[00:00:01]
SO THE INSTRUCTIONS ARE THERE.
UM, I'LL WORK WITH JEFF AND SEE HOW WE WANT TO HANDLE COMMENTS DURING HIS PRESENTATION.
UM, WE ARE NOT VOTING ON ANYTHING TODAY.
[1. Antitrust Admonition]
ANTITRUST IF WE CAN GET IT UP.UH, TO AVOID RAISING CONCERNS ABOUT ANTITRUST LIABILITY.
PARTICIPANTS IN
AND THERE'S MORE INFORMATION ON THE WEBSITE.
SO WE, UM, WE CONVENED THE MEETING TODAY TO DO A TAC REVIEW OF THE STATE OF THE MARKET FROM THE IMM.
I THINK IN RECENT YEARS PAST, WE HAD BEEN DOING THIS REVIEW AT WMSI, I REQUESTED WE DO IT AT TECH BECAUSE OF SOME OF THE, UM, YOU KNOW, CIRCULAR DISCUSSIONS WE, WE'VE BEEN HAVING RECENTLY.
UM, AND I KNOW THAT THERE ARE A COUPLE OTHER THINGS IN THE WORK.
I, I BELIEVE COMMISSION STAFF WILL HAVE A RESPONSE TO THE STATE OF THE MARKET THAT THEY WILL FILE THIS MONTH.
UM, A FREAK IS ON, SHE CAN CORRECT ME IF I'M WRONG, UM, BUT SIMILAR TO THE RESPONSE THEY DID LAST YEAR, I'M TOLD WE ARE EXPECTING, AND THEN ERCOT WILL HAVE A RESPONSE AT THE SEPTEMBER BOARD.
BUT I THINK WE CAN TREAT THIS AS OUR OPPORTUNITY TO, YOU KNOW, LISTEN TO THE IMM AND, AND HAVE OUR RESPONSE AND, AND THEN SEND THINGS, SEND THINGS TO WMS. UM, JEFF HAS THE PRESENTATION.
HE'S NOT GONNA GO, YOU KNOW, LINE BY LINE THROUGH THE, THE STATE OF THE MARKET.
HE'S PULLED OUT THE THINGS THAT HE THINKS ARE OF INTEREST.
SO I THINK WE'LL HAVE HIM PRESENT.
WE'LL HAVE STAKEHOLDERS ASK QUESTIONS AND COMMENT.
UM, MAYBE AFTER THAT, IF THERE ARE TOPICS IN THE STATE OF THE MARKET THAT JEFF DIDN'T COVER THAT PEOPLE WANT TO BRING UP, WE CAN, UM, MAYBE SOME UPDATES FROM KEITH ON, ESPECIALLY ON ANYTHING IN THE WORKS FROM ERCOT TO ADDRESS ANY OF THE, THE ISSUES ALREADY.
AND THEN WE WILL CLOSE OUT WITH NEXT STEPS, UM, WHICH I THINK WILL LOOK LIKE ASSIGNMENTS MOSTLY TO WMS. SOUND GOOD TO EVERYONE? UM, JEFF, I WILL HAND IT OVER TO YOU.
I THINK YOUR PRESENTATION SORT OF CHANGES TOPICS EVERY SLIDE OR TWO SLIDES, BUT I THINK WE SHOULD TAKE QUESTIONS AS WE GO AND NOT WAIT TILL THE END SO THEY'RE KIND OF COMING UP AT RELEVANT TIMES.
DOES THAT WORK FOR YOU? YEAH, THAT WORKS FOR ME.
UM, I THINK, YOU KNOW, YOU, I THINK YOU'RE RIGHT.
IT'S, YOU KNOW, A COUPLE OF SLIDES, UH, PER TOPIC.
AND SO WHEN I GET TO THE END OF A TOPIC, I'LL THE END OF EACH TOPIC.
I THINK THAT'S A LITTLE SMOOTHER.
AND IF I FORGET AND I JUST KEEP MOVING THROUGH, UM, FEEL FREE TO STOP ME AND WE'LL TAKE SOME QUESTIONS.
I CAN SEE, OBVIOUSLY I CAN SEE THE CHAT SPACE TOO.
SO, UM, WHEN WE GET TO THAT BREAK POINT BY TOPIC, YOU KNOW, WE'LL, WE'LL, WE'LL, WE'LL DEAL WITH EVERYTHING IN THE CHAT AND ALL THAT.
YEAH, I CAN, I CAN CALL THE QUEUE, UM, BUT OKAY.
YEAH, WE WILL CERTAINLY STOP YOU WHEN WE NEED TO.
[2. IMM State of the Market Presentation]
AND THANK YOU FOR DOING THIS, JEFF.SO, UH, YEAH, SO THANK YOU, UH, AND GOOD MORNING EVERYBODY.
I APPRECIATE YOU JOINING THIS MORNING.
UM, SO WE'VE, YOU KNOW, AS, AS EVERYONE KNOWS THAT, UH, THE REPORT IS VERY VOLUMOUS, UH, AND HAS A LOT OF FACTS IN IT, WE TRIED TO PULL OUT A COUPLE OF THEMES, UM, TO TALK ABOUT.
AND SO THE FIRST FEW SLIDES WILL BE, AND, AND YOU CAN GO TO THE NEXT SLIDE IF YOU LIKE, PLEASE.
UM, AND SO, YOU KNOW, WE'LL, WE'LL DO A LITTLE BIT OF A SUMMARY, UM, AND THEN I'LL STOP AND ASK FOR QUESTIONS.
AND THEN, AND THEN WE'VE GOT, YOU KNOW, A COUPLE OF THEMES, UM, TO COVER AFTER THAT.
AND I'M HAPPY TO ADDRESS, YOU KNOW, ANYTHING IN THE REPORT.
AS I MENTIONED, IT'S A VERY LARGE REPORT WITH A LOT OF FACTS AND FIGURES IN IT.
SO IF I CAN'T, UM, IF I CAN'T RECALL THE PARTICULARS ABOUT A SPECIFIC STATISTIC OR SOMETHING THAT YOU BRING UP THAT YOU'D LIKE TO DISCUSS, UM, I CAN GET BACK TO YOU.
SO, UH, SO ANYWAY, SO LET'S GO AHEAD AND GET STARTED.
UM, SO AT A HIGH LEVEL, UH, WE DID SEE AN INCREASE IN, IN WHOLESALE ELECTRICITY PRICE.
UM, AS USUAL, UH, WE DON'T SEE THAT INCREASE, UM, CORRESPOND ONE TO ONE WITH INCREASE IN NATURAL GAS PRICE.
AND THAT'S OBVIOUSLY BECAUSE WE HAVE A, A NUMBER OF INTERVALS, UH,
[00:05:01]
UH, AND, AND I THINK A GROWING NUMBER OF INTERVALS WHERE MORE NATURAL GAS IS, IS NOT SETTING, UM, THE PRICE ON THE MARGIN.AND SO, YOU KNOW, IN THIS PARTICULAR CASE, WE SAW 61% INCREASE IN THE PRICE OF NATURAL GAS, BUT ONLY ABOUT ABOUT 14%, UH, INCREASE IN WHOLESALE ELECTRICITY PRICE.
SO, SO, UM, AND, AND AS YOU GET MORE, UM, PENETRATION FROM, UH, RENEWABLES AND, UH, ENERGY STORAGE RESOURCES, UM, YOU KNOW, I THINK WE'LL SEE THAT RELATIONSHIP DISSIPATE, UM, A LITTLE BIT FURTHER.
SO, YOU KNOW, FOR, FOR THOSE WHO, WHO FOLLOW IMPLIED HEAT RATES, UM, YOU KNOW, WE, WE HAD A DECREASE IN THE IMPLIED HEAT RATE, UH, OF 28%.
AND SO THAT, THAT'S REALLY JUST FOLLOWS OUT OF THE FIRST BULLET.
UM, IF YOU SEE GAS PRICE GO UP AND ENERGY PRICE GO UP, BUT LESS SO YOU'RE GONNA GET A DECREASE IN THE IMPLIED HEAT RATE.
SO, UM, WE DID SEE A VERY, VERY SMALL AMOUNT OF SHORTAGE PRICING.
AND, YOU KNOW, THAT MIGHT BE SOMETHING THAT WE TALK ABOUT A LITTLE BIT LATER, UH, IN THIS DISCUSSION.
UM, AND IT, IT WAS, UH, THE LOWEST, THE LOWEST IMPACT ON PRICE, UH, THAT WE'VE SEEN, UH, SINCE THE START OF SHORTAGE PRICING.
UM, AND LAST POINT HERE, UH, SINCE REAL TIME CO-OP OPTIMIZATION WAS IMPLEMENTED, UM, WE HAVE SEEN, WELL, IT'S JUST A RE KIND OF A AFFIRMATION OF THE THIRD BULLET, WHICH IS WE'VE JUST SEEN, YOU KNOW, VERY LITTLE SHORTAGE PRICING.
SO, AND, AND THERE ARE REASONS FOR THAT.
AND, AND THE, UH, SOME OF THE LATER SLIDES, WE'LL COVER THAT.
SO WE CAN GO ON TO THE NEXT SLIDE.
SO WE ALWAYS START WITH THE ALL IN PRICE, UH, BECAUSE IT IS MAYBE THE HIGHEST LEVEL INDICATOR OF WHOLESALE MARKET PERFORMANCE.
SO, UM, THIS BREAKS IT OUT BY, UM, PRODUCT EFFECTIVELY OR PRODUCT CLASS.
UM, AND WE HAVE NATURAL GAS OVERLAID ON THERE.
AND, AND GENERALLY THE POINT IS, UM, WHILE THE WHOLESALE ELECTRIC PRICE WAS UP SLIGHTLY, UH, COMPARED TO LAST YEAR AND COMPARED TO THE, UH, TWO YEAR, THREE YEARS PRIOR, ACTUALLY, UM, IT, IT'S, IT'S STILL VERY IN LINE.
UH, THE, THE SCALE ON THIS ADMITTEDLY IS A LITTLE BIT SKEWED BECAUSE WE'RE INCLUDING THE, UM, WHOLESALE, TOTAL WHOLESALE COSTS FROM 2021 WHEN, WHEN A STORM URI HAPPENED.
AND SO YOU, IT MIGHT LOOK LIKE THERE'S MORE VARIATION, UH, IN THE LAST FEW YEARS, UH, THAN WHAT THIS CHART WOULD SHOW.
AND, AND THAT'S TRUE IN A SENSE, BUT FROM A BIG PICTURE LEVEL, WE'RE JUST SEEING, YOU KNOW, THE WHOLESALE COSTS BEING FAIRLY CONSISTENT FOR THE LAST, UM, YOU KNOW, PROBABLY 6, 7, 5, 6, 7 YEARS, OR, OR, I'M SORRY.
UM, I'M SORRY, I DIDN'T MEAN YOURS.
UH, I WAS LOOKING AT THE MONTHS.
SO, SO THE WHOLE, THE TOTAL WHOLESALE COST IS LARGER THAN 2024, BUT MARKEDLY LOWER THAN, UH, 2022 AND 2023, WHICH WERE NOT WINTER STORM YEAR YEARS.
SO, SO WE ARE SEEING WHOLESALE COSTS, UH, CONSIDERABLY LOWER.
IF, IF YOU LOOK AT THE, YOU KNOW, THE AVERAGE PRICE, UM, IN OUR COST SYSTEM, UH, THAT'S BEEN COMING DOWN WHEN NORMALIZED FOR NATURAL GAS.
UH, AND SO, YOU KNOW, I THINK YOU, YOU'LL SEE THAT, AND WE'VE HAD A LARGE INFLUX OF SOLAR AND ENERGY STORAGE RESOURCES OVER THE LAST COUPLE OF YEARS, UH, WHICH HAVE HELPED DRIVE THE PRICE DOWN, UH, AND, AND THEREFORE THE WHOLESALE COSTS.
SO THE IMPLIED HEAT RATE IS DOWN ALSO.
UM, YOU KNOW, WE, WE INCLUDE THIS BECAUSE IT, IT IS AN INDICATOR, IT, IT, IT DOES INCLUDE, UM, TWO, TWO MOVING PARTS, THE, THE WHOLESALE ELECTRIC PRICE AND ALSO THE NATURAL GAS PRICE.
UM, AND SO IT, IT IS INTERESTING IN THAT REGARD, BUT YOU HAVE TWO THINGS THAT ARE MOVING.
UM, I THINK AS, AS YOU LOOK AT THE RIGHT SIDE, THE RED BARS, UH, THE ANNUAL, YOU KNOW, WE'VE SEEN THE, UH, THAT SPREAD OR THE, THE IMPLIED HEAT RATE, UM, DECREASE, UH, OVER THE LAST THREE YEARS.
UM, IT WAS HIGHER IN 2023 LARGELY BECAUSE OF THE ECRS, UH, MATTER.
UM, AND SO, UH, 2022 WOULD BE A REASONABLE COMPARISON.
UH, ALSO, SO, SO WE'RE NOT SEEING, WE'RE NOT SEEING, I MEAN, IT LOOKS LIKE IT'S STABLE OR COMING DOWN, UM, BUT WE'RE NOT SEEING HUGE CHANGES.
UH, AS I MENTIONED BEFORE, I THINK AS WE SEE MORE ENERGY STORAGE RESOURCES AND POTENTIALLY MORE SOLAR COMING IN, UM, YOU KNOW, WE, WE WILL SEE THE SUPPLY HEAT RATE DECLINE FURTHER.
[00:10:02]
UH, NEXT SLIDE PLEASE.SO, UH, THIS IS AN INTERESTING ONE.
OBVIOUSLY IN THE INSET TABLE, WE'VE GOT, UM, STATISTICS FOR SHORTAGE PRICING BY YEAR.
SO YOU CAN LOOK AT THAT ACROSS A LARGER TIMEFRAME.
UM, IN, UH, 2025, YOU KNOW, WE SAW VERY LITTLE, UM, VERY LITTLE SHORTAGE PRICING.
AND WHEN THERE WAS SHORTAGE PRICING, IT WAS PRETTY LOW VALUE, UH, BUT DID, DID NOT CONTRIBUTE A LARGE AMOUNT TO, UM, THE ENERGY PRICE, UH, YOU KNOW, ON THE WHOLE, AND CERTAINLY NOT FOR THAT MONTH.
SO, SO THIS IS, AND, AND AGAIN, I THINK WE'LL, WE'LL COVER THE WHY OF THIS A LITTLE BIT LATER IN THE PRESENTATION.
BUT, AND YOU KNOW, IF YOU'VE HEARD ME TALK ABOUT WHAT KIND OF MARKET MODEL, UM, WILL SUPPORT SOURCE ADEQUACY FOR TEXAS GOING FORWARD, YOU KNOW, TEXAS HAS A ENERGY ONLY SHORTAGE PRICING MODEL CURRENTLY.
UM, AND WHAT WE'RE SEEING, AND AGAIN, I THINK WE'LL TALK ABOUT THIS A BIT LATER, BUT, UM, YOU KNOW, WHAT WE'RE SEEING IS, UH, TEXAS IS NOT SHORT NOW.
SO THERE IS A PRICE SIGNAL BEING SENT, AND THE PRICE SIGNAL IS, UH, THERE'S MORE THAN ADEQUATE CAPACITY, UH, IN THE TEXAS FOOTPRINT, UM, TO HANDLE, UH, YOU KNOW, THE THINGS THAT ARE, THAT HAVE BEEN, UH, THE SYSTEM CONDITIONS THAT HAVE BEEN POPPING UP AND, AND HANDLE THE LOAD GROWTH THAT HAS HAPPENED SO FAR.
UM, AND I THINK WE EVEN SAW THAT WITH, UH, THE NEW, UH, PEAK LOAD THAT OCCURRED A COUPLE WEEKS AGO, AND THE ERCOT SYSTEM RODE THROUGH THAT WITH FAIRLY HIGH PRC OR, UM, YOU KNOW, TOTAL RESERVE AND, AND VERY LOW IMPACT ON WHOLESALE ELECTRICITY PRICE.
UM, YOU KNOW, WE, WE WERE NOT SEEING PRICES IN THE THOUSAND TO 2000 RANGE.
WE WERE SEEING, I I THINK THE PRICE, I, I FORGET THE EXACT NUMBER, BUT I THINK IT WAS SOMEWHERE AROUND $350, UM, WHICH IS NOT A HIGH PRICE FOR A, UH, A NEW RECORD PEAK LOAD, UH, ESPECIALLY IN A MARKET THAT'S DESIGNED TO PRICE SHORTAGES WELL, SO, UH, SO ANYWAY, UM, LET'S MOVE ON TO THE NEXT SLIDE.
AND WHEN I GET DONE WITH THE SUMMARY, I'LL, I'LL ASK SOME QUESTIONS.
LET'S SEE, I, WE MIGHT BE, YEAH, LET ME GO AHEAD AND LET, LET'S TAKE SOME QUESTIONS ON, UH, THE SLIDES UP TO THIS POINT SO FAR WE DON'T HAVE ANY IN THE THAT.
BUT I, WE HAVE ONE NOW FROM SHANE.
THEY MAY BE WAITING TO SEE WHEN, WHEN YOU'RE CALLING FOR QUESTIONS.
BUT WE, WE HAVE TWO NOW, SO WE'LL GO TO SHANE AND THEN DROP.
THANKS, CAITLYN, SHANE, THOMAS, MICHELLE, UM, YEAH, I REALLY APPRECIATE, YOU KNOW, IMM UH, TAKING THE TIME TO GO OVER ALL THIS WITH US AND TAKE OUR QUESTIONS AND, UH, HELP US KIND OF DIGEST THE CURRENT STATE OF THE MARKET.
UM, IT'S VERY INTERESTING TO ME TO LIKE, GO THROUGH ALL THESE ACTUAL OPERATING RESERVE TRENDS, YOU KNOW, VERSUS LIKE, LIKE THE, THE STORY.
IT SEEMS LIKE WE'RE, YOU KNOW, GETTING TIGHTER AND TIGHTER, BUT THE, THE MARKET SIDE SEEMS TO BE GETTING WIDER AND WIDER.
UM, DO YOU ATTRIBUTE THIS KINDA THIS TREND IN DECREASING OR INCREASING PRC AND DECREASING TIME UNDER ORDC AND ALL OF THIS TO, UM, LIKE THE GROWTH, UH, MORE TO THE, THE CHANGING RESOURCE MIX AND THE GROWTH AND THE SOLAR WIND OR KIND OF CONSERVATIVE OPERATIONS IS, UM, WHAT, WHAT DO YOU SEE AS THE, THE CHIEF DRIVER OF, OF THIS SHIFT? YEAH, THAT'S A GREAT QUESTION, SHANE.
UM, SO I DO THINK THAT CONSERVATIVE OPERATIONS PLAYS A ROLE.
UM, YOU KNOW, OBVIOUSLY WE'VE BEEN, YOU KNOW, TRYING TO PROVIDE OUR, OUR PERSPECTIVE ON, ON, YOU KNOW, HOW ANCILLARY SERVICE PROCUREMENT AND TO SOME EXTENT, ALSO REC SHOULD BE, SHOULD BE MANAGED.
UM, AND WE'VE, YOU KNOW, BEEN PRETTY OPEN ABOUT OUR POSITION THAT WE THINK ERCOT IS OVER PROCURING IN THE, IN THE CONSERVATIVE OPERATIONS SPACE.
AND SO I DO THINK THAT THAT'S CONTRIBUTING TO IT.
BUT IF YOU THINK ABOUT, THINK ABOUT WHAT REALLY, SO, SO, SO THAT, THAT HAS A, AN IMPACT ON LIKE ANY GIVEN OPERATING HOUR, RIGHT? BUT, BUT
[00:15:01]
IF YOU TAKE A STEP BACK AND JUST THINK FROM US, FROM A STRUCTURAL PERSPECTIVE, YOU KNOW, DOES EVEN IF, EVEN IF ERCOT OPERATING IN A CONSERVATIVE OPERATION POSTURE, UM, IF, IF THERE, IF THE SYSTEM WERE TIGHT, NOT NOT OPERATING AT IT, BUT STRUCTURALLY IF THE SYSTEM WERE TIGHT, YOU'D SEE MORE SHORTAGE PRICING BECAUSE ERCO T'S CONSERVATIVE OPERATION CANNOT PRODUCE NEW STEEL IN THE GROUND FOR THE NEXT OPERATING.AND SO YOU WOULD BE SEEING SOME, UM, YOU'D SEE YOU'D BE SEEING MORE FREQUENT AND MAYBE HIGHER MAGNITUDE SHORTAGE PRICING EVENTS HAPPEN IF ERCOT, THE ERCOT SYSTEM WERE STRUCTURALLY, UH, I, I DON'T WANNA SAY SHORT, BUT, UM, TIGHT AND, AND SO THAT'S JUST, THAT'S NOT WHAT'S HAPPENING.
THERE'S, THERE IS ANOTHER ASPECT TO IT, WHICH WE, WHICH I DO HAVE SOME DISCUSSION POINTS ON LATER HAVING TO DO WITH, UM, BRC, UH, IN HOW IT, AND HOW YOU INTERPRET IT NOW AS, AS WE UNDERSTAND IT FROM, FROM ERCOT OPERATIONS.
BUT, BUT THE SIGNAL THAT I'M SEEING IS THAT ERCOT IS NOT STRUCTURALLY TIGHT AND WEATHER, WEATHER MATTERS.
UM, LIKE I SAID, WE HIT A NEW PEAK LOAD, UM, THERE, THERE HAS BEEN SOME LOAD GROWTH SINCE THE LAST PEAK LOAD WAS HIT.
SO, UM, THAT DOESN'T NECESSARILY MEAN THAT, THAT THE ERCOT SYSTEM HAS SHIFTED, UH, NECESSARILY, BUT, BUT I, I WOULD'VE EXPECTED TO SEE, UH, YOU KNOW, EVEN GIVEN CONCERNS ABOUT TIGHT CONDITIONS, I, I WOULD'VE EXPECTED TO SEE HIGHER PRICES PRODUCED IF ERCOT WERE STRUCTURALLY TIGHT.
AND, AND SO THAT'S NOT HAPPENING.
AND SO, AND SO WHAT, WHAT I DO THINK IS HAPPENING IS YOU'RE SEEING, YOU KNOW, THERE'S BEEN A FAIR AMOUNT OF SOLAR INSTALLS OVER THE LAST FIVE YEARS, BUT, BUT THERE'S BEEN A HUGE AMOUNT OF ENERGY STORAGE RESOURCES THAT HAVE COME ONLINE, UM, IN THE LAST FIVE YEARS.
AND I THINK THAT, I THINK THOSE TWO FACTORS ARE, YOU KNOW, WHAT'S REALLY DRIVING THIS PRICE SIGNAL THAT WE'RE SEEING THAT THAT ERCOT IS NOT STRUCTURALLY SHORT.
SO, AND, AND OF COURSE, IT'S WORTH MENTIONING, AND, AND THIS WILL COME UP AGAIN LATER WHEN WE TALK ABOUT HOW OPERATIONS ERCOT OPERATIONS DIVISION LOOKS AT PRC IS, IS, UM, YOU KNOW, SOLAR AND BATTERIES ARE VERY DIFFERENT TYPES OF RESOURCES, UH, COMPARED TO, UM, YOU KNOW, NATURAL GAS FIRE, A NATURAL GAS FIRED RESOURCE.
AND THAT ACTUALLY CHANGES HOW YOU INTERPRET THE PRC.
BUT, BUT I THINK IT'S, I, I THINK WE'RE SEEING THIS BECAUSE OF THE SOLAR AND MOSTLY BECAUSE OF THE ENERGY STORAGE RESOURCES THAT HAVE COME ONLINE.
SO I TALKED FOR LONGER THAN I SHOULD HAVE, BUT SHANE, DID THAT ANSWER YOUR QUESTION OR DID I MISS THE MARK? YEAH, IT CERTAINLY, UH, ADDRESSED WHAT I WAS GOING FOR THERE.
UM, YEAH, I THINK, YEAH, IT RELATES TO SOME OTHER TOPICS YOU HAVE GOING DOWN.
SO I'LL, I'LL WAIT I GUESS UNTIL WE GET DEEPER INTO THOSE SECTIONS TO DIVE INTO 'EM.
AND, YOU KNOW, ACTUALLY THERE'S SOMETHING I, I WAS TRYING TO AVOID TALKING ABOUT THIS, BUT IT'S HARD TO AVOID IT ACTUALLY THESE DAYS, BUT THERE'S, AT A MACRO LEVEL IN THE ERCOT FOOTPRINT, THERE'S TWO MOVING PARTS, THERE'S TWO MOVING THINGS THAT INTERACT WITH EACH OTHER THAT PRODUCE PRICE.
AND, AND SO WE'VE SEEN THIS BIG INFLUX OF SUPPLY, UM, AND ESPECIALLY FROM, YOU KNOW, RECENTLY SOLAR AND MOSTLY ENERGY STORAGE RESOURCES.
BUT, BUT THE DEMAND SIDE OF THE EQUATION IS, YOU KNOW, A VERY IMPORTANT PART.
AND, AND EVERYONE HAS TALKED ABOUT INCLUDING ME, UM, YOU KNOW, AND REVIEWED AND TALKED ABOUT AND CONSIDERED, UM, THE, THE ERCOT LOAD PROJECTIONS.
AND SO WHEN WE THINK OF, WHEN WE THINK OF 2025, OR WHEN WE THINK OF THE, A COUPLE WEEKS AGO WHEN, WHEN WE HAD THE NEW PEAK LOAD, UM, YOU KNOW, WE, WE LOOK AT THAT AND WE THINK, OH, WELL, SO THE MARKET DIDN'T REALLY MARKET HANDLED THAT VERY WELL.
UM, AND SO, YOU KNOW, WE MUST NOT BE STRUCTURALLY TIGHT, AND I THINK THAT'S ACCURATE, AS I'VE SAID.
BUT, BUT WITH THESE TWO MOVING PIECES, WE, WE HAD, WE HAD A LOT OF SUPPLY COMING IN WITH NOT A LOT OF NEW LOAD COMING IN FOR SEVERAL YEARS.
AND, YOU KNOW, LOOKING AT THE, THE NEXT SEVERAL YEARS, YOU KNOW, IT WOULD APPEAR THAT IT MIGHT BE THE CASE THAT WE'LL HAVE A LOT OF NEW LOAD COMING IN THAT WILL OUTPACE, UM, YOU KNOW, ADDITIONS AND SUPPLY.
AND SO, SO I WOULD EXPECT TO SEE THIS CHANGE.
IN FACT, I, I SAID SOMETHING EARLIER THAT I ALMOST CAVEATED, BUT I DIDN'T, WHICH IS, YOU KNOW, I, WHAT I SAID WAS, I THINK WE'LL SEE THE, THE IMPLIED, UM, HEAT RATE CONTINUE TO COME DOWN AS WE GET
[00:20:01]
MORE SOLAR AND AND BATTERY COMING IN COMMERCIAL.UM, BUT, BUT, AND, AND SO ALL OTHER THINGS EQUAL THAT, THAT MIGHT BE TRUE, BUT NOT ALL OTHER THINGS WILL BE EQUAL.
AND, AND WE ARE EXPECTING A LOT OF NEW LOAD TO COME IN, WHICH WILL CHANGE.
SO YOU'VE GOT A RATE OF CHANGE ACROSS TIME WHERE WE'RE GOING FORWARD, IT'S UP, WE'RE EXPECTING, WE'RE EXPECTING THE RATE OF CH THE RATE OF CHANGE IN LOAD TO OUTPACE THE RATE OF CHANGE IN NEW SUPPLY.
AND I THINK YOU'LL SEE THAT AFFECTING SHORTAGE CONDITIONS, SHORTAGE PRICING, AND THE IMPLIED HEAT RATE, UH, IN THE OPPOSITE DIRECTION I INDICATED EARLIER.
SO ANYWAY, THANKS FOR LETTING ME GET THAT IN.
YEAH, JEFF, THAT, THAT'S KIND OF A PERFECT SEGUE.
THANK YOU SO MUCH FOR PUTTING THIS.
I WAS GOING TO ASK YOU ABOUT THE LARGE LOAD GROWTH, AND YOU KNOW, HOW THIS, YOU KNOW, WITH THIS SHORTAGE PRICING NEAR ZERO AND PRC SURPLUS THIS LARGE, HOW DO YOU SEE, UH, IN TERMS OF PRICE SIGNALS THAT, UH, YOU KNOW, INCENTIVE FOR NEW DISPATCHABLE GENERATION, RIGHT? WHEN THESE LARGE LOADS ARE COMING IN THE NEXT TWO TO THREE YEARS, RIGHT? THERE'S HUGE AMOUNT OF LARGE LOADS THAT ARE COMING IN FOR THE NEXT TWO TO THREE YEARS.
SO HOW DO YOU SEE THOSE, UH, PLAYING OUT WITH THE, WITH, THERE IS NO SIGNAL HERE WITH THE, YOU KNOW, PRC SO LARGE AND SHORTAGE PRICING YEAR ZERO.
SO JUST, YOU UNDERSTAND? YEAH, I THINK THAT'S A GREAT, I THINK THAT'S A GREAT QUESTION.
I'VE TALKED ABOUT THAT A LITTLE BIT, UM, AT A COUPLE OF BOARD MEETINGS, JUST JUST TO HIGHLIGHT THE FEATURES, UH, THE, YOU KNOW, THE PRICE SIGNAL FEATURES OF DIFFERENT MARKET CONSTRUCTS.
AND SO WHAT, WHAT A ENERGY ONLY SHORTAGE PRICING MARKET CONSTRUCT IS GOING TO PRICE IS SHORTAGES NOW.
AND SO THE PRICE DOES NOT SEE ANTICIPATED SHORTAGES THREE YEARS OUT.
UH, IT ONLY SEES THE, THE SHORTAGE THAT IT IS EXPERIENCING RIGHT NOW, THE RELATIVE SHORTAGE.
UM, AND SO THAT'S A FEATURE OF THAT MODEL, UM, UH, OF THIS MODEL.
UH, YOU KNOW, THERE ARE OTHER, THERE ARE OTHER MODELS AS WELL, MARKET MODELS THAT I'VE TALKED ABOUT AND EVERYBODY'S TALKED ABOUT.
UM, SO, YOU KNOW, IF YOU LOOK AT A CAPACITY MARKET MODEL, THERE'S A FORWARD CAPACITY MARKET WHERE THE PRICE FOR THIS YEAR'S AUCTION REFLECTS PERCEIVED SHORTAGES THREE YEARS OUT, RIGHT? RIGHT.
SO THAT'S WHEN YOU GET THE LEADING PRICE SIGNAL.
IS IT, IT, AND I'M NOT ADVOCATING FOR IT, I'M JUST SAYING THAT MODEL'S SET UP TO PROVIDE A LEADING PRICE SIGNAL.
UM, THERE'S A PROMPT CAPACITY MARKET ALSO, AND THAT MODEL IS NOT SET UP TO, TO, YOU KNOW, DEMONSTRATE, UM, PERCEIVED FUTURE SHORTAGES IN THE PRICE TODAY.
IT'S, IT'S IT'S PROMPT BY, BY DESIGN, AND THEN YOU HAVE THE LOAD SERVING ENTITY OBLIGATION MODEL WHERE YOU, YOU REALLY DON'T, YOU KNOW, AND AT LEAST AS, AS IT'S BEEN IMPLEMENTED OTHER PLACES, YOU DON'T REALLY HAVE A LOT OF TRANSPARENCY INTO PRICE.
UM, BUT YOU WOULD SEE THE PRICES EX, IF YOU DID HAVE TRANSPARENCY TO THE PRICE, YOU, YOU WOULD SEE, YOU KNOW, THESE, THESE WOULD BE SHORT TO LONG TERM CONTRACTS AND YOU WOULD SEE PRICES FOR ENERGY CONTRACTED SEVERAL YEARS OUT REFLECTING ANTICIPATED SHORTAGES.
UM, SO, BUT, BUT THE, BUT THE ERCOT MODEL DOES NOT HAVE THAT.
AND SO, AND THE, THE POINT I'VE TRIED TO MAKE IN PRIOR DISCUSSIONS AT THE BOARD ON THIS VERY TOPIC IS WITH, WITH THIS MODEL, YOU KNOW, SO ANY, ANY COMPANIES, ANY MARKET PARTICIPANTS THAT ARE DOING FORWARD CONTRACTING FOR ENERGY, UM, THEY MAY BE ADJUSTING THEIR PRICES FOR THAT BASED ON ANTICIPATED SHORTAGES BECAUSE OF THE, THE HIGH LOAD GROWTH THAT'S COMING IN.
BUT YOU WILL NOT SEE THAT IN THE, THE, THE A-S-D-C-O-R-D-C FRAMEWORK.
YOU, YOU WILL, YOU WILL NOT SEE THAT THERE.
SO, UM, SO THE POINT I'VE TRIED TO MAKE IS, UH, IN ORDER FOR THOSE PRICE SIGNALS TO START, UH, INDICATING NEW INVESTMENT IS NEEDED, ERCOT NEEDS TO ROLL INTO A SPACE WHERE, YOU KNOW, THERE'S MORE SHORTAGES AND MORE SHORTAGE PRICING.
UM, AND, AND, YOU KNOW, EVERYONE WHO MAKES THEIR, THEIR LIVING IN THIS SPACE, YOU KNOW, IT'S LOOKING OUT THE NEXT COUPLE OF YEARS ANYWAY.
AND SO WHEN THEY START TO SEE THOSE SHORTAGE PRICES COME IN AND INDICATE THAT THE SYSTEM HAS, AND COME IN, COME IN, IN A, IN A SYSTEMIC WAY, NOT JUST, YOU KNOW, THERE WAS JUST ONE DAY WHERE THE LOAD FORECAST WAS OFF BY A TON AND WE HAD SEVERAL OUTAGES,
[00:25:01]
BUT, BUT, YOU KNOW, SEEING A SUMMER OR A WINTER WHERE THERE'S, YOU KNOW, SOME, SOME PREVALENCE IN SHORTAGE PRICING, THEN THEY'LL KNOW THAT LOAD HAS OUTPACED LOAD GROWTH, HAS OUTPACED SUPPLY GROWTH ENOUGH THAT THE SYSTEM IS NOT LONG ON INSTALLED CAPACITY AND, AND WILL BE EXPERIENCING TIGHTER CONDITIONS.AND THAT WOULD BE THE SIGNAL FOR NEW INVESTMENT.
SO, UM, SO ROTH DOES THAT MM-HMM
SO UNFORTUNATELY THAT IS PROBABLY, UM, NOT AS FORWARD LOOKING, RIGHT? I MEAN, UH, I'M, YEAH, I UNDERSTAND WHAT YOU'RE SAYING, UH, AND PROBABLY THAT IS WHAT IT IS AT THIS POINT.
BUT IN ORDER FOR THE, YOU KNOW, THE GRID TO BE RELIABLE AND, AND ALSO SEND PRICE SIGNALS, WE PROBABLY, WE CANNOT HAVE PROBABLY LOOK INTO, LOOK BACK AND THEN DECIDE ON THE, OH, NEW GENERATION NEEDS TO BE COMING IN BECAUSE THERE'S A LOT OF LARGE LOAD COMING IN OVER THE LAST, NEXT TWO TO THREE YEARS THAT, YEAH, YOU KNOW, DEMAND MAY OUTPACE SUPPLY.
AND, UH, WE, I MEAN, IF THAT IS AN INCENTIVE IN THAT AND IN THESE, THESE SUMMER OR, YOU KNOW, WINTER EVENTS ARE AN INCENTIVE FOR NEW GENERATION, THEN WE ARE LOOKING AT FOUR YEARS OR THREE YEARS FOR THE DISPATCHABLE GENERATION TO COME IN.
SO HOW ARE YOU GOING, HOW ARE WE GOING TO DEAL WITH THAT INTERIM PERIOD BETWEEN THAT SIGNAL UNTIL THE NEW GENERATION COMES IN, RIGHT? WHERE THE LARGE LOAD IS CONSTANTLY GROWING OVER THE NEXT THREE TO FOUR YEARS.
THAT'S KIND OF WHAT MY CONCERN IS AT THIS POINT, BUT THANK YOU.
I, I, YEAH, I DO HAVE 1, 1, 1 OTHER QUESTION, BUT PROBABLY I'LL HOLD OFF UNTIL YOU TALK ABOUT THE AS METHODOLOGY AND ROCK.
AND, AND JUST TO PUT A CAP ON IT, YOU KNOW, SO I, MY, IN MY VIEW THAT THE PRICE DYNAMICS OVER THE NEXT THREE TO FIVE YEARS ARE GONNA LOOK, UH, SHOULD, SHOULD LOOK DIFFERENT THAN THE PRICE DYNAMICS OVER THE LAST THREE TO FIVE YEARS.
UM, YOU KNOW, THERE WERE SPECIFIC ISSUES IN THE LAST THREE TO FIVE YEARS, BUT, BUT, BUT YOU, YOU, YOU MADE A GOOD POINT.
LOOKING BACK IS NOT REALLY GONNA HELP IT.
YOU NEED TO BE LOOKING FORWARD, UM, AND ANTICIPATING WHAT YOU'RE, AND, AND, AND TRYING TO RECONCILE WHAT YOU'RE SEEING TODAY WITH WHAT YOU EXPECT IN TWO YEARS OR THREE YEARS, UM, IN ORDER TO, YEAH.
UM, OKAY, SETH? SORRY, I WAS HAVING TROUBLE ON MUTE, BUT GO AHEAD, SETH.
YEAH, IT SOUNDS LIKE WE'RE GONNA TALK ABOUT R BUT YOU KNOW, AND, AND I, YOU KNOW, I CAN PROBABLY SAVE THIS UNTIL WE GET THERE, BUT I DON'T SEE HOW ANY OF THIS REALLY MATTERS IF ERCOT IS GONNA PROCURE LOWER ANCILLARY SERVICES AND THEN JUST ROCK FORM EVERY DAY INSTEAD, LIKE, IT'S, IT'S NOT A REAL MARKET.
SO LIKE, I DON'T KNOW THAT WE'RE REALLY GONNA SEE SCARCITY PRICING ANYWAY.
YEAH, WE, WE SHOULD TALK ABOUT THAT DURING THE RU WE, WE CAN LOOP BACK AROUND DURING RU 'CAUSE THAT'S AN IMPORTANT POINT.
YOU WANNA KEEP GOING, JEFF? SURE.
YEAH, SO JUST SO WE'RE KIND OF IN THE OBSERVATIONS ON OPERATING RESERVES SECTION NOW.
UM, SO, SO WE'VE SEEN PRC INCREASE, UH, CONSIDERABLY.
UM, AND, YOU KNOW, SINCE URI, UH, AND, AND THAT'S, YOU KNOW, MOST, MOST DIRECTLY ATTRIBUTABLE TO THE CONSERVATIVE OPERATIONS POSTURE, UM, I WON'T TALK ABOUT ALL THE STATS ON THIS SLIDE.
YOU CAN, YOU CAN HAVE A LOOK AT 'EM, BUT, BUT THE, THE PUNCHLINE OF THIS SLIDE SLIDE IS THAT WE'VE SEEN A, A VERY LARGE INCREASE IN AVAILABLE RESERVES, UH, IN, YOU KNOW, ACROSS OPERATING HOURS, UM, IN THE LAST, YOU KNOW, FOUR YEARS OR FIVE YEARS.
SO, UM, SO THAT IS, AND, AND, AND IT WASN'T A, IT WASN'T NECESSARILY AN ORGANIC GROWTH AND AVAILABLE OPERATING RESERVES.
IT, IT WAS, YOU KNOW, WE, WE BELIEVE LARGELY DUE TO, UM, CONSERVATIVE OPERATIONS.
IT, IT IS A LITTLE, AND WELL, I GUESS I'LL TALK ABOUT HOW YOU INTERPRET THE PRC IN IN A MINUTE.
AND YOU MAY HAVE ALL HEARD THIS FROM OPERATIONS A COUPLE TIMES ANYWAY, SO I'LL KEEP IT BRIEF.
BUT, BUT IT, THE, THERE, THERE, THE, THE LARGE INFLUX OF ENERGY STORAGE RESOURCES NO DOUBT HAS IMPACTED, UM, THE, THE MEASUREMENT OF PRC.
AND SO WHEN I SAY IT'S NOT ORGANIC, THAT'S PROBABLY NOT FAIR.
I, I, I DON'T KNOW WHAT PROPORTION OF THE INCREASE IN AVERAGE PRC IS DUE TO ADDITIONAL ENERGY STORAGE RESOURCES VERSUS C CONSERVATIVE OPERATION.
I DON'T, YOU KNOW, I, I DON'T HAVE, I HAVEN'T PICKED THAT APART TO KNOW THOSE PROPORTIONS, BUT
[00:30:01]
BOTH ARE AFFECTING IT.SO, UM, TO BE FAIR, IT IS PARTLY ORGANIC AND PARTLY NOT ORGANIC.
SO, UM, AND THE ISSUE, LET ME SEE IF IT MAKES SENSE TO TALK ABOUT THIS NOW.
ACTUALLY, LET ME, LET ME WAIT ON THE PRC FOR TWO MORE SLIDES.
SO LET'S GO TO THE NEXT SLIDE PLEASE.
SO, SO THIS, THIS, THIS BASICALLY JUST SHOWS, UM, WHAT THE PREVALENCE OF, OF LEVELS OF PRC, UM, AND WHAT, WHAT, YOU KNOW, HOPEFULLY YOU TAKE AWAY FROM THIS IS, YOU KNOW, IF WE DRAW A LINE AT A PRC OF SIX AND A HALF GIGAWATTS, THIS, THIS DOTTED RED SERIES SHOWS THAT, UM, YOU KNOW, STARTING IN 2023, UM, WE HAD SO MUCH PRC THAT THE PREVALENCE OF PRC DIPPING BELOW SIX AND A HALF MEGAWATTS DECLINED AND IS IS EFFECTIVELY ZERO NOW.
UM, AND THE GREEN DOTTED SERIES, WHICH IS JUST ACROSS THE, THE HORIZONTAL AXIS, UM, ACTUALLY DOESN'T REALLY SHOW THAT MUCH CHANGE.
IT'S, IT, IT, UM, I GUESS THE TAKEAWAY FROM THIS IS WE CERTAINLY HAVEN'T SEEN AN INCREASE IN THE PREVALENCE OF OURS WITH PRC BELOW THREE GIGAWATTS.
AND, AND SO, AND SO IT APPEARS THAT WE'RE FLUSH WITH, WITH RESERVES, UM, IN, IN, YOU KNOW, ON AVERAGE IN AN OPERATING HOUR.
SO LET'S GO TO THE NEXT SLIDE, PLEASE.
AND SO, AND SO HERE'S WHAT, HERE'S WHERE WE TALKED A LITTLE BIT ABOUT PRC.
AND, AND SO PR C'S IMPORTANT BECAUSE IT IS AN INDICATOR, IT IS A PRIMARY INDICATOR THAT OPERATIONS USES TO UNDERSTAND, UM, WHETHER OR NOT THEY NEED TO TAKE ACTION TO ENSURE RELIABILITY.
AND OBVIOUSLY THE, UM, YOU KNOW, EMERGENCY LEVELS, THE, THE OPERATOR OPERATING LEVELS ARE KEY TO DIFFERENT PRC LEVELS.
SO, UM, SO I'LL JUST COVER THESE TWO OBSERVATIONS THAT WE'VE HEARD AND YOU PROBABLY HAVE AS WELL FROM OPERATIONS.
SO INCREASED RELIABILITY RISK DUE TO RENEWABLES AND BATTERIES.
SO, SO THERE, SO YOU HAVE, UM, SO WHEN PRC WAS, SO LET, LET'S GO BACK, LET'S GO BACK, YOU KNOW, 10 YEARS.
UM, A, A MEASURE OF PRC WAS, YOU KNOW, COMPRISED LARGELY OF NATURAL GAS FIRED RESOURCES THAT, THAT WOULD BE ABLE TO PRODUCE IN 30 MINUTES, THE SAME AS THEY'RE ABLE TO PRODUCE RIGHT NOW.
AND PRC IS A RIGHT NOW MEASURE.
UM, AND AS WE'VE MOVED FORWARD IN TIME FROM THEN WITH GREATER RENEWABLE PENETRATION AND, UM, ALSO MORE ENERGY STORAGE RESOURCES, UH, IN THE MIX, A LOT MORE, UM, THESE, THE, THE, THE, THE ELEMENTS THAT COMPRISE PRC ARE NO LONGER, UM, CONSTANT FUEL SOURCE ELEMENTS LIKE A NATURAL GAS FIRED RESOURCE.
AND SO INTERPRETING A PRC OF, YOU KNOW, 6,000 RIGHT NOW DOESN'T MEAN YOU'LL HAVE A PRC OF 6,000 IN 30 MINUTES OR 60 MINUTES.
UM, BECAUSE THE VARIABLE ENERGY, NATURE OF RENEWABLES AND THE LIMITED USE NATURE OF, UM, EVERY STORAGE OR, OR ENERGY STORAGE RESOURCES SORT OF DILUTES THAT PROPERTY.
AND THAT'S CAUSED SOME CONCERN FOR, UM, OPERATIONS.
SO, UM, AND THE, THE SECOND POINT HERE, PRC INCLUDES CAPACITY FROM OUT MARKET RELIABILITY ACTIONS.
SO THIS, THIS IS, UH, I, I'M NOT SURE THIS REQUIRES MUCH DISCUSSION.
IT'S, IT'S, PRC IS JUST AN ACCOUNTING OF WHAT'S, WHAT'S AVAILABLE IN REAL TIME, UH, IN, IN TERMS OF RESERVES.
UH, IT DOESN'T HAVE TO BE ECRS OR REGULATION, IT'S JUST AVAILABLE RESERVES.
SO, SO, BUT, BUT THE POINT I WANTED TO MAKE IS, I THINK OPERATIONS IS HAVING SOME CHALLENGES WITH HOW TO INTERPRET OR DEAL WITH PRC BECAUSE OF THE INCREASED INFLUENCE ON THE INTERPRETATION OF PRC FROM VARIABLE ENERGY RESOURCES AND USE LIMITED LIKE BATTERY.
[00:35:01]
WHAT, WHAT WE'VE HEARD FROM THEM A COUPLE OF TIMES, AND I THINK THEY'VE MENTIONED THIS AT THE BOARD AND THEY PROBABLY HAVE AT STAKEHOLDER MEETINGS AS WELL, IS THEY HAVE LESS FAITH, UH, IN PRC, UH, COMPARED TO FIVE OR 10 YEARS AGO.AND SO, UM, GIVEN THAT IT'S ONE OF THE PRIMARY, YOU KNOW, INDICATORS OF WHETHER OR NOT ACTION NEEDS TO BE TAKEN TO SUPPORT RELIABILITY AND THAT, AND THAT ACTIONS THAT ARE TAKEN AFFECT THE MARKET, UM, AND GENERALLY, UH, THOSE TYPES OF ACTIONS REDUCE, UM, PRICE SIGNALS.
UH, AND ERCOT IS IN A SPACE WHERE, UM, IT IS ANTICIPATING NEEDING A LOT NEW GENERATION, UM, AND PRICE SIGNALS ARE THE PRIMARY MECHANISM FOR, FOR DOING THAT.
IT IS IN MY VIEW, PRETTY IMPORTANT THAT THAT ERCOT GRID OPERATIONS FIGURE OUT HOW TO GET A BETTER MEASURE OF PRC, UM, SO THAT IT CAN BE, UH, SOMETHING THAT THEY TRUST MORE, UM, AND DON'T FEEL LIKE THERE'S A LOT OF UNCERTAINTY AROUND IT THAT THEY NEED TO TAKE ACTION, UH, TO AVOID THE CONSEQUENCES OF THAT UNCERTAINTY.
SO, AND THERE ARE PROBABLY A COUPLE OF WAYS TO DO THAT.
I, I, I WILL MENTION, UM, AND I, I KNOW WE JUST FINISHED THE RTC, THE, THE, THE LIFT, THE, THE HUGE LIFT THAT WAS GOING TO RTC, BUT IN SOME SENSE, A MULTI INTERVAL OPTIMIZATION WOULD HELP WITH THAT BECAUSE, UM, YOU KNOW, EVERYONE WOULD'VE TO HAVE THEIR OFFERS IN THE WAY THEY WANTED THEM REFLECTED IN A, IN A BINDING MARKET CLEARING.
UM, AND SO IF THAT MULTIPLE, YOU KNOW, MULTIPLE INTERVAL OPTIMIZATION WENT OUT TWO, TWO HOURS, OR, YOU KNOW, I MEAN, I DON'T WANNA THROW OUT A REALLY LONG TIME 'CAUSE THAT'S COMPUTATIONALLY DIFFICULT, BUT EVEN IF IT WENT OUT TWO HOURS, UM, THAT, THAT MIGHT PROVIDE SOME BETTER CERTAINTY, AT LEAST WITH RESPECT TO ENERGY STORAGE RESOURCE AVAILABILITY.
IT, IT WON'T NECESSARILY HELP WITH RENEWABLE FORECAST ERRORS, UM, BECAUSE YOU'LL NEVER KNOW UNTIL IT HAPPENS, UM, IF THE WIND DIES DOWN OR THE CLOUDS ROLLING, BUT, BUT IT, BUT SOMETHING LIKE THAT WOULD PROVIDE A PRC FOR EVERY INTERVAL THAT, THAT, THAT OPTIMIZATION LOOKED OUT.
UM, THAT COULD BE TELLING, UM, IF THAT PRC MOVES UP OR DOWN, UM, COMPARED TO THE CURRENT INTERVAL, YOU KNOW, THAT WOULD BE MORE TELLING FOR OPERATIONS AND SOMETHING THAT THEY COULD ROLL IN AND WOULD ADD, MAYBE ADD SOME CERTAINTY TO THAT MEASURE FOR THEM.
UM, ANOTHER, ANOTHER APPROACH WOULD BE THERE IS A, A SCED LOOK AHEAD, UH, THAT'S RUN CURRENTLY AND TAKING PR IF THAT CALCULATES PRC, WHICH I'M SURE IT DOES, UM, TAKING THAT PRC AND LOOKING AT THAT, THE ONLY PROBLEM WITH THAT IS IT'S NOT A, THERE ISN'T A BINDING ASPECT TO IT, AND THERE ISN'T NECESSARILY AN EXPECTATION THAT GENERATOR OFFERS, YOU KNOW, WHERE THE OUT PERIOD REFLECT.
THEY, THEY HAVE AN OPPORTUNITY TO CHANGE THEIR OFFERS.
AND SO ENERGY STORAGE RESOURCE OFFERS MAY NOT, YOU KNOW, AN HOUR OUT MAY NOT REFLECT WHAT THEY REALLY, WHERE THEIR OFFER'S REALLY GOING TO BE.
AND SO IT MIGHT NOT BE THAT GOOD OF INFORMATION, A, A MULTI INTERVAL OPTIMIZATION, UM, YOU KNOW, WOULD HAVE SOME SETTLEMENT CONSEQUENCES.
AND SO EVERYONE WOULD NEED TO MAKE SURE THAT THEIR OFFERS OFFER PRICES WERE LINED UP, UH, THE WAY THEY WANTED THEM TO BE, UM, CONSIDERED BY THE MARKET AND THEN SETTLE ON.
UH, AND, AND I DIDN'T ANTICIPATE THAT HAPPENING ANYTIME SOON, BUT I JUST WANT TO THROW OUT THAT THERE ARE A COUPLE OF WAYS OF, OF DEALING WITH THAT.
ONE'S A LONGER TERM LARGE MARKET CHANGE, AND THE OTHER ONE MIGHT BE, MIGHT BE FEASIBLE WITH SOME CHANGES IN HOW, YOU KNOW, WHAT THE EXPECTATIONS ARE FOR OFFERS.
BUT, BUT, BUT THIS IS ACTUALLY REALLY A, A PRETTY IMPORTANT ISSUE BECAUSE I THINK, YOU KNOW, YOU'VE HEARD, I THINK IT MIGHT HAVE BEEN AFTER, AFTER WINTER STORM FERN, YOU KNOW, OUR OPERATIONS WAS, THAT'S WHEN IT FIRST CAME OUT.
UH, YOU KNOW, I THINK PUBLICLY A LOT THAT OPERATIONS HAD, UM, ISSUES WITH THE UNCERTAINTY AROUND AROUND PRC, AND THEN A LOT OF THAT WAS DRIVEN BY HOW A STATE OF CHARGE AND ENERGY STORAGE RESOURCES AND HOW YOU VIEW THOSE AS A PROJECTION 30 MINUTES OUT OR 60 MINUTES OUT.
SO, SO LEMME TAKE, I THINK WE GOT SOME QUESTIONS QUEUED UP HERE.
UM, BUT I, I WANNA TALK ABOUT THAT BECAUSE, YOU KNOW, WE'VE TALKED A LOT ABOUT OVER PROCURING RESERVE OUR POSITION THAT OR COSTS OVER PROCURING RESERVES.
BUT, BUT, BUT OPERATIONS NEEDS TO HAVE GOOD MEASURES, UM, GOOD INDICATORS
[00:40:02]
FOR WHEN THEY NEED TO, UM, PAY CLOSER ATTENTION AND, AND POTENTIALLY INTERVENED SO THAT, UH, YOU KNOW, RELIABILITY IS, IS SUPPORTED.UM, YOU'D LIKE TO SEE, YOU'D LIKE TO SEE THE MARKET HAVE A CHANCE TO PRODUCE THAT, AND IT, AND IT, AND IT WILL PRODUCE THAT, YOU KNOW, IF PRICES ARE ALLOWED TO GO UP.
BUT, BUT AT THE END OF THE DAY, OPERATIONS NEEDS TO HAVE A GOOD SET OF INSTRUMENTS TO FLY BY.
SO, SO LET ME OPEN IT UP TO QUESTIONS OR COMMENTS.
YEAH, LET'S GO TO SETH AGAIN AND THEN KATIE.
YEAH, I WAS JUST GONNA SAY, I FEEL LIKE THERE'S A TRADE OFF WITH THE MIO.
UM, I THINK THERE'S ALSO LIKE A PREMISE, UM, THAT THAT SORT OF UNDERPINS THE, UH, THE MIOS, UM, EFFICACY AND THAT IS THAT IT CAN DO A BETTER JOB AT PREDICTING WHAT'S AHEAD OF IT THAN THE MARKET CAN.
SO, YOU KNOW, TO SOME EXTENT WHAT, WHAT I'M KIND OF HEARING COME THROUGH WITH WHAT YOU'RE SAYING IS, WELL, THE MIO IS GONNA POSTURE THE SYSTEM GOING ON A FORWARD LOOKING BASIS BETTER THAN WHAT WE HAVE TODAY, WHICH SORT OF, YOU KNOW, THAT'S SORT OF SAYING, WELL, THE MARKET DOESN'T REALLY DO THAT ITSELF.
AND I KNOW LIKE KAISO HAS AN MIO AND THAT'S PROBABLY TRUE IN KAISO BECAUSE THEY DON'T BELIEVE IN PRICE FORMATION, UM, AND SCARCITY PRICING.
BUT WE HAVE A DESIGN IN ERCOT THAT I, YOU KNOW, THAT I THINK IS CAPABLE OF, OF GIVING THE RIGHT SIGNALS AND BEING ABLE TO COUNT ON THE BATTERIES BEING THERE WHEN WE NEED 'EM TO BE.
SO I, YOU KNOW, I'M NOT, I I JUST DON'T THINK THAT THE MI IS THE PANACEA AND IT'S ONLY GOOD AS IT'S, IT'S, ITS OUTPUTS AS WELL.
SO THE MIO CAN BE WRONG, UM, AND THEN YOU CAN START GIVING COST RECOVERY TO PEOPLE FOR A LOAD FORECAST THAT WASN'T RIGHT.
SO I, I JUST THINK THERE'S TRADE OFFS IN, IN, IN GOING THAT ROUTE.
YEAH, I, THANKS FOR THE COMMENT, SETH.
UM, SO MY, MY LIKE THIRD LEVEL OF DETAIL UNDERSTANDING OF HOW KAISO WORKS IS VERY DATED, BUT WHEN, WHEN THEY FIRST PUT IN THEIR NODAL MARKET THAT THEY THEN PUT IN SOME SHORTAGE PRICING, BUT AT THAT POINT IN TIME, AND YOU MAY BE MORE FAMILIAR WITH IT THAN I AM AT THIS POINT, BUT AT THAT POINT IN TIME, UM, ENERGY AND ANCILLARY SERVICES WERE NOT TRULY CO OPTIMIZED IN THE SAME SETTLEMENT BINDING SENSE.
SO ANCILLARY SERVICES WERE CO OPTIMIZED WITH ENERGY, UM, PRIOR TO THE SCED RUN AND THE PRICES PRODUCED BY, BY THAT RUN WERE BINDING ONLY FOR ANCILLARY SERVICE PROCUREMENT.
AND SO IF YOU HAD A SHORTAGE PRICING EVENT IN THAT RUN, YOU WOULD SEE HIGHER ANCILLARY SERVICE PRICES, BUT THAT SHORTAGE PRICE DID NOT AFFECT THE, THE FINANCIALLY BINDING ENERGY PRICE BECAUSE IT WAS HAPPENING IN A DIFFERENT RUN.
AND SO, AND SO YOU DIDN'T HAVE THAT PRICE FORMATION.
AND OF COURSE, YOU KNOW, IT'S THE ENERGY, IT'S THE IMPACT OF SHORTAGE PRICING ON THE ENERGY PRICE THAT IS THE BIG, THE BIG LIFT FOR, FOR REVENUE AND PRICE SIGNAL.
AND SO, SO THAT MARKET DIDN'T HAVE THAT AT THAT TIME.
I DON'T KNOW IF THEY'VE CHANGED THAT SINCE THEN, BUT, BUT, UM, I HAVEN'T HEARD ANYTHING ABOUT THAT CHANGE.
UH, ERCOT ISS A LITTLE ERCOT IS OBVIOUSLY VERY DIFFERENT.
THEY OPTIMIZE BOTH, BOTH THE AN IN REAL TIME, THE ANCILLARY SERVICE PRICING AND THE ENERGY PRICE OR BINDING.
AND SO YOU HAVE, YOU KNOW, A TRUE SHORTAGE PRICING, UM, PROLIFERATION ACROSS THOSE PRODUCTS.
AND SO, BUT, BUT, AND I DON'T WANNA TAKE AWAY FROM YOUR POINT THAT, THAT MAYBE YOU THINK THAT THAT MULTIPLE INTERVAL IS ISN'T THE PANACEA, BUT, BUT WHAT IT WILL DO, AND YOU'RE RIGHT, IT'LL, IT WILL POSTURE, ESPECIALLY IN RAMPS, IT WILL POSTURE, UM, RESOURCES, IT WILL HOLD, I MEAN I, I'VE, I KNOW THIS 'CAUSE I'VE ACTUALLY SEEN IT HAPPEN.
UH, IT WILL HOLD BACK FASTER RAMPING RESOURCES AND PAY THEM AN OPPORTUNITY COST JUST, IT'S JUST INHERENT, IT'S JUST IMPLICIT IN THE, IN THE PRICE THAT'S FORMED IN THE CURRENT CURRENT ANGLE, RIGHT? AND SO YOU DO GET, YOU DO GET SOME GOOD, YOU DO GET THAT AND YOU, YOU WILL, YOU'LL ALSO GET, UM, SOME SHORTAGE PRICING, UM, YOU KNOW, PROLIFERATE IN THAT, IN IN THAT SETTING AS WELL.
I THINK YOU HAD ANOTHER POINT TO MAKE.
I MEAN, EVERYTHING YOU SAID IS RIGHT ABOUT THEIR CO OPTIMIZATION FEATURES, BUT THE, THE, THE REAL, THE REAL ISSUES IN, IN KAISO EXTEND BEYOND JUST JUST THE STRUCTURAL MARKET DESIGN OF, OF HOW THEY CO OPTIMIZE, YOU KNOW, THEY, THEY CO OPTIMIZ THE RTPD, BUT NOT IN THE RTD.
BUT WHAT, WHAT I'M REALLY GETTING AT IS THAT A LOT OF TIMES KAISO WILL BIAS THEIR LOAD FORECAST TO DRIVE AN OUTCOME.
UM, AND SO THEY'RE, YOU KNOW, THEY HAVE PROBLEMS THERE.
AND I, I DON'T KNOW THAT ERCOT WOULD REALLY PAN OUT ANY DIFFERENT IF YOU GIVE 'EM THESE TOOLS BECAUSE LOOK AT WHAT THEY DO WITH THE R TODAY.
UM, SO IT, IT'S JUST, I, I JUST HAVE, YOU KNOW, SOME CAUTION THERE.
AND THEN THE OTHER POINT WOULD BE, YOU KNOW, WE, WE HAVE HIGHER OFFER CAPS.
[00:45:01]
OUR, I THINK OUR PRICES REFLECT A MORE GRADUAL RISE AS THE PRICES APPROACH SCARCITY, AT LEAST, YOU KNOW, THAT'S, THAT'S WHAT MY HOPE OF THE ERCOT MARKET IS.I HAVE SOME QUESTIONS THERE ABOUT WHAT, WHAT'S ACTUALLY HAPPENING AND ALLOWING THAT DESIGN TO WORK, BUT THAT, THAT'S KIND OF WHAT I'M REFERRING TO, BUT THANK YOU.
UM, I'M JUST TRYING TO RECCO RECONCILE IN MY OWN MIND HOW THE MULTI INTERVAL PROPOSAL ALIGNS WITH BURT'S PROPOSAL FOR THE SCUC.
I KNOW YOU'RE PROBABLY FAMILIAR WITH THAT, BUT, UM, CAN, CAN YOU HELP ME PUT THOSE TWO TOGETHER? SURE.
UM, THEY'RE, THEY'RE DIFFERENT, THEY'RE DIFFERENT ANIMALS.
SO, AND I'LL SPEAK ABOUT STUCK GENERICALLY THAT, UM, SO, AND, AND IN SOME PLACES IT'S CALLED STUCK STEC, SHORT TERM UNIT COMMITMENT, BUT, BUT SAME, SAME ANIMAL.
UM, AND SO WHAT WHAT THAT'S TRYING TO DO IS IT'S TRYING TO FIND AN ECONOMIC SOLUTION.
SO, SO SCED, WHETHER IT'S SINGLE INTERVAL OR, OR MULTI INTERVAL, SCED CANNOT COMMIT OR DECOMMIT RESOURCES.
IT, IT ONLY CHOOSES THE RIGHT DISPATCH LEVEL FOR EXISTING RESOURCES.
UM, AND LET'S LEAVE FAST START RESOURCES OUT OF IT FOR CONVENIENCE, BUT, BUT IT JUST CHOOSES DISPATCH LEVELS TO MANAGE, UM, THE SYSTEM ENERGY AND RESERVE REQUIREMENTS AND THEN CONGESTION.
AND IT ISN'T A, IT ISN'T A COMMITMENT ENGINE, BUT THE STUCK OR STUCK THAT YOU'RE TALKING ABOUT IS SOMETHING THAT WOULD HAPPEN AT TIMES BEFORE THE OPERATING HOUR AND BEFORE SCED, WHETHER IT'S INDIVIDUAL INTERVAL OR MULTI INTERVAL BEFORE SC IS RUN, UM, TO PERFORM SORT OF A LAST MINUTE, YOU KNOW, INM MERIT ORDER, UM, COMMITMENT.
SO YOU WOULDN'T HAVE A FOUR HOUR RESOURCE BEING COMMITTED IN THIS PROBABLY, UH, I'M NOT SURE WHAT, I'M NOT SURE HOW THE ERCOT PLAN WOULD DEAL WITH THAT, BUT YOU WOULD HAVE SHORTER START UNITS, YOU KNOW, NOT JUST 10 MINUTE START, BUT YOU KNOW, PROBABLY 30 MINUTE AND MAYBE OUT TO 60 MINUTE START RESOURCES, UM, BE AVAILABLE AND GET A FINANCIALLY BINDING, UM, YOU KNOW, COMMITMENT DECISION, UH, WITH, WITH PRICES IN IT, UM, IN THAT.
AND SO THAT TAKES THE, THAT TAKES THE, UM, YOU KNOW, SOME OF THE ONUS OFF OF RUCK WHERE IT'S JUST A R RUCK IS EVERYONE KNOWS IS NOT, NOT IT, IT IS MARKET.
I MEAN, OFFERS ARE CONSIDERED AND COMMITMENT COSTS ARE CONSIDERED AND SO FORTH, BUT, BUT THEY'RE ALL SCALED.
UM, AND IT DOESN'T PRODUCE, YOU KNOW, PRICES THAT REFLECT THE, THE REAL OFFERS.
THIS, THIS THING THAT YOU'RE TALKING ABOUT, THE STUCK OR STUCK WOULD, WOULD BE JUST BASICALLY ANOTHER MARKET RUN.
UM, I DON'T BELIEVE ANY PLACE DOES IT AS ITS OWN FULL SETTLEMENT RUN, MEANING, MEANING THAT IT WOULD PRODUCE, UM, BINDING AND SOLELY SERVICE PRICES, BINDING ENERGY PRICES FOR EVERYONE FINANCIALLY BINDING, AND THEN ALSO, YOU KNOW, UM, BINDING PRICES FOR WHATEVER IT WAS THAT WAS COMMITTED.
UM, SO, SO IT IS, IT COULD STILL BE CONSIDERED SOMEWHAT OF AN OUT OF MARKET, UM, MECHANISM, BUT IT, IT WILL DO IT AS THOUGH IT WERE A MARKET, UM, AND PRODUCE A MORE ECONOMICALLY RATIONAL, UM, DECISION.
SO I, AND, AND TO REFERENCE BACK TO CALIFORNIA, I KNOW CALIFORNIA HAS A STUCK PROCESS ALSO, UM, THAT DOES, UM, WHAT, WHAT I JUST DESCRIBED, SO THAT, SO THAT, YEAH.
DID, DID YOU HAVE A SPECIFIC QUESTION ABOUT HOW IT WOULD IMPACT THINGS OR, OR DID YOU JUST WANNA UNDERSTAND THE DIFFERENCE BETWEEN THEM? NO, I WAS KIND OF STUCK ON THE SLIDE THAT'S ON THE SCREEN AND HOW IT WOULD HELP WITH, UM, BATTERIES AND OTHER LIMITED DURATION RESOURCES.
AND SO WHAT I WAS TRYING TO UNDERSTAND, IF WHAT YOU WERE DESCRIBING WITH THE MULTI INTERVAL, UM, COULD ALSO RECEIVE THE SAME BENEFITS IF WE CONSIDERED SCUC.
YEAH, YOU KNOW, THAT'S, THAT'S CERTAINLY POSSIBLE BECAUSE A SCUC WILL LOOK OUT PROBABLY FOUR HOURS.
[00:50:01]
MEAN, I, AGAIN, I DON'T KNOW THE PARTICULARS OF OF ERCOT PROPOSAL, BUT, BUT YOU COULD STRUCTURE A SCUC TO WORK ON A 15 MINUTE BASIS, NOT A FIVE MINUTE OR OR SO BASIS.UM, AND IT WOULD LOOK OUT SEVERAL HOURS, YOU KNOW, TWO TO FOUR HOURS AND, UM, AND, AND IT WOULD CONSIDER EVERYTHING, UH, INCLUDING ENERGY STORAGE RESOURCES, THE, THE PROBLEM.
AND, AND SO IT WOULD BE DISPATCHING EVERYTHING.
IT'S, IT'S LITERALLY JUST A FULL DISPATCH WITH COMMITMENT FOR EVERYTHING.
UM, MANAGING CONGESTION, UH, RESERVES, ALL OF THAT.
THE, THE CHALLENGE I THINK WITH THE ENERGY STORAGE RESOURCES IS THE OFFERS.
SO IF, IF, IF ENERGY STORAGE RESOURCES ALWAYS OFFERED IN THEIR TRUE RESERVATION PRICE FOR CHARGING AND DISCHARGING, SO, SO THERE WAS, THERE, THERE JUST WASN'T ANY NEED TO ADJUST THOSE PRICES, UM, THEN ANY OF THESE RUNS WOULD CAPTURE WHAT THAT RUN THINKS WILL HAPPEN TO THE STATE OF CHARGE OVER THE, OVER THE OPTIMIZATION HORIZON.
AND SO THEN YOUR PROBLEM IS KIND OF SOLVED OUTSIDE OF UNCERTAINTY AND, AND WHATNOT.
I THINK ONE OF THE ISSUES, AND, AND I, I'M NOT SURE, I'M NOT ENTIRELY SURE WHY THIS IS STILL THE CASE, BUT, BUT IN THE PRIMARY ISSUE I THINK WITH ENERGY STORAGE RESOURCES IS THAT, IS THAT THERE, THERE'S STILL SOME PREVALENCE OF HAVING, OF USING YOUR BID PRICE TO STAY OUTTA MARKET, SO TO SPEAK, AND THEN POTENTIALLY CHANGING YOUR, YOUR BID, YOUR OFFER PRICE, UM, AS YOU SEE PRICE DYNAMICS UNFOLD, CHANGE IT TO WHERE YOUR RESERVATION PRICES, IT'S NOT AN ACCUSATION, UM, IT'S JUST, IT'S JUST SOMETHING THAT WE'VE SEEN.
WE, WE WE'VE, WE'VE SEEN THAT LESSON OVER TIME, BUT IN ORDER TO GET SOME CERTAINTY OVER, OR CERTAINTY MIGHT NOT BE THE RIGHT WORD, BUT TO REDUCE UNCERTAINTY OVER WHAT STATE OF CHARGE WILL BE FOR THE POOL OF ENERGY STORAGE RESOURCES OVER THE NEXT TWO HOURS.
ANYTHING, ANYTHING THAT YOU WOULD USE TO GAUGE THAT WOULD HAVE TO, YOU KNOW, ON A, ON A FORWARD LOOKING BASIS WOULD HAVE TO RELY ON ENERGY STORAGE RESOURCES HAVING THEIR TRUE RESERVATION PRICES REFLECTED IN THEIR OFFER PRICE.
AND THAT'S NOT A REQUIREMENT CURRENTLY.
UM, AND, AND YOU CAN USE YOUR OFFER PRICE TO MANAGE YOUR DISPATCH SO THAT YOU'RE NOT, SO THAT, YOU KNOW, YOU CAN CHOOSE VERY HIGH OR VERY LOW OFFER PRICES THAT DON'T REALLY REFLECT YOUR RESERVATION PRICE.
THEY REFLECT YOUR DESIRE TO BE DISPATCHED OR NOT BE DISPATCHED.
SO, SO ANYWAY, I THINK THAT'S THE BIGGEST CHALLENGE.
UH, AND SO FOR OPERATIONS TO GET A HANDLE ON THAT, THERE WOULD NEED TO BE SOME DISCUSSION AROUND WHAT THE EXPECTATION WAS FOR OFFER PRICES, UM, IN THE, IN THE NEAR TERM IN THE MARKET.
DOES THAT HELP? YEAH, NO, JEFF, THAT'S WHERE MY MIND WAS GOING WHEN YOU WERE TALKING ABOUT, UM, PRICES AND SORT OF STAYING AT THAT $2,000 CAP, UM, YOU KNOW, UNTIL THEY'RE REALLY NEEDED FOR DISCHARGE, WHAT LATE AFTERNOON EVENING, RIGHT.
UM, SO NO, THAT WAS WHERE MY MIND WAS GOING AND, AND IT ALSO IS COUPLED WITH THIS H-B-S-O-C ISSUE AND I'LL, I'LL TRY TO SAVE MY QUESTION FOR THAT FOR THE ROCK DISCUSSION, BUT I THINK THE TWO ARE TIED TOGETHER.
THANK YOU FOR THE, THE QUESTION, KATIE.
UM, CAN Y'ALL HEAR ME? YES, I CAN, I CAN HEAR YOU.
UM, YEAH, WAS HOPING YOU CAN WALK ME THROUGH YOUR THOUGHTS ON THE MULTI INTERVAL MARKET AND HOW THAT WOULD, UM, INCREASE OR DECREASE THE RAMP OF PRICE CHANGE GOING INTO, UM, I'LL CALL IT LIKE A PREDICTED SCARCITY EVENT.
UM, JUST SOME OF THE, THE CONVERSATION YOU AND SETH HAD, UM, MADE ME THINK, I MY ASSUMPTIONS MIGHT BE WRONG.
SO JUST WOULD, UM, LOVE JUST A, LIKE A LITTLE BIT OF A 1 0 1 ON THAT KIND OF IMPACT OF MULTI MARKET? YEAH, THAT'S A GREAT QUESTION ACTUALLY, BECAUSE, UM, BECAUSE IN THIS MARKET, IT'S THE SCARCITY EVENTS THAT, YOU KNOW, ARE GONNA REALLY SEND THE PRICE SIGNAL FOR NEW INVESTMENT.
SO, SO IF, IF WE HAVE A, IF WE HAVE A ONE HOUR MULTI INTERVAL OPTIMIZATION, SO IT'S, IT'S JUST ALWAYS LOOKING
[00:55:01]
OUT, LET'S JUST SAY THAT'S 12 SC INTERVALS OR, OR TWO HOURS.I THINK CALIFORNIA'S DOES BALANCE OF THIS HOUR PLUS THE NEXT HOUR, WHICH IS KIND OF WEIRD.
UH, IT MAYBE SHOULD JUST BE ALL, YOU KNOW, JUST ALWAYS TWO HOURS OUT.
SO LET'S SAY IT'S TWO HOURS OUT AND YOU'RE APPROACHING AN EVENING RAMP AND THINGS ARE LOOKING TIGHT ON, ON THAT DAY, AND, AND YOU MIGHT, WITHOUT A MULTI INTERVAL OPTIMIZATION, YOU MIGHT EXPECT TO SEE SOME SHORTAGE PRICING HAPPEN, UM, YOU KNOW, IN THE, IN THE MIDDLE OF THAT RAMP.
AND SO WHAT YOU WOULD SEE A MULTI INTERVAL OPTIMIZATION DOING IS IT'S, IT'S, IT'S SEEING THAT TIGHTNESS IN THE MIDDLE OF THE RAMP BECAUSE IT'S IN ITS OPTIMIZATION HORIZON, AND IT WILL FIND THE MOST ECONOMIC SOLUTION TO TRY AND LESSEN THE COST OF THAT TO, YOU KNOW, THE COST OF PERCEIVED IN THE OPTIMIZATION, UM, OBJECTIVE FUNCTION.
SO, SO IT'LL, IT'LL TRY AND REDUCE THE COST OF THAT OR MINIMIZE THE COST OF THAT.
AND IT MIGHT DO THAT BY, UM, HOLDING BACK UNITS AN HOUR, YOU KNOW, 30 MINUTES BEFORE THAT SHORTAGE, UH, IS ANTICIPATED TO HAPPEN AND ANTICIPATED, I MEAN, IT'S ANTICIPATED IN THE OPTIMIZATION, THE OPTIMIZATION SEES IT, AND SO IT, IT MIGHT HOLD, UM, FASTER RAMPING RESOURCES BACK WHERE THOSE RESOURCES WOULD OTHERWISE BE OPTIMAL, UH, ECONOMIC TO BE DISPATCHED IN THE CURRENT INTERVAL.
BUT IT'S HOLDING THEM BACK, UH, SO THAT THEY CAN BE AVAILABLE TO RAMP UP LATER.
AND, AND WHAT IT'S DOING INSTEAD IS IT'S RAMPING UP HIGHER COSTS, SLOWER RESOURCES EARLIER.
AND, AND IF YOU LOOK AT IT ON THIS INTERVAL BASIS, THOSE HIGHER COSTS, SLOWER RAMPING RESOURCES DON'T LOOK ECONOMIC, BUT THEY ARE ECONOMIC.
WHEN YOU FACTOR IN THE OPPORTUNITY COST OF HOLDING BACK THE, THE FASTER RAMPING RESOURCE, UM, IT WILL NECESSARILY MAKE THE SLOWER RAMPING RESOURCE ECONOMIC AND OVER THE COURSE OF ALL THOSE INTERVALS, THAT'S THE, THAT'S THE LOWER COST SOLUTION.
THE, THE HIGHER COST SOLUTION IS, UM, IS RAMPING UP THE FASTER RAMPING RESOURCES NOW, AND THEN THEY'RE UP AT THEIR HSL AND THEY CAN'T GIVE ANY MORE, UH, IN THE MIDDLE OF THE RAMP WHEN THINGS GET TIGHT AND YOU GET SHORTAGE PRICING, AND IT'S TOO LATE TO RAMP UP THE SLOWER RAMPING RESOURCES BECAUSE SCED JUST LOOKED AT THE ONE INTERVAL IT WASN'T LOOKING OUT.
AND SO, AND SO WHAT IT'S DOING IS IT'S ASSIGNING IN A SENSE, AN OPPORTUNITY COST OF NOT RAMPING UP THE SLOWER RAMPING RESOURCE EARLIER TO MEET THAT, THAT TO, TO, TO BE PROVIDING MORE ENERGY IN THE MIDDLE OF THE RAMP.
AND, AND IT'S ASSIGNING AN OPPORTUNITY COST TO THE FASTER RAMPING RESOURCE THAT IS ECONOMIC NOW, BUT IT'S NOT GONNA BE DISPATCHED NOW IT'S GONNA BE DISPATCHED UP TO ITS HSLA LITTLE BIT LATER.
AND, AND SO THOSE OPPORTUNITY COSTS FOR ARE, ARE, ARE TRULY BASED ON FUTURE CONDITIONS, CONDITIONS THAT ARE SEVERAL, UH, INTERVALS OUT, BUT THEY WIND UP RESIDENT IN THE LMP AT THOSE RESOURCES IN THE CURRENT INTERVAL.
AND SO YOU'LL GET HIGHER PRICING AS A RESULT OF THAT, BUT YOU WILL SEE FEWER INSTANCES OF SHORTAGE PRICING IN THE, UH, WHAT DID I SAY, THE MID, THE MIDDLE OF THE RAMP WHEN, WHEN THE, WHEN THE OPTIMIZATION PERCEIVED, UH, A RELATIVE SHORTAGE.
YOU'LL SEE THOSE DIMINISH IN, IN, UM, YOU KNOW, AN IMPACT, BUT YOU WILL SEE THE PRICES IN THE INTERVALS LEADING UP TO WHEN THAT INTERVAL WOULD'VE BEEN, UM, INCREASED BECAUSE OF THE TRADE-OFFS THAT ARE BEING MADE FOR DISPATCH TO GET EVERYBODY LINED UP.
SO DOES THAT, DOES THAT MAKE SENSE THE WAY I DESCRIBED IT? 100%.
I JUST HAVE ONE FOLLOW UP THOUGH.
UM, WOULD YOU EXPECT, UM, BECAUSE I CAN'T DO THE MATH, LIKE YOU CAN, WOULD YOU EXPECT THAT THE VOLUME UNDER THE TWO CURVES WOULD BE VERY SIMILAR, ONE'S JUST MORE SPREAD OUT AND SHORTER AND ONE'S MORE CONDENSED AND TALLER? SO YEAH, THAT'S A REALLY INTERESTING QUESTION.
SO, SO EACH OF THESE SCATTER INTERVALS IS SOLVING TO, UM, IS SOLVING TO LOAD PLUS RESERVE REQUIREMENTS, RIGHT? AND THEN MANAGING CONGESTION, UH, AS IT HAS TO.
AND SO LET'S PRETEND THERE'S NO CONGESTION AND IT'S JUST, IT'S JUST SOLVING FOR LOAD AND RESERVES.
THE, THE VOLUMES WILL BE EXACTLY THE SAME IN THE TWO CASES.
THE SINGLE INTERVAL OPTIMIZATION AND THE MULTI INTERVAL OPTIMIZATION, THE VOLUMES
[01:00:01]
WILL BE THE SAME BECAUSE, BECAUSE, YOU KNOW, SCED CLEARS TO, TO MEET THE RESERVE REQUIREMENTS AND, AND THE LOAD.IT'S JUST CHANGING THE MIX OF RESOURCES THAT IT'S USING TO MEET THOSE TWO THINGS.
UM, I CAN SEE SETH IS FOAMING AT THE MOUTH TO TALK ABOUT THE REAL IMPACTS OF THESE, BUT REALLY, OKAY.
APPRECIATE YOU, UM, EXPLAINING THE THEORETICAL SIDE TO ME.
YEAH, I DON'T WANNA BELABOR IT TOO MUCH.
I, I JUST WANT MAYBE FOR THE BENEFIT OF THE GROUP TO ALSO KNOW THAT THERE'S ANOTHER SIDE OF THE COIN HERE AND THAT'S THE UPLIFT SIDE THAT CAN BE GENERATED WITH MIO.
SO I JUST WANT TO PUT THAT OUT THERE.
I REALLY DON'T WANT TO EXPLAIN IT RIGHT NOW, BUT, UM, THERE'S REAL TRADE-OFFS, UH, TO, TO THIS, TO THIS KIND OF MARKET DESIGN.
S AND SETH, I THINK YOU EITHER, YOU HAD MENTIONED THAT BEFORE OR SOMEONE ELSE DID, AND, AND I THINK THE REFERENCE WAS TO CALIFORNIA WITH, WITH REAL TIME UPLIFT.
I, MY, AND, AND, AND LIKE I SAID, IT'S BEEN A NUMBER OF YEARS, BUT WHEN WE FIRST IMPLEMENTED THAT MULTI HONORABLE OPTIMIZATION, WE ACTUALLY PICKED APART, UH, A COUPLE OF PRICING INCIDENTS WHERE WE COULDN'T FIND THE MARGINAL RESOURCE, YOU KNOW, THE MARGINAL PRICE CENTER.
AND, AND IT TURNED OUT, AND, AND THE MATH WAS A LITTLE COMPLICATED, BUT WE WERE ABLE TO VERY CLEANLY SHOW THAT, THAT THE OPPORTUNITY COSTS OF THIS CHANGE IN, IN RESOURCE MIX, HOLDING BACK AN ECONOMIC BUT FASTER RAMPING RESOURCE AND, AND RAMPING UP WHAT LOOKED LIKE AN UNECONOMIC BUT SLOWER RAMPING RESOURCE THAT THE LMPS AT THOSE LOCATIONS REFLECTED THE OPPORTUNITY COSTS OF THAT TRADE OFF.
AND SO I'M NOT SURE WHERE THE UPLIFT COMES FROM BECAUSE, AND, AND I'M NOT, I'M NOT SAYING YOU'RE WRONG, I'M JUST SAYING I NEED TO LOOK INTO THAT A LITTLE BIT MORE BECAUSE IT'S NOT CLEAR TO ME WHAT'S DRIVING THAT UPLIFT, BECAUSE THE LMPS DO SEEM TO REFLECT THE, THE INTERTEMPORAL TRADE-OFFS AND THE OPPORTUNITY COSTS ASSOCIATED WITH THOSE.
SO IF YOU GOT, AND YOU, WE DON'T HAVE TO TALK ABOUT IT HERE, BUT IF YOU'VE GOT SOMETHING ON THAT, UH, THAT WOULD HELP SHAVE SOME TIME OFF OF MY LOOKING INTO IT, PLEASE, PLEASE PING ME, UM, VIA EMAIL AND, AND I'LL LOOK INTO IT.
JUST SO STEVE, I DON'T KNOW IF IT'S STEVE REY OR ANOTHER JUST STEVE, GO AHEAD.
STEVE, HIT THE WRONG UNMUTE BUTTON.
HEY, UH, JEFF, UH, THANKS, THANKS FOR THIS PRESENTATION.
UM, JUST, JUST FOLLOWING UP ON THAT LMP QUESTION, UM, IS, DOES THAT MEAN THAT WITH A NO CONGESTION CASE, YOU CAN SEE LMP DIFFERENCES ACROSS RESOURCES WITH THIS MULTI INTERVAL CONSTRUCT WITH A NO CONGESTION CASE? IF, IF THE OPTIMIZATION, IF THE MULTI INTERVAL OPTIMIZATION MOVED RESOURCES IN THIS INTERVAL TO MEET A NEED AND A FUTURE INTERVAL, SO IT WAS, IT WAS TRULY, UM, EXERCISING ITS ABILITY TO, TO MAKE TRADE OFFS OVER TIME, THEN YOU WILL SEE THAT YOU, YOU WILL SEE THE OPPORTUNITY COSTS ASSOCIATED WITH THOSE, THOSE INTERTEMPORAL MOVES, UM, REFLECTED IN THE LMPS.
SO, SO YOU WILL SEE, YOU WILL SEE, UH, A DELTA LMP, UM, DUE TO, DUE TO THE MULTI INTERVAL, NOT, NOT DUE TO CONGESTION.
JUST, JUST MAKING SURE I UNDERSTOOD WHAT YOU SAID IN, IN THE CONGESTION
IN, IN THE CONGESTION FREE CASE.
SO WE JUST DON'T HAVE THAT CONFUSION.
IN THIS EXAMPLE, YOU WILL SEE THE INTERTEMPORAL OPPORTUNITY COSTS ASSOCIATED WITH, WITH THOSE DECISIONS, THOSE INTERTEMPORAL DECISIONS, YOU WILL SEE THAT REFLECTED IN THE LMP IN THE CURRENT INTERVAL, THE, THE INTERVAL THAT
[01:05:01]
WOULD'VE BEEN DIFFERENT HAD THERE NOT BEEN, UH, MULTI INTERVAL OPTIMIZATION.BUT I MEAN, YOU, YOU'LL SEE THAT, YOU'LL SEE THAT I, I, I'M NOT, I DON'T, I'M NOT TRYING TO BELABOR A POINT, I'M JUST, UH, TRYING TO MAKE SURE THAT SOMETHING THAT SURPRISED ME FROM WHAT YOU ARE SAYING IS, IS THAT I'M UNDERSTANDING IT CORRECTLY, IS THAT, AGAIN, CONGESTION FREE CLAY REFLECTED IN THE LM P COULD POTENTIALLY BE REFLECTED IN ALL LMPS EQUALLY.
RIGHT? SO THAT'S WHY I'M CLARIFYING IS THAT THERE COULD BE A POTENTIAL WHERE I'M LOOKING AT A CONGESTION FREE CASE UNDER MULTI INTERVAL, AND I SEE AN LMP FOR ONE RESOURCE AT $50 AND AN LMP FOR ANOTHER RESOURCE AT $40.
AND I DON'T, I, I'M HESITANT TO SAY THEY WOULD BOTH BE 50, UM, BECAUSE IF YOU THINK IN THE CONGESTION CASE, SO NO INTERTEMPORAL JUST CONGESTION, THERE'S, THERE'S A CONSTRAINT THAT IS DRIVING THE PRICE DIFFERENCE, RIGHT? UH, YEAH.
SO LET'S, SO, SO IN THE INTERTEMPORAL OPTIMIZATION FRAMEWORK, YOU DON'T REALLY HAVE THAT KIND OF A CONSTRAINT, BUT THE OPPORTUNITY COST THAT IS, THAT I'M FACED WITH AS A FAST, AS A ECONOMIC FASTER RAMPING RESOURCE MAY NOT APPLY TO YOU.
YOU, AND SO I'M, I'M NOT ENTIRELY SURE.
I'M NOT ENTIRELY SURE THAT MY LMP WILL RELATE TO, TO YOUR LOCATION AND REFLECT THAT OPPORTUNITY COST.
I THINK IT WILL, BUT I'D HA I'LL HAVE TO LOOK INTO THAT A LITTLE BIT MORE.
OKAY, JESS, WE ARE, HOW ARE YOU DOING? 'CAUSE IT'S JUST BEEN YOU TALKING, DO YOU NEED A BREAK FOR FIVE MINUTES? I, WE CAN BREAK IF, IF YOU GUYS NEED A BREAK.
I'M, I'M STILL, YOU KNOW, SLIGHTLY DISAPPOINTED I DIDN'T GET FARTHER, BUT I, I, I ABSOLUTELY LOVE THE FACT THAT WE'RE HAVING A DISCUSSION RATHER THAN JUST ME TALKING ABOUT SLIDES.
SO, NO, WE, WE DON'T NEED TO TAKE A BREAK.
I JUST WANNA BE, YOU KNOW, I DON'T WANNA MAKE YOU TALK CONTINUOUSLY FOR HOURS.
SO IF YOU'RE GOOD, I THINK EVERYBODY ELSE IS GOOD TO KEEP GOING.
LET'S MOVE ON TO THE NEXT SLIDE.
SO, SO THIS SLIDE REALLY JUST GOES, OH, GO AHEAD.
UM, SO THIS SLIDE JUST TALKS ABOUT, YOU KNOW, WE, WE'VE HAD SOME FRUSTRATION THAT THAT CONSERVATIVE OPERATION POSTURE JUST APPEARS TO BE IMPERMEABLE.
AND THAT MAY OR MAY NOT BE A FAIR WAY TO DESCRIBE IT, BUT, BUT IT'S NOT CLEAR HOW IT ENDS.
IT'S NOT CLEAR WHAT CONDITIONS WOULD NEED TO MATERIALIZE FOR IT TO END.
UM, AND IT, AND, AND SO THIS SLIDE REALLY JUST COVERS SORT OF SOME OF OUR, OUR FRUSTRATION WITH THAT.
UM, AND I DON'T KNOW, I'VE, I'VE CERTAINLY SAID THINGS AT BOARD MEETINGS, I DON'T, I DON'T REALLY KNOW HOW WE MOVE OUT OF A CONSERVATIVE OPERATION INTO A BEST PRACTICES OPERATION.
SO I THINK THAT'S THE PUNCHLINE FOR THIS SLIDE.
LET'S GO AHEAD AND MOVE ON TO THE NEXT SLIDE.
UM, SO NOW WE'RE IN THE REC SPACE.
UH, AND THIS TALKS ABOUT, THIS SLIDE TALKS ABOUT, YOU KNOW, HOW WE'VE SEEN AN INCREASE IN RUX, UH, OVER, UM, THE MORE RECENT PERIOD, UH, OF TIME COMPARED TO PRIOR TO URI.
UM, AND THE NATURE OF THE RUX SEEMS TO HAVE CHANGED TOO.
UH, THE, THEY USED TO BE MOSTLY FOR SYSTEM CONDITIONS, AND NOW THEY ARE PREDOMINANTLY TO MANAGE CONGESTION.
UM, I'LL SAY WE'VE, WE'VE STARTED, YOU KNOW, SORT OF A DEEP DIVE INTO THAT, UH, TO TRY AND BETTER UNDERSTAND WHY THAT SHIFT OCCURRED.
THERE'S CERTAINLY BEEN, THERE'S CERTAINLY BEEN, YOU KNOW, CH CHANGES IN, IN THE FOOTPRINT AND THE RESOURCE MIX, UH, THAT MAY HAVE MOVED THINGS AWAY FROM A SYSTEM CONDITION TYPE OF WORLD TO A CONGESTION TYPE OF WORLD.
BUT, BUT, UM, UNFORTUNATELY WE DON'T, WE WEREN'T ABLE TO GET A LOT OF GRANULARITY ON WHAT TYPES OF CONDITIONS, WHAT TYPES OF CONGESTION CONDITIONS
[01:10:01]
WERE BEING MANAGED AND HOW THEY WERE BEING MANAGED.SO, FOR EXAMPLE, AND, AND I'M NOT EVEN SURE HOW YOU DEFINE THIS FROM REC, BECAUSE THE, THE OFFERS AND BIDS, BID PRICES ARE SKEW SKEWED HEAVILY.
BUT, YOU KNOW, IF YOU'RE TRYING TO ELIMINATE CONGESTION WITH RUCK, THAT'S A MISAPPLICATION OF R COMMITMENT.
IF YOU ARE TRYING TO AVOID A LINE OVERLOAD OR A CONSTRAINT VIOLATION, THAT IS A CLEAR, APPROPRIATE APPLICATION.
A IRAQ, IF, YOU KNOW, YOU DON'T WANNA ROLL INTO REAL TIME KNOWING THAT YOU'RE, YOU'RE OVERLOADING A LINE.
SO, SO WE'VE GOT, YOU KNOW, A COUPLE PEOPLE HERE WORKING ON TRYING TO DIG DEEPER INTO THAT AND, AND DETERMINE HOW WE CAN GET GREATER VISIBILITY INTO THE, THE CONGESTION MANAGEMENT ASPECT OF RUCK.
UM, SO, SO, UH, HOPEFULLY IN ABOUT TWO MONTHS, WE'LL, WE'LL HAVE MORE TO SAY ABOUT THAT.
YEAH, AND, AND, YOU KNOW, SO THE BATTERY STATE OF CHARGE COMES INTO PLAY HERE.
UM, YOU KNOW, THE, THE MORE WE'VE TALKED WITH OPERATIONS, AND I THINK THEY'VE BEEN OPEN WITH THE, THE STAKEHOLDER COMMUNITY ABOUT THIS, THAT, UM, THE WAY STATE OF CHARGE IS TRACKED, I GUESS, UM, IS CREATES A LEVEL OF UNCERTAINTY THAT'S DIFFICULT TO DEAL WITH IN IRAQ.
UM, ONE, ONE THING THAT'S, YEAH, SO ONE, ONE THING THAT'S INTERESTING IS, I, I THINK WE LEARNED THIS TWO YEARS AGO, IS THE ERCOT ERCOT CLEARS RUCK TO MEET LOAD PLUS ANCILLARY SERVICE OBLIGATIONS.
AND SO ONE OF THE, YOU KNOW, YOU, YOU WOULD EXPECT, ESPECIALLY IN A MODEL WITH SHORTAGE PRICING AND, AND A FAIR AMOUNT OF FAST START RESOURCES, YOU, YOU WOULD EXPECT THE ANCILLARY SERVICE ASPECT OF REALTIME RELIABILITY TO BE AUGMENTED BY FAST START RESOURCES REACTING TO HIGH PRICES.
AND SO, AND SO IT SEEMS LIKE, I, I DON'T KNOW IF I'D BE COMFORTABLE SAYING THAT RUCK SHOULDN'T INCLUDE ANY OF THE RESERVES, BUT COMMITTING TO ENSURE THAT THERE'S ENOUGH CAPACITY FOR ALL RESERVES, ALL OF THE SERVICES, ALL OF THE PROCUREMENT QUANTITIES, TARGET QUANTITIES TO BE MET, CERTAINLY, CERTAINLY REDUCES THE EXPECTATION THAT, THAT YOU'D GET THIS, THIS MARKET PRICE DYNAMIC WHERE IF YOU GET A LITTLE BIT SHORT, YOU GET THESE FAST START RESOURCES COME ON, THEY'RE PRODUCING ENERGY, IT FREES UP, UM, IT FREES UP CAPACITY FROM ALREADY ONLINE RESOURCES THAT THE REAL TIME CO-OP OPTIMIZATION WOULD THEN RECOGNIZE AND SELECT AS, YOU KNOW, PROVIDING RESERVES INSTEAD OF ENERGY.
AND SO I'M NOT SURE WHERE THE RIGHT BALANCE IS IN THERE.
AND, AND TO BE HONEST, I'M, I'M NOT SURE WHAT OTHER RTOS DO.
UM, BUT, BUT THE OTHER, MOST OF THE OTHER RTOS AREN'T AS DEPENDENT ON SHORTAGE PRICING FOR RESOURCE ADEQUACY AS TEXAS IS.
AND SO, YOU KNOW, ONE OF THE QUESTIONS THAT I THINK WE'LL BE LOOKING INTO THIS YEAR IS, IS, IS THERE A, A BETTER WAY TO ADDRESS RELIABILITY AND, AND, AND STILL LEAN ON THE MARKET TO SIGNAL IN THE SHORT RUN THAT, UM, YOU KNOW, FASTER UNITS NEED TO, NEED TO COME ON AND PROVIDE ENERGY, UM, SO OTHERS CAN PROVIDE RE UH, RESERVES.
SO, SO THAT'S MORE OF A SIDE COMMENT THAN ANYTHING FOR THIS SLIDE, BUT I, BUT I, I THINK IT'S IMPORTANT, SOMETHING WE'VE THOUGHT ABOUT A LITTLE BIT OVER HERE.
SO LET'S GO AHEAD AND MOVE ON TO THE NEXT SLIDE.
SO, SO ONE OF THE THINGS THAT WE NOTICED, UM, FROM THE PRIOR SLIDE, UH, IS, UH, THE, THE ADVANCED, THE, THE, THE TIME BETWEEN THE RUCKING AND, AND THE OPERATING HOUR HAS INCREASED, UH, OVER TIME.
AND SO YOU CAN SEE THAT IN THIS CHART, YOU KNOW, AFTER 2020, SO STARTING IN 2021, YOU KNOW, WE'RE SEEING, WE'RE SEEING LONGER START RESOURCES RELATIVELY LONGER START RESOURCES BEING WRECKED, YOU KNOW, AS THEY WOULD NEED TO BE,
[01:15:01]
UM, FURTHER IN ADVANCE OF THE OPERATING HOUR.AND, YOU KNOW, THAT'S PERSISTED AND GROWN.
UM, SOMEWHAT 2025 WAS, WAS A BIT LOWER.
I THINK WE SAW A PRETTY LOW WRECKING, UM, YOU KNOW, FOR THE MONTH OR TWO OR THREE AFTER, PROBABLY TWO MONTHS AFTER RTC WENT LIVE.
AND THEN, AND THEN WE'VE SEEN, YOU KNOW, MORE WRECKING SINCE THEN.
SO, BUT, BUT, BUT THE WRECKING OF RESOURCES HAS SHIFTED A LITTLE BIT TO ACCOMMODATE MORE WRECKING OF LONGER, RELATIVELY LONGER START RESOURCES.
SO, UM, AND WITH THE DECLINE IN, IN IMPLIED HEAT RATES, YOU KNOW, THAT THAT'S NOT, THAT ASPECT IS NOT TELLING ME THAT, UH, SHORTER START UNITS ARE DECIDING TO SELF COMMIT BECAUSE THEY'RE SEEING FAVORABLE PRICES.
SO, SO, UM, I THINK THIS IS, THIS PROBABLY JUST REFLECTS MORE OF A CONSERVATIVE OPERATIONS AND MAKING SURE THAT THE SYSTEM IS LEANING LESS ON PRICE SIGNALS FOR, UM, SELF-COMMITMENT OF SHORTER START UNITS AND LEANING MORE ON, ON, UM, WRECKING RELATIVELY WHEN WE START RESOURCES.
YEAH, AND, AND TO BE FAIR, ANOTHER FACTOR, UH, OBVIOUSLY RELEVANT FOR THIS SLIDE, ANOTHER FACTOR IS THE, UM, VERY DRAMATIC INCREASE IN ENERGY STORAGE RESOURCES AND THE PROBLEMS I MENTIONED EARLIER ABOUT TRACKING STATE OF CHARGE.
UM, AND SO THAT, THAT, TO BE FAIR, UH, THAT MAY BE DRIVING SOME OF THE SHIFT TO MORE FORWARD WRECKING, UM, AS WELL.
SO THIS, THIS CHART JUST SHOWS, UM, YOU KNOW, THE, THE FORECAST ERROR IN AGGREGATE FOR, UH, STATE OF CHARGE AND THAT THAT'S GROWING.
UM, YOU KNOW, THIS, THIS JUST SHOWS THREE HALF YEARS, BUT, UM, EVEN OVER THAT PERIOD, IT'S JUST GROWING CONSIDERABLY.
SO BATTERY STATE OF CHARGE HAS POPPED UP IN A NUMBER OF PLACES.
IT'S CLEARLY SOMETHING THAT NEEDS TO BE ADDRESSED, ESPECIALLY, YOU KNOW, CONSIDERING I, I, I DON'T KNOW THAT THERE'S A PROJECTED TAILING OFF OF GROWTH IN THE ENERGY STORAGE SPACE.
SO, SO THAT'S SOMETHING THAT ERCOT REALLY NEEDS TO ADDRESS, YOU KNOW, BE ABLE TO ADDRESS IN ORDER TO, UM, OPERATE THE GRID AND, AND ADMINISTER THE MARKET MORE EFFICIENTLY.
YOU KNOW WHAT, LET'S GO BACK TO THE PRIOR SLIDE 'CAUSE THIS IS A NEW TOPIC.
UM, SO, SO LET ME OPEN UP FOR QUESTIONS, UH, FOR THE R ASPECT OF IT, AND THEN WE'LL MOVE ON TO THE AS AS METHODOLOGY.
YOU HAVE A QUESTION FROM KATIE? RICH? HI, JEFF.
THIS WAS MY, UH, HOLDOVER QUESTION ON THE HB, UM, SOC ISSUE.
SO, UM, WE KNOW THAT RCOS ANNOUNCED THAT THEY'VE DONE SOME OUTREACH TO SOME OF THE MAIN ESRS TO ASK THEM TO CHANGE THEIR BEHAVIOR ON THE FLAT SOCS AND HAVE MORE ACCURATE COPS.
BUT, UM, AND I KNOW THAT CHANGING THE, THE REC ENGINE IS A, A BIG STEP, BUT, BUT DO YOU HAVE A RECOMMENDATION FOR HOW WE CAN MAKE THESE SOCS MORE, MORE ACCURATE, OR ERCOT CAN TAKE ACCOUNT OF MORE OF THE SOC BEFORE THEY START BUCKING? YEAH, SO I THINK THERE'S TWO, YOU KNOW, SO WE'VE ALREADY TALKED ABOUT PUTTING IN VALID PRICES, NOT, NOT PUTTING IN SORT OF DIS PRICES PRICE, YOU KNOW, OFFER OR BID PRICES THAT WOULD ENSURE YOU'RE NOT GOING TO BE MOVED BY THE MARKET, BUT PUTTING IN PRICES THAT REFLECT YOUR TRUE RESERVATION PRICE.
SO, SO THERE'S THAT, AND WE'VE ALREADY TALKED ABOUT THAT, UM, ON, ON THE JUST TRACKING AND, AND, AND SO THAT WOULD HELP, AND LET ME EXPLAIN HOW THAT WOULD HELP.
IS THERE, THERE IS AN EMPIRICAL, SO, SO I LAND ON THIS, I LAND ON THIS STATEMENT OFTEN IN MY CAREER, WHICH IS, WELL, IT'S GONNA BE HARD TO ESTIMATE THIS, BUT WE KNOW, WE KNOW THE CORRECT ANSWER ISN'T ZERO.
SO, SO WE KNOW, SO WE, SO WE SHOULD COME UP WITH SOME MEASURE AND HAVE A SENSE OF THE UNCERTAINTY AROUND THAT MEASURE AND NOT JUST THROW OUR HANDS UP AND SAY, WELL, IT'S HARD TO MEASURE, AND SO WE'RE JUST GOING TO ASSUME IT'S ZERO OR, OR WHATEVER THE NUMBER IS.
SO, SO I THINK ONE THING THAT COULD BE DONE IS, YOU KNOW, LOOKING DEEPER INTO, UM, YOU KNOW, WHAT
[01:20:01]
STATE OF CHARGE LOOKS LIKE, UH, DURING PARTICULAR HOURS OF THE DAY HISTORICALLY, AND, AND, AND MAYBE EVEN JUST USE RECENT HISTORY.SO IT WOULD REFLECT, YOU KNOW, BASICALLY CURRENT CONDI, SOME SOMETHING LIKE CURRENT CONDITIONS AND GET, GET A SENSE OF, YOU KNOW, IN AN HOUR ENDING 18 OR 20, WHAT DOES THE STATE OF CHARGE LOOK LIKE AND, AND WHAT WERE THE PRICES LEADING INTO THAT STATE OF CHARGE? AND YOU COULD COME UP WITH A STATISTICAL, SOME STATISTICS THAT WOULD ALMOST LIKE A, A LOOKUP TABLE THAT WOULD PROVIDE SOME HEURISTIC FOR, WELL, WE DON'T NEED TO CONSIDER THEM ALL UNAVAILABLE, UM, BUT WE'RE COMFORTABLE CONSIDERING THEM ALL 25% AVAILABLE BASED ON, BASED ON THIS HOUR AND, AND SIMILAR CONDITIONS AS SEEN IN THE LAST TWO WEEKS OR SOMETHING.
AND, AND SO THEN YOU CAN MOVE UP, YOU CAN MOVE UP THE CURVE WITH SOME CONFIDENCE, SOME CONFIDENCE, OR YOU'VE ELIMINATED SOME OF THE UNCERTAINTY AND YOU CAN ACCOUNT FOR SOME OF IT.
ACCOUNTING FOR SOME OF IT IS BETTER THAN ACCOUNTING FOR NONE OF IT, UM, IN MY VIEW.
SO, SO FOR A SHORT RUN CHANGE, I THINK THAT'S, THAT'S SOMETHING, AND I, I, TO BE HONEST, I, I DID HAVE THIS CONVERSATION A FEW MONTHS AGO.
I DON'T KNOW, I KNOW ERCOT IS, THIS IS A VERY BIG ISSUE FOR ERCOT.
I'M QUITE SURE THAT THEY'VE GOT A FEW PEOPLE WORKING ON, ON HOW TO ADDRESS IT, BUT I, I DON'T KNOW MUCH DETAIL ON WHERE THEY'VE GOTTEN, BUT, BUT I, BUT I THINK YOU CAN USE RECENT HISTORY AND, AND CREATE A CUTOFF AND MOVING IN THE RIGHT DIRECTION OF, WE'RE COUNTING SOME OF IT.
UM, YOU KNOW, BASED ON OUR STATISTICAL ANALYSIS OF THE LAST 14 DAYS, WE'RE NOT WILLING TO COUNT, YOU KNOW, WHAT THE, WHAT THE AVERAGE SOC IS, BUT WE'RE WILLING TO COUNT THE 25TH PERCENTILE OR SOMETHING.
AND THAT'S MOVING IN THE RIGHT DIRECTION, IN MY VIEW.
HEY, JEFF, I KNOW YOU, YOU JUST ANTICIPATED MY, MY LAST QUESTION ABOUT ERCOT, BUT I, I WAS WONDERING IF MAYBE KEITH OR SOMEONE FROM ERCOT COULD BRING THIS DISCUSSION BACK.
I MEAN, IT'S KIND OF A STANDING ITEM AT WMWG, BUT I WOULD, I WOULD LIKE TO HEAR THEIR THOUGHTS ON, ON YOUR PROPOSAL.
YEAH, WELL, I THINK YOU JUST TOOK IT A STEP TOO FAR.
IT'S NOT NECESSARILY A PROPOSAL, IT WAS REALLY A THOUGHT.
UM, BUT, BUT I'M, I'M SURE THAT, I'M SURE THAT ERCOT HAS GIVEN THIS QUITE A BIT OF THOUGHT.
AND TO BE HONEST, KEITH AND I HAVE TALKED ABOUT, YOU KNOW, THIS CONCEPT, UH, TO, TO HELP MOVE, MOVE THE NEEDLE IN, IN THE RIGHT DIRECTION ON, ON ACCOUNTING FOR SOME OF THIS, GIVEN THE UNCERTAINTY AROUND IT.
SO, UM, ONE OF THE OTHER, AND SO YOU ASKED ABOUT DIFFERENT SOLUTIONS, UH, UH, YOU KNOW, IF, IF YOU, IF YOU LOOK BACK AT, YOU KNOW, A GROUP OF PEOPLE WHO, WHO MAKE THEIR LIVING COMMERCIALIZING BATTERY AND, YOU KNOW, BATTERY STORAGE, I KNOW IT'S, I KNOW IT IS VERY DYNAMIC.
UM, THE, THE PRICE DYNAMICS MATTER, UH, ONE DAY ISN'T EXACTLY THE SAME AS ANOTHER DAY, BUT, BUT PEOPLE WHO DO THAT FOR A LIVING SHOULD HAVE A PRETTY REASONABLE IDEA OF WHETHER THEY'RE EXPECTING TO CHARGE OR DISCHARGE IN, IN ANY GIVEN HOUR OVER THE NEXT, YOU KNOW, OVER THE, THE NEAR TERM FORESEEABLE HORIZON.
UM, AND IF FOR NO OTHER REASON TODAY IS SIMILAR ENOUGH TO YESTERDAY AND THE DAY BEFORE THAT, THAT WOULD GIVE THEM SOME BASIS FOR EX EXPECTATION, OR, AND, AND SO THIS, THIS GETS BACK TO, YOU KNOW, THE, THE FOLKS WHO OPERATE THESE, I, I, I COMPLETELY UNDERSTAND YOU, YOU WILL NOT KNOW WITH CERTAINTY WHAT YOUR STATE OF CHARGE IS AT ANY POINT IN THE NEXT THREE HOURS, BUT YOU SHOULD HAVE SOME CONFIDENCE BANDS AROUND WHAT THAT IS BASED ON WHAT YOU'RE SEEING IN THE MARKET TODAY, WHAT YOU'VE SEEN, WHAT YOU'VE SEEN, AND HOW YOU'VE BEHAVED RELATIVE TO WHAT THE MARKET YESTERDAY, THE DAY BEFORE.
AND SO, PUSHING THE RESPONSIBILITY OVER ONLY TO ERCOT IS, YOU KNOW, ERCOT SHOULD DEFINITELY TRY AND IMPROVE THEIR ABILITY TO, TO, TO FORECAST STATE OF CHARGE.
BUT, BUT, YOU KNOW, THE, THE OPERATORS, THE, THE, THOSE COMMERCIALIZING THESE BATTERIES HAVE TO HAVE A PRETTY DECENT IDEA OF WHAT THEIR STATE OF CHARGE IS GONNA BE OVER THE NEXT THREE OR FOUR HOURS.
AND SO, YOU KNOW, TALKING WITH THEM AND, AND, AND COMING UP WITH SOME EXPECTATIONS FOR ACCURATE, YOU KNOW, ACCURATE REPORTING OF FUTURE STATE OF CHARGE FOR, FOR THE, FOR, YOU KNOW, THE, THE NEAR TERM FUTURE IS PROBABLY PART OF THE SOLUTION AS WELL.
UM, I SHOULD HAVE DESCRIBED THAT IN MORE DETAIL WHEN I WAS TALKING ABOUT WHAT KOT WAS DOING WITH OUTREACH.
I ASSUMED THAT WAS PART OF, UM,
[01:25:01]
WHAT THEY WERE REQUESTING AS WELL.SO YEAH, I, I DO APPRECIATE BOTH SIDES AND I APPRECIATE YOU TYING THAT TOGETHER.
KEITH, YOU WANNA WAIT UNTIL THE END OF THE ENTIRE PRESENTATION? YEAH, I, I THINK I'LL, I'LL DO A, A, A WIDER CONVERSATION, WHICH WILL INCLUDE RUCK AND WHERE RUCK HAS BEEN, WHERE RUCK IS, WHERE RUCK IS GOING, THAT TYPE OF STUFF.
SO I, YEAH, I WANT FORMAL REBUTTAL, NOT NOT REBUTTAL, BUT JUST A DISCUSSION ABOUT SOME OF THESE THINGS.
SO I'M JUST HAPPY TO HAVE THAT LATER RATHER THAN TO AFFECT THE FLOW OF WHAT JEFF'S DOING.
UM, LET'S, MONA WELL, WE'RE TRYING TO, MONA, IF YOUR QUESTION GOES WITH THIS SECTION, WE WE'RE TRYING TO GET THE QUESTIONS AS, AS THEY COME UP FOR JEFF, KEITH IS JUST, YOU KNOW, WANTING TO, I HAVE SORT OF THAT
BUT IF IT'S APPROPRIATE IN THIS SECTION, THEN LET'S GO AHEAD AND, AND DO THE QUESTION.
I, I WAS JUST GONNA ASK, UH, A QUESTION GOING BACK A COUPLE SLIDES WHERE YOU SAID THAT BROKE IS BEING USED MORE FOR CONGESTION MANAGEMENT THAN FOR SCARCITY ISSUES.
AND, UH, JUST WANTED, UH, TO ASK YOU TO EXPLAIN HOW THAT IS COMING INTO PLAY, HOW ROUGH FOR CONGESTION PURPOSES OR IS BEING USED, AND THEN SECONDLY, UM, IS IT THE MAJORITY OF THE ROUGH THAT'S GOING FOR CONGESTION CONCERNS? CAN YOU GIVE US A SENSE OF MAGNITUDE ON, ON HOW MUCH OF THE ROCK IS GOING FOR CONGESTION? THANKS.
I'LL, I'LL ADDRESS YOUR SECOND QUESTION FIRST.
SO, SO THE, THE VAST MAJORITY, AND, AND I DON'T HAVE AN EXACT STATISTIC, BUT I WOULD SAY, LET'S JUST SAY IT'S 75%, THREE QUARTERS.
UH, SO IT, IT, IT ACTUALLY I THINK IS HIGHER THAN THAT.
UM, IS, IS LABELED AS, YOU KNOW, UH, CONGESTION MANAGEMENT OR WHATEVER THE LABEL OUTTA R IS.
AND IF YOU LOOK BACK AGAIN, IF YOU LOOK BACK, YOU KNOW, PRE URI, UM, IT, THE, IT WAS MOSTLY FOR SYSTEM CONDITIONS AND NOT FOR, FOR CONGESTION.
UM, AND THEN YOUR OTHER QUESTION, CAN I GIVE SOME DETAIL ON HOW THESE RESOURCES, YOU KNOW, HOW CAN I, I THINK YOUR QUESTION WAS, CAN I GIVE SOME DETAIL ON WHAT DOES MANAGING CONGESTION MEAN, UH, IN THE ROCK SPACE? AND UNFORTUNATELY I CAN'T RIGHT NOW.
THAT'S WHAT, THAT'S WHAT IT, WE'VE GOT A COUPLE PEOPLE WORKING ON, UM, FOR THE NEXT MONTH OR SO, IS TO, YOU KNOW, GET ENOUGH DETAIL NOT ONLY FROM THE DATA, BUT ALSO FROM TALKING WITH FOLKS AT THE R DESK, UM, AT ERCOT OPERATIONS TO GET A SENSE OF WHAT THAT MEANS.
UH, AND, AND AS I MENTIONED EARLIER, YOU KNOW, THE, THE BOOKEND CASES WOULD BE I'M RUCKING TO, TO, UM, UH, ABATE CONGESTION.
SO I'M, I'M RUCKING SO THAT THERE IS NO CONGESTION.
AND THE BOOK, THE OTHER BOOKEND IS, I, I'M ONLY RUCKING FOR CONGESTION WHEN I SEE THAT A, UH, CONSTRAINT IS BEING VIOLATED, UH, THE FLOW, THE FLOW LIMIT IS BEING VIOLATED, WHICH, WHICH IS A NOW, NOW FOR RELIABILITY PURPOSES.
UM, AND SO I'M, I'M RUCKING TO AVOID THAT VIOLATION BECAUSE THAT'S A RELIABILITY ISSUE.
SO, BUT, BUT UNFORTUNATELY AT THIS POINT IN TIME, I DON'T HAVE A LOT MORE COLOR THAT I CAN OFFER ON HOW, HOW THAT PROCESS TAKES PLACE, UM, AT OUR CO BUT, BUT WE'LL, WE'LL HAVE MORE TO TALK ABOUT IN A COUPLE MONTHS.
SO R UM, YOU KNOW, TRIES TO FIND A SOLUTION WITH COMMITTED RESOURCES TO THE CONSTRAINTS IT HAS.
SO IN THAT CASE, WHAT ARE YOUR THOUGHTS ON HAVING R OPTIMIZE THE STATE INSTEAD OF USING THE, OUR BEGINNING STATE OF CHARGE AS, UM, AS A PARAMETER, BUT ACTUALLY OPTIMIZING AT A DECISION VARIABLE SO THAT IT CAN LOOK TO, IS THERE A SOLUTION GIVEN WHERE THE CURRENT STATE OF CHARGE IS, IS THERE A SOLUTION,
[01:30:01]
UM, TO MEET, UH, AND DISPATCH THE, THE BATTERIES AS NEEDED OVER THE R STUDY PERIOD? YOU KNOW, TO MEET ITS, UH, ALL ITS, UH, CONSTRAINTS? YEAH, SO THAT'S, YOU KNOW, THAT'S A GOOD QUESTION.UM, MY, MY UNDERSTANDING OF HOW RUCK IS SET UP HAS IMPROVED OVER THE LAST SIX MONTHS.
AND SO THERE'S, SO, YOU KNOW, ALL, ALL OF THE OFFER PRICES ARE, ARE SHAPED DOWN CONSIDERABLY.
UM, AND SO YOU'D HAVE TO THINK ABOUT HOW THAT IN ITSELF WOULD AFFECT THE DISPATCH.
IT, IT, IT MAY NOT, IT MAY NOT, IT, IT, IT MAY NOT HAVE A MATERIAL EFFECT ON HOW BATTERIES ARE TREATED RELATIVE TO OTHER RESOURCES.
I NEED TO THINK ABOUT THAT A LITTLE BIT MORE.
BUT THE BIGGEST ISSUE IN MY VIEW IS REP REP RUNS ON AN HOUR BASIS, AND IT IS, IT, IT PERCEIVES THE RAMP OF ANY ELEMENT OF THE SYSTEM OR THE SYSTEM AS A WHOLE AS BEING ACHIEVABLE OVER AN HOUR.
AND A LOT OF THE, YOU KNOW, UNTIL WE GET INTO A, A TRULY STRUCTURALLY TIGHT FOOTPRINT SPACE, UM, A LOT OF THE, A LOT OF THE PRICES THAT WOULD POP UP HIGH ENOUGH TO GET A BATTERY RESOURCE TO WANT TO DISCHARGE WON'T BE PERCEIVED BY RUCK BECAUSE THEY'RE CREATED BY INTER INTERVAL RAMP CONSTRAINTS THAT THAT COULDN'T BE MET ON A, LET'S CALL IT A FIVE MINUTE BASIS.
UM, BUT THAT RUCK WON'T PERCEIVE A, A RAMP SHORTAGE AT ALL OVER AN HOUR.
AND SO I THINK THE, THE STATE OF CHARGE THAT YOU WOULD GET, I, I LIKE THE THOUGHT, BUT THE ONE HOUR OP, YOU KNOW, THE, THE HOURLY TIMEFRAME FOR OPTIMIZATION VERSUS A SHORTER FIVE MINUTE TIMEFRAME, I THINK WILL SKIP OVER A LOT OF THE DISCHARGE CIRCUMSTANCES THAT YOU'LL SEE IN REAL TIME, ESPECIALLY DURING THE MORNING AND EVENING RAMP.
BUT YOU'VE, YOU'VE WORKED A LOT IN THIS SPACE, SEAN, WHAT DOES, DOES WHAT I'M SAYING, UH, MAKE SENSE TO YOU? AND DO YOU THINK THAT'S A VALID, I I JUST, I JUST DON'T THINK RUCK IS GONNA BE ABLE TO OPTIMIZE, UH, RESOURCES THAT ARE TAKING ADVANTAGE OF, YOU KNOW, FIVE OR 10 OR 15 MINUTE PRICE SPIKES.
UM, YEAH, THAT'S, I TALKED ABOUT THIS WITH
IF WE GO TO MORE OF A FIVE MINUTE ROCK, YOU'D HAVE TO PUT IN ALSO UNCERTAINTY WITHIN THOSE FIVE MINUTES, RIGHT? SO SOME SORT OF A STOCHASTIC, UM, ALGORITHM TO, TO OPTIMIZE THAT, THAT WOULD REALLY GET VERY, BUT THAT'S VERY EXPENSIVE.
I MEAN, COMPUTATIONALLY, THAT'S VERY EXPENSIVE, RIGHT? IT'S GONNA BE VERY, YEAH.
WELL, WE'RE GONNA HAVE A LOT OF DATA CENTERS HERE, SO GOT A LOT OF COMPETE, COMPETE, POWER.
DID, DID I ADDRESS YOUR QUESTION, CHOS? YEAH.
HEY JEFF, THIS IS VICTOR SAUERS.
HOW ARE YOU DOING, VICTOR? WONDERFUL, WONDERFUL.
SO ON THE STATE OF CHARGE, WHAT IS YOUR THOUGHTS? ARE YOU ASKING US TO DO API, WHAT HAVE YOU? 'CAUSE IN OUR ASSETS WE STREAM, SO I CAN SEE EXACTLY WHAT'S HAPPENING BY THE MILLISECOND, IF I WISH.
BUT WITH THAT BEING SAID, DO YOU FEEL THERE'S A CONCERN FROM OTHER, UH, STORAGE ASSETS THAT THIS IS BEING STREAMED TO ERCO? UH, 'CAUSE FOR INSTANCE, I CAN SEE WHAT MY DEGRADATION CURVE IS, WHICH IS CONCERNED FOR INVESTMENT GROUPS.
LIKE, IN OTHER WORDS, IS IT 3% OR IS IT 7% DEGRADATION? THAT'S EASY TO FIGURE OUT ON THE STATED CHARGE OVER A PATTERN.
SO I LIKE YOUR THOUGHTS OF THAT.
AND I ALSO HAVE A QUESTION WHAT YOUR THOUGHTS ARE AND UPCOMING DATA CENTERS, IF I DE-RATE THE DATA CENTERS BY 90%, THAT GIVES ME 20 MEGAWATT HOUR OF ADDITIONAL ESR.
THAT MIGHT BE IN BATCH ONE, BUT, UH, THAT'S ENORMOUS AMOUNT OF ASSETS AT THESE DATA CENTERS.
SO AN EXAMPLE, IF MY 500 MEGAWATT DATA CENTER, I NEED 250 MEGAWATT OF ENERGY STORAGE FOR AT LEAST ONE HOUR TO KEEP FROM BURNING UP MY GENERATION ASSETS AND COMPLIANT TO 2 82
[01:35:01]
AND ANY HERTZ EVENT THAT OCCURS DURING THAT TIME.SO I'D LOVE TO HAVE YOUR THOUGHTS ON THOSE TWO QUESTIONS.
UM, WELL, I'LL TAKE THE SECOND ONE FIRST.
SO, SO YOU'RE, YOU'RE TALKING, YOU'RE TALKING ABOUT SOMETHING IN A SPACE THAT IS STILL SORT OF UNDER DEVELOPMENT, UH, WITH REGARD TO, YOU KNOW, WHAT DOES IT MEAN TO BRING YOUR OWN GENERATION? UM, AND CORRECT ME IF I DIDN'T UNDERSTAND YOUR QUESTION, RIGHT.
BUT, UM, BUT IF YOU'RE TALKING ABOUT, YOU KNOW, THESE BATTERIES THAT ARE LOCATED WITH DATA CENTERS THAT HAVE TIME WHERE THEY'RE NOT NEEDED, UM, YOU KNOW, TO, TO SUPPORT THE DATA CENTER OPERATION, YOU KNOW, THAT'S, I I I DON'T KNOW THAT I JUST, I WOULD DISTINGUISH THOSE DIFFERENTLY FROM, FROM JUST, YOU KNOW, INDIVIDUAL BATTERY STORAGE OR EVEN EVEN BATTERY STORAGE CO CO-LOCATED WITH SOLAR.
I KNOW THAT BUSINESS MODELS ARE DIFFERENT, BUT, BUT FROM A, FROM AN OPERATIONS PERSPECTIVE, AND I, I DO NOT, I SHOULD GIVE THE DISCLAIMER, I'M NOT A GRID OPERATOR.
SO, UM, IT'S JUST MY PERCEPTION.
BUT MY PERCEPTION IS THAT THOSE ARE VERY SIMILAR ANIMALS.
UM, THE BIG DIFFERENCE WOULD BE THAT THE DATA CENTER WOULD PROBABLY WANT TO USE THE BATTERIES, UM, YOU KNOW, DURING PERIODS WHERE THE SYSTEM'S TIGHTER AND PRICES ARE HIGHER.
AND SO THAT WOULD, YOU KNOW, THAT BATTERY DISCHARGE SERVING THE DATA CENTER, UH, LOOKS AN AWFUL LOT LIKE JUST ADDITIONAL SUPPLY.
I MEAN, IT'S, IT'S REDUCING DEMAND, BUT IT'S HAVING THE SAME EFFECT ON THE POWER BALANCE.
AND THE VOLUME IS, IF I DISCOUNT THE NORMAL AMOUNT OF LOAD REQUESTS IN THE SYSTEM, I'M STILL FOR REAL MONEY THAT CAN BUILD THESE DATA CENTERS.
IT'S STILL 20 MEGAWATT HOUR PLUS THAT WE AS DATA CENTERS HAVE TO HAVE ENERGY STORAGE REGARDLESS.
BUT WITH THAT BEING SAID, UH, THAT'S A LOT MORE STORAGE IN THE ERCO SYSTEM THAT'S EITHER RECOGNIZED OR NOT.
SO, AND SO IS YOUR QUESTION ABOUT WHETHER OR NOT IT'S RECOGNIZED IN A SENSE THAT IT CAN PUSH ONTO THE GRID IT'S INTERCONNECTED OR IS, OR VERSUS
'CAUSE 'CAUSE YOU SHOULD HAVE, UM, SOME PERCEIVED AS PERCEIVED ON THE, ON THE GRID, UH, A A REDUCTION IN LOAD, UH, DURING PEAK HOURS, UH, COMPARED TO, YOU KNOW, NOT HAVING THOSE, THOSE BATTERY STORAGE RESOURCES.
AND, BUT FROM, FROM THE PERSPECTIVE OF, YOU KNOW, MEETING SYSTEM REQUIREMENTS, I THINK THEY LOOK THE SAME TO, TO GRID OPERATIONS AT LEAST DURING THOSE HOURS.
IF, IF YOU'RE SAYING THAT MAYBE THOSE BATTERIES COULD DISCHARGE ONTO THE GRID IN HOURS WHERE THEY'RE NOT NEEDED TO SERVE THE DATA CENTER LOAD, THAT'S A DIFFERENT STORY.
IS THAT WHAT YOU'RE TALKING ABOUT? YEAH, IF WE CAN, IF WE'RE, AS WE GO INTO BATCH ONE EVENTUALLY, UH, A LOT OF THE DATA CENTER OPERATORS THAT'S BEEN ON THESE VARIOUS MEETINGS SAYING, YOU KNOW WHAT, UH, HAVING ESR CAPABILITY NOT HAVE A STRANDED ASSET.
WE, WE WOULD LIKE TO BE ABLE TO DO THAT TO BE A GOOD NEIGHBOR.
BUT, UH, CURRENTLY THOSE THAT'S NOT IMPLEMENTED, THOSE KIND OF RULES AT THE POI.
I DON'T, TO BE HONEST, THERE'S, THERE'S ENOUGH HISTORY AND RULES AROUND THAT THAT I, I DON'T REALLY HAVE A GOOD SENSE OF HOW TO RESPOND TO THAT.
OKAY, LET'S GO DO THE SIMPLE ONE.
MY MY FIRST QUESTION, JEFF, IF YOU DON'T MIND.
SO FOR STATE OF CHARGE, WHAT WOULD YOU LIKE US, WHAT DO YOU RECOMMEND WE SHOULD DO? WHAT DO YOU THINK IT'S BEST ROSE AS AN OPERATOR AND ERCOT? YEAH, SO, SO WHAT I'M, WHAT I'M HEARING, AND AND WE STARTED, YOU KNOW, THERE, THERE WAS SOME COMMENT EARLIER ABOUT ERCOT TALKING ABOUT THEIR, YOU KNOW, CONVERSATIONS THEY WERE GONNA HAVE WITH BATTERY STORAGE, YOU KNOW, OPERATORS.
SO WE'VE BEEN LOOKING AT SOME OF THE DATA TOO.
I MEAN, I'M, I'M, I'M, I'M VERY SYMPATHETIC TO, YOU DON'T ACTUALLY KNOW WITH CERTAINTY WHAT'S GONNA HAPPEN IN FOUR, FOUR HOURS.
UM, BUT, BUT MY PERCEPTION IS IF IF YOU'RE COMMERCIALIZING THESE THINGS AS, AS, YOU KNOW, PART OF YOUR MAIN BUSINESS,
[01:40:01]
YOU HAVE, YOU HAVE SOME IDEA.AND SO IF YOU, YOU KNOW, AND, AND I'M NOT TRYING TO PRESCRIBE A RULE, I'M JUST, I'M JUST TRYING TO EXPLAIN HOW I THINK, UM, YOU COULD MAKE IT BETTER FOR, FOR ERCOT IS, YOU KNOW, YOU'VE GOT SOME BAND I'M SURE, UH, OF WHAT YOUR STATE OF CHARGE IS GONNA BE GOING OUT FOR SEVERAL HOURS.
MAYBE IT'S EVEN LONGER THAN THAT.
AND THERE'S A LOT OF UNCERTAINTY THERE.
BUT, BUT RATHER THAN KEEPING YOUR STATE OF CHARGE FLAT, UM, IF, IF THAT'S WHAT'S HAPPENING, YOU KNOW, JUST PICKING, PICKING SOME CONFIDENCE LEVEL IN THAT BAND AND, AND USING THAT TO PRESCRIBE WHAT YOU THINK YOUR STATE OF CHARGE WILL BE, IT'S, IT IS NOT FINANCIALLY BINDING, I DON'T BELIEVE IN ANY WAY, BUT IT CAN HELP WITH THE PLANNING AND THE R PROCESS, UM, A LOT BETTER IF, IF YOU ARE MORE THOUGHTFUL ABOUT WHAT YOU ACTUALLY THINK IS GONNA HAPPEN.
AND I HAVEN'T WORKED ON A, ON A ESR DESK, COMMERCIALIZATION DESK, BUT, BUT MY HUNCH IS THERE'S, THERE'S A LOT OF STATISTICS AND, AND CONFIDENCE BANDS AND EXPECTATIONS, UM, FOR HOW THINGS WILL PLAY OUT OVER THE NEXT, YOU KNOW, FOUR TO SIX HOURS.
SO, SO YOUR, THE ANSWER TO YOUR QUESTION IS, I I I, IT WOULD BE GREAT IF BATTERY OPERATORS COULD BETTER REFLECT THEIR EXPECTATION FOR STATE OF CHARGE IN, IN THEIR H-R-S-S-E.
UM, I JUST HAD A QUESTION IN REGARDS TO WHAT YOU'RE KIND OF SAYING ABOUT BATTERY OPERATIONS.
SO FROM MY UNDERSTANDING, THEY ARE FINANCIALLY INCENTIVIZED FOR THE ASDFS TO FOLLOW THOSE.
SO IF THEY ARE PICKING UP THESE DAY AHEAD AS COMMITMENTS, THEY'RE FINANCIALLY OBLIGATED TO MODEL BASED OFF THOSE ASDFS IN THOSE HOURS.
SO IF WE TAKE SOME CONFIDENCE BANDS ON TOP OF THAT, THEN YOU GET PENALIZED MORE BY NOT FOLLOWING WHAT THESE ASDFS HAVE SAID.
IS THAT A CORRECT INTERPRETATION? YEAH, THAT'S A GOOD POINT.
YOU KNOW, UH, MY, WHAT I SAID EARLIER SORT OF PRESUMED THAT THERE WASN'T AN AS COMPONENT TO IT.
AND, AND YOU'RE RIGHT, IF YOU PICKED UP A DAY AHEAD AS OBLIGATION, THEN, THEN THERE IS, YOU KNOW, SOME CONSEQUENCE TO HOW YOUR STATE OF CHARGE IS TREATED.
BUT I DON'T BELIEVE THAT'S TRUE FOR REC.
I MEAN, YOU ARE NOT, YOU'RE NOT, YOU KNOW, R ISN'T GOING TO DEAL WITH A BATTERY, YOU KNOW, REC ISN'T GOING TO COMMIT A BATTERY.
UM, AND IT'S NOT GOING TO ASSIGN YOU OR DEIGN YOU AS, UM, FROM YOUR DAY AHEAD, UH, POSITION.
AND SO HAVING A, HAVING A MORE ACCURATE STATE OF CHARGE REFLECTED IN, YOU KNOW, IN YOUR, IN YOUR STATE OF CHARGE THAT YOU REPORT TO ERCOT, UM, I DON'T SEE THAT AS HAVING A FINANCIALLY A, A, A FINANCIAL CONSEQUENCE.
IT, IT, IT MIGHT BE TRUE WHEN YOU GET INTO REALTIME, BUT, BUT THE REALTIME MARKET WOULD, WOULD UNDERSTAND YOUR AS OBLIGATION AND, AND YOU KNOW, IN CONJUNCTION WITH WHATEVER YOUR STATE OF CHARGE, IT WAS SEEN AS YOUR STATE OF CHARGE THEN AS WELL.
SO, SO THERE COULD BE, BUT IT IS NOT CLEAR TO ME HOW A MORE ACCURATE REPRESENTATION OF YOUR STATE OF CHARGE WILL WIND UP READJUSTING OR ADJUSTING YOUR AS OBLIGATION AND PUSHING SOME FINANCIAL CONSEQUENCE ONTO YOU.
BUT IF I'M MISSING SOMETHING, I GUESS I'M TALKING ABOUT, UM, THE R SHORTFALL COSTS TO WHERE IF WE HAVE TO MODEL OUR H BSCS FOR THESE DAY AHEAD AS COMMITMENTS AND EARNING 20 THROUGH 24, AND THEN I'M MODELING ENERGY ON TOP OF THAT, THEN I GET TO A PLACE POTENTIALLY WHERE I'M SHORT FOR MY DAY, I AHEAD AS COMMITMENTS LATER ON IN HOUR EARNING 23 OR 24.
'CAUSE I'VE MODELED ENERGY NOW ON TOP OF THESE COMMITMENTS.
YEAH, WELL YOU CAN, YOU, YOU KNOW, AND SO YOU, YOU KNOW, I DON'T KNOW WHAT YOUR, AS YOUR REALTIME AS OFFERS LOOK LIKE, UH, IF, IF, IF IT MAKES FINANCIAL SENSE FOR YOU TO GET TRADED OUT OF YOUR AS AND USED FOR ENERGY, THAT'S NOT A PROBLEM, RIGHT? IN REAL TIME.
UH, NO, I GUESS I'M JUST SAYING YOU CAN FINANCIALLY VERT, LIKE, WE'RE NOT PHYSICALLY TIED TO THESE AS COMMITMENTS.
WE'RE JUST MODELING THEM FOR THE H BSCS.
IT'S KIND OF THE STICKY ISSUE ON THIS.
SO, YOU KNOW, AND MAYBE THIS, I WOULD CERTAINLY BENEFIT FROM HAVING THIS CONVERSATION IN MORE DEPTH OFFLINE.
UH, IF YOU HAVE TIME SOMETIME.
[01:45:01]
YEAH, NO PROBLEM.BUT YEAH, MAYBE WE SHOULD DO THAT.
BUT, BUT I APPRECIATE YOU BRINGING UP THAT POINT.
IT IS, IT IS A COMPLICATION TO JUST SIMPLY, YOU KNOW, TELL US YOUR STATE OF CHARGE.
ARE YOU GOOD TO KEEP GOING, JEFF? ALRIGHT.
I, TO BE HONEST, I I WAS A LITTLE SURPRISED THAT WE HAD TO SCHEDULE FOR TWO AND A HALF HOURS AND THEN I FORGOT THAT I, I, IT TAKES ME A LONG TIME TO GET THROUGH THINGS, SO, UM, APOLOGIZE FOR TAKING UP EVERYBODY'S MORNING.
IF PEOPLE HAVE QUESTIONS, THIS IS GOOD.
SO, SO, YOU KNOW, THIS IS A, THIS HAS BEEN A LITTLE BIT OF A THORNY ISSUE AND I I THINK EVERYONE'S TRYING TO, TRYING TO FIGURE OUT WHAT IT MEANS AND, AND WORK THROUGH IT.
SO IN, IN PRIOR YEARS, UH, YOU KNOW, AT LEAST THE TWO PRIOR YEARS, AND CERTAINLY LAST YEAR, WE, YOU KNOW, WE'VE DONE SOME SIMULATIONS TO TRY AND DETERMINE WHAT THE IMPACT OF SOME OF ERCOT ASSUMPTIONS, I'M JUST GONNA CALL 'EM ASSUMPTIONS OR PARAMETERS, UH, THAT GO INTO THE MODEL.
UM, YOU KNOW, ONE OF 'EM IS AVOIDING A WATCH VERSUS, YOU KNOW, AVOIDING AN EEA ONE OR EEA TWO.
UM, THE OTHERS HAVE TO DO WITH, UH, FORECAST HORIZON AND, UM, YOU KNOW, ESR CAPACITY AND, AND VARIOUS OTHER ASPECTS OF, OF THE MODEL PARAMETERS AND OPERATING ASSUMPTIONS OR, OR GUIDELINES THAT GO INTO THE SIMULATION.
AND THE PURPOSE OF THAT MODELING WAS TO HIGHLIGHT THE IMPACT THAT DIFFERENT OPERATION OPERATING POSTURES, IF YOU WANNA CALL IT THAT, UH, WOULD HAVE ON AS PROCUREMENT.
AND SO OUR KNOW, OUR MESSAGE LAST YEAR WAS WE WOULD LIKE TO SEE A, A NUMBER OF THESE PARAMETERS ADJUSTED BECAUSE WE THINK THAT THEY'RE, THEY ARE OVERLY PROTECTIVE OF, OF RELIABILITY GIVEN, YOU KNOW, GIVEN REALISTIC RELIABILITY CONCERNS AND, UM, THINGS THAT ARE DONE IN OTHER RTOS.
WHEN WE MENTION OTHER RTOS, IT, IT IS BROUGHT UP THAT TEXAS IS DIFFERENT.
THAT DOES MAKE TEXAS DIFFERENT, UM, ESPECIALLY FROM A RELIABILITY PERSPECTIVE.
WE CANNOT LEAN ON NEIGHBORING CONTROL AREAS, UH, TO THE EXTENT THAT OTHER RTOS CAN AND SO FORTH.
BUT, BUT WE, BUT WE PUT TOGETHER LAST YEAR CERTAINLY PUT TOGETHER A, A PRETTY RICH SET OF INFORMATION INCLUDING RESULTS FROM OUR SIMULATIONS THAT, THAT INDICATE THAT LOOK, YOU KNOW, EASING OFF THE VERY CONSERVATIVE OPERATIONS POSTURE GENERICALLY, UM, YOU KNOW, WOULD RESULT IN LOWER RESERVE PROCUREMENT TARGETS.
AND, AND TO BE FAIR, YOU KNOW, AND IT'S, IT'S A LITTLE COMPLICATED HOW THIS WORKS OUT, BUT, BUT GENERICALLY, YOU KNOW, HIGHER RESERVE REQUIREMENTS ARE GONNA REQUIRE MORE RESOURCES TO BE ONLINE.
THAT'S MORE, AND AGAIN, GENERICALLY THAT'S MORE LSL THAT IS NOT PRICE SETTING, UH, THAT WINDS UP, UM, REDUCING REAL-TIME PRICES.
AND SO, UM, YOU KNOW, WE, WE, WE, WE DON'T WANNA SEE THAT IF IT'S THAT THAT THAT BOTHERS US FROM A PRICE FORMATION PERSPECTIVE, UH, HAVING ALL OF THAT NON-PRICE SETTING ENERGY ON ONLINE IF IT'S NOT, YOU KNOW, NEEDED FOR BEST PRACTICES, YOU KNOW, RELIABILITY, UH, ASSURANCE.
SO, SO THAT'S KIND OF A SUMMARY OF, OF WHAT WHAT WE'VE PUT FORWARD RECENTLY.
AND I, I KNOW ERCOT HAD TALKED A COUPLE WEEKS AGO ABOUT, YOU KNOW, UH, ADJUSTING, YOU KNOW, HAVING TO ADJUST THE RESULTS, UH, FROM THEIR MODEL BECAUSE THEY FOUND AN ERROR.
AND, UM, YOU KNOW, I DO UNDERSTAND HOW THAT CAN HAPPEN.
UM, THESE MODELS ARE, ARE COMPLICATED AS ARE THE DATA THAT GO INTO THEM.
SO, UM, BUT, BUT THE, THE AWKWARD, THE AWKWARDNESS FOR I THINK EVERYBODY, THE PEC OR COT AND AND US IS THAT IT, THE ERROR WOUND UP GREATLY INCREASING THE PROCUREMENT TARGET.
I THINK IN TOTAL IT WAS PROBABLY ANOTHER, UM, 3.7 TO FOUR GIGAWATTS OR SOMETHING LIKE THAT.
ABOVE, ABOVE WHAT WE HAD ALREADY BEEN ARGUING WAS, WAS TOO HIGH.
EVERY, EVERYBODY HERE HAS SEEN, UH, THIS SLIDE, UH,
[01:50:01]
A NUMBER OF TIMES.SO, UM, THE, THE POINT OF THIS OBVIOUSLY IS, YOU KNOW, WE, WE INCREASED OUR AS PROCUREMENT CONSIDERABLY STARTING IN 2021 AND, AND, AND GOING FORWARD.
SO, UM, AND IT'S MUCH LARGER THAN OTHER RTOS, BUT YOU DO, YOU KNOW, YOU WOULDN'T NORMALIZE IT BASED ON LOAD OBVIOUSLY, BUT, BUT THERE MIGHT BE SOME DIFFERENCES IN HOW OTHER RTOS WOULD IN BEST PRACTICE SET THEIR AS REQUIREMENTS.
SO, BUT IT DOES GIVE YOU A SENSE THAT WE ARE ACTUALLY PRETTY, PRETTY HIGH COMPARED TO OTHER RTOS.
MISO'S PROBABLY A GOOD COMPARISON.
UM, I DON'T SEE PJM IN HERE, BUT, UM, BUT MICE IS PROBABLY A GOOD COMPARISON 'CAUSE THEY'RE A PRETTY LARGE FOOTPRINT.
SO LET'S GO ON TO THE NEXT SLIDE.
SO, SO THIS, THIS GETS TO THE GENERAL POINT THAT WE WERE MAKING LAST YEAR, WHICH IS, WHETHER YOU CALL IT CON A CONSERVATIVE OPERATION POSTURE OR WHATEVER IT IS, UH, THAT'S DRIVING THE HIGHER PROCUREMENT, WE JUST DON'T SEE, WE JUST DON'T SEE A LOT OF RELIABILITY VALUE TO THE EXTRA PROCUREMENT, BUT IT'S, IT'S BEING PAID FOR, UM, AND TO THE EXTENT IT'S FORCING ADDITIONAL RESOURCES ONLINE WITH LSL THAT DOESN'T SET PRICE.
IT'S, IT'S HAVING A PRETTY, IT COULD HAVE A PRETTY PRONOUNCED EFFECT ON WHOLESALE, YOU KNOW, REALTIME WHOLESALE PRICING.
AND WE'RE NOT REALLY SURE THAT, YOU KNOW, IT'S, IT'S JUST NOT CLEAR THAT THAT, THAT THERE'S RELIABILITY VALUE THAT MERITS, UM, THAT LEVEL OF PROCUREMENT.
SO, UM, AND EVERYBODY HERE HAS PROBABLY SEEN THIS CHART A COUPLE TIMES ALREADY, SO I DON'T KNOW THAT WE, WE'LL NEED TO GO INTO A WHOLE LOT OF DETAIL ON THAT, BUT, BUT I'M HAPPY TO TAKE QUESTIONS, UM, ABOUT THE AS METHODOLOGY.
I, I THINK WE'LL WIND UP SUBMITTING COMMENTS AT SOME POINT.
I, I DON'T KNOW IF IT'S LATER THIS MONTH, I DON'T KNOW WHEN THE NEXT COMMENT PERIOD IS, BUT WHENEVER THAT IS, WE'LL, WE'LL WIND UP SUBMITTING COMMENTS AND THEY'LL, THEY'LL BE VERY SIMILAR TO OUR COMMENTS LAST YEAR.
THE, THE, THE AWKWARD PART IS WITH THE HIGHER BASELINE, UM, YOU KNOW, WE, WE, WE FELT THAT PROCUREMENT WAS TOO HIGH LAST YEAR.
GRANTED, YOU KNOW, WE, WE CALIBRATED OUR BASELINE TO ERCOT BASELINE.
SO, SO, YOU KNOW, WE NEED TO THINK THROUGH HOW THAT INCREASE IN BASELINE, UM, YOU KNOW, AFFECTS, UH, IT'S NOT GONNA AFFECT THE MESSAGE, UH, THAT WE THINK PROCUREMENT SHOULD BE LOWER, BUT IT JUST INCREASES THE BASELINE FROM WHICH THOSE DELTAS ARE ARE REFERENCED.
SO, SO, UM, HAPPY TO TAKE QUESTIONS.
THANK YOU SO MUCH FOR PROVIDING THIS AND REALLY THANK YOU TO TECH LEADERSHIP DOING THIS LATER.
I WILL HAVE SOME, UH, I WILL SAY LIKE, WE SHOULD MAKE THIS ANNUAL EVERY YEAR AFTER STATE OF THE MARKET REPORT WHERE WE CAN REALLY DISCUSS, GO OVER ALL THE RECOMMENDATION.
THIS IS REALLY SUPER HELPFUL TO STAFF TO HEAR FROM I AM MEMBER AND STAKEHOLDERS IN THIS ENVIRONMENT.
UH, SO JEFF, SO YOUR MAIN, UH, OBJECTION TO ERCOT AS METHODOLOGY IS, OKAY, THEY BUY TOO MUCH.
THERE IS COST TO IT, BUT IS REAL REASON IT INTERFERES WITH SHORTAGE PRICING.
AND COULD YOU EVER QUANTIFY THAT? WHAT WOULD BE THE REAL TIME PRICES BE AND HOW MUCH BIGGER NET MARGIN WILL HAVE INCREASED OR DECREASED? THE REASON I'M ASKING THIS QUESTION IS 'CAUSE I AM REALLY LIKE PUZZLED, UH, STAKEHOLDERS, ESPECIALLY GENERATORS.
THEY WANT THIS CONSERVATIVE OPERATIONS.
SO EVEN THOUGH MAYBE SHORTAGE PRICING WILL GIVE THEM MORE REVENUE, SO I AM REALLY PUZZLED, IS IT AS REVENUE MORE, YOU KNOW, GUARANTEED REVENUE DATA THEY DON'T WANT.
SO CAN CAN YOU EXPLAIN THIS IF I'M MAKING SENSE? I DON'T KNOW.
NO, YOUR QUESTION MAKES SENSE AND IT'S ACTUALLY A REALLY, IT'S A REALLY GOOD QUESTION BECAUSE, UM, BECAUSE IT IT MIGHT NOT BE CLEAR.
IT MIGHT, IT MIGHT NOT BE CLEAR THE WAY WE TALK ABOUT IT.
SO, SO MY, MY PRIMARY OBJECTIONS TO OVER PROCUREMENT AS ARE ONE, UM, IT RESULTS IN HIGHER AS COSTS THAN ARE NEEDED, UH, FOR, FOR A REASONABLE LEVEL OF RELIABILITY.
AND TWO, IT REDUCES, UM, WHOLESALE PRICES OUTSIDE OF SCARCITY PRICING.
IT REDUCES WHOLESALE PRICES BECAUSE YOU'RE PUSHING MORE NON PRICING
[01:55:01]
ENERGY ONTO THE, ONTO THE GRID.UH, NOW TO BE FAIR, UM, UH, ENERGY STORAGE RESOURCES DO PROVIDE A LOT OF ANCILLARY SERVICE AND THEY DO NOT HAVE AN LSL CONCEPT LIKE, LIKE A PEAKER OR A, YOU KNOW, A COMBINED CYCLE OR A STEAM UNIT.
SO, SO THERE, THERE IS SOME, THERE IS SOME, THERE IS SOME CAVEATING IN THERE DEPENDING ON THE PROPORTION OF ESR VERSUS NON ESR THAT ARE PROVIDING RESERVES.
BUT, BUT THE, YOUR QUESTION ABOUT WHETHER OR NOT IT AFFECTS SCARCITY PRICING IS A GOOD ONE.
SO, SO THE, THE, THE LINE FOR WHAT IS SCARCE MOVES BASED ON WHAT YOUR PROCUREMENT TARGET IS.
AND SO IF YOU'RE PROCURING MORE THE, THE, THE BENCHMARK FOR WHEN YOU'RE SCARCE VERSUS NOT SCARCE GETS MOVED OUT TO REFLECT YOUR HIGHER PROCUREMENT LEVEL.
AND SO IN A DIRECT SENSE, UM, IT, IT WOULDN'T INCREASING THE, THE AS PROCUREMENT WOULDN'T NECESSARILY REDUCE THE, THE AMOUNT OF SHORTAGE PRICING NECESSARILY.
UM, THERE MIGHT BE SOME FOURTH LEVEL DETAILED CAVEATS THAT, THAT IMPACT IT A LITTLE BIT.
BUT, BUT, BUT ON A SURFACE LEVEL, INCREASING THE PROCUREMENT LEVEL SHOULDN'T DIRECTLY REDUCE THE, YOUR OR SHORTAGE PRICING.
IT SHOULDN'T, IT SHOULDN'T DIRECTLY IMPACT YOUR SHORTAGE PRICING THAT WAY.
SO, SO I LET, LET ME, LET ME, LET ME ADDRESS YOUR QUESTION A LITTLE BIT MORE DIRECTLY.
YOU, I THINK YOU ASKED IF IT REDUCES SHORTAGE PRICING AND, AND I DON'T BELIEVE THAT THE PROCUREMENT LEVEL ITSELF REDUCES SHORTAGE PRICING BECAUSE THE BAR FOR WHAT IS SHORT GETS MOVED WITH THE PROCUREMENT LEVEL.
SO IKA, DOES THAT, DOES THAT HELP? NO, I'M CONFUSED NOW BECAUSE YOU ARE SAYING IT INTERFERES WITH THE SHORTAGE PRICING THAT I, I THOUGHT I'S OPINION BOTS YOU ARE BUYING TOO MUCH SO THAT YOU ARE NOT LETTING SCARCITY TO HAVE A ROLE.
UM, THE ARGUMENT, I, I THINK THAT, I THINK THE TWO PROMINENT ARGUMENTS ARE IF YOU'RE PAYING FOR RESERVES, UM, AND YOU'RE BUYING TOO MUCH, THEN YOU'RE PAYING TOO MUCH FOR RESERVES.
AND TO THE EXTENT THAT THERE'S MINIMUM LOAD ENERGY ONLINE FROM YOUR RESERVE PROCUREMENT, THAT THAT'S REDUCING ENERGY PRICES FOR EVERYONE.
UM, AND SO I I THINK THOSE ARE THE TWO, YOU KNOW, FIRST ORDER ARGUMENTS.
THE, THE SHORTAGE PRICING ARGUMENT IS A LITTLE, IT IS A LITTLE NUANCED.
UM, AND, AND LIKE I SAID, I THINK THE IMPORTANT THING TO REMEMBER IS THAT THE BENCHMARK FOR WHAT IS SHORT WINDS UP MOVING.
AND SO, UM, YOU'RE NOT, IT'S NOT THAT YOU'RE PROCURING, LIKE IF YOU'RE PROCURING AN EXTRA GIGAWATT, IT'S NOT LIKE YOU'RE, YOU, YOU NOW HAVE AN ADDITIONAL GIGAWATT TO EAT THROUGH BEFORE YOU GET TO YOUR SHORTAGE PRICING BECAUSE THE BENCHMARK FOR WHAT YOUR SHORTAGE PRICING STARTS, GETS MOVED OUT BY THE ADDITIONAL GIGAWATT THAT YOU'RE, THAT YOU'RE PROCURING.
SO IT DOES IMPACT THE SHORTAGE PRICING.
BUT YOU ARE SAYING, BUT I'M TRYING TO UNDERSTAND IS THE, AS REVENUES GENERATOR RECEIVE IS MUCH BETTER THAN RELYING ON THE REALTIME MARKET SHORTAGE PRICES OR, UH, THE IMPACT OF THE LOWER REALTIME PRICES, BUT IT MAKES UP FOR HAVING A GUARANTEED REVENUE STREAM IN THE ER CUTS AS PROCUREMENT.
YEAH, SO, YOU KNOW, WELL, THINK OF IT THIS WAY.
THERE'S A, THE, THE AMOUNT OF RESERVES WE BUY IS PRETTY SMALL RELATIVE TO THE AMOUNT OF LOAD THAT'S SERVED.
AND REAL TIME PRICES WIND UP PROLIFERATING INTO OTHER SPACES.
SO, UM, EXPECTATIONS OF REALTIME PRICES WILL AFFECT DAY AHEAD PRICE, DAY AHEAD CLEARING AND DAY AHEAD PRICES.
AS REALTIME PRICES INCREASE OVER TIME, YOU'LL SEE, UH, HIGHER, UM, HIGHER, UH, PRICES EMBEDDED IN CONTRACTS THAT ARE SIGNED OR, OR BILATERAL DEALS.
AND SO THE REALTIME PRICE IS REALLY CRITICAL AND IT, IT AFFECTS A MUCH LARGER
[02:00:01]
QUANTITY THAN THE, THE RESERVES THAT WE PROCURE.AND SO FOR A RESOURCE THAT IS SELLING RESERVES, YOU MIGHT BE RIGHT, DEPENDING ON THE IMPACT ON ENERGY PRICE THAT OVER PROCURING HAS, BUT YOU MIGHT BE RIGHT, GETTING, GETTING 25 CENTS FOR ECRS MIGHT BE BETTER, YOU KNOW, FOR THAT RESOURCE THAN, UM, MIGHT BE THAT MIGHT BE A BETTER GAIN FOR THEM THAN WHAT THEY'RE LOSING IN TERMS OF REAL-TIME ENERGY.
UM, AND THAT MIGHT ESPECIALLY BE TRUE FOR, UH, A BATTERY STORAGE RESOURCE THAT ISN'T RUNNING, YOU KNOW, THROUGHOUT THE DAY.
THEY'RE ONLY RUNNING WHEN PRICES ARE HIGHER.
UM, BUT, BUT FOR THE OTHER RESOURCES THAT AREN'T RECEIVING AS REVENUE, THE, THE, FOR THE REST OF THE CAPACITY, UH, IN THE MARKET THAT ISN'T RECEIVING AS REVENUE, UH, HAVING REAL-TIME PRICES SUPPRESSED BECAUSE OF OVER PROCUREMENT AND THE LSL EFFECT ON REAL-TIME PRICES, THAT THAT'S A, THAT'S A NEGATIVE FOR THEM.
AND THERE'S NO POSITIVE, UH, TO, TO BALANCE THAT OUT BECAUSE THEY'RE NOT, THEY'RE NOT SELLING RESOURCES, THEY'RE NOT SELLING RESERVES.
AND AGAIN, THE AMOUNT OF RESERVES WE BUY IS CONSIDERABLY SMALLER THAN WHAT OVERALL LOAD IS, UH, IN, IN THE SYSTEM.
SO, SO I AGREE WITH YOUR STATEMENT, BUT I, I, I AGREE THAT YOUR STATEMENT COULD BE TRUE FOR RESOURCES THAT DO SELL RESERVES, UM, BUT IT'S NOT TRUE UNIVERSALLY.
YEAH, SORRY JEFF, GO, GO AHEAD, SEAN.
YEAH, I THINK THE CAVEATS THAT JEFF, UM, MENTIONED ARE VERY IMPORTANT TO UNDERSTAND.
YOU KNOW, WHEN YOU HAVE A SITUATION WHERE YOU HAVE PLENTY OF CAPACITY, YOU DON'T HAVE SCARCITY, THEN OVER, OVER PROCURING ANSWER IS, WILL INCREASE THE PRICE OF ANCILLARIES, BUT IT WILL, UM, IF, IF IT RESULTS IN MORE COMMITMENT, IT COULD SUPPRESS THE, OR REDUCE THE ENERGY PRICE.
BUT DURING SCARCITY SITUATIONS, YOU KNOW, I DON'T THINK THAT'S TRUE DOING SCARCITY, WHEN YOU ALREADY ARE TIGHT ON RESOURCES, THEN YOU'RE ACTUALLY GOING UP THE ANSWER SERVICE DEMAND CURVE.
AND THAT'S WHEN IT'S VERY IMPORTANT THAT THESE QUANTITIES ARE RIGHT, BECAUSE WHEN, WHEN YOU'RE PROCURING MORE, WHEN ERCOT IS PROCURING MORE CAPACITY, REMEMBER THE A SDCS ARE ALSO IMPACTED BY THAT.
THE ANSWERING SERVICE PLAN AMOUNT SETS THE, THE FLOOR FOR THE ASCS.
SO INSTEAD OF THE ANSARY SERVICE DEMAND CURVES GOING TO ZERO OR NEAR ZERO, THEY'RE ACTUALLY NOW FLOORED AT, AT SOME, YOU KNOW, $5 15, WHATEVER THE FLOOR IS.
SO THAT ACTUALLY EXTENDS THE ANSARY SERVICE DEMAND CURVES, WHICH IS IN TODAY'S WORLD, THAT IS THE ORDC, THAT'S WHAT GIVES YOU THE SCARCITY PRICING.
SO I THINK, UH, YOU KNOW, AND, AND THAT'S WHERE I HAVE ISSUES WITH, YOU KNOW, SO BASICALLY, ESPECIALLY WITH NONS SPIN AND ECRS, THEY'RE REALLY NOT DEPLOYED WITHIN THE SC INTERVAL.
THEY'RE, UH, FOR ONLINE STUFF, THEY'RE DEPLOYED, YOU KNOW, THEY'RE SORT OF CAPACITY THAT'S AVAILABLE ON THE RESOURCES.
AND WHAT THESE PROCUREMENT DEMAND DOES, IT SENDS A PRICE SIGNAL OF HOW, UH, THE MARKET VALUES THAT RESOURCE SO THAT, UM, QSC HAVE AN INCENTIVE TO, YOU KNOW, SELF COMMIT AND PROVIDE THOSE SERVICES BASED ON THOSE PRICE SIGNALS AS WELL AS A LONG-TERM ANSWER SERVICE PRICE SIGNAL THAT GIVES INVESTMENT PRICE SIGNAL.
SO EVEN THOUGH RELIABILITY WISE, YEAH, YOU COULD PROCURE NONE OF IT, AND ROCK WOULD TAKE, TAKE CARE OF RELIABILITY, BUT YOU'RE NOT GETTING THE MARKET PRICE SIGNALS FOR SELF-COMMITMENT AS WELL AS FOR INVESTMENT IN FUTURE IF YOU JUST KEEP ROCKING AND PRODU, UH, YOU KNOW, PROCURE LESS AND LESS OF THIS.
SO REALLY THE RELIABILITY ARGUMENT, I MEAN, UH, YOU COULD DO WITHOUT ANY NONS SPIN, LET'S SAY, RIGHT? AND YOU WOULD JUST ROCK AND THE SYSTEM WOULD BE PERFECTLY RELIABLE, BUT YOU WOULDN'T BE SENDING THE PRICE SIGNALS.
AND THAT'S WHY THE QUANTITIES, AND THAT'S WHY WE ALSO THINK THAT, YOU KNOW, YOU SHOULDN'T COUNT ON FREE CAPACITY.
IT SHOULD REALLY REFLECT, UM, THE QUANTITIES NEEDED, THE VALUE OF THE CAPACITY FOR BOTH SHORT-TERM AND LONG-TERM INVESTMENT.
AND LIKE I, I'D LIKE TO HEAR IT JEFF'S, UH, OPINION ON THAT.
UM, CAN YOU, CAN YOU COVER SOMEWHAT CONCISELY YOUR, SO, SO YOU HEARD ME TALK A FEW MINUTES AGO ABOUT HOW OVER PROCURING MAY OR MAY NOT AFFECT SHORTAGE PRICING.
[02:05:01]
PART OF YOUR COMMENT AGAIN FOR ME? YEAH.SO DURING SHORTAGE CONDITIONS, YOU KNOW, THAT'S WHEN WE GO UP THE ANSARY SERVICE DEMAND CURVE MM-HMM
SO IF YOU, UM, YOU KNOW, YOU MENTIONED THAT TOO.
IF YOU PROCURE MORE, YOU'LL SEE SCARCITY EARLIER AND YOU'LL GO UP THE ANSLEY SERVICE DEMAND CURVE, UH, YOU KNOW, EVEN MORE.
AND THE ANS SERVICE DEMAND CURVE ITSELF IS DEPENDENT ON THE ANSLEY SERVICE PLAN, WHICH IS DEPENDENT ON THE MINIMUM, UM, METHODOLOGY, YOU KNOW, AMOUNT.
SO YOUR ADCS ARE IMPACTED BY WHAT ERCOT DETERMINES IS THE, IS THE MINIMUM QUANTITY, THE AS PLAN AMOUNT, RIGHT? SO ALL THAT TIES TOGETHER TO CREATE A MUCH STRONGER, UM, PRICE SIGNAL DURING SCARCITY BECAUSE ENERGY PRICES WILL ALSO REFLECT THE ADCS, UH, YOU KNOW, HOW FAR UP THE A AS SDCS YOU'VE GONE.
SO THAT IMPACTS ENERGY PRICES.
I THINK YOU'LL SEE A STRONGER, UH, ENERGY AND ANSLEY SERVICE PRICE WITH THESE ADDITIONAL PROCUREMENT, UH, DURING TIMES OF SCARCITY.
AND SO ARE YOU, AND SO ARE YOU, AND SO I WAS KIND OF THINKING ABOUT THIS AS I WAS RESPONDING TO CLARK'S QUESTION.
SO THERE'S A TOTAL, THERE'S A TOTAL AMOUNT OF AVAILABLE CAPACITY IN ANY OPERATING HOUR, AND IF I MOVE THE AS PLAN OUT TO A HIGHER QUANTITY, THAT THAT SHIFTS THE POINT AT WHICH I MIGHT START PRICING SCARCITY FURTHER OUT.
AND IS YOUR POINT THAT IF IT'S MOVED FARTHER OUT, THERE'S ACTUALLY LESS CAPACITY AVAILABLE SYSTEM-WIDE, WHETHER IT'S SOLD AS OR NOT, UM, TO MAKE UP FOR A SHORTAGE? UH, AND SO BY MOVING IT OUT, YOU'RE MORE LIKELY TO, UH, INCUR A SHORTAGE PRICING EVENT BECAUSE, BECAUSE THE FURTHER YOU, THERE'S ONLY SO MUCH CAPACITY AVAILABLE IN ANY HOUR, THE FURTHER YOU MOVE IT OUT, THE LESS CAPACITY THERE IS TO DISPATCH INTO AS AND MAKE UP FOR A SHORTAGE.
AS WELL AS YOUR, AND AS WELL AS YOUR, AS SDC, YOU'VE MOVED OUT, YOU KNOW? YES.
BECAUSE YOU MOVE IT OUT WITH THE PLAN, OF COURSE.
SO, SO, YOU KNOW, AND LIKE, LIKE I SAID, I WAS SORT OF, SORT OF HEDGING AWAY FROM TALKING ABOUT THAT WHEN, WHEN I WAS RESPONDING TO HARKES, UM, QUESTION.
BUT, BUT I BELIEVE I AGREE WITH THAT.
SO, SO YOU MAY, YOU MAY WIND UP WITH A HIGHER LIKELIHOOD OF EXPERIENCING A SHORTAGE EVENT IN THAT CIRCUMSTANCE.
SO WAS YOUR QUESTION DEEPER THAN THAT OR WERE YOU JUST LOOKING TO SEE IF WE, IF WE PERCEIVED THAT THE SAME WAY? YEAH, NO, I, I WAS JUST, UH, TRYING TO CONFIRM THAT THAT IS, YOU KNOW, HOW IT WOULD WORK THAT THE ADCS WOULD GET, UH, CHANGED AS WELL AND THAT WOULD RESULT IN GREATER SCARCITY.
AND I AGREE WITH YOUR POINT THAT DURING NONS SCARCITY INTERVALS, IF THERE IS ADDITIONAL COMMITMENT DUE TO THE PROCUREMENT, THEN THE ENERGY PRICE MIGHT BE IMPACTED DOWNWARD AND THE ANSARY SERVICE PRICES OF COURSE, WITH GREATER QUANTITY WOULD BE HIGHER.
BUT THE ENERGY PRICE MIGHT BE IMPACTED.
I THINK, I THINK WE'RE IN AGREEMENT.
UM, YEAH, SO THERE'S A LOT OF GOOD CONVERSATIONS, UM, UH, HAPPENING RIGHT NOW.
UH, THANKS FOR ACCOMMODATING ALL OF THIS, JEFF.
UM, SO YEAH, TALKING ABOUT THE PLAN HERE AND HOW THE INCREASED AS INCREASES THE, WHERE YOU CONSIDER BEING SHORT, AND I'M TRYING TO FIGURE OUT HOW THAT'S REFLECTED IN THE MARKET.
I GUESS WE'RE TALKING ABOUT THE ADCS DON'T GET LONGER.
I MEAN, REALLY YOU'RE INCREASING THE, THE $15 LITTLE LONG PORTION AT THE END SO THAT THE TOTAL VALUE THERE IS NOT GONNA BE GREAT EVEN IN A SHORTAGE CONDITION PRICE.
YOU KNOW, I THINK LARGELY WE'RE STILL SOLVING MUCH BELOW THE, THE $15 FLOOR, UM, YOU KNOW, THE MAXIMUM.
UM, SO EVEN REALLY THAT IF YOU HAD INCREASED THAT FLOOR, YOU'RE NOT GOING TO BE INCREASING THE, THE VALUE OF THE AS AND MOST CIRCUMSTANCES,
[02:10:01]
UM, BECAUSE IT'S NOT HITTING AT $15, OBVIOUSLY IT'S NOT GONNA HIT AT, YOU KNOW, $25.UM, SO WHAT'S THE, YOU, YOU'RE SHOWING A BIG COST HERE IN THIS INCREASE, YOU KNOW, 40%, UM, BY LOOKING AT WATCH AND REG AND RRS AND, AND, AND I'M KIND OF JUMPING OVER AROUND HERE, BUT THE, THE, SO APOLOGIES, THE, THE LOOKING AT THE WATCH VERSUS REG, UM, NUMBERS IN ERIKA'S PRESENTATION THEY HAD THAT, THAT'S LARGELY DRIVEN BY THE RRS PLUS REG PIECE OF THIS MM-HMM
UM, DO Y'ALL, HOW, HOW DO Y'ALL VIEW THAT, UM, KIND OF REQUIREMENT TO REPLENISH RRS PLUS REG? IS THAT SOMETHING Y'ALL SEE AS, AS STILL AS BEING FLUFF THAT'S BEING ADDED ON TO THE PLAN? I, I CAN UNDERSTAND THE ARGUMENTS OF, YOU KNOW, WATCH VERSUS LOAD SHE AND THINGS LIKE THAT, BUT THE, IF REALLY THE DRIVER'S, THE RS VERSUS REG ON THIS, WHAT'S THE KIND OF LOGICAL ARGUMENTS AGAINST, UM, MEETING THAT REQUIREMENT? YEAH, THAT'S A GOOD QUESTION.
SO, SO PREVIOUSLY, AND, AND I'M, I'M APPROXIMATING, BUT PREVIOUSLY THE WATCH, THE, THE RRS PLUS REG, UM, SET THE, SET THE PROCUREMENT, UM, AT ABOUT 65% OF THE TIME, ROUGHLY WITH THE, WITH THE ADJUSTMENTS THAT ERCOT MADE TO THEIR MODEL.
I DON'T KNOW WHAT THE PROPORTION IS ANY LONGER, UM, OF THAT IT, IT MIGHT BE THE SAME, OR IT MIGHT BE IT, IT MIGHT BE, UM, MUCH LOWER BECAUSE THEIR ADJUSTMENTS WOULDN'T AFFECT THE RRS PLUS REG.
UM, BUT IT, BUT IT WOULD AFFECT THE, YOU KNOW, THE OTHER ASPECTS OF PROCUREMENT OF THAT, OF THE HOSTING SERVICE.
SO, SO I DON'T KNOW WHERE IT IS, BUT, BUT YOU KNOW, THIS, I, I CAN KIND OF UNDERSTAND HOW THIS REQUIREMENT GOT THROWN IN PRIOR TO RTC, BUT IN A RTC WORLD, RTC WILL LOOK AT EVERYTHING THAT'S AVAILABLE AND IT WILL, IT WILL DECIDE WHAT THE BEST USE OF THOSE SUPPLY RESOURCES ARE.
AND SO IF THERE IS AN EVENT THAT DEPLETES RRS AND OR REG, UM, RTC WILL GO FIND RRS AND REG, UM, AMONG THE AVAILABLE RESOURCES AND REPLENISH THAT IN THE NEXT INTERVAL.
UM, AND THAT WILL WIND UP, YOU KNOW, THERE WILL NO DOUBT BE A SHORTAGE PRICE THAT WILL GET GET COMMUNICATED AND THERE WILL ALSO BE RE-DISPATCH COSTS THAT WILL GET COMMUNICATED INTO ENERGY LMPS.
SO I UNDERSTAND THAT EXPLICITLY INCORPORATING THOSE IN, IN ANOTHER SERVICE, UM, SO THAT YOU HAVE INSURANCE FOR RRS AND REG MIGHT HAVE MADE SENSE PRIOR TO RTC.
I CAN ALSO UNDERSTAND HOW DOING THAT, ESPECIALLY SINCE YOU R TO ENSURE, UH, ENOUGH AVAILABLE RESOURCES TO COVER YOUR LOAD PLUS ALL ANCILLARY SERVICE TARGETS, UM, THAT, THAT, THAT PROVIDES A, A GOOD AMOUNT OF INSURANCE.
BUT WHAT WE'RE SEEING, AND, AND AGAIN, ESRS COME INTO THIS, BUT WHAT WE'RE SEEING IN TERMS OF PRS, UH, THE WAY IT IS HAS BEEN LAST YEAR AND THIS YEAR IS JUST DOESN'T SEEM NECESSARY TO ME TO PROCURE RIG AND RRS IN ANOTHER SERVICE AS BACKUP.
UM, AND THAT RTC IS, IS VERY WELL SITUATED TO GO TAKE FROM RESOURCES THAT ARE AVAILABLE AND REPLENISH THOSE.
SO, I DON'T KNOW, I DON'T KNOW WHERE THE, YOU KNOW, WE, WE OFTEN, WHEN WE TRY TO FIND SOLUTIONS, WE WIND UP SPLITTING THE BABY.
SO I DON'T, I DON'T KNOW IF SCALING THE RR RS PLUS REG AS IT'S REFLECTED IN OTHER REQUIREMENTS, YOU KNOW, SCALING IT TO 50% OR 25%, IF THAT MAKES SENSE TO DO.
BUT IT JUST DOESN'T SEEM LIKE, IT SEEMS LIKE IN A PRE RTC WORLD, THIS MIGHT HAVE MADE SENSE.
IT SEEMS TO MAKE LESS SENSE TO ME IN AN RTC WORLD.
SO DOES THAT HELP ADDRESS YOUR QUESTION? YEAH, I'M JUST TRYING TO KIND OF POINT TO WHERE YOU'RE NOT POINT TO, BUT I UNDERSTAND WHERE, WHERE THESE CHANGES WOULD WOULD, HOW, KIND OF, HOW THIS WOULD BE IMPACTED OR IF WE DID, YOU KNOW, IF THERE WAS AN ARGUMENT MADE TO
[02:15:01]
REDUCE THE, THE TARGET, WHAT, WHAT THE REAL EFFECT WOULD BE.OR IF YOU'RE GONNA BE ARGUING MAYBE, UM, FOR THE TARGET TO BE FROM LOAD, SHE ARE ARGUING TO REMOVE THE RRS AND REG REQUIREMENTS.
YEAH, AND WE'VE GOT A LOT OF OPINIONS ON THAT.
SO NOW I UNDERSTAND YOUR QUESTION A LITTLE BIT BETTER.
UM, SO, SO I THINK MOVING DOWN TO AN EEA ONE, UH, WOULD BE A, A, A MOVE IN THE RIGHT DIRECTION INSTEAD OF A WATCH.
I KNOW I'VE MENTIONED IT BEFORE, BUT I LIVED THROUGH THE, UH, CALIFORNIA ENERGY CRISIS IN 2000 AND THE WATCHES, YOU KNOW, WE HAD ENERGY WATCHES THEN, AND YOU COULD SEE THE RESPONSE, UH, IN, IN THE LOAD CURVE, THE ACTUAL LOAD CURVE, UH, WHEN THOSE WENT OUT BECAUSE THEY DIDN'T GO OUT ALL THE TIME.
THEY ONLY WENT OUT WHEN IT WAS EXTREMELY TIGHT CONDITIONS.
UM, AND SO THEY WEREN'T ABUSED OR OVERUSED.
UM, THEY WERE USED AS AN EMERGENCY, UH, YOU KNOW, TOOL AND SO, OR AN, AN EMERGENCY AVOIDANCE TOOL.
SO, SO I DON'T, I DON'T UNDERSTAND GI GIVEN THAT BENEFIT, POTENTIAL BENEFIT.
I DON'T UNDERSTAND WHY AVOIDING A WATCH IS A OPERATING CRITERIA FOR BUYING RESERVES.
I THINK AN EEA ONE IS, MIGHT EVEN STILL BE HIGH AT EA TWO.
I, I WOULDN'T WANNA GO BELOW AT EA TWO, BUT IT, BUT SETTING IT AT THE EA ONE WOULD BE A GREAT, UH, IMPROVEMENT, I THINK.
UM, AND, AND IT WOULD ALLOW THE WATCH TO SERVE ITS PURPOSE.
UH, IF, IF THE WATCH WERE, YOU KNOW, IS, IS TRULY ISSUED AT A TIME WHEN, WHEN CONSERVATION OR, OR, OR SHIFTS IN THE LOAD CURVE, UH, COULD VOLUNTARY SHIFTS IN THE LOAD CURVE COULD BE BENEFICIAL.
UM, SO THERE'S THAT ON THE REG PLUS RRS, YOU KNOW, I, I THINK WE'RE LOOKING AT, WE, WE, WE STILL DON'T UNDERSTAND THAT THAT REQUIREMENT AND, AND WE'VE BEEN TOLD THAT IT'S A, AN IT'S REQUIRED BY NERC.
IT'S NOT CLEAR TO US THAT IT IS, BUT THERE MIGHT BE A NUANCE TO IT IF IT IS NOT STRICTLY REQUIRED BY NERC AND, AND, AND RECOGNIZING THAT THAT ERCOT IS AN ISLAND.
IT IS NOT LIKE THE OTHER, IT'S NOT LIKE THE OTHER RTOS, YOU KNOW, SOME, SOME SCALING AT LEAST, UM, YOU KNOW, I THINK WOULD BE APPROPRIATE, ESPECIALLY GIVEN THAT WE HAVE HIGH, HIGH PRC GENERALLY SPEAKING.
UM, AND, UM, R-T-C-R-T-C WILL FIND A SOLUTION FOR THESE, AND THAT WASN'T POSSIBLE BEFORE WHEN THIS PART OF THE REQUIREMENT WAS INSTITUTED.
AND SO I THINK KEEPING THEM IN THERE, UH, AT THEIR WHOLE VALUES, UH, YOU KNOW, IGNORES THE BENEFITS OF RTC, UH, AND HAVING A HIGH PRC.
SO THAT'S WHERE WE'RE GONNA LAND PROBABLY ON, ON BOTH OF THOSE THINGS.
UM, I THINK WE'RE GONNA BE, I THINK WE'RE GOING TO, UM, BE CONSISTENT WITH PRIOR COMMENTS ON THE, ON THE FORECAST ERROR HORIZON THAT, YOU KNOW, THAT WE THINK THAT SHOULD BE SHORTER.
WE, WE, WE SUBMITTED, YOU KNOW, A, A, A CHART SHOWING THE, THE FORECAST VARIABILITY, UH, AS YOU GO OUT HOUR BY HOUR, AND WHEN YOU GET OUT TO SIX HOURS, IT'S JUST HUGE, YOU KNOW, AT LEAST, AT LEAST BRING IT BACK TO THREE HOURS.
UM, FOUR ON THE OUTSIDE, UH, LET'S SEE, THREE HOURS IS PROBABLY WHERE, WHERE WE'LL LAND FOR A RECOMMENDATION BECAUSE, YOU KNOW, IS ONCE, ONCE DRS COMES IN, DRS IS A TWO HOUR START, THREE HOURS GETS YOU EVEN BEYOND THAT.
SO, SO ANYWAY, THAT'S, I THINK THAT'S WHERE WE'RE GONNA BE WITH OUR RECOMMENDATIONS.
UM, THANKS FOR THE QUESTION, SETH AND I, I WANNA MAKE SURE WE LEAVE TIME FOR, FOR KEITH'S COMMENTS.
I MAYBE IF I JUST HAVE ONE, ONE QUICK THING THOUGH.
UH, YOU DIDN'T TOUCH ON THE, THE RISK CREDITS.
UH, WHERE YOU, WHERE ARE Y'ALL? I, I FEEL LIKE THERE'S LIKE PRETTY GOOD CONSENSUS THAT RISK CREDITS ARE NOT LIKE A GREAT CONCEPT TO BE PUTTING IN THERE.
I THINK THAT WAS LED US TO CONFUSION AT THE ROSS VOTE.
UM, YEAH, LIKE WE DON'T LIKE THE RISK CREDITS, LIKE GETTING DISCOUNTING ON SOMETHING TO BE THERE WITHOUT KIND OF PUTTING ANY SORT OF MARKET INCENTIVE IS NOT A GREAT IDEA.
BUT THAT SEEMS TO BE, I SEEN THEM, THEY'RE BEING JUST USED AS A TOOL TO LOWER THE PLAN.
I MEAN, I THINK THE RISK CREDITS WERE, I MEAN, IN AN RTC WORLD, I, I MIGHT, I MIGHT HAVE UNLOADED CAPACITY AND I'M QUALIFIED TO PROVIDE ANY, ANY OF THE RESERVE SERVICES OR, YOU KNOW, PICK ONE.
UM, AND I MIGHT HAVE A UNQUALIFIED CAPACITY IF, IF ERCOT IS, IS ACKNOWLEDGING THAT
[02:20:01]
UNLOADED CAPACITY THAT IS QUALIFIED FOR RESERVES.UM, RTC IF IT NEEDS ME, BUT I WENT INTO REAL TIME WITHOUT HAVING RESERVE PROCUREMENT AND IT NEEDS ME AND I'M AN ECONOMIC SOLUTION, RTC WILL, UH, BUY RESERVES FROM ME AND PAY ME FOR IT.
AND SO, AND SO I THINK, YOU KNOW, AND AGAIN, A RISK CREDIT CONCEPT MAY HAVE BEEN FORMED PRIOR TO RTC, BUT, BUT WITH RTC, YOU KNOW, I DON'T KNOW WHY YOU WOULDN'T, WHY YOU WOULDN'T COUNT THAT CAPACITY AS BEING AVAILABLE BECAUSE RTC WILL BUY IT IF IT NEEDS IT.
SO, SO IT WOULDN'T BE COUNTING IT, IT WOULDN'T BE COUNTING IT AGAINST MEETING ITS RESERVE REQUIREMENT.
IT WOULD JUST BE COUNTING IT AS BEING AVAILABLE TO BE PAID TO MEET THE RESERVE REQUIREMENT.
AND I DON'T SEE WHY IT SHOULDN'T BE BECAUSE IT'S THERE AND WE NOW HAVE A MARKET THAT WILL DO THAT IF, IF NECESSARY.
SO DID, DOES THAT ADDRESS YOUR QUESTION, SETH? OR WERE YOU GETTING AT SOMETHING ELSE? YEAH, I CAN UNDERSTAND WHERE Y'ALL ARE COMING FROM ON THAT.
UM, YEAH, IT'S, YEAH, IT'S A, IT'S A CONCEPT.
I THINK THAT'S KIND OF GOTTEN AWAY FROM LIKE WHAT ITS INTENT IS HERE AND BACK COULD VERY WELL BE, YEAH, YEAH.
YEAH, I'LL, I'LL, I'LL LET THE MEETING MOVE ON.
SURE IS SHANE NOT BE, THAT'S A SLIGHTLY, SORRY, SHANE, WHICH I CAN SAY BECAUSE I DROPPED
ALRIGHT, LET'S GO TO, UH, LET'S GO TO KATIE AND THEN, UM, I MAY HAVE A COUPLE OF COMMENTS LOGISTICAL, BASICALLY.
AND THEN KEITH, I THINK YOU NEED TO GET GOING IN WHAT, 15 MINUTES? 10 MINUTES? YEAH, SOMETHING LIKE THAT.
SO LET'S GO TO KATIE AND, AND TRY TO THEN GO TO, UH, ERCOT.
THANK YOU FOR LETTING ME HAVE THE, THE LAST QUESTION.
THIS IS REALLY A, A FOLLOW UP TO A QUESTION THAT'S STILL OUTSTANDING WITH ERCOT, JEFF, SO I WANTED TO GET YOUR TAKE ON IT.
UM, SO WHAT DO YOU THINK ABOUT REDUCING THE DAM AS PROCUREMENT TARGETS BASED ON THE HISTORICAL EVIDENCE THAT ESRS TYPICALLY PROVIDE SOME AMOUNT OF CAPACITY? I MEAN, WE JUST TALKED ABOUT THAT, UM, WHILE SIMULTANEOUSLY ASSUMING THAT THOSE SAME HISTORICAL ESR QUANTITIES WILL BE AVAILABLE IN REAL TIME OR THE R ENGINE.
SO ESSENTIALLY WHAT I'M ASKING IS SHOULDN'T WE KEEP THE ASSUMPTIONS THE SAME THROUGHOUT THE VARIOUS PROCESSES? YEAH, SO, SO, YOU KNOW, LET, LET ME LOOP BACK AROUND TO A POINT I WAS TRYING TO MAKE A MOMENT AGO, WHICH IS I DON'T, I DON'T THINK YOU WANNA COUNT ON UNLOADED UNPROCURED CAPACITY AGAINST YOUR AS REQUIREMENT.
SO YOU, YOU WANNA PAY FOR THE SERVICES THAT YOU'RE COUNTING ON RECEIVING.
UM, AND SO I DON'T, I I DON'T KNOW, THAT MAY MAYBE, MAYBE, I DON'T UNDERSTAND, MAYBE THERE'S A NUANCE TO YOUR QUESTION.
I I, I'D RATHER SEE THE AS TARGETS SET WITH, YOU KNOW, SENSIBLE BEST PRACTICES, YOU KNOW, RELIABILITY, UM, ASSUMPTIONS AND NEEDS, UH, AND THEN, AND THEN YOU JUST PROCURE TO THAT TARGET ON, ON YOUR A SDC IN THE DAY AHEAD AND THE REAL TIME.
AND SO I DON'T, SO, SO I WOULD AGREE THAT THE DAY AHEAD NEEDS TO REFLECT THE SAME ASSUMPTIONS THAT REAL TIME DOES, BECAUSE IF IT DOESN'T AND THEIR MATERIAL, THEY'LL, THEY'LL DRIVE A PRICE DIFFERENCE.
AND THEN YOU'RE JUST, YOU'RE JUST CREATING A PERPETUAL ARBITRAGE SITUATION THAT DOESN'T REALLY HAVE, THAT'S STRUCTURAL AND IT DOESN'T REALLY HAVE A, YOU KNOW, UH, IT DOESN'T SERVE A FUNCTION OTHER THAN MOVING MONEY AROUND.
SO, SO I WOULD LIKE, CAN I, CAN I GO AHEAD, REFRAME, BECAUSE I THINK, I THINK, I MEAN, IT'S A GREAT RESPONSE, BUT I THINK MAYBE I, I, I, I MISSED SOMETHING IN THE STEPS AND SORT OF ASSUMED YOU HAD SOME BACKGROUND ON THIS.
SO WHAT WE'RE SEEING IN THE RISK CREDITS IS ONE COMPONENT OF THAT IS ESR CAPABILITY.
OKAY? WHILE WE'VE JUST PREVIOUSLY TALKED ABOUT THE H-B-S-O-C ISSUES AND WHATNOT, BUT IF WE'RE GONNA ASSUME SOME PORTION OF CAPACITY THERE, WHY AREN'T WE THEN ASSUMING THAT SOME PORTION OF THAT WOULD BE AVAILABLE IN REAL TIME FOR THE WRECK ENGINE? UM, AND THAT WAS WHERE I, I GOT DIFFERING VIEWPOINTS FOR, FROM ERCOT ON THOSE TWO POINTS.
BUT, BUT WHY, WHY SHOULDN'T SOME OF THESE ASSUMPTIONS CARRY OVER THROUGHOUT ALL THE PROCESSES IS WHERE I WAS GOING.
I, I THANK YOU FOR THE CLARIFICATION, KATIE.
YEAH, I, SO, SO I'M IN, I'M IN FAVOR OF, OF,
[02:25:01]
SO IF THE ASSUMPTIONS ARE DRIVEN BY A METHODOLOGY, THE METHODOLOGY SHOULD BE CONSISTENT ACROSS THE DAY AHEAD OF THE WRECK AND THE REAL TIME, AND IN MY VIEW, UM, AND, AND THAT METHODOLOGY FOR PRODUCING THE ASSUMPTION FOR RISK CREDITS, YOU KNOW, IT MIGHT BE A DIFFERENT RISK CREDIT, BUT, BUT THE METHODOLOGY THAT PRODUCES THAT RISK, RISK CREDIT ACROSS THOSE THREE TIMEFRAMES, UM, SHOULD BE CONSISTENT.AND IT, AND IT SHOULDN'T, UNLESS THERE'S A REALLY GOOD REASON FOR IT.
IT SHOULDN'T, IT SHOULDN'T BE BIASING, UH, THE RISK CREDIT ONE WAY OR THE OTHER, UM, IN THAT.
SO I, BUT, BUT UNFORTUNATELY, KATIE, I'M NOT REALLY FAMILIAR WITH WHAT MIGHT BE DRIVING YOUR DAY AHEAD ISSUE.
I THINK IT'S JUST THE WAY THE, UM, ASSUMPTIONS WERE MADE FOR THAT RISK CREDIT, WHICH IS DRIVING, UM, RIGHT NONS SPEND AND ECRS PROCUREMENT, BUT THEN AT THE SAME TIME, WE'RE SEEING THESE ISSUES WHERE YOU'RE NOT COUNTING SOME OF THAT CAPACITY IN, UM, IN ROCK.
AND SO IT'S NOT SEEING THAT OH, IN THE ENGINE.
SO WE'RE SEEING THAT INCREASE IN ROCK.
SO I'M, I'M TRYING TO DRAW A COMPARISON TO IF YOU TREAT IT ONE WAY IN AS METHODOLOGY YEAH.
WHY AREN'T YOU TREATING IT THE SAME WAY IN OTHER PROCESSES? I, I SEE.
YEAH, NO, THAT, THAT MAKES SENSE.
I'M NOT, I'M NOT FAMILIAR WITH WHAT NUANCE MIGHT DRIVE THE DIFFERENCE, BUT IN GENERAL, IT, IT IN GENERAL IN MY VIEW, UH, THE, THE, THE METHODOLOGY FOR THAT SHOULD BE THE SAME ACROSS THOSE THINGS.
SO, SO, UH, I'LL, I'LL TRY TO GET MYSELF UP TO SPEED, UH, A LITTLE BIT MORE ON WHAT YOU'RE TALKING ABOUT.
MAYBE WE CAN CHAT ABOUT IT SOMETIME.
UM, JEFF, I THINK YOU'RE WRAPPED UP WITH YOUR SLIDE.
UM, I THINK YOU MAYBE CREATED A LOT OF HOMEWORK FOR YOURSELF TODAY WITH SOME OFFLINE CONVERSATIONS, BUT THAT'S GOOD.
UM, WE, ON THE ANCILLARY SERVICE METHODOLOGY, WE WILL BE VOTING ON THIS AT TECH, WHICH IS THE 26TH, UM, THAT WE WOULD LOVE IMM COMMENTS AHEAD OF THAT.
YOU REFERENCED COMMENTS A COUPLE TIMES, SO I THINK LIKE THE END OF NEXT WEEK WOULD BE GREAT.
UM, AND THEN IT WOULD GO TO SEPTEMBER BOARD, UM, WHICH, WHICH I'M SURE THEY'D WANT YOUR OPINION ON AS WELL, JEFF, AND, AND YOU CAN WORK WITH REBECCA AND HER GROUP ON THAT.
BUT THAT, THAT BOARD MEETING IS SEPTEMBER 14TH, 15.
BUT THE TAC IS THE 26TH OF THIS MONTH.
UM, AND THEN BEFORE I TURN IT OVER TO KEITH, UH, I KNOW IKA WAS ON, AND, AND THANK YOU REALLY A LOT FOR THE COMPLIMENTS.
UM, I, I REALLY WANTED JEFF TO DO THIS.
IT WAS GONNA BE PART OF A REGULAR MEETING, BUT IT WORKED OUT THIS WAY AND I, I THINK IT WENT WELL AND IT WOULD BE A GOOD THING TO DO NEXT YEAR AND FOLLOWING YEARS.
UM, I DON'T KNOW IF SHE'S STILL ON, BUT IF COMMISSION STAFF WANTS TO ADD ANYTHING NOW, UM, I CAN GIVE THEM THAT OPPORTUNITY TOO.
I THINK WE'RE EXPECTING A FILING FROM THEM IN AUGUST.
IF YOU HAVE TIME OR CAN WAIT UNTIL KEITH, I REALLY HAVE A COUPLE OF THINGS TO TELL TO THE, UH, TECH MEMBERS, BUT I CAN WAIT UNTIL KEITH IS DONE.
[3. Stakeholder/ERCOT Comments]
TO KEON.ALRIGHT, WELL THANK, THANKS TO JEFF AND EVERYONE.
UM, THIS WAS, UH, OBVIOUSLY A GOOD, GOOD RECAP AND, AND DISCUSSION ABOUT, UM, THE REPORT AND THE IMM COMMENTS.
THERE'S A COUPLE, THERE'S A COUPLE THINGS I DO WANNA HIGHLIGHT HERE.
AND PARTICULARLY AS WE THINK ABOUT THE RUCK IN PARTICULAR, THERE'S BEEN A LOT OF DISCUSSION ABOUT THAT RECENTLY.
AND OBVIOUSLY WHEN WE LOOK AT THE RESULTS FROM 2025, I THINK WHAT, WHAT'S, WHAT'S KIND OF DIFFICULT IS THE WORLD HAS SHIFTED, UH, IN PARTICULAR WITH THE RTC POST B.
SO WHEN WE TALK ABOUT WHAT HAPPENED IN 2025 WITH REGARDS TO THINGS LIKE RUCK, THE WORLDS ARE DIFFERENT.
AND SO I THINK THAT'S SOMETHING THAT WAS KIND OF MISSING IN TODAY'S CONVERSATION WAS RTC HAS CHANGED THE RUCK.
UM, IT HAS NOT ELIMINATED EVERYTHING, BUT IT HAS, IT HAS GREATLY REDUCED THE FREQUENCY RELATIVE TO WHAT WE SAW IN 2025.
SO THERE IS, THERE IS A SIGNIFICANT CHANGE THERE.
THERE WERE A LOT OF DISCUSSIONS ABOUT, UM, ABOUT THE RUX THAT WE DO HAVE.
UM, AND, AND THAT'S KATIE'S POINT IS YES, THERE IS A PATTERN IN 2026, AND WE HAVE HIGHLIGHTED THAT WE HAVE DONE, UH, WE HAVE DONE SOME, SOME STUDIES, UH, AND SOME ANALYSIS THAT HAS SHOWED THAT YES, IN
[02:30:01]
FACT, MUCH OF THE R THAT WE HAVE SEEN IS, IS A FUNCTION OF, UH, INPUTS TO RUCK.AND YES, THOSE INPUTS INCLUDE HOW STATE OF CHARGE IS BEING OFFERED BY A SET OF RESOURCES IN THE, INTO THE RU PROCESS.
WE'VE BEEN LOOKING, WE'VE BEEN DOING SOME OUTREACH OVER THE LAST SEVERAL MONTHS.
UH, OUR, MY UNDERSTANDING IS THAT THERE HAS BEEN SOME, SOME CHANGES IN, IN BEHAVIOR, UH, OVER THE LAST SEVERAL WEEKS.
MY UNDERSTANDING IS WE WILL HAVE SOME, UH, MATERIAL READY FOR THE, THE UPCOMING, UH, W-M-W-G-I BELIEVE IN SEPTEMBER.
SO OBVIOUSLY THAT, THAT IS A, UM, THERE'S A POSITIVE PIECE TO TAKE FROM THAT AS, HEY, YOU KNOW, HOW DO WE CONTINUE TO REDUCE RUX? STEP ONE IS RTC, STEP TWO, WE GET BETTER INPUTS TO RUCK.
UH, WE DO KNOW, WE DO KNOW, UM, THAT OBVIOUSLY DRS IS DESIGNED TO HELP ADDRESS RUCKS AS WELL.
SO, YOU KNOW, WE'RE DEFINITELY TRENDING IN THE RIGHT DIRECTION WITH 1309 PASSED AS WELL.
SO, UM, IS THERE MORE WE CAN DO? WE'RE, WE'RE OBVIOUSLY DOING THINGS, BUT, BUT YOU KNOW, OPERATORS AT THE END OF THE DAY, UH, WHEN, WHEN THEY HAVE THE TOOL AND IT DOES WHAT IT, AND THEN THE NUMBERS COME OUT OF THE, THE RUCK, THEY HAVE A DECISION, AN OPTION TO MAKE, UH, CHOICES AND, AND WE DO SEE THAT PLAY OUT.
ALRIGHT, SO THAT'S, UH, THOSE ARE MY POINTS ON THE RUCK.
DO WE WANNA TAKE A QUESTION, A QUICK QUESTION NOW ON THAT, BECAUSE I'M GONNA SWITCH OVER TO SOME OF THE OTHER THINGS THAT, THAT WE'RE DISCUSSED THIS MORNING.
I SEE KATIE, YEAH, KEITH, JUST REALLY QUICK, UM, JUST WANTED TO GO BACK AND I'LL, I'LL BE VERY CAREFUL WHAT I CALL THIS, BUT THE, THE CONCEPT THAT JEFF LAID OUT ON, UM, IMPROVING THE ROCK AND, AND WHAT YOU SEE AS IN TERMS OF SOC CAPABILITY, COULD WE ADD THAT TO DISCUSSION? JEFF? MAYBE YOU COULD SEND ANDREW OR SOMEONE FROM YOUR TEAM TO TALK ABOUT IT AT WMWG.
UH, IS, WAS THAT IT, KATIE? OKAY.
YOU HAVE A QUESTION FROM SETH THOUGH? OKAY, SETH? YEAH.
JUST REAL QUICK, SO I UNDERSTAND WHAT YOU'RE SAYING, BUT WHY, WHY IS ERCOT, UM, PUTTING FORWARD OR RECOMMENDING THAT WE CONTINUE TO PROCURE THE REDUCED QUANTITIES OF ANCILLARY SERVICES FOR THE BALANCE OF THE YEAR, BUT YET EVERY DAY I SEE THAT WE'RE ROCKING UNITS FOR INSUFFICIENT ANCILLARY SERVICES, SO SHOULDN'T WE RAISE WHAT THE MARKET'S PROCURING, UH, SO THAT WE DON'T HAVE THIS INSUFFICIENCY? SO ON THE, SO YOU'RE, YOU'RE SAYING NOW YOU SWITCHED TOPICS TO SAY, OKAY, LET'S TALK ABOUT THE SERVICE METHODOLOGY, THE, THE COMMENTS ON, HEY, DO WE SEE A NEED TO INCREASE THE REQUIREMENT FROM THE, THE, THE PROCUREMENT LEVELS THAT WERE DETERMINED EARLIER IN THE YEAR, UH, TO SOME HIGHER LEVEL? AND, AND, AND HOW DOES THAT RELATE TO R UM, YOU KNOW, I, I THINK OUR VIEW IS THERE, THERE'S, THERE'S A NUMBER OF REASONS WHY WE'RE, WE'RE RECOMMENDING, UH, TO CONTINUE, UH, WITH, WITH WHAT WE HAVE FOR NOW.
UM, I DO THINK THAT THIS ISN'T OPTIMAL AND I THINK IT, IT'S UNFORTUNATE AND, AND OPTIMAL THAT THE MODEL, UH, THERE WERE SOME MODELING ERRORS THAT RESULTED IN SOME IN INACCURATE NUMBERS.
I, I THINK WE FEEL THAT GIVEN, GIVEN WHERE WE ARE, THIS IS, UH, IS THE BEST WE CAN DO AT THE MOMENT BECAUSE THERE ARE, THERE ARE UNINTENDED CONSEQUENCES EITHER OPTION WE GO.
SO, UM, I KNOW THAT THERE'S THE PUC DISCUSSIONS AND SO WE, TO THE EXTENT THAT YOU HAVE SOME COMMENTS OR SOME CONCERNS, YOU CAN, YOU CAN LAY THEM OUT IN, IN THE PUC PROCESS.
SO SWITCHING GEARS A LITTLE BIT TO THE DISCUSSION AROUND THE PRRC.
I THINK, UH, WE'VE, WE'VE SET IN SEVERAL FORUMS. I KNOW DAN'S, DAN'S BEEN LEADING THE CHARGE ON THE PRC DISCUSSION, UH, AND, AND OUR VIEWS ON, HEY, YOU KNOW, MAYBE WE'RE NOT LOOKING AT IT THE RIGHT WAY WHEN WE SEE THIS NUMBER, GIVEN THE FACT THAT THE RESOURCE MIX IS, IS DIFFERENT THAN WHAT IT WAS OVER THE LAST, UH, YOU KNOW, OVER THE LAST SEVERAL YEARS, IT HAS CHANGED.
AND, AND THERE ARE SOME, SOME ITEMS THAT, THAT WE HAVE POINTED TO.
ONE OF WHICH IS THE FOLD BACK ISSUE OF, UH, UH, OF THAT WE, WE SEE IN TERMS OF STATE OF CHARGE IS THAT IS REALLY THE STATED NUMBER, THE RIGHT NUMBER, UM, AND TO THE EXTENT THAT WE MAY HAVE TO MAKE, UH, SO IS THAT NUMBER TRULY REFLECTIVE
[02:35:01]
OF, OF THE CONDITION, UH, OF WHERE WE, WHERE WE ARE IN THE MOMENT AND WHERE WE EXPECT TO BE IN THE COMING MOMENTS.SO PRC, AGAIN, WE, WE DO, WE DO LOOK AT THAT A LITTLE BIT DIFFERENT THAN, THAN I THINK WE MIGHT HAVE LOOKED AT IT, YOU KNOW, FIVE YEARS AGO.
AND SO I THINK HAVING THIS DISCUSSION MOVING FORWARD, I THINK IS, IS GONNA BE FRUITFUL AND RELEVANT TO SEE, HEY, WHAT DOES PRC MEAN AND WHAT CAN WE DO TO EITHER IMPROVE THE ACCURACY OF IT OR, OR TO THINK OF, HEY, ARE THERE ARE OTHER WAYS TO THINK OF IT MOVING FORWARD? AND SO THAT'S OUR VIEW ON PRC.
AND SO IF THERE'S ANY QUESTIONS, LOOKS LIKE WE, WE MAY HAVE SHAMS, ACTUALLY, MY, MY QUESTION WAS JUST, UH, YOU KNOW, HOW WE FILE COMMENTS ON EASTMAN BECAUSE IT'S NOT AN NP OR ANYTHING, BUT, UM, YEAH, DIDN'T, DIDN'T IKA MENTION IT WAS 5 5 9 9 9.
ISN'T THAT THE, WELL, THE, THE 27 METHODOLOGY IS GONNA BE VOTED ON BY TECH.
SO I THINK THAT'S PROBABLY WHAT HE'S ASKING FOR TOO, RIGHT? YEAH.
FOR 2026, YOU CAN FILE COMMENTS IN 5, 5, 9, 9 9 FOR THE DISCREPANCY, LIKE FOR THE DISCREPANCY FOR CAUSE EXCEPTION TO CONTINUE TO BUY THE POST SET AMOUNTS AND NOT TO ADD ADDITIONAL FOR GIGAWATT.
SO THE, THE PUC DOCKET IS THE DISCUSSION ON THE GOOD CAUSE EXEMPTION OF THE DISCREPANCY FOR 2027.
IT'S A VOTING ITEM AT TECH, BUT IT DOESN'T HAVE AN NPRR PAGE.
I DON'T REMEMBER HOW WE DID THIS LAST YEAR.
AND WOULD WE JUST POST THIS TO THE TECH PAGE SOMEWHERE? YEAH, I THINK SINCE WE DON'T HAVE LIKE A FORMAL WAY TO DO IT, WE CAN JUST POST IT TO THE KEY DOCS AND PEOPLE CAN READ.
YEAH, JUST SEND, SEND THEM TO STAKEHOLDER SERVICES.
AND CORY WILL KNOW WHAT TO DO REVISION REQUEST.
SEND THEM TO REVISION REQUEST LIKE YOU WOULD A REVISION REQUEST AND WE'LL PO POST THEM TO THE TECH PAGE OR YOU KNOW, COREY KNOW BETTER THAN ME AND ANNE SO COREY CAN DECIDE.
ANNE, DID YOU WANNA CHIME IN OR KEITH, DID YOU HAVE A THOUGHT TO FINISH THERE? NO, NO, I THINK WE CAN HEAR FROM DAN.
I I JUST WANTED, LET'S GO TO DAN, CAN YOU HEAR ME? YEAH, WE CAN HEAR YOU DAN.
I JUST WANTED TO CLARIFY THE, UH, ONE LITTLE THING THAT OPERATIONS MESSAGE THAT YOU'RE SEEING THAT SAYS THAT AS TO WHY WE'RE WRECKING IS BECAUSE OF ANCILLARY SERVICE SHORTAGE THAT'S RELATIVE TO THE CURRENTLY POSTED QUANTITIES OF AS, IT HAS NOTHING TO DO WITH THE, THE MARKET NOTICE THAT THAT'S TO DO WITH THE ERROR AND THE, THE PROBABILISTIC MODEL.
SO JUST ONCE THAT SAID THAT, I WENT, OH, I GUESS I COULD SEE HOW PEOPLE MIGHT MISUNDERSTAND THAT, BUT THAT'S NOT, THOSE TWO THINGS ARE, ARE UNRELATED.
THE OPERATIONS MESSAGE IS ONLY RELATED TO NOT PROCURING ENOUGH TO, UM, UH, MEET THE, THE CURRENTLY POSTED QUANTITY.
UM, CAN WE, IF IT'D BE POSSIBLE, CAN WE GO BACK A SLIDE? UH, THAT'S IT.
SO I THINK THIS IS MISLEADING.
UM, AND I THINK IT REALLY DOES SPEAK TO THE NATURE OF THE, THE ISLAND THAT IS ERCOT RELATIVE TO THE EASTERN INTERCONNECT OR THE WESTERN INTERCONNECT THAT, THAT THESE OTHER REGIONS PARTICIPATE IN.
AND I BELIEVE IT WAS, WAS DR. DAVID PATTON MADE A COMMENT AT A FOR TECHNICAL CONFERENCE CONFERENCE ABOUT 18 MONTHS AGO AND, AND SAID THAT, HEY, THERE ARE LATENT RESERVES AND IT'S CALLED THE EASTERN INTERCONNECT, RIGHT? IT'S THESE INTERTIE TRANSACTIONS THAT, UH, THEY CAN RELY ON DURING PERIODS OF STRESS.
UH, WE DON'T HAVE THAT LUXURY.
UH, WE ALSO HAVE ECRS FOR INSTANCE.
YOU KNOW, I I DON'T KNOW OF ANY OTHER PRODUCT THAT THAT IS EXACTLY LIKE THAT.
SO WE HAVE DIFFERENT PRODUCTS, UH, WE HAVE MORE RENEWABLES THAN, WE HAVE MORE RENEWABLES THAN THE ISO NEW ENGLAND GRID IN TERMS OF, YOU KNOW, WE HAVE MORE SOLAR PRODUCTION TODAY THAN THAN ISO NEW ENGLAND HAS EVER HAD FOR PEAK LOAD.
SO YEAH, THERE IS FORECAST ACCURACY ISSUES THAT COME UP THAT'S GONNA RE RESULT IN HIGHER LEVELS OF RESERVES THAN SOME OF THESE OTHER MARKETS.
YES, I KNOW JEFF SAID COMPARE IT TO MISO, UH, BUT AGAIN, THEY HAVE LATENT RESERVES THAT WE DO NOT HAVE.
AND SO WHEN WE HAVE OUR RESERVES, THAT IS, THAT IS SOMETHING BAKED INTO THIS PROCESS THAT, THAT THESE OTHER REGIONS DON'T HAVE TO WORRY ABOUT.
SO I FIND THE SLIDE TO BE A BIT
[02:40:01]
MISLEADING AND I THINK THAT WE NEED TO REALLY CONSIDER WHAT THAT MEANS BECAUSE WHEN THE OTHER MARKETS TEND TO EXPERIENCE, UH, EXPERIENCE A SYSTEM TIGHTNESS, WHETHER IT'S PGMM OR SPP OR MISO, I THINK THE ONE THING YOU, YOU TEND TO SEE IS A ENORMOUS AMOUNT OF INTERTI INTERCHANGE OCCURRING DURING THOSE PERIODS THAT, UH, ARE, IT CAN BE BIGGER THAN SOME OF THESE RESERVE LEVELS THAT WE'RE SEEING HERE.SO, UH, I THINK IT'S, IT'S, IT'S MISLEADING TO SORT OF PAINT ERCOT AND A LIGHT OF, OF BEING NOW IT'S, IT'S DIFFERENT.
AND, AND SO I WANTED TO MAKE SURE THAT THAT THAT POINT WAS, WAS, WAS CLEAR.
SO THE FINAL POINT I WANTED TO MAKE, UH, HAS TO DO WITH SOME OF THE IM RECOMMENDATIONS.
AND SO WE WILL BE, UH, POSTING OUR, OUR RECOMMENDATIONS, OUR OUR RESPONSE TO THE IMM RECOMMENDATIONS, UH, AS PART OF THE SEPTEMBER BOARD PACKET.
UH, BUT JUST TO GIVE YOU, YOU, YOU FOLKS A, A PREVIEW OF SOME OF THIS CONVERSATION.
UH, SO, UH, THERE ARE SOME RECOMMENDATIONS THAT, UH, WE FEEL ARE MORE IN THE AREA OF THE PUC, OBVIOUSLY THE RECOMMENDATION ON, UH, THE FIRM FUEL SERVICE, THAT WAS THE NEW ONE FOR THIS YEAR.
WE SEE THAT AS, AS NOT SOMETHING THAT THAT'S REALLY AN ERCOT ITEM.
WE, WE WERE WORKING TO IMPLEMENT THE CHANGES TO FIRM FUEL THAT, UH, PROCEEDED THROUGH THE, THE PPUC PROCESSES, UH, FOUR CP, ANOTHER ONE, UH, WITH, WITH REGARDS TO THAT.
NOW THERE ARE A, A FEW RECOMMENDATIONS THAT WE DO ALIGN UP PRETTY WELL WITH THE IMM, FOR INSTANCE, THE UNCERTAINTY PRODUCT.
WE SEE THAT AS DRRS, THE 1309, WHICH, WHICH PASSED EARLIER THIS YEAR.
WE DO SEE, UH, THE RECOMMENDATION ON IMPLEMENTING A POINT-TO-POINT BID OBLIGATION FEE, UH, THAT IS NPR 1343 AND THAT IS IN THE, THE PROCESS RIGHT NOW.
AND THEN OBVIOUSLY THERE'S THE, THE DISCUSSION THAT WE'VE HEARD ABOUT THE MULTI INTERVAL REALTIME MARKET.
I THINK THIS IS SOMETHING THAT, UH, IS, THERE'S INTERESTING IN CONCEPT, UH, I'VE HEARD AND, AND TALKED TO SOME OF THE OTHER MARKETS AND REGIONS.
I KNOW I NEW ENGLAND'S GIVING IT SOME THOUGHT.
UH, CALIFORNIA HAS BEEN GIVING THIS SOME THOUGHT FOR SOME TIME.
SO WE'RE NOT, WE'RE NOT OPPOSED TO THINKING ABOUT THAT.
I'M JUST NOT SURE HOW RIPE THAT IS IN TERMS OF CONVERSATION.
THIS, THIS MAY END UP BEING SOMETHING MORE ALONG THE LINES OF OUR, UH, OUR, OUR GRIT PROCESS.
OUR GRIT INNOVATIONS TEAM POTENTIALLY MAY, MAY LOOK INTO THAT.
UH, BUT I WILL NOTE THAT STATE OF CHARGE IS SOMETHING THAT, THAT WE SEE AS, AS A CHALLENGE.
UH, WE'VE BEEN THINKING ABOUT, UH, SIZE BEEN BEEN WORKING ON THIS, UH, OVER THE PAST, UH, PAST PERIOD HERE.
SO, UH, WE'RE THINKING ABOUT STATE OF CHARGE, BUT I THINK WHEN WE THINK OF IMPLEMENTING A MULTI INTERVAL MARKET AND YOU THINK ABOUT, HEY, DO WE, CAN WE WAIT THAT LONG? UH, I I I THINK IF, IF WE WANNA WAIT POTENTIALLY SIX YEARS FOR A SOLUTION, THEN YEAH, A MULTI INTERVAL MARKET MAY BE A WAY TO GO.
BUT I THINK OUR CONCERNS ARE A LITTLE MORE REAL, UH, GIVEN THE FACT THAT, UH, THERE ARE OTHER MARKETS, UH, THAT, YOU KNOW, ARE HOPING TO GET STORAGE, BUT THE LEVELS ARE, ARE NOTHING, NOTHING NEAR THE LEVEL THAT, THAT WE'RE EXPERIENCING.
AND, AND WHEN YOU LOOK AT THE CALIFORNIA MODEL AND HOW THEY MANAGE STATE OF CHARGE, WE WANNA AVOID THE, THE PITFALLS AND CHALLENGES THAT THEY DEAL WITH IT.
I KNOW SETH WAS MENTIONING UPLIFT PAYMENTS AND AND THAT'S SOMETHING THAT IS, IS TRUE AND IS A, IS A MAJOR CONCERN FOR, FOR, FOR THEM AND, AND IT WOULD BE FOR US IF WE HAD TO GO DOWN THAT ROUTE.
SO WE'D LIKE TO AVOID SOMETHING LIKE THAT AS WELL.
UH, BUT IT IS DEFINITELY SOMETHING WORTH, WORTH THINKING ABOUT AND, AND IS SOMETHING THAT WE, WE, WE SEE HAS SOME POTENTIAL BENEFIT BUT, BUT WE NEED TO EVALUATE THAT AND STUDY IT.
SO ANYWAY, SO THOSE ARE SOME OF OUR COMMENTS UH, THAT WE'LL MAKE AT THE BOARD WITH REGARDS TO THE RECOMMENDATIONS AND I'LL PAUSE THERE AND SEE IF THERE ARE ANY FINAL QUESTIONS FOR ME.
[4. Next Steps/Assignments]
OKAY, UM, I THINK I SAID WE MIGHT MAKE SOME ASSIGNMENTS TODAY, BUT I THINK WE HAVE A LOT OF THINGS IN PROGRESS.LET ME SPEND SOME TIME MAYBE CATCH UP WITH KEITH AND JEFF OFFLINE.
UM, BUT THERE'S BEEN SOME GOOD REQUESTS, UH, KATE, KATIE MADE SOME OR WIG AND UM, AND I THINK JEFF'S GONNA FOLLOW UP WITH SOME PEOPLE OFFLINE.
SO I THINK WE SHOULD FOCUS ON AN ANCILLARY SERVICES THAT WE NEED TO GET COMMENTS ON THIS YEAR, UM, AND THEN GO FORWARD FROM THERE.
SO AS WE SAID, THE LINK FROM IKA, THERE'S A PC DOCKET FOR THE
[02:45:01]
GOOD CAUSE EXEMPTION FOR THE VARIANCE AND PROCUREMENT FOR 2026.AND THEN FOR 2027, UM, WE WILL NEED TO TAKE A VOTE ON THE 2027 METHODOLOGY AT HACK IN ABOUT TWO WEEKS.
SO IT'D BE GOOD TO HAVE THOSE COMMENTS NEXT WEEK.
YOU CAN SEND THEM TO REVISION REQUEST AND WE WILL POST THEM TO THE HACK PAGE.
ANYTHING ELSE? I DO THINK THIS WENT WELL.
AGAIN, I APPRECIATE THE 10 WORDS, UM, IKA AND YOU KNOW, WOULD HOPE, LOVE TO DO IT AGAIN NEXT YEAR.
THIS IS REALLY SUPER USEFUL AND MAYBE NEXT YEAR WE HAVE MORE TIME AND MAYBE DO IT IN PERSON.
THIS IS READY FOR, HELPFUL FOR US TO HAVE IMM WORKOUT AND ALL THE BRILLIANT MARKET STAKEHOLDERS, UH, IN THE SAME ROOM TO REALLY UNDERSTAND, UH, HOW WE CAN IMPROVE OUR MARKET.
THE ONE THING I WAS GONNA SAY IS, UH, STAFF IS ALSO WORKING ON THE, OUR RESPONSE TO STATE OF THE MARKET REPORT AND COMMISSION WILL TAKE IT UP HOPEFULLY NEXT AUGUST 20 OPEN MEETING.
UH, I WAS WAITING FOR THIS MEETING TO FINALIZE OUR, UH, PERSPECTIVES IN THAT.
AND ALSO, UH, WE ARE ALSO WORKING ON SOME QUESTION FOR PROJECT 5 9 5 5 0.
THAT'S THE FIVE YEAR, EVERY FIVE YEAR WE HAVE TO REVIEW THE OFFER CAPS AND THE EMERGENCY PRICING PROGRAM AND SCARCITY PRICING.
I REALLY THINK THIS DISCUSSION IS ALSO VERY HELPFUL AND CAN CONTINUE IN THAT.
SO WE WILL ASK SOME QUESTIONS AND WE WILL GET FEEDBACK FROM YOU, UH, HOW REALLY WE CAN IMPROVE, ESPECIALLY WITH THE EXPERIENCE WE HAVE WITH THE RTC, UH, HOW WE CAN IMPROVE THIS ENERGY ONLY MARKET.
SO, UH, THAT'S ALL I HAVE AND REALLY THANK YOU VERY MUCH TO EVERYONE.
THOSE ARE TWO GOOD FLAGS AND I AGREE, I THINK WE SHOULD DO IN PERSON NEXT YEAR.
WE'LL HAVE TO, I THINK IT WORKS WELL AS A STANDALONE MEETING AND NOT AS PART OF A REGULAR TRACK MEETING, BUT I THINK WE'LL TRY TO DO IT IN PERSON.
UM, AND, AND SO WE'LL WATCH FOR THE FILING.
YOU SAID AUGUST 20TH, OPEN MEETING, MEETING ON THE STATE OF THE MARKET AND THEN IN THAT DOCKET ON THE REVIEW OF THE OFFER CAPS, WE'LL, WE'LL HAVE SOME RELATED QUESTION.
AND THEN KEITH WILL DO, I THINK I'M, I'M GUESSING A LITTLE BIT SIMILAR TO TODAY, BUT PERHAPS MORE FORMAL AT THE, UH, SEPTEMBER BOARD.
UM, YOU KNOW, THE, THIS IS A LOT FOR, FOR YOU TO DO FOR THE ONE MAN SHOW AND, AND I THOUGHT THE DIALOGUE WAS REALLY GOOD AND YOU KNOW, I I JUST APPRECIATE THE TIME AND I, I THINK STAKEHOLDERS DO TOO 'CAUSE IT SEEMS LIKE YOU HAD A LOT OF GOOD BACK AND FORTH AND, AND HAVE A LOT OF FOLLOW UP TO DO.
AND SO HOPEFULLY THAT'S A GOOD THING FOR EVERYONE.
UH, APPRECIATE THE TIME AND I REALLY, UH, VALUE THE BACK AND FORTH RATHER THAN ME JUST ROLLING THROUGH SLIDES.
SO THANK YOU TO EVERYONE, UM, WHO ASKED QUESTIONS OR, OR HAD DISCUSSION WITH ME ON THAT.
YEAH, I THOUGHT IT WAS REALLY GOOD.
SO WE'LL DO IT IN PERSON NEXT YEAR, UH, AND WE CAN HAVE A, YOU KNOW, ANNUAL JEFF DAY, SO
IF THERE'S NOTHING ELSE, I THINK WE CAN, UH, ADJOURN THE WORKSHOP AND WE WILL SEE EVERYBODY AT THE REGULAR TECH MEETING IN ABOUT TWO WEEKS.
AND, YOU KNOW, THIS IS A GOOD LEAD UP TO IT BECAUSE THE SORT OF MAIN EVENT, I THINK ON THAT AGENDA IS THE ANSWER SERVICE METHODOLOGY FOR 2027.