Dec 09, 2025 Board of Directors Meeting

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UH, GOOD MORNING, ERCOT, BOARD OF DIRECTORS AND GUESTS.

I'M BILL FLORES AND I HEREBY RECONVENE AND CALL TO ORDER THE DECEMBER 8TH AND NINTH 2025 MEETING OF THE BOARD.

THIS MEETING IS BEING WEBCAST LIVE TO THE PUBLIC ON KOTS WEBSITE.

I WOULD LIKE TO PROVIDE PUC CHAIR THOMAS GLEASON, THE OPPORTUNITY TO RECONVENE THE OPEN MEETING OF THE PUBLIC UTILITY COMMISSION OF TEXAS.

THANK YOU, MR. CHAIRMAN.

THIS MEETING, THE PUBLIC UTILITY COMMISSION OF TEXAS WILL COME TO ORDER TO CONSIDER MATTERS HAVE BEEN DULY POSTED WITH THE SECRETARY OF STATE FOR TODAY, DECEMBER 9TH, 2025.

UH, THANK YOU CHAIR GLEASON.

THE ANTITRUST ADMONITION AND SECURITY MAP WERE INCLUDED WITH THE POSTED MEETING MATERIALS.

UH, AND WE, UH, ARE NOW OPEN FOR COMMENTS.

CHAD, HAS ANYONE EXPRESSED AN INTEREST IN, UH, COMMENTING TO THE BOARD TODAY? NO ONE HAS EXPRESSED AN INTEREST CHAIRMAN.

OKAY.

THANK YOU, CHAD.

UH,

[11. CEO Update]

PABLO VEGAS IS GOING TO MAKE HIS PRESENTATION WITH THE CEO REPORT, PABLO.

ALL RIGHT.

THANK YOU, CHAIR FLORES, AND THANK YOU EVERYBODY FOR YOUR PARTICIPATION TODAY AND YOUR INTEREST IN THE IMPORTANT WORK THAT WE ARE DOING AT ERCOT.

IN THIS MORNING'S UPDATE, I'M EXCITED TO SHARE ERCO T'S NEW VISION AND MISSION AND VALUES.

THE, AS THE GRID HAS EVOLVED, OUR STRATEGIES HAVE EVOLVED ALONG WITH IT, AND WE'RE ALIGNING OUR CORE VISION AND OUR MISSION TO THE NEEDS OF THE MARKET.

AND WE'VE ESTABLISHED A SET OF VALUES THAT WE BELIEVE REFLECT HOW OUR EMPLOYEES WANT TO WORK AND EXPERIENCE THEIR CAREERS AT ERCOT.

I'M GONNA TOUCH BASE ON SOME OF THE CHANGES IN OUR SUPPLY MIX SINCE LAST WINTER.

I HAVE AN UPDATE ON OUR MOBILE GENERATION SOLUTION THAT WE'VE BEEN TALKING ABOUT IN SAN ANTONIO, AS WELL AS THE RELATED RELIABILITY MUST RUN CON, UH, CONTRACT WITH THE BRO THREE UNIT.

I'M GONNA DISCUSS SOME OF THE PROGRESS BEING MADE ON THE PROVISIONS IN SENATE BILL SIX AND THE ROADMAP AHEAD OF US AS IT RELATES TO OUR OP OPERATIONS AND MARKETS AND PLANNING WORK.

AND THEN I'M GONNA CLOSE, LIKE I ALWAYS DO, WITH SOME THANKS AND APPRECIATION FOR SOME OF THE INCREDIBLE ACCOMPLISHMENTS THAT HAVE BEEN, UH, DELIVERED SINCE OUR LAST TIME TOGETHER AS A BOARD.

HERE WE GO.

A YEAR AGO, WE DEFINED THE CONCEPT OF ERCOT 4.0 AND WHAT IT REPRESENTS IN RELATION TO EARLIER PERIODS OF ERCOT OPERATIONS.

AND AT A HIGH LEVEL, IT REPRESENTS A TRANSITION IN OUR MARKET THAT IS CHARACTERIZED BY HIGH AND VERY RAPID GROWTH OF INTERMITTENT AND SHORT SUPPLY, UH, SHORT DURATION SUPPLY RESOURCES.

IT'S CHARACTERIZED BY A RAPIDLY CHANGING CUSTOMER BASE THAT INCLUDES PRICE RESPONSIVE LOADS LIKE CRYPTO MINERS, RAPIDLY GROWING LARGE SCALE DATA CENTERS, AND CONTINUED PENETRATION OF DISTRIBUTED ENERGY RESOURCES THROUGHOUT THE GRID FROM PEOPLE'S HOMES TO THEIR BUSINESSES AND LOCATIONS ACROSS THE DISTRIBUTION SYSTEM.

IT'S A SIGNIFICANT SHIFT IN OPERATIONAL REQUIREMENTS, AND IT REPRESENTS AN OPPORTUNITY TO CREATE A MORE RESILIENT AND COST-EFFECTIVE GRID FOR THE BENEFIT OF ALL TEXANS.

THIS SHIFT CREATED AN OPPORTUNITY TO RE-LOOK AT OUR VISION AND OUR MISSION, AND TO MAKE SURE IT WAS ALIGNED BY THE SUCCESS OPPORTUNITIES THAT ERCOT 4.0 PRESENTS.

AND THAT SUCCESS DEPENDS ON KEEPING RELIABILITY AS THE BEDROCK OF OUR ORGANIZATION.

RELIABILITY IN TODAY'S DEFINITION OF RELIABILITY, WHICH INCLUDES A SOCIETY THAT DEPENDS FULLY ON THE AVAILABILITY OF ELECTRICITY FOR NEARLY EVERY FACET OF MODERN LIFE.

AND TO DO SO, WE'RE GOING TO HAVE TO EMBRACE INNOVATION AS ONE OF OUR CORE SUCCESS FACTORS TO KEEP UP WITH THE PACE OF CHANGE.

OUR NEW VISION IS TO BE THE MOST RELIABLE AND INNOVATIVE GRID IN THE WORLD, NOT JUST IN TEXAS, NOT JUST IN THE UNITED STATES, BUT IN THE WORLD.

WE ARE ONE, IF NOT THE LEADING GRID GLOBALLY WHEN IT COMES TO OPERATIONAL AND TECHNICAL COMPLEXITIES.

AND TO BE SUCCESSFUL, WE NEED TO BE A CLEAR LEADER ON A STAGE THAT REPRESENTS THE ENTIRETY OF THIS PLANET, THE IMPACT OF WHAT TEXAS REPRESENTS TO THE GLOBAL ECONOMY TODAY.

AND IF YOU LOOK AT IT JUST ON ENERGY, WE PRODUCE MORE THAN 40% OF THIS COUNTRY'S OIL.

30% OF THIS COUNTRY'S NATURAL GAS HAVE A TOTAL REFINING CAPABILITY OF ABOUT 30% OF WHAT THE UNITED STATES USES.

THAT'S JUST AN IMPACT INSIDE OF TEXAS AND THE UNITED STATES.

BUT TO BE IMPORTANT IN THE FUTURE, TO BE SUCCESSFUL, WE'RE GONNA HAVE TO BE A GLOBAL LEADER ON THAT STAGE.

OUR MISSION IS WHAT WE DO EVERY DAY TO ACHIEVE THIS VISION, WE WILL ENSURE A RELIABLE GRID WITH COMPETITIVE AND COST EFFECTIVE ELECTRICITY MARKETS.

THAT IS

[00:05:01]

IT IS THE RE AGAIN, RELIABILITY AT THE CORE OF IT, AND WE RECOGNIZE THE CRITICAL IMPORTANCE OF A COST-EFFECTIVE GRID WHEN IT COMES TO A THRIVING ECONOMY.

AND THEN OUR VALUES THAT WE DEVELOPED, WE DID THAT DIRECTLY WITH INPUT FROM MANY, MANY ERCOT EMPLOYEES.

WE HELD FOCUS GROUPS AND GATHERED SURVEYS FROM HUNDREDS OF OUR EMPLOYEES WHO SPOKE TO WHAT IT SHOULD FEEL LIKE TO WORK AND TO BE A PART OF THIS ORGANIZATION, AND WHAT A SET OF CORE VALUES THAT WILL CREATE AN ENVIRONMENT THAT WILL FOSTER BOTH INDIVIDUAL AND ORGANIZATIONAL SUCCESSES.

I'M NOT GONNA REVIEW EACH ONE OF THE VALUES THAT ARE ON THIS SLIDE, BUT YOU CAN SEE THAT EACH ONE OF THEM BUILDS UPON AND SUPPORTS EACH OTHER TO CREATE AN ENVIRONMENT WHERE WE CAN ACHIEVE OUR VISION AND ACHIEVE SUCCESS IN OUR DAILY MISSION.

SO CHANGES THAT WE'VE SEEN IN THE GRID SINCE LAST WINTER, 2025 A YEAR, 2025, IS GONNA REPRESENT A YEAR WITH TREMENDOUS SUPPLY GROWTH ON THE ERCOT GRID.

WE EXPECT TO SEE NEARLY 16 GIGAWATTS OF NEW SUPPLY CONNECTED ONTO THIS GRID IN 2025, JUST SINCE THE END OF LAST WINTER.

THIS IS A CHART SHOWING FROM MARCH 1ST THROUGH NOVEMBER 1ST.

THIS YEAR, WE'LL HAVE CONNECTED APPROXIMATELY 11 GIGAWATTS OF NEW CAPACITY.

YOU CAN SEE THE LARGE MAJORITY OF IT CONTINUES TO BE IN THE TWO RESOURCE TYPES WE'VE BEEN SEEING OVER THE LAST SEVERAL YEARS.

STORAGE.

WE'RE NOW REPRESENTING STORAGE AS WITH BOTH THE CAPACITY, UH, PEAK CAPACITY NUMBER, AS WELL AS ITS ENERGY CAPACITY, BECAUSE SINCE STORAGE IS DURATION LIMITED, THE ENERGY MEASURE IS A MORE APPROPRIATE MEASURE OF ITS CAPACITY.

AND WHILE WE ARE STILL SEEING LOW NUMBERS IN OUR NATURAL GAS CONNECTIONS INTO THE GRID, WE ARE SEEING SIGNIFICANT IMPROVEMENTS IN THE NATURAL GAS PIPELINE EXPRESSING POTENTIAL INTEREST IN CONNECTING INTO THE ERCOT GRID.

I THINK IT'S HELPFUL TO SHOW THIS COMPARATIVE, I'VE DONE THIS IN THE PAST AS WELL AS WE GET INTO THE WINTER SEASON, UNDERSTANDING THE IMPACT OF SUPPLY ADDITIONS IN BOTH THE WINTER AND SUMMER PEAK CONDITIONS.

AND YOU CAN SEE FROM THIS INTEGRATED SLIDE, THERE ARE VERY SIGNIFICANT DIFFERENCES IN THE LOW CARRYING CAPABILITIES BETWEEN THESE DIFFERENT RESOURCES AT PEAK BASED ON THEIR PRODUCTION TYPE.

I SHARE THIS TO TRY TO HELP EXPLAIN SOME OF THE DIFFERENCES WHY DURING THIS PAST SUMMER, DURING THE PEAKS, WE HAVEN'T REALLY BEEN EXPERIENCING SCARCITY GRID CONDITIONS BECAUSE THE SIGNIFICANT ADDITIONS OF SOLAR AND BATTERY STORAGE ARE OPTIMALLY POSITIONED TO HELP DURING THOSE SUMMER PEAKS IN THE AFTERNOONS AND EARLY EVENINGS.

AS THE SUN IS TRANSITIONING OUT, WINTER STILL REPRESENTS THE HIGHER RISK PERIOD IN THE ERCOT MARKET BECAUSE FEWER OF THESE RESOURCES THAT ARE BEING ADDED ARE AVAILABLE DURING THE WINTER PEAK PERIODS, WHICH TEND TO BE IN THE MORNINGS BEFORE THE SUN RISES, OR IN THE EARLY EVENINGS RIGHT AFTER IT SETS.

I THINK IT'S IMPORTANT TO HIGHLIGHT SOME OF THE PROGRESS THAT HAS BEEN MADE ON THE WEATHERIZATION PROGRAM THROUGH OUR FIRST FOUR YEARS, AND THIS IS A FOCUS ON OUR WINTER WEATHERIZATION.

SINCE THE INCEPTION OF THIS PROGRAM IN IN, UH, DECEMBER OF 2021, WE HAVE COMPLETED OVER 4,000 WINTERIZATION INSPECTIONS OF BOTH GENERATION AND TRANSMISSION FACILITIES.

WE INSPECT THEM FOR VARIOUS PREPARATION MEASURES THAT ARE INTENDED TO REASONABLY ENSURE SUSTAINED OPERATION AT WEATHER ZONE SPECIFIC COLD AND HOT CONDITIONS.

WE HELD A WINTER WEATHERIZATION WORKSHOP, UH, IN OCTOBER ON THE 16TH THIS YEAR, WE HAD OVER 200 PEOPLE ATTEND THAT WORKSHOP AND IT HIGHLIGHTED BEST PRACTICES PRESENTATIONS FROM THREE OF OUR MARKET PARTICIPANTS FROM LCRA, FROM CPS ENERGY AND FROM AN L THE WINTER 2025 AND 2026 INSPECTION PERIOD.

STARTED A WEEK AGO TODAY ON TUESDAY, AND WE PLAN TO HAVE A MINIMUM OF 450 INSPECTIONS OVER THE COURSE OF THIS WINTER.

I INCLUDED THIS, UH, GRAPH ON THE RIGHT SIDE, THE WINTER CURE PERIODS BECAUSE I THINK IT'S IMPORTANT THAT NOT ONLY ARE WE GOING OUT INSPECTING, BUT THIS SHOWS HOW WE HAVE BEEN SEEN PROGRESS ON THE PERFORMANCE OF THOSE INSPECTIONS OVER THE COURSE OF TIME.

AND SO THE CURE PERIOD IS A MEASUREMENT THAT'S FOUND WHEN WE HAVE FOUND INSTANCES OF NON-COMPLIANCE WITH THE WEATHERIZATION RULE.

AND THEN THE DEALING WITH THOSE, UH, WE GIVE THEM A CURE PERIOD IN ORDER TO DEAL WITH THOSE FINDINGS OF NON-COMPLIANCE.

AND YOU CAN SEE FROM BEGINNING IN THE WINTER OF 2022 TO 2023, THE INSTANCES THAT WE HAD A TOTAL OF, UH, 75, 55 OF THOSE WERE AT, UH, TRANSMISSION SERVICE.

AND, UH, 20 OF THOSE AT, UH, SUPPLY RESOURCES.

AND THOSE HAVE DECREASED OVER TIME TO A TOTAL OF ONLY FIVE OVER THE LAST WINTER.

AND WE'VE HAD SIMILAR, SIMILAR BENEFITS AND PERFORMANCE, UM, AS WELL IN THE SUMMER PERIODS.

OUR CURE PERIODS HAVE GONE FROM ABOUT 15 IN 2023 DOWN TO THREE THIS PAST SUMMER.

SO SIGNIFICANT PRO IMPROVEMENTS IN PERFORMANCE AND FINDINGS OF NON-COMPLIANCE.

[00:10:01]

ALL OF THOSE MOBILE GENERATING UNITS HAD HAD BEEN ABLE TO INITIALLY SYNCHRONIZE WITH THE ERCOT GRID, AND AS OF THIS WEEK, ALL 15 OF THEM HAVE BEEN SUCCESSFULLY TESTED AND ARE AVAILABLE FOR DISPATCH UNDER EMERGENCY CONDITIONS.

AND AS A REMINDER, THE CONTRACT FOR THESE MOBILE GENERATION UNITS RUNS THROUGH MARCH OF 2027, AND WE HAVE THE RIGHT TO TERMINATE THAT EARLIER IF THE RELIABILITY NEED NO LONGER EXISTS GOING FORWARD.

RELATED TO THAT, AN UPDATE ON THE RELIABILITY MUST RUN AGREEMENT THAT WE HAVE IN PLACE WITH CPS ENERGY, UH, ON THE RIG THREE UNIT, THE OUTAGE, IT BEGAN LAST MARCH, IF YOU RECALL, AFTER THE APPROVAL BY THE BOARD LAST DECEMBER A YEAR AGO, UH, FROM NOW AND TO DATE, THE BIGGEST AND MOST SIGNIFICANT ISSUE IN THAT OUTAGE PERIOD WAS A REPLACEMENT OF THAT NUMBER NINE BOILER SUPER HEADER, UH, SUPER HEATER HEADER.

THE WORK WAS COMPLETED FOR THAT REPLACEMENT IN OCTOBER, UH, END OF OCTOBER THIS YEAR.

TESTING COMPLETED MOST RECENTLY IN NOVEMBER, WE HAD A ISSUE IDENTIFIED BY CPS THAT THERE WERE SOME IMPURITIES IN THE TURBINE BEARING LUBRICATION OIL, AND SOME ADDITIONAL WORK WAS GONNA NEED TO BE DONE TO, UH, REFURBISH THOSE INSTALLED BEARINGS THAT COULD COST AN ADDITIONAL 1.8 MILLION, POTENTIALLY ADD ABOUT A 10 DAY DELAY TO THE SCHEDULE.

SO AS OF TODAY, IT'S CURRENTLY SCHEDULED TO RETURN TO SERVICE ON DECEMBER 15TH.

THERE IS A LITTLE BIT OF RISK TO THAT SCHEDULE BASED ON THE REFURBISHMENT WORK THAT NEEDS TO OCCUR.

SO SHIFTING GEARS INTO THE, UM, REGULATORY AND POLICY ARENA, WE'VE TALKED ABOUT SENATE BILL SIX AND ITS BROAD IMPACTS SEVERAL TIMES IN, UH, IN THESE BOARD DISCUSSIONS.

IT'S DRIVING FOUR SIGNIFICANT NEW RULEMAKINGS.

ONE IS FOCUSED ON THE LOAD FORECAST STANDARDIZATION FOR LARGE LOADS, VERY SIGNIFICANT PART OF THE PROVISION, WHICH IS INTENDED TO GIVE US BETTER CLARITY AND BETTER ACCURACY ON THE NUMBERS THAT WE EXPECT IN THAT LOAD FORECAST, WHICH AS I DISCUSSED IN MY, IN MY LAST UPDATE A COUPLE MONTHS AGO, IS REALLY THE FOUNDATION FOR ALL OF THE PLANNING AND ALL OF THE RELIABILITY REPORTING THAT WE DO.

WE HAVE ANOTHER RULE MAKING ON LARGE LOAD, UH, INTERCONNECTION STANDARDS, A THIRD ONE ON COST ALLOCATION FOR TRANSMISSION INFRASTRUCTURE, AND THEN A FOURTH ON THE NET METERING RULES, WHICH IS ADDRESSED IN THIS SLIDE.

WE'VE ESTABLISHED AN INTERIM NET METERING REVIEW PROCESS THAT ALIGNS WITH WHAT THE PROPOSED RULE IS THAT'S GONNA BE GOING THROUGH.

WE ALREADY HAVE SEEN TWO NET METERING ARRANGEMENTS FORMALLY SUBMITTED FOR OUR REVIEW AT THIS TIME.

AND WE'RE GONNA NEED, OUR REQUIREMENTS ARE WE HAVE TO GO THROUGH AND COMPLETE OUR ANALYSIS WITHIN 120 DAYS OF NOTI NOTIFYING THE PUC THAT WE'VE RECEIVED ALL OF THE COMPLETED INFORMATION FOR THESE NET METERING ARRANGEMENTS, AND WE'RE COORDINATING VERY CLOSELY WITH STAFF ON THOSE PUC STAFF ON THOSE.

WE EXPECT ALL OF THESE RULEMAKINGS TO UNDER TO GO THROUGH THE PROCESS IN 2026 WITH THE NET METERING AND THE FORECAST STANDARDIZATION PROCEEDING FIRST, AND THEN FOLLOWED BY THE OTHER TWO, UH, RULEMAKINGS.

I HAD LIKE TO GIVE A LITTLE BIT OF A LOOK AHEAD AS TO WHAT'S STILL ON THE AGENDA AND, UH, IMPORTANT WORK COMING UP.

SO FROM A CURRENT OPERATIONS, I'LL, I'LL REALLY HIGHLIGHT THE NOER 2 45.

IF YOU RECALL.

THIS IS THE OPERATING GUIDE CHANGE THAT IS RELATED TO THE REQUIREMENTS FOR RIDE THROUGH REQUIREMENTS ON INVERTER BASED RESOURCES THROUGH, WE PROBABLY WILL BE LOOKING AT REVIEWING THE SUBMISSIONS THAT WE'VE RECEIVED IN FOR EXTENSIONS AND FOR EXEMPTIONS FOR, FOR COMPLIANCE WITH THAT RULE THROUGH THE SECOND QUARTER OF 2026.

AND THEN THE ACTUAL RELIABILITY ASSESSMENTS THAT WE THEN RUN FOLLOWING, HAVING ALL OF THAT DATA IN WILL PROCEED IN THE SECOND HALF OF 2026 WITH DECISIONS ON WHAT CAN BE EXEMPTED, WHAT CAN BE EXTENDED IN TERMS OF TIMING AND COMPLIANCE.

FOR THE NOGA 2 45 RULE, THERE'S QUITE A LOT ON THE MARKET DESIGN PLATE, THE DRRS, DISPATCHABLE RELIABILITY RESERVE SERVICE, WE TALKED ABOUT THE TWO NPR R RELATED TO THAT YESTERDAY.

WE'VE GOT THE RESIDENTIAL DEMAND RESPONSE PROGRAM, UH, THAT WE ALSO DISCUSSED IN YESTERDAY'S UPDATE.

WE HAVE A NEW LARGE LOAD DEMAND RESPONSE PROGRAM THAT IS COMING OUT OF, UH, SENATE BILL SIX.

AND SO WE'LL BE WORKING ON THE DEVELOPMENT OF THAT.

AND THEN, OF COURSE, FROM THE PRIOR LEGISLATIVE SESSION AFFIRMING REQUIREMENT, THAT IS A SIGNIFICANT PIECE OF MARKET DESIGN, UH, PROTOCOL WORK WE'RE GONNA BE DOING IN 2026, AND THAT NEEDS TO BE COMPLETED BY THE END OF THIS, UH, NEXT YEAR.

AND THEN AT THIS TIME OF YEAR, FROM A PLANNING PERSPECTIVE, WE PUBLISH A LOT OF END OF YEAR REPORTS.

WE PUBLISH THE CAPACITY, DEMAND AND RESERVE REPORTS.

THAT LOOKS OUT FIVE YEARS

[00:15:01]

THEN WHAT DOES THE RESERVES LOOK LIKE UNDER THOSE CONDITIONS? WE'VE GOT THE 2025 REGIONAL TRANSMISSION PLAN THAT'S GONNA COME OUT.

THIS, UH, THIS MONTH WE PUBLISH A CONSTRAINTS AND NEEDS REPORT.

THIS IS A FOCUS ON TRANSMISSION CONSTRAINTS.

WE'VE ALSO HAVE THE RELIABILITY STANDARDS ANALYSIS THAT'S GONNA BE TAKING PLACE IN 2026.

THIS WILL BE THE FIRST FORMAL EVALUATION OF THE NEW RELIABILITY STANDARD THAT WAS ESTABLISHED FOR ERCOT IN 2024.

WE'LL BE DOING THAT FULL SCALE ANALYSIS IN 2026.

ALL OF THESE REPORTS ARE GOING TO INDICATE SIMILAR MESSAGING, BUT IN THE VERY SHORT TERM, THE ADDITIONS OF SUPPLY HAVE BEEN HELPFUL IN IMPROVING THE RELIABILITY CHARACTERISTICS OF THE GRID.

IN THE LONG TERM, THERE'S INCREASING RISK IF THE LOAD MATERIALIZES AND INFRASTRUCTURE DEVELOPMENT DOESN'T KEEP UP.

THE MESSAGING AND THE, THE, THE RISKS THAT ARE IDENTIFIED ARE CONSISTENT WITH REPORTS WE'VE SEEN OVER THE LAST YEAR, AND DEPENDING ON THE AMOUNT OF LOAD THAT COMES AND THE PACE AT WHICH IT COMES REALLY IS THE KEY DRIVERS TO THE DEGREE THAT THAT RISK MAY OR MAY NOT BE MATERIALIZED.

WE HOSTED, UM, A GRID X EVENT HERE AT, UM, UH, THE, ACTUALLY THE MET CENTER HERE JUST A COUPLE WEEKS AGO.

NERC DOES THIS EVERY YEAR OR EVERY OTHER YEAR.

THEY DO A LARGE SCALE GRID X EXERCISE, WHICH IS INTENDED TO PRACTICE A RESPONSE TO BOTH CYBER AND PHYSICAL ATTACKS ON THE ELECTRIC GRID.

THIS YEAR, WE PARTICIPATED IN, IN THREE DIFFERENT WAYS.

ONE, WE HAD OUR IT AND OUR CYBER TEAMS COMPETE IN A HANDS-ON TECHNICAL EXERCISE TO IDENTIFY AND STOP CYBER ATTACKS.

SPECIFICALLY.

THAT WAS DONE A LITTLE BIT EARLIER THIS YEAR.

THE OVERALL ERCOT LEADERSHIP TEAM, IN ADDITION TO PARTICIPATION WITH THE PUBLIC UTILITY COMMISSION, THE TEXAS DEPARTMENT OF EMERGENCY MANAGEMENT, THE FBI AND OTHER STATE AGENCIES ALL GATHERED TOGETHER, AND WE DID A TABLETOP EXERCISE THAT WAS FOCUSED ON DECISION MAKING, COORDINATION AND COMMUNICATION DURING A VERY COMPLEX CYBER PHYSICAL ATTACK SCENARIO.

THAT WAS A COUPLE WEEKS AGO.

AND THEN OUR ERCOT OPERATIONS TEAM USED THEIR TRAINING SIMULATOR TO EMULATE AND RESPOND TO GRID X ATTACKS ACCORDING TO THEIR REGULAR TRAINING CYCLES.

SO, VERY ACTIVE ENGAGEMENT IN BUSINESS CONTINUITY AND DISASTER RECOVERY PREPARATIONS.

THESE TABLETOPS ARE EXTREMELY HELPFUL IN ALIGNING ROLES AND ACCOUNTABILITIES DURING A CRISIS EVENT, AND MAKING SURE THAT OUR COMMUNICATION CAPABILITIES ARE BOTH AGILE AND READY FOR THE CHALLENGES OF THE MOMENT.

I'D LIKE TO REMIND EVERYBODY COMING INTO THE WINTER SEASON THROUGH OF THE VARIOUS COMMUNICATION CHANNELS THAT ARE AVAILABLE AT ERCOT TO GET INFORMATION.

OUR WEBSITE, YOU CAN SEE THAT ON THE TOP RIGHT OF THIS SLIDE, WE HAVE ABOUT A DOZEN DIFFERENT DASHBOARDS THAT HELP TO INFORM WHAT'S HAPPENING ON THE GRID IN REAL TIME.

WE ALSO HAVE OUR TEXAS ADVANCED NOTIFICATION SYSTEM.

TEXANS, YOU CAN SIGN UP TO GET EMAIL UPDATES IF THERE ARE CHANGES TO GRID CONDITIONS THAT REQUIRE ANY KIND OF AWARENESS OR RESPONSE BY THE GENERAL PUBLIC.

AND WE ALSO ARE ON SOCIAL MEDIA.

YOU CAN FOLLOW US ON LINKEDIN, ON X, ON FACEBOOK, AND ON INSTAGRAM.

SO LOTS OF DIFFERENT CHANNELS AND AVENUES TO GET REAL TIME UPDATES, AS WELL AS TO GET INFORMATIONAL AND EDUCATIONAL UPDATES ON WHAT IT IS THAT OUR IS FOCUSED ON, ON THE PRIORITIES OF THE ORGANIZATION.

AND THEN I'D LIKE TO FINISH WITH, UH, SOME EMPLOYEE RECOGNITIONS.

SO WE'VE HAD THREE THINGS THAT I WANNA RECOGNIZE.

THE FIRST, AND WE TALKED ABOUT THIS YESTERDAY, AND I THINK MATT MARINAS DID A FANTASTIC JOB OF ACKNOWLEDGING THE BREADTH, THE COMPLEXITY OF THIS IMPLEMENTATION AND GO LIVE.

AND I WANNA, AGAIN, REITERATE NOW ON BEHALF OF EVERYBODY WITHIN OUR ORGANIZATION, OUR THANKS TO THE BROAD MARKET, TO THE PUBLIC UTILITY COMMISSION, TO THE AGENCIES THAT WE WORK WITH, AND A DEEP THANKS TO ALL OF THE EMPLOYEES INSIDE OF OUR ORGANIZATION FOR THE WORK THAT WENT INTO THE REALTIME IZATION PLUS BATTERY IMPLEMENTATION.

THIS IS THE MOST SIGNIFICANT CHANGE TO OUR REAL-TIME MARKET SINCE WE CONVERTED FROM A ZONAL MARKET TO A NODAL MARKET BACK IN 2010.

VERY SIGNIFICANT COMPLEX CHANGE, INTENSE COORDINATION REQUIRED ACROSS THE ENTIRE MARKET PARTICIPANT LIST, AND IT WENT EXTREMELY WELL.

SO A HUGE THANKS TO EVERYBODY INVOLVED IN THAT.

I ALSO WANT TO CALL OUT THOSE THAT HELPED TO LEAD THE CORE VALUES WORK AT ERCOT.

IT TOOK WEEKS AND WEEKS OF WORK TO DO THE SURVEYS AND TO HOST THE LISTENING SESSIONS AND TO GATHER THE INPUT AND TO SYNTHESIZE AND TO ADJUST IT AND CONTINUE TO ITERATE ON IT TO GET TO THOSE FINAL VALUES THAT WE DEVELOPED.

AND SO A BIG THANKS TO THE TEAM THAT LED THAT.

AND THEN SIMILARLY, WE HAD AN INTERNAL TEAM THAT REALLY HELPED TO LEAD A SUCCESSFUL EMPLOYEE SUMMIT FOR ERCOT.

WE DO A ONCE A YEAR ALL EMPLOYEES GATHERING.

WE DID IT ON OCTOBER 14TH THIS YEAR.

[00:20:01]

SO AN EXCELLENT PRODUCTION AND VERY WELL DONE AND THINK A VERY HIGH VALUE USE OF TIME.

SO WITH THAT, I'LL PAUSE CHAIR FLORES, IF THERE'S ANY QUESTIONS FROM, UH, THE BOARD OR FROM ANYONE ELSE, I WELCOME THE FEEDBACK OR QUESTIONS PUBLIC.

CAN WE ASK THOSE, UH, ERCOT TEAM MEMBERS TO STAND UP THAT YOU JUST RECOGNIZED THE, FOR ALL THREE OF THESE, UH, CATEGORIES, CORRECT? YEAH, IF, UH, ANY OF YOU ARE NAMED ON ANY OF THESE THREE CATEGORIES, IF YOU'RE IN THE ROOM, PLEASE, PLEASE STAND UP.

I ALREADY, I KNOW THERE'S MANY OF YOU IN HERE, SO PLEASE STAND.

THERE'LL BE SOME SOMEWHERE FOR RECORD.

DON'T BE SHY.

I WAS GONNA GIVE THEM APPLAUSE, BUT THERE'S NOBODY TO APPLAUSE.

WELL, , I THINK WE'VE GOT SOME HIGH PEOPLE.

GREAT WORK.

ANY QUESTIONS FOR PABLO? WELL, GREAT REPORT AND, UH, KEEP UP THE GREAT WORK.

WE LOOK FORWARD TO, UH, THE EXCITEMENT THAT WE HAVE IN 2026.

THANK YOU.

WITH

[12.1 Human Resources and Governance (HR&G) Committee]

UH, SHE WILL PRESENT AGENDA ITEM 12.1, WHICH IS, UH, THE COMMITTEE'S REPORT.

IT HAS TWO ASSOCIATED VOTING ITEMS. PEGGY, THANK YOU, CHAIR FOREZ.

THE HUMAN RESOURCES AND GOVERNANCE COMMITTEE HAD A ROBUST AGENDA YESTERDAY WITH, UH, MS. BILLMAN TO TWO VOTING ITEMS COMING OUTTA GENERAL SESSION AND TWO VOTING ITEMS IN EXECUTIVE SESSION.

THE FIRST ITEM, WHICH IS VOTING ITEM, WAS, UH, A, A DISCUSSION WITH PABLO ABOUT THE, UH, RECOMMENDATION REGARDING THE ERCOT VISION, MISSION, AND CORE VALUES THAT HE JUST REFERENCED.

AND THERE'S A, THERE'S A, A MEMO IN THE, UH, MATERIALS, UH, FOR THE BOARD.

THIS IS THE SECOND TIME THAT THE HUMAN RESOURCES AND GOVERNANCE COMMITTEE HEARD FROM PABLO ON THIS.

AND I THINK WE WERE ALL VERY IMPRESSED WITH THE PROCESS AND THE THOUGHTFULNESS THAT WENT INTO THE CREATION OF THE NEW VISION AND MISSION CORE VALUES.

UH, SECOND, WE REVIEWED THE ERCOT GOVERNMENT DOCUMENTS, AND THERE ARE, WERE NO SUGGESTED CHANGES AT THIS TIME.

THIRD, WE, UH, REVIEWED THE PERIODICITY OF THE, UH, ERCOT BOARD MEETINGS WITH THE COMPARISON TO OTHER ISOS.

THERE'LL BE NO CHANGES PROPOSED TO THE ERCOT PERIODICITY AT THIS TIME.

AND THIS REVIEW WILL BE FILED WITH THE COMMISSION AS REQUIRED BY THE REGULATIONS.

UH, THE FOURTH ITEM, WHICH IS A VOTING ITEM, IS THAT THE COMMITTEE VOTED TO, UH, RECOMMENDED THAT THE BOARD APPROVE THE 2027 BOARD MEETING SCHEDULE AND ANNUAL MEETING OF THE MEMBERS.

UH, THE, UH, PROPOSED MEETING DATES ARE FEBRUARY 8TH AND NINTH, APRIL 12TH, 13TH, JUNE 21 IN 22, SEPTEMBER, 2020, 2021, DECEMBER 6TH AND SEVENTH WITH THE ANNUAL MEETING, UH, ON DECEMBER 6TH, 2027.

FIFTH, WE LOOKED AT THE, UH, ANNUAL REVIEW OF THE BOARD COMMITTEE MEMBERSHIP.

WE HAD JUST, UH, GOTTEN OUR NEW COMPLIMENT OF BOARD MEMBERS, WHICH WE'RE VERY EXCITED ABOUT, AND WE HAD REVIEWED THAT AT THE LAST BOARD MEETING.

SO NO CHANGES ARE RECOMMENDED AT THIS TIME, BUT THE COMMITTEE WILL CONTINUE TO REVIEW A COMMITTEE MEMBERSHIP AS NEEDED.

WE ALSO LOOKED AT THE, UH, ANNUAL COMMITTEE SELF-EVALUATION SURVEYS, RESULTS OF THE HUMAN RESOURCES AND GOVERNANCE COMMITTEE, THE TECHNOLOGY SECURITY COMMITTEE, AND THE FINANCE AND AUDIT COMMITTEE.

AND, UH, SOME MATERIALS WERE FILED IN, IN THE BOARD BOOK, BUT THE COMMITTEES ARE ALL FUNCTIONING WELL.

WE ALSO HEARD FROM GILBERT HUGHES AND MARK MINOR PRESENTED THEIR ANNUAL COMMUNICATIONS OVERVIEW.

AND WE HEARD FROM MORRIS BACK ON THE, UH, HUMAN RESOURCES REPORT FOR 2025, AS WELL AS INITIATIVES IN 2026.

[12.1.1 ERCOT Vision, Mission, and Core Values]

I MOVE THAT THE BOARD ACCEPT THE ERCOT VISION, MISSION, AND CORE VALUES IS RECOMMENDED BY THE HUMAN RESOURCES AND GOVERNANCE COMMITTEE.

IS THERE A SECOND? OKAY, CHRIS, THANK YOU.

ALL IN FAVOR? AYE.

AYE.

ANY OPPOSED? ANY ABSTENTIONS? OKAY.

THE NEW MISSION, VISION, AND CORE VALUES ARE APPROVED.

[12.1.2 2027 ERCOT Board Meetings Schedule and 2027 Annual Meeting of Members]

IS THERE A SECOND? OKAY, KATHLEEN, THANK YOU.

ALL IN FAVOR?

[00:25:01]

AYE.

ANY OPPOSED? ANY ABSTENTIONS? OKAY.

THE MEETINGS ARE SET FOR NEXT YEAR OR FOR 2027.

UH, NEXT.

THANK YOU.

THANK YOU.

ANY MORE TO YOUR REPORT? NO, THAT CONCLUDES IT.

OKAY.

THANK YOU.

UH, NOW WE'RE

[12.2 Finance and Audit (F&A) Committee]

UH, WE HAVE ONE ASSOCIATED VOTING ITEM.

UH, LET ME WALK THROUGH THE REPORT FIRST, THEN WE'LL HAVE THE VOTING ITEM.

UH, THE COMMITTEE WENT THROUGH ITS NORMAL REPORTS, UH, DEBT COMPLIANCE INVESTMENTS, AND WENT THROUGH THE, UH, PROJECTED OUTLOOK FOR THE FULL YEAR 2025 FINANCIAL PERFORMANCE OF THE ORGANIZATION.

ALL THE PERFORMANCES WERE NOMINAL AND AS WERE EXPECTED.

UH, NOW IN TERMS OF, UH, WE ALSO, THE COMMITTEE ALSO REVIEWED THE, UH, SOC AUDIT REPORT.

AND IT HAD A STANDARD, UH, THIS IS A STANDARD ANNUAL REQUIREMENT.

UH, THE, UH, ORGANIZATION RECEIVED AN UNMODIFIED OR CLEAN OPINION.

THE INDEPENDENT AUDITOR ALSO PROVIDED INFORMATION ABOUT THE ENHANCEMENT TO THE CONTROL ENVIRONMENT AS THE, UH, TREASURY MANAGEMENT SYSTEM HAS CONTINUED TO BE AUTOMATED OVER THE LAST COUPLE OF YEARS.

[12.2.1 Acceptance of 2025 System and Organization Control Audit Report]

DO I HAVE A SECOND? SECOND.

THANK YOU, CHRIS.

ALL IN FAVOR? A AYE.

ANY OPPOSED? THAT MOTION IS CARRIED.

UH, THERE IS NO OTHER, UH, REPORTING.

UH, THAT CONCLUDES BY REPORT FOR THE FINANCE AND AUDIT COMMITTEE.

WE'LL

[12.3 Technology and Security (T&S) Committee]

ITEM 12.3, THE TECHNOLOGY AND SECURITY COMMITTEE REPORT.

JOHN? THANK YOU MR. CHAIR.

UM, TECHNOLOGY AND SECURITY COMMITTEE MET YESTERDAY MORNING IN BOTH REGULAR AND EXECUTIVE SESSION.

IN REGULAR SESSION, WE HAD A GUEST SPEAKER, DR. LEE SHAY, WHO'S A HARVARD PROFESSOR AND MEMBER OF THE BOARD OF PJM, WHO PRESENTED A ROADMAP FOR INTEGRATING A AGENTIC AI INTO POWER SYSTEMS. A VERY INTERESTING DISCUSSION AND CONTINUES, UH, WITH OUR ONGOING AI THEME.

UM, AGEN AI ENABLES LARGE LANGUAGE MODELS TO INTERACT WITH REAL WORLD WORKFLOWS, OFFERING HUMAN AI COLLABORATION RATHER THAN REPLACEMENT.

IT CAN STREAMLINE THINGS LIKE INTERCONNECT STUDIES, OPTIMIZING DISPATCH ENHANCING RELIABILITY THROUGH TOOLS LIKE REINFORCEMENT LEARNING AND PROBABILISTIC SCENARIO PLANNING.

UM, ERCOT IS WELL POSITIONED TO LEAD IN THE SPACE AND USE THIS TECHNOLOGY WITH OPPORTUNITIES TO REDUCE ENGINEERING OVERHEAD AND ACCELERATE THE GRID TRANSFORMATION, UH, WITH AN EMPHASIS ON SECURE ETHICAL HUMAN IN THE LOOP AI UH, DEVELOPMENT.

FOLLOWING HIS PRESENTATION, UH, WE WENT INTO OUR ANNUAL COMMITTEE SELF VALUATION.

AND AS YOU'VE HEARD THERE, THAT WAS ALL FINE.

WE HAD A GOOD DISCUSSION.

UH, WOULD MENTION THAT AI IS SOMETHING THAT WE ARE EXPLICITLY INCORPORATING INTO OUR CHARTER SO THAT WE WILL PAY MORE ATTENTION TO THAT IN THE FUTURE.

AND WE'LL BE WORKING WITH JP AND HIS TEAM ON PRIORITIZING SOME OF THE AI INVESTMENTS FOR THE COMPANY.

UM, WE HAD A BRIEF TECHNICAL OVERVIEW OF RTC UH, PLUS B MAINLY BECAUSE WE, WE HEARD FROM MATT AND OTHERS IN THE FULL BOARD.

UM, AND WE TALKED ABOUT SOME OF THE LESSONS LEARNED AND, AND SOME OF THE PROBLEMS THAT WE DISCOVERED ALONG THE WAY, WHICH AS, AS, UH, JP HAS TOLD US WE'RE, WE'RE GONNA BE IN ANOTHER SIX MONTHS OF SORT OF BEDDING DOWN THAT TECHNOLOGY AND GETTING IT STABILIZED.

SO WE'LL BE, UH, WE'LL BE CONTINUING TO FOLLOW THAT UP.

UM, BUT, UH, IT, IT HAS OBVIOUSLY GONE EXTREMELY WELL.

UM, WE HAD OUR USUAL OVERVIEW OF THE 18 GRID TRANSFORMATION INITIATIVES, UH, WAS A REQUEST FROM THE BOARD THAT, UH, THERE'LL BE A LITTLE MORE PRIORITIZATION ON THE THINGS THAT ARE REALLY, REALLY IMPORTANT AND MORE IMMINENT VERSUS THE THINGS THAT ARE STILL IN THE PLANNING STAGES.

UM, AND THEN WE, AS WE ALWAYS DO, WE TALKED ABOUT FUTURE AGENDA ITEMS AND YOU KNOW, WHAT TOPICS THAT WE WANTED TO BRING BACK IN FRONT OF THE, THE COMMITTEE, INCLUDING THINGS PERHAPS RELATED TO BATTERY AND ALSO NUCLEAR.

UM, AND UH, AS I MENTIONED, WE WANTED TO MAKE SURE WE PRIORITIZE THE, UH, INITIATIVES OF THE TECHNOLOGY TEAM.

THAT CONCLUDES MY REPORT.

OKAY.

THANK YOU JOHN.

AND, UH, YOU MADE A COMMENT ABOUT THE COMMITTEE'S SELF VALUATION.

SO I NEED TO AMEND THE F AND A COMMITTEE REPORT THAT THE F AND A COMMITTEE DID, UH, REVIEW THE COMMITTEE'S SELF-EVALUATIONS AND FOUND THAT THE COMMITTEE WAS OPERATING EFFECTIVELY AND APPROPRIATE WITH THIS CHARTER.

[13.1 Adjunct Membership Approval of Agentic Infrastructure LLC for Membership Year 2026]

WELL, LET ME, BEFORE I GO ANYWHERE, WERE THERE ANY QUESTIONS FROM BOARD MEMBERS ON ANY OF THE COMMITTEE REPORTS? OKAY, THANK YOU.

UH, WE'LL MOVE TO AGENDA ITEM 13.1, WHICH IS AN ADJUNCT MEMBERSHIP APPROVAL OF AGEN INFRASTRUCTURE LLC MEMBERSHIP FOR MEMBERSHIP YEAR 2026.

SAMUEL BRANTON WITH INFRASTRUCTURE LLC

[00:30:01]

IF THE BOARD HAS ANY QUESTIONS FOR AGTECH, UH, CHAD SEALEY WILL PRESENT THIS ITEM.

CHAD.

ALRIGHT, THANK YOU CHAIRMAN.

UP ON THE SCREEN AS A SHORT DECISION TEMPLATE THAT EXPLAINS THE BACKGROUND AND RATIONALE FOR AGTECH INFRASTRUCTURE.

BEING AN ADJUNCT MEMBER FOR 2026, UH, CONSISTENT WITH THE BYLAWS, ADJUNCT MEMBERSHIP REQUIRES BOARD APPROVAL.

ADJUNCT MEMBERSHIP DOES NOT HAVE ANY OTHER VOTING RIGHTS EXCEPT FOR PARTICIPATING AT THE PROTOCOL REVISION SUBCOMMITTEE IN WHICH THEY CAN VOTE.

UH, GENTECH INFRASTRUCTURE IS GOING TO ALIGN ITSELF WITH THE INDEPENDENT GENERATOR SEGMENT FOR 2026.

AND SO WE NEED BOARD APPROVAL TO APPROVE THEIR APPLICATION.

DOES ANYONE WISH TO MAKE A MOTION IN THIS REGARD? SO MOVED.

THANK YOU BILL.

SECOND.

SO FROM CHRIS, THANK YOU.

ALL IN FAVOR? AYE.

AYE.

ANY OPPOSED? ANY ABSTENTIONS? OKAY.

GENTECH MEMBERSHIP IS APPROVED FOR 2026.

NEXT IS AGENDA ITEM

[13.2 Non-Opt-In Entity (NOIE) Load Zone Changes - Request of Lamar Electric Cooperative]

JO LOAD ZONE CHANGE.

UH, THIS IS A REQUEST OF LAMAR ELECTRIC COOPERATIVE, UH, BRIAN STORY, THE CEO WITH LAMAR ELECTRIC CO COOPERATIVE ALONG WITH RAMSEY CRISP OF SE ENERGY, WHICH IS PART OF SNYDER ENGINEERING.

ARE WITH US IN PERSON TODAY.

IF THE BOARD HAS ANY QUESTIONS FOR LAMAR ELECTRIC COOPERATIVE, KIM RAINWATER PRESENT THIS ITEM.

KIM? NOPE.

OKAY.

GOOD MORNING.

UH, KIM RAINWATER FOR ERCOT LEGAL.

UH, WE HAVE A REQUEST FROM LAMAR ELECTRIC CO-OP, AS YOU CAN SEE, TO MOVE ABOUT 60 MEGAWATTS OF PEAK LOAD FROM THE RAYBURN ELECTRIC CO-OP LOAD ZONE TO THE COMPETITIVE NORTH LOAD ZONE.

UH, LAMAR IS PRESENT, UH, WITH SCHNEIDER ENGINEERING FOR ANY QUESTIONS ABOUT THE REASON FOR THE CHANGE, BUT, UH, THE PROTOCOLS DO REQUIRE BOARD APPROVAL.

SO FOR OUR PART, ERCOT DOES RECOMMEND APPROVAL, UM, MAINLY FOR THREE REASONS.

YOU CAN SEE THERE ON THE COVER SLIDE THAT THE LEAD TIME IS 48 MONTHS.

SO THESE CHANGES WOULDN'T GO INTO EFFECT UNTIL JANUARY 1ST, 2030, WHICH BUILT INTO THE PROCESS IS SUFFICIENT TIME TO MAKE READY THE MARKET, UM, INCLUDING REGARDING CONGESTION, REVENUE RIGHTS, AUCTIONS.

AND, UM, WE DID A LITTLE BIT OF RESEARCH.

UH, WE'VE, WE'VE IDENTIFIED TWO PRIOR OCCASIONS AT LEAST WHEN THE BOARD APPROVED SIMILAR REQUESTS.

UM, ONE FROM GUADALUPE VALLEY ELECTRIC COOPERATIVE COOPERATIVE MOVE FROM LCRA TO A COMPETITIVE LOAD ZONE IN 2014.

AND THEN WE HAD ONE MORE RECENTLY IN 2023 WHEN, UM, THE HAMILTON LOAD MOVED FROM COMPETITIVE TO LCRA AND THAT WAS AFTER THE BRAZOS UH, BANKRUPTCY.

SO, UM, FOR, UH, FROM OUR REVIEW, ERCOT SMES HAVE REVIEWED AND IDENTIFIED NO REASON NOT TO APPROVE LAMAR'S REQUEST.

UM, WITH THAT WE WOULD REQUEST THE BOARD'S APPROVAL.

IF YOU HAVE ANY QUESTIONS FOR BRIAN OR, UH, RAMSEY, ARE THERE ANY QUESTIONS FOR BRIAN OR RAMSEY THE PRINCIPALS OR FOR KIM WHO'S PRESENTING THIS? I DON'T HEAR ANY, NO COMMENTS.

SO FOR THAT, I'LL ENTERTAIN A MOTION TO APPROVE THIS CHANGE.

I'LL MOVED.

OKAY.

THANK YOU.

JULIE, DO I HAVE A SECOND? SECOND.

UH, KATHLEEN.

PEGGY? UH, ALL IN FAVOR? AYE.

AYE.

ANY OPPOSED? OKAY, THE MOTION IS CARRIED.

UH, THE NEXT THANK YOU KIM.

[13.3 Application for Permanent Site-Specific Exemption from Compliance with Paragraphs (5)-(6) of Protocol Section 10.3.2.3, Generation Netting for ERCOT-Polled Settlement Meters – Request of BHER Power Resources, Inc.]

HERE WE'VE GOT A REQUEST FROM BHER, POWER RESOURCES AND AGENDA ITEM 13.3, UH, WITH AN APPLICATION FOR PERMANENT SITE SPECIFIC EXEMPTION FROM COMPLIANCE WITH PARAGRAPHS FIVE AND SIX, A PROTOCOL SECTION 10.3, 0.2 0.3, WHICH IS GENERATION NETTING FOR ERCOT POLL SETTLEMENT METERS.

UH, NEIL CONNOR WITH BHER POWER RESOURCES IS WITH US VIA WEBEX.

IF THE BOARD HAD ANY QUESTIONS FOR BHER AND BRENT DEL WILL PRESENT THIS ITEM.

BRENT, THANK YOU CHAIR.

YOU WANT US SAY THIS IN A SIMPLE FORMAT? I'M BRENT RIDDELL, DEPUTY GENERAL COUNSEL FOR ERCOT.

UM, I'M HERE TO DISCUSS A-B-H-E-R POWER RESOURCES EXEMPTION REQUEST, WHICH WAS PREVIEWED YESTERDAY BY TAC CHAIR KAITLYN SMITH DURING HER REPORT.

THE DECISION AT HAND BEFORE THE BOARD IS WHETHER TO APPROVE A PERMANENT EXEMPTION FOR BHER POWER RESOURCES FROM AN ERCOT PROTOCOL PROVISION.

OUR RULE STATE THAT FACILITIES MUST CONNECT TO THE GRID ONLY THROUGH DESIGNATED METERING POINTS.

THERE IS AN EXCEPTION THAT EXISTS FOR AUXILIARY LOADS UP TO 500 KILOWATTS.

[00:35:01]

IT EXCEEDS THAT 500 KILOWATT AUXILIARY LOAD LIMIT, UM, AND RECONFIGURATION TO MEET THE CAP IS NOT PRACTICAL.

IN OCTOBER, ERCOT RECEIVED BHE R'S EXEMPTION REQUEST.

AT THE NOVEMBER TECH MEETING, ENCORE SUPPORTED THE REQUEST AND TAC VOTED TO APPROVE IT.

UH, TAG NOTED THAT THE FACILITIES CONFIGURATION PREDATES THE CURRENT RULE.

SO THE RECOMMENDATION BEFORE YOU TODAY FROM OUR STAFF IS THAT THE BOARD APPROVE THE PERMANENT EXEMPTION.

AND AS THE CHAIR MENTIONED, NEIL CONNOR, GENERAL MANAGER OF BHE RENEWABLES IS PRESUMABLY JOINING US FROM BIG SPRING VIA WEBEX.

IF YOU HAVE ANY QUESTIONS, ANY QUESTIONS FOR BRAND OR FOR THE COMPANY REPRESENTATIVE, WITH THAT, I WILL ENTERTAIN THIS MOTION, WHICH WOULD BE THAT THE BOARD ACCEPT THE APPLICATION FOR PERMANENT SITE SPECIFIC EXEMPTION FROM COMPLIANCE WITH PARAGRAPHS FIVE AND SIX OF PROTOCOL SECTION 10.33 GENERATION NETTING FOR ERCOT POLL SETTLEMENT METERS, WHICH IS A REQUEST FROM BHER POWER RESOURCES.

DO I HAVE THAT MOTION? SO MOVED.

OKAY, PEGGY.

THANK YOU A SECOND, JULIE.

ALL IN FAVOR? A AYE.

ANY OPPOSED? ANY ABSTENTIONS? OKAY, THAT IS APPROVED.

THANK YOU.

ALRIGHT,

[14.1 25RPG025 AEP Texas, CPS Energy, Oncor and CNP Texas 765-kV-STEP Eastern Backbone Project]

THERE ARE SUB ITEMS UNDER THIS ONE, UH, REGIONAL PLANNING GROUP PROJECTS, WHICH INCLUDES THREE VOTING ITEMS THAT CHRISTIE HOPS CAN PRES PRESENT.

THE FIRST ONE THAT SHE WILL PRESENT IS THE AGENDA ITEM 14.1, WHICH IS 25 RPG 0 2 5 A EP, TEXAS CPS ENERGY, ENCORE, AND CMP TEXAS 7 65 KV STEP EASTERN BACKBONE PROJECT.

WE KNOW THAT TWO NO VOTES AND TWO ABSTENTIONS WERE CAST ATTACK, BUT TAX STILL HAS RECOMMENDED THE PROJECT FOR APPROVAL.

CHRISTIE, PLEASE WALK US THROUGH THE PROJECT AND THEN WE'LL HAVE AN OPPORTUNITY FOR ANY FURTHER COMMENTS.

ALL RIGHT.

GOOD MORNING BOARD MEMBERS AND BILL, I'M GLAD YOU HAD TO READ THAT NAME OF THAT PROJECT INSTEAD OF I , NOT ME.

WHAT A, A GREAT YEAR IT'S BEEN TO BE A PART OF SYSTEM PLANNING AND WATCH HOW WE REALLY HAVE INVOLVED HERE IN THE ERCOT MARKET FROM THE LANDMARK DECISIONS THAT OUR REGULATORS MADE AT THE PUC EARLIER THIS SPRING, UH, THAT LED FORTH FOR RELIABILITY PLAN INTO THE PERMIAN BASIN AND THEN BUILDING OFF OF THE WORK THAT WE STARTED LAST YEAR.

THE BOARD HAS BEFORE YOU QUITE AN OPPORTUNITY TO CONSIDER A PROJECT, UM, THAT I BELIEVE WILL BE A BIG RELIABILITY BENEFIT FOR CONTINUING TO POWER THE STATE OF TEXAS BOTH RELIABLY AND EFFICIENTLY.

SO IF YOU'LL INDULGE ME, WE'VE ADDED A FEW EXTRA SLIDES.

JUST KNOWING THE MAGNITUDE OF THIS PROJECT WOULD LIKE TO GIVE SOME OF OUR NEWER BOARD MEMBERS SOME HISTORY ON HOW WE GOT HERE.

UM, THE STUDY PROCESS THAT WE WENT THROUGH AND HOW WE CAME TO OUR DECISIONS AND OUR RECOMMENDATIONS THAT WE HAVE BEFORE YOU TODAY IN 2024, AS WE WERE NOT ONLY LOOKING AT THE PERMIAN BASIN RELIABILITY PLAN AND HOW TO MOST EFFICIENTLY AND RELIABLY SERVE THE NEEDS IN THE PERMIAN BASIN AREA, WE ALSO STARTED TO OBSERVE IN OUR PLANNING FORECAST THE NEED OUT IN THE FUTURE FOR MORE TRANSMISSION TO RELIABLY SERVE THE GROWING STATE.

AND WHAT WE SAW IN THAT 2030 FORECAST WAS A GROWING DEMAND TO NEAR 150 GIGAWATTS COMPARED TO THE PREVIOUS YEARS WHEN WE HAD STUDIED IN ABOUT THE 120 GIGAWATT RANGE.

SO AT THAT TIME WE REALIZED WE COULD NOT KEEP PLANNING THE SYSTEM THE WAY WE ALWAYS HAD, MEANING 3 45 VOLTAGE BEING THE HIGHEST LEVEL TO SERVE THE CUSTOMERS.

AT THAT TIME, OUR TEAM EMBARKED ON A PROCESS TO LOOK NOT ONLY AT PLANNING THE SYSTEM THE WAY WE ALWAYS HAD, BUT WE ALSO LOOKED AT USING 7 65 VOLTAGE IN FACT BUILDING WHAT I WOULD CALL A SUPER HIGHWAY.

YOU THINK ABOUT BUILDING THE INTERSTATE SYSTEM, CONNECTING YOUR GENERATION IN YOUR LARGE LOAD CENTERS.

AND WE LOOKED AT HOW THAT MIGHT WORK WITH OUR CURRENT NETWORK.

AND WE PROVIDED TWO PLANS THROUGHOUT 2024 AND FILED SOME COMPARISON DOCUMENTS OF THE COMMISSION THAT LOOKED AT THE PROS AND CONS OF USING VOTE.

THAT WAS BACK IN JANUARY.

IN APRIL.

AS I MENTIONED, THE COMMISSION MADE THE DECISION FOR THE PERMIAN BASIN TO USE THE IMPORT PATH CAPABILITY AT THE 7 65 LEVEL.

THIS WOULD ALLOW ERCOT TO START USING THAT

[00:40:01]

AS WE LOOKED AT THE RELIABILITY NEEDS FOR THE REST OF THE STATE IN THE SUMMER, WE HAD A JOINT PROJECT THAT WAS SUBMITTED THROUGH OUR NORMAL REGIONAL PLANNING GROUP PROCESS FROM ENCORE, A EP CENTER POINT AND CPS THAT WOULD HAVE US CONTINUE TO STUDY THE EASTERN BACKBONE OF THE 7 65 NETWORK.

SO THROUGHOUT THE SUMMER AND THIS FALL, ERCOT COMPLETED ADDITIONAL SENSITIVITY STUDIES, ECONOMIC ANALYSIS AS WELL AS STABILITY, UH, ANALYSIS IN COORDINATION WITH THE STAKEHOLDERS, REVIEWING STAKEHOLDER COMMENT AND INPUT.

AND WE DELIVERED OUR FINAL RECOMMENDATION TO THE REGIONAL PLANNING GROUP AND TAC CONSIDERED IN NOVEMBER OF THIS YEAR.

THUS IT'S BEFORE YOU FOR BOARD ENDORSEMENT TODAY.

SO AGAIN, JUST A LITTLE BIT OF THE DETAIL AS WE WENT BACK AND LOOKED, WHAT WAS THE BEST OPTION TO BE ABLE TO SERVE THE NEEDS OF THE STATE? THERE ARE SEVERAL RELIABILITY BENEFITS THAT I WANNA HIGHLIGHT THAT REALLY LED TO OUR RECOMMENDATION THAT'S BEFORE YOU TODAY.

THE FIRST IS IF YOU THINK ABOUT THESE 7 65 LINES, WHILE YES, 7 65 IS NEW TO TEXAS, IT'S NOT NEW TECHNOLOGY, IT'S BEEN IN USE SINCE THE 1960S IN THE US SO IT'S TRIED AND TRUE BY USING THIS HIGHER VOLTAGE GREENFIELD NEW RIGHT OF WAYS, NEW BUILD OUT OF THE SYSTEM THAT ALLOWS US THE FLEXIBILITY WE NEED TO CONTINUE TAKING MAINTENANCE OUTAGES ON THE CURRENT SYSTEM.

WE HAVE, AS WE'VE CONTINUED TO GROW, IT BECOMES MORE AND MORE DIFFICULT EACH DAY FOR UTILITIES TO BE ABLE TO TAKE THE OUTAGES THEY NEED TO MAINTAIN LINES TO CUT IN NEW LINES FOR ADDITIONS OF GENERATION OR ADDITIONS OF LOADS TO THE SYSTEM.

SO THIS GAVE US MORE FLEXIBILITY FROM THAT PERSPECTIVE.

YOU'LL SEE IN THE COMPARISON CHART THROUGH THE ECONOMIC ANALYSIS, BY UTILIZING THE 7 65 NETWORK, THERE ARE REDUCED CONGESTION COST ON THE SYSTEM.

SO YES, WHILE THAT'S AN ECONOMIC BENEFIT, IT ALSO PROVIDES AN UNDERLYING RELIABILITY BENEFIT.

SO IF YOU THINK ABOUT IF YOU HAVE A SYSTEM WHERE, UH, POWER CAN FLOW FREELY WITHOUT CONGESTION WHERE IT HAS TO BE REROUTED, THAT GIVES US MORE FLEXIBILITY NOT ONLY WHERE GENERATION IS SIDED, BUT ONCE IT'S SIDED THERE, BEING ABLE TO GET IT TO WHERE THE CONSUMERS NEED IT.

THE MOST IMPACT TO CUSTOMERS.

I KNOW WHEN YOU SAY 7 65, YOU THINK 3 45 IT MUST BE TWICE AS BIG.

WHILE, WHILE IT CAN CARRY MUCH MORE POWER ACROSS THOSE LINES, IT TAKES A LOT LESS RIGHT OF WAY TO MOVE THE SAME AMOUNT OF POWER.

A 7 65 RIGHT OF WAY IS NEEDED ABOUT 200 FEET COMPARED TO FIVE AND HALF, 3 45 RIDE AWAYS TO CARRY THE SAME AMOUNT OF POWER.

SO JUST 1 7 65 LINE COULD BE BUILT INSTEAD OF FIVE AND A HALF, 3 45 LINES LESS IMPACT TO THE CONSUMERS OF TEXAS AS BRIDE AWAYS ARE NEEDED TO BE BUILT.

AND THEN LAST BUT NOT LEAST AS WE DID OUR RESEARCH, UH, IN TALKING WITH OTHERS SYSTEMS THAT UTILIZE HIGHER VOLTAGE, THEY SEEM TO FIND THAT THEY HAVE FEWER FORCED OUTAGE RATES ON THOSE HIGHER VOLTAGE LINES BECAUSE OF THE SETUP IN THEIR CONFIGURATIONS.

SO JUMPING IN, UH, TO THE PARTICULAR PROJECT IN FRONT OF YOU, AS I STUDIED, UH, THE UTILITIES BROUGHT THIS TO US THIS SUMMER.

WE UTILIZED, UH, DURING OUR NORMAL PROCESSES, UH, THE OPPORTUNITY TO BUILD OFF OF THE WORK THAT WE HAD DONE IN 2024 IS OUR BASE CASE TO DO ADDITIONAL ANALYSIS AND SENSITIVITY STUDIES.

ONE OF THE THINGS THAT WE FOCUSED ON, AND WE GET A LOT OF QUESTIONS IS THE CONCERN THIS PLAN WAS DEVELOPED FOR LOAD INCREASES IN THE STATE, SUBSTANTIAL LOAD INCREASES.

WHAT IF THOSE LOADS DON'T MATERIALIZE? SO WE RAN SENSITIVITY STUDIES TO TAKE A STEP BACK AND LOOK WHAT IF THOSE LARGE LOADS DON'T MATERIALIZE.

SO WE RAN THE RELIABILITY NEED BASED OFF OF LOWER LEVELS OF LOAD AND WE STILL STILL SAW THE NEED DEMONSTRATED FOR THIS 7 65 SYSTEM.

SO OVER BASICALLY A TWO YEAR PROCESS TIMELINE, WE CONTINUE TO REVIEW, DO ADDITIONAL ANALYSIS, TAKE IN STAKEHOLDER FEEDBACK AND COMMENTS.

OUR PROJECT SUMMARY, UH, THIS IS A LIST OF THE RECOMMENDATIONS THAT WOULD BE NEEDED FOR NEW

[00:45:01]

AND SO I STAND BEFORE YOU NOW TO, UH, BRING YOU ERCOT RECOMMENDATION TO MOVE FORWARD AND REQUEST YOUR ENDORSEMENT OF MOVING FORWARD WITH THIS PROJECT AS WELL.

I'LL PAUSE THERE 'CAUSE I KNOW YOU PROBABLY HAVE SOME QUESTIONS.

OKAY, ANY QUESTIONS FOR CHRISTIE FOR THIS INCREDIBLY IMPORTANT PROJECT? SO CHRISTIE, WHAT YOU'RE SAYING, EVEN IN OUR, OUR LOW LOAD CASE, THIS IS STILL REQUIRED FOR RELIABILITY.

SO THROUGHOUT ALL THREE SCENARIOS, LOW BASE, HIGH LOAD, THIS IS REQUIRED FOR RELIABILITY AND THE BEST ALTERNATIVE.

YES, I THAT IS CORRECT.

UM, ONE THING THAT I FAILED TO ALSO POINT OUT IS A PART OF THAT TWO YEAR STUDY PROCESS.

NOT ONLY DID WE STUDY IT LOOKING OUT TO 2030 DURING OUR 2024 REVIEW CYCLE, BUT WE'VE BEEN UNDERGOING WITH, YOU KNOW, ADDITIONAL NEW LOADS THAT HAVE COME IN AS WE'RE STUDYING 2025 LOOKING OUT TO 2031.