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[1. Call General Session to Order ]
MORNING, MEMBERS OF THE FINANCE AND AUDIT COMMITTEE AND GUESTS.UH, THIS IS CHRIS RUMMEL, COMMITTEE CHAIR.
WELCOME TO THE JUNE 1ST, 2026 FINANCE AND AUDIT AUDIT COMMITTEE MEETING.
I HEREBY CALL THIS MEETING TO ORDER.
THIS MEETING IS BEING WEBCAST LIVE TO THE PUBLIC ON ERCO T'S WEBSITE.
I HAVE CONFIRMED A QUORUM OF COMMITTEE MEMBERS IS PRESENT IN PERSON.
BEFORE WE BEGIN THE MEETING, I'LL ASK PUC CHAIR THOMAS GLEASON IF YOU WOULD LIKE TO CALL AN OPEN MEETING OF THE PUBLIC UTILITY COMMISSION OF TEXAS TO ORDER.
THIS MEETING AND THE PUBLIC UTILITY COMMISSION OF TEXAS WILL COME TO ORDER TO CONSIDER MATTERS THAT HAVE BEEN DULY POSTED WITH THE SECRETARY OF STATE FOR JUNE 1ST, 2026.
ALRIGHT, BEFORE MOVING ON TO TODAY'S BUSINESS, I'LL HIGHLIGHT TO COMMITTEE MEMBERS THAT THE ANTITRUST ADMONITION AND SECURITY MAP ARE INCLUDED WITH POSTED MEETING MATERIALS.
THE FIRST ORDER OF BUSINESS ON TODAY'S AGENDA IS ITEM TWO.
NOTICE OF PUBLIC COMMENT, IF ANY.
TODAY'S MEETING AGENDA WAS POSTED PUBLICLY ON MAY 22ND, 2026, AND PROVIDED INSTRUCTIONS FOR THE PUBLIC FOR COMMENTING IN PERSON.
TO DATE, NO ONE HAS EXPRESSED INTEREST IN COMMENTING.
IS THAT STILL CORRECT, CHAD? THAT IS CORRECT.
[3. April 20, 2026, General Session Meeting Minutes ]
IS AGENDA ITEM THREE.GENERAL SESSION MEETING MINUTES.
THERE IS A DRAFT IN THE MEETING MATERIALS.
DOES ANYONE HAVE ANY COMMENTS OR WISH TO MAKE A MOTION? MR. CHAIRMAN, ONE COMMENT.
UH, I WAS IN ATTENDANCE AT THAT MEETING.
ALRIGHT, WELL WE'RE GONNA NOTE YOU
SO WOULD THAT CHANGE NOTED? MOVE TO APPROVE.
ANY OPPOSED OR ABSTENTIONS? GREAT.
[4.1 Review 2026 Financial Summary ]
UP, UH, ARE THE COMMITTEE BRIEFS, RICHARD SHIELD WILL PRESENT AGENDA ITEM 4.1, REVIEW OF THE 2026 FINANCIAL SUMMARY.UH, RICHARD SHIELD, UH, SENIOR VICE PRESIDENT, CHIEF FINANCIAL OFFICER.
CHIEF RISK OFFICER PRESENTING THE 2026 FINANCIAL SUMMARY REVIEW FOR DISCUSSION ONLY.
UH, TODAY WE'RE TALKING ABOUT THEIR RESULTS TO DATE, UH, THROUGH APRIL.
UH, WE HAD ACTUAL REVENUES, NET OF EXPENDITURES, 12.5 MILLION FAVORABLE TO BUDGET.
UH, WE HAVE FORECAST REVENUES, NET OF EXPENDITURES AT 16.1 MILLION FAVORABLE.
WE'RE LOOKING AT THE, UH, WATERFALL CHARTS HERE.
UM, WE'RE LOOKING AT CURRENT YEAR RESULT.
I MEAN, CURRENT PERIOD RESULTS VERSUS THE PRIOR PERIOD.
WE REPORTED IN APRIL, UH, VARIANCE TO BUDGET ON REVENUES.
WE WERE SHOWING A 10.7 MILLION, UM, IN, UH, FEBRUARY.
RESULTS IN APRIL, WE'RE LOOKING, UH, 4.5 MILLION, AND THAT'S MADE UP LARGELY WHEN WE'RE THINKING ABOUT THAT DELTA.
UH, WE HAD A CHANGE IN OUR INTERCONNECTION REVENUE.
SO WE'RE, UH, WE'RE LOOKING A LITTLE MORE UNFAVORABLE ON THE INTERCONNECTION.
THE PACE OF INTERCONNECTIONS IS SLOWING, UH, AS FAR AS THE GENERATION SIDE, AS WELL AS THE VERY LARGE PIECE WITH LARGE LOAD INTERCONNECTIONS.
SO WE'RE LOOKING AT ABOUT A 1.6 MILLION DELTA THERE.
THE BIGGEST CHANGE BY FAR THOUGH, IS THE CHANGE IN INTEREST INCOME.
AT THE FEBRUARY MEETING, WE PRESENTED A 22.4 MILLION, UH, FAVORABLE INTEREST INCOME.
NOW THAT'S LARGELY THE RESULT OF THE FAIR MARKET VALUE ADJUSTMENT.
SO WHEN WE'RE THINKING ABOUT YOUR TRAJECTORY, ACTUAL INTEREST INCOME HASN'T CHANGED SIGNIFICANTLY FROM FROM FEBRUARY.
SO THAT WAS ABOUT A 6 MILLION, UH, DELTA WE'RE LOOKING AT ON THAT NUMBER.
ON THE REVENUE SIDE, VARIANCE TO BUDGET, UH, WE'RE LOOKING AT 11.6 MILLION.
UH, DELTA, UH, THAT'S PRIMARILY DRIVEN BY OUR STAFFING MANAGEMENT.
WE HAVE, UH, OF COURSE BEEN WORKING THROUGH THE BATCH ZERO, UH, BATCH ONE PROCESS.
WE HAVE, UH, SOME HEADCOUNT IN RESERVE ON THOSE, AS WELL AS LOOKING FOR HOW THE RTP IS GOING TO PLAY THROUGH AND LOOKING AT THE GOOD CAUSE EXCEPTION.
SO THAT'S, THAT'S GONNA CHANGE THE AMOUNT OF HEADCOUNT WE MIGHT NEED FOR THE YEAR.
SO WE FORECAST VACANCIES FOR THOSE POSITIONS, UH, ASSUMING, ASSUMING A, UH, AN APPROVAL ON THAT ITEM.
UH, IF IT, IF IT MOVES WHERE IT'S NOT APPROVED, THEN WE'LL, WE'LL DISCUSS THAT AGAIN IN SEPTEMBER WITH OUR REVISED FORECAST.
UH, WHEN WE'RE LOOKING AT OUR OTHER EXPENDITURES, UM, SOME CHANGES WITH THE COMMON INFRASTRUCTURE.
UH, WE HAD SOME, UH, PROJECT CHANGES AND THAT, UH, FAVORABLE VARIANCE, UH, THAT'S TURNED INTO A FAVORABLE VARIANCE
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FROM AN UNFAVORABLE VARIANCE.SO WE HAVE ABOUT A 3.2 TO 6.6 CHANGE ON THAT AND ABOUT A MILLION IN OUR INSURANCE PREMIUMS WHEN WE WE'RE LOOKING AT FAVORABLE CHANGES FOR THIS PERIOD, I DO WANNA CALL OUT OUR CASH BALANCES, UM, YEAR-END CASH, WHICH ISN'T REALLY PRESENTED ON THIS WHEN WE'RE THINKING ABOUT OUR, OUR ANNUAL UPDATES.
WE WERE ORIGINALLY FORECASTING 183.4 MILLION CASH BALANCE.
THE MOMENT WE'RE LOOKING AT A 226.9 MILLION, THAT'S ABOUT A 43.5 MILLION SHIFT IN THE CASH BALANCE BETWEEN WHAT WAS BUDGETED VERSUS FORECAST FOR THE YEAR.
AGAIN, DRIVEN BY INTEREST INCOME AND THE PRIOR YEAR AND THIS YEAR.
SO JUST WANTED TO MAKE YOU AWARE OF THOSE, THOSE CHANGES.
LOOKING AT THE LOAD FORECAST LOADS ON TREND.
UM, AND AS A REMINDER, UH, TO THE BOARD AND, UH, VIEWERS, WE HAVE A DIFFERENT FORECAST ON LOAD VERSUS ENERGY WHEN WE'RE THINKING ABOUT, UM, HOW FINANCE WORKED, OUR BUDGET PROJECTIONS VERSUS WHAT WE'RE THINKING ABOUT FOR OPERATIONS.
SO WE'RE RUNNING ON A SLIGHTLY MORE CONSERVATIVE WITH THE KIND OF WEATHER, WEATHER RELATED CHANGES.
WE'RE, WE'RE ON TREND AT THE MOMENT, UH, WITH THE POTENTIAL IF, UH, WEATHER CONDITIONS GET MORE HARSH, THAT, THAT, WE'LL SEE, WE'LL SEE EXCESS REVENUES FROM SYSTEM ADMINISTRATION FEE RATE.
STATEMENT OF FINANCIAL POSITIONS.
NOTHING TO NOTE SIGNIFICANTLY HERE.
UH, STATEMENT OF ACTIVITIES, AGAIN, I'LL CALL OUT THE VERY BOTTOM, UM, BULLET.
WE HAVE 10 MILLION DECREASE IN TREASURY OBLIGATIONS.
FAIR VALUE ADJUSTMENT, 7.1 MILLION FOR THIS PERIOD VERSUS A 2.9 MILLION GAIN, SAME PERIOD IN 2025 WHEN WE'RE LOOKING, UH, BOARD OVERBOARD.
THAT'S ABOUT A 6 MILLION CHANGE VALUE STREAM PRESENTATION OF OUR STATE, OF OUR, UM, FINANCIAL SUMMARY.
SO WE'RE LOOKING AT WHAT WE'RE INVESTING IN EACH ONE OF OUR VALUE STREAMS. THE TOP THREE HERE, WHEN YOU'RE LOOKING AT COMMERCIAL OPERATIONS, GRID OPS AND MANAGE THE NETWORK MODELS, IT'S ABOUT 52% OF OUR SPEND.
THIS IS ON TRACK, UM, NOT ON TRACK.
THIS IS VERY SIMILAR TO WHAT WE SAW IN 2025.
SO FOR THE TOP THREE WE HAD, WE HAD ABOUT THAT SAME AMOUNT, ABOUT 52% COVERING THOSE THREE CONGESTION REVENUE, RIGHT? AUCTION RECEIPTS, UH, HELD BY ERCOT.
WE SAW THIS AT 2.34 BILLION IN FEBRUARY.
WE'RE LOOKING AT 2.38 IN APRIL.
AGAIN, THIS IS ONE OF OUR DRIVERS FOR THE HIGHER THAN EXPECTED, UH, FORECAST YEAR END CASH BALANCE.
IT TAKES ME TO THE END OF MY REMARKS ON THIS PRESENTATION ON CRR.
IS THERE A WAY TO UNDERSTAND WHAT FRACTION IS DUE TO ACTUAL GROWTH ON THE GRID VERSUS ACTUAL CONGESTION? YOU KNOW, SEE WHAT I'M ASKING? IS THERE ANY OTHER INFORMATION WE CAN GET OUT OF THIS BESIDES IT'S GETTING BIGGER? WE CAN, WE CAN WORK WITH KEITH AND HIS GROUP AND GET MORE DRILL INTO THE DETAIL.
I'M SORRY, WERE YOU ASKING ME? OKAY.
YEAH, I, WE CAN PRODUCE SOMETHING.
I'LL, I'LL SEE WHAT WE CAN BRING BACK THE NEXT, I DON'T KNOW WHAT LEVEL OF DETAIL WE CAN, WE CAN PULL ON THAT, ON WHAT THOSE PARTICULAR DRIVERS ARE, BUT IF I CAN, I'LL BRING IT BACK IN SEPTEMBER AND IF NOTHING ELSE, I'LL GIVE YOU AN UPDATE.
ANY OTHER QUESTIONS OR COMMENTS FOR RICHARD? GREAT, THANK YOU RICHARD.
[4.2 Periodic Report on Investments ]
[4.3 Periodic Report on Debt Compliance ]
ITEMS ARE AGENDA ITEMS 4.2, PERIODIC REPORT ON INVESTMENTS AND 4.3 PERIODIC REPORT ON DEBT COMPLIANCE.IN AN EFFORT TO STREAMLINE THE MEETING, UH, WHEN I THINK WE THINK THE PRESENTATIONS ARE, UM, NOT NECESSARY, UH, THE REPORTS ARE INCLUDED IN THE MEETING MATERIALS FOR THE COMMITTEE'S INFORMATION.
UH, AND SO IF THERE'S NO DISCUSSION, WE'D LIKE TO MOVE ON TO THE NEXT ITEM.
I, I DID WANNA PULL OUT ON, UH, SLIDE, UH, IN THE APPENDICES.
UH, WHEN I THINKING ABOUT THAT REPORT, ONE OF THE ITEMS WE'VE, WE'VE TALKED ABOUT, UH, I DID WANNA HIGHLIGHT FOR THE COMMITTEE IS THE YIELD, OH, I NEED TO SKIP AHEAD.
CAN YOU SKIP ME TO THAT? THAT PAGE NINE, 4.2.
SO I WANTED TO GIVE JUST A QUICK UPDATE ON OUR PRICING ON SUB CHAPTER N AND SUBTYPE CHAPTER M UH, BOND TRADING.
WHEN WE'RE LOOKING AT THE RESULTS FOR M AND N, UH,
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I HAVE N PULLED UP HERE.JUST WANTED TO CALL OUT THAT, UM, OUR DIFFERENTIAL BETWEEN US TREASURY AND, UH, THE CURRENT TRADING YIELD FOR THESE IS STAYING IN A VERY, VERY CONSISTENT RANGE FOR THE A ONE AND A FOUR.
WE'RE LOOKING AT A TWO AND A THREE, WE'RE AT 92 AND 113 AND FOUR M WE'RE PRICING AT 93 BASIS POINTS OVER TREASURY.
THE MARKET'S BECOME VERY COMFORTABLE WITH THESE, THESE BOND INSTRUMENTS AND WITH ERCOT IN GENERAL.
SO IT'S BEEN A VERY FAVORABLE MOVE FOR ERCOT.
RICHARD, I KNOW THIS IS A FOLLOW UP ON PAST DISCUSSION.
SO, UH, WOULD YOU SAY YOU'RE HAPPY WITH WHERE WE'RE, UH, WITH THE YIELD WE'RE PAYING RELATIVE TO THE YIELD? THAT'S TRADE, THAT'S TRADING.
UH, THAT IT'S A VERY TIGHT YIELD, UH, AGAINST TREASURY.
I THINK IT'S, IT, IT'S A BIG, UM, MARKET ENDORSEMENT OF, UH, THE, THE VALUE OF THE ERCOT BONDS AND THE SAFETY OF THIS INVESTMENT.
ANY OTHER COMMENTS, QUESTIONS FOR RICHARD? ALRIGHT.
[5. Future Agenda Items]
NEXT UP IS AGENDA ITEM FIVE.UH, FUTURE AGENDA ITEMS. RICHARD, DO YOU WANNA TAKE US THROUGH THIS AS WELL? SURE.
TAKE YOU THROUGH THIS, UH, WHEN WE'RE LOOKING AT THE NEXT, UH, NEXT ITEM, THE NEXT AGENDA ITEMS WE'RE LOOKING AT SEPTEMBER 14TH.
WE'RE LOOKING AT UNDERTAKING THE ANNUAL SELF-EVALUATION.
OF COURSE, ALL THE STANDARD REPORTS.
WE'LL BE LOOKING AT REVIEWING RISK MANAGEMENT POLICIES AND PRACTICES AT THE BOARD OF DIRECTORS.
UM, AND OF COURSE WE'LL BE REVIEWING INSURANCE RENEWALS HERE AT F AND A AS WELL AS, UM, STANDARD ETHICS POINT, INTERNAL AUDIT ACTIVITY AND SO FORTH.
I DID WANNA MAKE A COMMENT ABOUT, UH, SELF-ASSESSMENT AT MY OTHER BOARD.
WE ACTUALLY USED AI TO UPDATE THE QUESTIONS AND SO IT PULLS FROM OTHER GOVERNANCE BEST PRACTICE DOCUMENTS AND WE UPDATED OUR SELF-ASSESSMENT QUESTIONS, WHICH I THOUGHT WAS INTERESTING.
OF COURSE, THE ONE ITEM THAT WE MOVED FORWARDS FROM THIS, UH, DUE TO THE EARLY JUNE BOARD MEETING, IT'S A 401K AUDIT.
AND, AND RICHARD, JUST THAT'S THE AUDITS, UH, AREN'T, THE AUDITOR WAS NOT, UH, YET COMPLETE WITH THEIR WORK AND THAT'S WHY WE'VE MOVED THIS FORWARD.
WE, WE, WE CAUGHT THEM EARLY WITH THIS, THIS JUNE TIMING, UH, ON THIS PARTICULAR BOARD MEETING, THEY WEREN'T ABLE TO COMPLETE THE WORK OTHERWISE.
IT'S, UM, IT'S STRICTLY A TIMING ISSUE AND THE AUDIT IS MOVING ALONG.
UH, OTHERWISE, UH, WITHOUT EXCEPTION, THAT'S CORRECT.
THE LAST ITEM BEFORE WE MOVE ON TO THE EXECUTIVE SESSION IS AGENDA ITEM SIX, OTHER BUSINESS.
IS THERE ANY OTHER BUSINESS ANY COMMITTEE MEMBER WISHES TO RAISE AT THIS TIME? GREAT.
[Convene Executive Session ]
TIME, THE COMMITTEE WILL ADJOURN GENERAL SESSION AND TAKE A FIVE MINUTE BREAK BEFORE CONVENING AN EXECUTIVE SESSION.NO VOTING ITEMS ARE ANTICIPATED FOLLOWING THE EXECUTIVE SESSION, SO GENERAL SESSION WILL NOT RECONVENE AFTER THE CONCLUSION OF THE EXECUTIVE SESSION.
GENERAL SESSION IS NOW ADJOURNED AND THE WEBCAST WILL BE CONCLUDED.
CHAIR GLEASON, THIS MEETING, THE PUBLIC UTILITY COMMISSION OF TEXAS WILL STAND IN RECESS.