Sep 23, 2025 Board of Directors Meeting

SEE IT WITHIN THERE, AND IT HAS A LOT OF GOOD INFORMATION ABOUT THE WORK WE'RE DOING ON OUR INNOVATION AGENDA.

YEAH, PABLO, THIS POINT, UH, IT, THE INITIAL SUBMISSION WAS VERY DISAPPOINTING, BUT I UNDERSTAND IT'S A NEW PROGRAM AND EVERYBODY'S LEARNING.

SO IT SAID THAT THE PROCESS WAS GOOD TO TRY TO GET MORE PEOPLE INVOLVED.

WHAT IS OUR ULTIMATE REMEDY? AND YOU MAY NEED TO ASK CHAD THIS IF, IF, IF THE PARTIES DON'T COMPLY, BECAUSE THIS IS SUCH A CRITICAL ITEM FOR US.

WELL, WITHOUT, IF, IF WE DON'T HAVE AN EXEMPTION OR AN EXEMPTION, UH, IF WE DON'T HAVE AN EXEMPTION OR AN EXCEPTION THAT IS APPROVED BASED ON WHATEVER THE SUBMITTAL, UH, QUALITY IS, THEN THEY'RE GONNA BE HELD TO THE STANDARD THAT APPLIES TO THEIR GENERATING RESOURCE.

AND EFFECTIVELY, IF THEY DON'T COMPLY WITH THE PERFORMANCE REQUIREMENTS OF THAT STANDARD, THEN THEY WOULD BE NONCOMPLIANT AND SUBJECT TO WHATEVER FINES AND PENALTIES THAT WOULD BE ASSOCIATED WITH THAT.

AND THEN IF THE SUBMITTAL THAT WE GET IS INSUFFICIENT OR DEFICIENT AND IS NOT ABLE TO BE REMEDIED, IF WE DO GET A, A SUBMITTAL THAT'S NOT, UH, THAT'S NOT ADEQUATE AND WE CAN'T, UH, RESOLVE IT, THEN AGAIN, IT WOULD NOT BE ACCEPTED AND THEY WOULD BE SUBJECT TO THE PERFORMANCE OF THE, OF THEIR RESOURCE BASED ON WHEN IT WAS INTERCONNECTED.

THANK YOU FOR THE QUESTIONS.

UM, SHIFTING GEARS HERE, WE HAVE BEEN, UH, TALKING QUITE A BIT OVER THE LAST COUPLE YEARS ABOUT OUR, UM, INNOVATION AND OUR TRANSFORMATION AGENDA.

AND WHAT, WHAT WE'RE REALLY FOCUSED ON HERE IS ADVANCING RESEARCH AND PROTOTYPING, EMERGING CONCEPTS AND SOLUTIONS THAT MAY BE THREE TO FIVE YEARS DOWN THE ROAD READY FOR PRIME TIME SCALING.

SO IT'S JUST BEYOND THE CURRENT PROJECT DEVELOPMENT CYCLE THAT WE'RE WORKING ON TODAY.

AND WE WANNA BE LOOKING AROUND THE CORNER TO WHAT THESE INNOVATIONS AND TECHNOLOGIES COULD BE THAT WE COULD LEVERAGE TO ANTICIPATE HOW TO SOLVE THE PROBLEMS OF THE FUTURE WITH TECHNOLOGIES THAT ARE JUST EMERGING TODAY.

AND THAT'S WHAT THIS FOCUS ON INNOVATION AND TRANSFORMATION IS, IS REALLY ABOUT, WE ARE JUST LAUNCHING RIGHT NOW A NEW WEBSITE TO HELP BRING MORE VISIBILITY TO THE WORK WE'RE DOING IN THIS SPACE.

THIS WEBSITE, YOU CAN FIND THE ROADMAP OF OUR GRID TRANSFORMATION INITIATIVES.

THESE ARE THE INITIATIVES WE'RE WORKING ON WITHIN THE ORGANIZATION ON VARIOUS FACETS OF TECHNOLOGIES AND, UH, AND, UH, ADVANCEMENTS AND GRID OPERATIONS WHERE YOU'LL ALSO FIND, UH, THERE ARE RESEARCH AND INNOVATION PARTNERSHIP, UH, PROGRAM WHERE WE ARE ENGAGING IN DEVELOPING WHITE PAPERS AND CASE STUDIES AND PROTOTYPES WITH EXTERNAL ENTITIES OUTSIDE OF ERCO.

SO THIS COULD BE RESEARCH INSTITUTIONS OR SOME OF THE GOVERNMENT LABS, THE RESEARCH LABS THAT WE WOULD BE PARTNERING WITH TO DEVELOP SOME OF THESE INNOVATIONS.

AND THEN WE ALSO POST OUT HERE INFORMATION AS IT RELATES TO OUR UPCOMING INNOVATION SUMMIT.

SO I'LL DO A LITTLE PLUG FOR THAT.

WE'VE GOT ONE COMING UP IN 2026.

IT'S GONNA BE ON MARCH 31ST AT THE KALAHARI RESORTS AND CONVENTION CENTER.

WE HAD TREMENDOUS, UM, PARTICIPATION LAST YEAR FROM, UM, INDUSTRY PARTICIPANTS ALL OVER THE US AND GLOBALLY CAME TO PARTICIPATE IN THIS EVENT.

AND I THINK IT WAS HIGHLY SUCCESSFUL.

IT WAS THE SECOND YEAR WE'VE DONE IT.

THIS WILL BE OUR THIRD YEAR OF DOING THE INNOVATION SUMMIT, AND WE'RE REALLY LOOKING FORWARD TO, UM, TO HOSTING THAT AGAIN.

SO I ENCOURAGE YOU TO GO THIS, THIS WEBSITE IS ACCESSIBLE ON THE ERCOT.COM WEBSITE.

YOU CAN

[00:25:01]

AND THEN LASTLY, I JUST WANNA CLOSE WITH, UH, WITH A SIGNIFICANT THANKS, UH, ACROSS A COUPLE GROUPS OF, UH, EMPLOYEES.

AND I WANNA START WITH THE, OUR LOAD AND GENERATION INTERCONNECTION TEAM.

THAT TEAM, SINCE FEBRUARY OF 2021, HAS DONE AN INCREDIBLE JOB OF CONNECTING OVER 56,000 MEGAWATTS OF NEW GENERATION SUPPLY.

38,000 OF THOSE WERE RENEWABLES.

14,000 OF THOSE WERE ENERGY STORAGE RESOURCES AND OVER 3000 MEGAWATTS OF NEW GAS.

AND ON THE LOAD SIDE, THIS IS JUST IN THE LAST TWO YEARS, THIS TEAM HAS REVIEWED AND APPROVED STUDIES FOR INTERCONNECTING OVER 20,000 MEGAWATTS OF NEW LARGE LOAD.

AND OF THOSE 7,500 MEGAWATTS OF THAT ARE APPROVED TO ENERGIZE TODAY.

AND SO TO PUT THAT INTO PERSPECTIVE THAT WHEN YOU GO BACK ABOUT 10 YEARS, OUR RESOURCE INTEGRATION TEAM HAD ABOUT 254 APPLICATIONS THAT THEY WERE MANAGING IN AUGUST OF THIS YEAR.

WE HAVE OVER 2000 INTERCONNECTION AGREEMENTS THAT WE ARE WORKING TO MANAGE ON BOTH THE LOAD AND THE SUPPLY SIDE.

SO MORE THAN A 10 X INCREASE IN THE WORKLOAD OVER THIS LAST 10 YEARS.

AND THEY'VE DONE AN INCREDIBLE JOB OF MANAGING THAT QUEUE.

WHEN YOU THINK ABOUT ALL, EVERYTHING YOU READ AROUND THE COUNTRY, THE DIFFICULTY IN GETTING RESOURCES MOVED THROUGH AN INTERCONNECTION QUEUE, WHETHER LOAD OR SUPPLY, YOU DON'T TYP YOU, YOU DON'T TYPICALLY READ ABOUT THE SIGNIFICANT ISSUES IN ERCOT BECAUSE OF THE APPROACH THAT WE HAVE, THE ABILITY FOR US TO FLEX OUR TEAM UP, THE METHODOLOGY WE USE FOR INTERCONNECTION STUDIES, ALL OF THAT LEADS TO A MUCH FASTER INTERCONNECTION PROCESS.

AND THIS TEAM HERE HAS DONE A PHENOMENAL JOB OF EXECUTING THAT.

AND THEN THE LAST THING I WANNA RECOGNIZE, AND, AND I'M REALLY PROUD OF THIS, UH, THESE, THESE TWO GROUPS HERE THAT DO COMMUNITY SERVICE INSIDE AND OUTSIDE OF THE FOUR WALLS OF ERCOT.

AND SO THIS IS JUST A PARTIAL LIST OF PEOPLE THAT HAVE PARTICIPATED FIRST IN THE FLOOD RESPONSE DURING JULY.

WE WERE HONORED IT TO HAVE SEVERAL INCREDIBLE TEAMS TO STEP UP DURING THOSE DISASTER RELIEF EFFORTS WITH THE AUSTIN DISASTER RELIEF NETWORK.

WE HAD MEMBERS FROM CYBER SECURITY FACILITIES, PROJECT MANAGEMENT, OUR GDP AND IT DEPARTMENTS ALL ROLLED UP THEIR SLEEVES TO DEPICTION ON RECOVERY TASKS, WHICH INCLUDED PHYSICALLY REMOVING DEBRIS, CLEARING OUT FLOODED AREAS, AND REALLY OFFERING CARE TO THOSE WHO WERE IMPACTED BY THE EVENTS THIS, UH, THIS SUMMER.

AND THEN WE HAD MEMBERS OF OUR CORPORATE COMMUNICATIONS TEAMS WORKING ON ASSEMBLING HYGIENE KITS THAT THEY REFERRED TO AS BUCKETS AND FILLING THEM WITH ESSENTIAL ITEMS THAT WERE NEEDED FOR FAMILIES THAT WERE IMPACTED BY THE FLOODING.

SO A HUGE THANKS TO THE PEOPLE WHO PARTICIPATED IN THAT.

AND THEN I WANTED TO CALL OUT A BOYS AND GIRLS CLUB EVENT.

WE DO THIS EVERY YEAR.

WE BRING IN A GROUP TO, THIS LAST YEAR WAS ABOUT 20 KIDS THAT CAME IN THREE CHAPERONES AND SPENT A WHOLE DAY AT ERCOT LEARNING ABOUT WHAT WE DO AND HAVING A LOT OF FUN AND PLAYING GAMES.

I HAD A CHANCE TO PARTICIPATE WITH THEM THROUGH PART OF IT.

IT WAS REALLY A GREAT PROGRAM.

AND OUR TEAM THAT DOES THAT EVERY YEAR REALLY GETS A LOT OUT OF THAT.

I THINK THE KIDS GET A LOT OUT OF THAT.

AND SO IT, IT HELPS TO CONNECT US CLOSER TO THE COMMUNITY AND TO HOPEFULLY FUTURE ERCOT EMPLOYEES, UH, THAT WE GET A CHANCE TO EXPOSE TO THE FUN THINGS THAT WE DO AT ERCOT.

SO A BIG THANKS TO THAT TEAM.

SO LET ME PAUSE IF THERE'S ANY QUESTIONS WITH ANYTHING THAT I'VE COVERED BEFORE WE MOVE ON TO THE, THE NEXT TOPIC.

DELVING A LITTLE DEEPER INTO SENATE BILL SIX.

LET ME START, NOT WITH A QUESTION, BUT WITH A COMPLIMENT FOR, UH, THE FLOOD RESPONSE TEAM AND ALSO FOR THE INTERCONNECT TEAM.

THAT'S AMAZING PROGRESS.

SO THANK YOU BILL.

THE NEED YOU TO PUBLISH THOSE NUMBERS.

SO I SEND A THANK YOU TO EVERY SINGLE ONE OF THE PEOPLE THAT RECEIVED THIS KIND OF A RECOGNITION IN ADVANCE AND ENCOURAGE THEM TO WATCH SO THAT THEY CAN HEAR THE FEEDBACK AND THE COMMENTARY.

SO THANK YOU FOR THAT, BILL.

I APPRECIATE THAT.

ANY QUESTIONS FOR PABLO? OKAY.

LET'S MOVE TO, UH, THE NEXT ITEM IS THE GEN ITEM 12, THE SUMMER 2025, OPERATIONAL AND MARKET REVIEW CHAIRMAN, WE'RE GONNA GO WITH 11.1 FIRST, WHICH IS A LITTLE MORE, I'M DEEP DIVE DIVE, THE NET METERING

[11.1. Update on ERCOT Interim Process for Net Metering Arrangement Study Details (PURA § 39.169)]

PROCESS, THE UPDATE ON THE ERCOT INTERIM PROCESS FOR NET METERING.

UH, PABLO, I THINK YOU'RE IN CHARGE.

WELL, WOODY, ARE YOU DOING THIS? OKAY, I'M GONNA, I'M GONNA STEP IN.

SO THOSE ARE THE THREE STEPS.

ALRIGHT, SO ON PABLO'S THIRD SLIDE, YOU SAW LIKE FIVE DIFFERENT AREAS THAT SENATE BILL SIX ADDRESSED.

SO THIS IS JUST LOOKING AT THE NET METERING PORTION OF SENATE BILL SIX .

SO SOME OF THE BACKGROUND AROUND THIS, UM, SENATE BILL SIX IS FROM, FROM A NET METERING PERSPECTIVE, REQUIRES THE, UH, THE GENERATION COMPANY TO, UH, SUBMIT A NOTICE TO ERCOT BEFORE IMPLEMENTING THE NET METERING.

SO THAT'S THE FIRST THING.

IT REQUIRES ERCOT TO STUDY THE, UH, THE PROPOSED NET METERING, AND THEN IT REQUIRES THE PUC TO APPROVE, DENY, OR IMPOSE REASONABLE CONDITIONS.

[00:30:01]

UH, THERE ARE SOME CONDITIONS, UM, THOSE CONDITIONS, AND PROBABLY THE MOST IMPORTANT OF THOSE CONDITIONS IS THAT WHATEVER THE GENERATION WAS BEFORE, WHATEVER IT CONTRIBUTED TO THE SYSTEM AFTER NET METERING, IT MAY BE REQUIRED TO RETURN THAT SAME AMOUNT OF GENERATION TO THE SYSTEM THROUGH CURTAILMENT OF THE LOAD FOR CERTAIN CONDITIONS.

AND WE'LL TALK ABOUT WHAT THOSE CONDITIONS ARE.

SO THE THREE PART STUDY, UH, STARTS WITH A TRANSMISSION SECURITY ANALYSIS.

SO THE, THE CURRENT PROCESS REQUIRES THE TSP TO DO A STUDY ON, ON THE NET METERING AND WHAT, WHAT EFFECT IT HAS ON THIS, ON THE GRID.

AND THEN ERCOT WILL REVIEW THAT STUDY AND IT MAY ADD SOME ADDITIONAL INFORMATION OR REQUEST SOME DIFFERENT ADDITIONAL INFORMATION.

BUT IT'S BASICALLY A STEADY STATE ANALYSIS, A STABILITY ANALYSIS, AND, UH, WE'LL, WE'LL LOOK AT NET METER OR NET PEAK VERSUS PEAK CONDITIONS AND THINGS LIKE THAT.

BUT THAT IS THE, THE TRANSMISSION SECURITY ANALYSIS, NOT, NOT ANYTHING DRAMATICALLY DIFFERENT THAN WHAT WE'VE DONE IN THE PAST.

THE RESOURCE ADEQUACY, UM, IS, IS THE SECOND PART OF THAT.

THIS ANALYSIS, UH, PROVIDES A HIGH LEVEL VIEW OF THE IMPACT THAT LOAD HAS ON RESERVE MARGINS USING THE CDR.

SO IT'S JUST A, A LOOK AT WHAT THE CDR LOOKS LIKE BEFORE AND AFTER WHAT THE RESERVE MARGINS, WHAT EFFECT THIS, THIS NEW LOAD HAS.

SO ANOTHER QUESTION THAT PEOPLE HAVE IS HOW WILL ERCOT ADDRESS THE ANTICIPATED EMERGENCY CONDITION? SO, UM, THIS WILL REQUIRE A LITTLE BIT OF NEW INFORMATION FROM, FROM LARGE LOADS THAT WE DON'T CURRENTLY ASK FOR.

AND ONE OF THOSE IS WHAT'S CALLED HERE, THE, THE LOAD CURTAILMENT DURATION.

BUT BASICALLY THIS IS THE AMOUNT OF TIME BETWEEN THE ERCOT INSTRUCTION TO CURTAIL AND HOW LONG IT TAKES THE LOAD TO ACTUALLY CURTAIL.

UM, WE'LL ALSO NEED TO HAVE SOME LOAD SHAPE INFORMATION, WHICH IS BASICALLY LOOKING AT THE DEMAND RESPONSE.

SO WHETHER OR NOT THAT LOAD WILL, UH, WILL HAVE THE CONSTANT LOAD SHAPE, OR IF IT WILL, IT WILL CHANGE WITH PRICES.

SO THOSE TWO THINGS ARE, ARE NEW INFORMATION THAT WE'LL WE'LL BE ASKING FOR IN ORDER TO MAKE THIS, UH, IN ORDER TO HELP US HAVE INFORMATION FOR THE ANTICIPATED EMERGENCY CONDITION.

UM, SLOW RESPONDING CAPABILITY.

THINGS THAT TAKE 30 MINUTES OR 60 MINUTES TO, TO TAKE OFF, UH, WOULD BE DEPLOYED PROBABLY BEFORE AN EEA IN ANTICIPATION, UH, FASTER RESPONDING CAPABILITY, MAYBE WITHIN FIVE MINUTES, MAYBE DEPLOYED WITHIN AN EEA.

SO SLOWER RESPONDING THINGS NEED TO BE ASKED TO MAKE THAT MOVE EARLIER.

AND MAYBE MORE OFTEN FASTER RESPONDING CAN BE DONE CLOSER TO AN EEA OR EVEN WITHIN AN EEA.

UH, DAN IS GONNA COME UP AND TALK ABOUT THE, UH, CONTROL ROOM, HOW THESE, HOW THIS IS ACTUALLY APPLIED IN A CONTROL ROOM SITUATION.

UM, AND HE'LL EXPLAIN THESE CHARTS, UH, WHILE HE COMES UP.

I'M GONNA GO AHEAD AND LOOK AT THESE LAST TWO SLIDES.

SO HOW WILL, HOW WILL KOTT KNOW AVAILABLE CAPACITY OF THE GENERATION CAPABILITY OF THE LARGE LOAD? THIS IS AN IMPORTANT, UH, IMPORTANT PART OF THIS IS THAT WE'LL NEED TELEMETRY ON BOTH THE LOAD AND THE GENERATION.

WE'LL NEED TO BE ABLE TO SEE BOTH.

SO WE'LL KNOW EXACTLY WHAT IS AVAILABLE WHEN WE ASK FOR IT.

SO THAT IS A, UH, THAT TELEMETRY OF GROSS LOAD IS AN IMPORTANT ADDITION.

AND FINALLY, THERE IS A, A THIRD PIECE OF THE ANALYSIS OF STRANDED AND UNDERUTILIZED TRANSMISSION THAT MAY RESULT AS A RESULT OF THE NET METERING.

AND THIS IS STILL A WORK IN PROGRESS, BUT IN OUR INTERIM PROCESS, WE'LL REPORT BACK BOTH BEFORE AND AFTER THE LOADING, DURING PEAK CONDITIONS ON THE CHANGE IN RELEVANT TRANSMISSION LOADING, AND IF THERE IS ANYTHING THAT IS ACTUALLY UNDERUTILIZED.

SO I EXPECT THIS WILL PROBABLY CHANGE AFTER THE PEC RULE AND WE'LL GET SOME MORE FEEDBACK ON, ON WHAT NEEDS TO BE LOOKED AT HERE.

BUT FOR THE INITIAL INTERIM STUDY THAT WE'RE DOING, THAT'S WHAT WE'RE GONNA DO IS WE'RE GONNA LOOK AT RELEVANT TRANSMISSION BEFORE AND AFTER THE LOAD AND SEE IF THERE'S ANYTHING THAT'S NO LONGER UTILIZED AT ALL OR HOW MUCH LESS IT'S UTILIZED AS A RESULT OF HAVING THE LOAD ON THE SYSTEM.

SO WITH THAT, I'M GONNA LET DAN COME TALK ABOUT, UH, A COUPLE SLIDES BACK.

CURRENT LOAD PLUS THESE LARGE LOADS, HOW WILL WE USE THE, THE, UH, PARAMETERS THAT ARE WITHIN SB SIX TO LOWER THAT, THOSE LARGE LOADS? UM, SO IT'S, IT'S VERY STRUCTURED.

GOOD MORNING.

UM, THIS EXAMPLE IS REALLY A VERY HIGHLY STRUCTURED EXAMPLE TO KIND OF ILLUSTRATE IF WE GET INTO CONDITIONS WHERE WE DON'T HAVE ENOUGH GENERATION TO SERVE KIND OF THE, THE

[00:35:01]

IF YOU LOOK AT THE, THE BOTTOM GRAPH HERE, YOU CAN SEE THE, UH, GRAY AREA IS INTENDED TO ILLUSTRATE THE AMOUNT OF GENERATION THAT'S AVAILABLE.

AND YOU CAN SEE IT'S GOING DOWN.

SO THIS IS INDICATIVE OF LIKE THE SUN GOING DOWN OR AN EVENING OR SOMETHING LIKE THAT.

THE, THE BLACK LINE IS THE, IS THE NATIVE GENERATION OR NATIVE LOAD.

SO IT'S KIND OF THE, THE, THE TRADITIONAL LOAD, NOT INCLUDING THE, THE LARGE LOADS.

AND THEN THE PURPLE LINE IN THIS, THIS ILLUSTRATION IS THE, THE SUM, THE AMOUNT OF LARGE LOAD THAT WE'RE ASSUMING FOR THE PURPOSE OF THIS EXAMPLE TO BE AVAILABLE.

AND WE'RE ASSUMING 6,000 MEGAWATTS, UH, THAT IS IN THE CATEGORY OF HAVING 50% BACKUP GENERATION AND 6,000 MEGAWATTS.

THAT'S IN THE CATEGORY OF HAVING, UM, BEING CO-LOCATED WITH EXISTING GENERATION RESOURCES.

AND SO WITH WITH, WE CAN'T TAKE 6,000 MEGAWATTS OFF THE SYSTEM AT ONE TIME, IT WOULD CAUSE A FREQUENCY PROBLEM.

SO ONE OF THE, THE KIND OF KEY THINGS TO ILLUSTRATE HERE IS THAT WE'VE GOT, WE'RE GONNA HAVE TO DIVIDE THAT UP INTO BLOCKS, PRESUMABLY WE CAN DO THAT, UH, RANDOMLY SO THAT YOU'RE NOT ALWAYS IN THE SAME BLOCK GETTING STRUCK FIRST.

UM, AND FOR THE PURPOSE OF THIS EXAMPLE, WE MADE THOSE BLOCKS BE 2000 MEGAWATTS.

'CAUSE THAT IS A REASONABLE AMOUNT FOR MAKING SURE THAT WE CAN TURN IT OFF WITHOUT, AT ONE TIME WITHOUT CAUSING A FREQUENCY ISSUE.

SO WE'VE BROKEN THOSE OUT INTO THOSE 2000 MEGAWATT BLOCKS.

UM, THEN MOVING TO THE TOP GRAPHIC, WE'RE SHOWING BASICALLY THE, THE DARK BLUE LINE IS THE LARGE LOAD DEMAND RESPONSE PROGRAM THAT, THAT, THAT PABLO MENTIONED EARLIER.

THIS IS PART OF SENATE BILL SIX.

WE HAVE TO GIVE THEM 24 HOURS ADVANCE NOTICE FOR THE PURPOSE OF THIS EXAMPLE.

WE'RE ASSUMING THAT THOSE ARE ALREADY, WE GAVE THEM THAT NOTICE A DAY AHEAD.

UH, THEY'RE TURNED OFF IN ADVANCE OF THE THINGS THAT WE'RE GONNA TALK ABOUT IN THIS EXAMPLE.

UM, AND SO IT'S REALLY JUST FOCUSED ON THE, THOSE CO-LOCATED LOADS AND THEN THE, THE 50% BACKUP GENERATION LOADS.

UM, AND SO THESE BLOCKS ILLUSTRATE THE, THE DARK, THE MEDIUM BLUE LINES ILLUSTRATE THE, THE 2000 MEGAWATT BLOCKS OF CO-LOCATED, UH, WITH EXISTING GENERATION RESOURCES.

THE LIGHTER BLUE LINES ILLUSTRATE THE, THE 50% BACKUP GENERATION BLOCKS OF 2000 MEGAWATTS.

AND WE'RE ASSUMING THAT THOSE WILL COME OFF OVER TIME AT THE TIME THEY'RE NEEDED.

UM, THAT WILL BRING DELAY ABOUT 10 MINUTES IN BETWEEN EACH BLOCK IF POSSIBLE, TO GIVE.

ONCE THE LOAD COMES OFF, WE'LL GIVE FREQUENCY A CHANCE TO RECOVER.

AND THEN, UM, AND AS WOODY MENTIONED, WE'LL DO THIS KIND OF IN ORDER OF THE HOW LONG IN ADVANCE WE HAVE TO GIVE THEM NOTICE BETWEEN THE TIME WE TELL THEM TO TURN OFF UNTIL THEY'RE ACTUALLY TURNED OFF.

AND SO WE WILL REQUEST THAT INFORMATION UP FRONT.

WE'LL KNOW THAT WE'LL WAIT AS LONG AS POSSIBLE WITH THE ONES THAT HAVE A SHORT LEAD TIME, AND THAT'S ILLUSTRATED BY LIKE THE THIRD DOWN, UH, OF, IN THE MEDIUM BLUE CATEGORY WHERE IT HAS A FIVE MINUTE LEAD TIME.

UH, WE'RE ASSUMING WE CAN WAIT UNTIL LAST ON THOSE.

AND THEN ONES THAT HAVE SAY THIS IS ILLUSTRATED TO SAY 30 MINUTES AHEAD OF TIME, BUT WE DON'T REALLY KNOW HOW MUCH NOTICE THEY'RE GONNA NEED.

IF IT'S LONGER THAN THAT, THEN YOU KNOW, THAT GRAY BAR ON EACH AREA WOULD MOVE BACK FURTHER.

AND SO AS THESE COME OFF, THEN MOVING BACK TO THE BOTTOM SLIDE, BOTTOM GRAPHIC, UH, YOU CAN SEE THE, THE BLACK LINE IS THE TRADITIONAL LOAD.

THE PURPLE LINE SHOWS THE EXTRA 12,000 MEGAWATTS LOAD'S STILL CLIMBING BECAUSE THE TRADITIONAL LOAD IS CLIMBING.

AND THEN WE START TAKING THOSE OFF AND YOU CAN SEE THE, THE KIND OF THE ZIGZAG AND THE PURPLE LINE THERE.

THAT'S THE LARGE LOADS COMING OFF.

AND THEN THE LOAD CONTINUE, GROWS BACK UP A LITTLE BIT, THE TRADITIONAL LOAD GROWS BACK UP.

WE TAKE ANOTHER BLOCK OFF, WE TAKE ANOTHER BLOCK OFF THE TURQUOISE LINE, THEN IS THE RESERVES.

OKAY? AND SO THAT, THAT RESERVE AMOUNT IS THE DIFFERENCE BETWEEN THE GENERATION THAT'S AVAILABLE AND THE LOAD, THE PURPLE LINE, THE LOAD THAT'S ON THE SYSTEM.

AND YOU SEE THAT AS GENERATION, UH, IN THE FIRST FEW MINUTES HERE, AND I GUESS I SHOULD SAY MINUTES ARE ON THE X AXIS.

SO IT, IT'S, IT'S ALL SCALED TO THE POINT IN TIME THAT EVEN IN THIS, IN THIS KIND OF, UH, MADE UP EXAMPLE, IT'S SCALED TO THE POINT THAT WE WOULD HAVE TO SHED LOAD EVEN WITH JUST TRADITIONAL LOAD THAT'S T ZERO.

OKAY? AND SO, UM,

[00:40:01]

BASICALLY THE THE, THE RESERVES THEN, WHICH IS THE DIFFERENCE BETWEEN THE GENERATION AVAILABLE AND THE PURPLE LINE DROPS THROUGH AS THE GENERATION GOES DOWN AND THE LOAD GOES UP, IT'S GONNA DROP, YOU CAN SEE IT GETS DOWN TO ABOUT THE 2 20, 500, 2000 RANGE EARLY ON.

AND THEN WE HAVE TO TAKE OFF THE FIRST BLOCK OF THE LARGE LOADS THAT MAKES THE RESERVES GO BACK UP FOR SOME PERIOD OF TIME.

BUT AS GENERATION CONTINUES TO DROP AND THE LOAD GOES UP, IT DROPS AGAIN AND WE'LL HAVE TO TAKE OFF ANOTHER BLOCK.

AND BASICALLY DOING IT IN THIS MANNER KEEPS THE, UH, THAT RESERVE LEVEL ABOVE THE LEVEL THAT WOULD CAUSE US TO HAVE TO GO INTO AN EEA THREE AND SHED FIRM LOAD AS LONG AS POSSIBLE OUT TO THAT POINT WHERE WE WOULD HAVE TO DO IT ANYWAY, JUST WITH THE TRADITIONAL LOAD.

SO IT'S KIND OF AN ORGANIZED WAY OF TAKING OFF THE LARGE LOADS THAT, UM, WILL, WILL DELAY THE, UH, UM, THE USE OF EEA THREE AS LONG AS POSSIBLE.

HOPEFULLY THAT MAKES SENSE.

UM, EEA THREE IS DEFINED BY NERC, IS THE LEVEL AT WHICH WE, I HAVE A QUESTION.

SORRY.

I I THOUGHT YOU'RE FINISHED WITH THIS SLIDE.

CAN, I'M A LITTLE UNCLEAR ON THIS.

UH, ARE IS, CAN YOU DESCRIBE WHERE WE ARE IN THE PROCESS? SO THIS IS GOING BACK TO ONE OF YOUR SLIDES.

WE HAVE TO DO A STUDY AND WE'VE, ISN'T THIS WHAT WE'VE BEEN WORKING WITH PUC STAFF AND WE PRESENTED TO THE COMMISSION, THIS IS, THIS IS WHAT WE'RE RECOMMENDING AND THAT IT STILL HAS TO GO THROUGH THE PUC PROCESS.

SO I WOULD SAY THAT THAT THAT, UM, THERE, THERE IS A COMMISSION RULEMAKING GOING ON TO DEAL WITH, UH, UH, ISSUES RELATED WITH IMPLEMENTATION OF SENATE BILL SIX.

WHAT WE'RE TRYING TO DO HERE IS SAY FROM AN OPERATIONAL PERSPECTIVE AS KIND OF PRACTICAL OPERATIONAL PERSPECTIVE TO WHAT IT WOULD LOOK LIKE TO ACTUALLY TAKE THOSE LOADS OFF OVER TIME IN ORDER TO STAY OUT OF FIRM LOAD.

SHE, AND MOVE THAT OUT AS LATE AS POSSIBLE IN THIS, IN THIS EXAMPLE WHERE WE WOULD BE GOING THERE ANYWAY.

BECAUSE BY COMING UP WITH AN EXAMPLE LIKE THIS AND, UH, ILLUSTRATING IT AND, UH, MAKING IT MORE KIND OF PUBLIC, IT, IT ILLUSTRATES SOME OF THE, THE, UH, PARAMETERS THAT WILL NEED TO BE DECIDED ON AS A PART OF THIS, THIS RULEMAKING.

I THINK THAT ANSWERED IT.

SO PEGGY, WE'RE, WE'RE KIND OF IN THIS, UH, INTERIM PHASE WHERE WE'RE NOT GONNA, WE KNOW THAT SOME OF THESE AGREEMENTS ARE GONNA COME TO FRUITION PRIOR TO A RULE BEING ADOPTED.

AND SO I THINK TO ERCOT STAFF'S CREDIT, TRYING TO PROVIDE TRANSPARENCY ON WHAT THAT INTERIM PROCESS WILL LOOK LIKE FOR THOSE ENTITIES THAT DECIDE TO MOVE FORWARD WITH THESE AGREEMENTS PRIOR TO A RULE BEING ADOPTED.

DAN, HOW DO YOU DEAL, HOW DO YOU DEAL WITH, I'M THINKING OF LARGE LOADS THAT DON'T SHUT DOWN EASILY.

STEEL PLANTS, CEMENT PLANTS, REFINERIES, UM, ALL OF THESE GUYS TAKE DAYS TO, TO DO AN ORDERLY SHUTDOWN.

NOW THEY CAN DO A DISORDERLY SHUTDOWN, BUT THEN YOU RISK FREEZING THE PLANT AND ALL KINDS OF BAD STUFF HAPPENS.

SO HOW, HOW DOES THAT FACTOR IN HERE? OR DO THEY JUST NOT PARTICIPATE IN THIS KIND OF PROGRAM? WELL, SO THEY REALLY DON'T PARTICIPATE IN THIS, AT LEAST THE TWO BLUE CATEGORIES THAT I'M TALKING ABOUT HERE.

YEAH, THERE IS THE POTENTIAL THAT SOME OF THEM MAY PARTICIPATE IN THIS VOLUNTARY PROGRAM, THE LARGE LOAD DEMAND RESPONSE PROGRAM, WHICH THEY GET PAID TO TURN OFF AND WE GIVE THEM 24 HOURS ADVANCE NOTICE.

BUT REALLY THIS, THE REST OF THIS IS WHAT THE LOADS THAT ARE, UH, IMPLICATED BY SENATE BILL SIX.

SO, SO THESE ARE BY DEFINITION ONLY LOADS THAT CAN BE REASONABLY SHUT DOWN IN FINITE PERIOD OF TIME, MEASURED IN MINUTES OR SMALL NUMBER OF HOURS OR SOMETHING? YES.

UM, YEAH.

UM, AND SO THERE, IT, IT'S A, IT'S A LITTLE CIRCULAR.

SO, UH, SENATE, UH, EEA THREE IS SOMEWHAT DEFINED BY THE LEVEL AT WHICH WHEN WE GET THE RESERVES GET DOWN TO A LEVEL THAT WE CAN'T WITHSTAND THE LOSS OF THE LARGEST UNIT ON THE SYSTEM.

AND THAT'S DEFINED BY NERC RULES.

AND SO THAT'S, THAT'S, THAT ONE'S KIND OF DEFINED.

EA ONE AND TWO ARE LESS DEFINED.

AND IN FACT, FOR THE PURPOSES OF THIS, UH, ONCE WE KNOW WHAT KIND OF THE RULES ARE GONNA BE FOR WHEN WE CAN, WHAT, WHAT LEVELS OF RESERVES WE CAN TURN OFF THESE DIFFERENT LOADS AT, THAT WILL ALMOST DEFINE WHAT, WHERE IS EEA ONE, IF WE CAN'T TURN ANY OF 'EM OFF UNTIL WE DECLARE EEA ONE, THEN THE POINT IN TIME THAT WHICH WE NEED TO TAKE THE FIRST BLOCK OF LOAD OFF WILL BE EEA ONE.

[00:45:01]

IT'S THAT WE'LL HAVE TO DEFINE THOSE THINGS BY WHEN WE NEED TO TAKE IT OFF.

AND, AND I GUESS THE O THE OTHER THING THAT I NEED TO ILLUSTRATE AND THAT THAT'S THE BEAUTY OF AN EXAMPLE IS THAT REGARDLESS OF WHEN, WHAT, WHEN WE DECIDE THIS LEVEL IS EEA ONE, THE, THAT WHEN EACH BLOCK OF LOAD GETS TURNED OFF DOES NOT CHANGE.

SO THE TIMING DOESN'T CHANGE.

WE'RE TRYING TO PUSH IT OUT AS LONG AS POSSIBLE, KEEP THE LOAD ON AS LONG AS POSSIBLE, BUT, YOU KNOW, WE CAN, WE WILL BE DEFINING E ONE BASED ON WHAT WE NEED TO TAKE OFF IN ORDER TO KEEP THE SYSTEM RESERVES HIGH ENOUGH.

AG THE OTHER ISSUE I GUESS THAT I NEED TO BRING UP IS THAT, THAT, WHILE THIS LOOKS LIKE A SLOW PROCESS, WE'RE GONNA HAVE TO BRING THESE LOADS ON AGAIN, IN THOSE CONTROLLED MANNER ALSO.

SO WE CAN'T JUST ADD 'EM ALL BACK QUICKLY, WE'VE GOTTA, WE'LL ADD 'EM BACK AS QUICK AS POSSIBLE, BUT THERE'LL JUST, THERE'LL STILL HAVE TO BE TIME FOR THE SYSTEM TO CATCH UP AS WE'RE TURNING THE BLOCKS BACK ON.

UM, THERE'S PRICING IMPLICATIONS FROM IF WE'RE IN EEA AND WE'RE TURNING THESE LOADS OFF AND THERE'S ADMINISTRATIVE PRICING AT, AT A, AT THE CAP OR SOMETHING HIGH DURING THAT ENTIRE PERIOD, THEN WE'RE GONNA SEE, YOU KNOW, HIGHER PRICES DURING THAT ENTIRE PERIOD.

SO I THINK THAT'S ALL I HAVE FOR, UM, THIS EXAMPLE, BUT HAPPY TO ANSWER ANY MORE QUESTIONS.

ANY QUESTIONS FOR DAN OR WOODY ON 11.1? I HAD A QUESTION FOR WOODY.

JULIE, WOODY, YOU DESCRIBED A LOT OF NEW, LET'S SAY, MODELING AND DATA REQUIREMENTS FOR THE INTERCONNECT PROCESS OF LARGE LOADS.

HOW MUCH TIME DOES THAT ADD TO THE INTERCONNECT PROCESS? WELL, THE, THE NEW INFORMATION FOR LARGE LOADS IS REALLY LIMITED TO HOW LONG DOES IT TAKE YOU TO SHUT OFF AND GIVE US SOME IDEA OF HOW MUCH DEMAND RESPONSE YOU HAVE.

SO THAT'S REALLY THE ONLY NEW INFORMATION WE'RE REQUIRING.

SO SHOULDN'T LENGTHEN THE PROCESS AT ALL.

UM, THE OTHER NEW, I GUESS YOU COULD CALL IT NEW PIECE IS MAYBE SOME TELEMETRY REQUIREMENTS.

WE WANNA SEE THAT GROSS LOAD WE WANNA, SO THAT WOULD BE A, THAT WOULD BE SOMETHING THEY'D HAVE TO, TO SUPPLY, BUT I, I DON'T THINK THAT'S GONNA KEEP ANYTHING FROM, FROM MOVING FORWARD.

MOVE TO AGENDA ITEM 12, WHICH IS THE SUMMER 2025 OPERATIONAL AND MARKET REVIEW.

ANY OTHER QUESTIONS FOR WOODY OR DAN? OKAY, THANK YOU.

THAT LAST EXAMPLE I THOUGHT WAS PARTICULARLY HELPFUL ON HOW THIS PROCESS IS GONNA WORK.

SOUNDS LIKE, UH, ERCOT, UH, STAFF AND PUCC UH, STAFF HAVE A LOT OF WORK STILL IN FRONT OF THEM ON THIS PARTICULAR ISSUE.

UH, WITHOUT ANY FURTHER QUESTIONS OR COMMENTS, LET'S

[12. Summer 2025 Operational and Market Review]

UH, DAN WOODFIN IS GONNA REMAIN AT THE PODIUM AND KEITH COLLINS IS GONNA JOIN HIM.

ALRIGHT.

UM, SO PABLO'S ALREADY KIND OF GIVING YOU A HIGH LEVEL OVERVIEW OF WHAT HAPPENED THIS SUMMER OR LUCKILY WHAT DIDN'T HAPPEN THIS SUMMER.

UM, SO I'LL GIVE YOU A LITTLE MORE DETAILS ON THIS.

UM, YOU KNOW, I THINK MOST OF US LIVE IN TEXAS AND WHEN WE THINK ABOUT THIS SUMMER, WE THINK, OH, THIS WAS A, A COOL SUMMER.

BUT IN FACT, WHEN YOU LOOK AT THE, AT THE, THE NUMBERS, UH, THE TEMPERATURES WERE ACTUALLY CLOSER TO AVERAGE.

IT'S JUST WE'VE HAD SO MANY WELL ABOVE AVERAGE SUMMERS IN A ROW THAT THIS SEEMS LIKE A COOL SUMMER RELATIVE TO THOSE.

UH, BUT THIS IS MORE WHAT A NORMAL SUMMER LOOKS LIKE WITH, UH, SOME PARTS HAD WERE COOLER, SOME PARTS WERE WARMER OR IF YOU LOOK OVER THE WHOLE SUMMER, BUT GENERALLY ACROSS THE STATE IT WAS RELATIVELY AVERAGE.

UM, WHAT ON THE RIGHT SIDE THOUGH, YOU SEE, WE WERE MORE, UH, DID BECAUSE OF THE EARLY JULY RAIN AND WE DID SEE SIGNIFICANTLY MORE RAINFALL THAN THAN AVERAGE.

UM, AND WHAT THAT, WHAT THIS GRAPH SHOWS, UH, THE, THE LINES ON THE GRAPH SHOW A COMPARISON BETWEEN THE, THE HIGH TEMPERATURE FOR THE DAY OF THIS SUMMER VERSUS 2023.

SO OUR IS PROBABLY MOST NOTED EARLIER.

OUR PEAK DEMAND OF ALL TIME HAPPENED IN, UH, 2023.

SO WE COMPARED DAILY HIGH TEMPERATURES ACROSS THE SUMMER BETWEEN 23 AND, AND THIS YEAR.

AND YOU CAN SEE THAT ALMOST EVERY DAY, THE HIGH TEMPERATURE IN 2023 WAS SIGNIFICANTLY HIGHER THAN IT WAS THIS SUMMER.

AND SO THAT EXPLAINS

[00:50:01]

REALLY, UH, THE, ANOTHER LARGE PIECE OF WHY THE, UH, THE DEMAND, PEAK DEMAND WASN'T AS HIGH, ALTHOUGH AS PABLO NOTED, THE, BETWEEN THOSE TWO YEARS, THE ENERGY ACTUALLY CONSUMPTION ACTUALLY INCREASED BY ABOUT 10%.

AND SO THERE'S A LOT OF OFF PEAK, MORE OFF PEAK DEMAND GOING ON DURING THIS SAME TIME PERIOD, EVEN THOUGH THE PEAKS IN THE SAME RANGE OR A LITTLE LESS THAN ON A DAILY BASIS IN SPITE OF THOSE HOTTER TEMPERATURES IN 23.

UM, ANOTHER THING TO POINT OUT FOR THE OBSERVED FOR THIS SUMMER IS THAT WE SAW A, A HIGHER, UH, AMOUNT OF FORCED OUTAGES OF THE THERMAL GENERATION FLEET THIS SUMMER COMPARED TO, UH, LAST SUMMER.

THE BLUE LINE IS LAST SUMMER, THE PURPLE LINE IS THIS SUMMER.

YOU CAN SEE THAT GENERALLY THE PURPLE LINE IS ABOVE THE BLUE LINE, UH, FOR MOST DAYS.

THE ONE THING I'LL NOTICE IS YOU DO SEE A PATTERN IN THE, UH, THE BLUE LINES WHERE YOU HAVE PERIODS IN WHICH THE, THE FORCED OUTAGES WERE LOWER THAN OTHER TIMES THAT TENDED TO BE, YOU KNOW, THERE ON A, A DAY IF YOU, YOU'VE GOT A BOILER TUBE LEAK THAT'S NOT TOO BAD, MAYBE YOU CAN OPERATE THROUGH THAT IF WE'RE IN TIGHT CONDITIONS AND PRICES ARE EXPECTED TO BE HIGH THIS SUMMER BECAUSE WE WEREN'T IN TIGHT CONDITIONS AND DIDN'T SEE AS HIGH OF PRICES THERE, THEY HAD THE CAPABILITY TO GO AHEAD AND TAKE THOSE MAINTENANCE OUTAGES AND, AND, UH, FIX THE PROBLEM RATHER THAN TRYING TO OPERATE THROUGH THEM.

SO THAT, THAT HAS SOMETHING TO DO WITH PROBABLY THE DIFFERENCE BETWEEN THOSE, WHAT WE SAW BETWEEN THOSE TWO YEARS.

DAN, IS THIS PART OF A BROADER TREND ON THE FOUR OUTAGES? I MEAN, IS THIS PARTIALLY RELATED TO THE AGING FLEET OR DO YOU HAVE A VIEW ON THAT? IT, IT PROBABLY HAS SOMETHING TO DO WITH THAT.

IT IS PROBABLY A LITTLE BIT BOTH THINGS, AGING FLEET AND THEN ALSO THE FACT THAT WE WEREN'T AS TIGHT.

UM, THANK YOU.

UM, THE, UM, OTHER THING WE SAW THIS SUMMER BECAUSE OF THE INCREASE IN SOLAR GENERATION AND THEN ALSO THE UM, UM, THE, THE KIND OF, THE MORE, UM, WHERE THE LOAD CONSUMPTION WAS, WE, WE ACTUALLY SEE OUR HIGHEST NET LOAD AS SHIFTED OUT TO OUR ENDING 22, WHICH IS THE 10, OUR ENDING 10:00 PM UH, AS OPPOSED TO 9:00 PM WHERE IT WAS LAST YEAR.

SO AS WE'VE GOT MORE SOLAR, PARTICULARLY IN JUNE AND JULY, THAT THAT, YOU KNOW, THE TIGHTEST TIME IS GONNA BE WHEN THE SUN, AFTER THE SUN GOES DOWN IN JUNE AND JULY, THAT'S NOT UNTIL THE 10:00 PM HOUR IN AUGUST DAYS ARE SHORTER.

SO IT HASN'T SHIFTED AS MUCH THERE.

DAN ON THIS ONE.

MM-HMM .

CAN YOU FACTOR IN THE BATTERIES FOR US? IS THAT ALSO HELPING EXTEND? WELL, SO THIS, THIS GRAPH IS SHOWING JUST NET LOAD, SO IT'S, IT'S LOAD MINUS WIND AND SOLAR.

WHAT HAPPENS, I DON'T THINK WE PUT THIS GRAPH IN HERE, BUT THERE, UH, BASICALLY THE BATTERIES, WHENEVER THAT TIGHTEST TIME IS, IF THEY'RE, THE BATTERIES ARE GONNA BE DISCHARGING INTO THAT TIGHTEST TIME TO HELP SERVE THE, THE LOAD DURING THAT TIME.

AND SO, UH, YOU WOULD EXPECT THEM TO ALSO THE MAX DISCHARGE BEING LATER IN THE DAY AS WELL AS MORE AS WE'RE MORE DEPENDENT ON SOLAR.

I THINK WE'VE GOT, ACTUALLY WE'VE GOT A SLIDE LATER THAT SHOWS THE BATTERY DISCHARGE.

UM, YEAH, UH, I'LL SKIP AHEAD TO THAT ONE.

SO THIS BASICALLY SHOWS YOU THE RELATIONSHIP BETWEEN SOLAR AND WIND GENERATION, THE PRC, SO THE RESERVES ON THE SYSTEM, AND THEN THE STATE OF CHARGE OF BATTERIES.

AND SO WHAT YOU CAN SEE IS THAT AS THE, UH, THE SOLAR RAMPS OFF, OUR RESERVES, UH, DROP TEND TEND TO DROP TO THE LOWEST AMOUNT, UH, AFTER THE SUN'S DOWN BY A LITTLE BIT.

AND THEN THE BATTERY STATE OF CHARGE IS ALSO DROPPING AS THEY'RE DISCHARGING IN ORDER AS THE SUN'S GOING DOWN.

AND SO THE KIND OF THAT TIGHTEST TIME OCCURS AFTER THE SUN'S BEEN DOWN AFTER A LOT OF THE BATTERY STATED CHARGE HAS BEEN CONSUMED.

AND THEN YOU'LL SEE THE LOWEST RESERVES HAPPENING KIND OF AS THE BATTERIES ARE RUNNING OUT.

GOOD CHART.

THE DAYS WITH THE LOWEST RESERVES.

SO WE'VE, WE'VE PUT THIS GRAPHIC IN HERE JUST TO SHOW KEY DAYS FOR THE LAST SEVERAL YEARS.

UM, WE'VE ADDED, UH, 6, 5, 7 1, AND EIGHT 20.

THOSE ARE KIND OF THE LOWEST

[00:55:01]

YOU'LL NOTICE THAT THE LOWEST RESERVES THIS YEAR WERE THE NUMBER AT THE TOP OF EACH SECTION THERE, INSTANTANEOUS PRC, THAT'S THE LOWEST RESERVES WERE, WERE HIGHER THAN, THAN THE DAYS OF, UH, 2023.

UM, AND YOU CAN KIND OF SEE THE MIX BETWEEN OUTAGES.

WERE OBVIOUSLY HIGHER THIS YEAR.

UM, THE, THAT THE, THIS IS THE INSTANTANEOUS TIGHTEST RESERVE TIME.

SO IT'S SOMEWHAT, UM, ILLUSTRATES WHAT, WHAT WE JUST TALKED ABOUT, THAT, THAT IN 2023 SOMETIMES OUR TIGHTEST TIMES WERE WHEN THE SUN STILL WAS PRODUCING A LITTLE BIT BECAUSE IT WAS AN, UH, HOUR ENDING 19 OR 20 BACK IN, UM, THE, IN 2023.

NOW WE'RE SEEING IN, UH, 2025 WE'RE SEEING THAT IT'S THAT TIGHTEST TIME IS AFTER THE SUN GOES DOWN AND AFTER SIGNIFICANT PORTION OF THE BATTERIES OF DISCHARGE.

AND THIS SHOWS JUST A LITTLE MORE GENERAL DURING THOSE, THOSE TUST DAYS, THE PATTERN WAS THEY CHARGE UP DURING THE, THE DAYTIME WHEN THE SUN'S UP, DISCHARGE AFTER THE SUN GOES DOWN OR AS THE SUN'S GOING DOWN AND THEN AFTERWARDS AND THEN CHARGE UP HOPEFULLY SOME OVERNIGHT DEPENDING ON, ON WHAT THE WIND OUTPUT IS.

UM, PABLO MENTIONED THIS, THAT OUR SOLAR RECORD NOW EXCEEDS OUR WIND RECORD IN TERMS OF THE INSTANTANEOUS OUTPUT BETWEEN THOSE TWO RESOURCE TYPES, BUT YOU CAN KIND OF WITH THIS GRAPHIC, SEE HOW THAT HAS RATCHETED UP OVER TIME.

UH, WE THOUGHT THAT WAS, WAS INTERESTING.

UM, YOU CAN ALSO SEE THAT WE HAVE THE, THE BATTERY OUTPUT, UM, ESR OUTPUT HAS ALSO HIT A NEW RECORD, WHICH WE'RE TRACKING AS WELL THIS SUMMER.

UM, DEMAND RESPONSE, UM, WE SAW A SIGNIFICANT DURING ON THE, THE PEAK DAY EIGHT 18 WE SAW, SAW A SIGNIFICANT RESPONSE FROM BOTH FOUR CP SO THE LOADS THAT ARE, UH, ABLE TO REDUCE THEIR CONSUMPTION IN ORDER TO AVOID PAYING TRANSMISSION CHARGES, WHICH ARE BASED ON YOUR FOUR COINCIDENT PEAK, THE DEMANDS DURING YOUR FOUR COMMIT COINCIDENT PEAK HOURS.

SO THERE'S REDUCTION FROM THAT.

THERE'S ALSO THE CRYPTO MINERS TURNED OFF DURING THAT TIMEFRAME.

AND SO IF YOU, IF YOU ADD BACK THOSE LOADS AND WE, WE ESTIMATED THIS WITH OUR MODELS, THE PEAK DEMAND RATHER THAN BEING 83 8 WOULD HAVE BEEN 88 5.

UM, INTERESTINGLY IF YOU GO BACK AND USE THE WEATHER, DO THE SAME KIND OF CALCULATION FOR, FOR 2023 AND DO A WEATHER NORMALIZATION TO 2025 AND THEN ALSO ADD BACK THE DEMAND AND THE DEMAND RESPONSE FROM BOTH YEARS.

UH, 2023 WOULD'VE BEEN 81 5 AND THEN WE'RE TALKING ABOUT 88 5 HERE.

SO THERE'S SIGN THERE IS A SIGNIFICANT, WHEN YOU WEATHER NORMALIZE IT AND TAKE THE DEMAND RESPONSE OUT, THERE HAS BEEN SIGNIFICANT LOAD GROWTH.

AND NOW I'LL TURN IT.

OH, IF YOU DON'T HAVE ANY MORE QUESTIONS, I'LL TURN IT OVER TO KEITH.

ALRIGHT, THANK YOU.

I'M GOING TO COVER THE MARKET ASPECT OF, OF THE SUMMER AND WE'LL START HERE WITH PRICES AND, AND PEAK MARGIN.

UH, WE'VE, WE'VE EVEN COMPARED, UH, IN THE SORT OF THE BLACK BARS IS, UH, SUMMER 20 OR IS 23.

UH, THE GREEN IS 24 AND THE BLUE IS, UH, UH, THIS PAST, THIS PAST YEAR.

AND WHAT'S WHAT'S INTERESTING IS THE, THE THREE SUMMER MONTHS, UH, FOR THIS PAST SUMMER AVERAGED AROUND $34 A MEGAWATT HOUR, UH, WHICH IS ABOUT 10% HIGHER THAN, THAN LAST SUMMER.

BUT THAT'S, THAT MAY SEEM COUNTERINTUITIVE BECAUSE, UH, WE'VE HAD A LOT OF, UH, NEW, NEW RESOURCES.

UH, WHEN WE LOOK AT JULY OF LAST YEAR AND JULY OF THIS YEAR, WE'RE UP ABOUT 14 GIGAWATTS OF COMBINATION OF SOLAR STORAGE AND, AND A LITTLE BIT OF WIND.

UH, AND SO, UH, AND AS, AS DAN NOTED, THIS IS MORE OF AN AVERAGE WEATHER YEAR, EVEN MORE SO THAN LAST SUMMER.

SO WHY ARE THE PEAKER NET MARGINS, WHICH YOU SEE AT THE BOTTOM IN BLUE IS LOWER? AND THE REASON FOR THAT IS, UH, GAS PRICES WERE UP ABOUT 45%, UM, THIS PAST SUMMER, RELATIVE TO LAST YEAR, AVERAGING AROUND $2 AND 70 CENTS.

UM, UH, SO, SO THAT'S THE REASON WHY, UH, THE, THE POWER PRICES HAVE HAVE INCREASED.

WE, WE SAW THE INCREASE IN, IN THE GAS PRICE, BUT THE PEAK NET MARGIN WAS DOWN GIVEN THE FACT THAT, UH, THE GAS PRICES WERE ALSO UP.

SO, UH, THOSE NUMBERS AT THE BOTTOM, YOU SEE, UH, PEAKER NET MARGIN, UM,

[01:00:01]

UH, THIS YEAR IS, IS, UH, THROUGH, THROUGH THE SUMMER IS AROUND 52, UH, THOUSAND, UH, COMPARED TO LAST YEAR AT ABOUT 74.

AND THEN, UH, VERY DIFFERENT IN, IN 23, IN ALMOST 200.

AND, AND JUST LOOKING AT SOME RECENT NUMBERS AND UPDATES, UM, THAT THAT SPREAD BETWEEN 24 AND 25 IS, HAS INCREASED.

UH, IT'S AROUND 80, 84,000 COMPARED TO ABOUT 55,000.

SO IT'S, IT'S A, IT'S AN INCREASING SPREAD.

AND IT'S SOMETHING WHERE, UH, WE, WE NOTED A LITTLE BIT YESTERDAY WHERE THE MARKET, THE MARKET IS NOT SIGNALING, UM, UM, THE NEED FOR, FOR NEW, UH, THERE'S, THERE'S NOT A LOT OF, UM, UH, SCARCITY PRICING.

AND, AND, AND THUS THE, THE PEAKER NET MARGIN IS, IS NOT, NOT INCREASING.

ALRIGHT, WE'LL MOVE FORWARD.

AND SO WE, WE HIGHLIGHT THE, UH, THE SCARCITY PRICING THAT WE SEE WITH OUR OPERATING RESERVE DEMAND CURVE, AND WE COMPARE THAT THAT'S IN THE RIGHT HAND CHART WHEN WE LOOK AT THE FREQUENCY AND THE MAGNITUDE, UH, OF, OF THOSE EVENTS.

AND WHAT WE'VE SEEN THAT IS, IS THAT, UH, THE FREQUENCY IN PARTICULAR IS VERY LOW.

THE SCALE YOU SEE ON THE RIGHT HAND SIDE IS, UH, SO IN, IN THIS PAST SUMMER IS LESS THAN 0.1% OF THE TIME.

SO VERY INFREQUENT, UH, NUMBER OF SCARCITY EVENTS, EVEN THOUGH THE, THE, THE BLUE BARS, WHICH REPRESENT THE, THE PRICE AT OUR CONTRIBUTIONS A SLIGHTLY HIGHER, UH, THIS YEAR.

BUT ULTIMATELY THE, THE FREQUENCY OF THAT WAS, WAS LOWER THAN IT HAS BEEN OVER THE LAST COUPLE YEARS.

SO NOT MUCH SCARCITY ON THE SYSTEM, UH, BUT GIVEN THE CONDITIONS THAT, THAT DAN HAD MENTIONED EARLIER, UM, UM, MORE MODERATE YEAR, UH, AND OBVIOUSLY NEW, MORE GENERATION, MORE MODERATE LOADS.

UH, AND, AND THAT LEADS TO OUR, OUR LEFT HAND CHART SHOWING THAT OUR ESSENTIALLY AVAILABLE CAPACITY, UH, THAT'S EITHER ONLINE OR ONLINE PLUS OFFLINE HAVE BEEN INCREASING.

AND SO WITH THAT, WE, WE ARE EXPERIENCING THOSE, THOSE, UH, LOWER PRICES.

BUT, BUT MORE IMPORTANTLY ON THIS CHART, THE, THE FEWER INSTANCES OF THE, UH, SCARCITY PRICING, LOOKING AT THE COST OF ANCILLARY SERVICES, THOSE WERE ALSO IMPACTED, UH, WITH THE LOWER OVERALL COSTS.

UH, THESE ARE SORT OF TOTAL COSTS, UH, AND, AND REFLECTIVE OF THE PRICING AND, AND THE QUANTITY.

AND WHAT WE SAW HERE IS IN THE SUMMER MONTHS, A TOTAL OF ABOUT 30, 36, 30 $7 MILLION, UH, COMPARED TO SUMMER 24, THAT WAS ABOUT 80, UH, 80 MILLION.

AND THEN, UH, IN SUMMER OF 23, IT WAS 1.2 BILLION.

SO A VERY SIGNIFICANT DROP OFF IN THE, THE TOTAL PAYMENTS MADE FOR ANCILLARY SERVICES.

UH, IN, UH, IN THE LAST SUMMER, LOOKING AT CONGESTION, CONGESTION WAS UP SLIGHTLY COMPARED TO LAST SUMMER.

THE PRIMARY INSTANCE WE SAW WAS INCREASED CONGESTION IN THE WEST ZONE.

AND THAT CONGESTION IN THE WEST ZONE IS GENERALLY A FUNCTION OF WIND, EITHER HIGH WIND OUTPUT OR LOW WIND OUTPUT.

AND WE SEE MORE CONGESTION DURING THOSE PERIODS.

AND SO THAT IS THE REPRESENTED IN THE SORT OF THE, UH, GRAYISH COLOR THAT YOU SEE ABOVE THE BLUE, UH, THAT IS OUR, OUR WEST ZONE.

UH, AND ULTIMATELY, UH, MORE CONGESTION THAT RE THAT REGION GIVEN, GIVEN THE WIND PATTERNS THAT WE SAW IN, IN EITHER HIGH OR, OR REALLY LOW PERIODS OF WIND, UH, WE SAW SIGNIFICANT INCREASE IN THE NUMBER OF, UH, RELIABILITY UNIT COMMITMENTS, THE EFFECTIVE RESOURCE HOURS.

AND WE LOOK AT THE NUMBER OF RESOURCE HOURS THAT WERE COMMITTED DURING THAT PERIOD, WERE OVER A THOUSAND.

AND WHEN YOU COMPARE THAT TO THE PRIOR YEAR, THAT'S A THREE AND A HALF TIMES MORE RUCKS THAN WE SAW IN 24 AND ABOUT TWO TIMES MORE THAN WHAT WE SAW IN, IN 23.

AND, UH, WHAT WE SEE WITH THOSE BIG GRAY BARS, UH, IS THAT, THAT IS RE RELATED TO CONGESTION RELATED TO THE EX, ALMOST EXCLUSIVELY TO THE SOUTH TEXAS EXPORT IS DRIVING A LOT OF THE NEED FOR THOSE RELIABILITY UNIT COMMITMENTS.

UH, OBVIOUSLY WE'VE, WE'VE TALKED ABOUT, UH, THE NEED FOR THE, THE LIFECYCLE UNITS.

AND SO THAT'S, THAT'S ALL GENERAL RELATED TO THAT, THAT PARTICULAR CONSTRAINT THAT WE SEE ON THE SYSTEM.

AS I NOTED AT, AT THE BEGINNING, WE'VE SEEN A SIGNIFICANT INCREASE IN THE, THE NUMBER OF ENERGY STORAGE RESOURCES PARTICIPATING IN THE MARKET.

UH, WHAT WE HAD SEEN HISTORICALLY IS A HIGH CONCENTRATION OF OFFERS ABOVE, UH, ESSENTIALLY AT THE CAP, UH, ABOVE THE $4,900 A MEGAWATT HOUR.

UH, IN 2023, THERE WAS REPRESENTED ABOUT 30% OF THE STORAGE RESOURCES THAT FELL IN SUMMER 24, UH, TO ABOUT 15%.

[01:05:01]

AND, UH, CAME DOWN EVEN FURTHER IN, IN 2025 TO, UH, UH, ABOUT 10%.

SO EVEN THOUGH THE, UH, YOU MIGHT SAY, WELL, THE QUANTITY OF THOSE BLUE, BLUE AREAS THAT YOU SEE ON THE CHART HAVE INCREASED IN IN 25, THE PERCENTAGE HAS COME DOWN AS, AS WE'VE HAD SIGNIFICANT INCREASES IN THE VOLUME OF ENERGY STORAGE RESOURCES IN, IN THE MARKET.

AND THEN, AND THEN THE FINAL SLIDE I HAVE HERE IS, IS SHOWING THE CONTRIBUTION TO ANCILLARY SERVICES, UH, OF ENERGY STORAGE RESOURCES.

UH, SO THIS IS THE, ESSENTIALLY THE PERCENT OF THE VOLUME OF, OF ENERGY RESOURCE, ENERGY SOURCE RESOURCES THAT MAKE UP THE VARIOUS QUANTITIES THAT WE HAVE FOR OUR DIFFERENT TYPES OF, OF ANCILLARY SERVICES.

AND WHAT WE SEE IS A, A CONTINUED UPTICK OVER THE LAST COUPLE YEARS.

OUR REGULATION RESOURCES BOTH UP AND DOWN, UH, OVER 90% ARE MADE UP OF ENERGY STORAGE RESOURCES FOR OUR, UH, FOR OUR RS PRODUCTS.

IT'S, UH, OVER 65%.

UH, THIS PAST SUMMER, UH, ECRS WAS AROUND 47%.

AND THEN, UH, NONS SPIN, UH, AT AROUND 27% OR SO.

SO AN INCREASING LEVEL OF PARTICIPATION OF, UH, STORAGE RESOURCES IN OUR ANCILLARY SERVICE MARKETS.

UH, AGAIN, WE SAW, UH, LOW'S, UH, COMPARED TO THE LAST COUPLE YEARS IN, IN OUR AS PRODUCTS IN TERMS OF COSTS, AND AGAIN, INCREASES IN THE NUMBER OF, OF ENERGY STORAGE RESOURCES PARTICIPATING IN THOSE MARKETS AS, AS THOSE VOLUMES AND QUANTITIES HAVE INCREASED OVER THE LAST FEW YEARS.

I'LL PAUSE HERE AND SEE IF THERE ARE ANY, ANY QUESTIONS THAT YOU MAY HAVE.

UH, YES, I, I HAVE A QUESTION, KEITH, ON BACK TO SLIDE 15.

ALRIGHT, THE ROCK SLIDE.

YES.

UH, WHEN DO WE EXPECT THE, UH, THE NEW TRANSMISSION UPGRADES TO BE IN PLACE THAT WOULD HELP, UH, MITIGATE THIS FACTOR? WHAT'S, WHAT PROBABLY HAS THE ANSWER FOR THAT? UH, FALL OF 26.

FALL OF 26.

SO JUST AROUND THE CORNER THEN.

OKAY, THANKS KEITH.

I HAVE A QUESTION ABOUT ANCILLARY SERVICE COST.

YES.

UH, ON YOUR SLIDE LIKE 13, THE UM, Y ACCESS SCALE IS SKEWED BY 2023.

CAN YOU TELL US ROUGHLY HOW MUCH WE SPENT YEAR TO DATE ON ANCILLARY SERVICES IN 25? UH, I, I'LL, I'LL APOLOGIZE.

I LOOKED AT THE SUMMER NUMBERS, I DIDN'T LOOK AT THE YEAR TO DATE NUMBERS, BUT I CAN FOLLOW UP WITH THAT.

YEP.

KEITH, JUST REAL QUICK, UM, ON SLIDE 11, YOU WERE TALKING ABOUT PEAK NET MARGIN SCARCITY PRICING.

I KNOW WE'LL TALK ABOUT THIS UNDER ITEM 15, BUT CAN YOU SPEAK TO THE ROLE OF OUR CURRENT AS METHODOLOGY AND CONSERVATIVE OPERATIONS POSTURE AND HOW THAT CONTRIBUTES TO, TO THIS? UH, I THINK WHAT'S, WHAT'S CHALLENGING PARTICULARLY IN, IN THIS LAST SUMMER IS, UM, GIVEN THAT THE WEATHER PATTERNS WERE ALSO VERY DIFFERENT DURING THAT PERIOD AND, AND THE INCREASE IN GENERATION, SO THERE'S, THERE'S DIFFERENT MOVING PARTS, RIGHT? SO YOU'VE GOT THE MODERATE LOAD LEVELS, YOU'VE GOT, UH, THE, UH, INCREASE IN GENERATION AND YOU'VE GOT, UM, UH, ESSENTIALLY HOLDING MORE RESERVES BACK.

IF, IF ANYTHING, TO THE EXTENT THAT YOU HAD A CONSERVATIVE OPERATIONS POSTURE, YOU'RE MOVING MORE RESOURCES INTO ANSLEY SERVICES AND YOU'RE HOLDING THEM.

UH, AND, AND IF I DON'T, AND IF I RECALL, I DON'T KNOW THAT WE HAD ANY ECRS EVENTS, UM, THIS SUMMER.

I, NOT OFF THE TOP OF MY HEAD, MAY MAYBE, MAYBE ONE OR TWO, BUT I, I DON'T RECALL ANY.

UH, SO, SO ULTIMATELY THAT TYPE OF POSTURE WOULD HAVE THE EFFECT OF POTENTIALLY, UM, UH, TIGHTENING THE AMOUNT OF AVAILABLE SUPPLY THAT'S AVAILABLE.

BUT AS WE SEE HERE, THAT WAS NOT A SIGNIFICANT EFFECT, UM, IN, IN THE MARKET, UM, THAT WE SAW AT LEAST THIS SUMMER.

ALRIGHT.

ALRIGHT, THANK YOU.

ANY QUESTIONS FOR DAN? ANY COMMENTS? OKAY, WOODY, ANY CLOSING COMMENTS FROM YOU ON THIS? SOMEBODY? OKAY.

[13. 2025 Texas Reliability Entity Presentation]

WITH THAT, WE'LL MOVE TO AGENDA ITEM 12, UH, WHICH IS, UH, THE TEXAS RELIABILITY ENTITY PRESENTATION.

I BELIEVE PABLO IS GOING TO INTRODUCE OUR, UH, GUEST, JIM ALBRIGHT.

YES, I WILL.

TEXAS RE IS RESPONSIBLE FOR DEVELOPING, MONITORING, ASSESSING, AND ENFORCING COMPLIANCE WITH THE NERC RELIABILITY STANDARDS IN THE ERCOT REGION.

CHAIR FLORES.

SO TODAY WE HAVE THE PLEASURE OF WELCOMING JIM ALBRIGHT, WHO SERVES AS THE PRESIDENT AND CHIEF EXECUTIVE OFFICER FOR TEXAS RE.

TEXAS RE PLAYS A VERY CRITICAL ROLE IN ASSURING THE EFFICIENT AND THE EFFECTIVE REDUCTION OF RISK TO THE RELIABILITY AND SECURITY OF THE BULK POWER SYSTEM IN THE ERCOT REGION.

THROUGH A DELEGATION AGREEMENT WITH THE NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION OR NERC,

[01:10:01]

JIM HAS SERVED IN LEADERSHIP POSITIONS WITH TEXAS RE SINCE 2013 AND PRIOR TO JOINING TEXAS RE HE WAS THE DEPUTY EXECUTIVE DIRECTOR AT THE PUBLIC UTILITY COMMISSION OF TEXAS, WHERE HE SERVED IN VARIOUS MANAGEMENT POSITIONS FOR OVER 15 YEARS.

JIM, WELCOME AND THANK YOU FOR JOINING US TODAY.

THANK YOU, PABLO.

UM, GOOD MORNING EVERYONE.

UM, AS YOU KNOW, I'M JIM ALBRIGHT, PRESIDENT, CEO, UH, OF TEXAS.

RE I WANNA THANK Y'ALL FOR HAVING ME HERE TODAY.

UH, THIS IS A FIRST FOR OUR ORGANIZATION TO GET UP AND, AND, AND SPEAK TO THE ARCH ARCHIVE BOARD.

UM, SO I REALLY APPRECIATE US, UH, HAVING THIS OPPORTUNITY.

I'M EXCITED TO GIVE YOU A LITTLE BIT OF, UM, INFORMATION ABOUT US, WHO WE ARE, WHAT OUR MISSION IS, BUT ALSO TALK ABOUT OUR ASSESSMENT OF RELIABILITY, PERFORMANCE, AND REGIONAL RISKS.

UM, THIS IS SOMETHING WE DO ANNUALLY.

I'LL TALK A LITTLE BIT MORE ABOUT IT.

PABLO KIND OF TEED UP, UH, WHO WE ARE AND WHAT WE ARE, BUT I'LL GO OVER IT A LITTLE BIT MORE, UM, SEE IF I CAN FIGURE THIS OUT.

THERE WE GO.

UM, TEXAS RE'S MISSION IS TO ASSURE EFFECTIVE AND EFFICIENT REDUCTION OF RISK TO THE RELIABILITY AND SECURITY OF THE BULK POWER SYSTEM HERE IN THE ERCOT INTERCONNECTION.

UM, WE'RE INDEPENDENT OF ALL USERS, OWNERS, OPERATORS OF THE BLOCK POWER SYSTEM.

UM, OUR GOVERNANCE INCLUDES A HYBRID BOARD.

WE'VE GOT, UH, FOUR INDEPENDENT DIRECTORS WHO ARE ELECTED BY OUR TEXAS RE MEMBERSHIP.

UH, AND WE HAVE TWO NON-VOTING MEMBERS FROM THE PUBLIC UTILITY COMMISSION OF TEXAS AND FROM THE OFFICE OF PUBLIC UTILITY COUNCIL.

UM, MEMBERSHIP IN TEXAS, REA IS OPEN TO ANYONE WHO'S AN ENTITY IN THE ERCOT REGION AND PARTICIPATES IN THE BULK POWER SYSTEM, UH, THAT REGISTERS WITH US AND COMPLIES WITH OUR BYLAWS.

UM, STAKEHOLDER MEMBERS ARE PROVIDE RECOMMENDATIONS TO OUR ORGANIZATION THROUGH THE MEMBER REPRESENTATIVE COMMITTEE.

AND THE MEMBERS COMMITTEE INCLUDES REPRESENTATIVES FROM VARIOUS, UH, INDUSTRY PARTICIPANTS ACROSS ALL RANGES OF, YOU KNOW, GENERATORS, TRANSMISSION OWNER, TRANSMISSION OWNERS, AND OPERATORS.

UM, SO NEEDLESS TO SAY, WE HAVE A LOT OF, IN PEOPLE THAT ARE HEAVILY INVOLVED IN WHAT WE DO AND HOW WE DO THINGS.

UM, AND THEY ACTUALLY ELECT A CHAIR OF THE MRC AND CHAIR AND VICE CHAIR OF THE MRC, WHO ARE ACTUALLY, WHO ARE AFFILIATED MEMBERS ON THE TEXAS RE BOARD.

UM, WE OPERATE UNDER A DELEGATED AGREEMENT, AS PABLO SAID.

UM, WE GOT OUR AUTHORITY FROM THE NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION OR NERC.

UM, WE ARE ONE OF SIX REGIONAL ENTITIES ACROSS THE COUNTRY.

UM, WE COM COLLECTIVELY COMPRISE WHAT WE REFER TO AS THE ELECTRIC RELIABILITY ORGANIZATION OR ERO.

UH, ERO MODEL BALANCES A CONTINENT WIDE SCOPE, CONTINENT WIDE SCOPE WITH FLEXIBILITY AND RESPONSIVENESS NECESSARY TO REFLECT THE UNIQUE NEEDS OF REGIONS LIKE TEXAS.

UH, WITHIN THIS ROLE, TEXAS RE OCCUPIES A VERY UNIQUE, UM, POSITION AS A BRIDGE BETWEEN STATE AND FEDERAL POLICY MAKERS.

UM, THE ACTIVITIES THAT GO ALONG WITH THAT, WE SEE OURSELVES AS AN INDEPENDENT VOICE FOR THE RELIABILITY AND SECURITY OF THE ERCOT INTERCONNECTION.

THE ROLE ALLOWS TEXAS RE TO LEVERAGE OUR EXPERTISE AND INDEPENDENCE TO EFFECTIVELY INFORM AND ENGAGE WITH OUR BROAD SPECTRUM OF STAKEHOLDERS AND POLICY MAKERS THAT COLLECTIVELY SHAPE THE RELIABILITY AND SECURITY OF OUR TRANSFORMING GRID.

TEXAS RE'S PRIMARY RESPONSIBILITY ARE TO ENSURE COMPLIANCE AND MANDATORY COMPLIANCE WITH MANDATORY RELIABILITY AND SECURITY STANDARDS.

UM, THE ENTITIES WHO USE OWN AND OPERATE ON THE BULK POWER SYSTEM MUST, MUST FOLLOW THESE STANDARDS.

UH, WE CONDUCT ASSESSMENTS OF THE GRID ABILITY TO MEET ELECTRIC POWER DEMAND.

UH, WE ALSO ANALYZE REGIONAL SYSTEM EVENTS THAT GO ON IN IN THE ERCOT INTERCONNECTION.

UM, TEXAS RE PERSONNEL TYPICALLY CONDUCT ABOUT 50 ASSESSMENTS AUDITS, UM, THROUGHOUT THE YEAR, UM, ON AVERAGE.

AND, AND WE LOOKED AND WE LOOKED AT PROBABLY, OH, WE PROBABLY RECEIVED 200, UM, VIOLATIONS, UH, THROUGHOUT THE YEAR.

BUT MOST OF THOSE, THE MAJORITY OF THOSE ARE ACTUALLY REPORTED FROM OUR ENTITIES.

UM, AND, AND I'M HAPPY TO SAY THE MAJORITY OF THOSE ARE ALSO, UM, WHAT WE CONSIDER MINIMAL RISK ISSUES.

UM, SO THAT'S A GOOD FOR THE CON, GOOD FOR THE INTERCONNECTION THAT WE'RE, THAT WE OVERSEE.

UM, WE ALSO

[01:15:01]

SERVE IN A DIFFERENT WAY.

I ALWAYS REFER TO US AS WE LEAD WITH OUTREACH FIRST.

UH, YOU KNOW, WE'RE, WE'RE PARTNERS IN THIS, IN THIS RELIABILITY WORK THAT WE DO.

AND SO WE LEAD WITH OUTREACH.

UH, WE WANNA MAKE SURE THAT THE ENTITIES THAT WE OVERSEE ARE PREPARED FOR WHEN WE COME OUT AND, AND, AND DO OUR COMPLIANCE AUDITS.

UM, AND SO WE HAVE SEVERAL, UH, OUTREACH ENGAGEMENTS THROUGHOUT THE YEAR.

UH, JUST LAST WEEK WE ACTUALLY HAD OUR, OUR MEMBERS REPRESENTATIVE COMMITTEE.

WE HAD DAN WOODFIN AND JULIA MONTE, I'LL PROBABLY JUST MESS UP HER NAME, UH, SPEAK AT OUR, AT OUR LAST MEETING.

AND, YOU KNOW, THEY PROVIDED GREAT INFORMATION AND SOME REALLY VALUABLE PRESENTATIONS, UH, TO OUR MEMBERS.

AND, YOU KNOW, SO WE'RE ALWAYS LEANING ON, UM, OUR INDUSTRY PARTICIPANTS THAT, UH, TO BRING THE KNOWLEDGE THAT THEY HAVE ON DIFFERENT TOPICS.

UH, DAN'S DAN'S, UH, ENLIGHTENED US ALL ON THE IBERIAN PENINSULA EVENT, AND WE TALKED ABOUT THAT AND, AND THE DIFFERENCES BETWEEN ERCOT AND, AND WHAT'S GOING ON OVER THERE.

AND, UM, AND I'VE HEARD A LOT OF DIFFERENT PRESENTATIONS ON THAT SUBJECT IN THE LAST FEW MONTHS.

AND, AND DAN'S WAS, UM, IT HIT HOME.

IT WAS REALLY GOOD.

UM, IT'D BE NO SURPRISE TO ANYONE IN HERE.

I MEAN, YOU SAW THE NUMBERS, THE GENERATION GROWTH THAT WE'RE WE'RE SEEING HERE AT OTT.

UH, WE WE'RE LEADING THE COUNTRY AND THE NUMBER OF REGISTERED ENTITIES THAT WE HAVE, UH, WE WE HAD THE MOST INCREASE IN 2024.

WE DON'T THINK THAT'S GONNA SLOW DOWN CONSIDERABLY WITH THE, WITH THE GENERATION Q AND THE THINGS THAT ARE COMING ON HERE AT ERCOT.

ONE OF OUR FOCUS AREAS AT TEXAS RE IS EXPANDING OUR OUTREACH TO THE STATE POLICY MAKERS AND TO, UH, OUR INDUSTRY STAKEHOLDERS.

WE'VE DEVELOPED STRONG RELATIONSHIPS WITH THE PUBLIC UTILITY COMMISSION, UM, AT THE STAFF LEVEL.

UH, WE'VE BEEN FORTUNATE ENOUGH TO SPEAK WITH THE COMMISSIONERS, AND WE HAVE CHAIRMAN GLEASON AS A PART OF OUR BOARD, SO WE HAVE LOTS OF CONVERSATIONS WITH THEM.

UH, WE ALSO HAVE THAT SAME PARTNERSHIP WITH ERCOT.

UH, THOUGH WE'RE, THOUGH WE ARE A REGULATOR, AND, AND WE DO COME TO, UH, AUDITS ON YOU, UH, WE HAVE A GREAT WORKING RELATIONSHIP WITH ERCOT AS, AND WE ALL, UH, COMMUNICATE ON A REGULAR BASIS AND TALK ABOUT THESE ISSUES.

UM, UM, PARTICULARLY EVERYTHING THAT PABLO TALKED ABOUT IN HIS CEO REPORT, UH, HE AND I TALK EVERY COUPLE MONTHS ABOUT, AND THAT'S WHAT OUR CONVERSATIONS USUALLY ENTAIL, IS WHAT'S GOING ON, WHAT THEY'RE DOING, AND HOW THEY'RE MITIGATING THE RISKS.

UM, BUT FOR 2025, TEXAS ALREADY IDENTIFIED 12 KNOWN AND EMERGING RISKS FOR THE ERCOT REGION ON TOPICS RANGING FROM FACILITY RATINGS FOR PHYS TO PHYSICAL SECURITY.

I WANNA FOCUS PRIMARILY ON JUST THREE SIGNIFICANT AREAS FOR THIS REPORT, UM, THAT SOME OF THEM HAVE ACTUALLY BEEN TALKED ABOUT TODAY ALREADY.

UM, FIRST THE REPORT HIGHLIGHTS THE INCREASING RISKS WE'RE SEEING AROUND THE INTEGRATION OF NEW LARGE LOADS.

WE FIRST IDENTIFIED THIS DISORGANIZED, UM, INTEGRATION OF LARGE LOADS LAST YEAR IN OUR, IN OUR LAST YEAR'S REPORT THIS YEAR.

WE'VE SIGNIFICANTLY INCREASED, UH, THE RISKS THAT WERE ASSOCIATED WITH THE INTEGRATION OF THESE LOADS BASED ON A RECOGNITION OF THE PACE AND THE SCOPE OF THESE LOADS THAT ARE COMING ON IN OUR INTERCONNECTION.

UM, WE'VE ALSO SEEN MULTIPLE DISTURBANCES IN OUR COT, UH, AND ALSO IN VIRGINIA, UH, INVOLVING LARGE UNANTICIPATED LOAD REDUCTIONS IN RESPONSE TO VOLTAGE DISTURBANCES.

UH, TEXAS RE, NERC AND CIRC, WHICH IS THE REGIONAL ENTITY THAT OVERSEES THE VIRGINIA AREA.

UM, THEY DEVELOP, WE'VE DEVELOPED AN INCIDENT REVIEW AND RESPONSE TO THE VOLTAGE DISTURBANCES.

UM, WE HAVE SEEN MULTIPLE EVENT, WE'VE SEEN MULTIPLE EVENTS IN OTHER REGIONS NOW.

UH, SO THIS IS DEFINITELY SOMETHING THAT, YOU KNOW, IS ONE OF THE THINGS THAT WE WANT TO HIGHLIGHT AND OBVIOUSLY HAS BEEN TO TOUCHED ON WITH THE CONVERSATIONS AROUND SENATE MIDDLE SIX IMPLEMENTATION.

UM, AND, AND THAT'S A CREDIT TO ERCOT.

IT'S A CREDIT TO THE STATE.

UM, WE'RE VERY FORTUNATE IN RESPECT TO SOME OF THESE ISSUES THAT, THAT WE'RE SEEING ON THE NATIONAL LEVEL.

YOU KNOW, RIGHT, WRONG OR DIFFERENT, WE'VE ALREADY SEEN 'EM HERE IN ERCOT.

UM, WE, AS I, WHEN I SPEAK TO MY, ON THE NATIONAL LEVEL, A LOT OF TIMES I REFER TO ERCOT AS OUR LITTLE LABORATORY WHERE WE'RE OUT IN FRONT OF EVERYBODY ELSE AND, AND SEEING THE RISK.

BUT FORTUNATELY, WE'RE ALSO LOOKING FOR THE RE THE THINGS TO MEDICATE THOSE RISKS.

SO THAT'S A, THAT'S A CREDIT TO WHAT GOES ON HERE, AND IT, AND IN ALL HONESTY, IT MAKES MY JOB MUCH EASIER TO HAVE THE CONVERSATIONS ON THE NATIONAL LEVEL.

UM, SECOND, OUR REPORT CONTINUES TO HIGHLIGHT THE WORK AT THE STATE AND FEDERAL LEVEL TO IMPLEMENT COLD WEATHER WINTERIZATION MEASURES.

OBVIOUSLY, NERS IMPLE IMPLEMENTED THEIR ENHANCED COLD WEATHER WINTERIZATION REQUIREMENT STANDARDS LAST YEAR, COMPLEMENTING THE STATE LEVEL STANDARDS AND INSPECTION PROGRAM THAT ERCOT HAS, UH, BEEN CONDUCTING OVER THE LAST FEW YEARS.

THESE EFFORTS ARE BEARING FREE IN 2024.

THE BULK POWER SYSTEM PERFORMED WELL DURING

[01:20:01]

SEVERAL NOTABLE EXTREME EVENTS, AND WITH NO SIGNIFICANT LOAD LOSS RESULTS, THIS CONTINUED RESPON PROGRESS IN RESPONSE TO WINTER STORMS DEMONSTRATES THE BENEFIT OF COORDINATED MITIGATION MEASURES.

AND THE SUCCESS HAS LED TO US TO REDUCE THAT LEVEL OF RISK.

THIS IS NOT TO SAY THE WORK IS, IS, IS OVER.

UH, WE MUST CONTINUE TO BE VIGILANT AND WE WILL CONTINUE TO PRIORITIZE AND REVIEW OUR COMMITMENT TO THE, TO THE NATIONAL LEVEL STANDARDS.

AND, AND OBVIOUSLY THE STAFF AT TRE IS ALWAYS WORKING WITH ERCOT, LOOKING AT WHAT'S GOING ON ON THE STATE LEVEL FROM THE STANDPOINT OF, OF THEIR PROGRAMS. AND, AND WE WANT TO COMPLIMENT THOSE THINGS.

UH, WE, WE TRY NOT TO STEP ON EACH OTHER'S TOES.

UH, WE, WE'VE GOT THE STATE LEVEL STANDARDS AND THEN WE'VE GOT THE FEDERAL STANDARDS.

SO WE TRY TO BALANCE OUR APPROACH.

AND FINALLY, OUR REGIONAL RISK REPORT HIGHLIGHTS ONE NEW 2025 RISK, AND IT'S AROUND ARTIFICIAL INTELLIGENCE.

AI SYSTEMS RELY ON COPIOUS AMOUNTS OF ENERGY.

UH, WE KNOW ABOUT THE ISSUES OF, OF THEM COMING ONLINE AND THE GROWTH OF THESE LOADS, BUT THAT'S JUST PART OF THE, OF THE, OF THE RISK THERE OR PART OF THE STORY.

UM, BEYOND THE AI SYSTEMS THEMSELVES, THE USE OF AI IN THE ELECTRIC INDUSTRY, WHILE PROMISING IT ALSO CARRIES CYBERSECURITY RISKS.

UM, YOU KNOW, IT'S A, IT'S A BALANCING OF FINE LINE THERE.

UH, NER R'S ELECTRICITY INFORMATION SHARING ANALYSIS CENTER, OR EISAC AS WE REFER TO IT, HAS ALREADY IDENTIFIED IN INSTANCES IN WHICH AI POWERED TOOLS AND SYSTEMS ARE BEING USED TO ENHANCE AUTONOMOUS AND ADVERSARIAL CYBER ATTACKS ON THE SYSTEM.

WHILE THESE INSTANCES HAVE NOT AFFECTED OR IMPACTED THE BULK POWER SYSTEM PER SE, UH, TO DATE, THE ABILITY OF THIS, YOU KNOW, THE ADAPTIVE MALICIOUS CODE TO BYPASS SECURITY CONTROLS, POISON DATA, DEEP FAKES, VOICE CLONING, OR SIMPLY AUGMENT TRADITIONAL PHISHING ATTACKS AND MAKE THEM THAT MUCH MORE DANGEROUS, UH, WILL UNDOUBTEDLY INCREASE AS THE CYBER ATTACK SURFACE, UH, OF THE GRID CONTINUES TO INCREASE OVER THE YEARS.

SO THAT'S SOMETHING THAT WE WANT TO, YOU KNOW, PAY ATTENTION TO AND FOCUS ON OVER THE NEXT COUPLE OF YEARS AND HOW WE'RE ALL USING AI IN OUR WORK.

EMERGING TRENDS AROUND RELIABILITY, YOU KNOW, THESE EMERGING RISKS WILL CONTINUE TO FUNDAMENTALLY SHAPE OUR COLLECTIVE RELIABILITY AND SECURITY WORK AS WE MOVE INTO THE FUTURE.

IN TERMS OF THE RELIABILITY STORY, YOU KNOW, WE'RE INTEGRATING NEW TECHNOLOGIES.

WE'RE LOOKING AT, UM, DISPERSED AND VARIABLE GENERATION RESOURCES, DISPERSED AND GENERATION RESOURCES.

MY COMPUTER JUST SENT ME SOMETHING, UH, SORRY ABOUT THAT.

I, BUT IN TERMS OF INTEGRATING NEW LARGE LOADS, THE R HAS SEVERAL FUNDAMENTAL QUESTIONS THAT WILL SHAPE OUR COLLECTIVE RELIABILITY WORK FOR YEARS TO COME.

AND THESE QUESTIONS INCLUDE WHETHER LARGE LOADS SHOULD BECOME A NERC SHOULD BECOME NERC REGISTERED ENTITIES.

I KNOW THIS IS SOMETHING THAT TEXAS IS LOOKING AT TOO, HOW THEY'RE GONNA DO IT ON THE NATIONAL LEVEL.

WE'RE LOOKING AT THAT ALSO, UH, ARE NEW STANDARDS NEEDED FOR LARGE LOAD GEN INTERCONNECTIONS? UM, WHAT STUDIES SHOULD THE OPERATORS PERFORM IN BRINGING ON THESE LOADS? UM, NERC HAS ESTABLISHED A LARGE LOAD TASK FORCE, UM, TO ADDRESS THESE QUESTIONS.

HOPEFULLY THIS TASK FORCE WILL COMPLIMENT THE WORK THAT'S GOING ON AT THE ERCOT LEVEL.

WE'RE FORTUNATE TO HAVE, UM, PATRICK GUAVA FROM ERCOT AND MARTHA HENSON FROM ENCORE, FROM THIS REGION THAT ARE LEADERS ON THE NERC LARGE LOAD TASK FORCE.

SO HOPEFULLY THE THINGS THAT WE'RE LEARNING ON THE ERCOT LEVEL CAN BE TRANSFERRED UP TO THE NATIONAL LEVEL AND USED ACROSS THE COUNTRY.

UM, THERE WILL BE A NERC WILL BE RELEASING A WHITE, THE LARGE LOADS TASK FORCE ON THE NATIONAL LEVEL.

WE'LL BE RELEASING A WHITE PAPER, UH, BY THE END OF THE YEAR.

UH, IT'S SOMETHING THAT I THINK WILL KIND OF HELP DRIVE WHAT'S GONNA GO ON NATIONALLY.

UM, I WOULD IMAGINE THAT SOME OF THE THINGS THAT WE'RE SEEING HERE WITH SENATE BILL SIX IMPLEMENTATION AND OTHER THINGS WILL HELP FORM SOME OF THAT WORK.

UM, REGARDING SECURITY, THE BLOOD POWER SYSTEM WEARING INTEGRATING NEW TYPES OF OF SERVICES, FACILITIES, TECHNOLOGIES EVERY DAY, THAT'S INCREASING THE GRID'S OVERALL ATTACK SURFACE.

THE SHIFT FROM TRADITIONAL ON-PREMISE CLIENT SERVER BUSINESS MODELS TO VIRTUALIZED AND CLOUD-BASED OFF-PREMISE SOLUTIONS, WHILE OFFERING GREAT PROMISE EFFICIENCY AND FLEXIBILITY.

IT'S DRIVING EXPANSION OF THE CYBER AND EVEN PHYSICAL SECURITY CONCERNS THAT WE HAVE.

WE'RE ALREADY SEEING MISCONFIGURED CLOUD ENVIRONMENTS THAT CAN SERVE AS COMMON ENTRY POINTS FOR ATTACKERS.

MOREOVER, THE TYPES OF SHARED RESPONSIBILITY MODELS THAT UNDERPIN CLOUD COMPUTING ARRANGEMENTS IN INHERENTLY INCREASE THE COMPLEXITY,

[01:25:01]

OUR CYBERSECURITY, GOVERNANCE, AND SECURITY ACTIVITIES.

AS WE CONTINUE TO EXPAND THE USE OF THESE TECHNOLOGIES AND REAP THE BENEFITS OF THEIR SCALABILITY, AGILITY, AND AVAILABILITY, WE HAVE TO CONTINUE TO EVOLVE OUR SECURITY CONTROLS ALONG WITH THEM.

PRESENTLY, THE ERO IS EXPLORING WAYS TO INTEGRATE THE USAGE OF VIRTUAL TECHNOLOGY SECURELY AND RELIABLY INTO THE CRITICAL INFRASTRUCTURE PROTECTION STANDARDS.

WE'RE ALSO LOOKING AT WAYS TO ESTABLISH RISK-BASED OUTCOME DRIVEN REQUIREMENTS THAT PLACE CLOUD SERVICES ON PAR WITH OTHER THIRD PARTY RESOURCES ALREADY USED FOR REGULATED SYSTEMS. AS THESE TRENDS CONTINUE, WE ARE SEEING A NEED TO RETHINK TRADITIONAL CYBERSECURITY MODELS THAT PRIMARILY FOCUS ON PERIMETER DEFENSES, YOU KNOW, FOR WELL-DEFINED ON-PREMISE CYBER FOR ASSETS.

WE'RE SEEING ZERO TRUST ARCHITECTURE CONCEPTS THAT REQUIRE VERIFICATION OF EVERY USER SYSTEM AND APPLICATION, WHETHER RESOURCES, UH, INSIDE OR OUTSIDE THE NETWORK BEGINNING TO BE IMPLEMENTED IN THE STANDARD IN THE CYBER INFRASTRUCTURE PROTECTION STANDARDS.

UM, IF YOU WOULD LIKE TO LEARN MORE ABOUT OUR ANNUAL ASSESSMENT, I WOULD ENCOURAGE YOU TO VISIT OUR WEBSITE AND LOOK AT IT IN MORE DETAIL.

WHEN WE DISCUSS WHAT WE'RE GOING, WHAT'S GOING ON IN ERCOT, WE'RE PROUD TO REFER TO IT AS A LABORATORY DOWN HERE IN TEXAS, WE REALLY FEEL LIKE THAT WHAT'S GOING ON IS IMPORTANT AND CRITICAL TO THE WORK ACROSS THE COUNTRY, AND WE WANNA MAKE SURE THAT WE'RE COMMUNICATING WHAT'S GOING ON HERE ON THE NATIONAL LEVEL, UH, FOR MULTIPLE REASONS.

UH, BUT, BUT WE WANNA LEARN FROM WHAT'S GOING ON HERE.

UH, ERCOT HASS BEEN DONE A GREAT JOB OF PARTICIPATING ON THE NATIONAL LEVEL.

I'VE BEEN INVOLVED IN SEVERAL EVENTS, UH, WHERE THEY ACTUALLY DID PARTICIPATE AND, AND CAME AND SPOKE AND TALKED ABOUT WHAT WAS GOING ON HERE.

UH, PABLO'S DONE A GREAT JOB OF COMMUNICATING WITH NERC WHEN THEY'VE REACHED OUT TO HIM ON WHAT'S GOING ON HERE.

AND, AND HE'S ALSO PROVIDED PARTICIPANTS ON THE NATIONAL LEVEL.

SO THAT, THAT'S GREAT.

I MEAN, THIS IS A PARTNERSHIP.

UH, ADDITIONALLY, I LOOK FORWARD TO WHAT RUDY, WHAT WOODY'S GONNA TALK ABOUT NEXT, WHERE HE TALKS ABOUT THE RISKS AND HOW THEY'RE ADDRESSING THE RISKS THAT WE'RE SEEING.

ALSO, WHAT, UH, THE DEPARTMENT OF ENERGY AND ALSO NERC IS SEEING.

UM, IN CONCLUSION, I WANT TO THANK YOU FOR ALLOWING ME TO BE HERE.

UM, I I REALLY ENJOY WORKING WITH PABLO AND I SEE HIM AS A PARTNER IN THIS RELIABILITY, UH, PARTNERSHIP THAT WE HAVE.

HE'S A STRONG ADVOCATE FOR RELIABILITY.

UH, HE CAME IN A UNIQUE TIME, UM, IN OUR, IN WHERE WE WERE.

UM, AND AS PABLO SAID, I'VE, I'VE BEEN HERE FOR A LONG TIME FROM THE STANDPOINT OF BEING IN ERCOT REGION.

UM, AND I'VE SEEN IT IN ALL DIFFERENT LEVELS, AND RIGHT NOW IS A GOOD TIME TO BE IN THE RELI RELIABILITY BUSINESS.

SO I APPRECIATE WHAT PABLO'S DOING HERE AND WHAT THE BOARD'S DOING AND WHAT THE COMMISSION HAS DONE SO FAR TO CONTINUE TO MOVE THE NEEDLE ON RELIABILITY AND SECURITY OF OUR GRID.

UM, IT'S A, AS I SAID A MINUTE AGO, RELIABILITY IS A TEAM SPORT AND IT'S THE PARTNERSHIP WE HAVE WITH ERCOT IS, IS IMPORTANT FOUNDATION FOR US TO BE ABLE TO DO THE THINGS THAT WE DO.

UM, SO AS WE MOVE FORWARD, I URGE EACH OF YOU TO STAY ENGAGED, BE PROACTIVE, UH, IN ADDRESSING THE CHALLENGES AND OPPORTUNITIES.

'CAUSE AS WE CONTINUE TO GROW AND TRANSFORM, THEY SEEM TO KEEP COMING UP.

SO, UH, I REALLY APPRECIATE ALL THE WORK THAT'S BEING DONE, AND I, AND I'M HAPPY TO ANSWER ANY QUESTIONS THAT YOU MIGHT HAVE.

WELL, THANK YOU, JIM.

ANY QUESTIONS FOR JIM? WE APPRECIATE THE PRESENTATION AND I, I, UH, WOULD REFER THIS AS A PARTNERSHIP OF TWO ORGANIZATIONS THAT BOTH HAVE RELIABILITY IN THEIR NAME.

THAT'S RIGHT.

SO, WELL, THANK YOU.

I WOULD AGREE MORE.

AND, AND I JUST WANT TO ADD THAT, UH, I WANNA, YOU KNOW, EXPRESS MY APPRECIATION FOR THE WILLINGNESS TO ALWAYS BE AVAILABLE TO TALK THROUGH RELIABILITY ISSUES, UNDERSTAND THE WAY TEXAS RE OR NERC IS THINKING ABOUT A PARTICULAR TOPIC.

I I OFTEN WILL REACH OUT TO JIM TO GET A PERSPECTIVE ON THIS AS WE'RE TRYING TO THINK THROUGH SPECIFIC PROTOCOLS OR, OR OPERATING GUIDE REVISIONS.

AND HE'S ALWAYS, UH, ALWAYS, UH, GENEROUS WITH HIS TIME.

AND I, I THINK WE WORK VERY WELL TOGETHER IN THAT REGARD.

SO THANK YOU, JIM, FOR YOUR CONTINUED PARTNERSHIP.

AND, UH, I AGREE WE HAVE A VERY GOOD ALIGNMENT IN TERMS OF WHAT WE KNOW IS CRITICALLY IMPORTANT FOR ADVANCING RELIABILITY HERE IN THE ERCOT SYSTEM.

NO, I APPRECIATE THOSE COMMENTS AND, AND I, AND I REALLY DO APPRECIATE WORKING WITH YOU.

THANKS, JIM.

WE LOOK FORWARD TO HAVING YOU BACK IN THE FUTURE.

[14. ERCOT Assessments and Recommendations in Response to DOE, NERC, and Texas RE Grid Reports]

OUR NEXT AGENDA ITEM IS 14 ERCOT ASSESSMENTS AND RECOMMENDATIONS IN RESPONSE TO THE DEPARTMENT OF ENERGY, NERC AND TEXAS RE GRID REPORTS.

UH, THIS IS PRESENTED BY WOODY.

WOW.

IDENTIFIED, AND THEN WE'LL TRACK THAT BACK TO SOME OF THE THINGS THAT WE'RE DOING HERE IN ERCOT.

SO THIS WILL BE SOMEWHAT OF A FOLLOW UP TO WHAT WE JUST HEARD.

SO THIS IS A, PROVIDES AN OVERVIEW OF SOME INITIATIVES THAT, UH, THAT WE HAVE RELATED TO THE RECOMMENDATIONS THAT COME FROM THREE DIFFERENT NATIONAL REPORTS.

SO WE'LL LOOK AT WHAT THOSE REPORTS SAY, WHAT THEY RECOMMEND, WHAT SOME OF THE RISKS ARE THEY

[01:30:01]

SO THE THREE REPORTS, UH, DOE WITHOUT A RE, UH, RESOURCE ADEQUACY REPORT, EVALUATING THE RELIABILITY AND SECURITY OF THE UNITED STATES ELECTRIC GRID.

UH, NERC HAS THE 2025 STATE OF RELIABILITY ASSESSMENT, AND THEN, UH, THE TRE HAS THE, THE RELIABILITY AND PERFORMANCE REGIONAL ASSESSMENT AS WELL.

SO THOSE ARE THE THREE THAT WE'LL REVIEW.

SO STARTING WITH THE, THE DOE REPORT, UM, EARLIER THIS YEAR THERE WAS A EXECUTIVE ORDER 1 4 2 6 2, WHICH WAS, UH, STRENGTHENING THE RELIABILITY AND SECURITY OF THE UNITED STATES ELECTRIC GRID.

SO IT'S A NATIONAL LOOK AT STRENGTHENING THE GRID.

UH, THIS DOE REPORT WAS IN RESPONSE TO THAT EXECUTIVE ORDER.

UM, A COUPLE THINGS ABOUT THE REPORT I THINK I THOUGHT WERE KIND OF INTERESTING.

UH, THE REPORT HAS A LOAD FORECAST IN IT FOR ERCOT, AND THAT LOAD FORECAST IN 2030 IS 105 GIGAWATTS.

SO THAT'S QUITE A BIT LESS THAN WHAT WE'RE LOOKING AT.

UM, THE REPORT ALSO USED A MODEL THAT WAS BASED ON A NERC ITCS, UH, INTEGRATED TRANSMISSION AND CAPACITY SYSTEMS MODEL THAT INCLUDED 14,000 MEGAWATTS OF AC INTERCONNECTIONS WITH THE, WITH THE EASTERN INTERCONNECT BETWEEN ERCOT AND THE EASTERN INTERCONNECT.

SO THAT WAS THE BASIS OF THE DOE REPORT, A LOT OF INTERCONNECTION AC INTERCONNECTION, WHICH WE DON'T HAVE AT ALL, AND A LOAD FORECAST THAT WAS MUCH LOWER.

SO THOSE, THAT'S THE WHERE THIS IS COMING FROM.

SO THE KEY AREAS OF, UH, KEY FOCUS AREAS WERE, UM, THE, THE IMPORTANCE OF MAINTAINING AN ADEQUATE SUPPLY OF ENERGY, THE URGENCY TO ADD NEW DISPATCHABLE GENERATION, THE NEED TO ENSURE POWER PLANT RETIREMENTS DON'T ADVERSELY AFFECT RELIABILITY.

UM, MODERNIZING RESOURCE ADEQUACY AND CRITERIA.

AND, UH, THE VALUE OF UPGRADING TRANSMISSION SYSTEM TO MITIGATE INTRA REGIONAL POWER TRANSFER RISK.

SO INTRA REGIONAL WITHIN, WITHIN THE, LIKE THE ERCOT REGION.

SO SOME ERCOT ACTIVITY RELATED TO THE DEAL OE REPORT FOR THE FIRST ONE, UM, THE ADEQUATE SUPPLY OF ENERGY.

UM, WE, WE WILL TALK LATER TODAY ABOUT THE DISPATCHABLE RELIABILITY RESERVE SERVICE.

SO THAT'S IN DEVELOPMENT.

UM, SB SIX ALSO GIVES US DEMAND RESPONSE FOR, FOR LARGE LOADS.

SO THOSE ARE TWO VERY IN FRONT OF US TODAY TYPE THINGS THAT ARE IN DEVELOPMENT THAT WILL HELP WITH, UH, ADEQUATE SUPPLY OF ENERGY.

THE SECOND ONE WAS THE URGENCY TO, TO SWIFTLY ADD NEW DISPATCHABLE GENERATION.

OF COURSE, WE'VE GOT THE TEXAS ENERGY FUND WITH THE FIRST UNITS COMING ONLINE IN 2026.

SO I THINK PABLO TALKED ABOUT THAT EARLIER TODAY.

WE'VE GOT SOME UNITS IN IN JANUARY OF 2026 THAT'LL START COMING ON.

UM, AND WE ALSO, UM, THE, THE ERCOT GENERATION INTERCONNECTION PROCESS, WE'VE HAD OVER 40 GIGAWATTS ENERGIZED IN THE LAST FIVE YEARS.

SO THAT'S A VERY, IT'S A VERY ROBUST AMOUNT OF, OF NEW GENERATION THAT HAS BEEN, UH, PUT ON THE ERCOT GRID.

THE THIRD ITEM, UH, THE NEED TO ENSURE POWER PLANT RETIREMENTS.

UM, SO WE HAVE, UH, AN ERCOT RMR PROCESS THAT'S EXISTING TODAY, AND WE JUST GOT THROUGH USING IT WITH THE BRO UNIT.

UM, AND WE ALSO HAVE A 2025 OKR WITHIN ERCOT TO UPDATE THAT PROCESS AND TO MAKE SURE IT'S, IT'S UP TO DATE AND MODERN AND, AND ANY IMPROVEMENTS THAT WE NEED FOR THAT.

AND SO THAT'S SOMETHING WE'RE ACTIVELY WORKING ON ON RIGHT NOW.

THE FOURTH ONE, UH, THE NEED TO MODERNIZE RESOURCE ADEQUACY RE UH, CRITERIA.

UM, I THINK WORKING WITH THE PUC HERE, WE HAVE THIS NEW THREE PART RELIABILITY STANDARD, AND WE WILL START THAT 2026, THAT FIRST REPORT.

SO I THINK WE'RE WAY OUT IN FRONT OF EVERYONE ELSE ON THIS RESOURCE ADEQUACY, UH, OR RELIABILITY STANDARD, UH, MODERNIZATION.

UM, I THINK A LOT OF PEOPLE ARE TRYING TO CATCH UP WITH US ON THAT ONE.

AND ALSO ERCOT USE OF ELCC FOR INTERMITTENT GENERATION.

THAT'S ANOTHER, THAT'S ANOTHER ITEM THAT A LOT OF PLACES HAVEN'T BEEN FORCED TO NECESSARILY USE BECAUSE THEY DON'T HAVE THAT PENETRATION LEVEL OF, OF, UH, WIND AND SOLAR LIKE WE DO.

BUT THE, THAT EFFECTIVE LOAD CARRYING CAPACITY, THE ELCC MEASUREMENT FOR INTERMITTENT GENERATION IS BECOMING AN INDUSTRY STANDARD FOR, FOR HOW TO MEASURE THE NAMEPLATE VALUE OF A WIND OR SOLAR UNIT.

AND FINALLY, THE VALUE OF UPGRADING THE TRANSMISSION SYSTEM FOR INTER-REGIONAL TRANSFER.

[01:35:01]

UM, LAST YEAR, THIS BOARD, UH, APPROVED THE, THE ADDITION OF SIX NEW SYNCHRONOUS CONDENSERS.

AND WE'LL SEE THE FIRST OF THOSE IN 2027.

THAT'S A, THAT'S A MAJOR IMPROVEMENT THAT WILL HELP 'EM IN, IN SEVERAL AREAS.

AND THEN LAST YEAR WE HAD THE ERCOT, UH, REGIONAL, UH, TRANSMISSION PLAN, WHICH INCLUDED THE 7 65 EDITIONS THAT'LL START SHOWING UP IN, IN, UH, IN 2030.

SO THOSE ARE, UH, SOME OF THE WAYS THAT, UH, ERCOT HAS, HAS RESPONDED TO SOME OF THE, UH, RECOMMENDATIONS IN THE DOE REPORTS.

SO ANY, ANY QUESTIONS ABOUT ANY OF THOSE OR WE CAN WAIT TILL THE END.

AND, UH, SO THE SECOND REPORT WE'LL LOOK AT IS THE, UH, THE NERC 2025 STATE, STATE OF RELIABILITY ASSESSMENT OVERVIEW, WHICH LOOKS AT THE 2024 BULK POWER SYSTEM.

SO THIS IS A NATIONAL REPORT.

SO ONE OF THE THINGS THEY MENTIONED WAS SEVERE WEATHER, UH, THE GROWTH OF DATA CENTERS, HIGH CONCENTRATION OF, OF BATTERIES, AND IBR RIDE THROUGHS.

SO THAT'S THE SOME OF THE KEY TAKEAWAYS THAT, THAT THEY HAD IN THAT NERC REPORT.

SO WHERE ARE WE, WHAT ARE OUR ACTIVITIES LOOK LIKE AROUND THOSE? SO FROM A SEVERE WEATHER, UM, BEING A THREAT TO, TO RELIABILITY, UM, ERCOT, OF COURSE HAS BEEN INSPECTING WEATHER, DOING WEATHER INSPECTIONS.

NOW THIS WILL BE OUR FOURTH WINTER.

SO WE HAVE, UH, AFTER WINTER STORM URI, UH, IN COOPERATION WITH, UH, THE PUBLIC UTILITY COMMISSION AND THE LEGISLATURE AS WELL.

UH, WE RESPONDED VERY QUICKLY AND, UH, PUT TOGETHER A TEAM.

AND WE'VE BEEN INSPECTING UNITS FOR BOTH EXPECTING UNITS AND TRANSMISSION SYSTEM FOR BOTH WINTER AND SUMMER PREPAREDNESS.

UH, WE CURRENTLY EXCEED THE PUC MINIMUMS FOR WHAT WE HAVE TO DO BY ABOUT 65%, AND WE CONTINUE TO KEEP THAT PACE, UM, IN ORDER TO HAVE SOME KIND OF POSITIVE EFFECT ON, ON THAT WEATHERIZATION.

UM, ANOTHER INTERESTING THING THAT WE DO IS WE CONDUCT OUR ANNUAL HURRICANE AND WINTER STORM SIMULATIONS WITH OTHER MARKET PARTICIPANT OPERATORS.

SO WE TAKE OUR OPERATORS AND TAKE OPERATORS FROM AROUND THE SYSTEM, TSP OPERATORS AND QUEASY OPERATORS.

WE ALL GET TOGETHER AND WE DO SIMULATIONS OF HURRICANES AND WINTER STORMS. AND THAT IS AN OPPORTUNITY FOR OUR OPERATORS TO SEE FACE TO FACE THE OPERATORS THEY'RE NORMALLY DEALING WITH ON A TELEPHONE.

AND, UH, THEY, THEY GO THROUGH SIMULATIONS AND, AND WORK THROUGH ISSUES.

UM, WE CONTINUE, WHEN WE DO SEE HURRICANES COMING, WE CONTINUE TO, UH, POSTURE OUR SYSTEM TO, TO ABSORB THAT HURRICANE.

SO WE TURN UNITS ON REDUCE OUTAGES.

WE, WE PRE POSTURE THE SYSTEM TO BE AS RESILIENT AS POSSIBLE FOR WHEN THOSE, THOSE HURRICANES COME ON.

AND, UM, THE, UH, THE 2024 COMPLETION OF THE ERCOT RESILIENCY STUDY, AND WE'LL DO ANOTHER ONE, I BELIEVE IN 2026.

SO THAT'S EVERY OTHER YEAR.

BUT THAT IS A STUDY THAT LOOKS AT RESILIENCY AND WHERE IT COULD BE MOST BENEFICIAL IN THE ERCOT GRID.

SO THAT'S SOMETHING THAT CAME OUT OF THE LEGISLATIVE SESSION RIGHT AFTER WINTER STORM URI.

THE SECOND ITEM IS THE GROWTH OF DATA CENTERS, UM, SIGNIFICANT REALTOR OR NEAR TERM RELIABILITY CHALLENGE DUE TO HOW FAST THEY'RE AT BEING ADDED AND HOW LARGE THEY ARE AND THEIR POWER USAGE BEHAVIOR.

UM, SO WE ESTABLISHED A, A LARGE LOAD CONNECTION PROCESS IN MARCH OF 2022, AND WE'VE CONTINUED TO UPDATE THAT PROCESS, CONTINUE TO ADD PEOPLE TO THAT PROCESS AND ADAPT IT TO, UH, TO MORE EFFECTIVELY MEET THAT, THAT CHALLENGE.

UH, SB SIX ESTABLISHES THE RELIABILITY EXPECTATIONS FOR LARGE LOADS.

WE'VE TALKED ABOUT THOSE ALREADY THIS MORNING.

CO-LOCATED LOADS, LOADS WITH 50% BACKUP.

WE NOW HAVE TOOLS FROM SB SIX THAT WILL HELP US HANDLE DATA CENTER AND CREATE SOME DEMAND RESPONSE THERE.

AND BEHIND THE SCENES, ERCOT IS ENGAGED WITH NERC, WITH E-CIG, OTHER RESEARCH INSTITUTE INSTITUTIONS.

WE HAVE OUR GRID TRANSFORMATION GROUP THAT WE HAVE ELEVATED ALL THE WAY TO AN EXECUTIVE LEVEL JUST TO MAKE SURE WE STAY ON TOP OF AND UNDERSTAND THE EMERGING TRENDS AND THE EMERGING PROBLEMS. UH, WE'VE GOT MULTIPLE TECHNICAL EXPERTS THAT ARE IN THE MIDDLE OF ALL THE DIFFERENT KINDS OF NEW THINGS THAT WE'RE SEEING.

WE'RE, WE'RE IN A GRID TODAY THAT IS CHANGING MORE RAPIDLY THAN EVER, AND WE WANNA MAKE SURE THAT WE'VE GOT OUR, UH, OUR BEST PEOPLE OUT IN FRONT, MAKING SURE THAT, THAT, THAT WE'RE AWARE OF WHAT THOSE CHANGES ARE.

UM, HIGH CONCENTRATIONS OF BATTERIES HAVE RESULTED IN IMPROVED FREQUENCY RESPONSE.

THIS IS ACTUALLY A POSITIVE.

UM, WE HAVE A 2024 OKR THAT PROMOTES, UH, THE, UH, ADVANCED GRID SUPPORT, WHICH IS THE GRID FORMING.

YOU'LL HEAR SOME MORE ABOUT THAT TODAY.

BUT,

[01:40:01]

UH, WE, WE HAVE, WE'RE PROBABLY FURTHER OUT THAN MOST FOLKS BECAUSE OF THE, THE NUMBER OF BATTERIES THAT WE CURRENTLY HAVE.

AND SO I THINK, UH, WE, WE'VE MADE SOME GOOD PROGRESS THERE.

AND FINALLY, THE, UH, THE LAST, THE NERC, UH, RECOMMENDATIONS WAS THE IBR RIDE THROUGH BOTH PERFORMANCE AND MODELING ISSUES, UNDERSCORE THE IMPORTANCE OF ONGOING EFFORTS TO ADDRESS THIS.

SO, UH, PABLO TALKED ABOUT THE, UH, NOGA 2 45 ISSUE EARLIER.

UM, WE CONTINUE TO ADVANCE THAT RIDE THROUGH PERFORMANCE WITH THAT INITIATIVE.

UH, WE ALSO HAVE PASSED SOME, SOME PLANNING GUIDE REVISIONS THAT, UH, REQUIRE BETTER MODEL VALIDATION.

AND SO WE'RE, WE'RE ON TOP OF THAT AND WE'RE WORKING WITH MARKET PARTICIPANTS TO MAKE SURE WE HAVE THE BEST INFORMATION AVAILABLE.

UM, AND FINALLY, THE KEY FOCUS AREAS IN THE, IN THE TRE, UH, REPORT.

SO WHAT I DID ON THE, THE TRE REPORT IS SIMILAR TO WHAT WE HEARD JUST NOW.

I, I TOOK THE ONES THAT HAD, UH, MAJOR IMPACTS AND WERE POSSIBLE OR LIKELY POSSIBLE OR LIKELY MAJOR IMPACTS POSSIBLE OR LIKELY.

SO THAT CHART THAT JIM SHOWED, THESE ARE THE ONES THAT ARE MAJOR AND POSSIBLE.

SO THERE'S SUPPLY CHAIN ENERGY AVAILABILITY, UH, GAS SUPPLY RESTRICTIONS DURING COLD WEATHER, DISORGANIZED INTEGRATION OF LARGE LOADS, AND IBR RIDE THROUGH.

SO LET'S LOOK AT WHAT WE'RE DOING IN THOSE AREAS.

SO SUPPLY CHAIN FOR, FOR GRID EQUIPMENT.

SO WE DON'T INCORPORATE KNOWN SUPPLY CHAIN RESTRICTIONS FOR RESOURCE INTEGRATION, BUT WE DO, UM, INCORPORATE WHAT DEVELOPERS TELL US IS THEIR, UH, SUPPLY CHAIN.

SO WE DO INCORPORATE THAT, BUT WE'RE NOT OUT BUYING ANY EQUIPMENT OR ANYTHING LIKE THAT.

UH, WE INCLUDE THE SAME THING FOR TSPS.

THEY'RE ESTIMATED IN-SERVICE DATES.

IF IT'S GONNA TAKE 'EM AN EXTRA YEAR TO GET A TRANSFORMER, THEN THAT'S INCORPORATED IN OUR ESTIMATES OF WHEN THOSE APPROVED TRANSMISSION ADDITIONS ARE ACTUALLY MADE TO THE SYSTEM.

SO WE ARE INCORPORATING THAT, BUT WE ARE NOT INVOLVED IN, UH, ANY OF THIS NEGOTIATIONS OR, OR ANY OF THAT KIND OF STUFF.

UM, ENERGY AVAILABILITY RISKS CONTINUE TO REFLECT RAPID GRID TRANSFORMATION.

UM, I THINK ONE OF THE MAJOR THINGS THAT WE'VE DONE HERE IS THE ADOPTION OF THE NEW RELIABILITY STANDARD.

THAT'S A, IT'S A POWERFUL TOOL TO GIVE US A VERY FIRM MEASUREMENT OF, OF WHERE WE ARE FROM A, FROM A RELIABILITY STANDPOINT.

UM, I CAN REMEMBER SITTING IN FRONT OF, UH, A LEGISLATIVE COMMITTEE AND SOMEONE ASKED, ARE YOU RELIABLE? AND I'M, HOW DO YOU ANSWER THAT IF YOU DON'T HAVE A STANDARD THAT YOU CAN, THAT YOU CAN USE? AND WE DIDN'T HAVE A STANDARD UNTIL WE HAD THIS RELIABILITY STANDARD.

SO NOW, WE'LL, WE'LL ACTUALLY HAVE SOMETHING TO ANSWER THAT QUESTION WITH.

UM, THE INCORPORATION OF PROBABILISTIC ANALYSIS AND PLANNING AND REPORTING AND ANCILLARY SERVICE OUTAGE COORDINATION.

THE, THE INFLUX OF, OF, OF WIND AND SOLAR AND THE FACT THAT THOSE INTERMITTENT SOURCES ARE NOT LIKE THE SOURCES OF GENERATION WE'VE SEEN IN THE PAST IS FORCING ALL OF OUR ANALYSIS TO GO MORE TOWARD A PROBABILISTIC ANALYSIS.

SO IF YOU HAVE AN INTERMITTENT A HUNDRED MEGAWATT INTERMITTENT RESOURCE, WHAT DO YOU COUNT THAT AS? IS IT 50 MEGAWATTS? IS IT A HUNDRED MEGAWATTS? IS IT ZERO MEGAWATTS? WELL, THE BETTER ANSWER IS TO DO A PROBABILISTIC ANALYSIS WHERE YOU LOOK AT ALL A WHOLE RANGE OF, OF POSSIBLE, UH, OUTPUT.

AND, UH, SO YOU'LL SEE THAT INCORPORATED IN MORE AND MORE OF THE ANALYSIS THAT WE'RE GONNA BE DOING, PLANNING AND OPERATIONS AND ANCILLARY SERVICES AND, AND REPORTING.

UH, IT'S ALSO IN OUR ADAGE COORDINATION NOW.

SO ALL THOSE THINGS ARE STARTING TO LEAN MORE ON THAT PROBABILISTIC ANALYSIS.

UH, NUMBER THREE HERE, THE GAS SUPPLY RESTRICTIONS DURING COLD WEATHER, UM, THAT IS SOMEWHAT OUTSIDE OF, OF WHAT WE CAN DO, BUT WE HAVE ESTABLISHED A FIRM FUEL SERVICE AND THAT BASICALLY TAKES THE RISK OUT OF SOME UNITS.

SO THE, THE GAS SUPPLY SCARCITY THAT MAY OCCUR FOR SOME UNITS CAN BE REPLACED WITH A FIRM FUEL SERVICE.

SO THAT'S HELPED.

WE ALSO, UH, TSPS ALSO IDENTIFY GAS SUPPLY LOADS AS CRITICAL AND EXCLUDE THEM AT LEAST FROM THE INITIAL LOAD SHED ROTATIONS.

THAT WAS A, UH, A PROBLEM THAT, UH, WE HAD DURING WINTER STORM UY, THAT'S, THAT'S BEEN CORRECTED, UM, PARTICIPATION IN THE GAS ELECTRIC WORKING GROUP AND THE TEXAS ENERGY RELIABILITY COUNCIL, THE TURK GROUP.

AND SO WE ACTIVELY PARTICIPATE IN THOSE GROUPS AS WELL.

AND THOSE GROUPS HELP BRIDGE THE GAP BETWEEN THE ELECTRIC AND GAS, UM, INTEGRATION OF LARGE LOADS.

UM, SO LIKE I SAID BEFORE, WE'VE ESTABLISHED THIS LARGE LOAD CONNECTION PROCESS IN, IN MARCH OF 2022.

SB SIX GIVES US SOME NEW TOOLS AND, UH, WE'RE ALSO ENGAGED WITH, WITH NERC AND, AND OTHER RESEARCH INSTITUTES TO, UH, TO MAKE SURE

[01:45:01]

WE UNDERSTAND ALL THE EMERGING ISSUES.

AND FINALLY, THE IBR RIDE THROUGH SYSTEM DISTURBANCES CONTINUE, UM, THE NOER 2 45 PROCESS, LIKE I'VE SAID BEFORE, AND JUST AN INCREASED EMPHASIS ON BOTH REGIONAL AND SYS AND REGIONAL AND SYSTEM STABILITY, STABILITY ANALYSIS.

UM, WE DO A LOT MORE STABILITY ANALYSIS, ESPECIALLY ACROSS A REGION NOW THAN WE, THAN WE'VE EVER DONE.

AND WE'LL HAVE TO CONTINUE DOING THAT.

SO THAT'S A PUT A LITTLE CHART TOGETHER HERE, SUMMARY OF THE REPORTED ISSUES AND WHICH OF THOSE REPORTS ACTUALLY REPORTED THOSE ISSUES.

SO I THINK THE KEY TAKEAWAY HERE IS THAT WE'VE GOT INITIATIVES THAT ADDRESS ALL OF THOSE ISSUES AND, UH, IF YOU'VE GOT QUESTIONS, BE GLAD TO ANSWER 'EM.

UH, THANK YOU WOODY.

GO BACK, UH, ONE SLIDE TO SLIDE EIGHT AND, UH, AT THE BOTTOM YOU TALKED ABOUT THAT THE IBR RIDE THROUGH DISTURBANCES CONTINUE.

CAN YOU QUANTIFY THAT FOR US? UH, TYPICAL MONTH, WEEKDAY.

SO WE CONTINUE TO SEE, UM, IBR RIDE THROUGH ISSUES WHERE YOU'LL HAVE A FAULT ON THE SYSTEM AND I BS IN, IN THE SURROUNDING AREA, WILL WILL DROP OFFLINE.

UM, THERE IS A CHART OUT THERE.

I DON'T KNOW IF DAN, DO YOU HAVE THAT IN? IT'S IN THE APPENDIX OF THE SYSTEM OPERATIONS REPORT.

THAT I'M ABOUT TO GO OVER.

SO THAT SHOWS YOU THE FREQUENCY.

AND WHAT'S INTERESTING, WELL, I'LL INDULGE A LITTLE BIT HERE.

WHAT'S INTERESTING IS YOU'LL SEE GENERATION DROP OFF LINE FOR A FAULT, BUT YOU'LL ALSO SEE LARGE LOADS DROP OFFLINE FOR A FAULT.

AND IF YOU PUT THOSE TWO CHARTS TOGETHER, YOU'LL SEE LOSS OF LOAD, LOSS OF GENERATION, AND THEY JUST ALTERNATE BACK AND FORTH AND, UH, IT'S GONNA BE A, UH, SOMETHING WE'RE GONNA HAVE TO DEAL WITH IN, IN THE GRID IN, IN THE WAY IT'S CHANGING.

THE NEXT ITEM IS AGENDA ITEM 15, RECOMMENDATION REGARDING THE 2026 ERCOT METHODOLOGIES FOR DETERMINING MINIMUM ANCILLARY SERVICE REQUIREMENTS.

ANY OTHER QUESTIONS FOR WOODY? JULIE WOODY, THIS IS A GREAT LIST OF ACTIVITIES, UH, IMPROVING RELIABILITY.

YOU MENTIONED THE RELIABILITY STANDARD IN 2026.

WHAT, WHAT MONTH WILL WE BE TAKING A LOOK AT THE RELIABILITY STANDARD? SO WE'LL START WORKING WITH THE PUC ON THAT IN DECEMBER OF THIS YEAR AND UH, THE PROCESS WILL WORK ITS WAY MOSTLY THROUGH 2026, I THINK.

CHRISTIE, WHAT'S THE SURE.

SO WE, UH, HAVE WORKED WITH COMMISSION STAFF ON THE TIMELINE AND SO WHAT'LL HAPPEN IS WE'RE CURRENTLY WORKING RIGHT NOW AND WHAT OUR ASSUMPTIONS WOULD BE IN THE MODELS THAT WILL GO INTO THE RELIABILITY STANDARD PART OF THE COMMISSION RULE IS THAT THE COMMISSIONERS HAVE TO REVIEW THE ASSUMPTIONS WE'RE MAKING AND WE NEED TO GET AGREEMENT FROM THEM.

SO WE'LL BE FILING THAT WITH THE COMMISSION IN JANUARY.

THEY'LL HAVE A TIME TO REVIEW AND PROVIDE US INPUT, THEN WE'LL GO THROUGH OUR MODELING EXERCISES.

UM, IF WE COME UP AND DETERMINE THAT WE ARE SHORT OF THE RELIABILITY STANDARD, THEN AT ERCOT WE'LL HAVE TO WORK TO PROVIDE SOME OPTIONS BACK TO THE COMMISSION ON, UM, MARKET DRIVERS.

THEY COULD ADJUST TO HELP US GET BACK TO THE RELIABILITY STANDARD.

AND SO IS WHAT HE SAID THAT'LL TAKE THROUGHOUT ALL OF NEXT YEAR, TOWARDS THE END OF, TOWARDS THE END OF THE YEAR BEFORE, UM, I WOULD EXPECT ANY FINAL DECISIONS OUT OF THE COMMISSION.

UH, SO ANY OTHER QUESTIONS I CAN DEFLECT TO SOMEONE ELSE? .

ALRIGHT, THANK YOU.

THANKS WOODY.

[15. Recommendation regarding 2026 ERCOT Methodologies for Determining Minimum Ancillary Service Requirements]

UH, WE PREVIEWED THIS, UH, ERCOT PROPOSED METHODOLOGIES AT THE JUNE BOARD MEETING, AND NOW WE'RE HERE TO VOTE ON THE PROPOSED METHODOLOGY.

THE MEETING MATERIALS INCLUDE JOINT CONSUMER COMMENTS AND THERE WERE SEVEN NO VOTES.

ATTACK, ATTACK, ENDORSE THE ERCOT STAFF RECOMMENDATION.

UH, DAN WOODFIN IS GONNA COME BACK TO THE PODIUM ALONG WITH, UH, NIKITA MAG MAGO AND THEY'RE GONNA PRESENT STAFF PROPOSAL AND THEN WE'LL ENTERTAIN THE DISCUSSION.

YEAH, SO ACTUALLY BILL, UH, IKA ISS GONNA GIVE THE PRESENTATION.

UH, I WANT TO INTRODUCE YOU TO HER BECAUSE I THINK THIS HER FIRST TIME PRESENTING TO THIS BOARD.

MAKE HAVE TO BE APPROVED BY THE PUC BEFORE WE IMPLEMENT THEM.

SHE'S THE NEW THERE GO.

I'M, I'M MURDERED YOUR NAMES, I'M SORRY.

IT'S ALL GOOD.

NO WORRIES.

SHE, SHE'S, SHE'S THE NEW DIRECTOR OF BALANCING OPERATIONS PLANNING, ALTHOUGH SHE'S NEW TO THAT ROLE, SHE'S BEEN DOING THE WORK AND HAS BEEN AT ERCOT FOR 17 YEARS, SO, OKAY.

SHE'S AN EXPERT THERE.

UH, SO THIS PARTICULAR TOPIC HERE WITH, WITH THIS SLIDE DECK, WE WILL PRESENT TO YOU A SUMMARY OF THE CHANGES OR SUMMARY OF THE METHODOLOGY WE ARE PROPOSING TO USE FOR COMPUTING ANCILLARY SERVICE REQUIREMENTS FOR 2026.

UM, THE CONTEXT HERE IS ANY, UH, METHODOLOGY CHANGE WE PROPOSE REQUIRES THE BOARD TO REVIEW AND RECOMMEND APPROVAL OF THE SAME.

AND ANY RECOMMENDATIONS YOU

[01:50:01]

M IN THE SLIDE DECK TODAY, WHEN WE START TALKING ABOUT THE METHODOLOGY, THERE IS ESSENTIALLY TWO PRIMARY ANCILLARY SERVICES, UH, CALLED CONTINGENCY RESERVE AND NONS SPEND THAT WE ARE FOCUSED MOST OF OUR ATTENTION ON THAT IS WHERE THE BULK OF THE CHANGES THAT WE ARE PROPOSING APPLY.

UM, AND THIS IS THE PLACE WHERE WE ARE LOOKING TO WORK UP WORK IN ONE OF THE FINDINGS THAT CAME OUT OF THE 2024 ANCILLARY SERVICE STUDY THAT THE PUCT CONDUCTED.

WE WILL ALSO TALK A LITTLE BIT ABOUT REGULATION AND RESPONSIVE RESERVE AT THE TAIL.

SO WITH THAT, I'LL GET, I'LL GET STARTED.

LEMME SEE.

HOW DO I MOVE? OH, HERE WE GO.

OKAY, PERFECT.

SO STARTING OFF WITH A BACKGROUND.

UH, ANCILLARY SERVICES ARE NEEDED TO MAINTAIN RELIABILITY.

WHEN SYSTEM EXPERIENCES FORECAST ERRORS OR LOSS OF SUPPLY, DRIVERS THAT INFLUENCE THE QUANTITIES THAT WE CALCULATE INCLUDE MEGAWATTS OF, UH, INTERMITTENT RESOURCES THAT ARE SERVING LOAD.

WHAT IS THE ACCURACY OF OUR LOAD WIND SOLAR FORECAST? WHAT IS THE PROBABILITY OF SUPPLY LOSS SYSTEM INERTIA THAT WE TYPICALLY SEE DURING THOSE HOURS? WHAT IS THE SIZE OF OUR LARGEST RESOURCE? AND SO ON.

IN GENERAL, THE PERCENTAGE OF LOAD THAT IS SERVED AS THE PERCENTAGE OF LOAD THAT IS SERVED BY INTERMITTENT RESOURCES ARE INCREASING.

THE NEED FOR HAVING MORE ANCILLARY SERVICES TO MAINTAIN THE LIABILITY IS ALSO, UH, INCREASING.

NOW, UH, YOU ALL HAVE HAVE BEEN FOLLOWING WHAT AIRCO HAS BEEN DOING IN THIS SPACE, AND WE CONTINUOUSLY ARE WORKING ON IMPROVING TOOLS, UH, THAT WE HAVE FOR MANAGING VARIABILITY AND UNCERTAINTY CLOSER TO REAL TIME.

UH, THESE TOOL IMPROVEMENTS ARE, UH, VERY FREQUENTLY SHOW UP IN THE METHODOLOGY UPDATES THAT WE MAKE WHERE WE LOOK TO ALIGN THOSE METHODOLOGIES AND MAKE SURE THEY'RE CAPTURING THE RIGHT PROFILE OF RISK THAT WE SEE IN 2026.

WHAT'S, UH, WHAT'S NEW OR DIFFERENT IS WE ARE REVIS, WE ARE REVISING THE ECRS AND NON SPEN DETERMINATION METHODOLOGY TO USE A PROBABILISTIC MODEL THAT WILL ALLOW US TO MORE PRECISELY MODEL FORCED OUTAGES AND, UH, NET LOAD FORECAST ERRORS, AND ALSO TAKE INTO ACCOUNT THE OPERATIONAL REQUIREMENTS THAT WE USE TO OPERATE, UH, THE GRID.

NOW, JEFF OUGH, WHEN HE WAS HERE LAST, UH, UH, AT YOUR LAST MEETING, UH, TRY TO INTRODUCE THIS TOPIC AND HELP, UH, UH, SET THE STAGE ON WHY, WHAT CHANGES WE ARE TRYING TO MAKE.

I'LL TRY TO GET INTO THE DETAILS IN THE NEXT FEW SLIDES.

NOW, SOMETHING TO KEEP IN MIND IS, AS, AS YOU SEE, THE MATERIALS AND THE DATA OVERALL ANCILLARY SERVICE QUANTITIES IN 2026 ARE INCREASING.

NOW THIS IS BECAUSE EVEN THOUGH WITH THE PROBABILISTIC METHOD WE CAN MODEL THE RISKS MORE PRECISELY, FORCED OUTAGES STILL OCCUR, FORECAST ERROR STILL OCCUR.

IF YOU LOOK AT OUR, THE DATA THAT WE PUBLISHED, THE MEAN OF OUR FORECAST ERROR IS FAIRLY TIGHT.

WE ARE FAIRLY CLOSE, NOT INCREASING AS STEADILY, BUT THE STANDARD DEVIATION OF OUR UNDER FORECAST ERROR IS INCREASING.

AND WHAT THAT, WHAT THAT ESSENTIALLY SAYS IS UNCERTAINTY IN OUR UNDER FORECASTING IS INCREASING, AND THAT UNCERTAINTY IS TO BE COVERED BY THE ANCILLARY SERVICES THAT WE PROCURE.

UM, SO WITH THAT SAID, LET'S LOOK ON, SO WHAT I'LL DO HERE IS I'VE STARTED BY SHARING WITH YOU A, A GRAPHIC VIEW OF THE METHODOLOGY THAT WE ARE PROPOSING TO USE TO COMPUTE ECRS AND NON SPEN.

THESE ARE THE UNCERTAINTY RESERVES THAT WE BUY.

ONE HAS A 10 MINUTE RESPONSE CAPABILITY AND THE OTHER HAS 30 MINUTE.

THE CENTRAL ASPECT OF THE METHODOLOGY IS A MONTE CARLO OPTIMIZATION.

THIS MONTE CARLO OPTIMIZATION USES HISTORIC, UH, RISK THAT WE'VE SEEN IN A SIX R TIMEFRAME.

UH, THIS RISK INCLUDES FORECAST ERRORS, SO OF LOAD WIND AND SOLAR DISIN RISK INCLUDES ACCUMULATED FORCED OUTAGES OVER A SIX HOUR PERIOD.

UH, THE OPTIMIZATION IS ALSO AWARE OF AN ADDITIONAL ASPECT.

WE CALL IT RISK CREDIT.

THIS RISK CREDIT IS ESSENTIALLY, UH, ACKNOWLEDGING THAT WHEN WE OPERATE IN REAL TIME, WE WILL HAVE RESOURCES THAT HAVE CAPA CAPABILITY OR CAPACITY ONLINE THAT IS NOT BEING USED TO SERVE LOAD OR BEING RESERVED.

SO IT'S EXCESS ROOM OR HEADROOM THAT IS AVAILABLE ON RESOURCES.

SO IN THE METHODOLOGY WE MAKE, UH, A WAY OF THE, THE ENGINE AWARE OF WHAT WE CALL AS HISTORIC HEADROOM.

THAT IS CAPACITY THAT CAN BE RAMPED TO WITHIN 30 MINUTES AND SUSTAINED FOR FOUR HOURS.

AND THIS HEADROOM GETS APPLIED

[01:55:01]

AS A CREDIT.

SO IT REDUCES THE RISK THAT RESERVES HAVE TO COVER, UH, AS FAR AS THE METHODOLOGY IS CONCERNED.

UH, THE SECOND PIECE, THE SECOND ASPECT OF THE METHODOLOGY IS A CONVERGENCE CRITERIA.

SO THIS IS ESSENTIALLY THE BRAINS OF THE, UH, UH, THIS AND THE MONTE CARLO WORK HAND IN HAND IN SETTING UP THE REQUIREMENT QUANTITIES.

AND WHAT THE CONVERGENCE CRITERIA HELPS.

THE, UH, THE METHOD THE ENGINE DO IS IDENTIFY A SET OF RESERVES THAT WILL, UH, UH, RESULT IN A ONE IN 10 YEAR PROBABILITY OF OPERATING MARGIN, DROPPING BELOW THE SUM OF REGULATION AND RRS WE PROCURE OR THE WATCH THRESHOLD, WHICHEVER IS GREATER.

SO THIS IS, UH, THIS IS THE CONVERGENCE CRITERIA THAT IS NOW AWARE OF WHAT, UH, WHAT SORT OF RESERVES WE NEED TO BUY TO MAINTAIN OUR OPERATING POSTURE, OF AVOIDING, UH, OF OPERATING SUCH THAT ON, ON NONS SCARCITY DAYS, WE HAVE SUFFICIENT RESERVES.

SO WE DON'T ENTER A WATCH TYPE CONDITION.

AND IT IS ALSO AWARE OF OPERATING CRITERIA OF ENSURING WE HAVE RESERVES SO WE CAN CONTINUOUSLY MEET OUR NERC REQUIREMENTS TO BALANCE SUPPLY AND DEMAND AND MAINTAIN FREQUENCY CONTROL.

THE OUTPUTS YOU'LL SEE ARE SHOWN IN A GREEN BOX RIGHT HERE IN, IN THIS GRAPHIC.

SO ONCE WE DID, ONCE THE METHOD, ONCE THE OPTIMIZATION COMPUTES REQUIREMENTS, WE THEN SPLIT THEM UP INTO ECRS AND NONS SPIN REQUIREMENTS SEPARATELY.

THE ECRS REQUIREMENTS TO AN ADDITIONAL STEP.

AND, UH, AND THAT ADDITIONAL STEP IS TO ENSURE THAT THE ASSIGN THE QUANTITIES WE ASSIGN TO ECRS ARE SUFFICIENT TO COVER THE MEGAWATTS WE NEED TO RECOVER FROM A FREQUENCY EVENT.

IF WE WERE TO HAVE A SUPPLY TRIP OF OUR, OF OUR, OF OUR UNIT, WE NEED TO BE ABLE TO RESTORE FREQUENCY BACK TO 60 HERTZ.

SO THE, SO THAT PARTICULAR CRITERIA, WE CALL IT, UH, ECRS NEEDS FOR FREQUENCY RECOVERY IS ALSO BAKED INTO THE, INTO THE OUTPUT OF THE TOOL.

OKAY, HERE WE GO.

SO, SO WE SHARE ONE MORE, UH, PIECE OF INFORMATION, AT LEAST AS WE WERE BUILDING THE MODEL.

WE STARTED LOOKING AT WHAT ARE THE BENEFITS OF HAVING A PROBABILISTIC APPROACH.

AND IN THIS PARTICULAR GRAPHIC, WHAT WE DO IS WE, UH, WE LOOK AT THE RISK, UH, WE RANK THE RISK IN EVERY HOUR FOR WHICH THE OPTIMIZATION WAS RUN.

RANK ONE IS FOR THE HOURS WITH THE HIGHEST RISK, UH, AND THE RANK TWO 50 AS AN EXAMPLE.

HERE IS A RANK FOR THE LOWER RISK.

UH, AND THEN SO WE'VE PLOT ON Y ON X AXIS ARE ALL THE RANKS THAT, UH, OF THE, UH, OF THE RISKY HOURS.

AND ON THE Y AXIS, WHAT WE DID IS WE COMPARED THE QUANTITIES THAT THE PROBABILISTIC METHOD PRODUCED FOR THOSE HOURS WITH THE CURRENT METHOD THAT WAS APPROVED LAST YEAR.

AND ESSENTIALLY WHAT YOU'LL SEE, POSITIVE NUMBER WILL MEAN HIGHER REQUIREMENT, UH, ASSIGNED A NEGATIVE NUMBER WILL MEAN LOWER, UH, REQUIREMENT ASSIGNED.

AND IN, IN THIS, THIS GRAPHIC IS TRYING TO POINT OUT THAT THE HOURS WHICH ARE RISKY, THEY RANK, THEY THEY RANK, UH, THEY HAVE THE RANK OF, UH, LOWER RANK IN THE, ON THE X AXIS HAVE A HIGHER REQUIREMENT.

SO THE PROBABILISTIC METHOD IS ALLOWING US TO TAILOR THE REQUIREMENTS SO THAT THE HOURS WITH THE HIGHEST RISK HAVE THE MOST QUANTITIES AND THE HOURS WITH THE LOWER RISK DON'T HAVE AS MUCH.

UH, CAN I ASK A QUESTION? YES, PLEASE.

DOES THAT NET OUT TO ZERO OR SOME POSITIVE OR NEGATIVE NUMBER? IT NET DOESN'T NET OUT TO ZERO.

UH, OVERALL, UH, IT DOESN'T NET OUT TO ZERO.

MAYBE I'LL LEAVE IT THERE, BUT I WILL SHOW YOU HOW THE QUANTITY RANGES LOOK LIKE HERE IN A LITTLE BIT.

UH, I HAVE ONE GRAPHIC WHICH SHOWS YOU AN OVERALL AVERAGE COMPARISON.

AVERAGE QUANTITIES ARE SIMILAR, TOTALS ARE SLIGHTLY HIGHER IF I LOOK AT STATISTICAL VERSUS, UH, THIS, UH, PROBABILISTIC.

UM, AND SO THIS IS ONE GRAPHIC AND WHERE HERE WHAT WE TRY TO DO IS WE FOCUS ON THE TWO PRODUCTS SEPARATELY.

SO ECRS AND NONS SPEND.

BUT YOU'RE LOOKING AT HOW THE REQUIREMENTS ARE IMPACTED OR CHANGE IN 2026 SEPARATELY.

SO ONCE AGAIN, TO RECAP, ECRS IS A RESERVE, WHICH HAS A 10 MINUTE RESPONSE CAPABILITY, AND IT IS USED TO RESTORE FREQUENCY FOLLOWING A UNIT TRIP AND PROVIDE CAPACITY FOR INTRA HOUR FORECAST ERROR.

THE GRAPHIC HERE IN A BO UH, IN FRONT OF YOU, UH, ON YOUR, ON YOUR RIGHT IS SHOWING, UH, THE COMPARISON OF THE HOURLY ECRS QUANTITY.

THE RANGE IS IN A BLUE BAR AND THE AVERAGES ARE ORANGE DIAMONDS.

THERE ARE THREE COMPARATIVES.

THE, UH, ON THE X AXIS, THE FIRST, UH, SET OF BARS CORRESPOND TO THE RANGE AND AVERAGE FOR ECRS IN 2025.

SO THIS CURRENT YEAR, THE MIDDLE BARS, UH, SHOW YOU WHAT THE RANGE AND AVERAGE LOOK LIKE WITH THE

[02:00:01]

PROPOSED METHODOLOGY.

SO THIS IS THE PROBABILISTIC METHODOLOGY FOR 2026, AND THE THE THIRD BAR SHOWS THE SAME INFORMATION, BUT THIS TIME WE'VE COMPUTED IT USING THE METHOD THAT WAS APPROVED LAST DECEMBER.

SO SAME METHOD THAT 2025 QUANTITIES WERE, UH, COMPUTED ON AVERAGES, YOU WILL NOTICE, UM, THERE IS A SLIGHT INCREASE IN AVERAGE, UM, AND THE RANGE IS ALSO SLIGHTLY, UH, SLIGHTLY HIGHER OVERALL.

IF YOU LOOK AT HOUR BY HOUR, THE PROFILE OF ECRS LOOKS VERY SIMILAR.

HOWEVER, WE HAVE BEEN WITH THE PROBABILISTIC METHOD, ABLE TO TAILOR THOSE QUANTITIES BETTER TO THE HOURS WHERE THE RISK IS HIGH.

NOW, WE SHARE SIMILAR INFORMATION FOR NONS SPIN, WHICH, UH, WITH YOU ALSO.

AND AGAIN, UH, UH, TO RECAP, NONS SPIN IS RESERVES THAT CAN RESPOND IN 30 MINUTES, AND THEY ARE USED TO PROVIDE CAPACITY FOR LONGER DURATION.

SO SUSTAINED, UH, NET LOAD FORECAST ERRORS OR FOR UNIT TRIPS, TYPE EVENTS, UH, SIMILAR THREE COMPARATIVE ARE ALSO WE'VE SHARED FOR NONS SPEND AS WELL.

UH, IN CASE OF NONS SPEND, YOU'LL NOTICE AGAIN, UH, THE AVERAGE QUANTITIES LOOK FAIRLY SIMILAR TO 2025.

THERE'S A SLIGHT CHANGE, BUT THE, THE BIGGER CHANGES IN THE RANGE, UH, OF QUANTITIES.

UM, ALL RIGHT, SO I'LL MOVE ON.

NOW, THE, AS FAR AS THE PROBABILISTIC METHOD GOES, THEREFORE THREE PARTICULAR AREAS WHERE WE HEARD FEEDBACK, AND AS THE DISCUSSION TODAY PROGRESSES, YOU WILL HEAR FEEDBACK, YOU WILL HEAR THOSE.

ALSO.

THE THREE PRIMARY TOPICS ARE, FIRST, HOW FAR, UH, SHOULD WE LOOK AHEAD WHEN WE LOOK AT THE FORECAST ERRORS THAT WE ARE PUTTING INTO THE PROBABILISTIC METHOD, AKA HAS RECOMMENDED USING SIX R.

UH, THAT IS ANCHORED ON, UH, THE TYPE OF, UH, LEAD TIMES WE SEE IN THE UNITS THAT WE'VE HISTORICALLY HAD TO USE UNIT COMMITMENT TYPE INSTRUCTIONS ON.

AND, AND THE, AND THE, AND THE, THE IMM AND THE OTHERS HAVE RECOMMENDED THREE, OR SOMETIMES EVEN AS LOW AS ONE.

NOW, OUR PERSPECTIVE ON CHANGING, UH, HOW THE, HOW FAR WE LOOK AHEAD, LIKE I MENTIONED, UH, IT LOWERING THE LOOK AHEAD PERIOD WILL LIKELY IMPACT THE OVERALL QUANTITIES OF ECRS AND NONS SPIN THAT WE PROCURE, BUT IT COULD INCREASE THE NUMBER OF ROCKS WE MAY NEED TO MAINTAIN, UH, UH, TO MAINTAIN COMPLIANCE WITH THE OPERATING GUIDANCE WE'VE BEEN GIVEN.

THE SECOND TOPIC IS WHAT LEVEL OF RISK SHOULD A CART TRY TO AVOID BY, BY PROCURING A, IS IT A WATCH, IS IT A LOAD SHED OR, OR NOT? SO SOMETHING TO NOTE HERE IS, UH, THERE ARE TWO PIECES THAT PLAY INTO THE CONVERGENCE CRITERIA.

ONE IS THE OPERATING POLICY OF AVOIDING WATCHES, AND THE OTHER IS ENSURING WE HAVE SUFFICIENT RESERVES TO, TO RECOVER OUR FREQUENCY RESERVES REGULATION AND RRS.

THAT SECOND ASPECT IS DRIVEN MORE SO BY OUR FOR, BY THE NEED TO ENSURE WE CAN STAY IN COMPLIANCE WITH NERC REQUIREMENTS AROUND FREQUENCY ON A CONTINUOUS BASIS.

AND WHAT HAPPENS IS, BECAUSE THERE ARE TWO FACTORS, AND WE USE LARGER OF OR GREATER OF TWO, WHICHEVER, IS THE MORE BINDING AS THE REQUIRE, AS THE, AS THE CONVERGENCE TO BASE THE REQUIREMENTS ON WA, THE, THE WATCH THRESHOLD, UH, PLAYS A ROLE IN SETTING QUANTITIES IN ABOUT 1% OF THE HOURS.

IN ALL OTHER CASES, WE ARE SETTING THE REQUIREMENTS BASED OFF OF THE AMOUNT OF MEGAWATTS NEEDED TO RESTORE REGULATION AND RRS.

SO BY CHANGING WATCH TO, UH, SOMETHING LOWER, IT'S ONLY THOSE 1% HOURS THAT ARE REALLY IMPACTED FROM A QUANTITY PERSPECTIVE.

UM, AND OVERALL, THERE'S A TOTAL IMPACT OF ABOUT 0.3% REDUCTION COMPARED TO, UH, THE, THE WATCH.

SO AGAIN, KEEP IN, BEAR IN MIND THE, THE REDUCTION OR THE CHANGE IN QUANTITIES, UH, DOESN'T, UH, DOESN'T MEAN THAT THE, THE RISK IS CHANGING.

IT IS SIMPLY INDICATING THAT THE NEED TO RESTORE FREQUENCY IS TAKING MORE PROMINENCE IN THOSE HOURS.

THE LAST ASPECT HERE IS, UH, THE LAST QUESTION OR THE LAST TOPIC THAT YOU'LL HEAR CONVERSATION AROUND IS HOW MUCH SHOULD WE DISCOUNT THE AS QUANTITIES FOR A PARTICULAR TIME PERIOD BASED ON THE EXTRA HEADROOM THAT RESOURCES HAVE AVAILABLE? AND THERE ALSO, THERE'S A VARIETY OF OPINIONS.

NOW, ONE, IN THIS CASE, WHAT IS IMPORTANT TO KEEP IN MIND IS RTCB THAT IS GOING TO BE IMPLEMENTED IN DECEMBER AHEAD OF 2026, UH, IS LIKELY GOING TO IMPROVE THE EFFICIENCY OF UNIT COMMITMENTS THAT WE SEE.

SO COUNTING ON A HUNDRED PERCENT OF HISTORIC HEADROOM MAY NOT BE PRUDENT.

WE MAY BE COUNT, UH, WE MAY BE OVER COUNTING ON WHAT'S AVAILABLE.

SO ERCOT, UH, ARD DOES THINK IT IS OKAY TO TAKE A MODERATE CREDIT, AND WE HAVE PROPOSED TAKING A CREDIT WHERE YOU TAKE A HIGHER CREDIT IN THE NIGHT BASED OFF OF HEADROOM THAT'S AVAILABLE AND LOWER

[02:05:01]

CREDIT DURING THE DAYTIME, PRIMARILY BECAUSE YES, WE RECOGNIZE RTC MAY CHANGE THE AMOUNT OF HEADROOM THAT'S AVAILABLE, BUT WE DO THINK THIS, THIS PATTERN OR THE PROFILE OF HAVING MORE HEADROOM AVAILABLE IN THE NIGHT VERSUS LESS DURING THE DAY WILL CONTINUE.

SO THAT'S AT LEAST, UH, BEEN OUR PERSPECTIVE ON IT, ON, ON THIS PARTICULAR, UH, RESPONSE.

NOW, THE KEY TAKEAWAY I WANT TO LEAVE YOU WITH FROM THIS SLIDE IS BUYING MORE AND A NONS SPEND, UH, AND ECRS RATHER THAN R WAS BASED OFF OF A POLICY GUIDANCE THAT, UH, HAS PREVIOUSLY RECEIVED.

NOW, A AS YOU HEAR THE CONVERSATION TODAY, WHEN THE, WHEN THE IMM RECOMMENDS USING A ONE R RISK ANALYSIS, UH, UH, AS A, UH, OR LOOKING AT HOW THE RISK PROFILE OF THE SYSTEM LOOKS BY, BY USING ONE HOUR AHEAD FORECAST OR ONE HOUR AHEAD RISK OUTLOOK, IT DOESN'T SEEM TO RECOGNIZE THAT WE, UH, WHEN OPERATING IN REAL TIME, THERE WILL BE CONDITIONS WHEN THE LEAD TIME OF UNITS THAT ARE AVAILABLE ARE SIX HOURS AWAY OR MORE HOURS AWAY.

AND ALSO IT IGNORES THAT WE NEED TO BE ABLE TO PREPARE TO, UH, TO RE, UH, FOR OTHER ADDITIONAL TRIPS THAT MAY SHOW UP FOLLOWING AN EVENT.

UM, SO THOSE ARE SOME THINGS TO KEEP IN MIND AS YOU HEAR THOSE CONVERSATIONS THAT, UH, THAT OPERATING, UH, CONDITIONS VARY FROM DAY TO DAY.

AND, UH, AND THIS METHODOLOGY THAT IS OUT HERE IS LOOKING TO CAPTURE RISKS MORE APPROPRIATELY.

I WILL SWITCH CONTEXT AND SPEND SOME TIME TALKING ABOUT REGULATION AND RRS.

UM, AS I MENTIONED, UH, THERE IS VERY MINIMAL CHANGES WE ARE MAKING ON THE FREQUENCY SIDE OF, UH, UH, OF THE CALCULATIONS THAT WE DO.

UH, REGULATION QUANTITIES ARE SET BASED OFF OF FORECAST ERRORS IN OUR INTRA HOUR FORECAST.

SO THIS IS THE FIVE MINUTE FORECAST THAT WE USE FOR DISPATCH.

WE ARE MAKING A SMALL CHANGE IN IT.

THERE IS A, A COMPONENT OF REGULATION THAT IS BEING REMOVED WITH RTC, SO WE ARE REMOVING ITS ACCOUNTING, UH, FROM THE METHODOLOGY.

NOW, FROM AN OUTCOMES PERSPECTIVE, WHAT DO 2026 QUANTITIES FOR REGULATION LOOK LIKE? IN GENERAL, WE ARE SEEING AN INCREASE IN THE REGULATION QUANTITIES NEEDED FOR 2026, AND THIS IS MOSTLY DRIVEN BY INCREASE IN THE FORECAST ERROR THAT WE SEE IN THAT SHORTER TIMEFRAME, AND MORE SO DRIVEN BY A CHANGE IN OUR SOLAR, UH, PROFILE.

AS AN EXAMPLE, SIMILAR OBSERVATIONS APPLY BOTH FOR REGULATION UP AND REGULATION DOWN QUANTITIES ON RESPONSIVE RESERVE.

SO THIS IS THE CAPACITY THAT WE USE TO ARREST FREQUENCY.

WHEN THERE ARE LARGE NET TRIPS, UH, THERE IS A MINOR CHANGE THAT WE TEND TO DO ON AN ANNUAL BASIS ALMOST, AND THAT ANNUAL AND THAT CHANGES TO ALIGN THE MINIMUM AMOUNT OF FREQUENCY RESPONSE THAT WE PROCURE FROM PRIMARY FREQUENCY RESPONSE.

UH, NERC HAS UPDATED ITS ANALYSIS AND BASED OFF OF NERS NEW ANALYSIS, WE ARE ALSO RECOMMENDING A SLIGHT INCREASE, UH, IN THAT MINIMUM REQUIREMENT.

THIS IS A ROUTINE UPDATE.

LIKE I MENTIONED.

WE TEND TO DO IT ALMOST ON AN ANNUAL BASIS.

THE QUANTITIES OF RESPONSIVE RESERVE IN 2026 LOOK VERY SIMILAR TO 2025.

UH, THERE IS A VERY MINOR, UH, CHANGE IN, UH, RANGE.

THE AVERAGES ARE VERY SIMILAR.

UM, THE, IF YOU LOOK ON AN HOUR TO HOUR BASIS, THERE ARE CERTAIN MONTHS WHERE THE QUANTITIES LOOK SLIGHTLY DIFFERENT, AND THAT'S MOSTLY DRIVEN BY THE OPERATING CONDITIONS ON THOSE, UH, DURING THOSE HOURS.

WITH THAT, I WILL SUMMARIZE THE AS METHODOLOGY.

ONCE AGAIN, WE HAVE REVIEWED, UH, THE, THE AS METHODOLOGY AND ARE PROPOSING SEVERAL CHANGES, 1 1 26 BASED ON, UH, SOME BASED ON THE FINDINGS WE SAW IN THE AS STUDY FORECASTED RESOURCE EXCHANGES AND BETTER ACCOUNTING OF RISKS.

UM, WE ARE REQUESTING A BOARD TO ENDORSE, UH, THE PROPOSED AS METHODOLOGY.

UH, UPON YOUR APPROVAL, WE INTEND TO SEEK PP C'S APPROVAL BEFORE END OF 9 25, SO THAT THIS NEW METHODOLOGY CAN BE AFFECTED IN JANUARY.

AND BEFORE I PAUSE, I'LL LEAVE YOU WITH ONE MORE SLIDE.

NOW, UH, LAST YEAR WE HAD STARTED SHARING A ROADMAP ON HOW WE SEE THE AS METHODOLOGY EVOLVING.

AND, UH, TO GIVE YOU, UH, THIS IS THE PLACE WHERE WE HAD TRIED TO CAPTURE TWO OF THE PRIMARY FINDINGS IN THE AS STUDY.

ONE WAS PROBABILISTIC METHOD, AND SECOND WAS A CONCEPT OF COMPUTING AS QUANTITIES DYNAMICALLY.

SO INSTEAD OF SETTING ALL REQUIREMENTS OR ALL MINIMUM REQUIREMENTS IN DECEMBER, AND THEN MAKING A VERY HANDFUL OF CHANGES WITHIN CLOSER TO REAL TIME, THE DYNAMIC APPROACH WILL ALLOW US TO SET QUANTITIES CLOSER TO REAL TIME BASED OFF OF FORECASTED DATA.

SO, AT LEAST LAST YEAR IN OUR ROADMAP, WE WERE THINKING THAT, UH, UH, FOR 2027, WE COULD CONSIDER, UH, TRANSITIONING A METHODOLOGY THAT TRANSITIONS

[02:10:01]

US TO THE DYNAMIC AS METHOD THIS YEAR, UH, UH, IN, IN, IN WORKING THROUGH THE PROBABILISTIC METHOD AND, AND SEEING THE, THE FEEDBACK WE'VE RECEIVED AND ALSO RECOGNIZING THAT RTC LIKELY WILL HAVE AN IMPACT ON, UH, ON HOW WE LOOK AT, UH, THE, THE METHODOLOGY GOING FORWARD.

WHAT WE ARE PROPOSING TO DO IS A SHIFT, UH, THE DYNAMIC CONSIDERATION OUT BY ONE YEAR.

SO WE WOULD LOOK TO, UH, SET THOSE QU.

WE WOULD LOOK TO USE A DYNAMIC APPROACH IN 2028 AND SPEND, UH, THE, THIS TIME THAT WE'VE GAINED WORKING ON REFINING THE, AN, THE PROBABILISTIC ANNUAL METHODOLOGY MODEL.

FURTHER PROB, UH, WORK ON REFINING THE RISK CRITERIA IN IT AND ALSO LEARN FROM RTC.

SO I'LL PAUSE WITH THAT.

I'M HAPPY TO TAKE ANY QUESTIONS YOU MAY HAVE FOR ME.

THANK YOU NATIKA, A LOT TO, UH, DIGEST AND NATIKA PRESENTATION.

UM, DAN, DO YOU HAVE ANY ADDITIONAL COMMENTS THAT YOU'D LIKE TO ADD? NO, I THINK, YOU KNOW, WE, THE LAST THING THAT SHE TALKED ABOUT THAT WE'RE MOVING THIS OUTTA HERE, THAT'S, THAT STILL COMPORTS WITH THE P C'S ANCILLARY SERVICE.

THEY ACTUALLY WERE WANTING US TO DO THE PROBABILISTIC METHODOLOGY.

I THINK WE'D SETTLED ON 2027 FOR THAT.

SO WE'RE ACTUALLY DOING THAT A YEAR EARLY, BUT THE DYNAMIC PART WAS NOT SUPPOSED TO BE DONE UNTIL 2028.

SO WE'RE STILL ON TARGET FOR THAT.

I SEE.

ALRIGHT, UH, WADE DISCUSSION.

WHO WANTS TO START, HALEY? WELL, I WOULD JUST LIKE TO GET A LITTLE CLARITY ABOUT THE ABSOLUTE AMOUNT OF ANCILLARY SERVICES.

WE'RE TALKING ABOUT THAT THERE, IT'S MOVING FROM $25 AMOUNT TO 26.

CAN SOME SOMEBODY JUST BE REAL SPECIFIC AND SAY HOW MUCH MORE WE'RE ACTUALLY GONNA RECOMMEND SPENDING? I'M, I'M NOT CLEAR ON THE ACTUAL DOLLAR IMPACT TO THE GRID.

GIMME ONE MINUTE.

SO YOU'RE LOOKING TO UNDERSTAND, UH, FROM A QUANTITY PERSPECTIVE, FROM A TOTAL QUANTITY PERSPECTIVE, IF WE COMPARE 2025 QUANTITIES FROM JAN TO JULY WITH WHAT 2026 PROBABILISTIC METHOD WOULD COME UP WITH IT IS A 7.5% INCREASE IN THE TOTAL A REQUIREMENTS THAT YOU WILL SEE.

SO THIS WOULD BE ADDING UP REGULATION, RESPONSIVE ECRS AND NONS SPIN.

UM, UH, AND I THINK YOU WANTED TO KNOW A COST NUMBER AS WELL.

SO THERE WOULD, UH, WE TEND TO USE, AT LEAST WHEN WE DO ESTIMATES ON COST, UH, DIRECTOR, WE TEND TO USE, UH, THE CLEARING PRICE THAT WE SAW IN 2025 AS THE BASIS.

UH, AND AT LEAST WHAT WE ESTIMATE IS, UH, THERE WOULD BE A, UH, IF YOU JUST LOOK AT 2025 AND COMPARE IT WITH 2026, THERE WOULD BE A 12% INCREASE, ALL OF IT.

UH, SO IT'S THE SAME, THE COST IS THE SAME, REALLY WHAT'S CHANGING IS THE QUANTITY.

SO THERE WOULD BE A 12% INCREASE IF YOU APPLY THE SAME COST.

NOW, REC RECOGNIZE IN REAL TIME WHEN RTC COMES IN, THINGS WILL BE DIFFERENT, RIGHT? WE'LL, UH, WE'LL BE USING A NEW NEWER MECHANISM TO CLEAR THE PRICES, THE OFFERS THAT COME IN WILL TAKE INTO ACCOUNT MARKET CONDITIONS AT THAT TIME.

SO, SO THERE WOULD BE OTHER FACTORS THAT PLAY A ROLE IN SETTING THOSE COSTS THAT EVENTUALLY SHOW UP.

BILL, DO, SO OBVIOUSLY THERE'S DIFFERENT PERSPECTIVES ON THIS.

DO WE HAVE A, IS THERE A COST COMPARISON BETWEEN SAY WHAT THE IMM COST SAVINGS COMPARISON BETWEEN WHAT THE IMM IS PROPOSED AND WHAT ERCOT ISS PROPOSING? I, I THINK AT THIS POINT, UH, CHAIRMAN LACSON, WOULD YOU, YEAH, I THINK IT MIGHT BE HELPFUL, JEFF, IF YOU WANT TO COME UP AS WELL.

IMM HAS BEEN MENTIONED A NUMBER OF TIMES, SO I THINK THAT MIGHT BE HELPFUL TO HAVE YOU AS WELL.

SO, MAY I JUST RESPOND BACK? I WE DON'T HAVE ESTIMATES, AT LEAST ON OUR END FROM THE, UH, FROM WHAT THE IMPACT TO QUANTITIES WOULD BE IF WE CHANGE THE LOOK AHEAD.

BUT IF YOU, YOU WERE TO STRICTLY CHANGE THE CRITERIA FROM A WATCH TO A EEA ONE, UH, THE QUANTITIES WOULD REDUCE THE, THE NET REDUCTION YOU, IF YOU COMPARE PROBABILISTIC NOW TO THE EEA METHOD FROM WATCH VERSUS EEA WOULD BE A 0.3% REDUCTION IN THE TOTAL QUANTITIES.

AND LIKE I SAID, THAT THE REASON WHY THAT HAPPENS IS THERE ARE ONLY ABOUT A 1% OF THE HOURS THAT ARE IMPACTED BY THE CHANGE FROM WATCH TO EEA.

GOT IT.

SO I'LL LEAVE IT AT THAT.

UH, CHAIRMAN GLEASON HAS INVITED JEFF OR IAM UP TO, UH, PRESENT HIS, UH, FEEDBACK ON THE AS AND I WANT TO SAY CONSERVATIVE OPERATIONS,

[02:15:01]

UH, DISCUSSION.

UH, THANK YOU.

QUANTITY, THE RESERVE, THE SHORTAGE PRICING RESERVE MODEL WILL NOT PRICE IT.

SO JEFF MCDONALD, DIRECTOR OF IMM, UH, AND I'LL WALK THROUGH MY SLIDES FAIRLY QUICKLY.

I ALSO INCLUDED A MEMO WHICH WE'D PREPARED FOR THE STAKEHOLDER PROCESS.

SO, UM, AND I WON'T COVER THE MEMO, BUT I'M HAPPY TO ANSWER ANY QUESTIONS.

SO, UH, AND I'LL TRY TO GO THROUGH THESE PRETTY BRIEFLY.

I KNOW IT WAS A SHORT DECK.

EVERYONE HAD A CHANCE TO LOOK AT 'EM.

I MIGHT FOCUS MORE ON JUST THE CHARTS AND PROVIDE SOME EXPLANATION THERE.

UM, I, I, I WANTED TO START BY SAYING I DO APPRECIATE THE SITUATION THAT ERCOT HAS BEEN PLACED IN WITH A SORT OF UNWRITTEN CONSERVATIVE OPERATIONS DIRECTIVE THAT HAD TO BE ROLLED INTO, UH, THEIR OPERATIONAL PLAN AND ALSO RECOGNIZED THAT, YOU KNOW, WE'RE, WE'RE NOW FIVE WINTERS, UM, OR SO IN THAT NEIGHBORHOOD PAST YURI, AND IT MIGHT BE TIME TO, UH, RECONSIDER THAT.

AND THAT'S PART OF THE PUNCHLINE OF THE SLIDES THAT I HAVE, IS I, I REALLY FEEL JUST IN MY YEAR AND A HALF HERE, IT'S COME UP SO MUCH.

YOU KNOW, THERE NEEDS TO BE, IN MY VIEW, A PATHWAY TO FORMALLY RECONSIDERING HOW CONSERVATIVE OPERATIONS IS, IS, UM, INSTITUTED IN IN ERCOT OPERATIONAL PLAN.

SO I'LL, I'LL JUST GIVE A QUICK OVERVIEW HERE.

UM, ONE HATS OFF TO, TO ERCOT FOR DEVELOPING A STOCHASTIC RISK MODEL FOR EVALUATING, UH, AS PROCUREMENT NEEDS.

SO, UM, YOU KNOW, WE FELT LIKE THEY DID A VERY GOOD JOB, UH, IN THAT SPACE AND ALSO WENT THROUGH, UH, THE DIFFERENT ASSUMPTIONS, YOU KNOW, VERY CLEARLY IN, IN THE STAKEHOLDER PROCESS.

SO, UH, HATS OFF TO ERCOT FOR THAT.

UM, I, I WILL SAY, YOU KNOW, WE'VE IDENTIFIED THREE AREAS WHERE WE FEEL THE CONSERVATIVE OPERATION DIRECTIVE HAS BEEN DRIVING, UH, A PUSH.

AND, AND THERE ARE OTHER REAL FACTORS ASIDE FROM THE CONSERVATIVE OPERATION DIRECTIVE, BUT THAT SEEMS TO BE AN OVERRIDING FACTOR IN DRIVING SOME OF THESE PARAMETER CHOICES OUT FARTHER TO ENSURE A HIGHER PROCUREMENT LEVEL.

SO WE'VE GOT, WE'VE GOT THE FOUR HOUR, UM, UH, ENERGY STORAGE RESOURCE DURATION REQUIREMENT.

WE'VE GOT THE SIX HOUR LOAD FORECAST AIR, AND WE'VE GOT CLEARING TO A WATCH, WHICH THIS YEAR CHANGED CLEARING TO A ONE IN 10 PROBABILITY OF OBSERVING A WATCH, WHICH THIS YEAR CHANGED TO, UH, AS, UH, NITKA MENTIONED THE GREATER OF THAT 3000 MEGAWATTS OR THE REGULATION PLUS RRS REQUIREMENT, WHICH EFFECTIVELY MAKES EER ECRS AND NONS SPIN, UH, A 100% INSURANCE FOR, UH, REGULATION IN ECRS.

SO, UM, THAT'S, THAT'S DRIVING THAT OUT AS WELL.

AND IT'S NOT CLEAR THAT THAT IS REALLY A NECESSARY, UH, FROM A RELIABLE OPERATIONS PERSPECTIVE, FROM, FROM OUR PERSPECTIVE.

UM, AGAIN, THESE CRITERIA APPEAR TO DIVERGE FROM A RELIABILITY BASIS.

AGAIN, THE WATCH, AND I'LL COVER THIS WHEN I, WHEN WE COVER THE CHART THAT I PER ONE OF THE TWO CHARTS I PROVIDED, BUT CLEARING TO A WATCH, UH, CAN BE RELATED TO RELIABILITY, BUT IT ISN'T BASED ON A RELIABILITY CRITERIA.

I'LL COVER THAT IN A MINUTE.

SO, UH, ONE OF THE TWO BIG PUNCHLINES I THINK FROM, FROM THE IMM POSITION IS WE ARE CONCERNED THAT THIS INCREASED RESERVE PROCUREMENT WILL WIND UP UNDERMINING PRICE FORMATION AND ACTUALLY REDUCE THE, UH, PRICE SIGNAL THAT YOU'LL GET OUT OF THE REAL TIME MARKET IN ORDER TO PROVIDE THE RIGHT PRICE SIGNALS TO INCENT NEW INVESTMENT.

NEW INVESTMENT HAS BEEN THE BIG TOPIC FOR THE LAST YEAR OR SO, UH, WITH THE LOAD FORECAST PROJECTIONS.

SO THIS, THIS WILL, IN MY VIEW, ABSOLUTELY UNDERMINE THAT BECAUSE, AND I'LL, I'LL COVER THE WHY IN A MINUTE, BUT THAT'S A BIG CONCERN OF OURS.

SO, SO I, I WOULD HATE TO SEE A SHORT TERM OVER PROCUREMENT OF OPERATIONS INTERFERE WITH A MEDIUM TERM PRICE SIGNAL THAT HAS BEEN IDENTIFIED AS SOMETHING THAT'S, YOU KNOW, GREATLY NEEDED IN ERCOT FOR ADDITIONAL INSTALLED CAPACITY.

UM, THAT PRICE SUPPRESSION COMES FROM TWO SOURCES.

ONE IS THE WAY THE SHORTAGE PRICING IS CRAFTED CURRENTLY, IT DOESN'T RECOGNIZE OR IT HASN'T BEEN CALIBRATED TO THE FULL NEW PROCUREMENT LEVELS.

AND SO THERE'S AN AREA WHERE WHEN ERCOT GOES SHORT FROM ITS LONG PROCUREMENT

[02:20:01]

SO IT HASN'T BEEN CALIBRATED TO PRICE THOSE SHORTAGES THAT'S GOING TO, UM, SUPPRESS REAL TIME PRICE FORMATION.

ANOTHER ASPECT OF IT IS THE MORE OR THE HIGHER YOUR RESERVE PROCUREMENT, THE MORE ONLINE RESOURCES YOU'RE GONNA HAVE.

THOSE ONLINE RESOURCES WEREN'T OTHERWISE ECONOMIC TO PRODUCE ENERGY.

AND SO THEY'LL BE SITTING AT THEIR LOW SUSTAINABLE LIMIT.

THEY CANNOT SET PRICE THERE, BUT THEY ARE THAT LOW SUSTAINABLE LIMIT, LIKE THE IDLE OF YOUR CAR.

IT'S RUNNING AND IT'S PRODUCING.

AND SO IT IS SATISFYING SOME OF THE DEMAND, BUT IT'S NOT, IT'S NOT ESTABLISHING A HIGHER PRICE BECAUSE OF THAT.

IT'S NOT ALLOWED TO SET PRICE.

SO BOTH OF THOSE THINGS WIND UP RETARDING, UM, REAL TIME PRICE FORMATION AND INTERFERING WITH THE MARKET'S ABILITY TO INCENT NEW INVESTMENT.

I UNDERSTAND YOUR LONG TERM CONCERN, BUT YOU'RE STILL SAYING IN YOUR OPINION, WE'VE HAD SO MUCH GOOD WORK SINCE URI, THERE'S NO RISK IF WE GO RIGHT UP TO THIS EDGE.

AND THAT'S THE PREMISE YOU HAVE.

'CAUSE IF WE GO OVER AN EDGE, THEN YOUR LONG TERM PRICE STUFF SORTS OUT THE WINDOW.

SO I THINK THE DEBATE ISN'T AROUND THE LONG-TERM BENEFIT.

IT'S AROUND ARE WE TOO CLOSE TO THIS EDGE? RIGHT.

AND I'LL, THAT'S, YOU KNOW, WE'RE SORT OF MASKING THAT BY TALKING ABOUT ALL THIS GOOD FINANCIAL STUFF.

SO, SO I APPRECIATE YOU BRINGING UP THAT POINT.

UM, ONE OF THE ISSUES ACTUALLY, THERE WERE I THINK TWO ISSUES, TWO PRIMARY DRIVERS OF THE OUTAGES IN YURI.

ONE WAS GENERAL RESILIENCY, THE OTHER WAS THE AVAILABILITY OF NATURAL GAS.

SO HAVING TWICE THE RESERVE PROCUREMENT DURING YURI WOULDN'T HAVE PROVIDED ADDITIONAL, UM, RELIABILITY BECAUSE THE NATURAL GAS WAS CONSTRAINED.

AND SO THOSE ADDITIONAL RESOURCES WOULDN'T HAVE ACTUALLY BEEN ABLE TO PROVIDE ENERGY IF CALLED UPON THE, THE RESILIENCE ISSUES ARE BEING ADDRESSED.

SOME OF THEM HAVE BEEN ADDRESSED AND, AND OTHERS I UNDERSTAND ARE CONTINUING TO BE ADDRESSED.

AND SO HOPEFULLY THAT CLEARS THAT CONSTRAINT.

SO I DON'T LIKE THE WORD HOPEFULLY.

UM, AND ALSO I'D UNDERSTAND THAT YURI IS A UNIQUE, WAS A SITUATION THAT WE CORRECTED.

SO I'M STILL ON THIS, HOW RISKY IS THIS EDGE THAT WE'RE TALKING ABOUT? AND ASSURANCES DON'T GIVE ME CONFIDENCE.

AND THERE'S BEEN A WHOLE LOT OF MATH BEING DONE ON THE FUTURE PROJECTIONS, BUT I, I HAVEN'T SEEN A LOT AROUND THE RISK BECAUSE THE FUTURE PROJECT, AGAIN, I'LL JUST REPEAT WHAT I SAID, IS IF WE GO OVER AN EDGE, THOSE FUTURE PROJECTIONS GO OUT THE WINDOW AND WE HAVE A WHOLE LOT OF DISRUPTION, A LOT OF COSTS, AND THEN WHATEVER SAVINGS WE WERE SUPPOSED TO GET ARE GONE.

RIGHT? AND SO YOU, YOU SORT OF SKIP OVER THAT RISK BY JUST SAYING WE'RE FINE IN YOUR OPINION.

SO TO TO ADDRESS THE, THE RISK ISSUE, UM, I'LL, I'LL GO AHEAD AND EXPLAIN THIS CHART.

UM, SO THE BLUE CURVE HERE IS THE LOSS OF LOAD PROBABILITY CURVE THAT WE'VE CALCULATED USING OUR PREFERRED PARAMETERS FOR AS PROCUREMENT THAT REPRESENTS YOUR RISK.

AND SO AS YOU CAN SEE ON THE VERTICAL AXIS, WE HAVE A ANNUAL PROBABILITY.

SO THE 0.1 IS EQUIVALENT TO A ONE IN 10 PROBABILITY OF ANY LOSS OF LOAD, JUST ONE MEGAWATT LOSS OF LOAD EVEN WILL COUNT.

IF YOU LOOK ON THE HORIZONTAL AXIS, THAT'S THE TOTAL PROCUREMENT FOR ECRS AND NONS SPIN.

AND SO THE CURVE, THE BLUE CURVE REPRESENTS OUR, UM, PREFERRED PROCUREMENT PARAMETERS.

IF YOU LOOK TO THE FAR RIGHT WHERE THE ORANGE CURVE IS, AGAIN, WE PICKED THE ONE IN 10 BECAUSE I, I I BELIEVE THAT IS, UH, WHAT, WHAT ERCOT HAD CHOSEN A ONE PROCURE TO A ONE IN 10 CHANCE OF OBSERVING A WATCH.

AND SO THE EDGE, IF, IF, IF YOU'RE TALKING ABOUT THE EDGE OF RELIABILITY, WHERE WE GO FROM NOT LOSING ANY LOAD TO LOSING SOME LOAD, THE ERCOT CURVE IS WELL BEYOND, UH, THAT EDGE.

AND SO IF YOU LOOK AT WHERE THE BLUE LINE, WHICH IS AGAIN OUR, OUR SIMULATED LOSS OF LOAD PROBABILITY, GIVEN THE PARAMETERS THAT WE THINK SHOULD BE INCLUDED IN THE PROCUREMENT PROCESS, YOU HIT ZERO INCREMENTAL RELIABILITY AT ABOUT THREE GIGAWATTS OF PROCUREMENT FOR ECRS AND NONS SPIN THE NEXT TWO GIGAWATTS OF PROCUREMENT OUT TO WHERE ERCOT PROPOSAL TO

[02:25:01]

PROCURE IS, PROVIDES ZERO ADDITIONAL RELIABILITY BENEFIT.

AND THAT'S A KEY PART.

I'M, I'M, I AM GLAD THAT YOU BROUGHT UP THE EDGE BECAUSE YOU KNOW, DIFFERENT PEOPLE MAY DEFINE THAT DIFFERENTLY.

WE, WE THINK THAT THE EDGE IS WHERE YOU ARE RISKING LOSS OF LOAD, UM, AND THE ERCOT PROPOSAL LEAVES A CONSIDERABLE ROOM.

AND IN FACT, AS YOU CAN SEE IN THE ORANGE ARROW, IT'S 140% INCREASE IN PROCUREMENT OVER, OVER WHAT WE THINK WOULD BE PRUDENT.

SO I SEE PLOTS HERE, BUT I DON'T SEE THE VARIABLE, THE VARIATION ARE THESE WI PLOTS.

I MEAN, I JUST DON'T SEE THE, THE RANGE.

IN OTHER WORDS, THEY LOOK LIKE VERY CRISP LINES, BUT THERE'S ERRORS AND PUSHING SOMETHING TO A SYSTEM THIS COMPLEX TO AN EDGE TILL THERE'S A SCARCITY SIGNALS, ASSUMING EVERYTHING WORKS THE WAY IT'S SUPPOSED TO WORK.

SO WHAT ARE, WHERE ARE THE ERROR BARS ON THIS? SO THE AIR, I'M LOOKING AT THE SLOPE, THAT'S WHAT I'M ASKING.

ARE THERE WI PLOTS? WHAT ARE THEY? SO GO AHEAD.

THE, THE ERRORS ARE ACTUALLY BUILT INTO THE MODEL.

SO THIS IS, SO WE, WE USE A STOCHASTIC SIMULATION MODEL, WHICH LOOKS AT ALL DIFFERENT VARIATIONS OF OBSERVED, UM, OUTAGE, OUTAGE RATES, AND THEN WE ALSO PERTURB THE OUTAGE RATES, ALL DIFFERENT VARIATIONS OF FORECAST ERROR, UH, AND SO FORTH.

SO ALL OF THE RISK VARIABLES THAT NITKA HAD MENTIONED GO INTO THE PROCUREMENT PROCESS.

THOSE ARE ALL, UH, ACCOUNTED FOR IN THE SIMULATION PROCESS.

AND SO WE DON'T SHOW THEM EXPLICITLY THAT WOULD ACTUALLY REQUIRE A, PROBABLY A DIFFERENT CHART OR CHARTS.

BUT THE ANNUAL PROBABILITY THAT YOU SEE THERE ACTUALLY IN EMBODIES THE VARIABILITY THAT YOU'RE TALKING ABOUT.

IF, IF I CAN PARAPHRASE THE DISCUSSION, I GUESS THE EDGES WE'RE TALKING ABOUT ERCOT CONSIDERS THE EDGE GETTING TO A WATCH YOU CONSIDER OR THE IMM RATHER CONSIDERS THE EDGE GETTING TO AN EEA THREE TO LOCHE, IS THAT RIGHT? YEAH, THAT'S CORRECT.

SO, AND LOOK, YOU'LL FORGIVE ME FOR SAYING THIS, BUT WE'RE SITTING HERE AS DIRECTORS AND WE HEAR THE ERCOT STAFF SAYING, LOOK, WE APPLIED THE PUC CRITERIA TO THE MODELS AND THIS IS THE ANSWER COME, WE COME UP WITH.

AND THEN YOU COME UP WITH A MODEL THAT WE HAVE NO IDEA HOW YOU CALCULATED OR WHAT THE HELL YOU'VE DONE, AND YOU COME UP WITH A DIFFERENT ANSWER.

WE JUST CAN'T BELIEVE YOU.

I MEAN, IT, IT'S, IT, YOUR, YOUR CREDIBILITY WITH US AS DIRECTORS IS ZERO, JEFF.

I'M NOT REALLY SURE HOW TO ADDRESS THAT.

WELL, YOU COULD START BY CONVERGING MAYBE WITH THE ERCOT STAFF ON, YOU KNOW, SHOWING DATA THE SAME WAY OR SOMETHING.

WE'VE, YOU KNOW, WE, SO WE HAVE WORKED VERY CLOSELY FOR, YOU KNOW, THE YEAR AND A HALF THAT I'VE BEEN HERE, STARTING WITH THE AS STUDY, UH, LAST SUMMER, AND THEN THROUGH THIS PROCESS AS WELL.

WE'VE WORKED VERY CLOSELY WITH ERCOT STAFF.

SO, SO PART OF THE RECOMMENDATION, WHICH IS LATER IN THE SLIDE DECK IS THAT, YOU KNOW, WE DO HAVE TWO DIFFERENT SIMULATION MODELS.

IT WOULD BE OUR, OUR RECOMMENDATION IS THAT ERCOT, UM, SIMULATE THE POLICY PERMUTATIONS THAT WE'VE ADVOCATED FOR.

WE ARE CONFIDENT THAT OUR MODEL CAPTURES, UH, DIRECTION AND ORDER OF MAGNITUDE A ACCURATELY, BUT AS YOU POINT OUT, TWO DIFFERENT SIMULATION MODELS ARE GONNA PRODUCE, THEY'LL NEVER PRODUCE THE EXACT SAME RESULT.

SO IT WOULD BE VERY HANDY IN, IN THE SPIRIT OF WHAT YOU'RE TALKING ABOUT, IT WOULD BE VERY HANDY IF ERCOT HAD EVALUATED THESE DIFFERENT POLICY ALTERNATIVES AND PRESENTED THOSE FOR, FOR DECISION MAKING PURPOSES.

JEFF, CAN WE GET YOU TO GO AHEAD AND ROLL FORWARD TO YOUR, YOUR RECOMMENDATION TO THE IAM RECOMMENDATIONS? CAN I MAKE A QUICK COMMENT ON THAT SLIDE THOUGH? BECAUSE I THINK IT'S IMPORTANT TO, TO STATE THAT WHERE JEFF HAS NOT NOTATED NO ADDITIONAL RELIABILITY VALUE, WHAT YOU, WHAT HE'S MEASURING IS THAT THERE'S NO INCREMENTAL BENEFIT AGAINST GETTING INTO A LOAD SHE EVENT, RIGHT? BUT WHAT'S NOT, HE'S NOT SAYING IS THAT IT DOESN'T MEAN THAT WE ARE GETTING INCREMENTAL RELIABILITY EVENT, UH, BENEFIT BY NOT GETTING INTO EEA LEVELS ONE, TWO OR WATCH LEVELS.

THAT IS THE INCREMENTAL RELIABILITY BENEFIT BY MOVING AWAY FROM A LOAD SHE, UH, EVENT THAT YOU GET FROM THOSE ADDITIONAL INCREMENTAL VALUES.

SO JUST TO BE CLEAR, YOUR MEASURE, IS THAT CORRECT, JEFF? YOU'RE STATING YEAH, NO INCREMENTAL RELIABILITY VALUE IN TERMS OF LOAD.

SHE ONLY, THERE IS INCREMENTAL RELIABILITY VALUE IF YOU MEASURE IMPROVEMENTS AGAINST LOAD SHED THROUGH EEA LEVELS TO A WATCH IN TERMS OF IMPROVEMENTS.

AND IF, IF I CAN ADD TO THAT, I THINK THERE'S VALUE TO AVOIDING WATCHES.

I MEAN, UH, THERE'S A HARD COST TO GETTING TO EEAS, IN MY VIEW.

THERE'S A COST TO THAT BECAUSE THE PUBLIC GETS RATTLED, THE LEGISLATORS GET RATTLED, THE GOVERNOR GETS RATTLED, MAYBE OUR COMMISSIONERS GET RATTLED.

AND, AND WHAT YOU WE'RE BUYING ANCILLARY SERVICES AS AN INSURANCE PREMIUM TO AVOID THAT, AND SORT OF THE QUESTION IS THE WHERE DO YOU, WHERE, WHAT IS THE EDGE IN, IN MY VIEW, IF YOU GO ON WATCHES,

[02:30:01]

PROBABLY THEY WOULD, I DON'T WANNA PUT WORDS IN GENERAL'S MOUTH, YOU'RE HERE, YOU'RE GONNA SPEAK UP.

BUT, UH, SO THERE, THERE'S A, THERE'S A SOFT VALUE TO THAT THAT CANNOT BE QUANTIFIED.

SO I THINK THAT'S REALLY THE DISCUSSION WE'RE HAVING HERE IS HOW CLOSE TO WHAT EDGE DO YOU GO TO AND WHAT ARE YOU WILLING TO PAY TO AVOID GETTING TO THAT POINT? SO, SO IF I COULD JUST COMMENT ON THAT FOR A MINUTE.

AND, YOU KNOW, I LIVED, UH, PROFESSIONALLY AND, AND PERSONALLY LIVED THROUGH THE CALIFORNIA ENERGY CRISIS IN THE EARLY TWO THOUSANDS.

I'M NOT STANDING UP HERE AS IMM ADVOCATING A WATCH, OR I'M, I'M ALSO NOT AGAINST IT.

BUT I WILL SAY WHAT WE OBSERVED IN CALIFORNIA WAS THAT CONSERVATION, UM, PROCLAMATIONS, UH, MADE A VERY, UH, MEASURABLE DIFFERENCE ON VERY TIGHT DAYS.

SO THERE'S A FLIP SIDE TO THE COIN OF AVOIDING A WATCH, WHICH IS, IF, YOU KNOW, I, I WATCHED IT HAPPEN FOR A, FOR A SUMMER WHERE WE EXPERIENCED BLACKOUTS AND, AND, AND, YOU KNOW, HAVING PUBLIC WATCHES, YOU COULD SEE THE DEMAND RESPONSE HAPPEN.

AND I COULDN'T TELL YOU HOW MANY MEGAWATTS OF AVOIDED OUTAGE IT WAS, BUT IT WAS CLEARLY MEASURABLE.

SO THERE'S, THERE'S TWO SIDES TO THAT COIN.

YEP.

HEY, JEFF.

SO, UM, WE'RE OBVIOUSLY COMING INTO RTC, WHICH IS ONE OF THE BIGGEST OPERATIONAL CHANGES WE'VE MAKING AS AN ORGANIZATION.

AND I THINK THE PRIOR SPEAKER SAID THIS, THE EVALUATION DOESN'T CONSIDER RTC THAT COULD KIND OF CHANGE THE OUTCOME.

SO I GUESS MY QUESTION IS, AS IT RELATES TO THE TIMING OF THIS AND CONSIDERING WHAT WE'RE IMPLEMENTING FROM AN RTC PERSPECTIVE, WHY IS NOW THE RIGHT TIME TO STACK ANOTHER POLICY ON TOP OF THAT AS OPPOSED TO EVALUATING RTC AND DOING, IMPLEMENTING THIS AT A LATER DATE? WELL, IT'S, AND IT'S WORTH STAYING FOR THE, FOR THE PUBLIC THAT RTC DOES MODIFY THE WAY WE ALLOCATE ANCILLARY RESOURCES.

SO IT, SO IT MESSES WITH THE WAY ANCILLARY RESOURCES GET MOVED AROUND IN THE SYSTEM.

SO, SO ONE OF THE FEATURES IN RTC, UM, AS WAS JUST POINTED OUT, IS YOU'LL GET A MORE EFFICIENT OR ECONOMIC ALLOCATION OF, OF ENERGY AND RESOURCE, UH, OF RESERVE UTILIZATION AMONG THE RESOURCES THAT ARE PARTICIPATING.

THAT'S A BETTER THING.

UH, I DON'T SEE THAT, I DON'T SEE THAT ADDING RISK, UH, TO BE FAIR ABOUT THAT.

UM, I, I THINK THE, THE DIFFERENCE THAT WE'RE OBSERVING HERE, YOU KNOW, WE, WE CAME OUT WITH SIMILAR COMMENTS, UH, YOU KNOW, IN THE AS STUDY PROCESS.

SO I, I DON'T, THE, THE, IN MY VIEW, THE PROCUREMENT IS SO FAR OVER, YOU KNOW, WHAT WOULD BE, UH, JUSTIFIED BASED ON MERELY A LOSS OF LOAD PERSPECTIVE, THAT EVEN IF IT WAS MOVED BACK 50% OF THE DIFFERENCE, SO IT WAS ONLY 70% OVER, I DON'T VIEW THAT AS ADDING ANY RISK BECAUSE RTC IS HAPPENING.

SO I, I THINK, JEFF, IN FAIRNESS TO, YOU'VE GOT TWO MORE SLIDES WITH YOUR RECOMMENDATION, WHY DON'T YOU RUN THROUGH THOSE AND THEN WE WILL, UH, CONTINUE THE DISCUSSIONS.

SURE.

SO, SO OUR RECOMMENDATION IS BASICALLY THREE POINTS.

ONE I HAVE ALREADY MENTIONED, WHICH IS WE WOULD LIKE TO SEE ERCOT, UM, MODEL THE PARAMETER CHANGES BECAUSE THERE ARE DIFFERENCES IN THE SIMULATION MODEL.

WE WOULD LIKE TO SEE ERCOT MODEL THE PARAMETER CHANGES THAT WE'RE PROPOSING AND PROVIDE THAT INFORMATION PUBLICLY, UM, SO THAT IT, IT PROVIDES A RICHER BASIS ON WHICH TO MAKE A DECISION TO, AND I DIDN'T COVER IT, BUT WE HAVE A COMPROMISE PROPOSAL, WHICH IS, YOU KNOW, BASICALLY OUR SET PARAMETERS, BUT SPLITTING THE DIFFERENCE BETWEEN ONE HOUR AND SIX HOURS FOR LOAD FORECAST ERROR HORIZON, UH, AND SPLITTING IT TO THREE HOURS.

AND THEN, AND THEN THE LAST PART OF THE RECOMMENDATION IS, UM, SOMEBODY NEEDS TO FIGURE OUT WHAT THE OFF RAMP IS FROM CONSERVATIVE OPERATIONS SO THAT WE'RE NOT JUST, UH, DOING THIS FOREVER.

AND I'LL, I'LL END WITH WHAT I STARTED WITH, WHICH IS I FEEL FOR ERCOT HAVING BEEN PUT IN A SITUATION WHERE THEY HAVE TO INCORPORATE, YOU KNOW, THAT KIND OF A UNWRITTEN POLICY DIRECTIVE INTO THEIR, UH, ACTUAL RELIABILITY OPERATIONS, BUT THERE'S GOTTA BE AN OFFER RAMP FOR THAT.

SO, UH, THAT WAS OKAY.

THAT'S IT, JEFF.

WE APPRECIATE YOUR ANALYSIS AND YOUR, UM, RECOMMENDATION.

ANY OTHER, UH, QUESTIONS FOR JEFF BEFORE WE CONTINUE THE DISCUSSION? OKAY, DAN, I THINK YOU WANT, JEFF, I THINK WE'RE GOOD WITH YOU.

[02:35:01]

THANK YOU VERY MUCH.

UH, DAN, DID YOU HAVE SOMETHING YOU WANTED? YES, PLEASE.

THE, UH, I THINK THERE'S A SEVERAL THINGS.

UM, ONE IS THAT, THAT WE DON'T, UM, SPECIFICALLY COME UP WITH QUANTITIES OF ANCILLARY SERVICES THAT WE BUY BASED ON EXTREME WEATHER EVENTS LIKE YURI, BECAUSE IF THERE'S A YURI, EVERY RESOURCE THAT'S AVAILABLE IS GONNA BE ONLINE AND BEING USED TO SERVE LOAD.

AND SO THAT'S NOT WHAT WE'RE TALKING ABOUT.

WHAT WE'RE REALLY TALKING ABOUT IN TERMS OF ANCILLARY SERVICE QUANTITIES AND HOW MUCH WE BUY IS ON A DAY WHERE THERE IS SUFFICIENT CAPACITY AVAILABLE.

THERE'S JUST BIGGER FORECAST ERRORS BECAUSE WE'VE GOT A LOT OF WIND AND SOLAR AND EVERYTHING IS ON THE SYSTEM THAT THAT CAUSE IT TO, TO VARY.

THERE'S SUFFICIENT CAPACITY AVAILABLE, BUT WE DON'T START IT IN TIME BECAUSE WE DON'T RECOGNIZE THAT THOSE ERRORS ARE HAPPENING EARLY ENOUGH.

AND SO WHAT WE'RE TRYING TO CAPTURE HERE IS REDUCING THOSE RISKS WHERE WE HAVE TO ULTIMATELY SHED LOAD OR GO INTO A WATCH OR WHATEVER IT IS, WHATEVER THE CRITERIA IS, BECAUSE WE DIDN'T LOOK, THERE WAS PLENTY OF CAPACITY AVAILABLE.

WE JUST DIDN'T LOOK FAR ENOUGH AHEAD OR, OR CAPTURE THAT RISK APPROPRIATELY.

SO THAT'S WHAT WE'RE REALLY TRYING TO DO HERE.

IT'S NOT THOSE EXTREME DAYS, IT'S BECAUSE EVERYTHING'S GONNA BE ONLINE FOR THOSE ANYWAY.

IT'S THE DAYS WHERE EVERYBODY SCRATCHES THEIR HEAD AND GOES, WHY IS ERCOT CALLING A WATCH TODAY? WHEN IN FACT, YOU KNOW, IT'S A BRIGHT WINDY DAY, WE DON'T WANNA HAVE THOSE.

UM, AND BUT IF WE DON'T START THOSE GENERATORS IN TIME AND WE DON'T HAVE ENOUGH ANCILLARY SERVICES, THEN WE MIGHT HAVE TO, BUT WE DIDN'T NEED TO.

AND SO THOSE ARE WHAT WE'RE TRYING TO AVOID.

WE HAVE TO ENSURE THAT THE COMMISSION IS ULTIMATELY MAKING DECISIONS THAT ARE IN THE PUBLIC INTEREST, WHICH IS, UM, INHERENTLY WEIGHING BOTH THE RELIABILITY AND ECONOMIC NEEDS OF THE RESIDENTS OF THE STATE WHO, UM, WE'RE ALL HERE TRYING TO SERVE AND PROTECT.

I'D LIKE TO, UH, HAVE TRIM AND GLEASON AND THEN PABLO UH, ADD SOME COMMENTARY AND INVITE COMMENTS FROM THE OTHER COMMISSIONERS IF THEY'RE INTERESTED.

YEAH, SO FIRST OFF, I WANNA THANK DAN AND NITKA, 'CAUSE THEY BRIEFED ME ON THIS.

WE SPENT A LOT OF TIME, I DO WANT TO THANK JEFF AND DAVID PATTON, WHO SPENT A LOT OF TIME WITH ME ON THIS AS WELL.

PABLO AND I TALKED ABOUT THIS OVER THE WEEKEND.

SO I WILL SAY, I THINK DIRECTIONALLY I AM, I'M IN AGREEMENT WITH THE IMM THAT WE NEED TO LOOK AT ALL OF THIS.

UM, I DON'T THINK, I WOULD ARGUE THAT WE ARE OPERATING ON AN EDGE RIGHT NOW, AND I THINK IT WOULD BE, I, I DON'T THINK WE SHOULD, UM, IGNORE THE PRICE FORMATION ASPECTS OF THE, THE POSTURE THAT WE'VE TAKEN.

BECAUSE I KNOW AT THE COMMISSION AND, AND AT ERCOT WE TALK A LOT ABOUT THE NEED TO PROVIDE PROPER INCENTIVES FOR THE TYPE OF GENERATION WE WANT TO SEE.

AND I THINK, UM, TO IGNORE THE PRICE, PRICE FORMATION IMPACTS OF, OF THE CONSERVATIVE OPERATIONS POSTURE THAT WE'VE TAKEN, UM, I, I, I THINK WOULD, WOULD BE FOOLISH OR AT LEAST AS I SIT HERE AS A COMMISSIONER, I, I THINK I'M PERSUADED IN BARKSDALE.

I WANT TO, I'M GONNA PUT YOU ON THE SPOT A LITTLE BIT 'CAUSE WE DISCUSSED THIS AS WELL.

YOU KNOW, MY POSITION, I, I THINK I'VE BEEN PERSUADED, GIVEN RTC PLUS B AS WELL AS THE RELIABILITY STANDARD ANALYSIS THAT'LL HAPPEN IN 2026 AND GETTING, UM, ADDITIONAL UNDERSTANDING AROUND THE, THE PROBABILISTIC MODELING THAT WHILE I AGREE THAT WE NEED TO LOOK AT THIS AND POTENTIALLY MAKE SOME CHANGES IN THIS DIRECTION, IT IS MORE PRUDENT TO WAIT UNTIL NEXT YEAR FOR 2027.

UM, I, I, I JUST THINK THAT'S THE MOST PRUDENT WAY FORWARD.

I THINK THIS NEEDS MORE DISCUSSION.

UM, DOES THAT ALIGN WITH STAFF'S POSITION? I THANKS CHAIRMAN.

UM, THIS IS BARKSDALE ENGLISH.

I'M THE DEPUTY EXECUTIVE DIRECTOR FOR THE PUBLIC UTILITY COMMISSION.

THANKS FOR THE, UH, QUESTION, SIR.

UM, BACK IN JANUARY OF THIS YEAR, THE COMMISSION PUBLISHED A REPORT ON THE ANCILLARY SERVICE STUDY, UM, AND SENT THAT OFF TO THE LEGISLATURE AHEAD OF THE SESSION.

AND, UM, UH, IN THAT REPORT, THERE ARE SEVERAL FINDINGS.

ONE WAS THAT THE CURRENT METHODOLOGY IS, IS SUFFICIENT TO MEET, UM, ERCOT NEEDS, UM, AS DETERMINED BY NERC AS WELL AS, UM, OTHER STANDARDS AND POLICIES THAT HAVE BEEN SET.

UM, BUT IN THAT STUDY, UM, YOU ALL DETERMINED THAT IT'S IMPORTANT TO CONTINUE TO PUSH THIS CONVERSATION FORWARD.

AND BECAUSE THE ANCILLARY SERVICE, UH, METHODOLOGY PROCESS TAKES TIME, IT'S MONTHS AND MONTHS AND MONTHS OF WORK, UM, THAT ERCOT STAFF AND THE STAKEHOLDERS GO THROUGH, UH, COMMISSION STAFF'S OPINION IS THAT IT'S APPROPRIATE TO CONTINUE THIS CONVERSATION AND TEE IT UP FOR A DECISION, UH, FOR 2027.

AND, UM, I I ALSO WANT TO THANK JEFF, UM, AND THE IMM BECAUSE I THINK IT'S IMPORTANT TO CHALLENGE THE ASSUMPTIONS THAT

[02:40:01]

AND, AND I THINK THAT'S AN IMPORTANT POINT.

I DON'T VIEW THIS AS THERE BEING A RIGHT OR WRONG ANSWER.

WE'RE DEALING IN TRADE OFFS BETWEEN MULTIPLE GOODS, WHETHER IT'S INCREASED RELIABILITY, AFFORDABILITY, UM, WHATEVER THAT TRADE OFF IS.

AND SO, AGAIN, AND, YOU KNOW, I'LL, I'LL TURN YIELD TO, UH, TO MY COLLEAGUES ON THE COMMISSION, BUT I, I, AGAIN, I JUST WANT TO SAY THANK YOU TO THE IMMI THINK DIRECTIONALLY THEY ARE CORRECT THAT WE NEED TO MOVE TOWARDS THIS.

I DON'T KNOW IF IN DEGREE, UM, I AGREE WITH THEM, YOU KNOW, LIKE, LIKE WAS STATED LOAD, SHE IS NOT AN OUTCOME THAT I'M WILLING TO LIVE WITH OR I THINK THE CITIZENS OF THIS STATE ARE WILLING TO LIVE WITH.

SO I DON'T KNOW THAT'S WHAT WE SHOULD BE SOLVING FOR.

BUT I THINK A MOVE, I THINK A MOVE AWAY FROM THE, THE POSTURE WE'VE HAD SINCE YOU IN RECOGNITION AND ACKNOWLEDGEMENT OF ALL THE WORK THAT HAS BEEN DONE MAKES SENSE.

BUT AGAIN, I THINK IT'S PRUDENT TO, UH, CONTINUE TO HAVE THAT CONVERSATION AND ADDRESS THIS IN THE METHODOLOGY FOR 2027.

JUST, JUST TO MAKE SURE THAT I'M INTERPRETING WHAT BARKSDALE AND, AND YOU'RE SAYING CHAIRMAN, IS THAT AT THIS POINT WE WOULD PROPOSE THE TAC PROPOSAL AND THEN WE WOULD HAVE THIS CONVERSATION AGAIN WITH ADDITIONAL COLLABORATION AMONG THE PUC, THE IMM AND ERCOT STAFF AS WELL AS THE STAKEHOLDERS IN TAC IN 2026.

IS THAT THE CORRECT INTERPRETATION? YEAH, I WOULD, I WOULD SAY 4 27.

YEAH, I WOULD SAY, AND NOT 27, NOT PICK IT BACK UP.

I WOULD SAY AT THIS POINT IT SHOULD BE ONGOING.

THAT THIS IS A BIG ENOUGH DECISION AND THESE ARE DIFFICULT POINTS TO, TO REALLY DEBATE.

AND AGAIN, THERE IS NO RIGHT ANSWER TO THIS.

IT'S A, A MEASURE OF OF RISK AND RISK TOLERANCE FOR THE BOARD, FOR THE COMMISSION.

UM, BUT I, I'M IN FAVOR OF THE RECOMMENDATION BY ERCOT STAFF FOR THIS YEAR, BUT ACKNOWLEDGING THAT I, I THINK THIS IS SOMETHING WE HAVE TO LOOK TO, TO POTENTIALLY MOVE AWAY FROM AS WE CONTINUE TO WEIGH THOSE, THOSE TRADE OFFS AND THOSE RISKS.

FAIR ENOUGH.

AND CHAIRMAN, IF, IF I MAY, IT SURE, IT MAY BE APPROPRIATE, THE COMMISSIONERS MAY WANT TO, UM, HAVE SOME OF THIS POLICY LEVEL CONVERSATION AT THE COMMISSION TO HELP SIGNAL KIND OF THE DIRECTION THAT THE THREE OF YOU ULTIMATELY DECIDE MAY BE BEST FOR THE STATE, UH, IN, IN ORDER TO PROVIDE A LITTLE BIT OF GUIDANCE FOR THE STAKEHOLDERS AND ERCOT STAFF TO BE ABLE TO THINK THROUGH THE 27 METHODOLOGY PROCESS.

COMMISSIONER ALTMAN OR COMMISSIONER JACKSON.

UH, I'M NOT SURE WHERE THE REST BOARD IS.

I WOULD TOTALLY CONCUR WITH THAT, THAT OPINION.

ANY COMMENTS ON THAT? YEAH, FIRST I WANT, UM, FOR JEFF AND THE IMM, UM, I THINK IT IS HELPFUL THAT THIS TIME IN GOING THROUGH THESE NUMBERS THAT I AND M DID ADDRESS THE FACT THAT ERCOT IS OPERATING UNDER A CERTAIN PROCEDURE THAT WE TOLD THEM TO OPERATE IN THOSE PARAMETERS.

AND LAST YEAR WHEN WE WERE GOING THROUGH THIS METHODOLOGY THAT WASN'T CLEAR TO THE PUBLIC, IT MADE IT LOOK LIKE TWO VERY DIFFERENT NUMBERS.

IT MADE US NOT BE ABLE TO COMPARE APPLES AND ORANGES 'CAUSE IT WAS VERY DIFFERENT.

UM, SO THANK YOU, JEFF FOR ACKNOWLEDGING THAT ERCOT IS OPERATING UNDER THAT PARAMETER THAT WE PROVIDED.

UM, UH, I THINK THAT THE CHAIRMAN HAS KIND OF IDENTIFIED THAT THERE'S A LOT OF ITEMS COMING BEFORE, UM, AND THROUGH ERCOT LIKE RTC AND THE RELIABILITY STANDARD THAT WILL HOPEFULLY BE ABLE TO PROVIDE INFORMATION FOR US TO BETTER ADAPT AND READ THE MARKET AND KNOW WHAT WE'RE DOING.

UM, SO I, I DO WANNA SEE THE RESEARCH THAT COMES FROM THAT FOR THE NEXT YEAR.

UM, AND I WOULD BE IN AGREEMENT THAT THE CHANGE SHOULD NOT HAPPEN NOW, IT SHOULD MOVE FORWARD FROM TAC AS IS.

UM, BUT I AM INTERESTED TO HEAR, UM, YOU KNOW, IT'S BEEN FOUR YEARS SINCE WE'VE KIND OF, MAYBE FIVE SINCE WE'VE OPERATED UNDER THESE CONSERVATIVE OPERATIONS.

WHAT ARE THE OTHER OPTIONS? OPTIONS IF WE AREN'T BUYING SO MUCH ANCILLARY SERVICES? AND WE DO GET CLOSE TO THAT.

THERE ARE OTHER OPTIONS.

CAN YOU REMIND US WHAT THOSE ARE THAT YOU COULD DO? LIKE R AND STUFF LIKE THAT? MR. JACKSON? THAT WAS A QUESTION.

SORRY.

OH, THAT WAS A QUESTION.

I'M SORRY.

AT THE HIGH LEVEL IT IS, WE, IT'S BASICALLY A MATTER OF BRINGING MORE GENERATION ONLINE AT THE TIMES WE NEED IT.

THERE'S PROBABLY THREE.

THERE'S OBVIOUSLY WE GO IN TO WATCH EA ED, WHATEVER THE CATEGORY IS.

THERE'S RELIABILITY UNIT COMMITMENT WHERE WHEN WE HAVE ACTUAL CONDITIONS, WE COULD BRING MORE GENERATION ONLINE RATHER THAN PROCURING AS MUCH ANCILLARY SERVICES.

AND, UM, I HAD A THIRD OPTION AND I FORGOT IT.

WELL, A THIRD OPTION.

THESE ARE MINIMUMS THAT YOU BUY.

OH, THAT, THAT WAS THE OTHER ONE.

REALLY HIGH VARIABILITY DAY, MAYBE YOU BUY MORE ANCILLARY SERVICES THAN THE MINIMUM.

SO IF FOR SOME REASON YOU KNEW TOMORROW WAS GONNA BE SOME

[02:45:01]

IF WE MOVE TO MORE OF A DYNAMIC ANCILLARY SERVICE, WHICH IS WHAT WE'RE TALKING ABOUT DOING IN 2028, THAT WOULD, THAT WOULD, UH, ALLEVIATE A LOT OF THIS AS WELL.

I THINK THAT'S THE ULTIMATE ANSWER.

BUT OF COURSE THERE'S, THERE'S DOWNSIDE FROM A REP PERSPECTIVE ON THAT ONE AS WELL.

SO I GUESS IN MY MIND IT'S, UM, WE'RE WE'RE TALKING ABOUT MANAGEMENT OF RISK, WHICH IS ALSO ABOUT MANAGEMENT OF CHANGE.

AND SO, YOU KNOW, NOT ONLY ARE WE, I THINK DISCUSSING THE LEVEL OF ANCILLARY SERVICES TO KIND OF ADDRESS THE AS IS, BUT WE NEED TO BE CONSCIOUS OF THE OTHER THINGS THAT ARE HAPPENING WITHIN THE MARKET.

THE, UH, ENTRY OF THE LARGE LOADS, WHICH IS A HIGH PERCENTAGE, AND AN ACTOR THAT, YOU KNOW, BY ITS VERY NATURE IS VARIABLE.

UM, THE RISING LOAD FORECAST, UM, YOU KNOW, THE CHANGE IN THE RESOURCE MIX AND THE FACT THAT WE'VE JUST IMPLEMENTED AND ARE WORKING TOWARDS, UH, A RELIABILITY STANDARD, WHICH IS 3D.

SO IN MY MIND, WE KIND OF HAVE ALL OF THE ELEMENTS IN PLACE TO MANAGE CHANGE IN A WAY THAT, YOU KNOW, NOT ONLY KEEPS RELIABILITY AS OUR NORTH STAR, BECAUSE IN MY HEART, I DON'T THINK WE'D EVER WANNA FORGET THAT.

AND THEN SECONDLY, RECOGNIZING THAT AGAIN AS, UM, AS, AS PUBLIC SERVANTS, WE WANNA MAKE SURE THAT THE DECISIONS THAT WE MAKE ARE THE MOST COST EFFECTIVE AND AFFORDABLE THAT WE CAN.

AND SO, YOU KNOW, ALL THE THINGS THAT ARE KIND OF IN PLAY RIGHT NOW, I THINK VERY MUCH POINT TOWARDS, I THINK WHAT THE CHAIRMAN SUGGESTED IS THAT, YOU KNOW, WE, WE GO AHEAD AND, AND TAKE TAX RECOMMENDATION FOR THIS POINT IN TIME, BUT, YOU KNOW, RECOGNIZE WHAT THE IMM SAYS AND THIS OPPORTUNITY TO KIND OF UTILIZE THAT AND MAYBE EVEN START THINKING ABOUT IT, WHICH I THINK WAS YOUR POINT RIGHT NOW AS, AS WE MOVE FORWARD WITH WHAT IS, YOU KNOW, WHAT DOES IT LOOK LIKE, YOU KNOW, IN THIS NEXT STAGE WE'VE, I THINK, UH, THE WORK THAT ERCOT HAS DONE IN TAKING THE PROBABILISTIC, UH, APPROACH, UM, THE NEXT STEP, WHICH IS TO KIND OF LOOK AT WHAT WE CAN DO IN, IN A REAL TIME AND MORE REAL TIME SITUATION IS, IS VERY FORWARD THINKING AND IS GONNA GET US TO A GOOD PLACE.

SO, UM, IN, IN MY MIND, IT'S ALL ABOUT MANAGING CHANGE.

IT'S ABOUT RECOGNIZING THAT SOME OF THE THINGS THAT ARE COMING, WE MAY KNOW ABOUT, THERE ARE OTHER THINGS THAT ARE COMING THAT WE MAY NOT KNOW ABOUT.

AND SO VERY IMPORTANT THAT WE CONTINUE TO KIND OF BASE OUR DECISION ON, YOU KNOW, GOOD DATA AND GOOD SCIENCE AND ALSO, AGAIN, KIND OF KEEP AN OPEN MIND IN TERMS OF WHAT WE NEED TO DO TO RECOGNIZE ALL OF THE CHANGE THAT'S COMING.

SO I'D BE IN FAVOR OF THE, OF I THINK WHAT YOU RECOGNIZE, WHICH IS TAKING TAX RECOMMENDATION AND THEN WORKING AS WE MOVE FORWARD WITH, UM, YOU KNOW, A A, YOU KNOW, A A BETTER MA A BETTER SOLUTION IN TERMS OF MANAGING THE CHANGE.

INTO THIS, IT WAS GONNA BE FAR MORE THAN THAT, BUT I THINK WE'VE COME TO A GOOD PLACE AND I WANT TO, I THINK PABLO SUMMED IT UP WELL.

DOES ANYONE ELSE HAVE COMMENT? PABLO, DO YOU HAVE ANYTHING? JUST, I I JUST WANNA AFFIRM TWO KEY POINTS THAT WERE MADE AND I'LL JUST, I'LL DO IT VERY QUICKLY.

THE, THE FACT, KATHLEEN, WHAT YOU MENTIONED, THE FACT THAT WE'RE HEADING TO A PERIOD OF DYNAMIC CHANGE.

WE RECOGNIZE THAT THE LOAD GROWTH TRAJECTORY IS CHANGING.

THE CONTINUED, UH, RESOURCE MIX CHANGE IS CONTINUING TO CHALLENGE THE OPERATIONAL, UM, OPERATIONS TEAM AND THE OPERATIONAL MANAGEMENT OF THE GRID RELIABLY.

THOSE THINGS ARE GOING TO BE ACCELERATING OVER THE COMING MONTHS AND YEARS, AND I THINK THAT'S SOMETHING WE ALWAYS GET TO KEEP IN THE BACK OF OUR MIND.

AND THEN ADDING THOSE AS SIGNIFICANT A CHANGE AS THE REALTIME CO OPTIMIZATION PLUS BATTERIES INTO THE MARKET IS GOING TO BE ONE OF THE BIGGEST MARKET CHANGES ECONOMICALLY AS WELL AS OPERATIONALLY THAT WE'VE GONE THROUGH IN OVER A DECADE.

AND SO I THINK IT'S VERY PRUDENT TO SEE THE IMPACT OF THAT OVER MULTIPLE CYCLES, MEANING OVER A WINTER, OVER A SUMMER, OVER SHOULDER SEASONS, TO SEE HOW THE PERFORMANCE OF THAT NEW CO-OP OPTIMIZATION WORKS AND THE ALLOCATION OF RESOURCES BETWEEN ANCILLARY AND ENERGY IS PERFORMED.

AND I THINK THAT WILL BETTER INFORM THIS INCREMENTAL ANALYSIS THAT WE NEED TO DO AND CONTINUE TO DO ON THE RIGHT ANCILLARY SERVICE PROCUREMENT.

I APPRECIATE THE TENSION BETWEEN RELIABILITY AND, UH, EFFICIENCY AND COST EFFECTIVENESS.

THAT'S A TENSION THAT I THINK WE ALL DEAL WITH IN WHAT WE DO DAY TO DAY.

AND, UH, AND I DO APPRECIATE THE, THE WAY THAT WE'VE BEEN WORKING WITH THE IMM AS WELL AS WITH THE PC STAFF ON THIS END, WITH THE ATTACK AND STAKEHOLDERS.

IT HAS BEEN VERY OPEN, CANDID, AND DIRECT IN TERMS OF HOW THE, THE WORK HAS BEEN DONE.

AND SO THAT'S THE WAY WE GET TO THE RIGHT ANSWERS IN THE END.

AND I APPRECIATE THE WAY THAT EVERYONE HAS JUMPED INTO THIS, UH, IMPORTANT TOPIC.

SO WITH THAT, I AGREE WITH AND, AND SUPPORT, UH, THE PERSPECTIVE THAT THOMAS HAS, UH, RECOMMENDED, AND I THINK THAT'S A PRUDENT DECISION FOR THIS STAGE.

WELL, THIS WAS ONLY A 20 MINUTE DISCUSSION ON THE AGENDA, BUT I AM, I THINK I KNEW THAT GOING

[02:50:01]

I THINK THE CHAIRMAN HAS SUMMED IT, UH, SUMMED IT UP WELL.

I WANT TO THANK, UH, JEFF AND IMM FOR THE WORK THEY'VE DONE ON THIS FOR THE PUC AND THE STAFF WORK THEY'VE DONE ON THAT.

UH, T THANK YOU FOR THE WORK YOU'VE DONE ON THAT.

I KNOW YOU SPENT A LOT OF HOURS ON IT.

DAN NITKA ALL OF THE ERCOT STAFF.

THANK YOU FOR THE WORK YOU'VE DONE ON US.

SO NOW WE HAVE HERE AT THE, THE POINT TO VOTE AND THE MOTION IS TO APPROVE THE 2026 ERCOT METHODOLOGIES.

I WOULD ADD ERCOT SLASH TECH ATTACK METHODOLOGIES FOR DETERMINING MINIMUM ANCILLARY SERVICE REQUIREMENTS AS PRESENTED.

ANY OPPOSED? ANY ABSTENTIONS? OKAY, YOUR IN FAVOR.

SO, UH, THE PROPOSED METHODOLOGIES FOR ANCILLARY SERVICES PROCUREMENT ARE UNANIMOUSLY APPROVED.

UH, THANK Y'ALL.

UH, NEXT IS AGENDA ITEM 16, SYSTEM PLANNING AND OPERATIONS.

THERE ARE TWO SUB ITEMS. THE FIRST IS AGENDA ITEM 16.1, SYSTEM OPERATIONS UPDATE PRESENTED BY DAN WOODFIN.

DAN, WE BREAK FOR LUNCH ONE O'.

ACTUALLY, I THINK THAT'S A GOOD IDEA.

UH, LET'S TAKE A FIVE MINUTE B, LET'S SAY 10 MINUTE BREAK TO GRAB LUNCH.

SO LET'S RECONVENE, UH, JUST A LITTLE BIT AFTER ONE O'CLOCK.

UH, SO WE ARE GONNA, UH, RECESS THIS MEETING.

UH, CHAIRMAN GLEASON, THIS MEETING, THE PUBLIC UTILITY COMMISSION OF TEXAS WILL STAND IN RECESS.

ALREADY BEEN BUILT, SOME OF THEM OTHERS THAT ARE, ARE IN, IN PROCESS OF, OF, UH, MAKING THEIR WAY THROUGH THE PROCESS.

WE'LL BE BACK AT, UH, 1303,

[16.1. System Operations Update]

UM, AND WE'VE STARTED LOOKING AT THIS MORE FROM AN OPERATIONAL PERSPECTIVE.

HOW IF THE TRANSMISSION DOESN'T COME IN AT THE SAME TIME AS THE LOAD OR BEFORE THE LOAD, THEN HOW ARE WE GONNA MANAGE THE, THE, THE, THE EXTRA LOAD GROWTH IN THAT AREA? AND SO, UM, WHAT WE'VE IDENTIFIED IS THAT UNDER LOW SOLAR, LOW WIND CONDITIONS, UM, IT, IF WE LOOK AT THE AMOUNT OF LOAD THAT'S ALREADY BEEN APPROVED TO ENERGIZE, NOW, IT'S NOT THERE YET.

LIKE IF WE LOOKED LAST NIGHT WHEN THE SUN WENT DOWN, WE'RE NOT, WE'RE NOT SEEING THIS VOLUME YET, BUT IT COULD BE WITH THE AMOUNT THAT'S APPROVED TO ENERGIZE THAT COULD BE THERE AS LATE AS, AS LATE THIS YEAR.

UM, WE WOULD HAVE OVERLOADS, ESPECIALLY DURING OUTAGE SEASON, BUT, BUT O OVERLOADS THAT COULD OCCUR.

AND THESE, THESE OVERLOADS COULD BE CASCADING IF THEY, UM, IF, IF WE GET THE FULL AMOUNT THAT'S ALREADY BEEN APPROVED TO ENERGIZE ACTUALLY ON THE SYSTEM.

AND WHAT I MEAN BY CASCADING, CASCADING MEANS YOU HAVE A CONTINGENCY ON THE SYSTEM.

UH, LINE TRIPS OUT, FLOWS REDISTRIBUTE.

THERE IS MORE OF THE LOADING ON SOME ADDITIONAL LINES ARE OVER THEIR LIMIT.

THEY POTENTIALLY COULD TRIP OUT AND SO FORTH TO THE POINT THAT THE WHOLE AREA LOSES SERVICE, UH, LOSES ELECTRIC SERVICE.

AND SO BASICALLY, UH, WE'RE LOOKING AT HOW DO, HOW DO WE MANAGE THAT? HOW DO WE TRY TO MINIMIZE THAT FROM HAPPENING? AND WHAT DO WE DO IF, IF IT DOES, UH, WERE TO OCCUR? AND SO, UH, WE'VE PUT IN PLACE THESE, UM, UM, INTERCONNECTION RELIABILITY OPERATING LIMITS, AND THERE'S TWO DIFFERENT ONES IN THE WEST, FAR WEST TEXAS AREA.

THEY WERE EFFECTIVE, UH, LAST WEEK.

UM, AND BASICALLY IT ALLOWS US TO MONITOR THE, THE FLOWS ON THE LINES THAT MAKE UP THAT INTERFACE THAT COULD POTENTIALLY RESULT IN A CASCADING EVENT.

UH, AND WE CREATED THESE GENERIC TRANSMISSION CONSTRAINTS.

NOW, NORMALLY SC IS ALREADY GOING TO BE TRYING TO MOVE GENERATION UP AND REDUCE THESE OVERLOADS.

AND SO WE'LL, UH, ALL THE RIGHT PRICE SIGNALS WILL BE THERE TO, UH, SEND THE RIGHT MARKET SIGNALS TO THE GENERATION TO BE ONLINE, TO BE AT ITS FULL OUTPUT, UM, THROUGH THIS.

UM, BUT IF WE, IF THAT'S NOT ENOUGH BECAUSE THE WIND'S NOT THERE AND THE SOLAR'S NOT THERE, AND THE LOAD ACTUALLY COMES TO PASS, THEN THESE, WE MAY OVERLOAD THE LINES.

AND WHAT WE'RE TRYING TO DO IS RECOGNIZE AT WHAT POINT DO THOSE OVERLOADS BECOME SEVERE ENOUGH THAT WE NEED TO TAKE ACTIONS UP TO AND INCLUDING LOAD SHED PRIOR TO A CONTINGENCY OCCURRING, BECAUSE IF THE CONTINGENCY OCCURRED, IT WOULD CASCADE.

AND SO THAT'S REALLY WHAT THESE, THESE LIMITS ARE, ARE DOING.

UM,

[02:55:02]

WE'VE ALSO BEEN, UM, SO WE'RE, WE'RE MONITORING THESE TODAY.

WE HAVEN'T EVEN ON A, I GUESS I LOOKED TO A FEW DAYS AGO, WE'RE GETTING UP TO ABOUT TWO THIRDS OF THE LIMIT SOMEWHERE IN THAT RANGE.

SO WE'RE NOT THERE YET.

AND THERE'S SOME UNCERTAINTY AS TO WHEN WE WILL GET THERE BECAUSE IT'S ALL A FUNCTION OF HOW QUICKLY THE LOADS, UH, BUILD OUT IN THAT AREA.

UM, THERE'S ALSO, UH, UH, SOMETHING TO NOTE IS THAT A SIGNIFICANT PORTION, UH, OF THE LOADS THAT ARE COMING ON IN THAT AREA ARE CRYPTO MINERS.

AND SO THEY'RE LIKELY TO BE PRICE SENSITIVE.

SO AS WE'RE SENDING THE APPROPRIATE PRICE SIGNALS OUT TO THAT AREA, THEY ARE LIKELY TO SEE HIGHER PRICES.

OF COURSE, IT DEPENDS ON THEIR CONTRACTS AND THOSE KIND OF THINGS.

'CAUSE THEY MAY BE GETTING ZONAL PRICES RATHER THAN JUST THIS KIND OF SUB ZONE AREA PRICES.

BUT AT LEAST THE, THE PRICES IN THAT FAR WEST AREA ARE LIKELY TO BE HIGHER AND, AND INCENT THEM TO COME OFF AT, WHICH WOULD ALSO BASICALLY SOLVE THE PROBLEM.

OKAY, SO I THINK THAT'S ALL I'VE GOT ON THAT ONE.

I'LL PAUSE FOR QUESTIONS BEFORE I MOVE ON TO THE NEXT ITEM.

ANY QUESTIONS FOR DAN? OKAY, KEEP GOING.

DAN, I HAVE A QUESTION.

SORRY.

HOW, HOW LONG DO YOU ANTICIPATE THAT YOU'LL HAVE THESE IOLS IN PLACE? UM, THERE ARE, UM, DIFFERENT TRANSMISSION PROJECTS THAT ARE COMING, WHICH, UM, CHRISTIE HAS A LIST, IS THIS PART OF THE PERMIAN BASIN? BUT DEFINITELY THEY WILL BE SOLVED BY THE TIME WE GET TO THE PERMIAN BASIN.

THERE ARE SOME THAT ARE COMING ON AND SOME THAT WILL HELP IN 2026, UM, 2027.

AND THEN THE, OF COURSE THE 7 65 ONES.

GOT, BUT THERE'S, THERE IS A LOT OF, THERE'S A LOT OF NEW TRANSMISSION COMING IN THAT AREA THAT WILL HELP TO SOLVE THE PROBLEM.

BUT IT ALSO, THE OUTAGES THAT ARE NEEDED TO, UH, DURING THE CONSTRUCTION OF SOME OF THOSE LINES MAY ACTUALLY MAKE IT WORSE TEMPORARILY, UH, AS, AS BEFORE IT GETS BETTER.

THE FIRST, THE FIRST TRANSMISSION ADDITIONS WILL OCCUR BEFORE SUMMER OF NEXT YEAR.

WOULD YOU SAY THAT AGAIN, WOODY? WHAT, WHAT WAS THAT? THE FIRST TRANSMISSION ADDITIONS WILL OCCUR BEFORE THE SUMMER OF NEXT YEAR.

THERE.

I, I GUESS I SHOULD ADD, I FOUND MY LIST.

THERE'S, THERE'S 10 DIFFERENT PROJECTS THAT PROBABLY AFFECT THIS OVER THE COURSE OF, UH, BEFORE THE 7 65 LINES OVER THE COURSE OF THE NEXT SEVERAL YEARS.

HIGH FREQUENCY, UM, HOW BIG OF A, A LARGE LOAD TRIP LIKE THAT COULD WE WITHSTAND? AND WE AT, AT AS OF THE LAST MEETING WE HAD IDENTIFIED THAT ROUGHLY 2,600 MEGAWATT LOAD SIZE WOULD BE UNDER WORST CASE CONDITIONS WOULD BE, WOULD POTENTIALLY CAUSE AN OVER FREQUENCY EVENT TO THE POINT THAT WE, WE NEEDED TO, TO DEFEND AGAINST THAT.

THE, THE NEXT, UH, TOPIC IS EVENT ANALYSIS.

AND YOU KNOW, WE'VE BEEN, UM, UM, I THINK, UH, I THINK IT WAS THE CHAIRMAN ASKED THE QUESTION A WHILE AGO, HOW MANY IBR RIDE THROUGH EVENTS HAVE WE HAD? AND, UM, THIS YEAR, 2025, WE'VE SEEN 12 EVENTS.

UM, AND WE'VE, WE'VE PUTTING, BEEN FOCUSING A LOT OF EFFORT ON IDENTIFYING THOSE, WORKING WITH THE, THE PEOPLE THAT HAVE, UH, THE RESOURCE ENTITIES THAT HAVE THE ISSUES AS WELL AS THE LARGE LOAD RIDE THROUGH EVENTS.

AND IN DEVELOPING THE, UM, UM, ADDITIONAL TOOLS AND ALSO ADDING PEOPLE THAT ARE THAT TO DO RESOURCE, UH, EVENT ANALYSIS.

WE'VE STARTED TO SEE OTHER KIND OF EVENTS THAT WE WOULDN'T NOR HAVE PREVIOUSLY BEEN ABLE TO DETECT.

AND SO, AND UH, LISTED THEM ON HERE AS OSCILLATION EVENTS AND THEN IBR LARGE, UH, MEGAWATT CHANGE EVENTS, WE'VE STARTED SEEING THESE IN OUR EVENT ANALYSIS AND THEY, UM, UM, BECAUSE OF THE ENHANCED, UH, ABILITIES TO DO TO DO THIS ANALYSIS.

AND SO THAT'S, THAT'S GOOD BECAUSE THEY HIT, THEY'RE NOT CAUSING PROBLEMS, BUT IT ALLOWS US TO, AS WE SEE THEM, THESE MORE MINOR EVENTS, WE CAN WORK THROUGH THE, UH, WITH THE, THE ENTITIES AND SOLVE THEM BEFORE THEY BECOME BIG EVENTS.

AND I'VE, I'VE ADDED A COUPLE OF EXAMPLES IN HERE THAT I WON'T GO THROUGH, UH, IN THE INTEREST OF TIME, BUT IF YOU HAVE ANY QUESTIONS, I'D BE HAPPY TO ANSWER.

WE'VE TALKED, UM, I TALKED LAST MEETING ABOUT THE LARGE LOAD, UH, VARIOUS STABILITY ISSUES RELATED TO LARGE LOADS.

I JUST WANTED TO GIVE AN AN UPDATE ON THAT, THAT FOR EXAMPLE, I GUESS WE, THERE WERE SEVERAL, THERE ARE SEVERAL DIFFERENT STUDIES GOING ON.

ONE OF THEM THAT WE IDENTIFIED LAST TIME WAS IF, IF A WE HAVE LARGE LOAD THAT TRIPS OFFLINE AND IT CAUSES

[03:00:01]

UM, WE'VE BEEN, WE'VE WE'RE ALL NOW WORKING ON SOME ADDITIONAL STUDIES AND WE DON'T HAVE THE RESULTS, UH, FOR THEM FOR YOU YET, BUT WANTED TO LET YOU KNOW THAT IT'S GOING ON TO LOOK AT THAT WAS UNDER WORST CASE CONDITIONS.

NOW WHAT ARE THE PARAMETERS THAT CAUSE THAT NUMBER TO BE HIGHER, UH, DURING OTHER CONDITIONS? WHAT WE FOUND IS THAT THAT'S SIGNIFICANTLY, UH, DEPENDENT ON INERTIA.

AND SO THE MORE INERTIA WE HAVE ON THE SYSTEM, THE LARGER THE, THE, THE SLOWER THE, UH, FREQUENCY CHANGE IS FOR A LARGE LOAD EVENT AND THEREFORE WE CAN WITHSTAND A MUCH BIGGER EVENT, UM, UNDER MANY CONDITIONS AS COMPARED TO THAT KIND OF WORST CASE CONDITION THAT WE IDENTIFIED.

AND SO WE'RE DOING A STUDY TO, TO KIND OF FLESH THAT CURVE, WHAT THOSE PARAMETERS ARE OUT SO THAT WE CAN, UH, COMMUNICATE THAT OUT TO TO MARKET PARTICIPANTS.

THE SECOND ONE IS, LAST TIME I LOOKED AT, UH, THAT WE HAD STUDIED WEST TEXAS TO SEE DO WE HAVE, UH, FAULTS IN THE WEST TEXAS AREA THAT COULD TRIP MORE THAN THAT 2,600 MEGAWATT AMOUNT OFFLINE.

UH, BUT WE PRIMARILY AT THAT POINT HAD JUST LOOKED AT THE WEST TEXAS AREA.

WE'RE NOW LOOKING AT OTHER AREAS ACROSS THE STATE TO SEE WITH THE AMOUNT OF LARGE LOADS THAT ARE BEING ADDED AND CONCENTRATED, OTHER AREAS WHERE CAN, WHERE WOULD, MIGHT, WE ALSO HAVE AN ISSUE WHERE A SINGLE FAULT COULD, COULD CAUSE MORE THAN THAT MEGAWATT AMOUNT TO, TO BE, UH, TRIPPED ON, UM, INSTANTANEOUSLY.

AND SO WE'RE, WE'RE IN THE PROCESS OF LOOKING AT THAT.

THERE ARE LIKELY TO BE OTHER AREAS THAT, THAT HAVE THAT PROBLEM.

BUT WE'RE, UM, WE'LL BE SHARING THAT WITH STAKEHOLDERS AS SOON AS, AS THAT, UH, IS DONE.

UM, THE, UM, AND OF COURSE ONCE WE IDENTIFY WHERE THOSE AREAS ARE, WE'RE IDENTIFYING THEM BASED ON THE 2,600.

BUT THEN OPERATIONALLY WE'D LIKE TO COME UP WITH A, A, UH, SYSTEM WHERE IF WE'RE IN A HIGHER, UH, LEVEL EVENT WHERE, WHERE WE'RE IN HIGH INERTIA CONDITIONS, 2,600 NUMBER IS, IS HIGHER THAN WE WOULDN'T NEED TO LIMIT THE CONSUMPTION IN THOSE, UH, OTHER AREAS OR WEST TEXAS.

UM, THE, WE HAVE PROPOSED OUT TO STAKEHOLDERS IN THE LARGE LOAD WORKING GROUP, A VOLTAGE RIDE THROUGH STANDARD.

SO WE HAVE, WE HAVE VOLTAGE RIDE THROUGH STANDARDS FOR IBS FOR OTHER TYPES OF GENERATION.

UM, AS FAR AS I'M AWARE, NO ONE IN THE WORLD HAS ONE FOR THESE LARGE LOADS YET.

I'VE HAD SEVERAL PEOPLE TELL US, ERCOT, WHEN YOU GET YOURS DONE, WE'LL JUST COPY IT.

AND SO, UH, ONCE AGAIN, WE'RE LEADING.

UM, AND SO WE'VE, WE'VE STARTED TO WORK WITH STAKEHOLDERS TO ADDRESS WHAT DOES THE SYSTEM NEED AND THEN TRY TO MARRY THAT UP WITH WHAT THE OEMS AND OTHERS TELL US THAT THE UP S IS AND THOSE KIND OF, UH, WHAT, WHAT CAN THE LARGE LOADS DO, UM, IN TERMS OF THAT RIDE THROUGH.

AND SO WE HAVEN'T SUBMITTED THAT YET, BUT WE'RE GETTING CLOSE TO, UH, ACTUALLY PUTTING THAT INTO THE STAKEHOLDER PROCESS THAT, SO IT WOULD BECOME A REQUIREMENT.

'CAUSE OBVIOUSLY THE LARGE LOADS WANT TO KNOW WHAT IS THE, WHAT IS, WHAT'S THE STANDARD, WHAT, WHAT'S, WHAT'S GOOD ENOUGH? AND THAT'S WHAT WE'RE TRYING TO DEFINE.

AND THEN, WE'LL, AS YOU REMEMBER LAST TIME WE TALKED ABOUT THIS BRIDGE WHERE FOR THIS LARGE LOAD VOLTAGE RIGHT THROUGH, WE'RE GONNA HAVE TO BUILD THE BRIDGE FROM BOTH SIDES.

WE CAN, THE LARGE LOADS ARE GONNA HAVE TO MEET CERTAIN REQUIREMENTS.

WE'RE GOING TO HAVE TO UPGRADE THE GRID.

AND THEN THESE OPERATIONAL THINGS THAT WE MAY HAVE TO DO.

WE'LL, IF WE DON'T, IF THE TWO DON'T SIDES DON'T MARRY UP, THEN WE'LL HAVE TO DO OPERATIONAL THINGS.

BUT WE WANNA LIMIT THAT GAP AS MUCH AS POSSIBLE BY BUILDING OUT FROM BOTH SIDES.

AND THEN I GUESS I'LL PAUSE THERE FOR ANY QUESTIONS ABOUT THAT ONE.

ANY QUESTIONS FOR DAN? OKAY.

AND THEN FINALLY, UM, YOU, UM, UM, APPROVED YESTERDAY ON THE CONSENT AGENDA, NGER 2 72 AND, AND PICKER 1 21, UH, WHICH WOULD REQUIRE NEW ENERGY STORAGE RESOURCES THAT HAVE AN INTERCONNECTION AGREEMENT AFTER NEXT SPRING TO PROVIDE, UM, ADVANCED GRID SUPPORT.

UM, THE, UM, WHERE THERE ARE A LOT OF ENERGY STORAGE DEVICES THAT ALL IN THE INTERCONNECTION QUEUE THAT ALREADY HAVE INTERCONNECTION AGREEMENTS,

[03:05:01]

SO THEY WOULDN'T BE SUBJECT TO THAT FUTURE, UH, REQUIREMENT.

AND SO, BUT WE WOULD LIKE FOR THEM TO HAVE, BE ABLE TO DO ADVANCED GRID SUPPORT.

AND SO OUR PLAN IS TO VERY SHORTLY PUT OUT A, A SECOND, UH, NPRR THAT WOULD PROVIDE AN INCENTIVE FOR EXISTING RESOURCES, THAT EXISTING ENERGY STORAGE RESOURCES THAT HAVE THE CAPABILITY TO BECOME GRID FORMING, TO DO, TO DO SO, TO MEET THOSE SAME, REQUIRE THE, THE SAME, UH, MODELING REQUIREMENTS THAT ARE IN THE, UH, UH, NORE 2 72.

UM, NOW IF IT REQUIRES YOU TO, YOU KNOW, TEAR OUT YOUR INVERTERS AND THOSE KIND OF THINGS, THAT WOULD NOT, THE INCENTIVE ISN'T GONNA BE ENOUGH TO DO THAT KIND OF THING, BUT IF IT'S SOFTWARE CHANGES AND THOSE KIND OF THINGS, WE'RE TRYING TO INCENT THEM THOSE TO DO THAT.

AND SO THAT'S COMING.

KIND OF WANTED TO GIVE YOU A HEADS UP ABOUT THAT.

THAT WILL BE THE, THE SECOND HALF OF THAT DISCUSSION.

DAN, I, I ASSUME BY THAT YOU MEAN FINANCIAL INCENTIVES? YES.

IT'D BE A, SOME, SOME, AT LEAST THE WAY WE'RE THINKING ABOUT PROPOSING, IT'D BE SOME KIND OF ONE TIME PAYMENT, UM, FOR GOING THROUGH THE PROCESS OF BECOMING QUALIFIED TO BE, UH, PROVIDED ADVANCED CREDIT SUPPORT.

INTO THE QUARTERLY, UH, STABILITY ANALYSIS.

AND I GUESS THE ONE THING I WOULD GO THROUGH IN MY APPENDIX IS FOLLOWING UP ON THE, THE IBR GRAPH.

YEAH, THERE IT WAS.

SO WE ARE INCLUDING THAT, UH, TO THE CHAIRMAN'S QUESTION EARLIER IN THE APPENDIX.

UM, EVERY, EVERY MEETING.

ANY QUESTIONS FOR DAN? UH, THANKS DAN.

UH,

[16.2. System Planning and Weatherization Update]

CHRISTIE, YOU'RE UP.

ALL RIGHT.

SO AS I WAS LISTENING TO PABLO TALK THIS MORNING, I RECOGNIZE WE COVERING KRISTY, CAN YOU PULL THE MICROPHONE CLOSER PLEASE? AS I, I LISTENED TO PABLO'S REPORT THIS MORNING.

I RECOGNIZE WE'RE RECOVERING A LOT OF THE SAME TOPICS.

UM, BUT THE SAYING SAYS THERE'S NO HARM IN, IN REPEATING GOOD THINGS.

AND I THINK, YOU KNOW, PROUD MOM, MY TEAM IS DOING A LOT OF GOOD THINGS.

SO I'M GONNA TOUCH ON THOSE, GIVE YOU SOME OF THE HIGHLIGHTS, UH, OF THE WORK THAT THEY'VE BEEN DOING, UH, AND THE PROGRESS THAT'S BEING MADE, AS WELL AS TRY TO HIT ON A COUPLE OF QUESTIONS THAT I'VE GOTTEN FROM BOARD MEMBERS THE PAST DAY AND A HALF, UH, ON SOME OF THE TOPICS IN MY SPACE AS WELL.

UM, KEEPING WITH THE TOPIC OF LARGE LOADS, UH, WHAT WE'RE TRACKING NOW IN THE LARGE LOAD INTERCONNECTION QUEUE, UM, THIS SLIDE SAYS 189 GIGAWATTS OF REQUESTS.

I JUST LOOKED AT THE REPORT THAT WAS PULLED YESTERDAY.

WE'RE UP TO 199 GIGAWATTS IN OUR QUEUE.

A COUPLE OF THINGS I WOULD HIGHLIGHT, UM, AS YOU THINK ABOUT THOSE NUMBERS, BACK IN, IN 2024, WE TOOK IN 73 DISTINCT REQUESTS IN THE LARGE LOAD INTERCONNECTION QUEUE.

THUS FAR IN 2025, WE'VE TAKEN IN 183.

SO LOOKING BACK AT THIS TIME LAST YEAR, WE WERE TRACKING ABOUT 56 GIGAWATTS WORTH OF REQUESTS.

WERE NOW, YOU KNOW, NEARING 200 GIGAWATTS WORTH OF REQUESTS.

WHEN YOU LOOK AT THE BREAKDOWN OF THE TYPES, UH, WELL OVER, UH, ALMOST 70% OF THOSE ARE DATA CENTER REQUESTS, UM, AND A STAT THAT WE'VE LOOKED IN.

THEY'RE DOING A LOT OF NEW REPORTING.

WE'LL TRY TO BRING THIS INTO FUTURE REPORTS.

WHEN I LOOK AT THE SIZES OF THESE LARGE LOADS, SO THEY HAVE TO BE AT LEAST 75 MEGAWATTS, THEY'RE REQUIRED TO GO THROUGH THIS PROCESS.

RIGHT NOW, WE'RE TRACKING 328 REQUESTS.

74 OF THEM, OR 23% ARE REQUESTS FOR LOADS THAT ARE WELL OVER A THOUSAND MEGAWATTS IN SIZE.

AND JUST TO PUT THAT INTO PERSPECTIVE, THE SIZE OF LUBBOCK, WHERE THAT OTHER, ONE OF THOSE OTHER UNIVERSITIES IS IN TEXAS 600 MEGAWATTS.

SO WE'RE LOOKING AT 74 POTENTIAL AREAS OF GROWING THE SIZE OF LUBBOCK, UH, IN THE GRID IN THE COMING YEARS.

ALL RIGHT.

SO WITH THAT LARGE LOAD, WE'RE GONNA NEED A GENERATION TO BE ABLE TO MEET THOSE NEEDS.

RIGHT NOW, WE'RE TRACKING OVER 2000 REQUESTS IN THE INTERCONNECTION QUEUE.

THAT'S TOTALING OVER 428, UH, GIGAWATTS.

AGAIN, A MAJORITY OF THAT CONTINUES TO BE, WE SEE SOLAR AND ENERGY STORAGE NEARING ALMOST 80% OF OUR INTERCONNECTION REQUESTS.

UM, AND YOU'LL SEE AS THOSE, YOU KNOW, REALLY START TO COME ON IN YEARS 27 AND 28, UH, FOR THOSE REQUESTS, PABLO MENTIONED THE TEXAS ENERGY FUND.

WE CONTINUED TO WORK WITH THOSE ENTITIES AS THEY PROGRESS THROUGH THEIR TIMELINES.

WE NOW HAVE THREE, UM, THAT HAVE MET ALL OF THEIR REQUIREMENTS THAT THEY NEED TO GET

[03:10:01]

TWO OF THEM HAVE, THEY MET THE MARK FOR AUGUST.

UM, WE HAD ANOTHER ONE THAT HAS MET ITS MARK, UH, THAT MET THE NOVEMBER 1ST DEADLINE.

UM, SO THREE OF THOSE PROJECTS MOVING FORWARD AND GETTING CLOSER TO THEIR ENERGIZATION.

PABLO ALSO MENTIONED, UH, THE QUARTERLY STABILITY ASSESSMENT.

AND THIS, HE LOOKED AT THE MOST RECENT ONE.

THIS JUST KIND OF GIVES YOU A HISTORIC PERSPECTIVE OF WHAT WE'VE LOOKED AT.

UM, BACK IN 2024, THERE WAS OVER 13,000 MEGAWATTS THAT WENT THROUGH THAT ANALYSIS FOR ENERGIZATION.

UM, THIS YEAR THERE WAS 14, ALMOST 15,000 MEGAWATTS THAT HAVE GONE THROUGH THE PROCESS TO BE ENERGIZED IN 2025.

AND WE'VE ALREADY PROCESSED OR ARE IN THE PROCESS OF PROCESSING OVER, UH, 6,000 FOR GOING IN THE FIRST PART OF 2026.

SO, UH, THE GENERATION INTERCONNECTION TEAM CONTINUING TO WORK THROUGH WITH THE RESOURCES AND UTILITIES AND OPERATIONS TO GET THOSE MEGAWATTS ONTO THE SYSTEM.

GOT THE LARGE LOADS, WE'VE GOT THE GENERATION, YOU NEED THE WIRES TO CONNECT THE TWO TO RELIABLY SERVE THEM.

AS WE WENT THROUGH LAST YEAR AND STUDIED, UH, IN 2024, OUR ROADMAP, LOOKING OUT TO 2030 REGIONAL TRANSMISSION PLAN AND NUMBER OF PROJECTS WERE IDENTIFIED, AND WE CONTINUE TO SEE AN UPTICK IN THE NUMBER OF PROJECTS THAT THEN COME THROUGH THE REGIONAL PLANNING GROUP PROCESS FOR REVIEW AND ENDORSEMENT TO MOVE FORWARD TO THAT NEXT STAGE OF BUILDING.

IF YOU LOOK AT THE GRAPH ON THE LEFT, YOU CAN SEE IN 2024, THERE WERE 22 DIFFERENT RPG PROJECTS THAT THE TEAM REVIEWED HAD INDEPENDENT REVIEW AND ENDORSED MOVING FORWARD AT THE VARIOUS LEVELS.

UM, 12 OF THOSE, EXCUSE ME, UH, SORRY, SIX OF THOSE WERE ACTUALLY AT THE HIGHER LEVEL TIER ONE THAT CAME HERE TO THE BOARD.

WE'RE ON TRACK THIS YEAR TO PROBABLY MORE THAN DOUBLE THAT.

WE'VE ALREADY DONE 24 AT THE VARIOUS STAGES FROM TIER ONE TO TIER THREE LEVELS, AND WE'VE GOT ANOTHER 18 TO 21, UH, THAT ARE IN PROGRESS RIGHT NOW.

UH, JULIE ASKED ME YESTERDAY, YOU KNOW, HOW MANY CAN THE BOARD EXPECT TO SEE? WELL, RIGHT NOW, OF THOSE THAT ARE IN PROCESS AT ERCOT, WE'VE GOT 12 THAT ARE AT THAT TIER ONE LEVEL THAT WILL EVENTUALLY END UP HERE AT THE BOARD LOOKING AHEAD TO DECEMBER.

IF WE CAN KEEP ON TARGET AND MEET OUR TIMELINES FOR REVIEWS IN T CONSIDERATION, THERE'LL BE ANOTHER SIX HERE IN DECEMBER.

TWO OF THOSE, WHICH INCLUDES, UH, 7 65 ADDITIONS, UM, THAT WE'VE CONTINUED TO ANA, DO ANALYSIS ON CONTINUING THE ANALYSIS WE DID ALL LAST YEAR ON THOSE PROJECTS.

UM, AND LOOKING AT THEIR VIABILITY TO MOVE FORWARD IN THE PROCESS, WE'RE WELL UNDERWAY IN OUR 2025 REGIONAL TRANSMISSION PLAN.

THAT'S LOOKING OUT TO 2031.

UH, FOR THE, THE BENEFIT OF THE BOARD MEMBERS THAT ARE NEW, UM, WE BROUGHT LONG-TERM LOAD FORECAST INFORMATION THAT WE HAD RECEIVED FROM THE UTILITIES BACK IN APRIL.

THEY HAD TOLD US, BASED OFF OF THEIR CUSTOMER INFORMATION, THEY EXPECTED THAT WE WOULD HAVE A DEMAND IN 2031 OF OVER 200 GIGAWATTS ON THE SYSTEM.

WE THEN DID SOME ADDITIONAL ANALYSIS TO APPLY SOME HISTORICAL PERSPECTIVE ON WHAT WE'VE ACTUALLY SEEN MATERIALIZED FROM THOSE REQUESTS THAT DID NOT HAVE SIGNED CONTRACTS.

AND WE WORKED WITH THE, UH, PUBLIC UTILITY COMMISSION TO APPLY THAT TO OUR TRANSMISSION PLAN.

THE FINAL NUMBER THAT WE ARE CURRENTLY STUDYING IS FOR 2031 IS 159 GIGAWATTS.

UM, WHAT WE'RE INITIALLY SEEING, WE'RE WORKING WITH THE UTILITIES, UH, WE'RE GOING THROUGH THAT COLLABORATION STAGE.

WE'RE ON TARGET TO MEET AN END OF THE YEAR DEADLINE FOR POSTING THAT.

BUT AS WE CONTINUE TO ANALYZE THE LOADS THAT ARE MOVING TO THE SYSTEM, THE DYNAMICS OF WHERE WE'RE SEEING RESOURCES LOCATED ON THE SYSTEM, WE CONTINUE TO SEE THE NEED FOR THE 7 65 NETWORK, NOT ONLY WHAT THE COMMISSION HAS ALREADY APPROVED, UM, BUT WHAT WE HAVE RECOMMENDED FOR THE EASTERN PORTION OF THE STATE TO MOST EFFICIENTLY AND RELIABLY MOVE POWER AROUND THE SYSTEM FROM A RESOURCE ADEQUACY.

UH, A LOT OF WORK GOING ON, NOT ONLY IN OUR REGULAR REPORTING THAT COMES THROUGH OUR, OUR MONTHLY REPORTS, LOOKING AT PROBABILISTIC ANALYSIS OF THE CHANCE OF IT, UH, ENCOUNTERING EMERGENCIES ON THE SYSTEM, AS WELL AS OUR CAPACITY AND DEMAND REPORTS, OUR NERC REPORTING.

UM, JUST KIND OF LOOKING BACK, UH, AS A COMPARISON OF OUR MOST RECENT MONTHLY OUTLOOKS, WHAT WE'VE SEEN IS A DECREASING PROBABILITY OF GOING INTO EMERGENCY CONDITIONS ON THE SYSTEM THAT'S REFLECTED BY NOT ONLY THE GROWTH THAT WE'VE SEEN IN BATTERIES AND SOLAR, BUT AS WELL AS, UM, HOW WE ARE NOW LOOKING AT OUR LARGE LOAD FORECAST.

WE'VE

[03:15:01]

BECOME, WE'VE GOT MORE OPERATIONAL DATA, WE'VE GOT ADDITIONAL DATA AS THEY'RE GOING THROUGH THE LARGE LOAD INTERCONNECTION, AND WE HAVE BETTER PERSPECTIVES ABOUT WHEN THEY'RE ACTUALLY GOING TO CONNECT TO THE SYSTEM AND HOW THEY'RE GONNA RAMP UP THEIR OPERATIONS.

AND WE'RE ABLE TO REFLECT THAT IN THE NEARER TERM IN OUR REPORTING RISK, UM, TO SOME OF THE QUESTIONS THAT CAME UP EARLIER ABOUT THE RELIABILITY STANDARD.

UH, JUST FOR, FOR ADDITIONAL INFORMATION KIND OF ON THOSE TIMELINES, WE'LL BE FILING OUR ASSUMPTIONS WITH THE COMMISSION IN JANUARY ABOUT THE MODEL THAT WE WOULD LIKE TO USE.

WE EXPECT TO GET FEEDBACK FROM THE COMMISSION AND APPROVAL ON THOSE ASSUMPTIONS BY THE END OF APRIL OF NEXT YEAR.

THAT MEANS THEN WE GO BACK IN HOUSE, RUN OUR STUDIES, DO OUR ANALYSIS.

WE SHOULD HAVE THAT COMPLETE BY THE END OF AUGUST, OR WE'LL BE FILING THAT WITH THE PUBLIC UTILITY COMMISSION SO THEY CAN GO THROUGH, REVIEW IT, HAVE WORKSHOPS, GET INPUT FROM STAKEHOLDERS, THE PUBLIC, AND I THINK THAT WOULD MEAN BY, BY THE END OF THE YEAR, WE SHOULD EXPECT TO HAVE INFORMATION BACK ON THE, THE RELIABILITY STANDARD.

SO I JUST WANTED TO CLARIFY OR GIVE SOME ADDITIONAL DETAIL ON THAT.

WEATHERIZATION, THE TEAM IS WRAPPING UP THEIR SUMMER INSPECTIONS.

THESE NUMBERS WERE PULLED AT THE END OF AUGUST.

UM, AS WE'RE NOW ALMOST TO THE END OF SEPTEMBER, WE'VE CURRENTLY, AS THE END OF LAST WEEK, WE'VE DONE 674 INSPECTIONS OF BOTH RESOURCES AND TSP FACILITIES, UM, EXCEEDING OUR GOAL THAT WE HAD SET FOR THE SUMMER TO KEEP ON TARGET TO MEET THE NUMBERS INSPECTIONS REQUIRED BY THE COMMISSION.

UM, COMPLIANCE LEVELS HAVE REMAINED REALLY WELL THROUGH THIS SUMMER INSPECTION PERIOD WITH MOST OF THE DEFICIENCIES, UM, THAT HAVE BEEN IDENTIFIED BEING CURED, UM, VERY NEAR AFTER OUR INTERACTION WITH THE RESOURCES OR THE UTILITIES.

LAST BUT NOT LEAST, PABLO ALSO HIT ON NGER 2 45 AND JUST WANTED TO SHOW KIND OF A, A GRAPHIC VIEW.

ON THE LEFT, YOU CAN SEE IS A QUICK SUMMARY OF WHAT WE RECEIVED BACK IN APRIL OF, AT THAT TIME, WE DID HAVE 484 RESPONSES THAT TOLD US THEY WOULD BE ABLE TO MEET THE REQUIREMENTS BY THE END OF THE YEAR OR THEIR COMMERCIAL OPERATION DATE.

SO THAT WAS GOOD.

WE HAD 427 THAT ASKED FOR EITHER ADDITIONAL TIME OR EXEMPTIONS.

AS PABLO MENTIONED, WE HAD TO ITERATE THROUGH WITH THOSE RESOURCES TO GET ADDITIONAL INFORMATION WORKING WITH THEM THROUGH WORKSHOPS AND FEEDBACK OF WHAT THEY HAD INITIALLY SUBMITTED.

SO WE BREAK DOWN THOSE SUBMISSIONS THAT WE RECEIVED.

UH, A HUN, ANOTHER 119 HAVE NOW, UM, SAID THEY CAN MAXIMIZE.

UM, SO YOUR, YOUR QUESTION EARLIER, JOHN, THEY HAVE TOLD US, YOU KNOW, WE WITHDRAW, WE'VE, YOU KNOW, WE'VE DONE FURTHER WORK, WE CAN MEET THOSE STANDARDS.

UM, SO THE GOOD NEWS IS WE'VE GOT 603 SUBMISSIONS OR ABOUT 60,000 MEGAWATTS THAT BELIEVE THEY CAN MEET THE STANDARDS BY THE END OF THE YEAR, BY THE TIME THEY GO COMMERCIAL, THE OTHER 277, WHICH IS ABOUT 31,500 MEGAWATTS.

WE'LL CONTINUE TO WORK WITH THEM.

WE'RE IN THE PROCESS NOW OF LOOKING AT THE QUALITY OF THE INFORMATION THEY'VE PROVIDED, THE MODELS THAT THEY'VE PROVIDED, AND WE'LL BE GOING THROUGH THOSE ITERATIONS AND WE CAN REPORT BACK TO YOU NEXT TIME WHERE WE STAND ON THOSE.

UM, BUT GOOD PROGRESS BEING MADE.

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

ANY QUESTIONS FOR CHRISTY? OKAY, THANKS CHRISTY.

THE, UH, WE'LL NOW MOVE TO AGENDA, UH, 16

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

POINT, EXCUSE ME.

UH, WE'RE GONNA MOVE TO THE BOARD COMMITTEE REPORTS IN AGENDA ITEM 17.1, UH, IS THE FINANCE AND AUDIT COMMITTEE REPORT.

THEN WE'LL HAVE THE HRMG REPORT, AND THEN WE WILL, UM, HAVE THE TECHNOLOGY AND, AND SIGN COMMITTEE REPORT.

UH, WITH RESPECT TO THE, UH, I'M SORRY, WITH RESPECT TO THE FINANCE AND AUDIT COMMITTEE REPORT, UH, COMMITTEE MEMBERS DISCUSS THE COMMITTEE SELF-EVALUATION PROCESS.

UH, SELF-EVALUATIONS WILL BE CONDUCTED NOW THROUGH NOVEMBER, AND THE RESULTS WILL BE PRESENTED AT THE DECEMBER MEETING.

UH, WE MET WITH OUR INDEPENDENT FINANCIAL AUDITOR, UM, AND WE ALSO DISCUSSED WITH THEM THE, THE, UM, PLANNING FOR THE 2025 FINANCIAL AUDIT.

UH, WE ALSO HAD OUR NORMAL COMMITTEE BRIEFS REPORT TO DISCUSS FINANCIAL PERFORMANCE INVESTMENTS AND DEBT COMPLIANCE.

AND ALL THOSE REPORTS WERE NOMINAL.

WE THEN, UH, DISCUSSED THE RECENT SUBCHAPTER M BOND REFINANCING.

THE FINANCING TOOK PLACE ON VERY FAVORABLE TERMS AT ONLY 95 BASIS POINTS OVER THE 10 YEAR, UM, UH, TREASURY YIELD ERCOT.

AS PART OF THAT ERCOT EARNED AN AID, UH, DOUBLE OR AAA RATING ON THE IN BONDS AND REFINANCING, UH, FROM MOODY'S.

THAT'S THE HIGHEST RATING AVAILABLE FOR MOODY'S.

AND IT'S IMPORTANT TO NOTE THAT THE NEXT SAVINGS TO TEXAS RATE PAYERS IS NORTH OF $60 MILLION.

THERE WERE NO

[03:20:01]

VOTING ITEMS IN REPORT.

AND THAT CONCLUDES MY REPORT FOR F AND A.

PEGGY.

[17.2. Human Resources and Governance (HR&G) Committee]

THANK YOU, CHAIRMAN.

UH, WE HAD A VERY LIGHT GENERAL SESSION FOR THE HUMAN RESOURCES AND GOVERNANCE COMMITTEE.

UH, ALL THE COMMITTEES, UH, INDEPENDENTLY LOOKED AT THE PROCESS FOR THE ANNUAL COMMITTEE SELF-EVALUATIONS AND THE, THOSE WILL BE TAKING PLACE WITH REPORTING OUT IN DECEMBER 8TH.

UH, BOARD MEETING, COMMITTEE MEETINGS.

SECOND, UH, BRANDON GLEASON PROVI PRESENTED A BRIEF, UH, REVIEW OF THE CONFLICT AND INTEREST DISCLOSURES SUBMITTED BY EMPLOYEES AND BOARD MEMBERS.

UH, HE HIGHLIGHTED THAT SINCE THE LAST REVIEW IN JUNE OF 2024, NO BOARD MEMBERS HAVE IDENTIFIED A CONFLICT OF INTEREST THAT REQUIRED CUSAL FOR A SPECIFIC VOTING ITEM.

AND THE NUMBER OF POTENTIAL CONFLICT OF INTERESTS REPORTED BY ERTA EMPLOYEES AND ADDRESSED BY THE LEGAL DEPARTMENT WAS, UH, SIMILAR IN THE SAME LEVEL AS, UH, THE PREVIOUS YEARS.

AND MOST OF THOSE, UH, POTENTIAL CONFLICTS THAT INTERESTS ARE IN THE FORM OF ERCOT EMPLOYEES THAT MAY HAVE RELATIONSHIPS WITH ERCOT VENDORS OR MARKET PARTICIPANTS IN OUR PROCESSES.

THEY HAVE TO DISCLOSE THAT.

AND THEN THE LEGAL DEPARTMENT LOOKS AT THOSE.

UH, FINALLY, THE COMMITTEE, UH, DISCUSSED THAT ERCOT STAFF HAD SURVEYED THE BOARD MEMBERS FOR POTENTIAL 2027 BOARD MEETING DATES.

AND THE PROPOSED MEETING DATES ARE FOR 2027, OUR FEBRUARY 9TH, FEBRUARY 8TH AND NINTH, APRIL 12TH AND 13TH, JUNE 21 AND 22.

SEPTEMBER, 2020 1, 20 21, AND DE DECEMBER 6TH AND SEVENTH WITH THE ANNUAL MEETING BEING DECEMBER 6TH, 2027.

THOSE DATES WILL BE VOTED ON IN DECEMBER.

MEETING, UH, THEY'VE BEEN CLEARED WITH THE BOARD MEMBERS AND, UH, STAFF WILL BE SENDING OUT CALENDAR AND RIGHT TO GET IT ON EVERYBODY'S CALENDARS.

UH, THAT CONCLUDES OUR REPORT.

WELL, THANK YOU PEGGY.

UH, JOHN

[17.3. Technology and Security (T&S) Committee]

SWEN WILL REPORT THE TECHNOLOGY AND SECURITY, UH, COMMITTEE REPORT.

THANK YOU, BILL.

UM, WE HAD A INTERESTING MEETING.

UM, WE HAD A GUEST SPEAKER, UM, ACTUALLY FOUR GUEST SPEAKERS WHO DISCUSSED THE TOPIC OF GEOTHERMAL ENERGY AND ITS POTENTIAL IN TEXAS.

I THINK I CAN SUMMARIZE BY SAYING THERE'S A LOT OF POTENTIAL, BUT IT'S NOT CLEAR YET HOW FAST IT'S GONNA BE REALIZED AND HOW IT SCALES UP.

I MEAN, MOST OF THE TEST PROJECTS RIGHT NOW ARE RELATIVELY SMALL, THREE MEG, THREE, THREE MEG, FOUR MEG, FIVE MEG, THINGS LIKE THAT.

AND, AND OBVIOUSLY YOU NEED A LOT OF THOSE TO GIVE YOU, YOU KNOW, SOMETHING THAT'S USEFUL.

ON THE OTHER HAND, IT'S GOT GREAT CHARACTERISTICS.

IT'S DISPATCHABLE, IT'S CLEAN, IT'S RELATIVELY ECONOMICAL.

SO WE'RE, WE'RE THERE.

THERE'S, THERE'S LOTS OF PROJECTS UNDERWAY RIGHT NOW.

I WOULD SAY A LOT OF THEM ARE SORT OF SPECIAL IN THE SENSE THAT THEY'RE MILITARY OR OTHER THINGS THAT ARE, THAT HAVE UNIQUE SET OF CHARACTERISTICS.

UM, AND WE, WE WILL WATCH THIS CAREFULLY TO SEE IF IT ACTUALLY SCALES UP.

UM, WE DID REVIEW OUR QUESTIONNAIRE.

WE HAD OUR NORMAL UPDATE ON THE TECHNOLOGY PROJECTS IN JPS ORGANIZATION WITH A PARTICULAR FOCUS ON RTC.

UM, AND WE SPENT A LOT OF TIME TALKING ABOUT RTC, PARTICULARLY THE, THE CUTOVER PROCESS AND, AND, AND HOW THE TESTING HAS GONE.

SO WE KIND OF GOT INTO A LITTLE BIT OF DETAIL ON HOW THAT WAS GOING, AND I WOULD SAY IT'S GOING WELL AND OBVIOUSLY WE, WE HEARD FROM MATT ABOUT HIS ASSESSMENT OF IT EARLIER.

UH, AND THEN WE TALKED ABOUT FUTURE AS ASSESS AGENDA ITEMS, UH, WHICH WILL PROBABLY INCLUDE SOMETHING AROUND AI.

WE'VE, WE'VE TALKED ABOUT AI BEFORE, BUT I THINK IT'S PROBABLY TIME NOW TO HAVE A A LITTLE BIT MORE FOCUSED SESSION ON THE AI STRATEGY FOR, FOR ERCOT.

SO, UH, THAT, THAT'S GONNA COME UP HOPEFULLY IN DECEMBER.

THAT'S MY REPORT.

JOHN, ARE THERE ANY QUESTIONS FROM ANY DIRECTORS THAT WEREN'T ABLE TO PARTICIPATE IN COMMITTEE MEETINGS THAT HAVE A, A QUESTION ON THE REPORTS? OKAY.

BOARD WILL NOW RECESS AND CONVENE AN EXECUTIVE SESSION.

UH, THE LAST ITEM, UH, FOR THIS PART OF THE, UH, MEETING IS AGENDA ITEM 18, OTHER BUSINESS.

DO WE HAVE ANY OTHER BUSINESS TO TALK ABOUT BEFORE WE BREAK FOR EXECUTIVE SESSION? OKAY, I DON'T HEAR ANY.

THE

[Convene Executive Session]

FOLLOWING EXECUTIVE SESSION.

WE ANTICIPATE SEVERAL VOTING ITEMS. SO GENERAL SESSION WILL RECONVENE AT THE CONCLUSION OF THE EXECUTIVE SESSION.

THE GENERAL SESSION OF THE ERCOT BOARD OF DIRECTORS MEETING IS NOW RECESSED AND THE WEBCAST WILL BE SUSPENDED AS SOON AS CHAIRMAN GLEASON FINISHES HIS WORK.

THANK YOU, MR. CHAIRMAN.

THIS MEETING, THE PUBLIC UTILITY COMMISSION OF TEXAS IS, WILL STAND IN RECESS.