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[1. Call General Session to Order]
GOOD AFTERNOON.I MEMBERS THE ERCOT BOARD OF DIRECTORS AND GUESTS.
I'M BILL FLORES ERCOT, BOARD CHAIR.
WELCOME TO THE JUNE 23RD, 24, 20 25 BOARD OF DIRECTORS MEETING.
I HAVE CONFIRMED THAT REQUIREMENTS PRESENT IN PERSON AND HEREBY CALL THIS MEETING OF THE ERCOT BOARD OF DIRECTORS TO ORDER.
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 ON 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 JUNE 23RD, 2025.
THE ADMIN ANTITRUST ADMONITION, AS WELL AS THE SECURITY MAP ARE INCLUDED WITH THE POSTED MEETING MATERIALS.
UH, BEFORE WE UH, BEGIN, I'D LIKE TO RECOGNIZE THAT OUR TWO NEWEST BOARD MEMBERS, UH, CIGNA, CORNELIUS, AND ALEX HERNANDEZ, ARE NO LONGER ON THE BOARD.
BOTH SIG AND ALEX ARE PURSUING NEW OPPORTUNITIES IN THE ELECTRICITY MARKET IN THE ERCOT REGION, AND WE WISH THEM THE BEST.
AND BECAUSE OF THEIR PURSUIT OF THOSE ACTIVITIES, UH, THE ERCOT, THE STATUTORY RULES DO NOT ALLOW THEM TO CONTINUE AS A MEMBER OF THE ERCOT BOARD.
UM, THE BOARD SELECTION COMMITTEE IS WORKING TO FULFILL THE THREE VACANT SEATS THAT WE HAVE OPEN CURRENTLY, AND OUR HOPE IS THAT THAT COULD HAPPEN AS SOON AS THE, UH, MEETING IN SEPTEMBER.
UH, THE FIRST ORDER OF BUSINESS ON TODAY'S AGENDA IS ITEM TWO.
NOTICE OF PUBLIC COMMENT, IF ANY.
TODAY'S MEETING AGENDA WAS POSTED PUBLICLY ON JUNE 16TH, 2025, AND PROVIDED INSTRUCTIONS TO THE PUBLIC FOR COMMENTING IN PERSON.
TO DATE, NO ONE HAS EXPRESSED AN INTEREST IN COMMENTING.
IS THAT STILL CORRECT, CHAD? THAT IS CORRECT.
[3. April 7-8, 2025, General Session Meeting Minutes]
IS JEN.ITEM THREE, THE APRIL 7TH AND EIGHTH, 2025.
GENERAL SESSION MEETING MINUTES.
THERE'S A IN AND MEETING MATERIALS.
WOULD ANY MEMBER LIKE TO DISCUSS THESE? IF NOT, I'LL ENTERTAIN A MOTION, UH, TO APPROVE THEM.
THEN MADE A MOTION TO APPROVE.
DO I HAVE A SECOND? SECOND, UH, JOHN.
ANY ABSTENTIONS? ANY, UH, OPPOSITION? OKAY, THE MINUTES ARE APPROVED.
[4.1.1 Combined Oncor Delaware Basin Stage 5 Project and Wind Energy Transmission of Texas Delaware Basin Stage 5 Project Alternative]
AGENDA, UH, FOUR, SYSTEM PLANNING AND OPERATIONS.THERE ARE SEVERAL SUB ITEMS UNDER THIS, UH, UH, SUBJECT.
THE FIRST IS AGENDA ITEM 4.1, REGIONAL PLANNING GROUP PROJECTS WITH TWO VOTING ITEMS. I PLEA, I BELIEVE THAT BU NAN IS GOING TO BE PRESENTING BOTH OF THESE ITEMS. WE'LL START WITH THE JENNA ITEM ES, UH, EXCUSE ME, 4.1 0.1 A COMBINED ENCORE, DELAWARE, DELAWARE BASIN STAGE FIVE PROJECT AND WIND ENERGY TRANSMISSION OF TEXAS DELAWARE'S BASIN STAGE FIVE PROJECT ALTERNATIVE, PROBABLY, SORRY, THAT WAS A LONG SENTENCE.
UM, I'M HERE TO PRESENT TWO RPG PROJECTS FOR YOUR ENDORSEMENT TODAY.
I'LL START WITH THE FIRST ONE, WHICH IS THE ENCORE COMBINED ENCORE DELAWARE BASIN STAGE FIVE PROJECT AND THE WIND ENERGY TRANSMISSION TAX DELAWARE BASIN ALTERNATE PROJECT THAT WAS SUBMITTED FOR RPG REVIEW.
UH, THE PURPOSE OF THIS IS TO PROVIDE AN OVERVIEW OF THE PROJECT, UH, WHICH IS AN $855 MILLION PROJECT, WHICH LOOKED AT THE COMBINED DELAWARE BASE IN STAGE FIVE PROJECT AND THE ALTERNATIVE AT THE END OF THE PRESENTATION, UM, WE WILL REQUEST THE BOARD TO AND RECOMMEND THE BOARD TO ENDORSE THE COMBINED DELAWARE BASE IN STAGE FIVE AND ALTERNATE RPG PROJECT, UH, WITH THE ENCORE OPTION BASED ON THE NERC AND ERCOT, UH, PLANNING CRITERIA.
SO THIS SLIDE PROVIDES AN OVERVIEW OF THE TIER ONE PROJECT REQUIREMENTS, UH, THIS PROJECT AS FALSE UNDER, UH, TIER ONE, BASICALLY THAT IT CONCEDES THE A HUNDRED MILLION DOLLAR PROJECT COST ALSO FOR TIER ONE PROJECTS REQUIRES THE BOARD ENDORSEMENT.
AND, UH, ERCOT SHOULD ALSO PRESENT THIS PROJECT ATTACK FOR REVIEW AND COMMENTS.
ANY COMMENTS FROM TAX WILL BE PRESENTED TO THIS BOARD.
SO THE BACKGROUND ON THIS PROJECT IS THAT THIS IS, THIS PROJECT IS PRIMARILY A LABORATORY PROJECT REQUIRED TO SERVE, UH, LOAD GROWTH IN SEVERAL COUNTRIES IN THE FOUR WEST WEATHER ZONE.
THERE ARE ALL EIGHT COUNTIES LISTED HERE.
UM, GOING BACK, WE DID AN STUDY DELAWARE BASIN LOAD INTEGRATION STUDY IN 2019, AND THIS PROJECT WAS, ARE IDENTIFIED
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IN THAT, UH, STUDY AND RECOMMENDED IT FOR THE IMPORT NEED FOR SERVING THE LOAD IN THE DELAWARE ON THE FOREST REGION.IN ADDITION TO THAT, WHEN WE PERFORMED THE 2024 UH, PERMIAN BASIN AND RELIABILITY STUDY, UH, THE NEED WAS CONFIRMED AND, UH, WE DID SEE THE RELIABILITY NEED, WHICH WAS PREVIOUSLY IDENTIFIED IN 2019.
SO BACK IN MAY, 2024, ENCORE SUBMITTED THIS PROJECT, DELAWARE BASIN STAGE FIVE, AS IDENTIFIED IN THE DELAWARE BASIN LOAD INTEGRATION STUDY, AND WE, UH, ALSO SUBMIT AN ALTERNATE SUBMITTAL FOR THIS PROJECT.
UH, THIS PROJECT WENT THROUGH RPG REVIEW AND ERCOT PRESENTED THIS PROJECT ATTACK ON MAY 28TH, 2025, AND TAC UNANIMOUSLY ENDORSED THE PROJECT.
SO THE BASIS FOR THE BOARD ENDORSEMENT IS THIS PROJECT AGAIN, IS, UH, IS COMING FROM THE DELAWARE BASIN LORD INTERCONNECTION STUDY.
PRIMARILY THIS IS AN IMPORT PROJECT NEEDED TO SERVE LOAD WHEN THE DELAWARE BASIN STUDY WAS DONE.
UH, THIS PROJECT WAS IDENTIFIED AS NEEDED FOR DELAWARE BASIN LOAD GROWTH WHEN IT EXCEEDED, UH, ROUGHLY AROUND 5,400 MEGAWATTS.
AND WE DID IDENTIFY THIS IN THE 2023 REGIONAL TRANSMISSION PLAN WHERE THE 2025 LOAD PROJECTIONS WERE SUPPOSED TO EXCEED, UH, 5,400 MEGAWATTS AND AGAIN, 2024 PERMIAN BASIN RELIABILITY STUDY ALSO IDENTIFIED THE NEEDS ORIGINAL NEED WITH ADDITIONAL TRANSMISSION UPGRADES THAT WAS IDENTIFIED IN THE 2024 PERMIAN BASIN PLAN.
UM, ERCOT STAFF REQUESTS AND RECOMMENDS THE BOARD TO ENDORSE THE NEED FOR THE COMBINED DELAWARE BASIN STAGE FIVE AND ALTERNATE PROJECT WITH ENCORE OPTION BASED ON NERC AND ERCOT RELIABILITY PLANNING CRITERIA.
UH, THE MAP HERE SHOWS, UH, KEY COMPONENTS OF THE PROJECT.
I WILL NOT GET INTO ALL DETAILS, BUT PRIMARILY THIS IS A, UH, DOUBLE CIRCUIT THREE 40 5K.
WE NEED NEW LINE FROM FARADAY TO LA MESA TO CLEAR FORK TO DRILL HOLE, UH, ROUGHLY AROUND 220 MILES OF NEW DOUBLE CIRCUIT 3 45 KV LINE.
WITH THAT, I'LL PAUSE HERE TO SEE IF THERE ARE ANY QUESTIONS, ANY QUESTION FOR PROB.
UH, BEFORE WE MOVE ON, I'LL ENTERTAIN A MOTION IF, DOES ANY BOARD MEMBER WISH TO DISCUSS THIS ITEM? OKAY.
IF NOT, I'LL ENTERTAIN A MOTION TO APPROVE THE TIER ONE COMBINED DELAWARE BASE STAGE FIVE AND ALTERNATIVE REGIONAL PLANNING GROUP PROJECT ENCORE OPTION IS PRESENTED.
ANY ABSTENTIONS? ANY OPPOSITION? OKAY.
THAT RECOMMENDATION HAS BEEN APPROVED.
[4.1.2 Oncor Tredway 138-kV Switch and Expanse to Tredway 138-kV 2nd Circuit Project]
STILL GOT THE STAGE.YOU'RE GONNA PRE, UH, PRESENT AGENDA ITEM 4.1 0.2, THE ENCORE TREADWAY 135, 1 38 KV SWITCH AND EXPANSE TO TREADWAY 1 38 KV SECOND CIRCUIT PROJECT.
THIS IS AN ENCORE TREADWAY 1 38 KV SWITCH, AND THE EXPANSE TO TREADWAY 1 38 KV SECOND CIRCUIT PROJECT.
UH, THE PURPOSE IS TO PROVIDE AN OVERVIEW OF THIS $119 MILLION PROJECT, UH, WHICH IS TO BUILD A NEW TREADWAY 1 38 KB SWITCH, AND ALSO BUILD, UH, EXPANDS TO TREADWAY SECOND CIRCUIT, 1 38 KB LINE.
AGAIN, THIS IS A TIER ONE PROJECT.
AT THE END OF THIS OVERVIEW, ERCOT WOULD REQUEST AND RECOMMEND THE BOARD TO ENDORSE THE ENCORE TREADWAY 1 38 KB SWITCH, AND THE EXPANDS TO TREADWAY 1 38 KB SECOND CIRCUIT, RPG PROJECT, OPTION ONE, UH, BASED ON THE NERC AND UH, ERCOT PLANNING CRITERIA.
THIS IS A TIER ONE PROJECT, A HUNDRED MILLION DOLLARS, OVER A HUNDRED MILLION DOLLARS.
UH, TIER ONE PROJECTS REQUIRES BOARD ENDORSEMENT AND, UH, ERCOT PRESENT TO THIS PROJECT ATTACK.
SO, OVERVIEW OF THIS PROJECT, AGAIN, ENCORE SUBMITTED THIS PROJECT IN SEPTEMBER, 2024.
UH, THE PURPOSE IS AGAIN, A RELIABILITY NEED, UH, DRIVEN BY LOAD GROWTH IN THE FOREST, UH, WEATHER ZONE.
UM, AIRCRAFT PERFORMED THE INDEPENDENT REVIEW AND IDENTIFIED SEVERAL THERMAL OVERLOADS AND VOLTAGE ISSUES AND ER, BASED ON THE REVIEW, ERCOT UM, IDENTIFIED THE
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NEED FOR THE, THE SECOND CIRCUIT AND THE NEW STATION.UH, ERCOT PRESENTED THIS PROJECT ATTACK ON APRIL 25TH.
ATTACK ORDERED TO UNANIMOUSLY ENDORSE THIS PROJECT, UH, SOME OF THE BASIS OF THE PROJECT.
AGAIN, THIS IS A RELIABILITY PROJECT, PRIMARILY DRIVEN BY NERC AND RC, OUR PLANNING CRITERIA, SOME OF THE VIOLATIONS THAT WE SAW DURING THE NEED ANALYSIS IS LISTED HERE.
PRIMARILY, THE PROJECT NEED IS DRIVEN BY, UH, LOSS OF A SINGLE TRANSMISSION LINE AND ALSO LOSS OF A LOSS OF A GENERATION UNIT.
IN ADDITION TO THAT, IT WAS ALSO DRIVEN BY THE ERCOT PLANNING CRITERIA, WHICH IS A COMBINATION OF A LOSS OF A, UH, GENERATION UNIT, FOLLOWED BY LOSS OF A SINGLE TRANSMISSION ELEMENT.
SO, UH, THIS IS THE OVERVIEW OF THE PROJECT.
UM, AGAIN, ERCOT, UH, STAFF RECOMMENDS THE PORT TO INDOORS THE NEED FOR ONCORE TREADWAY ONE 30 KV SWITCH, AND THE EXPANDS TO TREADWAY 1 38 KV SECOND CIRCUIT OPTION ONE, BASED ON THE NERC AND RELIABILITY CRITERIA.
UM, AGAIN, THIS, UM, THIS PROJECT HIGHLIGHTS THE KEY COMPONENT, WHICH IS BASICALLY A NEW, UH, DOUBLE CIRCUIT ONE 30 KV FROM, UH, TREADWAY TO EXPENSE, AND ALSO IT ADDS SOME ADDITIONAL REACTIVE SUPPORT AT THE EXPENSE, UH, ONE 30 KV STATION.
WITH THAT, I'LL, UH, PAUSE TO SEE IF THERE ARE ANY QUESTIONS.
ANY QUESTIONS ON THIS ITEM? ANY DISCUSSION? OKAY.
IF NOT, UH, THANK YOU, BU I'LL, UH, ENTERTAIN A MOTION TO APPROVE THE TIER ONE ENCORE TREADWAY, 1 35, 1 38 KV SWITCH AND EXPANDS TO TREADWAY 1 38 KV SECOND CIRCUIT REGIONAL PLANNING GROUP PROJECT OPTION ONE AS PRESENTED.
I'M SORRY, I MISSED THAT, JULIE.
ANY OPPOSED? ANY ABSTENTIONS? OKAY, THAT PROJECT'S APPROVED.
[4.2 ERCOT Risk-Based Maximum Daily Resource Planned Outage Capacity Methodology Revision]
NOW MOVE TO AGENDA ITEM 4.2, ERCOT, RISK-BASED MAXIMUM DAILY RESOURCE PLAN TO OUTAGE CAPACITY METHODOLOGY REVISION.UH, THIS IS FRED JUAN WITH
UH, SO I'M HERE TODAY TO PRESENT A REVISION TO THE, UH, METHODOLOGY CALCULATED THE MASS DAILY RESOURCE PLAN,
UH, TYPICALLY WE USE M-D-R-P-O-C.
UH, SO AT THE END OF PRESENTATION, UH, WE ASK FOR THE BOARD TO APPROVE THIS REVISION.
SO, UH, QUICK OVERVIEW ABOUT THE, UH, M-D-R-P-O-C, UH, ABOUT ITS PURPOSE AND, UH, THE USAGE AND, UH, THE NEED OF THIS REVISIONS.
I THINK TO ME THE, THE, THE PPRR SECTION, UH, 35.0021, UM,
UH, AND, UH, THROUGH THE WHOLE STAKEHOLDER PROCESS, THE APPROVAL OF 1108, UH, WAS CONTESTED, UH, RESULTED A NEED FOR THE BOARD TO APPROVE THE REVISIONS TO THE M-D-R-P-O-C METHODOLOGIES.
UM, SINCE WE IMPLEMENT M-D-R-P-O-C, IT IS CURRENTLY USED, UH, FOR
UH, THIS CURVE, UH, IS CURRENTLY POSTED, UH, UP TO THE FIVE YEARS AND, UH, UPDATED REGULARLY, UH, AND, UH, AVAILABLE TO THE, UH, STAKEHOLDERS AND THE RESOURCE ENTITY HAVE A TRANSPARENCY TO KNOW WHAT IS THE LIMIT, WHAT IS AVAILABLE WINDOW TO SCHEDULE OUTAGES, AND DUE TO THE CHANGES IN THE MARKET CONDITION, WE'LL HAVE MORE DETAILS IN THE NEXT SLIDE.
UH, THE EXISTING METHODOLOGY, UH, BECOME THE CHALLENGES, AND THAT'S WHY WE SEE THE NEED TO, UH, HAVE THE CHANGES.
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SO, REALLY, FROM THE OUTAGE COORDINATION PERSPECTIVE, UH, THE OBJECTIVE IS TO SUPPORT THE NEEDED OUTAGES, MAKE SURE THE GENERATOR TAKE UNNECESSARY AND APPROPRIATE MAINTENANCE.AT THE SAME TIME, WE'LL ALSO TRY TO, UH, MAINTAIN THE SUFFICIENT AVAILABLE GENERATION OUR RESOURCES TO MEET THE PROJECTED DEMAND.
SO THE RESOURCE MIX AND THE PROJECTED LOAD GROWTH, UH, HAVE MADE THE, OUR EXISTING METHODOLOGIES, UH, BECOME CHALLENGES.
UH, IF WE FOLLOW TODAY'S METHODOLOGY DUE TO ESPECIALLY THE LOAD GROWTH, UH, WE CAN SEE THE M-D-R-P-O-C CAN DROP SIGNIFICANTLY.
SUCH A LADDER E WILL BE, WILL NOT BE SUFFICIENT TO SUPPORT THE NEEDED, UH, RESOURCE OUTAGES.
SO WE IDENTIFY THIS ONE AND IN LATE 2024, UH, WE PRESENT THE CHALLENGES AND THE RECOMMEND, UH, TO FREEZE M-D-R-P-O-C, WHAT WE CURRENTLY POSTED TO SUPPORT THE NEEDED TG TODAY, AND AT THE SAME TIME, ALSO WORK ON A REVISION TO THE METHODOLOGY TO IDENTIFY A PROBLEM METHODOLOGY MOVING FORWARD.
SO THE, THE MAJOR CHANGES FOR THIS REVISION IS, UH, A NEW RISK BASED APPROACH, UH, IS PROPOSED AND IMPLEMENTED AND CONSIDERED TO CALCULATE A-M-D-R-P-O-C FOR THE THERMAL GENERATION RESOURCES.
AND, UH, THE BENEFIT FOR THIS, UH, APPROACH IS TO PROVIDE A SUFFICIENT OUT CAPACITY AT, AT THE SAME TIME, IT WILL HELP TO QUANTIFY THE RISK OF THE DETERMINANT M-D-R-P-O-C, AND IT WILL HELP IT HELP TO FURTHER ASSIST THE FUTURE ADJUSTMENT OF THE M-D-R-P-O-C IF NECESSARY AND ASSOCIATE RISK.
SO, UH, THIS CHART SHOW A COMPARISON, UH, OF OUR, UH, REVISED M-D-R-P-O-C AGAINST THE HISTORICAL RESOURCE PLAN OUTAGES.
I THINK THE KEY TAKEAWAY IS THIS REVISED METHODOLOGY.
IT PROVIDES SUFFICIENT T CAPACITY AND THEN MAINTAIN AVAILABLE RESOURCE CAPACITY TO MEET THE NEAR TERM PROJECT LOAD.
UH, GROWTH, UH, I WAS KIND OF HIGHLIGHTED BECAUSE OF THE PROJECT LOAD OF GROWTH.
UH, I THINK THIS IS REVISION, UH, EXPECT TO PROVIDE THE SAME LEVEL OF, OF M-D-R-P-O-C FOR THE FOLLOWING FIVE YEARS, BUT AT THE SAME TIME, YOU CAN NOTE IT ON THE CHART AT THE RIGHT.
UH, IN THE FUTURE YEARS, UH, THE RISK OF FAILING BELOW THE TARGET RESERVE, UH, IS CALCULATED AND CAN BE INCREASED SIGNIFICANTLY, IS REALLY DUE TO THE EXPECTED LOAD GROWTH IN THE FUTURE.
SO THESE ARE THE LAST SLIDES, KIND TO SHOW YOU, UH, THE, THE WHOLE PROGRESS, HOW WE WORK WITH OUR STAKEHOLDERS, UH, COME TO THESE REVISIONS.
I THINK, UH, I POINT OUT IN THE BEGINNING, UH, WE FIRST, UH, PROVIDE UPDATED TO, UH, TECH, UH, IN LATE 2024 WITH IDENTIFY THE CHALLENGES, ALSO THE PROPOSED THE METHODOLOGY, UH, AND OVER THE, OVER THE SEVERAL MONTHS, UH, WE TAKE THE STAKEHOLDERS FEEDBACK, THE COMMENTS, AND THE SUGGESTIONS INTO OUR REVISIONS, UH, TO IDENTIFY.
AND THE FINAL VERSION WE HAVE TODAY, I THINK THIS CONCLUDE MY UPDATE.
ANY QUESTIONS FOR FRED? IF NOT, UH, ANY BOARD MEMBER WISH TO DISCUSS THIS ITEM, I WILL THEN NOW ENTERTAIN A MOTION TO APPROVE THE REVISION TO THE METHODOLOGY FOR CALCULATING MAXIMUM DAILY RESOURCE PLAN TO OUTAGE CAPACITY AS PRESENTED.
ANY OPPOSED? ANY ABSTENTIONS? OKAY.
[4.3 Aggregate Distributed Energy Resource (ADER) Pilot Project – Phase 3]
ITEM 4.3, AGGREGATE DISTRIBUTED ENERGY RESOURCE, A DER PILOT PROJECT PHASE THREE.RYAN KING IS PRESENTING RYAN, THE PODIUM IS YOURS.
THANK YOU VERY MUCH, MR. CHAIR.
I'M THE MANAGER OF MARKET DESIGN AT ERCOT.
VERY PLEASED TO BE ABLE TO SPEAK TO YOU ALL TODAY WITH RESPECT TO THE AGGREGATE DISTRIBUTED ENERGY RESOURCE PILOT PROJECT.
SO, UM, THE PURPOSE OF TODAY'S DISCUSSION IS TO, UH, ERCOT.
WE'VE, WE ARE REQUESTING THAT THE BOARD OF DIRECTORS APPROVE THE PROPOSED PHASE THREE AGGREGATE DISTRIBUTED ENERGY RESOURCE PILOT, UH, PROJECT GOVERNING DOCUMENT, WHICH IS INCLUDED IN ATTACHMENT A.
WHAT I'M HOPING TO DO TODAY, UH, IS COVER A FEW THINGS.
FIRST IS, UH, THE CURRENT STATE OF THE PILOT PROJECT,
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UH, OBSERVATIONS FROM THE SECOND PHASE OF THIS PILOT.AND THEN THE FOCUS OF THE DISCUSSION WILL BE ON THE PROPOSED CHANGES, WHICH ARE INCORPORATED IN PHASE THREE OF THE GOVERNING DOCUMENT, WHICH ARE AIMED AT EXPANDING PARTICIPATION, IMPROVING ACCESS, AND CONTINUING TO BE ABLE TO GROW THE PILOT, UH, TO SUPPORT FUTURE GROWTH.
UM, JUST A NOTE THAT THIS, UH, PHASE THREE GOVERNING DOCUMENT WAS THE SUBJECT OF FAIRLY EXTENSIVE DISCUSSION AT THE WMS AND TAC.
AND, UH, BOTH STAKEHOLDER BODIES HAVE ENDORSED THESE RESULTS AS WELL AS THE PHASE THREE GOVERNING DOCUMENT.
SO THIS SLIDE IS A FAIRLY FAMILIAR SLIDE, UH, AT THIS POINT.
UM, A COUPLE OF THINGS TO NOTE IS THAT THE PILOT CONTINUES TO GROW.
WE NOW HAVE THREE RESOURCES THAT ARE, UH, SUBMITTING, UH, BIDS TO BUY IN THE REAL-TIME ENERGY MARKET EVERY DAY, AND ALSO BEING AWARDED ANCILLARY SERVICES.
THERE ARE FURTHER, UH, NINE RESOURCES THAT ARE IN VARIOUS STAGES OF THE REGISTRATION PROCESS FOR TOTAL CAPABILITY OF AROUND 38 MEGAWATTS.
AND I WILL NOTE AS WELL THAT IN ADDITION TO THESE FORMAL STATISTICS, WE DO SEE A, A CONTINUING DEGREE OF INTEREST, BOTH WITHIN AND OUTSIDE THE STATE OF TEXAS.
UM, A A NUMBER OF, UH, UH, PARTICIPANTS ARE, ARE WATCHING THIS PROGRAM AND LOOKING TO, UH, PARTICIPATE IN THIS GOING FORWARD.
SO, UM, THIS IS PART OF THE, THE OVERALL PHASE TWO REPORT.
UH, JUST A COUPLE OF THINGS I'D LIKE TO HIGHLIGHT HERE IS THAT, UH, THE A DR RESOURCES ARE USUALLY AVAILABLE FOR MOST OF THE DAYLIGHT HOURS OF THE DAY, BUT THE AMOUNT OF TIMES, UM, THAT THEY WOULD LIKELY BE DISPATCHED IS FAIRLY LOW.
UM, THAT'S NOT SURPRISING GIVEN THE FACT THAT A NUMBER OF THESE ARE HOUSEHOLD BATTERIES, HOUSEHOLDS PLACE, UH, A LARGE PREMIUM OR A LARGE VALUE ON, ON CONSUMING LOAD, UH, RATHER THAN, UH, BEING RETAILED.
UH, THEY ALSO WANT TO MAKE SURE THAT THEY HAVE A SUFFICIENT STATE OF CHARGE OF THEIR HOME BATTERY, UH, TO ENSURE THAT THEY HAVE BACKUP, UH, FOR A, A GRID OUTAGE, THAT TYPE OF THING.
SO IN TERMS OF THE PHASE THREE GOVERNING DOCUMENT, WHAT I HAVE HERE ARE THE, A HIGH LEVEL OVERVIEW OF THE RECOMMENDATIONS THAT WE'VE INCLUDED.
PROBABLY THE MOST SIGNIFICANT IS THAT WE HAVE ENABLED A, A OR PROPOSING TO ENABLE A, A NEW PARTICIPATION MODEL.
AND THIS IS REALLY AIMED AT, UH, THOSE RESOURCE TYPES OR AGGREGATIONS OF RESOURCE TYPES, UM, THAT CAN RESPOND VERY QUICKLY TO A DISPATCH INSTRUCTION OR A SIGNAL.
BUT, UM, ARE NOT THE TYPE OF RESOURCES THAT WANT TO BE IN THE DAY TO DAY, FIVE MINUTE REAL TIME ENERGY MARKET, OR MAY NOT BE ABLE TO RAMP UP AND DOWN OVER A FIVE MINUTE LINEAR RAMP, BUT STILL, UM, HAVE A CAP, HAVE CAPACITY, AND ARE IDEALLY SUITED TO PROVIDE SOME OF OUR ANCILLARY SERVICES.
UM, THIS WAS SOMETHING THAT WAS ALWAYS CONTEMPLATED AS PART OF THE, THE PILOT EVOLUTION.
AND BASED ON SOME DISCUSSIONS THAT WE HAD INTERNALLY, AS WELL AS WITH STAKEHOLDERS, WE SEE THAT THERE'S A MODEL EXISTING THAT CAN BE UTILIZED OR NON-CONTROLLABLE LOAD RESOURCE PARTICIPATION MODEL THAT WILL NOW ENABLE, UH, AGGREGATED RESOURCES TO PARTICIPATE UNDER THIS MODEL.
UH, COMMENSURATE WITH THIS MODEL, WE'VE ALSO ENABLED THIRD PARTIES TO PARTICIPATE IN THE PILOT.
UM, BUT THAT WILL BE LIMITED, UH, LIMITED RATHER TO LARGER CUSTOMERS, MORE SOPHISTICATED CUSTOMERS.
SO, UH, WE'RE LOOKING AT, UH, GREATER THAN A HUNDRED KILOWATT PREMISES, UH, CAN PARTICIPATE WITH THIRD PARTIES.
AND AS, UH, PART OF THAT, UH, POLICY DESIGN, WE'VE ALSO PUT INTO, UH, PUT IN PLACE SOME PROCEDURES THAT ENSURE THAT, UH, THE THIRD PARTY IS SHARING, UH, THE REQUISITE INFORMATION AROUND THAT CUSTOMER WITH THAT CUSTOMER'S LOAD SERVING ENTITY.
WE'VE ALSO PROPOSED, UH, SOME CLARIFICATIONS AND SOME UPDATES TO, WITH RESPECT TO, UH, VALIDATION AND TESTING AND REVIEWING OF THE AGGREGATION FORMS. SOME OF THESE ARE BASED ON LESSONS LEARNED.
SOME OF THESE ARE BASED ON, UM, LOOKING AHEAD TO THE, THIS RESOURCE TYPE.
AND, UH, SOMETHING THAT WE'LL GET INTO IN THE, UH, NEXT SLIDES IS WITH RESPECT TO PARTICIPATION LIMITS.
SO AS PART OF PHASE ONE AND TWO, UM, WE'VE BEEN OPERATING WITHIN A FAIRLY LIMITED ENVELOPE.
THERE IS A, UH, A 40 MEGAWATT ANCILLARY SERVICE CAPACITY AND AN 80 MEGAWATT OVERALL CAPACITY.
UH, WHAT WE HAVE, UH, ADOPTED IS A, A DOUBLING OF THOSE CAPACITY LIMITS.
THAT'S IN PART, UH, BASED ON THE INTEREST THAT WE'RE HEARING AND AND OBSERVING IN TERMS OF PARTICIPATION IN THE PILOT.
UM, AND THIS WILL ALLOW THE, THE PILOT TO CONTINUE TO GROW AND ACCOMMODATE GROWTH OVER TIME.
UH, ADDITIONALLY, WE'VE PROVIDED A LITTLE BIT MORE CLARIFICATION AS TO HOW WE WILL MANAGE GROWTH GOING FORWARD.
SO WHAT WE'VE INCLUDED IN THE GOVERNING DOCUMENT IS A SPECIFIC LANGUAGE THAT SAYS, AS AND WHEN WE ARE REACHING ONE OF THE LIMITS, THERE'S A LIMITS
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ON, ON THE AMOUNT OF CAPACITY THAT AN INDIVIDUAL QSE CAN CAN HAVE, AS WELL AS THE GLOBAL LIMITS.WE WILL MAKE COMMENSURATE ADJUSTMENTS TO THAT, UM, WHILE CONTINUING TO MANAGE THE ADMINISTRATIVE BURDEN OF THE PROJECT.
SO I THINK THAT'S MEANT TO PROVIDE A BALANCE BETWEEN THE ABILITY FOR ERCOT TO, TO MANAGE, UH, THE OVERALL, UH, ADMINISTRATION OF THE PROJECT, BUT ALSO ENSURE THAT THERE'S CONFIDENCE THAT THIS IS GOING TO CONTINUE TO GROW.
SO IN TERMS OF THE, UH, NEXT STEPS WITH RESPECT TO, UH, THE PILOT PROGRAM, UH, ONCE OR AFTER THE, THE BOARD HAS APPROVED THIS, ERCOT WILL PUT THE CHANGES FROM THE PHASE THREE GOVERNING DOCUMENT INTO EFFECT.
UM, AS IS SORT OF A, A GOAL OF, OF A PILOT PROJECT, THERE ARE NO SYSTEM CHANGES AT THIS POINT.
SO WE CAN EFFECTIVELY IMMEDIATELY, UH, IMPLEMENT THE, THE, THE NEW PHASE OF THE PILOT UPON APPROVAL FROM THE ERCOT BOARD.
UM, AND ONE OTHER THING THAT I THINK IS IMPORTANT TO NOTE IS THAT, UH, WE FEEL AT THIS POINT THAT, UH, GIVEN THE OBSERVATIONS THAT WE'VE SEEN ON THE PILOT AND THE LEARNINGS, WE FEEL THAT THIS, UH, IS ABLE TO BE, UH, AT LEAST AS A GOAL PART OF ERCOT ENDURING MARKET DESIGN.
SO WHAT WE'RE PROPOSING IS AFTER AN INITIAL PERIOD, WE WOULD LOOK TO INCORPORATE THIS PILOT INTO A FORMAL PART OF OUR MARKET DESIGN, AND THAT WOULD BE IN THE FORM OF A NODAL PROTOCOL REVISION REQUEST.
SO THAT IS, UM, A SUMMARY OF THE, THE PILOT STATUS, THE CHANGES THAT WE'RE LOOKING AT FOR PHASE THREE AND SOME OF THE OBSERVATIONS THAT WE'VE SEEN.
BUT I'M, I'M HAPPY TO TAKE ANY QUESTIONS.
ALRIGHT, I HAVE A COUPLE OF QUESTIONS FOR YOU.
AND IN PHASE TWO, IF YOU LOOK AT THE AGGREGATE RESOURCE CAPACITY THAT, THAT A DR PROGRAM HAS, HOW DOES THAT COMPARE TO THE A DR PROGRAMS ARE GOING THAT ARE, UH, IN PLACE IN OTHER PARTS OF THE COUNTRY? UM, WELL, I WOULD SAY THAT THERE, IT IS LIKELY THAT THEY'RE A LITTLE BIT SMALLER THAN SOME OF THE, THE DERS, UH, IN OTHER JURISDICTIONS, BUT I THINK THAT IN SOME SENSE IS BECAUSE WE ARE MOVING MUCH FURTHER IN TERMS OF THE INTEGRATION OF THESE RESOURCES IN THE MARKET.
SO, UM, THERE ARE OTHER JURISDICTIONS THAT, THAT HAVE ENABLED DERS AS A KIND OF AN EMERGENCY RESOURCE, AS A CAPACITY RESOURCE.
BUT WHAT WE'RE DOING WITH THIS PILOT IS, UH, THESE RESOURCES ARE REALLY COMPETING IN OUR REAL TIME ENERGY AND ANCILLARY SERVICES MARKETS.
SO THESE ARE COMPETING WITH, UM, LOAD AND GENERATION.
AND SO THE, THE STANDARD THAT WE SET PARTICIPATION IN THAT IS HIGHER THAN IF THIS WAS JUST A, A KIND OF A, A A, AN EMERGENCY TYPE OF RESOURCE.
UM, BUT HAVING SAID THAT, I WILL SAY AT LEAST COLLOQUIALLY, WE ARE SEEING A, ESPECIALLY IN THE LAST FEW MONTHS, AND, UH, AND BASED ON THE INTEREST IN, IN THIS NEW PARTICIPATION MODELS, THAT WE MAY BE ABLE TO REDUCE SOME BARRIERS TO PARTICIPATION.
AND WE EXPECT TO SEE POTENTIALLY SOME SIGNIFICANT GROWTH, EVEN THOUGH THE, OVER THE LAST TWO AND A HALF YEARS OR SO, IT HAS BEEN SOMEWHAT MODEST.
SO I, I THINK I'M HEARING FROM YOU THAT ERCOT IS STILL LEADING, UH, VIS-A-VIS THE, THE OTHER ISOS AND RTOS IN THE COUNTRY IN THIS PARTICULAR, UH, RESOURCE AVAILABILITY.
I, I THINK THAT'S ACCURATE, MR. CHAIRMAN.
ANY OTHER QUESTIONS FOR RYAN? THIS BOARD, UH, HAVE ANY OTHER DISCUSSION ON THIS PARTICULAR ISSUE? JULIE, UH, RYAN, COULD YOU DESCRIBE MAY, MAYBE YOU DID, BUT MAYBE REPEAT IT.
UM, SOME OF THE BOUNDARY CONDITIONS YOU RUN INTO, THINGS WE CAN'T DO WITH A D OR, AH, UH, WELL, ONE OF THE THINGS THAT, UM, WE'RE CONTINUING TO LOOK AT IS IF YOU LOOK AT THE, THE, THE ANCILLARY SERVICES THAT, UH, WE'RE, UH, ALLOWING THESE RESOURCES TO PARTICIPATE IN, THEY'RE IN SOME SENSE CAPACITY BASED ANCILLARY SERVICES.
SO NONS SPIN, UM, OR CUT CONTINGENCY RESERVE SERVICE, THESE ARE, UM, SERVICES THAT, THAT REQUIRE REDUCTION WITHIN, UH, 30 MINUTES OR 10 MINUTES.
UM, ONE OF THE THINGS THAT, THAT WE ARE CONTINUING TO LOOK AT, BUT HAVEN'T QUITE, UH, UM, DEFINED YET IS, IS WHETHER THERE ARE OTHER MORE, UM, MORE, MORE ESSENTIAL TO OUR RELIABILITY, LIKE OUR, OUR, UH, FREQUENCY RESPONSIVE SERVICES, FOR EXAMPLE, THAT, UH, BECAUSE THESE ARE AGGREGATED RESOURCES AND THEY'RE NOT TIED TO A A PARTICULAR LOCATION, UM, IT GIVES US MORE PAUSE BEFORE WE INTRODUCE THIS RESOURCE INTO WHAT IS EFFECTIVELY OUR CORE RELIABILITY, UH, SERVICES.
NOT TO SAY THAT, UH, WE WON'T, BUT IT REQUIRES A LITTLE BIT MORE, UH, DISCUSSION AND REFLECTION.
MAYBE THE OTHER THING, UH, TO NOTE, UH, THAT THAT'S INCLUDED IN, IN THE BROADER REPORT IS THAT, UH, THESE RESOURCES BY NATURE, BECAUSE THEY'RE AGGREGATED, UM, THEIR DISPATCH IS NOT BASED ON THEIR ACTUAL LOCATION.
[00:30:01]
AT A LOAD ZONE.AND ONE OF THE THINGS THAT WE INCLUDE IN THE STUDY IS SOME ANALYSIS THAT SHOWS, WELL, THIS IS THE IMPACT, UH, BASED ON HOW THEY WERE DISPATCHED.
BUT, UM, IF WE WERE TO COME UP WITH AN ALTERNATIVE DISPATCH METHODOLOGY THAT KIND OF WEIGHTED THE LOCATION OF THESE INDIVIDUAL RESOURCES, WHAT WOULD THAT LOOK LIKE? AND WHILE THE, THE RESOURCES ARE STILL SMALL, WE DO SEE FROM TIME TO TIME THERE IS SOME DISCREPANCY IN TERMS OF THE, THE ACTUAL LOCATIONAL, UH, IMPACT ON POWER FLOWS.
IF THERE'S NO OTHER DISCUSSION OR ANY OTHER QUESTIONS, THERE AREN'T ANY, I'LL ENTERTAIN A MOTION, UH, TO AUTHORIZE AND APPROVE ERCOT TO CONDUCT THE AGGREGATE DISTRIBUTED ENERGY RESOURCE PILOT PROJECT AS DESCRIBED IN THE PHASE THREE GOVERNING DOCUMENT.
DO I HAVE A SECOND? YES, THEN, UH, JOHN.
ANY OPPOSED? ANY ABSTENTIONS? OKAY.
[4.4 Real-Time Market Price Correction – Generic Transmission Constraint Incorrectly Being Considered in SCED]
DRAKE.UH, NEXT GORDON DRAKE IS GONNA PRESENT AGENDA ITEM 4.4, REAL TIME MARKET PRICE, GENERIC TRANSMISSION CONSTRAINT INCORRECTLY BEING CONSIDERED IN SC.
GORDON DRAKE, DIRECTOR OF MARKET DESIGN AND ANALYSIS AT ERCOT, AND PLEASED TO BE WITH YOU TODAY TO PRESENT OUR RECOMMENDATION, UH, REGARDING A PRICE CORRECTION EVENT, UM, AND SEEKING APPROVAL FROM THE BOARD FOR THAT, UM, FOR THAT PRICE CORRECTION.
UM, AS BACKGROUND FOR THE, THE CONDITIONS THAT LED TO THE EVENT, WE, UH, TYPICALLY WILL, UH, THROUGH THE, THE COURSE OF, OF MONITORING THE, THE POWER SYSTEM RELIABILITY HAVE CERTAIN, UM, UH, CERTAIN CONSTRAINTS THAT ARE, ARE BEING MONITORED ACTIVELY, BUT NOT BEING ACTIVELY MANAGED THROUGH OUR SCED DISPATCH PROCESS.
AND, UM, ONE SUBSET OF THOSE ARE POST CONTINGENCY OVERLOADS ON GENERIC TRANSMISSION CONSTRAINTS.
UM, AND, UH, ON MARCH 27TH, UH, DURING A ROUTINE SOFTWARE UPDATE, UH, THE, THE PARAMETER THAT KEEPS THOSE, UH, POST CONTINGENCY OVERLOADS FROM BEING PASSED TO SC, UH, AND CONSIDERED WITHIN SCED WAS INADVERTENTLY SET TO A DEFAULT VALUE, WHICH MEANT THAT IT WAS NOT PERFORMING THAT FUNCTION TO, UM, TO, TO KEEP THOSE CONSTRAINTS FROM BEING PASSED TO SCED.
AND AS A RESULT, UH, THE CONSTRAINT WAS PASSED, IT WAS, UH, IT WAS ACTIVATED AND THAT CONSTRAINT REACHED AT TIMES ITS MAXIMUM SHATTER PRICE OF $5,251 PER MEGAWATT HOUR.
UH, THE, UH, THE ISSUE IMPACTED INTERVALS ON BOTH MARCH 28TH AND MARCH 29TH.
UM, WE CORRECTED THE PRICES FOR MARCH 28TH WITHIN THE, THE TWO DAY WINDOWS, UH, ALLOWED UNDER THE PROTOCOLS.
UH, BUT WE DID NOT DO SO FOR, UH, THE, UM, OPERATING DAY MARCH 29TH.
WE DID NOT, UM, DID NOT MEET THAT TWO BUSINESS DAY DEADLINE, UH, WHICH IS WHY WE ARE, UM, BRINGING THE EVENT TO THE BOARD TODAY.
UH, WE HAD NOTIFIED THE MARKET OF THE EVENT THROUGH TWO MARKET NOTICES, UM, AND HAVE TAKEN CORRECTIVE ACTION TO ENSURE THAT, THAT THIS PARAMETER IS ACTIVELY MONITORED THROUGH THE SOFTWARE RELEASE CHECKLIST.
AND, AND IS, IS ACTIVELY CHECKED BEFORE THE RELEASE PROCEEDS, BEFORE BRINGING A PRICE OF CORRECTION EVENT TO THE BOARD.
WE WILL ATTEST IT AGAINST THE SIGNIFICANCE, SIGNIFICANCE CRITERIA OUTLINED IN OUR PROTOCOLS.
UM, AND FOR THIS EVENT ON MARCH 29TH, THERE WERE 12 COUNTERPARTIES, UH, WHICH, UH, DEMONSTRATED THAT THEY HAD REACHED THAT, UH, ONE OR BOTH OF THOSE SIGNIFICANT SIGNIFICANCE CRITERIA.
AND IN THIS CASE, UH, 12 COUNTERPARTIES, UH, MET BOTH SIGNIFICANCE CRITERIA.
THE MAXIMUM IMPACT TO A SINGLE COUNTERPARTY IS SHOWN HERE, UH, JUST SHORT OF $100,000, UH, ON THE DOLLAR AMOUNT.
AND A, UH, IN TERMS OF THE PERCENTAGE CRITERIA FOR CRITERIA ONE A, A, AN IMPACT OF JUST LESS THAN 50%, AND, UH, JUST MORE THAN 98% FOR CRITERIA NUMBER TWO, THE MAXIMUM ESTIMATED CHANGE IN CHARGES DUE TO ERCOT.
SO THIS IS THE CHANGE IN THE, THE OVERALL SETTLEMENT AMOUNTS WAS A, A, UH, ULTIMATE RESULT IN A, A PAYMENT, A CHANGE IN NET PAYMENT OF JUST MORE THAN $80,000 OR ABOUT A THIRD OF A PERCENT OF THE TOTAL SETTLEMENT AMOUNTS FOR MARCH 29TH.
WITH THAT, I WOULD LIKE TO SEEK THE BOARD APPROVAL OF THE ERCOT RECOMMENDATION REGARDING THIS PRICE EVENT.
THANK YOU, GORDON, ARE THERE ANY QUESTIONS OR IS THERE ANY FURTHER DISCUSSION ON THIS ITEM? IF NOT, I'LL UH, ENTERTAIN A MOTION TO DETERMINE THAT PRICES NUMBER ONE, THAT, SORRY,
[00:35:01]
THAT, UH, NUMBER ONE, DETERMINE THAT PRICES FOR OPERATING DAY MARCH 29TH, 2025 WERE AFFECTED BY THE INCORRECT CONSIDERATION OF A GENERIC TRANSMISSION CONSTRAINT AS, UH, GORDON PRESENTED, AND TWO, THAT DIRECT ERCOT STAFF TO IMPLEMENT THE APPROPRIATE PRICE CORRECTIONS PURSUANT TO PROTOCOL SECTION 6.3.ANY OPPOSED? ANY ABSTENTIONS? OKAY.
[4.5 Preview of ERCOT Recommendation regarding 2026 ERCOT Methodologies for Determining Minimum Ancillary Service Requirements]
TO AGENDA ITEM 4.5, PREVIEW OF ERCOT RECOMMENDATION REGARDING 2026 METHODOLOGIES FOR DETERMINING DETERMINING MINIMUM ANCILLARY SERVICE REQUIREMENTS.JEFF BILLOW IS PRESENTING JEFF.
UH, SO THE PURPOSE OF ME BEING HERE TODAY IS TO, UH, GIVE YOU AN INFORMATIONAL ONLY PREVIEW OF SOME CHANGES THAT WE'RE PROPOSING TO OUR ANCILLARY SERVICES METHODOLOGY FOR 2026.
UH, WE, WE'LL BRING THE FULL SUITE OF CHANGES BACK, BACK HERE IN SEPTEMBER.
UH, SO THIS IS JUST A, UH, A HEADS UP RIGHT NOW.
UH, SO E EVERY YEAR WE GO THROUGH A PROCESS WHERE WE REVIEW THE METHODOLOGY THAT WE USE TO CALCULATE THE QUANTITIES OF ANCILLARY, ANCILLARY SERVICES.
AND WE, UH, START WITH OUR OWN INTERNAL ANALYSIS.
WE GO TO THE WORKING GROUPS ON BOTH THE RELIABILITY AND THE WHOLESALE MARKET SIDE OF, UH, THE STAKEHOLDER GROUPS.
UH, WE GO TO THE SUBCOMMITTEES TO T AND THEN, UH, THE, THE BOARD, UH, WILL VOTE ON THOSE CHANGES AND RECOMMEND APPROVAL OF THAT METHODOLOGY.
AND ULTIMATELY, THE, THE PUC WILL APPROVE, UH, THAT METHODOLOGY CHANGE.
UH, SO RECENT, I'M HERE TODAY IS THAT THERE'S, UH, A, A LITTLE BIT OF A UNIQUE CHANGE TO THE METHODOLOGY COMING UP FOR 2026.
AND THIS COMES OUT OF THE, UH, PCS 20 20 20 24 ANCILLARY SERVICES STUDY.
UH, AND IN PARTICULAR ON, UH, TOPIC FIVE, THEY HAD THE RECOMMENDATION THAT ERCOT SHOULD DEVELOP A PROBABILISTIC MODEL FOR CALCULATING THE, THE QUANTITIES OF ANCILLARY SERVICES.
UH, THAT RECOMMENDATION THEY GAVE US UNTIL 2027 TO IMPLEMENT THAT.
BUT WE, WE THINK THIS IS A GOOD IDEA, AND WE BELIEVE THAT WE CAN GET THIS IN PLACE FOR THE 2026 AS METHODOLOGY.
SO, UH, SO ON, ON THIS SLIDE, ON, ON THE LEFT HAND SIDE, I HAVE A LIST OF OUR, UH, CURRENT ANCILLARY SERVICES AS WELL AS THE, UH, UPCOMING D-R-S-D-R-S WILL NOT BE IN THE, THE, UH, 2026 METHODOLOGY BOOK FOR COMPLETENESS.
I WANTED TO INCLUDE IT ON THIS SLIDE.
AND THEN I HAVE, UH, BROADLY THESE INTO TWO CATEGORIES BASED ON PURPOSE.
UH, SO REGULATION SERVICE, R-R-S-E-C-R-S, UH, WE USE THESE ANCILLARY SERVICES TO CONTROL FREQUENCY SO THAT THEY'RE ALL ABOUT KEEPING THE FREQUENCY AT 60 HERTZ.
UM, AND THEN, UH, SO E-E-C-R-S, UH, SERVES DUAL PURPOSES BECAUSE IT'S OUR 10 MINUTE PRODUCT.
SO WE USE IT TO, UH, RECOVER FREQUENCY WHEN, WHEN WE HAVE A, AN EVENT ON THE SYSTEM, WE'LL USE IT TO RECOVER FREQUENCY TO 60 HERTZ.
UH, BUT WE ALSO USE IT, UH, AND AS WELL AS NONS SPIN FOR, UH, CAPACITY AND ENERGY WHEN WE HAVE UNEXPECTED THINGS HAPPEN ON THE GRID, LIKE A FORECAST MISS, OR IF WE HAVE, UH, MULTIPLE FORCE OUTAGES OF, OF GENERATORS.
UM, AND SO IT'S THAT, THAT COMPONENT OF TRYING TO MANAGE THAT RISK OF WHAT ARE THESE UNCERTAINTIES THAT COULD HAPPEN ON THE GRID? UH, HOW WE CALCULATE THAT RISK IS A STATISTICAL ANALYSIS BASED ON THOSE UNCERTAINTIES.
AND, AND THAT IS THE PIECE, THAT'S WHY I, I'VE CIRCLED IN AND READ THAT THAT IS THE PIECE THAT IN THE METHODOLOGY THAT WE ARE, UH, PROPOSING TO CHANGE FOR 2026.
UH, SO WHAT'S CHANGING? SO I, I TRIED TO, UH, UH, SIMPLIFY WHAT, WHAT IS CHANGING, UH, SO THAT THE 2025, UH, METHODOLOGY IS DEPICTED ON, ON THE GRAPHIC ON THE LEFT.
UH, AND ESSENTIALLY WHAT WE DO IS WE, UH, LOOK AT OUR NET LOAD FORECAST ERRORS, UH, THE, THE HISTORIC UNCERTAINTY THAT WE HAVE IN, IN NET LOAD FORECAST, UH, AND WE CALCULATE A, UM, UH, PERCENTILE OF, UH, KINDA WHAT, WHAT WE WANT TO COVER, UH, FOR THE, FOR THAT RISK.
UH, WE DO SOMETHING SIMILAR FOR FORCED OUTAGES AND, AND WE CALCULATE A, A PERCENTILE.
UH, AND, AND IF YOU LOOK AT THE METHODOLOGY TODAY, YOU'LL SEE THAT WE ARE TAKING MAYBE FOR A CERTAIN MONTH HOUR,
[00:40:01]
WE'RE TAKING MAYBE 90TH PERCENTILE OF OUR FORECAST ERROR, AND WE'RE TRYING TO COVER THAT, UH, AND MAYBE 75TH PERCENTILE OF THE, UH, THE FORCED OUTAGES.UM, AND SO WHY, WHY CHANGE THAT WE'VE BEEN USING THAT METHODOLOGY FOR YEARS.
UH, AND THERE ARE A COUPLE SHORTCOMINGS WITH, WITH THE CURRENT METHODOLOGY.
UM, AND IN PARTICULAR, UH, WHAT WE CAN'T DO TODAY IS WE CAN'T PRECISELY CALCULATE THE, THE PROBABILITY, UH, OF AN, OF AN OUTAGE OR, OR SORRY, OF A, UH, FALLING SHORT ON ANCILLARY SERVICES.
WE CAN'T, UH, CALCULATE THAT PRECISELY.
UH, SO WE, WE CAN OBVIOUSLY, YOU KNOW, I'D GIVE THE EXAMPLE, WE COULD TAKE 90TH PERCENTILE OF THIS RISK AND 70TH FIFTH PERCENTILE THIS RISK, AND WE CAN CALCULATE THAT.
BUT WHAT THIS METHODOLOGY THAT DOESN'T REALLY CAPTURE IS, UH, THAT THERE ARE TIMES ON THE SYSTEM WHERE WE HAVE, UH, MAYBE EXCESS CAPACITY.
SO THINK ABOUT MIDDLE OF THE NIGHT.
I HAVE A LOT OF GENERATORS THAT, UH, THAT THEY'RE NOT SITTING AT, AT MAXIMUM OUTPUT.
AND SO THEY'VE GOT SOME EXCESS CAPACITY THAT MAYBE THEY COULD, UH, CONTRIBUTE IF WE HAD A BIG FORECAST MISS, OR IF WE HAD A LARGE GENERATOR TRIP.
UH, SO WE'RE, WE'RE NOT TAKING THAT INTO ACCOUNT INHERENTLY IN, IN THE METHODOLOGY TODAY.
UH, SO WE, WE WILL MAYBE USE, IN NIGHTTIME HOURS, WE'LL USE A, A LOWER, UH, PERCENTILE, UH, KIND OF COVERAGE THAT, THAT WE'RE, UM, GONNA USE, UH, TO, TO, TO COVER THAT RISK.
UH, AND, AND SO THE, THE SHORTCOMING THERE IS, I CAN'T PRECISELY CALCULATE THAT, WHICH MEANS, UH, I CAN'T, UH, COMMUNICATE TO POLICY MAKERS, YOU KNOW, WHAT, WHAT IS THE TRADE OFF IF I GET LESS OF THIS ANCILLARY SERVICE? BUT WHAT DOES THAT MEAN IN TERMS OF RELIABILITY RISK? UH, AND, AND SO THAT'S WHAT THE, THE NEW METHODOLOGY IS, IS INTENDED TO ACCOUNT FOR.
AND I, I SHOULD NOTE WHEN I SAY, UH, RESERVE NEED IN, IN THE GREEN BOX OR THE GREEN CIRCLE, THAT THAT'S REALLY QUANTITY OF ANCILLARY SERVICES.
UH, AND SO THE, THE NEW METHODOLOGY THAT WE'RE PROPOSING TO USE WILL TAKE, UH, ALL OF THE RISKS THAT WE HAVE, ALL OF WHAT WE CALL RISK REDUCERS, WHICH WOULD BE, AGAIN, LIKE IN THE MIDDLE OF THE NIGHT WHEN I HAVE THIS EXCESS CAPACITY, AND I CAN FEED ALL OF THAT INTO A MONTE CARLO ENGINE, AND I CAN THEN, UH, WITHIN AN ENGINE, I CAN SET DIFFERENT TARGETS FOR, UH, YOU KNOW, I, I, I WANT TO HAVE A, A ONE IN 10 RISK, OR MAYBE I WANT TO HAVE A ONE IN TWO OR ONE IN 20.
I, I CAN CALCULATE THOSE RISKS AND WHAT, WHAT EACH OF THOSE RISKS MEANS IN TERMS OF HOW MUCH OF THIS ANCILLARY SERVICE PRODUCT, UH, SHOULD I BE BUYING.
UH, ONE, ONE OTHER NOTE ON THAT, WHEN I TALK ABOUT RELIABILITY CRITERIA HERE, UH, THIS IS DIFFERENT FROM WHEN WE THINK OF RESOURCE ADEQUACY AND THAT RELIABILITY STANDARD, UH, SO THAT, THAT RELIABILITY STANDARD IS ABOUT DO IN GENERAL.
UH, WHEN I THINK ABOUT MY PEAK, UH, ON THE SYSTEM, DO I HAVE ENOUGH RESOURCES TO MEET THAT PEAK DEMAND? UH, IN, IN CONTRAST, THIS RELIABILITY CRITERIA IS, IS MORE ABOUT, UM, YOU KNOW, MAY MAYBE I HAVE ENOUGH RESOURCES, BUT AM I CARRYING ENOUGH RESERVES ON THE SYSTEM, UH, TODAY? UH, SO SAY FOR SUNSET TODAY, OR FOR ANY ANY HOUR OF THE DAY, AM AM I CARRYING ENOUGH RESERVES, UH, TO MEET ANY UNEXPECTED THINGS THAT COULD HAPPEN, UH, THROUGH THE DAY? SO JUST WANTED TO, TO CONTRAST THOSE OR, OR TWO DIFFERENT THINGS.
OKAY, SO WHAT, WHAT IS NOT CHANGING? UM, SO OUR, UM, REGULATION RS AND THE FREQUENCY RESPONSE PORTION OF ECRS, THE, THE METHODOLOGY THAT WE USE TO CALCULATE THOSE QUANTITIES ARE NOT SIGNIFICANTLY CHANGING.
WE, WE, EVERY YEAR WE'LL GO AND WE'LL MAKE TWEAKS TO THOSE METHODOLOGY, BUT NOT, NOT NEAR AS SIGNIFICANT AS THE PROPOSED CHANGE TO ECRS AND, AND NONS SPIN.
UM, ONE OTHER, UH, ITEM I WANTED TO HIGHLIGHT FROM THE, UH, THE 2024 PUC AS STUDY, UH, WAS THERE WAS A, UM, A RECOMMENDATION TO LOOK AT.
UH, SO LEMME CONTRAST WITH WHAT WE DO TODAY, IS WE CALCULATE ALL OF OUR ANSWERS SERVICES QU QUANTITIES ON AN ANNUAL BASIS.
SO THAT MEANS, UH, BY DECEMBER OF THIS YEAR, I WILL HAVE A, UH, QUANTITY CALCULATED FOR E EVERY HOUR OF THE YEAR, UH, WHAT MY AS NEEDS ARE.
UH, SO ONE RECOMMENDED CHANGE IS TO LOOK AT SITTING THAT QUANTITY MORE DYNAMICALLY.
UH, SO AS AN EXAMPLE, SO TODAY, UM, YOU KNOW, I'VE, I'VE GOT A HOT, HOT SUMMER DAY, UH, BUT I'M PRETTY CONFIDENT IN THE, THE WIND FORECAST THAT I HAVE.
AND, AND SO I HAVE MAYBE LESS RISK, UH, ON THE SYSTEM TODAY AS, AS MAYBE OPPOSED TO ANOTHER DAY WHERE I HAVE MAYBE A FRONT THAT IS MOVING THROUGH AND I, I, YOU KNOW, MY, MY NEEDS, MY RISK COULD CHANGE BECAUSE I'M, I'M NOT CERTAIN WHEN THE WIND FORECAST IS OR WHEN THE WIND IS GONNA PICK UP.
SO I HAVE SOME UNCERTAINTY IN MY FORECAST.
UH, SO, SO TODAY WHEN I CALCULATE THAT QUANTITY ANNUALLY, I HAVE TO TAKE INTO ACCOUNT THAT I COULD HAVE A FRONT MOVE THROUGH ON ANY DAY.
[00:45:01]
BUT I COULD MORE EFFICIENTLY SET THAT, THOSE QUANTITIES IF I DID THAT MORE ON A DAILY BASIS.UH, AND SO THAT IS A CHANGE THAT WILL BE COMING.
WE'RE, WE'RE CURRENTLY LOOKING AT 2027 TO DO THAT MORE, UH, EFFICIENT DAILY CALCULATION, UH, OF MY ANCILLARY SERVICE QUANTITY NEEDS.
UH, BUT THAT IS NOT CHANGING FOR 2026.
UH, AND, AND THE LAST THING I WANTED TO HIGHLIGHT THAT IS NOT CHANGING IS THE RISKS ARE NOT, ARE NOT DECREASING.
UH, THEY'RE, THEY ARE CHANGING, BUT THEY'RE, THEY SEEM TO BE INCREASING AS WE GET MORE VARIABLE RESOURCES ON THE GRID.
AND SO I'VE HEARD THIS NARRATIVE THAT, HEY, WHEN ERCOT MOVES TO THIS PROBABILISTIC METHOD, THEN ANCILLARY SERVICE QUANTITIES ARE GONNA GO DOWN, UH, QUITE A BIT.
UH, AND SLIGHT PUSHBACK ON THAT.
UH, I'M NOT SURE THAT THAT IS THE CASE.
THERE MAY BE CERTAIN HOURS WHERE WE SEE THAT THE ANCILLARY SERVICE QUANTITIES COULD GO DOWN, UH, BUT THE, THE RISKS RISKS ARE INCREASING.
UH, AND SO AS THOSE RISKS INCREASE, THEN WE NEED TO ASSUME THAT THOSE AS QUANTITIES ARE GONNA LIKEWISE IN INCREASE AS WELL.
SO, UH, I MENTIONED THAT WE, UH, USUALLY GO TO STAKEHOLDERS AND, AND WE GET FEEDBACK ANYTIME WE MAKE A CHANGE THIS YEAR, BECAUSE OF THE MORE SIGNIFICANT CHANGE TO ECRS AND NONS SPEND METHODOLOGY.
WE, WE STARTED THAT PROCESS A LITTLE EARLIER, AND WE ALSO HAVE BUILT IN A COUPLE OF WORKSHOPS.
UH, WE HAD THE FIRST ONE IN MAY.
AND THOSE WORKSHOPS ARE FOCUSED ON THE TECHNICAL DETAILS ON, UH, OF, OF WHAT THIS METHODOLOGY CHANGE IS GONNA LOOK LIKE, THE MECHANICS OF, OF HOW THAT WILL WORK.
UH, THAT WHAT I GAVE YOU IN ONE SLIDE OF WHAT IS CHANGING WAS A, I THINK, 55 SLIDE PRESENTATION AT THE MAY 19TH WORKSHOP.
UH, AND SO WE'RE TRYING TO WORK WITH STAKEHOLDERS AND GET FEEDBACK, UH, BEFORE WE BRING THIS METHODOLOGY CHANGE TO YOU IN SEPTEMBER.
UH, WITH THAT, I WILL PAUSE AND TAKE ANY QUESTIONS THAT Y'ALL HAVE.
JEFF, MY QUESTION IS, UH, RELATED TO THE TRANSITION TO RTC.
SO THE DATA YOU, YOU USED TO PLUG INTO THE PROBABILISTIC MODELS GOES HOW FAR BACK IN TIME? MOST OF THE DATA GOES, UH, THREE YEARS BACK? THREE YEARS BACK.
SO AS WE GET INTO 26 AND RTC IS OPERABLE AND HOPEFULLY MORE EFFICIENT, HOW WILL YOU ACCOMMODATE RTC DATA? YEAH, THAT, THAT'S, UH, INSIGHTFUL QUESTION.
SO THE, UM, SO, SO LET, LET'S START WITH WHAT DOESN'T CHANGE WITH RTC.
SO THE, THE FORECAST THEMSELVES ARE NOT CHANGING WITH RTC, AND SO WE STILL HAVE THAT, THAT RISK OF, YOU KNOW, I'VE, I'VE GOT WEATHER UNCERTAINTY THAT COULD CAUSE MY LOAD FORECAST OR WIND FORECAST OR SOLAR FORECAST, YOU KNOW, COULD, COULD CAUSE AIRS.
UM, RTC IS ALSO NOT CHANGING THE, UM, THE FOUR OUTAGES ON THE GENERATORS, RIGHT? SO, YOU KNOW, THEY'RE GONNA BREAK REGARDLESS OF WHAT KINDA MARKET WE HAVE, YOU KNOW, THAT, YOU KNOW, THEIR MECHANICAL UNITS AND, AND, YOU KNOW, SO THEY'RE GONNA HAVE THOSE OUTAGES.
SO THOSE, THOSE RISKS ARE NOT CHANGING.
UH, WHAT DOES CHANGE WITH R TC IS THE, THE, YOU KNOW, AS WE TALK ABOUT THOSE RISK REDUCERS, SO IT'S, IT'S, I HAVE MAYBE GENERATORS THAT ARE ONLINE ON THE SYSTEM THAT MAYBE THEY'RE NOT AT THEIR FULL CAPACITY AND THEY COULD, UH, YOU STEP IN, IF I HAVE A FORECAST MISS OR, YOU KNOW, HAVE A GENERATOR THAT TRIPS, AND THEY, THEY COULD STEP IN AND THEY COULD PROVIDE SOME OF THAT, THAT CAPACITY NEED FOR ME.
UH, SO THAT, THAT WILL POTENTIALLY CHANGE WITH R TC BECAUSE THE MARKETS CAN BE RUNNING THEORETICALLY MORE EFFICIENTLY.
UH, AND, AND SO THEY, THERE MAY BE GENERATORS THAT IN THE PAST THEY WOULD'VE DECIDED TO RUN, BUT MAYBE THEY'RE NOT GOING TO.
AND SO THAT, THAT COMPONENT IS CHANGING, AND WE'VE TALKED ABOUT THAT AND HOW DO WE NOT OVER COUNT THAT, UH, THAT POTENTIAL RISK REDUCER IN, IN THE METHODOLOGY.
AND SO WE'VE BEEN HAVING DISCUSSIONS ABOUT THAT AND, AND ARE, UH, TRYING TO COME UP WITH A METHODOLOGY THAT WE'LL TAKE THAT INTO ACCOUNT.
WE LOOK FORWARD TO, UH, THE CONTINUING OF DISCUSSION ON THIS, UH, INITIATIVE.
[4.6 System Planning and Weatherization Update]
GEN ITEM 4.6 SYSTEM PLANNING AND WEATHERIZATION UPDATE.CHRISTIE THE MICROPHONE IS YOURS.
ALL RIGHT, GOOD AFTERNOON BOARD MEMBERS.
SO IT SEEMS LIKE A LONG TIME, UH, SINCE OUR LAST UPDATE TO Y'ALL IN, UH, APRIL.
SO I WANNA GO THROUGH SOME OF THE CHANGES THAT WE'VE BEEN SEEING IN THE SYSTEM PLANNING AND WEATHERIZATION AREA SINCE THEN.
I'M GONNA KICK OFF, UH, SOME OF THE, THE THINGS THAT HAVE BEEN HAPPENING IN THE TRANSMISSION PLANNING SPACE.
WHAT WE'VE BEEN SEEING, UH, AS FAR AS, UM, THE MATERIALIZATION OF THE GENERATION INTERCONNECTION QUEUE, AS WELL AS LARGE LOADS THAT
[00:50:01]
ARE SEEKING TO INTEGRATE INTO THE SYSTEM.THE WORK THAT'S KICKED OFF FOR OUR SUMMER WEATHERIZATION AND SOME OF THE RESOURCE ADEQUACY REPORTS WE'VE POSTED THIS SPRING.
FIRST THING, UH, IT DIDN'T PUT A SLIDE IN, UM, BUT NOT TOO LONG AFTER THE APRIL BOARD, UH, WE DID GET A DECISION FROM THE PUBLIC UTILITY COMMISSION TO MOVE FORWARD WITH THE USE OF 7 65, UH, FOR THE PERMIAN BASIN.
SO THAT WAS A, A BIG MOMENT FOR TRANSMISSION PLANNING IN THE REGION.
SO I WANTED TO MAKE SURE WE, WE DIDN'T LET THE MEETING GO BY WITHOUT RECOGNIZING THE TEAM ON THAT.
WE'VE NOW TURNED OUR FOCUS INTO WORKING ON THE ROADMAP FOR THE 2025 REGIONAL TRANSMISSION PLAN.
SO AS YOU RECALL, THIS IS THE ROADMAP.
AS WE'RE LOOKING AT THE STATE, WHERE WE'RE SEEING LOAD GROWTH, WHERE WE'RE SEEING GENERATION ADDED TO THE SYSTEM, WE'RE PROVIDING THAT TRANSMISSION PLANNING ROADMAP THAT THE TSPS CAN THEN USE TO SUBMIT TRANSMISSION PROJECTS TO MOVE PLANS FORWARD.
WHEN WE MET WITH YOU IN APRIL, WE PRESENTED A RESOURCE ADEQUACY, ERCOT ADJUSTED LOAD FORECAST, AND WE DID HIGHLIGHT AT THAT MEETING AS WE MOVED INTO THE TRANSMISSION PLANNING PROCESS, WE MAY HAVE TO MAKE FURTHER ADJUSTMENTS TO THAT LOAD FORECAST AS WE TRANSLATE THAT INTO THE REGIONAL TRANSMISSION PLAN.
SINCE THAT APRIL BOARD MEETING, WE CONTINUE TO WORK THROUGH THE DATA THAT WE WERE PROVIDED BY THE TRANSMISSION PROVIDERS.
UM, WE LOOKED AT THE MODEL INFORMATION THEY PROVIDED US.
WE COMPARED THEIR LETTERS TO WHAT THEY PROVIDED AS IN THEIR RFI RESPONSES, AND WE FOUND THAT WE NEEDED TO GO TO THE COMMISSION AND REQUEST A GOOD CAUSE EXCEPTION FOR MOVING FORWARD, UM, WITH USING THE ERCOT ADJUSTED LOAD FORECAST.
'CAUSE OUR CURRENT PLANNING RULES WOULD'VE REQUIRED US TO USE ALL OF THE TSP OFFICER LETTER LOAD.
AS YOU RECALL, WHEN WE PRESENTED THAT TO YOU, THAT HAD BEEN OVER 200 GIGAWATTS.
IF WE HAD HAVE TAKEN ALL OF THAT IN.
SO TO BE ABLE TO USE THAT NUMBER, UH, THAT WAS CLOSER TO THE ERCOT ADJUSTED LOW FORECAST, WE NEEDED THAT GOOD CAUSE EXCEPTION, AND THE COMMISSION DID GRANT THAT EXCEPTION AT THE BEGINNING OF JUNE.
AND SO WORK NOW IS WELL UNDERWAY IN DEVELOPING THE 2025 ROADMAP FOR THE REGIONAL TRANSMISSION PLAN FOR OUT SIX YEARS INTO 2031.
WE ARE STILL WORKING THROUGH A FEW NUANCES WITH SOME OF THE MODELING INFORMATION, BUT WE EXPECT THAT TOTAL SYSTEM LOAD THAT WILL BE STUDYING FOR THE 2031 SUMMER PEAK WILL BE SOMEWHERE BETWEEN 150 AND 156 GIGAWATTS.
ALSO WANTED TO UPDATE YOU ON SOME WORK THAT WE'RE DOING.
UM, IN RESPONSE TO WHAT WE SAW LAST YEAR, WE'VE TALKED ABOUT, THERE WERE SEVERAL STUDIES, ONE DONE BY NERC, ONE DONE BY THE DOE, WHERE THEY PUBLISHED STUDIES RECOMMENDING CONNECTIONS BETWEEN ERCOT AND OTHER REGIONS FOR HELPING TO BUILD RESOURCE ADEQUACY AND RESILIENCE ON THE GRID.
NOW, WE FOLLOWED COMMENTS IN EACH OF THOSE PROCEEDINGS BECAUSE WHAT WE FELT WAS THOSE STUDIES ONLY LOOKED AT PART OF THE PICTURE.
WE WENT THROUGH AN RFP PROCESS.
WE ARE WORKING WITH POWER GYM, WHO IS FORMALLY ARAE, AND WE ARE WORKING TO LOOK AT ALL ASPECTS OF RESOURCE ADEQUACY AND RESILIENCY.
WE'RE LOOKING AT WHAT WOULD IT BE IF WE ADDED NEW NATIVE GENERATION INTO THE ERCOT SYSTEM.
WHAT ABOUT SWITCHABLE GENERATION RESOURCES, ADDITIONAL ASYNCHRONOUS TIES WITH THE OTHER REGIONS, AS WELL AS SYNCHRONOUS TIES, OR MAYBE THERE'S SOME COMBINATION OF THREE.
BUT WHAT WE'RE LOOKING AT IS NOT JUST FROM A RESOURCE ADEQUACY, WE WANNA KNOW WHAT IS IT GONNA DO TO OUR MARKET AND BOTTOM LINE, WHAT WOULD IT DO TO THE CONSUMERS OF TEXAS? HOW WOULD IT IMPACT THEIR COST? WE'LL BE WORKING ON THAT THROUGHOUT THE REST OF THE YEAR, AND WE HOPE TO HAVE A REPORT THAT WE CAN SHARE WITH YOU THE FIRST QUARTER OF NEXT YEAR ON WHAT WE FIND FROM THOSE STUDIES.
WORK CONTINUES ON ALL OF THE TEXAS ENERGY FUND PROJECTS.
WE'RE TRACKING 20 DIFFERENT PROJECTS THAT ARE IN VARIOUS STAGES.
AS YOU GO FROM LEFT TO RIGHT ACROSS THE GRAPH, YOU CAN SEE THEY'VE ALL, UM, SUBMITTED THEIR FULL INTERCONNECTION STUDIES.
WE DO HAVE, UM, SEVEN OF THEM THAT HAVE COMPLETED THEIR INTERCONNECTION STUDIES.
AND AS YOU MOVE FURTHER ALONG, UM, THEY'VE MET MORE OF THEIR REQUIREMENTS.
FOR EXAMPLE, FOUR ON THE RIGHT.
YOU CAN SEE NOT ONLY HAVE THEY COMPLETED THEIR INTERCONNECTION STUDIES, THEY'VE GOT AN INTERCONNECTION AGREEMENT SIGNED.
THEY'VE GOT THEIR AIR PERMITS, THEIR WATER PERMITS, SO THEY'RE ADVANCING THROUGH THE PROCESS.
WE CONTINUE TO SEE A QUEUE FOR GENERATION INTERCONNECTION
[00:55:01]
REQUEST.UH, AGAIN, THE BULK OF INTEREST CONTINUES TO BE IN SOLAR AND IN BATTERIES.
WE'RE ALSO MATCHING THAT WITH A LARGE LOAD INTERCONNECTION QUEUE.
WE'RE NOW TRACKING WELL OVER 150 GIGAWATTS OF REQUEST.
NOW, ONE OF THE THINGS THAT I HOPE BY THE TIME THAT WE RETURN TO YOU IN SEPTEMBER WITH THE PASSAGE OF SB SIX WORKING WITH THE COMMISSION, WE'RE GOING THROUGH EFFORTS INTERNALLY TO, UM, GO THROUGH THE QUEUE, UH, AND LOOK AT TRYING TO CREATE A SINGLE SOURCE OF TRUTH FOR LARGE LOAD INFORMATION AT ERCOT.
I'M HOPING THAT WE'LL BE ABLE TO COME BACK TO YOU, UH, AND SHARE BETTER INFORMATION ABOUT WHAT IS ACTIVELY WORKING TO TRY TO GET THROUGH THE LARGE LOAD INTERCONNECTION QUEUE.
SUMMER WEATHERIZATION INSPECTIONS ARE WELL UNDERWAY.
UH, WE HAD SOME WORKSHOPS TO SHARE BEST PRACTICES AMONGST RESOURCES, TRANSMISSION SERVICE PROVIDERS.
THEY SUBMITTED THEIR WEATHERED PREPAREDNESS BY THE BEGINNING OF JUNE OF ALL OF THE RESOURCES AND TRANSMISSION SERVICE ENTITIES, UH, THE 15 THAT WERE STILL OUTSTANDING AFTER OUTREACH FROM THE TEAM, EVERYONE HAS NOW SUBMITTED THEIR INFORMATION.
WE REPORTED THAT TO THE COMMISSION LAST WEEK.
OUR SUMMER INSPECTIONS ARE ALSO WELL UNDERWAY.
UM, I BELIEVE AS OF THE END OF LAST WEEK, WE HAD DONE, UH, 74 RESOURCES AND 18 TRANSMISSION SERVICE PROVIDERS, AND OUR GOAL BY THE END OF THE SUMMER IS TO HIT OVER 600 DIFFERENT FACILITIES.
LOOKING AT SOME OF OUR RESOURCE ADEQUACY REPORTS, I'M GONNA QUICKLY GO THROUGH JUNE AND JULY.
UM, AS YOU LOOK AT OUR PROBABILISTIC MODELING ABOUT WHAT COULD HAPPEN BASED OFF OF MANY DIFFERENT RUNS, UH, OF WEATHER LOADS, ET CETERA, OUTAGES WE'RE SHOWING THAT COMPARED TO LAST SUMMER, THE RISK HAS DECREASED.
UM, ESPECIALLY YOU CAN SEE THAT AS WE GO INTO THE MONTH OF AUGUST, UM, THE, THE PERIOD OF CONCERN CONTINUES TO BE WHEN THE SUN GOES DOWN, AND WE ARE STILL ON A HOT SUMMER DAY.
AND AS WE TRANSITION, UM, THROUGH THAT, UH, SOLAR RAMP DOWN, WE'RE SHOWING LESS THAN A PERCENT CHANCE OF GETTING INTO AN ENERGY EMERGENCY.
UM, AND AS YOU LOOK WHAT CHANGED SINCE LAST SUMMER, WE'VE SEEN ALMOST 10,000 MEGAWATTS ADDED TO THE SYSTEM.
AGAIN, MOST OF THAT'S COMING FROM SOLAR AND BATTERIES, BUT THAT DOES PUT US IN A BETTER POSITION TO GET OVER THOSE EVENING RAMPS AS WE GO INTO LATE SUMMER.
I'D ALSO COMMENT IF YOU WERE FOLLOWING AND YOU LOOKED AT THE NERC SUMMER ASSESSMENT, IT'S FOR THAT SAME TIMEFRAME OF AUGUST, BUT YOU SEE THERE'S A DIFFERENT PERCENTAGE BETWEEN THE TWO.
THE REASON FOR THAT IS WE HAD TO HAVE THAT NERC SUMMER ASSESSMENT IN IN EARLY APRIL, AND THAT WAS BEFORE WE HAD COMPLETED USING THE ERCOT ADJUSTED LOAD FORECAST.
THE ERCOT ADJUSTED LOAD FORECAST WAS USED IN OUR MOST RECENT AUGUST MORA POSTING WHEN WE WERE LOOKING AT LAST SUMMER.
UH, THOSE TIMEFRAMES FOR THAT EVENING WAS ABOUT A 16% CHANCE OF GOING INTO AN EMERGENCY.
SO MUCH IMPROVED OVER LAST SUMMER.
AS YOU, UH, SWITCH OVER AND LOOK AT OUR CAPACITY, DEMAND, AND RESERVES REPORT, UH, THIS IS SHOWING FOR SUMMER OF 2026, SO NOT THIS SUMMER, BUT LOOKING AHEAD HOW THESE HAVE CHANGED SINCE OUR DECEMBER, UM, WHEN WE WERE LOOKING AT SUMMER OF 2026, THAT'S IN THAT BOTTOM GRAPHIC AGAIN.
AND THE BIG DIFFERENCE IS BY, WE USE FOR THIS MAY CDR, WE USE THE ERCOT ADJUSTED LOAD FORECAST.
SO IT'S SHOWING THAT WE DO HAVE, UM, MORE RESERVES, UM, BY USING THAT ADJUSTED LOAD FORECAST.
IF YOU LOOK AT OUR PLANNING RESERVE MARGINS FOR BOTH THE SUMMER AND FOR THE WINTER, UM, YOU CAN SEE THERE IS STILL THAT DOWNWARD PRESSURE AS WE GO OUT TO THE FURTHER YEARS.
AND THAT'S JUST ABSTINE, UM, CHANGES THAT YOU MAY SEE AS MORE GENERATIONS ADDED AS MARKET SIGNALS ARE SENT.
BUT WITH INFORMATION THAT WE HAVE TODAY, UM, THAT'S WHAT WE'RE SHOWING IN THOSE OUT YEARS FOR NOW.
AND THEN ONE LAST UPDATE, I WANT TO KEEP YOU UPDATED AS WE GO OUT THROUGHOUT THIS YEAR, UM, AFTER YOU APPROVE NOER 2 45, WHICH REQUIRED INVERTER BASED RESOURCES TO, DEPENDING ON THEIR TIME OF WHEN THEY HAD CONNECTED TO THE GRID TO MEET CERTAIN VOLTAGE OR FREQUENCY RIDE THROUGH REQUIREMENT STANDARDS, WE'VE HAD, UM, TRYING TO BUILD A TEAM THAT'S WORKING THROUGH ALL OF THE REQUESTS FOR EITHER EXEMPTIONS OR EXCEPTIONS THAT WE RECEIVED.
UM, WANT TO GIVE A THANKS TO THE MARA AND HER TEAM, UH, AS WE WERE HAVING PROBLEMS GETTING STAFFING UP.
WE'VE GOT SIX INTERNS THAT ARE ON THE GROUND, AND WE'RE
[01:00:01]
NOW MAKING GOOD PROGRESS OF GOING THROUGH ALL OF THOSE, UM, UH, ENTITIES INFORMATION THAT WE RECEIVED EARLIER THIS SPRING.WE'RE STILL ON TRACK TO START OUR STUDY PROCESS FOR OUR RELIABILITY ASSESSMENT IN THE FALL TIMEFRAME SO WE CAN MEET OUR REQUIREMENTS TO NOTIFY, UM, THE ENTITIES BY THE END OF THE YEAR.
UH, THE 900 ENTITIES WE'RE RECEIVING INFORMATION FOR IS, IS THIS THE TOTAL GROUP OR IS THIS THE ENTITIES THAT ARE SEEKING AN EXEMPTION? THAT WOULD BE THE TOTAL GROUP.
SO IF YOU THINK ABOUT ALL OF THE SOLAR, THE WIND, UM, THE BATTERIES ON THE SYSTEM, THAT, THAT WAS WITH ENTITIES THAT WERE REQUIRED TO PROVIDE US INFORMATION.
AS WE GO TO THIS NEXT SLIDE, YOU CAN SEE WE HAD THE CURRENT RESOURCES ON THE SYSTEM.
SO AGAIN, THESE ARE JUST IBR RESOURCES.
WE RECEIVED INFORMATION FROM 795.
UM, I'M PLEASED TO SHOW THAT WHAT WE, WHAT THEY'VE SUBMITTED FROM OUR KIND OF INITIAL PASS OF GOING THROUGH THE INFORMATION THAT IS ALMOST HALF OF THEM SAY THEY INTEND TO BE ABLE TO MAXIMIZE BY THE END OF THE YEAR.
THEY'RE GONNA MEET THE STANDARDS.
WE HAD 125 THAT REQUESTED AN EXTENSION.
SO THEY, THEY'RE SAYING THEY CAN BE COMPLIANT, BUT THEY NEED ADDITIONAL TIME TO MAKE CHANGES TO THEIR SYSTEMS. THERE ARE 139 THAT GAVE US A NOTICE OF INTENT TO REQUEST AN EXEMPTION, AND THAT'S WHAT WE'LL BE GOING THROUGH THIS FALL TO LOOK AT THAT STUDY PROCESS TO SEE WHETHER WE CAN GRANT THAT EXEMPTION OR NOT.
WE HAD 144 THAT REQUESTED AN EXTENSION AND GAVE US A NOTICE OF INTENT FOR AN EXEMPTION.
AND WHAT WE'VE HEARD ANECDOTALLY FROM SOME OF THESE RESOURCES IS THAT THEIR MANUFACTURERS COULDN'T GIVE 'EM THE MODELS UNTIL LATER NEXT YEAR.
THEY THINK POSSIBLY THEY COULD BE COMPLIANT, BUT THEY DON'T KNOW.
SO NOT ONLY DID THEY REQUEST AN EXTENSION, THEY ALSO REQUESTED AN EXEMPTION JUST TO BE SAFE BECAUSE OF THAT APRIL 1ST DEADLINE.
AND THEN THERE WERE 16 THAT WE TURNED OVER TO ENFORCEMENT BECAUSE THEY DID NOT RESPOND.
SO THOSE WERE FOR ENTITIES THAT HAD AN INTERCONNECTION DATE, UH, OF BY APRIL 1ST.
THEN THOSE NEW RESOURCES, WHICH IS, UM, YOU KNOW, JUST OVER A HUNDRED, THEY OVER A HUNDRED OF THEM.
SO THEY'D BE ABLE TO MAXIMIZE BY THE END OF THE YEAR BY THEIR SYNCHRONIZATION DATE.
WE HAD 15 THAT ASKED FOR AN EXTENSION, FIVE THAT ASKED FOR AN EXEMPTION, AND THEN ONLY ONE OF THOSE THAT REQUESTED BOTH AN EXTENSION AND EXEMPTION.
SO OF THE NEAR RESOURCES, UH, YOU CAN SEE MOST OF THEM ARE GONNA BE ABLE TO, THEY THINK THEY'RE GONNA BE ABLE TO MEET THE REQUIREMENTS.
UM, BUT WE ARE CONTINUING TO, TO DIG THROUGH THE INFORMATION.
AS YOU CAN IMAGINE WHEN YOU ASK A QUESTION, UH, THE WAY THAT YOU GET THE INFORMATION BACK, UM, SOMETIMES TAKE SOME DIGGING, SOME BACK AND FORTH.
AND SO WE CONTINUE TO, TO WORK ON THAT WITH RESOURCE ENTITIES SO THAT WE CAN DO OUR STUDIES LATER THIS, THIS YEAR.
ALL RIGHT, ANY QUESTIONS? ALL RIGHT, THANK YOU.
UH, WE'LL NOW MOVE TO AGENDA ITEM
[4.7 System Operations Update]
4.7, SYSTEM OPERATIONS UPDATE.OH, I, ALL RIGHT, GOOD AFTERNOON.
SO, UH, BECAUSE YOU ARE SEEING SO MANY INDIVIDUAL PRESENTATIONS FROM MY GROUP, THIS, THIS IN THIS MEETING, I DON'T HAVE MUCH IN REGARD TO THE, THE KIND OF COMBINED, UH, OPERATIONS REPORT.
UM, I DO WANT TO SHOW YOU SOMETHING ABOUT IBR AND LARGE LOAD RIDE THROUGH EVENTS, TELL YOU WHERE WE'RE GOING WITH THAT.
AND THEN, UH, I KNOW THERE'S A LOT OF INTEREST IN FROM AROUND THE WORLD AND THE POWER INDUSTRY ABOUT KNOWING WHAT WENT ON IN SPAIN.
AND, UH, WE'VE TRIED TO PUT TOGETHER, UH, A PRESENTATION TO EXPLAIN, AT LEAST WHEN WE ORIGINALLY PUT THIS TOGETHER, IT WAS BEFORE THEY HAD PUT OUT ANY KIND OF REPORT THAT WAS VERY LIMITED INFORMATION.
AND SO WHAT WE, UH, TRIED TO DO WAS LOOK AT IF WE HAD AN EVENT THAT WAS SIMILAR TO SOME OF THE THINGS THAT MIGHT HAVE CAUSED THEIR EVENT, DO WE HAVE THINGS IN PLACE TO PROTECT AGAINST THAT AND SO FORTH.
[01:05:01]
RED ELECTRIC OF THE GRID OPERATOR FOR THE SPANISH GRID ACTUALLY PUT OUT THEIR REPORT.UH, IT'S, IT'S PROBABLY NOT WHAT WILL ULTIMATELY BE THE FULL REPORT, BUT THERE'S A FEW PAGES OF MORE INFORMATION.
SO WHAT WE DID, YOU SEE THAT THIS PRESENTATION IS REVISED.
WE TRIED TO ADD SOME, UH, ADDITIONAL SLIDES TO GO OVER.
UH, WHAT THEY HAVE SAID ACTUALLY WAS CONTRIBUTING FACTORS TO THE EVENT.
SO I'LL PROBABLY FOCUS MORE ON THOSE AS WE GO THROUGH THIS.
UM, SO YOU'VE SEEN THESE SLIDES THE LAST, UH, FEW MONTHS WE'VE BEEN SHOWING THE IBR EVENTS AND THEN ALSO THE LARGE ELECTRONIC LOAD RIDE THROUGH EVENTS.
WE'VE HAD A FEW ADDITIONAL ONES, UH, SINCE THE APRIL, UH, MEETING.
UM, WHAT WE'RE GOING TO DO GOING FORWARD, AS, AS YOU KNOW, IN THE APPENDIX OF THIS PRESENTATION, WE'VE GOT SEVERAL ITEMS THAT ARE INTENDED TO PROVIDE KIND OF AN EARLY INDICATOR IF WE'VE WE'RE HAVING ANY KIND OF RELIABILITY, UM, THINGS THAT ARE GOING ON THAT, THAT MIGHT BE FORESEEABLE AHEAD OF TIME, LIKE FORECAST ERRORS, LIKE FREQUENCY CONTROL ISSUES LIKE TRANSMISSION CONTROL ISSUES.
WE'VE GOT THOSE IN THE APPENDIX NOW, AND WE'RE GONNA BE ADDING, UH, THESE SLIDES SO THAT THEY WILL BE EACH, UH, MEETING IN THE APPENDIX.
SO I WON'T BE GOING OVER THEM UNLESS THERE'S A BIG EVENT.
UH, I WON'T BE GOING OVER THEM EACH TIME, BUT THEY WILL BE IN THE APPENDIX.
SO THE, THE IBERIAN PENINSULA EVENT, UM, AS I MENTIONED, THIS PRESENTATION ONLY INCLUDES PUBLICLY AVAILABLE INFORMATION.
WE DON'T HAVE ANY, UH, EXTRA THINGS.
THERE'S BEEN A LOT OF SPECULATION ABOUT THIS IN VARIOUS SOURCES.
WE'VE TRIED NOT TO SPECULATE AS TO WHAT, UH, AND ONLY USE THE INFORMATION THAT'S AVAILABLE.
BUT WE HAVE TAKEN INTO ACCOUNT, AS I MENTIONED, THE THE RED ELECTRIC REPORT FROM LAST WEEK.
SO ERCOT AND SPAIN ARE, ARE ROUGHLY THE SAME SIZE.
WE'VE GOT A LITTLE MORE GENERATION AND HIGHER PEAK DEMAND.
UM, THEY, UM, BIG DISTINCTION I GUESS IS THAT THEY ARE, UH, CONNECTED.
THEY HAVE SOME CONNECTIONS TO FRANCE AND THEN CONNECTIONS TO MOROCCO, UH, IN THE SOUTH, AND, UM, BUT NOT A LOT OF CAPABILITY.
THEY ALSO HAVE A DC TIE WITH FRANCE.
UM, AND YOU CAN ACTUALLY SEE THIS A LITTLE BETTER ON THE SLIDE THAT, UM, THERE ARE, UM, YOU KNOW, A FEW LINES ACROSS HERE WITH FRANCE, AND THEN THERE'S THE ONE, UH, HERE WITH, UH, MOROCCO.
UM, AND SO WHAT, WHAT WHAT WAS KNOWN PRIOR TO THE REPORT COMING OUT LAST WEEK IS THAT THERE WERE A COUPLE OF DIFFERENT GENERATION LOSS EVENTS THAT SEEMED TO HAVE HAPPENED, UH, THAT RESULTED IN, UM, AN INSTABILITY WHERE ADDITIONAL GENERATION WAS LOST BECAUSE THAT ADDITIONAL GENERATION WAS LOST.
THE, THE IBERIAN PENINSULA WITH BOTH SPAIN AND PORTUGAL IN IT SEPARATED FROM THE EUROPEAN SYSTEM, BOTH AT MOROCCO AND AT, UM, UH, WITH FRANCE.
UH, THERE WAS STILL LOT MORE GENERATION LOST.
THERE WAS AN IMBALANCE THERE UNDER FREQUENCY LOAD SHED ACTIVATED, BUT THEY DIDN'T SAVE THE GRID AND THE WHOLE THING BLACKED OUT.
AND, UM,
UH, THEIR BLACKSTAR IMPLEMENTATION WAS, WAS PUT IN PLACE, AND THEY ACTUALLY HAD THE WHOLE THING, ALL THE LOAD BEING SERVED AGAIN WITHIN LESS THAN A DAY, WHICH IS ACTUALLY PRETTY IMPRESSIVE FROM A POWER SYSTEM OPERATIONS PERSPECTIVE.
UM, THIS SLIDE SHOWS REGARDLESS OF WHAT THE PERCEP PRECIPITATING EVENT WAS, THEY LOST THE 2.2 GIGAWATTS OF GENERATION.
YOU CAN SEE THE, UM, KIND OF THAT WAS LOST HERE, AND THEN 20 SECONDS LATER, THE FREQUENCY KEPT.
IT KEPT GOING DOWN IN SPITE OF THE FACT THAT THEY HAD, UM, SOME OF THEIR LOAD, A LOT OF THEIR LOAD AND THEIR UNDER FREQUENCY LOAD SHED THAT WENT AWAY.
SO WHAT THAT MEANS BY THE FREQUENCY GOING DOWN THAT MUCH, THAT MEANS THEY WERE LOSING GENERATION FASTER THAN THEY WERE AT SHEDDING THE LOAD, AND THAT WAS CAUSING THE FREQUENCY TO CONTINUE TO GO DOWN.
AND I GUESS THE KIND OF THE INTERESTING THING ON THIS IS THAT IS LIKE 30 SECONDS.
SO FROM WHEN THEY WERE OKAY TO WHERE, WHEN THEY WERE IN THE BLACK, THAT WAS A 32ND, UH, TIMEFRAME.
UM, AND THEN THEIR BLACK START
[01:10:01]
EVENT, AND I'LL COME BACK AND TALK MORE ABOUT SOME OF THE CAUSES, BUT THE, THE, THEIR BLACK START, BECAUSE THEY'RE SYNCHRONOUSLY CONNECTED WITH, UH, FRANCE AND, AND, UH, AND MOROCCO, THEY STARTED THEIR RESTORATION PROCESS AS, AS WE WOULD, UH, QUICKLY AFTER THE EVENT, THEIR INITIAL RESTORATION WAS DONE THROUGH THOSE TIES.THEY ALSO HAVE SOME BLACK START UNITS THAT THEY WERE ABLE TO START ISLANDS WITHIN THE GRID.
AND, UM, SOME OF THOSE DIDN'T WORK.
UH, THEY DIDN'T KEEP IT BALANCED WELL ENOUGH, AND SO THEY HAD TO RESTART A COUPLE OF TIMES.
AND THEN, LIKE I SAID, THEY WERE ABLE TO RESTORE THE WHOLE THING WITHIN LESS THAN A DAY.
SO WE'LL TALK ABOUT, WELL, I THINK THE, THE GENERAL CONSENSUS IS BECAUSE THEY HAD THOSE TIES, THEY WERE ABLE TO, THEY HAD THE STABLE GRIDS ON BOTH SIDES THAT WERE ABLE TO ALLOW THEM TO, TO RESTORE THE POWER, UH, QUICKER.
SO FROM THE, THIS REPORT THAT CAME OUT LAST WEEK, THERE'S REALLY A COMBINATION OF THREE THINGS THAT, WHETHER IT WAS THE ROOT CAUSE AND I WOULD QUESTION WHETHER THEY ACTUALLY WENT BACK ALL THE WAY TO THE ROOT CAUSE IN THE, WHAT THIS, YOU KNOW, KIND OF REPORT THAT'S BEEN WRITTEN SO FAR.
BUT YOU CAN IMAGINE THERE'S A LOT OF PRESSURE TO GET INFORMATION OUT.
AND SO THEY'VE GOTTEN THIS REPORT OUT, SEEMS TO BE, UH, THREE CONTRIBUTING FACTORS.
ONE IS THE OSCILLATIONS, SOME OSCILLATIONS THAT WENT ON.
UM, THEN THEY'RE, UH, HOW THEY MANAGED THE VOLTAGE ON THE GRID, UH, SEEM TO HAVE CONTRIBUTED TO THE PROBLEM.
AND THEN THEY ALSO HAD SOME, UH, GENERATORS THAT DIDN'T RIDE THROUGH DURING THE COURSE OF THE EVENT.
SO WE'RE GONNA TALK ABOUT THOSE AND REALLY TRY TO COMPARE, CONTRAST THEM WITH WHAT WE'VE DONE ON THESE ISSUES.
UM, AS FAR AS OSCILLATIONS GO, THEY, THEY HAD, THERE WERE A COUPLE OF MINUTES APART.
THEY HAD SOME OSCILLATIONS THAT WERE OCCURRING.
THE FIRST ONE WAS, UH, SEEMED TO HAVE BEEN FROM A PARTICULAR PHOTOVOLTAIC PLANT THAT THE CONTROL SYSTEM APPARENTLY WASN'T TUNED WELL.
AND SO THAT WAS CAUSING AN OSCILLATION.
UM, AND THEN THERE WAS SOME ADDITIONAL OSCILLATIONS THAT OCCURRED.
AND GENERALLY WHAT THE GRID OPERATOR DID TO TRY TO STOP THOSE OSCILLATIONS SEEMS TO HAVE INCREASED THE VOLTAGE ON THE GRID BECAUSE THEY PUT IN PLACE SOME ADDITIONAL LINES.
THE CHARGING ON THOSE LINES CALLED THE, CAUSED THE VOLTAGE TO GO HIGHER AND SO FORTH.
FOR, FROM AN ERCOT PERSPECTIVE, UM, ONE OF THE KEY THINGS IS WE HAVE HAD SITUATIONS WHERE WE'VE HAD INVERTER BASED RESOURCES, WHERE THEIR CONTROL SYSTEM HAS CAUSED AN OSCILLATION ON THE GRID.
AND WE GENERALLY, WELL, ONCE WE'VE DETERMINED WHAT RESOURCE IS CAUSING THAT PROBLEM, WE WILL ORDER THAT RESOURCE OFFLINE RATHER THAN TRYING TO ADJUST THE GRID TO STOP THAT OSCILLATION.
IF IN FACT, THAT WAS WHAT WAS CONTRIBUTING TO TO, IN THEIR CASE, UH, I THINK WE WOULD'VE OR OFFER ORDERED THAT, UH, PLANT OFF ONCE WE, ONCE WE FOUND WHAT IT WAS.
AND WE USE OUR PMU SYSTEM TO IDENTIFY, UH, WHICH PLANT MIGHT BE CAUSING THAT OSCILLATION.
UM, ALL OF OUR CONVENTIONAL GENERATION RESOURCES HAVE WHAT'S CALLED THE POWER SYSTEM STABILIZER.
THEY'RE TUNED SO THAT IF THERE'S A WIDE AREA OSCILLATION, LIKE THE SECOND KIND OF OSCILLATION THEY SEEM TO BE HAVING, THOSE GENERATORS WILL HELP TO DAMPEN OUT THAT OSCILLATION.
AND SO THAT'S A, A, A PROTECTION MECHANISM THAT'S IN PLACE.
AND THEN OF COURSE, WE HEAR A LOT OF COMPLAINTS ABOUT GTCS, BUT GENERIC TRANSMISSION CONSTRAINTS, WE USE THOSE TO LIMIT FLOWS ON THE GRID.
IF WE DO STUDIES AND SHOW THAT THO THERE COULD BE AN OSCILLATION BY MOVING TOO MUCH POWER ACROSS THE GRID, WE WILL ACTUALLY PUT THESE GTCS IN PLACE TO LIMIT HOW MUCH POWER FLOW HAPPENS TO A LEVEL AT WHICH OSCILLATIONS DON'T OCCUR.
FROM VOLTAGE CONTROL PERSPECTIVE, THAT, YOU KNOW, A LOT OF OUR KIND OF, I MENTIONED WE WERE TRYING NOT TO SPECULATE WHAT THE CAUSE IS, BUT, UH, A LOT OF THE CONTRIBUTING FACTOR TO THIS SEEMS TO HAVE BEEN AROUND THEIR VOLTAGE CONTROL.
AND A LOT OF THAT IS THAT THEIR, UM, INVERTER BASED RE THEIR RENEWABLE RESOURCES AREN'T REQUIRED TO TRY.
THEY'RE, THEY'RE ON POWER FACTOR CONTROL, WHICH MEANS AS THEIR OUTPUT GOES UP, THEIR REQUIREMENT TO PROVIDE VOLTAGE SUPPORT GOES UP.
AND IF THE POWER OUTPUT GOES DOWN, THEIR REQUIREMENT TO PROVIDE REACTIVE POWER GOES DOWN.
UH, AND ON OUR SYSTEM, WE HAD THIS ARGUMENT 15 YEARS AGO, AND IT WAS A, IT WAS A COURT CASE THAT CHAD WAS INVOLVED IN BACK WHEN, AND WE AGREED THAT WITHIN A RANGE OF POWER FACTORS, IT DOESN'T MATTER WHAT YOUR OUTPUT IS, YOU HAVE TO HELP WITH VOLTAGE SUPPORT UP TO THAT LEVEL OF, OF REACTIVE POWER.
AND SO, UH, IN THIS CASE, THE OUT IN OUR CASE, THE OUTPUT OF THOSE UNITS ISN'T,
[01:15:01]
UH, THE REAL POWER OUTPUT OF THOSE UNITS DOESN'T AFFECT THEIR REQUIREMENTS TO, TO PROVIDE VOLTAGE SUPPORT.AND SO THAT WOULD'VE, THAT WOULD HELP IN THE SITUATION OF WHAT WENT ON THERE.
ONE, REGARDLESS OF WHAT THE PROBLEM WAS THAT CAUSED THE VOLTAGE TO GO HIGH, ALL OF THEIR UNITS OR ALL OF OUR UNITS WOULD BE PULLING DOWN TRYING TO, TO WITHSTAND THAT, WHEREAS THEIR UNITS MIGHT NOT BE.
AND THEN IF THE UNITS GO AWAY, WHICH IS WHAT HAPPENED, THEY WOULD ALSO, UH, LOSE THE ABILITY TO PULL THE VOLTAGE DOWN.
AND THEN THEY ALSO PAY CERTAIN UNITS TO, UH, BE ONLINE TO PROVIDE DYNAMIC VOLTAGE SUPPORT.
AND THAT WASN'T HAPPENING IN THE, IN A COUPLE OF CASES, IT APPEARS THAT THEY DID NOT PROVIDE THAT DYNAMIC REPORT, UH, VOLTAGE SUPPORT.
IN FACT, ONE OF THEM SEEMS TO HAVE ACTUALLY BEEN HURTING THE SITUATION ACCORDING TO THIS, THIS REPORT.
AND THEN FINALLY, THERE WAS AT LEAST A COUPLE OF SITUATIONS WHERE THE, SOME OF THE GENERATORS DIDN'T RIDE THROUGH AS VOLTAGE STARTED TO GO HIGH, THEY DIDN'T STAY ONLINE TO THE DEGREE THAT THEY SHOULD HAVE, UH, BASED ON THEIR VOLTAGE RIDE THROUGH REQUIREMENTS, UM, INCLUDING SOME ON THE, APPARENTLY THE DISTRIBUTION SYSTEM HAD SOME ISSUES THERE TOO.
AND SO WE JUST TALKED ABOUT, CHRISTY JUST TALKED ABOUT NO, 2 45, SOME OF THE REQUIREMENTS AROUND THAT AND HOW IT'S BEING IMPLEMENTED, THAT WILL, UH, CERTAINLY HELP WITH, UH, PART OF WHAT WE SAW HERE.
SO WE'VE GOT, I'VE LEFT THE SLIDES IN HERE THAT TALKED ABOUT SOME OF OUR, UM, INITIAL SPECULATION AS TO WHAT, WHAT MIGHT HAVE CONTRIBUTED TO THE PROBLEM.
HONESTLY, SOME OF THESE ARE MORE COMPLEX THAN WHAT ACTUALLY HAPPENED.
UM, AND, BUT IT IS, UH, INTERESTING TO GO THROUGH IF YOU, UH, WANT TO, UH, TO LOOK AT KIND OF SOME OF THE THINGS WE'VE GOT GOING ON THAT MIGHT HAVE BEEN A PROBLEM AND HOW WE'VE, UH, MITIGATED THOSE THINGS.
I DO WANNA TALK ABOUT ONE MORE SLIDE THAT'S KIND OF AT THE END.
AND THAT'S THIS BLACK START IMPROVEMENTS, UH, PLAN.
UM, WE OF COURSE HAVE A BLACK START PLAN TO, TO BRING THE SYSTEM BACK.
IF, IF WE WERE TO HAVE THIS SITUATION WHERE THE GRID WAS BLACK, WE HAVE A BLACK START PLAN, WE TRAIN WITH ALL THE TRANSMISSION OWNERS AND QUALIFIED SCHEDULING ENTITIES ONCE A YEAR WHERE WE BRING IN GROUPS OF PEOPLE, UH, FOR SIX WEEKS TO RUN THROUGH A BLACK START SIMULATION ON OUR SIMULATOR AND, AND TRAIN ON WHAT WOULD HAPPEN WITH THAT.
IT ACTUALLY WILL START IN OCTOBER OF THIS YEAR.
WE'LL START THAT SIX WEEK CYCLE.
UM, ONE OF THE THINGS THAT WE'RE, WE'VE HAD ON OUR RADAR FOR A WHILE IS THE USE OF TEMPORARY SYNCHRONOUS TIES, UH, TO BE A PART OF THAT BLACK START PLAN, UH, SO THAT WE COULD TAKE ADVANTAGE OF THE, THE STABILITY OF OTHER GRIDS AS WE'RE GOING THROUGH THE BLACK START.
AND THEN ONCE WE GET A STRONG ENOUGH ISLAND IN PLACE, UH, THAT, THAT IT CAN STAND ON ITS OWN, THEN WE CAN OPEN THOSE TIES BEFORE THE, YOU KNOW, WE ACTUALLY START TYING THE ISLANDS TOGETHER.
AND SO THAT'S SOMETHING THAT I THINK AS A, AS LOOKING AT WHAT, WHAT WENT ON WITH THIS EVENT AND HOW IMPRESSIVE THAT IS, THAT THEY GOT IT ALL BACK WITHIN A DAY.
UH, WE NEED TO RE-LOOK AT THAT AND WE'LL BE DOING SO, UM, OVER THE NEXT FEW MONTHS.
SO WITH THAT, WHERE WOULD YOU, UM, TIE IT TO? WOULD YOU GO UP TO OKLAHOMA OR OVER, OVER TO NEW MEXICO? WHERE, WHERE WOULD THOSE, I THINK GENERALLY IT'D BE PLACES WHERE EITHER WE ALREADY HAVE, UH, NORMALLY OPEN TIES, BLOCK LOAD, TRANSFER POINTS MM-HMM
OR, YOU KNOW, THERE'S AT LEAST STRONG TRANSMISSION NEAR TO EACH OTHER.
WHERE WE CAN MAKE THOSE CONNECTIONS MAYBE AT THE DC TIES, THAT WOULD BE A, A POTENTIAL LOGICAL PLACE, BUT YOU CAN'T USE THE DC TIES FOR THAT.
THEY'RE NOT, BUT YOU COULD USE, YOU COULD PERHAPS BUILD A BYPASS FOR TEMPORARY PURPOSES TO TAKE ADVANTAGE OF THAT LARGE SYSTEM.
SO ANY OTHER QUESTIONS ON THAT? OKAY.
UH, I DO HAVE ONE QUESTION THAT THE 2.2 GIGAWATTS OF GENERATION, THAT, THAT WAS THE INITIAL EVENT THAT DROPPED OFFLINE, HAVE, HAVE, HAVE THOSE BEEN IDENTIFIED SPECIFICALLY YET? I DON'T THINK THEY'VE IDENTIFIED EXACTLY WHICH ONES THEY ARE YET.
THAT WAS, THAT WAS FROM THE PREVIOUS REPORT.
I DON'T REMEMBER IT BEING IN THE REPORT.
[5. Stakeholder Engagement Topic – Transmission Planning]
AGENDA ITEM FIVE, STAKEHOLDER ENGAGEMENT, TOPIC TRANSMISSION PLANNING.THIS IS THE FIRST TIME THE BOARD HAS DONE A STAKEHOLDER ENGAGEMENT LIKE THIS.
SO I LOOK FORWARD TO, UH, THE PARTICIPATION AND DISCUSSION WITH THE DIRECTORS.
REBECCA VOS AND CHRISTIE ARE GOING TO MAKE THE, ARE GONNA LEAD THE DISCUSSION.
IT'S MY UNDERSTANDING THAT THE STAKEHOLDER PRESENTATIONS INCLUDE INPUT FROM RESPECTIVE MARKET SEGMENTS.
[01:20:18]
THIS IS THE INAUGURAL, UM, SESSION OF A NEW INITIATIVE TO PROVIDE AN OPPORTUNITY FOR MARK PARTICIPANTS TO COME BEFORE THE BOARD AND GIVE INSIGHT AND PERSPECTIVE ON KEY POLICY ISSUES OUTSIDE OF A SPECIFIC REVISION REQUEST.
UM, WE'VE WORKED WITH BOARD LEADERSHIP AND TAC LEADERSHIP, I WANNA THANK THEM AND THE CROSS SECTION OF MARKET PARTICIPANTS WHO SPEAK ON TRANSMISSION PLANNING.
THIS MONTH WE HAVE A CROSS SECTION OF REPRESENTATIVES FROM INDUSTRIAL CONSUMERS MOST VINNO AND JOHN ROSS HUBBARD ON BEHALF OF TIEC, INVESTOR ON UTILITIES, WAYMAN SMITH AND COLIN MARTIN FOR A EP AND ENCORE AND THE INDEPENDENT GENERATOR SEGMENT.
CHASE SMITH AND JOSH HALE FOR SEVEN POWER, I BELIEVE WE ARE STARTING WITH TIEC AND THEN INDUSTRIAL CONSUMER SEGMENT.
AND GOOD AFTERNOON BOARD MEMBERS.
UM, TODAY, JOHN AND I WILL BE HANDING IT OFF TO EACH OTHER.
SO I'LL START FIRST WITH A QUICK DISCUSSION ON WHY TRANSMISSION PLANNING MATTERS TO CONSUMERS.
JOHN WILL THEN FOLLOW IT UP BY WALKING YOU THROUGH THE CONSUMER'S PERSPECTIVE ON THE VARIOUS TRANSMISSION PLANNING TEST.
AND THEN I'LL CONCLUDE WITH HOW IT CAN IMPACT VARIOUS BUSINESSES AND WHAT YOU MAY OR MAY NOT SEE FROM A CUSTOMER ENGAGEMENT PERSPECTIVE.
SO WHY DO CONSUMERS CARE? UM, I DON'T THINK ANYONE WILL BE SURPRISED TO SEE COST UP HERE AS THE FIRST ONE IN ERCOT, CONSUMERS PAY FOR NEARLY ALL OF THE TRANSMISSION UPGRADES AND ALL OF THE, UH, INFRASTRUCTURE IN GENERAL FOR TRANSMISSION FACILITIES.
THIS IS A LITTLE DIFFERENT THAN SOME OF THE OTHER ISSOS AND RTOS.
UM, BECAUSE AN ERCOT, UH, CUSTOMERS ALSO PAY FOR THE UPGRADES NECESSARY TO CONNECT, UH, GENERATORS.
THIS IS MEANT TO BE AN INCENTIVE FOR THEM TO CHOOSE TO CITE AN ERCOT, UM, TO OFFER A LITTLE PERSPECTIVE OF HOW MUCH OF A COST IT CAN BE CONSUM FOR CONSUMERS.
UM, ONE RANDOM SORT, WELL, I SAY RANDOM ONE ROUGH EXAMPLE IS IT COULD BE 30%, 40% OF YOUR TOTAL DELIVERED POWER COST.
THAT, OF COURSE, WILL VARY BASED ON WHETHER OR NOT YOU'RE A LARGE LOAD OR A SMALL LOAD.
AND THEN OF COURSE, YOUR PRIVATE, UM, ARRANGEMENTS WITH YOUR SUPPLIER FOR YOUR COST OF POWER, BUT IT CAN BE A SIGNIFICANT, UM, COST FOR CONSUMERS.
AND IF YOU COUPLE THAT WITH SOME OF THE VERY INTENSIVE POWER INTENSIVE, UM, INDUSTRIES WE HAVE HERE IN TEXAS, IT'S EVEN FURTHER A COST FOR US.
SO FOR, FOR INSTANCE, IN SOME INDUSTRIES YOU MAY SEE POWER BE AS SECOND LARGEST COST, THIRD LARGEST COST.
I'VE EVEN SEEN IT BE THE LARGEST COST BEFORE, DEPENDING ON THE PRICE OF POWER AT ANY GIVEN TIME.
IT'S ALSO IMPORTANT FROM A RELIABILITY PERSPECTIVE.
SO WE OF COURSE, WANT TO BE ABLE TO CONNECT WHEN WE NEED TO GROW OUR FACILITIES OR SITE A NEW FACILITY HERE IN THE ERCOT AREA, BUT IT CAN ALSO BE REALLY IMPORTANT JUST IN THOSE DAY-TO-DAY BLIPS.
SO I WANT TO, YOU KNOW, I WANNA SHARE THAT IF YOU REPEATEDLY SEE A BLIP AT SOME OF YOUR SITES, IT CAN ACTUALLY HARM THE EQUIPMENT OUT THERE AND YOU MAY BE FORCED TO REPLACE VERY EXPENSIVE MACHINERY THAT CAN BE MILLIONS OF DOLLARS BEFORE THE END OF LIFE FOR THAT PARTICULAR PIECE OF EQUIPMENT.
AND THEN OF COURSE, IF THERE'S, UM, YOU KNOW, UNNECESSARY OR UNUSED TRANSMISSION, THAT STILL STILL HAS TO BE RECOVERED IN COST AND IT CAN UNNECESSARILY DRIVE UP COST FOR CONSUMERS.
SO WE REALLY PREFER A BALANCED APPROACH, UH, FOR THOSE REASONS.
YOU'LL TYPICALLY SEE CONSUMERS ONLY SUPPORT, UH, TRANSMISSION PROJECTS WHEN THEY'RE EITHER FOR RELIABILITY PURPOSES OR THEY HAVE A VERY CLEAR ECONOMIC BENEFIT AND THEY WILL SAVE COSTS FOR CONSUMERS.
AND THEN WITH THAT, I'LL HAND IT OFF TO JOHN.
SO AS MELISSA SAID, WE THOUGHT PROVIDING AN OVERVIEW OF THE DIFFERENT TYPES OF TRANSMISSION PROJECTS WOULD BE HELPFUL, HELPFUL CONTEXT FOR THE CUSTOMER PERSPECTIVE.
SO IN ERCOT, THERE ARE THREE DIFFERENT TYPES OF RELIABILITY OR OF TRANSMISSION PROJECTS.
THERE ARE ECONOMIC PROJECTS, RELIABILITY PROJECTS, AND RESILIENCY PROJECTS.
ECONOMIC PROJECTS ARE INTENDED TO ELIMINATE INEFFICIENCIES AND REDUCE PRICES FOR CONSUMERS.
THERE ARE TWO DIFFERENT TYPES OF ECONOMIC COST BENEFIT TESTS THAT THE PUC CONSIDERS, WHICH I'LL DISCUSS MORE ON THE NEXT SLIDE.
UM, THERE ARE ALSO RELIABILITY PROJECTS.
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THESE ARE NEED-BASED PROJECTS ESSENTIAL TO SERVE, LOAD AND FACILITATE ROBUST WHOLESALE COMPETITION.ERCOT REGIONAL TRANSMISSION PLANNING OR ERCOT REGIONAL TRANSMISSION PLAN WILL IDENTIFY NOTEWORTHY RELIABILITY PROJECTS TO HELP MEET THE SYSTEM'S TRANSMISSION NEEDS OVER A SIX YEAR TIME PLANNING HORIZON.
AND THEN UTILITIES WILL TAKE OUR COTS ANALYSIS AND RECOMMENDATIONS, RUN AN INDEPENDENT ANALYSIS USING THEIR DATA AND BRING THE PROJECT FORWARD FOR CONSIDERATION AT THE RPG UH, GROUP.
GENERALLY THESE PROJECTS, AGAIN, AS MELISSA SAID, AREN'T CONTROVERSIAL BECAUSE, UH, THEY'RE NEEDED TO SERVE CUSTOMERS OR TO, UM, OR, OR FOR RELIABILITY REASONS.
FINALLY, THERE'S RESIL RESILIENCY PROJECTS.
THESE, THIS IS A NEW CATEGORY THAT WAS ADDED AFTER THE 2021 LEGISLATIVE SESSION.
UNDER THE PUCS RULES RESILIENCY PROJECTS ARE PROJECTS THAT DON'T QUITE MEET THE ECONOMIC OR RELIABILITY, UH, BENEFIT ANALYSES, BUT MERIT APPROVAL BECAUSE THEY IMPACT, THEY REDUCE THE IMPACT TO CUSTOMERS FOR OF POTENTIAL OUTAGES CAUSED BY EXTREME WEATHER EVENTS.
ERCOT RECENTLY PROPOSED NPRR 1278 TO ADDRESS THIS PROCESS FOR HOW ERCOT DETERMINES WHAT PROJECTS, UH, TO RECOMMEND TO THE COMMISSION FOR CONSIDERATION.
AND THIS IS STILL WORKING THROUGH THE STAKEHOLDER PROCESS.
UH, AGAIN, THERE'S TWO TYPES OF ANALYSES FOR CONSIDERING AN ECONOMIC PROJECT, THE CONGESTION COST SAVINGS TEST, AND THE PRODUCTION COST SAVINGS TEST.
BEFORE DIVING INTO EACH OF THESE TESTS, IT'S WORTH NOTING THAT THE ASSUMPTIONS BAKED INTO ERCOT MODELING ANALYSIS WILL DRIVE THE RESULTS OF THE TEST.
THE MOST CONTROVERSIAL ASSUMPTION IS THE TIMEFRAME CONSIDERED FOR THE ANALYSIS.
AND THIS IS BECAUSE COSTS ARE THE HIGHEST FOR TRANSMISSION PROJECTS IN THE FIRST FEW YEARS OF THE PROJECT'S LIFE.
SO BY ANNUALIZING THOSE COSTS OVER A LONGER PERIOD OF TIME, THE PROJECT MAY LOOK LESS COSTLY.
ON THE BENEFIT SIDE, ANNUALIZING THE BENEFITS OVER A LONGER PERIOD OF TIME CAN ALSO INFLATE THE PERCEIVED BENEFITS OF A PROJECT.
THIS IS BECAUSE, UM, ERCOT PROJECT, THE RELIABILITY OF ERCOT LONG-TERM PROJECTIONS ARE DECREASED OVER TIME, SPECIFICALLY OVER A LONG TIME PERIOD.
THERE'S NO INFORMATION ON FUTURE GENERATION SIGHTINGS OR FUEL COSTS.
BOTH ARE SUBSTANTIAL DRIVERS OF PERCEIVED BENEFITS IN THE COMMISSION'S PROJECT, APPROVING THE CONGESTION COST SAVINGS TEST AND, AND UPDATING THE RULES, THE COMMISSION DETERMINED THE TIME HORIZON FOR EACH TEST.
THE PRODUCTION COST SAVINGS TEST COMPARES THE COST OF THE FIRST YEAR ANNUAL REQUIREMENT AND THE BENEFITS OVER A SIX YEAR TIME HORIZON USING A TWO AND FIVE YEAR RTP CASE.
THE CONGESTION COST SAVINGS TEST CONSIDERS THE FIRST THREE YEARS REVENUE REQUIREMENT AND THAT SAME SIX YEAR TIME HORIZON FOR THE BENEFITS SIDE OF THE EQUATION.
NOW TURNING TO THE TWO TESTS, THE CONGESTION COST SAVINGS TEST COMPARES THE COST OF THE PROJECTS AGAINST THE REDUCTION IN SYSTEM-WIDE CONSUMER ENERGY COSTS.
INDUSTRIAL CUSTOMERS ADVOCATED FOR THE USE OF THIS TEST BECAUSE CUSTOMERS PAY FOR TRANSMISSION AND ERCOT AND THE TEST ENSURES ALIGN WILL ACTUALLY PRODUCE A SAVINGS FOR CUSTOMERS PRIOR TO DIRECTION FROM THE LEGISLATOR LEGISLATURE AND THE COMMISSION.
ERCOT ONLY USED THE PRODUCTION COST SAVINGS TEST, WHICH ISN'T APPROPRIATE IN AN ENERGY ONLY MARKET.
SPECIFICALLY, THE PRODUCTION COST SAVINGS TEST COMPARES THE COST OF A PROJECT AGAINST THE REDUCTION IN PRODUCTION OR FUEL COSTS FOR GENERATORS.
GENERALLY, INDUSTRIAL CONSUMERS HAVE OPPOSED THE USE OF THIS TEST EXCLUSIVELY BECAUSE THE REDUCTION IN FUELED COSTS DO NOT ALWAYS TRANSLATE TO COST SAVINGS FOR CONSUMERS.
THIS IS BECAUSE UNLIKE IN A VERTICALLY INTEGRATED UTILITY, CUSTOMERS DO NOT DIRECTLY PAY FUEL COSTS.
INSTEAD THEY PAY A MARGINAL CLEARING PRICE FOR ENERGY.
AS A RESULT, THE TEST GENERALLY BENEFITS GENERATORS WHO SIDE ON THE WRONG SIDE OF A CONSTRAINT.
NOW WE'LL TURN IT BACK OVER TO MELISSA TO TALK ABOUT, UH, THE TRANSMISSION PLANNING AND BUSINESS DECISIONS.
SO BEFORE WE COVER HOW IT CAN IMPACT SOME OF OUR BUSINESSES, WE WANTED TO SORT OF SET THE STAGE WITH WHAT CAN GO INTO SIDING FOR A CONSUMER, PARTICULARLY A LARGE INDUSTRIAL CONSUMER.
SO MANY OF THESE FACILITIES DO NOT NECESSARILY HAVE EXTREME FLEXIBILITY.
SO SOME OF THEM MIGHT BE LIMITED TO WHERE THE MINERALS ARE THAT THEY'RE EXTRACTING OUT OF THE GROUND GROUND WITH SOME FLEXIBILITY TO PIVOT TO A DIFFERENT UTILITY OR A DIFFERENT, OR I-S-O-R-T-O, WHERE THEY MAY ALSO OWN OR LEASE LAND, UM, DEPENDING ON HOW THE INFRASTRUCTURE IS COMING ALONG THERE.
UM, BUT IN ADDITION TO THAT, UM, THERE ARE THINGS THAT GO INTO SITING CONSIDERATIONS SUCH AS PROXIMITY TO MAYBE A GAS PIPELINE OR WHETHER OR NOT THERE ARE CO2 OFF-TAKERS NEARBY.
UM, MAYBE YOU NEED INDUSTRIAL GASES TO BE PART OF YOUR SUPPLY CHAIN.
THERE CAN BE A NUMBER OF FACTORS THAT DETERMINE WHERE A A LARGE CUSTOMER MAY SITE AND THEY MAY ENTER INTO CONTRACTUAL ARRANGEMENTS.
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UM, EARLY ON IN THOSE, UM, SIGHTING DECISIONS, UH, THE INTERCONNECTION PROCESS, WELL, WE USUALLY TRY TO WORK WITH OUR UTILITIES AS FAR IN ADVANCE AS WE CAN.UM, SOMETIMES THERE HAVE ALREADY BEEN MILLIONS OF DOLLARS INVESTED NEGOTIATING LAND RIGHTS, NEGOTIATING, UM, POTENTIALLY SOMEONE ELSE'S BUILDING NEXT TO YOU AS PART OF THIS VALUE CHAIN.
SO YOU'RE USUALLY FAR ALONG INTO THIS PROCESS.
UH, ONCE THE INTERCONNECTION HAS BEEN REQUESTED WITH THE UTILITY REGARDING TIMING, UM, YOU TYPICALLY TRY TO AGAIN, SUBMIT YOUR INTERCONNECTION AS SOON AS POSSIBLE.
UM, BUT THAT CAN VARY BASED ON THE LOAD TYPE AND THE LOAD SIZE.
SO FOR EXAMPLE, A, YOU KNOW, FIVE MEGAWATT OIL AND GAS FACILITY MAY REQUEST POWER FROM THEIR UTILITY SEVEN MONTHS BEFORE THEY NEED IT.
UM, WHERE, AND A A LARGE CHEMICAL FACILITY MIGHT WORK YEARS IN ADVANCE, 2, 3, 4, EVEN YEARS BEFORE THEY'RE NEEDING THAT POWER.
UM, AND THIS IS BECAUSE WE WANT CERTAINTY REGARDING OUR POWER AND WHEN IT WILL BE AVAILABLE.
AND YOU LIKELY EXPECT THERE WILL BE INFRASTRUCTURE UPGRADES NECESSARY, AND YOU WANNA ALLOW TIME FOR THAT TO BE CONSTRUCTED AHEAD OF, UM, THE GO LIVE OF YOUR PROJECT.
SO WITH THAT IN MIND, UM, HOW DOES THIS ALL IMPACT OUR BUSINESS DECISIONS? SO OF COURSE, WE WOULD LOVE TO JUST HAND OVER A FORUM TO THE UTILITY AND THEY SAY YOU CAN HAVE YOUR POWER ON THE EXACT DATE YOU WANT IT, AND THERE'S NO, NO RESTRICTIONS AND NO UPGRADES NECESSARY.
THAT IS VERY RA, VERY RARE, VERY UNCOMMON.
UM, SO SOME OF THE THINGS THAT WE REALLY PAY ATTENTION TO AS A LOAD ARE OUR ABILITY TO CONNECT TO THE GRID IN A TIMELY FASHION.
SO THIS IS THIS INSUFFICIENT OR OVERBUILD OF TRANSMISSION.
SO WE WANT IT TO JUST BE, WE WANT IT TO BE JUST RIGHT.
IDEALLY, UM, WE WOULDN'T OVERBUILD BECAUSE THAT CAN DRIVE UP COST.
UH, BUT WE WOULD MAKE SURE THAT THERE IS SUFFICIENT TRANSMISSION BEING BUILT TO KEEP UP WITH THE GROWING ECONOMY IN TEXAS, BECAUSE IF NOT, THERE CAN BE LARGE DELAYS IN OUR PROJECTS THAT CAN HAVE A DOMINO EFFECT ON THE VARIOUS SUPPLY CHAINS.
UM, THE FIRST ONE, REGULATORY UNCERTAINTY.
UM, THIS IS SOMETHING THAT IS VERY IMPORTANT BECAUSE ABRUPT CHANGES, UM, CONTINUOUS CHANGES TO THE PROTOCOLS.
ANYTHING THAT'S NOT CODIFIED OR RETROACTIVELY APPLICABLE CAN HAVE A VERY DISRUPTIVE IMPACT TO THE BUSINESS.
UM, IT COULD CAUSE COSTLY RETROFITTING THAT COULD FURTHER DELAY PROJECTS.
AND TYPICALLY IF YOU HAVE SOMETHING THAT'S PROSPECTIVE, YOU CAN TO SOME WHAT EXTENT, TO SOME EXTENT, PLAN FOR IT.
AND IT'S USUALLY MORE COST EFFICIENT TO DO THAT EARLY ON IN THE PROCESS VERSUS THERE'S ANY RETROACTIVE, UM, CHANGES THAT ARE REQUESTED.
UM, IN, IN GENERAL, IF IT, IF IT'S A CHALLENGING REGULATORY ENVIRONMENT, YOU COULD SEE LOADS, UM, LOOKING TO SITE IN TEXAS, START CONSIDERING OTHER AREAS THAT MIGHT HAVE A MORE READILY AVAILABLE TRANSMISSION AND CLEAR RULES.
AND THEN THE LAST ONE, UM, INTERCONNECTION STUDIES.
HISTORICALLY AS CONSUMERS, WE'VE JUST WENT TO OUR UTILITY, WE'VE PROVIDED THE INFORMATION AND ON OUR BEHALF, THEY HAVE MOSTLY WORKED WITH ERCOT TO COMPLETE ALL OF THE STUDIES AND MODELING AND THEN BRING THE RESULTS BACK TO US.
UM, THIS ISN'T NECESSARILY BAD, BUT MOST RECENTLY WE, UM, ARE BEING ASKED MORE TO PROVIDE OUR T DSPS WITH DETAILED MODELING.
AND I JUST WANTED TO FLAG THAT THERE CAN BE A LEARNING CURVE ASSOCIATED WITH THAT.
SO WE DON'T NECESSARILY HAVE THE IN-HOUSE EXPERTISE TO PROVIDE SOME OF THIS MODELING.
SO WE DO CONTRACT WITH CONSULTANTS TO BE ABLE TO DO THAT IN AN EFFICIENT WAY, AND THERE'S A COST TO THAT AND THERE'S A LEARNING CURVE, UM, JUST EVEN IN-HOUSE TRYING TO MAKE SURE THAT WE UNDERSTAND AND CAN GET THAT DONE IN A TIMELY FASHION.
AND, UM, THE LAST THING IS JUST TO NOTE, THERE CAN BE SOME SEQUENCING, UM, I GUESS LEARNING CURVES HERE AS WELL.
SO HISTORICALLY, AGAIN, WE'VE BEEN ABLE TO RUN THE EPC PHASE OF OUR PROJECT IN PARALLEL WITH THE INTERCONNECTION PROCESS.
SO TO THE EXTENT THAT ANYTHING COMES OUT OF THE INTERCONNECTION PROCESS THAT MIGHT HAVE A CHANGE FOR OUR LOAD, THEN THAT COULD CAUSE SOME SEQUENCING, UM, AND SOME DELAYS AS WELL.
SO THAT'S SOMETHING WE'RE MINDFUL OF AND TRY TO WORK WITH OUR UTILITIES AND ERCOT, UM, IN ADVANCE TO MAKE SURE IT DOESN'T HAPPEN.
AND THEN LASTLY, CUSTOMER ENGAGEMENT.
UM, CONSUMERS TYPICALLY WORK WITH THEIR UTILITIES MOST.
UM, YOU HAVE SOME REPRESENTATION HERE AT ERCOT, UM, SUCH AS OXY.
YOU KNOW, WE'RE, WE'RE NOT ONLY A LOAD, BUT WE'RE A QSE AND A REP, SO WE'RE, WE'RE ACTIVE IN THE STAKEHOLDER PROCESS, BUT YOU MAY HAVE A CONSUMER THAT HAS ONE FACILITY IN TEXAS, OR MAYBE THEY HAVE MULTIPLE, BUT YOU KNOW, PALES IN COMPARISON TO HOW BIG THEY ARE IN SAY, PJM.
SO THEY DON'T NECESSARILY HAVE THE BANDWIDTH TO BE AT EVERY SINGLE WORKING GROUP MEETING HERE AT ERCOT FOR THAT REASON.
YOU'LL OFTEN SEE, UM, CONSUMERS ENGAGE THEIR TRADE ASSOCIATIONS TO, UM, ADVOCATE ON THEIR BEHALF AT THE STAKEHOLDER WORKING GROUPS.
JOHN REPRESENTS TIEC, SO YOU'LL SEE HIM AT SOME OF THE WORKING GROUPS.
UM, AND, YOU KNOW, WE'RE MAKING WIDGETS, SO WE TRY TO BE HERE AS MUCH AS WE CAN, BUT ULTIMATELY, UH, WE ALWAYS APPRECIATE, YOU KNOW, CLEAR, CLEAR RULES THAT HOPEFULLY SOMEONE LOOKING TO SITE HERE COULD SEE AND UNDERSTAND HOW TO CONNECT THEIR LOAD.
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UNLESS THERE ARE ANY QUESTIONS, PEGGY? YEAH.THANK YOU FOR YOUR PRESENTATION.
MELISSA, YOU GO BACK TO THE ONE SLIDE.
I APPRECIATE THE COMMENT ABOUT, UH, CUSTOMERS NOT HAVING THE BANDWIDTH TO MONITOR ALL THESE PROCEEDS.
DO YOU HAVE ANY SUGGESTIONS ON WHAT WE CAN DO TO HELP THAT PROCESS? WELL, IT'S A DIFFICULT PROCESS 'CAUSE WE, WE, WE HAVE THIS PROCESS IN PLACE WITH ALL THESE WORKING GROUPS.
IT IS, AND I, AND I THINK, UM, I, I SEE ERCOT, RIGHT, TRYING TO DO THAT EVERY DAY, TRYING TO GIVE MORE MARKET NOTICES.
I THINK, UM, IT TO THE EXTENT THAT YOU CAN GIVE ADVANCED NOTICE OF THINGS AND MAKE SURE IT'S BEING CIRCULATED TO THE TRADE ASSOCIATIONS, THEY'RE USUALLY, UM, THE BEST WAY YOU CAN REACH THOSE CONSUMERS THAT AREN'T ACTIVE, UM, FOR BUSINESSES THAT MIGHT NOT YET BE HERE AND ARE LOOKING, I THINK JUST TRANSPARENCY IN ALL OF THE PROCESSES.
SO, SO FOR INSTANCE, AS AN ENERGY MANAGER, WHEN I'M ASKED IF WE COULD CITE IN A STATE WE'RE NOT IN, THE FIRST THING I GO DO IS READ THE RULES AND, AND TRY TO SEE, YOU KNOW, WHAT, WHAT THAT WOULD MEAN BEFORE WE TYPICALLY EVEN HIRE SOMEBODY.
I'M SORRY, THE, THE OTHER THING I'D ADD IS HAVING SOME OF THE, SOMETIMES A LOT OF THE REALLY BIG CONVERSATIONS HAPPEN AT WORKING GROUPS AS OPPOSED TO HAPPENING AT, UM, PRS OR TAC, WHICH MORE PEOPLE ARE ABLE TO PAY ATTENTION TO.
SO TO THE EXTENT THAT THOSE LARGER CONVERSATIONS CAN HAPPEN, THOSE HAPPEN IN THOSE VENUES, IT'LL ALLOW, IT'LL, IT'LL PROVIDE THAT TRANSPARENCY THAT MELISSA'S REFERRING TO.
ANY OTHER QUESTIONS, COMMENTS? WE CERTAINLY APPRECIATE YOUR INPUT, UH, AS WE, UH, UH, LOOK AT THIS PROCESS AND WE LOOK FORWARD TO CONTINUING OUR ENGAGEMENT WITH YOU IN THE FUTURE.
OKAY, THANK YOU AND THANKS FOR HAVING US TODAY.
UH, THE NEXT, UH, PRESENTERS ARE GONNA BE COLIN MARTIN WITH ENCORE ELECTRIC DELIVERY AND WAYMAN SMITH OF, OF A EP.
AND THIS IS FOR THE INVESTOR OWNED UTILITY SEGMENT.
UH, UM, IT'S REALLY AN HONOR TO BE HERE, UH, TO PRESENT TO YOU ON BEHALF OF THE IOU SEGMENT.
UM, I, AS YOU CAN TELL FROM THE GRAY HAIR, I'VE BEEN AROUND THIS BUSINESS A LONG TIME AND I CAN'T RECALL A MORE EXCITING TIME, UH, CERTAINLY TO BE IN THE TRANSMISSION BUSINESS AND IN PARTICULAR, TRANSMISSION PLANNING.
THE, THE RATE OF CHANGE, UM, OF THE MARKET RIGHT NOW IS JUST UNPRECEDENTED.
AND, YOU KNOW, WE WERE IN AN ENVIRONMENT WHERE OUR EXISTING PROCESSES, UM, RULES, POLICIES, THEY NEVER REALLY ENVISIONED, UH, THE NUMBER OR THE SIZE OF THE LOAD REQUESTS THAT WE'RE SEEING NOW.
AND SO, YOU KNOW, IT'S A GREAT OPPORTUNITY.
IT ALSO PRESENTS SOME CHALLENGES.
AND, AND SO I THINK IT'S CRITICAL, UH, AS WE HAVE BEEN THAT WE ALL WORK TOGETHER AND ADAPT QUICKLY AND REALIZE THAT, YOU KNOW, WE'RE GONNA HAVE TO DO THINGS A LITTLE BIT DIFFERENTLY THAN WE'VE DONE 'EM HISTORICALLY.
UM, AND SO TODAY, UM, WANTED TO, TO SORT OF LEVEL SET A LITTLE BIT, TALK ABOUT, UM, SOME FUNDAMENTALS FROM A TRANSMISSION PLANNING PERSPECTIVE.
MOST OF THAT, UM, IF NOT ALL OF IT YOU PROBABLY HEARD BEFORE, UM, BUT MAYBE PUT A LITTLE DIFFERENT COLOR ON IT FROM THE IRU PERSPECTIVE, AND THEN WOULD LIKE TO TEE UP SOME TRANSMISSION POLICY ISSUES OF INTEREST TO THE IOUS.
AND THEN COLIN WILL SORT OF DRILL DOWN, UM, INTO SOME KEY ISSUES THAT WE WANTED TO PRESENT HERE TO THE BOARD.
UM, SOME OF THE FUNDAMENTALS, UH, WHERE DO TRANSMISSION PROJECTS COME FROM? SO SORT OF CATEGORIZE THESE INTO FIVE MAJOR, WHAT I'LL CALL NEED DRIVERS.
UM, ONE, UH, AS A TRANSMISSION OWNER, WE HAVE CERTAIN COMPLIANCE RESPONSIBILITIES FROM NERC, NORTH AMERICAN ELECTRIC LIABILITY COUNCIL, AS WELL AS ERCOT AND SOME TSP SPECIFIC RELIABILITY CRITERIA.
AND SO ON AN ANNUAL ANNUAL BASIS, WE ASSESS THE PERFORMANCE OF THE TRANSMISSION SYSTEM AGAINST THOSE
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ESTABLISHED CRITERIA.AND TO THE EXTENT WE IDENTIFY DEFICIENCIES, WE HAVE TO DEVELOP, UM, CORRECTIVE ACTION PLANS TO ADDRESS THOSE DEFICIENCIES.
SO THAT'S ONE DRIVER WHERE A TRANSMISSION PROJECT CAN COME FROM ANOTHER AS, AS Y'ALL ARE, ARE VERY FAMILIAR WITH THE ERCOT REGIONAL TRANSMISSION PLAN.
UM, THAT'S A FIVE YEAR PLAN CONDUCTED BY ERCOT, UM, THAT I VIEW AS A MORE, UH, HOLISTIC REGIONAL STUDY, IF YOU WILL.
AND, YOU KNOW, IT'S GOTTEN, UM, IT'S ALWAYS BEEN CRITICAL, BUT CERTAINLY AS OF LATE, UH, EVEN MORE ATTENTION PLACED THERE AS IT SHOULD JUST BECAUSE OF THE MAGNITUDE AND THE SIZE OF SOME OF THE LOADS THAT ARE SEEKING TO INTERCONNECT AND THE WIDESPREAD IMPACTS THAT THOSE LOADS CAN HAVE.
AND SO YOU REALLY NEED TO BE LOOKING AS A TSP, WE NEED TO BE CONSIDERING BEYOND OUR OWN GEOGRAPHIC FOOTPRINT, AND THE RTP IS A GREAT MECHANISM TO DO THAT.
UH, THIRD CATEGORY CUSTOMER STUDIES IS, CAN BE BOTH ON THE LOAD SIDE AS WELL AS THE GENERATION SIDE, IN PARTICULAR IF IT'S A GENERATOR WHERE THE DELIVERABILITY CRITERIA, UM, APPLIES, THAT CAN DRIVE THE NEED FOR TRANSMISSION UPGRADES.
AND, AND THEN AS I'VE ALLUDED TO A COUPLE OF TIMES, THE, THE CUSTOMER LOAD STUDIES, AND WE ARE ENGAGED IN THOSE STUDIES CONTINUOUSLY.
UM, AS YOU ALL ARE, ARE AWARE, AND MANY OF THOSE, IN ORDER TO RELIABLY CONNECT THOSE LOADS, THEY WILL REQUIRE NEW TRANSMISSION PROJECTS.
A FOURTH CATEGORY ARE AD HOC, UM, ER CUT STUDIES AND EXAMPLES OF THAT ARE THE RECENT PERMIAN BASIN RELIABILITY PLAN.
PRIOR TO THAT, WE HAD A, A LOWER RIO GRANDE VALLEY, UM, AD HOC STUDY THAT WAS PERFORMED BY ERCOT, UH, THAT PROVIDED AN OPPORTUNITY TO GET SOME MUCH NEEDED UPGRADES TO THE LOWER RE GRAND VALLEY.
AND THEN FINALLY, A REHAB AND RESILIENCY PROJECTS.
THOSE ARE, ARE PRIMARILY TSP IDENTIFIED PROJECTS.
UM, SO THOSE ARE KIND OF MAJOR NEED DRIVERS IN TERMS OF HOW WE EVALUATE THOSE.
SO I SORT OF THINK ABOUT IT LIKE, UM, NEEDS IDENTIFICATION AND, AND THEN THE SECOND STEP IS WHAT I WOULD CALL SOLUTIONS DEVELOPMENT.
SO WE HAVE A NEED, WHAT'S THE BEST PROJECT TO ADDRESS THAT NEED? UM, AND SO THE TSPS WILL USE THE STEADY STATE, UH, WORKING GROUP CASES.
THOSE ARE BUILT COLLABORATIVELY, UH, THROUGH THE ERCOT WORKING GROUP PROCESS.
UM, THEY'RE UPDATED TWICE A YEAR.
AND THEN THE DYNAMIC AND, UH, SHORT CIRCUIT CASES ARE BASED ON THOSE SSWG CASES.
SO THOSE ARE SORT OF THE BASE, UM, CASES THAT WE USE.
THEY'RE BASED ON THE TSP LOAD FORECAST THAT'S SUBMITTED THROUGH THE ANNUAL LOAD DATA REQUEST, THE A LDR.
UM, AND SO THOSE ARE THE CASES THEN THAT WE USE.
WE TAKE THOSE CASES, UPDATE THOSE, UH, FOR ANY UPDATED LOADS, TOPOLOGY GENERATION THAT MAY, UH, HAVE, UH, MOVED ALONG IN THE, IN THE DEVELOPMENT PHASE.
SO WE'LL UPDATE THOSE CASES, WE'LL VERIFY THAT NEED THAT WE IDENTIFIED, AND THEN WE WILL EVALUATE, UH, VARIOUS OPTIONS FOR MITIGATING THAT IDENTIFIED NEED ULTIMATELY COME OUT OF THAT WITH A RECOMMENDED PROJECT THAT'S, UM, BASED ON ITS PERFORMANCE IN MITIGATING THE NEED, UH, ITS FEASIBILITY COST, THE TIME TO IMPLEMENT THAT PROJECT.
UM, AND THEN AN ASSESSMENT OF WHAT THAT PROJECT DOES, NOT ONLY FOR MEETING EXISTING NEEDS, BUT, UM, DOES IT PROVIDE, UH, ANY BENEFITS IN TERMS OF FUTURE HEADROOM? SO, SO WE GO THROUGH THAT PROCESS TO EVALUATE, UM, YOU KNOW, THE VARIOUS ALTERNATIVES COME UP WITH A RECOMMENDED PROJECT, AND THEN SOME OF THOSE WILL REQUIRE SUBMISSION INTO THE REGIONAL PLANNING GROUP OR THE RPG REVIEW PROCESS.
UM, THERE'S A TIER, UM, SYSTEM FOR HOW THOSE ARE, UH, PROJECTS GET CATEGORIZED IF IT'S OVER 25 MILLION AND IT'S NOT A NEUTRAL PROJECT, WHICH, WHICH I'LL, I'LL GIVE SOME EXAMPLES OF.
UM, IT'S GONNA BE A TIER ONE, TWO OR THREE.
IF IT'S OVER A HUNDRED MILLION, IT'S TIER ONE.
IF IT REQUIRES A CCN APPLICATION, IT'S GONNA BE TIER TWO.
UM, IF IT'S GREATER THAN 25, LESS THAN A HUNDRED NO CCN, THEN IT'S TIER THREE.
THE CRITICAL THING HERE, BOTH TIER ONE AND TIER TWO PROJECTS WILL REQUIRE AN ERCOT INDEPENDENT REVIEW.
AND TIER ONE ALSO REQUIRE, UH, BOARD OF DIRECTORS APPROVAL.
UM, I MENTIONED THE NEUTRAL PROJECTS.
SOME EXAMPLES OF THOSE ARE DIRECT INTERCONNECTION GENERATION, UH, COULD BE CONNECTING A RADIO LOAD, A PROJECT THAT DOESN'T INCREASE TRANSFER CAPABILITY.
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UM, THOSE TYPES OF PROJECTS WHERE YOU'RE NOT, UH, BUILDING NEW NETWORK LOOPED FACILITIES CAN QUALIFY AS A NEUTRAL, UM, A NEUTRAL PROJECT.UM, AND THEN ONCE YOU, ONCE YOU SUBMIT THE PROJECT THROUGH RPG AND GET ENDORSEMENT IF REQUIRED, UM, WE CAN THEN MOVE TO PROJECT EXECUTION.
OBVIOUSLY IF YOU HAVE A CCN REQUIREMENT, UH, WE COME TO THE, TO THE COMMISSION.
AND THAT'S WHERE REALLY THAT INDEPENDENT REVIEW SORT OF HELPS YOU FROM A PURPOSE AND NEED PERSPECTIVE.
IF WE'RE GONNA COME AND FILE, UM, FOR A CCN AND THEN IN THE CCN PROCEEDING, EVALUATE ROUTE ALTERNATIVES, FINALIZE A ROUTE, UM, AND THEN WE CAN START TO MOVE FORWARD WITH PROJECT EXECUTION, WHICH WILL INCLUDE RIGHT AWAY ACQUISITION, PERMITTING, ALL THOSE SORTS OF THINGS THAT ALL HAVE TO OCCUR BEFORE WE CAN ACTUALLY START, YOU KNOW, TURNING DIRT, IF YOU WILL, AND PUTTING THE PROJECT IN PLACE.
IF IT DOESN'T REQUIRE A CCN, THEN, THEN WE CAN MOVE DIRECTLY, UM, INTO PROJECT EXECUTION.
ONCE THAT PROJECT IS FINALIZED, WE UPDATE THOSE, UH, SSWG CASES THAT I TALKED ABOUT EARLIER, UM, AND ALSO PUT THAT PROJECT INTO THE TRANSMISSION PROJECT INFORMATION TRACKING OR THE TIPT SYSTEM, WHICH PROVIDES, UH, THAT STAKEHOLDER NOTIFICATION ALONG WITH, UH, THE INSERVICE STATE FOR THE PROJECT.
ONCE CONSTRUCTION DOES BEGIN WITH AN UPDATE, UH, THE MONTHLY CONSTRUCTION, UH, PROGRESS REPORT, THE MCPR, AND ULTIMATELY WHEN THE PROJECT'S COMPLETED AND CLOSED OUT, IT IS INCLUDED IN, UH, THE TSPS INTERIM TCOS AND ULTIMATELY, UM, A RAID CASE.
UM, O ONE OF THE THINGS I WANNA POINT OUT ABOUT THAT, THERE'S NOTHING I JUST TALKED ABOUT THAT'S FAST.
OKAY, SO A LOT OF STEPS, UH, NEED IDENTIFICATION SOLUTIONS DEVELOPMENT, RPG FILING, CCN FILING, IT TAKES A WHILE.
UM, AND SO ESPECIALLY FOR A LARGER PROJECT, YOU KNOW, YOU'RE REALLY TALKING ABOUT FIVE YEARS AND LONGER, UM, TO GET SOME OF THESE LARGER SCALE PROJECTS PUT INTO PLACE.
AND SO ONE OF THE KEY, UH, POLICY ISSUES, I REALLY WANTED TO, TO TEE UP, UM, OBVIOUSLY, AND THIS, THIS HAS GOTTEN A LOT OF SCRUTINY, BUT, UM, YOU KNOW, PLANNING FOR A LOT OF THESE LARGE LOAD ADDITIONS, UM, HISTORICALLY YOU HAD TO HAVE A SIGNED CONTRACT BEFORE YOU COULD GO AND GET ENDORSEMENT THROUGH THE RPG PROCESS.
WELL, BY THE TIME YOU GET TO A SIGNED CONTRACT, MOST OF THESE LOADS, YOU KNOW, THEY WANT TO CONNECT 1824, YOU KNOW, MAYBE 30 MONTHS.
AND, AND SO YOU, YOU KIND OF GOT A PROBLEM, RIGHT? I JUST TALKED ABOUT THE PROCESS THAT CAN TAKE FIVE YEARS AND LONGER.
YOU GOT LOADS THAT WANT TO CONNECT IN, YOU KNOW, TWO YEARS, UH, THAT DOESN'T WORK TOO WELL.
UM, AND SO HOW DO YOU GET AHEAD OF THAT? WELL, ONE OF THE WAYS WE NOW HAVE, UM, IN TERMS OF FLEXIBILITY TO START TO PLAN FOR THE FUTURE AND GET AHEAD, UM, IS THE ABILITY TO, UH, SUBMIT THE, UM, THE FORECASTED LOADS LOAD SEEKING INTERCONNECTION VIA THE QUOTE UNQUOTE LETTER LOADS OR THIRD PARTY INDEPENDENT LOAD FORECAST.
SO, EXTREMELY HELPFUL, UM, YOU KNOW, FINALLY GIVES US THE ABILITY TO START PLANNING A LITTLE FURTHER AHEAD.
UM, AND SO THAT'S, THAT'S BEEN VERY HELPFUL IN TERMS OF TRYING TO CATCH UP AND GET AHEAD OF IT A LITTLE BIT.
UM, ONE THING I WILL POINT OUT, I KNOW CHRISTIE TALKED EARLIER ABOUT SOME OF THE ADJUSTMENTS TO THE LETTER LOADS, AND I UNDERSTAND THAT, JUST KEEP IN MIND, THOSE, THOSE LETTER LOADS ARE A VERY SMALL FRACTION OF THE TOTAL LOAD REQUESTS THAT WE HAVE.
UM, AND SO WE HAVE MANY MORE REQUESTS THAN WHAT ARE BEING SUBMITTED IN THOSE LETTER LOADS.
AND FOR A LETTER LOAD THAT, YOU KNOW, MAY END UP NOT MOVING FORWARD, THERE ARE 10 MORE RIGHT BEHIND THEM, RIGHT? SO THAT QUEUE IS BIG, IT'S MUCH BIGGER THAN WHAT YOU'RE SEEING.
SO JUST SOMETHING TO KEEP IN MIND.
UM, CAN I INTERRUPT ON THAT POINT? UH MM-HMM
ARE YOU SAYING FOR THE MAJORITY, VAST, VAST MAJORITY, YOU HAVE SIGNED INTERCONNECT AGREEMENTS? I'M, I'M REALLY HURT HERE AND I'M SORRY.
I WANTED TO FOLLOW UP ON YOUR COMMENT THAT IT'S JUST A MINIMAL NUMBER THAT, UH, ARE HAVE THE OFFICER LETTER AS TEST STATIONS.
ARE YOU SAYING THAT FOR THE VAST MAJORITY OF THE LOAD THAT YOU'RE SUBMITTING, YOU HAVE SIGNED INTERCONNECT AGREEMENTS?
WE HAVE LOADS THAT HAVE SIGNED AGREEMENTS.
WE ALSO SUBMITTED SOME OF THE OFFICER ATTESTATION LETTERS.
AND, AND MY POINT REALLY WAS JUST EVEN IF YOU TAKE THE SIGN LOADS AND THE OFFICER ATTESTED LETTERS, THERE'S A LOT MORE LOAD IN OUR QUEUE THAT ARE REACHING OUT TO US AND INDICATING THEIR DESIRE TO CONNECT.
[01:50:01]
AND SO THOSE, IF YOU TAKE THE SIGN LOADS AND THE OFFICER LETTERS, THAT'S, THAT'S STILL A SMALL PERCENTAGE OF ALL THE LOADS THAT WE HAVE SEEKING TO INTERCONNECT.SO, UM, FINALLY, AND I, I DON'T WANNA STEAL ALL OF STEIN, BUT, UM, REALLY, REALLY EXCITED THAT, UH, WE HAVE THE ABILITY TO MOVE FORWARD WITH 7 65.
UM, EVERYTHING I'VE TALKED ABOUT AND WHERE WE ARE AS AN INDUSTRY, UM, THE POTENTIAL GROWTH THAT WE HAVE AHEAD OF US, UH, IN MY MIND IT'S 7 65 IS ABSOLUTELY THE RIGHT ANSWER.
UM, AND SO THE MORE THAT, UM, WE CAN DEVELOP A ROBUST TRANSMISSION SYSTEM, UM, THAT HAS SOME HEADROOM AND ALLOWS US TO GET THIS BACKBONE IN PLACE, UH, TO START BUILDING OUT THE SYSTEM FOR THAT FUTURE GROWTH, REALLY, REALLY CRITICAL.
AND SO I'M REALLY EXCITED ABOUT WHERE WE'RE HEADING AND I'M LOOKING FORWARD TO GETTING THAT 7 65 BACKBONE TO THE REST OF THE STATE.
UM, SO WITH THAT, I'LL TURN IT OVER TO COLIN.
I THINK MAYBE IF I CAN ADD TO, TO YOUR QUESTION, WHEN WE COLLECTED THE INFORMATION FROM THE TRANSMISSION SERVICE PROVIDERS, THEY PROVIDED AS THEIR CONTRACT NUMBERS, THEIR OFFICER LETTER LOAD NUMBERS, BUT WE ALSO REQUESTED FROM THEM, YOU KNOW, WHAT'S YOUR ALL IN NUMBER? SO MEANING WHAT WERE THEY LOOKING AT IN THEIR QUEUE BEFORE THEY WORKED THROUGH AND PROVIDED US EITHER AN OFFICER LETTER OR CONTRACT? AND THAT TOTAL, WHAT, WHAT WAS REPORTED TO US IN ALL OF THE TSPS QUEUES RIGHT NOW WOULD BE OVER 310,000 MEGAWATTS.
SO JUST TO KIND OF PUT SOME NUMBERS BEHIND WHAT WAYMAN WAS TALKING ABOUT, COLIN, IT'S ALL YOURS.
GOOD AFTERNOON, COLIN MARTIN WITH ENCORE.
I'M GONNA SPEND A FEW MINUTES TODAY ON A HANDFUL OF KEY ISSUES THAT THE IOU GROUP FELT WOULD BE APPROPRIATE TO HIGHLIGHT FOR YOUR AWARENESS.
AND I'M GONNA REALLY FOCUS ON THE FIRST THREE SLIDES IN THIS SECTION AND THE TIME THAT I'VE GOT GIVEN.
THERE'S BEEN SOME SIGNIFICANT MOVEMENT ON THE LARGE LOAD SIDE.
AND, UH, DAN HAS SOME, SOME CONTENT THAT'LL BE ADDRESSED IN DETAIL.
UH, TOMORROW WHEN THE BOARD MEETING RESUMES, UH, THE, THE FIRST ITEM IS THE REGIONAL TRANSMISSION PLAN USE CASE.
AND, AND THIS KIND OF BUILDS ON SOME OF THE CONTENT THAT, THAT MELISSA, JOHN, RUSS AND, AND WAYMAN TALKED THROUGH AND PROVIDED A GOOD BACKGROUND ON THE FRONT END OF THE PLANNING PROCESSES.
UH, AND WAYMAN ALSO KIND OF WALKED THROUGH THE FLOW FROM A REGIONAL PLANNING GROUP REVIEW PERSPECTIVE.
SO JUST TO REITERATE, THE, THE RTP IS A FORWARD-LOOKING FIVE-YEAR TRANSMISSION PLAN PERFORMED ON AN ANNUAL BASIS THAT PROVIDES A HOLISTIC VIEW OF THE ANTICIPATED TRANSMISSION NEEDS.
WHILE THE RPG REVIEW PROCESS IS REALLY A STRUCTURE FOR ERCOT TO REVIEW AND GET INPUT FROM STAKEHOLDERS AND PERFORM ADDITIONAL STUDIES ON SUBMITTED PROJECTS THAT KIND OF FLOW THROUGH THAT PROCESS.
UH, WITH THE VOLUME OF PROJECTS CURRENTLY IN FRONT OF US, WE'RE FINDING THAT THE RPG REVIEW PROCESS IS SIGNIFICANTLY INCREASING THE TIME ON THE FRONT END OF PROJECTS IN SITUATIONS WHERE AN ROUTT INDEPENDENT REVIEW IS BEING PURSUED.
UH, SO, SO THE RECOMMENDATION ON THIS SLIDE IS THAT WHERE POSSIBLE, UH, A BETTER WAY TO LEVERAGE THE, THE SUBSTANTIAL WORK, KIND OF THE YEAR ROUND WORK THAT GOES ON AND GOES INTO THE RTP FROM THE ERCOT PLANNING TEAM IS TO UTILIZE PROVISIONS THAT ALREADY EXIST IN THE ERCOT PLANNING GUIDE TO ENDORSE RTP PROJECTS WITHOUT LENGTHY UD IN THE RPG PROCESS.
UH, THIS WOULD SIGNIFICANTLY ACCELERATE THE TIMELINE FOR GETTING PROJECTS TO THE EXECUTION STAGE.
IT WOULD ALLOW TSPS TO SERVE CUSTOMERS IN A MORE TIMELY MANNER, AND IT WOULD REDUCE SOME OF THE STUDY AND RESTUDY BURDEN ON THE, ON THE ERCOT STAFF.
UH, DISCUSSIONS AT LAST FRIDAY'S OPEN MEETING ARE A GREAT EXAMPLE OF THIS, THIS CONCEPT IN ACTION FOR THE 7 65 KV PORTION OF THE 2024 RTP, UH, WOODY ADDRESS THIS IN DETAIL AT THE MEETING, AND I WANT TO ATTEMPT TO, TO REHASH THAT, THAT DISCUSSION, GIVEN THE SHORT TIME THAT WE HAVE, BUT IN A NUTSHELL, FOR THE EASTERN 7 65 KV PROJECTS, THIS APPROACH WOULD MOVE THOSE PROJECTS, UH, TO THE EXECUTION PHASE, REALLY EIGHT TO 15 MONTHS QUICKER THAN GOING THROUGH THE FULL ERCOT INDEPENDENT REVIEW PROCESS AND, AND STARTING FROM SCRATCH FOR STUDIES, UH, THESE, THESE MONTHS AND YEARS SAVED IN THE REVIEW PROCESS ARE CRITICAL TO THE TIMELY IMPLEMENTATION OF PROJECTS WITH A KNOWN AND DEMONSTRATED NEED.
AND I WOULD SUGGEST THAT THAT MAKING USE OF THE REGIONAL TRANSMISSION PLAN FOR THIS PURPOSE, UH, COULD POTENTIALLY BE SOMETHING THAT'S MORE OF THE RULE AND NOT THE EXCEPTION.
UH, THE, THE SECOND ITEM TRANSITIONING TO, TO PLANNING A SYSTEM THAT CAN BE EFFECTIVELY OPERATED, THERE'S A, THERE'S A GROWING GAP IN WHAT'S CONSIDERED IN PLANNING ANALYSES AND THE CONDITIONS THAT ARE ACTUALLY EXPERIENCED IN REAL TIME OPERATIONS.
AND I'M, I'M OVERSIMPLIFYING A BIT, BUT IN BROAD STROKES, THE SYSTEM IS PLANNED ON AN N MINUS ONE BASIS USING LIMITED SCENARIOS, KIND OF LOOKING AT SEASONAL ON PEAK AND OFF
[01:55:01]
PEAK CONDITIONS, AND THEN A SEPARATE CASE THAT LOOKS AT HIGH RENEWABLE AND MINIMUM LOAD CONDITIONS.SO THAT'S FROM A PLANNING STANDPOINT, FROM AN OPERATIONS PERSPECTIVE, THE SYSTEM IS OPERATED TO N MINUS X CONDITION.
YOU KNOW, WHAT, BEYOND THE N MINUS ONE AND GENERATION RESOURCE CONDITIONS ARE, ARE HIGHLY DYNAMIC.
UH, ONE OF THE MOST DYNAMIC AND, AND SIGNIFICANT GROWING VARIABLES THAT REQUIRES ADDITIONAL ATTENTION IN THE PLANNING HORIZON IS THE FACT THAT THE SUN GOES DOWN EVERY NIGHT.
AND AT THIS TIME THERE, THERE'S NOT A, A NON-SOLAR CASE THAT IS ROUTINELY USED IN THE PLANNING HORIZON.
UH, WE'RE SEEING MULTIPLE, UH, SYMPTOMS THAT SHOW THAT THE OPERATIONAL MARGIN IN THE TRANSMISSION SYSTEM IS STRUGGLING TO KEEP UP WITH THIS GROWING VARIABLE.
A SIGNIFICANT GROWTH IN, IN CONSTRAINT MANAGEMENT PLANS, SPECIFICALLY FOR OVERNIGHT CONDITIONS, SIGNIFICANT GROWTH, UH, IN, IN CONGESTION, AGAIN, PRIMARILY IN THE OVERNIGHT TIMEFRAME.
AND THEN THE, THE INABILITY TO GET PLANNED OUTAGES FOR BOTH, BOTH TRANSMISSION FACILITIES AND FOR GENERATIONAL RESOURCES.
AND FOR, YOU KNOW, FROM A TRANSMISSION STANDPOINT, WE ARE, WE SEE THAT, YOU KNOW, PRETTY BROADLY THAT WE'RE ABLE TO GET, UH, MANY DIFFERENT OUTAGES DURING THE DAY.
BUT IF YOU LOOK TO TAKE THOSE OUT AND CONTINUE THEM OVERNIGHT, THAT'S WHERE THE, THE CONSTRAINT REALLY POPS UP.
AND IN THE WEST TEXAS AREA, SEEING, UH, SIGNIFICANT ISSUES WITH, WITH NON-SOLAR CONDITIONS, WHEN WIND CONTRIBUTIONS ARE LOW, UH, PROJECTS ARE COMING TO ADDRESS THIS AS PART OF THE PERMIAN BASIN PLAN, BUT THERE ARE RISKS IN THE INTERIM.
SO, SO THE RECOMMENDATION HERE IS TO BEGIN INCLUDING ADDITIONAL PLANNING SCENARIOS THAT SPECIFICALLY ACCOUNT FOR NON-SOLAR AND POTENTIAL LOW WIND CONDITIONS TO ENSURE THAT THE SYSTEM IS PLANNED TO SUPPORT A WIDER RANGE OF KNOWN REAL-TIME CONDITIONS.
UH, SOLAR CAPACITY HAS GROWN SUBSTANTIALLY OVER THE LAST FEW YEARS, AND IT'LL CONTINUE TO GROW AND BE AN IMPORTANT PART OF THE, OF THE RESOURCE SUPPLY ON THE ERCOT GRID.
UH, BUT THE COMBINATION OF THAT, ALONG WITH THE LOAD GROWTH WE'VE SEEN OVER THE SAME TIMEFRAME, THE THING THAT'S FORECASTED, UH, THAT WE JUST TALKED ABOUT A MINUTE AGO REQUIRES A BIT OF A SUPPLEMENTAL APPROACH TO THE, TO THE PLANNING ANALYSIS.
UH, THE GOOD NEWS IS THAT THIS HAS BEEN RECOGNIZED BY THE ERCOT STEADY STATE WORKING GROUP, AND THEY ARE ACTIVELY WORKING TO MODIFY THE PROCEDURE MANUAL TO ACCOUNT FOR THIS NEED AND START DEVELOPING NON-SOLAR CASES, UH, FOR THE UPCOMING PLANNING CYCLES.
AND THOSE CYCLES, UH, NEED THOSE CHANGES NEED TO CONTINUE TO MOVE FORWARD AND BE INTEGRATED AS PART OF THE NORMAL PLANNING PROCESS.
AND IT'S POSSIBLE THAT IN THE FUTURE, A REVISION REQUEST MIGHT BE NEEDED TO EXPLICITLY REQUIRE THIS FOR CERTAIN STUDIES AND ACTIVITIES, UH, STICKING WITHIN THE PLANNING A SYSTEM THAT CAN BE EFFECTIVELY OPERATED IS ANOTHER TOPIC IN THIS AREA IS TIED TO INDUSTRY STORAGE RESOURCES.
SO ESRS ARE A, A GROWING AND VALUABLE RESOURCE ON THE GRID, AND THEY'RE INCREASINGLY CRITICAL IN BRIDGING GAPS IN CAPACITY AND PROVIDING ANCILLARY SERVICES.
THE, THE, THE CONCERN HERE IS THAT, THAT CURRENTLY ESR PARTICIPATION IS PURELY MARKET BASED, YOU KNOW, OFFERS THE CHARGE OFFERS TO SELL, BUT WITH THE ADDED COMPLEXITY OF A, OF A, OF A TIME DURATION, AT TIMES THOSE MARKET SIGNALS MAY NOT BE CLEAR OR MAY NOT APPEAR TO BE ALIGNED WITH THE RELIABILITY NEED.
AND ERCOT DOES NOT CURRENTLY HAVE THE CAPABILITY TO CONTROL AN E ESR STATE OF CHARGE OR ISSUE A DISPATCH INSTRUCTION TO AN ESR.
SO IF YOU THINK ABOUT THIS IN TERMS OF A, OF A THERMAL DISPATCHABLE RESOURCE, THERE'S NO CONCEPT OF OF RUCKING AN ESR.
SO THERE'S NO, NO ABILITY TO HOLD CAPACITY FOR A TIME WHEN IT'S REALLY NEEDED TO MITIGATE A RELIABILITY RISK OR TO REQUIRE CHARGING IN ANTICIPATION OF A KNOWN OR EXPECTED RELIABILITY RISK.
SO THE RECOMMENDATION HERE, AND THEN, YOU KNOW, WHY IS THE TRANSMISSION GUY TALKING ABOUT, ABOUT BATTERIES? TYING THIS BACK TO THE, TO THE PLANNING TOPIC, PLANNING STUDIES, OPERATIONAL STUDIES AND RESOURCE ADEQUACY STUDIES ARE ALL BASED ON ASSUMPTIONS OF RESOURCE BEHAVIORS AND AVAILABILITY.
SO FROM A FOUNDATIONAL PERSPECTIVE, IT'S CRITICAL TO HAVE ALIGNMENT OF ASSUMPTIONS ON HOW RESOURCES WILL BEHAVE AND THE TOOLS THAT ERCOT HAS TO BE ABLE TO ENSURE THOSE OUTCOMES AND PROPERLY MITIGATE RISKS.
SO THE QUESTION OF HOW AND IF IT IS APPROPRIATE TO EXPAND OR EXPAND ERCOT CONTROL AND USE OF ESRS, UH, TO PROVIDE CERTAINTY AROUND THE AVAILABILITY OF THESE RESOURCES TO ADDRESS RELIABILITY NEEDS AND NOT JUST DEPEND ON OFFERS, IT IS A TIMELY ITEM AND, AND MERITS SOME DEEPER DISCUSSION.
I WON'T GO INTO THE MECHANISM OR MARK CONSTRUCTS OF HOW TO DO THIS 'CAUSE IT CAN GET PRETTY COMPLEX PRETTY QUICK.
UH, BUT JUST WANTED TO HIGHLIGHT THIS AS A, AS A NEED AND A, AND A POTENTIAL GAP IN ASSUMPTIONS BETWEEN PLANNING AND REAL TIME CONDITIONS.
AND THESE LAST TWO ITEMS, I, I MENTIONED THAT, THAT DAN'S TOUCHING ON, ON LARGE LOAD COORDINATION, UH, TOMORROW, UH, THIS FIRST ONE HERE IS REALLY MORE ON THE, ON THE STUDIES SIDE OF THINGS, UH, NEIGHBORING TSPS.
YOU KNOW, WHEN YOU, IF YOU'VE GOT A LARGE LOAD AND, AND YOU'VE GOT SOMEWHAT OF A PATCHWORK OF, OF TSPS ON THE, ON THE SYSTEM AND, AND YOU DROP THAT LARGE LOAD IN THE MIDDLE THERE, UH, YOU'RE IMPACTING MULTIPLE TSPS.
SO THERE'S A, A BROADER NEED TO TAKE A LOOK AT WHAT, WHAT ARE THE COORDINATION, HOW DOES, HOW DOES THAT LOOK LIKE FROM A, FROM A GEOGRAPHIC AND A SYSTEM STANDPOINT WITH THE NUMBER OF LOADS
[02:00:01]
THAT ARE POPPING UP ACROSS THE SYSTEM, GIVEN THAT THE SYSTEM'S, UH, VERY INTERCONNECTED IN NATURE AND THAT WE'RE SEEING KIND OF THE, THE LESSENING OF THE MARGIN IN THE SYSTEM.YOU CAN'T STUDY THESE IN A, IN A VACUUM.
SO I CAN'T STUDY INTERCONNECTION, UH, IN A VACUUM AND NOT INTERFACE WITH WAYMAN IF WE'VE GOT INTERFACING FACILITIES THERE.
BUT THE IMPACTS ARE, ARE REGIONAL AND THEY IMPACT MULTIPLE TSPS.
AND REALLY THE MOST ORGANIZED WAY TO STUDY THIS IS IN THE CONSTRUCT OF THE REGIONAL TRANSMISSION PLAN.
UM, BUT THAT CAN BE SOMEWHAT, SOMEWHAT SLOW IN LAGGING, PARTICULARLY IF THE RESULTS, UH, ARE NOT ACTIONABLE.
SO THE RECOMMENDATION HERE, AND WE'RE, WE'RE IN FAVOR OF THIS, IS TO IMPLEMENT A MORE, MORE FREQUENT AND ADAPTIVE PROCESS TO STUDY LARGE LOADS AND, AND CLUSTERS AND DEVELOP CLEAR PATHS TO INTERCONNECTION.
AND THIS, THIS LAST ONE HERE, LARGE LOAD OPERATIONAL IMPACTS.
I'M GONNA JUST HOLD THIS FOR, FOR DAN TO ADDRESS TOMORROW.
WE'RE HAPPY TO TAKE ANY QUESTIONS.
ANY QUESTIONS FOR COLLIN OR FOR WAYMAN? ANY DISCUSSION? COURTNEY, DO YOU HAVE A QUESTION? NO.
ALRIGHT, WELL THANK YOU GENTLEMEN.
WE APPRECIATE YOUR, OH, YOU, NO, OKAY.
WE APPRECIATE YOUR, UH, INPUT AND WE LOOK FORWARD TO CONTINUING WITH DISCUSSIONS.
OUR THIRD PRESENTERS ARE CHASE SMITH AND JOSHUA HALE, BOTH OF SOUTHERN POWER COMPANY FOR THE INDEPENDENT GENERATOR SEGMENT.
I'M JOSH HILL FROM SOUTHERN POWER AND I'M JOINED BY CHASE SMITH.
UM, SO WE'RE, UH, VERY THANKFUL TO HAVE THE OPPORTUNITY TO DISCUSS THIS TOPIC OF TRANSMISSION PLANNING FROM THE INDEPENDENT GENERATOR PERSPECTIVE PERSPECTIVE TODAY.
APPRECIATE THE OPPORTUNITY TO BE HERE.
UM, SO CHASE AND I'LL DO OUR BEST TO REPRESENT THE SEGMENT AND NOT NECESSARILY SOUTHERN POWER VIEW OR A SUB SUBSET OF THE SEGMENT.
SO WE'LL COVER JUST AT A HIGH LEVEL OUR SEGMENT'S PERSPECTIVE OF THE TRANSMISSION PLANNING PROCESS.
WE'LL DISCUSS THE BUSINESS IMPLICATIONS, UM, FOR INDEPENDENT GENERATORS, BOTH FROM A NEW INVESTMENT DECISION AS WELL AS FROM A EXISTING OPERATING ASSET.
AND THEN WE'LL DISCUSS HOW WE ENGAGE TYPICALLY WHERE AND HOW WE ENGAGE IN TRANSMISSION POLICY.
AND THEN WE'LL CONCLUDE WITH THE SORT OF CURRENT AND FUTURE CHALLENGES FACING AIRCO FROM A TRANSMISSION PLANNING PERSPECTIVE.
AND SO WE AT SOUTHERN COMPANY TYPICALLY VIEW THE ELECTRIC VALUE CHAIN ACROSS THESE THREE BIG CATEGORIES OF MAKE, MOVE, AND SELL, UH, ELECTRICITY.
OBVIOUSLY TRANSMISSION IS SQUARELY IN THE MIDDLE AS THE BACKBONE OF MOVING ELECTRICITY FROM THE GENERATOR TO THE CONSUMER.
UM, YOU KNOW, KEY INSIGHTS FROM, FROM OUR PERSPECTIVE AS GENERATORS, UM, YOU KNOW, THE LONGER TERM THAT PROACTIVE TRANSMISSION PLANNING IS CRITICAL TO, TO BUILDING OUT A SYSTEM AND BALANCING THE NEEDS OF THE DUAL AND SOMETIMES COMPETING NEEDS OF RELIABILITY AND ECONOMICS.
UM, SO IF YOU THINK ABOUT A SYSTEM THAT'S WELL, WELL-PLANNED, DESIGNED, CONSTRUCTED, OPERATED AND MAINTAINED, UM, THAT SYSTEM CAN PROVIDE RELIABLE AND COST EFFECTIVE SERVICE TO THE EXISTING CUSTOMERS AND SEND THE RIGHT SIGNAL TO NEW LOADS AND NEW GENERATORS TO, TO HAVE THE CONFIDENCE THAT THE SYSTEM CAN SERVE THEIR NEEDS IN THE FUTURE.
UM, THINKING ABOUT TRANSMISSION INVESTMENT, IT'S, UM, IT'S CLEARLY CAN BE VERY LUMPY AT TIMES.
SO I THINK YOU'LL PROBABLY HEAR SOME OF WHAT WE TALK ABOUT FROM THE GENERATOR SEGMENT PROBABLY HAS QUITE A BIT OF OVERLAP WITH WHAT YOU HEARD FROM THE CUSTOMER SEGMENT, CONSUMER SEGMENT, AND THE IOU SEGMENT IN THE SENSE THAT YOU'RE NEVER GONNA HAVE PERFECT BALANCE.
YOU'RE EITHER GONNA CONSTANTLY BE, YOU KNOW, LONG OR SHORT TRANSMISSION JUST DUE TO THE LUMPY AND LONG-TERM NATURE OF THAT INVESTMENT DECISION.
BUT WE THINK IF YOU'RE PROACTIVE IN YOUR PLANNING APPROACHES, YOU CAN, YOU CAN STRIKE AS AS GOOD OF A BALANCE AS YOU CAN IN THE CURRENT ENVIRONMENT OF RAPID LOAD GROWTH LIKE WE HAVE.
IT'S MU MUCH MORE IMPORTANT TO BE FORWARD THINKING.
UM, THINKING ABOUT, UM, AS A GENERATOR WHERE WE LOOK TO PLACE OUR GENERATION, UH, WE'LL GET INTO THIS PLACE.
OUR RESOURCES, WE'LL GET INTO THIS A LITTLE BIT MORE DETAIL IN THE NEXT COUPLE OF SLIDES, BUT LOOKING AT THAT AVAILABLE TRANSFER CAPABILITY ON THE SYSTEM IS A KEY FACTOR IN WHERE WE LOOK TO, TO LOCATE, UM, FOR OPERATING AND FOR, UH, COMMERCIAL REASONS.
AND THEN THOSE TRANSMISSION CONSTRAINTS THAT SHOW UP IN THE FORM OF CONGESTION AND CURTAILMENT CAN HAVE A SIGNIFICANT IMPACT AND DISRUPT THE ECONOMIC PICTURE, UM, FOR OUR INVESTMENTS.
SO I'M GONNA NOW HAND IT OVER TO CHASE AND HE'LL START
[02:05:01]
INTRODUCING THE TRANSMISSION PLANNING, UH, BUSINESS IMPLICATIONS FOR US.UM, THANK YOU FOR THE OPPORTUNITY, UH, TO BE HERE TODAY TO SPEAK TO THE, TO THE BOARD.
UM, TRANSMISSION PLANNING CAN IMPACT THE BUSINESS OPERATIONS OF GENERATION RESOURCES IN TWO KEY WAYS, UM, BY IMPACTING THE OVERALL TRANSMISSION TRANSFER CAPABILITY OF THE SYSTEM.
UH, FIRST TRANSMISSION CONGESTION OCCURS WHEN TRANSMISSION CONSTRAINTS PREVENT THE MOST EFFICIENT, UH, DISPATCH OF RESOURCES ON THE SYSTEM TO SERVE CUSTOMER LOAD.
AND THIS LEADS TO, UH, DIFFERENCES IN ELECTRICITY, ELECTRICITY PRICE POINTS ON THE SYSTEM.
AND SECOND, ERCOT MAY CURTAIL THE ENERGY PRODUCTION OF CERTAIN RESOURCES, UH, TO RELIEVE TRANSMISSION CONSTRAINTS AND MAINTAIN TRANSMISSION ELEMENTS WITHIN, UH, RATED OPERATING LIMITS.
UH, THE OVERALL CONGESTION AND CURTAILMENT THAT A RESOURCE EXPERIENCE, UM, VARIES BASED ON MULTIPLE FACTORS INCLUDING, UH, RESOURCE TECHNOLOGY TYPE, UH, COMMERCIAL OPERATIONS STRATEGIES AND LOCATION, UM, ON THE GRID.
UM, GENERALLY CONGESTION COSTS AND CURTAILMENT, UH, HARM THE FINANCIAL PERFORMANCE OF A RESOURCE AND DRIVE IMPORTANT DECISIONS IN BOTH THE RESOURCE DEVELOPMENT AND COMMERCIAL OPERATIONS TIME HORIZONS FROM A ASSIGNING PERSPECTIVE, UM, JOSH ALLUDED TO THIS, BUT, UM, EXPECTED CONGESTION THAT A RESOURCE WILL EXPERIENCE OVER A LONG-TERM HORIZON HAS A SIGNIFICANT IMPACT ON, UM, CITING LOCATION DECISIONS WHEN A, UH, WHEN A RESOURCE PROJECT IS GOING THROUGH DEVELOPMENT, UH, GENERALLY YOU KNOW, ELECTRICITY, PRICE, NODES PRICE HIGHER, WHERE GENERATION SUPPLY IS VALUED MORE.
UM, AND THIS IS A LARGE INCENTIVE FOR BOTH RESOURCE RETENTION AND DEVELOPMENT.
AND THEN THE COMMERCIAL OPERATIONS, UM, PERSPECTIVE, UM, WHOLESALE GENERATORS SELL WHOLESALE ELECTRICITY AND OR ANCILLARY SERVICES.
AND, UH, MARKET PARTICIPANTS HEDGE CONGESTION AND CURTAILMENT RISKS, UH, VIA BILATERAL CONTRACTS, UH, CO-LOCATION WITH LOADS AND OR USE OF, UM, ERCOT MARKET PRODUCTS SUCH AS CONGESTION, REVENUE RIGHTS, AND DAY AHEAD VERSUS REAL-TIME OPTIMIZATION STRATEGIES.
UH, THERE ARE THREE KIND OF PRIMARY OPTIONS TO MANAGE CONGESTION ON THE TRANSMISSION SYSTEM.
UH, FIRST NEW GENERATION CAPACITY CAN BE ADDED TO THE HIGH SIDE OF A CONSTRAINT, UH, TO SERVE CUSTOMER LOAD.
SECOND, NEW LOAD CAPACITY CAN BE ADDED TO THE LOW SIDE OF A TRANSMISSION CONSTRAINT TO CONSUME GENERATION SUPPLY.
AND THIRD, ERCOT CAN MANAGE TRANSMISSION CONGESTION AND DAY-TO-DAY OPERATIONS, OR A NEW TRANSMISSION PROJECT CAN BE, UH, REVIEWED AND APPROVED TO IN INCREASE THE TRANSMISSION, UM, SYSTEMS TRANSFER CAPABILITY, UH, AND KIND OF RAISE, RAISE, UM, KIND OF OPERATING LIMITS AND REDUCE CONGESTION.
UM, A A POINT I WANNA MAKE IS THAT CONGESTION IS NOT INHERENTLY GOOD OR BAD.
UM, IT PROVIDES AN ECONOMIC SIGNAL, UH, TO RESOURCES FOR BOTH THE SIDING AND COMMERCIAL OPERATIONS, UM, ISSUES THAT WE'VE ALREADY TOUCHED ON.
UM, BUT, UM, THE CONGESTION DOES REFLECT THIS IMPORTANT ECONOMIC SIGNAL AND THE FACT THAT THERE IS LIMITED TRANSFER CAPABILITY IN A CERTAIN PART OF THE GRID.
UM, A BALANCE MUST BE ACHIEVED BETWEEN, UM, THE CONGESTION RENTS THAT ARE EXPERIENCED ON THE SYSTEM THAT ULTIMATELY FLOW TO CONSUMERS THAT CAN ALSO NEGATIVELY IMPACT, UM, THE OPERATIONS OF GENERATION RESOURCES AND ALSO THE EXPECTED COST OF A TRANSMISSION PROJECT THAT WOULD BE NEEDED TO ALLEVIATE, UM, THAT CONGESTION.
UM, AND ERCOT USES, UM, ROBUST ECONOMIC PLANNING CRITERIA TO EVALUATE IF A PROPOSED TRANSMISSION PROJECT, UM, DOES OR DOES NOT MEET, UM, BENEFIT TO COST RATIO THRESHOLDS AND THAT THAT JUSTIFY WHETHER IT SHOULD OR SHOULD NOT MOVE FORWARD.
UM, I'M GONNA HAND IT BACK TO JOSH TO TALK ABOUT TRANSMISSION RISKS, UM, IN BOTH THE RESOURCE DEVELOPMENT INCITING AND COMMERCIAL OPERATIONS PERSPECTIVES.
ALL RIGHT, SO AS CHASE MENTIONED, WE'LL TALK ABOUT TRANSMISSION RISKS SORT OF IN TWO, UM, TIME HORIZONS, IF YOU WILL.
SO THE FIRST IS, AS A GENERATOR, IF WE'RE LOOKING TO MAKE A, AN INVESTMENT DECISION, WHETHER IT'S TO BUILD, BUY, OR EXPAND AN EXISTING RESOURCE, UM, THOSE TWO BIG RISKS OF CONGESTION AND CURTAILMENT ARE, ARE TOP OF MIND.
UM, SO A CONGESTION RISK CAN AFFECT THE SETTLEMENT OF A, A HEDGE OR A PPA THAT WE HAVE ON THE RESOURCE.
AND THEN OBVIOUSLY, CURTAILMENT RISK CAN JUST KIND OF LOWER THE, LOWER
[02:10:01]
THE CEILING OF OPPORTUNITY FOR, FOR, UH, GENERATION FROM THE UNIT.SO, UM, WE'LL TYPICALLY DO ANALYSIS INTERNALLY AND OFTEN WORK WITH CONSULTANTS TO TRY TO FORECAST 10, 15, 20 YEARS INTO THE FUTURE.
WHAT DO THOSE, WHAT DO THOSE RISKS LOOK LIKE TO A, TO A NEW INVESTMENT? UM, AND SO IF WE CAN SORT OF WALK DOWN THE LIST ON THE RIGHT HAND SIDE AND HAVE A HIGH DEGREE OF CONFIDENCE THAT APPROVED TRANSMISSION INVESTMENT IS GOING TO COME ONTO THE SYSTEM AT THE TIME IT'S SUPPOSED TO ACCORDING TO PLAN, UM, THAT WILL HAVE, THAT WILL GIVE US CONFIDENCE THAT IT'S GONNA LOWER THE CURTAILMENT RISK, LOWER THE BASIS RISK, AND REALLY ALLOW US TO NEGOTIATE A COMMERCIAL CONTRACT THAT REFLECTS THOSE RISKS APPROPRIATELY.
AND SO, UM, AGAIN, THAT TRANSMISSION PLANNING PROCESS THAT'S, UM, STABLE, I THINK YOU HEARD EARLIER, SORT OF THAT REGULATORY CERTAINTY AROUND THAT, UM, IS SOMETHING THAT WE LOOK FOR AS THE INDEPENDENT GENERATOR TO MAKE THOSE LONG-TERM HIGH CAPITAL INVESTMENT DECISIONS.
AND THEN NEXT, AT A DIFFERENT POINT IN TIME WHEN WE'VE MADE THE DECISION AND WE HAVE AN OPERATING ASSET, UM, THE, THE RISKS ARE STILL THERE.
IT JUST KIND OF ZOOMS INTO A, UM, TIGHTER TIME WINDOW.
USUALLY WE'RE TRYING TO MANAGE TO AN ANNUAL FINANCIAL PLAN, AND THAT EVEN DROPS FURTHER DOWN INTO INTRADAY DECISIONS THAT WE'RE MAKING IN THE MARKETS AND, AND OPERATIONALLY.
AND SO, UM, IF YOU THINK ABOUT THOSE FACTORS OF RISK THAT BECOME MORE ACUTE AS WE'RE OPERATING AN ASSET ON THE LEFT HAND SIDE, SOME OF THOSE ARE MACRO LEVEL THINGS THAT ERCOT HAS NOTHING TO DO WITH.
UM, BUT AGAIN, THAT, THAT THEME OF, UM, YOU KNOW, POLICY CHANGES BEING SORT OF KNOWN AND PREDICTABLE IS STILL THERE.
UM, THE, THE TIMING OF, UM, TRANSMISSION GENERATOR, OUTAGE GENERATION OUTAGES, AND THE MAGNITUDE OF THOSE CAN AFFECT US IN THE INTRADAY AND, AND, AND IN A YEAR.
UM, UH, GENERIC TRANSMISSION CONSTRAINTS.
CHASE IS GONNA COVER THAT IN A LITTLE BIT MORE DETAIL, BUT SORT OF THE, THE BINDING OF THOSE OR THE EMERGENCE OF NEW GTCS CAN OBVIOUSLY HAVE AN IMPACT.
AND THEN IF YOU THINK ABOUT HOW WE MANAGE THESE, UM, RISKS ON A MORE DAY-TO-DAY BASIS, WE DO HAVE, UM, MODELS THAT WE RUN EVERY DAY TO TRY TO SIMULATE THESE, UM, SIMULATE THESE CONDITIONS AND SIMULATE THEIR RISK EVERY DAY AND TRY TO MAKE DECISIONS FROM A, FROM A COMMERCIAL PERSPECTIVE AS HOW WE OPTIMIZE, MANAGE THOSE RISK AND OPTIMIZE THE VALUE OF OUR ASSETS.
SO I'M GONNA TURN IT BACK OVER TO CHASE, WHO'S GONNA CLOSE US OUT AND, UH, TALK THROUGH GTCS.
AND THEN THE CHALLENGES FACING US ON THE HORIZON.
GENERIC TRANSMISSION CONSTRAINTS, UM, WE'VE REFERENCED THEM A FEW TIMES ALREADY TODAY.
UM, THEY'RE OPERATING LIMITS, UM, THAT CONSTRAIN POWER FLOW BETWEEN REGIONS, UH, THAT ERCOT USES TO MANAGE STABILITY AND NON-THERMAL RELIABILITY LIMITS.
UM, THERE ARE NECESSARY TOOL THAT ERCOT NEEDS TO RELIABLY MANAGE THE SYSTEM.
AT THE SAME TIME, THEY ALSO CAN HAVE SIGNIFICANT IMPACT ON CONGESTION AND CURTAILMENT FOR CERTAIN RESOURCES.
UM, THE, UH, YOU CAN SEE ON THE LEFT HAND SIDE OF THE SCREEN HERE, UM, THAT ERCOT IS FORECASTING, UH, THROUGH KIND OF THE END OF THE DECADE THAT THE WEST TEXAS AND PANHANDLE GTCS, UM, ARE FORECAST TO BE TWO OF THE MOST IMPACTFUL TRANSMISSION CONSTRAINTS FROM A CONGESTION RENT PERSPECTIVE, UH, THROUGH 2029.
AND SO, YOU KNOW, THEY'RE, THEY'RE EXPECTED TO CONTINUE TO, UM, HAVE AN IMPACT.
UM, I THINK THAT GIVEN THE, THE TRENDS OF THE, OF MOVING TOWARDS HIGHER INVERTER BASED RESOURCE PENETRATION, AND, AND NOW WITH MORE LARGE ELECTRONIC LOADS, THIS HAS CONTINUED TO BE A LARGE FOCAL POINT FOR ERCOT, AND I THINK FOR, FOR GOOD REASON TO, UM, TO MANAGE THE STABILITY RISK.
UM, CURRENTLY, ERCOT DOES PUBLISH GENERIC TRANSMISSION CONSTRAINT EXIT STRATEGIES.
UM, THESE TYPICALLY DO REQUIRE SIGNIFICANT, UH, TRANSMITTED UPGRADES TO EXIT, UM, TO EXIT THOSE GTCS AND ERCOT USES ECONOMIC AND RELIABILITY PLANNING CRITERIA TO EVALUATE IF A PROPOSED TRANSMISSION PROJECT, UH, TO EXIT A GTC IS WARRANTED.
UM, I WILL SAY THAT I THINK, UM, THE IN INDEPENDENT GENERATOR SEGMENT'S PERSPECTIVE, UM, VIEWS THE, THE FORWARD LOOKING 7 65, UM, PLAN AS, UM, JUST A, A REALLY GOOD STRATEGIC OPTION FOR TEXAS, AND IT PROVIDES A LOT OF BENEFITS, BUT ONE OF THEM IS TO HELP EXIT GTCS AND MITIGATE, UM, SOME OF THESE CONGESTION AND CURTAILMENT, UM, RISKS THAT, THAT WE'RE TALKING ABOUT IN, IN ADDITION TO ALL OF THE VARIOUS OTHER RELIABILITY AND RESILIENCE, RESILIENCE
[02:15:01]
BENEFITS, AND, UM, JUST, UM, FORECASTING THIS, THIS HUGE, HUGE, UM, KIND OF LOAD, UM, INTEREST IN, IN THE STATE OF TEXAS THAT'S GOING ON RIGHT NOW FROM A TRANSMISSION POLICY PERSPECTIVE.UM, INDEPENDENT GENERATORS SEGMENT ENGAGES IN ERCOT TRANSMISSION POLICY ISSUES IN TWO MAIN ARENAS.
UH, THE REGIONAL PLANNING GROUP, UM, GENERATORS MONITOR AND PROVIDE FEEDBACK ON ERCOT PLANNING ACTIVITIES, AND ALSO REVIEW AND ASSESS THE POTENTIAL IMPACT OF, UH, NEW PROPOSED TRANSMISSION PROJECTS.
AND AT THE, UM, RELIABILITY AND OPERATIONS SUBCOMMITTEE AND PLANNING WORKING GROUP INDEPENDENT GENERATORS ENGAGE ON TRANSMISSION POLICY ISSUES AND EVALUATE AND PROVIDE FEEDBACK ON BOTH INTERCONNECTION AND TRANS TRANSMISSION PLANNING, UM, POLICIES.
UM, AND, UM, IT SUMMARIZES THE INDEPENDENT JUNIOR SEGMENT'S PERSPECTIVE ON CURRENT AND FUTURE TRANSMISSION PLANNING CHALLENGES FACING ERCOT.
UM, FIRST, UM, I THINK, I THINK FUTURE GRID'S BEEN MENTIONED PROBABLY A FEW TIMES, UM, ALREADY TODAY, AND WE THINK THAT'S A KIND OF A, A CORE, UM, GOOD WAY TO SUMMARIZE THE, THE CHALLENGE ON ERCOT HANDS TO, TO PLAN FOR THE FUTURE SYSTEM NEEDS, UM, INCLUDING RELIABILITY, ECONOMIC AND RESILIENCY NEEDS, AND ALSO FACILITATING ECONOMIC DEVELOPMENT OPPORTUNITIES FOR TEXAS.
UM, SECOND, WE THINK THAT, UM, ERCOT MUST MAN CONTINUE TO MANAGE PRUDENTLY CONGESTION AND CURTAILMENT, UM, COSTS AND RISKS, UM, ASSOCIATED WITH TRANSMISSION CONSTRAINTS AND IN PARTICULAR, GENERIC TRANSMISSION CONSTRAINTS GIVEN THEIR, UH, CURRENT AND FUTURE EXPECTED LARGE IMPACT.
AND FINALLY, ERCOT MUST CONTINUE TO ASSESS THE ACCURACY OF ITS LOAD FORECAST AND EVALUATE WHETHER, UM, YOU KNOW, POTENTIAL ADJUSTMENTS MAY BE NEEDED AT TIMES TO PRODUCE MEANINGFUL RESULTS.
UM, UM, SIMILAR TO WHAT'S BEEN, WHAT'S BEEN APPROVED IN THE PLAN AND FOR THE 2025 RTP, UM, WE THINK THERE'S, YOU KNOW, VARIOUS DYNAMIC OR INDUSTRY DYNAMICS AT, AT PLAY HERE, BUT IN PARTICULAR, THE, JUST THE STRONG INTEREST IN LARGE LOAD DEVELOPMENT IN THE STATE.
AND, UM, THE USE OF TSB OFFICER, UH, LETTERS, WHICH IS A, WHICH IS A, A NEW ADDITION, A NEW CHANGE TO THE PROCESS THAT I THINK, UM, BOTH TSPS AND
AND THE PLANNING, UM, DIFFERENT PLANNING ACTIVITIES.
UM, THAT CONCLUDES OUR PRESENTATION.
UH, ONCE AGAIN, WE APPRECIATE THIS OPPORTUNITY AND HAPPY TO ANSWER ANY QUESTIONS IF THERE ARE ANY.
JOSHUA, ANY, UH, QUESTIONS, ANY FURTHER DISCUSSION? WELL, AGAIN, WE APPRECIATE YOUR INPUT INTO THIS ISSUE.
I'M SURE WE'LL HAVE MORE DISCUSSIONS LIKE THIS AS WE, UH, UH, LOOK AT THE, UH, DEMANDS ON THE ERCOT SYSTEM OF OVER FUTURE DECADES.
SO THANK YOU, UH, WITH THAT, WE WILL NOW TAKE A, UH, FIVE MINUTE BREAK BEFORE WE GET INTO OUR COMMITTEE BRIEFS.
UH, CHAIR GLEASON, THIS MEETING AND THE PUBLIC UTILITY COMMISSION WILL STAND IN RECESS.
WE WILL, UH, RECONVENE AT, UH, LET'S SEE, HOPEFULLY NO LATER THAN 1550.
LET, LET'S GO AHEAD AND GET STARTED.
UM, SO THE MEETING IS, UH, UH, RECONVENE AND CALL BACK TO ORDER.
I'M GONNA ASK CHAIR GLEASON, UH, TO, UH, RECONVENE THE, UH, PUC MEETING.
THIS MEETING, THE PUBLIC UTILITY COMMISSION WILL RECONVENE AT 3:53 PM UH, THANK YOU, CHAIR GLEASON.
[6.1 Independent Market Monitor (IMM) 2024 State of the Market Report]
NEXT ITEM IS AGENDA ITEM SIX, COMMERCIAL MARKETS, WHICH INCLUDES A FEW SUB ITEMS. THE FIRST SUB ITEM IS AGENDA ITEM 6.1, THE INDEPENDENT MARKET MONITOR IMM 2024, STATE OF THE MARKET REPORT.IMM DIRECTOR JEFF MCDONALD IS PRESENTING.
YOU CAN PROCEED WHEN YOU'RE READY.
THANK YOU FOR TAKING THE TIME.
UM, I'LL GIVE YOU A LITTLE BIT OF PREAMBLE FOR, UH, THE SLIDES THAT I PUT TOGETHER TODAY.
SO THE STATE OF THE MARKET REPORT IS GENERALLY, UH, LONG AND HAS AN AWFUL LOT OF CONTENT IN IT, AND I'VE BEEN GIVING STATE OF THE MARKET REPORTS FOR ABOUT TWO DECADES, AND
[02:20:01]
LAST SEVERAL YEARS, I'VE DECIDED THAT IT'S PROBABLY MORE INTERESTING FOR PEOPLE IF I PICK THE ITEMS OUT OF THE REPORT THAT ARE INTERESTING RATHER THAN GO THROUGH THE ENTIRETY OF IT.SO, SO, UH, YOU KNOW, I'VE PICKED WHAT I THINK ARE SOME OF THE, THE HIGHLIGHTS OF THE REPORT.
IF THERE ARE OTHER ASPECTS OF THE REPORT THAT YOU'D LIKE TO DISCUSS, YOU KNOW, PLEASE FEEL FREE TO BRING IT UP.
SO I ALWAYS START WITH THE ALL IN COSTS.
SO WE DID SEE THAT THE ALL IN COSTS FOR 2023, UH, DECLINED SIGNIFICANTLY, UH, A LITTLE OVER 50%, UH, WHICH IS, UH, AN ENORMOUS, UH, DECLINE YEAR OVER YEAR.
THERE WERE, UH, YOU KNOW, TWO PRIMARY REASONS FOR THAT.
I THINK ONE, ONE WAS, UH, THE WEATHER THAT WE EXPERIENCED IN 2024 WAS MUCH MORE MILD.
UH, AND SO WE DIDN'T HAVE AS MANY TIGHT SUPPLY CONDITIONS IN 2024 AS WE DID IN 2023.
UM, A LOT OF TIMES WHEN I, WHEN I TALK ABOUT AN ALL IN COST DECREASING, OR I TALK ABOUT, UH, ENERGY COSTS DECREASING, I NOTE THAT THE, UM, NATURAL GAS PRICE DECREASED SIGNIFICANTLY.
THAT ACTUALLY WASN'T THE CASE, UH, IN THE DIFFERENCE BETWEEN 2023 AND 2024.
IT WAS PRIMARILY SYSTEM CONDITIONS, IT WAS WEATHER AND SYSTEM CONDITIONS.
UM, AND I THINK ANOTHER LARGE CONTRIBUTOR TO THAT WAS, UM, ERCOT CHANGE IN HOW THEY DEPLOYED ECRS, UH, IN 2024 COMPARED TO 2023.
AND SO WE SAW A LOT FEWER, UM, WHAT WE CALL SYSTEM LAMBDA SHORTAGE CONDITIONS OR ENERGY SHORTAGE CONDITIONS, UH, OCCUR IN 2024, AND THAT REDUCED THE COST CONSIDERABLY AS WELL.
SO, SO AS YOU CAN SEE THAT THE ENERGY COST DECLINED ABOUT 50%, AND ANCILLARY SERVICE COST DECLINED ABOUT 74%.
AND AS I NOTED, NATURAL GAS PRICE, UH, DECLINED, BUT NOT MUCH.
IT WAS FAIRLY LOW IN 2023 ON AVERAGE, AND, UM, WAS ONLY SLIGHTLY LOWER IN 2024.
SO, AS I NOTED, THE SYSTEM WAS LESS STRESSED IN 2023.
THAT WAS LARGELY DUE TO, TO WEATHER, UH, AND, UH, FEWER INSTANCES OF TIGHTER CONDITIONS THAT WERE, THAT WOULD'VE OTHERWISE BEEN ADDRESSED THROUGH HIGHER PRICES, UH, IN THIS, IN THE REAL TIME MARKET.
SO ONE THING, SO I, I PUT T CHARTS HERE.
UH, ONE IS THE PEAKER NET MARGIN.
AND SO, AS YOU CAN SEE, WELL, I DON'T KNOW IF YOU CAN SEE IT.
I TRIED TO MAKE EVERYTHING NICE AND LARGE, UM, BUT IF YOU, IF YOU LOOK, UH, THE 2024 LINE IS PURPLE, AND IT IS, YOU KNOW, SORT OF CENTER OF MASS, UH, OF THE CLUSTER OF NON URI PEAKER NET MARGINS.
SO IT WAS A, AN AVERAGE YEAR FOR PEAKER NET MARGIN.
UH, IT, IT DID NOT REALLY, UH, INCREASE ABOVE NET CONE AND IT DIDN'T GET ANYWHERE NEAR THE THRESHOLD.
SO, UM, SO THAT'S, AND I'LL, I'LL COVER THIS IN THE NEXT SLIDE, BUT, BUT PART OF THE REASON FOR THAT IS WE JUST HAD, YOU KNOW, AS I MENTIONED, IT WAS, UH, A EASIER YEAR TO MOVE THROUGH IN TERMS OF SYSTEM CONDITIONS BECAUSE OF THE WEATHER.
UM, WE SAW LOWER OPERATING RESERVE DEMAND CURVE PRICING OR, UH, UH, RESERVE SHORTAGE PRICING.
UH, AND IT WAS SOMEWHAT LOWER, AND THAT'S WHY I PUT THE TABLE IN DOWN HERE.
AS YOU CAN SEE, UM, IN THE MIDDLE COLUMN, UH, YOU CAN SEE IN 2024, THE AVERAGE PRICE FOR ORDC WAS JUST OVER $11.
IN 2023, IT WAS JUST OVER $12.
SO THAT'S NOT THAT MUCH OF A DECREASE.
SO THEN THE QUESTION IS, WHAT WAS IT? YOU KNOW, THE SHORTAGE PRICING IS INTENDED TO PROVIDE A PRICE SIGNAL, UM, WHEN THE SYSTEM IS SHORTER RESERVES.
AND SO WHAT WAS IT THAT WAS DRIVING, UM, THE PRICE FURTHER DOWN IF WE'RE NOT SEEING THAT BIG OF A DECLINE IN THE AVERAGE ORDC PRICE? AND THE ANSWER TO THAT IS, AS I MENTIONED EARLIER, WE SAW FEWER ENERGY SHORTAGE PRICES OR SYSTEM LAMBDA, UM, POWER BALANCE CONSTRAINT VIOLATIONS WHERE THERE'S A PENALTY PRICE INJECTED INTO THE LMP BECAUSE THE SYSTEM IS ACTUALLY SHORT ON ENERGY, NOT NECESSARILY SHORT ON RESERVES.
WE SAW FEWER INSTANCES OF THAT, AND WE ALSO SAW THAT THE, WHEN THERE WERE INSTANCES OF THAT, THE, UH, THE AVERAGE IMPACT WAS LOWER.
SO THAT WAS ONE FACTOR, UH, THAT LOWERED THE, THE ALL IN COST CONSIDERABLY.
AND ANOTHER FACTOR WAS JUST WHEN, WHEN THERE WAS NEW TYPE OF SHORTAGE PRICING OCCURRING, UM, WE WERE JUST SEEING LOWER PRICES GENERALLY BECAUSE SYSTEM CONDITIONS WERE
[02:25:01]
LESS TIGHT.SO THIS CHART HERE IS, IS AN INTERESTING ONE IN MY VIEW, AND WE'RE, WE'LL BE, WE'RE WRAPPING UP THE, UH, THE IMPACT ON SYSTEM PRICES HERE.
BUT ON, ON THE LEFT SIDE YOU SEE IS 2023, RIGHT SIDE IS 2024.
AND THIS SHOWS THE FREQUENCY OF PRICE SPIKES AND THE IMPACT THOSE PRICE SPIKES HAD ON THE AVERAGE PRICE BY HOUR ACROSS THE YEAR.
SO AS YOU CAN SEE, AND, AND I'M, I'M SURE EVERYONE HERE KNOWS, YOU KNOW, WE'VE GOT, UH, DEPENDING ON THE TIME OF YEAR, LATE AFTERNOON OR OR EVENING RAMPING ISSUES, UH, IN ERCOT.
AND SO IN 2023, YOU SEE A LOT OF THOSE LATE AFTERNOON AND EVENING HOURS WHERE YOU HAVE A LARGER PROPORTION OR YOU HAVE A LARGER IMPACT FROM PRICE SPIKES, UH, ON THE AVERAGE SYSTEM PRICE.
UH, IF YOU GO OVER TO 2024, AS YOU CAN SEE, WE ACTUALLY HAVE A HIGHER FREQUENCY OF PRICE SPIKES, BUT THEY WERE OF A, OF A LOWER, UM, LEVEL.
SO THEY DIDN'T, YOU KNOW, THE, THE PRICE SPIKE ITSELF WAS A SPIKE BY DEFINITION, BUT IT WASN'T AS HIGH AS WHAT WE WERE SEEING IN 2024, AND IT WAS HAVING A MUCH, MUCH LESS PRONOUNCED IMPACT ON THE OVERALL AVERAGE PRICE.
SO, UM, A COUPLE OF BOARD MEETINGS AGO I MENTIONED, UH, THAT WE WERE SEEING A DIFFERENCE IN, IN COMMERCIALIZATION OF ENERGY STORAGE RESOURCES.
SO I THOUGHT, AND, AND WE HAVE A, A MORE EXPANDED SECTION IN THE STATE OF THE MARKET REPORT ON ENERGY STORAGE RESOURCES IF YOU'RE INTERESTED.
BUT I THOUGHT I'D THROW UP A COUPLE OF SLIDES HERE, UH, JUST TO GIVE A SENSE OF WHAT'S HAPPENING IN ERCOT AND A LITTLE BIT ABOUT WHERE THIS IS GOING.
SO, SO WE'VE, WE'VE GOT ABOUT, UH, 1.9 GIGAWATTS OF ESR CAPACITY, UM, BY THE END OF, OF, UM, 2024 WITH AN AVERAGE DURATION OF 1.6 HOURS.
SO THAT'S, I'M SORRY, YOU, YOU'RE RIGHT, YOU'RE RIGHT.
IT'S, IT'S ABOUT 92, 9300 GIGAWATTS.
UM, SO, AND, AND I'LL NOTE THAT THERE'S CONSIDERABLE, UM, DEVELOPER INTEREST IN BRINGING NEW ENERGY STORAGE RESOURCE CAPACITY INTO ERCOT.
SO, UM, I, IT, IT'S DIFFICULT TO KNOW HOW TO INTERPRET, UM, A QUEUE AS I'M SURE EVERYONE IN HERE KNOWS, BECAUSE THERE'S DIFFERENT STAGES, DIFFERENT LEVELS OF INTEREST, DIFFERENT COMMITMENT, BUT THERE'S, YOU KNOW, WELL OVER 150 GIGAWATTS OF INTEREST REFLECTED FROM ENERGY STORAGE RESOURCES IN THE QUEUE, UH, TO COME INTO THE ERCOT SYSTEM OVER THE NEXT, UM, THREE YEARS, I THINK, THREE OR FOUR YEARS.
UM, I DON'T KNOW HOW MUCH OF THAT WILL SHOW UP, BUT THE ISSUES THAT WE'RE DEALING WITH, WITH ENERGY STORAGE RESOURCES RIGHT NOW, UM, I WOULD EXPECT TO COMPOUND AND BECOME MORE OF A HEADLINE ISSUE AS WE MOVE FORWARD OVER THE NEXT COUPLE YEARS.
BUT ONE OF THE THINGS I WANTED TO POINT OUT, UM, THAT I HAD MENTIONED EARLIER, BUT, BUT I'VE GOT A NICE CHART FOR IT NOW, IS, UM, I FOCUS ON THE CHARGING BID SIDE HERE ON THIS CHART.
SO I THINK THE, THE TAKEAWAY HERE IN, IN PRIOR YEARS, WE'D SEEN ENERGY STORAGE RESOURCES OFFERING VERY HIGH PRICES TO DISCHARGE.
AND SO ONE OF THE THINGS THAT, THAT BROUGHT FORWARD IS WHY, WHY WOULDN'T YOU JUST BE TRYING TO ARBITRAGE, UM, PRICE DIFFERENCES WITHIN THE DAY? SO I'LL, I'LL CHARGE WHEN THE PRICE IS $10, I'LL DISCHARGE WHEN IT'S $40, AND, AND I'M HAPPY TO MAKE THAT MONEY DAY IN AND DAY OUT.
UM, AND THERE, THERE ARE A COUPLE OF REASONS FOR THAT.
AND IN FACT, WE, I THINK WE DON'T REALLY SEE THAT BEHAVIOR IN MOST OF THE RTOS, ALTHOUGH THAT WAS SOMETHING THAT EVERYONE EXPECTED BEFORE ENERGY STORAGE RESOURCES REALLY, UM, TOOK A STRONG FOOTHOLD IN RTOS.
BUT WHAT WE'RE SEEING MORE IS, UH, ENERGY STORAGE RESOURCES OFFERING RESERVES.
AND THAT IS, UH, MORE OF A CORE OF THEIR REVENUE MODEL, UH, BUT THEY'RE HAPPY TO DISCHARGE WHEN PRICES GET HIGHER.
ONE OF THE CHALLENGES OF THAT MODEL IS THAT, UH, IN ERCOT, AND, AND THIS IS TRUE IN OTHER RTOS ALSO, IS WE DON'T HAVE A GOOD ACCOUNTING OF,
[02:30:01]
UH, STATE OF CHARGE IN THE MARKET.SO WE DON'T KEEP ACCOUNT OF THE STATE OF CHARGE OF THE BATTERIES AS THE MARKET IS DECIDING WHETHER OR NOT TO DISCHARGE THEM FOR ENERGY AND THEIR HORIZON FOR CHARGING AND DISCHARGING SPANS HOURS, IF NOT DAYS, UM, WHICH ISN'T ACCOUNTED FOR IN OUR MARKETS EITHER.
SO, SO WHAT WE WERE SEEING A FEW YEARS AGO WAS MUCH HIGHER PRICES, UM, THAT WERE USED TO MANAGE THE STATE OF CHARGE.
SO WHEN THE BATTERY WAS INTERESTED IN DISCHARGING BECAUSE IT THOUGHT THE MARKET WAS GONNA PRODUCE A HIGHER PRICE, THEY WOULD LOWER THEIR PRICES DOWN, GET SELECTED, UH, FOR DISCHARGE, DISCHARGE, AND THEN MOVE THEIR PRICE BACK UP TO PRESERVE THEIR REMAINDER OF THEIR CHARGE.
WHAT DISCHARGE SHOWING YOU IF YOU FOCUS ON THE FAR RIGHT BAR FOR 2024 FOR CHARGING BIDS? SO WE'RE SEEING AN AWFUL LOT OF, UM, OH, EXCUSE ME.
LET'S FOCUS ON, UH, THE DISCHARGING OFFERS ON THE LEFT SIDE.
SO, SO WE'RE SEEING A VERY LARGE PROPORTION OF THE 2024 BAR, UH, IN WHAT I WOULD CONSIDER A COMPETITIVE RANGE.
IT'S OFFERED IN A ZERO TO A HUNDRED DOLLARS.
THEY'RE, THEY ARE, THESE RESOURCES ARE COMMERCIALIZING THEMSELF IN A WAY THAT'S COMPETITIVE.
AND, YOU KNOW, NONE OF THAT IS NECESSARILY DUE TO CHANGES IN THE MARKET STRUCTURE THAT BE, THAT BETTER ACCOMMODATE THEIR, THEIR LIMITED USE NATURE.
I THINK WHAT WE'RE SEEING IS MORE, UM, ONE, MAYBE MORE FAMILIARITY FROM A LARGER GROUP OF ENERGY STORAGE RESOURCE OPERATORS AS TO HOW THIS MARKET FUNCTIONS, BUT ALSO I THINK WE'RE SEEING THE RESULT OF COMPETITION.
SO, YOU KNOW, AS YOU NOTED FROM THE PRIOR SLIDE, WE'VE SEEN AN ENORMOUS INFLUX OF INSTALLED CAPACITY OF ENERGY STORAGE RESOURCES IN THE LAST YEAR OR TWO.
AND I THINK THEY'RE, UM, COMPETING WITH EACH OTHER, AND IT'S LOWERING THE OFFER PRICE, UH, IN A LOT OF THE INTERVALS SO THAT WE'RE SEEING MORE COMPETITIVE OFFERS.
AND THAT'S FANTASTIC, ACTUALLY.
UM, THAT TELLS ME THAT, THAT THEY'RE NOT PROTECTING THEIR STATE OF CHARGE FROM OTHERWISE ECONOMIC, UH, ECONOMIC TRANSACTION ANY LONGER.
THEY'RE TRYING TO COMPETE WITH EACH OTHER, UM, AND MAYBE MOVE MORE TOWARDS TRYING TO CAPTURE, UH, THESE INTRADAY OR EVEN SHORTER TERM INTRADAY, UH, PRICE SWINGS THAT MIGHT, UM, WE MIGHT SEE THAT IMPROVE EVEN FURTHER WHEN WE GET INTO RTC AT THE END OF THIS YEAR WHEN THEY CAN RELY ON THE REAL TIME MARKET TO MAKE AN ECONOMIC COMPARISON FOR THEM AS TO WHETHER OR NOT IT'S BETTER FOR THEM TO BE PROVIDING RESERVES OR PROVIDING ENERGY.
SO, BUT I, I VIEW THIS AS A VERY POSITIVE DEVELOPMENT.
SO, UM, ONE OF THE INTERESTING THINGS THAT CAME ABOUT AS WE WERE WORKING THROUGH OUR ANALYSIS OF THE COMPETITIVENESS OF THE ERCOT MARKET IS WE, WE'VE, I I WOULD SAY IN THE YEAR THAT YEAR PLUS THAT I'VE BEEN HERE, THERE ARE DIFFERENT ASPECTS WHERE WE'VE GONE THROUGH AND SORT OF PICKED APART HOW, HOW WE EVALUATE THINGS AND, AND RECONSTRUCTED A BIT.
AND THE PIVOTAL SUPPLIER ANALYSIS IS ONE OF THOSE, ONE OF THOSE AREAS.
SO WHEN WE PULLED TOGETHER THE PIVOTAL SUPPLIER ANALYSIS FOR 2024, AND WE'D MADE SOME IMPROVEMENTS TO THE METHODOLOGY THAT WE APPLY IN THAT SPACE, WE FOUND THAT IN THE UPPER QUARTILE OF LOAD OF NET LOAD, ACTUALLY, UM, THERE'S A, A 90% FREQUENCY THAT THERE IS ONE OR MORE PIVOTAL SUPPLIERS, A PIVOTAL SUPPLIER.
UM, AND THIS IS ACTUALLY A VERY COMMON MEASURE OF COMPETITIVENESS OR MARKET POWER IN THE DIFFERENT RTOS, BUT A PIVOTAL SUPPLIER IS A SUPPLIER FROM WHOM WE NEED AT LEAST SOME OF THEIR CAPACITY TO BE MADE AVAILABLE TO THE MARKET IN ORDER FOR US TO MEET DEMAND.
SO IT DOESN'T HAVE ANYTHING TO DO WITH THE SUBTLETIES OF WHETHER OR NOT IT WOULD BE PROFITABLE TO EXERCISE MARKET POWER IF THEY HAD IT THIS HOUR VERSUS ANOTHER HOUR.
IT'S A LITTLE MORE BLUNT OF A MEASURE.
AND IF WE NEED ANY OF YOUR PORTFOLIO IN ORDER TO MEET LOAD PLUS THE RESERVE REQUIREMENT, THEN YOU'RE PIVOTAL IN SOME SENSE.
SO IN THE UPPER QUARTILE OF NET LOAD PERIODS, UH, DURING 2024, WE HAD A ABOVE 90%, UM, WAS LIKE 98%, UH, FREQUENCY OF HAVING A PIVOTAL SUPPLIER.
SO THAT'S, THAT'S A, A LITTLE BIT
[02:35:01]
ALARMING TO ME.UM, WE DON'T HAVE, IN TEXAS, WE DON'T HAVE A SYSTEM LEVEL MARKET POWER MITIGATION MECHANISM IN THE MARKET DESIGN.
SO THIS RESULT LED TO, UH, ONE OF OUR RECOMMENDATIONS.
UH, I'LL NOTE ALSO, IF YOU LOOK AT THE TABLE BELOW, THIS IS THE PERCENT OF HOURS WHERE THERE IS ONE OR MORE PIVOTAL SUPPLIERS BY ZONE.
AND WE SEE IN 2024, YOU KNOW, I, I'LL PICK THE WEST ZONE BECAUSE THAT'S THE HIGHEST.
THERE'S 50%, UH, OF THE HOURS WHERE THERE'S MARKET POWER IN THE WEST ZONE, UM, OR IT'S NOT THE HIGHEST IN NORTH ZONE, IT'S THE HIGHEST AT 66%.
SO, SO THAT TRIGGERED FOR US, YOU KNOW, THAT'S A PRETTY HIGH PERCENTAGE FOR THE UPPER QUARTILE EXERCISING MARKET POWER WHEN YOU'RE NOT IN TIGHTER, UM, SUPPLY CONDITIONS, UH, IS DIFFICULT TO PULL OFF.
SO THAT WAS WHY WE FOCUSED ON THE UPPER QUARTILE OF NET LOAD.
SO, UM, THAT BECAME ONE OF OUR RECOMMENDATIONS AS WELL.
SO THE QUESTION IS, SO YOU'VE, YOU KNOW, YOU'RE MEASURING MARKET POWER.
THERE'S ACTUALLY DIFFERENT WAYS, UH, FOR PEOPLE TO MEASURE COMPETITIVENESS.
AS I MENTIONED, THIS IS A VERY COMMON WAY FOR, UM, WHOLESALE ELECTRICITY MARKETS ANYWAY.
BUT THEN THE QUESTION IS, SO FINE, UH, MARKET POWER EXISTS.
ARE WE SEEING IT EXERCISED? ARE THEY TRYING AND FAILING? ARE THEY TRYING TO EXERCISE THE MARKET POWER? BUT, UM, AND, AND DOING IT SUCCESSFULLY? SO WE'VE GOT A COUPLE SCREENS FOR THAT.
AND, UH, THE SCREEN, WE, YOU KNOW, WE HAVE GOT A, AN ECONOMIC WITHHOLDING SCREEN AND A PHYSICAL WITHHOLDING SCREEN.
SO THE ECONOMIC WITHHOLDING SCREEN IS CALLED THE OUTPUT GAP.
AND THE OUTPUT GAP BASICALLY MEASURES WHETHER OR NOT THE PRICE WAS AT A LEVEL WHERE IT WOULD'VE BEEN ECONOMIC FOR YOU TO RUN AND YOU WERE AVAILABLE TO RUN.
SO UNAVAILABLE TO RUN WOULD FALL ON THE PHYSICAL WITH WITHHOLDING CATEGORY IN THE ECONOMIC WITHHOLDING CATEGORY.
WE LOOK AT THIS OUTPUT GAP, WHICH IS THE GAP BETWEEN WHERE WE THINK YOU SHOULD HAVE BEEN PRODUCING AND WHERE YOU WERE PRODUCING BASED ON THE PRICE THAT WE'RE SEEING.
UM, AND AS YOU CAN SEE FROM HERE, UH, SMALL SUPPLIERS HAVE A PRETTY SMALL OUTPUT GAP AND A SMALL PERCENTAGE OF THE TIME.
UM, AND LOOKING ACROSS THE BOTTOM, THE HORIZONTAL AXIS, THAT'S THE PERCENTILE OF LOAD.
SO, BUT AS YOU CAN SEE, LARGE SUPPLIERS, UM, HAVE A MUCH HIGHER OUTPUT GAP THAT WOULD PARTLY STAND TO REASON BECAUSE THEY HAVE MORE CAPACITY.
SO I WOULD EXPECT IF, IF, IF SMALL AND LARGE SUPPLIERS WERE BOTH ECONOMICALLY WITHHOLDING, I WOULD EXPECT THE LARGE SUPPLIERS TO STILL HAVE A LARGER OUTPUT GAP, EVEN THOUGH, UM, THE SMALL SUPPLIERS ARE WITHHOLDING AS WELL.
SO SOME OF THAT IS PORTFOLIO SIZE, UM, BUT, BUT SOME OF IT IS UNECONOMIC NON-PRODUCTION.
UM, AND THEN THE GREEN LINE HERE, AS YOU CAN SEE, IS A PERCENT OF HOURS WITH THE OUTPUT GAP.
AND SO AS WE GET INTO, IF YOU LOOK AT THE UPPER QUARTILE, WHICH IS THE, THE TWO BARS ON THE RIGHT HAND SIDE, YOU KNOW, YOU CAN SEE THAT WE'RE SEEING SIGNIFICANT OR MATERIAL, UM, OUTPUT GAPS IN, YOU KNOW, OVER 50% OF THE INTERVALS.
SO, SO THAT, JEFF, I THINK WE'VE GOT A QUESTION.
YEAH, JEFF, ON, ON THE WITHHOLDING, DO YOU MONITOR THIS REAL TIME OR WHEN YOU SEE ANOMALIES IN PRICE, OR IS THIS, THIS, IS IT NOT ALL AFTER THE FACT? IS IT, UH, SO WE DON'T MONITOR IT IN REAL TIME, LIKE THE DAY, THE DAY THE MARKET'S RUNNING, BUT WE'VE GOT SCREENS THAT WE RUN WEEKLY BASICALLY TO LOOK BACK AND, AND SEE WHETHER OR NOT, UM, AND, AND THEY'RE, THEY'RE JUST BASED ON WHAT, THEY'RE THE SAME SCREENS THAT WE USE TO PRODUCE THIS.
ONCE WE PRODUCE THIS FOR THE STAY OF THE MARKET, WE, WE THEN DECIDED TO JUST RUN IT ON A, ON A WEEKLY BASIS.
IF YOU SEE SOMETHING THAT LOOKS AT OUTTA WHACK, WHAT DO YOU DO WITH THAT INFORMATION ON THAT WEEKLY BASIS? THAT'S, THAT'S A GREAT QUESTION.
SO IF WE SEE, IF WE SEE SOMETHING, SO, SO FOR ME, SO SORT OF A INDUSTRY STANDARD DEFINITION OF MARKET POWER IS THAT YOU, YOU HAVE THE OPPORTUNITY TO RAISE THE PRICE MATERIALLY FOR A MATERIAL LENGTH OF TIME.
SO IF I SEE SOMETHING HAPPEN ON ONE OR TWO DAYS IN A WEEK, BUT IT HASN'T HAPPENED PRIOR TO THAT, AND I'M NOT SEEING IT HAPPEN ANY LONGER, I, YOU KNOW, WE, WE'VE GOT THAT ON THE RECORD, WE'LL KEEP OUR EYES ON IT, BUT I'M PROBABLY NOT
[02:40:01]
GOING TO PURSUE THAT.BUT IF I SEE A COMPANY WITH THEIR PORTFOLIO WITHHOLDING IN A STRATEGIC FASHION THAT BENEFITS THEM OVER A PERIOD OF TIME, THEN WE HAVE AN INTERNAL PROCESS FOR THAT, THAT, SO WE'LL OPEN AN INVESTIGATION INTERNALLY, SINCE WE'VE ALREADY GOT, UM, YOU KNOW, THESE METRICS THAT, THAT SHORTENS THE INVESTIGATION TIME CONSIDERABLY.
WE WOULD, WE WOULD NORMALLY REACH OUT TO THE PARTICIPANT TO TRY AND FIND OUT IF THERE'S SOMETHING WE'RE MISSING THAT WOULD RATIONALIZE THAT BEHAVIOR.
AND THEN IF WE STILL FELT THAT THEY WERE EXERCISING MARKET POWER AND AFFECTING, YOU KNOW, THE, THE TEXAS WHOLESALE MARKET AND TEXAS RATE PAYERS, WE WOULD REFER THAT TO THE PUC AND THEN WORK WITH THEM.
THEY'VE GOT A, A GROUP CALLED THE DICE GROUP.
WE WOULD WORK WITH THE PUC, UM, TO PROVIDE WHATEVER SUPPORT WE COULD TO HELP THEM MOVE FORWARD IN THEIR INVESTIGATION.
SO, UM, I NOTED THE, THE, THE THIRD BULLET HERE IS IT SAYS HIGH FREQUENCY, BUT SMALL AVERAGE CAPACITY WITHHELD.
SO THAT BRINGS UP AN INTERESTING POINT ALSO, THAT, YOU KNOW, WHEN PEOPLE TALK ABOUT MARKET POWER IN WHOLESALE ELECTRICITY, THEY'RE OFTEN TALKING ABOUT LARGE, LARGE IMPACTS ON PRICE.
SO I'M A, I'M A BIG FISH AND I, I WITHHELD 20% OF MY CAPACITY, AND I MOVED THE PRICE UP FROM, YOU KNOW, $60 TO A HUNDRED DOLLARS.
ANOTHER WAY, IF, IF I'M A VERY LARGE FISH, I MIGHT BE ABLE TO MOVE THE PRICE UP.
UM, AND I USE THE TERM LARGE FISH AND SMALL FISH BECAUSE THOSE ARE ACTUALLY TECHNICAL TERMS AND ERCOT FOR, UM, WHO GETS LOOKED AT AND WHO DOESN'T.
SO, SO, BUT IF I'M A LARGE FISH, IF I'M A REALLY LARGE FISH AND I CAN MOVE THE PRICE UP THREE OR FOUR OR $5, BUT I CAN DO IT IN 25 TO 30% OF THE HOURS, THAT'S, THAT COULD BE VERY EGREGIOUS OVER A PERIOD OF TIME AS WELL.
IF YOU THINK ABOUT, UM, YOU KNOW, YOU, YOU TAKE THAT THREE OR FOUR OR $5 AND YOU MULTIPLY IT BY, UH, DAILY LOAD IN TEXAS, THAT'S TENS OF MILLIONS OF DOLLARS.
SO, SO THERE ARE DIFFERENT DEGREES OF THIS.
IT'S CERTAINLY EASIER TO SPOT THE LARGER, UM, ATTEMPTS TO EXERCISE MARKET POWER, AND IT CAN BE MORE SUBTLE TRYING TO IDENTIFY SMALLER EXERCISES, MARKET POWER.
SO AS I MENTIONED, WE ALSO LOOK AT, UM, PHYSICAL WITHHOLDING ECONOMIC AND PHYSICAL WITHHOLDING ARE, UH, NOT PERFECT SUBSTITUTES, BUT PRETTY CLOSE TO PUT PERFECT SUBSTITUTES FOR EXERCISING MARKET POWER.
AND THIS CHART, WHAT YOU'RE SEEING IS YOU'RE SEEING THE PERCENTAGE OF, OF CAPACITY THAT'S OUT OR D RATED, UM, BY LOAD LEVEL.
AND SO IF I WAS LOOKING, IF, IF I WANTED TO SEE IF A LARGE FISH WAS EXERCISING MARKET POWER, I WOULD EXPECT TO SEE THEM HAVE, WITH PHYSICAL WITHHOLDING, I WOULD EXPECT TO SEE A HIGHER FREQUENCY OF CAPACITY OUT DURING HIGHER LOAD PERIODS WHERE THEY WOULD HAVE MORE LEVERAGE TO IMPACT THE PRICE.
WE'RE REALLY NOT SEEING THAT HERE.
UH, AS YOU CAN SEE, UH, THE STORY'S BEEN FAIRLY CONSISTENT.
WE SEE LOWER LEVELS OF OUTAGE, UH, DURING HIGHER LOAD PERIODS, NOT HIGHER LEVELS OF OUTAGE, AND IT DOESN'T DEVIATE THAT MUCH FROM A CONTROL GROUP, WHICH WOULD BE THE SMALL FISH WHO WOULDN'T HAVE MARKET POWER AND WOULDN'T BE TRYING TO EXERCISE IT.
SO, SO THIS, THIS TELLS A GOOD STORY IN THE AGGREGATE.
AND OF COURSE, WE'VE GOT ALL OF THE UNDERLYING ASSET LEVEL AND PORTFOLIO LEVEL DATA FOR THIS ALSO, UM, SO THAT WE CAN MONITOR AT THAT LEVEL AS WELL.
SO I SAID EARLIER, TWO SLIDES AGO THAT, UH, YOU KNOW, 95 OR 98%, UH, MARKET POWER, FREQUENCY OF MARKET POWER IN THE UPPER QUARTILE OF LOAD IS ALARMING AND IT IS ALARMING, BUT WE'RE NOT SEEING, UM, SIGNS THAT IT'S BEING EXERCISED IN A WAY THAT IS, UM, OVERT OR SYSTEMATIC.
SO I'LL MOVE ON TO RESOURCE ADEQUACY.
SO WE, WE ACTUALLY DID A VERY EXPANDED SECTION IN THE STATE OF THE MARKET ON RESOURCE ADEQUACY.
AND PART OF THAT, I, I WOULD SAY THAT WAS BROUGHT ON BY SOME OF THE THINGS THAT, THAT THIS GROUP HAS, HAS HEARD ABOUT OVER THE LAST SIX MONTHS OR, OR FIVE MONTHS REGARDING PROJECTED, UH, PLANNING RESERVE MARGINS AND LOAD PROJECTIONS AND OFFICER LOAD LETTER, UM, INTEREST IN, IN LOAD IN, IN FUTURE YEARS AND SO FORTH.
AND SO ALL OF THAT BECAME A VERY, VERY BIG TOPIC OF
[02:45:01]
DISCUSSION, UM, AMONGST THE BROADER ERCOT PARTICIPANT GROUP.AND SO WE THOUGHT WE WOULD DO A DEEPER DIVE INTO, YOU KNOW, THE INFORMATION THAT WAS AVAILABLE, THAT THAT WAS MADE AVAILABLE, SOME OF THE METHODS THAT WERE USED BEHIND IT.
UM, AND I'M, I'M ACTUALLY COVERING THE, THE SECOND MAIN BULLET BEFORE I GET BACK UP TO THE FIRST MAIN BULLET.
I SHOULD HAVE PUT THOSE IN A DIFFERENT ORDER.
BUT, UM, BUT I WILL SAY, YOU KNOW, THERE, THERE WERE SOME BIG IMPROVEMENTS, I THINK IN THE PLANNING RESERVE MARGIN PROJECTION, THE MOST RECENT ONE COMPARED TO PRIOR YEARS.
UM, ONE OF 'EM IS, YOU KNOW, ERCOT INTRODUCED, UH, EFFECTIVE LOAD CARRYING CAPACITY, WHICH BASICALLY RECOGNIZES THAT, YOU KNOW, DIFFERENT TYPES OF RESOURCES ARE NOT ALWAYS AVAILABLE, OR YOU CAN'T ALWAYS COUNT ON THEM TO, YOU KNOW, PRODUCE AT THEIR NAME PLATE CAPACITY.
AND SO THERE ARE ADJUSTMENT FACTORS YOU APPLY THAT, THAT MAKE, MAKE THE REPRESENTATION OF WHAT YOU CAN COUNT ON THEM FOR UNDER DIFFERENT CIRCUMSTANCES, MUCH MORE ACCURATE.
SO THAT WAS A BIG IMPROVEMENT.
UM, THERE WAS ALSO THE, UH, THE DIFFERENT SCENARIOS BECAUSE THIS WAS THE FIRST YEAR THAT, UH, OFFICER LOAD LETTER HAD TO BE INCLUDED.
UH, AND SO AS, AS YOU NOTED FROM THE CDR REPORT, YOU KNOW, THERE WERE DIFFERENT SCENARIOS TO HELP PROVIDE SOME CONTEXT FOR THAT.
AND THOSE WERE GOOD, THOSE WERE POSITIVE MOVES FORWARD, UH, IN PROVIDING INFORMATION THAT COULD BE DIGESTED AND COUNTED UPON, OR, I, I DON'T, PEOPLE TAKE THIS WORD THE WRONG WAY, BUT IT'S JUST MORE CREDIBLE WHEN YOU PROVIDE DIFFERENT SCENARIOS.
IT ALLOWS PEOPLE TO SEE WHAT WOULD HAPPEN, UH, UNDER DIFFERENT CIRCUMSTANCES, AND THEY CAN CHOOSE WHAT THEY THINK, UM, IS THE MORE LIKELY OUTCOME.
SO, BUT HAVING SAID THAT, THERE'S ONE, YOU KNOW THERE, AND WE, WE, I WOULD ENCOURAGE YOU TO LOOK AT THIS SECTION, THE STATE OF THE MARKET REPORT THERE, THERE'S AN AWFUL LOT OF DETAIL ON, ON THE INFORMATION.
ONE OF THE THINGS THAT I THINK I'D LIKE TO PROVIDE AS, AS CONTEXT IS, YOU KNOW, IF YOU LOOK AT THE PLANNING RESERVE MARGIN, IT LOOKS FAIRLY DIRE.
UM, WE, WE MOVE INTO A NEGATIVE PLANNING MARGIN OVER THE NEXT FIVE YEARS IN MOST SCENARIOS.
YOU LOOK AT THE PRIOR YEAR'S, UH, CDR PLANNING, RESERVE MARGIN FORECASTING, IT JUST DOESN'T LOOK ANYTHING LIKE THAT.
I I DO THINK, YOU KNOW, AS I MENTIONED, THERE WERE IMPROVEMENTS THAT WERE MADE THIS YEAR THAT ARE, THAT ARE NOTABLE.
BUT ONE OF THE THINGS THAT I WOULD LIKE TO LEAVE WITH THE GROUP IS JUST THE INTERPRETATION OF WHAT IS SHOWN AS A NEGATIVE PLANNING RESERVE MARGIN, UH, YOU KNOW, IN THAT CHART, AND THERE'S A COUPLE CHARTS IN THERE THAT, THAT MAY BE CONVEYED THE SIMILAR INFORMATION.
ONE OF THE SHORTCOMINGS, AND THIS IS A VERY DIFFICULT THING TO OVERCOME, IS BEING ABLE TO ACCOUNT FOR WHAT YOU WOULD CALL MARKET GROWTH OR ENDOGENOUS GROWTH OF, OF NEW RESOURCES AS YOU MOVE THROUGH TIME.
SO ONE OF THE THINGS THAT YOU WOULD EXPECT TO SEE IF YOU GET A PLANNING RESERVE MARGIN DROP OFF AND GET DOWN TO LOW LEVELS, YOU WOULD EXPECT TO SEE THAT RESULT IN SHORTAGE PRICING IN THE REAL TIME MARKET.
SO PLANNING RESERVE MARGIN IS FORWARD LOOKING, BUT AT SOME POINT WE GET TO THAT YEAR WHERE IT'S NEGATIVE, IF WE HAVE A NEGATIVE PLANNING RESERVE MARGIN SYSTEM CONDITIONS HERE WILL BE TIGHT AND YOU'LL SEE A LOT MORE, UM, SHORTAGE PRICING.
AND THAT WILL PROVIDE, THAT WILL DRIVE THE PEAKER NET MARGIN UP AND UP AND UP AS WE MOVE INTO LOWER AND LOWER PLANNING RESERVE MARGINS.
AND THAT'S WHERE YOU WOULD GET PART OF YOUR PRICE SIGNAL FOR NEW INVESTMENT.
IT TAKES A YEAR OR TWO OR THREE, DEPENDING ON WHERE THE DEVELOPER IS TO GET YOUR NEW INVESTMENT INTERCONNECTED AND COMMERCIAL MIGHT TAKE A YEAR OR TWO LONGER THAN THAT, BUT, BUT INHERENTLY THAT TYPE OF LOOK DOESN'T INCLUDE NEW INVESTMENT IN INSTALLED CAPACITY THAT WILL RESULT FROM THE MARKET CONDITIONS THAT WE WOULD EXPECT TO ARISE WHEN THE PLANNING RESERVE DROPS.
I DON'T CONSIDER IT A, UM, YOU KNOW, A FAULT OF THE, OF THE METHOD.
IT'S JUST, I WANTED TO LEAVE YOU WITH MY PERCEPTION ON HOW YOU INTERPRET THAT.
SO, SO THAT SEVERE NEGATIVE PLANNING RESERVE MARGIN, I PROBABLY SHOULD HAVE INCLUDED THE CHART HERE, BUT I THINK EVERYONE IN HERE HAS SEEN IT A NUMBER OF TIMES ISN'T NECESSARILY WHAT'S GOING TO HAPPEN.
IT'S WHAT WOULD HAPPEN IF WE DON'T GET ADDITIONAL NEW INVESTMENT TO HELP COUNTER SOME OF THE LOAD GROWTH AFTER A YEAR OR TWO OR
[02:50:01]
THREE.SO THERE'S THAT MISSING PIECE, AS I MENTIONED, IT IS A VERY DIFFICULT THING TO MODEL ACCURATELY.
UM, AND IN THIS PARTICULAR CASE, IT WOULD REQUIRE SOME KIND OF FEEDBACK LOOP INTO A MARKET PRICE MODEL, UM, WHERE YOU WOULD EXPECT TO SEE MARKET PRICES INCREASE AND DRIVE THE INVESTMENT.
SO, SO IT'S DEFINITELY NOT A CRITICISM OF THE PROJECTION, IT'S A NOTE ON HOW TO INTERPRET IT.
SO, UM, HAVING SAID THAT, I'LL MOVE UP TO THE FIRST MAIN BULLET, WHICH IS MARKET SIGNALS FOR NEW INVESTMENT.
SO WE DID SEE, UM, WE DID SEE NET REVENUES ABOUT 20 TO 25% BELOW CONE, UH, FOR 2024.
IF YOU LOOK BACK IN THE, IN THE REPORT AND LOOK AT THE CHART THERE, YOU'LL SEE THREE OUTTA THE LAST FIVE YEARS, UH, REVENUE HAS BEEN ABOVE CONE ONE YEAR, IT WAS JUST BARELY ABOVE CONE, I THINK.
UM, AND SO AND SO YOU HAVE THIS SMATTERING OF SOME YEARS IT'S ABOVE CONE, AND SOME YEARS IT'S BELOW CONE.
AND THAT'S ACTUALLY WHAT YOU WOULD EXPECT.
I THINK IF WE SEE, UH, FIVE YEARS IN A ROW WHERE REVENUE IS ABOVE CONE, YOU WOULD EXPECT TO SEE SOME, UM, EAGER NEW DISPATCHABLE INVESTMENT IN, IN THE QUEUE.
BUT THAT'S NOT WHAT WE'RE SEEING.
SO, SO THE QUESTION IS, WHY, WHY ARE WE NOT SEEING THAT? AND I, I BELIEVE I WAS ASKED THAT QUESTION, UM, THE LAST TIME I WAS HERE TALKING ABOUT THE STATE OF THE MARKET, AND UNFORTUNATELY I DON'T HAVE A CONCRETE ANSWER FOR YOU, BUT, BUT I PUT DOWN FOUR BULLET POINTS HERE THAT ARE THINGS THAT I THINK, UH, MIGHT BE DRIVING SOME OF THE, THE RELUCTANCE FOR NEW GENERATORS TO COME FORWARD AND, AND ENTER THE QUEUE.
UM, ONE OF 'EM IS LOWER MERCHANT ESTIMATES FOR FORWARD PLANNING RESERVE MARGINS.
SO I JUST FINISHED TALKING ABOUT HOW IT'S DIFFICULT TO INCLUDE IN YOUR MODEL.
UM, HOW MUCH NEW INVESTMENT ARE YOU GOING TO EXPECT TO SEE AS YOUR PLANNING RESERVE MARGIN DIPS DOWN? IF I FLIP THAT AROUND, ANY NEW, ANY NEW DEVELOPER OR A DEVELOPER OF NEW INSTALLED CAPACITY IS GOING TO BE LOOKING FORWARD SAYING, WHAT DO I EXPECT TO SEE HAPPEN? DO I EXPECT THIS PLANNING RESERVE MARGIN TO GO LOWER? DO I, YOU KNOW, IF IT, IF IT GOES SO LOW THAT IT'S ZERO OR NEGATIVE, I WOULD EXPECT TO SEE SOME PRETTY HIGH PRICES.
I, I WOULD LIKE TO GET IN ON THAT, UM, I WOULD GET IN THE QUEUE.
AND SO WE'RE NOT SEEING THAT JUST YET, BUT, BUT, UH, THIS NEW INFORMATION ABOUT, YOU KNOW, THE DECLINING IN PLANNING RESERVE MARGIN, UM, PRIMARILY DUE TO THE INCREASE IN FORECASTED NEW LOAD COMING IN IS STILL NEW.
SO WE'LL SEE NEXT YEAR WHETHER OR NOT THAT GETS TRACTION IN THE DEVELOPER COMMUNITY, UH, HESITANCY SPURRED BY GOVERNMENT PROGRAM AVAILABILITY.
SO THE TEXAS ENERGY FUND WAS INTENDED TO BRING NEW INVESTMENT IN SOONER, SOONER THAN THE MARKET WOULD.
AND SO WHEN YOU DO THAT, YOU'LL GET YOUR NEW INVESTMENT SOONER.
BUT THEN YOU ALSO HAVE A QUESTION WITH DEVELOPERS OF NEW INSTALLED CAPACITY AS TO WHETHER OR NOT THERE'S GONNA BE ANOTHER TEXAS ENERGY FUND, SHOULD WE WAIT AND SEE AND, AND TRY AND, UH, CAPTURE SOME SAVINGS FROM THAT OR NOT.
SO GOVERNMENT INTERVENTION CAN HAVE A SUPPRESSING EFFECT ON NEW INVESTMENT, UH, IN THE MARKET, UH, SUPPLY CHAIN ISSUES.
SO I WISH I COULD, I WISH I, I WISH THERE WERE, UM, MORE SOLID DATA SOURCES FOR SOME OF THESE SUPPLY CHAIN ISSUES IS ONE OF 'EM.
I HAVE HEARD ANECDOTALLY FROM A COUPLE OF PEOPLE IN THE GENERATOR COMMUNITY THAT IT TAKES A LOT LONGER AND IT'S A LOT MORE EXPENSIVE TO DEVELOP NEW GENERATION DUE TO SUPPLY CHAIN ISSUES THAN WHAT ANYONE'S MODEL IS SHOWING WHAT, WHETHER IT'S A POTOMAC MODEL, A BRATTLE MODEL, OR PICK ANY OF THE OTHER MODELS.
UM, AND SO IF THAT'S THE CASE, THEN EVERYBODY'S MODEL'S WRONG AND IT TAKES LONGER AND IT'S MORE EXPENSIVE, AND WE'RE NOT ABLE TO CAPTURE THAT BECAUSE WE DON'T HAVE REAL DATA ON IT.
AND, UH, THE LAST IS ANTICIPATION THAT INCREASE IN BATTERY ENERGY STORAGE MAY, UH, MAY SHAVE SHORTAGE REVENUE.
SO A LOT OF THE SHORT, SO SHORTAGE REVENUE, WHICH WOULD BE A, A PRIMARY CONTRIBUTOR TO COVERING THE FIXED COST OF, OF INSTALLING NEW GENERATION IS GONNA COME BASICALLY AT TWO TIMES.
IT'S COMING DURING SHORT PERIOD SHORTAGES LIKE WE SEE, UH, IN THE EVENING RAMP SOMETIMES.
AND IT'S GONNA COME DUE TO EVENTS LIKE AN EXTENDED OR PROLONGED HEAT WAVE OR COLD SNAP.
[02:55:01]
BATTERY ENERGY STORAGE RESOURCES WON'T HELP AS MUCH DURING PROLONGED HEAT WAVE OR COLD SNAP, BUT, BUT I WOULD ANTICIPATE THAT THE, THE BATTERY ENERGY STORAGE WILL SHAVE CONSIDERABLE AMOUNT OFF OF THE, UM, SHORTAGE REVENUE THAT WOULD OTHERWISE OCCUR DURING THESE SHORTER PERIODS LIKE RAMPING PERIODS OR IF YOU HAVE A, A SHORT OUTAGE, SIGNIFICANT SIZE OUTAGE OR SIMULTANEOUS OUTAGES OF GENERATION RESOURCES THAT CAUSE UH, THE SYSTEM TO PRETTY SHORTAGE PRICES.SO, SO I WISH I HAD HARD DATA AND COULD SHOW YOU CHARTS ON THESE THINGS.
UH, I DON'T, BUT THESE ARE, THESE ARE THE ASPECTS THAT I LOOK AT WHEN I ASK MYSELF, WHY ARE WE NOT SEEING MORE GAS FIRED, NEW ENTRY, UH, IN THE QUEUE? AND, UM, I, I'M HAPPY TO, I'LL JUST, I'LL JUST WALK THROUGH THESE REALLY QUICKLY.
UH, I, I BELIEVE I'VE PROBABLY TAKEN MORE TIME THAN, THAN WE THOUGHT I WOULD.
SO WE DID HAVE, UH, FOUR OR FIVE, DEPENDING ON HOW YOU COUNT IT.
SO THE FIRST ONE IS, THESE ARE RELATED, AND I TALKED ABOUT THIS, UH, A COUPLE OF MONTHS AGO, UH, WITH THIS GROUP, THAT THE, THIS, THIS DISCONNECT BETWEEN THE SHORTAGE PRICING MECHANISM AND HOW RESERVES ARE PROCURED, HOW IT IS DETERMINED THAT RESERVES ARE PROCURED, HAS CAUSED SOME ISSUES.
THE ISSUE WE WERE TALKING ABOUT A FEW MONTHS AGO WAS PUTTING A $15 FLOOR PRICE, UH, FOR RESERVES IN THE RUCK.
I BELIEVE THAT WE WOULDN'T HAVE TO DO THAT IF, IF THE SHORTAGE PRICING MECHANISM AND ANCILLARY SERVICE PROCUREMENT WERE REEVALUATED AND TRUED UP SO THAT THEY WERE CONSISTENT WITH EACH OTHER.
UM, UH, MY GROUP HAD PUT FORWARD SOME A-A-S-D-C CURVES TO HELP RESOLVE AN ISSUE.
WE NOTED IN, IN OUR MEMO ON THAT, UH, THAT THIS NEEDS TO BE REVISITED BECAUSE THIS WAS THE BEST WE COULD DO WITH THE AMOUNT OF TIME WE HAD.
SO IT, IT SOLVED THE PROBLEM, BUT IT, IT DIDN'T, BUT IT, BUT THERE'S, IT DIDN'T RESOLVE AN INCONSISTENCY.
SO, SO THERE'S, THERE'S GOOD REASON SOMETIME AFTER, YOU KNOW, IN, IN WHATEVER THE PHASE B IS OR PHASE TWO OF EVALUATING MARKET RULE CHANGES AFTER WE GO LIVE WITH RTC, UH, REEVALUATING THE ADCS TO REFLECT MARGINAL RELIABILITY, AND THEN ALSO MAKING SURE THAT THEY'RE CONSISTENT WITH THE AS METHODOLOGY, WHICH, UH, YOU KNOW, UH, ERCOT STAFF MENTIONED EARLIER, UM, THEY ARE ADOPTING A STOCHASTIC METHOD, UH, WHICH IS FANTASTIC.
WE THINK THAT'S GONNA PROVIDE MORE OPPORTUNITY TO EVALUATE MORE SITUATIONS AND FIND A, YOU KNOW, A PROCUREMENT LEVEL THAT PRESCRIBES A PROBABILITY OF LOST LOAD THAT IS ACCEPTABLE, UM, RATHER THAN THE PRIOR METHOD.
ANOTHER RECOMMENDATION IS SET THE DURATION REQUIREMENTS TO ONE HOUR FOR ECRS AND NON SPIN.
UH, THERE IS A-N-P-R-R, UH, I THINK IS, UH, 1282 THAT IS FINISHING UP OR JUST FINISHED UP RECENTLY.
SO THE ECRS, UH, DURATION IS ONE HOUR, AND THAT, UH, IT WAS DECIDED TO LEAVE THE NONS SPIND DURATION AT FOUR HOURS.
WE'VE PUT FORWARD SOME ANALYSIS DEMONSTRATING THAT, AND THAT'LL BE AN EASIER DISCUSSION TO HAVE.
I THINK ONCE DRRS GOES INTO PLACE, DRS WILL TAKE CARE OF THE FOUR HOUR FORECAST UNCERTAINTY, AND THEN WE CAN REEVALUATE, UM, HOW LONG WE NEED, UH, TO, UH, DURATION FOR NONS SPIN.
AND I SHOULD MENTION, THESE DURATIONS REALLY ONLY APPLY TO, UM, BATTERY STORAGE.
BUT IF YOU LOOK AT THE AMOUNT OF BATTERY STORAGE WE HAVE, AND I MENTIONED EARLIER, THERE'S LIKE 150 GIGAWATTS IN THE QUEUE FOR THE NEXT FEW YEARS, BATTERY STORAGE COULD BE A VERY RICH SOURCE OF RESERVES AND ENERGY GOING FORWARD.
SO IT'S WORTH WORKING OUT, UM, AND, AND COULD HAVE A PROFOUND IMPACT ON, ON PRICES.
THIRD, IMPLEMENT A PROCESS TO MITIGATE SYSTEM AND ZONE MARKET POWER.
I'VE ALREADY TALKED ABOUT THOSE IN THE COMPETITIVENESS SECTION.
AND THEN THE LAST ONE, ESTABLISH REAL TIME OFFER REQUIREMENT THAT REALLY FELL OUT OF THAT SAME DISCUSSION.
I THINK IT WAS NPR AT 1269, UM, WHERE WE HAD THE $15 PRICE FLOOR AND REC.
AND THEN THERE WAS ALSO AN ISSUE WITH HOW TO, HOW TO ESTABLISH THE PRICE VALUE THAT ERCOT WOULD STICK IN AS A PROXY IF A PARTICIPANT DIDN'T FILL OUT THEIR OFFER CORRECTLY AND SO FORTH.
AND, UM, WE HAD A DISAGREEMENT OVER THAT.
BUT, BUT REGARDLESS OF HOW YOU VALUE IT, ONE
[03:00:01]
THING THAT CAME OUT OF THAT DISCUSSION WAS THERE, THERE IS APPARENTLY AN OBLIGATION FOR PARTICIPANTS TO OFFER, UH, INTO THE REAL TIME MARKET.AND IF THAT'S THE CASE, IT SHOULDN'T BE IMPLICIT THROUGH A PROXY OFFER.
WE, WE REQUIRE YOU TO OFFER IN, WE REQUIRE YOU TO SUBMIT, YOU KNOW, FULL AND ACCURATE OFFERS, AND THEN THERE ARE CONSEQUENCES IF YOU DON'T.
AND THAT MAY HELP SORT OF CONTAIN THE, THE DISCUSSION ABOUT WHAT A COMPETITIVE OFFER PROXY PRICE IS A LITTLE BIT.
UM, IF THERE'S ANYTHING ELSE ANYONE WOULD LIKE TO TALK TO ABOUT, OR IF YOU SAW ANYTHING IN THE REPORT AS YOU PARIS IT, PLEASE, YOU KNOW, YOU CAN ASK NOW OR YOU CAN REACH OUT TO ME.
I'M, I'M GLAD THAT WAS THE SHORT VERSION TODAY,
UH, ANY QUESTIONS FOR JEFF? OKAY, THANKS JEFF.
WE APPRECIATE THE, UH, THE REPORT.
UH, WE HAVE THREE GEN ITEMS LEFT THAT I'M HOPING WE CAN CONCLUDE BY.
[6.1.1 ERCOT Staff Preliminary Response to IMM 2024 State of the Market Report]
IS, UH, GEN ITEMS 6.1 0.1, THE ERCOT STAFF PRELIMINARY RESPONSE.THE ERCOT, UH, STAFF PRELIMINARY RESPONSE TO IMM 2024, STATE OF THE MARKET REPORT.
UM, I KNOW THAT WE'LL HAVE A MORE DETAILED DISCUSSION ABOUT THIS IN SEPTEMBER.
UM, KEITH COLLINS IS PRESENTING KEITH, BUT I THINK, PAPA, DO YOU HAVE SOMETHING? YEAH, REAL QUICK.
I JUST HAPPENED TO HAVE FOUND A, UM, LOOKS LIKE A MEN'S WEDDING RING ON THE FLOOR RIGHT NEXT TO ME.
SO BEFORE PEOPLE LEAVE, IF THIS MIGHT BE YOUR WEDDING RING, IT'S RIGHT HERE.
UM, AS, AS YOU'VE NOTED, UM, THESE ARE PRELIMINARY COMMENTS.
WE WILL HAVE COMMENTS, UH, AT THE SEPTEMBER MEETING, THE, THE DIFFERENCE BETWEEN THESE AND THOSE.
UH, IN, IN SEPTEMBER WE'LL GO THROUGH THEIR RECOMMENDATIONS A LITTLE MORE SYSTEMATICALLY.
AND TODAY, UH, I'M JUST GONNA COVER SOME, SOME HIGH LEVEL POINTS FROM THEIR REPORT.
UM, SO THEIR REPORT CAME OUT JUST A FEW WEEKS AGO.
UH, HOPEFULLY YOU'VE HAD A CHANCE TO, TO READ IT, IF NOT, UM, I THINK BETWEEN JEFF AND I I THINK YOU'LL GET A GOOD SENSE OF IT.
AND HAVING HAD A CHANCE TO, TO READ THROUGH IT.
THERE'S, IT'S RATHER, RATHER EXTENSIVE.
THERE ARE DEFINITELY SOME THINGS WE AGREE WITH, UH, AND, AND SOME OTHER THINGS THAT WE MAY HAVE SOME, SOME, UM, UH, WE MAY BE IN DISAGREEMENT, BUT OVERALL IT'S A VERY GOOD AND WELL-WRITTEN REPORT.
SO THE, THE AREAS OF ALIGNMENT THAT WE HAVE, I ACTUALLY HAVE TWO, TWO PAGES HERE.
UH, GIVEN THAT THERE WERE SEVERAL OF THEM, UH, BUT I DID WANNA HIGHLIGHT A, A COUPLE OF THEM.
UH, THE FIRST ONE IS, UM, THE ECRS.
THIS WAS, WAS DEFINITELY SOMETHING WHERE THERE WAS A LOT OF DISCUSSION LAST YEAR AND, UH, THE IMM DID DID MAKE A NOTE TO SAY THAT THERE WERE ENHANCEMENTS IN, IN 24, AND THOSE WERE, UM, UH, IMPROVEMENTS THAT THAT LED TO SOME OF THE IMPROVEMENTS WE SAW IN MARKET RESULTS.
SO THAT, THAT WAS REALLY POSITIVE.
UH, AND THEN, UH, WITH REGARDS TO, UH, THE CDR, UH, THE EFFECTIVE LOAD CARRYING CAPABILITY, UH, IN THE CDR REPORT WAS, WAS SOMETHING ALSO, ALSO NOTED.
UM, AND, AND THAT WAS SOMETHING THAT, UH, THEY HIGHLIGHTED AS, AS BEING AN IMPORTANT CHANGE THAT, THAT WAS IMPLEMENTED FOR FURTHER ALIGNMENTS.
UH, AGAIN, UM, UH, THE CHANGES IN THE ANSWER SERVICES, UH, TO, TO PROBABILISTIC HOW, HOW WE APPROACH THAT.
AND, AND JEFF BILLOW TALKED ABOUT THAT.
UH, THERE'S, THERE'S DEFINITELY, UH, SOME ALIGNMENT THAT'S OCCURRING THERE.
AND THEN, UH, THE FINAL ITEM ON MULTI INTERVAL, REAL-TIME MARKET.
THIS WAS ACTUALLY SOMETHING THAT, UH, VENCAT TALKED ABOUT IN, UH, THE TNS EARLIER TODAY.
THERE THERE ARE A FEW RECOMMENDATIONS THAT THE IMAN HAD THAT WE BELIEVE THAT WE'VE, UH, OR ITEMS THAT THEY HAD POINTED OUT THAT WE BELIEVE WE'VE, WE'VE ALREADY ADDRESSED.
UH, ONE OF THE THINGS THEY'VE NOTED IS, UH, THE NEED FOR, UH, ECRS TO HAVE A FORECASTED TRIGGER.
AND, AND WE DO HAVE AN ELEMENT, THERE'S ACTUALLY A THREE PART TRIGGER FOR ECRS.
UH, WE BELIEVE THAT THAT ONE OF OUR TRIGGERS, WHICH DOES LOOK FORWARD AND DOES LOOK AT RAMPING NEEDS, UM, UM, IT, IT MAY DIFFER FROM WHAT THE I, UH, IMM WAS NOTING, BUT IT IS A FORECASTED VIEW OF, OF THE NET LOAD RAMP.
AND, UH, WE, WE DO THINK THAT THAT DOES ADDRESS, UH, FROM OUR PERSPECTIVE, THE, THE FORECAST NEED.
UH, WE ALSO DO NOTE THAT THE, UH, ECRS OPERATIONAL CONDITIONS WHEN THEY, UH, THERE IS A, A RECOMMENDATION TO SAY THAT IT SHOULD BE HELD THROUGHOUT THE, THE PERIOD OF NEED.
[03:05:01]
RECEIVED FROM THE IMM LAST SUMMER, AFTER ONE OF THE SUMMER EVENTS, AND IS SOMETHING THAT WAS ADDRESSED IN PROCEDURAL TRAIN CHANGES AT THAT TIME.AND THEN FINALLY, UH, THE ECRS, UH, RECOMMENDATION THAT JEFF DID NOTE IS SOMETHING THAT IS ACTUALLY A PART OF NPR 1282 THAT'LL BE DISCUSSED TOMORROW.
AND SO, UH, JUST TO, TO NOTE THAT THAT IS ACTUALLY AN AREA OF ALIGNMENT BETWEEN THE IM A REPORT AND, UH, THE ERCOT POSITION.
THERE ARE A FEW POINTS OF DISAGREEMENT THAT I, I DO WANT TO HIGHLIGHT HERE.
UH, ONE HAS TO DO WITH THE ECRS, UM, UH, DEPLOYMENTS IN 2023.
THIS DID COME UP IN THEIR REPORT IN A FEW, A FEW CASES.
I THINK WHAT WHAT HAD HAPPENED, UH, LATER, LAST YEAR, THERE WAS SOME SUBSEQUENT ANALYSIS THAT WAS DONE, UH, INDEPENDENTLY THAT DID IDENTIFY THAT, UH, THERE WERE OTHER FACTORS, PARTICULARLY WEATHER AND OUTAGES THAT WERE, AND THEY QUANTIFIED THOSE FACTS, UH, EFFECTS IN, IN THIS INDEPENDENT REPORT THAT SHOWED THAT THOSE HAD, UH, SIGNIFICANT IMPACTS ON SOME OF THE, UH, SOME OF THE EFFECTS THAT THE IMM WAS, WAS HIGHLIGHTING AS, AS ECRS DRIVEN.
THE OTHER THING I'LL NOTE AS, AS A, UH, AN AREA OF DISAGREEMENT IS THERE WAS SOME COMPARISON DONE BETWEEN OTHER REGIONS, UH, PARTICULARLY, UH, NEW ENGLAND, NEW YORK AND, AND MISO AND, AND SAID, WELL, LOOK AT THE RESERVE LEVELS IN THESE REGIONS AND LOOK AT THE RESERVE LEVELS IN ERCOT.
AND I DO WANT TO POINT POINT OUT THAT, UH, THAT THE REGIONS ARE, ARE, ARE DIFFERENT, UH, PARTICULARLY WHEN IT COMES TO, UH, LOAD SIZE ISO NEW ENGLAND IS, IT PEAKS AT 28 GIGAWATTS.
UH, AND I BELIEVE THAT WAS IN 26, 2006, SO IT WAS A LONG TIME AGO.
AND, UH, ERCOT HAS, UH, RENEWABLE RESOURCES THAT, UH, COMBINE AT, UH, AT ABOUT 70 GIGAWATTS.
SO THE SIZE IS VERY DIFFERENT.
SO WHEN WE LOOK AT AND COMPARE OUR RESERVE LEVELS TO THE LEVELS THAT YOU HAVE IN, IN OTHER REGIONS, THERE'S, THERE'S SOME PARTICULAR REASONS, LOAD SIZE, RENEWABLES, SIZE OF RENEWABLES, AND, AND THE POTENTIAL FOR FORECAST UNCERTAINTY.
AND THEN ANOTHER POINT THAT, UH, ACTUALLY, UH, DR.
DAVE PATTON MADE AT FERC RECENTLY WHERE HE WAS COMPARING MISO AND ERCOT.
AND, AND, AND I'M PARAPHRASING, I MEAN, HE SAID THAT, UH, ERCOT IS AN ELECTRIC ISLAND AND MISO IS NOT BECAUSE IT HAS LOTS OF INTERCONNECTIONS WITH OTHER REGIONS, WHICH MAKES IT ROBUST.
AND, UH, I I THINK THE, THE TAKEAWAY TO THAT IS WHEN WE LOOK AT PARTICULARLY SOME OF THE RESERVES LIKE ECRS THAT WE HAVE, UM, THAT'S IN RESPONSE TO THAT AND PROVIDE THAT RESILIENCY THAT WE HAVE IN THE GRID.
SO YES, WE'RE GONNA HAVE MORE RESERVES THAN SOME OF THESE REGIONS DO BECAUSE WE DON'T HAVE THE BENEFITS OF, OF THAT INTERCONNECTION THAT THEY RELY ON FOR THAT ROBUSTNESS.
AND THEN THE FINAL POINT IS, IS SOMETHING THAT, UH, JEFF HAD JUST MENTIONED ON NONS SPIND DURATION, UM, UH, THEY RECOMMENDED IS SET THE DURATION TO AN HOUR.
OUR RECOMMENDATION, WHICH WE'LL TALK ABOUT TOMORROW IN, UH, NPRR 1282, IS THAT, UH, WE BELIEVE THAT FOUR HOURS IS APPROPRIATE WHEN WE LOOK AT HISTORIC DATA, THAT DATA ON DEPLOYMENTS IS GENERALLY MULTI-HOUR.
WHEN YOU LOOK AT THE NEED OF UNDER FORECAST, THAT'S MULTI-HOUR.
AND, UH, EVEN IN, IN THE IMM REPORT, THEY LIST A SERIES OF, OF, UH, WHAT WE WOULD CONSIDER PREREQUISITES.
THEY SAID, WELL, THERE'S DRS COMING.
THERE'S THE POTENTIAL FOR MULTI INTERVAL REALTIME MARKET.
AND, AND WE AGREE THAT THOSE ARE, ARE GREAT THINGS TO HAVE, BUT, UM, UH, IN, IN OUR VIEWS, THOSE ARE NEEDED BEFORE YOU, YOU POTENTIALLY LOWER THE REQUIREMENT RATHER THAN, UH, SOMETHING THAT COMES LATER.
AND SO, AS, AS YOU NOTED, WE, WE WILL, UH, PROVIDE A MORE DETAILED RESPONSE AT THE SEPTEMBER BOARD MEETING.
I'M HAPPY TO HAVE ANY QUESTIONS TODAY IF, IF YOU SHOULD HAVE ANY, ANY QUESTIONS FOR KEITH? OKAY.
[6.2 Commercial Markets Update]
THE NEXT AGENDA ITEM IS, UH, COMMERCIAL MARKETS UPDATE, KEITH, UH, AGENDA ITEM 6.2.AND KEITH, YOU'RE, UH, THE, YOU REMAIN AS A PRESENTER.
WE'LL JUST SWITCH THE SLIDES UP HERE AND WE'LL GET GOING.
I'LL JUST SORT OF START BY NOTING THAT, UH, WE'RE GONNA COVER A COUPLE KEY MARKET INITIATIVES THAT WE'RE WORKING ON.
UH, AND, UH, AND THEN WE'RE GONNA TALK ABOUT THE MARKET DESIGN FRAMEWORK THAT WAS DISCUSSED LAST SUMMER AND SOME, SOME WORK WE'VE DONE OVER THE PAST SEVERAL MONTHS TO, UH, WITH THE STAKEHOLDERS AND WHERE WE ARE WITH THAT.
UM, SO THE KEY MARKET DE DESIGN INITIATIVES THAT, THAT I'M GONNA TALK ABOUT TODAY, UH, QUICKLY IS, UH, RESIDENTIAL DEMAND RESPONSE.
THIS WAS ACTUALLY SOMETHING THAT DR. WEBER TALKED ABOUT.
UH, DURING THE, UH, DURING HIS PRESENTATION, HE HAD MADE A COMMENT ABOUT WOULDN'T
[03:10:01]
IT BE GREAT TO HAVE RESIDENTIAL DEMAND RESPONSE? AND, AND WE AGREE, AND THAT'S EXACTLY WHAT WE'RE WORKING ON.WE'VE HAD A COUPLE, UH, STAKEHOLDER WORKSHOPS ON THIS.
OUR CURRENT DESIGN DEFINITELY TARGETS THAT RESIDENTIAL NEED, UH, IN, UH, IN, IN MUCH LIKE A FOUR CP WE ARE TARGETING KEY HOURS AND PERFORMANCE DURING THOSE KEY PERIODS.
UH, EXCEPT THIS TIME IT'LL BE NET PEAK.
SO IT WILL DIFFER FROM FOUR CP.
AND THE IDEA IS THAT IT'LL BE FOR, UH, TO INCENTIVIZE THE RESIDENTIAL PARTICIPATION, UH, SPECIFICALLY.
SO IT DIFFERS FROM THE DISCUSSION THAT RYAN HAD EARLIER ON THE A DER, UH, PILOT PROJECT THAT WE WERE TALKING ABOUT.
I WILL NOTE THAT, UH, ONE OF THE LATEST, UH, POTENTIAL CHANGES IS TO, UH, DESIGN ELEMENTS IS TO, IS TO POTENTIALLY LIMIT THE, AT LEAST INITIALLY LIMIT THE, THE PARTICIPATION TO 500, UH, MEGAWATTS.
I THINK WE SEE THE POTENTIAL TO BE GIGAWATTS, BUT AS WE GET STARTED, WE WANNA, UH, UH, GET STARTED AND, AND SEE WHAT WE CAN GET THROUGH THE PROGRAM.
AND IF, IF WE WANNA MAKE CHANGES LATER, WE CAN DO THAT.
WE'RE ALSO, UH, SECOND INITIATIVE THAT WE'RE TALKING ABOUT IS WE'VE RESTARTED THE DISPATCHABLE RELIABILITY RESERVE SURFACE.
THIS WAS SOMETHING THAT WE HAD STARTED, UH, A WHILE BACK, UH, BUT GIVEN, UH, OTHER COMPETING PRIORITIES LIKE RTC, UH, UH, WE DECIDED TO PULL BACK ON THAT.
OUR LAST, UH, WORKSHOP WAS IN FEBRUARY.
WE HAVE A WORKSHOP LATER THIS WEEK WHERE WE'LL TALK ABOUT THE DESIGN AND THE ELEMENT.
AND I THINK IT'S REALLY KEY TO HIGHLIGHT FOR YOU THAT THE, UH, THE LEGISLATURE, LEGISLATURE HAD VERY SPECIFIC STATUTORY OBLIGATIONS.
AND WE INTEND TO, UH, MEET ALL OF THOSE, UH, AS THEY HELP, AS THEY REQUIRE, UH, REDUCTION IN, UH, THE, THE RUCKS.
UM, AND TO IMPROVE FLEXIBILITY, BUT ALSO TO TAKE INTO ACCOUNT SOME OF THE PUC GUIDANCE THAT WE HAD BACK IN DECEMBER WHERE, UH, THEY WERE, UH, WERE, AND I REALIZE SOME OF OUR MEMBERS ARE HERE, BUT I THINK THE, THE CONCEPT WAS TO LEAVE OPTIONS ON THE TABLE.
AND SO IF WE CAN CONSIDER, UH, A, UH, A PROCESS TO ALLOW FOR IMPROVED RESOURCE ADEQUACY AND, AND BUILD THAT PRE IN, PRE-BUILD THAT INTO THE SYSTEM, WE WOULD DO THAT.
SO WE ARE CONSIDERING BOTH OF THOSE THINGS AS WE MOVE FORWARD.
AND AS I SAID THAT OUR, OUR NEXT WORKSHOP WILL BE, UH, LATER THIS WEEK.
WE HAVE, UH, WE'VE TALKED ABOUT THIS BUT BEFORE, SO I WON'T SPEND TOO MUCH TIME ON THIS SLIDE, BUT WE DO HAVE NPRR 1277, WHICH IS A MODIFICATION TO THE CREDIT FORMULA.
AND THIS, THIS, WE BELIEVE WILL ENHANCE, UH, AND MAKE IT MORE ACCURATE AND EFFICIENT, PARTICULARLY WHEN WE HAVE, UH, AN EXTREME WEATHER EVENT, UH, WHERE, OR EXTREME PRICING EVENT, IF YOU WILL.
UH, AND SO IT WILL MORE ACCURATE REFLECT THE, THE CREDIT DURING THOSE INSTANCES.
AND THIS IS SOMETHING THAT'S BEEN A COLLABORATIVE PROCESS OVER THE LAST SEVERAL MONTHS, AND ULTIMATELY IS SOMETHING THAT'LL BE COMING TO THE BOARD, UH, SHORTLY.
BUT, BUT WE DO FEEL THAT THIS IS A, AN ENHANCEMENT AND PRS UH, VOTED UNANIMOUSLY TO MOVE THIS FORWARD.
ALSO, STICKING WITH THE CREDIT SIDE, WE DO HAVE SOMETHING WITH REGARDS TO A, A CREDIT STRESS TESTING FRAMEWORK.
THIS IS SOMETHING THAT WE IN, UH, INTRODUCED TO THE CREDIT FINANCE SUBGROUP RECENTLY.
WE ARE TAKING ESSENTIALLY PROCESS THAT'S BEEN USED IN OTHER INDUSTRIES SUCH AS BANKING, WHERE THEY, UH, PROACTIVELY ANALYZE, UH, THE EFFECTS OF, UH, OF STRESS ON, ON DIFFERENT PARTICIPANTS AND IDENTIFY AND ALLOW US TO IDENTIFY AND MEASURE RISK AND TO MITIGATE THAT BEFORE ISSUES OCCUR.
AND AGAIN, THIS IS SOMETHING THAT WE'RE WORKING THROUGH THE STAKEHOLDER GROUP, UH, BUT WANTED TO MAKE SURE YOU WERE AWARE THAT WE'RE WORKING ON THESE MITIGATION EFFORTS WITH RESPECT TO CREDIT.
THE NICE THING IS THAT IT'S, UH, IN LINE WITH PREVIOUS PERIODS.
SO, UM, UH, THE NICE THING IS IT'S IN LINE.
THERE'S NOT MUCH ELSE TO SAY HERE ON, ON THIS SLIDE.
ALRIGHT, I'LL TALK ABOUT THE MARKET DESIGN FRAMEWORK.
UH, AND THIS IS AN UPDATE FROM A CONVERSATION THAT WE HAD, UH, LAST SUMMER.
AND, AND SO, UH, JUST AS, AS BACKGROUND, WE DID TALK ABOUT THIS, UH, AS PABLO NOTED THIS.
AND, AND WHAT WE HAVE BEEN DOING IS WORKING THIS THROUGH THE STAKEHOLDER PROCESS, UH, TAKING FEEDBACK AND INCORPORATING THAT IN INTO OUR DESIGN.
ALRIGHT? AND, AND SO THE, THE PRIMARY PURPOSE OF THE MARKET DESIGN FRAMEWORK IS, IS TO AID FOLKS SUCH AS YOURSELVES.
UH, AS YOU THINK ABOUT THE VARIOUS MARKET DESIGN INITIATIVES THAT ARE COMING TO BETTER UNDERSTAND HOW THEY FIT WITHIN A DESIGN FRAMEWORK.
AND THE BEST WAY TO THINK ABOUT THIS IS WE HAVE A, IF YOU CALL IT THE MARKET DESIGN TOOL SHED, UH, THERE ARE TOOLS IN YOUR TOOL SHED TO ACHIEVE DIFFERENT OBJECTIVES
[03:15:01]
AND TO HELP FOLKS UNDERSTAND WHAT THOSE TOOLS DO AND HOW THEY MEET THE, HOW THEY IMPROVE OUR MARKET DESIGN OVERALL.AND I DO HAVE A SLIDE LATER THAT SHOWS, UH, SOME OF THESE INITIATIVES AND HOW THEY FIT WITHIN THAT FRAMEWORK.
OUR SECONDARY PURPOSE IS TO AID IN DISCUSSION WITH, UH, STAKEHOLDERS, UH, AND, AND, UH, PROVIDE THAT COMMON FRAMEWORK.
IT IS NOT COMPREHENSIVE IN THAT IT COVERS EVERY SINGLE POSSIBLE FACTOR OR ATTRIBUTE THAT COULD AFFECT DESIGN.
AND IT'S NOT INTENDED TO SURPASS A, A, A LEGISLATIVE OR REGULATORY PRIORITY, UH, OR, OR TO INSTILL A, A DIFFERENT REQUIREMENT OR STANDARD, RIGHT? SO THIS, THIS WAS THE SET OF INIT, UH, ATTRIBUTES THAT WE HAD, UH, UH, PRESENTED TO YOU LAST, LAST YEAR.
UH, WE DID GET SOME FEEDBACK INCLUDING THE BOARD, UH, AND STAKEHOLDERS.
AND SO WE'VE ADDED TWO ADDITIONAL ATTRIBUTES BASED ON THAT FEEDBACK.
THE FIRST ONE IS AFFORDABILITY.
AND IN THIS, UH, IT'S MINIMIZING COST TO CONSUMERS WHILE MAINTAINING AND PROMOTING RELIABILITY, AND THEN COMPETITION, UH, MAXIMIZING THAT USE OF COMPETITION, UH, AND INCLUSIVE MARKET MECHANISMS WHERE APPROPRIATE.
ALRIGHT? UM, THIS, THIS TABLE IS, IS A WAY, UH, IT'S, IT'S ILLUSTRATIVE AND IT'S SHOWING US, UH, VARIOUS INITIATIVES AND HOW, UH, WHAT ATTRIBUTES THEY ADDRESS.
SO FOR INSTANCE, UH, REAL-TIME CO-OP OPTIMIZATION PLUS BATTERIES, UH, YOU CAN SEE THAT, UH, WE'VE, WE'VE GIVEN IT FOUR PLUS MARKS ON EFFICIENCY, MEANING THAT THIS IS DES THIS PRIMARILY IS AN EFFICIENCY DESIGN.
IT DOES ADDRESS OTHER ELEMENTS AS WELL.
AND UH, WE DID NOTE THAT IT CAN POTENTIALLY HAVE NEGATIVE EFFECTS ON AVAILABILITY.
WE'VE HEARD THAT FROM STAKEHOLDERS THAT THAT HAS THE POTENTIAL TO DO THAT.
BUT ONE OF THE THINGS WE ARGUE IS THERE ARE OTHER MECHANISMS THAT CAN HELP ADDRESS THAT ELEMENT.
AND IN PARTICULAR, YOU'LL NOTE THAT DRS AS AN ANSARY SERVICE AND A RESOURCE ADEQUACY TOOL HAS THE POTENTIAL TO DO JUST THAT.
IN ADDITION TO BEING A FLEXIBILITY TOOL, IT CAN ALSO IMPROVE AVAILABILITY AND RESILIENCY ON THE GRID.
UH, THE OTHER ONE I WILL NOTE IS THE ONE AT THE END, WHICH IS OUR RESIDENTIAL DR PROGRAM THAT WE JUST MENTIONED A MINUTE AGO.
AND I WILL NOTE THAT YOU'LL SEE THAT QUALITY IS THE HIGHEST THERE.
AND, AND THE REASON WHY WE RATED THAT HIGHEST IS THAT, UM, SPEED TO MARKET.
WHEN WE'RE LOOKING AT, UH, A SITUATION, AND THIS, THIS ALSO CONNECTS WITH WHAT, UH, DR. WEBER WAS TALKING ABOUT EARLIER TODAY, IS THAT, UH, UH, YES, WE'LL NEED NATURAL GAS RESOURCES.
YES, WE'LL NEED OTHER RESOURCES, BUT THE TIME HORIZON IN WHICH WE CAN ACQUIRE THOSE RESOURCES IS, IS YEARS AWAY.
RESIDENTIAL DEMAND RESPONSE IS SOMETHING THAT WE BELIEVE WE CAN TAP INTO MUCH QUICKER THAN THESE OTHER RESOURCES.
THIS IS SOMETHING THAT'S KEYS TO MEASURE WHERE WE ARE RELATIVE TO THE FRAMEWORK.
WE NEED TO KNOW, HAVE WE ACHIEVED AN OPTIMAL LEVEL OF, LET'S SAY EFFICIENCY OR RESILIENCY? UH, AND ULTIMATELY THE, THE, UM, WE BELIEVE THAT, UM, DIFFERENT ATTRIBUTES REQUIRE DIFFERENT LEVELS OF MEASURE.
FOR INSTANCE, THE, UM, THE RELIABILITY STANDARD CAN BE REALLY DO A REALLY GOOD JOB OF MEASURING SOME OF THESE ELEMENTS, BUT PERHAPS NOT OTHERS.
AND SO, JUST, JUST FOCUSING ON THAT ONE IN PARTICULAR, UH, SOME OF THE KEY ATTRIBUTES THAT, THAT THE RELIABILITY STANDARD CAN, CAN SHOW WHERE THERE MAY BE A DEFICIENCY OR SURPLUS IS AVAILABILITY, FLEXIBILITY, DEPENDABILITY, AND A RESILIENCY.
AND ULTIMATELY THE KEY INITIATIVES THAT WE ARE TALKING TO YOU TODAY ABOUT HELP TO ADDRESS SOME OF THOSE ISSUES, DISPATCHABLE, RELIABILITY RESERVE SERVICE, UH, PARTICULARLY AS ANS ANSWER SERVICE AND A RESOURCE ACCURACY TOOL, THE RESIDENTIAL DEMAND RESPONSE AND THE, UH, HOUSE BILL, 1500 FIRMING REQUIREMENT.
ALL OF THOSE WORK TO, UH, ADDRESS THOSE ELEMENTS THAT ARE WITHIN THE RELIABILITY STANDARD.
UH, WE'RE, WE'RE TALKING WITH YOU TODAY ABOUT THIS.
UH, WE WILL DEFINITELY CONTINUE TO FOLLOW UP WITH STAKEHOLDERS AS NEEDED, UH, AND, AND WORK ON THOSE MEASUREMENT APPROACHES.
BUT I WILL NOTE THAT PARTICULARLY THE USE OF THE FRAMEWORK IS SOMETHING THAT YOU'RE GONNA SEE MORE OF AND IS GONNA BE A PART OF THE NPRR PROCESS WHERE EACH NPRR, WE'RE GONNA HAVE AN ABILITY TO CHECK OFF THE DIFFERENT ITEMS THAT, THAT, UH, THE NPR ADDRESSES.
I WILL NOTE THAT ACTUALLY IT WAS MENTIONED IN SOME COMMENTS ON NPR 1282.
SO, UH, TO THE EXTENT THAT YOU'VE READ THOSE COMMENTS OR REREAD THEM, YOU'LL SEE THAT ACTUALLY THE FRAMEWORK WAS USED IN SOME OF THOSE COMMENTS.
AND, AND WE DO FEEL THAT THAT'S, UH, IT'S GREAT TO SEE THAT BECAUSE IT DOES DEFINITELY HIGHLIGHTS WHERE SOME OF THE, THE, THE CHALLENGES AND ISSUES IN TERMS OF, UH, SOME OF THOSE DIFFERENCE OPINIONS MAY OCCUR.
I BELIEVE THAT TAKES ME TO THE END OF THE PRESENTATION I WANTED TO HAVE FOR YOU TODAY.
ANY QUESTIONS FOR ME? SO ANY QUESTIONS FOR KEITH? OKAY, THANK YOU KEITH.
[03:20:01]
ALRIGHT, THANK YOU.[6.3 Real-Time Co-optimization Update]
UH, NEXT, THE LAST ITEM FOR TODAY'S AGENDA IS 6.3 REALTIME COOPERATION UPDATE.GOOD AFTERNOON, MATT MARS WITH ERCOT.
I HAVE SIX MINUTES FOR 16 SLIDES.
YOU WANT IT THAT FAST? GIVE YOU SEVEN SEVEN.
ALRIGHT, SO JUAN DID THE USUAL UPDATE.
A LOT OF THIS IS NOT NEW INFORMATION, BUT I DID WANNA SLOW DOWN IN THE MIDDLE PART, WHICH IS THE MARKET READINESS UPDATE THAT EVERYONE'S BEEN WAITING ON.
HOW ARE WE DOING WITH MARKET TRIALS? WE, SO WE HAVE OUR FIRST INSIGHT INTO THAT.
UH, IN TERMS OF, THANKS AGAIN FOR GETTING US GREEN.
THE TOP HALF OF THE SPREADSHEET HAS BEEN THESE NPRS AND POLICIES THAT WE NEEDED SETTLED BY THE BOARD.
SO NPR 1282 FOR THE STATE OF CHARGES UP TOMORROW.
AND THEN WE HAVE A REMAINING CLEANUP REVISION REQUEST THAT'S 1290 THAT WE'RE WORKING WITH THE STAKEHOLDERS ON.
SO THAT'S ON BOARD FOR SEPTEMBER.
UH, THE KEY ON THE AS DURATION OR 12 6 12 82 TOMORROW IS THAT WITH APPROVAL, IT'S A PARAMETER AND WE DIAL IT IN FOR MARKET TRIALS STARTING IN JULY.
SO THAT'S A REAL BENEFIT TO US TO HAVE.
AND THEN THE BOTTOM HALF IS JUST FINISHING UP THE TRIALS HANDBOOKS OF TRAINING FOR THE MARKET TO BE READY.
SO IN TERMS OF THE SCOPE, SOMETIMES PEOPLE DON'T REALIZE THE SCOPE OF THE PROGRAM.
THIS IS JUST A GOOD IF YOU'RE CHECKING THE BOX ON WHAT ALL PROTOCOLS ARE BEING IMPLEMENTED, THOSE ARE ALL THE REVISION REQUESTS THAT WE'RE PUTTING IN.
AGAIN, THESE ONES IN THE MIDDLE ARE THE ONES THAT HAVE BEEN PLANNED FOR AND ADDRESSED BY THE TASK FORCE AND MORE RECENTLY ADOPTED, UH, THE ONES DOWN BELOW HAVE INTERDEPENDENCIES OR THEY'VE BEEN PASSED IN PARALLEL TO RTC AND WE'VE KIND OF HOOKED IT INTO THE RTC SCOPE.
SO THAT WAY ON DECEMBER 5TH, EVERYONE KNOWS WHAT WE'RE GOING LIVE WITH.
IN TERMS OF THE PROGRAM HIGHLIGHTS, WE HAVE, UM, OUR VENDOR CODE CAME IN A DAY EARLY.
THAT WAS OUR FINAL DROP FROM OUR MAJOR VENDOR AND THAT WAS ON MAY 13TH.
WE'VE HAD TWO OPERATING DAY TESTS.
WE TALKED ABOUT THOSE BID TO BILL PROCESSES TO MAKE SURE THE GREASE WORKS IN THE WHEELS THROUGH ALL THE SYSTEMS. UH, WE DID DEPLOY INTO THE MARKET TRIALS ENVIRONMENT ON MAY 5TH.
THAT WAS OUR LITTLE SYN CODE TOMORROW LET'S GET UP AND GO LIVE AND GET OUR SUBMISSIONS GOING IN.
AND THEN THE, UH, WE DID ALL THE SIX WEEK OPERATOR TRAINING SEMINARS.
THAT WAS ABOUT 800 OPERATORS ACROSS TEXAS WERE IN TAYLOR FOR THAT.
AND RTC HAD THAT PIECE OF THE PRESENTATIONS.
UH, AGAIN, THANK YOU FOR NPR 12 68, 12 69, AND 1270.
THOSE WERE THE AS DEMAND CURVES IN APRIL.
AND THE SHAPES OF THOSE, THOSE HAVE NOW BEEN IMPLEMENTED AND ARE IN TESTING, UH, FOR ERCOT TO DEPLOY INTO MARKET TRIALS IN JULY.
IN TERMS OF THE ACTIVITIES, THEY'RE STILL IN FLIGHT.
WE'VE TALKED ABOUT THE TWO FIRST ONES, THE NPRS 1282 AND 1290, UH, THE MARKET READINESS TRIALS, WE COMPLETED THE HANDBOOKS LAST WEEK WITH THE TASK FORCE.
SO THAT'S HOW DO WE MANAGE THESE OTHER TESTS? WE'VE PUT UP SOME NEW TRAINING MATERIALS AND THEN AGAIN, OUR MARKET TRIALS BEGIN ON MAY 5TH.
SO I'VE SHOWED YOU THIS SLIDE A GAZILLION TIMES.
UH, WHAT I WANTED TO DO IS SLOW DOWN AND PICK IT APART WITH THREE DIFFERENT SLIDES SO YOU CAN CHEW ON IT A LITTLE BIT AND SEE I'VE CALLED IT THE CRAWL WALK RUN.
IT'S THE FIRST PART OF MAY AND JUNE IS WHAT WE'RE IN RIGHT NOW AND THEN INTO JULY AND AUGUST, UH, LEADING UP TO THE BIGGER TESTING.
SO THE THEME OF THIS ONE MAY AND JUNE IS ESTABLISHING CONNECTIVITY WITH THE MARKET PARTICIPANTS.
WE'VE BUILT OUR SYSTEMS NOW WE NEED TO MAKE SURE THE QUES, UH, CAN CONNECT TO US.
AND SO THE TWO BOXES FOR THAT IS THE, UH, QUEASY WILL TEST THEIR MARKET SUBMISSIONS TO GET TRANSACTIONS IN.
AND THEN IN PARALLEL TO THAT, THEY'LL ALSO MAKE SURE THAT THE EMS SYSTEM, THE TELEMETRY, THE FOUR SECOND DATA IS GOING BACK AND FORTH BETWEEN US.
AND SO THAT'S BEEN THE HEAVY LIFT OF, JUST TO GIVE YOU A FEEL FOR IT, ACROSS 95 QU HAD TO SET UP 26,000 NEW TELEMETRY POINTS.
SO THAT BACK AND FORTH HAS BEEN WHAT'S GOING ON TO BUILD UP THIS DATABASE SO THAT EVERYONE CAN TALK TO EACH OTHER WITH THIS NEW DATA.
SO ON JULY 7TH WE START TO EXERCISE THAT DATA.
THE MARKET WILL START TO PUT INTO THE SYSTEMS AND WE'LL SUPPORT THIS, I HAVE IT IN THE BOX HERE, THIS IDEA OF PARALLEL PRODUCTION ON TUESDAYS AND THURSDAYS, WHERE FROM NINE TO FIVE ALL THE QUAS WILL PUT IN REASONABLE OFFERS THAT REPRESENT 80 TO 120% OF THEIR COSTS.
THAT'LL BE THE REAL TIME IZATION AND THEY'LL HAVE AS OFFERS IN AND ERCOT WILL START TO PRINT PRICES AND SIGNAL WHERE YOU SHOULD GO, BUT NO ONE WILL GO THERE.
THAT'S THAT OPEN LOOP CONCEPT.
HERE'S THE SOLUTION BUT DON'T FOLLOW IT.
UH, AND THEN AGAIN, IN PARALLEL TO THAT, THE ORANGE ARROW DROPS INTO THESE COORDINATED INDIVIDUAL QUEASY TESTS THAT'S MAKING SURE THAT WE CAN GET ON WITH THE QUEASY AND SAY, FOLLOW THIS NEW FOUR SECOND SIGNAL FOR 15 MINUTES WITH A REPRESENTATION OF YOUR RESOURCES.
AND YOU'LL DO THAT FOR 15 MINUTES.
AND AT THAT POINT WE'LL HAVE THEM CHECKED OUT AND THEY'RE DONE.
AND THEN I'LL, THAT ALL LEADS UP TO THE SEPTEMBER, OCTOBER.
THIS ON THE RIGHT SIDE IS THE CLOSED LOOP LOAD FREQUENCY CONTROL TEST.
THAT'S WHERE OUR CONTROL ROOM AND THE QUEASY CONTROL ROOMS WILL SWITCH OVER FOR TWO HOURS.
SO EVERYTHING HAS REALLY BEEN LEADING UP TO THIS DISPATCH TO MAKE SURE ERCOT CAN MAINTAIN FREQUENCY.
[03:25:01]
AND AGAIN, THAT'S ONE OF THE BIGGEST RISKS TO GO LIVE IS TO MAKE SURE THAT YOU CAN CONTROL FREQUENCY.ON THE LEFT SIDE IS THE DAY AHEAD MARKET.
THAT'S WHERE IT OPENS UP FROM 90 QUAS TO 400 QUAS.
AND THAT'S A VOLUNTARY DAY AHEAD MARKET TO BE TESTED OUT.
SO THAT'S, IF YOU EVER WANT TO GO BACK, I KNOW I'M TALKING FAST, BUT THOSE ARE THE CHEAT SHEETS TO GO BACK TO.
SO THAT SETS THE STAGE FOR THAT MAY JUNE CONNECTIVITY TEST.
WE STILL HAVE ANOTHER WEEK LEFT IN IT.
THIS IS THE ONE FOR THE MARKET SUBMISSIONS.
THIS IS SUBMITTING YOUR AS OFFERS AND GETTING THE UH, BATTERY STORAGE OFFERS IN.
AND THAT'S ALL GREEN EXCEPT FOR THREE COMPANIES AND ACTUALLY IT'S DOWN TO TWO COMPANIES NOW.
THEY'VE GOTTEN THE DATA IN WELL THAT REALLY POPS GREEN.
THE SCORE, THIS SCORECARD IS, HAS EVERYONE ADDED THE 26,000 POINTS YET? SO WE HAVE A LOT OF YELLOWS BUT THEY MAY HAVE 90% OF THEIR DATA IN THAT'S JUST NOT THAT LAST PIECE.
WE DON'T HIT GREEN UNTIL IT'S A HUNDRED PERCENT OF ALL THOSE ELEMENTS.
SO THIS IS LOOKING REALLY GOOD.
OVERALL IT'S AN 88% IS WHERE WE'RE AT ON THE TELEMETRY BEING IN.
AND THEN THE LAST ONE, THIS IS A CHECKOUT.
THIS IS WHERE YOU SET UP ALL THESE NEW POINTS.
WE'RE GONNA SAMPLE AND POKE ONE AND STICK A 4.3 IN IT.
WHAT DO YOU SEE ON YOUR SIDE? YOU SEE A 4.3.
SO WE KNOW THAT THERE'S ACTUALLY DATA FLOWING BACK AND FORTH.
SO THAT'S THE SHAKEOUT REALLY TO GET THE COMMUNICATIONS DONE.
UM, AND THAT'S SETS THE STAGE FOR US THE PROGRESSION BETWEEN NOW AND SEPTEMBER.
WHEN YOU GET BACK IN SEPTEMBER, WE'LL BE IN THE MIDDLE OF THE LFC TEST.
IN THE MEANTIME, I'LL PAUSE HERE AND TOUCH ON SOMETHING THAT'S BEEN TALKED ABOUT A COUPLE OF TIMES.
IT'S THE IDEA OF RTC HAS BEEN IN THE WAY OF A LOT OF THINGS.
THANK YOU FOR MAKING ROOM FOR US TO GET THROUGH THE PROGRAM.
BUT THERE'S THIS BACKLOG THAT'S STARTING TO SHOW UP AND WHAT DOES IT LOOK LIKE FOR ERCOT TO PRIORITIZE WITH THESE BIG THINGS? SO THE FIRST ONE IS THAT THE APRIL BOARD MEETING WAS THE IDEA OF THIS PRODUCTION CODE FREEZE INTERNAL ERCOT.
WE CAN'T CHANGE ANYMORE EMS AND MMS SYSTEMS. OTHER ONES YOU CAN, BUT NOT THE CORE SYSTEMS. UM, ALSO THE MARKET HAS BEEN WILLING TO SAY, OKAY, NO NEW NPRS FOR, I'M SORRY, NO IMPLEMENTING NPRS THE REST OF THE YEAR.
SO WE'VE BEEN COLLABORATING WITH TAC LEADERSHIP ON HOW TO PRIORITIZE THE REMAINING WORK.
ONCE THIS IS OUTTA THE WAY, HOW DO WE SIFT THROUGH THAT? SO THE FIRST THING IS THE IDEA IS PAUSING WORK, WHICH WORK IS NON-PRIORITY AND IN A WAY THAT CAN BE SET ASIDE OR PAUSED ON.
AND THEN HOW TO COME BACK TO IT.
THE NEXT ONE IS WHERE TO CONTINUE WORK.
WELL, WE NEED TO WORK ON THE SENATE BILL SIX, WE NEED TO WORK ON THE DRS, WE NEED TO WORK ON DEMAND RESPONSE.
SO THOSE ARE THE LEGISLATIVELY OR GOVERNANCE WISE HAVE BEEN TOLD TO DO THAT.
AND THEN THE LAST PIECE IS THE PRIORITIZING POST RTC WORK AFTER GO LIVE, WHAT'S THE MOST IMPORTANT NEXT MARKET DESIGN ELEMENT TO TAKE UP TO FIT IN BETWEEN THOSE OTHER ACTIVITIES.
SO THAT'S REALLY JUST KIND OF THE HOW DO WE GET PAST THIS IN A WAY THAT WE KNOW WHAT TO EXPECT ON THE OTHER SIDE.
AND SO WORKING WITH T ON WHAT'S THE BEST PROCESS TO DO THAT.
SO AGAIN, THANK YOU FOR THE SUPPORT.
UM, WE'LL BE BACK AT THE SEPTEMBER BOARD WITH NPR 1290, THE RESULTS OF THAT LOAD FREQUENCY CONTROL TEST AND THEN ANY UPDATE ON THE TRANSITION TO GO LIVE AND ANY RISKS.
SO WITH THAT, WE'LL SEE IF THERE ARE ANY QUESTIONS.
SO ANY QUESTIONS FOR MATT? IT'S NOT A QUESTION, IT'S A COMMENT.
UM, I, I REALLY LIKE THE PARKING LOT IDEA OR CREATIVE BACKLOG AND THE PRIORITIZING THAT 'CAUSE UH, I REALLY APPRECIATE EVERYONE PAUSING AND FOCUSING ON RTC.
ANY OTHER QUESTIONS, COMMENTS? ALRIGHT, WITH THAT, UH, WE ARE GOING TO CONCLUDE THE GENERAL SESSION FOR TODAY.
TOMORROW, THE MEETING WILL RESUME IN GENERAL SESSION AT 10:00 AM THE GENERAL SESSION IS NOW RECESSED AND THE WEBCAST WILL BE SUSPENDED.
CHAIRMAN GLEASON, THIS MEETING, THE PUBLIC UTILITY COMMISSION OF TEXAS IS ADJOURNED.