Sep 22, 2025 Board of Directors Meeting

ALL IN FAVOR? AYE.

AYE.

ANY OPPOSED? ANY ABSTENTIONS? THE MINUTES ARE APPROVED.

IS WRITTEN D DO WE WANNA LOG ANY ABSTENTIONS FOR ANY OF THE NEW BOARD MARKS? OKAY, SO, OH, I'M SORRY.

SO BILL, CHRIS, AND OR KATHLEEN, ARE YOU ABSTAINING? AS ABSTAINING AS WELL? OKAY.

THAT IMPACT RELIABILITY? LET'S SEE.

I'M GONNA HAVE TO DO THAT FOR THE FIRST ROUND OF MEETINGS.

ALRIGHTY.

UH, NEXT

[4. Consent Agenda]

IS THE CONSENT AGENDA.

UH, ITEM FOUR, UH, ITEM 4.1.

OF THAT AGENDA OF THIS ITEM HAS UNOPPOSED REVISION REQUEST RECOMMENDED BY TAC FOR APPROVAL.

THE MEETING MATERIALS INCLUDE COMMENTS FROM PLUS POWER REGARDING NOER 2272 ADVANCED GRID SUPPORT REQUIREMENTS FOR INVERTER BASED ENERGY STORAGE RESOURCES.

THE COMMENTS SUGGEST THE BOARD REMAND THE REVISION REQUEST FOR FURTHER FURTHER WORK TO THE STAKEHOLDER PROCESS.

IN LIGHT OF TAX UNANIMOUS RECOMMENDATION TO APPROVE THE RE REVISION REQUEST, I PROPOSE THAT WE DON'T MAKE ANY CHANGES TO THE CONSENT AGENDA.

CHAD WILL NOW PROCEED WITH THE BUDGET IMPACTS OF THE REVISION REQUEST.

ALRIGHT, THANKS.

CHAIRMAN.

THERE ARE 21 REVISION REQUESTS ON THE CONSENT AGENDA.

NINE OF THEM HAVE SOME TYPE OF ER CAP BUDGET IMPACT.

THE BIGGEST BUDGET IMPACTS ARE ASSOCIATED WITH NPR IS 1288 AND 1289 THAT DEAL WITH OUR CRR AUCTION PROCESSES AND SYSTEMS. EACH ONE OF THOSE REVISION REQUESTS HAVE A COST IMPACT RANGING FROM 400,000 TO ROUGHLY 800,000, AND WILL TAKE APPROXIMATELY ONE YEAR TO IMPLEMENT ONCE THE PROJECTS BEGIN.

AND AS YOU NOTED, CHAIRMAN NOER 2 72 AND PICKER 1 21 ARE ON THE CONSENT AND AGENDA, BOTH DEAL WITH ADVANCED GRID SUPPORT REQUIREMENTS FOR INVERTER BASED ESRS, WHICH IS OUR GRID FORMING CAPABILITY DISCUSSION THAT WE'VE HIGHLIGHTED THE BOARD OVER THE LAST SEVERAL MEETINGS.

SO WITH THAT, I'LL TAKE ANY QUESTIONS FROM THE BOARD.

ANY QUESTIONS FOR CHAD ON ANY OF THE ITEMS AND THE CONSENT AGENDA? OKAY.

CHAD, WERE THERE ANY OTHER RELIABILITY, HIGH IMPACT NPRS YOU WANTED TO MENTION THAT ARE IN THE CONSENT AGENDA? HIGH IMPACT OR

[00:05:01]

I MEAN, THERE'S, THERE'S SEVERAL THAT, YOU KNOW, NPR 12 A, UH, IS IT 1283? MODIFICATION OF SSR MITIGATION TIMELINES? THAT'S ANOTHER CRITICAL, UM, PLANNING ONE THAT IMPACTS SUB SYNCHRONOUS RESONANCE.

SO THAT'S ONE THAT I WOULD HIGHLIGHT.

UH, ALL OF 'EM HAVE SOME KIND OF RELIABILITY CONTEXT TO THEM.

THE IMPROVEMENTS TO ALTERNATIVE, UH, FIRM FUEL SUPPLY SOURCE RESOURCE DESIGNATION ALSO HAS SOME RELIABILITY ATTRIBUTES TO IT.

OTHER ONES ARE MORE UNDER OUR STRATEGIC KIND OF PLAN TWO, MARKET EFFICIENCY OR ADMINISTRATIVE RELATED.

BUT THE, THE TWO, THERE'S OBVIOUSLY ANOTHER ONE.

UH, BIGGER 1 29 ESTABLISHED GRID RELIABILITY, UH, RESILIENCY ASSESSMENT POSTING REQUIREMENTS, WHICH IS A CHANGE IN OUR POSTING REQUIREMENTS AS IT HAS A SMALL, UH, BUDGET IMPACT THAT'LL BE ABSORBED BY, UH, O AND M.

ANY OTHER QUESTIONS FOR CHAD ON THE CONSENT OF JET ITEMS? YEAH, MR. CHAIRMAN, JUST REAL QUICK, CHAD, UM, ON 2 72, UH, YOU KNOW, I, I THINK I HAD EXPRESSED TO YOU SOME CONCERNS I HAD HEARD AROUND, UM, GRID FORMING, UM, VERSUS GRID FOLLOWING.

AND I JUST WANTED TO MAKE SURE EVERYONE WAS ON THE SAME PAGE AROUND THIS IDEA THAT THE IDEA WOULD BE THAT YOU WANT THE CAPABILITY FOR ALL OF THESE RESOURCES, BUT NOT THAT YOU WOULD MAKE, THAT YOU WOULD ASK THOSE RESOURCES TO PERFORM TO THEIR MODELING RIGHT OUT THE GATE.

THAT ALL OF THESE WOULD HAVE TO BE TURNED ON INITIALLY.

THAT IS NOT THE INTENT OF WHAT YOU'RE LOOKING TO DO HERE.

CORRECT? CORRECT.

THE NOER AND THE PIGGER ARE NOT ABOUT A REAL TIME OPERATIONS PERFORMANCE REQUIREMENT.

IT'S ABOUT BRINGING THE CAPABILITY TO THE TABLE AS FAR AS NEW, UH, ESRS.

AND SO WITH THAT, MR. CHAIRMAN, I AGREE WITH YOU.

UM, I THINK IT'S APPROPRIATE FOR THESE TO MOVE FORWARD GIVEN THAT CLARIFICATION.

THANK YOU, MR. CHAIRMAN.

AGENDA ITEM FIVE, HIGH IMPACT POLICY DISCUSSIONS IN THE STAKEHOLDER PROCESS.

I HEARING NO FURTHER DIS IS THERE ANY FURTHER DISCUSSION? OKAY.

HEARING NO FURTHER DISCUSSION, I'LL ENTERTAIN A MOTION TO APPROVE THE CONSENT AGENDA AS IT WAS PRESENTED.

A MOTION BY, UH, PEGGY AND A SECOND BY JULIE.

ALL IN FAVOR? AYE.

AYE.

ANY ABSTENTIONS? ANY OPPOSITION? OKAY.

THE CONSENT AGENDA IS APPROVED.

NEXT IS

[5. High-Impact Policy Discussions in the Stakeholder Process]

REBECCA ZER AND ANN BORN ARE GONNA PRESENT REBECCA AND ANN, IF YOU'LL MAKE YOUR WAY TO THE PODIUM.

REBECCA ZOFF.

THIS CYCLE UPDATE IS A LITTLE BIT OF A TRANSITION WITH THE ANTICIPATED GO LIVE OF RTC PLUS B IN DECEMBER.

THE FINAL THREE REVISION REQUESTS THAT WILL BE IN PLACE BEFORE, UM, RTC GO LIVE IMPLEMENTATION.

WERE AT THE CONSENT AGENDA THIS MONTH.

UM, WE EXPECT THOSE TO BE AT THE PUC IN NOVEMBER AND IMPLEMENTED FOR DECEMBER 1ST FOR THAT DECEMBER 5TH GO LIVE.

THE BIG UPDATE HERE IS LOOKING AT POST-IMPLEMENTATION.

I KNOW THAT STAKEHOLDERS HAVE BEEN HAVING CONVERSATIONS WITH PRIORITIZATION.

IT'S SOMETHING KEITH WILL TALK ABOUT MORE TOMORROW, BUT WE'RE LOOKING AT THE PROJECT.

QRTC PLUS B HAS BEEN SUCH A MAJOR PROJECT THAT'S TAKEN SO MUCH TIME AND RESOURCES THAT WE'VE HAD LIMITED CAPACITY FOR, UM, PRIORITIZING PROJECTS THAT HAVE BEEN APPROVED AND NOT IMPLEMENTED, AND ALSO ALL OF THE KEY CRITICAL PROJECTS COMING OUT OF THE COMMISSION OF THE LEGISLATURE.

DRRS IS ONE OF THOSE CRITICAL PROJECTS.

I DO WANNA HIGHLIGHT THAT.

UM, WE ARE AT THIS POINT LOOKING AT A REVISED, UM, REVISION REQUEST AND WITHDRAWING NPR 1235.

WE HAD THE SERIES OF WORKSHOPS THROUGH THIS YEAR, THE LAST IN JUNE, AND WE'LL BE LOOKING AT A NEW NPR THAT SATISFIES THE STATUTORY LANGUAGE AS WELL AS THE DESIGN FLEXIBILITY FOR A RESOURCE ADVOCACY MANDATE.

LARGE LOAD ISSUES.

SB SIX WAS THE KEY LEGISLATIVE, UM, ISSUE COMING OUT OF SESSION.

WE ARE NOW WORKING WITH THE PUC.

THERE'S A SERIES OF FIVE RULEMAKING PROJECTS THAT THEY'VE OPENED.

I WANNA HIGHLIGHT TWO NET METERING ARRANGEMENTS AND THE LARGE LOAD FORECASTING CRITERIA.

[00:10:01]

ERCOT HAS BEEN WORKING WITH THE PUC ON, UM, PRESENTING THE INTERIM PROCESSES.

WE ISSUED A MARKET NOTICE WITH THE STANDALONE RESOURCE LIST AS OF SEPTEMBER 1ST.

UM, AS AN UPDATE TO THIS SLIDE, THERE WAS A NEW FILING ON FRIDAY THAT INCLUDED THE ENERGY STORAGE RESOURCES BATTERIES, UM, BASED ON THAT FEEDBACK AT THE COMMISSION LEVEL AND THEN LARGE LOAD FORECASTING, UM, THE GOAL IS TO HAVE RULES IN PLACE AND PROTOCOLS IN PLACE TO EFFECTUATE THESE CHANGES IN THE 2026, UM, RTP.

SO BOTH OF THOSE ARE TARGETED RULEMAKING PROJECTS FOR A MARCH, 2026, UM, IMPLEMENTATION DAY AT THE LATEST, THE LARGE LOAD WORKING GROUP WAS THE NEW WORKING GROUP FOR THIS YEAR.

UM, THEY HAVE NOW SCHEDULED MEETINGS THROUGH THE END OF THE YEAR, MEANING EVERY TWO MONTHS.

LAST, UM, CYCLE, WE HIGHLIGHTED THIS EMERGING ISSUE OF VOLTAGE RIDE THROUGH AT THE WORKING GROUP.

IN JULY, A DRAFT STANDARD WAS PRESENTED.

WE EXPECT A REVISION REQUEST ON THAT Q4 OF THIS YEAR.

I KNOW THAT'S SOMETHING DAN WILL TALK ABOUT MORE AS UPDATE TOMORROW.

THIS REC, UM, PROGRAM ISSUE IS THE NPRR 1264 ENERGY ATTRIBUTE PROGRAM OR EAC PROGRAM.

WE HEARD FROM THE SPONSORS OF THAT REVISION REQUEST.

UM, LAST BOARD IN JUNE, DO AN UPDATE THAT WE HAVE SEEN LANGUAGE LOOKING AT THAT STREAMLINED SINGLE SOURCE.

UM, EAC ADMINISTRATOR WITH THAT ERCOT ASKING FOR MORE TIME JUST TO EVALUATE THE PROPOSAL AND SEE IF IT SHOULD COME BACK AS A REVISED 1264 OR A NEW REVISION REQUEST.

AND THEN RESIDENTIAL DEMAND RESPONSE.

I KNOW WE'VE BEEN TALKING ABOUT THIS FOR A WHILE, THAT NPRR 1296 IS NOW LIVE.

WE DO EXPECT A ROBUST STAKEHOLDER CONVERSATION AS WE MOVE, UM, THAT THROUGH THE PROCESS, WE'VE ALREADY RECEIVED COMMENTS.

UM, I KNOW THE SLIDE SAYS TABLED AT PRS LAST WEEK.

IT WAS REFERRED TO THE WHOLESALE MARKET WORKING GROUP AND THE RETAIL MARKET WORKING GROUP.

AND WE EXPECT, AGAIN, NOT, UM, TO, TO TAKE TIME AND HAVE ROBUST DISCUSSION THROUGH THE PROCESS.

THESE TWO PLANNING CRITERIA REVISION REQUESTS, I JUST WANNA HIGHLIGHT, UM, AS WE SEE THESE, UM, LARGE LOW GROWTH ISSUES THAT WE'RE TALKING ABOUT QUITE A BIT THROUGH THE BOARD, THESE TWO ARE LOOKING AT WHAT THE RESILIENCY CRITERIA AS A FOLLOW UP TO A PEC RULEMAKING, WHAT THAT LOOKS LIKE IN ADDITION TO, UM, THE ECONOMIC AND RELIABILITY CRITERIA.

AND THEN ALSO, UM, HOW WE INCORPORATE GENERATION IN THE TRANSMISSION PLANNING PROCESS WHEN, UM, THERE'S NOT GENERATION TO SOLVE THE CASE.

AND THEN THE FINAL ISSUE IS CONGESTION, REVENUE RIGHTS, OR RRS.

THIS ITEM IS MORE OF A TREND.

THE, UM, FIRST TWO ITEMS OR SYSTEM OBSERVATION AND EFFICIENCIES THAT WERE ON THE CONSENT AGENDA, BOTH ERCOT SPONSORED FOR THIS BOARD CYCLE.

THE OTHER TWO ARE DESIGN CONSIDERATIONS.

SPARK IT BY STAKEHOLDERS.

IF YOU WANNA HIGHLIGHT, UM, NPRR 1297 THAT WAS AT PRS AND WAS REJECTED BY STAKEHOLDERS.

UM, I THINK THERE WERE THOUGHTS THAT IT WOULD LIMIT LEGITIMATE HEDGING ACTIVITY, AND THAT'S A RARE OUTCOME.

I THINK WE PULLED TO STICK IN LESS THAN 2% OF THE HISTORIC REVISION REQUESTS HAVE BEEN REJECTED AT THE PRS LEVEL.

ARE THERE ANY QUESTIONS? ANY QUESTIONS FOR REBECCA ON THE HIGH IMPACT ITEMS? I'M GONNA COMPLIMENT YOU, REBECCA, ON THE NEW FORMAT.

WE HAD A JULY AND A AUGUST REGULAR TECH MEETING.

OKAY, ANYTHING ELSE ON THIS PARTICULAR AGENDA ITEM? OKAY, WITH THAT, WE'RE GONNA MOVE TO AGENDA ITEM 6.1 OR SIX AND 6.1.

UH, AGENDA ITEM

[6. TAC Report]

SIX IS ATTACK REPORT.

UH, AND THEN THERE'S A SUB ITEM 6.1, WHICH IS THE BIANNUAL STAKEHOLDER BODY STRUCTURAL AND PROCEDURE REVIEW.

UH, KAITLYN SMITH, THE CHAIR OF THE TECHNICAL ADVISORY COMMITTEE IS HERE TO PRESENT THESE TWO AGENDA ITEMS. OKAY, SEE YA.

SEE YOU.

ALL RIGHT.

GOOD AFTERNOON.

I'M CAITLIN SMITH, CHAIR OF THE TECHNICAL ADVISORY COMMITTEE.

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

[00:15:01]

SO AT THOSE JULY AND AUGUST TECH MEETINGS, WE RECOMMENDED APPROVAL OF 21 REVISION REQUESTS.

I THINK THAT'S A SLIGHTLY LARGE NUMBER FOR THAT AMOUNT OF MEETINGS.

SO A LOT MOVING THROUGH TAC RIGHT NOW.

UM, ALTHOUGH THESE REVISION REQUESTS WERE ALL UNOPPOSED, WE DID RECEIVE COMMENTS TO NOUR 2 78 AFTER THE TAC MEETING.

THERE'S ALREADY BEEN SOME DISCUSSION ON ON THAT, SO I DON'T THINK I'LL, I'LL GO INTO IT.

BUT ON, ON SEPTEMBER 15TH PLUS POWER FILED COMMENTS REQUESTING THAT THE BOARD REMAND THAT WITH DIRECTION TO REVISE THE NOGA TO ELIMINATE THE, THE REQUIREMENT, UM, THAT ESRS BE ABLE TO PROVIDE THE ADVANCED GRID SUPPORT SERVICES THAT, THAT MEET THE MODELING REQUIREMENTS OF FIGURE 1 21.

THEY WERE REQUESTING, UM, YOU KNOW, BEFORE A REQUIREMENT HAPPENS TO SEE STUDIES ESTABLISHING THE NEED BY LOCATION AND SERVICE AND, UM, REQUESTING THE ADOPTION OF CLEAR TESTABLE STANDARDS AND A PHASED IMPLEMENTATION.

ALL RIGHT, SO THIS IS ONE SLIDE, BUT IT'S QUITE A BIT OF WORK.

UM, AT THE AUGUST TECH MEETING, WE VOTED TO ENDORSE TWO RPG PROJECTS.

THE FIRST ONE WAS THE THE BTU TEXAS A AND M UNIVERSITY SYSTEM, ELLIS CAMPUS RELIABILITY PROJECT.

OPTION ONE.

WE DID HAVE ONE ABSTENTION HERE, BUT THE, THE ABSTENTION WAS NOT SUBSTANTIVE.

UM, THE, THE PERSON WHO SITS IN THE, THE CONSUMER SEAT FOR CITY OF EASTLAND AS A CONSULTANT, AND THEY HAD ALSO CONSULTED ON, UM, FOR BTU ON THIS PROJECT, WEARING A DIFFERENT HAT.

SO THEY KIND OF DIDN'T WANT TO CROSS OVER THOSE INTERESTS.

SO THE ABSTENTION WAS A SEPARATION OF THOSE INTERESTS.

THE SECOND PROJECT, THE, THE CENTER POINT BAYTOWN AREA LOAD EDITION PROJECT OPTION TWO A, UH, WE DID HAVE THREE OPPOSING VOTES FROM THE CONSUMER SEGMENT AND THE INDEPENDENT RETAIL SEGMENT AND ONE ABSTENTION FROM THE COOPERATIVE SEGMENT.

THE REASON FOR THE NO VOTE IS INCLUDED IN YOUR BOARD PACKET.

UM, THE CONCERN WAS THAT WHAT WAS SUBMITTED AS A 142 MILLION PROJECT TURNED INTO A $545 MILLION PROJECT AFTER ERCOT INDEPENDENT REVIEW.

THE PRIMARY DRIVER FOR THIS PROJECT IS TO ACCOMMODATE A NEW LARGE LOAD TO BE LOCATED IN HARRIS COUNTY.

NO DETAILS REGARDING THE SIZE OF THE LOAD OR THE TIMING OF ITS SCENARIO CONNECTION WERE PROVIDED TO TAC OUR CONCERN, THIS IS THE NO VOTE STILL WITH THIS PROJECT WAS STILL LACK OF COMPREHENSIVE DOCUMENTATION PROVIDED TO TAC EXPLAIN AND INCREASED COST.

UM, THROUGH DISCUSSION, WE WERE ABLE TO, TO DETERMINE THAT THAT ADDITIONAL COST, UM, INCLUDES TEMPORARY BYPASS FACILITIES.

UM, MY UNDERSTANDING OF WHAT HAPPENED WAS THAT THE, THE MAINTENANCE OUTAGE CRITERIA WAS IMPLEMENTED FOR THIS PROJECT.

UM, BUT THERE'S STILL A LACK OF DETAIL FOR THOSE CONSUMERS AND, UH, INDEPENDENT RETAILER TO, TO VOTE TO ENDORSE THIS PROJECT.

I CAN PAUSE HERE, BUT I BELIEVE YOU GUYS ARE TAKING THIS UP SEPARATELY TODAY OR LATER TODAY OR TOMORROW.

OKAY, I WILL CONTINUE.

UM, ALSO AT THE AUGUST TECH MEETING, WE VOTED TO ENDORSE THE 2026 ANCILLARY SERVICES METHODOLOGY.

AGAIN, WE HAD SEVERAL OPPOSING VOTES HERE.

WE HAD SEVEN OPPOSING VOTES.

THE OPPOSING VOTES WERE FROM THE CONSUMER SEGMENT AND THE INDEPENDENT RETAILER SEGMENT.

UM, AND THEN WE HAD THREE ABSTENTIONS, AND THOSE WERE FROM THE INDEPENDENT GENERATOR SEGMENT AND THE MUNICIPALLY OWNED UTILITIES SEGMENT.

AND I BELIEVE WE'LL HAVE DISCUSSION ON THIS, UM, THE TOMORROW, UM, AND THE ERCOT AND THE IMM WILL SPEAK, I DID WANNA HIGHLIGHT THAT, THAT A SIGNIFICANT AMOUNT OF WORK WENT INTO THIS, UH, PARTICULARLY FROM OUR, OUR RELIABILITY OPERATIONS SUBCOMMITTEE AND WHOLESALE MARKET SUBCOMMITTEE.

UM, THE LEADERSHIP AND THE MEMBERSHIP OF THOSE COMMITTEES PUT A LOT OF WORK INTO THIS.

UH, WE START THE PROCESS REALLY EARLY, ESPECIALLY IN THE LAST COUPLE OF YEARS, TO GET THE METHODOLOGY VETTED BY STAKEHOLDERS, OUR SUBJECT MATTER EXPERTS, AND THEN HAVE IT APPROVED BY THE BOARD AND THE COMMISSION BEFORE THE END OF THE YEAR.

THIS IS THE FIRST YEAR WHERE WE IMPLEMENTED NEW FEATURES FROM THE ANCILLARY SERVICES STUDY THAT THE COMMISSION DID LAST YEAR.

UM, THERE'S A PROBABILISTIC METHODOLOGY FOR ECRS AND NONS SPIN, AND OF COURSE, YOU KNOW, WE ARE LOOKING AT ALL THINGS THIS YEAR WITH AN EYE TOWARDS REAL TIME CO-OP OPTIMIZATION.

SO THE AMOUNT OF ANCILLARY SERVICES YOU'RE THINKING ABOUT DIFFERENTLY WITH THE, THE DEPLOYMENT AND THE, THE PRICING BEING DIFFERENT UNDER RTC.

SO A LOT OF SUBSTANTIVE WORK HERE.

AND I REALLY WANNA HIGHLIGHT THE WORK THOSE STAKEHOLDERS DID AND, AND THANK THEM.

THE CONSUMERS PROVIDED A STATEMENT REGARDING THEIR NO VOTE ALSO IN YOUR BOARD MATERIALS.

UM, IN PREPARING FOR THIS, I WAS DIRECTED TO A PARTICULAR SENTENCE, UH, REGARDING THE OVER, OVER PROCUREMENT OF ANCILLARY SERVICES, RESTRICTING THE, THE ENERGY MARKET AND PREVENTING THE MOST ECONOMICALLY EFFICIENT OUTCOME.

[00:20:01]

UM, THE THEORY BEING THAT RESTRICTING THE ENERGY MARKET WITH OVER PROCUREMENT OF ANCILLARIES COULD CAUSE ENERGY PRICES TO RA TO RAISE, I THINK THE EASIEST WAY TO SAY THIS FROM CONSUMERS WAS THAT THEY DON'T WANT TO PAY FOR THINGS THAT ARE NOT CONTRIBUTING TO RELIABILITY.

AND THEY SAW THIS AS MAYBE EVEN BEING DETRIMENTAL TO RELIABILITY IN THE LONG TERM BY THAT CONSTRICTING OF THE ENERGY MARKET.

ADDITIONALLY, I THINK THIS GOT VERY CONTENTIOUS, UM, NOT JUST ABOUT THE PROCUREMENT NUMBERS OR THE PROBABILISTIC METHOD, BUT THE CONSERVATIVE OPERATIONS.

SO ESSENTIALLY THE METHODOLOGY WAS SAYING THAT IN ORDER TO KEEP CONSERVATIVE OPERATIONS, OUR CRITERIA SHOULD BE TO AVOID A WATCH.

AND IN ORDER TO AVOID A WATCH, WE SHOULD USE A SIX HOUR LOOK AHEAD.

AND THE CONSUMERS WERE WANTING TO SEE MORE DISCUSSION ON THOSE POINTS, RIGHT? WHETHER AVOIDING A WATCH IS STILL THE RIGHT CRITERIA, WHETHER A SIX HOUR LOOK AHEAD IS WHAT YOU NEED TO AVOID A WATCH, THE BIENNIAL TAX STAKEHOLDER BODY STRUCTURAL AND PROCEDURAL REVIEW.

THE, THE NEXT PRESENTATION IS ON THAT.

SO I WILL SKIP THIS FOR NOW.

THE, UH, INITIATIVE PRIORITIZATION WORKSHOP, I BELIEVE KEITH IS PRESENTING ON THIS TOMORROW.

UM, IT'S MORE EXCITING THAN IT SOUNDS.

UM, SO WE'VE BEEN WORKING CLOSELY WITH, WITH KEITH AND HIS TEAM.

SEVERAL MONTHS AGO, CAME TO TECH LEADERSHIP AND, YOU KNOW, WE'VE BEEN WORKING ON HOW TO HELP THEM WITH PRIORITIZING REVISION REQUESTS AND INITIATIVES THAT ALSO MIGHT LEAD TO REVISION REQUESTS.

UM, AS YOU ALL ARE WELL AWARE, ERCOT HAS AN INCREDIBLE NUMBER OF THINGS IN FRONT OF THEM TO IMPLEMENT TIMELY DELIVERY OF RTC LEGISLATIVE MANDATES LIKE DRS AND FIRMING.

AND THEN WE HAD THIS BACKLOG OF, OF APPROVED VERSION REQUESTS TO IMPLEMENT.

SO WE HELD A WORKSHOP, IT WENT VERY WELL.

UM, WE, WE HAD A CHAIR OF THAT WORKSHOP THAT LET ME VOLUNTEER HER, AMANDA FRAZIER.

UM, AND, AND THANK YOU FOR HER HELP.

I THOUGHT THAT WORKSHOP WENT REALLY WELL, BETTER THAN I EXPECTED.

YOU KNOW, IT CAN BE FAIRLY CONTENTIOUS WHEN DEBATING PRIORITIES.

IT'S NOT SOMETHING WE HAVE STANDARDIZED HERE.

OTHER ISOS SOMETIMES VOTE ON INITIATIVES OR PRIORITIES FOR THE NEXT YEAR.

WE HAVEN'T DONE SOMETHING LIKE THAT IN ER O BEFORE.

UM, BUT I, I THINK IT WENT PRETTY SMOOTHLY.

BUT THE ISSUE TO ME IS THE THEME IS THAT WE CONTINUE TO ADD THINGS TO OUR HIGH PRIORITY LIST AND NEVER TAKE THINGS OFF.

AND SO THAT IS SOMETHING THAT WE ARE TRYING TO HELP ERCOT TACKLE.

UM, TROY ANDERSON WITH ERCOT IS, IS GOING TO PRESENT TO T AND NOT JUST PRS.

AND I JUST WANNA NOTE HE DOES REALLY GREAT WORK, UM, AT THE, THE PROTOCOL REVISION SUBCOMMITTEE.

HE, HE HAD SOME MATERIALS ON JUST HOW MUCH ERCOT HAS IN FRONT OF THEM WITH, YOU KNOW, DESIGN IMPLEMENTATION PHASES ONE AND TWO, AND IT'S VERY EYE-OPENING AND IT, IT'S GREAT TO SEE IN THAT WAY.

SO THIS IS THE END OF MY REGULAR TECH REPORT, AND I THINK I CAN GO STRAIGHT TO THE NEXT ONE, UNLESS YOU WANNA PAUSE HERE.

ANY, ANY QUESTIONS ON THE FIRST PART OF KAITLYN'S REPORT? OKAY.

[6.1 Biennial TAC Stakeholder Body Structural and Procedural Review]

LET'S SEGUE TO 6.1.

OF THING IS WHAT WE'RE ASKING FOR.

BACKGROUND ON THIS REVIEW IS THAT IT'S INTENDED TO APPROVE, IMPROVE TAX PROCESSES AND STRUCTURE FOR BETTER EFFICIENCY AND ALIGNMENT WITH STRATEGIC OBJECTIVES.

UH, WE PREVIOUSLY DID THIS EVERY YEAR.

THIS IS THE FIRST TIME WHERE WE HAD THE YEAR OFF.

WE'RE DOING IT BI ALLY NOW.

AND I, I THINK THAT WAS TO OUR BENEFIT.

UM, YOU KNOW, I THINK THAT ENABLED US TO KIND OF MAKE MORE CHANGES AND, AND LOOK AT IT WITH FRESHER EYES AND DO A, A DEEPER DIVE THIS YEAR.

SO BASICALLY WE SEND OUT SORT OF SELF AUDIT, SELF REPORTS TO OUR SUBCOMMITTEE, WORKING GROUP, TASK FORCE LEADERSHIP.

UM, WE HAD A COUPLE OF DISCUSSIONS AT TAC AND THEN WE HAD A WORKSHOP TO DISCUSS THE RESULTS AND RECOMMENDATIONS IN DEPTH.

PEOPLE DID A REALLY GOOD JOB OF, OF NOT JUST BRINGING SORT OF COMPLAINTS AND WHAT'S HAPPENING, BUT ALSO RECOMMENDATIONS TO, TO HELP WITH EFFICIENCY.

AND THEN WE REPORTED OUT THAT DISCUSSION TO THE AUGUST TECH MEETING.

SO HERE'S THE INFORMATION WE ASK FOR, YOU KNOW, DOES THE GROUP SCOPE OR PROCEDURES NEED TO BE CHANGED? WE'VE ALREADY HAD ONE CHANGE, YOU KNOW, DUE TO THE, THE CHANGE.

UM, WE USED TO HAVE THE SARAH AND NOW WE HAVE THE MORA.

SO THAT'S A GROUP THAT WAS AFFECTED THAT THE SCOPE NEEDED TO BE CHANGED.

UM, DOES, YOU KNOW, HOW, HOW FREQUENTLY IS THE MEET THE GROUP MEETING? WHAT'S THE MEETING LENGTH? WHAT'S THE ATTENDANCE, UH, FOR THE WORKING GROUPS AND TASK FORCES? ARE THEY REPORTING TO THE MOST APPROPRIATE SUBCOMMITTEES? UM, IS THE GROUP STILL NECESSARY TO ACHIEVE TAC OR CUT STRATEGIC OBJECTIVES? YOU KNOW, DOES THE SCOPE OVERLAP WITH ANOTHER GROUP? THAT KIND

[00:25:01]

WE ARE RECOMMENDING A FEW SUBSTANTIVE CHANGES TO BE IMPLEMENTED NEXT YEAR UNDER THE RETAIL MARKET SUBCOMMITTEE.

WE ARE RECOMMENDING TO CONSOLIDATE THE PROFILING WORKING GROUP AND TEXAS SET WORKING GROUP.

UM, THE METERING WORKING GROUP, WHICH IS VERY IMPORTANT.

THAT'S WHERE YOU HAVE YOUR DISCUSSIONS ABOUT, YOU KNOW, NET NET METERING LOAD AND GENERATION AND, AND ALL OTHER METERING.

UM, THAT IS CURRENTLY UNDER THE WHOLESALE MARKET SUBCOMMITTEE.

WE ARE RECOMMENDING TO MOVE THAT TO THE RELIABILITY OPERATIONS SUBCOMMITTEE.

AND THEN THERE WERE TWO GROUPS UNDER THE WHOLESALE MARKET SUB SUBCOMMITTEE THAT WE'RE ALREADY NOT MEETING THAT WE ARE PROPOSING TO SUNSET AND, AND KEEP THOSE DISCUSSIONS AT THE WHOLESALE MARKET WORKING GROUP.

THOSE ARE THE RESOURCE COST WORKING GROUP AND THE MARKET SETTLEMENT WORKING GROUP .

WE ALSO COVERED HOW MANY REVISION REQUESTS ARE GOING THROUGH THESE STAKEHOLDER GROUPS.

AND THEN ANN AND HER TEAM MAPPED THE REVISION REQUEST TO STRATEGIC PLAN OBJECTIVES.

AND, AND THE OTHER REASONS WE USE, THE KEY TAKEAWAY IS THAT THE MAJORITY IS OF REQUESTS ARE MAPPED TO GENERAL SYSTEM AND OR PROCESS IMPROVEMENTS AS OPPOSED TO ONE OF THE, THE SUBSTANTIVE STRATEGIC OBJECTIVES.

THIS SLIDE, I THINK IS, IS VERY INTERESTING.

IT'S JUST STATISTICS ON THE ATTENDANCE DURATION, UM, MEETING COUNT OF ALL OF OUR MEETINGS, UM, YOU KNOW, THIS ONE HASTAC AND THEN THE SUBCOMMITTEES THAT REPORT TO IT.

AS YOU CAN SEE, THE THE TAC MEETINGS ARE QUITE LENGTHY.

UM, YOU KNOW, A LITTLE MORE THAN HALF A DAY, DAY, I THINK THIS IS BY DESIGN.

WE ARE WITH THIS BOARD REALLY TRYING TO PRESERVE THE RECORD ATTACK, MAKE SURE WE GET ALL THE ISSUES KIND OF ON, ON RECORD FOR YOU THERE SO WE CAN HAVE TRANSPARENCY, UM, OF ALL THE, THE ISSUES THAT ARE COMING FROM THOSE SUBCOMMITTEES.

THE OTHER THING I THOUGHT WAS SORT OF INTERESTING WAS THAT YOU CAN SEE, UM, AT THE BOTTOM AS WE GO FROM 21 TO 25, I THINK WE ARE HAVING MORE MEETINGS AND CANCELING LESS AS WE ARE BACK IN PERSON AFTER CID AND, AND GETTING USED TO BEING MORE BACK IN PERSON.

SO WE HAD THE RECOMMENDATIONS MOVING FORWARD, UM, THOSE SUBSTANTIVE CHANGES.

SO THE WORKING GROUPS WILL START AT THE SUBCOMMITTEES THAT THE WORKING GROUPS ARE UNDER.

WE ALSO HAD A REVISION REQUEST THAT WAS FILED AFTER THIS WORKSHOP IN ORDER TO ADDRESS AN ISSUE THAT WAS RAISED ON LATE FILING OF MATERIAL THAT, THAT REVISION REQUEST IS NPRR 1298.

UM, I'D LIKE THE SENTENCE TACK IS, OF COURSE COMMITTED TO CONTINUOUSLY SEEKING WAYS TO ENHANCE THE EFFICIENCY OF ITS STRUCTURE IN MEETINGS.

AND WE WILL HAVE THIS FORMAL REVIEW AGAIN IN 2027.

UM, I'M HAPPY TO TAKE PROPOSED EFFICIENCIES IN THE MEANTIME, UH, IF ANYBODY WANTS TO REACH OUT TO ME, I'LL PAUSE THERE FOR QUESTIONS.

ANY QUESTIONS OR COMMENTS FOR KAYLA? I'VE GOT A QUESTION.

WE, WE HAD THIS DISCUSSION.

I WAS SHOCKED THAT THERE WERE OVER 400 COMMITTEES, SUB COMMITTEE MEETINGS LAST YEAR.

UH, I KNEW THERE WERE A LOT, BUT I DIDN'T KNOW THERE THERE WERE THAT MANY.

HAVE WE DONE ANY BENCHMARKING ABOUT OUR STRUCTURE AGAINST OTHER ISO STRUCTURES FOR STAKEHOLDER GROUPS? ANN SAYS NO.

UM, WE'VE PROBABLY DONE SOMETHING CLOSE TO THAT, BUT I, I DON'T KNOW IF WE'VE, WE'VE DONE THAT.

YOU KNOW, I, I THINK THAT'S SOMETHING WE ARE THINKING ABOUT, RIGHT? WE ARE DEFINITELY TRYING TO SEE IF WE CAN CONSOLIDATE THAT.

UM, YOU KNOW, I, I THINK A LOT OF THEM ARE, OR MOST OF THEM ARE VALID, BUT I, I THINK THAT IS A LOT OF MEETINGS FOR STAKEHOLDERS, YOU KNOW, PARTICULARLY CONSUMERS AND AND ERCOT STAFF I KNOW TO GO TO.

SO THAT INCLUDES EVERYTHING.

I THINK.

UM, I, I ALSO DIDN'T GET THAT CONFIRMED, BUT, BUT TAC THE SUBCOMMITTEES, THE WORKING GROUPS, THE TASK FORCES, UM, IT MAY NOT INCLUDE SOME OF THE THINGS OUTSIDE OF TAC.

I DON'T KNOW IF RPG IS INCLUDED IN THAT IN THINGS LIKE RPG, BUT I THINK IT INCLUDES ALL OF OUR STAKEHOLDER MEETINGS.

UM, AND, AND THE ANSWER IS NO.

WE, BUT WE CAN, WE CAN GET THAT AND BRING THAT BACK TO YOU.

COULD YOU ALSO GET THE INFORMATION FOR RPG AS WELL? COULD YOU ALSO GET THE INFORMATION FOR RPG AS WELL? WE COULD GET THE INFORMATION FROM, FROM RPG.

UM, THAT WAS NOT INCLUDED IN THE, THE REVIEW.

IT DOESN'T REPORT TO TAC, IT'S A, OUR CO LED GROUP.

UM, AND IT, IT'S A NON-VOTING GROUP AND I THINK NOT EVEN THE CONSENSUS DRIVEN GROUP, BUT IT, IT'S SORT OF OUTSIDE THE, THE SCOPE OF, OF TAC.

BUT WE CAN BRING THAT INFORMATION BACK.

I THINK JUST THE MEETING FREQUENCY AND AND LENGTH.

THAT'D BE GREAT.

[00:30:02]

I'LL WORK WITH ANN.

ANY OTHER QUESTIONS, COMMENTS, FEEDBACK FOR CAITLYN? WELL, CAITLYN, LET ME UH, SAY THANK YOU ON BEHALF OF THE BOARD FOR THE INCREDIBLE INVESTMENT.

THERE'S OVER A THOUSAND HOURS OF TIME INVESTED THIS YEAR, UH, BY TAC UH, IN LOOKING AT AT THE PROCESSES.

WE APPRECIATE THAT AND ALL THE STAKEHOLDERS THAT, THAT ARE, ARE BACKING YOU UP TO HELP THIS GET DONE.

THANK YOU ALL.

WELL, I APPRECIATE THAT.

THAT WE'RE GONNA MOVE TO AGENDA ITEM SEVEN, THE REGIONAL, UM, PLANNING GROUP PROJECTS.

OKAY, WITH

[7.1 CNP Baytown Area Load Addition Project]

THERE ARE TWO VOTING ITEMS THAT CHRISTIE HOBBS IS GONNA PRESENT.

THE FIRST IS GOING TO BE AGENDA ITEMS 7.1, THE CNP BAYTOWN AREA LOAD EDITION PROJECT.

THE MEETING MATERIALS INCLUDE JOINT COMMENTS FROM CONSUMERS, THE OFFICE OF PUBLIC UTILITY COUNCIL AND RHYTHM OPS.

ALSO, WE KNOW THAT THE JOINT COMMENTERS CAST THREE NO VOTES ATTACK, BUT THE ATTACK STILL ENDORSE THE PROJECT.

UH, CHRISTIE, PLEASE PRESENT THE PROJECT AND THEN WE'LL HAVE AN OPPORTUNITY FOR FURTHER, UH, COMMENTS AND QUESTIONS.

ALL RIGHT, GOOD AFTERNOON BOARD MEMBERS.

SO THIS IS THE FIRST OF TWO ERCOT RECOMMENDED PROJECTS THAT WE'RE BRINGING TO YOU FOR YOUR CONSIDERATION TO ENDORSE THE NEED FOR THESE PROJECTS.

UH, FOR THE BENEFIT OF OUR NEW BOARD MEMBERS.

AS A PART OF OUR TRANSMISSION PLANNING PROCESS, WE LOOK OUT INTO THE FUTURE SIX YEARS.

WE DO TRANSMISSION PLANNING ROADMAPS, THEN THE UTILITIES WORK TO TAKE THE PROJECTS WE RECOMMEND OUT OF THAT ROADMAP, AND THEY BRING 'EM THROUGH THE REGIONAL PLANNING GROUP PROCESS.

WE'RE ABLE TO DO A LITTLE ADDITIONAL REVIEW, UM, AS ALLUDED TO, IT'S A, A STAKEHOLDER GROUP THAT'S LED BY ERCOT.

WE'RE ABLE TO GET FEEDBACK ON DIFFERENT ALTERNATIVES, DIFFERENT PROJECT NEEDS, UM, FOR PROJECTS THAT ARE RECOMMENDED.

SO THIS IS THE FIRST OF TWO.

IT WAS RECOMMENDED BY CENTER POINT.

IT WAS BROUGHT FORWARD, AND UH, AS BILL NOTED, THERE WERE SOME NO VOTES, WHICH IT'S BEEN A VERY LONG TIME AT THE TAC PROCESS SINCE THERE HAVE BEEN NO VOTES OR ABSTENTIONS ON THESE TRANSMISSION PROJECTS COMING FORWARD.

SO WE'LL SPEND A LITTLE BIT MORE TIME UNDERSTANDING WHY.

ALL RIGHT, SO SENATOR POINT BROUGHT THIS TO US, UH, ALMOST A YEAR AGO AS A RECOMMENDATION.

THE PURPOSE OF IT IS TO, AS WE LOOK AT GROWTH IN THAT HOUSTON AREA, IN HARRIS COUNTY, IN THE COASTAL WEATHER ZONE, RELIABILITY VIOLATIONS ON THE SYSTEM, SO THERMAL OR VOLTAGE VIOLATIONS ON THE GRID, WE PERFORMED OUR INDEPENDENT REVIEW BASED OFF OF BOTH NERC AND ERCOT PLANNING GUIDE CRITERIA.

AND WE'VE RECOMMENDED AN OPTION THAT WAS DISCUSSED AT RPG AND ENDORSED BY T EVEN WITH, UH, THE OPPOSING VOTES IN THE ABSTENTIONS.

THIS PARTICULAR PROJECT ACTUALLY LOOKS AT THE ADDITION OF A LARGE LOAD IN THAT AREA.

AND THEN AS YOU ADD THAT IN AND YOU TAKE INTO DIFFERENT ACCOUNT, DIFFERENT PLANNING CRITERIA AND CONTINGENCIES, HOW DOES THAT IMPACT THE SYSTEM? AND THERE WERE A NUMBER OF DIFFERENT PLANNING CRITERIA, BOTH AT THE NERC LEVEL AND AT THE ERCOT PLANNING LEVEL WHERE WE SAW THERE WAS VOLTAGE OR THERMAL VIOLATIONS ON THE SYSTEM.

SO THERE WAS ADDITIONAL UPGRADES OR ADDITIONAL LINES THAT WERE NEEDED TO BE ABLE TO ALLEVIATE THOSE CONDITIONS ON THE SYSTEM.

THOSE THINGS VARIED FROM LOOKING AT MULTIPLE CONTINGENCIES.

SAY YOU HAD A SITUATION WHERE YOU HAD A LOSS OF GENERATION IN THE AREA AND THEN YOU HAD A LOSS OF MAYBE ANOTHER GENERATOR OR A TRANSFORMER TRANSMISSION CIRCUIT IN THE AREA TO THINGS WHERE YOU HAD MULTIPLE CONTINGENCIES ON COMMON STRUCTURES, ET CETERA.

WITH THAT, UM, WE RECOMMENDED, WE LOOKED AT FOUR DIFFERENT OPTIONS.

UM, THE ORIGINAL OPTION THAT CENTERPOINT BROUGHT TO US, UM, AND I THINK THIS WAS SOME OF THE, THE BASIS BEHIND THE NO VOTES.

AND OF COURSE, UH, WE'VE GOT CONSUMER REPRESENTATIVES HERE TODAY.

UM, AND THEY DID FILE COMMENTS.

PLEASE FEEL FREE TO, TO JUMP IN AND CORRECT ME IF I'M WRONG.

I THINK SOME OF THE, THE CONCERNS WERE GETTING MORE INFORMATION ABOUT THE PROJECT.

AND IN PARTICULAR WE LOOKED AT FOUR DIFFERENT OPTIONS.

WE LOOKED AT THE OPTION THAT CENTERPOINT BROUGHT US, AS WELL AS SOME OTHER ALTERNATIVES.

AND OF THOSE FOUR OPTIONS, THE ONLY ONE THAT MET ALL OF THE RELIABILITY CRITERIA WAS THE, THE PROJECT THAT'S BEFORE YOU TODAY, BUT IT IS A HIGHER, UM, COST PROJECT.

THE ORIGINAL, UH, PROPOSAL FROM CENTERPOINT WAS FOR, UH, $141 MILLION.

UM, IT INCREASED TO UPDATED COST ESTIMATES TO 163 COMPARED TO THE $545 MILLION PROJECT THAT WE ULTIMATELY RECOMMENDED.

AND THE REASON IS, IS THAT WE WENT THROUGH IN OUR STUDY CASES

[00:35:01]

AND WERE REQUIRED BOTH BY OUR PLANNING CRITERIA AND NERC PLANNING CRITERIA TO LOOK AT CERTAIN MAINTENANCE TYPE OUTAGE LEVELS.

AND WHAT WE FOUND IS THAT THE PROJECT THAT CENTERPOINT BROUGHT FORWARD DID NOT MEET THOSE CRITERIA.

WE STILL STILL SAW VIOLATIONS ON THE SYSTEM AND SO WE HAD TO MAKE ADDITIONAL RECOMMENDATIONS.

UM, I THINK THERE WAS ALSO SOME DISCUSSION BECAUSE ONE OF THE MAIN DRIVERS BEHIND THE PROJECT THAT CENTER POINT BROUGHT FORWARD IS FOR A LARGE LOAD THAT IS LOCATING IN THEIR AREA, IT'S ABOUT A 475 MEGAWATT LOAD.

I THINK THERE WAS SOME QUESTIONS, UH, ABOUT THE COST AND WHAT IF THAT PROJECT DOES NOT SHOW UP.

I WOULD SAY THIS PROJECT MEETS THE NEED FOR THAT LARGE LOAD, BUT IT ALSO LOOKS AT MEETING THOSE MAINTENANCE OUTAGE CRITERIA THAT COULD HAPPEN POSSIBLY EVEN TODAY, EVEN WITHOUT THAT LARGE LOAD THERE.

SO AFTER TAKING INTO CONSIDERATION ALL THE OPTIONS, WE DID RECOMMEND, UH, OR ENDORSED AS A PART OF OUR INDEPENDENT REVIEW OPTION TWO A, WHICH DOES HAVE A $545 MILLION COST.

UM, IT'S GOT MORE TRANSFER CAPABILITY LOOKING AHEAD TO THE FUTURE AS THE SYSTEM CONTINUES TO GROW.

ANOTHER REASON FOR A LOT OF THE COSTS IS BECAUSE WE ARE LOOKING AT A VERY METRO AREA, AND YOU'LL START TO SEE THIS MORE ACROSS THE STATE.

WE TALKED ABOUT THIS LAST YEAR WHEN WE WERE DEVELOPING 7 65, AND THAT WAS ONE OF THE BENEFITS IS BECAUSE WE'VE MAXIMIZED THE CAPABILITY OF OUR SYSTEM TODAY, THE TRANSMISSION LINES THAT ARE IN SERVICE, WE NEED THEM TO MAINTAIN AND BE IN SERVICE.

AND SO TO BE ABLE TO DO UPGRADES TO DO ADDITIONAL WORK, WHAT WE'RE FINDING IS A LOT OF THE UTILITIES ARE HAVING TO DO WHAT WE CALL HOT WORK.

SO THEY'RE HAVING TO BUILD IN PARALLEL AND CREATE SEPARATE STRUCTURES TO KEEP THOSE LINES IN SERVICE, TO KEEP SERVING THE CUSTOMERS WHILE THE UPGRADES CAN BE DONE, WHICH MEANS MORE COST, UM, AS A PART OF THE PROCESS.

SO WHAT I WOULD REQUEST FOR YOU TODAY, UM, IS, UH, TO ENDORSE THE NEED FOR THIS PROJECT OPTION TWO A BASED ON BOTH MEETING THE NERC AND THE ERCOT RELIABILITY PLANNING CRITERIA.

AND WITH THAT, I WILL PAUSE TO SEE IF YOU HAVE ANY QUESTIONS.

ANY QUESTIONS FOR CHRISTIE? I I HAVE A COUPLE QUESTIONS.

BEN.

UH, YOU HAD MENTIONED, UH, STRANDED CAUSE YESTERDAY WITH THE PROPOSED PROJECT.

ARE THERE ANY CONTROLS SHOULD THOSE COSTS BECOME STRANDED? SO MEANING WOULD YOU BE REFERRING IF THE PROJECT DOES NOT SHOW UP? CORRECT.

SO I THINK WHAT WE'RE LOOKING AT IS WE'VE GOT A ENDORSED LETTER ATTESTATION FROM THE UTILITY THAT SAYS THAT THAT PROJECT IS COMING FORWARD.

AND SO WE LOOK AT THE RELIABILITY NEED BASED ON THAT.

I WOULD SAY ANY UTILITY THAT GOES FORWARD IN BUILDING A PROJECT, THEY ARE THEN SUBJECT TO THE PUC AS TO WHETHER OR NOT THOSE COSTS CAN BE RECOVERED.

AND I WOULD THINK IF A UTILITY WENT FORWARD AND BUILT A PROJECT AND THEN THEY COULDN'T DEMONSTRATE TO THE COMMISSION THAT THERE WAS A NEED FOR THAT, THEY WOULD HAVE A DIFFICULT HURDLE IN BEING ABLE TO RECOVER THOSE COSTS.

BUT I WOULD DEFER, LIKE, AGAIN, FROM THE ERCOT PERSPECTIVE, WE'RE LOOKING AT NEED BASED OFF OF INFORMATION PROVIDED TO US IN THE CURRENT TOPOLOGY OF THE SYSTEM AS FAR AS LOOKING AT THE COST OF OPTIONS, WE TRY TO LOOK AT WHEN WE'RE COMPARING OPTIONS TO MAKE SURE WE'RE GETTING THE MOST BENEFIT FOR COST.

UM, BUT AT THE END OF THE DAY THEN THAT, THAT LANDS AT THE COMMISSION.

I SUPPOSE THE COMMISSION WANTS TO COMMENT.

CHRISTIE, I THINK THAT WAS VERY WELL SAID.

YOU KNOW, WE HAVE TWO OPEN SPOTS ON THE COMMISSION.

YOU SOUNDED A LOT LIKE A COMMISSIONER THERE, SO YOU JUST LET ME KNOW.

TO APPROVE THE CNP BAYTOWN AREA LOAD EDITION PROJECT AS IT WAS PRESENTED.

YOU WOULD MISS ME HERE.

I KNOW THAT'S TRUE.

SO, UH, SPEAKING OF THAT, IS THERE GONNA BE A CCN REQUIRED FOR THIS, FOR THIS PARTICULAR PROJECT? NO.

UM, AS WAS STATED IN THE ERCOT INDEPENDENT REVIEW, UM, I BELIEVE THERE'S NO NEW RIGHT OF WAYS THAT ARE REQUIRED FOR THIS PARTICULAR PROJECT.

SO AFTER IT'S APPROVED BY THE BOARD, THERE'S NOT GONNA BE ANY FURTHER PRUDENCE REVIEW OR ANY KIND OF OTHER PUBLIC INPUT.

IS THAT CORRECT? I WOULD SAY THE NEXT INPUT WOULD BE IS WHEN, UH, THE UTILITY GOES BEFORE THE COMMISSION TO TRY TO RECOVER THOSE RATES.

SO THAT'S AFTER THE RATES ARE IMPOSED ON CONSUMERS AND THEY, UH, IS THAT CORRECT? I WOULD, I DON'T WANNA GET INTO THE COMMISSION RATE MAKING PROCESS, BUT MY UNDERSTANDING IS IF THEY WERE GONNA GET ROLLED INTO THE RATES, THEY HAVE TO BE ABLE TO GO TO THE COMMISSION AND JUSTIFY THOSE RATES BEFORE THEY'RE PASSED ON TO THE CONSUMER.

ANY OTHER QUESTIONS OR COMMENTS? CHRISTIE, ON THIS PARTICULAR PROJECT, I DON'T HEAR ANY, SO I'LL ENTERTAIN A MOTION

[00:40:01]

SO MOVED.

THANK YOU, PEGGY.

DO I HAVE A SECOND? SECOND.

WHO WAS THE SECOND? LINDA AND JOHN.

MEANS THEY'RE ALL IN FAVOR? ALL IN FAVOR A.

ANY OPPOSITION? I'LL ABSTAIN.

BENJAMIN OPEC VOTES? NO.

UH, ANY, HOLD ON.

I WANNA MAKE SURE.

I THINK HE'S ABSTAINING.

OH, HE ABSTAINED.

I'M SORRY.

I'M GLAD YOU CLARIFIED THAT.

UH, ANY, UM, OKAY, SO NO OPPOSITION.

GOT ONE ABSTENTION.

THE MOTION IS APPROVED.

SO THE PROJECT'S APPROVED.

TO TALK ABOUT AGENDA ITEM 7.2, THE BTU TEXAS A AND M UNIVERSITY SYSTEM, ELLIS CAMPUS RELIABILITY PROJECT.

WITH THAT, UH, WE'RE GONNA ASK CHRISTY

[7.2 BTU - Texas A&M University System RELLIS Campus Reliability Project]

ALL THE AGGIES GO WHOOP.

SO YEAH, I, I THINK YOU STOLE MY JOKE.

IT'S THE BRYAN TEXAS UTILITIES PROJECT FOR THE BEST UNIVERSITY SYSTEM, ELLIS CAMPUS RELIABILITY PROJECT.

AND THANK YOU FOR WEARING A MARINE JACKET TODAY TO SUPPORT THE CAUSE.

I'M TRYING TO HELP US GET ACROSS THE LINE TODAY, .

ALL RIGHT.

AGAIN, THIS ONE WAS BROUGHT TO US BY BRIAN, TEXAS UTILITIES.

THEY BROUGHT IT TO US AT THE BEGINNING OF THE YEAR.

UM, SO AGAIN, A A, A THOROUGH REVIEW, UM, DONE BY THE TEAM IN, UH, THIS PAST YEAR.

I'M NOT GONNA GO THROUGH ALL THE REQUIREMENTS AGAIN.

THIS IS A PROJECT THAT'S OVER A HUNDRED MILLION DOLLARS.

THAT'S WHY IT'S BEFORE YOU TODAY.

AND AS THE, THE TEXAS A M UNIVERSITY SYSTEM, ESPECIALLY OUT OF THE ELLIS CAMPUS IS GROWING AS WELL AS IN BRAZOS COUNTY IN THE EAST WEATHER ZONE, UM, THE UTILITY BROUGHT FORWARD THIS PROJECT FOR THAT GROWTH IN THE AREA.

UM, OUR ENDORSEMENT AND REVIEW IS BASED ON BOTH RELIABILITY NEEDS FOR THERMAL AND VOLTAGE VIOLATIONS, AGAIN, IN THOSE NEIGHBORING COUNTIES AND AREAS.

UH, THIS PROJECT WAS UNANIMOUSLY ENDORSED BY THE TAC AT ITS LAST TAC MEETING.

AGAIN, THE NEED FOR IT.

AS WE GO THROUGH AND WE LOOK AT OUR PLANNING CRITERIA, UM, THERE WERE A NUMBER OF AREAS THAT WE'RE REQUIRED TO LOOK AT TO SEE IF, FOR EXAMPLE, IF YOU LOSE A GENERATOR IN THE AREA, IF YOU LOSE MULTIPLE TRANSMISSION ELEMENTS IN AN AREA, WHAT IS THE RELIABILITY IMPACT? AND TO MAKE SURE WE'RE NOT EXCEEDING THOSE VIOLATIONS IN THE AREA.

WHAT YOU'LL SEE IS, AS WE WENT THROUGH, WE STARTED THIS PROCESS BACK IN JANUARY AND WE WENT FORWARD AND WE ACTUALLY, WE HAD SEVERAL OPTIONS AND WE SHORTLISTED IT TO THREE.

AND IT REALLY CAME DOWN TO OPTION ONE VERSUS OPTION TWO.

IF YOU TAKE A CLOSE LOOK AT THE DETAIL IN THE ERCOT INDEPENDENT REVIEW, YOU'LL ACTUALLY FIND THAT OPTION ONE IS MORE EXPENSIVE THAN OPTION TWO.

UH, OPTION ONE WAS $281 MILLION COMPARED TO OPTION TWO, WHICH IS $199 MILLION.

BUT AS WE MOVED THROUGH THE STUDY PLANNING PROCESS, WHEN WE GOT TO JUNE, WHAT WE REALIZED WAS, UH, OR NOT REALIZED NEW INFORMATION WAS PROVIDED, BUT WE WERE ALREADY VERY WELL FAR IN THE PROCESS.

IN THE STUDY, IN THE ERCOT INDEPENDENT REVIEW, UM, THE UTILITY CAME FORWARD WITH A NEW LARGE LOAD THAT HAD SIGNED INTERCONNECTION REQUEST IN THE JUNE TIMEFRAME.

THAT NEW LARGE LOAD IS LOOKING TO CONNECT AT 1200 MEGAWATTS.

SO, UH, ANOTHER LARGE LOAD GROWTH IN THE AREA.

THERE WERE ALSO DISCUSSIONS ABOUT ANOTHER THOUSAND MEGAWATT LARGE LOAD THAT WAS INCLUDED IN SOME OF THE TSP LETTERS.

UM, BUT THEY'RE NOT AS FAR ALONG, BUT THERE'S ANOTHER POTENTIAL FOR ANOTHER VERY LARGE LOAD.

SO WHAT WE DID IS SOME OF OUR SENSITIVITY ANALYSIS WAS LOOKING AT HAVING THESE LARGE LOADS AND WHAT THE VARIOUS OPTIONS WOULD DO.

UH, WHAT WE SAW AS OPTION ONE IS ACTUALLY BETTER FOR THE LONGER TERM.

WITH THOSE LOADS AND THE CONTINUED LOAD GROWTH, YOU SEE LESS VIOLATIONS WITH OPTION ONE.

YOU ALSO SEE THAT IT'S EASIER TO MAKE FUTURE UPGRADES.

SO KIND OF THINK ABOUT IT AS INVESTING RIGHT NOW FOR FUTURE UPGRADES THAT WE KNOW.

UM, AGAIN, WITH THE 1200 MEGAWATT WITH SOMEWHAT CERTAINTY, THOSE ARE GONNA BE COMING RIGHT BEHIND IT FOR REVIEW OF OTHER PROJECT NEEDS.

AND SO BECAUSE OF THAT NEW INFORMATION, THE ADDITIONAL ANALYSIS, THE COMPARISON BETWEEN THE TWO, UH, OR KOT, CHOSE TO ENDORSE OPTION ONE.

UM, AS REVIEWED BY TAC.

THEY ALSO UNANIMOUSLY ENDORSE THAT.

AND SO TODAY, UH, I WOULD ASK YOU FOR YOUR CONSIDERATION ENDORSING THE NEED FOR THIS PROJECT, UH, OPTION ONE, BASED ON BOTH THE NERC AND THE ERCOT PLANNING CRITERIA.

AND, UH, TO A PREVIOUS QUESTION BEFORE THIS ONE, WE'LL HAVE TO GO THROUGH A CCN PROCESS BECAUSE THERE ARE NEW LINES THAT ARE GONNA BE CONSTRUCTED.

ANY QUESTIONS OR COMMENTS FOR CHRISTIE ON THIS PROJECT? OKAY, HEARING NONE, I'LL ENTERTAIN A MOTION TO APPROVE THE BTU TEXAS C AND M UNIVERSITY SYSTEM, ELLIS

[00:45:01]

CAMPUS RELIABILITY PROJECT AS IT WAS PRESENTED.

SO MOVED.

THANK YOU, JULIE.

SECOND, LINDA SECOND.

ALL IN FAVOR? AYE.

ANY OPPOSED? ANY ABSTENTIONS? OKAY.

THAT PROJECT IS UNANIMOUSLY APPROVED.

UH, AT THIS POINT I HAVE A FIVE MINUTE BREAK ON THE AGENDA.

DO WE NEED TO TAKE A BREAK OR CAN WE CHARGE ON? OKAY, WE'RE GONNA CHARGE ON, UM, THE NEXT

[8.1 Independent Market Monitor (IMM) Report]

ITEM IS AGENDA ITEM EIGHT, COMMERCIAL MARKETS, WHICH INCLUDES A FEW SUB ITEMS. FIRST IS AGENDA ITEM 8.1, THE INDEPENDENT MARKET MONITOR REPORT.

I AM M DIRECTOR JEFF MCDONALD IS GOING TO PRESENT AND HE PROMISED ME HE'D DO IT IN 10 MINUTES OR LESS.

THANKS, JEFF.

YEAH, GOOD AFTERNOON.

UH, IT, HAVING BEEN A VERY MILD SUMMER, REALLY HELPS WITH THE TIMING.

SO, UH, YOU MAY HAVE NOTICED I ONLY PRODUCED A COUPLE OF SLIDES, AND IN FACT, I'LL PROBABLY ONLY COVER THE FIRST SLIDE AND THE LAST TWO SLIDES FOR, UM, IN ORDER TO KEEP US UNDER 10 MINUTES.

SO, UH, I THINK I GOT IT.

AND THAT'S SEMI UNPREDICTABLE.

OH, THANKS.

THAT, UH, THAT HELPS.

SO AS YOU CAN SEE HERE, SO WE'VE GOT FOUR YEARS REPRESENTED HERE.

UH, THE LINE REPRESENTS, UH, LOAD AND, UM, UH, AVERAGE DAILY PEAK LOAD.

AND THEN WE'VE GOT THE DIFFERENT COMPONENTS OF THE ENERGY PRICE REFLECTED HERE.

AND AS YOU CAN SEE, UH, 2024 AND 2025 WERE BOTH VERY MILD PRICING YEARS FOR, UH, JANUARY THROUGH AUGUST, UM, PRICE WAS UP.

IT'S, IT'S BARELY PERCEPTIBLE IN THIS PRICE WAS UP ABOUT 15% COMPARED TO JANUARY THROUGH AUGUST OF LAST YEAR.

WE HAVE SEEN A, UH, INCREASE, A SIGNIFICANT INCREASE IN NATURAL GAS PRICE.

GAS PRICES WERE VERY LOW LAST YEAR FOR THE FIRST EIGHT MONTHS OF THE YEAR.

UM, THERE WAS ACTUALLY A PRETTY SIGNIFICANT INCREASE IN GAS PRICE.

AND WE'VE GOT ABOUT 5% INCREASE IN AVERAGE DAILY LOAD OVER THE SAME PERIOD YEAR OVER YEAR.

UM, BUT WE'VE SEEN AN, AND AGAIN, IT'S BARELY PERCEPTIBLE IN HERE BECAUSE, UH, PRICING WAS SO MILD, BUT WE'VE SEEN A, A LOWER IMPACT OF, UH, SHORTAGE PRICING THIS YEAR.

AND, UH, I THINK THAT AND HAVING MORE, A HIGHER FREQUENCY OF NON-THERMAL GENERATION, UH, ON THE MARGIN, UH, HAVE RESULTED IN A LITTLE BIT OF A PRICE INCREASE.

AGAIN, 15%, BUT WE'RE NOT SEEING A PRICE INCREASE COMMENSURATE WITH, WITH THE INCREASE IN NATURAL GAS PRICE.

SO I WOULD NORMALLY HAVE, UH, A LOT OF OTHER SLIDES TO SHOW, BUT IT'S BEEN, UH, AT LEAST FROM A MARKET PERSPECTIVE, A FAIRLY UNEVENTFUL SUMMER.

UM, I'M SURE THE OPERATIONS TEAM HAS HAD TO DEAL WITH THINGS HERE AND THERE, BUT MARKET-WISE IT'S BEEN EXTREMELY MILD.

SO I'LL MOVE THROUGH, UH, THE NEXT THREE SLIDES.

I DON'T THINK THEY'RE REALLY THAT INTERESTING, UM, WITH RESPECT TO WHAT WAS HAPPENING THIS LAST SUMMER.

BUT I WILL SHOW, I DID WANNA TALK A LITTLE BIT ABOUT PRICE CONVERGENCE.

UM, AND SO I'VE GOT TWO CHARTS HERE.

THIS IS THE SUMMER PRICE SPREAD, AND THE NEXT CHART SHOWS THE WINTER PRICE SPREAD.

AND I WANTED TO EXPLAIN THE IMPORTANCE OF THIS, UH, JUST BRIEFLY.

UH, SO THIS SHOWS THE ABSOLUTE D AVERAGE DEVIATION UP AND DOWN BY HOUR OF THE DAY FOR THE SEASON.

AND THEN THE GREEN LINE IS THE AVERAGE SPREAD.

IT DOESN'T LOOK AT THE ABSOLUTE VALUE, IT JUST LOOKS AT THE AVERAGE SPREAD.

AND WHAT WE'RE LOOKING FOR IS FOR THE AVERAGE SPREAD TO BE ABOUT ZERO, EVEN THOUGH ON ANY GIVEN DAY, AND WITHIN AN HOUR, SOME DAYS YOU'LL HAVE A, A POSITIVE SPREAD, AND SOME DAYS YOU'LL HAVE A, A NEGATIVE SPREAD.

AND SO, AND THIS WOULD BE, YOU KNOW, REAL TIME MINUS, UH, DAY AHEAD.

AND SO WHAT WE'RE LOOKING FOR IS THE EXTENT TO WHICH THE SPREAD, THE, THE SIMPLE AVERAGE OF THE SPREAD IS CLOSE TO ZERO.

THAT TELLS US THAT THE DAY AHEAD MARKET IS FUNCTIONING IN A WAY THAT'S CONSISTENT WITH THE REAL TIME MARKET.

AND ONE OF THE THINGS THAT HELPS IT DO THAT, BECAUSE THERE'S SO MUCH THAT CAN HAPPEN BETWEEN DAY AHEAD AND REAL TIME IN TERMS OF SHIFTS IN FORECAST LOAD, DIFFERENT RESOURCES, GENERATION RESOURCES, UM, HAVING AN OUTAGE, DIFFERENT TRANSMISSION ISSUES THAT MIGHT RESTRICT, UM, FLOW.

AND SO WHAT WE'RE LOOKING FOR IS WHETHER OR NOT VIRTUAL BIDS IN THE DAY AHEAD HELP SMOOTH OUT THESE PRICE DIFFERENCES, AND ESPECIALLY TO THE EXTENT THAT THEY'RE PREDICTABLE.

AND SO I THINK WHAT THIS SHOWS IS THAT YOU'VE GOT ABOUT A $20 PRICE SPREAD IN THE, IN THE MARKET, WHERE IN REAL TIME IT'S $20 HIGHER THAN A DAY AHEAD.

AND,

[00:50:01]

THIS IS AN AVERAGE, OF COURSE, OVER THE ENTIRE SUMMER SEASON.

SO, UH, AT LEAST THROUGH AUGUST.

SO ANYWAY, A NEXT STEP FOR US IS TO LOOK AT WHETHER OR NOT, UM, THERE ARE SYSTEMIC DRIVERS, UH, OF THIS DIFFERENCE THAT ARE UNPREDICTABLE OR WHY VIRTUAL BIDS AREN'T, AREN'T, UM, CAPITALIZING ON THIS.

THIS IS $20 A MEGAWATT HOUR.

SO THAT'S, UM, EASY MONEY, UH, IF IT'S PREDICTABLE ENOUGH.

AND SO THE SAME STORY HOLDS FOR THE WINTER.

I'LL, I'LL JUST SHOW IT, UH, VERY BRIEFLY.

UH, SAME STORY HOLDS FOR THE WINTER.

THIS IS THE LAST FULL WINTER.

AND UNLIKE IN THE SUMMER WHERE WE SAW, UH, EVENING, UH, PRICE DEVIATIONS THAT WERE APPEAR TO BE SYSTEMIC, UH, IN THE WINTER WE SEE A VERY MILD, VERY SHORT-LIVED, UH, NEGATIVE DEVIATION THAT APPEARS TO BE SYSTEMIC.

BUT, UM, AGAIN, COMPARED TO THE SUMMER, IT'S, YOU KNOW, MAYBE TWO THIRDS AS MUCH OF A DEVIATION.

AND IT LOOKS LIKE IT'S A SHORTER PERIOD OF TIME.

SO ANYWAY, I JUST WANTED TO HIGHLIGHT THAT FOR YOU BECAUSE, UH, PEOPLE DON'T TALK ABOUT IT VERY MUCH, BUT IT, IT IS IMPORTANT THAT WE HAVE A DAY AHEAD MARKET THAT REFLECTS REAL TIME CONDITIONS TO THE EXTENT THAT THAT'S POSSIBLE, AND CERTAINLY IN CIRCUMSTANCES WHERE THERE ARE SYSTEMIC DIFFERENCES.

AND SO THAT'S SOMETHING THAT WE'RE PURSUING OVER THE NEXT SIX OR OR EIGHT MONTHS, UH, TO TRY AND GET A BETTER HANDLE ON WHAT MIGHT BE DRIVING THIS TO THE EXTENT THAT IT'S MATERIAL.

SO, UH, HAPPY TO TAKE ANY QUESTIONS AND I HOPE I FINISHED IN UNDER 10 MINUTES.

OKAY, THANK YOU, JEFF.

ANY QUESTIONS FOR JEFF ON HIS REPORT, THE LAST TWO PAGES OF ANALYSIS? WELL, IT WAS ALL INTERESTING, BUT THE LAST TWO PAGES WERE VERY INTERESTING.

ERCOT STAFF REPORT TO THE IMM 2024 STATE OF THE MARKET REPORT.

THANK, LOOK FORWARD TO FURTHER DETAIL ON THAT.

UH, THANKS JEFF.

SO WE'RE GONNA MOVE ON TO, UH, AGENDA ITEM, UH, 8.1, EXCUSE ME, 8.2.

IT'S THE

[8.2 ERCOT Staff Response to IMM 2024 State of the Market Report]

ERCOT STAFF PROVIDED A PRELIMINARY RESPONSE AT THE BOARD MEETING IN JUNE AND TODAY KEITH COLLINS WILL PROVIDE A MORE IN DEPTH DISCUSSION.

KEITH, THE PODIUM IS YOURS.

ALRIGHT, THANK YOU.

AS, AS YOU NOTED, WE DID PROVIDE A PRELIMINARY DISCUSSION AT THE LAST, UH, BOARD MEETING.

AND AT THIS, THIS MEETING, WE'RE GONNA FOCUS PARTICULARLY ON THE RECOMMENDATIONS THAT WERE MADE IN THAT REPORT.

AND, AND WE DON'T, WE DON'T INTEND TO COVER THE, THE, THE WHOLE OF THE REPORT, BUT, BUT JUST THOSE RECOMMENDATIONS.

THERE WERE FIVE NEW RECOMMENDATIONS IN THEIR 2024 REPORT.

UH, WE WILL GO THROUGH EACH OF THOSE.

UH, TWO OF THEM WERE RELATED.

UH, AND SO EVEN THOUGH THEY, THEY WERE BOTH RELATE TO SHORTAGE PRICING AND WHAT WE'LL COVER THEM HERE ON THE FIRST SLIDE.

UH, THE FIRST ONE IS TO, UH, EFFECTIVELY MODIFY THE ANSI SERVICE DEMAND CURVES, UH, ACCORDING TO THEIR MARGINAL RELIABILITY VALUE.

UH, I THINK, UH, OVERALL YOU'LL SEE THE YELLOW, THE COLORS SORT OF INDICATE, UH, GREEN AGREEMENT, YELLOW SORT OF A LITTLE MORE NEUTRAL, AND THEN RED, UH, IS DISAGREE.

AND SO HERE WE'RE, WE'RE A LITTLE MORE NEUTRAL IN, IN TERMS OF, I THINK IN PRINCIPLE, WE, WE DO THINK THAT THE A SD WE DO AGREE WITH THE, THE IDEA THAT THE ASSC SHOULD BE REVISITED.

UH, I THINK THAT, UM, THERE'S LIKELY TO BE A LOT OF DISCUSSION AND INTEREST IN WHAT THAT MAY LOOK LIKE.

UH, AND SO WE, WE ULTIMATELY HAVE A SENSE THAT, UH, THIS IS IMPORTANT AND IS LIKELY TO, TO BE, UH, DISCUSSED.

UH, BUT, BUT I, BUT WITH REGARDS TO THE PARTICULAR RECOMMENDATION OF THE IMM, WE'RE, WE'RE NOT NECESSARILY ENDORSING THEIR, THEIR APPROACH.

BUT, UH, THE CONCEPT OF REVISITING, UH, DOES SEEM TO MAKE SENSE.

AND ULTIMATELY, THIS, THIS WAS DISCUSSED AS PART OF THE PRIORITIZATION AND, UH, FALLS WITHIN THAT HIGH PRIORITY OF, OF THINGS TO BE COVERED IN, IN THE COMING MONTHS.

THE SECOND RECOMMENDATION IS, IS RELATED TO AN ITEM THAT THAT WILL BE DISCUSSED A LITTLE BIT TOMORROW.

AND, AND THIS HAS TO DO WITH PROBABILISTIC AND STOCHASTIC MODELING, UH, OF, OF ANCILLARY SERVICES.

AND, AND AGAIN, I THINK THE, THE CONCEPT, UH, OF, OF AGREEMENT IS WE AGREE THAT THE PROBABILISTIC APPROACH AND, AND AND MODELING OF, OF, OF THAT IS, IS IMPORTANT.

AND SO ULTIMATELY THERE'S AGREEMENT IN THAT POINT.

NOW, THE DISAGREEMENT, UH, WHEN, WHEN WE GET TO THE SPECIFIC ELEMENTS WITHIN THE METHODOLOGY, I THINK THAT'S, THAT'S LIKELY TO BE WHERE THE, THE, THE DISCUSSION IS GONNA FOCUS AND, AND HAS FOCUSED ON IS, IS ERCOT, UM, UH, IS IS VIEWING IT IN ONE WAY.

THE, THE IMM IS LOOKING AT PARTICULAR VARIABLES AND, AND ELEMENTS IN A, IN A SEPARATE WAY.

BUT I THINK THE CONCEPT OF, OF THE PROBABILISTIC AND STOCHASTIC MODELING IS SOMETHING THAT, UM, UH, ULTIMATELY, UH, HAS, HAS HAD A LOT OF TRACTION WITHIN .

UH, THE

[00:55:01]

FINAL THREE RECOMMENDATIONS, UH, ARE, UH, ONE IS RELATED TO ECRS AND NONS SPIN, UH, DURATION.

THIS WAS DISCUSSED AT THE JUNE, UH, BOARD MEETING.

UH, AND ULTIMATELY, UH, UH, WHAT, WHAT WAS PASSED WAS THE, UH, THE, THE LONGER, UH, REQUIREMENT AS OPPOSED TO THE, THE MARKET MONITOR RECOMMENDATION.

SO I'VE, I'VE COVERED THAT HERE IN RED.

UH, AND THEN THE FINAL TWO RECOMMENDATIONS, ONE IS TO, UH, IMPLEMENT A PROCESS FOR MITIGATION, UH, TO EXPAND THE MITIGATION, TO FOCUS ON MARKET POWER AT SYSTEM AND ZAL LEVELS.

I THINK OUR, OUR VIEW HERE IS IT, IT'S, UH, AN INTERESTING IDEA.

UH, WE DON'T HAVE ANY PARTICULAR REASONS WHY THIS SHOULD OR SHOULD NOT OCCUR.

UH, AND SO WE ARE AWAITING, UH, ESSENTIALLY AWAITING FOR FURTHER ANALYSIS FROM THE IMM, UH, TO, TO SHOW, UH, THE JUSTIFICATION AND THE PARTICULARS OF, OF WHAT THEIR RECOMMENDATION MEANS.

SO IT'S MORE NEUTRAL.

AND THEN THE FINAL RECOMMENDATION IS REGARDS TO, UH, ESSENTIALLY REAL TIME ESTABLISHING REAL TIME OFFER REQUIREMENTS, PENALTIES AND PROXY PRICING.

UH, I BELIEVE IT WAS, UH, IT WAS 1268, I BELIEVE, UH, WHERE THIS WAS, WAS ADDRESSED, AND, OR 12, YEAH, 12 61, 1 OF THOSE 12 68, 12 60 NINES.

UM, UH, BUT ULTIMATELY I THINK WE'RE, UH, WE'RE, WE'RE MORE NEUTRAL IN THIS AND, AND AWAITING, UH, FURTHER ANALYSIS OR INFORMATION FROM THE IMM TO HELP, HELP PROMOTE, UH, THE REASONS FOR WHY THEY THINK THIS IS AN IMPORTANT CHANGE, UM, AND, AND ALLOW US TO BETTER UNDERSTAND WHY, WHY WE WOULD AGREE OR DISAGREE WITH THEIR POSITION.

SO THOSE ARE THE FIVE NEW RECOMMENDATIONS WE HAVE.

I DO COVER SOME OF THE EXISTING RECOMMENDATIONS THAT THEY'VE MADE.

THERE'S, AND REALLY THE TAKEAWAY HERE IS THERE'S, FOR THE MOST PART, THERE'S BEEN PROGRESS ON, ON MANY OF THESE RECOMMENDATIONS, WHETHER, UH, IN SOME CASES THE PUC IS, IS MOVING FORWARD.

UH, THE SMALL FISH RULE IS A GOOD EXAMPLE OF THAT, UH, WHERE THERE'S AN OPEN PROJECT THAT'S MOVING FORWARD.

UH, UH, UH, THE, THE FARM FUEL SUPPLY SERVICE IS ANOTHER ONE THAT FALLS INTO THAT CATEGORY.

THE, THE ECRS RECOMMENDATION THAT WE SEE THERE AT THE TOP WILL NO LONGER BE, UH, RELEVANT ONCE THE RTC PLUS B IS IMPLEMENTED IN DECEMBER.

UH, AND THAT CO-OP OPTIMIZATION PROCESS OCCURS.

SO THAT, THAT SHOULD HOPEFULLY ADDRESS THAT ITEM.

UH, THE MULTI INTERVAL REALTIME MARKET RECOMMENDATION.

WE DID RELEASE A WHITE PAPER THAT, UH, AS PART OF OUR, OUR GRID, UH, TRANSFORMATION, UH, PROCESS, THE GRID PROCESS THAT, UM, IT DOESN'T COVER, UH, THE, THE COMPLETE ISSUE THAT THE IMM HAS BROUGHT UP.

UH, BUT IT DOES HELP RAISE SOME QUESTIONS AND THINGS TO THINK ABOUT, UH, WITH REGARDS TO HOW WE MIGHT CONSIDER A MULTI INTERVAL PROCESS, UH, WHICH COULD, COULD POTENTIALLY IN THE FUTURE RESULT IN, IN SOME SORT OF CHANGE IN THE MARKET PROCESSES.

UH, SO THAT'S, THAT'S SORT OF THE BEGINNINGS OF, OF, OF THE THINKING THROUGH THAT, THAT PARTICULAR ITEM, UH, THE UNCERTAINTY PRODUCT IS RELATED TO THE, UH, DRS PROJECT, UH, WHICH I'LL TALK ABOUT A LITTLE BIT, UH, IN, IN THE NEXT PRESENTATION.

UH, AND THAT, THAT, UH, NPRR IS IN PROCESS AND SOMETHING, OR IS, IS UNDER DEVELOPMENT AND, AND GONNA BE FILED IN IN THE COMING WEEKS HERE.

AND THEN THE FINAL SET OF RECOMMENDATIONS, UH, INCLUDE, UH, SOME, SOME OTHER, UH, ITEMS THAT EITHER, UH, ADDITIONAL INFORMATION FROM THE IMM WOULD BE HELPFUL, UH, UH, THINGS THAT ARE PROCESSING THROUGH THE STAKEHOLDER PROCESS WHERE WE, WE, WE AGREE IN PRINCIPLE, BUT IT'S, IT'S BEING DISCUSSED IN THE STAKEHOLDER PROCESS.

AND, UH, THE, UH, FOUR CP METHOD, UH, UH, MODIFICATIONS ARE SOMETHING THAT ARE, IS UNDERGOING AT THE COMMISSION AS WE SPEAK.

SO, UH, THOSE ARE, UH, OUR RESPONSES TO THE PARTICULAR RECOMMENDATIONS FROM THE IMM IN THEIR 2024 REPORT.

UH, HAPPY TO HAVE ANY, UH, HAPPY TO ANSWER ANY QUESTIONS THAT THE BOARD MAY HAVE.

I, I HAVE A QUESTION, KEITH.

YEP.

UH, YOU, YOU'RE IN ONE OF YOUR INTRODUCTORY SLIDES INDICATES THAT THE PC STAFF HAS FILED RESPONSE RESPONSES ON NINE MINUTES, UH, REPORT.

ARE WE, IS STAFF AND THE PUC STAFF ALIGNED? YES.

I, I, HAVING, HAVING LOOKED AT THE PUC RECOMMENDATIONS, I BELIEVE THAT WE ARE VERY MUCH IN, IN ALIGNMENT WITH WHAT THEIR RECOMMENDATIONS WERE OVERALL.

YEP.

GOING TO CONTINUE WITH AGENDA ITEM 8.3 COMMERCIAL MARKETS UPDATE, UH, WE'LL, WE'LL DISCUSS OUR COMMERCIAL MARKETS UPDATE.

ANY OTHER QUESTIONS FOR KEITH ON THE 2024 IMM RESPONSE BY ADA? UH, I JUST WANNA COMPLIMENT KEITH FOR THE FOLLOW UP ON THESE ITEMS OVER MULTIPLE YEARS.

[8.3 Commercial Markets Update]

NEXT IS, UH, KEITH IS

[01:00:01]

UH, ONE OF THE ITEMS THAT HAD BEEN DISCUSSED IN, IN A COUPLE OF THE PREVIOUS, UH, PRESENTATIONS, TALKED ABOUT OUR, UH, INITIATIVE PRIORITIZATION PROCESS.

AND, UH, WANT TO GIVE YOU JUST A QUICK HIGHLIGHT ON, ON THIS.

UM, WITH THE RTC PROJECT, UH, THERE'S BEEN A LOT OF, UM, IMPLEMENTATION INITIATIVES THAT HAVE BEEN ON HOLD.

UM, AND THEN AT THE SAME TIME, THERE'S A LOT OF DEVELOPMENT THAT DOES CONTINUE TO OCCUR.

AND WHAT CAN HAPPEN IS THE SAME RESOURCES THAT ARE WORKING ON NEW DEVELOPMENT ARE ALSO WORKING ON IMPLEMENTATION.

SO YOU END UP WITH A BIT OF A BACKLOG.

SO THIS IDEA OF, HEY, LET'S, LET'S SIT DOWN AND PRIORITIZE, UH, WHAT THOSE INITIATIVES WE SHOULD BE WORKING ON.

AND SO WE HAD A, A WORKSHOP, UH, A FEW WEEKS BACK THAT, THAT HELPED WORK THROUGH THAT PROCESS.

AND, AND SO WHAT WE DID IS WE HELPED TIER, UM, THE, THE DIFFERENT INITIATIVES INTO, YOU KNOW, THE TIERS THAT ARE OUTLINED HERE, CRITICAL, HIGH, MEDIUM, AND THEN A COUPLE NO ACTION AND, AND POTENTIAL REMOVAL.

UH, UH, AS, AS WAS NOTED EARLIER, WE, WE DO THINK THIS WAS REALLY HELPFUL.

UH, THE CRITICAL INITIATIVES ARE ACTUALLY LISTED HERE, UH, ON THE SHEET.

UH, A LOT OF THESE ARE, UH, COME FROM EITHER LEGISLATIVE, UH, REQUIREMENTS, THE PUC, UH, IN, IN SOME CASES THE RESIDENTIAL DEMAND RESPONSE WAS SOMETHING THAT WAS, WAS, WAS, UH, PART OF THE BOARD.

SO THESE ARE THINGS THAT, THAT WE CONSIDER CRITICAL AND IMPORTANT FOR US TO, TO WORK ON GOING FORWARD.

AND, AND MANY OF THESE WILL, YOU MAY HAVE HEARD OF BEFORE OR, OR, UH, WE'LL BE HEARING ABOUT SHORTLY, UH, AS CRI CRITICAL.

SO, SO THESE ARE THE ONES THAT ARE ON OUR LIST.

AND, UH, WE'RE WORKING ON, UM, SORT OF THAT NEXT TIER, THAT TIER TWO HIGH PRIORITY ITEMS THERE'S ABOUT TWO DOZEN ITEMS THAT ARE EITHER INITIATIVE THAT'S UNDER IMPLEMENTATION IN IMPLEMENTATION PROCESS, IT'S UNDER NPR DEVELOPMENT, OR IT'S SORT OF IN PRE-DISCUSSION OF PRE NPR WORK.

SO THERE'S A LOT OF THINGS THAT, THAT WE ARE WORKING ON, UH, TO HELP MOVE THAT FORWARD.

THE MEDIUM PRIORITY STUFF, THERE'S, THERE'S ABOUT, OH, SOMEWHERE IN THE ORDER, ABOUT 40 ISH ITEMS ON THAT LIST.

UM, AND SO WE'RE, WE'RE NOT PLANNING ON, ON TAKING ANY ACTIONS ON THOSE AS AS WE SPEAK, BUT AS WE GET THROUGH SOME OF OUR HIGH PRIORITY ITEMS, WE'LL, WE'LL MOVE THOSE FORWARD.

SO AGAIN, THIS IS A GOOD FIRST STEP.

I THINK OUR SENSE IS THERE'LL BE MORE DISCUSSION ON PRIORITIZATION GOING FORWARD, BUT IT WAS A GOOD FIRST STEP, I THINK, IN TERMS OF TRYING TO IDENTIFY WHAT ARE THE HIGH PRIORITY THINGS AS, AS WE HAVE SORT OF OUR RESOURCES AND HOW WE ALLOCATE THOSE RESOURCES TO WORK ON THESE PROJECTS.

SINCE, SINCE THE LAST BOARD, NO, NO SIGNIFICANT, NO DEFAULTS, NO CREDIT RELATED ISSUES.

UM, MOVING ON TO DISCUSS TWO, TWO ITEMS AND, AND ACTUALLY I THINK REBECCA DID, DID COVER THESE, SO I WON'T SPEND TOO MUCH TIME, BUT THERE ARE TWO ITEMS THAT COMMERCIAL OPERATIONS STAFF ARE WORKING ON, UH, RATHER DILIGENTLY.

ONE IS OUR RESIDENTIAL DEMAND RESPONSE, UH, DESIGN.

THIS WAS SOMETHING THAT, UH, WAS FILED, UH, NPRR 1296, UH, THAT WAS FILED ON AUGUST 26, THAT, THAT JOURNEY THROUGH THE STAKEHOLDER PROCESS HAS BEGUN.

UH, AND WE DO TAKE, EXPECT THAT THERE'LL BE SOME ROBUST DISCUSSION ABOUT THAT.

AND THEN ULTIMATELY, ONCE THAT'S, THAT'S, UH, APPROVED, IT'LL TAKE ANYWHERE FROM 10 TO 16 MONTHS TO, UH, ONCE WE GET FINAL PUC APPROVAL TO MOVE THAT THROUGH THE PROCESS.

SO WE'RE EXCITED TO HAVE THE NPR AND LOOK FORWARD TO THE ON ONGOING DISCUSSION THAT WE'LL HAVE AROUND THAT.

AND THEN THE SECOND ITEM IS OUR DISPATCHABLE RELIABILITY RESERVE SERVICE.

THIS WAS SOMETHING THAT WAS A PART OF THE, UH, 88 LEGISLATURE, UH, AS PART OF THE, UH, HB 1500.

UH, WE ARE, UH, WE HAVE BEEN WORKING OVER THE PAST SEVERAL MONTHS, UH, WORKING ON, UH, GETTING THAT NPR ALREADY.

WE DO ANTICIPATE, UH, THAT, THAT NPR, UH, WILL BE FILED.

UH, IT SAYS, END OF OC IT SAYS OCTOBER.

MY SENSE IS END OF OCTOBER, ABOUT SIX WEEKS OR SO, END OF OCTOBER, EARLY NOVEMBER TIMEFRAME ON THAT ONE.

RIGHT.

MOVING FORWARD, UH, AGAIN, ANOTHER ITEM THAT THAT DID COME UP EARLIER IS OUR ENERGY ATTRIBUTE CERTIFICATE.

THIS WAS SOMETHING DISCUSSED AT THE LAST BOARD MEETING.

UH, WE ARE WORKING ON, UH, WHAT WAS DISCUSSED AS A LIGHTWEIGHT OPTION TO ALLOW FOR ESSENTIALLY A THIRD PARTY.

UH, ERCOT WOULD BE A DATA PROVIDER.

THE THIRD PARTY WOULD, UH, ESSENTIALLY DEVELOP THE PROGRAM WITH THE DATA.

AND SO WE ARE WORKING THROUGH, UH, THE, THE DESIGN AND DEVELOPMENT OF THAT, THE, UH, THE IMPACT ASSESSMENT AS WELL, AND, AND, UH, HOW TO, HOW TO ENSURE THAT THE, UH, THAT THE NPR DOES DOES CAPTURE THAT.

SO, UH, AGAIN, THAT'S SOMETHING THAT WE'RE WORKING ON AND, AND IN THE NEXT, UH, UH, COMING MONTHS HERE TO, TO HELP PULL THAT TOGETHER AND, AND AGAIN, MOVE THAT FORWARD.

JUST A QUICK MARKET CREDIT UPDATE.

UH, THE, THE REAL KEY IS THERE'S BEEN NO SIGNIFICANT ISSUES, UH,

[01:05:01]

AND, UH, THE TOTAL PO POTENTIAL EXPOSURE INCREASED MODERATELY AS EXPECTED DURING THE, UH, AS THE, THE LOADS INCREASE DURING THE SUMMER MONTHS.

UH, I WILL NOTE THAT, UH, NPR 1277, WHICH WAS ON THE CONSENT AGENDA, UH, UH, UH, PASSED THROUGH THE, THE STAKEHOLDER PROCESS AND, AND ULTIMATELY, UH, THROUGH THE, UH, IS, IS ON THE CONSENT AGENDA.

UM, AND THEN FINALLY WE ARE CREDIT STAFF IS WORKING WITH THE CREDIT FINANCE SUBGROUP ON, UM, ESSENTIALLY A CONCEPT THAT YOU FIND GENERALLY IN BANKING, WHICH IS STRESS TESTS.

UH, AND SO OUR, OUR, OUR FORMULAS DO A GOOD JOB LOOKING AT AVERAGE CONDITIONS, BUT WE ARE, UH, DEVELOPING A PROCESS TO CONSIDER HOW TO EVALUATE, UH, CREDIT CONCERNS THROUGH, UH, STRESS SCENARIOS.

AND SO THAT'S BEING DISCUSSED AND WORKED AT WITH THE CREDIT FINANCE SUBGROUP.

AND HOPEFULLY WE'LL HAVE SOME RESULTS IN THE COMING, COMING WEEKS AND, AND, AND MONTHS AS WE MOVE FORWARD HERE.

AND THEN THE FINAL SLIDE THAT I WANTED TO, TO BRING UP TODAY IS, ONE, IT'S A BIT NEW.

WE DON'T TALK ABOUT EMERGENCY RESPONSE SERVICE REGULARLY.

THIS IS OUR ERS PROGRAM.

THIS IS, UM, ESSENTIALLY A EMERGENCY DEMAND RESPONSE PROGRAM.

AND THE REAL KEY TAKEAWAY HERE IS THAT WE DID REQUEST, UH, NEW INFORMATION AND THAT NEW INFORMATION IS THE TYPE OF RESOURCE THAT IS PROVIDING THE ERS AND, AND THE QUANTITY ASSOCIATED WITH THAT.

AND, AND WHAT WAS REALLY INTERESTING HERE IS, IS THAT THE CRYPTO MINING, UH, DOES REPRESENT, UH, UH, 50% OR MORE OF THE, THE RESOURCES PARTICIPATING IN THE PROGRAM.

AND I HAD A LATE BREAKING UPDATE.

WE DID HAVE A, A RECENT, UH, ERS, UH, PROGRAM, UM, UH, OVER THE LAST, UH, LAST WEEK THAT, THAT WAS LOOKING FORWARD EVEN FURTHER.

AND WHAT WE FOUND WAS THAT THERE WAS EVEN MORE, UH, CRYPTO MINING, UH, RESOURCES INCLUDING IN THAT PROGRAM.

SO WE CONTINUE TO SEE, WHILE THE QUANTITY OF, UH, UH, OF ER SS IN INCREASED OVER THE LAST FEW YEARS, UH, THE BREAKDOWN HAS, HAS INCLUDED TO INCREASE TO, TO MEET THOSE, TO INCLUDE THE CRYPTO MINING RESOURCES.

UH, AND, AND WHAT'S INTERESTING IS THESE, THESE CRYPTO MINES ARE, THESE CRYPTO MINING RESOURCES ARE, ARE GENERALLY VERY PRICE SENSITIVE.

AND, AND IT WAS INTERESTING WHEN, WHEN WE LOOK AT, UH, THE SENATE BILL SIX, WHICH PASSED THE, THE RECENT LEGISLATIVE SESSION, UH, ONE OF THE THINGS THEY WERE VERY EXPLICIT ABOUT WAS THERE WAS A LARGE LOAD PROGRAM DEVELOPED AS PART OF SENATE BILL SIX.

SO ANY RESOURCES OVER 75 MEGAWATTS, WHICH GENERALLY THE CRYPTO RESOURCES ARE, UH, LARGE LOADS IN MOST CASES.

AND IN THAT PROGRAM IT DISALLOWS, UM, UM, RESOURCES TO BE, IF YOU'RE PRICE, UH, RESPONSIVE RESOURCES THAT YOU CAN'T PARTICIPATE IN THAT PROGRAM.

BUT WHAT'S INTERESTING IS THAT THE ERS PROGRAM DOES NOT HAVE THAT, THAT TYPE OF LIMITATION.

AND SO WE DO SEE THESE CRYPTO MINING LOAD PRO, UM, UM, UH, THEY, THEY ARE PARTICIPATING IN THIS PROGRAM.

BUT, BUT THERE IS AN INTERESTING, UH, ELEMENT TO SAY THAT, THAT, GEEZ, THIS PROGRAM, WHICH WAS DESIGNED, UH, ALMOST 20 YEARS AGO, UH, BEFORE, BEFORE CRYPTO MINING WAS, WAS KIND OF A THING.

UM, UH, UH, NOW YOU HAVE A SITUATION WHERE IT'S THE EXTENT THAT, YOU KNOW, UH, IT MAY, IT MAY MAKE SENSE TO RECONSIDER, UM, HOW THIS PROGRAM IS, IS CONSTRUCTED GIVEN, GIVEN THE FACT THERE'S A, A SIGNIFICANT INCREASE IN, IN THIS NEW TYPE OF RESOURCE THAT IS, IS PRIMARILY PRICE RESPONSIVE, UH, IN THE ERS PROGRAM.

SO I'LL, I'LL PAUSE THERE AND SEE IF THERE ARE ANY QUESTIONS.

HOW DOES ERS PROGRAM WORK? YEAH, SO THE, THE QUESTION WAS, WELL, HOW DOES THE PROGRAM WORK? AND SO IT'S, IT'S ESSENTIALLY WE ARE PROCURING, YOU KNOW, YOU, I KNOW IT'S, IT'S, IT'S A WORD WE DON'T USE HERE OFTEN, BUT IT'S, IT'S BASICALLY PROCURING DEMAND RESPONSE CAPACITY TO BE AVAILABLE, UM, ON THE DAYS WHERE YOU NEED TO, UM, UH, UH, UTILIZE THOSE RESOURCES AND GENERALLY DURING EMERGENCIES.

SO DO WE HAVE TO ? UM, GENERALLY THAT'S THE CASE, BUT, BUT I WILL NOTE THERE WAS A, THERE WAS DISCUSSION AT THE COMMISSION DURING THAT TIME ABOUT WHETHER OR NOT RESOURCES COULD BE PRICE RESPONSIVE.

AND A GOOD EXAMPLE IS THIS STEEL MILLS, UH, UH, TEND TO BE, UM, PRICE RESPONSIVE LIKE THE CRYPTO MINES.

AND SO AT THAT TIME, UM, THE COMMISSION DID SORT OF SUPPORT THE CONCEPT OF PRICE RESPONSIVENESS WAS OKAY, WHICH MEANT THAT YOU COULD, YOU DIDN'T HAVE TO WAIT TILL THE, TO BE CALLED UPON BY ERCOT, UM, UH, OPERATIONS TO DEPLOY SO YOU COULD PRE-DEPLOYMENT.

AND SO THAT, THAT IS, THAT WAS TRUE THEN, AND THAT'S WHAT WE SEE TODAY.

UH, BUT UM, UH,

[01:10:01]

IT DID ALLOW FOR THAT.

UH, AND IT DOES ALLOW FOR RESOURCES.

SO SOME RESOURCES DO PRE REDEPLOY AND SOME RESOURCES DO NOT.

SO THEY HAVE TO NOTIFY US IF THEY DO.

NO, NO.

ANY QUESTIONS? YEAH.

REAL QUICK, KEITH, WILL YOU, DO YOU MIND GOING INTO YOUR APPENDIX REAL QUICK? SURE.

TO SLIDE 12.

SLIDE 12, YES.

SO I THINK THIS IS AN INTERESTING SLIDE FOR THOSE OF US INTERESTED IN INCENTIVES FOR BUILDING NEW GENERATION RESOURCES.

CAN YOU TELL ME KIND OF WHAT, WHAT STORY THIS SLIDE IS TELLING? OKAY, GREAT.

GREAT QUESTION.

AND WHAT'S DIFFERENT IS THIS SLIDE IS DIFFERENT FROM THE ONE I PRESENTED AT THE LAST BOARD MEETING.

SO WHAT THIS SLIDE IS SHOWING US IS, UM, IF YOU ARE TRYING TO TRADE POWER AT THE, AT AN ERCOT TRADING HUB LOCATION, UM, LOOKING AT DIFFERENT CHUNKS, LOOKING AT DIFFERENT PERIODS, WHETHER IT WAS A YEAR AGO IN THE BLUE, UH, SIX MONTHS AGO IN THE, THE NEXT COLOR, UH, THE GREEN COLOR THREE MONTHS AGO, ONE MONTH AGO, AND THEN THE MOST RECENT DATA IN THE RED.

SO WHAT WE SAW IS WHAT THE RED IS SHOWING US IS THAT THERE HAS BEEN A, A RECENT UPTICK IN THE 26, 27, 28, 29 30, IS THAT THAT FORWARD PRICE HAS INCREASED RECENTLY RELATIVE TO THOSE OTHER PERIODS A MONTH AGO, OUT TO A YEAR AGO.

AND SO, AND THIS IS A BIT OF A CHANGE FROM WHAT WE SAW EVEN AT THE SLIDE, UH, IN THE JUNE MEETING, WHICH WAS THE EXACT OPPOSITE, WHERE THE REDS WERE THE LOWEST VALUE, UH, GOING FORWARD OUT NOW THAT THEY TEND TO BE THE HIGHEST VALUE.

AND SO, UH, ULTIMATELY IT'S ABOUT A 15 TO 20% INCREASE IN THE FORWARD VALUES GOING OUT.

UM, IT'S HARD TO SAY SPECIFICALLY WHAT CAUSED THAT.

AND IT'S ALSO IMPORTANT TO KNOW THAT THESE FORWARDS, PARTICULARLY THE OUT YEARS, TEND TO BE A LITTLE LESS LIQUID, MEANING THAT YOU COULD HAVE JUST A FEW TRADES, UH, UH, CREATING THOSE PRICES.

BUT ESSENTIALLY WHAT WE'RE SEEING IS THOSE FORWARD PRICES HAVE INCREASED.

IT, IT'S POSSIBLE THAT, UM, UH, UH, TO THE EXTENT THAT THERE'S MORE CERTAINTY ON, UH, FUTURE LOADS, THAT THAT COULD BE PLAYING A ROLE IN WHAT'S GOING HERE.

BUT, BUT AGAIN, IT'S, IT'S HARD TO SAY DEFINITIVELY THAT THAT'S, THAT'S WHAT'S DRIVING THIS, OTHER THAN THE OBSERVATION THAT IT HAS INCREASED IN THAT 15 TO 20% RANGE GOING UP.

BUT, BUT WHAT I THINK IS STILL INTERESTING TO YOUR QUESTION, THOMAS, IS THAT EVEN WITH THAT UPTICK IN THE MOST RECENT DATA, IF YOU STILL LOOK AT THE CHUNKS OF COLORS BETWEEN 2026 THROUGH 2030, IT'S A DOWNWARD DECLINE.

PRICING IS DECLINING IN THE FUTURE IN ALL OF THESE SCENARIOS, EXCEPT FOR A COUPLE OF LITTLE ANOMALIES, WHICH IS AN ODD PERSPECTIVE GIVEN A RISING DEMAND ENVIRONMENT THAT THE OUTLOOK IS THAT PRICES ARE GONNA BE DECLINING OVER TIME.

AND, AND AS WE'RE LOOKING AT, YOU KNOW, THE COST OF NEW ENTRY FOR, SAY, A, A GAS PLANT, WHICH I KNOW SOMETIMES YOU, UM, YOU HAVE IN YOUR PRESENTATION STILL WELL BELOW THE COST, I THINK LAST TIME IT WAS AROUND $140, IS THAT CORRECT? UH, IT, THE, UM, THE CONVERSION'S A LITTLE DIFFERENT.

THESE ARE MEGAWATT HOURS.

OKAY, GOT IT.

UM, BUT, BUT YOU'RE RIGHT, THESE, THESE ARE WELL BELOW WHAT IT WOULD TAKE TO GET A, A NEW PEAKER PLANT.

OKAY? YEP.

GONNA MOVE TO AGENDA ITEM 8.4, A MARKET PRICE CORRECTION RELATED TO AN INCORRECT GENERIC TRANSMISSION CONSTRAINT LIMIT USED IN THE DAY AHEAD MARKET.

ANY OTHER QUESTIONS FOR KEITH? OKAY, KEITH, THANK YOU FOR THE ANALYSIS.

ALRIGHT, THANK YOU.

WE'RE

[8.4 Market Price Correction – Incorrect Generic Transmission Constraint Limit used in the Day-Ahead Market]

GORDON DRAKE IS GOING TO BE OUR PRESENTER FOR THIS ITEM.

GOOD AFTERNOON.

A PLEASURE TO BE HERE TO PRESENT, UH, AND REQUEST APPROVAL FOR, UH, CORRECTION OF DAY AHEAD MARKET PRICES FOR OPERATING DAY JUNE 27TH.

SO AS PART OF THIS PRESENTATION, I'LL PROVIDE SOME BACKGROUND ON THE EVENTS THAT LED TO, UH, PRICING ISSUE IN THE DAY AHEAD MARKET FOR THAT DAY, THE RESULTS OF OUR PRICE IMPACT ANALYSIS, AND, AND MOVE FORWARD WITH THAT REQUEST FOR APPROVAL TO CORRECT PRICES.

SO IN THE, UH, THE DAY AHEAD MARKET FOR OPERATING DAY JUNE 27TH.

SO THIS IS HAPPENING ON JUNE 26TH.

UM, AS PART OF THE, THE NORMAL COURSE OF PREPARING FOR THAT DAY AHEAD MARKET, THERE WAS AN AUTOMATED PROCESS THAT WAS FAILING TO COME TO A, A SOLUTION FOR DETERMINING THE APPROPRIATE LIMITS, UH, TO USE ON, ON GTCS FOR THAT DAY, AND PROMPTED, UH, A MANUAL RERUN OF THE, UH, OF THAT PROCESS.

AND IN THE COURSE OF THAT RERUN, THERE WAS A, A SOFTWARE MALFUNCTION THAT FAILED TO TAKE INTO CONSIDERATION ALL OF THE OUTAGE CONDITIONS, UH, THAT, UH, THAT WERE NECESSARY IN ORDER TO CALCULATE THOSE LIMITS ACCURATELY.

UM, AS A RESULT WHERE THE LIMIT SHOULD HAVE BEEN SET, UH, ON THE SAM SWITCH,

[01:15:01]

GENERIC TRANSMISSION CONSTRAINTS TO 431 MEGAWATTS, UH, IT WAS SET TO 9,999 MEGAWATTS EFFECTIVELY, UH, A NON-BINDING LIMIT ON, UH, THE SAM SWITCH GENERIC TRANSMISSION CONSTRAINT.

UM, WE IDENTIFIED THE ISSUE, UM, ON JULY 8TH, UH, AND BEGAN AN INVESTIGATION INTO THE, UH, THE, THE SOURCE OF THAT.

HOWEVER, OUR PROTOCOLS, UH, ONLY ALLOW US TO GO AHEAD AND PERFORM A PRICE CORRECTION IF WE, UH, PER, UH, UH, UNDER OUR OWN PROTOCOL AUTHORITY IF, IF WE'RE ABLE TO CORRECT THAT WITHIN TWO DAYS OF THAT THE DAY AHEAD MARKET IN QUESTION.

UM, HAVING IDENTIFIED IT ON JULY 8TH, WE WERE NOT ABLE TO MEET THAT TIMEFRAME, WHICH IS WHY WE ARE HERE, UH, IN FRONT OF THE BOARD TODAY.

UH, WE'VE IDENTIFIED THE, THE CAUSE OF THE SOFTWARE ISSUE.

IT HAS BEEN, UH, REMEDIED AND IN THE INTERIM PERIOD BETWEEN IDENTIFYING THE ISSUE AND, UH, AND IMPLEMENTING THE FIX, THERE WAS A, A MANUAL PROCESS THAT ENSURED THAT FOR EACH OF THOSE, UH, DAY HEAD MARKETS, WE WERE CALCULATING CORRECT LIMITS.

UM, WHILE THAT FIX WAS, WAS IN DEVELOPMENT, WE COMMUNICATED THE ISSUE AND OUR INVESTIGATION OF THE ISSUE TO THE MARKET THROUGH TWO MARKET NOTICES, THE FIRST ON JULY 25TH, UH, INDICATING WE WERE COMMENCING OUR ANALYSIS.

AND ON AUGUST 19TH, COMMUNICATING THE RESULTS OF THAT ANALYSIS AND OUR INTENTION TO SEEK BOARD APPROVAL TO CORRECT PRICES FOR, UH, OPERATING DAY JUNE 27TH IN ORDER TO, UH, TO, TO COME BEFORE THE BOARD AND REQUEST A PRICE CORRECTION.

THE IMPACT OF THE, UH, PRICING ISSUE NEEDS TO MEET ONE OF TWO CRITERIA, UH, THAT EITHER THE, THE IMPACT TO A SINGLE COUNTER PARTY IS, UH, 2% AND ALSO GREATER THAN $20,000 OR 20%, AND ALSO GREATER THAN $2,000.

AS WE CONDUCTED OUR ANALYSIS FOR, UH, OPERATING DAY JUNE 27TH, UH, WE MET BOTH OF THOSE CRITERIA.

THERE'S ONE COUNTERPARTY THAT SATISFIED CRITERIA NUMBER ONE AND EIGHT, COUNTERPARTIES THAT SATISFIED CRITERIA.

NUMBER TWO, THE MAXIMUM VALUE OF AN IMPACT TO ANY SINGLE COUNTERPARTY ON A DOLLAR AMOUNT WAS, UH, JUST NORTH OF $26,000.

UH, AND ON THE, THE PERCENTAGES, UH, CRITERIA, ONE ABOUT 25%, AND ON CRITERIA TWO, 116%.

AND SO THESE, UM, THIS PRICING IMPACT DID MEET THOSE SIGNIFICANT SIGN SIGNIFICANCE CRITERIA FOR REQUESTING BOARD APPROVAL.

THE MAXIMUM CHANGE TO OVERALL ERCOT SETTLEMENT WAS, UH, AROUND $125,000, JUST SHORT OF $125,000, UH, WHICH REPRESENTS A, UH, A NET CHANGE OF 1.2% TO ALL ERCOT SETTLEMENTS.

BECAUSE THIS IS A POSITIVE NUMBER.

THIS IS AN INCREASE IN, IN CHARGES, UH, FROM ERCOT TO MARKET PARTICIPANTS.

UM, AND SO WITH THAT, UH, CONCLUSION OF OUR ANALYSIS, UM, AND THE, THE SUMMARY PROVIDED, WE'D LIKE TO REQUEST BOARD APPROVAL TO CORRECT MARKET PRICES AND THE DAY AHEAD MARKET FOR OPERATING DAY JUNE 27TH.

HAPPY TO ANSWER ANY QUESTIONS BEFORE GOING TO THE, GOING TO THE VOTE.

THANK YOU, GORDON.

ANY QUESTIONS FOR MR. DRAKE ON THIS PRICE CORRECTION? IF NOT, I'LL ENTERTAIN A MOTION TO, NUMBER ONE, DETERMINE THE PRICES FOR THE IDENTIFIED INTERVALS FOR OPERATING DAY JUNE 27TH, 2025, THAT WERE SIGNIFICANTLY IMPACTED BY THE USAGE OF AN INCORRECT GENERIC TRANSMISSION.

GET STRAIGHT LIMIT IN THE DAY HEAD MARKET AND NUMBER TWO, DIRECT ERCOT TO IMPLEMENT THE APPROPRIATE PRICE CORRECTIONS PURSUANT TO PROTOCOL SECTION 4.5, 0.3.

I HAVE A MOTION.

THANK YOU, JOHN.

I HAVE A SECOND, LINDA.

IS AGENDA ITEM 8.5, REAL TIME CO-OP OPTIMIZATION UPDATE.

ALL IN FAVOR? A AYE.

ANY OPPOSED, ANY ABSTENTIONS? THE PRICE CORRECTION FOR JUNE 27TH, 2025 IS APPROVED.

THANK YOU, MOR.

THE NEXT ITEM

[8.5 Real-Time Co-optimization Update]

MATT MORENOS IS OUR PRESENTER.

MR. CHAIRMAN, COULD I JUST ASK, UH, YES, MA'AM, ABOUT THE ROOT CAUSE OF THE ISSUE WE JUST SAW FROM JP TO MAYBE MAKE A COMMENT? JP, DO YOU WANNA CHIME IN? YES, LET ME CHIME IN.

SO THE, SO THERE IS A SET OF PROCESS THAT NORMALLY WE DO.

SO IN THIS PARTICULAR CASE, AND GORDON'S STILL HERE, THAT THE OPERATOR EXECUTED A DIFFERENT PATH THAN NORMAL.

AND IN THAT DIFFERENT PATH, THE, THE BUTTONS THAT ARE INVOLVED IN THAT PATH, WERE NOT TESTED TO DO THIS.

SO, UM, OUR NORMAL PATH, THIS WOULD NOT HAVE HAPPENED, BUT IN AN ALTERNATE PATH, THIS, UH, AREA WHERE IT WAS NOT, WE DIDN'T ANTICIPATE THE OPERATOR TO GO DOWN THIS PATH.

AND, AND THAT'S WHERE THE SOFTWARE DEFECT WAS, IF THAT HELPS.

SO, SO YES, IT'S A SOFTWARE DEFECT THAT SHOULD HAVE BEEN CAUGHT, BUT A NORMAL TESTING PROCESS, UM, WENT A DIFFERENT PATH.

IT MAY FOLLOWED A DIFFERENT PATH, WHICH IS ALSO NOT IN,

[01:20:01]

IT'S NOT INCORRECT, BUT THAT'S NOT THE NORM, THAT'S NOT THE NORMAL PATH THE OPERATORS WOULD FOLLOW.

SO IT SUPPOSE AN OF RTC CHANGE, IS THERE ANYTHING LESSONS LEARNED FROM HERE THAT CAN BE APPLIED AS WE IMPLEMENT RTC? THAT WAS YES.

THE, SO THERE ARE UNTESTED PATHS THAT PEOPLE TAKE, THEN YES, WE MIGHT RUN INTO UNTESTED DEFECTS.

YES.

OKAY, THANKS JULIE.

ANY OTHER? THANKS, JP.

ANY OTHER QUESTIONS ON THIS? OKAY, WITH THAT, WE'RE GONNA TURN IT OVER TO MATT FOR THE, UH, BIGGEST PROJECT THAT ERCOT HAS BEEN WORKING ON FOR A WHILE.

SO BACK TO SEPTEMBER 11TH.

GOOD AFTERNOON BOARD.

SO I WANTED TO WALK THROUGH SOME BRIEF SLIDES TODAY TO SHOW WHERE WE'RE AT IN THE IMPLEMENTATION PROCESS.

IT FEELS LIKE WE'RE, IF IT'S A FOOTBALL GAME, FIRST DOWN GOAL FROM THE EIGHT YARD LINE, THERE'S STILL WAYS TO GO, BUT THINGS HAVE BEEN GOING PRETTY WELL.

UM, THANK YOU FOR THE APPROVAL.

THE ONE ITEM WE HAD HERE TODAY WAS, UM, THE FINAL NPR CLEANUP.

SO THAT'S THE TOP RED SQUARE, WHICH WAS TO KNOCK THAT OUTTA THE WAY FOR THE, UH, POLICIES ALL TO BE SETTLED IN TIME FOR GO LIVE.

AND THEN THE BOTTOM THREE PIECES THAT WE'RE WORKING ON THE TASK FORCE STILL IS THE GO LIVE TRANSITION PLAN.

WHAT DOES IT LOOK LIKE TO CUT OVER IN THE DAYS AND HOURS LEADING UP TO, UH, THE SWITCHOVER? AND JP TOUCHED ON THAT THIS MORNING A BIT.

UH, ANY PROTOCOL WAIVERS OR, UH, GOOD CAUSE EXCEPTIONS THAT WE MAY NEED DURING THAT TRANSITION PROCESS.

AND THEN POSTING OPERATING PROCEDURES AND OTHER RED LINES OF WHAT CHANGES WITH GO LIVE.

SO THOSE POLICY ISSUES ARE SETTLED AND WE ARE IN THIS MARKET TRIALS PATH.

UM, IF YOU'RE NEW TO THE BOARD, WELCOME, UH, I WILL SHARE THAT.

I'VE SHOWN THIS A LOT OF TIMES, BUT I'LL, I'LL SLOW DOWN AND JUST KIND OF UNPACK IT A LITTLE BIT.

WE DON'T NORMALLY TAKE SIX MONTHS TO IMPLEMENT SOMETHING, BUT THE STORY IS, IS WILL YOU IMPLEMENT A MAJOR REDESIGN OF YOUR REAL-TIME MARKET AND YOUR FOUR SECOND, UH, CONTROL OF THE SYSTEM? YOU NEED TO TEST IT.

AND IT'S NOT JUST ABOUT ERCOT BEING SUCCESSFUL, IT'S ABOUT 95 OTHER COMPANIES THAT ARE BATTERIES, LOAD RESOURCES AND GENERATORS THAT HAVE TO MOVE THEIR MACHINES.

UH, SO FOR EXAMPLE, ONE OF THESE BOXES, THE NUMBER TWO, UM, ORANGE BOX THERE FOR THE TELEMETRY CHECKOUT, THAT'S WHERE THE MARKET NEEDED TO ADD 26,000 NEW POINTS TO SUPPORT ALL THIS NEW TELEMETRY, UH, FOR THIS, UH, PULSING BETWEEN SYSTEMS. SO WHAT MAY AND JUNE WERE, UH, WAS THE INITIAL CONNECTIVITY AND DATA SET UP WHAT JULY AND AUGUST WAS, WAS RUNNING THE REAL TIME MARKET, SEEING HOW THINGS LOOK AND MAKE SURE THAT WE HAVE THE INPUTS THAT ERCOT NEEDED AND THAT WE'RE PUBLISHING THINGS THAT THE KIRK THAT THE MARKET CAN SEE AND MAKE SENSE.

AND THEN WE GRADUATED INTO WHERE WE ARE NOW THAT WE'LL TALK ABOUT IN A MINUTE, WHICH IS WE ACTUALLY CONTROLLED THE PRODUCTION SYSTEM FOR TWO HOURS ON SEPTEMBER 11TH, AND THAT'S THIS TWO HOUR CONTROLLED TEST.

WE WANNA SHAKE OUT THAT UNKNOWNS BEFORE WE GET TO GO LIVE.

THIS IS NOT SOMETHING YOU GO LIVE ON AND THEN UNDO, IT'S A FULL COMMITMENT.

SO THAT'S THE REASON FOR THESE EXTENDED TRIALS.

AND HOW DO WE KNOW WHERE WE'RE AT? UM, WHAT WE'VE DONE IS REPORT CARDS IS OUR, OUR KIDS LOVE THESE THINGS.

YOU LIKE TO BE GREEN, YOU DON'T LIKE TO BE RED.

UH, THE FEEDBACK IS THIS IS NOT A SHAMELESS, IT'S ACTUALLY AN EXCELLENT TOOL.

WE USED IT 15 YEARS AGO FOR THE, UM, NODAL PROGRAM.

IT'S THAT THESE PUBLIC SCORECARD BY COMPANY ARE THAT FEEDBACK LOOP TO HOW'S MY COMPANY DOING? SO THE MARKET PARTICIPANTS AND THEIR MANAGEMENT WILL SEE THEMSELVES, IT'S AT RED AND SAY, HEY, WHAT'S GOING ON? WHAT'S OUR BOTTLENECK? UM, ALSO THE SUPPORTING VENDORS.

YOU MAY BE A VENDOR THAT ROLLS OUT TO 15 CUSTOMERS, BUT YOU DON'T KNOW HOW THE CUSTOMER IS DOING.

SO THERE'S A GOOD FEEDBACK LOOP ON THAT SIDE.

AND THEN OF COURSE, TO THE TASK FORCE TO T AND THE BOARD, WE KNOW WHERE WE'RE AT.

SO IF IT'S ALL RED, THAT'S BAD.

IF WE'RE GREEN.

UH, SO WHAT'S BEEN GREAT IS COLLECTIVELY THE MARKET PARTICIPANTS HAVE REMAINED ON SCHEDULE FOR EACH ROUND OF MARKET TRIALS.

SO I SALUTE THE CROWD OVER THERE, UM, TO GET ALL THIS IN PLACE.

WE CAN'T DO IT ALONE.

AND SO IT'S BEEN A GREAT, UH, COLLABORATION ALONG THE WAY.

SO WHAT ARE WE DOING RIGHT NOW? IT'S, UH, THIRD WEEK OF SEPTEMBER.

SO ON SEPTEMBER 11TH, WE DID OUR FIRST OF TWO, AND IF YOU FOCUS ON THE RIGHT LIVE PRODUCTION TESTS, AND THAT'S IF I, I WISH I COULD HAVE FILMED IT BECAUSE HERE'S HOW IT KIND OF LOOKED LIKE IN THE CONTROL ROOM.

OUR OPERATORS ARE SITTING THERE ON THEIR NORMAL REAL-TIME SYSTEMS AND AT 10 35 WE DO A HOTLINE CALL AND THEY TURNED TO THE OTHER SIDE AND USED THEIR RTC SYSTEMS TO SECURE CONSTRAINTS AND MANAGE, UH, CONGESTION.

AND SO THAT SWITCHOVER WAS DONE FOR TWO HOURS AND THEN SWITCHING BACK, THERE'S A LOT OF RISK WITH ACTUALLY SWITCHING OVER.

SO WE'LL TALK MORE ABOUT THE LFC TEST ITSELF AND THEN SWITCHING BACK.

BUT WE'VE ALSO STOOD UP THE DAY AHEAD MARKET.

UH, WE'VE BEEN TALKING ABOUT THE 95 COMPANIES NOW.

THIS IS THE CHANCE FOR, UH, OUR DAY AHEAD MARKET HAS SOME CHANGES ALSO, AND WE HAVEN'T TALKED MUCH ABOUT IT HERE, BUT IT'S THE MARKETERS, IT'S THE PEOPLE THAT ARE LOAD ONLY AND HOW THEY CHANGED THEIR DAY AHEAD MARKET ACTIVITIES FOR THEIR HEDGING.

UH, AND SO WE HAVE THE DAY AHEAD MARKET IS OPEN.

UH, WE PUSHED OUT A MARKET NOTICE LAST WEEK INVITING THEM TO GET THEIR DIGITAL CERTIFICATES AND START LOGGING IN BEFORE GO LIVE TO SHAKE OUT ON THOSE SYSTEMS.

[01:25:03]

SO WE'RE DOING TWO PLANNED TESTS.

THE FIRST ONE WAS SEPTEMBER 11TH.

THE NEXT ONE WE JUST ANNOUNCED TODAY ON THE MARKET CALL IS ON OCTOBER 30TH.

AND SO ERCO SUCCESSFULLY CONDUCTED THE FIRST OF THESE TWO TESTS, UH, WAS THE MARKET PARTICIPANTS NEED TO SUBMIT ACCURATE TELEMETRY BIDS AND OFFERS FROM THE FIELD.

WE JUST HEARD FROM THE PREVIOUS DISCUSSION, ALL THE DATA HAS TO BE RIGHT FOR THESE THINGS TO WORK.

SO THE OPERATORS AND EVERYONE IS IN FRONT OF THEIR SCREENS TO MAKE SURE THIS WORKS.

AND ON THE MARKET SIDE, AND MACHINES MOVED ON THE SYSTEM.

SO THIS IS THE IDEA OF RTC DID CONTROL FREQUENCY IN THE REALTIME MARKET FOR TWO HOURS.

SO THE SC OUR REALTIME MARKET WAS AWARDING ANCILLARY SERVICES IN REAL TIME FOR THE FIRST TIME EVER, JUST FOR TWO HOURS.

UH, AND THEN ALSO THE ENERGY DISPATCH AROUND THAT.

AND THEN THE REALTIME MARKET AND FREQUENCY CONTROL WAS CONTROLLED.

SO THAT'S IN THE BOTTOM RIGHT.

IT'S HARD TO TALK ABOUT FREQUENCY CONTROL WITHOUT A GRAPH.

YOU KNOW, THE IDEA OF THE MIDDLE LINE HERE, IT'S HARD TO SEE.

UH, I HAVE A LINK TO THE, IF YOU, IF YOU REALLY WANT TO GO LOOK, YOU CAN SEE IT ON THIS, UH, SEPTEMBER 16TH MEETING.

WE HAD A LOT OF SLIDES ABOUT WHAT HAPPENED.

UH, AND SO THIS TWO HOUR WINDOW IN THE MIDDLE IS 60 HERTZ.

THAT'S WHERE YOU WANNA LIVE.

AND AS WE BUY REGULATION, WE ERCOT, UH, BY REGULATION.

SO AS WE MOVE AWAY FROM THE 60 HERTZ BECAUSE A STEEL MILL IS ON OR MAYBE THE CLOUDS MOVED IN OR SOMETHING IS SHIFTING ON THE SYSTEM, IT'S HOW TO COMPENSATE EVERY FOUR SECONDS TO STAY AT 60 HERTZ.

SO THIS IS USUALLY A PIECE THAT LOOKS LIKE THIS.

AND EARLIER TODAY SOMEBODY ASKS, WHAT WERE THE LESSONS LEARNED? WELL, BY DESIGN, ONE OF THE BIGGEST LESSONS LEARNED IS HOW TO MANAGE OUR FREQUENCY.

WELL, THIS IS A CHANCE TO DO TUNING.

UH, FOR EXAMPLE, WE HAD, DURING THE TEST, I THINK WE LOST, SORRY, LOSS IS ALWAYS THE WRONG WORD.

WE HAD A DECREASE IN SOLAR AND IN, UM, WIND OF ABOUT 3000 MEGAWATTS DURING THE TEST.

SO THAT DROP OFF IN POWER WAS SOMETHING THAT WE HAD TO SEE OTHER THINGS PICK UP.

WE ALSO SAW A TWO UNITS TRIP DURING THE TEST.

AND SO IT WASN'T NECESSARILY AN EASY PEASY TEST LIKE SOME OF US THOUGHT IT WOULD BE, BUT THINGS HAPPEN ALONG THE WAY.

AND THE GOOD NEWS IS, IS THAT THE OPERATORS ARE NOW AND THE ENGINEERS ARE LOOKING AT HOW DID OUR SYSTEM REACT AND DO WE NEED TO REFINE THAT LFC TUNING EVERY FOUR SECONDS? SO THAT'S THE MAIN LESSON LEARNED.

UH, WE HAD, UM, ERCOT HAD ISSUES.

I'M NOT GONNA HIDE THOSE.

OUR SYSTEMS WEREN'T PERFECT.

THE NICE PART OF ACTUALLY DOING A DRESS REHEARSAL, PEOPLE LOOK AT THE MONEY, THEY LOOK AT THE MEGAWATTS AND THEY SEE IF THEY CAN FOLLOW.

AND THAT FOUND SOME SCENARIOS WHERE WE HAD GAPS.

AND SO THOSE DEFECTS ARE IN, UM, FOR DELIVERY IN THE SECOND WEEK OF OCTOBER.

UM, AND WAS THERE ANYTHING ELSE TO COVER? THIS WAS AN IMPORTANT SLIDE.

OKAY, WELL I'LL WRAP UP AND THEN WE CAN COME BACK TO IT IF YOU WANT TO.

SO AGAIN, THIS FINAL PUSH TO THE FINISH, UM, AGAIN, THANKS TO THE MARKET.

WE TALKED ABOUT STAKEHOLDER MEETINGS.

THERE'S A LOT OF THEM.

WE WERE PART OF THAT.

IT'S THE 27 MEETINGS OVER THE LAST TWO YEARS, UH, 25 REVISION REQUESTS.

IT'LL BE NICE TO HAVE PROTOCOLS THAT DON'T HAVE ALL THESE RTC BOXES IN THEM, UH, TO GET RID OF A LOT OF PROTOCOLS.

UH, WE'VE HAD ON-TIME DELIVERIES FROM THE ERCOT STAFF AS WELL AS THE VENDOR, UH, TO GET WHERE WE ARE.

AND WE'VE DONE FOUR SUCCESSFUL BID TO BILL OPERATING DAYS.

SO IT'S ONE THING TO DO AN LFC TEST AND JUST TEST THOSE CONTROLS, BUT DO THE SETTLEMENTS WORK TO THE CREDIT SYSTEMS WORK TO THE REPORTS WORK.

SO THAT BID TO BILL WAS SUCCESSFUL.

AND THEN THE BEST RISK MITIGATION TO GO LIVE ON THIS IS TO RUN THIS THING OVER AND OVER AGAIN.

SO BY THE TIME WE GET TO DECEMBER 4TH AND FIFTH, THAT IS WHERE WE'LL HAVE BEEN RUNNING OUR SCALE, OUR REAL-TIME MARKET FOR FIVE MONTHS.

AND SO WHAT'S LEFT TO GO? UH, WE HAVE SIX WEEKS TO MARKET TRIALS LEFT AGAIN.

THE ANOTHER LFC TEST ON OCTOBER 30TH, DAY AHEAD, MARKET RUNS WILL CONTINUE NOVEMBER 5TH, WE'LL PUSH OUT A MARKET NOTICE TO SAY WE'RE GOING LIVE.

UM, AND THE TRANSITION ACTUALLY BEGINS.

SO THE TIMING OF THIS IS INTERESTING.

SO IT'S THE MONDAY AFTER THANKSGIVING DAY IS THE GO LIVE.

SO WE ALL COME BACK FROM VACATION YOU'RE ON FOR MONDAY THROUGH THURSDAY IS THE STRETCH TO GET TO THE GO LIVE THAT NIGHT.

IT'S A MIDNIGHT TYPE CUTOVER.

SO THE FIRST OPERATING DAY IS THAT FRIDAY, UH, DECEMBER 5TH.

AND THEN WE'RE HERE BRIGHTON EARLY ON MONDAY MORNING TO TALK ABOUT WITH YOU GUYS.

UM, SO IT'S ALMOST A REAL TIME UPDATE OF HOW IT WENT ON DECEMBER 8TH.

SO THAT'S ALL I HAVE.

IF THERE ARE ANY QUESTIONS, NOBODY MAKES RTC SOUND MORE EXCITING THAN YOU.

, MY KIDS WOULD DISAGREE WITH YOU, BUT YES.

ALRIGHT, THANK Y'ALL.

ANY QUESTIONS FOR MAYOR? MR. CHAIRMAN, I, ANY COMMENTS? OKAY, MA'AM, UH, I NOTICED ON YOUR, UH, TEST WINDOW THAT THE FREQUENCY DROPS WERE LOWER DURING THE TEST WINDOW THAN OUTSIDE THE TEST WINDOW.

IS THERE ANY REASON FOR THAT? SO THAT IS PART OF THE TUNING AND WHAT I HEARD FROM THE ENGINEERS WAS AGAIN, WE HAD THIS DOWN PRESSURE FROM CLOUD COVER MOVING IN AS WELL AS WIND DROPPING OFF AND THEY'RE LOOKING AT WHAT IT LOOKS LIKE TO USE THAT FIVE MINUTE FORECAST TO BIAS IT THE OTHER DIRECTION.

SO THAT IS PART OF THE TUNING.

GOOD OBSERVATION.

NEXT IS AGENDA ITEM NINE, STAKEHOLDER ENGAGEMENT TOPIC, WHICH IS, UH, AGAIN TIED TO REAL TIME COOPERATION PLUS BATTERIES.

ANY OTHER QUESTIONS? ANYTHING ELSE? ALRIGHT, THANK YOU MATT.

ALRIGHT, THANK YOU.

UH, THE

[9. Stakeholder Engagement Topic – Real-Time Co-optimization Plus Batteries (RTC+B)]

[01:30:01]

UH, REBECCA ZERVOS AND KEITH COLLINS ARE GONNA FACILITATE THE DISCUSSION.

OPEN COMPETITIVE PRICING.

SO THE INTENT OF THESE PRESENTATIONS IS TO TAKE IMPORTANT POLICY ISSUES THAT WE'RE LOOKING AT OUTSIDE OF JUST THE REVISION REQUEST AND GET DIFFERENT PERSPECTIVES FROM THE DIFFERENT MARKET SEGMENTS.

THIS CYCLE, WE HAVE THE RTC PLUS B PROJECTS.

SO WE HAVE REPRESENTATIVES FROM THE INDEPENDENT RETAIL PROVIDERS, THE INDEPENDENT POWER MARKETERS, AND THE MUNICIPAL SEGMENTS.

BILL AND JAY ALREADY LINED UP.

WELCOME BACK L AND JAY.

GOOD TO SEE Y'ALL AGAIN.

GOOD AFTERNOON EVERYONE.

BILL BARNES, SENIOR DIRECTOR OF REGULATORY AFFAIRS FOR NG AND NRG ENTITIES, WHICH INCLUDES RELIANT ENERGY, WHICH IS THE LARGEST RETAIL ELECTRIC PROVIDER IN THE NRG PORTFOLIO.

HENCE IT IS THE CORPORATE MEMBER IN THE ERCOT STAKEHOLDER PROCESS.

HAPPY TO REPORT I AM MELY THE WARMUP ACT FOR J HARPO, WHO IS CEO OF A P, UM, A P, G AND E, WHICH MEANS HE HAS A REAL JOB CONDUCTS REAL BUSINESS.

SO I'M LOOKING FORWARD TO HEARING FROM HIM AND, UH, AND LEARNING HIS PERSPECTIVE AS WELL.

SO WE REALLY APPRECIATE THE OPPORTUNITY TO BE HERE TODAY AND PROVIDE OUR VIEWS ON REALTIME CO-OP OPTIMIZATION, WHICH AS YOU GUYS MAY KNOW, STAKEHOLDERS DON'T OFTEN AGREE ON MANY THINGS REAL TIGHT.

REALTIME CO OPTIMIZATION IS ONE OF THOSE RARE SUBJECTS WHERE THERE'S NEAR UNANIMOUS AGREEMENT THAT THIS IS THE RIGHT THING TO DO.

IT IS WHAT I CALL PROVEN SCIENCE, UH, BECAUSE IT HAS BEEN IMPLEMENTED SUCCESSFULLY IN OTHER MARKETS AND DEMONSTRATED BENEFITS, UH, AND PROVEN AT DISPATCH.

AND WE ALWAYS LIKE TO MAKE OUR DECISIONS BASED ON SOUND DATA, FACTS AND SCIENCE.

ISN'T THAT RIGHT? COMMISSIONER JACKSON? SO IT WAS IMPORTANT FOR OUR SEGMENT, UM, REP SEGMENT TO PROVIDE A LITTLE BIT OF BACKGROUND FOR THE BOARD ON THE COMPETITIVE RETAIL MARKET.

THAT'S BECAUSE YOU GUYS DON'T OFTEN HEAR ABOUT ISSUES IN THE RETAIL MARKET BECAUSE IT IS SO SUCCESSFUL AND IT IS FAIRLY STABLE AT THIS POINT.

WE HAVEN'T MADE ANY MAJOR CHANGES TO THE RETAIL MARKET IN MANY, MANY, MANY YEARS.

REALTIME CO-OP OPTIMIZATION IS THE THIRD MAJOR OVERHAUL OF THE WHOLESALE MARKET.

WE IMPLEMENTED THE ZAL MARKET THE BEGINNING OF RESTRUCTURING, THEN UPDATED THAT TO THE NODAL MARKET IN 2010.

AND HERE WE ARE WITH REAL TIME CO OPTIMIZATION, WHICH IS A SIGNIFICANT SYSTEMS ENGINEERING PROJECT THAT TOUCHES EVERYONE THAT, THAT, THAT INTERACTS IN THE ERCOT MARKET.

THE RETAIL MARKET ISN'T.

AND ONE OF THE, UM, INITIAL PRINCIPLES WHEN WE ADOPTED THE LEGISLATION TO INVOKE RESTRUCTURING WAS THAT ERCOT WAS CHARGED WITH A HANDFUL OF OF FUNCTIONS, ONE OF THOSE BEING THE ADMINISTRATION OF THE COMPETITIVE RETAIL MARKET BY A COMPLETELY INDEPENDENT ENTITY THAT DOES, HAS NO STAKE IN THE BUSINESS.

AND THAT HAS PROVEN TO BE HIGHLY SUCCESSFUL.

THE ERCOT COMPETITIVE RETAIL MARKET IS THE MOST SUCCESSFUL RETAIL ELECTRIC MARKET IN THE WORLD.

THAT IS NOT AN OVERSTATEMENT AND IT'S NOT, UH, PUMPING IT UP.

IT IS.

THAT'S A TRUE STATEMENT.

AND THAT'S BECAUSE OF THE KEY PRINCIPLES THAT WE ADOPTED WHEN DESIGNING IT.

WE DON'T TRY TO REGULATE RETAIL PRICES.

THE MARKET DOES THE BEST JOB OF DOING THAT.

WHENEVER YOU OFFER PRICES, THERE'S ALWAYS GONNA BE ANOTHER COMPETITOR OUT THERE READY TO UNDERCUT YOUR PRICE.

THE MARKET DOES A GREAT JOB.

IT'S VICIOUSLY COMPETITIVE.

THE REGULATION THAT WE HAVE, WHICH OVERSIGHT FROM THE PUCT IS FOCUSED ON CUSTOMER PROTECTIONS AND DISCLOSURES.

SO REASONABLE REGULATION IN THE RIGHT PLACES WHERE YOU WANT IT TO BE, WHICH ALSO ALLOWS FOR REPS TO INNOVATE AND DEVELOP A LOT OF, UH, PRODUCTS.

DEMAND RESPONSE VPPS.

THERE ISN'T HINDRANCES ON, UM, THE PRODUCT DESIGN.

SO AS A RESULT, HIGHLY SU SUCCESSFUL MARKET OVER NEARLY 140 LICENSED REPS AT THE PUCT, ALMOST 97% OF ALL CUSTOMERS IN THE COMPETITIVE TERRITORIES HAVE SWITCHED PROVIDERS OR CHOSEN THEIR PROVIDER.

THERE ISN'T ANY OTHER MARKET THAT COMES NEAR THAT.

UH, AND ANOTHER KEY POINT HERE TO UNDERSTAND, NOT ALL OF ERCOT IS COMPETITIVE.

YOU'RE GONNA HEAR COMING UP IN A FEW SLIDES, THE MU UH, MUNICIPAL UTILITIES ARE GONNA PROVIDE YOU AN UPDATE AS WELL.

MOST OF THE ERCOT REGION, 75% IS IN THE COMPETITIVE RETAIL

[01:35:01]

MARKET.

SO WE REALLY WANTED TO MAKE SURE YOU FELT WELCOME TALKING TO TAC MEMBERS.

SO WE NEEDED TO INCLUDE A CHART THAT HAD AN OVERWHELMING AMOUNT OF ACRONYMS, WHICH IS WHAT WE LIKE TO DO.

THAT'S HOW WE SHOW LOVE.

UH, THE MAIN POINT OF THIS CHART THOUGH IS TO AGAIN, HIGHLIGHT ONE OF THE KEY SUCCESS FACTORS, AND THAT IS THE FULL FUNCTIONAL SEPARATION OF THE COMPETITIVE SERVICES AND THE NON-COMPETITIVE SERVICES.

SO WHEN YOU LOOK AT THIS CHART, YOU SEE WHERE THERE'S THE POWER PLANT AND THERE'S THE HOME PROVIDING RETAIL SERVICES.

COMPETITIVE WHOLESALE MARKET PARTICIPANTS ARE COMPETITIVE, GENERATION SIZE, COMPETITIVE.

THE DELIVERY, BECAUSE THAT IS A MONOPOLY THAT OWNS THE WIRES NO ONE ELSE DOES, IS REGULATED.

AND THAT'S WHY WHEN YOU SEE THE SEGMENTS THAT ARE TALKING TO YOU, INDEPENDENT RETAIL, ELECTRIC PROVIDER, INDEPENDENT GENERATOR, INDEPENDENT POWER MARKETER, THAT MEANS WE ARE INDEPENDENT FROM REGULATED UTILITIES.

SO THAT HAS ALLOWED THIS MARKET TO THRIVE.

RETAIL ELECTRIC PROVIDERS HAVE DEVELOPED NUMEROUS TYPES OF PRODUCTS FOR CUSTOMERS, INCLUDING TIME OF USE, DEMAND RESPONSE, RENEWABLE PEAK REBATES, AND ALSO MEANS THAT RETAILERS ARE THE ONES THAT SHIELD THE CUSTOMERS FROM PRICE RISK, WHOLESALE PRICE RISK.

THAT'S ONE OF THEIR, OUR MAIN FOCUSES IS MANAGE PRICE RISK FOR RESIDENTIAL CONSUMERS.

WHEN THERE'S PRICE SPIKES IN THE MARKET, THINGS HAPPEN.

INVESTORS, COMPETITIVE ENTITIES WEAR THAT RISK, NOT THE CONSUMER.

AND SO THAT'S ONE OF THE BIG, UH, IMPACTS THAT RTC HAS ON OUR BUSINESSES IN OUR INDUSTRY, WHICH IS WHAT JAY'S GONNA TALK ABOUT NEXT.

THANK YOU BILL.

I'M JAY HARPO, THE CEO OF A PG AND E.

WE'RE A, UH, SMALL TO MEDIUM SIZED RETAILER THAT, UH, SERVES RESIDENTIAL AND COMMERCIAL CUSTOMERS IN TEXAS.

BEEN IN BUSINESS SINCE 2004, SO WE'VE BEEN IN THE MARKET FOR QUITE A LONG TIME.

UM, TODAY I'D LIKE TO TALK TO YOU A LITTLE BIT ABOUT HOW RTC PLUS B WILL IMPACT R EEPS.

AND THE GOOD NEWS IS THAT IT WON'T IMPACT US VERY MUCH, BUT I'M GONNA EXPLAIN WHY.

IF YOU LOOK AT THE CENTER OF THE, UH, SCREEN HERE, THE BLUE BOXES REPRESENT THE TOTAL BILL THAT A CUSTOMER OF A COMPETITIVE RETAILER WOULD SEE.

BREAKING THAT DOWN INTO TWO SECTIONS, THE REP MANAGED PORTION AND THE TDU OR TDSP, THE POLES AND WIRES CHARGES ON THE BOTTOM THERE.

IF WE TAKE THE, UH, REP MANAGED CHARGES AND BREAK THOSE OUT FURTHER, YOU SEE THE, UM, THE BLUE BOX WITH ANCILLARY SERVICES AND THE ORANGE WITH THE WHOLESALE ENERGY.

THOSE ARE THE PRICES THAT WILL BE IMPACTED BY RTC PLUS B.

AND SO FOR THOSE SECTIONS, THAT'S WHAT REPS HAVE TO WORRY ABOUT MANAGING, BUT WE MANAGE BOTH THE PRICE AND THE QUANTITY OF THAT WHILE RTC PLUS B IS GONNA CHANGE THE PRICES OF THE REAL-TIME ENERGY.

UM, THERE IT IS NOT GONNA CHANGE THE QUANTITIES AND THAT'S A VERY IMPORTANT ASPECT I WOULD LIKE TO JUST HIGHLIGHT.

THERE ARE OTHER CHANGES IN ERCOT THAT MAY SEEM TO BE SMALLER, SUCH AS DRRS, WHERE IT'S NOT A BIG AS BIG OF A PROJECT TO ERCOT, BUT MAYBE THAT HAS A BIGGER IMPACT ON REPS BECAUSE WE DON'T KNOW THE QUANTITY NOR THE PRICE OF THAT ITEM.

WHEREAS WITH RTC PLUS B VERY BIG PROJECT, HOWEVER, IT'S NOT CHANGING THE QUANTITIES, IT IS CHANGING THE PRICE, BUT THE PRICE THAT IT'S CHANGING IS ONLY FOR THE REAL TIME MARKET, WHICH YOU'LL SEE AS A SMALL PORTION OF WHAT A REP WOULD PURCHASE.

SO WHEN IT COMES TO THE PRICE OF ENERGY AND ANCILLARY SERVICES, THE BEST PRACTICE OF A REP IS TO FORWARD HEDGE MOST OF THOSE, UH, EXPOSURES REALLY AT THE TIME YOU MAKE THE SALE TO THE RESIDENTIAL CUSTOMER, YOU GO MAKE THE HEDGE.

THAT'S WHAT A COMPANY LIKE OURS DOES.

AND SO REPS SHOULD BE MOSTLY PROTECTED FROM THE CHANGES TO THE REALTIME ENERGY PRICE.

AND I'LL HIGHLIGHT THAT ON THIS NEXT SLIDE HERE.

UH, THE BLUE, UM, VARIATION LINE THERE IS, UH, REPRESENTATION OF CUSTOMER LOAD AND THOSE GRAY BOXES ARE THE TERM HEDGES THAT MAY HAVE BEEN MADE FIVE YEARS AHEAD OF TIME ALL THE WAY UP TO MAYBE A MONTH BEFORE THE MONTH THAT WE'RE GONNA SERVE THAT CUSTOMER LOAD.

UM, THE RED AND GREEN BOXES, UH, THERE TOWARDS THE BOTTOM WOULD REPRESENT THE DAY AHEAD AND REAL TIME PRICE, UH, QUANTITIES THAT A REP LIKE OURS WOULD PURCHASE.

WE MIGHT MAKE SALES REPRESENTED BY THE GREEN AND MAYBE PURCHASES REPRESENTED BY THE RED TO SHAPE OUR, UH, LOAD TO MATCH THE HOURLY CONSUMPTION PATTERNS OF OUR CUSTOMERS.

WE WOULD DO THOSE RED AND GREEN PURCHASES IN BOTH THE DAY AHEAD AND REAL TIME MARKETS.

MOST OF THAT SHAPING FOR REP FOLLOWING BEST PRACTICES WOULD BE DONE LIKE OURSELVES.

IT WOULD BE DONE IN DAY AHEAD WITH A LITTLE BIT DONE IN THE REAL TIME MARKET.

AND OVERALL CLOSE TO MAYBE ONE TO 5% OF OUR TOTAL LOAD WOULD BE PURCHASED IN THE REAL TIME MARKET AND THAT THOSE ARE THE PRICES THAT

[01:40:01]

ARE IMPACTED BY RTC PLUS B.

SO YOU CAN SEE THAT A REP FOLLOWING BEST PRACTICES WOULD'VE HEDGED ALL OF THIS ENERGY WAY AHEAD OF TIME, NOT BE OVERLY IMPACTED BY RTC PLUS B.

UM, SO AT THIS POINT I'M GONNA KICK IT OVER TO BILL.

HE'S GONNA FINISH UP WITH A FEW, UH, OF THE SORT OF NON-PRICE ITEMS THAT'LL IMPACT US.

YEAH, SO JUST A LITTLE MORE DEPTH ON THE SPECIFIC IMPACTS OF RTC ON RETAIL ELECTRIC PROVIDERS, WHICH AGAIN, JAY TOUCHED ON THE MAJOR PART.

WE ARE THE ONES THAT PROVIDE SERVICE TO CUSTOMERS.

SO WE'RE RESPONSIBLE AND EXPOSED TO THE CHANGES IN PRICING.

BUT OBVIOUSLY YOU'VE HEARD FROM MATT, UH, NUMEROUS TIMES MAJOR TECHNICAL PROJECT.

SO ANY ENTITY THAT INTERACTS WITH ERCOT DISPATCH SYSTEM, WHICH ARE TYPICALLY ENTITIES THAT HAVE RESOURCES, WHICH INCLUDES LOAD RESOURCES, MEANS WE'RE ALL IN THIS TOGETHER AND WE ARE, ARE GOING THROUGH A SIGNIFICANT SYSTEM CHANGE.

MY COMPANY, WE HAVE NUMEROUS IT VENDORS, FOLKS THAT ARE HELPING US WITH NOT ONLY DEVELOPMENT OF THE NEW SYSTEM CHANGES, BUT ALSO THE TESTING THAT'S INVOLVED THAT CONSUMES OUR INTERNAL RESOURCES AS WELL.

I WAS JUST ON A CALL THIS MORNING MY SETTLEMENT FOLKS TRYING TO MAKE SURE THAT WE HAVE ALL THE CHARGE CODES MAPPED ACCORDINGLY.

UM, SO MAJOR SYSTEM, UH, CHANGE AND JUST SHOUT, SHOUT OUT TO MATT AND THE TEAM.

UH, ERCOT HAS DONE A FABULOUS JOB OF RUNNING THE TESTING PROCESS AND UH, KEEPING MARKET PARTICIPANTS PLUGGED IN AS WE'RE GOING, UH, THROUGH MAKING SURE OUR SYSTEMS ARE UP TO DATE AND ALSO ERCOT MAKING THEIR IT RESOURCES AVAILABLE TO TALK TO OUR IT RESOURCES, WHICH HAS BEEN A HUGE PART OF THE SUCCESS SO FAR.

I JUST WANTED TO TOUCH ON, UH, THE CHANGE IN NON-CONTROLLABLE LOAD DISPATCH.

THAT IS A, ONE OF THE A, A BIGGER IMPACTS TO THOSE OF US THAT HAVE LOAD RESOURCES.

THOSE LOAD RESOURCES, UM, ARE TYPICALLY ONES, THINK OF A SMALL MANUFACTURING PLANT THAT HAS A RELAY THAT YOU EITHER ARM OR DISARM.

AND WHEN THAT RELAY GETS RECEIVES, UH, A SIGNAL THAT ERCOT FREQUENCY IS BELOW A CERTAIN THRESHOLD THAT RELAY OPENS AND THAT THAT MANUFACTURING PROCESS TRIPS OFFLINE, THAT IS NOT CONDUCIVE TO CHANGING EVERY FIVE MINUTES.

YOU CAN'T HAVE SOMEONE RUNNING OVER THERE, TURN IT ON, TURN IT OFF.

SO ERCOT HAS, UH, IMPLEMENTED THIS CONCEPT OF SELF-PROVISIONING THAT ALLOWS US TO TER STATUS AND AVAILABILITY OF THAT RESOURCE TO KEEP IT, UM, MINIMIZE THE EXPOSURE FROM THAT SYSTEM CHANGE AND LET THEM OPERATE AS THEY TYPICALLY WOULD.

SO I JUST WANTED TO HIGHLIGHT THAT AS A SPECIFIC IMPACT FOR THOSE OF US THAT SERVE LOAD.

AND THEN MARKET IMPACTS KIND OF JUST, UH, RECAPPING WHAT JAY TALKED ABOUT.

NEW PRICING POINTS.

WE'RE GONNA HAVE REAL REALTIME PRICES, UM, FOR ANCILLARY SERVICES.

THAT'S NEW.

SO THAT MEANS NEW CONTRACTS.

WHERE DO WE, WHO ARE WE SETTLING WITH, WITH OUR CUSTOMERS? WITH OUR COUNTERPARTIES, WE'RE BUYING REAL TIME ANCILLARY SERVICE PRODUCTS.

WE'RE TRYING TO PRICE IT.

WE'RE TRYING TO MARK WHERE THOSE VALUES ARE, UM, SO THAT WE CAN HAVE, WE CAN PRICE OUR RETAIL DEALS ACCURATELY.

THAT'S A BIG CHANGE.

AND THEN MAKING SURE THERE'S LIQUIDITY, THOSE PRODUCTS ARE AVAILABLE TO PURCHASE SO THAT WE CAN HEDGE AS JAY EXPLAINED.

UM, AND THEN CONTRACTS AND HEDGES.

THAT WAS THE OTHER CALL I WAS ON THIS MORNING.

WE'RE TRYING TO FIGURE OUT HOW DO WE COMMUNICATE TO OUR, UM, MID-SIZE AND AND LARGE CNI CUS UH, CUSTOMERS THE CONTRACT LANGUAGE THAT NEEDS TO CHANGE TO MAKE SURE THAT WE'RE ACCOMMODATING THE SETTLEMENT AND THE PRICING IMPACTS OF RTC.

SO THOSE ARE SOME JUST REAL WORLD EXAMPLES FOR YOU GUYS ON HOW THIS IMPACTS RETAIL ELECTRIC PROVIDERS.

CAN I ASK YOU A QUESTION, BILL? HOW LONG DO YOU THINK IT'LL TAKE FOR A DERIVATIVES MARKET TO DEVELOP FOR THE, FOR FORWARD PRICING ON ANCILLARY SERVICES? YOU CAN BUY, YOU CAN BUY FORWARD ANCILLARIES TODAY.

UM, AND YOU CAN DO THAT THROUGH VARIOUS MEANS.

UH, SOME OF THE EXCHANGES, FINANCIAL EXCHANGES LIKE ICE, UH, AND NYMEX, BUT PRIMARILY ICE HAS SOME LIQUIDITY THERE, MAINLY THROUGH THE BILATERAL MARKET, UH, BUYING THROUGH LONG-TERM PPAS WITH GENERATORS OR SUPPLIERS.

SO THERE IS SOME LIQUIDITY, BUT WHENEVER YOU GO THROUGH A SYSTEM CHANGE LIKE THIS, THAT ALWAYS MAKES PEOPLE A LITTLE BIT NERVOUS ABOUT SHOWING YOU A PRICE, UM, BEYOND WHEN THE IMPLEMENTATION DATE IS.

SO, AND THAT'S WHERE I'M GOING IS WHAT DO YOU, HOW LONG DO YOU THINK POST IMPLEMENTATION IT'LL TAKE FOR, FOR MORE LIQUIDITY TO BE IN THAT MARKET HISTORY? SO ONCE, ONCE WE TURN FLIP THE SWITCH AND SUCCESS, WE'RE ALL HAPPY.

WE'RE, WE'RE ALL MONITORING THE, THE MARKET, SEEING WHAT PRICES DO GET F FAMILIAR WITH HOW THE, UH, UH, ANCILLARY SERVICE PRICE IS CLEARED REAL TIME, THEN THAT CONFIDENCE WILL GET BACK AND WE'LL SEE MORE LIQUIDITY IMPROVE YOU CAN HEDGE TODAY, BUT THIS IS, THIS IS TYPICAL, UH, WITH ANY SYSTEM CHANGE LIKE THIS.

AS MARKET PARTICIPANTS NEED TO SEE IT WORK FOR A WHILE BEFORE, UH, REALLY GETTING CONFIDENT THAT THEY CAN START WRAPPING UP A LOT OF DEALS AND THE, THE POWER MARKETERS ARE COMING UP NEXT, THEY MAY BE ABLE TO ANSWER THAT.

UH, THAT'S A GOOD QUESTION FOR THEM.

SO LET'S NOT LET THEM OFF THE HOOK.

ANYTHING ELSE? ANY QUESTIONS FOR JAY OR BELL? OKAY, THANK YOU.

YEP.

Y'ALL ARE GIVING MATT A RUN FOR THE MONEY ON MAKING RTC EXCITING.

SHOULD I, OKAY, OUR NEXT, UH, GROUP IS GONNA BE THE INDEPENDENT POWER MARKET MARKETER SEGMENT, UH, SETH COCHRAN WITH STRATEGIC WHO IS THE STRATEGIC MARKET POLICY HEAD OF VIT O AND JEREMY CARPENTER, WHO'S VICE PRESIDENT OF ENERGY MANAGEMENT AND OPERATORS AT 10 NASCA.

WE'RE GONNA BRING UP, REBECCA, ARE YOU GONNA INTRODUCE THE NEXT GROUP OR

[01:45:01]

GOOD AFTERNOON, MEMBERS OF THE BOARD.

I'M JEREMY CARPENTER.

UM, AND ALONG WITH SETH COCHRAN, WE WILL BE PRESENTING THE INDEPENDENT POWER MARKETERS VIEW ON RTC PLUS B.

AND I GUESS IT MIGHT BE HELPFUL TO START OUT WITH, TO GIVE YOU A BRIEF INTRODUCTION TO THE IPM, WHO WE ARE, WHAT WE DO, WHAT WE BRING TO THE MARKET, AND WE'RE A PRETTY DIVERSE GROUP.

SO WE ARE HEDGE TRADERS, PHYSICAL AND FINANCIAL ENERGY TRADERS, CONGESTION MANAGEMENT, UM, AND THIRD PARTY QES PROVIDING SCHEDULING SERVICES AND PORTFOLIO OPTIMIZATION.

AND WHAT WE BRING TO THE MARKET, AND AS WE JUST TOUCHED ON, IS LIQUIDITY AND COMPETITION AND IN HEDGING STRATEGIES AND TRANSACTIONS AND RISK MANAGEMENT AND, AND THE ABILITY FOR MULTIPLE MARKET PARTICIPANTS TO SCHEDULE THROUGH THE THIRD PARTY QSC AS OPPOSED TO THOSE THAT OWN THEIR OWN GENERATION OR LOAD.

UM, ULTIMATELY WE ARE FAIRLY MARKET AND ELECTRON AGNOSTIC.

UM, OUR GOAL IS TO MAKE SURE THAT THE MARKET FUNCTIONS PROPERLY, THAT IT'S FAIR FOR EVERYONE AND THE RULES STAY SOMEWHAT STEADY SO THAT WE CAN UNDERSTAND WHAT THE MARKET IMPLICATIONS WOULD BE AND THE EXPECTATIONS AS WE MOVE FORWARD.

UM, I PROMISE I DIDN'T COORDINATE WITH MATT AND PERHAPS I SHOULD HAVE, BUT MOST OF MY SLIDES WILL TOUCH ON A LOT OF THE STUFF THAT HE'S PREVIOUSLY TOUCHED ON.

SO WE MAY SKIP THROUGH THROUGH SOME OF IT AS WE GO FORWARD.

BUT, UM, FIRST I'LL TOUCH ON JUST SOME OF THE CORE DESIGN FEATURES WITHOUT GOING TOO FAR INTO IT.

THE, THE, THE MAIN ONES RIGHT ARE THE RTC PLUS B, SO THE REAL TIME CO CO OPTIMIZATION AND THE BATTERIES.

BUT, UM, ONE OF THE OTHER MORE NUANCED CHANGES THAT WE HAVEN'T TALKED ABOUT TOO MUCH IS THE, THE NO LONGER PHYSICAL ANCILLARY SERVICE AWARDS IN THE DAY AHEAD MARKET.

SO THAT WILL INCREASE LIQUIDITY, ALLOWING FINANCIAL PLAYERS SUCH AS INDEPENDENT POWER MARKETERS TO COME IN AND TAKE POSITIONS ON ANCILLARY SERVICES WILL ADD LIQUIDITY AND ADD COMPETITION AND SHOULD BRING MORE PRICE, UM, COHESIVENESS.

AND THEN FOR THE SINGLE MODEL BATTERIES, AS YOU KNOW, THEY'RE CURRENTLY MAT MODELED AS TWO RESOURCES SEPARATELY.

IT SHOULD BRING SOME, UM, SOME EFFICIENCY GAIN AS WE, AS WE MODEL THOSE TOGETHER.

UM, MOVING FORWARD.

AND I GUESS OUR SLIDES, OUR WIDE SCREEN SLIDE PRESENTATION, DIDN'T, IS THAT BETTER? SURE.

OR YOU WANT ME TO GO DOWN TO A HUNDRED? WHATEVER YOU THINK WORKS BEST HONOR, SORRY ABOUT THAT.

TECHNICAL DIFFICULTIES, RIGHT? EXACTLY WHAT WE WANT TO SEE ROLLING INTO RTC PLUS B.

SO ONE OF THE QUESTIONS WE ARE ASKED IS WHAT, WHAT IS GOING TO BE THE DAY-TO-DAY OPERATIONAL CHANGES? AND I'M GOING TO SPEAK PRIMARILY FROM A QSE PERSPECTIVE TODAY, AND A LOT OF THE REASON WHY WHAT MATT SAID IS ALMOST WHAT I WILL SAY IS WE ARE THE MAIN INTERFACE WITH ERCOT.

SO WHILE THERE ARE INDIVIDUAL RESOURCES AND LOADS, EVERYTHING FLOWS THROUGH A QSE AND THE QSE INTERACTS DIRECTLY WITH ERCOT, WHICH IS WHY A LOT OF WHAT WE'VE SEEN AND WHAT WE'VE EXPERIENCED ARE THE SAME.

THE TWO MAIN THINGS THAT I'LL TOUCH ON IS RESOURCE MANAGEMENT AND BATTERY PARTICIPATION.

SO WHEN I TALK ABOUT RESOURCE MANAGEMENT, WHAT'S BEING CO OPTIMIZED IN REAL TIME IS ENERGY AND ANCILLARY SERVICES WHERE PREVIOUSLY THAT WAS ONLY DONE IN THE DAY AHEAD MARKET.

AND THEN IF CHANGES WERE TO BE MADE IN REAL TIME, THAT WAS THE RESPONSIBILITY OF THE QSE TO DETERMINE WHERE ANCILLARY SERVICES WOULD BE MOVED IF THEY DECIDED TO MOVE ANCILLARY SERVICES FROM ONE RESOURCE TO ANOTHER.

IT REQUIRED A MANUAL CHANGE IN THE MARKET, A SUBMISSION OF A NEW CURRENT OPERATING PLAN.

SO QUITE A BIT OF LEGWORK TO GET THAT DONE, WHEREAS NOW IT'LL ALL BE MANAGED THROUGH BIDS AND OFFERS.

SO THE ECONOMICS OF ANCILLARY SERVICES AND THE OPTIMIZATION ENGINE THAT ERCOT HASS PUT TOGETHER WILL MANAGE THAT IN REAL TIME FOR US.

SO THAT SHOULD DEFINITELY INCREASE EFFICIENCY ON OUR DESK.

AND THEN FOR BATTERY PARTICIPATION, AS I MENTIONED, CURRENTLY THEY'RE, THEY'RE MODELED AS TWO RESOURCES, SO YOU'VE GOT TWO SETS OF TELEMETRY POINTS.

IF YOU'VE GOT TWO CURRENT OPERATING PLANS, IF YOU'VE GOT TWO SETS OF DISPATCHES THAT COME ACROSS, WHEREAS NOW IT'LL BE A SINGLE MODEL.

SO WE EXPECT THAT TO BE A GREAT EFFICIENCY GAIN ON OUR DESKS AS WELL.

THIS IS DEFINITELY EVERYTHING MATT HAS SAID, BUT AS FAR AS THE IMPLEMENTATION STATUS, THE MAIN THING I'LL TOUCH ON TWO THINGS REALLY.

ONE, WE ARE FULLY SUPPORTIVE OF CONTINUED TESTING.

WE THINK THE TESTS SO FAR HAVE BEEN VERY PRODUCTIVE.

UM, MATT MENTIONED THERE WERE A FEW ISSUES THAT WERE NOTICED THAT ARE BEING WORKED THROUGH.

WE SAW THAT BOTH FROM A MARKET PERSPECTIVE AND FROM OUR INDIVIDUAL CUSTOMER'S PERSPECTIVE.

SO AS WE GO THROUGH THESE TESTS TOGETHER, IT'S GIVING US OPPORTUNITIES TO BRING ALL THAT TOGETHER AND PREPARE FOR THE DECEMBER 5TH GO LIVE.

AND IT ALSO TOUCHED ON SOME REPORTING

[01:50:01]

READINESS.

UM, THERE WERE SOME SETTLEMENTS REPORTS THAT WE STILL HAD OUTSTANDING WHEN I PUT THIS PRESENTATION TOGETHER.

THOSE HAVE SINCE BEEN COMPLETED.

AND THEN THERE ARE STILL SOME OPERATING, NOT OPERATING GUIDES, BUT OPERATING PROCEDURES THAT WE'RE, WE'RE LOOKING TO SEE COMPLETION ON.

SO SOME OF THE CHALLENGES THAT WE'VE EXPERIENCED AS A QSE, UH, GOING THROUGH IMPLEMENTATION, I THINK THE ANALOGY IS CHANGING AN AIRPLANE ENGINE WHILE YOU'RE FLYING IT.

UM, AS THE RULES HAVE BEEN DEVELOPED, WE'RE TRAINING PEOPLE, WE'RE DEVELOPING SYSTEMS, WE'RE CREATING NEW PROCESSES, PROCESSES AND PROCEDURES WHILE WE'RE SIMULTANEOUSLY SITTING IN THE WORKING GROUPS AND HELPING TO PUT TOGETHER THE PROTOCOLS.

SO THAT IS A CHALLENGE THAT WOULD BE EXPECTED, BUT IT'S ONE THAT WE WERE DEFINITELY WORKING THROUGH, UM, FOR THIS WHOLE PROCESS.

AND, AND WE EXPECT AND KNOW THAT THERE WILL STILL BE DISCUSSIONS.

I THINK A FEW OF THE NPRS THAT WILL REQUIRE DISCUSSIONS AFTER GOLO HAVE BEEN TOUCHED ON AS WELL.

UM, SO THE INCREASED SCRUTINY ON TELEMETRY, THIS LAST POINT I HAVE, AND I'LL TOUCH MORE UH, ON THE NEXT, BUT REALLY TELEMETRY IN THE ERCOT MARKET IS, IS ALREADY MORE USED THAN ANY OF THE OTHER CENTRALLY CLEARED MARKETS.

SO ERCOT FOR BOTH SETTLEMENTS AND DISPATCH RELI VERY HEAVILY ON TELEMETRY.

AND WHERE WE'VE SEEN CHALLENGES IS NOT ONLY AS A QSE ARE WE RESPONSIBLE FOR PROVIDING TELEMETRY TO ERCOT, BUT WHEN MATT MENTIONED THE THOUSANDS OF POINTS OF NEW TELEMETRY THAT ARE BEING DEVELOPED, WELL WE HAVE TO TURN AROUND WITH MULTIPLE INDIVIDUAL CUSTOMERS AND HAVE MULTIPLE CONVERSATIONS WITH EACH CUSTOMER TO LINE UP THOSE TELEMETRY POINTS.

SO WHILE OUR CAR GETS TO TALK TO US FOR A LOT OF THOSE POINTS, WE'RE REACHING OUT TO INDIVIDUAL CUSTOMERS, WHICH CAN BE CHALLENGING AND SOMETHING THAT WE'VE WORKED THROUGH AS WE'VE, UM, AS WE'VE GONE THROUGH THE PROCESS.

UH, THE LAST QUESTION WE HAD WERE ANY OPERATIONAL CONSIDERATIONS THAT WE HAVE AHEAD OF GO LIVE.

AND REALLY, I, SO I SAT ON OUR OPERATIONS DESK IN DECEMBER OF 2011 WHEN WE TRANSITIONED FROM ZAL TO NODAL AND WE SAT IN A ROOM AND TRIED TO THINK THROUGH WHAT WERE SOME OF OUR LESSONS LEARNED DURING THAT PROCESS.

AND WHAT I REMEMBER MOST WAS OUR ABILITY TO SIT AND HAVE REAL TIME DISCUSSIONS WITH THE ERCOT OPERATIONS TEAM ABOUT DOES THIS PRICE LOOK RIGHT? ARE WE BEING DISPATCHED? ARE WE BEING DISPATCHED AS WE'RE SUPPOSED TO? DO WE UNDERSTAND THIS PROTOCOL, RIGHT? IS THIS, IS THIS HAPPENING AS IT'S SUPPOSED TO HAPPEN? AND OUR EXPECTATION IS THAT KIND OF TRANSPARENCY, THAT COMMUNICATION, THAT ALL HANDS ON DECK IS WHAT WE'LL EXPECT TO SEE AS WE TRANSITION INTO THE GO LIVE, UH, ON DECEMBER 5TH.

UM, WE'RE CAUTIOUSLY OPTIMISTIC, WE'VE BEEN IMPRESSED WITH THE WAY THINGS HAVE GONE AND WE JUST LOOK FORWARD TO MAINTAINING THAT TRANSPARENCY AND COMMUNICATION AS WE, UM, MOVE FORWARD.

AND WITH THAT, I'LL PASS IT OVER TO SETH TO TALK MORE MARKET ISSUES.

ALRIGHT, SETH COCHRAN WITH VITOL, IT'S A PLEASURE TO BE WITH YOU ALL.

UM, SO LET ME GO HERE.

THERE WE GO.

SO I'M HERE TO TALK ABOUT SOME OF THE MARKET ISSUES.

UM, SO AS STEVE WAS SAYING, POWER MARKETERS LIVE AND THRIVE ON EFFICIENT PRICE PRICES IN THE MARKETS COMPETITION TRANSPARENCY.

SO I'M GONNA FOCUS ON THOSE THINGS.

AND RTC DEFINITELY DELIVERS THERE.

UH, SO THERE'S SOME ATTRIBUTES ABOUT RTC THAT SPECIFICALLY IMPACT THE ACTIVITY THAT POWER MARKETERS UNDERTAKE.

AND ONE OF THOSE IS CONGESTION TRADING AND CONGESTION WILL BE MANAGED MUCH MORE EFFICIENTLY UNDER RTC.

UH, SOME PEOPLE MAY REMEMBER EVENTS.

I HAVE A TEST CASE HERE WHERE ERCOT WAS NOT ABLE TO USE THE FULL DISPATCHABLE, UH, RANGE OF RESOURCES ACROSS THE SYSTEM DUE TO THEM BEING TRAPPED, UH, BEHIND A WALL.

AND RTC WILL UNLOCK THAT AND OPEN UP THE DISPATCH AND BRING THOSE EFFICIENCIES.

UM, THIS IS SOMETHING WE'RE WATCHING.

UM, WE THINK IT'S AN IMPORTANT ATTRIBUTE AND THIS FEATURE WILL ALSO LEAD TO LESS OUTTA MARKET ACTIONS.

WE THINK THAT THAT WILL BE THE CASE TOO, WHICH IS GREAT BECAUSE THOSE LEAD TO COST OUTSIDE OF THE MARKET.

WE WANNA SEE THE COST IN THE LMPS.

UH, THAT'S WHAT WE TRADE ON.

THAT'S WHAT WE THINK ABOUT.

THAT'S WHAT FORMS OUR FORD EXPECTATIONS.

SO WE LIKE TO SEE THINGS IN THE, IN THE MP, SO RTC, GREAT ON ALL THOSE OBJECTIVES.

UM, THINGS TO WATCH POST DEPLOYMENT, THAT'S MY SECOND SLIDE HERE.

SO THE DRAWING ON THE EXPERIENCE OF SOME OF THE OTHER RTOS AND ISOS, WHEN THEY GO THROUGH THESE CO OPTIMIZ FEATURES WITH THEIR ANCILLARY SERVICES, THEY'RE, THEY HAVE RUN INTO SITUATIONS WHERE THE RESERVES ACTUALLY END UP GOING BEHIND TRANSMISSION CONSTRAINTS.

SO THE RESERVES ARE BEING SHIFTED AS YOU WOULD EXPECT WITH THE RTC ALGORITHM AND IT'S LEADING TO MORE EFFICIENT ENERGY PRICES, BUT IT CAN BE AT THE EXPENSE OF THE RESERVES THAT IT'S SHIFTING, UH, TO, TO NOT BE DELIVERABLE.

UM, AND THIS LEADS TO

[01:55:01]

THE FACT THAT REAL-TIME CO OPTIMIZATION IS OPTIMIZED ON FINDING THE LOWEST OPPORTUNITY COST, UH, ENERGY RESOURCE.

UH, AND THAT IS OFTEN AREAS WITH LOW LMPS AND THOSE ARE AWFULLY, OFTEN CONSTRAINED DOWN AREAS.

AND THAT LEADS TO THESE BEING, UH, SHIPPED LEADS TO RESERVES BEING SHIFTED BEHIND THESE CONSTRAINTS.

THIS IS SOMETHING WE THINK NEEDS TO BE WATCHED.

UH, MISO RAN INTO AN ISSUE WITH ONE OF THEIR CO OPTIMIZED PRODUCTS WITH THIS AND THEY ENDED UP HAVING TO EXCLUDE SOME RESOURCES FROM BEING ABLE TO PARTICIPATE.

UH, CASOS HAD ISSUES WITH THIS AS WELL, AND THEY'VE HAD MANUAL WORKAROUNDS TO ADDRESS THE ISSUE.

AND THEN MORE RECENTLY THEY'VE ACTUALLY, UH, DECIDED TO CORRECT THE PROGRAM PRO THE PROBLEM PROGRAMMATICALLY, UH, IN THEIR, UH, ANCILLARY SERVICE, UH, ALGORITHMS. AND THEY'RE SEEING SOME SUCCESS WITH THAT.

UH, BUT IT TOOK THEM MANY YEARS TO, TO GET THAT, UH, IMPLEMENTED AND IT'S SORT OF AN ONGOING THING.

SO THERE, THERE ARE WAYS TO ADDRESS IT.

SO THIS IS SOMETHING THAT, THAT WE THINK IS WORTH WATCHING BECAUSE IN EFFECT, THE EFFICIENCIES THAT WE'RE SEEING, WE WANT THEM TO BE TRUE AND WE ACTUALLY WANT TO SEE THAT IF YOU ARE SHIFTING THE ALGORITHM IS SHIFTING RESERVES TO CERTAIN RESOURCES, THE EXPECTATION WOULD BE THOSE SHOULD BE DELIVERABLE.

JUST CAN'T IMAGINE THAT WE DON'T SEE SOMETHING THAT WE DIDN'T INTEND.

AND NEXT, NEXT, YOU KNOW, THIS HAS BEEN A BIG PROJECT THAT ERCOT HASS UNDERTAKEN.

I THINK WE'VE OFTEN REFERRED TO AS NODAL 2.0, UH, FILL IN THE BLANK, BUT IT'S A MASSIVE UNDERTAKING.

MATT UNDERSCORED THAT WE HAVE SCORECARDS.

IT'S VERY REMINISCENT OF WHEN WE TURN TO SWITCH ON THE ACTUAL NODAL MARKET, RIGHT? SO IT'S A BIG DEAL.

SO WE ACTUALLY, UH, ERCOT, YOU KNOW, TO RIGHTFULLY HAS BEEN PENS DOWN ON A LOT OF CHANGES AND THEY'VE BEEN TRYING TO GET THIS LOCKED DOWN AND GET IT IMPLEMENTED.

UM, AND I THINK THAT'S, THAT'S THE RIGHT WAY TO DO IT.

UH, BUT BECAUSE OF THAT, THERE'S BEEN SOME PROJECTS THAT HAVE NOT SEEN PROGRESS THAT WE WOULD, WE WOULD'VE HOPED.

UH, SO ONCE WE GET PAST RTC, I THINK ONCE WE GET THROUGH ALL THE KINKS OF IT, WE'LL BE LOOKING FORWARD TO NEW PROJECTS THAT, UH, THAT HAVE BEEN OUT THERE OF SOME OF WHICH HAVE BEEN OUT THERE FOR SOME TIME.

AND THESE ARE ON OUR LIST AS A SEGMENT.

THESE ARE THINGS THAT WE WOULD LIKE TO SEE, UH, MOVE FORWARD WHEN WE GET TO THE POST RTC REALM.

UM, ONE IS WE THINK THAT THE, UH, ANCILLARY, ANCILLARY SERVICE DEMAND CURVES THAT UNDERPIN THE PRICING OF RTC, WE THINK THAT THOSE WILL NEED TO BE LOOKED AT AGAIN.

UH, WE THINK IF THERE IS A NEED TO PUT ADDITIONAL NET MARGINS INTO THE MARKET, THAT WOULD BE AN EFFECTIVE WAY TO DO IT.

WE SEE THAT BEING A MORE EFFECTIVE WAY OF DOING IT THAN USING DRRS AS A RESOURCE ADEQUACY TOOL.

UM, AND THEN NEXT IS THE MULTI INTERVAL, UH, OPTIMIZATION.

AND TODAY ERCOT HAS A FIVE MINUTE HEARTBEAT.

I THINK WE ALL KNOW THAT, RIGHT? SO WE ITERATE AROUND THAT.

UH, THIS MULTI INTERVAL OPTIMIZATION WOULD GIVE ERCOT A VIEW OUT THROUGH THE WHOLE DAY OR AS LONG AS THEY WANTED TO, TO MAKE THAT HORIZON.

AND IT STARTS TO LOOK MORE LIKE A DAY AHEAD MARKET.

WE ALL KNOW IN A DAY AHEAD MARKET TODAY, WE OPTIMIZE ACROSS THE WHOLE DAY.

SO NOW WE'D BE ABLE TO DO THAT INTO REAL TIME.

SO THAT WOULD BE ADDITIONAL EFFICIENCIES.

I THINK THAT WOULD BE IMPORTANT AS WE SEE MORE, IF WE NEED MORE GRID FLEXIBILITY, UH, IT COULD HELP US OPTIMIZE THE STORAGE FLEET, UH, DUE TO THE DURATION LIMITATIONS WITH STATE OF CHARGE.

SO WE VIEW THIS AS ANOTHER SOURCE OF POTENTIAL EFFICIENCIES, UH, DESERVES TO BE LOOKED AT.

UH, AND THEN LAST, UH, BUT NOT LEAST, UH, THERE'S AN EXISTING PROPOSAL OUT THERE, UH, RIGHT NOW NPRR 1214.

AND THIS TAKES AN EXISTING CONSTRUCTS AND REFINES IT SO THAT IT, SO THAT THE PRICE SIGNALS IN THE PRICE ADJUSTMENT ADDER, UH, THAT WE KNOW ABOUT IN REAL TIME, THAT COUNTERACTS OUT OF MARKET ACTIONS, THAT THAT WOULD BE MOVED TO A LOCATIONAL APPLICATION INSTEAD OF JUST BEING APPLIED THE SYSTEM-WIDE BASIS.

UH, WE HAVE AROUND, I THINK, 800, 900 SETTLEMENT POINTS IN ERCOT.

AND TODAY THE ADJUSTMENT IS JUST, IT'S APPLIED TO ALL, UH, NODES, ALL PRICING NODES, UH, CONS UNIFORMLY INSTEAD OF SEEING WHAT THE FULL NODE OF SOLUTION IMPACT WOULD BE AND MAKE THE ADJUSTMENTS IN A MORE FINE TUNED BASIS.

UH, SO WE, WE THINK THAT THERE'D BE GOOD EFFICIENCIES THAT WOULD COME FROM A PROPOSAL LIKE THAT AS WELL.

SO THOSE, THOSE ARE THE THINGS THAT, UH, ARE ON THE MINDS OF, OF OUR SEGMENT.

ANY QUESTIONS FOR JEREMY OR SETH? NO.

WHAT, UH, KEEPS YOU AWAKE AT NIGHT BETWEEN NINE DECEMBER 5TH? UM, YOU KNOW, NOTHING KEEPS ME AWAKE AT NIGHT.

I THINK, UM, YOU KNOW, WE'VE GOT, UH, SOME VETERANS AT ERCOT HAVE THAT HAVE DONE THIS, HAVE, HAVE BEEN AROUND, UH, FOR A LONG TIME THAT HAVE SEEN THESE MAJOR TRANSITIONS.

I'M, I'M CONFIDENT THAT, UH, IT'S IMPLEMENTED ON TIME AND IT'S, IT'S CORRECT.

AND I, YOU KNOW, THERE WILL BE SOME CHALLENGES, I THINK WHEN WE GET POST RTCI

[02:00:01]

'CAUSE IT'S SUCH A MASSIVE CHANGE.

UH, BUT AGAIN, I THINK, YOU KNOW, EVERYONE SORT OF ACKNOWLEDGES THAT, AND I THINK ERCOT STANDS READY, STAKEHOLDER STAND READY TO CONTRIBUTE TO THAT AND TO MAKE SURE THAT, YOU KNOW, ONCE WE IDENTIFY SOMETHING, IT COULD GET IMPLEMENTED AND CORRECTED AS SOON AS POSSIBLE.

JEREMY, MAY YOU, HE HAS MORE, UH, OF AN ASSET BACKED, UM, BUSINESS THAN WHAT VTAL DOES IN TEXAS.

WE DO HAVE ASSETS OUTSIDE OF TEXAS.

SO MAYBE YOU, IS THERE ANYTHING THAT KEEPS YOU UP AT NIGHT? YOU WANNA YEAH, I, I DON'T THINK THERE'S ANYTHING THAT KEEPS ME UP AT NIGHT FEARFULLY.

IT'S MORE JUST GOING OVER EVERYTHING AND MAKING SURE WE'VE ADDRESSED ALL THE QUESTIONS WE HAVE, MAKING SURE WE HAVE ALL THE PROCEDURES IN PLACE, MAKING SURE THE TOOLS ARE READY, HAVE WE DONE IT? HAVE WE DONE IT? HAVE WE DONE IT? SO, I, I, I DON'T HAVE ANY CONCERNS OF THINGS NOT WORKING OR THAT WHAT IS THE CATASTROPHIC FLAW THAT MIGHT POP UP, BUT IT'S MORE JUST CONTINUING TO BE READY AT ALL TIMES.

GOOD.

ANY OTHER QUESTIONS FOR THE INDEPENDENT POWER MARKETERS SEGMENT? OKAY.

S JEREMY, THANK YOU FOR YOUR TIME TODAY.

APPRECIATE THE, UH, THE UPDATE.

UH, OUR NEXT GROUP IS GONNA BE THE MUNICIPALS.

UH, DAVID KEY IS THE DIRECTOR OF ENERGY MARKET POLICY AT CPS ENERGY, AND TAYLOR KILROY IS THE EXECUTIVE DIRECTOR FOR THE TEXAS PUBLIC POWER ASSOCIATION.

I TAYLOR, CAN I GET YOU TO TURN ON THE MICROPHONE OR HOLD IT CLOSER? HOW ABOUT NOW? THAT'S BETTER.

WITH THAT, I'LL TURN IT OVER TO DAVID KEY FOR A MORE SPECIFIC OUTLOOK ON RTC.

MOST PEOPLE DON'T SAY IT'S BETTER WHEN I TURN ON THE MIC, BUT THANK Y'ALL SO MUCH.

UH, AGAIN, MY NAME IS TAYLOR KILROY.

I'M THE EXECUTIVE DIRECTOR OF THE TEXAS PUBLIC POWER ASSOCIATION.

WE'RE THE TRADE ASSOCIATION FOR TEXAS'S 72 MUNICIPALLY OWNED ELECTRIC UTILITIES, LIKE YOU HEARD FROM THE OTHER SEGMENTS.

BEFORE WE GET INTO THE REAL EXPERTISE, UH, WE WANTED TO SPEND A MOMENT JUST KIND OF TELLING WHO WE ARE, WHAT WE VALUE, AND KIND OF WHERE WE'RE COMING FROM.

I THINK THAT'LL HELP PROVIDE MORE OF A BASELINE FOR, UH, DAVID'S COMMENTS ON RTC SPECIFICALLY.

SO AGAIN, I MENTIONED, UH, 72 MUNICIPALLY OWNED UTILITIES IN TEXAS.

YOU'LL SEE A HANDFUL THAT ARE IN SPPA HANDFUL IN MISO, BUT THE VAST MAJORITY OF OUR PEOPLE, UM, MORE THAN 60 CITIES ARE IN ERCOT.

COLLECTIVELY, WE BRING NEARLY, UH, 10,000 GIGAWATTS OF GENERATION CAPACITY IN ERCOT.

WE PROVIDE, UH, MORE THAN 3,300 MILES OF TRANSMISSION, AND WE ALSO SERVE ABOUT 5.1 MILLION CUSTOMERS IN TEXAS.

ALTHOUGH THE WAY SOME CITIES LIKE NEW BRAUNFELS AND GEORGETOWN HAVE BEEN GROWING, WE MIGHT BE AT 20% TODAY.

UM, FUNDAMENTALLY REALLY WHERE WE COME FROM, WE ARE CUSTOMER OWNED.

WE ARE NOT LOOKING TO SATISFY STAKEHOLDERS AND SHAREHOLDERS FROM ACROSS THE WORLD.

AND SO THAT LOCAL PERSPECTIVE PERMEATES EVERYTHING WE DO.

WE'RE CUSTOMER FOCUSED, WE ARE CITY OWNED.

IF YOU'RE MAD, UH, YOU HAVE ELECTED OFFICIALS OR AN APPOINTED BOARD THAT ARE DIRECTLY RESPONSIBLE FOR THE OPERATIONS OF THAT UTILITY.

SECONDLY, WE ARE ALSO NON-PROFIT.

WE'RE NOT HERE TO, UH, MAKE A TRILLION DOLLARS OFF THE MARKET.

WE ARE JUST TRYING TO MAKE SURE THAT OUR CUSTOMERS ARE SERVED.

THIRD, AS, AS BILL BARNES MENTIONED EARLIER, UM, UNLIKE OUR FRIENDS IN THE INVESTOR OWNED COMMUNITY, WHEN THE ELECTRICITY MARKET WAS RESTRUCTURED, WE WERE ALLOWED TO REMAIN VERTICALLY INTEGRATED.

AND SO MUNICIPALLY AND UTILITIES ARE ALLOWED TO OWN GENERATION, PROVIDE TRANSMISSION, AND PROVIDE RETAIL SERVICE ALL UNDER THE SAME ROOF.

NOT ALL DO, IN FACT, ONLY A HANDFUL OPERATE IN ALL THREE REALMS. UH, SOME YOU MIGHT KNOW LUBBOCK, UH, RECENTLY OPTED INTO THE, UH, DEREGULATED RETAIL MARKET.

FOR THE MOST PART THOUGH, UH, MOST OF OUR FOLKS DO OPERATE AT LEAST DISTRIBUTION AND RETAIL, ALTHOUGH YOU'LL SEE IN JUST A SECOND, WE DO HAVE SOME PRETTY LARGE GENERATION OWNERS AS WELL.

WITH THAT, I, I DO WANNA SAY BEFORE I, I WALK OFF, UH, ONE OF THE BIGGEST MISCONCEPTIONS YOU'LL HEAR ABOUT THE VERTICALLY INTEGRATED MODEL OF MUNICIPAL UTILITIES IS WE'RE NOT A CLOSED LOOP.

YOU KNOW, THE CITY OF AUSTIN ISN'T BUYING THEIR OWN POWER OR SELLING THEIR OWN POWER.

IT'S NOT JUST A CLOSED LOOP.

WE SELL TO ERCOT AS ALL OTHER GENERATORS DO.

WE BUY FROM ERCOT, AS ALL OTHER RETAILERS DO.

WE ARE OPERATING EVERY DAY JUST IN THE SAME WAY, SLIGHTLY DIFFERENT MODEL, UM, AS EVERYONE ELSE IN THE MARKET.

AND WITH THAT, UM, I WILL SAY, I DON'T KNOW WHERE YOU STARTED YOUR DAY, BUT YOU'LL NOTICE THE CITY OF AUSTIN IS ONE OF OUR MEMBERS.

AND SO IF YOU WEREN'T A PUBLIC POWER CONSUMER THIS MORNING, YOU CERTAINLY ARE TODAY.

WELCOME TO THE FAMILY.

DON'T WORRY, THIS FAMILY DOESN'T REQUIRE YOU TO SHOW UP FOR THANKSGIVING.

[02:05:01]

THANKS TAYLOR.

DAVID KEY, UH, CPS ENERGY.

UM, SO I WANTED TO INCLUDE A SLIDE THAT REALLY TALKED ABOUT CPS 'CAUSE LIKE TAYLOR MENTIONED, MOUS ARE VERY DIFFERENT ACROSS OF OUR, OUR SEGMENT.

UM, CPS IS THE LARGEST MUNICIPALLY OWNED UTILITY, UM, IN THE CITY.

IN, IN, IN TEXAS, ALSO LARGEST ELECTRIC IN, UH, NATURAL GAS UTILITY IN THE COUNTRY.

UM, IT'S IMPORTANT WHEN WE'RE TALKING ABOUT RTC TO NOTE THAT WE ARE THE FOURTH LARGEST GENERATOR IN ERCOT.

UM, BETWEEN OUR OWN GENERATION AND OUR CONTRACTS, UH, WE PROVIDE, UH, QUITE A LOT OF POWER TO THE MARKET.

UM, AND WE DO HAVE QUITE A LARGE LOAD, NEARLY GETTING UP TO SIX GIGAWATTS OF, OF CONSUMER LOAD, UM, THAT'S ESTIMATED TO GROW.

HAVE WE SEEN AND WE HEARD, UM, WE'RE NOT IMMUNE TO A LARGE LOAD, UH, COMING INTO OUR AREA.

UM, AND SO WE'RE WORKING TO SERVE THAT.

UM, THE OTHER THING I WANTED TO, TO HIGHLIGHT HERE, AND IT'S PROBABLY THE SAME ACROSS MOST OTHER COMPANIES, BUT I WANTED TO POINT POINT OUT TO THIS GROUP, UM, IS AS, AS A MUNICIPAL, WE THINK IN VERY LONG TERMS, VERY LONG TERM ASSET PLANS, HOW DO WE SERVE OUR CUSTOMERS? WE'RE NOT COMPETING FOR MUCH OF OF CUSTOMERS, SO WE HAVE TO FIGURE OUT HOW DO WE SERVE OUR, OUR CUSTOMERS THE BEST WAY? AND WE DO THIS THINKING LONG TERM.

SO WE HAVE, UH, THINGS LIKE HORIZON 2050 WHEN WE'RE TALKING ABOUT LONG TERM PLANNING, WE THINK, YEAH, YOU KNOW, 25 YEARS.

UM, SO THAT'S, IT'S SOMETHING THAT'S IMPORTANT.

SO AS WE'RE THINKING ABOUT RTC, REALLY TRYING TO FIGURE OUT WHAT'S THE LONG-TERM PERSPECTIVE OF THIS.

UM, AND WE, WE CAN TALK ABOUT THAT IN A SECOND.

UM, AS WE LOOKED AT, AS I TALKED WITH THE OTHER MEMBERS OF THE SEGMENT, I TALKED WITH OUR FOLKS INTERNALLY.

EVERYBODY SEEMS TO ALWAYS HAVE BEEN POSITIVE AND IT'S BEEN ECHOED TODAY THROUGH ALL OF OUR SPEAKERS.

EVERYBODY REALIZES THIS IS SOMETHING WE NEED TO DO IT, IT'S GONNA PROVIDE THE RIGHT EFFICIENCIES.

UM, I THINK THE LAST POINT ON THE FIRST BULLET IS WHAT I'M, I'M GONNA BE FOCUSING ON IS PRICES REFLEX SCARCITY.

AND WE, WE NEED TO MAKE SURE THAT THE PRICES AND THE WHOLESALE MARKET DO REFLECT THE NEED.

UM, AND WE HAVE, YOU KNOW, THE RIGHT SIGNALS TO INVESTORS.

UM, CPS THINKING LONG TERM, HOW DO WE KNOW WHAT WE NEED TO BUILD? HOW DO WE KNOW WHAT WE NEED TO BUY? HOW DO WE KNOW THAT THERE'S GONNA BE A MARKET THERE TO PARTICIPATE IN? THOSE ARE ALL THINGS THAT WE'RE, WE'RE INTERESTED IN.

UM, AND I THINK THAT'S BEEN, YOU KNOW, THE SAME ACROSS OUR, OUR SEGMENT.

UM, WE'VE ALREADY HEARD ABOUT INCREASES TO, UH, EFFICIENCY FROM CONGESTION, UM, YOU KNOW, MARKET EFFICIENCIES.

AND SO I WON'T COVER THOSE VERY MUCH.

UM, FROM A CHALLENGES PERSPECTIVE, WE'VE HEARD THAT THIS IS A MAJOR PROJECT, SO I WON'T REALLY REPEAT ALL OF THOSE.

UM, I THINK THE BIGGEST, UH, QUESTIONS THAT WE'RE THINKING ON CHALLENGES FROM A TECHNICAL STANDPOINT IS MAKING SURE ALL OF THE, ALL THE POINTS, THE, THE DATA POINTS BETWEEN THE, THE QSCS WORK, UH, MAKING SURE ALL THE SOFTWARE IS UP TO DATE AND MAKING SURE EACH OF OUR SHIFTS ON THE CONTROL IN THE CONTROL ROOM ARE READY TO, TO MAKE THE TRANSITION.

SO THAT'S BEEN THE, THE BIGGEST CHALLENGE.

UM, I COULDN'T FIND A WHOLE LOT OF CONCERNS.

UM, I THINK AS FOLKS ARE LOOKING AT THESE TESTING WINDOWS THAT MATT DESCRIBED EARLIER, UM, THEY'RE RE THEY'RE RECOGNIZING THE IMPORTANCE OF SUBMITTING QUALITY DATA.

THAT'S SOMETHING THAT WE'VE DONE TO, UM, TO, TO TRY AND IMPROVE THE PROCESS.

UM, AND SO I THINK THAT'S OUR, PROBABLY THE ONLY CONCERN WE CAN REALLY FIND, WE'RE REALLY HAVING TO DIG HERE IS, UM, THE BETTER DATA WE GET IN DURING THE TEST WINDOWS, THE MORE WE CAN TEST OUT THE, THE SOFTWARE AND THE, THE PROCESS AT ERCOT AND THE MORE COMFORTABLE WE CAN FILL WITH THE OUTCOMES.

SO I THINK THOSE ARE PROBABLY OUR, OUR MAJOR CONCERNS.

UM, AS FAR AS POST RTC, UM, WHAT SHOULD WE BE DOING IN THE MARKET? I THINK FOR US, AND, AND WE'VE UNDER, I'VE UNDERLINED REVIEW BECAUSE I THINK OUR PERSPECTIVE IS, YOU KNOW, TAKING A LONG TERM VIEW, HOW DOES THIS CHANGE REALLY GONNA AFFECT US? WE DON'T WANNA BE TAKING, UM, EMERGENCY OR KNEE JERK REACTIONS TO SOMETHING WE SEE IN THE MARKET.

WE WANNA REALLY UNDERSTAND HOW THIS CHANGE IS GONNA IMPACT MARKET PRICING.

WE WANT TO THINK ABOUT WHAT DOES THIS DO FOR THE LONG TERM PROSPECTS FOR, UH, RESOURCE ADEQUACY.

THAT'S GONNA BE A BIG WORD.

IF YOU HAVEN'T HEARD IT YET, YOU'RE GONNA HEAR QUITE A LOT HERE AT ERCOT.

UM, I'VE HEARD PEOPLE SAY WE NEED TO REVIEW THE ASCS, THE DEMAND CURVES.

UH, WE TOTALLY AGREE.

WE NEED TO UNDERSTAND HOW THEY'RE WORKING, IF THEY'RE WORKING AS INTENDED, AND IF THERE ARE ANY ADJUSTMENTS NEEDED.

UM, SO FAR WE'VE BEEN VERY SUPPORTIVE OF EVERYTHING FROM RTC, UH, BUT WE DO, UH, CAVEAT THAT, UM, WE DO WANT TO SEE HOW THIS PERFORMS AND HOW IT'S GOING TO GIVE US THE MARKET THAT WE THINK WE NEED, UM, AND TO, YOU KNOW, CREATE THE INVESTMENT GENERATION THAT WE THINK WE NEED GOING FORWARD.

SO A PRICE FORMATION OUTCOME IS ALSO VERY IMPORTANT TO US.

UM, OUTSIDE OF RITC, OUR POLICY PRIORITIES AND, YOU KNOW, FOCUSING BACK ON THE SEGMENT, UM, I THINK EVERYBODY'S BEEN REALLY STARTING TO FOCUS ON THE SENATE BILL SIX, UM, LARGE LOADS.

HOW ARE THEY GONNA IMPACT THE MARKETS, UM, FROM MUNICIPALS? A LOT OF THEM ARE VERTI, VERTICALLY INTEGRATED, SOME HAVE TRANSMISSION.

HOW DOES THAT IMPACT THEM? A LOT OF 'EM HAVE DISTRIBUTION.

THERE'S AN IMPACT THERE AND HOW DOES IT ALL WORK TOGETHER? AND THOSE ARE OUR, THOSE ARE OUR BIG CHALLENGES IN OUR BIG QUESTIONS.

UM,

[02:10:01]

THE THINGS THAT KEEP US UP AT NIGHT IS HOW ARE WE GONNA MAKE ALL THIS WORK? UM, AND AGAIN, PRICE FORMATION OUTCOMES.

AS FAR AS THE BIGGER POLICIES, UM, WE TALKED ABOUT, YOU'VE HEARD ABOUT DRS, UM, THAT'S, THAT'S GONNA BE ALSO SOMETHING THAT'S IMPORTANT FOR US.

UM, I THINK THE ONLY OTHER THING WOULD BE, UH, MARKET DESIGN IMPROVEMENTS.

WE'RE STILL, UH, PARTICIPATING IN INTERESTED IN ALL THE WORK AT THE COMMISSION RELATED TO MARKET DESIGN.

UM, REALLY WANNA MAKE SURE THAT THE MARKET WORKS FOR US.

UM, AND, AND THE SLIDE TAYLOR HAD SHOWN, UM, IT'S, IT'S ABOUT POWER SUPPLY COSTS.

HOW CAN WE PROVIDE THE BEST COST TO OUR CUSTOMERS? AND SO WE REALLY NEED THE MARKET TO WORK FOR THE STATE FOR, FOR OUR CUSTOMERS.

UM, WE PROVIDE BENEFITS TO OUR CUSTOMERS BY BEING ABLE TO HAVE AN EFFICIENT MARKET.

UM, AND WHEN THERE'S SCARCITY, OUR GENERATION CAN HELP PROVIDE THE STATE MUCH NEEDED CAPACITY AND POWER.

SO WE SEE THAT AS BEING A VALUE TO BOTH, BOTH SIDES OF THE EQUATION THERE.

UM, AND I THINK THAT'S IT, AND I'LL SEE IF WE HAVE ANY QUESTIONS.

FOR TODAY IS AGENDA ITEM 10, THE ANNUAL ME ANNUAL MEMBERSHIP MEETING ANNOUNCEMENT.

ANY QUESTIONS FOR TAYLOR OR DAVID? ALRIGHT, THANK YOU.

WE, UH, OH, NO, NO, NO, NO, NO QUESTIONS.

THANK YOU FOR, UH, JOINING US TODAY.

UH, LET'S SEE.

REBECCA, YOU AND KEITH STARTED THIS.

DO YOU HAVE ANY WRAP UP COMMENTS THAT YOU WANNA SHARE OR SHOULD WE MOVE ON? OKAY, NO, OUR LAST ITEM

[10. Annual Membership Meeting Announcement]

UH, CHAD IS THE PRESENTER CHECK.