* This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting. [00:00:02] ALL RIGHT, GOOD [1. Call General Session to Order] MORNING, MEMBERS OF THE FINANCE AUDIT COMMITTEE AND OUR GUESTS. UH, MY NAME IS CHRIS RUMMEL. I'M THE NEW COMMITTEE CHAIR. WELCOME TO THE FEBRUARY 9TH, 26TH FINANCE AND AUDIT COMMITTEE MEETING. I HEREBY CALL THE MEETING TO ORDER THIS MEETING OF THE FINANCE AND AUDIT COMMITTEE. UH, THIS MEETING IS BEING WEBCAST LIVE TO THE PUBLIC ON ERCOT WEBSITE. I HAVE COMMITTED THAT A, A CONFIRM THAT A QUORUM IS PRESENT, UH, IN PERSON. SO BEFORE MOVING ON TO TODAY'S BUSINESS, I'LL HIGHLIGHT THE COMMITTEE MEMBERS THAT THE ANTITRUST ADMONITION AND THE SECURITY MAP ARE INCLUDED IN THE POSTED MEETING MATERIALS. THE [2. Notice of Public Comment, if Any] FIRST ORDER OF BUSINESS ON TODAY'S AGENDA IS ITEM TWO. NOTICE OF PUBLIC COMMENT, IF ANY. UH, I DON'T BELIEVE THERE DATE HAS BEEN ANY EXPRESSED. CHAD, THAT IS CORRECT. CHAIR. NOBODY HAS INDICATED A WILLINGNESS FOR COMMENTS. ALL [3. December 8, 2025 General Session Meeting Minutes] RIGHT. NEXT IS AGENDA ITEM THREE. DECEMBER 8TH, 2025. GENERAL SESSION MEETING MINUTES. THERE'S A DRAFT OF THE MEETING, MA, IN MEETING MINUTES IN THE MATERIALS, UH, DOES ANYONE HAVE ANY COMMENTS OR WISH TO MAKE A MOTION? ALL RIGHT, BEN, SECOND. JULIE. ALL IN FAVOR? NO OPPOSED ABSTENTIONS. VERY GOOD. THE MOTION PASSES UNDER AGENDA ITEM [4. Annual Charter Review and Approval] FOUR, ANNUAL CHARTER REVIEW AND APPROVAL. WE HAVE TWO SUB ITEMS. FIRST AGENDA ITEM 4.1, REVIEW OF THE COMMITTEE CHARTER. THERE ARE NO REVISIONS CURRENTLY PROPOSED FOR 2026. WOULD ANY COMMITTEE MEMBER LIKE TO FURTHER DISCUSS THE COMMITTEE CHARTER AT THIS TIME? ALRIGHT, NEXT, A AGENDA ITEM 4.2, THE INTERNAL AUDIT DEPARTMENT CHARTER PENNY IS, UH, CHESKY WILL PRESENT REVISIONS TO THE CHARTER PROPOSED FOR 26. UH, AND THIS IS A VOTING ITEM FOR THE COMMITTEE, BUT DOES NOT REQUIRE BOARD FINAL APPROVAL. PENNY? GOOD MORNING. PENNY CHEKI, NATIONAL WALLET DIRECTOR. UM, I AM BRINGING THE CHARTER TO YOU TODAY FOR APPROVAL AS REQUIRED BY THE GLOBAL INTERNAL AUDIT STANDARDS. THE LAST CHARTER WAS APPROVED IN FEBRUARY OF LAST YEAR. THERE WERE NO CHANGES ON THE, THIS CHARTER FROM THE LAST CHARTER, AND THAT LAST CHARTER WAS REVISED TO COMPLY WITH THE NEW AUDITING STANDARDS, SO WENT INTO EFFECT LAST YEAR. ANY QUESTIONS? ALRIGHT, UNLESS THERE'S ANY COMMENTS OR QUESTIONS, AGAIN, I'LL ENTERTAIN A MOTION TO APPROVE THE REVISED INTERNAL AUDIT DEPARTMENT CHARTER BILL. SECOND. JULIE? UH, UH, ALL ALL IN FAVOR? ANY OPPOSED? ANY ABSTENTIONS? ALRIGHT, THE MOTION PASSES. [5. Annual Policy Review] AGENDA ITEM FIVE IS ANNUAL POLICY REVIEW. THE THREE SUB ITEMS ARE NON-VOTING ITEMS THAT RICHARD SHIELD WILL TAKE US THROUGH. AGENDA ITEMS FIVE. ONE HANDLING OF COMPLAINTS REGARDING FINANCIAL MATTERS. 5.2. POLICY ON HIRING FORMER EMPLOYEES OF THE INDEPENDENT AUDITOR AND 5.3 POLICY ON INDEPENDENT AUDITOR SELECTION. RICHARD, YOU HAVE THE FLOOR. THANK YOU. THIS IS A RELATIVELY QUICK UPDATE. WE'VE HAD NO CHANGES FOR THE HANDLING OF COMPLAINTS REGARDING FINANCIAL MATTERS. WE HAVE PROCEDURES FOR THE RECEIPT, RETENTION AND TREATMENT OF COMPLAINTS. UH, THEY'RE IN PLACE AND CONSISTENT WITH PRIOR YEAR. UM, IT'S JUST AN OVERVIEW OF HOW THEIR COMPLAINTS ARE HANDLED. ANY QUESTIONS? NO. ALL RIGHT. MOVING ALONG. ITEM 5.2, UH, AGAIN, THIS ANNUAL REVIEW OF THE FINANCE NON COMMITTEE CHARTER REQUIREMENTS TO ESTABLISH OUR HIRING POLICY. THIS IS DESIGNED TO, UM, TO PREVENT A CONFLICT OF INTEREST BETWEEN OUR, IN OUR EXTERNAL AUDITORS, UH, AND THE WORK THEY'RE DOING FOR US AND MAINTAINING THEIR INDEPENDENCE. SO WE HAVE A COOLING OFF PERIOD IN PLACE, UM, FOR, UH, ANY, ANY CANDIDATES WHO ARE FROM OUR EXTERNAL AUDITORS. WE'VE HAD NO HIRES OF STAFF FROM OUR EXTERNAL AUDITORS. ITEM 5.3, POLICY ON [00:05:01] INDEPENDENT AUDITOR SELECTION. UH, ANNUAL REVIEW OF THAT REQUIREMENT. NO ACTION IS REQUESTED. POLICIES RELATING TO SOLICITATION. NEXT, REQUIRED REQUEST FOR PROPOSAL FOR INDEPENDENT AUDIT SERVICES WILL BE IN 2026. OUR MOST RECENT REQUIRED FINANCIAL STATEMENTS AUDIT PARTNER ROTATION STARTED FOR THE 2025 AUDITOR. SO WE'LL HAVE A NEW AUDIT PARTNERSHIP WHO WAS INTRODUCED LAST YEAR. ALL RIGHT. ANY OTHER QUESTIONS ON THOSE? THAT CONCLUDES MY REMARKS. ALL RIGHT, VERY GOOD. THANK YOU, RICHARD. UH, MOVING [6. Annual Risk Assessments] ON. AGENDA ITEM SIX, THE ANNUAL RISK ASSESSMENTS. THERE ARE TWO NON-VOTING ITEMS, UH, FOR DISCUSSION. FIRST AGENDA ITEM SIX, ONE, FORECAST ADEQUACY OF THE BUDGETED SYSTEM ADMINISTRATION FEE RATE. AGAIN, RICHARD, YOU HAVE THE FLOOR. THANK YOU. UH, FOR ITEM 6.1, WHAT WE'RE TRYING TO CONVEY IS, UH, ACCORDING TO MARKET PARTICIPANT REQUESTS IS LOOKING AT THE ADEQUACY OF OUR SYSTEM ADMINISTRATION FEE RATE THAT WE CURRENTLY HAVE IN PLACE FOR THE UPCOMING YEAR. FOR THIS, FOR 2027, THE AMOUNT THAT WAS SUBMITTED IN THE BUDGET TO THE PEC IS ADEQUATE, UH, AS STATED FOR THE SYSTEM ADMINISTRATION FEE RATE FOR 2027. THANK YOU, RICHARD. UH, MOVING ON. LESLIE SWANSON WILL PRESENT THE NEXT ITEM AGENDA. ITEM SIX TWO. REVIEW OF FINANCIAL INSTITUTIONS THAT ARE MARKET PARTICIPATIONS PARTICIPANTS. I'M SORRY, LESLIE, YOU HAVE THE FLOOR. GOOD MORNING, LESLIE SWANSON. THIS IS AN ANNUAL DISCLOSURE ITEM FOR REVIEW. IF A FINANCIAL INSTITUTION IS ALSO A MARKET PARTICIPANT OR COT WILL HAVE A CONFIDENTIALITY AGREEMENT IN PLACE WITH THAT FINANCIAL INSTITUTION. THIS IS DONE TO ENSURE THERE'S NO COMPETITIVE ADVANTAGE TO FINANCIAL INSTITUTIONS IN THE MARKET. THIS SLIDE OUTLINES ALL OF OUR FINANCIAL INSTITUTIONS, THAT OUR MARKET PARTICIPANTS. THERE HAVE BEEN NO CHANGES SINCE LAST YEAR. THIS ITEM IS ALSO A REMINDER OF THE REQUIREMENT FOR ERCOT BOARD MEMBERS TO DISCLOSE IF AN OFFICE, IF YOU ARE AN OFFICER OR DIRECTOR, YOU'RE EMPLOYED OR OWNED, OR HAVE A BENEFICIAL INTEREST IN MORE THAN 10% OF A STOCK OF A QUALIFIED INSTITUTION. AND THE LAST SLIDE, JUST LIST THE MARKET PARTICIPANT OR THE FINANCIAL INSTITUTIONS THAT ARE NOT MARKET PARTICIPANTS FOR TRANSPARENCY. ANY QUESTIONS? ALL RIGHT, THANK YOU FOR THAT REVIEW. LESLIE [7. Annual Corporate Standards Review and Approval] HAS THE NEXT ITEM AS WELL. AGENDA ITEM SEVEN, THE ANNUAL CORPORATE STANDARDS REVIEW AND APPROVAL. AND THERE ARE TWO SUB ITEMS THAT ARE VOTING ITEMS. FIRST AGENDA, ITEM SEVEN, ONE RECOMMENDATION REGARDING FINANCIAL CORPORATE STANDARDS. LESLIE ERCOT IS SEEKING A VOTE FROM THE FINANCE AND AUDIT COMMITTEE TO RECOMMEND APPROVAL TO THE BOARD ON THE FINANCIAL CORPORATE STANDARD. THE STANDARD'S OBJECTIVE IS TO MAINTAIN FINANCIAL INTEGRITY, AND IT SETS THE FRAMEWORK FOR ERCOT DEBT, LIQUIDITY, AND BUDGET. THE STANDARD IS REVIEWED ANNUALLY AND WE'RE PROPOSING MINOR GRAMMATICAL UPDATES. ANY QUESTIONS? WOULD ANY COMMITTEE MEMBER LIKE TO DISCUSS THE ISSUE OR MAKE A MOTION TO APPROVE THE REVISED FINANCIAL CORPORATE STANDARD? SECOND. ALRIGHT, BILL, JULIE, SECOND. UH, ALL IN FAVOR? ANY OPPOSED? ANY ABSTENTIONS? THE MOTION CARRIES. THANK YOU. UH, NEXT, LESLIE WILL WALK US THROUGH AGENDA ITEM SEVEN TWO RECOMMENDATION REGARDING INVESTMENT CORPORATE STANDARD, LESLIE. OKAY. THIS STANDARD OUTLINES THE INVESTMENT INSTRUMENTS AND IT SETS THE OBJECTIVES FOR INVESTING. THE OBJECTIVES ARE PRESERVATION OF PRINCIPLE LIQUIDITY, AND LASTLY, THE RETURN ON INVESTMENT. WE'RE PROPOSING NO CHANGES TO THIS STANDARD. ALL RIGHT. UNLESS THERE ARE ANY COMMENTS OR QUESTIONS, I'LL ENTERTAIN A MOTION TO APPROVE THE REVISED INVESTMENT CORPORATE STANDARD. BEN, CAN I HAVE A SECOND? SECOND. BILL. SECOND. ALL IN FAVOR SAY AYE. AYE. ANY OPPOSED? ANY ABSTENTIONS? MOTION CARRIES. ALL RIGHT. [8. Committee Briefs] NEXT UP ARE THE COMMITTEE BRIEFS. RICHARD WILL PRESENT THE FIRST COMMITTEE BRIEF AGENDA, ITEM EIGHT ONE, UH, REVIEW 2025 FINANCIAL SUMMARY. ALL RIGHT, RICHARD, YOU HAVE THE FLOOR. THANK YOU. OKAY. UH, TAKE YOU THROUGH, UM, PRELIMINARY YEAR END RESULTS. SO WE HAVE AN UNAUDITED, [00:10:01] UM, 2020 BY ACTUAL REVENUES NET OF EXPENDITURES OF 109.7 MILLION FAVORABLE TO THE BUDGET, DRIVEN PRIMARILY BY THE INTEREST INCOME BEING FAVORABLE BY 69.4 MILLION UNBUDGETED LEGAL FEES, RECOVERY OF 7.1 MILLION, STAFFING MANAGEMENT OF 5.5 MILLION, AND PROJECT EXPENDITURES BEING FAVORABLE BY 5.4 MILLION. SO RELATIVELY UNCHANGED OTHER THAN THIS. UM, PROJECT EXPENDITURES ITEM WITH WHICH I'LL COVER IN THE NEXT SLIDE. AGAIN, WE HAD A 252.1 MILLION OF OPERATING FUNDS AS OF DECEMBER 31ST, 2025, RELATIVELY SIMILAR TO THE AMOUNT AVAILABLE IN OCTOBER OF 2025. ALL RIGHT, LOOKING AT OUR WATERFALL CHART, WE HAVE SEVERAL CHANGES HERE, UH, FROM OUR OCTOBER BOARD MEETING. SO OUR SYSTEM ADMINISTRATION FEE RATE, UH, I MEAN SYSTEM ADMINISTRATION FEE INCOME, UH, WE SEE THAT HAS FALLEN, UH, FROM, UH, ABOUT 3.4 MILLION TO 5.8. THAT'S DRIVEN LARGELY BY THE WEATHER IN DECEMBER. SO IT'S LARGELY A WEATHER ADJUSTMENT, AND YOU'LL SEE THAT IN SOME OF OUR FOLLOWING SLIDES. UH, RELATIVELY UNCHANGED DEPARTMENT REVENUES. AND AGAIN, WE SEE THE CHANGE. UM, IN INTEREST INCOME, UH, THAT'S UP 3.3 MILLION FROM THE OCTOBER FORECAST, DRIVEN LARGELY BY MARKET CHANGES AND FORCES. WHEN WE'RE LOOKING AT OUR PRELIMINARY EXPENDITURES, YEAR-END VARIANCE TO BUDGET, WE HAVE SEVERAL, SEVERAL MOVERS HERE. UM, ON OUR, UH, PROJECT SIDE, WE SAW A 3.3 MILLION INCREASE ON PROJECT EXPENDITURES TO 5.4 MILLION. SO THAT'S AT 3.3 MILLION. IT'S RELATED PRIMARILY TO TWO, TWO OF OUR LARGER PROJECTS, UH, ONE BEING THE, UH, IAM PROJECT WHERE WE WERE LOOKING TO FINISH OUR INTERNAL REVIEWS OF THE SOFTWARE WE'RE CHOOSING THERE. THE DELAY THERE DOESN'T IMPACT OUR TOTAL TIMELINES ON THAT PROJECT, BUT IT SHIFTED SPENDING FROM 2025 TO 2026 AND ALSO OUR FIBER PATH, UH, PROJECT. SO LOOKING AT THE UNDERGROUND FIBER, UM, CHANGE THAT WE'RE MAKING, PERMITTING ISSUES THERE, DELAYED OUR EXTERNAL CONTRACTOR AND WHILE THEY WORKED DILIGENTLY TO TRY TO CORRECT THAT, THOSE, THOSE PUSH THROUGH, THEN WE WERE LOOKING AT, UM, BUILDING AND FURNITURE IMPROVEMENTS, RELATIVELY SMALL CHANGE THERE. POINT SEVEN TO 0.4, WHEN WE'RE THINKING ABOUT THE RESOURCE MANAGEMENT COLUMN, THAT'S UP 2.9 MILLION FAVORABLE. THAT'S DRIVEN ABOUT 1 MILLION BY STAFFING MANAGEMENT AND ANOTHER 1.9 MILLION IN PROJECT WORK. NOW, WE'VE, WE'VE TALKED ABOUT THE INTENSITY OF EFFORT THAT RTC PLUS B, UH, REQUIRED OF ERCOT AND THAT WE EXPENDED. SO THIS IS ONE OF THOSE, ONE OF THOSE AREAS WHERE YOU CAN SEE THAT COMING THROUGH THAT PROJECT THAT, UH, RESOURCE MANAGEMENT IS AN OFFSET TO PROJECT EXPENDITURES. SO THAT WAS A SIGNIFICANT, UM, A SIGNIFICANT VARIANCE FAVORABLE. AND THEN MOVING TO OUR OTHER EXPENDITURES COLUMN, THAT CHANGED BY ABOUT 2.5 MILLION, UH, LARGELY DRIVEN BY 1.8 MILLION FAVORABLE CHANGE IN COMMON INFRASTRUCTURE AND MINOR CAP. WE HAD PROJECTED, UM, SOME RELINQUISHMENT OF TECHNOLOGY EARLY NEXT YEAR. THAT PROJECT FINISHED AHEAD OF SCHEDULE, AND SO WE SAW THAT, UM, MOVE THROUGH IN 2025. UM, OTHERWISE RELATIVELY MINOR CHANGES, UH, THROUGHOUT, UH, OF COURSE, WE STAY WITH THE PRIMARY MOVER OF THAT 7.1 MILLION LEGAL FEES RECOVERY IN THIS COLUMN, AS WELL AS OUR OUTSIDE LEGAL SERVICES OF 3.7 MILLION. AND WITH THE REMAINDER BEING RELATIVELY UNCHANGED MOVING FORWARDS, YOU'LL SEE THE IMPACT OF DECEMBER HERE WHEN WE'RE LOOKING AT OUR TOTAL MONTHLY TERAWATT HOUR LOAD AND CUMULATIVE SYSTEM ADMINISTRATION FEE REVENUE IN DECEMBER, UH, WHEN WE CAME TO YOU IN OCTOBER RATHER OF 2025, WE WERE FORECASTING, UM, 5.1 MILLION HIGHER DECEMBER THAN, THAN WHERE WE WOUND UP. OKAY. AND OUR STATEMENTS, FINANCIAL POSITIONS, RELATIVELY STRAIGHTFORWARD. UM, UH, BOARD TO BOARD, UH, OUR NET ASSETS WITHOUT DONOR RESTRICTIONS INCREASED 85 1 0.5 MILLION YEAR OVER YEAR, MAINLY DRIVEN BY THE FINANCIAL INTEREST INCOME, WHICH OF COURSE THIS YEAR HAS BEEN THE COMMON STORY. AND THEN WE HAVE, UH, PAY DOWNS IN BOTH SUBCHAPTER M AND SUBCHAPTER N ENTITIES. UH, AGAIN, EXPECTED ONGOING PAY DOWNS. THE FIRST T TRAUNCH OF N JUST FOR COLOR, UH, WILL BE FULLY PAID IN 2034. ALL RIGHT, WHEN WE'RE LOOKING AT THE ERCOT STATEMENTS OF ACTIVITIES AND NET ASSETS, AGAIN, THIS IS, UH, NOTHING SURPRISING, UM, PERIOD TO PERIOD. WE HAVE THE, UM, REFLECTION IN THE 19 POINT, UH, ZERO MILLION INCREASE IN OPERATING EXPENSES. ONE OF THE DRIVERS THERE IS THE 8.5 MILLION DECREASE IN OUTSIDE SERVICES EXPENSE. AND THAT REFLECTS BACK TO THE 7.1 MILLION WE SAW EARLIER ON THE WATERFALL CHARTS. SO THAT'S THE SAME, THE SAME DRIVER HITTING US IN THAT LINE AS WELL. [00:15:01] AND THAT'S BEEN CONSISTENT THROUGHOUT THE YEAR. AND THEN WE SEE THE 4.1 MILLION DECREASE IN OTHER INCOME THAT'S DRIVEN BY AN 11.8 MILLION DECREASE IN INTEREST INCOME, UH, 24 TO 25 COMPARISON PERIODS, AND THEN A 6.8 MILLION INCREASE IN US TREASURY OBLIGATION, FAIR VALUE ADJUSTMENT. WE HOLD ALL OF OUR TREASURY OBLIGATIONS, UH, TO MATURITY. SO WHILE WE HAVE THIS ACCOUNTING ADJUSTMENT, UH, THIS WILL ACTUALLY IMPACT ERCOT TOTAL CASH POSITION. THEN FINALLY, A REVIEW OF THE CRR FUNDS AND OUR USAGE. SO WE HAVE UNRESTRICTED CASH AND BOND INVESTMENTS, EXCEEDED MARKET LIABILITIES BY 252.1 MILLION. AND YOU'LL NOTICE ON OUR TOTAL CRR AUCTION FUND RECEIPTS, WE ARE MAINTAINING A RELATIVELY STEADY AND SLIGHTLY INCREASING OTHER THAN THE, THE ONE TIME INCREASE THAT WE SAW IN AUGUST OF 2025. TAKES ME TO THE END OF MY COMMENTS AND SLIDES. ALL RIGHT, THANK YOU, RICHARD. I COMMENT AND SAY, I THINK THE MATERIALS ARE WELL DONE AND TRANSPARENT. THANK YOU. ALRIGHT, LESLIE WILL NOW PRESENT AGENDA ITEMS EIGHT TWO AND EIGHT THREE RESPECTIVELY, PERIODIC REPORT ON INVESTMENTS AND PERIODIC REPORT ON DEBT COMPLIANCE. LESLIE, PLEASE PROCEED WHEN YOU'RE READY. THESE ARE THE PERIODIC REPORTS. UM, I DON'T HAVE ANY PREPARED COMMENTS FOR YOU GUYS. UH, WE ARE IN COMPLIANCE WITH THE INVESTMENT STANDARD AND THE DEBT. UM, DO YOU HAVE ANY QUESTIONS FOR ME? THANK YOU, LESLIE. UH, NEXT [9. Future Agenda Items] UP IS AGENDA ITEM NINE. FUTURE AGENDA ITEMS. RICHARD, YOU MANAGE THIS DISCUSSION, YOUR HONOR. OKAY. UH, THIS IS, UH, NO ACTIONS REQUESTED FOR DISCUSSION ONLY. JUST A PREVIEW OF WHAT WE'RE LOOKING AT FOR THE REMAINDER OF THE YEAR. THIS IS IN LINE WITH WHAT, UM, WE PREVIEWED IN DECEMBER AND PRIOR YEARS. RICHARD, DO WE KEEP THIS DOCUMENT IN A PLACE WHERE EVERYONE CAN EASILY GET ACCESS TO IT? EVERYONE FROM THE COMMITTEE? IS THIS, UH, ON THE, ON THE WEBSITE OR WHERE NO, THIS ISN'T PUBLICLY POSTED. I MAINTAIN THIS INTERNALLY. IF THAT'S DESIRED, WE CAN THINK ABOUT A SOLUTION THERE. YEAH, I LIKE TO, IT'S, I THINK IT'S A GREAT THING TO HAVE BEFORE YOU START LOOKING AT THE AGENDA WHEN YOU REVIEW THE MATERIALS FOR SURE. FOR THE COMMITTEE MEMBERS. OKAY. WE'LL WORK ON THAT. THANKS FOR THE COMMENT. SO BILL FLORES, UH, IF ADDRESS THIS TO YOU IN A PRIOR YEAR, WE DID ADJUST THE SYSTEM ADMINISTRATION FEE IN THE MIDDLE OF THE YEAR ONCE. AND WHAT WAS THE, WHAT IS THE TRIGGER FOR THAT? IS IT A DOLLAR AMOUNT, A PERCENTAGE AMOUNT? I DON'T RECALL THE EXACT, I DON'T RECALL THE EXACT REASON WE DID IT, BUT I THINK IT WAS BECAUSE WE HAD, UM, A LARGE INCREASE IN INTEREST INCOME THAT WAS NOT EXPECTED, BUT I DON'T RECALL EXACTLY WHY. OKAY. SO THE REASON I BRING THAT UP IS THAT COULD POSSIBLY HAPPEN AGAIN, BUT I DON'T UNDERSTAND. WHAT IS OUR TRIGGER FOR REVIEWING A POSSIBLE CHANGE IN SYSTEM ADMINISTRATION FEE IS, IS THE QUESTION, WHAT WOULD TRIGGER A CHANGE IN THE SYSTEM ADMINISTRATION FEE RATE? THAT'S SURE. SURE. SO, UH, THAT, THAT'S NOT SOMETHING WE'VE DONE, UH, RECENTLY. WHAT, WHAT WE TRY TO DO WHEN WE'RE PLANNING OUT THE SYSTEM ADMINISTRATION FEE RATE IN THE NEXT COUPLE OF YEARS IS LOOKING AT OUR TOTAL AVAILABLE LIQUID CASH FLOW AT THE END. UM, THE ACTUAL EXPENDITURES WE'RE EXPECTING OVER THE BUDGETED TIME PERIOD, WE'RE TRYING TO SET A SYSTEM ADMINISTRATION FEE RATE THAT ENDS US WITH A SUFFICIENT CASH BALANCE AT THE END OF THE SECOND YEAR OF THAT, SO THAT WE DON'T WIND UP WITH NEEDING TO CHANGE THAT SYSTEM ADMINISTRATION FEE RATE IN BETWEEN. AND OF COURSE, WE'RE ALWAYS LOOKING AT INTERGENERATIONAL EQUITY WHEN WE'RE SETTING THE SYSTEM ADMINISTRATION FEE RATE, MAKING SURE THAT WE'RE [00:20:01] PAYING FOR CURRENTLY WHITE PEOPLE ARE RECEIVING CURRENTLY, AND WE'RE NOT, WE'RE NOT DISTRIBUTING PAYMENTS OVER TIME TO PEOPLE WHO AREN'T GONNA BENEFIT FROM THOSE CHANGES. SO WHEN YOU THINK ABOUT OUR, OUR BUDGET INTERNALLY, WHAT WE'VE DONE IS WE'VE SET A CASH BALANCE AT THE END OF 2027, THAT'S SUFFICIENT. AND BEYOND THAT, WE HAVE ADDITIONAL LIQUIDITY THAT'S AVAILABLE TO US. SO WHEN WE'RE PLANNING THAT 70 OR $80 MILLION CASH BALANCE THAT I, I CAN'T REMEMBER THE AMOUNT OFFHAND, BUT LET'S JUST CALL IT IN THAT AREA. UM, WE ADDITIONALLY HAVE ANOTHER 150 MILLION THAT WE'RE AVAILABLE TO DRAW. SO SHOULD WE ENGAGE, SHOULD WE ENCOUNTER AN EMERGENCY SITUATION WHERE SOMETHING CHANGES DRAMATICALLY AND WE NEED TO DRAW DOWN FUNDS OR WHERE, UH, EXPECTED SYSTEM ADMINISTRATION FEE RATE REVENUE DOESN'T, UH, DOESN'T TRANSPIRE, THEN WE DO HAVE THAT CUSHION. SO WE HAVE THE ORIGINAL CUSHION THAT WAS SET IN THE BUDGET MATERIALS, AND THEN WE HAVE THE ADDITIONAL 150 MILLION THAT WE'RE ABLE TO DRAW. AND WHEN YOU THINK OF THAT, UH, GRAPH I SHOWED YOU THE FINAL, THE CRR AUCTION RECEIPTS, THE VERY BOTTOM OF THAT, THE DOTTED LINE REPRESENTS THE AMOUNT WE'RE ABLE TO DRAW FROM THE CRR FUNDS. SO WE'RE ABLE TO TAKE A, A ESSENTIALLY A ZERO COST OTHER THAN THE LOST INTEREST RATE, UH, THAT WE WOULD'VE EARNED ON THE CRR AUCTION RECEIPTS. WE CAN TAKE THAT AS A FUNDING SOURCE. AND THAT HAS HAPPENED IN THE PAST. NOW WE HAVE DONE THAT DRAWN ON THAT CRR, UM, AUCTION RECEIPT FUND TO PROVIDE ADDITIONAL LIQUIDITY THROUGH THE NEXT BUDGET CYCLE RATE SETTING PERIOD. BUT IF WE DID NEED TO GO BACK, THAT'S A PUBLIC UTILITY COMMISSION, UH, APPROVED ITEM. SO THE BOARD WOULD NEED TO APPROVE, THE F AND E COMMITTEE WOULD NEED TO APPROVE. WE TAKE THAT TO THE PCT IF WE HAD THAT AND THEY WOULD NEED TO APPROVE, UM, A CHANGE, AN UNEXPECTED CHANGE IN THE SYSTEM ADMINISTRATION FEE RATE. AND I'D ALSO ADD, JULIE, IT'S LESS LIKELY WITH OUR TWO YEAR BUDGET CYCLE THAT WE'D HAVE TO DO, SO WHEN WE WERE DOING FOUR YEAR OR LONGER TERM ONES, THE LIKELIHOOD WAS LARGER BECAUSE OF WHAT COULD TRANSPIRE OVER THE COURSE OF A FOUR YEAR BUDGET WINDOW. THAT'S A GOOD POINT. YEAH. WE HAVE GOOD FLEXIBILITY WITH THE TWO YEAR PERIOD. AND JUST TO CLOSE OUT ON THE FUTURE AGENDA ITEMS, TH THIS IS A PUBLIC DOCUMENT THAT'S POSTED ON OUR WEBSITE AS PART OF THE ERCOT MATERIALS. SO I JUST WANNA MAKE, MAKE THAT CLEAR. ALL RIGHT. ANY OTHER COMMENTS? ALL RIGHT. LAST ITEM BEFORE WE MOVE INTO INTO THE EXECUTIVE SESSION IS AGENDA ITEM 10, OTHER BUSINESS. IS THERE ANY OTHER BUSINESS ANY COMMITTEE MEMBER WISHES TO RAISE? HEARING NONE, WE SHOULD ADJOURN. [Convene Executive Session] SHOULD WE TAKE A, A QUICK BREAK? EVERYBODY GRAB THEIR LUNCH AND THEN COME BACK IN FOR THE EXECUTIVE SESSION? SO THERE, THIS WILL BE THE, UH, ADJOURNING GENERAL SESSION 'CAUSE THERE ARE NO VOTING ITEMS COMING OUT OF EXECUTIVE SESSION. * This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting.