON WHAT MIGHT, WHAT, WHAT WE MIGHT SEE IN, IN, IN, UM, THE MEDIUM TERM.
WELL, DEMAND RESPONSE CAN PLAY A BIG ROLE ON THAT.
AND SO, SO WE SEE THIS AS AN IMPORTANT PRIORITY, UH, FOR 2025 TO CREATE THOSE RULES SO THAT WE CAN GET ACCESS TO THESE RESOURCES MOVING FORWARD.
UM, UH, ULTIMATELY IT'S, IT'S AN INCENTIVE PAYMENT THAT WILL, WILL MAKE ITS WAY TO THE, THE RETAIL ENERGY PROVIDERS, UM, UH, THROUGH THE QSC.
UH, BUT ULTIMATELY, UH, TO IDENTIFY WHAT THE, THE VALUE THAT THOSE, UH, UH, DEMAND RESPONSE OF PROVIDING DURING THE HIGHEST, HIGHEST NET LOAD PERIODS.
UH, ULTIMATELY OUR DISCUSSIONS WITH STAKEHOLDERS IS GOING TO, UM, IT, IT ACTUALLY ALREADY HAS COMMENCED, BUT WE'LL BE WORKING ON THEM, UH, WORKING WITH STAKEHOLDERS IN, IN THE FOLLOWING QUARTERS, Q2, Q3, UH, AND HAVE SOMETHING, UH, BY, BY THE END OF THE YEAR.
THE INTENT OF THE PROGRAM IS, IS ULTIMATELY, UH, SOMETHING THAT'S, UH, QUICK TO DEVELOP, UH, SIMPLE AND ITS ADMINISTRATION, UH, CAN BE POPULAR FOR FOLKS TO BE A PART OF AND, AND ULTIMATELY IS COST EFFECTIVE IN THE END.
SO THAT'S OUR GOALS FOR THIS YEAR.
AND, UH, WE DO THINK THAT, UH, WE HAVE SOME, SOME NOVEL CONCEPTS THAT, UH, WE'LL BE ABLE TO ACCOMPLISH THIS, UH, IN THE COMING YEAR.
SO I'LL PAUSE AND SEE IF THERE'S ANY QUESTIONS ON, ON THE DR PROGRAM.
DO YOU HAVE A TIMELINE? UH, THE TIMELINE IS ULTIMATELY BY THE END OF THE YEAR, WE WANT TO HAVE THE INITIATIVE COMPLETE AND, UM, UH, IN TERMS OF IMPLEMENTATION, UM, I THINK REALISTICALLY, UH, WE, WE'D LOVE TO HAVE IT NEXT YEAR, BUT I THINK GIVEN, UH, YOU KNOW, REALISTICALLY IT'D PROBABLY BE FOR 27, IS THAT WE WOULD IMPLEMENT IT.
SO WE ON DESIGN THIS YEAR, UM, UH, WORK ON DEVELOPMENT IN, IN 26 AND, UH, IMPLEMENT IN THE 27 TIMEFRAME.
THE NEXT, THE NEXT ITEM TO TALK ABOUT THAT, UH, COMMERCIAL OPERATIONS IS WORKING ON THIS IS SOMETHING THAT WE HAD, UH, GIVEN AN UPDATE TO THE, UH, R AND M COMMITTEE AT ITS LAST MEETING, UH, IS THAT WE HAD, UH, DEVELOPED SOME POLICY ITEMS THAT WE WERE WORKING ON TO MODIFY, UH, SOME FORMULAS THAT, UH, EVALUATE THE AGGREGATE LIABILITY IN, UM, UH, THAT WE ASSESS, UH, WE HAD IDENTIFIED AT THE RM THAT WE HAD A, AN APPROACH AND A METHOD.
AND ULTIMATELY WHAT WE'RE, WE'RE BRINGING TO YOU TODAY IS TO SAY THAT WE NOW HAVE AN NPRR, UM, UH, NPRR 1277, UH, THAT, UH, ESSENTIALLY, UM, CODIFIES THOSE POLICY CHANGES, UH, INTO THE NPRR.
I WILL NOTE THAT ULTIMATELY THE GOALS OF THIS, THIS POLICY CHANGE IS TO ADDRESS, UH, SORT OF OVERCOLLATERALIZATION DURING PERIODS OF ESSENTIALLY WHEN YOU HAVE SIGNIFICANT PRICE, UH, MOVEMENTS, UH, UPWARDS.
WHAT WE FOUND IS THAT, UH, IT CAN CREATE A, A LARGE OVER COLLECTION, UH, THE EXAM.
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AT THE RMM LAST TIME, AND, UH, THIS WILL ADDRESS THAT, WE'LL ADDRESS SOME OF THE VOLATILITY IN THOSE COLLATERAL REQUIREMENTS AND, AND ALSO IT WILL ADDRESS SOME UNDER COLLATERALIZATION AS WELL.UH, ULTIMATELY WE, WE THINK THAT, UH, THERE'S BEEN A BROAD CONSENSUS ON, ON THESE, UH, THESE CHANGES TO THE, THE FORMULATION, AND WE THINK THAT THIS IS A, UH, THIS IS ULTIMATELY GONNA BE AN IMPROVEMENT IN ENHANCEMENT GOING FORWARD.
SO, UH, WE SEE THIS AS, AS, UH, JUST CONTINUATION OF, OF WHAT WE DID WITH THE POLICY.
I WILL NOTE THAT, UH, CREDIT IS OBVIOUSLY SOMETHING THAT WE SEE AS, AS A HIGH POTENTIAL RISK, UM, TO THE ORGANIZATION, BUT, UM, WHAT WE'RE DOING HERE IS, IS HELPING TO, TO FURTHER MITIGATE THAT RISK AS WE'RE MOVING FORWARD.
SO, I'LL, I'LL PAUSE AND SEE IF THERE ARE ANY ADDITIONAL QUESTIONS ON, ON THE, UH, FORMULA CHANGES ON THE CREDIT.
HEARING NONE, UM, WE'LL KEEP GOING FORWARD.
THE, THE THIRD ITEM THAT I WANTED TO COVER TODAY WAS SOME DISCUSSION ABOUT THE FEBRUARY WINTER WEATHER EVENT.
I KNOW DAN'S GONNA BE APPROACHING IT FROM AN OPERATIONAL PERSPECTIVE, BUT, UH, WANTED TO ALSO APPROACH IT FROM A MARKET PERSPECTIVE AND WHAT WE SAW DURING, UH, THE RECENT WINTER WINTER COLD SNAP IN, IN FEBRUARY.
AND SO, UH, WE'RE WE'LL COVER PRICING.
WE'LL TALK A LITTLE BIT ABOUT FIRM FUEL SUPPLY SERVICE, UH, RELIABILITY UNIT COMMITMENT DURING THAT PERIOD AND SOME OF THE CONGESTION THAT WE SAW.
ALRIGHT, SO WHAT WE HAVE HERE IN THE FIRST, FIRST COUPLE SLIDE, THE FIRST SLIDE HERE IN THE FIRST TWO CHARTS THAT WE HAVE IS, UH, WE, WE DO HAVE, UH, THE DAY HEAD PRICING IN THE TOP CHART AND THE REAL TIME PRICING IN, IN THE BOTTOM CHART.
AND, UH, ONE OF THE THINGS THAT DID STAND OUT IN THIS EVENT WAS, UH, THE, UH, THE TIMING, LET'S SAY, OF SOME OF THE PRICING IMPACTS DIFFERED, UM, IN THE MARKET.
SO, FOR INSTANCE, ON THAT FIRST DAY ON ON WEDNESDAY, UH, FEBRUARY 19TH, UH, THE DEADHEAD MARKET WAS, WAS GENERALLY FAIRLY QUIET.
BUT WHAT WE SAW IN THE REAL TIME THAT, UH, WE STARTED TO SEE SOME ELEVATED PRICES IN BOTH, UH, THE MORNING RAMP AND, AND THE, UH, THE EVENING RAMP DURING, DURING THE COLD, UH, AS THE COLD SNAP WAS COMING IN.
AND, AND ULTIMATELY THE HIGHEST PRICES WE SAW, UH, AT THE HUB LEVEL, UH, DURING, DURING THE REAL TIME HAPPENED TO BE ON THAT FIRST DAY.
SO, AS THAT EVENT CAME IN, UM, THE DEADHEAD DIDN'T, UH, DID NOT TO THE SAME EXTENT, UH, THAT THE SAME IMPACTS WERE NOT SEEN, BUT WE DID HAVE THE REAL TIME REACTIONS IN BOTH THOSE RAMPING PERIODS AND THE DEADHEAD MARKET.
ON THE THURSDAY, YOU'LL SEE THAT, UH, WE HAD OUR HIGHEST DAY AHEAD PRICES OF OVER $800 AT THE HUB, UH, PARTICULARLY NOTED IN, IN THE MORNING RAMP.
UH, AND WE SAW THE, THE MORNING RAMP, UH, ALSO HIGH IN REAL TIME ON, ON THAT DAY AS WELL.
AND THEN OVER THE, THE COURSE OF THE NEXT COUPLE DAYS, UH, WE DID SEE RAMPING IM IMPACTS DURING THE MORNING AND, AND EVENING RAMPING PERIODS, BUT NOTHING, NOTHING AS EXTREME AS, AS WHAT WE SAW ON, ON THAT THURSDAY, UH, THURSDAY EVENT.
AND SO ONE OF THE THINGS TO, TO TAKE AWAY, UH, FROM, FROM THE IMPORTANCE OF PRICING, AND I'LL, I'LL GET TO THAT IN A SECOND.
UM, ACTUALLY I'LL SKIP AHEAD TO IT, IS, UH, THE CONNECTION AND THE RELATIONSHIP OF THE PRICING AND WHAT WE SAW IN, IN TERMS OF RELIABILITY UNIT COMMITMENT.
SO WHEN OPERATORS ARE, ARE TAKING ACTIONS TO SECURE THE, THE SYSTEM THROUGH RELIABILITY UNIT COMMITMENT, UM, WHEN THE PRICING, UH, WAS STRONGEST IN THE DAY AHEAD, AND THAT WAS ON THAT THURSDAY, YOU'LL SEE THAT THE RUCK, THE RUCKS DURING THAT PERIOD WERE, WERE THE, WERE THE LOWEST.
UH, AND THAT'S, THAT'S AN IMPORTANT OUTCOME.
AND I, I THINK THAT'S ACTUALLY GONNA BE AN IMPORTANT DISCUSSION POINT WHEN WE, WE TALK ABOUT, UH, 1269 LATER TODAY AND INTO TOMORROW, IS THE, THE STRONGER THE, THE SIGNAL IN RU UH, IN, IN THE MARKET, IN THIS CASE, THE DAY AHEAD MARKET.
UM, THE LESS USE OF RUCK THAT WE SAW, UH, IN, UM, UH, ON THOSE DAYS.
AND, AND ULTIMATELY ON THAT, THAT MON ON THE WEDNESDAY THE 19TH AND FRIDAY THE 21ST, WHAT WE SAW THERE WERE, WERE SOME ELEVATED LEVELS OF RUCK.
UH, AS WE COMPARE THAT, UH, TO OTHER PERIODS.
THESE WERE, WERE HIGHER INSTANCES OF RUCK, WHEREAS ON THAT THURSDAY WAS, WAS SIGNIFICANTLY LESS, UH, GIVEN THE PRICE SIGNALS WERE STRONGER IN THE DAY AHEAD ON THAT DAY.
UM, SO JUST STEPPING BACK FOR A MINUTE, AND ANOTHER THING THAT THAT IS IMPORTANT IS FIRM FUEL SUPPLY SERVICE.
SO THIS IS A, A PROGRAM, UM, TO HELP ENSURE THAT WE HAVE AVAILABILITY OF, UH, ONSITE, UH, AS IT IS NOW ONSITE AVAILABILITY, PARTICULARLY FUEL OIL RESOURCES AVAILABLE.
AND ARE THOSE RESOURCES CALLED UPON, UH, DURING THESE EVENTS AND, AND, AND IN THIS CASE, YES.
WE SAW ON THE 19TH, THE 20TH AND
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THE 21ST, UH, WE DID, UH, ACTIVATE THOSE RESOURCES THAT HAVE THOSE FIRM FUEL, UH, ON THESE DAYS.SO IT WAS ULTIMATELY FOUR RESOURCES UP TO JUST UNDER 500 MEGAWATTS OF, OF AVAILABILITY.
SO, UM, THIS IS, LOOKING BACK OVER THE LAST COUPLE YEARS, WE SAW FIRM FUEL, UH, DURING ONE COLD SNAP, UH, I BELIEVE IT WAS, IT WAS, UH, WINTER STORM HEATHER IN 2024.
AND IN, IN, UH, THE 20, THE 23 TIMEFRAME, WE DID SEE A COUPLE INSTANCES OF FIRM FUEL.
SO, UM, IT'S, IT'S COMMON TO SEE THESE THINGS AT LEAST, AT LEAST ONCE A SEASON.
AND THIS, UH, THIS WAS THE EVENT THAT WE SAW AND, AND THE PERFORMANCE WE HAD, UH, DURING THOSE DAYS.
HOW DOES IT TAKE SO LONG TO EVALUATE THE PERFORMANCE? SO, UH, ULTIMATELY WE'RE, UM, LOOKING AT, UH, ULTIMATELY THE REASONS FOR WHY YOU CAN SEE THERE'S A DELTA BETWEEN WHAT THE BASE POINTS ARE VERSUS THEIR OBLIGATION AND THE HSL.
AND SO, UH, WE HAVE TO, UH, REACH OUT TO THE, THE RESOURCES, LOOK AT THE DATA AND, AND BE ABLE TO DO THAT.
I THINK THE, THE OTHER REASON WHY IT TAKES SO LONG IS THAT A LOT OF THE RESOURCES THAT WOULD DO THAT ANALYSIS ARE ALSO FOCUSED ON OUR, UH, REAL TIME CO-OP OPTIMIZATION ANALYSIS.
AND SO IT'S, IT'S A IT COMPETING RESOURCE CHALLENGE THAT WE SEE TO EVALUATE IT.
SO, UM, I THINK OUR HOPE IS THAT WE'LL BE ABLE TO DO IT.
UH, BUT GIVEN SOME OF THE CHALLENGES, UH, WITH, WITH WHAT WE'RE DOING WITH THE, UH, RTC, UH, THOSE RESOURCES WERE, WE'RE DEDICATED TO EVALUATING THAT.
AND THEN, UM, THE FINAL, THE FINAL POINT I WANTED TO COVER IS, IS CONGESTION AND WHAT WE SAW THERE WAS SOME SIGNIFICANT DIFFERENCE BETWEEN CONGESTION IN, IN THE DAY AHEAD AND IN THE REAL TIME, UH, THE DAY AHEAD.
THE, THE HIGHEST CONGESTION LEVELS WERE ON THE THURSDAY, AND THEN, UH, IN THE REAL TIME IT WAS, IT WAS, UH, IT WAS ON THE, THE TUESDAY ON THE 19TH.
AND UH, YOU CAN SEE THE SOUTH ZONE IS, IS THE PROMINENT CONGESTION ZONE, AND THAT'S WHERE WE'VE SEEN A LOT OF THE SORT OF SOUTH EXPORT CONSTRAINT.
AND THAT DID PLAY A ROLE IN, IN THIS EVENT AS WELL.
SO, UH, THAT'S ONE OF THE REASONS WHY WE DID SEE THE HIGH CONGESTION ON THOSE DAYS.
AND, AND ON THE 19TH, AS WE NOTED, UH, EVEN FOR THE ENERGY PRICES, UH, IT WAS MORE IN THE REAL TIME WAS MORE, UH, SIGNIFICANT THAN WHAT WE SAW ON THE DAY AHEAD.
AND, AND THE CONGESTION PATTERN REFLECTS THAT AS WELL.
AND THEN, UH, ULTIMATELY WE DID HAVE SOME ADDITIONAL SLIDES WHERE WE DID COVER THINGS LIKE, UH, ANCILLARY SERVICES.
I WILL NOTE THAT ANCILLARY SERVICES DURING THIS PERIOD DID REACH OVER $200.
UM, UH, AND WHILE THE PRICE HAS REACHED OVER 800, UH, WE DO HAVE ADDITIONAL SLIDES ON THAT.
I ALSO NOTE THAT WE DO HAVE A CREDIT SLIDE AT THE END, UH, WHERE I THINK THE KEY TAKEAWAY IS THAT, UM, UH, THERE'S, UH, IT'S, IT'S THE CREDIT, THE CREDIT OUTCOMES ARE VERY NORMAL EVEN GIVEN THE, UH, PRICING OUTCOMES WE SAW, UH, DURING THIS EVENT.
SO I'LL, I'LL PAUSE AND SEE IF ANY FINAL QUESTIONS FOR ME.
KEITH, I HAVE A QUESTION ON THE CONGESTION YES.
IS IT ATYPICAL TO HAVE THAT BIG OF VARIANCE BETWEEN DAY AHEAD AND REAL TIME WHEN IT COMES TO CONGESTION? I, I THINK WE, WE GENERALLY DON'T SEE THESE LARGE DIFFERENCES IN CONGESTION UNLESS THERE'S, UM, SOMETHING SIGNIFICANT HAPPENING.
AND, AND I THINK, UM, SO YOUR QUESTION IS ISN'T ATYPICAL? THE ANSWER IS YES.
IS THERE ANYTHING HAPPENING HERE THAT HAPPENED BETWEEN DAY AHEAD AND REAL TIME THAT, THAT CAUSED THIS? AND I, I THINK THE, THE BIG DIFFERENCE HERE WAS THAT WHEN YOU LOOK AT THE, THE MARKET OUTCOMES ON THE, THE 19TH IN PARTICULAR FOR THE DAY AHEAD, THEY DIDN'T REFLECT THE SAME CONDITIONS THAT ACTUALLY MATERIALIZED IN REAL TIME.
AND SO THAT CONGESTION WAS EXACERBATED IN PARTICULARLY NOTED ON THAT, THAT 19TH DAY.
ANY OTHER QUESTIONS FOR, YEAH, I'VE, NOT REALLY A QUESTION.
I JUST, I'D ASK KEITH IF I COULD ASK HIM TO JUST GO TO THE APPENDIX REAL QUICK.
SLIDE, UH, 16 IN YOUR APPENDIX, COULD YOU TALK A LITTLE BIT ABOUT THE KIND OF STRUCTURAL CHANGE IN DRIVERS FOR ROCK THAT LOOK LIKE WE'VE GOT QUITE A BIT MORE CONGESTION, CONSISTENTLY DRIVING ROCKING ACTIVITIES MM-HMM
UM, CAN YOU TALK A LITTLE BIT ABOUT THAT? YEAH, SO THE, YOU YOU'LL KNOW THAT REPRESENTED IN THAT DARK GRAY LINE THAT WE SEE HERE.
UH, AND AS, AS PABLO WAS NOTING IN THE SORT OF THAT SPRING PERIOD, WE SAW AN INCREASE.
AND, AND AS, UH, IN, IN SEVERAL MONTHS IT'S BEEN THE, THE BIGGER PORTION OF, OF THE RUCK AND IT IS RELATED TO THE, UH, THE, THE ESSENTIALLY THE SAME CONSTRAINT THAT OUR RMR RESOURCES ARE, ARE LOOKING TO ADDRESS.
AND SO WE SEE THAT THAT CONSTRAINT BEING MORE OF A ROLE, UM, IN THE MARKET.
WE SEE THAT CONSTRAINT PLAYING A ROLE WITH, UH, RUCK ACTIVITY.
[00:55:01]
SO, UH, AND OBVIOUSLY THE NEED FOR THE, THE RMR RESOURCES, SO IT IS, IT IS PLAYING A, A SIGNIFICANTLY LARGER ROLE, UH, OVER THE LAST SEVERAL MONTHS IN, IN WHAT WE'RE DOING HERE.UH, ANY OTHER QUESTIONS FOR KEITH ON THE OPERATIONS REPORTS? OKAY, KEITH, ANYTHING ELSE WE SHOULD HAVE ASKED THAT WE DIDN'T? NOPE.
UH, THE LAST OR THE NEXT ITEM FOR TODAY IS AGENDA ITEM, UH, 5.3 0.1, REALTIME COOPERATION UPDATE.
MATT IS GONNA PRESENT THIS GOOD AFTERNOON BOARD MEMBERS MATT MARINAS ERCOT.
UM, APOLOGIES FOR THE UPDATES.
WE HAD QUITE A FEW RED LINES, UH, THROUGH THIS.
THE MAIN REASON WE KNEW THAT WE WANTED TO UPDATE THIS PRESENTATION IS THAT WE'VE BEEN REACHING OUT TO STAKEHOLDERS TO SEE IF THEY'RE READY FOR RTC.
UH, SO WE DID GET A, UH, DASHBOARD FOLDED IN THERE.
UH, THE MAIN PIECE IS THAT WE HAD A MARKET COST OF RUCK INSTRUCTIONS AS WE START TO UNPACK THE ANALYSIS, UM, IN TODAY'S PRESENTATION, ONE OF THE THINGS THAT CAME UP AFTER TAC WAS, WELL, IF THIS IS THE COST OF AN AS DEMAND CURVE, HAVING UP BEING THE FLOOR, IF WE DON'T HAVE THAT FLOOR AND WE HAVE TO RUCK MORE, WHAT WOULD THOSE COSTS LOOK LIKE? SO WE TRIED TO PUT THE OTHER SIDE OF THE EQUATION IN ON THIS AND WE'LL HIT THAT AS WE GO THROUGH THE PRESENTATION.
ALL RIGHT, SO TODAY WE'RE GONNA FOCUS ON, UH, TWO MAIN THINGS.
ONE IS JUST THE GENERAL PROGRAM UPDATE.
IT'S A ONE-PAGER INSTEAD OF SIX, AND REALLY WANTED TO DO THAT TO MAKE ROOM FOR THIS, UH, MIDDLE PIECE, WHICH IS THE EXPLANATION OF THE THREE NPRS.
UH, KEITH AND I TALKED, THE BEST THING I CAN DO TODAY IS PREPARE YOU FOR NPR 1269 TOMORROW.
AND SO I'M HAPPY TO DIVE INTO THE PROGRAM UPDATES AND GO THERE AS NEEDED.
BUT WE KIND OF RESTRUCTURED THIS A LITTLE BIT TO, UM, HIT MAINLY ON THOSE, THE KEY TAKEAWAYS WE'LL HIT AT THE END AGAIN.
SO IN TERMS OF WHAT IS THE RTC PLUS B PROGRAM AND TASK FORCE DOING, UH, FIRST ON THE POLICY ITEMS, AGAIN, THOSE THREE NPRS ARE HERE BEFORE YOU TODAY.
A LOT OF WORK WENT INTO THAT BY THE WAY.
THE NEXT IS THE INITIAL TASK FORCE DISCUSSION OF STATE OF CHARGE.
SO IF WE HAVE REAL TIME COOP OPTIMIZATION, IT'S CYCLING EVERY FIVE MINUTES AND BATTERIES IN ARE IN CURRENTLY HOURLY MARKET.
SHOULD ANY OF THOSE PARAMETERS CHANGE AS WE TRANSITION TO RTC? SO, UM, SO JEFF BILLOW
AND WE HOPE TO BRING AN NPR FORWARD AT THE NEXT BOARD MEETING IN JUNE.
UH, THE GOOD NEWS IS THAT IS NOT A REDESIGN ELEMENT THAT'S MERELY A PARAMETER IS THE DURATION TWO HOURS OR FOUR HOURS IN A NUMBER THAT WE PUT IN THE NEXT ONE OF THE PROGRAM MILESTONES.
INTERNALLY, OUR JOB IN THIS BEST OF BREED SYSTEMS THAT WE HAVE, WE HAVE AN ENERGY MANAGEMENT SYSTEM, A MARKET MANAGEMENT SYSTEM, SETTLEMENTS AND BILLING, AND THOSE ARE THE BIG THREE WHEN IT COMES TO TELEMETRY MARKETS AND SETTLING THAT MARKET.
THAT IS PROBABLY 90% OF THE COST OF THIS $50 MILLION PROGRAM.
AND SO WHAT WE'VE BEEN ABLE TO DO IS LAST WEEK WE WERE ABLE TO RUN OUR FIRST OPERATING DAY ON THOSE THREE PRIMARY SYSTEMS. UH, JP HAD ASKED ME WHAT KEEPS ME UP AT NIGHT.
THAT WAS THE TEST THAT WAS KEEPING ME UP.
THERE'S SOME OTHER STUFF ON THE SIDE, BUT IF WE DON'T GET THAT ONE RIGHT BACK IN 2010, THAT'S WHEN WE TURNED THE CRANK AND THINGS DIDN'T COME OUT AND THIS WAS A REAL WIN FOR THE TEAM.
SO PROBABLY A HUNDRED PLUS PEOPLE WENT INTO THAT ONE.
THE NEXT ONE IS MARKET READINESS UPDATE.
WE SENT OUT A MARKET NOTICE TO THE QUEASY WITH RESOURCES, AND WE DID THIS BACK LAST YEAR IN THE FALL TIMEFRAME AND SAID, REAL TIME CO-OP OPTIMIZATION IS COMING.
DO YOU HAVE AN ACCOUNTABLE EXECUTIVE THAT WE CAN WORK WITH ON THIS? AND WE SCORECARDED EVERYONE THAT WAS 105 IES AND EVERYONE WENT GREEN.
WE LOOKED THAT UP AGAIN ON MID-MARCH BECAUSE WE'RE GETTING READY TO START TRIALS IN MAY.
AND SO WE'VE HIT 107 QU 103 HAVE RESPONDED BACK.
WE'RE STILL WORKING WITH THOSE LAST FOUR, UH, TO CHECK THAT OFF, BUT WE HAD A GREAT RESPONSE.
SO I, I WOULD LOVE TO SAY IT WAS A HUNDRED PERCENT, BUT NO ONE'S TOLD US THEY'RE NOT COMING, UH, TO THE TRIALS AT THIS POINT.
SO WE WILL CONTINUE TO WORK THROUGH THAT AND YOU'LL SEE A COMPLETED SCORECARD AT THE NEXT MEETING.
WE'VE ALSO BEEN WORKING ON A LOT OF, UH, MARKET TRIAL HANDBOOKS.
WHAT DOES IT LOOK LIKE? THESE ARE OUR CONTRACTS WITH THE MARKET ON HOW DO WE TEST OUR SYSTEMS, UH, AND INTERACT WITH MARKET PARTICIPANTS.
AS WE GO THROUGH THOSE TRIALS, WE'VE ALSO SET UP SOME NEW TRAINING.
UH, WE WENT THROUGH A DEMAND RESPONSE.
UH, IF YOU'RE A LOAD RESOURCE AND HERE'S HOW YOU RESPOND IN RTC, WHAT WOULD THAT LOOK LIKE? WE ALSO FOCUS ON THE DAY AHEAD, MARKET CHANGES AND OPERATIONS CHANGES.
UH, AND THEN THE BIGGER ONE RIGHT NOW IS THE OPERATOR TRAINING SEMINAR IS GOING ON, UH, OUT IN TAYLOR EVERY WEEK.
WE HAVE, WHAT IS IT, 200 OPERATORS ROLL INTO TOWN AND THEY GO THROUGH ALL THIS NERC CERTIFIED TRAINING.
REALTIME CO OPTIMIZATION HAS AN HOUR AND A HALF OF THAT TRAINING JUST TO GET EVERYONE, UH, SPEAKING THE SAME LANGUAGE.
AND THEN AGAIN, WE HAVE A LOT MORE IN APPENDIX A.
I WASN'T GONNA PLAN TO HIT THAT TODAY, BUT WE HAVE ANOTHER SIX SLIDES IN THERE IF YOU NEED IT.
[01:00:01]
ANY QUESTIONS ON THE PROGRAM? THAT WAS JUST KIND OF OUR HELICOPTER FLY BY.ALRIGHT, UM, I'LL HIT THIS ONE AND THEN WE'LL TRANSITION INTO THE NPRS.
WE'VE ALSO BEEN, UM, WHAT'S IT LOOK LIKE TO PROTECT A PROGRAM? THE BEST THING YOU DO IS MANAGE CHANGE.
AND SO THE MARKET'S BEEN REALLY GOOD ABOUT NOT ADDING SCOPE, UH, TO THE RTC PROGRAM.
UH, BUT IT'S ALSO ABOUT MINIMIZING CHANGES.
SO FIRST OF ALL, ERCOT HAS TO HAVE DISCIPLINE.
SO THAT'S WHERE JP BROUGHT FORWARD THE IDEA THAT INTERNAL TO ERCOT, THERE'S A PRODUCTION FREEZE ON THESE IMPACTED SYSTEMS, UH, STARTING ESSENTIALLY AT THE END OF MAY THROUGH GO LIVE.
AND SO ESSENTIALLY IT'LL BE TAKE QUITE A BIT OF A REASON, RELIABILITY AND EXECUTIVE SIGN OFF TO ROLL MORE CHANGES INTO OUR SYSTEMS BETWEEN NOW AND THEN.
SO IT'S DISCIPLINE IS REALLY THE CHANGE.
UH, SORRY, THERE'S ALWAYS DISCIPLINE AT OUR T WE'RE RAISING THE BAR ON CHANGES INTO OUR PRODUCTION SYSTEMS. UH, THE NEXT ONE IS THIS, NO MAJOR MARKET CHANGES.
UH, FOR THOSE OF YOU THAT, UM, ARE PRS OR TAC, WE HAVE THIS DASHBOARD THAT SHOWS UP AND IT'S KIND OF HARD TO SEE ON THE RIGHT, BUT WHAT I WANTED TO TEASE OUT IS NORMALLY TROY ANDERSON COMES AND SAYS, HERE'S ALL THE NPRS THAT WE'RE RELEASING EVERY MONTH OR EVERY OTHER MONTH.
AND THERE'S LOTS OF NPRS, LOTS OF CHANGES COMING, BUT AS YOU SEE, ONCE WE HIT MAY, JUNE, JULY IS BOXED OUT, THAT'S WHERE WE'RE JUST DOING REAL TIME CO OPTIMIZATION.
SO WE'VE RESERVED THE RUNWAY FOR THAT WORK.
THAT'S WHY I HAVE TO TALK ABOUT THE ONES THAT ARE CONSENT TO GET TO THE ONES THAT AREN'T CONSENT.
UH, THE TIMELINE, UH, THAT WE'VE HAD.
WE'VE HAD SIX R-T-C-B-T-F MEETINGS JUST TO GET TO THIS POINT.
UH, WE'VE HAD TAC APPROVAL LAST MONTH ON MARCH 26TH, AND WE'RE HERE TODAY FOR YOUR CONSIDERATION TOMORROW AND NPR 1268 IN 69 AND 70.
I HAVE A STORY ON EACH OF THOSE, BUT THE REASON WE NEED THIS NOW IS TO GET THIS SYSTEMS CHANGED AND INTO MARKET TRIALS SO THAT WE CAN EXECUTE WHAT WE, UM, PROTOCOLS SHOW.
SO THE FIRST OF ALL, THESE AS DEMAND CURVES.
YOU'VE HEARD THAT, I DON'T KNOW HOW MANY TIMES YOU'VE HEARD THAT WORD TODAY.
UM, IT'S THE IDEA OF THESE AS DEMAND CURVES ARE SOMETHING THAT IF YOU LOOK AT THE TOP LEFT FIGURE, THAT'S WHAT OUR ORDC CURVE LOOKS LIKE.
THAT'S THE CURRENT DAY PRICE ADDER THAT SHOWS THAT THERE'S A $5,000 ADDER WHEN WE'RE ON THE EDGE OF RUNNING OUT OF ENERGY.
SO THAT'S THE HIGH DEMAND OF $5,000, AND THEN IT DROPS OFF A SLOPE, AND ESSENTIALLY AS OUR RESERVES GET TIGHTER AND TIGHTER AND TIGHTER, THE PRICES GO UP.
WELL, THAT WAS PUT IN PLACE TO OFFSET WHAT SHOULD HAVE BEEN THERE IS AS DEMAND CURVES, WHICH ARE USED AT OTHER ISOS BECAUSE EVERYBODY ELSE HAS RTC.
WE DON'T YET, BUT THAT'S WHAT WE'RE GETTING TO.
AND SO WHEN WE FILED AT THE COMMISSION BACK IN 2019, THE IDEA IS WHAT SHOULD THOSE DEMAND CURVES LOOK LIKE? AND IT WAS POLICY WAS KIND OF FRAMED OUT TO SAY, LET'S GET THEM UNDER THE ORDC CURVE.
SO THAT'S OUR BOUNDARY THAT WE'VE BEEN WORKING WITH.
AND THE IDEA WAS, IS THOSE WERE APPROVED IN 2019.
WE CAME BACK TO THE MARKET TODAY, AND THE IMM SAID, YOU KNOW, THERE'S ACTUALLY A BETTER WAY TO DO THIS.
THERE'S A WAY TOMO SLICE AND DICE UNDER THAT CURVE TO CREATE THESE RAMPS.
SO WHAT'S BEING APPROVED IS THE ONE ON THE TOP LEFT, YOU'LL SEE ARE SUDDEN DROPS.
FOR EXAMPLE, TOP LEFT FIGURE 5,000 SAYS THAT THE FIRST MEGAWATT OF REGULATION, YOU GO SHORT ON THE PRICE THAT GOES STRAIGHT TO 5,000.
WELL, NOW ON THE BOTTOM RIGHT, NPR 1268 IS WHERE AS WE GO SHORT ON REGULATION, THERE'S ACTUALLY A, IT'S A SMALL, BUT THERE IS A RAMP THAT DOESN'T START AT 5,000.
IT STARTS IN THE HUNDREDS OF DOLLARS, AND THAT'S FOR THE SAME FOR THE OTHER SERVICES.
SO THAT'S WHAT WAS BROUGHT IN AS A, UM, A CONCEPT.
UH, SO THE PURPOSE WAS TO IMPROVE THE SHAPE OF THE AS DEMAND CURVES.
THE HISTORY, IT WAS FILED BY THE IMM IN JANUARY 28TH.
CLARIFYING COMMENTS WERE SUBMITTED BY ERCOT HUNT ENERGY.
THE IMM FILED MINOR CORRECTIONS ON MARCH 19TH IN T UNANIMOUSLY APPROVED THIS.
SO THAT ONE'S GOOD TO GO, BUT THIS IS THE ONE TO TALK TO REMEMBER, BECAUSE WHEN WE'LL COME BACK TO THIS AS DEMAND CURVE SHAPES, THIS IS THE SLIDE TO REFERENCE NPR 1270.
WE HAD SOME ADDITIONAL CLARIFICATIONS.
THE BIG ONE WAS THE IDEA THAT THERE'S AN ORIGINAL MARKET DESIGN THAT SAID, IF QUEASY WITH A RESOURCE CAN, UH, DISPATCH AND SCED WILL AUTOMATICALLY QUALIFY IT FOR NONS SPIND IN ECRS AND THINKING THROUGH THAT.
IF THE TASK FORCE WAS REALIZING, WOW, WE'RE GONNA START AWARDING ANCILLARY SERVICES TO SOMEONE THAT DIDN'T EVEN QUALIFY FOR 'EM, JUST BECAUSE THEY CAN DISPATCH TO 'EM, DO THEY KNOW HOW TO OFFER IN, DO THEY KNOW HOW TO TELEMETRY, DO, DO THEY KNOW THESE OTHER THINGS? AND SO WE RECOGNIZED THAT WAS A GAP.
SO WE CLOSED THE GAP BY SAYING, YOU CAN STILL QUALIFY, BUT YOU HAVE TO GO THROUGH A PROCESS.
THE BIG THING WAS, I HAVE IT HERE ON THIS BULLET, IS THE REMOVAL OF THAT AUTOMATIC QUALIFICATION WAS ENSURE RELIABLE ANCILLARY SERVICES AND DEPLOYMENT, AND THEN ALSO TO HELP MITIGATE THE RISK OF MARKET DISTORTIONS BY PROXY OFFERS.
SO YOU SAY, WHAT'S A PROXY OFFER? WELL, A PROXY OFFER IS SOMETHING ADMINISTRATIVELY CREATED WHEN A QUAI DOES NOT PROVIDE AN OFFER PRICE
[01:05:01]
FOR THE FULL RANGE OF THE, UH, RESOURCE OR AT ALL.IT'S WHAT DOES ERCOT ADMINISTRATIVELY PUT IN ITS PLACE? SO IF WE HAD A BUNCH OF, UH, QU ACCIDENTALLY PARTICIPATING IN THE MARKET WITH A BUNCH OF BLANK SPACES, WE WOULD BE DIALING THESE NUMBERS THAT WOULD DISTORT THE MARKET.
SO THE MARKET WAS PLEASED WITH THIS BECAUSE GETTING RID OF THIS AUTOMATIC THING MEANS PEOPLE ARE THERE BECAUSE THEY'VE QUALIFIED, THEY'RE TRAINED, AND THEY'RE REGISTERED TO DO THIS STUFF.
SO, UH, THAT HELPS TO MITIGATE THE RISK, UH, TO THESE, UH, PROXY OFFERS.
SO AGAIN, THAT WAS FILED JANUARY 28TH.
SO I CALLED THIS AN OMNIBUS THING BECAUSE IT HAD LOTS OF STUFF IN IT, BUT, AND I REGRET THAT IT IS A LOT IN ONE THING.
UH, SO LET KIND UNTANGLE THE EASY STUFF, UH, FROM THE THINGS WE WE'RE GETTING STUCK.
SO THE PURPOSE WAS TO CODIFY A GROUP OF POLICY CHANGES.
I'VE BEEN COMING HERE TO THE R AND M GROUP WITH A LIST OF ALL THESE THINGS TO DO.
THIS IS THREE OUTTA THE FOUR WE NEEDED TO GET DONE.
SO THE FIRST ONE WAS SCALING FACTORS.
WE DON'T NEED TO TALK ABOUT IT.
IT'S THE IDEA OF HOW DO WE SHARE RAMPING BETWEEN ENERGY AND ANCILLARY SERVICES.
THE NEXT ONE IS THE PARAMETERS FOR AS PROXY OFFER FLOORS.
THAT'S BEEN AN EVOLVING DISCUSSION SINCE NOVEMBER OF LAST YEAR.
UH, ORIGINALLY ERCOT AND THE INDEPENDENT MARKET MONITOR SAID IF SOMEONE DOESN'T SUBMIT SOMETHING, LET'S PUT IN A ZERO $0 PER MEGAWATT.
UH, WHILE MOST R-T-C-B-T-F STAKEHOLDERS SAID, WELL, YOU CAN OFFER IT IN FREE, OR YOU OFFER IT AT THE CAP, IT'S KIND OF LIKE PUT 'EM IN THE FRONT OF THE LINE OF THE OFFER STACK OR THE END OF THE LINE.
SO AFTER EXTENSIVE DEBATE AND SOME EVALUATIONS, UH, ERCOT PROPOSED A COMPROMISE OF USING THE MINIMUM OF $2,000 OR THAT X PERCENTILE OF THE AS DEMAND CURVES, 95% OF THE AS DEMAND CURVES.
JUST TO ORIENT YOU TO THAT, THE IDEA OF A 95% ON THE AS DEMAND CURVE WOULD BE GOING FROM LEFT TO RIGHT.
SO THE 95% IS ON THOSE VALUES AT THE END OF THE DEMAND CURVE, NOT AT THE HIGH SIDE OF THIS.
SO THIS IS WHERE, YOU KNOW, NON SPIND COULD BE IN THE TENS OF DOLLARS WHEN IT HITS THAT PROXY AT 95% OR A HUNDRED DOLLARS FOR ECRS.
SO I JUST WANTED TO GIVE YOU KIND OF HOW THAT, THE MECHANICS OF THAT WORK.
SO ERCOT SUBMITTED COMMENTS TO MEMORIALIZE THAT AT 95%.
UM, THE INDEPENDENT MARKET MONITOR AND THE TEXAS INDUSTRIALS, UH, SUBMITTED CON CONCERNS WITH THE APPROACH, UH, INCLUDING TIEC PROPOSED A MINIMUM OF $15 OR 95% OF THE CURVES.
POLICY NUMBER THREE WAS THE IDEA OF WE, WHEN WE RUN RU RELIABILITY UNIT COMMITMENT TODAY, WE ALMOST USE PENALTY FACTORS.
IT'S A VERY HIGH PENALTY FACTOR TO MAKE SURE WE GET WHAT WE NEED.
SO THE IDEA WAS CAN WE USE THOSE AS DEMAND CURVES AS THE FINANCIAL SIGNAL IN RUCK FOR THE OPERATOR TO SAY, I HAVE SCARCITY.
I NEED TO COVER THE LOAD FORECAST ERROR AND GET US THROUGH THE DAY SECURELY AND RELIABLY.
SO THE IDEA IS WHAT DOES THE RUCK STUDY TOOL FOR OPERATORS HAVE ECONOMICALLY BEHIND IT TO COMMIT? AND SO THE ERCOT OPERATOR USES A RUCK STUDY TOOLS TO ENSURE THERE'S ENOUGH CAPACITY FOR ENERGY AND ANCILLARY SERVICES.
UH, WE ASSUMED ERCOT ASSUMED THAT WE WOULD HAVE TO COME BACK AND ANALYZE THE ADCS TO SEE IF THOSE WOULD WORK IN RUCK.
AND SO WE PROVIDED THAT THE RUCK TOOL AND FOUND THAT THE AS DEMAND CURVE, UM, FOR REAL TIME AND DAY AHEAD WAS SUCH THAT IT ACTUALLY WORKED WITH MINIMAL CHANGES.
SO WE WENT FROM PENALTY FACTORS TO AN ECONOMIC CURVE, AND IT LOOKED LIKE THE NUMBERS WERE THERE WITH ONE EXCEPTION WHEN WE GOT TWO DAYS, GOT TO A TYPE OF OPERATING DAY WHERE THAT AS DEMAND CURVE GETS VERY LOW AT NONS SPEND, YOU CAN END UP $20, $15 5 CENTS, 3 CENTS, 2 CENTS OUT OF THIS $9,000, UH, 9,000 MEGAWATT RANGE.
THERE'S NO PRICE SIGNAL THERE.
THE CONTROL ROOM WANTS ANCILLARY SERVICES.
AND SO WHAT ERCOT FOUND IS IF WE PUT IN THE STUDY TOOL TO INCREASE THAT FOR TO $15, ALL OF A SUDDEN THINGS STARTED TO WORK BETTER AND START TO FIND AND REOPTIMIZE TO FIND A SOLUTION.
SO ERCOT CODIFIED $15, UH, WE STUDIED $50 DOWN TO $5, DOWN TO $0 IN $5 INCREMENTS, AND $15 WAS THE SWEET SPOT TO GET THE MOST COMMITMENT, UH, FOR MINIMAL PRICE.
SO THAT WAS DONE IN COMMENTS ON MARCH 3RD.
OKAY, SO THOSE ARE THE THREE POLICIES THAT WHEN THE ROUGH DEMAND CURVE WAS STUDIED, TCPA RECOGNIZED AND FILED ON MARCH 4TH, AND WE'VE ALL BEEN WORKING TOGETHER, RIGHT? WE'RE AT THE TASK FORCE.
AND AS THEY SEE OUR STUDIES, UM, THERE HAD BEEN ONGOING DISCUSSION OF THE CURRENT A S DEMAND CURVE MAY NOT GET THE RIGHT MARKET SIGNALS TO GET ALL THE ANCILLARY SERVICES YOU WANT.
ERCOT, SHOULD THERE BE A CHANGE? SO AS THE RUCK STUDY CAME OUT, THAT'S
[01:10:01]
WHEN ERCOT IDENTIFIED THE NEED FOR AN A S DEMAND CURVE FLOOR OF $15, MULTIPLE MARKET PARTICIPANTS VOICE BELIEF THAT THERE SHOULD BE THE SAME PRICE SIGNAL FOR REAL TIME AND DAY AHEAD FOR THOSE AS DEMAND CURVES.SO ERCOT DID A STUDY, UH, FOR PRS INTACT TO DEMONSTRATE THE RELIABILITY AND MARKET IMPACTS OF THAT $15 FLOOR.
SO KEITH WILL TOUCH ON THAT TOMORROW.
IT'S, THE IDEA IS IF YOU HAVE A $15 FLOOR, WHAT DOES IT RELIABLY LOOK LIKE IN TERMS OF THE NUMBER OF MEGAWATTS MOVING AROUND AND WHAT'S THE PRICE ON THAT? SO WE WEREN'T GONNA GET INTO THAT TODAY.
I'M HERE TO SET THE STAGE FOR THAT TOMORROW.
UH, PRIOR TO ATTACK, UH, THE JOINT CONSUMERS HAD FILED COMMENTS TO PROPOSE THE AS DEMAND CURVE, UM, OFFER FLOOR B ZERO.
I I SAID, OFFER FLOOR AS DEMAND CURVE FLOOR BE $0 INSTEAD OF $15.
THEY'RE THINKING, AS THEY SAID, NOT WHAT THEY, AS THEY FILED.
WHAT WAS IMPLIED WAS THAT GO AHEAD AND BUILD THE FLOOR LOGIC, BUT IMPLEMENT AS $0 AND THEN YOU CAN CHANGE THE PRICE UP TO 15 LATER IF YOU WANT TO.
UH, SO AT THE TAC TAC APPROVE THE VERSION AND THE ONE THAT YOU'LL HAVE BEFORE YOU TOMORROW, IT HAS THE AS PROXY OFFER FLOOR AT THE MINIMUM OF 2000 OR 95%, THE R AS DEMAND CURVE WITH A $15 FLOOR, THE REALTIME MARKET AND DAY AHEAD MARKET ADCS WITH THAT SAME $15 FLOOR.
AND SO SINCE THEN, ERCOT HAS FILED COMMENTS IN SUPPORT OF 1269.
ERCOT TOOK THE TIME TO KIND OF PUT THAT IN THE STUDY.
UH, ALSO THE JOINT CONSUMERS FILED COMMENTS ON FRIDAY REGARDING THIS.
AND AGAIN, THEY WERE REINFORCING THE IDEA OF A $0 FLOOR.
SO AGAIN, UH, KEITH WILL TALK MORE ABOUT THIS TOMORROW, BUT WHAT TACKED IS AFTER, UM, FILING OUR COMMENTS, THE IDEA WAS TO PUT THAT ANALYSIS INTO COMMENTS.
AND AS WE BROUGHT THAT ANALYSIS FORWARD OF WHAT THOSE PRICE CHANGES MAY LOOK LIKE, IS ACTUALLY, UH, COMMISSION STAFF SAID AGAIN, WHAT WOULD IT LOOK LIKE IF YOU WERE RUCKING INSTEAD? AND SO THAT'S WHY WE STARTED TO PUT THESE, WEAVE THIS STORY TOGETHER, HOW THINGS FIT TOGETHER.
AND THEN THE APPENDIX ARE 16 PAGES OF STUDY NOTES.
SO WE CAN GO INTO THOSE TODAY IF WE WANT TO.
I WOULD RATHER NOT, UH, BUT KEITH WILL HIT SOME THE HIGHLIGHTS OF THOSE TOMORROW.
SO FIRST ONE WAS A PROXY OFFER FOR ERCOT DOES BELIEVE IT'S A GOOD COMPROMISE TO ACHIEVE THE, UH, USING THE MINIMUM OF 2000 OR THE 95% OF ADCS.
ALTHOUGH ERCOT HAS NOT TESTED OTHER SPECIFIC VALUES.
ALL STUDIES PERFORMED IN RECENT MONTHS HAVE USED THESE VALUES, AND WE HAVE NOT OBSERVED ANY PRICE FORMATION ISSUES.
THIS HAS BEEN THE BACKBONE OF ALL OF OUR STUDIES.
IF WE DON'T HAVE A CURVE PUT IN THE PRICE OR AN OFFER, PUT IN A PRICE AND RUN THE STUDY, AND WE'VE RUN THIS OVER AND OVER AGAIN, AND WE'RE NOT SEEING THAT $2,000 STRIKING THE PRICE.
UH, THE NEXT PIECE, THIS IS A MORE IMPORTANT ONE, THE A SCC FLOOR FOR REAL TIME AND DAY AHEAD, ERCOT BELIEVES THE $15 FLOOR IS APPROPRIATE AND REASONABLE TO HELP ALIGN AND INCENT SELF-COMMITMENT BY THE QUEASY TO REDUCE RISK OF RUCK OPERATOR COMMITMENTS AND TO PROPERLY VALUE THE FULL ANCILLARY SERVICE PLAN.
IN OTHER WORDS, NOT COME UP SHORT, WHILE THE AS DEMAND CURVE FLOOR WOULD IMPACT ENERGY AND ANCILLARY SERVICE PRICES.
AS YOU'LL SEE IN OUR STUDY, THE R INSTRUCTIONS WILL ALSO IMPACT THE MARKET IN THE FORM OF INFERIOR LONG-TERM PRICE SIGNALS AND INCREASE COST OF WHEN WE COMMIT THOSE UNITS.
SO WITH THAT, THAT'S SET IN STAGE FOR TOMORROW.
AGAIN, YOU HAVE NPR 12 68, 12 69, 12 70, UH, 68, 6 AND 70.
ON THE CONSENT AGENDA, 1269 IS THE ONE THAT WILL HAVE ERCOT PRESENT.
UH, SO T WILL PRESENT, THEN ERCOT WILL PRESENT AND POSSIBLY THE IMM AND, UM, CONSUMERS WILL PRESENT.
AND THOSE ARE WHAT'S POSTED WITH YOUR PACKET FOR AGENDA ITEM 12 TOMORROW.
UH, AGAIN, WE'LL WORK WITH STAKEHOLDERS ON STATE OF CHARGE THIS MONTH.
UH, MARKET READINESS DETAILS WILL BE AVAILABLE AT THE NEXT MEETING.
UH, I WOULD LIKE TO, THIS IS KIND OF A POLICY MEETING.
THE THEME FOR THE NEXT MEETING WILL BE THE MARKET TRIALS AND HOW WE'RE UNPACKING THOSE WITH THE MARKET, UM, GOING FORWARD.
AND WITH THAT, I'LL CLOSE AND SEE IF THERE ARE ANY QUESTIONS.
JOHN, DO YOU HAVE A QUESTION? IS IT, IS IT FAIR TO ASSUME THAT IF WE DON'T MAKE THIS DECISION, THEN WE CAN'T GO INTO THE TRIALS? UM, NO.
WE CAN STILL ENHANCE OUR SOFTWARE TO BUILD THESE, THE CURVE LOGIC THAT'S BEEN RESHAPED.
UM, I WOULD SAY THAT WE CAN GO THE FIRST TWO MONTHS INTO TRIALS BECAUSE IT'S MAINLY CONNECTIVITY TESTING.
BUT ONCE WE GO INTO OBSERVING PRICE FORMATION, UH, WE'D LIKE THAT IN THE JUNE JULY TIMEFRAME.
SO WE CAN'T COMPLETE THE TRIALS.
WE CAN'T COMPLETE THE TRIALS WITHOUT THAT.
NOT WITHOUT SEEING SOMETHING YOU COULD GO BLIND INTO LIVE, BUT WE'RE TRYING TO EXERCISE EVERYTHING BEFORE WE GO LIVE.
YEAH, I THINK THAT'S IMPORTANT.
GENERALLY NOT A GOOD IDEA TO GO LIVE.
SO MATT, CAN YOU BACK UP A SLIDE?
[01:15:01]
SO EMBEDDED IN THAT LAST COMMENT, I GUESS IS A RELIABILITY COMMENT, CORRECT? YES.SO, UH, JUST WANTED TO CONFIRM THAT ONE OF THE REASONS ERCOT IS PROPOSING, WHAT THEY'RE PROPOSING IS TO ENHANCE RELIABILITY.
AND SO I'LL, I'LL STEAL A LITTLE BIT OF KEITH, UH, THUNDER, FOR EXAMPLE, BY HAVING THE AS DEMAND CURVE FLOOR IN THERE, WE WOULD SEE AN INCREASE OF 92 MEGAWATTS BEING AVAILABLE TO THE ROCK OPERATOR TO COMMIT.
SO IT'S THAT IDEA OF FILLING THAT RELIABILITY GAP OF MEGAWATTS OF CAPACITY BY USING A BETTER PRICE SIGNAL IN THE TOOL.
OKAY, ANY OTHER QUESTIONS? MATT? IS THERE SOMETHING WE SHOULD HAVE ASKED THAT WE DIDN'T? OH,
UM, WELL, I CONFESS MY, MY ONE THAT WAS, OKAY, SO WHAT DO I LOSE SLEEP AT OVERNIGHT? WAS THAT OPERATING THE DAY TEST? WE JUST DID.
YEAH, IT'S HARDER THAN IT LOOKS AND IT WORKED.
UH, THE NEXT PIECE IS THE JULY AUGUST TIMEFRAME.
THAT'S WHERE WE'LL START TO PUT QUEASY, NOT JUST SENDING US DATA, BUT ACTUALLY MOVING THE RESOURCES TO FOLLOW THE RTC TELEMETRY SIGNALS.
THAT'LL BE THE NEXT, GET TO THE OTHER SIDE OF THAT ONE TO FEEL BETTER.
BUT, UM, NO, WE THANK YOU FOR SUPPORT OF GETTING THESE NPRS OUT.
IF THERE'S NOTHING ELSE FOR MATT, UH, WHAT I'D LIKE TO DO, GIVEN WHERE WE ARE ON TIME, IS GO AHEAD AND PULL FORWARD A COUPLE OF ITEMS, ONE OR TWO ITEMS FROM TOMORROW.
UH, THE FIRST WOULD BE AGENDA ITEM
[14. System Planning and Operations]
14.3, SYSTEM OPERATIONS UPDATE.UH, DAN WOODFIN WAS ORIGINALLY SCHEDULED TO DO THAT AND UH, HE HAS, UH, GRACIOUSLY AGREED TO DO IT TODAY, RIGHT NOW.
AND AS A HEADS UP, DEPENDING ON TIME, WE MAY, UH, SEGUE TO, UH, AGENDA ITEM 14.2 AND KRISTY WILL PRESENT THAT ONE ONCE DAN'S DONE.
UM, SO I'VE GOT A FEW THINGS I WANNA SHARE WITH YOU, KIND OF THE NORMAL HOT TOPICS OF THINGS THAT ARE GOING ON.
ONE IS, UH, I GUESS WHEN I PUT THIS TOGETHER, I WAS THINKING YOU WOULD ALREADY HAVE PROVED THE THE CONSENT AGENDA TOMORROW, AND, BUT THIS ACTUALLY MAY BE BETTER BECAUSE WE'VE DONE SOME ANALYSIS OF THE SOME TIGHT DAY THAT WE HAD BACK IN NOVEMBER THAT LED TO THE NEED FOR NPR 1273.
AND SO I'M GONNA WALK THROUGH THAT, UM, BEFORE YOU VOTE ON IT, AS OPPOSED TO AFTER.
WE'RE GONNA TALK A LITTLE BIT ABOUT THE FEBRUARY EVENT, AND THEN TALK ABOUT SOME ADDITIONAL, UH, LARGE LOAD TRIPS THAT HAVE OCCURRED THAT I TALKED TO YOU ABOUT BACK IN DECEMBER.
UM, SO ON NOVEMBER 10TH, IF YOU RECALL, WE HAD A PRETTY TIGHT OPERATING DAY.
WE WOUND UP RELEASING A LOT OF THE RESERVES.
UM, ON THAT DAY, UM, THE STATE OF CHARGE OF ALL THE, KIND OF THE ENTIRE FLEET OF BATTERIES, UH, WENT FROM, UH, 90, NEARLY 93% DOWN TO, UH, 11.6% BY 9:00 PM AFTER WE RELEASED ALL THE ANCILLARY SERVICES AND ALL THE, THE, THE BATTERIES WERE RELEASED INTO THE MARKET, UM, ON THAT DAY, OUR PHYSICAL RESPONSIVE RESERVE CAPACITY.
SO THAT'S THE AMOUNT THAT WHEN WE GET INTO TIGHT CONDITIONS, WE MONITOR.
AND ONCE WE'VE RELEASED ALL THE ANCILLARY SERVICES, WE MONITOR THAT NUMBER TO SEE, OKAY, HOW MUCH RESERVES DO WE REALLY HAVE LEFT THAT'S CAPABLE OF WITHSTANDING IF A UNIT WERE TO TRIP, DO WE HAVE ENOUGH TO RECOVER FREQUENCY? UM, AND SO THAT'S THE AMOUNT THAT WE MONITOR ON THAT NIGHT.
THE PRC WAS, UH, 6,000 SOME ODD MEGAWATTS, BUT WHAT WE HAVE RECOGNIZED IS THE, WHEN WE GET INTO VERY TIGHT CONDITIONS, WE NEED TO ALWAYS BE PREPARED FOR THE LOSS OF THE LARGEST UNIT AND BE ABLE TO NOT LET FREQUENCY GO TOO LOW, BUT HAVE IT BE ABLE TO RECOVER IT.
AND SO WE ALWAYS NEED, THERE'S A NERC REQUIREMENT THAT WE NEED TO DO WHATEVER IT TAKES, INCLUDING LOAD SHED TO MAINTAIN ENOUGH RESERVES SO THAT IF THE LARGEST UNIT TRIPS WE CAN RECOVER.
UM, AND, AND WE DON'T GET INTO UNCONTROLLED LOAD SHED OR SOMETHING LIKE THAT.
AND WHAT WE'VE RECOGNIZED IS THAT IF WE GOT INTO THE CONDITIONS THAT WE LIKE THAT WHERE WE WERE OUT OF EVERYTHING ELSE, WE NEEDED TO SHED LOAD IN ORDER TO PRESERVE THE, IN A CONTROLLED WAY, IN ORDER TO PRESERVE THAT, THOSE RESERVES WE WOULD NEED TO IT.
THE, WHEN WE ORDER LOAD SHED, WE HA THAT CAN TAKE UP TO 30 MINUTES FOR THAT LOAD SHED TO OCCUR.
WE NEED TO MAKE SURE THAT WE'VE, THOSE RESERVES ARE CAPABLE OF LASTING LONG, AT LEAST THAT 30 MINUTES PLUS
[01:20:01]
SOME TIME TO ACTUALLY MAKE THE OPERATING INSTRUCTIONS AND THAT KIND OF THING.SO IN NPR 1270, LOOKING AT THIS EVENT MADE US REALIZE, OKAY, WE WERE DOWN TO WHERE WE DIDN'T HAVE THAT MUCH STATE OF CHARGE LEFT.
THE PRC NUMBER TODAY ONLY ASSUMES 15 MINUTES OF STATE OF CHARGE.
SO IF YOU, IF YOU, IF YOU HAVE, HOW MUCH YOU HAVE THERE.
AND SO WE NEED TO CHANGE THAT BECAUSE ON THIS DAY, PRC AS IT'S CALCULATED TODAY WITH THAT 15 MINUTE, UM, UM, DURATION PROBABLY WASN'T A GOOD INDICATOR OF HOW MUCH, UH, HOW CLOSE WE WERE TO NEEDING TO, TO SHED LOAD.
AND SO WE'VE, WE'VE PROPOSED NPR 1273 THAT WOULD INCREASE THAT STATE OF CHARGE REQUIREMENT OUT TO 45 MINUTES.
SO THAT WE'RE COUNTING HOW MUCH PRC WOULD BE THAT IS ABLE TO SUSTAIN FOR LONG ENOUGH TO GIVE US ROOM TO SHED LOAD IF WE WERE TO NEED THAT.
AND SO THAT'S REALLY, UH, WHAT WE FOUND FROM ANALYZING THAT EVENT.
I USE THIS AS AN ILLUSTRATION OF WE'RE DOING THIS KIND OF ANALYSIS ALL THE TIME ON NEAR MISSES, THINGS THAT AREN'T A PROBLEM, BUT WE ANALYZE THE NEAR MISSES TO REAL, TO TO INVESTIGATE WHETHER IS THERE SOMETHING WE NEED TO CHANGE TO FIX, TO, TO MAKE IT WHERE THAT NEAR MISS DOESN'T BECOME A PROBLEM THE NEXT TIME SOMETHING LIKE THAT HAPPENS.
AND SO IN THIS CASE, WE'RE MAKING THAT CHANGE.
YOU'LL HAVE NPR 1273 BEFORE YOU TOMORROW.
UM, WHEN WE WENT BACK AND RECALCULATED THE PRC FOR THAT NIGHT AS TO WHAT IT WOULD BE UNDER 1273, IT DROPPED FROM, UH, 61, UM, HUNDRED MEGAWATTS DOWN BY 2000 MEGAWATTS.
SO WE WOULD STILL BEEN WELL ABOVE THE LEVEL THAT WE, UH, WHICH EEA WOULD BE DECLARED, BUT IT WOULD'VE BEEN SIGNIFICANTLY LOWER THAN WHAT WE WERE SEEING THAT NIGHT.
UM, SO THE NEXT THING IS MARCH HAS BEEN A PRETTY EVENTFUL MONTH FROM A RENEWABLES PERSPECTIVE.
WE HIT A NEW WIND RECORD FOR THE TOTAL, UH, AMOUNT OF WIND GENERATION THAT WE SAW IN THE SYSTEM, UH, ACTUALLY OCCURRING.
UH, THE AMOUNT OF SOLAR THAT WE SAW BEING OUTPUT ONTO THE SYSTEM, UH, WAS A NEW RECORD.
AND, YOU KNOW, SOMETIMES WE'RE NOT AT KIND OF THE MAXIMUM SOLAR OR THE MAXIMUM WIND, BUT THE COMBINATION OF THE TWO IS AT A MAXIMUM LEVEL.
AND SO THAT'S WHAT'S SHOWN IN THE THIRD COLUMN HERE, THIS RENEWABLE COLUMN, WHICH MEANS THAT BETWEEN SOLAR AND WIND, THEY WERE GENERATING NEARLY 40, UH, GIGAWATTS, WHICH AT THE TIME WAS ABOUT 73% OF THE LOAD ON THE SYSTEM WAS BEING SERVED BY THOSE, THOSE RENEWABLES.
AND THEN THE, THE PENETRATION IS THE, IS THAT NUMBER, HOW MUCH OF THE LOAD AT THAT POINT IN TIME WAS BEING SERVED BY WIND, SOLAR, UM, UH, WIND OR SOLAR.
AND WHAT YOU SEE ON THAT KIND OF BOTTOM PART OF THE TABLE IS WE ALSO HIT A NEW WIND, UH, NOT A NEW WIND RECORD THAT WAS BACK IN 2022, BUT A NEW, UH, SOLAR RECORD OF 56.6% OF THE LOAD WAS BEING SERVED BY SOLAR.
AND THEN WE HAD A COMBINED RECORD ON, ON MARCH 2ND OF 70, OVER 76% BEING SERVED BY THE AGGREGATE OF THE RENEWABLES.
SO, UM, LOTS OF, UH, NEW RECORDS OF THOSE TYPES.
UM, KEITH TALKED A LOT ABOUT THE FEBRUARY EVENT, WHICH THE WEATHER CHANNEL HAS CALLED KINGSTON IN THE SAME WAY THEY CALLED YURI.
THEY, THEY NAMED THESE THINGS AND SO ON, ON FEBRUARY THAT THAT COLD WEATHER THAT WAS, UH, ON FEBRUARY 19TH AND 20TH, UM, WE'VE GONE BACK AND LOOKED AT THE, THE HIGHEST NET LOAD HOURS, THE THE HOURS IN WHICH LOAD MINUS WIND, MINUS SOLAR, WHICH IS REALLY THE AMOUNT OF LOAD THAT HAS TO BE SERVED BY DISPATCHABLE GENERATION PLUS BATTERIES.
UH, WHAT WERE THE HIGHEST HOURS THAT WE'VE EVER SEEN, AND YOU CAN SEE THE HIGHEST WAS, WAS BACK IN AUGUST OF 23 WHEN WE WERE OVER 70.4 GIGAWATTS.
BUT THIS WINTER STORM KINGSTON WAS REALLY THE HIGHEST, UM, WINTER HOUR WE'VE SEEN IN TERMS OF THE NET DEMAND ON THE SYSTEM, UM, OF A LITTLE UNDER 70 GIGAWATTS.
UM, AND THEN FROM THE, IN FACT, MOST OF THE TOP FOUR, WELL THE TOP FOUR FIVE HOURS THERE HAVE ALL BEEN IN THE SUMMER.
SO IT'S REALLY THE HIGHEST WINTER HOUR THAT WE'VE SEEN SO FAR, INCLUDING THROUGH HEATHER AND ELLIOT AND, AND THE AMOUNT THAT WE WERE SERVED BEFORE THE, THE LOAD
[01:25:01]
SHED STARTED IN URI.UM, WE'VE DONE THAT ACROSS, UH, KIND OF THE PEAKS BY SEASON.
AND THERE'S SOME INTERESTING THINGS HERE.
ONE, YOU SEE THE, THE KIND OF THE LIGHT BLUE BAR ON THE RIGHT SHOWS THAT WE HAVE SEEN NET LOAD GROWTH, UH, IN THE, IN THE LAST YEAR, UM, DURING THE SUMMER SEASON.
YOU DON'T SEE A LOT OF GROWTH.
AND WHAT THAT MEANS IS, AT LEAST DURING THE SUMMER FOR PEAK DEMAND CONDITIONS, THE SOLAR'S KIND OF BEEN KEEPING UP.
THE SOLAR GROWTH HAS BEEN KEEPING UP TO SOME EXTENT WITH THE, THE PEAK DEMAND.
OF COURSE, THEN THE SUN GOES DOWN AND WE HAVE TIGHT CONDITIONS IN THE LATER EVENING, WHICH WE'VE, WE'VE TALKED ABOUT SEVERAL TIMES IN THE WINTER, THOUGH THE GROWTH IN SOLAR HASN'T BEEN HELPING A LOT, UH, IN TERMS OF SERVING THE NET PEAK DEMAND.
AND SO YOU SEE THAT KIND OF A CONSISTENT GROWTH THROUGH THE YEARS.
UM, I MEAN, THERE'S SOME UP AND DOWN JUST BECAUSE OF WEATHER CONDITIONS, UM, BUT WE THOUGHT THAT WAS INTERESTING TO SHARE.
BACK IN DECEMBER, I TALKED A LOT ABOUT THE, THE MANY, UH, EVENTS WE'VE BEEN HAVING WITH, UH, DUE TO LARGE ELECTRONIC LOADS TRIPPING ON THE SYSTEM.
AND THESE ARE PRIMARILY, UH, CRYPTO MINERS, UH, NOT KIND OF CONVENTIONAL DATA CENTERS OR, OR THE, THE, THE, THOSE KIND OF DATA CENTERS.
BUT, UM, BUT WE'VE HAD SOME MORE SINCE DECEMBER.
KINDA WANNA KEEP THIS IN FRONT OF YOU BECAUSE WE HAVE SEVERAL NPRS THAT ARE GONNA BE, AND OTHER KIND OF REVISION REQUESTS THAT ARE GONNA BE COMING BEFORE YOU OVER THE NEXT FEW MONTHS AND RECOGNIZE TO TRY TO HELP US START TO SOLVE THIS PROBLEM.
WE'VE, WE'VE, OUR STAFFS HAVE BEEN DOING A LOT OF WORK WITH ACROSS THE INDUSTRY WITH PEOPLE IN OTHER AREAS THAT HAVE LARGE DATA CENTERS WITH EPRI, WITH NERC, WITH E-CIG, AND LOTS OF OTHER FOLKS TRYING TO REALLY, THE WHOLE INDUSTRY IS TRYING TO UNDERSTAND WHAT ARE THE REQUIREMENTS THAT WOULD LEAD TO, TO THESE LARGE LOADS TRIPPING WHEN YOU HAVE A A VOLTAGE DIP ON THE SYSTEM, WHAT CAN WE EXPECT? HOW DO WE PROTECT AGAINST THAT? UM, DOES IT HAPPEN WHEN YOU HAVE ONE FAULT ON THE SYSTEM OR DOES IT TAKE MULTIPLE FAULTS ON THE SYSTEM TO CAUSE THESE, UM, UH, LOADS TO TRIP OFF? AND SO WE STARTED TO LOOK AT THAT, JUST KIND OF WANNA KEEP IT BEFORE YOU BECAUSE IT IS COMING AND WE'RE CONTINUING TO SEE THOSE, UM, EVEN UM, AFTER WHAT WE TALKED ABOUT IN DECEMBER AND ALL OF THE NORMAL OPERATING, UM, METRICS ARE LOOKING GOOD.
UM, SO HAPPY TO ANSWER ANY QUESTIONS YOU HAVE.
SO DAN, THANK YOU FOR THE ANALYSIS, WHAT I CALL THE NEAR MISS, WHICH I ALSO LIKE TO CALL THE YELLOW ZONE.
OKAY, MY QUESTION IS ABOUT, UM, IBR RIDE THROUGHS THAT WE DISCUSSED LAST YEAR MM-HMM
ARE YOU TRACKING THOSE AND ARE THOSE INCREASING OR DECREASING IN FREQUENCY? YEAH, SO, UH, WE'RE, WE'RE, WE STILL SEE A FEW, UM, AS PART OF NORE 2 45.
I THINK CHRISTIE'S GONNA TALK ABOUT THIS, RIGHT? OKAY.
UH, APRIL, THE BEGINNING OF APRIL WAS KIND OF A MOMENTOUS TIME FOR THE IMPLEMENTATION OF NO 2 45, SO I THINK SHE'S GONNA TALK ABOUT THAT.
ALRIGHT, ANY OTHER QUESTIONS FOR DAN? DAN, THANKS FOR YOUR REPORT.
UH, NEXT WE'RE GONNA MOVE TO AGENDA ITEM 14.2, SYSTEM PLANNING AND WEATHERIZATION UPDATE.
AND CHRISTIE HOBBS IS OUR PRESENTER.
ALL RIGHT, GOOD AFTERNOON BOARD MEMBERS.
UM, SO TAKE YOU TO, THROUGH OUR NORMAL SYSTEM PLANNING AND WEATHERIZATION UPDATE, I THREW IN A FEW EXTRA SLIDES THIS TIME, GIVEN THIS IS THE FIRST TIME THAT THE BOARD IS GONNA HEAR ALL OF THIS MATERIAL.
UM, BUT THEN SOME OF THEM, I'LL JUST MOVE INTO THE APPENDIX AS WE GO FORWARD, BUT DID WANNA MAKE SURE YOU HAVE A GOOD BASELINE AS WE START OFF.
ALL RIGHT, SO AS DAN ALLUDED TO, UH, HE STOLE MY THUNDER, NO
AND SO JUST AS A REMINDER, UH, WHAT NOER 2 45
[01:30:01]
DOES IS IT PUT IN PLACE REQUIREMENTS FOR ALL EXISTING AS WELL AS SOME OF THE NEW, OR ALL THE NEW IBR.SO WIND, SOLAR, UH, COMING TO THE SYSTEM TO BE ABLE TO MAXIMIZE OR HAVE A CERTAIN LEVEL OF VOLTAGE RIDE THROUGH OR FREQUENCY RIDE THROUGH REQUIREMENTS.
AND SO BY, UH, DECEMBER 1ST, UH, LATER THIS YEAR, THEY HAVE TO HAVE REQUIREMENTS FOR IMPLEMENTING QUICK CHANGES THAT THEY CAN MAKE TO THEIR SETTINGS, UH, THEIR PARAMETERS, THEIR SOFTWARE, UM, SOME OF THEIR FIRMWARE MODIFICATIONS TO GET TO A SET OF STANDARDS TO IMPROVE THOSE RIDE THROUGH CAPABILITIES.
SO THOSE RESOURCES THAT WERE CURRENTLY ON THE SYSTEM AND HAD SIGNED AGREEMENTS BY AUGUST 1ST OF LAST YEAR, THEY HAVE, UM, TO AT LEAST MEET LEGACY VOLTAGE RIDE THROUGH REQUIREMENTS AND, UH, FREQUENCY RIDE THROUGH REQUIREMENTS.
AND THEN THEY HAVE AN OPPORTUNITY, WHICH WE HAD THIS APRIL 1ST DEADLINE WHERE THEY CAN EITHER REQUEST AN EXTENSION FOR COMPLIANCE WITH THAT DECEMBER 31ST DEADLINE, OR THEY CAN REQUEST AN EXEMPTION, MEANING MAYBE THEY HAVE SOME OLDER EQUIPMENT THAT JUST CANNOT BE UPDATED TO MEET THOSE REQUIREMENTS FOR THOSE NEWER RESOURCES THAT WERE CURRENTLY IN OUR GENERATION INTERCONNECTION QUEUE.
UH, AND MOVING FORWARD, THEY HAD THE ABILITY IF THEY WANTED TO REQUEST, UM, AN EXTENSION TO COMPLY WITH CERTAIN REQUIREMENTS.
SO I'M GONNA WALK YOU THROUGH, UH, KIND OF WHAT THOSE TWO, UH, PARAMETERS ARE FOR EXTENSIONS AND EXEMPTIONS.
AND THEN I'VE GOT SOME INITIALS, EARLY STATS.
AGAIN, WE JUST GOT ALL OF THOSE REQUESTS IN, UH, LAST WEEK.
WE'RE STILL GOING THROUGH THE DATA QUALITY OF WHAT WE RECEIVE, BUT I'VE GOT SOME HIGH LEVEL STATS TO SHARE WITH YOU.
ALRIGHT, SO WHAT IS OUR REVIEW AND EXEMPTION PROCESS? SO IF AN ENTITY REQUESTS AN EXEMPTION FROM THE RULE, WE'VE GOTTA TAKE A LOOK AND MAKE SURE THAT THAT EXEMPTION IS NOT GONNA HAVE A RELIABILITY IMPACT ON THE SYSTEM.
AND SO ERCOT WILL PERFORM STUDIES TO SEE WHAT THAT RELIABILITY IMPACT IS FROM THAT EXEMPTION.
SO WHAT WE'RE CURRENTLY GOING THROUGH THE PROCESS IS TO SEE IF, IF THE INFORMATION PROVIDED TO US WAS COMPLETE, AS WELL AS TRYING TO DEFINE WHAT OUR SCOPE IS FOR MOVING FORWARD FOR THOSE, UH, EXEMPTION STUDIES.
SO AS YOU CAN IMAGINE, WE MAY HAVE A SET OF IBR THAT ARE CLUSTERED TOGETHER, SO WE MAY DEFINE PART OF OUR SCOPE TO LOOK AT THAT PART OF THE SYSTEM WHERE THEY'RE ALL CLUSTERED TOGETHER IN THE IMPACT OF THE SYSTEM.
AND SO THOSE ARE SOME OF THE THINGS THAT WE'RE GONNA BE WORKING THROUGH, UH, THIS SUMMER.
AND WE'LL START OUR EXEMPTION STUDIES, UH, RELIABILITY ASSESSMENT STUDIES IN THE FALL WITH THE GOAL OF HAVING RESPONSES BACK ON WHETHER OR NOT, UH, THOSE EXEMPTIONS COULD MOVE FORWARD IN THE NOVEMBER, EARLY DECEMBER TIMEFRAME.
NOW, FROM AN EXTENSION, UM, PROCESS, KOTS GOT TO REVIEW THE REQUEST FOR EXTENSIONS, UM, AS SOON AS PRACTICAL.
SO THE TEAM IS GOING THROUGH THOSE RIGHT NOW.
IF THEIR INFORMATION IS NOT COMPLETE, THEY HAVE 10 BUSINESS DAYS TO UPDATE, UM, AND IMPROVE, UH, THE QUALITY OF THE INFORMATION THEY PROVIDED US.
ONCE THEIR REQUESTS ARE COMPLETE, WE'VE GOT SEVEN DAYS TO PUT AN ACCOUNTABLE, UH, SENIOR REPRESENTATIVE ON THAT REQUEST.
WE'VE GOT 180 DAYS TO MAKE A DECISION.
WE MAY REQUEST LONGER IF WE NEED ADDITIONAL TIME, UH, TO REVIEW, AND THEN WE HAVE TO NOTIFY THE MARKET PARTICIPANT OF THE DECISION.
THOSE DECISIONS CAN BE, UH, APPEALED UP TO THE COMMISSION IF THE MARKET PARTICIPANT DISAGREES, UH, WITH THE OUTCOME OF OUR DECISION.
UM, SO WHAT DID WE SEE? UM, I WILL SAY THAT I WAS VERY PLEASED WITH THE RESPONSES THAT WE GOT BACK.
AGAIN, WE'RE STILL DIGGING INTO THE QUALITY, UH, BUT FOR THOSE CURRENT RESOURCES, WE SENT REQUESTS FOR INFORMATION TO 795 RESOURCES THAT ARE IN OUR NETWORK OPERATIONS MODEL.
WE RECEIVED 765 RESPONSES BACK.
UM, AND OF THOSE 60% SAID THEY WILL BE ABLE TO MAXIMIZE THEIR, UH, RIDE THROUGH CAPABILITIES BY DECEMBER 31ST OF THIS YEAR.
WE'RE STILL TRYING TO WORK TO TELL YOU HOW MANY MEGAWATTS THAT IS, UM, BUT I, I WAS VERY PLEASED TO SEE THAT LEVEL OF RESPONSE BACK.
UM, OF THOSE WE HAD 205 THAT REQUESTED AN EXTENSION.
SO THEY WOULD LIKE TO GO, THEY WOULD LIKE TO COMPLY, BUT THEY'RE SAYING IT'S GONNA TAKE THEM LONGER THAN DECEMBER 31ST TO BE ABLE TO COMPLY.
WE HAD 28 THAT GAVE US A NOTICE OF INTENT TO REQUEST AN EXEMPTION SO THAT THEY CAN SAY, THEY'RE SAYING THEY CAN'T MEET THOSE STANDARDS.
WE HAD 59 THAT REQUESTED BOTH AN EXTENSION OR AN EXEMPTION.
UM, THE REASON THAT WE SAW THAT IS THAT THE PROTOCOLS
[01:35:01]
WERE VERY CLEAR YOU HAD TO MAKE THAT REQUEST FOR EITHER OR BY THAT DATE.AND IF THEY KNOW THAT ONE MAY NOT BE GRANTED, MEANING THEIR EXEMPTION MAY NOT BE GRANTED, THEN THEY MIGHT NEED TIME FOR AN EXTENSION.
SO THEY, THEY REQUESTED BOTH TO MAKE SURE THEIR BASES WERE COVERED.
THERE WERE 30 THAT DID NOT RESPOND.
AND AS WE STARTED REVIEWING THROUGH THOSE AND HOW DO WE RECONCILE AND HOW DO WE CONTINUE MOVING FORWARD, WE TOOK A LOOK, UM, AND WE SENT A MARKET NOTICE ON FRIDAY.
WE ACTUALLY EXTENDED FOR 10 BUSINESS DAYS TO BE ABLE TO RE RESPOND TO GET THOSE REQUESTS IN.
WE FELT THAT WAS CONSISTENT WITH THE, THE OTHER PROVISIONS THAT SAY IF YOUR APPLICATION'S NOT COMPLETE, YOU HAVE 10 BUSINESS DAYS TO COMPLETE THAT.
SO WE'RE TRYING TO GET THAT ADDITIONAL INFORMATION IN TO GET THOSE FINAL RESPONSES IN.
SO FOR THOSE NEW INTERCONNECTING ENTITIES OR RESOURCES THAT ARE IN THOSE EARLY STAGES, MEANING THEY'RE JUST GOING OR FINALIZING, GOING THROUGH THE GENERATION INTERCONNECTION QUEUE, THEY ONLY HAD TO RESPOND IF THEY WANTED TO ASK FOR AN EXTENSION OR A NOTICE OF AN INTENT FOR AN EXEMPTION.
WE RECEIVED 104 RESPONSES, UM, FROM THOSE NEW RESOURCES.
85 OF THEM SAID THAT THEY, UM, THAT RECEIVED SAID THEY CAN MAXIMIZE BY DECEMBER 31ST.
13, REQUESTED AN EXTENSION, FIVE, REQUESTED A NOTICE AND INTENT FOR AN EXEMPTION.
UM, AND ONE PROVIDED BOTH AN EXTENSION AND, UH, EXEMPTION REQUEST.
SO OVERALL, UM, WE'RE PLEASED WITH THE RESPONSES THAT WE RECEIVED.
UM, THE TEAMS ARE WORKING, UH, RIGHT NOW, AGAIN, TO DO THE DUE DILIGENCE TO GO THROUGH THE QUALITY OF THE DATA.
UM, BUT WE WILL CONTINUE TO PROVIDE UPDATES, UM, AS WE HAVE MORE DETAIL WHAT'S BEHIND THOSE REQUESTS.
AND AS WE MOVE THROUGH THE, THE STUDY AND EXEMPTION REQUEST, UH, A RELIABILITY ASSESSMENT PROCESS.
ALL RIGHT, TEXAS ENERGY FUND, THIS WAS ONE OF THE UPDATED SLIDES IN YOUR DECK, UM, PROVIDED ON FRIDAY.
AND BECAUSE OF SOME OF THE CHANGES THAT WE'VE SEEN HAPPENING, UM, AT THE COMMISSION, WE WANTED TO GET YOU THE MOST CURRENT STATS.
SO WE'RE CURRENTLY TRACKING, UM, THE 16 PROJECTS THAT ARE GOING THROUGH DUE DILIGENCE AT THE COMMISSION.
THOSE ACCOUNT FOR ABOUT 8,000 MEGAWATTS OF, UM, NEW GAS, UM, GENERATION ON THE SYSTEM.
UH, WHAT YOU'LL SEE AS THAT ALL OF THEM HAVE SUBMITTED THEIR FULL INTERCONNECTION STUDY APPLICATIONS WITH ERCOT, UM, AND THEY'RE ADVANCING THROUGH SEVEN HAVE ACTUALLY COMPLETED THOSE FULL INTERCONNECTION STUDY PROCESSES.
SO, UH, MOVING FORWARD, UH, A LOT OF PROGRESS ON THOSE.
NOW, THE OVERALL GENERATION INTERCONNECTION QUEUE, WE ARE TRACKING JUST UNDER 2000 NEW GENERATION INTERCONNECTION REQUESTS IN THE MARKET.
SO, AS WE TALKED ABOUT, UM, AND, AND FINANCE AND AUDIT, A NUMBER OF REQUESTS THAT WE'RE WORKING WITH, UH, NEW ENTITIES AS WELL AS THE TRANSMISSION SERVICE PROVIDERS TO TRY TO PROCESS THIS MEGAWATTS THAT WANNA COME TO THE SYSTEM, IT'S ABOUT 400 GIGAWATTS.
WE RECOGNIZE THAT NOT ALL OF THAT WILL MATERIALIZE, BUT IT IS A LOT OF WORK TO PROCESS THE STUDIES AND WORK THEM THROUGH THE PROCESS.
AGAIN, SOLAR AND BATTERY ENERGY STORAGE CONTINUE TO ACCOUNT FOR WELL OVER THE MAJORITY OF, OF WHAT WE'RE TRACKING AND THE INTEREST WE'RE SEEING COMING INTO THE MARKET.
NOW, OUR CURRENT LARGE LOAD INTERCONNECTION QUEUE, UM, WE HAVE PASSED, SURPASSED THE A HUNDRED GIGAWATT MARK OF A LARGE LOADS REQUEST TO ENTER INTO THE MARKET.
WE'RE TRACKING, UH, ABOUT 108,000 MEGAWATTS OF LARGE LOADS.
THAT'S COMPARED TO IN DECEMBER WHEN I REPORTED TO YOU ABOUT 63,000.
SO YOU CAN SEE WE'VE ALMOST DOUBLED IN THE AMOUNT OF LARGE LOADS THAT ARE SEEKING, UH, TO ENTER INTO THE PROCESS.
ONE OF THE THINGS I DID WANNA HIGHLIGHT, AGAIN, KIND OF LIKE DAN, UH, THERE'S AN IMPORTANT NPRR AND PICKER THAT ARE COMING BEFORE YOU TOMORROW ON THE CONSENT AGENDA THAT HAS TO DO WITH THE LARGE LOAD INTERCONNECTION PROCESS.
UM, SO JUST AS A REMINDER, WE HAVE BEEN WORKING IN AN INTERIM PROCESS FOR WELL OVER THE LAST TWO YEARS.
WHEN WE STARTED THAT PROCESS, WE HAD ABOUT 2000 MEGAWATTS OF LARGE LOADS IN THE INTERCONNECTION QUEUE.
WE'RE NOW WELL OVER A HUNDRED.
SO IT'S VERY IMPORTANT THAT WE GET THESE RULES ESTABLISHED AND CODIFIED IN THE PROTOCOLS.
UM, SOME OF THE KEY THINGS, I'LL JUST HIGHLIGHT WHY IT'S IMPORTANT, UH, THAT WE CONTINUE MOVING THIS FORWARD AT F ADDS THE OFFICIAL DEFINITION OF WHAT A LARGE LOAD IS.
IT HELPS TO PROVIDE ERCOT UH, VISIBILITY AND SITUATIONAL AWARENESS FOR THOSE LARGE LOADS THAT ARE 25 MEGAWATTS, UH, AND GREATER.
WHY IS THIS IMPORTANT? YOU KNOW, AS WE'VE BEEN THROUGH SOME PREVIOUS WINTER STORMS, WE GET QUESTIONS, ARE THOSE LARGE LOADS ON? HAVE THEY TURNED OFF? AND AS WE START TO GET ADDITIONAL DATA POINTS, THAT HELPS US WITH OUR FORECASTING AS WE GO FORWARD.
ONCE WE START TO SEE THE BEHAVIOR OF THESE LARGE LOADS,
[01:40:02]
IT SPECIFICALLY DEFINES THOSE TIMELINES AND PROCESSES FOR THE INTERCONNECTION STUDIES AND THE REQUIREMENTS THAT GO WITH CONNECTING.IT PROVIDES CERTAINTY INTO THAT PROCESS.
IT ALSO ALLOWS US TO UPDATE SOME OF OUR TOOLS SO WE CAN GIVE BETTER VISIBILITY INTO THE TRANSMISSION SERVICE PROVIDERS SO THEY KNOW WHERE THINGS ARE IN THE PROCESS, WHAT NEEDS THEIR ATTENTION, WHAT NEEDS ADDITIONAL APPROVAL, AND HOW WE CONTINUE TO MOVE THOSE THROUGH.
THERE HAVE BEEN SOME QUESTIONS AS IT'S, UM, MADE ITS FINAL, UH, TRACKS THROUGH THE STAKEHOLDER PROCESS.
HOW DOES THIS ALIGN WITH SENATE BILL SIX THAT'S CURRENTLY IN PROCESS? AND FROM OUR INITIAL REVIEW OF WHERE SB SIX SITS TODAY, UM, THERE ARE NO ISSUES.
UM, THEY JUST COMPLIMENT EACH OTHER.
IF THERE ARE ADDITIONAL CHANGES, WE CAN ALWAYS COME BACK, UM, AND ADJUST THE RULES JUST LIKE WE ALWAYS DO, UM, TO ALIGN IF THERE ARE CHANGES THAT ARE NEEDED DOWN THE ROAD.
SO OF THOSE LARGE LOADS, UM, THAT WE'VE ALREADY STUDIED AND GIVEN THE APPROVAL TO ENERGIZE AND MOVE THROUGH, WHAT HAVE WE OBSERVED? UM, THERE'S ABOUT 6,300 MEGAWATTS THAT HAVE BEEN IMPROVED TO ENERGIZE WHAT WE'VE OBSERVED, AS AT ANY SIMULTANEOUS POINT, UM, THE MOST WE'VE SEEN ON IS ABOUT 3,300.
NOW, THAT MEANS THEY COULD BE ON AT DIFFERENT TIMES.
IT MAY MEAN IT'S A, A NEW LARGE LOAD THAT'S RAMPING UP THEIR OPERATIONS AND THEY'RE RAMPING INTO THEIR FULL AMOUNT.
UM, BUT WE'LL CONTINUE TO UPDATE YOU ON, ON WHAT WE'VE SEEN IN THE QUEUE.
SO WE'VE TALKED ABOUT LOADS, WE'VE TALKED ABOUT GENERATION.
WE'VE GOTTA HAVE A GOOD TRANSMISSION PLAN TO MAKE SURE THAT WE CAN CONNECT THE TWO TOGETHER SO THEY CAN OPERATE EFFICIENTLY.
THIS IS TYPICALLY A SLIDE THAT I PUT IN THE APPENDIX, JUST TO KEEP YOU AWARE.
CHRISTIE, CAN I JUST ASK A QUESTION ON THE LAST TOPIC? I THINK IT'D BE HELPFUL FOR THE BOARD IF YOU COULD AT LEAST CATEGORIZE THE TYPES OF LARGE LOADS THAT YOU'RE SEEING, WHETHER THEY'RE DATA CENTERS, INDUSTRIAL, YOU KNOW, HYDROGEN PLANTS, LP GAS, ET CETERA.
JUST 'CAUSE 'CAUSE I THINK PART, JUST TRIGGERING OFF YOUR LAST COMMENT, PART OF THIS IS BECAUSE EACH ONE OF THOSE MIGHT HAVE SOMEWHAT DIFFERENT CHARACTERISTICS IN TERMS OF DURATION AND, YOU KNOW, YOU KNOW, ARE THEY 24 BY SEVEN? ARE THEY MORE INTERMITTENT THAN THAT? ABSOLUTELY.
AND SO WE'LL LOOK AT THE BEST WAY TO, TO PRESENT AND REPRESENT THAT FOR YOU.
FROM A TRANSMISSION PLANNING, REALLY THE, THE, A LOT OF WORDS ON THIS SLIDE, BUT I, WHAT A KEY TAKEAWAY I'D LIKE YOU TO HAVE IS REALLY BY LOOKING AT THAT GRA GRAPH.
SO THE NUMBER OF PROJECTS THAT COME THROUGH TO YOU AND YOUR CONSIDERING WE'RE RECOMMENDING FOR ENDORSEMENT MOVING FORWARD.
AS YOU CAN SEE OVER THE LAST SEVERAL YEARS, THAT'S CONTINUED TO INCREASE.
UM, IN FACT, UH, IN 2023 THERE WAS 3.2 BILLION ENDORSED, 20 24, 3 0.7, EXCUSE ME, 3.8 BILLION.
SO WE'RE CONTINUING TO SEE, UH, THE NEED FOR INVESTMENT TO MEET BOTH GROWING LOAD AS WELL AS WHERE GENERATIONS BEING CITED AND CONNECTING THE TWO.
WE'VE DONE A LOT OF TALK, UM, ABOUT THE PERMIAN BASIN, UH, TRANSMISSION PLAN.
UH, JUST A LITTLE BIT OF HISTORY FOR BOARD MEMBERS THAT ARE NEW.
THIS WAS SOMETHING THAT CAME OUT OF HB 50 66.
UH, THE COMMISSION DIRECTED US IN DECEMBER OF 2023 TO DO A TRANSMISSION RELIABILITY PLAN STUDY FOR THE PERMIAN BASIN.
AND LOOKING AT THE INCREDIBLE LOAD GROWTH IN THAT AREA, WE MADE A RECOMMENDATION TO THE COMMISSION IN JULY OF 2024.
AND BECAUSE OF WHAT WE SAW IN THE INCREASED LOAD GROWTH IN THAT REGION, BUT THE LACK OF CONVENTIONAL GENERATION IN THAT AREA WAS THE NEED FOR, UH, IMPORT PASS TO MOVE POWER INTO THE REGION.
AND WE PROVIDED THE COMMISSION TWO OPTIONS, ONE AT THE CURRENT IMPORT LEVEL OF 3 45 KB, AND THE SECOND WAS USING GOING TO A HIGHER VOLTAGE OF 7 65.
THE COMMISSION, UM, CONTINUED THROUGH THEIR DUE DILIGENCE.
WE PROVIDED OUR STATEWIDE KIND OF OVERVIEW OF WHAT WE SAW PROGRESSING THROUGH THE STATE.
UM, THEY'VE BEEN TAKING A LOT OF TIME TO TAKE COMMENTS AND QUESTIONS FROM THE STAKEHOLDERS AS THEY REVIEW AND MAKE A DECISION.
THEY'RE DUE TO MAKE A DECISION AT THEIR APRIL 24TH OPEN MEETING ON THOSE IMPORT PATHS.
NOW, BACK, UM, IN JULY OF LAST YEAR, WHEN WE PUT OUR RECOMMENDATION OUT FOR THOSE OPTIONS, WHEN WE DO A TRANSMISSION PLAN, WE TYPICALLY GO OUT TO THE TRANSMISSION SERVICE PROVIDERS AND GET COST ESTIMATES ON WHAT IT'S GONNA COST TO BUILD THOSE LINES.
WE GOT THOSE UPDATES IN MAY OF 2024 LAST YEAR FOR THE 3 45.
BUT BECAUSE THERE WERE LIMITED, UM, TSPS THAT HAD EXPERIENCE IN BUILDING AT THAT TIME OF 7 65, WE CHOSE TO USE A GENERIC, UM, MISO ESTIMATE FOR TEXAS ON THE COST ESTIMATE FOR THE 7 65 LINES.
[01:45:01]
UM, APPROVED THEIR ORDER LAST SEPTEMBER, THEY TOLD THE TSPS TO START WORKING ON BOTH SO THAT THEY'D BE READY TO MOVE FORWARD WHEN A DECISION WAS MADE.AND BECAUSE OF THAT, THE TRANSMISSION SERVICE PROVIDERS STARTED WORKING WITH VENDORS AND THEY'VE GOT A LOT MORE EXPERIENCE AND EXPOSURE NOW TO WHAT COST TO EXPECT.
SO WE RECENTLY FILED WITH THE COMMISSION AN UPDATE ON COST.
WHAT WE SAW WAS, IF YOU LOOK AT THE 3 45 IMPORT PATHS, WHAT WE SAW WAS, UM, SEVERAL OF THE TSPS PROVIDED COST ESTIMATES.
SEVERAL TOLD US THEIR COST WOULDN'T CHANGE FOR 3 45.
SO OVERALL WE SAW THEIR COST INCREASE FROM LAST YEAR'S ESTIMATES BY 7.6% FOR THE 7 65.
COMPARING TO THE GENERIC MISO ESTIMATES, ONCE WE PUT MORE GRANULARITY TO IT, UM, AGAIN, FAST FORWARD, A LOT HAS CHANGED IN THE LAST YEAR, UH, WITH, UH, AS IT RELATES TO COST, WE SAW THE 7 65 PLAN INCREASE BY 11.6%.
END OF THE DAY, UH, WE RECOGNIZE, UH, IT'S GONNA BE A, AN INVESTMENT FOR THE CONSUMERS TO BE ABLE TO GET THE TRANSMISSION BUILT THAT THEY NEED.
UM, BUT THE, THE COST ESTIMATES CAME IN STILL FAIRLY CLOSE TO EACH OTHER.
THESE NUMBERS JUST LOOK AT THE COST.
THEY DON'T, UH, I DON'T HAVE THE INFORMATION HERE, BUT IF YOU'RE INTERESTED LATER IN GOING INTO, I CAN DEFINITELY GET YOU THAT ADDITIONAL INFORMATION WE'VE CONTINUED TO SHARE ABOUT THE FUTURE BENEFITS, UH, OF ONE VERSUS THE OTHER AND HOW THEY COMPARE.
ONE ADDITIONAL PIECE OF INFORMATION WE PROVIDED TO THE COMMISSION LAST WEEK IS WE'VE, WE'VE OFTEN SAID THAT WE FEEL LIKE OUR CURRENT TRANSMISSION SYSTEM HAS MAXIMIZED ITS CAPABILITY, MEANING WE HAVE SQUEEZED ALL WE CAN OUT OF THE CURRENT TRANSMISSION SYSTEM.
AND SO ONE OF THE WAYS THAT WE WERE ABLE TO TRY TO QUANTIFY AND PUT NUMBERS TO THAT IS DAN'S TEAM ACTUALLY HELPED ME OUT.
THEY PULLED INFORMATION FROM OUR OUTAGE COORDINATION SYSTEM AND LOOKED AT OVER THE PAST DECADE THE NUMBER OF TRANSMISSION OUTAGES ON THE 3 45 SYSTEM THAT WE HAVE WORKED WITH THE TRANSMISSION SERVICE PROVIDERS FOR EITHER THEM TO WITHDRAW IT OR WE'VE HAD TO REJECT THEIR REQUEST.
AND THE REASON IS, IS WHEN THEY PUT THOSE REQUESTS IN, WE HAVE TO LOOK AT SYSTEM CONDITIONS AND WHETHER OR NOT THE TRANSMISSION SYSTEM WOULD REMAIN SECURE.
AND BECAUSE OF HOW WE'VE SEEN THE GRID EVOLVE, IT'S BECOMING INCREASINGLY MORE DIFFICULT TO TAKE OUTAGES ON THAT 3 45 SYSTEM.
AGAIN, EITHER WAY, UM, THERE'S MORE TRANSMISSION CAPABILITY THAT IT'S NEEDED.
UM, BUT THIS IS JUST A WAY TO, TO KINDA SHARE HOW THAT'S EVOLVED OVER TIME.
IS THIS LOAD BASED? IS IS THIS LOAD BASED CHRISTIE? IS, IS THAT WHAT HAPPENED IN 20 THAT THE LOAD WENT UP SIGNIFICANTLY AND IT'S, IT'S LOAD? UM, YOU, YOU'RE SEEING LOAD INCREASES, YOU'RE ALSO SEEING, UM, MAYBE DIFFERENT OUTAGES.
UM, SO IF A, A RESOURCE IS TAKING AN OUTAGE, IT IMPACTS THE, THE POWER FLOW OF THE SYSTEM.
AND SO A REQUESTED, UM, OUTAGE, TRANSMISSION OUTAGE MAY HAVE TO BE CANCELED OR MOVED, UM, TO BE ABLE TO ACCOMMODATE THOSE OUTAGES ON THE SYSTEM AS WELL.
I'D ALSO ADD THAT WHEN, WHEN THOSE OUTAGES ARE WITHDRAWN OR REJECTED, THEY'RE PUT BACK IN AGAIN AND THEY'RE, THEY'RE STILL TAKEN 'CAUSE YOU STILL HAVE TO DO THE MAINTENANCE ON THE LINE, BUT THEY'RE DONE AT A, THEY'RE EITHER DONE HOT OR THEY'RE DONE WITH SHORTER RESTORATION TIME, WHICH IS A MORE EXPENSIVE WAY OF, OF, OF, UH, PERFORMING THE MAINTENANCE WORK.
SO ULTIMATELY WHEN THAT GRAPH RISES, THAT'S A HIGHER COST TO TAKE THOSE OUTAGES TO CONSUMERS.
ALL RIGHT, WE WRAPPED UP THE WINTER WEATHERIZATION SEASON.
WE'VE, UH, CLOSED OUT THE SEASON DOING A 460 INSPECTIONS, UH, THAT WAS OUR FOURTH WINTER SEASON TO COMPLETE THE INSPECTIONS OF THE GENERATION AND TRANSMISSION FLEET.
UM, WE CONTINUE TO SEE GOOD RESULTS, UM, FROM THE PERFORMANCE OF UNITS.
UH, YOU HEARD FROM DAN AND KEITH EARLIER ABOUT THOSE WINTER STORMS. UH, WHAT WE OBSERVED WAS, YOU KNOW, VERY LIMITED IMPACT TO THERMAL OUTAGES ON THE SYSTEMS DURING THOSE TIMEFRAMES.
UM, SO WE WILL CONTINUE WORKING WITH PROVIDERS TO KEEP THAT INFORMATION IN FRONT OF THEM AS WE GO INTO EACH SEASON, UM, SO THAT EVERYONE IS PREPARED, UH, TO THE BEST OF THEIR ABILITY TO MEET THOSE STANDARDS FOR WHATEVER WEATHER, UH, WE'RE IMPACTED BY.
THEN LAST BUT NOT LEAST, OUR MONTHLY OUTLOOK ON RESOURCE ADEQUACY RIGHT HERE, I'VE GOT APRIL AND MAY.
WE ACTUALLY ALSO PUT OUT ON FRIDAY OUR JUNE MORUM.
AND WHAT YOU CONSISTENTLY SEE IS WE, WE DO A SET OF PROBABILISTIC RUNS TO LOOK AT THE, THE POTENTIAL FOR GOING INTO AN EMERGENCY TYPE EVENT, UM, UNDER VARIOUS CONDITIONS.
AND WHAT WE CONSISTENTLY SEE IS, IS IN THOSE EVENING HOURS
[01:50:01]
AS THE SUN STARTS SETTING, THAT'S WHERE WE SEE OUR RISK OF A POTENTIAL, UM, EMERGENCY TYPE CONDITIONS.BUT WHAT YOU DO SEE HIGHLIGHTED HERE IS THOSE PERCENTAGES ARE VERY LOW, AND THE REASON THAT WE'RE SEEING THOSE DECREASE FROM WHAT WE OBSERVED LAST YEAR IS WE'RE CONTINUING TO SEE MORE BATTERIES ADDED TO THE SYSTEM, AND THAT HELPS, UH, TO PROVIDE, UM, MORE COVERAGE IN THOSE SHORTER DURATION TYPE EVENTS.
UH, THE JUNE NUMBER IS ALSO, UH, THE HIGHEST RISK IS THE HOUR ENDING 9:00 PM AND IT'S LESS THAN ZERO OR LESS THAN 1% AS WELL.
I THINK IT'S 0.35% AT THAT NINE O'CLOCK HOUR.
THANK YOU, CHRISTI, ANY QUESTIONS FOR CHRISTY? JULIE, I'D LIKE TO GO BACK TO MY QUESTION.
I APPRECIATE CHRISTIE'S PRESENTATION ON THE NORE 2 45 IMPLEMENTATION, AND IT'S GOOD TO SEE THE RESPONSE FROM THE MARKET PARTICIPANTS, BUT MY QUESTION WAS, ARE WE TRACKING THE IBR WRITE THROUGH EVENTS AND WHAT DOES THAT TREND LOOK LIKE? IS CHRISTIE TRACKING IT? IS DAN TRACKING IT? YES, WE'RE, WE'RE LOOKING AT THAT.
WE'VE GOT FOLKS THAT, THAT LOOK AT THAT ALL THE TIME.
I JUST DON'T HAVE THE NUMBERS IN FRONT OF ME, BUT I CAN GET 'EM FOR YOU BY TOMORROW.
BUT IS YOUR SENSE IT'S, THERE'S STILL OCCURRING? YES.
I'M, I'M HOPE WE'RE HOPING THAT THIS MAXIMIZATION CUTS THAT NUMBER.
YES, BUT IT LOOKS LIKE WE'VE GOT OVER A YEAR TO ACTUALLY IMPLEMENT IT, SO THAT'S WHY I WAS LIKE CURIOUS ABOUT THE CURRENT STATE OF IBR EVENTS.
YEAH, WE, WE'LL, I'LL, I'LL, I'LL GET YOU THOSE KIND OF THE VOLUME NUMBERS TOMORROW.
ANY OTHER QUESTIONS FOR CHRISTIE OR, YEAH, MR. CHAIRMAN, JUST REALLY QUICKLY, CHRISTIE ON THE PERMIAN BASIN RELIABILITY PLAN, UM, WHAT IS THE DIFFERENCE IN TRANSFER CAPABILITY BETWEEN THE 7 65 IMPORT PLAN AND THE 3 45? DO YOU KNOW, APPROXIMATELY? SO, I, IT'S APPROXIMATELY, AND THE REASON I KNOW THIS NUMBER IS BECAUSE IT'S 7 65, WHICH IS EASY TO REMEMBER.
UM, I THINK IT'S, UH, IN OUR, IF I GO BACK TO REPORT, I ACTUALLY HAVE IT IN MY BAG IF WE WANNA PULL OUT SPECIFICS, BUT WHEN WE DID THE PERMIAN STUDY, WE LOOKED AT FOR BOTH PLANS, THE 3 45 PLAN AND THE 7 65 PLAN, WE LOOKED AT, OKAY, YOU SERVE THE CURRENT DEMAND BY HAVING THESE ADDITIONAL IMPORT PASSED IN, HOW MUCH MORE CAPACITY COULD WE SERVE? SO, UM, THE WAY THE POWER FLOWS, WHAT WE SAW WAS HIGHER FOR THE 7 65 BY 765 MEGAWATTS IN COMPARISON.
UM, SO AGAIN, IT DOESN'T GO LINE BY LINE.
IT LOOKS AT THE TOTAL, THROUGH THE POWER FLOW ANALYSIS AND WITH THE 3 7 65 LINES, BECAUSE THEY HAVE, YOU KNOW, LOWER IMPEDANCE, UM, POWER, MORE POWER CAN FLOW OVER THEM INTO THE REGION.
ANY OTHER QUESTIONS OR COMMENTS? KRISTY? THANK YOU.
UH, LET DON, UNLESS THERE ARE ANY OBJECTIONS,
[Recess Meeting until 10:00 a.m., Tuesday, April 8, 2025]
THIS WILL CONCLUDE THE GENERAL SESSION FOR TODAY.UH, OUR MEETING WILL RESUME AND GENERAL SESSION AT 10:00 AM GENERAL SESSION IS NOW RECESSED AND THE WEBCAST WILL BE SUSPENDED.
CHAIRMAN GLEASON, THIS MEETING, THE PUBLIC UTILITY COMMISSION OF TEXAS IS ADJOURNED.
[Reconvene General Session 10:00 a.m., Tuesday, April 8, 2025]
ERCOT BOARD OF DIRECTORS AND GUESTS, I'M BILL FLORES ERCOT, BOARD CHAIR.I HEREBY RECONVENE AND CALL TO ORDER THE APRIL 7TH AND APRIL 8TH MEETING OF THE ERCOT BOARD OF DIRECTORS.
AS A REMINDER, THIS MEETING IS BEING WEBCAST LIVE TO THE PUBLIC ON ERCOT WEBSITE.
BEFORE WE GET GOING, I'D LIKE TO PROVIDE PUC CHAIRMAN THOMAS GLEASON AN OPPORTUNITY TO RECONVENE THE OPEN MEETING OF THE PUBLIC UTILITY COMMISSION OF TEXAS.
THIS MEETING OF THE PUBLIC UTILITY COMMISSION OF TEXAS WILL COME TO ORDER TO CONSIDER MATTERS THAT HAVE BEEN DULY POSTED WITH THE SECRETARY OF STATE FOR APRIL 8TH, 2025.
UH, BEFORE MOVING ON TODAY'S BUSINESS AGAIN, THE ANTITRUST ADMONITION AND THE SECURITY MAP ARE EACH INCLUDED IN THE POSTED MEETING MATERIALS.
UH, CHAD, JUST TO CONFIRM, HAS ANYONE FROM THE PUBLIC EXPRESSED EXPRESSED INTEREST IN COMMENTING TODAY ON ANY ITEMS? NO.
UH, WE'RE GONNA START WITH AGENDA
[6. Consent Agenda]
ITEM SIX, THE CONSENT AGENDA, INCLUDING ITEM 6.1, UNOPPOSED REVISION REQUEST RECOMMENDED BY TAC FOR APPROVAL.CHAD, PLEASE PROCEED WITH PROVIDING BUDGET IMPACTS OF THE REVISION REQUEST.
THERE ARE 12 REVISION REQUESTS ON THE CONSENT AGENDA.
A COUPLE WERE DISCUSSED YESTERDAY DURING THE FIRST PART OF OUR BOARD MEETING IN THE AFTERNOON.
UH, SEVERAL OF THEM DO HAVE BUDGETARY IMPACTS AND FTE IMPACTS.
SPECIFICALLY, I WOULD NOTE NPR 1 2 3 4, WHICH DEALS WITH LARGE LOADS, HAS A BUDGET IMPACT BETWEEN 600,000 AND 800,000 AND SOME
[01:55:01]
ANNUAL REOCCURRING O AND M STAFFING COSTS.IT ALSO HAS A FT IMPACT OF 10.7, UH, EMPLOYEES TO INCORPORATE THAT ACROSS, UH, MULTIPLE DIVISIONS WITHIN THE ORGANIZATION.
A COUPLE OTHER REVISION REQUESTS, 1250 HAS A BUDGET IMPACT BETWEEN 25,000 AND 50,000.
NPR 1268 DOES NOT HAVE ANY BUDGET IMPACT.
THAT'S AN RTC ONE ALONG WITH, UH, 1270.
AND THEN TWO OTHER REVISION REQUESTS, WHICH IS SCR 8 29 AND VCMR 0 4 2 HAVE BUDGET IMPACTS BETWEEN A HUNDRED THOUSAND AND 200,000.
HAPPY TO ANSWER ANY QUESTIONS.
ARE THERE ANY QUESTIONS FOR CHAD ON ANY OF THE, UH, UNANIMOUSLY APPROVED NPRS? IF THERE'S NO FURTHER DISCUSSION, I'LL ENTERTAIN A MOTION TO APPROVE THE CONSENT AGENDA AS PRESENTED.
UH, PEGGY, UH, ALL IN FAVOR? AYE.
ANY OPPOSED? ANY ABSTENTIONS? THE CONSENT AGENDA IS UNANIMOUSLY APPROVED.
[7. General Session Meeting Minutes]
UH, NEXT IS AGENDA ITEM SEVEN, THE GENERAL SESSION MEETING MINUTES, INCLUDING ITEM 7.1, THE FEBRUARY 4TH, 2025, GENERAL SESSION MEETING MINUTES AND ITEM 7.2, THE FEBRUARY 25TH, 2025, GENERAL SESSION, UH, SPECIAL MEETING MINUTES.UH, THERE ARE DRAFTS IN THE MEETING MATERIALS.
WOULD ANY BOARD MEMBER LIKE TO DISCUSS? IF NOT, I'LL ENTERTAIN, ENTERTAIN A MOTION TO APPROVE THE FEBRUARY 4TH, 2025 GENERAL SESSION MEETING MINUTES AND THE FEBRUARY 25TH GENERAL SESSION.
ANY OPPOSED? ANY ABSTENTIONS? BOTH SETS OF MEETINGS MEETING MINUTES ARE UNANIMOUSLY APPROVED.
UH, WE'RE NOW GONNA MOVE TO AGENDA
[8. CEO Update]
ITEM EIGHT AND ERCOT, CEO, PABLO VEGAS IS OUR FIRST PRESENTER TODAY PRESENTING AGENDA ITEM, UH, EIGHT, THE CEO UPDATE.THANK YOU, CHAIR FLORES, APPRECIATED.
THANK YOU ALL FOR YOUR, UM, TIME TODAY AND YOUR COMMITMENT TO THE IMPORTANT WORK THAT WE'RE DOING HERE AT ERCOT.
UM, TODAY I AM GOING TO COVER A FEW TOPICS RELATED TO KIND OF WHERE WE ARE SEASONALLY.
WE'RE IN THE SHOULDER MONTH OF SPRING.
I'M GONNA TALK A LITTLE BIT ABOUT WHAT THAT MEANS AND KIND OF WHAT ARE SOME OF THE TYPICAL, UM, COMMUNICATIONS THAT THE MARKET SEES AS A RESULT OF US BEING, UH, IN A SHOULDER MONTH.
THEN, UH, I'LL COVER BRIEFLY, UH, BRIEF UPDATE ON WHAT'S GOING ON WITH, UH, BRONA UNIT THREE, THE LATEST INFORMATION THAT WE HAVE ON THE INSPECTION AND REPAIR WORK THAT'S HAPPENING THERE, FOLLOWED BY AN UPDATE ON WHERE WE'RE WITH THE LIFECYCLE, UM, MOBILE GENERATOR, UH, TRANSITION FROM THE, UH, SAN FROM THE, UH, HOUSTON AREA OVER TO THE SAN ANTONIO AREA AS PART OF THE, UH, RMR UH, MITIGATION SOLUTION.
AND THEN, UM, TALK ABOUT A COUPLE OF, UH, COM, UH, ACTIVITIES AND EXTERNAL EVENTS THAT WE'RE GONNA BE DOING.
AND SO SOME, UH, SOME REALLY IMPORTANT, UH, EXTERNAL STAKEHOLDER OPPORTUNITIES COMING UP IN THE, IN THE NEXT COUPLE OF MONTHS THAT I THINK ARE GONNA BE VERY VALUABLE FOR, UH, FOR PARTICIPANTS.
SO STARTING OFF WITH, UH, KIND OF THE SHOULDER SEASON, UM, SCHEDULE MAINTENANCE PERIOD.
SO DURING THIS PERIOD OF TIME, THIS IS WHEN THE GENERATORS IN THE SYSTEM, AND THIS IS REALLY ALL GENERATORS, THE RENEWABLES AS WELL AS THE, UH, THERMAL GENERATORS TAKE THE OPPORTUNITY DURING THE KIND OF MORE MODERATE WEATHER TO TAKE OUTAGES, DO MAINTENANCE, PLAN MAINTENANCE.
AND WE ARE SEEING THAT GOING ON.
IT'S A REALLY CRITICAL CYCLE FOR THE, UH, FOR ANY GRID.
AND IT'S SUPER CRITICAL HERE AS WELL BECAUSE WE KNOW DURING THE, UH, EXTREMES OF SUMMER AND THE PEAKS IN THE WINTER, WE NEED ALL OF THESE RESOURCES TO BE ABLE TO BE CONTRIBUTING.
AND SO WHAT IT LOOKS LIKE, UM, AT A TIME LIKE THIS, I CHECK TODAY'S NUMBERS ON OUR OUTAGES TODAY.
WE HAVE ABOUT, UM, 38,800 MEGAWATTS OF, UH, RESOURCES THAT ARE OUT ON MAINTENANCE RIGHT NOW.
THE LARGE MAJORITY OF THAT IS, UH, IS PLANNED.
UM, UH, THERE IS SOME FORCED OUTAGES AS THERE ALWAYS IS, YOU KNOW, AROUND THE CLOCK.
BUT THAT'S NOT AN UNUSUAL LEVEL OF OUTAGES TO HAVE IN A, UH, BEAUTIFUL APRIL DAY LIKE WE HAVE TODAY.
UM, WE HAVE NOT HAD AN ISSUE WITH LIMITING, UM, SCHEDULE MAINTENANCE OUTAGES ON THE GENERATOR SIDE THIS SEASON.
THOSE HAVE BEEN ABLE TO PROCEED AS NECESSARY.
WE ARE CONTINUING THOSE SEASONALLY YEAR AFTER YEAR, SEEING CHALLENGES WITH THE, ALWAYS TAKING THE TRANSMISSION LEVEL OUTAGES AT THE TIMES AND AT THE DURATIONS THAT THEY ARE REQUESTED.
AND WE HAVE HAD TO MOVE AROUND THOSE, UH, TRANSMISSION OUTAGES PERIODICALLY IN ORDER TO MANAGE LOCAL RELIABILITY OR, UH, CONGESTION ISSUES.
UM, BUT WE TRY NOT TO DO THAT TO THE EXTENT POSSIBLE.
SO THIS IS THE, UH, PERIOD OF TIME WE EXPERIENCED.
IT'S IN THE SPRING, FROM MARCH 15TH THROUGH MAY 15TH IN THE FALL, SEPTEMBER 15TH THROUGH DECEMBER 15TH.
WE TAKE THESE PERIODS OF TIME TO, TO MAKE SURE THAT THE FLEET CAN BE, UM, RELIABLY MAINTENANCE IN ORDER TO CONTINUE OPERATING DURING THE PEAK SEASONS.
[02:00:01]
OF THINGS THAT WE DO DURING THE, UH, THESE PERIODS THAT ARE MORE COMMON IN THE SHOULDER PERIODS, ONE OF THEM IS ADVANCED ACTION NOTICES.UM, AN ADVANCED ACTION NOTICE IS ESSENTIALLY US SEEN A CONDITION COMING ON THE, ON THE GRID BASED ON, COULD BE A VARIETY OF FACTORS.
UM, IT COULD BE A CHANGE IN THE WEATHER FORECAST.
WE COULD SEE AN UNSEASONABLY WARM DAY ALL OF A SUDDEN HAPPEN IN THE SPRING OR IN THE FALL.
AND, UH, OR WE MAY SEE, YOU KNOW, A COMBINATION OF, YOU KNOW, A CHANGE IN THE EXPECTED RENEWABLE OUTPUT OR BECAUSE OF THE AMOUNT OF FORCED OUTAGES THAT WERE ON TOP OF THE PLANNED OUTAGES.
WE JUST HAVE A DIFFERENT CONDITION AND, AND DIFFERENT CIRCUMSTANCE EVOLVING ON THE GRID.
AND SO WE COMMUNICATE AN ADVANCED ACTION NOTICE TO THE MARKET, LETTING THEM KNOW THAT WE MAY NEED TO MAKE CHANGES AND MOVE PLANNED OR SCHEDULED OUTAGES AROUND EITHER THE GENERATION OR THE TRANSMISSION SYSTEM.
UM, SOME OF THE THINGS THAT WE CAN DO, UH, AS PART OF AN A A N INCLUDE ADJUSTING THE ACTUAL OUTAGE SCHEDULE, REDUCING THE OUTAGE RESTORATION TIME, SAYING, HEY, WE'RE GONNA NEED TO HAVE THE ABILITY TO BRING SOMETHING BACK A LITTLE BIT SOONER IF THESE CONDITIONS MATERIALIZE AS WE ARE SEEING THE POSSIBILITY OF, OR IF WE CAN ADJUST THE SYSTEM CONFIGURATION IN SOME WAY IN ORDER TO ROUTE THE TOPOLOGY IN A WAY THAT CAN MANAGE THAT RISK.
YOU KNOW, THAT'S SOMETHING THAT WE WOULD LOOK TO DO IF WE CAN AVOID HAVING TO, UM, HAVING TO CHANGE THE, THE, THE SCHEDULES.
AS YOU CAN SEE, WE LOOKED, WE BROUGHT SOME DATA FROM THE LAST FEW SPRINGS, HAVE HAD MORE AANS, UH, WITH ASSOCIATED MEGAWATTS IN PRIOR YEARS THIS SPRING.
WE REALLY HAVEN'T HAD ANY AS OF THE START OF, UH, THIS MONTH, BUT THAT COULD CHANGE AS WE CONTINUE THE SEASON INTO APRIL AND INTO MAY AND, AND EARLY JUNE.
WE DEFINITELY HAVE HAD TO BE STRICTER IN MANAGING THESE MAINTENANCE OUTAGES AS THE KIND OF THE TIGHTNESS OF THE GRID OVERALL, UH, CONTINUES TO, UH, TO, UH, TO GROW.
AS WE SEE, YOU KNOW, THE GROWTH ON THE SYSTEM, WE SEE GROWTH ON THE DEMAND, AND SO WE'RE GONNA HAVE TO BE VERY CAREFUL WITH THESE, UH, OUTAGES AND MANAGING THOSE VERY CLOSELY.
AND THE MARKET PARTICIPANTS THAT HAVE BEEN ON THE OTHER SIDE OF THESE AANS UNDERSTAND THAT VERY WELL.
BUT JUST WANTED TO LET YOU KNOW, THIS IS THE ONE OF THE CORE TOOLS WE USE.
IT'S PRIMARILY DURING THESE SHOULDER MONTHS, UH, THAT WE USE THEM.
AND IT'S SOMETHING THAT IS VERY HELPFUL TO ENSURE THAT WE CAN MAINTAIN RELIABILITY, UH, AND BE FLEXIBLE TO THE CONDITIONS THAT ARE EXPERIENCED ON THE GRID.
ANOTHER THING THAT WE DO IS, UM, ISSUE OPERATING CONDITION NOTICES.
AND THIS IS REALLY NOT LIMITED TO THE SHOULDER MONTHS.
THIS IS SOMETHING THAT HAPPENS THROUGHOUT THE YEAR, UH, PRETTY REGULARLY.
AND THE TYPES OF THINGS THAT WOULD, UM, KIND OF DRIVE THAT WOULD BE WHEN WE SEE A THRESHOLD CRITERIA MET, LIKE IF WE SEE 94 DEGREES OR HIGHER IN THE MONTHS OF OCTOBER THROUGH MAY, BETWEEN SAN ANTONIO AND THE DALLAS FORT WORTH REGIONS.
SO THAT WOULD BE CONSIDERED THE COOLER PERIODS OF THE GRID, YOU KNOW, OCTOBER THROUGH MAY.
AND SO IF WE SEE AN ELEVATED TEMPERATURE, AVERAGE TEMPERATURE SUSTAINED IN THIS REGION, THEN THAT WOULD MEET THE CRITERIA FOR US TO LET THE MARKET KNOW THERE'S AN OPERATING CONDITION NOTICE THAT COULD LEAD TO SOME KIND OF A, UH, FUTURE ACTION.
IT'S BASICALLY AN EARLY NOTICE THAT WE ARE SEEING THE CONDITIONS EXIST THAT COULD LEAD TO US HAVING TO TAKE SOME ACTION TO MANAGE THAT CONDITION IN THE FUTURE.
SO IT'S KIND OF PUTTING THE MARKET ON NOTICE.
IT'S NOT SIGNALING THAT WE EXPECT THERE TO BE SOME KIND OF A RELIABILITY ISSUE OR SOME KIND OF A CONSTRAINT, BUT WE ARE BEING PROACTIVE AND LETTING PEOPLE KNOW THAT THE CONDITIONS ARE RIPE FOR US TO HAVE TO TAKE SOME KIND OF ACTION TO DEAL WITH THESE CONDITIONS.
WE'VE SEEN THIS ALSO HAPPEN IN RECENT MONTHS BECAUSE OF THE WILDFIRE RISKS WHERE TRANSMISSION OPERATORS ARE TAKING THE PRUDENT STEPS TO, UH, TAKE OFF RECLOSER ACTIONS ON SOME OF THEIR TRANSMISSION LINES TO AVOID THE RISK OF SPARKING AND CREATING A WILDFIRE.
AND SO WHEN THE CONDITION GETS CONFI, WHEN THE, WHEN THE SYSTEM GETS CONFIGURED IN THAT WAY, WE WOULD PUT OUT A NOTICE INTO THE MARKET TO SAY THAT THE OPERATING CONDITION IS, UH, IN, IN PLACE THAT THIS SITUATION EXISTS.
AND SO BECAUSE OF THE LACK OF RECLOSER ACTION, ERCOT MAY HAVE TO DEAL WITH THE TRANSMISSION SYSTEM IN A DIFFERENT WAY IN ORDER TO MANAGE EVENTS THAT HAPPEN.
AND SO IT'S REALLY JUST ONE OF THOSE LETTING PEOPLE KNOW THERE'S A SITUATION OUT THERE BASED ON HEAT OR OPERATING CONDITIONS THAT WE WANT THE MARKET JUST TO BE AWARE OF, AND THAT WE'RE GONNA DO WHAT WE NEED TO DO ON A ROUTINE BASIS IN ORDER TO MANAGE THAT CONDITION.
ANY QUESTIONS ON THOSE TWO BEFORE I MOVE ON TO THE NEXT TOPIC? SO THE OVERALL KINDA SHOULDER SEASONS, THE AANS OR THE OCNS, AND IF THERE'S ANY HARD ONES, I'LL GIVE THEM TO DAN 'CAUSE HE'S BEST AT ANSWERING THIS.
SO LET'S, UM, TALK A LITTLE BIT ABOUT THE, UM, UH, BRO UNIT, UM, UH, UPDATES THAT HAVE BEEN GOING ON.
SO IF YOU RECALL, WE, UM, PUT IN THE RR AGREEMENT AND APPROVED THAT, UH, ON FEBRUARY, UH, 25TH OF THIS YEAR.
THE OUTAGE BEGAN PROMPTLY AFTERWARDS ON MARCH 2ND.
INSPECTIONS OF ALL OF THE KIND OF CORE COMPONENTS AND KIND OF TAKING APART THE UNIT
[02:05:01]
TO DO THE INSPECTION AND MAINTENANCE HAS BEEN UNDERWAY.AND, UM, THERE HAS BEEN SOME PRETTY SIGNIFICANT FINDINGS RECENTLY RELATED TO THE, UH, TO THOSE INSPECTIONS.
IN ON MARCH 28TH, THE CONTRACTOR DETERMINED THAT THE BOILER SUPER HEATER HEADER IS GONNA NEED TO BE REPLACED, WHICH IS A FAIRLY SIGNIFICANT, UH, REPLACEMENT ITEM, AND IT'S A FAIRLY COSTLY ONE RIGHT NOW.
UH, THE COST THAT WE HAVE, INCREMENTAL COSTS FOR REPAIRS THAT WE HAVE RECEIVED ARE AT ABOUT 2.7 MILLION.
THAT DOES NOT YET INCLUDE THE COST ESTIMATE FOR THE REPLACEMENT OF THE BOILER SUPERHEAD SUPER HEATER HEADER.
SO THAT WILL BE AN INCREMENTAL COST ON TOP OF THAT THAT WE'LL HAVE TO EVALUATE.
IN ADDITION, WE HAVE GOTTEN SIGNALS THAT THERE MAY BE SOME COMPONENTS THAT NEED TO BE REPLACED THAT HAVE LONGER LEAD TIMES IN ORDER TO BE ABLE TO GET THOSE COMPONENTS IN AND GET THE UNIT UP AND RUNNING.
RIGHT HERE IN THIS SLIDE, IT SAYS THE TWO TO THREE MONTHS, UH, IN DELAYS ANTICIPATED, WE'VE GOTTEN RECENT INFORMATION THAT INDICATE IT COULD BE LONGER THAN THAT, IT COULD BE UPWARDS OF SIX TO 12 MONTHS, BUT THAT NEEDS TO BE VALIDATED STILL WITH THE OEMS AND WITH POTENTIAL OTHER SUPPLIERS.
AND SO WE'LL BE LOOKING AT THE IMPACT OF THOSE DELAYS TO UNDERSTAND WHAT THAT MEANS IN TERMS OF THE ACTUAL AVAILABILITY POTENTIAL, AND THEN EVALUATE THE COST BENEFIT OF CONTINUING TO WORK THROUGH THIS, UH, UH, THIS MAINTENANCE AND REPAIR CYCLE WITH PRODUCT UNIT THREE VERSUS LOOKING AT SOME OTHER ALTERNATIVE.
THAT DATA IS VERY NEW AND WE'RE STILL GONNA NEED TO EVALUATE KINDA WHAT THE IMPLICATIONS OF THAT.
BUT AT THIS POINT IN TIME, YOU KNOW, THE, THE TEAM AT THE CPS IS WORKING DILIGENTLY TO TRY TO FULLY GO THROUGH THAT UNIT, MAKE SURE THAT ONCE IT IS BROUGHT BACK, IF IT'S ABLE TO BE DONE SO THAT IT'LL BE OPERATING SAFELY AND OR RELIABLY FOR THE TERM THAT IT'S GONNA BE ABLE TO DO.
SO DURING THIS RMR PERIOD, HERE'S A COUPLE OF, UH, PICTURES THAT WERE SHARED, UH, BY CPS ENERGY.
TO GIVE YOU A LITTLE BIT OF PERSPECTIVE OF THE SCALE AND THE SIZE OF SOME OF THESE, UH, AND VINTAGE OF SOME OF THESE, UH, ASSETS THAT ARE, THAT ARE, UH, INSIDE OF PRODUCT UNIT THREE, WE'RE LOOKING AT THE LOW PRESSURE TURBINE ROTOR, UH, ON THE TOP LEFT AND THE, THE CLEANING PROCESS THAT'S GOING ON THERE.
AND THEN THE GENERATOR ROTOR, UH, ON THE BOTTOM RIGHT.
SO SOME SIGNIFICANT, SIGNIFICANT LARGE COMPONENTS, UM, THAT ARE OF A SIGNIFICANT VINTAGE.
AND SO THERE'S, UH, THERE'S A LOT OF, A LOT OF WORK GOING INTO MAKING SURE THAT THEY CAN BE OPERATED SAFELY, CONTINUALLY REGARDING THE, UH, LIFECYCLE POWER MOBILE GENERATION UPDATE.
UM, SO IN ALSO ON FEBRUARY 25TH, UH, THE BOARD AUTHORIZED MOVING FORWARD WITH AN OPTION TO RELOCATE THESE LIFECYCLE UNITS FROM HOUSTON TO SAN ANTONIO IN ORDER TO HELP MANAGE THE LOCAL TRANSMISSION CONSTRAINT THAT, UM, UH, EXISTED IN, UH, DURING THAT, THAT WAS REVEALED DURING THE RMR ANALYSIS.
THE ONE OF THE ISSUES THAT, UH, WAS AT BAY WAS TRYING TO DETERMINE WHETHER OR NOT HOW THE AIR PERMITTING PROCESS WOULD WORK.
AND WE BELIEVE THAT THAT ISSUE HAS BEEN, UH, RESOLVED.
TCQ HAS IDENTIFIED A WORKABLE PATH FORWARD, FORWARD FOR AN AIR PERMIT THAT WAS A, UH, A SIGNIFICANT ACCOMPLISHMENT AND MILESTONE THAT NEEDED TO BE ACHIEVED.
RIGHT NOW, WE'RE STILL IN THE FINAL STAGES OF THE NEGOTIATIONS WITH, UH, LIFECYCLE POWER.
THERE'S, UH, LIFECYCLE POWER DETERMINING THE, DISCUSSING THE TERMS OF RELEASE WITH CENTERPOINT AND THEN LIFECYCLE POWERS, NEGOTIATING QUEASY SERVICES AND AN INCORRECT END AND INTERCONNECTION AGREEMENT, UH, WITH CPS ENERGY AS WELL AS WITH, UM, AS WELL AS WITH KOTT.
AND SO WE'VE BEEN WORKING TOGETHER TO GET THESE KIND OF THREE COMPONENTS OF THE CONTRACT FINALIZED, EXPECT THAT TO BE DONE SOON AND, UH, AND FOCUS ON GETTING THESE UNITS UP AND RUNNING IN THE SAN ANTONIO AREA.
WE, UM, WE ARE PLANNING TO DO EVERYTHING WE CAN TO INCENTIVIZE BRINGING THESE UNITS ON AS QUICKLY AS POSSIBLE, UM, IN THE, UM, IN THE SAN ANTONIO AREA.
GIVEN THE FACT THAT WE ARE SEEING SIGNIFICANT, UH, COST AND POTENTIAL SCHEDULE DELAYS ON THE BRO UNIT INCREASES THE IMPORTANCE IN OUR VIEW OF HAVING THESE RESOURCES AVAILABLE DURING THIS, THE PEAK PARTS OF THIS SUMMER IN ORDER TO SUPPORT THE RELIABILITY, UH, IN THAT REGION.
AND SO THAT'S SOMETHING THAT WE REALLY WANT TO, UM, FOCUS ON AND WORK CLOSELY WITH CPS AND LCP TO DO EVERYTHING WE CAN TO POTENTIALLY ACCELERATE THE AVAILABILITY OF THOSE RESOURCES AS EARLY AS POSSIBLE THIS SUMMER, KNOWING THAT, UH, LIKELY WE'RE NOT GONNA HAVE ANY OF THE NIC UNITS, UH, RUNNING DURING THE SUMMER.
SO LET ME PAUSE THERE AND SEE IF THERE'S ANY QUESTIONS ON EITHER THE BRO SCHEDULE OR ON THE, UH, POWER.
UH, WITH THE DELAY ON GETTING THE LIFECYCLE POWER CONTRACT SIGNED, IS HAS, HAS ANY WORK COMMENCED ON GETTING THE FACILITIES READY FOR THAT FOR THE MOBILE GENERATION? YES.
UH, AND MAYBE I CAN ASK, UM, WOODY, PERHAPS TO, OR CHAD TO JUMP IN AND, AND SUPPORT THAT THEY'VE BEEN CLOSE TO THE, UH, TRANSACTIONAL, UH, ACTIVITIES THAT ARE HAPPENING ACTUALLY ON THE GROUND.
[02:10:01]
WORK ON THE SPECIFIC SITES, NO, BUT THERE'S OBVIOUSLY BEEN A LOT OF, UM, COORDINATION BETWEEN LIFECYCLE CPS AND ERCOT ON MODEL DATA INFORMATION THAT'LL BE NECESSARY TO MOVE THROUGH THE INTERCONNECTION PROCESS TO STUDY, UH, THOSE FACILITIES.THE, THE REASON IT'S TAKING SO LONG IS, AS PABLO HIGHLIGHTED ON THAT THIRD BULLET POINT, THERE'S MULTIPLE CONTRACTS INVOLVED HERE RELEASED BY CENTER POINT CPS AND, AND LIFECYCLE, AND THEN THE AGREEMENT BETWEEN ERCOT AND LIFECYCLE THAT DOES IMPACT CPS AND THIS IS A NEW THING.
AND SO IT INVOLVES A, A LOT OF LEGAL, UM, WORK AMONG ALL THOSE PARTIES TO MAKE SURE THAT THAT RISK IS BEING APPROPRIATELY MANAGED.
UH, WE ARE VERY CLOSE, I BELIEVE, TO GETTING THE ERCOT VERSION WITH LCP DONE.
UH, BUT OBVIOUSLY WE DON'T HAVE CONTROL OVER HOW, UH, LCP WORKS WITH CENTERPOINT OR CPS WORKS WITH LCP ON THEIR KIND OF BILATERAL ARRANGEMENT.
WE'RE PUTTING AS MUCH PRESSURE ON THOSE PARTIES TO GET THOSE ISSUES WRAPPED UP AS WELL.
BUT, UM, I'M PRETTY OPTIMISTIC THAT WE SHOULD BE ABLE TO GET ALL THIS RESOLVED, HOPEFULLY BY THE END OF THIS WEEK AS FAR AS THE CONTRACTS TO ALLOW THAT TO MOVE FORWARD WITH ANTICIPATION OF GETTING THOSE ASSETS ONTO THE GRID SOMETIME THIS SUMMER.
ALL OF THE CONTRACTS, NOT JUST THE ER ARCHIVE CONTRACT, THAT THEY'RE ALL KIND OF CONTINGENT ON EVERYTHING BEING FOLDED UP TOGETHER.
ANY OTHER, UH, ANY OTHER QUESTIONS? SIG, IS THERE A DROP DEAD DATE WHEN FOR WHATEVER REASON YOU CAN'T GET EVERYTHING DONE THAT YOU'LL MISS THIS SUMMER WINDOW WHERE YOU'LL PUNT THE WHOLE PROJECT? NOT A DROP DEAD DATE THAT I'M AWARE OF, BUT OBVIOUSLY EVERY DAY THAT GOES BY PUTS MORE RISK ON THOSE 15 MOBILE GENERATORS NOT BEING THERE DURING THAT KIND OF AUGUST PEAK, WHICH IS WHEN WE NEED THEM.
SO, UH, AGAIN, THE EMPHASIS IS TO TRY TO GET ALL THIS WRAPPED UP BY THE END OF THE WEEK SO THAT WE CAN CONTINUE TO MOVE FORWARD, UH, WITH THE BEST POSSIBILITY OF HAVING THOSE ASSETS AVAILABLE FOR THE SUMMER PEAK.
AND JUST TO PUT A MAYBE BROADER POINT ON THAT, THERE ISN'T A SCENARIO WHERE WE'RE GONNA PUNT THIS FOR THE SUMMER.
WE'RE GONNA MOVE FORWARD IRRESPECTIVE TO TRY TO GET THIS PUT IN AS QUICKLY AS POSSIBLE.
LAST COUPLE OF ITEMS THAT I'VE GOT, UH, RELATED TO SOME OF OUR EXTERNAL ACTIVITIES.
SO LAST YEAR WE HAD OUR FIRST ANNUAL INNOVATION SUMMIT THAT WE HOSTED AND BROUGHT IN STAKEHOLDERS AND INDUSTRY PARTICIPANTS AND RESEARCH PARTICIPANTS FROM AROUND THE COUNTRY TO TALK ABOUT WHAT'S GOING ON IN THE INNOVATIONS ON THE GRID.
UH, BROADLY SPEAKING, I THINK IT WAS A VERY SUCCESSFUL, UH, GATHERING OF PROFESSIONALS WHERE REALLY INTERESTING IDEAS SHARED ACROSS THE BOARD ON HOW DIFFERING GRIDS AROUND THE COUNTRY ARE DEALING WITH MANY DIFFERENT OF THE CHA, MANY OF THE SAME CHALLENGES AND SOME OF THE UNIQUE CHALLENGES THAT ARE EXPERIENCED IN DIFFERENT REGIONS IN THE COUNTRY.
WE'RE GOING TO HAVE ANOTHER ANNUAL INNOVATION SUMMIT THIS YEAR ON MAY 6TH.
WE'RE GONNA BE LOOKING, UM, ON AN, AT AN AGENDA THAT'S A LITTLE MORE, I'D SAY MAYBE ERCOT FOCUSED ON SOME OF THE PERSPECTIVES ON SOME OF THE ISSUES THAT WE'RE DEALING WITH HERE IN ERCOT.
WE WILL BE BRINGING IN, UH, EXPERTS AND INDUSTRY PARTICIPANTS FROM AROUND THE COUNTRY, COUNTRY.
AND THE AGENDA IS GONNA INCLUDE TALKING ABOUT KIND OF WHAT ARE SOME OF THE INNOVATION ROADMAPS THAT WE ARE DRIVING AND WHY, UH, TALK ABOUT THE ISSUES AND OPPORTUNITIES AND, AND, UH, CHALLENGES AROUND DATA CENTERS AND THE LARGE LOAD GROWTH THAT WE'RE SEEING.
THE, UH, WE'RE GONNA TALK ABOUT DEMAND RESPONSE.
DEMAND RESPONSE IS, AS YOU'VE HEARD YESTERDAY WITH KEITH'S PRESENTATION, IT'S GONNA CONTINUE TO BE A FOCUS FOR US BOTH AT THE INDUSTRIAL LEVEL, ALL THE WAY DOWN THROUGH THE RESIDENTIAL LEVEL.
SO DEMAND RESPONSE OPPORTUNITIES, HOW WE'RE LEVERAGING PROBABILISTIC MODELING TO IMPROVE OUR, UH, FORECASTING AND, UH, AND MODELING TOOLS ACROSS TRANSMISSION AND GENERATION.
AND, UM, AND JUST IN GENERAL OVERALL, YOU KNOW, INNOVATION KIND OF PANEL WITH OTHER ISOS AND RTOS TOGETHER, UH, COMING, YOU KNOW, COMING TOGETHER TO SHARE IDEAS.
IT REALLY WAS A, I THINK A VERY HELPFUL DAY THAT WE SPENT, UH, LAST YEAR GETTING A CHANCE TO REALLY HEAR, MAKE CONNECTIONS AND NETWORK CONNECTIONS THAT HAVE BEEN LEVERAGED IN THE MONTHS SINCE WORKING ON ISSUES WITH, UH, OUR PEERS AROUND THE COUNTRY.
AND WE CONTINUE TO BUILD ON THOSE RELATIONSHIPS WITH, UH, WITH, UH, PLANNING AND HOSTING THIS SUMMIT COMING UP ON MAY 6TH THERE, UH, IT IS FREE TO EVENT, FREE TO ATTEND, AND THERE'S A LINK HERE, UH, ON THE, UH, ON OUR WEBSITE THAT YOU CAN GO TO IF YOU'RE INTERESTED IN REGISTERING.
SO WE WELCOME, WELCOME ALL THAT ARE INTERESTED IN PARTICIPATING, AND THEN I'M REALLY PLEASED TO ANNOUNCE THAT, UH, WE ARE PUBLISHING, UM, FOR THE FIRST TIME IN QUITE A FEW YEARS, UM, A VERSION OF WHAT YOU WOULD CALL AN ANNUAL REPORT.
[02:15:01]
UH, WE'RE CALLING THIS ADVANCING RELIABILITY FOR 2024, THE STATE OF THE GRID, THIS QR CODE, YOU CAN BE, YOU CAN USE TO ACCESS THE, UH, DIGITAL COPY OF IT.IT'S ALSO LINKED, UM, ON OUR WEBSITE AND YOU CAN GET, UH, ACCESS TO IT THERE.
BUT IT, IT'S REALLY HIGHLIGHTING A LOT OF THE THINGS THAT HAVE OCCURRED SINCE REALLY THE LAST TIME WE PUBLISHED AN ANNUAL REPORT.
AND THERE'S BEEN A LOT OF CHANGES IN A LOT OF PROGRESS MADE ON THE ERCOT GRID THAT WE'VE TALKED A LOT ABOUT IN THESE MEETINGS.
BUT MORE BROADLY SPEAKING, WHAT WE WANTED TO DO IS BRING THAT TOGETHER INTO KIND OF ONE VIEW TO KIND OF HAVE A PERSPECTIVE ON HOW WE'RE THINKING ABOUT CORE ASPECTS OF RELIABILITY AND INNOVATION TECHNOLOGY INVESTMENTS, AND THE IMPORTANT WORK THAT ERCOT HAS DONE IN CONJUNCTION WITH THE LEGISLATURE AND THEIR POLICY CHANGES WITH THE PUBLIC UTILITY COMMISSION AND THE REGULATORY AND POLICIES, SEE SUPPORT FROM THEM AND HOW WE'VE WORKED TOGETHER TO REALLY ADVANCE THE RELIABILITY OF THE GRID OVER THESE LAST FEW YEARS.
UM, I THINK IT'S A WELL DONE REPORT.
I HOPE THAT, UH, YOU GET A CHANCE TO REVIEW IT.
IT'S SOMETHING THAT WE WANT TO START TO DO ON AN ANNUAL BASIS TO REFLECT ON THOSE PROGRESS POINTS WE'VE MADE IN THE, IN THE PRIOR YEAR, AS WELL AS WHERE SOME OF THE CHALLENGES AND THE OPPORTUNITIES ARE AS WE LOOK DOWN THE ROAD.
AND SO WE LOOK FORWARD TO YOUR FEEDBACK ON THIS, UH, NEW PUBLICATION AND, UH, AND HOPE THAT IT'S HELPFUL IN UNDERSTANDING SOME OF THE PROGRESS AND SOME OF THE CHALLENGES THAT WE ARE, UH, FACING IN THE YEARS AHEAD.
AND THEN, LIKE I ALWAYS LIKE TO DO WITH, UH, MY DISCUSSIONS, UH, HERE AT THE, AT THE BOARD IS I LIKE TO OFFER SOME THANKS.
AND, UH, THIS TIME I'D LIKE TO OFFER THANKS TO THE TEAM THAT WORKED ON NORE 2 45, NORE 2 45, UH, WAS THE, UH, NODAL OPERATING GUIDE REVISION THAT DEALT WITH THE, UH, RIDE THROUGH STANDARDS FOR INVERTER BASED RESOURCES.
AND IT WAS ONE OF THE MOST COMMENTED, UH, OPERATING GUIDE CHANGES THAT WE'VE PROBABLY EVER DONE, UH, IN ERCOT.
IT HAD A LOT, A LOT OF FOCUS AND ATTENTION FROM THE MARKET AND THE INDUSTRY AT LARGE.
IT WAS WORKED THROUGH FOR A PERIOD OF WELL OVER A YEAR AND A HALF, STARTING EARLY IN 2023 THROUGH ITS, UH, PASSAGE LATE IN 2024.
IT, UM, IT WAS A EFFORT THAT I THINK CHARACTERIZED COLLABORATION THE WAY IT'S SUPPOSED TO BE DONE IN THE MARKET.
IT WASN'T EASY, IT WASN'T ALWAYS SMOOTH.
THERE WAS CONTENTION THERE ENDED UP WITH COMPROMISE.
I THINK THERE WAS SOMETHING IN THERE FOR EVERYBODY TO LIKE, AND THERE WAS SOMETHING IN THERE FOR EVERYBODY TO HATE.
AND IT REALLY CHARACTERIZED, I THINK, SOME OF THE MORE COMPLEX ISSUES THAT WE DEAL WITH AS A, AS A GRID.
AND I THINK IT'S REPRESENTATIVE OF SOME OF THE THINGS WE'LL DEAL WITH IN THE FUTURE, BECAUSE THE CHANGES THAT ARE GONNA BE COMING OUR WAY ARE GOING TO BE HARDER.
THE, IT'S NOT GONNA GET ANY EASIER TO MANAGE THE COMPLEXITIES OF THIS GRID AS WE GO FORWARD AND THE WAY WE WORK THROUGH THESE OPERATING GUIDES OR PLANNING PROTOCOLS, UM, ARE REALLY, REALLY CONSEQUENTIAL.
I, I FEEL BLESSED TO BE WORKING IN AN ISO WHERE THAT PROCESS IS MIGHT MAYBE ONE OF THE MOST TRANSPARENT AND OFFERS THE MOST OPPORTUNITY FOR REAL IMPACT BY THE MARKET AND THE STAKEHOLDERS THAT ARE INFLUENCED MOST BY THE DECISIONS.
AND THAT'S A REALLY UNIQUE THING THAT WE HAVE HERE.
AND SO, WHILE THIS WAS ONE OF THE MORE CHALLENGING ONES THAT WE WORKED THROUGH, I THINK IT REPRESENTED, YOU KNOW, SOME OF THE BEST WORK THAT, UH, THAT WE CAN DO TOGETHER AS A MARKET.
AND SO I JUST WANNA OFFER MY THANKS JUST TO THE INTERNAL TEAM.
AND I, I ALSO WANNA THANK THE MANY, MANY EXTERNAL PEOPLE THAT WORKED ON THIS AND, AND GOT US THROUGH THIS PROCESS.
THIS TEAM HERE ON THE SCREEN, UH, SPENT COUNTLESS HOURS, DAYS AND WEEKS FOCUSED ON TRYING TO ENSURE WE COULD GET TO A COMPROMISE AND TO AN ANSWER THAT IN THE END WOULD ADVANCE RELIABILITY.
AND I THINK THEY WERE SUCCESSFUL IN DOING THAT.
SO WITH THAT, I WILL, UH, CONCLUDE MY COMMENTS UNLESS THERE ARE ANY QUESTIONS FROM, UH, ANYBODY.
ANY QUESTIONS FOR PABLO? OKAY, THANK YOU.
WE WILL MOVE ON TO THE NEXT GEN ITEM, WHICH I KNOW SEVERAL PEOPLE ARE LOOKING FORWARD TO.
[8.1 Long-Term Load Forecast Update (2025–2031) and Methodology Changes]
8.1, THE LONG-TERM LOAD FORECAST UPDATE FOR 2025 THROUGH 2031, ALONG WITH METHODOLOGY CHANGES THAT WERE USED TO PREPARE THAT REPORT.UH, IT'S GONNA BE PRESENTED BY PABLO WOODY RICKSON AND RICHARD SHIELD.
SO GENTLEMAN, I'LL START WITH WOODY.
SO THIS ITEM, UH, LOOKS AT, UH, CHANGES TO THE LONG-TERM LOAD FORECAST USED BY USED BY ARCOT.
SOME OF THE KEY TAKEAWAYS ARE A DISCUSSION OF THE PLANNING GUIDE AND PROTOCOL REQUIREMENTS FOR USE OF THE FORECAST.
WE'LL LOOK AT THE TSP PROVIDED FORECAST AND THE TREATMENT OF DATA CENTER LOAD GROWTH.
WE'LL LOOK AT A METHODOLOGY BEHIND A NEW ERCOT ADJUSTED LONG-TERM LOAD FORECAST.
AND FINALLY, THE, UH, WE'LL LOOK AT THE ENERGY FORECAST USED FOR THE ERCOT SYSTEM ADMINISTRATION FEE.
[02:20:01]
NO VOTING ACTION REQUIRED ON THIS FROM THE BOARD.SO SOME OF THE IMPLICATIONS OF HOUSE BILL 50 66, WHICH WAS PASSED IN 2023 FOR TRANSMISSION PLANNING.
SO HOUSE BILL 50 66 CLARIFIED THAT TSP PROVIDED LOAD FORECAST PROVIDED THAT THE TSP PROVIDED LOAD FORECAST, THE PUC MUST CONSIDER IN EVALUATING THE NEED FOR A TRANSMISSION FAC FACILITY.
UM, THE BILL DID NOT DIRECTLY APPLY TO ERCOT.
HOWEVER, NODAL PROTOCOL CHANGES AND PLANNING GUIDE CHANGES REVISED OUR, OUR PROTOCOLS AND, AND, UH, AND PLANNING GUIDES REGARDING THE ERCOT LOAD FORECAST TO ALLOW TSPS TO INCLUDE LOAD THAT IS NOT SUPPORTED BY AN INTERCONNECTION AGREEMENT WHILE STILL HONORING THE QUANTIFIABLE EVIDENCE STANDARD IN THE PUC SUBSTANTIVE RULE.
SO THOSE PIG THAT PIGGER 1180 OR NPR 1180 AND PICKER 1 0 7 PROVIDED THAT LOAD FORECAST SUPPORTED BY ONE OF THE FOLLOWING WOULD BE SUFFICIENT.
SO THOSE THREE CATEGORIES THAT YOU SEE THERE.
SO THE FIRST CATEGORY WAS AN EXECUTED INTERCONNECTION OR OTHER AGREEMENT, A THIRD PARTY LOAD FORECAST OR A LETTER FROM A TSP OFFICER ATTESTING SUCH TO SUCH A LOAD.
THOSE THAT NPRR AND PR WERE APPROVED IN JANUARY OF THIS YEAR.
SO KEEP IN MIND THAT THIS IS HOW HB 50 66 AND THOSE GUIDE CHANGES APPLY TO TRANSMISSION PLANNING.
SO WE ALSO HAVE RESOURCE ADEQUACY.
SO THE OTHER PART OF THE STORY IS WHAT IMPACT DOES IT HAVE ON, ON, ON RESOURCE ADEQUACY REPORTS? SO ERCOT MUST PROVIDE AN ANNUAL REPORT QUANTIFYING THE CAPABILITY OF EXISTING AND PLANNED ELECTRIC GENERATION RESOURCES AND LOAD RESOURCES EVERY YEAR.
AND SO WE DO THAT WITH, WITH THE CDR.
SO ERCOT HAS THE FLEXIBILITY TO DETERMINE THE APPROPRIATE VALUES TO INCLUDE IN ITS LOAD FORECAST THAT USES IN THAT.
SO THE PREVIOUS CDR DECEMBER, 2024, WE ACTUALLY USED THE, THE TSP LOAD FORECAST AND IT RESULTED IN NEGATIVE PLANNING RESERVE MARGINS AS EARLY AS 2026.
SO WE'RE GONNA PIVOT AWAY FROM USING THAT FORECAST IN THIS YEAR'S MAY CDR, AND WE'LL MOVE TO THE ERCOT ADJUSTED LOAD FORECAST THAT WE'LL TALK ABOUT IN SUBSEQUENT SLIDES.
SO THIS GRAPHIC ILLUSTRATES THE PROCESS USED TO, TO ARRIVE AT THE AGGREGATE TSP PROVIDED LOAD FORECAST.
SO YOU START WITH THIS, UH, THE ERCOT BASE ECONOMETRIC FORECAST.
WE DO SOME THINGS WITH ELECTRIC VEHICLES PHOTOVOLTAICS ON ROOFTOPS, NOT NOT YOUR, UH, UTILITY SCALE SOLAR, BUT THE, THE ROOFTOP SOLAR.
UH, AND THEN WE ADD IN TRANS TSP INFORMATION.
AND THOSE ARE THOSE THREE CATEGORIES WE TALKED ABOUT IN THE PREVIOUS SLIDE.
EXECUTED CONTRACTS, THIRD PARTY FORECAST, AND TSP OFFICER ATTESTED LOADS.
SO THE MOST IMPACTFUL DIFFERENCE THAT HB 50 66 ADDED WAS THE TSP OFFICER ATTESTED LOADS.
UM, THAT'S WHERE YOU SEE MOST OF THE BIG DIFFERENCE THAT WE WILL, WE WILL SHOW THAT IN IN THE NEXT SLIDE.
ANOTHER INTERESTING POINT HERE IS THAT ERCOT IS BEGINNING TO HAVE ACTUAL LOAD TO VERIFY PAST TSP FORECAST FUTURE LOAD.
SO FOR EXAMPLE, A A 2023 FORECAST OF A 2024 LOAD, WE CAN NOW GO LOOK AT THAT LOAD AND SEE HOW IT MATCHES THE FORECAST.
SO WE'RE BEGINNING TO BE ABLE TO INCORPORATE SOME OF THAT INFORMATION IN THE ERCOT ADJUSTED LOAD FORECAST.
WE'LL DISCUSS HOW ERCOT WILL USE THOSE PERFORMANCE MEASURES IN IN LATER SLIDES.
SO THIS GRAPH IS A COMPARISON OF THE 2024 TSP PROVIDED LOAD FORECAST AND THE 2025 TSP PROVIDED LOAD FORECAST.
THE GRAY LINE AT THE TOP THAT YOU SEE IS THE 2025 AGGREGATE TSP LOAD FORECAST, AND THE BLUE LINE IS THE 2024 FORECAST.
YOU CAN SEE THERE'S A SUBSTANTIAL INCREASE 68 GIGAWATTS IN, UH, 2031.
IF YOU LOOK AT THE BAR CHARTS BELOW THAT, YOU CAN ALSO SEE THAT MOST OF THE LOAD GROWTH FROM LAST YEAR IS FOUND IN THE NEW OFFICER LETTER LOADS.
THAT'S THAT LAST, UH, TEAL COLORED, UH, BAR.
YOU SEE THOSE ARE THE OFFICER LETTER LOADS.
[02:25:01]
EVEN FURTHER IN THIS GRAPH, YOU SEE AN INCREASE OF 55 GIGAWATTS OF OFFICER LETTER LOADS JUST IN DATA CENTERS OVER LAST YEAR.THAT'S THAT MIDDLE SET OF BAR CHARTS.
UM, THE BOTTOM CHART, YOU ALSO SEE AN INCREASE IN THE NUMBER OF TSPS PROVIDING NEW LOAD IN ONE OF THOSE THREE CATEGORIES WE TALKED ABOUT ON SLIDE FOUR.
SO WE HAD THOSE THREE CATEGORIES.
LAST YEAR WE HAD SEVEN TSPS PROVIDING ADDITIONAL LOAD.
THE TOTAL OFFICER LETTER LOADS INCREASED FROM 2024 TO TWENTY TWENTY FIVE, A HUNDRED EIGHTY NINE SITES WERE, WERE ADDED ADDITIONAL OVER THE, OVER THE LAST YEAR.
SO THIS IS THE, UH, THE, THE 2025 AGGREGATE TSP PROVIDED LOAD FORECAST BROKEN DOWN BY TYPES AND BY YEARS.
THE BOTTOM BAR THAT YOU SEE THERE, THE CYAN COLOR IS, IS THE BASE LOAD THAT YOU SEE.
AND YOU SEE THE LOAD GROWTH, THE JUST THE LOAD GROWTH FROM THE BASE FROM 86 UP TO 94.
THE GRAY BAR, THE GRAY SECTION THERE REPRESENTS THE, UH, THE AGGREGATE TSP FORECASTED DATA CENTER GROWTH ALONE.
SO YOU SEE THAT THAT'S A PRETTY SUBSTANTIAL AMOUNT.
UM, IN 2030, THE UH, FORECAST, THE TSP PART OF THE FORECAST FOR DATA CENTERS WAS 29,000 2020.
UH, THAT GREW TO ALMOST 78,000 IN 2025.
SO THAT'S WHERE MOST OF THAT LOAD GROWTH IS COMING.
SO THIS, THIS GRAPHIC ILLUSTRATES THE PROCESS THAT, UH, ERCOT IS GOING TO USE TO PRODUCE A NEW ERCOT ADJUSTED LOAD FORECAST.
IT'S BASED ON THREE DIFFERENT ADJUSTMENTS.
THE FIRST IS A DELAY IN SERVICE, A DELAY IN THE INSERVICE DATE OF 180 DAYS FOR ALL NEW LARGE LOADS.
THE SECOND ADJUSTMENT IS A REDUCTION OF ALL NEW DATA CENTER DEMAND TO 49.8% OF THE REQUESTED FORECASTED AMOUNT.
AND THE FINAL ONE IS A REDUCE OF OFFICER LETTER LOADS TO 54, 55 0.4%.
SO THE 49.8 AND 55.4% REPRESENT A MEASURED PERCENTAGE OF POWER BEING USED VERSUS WHAT WAS FORECASTED.
SO THOSE NUMBERS WERE DERIVED FROM LOADS THAT HAD BEEN FORECASTED THAT WE CAN NOW SEE AND MEASURE.
SO THOSE, THOSE NUMBERS AS WE MOVE FORWARD, CAN CHANGE AS FORECASTS BECOME MORE ACCURATE.
THOSE, THOSE NUMBERS WILL ALSO CHANGE.
SO I THINK THAT'S AN, AN IMPORTANT PART TO KEEP IN MIND HERE, IS THAT THIS IS A, UH, A FORECAST BASED ON THE MOST RECENT DATA WE HAVE, AND WE'LL CONTINUE TO UPDATE THAT AS WE MOVE FORWARD.
SO THIS CHART COMPARES THREE DIFFERENT FORECAST METHODOLOGIES.
SO STARTING FROM THE BOTTOM, YOU SEE THE GREEN LINE THAT IS THE ERCOT FORECAST THAT WE WOULD'VE USED BEFORE HB 50 66 AND FIGURE 1 0 7 AND NPR 1180.
SO THAT'S THE, THAT'S THE PRE HB 50 66 FORECAST.
THE GRAY LINE IS THE NEW ERCOT ADJUSTED LOAD FORECAST.
AND THEN THE LINE ON TOP THAT YOU SEE IS THE TSP PROVIDED FORECAST FOR 2025 F.
SO, UH, ONE THING I'D POINT OUT IS THE GRAY LINE IS IT'S STILL A VERY AGGRESSIVE LOAD FORECAST.
A LOT OF NEW LOAD GROWTH THERE.
UM, IT'S 26 GIGAWATTS OVER WHAT WE WOULD HAVE PREDICTED BEFORE HB 50 66.
THE OTHER THING I'D POINT OUT IS THAT, UH, THAT LITTLE BAR DUMBBELL BAR THING THAT YOU SEE THERE ON THE GRAY LINE, THAT IS A, UH, 130 GIGAWATT TO 148 GIGAWATT RANGE THAT WAS USED IN THE 2024 REGIONAL TRANSMISSION PLAN THAT WE PUT OUT LAST YEAR.
SO THIS YEAR'S ADJUSTED LOAD FORECAST FITS VERY WELL IN THE RANGE OF VALUES WE USED IN LAST YEAR'S RTP FOR 2030.
SO THERE SHOULD BE NO INCONSISTENCIES THERE.
THIS IS VERY, VERY MUCH IN LINE WITH WHAT WE STUDY IN THE RTP.
SO THIS CHART LOOKS AT THE ANNUAL COMPARISON OF THE NEW ERCOT ADJUSTED LOAD FORECAST VERSUS THE TSP FORECAST.
YOU SEE THE TSP FORECAST BEHIND IN THE GRAY.
THAT'S THE SAME VALUES THAT YOU SAW ON SLIDE EIGHT.
THE VALUES IN THE FOREGROUND ARE THE, UH, ERCOT ADJUSTED FORECAST.
AND YOU'LL SEE THAT THE FUTURE DATA CENTER GROWTH REMAINS THE SINGLE LARGEST AREA OF ADJUSTMENT.
THAT'S WHERE MOST OF THE REDUCTION OCCURS.
[02:30:01]
GIGAWATT FORECAST IN 2030 FITS INTO THAT LOAD RANGE THAT WE USED IN THE RTP.AND YOU SEE THAT IN THE 2030 BAR THERE.
THAT RIGHT HERE, WHERE THIS REPRESENTS THE RANGE THAT WE USED IN THE RTP AND THE NEW FORECAST FITS THAT RANGE VERY WELL.
WE, WE PUT THIS SLIDE IN BECAUSE, UM, ALL THIS NEW LOAD GROWTH IS GONNA REQUIRE MORE GENERATION.
UH, THIS SLIDE PROVIDES SOME CONTEXT FOR HOW MUCH GENERATION HAS BEEN ADDED IN PREVIOUS YEARS.
SO FOR EXAMPLE, UM, DURING THE EARLY TWO THOUSANDS, MORE THAN 27,000 MEGAWATTS OF NEW GAS GENERATION WAS ADDED OVER A FIVE YEAR PERIOD.
MORE RECENTLY, IN THE LAST THREE YEARS, WE'VE SEEN 25,000 MEGAWATTS OF WIND AND SOLAR ADDED.
AND ABOUT THAT 9,000 MEGAWATT HOURS OF, OF, UH, ENERGY STORAGE WERE ALSO ADDED.
SO THESE PERIODS OF RAPID GROWTH REPRESENT SOME CONTEXT FOR HOW MUCH NEW GENERATION YOU COULD EXPECT TO BE BUILT IN, IN, IN THE ER, ARCHIVET GRID.
I MEAN, THERE ARE LIMITS TO WHAT, HOW MUCH GENERATION CAN BE ADDED, AND THOSE LIMITS SHOULD BE FACTORED IN WHEN WE TALK ABOUT WHAT A LOAD FORECAST LOOKS LIKE.
THE OTHER THING I'D POINT OUT ABOUT THIS LINE OR THIS GRAPH, IS THE RED LINE THAT YOU SEE.
AND THAT IS A WINNER ELCC EFFECTIVE LOAD CARRYING CAPACITY OF THAT GENERATION.
SO EVEN THOUGH YOU SEE A LOT OF NEW GENERATION BEING BUILT RECENTLY, THE EFFECTIVE LOAD CARRYING CAPACITY IS, IS MUCH LESS THAN WHAT IT WAS IN THE EARLY TWO THOUSANDS FOR THAT NEW GENERATION BECAUSE IT'S BECAUSE OF ITS ELCC MEASUREMENTS.
SO WHAT DO YOU PUT THAT IN CONTEXT? SO EVEN THOUGH IN 2024 WE ADDED LOOKS LIKE ROUGHLY JUST UNDER 14 GIGAWATTS OF TOTAL GENERATION RESOURCES, ABOUT THREE GIGAWATTS OF THAT IS ELCC.
THAT'S REALLY USABLE GENERATION.
THAT YOU CAN COUNT ON IN THE WINTER.
A LOT OF THAT SOLAR YOU CAN'T COUNT ON FOR A, A WINTER PEAK BECAUSE THE PEAKS OCCUR BEFORE AND AFTER THE SUN COMES UP.
UM, AND BATTERIES HAVE A LIMITED DURATION.
SO ALL THOSE THINGS FACTOR INTO THAT ELCC NUMBER.
SO THE USE OF THE ERCOT ADJUSTED LOAD FORECAST, UM, THE FORECAST GOES MANY PLACES IN THE ERCOT SYSTEM IN AN ERCOT ANALYSIS.
UH, THE FIRST IS THE CAPACITY AND DEMAND RESERVES REPORT.
SO BEGINNING IN MAY OF THIS YEAR, UH, WE'LL USE THE ERCOT ADJUSTED LOAD FORECAST FOR DEVELOPING THE PLANNING RESERVE MARGIN.
UH, WE MAY HAVE ADDITIONAL SCENARIOS THAT INCLUDE THE TSP FORECASTED LOAD AS WELL.
THE REGIONAL TRANSMISSION PLAN IS ANOTHER PLACE, UH, ERCOT WILL UTILIZE THE ERCOT ADJUSTED LOAD FORECAST.
UH, A GOOD CAUSE EXCEPTION MAY BE REQUIRED FROM THE PUC, UH, IN ORDER TO USE THAT FORECAST IN THAT PARTICULAR PLAN BECAUSE OF THE, UH, NPRR AND THE FIGURES THAT WERE PASSED EARLIER, THE REGIONAL PLANNING GROUP PROJECTS THAT ARE SUBMITTED TO ERCOT.
SO IF THE RTP IS KIND OF THE ROADMAP, THE THE, UH, RPG PROJECTS COME IN TO FILL OUT AND FLESH OUT THAT, THAT ROADMAP.
SO ERCOT ANALYSIS WILL BEGIN WITH THE ADJUSTED LOAD FORECAST, BUT WE'LL ALSO CONSIDER TSP PROVIDED LOAD FORECAST IN THE RPG REVIEW PROCESS.
AND FINALLY, UH, RESOURCE OUTAGE SCHEDULING.
PABLO TALKED ABOUT THE, UH, THE SEASONAL AMOUNT OF, OF RESOURCE OUTAGES THAT ARE GOING ON RIGHT NOW.
UM, THAT'S THE AMOUNT THAT YOU ALLOW IS DRIVEN BY THE, UH, M-D-R-P-O-C LEVEL MAXIMUM DAILY RESOURCE PLANNED OUTAGE, SOMETHING C UM, I SHOULD HAVE WRITTEN THAT DOWN.
BUT ANYWAY, WE WILL UPDATE THAT M-D-R-P-O-C TO THE AR ARCHIVE ADJUSTED LOAD FORECAST, WHICH WILL PROVIDE AS A PART OF THAT PROCESS.
AND, UH, IT'LL PROVIDE SOME MORE BANDWIDTH FOR RESOURCE OUTAGES.
AND FINALLY, UM, EVERYTHING WE'VE BEEN TALKING ABOUT SO FAR THROUGH THESE SLIDES ARE DEMAND FORECAST.
UM, DEMAND IS THE AMOUNT OF POWER BEING CONSUMED AT ANY POINT IN TIME.
ENERGY IS THE AMOUNT OF POWER CONSUMED OVER A PERIOD OF TIME.
SO THE ERCOT ADJUSTED LOAD FORECAST WE DISCUSSED IS A DEMAND FORECAST POINT IN TIME FORECAST.
UH, WE USE THAT IN TRANSMISSION PLANNING, RESOURCE ADEQUACY.
UH, WE USE IT TO SCALE ENERGY FORECAST WE USE IN TRANSMISSION PLANNING.
UM, THE TWO CHARTS THERE SHOW THAT, UH, YOU CAN HAVE TWO PERIODS OF TIME THAT HAVE THE SAME DEMAND, THAT HAVE DIFFERENT AMOUNT OF ENERGY.
THE AREA UNDER THE CURVE IS, IS DIFFERENT, BUT THE DEMAND IS THE SAME.
[02:35:01]
KEY TAKEAWAY HERE IS THAT THE ENERGY FORECAST USED FOR THE ERCOT SYSTEM ADMINISTRATION FEE IS BASED ON THE SAME INFORMATION AS THE, UH, ERCOT LOAD FORECAST, BUT DIFFERS IN BEING A FORECAST OF ENERGY.AND RICHARD'S GONNA TALK ABOUT THE, UH, TALK ABOUT THE USE OF THAT ENERGY FORECAST.
BUT BEFORE, BEFORE I GO, IS THERE ANY QUESTIONS ABOUT ANY OF THESE SLIDES THAT WE'VE COVERED? YEAH, WOODY, JUST REAL QUICK, WILL YOU GO BACK TO SLIDE NINE NINE REAL QUICK? SO LOOKING AT THOSE KIND OF DISCOUNT RATES THAT YOU APPLIED, UM, I ASSUME THOSE ARE AVERAGES ERCOT WIDE.
WAS ANY CONSIDERATION GIVEN TO APPLYING DIFFERENT METHODOLOGIES FOR DIFFERENT TSP SERVICE TERRITORIES BASED ON WHAT YOU'RE SEEING SPECIFIC TO THOSE TERRITORIES AS IT PERTAINS TO THOSE PERCENTAGES? YEAH, SO THOSE, THOSE PERCENTAGES WERE TO HELP US ARRIVE AT A, A AGGREGATE NUMBER FOR THE FORECAST, HOW WE APPLY THOSE PERCENTAGES IN A CASE, BECAUSE WHEN YOU TAKE THAT, THAT OVERALL PERCENTAGE, YOU REDUCE IT TO, YOU KNOW, 49.8%, YOU STILL HAVE TO PUT IT IN A CASE IN POSITIONS IN A CASE.
AND SO THAT'S SOMETHING WE'RE GONNA HAVE TO START TALKING WITH THE TSPS ABOUT HOW TO APPLY THAT.
SO THAT COULD BE REGIONAL, THAT COULD BE, UH, BY TSP.
THERE ARE A LOT OF DIFFERENT WAYS IT COULD BE CONSISTENT ACROSS ALL, BUT THAT'S TO BE DETERMINED ON HOW IT WILL BE APPLIED.
ANY, ANY OTHER QUESTIONS? COULD YOU JUST REMIND THE AUDIENCE WHAT THE DEFINITION OF A LARGE LOAD, 75 MEGAWATTS AND LARGER? SO, UH, SO THIS IS A PROCESS QUESTION.
SO UNDERSTANDING WHAT YOU DID ON SLIDE 10 WAS, UH, LOOKING AT ADJUSTING THE NUMBERS THAT COMING IN ON SLIDE SEVEN.
SO IF YOU GO TO SLIDE SEVEN, YOU DID MAKE ADJUSTMENTS TO THESE PROJECTIONS.
SO WE KNOW THAT DATA'S COMING IN ON THE HYDROGEN CENTERS, UH, IN TERMS OF FUNDING GOING DOWN.
UM, WE KNOW THAT THERE MAY BE SUPPLY CHAIN ISSUES THAT'LL AFFECT, UH, THE GROWTH OF THE, OF THE DATA CENTERS.
SO WHAT'S THE PROCESS FOR UPDATING THIS AS WE GET NEW INFORMATION? RIGHT, SO THE, UH, THE AIRCO FORECAST ADJUSTED FORECAST, AS WE GET HISTORICAL INFORMATION ABOUT HYDROGEN LOADS, WE CAN APPLY THAT SAME KIND OF FACTOR TO HYDROGEN LOADS.
WE DON'T HAVE THOSE TO LOOK AT YET.
WE HAVE DATA CENTER LOADS THAT WE CAN LOOK AT, BUT WE DON'T HAVE THE HYDROGEN LOADS.
SO AS WE, AS THAT BECOMES HISTORIC INFORMATION, WE CAN USE THAT TO, TO ADJUST.
SO DO YOU HAVE SOME ESTIMATE, LIKE, I KNOW THIS IS A NEW, HOW, LIKE, FREQUENCY WILL YOU DO IT ONCE A QUARTER, ONCE EVERY SIX MONTHS? ONCE EVERY, WHAT'S YOUR SENSE OF HOW OFTEN YOU'LL BE FEEDING DATA INTO THIS AND THEN USING THAT NEW INFORMATION? RIGHT NOW, THIS IS AN ANNUAL PROCESS.
UH, IS THERE A, IN YOUR MIND, MIGHT THERE BE A CHANGE THAT'S SIGNIFICANT ENOUGH TO CAUSE YOU TO DO IT SOONER THAN ANNUAL? WE COULD.
AS, AS WE GET MORE INFORMATION IN, WE CERTAINLY CAN MAKE THIS TWICE A YEAR, QUARTERLY.
I MEAN, THERE ARE WAYS OF, OF CHANGING THIS AND UPDATING IT.
THE PROBLEM IS THAT MOST OF THE TRANSMISSION PLANNING PROCESS IS AN ANNUAL PROCESS.
SO YOU START WITH A LOAD IN THE, IN THE TRANSMISSION PLANNING PROCESS.
AND, UM, IT'S DIFFICULT TO, TO MAKE A MID-YEAR ADJUSTMENT.
BUT YOU'RE OPEN TO, IF THERE IS A SIGNIFICANT DEFINING EVENT THAT THAT'S RIGHT, YOU CAN, THAT'S YES.
AND, AND WOODY, IT MAY BE HELPFUL TO ADD, LIKE IN THE TRANSMISSION PLANNING PROCESS, THE RTP IS A ROADMAP THAT DOESN'T JUST APPROVE PROJECTS.
THEY STILL HAVE TO COME BACK THROUGH, GO THROUGH THE RPG REVIEW, GET COMMISSION APPROVAL BEFORE IT'S APPROVED.
SO THERE'S MULTIPLE PLACES WHERE IF THERE'S ADJUSTMENTS AND THEY CAN NO LONGER JUSTIFY THAT LOAD, THERE'S PROTECTIONS IN PLACE BEFORE TRANSMISSION IS BUILT.
ANY, ANY OTHER QUESTIONS ON THESE FIRST SLIDES? YEAH, I HAVE A QUESTION.
UH, UH, RECOGNIZING THAT ERCOT AND THE TSPS ARE ALL ADJUSTING TO THE HB 50 66, UH, REGIME, UH, ARE YOU, CAN YOU COMMENT ON THE QUALITY OF INFORMATION WE'RE GETTING BECAUSE IT'S, THAT'S CRITICAL TO ANYTHING WE DO REGARDLESS HOW WE SLICE AND DICE THE MATERIAL WE RECEIVE? YEAH, SO I, I THINK PSPS AND ERCOT BOTH ARE, UM, ARE WORKING THROUGH SOME VERY NEW INFORMATION.
DATA CENTERS ARE NOT SOMETHING THAT WE WERE FORECASTING OR LOOKING AT FOUR YEARS AGO, FIVE YEARS AGO.
UM, SO THIS IS, THIS IS NEW INFORMATION.
HOW FAST IT BUILDS OUT IS SOMETHING WE'RE ALL GONNA LEARN TOGETHER.
AND SO AS FAR AS THE QUALITY OF INFORMATION,
[02:40:01]
I THINK IT NEEDS TO BE ADJUSTED.THAT'S WHY WE PUT OUT THIS ADJUSTED FORECAST.
THE ADJUSTMENTS, THOUGH, ARE BASED ON JUST THE LEADING EDGE OF HISTORIC NUMBERS.
AS WE GET MORE OF THOSE NUMBERS, I THINK WE WILL WILL MERGE.
AND WHAT I HOPE HAPPENS OVER TIME IS THE ERCOT ADJUSTED LOAD FORECAST AND THE OVERALL TSP AGGREGATE FORECAST END UP MERGING INTO THE SAME FORECAST EVENTUALLY.
AND SOME, AND SOMETHING TO ADD TO THAT ALSO IS THAT, YOU KNOW, THERE IS LEGISLATION BEING CONSIDERED RIGHT NOW.
SENATE BILL SIX IS ONE OF THOSE THAT HAS PROVISIONS IN IT TO DEAL WITH THE INPUTS.
SO TO STANDARDIZE THE REQUIREMENTS AROUND WHAT GETS INCLUDED IN A TRANSMISSION COMPANY'S SUBMITTED FORECAST, THAT WILL DEFINITELY BE INFLUENTIAL TO THIS PROCESS AS WELL.
AND WE WOULD LOOK TO ADAPT OUR METHODOLOGIES TO WHATEVER THE LEGISLATIVE REQUIREMENTS ARE.
BUT THAT'S ANOTHER QUALITY KIND OF, UH, INPUT THAT MIGHT, UM, MIGHT AFFECT THIS.
MY COMMENT REALLY WENT TO THE INFORMATION PROVIDED FROM THE TSPS.
UH, AND I KNOW THEY'RE LEARNING, WE'RE LEARNING, BUT, YOU KNOW, HAVING SOME VIGOR TO THAT PROCESS, IT'S CRITICAL BECAUSE WE GET THE INFORMATION FROM THEM AND WE NEED TO RELY ON IT TO SOME EXTENT IN MAKING THESE DECISIONS, UH, TO JUST COMMENT.
ANYTHING ELSE? ALRIGHT, I'LL TURN THIS OVER TO RICHARD THEN.
UH, RICHARD SHIELD, CFO, CHIEF RISK OFFICER FOR ERON.
I WANNA WALK THROUGH THE IMPACTS OF THE ADJUSTED LOAD FORECAST AND HOW WE'RE THINKING ABOUT THAT FOR THE SYSTEM ADMINISTRATION FEE RATE SETTING PURPOSES.
SO THE ADJUSTED LOAD FORECAST, WHICH WOODY JUST DISCUSSED, I, WE ARE PLANNING TO MODIFY FOR PURPOSES OF SETTING THE SYSTEM ADMINISTRATION FEE RATE AND FOR FORECASTING PURPOSES FOR FINANCIALS AT ERCOT.
SO THIS, THIS ADJUSTMENT THAT WE'RE DISCUSSING ON THE NEXT TWO SLIDES, UH, ONLY AFFECTS THOSE TWO PILLARS.
IT AFFECTS THE FEE RATE AND IT WILL AFFECT THE FINANCIAL FORECASTING AT ERCOT.
AND SO WHAT, WHAT WE DID WAS, WHEN WE'RE THINKING ABOUT THE SYSTEM ADMINISTRATION FEE RATE AND ABOUT OUR CASH FLOW AND FINANCING NEEDS AT ERCOT AND FUNDING OPERATIONS, WE MADE, UH, TWO, TWO SIGNIFICANT ADJUSTMENTS TO THE ADJUSTED LOAD FORECAST.
WHAT HE JUST DISCUSSED, THE PRIMARY IS THE DELAY OF CONTRACT AND OFFICER LETTER LOADS.
CURRENTLY THAT'S SET AT THE 180 DELAY DAY DELAY.
AND THAT WAS COVERED IN THE EARLIER SLIDE.
AND IF YOU'LL RECALL, THE EXPERIENCE THAT WE'VE HAD WITH THAT SO FAR IS AROUND 220 DAYS.
SO SLIGHTLY MORE AGGRESSIVE FORECAST FOR THE ADJUSTED LOAD FORECAST.
WE'VE ADJUSTED THAT TO A 365 DAY DELAY.
UH, CONSIDERING THE NUMBER OF NEW OFFICER LETTER LOADS THAT HAVE BEEN GENERATED BETWEEN THE 2024 FORECAST AND THE 2025 FORECAST FOR THE DATA CENTERS, WE USE THE SAME LOAD DISCOUNT.
IT'S AT 48 49 0.8%, BOTH FOR LOAD AND FOR ENERGY.
UM, OF COURSE, SYSTEM ADMINISTRATION FEE RATE IS SET ON ENERGY.
SO I JUST WANNA CALL THAT OUT.
WE DISCOUNTED, WE TOOK THE 55.4% AND WE REPLACED THAT WITH A 20% DISCOUNT.
WHEN WE LOOK AT THE DELTA BETWEEN, UH, 2024 AND 2025, THAT STILL ANTICIPATES A 60% INCREASE IN THE NUMBER OF OFFICER LETTER LOADS THAT TRANSLATE FROM, UH, AN OFFICER LETTER TO ACTUAL ENERGIZATION.
SO IT'S STILL A SIGNIFICANT INCREASE BETWEEN THE TWO YEARS.
UM, AND THEN I HAVE A GRAPH JUST TO SHOW WHAT THIS LOOKS LIKE IN PRACTICE AND WHAT OUR EXPERIENCE LOOKS LIKE PREVIOUSLY.
SO WE HAVE EACH OF THE FORECAST FROM 2019, THE LOAD FORECAST TRANSLATED TO ENERGY.
SO OUR ENERGY FORECAST FOR 20 19, 20 21 AND 2023 ARE ALL IN A VERY TIGHT RANGE, UH, CARRIED ACROSS ALL THE WAY TO 2031.
AND THEN IN 2025, THE ADDITION OF THE GRAY BAR, WHICH IS THE 2025 SYSTEM ADMINISTRATION FEE FORECAST, AS WELL AS THE TRANSLATED ADJUSTED LOAD FORECAST TO ENERGY SHOWING YOU WHAT THE RESULTS WOULD BE.
UM, THE DOTTED LINE THAT RUNS ACROSS THE GRAPH IS IN A LINEAR EXTENSION OF ERCOT ACTUAL RESULTS, UH, TO FUTURE YEARS.
SO 2024 WAS AN, WAS A HIGHER YEAR.
AND WE'VE, WE'VE SEEN THAT EXTEND ACROSS, UM, FOR 2026 AND 2027.
THE LINEARS, UH, ARE VERY, VERY CLOSE TO THE 2023.
2020, UM, YEAH, THE 2023 FORECAST THAT WE HAD PREVIOUSLY.
SO, UH, THE 2025 SYSTEM ADMINIS SYSTEM ADMINISTRATION FEE RATE FORECAST IS STILL SLIGHTLY MORE AGGRESSIVE THAN THOSE PREVIOUS FORECASTS INTO WOODY'S POINT EARLIER, WE WEREN'T EVEN LOOKING AT SIGNIFICANT DATA CENTER LOADS.
UH, AS RECENTLY AS 2023, IF WE HAD USED THE 2025 ADJUSTED LOAD FORECAST THAT IS BEING USED FOR SYSTEM PLANNING, IT WOULD'VE BEEN SIGNIFICANTLY HIGHER, UH,
[02:45:01]
BASIS FOR OUR SYSTEM ADMINISTRATION FEE RATE AND WITHOUT THE ABILITY TO PERFORM REGRESSION ANALYSIS ON THOSE NUMBERS.WE'RE GONNA HOLD THAT FOR 2026 AND 2027 TO WOODY'S POINT.
WE WILL REVISIT THAT AS WE'RE APPROACHING THE 20 28, 20 29, UH, BUDGET CYCLE AND SETTING THE FEE RATE FOR 2028 AND 2029.
ANY QUESTIONS? ANY QUESTIONS FOR RICHARD? OKAY, THANK YOU RICHARD.
[9. Update on Texas Economy]
AGENDA ITEM IS ITEM NINE, WHICH IS AN UPDATE ON THE TEXAS ECONOMY.OUR PRESENTER TODAY IS PANCE, A LABOR ECONOMIST AT THE FEDERAL RESERVE BANK OF DALLAS.
SHE WORKS ON REGIONAL ECONOMIC GROWTH AND DEMOGRAPHIC CHANGE.
SHE MANAGES THE REGIONAL MICROECONOMICS GROUP AT THE DALLAS FED RESEARCH DEPARTMENT, AND SHE IS ALSO EXECUTIVE EDITOR OF THE PUBLICATION SOUTHWEST ECONOMY.
AND SHE CO-EDITED THE 10 GALLON ECONOMY SIZING UP ECONOMIC GROWTH IN TEXAS IN 2015.
HER ACADEMIC RESEARCH FOCUSES ON THE LABOR MARKET IMPACTS OF IMMIGRATION, UNAUTHORIZED IMMIGRATION, AND US IMMIGRATION POLICY.
SHE IS CO-AUTHOR OF THE BOOK BESIDE THE GOLDEN DOOR, US IMMIGRATION REFORM IN THE NEW ERA OF GLOBALIZATION IN 2010.
UH, SHE IS AFFILIATED WITH SEVERAL ACADEMIC INSTITUTIONS, UH, RESEARCH FELLOW AT THE TOWER CENTER FOR PUBLIC POLICY AND INTERNATIONAL AFFAIRS, AND THE MISSION FOODS, TEXAS MEXICO CENTER AT SOUTHERN METHODIST UNIVERSITY AND AT THE, UH, IZA INSTITUTE OF LABOR AND BOND GERMANY, AS WELL AS ADJUNCT SCHOLAR OF THE AMERICAN ENTERPRISE INSTITUTE.
UH, OREN US WAS A SENIOR ECONOMIST ON THE COUNCIL OF ECONOMIC ADVISORS AND THE EXECUTIVE OFFICE OF THE PRESIDENT IN 20, EXCUSE ME, 2004, 2005, WHERE SHE ADVISED THE BUSH ADMINISTRATION ON LABOR, HEALTH AND IMMIGRATION ISSUES.
SHE HOLDS A PHD IN ECONOMICS FROM UCLA AND BACHELOR'S DEGREE IN ECONOMICS AND SPANISH FROM THE UNIVERSITY OF ILLINOIS IS AT URBAN AND CHAMPAIGN.
SO THANK YOU FOR JOINING US TODAY, MISS ERREN, AND THE FLOOR IS YOURS.
WE LOOK FORWARD TO YOUR THANK SO PRESENTATION.
UH, WELL I'M, UH, SO HAPPY TO BE HERE AND, UH, THANK YOU FOR INVITING ME.
AND I THOUGHT WE'D TALK ABOUT, UM, HOW RESILIENT IS THE CURRENT OUTLOOK FOR GROWTH, UH, IN OUR REGION.
SO, UM, OF COURSE THERE'S THE FIRST, THE DISCLAIMER.
UH, THESE VIEWS ARE CERTAINLY MY OWN AND I DO NOT SPEAK FOR THE FEDERAL RESERVE SYSTEM.
ALRIGHT, LET'S START WITH AN OVERVIEW.
UH, SO THE TEXAS ECONOMY'S LIKELY SLOWING.
UH, I OUTLOOKS HAVE RECENTLY TURNED PESSIMISTIC.
UH, THE LABOR MARKET HAS BEEN PRETTY ROBUST SO FAR, THOUGH JOB GROWTH HAS BEEN ROBUST, UH, SO FAR IN 2025.
UM, BUT YOU KNOW, THE CAVEAT THERE IS THAT THE EMPLOYMENT DATA IS ONLY THROUGH FEBRUARY.
REAL TIME SURVEYS OF TEXAS BUSINESSES THAT WE DO AT THE DALLAS FED ARE FLASHING SOME WARNING SIGNS, ESPECIALLY IN MARCH.
SO GROWTH IS LIKELY TO SLOW FURTHER AS FAR AS WE CAN TELL.
UH, AND WE'RE BELOW TREND IN 2025, AND WE'LL PROBABLY SLOW FURTHER, UH, THAN WE'RE CURRENTLY FORECASTING.
THEY'RE GONNA LEAD TO HIGHER PRICES.
UH, CONSUMPTION AND INVESTMENT WILL SLOW AND POSSIBLY DECLINE.
THERE WILL BE WE ANTICIPATE, UH, ADDITIONAL NEGATIVE GROWTH EFFECTS OF LOWER IMMIGRATION AND GOVERNMENT SPENDING CUTS, UH, FEDERAL GOVERNMENT SPENDING CUTS.
I THINK THE TEXAS GOVERNMENT MAY BE SPENDING INCREASING
AND OF COURSE, IF WE GET DEREGULATION, UH, FROM THE CURRENT ADMINISTRATION, THAT CAN ALSO BE A TAILWIND, ESPECIALLY FOR CERTAIN INDUSTRIES LIKE ENERGY.
UH, SO THE TEXAS BUSINESS OUTLOOKS THAT WE DO AT THE DALLAS FED THAT I MENTIONED ON THE OVERVIEW SLIDE ARE SHOWING THAT ACTIVITY IS SLOWING.
UM, WE HAVE A SERVICE SECTOR, WHICH IS OF COURSE THE BULK OF THE ECONOMY THAT'S HERE IN GREEN.
THAT'S SERVICE SECTOR REVENUE, UH, AND MANUFACTURING PRODUCTION IN BLUE.
AND SO THESE ARE DIFFUSION INDEXES.
IF THEY'RE IN POSITIVE TERRITORY THERE, YOU KNOW, THAT SIGNIFIES GROWTH.
BUT OF COURSE, THE FACT THAT THEY'VE TURNED DOWN IN RECENT MONTHS SUGGESTS THAT THIS GROWTH IS SLOWING.
WE ALSO HAVE MORE SENTIMENT BASED INDICATORS FROM OUR SURVEYS.
SO HERE I'M SHOWING YOU, UH, THINGS LIKE, UH, COMPANY OUTLOOK, WHICH IS A PRETTY, UH, GOOD PREDICTOR IN OUR SURVEYS FOR FUTURE ACTIVITY AND OTHER MEASURES OF FUTURE BUSINESS ACTIVITY, FUTURE INVESTMENT AND FUTURE OUTPUT.
AND OF COURSE, MANY OF THESE, UH, SURVEY INDICATORS PICKED UP AFTER THE ELECTION.
UM, MANY ACTUALLY PICKED UP AFTER THE FED CUT RATES LAST SEPTEMBER.
UM, BUT UH, AS YOU CAN SEE IN RECENT MONTHS, UM, THEY'VE TURNED DOWN AND SOME HAVE TURNED DOWN TO THE POINT WHERE, FOR EXAMPLE, COMPANY OUTLOOK IS IN NEGATIVE TERRITORY, WHICH MEANS THAT THEY'RE, UH, FORESEEING A WORSENING OUTLOOK ON THE LABOR MARKET.
[02:50:01]
GROWTH, AGAIN, AS I MENTIONED EARLIER THIS YEAR, IS, UH, IT'S, UM, YOU KNOW, STILL PRETTY ROBUST AT 1.9% THROUGH FEBRUARY.THAT'S FEBRUARY OVER DECEMBER.
UM, THAT'S BETTER THAN LAST YEAR, WHICH ACTUALLY WAS QUITE SLOW.
WE ONLY GREW 1.5% LAST YEAR, WHICH IS VERY SLOW FOR TEXAS.
WE TYPICALLY GROW, UH, ON AVERAGE AT 2.1% GROWTH RATE.
UH, WE ALSO TYPICALLY GROW ABOUT ONE PERCENTAGE POINT FASTER THAN THE NATION, WHICH YEAR TO DATE THAT SEEMS TO BE HOLDING TRUE.
THE US IS COMING IN AT 1%, WE'RE AT 1.9%.
UM, BUT LAST YEAR THE TEXAS GROWTH PREMIUM WAS PRETTY SMALL.
UM, AND SO, UH, YOU KNOW, THAT BEARS WATCHING.
OF COURSE OUR DATA IS BENCHMARKED, PRE BENCHMARKED AS WE CALL IT.
AND THE US DATA IS NOT FULLY BENCHMARKED FOR LAST YEAR.
SO WE EXPECT THAT THE US NUMBER WILL PROBABLY BE REVISED DOWN, BUT WE ARE KIND OF WATCHING THAT TEXAS GROWTH PREMIUM 'CAUSE WE KIND OF PUT A LOT OF STOCK INTO IT.
WE'RE USED TO GROWING FASTER THAN THE NATION.
IF YOU LOOK BY SECTOR, YOU CAN SEE THAT OVER THE LAST YEAR HERE IN THE LIGHTER BLUE BARS, THAT JOB GROWTH HAS BEEN FASTEST, BUT IN SMALL, IN OUR SMALLER SECTORS.
SO IN FINANCE, CONSTRUCTION AND ENERGY, ALL OF THEM ARE PRETTY SMALL AS A SHARE OF GROWTH, AS A SHARE OF EMPLOYMENT, SORRY.
AND, UM, SO THAT'S WHERE WE'VE SEEN SOME OF OUR MORE ROBUST GROWTH.
THAT'S ALSO WHERE WE MIGHT VERY WELL SEE SOME SLOWING GOING FORWARD.
WE OBVIOUSLY, THE FINANCIAL SECTOR IS CURRENTLY, YOU KNOW, THERE'S A LOT OF DISRUPTION IN THE FINANCIAL SECTOR AT THE MOMENT.
UH, YOU MIGHT SEE SLOWING, UH, JOB GROWTH IN THAT SECTOR, EVEN IN OUR REGION AS A RESULT, UH, CONSTRUCTION, WE, UH, EXPECT THAT THEY'LL BE CONTENDING WITH LARGER INPUT COSTS FOR BUILDING AS A RESULT OF TARIFFS AND ENERGY.
WE'RE SEEING OIL PRICES SINK, OF COURSE, YOU KNOW, OIL PRICES ARE PRETTY VOLATILE.
UH, BUT THAT CAN AFFECT, UH, YOU KNOW, ACTIVITY IN HIRING GOING FORWARD.
IN THE ENERGY SECTOR, OUR LARGEST SECTORS ARE KIND OF THE ONES THAT ARE LISTED TOWARD THE LEFT OF THE CHART.
UH, TRADE TRANSPORTATION AND UTILITIES HAS HAD VERY SLUGGISH GROWTH.
THAT'S ALMOST 20% OF OUR EMPLOYMENT PROFESSIONAL AND BUSINESS SERVICES IS WHERE WE GET SOME OF OUR MOST HIGH PAYING JOBS.
UM, THAT'S ALSO REALLY, UH, SLOWED OVER THE LAST, YOU KNOW, OVER THE LAST YEAR IT'S ONLY GROWN ABOUT 1%.
SO WE'RE KIND OF WATCHING THOSE, THOSE ARE LARGE SECTORS THAT WE TURN TO, UH, YOU KNOW, THOSE KIND OF OUR, UH, REAL ENGINES OF, OF OF CONSISTENT GROWTH IN OUR REGION.
WHERE DO WE SEE SLOWING? YOU HAVE TO REALLY LOOK HARD, UH, TO SEE, YOU KNOW, ANY INDICATORS THAT WOULD POINT TO, TO OUR, UH, YOU KNOW, IN THE LABOR MARKET POINT TO, UH, YOU KNOW, KIND OF BAD NEWS.
UH, REALLY THE UNEMPLOYMENT RATE, THE U THREE, THE BASELINE UNEMPLOYMENT RATE IS NOT SHOWING MUCH WORSENING.
IT'S STILL, YOU KNOW, AT 4.1%, I THINK THE MARCH US DATA IS, IS 4.2%.
BUT, UH, YOU KNOW, AGAIN, THAT'S PRETTY CONSISTENT WITH FULL EMPLOYMENT.
SO NOT A LOT OF SIGN YET IN THE UNEMPLOYMENT RATE, UH, YOU KNOW, OF, OF, OF EXCESS CAPACITY OR, UH, OR LAYOFFS.
UH, BUT IF YOU LOOK AT KIND OF HERE, I'VE ALSO PICTURED IN THE, THE HIGHER BARS THERE ARE THE BROADER MEASURE OF UNEMPLOYMENT.
SO THE U SIX, WHICH TAKES INTO ACCOUNT DISCOURAGED WORKERS AND ALSO, UH, THOSE ARE THE ONES WHO ARE LOOKING, WERE LOOKING FOR A JOB BUT, UH, HAVE STOPPED DOING SO BECAUSE THEY COULDN'T FIND ONE.
ALSO, WE ARE INCLUDING HERE WORKERS WHO ARE PART, UH, PART-TIME, UM, BECAUSE THEY CAN'T FIND A FULL-TIME JOB.
SO THOSE ARE THE MARGINALLY ATTACHED, AND YOU CAN SEE THAT NOW FOR THE NATION, THAT MEASURE IS ALMOST UP AT 8%.
SO, UM, SO WE ARE WATCHING BROADER MEASURES AND OF COURSE THERE ARE OTHER MEASURES, UM, OF LAYOFFS NATIONALLY LIKE THE CHALLENGER DURING CHRISTMAS.
THOSE ARE UP QUITE A BIT, OBVIOUSLY CAPTURING SOME OF THOSE FEDERAL GOVERNMENT LAYOFFS.
IN TEXAS, THOUGH, IF YOU LOOK AT WARREN LAYOFFS AND INITIAL CLAIMS, YOU'RE REALLY NOT SEEING, UH, MUCH WORSENING YET.
UM, ON MIGRATION, I JUST WANTED TO TALK A LITTLE BIT.
YOU KNOW, I MENTIONED THE TEXAS GROWTH PREMIUM.
WE TEND TO GROW A PERCENTAGE POINT FASTER IN TERMS OF EMPLOYMENT GROWTH.
WE TEND TO GROW A PERCENTAGE POINT FASTER.
I THINK MIGRATION IS THE MAIN REASON THAT WE'RE ABLE TO SUSTAIN, SUSTAIN THIS, UH, GROWTH PREMIUM.
AND IF YOU SEE, UH, HERE, YOU'LL SEE THAT WE'VE REALLY HAD THREE RECORD YEARS OF MIGRATION TO OUR STATE.
AND SO THESE BARS ARE SHOWING YOU NET MIGRATION INTO THE STATE.
THEY'VE BEEN RUNNING OVER 400,000 FOR THE LAST THREE YEARS.
THE BULK OF THAT LAST YEAR WAS INTERNATIONAL MIGRATION.
UH, BEFORE THAT IT WAS PRETTY MUCH HALF, HALF DOMESTIC MIGRATION AND INTERNATIONAL.
SO DOMESTIC MIGRATION IS MIGRATION FROM OTHER STATES.
INTERNATIONAL IS MIGRATION HERE FROM OTHER COUNTRIES.
AND SO WE'VE REALLY SAW THESE OUTSIZED MIGRATION, UH, TRENDS HERE IN THE LAST THREE YEARS.
AND I THINK IF YOU'VE READ ABOUT THE, IF YOU'VE OPENED ANY NEWSPAPER OR ANY KIND OF, UH, YOU KNOW, DIGITAL DEVICE, YOU KNOW, THAT, UH, WE HAD A BORDER MIGRATION SEARCH, UM, WHICH IS IN THE PROCESS OF
[02:55:01]
BEING REVERSED, BUT WE CALCULATE THAT ON.WE, WE THINK THAT ABOUT OVER THE LAST THREE YEARS, THAT PROBABLY LED TO ABOUT 550,000 EXTRA INTERNATIONAL MIGRANTS TO TEXAS.
THAT'S ABOUT 10% OF THE TOTAL, UH, FOR THE NATION AS A WHOLE.
UM, SO THAT REALLY BOOSTED POPULATION GROWTH HERE.
WE DID HAVE A RECORD YEAR POPULATION GROWTH LAST YEAR, 1.8%.
SO, UM, WE DON'T EXPECT THIS TO CONTINUE.
IF YOU LOOK AT THE BORDER MIGRATION, IT'S WAY, WAY DOWN.
ENCOUNTERS THAT THE BORDER ARE, UH, YOU KNOW, DOWN 95% YEAR ON YEAR ONE, UH, CONSEQUENCE OF SO MUCH MIGRATION TO OUR REGION, WHETHER IT'S FROM OTHER STATES OR OTHER COUNTRIES, IS THAT WE CONSISTENTLY LEAD IN LABOR FORCE GROWTH.
SO HERE I'M COMPARING LABOR FORCE GROWTH RATES, UH, TO OTHER LARGE STATES LIKE ILLINOIS, CALIFORNIA AND NEW YORK, AND ALSO TO THE US AVERAGE.
AND YOU CAN JUST SEE FROM THE BLUE BARS THERE THAT TEXAS JUST CONSISTENTLY LEADS IN LABOR FORCE GROWTH.
AND AGAIN, THIS IS WHAT ENABLES US TO HAVE THIS OUTSIZED EMPLOYMENT GROWTH, UH, AND OUTSIZED, UH, ECONOMIC GROWTH.
WE'VE ALSO, IN OUR, UH, TEXAS BUSINESS OUTLOOK SURVEYS AT THE DALLAS FED ASKED, UH, FIRMS, ARE YOU RELYING ON, UH, HIRING, UH, PEOPLE WHO MOVE HERE FROM OTHER STATES OR PEOPLE WHO MOVE HERE FROM OTHER COUNTRIES? LAST YEAR IT WAS INTERESTING BECAUSE THE SHARE OF OUR FIRMS THAT RESPOND TO OUR SURVEYS, AND IT'S OVER 350 FIRMS IN EVERY, IN ANY GIVEN MONTH, THEY TOLD US THAT, YOU KNOW, 24% OF THEM WERE RELYING ON MAKING THOSE HIRES, UH, YOU KNOW, OF IMMIGRANTS.
AND THAT WAS UP ALMOST 10 POINTS FROM THE YEAR PRIOR.
SO THERE'S DEFINITELY, UH, YOU KNOW, UH, THE IMMIGRATION IS FEEDING INTO THE LABOR MARKET AND TEXAS EMPLOYERS ARE DEPENDING ON IMMIGRANTS FOR HIRING.
AND SO AS IMMIGRATION GOES DOWN, WE CAN EXPECT THAT HIRING WILL GO DOWN.
OKAY, LET ME TALK A LITTLE BIT ABOUT THE MANUFACTURING CONSTRUCTION.
THAT'S BEEN ANOTHER MAJOR, MAJOR, UH, THEME HERE IN THE LAST FEW YEARS OF THE TEXAS ECONOMY.
SO WE HAVE A CONSTRUCTION BOOM IN THE UNITED STATES THAT WE HAVEN'T SEEN THE LIKE, OF IN, GOSH, I DON'T KNOW, 70 YEARS WE WENT BACK AS FAR AS THE DATA COULD TAKE US.
I'M NOT SHOWING YOU ALL THAT HISTORY HERE, BUT WHAT I'M SHOWING YOU IN THE BLACK LINE IS OF THIS, UH, MANUFACTURING CONSTRUCTION BOOM IN THE UNITED STATES THAT WE EXPERIENCED HERE IN THE POST PANDEMIC PERIOD, THE BLACK LINE SHOWS YOU WHAT SHARE OF THAT CONSTRUCTION SPENDING WAS HAPPENING IN TEXAS.
AND SO THAT'S TEXAS'S SHARE OF US NON-RESIDENTIAL BUILDING AND NON BUILDING.
AND SO IT'S BEEN HOVERING, UH, YOU KNOW, UH, AT 15, BETWEEN 15 TO 20% OVER THE LAST THREE YEARS.
SO THAT MEANS THAT WE'RE AGAIN, ABOUT NINE, NINE AND A HALF PERCENT OF THE ECONOMY.
SO THE FACT THAT WE'RE, YOU KNOW, THAT'S REALLY OUTSIZED GROWTH IN OUR REGION.
UM, IT'S, I'VE ALSO SHOWING YOU THE GREEN, UH, SORT OF THE GREEN SHADED BARS AND, AND THE RED SHADED BARS.
AND THAT TELLS YOU KIND OF WHERE THE BULK OF THIS GROWTH IS COMING FROM.
ONE IS REALLY IN THE POWER SECTOR, AND THAT'S MOSTLY L AND G.
SO L AND G TERMINALS LIKE THE RIO GRANDE VALLEY, UH, L AND G TERMINAL IN BROWNSVILLE.
UM, OTHERWISE, UH, MANUFACTURING PLANTS IN GREEN AND THAT'S REALLY DRIVEN BY CHIP SPENDING AND SO MANY, UH, THE BEGINNING OF THE CONSTRUCTION OF SO MANY SEMICONDUCTOR PLANTS IN TEXAS, OF COURSE, SAMSUNG IN TAYLOR, TEXAS, AND ALSO TI IN SHERMAN, TEXAS.
SO IT'S JUST BEEN, UM, IT'S JUST BEEN AN, UH, A TREMENDOUS BUILDING.
SOME OF IT IS RELATED TO, OBVIOUSLY LIKE THE CHIPS ACT.
WE HAVE A STATE CHIPS ACT THAT'S OBVIOUSLY INCENTIVIZED SOME OF THE SEMICONDUCTOR SPENDING HERE IN OUR STATE.
UH, BUT SOME OF IT, UH, AND SOME OF IT'S RELATED TO THE INFLATION REDUCTION ACT AND THE, AND THE INFRASTRUCTURE ACT.
BUT I THINK THE BULK OF THIS, AT LEAST IN THE POWER SECTOR IN TERMS OF IT BEING L AND G BASED, IS REALLY RELATED MORE TO STRUCTURAL FACTORS.
AND THE FACT THAT WE ARE WITH, UH, WITH THE SHALE BOOM, WE PRODUCE, YOU KNOW, SO MUCH NATURAL GAS AND THERE'S SO MUCH, UM, DEMAND OVERSEAS, AND THERE'S PRICE FOR NATURAL GAS IS SO MUCH HIGHER OVERSEAS THAT THERE'S JUST A HUGE INCENTIVE TO BUILD THESE LNG TERMINALS AND EXPORT THE NATURAL GAS.
HERE, YOU CAN SEE ON A NATIONAL, UH, BASIS REALLY WHAT THIS CONSTRUCTION SPENDING IN SECTORS AS DEFINED BY THE CENSUS BUREAU IN THIS CASE, UH, WHERE THEY'RE CONCENTRATED.
AND HERE YOU CAN SEE REALLY FROM THE ORANGE SURGE IN THE ORANGE, UH, LINE THERE, YOU CAN SEE THAT SO MUCH OF THIS WAS, UH, REALLY COMPUTER RELATED.
SO THAT'S THE SEMICONDUCTOR, UH, SPENDING THE BLUE LINE IS SIGNIFICANT THOUGH, THE CHEMICAL SPENDING, THAT'S PETROCHEMICALS, AND THAT'S WHERE TEXAS IS ALSO A HUGE PLAYER.
SO MUCH, AGAIN, BECAUSE OF THE LOW PRICE OF NATURAL GAS, WE CAN
[03:00:01]
REALLY COMPETE INTERNATIONALLY WITH OUR PETROCHEMICAL PRODUCTS.AND SO WE'RE HUGE EXPORTERS OF PETROCHEMICAL PRODUCTS.
AND SO WE CONTINUE TO ADD TO THAT INFRASTRUCTURE, UH, ALONG THE GULF COAST.
AND, YOU KNOW, AGAIN, WE'LL TALK ABOUT TARIFFS IN A MINUTE, BUT THAT'S ANOTHER AREA WHERE I'M A LITTLE BIT CONCERNED IN TERMS OF, UH, WHAT HAPPENS TO, UH, AGAIN, THE, THE, THE TRADING, UM, YOU KNOW, OUR, OUR, OUR COMPETITIVENESS IN, UH, TARIFF ENVIRONMENT.
LASTLY, ON, UH, Y'ALL MENTIONED DATA CENTERS EARLIER, AND I WAS REALLY SHOCKED TO SEE THE LOAD GROWTH THAT'S COMING FROM DATA CENTERS.
OF COURSE, A LOT OF SPENDING, UH, THE DATA CENTER SPENDING, AS YOU CAN SEE HERE, THIS IS FOR TEXAS.
WE WENT PROJECT BY PROJECT IN THE CONSTRUCTION SPENDING, UH, DATA TO TRY TO PIECE TOGETHER HOW MUCH OF THIS, THE PROJECT IN TEXAS WERE DATA CENTERS, HOW MANY WERE, UH, SEMICONDUCTORS.
AND WHEN YOU LOOK AT IT REALLY BEFORE THE PANDEMIC, IT WAS, UH, YOU KNOW, IT WAS THERE FOR DATA CENTERS.
THERE WAS VERY LITTLE, NOTHING REALLY IN SEMICONDUCTOR MANUFACTURING, BUT AFTER THE PANDEMIC, SO AFTER THE, AGAIN, THE CHIP SACKS PASSED AND SO FORTH, IN 2020, UH, THE EARLIER PERIOD, 2020 TO 2022 IN THE BLUE LINE, AND THEN, OR IN THE BLUE BAR, AND THEN 2023 IN THE RED BAR, YOU CAN JUST SEE, UH, JUST AMAZING, UM, YOU KNOW, 12 BILLION, UH, IN SEMICONDUCTORS, 15 BILLION IN 2023.
AND THEN DATA CENTERS ALSO, UH, YOU KNOW, SO, UH, THE INVESTMENT, THEY'RE SO, UH, SIZABLE THAT IT ACTUALLY RIVALS, UH, THE CHIP SPENDING, WHICH I WAS ALSO SURPRISED TO SEE, UM, ON ENERGY, UH, I WANTED TO JUST SAY, UH, A FEW REMARKS ABOUT OIL PRODUCTION.
WE ARE, UH, STILL AT RECORD, UH, LEVELS OF OIL PRODUCTION IN THE STATE, ABOUT FIVE, UH, 0.6 MILLION BARRELS PER DAY.
AND THAT'S REALLY THE BLACK LINE HERE.
AND, UH, THE MOST FASCINATING THING ABOUT, UH, RECORD OIL PRODUCTION IN TEXAS IS THAT THE BLUE LINE IS THE RIG COUNT.
AND, YOU KNOW, THEY MOVED, THEY USED TO MOVE TOGETHER, AND NOW THEY MOVE IN OPPOSITE DIRECTIONS.
AND THAT REALLY IS A FASCINATING PHENOMENON IN THE SENSE THAT THE EFFICIENCY AND PRODUCTIVITY ENHANCEMENTS TO DRILLING ARE SO PRONOUNCED THAT OVER TIME THE BLUE LINE HAS JUST BEEN TRENDING DOWN AS THE BLACK LINE TRENDS UP, WHICH MEANS THAT, YOU KNOW, WE NEEDED 900 RIGS BASICALLY TO PRODUCE, YOU KNOW, HALF THE OIL IN 2014, NOT QUITE HALF, BUT, AND NOW WE CAN DO, YOU KNOW, TWICE THE OIL WITH 254 RIGS.
SO IT REALLY IS A TREMENDOUS, UH, INCREASE, UH, IN PRODUCTIVITY AND EFFICIENCY IN THE OIL FIELD.
IN TERMS OF, UM, IN TERMS OF, UH, WHAT WE CAN DO NOW WITH, UH, NEW, NEW METHODOLOGIES AND NEW AND, AND THE INNOVATION, UH, I GUESS YOU'LL NOTICE THAT THE BLACK LINE, SO THE TEXAS CRUDE OIL PRODUCTION HAS TURNED DOWN A LITTLE BIT AT THE VERY END.
WE ARE, UM, YOU KNOW, IT HAS, IT HAS COME DOWN HERE AND NATIONALLY AS WELL.
AND SO, UH, WE'LL, WE'LL SEE WHERE THAT LEADS US.
YOU KNOW, THE BIGGEST, UH, EXPLANATORY FACTOR FOR CRUDE OIL PRODUCTION IS THE PRICE OF OIL.
SO, UH, I REALIZED WHEN I PUT THIS CHART TOGETHER, WHICH REALLY ONLY IS LIKE ONE WEEK OLD, BUT IT'S ALREADY, UH, VERY OUTDATED.
SO THIS IS THE DALLAS FED ENERGY SURVEY.
WE ASK RESPONDENTS WHAT ARE THEIR EXPECTATIONS FOR OIL PRICES IN SIX MONTHS, IN ONE YEAR, IN TWO YEARS, AND SO FORTH.
AND SO, YOU KNOW, AT THE TIME, OIL PRICES WERE AROUND 70 AND, UH, OUR, OUR RESPONDENTS TO OUR ENERGY SURVEY WERE PREDICTING, YOU KNOW, THEY WERE GONNA REMAIN AROUND 70 OR RIGHT UNDER THAT, UH, REALLY IN THE NEXT SIX MONTHS, IN THE NEXT YEAR, AND SO FORTH.
OF COURSE, IN THE MEANTIME, WE'VE SEEN, UH, A BIG DROP IN OIL PRICE, UH, I THINK MOSTLY DUE TO EXPECTATIONS OF, UH, LOWER GLOBAL OIL DEMAND AS A RESULT OF SLOWER, UH, ECONOMIC GROWTH, PERHAPS DUE TO, UH, THE, THE TRADE WAR, UH, THAT'S BREAKING OUT.
AND, UH, THE SIGNIFICANCE OF THE LOWER OIL PRICE IS REALLY IN THAT LITTLE TEXT BOX.
SO WE HAVE A BREAK EVEN PRICE, UH, FOR OIL, WHICH MEANS THAT IN ORDER TO DRILL A NEW, WELL, OIL PRODUCERS NEED A CERTAIN PRICE FOR LARGE PRODUCERS, THAT PRICE IS $61.
UM, SO THAT'S WHERE WE ARE RIGHT NOW TODAY, UH, BUT FOR SMALL PRODUCERS, BUT THEY FACE HIGHER COSTS, RIGHT? UM, THEIR, UH, BREAK EVEN PRICE.
SO THE PRICE THEY NEED TO DRILL PROFITABLY DRILL ANOTHER WELL IS, UH, IS $66.
SO I THINK STANDS TO REASON IF OIL PRICES STAY WHERE THEY ARE, AND THAT'S, WHO KNOWS IF THAT'S GONNA BE THE CASE, BUT, UM, YOU KNOW, YOU'LL SEE LESS DRILLING THIS YEAR.
UM, THE DALLAS FED ENERGY SURVEY ALSO SHOWS, UM, THIS IS, AGAIN, BEFORE, YOU KNOW, THIS IS, YOU KNOW, DATA FROM A COUPLE WEEKS AGO.
BUT EVEN IF YOU LOOK AT BUSINESS ACTIVITY, CAPITAL EXPENDITURES AND COMPANY OUTLOOK
[03:05:01]
HERE, YOU CAN SEE THERE REALLY HASN'T HAPPENED MUCH.UH, YOU KNOW, REALLY IN THE LAST, UH, IN THE LAST COUPLE OF YEARS, OIL UH, PRODUCERS HAVE BEEN PRETTY, UH, JUST STEADY AS SHE GOES THERE AND HAVEN'T SEEN A BIG PICKUP IN, IN INVESTMENT, NOT EVEN WITH THE CHANGE IN ADMINISTRATION.
SO THEY'RE KIND OF SEEING THINGS REMAINING AS THEY ARE IN TERMS OF THEIR INVESTMENT ACTIVITY.
UM, I THINK ONE, IF YOU READ THE COMMENTS, WHICH ARE PUBLIC FROM THE ENERGY SURVEY ON THE DALLAS FED WEBSITE, YOU'LL SEE THAT WHILE THEY'RE OPTIMISTIC ABOUT, YOU KNOW, THE LESS BURDENSOME REGULATION ON THEIR SECTOR GOING FORWARD, THEY ARE CONCERNED ABOUT THE RISING INPUT COSTS THAT, AGAIN, MUCH OF THAT FROM, FOR EXAMPLE, STEEL AND ALUMINUM TARIFFS, STEEL IN PARTICULAR, YOU NEED A LOT OF STEEL IF YOU'RE GONNA LAY DOWN THE PIPE, UH, FOR OIL.
UH, SO I JUST WANTED TO SHOW, AND YOU GUYS KNOW THIS SO MUCH BETTER THAN I DO, I DON'T REALLY EVEN KNOW THE INDUSTRY JARGON, SO YOU HAVE TO FORGIVE ME, KIND OF A NOVICE HERE AT ERCOT, BUT, UH, SO, BUT I WAS CURIOUS TO SEE HOW MUCH, UH, ELECTRICITY DEMAND AND CONSUMPTION, UH, IF YOU WILL, HAS INCREASED OVER TIME IN TEXAS AS COMPARED TO THE US.
AND SO THIS IS KIND OF, UH, JUST CHARTING THAT, WHICH I THINK IS VERY INTERESTING.
THERE'S A NUMBER OF THINGS, AS Y'ALL KNOW, UH, JUST HAVING GONE THROUGH YOUR FORECAST EXERCISE, THAT THIS IS, SOME OF THIS IS ECONOMIC GROWTH AND, AND POPULATION GROWTH, CERTAINLY, UH, BUT HOT WEATHER.
AND THEN OF COURSE, ELECTRIFICATION, UH, NOT LEAST IN THE OIL FIELD, BUT WE WERE JUST TALKING ABOUT.
BUT, UM, I THOUGHT THE INTERESTING THING WAS THAT I GUESS IN TEXAS WE'RE KIND OF USED TO ELECTRICITY CONSUMPTION GROWING, WHEREAS IN THE US IT'S A BIG GAME CHANGER, RIGHT? 'CAUSE THEY DIDN'T HAVE MUCH GROWTH IN DEMAND FOR, FOR QUITE SOME TIME.
WE DID SOME RESEARCH A COUPLE YEARS AGO ON THE SUMMER OF 2023 WHEN WE HAD EXTREMELY HOT SUMMER, IF YOU REMEMBER.
AND WE WANTED TO KNOW HOW DO THOSE HOT SUMMERS, HOW DOES THAT HOT WEATHER AFFECT, UH, ECONOMIC ACTIVITY HERE IN THE, IN, IN TEXAS, IN OUR REGION, UH, VERSUS OTHER PLACES.
AND SO THESE ARE KIND OF THE NEGATIVE GDP EFFECTS OF, OF, UH, A ONE, UH, A RISE OF, UH, OF ONE DEGREE IN AVERAGE.
SUMMER TEMPERATURE HAS ACTUALLY, AS YOU CAN SEE HERE, UH, A 0.4 PERCENTAGE POINT, UH, EFFECT, A NEGATIVE 0.4 PERCENTAGE POINT EFFECT ON SUMMER GDP IN THE STATE, WHICH IS REALLY INTERESTING.
IT'S ABOUT TWICE THAT OF THE EFFECT NATIONALLY.
AND SO WE DO SUFFER HERE IN THE SUMMERTIME BECAUSE WE START OUT WITH SUCH HIGH TEMPERATURES, THE IMPACT ON GDP OF RISING, UH, YOU KNOW, OF CONSISTENTLY HIGHER TEMPERATURES IN THE SUMMER, ACTUALLY DEPRESSED ECONOMIC ACTIVITY, MUCH MORE SO THAN ELSEWHERE, UH, WHICH I THOUGHT WAS INTERESTING.
THE OTHER THING THAT WE LEARNED FROM THE SUMMER OF 2023 WAS THAT WHEN YOU HAVE A HOTTER SUMMER AND YOU HAVE LESS ACTIVITY IN THE SUMMER, YOU HAVE MORE ACTIVITY IN THE FALL AND SPRING.
SO IT'S NOT JUST BAD NEWS, UH, BUT I DON'T KNOW, YOU KNOW, TO WHAT EXTENT ERCOT FOLLOWS, WE, WE TALKED ABOUT SHOULDER MONTHS EARLIER, RIGHT? SO THAT WAS INTERESTING.
SO HERE YOU CAN SEE THAT, UH, YOU KNOW, AT LEAST YOU HAVE THAT, THAT SPILLOVER EFFECT.
SO IF YOU HAVE A VERY HOT SUMMER, UM, THOSE WARMER TEMPERATURES IN FALL AND SPRING, IF THEY MANIFEST, THEY WILL RESULT IN HIGHER ACTIVITY, HIGHER ECONOMIC ACTIVITY IN THOSE SHOULDER MONTHS VERSUS THE SUMMER MONTHS.
SO THAT WAS, UM, THAT WAS INTERESTING.
THAT WORKS FOR INDUSTRIES THAT CAN SPREAD THEIR ACTIVITY TO FALL, UH, YOU KNOW, TO FALL IN SPRING.
BUT, UM, YOU KNOW, YOU THINK OF CERTAIN, UM, YOU KNOW, CERTAIN HOSPITALITY AND LEISURE INDUSTRIES THAT MAYBE ARE TAKING ADVANTAGE OF KIDS' SUMMER BREAKS.
IT'S HARDER FOR THEM TO TAKE ADVANTAGE OF WARMER WEATHER IN THE FALL AND SPRING, UH, WHEN THE KIDS ARE IN SCHOOL.
ALL RIGHT, SO, UM, LET'S TALK A LITTLE BIT ABOUT INTERNATIONAL TRADE.
UH, SO I WILL SAY THAT, UM, WE ARE, JUST BEFORE WE START OUT, I MEAN, PRESUMABLY YOU KNOW THIS, BUT WE ARE THE BIGGEST TRADING STATE IN THE NATION.
SO NO, NO STATE HAS MORE EXPORTS AND IMPORTS THAN TEXAS.
SO, AND REALLY THE DIFFERENCE IS ACTUALLY QUITE LARGE.
OF COURSE, A LOT OF OUR TRADE IS WITH MEXICO.
UM, BUT WE ALSO HAVE SIGNIFICANT TRADE WITH, WITH OTHER NATIONS.
UM, SO, SO WE ARE VULNERABLE, UH, TO TARIFFS, I GUESS IS WHAT I WOULD KIND OF MY PREAMBLE ON THIS.
UH, IN OUR TEXAS BUSINESS OUTLOOK SURVEYS, WE ASKED, ASKED, UH, TEXAS BUSINESSES, UH, AND THIS IS OF COURSE, BEFORE WE KNEW WHAT THESE, UH, RETALIATE, YOU KNOW, THESE, UM, RECIPROCAL TARIFFS WOULD LOOK LIKE.
AND SO WE WERE STILL, OUR, UH, RESPONDENTS WERE STILL KINDA OPERATING IN THE DARK.
SO WE ASKED THEM, PLEASE COMMENT ON HOW US TRADE POLICY UNCERTAINTY AND TARIFFS ARE IMPACTING YOUR BUSINESS, IF AT ALL.
[03:10:01]
AND SO, YOU KNOW, IN TERMS OF THE COMMENTS, WE WENT THROUGH ALL THE COMMENTS, AND WE GOT A LOT OF RESPONSES.UM, AND ABOUT 38% OF THOSE COMMENTS AT THE TIME, AND AGAIN, THIS IS BEFORE, YOU KNOW, WE SAW WHAT HAPPENED LAST WEEK, BUT 38% WERE NEGATIVE, ONLY 3% WERE POSITIVE.
SO AS YOU KNOW, TARIFFS MAY PROTECT SOME INDUSTRIES.
AND SO IF YOU'RE PURELY, YOU KNOW, A DOMESTIC PRODUCER, YOUR SUPPLY CHAINS ARE DOMESTIC, UM, AND YOU'RE NOT IMPORTING YOUR INPUTS, THEN PERHAPS YOU WILL BENEFIT.
UM, BUT 38% OF RESPONSES WERE NEGATIVE, 3% WERE POSITIVE.
AND OF COURSE, AT THE POINT, AT THAT POINT IN TIME, A LOT OF PEOPLE DIDN'T KNOW, UH, YOU KNOW, HOW THEY WERE GOING TO BE IMPACTED.
SO WE EXPECT THAT ON THAT THIS IS GONNA BE A NEGATIVE FOR TEXAS BUSINESS WHEN, UH, IN THEIR COMMENTS, AND WE TRIED TO SORT THROUGH THE COMMENTS AND TRIED TO PUT, UH, DIFFERENT COMMENTS FROM OUR BUSINESS CONTEXT.
AND YOU CAN READ ALL THESE COMMENTS ON OUR WEBSITE ANYWAY, WE PUT THEM INTO BUCKETS.
AND BY FAR, YOU KNOW, THE NUMBER ONE RESPONSE WAS, YOU KNOW, IN WHAT WAY IS THIS NEGATIVE FOR YOUR BUSINESS? AND IT'S INCREASING COSTS, COSTS, WHICH THEY'LL HAVE TO PASS ON TO THEIR CUSTOMERS.
THE UNCERTAINTY IS MAKING IT HARD TO PLAN.
UH, YOU KNOW, PRO THEY'RE DELAYING PROJECTS.
UM, THEY'RE LOWER DEMAND AS A RESULT OF THE HIGHER PRICES, UM, YOU KNOW, AND, AND SO ON, SUPPLY CHAIN DISRUPTIONS AND CONCERNS ABOUT INFLATION AND SO FORTH.
SO THERE'S A NUMBER OF WORRIES HERE.
UM, FROM OUR SURVEY RESPONDENTS, WE DID A SCENARIO ANALYSIS, UH, WHEN BEFORE THE, YOU KNOW, RECIPROCAL TARIFFS WERE ANNOUNCED, WE WERE STILL OPERATING UNDER THE SCENARIO OF 25% TARIFFS ON CANADA AND MEXICO.
AND, UH, SO WE DID KIND OF JUST, UH, SORT OF A STANDARD, UH, SCENARIO ANALYSIS OF WHAT THE IMPACT WITH THOSE OF THOSE TARIFFS ON, UH, TEXAS, UH, ON THE TEXAS ECONOMY.
AND WE FOUND ABOUT A 1.5 PERCENTAGE POINT DECLINE IN GDP.
SO THAT WOULD BE CUTTING GDP GROWTH IN HALF ABOUT, IN AN AVERAGE YEAR, UH, A DECLINE IN EMPLOYMENT, UH, OF ABOUT A HUNDRED THOUSAND JOBS, AND AN INCREASE IN THE UNEMPLOYMENT RATE OF ABOUT 0.8 PERCENTAGE POINTS.
UM, I'M ALSO LISTING HERE, THE PYRAMID GROUP HAS A SIMILAR ESTIMATE OR SIMILAR SCENARIO ANALYSIS, AND I'M LISTING THEIR NUMBERS, THEREFORE, YOUR REFERENCE, THEY HAVE A LARGER EMPLOYMENT IMPACT AND A LARGER, SLIGHTLY LARGER GDP IMPACT.
WE HAVE NOT BEEN ABLE TO LOOK, UH, AND, YOU KNOW, AT, IN TERMS OF THE EFFECTIVE TARIFF RATE OF WHAT WAS ANNOUNCED LAST WEEK, WE HAVEN'T YET RUN THE NUMBERS FOR TEXAS.
UM, MY SENSE IS THAT AT LEAST NATIONALLY, IT'S NOT GONNA BE VERY DIFFERENT FROM WHAT YOU SEE HERE, UH, NATIONALLY, IF THE RECIPROCAL TARIFFS STAND, FROM WHAT I UNDERSTAND, THE EFFECTIVE TARIFF RATE HAS GONE FROM A 3% TARIFF RATE TO A 20% TARIFF RATE, WHICH ACCORDING TO THE INVESTMENT BANK NEWSLETTERS, IF YOU READ THOSE, CORRESPOND TO ABOUT A TWO PERCENTAGE POINT DECLINE IN GDP GROWTH AND ABOUT A TWO PERCENTAGE POINT INCREASE IN INFLATION.
SO THAT GIVES YOU AN IDEA OF, OF WHAT, YOU KNOW, PEOPLE OUT THERE, THE CALCULATIONS THAT THEY'RE RUNNING.
IN TERMS OF THE OUTLOOK, UM, WE'RE, THERE'S CERTAINLY A LOT OF UNCERTAINTY RIGHT NOW.
UM, AND SO OBVIOUSLY THIS IS AFFECTING, AGAIN, FIRM'S ABILITY, ABILITIES TO, TO PLAN FOR THE FUTURE, ESPECIALLY OBVIOUSLY ANY INVESTMENT PROJECTS AND SO FORTH IN TERMS OF FIRMS, WHAT THEY'RE EXPECTING, UH, FOR COST AND PRICE INFLATION IN 2025.
HERE, JUST, YOU KNOW, DRAW YOUR ATTENTION TO SORT OF THE LAST SET OF BARS HERE ON THE, ON THE RIGHT, UH, UH, END OF THE SLIDE ON SELLING PRICES.
IF YOU LOOK AT SELLING PRICES LAST YEAR, ACTUALLY, FIRMS ARE SAYING THIS YEAR, SELLING PRICES ARE GONNA BE RISING, UH, MORE THAN THEY DID LAST YEAR.
SO, AND THIS IS BEFORE, AGAIN, THIS SURVEY RAN BEFORE THE TARIFF ANNOUNCEMENT LAST WEEK.
UM, AGAIN, BEFORE THE TARIFF ANNOUNCEMENT LAST WEEK, WE ASKED, WHAT ARE THE BIGGEST CONCERNS, UH, YOU KNOW, IN TERMS OF YOUR OUTLOOK AND RECESSION CONCERNS, UH, REALLY INCREASED IN MARCH.
UH, SO 50% OF RESPONDENTS TO OUR TEXAS BUSINESS OUTLOOK SURVEY SAID THAT DEMAND WAS THEIR BIGGEST CONCERN, FOLLOWED BY DOMESTIC POLICY UNCERTAINTY AND INFLATION.
OUR EMPLOYMENT FORECAST FOR 2025 FOR THE YEAR, WHEN THE YEAR STARTED OUT, WAS, UH, REALLY 1.6%.
UM, BUT I THINK THAT REALLY THE, UH, THE RISKS TO THIS FORECAST, UH, ARE TO THE DOWNSIDE.
UH, AGAIN, FOR ALL THE REASONS THAT I'VE BEEN TELLING YOU.
[03:15:01]
FADED AND ECONOMISTS, UH, HAVE REVISED THEIR FORECAST DOWN.UM, TARIFFS ARE THE MAIN REASON, UH, PROGRESS ON INFLATION HAS SLOWED AND RECESSION PROBABILITY HAS RISEN.
INFLATION EXPECTATIONS HAVE ALSO RISEN, AND CONSUMER COGNITIVE HAS FALLEN.
UH, IN TEXAS, RESILIENT GROWTH IS OUR BASELINE CASE, UH, BUT WITH RISKS TILTED TO THE DOWNSIDE, THE HEADWINDS, AGAIN, ARE TARIFFS, BUT ALSO SHARPLY SLOWER, UH, IMMIGRATION AND THE ROLLBACK OF FEDERAL GOVERNMENT SPENDING, UH, TAILWINDS, AGAIN, WE HAVEN'T SEEN THOSE YET, BUT IF THEY MATERIALIZED HERE IN THE SECOND HALF OF THE YEAR, OR IN 2026, THAT WOULD BE THINGS LIKE DEREGULATION, PERHAPS, UH, TAX CUTS.
UM, AND OF COURSE, HERE IN TEXAS, WE'RE FORTUNATE IN THAT, UH, YOU KNOW, FOR OUR STATE'S ROBUST BUSINESS CLIMATE, WHICH CONTINUES TO BE AN ASSET IN GOOD TIMES AND BAD.
AND, UH, AND OUR BUDGET SURPLUS, WHICH HOPEFULLY THE LEGISLATURE WILL SPEND ON US HERE SHORTLY.
UH, LET ME START WITH THE QUESTIONS IF I CAN.
I, SO FOR HEADWINDS, WE'VE GOT TARIFFS, UH, FOR A POTENTIAL TAILWIND.
WE'VE GOT THE EXTENSION OF THE TAX CUTS FROM 2017, WE'VE GOT DEREGULATION, POTENTIAL TAILWIND, AND THEN HERE IN TEXAS, UH, LOWER ENERGY PRICES ARE BOTH A TAILWIND AND A HEADWIND.
SO IF YOU WERE TO MASH ALL THAT TOGETHER, ASSUME ALL THOSE CAME TRUE, WHAT'S THE NET, UH, IMPACT ON THE ECONOMY IN, IN YOUR, FROM YOUR PERSPECTIVE? UM, WELL, FROM WHAT I, I THINK IT'S A NET NEGATIVE IN TERMS OF THE OUTLOOK.
SO BECAUSE WE ARE THE WORLD'S LARGEST ENERGY PRODUCER,
SO, UM, SO, UH, YEAH, BECAUSE WE ARE, WE'RE ENERGY EXPORTERS ON NET.
SO, UM, YOU KNOW, IF ENERGY OIL PRICES, UM, NATURAL GAS PRICES, UM, ARE LOWER, THAT, THAT HURTS US, UH, ON AVERAGE IN THE STATE.
AND GIVEN THAT WE HAVEN'T SEEN THE IMPACT YET OF DEREGULATION, UM, AND IF WE ASSUME THAT THE TAX CUTS ARE PRICED IN TO EXPECTATIONS, BECAUSE EVERYONE'S KIND OF BEEN EXPECTING, EVEN IF, YOU KNOW, SORT OF THE OTHER SIDE WOULD'VE WON THE ELECTION, WE WERE, THEY ALSO SAID THEY WERE GONNA HAVE TAX THE, YOU KNOW, EXTEND THE TCJA.
SO, UH, IF THAT'S PRICED IN AND DEREGULATION, UH, YOU KNOW, PROBABLY WILL NOT, UH, HAVE A BIG ENOUGH IMPACT TO, TO, TO KIND OF TIP THE SCALE, THEN I THINK, UH, YOU KNOW, ON NET THIS IS A NEGATIVE OUTLOOK.
I THINK YOU MENTIONED A POST TARIFF INFLATION ESTIMATE, BUT I MISSED IT.
WHAT WAS ABOUT THREE SLIDES BACK? DID YOU, UH, UM, OH, UH, YEAH, IT WASN'T ON THE SLIDE.
UM, I'M JUST KIND OF SIDING THE, SORT OF THE INVESTMENT BANK NEWSLETTERS, UHHUH, THIS IS NOT ANY KIND OF FED INTELLIGENTSIA, UH, BUT IF YOU JUST LOOK AT SORT OF THE INVESTMENT BANK NEWSLETTERS, THEY ESTIMATE THAT IF YOU GO FROM AN EFFECTIVE TARIFF RATE OF 3% TO 20%, WHICH WE ESTIMATE WITH THE RECIPROCAL TARIFFS, WE'RE GONNA BE AT A 20%, UH, TARIFF RATE, UH, THEN, UH, THE IMPACT OF THAT ON GDP GROWTH IS, UH, POSSIBLY TWO AS MUCH AS 2%, UH, TWO PERCENTAGE POINT DECLINE IN GDP GROWTH, THAT WOULD, SO IF WE'RE GROWING AT 2% NOW, THAT TAKES YOU TO ZERO, UH, AND, UH, TWO, YOU KNOW, AS MUCH AS A TWO PERCENTAGE POINT INCREASE IN INFLATION.
SO, UM, SO THAT, UH, BUT OF COURSE, YEAH, THOSE ARE THE BALLPARKS AND THERE'S BIG RANGES AROUND THOSE, AND THERE'S BIG QUESTION MARKS ABOUT THOSE.
THAT'S JUST KIND OF THE SCENARIO ANALYSIS THAT, THAT I'VE BEEN READING, YOU KNOW, SORT OF OUTSIDE.
THERE'S BEEN A LOT OF DEBATE ABOUT THE IMPACT OF TARIFFS ON US MANUFACTURING JOBS IS HIS LOOKING, UH, ON A US BASIS.
HIS, THE, THE FED HAD A CHANCE TO LOOK AT WHAT THE, THE IMPACT OF THE, ITS ESTIMATED, ITS ESTIMATES OF, UH, THE IMPACT ON TAR OF, OF TARIFFS ON MANUFACTURING JOBS NATIONWIDE.
UM, SO WE HAVEN'T DONE ANYTHING FORWARD LOOKING ON THAT.
UH, WE ARE ACTUALLY ON THURSDAY, AND YOU'RE WELCOME TO COME, UH, HAVING A CONFERENCE AT THE DALLAS FED WHERE ACTUALLY ONE OF THE ECONOMISTS IS BRINGING A RESEARCH PAPER WHERE HE LOOKED AT THE EFFECT OF THE 2018 TARIFFS ON US MANUFACTURING JOBS IN THE, YOU KNOW, THE FIRST TRUMP ADMINISTRATION.
BUT I THINK WHAT THEY FIND IS THAT, UM, YOU KNOW, WHEREAS THERE WERE SOME GAINS, UM, THEY WERE OUTWEIGHED BY LOSSES IN AMONG MANUFACTURERS THAT DEPEND ON FOREIGN INPUTS.
AND IN THAT CASE, IT WAS CHINESE INPUTS THAT WERE, YOU KNOW, SUBJECT TO THE 20%
[03:20:01]
TARIFFS.SO THE PROBLEM IS THAT WE ARE, SO OUR MANUFACTURING, UH, INDUSTRY AND OUR SUPPLY CHAINS ARE SO ENTRENCHED IN THE GLOBAL ECONOMY THAT SO MANY BUSINESSES REPLY, UH, YOU KNOW, UM, DEPEND AND RELY ON FOREIGN INPUTS THAT, YOU KNOW, THE TARIFF, WHEREAS IN THE LONG RUN, IT MIGHT BENEFIT, YOU KNOW, A DOMESTIC PRODUCTION, BUT IN THE SHORT TO MEDIUM RUN, YOU'RE GONNA HAVE A LOT OF DISRUPTION JUST BECAUSE WE'RE SO RELIANT ON FOREIGN SUPPLY CHAINS.
QUESTIONS FROM THE REST OF, UH, THE BOARD OR MANAGEMENT? ANY QUESTIONS? OKAY, WELL, THANK YOU.
THAT WAS VERY INFORMATIVE, PIA, WE APPRECIATE YOUR TIME HERE AT ERCOT TODAY AND, AND, UH, LOOK FORWARD TO HAVING YOU COME BACK AND GIVE US AN UPDATE.
[10. Reliability Monitor Update]
WITH THAT, WE'LL MOVE ON TO AGENDA ITEM 10, UH, WHICH IS A RELIABILITY MARKET UPDATE.BRANDON GLEASON IS PRESENTING.
BRANDON, WOULD YOU WALK US THROUGH THIS? THANK YOU, BILL.
GOOD MORNING, ERCOT BOARD OF DIRECTORS.
WE WANTED TO PROVIDE YOU A BRIEF UPDATE REGARDING A, UH, IMPORTANT BUT LESS KNOWN, UH, ROLE THAT ERCOT HAS, AND THAT IS SERVING AS THE RELIABILITY MONITOR.
AND THREE KEY TAKEAWAYS TODAY.
FIRST, WE'VE SEEN AN INCREASE IN VOLUME OF THE INCIDENT REVIEWS THAT WE'VE ANALYZED.
WE'VE ALSO SEEN AN INCREASE IN VOLUME OF THE MATTERS.
WE REFERRED TO THE PUC FOR ENFORCEMENT.
AND ALSO I JUST WANNA HIGHLIGHT THAT WE'RE CONSIDERING BASED ON THE CASE VOLUME THAT WE HAVE INSTITUTING A STREAMLINED REVIEW PROCESS THAT WE THINK WILL HELP CUT DOWN ON THE BACKLOG OF CASES THAT WE'RE DEVELOPING.
SO, AS A BACKGROUND HERE, ERCOT WAS DESIGNATED AS THE RELIABILITY MONITOR IN NOVEMBER OF 22.
AND BEFORE THAT, THERE WAS A, A, A DUAL EFFORT BETWEEN THE PC AND ERCOT TO ANALYZE VARIOUS, UH, RELIABILITY ISSUES AT THE STATE LEVEL CONCERNING BOTH ERCOT AND MARKET PARTICIPANTS.
PRIOR TO THAT, OF COURSE, IT WAS TEXAS RE THAT HANDLED THE RESPONSIBILITY.
AND SO OUR CORE FUNCTION AS THE RELIABILITY MONITOR WITH RESPECT TO ERCOT IS ANALYZING STATE RELIABILITY COMPLIANCE ISSUES.
AND THAT APPLIES TO BOTH ERCOT MARKET PARTICIPANTS AND ERCOT INC.
AND SO ONCE WE COMPLETE THIS ANALYSIS, WE ESSENTIALLY FORWARD THESE CASES TO THE PUC FOR ENFORCEMENT.
AND OF COURSE, DURING THE ENFORCEMENT PROCESS, WE SERVE IN A SUPPORT ROLE PROVIDING DATA, ADDITIONAL ANALYSIS, AND IN THE, IN THE EVENT OF AN ENFORCEMENT MATTER WAS CONTESTED AND, AND WENT ON, WE WOULD ALSO PROVIDE SUPPORT THERE.
AND JUST AS FAR AS WHAT THE PROCESS IS FOR THE ERM CASE INTAKE, UH, AGAIN, THIS IS JUST STATE RELIABILITY REQUIREMENTS, MARKET ASPECTS GO TO IMM, AND OF COURSE THERE'S THE NERC, THE FEDERAL RE RELIABILITY FRAMEWORK THAT'S HANDLED BY TEXAS RE AND NERC.
AND SO HERE AT ERCOT, ESSENTIALLY THERE'S AN EMAIL ADDRESS, ER M@ERCOT.COM WHERE MARKET PARTICIPANTS CAN SELF-REPORT.
IF ERCOT FOLKS SEE POTENTIAL COMPLIANCE ISSUES, THEY CAN FORWARD, UH, POTENTIAL INCIDENT REVIEWS.
AND THEN ALSO THERE'S JUST ROUTINE MONITORING AND ANALYSIS THAT ERCOT ISS DOING THAT, UH, RESULTS IN POTENTIAL NON-COMPLIANCE ANALYSIS AS WELL.
AND SO YOU'LL SEE HERE ON THIS CHART THAT ERCOT, THE ERM RECEIVES THIS, THIS INFORMATION FROM VARIOUS SOURCES, AND THEN THERE'S AN INITIAL DETERMINATION WHETHER THE MATTER IS INDEED RELIABILITY RELATED.
IF IT'S NOT AND IT'S NOT MARKET RELATED, THEN THIS GETS FUNNELED TO THE ERCOT LEGAL DEPARTMENT.
AND THESE VIOLATIONS TRADITIONALLY APPEAR IN A QUARTERLY REPORT, UH, TO THE PUC IDENTIFYING ERCOT INC'S COMPLIANCE VIOLATIONS.
AND IF THEY ARE, INDEED, IF THE INCIDENT REVIEW, THE INCIDENTS ARE IN FACT, UH, RELIABILITY RELATED, THEY'RE TRIAGED TO THE ERM UH, DEPARTMENT IN ERCOT, THEY'RE ASSIGNED A VALUE AND THEY GO THROUGH THE INCIDENT REVIEW PROCESSES.
IT'S IMPORTANT TO NOTE THAT EVERY ERCOT EMPLOYEE THAT PARTICIPATES IN THE ERM PROGRAM SIGNS A CODE OF CONDUCT, UH, AGREEING TO BE INDEPENDENT AND BE COGNIZANT OF COURSE, OF POTENTIAL CONFLICTS OF INTEREST.
OKAY, UH, LAST APRIL, UH, WE CAME TO YOU AND, UH, IDENTIFIED, UH, HOW MANY CASES AND INCIDENT REVIEWS HAD BEEN FORWARDED TO THE PUC SINCE, SINCE LAST APRIL.
UH, OUR CASE VOLUME HAS INCREASED AT JUST LESS THAN 12, UH, REFERRALS PER MONTH.
UM, AND THEN WE'VE REFERRED 75, UH, ANALYSES TO THE PUC FOR ENFORCEMENT SINCE LAST APRIL.
AND ONE THING THAT I WANNA HIGHLIGHT ON THIS SLIDE IS THAT YOU CAN SEE THAT OUR INTAKE IS ALMOST 12 MATTERS PER MONTH, AND OUR DISPOSAL IS LESS THAN FIVE.
AND SO WE'RE ACTIVELY, UH, INCREASING THE BACKLOG OF INCIDENT REVIEWS THAT ERCOT IS IN THE PROCESS OF EVALUATING.
AND ONE OF THE PLANS, UH, THAT WE HAVE IN ORDER TO
[03:25:01]
HELP EASE THAT BACKLOG, AND WE'VE BEEN WORKING WITH THE PUC ON THIS, IS DEVELOPING A MORE STREAMLINED PROCESS FOR LOWER RISK, UH, ISSUES THAT WILL IN, IN THEORY, HOPE THEM MOVE THROUGH THE PROCESS, UH, SOONER IN ORDER TO GET THAT BACKLOGGED DOWN AND RESOLVE THESE MATTERS.NOW, OF COURSE, NOW THAT WE'VE BEEN DOING THIS FOR, UH, ABOUT TWO AND A HALF YEARS, WE'VE STARTED TO SEE WHAT THE RESULTS OF ERCOT ANALYSIS AND THE PUC ENFORCEMENT IS.
AND THIS IS A SUMMARY OF THE TYPES OF MATTERS THAT HAVE BEEN SETTLED ULTIMATELY.
AND, UH, THE, THE SETTLEMENT AMOUNTS THERE ON THE RIGHT COLUMN.
SO YOU CAN SEE, YOU KNOW, BY THE DATE OF THESE MATTERS WHEN THEY CAME IN 20 22, 23.
AND AS THEY CYCLE THROUGH THE PROCESS, YOU SEE THE ULTIMATE RESOLUTION HERE.
SO THOSE ARE, UH, PUC FINALIZED SETTLEMENTS, AND THEN THESE ARE PENDING SETTLEMENTS, SETTLEMENTS THAT ARE, UH, STILL ON THE PIPELINE IN THE PROCESS OF BEING EVALUATED.
AND THEN TURNING TO THE BUDGET, UH, LAST YEAR WE HAD A BUDGET OF APPROXIMATELY $1.8 MILLION.
IT'S INCREASED SLIGHTLY FOR CALENDAR YEAR 2024.
AND THE PRIMARY, UH, DRIVER THERE IS AN INCREASE, UH, AN INCREASE IN HEADCOUNT.
THERE'S ANOTHER EMPLOYEE ON THE COMPLIANCE SIDE, UH, THAT ACCOUNTS FOR THAT, THAT INCREASE THERE.
AND BEFORE WE FINISH UP HERE, I JUST WANNA HIGHLIGHT, TAKE THIS OPPORTUNITY TO HIGHLIGHT ALL OF THE GUESTS MEMBERS, MARKET PARTICIPANTS THAT WE MAY MAINTAIN A ROBUST, UH, RELIABILITY MONITOR, UH, WEBPAGE HERE.
AND OF COURSE, THE KEY HERE IS ER M@ERCOT.COM.
UH, WE INVITE FOLKS TO, UH, SUBMIT SELF REPORTS.
IF YOU SEE SOMETHING ABOUT, UH, COMPLIANCE REGARDING A MARKET PARTICIPANT INCL REGARDING ERCOT, PLEASE DO REPORT IT TO THAT EMAIL ADDRESS AND WE'LL GET IT TRIAGED AND HANDLED.
AND WITH THAT, I'D BE HAPPY TO ANSWER ANY QUESTIONS.
JULIE, BRANDON, I HAVE A QUESTION.
UM, IF WE GO BACK TO YOUR SLIDE WHERE YOU'RE TALKING ABOUT THE NUMBER OF INCIDENCES IN THE LAST YEAR, HOW CAN YOU HELP US PUT THAT IN PERSPECTIVE? IF WE WERE LOOKING AT PARTS PER MILLION DEFECTS ON THE GRID, YOU KNOW, IS WERE THERE A THOUSAND CHANCES TO HAVE THESE RELIABILITY INVESTIGATIONS PUT IN PERSPECTIVE? THAT'S A GOOD QUESTION.
I THINK THAT THE, THE BIGGEST PERSPECTIVE IS IF YOU THINK ABOUT HOW MANY MARKET PARTICIPANTS THERE ARE, HOW MANY SECTIONS OF THE PROTOCOLS THERE ARE PUC SUBSTANTIVE RULES, OTHER BINDING DOCUMENTS, A TREMENDOUS AMOUNT OF PARTICIPANTS AND POTENTIAL VIOLATIONS.
AND SO I THINK THAT THAT DOES PUT IT IN PERSPECTIVE HERE.
YOU KNOW, WE'RE DEALING WITH, WITH 12 A MONTH OUT OF, YOU KNOW, I GUESS THOUSANDS AND THOUSANDS OF REQUIREMENTS, OF COURSE.
AND SO HOPEFULLY THAT ADDS A LITTLE BIT OF PERSPECTIVE THERE.
WELL, I THINK THAT'S IMPORTANT THAT WE UNDERSTAND THE, UM, SIZE OF THE DENOMINATOR IN THIS EQUATION.
AND SO OVERALL, THE GRID IS OPERATING EXTREMELY WELL.
I I THINK THAT'S FAIR, YES, ABSOLUTELY.
GIVEN THE AMOUNT OF REQUIREMENTS AND MARKET PARTICIPANTS.
ANY OTHER QUESTIONS, BRANDON? OKAY, THANK YOU.
WE'LL MOVE ON NOW TO AGENDA ITEM
[11. ERCOT Lancium Patent License Agreement Disclosure]
11, WHICH IS THE, UH, LANUM PATENT LICENSE AGREEMENT DISCLOSURE.UH, CHAD SEALEY IS GONNA PRESENT.
EVERY SECOND TUESDAY OF APRIL IS NATIONAL.
SO THAT'S WHY YOU GET TWO LAWYERS IN A ROW.
I, I MOVE, WE DISPENSE WITH THAT ONE.
IT'S BEEN AROUND FOR A WHILE, BILL.
ALRIGHT, I'LL MAKE THIS PRETTY QUICK.
SO I REALLY WANT TO TAKE AN OPPORTUNITY TO, UM, COME AND DISCLOSE TO THE BOARD THAT WE'RE GOING TO ENTER INTO AN AGREEMENT WITH A MORE PARTICIPANT LANUM.
THIS IS A LONG STANDING ISSUE THAT'S BEEN KIND OF PLAYING AROUND THE SURFACE IN THE STAKEHOLDER PROCESS FOR A COUPLE YEARS, DEALING WITH OUR CONTROLLABLE LOAD, UH, RESOURCE PROGRAM.
AND IT, IT'S A RESULT OF LANUM HAVING A PORTFOLIO OF PATENTS THAT COULD IMPLICATE THAT CLR PROGRAM.
AND STAKEHOLDERS HAVE BEEN TALKING ABOUT THIS AGAIN FOR ABOUT TWO YEARS.
IT STARTED IN THE LARGE LOAD TASK FORCE.
ERCOT WAS ASKED TO LOOK AT IT.
THERE'S BEEN, UH, DISPUTES AROUND THE PATENTS.
THERE'S BEEN ARGUMENTS AROUND THE PATENTS THAT'S BEEN GOING ON WITH THE STAKEHOLDERS.
ERCO T'S BEEN ENGAGED WITH LANING FOR QUITE SOME TIME, TRYING TO UNDERSTAND THE IMPACT OF WHAT THOSE PATENTS COULD MEAN TO OUR CLR PROGRAM.
AND I'M HERE TODAY TO TALK ABOUT, UH, AN AMICABLE RESOLUTION THAT RESULTS IN A NO COST OUTCOME FOR ERCOT TO HAVE A LICENSE IN WHICH WE CAN THEN SUB-LICENSE TO ANY MARK PARTICIPANT THAT WANTS TO PARTICIPATE AS A CLR OR A LOAD RESOURCE IN OUR PROGRAM.
[03:30:01]
IT'S IMPORTANT TO DISCLOSE THAT LANCIA IS A MARK PARTICIPANT.THEY ARE A QUEASY LOAD SERVING ENTITY AND RESOURCE ENTITY.
OF COURSE, MAKING THIS DISCLOSURE TO THE BOARD IS IMPORTANT BECAUSE WE NORMALLY DON'T ENTER INTO CONTRACTS WITH MARKET PARTICIPANTS EXCEPT FOR OUR STANDARD FORM AGREEMENTS THAT THEY'RE ACTIVELY PARTICIPATING IN THE ERCOT MARKET.
BUT HERE, THIS IS A GOOD OUTCOME IN WHICH WE CAN RESOLVE THIS ISSUE FOR THE ERCOT REGION.
AND SO I DO WANT TO THANK MICHAEL MCNAMARA, WHO'S CEO OF LANUM AND HIS TEAM ALONG WITH ERIC GOFF THAT SERVED AS A CONSULTANT WITH LANUM FOR ALL THE DISCUSSIONS THAT WE'VE HAD OVER THE LAST SEVERAL MONTHS TO COME TO AMICABLE RESOLUTION.
SO WHAT DOES THIS MEAN? AT THE END OF THE DAY, THERE WAS THIS PATENT 4 3 3 PATENT AND A, A SERIES OF PATENTS UNDERNEATH THAT, A FAMILY OF PATENTS THAT WAS ALLEGED TO IMPLICATE LOAD RESOURCES THAT WANTED TO PARTICIPATE IN CLR, IN WHICH THEY WOULD DYNAMICALLY RESPOND TO A DISPATCH INSTRUCTION BY ERCOT.
IT DOESN'T IMPACT ANY TYPE OF LOAD RESOURCE, IT HAS TO BE A LOAD RESOURCE THAT WOULD BE ACTING UNDER THIS PROGRAM THAT WOULD IMPLICATE THE PATENTS THAT LAND CM HAD.
UM, WE OBVIOUSLY WANT TO CONTINUE TO SEE MORE AND MORE PARTICIPATION IN THE CLR PROGRAM AND OUR UNDERSTANDING FROM OUR PARTICIPANTS THAT THIS WAS ACTING AS A BARRIER FOR THEM TO, UH, REGISTER AS A CLR AND THEN BE DISPATCHED BY SCUD.
ULTIMATELY, THERE IS ALSO A NOTAL PROTOCOL REVISION REQUEST 1262 THAT'S PENDING AT PRS IN WHICH ONE MARKED PARTICIPANT FILED TO TRY TO WRITE AROUND THE PATENT TO RESOLVE THAT ISSUE IN A WAY.
AND SO FOR A COUPLE MONTHS, WE'VE BEEN ENGAGED WITH THE STAKEHOLDERS AT THE PRS COMMITTEE TABLING THAT REVISION REQUEST TO SEE IF WE COULD COME TO AMICABLE RESOLUTION ON THE LANING PATENT ISSUE.
SO THAT NPR IS STILL SITTING AT PRS AND WE'LL BE TALKING TO PRS, I BELIEVE THAT'S TOMORROW ABOUT THE SAME MATTER TO SEE IF WE CAN GET THAT DISMISSED.
SO WORKING WITH LANCIA, LANCIA HAS OFFERED UP A NO COST LICENSE TO ERCOT TO RESOLVE THIS ISSUE.
WE ENTERED INTO A TERMS SHEET WITH LANCIA BACK IN FEBRUARY, AND ULTIMATELY THIS IS JUST FOR THE ERCOT REGION TO RESOLVE THIS POTENTIAL BARRIER TO ENTRY CONCERN FOR MARKET PARTICIPANTS TO PARTICIPATE IN THE CLR PROGRAM OR AS A LOAD RESOURCE OFFERING ANCILLARY SERVICES.
WE'VE NOTIFIED PRS THROUGH COMMENTS FILED WITH LANUM AND ERCOT THAT WE'D ENTERED INTO THIS TERM SHEET AND THAT WE WERE GONNA WORK ON A LICENSE AGREEMENT.
ON THIS SLIDE ARE THE HIGH LEVEL TERMS OF THE LICENSE AGREEMENT.
YOU ALSO HAVE THE ACTUAL LICENSE AGREEMENT AS AN ATTACHMENT TO THIS PRESENTATION.
BUT IN SHORT, THIS LICENSE APPLIES TO ERCOT AND ANY MARKET PARTICIPANT THAT WE WILL SUB-LICENSE THAT REGISTERS WITHIN THE ERCOT REGION TO PARTICIPATE AS ACL R, AS A LOAD RESOURCE FOR ANCILLARY SERVICES.
SO THIS WILL, THIS IS JUST FOR THE ERCOT REGION.
CIA MAINTAINS FULL CONTROL OF ITS LICENSES OUTSIDE THE ERCOT REGION, BUT FOR THE ERCOT REGION, ERCOT WILL BE ABLE TO EXECUTE A NO-COST LICENSE AGREEMENT TO RESOLVE THIS ISSUE.
OUR EXPECTATION IS THAT WE'LL EXECUTE THIS AGREEMENT THIS WEEK AFTER WE TALK TO PRS AND GET ANY FINAL COMMENTS, THEN WE WILL ISSUE A MARKET NOTICE AND POST THE, THE EXECUTED LICENSE AGREEMENT ON THE ERCOT WEBSITE.
AND THAT SHOULD RESOLVE THIS ISSUE.
OF COURSE, IT'S UNKNOWN WHETHER WE'LL SEE MORE LOAD RESOURCES COME INTO THE CLR PROGRAM, BUT THIS WILL NOT BE A NARRATIVE ON WHY THIS COULD SERVE AS A BARRIER TO ENTRY FOR THOSE ENTITIES TO COME INTO THE ERCOT MARKET.
SO WITH THAT, I'M HAPPY TO ANSWER ANY QUESTIONS.
ANY QUESTIONS FOR CHAD? SAY, I ASSUME THE ANSWER IS NO, BUT, UH, IS THERE ANY INFORMATION CAPTURED BY THE SOFTWARE LICENSE THAT COULD FLOW BACK TO LANING AND COULD BE COMPETITOR ADVANTAGE BY ANY CHANCE? NO, NOT FROM AN ERCOT REGION STANDPOINT.
SO THE, THE LICENSE IS BROAD ENOUGH THAT IT CAPTURES ANY PROSPECTIVE LICENSES GOING FORWARD.
UH, ANY PROSPECTIVE PATENTS THAT, UH, REVOLVE AROUND THE DESIGN OF OUR CLR PROGRAM AND HOW LOAD RESOURCES PARTICIPATE.
SO I DON'T ANTICIPATE THIS BEING AN ISSUE FOR LANCIA OR FOR OUR PARTICIPANTS IN THE ERCOT REGION GOING FORWARD.
ANY OTHER QUESTIONS? OKAY, I THINK THIS IS DEFINITELY A GOOD THING FOR THE, UH, GROWTH OF THE TEXAS MARKET WHEN IT COMES TO CLRS.
[03:35:02]
ALRIGHT, THAT, WITH THAT WE'LL MOVE[12. TAC Report ]
ON TO, UH, AGENDA ITEM 12, THE TAC REPORT.WE'RE GONNA INVITE OUR THIRD ATTORNEY IN A ROW TO COME UP TO THE, UH, TO THE PODIUM.
UH, THE TAC TAC RECENTLY APPROVED ON A NON UNANIMOUS BASIS TO REVISION REQUEST, UM, OR RECOMMENDED TO THE BOARD TO REVISION REQUEST ON A NON UNANIMOUS BASIS, UH, TO VOTE ON AGENDA ITEM 12.11, WHICH IS NPRR 1190 HIGH DISPATCH, LIMIT OVERRIDE PROVISION FOR INCREASED LOAD SERVING ENTITY COST AND AGENDA ITEM 12.2, UH, NPRR 1 2 6 9 REALTIME COOPERATION PLUS BATTERIES, UH, THREE PARAMETERS, POLICY ISSUES, NPRR 1269 IS AN URGENT RE REVISION REQUEST.
UH, CAITLIN IS GONNA WALK US THROUGH 1190 FIRST, WE'LL HAVE A VOTE ON THAT, AND THEN WE WILL, UH, DIG INTO NPR 1269.
SO, CAITLIN, WHY DON'T YOU WALK US THROUGH YOUR REPORT AND THEN 1190.
UM, AND BEAR WITH ME, MY THROAT IS A LITTLE SCRATCHY TODAY.
UM, AND I THOUGHT WE WERE GONNA GET A BREAK BEFORE MY REPORT, SO GOOD MORNING, OR I THINK CLOSE TO AFTERNOON, KAITLYN SMITH, CHAIR OF THE TECHNICAL ADVISORY COMMITTEE.
AS, AS CHAIRMAN FLORES SAID, I WILL BE WALKING YOU THROUGH THE ATTACK REPORT, AND IN PARTICULAR THE REVISION REQUEST WITH OPPOSING VOTES.
THE, UM, SO AS WE DO AT EACH BOARD MEETING, I'LL BE PRESENTING A SUMMARY OF THE TECH MEETINGS THAT HAVE OCCURRED SINCE THE LAST BOARD MEETING, WHICH WERE OUR FEBRUARY AND MARCH TECH MEETINGS.
AT THE FEBRUARY AND MARCH MEETINGS, WE RECOMMENDED APPROVAL OF 14 REVISION REQUESTS.
TWO OF THOSE HAD OPPOSING VOTES, AS THE CHAIRMAN MENTIONED, THOSE WERE 1190 AND 1269.
WE ALSO APPROVED OUR 2025 TAX STRATEGIC OBJECTIVES.
UM, THESE USED TO BE CALLED GOALS, BUT WE REBRANDED.
SO HERE'S THE LIST OF THE 12 UNANIMOUS REVISION REQUESTS.
I WILL DRAW YOUR ATTENTION TO, TO TWO ON THIS PAGE THAT ARE PARTICULARLY RELEVANT TO CONVERSATIONS WE'VE BEEN HAVING TODAY.
UH, THOSE ARE NPRR 1234 AND, UH, PR ONE 15.
THEY DID HAVE A COUPLE OF ABSTENTIONS EACH, UH, 1234 IS INTERCONNECTION REQUIREMENTS FOR LARGE LOADS AND MODELING STANDARDS FOR LOADS 25 MEGAWATTS OR GREATER.
UM, PGRR ONE 15 IS, IS THE RELATED PLANNING GUIDE REVISION REQUEST, I THINK.
UM, SO I KNOW REBECCA HAS THESE ON HER PRESENTATION, BUT IS THIS IS SORT OF THE FIRST BIG DELIVERY OF WORK FROM THE LARGE FLEXIBLE LOAD TASK FORCE THAT REPORTS TO TAC CURRENTLY? I, I THINK IT'S MONUMENTAL FOR TWO REASONS.
UM, ONE, PASSING THESE REVISION REQUESTS, I THINK IS A, A TESTAMENT TO THE GOOD WORK OUR COTTON STAKEHOLDERS ARE DOING.
THROUGH THE KIND OF DISCUSSIONS WE'VE HAD TODAY, I THINK, I THINK YOU WOULD NOTICE AND, AND ASSUME THAT SOME OF THESE LARGE LOADS ARE NEW STAKEHOLDERS, NEW PEOPLE TO NEW BUSINESSES, TO THE ERCOT PROCESS.
AND I THINK WE'VE DONE A REALLY GOOD JOB OF INCORPORATING THEIR EXPERTISE AND WORKING WITH THEM ON THIS.
AND THEN TWO, I THINK THIS IS KIND OF A, A TURNING POINT FROM HERE ON OUT.
I THINK WE'LL BE FOCUSING MORE ON THE OPERATIONAL ISSUES, UH, AS WE'VE KIND OF WRAPPED UP SOME OF THESE INTERCONNECTION ISSUES.
WE WILL BE ALSO REBRANDING LARGE FLEXIBLE LOAD TASK FORCE.
IT WILL BE JUST LARGE LOAD, PROBABLY WORKING GROUP AND ADDING A HYPERSCALER OR A DATA CENTER SUBGROUP.
SO WE COULD REALLY FOCUS ON THE EXPERTISE OF, OF THOSE OPERATIONS.
SO HERE ARE THE TWO WITH OPPOSING VOTES AND HERE ARE OUR STRATEGIC OBJECTIVES.
UM, I THINK WE, THEY'RE NOT 2025, I THINK THEY'RE EVERGREEN BECAUSE I BELIEVE I LOST THE ARGUMENT TO PUT 2025 IN THE NAME.
SO, SO ESSENTIALLY COMING INTO THIS YEAR, WE HAD GOALS AND IT WAS A, A LONG THREE PAGE LIST.
SOME WERE KIND OF BROAD AND NOT REALLY ACTIONABLE.
SOME WERE VERY SPECIFIC, BUT THEY WEREN'T, THEY WEREN'T COHESIVE OR CONSISTENT.
IT WAS KIND OF EVERYBODY WAS, WAS ADDING GOALS AND THEN WE WERE APPROVING THEM AND WE DIDN'T HAVE A GOOD WAY OF KEEPING OURSELVES ACCOUNTABLE.
WE, WE SORT OF REBRANDED WHAT WAS FORMERLY KNOWN AS GOALS TO BE STRATEGIC OBJECTIVES.
THESE ARE THOUGHT TO BE MORE EVERGREEN AND REALLY KIND OF THE STANDARDS THAT WE AS TAC WILL HOLD OURSELVES TO.
AND THEY PRETTY CLOSELY PARALLEL THE ERCOT STRATEGIC OBJECTIVES AND THE PLAN THAT'S, THAT'S SET EVERY FEW YEARS.
THE SECOND THING WE ARE DOING IS STARTING TO FOCUS MORE
[03:40:01]
ON OUR ACTION ITEMS LIST.THAT'S NOT IN FRONT OF YOU, BUT THAT IS THE ACTIONABLE ITEMS. UM, THEY COULD BE PROACTIVE, THEY COULD BE IN RESPONSE TO AN, A VENDOR ISSUE, BUT SORT OF A HOT TOPIC AND, AND SOMETHING WE WANNA INVESTIGATE THAT MAYBE DOESN'T HAVE A REVISION REQUEST.
A GOOD EXAMPLE WOULD BE RUCKS.
YOU KNOW, I, I KNOW YOU GUYS HEARD ABOUT RUX YESTERDAY AND THE INCREASE WE'RE HAVING.
SO, SO MAYBE SOMEBODY SAYS, WE WANNA TAKE A LOOK AT THAT AND THERE'S NO ASSOCIATED REVISION REQUEST.
THAT'S A GOOD EXAMPLE OF AN ACTION ITEM.
AND SO HERE, WITH ALL THAT SAID, HERE ARE THE NEW STRATEGIC OBJECTIVES.
I'LL POINT OUT A COUPLE OF 'EM.
UM, ONE, WORK WITH ERCOT STAFF TO EFFICIENTLY EXECUTE THE BOARD STRATEGIC OBJECTIVES FOR ERCOT AND ALIGN T OF SUBCOMMITTEE GOALS ACCORDINGLY.
UM, I THINK THE IMPORTANT WORD HERE IS EFFICIENCY.
WE ARE TRYING TO BE VERY MINDFUL OF ERCOT STAFF TIME AND A LITTLE BIT MORE DELIBERATE ON HOW WE ASSIGN THINGS IN THE PROCESS.
WE HAVE A LOT OF WORKING GROUPS AND SUBCOMMITTEES, SO TRYING TO GET RID OF SOME OF THE MAYBE REDUNDANCIES THERE WHEN WE SEND A REVISION REQUEST THROUGH CONSIDERATION.
UM, FOUR I THINK IS PROBABLY THE MOST IMPORTANT ONE THROUGH THE STAKEHOLDER PROCESS.
PROVIDE TECHNICAL AND POLICY PERSPECTIVES ON ISSUES PERTINENT TO
I THINK THAT'S WHAT WE'RE REALLY BRINGING TO THE PROCESS, RIGHT, ARE PERSPECTIVES ON, ON THE TECHNICAL AND ON THE POLICY, UM, SO THAT WE CAN SHARE THAT WITH THE REST OF THE GROUP.
AND THEN FIVE, ENGAGE WITH ERCOT BOARD TO PROVIDE ERCOT MEMBER PERSPECTIVES ON ERCOT RELATED INITIATIVES AND THEIR IMPACTS.
I THINK WE'LL TALK BRIEFLY ABOUT THIS LATER, BUT THE, UM, THE BOARD STAKEHOLDER ENGAGEMENT WE'RE REALLY HAPPY WITH.
AND I KNOW IN JUNE WE WILL BE COMING TO, TO TALK ABOUT SORT OF A HOT TOPIC AND SHARE STAKEHOLDER EDUCATION AND PERSPECTIVE WITH THE BOARD.
SO HIGHLIGHTS, UM, NON NON REVISION REQUEST HIGHLIGHTS, REALTIME CO OPTIMIZATION.
YOU WILL SEE THE REVISION REQUESTS THERE.
UM, I'LL JUST GIVE A, A QUICK SHOUT OUT IN OUR, OUR PRE-MEETING WITH CHAIRMAN FLORES.
I DID, BUT FOR BENEFIT OF EVERYBODY, MATT MARINAS HAS DONE A GREAT JOB ON THIS AT ARCOT.
UM, IF I EVER NEEDED A PROJECT MANAGER AGAIN IN MY LIFE, I WOULD CALL MATT.
SO HE'S DONE A GOOD JOB OF KEEPING STAKEHOLDERS KIND OF ON TIME.
THERE'S MARKET TRIALS, THERE'S POLICY DECISIONS, AND HE IS IS VERY GOOD AT TELLING US WHEN WE NEED TO MAKE A DECISION.
AND HE AND ERCOT HAVE BEEN VERY OPEN, RIGHT? IF THERE'S SOMETHING STAKEHOLDERS SAY, WELL, OR THE IMM SAYS LET'S GO BACK AND LOOK AT THIS, OR THIS ISN'T HOW IT'S WORKING IN PRACTICE, I THINK ERCOT HAS BEEN VERY GOOD AND VERY OPEN ON THAT.
AND KEEPING THE, THE PROJECT ON TIME AS WELL.
AS I JUST MENTIONED, ERCOT BOARD STAKEHOLDER ENGAGEMENT.
WE ARE PREPARING FOR JUNE BOARD.
UM, WE ARE HOPING TO PROVIDE STAKEHOLDER PERSPECTIVE.
AND, AND SO OUR PROPOSAL IS THAT WE WOULD HAVE THREE DIFFERENT SEGMENTS PRESENT THEIR PERSPECTIVE ON TRANSMISSION ISSUES.
FOR THIS MEETING IN PARTICULAR, THE THREE SEGMENTS WOULD BE THE, THE IOU, SO THE ONES DOING THE TRANSMISSION PLANNING.
UM, SECOND THE INVERTER BASED RESOURCES.
SO THEY CAN TALK ABOUT HOW TRANSMISSION AND TRANSMISSION PLANS AFFECT THEIR SITING.
THINGS LIKE GENERIC TRANSMISSION CONSTRAINTS.
AND THEN THE THIRD ONE, I THINK WE ARE LOOKING FOR A, A LARGE OR INDUSTRIAL CONSUMER BECAUSE THOSE ARE THE ONES PAYING FOR TRANSMISSION.
AND SO I THINK THOSE THREE PERSPECTIVES WILL REALLY GIVE YOU A FULL PICTURE, RIGHT? SO YOU CAN ASK WHAT'S KEEPING YOU UP AT NIGHT TO ALL THREE.
AND THEY CAN TELL YOU, YOU KNOW, I WAKE UP AND I DO THIS.
AND SO IT'S NOT ADVOCACY, BUT IT'S, IT'S PERSPECTIVE SEGMENT MEMBERSHIP, UM, REVISIONS TO CURRENT SEGMENT MEMBERSHIP STRUCTURE THAT THE IMPETUS FOR THIS WAS REALLY, AGAIN, THE, THE LARGE LOADS THAT THE DEFINITION OF INDUSTRIAL MAYBE DID NOT, WAS NOT TOTALLY INCLUSIVE OF DATA CENTERS AND CRYPTOCURRENCY LOAD.
SO THE PROPOSAL THERE IS TO EXPAND THAT TERM TO INCLUDE COMPUTING PROCESSES, INCLUDING VIRTUAL CURRENCY MINING AS DEFINED BY STATE LAW.
UM, WE DID TAKE THAT OPPORTUNITY TO DISCUSS OTHER ASPECTS WE MAY WANT CHANGED.
UM, THERE'S A PROPOSAL TO FORMALLY SPLIT, UH, THE SEATS AND THE, THE INVERTER BASED RESOURCE AND, AND THERMAL GENERATION RESOURCES.
THERE'S A PROPOSAL TO CHANGE THE DEFINITION OF TRANSMISSION AND DISTRIBUTION ENTITY.
UM, SO, SO THAT A AFFILIATE OF A TRANSMISSION ENTITY COULD PARTICIPATE IN OTHER SEGMENTS.
AND SO I THINK THE NEXT STEPS HERE IS THAT THE CORPORATE SECRETARY WOULD SUBMIT THESE, BUT I THINK IF STAKEHOLDERS GET TO SOME CONSENSUS, THERE WOULD BE AN IMPACT THERE.
AND OF COURSE, A MEMBER CAN ALWAYS PROPOSE AN AMENDMENT AS WELL.
[03:45:01]
MARKET DESIGN FRAMEWORK, I DON'T HAVE A LOT TO SAY HERE.UH, WE ARE CONTINUING OUR DISCUSSIONS WITH, WITH ERCOT.
WE HAD A LONG DISCUSSION IN JANUARY.
I THINK WE WILL HAVE A WORKSHOP IN APRIL.
LARGE LOAD ISSUES, I MENTIONED THIS, UM, EVERY MONTH ATTACK, WE REVIEW THE UPDATE TO THE LARGE LOAD INTERCONNECTION STATUS.
UM, AND WE ARE IN PROCESS OF REVISING THE SCOPE OF THAT GROUP.
SO IT WOULD BE NOT LARGE FLEXIBLE LOAD, BUT JUST LARGE LOAD AND PROBABLY BE A, A WORKING GROUP INSTEAD OF A TASK FORCE THAT THE SIGNIFICANCE THERE BEING, IT WOULD BE MORE PERMANENT.
AND THEN AGAIN, PROBABLY HAVING A SUBGROUP FOR, FOR HYPERSCALERS OR DATA CENTERS TO, TO REALLY FOCUS ON THE EXPERTISE ON THOSE OPERATIONAL ISSUES.
OUTAGE COORDINATION, OUTAGE CAPACITY CALCULATION.
THIS IS THE, UM, M-D-R-P-O-C THAT, THAT WOODY CANNOT REMEMBER THE ACRONYM AND I, I WON'T EVEN ATTEMPT, BUT I I THINK THE LAST WORD WAS CAPACITY.
UM, THE ISSUE HERE IS THAT THE METHODOLOGY FOR, UM, CALCULATING, YOU KNOW, HOW, HOW MUCH OUTAGE PLANNED OUTAGE YOU CAN HAVE AND THE LOAD FORECAST IS AN INPUT TO THIS.
AND SO THAT, THAT HAS PRESENTED A CHALLENGE.
AND SO ERCOT IS, IS WORKING ON, UM, AN UPDATED METHODOLOGY AND STAKEHOLDERS WHO ARE VERY INTERESTED ARE, ARE WORKING ON, ON UPDATED METHODOLOGY AS WELL, I BELIEVE.
ANY QUESTIONS ON ANY OF THAT BEFORE I GET TO THE REVISION REQUESTS? OKAY.
SO NPR 1190, UM, THIS IS THE HIGH DISPATCH LIMIT OVERRIDE PROVISION FOR INCREASED LOAD SERVING ENTITY COSTS.
UH, THIS ADDS A PROVISION FOR RECOVERY OF, UM, DEMONSTR DEMONSTRABLE FINANCIAL LOSS ARISING FROM A MANUAL HIGH DISPATCH LIMIT OVERRIDE TO REDUCE REAL POWER OUTPUT IN THE CASE WHEN THAT OUTPUT IS INTENDED TO MEET QSC LOAD OBLIGATIONS.
UH, SO THERE IS EXISTING POLICY HERE.
THIS FIRST EXPANDED IT TO NOE'S AND THEN SORT OF EXPANDED IT AGAIN TO ALL REPS.
THIS INITIALLY CAME TO THE AUGUST BOARD AND WAS REMANDED BACK TO TAC AT THE OCTOBER BOARD.
AGAIN, SORT OF A LONG HISTORY BEHIND THIS, STARTING IN 2013 WITH THE A CONTESTED CASE.
AND THEN IN 2014 WITH THE NPRR THAT WAS INITIALLY VOTED DOWN AND THEN APPEALED.
SO WE'RE SORT OF SEEING THAT KIND OF CONTROVERSY OVER THE, THE POLICY AGAIN, UM, WHERE, WHERE WE LANDED AS TECH IS ON A, A COMPROMISE WHERE WE WOULD STILL HAVE THIS POLICY, BUT BASICALLY A, A TRIGGER WHEN PAYMENTS REACHED $10 MILLION ANNUALLY, WE WOULD REVIEW THE, THE OPERATIONAL AND SETTLEMENT ASPECTS OF THIS.
ERCOT CAME BACK AND PROPOSED 3.5 MILLION.
UM, THE, THE HISTORICAL DATA WE HAD USED TO GET TO THE 10 MILLION INCLUDED YURI AND INCLUDED TIMES WHERE WE HAD A $9,000 PRICE CAP INSTEAD OF 5,000.
UM, AT THE TIME I, I BELIEVE ERCOT WAS SUPPORTIVE OF IT.
I BELIEVE THEY ARE NOW TAKING NO OPINION ON, ON REVISION REQUESTS HAVING TO DO WITH, UM, COST ALLOCATION.
BUT THE, THE SORT OF OPINION WITHIN THE NO OPINION WAS THAT THE, THE NUMBER MADE MORE SENSE DUE TO THE HISTORICAL CIRCUMSTANCES WITH YURI AND THE, THE PRICE CAP CHANGING.
SO WE DID HAVE A SLIGHT CHANGE THIS PAST HACK AGAIN WHEN IT CAME TO YOU THE FIRST TIME WITHOUT THE, THE COMPROMISE, WHICH IS THE TRIGGER, IT HAD ALL SIX CONSUMER VOTES OPPOSING IT NOW HAS FOUR CONSUMER VOTES OPPOSING.
UM, AND THE CONSUMER VOTES WHO, WHO STILL VOTED NO, POINTED US BACK TO THEIR OCTOBER COMMENTS.
BASICALLY, YOU KNOW, THE THINKING THESE PAYMENT, UM, OVERRIDE PAYMENTS ARE UNNECESSARY, UM, WILL FORCE CONSUMERS TO SUBSIDIZE MARKET PARTICIPANTS WHEN GRID CONDITIONS REQUIRE CURTAILMENT AND, AND SORT OF JUST THE POLICY OF PAYING FOR THE, WHAT THE OVERRIDE IS THERE.
ANY QUESTIONS HERE? ANY QUESTIONS ON NPR 1190? OKAY, WITH THAT, I'LL ENTERTAIN
[12.1.1 NPRR1190, High Dispatch Limit Override Provision for Increased Load Serving Entity Costs]
A MOTION TO, IF THERE'S NO OTHER DISCUSSION ON 1190, I'LL ENTERTAIN A MOTION TO, UM, APPROVE IT AS RECOMMENDED BY, BY ATTACK.UH, SO WE'VE HAD A, A MOTION BY PEGGY, A SECOND BY JULIE.
ANY OPPOSED? ANY ABSTENTIONS? OKAY.
MPR WE HAVE ONE OPPOSING FROM BEN
[03:50:01]
OR NO? OKAY.A NO VOTE FROM, UH, UH, BENJAMIN.
ALRIGHT, WITH THAT IT'S APPROVED, UH, WITH ONE NO VOTE.
[12.1.2 NPRR1269, RTC+B Three Parameters Policy Issues – URGENT ]
NPR 1269.UH, AGAIN, THAT IS, UH, RTC PLUS B THREE PARAMETERS, POLICY ISSUES.
UH, WE WILL, UH, WE WILL HAVE, UH, KAITLYN PRESENT, UH, TAX RECOMMENDATION AND THEY WILL GIVE AN OPPORTUNITY FOR OTHER COMMENTERS TO, UH, TO EXPRESS THEIR OPINIONS ON THIS PARTICULAR NPR KAITLYN.
ALRIGHT, UM, SO, SO EXACTLY CORRECT.
NPR 1269, THE, THE THREE PARAMETERS.
THIS ONE, UM, DID GET QUITE CONTENTIOUS AND THE AREA OF DISAGREEMENT WAS BASICALLY SO, SO, UM, FIRST THERE WAS PROPOSED A-A-S-D-C FLOOR IN RUCK.
AND THE TWO NOTES HERE IS, I THINK THIS IS TECHNICALLY NOT A FLOOR, IT'S A $15 PER MEGAWATT CURVE.
AND THEN TWO, I I SAY EVERYBODY GOT OKAY WITH IT.
I THINK NOT EVERYBODY WAS SUPPORTIVE OF THE, THE FLOOR IN RUCK, BUT KIND OF GOT COMFORTABLE WITH IT.
AND SO THEN WE EXTENDED THAT PROPOSAL, UM, SUPPORTED BY ERCOT AND THE GENERATORS TO EXTEND THAT ANCILLARY SERVICE DEMAND CURVE.
UM, $15 PER MEGAWATT CURVE OR, OR FLOOR AS WE'RE CALLING IT, TO REAL TIME AND TO DAY AHEAD.
AND WHAT THAT WAS INTENDED TO REMEDY IS INCO, AS YOU KNOW, WE SET OUR VOLUMES OF ANCILLARY SERVICES PRETTY FAR IN ADVANCE.
WE SET THEM THE YEAR BEFORE THROUGH THE ANCILLARY SERVICE METHODOLOGY THAT, THAT YOU APPROVE AND THE COMMISSION APPROVES.
AND WE HAVE SET THOSE QUITE HIGH, UM, SINCE YURI, SINCE WE'VE BEEN IN THE CONSERVATIVE OPERATIONS POSTURE.
SO THE WAY WE HAVE SET THE ANCILLARY SERVICE DEMAND CURVES IN 1268, WHICH WAS UNANIMOUSLY APPROVED TODAY, IS THE TAIL OF THE REQUIRED PROCUREMENT WOULD BE VALUED AT ZERO.
SO ON THE ONE HAND WE'RE SAYING YOU'RE REQUIRED TO PROCURE THESE, BUT ON THE OTHER HAND WE'RE SAYING YOU CAN'T PROCURE THESE 'CAUSE THEY HAVE A ZERO VALUE.
AND SO THAT'S HOW WE GET, GOT TO SORT OF HAVING A HIGHER THAN ZERO FLOOR ERCOT ANALYSIS SHOWED THAT THE $15 FLOOR WOULD ENSURE PROCUREMENT OF THAT FULL ANCILLARY SERVICE REQUIREMENT MORE OFTEN AND WOULD INCREASE RELIABILITY.
UH, WE HAD FIVE VOTES AGAINST OR SEVEN VOTES AGAINST.
WE HAD THE ENTIRE CONSUMER SEGMENT, UM, AND THEN ONE FROM THE I REP SEGMENT.
AND I WOULD SAY, YOU KNOW, THE CONCERN IS ONE WITH THE, THE HIGH LEVEL OF RESERVES, ESPECIALLY WHEN SHOWN NOT TO BE NEEDED.
SO THERE'S THAT DISCREPANCY THERE SAYING THEY'RE REQUIRED, BUT ALSO WE, WE CAN'T FULFILL THAT REQUIREMENT.
AND THEN I THINK THERE WAS A, UM, THEY WERE AGAINST A, A FLOOR, ESPECIALLY WHEN THERE'S NOT AN EXTENUATING CIRCUMSTANCE.
SO I THINK THE PRINCIPLE IS WE SHOULD NOT REALLY HAVE A FLOOR UNLESS THERE'S DATA THAT THAT SHOWS WHY AND, AND WHICH SPECIFIC FLOOR.
AND I WILL LEAVE IT AT THAT UNLESS THERE'S ANY QUESTIONS FOR ME ON THET DISCUSSION OR DECISION.
ANY QUESTIONS FOR CAITLYN ON 1269? OKAY, CAITLYN, THANK YOU FOR YOUR REPORT AND FOR TAX HARD WORK ON BOTH OF THESE ISSUES AS WELL.
UH, ITEMS ON THE CONSENT AGENDA, UM, WE ARE GOING TO ASK, UH, IS IT KEITH IS GOING TO COME UP AND PRESENT ERCOT POSITION ON NPR 1269 AND THEN, WE'LL, I THINK WE'VE GOT SOME JOINT COMMENTERS.
I'M HERE TO PRESENT ON NPR 1269, THE ERCOT UH, POSITION, AND WE'LL COVER DISCUSSION ON, UH, TWO ITEMS. I KNOW MATT PRESENTED, UH, YESTERDAY HE SAID THERE WERE, THERE WERE THREE PARAMETERS AND ONE OF THEM HE NOTED WAS WITH REGARDS TO RAMPING THAT WAS NOT CONTENTIOUS.
UH, BUT THERE WERE TWO OTHER ITEMS, ONE AROUND THE ANCILLARY SERVICE DEMAND CURVE, UH, FLOOR, AND THE SECOND ITEM AROUND WHAT IS ALSO CALLED A PROXY CURVE FLOOR.
SO I WILL, UH, TOUCH ON THAT, UM, AND, AND DISCUSS OUR, OUR VIEWS ON THAT.
AND, AND SOME OF THE KEY TAKEAWAYS HERE IS THAT WE, WE DO FEEL THAT THERE IS A LEGITIMATE CONCERN, UM, THAT THE DAY AHEAD IN REAL TIME PRICING, UH, MAY NOT BE SUFFICIENT AT TIMES TO INCENTIVIZE SELF-COMMITMENT, UM, AND ULTIMATELY COULD, COULD LEAD
[03:55:01]
TO THOSE INCREASED, UH, CONSTRUCTIONS.UH, THAT THE $15 FLOOR, UH, IS EFFECTIVELY, UM, UH, FAIRLY LIMITED OVERALL.
IT, WHEN IT DOES OCCUR, IT DOES PROVIDE, UH, UH, APPROPRIATE SIGNALS, BUT OVERALL THE PRICE IMPACT IS, IS FAIRLY LOW.
WE NOTE IT'S, IT'S, UH, 0.34, UH, DOLLARS PER, UH, MEGAWATT HOUR.
AND, UM, THE FLOORS WILL LESSEN THE, UH, THE SHORTAGES THAT THAT COULD OCCUR, UH, FOR THE, FOR THE ANCILLARY SERVICES, WHICH ULTIMATELY COULD LEAD TO, UH, UH, LEAD TO THOSE RUCKS.
AND THE PROXY OFFER FOR FLOOR IS, IS A COMPROMISE, UH, AND, AND WAS USED AND STUDIED, UH, AND WAS USED WITHIN THE A SDC STUDIES AND, UH, WE DID NOT SEE ANYTHING, UH, FROM AN OUTCOME PERSPECTIVE THAT WE WOULD CONSIDER, UH, UNREASONABLE OR, OR WARRANTING, UH, FURTHER ACTION OR CONCERN.
SO, UH, STARTING FIRST WITH THE ANSLEY SERVICE DEMAND CURVE FLOOR, UH, I THINK, UH, WE ARE CONCERNED THAT THERE WILL BE, UH, AN INCREASED INSTANCE OF, UH, RE THE RELIABILITY UNIT COMMITMENTS THAT CONCUR.
AS A RESULT OF THIS, UH, WE DID EXTENSIVELY STUDY THE $15 PER MEGAWATT, UH, UH, OUR A STC FLOOR IN THE R.
AND SO JUST TO BE CLEAR, I KNOW THERE WAS POTENTIALLY SOME CONFUSION THAT HEY, YOU DIDN'T STUDY THAT ACTUALLY WE DID, AND WE STUDIED IT TO IDENTIFY AT WHAT LEVEL, UH, OF, OF A FLOOR WITHIN THAT R PROCESS WOULD, WOULD BE EFFECTIVE IN, IN CREATING, UH, UH, THE SOLUTION WHERE THOSE RESOURCES WERE, UH, BEING COMMITTED THROUGH THE RUCK RATHER THAN, UH, LEAVING US, UH, SHORT AND HAVE THE OPERATORS HAVE TO TAKE ACTION.
UH, WE DO, UH, ANTICIPATE THAT EXTENDING THE $15, UH, PER MEGAWATT PER HOUR FLOOR AND CURVE TO THE, THE DATA IN REAL TIME SHOULD HELP PROMOTE SELF-COMMITMENT.
UM, OUR ANALYSIS SHOWED THAT THAT HITTING THE A-S-D-A-S-D-C FLOOR WAS RELATIVELY INFREQUENT AT 1.4% OF INTERVALS, UH, THAT WE DID ANALYZE.
AND, AND BY INTERVALS WE DID LOOK AT SEVERAL, LIKE 12,000.
SO WE ARE TALKING ABOUT A PRETTY SIGNIFICANT AMOUNT OF DATA THAT WE LOOKED THROUGH, UH, WHEN WE DID THIS ANALYSIS.
AND THE PRICE IMPACT WAS, UH, OVERALL VERY, VERY LIMITED, UH, BUT IMPORTANT WHEN IT DID, WHEN IT WAS THERE, IT WAS IMPORTANT.
BUT, UM, UH, OVERALL, UH, NOT, NOT AS SIGNIFICANT.
UH, WE DO SEE IT IMPORTANT TO COMPENSATE RESOURCES TO MEET THE RESERVE REQUIREMENT, UH, THAT WOULD BE VALUED AT ZERO OR AT PENNY'S OTHERWISE.
AND SO IT'S IMPORTANT THAT, UH, IF, IF YOU'RE, UM, UH, ULTIMATELY RUCKING RESOURCES THAT THERE'S VALUE TO THAT AND ULTIMATELY, UH, UH, WHAT WE SEE, UH, UNDER THE CURRENT, IF THE, IF THE FLOOR WERE TO BE AT ZERO, THAT, THAT YOU WOULDN'T, UH, WOULDN'T BE VALUING THOSE RESOURCES.
AS, AS CAITLYN NOTED, THIS IS, THIS IS NOT A PRICE FLOOR.
UH, WE ARE NOT ADDING $15 TO PRICES.
UH, WHAT IT DOES IS IT, IT INCREASES THE LEVEL AT WHICH YOU WILL EVALUATE OFFERS, UH, TO SET THE PRICE.
UM, AND, AND SO IT IS NOT NECESSARILY A, A PRICE FLOOR.
IT'S, IT'S NOT A PRICE FLOOR, IT IS AN EVALUATION FLOOR.
AND SO THE, THE IMPORTANCE OF THIS IS, UH, EXTENDING IT FROM THE RUCK TO THE, UH, TO THE DAY AHEAD IN THE REAL TIME.
I DID ALLUDE TO THIS A LITTLE BIT YESTERDAY IN MY COMMENTS ABOUT THE, UH, ABOUT THE WINTER WINTER WEATHER.
WE SAW A CHART, UH, THAT SHOWED THAT THE, UH, WHEN THE PRICE SIGNALS IN THE DAY AHEAD WERE ROBUST.
UH, WE SAW A REDUCED INSTANCE OF, OF, OF RUCKS ON THOSE DAYS.
AND ON THOSE DAYS WHERE THE PRICES WERE, WERE LESS, UH, LESS, UH, ROBUST, UH, A HIGHER INSTANCE OF, OF, OF RELIABLE, UNIQUE COMMITMENTS.
AND SO THAT, THAT SAME CONCEPT HERE APPLIES THAT, UH, WE, WE ARE DEPENDENT ON PRICE SIGNALS TO HELP PROMOTE, UH, RELIABLE, RELIABLE OUTCOMES.
I I WILL MAKE, UH, ONE CORRECTION FROM, FROM WHAT WAS STATED YESTERDAY IS THAT, UM, IT DOES, WHILE THIS DOES ENHANCE RELIABILITY, UM, UH, IN, IN THE SHORT RUN, THE OPERATORS HAVE THE ABILITY TO, TO TAKE A RUCK ACTION.
AND SO, UH, THEY, THEY WILL, THEY WILL ACHIEVE THAT RELIABLE OUTCOME REGARDLESS.
AND SO BY INCLUDING THE FLOORS, NOT ONLY IN THAT R PROCESS, BUT IN THE MARKET PROCESS, YOU BEGIN TO MOVE THOSE OPERATOR ACTIONS INTO THE MARKET ITSELF.
SO THE MARKET IS, IS, IS WORKING TO MIMIC WHAT, UH, ERCOT OPERATORS OR ARE
[04:00:01]
GOING TO BE DOING OTHERWISE.AND IN DOING SO, WE CAN ALSO SEND THE PRICE SIGNALS INTO THE MARKET TO ALLOW FOR THAT TO OCCUR.
AND SO, AND, AND IN SO DOING IT, IT CAN HELP TO ENHANCE, UH, LONGER TERM PRICE SIGNALS BY, BY HAVING THOSE, UH, THOSE FLOORS AND, AND, AND UH, HELPING, HELPING ENSURE THAT THOSE SELF COMMITMENTS ARE, ARE OCCURRING.
UM, WE CAN ALWAYS FINE TUNE THE FLOOR LATER, UM, AS, AS NEEDED.
I THINK, UH, THAT'S SOMETHING THAT IS, IS ALWAYS A POSSIBILITY.
UM, I THINK THE, IT WOULD HAD, HAD WE HAD THE LUXURY OF TIME TO BE ABLE TO DO AN EXTENT, EXTENT OF AN EXHAUSTIVE, UH, APPROACH TO EVALUATING WHICH SPECIFIC PRICE, UH, IN THE DAY AHEAD IN REAL TIME COULD, COULD IDENTIFY IT.
WE IDENTIFIED 15 EXTENSIVELY IN THE RUCK.
UH, AND SO WE FELT THAT EXTENDING IT TO THE OTHER MARKETS WAS, WAS ALSO APPROPRIATE.
NOW, UM, I DO WANNA MAKE ONE OTHER NOTE THAT'S, THAT'S IMPORTANT.
I'M GONNA SWITCH OVER TO, UH, MATT'S PRESENTATION FROM, UH, FROM, FROM YESTERDAY.
UH, FOLKS MAY NOT HAVE HAVE PICKED UP ON THIS, BUT ON SLIDE 30, UH, WE DID HIGHLIGHT SOME ANALYSIS THAT WE HAD DONE.
I THINK IT'S IMPORTANT TO RECOGNIZE THAT RUCK DOES, RUCK HAS ITS OWN COSTS AS WELL.
SO IF YOU'RE RUCKING A RESOURCE, YOU HAVE TO, UH, THERE ARE SOME COSTS ASSOCIATED WITH THAT.
AND SO WE WERE ABLE TO, AT THE REQUEST OF, UH, COMMISSIONED STAFF TO EVALUATE WHAT THOSE COMMITMENT COSTS ARE AND WHAT THE POTENTIAL OUTCOMES WOULD BE.
AND SO WE, WE HAD OBVIOUSLY CASE ONE IS OUR BASELINE, WHICH DOESN'T, UM, UH, WHICH IS, UH, THERE ARE NO FLOORS IN, IN THE BASELINE, BUT WE DO HAVE THE RUCK COMMITMENT COSTS.
AND FOR A RESOURCE WE SAW ON, ON ROUGHLY THAT IT WAS 92 MEGAWATTS ON, ON AVERAGE, THAT, UH, WE COULD, UM, AVOID RUCKING.
AND SO THE, WE ESTIMATED WHAT A RESOURCE OF, OF THAT SIZE WOULD BE FOR COMMITMENT COSTS.
AND WE ESTIMATED THOSE WERE ABOUT A LITTLE OVER $3 MILLION IN TERMS OF RUT COMMITMENT COSTS.
AND THEN WE APPLIED THAT TO TWO DIFFERENT CASES.
AND CASE TWO IS AN, IS A MORE EXTREME CASE, UH, HIGH END ESTIMATE.
AND, UH, CASE THREE IS, UH, UH, LOWER END, BUT, BUT PROBABLY CLOSER TO THE ESTIMATIONS THAT WE WOULD ANTICIPATE THAT WILL OCCUR, UH, IN THE MARKET.
AND SO WHAT WE SEE IS, UH, IN EXTREME CASES, UM, THE, THE 47.7 MILLION IS, IS A REPRESENTATION OF IT.
IT WOULD COST MORE WITH THE FLOORS.
HOWEVER, IN CASE THREE, WHICH WE CONSIDER TO BE MORE REPRESENTATIVE, UH, OF, OF THE OUTCOMES WE EXPECT, IT ACTUALLY RESULTS IN NEGATIVE ONE POINT, UH, NEGATIVE 1.9 MILLION, WHICH IS ACTUALLY REDUCTION IN COSTS ONCE YOU FACTOR IN THE COMMITMENT COSTS.
SO IT, IT ACTUALLY COULD RESULT IN CHEAPER OUTCOMES RELATIVE TO THE, UM, UM, UH, A, A NO FLOOR APPROACH.
SO I THINK THIS IS AN IMPORTANT CONCEPT AND, AND AGAIN, WE APPRECIATE THAT IT'S, IT'S SORT OF LATE BREAKING INFORMATION, BUT AGAIN, IT WAS BASED ON SOME QUESTIONS WE RECEIVED LATE FROM COMMISSION STAFF THAT WERE, UM, DEFINITELY VERY THOUGHTFUL QUESTIONS AND SOMETHING THAT WE, WE TRIED TO, TO DO AS, AS QUICKLY AS WE COULD AND, AND WE'RE ABLE TO INCLUDE IN THIS, THIS DECK.
SO I'LL JUST SWITCH BACK TO MY PRESENTATION AND SEE, UH, AT LEAST FOR THIS FIRST ITEM ON THE A SDC FLOORS, IF, IF, UH, THE BOARD HAS ANY QUESTIONS, UH, ON THESE, ANY QUESTIONS FOR KEITH? OKAY.
AND SO I'LL MOVE TO THE SECOND, UH, ITEM, WHICH IS THE PROXY OFFER CURVE FLOOR.
AND, UM, BASED ON SOME, SOME FOLLOW UP CONVERSATIONS, I, I REALIZE THERE MAY BE SOME CONFUSION THAT I'LL TRY TO SWITCH BACK TO MATT'S PRESENTATION FROM YESTERDAY TO HELP, HELP CLARIFY.
UH, SO ULTIMATELY, UH, A PROXY OFFER FLOOR IS, IS NEEDED WHEN THERE IS NO OFFER INCLUDED.
UH, AND, AND THAT CAN HAPPEN FOR, IT COULD BE HUMAN OR TECHNICAL AREA, UH, TECHNICAL ISSUES.
WE HAD SOME DISCUSSION ON, ON TAC ON HOW THAT COULD ARISE.
UH, A DISCUSSION AROUND A POTENTIAL COMMUNICATIONS TECHNICAL GLITCH THAT COULD OCCUR, WHICH COULD RESULT IN, UM, UH, THE LOSS OF INFORMATION BEING PROPERLY TRANSFERRED TO THE ER NOTT SYSTEMS. UM, THE QUESTION WAS ALSO RAISED AT T IF THE IMM, UH, HAD HAD NOTICED THIS IS A SYSTEMATIC PROBLEM.
AND, UH, AS, UH, AS, AS WAS NOTED, THIS IS GENERALLY NOT A HISTORICAL ISSUE.
AND, UM, UH, THE IMM HAD AGREED TO, TO PRESENT FURTHER INFORMATION HAD HAD, UH, HAD, TO THE EXTENT THAT THIS RAISES AS AS AN ISSUE, UM, THE PROPOSAL IN 1269 IS A COMPROMISE, UM, UH, THAT STRIKES THE BALANCE BETWEEN CONCERNS.
[04:05:01]
UH, THE ORIGINAL ERCOT PROPOSAL WAS ZERO, UH, DOLLARS PER MEGAWATT PER HOUR.UH, THE PER THE PARTICIPANT COUNTER PROPOSAL WAS, UH, $2,000 PER MEGAWATT PER HOUR.
AND ULTIMATELY, A, A COMPROMISE, UH, WAS, WAS DEVELOPED, WHICH IS, UH, IT'S THE LESSER OF $2,000 PER MEGAWATT PER HOUR, OR, UH, AND THIS IS WHERE IT GETS COMPLICATED, AND I'LL SHOW IN THE GRAPH IN A SECOND THE POINT ON THE ANCILLARY SERVICE DEMAND CURVE FOR THE ANCILLARY SERVICE THAT INTERSECTS WITH A QUANTITY THAT IS 95% OF THE ANCI SERVICE PLAN FOR THE ANCILLARY SERVICE.
SO, UM, LET ME SWITCH AND SHOW WHAT THAT IS, UH, BECAUSE IT IS NOT ENTIRELY INTUITIVE WHAT THAT MEANS.
SO LET ME GO UP, ALL RIGHT, IT'S ACTUALLY UP A LITTLE BIT.
SO IN MATT'S SLIDE DECK, UH, HE PRESENTED, UH, ESSENTIALLY, UH, YOU CAN SEE THE NPRR 1269 AS APPROVED.
AND SO, UM, THIS, THIS CHART DOWN HERE REPRESENTS THE, UH, THE ANCILLARY SERVICE DEMAND CURVES THAT ARE IN, UH, THE UNANIMOUS 1268.
AND SO, UH, WHAT, WHAT WOULD LIKELY REPRESENT 95, WHAT'S THE 95TH PERCENTILE? UM, AND SO WHEN YOU LOOK AT, THIS IS REGULATION SERVICE HERE, 95TH PERCENTILE, ROUGHLY IN OUR ANALYSIS TURNED OUT TO BE ABOUT 15, 1500.
WHEN YOU LOOK AT, UH, RRS IN THE ORANGE, THE 95TH PERCENTILE WAS, DID MY NOTES, UH, AROUND 400 TO 700.
SO IT'S AROUND HERE ON THE CURVE.
IT RESULTED IN ABOUT $17 TO $240.
AND THEN FOR A NONS SPEND, IT WAS IN THE 50 TO $60 RANGE, WHICH IS, YOU KNOW, SOMEWHERE AROUND HERE ON THE CURVE.
SO THAT REPRESENTS AROUND HERE, HERE, THERE, AND ABOUT THERE, UM, THE VALUE WE SAW IN OUR STUDIES, RIGHT? SO WE RAN, UM, SEVERAL INSTANCES OF THIS, AND THAT'S WHAT WE FOUND.
I WILL ALSO NOTE THAT IN ALL THE RUNS WE DID, IN NO CASE DID WE HIT THE $2,000 FLOOR.
OKAY? SO IT WAS ALL HITTING AT SOME OTHER PART, IT WAS HITTING THAT 95TH PERCENTILE OF THOSE CURVES.
SO, UM, I'LL PAUSE AND SEE IF THERE'S ANY QUESTION ON THE COMPROMISE CURVE ITSELF.
I JUST WANNA THANK KEITH FOR EXPLAINING THE OPERATING POINT AS STUDIED.
SO WHY THE NEED TO COMPROMISE? UM, THERE'S SORT OF A BALANCE OF POINTS TO BE CONSIDERED HERE.
UM, ON ONE HAND, UM, AS I SAID EARLIER ON, WE NEED A CURVE, UH, A COMPLETE CURVE SO THAT WE CAN ADDRESS ANY INAPPROPRIATE SCARCITY THAT COULD OCCUR.
AND, UM, THE CONCERN TO ALSO ADDRESS ANY PERS ANY STRATEGIC WITHHOLDING BEHAVIOR A PARTICIPANT PARTICIPANT MAY BE DOING.
AND SO, UH, UH, THIS IS SOMETHING THAT CAN BE DONE, UH, BY A PARTICIPANT IN THE, IN AN ATTEMPT TO RAISE PRICES, UM, IS TO, UH, CREATE A FALSE SCARCITY BY, UH, UH, INTENTIONALLY NOT SUBMITTING OFFERS.
AND SO A LOW OFFER CURVE OF $0 PER MEGAWATT PER HOUR CAN ADDRESS THOSE ISSUES.
SO YOU CAN ENSURE THAT, UH, YOU CAN ADDRESS AN APPROPRIATE SCARCITY AND THAT IT'LL BE THERE.
AND IF SOMEBODY IS ATTEMPTING TO DO A FORM OF STRATEGIC WITHHOLDING, YOU CAN ALSO ADDRESS THAT THE HIGH OFFER CURVE OF 2000, UM, UH, IS LESS LIKELY TO ADDRESS THE STRATEGIC BEHAVIOR ISSUE.
UM, BUT WHAT IT DOES, UH, BETTER THAN THE $0 IS TO THE EXTENT THAT I HAVE COSTS THAT I INCUR, UM, THOSE COSTS WILL, UH, IT CAN COVER A RANGE OF POTENTIAL COSTS IN, IN PRODUCING THOSE RESERVES.
AND SO, AS AN EXAMPLE, I MAY BE A, UH, A STORAGE RESOURCE AND, UM, I CHARGE IN THE MIDDLE OF THE DAY, UH, FOR $50,
[04:10:01]
AND I'M HOPING TO CATCH A RAMPING PERIOD LATER IN THE DAY.AND, UH, AND SO I SUBMIT AN OFFER, UH, THAT WOULD, WOULD REFLECT THAT, THAT, THAT COST, IF I'M SUBMITTING ZERO, UH, IN FOR THOSE RESOURCES, THEN, THEN I'M, UH, THE, THE LIKELIHOOD THAT I'M GOING TO BE TAKEN DURING THOSE PERIODS IS VERY HIGH.
SO MY COSTS ARE NOT GOING TO BE RECOGNIZED IN THAT PROCESS.
AND SO A $2,000, UM, PROXY OFFER WOULD, WOULD DEFINITELY ENSURE YOU WOULD COVER THAT, UH, IN, IN, IN MOST CASES, ALMOST, ALMOST ALL CASES.
AND SO IT'S TRYING TO FIND A COMPROMISE THAT BALANCES THESE TWO FORCES, RIGHT? IS IT STRATEGIC WITHHOLDING? ARE WE ABLE TO COVER COSTS? AND SO, UH, ULTIMATELY THAT'S THE NATURE BEHIND THE COMPROMISE THAT WE, WE DID FOR THE PROXY OFFER FLOOR, IS TO TRY TO BALANCE THOSE TWO CONCERNS.
AND, UH, ULTIMATELY, UH, IS SOMETHING THAT, UM, UH, IS, IS BROUGHT TO YOU, UH, TODAY.
SO, UH, I'M GONNA PAUSE AND SEE IF THERE ARE ANY QUESTIONS HERE WITH REGARDS TO THE PROXY OFFER FLOOR.
ANY QUESTIONS FOR KEITH? SAY, SO KEITH, DID THE, UH, COMPROMISE RESULT IN PARTIES CHANGING THEIR POSITION ON WHETHER OR NOT THERE WERE FOR AGAINST THIS? UM, I THINK THERE WAS, UH, THERE WERE STILL CONCERNS RAISED AT THE TAC, UH, AND THERE WAS AN ALTERNATIVE APPROACH IN SOME OF THE COMMENTS, BUT NO, THIS, THE COMPROMISE DID NOT CHANGE AS, AS FAR AS I KNOW, ANY, ANY POSITIONS ON THIS.
AND PART OF IT TOO IS IT WAS GROUPED WITH THE OTHER, THE OTHER ITEM AS WELL.
SO, SO, NO, I DON'T, I DON'T THINK SO.
AND I DON'T THINK THE BOARD HAD ANY OTHER QUESTIONS.
UH, THE IMM SUBMITTED COMMENTS THAT ARE INCLUDED IN YOUR BOARD PACKET ON, UH, PAGES 2 27 THROUGH 2 34, AND THEN ALSO THERE WERE COMMENTS SUBMITTED ON THIS NPR THIS PAST FRIDAY BY A GROUP OF CONSUMERS, UH, CALLED THE JOINT CONSUMERS.
THIS GROUP INCLUDES THE RESIDENTIAL CONSUMER SEGMENT, THE OFFICE OF PUBLIC UTILITY COUNCIL, THE TEXAS INDUSTRIAL ENERGY CONSUMERS, WHICH IS TIAC FOR SHORT, THE CITY OF EASTLAND, THE CITY OF DALLAS, AND ERCOT STEEL MILLS.
UM, THEIR COMMENTS ARE INCLUDED IN 2 35 TO 2 73, AND IT'S MY UNDERSTANDING THAT NOBODY WANTS TO COMMENT IN PERSON.
UH, SO THAT ALL, SO I THINK WE'VE HEARD ALL THE, THE 300 THAT THAT'S FOR THE JOINT CONSUMERS.
I DON'T KNOW IF JEFF WANTS TO SAY ANYTHING AS ON BEHALF OF THE IM OKAY.
GO AHEAD AND, UH, GRAB THE PODIUM.
AND BENJAMIN, I THINK YOU, YOU MIGHT HAVE SOMETHING AS WELL.
WHAT'S THAT? UH, UH, JUST BRIEFLY WANTED IT'S COMMENT.
UH, JEFF MCDONALD, DIRECTOR OF IMM.
SO, UM, SO I'D LIKE TO TALK ABOUT TWO OF THE THREE COMPONENTS, UH, OF 1269 AND FOLLOW UP A LITTLE BIT ON, ON WHAT KEITH HAS JUST TALKED ABOUT.
SO WITH, WITH RESPECT TO THE, UH, SHORTAGE PRICING OR O-R-D-C-A-S-D-C CURVE, THE $15 FLOOR THERE.
SO, SO WE ACTUALLY GRAPPLED WITH THAT FOR QUITE A BIT.
UM, ON THE SURFACE, UH, IT APPEARED TO BE AN ADMINISTRATIVE PRICE FLOOR TO ACHIEVE AN OBJECTIVE THAT WASN'T, UH, STATED OR MANDATED.
UM, AND POTENTIALLY, AND, AND DONE WITHIN R WE HAD LESS OF AN ISSUE WITH IT.
WHEN THE PROPOSAL, UH, WAS PUT FORWARD TO MOVE THAT FLOOR TO REAL TIME AND DAY AHEAD, WE TOOK EXCEPTION WITH IT.
THE REAL TIME MARKET AND DAY AHEAD MARKET ARE NOT REQUIRED TO PROCURE THE ENTIRE AS PLAN.
UM, AND THAT'S ACTUALLY, UH, YOU KNOW, THE FUNCTION THAT THE SHORTAGE PRICING, UH, MECHANISM, THE ORDC OR A SDC CURVES PERFORM IS THEY PRICE THE SHORTAGE.
SO WE WERE ORIGINALLY CONCERNED THAT IN MOVING THAT TYPE OF RELIABILITY INSTRUMENT INTO THE DAY AHEAD IN REAL TIME MARKET, UM, YOU WERE ACHIEVING TWO GOALS THAT, THAT, THAT MIGHT NOT HAVE BEEN OPTIMAL.
UM, AND, AND IN A SENSE, SUPPRESSING, ESPECIALLY THE REAL TIME PRICES ABILITY, UH, MARKET'S ABILITY TO EFFECTIVELY PRICE SHORTAGES.
SO, SO THAT THAT SHORTAGE PRICING CURVE IN REAL TIME IS THERE TO MEASURE SHORTAGES TO PROVIDE A DYNAMIC, NOT NOT NECESSARILY JUST THIS INTERVAL, BUT A DYNAMIC OVER TIME IS SIGNAL, AND I TALKED A LITTLE BIT ABOUT THIS YESTERDAY, UH, IN ORDER TO AND INDEED SELF-COMMITMENT FROM RESOURCES THAT ARE AVAILABLE TO COME ONLINE AND PROVIDE ENERGY
[04:15:01]
AND RESERVES BECAUSE OF HIGHER PRICES.SO, AND I, I THINK KEITH HAD MENTIONED THIS, YOU KNOW, EVERYBODY, UM, UNDERSTANDS THE POTENTIALLY PRICE SUPPRESSING EFFECT OF ANY KIND OF RUCK ACTIVITY, BUT THIS IS ANOTHER MEANS OF GETTING ADDITIONAL COMMITMENT IN RUCK WITHOUT THE OPERATOR ACTUALLY DOING IT.
SO YOU'RE GETTING ADDITIONAL COMMITMENT IN R WITH THIS $15 FLOOR THAT WILL WIND UP PUSHING ADDITIONAL CAPACITY INTO THE REAL TIME MARKET, AND WILL RESULT IN, IN SOME INSTANCES, YOU KNOW, MUTING OF SHORTAGE SIGNALS THROUGH THE SHORTAGE PRICING MECHANISM.
I, I CAN'T EMPHASIZE ENOUGH, THERE'S A DYNAMIC EFFECT TO THAT.
SO IT'S NOT JUST ABOUT THIS HOUR, IT'S ABOUT, UM, GENERATORS EXPECTATIONS OVER TIME AS TO WHAT KIND OF SIGNALS THEY'RE GETTING FROM THE REAL TIME MARKET AND HOW THEY WOULD WANT TO POSITION THEMSELVES TO TAKE ADVANTAGE OF THAT.
SO THAT'S WHERE WE STARTED, UM, A LOT OF CONVERSATION ON THE, UH, OPERATING RESERVE DEMAND CURVE FLOOR.
AND THROUGH THROUGH THAT CONVERSATION, WE REALIZED THAT AT THE HEART OF OUR OBJECTION WAS REALLY A MISMATCH BETWEEN HOW THE SHORTAGE PRICING MECHANISM PRICED SHORTAGES, AND THE QUANTITY OF RESERVE PROCUREMENT THAT ARE CAUGHT UNDERTAKES.
AND SO YOU CAN EFFECTIVELY THINK OF THIS ISSUE AS THERE IS NO VALUE TO INCREMENTAL OR DECREMENTAL RESERVE PROCUREMENT AT THE QUANTITY THAT THAT ERCOT IS PROCURING RESERVES THAT WOULD SIGNAL TO YOU THAT THERE MIGHT BE AN OVER PROCUREMENT OF RESERVES.
THAT'S THE NATURE OF THE PROBLEM.
THAT'S WHY THIS FLOOR OR CEILING, UM, I'VE, I'VE HEARD IT DESCRIBED BOTH WAYS.
THAT'S WHY THAT'S, UH, BEING, UH, INTRODUCED IN, INTO RUCK IS THAT WITH OUR CURRENT VALUATION OR OUR CURRENT PROCUREMENT LEVEL, UH, THERE ISN'T A NEED FOR MORE.
UH, HOWEVER, THERE, THERE, THERE ISN'T EVEN A NEED TO FULLY PROCURE FROM AN ECONOMIC PERSPECTIVE.
WE, UM, WE STILL OBJECT TO THE $15 FLOOR CEILING, BUT, UM, BUT WE ARE HOPEFUL THAT THROUGH THE AS METHODOLOGY PRACTICE OR, OR PROCESS THAT'LL TAKE PLACE, UH, STARTING SOON FOR THE 2026 PERIOD, THAT, THAT SOME OF THAT METHODOLOGY, SOME OF THE METHODOLOGY ADOPTED WILL TAKE A MORE, UM, STOCHASTIC APPROACH AND A MORE, UM, MARGINAL RELIABILITY APPROACH TO DETERMINING THE QUANTITY THAT'S PROCURED.
AND WHEN THAT HAPPENS, WE MIGHT SEE THIS ISSUE GO AWAY.
UM, ANOTHER WAY TO ADDRESS THIS ISSUE THAT, THAT I THINK IS PROBABLY IMPORTANT IS NOT JUST ON THE PROCUREMENT SIDE, BUT THE ORDC OR THE SHORTAGE PRICING MECHANISM HAS BEEN ALTERED OVER TIME TO PRODUCE MORE REVENUE.
THIS, THAT ACTUALLY ALSO, UM, TIES IN WITH SOME OF THE THINGS I SPOKE WITH YESTERDAY.
AND SO THESE TWO THINGS ARE, ARE, YOU KNOW, QUITE LITERALLY HAND IN HAND AND VERY DIRECTLY RELATED.
AND SO REEVALUATING THE ORDC CURVE OR NRTC, THE ANCILLARY SERVICE DEMAND CURVE, REEVALUATING THAT FROM A STOCHASTIC MARGINAL RELIABILITY PERSPECTIVE AND CHOOSING, YOU KNOW, ROLLING IN THAT ANALYSIS FROM THE AS METHODOLOGY PROCESS INTO ESTABLISHING THE SHORTAGE PRICING CURVE, WILL ACTUALLY SOLVE THIS PROBLEM.
IT WILL, IT WILL LINK THE TWO VERY DIRECTLY, AND YOU WILL GET A VERY, VERY REAL AND ACCURATE MARGINAL VALUE OF RESERVES.
WHETHER YOU ARE LOOKING TO PROCURE A LITTLE BIT MORE OR A LITTLE BIT LESS, THE VALUE THAT WILL BE PROVIDED FROM THAT WILL BE MUCH MORE ACCURATE AND MUCH BETTER REFLECT, UM, ERCOT NEEDS AS DETERMINED THROUGH THE AS METHODOLOGY PROCESS.
SO, SO I'VE MENTIONED TWO THINGS.
ONE IS WE LOOK AT WHETHER OR NOT THESE TYPES OF POLICIES WILL MUTE SHORTAGE SIGNALS THAT EXIST, AND THEY DO, UH, THAT'S THE WHOLE PURPOSE OF, OF THE $15 FLOOR IS TO AVERT A SHORTAGE IN R SO, SO MUTING SHORTAGE SIGNALS IS NOT GOOD, UH, IN TERMS OF ELICITING ADDITIONAL RESPONSE WHEN YOU NEED IT FROM GENERATORS.
AND THEN HAVING A MORE DIRECT LINKAGE BETWEEN A RELIABILITY BASED, YOU KNOW, MARGINAL RELIABILITY BASED AND SOLELY SERVICE PROCUREMENT METHOD AND HOW YOU CONSTRUCT YOUR OPERATING DEMAND CURVE.
YOUR OPERATING RESERVE DEMAND CURVES IS ABSOLUTELY CRITICAL IN VALUATION ALSO.
AND ALL OF THOSE ROLL INTO REALTIME PRICING AND PRICING SIGNALS.
SO, SO WE ARE NOT IN FAVOR OF THIS.
UM, I, I WILL RECOGNIZE, AS KEITH NOTED, IT IS,
[04:20:01]
IT REFLECTS A SMALL INCREMENTAL COST BECAUSE OF THE INFREQUENCY WITH WHICH IT TRIGGERS.UM, BUT IN PRINCIPLE, UH, WE DO NOT SUPPORT IT AND WOULD LIKE TO SEE, UH, THESE OTHER ASPECTS ADDRESSED, WHICH, WHICH I BELIEVE WILL BE OVER THE NEXT YEAR OR TWO.
SO THAT ADDRESSES, UH, THAT ONE COMPONENT, THE OTHER COMPONENT'S A LITTLE DIFFERENT.
AND, AND, UH, KEITH WRAPPED UP HIS, HIS DISCUSSION TALKING ABOUT THE PROXY OFFER PRICE FOR RESOURCES.
AND HE NOTED ONE, ONE THING IN PARTICULAR, WHICH IS THERE ARE DIFFERENT REASONS WHY, UH, ERCOT MIGHT NOT HAVE A COMPLETE OFFER FROM SOME OF THESE RESOURCES.
SO, UM, ONE OF THEM IS UNDERSTANDABLE, WHICH IS THERE WAS A COMMUNICATION GLITCH, POTENTIALLY AN ELECTRONIC COMMUNICATION GLITCH.
SO ER, THE, THE PARTICIPANT SUBMITTED INFORMATION LEGITIMATELY, BUT IT WASN'T RECEIVED AND COULDN'T BE USED BY ERCOT.
AND SO SOME PROXY VALUE NEEDED TO BE USED.
I DON'T KNOW WHAT PROPORTION OF THE TIME THAT HAPPENS, BUT, UM, BUT IN THE OTHER CASE WHERE THE PARTICIPANTS SIMPLY DID NOT SUBMIT A COMPLETE OFFER, A COMPLETE VALID OFFER, YOU KNOW, IN OUR, IN OUR WORK ON THAT PARTICULAR ASPECT, WE DIDN'T FIND AN EXPLICIT OFFER REQUIREMENT IN THE PROTOCOLS, BUT THE OFFER REQUIREMENT IS THERE, AND IT'S IMPLICIT IN THE FACT THAT ERCOT SUBMITS A PROXY OFFER FOR YOU.
SO, IN MY VIEW, A BETTER WAY OF DEALING WITH THIS ISSUE, AND I'LL GET TO THE SPECIFICS OF THE PROPOSAL IN A SECOND, BUT A BETTER WAY OF DEALING WITH THIS IS TO MAKE THE OFFER REQUIREMENT EXPLICIT SO THAT IT IS EXPLICIT THAT A PARTICIPANT IS REQUIRED TO SUBMIT A VALID, UM, OFFER AND THEN HAVE A PENALTY STRUCTURE, YOU KNOW, A FINE OR SOME SORT, UM, IN CASES WHERE THEY DON'T.
AND IN THAT CASE, YOU SHOULD GET, YOU SHOULD SEE MUCH BETTER COMPLIANCE, IN MY VIEW, THIS ENTIRE DISCUSSION WAS, UH, A LITTLE WEIRD BECAUSE I COULDN'T UNDERSTAND WHY, WHY WE WERE DEALING WITH HAVING TO SUBMIT PROXY OFFERS FOR RESOURCES.
WHY DIDN'T WE MAKE THAT THEIR RESPONSIBILITY IN A WAY WHERE THEY WOULD ACTUALLY ADHERE TO IT.
SO HAVING SAID THAT, I THINK THAT'S A BETTER APPROACH.
HAVING SAID THAT, THE PROPOSAL, YOU KNOW, WHEN I THINK OF, UM, FROM A PRICE FORMATION PERSPECTIVE, WHEN I THINK OF IF, IF, IF I HAVE TO COME UP WITH A VALUE, UH, TO SUBSTITUTE INTO, UH, UH, AN AUCTION, I WANNA COME UP WITH A VALUE THAT IS LEAST OBTRUSIVE TO COMPETITIVE PRICE FORMATION.
AND HA THE, THE PROPOSAL AS IT STANDS, AND KEITH NOTED THAT THE TWO IN, IN THE, IN THE INSTANCES THAT THEY SIMULATED OR, OR RERAN, UH, THE $2,000 NEVER HIT, BUT HE DID COVER SOME OF THE RANGES OF THE 95 PERCENTILE, 95TH PERCENTILE ON THE DIFFERENT SERVICE CURVES.
YOU KNOW, I THINK THE 95TH PERCENTILE IS AN ARBITRARY NUMBER THERE, THERE IS LITTLE TO NO INDICATION THAT WHEN PARTICIPANTS DON'T SUBMIT VALID OFFERS THAT, UM, THAT THAT WOULD CAUSE A SHORTAGE CONDITION THAT COINCIDES WITH THE 95TH PERCENTILE.
BUT THOSE RANGES WERE VERY HIGH.
WE WENT BACK AND LOOKED AT THE POOL OF UNITS THAT MOST FREQUENTLY HAD PROXY OFFERS SUBMITTED FOR THEM, AND WHEN THEY SUBMITTED VALID OFFERS, THE, THE CENTER OF MASS, UH, IN PRICE AROUND THE OFFERS THAT THEY SUBMITTED WERE ABOUT $15.
THAT WAS AT THE, THAT WAS, I THINK, QUITE LITERALLY THE LOWER BOUND ON THE RANGE THAT KEITH IDENTIFIED FOR THE DIFFERENT SERVICES.
I VIEW THIS PROPOSAL AS, UM, ONE NOT ADDRESSING AN OBLIGATION THAT CLEARLY PARTICIPANTS HAVE, UH, BY MAKING IT THEIR RESPONSIBILITY TO DO IT.
AND TWO, UH, INJECTING WHAT IS PROBABLY OBTRUSIVE AND, AND UNCOMPETITIVE PRICES INTO THE PRICE FORMATION PROCESS, UH, UNNECESSARILY.
SO WHEN WE WERE TALKING, UH, THROUGH THE STAKEHOLDER PROCESS ON THIS MATTER, YOU KNOW, WE, WE PROPOSED $15, THAT'S WHAT OUR ANALYSIS INDICATED WOULD BE A BETTER GUESS AT A COMPETITIVE OFFER FOR THIS POOL OF UNITS.
UM, I'M, I'M, YOU KNOW, DISAPPOINTED TO SEE THAT IT COULD BE AS HIGH AS IT IS.
I KNOW IT'S NOT GONNA BE 2000 OFTEN, IF AT ALL, BUT EVEN IN THE 200, 300, $400 RANGE WE WE'RE SEEING, WE'RE SEEING COMPETITIVE OFFERS FROM THIS POOL OF RESOURCES IN THE $15 RANGE.
SO, SO I VIEW THIS AS A INJECTION OF UNCOMPETITIVE POTENTIAL OUTCOMES, UH, INTO THE MARKET AND, UH, OPPOSE IT FOR THAT REASON.
AND I'M HAPPY TO ANSWER ANY QUESTIONS.
ANY QUESTIONS FOR JEFF PABLO? I WAS JUST GONNA, UM, OFFER AFTER MORE FOCUSED ON THE COMMENTS TO YOU TO THE FIRST ISSUE THAT I REALLY APPRECIATED THE WAY YOU
[04:25:01]
SEPARATED KIND OF THE, THE ISSUES AS YOU SEE WITHIN THE, RELATED TO THE ANCILLARY SERVICE DEMAND CURVE AND THE MINIMUM PRICE CONSIDERATION THAT THE BETTER SOLUTION LONG TERM IS SOME OF THESE KIND OF EVOLUTIONS THAT ARE LIKELY GOING TO EMERGE AS WE SEE THE CHANGES TO THE ANCILLARY SERVICE PROCUREMENT METHODOLOGY, WHICH IS GONNA BE MORE PROBABILISTICALLY BASED.IT'S GOING TO REFLECT BETTER REAL TIME, UM, UH, EXPECTATIONS ON THE RISKS ASSOCIATED WITH THE OPERATING PERIOD.
AND AS SUCH, THE, UM, THE NATURAL RESULT OF THAT WOULD BE ANCILLARY SERVICE DEMAND OFFERS THAT ARE GOING TO BE MORE REFLECTIVE OF THOSE RISKS, THOSE REAL RISKS.
THAT BEING SAID, UNTIL WE GET TO THAT POINT, THERE IS A NEED, UH, FROM THE OPERATOR POINT OF VIEW TO FILL OUT THE PROCUREMENT.
AND EVEN THOUGH THE SIGNAL MAY BE ZERO, WE STILL HAVE TO GET THAT PROCUREMENT.
AND I THINK THE POINT THAT THE ERCOT TEAM, UH, IS PUTTING FORTH IS THAT IT WOULD BE BETTER TO HAVE A, UH, ADMINISTRATIVE MARKET PROCESS PROVIDE THAT VERSUS A RUCK PROCESS.
AND UNDER SOME CIRCUMSTANCES AS, UH, AS, UH, KEITH POINTED OUT, THERE'S DIFFERING, YOU KNOW, KIND OF SCENARIOS, IT MIGHT ACTUALLY BE COST ADVANTAGEOUS TO CONSUMERS TO DO IT WITH THAT ADMINISTRATIVE FLOOR VERSUS DOING IT WITH THE ROCK.
AND SO I, I THINK THE BIGGER, I THINK YOU RAISED THE BIGGER ISSUE, WHICH IS HOW TO SOLVE THIS WITHOUT AN ADMINISTRATIVE SOLUTION.
I DO THINK WE'RE GOING TO GET THERE, AND I THINK I JUST, I THINK THE CLARITY YOU PROVIDED ON THAT PERSPECTIVE WAS HELPFUL TO THE DISCUSSION.
ANY OTHER QUESTIONS FOR JEFF, OR ANY COMMENTS? NO, PEGGY, I, I JUST, I WANNA ECHO WHAT PABLO SAID.
UH, IT JUST A MINOR POINT IN THAT DISCUSSION, WHY ISN'T IT CLEAR THAT THEY HAVE TO SUBMIT THE OFFERS, YOU KNOW, UH, AND CAN'T, CAN'T, KEITH, SO, SO I'LL JUST NOTE THAT THAT JEFF'S CHARACTERIZATION IS, IS ACCURATE, UM, THAT THE, IT IS A INDIRECT, UM, THAT THE REQUIREMENT IS INDIRECT THROUGH THE CREATION OF THE PROXY.
UM, THE PROXIES COULD, COULD LANGUAGE BE INTRODUCED TO REQUIRE IT? UM, YES.
UM, IT, THAT'S JUST NOT THE, THE PATH THAT'S WE'VE GONE DOWN.
BUT YOU HAVEN'T SEEN EVIDENCE OF PEOPLE GAMING.
I THINK HE DISCUSSED THIS AT THE TIME.
YEAH, YEAH, YEAH, WE HAVEN'T, I MEAN, IT'S, TO BE FAIR, IT'S, IT'S A VERY SMALL ISSUE.
SO GOING BACK TO JEFF'S AND PABLO'S COMMENTS, CAN YOU, A YEAR FROM NOW WE'LL BE DISCUSSING PROBABILISTIC A SDC CURVE.
SO WE'RE TALKING ABOUT LIVING WITH THIS FOR 12 MONTHS, PERHAPS, RIGHT? EVEN SOONER, PERHAPS DAN? YES.
UH, ACTUALLY WE'RE WOR, ALTHOUGH THE, I THINK THE RECOMMENDATION WAS TO PUT THAT IN PLACE BY 20 FOR THE CALENDAR YEAR 2027.
WE'RE WORKING TOWARD GETTING IT IN FOR CALENDAR YEAR 2026.
AND SO IN THE OCTOBER BOARD MEETING, WE'LL PROBABLY BE BRINGING YOU THE AS METHODOLOGY FOR 26 THAT WILL INCLUDE THAT.
NOW, THE OTHER PIECE THAT JEFF MENTIONED, WHICH IS KIND OF MORE DYNAMICALLY ADJUSTING THE, OR STOCHASTICALLY ADJUSTING THE, THE ANCILLARY SERVICE DEMAND CURVE SO THAT THEY DO MEET THAT REQUIREMENT.
IF THE SUM OF THOSE REQUIREMENTS ARE HIGHER THAN WHAT THE CURRENT ORDC LIMIT IS, THAT'S NOT IN PROGRESS AT THIS POINT.
JULIE, DO YOU HAVE ANOTHER QUESTION? OKAY, SEE, YES.
DOES, UH, THE IMM HAVE A VIEW ON WHAT, HOW THIS AFFECTS RELIABILITY ON HOW IT AFFECTS RELIABILITY? UM, SO THAT'S THE $15 FLOOR, NOT THE PROXY OFFER MATTER.
AND, UM, YEAH, SO, SO OUR PERCEPTION THROUGH THE WORK THAT WE DID ON THE AS STUDY LAST YEAR INDICATED THAT THAT ERCOT IS PROCURING AN EXCESS AMOUNT OF RESERVES, UH, RELATIVE TO WHAT WOULD BE NEEDED FOR, TO RUN A RELIABLE SYSTEM.
SO WE GET THAT THROUGH PROBABILISTIC MODELS, THROUGH ACTUALLY EVALUATING AND RERUNNING, UM, PRIOR YEARS, UH, REAL TIME MARKETS.
SO FROM MY PERSPECTIVE, AND, AND THAT IT WAS PROBABLY, I PROBABLY HINTED AT IT IN MY EARLIER DISCUSSION, BUT, BUT FROM MY PERSPECTIVE, IT LOOKS LIKE WE'RE OVER PROCURING OUT OUT OF A, UM, YOU KNOW, I, I, I GUESS A, A SENSE OF WANTING TO HAVE ADDITIONAL INSURANCE FOR RELIABILITY.
[04:30:01]
I HAVE NEVER BEEN A GRID OPERATOR.I'VE WORKED WITH THEM AND OTHER RTOS VERY CLOSELY.
I DON'T HAVE A FINELY TUNED SENSE OF WHAT THE EXACT RIGHT NUMBER IS, BUT 9,000 MEGAWATTS FOR RESERVE PROCUREMENT SEEMS ON THE HIGH END FOR THE SYSTEM, GIVEN WHAT WE'VE SEEN, UH, LOOKING AT PRIOR YEAR'S DATA, I UNDERSTAND THAT URI WAS A VERY UNIQUE AND VERY PAINFUL EXPERIENCE.
UM, AND SO THOSE, THOSE TAIL EVENTS ARE WHAT I THINK ARE DRIVING A DESIRE TO BUY ADDITIONAL RELIABILITY INSURANCE THROUGH HIGHER RESERVE REQUIREMENTS.
SO YOU WOULD SAY THAT, UH, AND I DON'T WANT TO MISCHARACTERIZE WHAT YOU'RE SAYING, BUT YOU WOULD SAY THAT IMPLEMENTING THIS TO SOME EXTENT IMPROVES RELIABILITY, IMPLEMENTING WHAT'S PROPOSED.
UM, SO THERE'S A, THERE'S A, A SHORT TERM EFFECT AND A MEDIUM TERM EFFECT IN THIS.
SO, SO IN THE SHORT TERM FOR, FOR THIS NEXT HOUR OR SOME HOUR TODAY, IMPLEMENTING THE $15 PRICE FLOOR WILL PUSH YOU INTO REAL TIME, YOU KNOW, IN, IN REC.
AND HAVING THAT PRICE FLOOR IN THE REAL TIME MARKET WILL HELP ENSURE THAT YOU ARE MORE LIKELY TO MEET YOUR 9,000 MEGAWATT RESERVE REQUIREMENT.
UM, AT SOME POINT, ONE ADDITIONAL MEGAWATT OF RESERVE DOES NOT IMPROVE RELIABILITY TODAY.
AND SO WHAT I'M SAYING IS, I THINK WE'RE ALREADY AT THAT POINT WHERE NO ADDITIONAL AN AN ADDITIONAL MEGAWATT OF RESERVE DOES NOT IMPROVE RELIABILITY.
I THINK THAT'S WHERE WE ARE IN OUR PROCUREMENT.
THIS HELPS ENSURE THAT WE'RE RIGHT AT THAT, MAYBE NOT RIGHT AT THAT POINT.
WE MIGHT EVEN BE BEYOND THAT POINT, BUT, BUT THIS HELPS ENSURE THAT THAT ERCOT IN REAL TIME OPERATIONS DOES NOT SLIP TOO FAR SHORT OF THAT POINT.
SO THAT WAS, UM, I APOLOGIZE THAT WAS NOT A BRIEF ANSWER.
THE BRIEF ANSWER IS, UH, IN, IN SOME HOUR TODAY, THIS IS RELIABILITY IMPROVING, UM, OVER THE MEDIUM TERM.
IF THIS WINDS UP MUTING REAL TIME PRICE SIGNALS FOR ADDITIONAL SELF-COMMITMENT AND COMMERCIAL RESPONSE TO SHORTAGE SIGNALS, I, IT'S NOT RELIABILITY IMPROVING.
ANY OTHER QUESTIONS OR COMMENTS FOR JEFF? JUST REAL QUICK.
SO JEFF, BUT WE'LL, WE'LL ADDRESS THE AMOUNT OF THE PROCUREMENT LATER.
SO SETTING THAT ASIDE, YOU WOULD AGREE THAT REDUCING INSTANCES OF RUCK IS A GOOD THING? YES.
YES, I ABSOLUTELY AGREE WITH THAT.
DO YOU BELIEVE THAT IMPLEMENT THAT EXTENDING THE $15 PER MEGAWATT FLOOR INTO THE DAY AHEAD IN REAL TIME MARKET WILL REDUCE R UM, I THINK, I THINK REGARDING THE DAY AHEAD MARKET, I THINK THE DAYS WHERE YOU'RE GOING TO SEE TIGHTER SUPPLY CONDITIONS AND HIGHER PRICES WILL SOLVE THAT WITHOUT THIS PRICE FLOOR.
I, I THINK THE DAYS WHERE THAT'S NEEDED, WHERE THAT ADDITIONAL, I DON'T KNOW WHAT WE'RE TALKING ABOUT IN TERMS OF MARGINAL PROCUREMENT BY PUTTING THE, THE $15 IN THE DAY AHEAD, BUT, BUT I, I THINK SYSTEM CONDITIONS WILL SOLVE THAT PROBLEM ON THE DAYS WHERE IT'S NEEDED, UM, IN THE REAL TIME.
IF IT PUSHES PRICES UP A LITTLE BIT AND THAT PERSISTS FOR LONGER, THEN YOU'LL SEE A RESPONSE, YOU'LL SEE A SELF-COMMITMENT RESPONSE AND, AND BOTH OF THOSE THINGS WITHOUT THE PRICE FOR THE DAY AHEAD, I THINK IT'S NOT A PROBLEM.
I, UM, WITH THE PRICE FLOOR IN THE REAL TIME, OVER TIME, I BELIEVE YOU'LL SEE A RESPONSE BECAUSE PARTICIPANTS WILL BE EXPECTING HIGHER PRICES IN REAL TIME.
SO I DO THINK THAT WILL GET A RESPONSE THAT WILL GET A POSITIVE RESPONSE AS OPPOSED TO RUCKING, WHICH WOULD SUPPRESS PRICES, WHICH WOULD GIVE YOU A NEGATIVE RESPONSE.
HAVING SAID THAT, I STILL THINK THE BETTER SOLUTION, WHICH I, WHICH YOU KNOW, PABLO HIGHLIGHTED WE'RE MOVING TO IS HAVING A, A BETTER, UH, SYNCHRONY BETWEEN, UM, UH, SENSIBLE AS PROCUREMENT THAT'S MARGINAL RELIABILITY BASED, AND HAVING THAT AS PROCUREMENT AND THOSE MARGINAL RELIABILITY REFLECTED IN THE SHORTAGE PRICING.
AND THEN, AND THEN YOU TAKE THAT PROBLEM OUT OF AN ADMINISTRATIVE RUCK SOLUTION THAT NEEDS TO BE EXTENDED TO THE OTHER TWO MARKETS.
AND I, I DON'T KNOW THAT YOU'RE HEARING DISAGREEMENT WITH THAT.
I THINK, AND, AND YOU AND I HAVE HAD THESE CONVERSATIONS BEFORE, WHAT GETTING TO WHAT WE THINK IS OPTIMAL, SOMETIMES WE NEED A BRIDGE TO DEAL WITH AN ISSUE.
AND I, I THINK WHAT WE'RE DISCUSSING HERE IS WHAT ERCOT VIEWS AS A BRIDGE TO REDUCE RUCK, WHICH I KNOW IS SOMETHING THAT WE'VE ALL TRIED TO DO IS IMPORTANT TO THE LEGISLATURE AS WELL.
SO I, I THINK WE'RE JUST MAYBE SOLVING FOR DIFFERENT THINGS THAT, THAT WITH AN UNDERSTANDING, WE'RE MOVING TOWARDS WHAT IS MORE OPTIMAL, FINDING A WAY TO BRIDGE THAT, THAT GAP RIGHT NOW.
ANYTHING ELSE, UH, FOR THIS PART OF THE DISCUSSION WITH THE IM M
[04:35:01]
JEFF, THANKS FOR YOUR, UH, FEEDBACK AND YOUR INPUT.UH, OPEC WAS PART OF THE JOINT CONSUMERS GROUP THAT COMMENTED AND I THINK BENJAMIN BARKLEY WOULD LIKE TO SEC MAKE A COUPLE OF COMMENTS ON 1269.
UH, JUST BRIEFLY, UH, I, I THINK SETTING THE A SDC DEMAND FLOOR, UH, AT $15 WITHOUT HAVING ANY INFORMATION FROM THE REAL TIME CO OPTIMIZATION MARKET IS PREMATURE.
UH, AND OUR PROPOSAL WOULD BEEN TO SET IT AT $0 JUST TO SEE HOW THE MARKET WOULD RESPOND IN THAT CIRCUMSTANCE.
I KNOW THAT'S NOT THE DIRECTION THAT, UH, THE BOARD'S MOVING, BUT I DID WANNA HIGHLIGHT THAT 'CAUSE I DON'T THINK KEITH BROUGHT IT UP.
ANY OTHER COMMENTS OR QUESTIONS? UH, AND AS AGAIN, CHAD TO CON RECONFIRM, NO ONE ELSE FROM THE JOINT CONSUMERS GROUP WANTS TO MAKE A COMMENT.
WITH NO OTHER DISCUSSION, UH, I'LL ENTERTAIN A MOTION THAT THE BOARD RECOMMEND APPROVAL OF NPR 1269 RTC PLUS B THREE PARAMETERS, POLICY ISSUES URGENT AS RECOMMENDED BY TAC.
UH, ANY ABSTENTIONS? OKAY, THIS PASSES WITH ONE NO VOTE.
UH, AT THIS POINT IN TIME BEFORE WE MOVE ON TO AGENDA ITEM 13, I'M GONNA GIVE THE BOARD A COUPLE OF OPTIONS.
WE CAN STOP AND TAKE A 15 MINUTE LUNCH BREAK.
I THINK IF WE DRIVE TO THE EXECUTIVE SESSION, IT'LL TAKE 30 TO 45 MINUTES, BUT I CAN GO EITHER WAY.
SO WHAT'S YOUR SENSE OF WHAT THE BOARD WOULD LIKE TO DO? WHAT'S THAT? DRIVE THROUGH? DRIVE THROUGH.
WHAT'S THAT? YEAH, I MEAN, WE'VE BEEN HERE SINCE 10 O'CLOCK.
IF YOU DON'T WANNA TAKE A BREAK, THAT'S FINE, BUT IT'S UNUSUAL.
UM, I THINK, I THINK WE'RE GONNA DRIVE THROUGH THIS IF THAT'S OKAY.
[13. High-Impact Policy Discussions in the Stakeholder Process]
ITEM 13, UH, HIGH IMPACT POLICY DISCUSSION, STAKEHOLDER PROCESS, UH, REBECCA AND ANN BNE ARE PRESENTING.REBECCA AND ANN, IF YOU WOULD, UH, TELL THE PODIUM, PODIUM GO QUICK BECAUSE PEOPLE ARE WANTING TO DRIVE FAST NOW.
WELL, WE DON'T HAVE PRESENTERS FOR THAT.
THIS IS THE FIRST TIME THIS PRESENTATION'S BEEN AT THE FULL BOARD.
IT'S SOMETHING THAT MOVED OVER FROM R AND M.
UM, THE GOAL IS TO PROVIDE KINDA A HOLISTIC OVERVIEW OF THINGS IN THE STAKEHOLDER PROCESS AS THEY DEVELOP AND, UM, REACH THE FULL BOARD.
SO THE, THE FIRST ISSUE WE'VE HEARD A LOT ABOUT OVER THE LAST TWO DAYS IS RTC AND THOSE FIRST THREE POLICY PARAMETER AND A SDC ISSUES REP FOR CONSIDERATION THIS MONTH AND MOVE FORWARD, WE ARE EXPECTING ANOTHER REVISION REQUEST TO BE FILED IN LATE APRIL AFTER ANOTHER, UM, RTC PLUS B TASK FORCE MEETING.
IT'LL BE LOOKING AT, UM, STATE OF CHARGE, WHICH WAS SEPARATED OUT FROM THE PARAMETERS NPRR AND UM, DURATION REQUIREMENTS FOR ANCILLARY SERVICES.
ONE OF THE THINGS I DID WANNA HIGHLIGHT WITH RTC PLUS B AS, AS WE EXPECT THAT LAST NPRR TO BE AT THE BOARD IN JUNE.
WE'RE ALSO GONNA BE GOING BACK THROUGH SEVERAL YEARS OF RTC RELATED REVISION REQUEST AND EVALUATING IN THE GRAY BOX LANGUAGE AND ANTICIPATION OF THAT DECEMBER 5TH GO LIVE DATE FOR DRRS.
WE DID HAVE A WORKSHOP IN FEBRUARY THAT WAS REALLY FOCUSED ON REAL-TIME ISSUES AND CONSIDERATIONS AND LOOKING AT THE STATUTORY REQUIREMENTS AND CONSTRAINTS FOR DRS AS A STANDALONE, AS WE'RE EXPECTING TO HAVE WORKSHOPS THROUGHOUT THIS YEAR TO START FOCUSING ON DESIGN OPTIONS.
AND THOSE DISCUSSIONS WILL BE AT THE FUTURE WORKSHOPS.
WE'RE LOOKING AT KIND OF THE GUIDANCE PROVIDED BY THE PUC IN DECEMBER THROUGH THAT ANCILLARY SERVICE STUDY, UM, TO FOCUS ON A PRIMARILY ANCILLARY SERVICE FOR OPERATIONAL RISKS AND THEN ALSO FLEXIBILITY FOR A MECHANISM AS A RESOURCE ADEQUACY TOOL.
[04:40:04]
ANY QUESTIONS FOR REBECCA? OKAY.WITH WITH LARGE LOADS, AGAIN, WE HAD THE TWO NPRR 1234 AND PICKER ONE 15 THAT HELPED DEFINE LARGE LOAD AND ESTABLISH MAXIMUM SINGLE CONTINGENCY THRESHOLDS AT THE BOARD THIS MONTH.
UM, KAITLYN HIGHLIGHTED THE ADDITIONAL MARKET SPONSORED LARGE LOAD RELATED N PRRS, AND THEY'LL WORK ON THOSE.
WE EXPECT THAT TO CONTINUE THROUGH THIS YEAR.
THERE'S A LOT OF INTEREST IN THE STAKEHOLDER PROCESS, UM, AND POLICY ISSUES AT CONSIDERATION WITH THE LEDGE.
AND SHE MENTIONED THE TASK FORCE MOVING FROM LARGE FLEXIBLE LOAD TO A POTENTIAL LARGE LOAD WORKING GROUP AND THAT HYPERSCALER WORKING GROUP OR SUBGROUP, UM, ANTICIPATED FORMING SOON.
SO THIS IS A NEW ISSUE, THE FIRM FUEL SUPPLY SERVICE, UM, IN JANUARY, ERCOT ASKS, UM, THE PUC FOR GUIDANCE ON THE EXPANSION OF FIRM FUEL SUPPLY SERVICE.
GIVEN THE SURVEY RESULTS, UM, WE DID FILE NPR 1275 LOOKING, EXPANDING, UM, PARTICIPATION AVAILABLE TO INCLUDE THE QUALIFYING PIPELINE DEFINITION THAT WAS ORIGINALLY ADOPTED BY TAC UNDER NPR 1169 THAT HAS PASSED PRS FIRST VOTE AND IS WAITING FOR AN IMPACT ANALYSIS COMMISSION.
STAFF RECENTLY FILED A MEMO ASKING FOR GUIDANCE ON SOME ADDITIONAL QUESTIONS THAT HAVE AROSE OUT OF THAT PROCESS.
MAINLY, IS THERE, UM, IS THERE A NEED TO LOOK AT PROCUREMENT QUANTITIES, PROCUREMENT MECHANISMS, AND A DESIRED LEVEL OF RELIABILITY GIVEN THE RISK OF OFFSITE VERSUS ONSITE STORAGE FOR FIRM FUEL? SO THERE WAS A ROBUST CONVERSATION AT LAST WEEK'S OPEN MEETING.
THE COMMISSION NEEDED MORE TIME TO THINK THROUGH THE IMPACTS OF EXPANSION.
WE EXPECT FUTURE DISCUSSION IN AN OPEN MEETING AND GUIDANCE ON THIS ISSUE.
I THINK THE ONE KEY TAKEAWAY IS THAT NPR 1275 WOULDN'T GO INTO EFFECT AND EVEN IT MOVED FORWARD.
IT COULD BE GRAY BOXED WITHOUT KIND OF THAT FUTURE GUIDANCE ON THOSE DECISIONS.
AND THEN THE LAST NEW ISSUE IS, I HAVE IT TITLED AS THE RENEWABLE ENERGY CREDIT PROGRAM.
ERCOT HAS BEEN THE REC PROGRAM ADMINISTRATOR SINCE SB SEVEN.
HB 1500 REQUIRED ERCOT TO MAINTAIN THE PROGRAM ON A VOLUNTARY BASIS VERSUS A REQUIRED BASIS.
12 AND 18 CODIFIED THAT REGULATORY CHANGE AND THE COMMISSION ALSO ADOPTED RULES UNDER 25,000 1 73.
DURING THAT RULEMAKING, UM, THE COMMISSION DECIDED THAT ERCOT HAD THE OPTION TO ASSIGN ADDITIONAL ATTRIBUTES TO REX, BUT CREATING NEW TYPES OF CREDITS OR AUTHORIZING OUR COACHES DO SO WAS BEYOND THE SCOPE OF THAT RULE.
WE NOW HAVE NPRR 1264, WHICH IS LOOKING TO CREATE A NEW ENERGY ATTRIBUTE CERTIFICATE PROGRAM.
AND THIS WOULD PUT REX AS A SUB OF THE EAC PROGRAM AND ALLOW ADDITIONAL FUEL TYPE OR GENERATOR ATTRIBUTES TO BE ADDED TO THAT CERTIFICATE.
ERCOT DID SOMETHING A LITTLE BIT UNIQUE AND THAT THE NPRR HAS PASSED OUT OF WMS, UM, WHERE IT WAS REFERRED FROM PRS, BUT ERCOT FILED BEFORE THEY WORK ON AN IMPACT ANALYSIS.
CONSIDERING THE SCOPE AND SIZE OF THIS PROGRAM, THEY ASKED POLICY QUESTIONS, UM, AND WE HAD FOUR RESPONSES LAST WEEK.
SO THE POLICY QUESTIONS WERE LOOKING AT WHAT THE PUBLIC POLICY PURPOSES WOULD BE SERVED BY REQUIRED ERCOT DEVELOP THIS PROGRAM AND WHAT ARE ERCOT CORE REGULATORY FUNCTIONS UNDER PUR 39 1 51, UM, RELATED TO THIS NPRR.
SO WE ANTICIPATE, UM, SPENDING THE NEXT MONTH OR TWO LOOKING AT THOSE RESPONSES, HAVING ADDITIONAL CONVERSATION THROUGH THE STAKEHOLDER PROCESS BEFORE MOVING FORWARD WITH AN IA.
ANYTHING ELSE, UH, REBECCA FOR YOU? OKAY.
ANY QUESTIONS FOR REBECCA ON THE, UH, STAKEHOLDER ITEMS THAT SHE DISCUSSED? OKAY, I GOT A QUESTION ABOUT DRRS.
WHEN ARE, ARE YOU EXPECTING FOR IT TO REACH THE BOARD? UH, I KNOW KEITH, UM, KEITH MIGHT WANNA WEIGH IN, BUT WE DO ANTICIPATE DRS THOSE WORKSHOPS GOING THROUGH THIS YEAR BEFORE WE HAVE A NEW PROPOSAL.
SO I THINK THE TIMELINE WOULD BE LOOKING AT NEW LANGUAGE BY THE END OF THE YEAR.
[04:45:03]
OKAY.[14.1 Exit Strategy for Reliability Must Run (RMR) of Braunig Unit(s) and/or Life Cycle Power Agreements]
TO A JET ITEM 14.AND AS A REMINDER, THERE WERE THREE SUB ITEMS UNDER THIS YESTERDAY, BUT WE COVERED 14.2 AND 14.3.
UH, NOW WE'RE GOING TO, UH, COME BACK TO AGENDA ITEM 14.1.
THE EXIT STRATEGY FOR RELIABILITY MUST RUN OF THE BROING UNITS AND OR LIFECYCLE POWER AGREEMENTS.
UH, CHRISTIE HOBBS IS PRESENTING.
ALL RIGHT, GOOD AFTERNOON BOARD MEMBER.
SO A LITTLE BIT OF A RECAP FROM WHAT WE DISCUSSED DURING YOUR SPECIAL BOARD MEETING WHEN WE WERE LOOKING AT STARTING TO LOOK AT EXIT STRATEGIES FOR, UM, GOING OUT OF THE CONTRACT THAT WAS EXECUTED FOR THE RMR AGREEMENT WITH THE BROING UNIT PER PROTOCOL, WE ARE REQUIRED TO STUDY AND LOOK AT OPTIONS THAT MAY BE FEASIBLE AND BE MORE COST EFFECTIVE THAN CONTINUING TO STAY IN THOSE RMR AGREEMENTS OVER TIME.
AS WE DISCUSSED, ONE OF THE OPTIONS THAT WE WERE STARTING TO LOOK AT WAS LOOKING, UH, AT THE ACCELERATION OF THE SAN ANTONIO SOUTH RELIABILITY TWO PROJECT.
WE'VE BEEN IN ACTIVE CONVERSATIONS WITH THE INVOLVED TSPS, WHICH ARE C-P-S-A-E-P AND STACK.
THIS WAS A PROJECT THAT YOU APPROVED ABOUT A YEAR AGO IN THAT, UH, SOUTH SAN ANTONIO AREA.
WHAT THEY SPECIFICALLY WENT OUT AND LOOKED AT IS REBUILDING THE LINE FROM SPRUCE TO PONTY AND PONTY TO TANGO.
BY DOING THE UPGRADES OF THIS, THEY CAN MOVE IN THE TIMELINES FROM THE FIRST, UH, CIRCUIT BEING REBUILT FROM DECEMBER OF 28 TO SEPTEMBER OF 2026, AND THEN THE ENDING DATE FROM MAY, 2029 TO JANUARY OF 2027.
SO WE TOOK A LOOK AT THAT, OUR ANALYSIS AND COMPARED THAT TO HOW, UM, IT REDUCED THE NEED FOR WHAT WE SAW WHEN THE BROING UNITS WERE RETIRING AND WHAT THAT WAS REPLACING AND DID BENEFIT ANALYSIS.
ALSO, AS A REMINDER, THIS IS AN IMPORTANT PROJECT BECAUSE IT'S ALSO ONE OF THE KEY ELEMENTS FOR BEING ABLE TO EXIT, UH, THE GENERIC TRANSMISSION CONSTRAINT FOR THAT REGION.
SO AGAIN, IT WOULD BRING THAT TIMELINE IN FOR GETTING OUT OF THAT CONSTRAINT AS WELL INTO THE 20, UH, 27 TIMEFRAME VERSUS 2029.
UM, AT THE TIME THAT THIS WAS PUT TOGETHER, WE WERE STILL IN THAT ANALYSIS, BUT ON FRIDAY WE PUT OUT A MARKET NOTICE THAT OUR ANALYSIS WAS COMPLETE.
UM, THAT INFORMATION IS SHARED BY PROTOCOL BECAUSE OF THE SENSITIVITY OF THE INFORMATION.
OUR MIS SECURE AREA, AND WE'LL WORK WITH REBECCA TO BE ABLE TO SHARE THAT REPORT WITH BOARD MEMBERS AS WELL.
SO YOU CAN TAKE A LOOK AT THE DETAILS OF WHAT WE FOUND.
UM, BUT THE, THE, TO CUT TO THE CHASE, WHAT WE FOUND IS VERY BENEFICIAL BY ACCELERATING THAT PROJECT, JUST BY GETTING THE FIRST CIRCUIT IN, SO NOT EVEN GETTING THE SECOND CIRCUIT IN, WE WOULD BE ABLE, UM, TO POTENTIALLY EXIT BOTH THE BROING THREE AS WELL AS THE LIFECYCLE AGREEMENTS, UH, AS EARLY AS SEPTEMBER OF 2026 WHEN THAT LINE FIRST CIRCUIT GOES INTO SERVICE BECAUSE OF THE ADDITIONAL BENEFITS.
AND WHAT WE FOUND IS THAT LINE BY UPGRADING IT PROVIDES ADDITIONAL BENEFIT TO THE SYSTEM ABOVE AND BEYOND WHAT BOTH THE BROING AND THE LCP UNITS WOULD PROVIDE.
UH, SO IT IS DEFINITELY A PROJECT WORTH MOVING FORWARD WITH ACCELERATING.
UH, WE'LL CONTINUE TO WORK WITH THE TRANSMISSION SERVICE PROVIDERS, UM, AND KEEP YOU UPDATED, UH, ON THE STATUS OF THAT ACCELERATION PROJECT.
ARE THERE ANY QUESTIONS? WELL, THAT WAS DEFINITELY GOOD NEWS.
UH, ANY QUESTIONS FOR CHRISTIE ON THIS ISSUE? JUST A QUICK ONE, CHRISTIE, LAST TIME YOU HAD A ROUGH IDEA OF THE COST OF THE ACCELERATION PLAN.
DO DO YOU HAVE A BETTER IDEA NOW OR, UM, WE MIGHT COULD SHARE THAT WITH YOU IN EXECUTIVE SESSION.
I KNOW, UM, UH, THAT CPS HAS BEEN IN THAT CYCLE AND THEY HAVE NOT SIGNED THEIR CONTRACTS YET.
UH, SO I WOULDN'T LIKE TO PUBLICLY SHARE THAT INFORMATION, BUT, UM, WHAT I CAN TELL YOU IS BASED OFF OF WHAT THE INCREASE COST FOR THE ACCELERATION COMPARED TO THE BENEFITS THAT ARE GONNA BE PROVIDED, THE BENEFITS MORE THAN EXCEED, UM, THE THE ACCELERATION COST.
ANY OTHER QUESTIONS FOR CHRISTIE ON THIS PARTICULAR SUBJECT? THANK YOU, CHRISTIE.
UH, WE'RE NOW GONNA MOVE TO JEN.
I WAS JUST GONNA, I WAS JUST GONNA ASK IF WE, YOU KNOW, WE HAD TWO, UH, CIRCUITS HERE.
SO IS THE THOUGHT HERE, CAN YOU PULL IT CLOSER? SO IS THE THOUGHT HERE NOT TO, UM, MOVE FORWARD WITH THE SECOND CIRCUIT? ONLY THE FIRST CIRCUIT? UH, THEY'LL CONTINUE MOVING FORWARD WITH BOTH.
SO THE FIRST CIRCUIT HELPS US TO GET OUT OF THE RMR AND FOR THE BROING UNIT, AS WELL AS THE LCP MOBILE GENERATION UNITS.
BY, BY GETTING THAT SECOND CIRCUIT IN IT PROVIDES ADDITIONAL BENEFIT THAT HELPS US WITH THAT OVERALL CONSTRAINT IN THE AREA, UH, FOR THE SOUTH TEXAS GTC.
[04:50:01]
OKAY, THANK YOU.[15. Update on Segment Definitions in the Bylaws]
ALRIGHT, LET'S MOVE ON TO AGENDA ITEM 15, UPDATE ON SEGMENT DEFINITIONS AND THE BYLAWS CHAD SEALEY IS PRESENTING.YEAH, I'M GONNA DO THIS HEARING.
UM, SO KAITLYN ALREADY KIND OF GIVE AN OVERVIEW UNDER HER TAC REPORT ON SOME OF THE DISCUSSIONS GOING ON IN TAC, BUT ALSO WITH OUR CORPORATE MEMBERS AND INTERESTED STAKEHOLDERS AROUND THE SEGMENT DEFINITIONS THAT ARE IN THE, THE BYLAWS.
SO THERE'S AN OPPORTUNITY TO POTENTIALLY CHANGE THE BYLAWS AND BETTER ALIGN THE SEGMENT DEFINITIONS WITH TODAY'S WORLD OF PARTICIPANTS.
UH, THESE DEFINITIONS HAVE BEEN IN THERE FOR PROBABLY 20 YEARS OR SO, AND WE OBVIOUSLY HAVE A LOT OF NEW AND DIFFERENT MARKET PARTICIPANTS PARTICIPATING IN OUR STAKEHOLDER PROCESS.
ON THE NEXT SLIDE KIND OF GIVES YOU A BACKGROUND ON HOW THIS CAME UP LAST YEAR, AT THE END OF Q3, Q4, UH, FOR THE LAST COUPLE YEARS WE'VE BEEN SEEING MORE DATA CENTER AND CRYPTO FACILITY PARTICIPATION IN THE STAKEHOLDER PROCESS.
AND WHAT WE NOTICED OVER THE LAST COUPLE YEARS IS THAT THEY HAD BEEN, UH, DESIGNATING THEMSELVES IN EITHER THE INDUSTRIAL CONSUMER SEGMENT OR THE LARGE COMMERCIAL CONSUMER SEGMENT, AND IT DIDN'T MAKE SENSE THAT YOU WOULD BE HAVING A DIVERSITY OF THOSE TYPE OF, UM, MEMBERS IN TWO DIFFERENT SEGMENTS.
SO, UH, THROUGH THE CURRENT REVIEW OF THE SEGMENT DEFINITIONS, ERCOT LEGAL MADE A CALL THAT WE BELIEVED DATA CENTERS AND CRYPTOCURRENCY MINERS SHOULD BE IN THE INDUSTRIAL SEGMENT.
WE DID TALK TO REPRESENTATIVES OF THE INDUSTRIAL SEGMENT AND THE LARGE CONSUMER SEGMENT BEFORE WE MADE THAT DECISION.
BUT THIS YEAR, IF YOU WENT AND PULLED UP THE MEMBERSHIP LIST, YOU WOULD SEE THAT THOSE TYPE OF CORPORATE MEMBERS ARE NOW IN THE INDUSTRIAL CONSUMER SEGMENT.
BUT WITH THAT, WE ALSO INDICATED TO TACK AND THE CORPORATE MEMBERS THAT WE WANTED TO GO AHEAD AND, YOU KNOW, TALK ABOUT IF THERE WAS ANY PROPOSED CHANGES TO THAT SPECIFIC SEGMENT DEFINITION OR IF MEMBERS HAD ANY OTHER IDEAS.
AND WHAT HAS TRANSPIRED OVER THE LAST COUPLE MONTHS IS THE WORKSHOP, ALONG WITH THREE PROPOSALS THAT KAITLYN ALREADY HIGHLIGHTED.
UM, ON THE NEXT SLIDE, YOU'LL SEE, UH, REALLY AT THE NEXT SLIDE, SORRY, NICOLE.
YOU'LL SEE THAT WE'VE GOT THREE PROPOSALS THAT TOUCH DIFFERENT SEGMENT DEFINITIONS.
TIC, THE ERCOT STEEL MILLS AND THE TEXAS BLOCKCHAIN COUNCIL ARE MODIFYING THE DEFINITION OF INDUSTRIAL SEGMENT, UH, REALLY KIND OF MODERNIZING AND EXPANDING IT TO INCORPORATE DATA CENTERS AND CRYPTO, UH, CURRENCY MINERS.
THERE'S ALREADY A DEFINITION IN, IN PURE AROUND VIRTUAL CURRENCY.
THEY'VE INCORPORATED THAT INTO THE PROPOSED BYLAWS AS WELL.
UH, CALPINE CONSTELLATION AND RA HAVE OFFERED UP A PROPOSAL TO REALLY BIFURCATE THE INDEPENDENT GENERATOR SEGMENT INTO THERMAL SUBSEGMENT AND INTO, UH, AN IRR SUBSEGMENT AS WELL.
UM, NEITHER ONE OF THESE CHANGES WOULD CHANGE THE VOTING RIGHTS WITHIN THOSE SEGMENTS.
THEY WOULD ALL STILL BE WEIGHTED THE SAME, EVEN THOUGH THEY WOULD BE ADDING AN ADDITIONAL REPRESENTATIVE TO THE INDUSTRIAL, UH, CONSUMER SEGMENT AT THE END OF THE DAY.
SO IT DOESN'T, UM, CHANGE ANY OF THE OVERALL VOTING STRUCTURE WITHIN THE STAKEHOLDER PROCESS.
AND THEN THE LAST ONE IS LONE STAR TRANSMISSION AND NEXTERA MOVING FORWARD WITH CHANGES TO THE DEFINITION OF THE TRANSMISSION DISTRIBUTION ENTITY SEGMENT.
REALLY, BECAUSE NEXTERA WANTS THE ABILITY NOT TO BE ALIGNED IN THE IOU SEGMENT UNDER THIS DEFINITION, THEY WANT TO BE ABLE TO PARTICIPATE AND VOTE IN THE INDEPENDENT GENERATOR SEGMENT.
SO THESE THREE PROPOSALS HAVE BEEN, UM, PROPOSED TO THE STAKEHOLDERS.
THERE'S A APRIL 18TH DEADLINE FOR ANY RESPONSES SO THAT WE CAN CONTINUE THE DIALOGUE WITH THE STAKEHOLDERS TO SEE IF ANYBODY ELSE HAS ANY OTHER IDEAS OR CONCERNS AROUND THESE PROPOSALS.
IF NOT, THERE'S AN OPPORTUNITY TO MOVE FORWARD AND EVOKE THE, THE PROCESS ON THE NEXT SLIDE, WHICH KIND OF LAYS OUT WHAT WE DID IN 2022 AS FAR AS THE PROCESS THAT'S IN THE ERCOT BYLAWS.
UH, SO WE MAY BE COMING TO THE JUNE HR AND G BOARD WITH AN OFFICIAL RED LINE TO CHANGE THESE SEGMENT DEFINITIONS.
THERE ARE OTHER CHANGES THAT ARE PROPOSED INTACT PROCEDURES THAT WOULD BE CASCADED AS A RESULT OF ANY CHANGES TO THE BYLAWS.
I THINK THE GOAL WOULD BE IF THE BOARD WANTS TO MOVE FORWARD WITH BYLAW CHANGES TO TRY TO GET THIS WRAPPED UP IN TIME FOR THE 2026, UH, RECORD DATE, WHICH WOULD ALLOW THIS ALIGNMENT TO MOVE FORWARD IN THE, IN THAT YEAR.
SO ON THE LAST SLIDE, YOU'LL SEE AGAIN APRIL 18TH RESPONSES ARE DUE ON THE THREE PROPOSALS.
WE HAVEN'T HEARD ANY OTHER PROPOSALS THAT HAVE BEEN OFFICIALLY FILED.
[04:55:01]
THE MEMBERS AND THE INTERESTED PARTIES TO KIND OF SEE IF WE CAN PUT TOGETHER A CONSOLIDATED RED LINE AND THEN TALK ABOUT WHAT THE, THE OPPORTUNITY IS TO MOVE FORWARD WITH THOSE BYLAW CHANGES AT THE JUNE HR AND G COMMITTEE MEETING.ANY QUESTIONS FOR CHAD ON THE SEGMENT CHANGES? OKAY.
ALRIGHT, WITH THAT WE'LL MOVE ON TO
[16. Board Committee Reports]
AGENDA ITEM 16.THE COMMITTEE REPORTS, UH, I SERVED AS A, UH, PRESIDING CHAIR OF FINANCE AND AUDIT, UH, YESTERDAY, UH, AFTER FOLLOWING CARLOS AGUILAR'S RESIGNATION FROM THE BOARD, I WILL, UH, ZIP THROUGH THESE THINGS AS QUICKLY AS I CAN.
UH, WE DID THREE PRIMARY THINGS.
WE, UH, RECEIVED THE AUDITED FINANCIAL STATEMENTS, UH, FROM THE COMPANY'S AUDITOR AND FROM THE CFO.
UH, THE, UH, UH, ERCOT RECEIVED CLEAN OR UNMODIFIED OPINIONS FOR ERCOT, CONSOLIDATED FOR A SPECIAL PURPOSE ENTITY M AND SPECIAL PURPOSE ENTITY N ON BEHALF OF THE FINANCE AND AUDIT COMMITTEE, I MOVE THAT THE BOARD ACCEPT THE 2024 FINANCIAL STATEMENTS AUDIT REPORTS FOR ERCOT CONSOLIDATED, UM, UH, T-E-M-F-S-M AND T-M-M-T-E-M-S-F-N AS PRESENTED BY BAKER TILLEY.
DO I HAVE A SECOND? OKAY, JOHN, THANK YOU.
ANY OPPOSED? ANY ABSTENTIONS? OKAY.
THE FINANCIAL STATEMENTS ARE APPROVED.
IN ADDITION TO THAT, UH, WE RECEIVED THE NORMAL COMMITTEE BRIEFS ON FINANCIAL REPORTING INVESTMENTS AND DEBT.
UH, THE COMPANY IS IN COMPLIANCE WITH ALL OF THE POLICIES RELATED IN THOSE AREAS.
UH, THE MOST IMPORTANT THING THAT THE COMMITTEE DID YESTERDAY WAS TO BEGIN THE FIRST REVIEW OF THE PROPOSED 20 26, 20 27 BUDGET.
UH, THE TOTAL AUTHORIZED SPEND IS $474 MILLION IN 2026 AND $557 MILLION IN 2027.
THE BULK OF THE INCREASE FOR 2027 IS DUE TO THE, UH, START OF THE, UH, DATA CENTER SIX, UH, REFRESH PROJECT, WHICH HAPPENS EVERY FEW YEARS.
UH, THE, WHEN YOU LOOK AT THAT MAP, WITH THAT SPIN MAPPED AGAINST THE PROPOSED ELECTRIC MARKET GROWTH IN TEXAS, UH, THE INITIAL BUDGET PROPOSES A DECREASE IN THE SYSTEM ADMINISTRATION FEE FROM 63 CENTS PER MEGAWATT HOUR TO 61 CENTS PER MEGAWATT HOUR, BEGINNING JANUARY 1ST, 2026.
UH, THE COMMITTEE WILL BE REVIEWING THIS AGAIN IN JUNE, UH, FOR FORMAL APPROVAL.
AND THERE ARE SEVERAL UNCERTAINTIES THAT THE COMMITTEE ASKED MANAGEMENT TO CONSIDER TO BAKE INTO THEIR BUDGET PLANNING PROCESS, INCLUDING TARIFFS, TRADE DISRUPTIONS, UH, AND IF WE HAVE AN ECONOMIC DOWNTURN, IF THERE'S A PROJECTED ECONOMIC DOWNTURN, THE IMPACT ON ELECTRIC DEMAND.
SO THAT WAS THE BULK OF THE FINANCE AND AUDIT COMMITTEE, UH, ACTIVITY YESTERDAY.
UH, WITH THAT WE'LL MOVE TO HR AND G AND I'M GONNA ASK, UH, PEGGY TO, UH, MAKE HER PRESENT.
PRESENT THE, UH, COMMITTEE ACTIVITIES.
UH, WE HAD ONE VOTING ITEM IN, UH, HUMAN RESOURCES GOVERNANCE COMMITTEE AND WE'RE REQUIRED BY THE CHARTER TO DO AN ANNUAL REVIEW OF THE BOARD POLICIES AND PROCEDURES.
AND, UH, THERE WERE NO RECOMMENDED CHANGES.
AND SO, UM, THE, THE HUMAN RESOURCES GOVERNANCE COMMITTEE VOTED TO RECOMMEND THAT THE BOARD APPROVE THOSE, UH, THE, THE CURRENT POLICY OR AFFIRM THE CURRENT POLICIES AND PROCEDURES.
I'LL MAKE THE MOTION WHEN I GET DONE WITH MY REPORT.
UH, WE DID HAVE SEVERAL, UH, INFORMATIONAL ITEMS ON IN THE HUMAN RESOURCES AND GOVERNANCE COMMITTEE.
WE, UH, RECEIVED AND DISCUSSED THE HUMAN RESOURCES OPERATIONS REPORT, THE ANNUAL STATUS REPORT FROM THE RETIREMENT PLAN COMMITTEE, AND THE ANNUAL STATUS REPORT ON HEALTH AND WELFARE ACTIVITIES.
IN ADDITION, IN THE MATERIALS YOU'LL SEE, UH, FROM THE HUMAN RESOURCES AND GOVERNANCE COMMITTEE, THIS IS REALLY FOR THE PUBLIC'S INFORMATION, THE 2024 OBJECTIVES AND KEY RESULTS, UH, UH, AND THE 2025 OKRS, WHICH THEY'RE INCLUDED IN MATERIALS.
THE COMMITTEE AND THE BOARD HAVE DISCUSSED THOSE IN, UH, ON NUMEROUS OCCASIONS.
SO, UH, THAT'S JUST REALLY FOR THE PUBLIC'S INFORMATION IN THE, IN THE HR AND G COMMITTEE MATERIALS.
UH, SO THAT CONCLUDES MY REPORT.
I, BUT I WILL MOVE THAT THE BOARD REAFFIRM THE BOARD POLICIES AND PROCEDURES SET FORTH IN ITEMS 16 THREE OF THE BOARD MATERIALS.
DO WE HAVE A SECOND? UH, JULIE.
ANY OPPOSED? ANY ABSTENTIONS? OKAY.
THE, UH, POLICIES AND PROCEDURES HAVE BEEN REAFFIRMED BY THE
[05:00:01]
BOARD.SO NEXT WE'LL MOVE TO JOHN SWENSON TO GIVE THE TECHNOLOGY AND SECURITY, UH, COMMITTEE REPORT.
MR. CHAIRMAN, I THINK MOST OF THE MEMBERS OF THE BOARD WERE IN THE TECHNOLOGY SECURITY COMMITTEE, SO I HAVE NO FURTHER REPORT.
THE, THE LAST ITEM, UH, BEFORE WE MOVE TO EXECUTIVE SESSION IS
[17. Other Business]
OTHER BUSINESS.IS THERE ANY OTHER BUSINESS THAT ANY BOARD MEMBER WISHES TO RAISE IN GENERAL SESSION? OKAY.
WITH THAT, WE WILL, UH, TAKE A 15.
LET'S, WE'LL TAKE A 15 MINUTE BREAK, UH, TO GRAB OUR LUNCH.
WE'LL COME BACK IN HERE AFTER, AFTER, UH, YOU GRAB THAT AND WE'LL, UH, GO
[Convene Executive Session]
INTO EXECUTIVE SESSION.SO THIS MEETING IS HEREBY RECESS UNTIL 12, UH, 1322 RATHER.
UH, CHAIRMAN GLEASON, THIS MEETING OF THE PUBLIC UTILITY COMMISSION OF TEXAS WILL STAND IN RECESS.
HELLO, BILL FLORES, UH, ERCOT BOARD CHAIR.
[Reconvene General Session]
HEREBY RECONVENE THE MEETING OF THE ERCOT BOARD OF DIRECTORS.I'VE CONFIRMED THAT A QUORUM IS PRESENT IN PERSON.
[18. Vote on Matters from Executive Session]
HAVE THREE VOTING ITEMS FROM EXECUTIVE SESSION.I WILL ENTERTAIN A MOTION TO APPROVE THE SELECTION OF BAKER TILLY AS THE INDEPENDENT FINANCIAL AUDITOR TO PERFORM THE FOLLOWING FOR THE YEAR ENDED DECEMBER 31ST.
2025 IS DISCUSSED IN AGENDA ITEM E ES 2.2 0.1.
FIRST OF ALL, THE FINANCIAL STATEMENTS.
AUDIT, SURFACER CERTIFICATE AND FORM NINE 90 REVIEW FOR ERCOT INC.
SECOND, THE FINANCIAL STATEMENTS AUDIT AND CONSOLIDATION PROCEDURES FOR TEXAS ELECTRIC MARKET STABILIZATION FUNDING, M1 LLC.
AND THIRD, THE FINANCIAL STATEMENTS AUDIT AND CONSOLIDATION PROCEDURES FOR TEXAS ELECTRIC MARKET STABILIZATION FUNDING.
SEE, DO WE HAVE A SECOND? A SECOND FROM BENJAMIN.
ANY OPPOSED, ANY ABSTENTIONS? OKAY.
THAT MOTION IS UNANIMOUSLY UH, APPROVED.
THIS MEETING OF ERCOT BOARD OF DIRECTORS IS NOW ADJOURNED AND THE WEBCAST WILL BE CONCLUDED.