WEBVTT

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(silence)

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(item:0.1:Chairwoman Jackson calls meeting to order) Good morning. This meeting of the Public Utility Commission

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of Texas will come to order. To consider matters that

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have been duly posted with the Secretary of State for

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November 2, 2023. For the record, my name is Kathleen

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Jackson. I'm joined by Will McAdams, Lori Cobos and

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Jimmy Glotfelty. (item:0.1:Chairwoman Jackson recognizes Commissioner Cobos, Werner Roth, Commission Staff) I'd like to congratulate and recognize

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the PUC's very own Werner Roth for receiving the David

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Carr Award for Outstanding Staff Contributions. As a result

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of his work in MISO, Chairing multiple stakeholder committees.

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Werner is the first recipient, recipient of the inaugural

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annual award. And it's no surprise to those of us who've

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worked closely with Werner to see him recognized by

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others for his astounding, his outstanding hard work.

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Additionally, Commissioner Cobos was elected as an

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At-Large Board Member for the organization of MISO

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States at their 2023 annual meeting. As a result, she

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will continue to serve on the Advisory Committee to

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the MISO Board of Directors and serve as the Lead on

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the transmission issues for the OMS Board. So congratulations

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to Lori and congratulations to um to Werner.

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(item:0.1:Chairwoman Jackson lays out agenda planning purpose) For planning purpose, we will take up Section 2 first,

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and then go into Closed Session as close to 11:30 as

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possible. If we've not finished the Agenda by then

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we will recess around 11:30 come back after Closed Session

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to finish the remainder of the Agenda. There was

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an issue with the numbering on the agenda. So um for

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clarification, there are no items, 18 or 19. Public

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Comment for General Matters, Item 16 will be taken

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up first. (item:0.1:Chairwoman Jackson lays out instructions for Public Comment) Public comments related to a specific Agenda

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item will be heard when that item is taken up. Speakers

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will be limited to 3 minutes each. And commenters

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should not approach the table unless oral argument has

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been granted or they have been invited by a Commissioner.

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Shelah, will you please walk us through the Consent

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items on today's Agenda? (item:0.2:Shelah Cisneros with Commission Counsel lays out Consent Agenda) Yes, ma'am. Good morning Commissioners.

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By individual ballot, the following items were placed

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on your Consent Agenda: Items 5-15. (item:0.2:Chairwoman Jackson asks for motion to approve items on Consent Agenda) I will entertain

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a motion to approve the items just described by Shelah.

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So moved. Second. I have a motion and a second. All in favor, say

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aye. Aye. Motion passes. (item:16:Chairwoman Jackson lays out instructions for Public Comment) Let's begin with Item No. 16.

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General Comments for Topics not Specifically Posted

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on this Agenda. Speakers will be limited to 3 minutes

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each. Shelah, do we have anyone from the public signed

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up to speak? (item:16:Shelah Cisneros with Commission Counsel confirms there are no Public Comments) Chairman, it's my understanding that no

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one has signed up to speak. And if I'm incorrect, Mike

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Hoke will correct me. 

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Ok, very good. This completes Item No. 16. I

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don't have anything on Item 17. There's nothing for

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18 or 19. I don't have anything on Item No. 20.

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(item:21:Chairwoman Jackson lays out Project No. 38533) Next up is Item No. 21, Project No. 38533. This

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is the Commission's Review of ERCOT's Budget. Shelah,

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do we have anyone from the public signed up to speak

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on Item No. 21? No, ma'am. No one signed to speak

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on this item. (item:21:Chairwoman Jackson lays out process of approving ERCOT's budget) And once the Commission approves ERCOT's

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Budget under 25.363 of our rules. The Commission

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must authorize ERCOT to charge a reasonable and competitively

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neutral administration fee to fund that budget. Because

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any change to the fee approved by the Commission must

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be noticed through standard market processes at

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least 45 days before implementation. We need to make

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a decision today for the budget to take effect January

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the 1st. We have Kasey Feldman with PUC Staff and Pablo

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Vegas, President and CEO of ERCOT here. Commissioner

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Cobos filed a memo. Let's hear from Kasey first and

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Pablo. And then Commissioner Cobos, you can lay out

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your memo. Kasey, do you want to come on up and provide

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a brief overview of your memo? Ok, very good. Please

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state your name for the record. (item:21:Kasey Feldman lays out Commission Staff's memo) Good morning, Kasey

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Feldman for Commission Staff. Commission Staff proposes

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an order in Project 38533 that would approve a two

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year budget for ERCOT effective January 1, 2024 and

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a 69 cent per Megawatt hour system administration fee

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consistent with ERCOT supplemental budget filing.

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It also includes uh directions regarding reporting

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on performance measures and includes instructions for

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ERCOT submission of its proposed 2026 to 2027 budget

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consistent with the process used in previous years.

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Ok, very good. Our next up is Pablo. Will you come

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on up and provide an overview if you will of ERCOT's

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budget and recent filings?

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Good morning Commissioners. I'm joined by Sean Taylor,

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our Chief Financial Officer in case there's any questions

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with regard to our budget today. I just want to

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affirm what Kasey pointed out that, you know, following

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the workshop. We had the opportunity. Can you state your name? Oh

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(item:21:Pablo Vegas, ERCOT President & CEO gives brief overview of ERCOT's proposed budget) my name is Pablo Vegas. I'm the President and CEO of ERCOT.

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Following the workshop that we hosted a couple that

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we had a couple of weeks ago here. We were able to

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make some adjustments to the proposed budget based

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on more current information on interest rates that

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reduced the system of administration fee asked from

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71 cents, which was originally what had been filed

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and approved by the ERCOT Board uh down to 69 cents.

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As uh as noted by Kasey, we over the last couple of

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weeks, we have responded to many inquiries um including

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inquiries from Senator Menendez and, and Senator Zaffirini,

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about uh aspects and components of that budget. 

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We've been trying to be helpful with all of the details

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around what are the drivers for the revenue side of

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the budget as well as what are the drivers for the

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expense side of the budget? And we are here and

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available to answer any questions based on what has

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been recommended and proposed by Staff.

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Ok.

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Do you have any questions now or would you like to

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hear from Commissioner Cobos? (item:21:Commissioner Cobos asks to reserve laying out her memo) Chairman Jackson, I would

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want to reserve laying out my memo until we have a

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deliberation on the actual budget and the numbers involved.

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Okay, open for a discussion. I, I think just to frame

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it up, it's my custom, I guess. (item:21:Commissioner McAdams on ERCOT's increased budget) Is the magnitude

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of the increase has been the topic of controversy

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and from, from my point of view, Sean uh or Pablo,

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um, the magnitude of the increase is somewhat driven

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by it. Well, it certainly driven by operational needs

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and capabilities of the organization, but it also,

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um it also reflects a very specific understanding of

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how revenues coming into ERCOT will be accounted for

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If you could. Gentlemen, please walk through the accounting

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of interest revenues of any type to the organization

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and how they are accounted for in the budget.

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Absolutely. (item:21:Sean Taylor, ERCOT CFO on auctions and treasury backed securities) Sean Taylor ERCOT, Chief Financial Officer

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So ERCOT has access to conjecture revenue rights auction

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receipts that we hold when market participants enter

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into those auctions, those auctions are then the funds

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from those auctions are then paid out in future dates

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up to 2 to 3 years in the future. During that time

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ERCOT invest those money in treasury or treasury backed

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securities. The interest that is earned on those treasuries

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and treasury back securities associated with those

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conjecture revenue rights auction receipts that we

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are holding is used to offset the system administration

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fee revenue requirements. That is our source of the

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funds that we are investing that come back to ERCOT

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against the system administration fee revenue requirements.

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(item:21:Sean Taylor, ERCOT CFO on investment buckets) We invest those in two large buckets. The first bucket

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are money market mutual funds that have the immediate

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liquidity requirements because we do bring in money

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in and out of every day. And so we're investing that

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money daily. The other which we enhanced this year

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and we included in one of the filings after one of

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the responses after it was presented at the October

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Finance and Audit Committee meeting. Shows a bond portfolio

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a ladder that we've established to help lock in the

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high interest rates that we're seeing right now. The

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way that ERCOT manages that process is we take those

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congestion revenue rights auction receipts to be paid

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out in the future and invest those in treasuries that

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mature three months prior to us having to pay those

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out at which time we'll roll those into money market

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mutual funds. This has allowed us to secure rates into

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24 and limited amount into 25 that help guarantee we

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have that rate of return coming in to offset that system

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and the revenue requirement. Thus lowering the impact

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to the Texas consumers of ERCOT's fees. So that money

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for 2024 is accounted for in the budget request. Correct.

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The

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that money. I'm sorry, the last bucket of revenues

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that you described which is the treasury, treasury

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bill related. Yes, the assumption on the revenues

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from the, from that ladder, from that bond ladder. Is

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a part of the assumed revenues coming in before the

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budget. Okay. Sean, can you walk us through? Um how you

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came up with the 2.5 and 2% interest rates that um

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you are using for years '24 and '25? Yes, absolutely.

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(item:21:ERCOT's Sean Taylor in response to Commissioner Cobos' question on interest rates) We started and if you want to refer to some of the

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documents. And within the documents, within ERCOT's

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original budget filing. We included the fed fund forward

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curve that includes a mean line and it also includes

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the projected ranges. At that time what we did was

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we took the main line and reduce that by 100 basis

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points or 1% approximately. That was our general strategy

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going into the budget request that was approved by

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the Board in June and submitted to the Commission in

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August. (item:21:ERCOT's Sean Taylor on the risk with interest rates) There is risk obviously associated with these

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interest rates. What we want to make sure that we're

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avoiding is from ERCOT's perspective is placing any

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solvency or liquidity risk on ERCOT that exceeds our

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ability to backstop it. Interest rates are quite variable.

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we've seen in the past where ERCOT has budgeted or

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using those forward curves that existed at the time.

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And the interest we've overcovered going back to the

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past few budget cycles, we've over recovered and then

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we've also under recovered. As we saw the rates drop back

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down to zero. So we know that there's variability in

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those numbers. So it's a balancing act. Of taking into

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consideration what the risk of under recovering on

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those interest income amounts are. And causing financial

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hardship on ERCOT liquidity concerns. That we do

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not have the ability to cover in another means. When

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I refer to covering in other means. (item:21:ERCOT's Sean Taylor on covering in other means) ERCOT has access

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to $100 million revolving line of credit. We use that

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if we need to. Our first step is to use congestion

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revenue rights auction receipts, if we up to that amount.

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The Board has authorized us to use those 2 fund operations

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in lieu of using that line of credit. Because it is

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a less costly option for ERCOT to use that for those funds.

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But we are limited to policies to only use the amount

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up to what we have available in that revolving line

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of credit. So that is what we are balancing to make

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sure that in the future if something happens, that

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we do not have access to those funds. (item:21:ERCOT's Sean Taylor on liquidity calculations) ERCOT can still fund

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operations. ERCOT has a couple of demands for that. One is

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our seasonality. Because most of our revenues come from

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our system administration fee revenues. In the early

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months of the year, we will undercover, we'll over

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recover in the middle months of the year and then we'll

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undercover in the latter months of the year. Just following

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the load demand. It that seasonality ERCOT's costs are

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primarily fixed across the year. Labor, hardware, software

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those things are generally fixed cost. So we take that

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into consideration. We also take into consideration

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just business liquidity requirements. So within any

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given month, if we have large bills due. We have to

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have cash to pay those until we recover those funds.

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So we consider that all in our liquidity calculations

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to determine how much risk we can put in place. So

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we balance those things out and determined that using

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those assumptions of the 2.5 and 2% that you referenced.

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We would still be able to cover a shortfall with that

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liquidity backstop. So balancing those two items made

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sense to us. What is the mean average you referenced

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to at the beginning? What's that mean average interest

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rate?

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What, what is it shown in the chart that we referenced? Yes sir.

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(item:21:Sean Taylor's response to Commissioner Cobos' question on mean average interest rate) So in ERCOT's budget request. The original amount which

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is then also referenced in the TIEC's comments about

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the ERCOT budget.

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On page 4 of TIEC's comments, you see the chart.

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That blue line and this is a reproduction of

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the chart from ERCOT's presentation. The blue line

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shows the mean and then the gray area shows the range

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of predictions. And so it varies across time and it

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varies by day. In ERCOT's response to TIEC's comments,

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we've included the chart that shows as of two separate

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days where though that mean actually varied by 25 basis

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points across four days from a Thursday to a Monday.

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And that is in ERCOT response to TIEC

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and it is on page

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3 of that response. That shows the current amount

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the one I was just referencing in TIEC shows what it

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looked like back in May. When we were taking the budget

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to the Board in June. And the one that is shown on

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page 3 of our response to TIEC is as of October

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23rd.

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(item:21:Commissioner Cobos' dialogue with Sean Taylor on interest rates) Okay. So the, the chart from May 2023 has a 3.5 and

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3% and then ERCOT reduced it by 100 basis points.

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That's how you got to 2.5 and 2. And then if you

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look in October 2023, I guess the means are what 4

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and 4.5. Is that correct or? Depending on the specific

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dates being chosen, yes. So the range goes anywhere

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from the beginning for as of December of the 550. Down

00:15:01.759 --> 00:15:05.859
to about a little bit over 400. We're looking out at

00:15:05.869 --> 00:15:12.070
the end of 25. Actually, the mid 25 through 26. So

00:15:12.080 --> 00:15:16.080
is that 5.5 and like a little bit over 4? Correct.

00:15:16.340 --> 00:15:20.279
Okay. Do we know what they are like today? I know they

00:15:20.288 --> 00:15:23.320
flat fluctuate on a daily basis? I did not look today.

00:15:23.330 --> 00:15:25.469
I would have been able to see what yesterday was yesterday

00:15:25.479 --> 00:15:27.200
It was fairly consistent with what we're looking at

00:15:27.210 --> 00:15:31.330
on this page. Okay. And then the fed did not announce

00:15:31.340 --> 00:15:33.418
an increase on Wednesday when they made their announcement.

00:15:34.399 --> 00:15:37.769
Okay. So Sean just to allow everybody to collect their

00:15:37.779 --> 00:15:41.369
thoughts. Talk to us about. All right, we're, you're

00:15:41.379 --> 00:15:43.178
applying for a two year. Well, actually, it's a

00:15:43.190 --> 00:15:47.538
four year budget window. Correct? With a two year approved

00:15:47.548 --> 00:15:49.840
budget. Describe the distinction between what we're

00:15:49.849 --> 00:15:54.369
looking at as we. (item:21:Sean Taylor's response to Commissioner McAdams on two year budget distinction) So we file a two year budget and

00:15:54.379 --> 00:15:57.058
that is what you are approving. You approve a couple

00:15:57.070 --> 00:15:59.308
of pieces of that. You approve the system administration

00:15:59.320 --> 00:16:02.298
fee rate as was mentioned earlier and you approve a

00:16:02.548 --> 00:16:06.129
total authorized expenditures. We are not allowed to

00:16:06.139 --> 00:16:09.548
spend more money than you tell us we can spend in a

00:16:09.558 --> 00:16:12.090
year without getting approval, additional approval

00:16:12.099 --> 00:16:14.599
to do so. I want to draw a distinction between the

00:16:14.609 --> 00:16:16.808
revenue and the expenditure side for that specific

00:16:16.820 --> 00:16:20.519
point. Even if we over recover as we are this year

00:16:20.529 --> 00:16:24.928
in 2023. Because when we did the 23 budget in 2021

00:16:24.940 --> 00:16:28.460
the ERCOT rate of interest that we were receiving at

00:16:28.469 --> 00:16:33.168
that time was one basis point. Which on $2 billion is

00:16:33.178 --> 00:16:36.690
$200,000. So the interest rates have a huge impact

00:16:36.700 --> 00:16:41.440
and they vary quite drastically. (item:21:ERCOT's Sean Taylor on spending approvals) That is why it's very

00:16:41.450 --> 00:16:45.229
important to remember and critical for the proper oversight

00:16:45.239 --> 00:16:48.149
of ERCOT. We do not have the ability to just take that

00:16:48.158 --> 00:16:51.729
money and spend that on anything until we get approval.

00:16:51.739 --> 00:16:54.080
Because the expenditures are completely separate from

00:16:54.090 --> 00:16:56.158
that perspective than the revenues and the interest

00:16:56.168 --> 00:16:59.090
income is considered a revenue, not an offset against

00:16:59.099 --> 00:17:01.798
expenditures. Thus reducing expenditure allow us to

00:17:01.808 --> 00:17:05.868
spend that money on other things. (item:21:Sean Taylor on 2 to 4 year budget cycle) So when we look at

00:17:05.878 --> 00:17:09.438
the 2 to 4 year budget cycle. What we do is we

00:17:09.448 --> 00:17:12.057
get the authorization from you for the two years similar

00:17:12.067 --> 00:17:16.519
to what the state process is. What ERCOT does is we

00:17:16.528 --> 00:17:18.538
look at a couple of different aspects that have been

00:17:18.548 --> 00:17:22.327
requested of it. In the past one is advance warning

00:17:22.337 --> 00:17:24.938
of fee increases when we did our last fee increase

00:17:24.948 --> 00:17:28.538
which was eight years ago. We were asked by market

00:17:28.548 --> 00:17:31.519
participants to give us more, give them more advanced

00:17:31.528 --> 00:17:35.118
notice of fee increases. They include ERCOT's fee in the

00:17:35.128 --> 00:17:36.989
rates that they're calculating that they then pass

00:17:36.999 --> 00:17:40.138
on to the actual consumers. It's also important to

00:17:40.148 --> 00:17:42.807
remember that ERCOT doesn't directly charge and use

00:17:42.817 --> 00:17:45.999
customers for our rate. Our rate flows through the

00:17:46.009 --> 00:17:48.347
load serving entities that are then passing that rate

00:17:48.358 --> 00:17:53.259
on. (item:21:Sean Taylor on fee increases and changes) So they need, they prefer to have more advanced

00:17:53.269 --> 00:17:55.779
notice of the fee increases and fee changes so that

00:17:55.789 --> 00:17:57.729
they can incorporate them into all their contracts

00:17:57.739 --> 00:18:00.519
and all of the pricing mechanisms that they are using

00:18:00.529 --> 00:18:03.318
in the calculations that they're creating to make sure

00:18:03.328 --> 00:18:04.789
that they are competing properly.

00:18:06.660 --> 00:18:10.368
That is one aspect of it. So we try to keep, keep

00:18:10.380 --> 00:18:13.289
the fee stable as long as possible. Said the last fee

00:18:13.299 --> 00:18:15.890
increase was 8 years ago. So we're able to manage

00:18:15.900 --> 00:18:19.670
that fee increase to be stable for 8 years. (item:21:Sean Taylor on the 4 year budget look) In

00:18:20.118 --> 00:18:24.098
this case of the 4 year, look that we take. The

00:18:24.108 --> 00:18:27.838
other thing that ERCOT does is budgets for our operating

00:18:27.848 --> 00:18:32.358
expenses. So that is labor, all of those types of items

00:18:32.368 --> 00:18:36.078
And also our capital expenditures are large outflows

00:18:36.088 --> 00:18:39.160
That's why you see spikes when you look at our budget

00:18:39.170 --> 00:18:41.699
request and our sources and uses and we look at the

00:18:41.709 --> 00:18:43.578
source and uses page. You'll see that in some years

00:18:43.588 --> 00:18:45.670
expenditures are higher for projects and some years

00:18:45.680 --> 00:18:48.118
are lower. One of the items that comes up this year

00:18:48.130 --> 00:18:52.108
in 2024 is the funding for real time optimization and

00:18:52.118 --> 00:18:54.568
other market design efforts. And so that causes a spike

00:18:54.578 --> 00:18:57.519
we also have spikes when we do our data center refreshes

00:18:59.189 --> 00:19:02.309
does not recover depreciation through its fee request.

00:19:02.318 --> 00:19:05.309
It's not part of our calculation. What we do is we

00:19:05.318 --> 00:19:09.009
recover the capital costs associated, which others

00:19:09.019 --> 00:19:12.449
would turn into depreciation by normalizing it across

00:19:12.459 --> 00:19:15.519
that four year period. Almost all of ERCOT assets that

00:19:15.529 --> 00:19:17.920
we purchase are hardware and software assets which

00:19:17.930 --> 00:19:21.469
have 3 to 5 year depreciable lives. So in lieu of issuing

00:19:21.479 --> 00:19:24.279
debt, which would be more costly to fund those as people

00:19:24.289 --> 00:19:26.959
with longer term assets are we've taken and incorporated

00:19:26.969 --> 00:19:30.309
those 3 to 5 year assets into our system. Administration

00:19:30.318 --> 00:19:33.420
fee rate from a revenue funding perspective. So to

00:19:33.430 --> 00:19:37.529
speak, to make that fair to the ratepayers and equitable

00:19:37.539 --> 00:19:41.578
across the generations. We then take that amount and

00:19:41.588 --> 00:19:44.900
determine what that fee should be across those four

00:19:44.910 --> 00:19:48.170
years to cover those expenditures. (item:21:Sean Taylor on interest income) We view interest

00:19:48.180 --> 00:19:50.979
income similarly and that interest income can spike

00:19:50.989 --> 00:19:53.140
in different years just like those capital expenditures

00:19:53.150 --> 00:19:56.009
can. So we feel that normalizing that interest income

00:19:56.019 --> 00:19:59.098
impact against this as an administration fee rate across

00:19:59.108 --> 00:20:02.098
at least a four year period is the appropriate thing

00:20:02.108 --> 00:20:05.229
to do. The other thing that I'll say about the four

00:20:05.239 --> 00:20:08.568
year fee or four year budget view, which results in

00:20:08.578 --> 00:20:13.039
a four year fee. (item:21:ERCOT's Sean Taylor on cash balance) Is that our goal and our objective

00:20:13.318 --> 00:20:15.699
is to have a cash balance and this is detailed in these

00:20:15.709 --> 00:20:19.019
materials as well at the end of the four years. That

00:20:19.029 --> 00:20:21.598
is positive but near zero to make sure that ERCOT is

00:20:21.608 --> 00:20:25.160
not overspending over recovering monies. So in the

00:20:25.170 --> 00:20:28.680
case of what we have showing with the, the 69 cent

00:20:28.689 --> 00:20:34.045
fee. That results in ERCOT having a $17 million cash balance at the

00:20:34.055 --> 00:20:37.265
end of 2027 the four years of which that fee would

00:20:37.275 --> 00:20:40.634
apply. When I say cash balance, I'm referring to ERCOT

00:20:40.644 --> 00:20:44.114
operating cash. So we're not having to use debt to

00:20:44.125 --> 00:20:46.884
fund at that point. Although ERCOT does have notes payable

00:20:46.894 --> 00:20:49.594
outstanding, which we paid that service on. Which are

00:20:49.604 --> 00:20:51.875
associated with buildings and those longer term asset

00:20:51.924 --> 00:20:55.515
a small amount of money in the scheme of ERCOT's budget.

00:20:55.525 --> 00:20:59.255
It's $5 million over $5 million a year for principal

00:20:59.265 --> 00:21:02.809
and interest. But that is how we have come up with

00:21:02.818 --> 00:21:07.170
the calculations. (item:21:Sean Taylor on over recovering interest income) And if we over recover on interest

00:21:07.180 --> 00:21:11.269
income, like we have in 2023 versus what we budgeted

00:21:11.640 --> 00:21:14.400
then we roll that over recovery into that calculation

00:21:14.410 --> 00:21:16.670
of what that next fee increase would be required across

00:21:16.680 --> 00:21:19.719
that next four year period. Still targeting what ERCOT

00:21:19.729 --> 00:21:23.059
cash balance would be at the end of that fourth year.

00:21:23.068 --> 00:21:25.818
So it's a rolling mechanism. So any over or under recovery

00:21:25.828 --> 00:21:29.459
is considered in that next cycle of the increases.

00:21:30.848 --> 00:21:36.858
Great. So one question leading into that.

00:21:38.890 --> 00:21:41.618
In terms of your forecast for 2024 because for the

00:21:41.630 --> 00:21:44.838
Commission, as we kind of had alluded to. Both in Board

00:21:44.848 --> 00:21:48.420
Meetings and in prebriefs. It's very important to

00:21:48.430 --> 00:21:52.880
know what is certain and what is not. Is the 2024 outlook

00:21:52.949 --> 00:21:56.949
certain for ERCOT? In terms of revenues and a reasonable

00:21:56.959 --> 00:22:00.039
degree of expectation on interest income that could

00:22:00.049 --> 00:22:03.160
be experienced by the system versus 2025? Because I

00:22:03.170 --> 00:22:05.670
understand in those out years, it becomes much more

00:22:05.680 --> 00:22:10.088
variable. (item:21:Sean Taylor's response to Commissioner McAdams' question on certainty of 2024 outlook) The greatest uncertainty is the interest

00:22:10.098 --> 00:22:12.680
income. I won't say that any of it's absolutely certain

00:22:12.689 --> 00:22:15.108
there can be fluctuations in the load. Our load forecast

00:22:15.118 --> 00:22:17.608
is usually very accurate when it comes to the impact

00:22:17.680 --> 00:22:20.150
of the administration fee rate. So usually that's within

00:22:20.160 --> 00:22:23.650
a couple of percentages. So usually that's pretty solid.

00:22:23.660 --> 00:22:26.420
Our user fees do vary, but that's a small amount of

00:22:26.430 --> 00:22:29.838
ERCOT's total budget. The interest income is truly the

00:22:29.848 --> 00:22:33.380
big variable. Sean, let me just ask one question there

00:22:33.390 --> 00:22:37.108
because it's important. On the load forecast, what metric

00:22:37.118 --> 00:22:39.828
do you use in the load forecast? Because so we looked

00:22:39.838 --> 00:22:42.608
it up and it's a good data point for all of us

00:22:42.618 --> 00:22:46.979
to know since 2016. Last approval load had grown 20%

00:22:47.009 --> 00:22:51.670
on the system. So that's on terawatts used, which is

00:22:51.680 --> 00:22:55.068
the volumetric assumption that you would pay the system

00:22:55.078 --> 00:22:59.400
administration fee to. So what is the load metric that

00:22:59.410 --> 00:23:03.608
you plug in to, to measure against for your forecast? 

00:23:03.660 --> 00:23:06.689
(item:21:Sean Taylor' response to Commissioner McAdams' question on forecasted load metric) It's the same forecast that ERCOT uses for everything

00:23:07.009 --> 00:23:10.559
that is directly into our load forecast. So a gross

00:23:10.568 --> 00:23:14.759
load expectation. Yes, the load that is being charged

00:23:14.769 --> 00:23:17.299
out on a daily basis. So when ERCOT revenue is based

00:23:17.309 --> 00:23:22.568
off of the load flowing through ERCOT load. Okay. 

00:23:27.989 --> 00:23:31.539
I have more but I was going to share. (item:21:Commissioner Cobos' observations on ERCOT's budget) Well I, I

00:23:31.549 --> 00:23:36.509
guess just a, a few observations. I think, you know

00:23:36.519 --> 00:23:42.098
Sean you explained the basis for the four year uh budgetary

00:23:42.108 --> 00:23:45.618
outlook. And trying to provide stability to the LSCs

00:23:45.630 --> 00:23:47.989
as to what to expect with the system administration

00:23:48.000 --> 00:23:52.650
fee. On the flip side to that, you know. I'm, I'm

00:23:52.660 --> 00:23:55.489
wondering if, you know, looking out that far. I, I

00:23:55.500 --> 00:23:58.039
understand the need to create stability for the LSCs,

00:23:58.049 --> 00:24:00.868
right in and having a picture. But at the same time,

00:24:00.880 --> 00:24:04.979
as you look beyond two years. You know that the assumptions

00:24:04.989 --> 00:24:07.709
and everything become more uncertain. And even though

00:24:07.719 --> 00:24:10.809
you're asking for a two year budget approval. The four

00:24:10.818 --> 00:24:13.969
year budgetary outlook, um when you, when you go past

00:24:13.979 --> 00:24:17.180
the two years into 26 and 27. There's just more uncertainty

00:24:17.189 --> 00:24:19.568
involved. Because, you know we're, we're looking out

00:24:19.578 --> 00:24:25.180
further. So um the other piece to that is observation

00:24:25.189 --> 00:24:29.039
is that while you can come in for a rate increase or

00:24:29.049 --> 00:24:32.739
decrease rather if interest income evolves and you

00:24:32.750 --> 00:24:35.098
get more money and, you know, dynamics change in terms

00:24:35.108 --> 00:24:38.750
of your assumptions in the revenue, um you can't refund

00:24:38.759 --> 00:24:42.199
the money. So, so the the the ratepayers that are paid

00:24:42.209 --> 00:24:44.959
for that system administration fee for those two years

00:24:44.969 --> 00:24:49.739
24 and 25. Well, they all have paid, but in the next

00:24:49.750 --> 00:24:51.318
two years, they'll get a reduction, but they're not

00:24:51.328 --> 00:24:53.618
really necessarily getting their money back. I mean

00:24:53.630 --> 00:24:56.229
there's some intergenerational inequity going on there

00:24:56.239 --> 00:24:59.880
as well. So I'm just trying to sort of figure out

00:24:59.890 --> 00:25:03.400
what, what as the Commission looks at your budget,

00:25:03.939 --> 00:25:07.939
how can through what lens should we be looking at the

00:25:07.949 --> 00:25:10.868
budget from instead of a four year sort of budgetary

00:25:10.880 --> 00:25:14.640
outlook. Which I get, you're trying to provide stability

00:25:14.650 --> 00:25:16.430
to the LSCs. But at the same time, there's just so

00:25:16.439 --> 00:25:19.338
much volatility in the market, right? So we should

00:25:19.348 --> 00:25:22.150
we sort of pare down our lens and really focus on on

00:25:22.160 --> 00:25:26.949
a much smaller short term, you know, outlook the

00:25:26.959 --> 00:25:30.489
next year, the next two years? And one of the, one

00:25:30.500 --> 00:25:32.318
of the things to consider on that Commissioner is a

00:25:32.400 --> 00:25:35.809
question for you, Sean. CRR funds are based on overall

00:25:35.818 --> 00:25:39.229
congestion in the system, correct? But you've noted

00:25:39.578 --> 00:25:44.000
actual a downturn in the level of CRR funds that we

00:25:44.009 --> 00:25:47.229
are holding. Could you describe that? (item:21:Sean Taylor's in response to Commissioner McAdams' question on CRR funds) The amount that

00:25:47.239 --> 00:25:50.049
we are holding in and it was shown in one of our

00:25:50.059 --> 00:25:53.029
filings has flattened off. And it was the first time

00:25:53.039 --> 00:25:55.739
in a while that we've seen. And we've seen this year

00:25:55.750 --> 00:25:58.338
where the long term congestion revenue rights that

00:25:58.348 --> 00:26:01.479
we're holding. The ones that are greater than one year.

00:26:01.568 --> 00:26:03.769
Have actually the dollar amounts have actually decreased

00:26:03.779 --> 00:26:05.689
year over year. So that's the first time we've seen

00:26:05.699 --> 00:26:10.719
that happen. So we have seen that change. The question

00:26:10.729 --> 00:26:14.588
about, I believe it was a question. It was just a statement. Observation.

00:26:14.699 --> 00:26:18.789
Observation. (item:21:Sean Taylor's response to Commissioner Cobos on equity across years, over payment) As far as the equity across the years and

00:26:18.799 --> 00:26:20.848
whether somebody could be over paying. There's a couple

00:26:20.858 --> 00:26:23.969
of items I'd like to highlight on that for your consideration.

00:26:24.930 --> 00:26:31.838
The first is that the interest income is not considered

00:26:31.848 --> 00:26:35.650
generally to be a primary source of revenue for ERCOT.

00:26:36.049 --> 00:26:39.180
It is that way right now, but that decreases in the

00:26:39.189 --> 00:26:43.500
future. So that is actually serving to provide those

00:26:43.509 --> 00:26:46.519
current people that you're speaking of, of those that

00:26:46.529 --> 00:26:49.719
will be paying in 24 and 25 a much lower rate than

00:26:49.729 --> 00:26:51.729
if we didn't apply that at all. If we're doing something

00:26:51.739 --> 00:26:54.430
else with that money. So I think that that offsets

00:26:54.439 --> 00:26:57.509
part of that concern. The other is that the certainty

00:26:57.519 --> 00:27:01.338
is ERCOT works to establish a four year. We were mentioning

00:27:01.348 --> 00:27:03.680
the load serving entities as being the beneficiary

00:27:03.689 --> 00:27:07.848
of that. But I believe that if we think about what

00:27:07.858 --> 00:27:11.279
is the greatest concern of most people and most companies

00:27:11.289 --> 00:27:14.219
it's the unknown. And so the uncertainty of what's

00:27:14.229 --> 00:27:16.779
happening in the future causes people to mitigate that

00:27:16.789 --> 00:27:20.469
risk in some way. The way that most people would mitigate

00:27:20.479 --> 00:27:22.689
a risk of an uncertainty is to build in some sort of

00:27:22.699 --> 00:27:27.539
cushion for that. So I think knowing that ERCOT's fee

00:27:27.549 --> 00:27:31.910
will be where it is. Also serves to make sure that people

00:27:31.920 --> 00:27:34.449
can track that fee on to others without having to worry

00:27:34.459 --> 00:27:37.469
about that changing and having to build in that uncertainty

00:27:37.479 --> 00:27:39.559
into their calculations in the future if they already

00:27:39.729 --> 00:27:41.920
know it. So I think it benefits the end gives customers

00:27:41.930 --> 00:27:44.108
in that way as well. And so I may just add one

00:27:44.118 --> 00:27:47.078
thing to those comments. (item:21:ERCOT's Pablo Vegas' response to Commissioner Cobos on overpayment, equity) Is that I think that what you're

00:27:47.088 --> 00:27:50.199
what you're looking for is perhaps a balance between

00:27:50.209 --> 00:27:53.588
um trying to balance the uncertainty of the interest

00:27:53.598 --> 00:27:55.858
rate environment that we're facing right now, which

00:27:55.868 --> 00:28:00.640
is fairly unusual in recent years and the um and, and

00:28:00.650 --> 00:28:03.299
the fairness to consumers who are going to be paying

00:28:03.309 --> 00:28:06.880
a fee for a period of time, a set period of time

00:28:07.449 --> 00:28:09.799
And so I think that balance, I think if you look on

00:28:09.809 --> 00:28:12.930
the short end of that balance, a one year type of fee

00:28:12.939 --> 00:28:15.180
that could change annually, I think it is difficult

00:28:15.189 --> 00:28:18.088
for both consumers and retailers to manage that consistently

00:28:18.098 --> 00:28:20.689
changing and fluctuations that could happen as a result

00:28:20.699 --> 00:28:24.519
of uh of interest rate changes. But at the same time

00:28:24.529 --> 00:28:26.890
you know four years could, you know, could be too

00:28:26.900 --> 00:28:29.818
long given how much uncertainty is in the out years.

00:28:30.318 --> 00:28:33.769
(item:21:Pablo Vegas with ERCOT on reasonable expectations) And so I think what we're trying to do here is trying

00:28:33.779 --> 00:28:37.910
to find a place in the middle where we can say with

00:28:37.920 --> 00:28:40.650
a reasonable expectation, it would be great to be able

00:28:40.660 --> 00:28:43.088
to have a four year set budget because that would,

00:28:43.318 --> 00:28:45.729
that would lead to a close to zero balance at the end

00:28:45.739 --> 00:28:48.549
because that would be ideal. I think for all participants

00:28:48.559 --> 00:28:51.539
that we were able to do that. However, if those assumptions

00:28:51.549 --> 00:28:54.868
in the out years proved to be incorrect. There is a

00:28:54.880 --> 00:28:56.989
mechanism through the biennial budget to make those

00:28:57.000 --> 00:29:00.068
adjustments so that we don't hold those monies any

00:29:00.078 --> 00:29:02.420
longer than necessary and can lower the system and

00:29:02.430 --> 00:29:05.789
administration fee in the next biennial budget. (item:21:Pablo Vegas on potential uncertainty of incremental needs and uses for funds) And

00:29:05.799 --> 00:29:07.709
there's one other uncertainty that we haven't spoken

00:29:07.719 --> 00:29:10.789
to. And that is the potential uncertainty of incremental

00:29:10.799 --> 00:29:15.250
needs or uses for funds. But if, if there were needed

00:29:15.259 --> 00:29:18.420
investments or changes or capabilities in the market

00:29:18.539 --> 00:29:21.588
that either the Commission or the Legislature wanted

00:29:21.949 --> 00:29:25.259
ERCOT to affect. Those are also uncertainties that merge

00:29:25.269 --> 00:29:27.088
in the next couple of years. Which if it was an increase

00:29:27.098 --> 00:29:29.963
in expenditures, the Commission would need to approve. But

00:29:30.015 --> 00:29:32.674
if the budget was there to be able to accommodate it

00:29:32.693 --> 00:29:35.064
it wouldn't have to quickly transition into trying

00:29:35.074 --> 00:29:37.634
to prove an increased budget down the road if there

00:29:37.644 --> 00:29:40.344
was, if there were additional needs in the market. That

00:29:40.354 --> 00:29:43.384
had to be developed based on those kinds of uncertainties

00:29:43.394 --> 00:29:45.713
too. So there's uncertainties on both the operational

00:29:45.723 --> 00:29:47.795
side, potentially and certainly on the financial side

00:29:47.805 --> 00:29:49.243
as we've been primarily talking about.

00:29:52.088 --> 00:29:57.449
So Sean, you brought up. We had assumptions going into

00:29:57.459 --> 00:30:02.000
June um that helped shape the budget filing that the

00:30:02.009 --> 00:30:05.868
Board considered. The environment as we said, was changing

00:30:06.318 --> 00:30:08.989
as we spoke. And I'm trying to narrow down and, and

00:30:09.000 --> 00:30:12.140
just for discussion purposes. (item:21:Commissioner McAdams' question to ERCOT on the magnitude of the increases) We have to look at

00:30:12.150 --> 00:30:14.618
this in or in terms of an order of magnitude change.

00:30:14.630 --> 00:30:17.170
The Commission has to do that and we have to recognize

00:30:17.180 --> 00:30:22.779
it. It's gone from a 29% potential increase to the

00:30:22.789 --> 00:30:30.539
fee to a 25% potential increase to the fee. So it

00:30:30.549 --> 00:30:33.959
it, it is, it is significant. I've said that before.

00:30:35.269 --> 00:30:38.750
But we're dealing with a bit of a changing environment

00:30:38.759 --> 00:30:41.779
because federal interest rate policy is changing, revenues

00:30:41.789 --> 00:30:45.789
are changing on the part of the administrator and we've

00:30:45.799 --> 00:30:49.430
even recognized that in the supplemental filing. Um

00:30:49.630 --> 00:30:52.259
and there's been a over performance, a positive over

00:30:52.269 --> 00:30:55.519
performance for revenues that Sean you've recognized.

00:30:55.529 --> 00:30:59.009
And that allowed you to credit the system with over

00:30:59.019 --> 00:31:02.380
$30 million in unexpected unanticipated as of June

00:31:02.390 --> 00:31:05.400
interest income, $36 million, something like that Pablo,

00:31:05.809 --> 00:31:10.170
um for this cycle. Now, does that include the the final

00:31:10.180 --> 00:31:13.180
year end estimate that you believe you'll, you'll have

00:31:13.189 --> 00:31:16.449
because I know that that anticipated as of the Board

00:31:16.459 --> 00:31:21.390
meeting $72.9 million on interest related income. And

00:31:21.400 --> 00:31:24.019
but you anticipated that you'd have $107 million

00:31:24.029 --> 00:31:26.630
or $106 million by the end of the year potentially.

00:31:26.799 --> 00:31:33.000
It includes 107. So it includes 107. So walk me

00:31:33.009 --> 00:31:36.670
through how the assumptions may change and thus potential

00:31:36.680 --> 00:31:40.410
magnitude of the increase that we could consider? Because

00:31:40.420 --> 00:31:43.568
I just want the Commissioners to have the full menu

00:31:44.430 --> 00:31:47.328
and the reasoning for it. And how it could affect your

00:31:47.338 --> 00:31:51.469
ability to operationalize your plans? And what the consumers

00:31:51.479 --> 00:31:54.489
could experience over a two year period? What does

00:31:54.500 --> 00:32:00.900
that look like now? (item:21:ERCOT's Sean Taylor on increases) So if we look at ERCOT's filing that

00:32:00.910 --> 00:32:04.229
supplemental filing, that includes the 69 cent calculation.

00:32:07.500 --> 00:32:11.900
On the first uh horizontal sheet, which is page 4

00:32:11.910 --> 00:32:14.680
of that filing. We showed that what you just referenced.

00:32:14.689 --> 00:32:17.719
Which was on the top where we have a 28% increase and

00:32:17.729 --> 00:32:20.910
on the bottom, we have a 24% increase to get to that

00:32:20.920 --> 00:32:24.509
69 cents. I will also point out on this slide that

00:32:24.519 --> 00:32:27.289
that 24% increase is that increase across those 8

00:32:27.299 --> 00:32:31.670
years. So the annualized increase of that 24% is less

00:32:31.680 --> 00:32:34.588
than 3%. The annualized increase in the system administration

00:32:34.598 --> 00:32:38.059
fee rate since our last fee increase was only 2.8%

00:32:38.068 --> 00:32:43.459
at the 69 cent proposal. As we turn to the next slide

00:32:43.469 --> 00:32:48.088
which is titled the ERCOT proposed budget summary, revised

00:32:48.098 --> 00:32:50.809
to include updated 2023 favorable financial variants.

00:32:51.799 --> 00:32:54.368
If we were to make changes to this slide based on what

00:32:54.380 --> 00:32:56.699
you're talking about with the change in interest income

00:32:56.709 --> 00:32:58.910
percentage, the interest rate. Then we would look at

00:32:58.920 --> 00:33:02.140
changing line 11(a) on here. The assumptions on here

00:33:02.150 --> 00:33:04.779
are the 2.5 and 2% that Commissioner Cobos mentioned

00:33:04.789 --> 00:33:08.858
earlier. We're to increase those by the approximate

00:33:08.868 --> 00:33:12.699
1% that we're talking about the change on the new forward

00:33:12.709 --> 00:33:17.410
curve. Then that would increase each of these years

00:33:17.420 --> 00:33:21.858
of interest income by $20 million each year of that

00:33:21.868 --> 00:33:24.529
$20 million across those four years. Then adds up to

00:33:24.539 --> 00:33:29.130
$80 million. We were to take that $80 million and apply

00:33:29.140 --> 00:33:33.380
that to the energy consumption in row 2. Which is

00:33:33.390 --> 00:33:37.150
the load and back that out. The rate, the conversion

00:33:37.160 --> 00:33:40.489
rate on that is previously filed is 1% change equals

00:33:40.559 --> 00:33:43.029
approximately four cents on the fee across those four

00:33:43.039 --> 00:33:47.479
years. Which would lower that 69 cents to 65 cents.

00:33:48.000 --> 00:33:50.709
What I would also like to highlight on that this page

00:33:50.719 --> 00:33:55.959
is row 17. Row 17 is that cash balance. Now assuming

00:33:55.969 --> 00:34:01.630
the $170 million that is currently in the budget for

00:34:01.640 --> 00:34:05.858
interest income from 24 to 27. ERCOT's cash balance

00:34:05.868 --> 00:34:09.478
at the end of 2027 is only $17 million. So we are

00:34:09.489 --> 00:34:14.728
down to that near zero level. If we were to increase

00:34:14.739 --> 00:34:17.119
that, as you mentioned that $20 million a year, that's

00:34:17.128 --> 00:34:20.260
$80 million more of risk that we're putting on this

00:34:20.269 --> 00:34:24.918
budget. (item:21:ERCOT's Sean Taylor on potential liquidity concerns) Which then makes for the just the potential

00:34:24.929 --> 00:34:27.659
for liquidity concerns in the future even higher. That's

00:34:27.668 --> 00:34:30.199
why we ended up with these numbers. So if we use that

00:34:30.208 --> 00:34:33.139
same methodology in that 1% we would consider that

00:34:33.550 --> 00:34:36.489
but then we would also consider the risk associated

00:34:36.500 --> 00:34:37.969
with that. And we would have that discussion with our

00:34:37.978 --> 00:34:40.978
Board. Have Commission Staff to try to balance some what

00:34:41.280 --> 00:34:43.728
Pablo was mentioned, balance the risk reward of that

00:34:43.750 --> 00:34:48.369
But the straight up math is four cents per 1%. And that's

00:34:48.378 --> 00:34:51.050
over an 8 year glide path. Four year glide path. Four

00:34:51.159 --> 00:34:55.159
year, four year. Just through 2027, eights years since the

00:34:55.168 --> 00:35:01.449
last fee increase. So Sean that, that's using the basically

00:35:01.458 --> 00:35:05.708
you would use a 3.5 and 3% that's the May 23 interest

00:35:05.719 --> 00:35:10.918
rate. If you use the October 2023 interest rates. But

00:35:10.929 --> 00:35:13.860
but reduce that by 100 basis points, where would that

00:35:13.869 --> 00:35:16.648
put us? That's approximately that you would be the

00:35:16.829 --> 00:35:16.918
same.

00:35:18.489 --> 00:35:18.898
Exactly. Okay.

00:35:21.320 --> 00:35:28.860
3, 3.5. Okay. So in your original um, filing on the budget.

00:35:29.309 --> 00:35:31.929
No, let me pull that up. It's um

00:35:36.590 --> 00:35:39.449
page 61, page 61. Which is essentially all the

00:35:39.458 --> 00:35:43.070
options, right? Option one is a four year rate increase,

00:35:43.079 --> 00:35:46.050
a two year rate increase and a one year rate increase.

00:35:47.769 --> 00:35:50.829
It's my understanding and, and let me confirm. That

00:35:50.840 --> 00:35:54.708
for Option 2 and 3. Which is Option 2 being

00:35:54.719 --> 00:35:57.079
the 2 year rate increase that starts in 24. So it's

00:35:57.090 --> 00:36:00.559
for 24 and 25 only, you're not looking into 26 and

00:36:00.570 --> 00:36:02.780
27. And then the Option 3, which is the 1 year

00:36:02.789 --> 00:36:07.280
rate increase. You haven't run the um, sort of the

00:36:07.289 --> 00:36:11.719
the calculation that was run for adjusting from 71

00:36:11.949 --> 00:36:15.918
to 69 cents. So if you look at this chart, the 65

00:36:15.929 --> 00:36:18.639
cents is really 63 because you need to account for

00:36:18.648 --> 00:36:22.449
the 2% decrease from 71 to 69. Is that correct? And

00:36:22.458 --> 00:36:26.619
then the second Option 3 would actually be 59 cents.

00:36:26.688 --> 00:36:30.679
Because you have to apply the 2 cents reduction that

00:36:30.688 --> 00:36:33.260
was applied from 71 to 69. You kind of have to translate

00:36:33.269 --> 00:36:34.860
that down to Option 2 and 3.

00:36:36.679 --> 00:36:40.059
It's not quite that directly, but yes. (item:21:Sean Taylor's response to Commissioner Cobos' question on rate reductions) They would, they

00:36:40.070 --> 00:36:41.969
would be lower to get to that amount because you're

00:36:41.978 --> 00:36:45.809
offsetting that fee in each in each year, you're offsetting

00:36:45.820 --> 00:36:48.898
it. So then you're choosing the way that this is developed

00:36:48.909 --> 00:36:52.289
is to choose a relatively consistent growth. We are

00:36:52.300 --> 00:36:55.215
still targeting even though you're referencing that

00:36:55.224 --> 00:36:57.175
we're no longer using the four years. In all these

00:36:57.184 --> 00:37:00.894
cases, we are using four years. It is just changing

00:37:00.905 --> 00:37:04.184
splitting that increase across two year two periods

00:37:04.195 --> 00:37:06.175
in one case or four periods in the other case. But

00:37:06.184 --> 00:37:08.574
we are still as shown on that page that you referenced

00:37:08.583 --> 00:37:13.304
page 61 that green amount at the end of 2027. That

00:37:13.313 --> 00:37:18.000
is still what we are targeting because we still have

00:37:18.010 --> 00:37:20.969
that objective of making sure that we have that after

00:37:20.978 --> 00:37:24.250
four years. The difference is just, it's just staggering

00:37:24.260 --> 00:37:27.550
two different rates across the same four year outlook

00:37:27.559 --> 00:37:30.570
is what is, what is what the difference is. But the

00:37:30.579 --> 00:37:32.329
four year outlook is the same, the four year budget

00:37:32.340 --> 00:37:35.929
is the same between the scenarios. Okay. I, I guess I

00:37:35.938 --> 00:37:37.668
was just trying to understand like, you know, we went

00:37:37.679 --> 00:37:40.300
from 71 to 69 right? Because of the interest income

00:37:40.719 --> 00:37:44.418
um realization and was trying to figure out like now

00:37:44.429 --> 00:37:46.320
that we, you know, because you guys updated that. ERCOT

00:37:46.329 --> 00:37:49.949
caught updated that um in their supplemental budget

00:37:49.969 --> 00:37:52.840
right? And, and so y'all ran the calculation because

00:37:52.849 --> 00:37:55.139
you're focused on the four year outlook. So if you ran

00:37:55.148 --> 00:37:58.280
the calculation on option two and three, applying that

00:37:58.289 --> 00:38:01.070
sa the same assumption that went from 71 to 69 would

00:38:01.079 --> 00:38:04.329
you be really looking at 63 cents and 59 cents for

00:38:04.340 --> 00:38:05.289
option two and three?

00:38:07.469 --> 00:38:10.050
Likely. So depending on what you want to do for 2026

00:38:10.059 --> 00:38:15.179
and 27. Okay. (item:21:Commissioner Cobos' thoughts on interest rates fluctuation and volatility) So if you basically because of that two

00:38:15.188 --> 00:38:20.280
cent reduction, um if you look at a four year outlook

00:38:20.289 --> 00:38:25.389
you have eight pennies. Is that eight pennies to play

00:38:25.398 --> 00:38:31.340
with if you look, I mean 4 years. And so because if

00:38:32.070 --> 00:38:34.679
we don't want to look four years out, it sounds like

00:38:34.688 --> 00:38:37.739
there's a balance between, you wanna look four years

00:38:37.750 --> 00:38:40.159
out to provide stability to the LSCs and you know

00:38:40.168 --> 00:38:44.148
not have to come in, you know, as, as much and just

00:38:44.159 --> 00:38:47.039
have stability. But then there's all this volatility

00:38:47.050 --> 00:38:50.228
in the market with interest rates and, and uncertainties

00:38:50.239 --> 00:38:52.050
and, and that kind of thing and I know revenue and

00:38:52.059 --> 00:38:54.610
are, are rather interest income is not your only source

00:38:54.619 --> 00:38:57.429
of revenue but, but it is a major driver. Right? Because

00:38:57.438 --> 00:39:00.559
that's how we're able to get from 71 cents to 69 cents

00:39:00.570 --> 00:39:03.329
And that's what the consumers are paying. Right. So

00:39:03.349 --> 00:39:06.349
I'm just wondering if we zero in on a two year budget

00:39:06.639 --> 00:39:09.039
and, and just kind of be conservative in how far we're

00:39:09.050 --> 00:39:13.188
looking out and run the calculation that gets you from

00:39:13.199 --> 00:39:18.889
71 to 69 cents to option two, which would get you from

00:39:18.898 --> 00:39:23.199
65 cents to 63 cents. That, that would at least get

00:39:23.208 --> 00:39:27.128
you to where you were in your calculation for the first

00:39:27.139 --> 00:39:29.958
option, which is the four year outlook to apples to

00:39:29.969 --> 00:39:33.958
apples. And then it seems like from there, you can

00:39:33.969 --> 00:39:37.539
maybe apply some penny savings as well to those two

00:39:37.550 --> 00:39:42.360
years. So I'm just trying to figure out like, you know

00:39:42.369 --> 00:39:49.699
is there some other way to um, kind of extrapolate

00:39:49.708 --> 00:39:53.668
all these assumptions and numbers to where we move

00:39:53.679 --> 00:39:56.039
some of the interest rate I get, I get, you're being

00:39:56.050 --> 00:39:58.458
conservative and you don't wanna, you know, overcount

00:39:58.469 --> 00:40:00.309
interest income because that could put you in a bad

00:40:00.320 --> 00:40:04.719
position. But at the same time, the interest rate volatility

00:40:04.728 --> 00:40:07.659
risk, we gotta be careful that we don't place that

00:40:08.188 --> 00:40:11.030
on the consumers and the, and the you know, the

00:40:11.039 --> 00:40:13.530
the, the consumers paying the system administration

00:40:13.539 --> 00:40:16.099
fee. Because again, they're not going to get refunded

00:40:16.360 --> 00:40:18.079
they're only going to get a reduced rate, the money

00:40:18.090 --> 00:40:20.869
is out the window, right for two years. So I'm trying

00:40:20.878 --> 00:40:24.539
to find a balance. And so for Sean's answer to contextualize

00:40:24.550 --> 00:40:27.369
it. (item:21:Commissioner McAdams' thoughts on stability) So it is important to look for ERCOT to look out

00:40:27.378 --> 00:40:31.659
into the future to have stability. But also the increase

00:40:31.668 --> 00:40:35.668
as per the approved rate will go up as of January.

00:40:36.168 --> 00:40:39.648
And so what what I'm the direction I'm coming at this

00:40:39.659 --> 00:40:45.030
from is I don't like rate shock and, um, the magnitude

00:40:45.039 --> 00:40:47.458
of the increase is what they will feel immediately

00:40:47.469 --> 00:40:51.039
albeit smoothed out over a longer term horizon, it

00:40:51.050 --> 00:40:53.840
becomes less because again, they don't experience the

00:40:53.849 --> 00:40:58.019
incremental increases over time, but still, um, on

00:40:58.030 --> 00:41:01.550
a volumetric basis, on a per Megawatt basis, these

00:41:01.559 --> 00:41:05.438
are, and that's why TIEC filed. Because they pay

00:41:05.449 --> 00:41:08.619
the majority of the amount of that fee. Because they

00:41:08.628 --> 00:41:11.398
use more electrons in the system than anybody else.

00:41:11.918 --> 00:41:14.789
So when they're doing their books, just like ERCOT

00:41:14.800 --> 00:41:17.989
is they're trying to forecast. Okay. How much more of

00:41:18.000 --> 00:41:20.909
a margin is reduced? But my profit margin is reduced

00:41:20.918 --> 00:41:24.159
because this fee is going out the door. So, I it's

00:41:24.168 --> 00:41:27.128
that first year, that's, that's very important and

00:41:27.139 --> 00:41:29.610
that's what I'm trying to focus on. And thus, I think

00:41:29.619 --> 00:41:33.228
Sean is doing that, he is now updating or he has been

00:41:33.239 --> 00:41:37.949
updating the assumptions going into what we're considering

00:41:37.958 --> 00:41:40.699
now. To, to try to be as accurate as possible with the

00:41:40.708 --> 00:41:44.820
best available information. But um I think what we're

00:41:44.829 --> 00:41:48.728
trying to do is squeeze down that initial big hit,

00:41:48.739 --> 00:41:52.668
that initial big increase or smooth it out. (item:21:Commissioner Cobos' thoughts on the impact of higher interest rates) Like focus

00:41:52.679 --> 00:41:56.389
on the 1st and 2nd year. Exactly. That's what I'm trying

00:41:56.398 --> 00:41:59.840
to do. So, so I'm trying to inform the feedback. That's

00:41:59.849 --> 00:42:03.458
why I'm focused on option two and looking at option

00:42:03.469 --> 00:42:06.539
three to just kind of cross compare with option one.

00:42:06.550 --> 00:42:09.590
And what the impact is of the 2% or, or rather the

00:42:09.599 --> 00:42:12.719
two cent reduction. So bringing it apples to apples

00:42:12.728 --> 00:42:15.929
right? So it's really 63 cents. We're looking at an

00:42:15.938 --> 00:42:21.289
option two. And, and so and then, and then also

00:42:21.389 --> 00:42:24.668
um take into consideration like what is the impact

00:42:24.679 --> 00:42:27.829
of just using the lower fee without taking 100 the

00:42:27.938 --> 00:42:30.590
the lower interest rate without taking 100 basis points

00:42:30.599 --> 00:42:34.148
off? So you end up at 3.5 3% which would lower the

00:42:34.159 --> 00:42:36.639
fee to 65 cents, which will actually get you back down

00:42:36.648 --> 00:42:42.469
to 63 potentially. Or, you know, I was trying to

00:42:42.478 --> 00:42:44.260
get, also get an idea of what would be the impact of

00:42:44.269 --> 00:42:45.539
the higher interest rate. And you're telling me it's

00:42:45.550 --> 00:42:48.599
the same. So I'm just trying to figure out a way where

00:42:48.610 --> 00:42:51.978
we could take the interest rate volatility and, and

00:42:51.989 --> 00:42:55.519
allow for some conservatives, some conservative assumptions

00:42:55.530 --> 00:42:57.780
but not be overly conservative. Because at the end of

00:42:57.789 --> 00:43:00.619
the day, being overly conservative is gonna result

00:43:00.929 --> 00:43:05.179
in paying more potentially then you need to. (item:21:ERCOT's Pablo Vegas on the uncertainty interest rates) The one

00:43:05.188 --> 00:43:08.228
thing to think about also in terms of the uncertainty

00:43:08.239 --> 00:43:11.750
of those interest rates is that the downside risk is

00:43:11.760 --> 00:43:14.688
likely higher than the upside risk at this point. Given

00:43:14.699 --> 00:43:18.000
how high interest rates have risen to and the expectation

00:43:18.010 --> 00:43:20.849
of changes in interest rates over time, the likely

00:43:20.860 --> 00:43:24.148
direction, if there's going to be more rapid changes

00:43:24.159 --> 00:43:27.329
would be on the downside versus on the high side, given

00:43:27.340 --> 00:43:29.599
the signals that reading and seeing from the federal

00:43:29.610 --> 00:43:31.889
government, from the Fed and everything else. So there's

00:43:31.898 --> 00:43:34.849
more downside risk than there is upside risk. And so

00:43:34.860 --> 00:43:37.309
I think we have to manage that as well as we think

00:43:37.320 --> 00:43:39.269
about the uncertainties ahead of us.

00:43:43.719 --> 00:43:46.570
I did have one question. And it really, it has to

00:43:46.579 --> 00:43:49.989
do more, I think with the operating side of the budget.

00:43:50.250 --> 00:43:55.168
(item:21:Chairwoman Jackson's question on constrained resources for operations) Because obviously, um we've given ERCOT many more tasks

00:43:55.179 --> 00:43:58.688
and many more things to do um driven by the change

00:43:58.699 --> 00:44:02.590
in resource mix, driven by the growth driven by the

00:44:02.599 --> 00:44:05.869
the changing market. And so, um I just want to make

00:44:05.878 --> 00:44:10.179
sure that as that increase occurs in terms of the resources

00:44:10.188 --> 00:44:14.889
that you need. That you're not in any way constrained

00:44:14.989 --> 00:44:17.628
because you haven't had the ability through whatever

00:44:17.639 --> 00:44:20.789
structure we end up with. To recover enough cost so

00:44:20.800 --> 00:44:23.449
that you stay balanced in the budget throughout the

00:44:23.458 --> 00:44:27.260
entire period. So, you know, if you kind of look at

00:44:27.860 --> 00:44:29.809
you know, the changes, I see it. It's almost been a

00:44:29.820 --> 00:44:32.550
step change and then we know that, you know, response

00:44:32.559 --> 00:44:36.378
to a step change is, is, is somewhat gradual, but the

00:44:36.389 --> 00:44:41.219
the slope of that curve. Is, is what we, you know, it's

00:44:41.228 --> 00:44:44.449
our ability to respond. And so we don't want any way

00:44:44.739 --> 00:44:49.969
be um and, and feel like that ERCOT is um, you know

00:44:49.978 --> 00:44:53.840
not able to hire as many people as you need. To get

00:44:53.849 --> 00:44:56.760
the software that you need when you need. So that we

00:44:56.769 --> 00:45:00.280
are in any way impacting your schedule. Yeah, I appreciate

00:45:00.289 --> 00:45:03.030
that. (item:21:Pablo Vegas' response to Chairwoman Jackson's question) And clearly the ramp up into many of the initiatives

00:45:03.039 --> 00:45:06.849
that we've been talking about like PCM, the real time

00:45:06.978 --> 00:45:11.309
optimization, the DRRS. And, and changes all related

00:45:11.320 --> 00:45:14.329
to those kinds of programs. Do require a lot of the

00:45:14.340 --> 00:45:16.760
investment and the resources and the capabilities in

00:45:16.769 --> 00:45:18.539
the next year or two as we're trying to get ramped

00:45:18.550 --> 00:45:21.030
up in development and get those moving. So you are

00:45:21.039 --> 00:45:22.929
correct that it is front loaded in terms of some of

00:45:22.938 --> 00:45:25.438
that growth. We've already seen some of it in 2023.

00:45:25.539 --> 00:45:28.070
Which led to some of the variances in the 23 budget

00:45:28.079 --> 00:45:31.418
that we've experienced and then we to continue to accelerate

00:45:31.429 --> 00:45:34.628
into 2024. As we Staff up fully for the execution of

00:45:34.639 --> 00:45:36.079
those programs. So I think that's a fair, that's a

00:45:36.090 --> 00:45:37.949
fair point. And that is certainly how we have been

00:45:38.179 --> 00:45:40.398
looking at the budget. To set it in a way that can

00:45:40.409 --> 00:45:43.079
smooth out and make sure to meet that, that peak and

00:45:43.090 --> 00:45:45.418
then be able to carry that forward as we execute over

00:45:45.429 --> 00:45:48.010
the next several years. Madam Chair, may I dovetail

00:45:48.019 --> 00:45:50.010
on your question? Just uh operationally.

00:45:52.219 --> 00:45:57.340
(item:21:Commissioner McAdams' dialogue with ERCOT's Pablo Vegas & Sean Taylor on FTEs) Pablo how many FTE does ERCOT stand at right now? Because

00:45:57.349 --> 00:45:59.559
I know you've been in a higher up phase and where are

00:45:59.570 --> 00:46:03.269
we at? We're in the 880, 890 range. Okay. 880,

00:46:03.280 --> 00:46:07.969
890. And with the goal of uh we, we need

00:46:07.978 --> 00:46:14.360
to get to over 1000, I believe. Yeah. And so, so we've

00:46:14.369 --> 00:46:18.059
been able to do that as a system, as load has increased

00:46:18.070 --> 00:46:21.128
And as these new revenues have become realized over

00:46:21.139 --> 00:46:25.360
the course of the year. And so you've been able to manage

00:46:25.369 --> 00:46:28.820
through that thus far? We started that process several

00:46:28.829 --> 00:46:31.679
months ago. And that's why some of our over bridges

00:46:31.688 --> 00:46:33.590
this year have occurred since we knew that it would

00:46:33.599 --> 00:46:35.750
take time to build these resources up. You can just

00:46:35.760 --> 00:46:38.668
go hire that many people in a week. Well, yeah. And

00:46:38.679 --> 00:46:41.269
then Woody's division, you know, which is very important

00:46:41.280 --> 00:46:44.719
operationally, the weatherization aspects, those inspectors

00:46:44.969 --> 00:46:47.349
So that's one of those divisions that was front loaded

00:46:47.360 --> 00:46:50.329
to have this higher up that goes back all the way to

00:46:50.340 --> 00:46:51.000
last year.

00:46:52.760 --> 00:46:56.429
Okay. So you're on path and doing that now under the

00:46:56.438 --> 00:46:59.250
current 55. And I have to ask this question because

00:46:59.300 --> 00:47:01.878
TIEC posed it. As matter of fact, they even recommended

00:47:01.889 --> 00:47:06.418
a rate reduction, um which I'm not looking at right

00:47:06.429 --> 00:47:11.208
now. But they said, uh why is uh an increase even needed?

00:47:11.219 --> 00:47:14.688
Given again, the more aggressive approach to interest

00:47:14.699 --> 00:47:18.239
rate calculation and all things being equal? Explain

00:47:18.250 --> 00:47:21.530
that. (item:21:Sean Taylor responds to Commissioner McAdams on why an increase is needed) I think it's important to note when you look at

00:47:21.539 --> 00:47:25.179
the 23 forecast. We have been authorized to exceed

00:47:25.188 --> 00:47:27.570
our budget. So we are not operating within the 55.5

00:47:27.610 --> 00:47:29.929
cents right now. That's important respect. You're not

00:47:29.938 --> 00:47:33.349
what we are not. We have expenditures are exceeding

00:47:33.360 --> 00:47:35.909
the 23 budget because we have had to go and hire these

00:47:35.918 --> 00:47:38.389
additional people and do all this additional work.

00:47:38.398 --> 00:47:40.949
So we have the authorization to exceed that budget

00:47:41.289 --> 00:47:44.188
for that purpose. That's why when you look at 2023.

00:47:44.360 --> 00:47:46.820
We have the additional interest income, but then we

00:47:46.829 --> 00:47:50.079
also have additional expenditures to accomplish all

00:47:50.090 --> 00:47:51.188
of these new things.

00:47:55.458 --> 00:47:59.329
Okay. You'll see that in detail. When you compare the

00:47:59.340 --> 00:48:03.039
21 numbers, we're just looking at on the sheet. When

00:48:03.050 --> 00:48:05.789
you look at the 23 budget versus the 23 forecast. On

00:48:05.800 --> 00:48:08.070
the expenditure side, you can see that the 23 forecast

00:48:08.079 --> 00:48:12.110
exceeds the 23 budget. Got it. Okay. So

00:48:13.969 --> 00:48:15.648
I'll just throw some numbers out there because I think

00:48:15.659 --> 00:48:17.059
it will be constructive. 

00:48:18.728 --> 00:48:20.719
So now that we're,

00:48:23.378 --> 00:48:25.550
we're talking about a difference in an increase in

00:48:25.559 --> 00:48:29.619
order of magnitude on a two year, two year budget with

00:48:29.628 --> 00:48:31.070
four year glide path.

00:48:33.628 --> 00:48:39.869
Of 16 to 18% option two, which is that now with

00:48:39.878 --> 00:48:44.349
updated assumptions. (item:21:Commissioner McAdams' thoughts on a one or two year budget) And a one year increase of around

00:48:44.360 --> 00:48:46.829
8 to 10% increase.

00:48:48.688 --> 00:48:51.119
I mean, this this is kind of a range that, that I'm

00:48:51.128 --> 00:48:53.168
looking at and debating. Um

00:48:55.688 --> 00:48:58.769
but, but I still have questions about the need case

00:48:58.780 --> 00:48:59.228
Um

00:49:01.260 --> 00:49:05.340
but they do have growing needs and we know that. So

00:49:05.659 --> 00:49:08.369
that's kind of the range I'm looking at it from, see

00:49:08.378 --> 00:49:12.090
how we build off that. So are you saying that you're

00:49:12.099 --> 00:49:15.389
focused on a two year budget or a one year budget?

00:49:15.800 --> 00:49:19.590
Well, look my starting point coming into this, I be

00:49:19.599 --> 00:49:22.688
I believe uh a one year budget is appropriate given

00:49:22.699 --> 00:49:26.188
the volatility. But I mean, with their updated assumptions

00:49:26.199 --> 00:49:30.628
coming in at two, it it needs to be discussed. What

00:49:30.639 --> 00:49:31.239
do y'all think?

00:49:34.289 --> 00:49:36.489
I love being the guy to do this every time. So if we do a

00:49:36.500 --> 00:49:39.769
two year budget what can we get? So let me uh can

00:49:39.780 --> 00:49:46.329
I give you my thoughts here, please? (item:21:Commissioner Glotfelty's thoughts on ERCOT's budget) I'm uh I tried

00:49:46.340 --> 00:49:51.219
to look at this um objectively through a growing market.

00:49:51.878 --> 00:49:55.659
Um I've tried to understand how these numbers are tied

00:49:55.668 --> 00:50:00.610
to um interconnections going up 300%. The numbers of

00:50:00.619 --> 00:50:04.050
market participants going up. I still don't quite understand

00:50:04.059 --> 00:50:07.269
it. I think there's a tipping point where these

00:50:08.119 --> 00:50:12.079
system where operations of an entity like this ought

00:50:12.090 --> 00:50:16.429
to become more efficient, the more you have. You pass

00:50:16.500 --> 00:50:21.010
this delta where you don't need to keep adding systems

00:50:21.019 --> 00:50:24.628
or adding issues. But those issues are benefiting you

00:50:24.639 --> 00:50:31.090
and you're reducing costs. I'm fearful that in

00:50:31.099 --> 00:50:36.179
this budget, um, there are too many across the, across

00:50:36.188 --> 00:50:40.289
the board salary increases. (item:21:Commissioner Glotfelty's thoughts on bonuses) Uh, too many, uh, across

00:50:40.300 --> 00:50:44.820
the board bonuses. The questions that I've asked about

00:50:44.829 --> 00:50:53.159
the bonus structures leave for those online or in the

00:50:53.168 --> 00:50:57.918
audience. There's currently a $23.2 million worth of

00:50:57.929 --> 00:51:02.639
bonuses in here. Of which $14 million, $14.5 million

00:51:03.320 --> 00:51:09.119
is for all employees. Um, $1.8 million is long term incentive

00:51:09.128 --> 00:51:14.179
for 66 specific employees. The problem is the delta

00:51:14.188 --> 00:51:17.510
between that is somewhere between around $6 million

00:51:17.519 --> 00:51:19.550
which seems unaccounted for. But

00:51:21.750 --> 00:51:26.208
this is the data that I get back that leaves me with

00:51:26.219 --> 00:51:31.949
a lot of questions about this budget. Um I, I'm,

00:51:33.519 --> 00:51:36.639
I'm gonna bark up an area that we really can't do anything

00:51:36.648 --> 00:51:39.949
about right now. (item:21:Commissioner Glotfelty on the Texas Regional Entity Liability Organization's numbers) Which is the Texas Regional Entity

00:51:40.329 --> 00:51:44.849
Liability Organization. Their numbers are continuing

00:51:44.860 --> 00:51:49.648
to go up $27 million, I think $29 million in terms of

00:51:49.659 --> 00:51:52.659
budget or what in terms of budget. That are reflected

00:51:52.668 --> 00:51:56.300
in the ERCOT budget, which is unfair. It's a pass through.

00:51:56.789 --> 00:51:59.800
It's a federal law that requires NERC, this is a NERC

00:52:00.739 --> 00:52:06.188
the Liability Council of Texas. That's a $27 million

00:52:06.340 --> 00:52:10.289
or $29 million part of this budget. Which

00:52:13.458 --> 00:52:15.389
our consumers are going to pay for it one way or the

00:52:15.398 --> 00:52:18.719
other. Either it's efficiently through ERCOT or it's

00:52:18.728 --> 00:52:23.010
inefficiently through uh some way that they figure

00:52:23.019 --> 00:52:26.969
out how to, to get money from market participants.

00:52:28.840 --> 00:52:31.809
But I don't like it because they're not here to defend

00:52:31.820 --> 00:52:35.530
that and we have no way to question that. That's approved

00:52:35.539 --> 00:52:39.059
by FERC and just becomes a pass through. But you all get

00:52:39.070 --> 00:52:42.260
the hard time, you all get the hard time for it and

00:52:42.728 --> 00:52:47.559
all of you all get to pay for it. I think

00:52:47.570 --> 00:52:51.159
that um. (item:21:Commissioner Glotfelty's thoughts on KPIs) I have asked since shortly after I got here

00:52:51.168 --> 00:52:56.840
2.5 years ago about possibly instituting FERC KPIs.

00:52:56.889 --> 00:53:01.539
FERC has a docket where they look at key performance

00:53:01.550 --> 00:53:05.699
indicators of RTOs and ISOs. They are not like

00:53:05.708 --> 00:53:11.938
ERCOT um KPIs. They are like um they are um specific

00:53:11.949 --> 00:53:17.539
to RTOs. And um some of them are very important

00:53:17.550 --> 00:53:20.478
and I think budgets, whether it be this year or in

00:53:20.489 --> 00:53:24.929
the future should be tied to the outcomes of these

00:53:24.938 --> 00:53:30.260
KPIs. The um somewhere in this morass, I do have a

00:53:30.269 --> 00:53:33.300
uh a note about that. Um

00:53:35.530 --> 00:53:39.728
I think some while ERCOT needs certainty in their budget.

00:53:40.389 --> 00:53:42.750
(item:21:Commissioner Glotfelty on adding incentives to ERCOT's budget) I also think there needs to be incentives in their

00:53:42.760 --> 00:53:46.728
budget. We need incentives in their budget for them

00:53:46.739 --> 00:53:50.978
to reduce congestion, the more they reduce, the more

00:53:50.989 --> 00:53:53.978
they get or the the more efficient they are, the more

00:53:54.168 --> 00:53:58.530
we need to find these benefits, um, to require them

00:53:58.539 --> 00:54:02.398
to be more efficient. I don't see it in here. I just

00:54:02.409 --> 00:54:06.070
see uh I, I asked the question. Is there anything

00:54:06.079 --> 00:54:08.289
on your wish list that you didn't put in here? And

00:54:08.300 --> 00:54:11.739
the answer was no. Which tells me they put every single

00:54:11.750 --> 00:54:12.478
thing in here.

00:54:14.320 --> 00:54:16.550
And that tells me that, that there's not a whole lot

00:54:16.559 --> 00:54:23.090
of budget scrutiny. And um, I'm convinced that a two

00:54:23.099 --> 00:54:27.079
year budget is all I'm gonna vote for. I'd be,

00:54:27.090 --> 00:54:30.199
I'd be happy to do one. But two, I can't go any

00:54:30.208 --> 00:54:34.679
further than that. And I think that what the number

00:54:34.688 --> 00:54:41.309
is um the system operations, the real time operations.

00:54:41.320 --> 00:54:43.958
The planning, weatherization, those are areas that

00:54:43.969 --> 00:54:46.869
are critical to the operation of our system. Some of

00:54:46.878 --> 00:54:48.610
the other areas I'm just not so sure.

00:54:51.168 --> 00:54:55.019
Okay. (item:21:Commissioner's dialogue concerning one or two year budget) So when you look at a two year budget, the option

00:54:55.030 --> 00:54:59.250
two and apply the across the board reduction of two

00:54:59.260 --> 00:55:03.329
cents, um, which would be 65 to 63.

00:55:05.898 --> 00:55:09.789
Is that something that you're okay with or is it a more

00:55:09.800 --> 00:55:11.978
reduced number? No, I think that's, that's probably

00:55:11.989 --> 00:55:14.369
in the ballpark. I mean, I think some flexibility.

00:55:14.378 --> 00:55:19.260
I think they have to. Uh yeah I think that's, that's

00:55:19.500 --> 00:55:23.030
I could live with that. And, and Commissioner McAdams

00:55:23.039 --> 00:55:25.128
you're looking at a one year which would place us at

00:55:25.139 --> 00:55:27.519
59 cents. That's correct.

00:55:30.898 --> 00:55:33.469
Is that something you're comfortable with. Look, I

00:55:33.478 --> 00:55:37.878
know 2024 is more certain than not. But, but again

00:55:37.889 --> 00:55:38.398
there,

00:55:40.579 --> 00:55:43.340
Okay. (item:21:Commissioner McAdams on peer group comparison) The other thing we need to talk about is peer group

00:55:43.349 --> 00:55:47.070
comparison. All right. And we, I know in our Staff

00:55:47.079 --> 00:55:50.148
briefing, we acknowledge this. So I think um you know

00:55:50.159 --> 00:55:55.978
I know PJMs annual budget is $405 million. Okay? As of

00:55:55.989 --> 00:56:00.789
the last one we pulled um. SPP just came back. They

00:56:00.800 --> 00:56:03.570
approved their budget. It was a neighborhood of $325

00:56:03.579 --> 00:56:07.489
million PJM is bigger in terms of an energy market.

00:56:07.500 --> 00:56:11.708
SPP is smaller. So keep apples and apples context to

00:56:11.719 --> 00:56:11.849
it.

00:56:13.469 --> 00:56:18.429
SPP is also growing west. They may go from a 55 gigawatt

00:56:18.438 --> 00:56:22.228
annual system to 100 and 20 gigawatt annual system

00:56:22.239 --> 00:56:27.909
in the next three years depending on which states continue

00:56:27.918 --> 00:56:29.989
to join. Um

00:56:31.659 --> 00:56:36.918
PJM operates a fully liquid for capacity market. They

00:56:37.159 --> 00:56:40.610
administer that market, they have 1000 employees. This

00:56:40.619 --> 00:56:43.599
is where Pablo believes that ERCOT will need to get

00:56:43.610 --> 00:56:48.559
to. Um their last approved budget is again backdated

00:56:48.869 --> 00:56:52.809
So $405 million, he's looking for $425 million annual.

00:56:53.199 --> 00:56:55.250
So we're kind of talking about it on that scale and

00:56:55.260 --> 00:56:58.780
we should review it uh as such. If I could add MISO's?

00:56:59.449 --> 00:57:04.519
Yeah, what is MISO? They're increasing at $397.4 million.

00:57:05.398 --> 00:57:11.668
So their their fee is going up to 4.7. Right, but they

00:57:11.679 --> 00:57:14.570
they can, they can do that smaller because they have

00:57:14.579 --> 00:57:18.688
more megawatts to socialize it across. 17 right bodies,

00:57:19.409 --> 00:57:24.369
states. Which ours is growing, ours is growing. Correct. 

00:57:24.978 --> 00:57:27.628
The number that we're socializing is continuing to

00:57:27.750 --> 00:57:30.648
which I think there's no end in sight on that. It will

00:57:30.659 --> 00:57:31.909
end at some point in time.

00:57:34.750 --> 00:57:39.978
(item:21:Commissioner Glotfelty on peer group comparison) You know, I don't want to use the pier. I think it's

00:57:39.989 --> 00:57:43.619
a good information because I think the peers are way

00:57:43.628 --> 00:57:50.369
off base. I think what PJM and MISO have become is far

00:57:50.570 --> 00:57:56.570
far from what the initial open access RTO ISO program

00:57:56.579 --> 00:58:03.139
was intended to create and they have become the blocking

00:58:03.148 --> 00:58:06.829
and tackling of everything, innovation across the United

00:58:06.840 --> 00:58:09.219
States. And I don't want that to happen here. That's

00:58:09.228 --> 00:58:14.030
why I want part of this. If they, if we get

00:58:14.039 --> 00:58:17.128
an increase. I, I want it to be strategic. I want

00:58:17.139 --> 00:58:21.280
it to be to those initiatives that help us. Um I um

00:58:21.530 --> 00:58:24.599
I, I get there's one other area which is the uh the

00:58:24.610 --> 00:58:28.728
systems, you know, RTC plus storage state of charge

00:58:28.739 --> 00:58:34.079
the DRRS, PCM. Um I mean, I, I just II I

00:58:34.090 --> 00:58:35.000
have to

00:58:36.688 --> 00:58:40.909
voice this Pablo. We've talked about the. (item:21:Commissioner Glotfelty on upgrading ERCOT's EMS system) I would be

00:58:40.918 --> 00:58:44.469
more willing to pay for a major increase if you all

00:58:44.478 --> 00:58:48.570
were going to upgrade your entire EMS system. That includes

00:58:48.579 --> 00:58:51.309
all of this to something that is more applicable to

00:58:51.320 --> 00:58:54.228
what other regions are using, like the Siemens system.

00:58:54.969 --> 00:58:59.699
And get the benefit of the updates that they do. We've

00:58:59.708 --> 00:59:03.878
talked about this. RTC is already a software tool that

00:59:03.889 --> 00:59:08.179
is built into PJM. We wouldn't have to go spend $50

00:59:08.188 --> 00:59:11.949
million to create it for our one of a kind GE system.

00:59:12.789 --> 00:59:18.039
And some of those strategic decisions I think have

00:59:18.050 --> 00:59:20.760
to be addressed by the Technology Committee, by John

00:59:21.070 --> 00:59:23.599
Swinson on the board uh Dell, Software Executive. And

00:59:23.610 --> 00:59:27.599
figure out I just, I don't think the intent of all

00:59:27.610 --> 00:59:33.000
of these RTOs was to continue to grow. You know, the

00:59:33.010 --> 00:59:36.750
old saying, I just want the land next to mine. Um they're

00:59:36.760 --> 00:59:40.458
growing and growing and growing and that's not absolutely

00:59:40.469 --> 00:59:45.659
essential for consumer benefits. I agree 100% Commissioner.

00:59:45.668 --> 00:59:48.369
(item:21:ERCOT's Pablo Vegas on the grid in the future) And, and you're describing exactly the posture that

00:59:48.418 --> 00:59:51.010
we are working to shift into. Which is taking a longer

00:59:51.019 --> 00:59:54.708
term look at where the grid of 5 years and 10 years

00:59:54.719 --> 00:59:56.769
from now is going to be versus the one we're operating

00:59:56.780 --> 00:59:59.869
today. And that's the challenge. Is as we're going through

00:59:59.878 --> 01:00:02.889
this very rapid transition on the grid of today, trying

01:00:02.898 --> 01:00:05.409
to make decisions that will put us in a position to

01:00:05.418 --> 01:00:09.079
leverage the economies of scale the economies of technology

01:00:09.090 --> 01:00:12.070
changes that will actually position us better than

01:00:12.079 --> 01:00:15.050
other RTOs to be in a place where we can operate

01:00:15.059 --> 01:00:18.300
that system of the future. And arguably I would say

01:00:18.530 --> 01:00:21.019
in the discussion around comparing with the other RTOs.

01:00:21.199 --> 01:00:24.869
We are operating one of the most complex systems in

01:00:24.878 --> 01:00:27.898
the world and arguably the most complicated in the

01:00:27.909 --> 01:00:33.289
United States right now. And so the rapidity of change

01:00:33.300 --> 01:00:35.750
I think is we're trying to keep up with that rapidity

01:00:35.760 --> 01:00:38.302
of change in the short term while so trying to keep

01:00:38.311 --> 01:00:40.782
an eye towards how can we prepare for and develop for

01:00:40.791 --> 01:00:44.572
the future. I would argue that. (item:21:Pablo Vegas on long term engagement) What we're trying to

01:00:44.583 --> 01:00:48.012
build into this budget, which includes capacity to

01:00:48.021 --> 01:00:50.652
do some of that longer term engagement, which includes

01:00:50.663 --> 01:00:54.472
things like engaging with outside research institutions

01:00:54.481 --> 01:00:57.612
with, with the institutes of higher education, with

01:00:57.623 --> 01:01:00.594
national. We had cut all of those initiatives out of

01:01:00.605 --> 01:01:03.155
our budget in the last couple of years because of the

01:01:03.166 --> 01:01:05.465
shortfalls that we had by keeping the budget flat,

01:01:05.686 --> 01:01:08.456
we're trying to build some of that back in so that

01:01:08.465 --> 01:01:11.545
we can have that engagement and start thinking about

01:01:11.554 --> 01:01:13.804
what are those technology investments you're describing

01:01:13.815 --> 01:01:16.614
that will get us to a much more advantageous position

01:01:16.625 --> 01:01:20.199
around economies of scale and innovation. And so it's

01:01:20.208 --> 01:01:22.500
it's through that lens that we built this budget to

01:01:22.510 --> 01:01:25.809
both try to manage the very short term changes, operation

01:01:25.820 --> 01:01:28.659
that we have to do like these projects, but also start

01:01:28.668 --> 01:01:31.628
to position ourselves for those longer term investments

01:01:31.639 --> 01:01:33.639
and changes which do take some dollars in order to

01:01:33.648 --> 01:01:36.239
you know, participate with those institutions and to

01:01:36.250 --> 01:01:38.264
start doing things like pilots and such that could

01:01:38.273 --> 01:01:41.385
be part of getting ready to do that, that's all baked

01:01:41.394 --> 01:01:44.204
into this as well. And so that's why I'm appreciative

01:01:44.215 --> 01:01:46.014
of you doing that. I mean, we've talked about that

01:01:47.684 --> 01:01:51.204
It was my view. I think you all accepted it or want

01:01:51.215 --> 01:01:54.465
to help rectify it that almost every other RTO has some

01:01:54.474 --> 01:01:58.559
dollars in there to engage these outside groups to

01:01:58.570 --> 01:02:00.929
get other data points, to use their technology, to

01:02:00.938 --> 01:02:03.820
help them understand the research that's coming down

01:02:03.829 --> 01:02:07.010
the line. The visualization tools, the better system

01:02:07.019 --> 01:02:10.978
operations tools, the better ways to site and manage

01:02:10.989 --> 01:02:12.300
transmission and

01:02:13.829 --> 01:02:16.465
doesn't even get to the distribution system. But I

01:02:16.885 --> 01:02:19.594
think putting that in is a is a good down payment for

01:02:19.603 --> 01:02:22.494
success in the long run and and having a little bit

01:02:22.503 --> 01:02:24.813
of a longer outlook. (item:21:Pablo Vegas on 4 year deal) And that's why we've advocated

01:02:24.824 --> 01:02:27.375
for this four year view because typically a lot of

01:02:27.385 --> 01:02:29.864
the short term development projects are a two year

01:02:29.875 --> 01:02:32.405
kind of horizon in terms of development in that 23

01:02:32.414 --> 01:02:35.094
year range, some of the longer ones you start now,

01:02:35.103 --> 01:02:39.090
but have a 3, 4 year horizon. And so looking ahead anticipating

01:02:39.099 --> 01:02:42.010
where we want to go, that also drives the desire to

01:02:42.019 --> 01:02:44.699
try to have a stable kind of a revenue stream that

01:02:44.708 --> 01:02:48.039
can be planned around anticipating those kinds of changes

01:02:48.050 --> 01:02:51.099
and tasks that may come from you all or may come from

01:02:51.219 --> 01:02:53.659
others outside to say this is important for her to

01:02:53.668 --> 01:02:55.250
be able to do this and we want you to move in

01:02:55.260 --> 01:02:58.360
that direction. So that's why I would strongly advocate

01:02:58.369 --> 01:03:02.559
for as long a horizon as reasonable to try to provide

01:03:02.570 --> 01:03:05.070
that kind of stability and the capacity to be able

01:03:05.079 --> 01:03:06.559
to make those kinds of investments.

01:03:08.989 --> 01:03:11.320
Pablo, since Commissioner Glotfelty he alluded to the kind of the

01:03:11.329 --> 01:03:16.239
project areas. And since we've received Legislative

01:03:16.250 --> 01:03:20.280
letters on it. Some of whom offices are represented

01:03:20.289 --> 01:03:24.530
in the room, office space. What are your thoughts we

01:03:24.579 --> 01:03:27.610
need to talk about? (item:21:ERCOT's Pablo Vegas' response to Commissioner McAdams' question on office space) Yeah the, the office space that

01:03:27.619 --> 01:03:31.349
we acquired across the street um has been incredibly

01:03:31.360 --> 01:03:35.369
helpful to enable efficient engagement with the Legislative

01:03:35.378 --> 01:03:38.679
bodies over the course of Session. We were across um

01:03:38.688 --> 01:03:41.750
working at the Capitol in meetings and educating and

01:03:41.760 --> 01:03:43.699
trying to help folks understand kind of what the various

01:03:43.708 --> 01:03:47.260
implications of all the different Legislation was over

01:03:47.269 --> 01:03:50.500
40, 50 times over the course of just the Session. We

01:03:50.510 --> 01:03:53.059
use that also as an office to be able to engage with

01:03:53.070 --> 01:03:54.780
meetings when we have meetings with you all here at

01:03:54.789 --> 01:03:57.159
the Commission or with Staff. It helps on both of those

01:03:57.168 --> 01:03:59.168
fronts because we can walk to the Capitol or to this

01:03:59.179 --> 01:04:01.849
location. What it provides for is the ability to then

01:04:01.860 --> 01:04:04.228
work productively in between the meetings because those

01:04:04.239 --> 01:04:06.510
meetings are not always contiguous. It doesn't, you

01:04:06.519 --> 01:04:08.179
know, when we have meetings at the Capitol, it's not

01:04:08.188 --> 01:04:10.500
necessarily 1, 2 and 3 o'clock. It could be at 9

01:04:10.510 --> 01:04:12.519
in the morning, at 4 in the day, and then at noon.

01:04:12.918 --> 01:04:15.280
And so it allows us to be productive and efficient

01:04:15.570 --> 01:04:18.188
and it's a relatively de minimus cost in our asset

01:04:18.199 --> 01:04:21.769
base. It's about $87,000 a year for that office space.

01:04:21.978 --> 01:04:25.168
And the cost of that has been far exceeded by the value

01:04:25.260 --> 01:04:27.478
that the team has gotten by being able to engage as

01:04:27.489 --> 01:04:30.260
needed with any of the folks that need to have folks

01:04:30.269 --> 01:04:32.898
available on a ready basis and be productive while

01:04:32.909 --> 01:04:36.878
we're doing that. May I ask you if we were, if you

01:04:36.889 --> 01:04:41.269
were to get out of that and find more affordable accommodations

01:04:41.280 --> 01:04:44.699
even just as close to the Capital? Um, how much would

01:04:44.708 --> 01:04:49.438
that cost? (item:21:Pablo Vegas, Sean Taylor respond to Commissioner McAdams on real estate cost) I don't know, I haven't done any research

01:04:49.449 --> 01:04:51.750
on additional real estate. Real estate isn't typically

01:04:51.760 --> 01:04:56.039
going down. No, no. I know that. When we, when we secured

01:04:56.050 --> 01:04:59.320
the position, we hired a firm went through the RFP process.

01:04:59.329 --> 01:05:02.889
Oh no, no. I'm not questioning that. So we have office

01:05:02.898 --> 01:05:06.199
space that could be available as I understand it might

01:05:06.208 --> 01:05:09.219
be an option. And I just want to make sure that we

01:05:09.228 --> 01:05:11.829
recognize the Legislative questions around that are

01:05:11.840 --> 01:05:14.269
deferential. And I know you do. We would be, we would

01:05:14.289 --> 01:05:17.010
absolutely be open to that as well. We really just

01:05:17.019 --> 01:05:20.079
the whole driver for it was being able to be more product

01:05:20.128 --> 01:05:23.699
and, and have access to those who would like to work

01:05:23.708 --> 01:05:23.949
with ERCOT.

01:05:25.769 --> 01:05:28.570
(item:21:Commission Staff Thomas Gleeson responds to Commissioner McAdams on office space) So Commissioner McAdams, that's correct. We have recently

01:05:28.579 --> 01:05:30.889
obtained additional floor space in this building on

01:05:30.898 --> 01:05:34.809
6. If you all so desire. You know happy to, to

01:05:34.820 --> 01:05:38.090
work to, to lend some of that to ERCOT. I will say

01:05:38.139 --> 01:05:41.500
we need to work with Facilities Commission about obtaining

01:05:41.510 --> 01:05:44.389
access for ERCOT to the building. Because obviously

01:05:44.458 --> 01:05:46.458
you know, we have early hearings and, and hearings

01:05:46.469 --> 01:05:48.929
that run late. But happy to do that and work with

01:05:48.938 --> 01:05:51.579
TFC and ERCOT. If that's what you all want. One more

01:05:51.590 --> 01:05:53.239
badge Pablo, we'll get you some.

01:05:56.000 --> 01:05:58.728
So I welcome any other thoughts. I mean

01:05:58.739 --> 01:06:01.849
Madam Chair, what do you think? (item:21:Chairwoman Jackson's thoughts on ERCOT's budget) So, you know, we've

01:06:01.860 --> 01:06:04.309
had a lot of discussion about the budget and, you know

01:06:04.320 --> 01:06:07.809
to me it's important that we have, you know, a very

01:06:07.820 --> 01:06:11.289
be very robust on the expense side, we've talked about

01:06:11.300 --> 01:06:14.840
some options on the income side and whether there might

01:06:14.849 --> 01:06:19.050
be an opportunity to, to maybe take a little bit um

01:06:19.059 --> 01:06:22.039
less conservative view, I guess on the interest and

01:06:22.260 --> 01:06:26.438
thereby have some opportunity to reduce um potentially

01:06:26.449 --> 01:06:30.688
what the fee might be. Um But I, I guess from my

01:06:30.699 --> 01:06:33.099
perspective and again, maybe it's kind of from my background

01:06:33.110 --> 01:06:36.239
is that a budget is a promise, right? It's, it's not

01:06:36.250 --> 01:06:40.269
just a promise from the standpoint of, you know, what

01:06:40.280 --> 01:06:42.978
our forecasts that I'm going to expand in staying within

01:06:42.989 --> 01:06:47.188
those dollars, but it's also achieving the objectives

01:06:47.199 --> 01:06:51.228
that the budget funding is intended to do. And so,

01:06:51.239 --> 01:06:54.070
you know, when you look at ERCOT's work up. I mean

01:06:54.079 --> 01:06:58.179
they were very comprehensive and it being a zero based

01:06:58.188 --> 01:07:01.639
kind of bottom up process. And so I feel, I feel very

01:07:01.648 --> 01:07:03.989
comfortable with what they have on the expense side

01:07:04.239 --> 01:07:06.590
recognizing all the work that we have ahead and the

01:07:06.599 --> 01:07:09.840
need to, you know, to, to basically be, you know, to

01:07:09.849 --> 01:07:12.829
be able to manage that change. I mean, we want to be

01:07:12.840 --> 01:07:14.918
able to be in charge of that change. We don't want

01:07:14.929 --> 01:07:17.829
to be reactive, we want to be, we want to be um

01:07:18.269 --> 01:07:22.849
um forthcoming and ahead of it. Um But, you know, part

01:07:22.860 --> 01:07:26.378
of that promise is to achieve those objectives. And

01:07:26.389 --> 01:07:29.250
I know that there, you know, staff uh did some work

01:07:29.260 --> 01:07:31.820
in terms of what the KBI should be. I know that

01:07:31.829 --> 01:07:35.179
Commissioner Cobos put together uh a memo, uh to me

01:07:35.188 --> 01:07:38.110
those kind of go hand in hand. So I think that, you

01:07:38.119 --> 01:07:42.260
know, very much there is an opportunity um potentially

01:07:42.269 --> 01:07:45.519
and I would welcome ERCOT thoughts on this to, to see

01:07:45.530 --> 01:07:48.128
where we could go, you know, if we had potentially

01:07:48.139 --> 01:07:50.978
as you've mentioned and pointed out maybe some, you

01:07:50.989 --> 01:07:54.148
know, less conservative approach to the, to kind of

01:07:54.159 --> 01:07:58.458
the income side. But um you know, also, you know, have

01:07:58.469 --> 01:08:02.750
that discussion about the KPIs and again, get ERCOT's thoughts

01:08:02.760 --> 01:08:04.938
potentially have you lay out your memo and get ERCOT's

01:08:05.148 --> 01:08:08.199
thoughts on the memo. Sure. And, and I'm happy to add

01:08:08.208 --> 01:08:10.659
more performance measures. If you know, I know Commissioner

01:08:11.070 --> 01:08:14.000
Glotfelty threw a couple out there, um that could be

01:08:14.010 --> 01:08:17.199
added. (item:21:Commissioner Cobos lays out her memo) Really what, what I want to ensure through the

01:08:17.208 --> 01:08:22.470
memo is that um if we approve any increase, that we

01:08:22.479 --> 01:08:25.430
have very specific performance measures to ensure the

01:08:25.439 --> 01:08:28.520
delivery of the Commission priorities that we have

01:08:28.529 --> 01:08:30.699
been focused on. Right now. I know ERCOT has been focused

01:08:30.708 --> 01:08:33.939
on it, um, have submitted filings at the Commission

01:08:33.949 --> 01:08:35.739
been updating the Board on where they're at. But I

01:08:35.750 --> 01:08:38.449
I just really want to make sure that we stay on time

01:08:38.458 --> 01:08:41.000
and within budget on these key priorities and, and

01:08:41.009 --> 01:08:42.759
the, and the, and the timelines that I've laid out

01:08:42.770 --> 01:08:45.810
the years, you know, are really based on ERCOT's filings

01:08:45.819 --> 01:08:49.140
right? So, um I just want to make sure that we are

01:08:49.149 --> 01:08:53.009
keeping track and we are meeting those milestones and

01:08:53.020 --> 01:08:57.529
you know, I I've laid out 4. One of them is a reliability

01:08:57.539 --> 01:08:59.869
standard and I know ERCOT is in the process of doing

01:08:59.878 --> 01:09:02.439
a lot of number runs. And the final piece to that,

01:09:02.449 --> 01:09:06.149
that I view is the value load study in ERCOT's reporting.

01:09:06.159 --> 01:09:09.009
Has said that that would be deliverable in the first

01:09:09.020 --> 01:09:12.470
quarter of 2024. So ensuring that we stay on track

01:09:12.479 --> 01:09:16.547
for that delivery, the implementation of DRS as per

01:09:16.559 --> 01:09:18.748
the letter that we got from the Legislature. And the

01:09:18.757 --> 01:09:21.188
desire throughout last Session was to implement it

01:09:21.198 --> 01:09:26.457
as expeditiously as possible. And prior to RTC plus B so it could

01:09:26.469 --> 01:09:30.519
be incorporated in the RTC plus B according to ERCOT's filings

01:09:30.528 --> 01:09:34.279
would be fully implemented and delivered in 2026. And

01:09:34.289 --> 01:09:37.359
then finally, the implementation of PCM aligning that

01:09:37.369 --> 01:09:42.720
with RTC plus B because ultimately, um you know, I

01:09:42.729 --> 01:09:45.509
know PCM, your update says delivery in towards the

01:09:45.520 --> 01:09:50.449
end of 25. And RTC's delivery is in 26 we would

01:09:50.458 --> 01:09:53.329
want to try to align those as closely as possible.

01:09:53.668 --> 01:09:56.350
And if they're not aligned, if PCM is implemented,

01:09:56.359 --> 01:09:59.009
you know, in 2025 and, and you know, there's a whole

01:09:59.020 --> 01:10:02.979
year nearly that goes by until RTC is implemented

01:10:02.989 --> 01:10:05.560
then we, we want to make sure that the cost assessment

01:10:05.569 --> 01:10:08.588
that that ERCOT provides in conjunction with the IMM

01:10:08.600 --> 01:10:12.979
to us shows us two costs, one cost with PCM alone without

01:10:12.989 --> 01:10:16.899
RTC and one cost with PCM and RTC together because

01:10:16.909 --> 01:10:20.109
I think the spirit of 1500 was intended to make sure

01:10:20.119 --> 01:10:23.890
that RTC and PCM were combined together because in

01:10:23.899 --> 01:10:27.350
one hand, you'll have the PCM market paying for the

01:10:27.359 --> 01:10:29.279
credits. And on the other hand, you have the efficiency

01:10:29.289 --> 01:10:31.810
of the RTC and that was all baked in together in

01:10:31.819 --> 01:10:33.628
the E3 report, the initial one. So I just want

01:10:33.640 --> 01:10:38.439
to make sure that um those two major projects, market

01:10:38.449 --> 01:10:42.569
design projects are as closely aligned as possible

01:10:42.579 --> 01:10:46.229
so that we understand the true cost of the PCM and

01:10:46.239 --> 01:10:48.140
if they're not going to be aligned, then we need to

01:10:48.149 --> 01:10:51.958
see two cost comparisons in the cost assessment. And

01:10:51.970 --> 01:10:55.449
so I believe that that was the intent of House Bill

01:10:55.458 --> 01:10:58.588
1500 all the discussions that happened um surrounding

01:10:58.600 --> 01:11:00.918
the passage of 1500. I wanna make sure we stay clear

01:11:00.930 --> 01:11:03.689
and, and true to that commitment. So, um those are

01:11:03.699 --> 01:11:09.159
my four Commission priorities that I want to um enshrine.

01:11:09.180 --> 01:11:13.020
in performance measures that will be reported on by

01:11:13.029 --> 01:11:15.359
ERCOT on a quarterly basis until they are implemented

01:11:15.369 --> 01:11:18.069
(item:21:Commissioner Cobos on tracking the budget) So that we are tracking for the, you know, first two

01:11:18.079 --> 01:11:21.430
years of the budget where they're at and where we're

01:11:21.439 --> 01:11:24.979
trending and accomplishing our priorities. And we take

01:11:24.989 --> 01:11:27.699
that into consideration when they come in in the next

01:11:27.708 --> 01:11:30.029
you know, whatever we decide here in the next for the

01:11:30.039 --> 01:11:32.850
next budgetary cycle because we gotta make sure we're

01:11:32.859 --> 01:11:36.619
on track and, and that we're, if we're gonna in approve

01:11:36.628 --> 01:11:40.409
any increase, whatever that number is, if we do, um

01:11:40.970 --> 01:11:42.789
that we gotta make sure that they're accomplishing

01:11:42.798 --> 01:11:47.430
their staffing up to meet our priorities and our expectations

01:11:47.439 --> 01:11:50.548
and the legislature's expectations and I'm happy to

01:11:50.560 --> 01:11:52.579
add any more. I know Commissioner Glotfelty, you mentioned

01:11:52.588 --> 01:11:54.500
reductions in congestion. I don't know how we measure

01:11:54.509 --> 01:11:56.729
that exactly. I guess it's the construction of transmission

01:11:56.739 --> 01:12:01.449
and reporting, but you also mentioned um, EMS upgrade

01:12:01.458 --> 01:12:05.909
and, and that's critically important because EMS upgrades

01:12:05.918 --> 01:12:08.149
(item:21:Commissioner Cobos on EMS upgrades) My experience has been that, you know, ERCOT, right

01:12:08.159 --> 01:12:11.909
now with GE um software environment, they have to conduct

01:12:11.918 --> 01:12:16.119
these EMS upgrades and, and they get in the way of

01:12:16.128 --> 01:12:18.739
us, you know, ERCOT being able to implement anything

01:12:18.750 --> 01:12:21.220
that has to be co-optimized through the EMS and MMS

01:12:21.229 --> 01:12:24.720
system. So it's critically important that the next must

01:12:24.729 --> 01:12:27.189
upgrade does not get in the way of the implementation

01:12:27.199 --> 01:12:32.409
of DRS and RTC and PCM even. So how if there's a

01:12:32.418 --> 01:12:35.390
performance measure you want to add into maybe starting

01:12:35.399 --> 01:12:38.600
to transition to a Siemens even. (item:21:Commissioner McAdams' dialogue with ERCOT on CRR and RTC) One performance measure

01:12:38.609 --> 01:12:41.789
And we should think about this is so much now is being

01:12:41.798 --> 01:12:45.720
predicated upon the levels of CRR funds. Correct,

01:12:45.729 --> 01:12:49.020
Sean. It's an important component. It is important

01:12:49.029 --> 01:12:51.958
that the interest rate is a bigger driver but the CRR.

01:12:52.180 --> 01:12:56.060
I got it, but the level of CRR funds is important and

01:12:56.069 --> 01:12:59.850
combined with the interest rate. Won't CRR funds decline

01:12:59.859 --> 01:13:05.060
once RTC is operationalized, congestion will decline?

01:13:05.779 --> 01:13:10.739
Thus hedging on CRRs, yes? You can draw that conclusion

01:13:10.770 --> 01:13:13.458
Yes. Okay. So that's an important milestone as well.

01:13:13.489 --> 01:13:16.819
New transmission. Yes, sir. But it's an important milestone

01:13:16.829 --> 01:13:19.539
that we have to in terms of their financial stability.

01:13:19.548 --> 01:13:22.819
Keep in mind which is a driver of when decisions around

01:13:22.829 --> 01:13:25.208
the system administration fee need be made.

01:13:27.628 --> 01:13:31.159
So what is your conclusion on that? When is RTC supposed

01:13:31.168 --> 01:13:35.009
to come online? 2026. So that's two years from now.

01:13:35.289 --> 01:13:39.588
Yeah, so 24-25 is a two year budget and so you would

01:13:39.600 --> 01:13:42.720
have to take that into consideration in the next budgetary

01:13:42.729 --> 01:13:46.770
cycle, the impact of their revenue from CRR funds.

01:13:47.079 --> 01:13:49.399
But I mean RTC would be implemented. You still have

01:13:49.409 --> 01:13:50.560
to realize the congestion.

01:13:52.329 --> 01:13:54.270
I mean, they're going to have the software developed

01:13:54.279 --> 01:13:56.829
they'll have modeling going on on what it will solve

01:13:56.838 --> 01:14:00.600
for it interrelates with PCM and how that, that helps

01:14:00.609 --> 01:14:03.720
again, solve for congestion. So we're gonna have models

01:14:03.729 --> 01:14:07.649
at that time. So what I'm saying is uh I think this

01:14:07.659 --> 01:14:10.750
starts to sync up with an overall vision of where they're

01:14:10.759 --> 01:14:14.378
gonna their next check in strategically um where

01:14:14.390 --> 01:14:18.680
they're gonna be headed. That's my point. Okay. So

01:14:18.689 --> 01:14:22.668
did ERCOT have any ideas or thoughts on the recommended

01:14:22.680 --> 01:14:26.520
KPIs? (item:21:ERCOT's Pablo Vegas' response to Chairwoman Jackson's question on KPIs) Yeah, I think we're very supportive of detailed

01:14:26.529 --> 01:14:29.649
and specific KPIs with regular check ins. I think the

01:14:29.659 --> 01:14:31.909
Staff did a really nice job of laying out a potential

01:14:31.918 --> 01:14:34.079
framework for that. And your supplemental memo gave

01:14:34.088 --> 01:14:36.289
some more specificity. A couple of things. I want to

01:14:36.298 --> 01:14:38.729
just make sure we're clear on. (item:21:Pablo Vegas on value of lost load) The value of lost load

01:14:38.739 --> 01:14:41.609
work based on our current work with the partners that

01:14:41.619 --> 01:14:44.470
has been getting delayed because of the time to contract

01:14:44.479 --> 01:14:47.390
with that partner. And the expectation is that the

01:14:47.628 --> 01:14:50.350
studies would be issued in the surveys would be issued

01:14:50.359 --> 01:14:53.229
in the first quarter. But it's likely that the respondents

01:14:53.239 --> 01:14:55.250
and the analysis and how much, how long it will take

01:14:55.259 --> 01:14:58.009
time for consumers of Texas to actually participate

01:14:58.199 --> 01:15:00.520
that could push it to the second quarter. So I think

01:15:00.529 --> 01:15:02.649
it would be more realistic based on what we know today

01:15:02.659 --> 01:15:05.878
to look at a second quarter timetable for the value

01:15:05.890 --> 01:15:08.060
of lost loads in the first quarter. But we can check

01:15:08.069 --> 01:15:10.869
in on that. I think you put a March 1st aid and

01:15:10.878 --> 01:15:13.088
as for a checkpoint in there. I think that makes a

01:15:13.100 --> 01:15:15.338
lot of sense. We can update on where we are and exactly

01:15:15.350 --> 01:15:17.279
in that study work. But I think that's probably a little

01:15:17.289 --> 01:15:20.699
more realistic on the value of loss load. Okay. (item:21:Pablo Vegas on DRS, PCM and RTC) With

01:15:20.708 --> 01:15:25.369
regard to the um the DRS, PCM and RTC. What, what

01:15:25.378 --> 01:15:27.789
we were thinking is that from a strategic point of

01:15:27.798 --> 01:15:31.189
view, anchoring everything around the most expeditious

01:15:31.199 --> 01:15:33.909
delivery of RTC as I have heard and understood that's

01:15:33.918 --> 01:15:36.890
a priority to everybody. It is for us too. So what

01:15:36.899 --> 01:15:39.270
we would like, what we would recommend is our current

01:15:39.279 --> 01:15:42.810
program of work has RTC being delivered in 2026 and

01:15:42.819 --> 01:15:45.548
that's on the most expeditious path that we've defined

01:15:45.878 --> 01:15:48.878
There is now changes that have been made potentially

01:15:48.890 --> 01:15:51.680
to the DRRS if we were to consider a different approach

01:15:51.689 --> 01:15:55.878
for DRRS than what has been um so far approved. So we'll

01:15:55.890 --> 01:15:58.020
need to talk about that if there's a different pathway

01:15:58.029 --> 01:16:02.048
on DRRS. And then for PCM, we're also working through

01:16:02.060 --> 01:16:04.949
now based on the framing document, a new design on

01:16:04.958 --> 01:16:07.359
PCM, that is going to be worked on in the first part

01:16:07.369 --> 01:16:10.649
of next year. So what we were thinking is that we would

01:16:10.810 --> 01:16:14.729
prioritize first the RTC delivery and then put together

01:16:14.739 --> 01:16:18.798
project plans and timelines for DRRS based on whatever

01:16:18.810 --> 01:16:23.060
the paths for that and PCM as a subset of meeting the

01:16:23.069 --> 01:16:26.569
RTC in the most expeditious way and within the budget

01:16:26.579 --> 01:16:29.220
that we have to do so. And so then we would be

01:16:29.229 --> 01:16:31.779
able to come back and lay out a set of performance

01:16:31.789 --> 01:16:33.939
metrics and timelines that would show exactly how that

01:16:33.949 --> 01:16:38.194
would work in conjunction with the, if that makes sense

01:16:38.204 --> 01:16:40.003
for you and we could again come back probably that

01:16:40.015 --> 01:16:43.055
March 9 period of next year, be able to do an update

01:16:43.064 --> 01:16:45.664
on overall the programs, the impact analysis because

01:16:45.673 --> 01:16:47.824
we don't have new impact analysis yet on those two

01:16:48.114 --> 01:16:51.125
those two projects and then the timeline for those

01:16:51.134 --> 01:16:56.470
two projects as well. Okay. So um I think I understand

01:16:56.479 --> 01:16:58.680
what you're saying. It's just basically you're going

01:16:58.689 --> 01:17:01.168
to prioritize RTC, we're going to make that the anchor

01:17:01.180 --> 01:17:03.220
with fast pace, fast pace

01:17:05.628 --> 01:17:10.270
DRRS would be floating in between there. I mean

01:17:10.289 --> 01:17:15.378
years 24 and 25 and even 26 to get it in place

01:17:15.390 --> 01:17:19.119
And according to some of the filings that I've seen

01:17:19.128 --> 01:17:23.000
from ERCOT and the stakeholder process on NPRR 203, they

01:17:23.009 --> 01:17:25.289
believe that they can implement at least the comments

01:17:25.298 --> 01:17:31.088
filed by Khan state that, you know, you can implement

01:17:31.100 --> 01:17:34.279
a stand alone DRRS product um that closely aligns with

01:17:34.289 --> 01:17:37.208
RTC. So, and, and that was actually passed in the

01:17:37.220 --> 01:17:42.298
NPRR and PRS uh NPRR 1203. So it seems like

01:17:42.310 --> 01:17:44.680
ERCOT is pretty confident they can make all that work

01:17:44.689 --> 01:17:48.069
according to these comments, that we can implement

01:17:48.079 --> 01:17:51.279
a stand alone DRRS. Yes, is to implement a stand alone

01:17:51.289 --> 01:17:55.159
that aligns with the delivery of RTC. (item:21:Pablo Vegas' response to Commissioner Cobos' question on standalone aligning with RTC) Yes, which is

01:17:55.168 --> 01:17:59.569
beyond the December 2024 deadline of the original assumption

01:17:59.579 --> 01:18:03.378
for the. That's correct. And I think there's still

01:18:03.390 --> 01:18:06.569
questions on the design, whether it would be a co ancillary

01:18:08.069 --> 01:18:10.270
service or not a co optimized ancillary service. And

01:18:10.279 --> 01:18:13.199
so I think that kind of design work has to happen and

01:18:13.208 --> 01:18:15.729
that would probably then align whether it goes live

01:18:15.739 --> 01:18:20.810
exactly concurrently with it or for it or. Are we commingling

01:18:20.819 --> 01:18:25.100
dockets here? Let's see something. To keep that a little

01:18:25.239 --> 01:18:27.458
bit. Ok. So, so I think you kind of laid out a

01:18:27.470 --> 01:18:31.949
process. Okay. And so Commissioner Cobos, based on what

01:18:31.958 --> 01:18:34.609
he kind of laid out in terms of your KPIs and what

01:18:34.689 --> 01:18:37.479
vision is kind of going forward again to make sure

01:18:37.489 --> 01:18:40.829
that we are aligning the budget with the KPIs and the

01:18:40.838 --> 01:18:44.029
expectations of what's delivered. Are you, are you

01:18:44.039 --> 01:18:46.979
kind of in agreement with what Pablo has laid out?

01:18:47.168 --> 01:18:51.029
(item:21:Commissioner Cobos' question on an amendment) So for purposes of, if everybody agrees to the changes

01:18:51.039 --> 01:18:54.579
that I'm proposing to any order that ultimately, if

01:18:54.588 --> 01:18:58.619
we approve an increase. If you all agree with the direction

01:18:58.628 --> 01:19:00.909
of my performance measures, what I would say is I would

01:19:00.918 --> 01:19:03.989
amend as, as Pablo suggested on the value loss load.

01:19:04.000 --> 01:19:08.199
Delivery of the bowl from the first quarter,

01:19:08.208 --> 01:19:11.250
second quarter to give some flexibility. Um I would

01:19:11.259 --> 01:19:15.079
amend um Commission priority number two, the implementation

01:19:15.088 --> 01:19:19.798
of DRRS as expeditiously as possible um to closely

01:19:19.810 --> 01:19:25.430
align with RTC delivery as opposed to before, just

01:19:25.439 --> 01:19:27.899
to build in a little bit of flexibility in the sort

01:19:27.909 --> 01:19:32.569
of alignment there. Commissioner does that presuppose

01:19:32.579 --> 01:19:34.369
that we're not going to hit our statutory deadline?

01:19:35.918 --> 01:19:36.569
Um

01:19:38.750 --> 01:19:41.310
You might get a no vote from me on this. I understand

01:19:41.319 --> 01:19:45.020
But yes, we need to decide that issue and we can return

01:19:45.029 --> 01:19:48.770
back to this if you like. OK, we can also pause to

01:19:48.779 --> 01:19:52.569
take that item as well and continue the discussion

01:19:52.579 --> 01:19:56.270
under both items. That that's, that is an option.

01:20:00.109 --> 01:20:02.789
Just to be safe in case there's any overlapping discussion

01:20:02.798 --> 01:20:06.180
is what I would say. Okay. Sure. Okay.

01:20:09.020 --> 01:20:11.829
But you do agree that any form of DRRS should be implemented

01:20:11.838 --> 01:20:14.628
expeditiously as possible. So, Shelah can you kind

01:20:14.640 --> 01:20:18.180
of help me through this? So we would need to um take

01:20:18.189 --> 01:20:21.720
up Item No.? Looking at Connie, would be 25. Is that

01:20:21.729 --> 01:20:24.270
right? Take up Item No. 25.

01:20:26.430 --> 01:20:30.430
Yes. Okay. (item:25:Chairwoman Jackson takes up Item 25 in conjunction with Item 21) We'll also be taking up Item 25 in conjunction

01:20:30.439 --> 01:20:33.329
with moving forward with the for the purposes of this

01:20:33.338 --> 01:20:36.020
discussion. And again, this is not necessarily to take

01:20:36.029 --> 01:20:40.100
up the DRRS but to include it in the discussion so that

01:20:40.279 --> 01:20:45.239
we are staying in concert with what the expectations

01:20:45.250 --> 01:20:49.199
are for the agenda. Exactly. (item:25:Chairwoman Jackson lays out the purpose of conjoining Item 25 with Item 21) So for the purposes of

01:20:49.208 --> 01:20:51.369
this discussion, in terms of moving forward with the

01:20:51.378 --> 01:20:54.899
budget, I think again, we're trying to, you know, come

01:20:54.909 --> 01:20:58.109
to grips with what we think the um the fee needs to

01:20:58.119 --> 01:21:01.189
be moving forward as well as you know, get our arms

01:21:01.199 --> 01:21:03.640
around the KPI process because what we're talking

01:21:03.649 --> 01:21:06.708
about here is just using these again as an indicator

01:21:06.720 --> 01:21:10.649
of performance as we move forward and we kind of monitor

01:21:10.659 --> 01:21:15.640
the budget. So yes, so yes. (item:25:Commissioner Cobos' thoughts on an amendment) So that, that's really

01:21:15.649 --> 01:21:19.270
the goal here is just to create very specific performance

01:21:19.279 --> 01:21:23.439
measures that are targeted, targeting our, our priorities

01:21:23.449 --> 01:21:25.569
that have been laid out in ERCOT filing. And we've

01:21:25.579 --> 01:21:28.628
been very focused on um after the Legislative Session

01:21:28.640 --> 01:21:31.708
on developing the reliability standard. DRRS, RTC

01:21:31.720 --> 01:21:36.369
and PCM. And um like I said, I'm happy to amend the

01:21:36.378 --> 01:21:41.020
first one. I'm happy to add if you like Commissioner

01:21:41.500 --> 01:21:44.069
Glotfelty and Commissioner McAdams, I'm happy to amend

01:21:44.079 --> 01:21:47.350
number two to just say implementation of DRRS as expeditiously

01:21:47.359 --> 01:21:48.250
as possible.

01:21:49.909 --> 01:21:53.668
Um that will work with RTC plus B or something I

01:21:53.680 --> 01:21:56.539
could smooth that out so that it's any form of DRRS.

01:21:56.588 --> 01:21:59.640
So that way we can make a decision to prove it. So

01:21:59.649 --> 01:22:02.789
so ultimately, just, just so everybody knows my position.

01:22:03.958 --> 01:22:08.298
(item:25:Commissioner McAdams appreciation of Legislators input) The very much appreciated the Legislators uh letter.

01:22:08.310 --> 01:22:10.770
um the Chairs of both Committees of jurisdiction in

01:22:10.779 --> 01:22:15.029
both Chambers and the um the Author of the House Bill

01:22:15.039 --> 01:22:18.220
1500 which gave us the framework that we're operating

01:22:18.229 --> 01:22:22.159
under. It was man, I, I can't say enough how much

01:22:22.168 --> 01:22:28.560
it was well taken by me. The letter, it identified

01:22:28.569 --> 01:22:32.048
some inefficiencies that have been inadvertent due

01:22:32.060 --> 01:22:34.918
to the way we're operating right now. Simply because

01:22:34.930 --> 01:22:39.409
of the changing landscape of the grid. They identified

01:22:39.418 --> 01:22:43.759
volatility and they identified

01:22:45.289 --> 01:22:49.708
basically the challenges with, with the way we're

01:22:49.720 --> 01:22:54.009
operating, the implication of their letter was for

01:22:54.020 --> 01:22:59.000
the Commission to instruct ERCOT or to bless ERCOT's

01:22:59.180 --> 01:23:03.520
action of disregarding an implementation date. And

01:23:03.979 --> 01:23:09.668
I cannot do that. As a former Legislative Aid, law matters

01:23:09.859 --> 01:23:16.449
and black letter law matters. And uh I, I so in any

01:23:16.458 --> 01:23:19.939
policy that blesses ERCOT, disregarding applicable

01:23:19.949 --> 01:23:25.048
law, I cannot do. And so even the language that Commissioner

01:23:25.378 --> 01:23:28.159
Cobos and again, we're talking about the KBI, I see

01:23:28.168 --> 01:23:29.798
we're going to have a different discussion later. I

01:23:29.810 --> 01:23:34.060
think about the DRRS, right? So I can amend it to say

01:23:34.069 --> 01:23:38.140
implementation of DRRS as expeditiously as possible

01:23:38.989 --> 01:23:43.359
Um to work with RTC plus B I could smooth it

01:23:43.369 --> 01:23:46.039
out and we can pass it around after, you know, make

01:23:46.048 --> 01:23:49.970
sure everybody's good so that it's not, it's any version

01:23:49.979 --> 01:23:52.720
of DRRS right. Yeah, Yeah,

01:23:56.270 --> 01:23:58.918
What we're talking about here missing deadlines. Just

01:23:58.930 --> 01:24:03.798
so, you know. (item:25:Commissioner Glotfelty's thoughts on DRRS) I think, I think this in my view goes

01:24:03.810 --> 01:24:06.588
back to the fact that DRRS was,

01:24:08.739 --> 01:24:12.759
is required under House Bill 1500. But what we haven't

01:24:12.770 --> 01:24:15.798
done is we still haven't looked at all of the ancillary

01:24:16.029 --> 01:24:19.079
services in total. So we're adding and adding and adding

01:24:19.088 --> 01:24:22.859
and adding and we've never looked at all of the pieces

01:24:22.869 --> 01:24:26.149
put together correctly. So we're going to add DRRS

01:24:26.180 --> 01:24:29.619
at some point in time, we've added ECRS in the last

01:24:29.628 --> 01:24:34.689
year. Um We've, yeah, I mean, the, the the problem

01:24:34.699 --> 01:24:38.779
to me, you know, we, we have to have a real understanding

01:24:38.789 --> 01:24:42.378
of what this market is gonna look like in terms of

01:24:42.390 --> 01:24:46.798
energy, day ahead, energy and ancillary services. And

01:24:46.979 --> 01:24:49.119
I, I haven't talked to many people that have a real

01:24:49.128 --> 01:24:51.500
understanding of, of what it looks like. But bottom

01:24:51.509 --> 01:24:54.378
line is Commissioner. I, I can get on board with some

01:24:54.390 --> 01:24:56.560
type of smooth out language whatever, whatever that

01:24:56.569 --> 01:25:01.009
means. I just if, if that policy approach again, tying

01:25:01.020 --> 01:25:01.890
their budget to it.

01:25:03.689 --> 01:25:07.338
Implies that they should miss the statutory deadline

01:25:07.350 --> 01:25:10.199
I have significant concerns with that. (item:25:Chairwoman Jackson on DRRS and KPIs) I don't think

01:25:10.270 --> 01:25:15.439
I think all it addresses is monitoring DRRS the ability

01:25:15.449 --> 01:25:19.208
at which we're able that is implementing it. And I

01:25:19.220 --> 01:25:22.649
think your language now says we'll make that decision

01:25:22.890 --> 01:25:26.359
in conjunction with right now is I'm sorry, this is

01:25:26.369 --> 01:25:31.470
really just focused towards the budget and the KPIs

01:25:31.579 --> 01:25:35.369
And, and again, this was something that initially started

01:25:35.378 --> 01:25:38.430
with Staff in terms of recommending certain KPIs to

01:25:38.439 --> 01:25:41.970
go along with, you know, the actual monitoring of

01:25:41.979 --> 01:25:44.600
you know, how well you're doing on your finances were

01:25:45.069 --> 01:25:47.649
you know, in the ERCOT Board as well as us, we, we

01:25:47.659 --> 01:25:50.930
look at, you know, what is your spend, what was your

01:25:50.939 --> 01:25:53.680
plan? What is your variance versus the plan? I mean

01:25:53.689 --> 01:25:55.779
we're, we're now coming in and saying we also want

01:25:55.789 --> 01:25:58.489
at the same time because of all of the important work

01:25:58.500 --> 01:26:01.250
activities that are happening to. Also at the same

01:26:01.259 --> 01:26:04.449
time. Look at, you know, what are you accomplishing

01:26:04.458 --> 01:26:08.088
along the way so that we can kind of be, be engaged

01:26:08.100 --> 01:26:11.829
we can monitor it and quite frankly, uh we continue

01:26:11.838 --> 01:26:13.890
to have the discussions about what do we need to do

01:26:13.899 --> 01:26:16.239
to make sure as the Commission that we're on track

01:26:16.250 --> 01:26:19.548
as well as how can we provide resources and make sure

01:26:19.560 --> 01:26:21.989
that ERCOT has what they need and that they're on track

01:26:22.000 --> 01:26:25.439
So I think that was really the only intent uh in terms

01:26:25.449 --> 01:26:27.798
of what you were talking about in terms of the KPIs

01:26:27.810 --> 01:26:32.789
So performance monitoring, I'm good on that. Absolutely

01:26:32.798 --> 01:26:37.384
So could you read it one more time? It's just the implementation

01:26:37.395 --> 01:26:41.064
of DRRS as expeditiously as possible to work with RTC

01:26:41.074 --> 01:26:45.524
C plus something like that? Yeah, it could be any form

01:26:45.534 --> 01:26:47.793
of DRRS and we'll make that decision here. A little

01:26:47.805 --> 01:26:50.784
bit later in the agenda. But as written, it would contemplate

01:26:50.793 --> 01:26:53.475
any form. Okay. We want to make sure we have total alignment

01:26:53.484 --> 01:26:56.944
with our ERCOT so just thoughts. Does that work for you Kenan? (item:25:ERCOT's Kenan Ögelman in response to Chairwoman Jackson's question on amendment) This is Kenan Ögelman 

01:26:57.213 --> 01:27:01.829
with ERCOT. Yeah I mean, I think the issue for us

01:27:01.838 --> 01:27:06.640
was the absolute statement of prior to RTC that was

01:27:06.649 --> 01:27:10.949
in item two. And the way you're proposing to smooth

01:27:10.958 --> 01:27:14.579
that out aligns with what uh Pablo was saying, which

01:27:14.588 --> 01:27:17.890
is um you know, we want a little bit of flexibility

01:27:17.899 --> 01:27:22.789
in and, and around delivering RTC plus B on time and

01:27:23.128 --> 01:27:27.548
uh and, and would like to be able to move slightly

01:27:27.560 --> 01:27:33.350
ahead or, or after RTC plus B depending on the circumstances

01:27:33.359 --> 01:27:36.930
Okay. Well, the delivery of RTC is a priority, right.

01:27:36.939 --> 01:27:39.029
And we cannot delay it and it shouldn't be delayed

01:27:39.039 --> 01:27:41.600
according to your comments by developing DRRS stand

01:27:41.649 --> 01:27:44.203
alone product. Now when and that all links up, that's

01:27:44.212 --> 01:27:47.103
what you need flexibility. Exactly. Okay. But again, the

01:27:47.112 --> 01:27:51.881
key point is RTC plus B is the number one priority.

01:27:52.493 --> 01:27:55.341
Okay. Pablo, you know what, wrap it up with any statements

01:27:55.353 --> 01:27:58.972
regarding the KPIs? (item:25:Pablo Vegas in response to Chairwoman Jackson's question on KPI strategy) I think it's a good strategy and

01:27:58.981 --> 01:28:01.462
we look forward to coming each quarter to talk about

01:28:01.472 --> 01:28:03.103
progress on these initiatives. And, and I think.

01:28:04.746 --> 01:28:08.125
On some, I would like us or you all to look at

01:28:08.136 --> 01:28:12.636
the FERC KPIs. (item:25:Commissioner Glotfelty's question on interest rates) I mean, clearly things like load forecast

01:28:12.645 --> 01:28:15.904
accuracy, things like that. Are really important for

01:28:15.916 --> 01:28:18.326
how you all are working internally. They're not just

01:28:18.335 --> 01:28:23.515
external KPIs but they are how the organization is working

01:28:23.770 --> 01:28:27.289
Um I think we've, um I, I think it's a good data

01:28:27.298 --> 01:28:32.640
point but to look at those at the FERC KPIs and um

01:28:32.949 --> 01:28:35.430
not all of them are going to be applicable to our market

01:28:35.439 --> 01:28:37.579
but some of them are, and I'd like you all to look

01:28:37.588 --> 01:28:39.899
at those and include, include those as we go through

01:28:39.909 --> 01:28:44.470
this process. Okay. So I know we've been talking, we've

01:28:44.479 --> 01:28:47.859
got the KPIs kind of issue kind of settled, I think

01:28:47.869 --> 01:28:51.369
And kind of what remains is um is the fee and I

01:28:51.378 --> 01:28:56.159
know that you've been kind of carry that. So, uh so

01:28:56.579 --> 01:28:59.798
so come up with something that hopefully, um you know

01:29:00.298 --> 01:29:01.020
ERCOT is um

01:29:02.640 --> 01:29:05.310
able to execute. Madam Chair, you may be upset with

01:29:05.319 --> 01:29:09.739
me. (item:25:Commissioner McAdams introduces Katie Coleman with TIEC) May I invite one individual uh to the, the dais

01:29:10.319 --> 01:29:10.869
um

01:29:12.609 --> 01:29:16.259
Nope. Katie Coleman of TIEC if I may.

01:29:18.729 --> 01:29:23.509
Like everybody's tensed up, Katie. You had

01:29:23.520 --> 01:29:26.759
a filing, it was a very detailed filing. And my question

01:29:26.770 --> 01:29:31.390
to you is the range that we are discussing was contemplated

01:29:31.399 --> 01:29:35.619
in your filing. Your group did analysis on it. 163

01:29:35.628 --> 01:29:39.579
is hitting one of those numbers, I'm sorry, option

01:29:39.588 --> 01:29:42.439
two is hitting one of those numbers that you discussed

01:29:42.449 --> 01:29:46.119
and evaluated. I understand that increasing the fee

01:29:46.128 --> 01:29:49.338
is not appetizing to your members. Could I clarify

01:29:49.350 --> 01:29:53.069
that. (item:25:TIEC's Katie Coleman in response to Commissioner McAdams' question on decreasing fee) So I think you referenced that we had asked for

01:29:53.079 --> 01:29:55.708
it to be decreased. And I just wanted to clarify what

01:29:55.720 --> 01:29:59.250
our filing was. We dug in on the assumptions. It is

01:29:59.270 --> 01:30:02.574
a that my customers pay a disproportionate amount of.

01:30:02.845 --> 01:30:05.515
So we have a responsibility to make sure that all

01:30:05.524 --> 01:30:09.055
the assumptions make sense. But we also very much recognize

01:30:09.064 --> 01:30:11.805
the important work that ERCOT does for reliability

01:30:11.814 --> 01:30:14.744
and we want them to be well funded. We want their employees

01:30:14.753 --> 01:30:18.704
to be happy. When we looked at the data that was

01:30:18.713 --> 01:30:21.145
filed, some of the issues that you all have hit upon

01:30:21.154 --> 01:30:23.713
were concerning to us, the interest rates looked out

01:30:23.725 --> 01:30:26.484
of sync with the information that we were reviewing.

01:30:26.899 --> 01:30:30.259
There were some other discrepancies I think earlier

01:30:30.270 --> 01:30:33.279
it was discussed, um you know, keeping the CRR balance

01:30:33.289 --> 01:30:36.600
flat at $2 billion. It's actually above that right now.

01:30:36.609 --> 01:30:38.989
So even if you keep it flat, it's actually at like

01:30:39.000 --> 01:30:42.958
$2.115 billion or something like that. Um those things

01:30:42.970 --> 01:30:46.270
all have an impact that could lend itself to a more

01:30:46.279 --> 01:30:49.899
conservative fee, but we were not proposing to reduce

01:30:49.909 --> 01:30:53.680
the fee. And I think just digging in on those parameters

01:30:53.689 --> 01:30:57.819
and an intermediate um fee and recognizing that some

01:30:57.829 --> 01:31:00.149
of these factors may be volatile over time like the

01:31:00.159 --> 01:31:03.548
interest rates, I think your conversation has given

01:31:03.560 --> 01:31:08.149
us some comfort that the um the proposal was vetted

01:31:08.600 --> 01:31:13.338
We, we were just to be frank, we had hoped to have

01:31:13.350 --> 01:31:15.819
a more open discussion about these issues at the hearing

01:31:15.829 --> 01:31:18.409
that was held. But because of the way it was structured

01:31:18.588 --> 01:31:21.048
we did not get a real opportunity to have some of those

01:31:21.060 --> 01:31:23.489
conversations and get some of those questions answered

01:31:23.500 --> 01:31:26.569
Hence the filing. Um But I think the diligence that

01:31:26.579 --> 01:31:31.489
you all have done on this satisfies many of our concerns

01:31:32.229 --> 01:31:33.750
Thank you, Katie. Don't say anything else.

01:31:35.939 --> 01:31:39.329
Madam Chair so I, I just wanted to afford the industrial

01:31:39.338 --> 01:31:42.899
consumers because they did file and, and they, they

01:31:42.909 --> 01:31:47.189
will bear some of the impact, the opportunity to kind

01:31:47.199 --> 01:31:50.329
of say their piece because when you're passing a budget

01:31:50.338 --> 01:31:52.520
and you're assessing a fee, it's good to have that.

01:31:52.588 --> 01:31:57.338
And I think it's good governance um with that um.

01:31:58.259 --> 01:31:58.918
(item:25:Commissioners dialogue with ERCOT on the 2 year budget option) The two year,

01:32:00.939 --> 01:32:05.560
yes, I'm good on to on to your budget to your budget

01:32:05.640 --> 01:32:12.009
at Sean say or forever hold your peace. The 63 is that

01:32:12.020 --> 01:32:16.279
I mean you needed to do that math uh because we your

01:32:16.289 --> 01:32:19.168
option two had contemplated 65. But again, Commissioner

01:32:19.369 --> 01:32:21.890
Cobos had pointed out your carry over. Does the math

01:32:21.899 --> 01:32:25.890
still work out for you to support your needs at 63

01:32:26.259 --> 01:32:31.020
Yes, thats an increase in 26 as well with using option

01:32:31.029 --> 01:32:35.649
two. Ok, I need to be clear. So you're saying 63 but

01:32:35.659 --> 01:32:38.208
with an increase later, that's the expectation that

01:32:39.029 --> 01:32:42.310
option too. Can you increase the fee after two years

01:32:43.509 --> 01:32:46.548
we'll see based on how things roll out. That's the

01:32:46.560 --> 01:32:49.149
whole thing in two years. We really don't know how

01:32:49.159 --> 01:32:51.310
it's going to look. Right. I'm trying to stick to landing

01:32:51.319 --> 01:32:54.159
with everything else that y'all are doing and because

01:32:54.168 --> 01:32:58.159
that's going to have a pretty dynamic effect on what

01:32:58.168 --> 01:33:02.369
you're looking at RTC and everything else. (item:25:PUC Executive Director Thomas Gleeson on operating budget reconciliation) Commissioners

01:33:02.378 --> 01:33:06.088
if I may just make a suggestion? You know, this process

01:33:06.100 --> 01:33:08.609
was set up to look very similar to what our process

01:33:08.619 --> 01:33:11.168
is at the Legislature. If you're going to approve a

01:33:11.180 --> 01:33:13.659
2 year budget, which I think is the right action.

01:33:14.079 --> 01:33:16.850
What I may suggest. I know Sean and his team provide

01:33:16.859 --> 01:33:20.500
updates to the ERCOT Board at a normal iteration on

01:33:20.509 --> 01:33:23.779
their budget progress. One of the things that, that

01:33:23.789 --> 01:33:27.229
state agencies file on the years that they're not submitting

01:33:27.239 --> 01:33:30.899
their LARs are an operating budget reconciliation. So

01:33:31.000 --> 01:33:35.378
perhaps we ask ERCOT to provide, say a year from now

01:33:35.390 --> 01:33:37.850
when they would have a year before they filed their

01:33:37.859 --> 01:33:41.208
next budget request, an operating budget reconciliation.

01:33:41.220 --> 01:33:43.680
Which would be an abridged version of their budget

01:33:43.689 --> 01:33:46.189
request so that you all can see their progress and

01:33:46.199 --> 01:33:47.850
have a discussion about that at that time.

01:33:50.100 --> 01:33:52.189
Sounds like a good measure just to track progress.

01:33:53.250 --> 01:33:55.699
Good. Yeah, absolutely. I am too.

01:33:57.770 --> 01:34:00.500
So um I don't know what motion I need to make on

01:34:00.509 --> 01:34:05.220
this. So it sounds like the motion would include

01:34:05.789 --> 01:34:11.819
um approving a 63 cent um fee SAF

01:34:15.259 --> 01:34:21.770
and the performance measures included in my memo. With

01:34:21.779 --> 01:34:25.259
the addition of a performance measure to track ERCOT's

01:34:25.270 --> 01:34:29.220
progress on FERC KPIs. Yes.

01:34:30.789 --> 01:34:32.949
And is there something that we have to do in a motion

01:34:32.958 --> 01:34:34.509
about total expenditures?

01:34:37.159 --> 01:34:39.289
So I don't know what that total expenditure number

01:34:39.298 --> 01:34:43.250
would be we do 63 cents. Well the total expenditure because

01:34:43.259 --> 01:34:44.918
you haven't changed, the expense side would be the

01:34:44.930 --> 01:34:45.199
same.

01:34:48.680 --> 01:34:51.869
So I just want to be clear that this is something that

01:34:51.878 --> 01:34:52.470
you feel

01:34:54.918 --> 01:34:56.930
comfortable about and that there's not another option that you want to

01:34:56.939 --> 01:34:59.640
discuss before we move forward. (item:25:ERCOT's Sean Taylor in response to the Commissioner's questions on total expenditures) So just to clarify

01:34:59.649 --> 01:35:01.819
the total expenditure, if you change the fee, then

01:35:01.829 --> 01:35:04.489
the total sources coming in and the total uses when

01:35:04.500 --> 01:35:06.890
we talk about total expenditures, it is total uses

01:35:06.899 --> 01:35:11.588
as was mentioned earlier in comparing ERCOT's $424 for the

01:35:11.600 --> 01:35:17.159
filing to the other ISOs. Then of that $424 that $26 million

01:35:17.168 --> 01:35:21.039
is associated with NERC there's also $18 million that's

01:35:21.048 --> 01:35:24.039
associated with increase in cash balance. So that number

01:35:24.048 --> 01:35:29.588
would actually decrease, as we decrease the 63 cents.

01:35:29.600 --> 01:35:32.149
So there would be an impact to that financial expenditure

01:35:32.159 --> 01:35:34.539
unless you did a direct offset with the interest income

01:35:34.548 --> 01:35:34.909
rate.

01:35:37.168 --> 01:35:39.890
So the total expenditures would decrease and we can

01:35:39.899 --> 01:35:43.229
calculate what that would be with the 63 cents. So

01:35:43.239 --> 01:35:47.289
do we uh Madam Chair. It is 11:18. You are close

01:35:47.298 --> 01:35:50.000
to your Executive Session mark. We are. Could we put our heads

01:35:50.009 --> 01:35:53.009
together and formulate a motion that captures what

01:35:53.020 --> 01:35:53.489
we need?

01:35:56.128 --> 01:35:59.229
Because we want this to sustain itself for a while.

01:35:59.239 --> 01:36:03.418
(item:25:Commission's Staff Connie Corona on ERCOT writing an updated order) I think we can do that. It would also be advisable

01:36:03.430 --> 01:36:09.579
for ERCOT to reduce, to writing the changes in the figures

01:36:09.588 --> 01:36:12.680
that Mr. Taylor just explained. So that we can make sure

01:36:12.689 --> 01:36:15.378
we have the accurate information in the order that

01:36:15.390 --> 01:36:16.739
we prepare for your signature.

01:36:18.359 --> 01:36:22.569
Okay. Sounds good. So, um we were scheduled to go into

01:36:22.579 --> 01:36:29.390
Closed Session um around 11:30. It's 11:18. So let's

01:36:29.869 --> 01:36:36.930
go ahead and skip to um Item 50. Which brings us

01:36:36.939 --> 01:36:39.909
to Closed Session and then we'll come back afterwards

01:36:39.918 --> 01:36:45.229
and, and have the, the details that we need to

01:36:45.239 --> 01:36:48.600
proceed on with the motion. (item:50:Chairwoman Jackson pauses Open Meeting, to hold Closed Session) So, having convened in

01:36:48.609 --> 01:36:51.918
duly noticed Open Meeting. The Commission is now at

01:36:51.930 --> 01:36:56.708
11:19 on November 2, 2023. To hold a Closed Session to

01:36:56.720 --> 01:36:59.850
discuss matters pursuant to Chapter 551 of the

01:36:59.859 --> 01:37:05.668
Texas Government Code sections 551.071, 551.074, 

01:37:05.699 --> 01:37:10.128
and 551.076. We'll break for a Closed Session and

01:37:10.229 --> 01:37:12.838
a few minutes for lunch and I'll anticipate us being

01:37:12.850 --> 01:37:14.979
back in about 45 minutes. Thank you.

01:37:18.628 --> 01:37:19.958
You catch me if I'm not.

01:37:23.500 --> 01:37:27.270
(item:50:Chairwoman Jackson concludes Closed Session, Public Meeting resumed) The Closed Session is hereby concluded at 12:32pm

01:37:27.279 --> 01:37:31.270
on November 2, 2023. And the Commission will resume

01:37:31.279 --> 01:37:34.359
its Public Meeting. The Commission will take no action

01:37:34.369 --> 01:37:37.850
today on litigation matters discussed in Closed Session.

01:37:38.039 --> 01:37:40.789
We will resume our agenda beginning with Item No.

01:37:40.798 --> 01:37:44.159
21. I know we took a break so that ERCOT could run

01:37:44.168 --> 01:37:45.869
some numbers and

01:37:48.369 --> 01:37:49.140
entertain a motion.

01:37:51.270 --> 01:37:53.750
Pending any objections from ERCOT. I would love to

01:37:53.759 --> 01:37:56.418
make a motion, good?

01:37:58.878 --> 01:38:02.189
Or comments. (item:21:Pablo Vegas' response to Commissioner McAdams' question prior to motion) Just a quick comment that, you know, we

01:38:02.199 --> 01:38:05.060
updated the, the numbers as we have discussed and put

01:38:05.079 --> 01:38:06.798
forth. And I just want to make sure it was clear because

01:38:06.810 --> 01:38:09.109
I'm not sure if it was clear in the conversation. That

01:38:09.350 --> 01:38:11.470
based on the assumption that are in there, there is

01:38:11.479 --> 01:38:14.970
an expectation of potentially coming back for a system

01:38:14.979 --> 01:38:18.640
admin fee increase in two years that this isn't setting

01:38:18.649 --> 01:38:21.378
a forecasted number for four years as the other assumptions

01:38:21.390 --> 01:38:24.140
were. And so that change is just part of that assumption

01:38:24.149 --> 01:38:25.708
just to make sure that was clear in the dialogue. But

01:38:25.720 --> 01:38:28.649
otherwise the numbers as proposed and as offered are

01:38:28.659 --> 01:38:30.859
the numbers discussed. Thank you, Mr Vegas. No, that

01:38:30.869 --> 01:38:34.199
was my understanding. It very much appreciate the clarification.

01:38:34.208 --> 01:38:36.789
I would also like to thank you for conducting the number

01:38:36.798 --> 01:38:42.199
run over the break. And this motion that I'll put forward

01:38:42.208 --> 01:38:46.140
reflects the outcome of that. (item:21:Motion to modify proposed order on ERCOT's budget consistent with memo, discussion) Members, I would modify

01:38:46.149 --> 01:38:49.458
I would move to modify the proposed order regarding

01:38:49.569 --> 01:38:52.109
ERCOT's budget, consistent with Commissioner Cobos

01:38:52.250 --> 01:38:54.729
memo and our discussion including

01:38:56.708 --> 01:38:59.560
development and reporting applicable to performance

01:38:59.569 --> 01:39:03.579
measures or metrics that other independent system operators

01:39:03.588 --> 01:39:06.949
or regional transmission operators use with the Federal

01:39:06.958 --> 01:39:12.359
Energy Regulatory Commission. Submission of value of

01:39:12.369 --> 01:39:15.869
lost load study associated with the development of

01:39:15.878 --> 01:39:19.119
a reliability standard in the second quarter of 2024.

01:39:19.869 --> 01:39:25.270
Implementation of DRRS as expeditiously as possible,

01:39:25.418 --> 01:39:32.409
and prior to or aligned with RTC plus B. Full implementation

01:39:32.418 --> 01:39:40.520
and delivery of RTC plus B in 2026. And implementation of

01:39:40.529 --> 01:39:44.289
the PCM must be aligned with the implementation of

01:39:44.298 --> 01:39:49.899
RTC plus B in 2026 consistent with House Bill 1500.

01:39:50.600 --> 01:39:53.020
Additionally, ERCOT shall file with the Commission

01:39:53.029 --> 01:39:56.579
and operating budget reconciliation for 12 months ending

01:39:56.588 --> 01:40:03.039
June 30, 2024 by September 1, 2024. A two year budget

01:40:03.048 --> 01:40:11.588
with system administration fee of $0.63 per Megawatt

01:40:11.600 --> 01:40:15.000
hour which is 63 cents for everybody listening. To be

01:40:15.009 --> 01:40:21.779
effective January 1, 2024. And 2024 expenditures of

01:40:21.789 --> 01:40:29.930
$405,700,000. And 2025 expenditures of 

01:40:29.939 --> 01:40:31.149
$414,300,000.

01:40:33.259 --> 01:40:36.899
So moved. I have in addition to your KPI on the

01:40:36.909 --> 01:40:39.479
fourth one. Where it says implementation of PCM must

01:40:39.489 --> 01:40:41.560
be aligned with the implementation of RTC plus B in

01:40:41.569 --> 01:40:45.529
2026. Adding the requirement that if they're not

01:40:45.539 --> 01:40:48.838
aligned, that we need to get cost analysis, both of

01:40:48.850 --> 01:40:52.060
PCM alone and PCM plus RTC plus B. Basically what

01:40:52.069 --> 01:40:52.770
I have in my memo.

01:40:56.229 --> 01:41:01.619
So I would modify the um. Okay so that's in your memo

01:41:01.628 --> 01:41:02.270
right? Yes.

01:41:04.029 --> 01:41:06.600
(item:21:Motion updated to harmonize proposed order Commissioner Cobos' memo) So I moved to harmonize additionally, moved to harmonize

01:41:07.119 --> 01:41:10.819
this order with your memo, which I had in there. So

01:41:10.979 --> 01:41:13.418
which would be full implementation and delivery of

01:41:13.430 --> 01:41:19.668
RTC plus B in 2026. And there's a parenthetical that you

01:41:19.680 --> 01:41:23.069
kind of sort of summarized but the actual language

01:41:23.079 --> 01:41:25.359
in my memo. Consistent with your memo.

01:41:27.588 --> 01:41:30.759
Motion made. Do I have a second? Second. We have a

01:41:30.770 --> 01:41:35.470
motion and a second. All in favor, say aye. Aye. Motion passes.

01:41:41.109 --> 01:41:44.100
Having wrapped up Item 21 the ERCOT budget. We will

01:41:44.109 --> 01:41:48.119
now transition to Section 1 of our agenda. Contested

01:41:48.128 --> 01:41:52.319
Case Items. First up is Item No. 1. Shelah, will

01:41:52.329 --> 01:41:53.850
you please lay out this item?

01:41:57.168 --> 01:42:03.289
Yes, ma'am. (item:1:Formal Complaint of Tammy Bean against Waterco, Jim & Gloria Nelson, Waterco Board) Item No. 1 is Docket No. 47411.

01:42:03.539 --> 01:42:05.810
This is the formal complaint of Tammy Bean against

01:42:05.819 --> 01:42:09.838
Waterco. Jim and Gloria Nelson and WaterCo

01:42:10.199 --> 01:42:13.569
Board. Before you is the proposal for decision from

01:42:13.939 --> 01:42:16.458
SOAH. No corrections or exceptions were followed by

01:42:16.470 --> 01:42:19.298
the parties and Chairman Jackson filed a memo in this

01:42:19.319 --> 01:42:22.949
docket. I did file a memo to make some needed corrections

01:42:22.958 --> 01:42:27.569
to the order. Do we have any thoughts? (item:1:Commissioner Cobos thoughts on the order) Chairman

01:42:27.579 --> 01:42:30.009
Jackson, the only additional thought I have is that

01:42:30.020 --> 01:42:32.708
um, we go ahead and remand the agreed sewer rate as

01:42:32.720 --> 01:42:34.850
well. I know there's agreement on it, but it sounded

01:42:34.859 --> 01:42:40.739
like from the analysis of the case that um, depending

01:42:40.750 --> 01:42:43.588
on how the first issue comes on with respect to the

01:42:43.600 --> 01:42:46.259
additional evidence on the connection fees that, that

01:42:46.270 --> 01:42:49.069
could impact the sewer rate. So I would suggest that

01:42:49.079 --> 01:42:52.939
we send everything back, including the affiliate expenses

01:42:52.949 --> 01:42:53.628
and the sewer rate.

01:42:55.359 --> 01:42:58.958
Is that a correct interpretation of what I read? You

01:42:58.970 --> 01:43:00.970
maybe? Are, are you referring to Item No. 3

01:43:00.979 --> 01:43:05.399
the Forest Glen? We're on Item No. 1. I'm sorry.

01:43:06.739 --> 01:43:09.869
It's been, it's been a long day, a long week. Sorry

01:43:09.939 --> 01:43:09.958
Chair

01:43:11.470 --> 01:43:12.000
Jackson. I didn't know we were gonna start with the

01:43:16.739 --> 01:43:20.869
contested cases, so it's fine. Now I know how you feel. (item:1:Commissioner McAdams motion to approve PFD modified by the Chairwoman's memo)  Commissioner Jackson, I agree with your memo. I believe and I believe

01:43:20.878 --> 01:43:23.430
and I would move to adopt the PFD as modified by your

01:43:23.439 --> 01:43:26.759
memo. Second. A motion and a second. All in favor, say

01:43:26.798 --> 01:43:31.588
aye. Aye. Motion passes. Okay. Next up is Item No. 2. Shelah,

01:43:31.829 --> 01:43:35.020
will you please lay out this item. Yes, ma'am. (item:2:Ratepayers appeal decision by Windermere Oaks WSC to change water & sewer rates) Item 2 is Docket

01:43:35.029 --> 01:43:39.208
No. 50788. This is the ratepayers appeal of the

01:43:39.220 --> 01:43:43.128
decision by Windermere Oaks Water Supply Corporation to change

01:43:43.140 --> 01:43:45.779
rates and sewer rates. The Commission considered the

01:43:45.789 --> 01:43:48.989
Docket at the June 16, 2022 of the meeting and the

01:43:49.000 --> 01:43:51.529
Commission remanded the Docket to SOAH for further

01:43:51.539 --> 01:43:54.770
processing. Before you is a second proposal for decision

01:43:54.779 --> 01:43:57.930
from SOAH. Windermere, the ratepayers group, Commission

01:43:57.939 --> 01:44:01.189
Staff all filed exceptions to the proposal for decision.

01:44:01.640 --> 01:44:04.789
The SOAH ALJ filed a memo declining to make changes

01:44:04.798 --> 01:44:08.509
to the PFD. Oral argument was requested in this Docket

01:44:08.520 --> 01:44:12.020
and the Commission voted to grant oral argument. (item:2:Chairwoman Jackson lays out instructions for oral arguments) So

01:44:12.029 --> 01:44:14.600
our normal time for parties to speak on oral argument

01:44:14.609 --> 01:44:17.759
is 3 minutes. However, due to the complexity of

01:44:17.770 --> 01:44:20.899
this case, I think we should allow parties 6 minutes

01:44:21.259 --> 01:44:26.539
each for oral argument. Any thoughts, all aligned. Shelah, 

01:44:26.548 --> 01:44:28.869
will you please call up the parties individually for

01:44:28.878 --> 01:44:32.810
oral argument? Yes, Chairman. We have four different

01:44:32.819 --> 01:44:35.109
people that signed up to speak. (item:2:Shelah Cisneros, Commission Counsel introduces Catherine Allen on behalf of ratepayers) The first person that

01:44:35.119 --> 01:44:38.539
signed up is Catherine Allen on behalf of ratepayers.

01:44:39.939 --> 01:44:42.128
And a reminder each party will have six minutes to

01:44:42.140 --> 01:44:45.128
speak. Miss Allen, if you'll come up to the desk and you'll

01:44:45.140 --> 01:44:47.569
just be sure to say your name for the record. That

01:44:47.579 --> 01:44:48.270
would be helpful.

01:45:05.020 --> 01:45:07.220
(item:2:Catherine Allen, Ratepayer Representative for Windermere Oaks Water Supply Corp.) Commissioners. My,

01:45:08.729 --> 01:45:11.689
my name is Catherine Allen. I'm here on behalf of the

01:45:11.699 --> 01:45:14.909
Ratepayer Representative for Windermere Oaks Water 

01:45:14.918 --> 01:45:18.689
Supply Corporation. First, we wish to tell you how

01:45:18.699 --> 01:45:22.250
grateful we are that the Commission agreed to allow

01:45:22.259 --> 01:45:25.819
us to address you today. We consider this your time

01:45:25.829 --> 01:45:28.418
really rather than ours. We're gonna do our very best

01:45:28.430 --> 01:45:31.668
to assist you in any way that we can because all that

01:45:31.680 --> 01:45:36.020
the ratepayers here are looking for is what they're

01:45:36.029 --> 01:45:38.520
entitled to under the law, which are just in reasonable

01:45:38.529 --> 01:45:41.119
rates. They're not looking to avoid paying for their

01:45:41.128 --> 01:45:44.890
utility service. They just want to do that in compliance

01:45:44.899 --> 01:45:50.838
with the law. And what precipitated this appeal was

01:45:50.850 --> 01:45:57.390
a 2020 rate increase by a Board of Directors that disregarded

01:45:57.479 --> 01:46:02.029
both the contract between Windemere and its members

01:46:02.039 --> 01:46:05.949
reflected in its governing documents. And fundamental

01:46:05.958 --> 01:46:10.279
rate making principles of just and reasonable rates.

01:46:11.189 --> 01:46:13.989
The ratepayers felt that they had no alternative but

01:46:14.000 --> 01:46:18.310
to appeal. Because their Board was requiring them to

01:46:18.319 --> 01:46:24.619
pay more than the cost to provide them service their

01:46:24.628 --> 01:46:29.319
contract with the company, which as you know is what

01:46:29.329 --> 01:46:32.989
allows Windemere to function as a utility. If it did

01:46:33.000 --> 01:46:36.939
not have governing documents with specific provisions

01:46:36.949 --> 01:46:41.020
could not be a utility. And those governing documents

01:46:41.029 --> 01:46:44.500
prohibit Windemere from collecting from its customers

01:46:44.509 --> 01:46:49.220
more than what it costs to provide service. Those documents

01:46:49.229 --> 01:46:53.079
prohibit Windemere from spending its resources for

01:46:53.088 --> 01:46:59.048
purposes other than to provide service. And those documents

01:46:59.060 --> 01:47:04.369
govern above. For example, the Texas Nonprofit Corporation

01:47:04.378 --> 01:47:09.970
Act and other law. That's the contract and it allows

01:47:09.979 --> 01:47:14.399
Windemere to exist and operate as a utility. Windermere's

01:47:14.409 --> 01:47:18.009
Board with the 2020 rate increase disregarded that.

01:47:18.619 --> 01:47:23.479
Likewise, the just and reasonable standards prohibit

01:47:23.489 --> 01:47:27.619
Windemere from collecting revenue in excess of the

01:47:27.628 --> 01:47:32.199
cost to provide service to its customers. And the 2020

01:47:32.208 --> 01:47:35.779
rate increase likewise contravened that.

01:47:37.359 --> 01:47:41.409
And getting no relief from their Board, the ratepayers

01:47:41.418 --> 01:47:44.378
had no alternative but to bring this appeal. And all

01:47:44.390 --> 01:47:49.729
that they are after is a rate that covers the cost

01:47:49.739 --> 01:47:54.369
of service. That's all that they're after. The proposed

01:47:54.378 --> 01:47:57.588
as it, as this appeal progressed. It became apparent

01:47:57.600 --> 01:48:01.739
that there were any number of other problems and frailties

01:48:01.890 --> 01:48:06.418
with the appealed rates. And Windermere shifted its

01:48:06.430 --> 01:48:10.789
position continuously in order to avoid those problems.

01:48:11.079 --> 01:48:14.069
There's a lot of minutia to that. There's no need to

01:48:14.079 --> 01:48:18.310
address it today except to say that if the Commission

01:48:18.319 --> 01:48:23.668
is to consider allowing some appeal case expenses,

01:48:24.220 --> 01:48:28.810
we simply ask the Commission to consider the complexity

01:48:28.850 --> 01:48:33.140
that resulted from having to follow the shifting positions

01:48:33.529 --> 01:48:38.470
Having to reask every time Windermere changed its position

01:48:38.479 --> 01:48:43.680
to reask for data to reask for its rate design. All

01:48:43.689 --> 01:48:46.708
of those things. we asked the Commission to keep that

01:48:46.720 --> 01:48:51.659
in mind if you are inclined to consider an award of

01:48:51.668 --> 01:48:55.020
expenses. But that minutia is kind of beyond uh the

01:48:55.029 --> 01:48:58.029
detail of what we're here today to talk about. What

01:48:58.039 --> 01:49:01.829
I do though want to address is that the proposal for

01:49:01.838 --> 01:49:05.680
decision carries forward and incorporates all of the

01:49:05.689 --> 01:49:09.088
problems that the appealed rates have. (item:2:Catherine Allen on recovery of costs) Number one,

01:49:09.588 --> 01:49:12.279
they recover costs that are greater than the cost of

01:49:12.289 --> 01:49:17.838
service. Even Windemere itself admits that these outside

01:49:17.850 --> 01:49:21.319
legal costs are not cost of service. Mr. Burress, its

01:49:21.329 --> 01:49:24.409
General Manager, Mr. Nelson, its treasurer and Vice-

01:49:24.418 --> 01:49:27.770
President. Very candidly admitted they don't make the

01:49:27.779 --> 01:49:30.819
water run, they don't make the toilets flush, they

01:49:30.829 --> 01:49:33.319
don't build capital improvements. They don't maintain

01:49:33.329 --> 01:49:36.560
the system, they don't help with billing, they don't

01:49:36.569 --> 01:49:41.668
help with office. None of that. It's entirely a different

01:49:41.680 --> 01:49:46.259
matter. They are not cost of service. And this commission

01:49:46.270 --> 01:49:48.958
has required that if you're going to include something

01:49:48.970 --> 01:49:52.720
in rates, it needs to be a cost of service. Clearly

01:49:52.729 --> 01:49:56.259
these are not and therefore they're problematic for

01:49:56.270 --> 01:49:58.770
that reason and I'll have about one more minute.

01:50:00.729 --> 01:50:07.509
In addition, they collect costs that are not uh known

01:50:07.520 --> 01:50:10.229
and cannot be known with reasonable certainty. Windermere

01:50:10.239 --> 01:50:11.149
has admitted that

01:50:12.770 --> 01:50:17.789
and so they are frail for that reason as well or uh

01:50:18.949 --> 01:50:23.039
sorry, I've, I've gotten myself off track with my paper

01:50:23.048 --> 01:50:26.739
There we go. Yeah. In addition,

01:50:33.739 --> 01:50:37.149
they uh were designed without a cost of service study

01:50:37.390 --> 01:50:40.310
They were designed without a revenue requirement. Windermere

01:50:40.319 --> 01:50:42.270
admitted that kind of at the end of the proceeding

01:50:42.989 --> 01:50:45.579
And so all of the data that everybody had looked at

01:50:45.878 --> 01:50:46.838
was for naught.

01:50:48.699 --> 01:50:51.279
The appealed rates recover expenses that Windermere's

01:50:51.289 --> 01:50:55.560
governing documents say it cannot recover, nothing

01:50:55.569 --> 01:50:59.588
can be reasonable prudent and sound about that decision

01:51:00.009 --> 01:51:02.600
because it's violating the governing documents. The

01:51:02.609 --> 01:51:06.479
appealed rates required all of Windermere's ratepayers

01:51:06.628 --> 01:51:11.350
to pay costs for which only a few received a benefit

01:51:13.020 --> 01:51:16.239
and that is prohibited both by the just and reasonable

01:51:16.250 --> 01:51:19.970
standards and the governing documents. I'm happy to

01:51:19.979 --> 01:51:22.180
address any questions that the Commissioners might

01:51:22.189 --> 01:51:25.430
have on that, but we again appreciate very much the

01:51:25.439 --> 01:51:28.640
opportunity to be here today and to have our word.

01:51:30.409 --> 01:51:31.458
Thank you so much.

01:51:34.359 --> 01:51:34.509
(silence)

01:51:36.759 --> 01:51:39.668
(item:2:Shelah Cisneros introduces Jamie Malden and Scott Miller with Windermere WSC) The next party that signed up to speak is at Windermere 

01:51:39.850 --> 01:51:43.199
WSC. There are two people that have signed up to speak

01:51:43.208 --> 01:51:45.439
Jamie Malden and Scott Miller.

01:51:48.930 --> 01:51:49.829
Would you like to approach?

01:51:56.829 --> 01:51:59.378
Miss Malden, just to clarify? Are you alone speaking for the party?

01:51:59.390 --> 01:52:02.918
I am, yes. I believe Scott Miller might be a ratepayer. Oh

01:52:02.930 --> 01:52:05.520
you're right. I'm sorry. And

01:52:08.088 --> 01:52:10.859
I saw a party represented owner. I didn't realize perhaps

01:52:10.869 --> 01:52:12.970
it's a homeowner. All right. Thank you for the clarification

01:52:12.979 --> 01:52:13.640
Thank you.

01:52:15.390 --> 01:52:18.020
(item:2:Jamie Malden with Windermere WSC opening remarks) Good afternoon Commissioners. Jamie Malden with

01:52:18.029 --> 01:52:20.878
Windemere Oaks Water Supply Corporation. I also have

01:52:20.890 --> 01:52:23.128
with me today, Jeff Walker. He is on the Board and

01:52:23.140 --> 01:52:25.729
he's available to answer any questions you might have

01:52:26.208 --> 01:52:29.088
Um, I just wanna, I with your permission, I would like

01:52:29.100 --> 01:52:32.149
to make one or two opening remarks and clarifications

01:52:32.159 --> 01:52:34.810
and reserve the rest of my time for closing if that's

01:52:34.819 --> 01:52:39.069
okay. Okay. Thank you. First, I would just, we would

01:52:39.079 --> 01:52:41.569
respectfully urge you to adopt the proposal for decision

01:52:41.579 --> 01:52:45.689
That is before you today. It is uh very well reasoned

01:52:45.699 --> 01:52:49.899
and thorough. Um and has a, a very in depth analysis

01:52:49.909 --> 01:52:56.020
of a very extensive record in this proceeding. Additionally

01:52:56.029 --> 01:52:59.009
most of the things you will likely hear today are not

01:52:59.020 --> 01:53:02.259
new and have been considered in that proposal for decision.

01:53:02.588 --> 01:53:04.789
There is some new information that I would like

01:53:04.798 --> 01:53:07.930
to provide to you since closure since the PFD was issued.

01:53:07.939 --> 01:53:11.119
And that is that Windemere Oaks has received insurance

01:53:11.128 --> 01:53:16.430
proceeds of approximately $679,000. Concurrently with

01:53:16.439 --> 01:53:19.899
this rate appeal, Windemere Oaks was appealing the

01:53:19.909 --> 01:53:24.229
insurance, their insurance company's denial to forward

01:53:24.239 --> 01:53:26.838
the legal costs of the underlying lawsuit. The Double

01:53:26.850 --> 01:53:34.020
F Hanger lawsuit. Windermere Oaks um won that appeal and

01:53:34.029 --> 01:53:37.020
received the insurance proceeds a few months ago since

01:53:37.029 --> 01:53:39.298
receiving those proceeds, Windermere Oaks has paid

01:53:39.310 --> 01:53:41.939
off all of the underlying legal debt and the only legal

01:53:41.949 --> 01:53:44.899
debt that is remaining is related to the rate case

01:53:44.909 --> 01:53:47.878
expenses for this rate appeal. And with that, I'll

01:53:47.890 --> 01:53:49.060
reserve my remaining time.

01:53:50.579 --> 01:53:50.668
Good.

01:53:56.750 --> 01:54:00.128
Thank you. (item:2:Shelah Cisneros introduces Scott Miller) The next person who signed up to speak is Scott Miller

01:54:00.140 --> 01:54:02.569
who I'm not sure if the party represented.

01:54:06.239 --> 01:54:08.579
Mr. Miller, if you state your name for the record and who

01:54:08.588 --> 01:54:11.048
you're representing. (item:2:Scott Miller, ratepayer of WSC) My name is Scott Miller and

01:54:11.060 --> 01:54:15.289
I'm a ratepayer for the Water Supply Corporation. 

01:54:15.298 --> 01:54:19.119
And I would just like to uh express my appreciation

01:54:19.399 --> 01:54:23.890
for the work y'all have done and for the uh knowledge

01:54:23.899 --> 01:54:27.579
that you have transmitted to a ratepayer to allow me

01:54:27.588 --> 01:54:30.720
to have the realization that not only am I a customer

01:54:31.060 --> 01:54:37.199
but an owner and with that comes uh the rights uh that

01:54:37.208 --> 01:54:39.659
I knew nothing about, I don't think most of our ratepayers

01:54:39.668 --> 01:54:44.560
knew about uh due to the documents that your Staff

01:54:44.869 --> 01:54:50.100
and dice uh committees provided real eye opener on

01:54:50.109 --> 01:54:54.600
to what's uh what we should have and how we can combat

01:54:54.609 --> 01:54:58.189
this, you know, huge increase in rates that we knew

01:54:58.199 --> 01:55:01.310
nothing. You know, as far as we know the utility bill

01:55:01.319 --> 01:55:04.979
you have to pay it. And uh took a while to get

01:55:04.989 --> 01:55:09.479
the realization that yes, there is power to, to, you

01:55:09.489 --> 01:55:13.729
know, maybe overturn this stuff. That's all I can put

01:55:13.739 --> 01:55:16.128
any additional time to the closing, like she said.

01:55:17.079 --> 01:55:19.859
Very appreciative, thank you. Thank you.

01:55:22.819 --> 01:55:27.270
(item:2:Shelah Cisneros introduces Merritt Lander with Commission Staff) Okay. All right, the final party will be Commission Staff, 

01:55:27.279 --> 01:55:28.180
Merritt Lander.

01:55:45.100 --> 01:55:48.048
Good morning Chairwoman, Commissioners. (item:2:Merritt Lander, Commission Staff on rejecting PFD) Merritt Lander,

01:55:48.060 --> 01:55:52.449
on behalf of Commission Staff. I actually wanna keep

01:55:52.458 --> 01:55:57.149
this brief today as well. I know that there is a

01:55:57.159 --> 01:56:02.409
lot of noise in this docket. There are multiple underlying

01:56:02.418 --> 01:56:05.149
lawsuits. There are legal expenses, there are costs

01:56:05.159 --> 01:56:09.270
of appeal. There is a revenue requirement that was

01:56:09.279 --> 01:56:13.180
initially presented to the Commission that we found

01:56:13.189 --> 01:56:17.329
out at the first hearing on the merits was not actually

01:56:17.418 --> 01:56:20.279
the revenue requirement used to design the rates.

01:56:22.229 --> 01:56:27.189
The reason that the PFD should be rejected is because

01:56:27.199 --> 01:56:31.039
it is based on a revenue requirement that the utility

01:56:31.048 --> 01:56:35.579
itself did not use to set its rates. Additionally,

01:56:35.588 --> 01:56:40.088
the PFD incorporates into base rates, extraordinary

01:56:40.100 --> 01:56:45.069
non-recurring legal expenses that at this point have

01:56:45.079 --> 01:56:49.009
all been paid off and if the rates are allowed to stand

01:56:49.409 --> 01:56:53.259
the utility will continue to collect those rates year

01:56:53.270 --> 01:56:57.939
after year after year. We all know that extraordinary

01:56:57.949 --> 01:57:02.100
expenses do not belong in base rates. That is not how

01:57:02.109 --> 01:57:04.890
we design rates. We have not designed rates like that

01:57:04.899 --> 01:57:10.739
for 20 years. This is a question of math and putting

01:57:10.750 --> 01:57:16.640
all of the noise aside. The math of the PFD is not

01:57:16.649 --> 01:57:22.189
good. Staff's rates allow Windemere to maintain its

01:57:22.199 --> 01:57:26.649
financial integrity. The refund that Staff recommends

01:57:26.909 --> 01:57:30.569
allows Windemere to maintain its financial integrity

01:57:31.088 --> 01:57:34.479
and so you can comfortably adopt Staff's rates knowing

01:57:34.489 --> 01:57:38.918
that the math is sound and Windermere's financial integrity

01:57:38.930 --> 01:57:43.378
will remain intact. And with that, I will reserve my

01:57:43.390 --> 01:57:47.289
time and I'm happy to answer any questions. I really

01:57:47.298 --> 01:57:48.699
appreciate the opportunity.

01:57:55.739 --> 01:57:59.208
I believe that some time is reserved on behalf of the

01:57:59.220 --> 01:58:00.430
WSC.

01:58:10.479 --> 01:58:12.708
We're gonna say 4.5 minutes.

01:58:14.250 --> 01:58:16.899
It's my record 4 minutes and 26 seconds, Ms. Malden.

01:58:16.989 --> 01:58:21.319
Okay, thank you. (item:2:Jaime Malden with WSC's closing remarks) Thank you for allowing me this opportunity

01:58:21.329 --> 01:58:23.759
I just want to speak, uh, make a few clarifications

01:58:23.770 --> 01:58:26.600
um, based on what Ms. Allen and Ms. Lander have said

01:58:26.609 --> 01:58:29.310
today. And first of all, everything that they have

01:58:29.319 --> 01:58:31.500
said, they have said already in this docket and has

01:58:31.509 --> 01:58:34.539
been considered uh in exceptions to the proposal for

01:58:34.548 --> 01:58:36.829
decision or were considered in the analysis of the

01:58:36.838 --> 01:58:40.890
proposal for decision. (item:2:Jaime Malden with WSC on cost of service) First of all, Ms. Lander talked

01:58:40.899 --> 01:58:43.649
about the cost of service. I would just like to point

01:58:43.659 --> 01:58:47.548
out that um, network accounts include in the definition

01:58:47.560 --> 01:58:50.199
of operations and maintenance, including legal fees

01:58:50.208 --> 01:58:54.359
We believe it is dangerous to set a policy that small

01:58:54.539 --> 01:58:58.569
nonprofit utilities cannot include outside legal expenses

01:58:58.579 --> 01:59:03.930
into their rates. We believe the PFD um, correctly

01:59:03.939 --> 01:59:06.310
analyzed that issue and came to the correct findings.

01:59:06.628 --> 01:59:10.729
(item:2:Jaime Malden with WSC on changing positions) Additionally um, it was said that Windermere Oaks

01:59:10.739 --> 01:59:14.270
changed its position, that is incorrect. We consistently

01:59:14.279 --> 01:59:18.439
maintained that the utility used the TRWA model and

01:59:18.449 --> 01:59:22.529
adjusted to account for increased legal expenses that

01:59:22.539 --> 01:59:26.729
is all heavily briefed. It's, it's a very extensive

01:59:26.739 --> 01:59:29.729
record and um, I don't want to go over all of it

01:59:29.739 --> 01:59:33.939
here today. (item:2:Jaime Malden with WSC's math and calculations of rates) Additionally and lastly, uh Ms. Lander

01:59:33.970 --> 01:59:36.289
brought up the calculation of rates and that the, the

01:59:36.298 --> 01:59:41.500
math is wrong. We would disagree and we provided

01:59:41.509 --> 01:59:44.289
uh or Windermere Oaks provided a filing on September 8,

01:59:44.298 --> 01:59:49.930
2023. That uh I, I think takes into consideration um

01:59:49.939 --> 01:59:53.289
and shows what the PFD was considering when setting

01:59:53.298 --> 01:59:56.479
rates. Uh and with that, um I will thank you for your

01:59:56.489 --> 01:59:56.850
time.

01:59:59.289 --> 02:00:01.789
All right, Commission Staff also reserved four minutes.

02:00:01.798 --> 02:00:04.159
If Commission Staff would like to respond, 

02:00:04.229 --> 02:00:04.270
it

02:00:12.970 --> 02:00:13.338
now.

02:00:18.270 --> 02:00:23.140
All right. Thank you guys. Again. (item:2:Merritt Lander with Commission Staff's closing remarks on revenue requirement) I wanna speak one

02:00:23.149 --> 02:00:28.418
more time to the revenue requirement. Initially, Windemere

02:00:28.458 --> 02:00:32.048
Oaks stated that it used a rate study provided by Texas

02:00:32.060 --> 02:00:35.750
Rural Water Association which showed a revenue requirement

02:00:35.759 --> 02:00:42.048
of $576,000 and included $171,000 in legal expenses

02:00:43.798 --> 02:00:47.168
After the first hearing on the merits, Windemere stated

02:00:47.779 --> 02:00:50.958
and it is in the RFI responses, it has been addressed

02:00:50.970 --> 02:00:55.239
in testimony. They use their 2020 annual budget to

02:00:55.250 --> 02:01:00.329
design their rates which included $250,000 a year in

02:01:00.338 --> 02:01:04.359
legal expenses. The TRWA study did not incorporate

02:01:04.369 --> 02:01:08.529
other revenues. We all know you start with an overall

02:01:08.539 --> 02:01:11.829
revenue requirement, you reduce it by the offsets from

02:01:11.838 --> 02:01:14.939
other revenues you then have a revenue requirement

02:01:14.949 --> 02:01:20.529
that you use for setting rates. TRWA included no offsets

02:01:20.798 --> 02:01:25.338
2020 annual budget included, some offsets also included

02:01:25.350 --> 02:01:28.850
an overestimation of expenses that were not supported

02:01:28.859 --> 02:01:33.899
by the record. And so to use the revenue requirement

02:01:34.079 --> 02:01:40.020
first provided by Windemere which Windemere then stated

02:01:40.029 --> 02:01:44.819
it did not use but rather used its 2020 annual budget

02:01:45.418 --> 02:01:50.048
The PFD uses that first number that Windemere itself

02:01:50.069 --> 02:01:54.770
did not use. You cannot use a revenue requirement that

02:01:54.779 --> 02:01:59.060
the utility itself did not use and then apply Staff's

02:01:59.069 --> 02:02:03.970
offset from a completely separate rate study to the

02:02:03.979 --> 02:02:07.619
revenue requirement from the PD and get to just and

02:02:07.628 --> 02:02:12.409
reasonable or mathematically sound rates. And for that

02:02:12.418 --> 02:02:16.970
reason, Staff's rates are the proper rates to adopt.

02:02:18.279 --> 02:02:20.699
Please let me know if you have any questions.

02:02:23.470 --> 02:02:25.819
That concludes the oral argument for this particular

02:02:25.829 --> 02:02:27.838
jacket. Okay, thank you.

02:02:30.720 --> 02:02:33.939
So I know we have a number of issues to discuss on

02:02:33.949 --> 02:02:35.069
this. And

02:02:36.890 --> 02:02:39.180
I was wondering who might take off the discussion?

02:02:39.229 --> 02:02:42.560
(item:2:Commissioner Cobos asks to defer consideration of item until next meeting) Chair Jackson. I would like to defer our discussion

02:02:42.569 --> 02:02:44.520
of these issues to the next open meeting. I'd like

02:02:44.529 --> 02:02:49.088
additional time to review the PFD and, and record um

02:02:49.250 --> 02:02:52.970
at least to a future open meeting date if that's possible.

02:02:53.088 --> 02:02:56.199
Look I, I think my feeling is, I think we've learned

02:02:56.208 --> 02:02:59.628
this is a complex case. Um a little more time would

02:02:59.640 --> 02:03:02.168
help me. So I, I would support that.

02:03:03.829 --> 02:03:07.918
I'm ready to go but uh I'll support the effort, the

02:03:08.119 --> 02:03:10.628
needs of my Commissioners. Okay. (item:2:Chairwoman Jackson defers item until a future meeting) Well, then we'll propose to bring

02:03:10.640 --> 02:03:14.289
this item back up to a future meeting. Thank you.

02:03:17.909 --> 02:03:20.520
Next up is Item No. 3. Shelah, will you please

02:03:20.529 --> 02:03:23.668
lay out this item? Yes, ma'am. (item:3:Application of Forest Glen Utility Co. Inc. for authority to change rates) Item No. 3 is

02:03:23.680 --> 02:03:27.829
Docket No. 52075. The application of Forest Glen

02:03:27.838 --> 02:03:31.319
Utility Company Incorporated for the authority to change

02:03:31.329 --> 02:03:35.539
rates. Before you is a proposed order that addresses a unanimous

02:03:35.548 --> 02:03:38.579
agreement between the parties. Commission Staff filed

02:03:38.588 --> 02:03:42.180
proposed corrections. The ALJ filed a memo revising

02:03:42.189 --> 02:03:45.168
the proposed order. Commission Counsel memo was filed

02:03:45.180 --> 02:03:48.229
recommending changes to the proposed order. And Chairman

02:03:48.239 --> 02:03:51.759
Jackson filed a memo in this docket. (item:3:Chairman Jackson recommends in memo remanding proceeding to docket management) I did follow memo

02:03:52.029 --> 02:03:54.739
recommending that this proceeding be remanded to docket

02:03:54.750 --> 02:03:57.689
management for further processing. Regarding evidence

02:03:57.779 --> 02:04:00.399
showing whether Forest Glen is in compliance with the

02:04:00.409 --> 02:04:04.060
previous Commission order. And I believe Commissioner

02:04:04.329 --> 02:04:07.039
Cobos you had some thoughts in this. Yes, Chair Jackson.

02:04:07.338 --> 02:04:12.199
Thank you. (item:3:Commissioner Cobos thoughts on remanding PFD) So my only addition would be that we go

02:04:12.208 --> 02:04:14.810
ahead and remand the agreed to rate as well. My understanding

02:04:14.819 --> 02:04:19.470
based on a review of the case is that the resolution

02:04:19.479 --> 02:04:22.029
of the first issue with respect to compliance with

02:04:22.039 --> 02:04:24.220
the Commission order could have an impact on the agreed

02:04:24.310 --> 02:04:28.628
sewer rate. So I would request that we go ahead and

02:04:28.640 --> 02:04:32.000
remand the whole docket back on all three issues and

02:04:32.009 --> 02:04:34.279
then make a determination later when it comes back

02:04:34.289 --> 02:04:39.338
on on the three issues. Okay. Sounds good to me. (item:3:Motion to remand case back to Docket Management, consistent with memos & discussion) So I

02:04:39.350 --> 02:04:41.609
would entertain a motion to remand this proceeding

02:04:41.619 --> 02:04:44.628
to docket management for further processing. Consistent

02:04:44.640 --> 02:04:48.708
with the Commission Counsel memo, my memo and our discussion.

02:04:50.168 --> 02:04:53.859
So moved. Second. I have a motion and the second. All in favor, say

02:04:53.869 --> 02:04:55.939
aye. Aye. Motion passes.

02:04:58.088 --> 02:05:01.079
Next up is Item No. 4. Shelah, will you please

02:05:01.088 --> 02:05:04.699
lay out this item? Docket number, I'm sorry. (item:4:Application of Conroe Resort Utilities, Undine TX, Undine TX Environmental, for STM) Item No. 

02:05:04.708 --> 02:05:09.529
four is Docket No. 52797. The application of Conroe

02:05:09.770 --> 02:05:14.829
Resort Utilities, LLC and Undine Texas, LLC and Undine

02:05:14.838 --> 02:05:19.560
Texas Environmental, LLC. For the sale, transfer or merger

02:05:19.569 --> 02:05:22.039
of facilities and certificate rights in Montgomery

02:05:22.048 --> 02:05:25.509
County. Before you as a certified issue in this proceeding

02:05:25.520 --> 02:05:29.239
from the Administrative Law Judge at SOAH. In September,

02:05:29.250 --> 02:05:31.708
the parties filed a joint request for certification

02:05:31.720 --> 02:05:34.509
of an issue to the Commission regarding the implementation

02:05:34.520 --> 02:05:38.069
of rates under the Texas Water Code. Later that month

02:05:38.079 --> 02:05:41.270
the SOAH ALJ filed an order certifying an issue to

02:05:41.279 --> 02:05:44.350
the Commission. The certified issue that is before

02:05:44.359 --> 02:05:47.378
the Commission is whether the Commission as part of

02:05:47.390 --> 02:05:50.548
the approval of a sale, transfer merger application

02:05:50.878 --> 02:05:54.819
under the Texas Water Code. Can authorize the implementation

02:05:54.829 --> 02:05:58.009
of a phase of a tariff that is different than the phase

02:05:58.020 --> 02:06:01.109
of a tariff in place at the time the application is

02:06:01.119 --> 02:06:04.140
filed. And that is the issue before the Commission.

02:06:05.029 --> 02:06:08.588
(item:4:Chairwoman Jackson lays out details of the application) So this docket is Undine's application for a sale, transfer

02:06:08.600 --> 02:06:11.069
or merger of water and sewer facilities and certificate

02:06:11.079 --> 02:06:16.628
rights as you stated under Texas Water Code 13.3011.

02:06:16.899 --> 02:06:20.140
Undine is requested to charge initial rates that are

02:06:20.149 --> 02:06:23.520
shown in the acquiring utilities, tariffs to the customers

02:06:23.529 --> 02:06:26.350
of the acquired utility. The rates shown in the acquiring

02:06:26.359 --> 02:06:30.319
utilities, tariffs are rates that are implemented in

02:06:30.329 --> 02:06:34.119
three phases. The parties agreed to use step one of

02:06:34.430 --> 02:06:37.529
Undine's phase in rate schedule as initial rates, even

02:06:37.539 --> 02:06:40.708
though the phased in rates were in step three, the

02:06:40.720 --> 02:06:45.390
Commission ALJ ruled that the, that the only rates

02:06:45.399 --> 02:06:49.970
of the third phase were enforced on the date the application

02:06:49.979 --> 02:06:54.088
was filed. So those are the only rates, those in the

02:06:54.100 --> 02:06:56.659
third phase that could be used as initial rates under

02:06:56.668 --> 02:07:02.588
Texas Water Code 13.3011. This refer, this proceeding

02:07:02.600 --> 02:07:05.229
was referred to SOAH and the parties jointly requested

02:07:05.239 --> 02:07:08.659
to pose this issue to the Commission. The SOAH ALJ

02:07:08.668 --> 02:07:12.489
posed the question to the Commission and um so

02:07:12.500 --> 02:07:13.659
it uh

02:07:15.378 --> 02:07:20.680
pose the question to the Commission. (item:4:Chairwoman Jackson's position on the application) It's my position

02:07:20.689 --> 02:07:23.939
that the Commission can authorize a person who files

02:07:23.949 --> 02:07:26.739
an application for sale, transfer or merger under the

02:07:26.750 --> 02:07:29.600
Texas Water Code to charge initial rates for service

02:07:29.609 --> 02:07:33.739
under a phase shown in an enforced tariff that is different

02:07:33.750 --> 02:07:36.539
than the phase of the tariff in place on the date the

02:07:36.548 --> 02:07:38.109
application is filed.

02:07:40.708 --> 02:07:44.100
I agree. Agreed. Agreed. Okay. (item:4:Motion to approve order consistent with discussion) I would, I would move to approve an order consistent

02:07:44.109 --> 02:07:49.310
with our discussion and what we just stated. Second.

02:07:49.899 --> 02:07:51.949
We have a motion and a second. All in favor, say aye. 

02:07:51.979 --> 02:07:53.918
Aye. Motion passes.

02:07:56.838 --> 02:08:01.850
Okay. Items 5-15 have been uh Consented.

02:08:07.369 --> 02:08:07.390
(silence)

02:08:08.979 --> 02:08:12.009
Returning to the previous agenda. I don't have anything

02:08:12.020 --> 02:08:20.509
on Items 22, 23 or 24. (item:25:Chairwoman Jackson lays out Project No. 53298) Next up is Item No. 25, Project

02:08:20.520 --> 02:08:25.250
No. 53298. Implementation of the wholesale electric

02:08:25.259 --> 02:08:29.259
market design. (item:46:Chairwoman Jackson lays out Project No. 55156) We will take up this item and Item 46

02:08:29.270 --> 02:08:34.079
together. Project No. 55156, implementation activities

02:08:34.088 --> 02:08:37.779
for the 88th Legislature. We have three items to discuss

02:08:38.060 --> 02:08:41.930
the ancillary services program, the performance credit 

02:08:41.939 --> 02:08:46.069
mechanism and DRRS. Shelah, do we have anyone from

02:08:46.079 --> 02:08:50.020
the public signed up to speak on Items 25 or 46? (item:25:Shelah Cisneros with Commission Counsel confirms there are no public comments) (item:46:Shelah Cisneros with Commission Counsel confirms there are no public comments)No

02:08:50.048 --> 02:08:51.958
ma'am, no one signed up to speak on those items.

02:08:54.329 --> 02:08:57.100
(item:25.1:Chairwoman Jackson opens discussion on ancillary services methodology) First, let's discuss the ancillary services methodology

02:08:57.109 --> 02:09:02.239
review. We have Harika with PUC Staff and Woody Rickerson

02:09:02.250 --> 02:09:06.720
with ERCOT here. Harika and Woody, do either of

02:09:06.729 --> 02:09:10.579
y'all have an update since our last open meeting.

02:09:15.048 --> 02:09:15.458
(silence)

02:09:21.489 --> 02:09:25.359
Okay, good afternoon. (item:25.1:Harika Basaran with Commission Staff on ancillary services methodology) Harika Basaran, Commission Staff. I

02:09:25.369 --> 02:09:28.689
believe ERCOT to a high level update, there was two requests

02:09:28.699 --> 02:09:32.338
from Commissioner McAdams. The methodology is currently

02:09:32.350 --> 02:09:35.229
not in the protocols. However, there is a division

02:09:35.239 --> 02:09:38.548
request in progress. It will move it to the protocol

02:09:38.560 --> 02:09:40.600
which means that it will come to the Commission for

02:09:40.609 --> 02:09:43.899
approval. And the second update will be uh after the

02:09:43.909 --> 02:09:47.708
services guidance documents, Commissioner McAdams has

02:09:47.779 --> 02:09:49.729
and I think ERCOT has been working on that.

02:09:53.869 --> 02:09:56.600
(item:25.1:Chad Seely with ERCOT on ancillary services methodology) Good afternoon. Chad Seely with ERCOT. So that's correct

02:09:56.609 --> 02:10:00.088
I think from previous Commission discussion, we can

02:10:00.100 --> 02:10:03.369
move forward with the protocol change that allows the

02:10:03.378 --> 02:10:07.970
Commission to review and improve the minimum quantities

02:10:07.979 --> 02:10:11.520
under our ancillary service methodology. You know

02:10:11.529 --> 02:10:14.048
you look at the ancillary service methodology document

02:10:14.060 --> 02:10:16.588
and you kind of think of it as a, as a cookbook

02:10:16.600 --> 02:10:19.449
it has everything in it. And so what we'd really do

02:10:19.458 --> 02:10:23.069
here over the coming weeks and months is kind of deconstruct

02:10:23.079 --> 02:10:25.588
that cookbook and see what makes sense to be put into

02:10:25.600 --> 02:10:29.208
the protocols to provide clear direction on these types

02:10:29.220 --> 02:10:31.489
of ancillary services and what they're meant to accomplish.

02:10:31.500 --> 02:10:34.668
As far as addressing risk on the system along with

02:10:34.680 --> 02:10:37.069
the the minimum quantities of procurement and then

02:10:37.399 --> 02:10:40.569
leverage that process that we do every year where we

02:10:40.579 --> 02:10:43.289
go to the stakeholders and talk about those changes

02:10:43.298 --> 02:10:45.918
to the minimum quantities. Have the Board approve that

02:10:45.930 --> 02:10:47.628
and then ultimately come over here for the Commission

02:10:47.640 --> 02:10:50.810
to approve that. So I think we can do that in

02:10:50.819 --> 02:10:53.029
the first part of the year with the protocol change

02:10:53.039 --> 02:10:56.259
around the process that ultimately you would approve

02:10:56.390 --> 02:10:58.869
And then the second half of the year is obviously looking

02:10:58.878 --> 02:11:03.149
at the 2024 ancillary service, sorry, 2025 ancillary

02:11:03.159 --> 02:11:07.088
service methodology that would be for Commission consideration

02:11:07.100 --> 02:11:10.869
at the end of next year. So we'll continue to coordinate

02:11:10.878 --> 02:11:13.560
with the Commission Staff on what this looks like to

02:11:13.569 --> 02:11:17.750
do that. (item:25.1:Chad Seely on ERCOT timelines) One thing that I would highlight is that obviously

02:11:17.759 --> 02:11:20.208
this document is used every year at the beginning of

02:11:20.220 --> 02:11:23.000
the year to set those minimum quantities. So that will

02:11:23.009 --> 02:11:25.958
require the Commission to take action at the end of

02:11:25.970 --> 02:11:28.878
every year for the next calendar year. So we just need

02:11:28.890 --> 02:11:32.520
to be cognizant of those timelines as we move forward

02:11:32.529 --> 02:11:36.369
with Board consideration and where you'll go with as

02:11:36.378 --> 02:11:39.329
far as approval of Board recommendations right now

02:11:39.338 --> 02:11:42.338
in your interim process, you want at least 30 days

02:11:42.350 --> 02:11:46.199
to consider uh an action from the Board. So we want

02:11:46.208 --> 02:11:49.100
to make sure that we're able to build in that time

02:11:49.109 --> 02:11:51.539
frame if we continue with that under a more permanent

02:11:51.548 --> 02:11:54.548
process for a document like this and not have a miss

02:11:54.560 --> 02:11:57.239
where the Commission is not able to look at that as

02:11:57.250 --> 02:12:00.180
we go into the next calendar year. (item:25.1:Chad Seely on guidance document) And then to the second

02:12:00.189 --> 02:12:03.239
point around the guidance document. I think again,

02:12:03.250 --> 02:12:05.600
if you go back to this ancillary service methodology

02:12:05.609 --> 02:12:08.378
document, kind of deconstructing it, putting the pieces

02:12:08.390 --> 02:12:11.869
that make sense in the protocols and providing additional

02:12:11.878 --> 02:12:14.159
clarity on our website around the different types of

02:12:14.168 --> 02:12:17.838
services and having that real educational value around

02:12:17.850 --> 02:12:21.668
what each service does. So part of your work effort

02:12:21.680 --> 02:12:25.548
is to kind of get everything in one place in a sense? Or to make

02:12:25.560 --> 02:12:29.149
it more manageable and understandable for the Commission

02:12:29.159 --> 02:12:31.359
and consumers to understand what each one of these

02:12:31.369 --> 02:12:33.909
products does. And what their purpose is in achieving

02:12:33.918 --> 02:12:35.659
those objectives. Correct.

02:12:38.470 --> 02:12:43.069
Madam, Madam Chair. Thank you. Thanks Chad, so

02:12:43.109 --> 02:12:47.359
Woody for you. Do you think it's achievable in terms

02:12:47.369 --> 02:12:50.668
of the guidance document, the sizing document, which

02:12:50.680 --> 02:12:55.390
is the methodology? Absolutely on track, agree with

02:12:55.399 --> 02:12:59.548
your proposed path forward for next year. But in terms

02:12:59.560 --> 02:13:01.918
of the guidance document, which is a little bit separate

02:13:01.930 --> 02:13:05.850
and distinct, it is just an explanation on how operations

02:13:05.859 --> 02:13:08.750
given the variability of the system. And again, what

02:13:08.759 --> 02:13:12.489
you see on MORA, you know, moving. Not necessarily MORA but what

02:13:12.500 --> 02:13:18.600
you see in system operations. How ops plans to use

02:13:18.609 --> 02:13:21.850
the ancillaries on a seasonal basis? What you see moving

02:13:21.859 --> 02:13:24.319
forward in the Summer? How you intend to use those

02:13:24.329 --> 02:13:28.270
in terms of time ranges, predictability. You again

02:13:28.279 --> 02:13:31.649
it's not a binding document for the system but an explanation

02:13:31.659 --> 02:13:35.449
on how operations believes they intend to use the ancillaries

02:13:36.199 --> 02:13:42.458
(item:25.1:Woody Rickerson of ERCOT to Commissioner McAdams on intended use of ancillaries) Woody Rickerson with ERCOT. Thank you, sir. Yes, I think we can. Okay. That I think that

02:13:42.470 --> 02:13:46.208
would be give the system great benefit. I think it

02:13:46.220 --> 02:13:48.220
will help inform the other discussion we'll have on

02:13:48.520 --> 02:13:51.899
the DRRS and I think it will help smooth a lot

02:13:51.909 --> 02:13:55.640
of stuff out. (item:25.1:Woody Rickerson's follow-up response to Commissioner McAdams) I think keep in mind that the ancillary

02:13:55.649 --> 02:13:59.458
service methodology used the minimal. Yes, sir. There

02:13:59.479 --> 02:14:02.289
are circumstances where you're gonna buy more. Yep

02:14:05.298 --> 02:14:10.409
Thank you. Thank you both. Appreciate it. (item:25.2:Chairwoman Jackson opens discussion on performance credit mechanism) Next up

02:14:10.418 --> 02:14:14.409
we'll discuss the performance credit mechanism. We

02:14:14.418 --> 02:14:17.909
have Kenan with ERCOT here. ERCOT filed a decision

02:14:17.918 --> 02:14:21.548
points document to further uh to guide further development

02:14:21.560 --> 02:14:24.560
of the PCM. Including ERCOT's recommendations for

02:14:24.569 --> 02:14:27.909
next steps with respect to each decision point for

02:14:27.918 --> 02:14:31.579
the PCM Design. Commissioner Cobos, you filed a memo.

02:14:31.588 --> 02:14:34.039
We'll hear from Kenan first and then discuss your

02:14:34.048 --> 02:14:41.259
memo. Thank you. (item:25.2:Kenan Ögelman with ERCOT on performance credit mechanism) Kenan Ögelman with ERCOT. So, um I think

02:14:41.270 --> 02:14:45.289
uh our, our filing, uh I think outlines both what was

02:14:45.298 --> 02:14:51.189
in uh HB1500 the uh discussion that the Commission

02:14:51.199 --> 02:14:56.909
had prior to last Session and the items that, that

02:14:56.918 --> 02:15:01.250
were highlighted there. Now that that's just the initial

02:15:01.259 --> 02:15:04.979
cut. We totally understand that there could be other

02:15:04.989 --> 02:15:08.949
dynamics that ultimately need to be considered as part

02:15:08.958 --> 02:15:14.560
of PCM. (item:25.2:Kenan Ögelman with ERCOT on engaging in feedback) So our path forward is to get a uh straw

02:15:14.569 --> 02:15:20.989
band uh designed and uh next year shared with stakeholders

02:15:21.000 --> 02:15:26.869
to engage in feedback. I think that would help inform

02:15:26.878 --> 02:15:31.890
the Commission of potentially other dynamics or other

02:15:31.899 --> 02:15:37.310
issues around PCM. And then um we would expect to work

02:15:37.319 --> 02:15:42.378
on it and uh have a target of sometime in 2026 trying

02:15:42.390 --> 02:15:46.909
to deliver that service. We would consistent with your

02:15:46.918 --> 02:15:52.119
other discussion today. You know, prioritize uh

02:15:52.128 --> 02:15:55.100
real time co optimization and, and this would kind

02:15:55.109 --> 02:15:59.600
of fit around uh the delivery of that. There's absolutely

02:15:59.609 --> 02:16:03.458
some other statutory requirements in terms of delivery

02:16:03.470 --> 02:16:09.229
of PCM relative to um uh real time optimization. So

02:16:09.239 --> 02:16:12.060
we plan to honor all of that as well. So I think

02:16:12.069 --> 02:16:15.039
that that's kind of a high level of where we're at

02:16:15.048 --> 02:16:17.819
I'm happy to answer any questions that you may have.

02:16:19.100 --> 02:16:21.759
I have a clarifying question, Kenan. Um under your

02:16:21.770 --> 02:16:26.548
timeline, you have um the Commission rulemaking is

02:16:26.560 --> 02:16:31.149
running concurrently with the cost analysis that they're

02:16:31.159 --> 02:16:34.849
happening in parallel. Can you speak to that a little

02:16:34.860 --> 02:16:38.798
bit? Because I'm, I'm just wondering how, how do you

02:16:38.808 --> 02:16:42.007
envision that like what's your reasoning for that

02:16:42.018 --> 02:16:44.619
or how that'll work? Because I mean, obviously we need

02:16:44.628 --> 02:16:46.658
to see what the cost and the market impact is before

02:16:46.667 --> 02:16:50.148
we start enshrining it into our Commission rules. So

02:16:50.158 --> 02:16:54.039
uh yeah, I mean, there, there is absolutely uh a design

02:16:54.048 --> 02:16:58.007
(item:25.2:Kenan Ögelman's response to Commissioner Cobos on design & accurate cost analysis) Uh so, so to give you accurate cost analysis, we

02:16:58.018 --> 02:17:02.167
need to know the design, but you need to know uh the

02:17:02.177 --> 02:17:07.079
cost uh to really ultimately approve something. So

02:17:07.088 --> 02:17:09.899
that was actually the reason for that to move in parallel

02:17:09.909 --> 02:17:14.620
So we would have a straw band, we would have feedback

02:17:14.940 --> 02:17:19.259
um that, you know, that could be a baseline for us

02:17:19.329 --> 02:17:24.879
um designing PCM and coming up with some uh cost impact

02:17:25.040 --> 02:17:28.729
But if um there are substantive rule changes or other

02:17:28.739 --> 02:17:32.790
things that need to happen that have uh what I would

02:17:32.799 --> 02:17:37.519
describe as uh uh administrative timelines to them

02:17:37.530 --> 02:17:41.299
I don't know if we can wait till all of that's done

02:17:41.308 --> 02:17:46.540
to start um all of the rule making process and all

02:17:46.549 --> 02:17:51.718
the input that the administrative law provisions require

02:17:52.818 --> 02:17:54.779
But wouldn't that be the reverse though? Like, I mean

02:17:54.789 --> 02:17:57.828
we would want to get the cost assessment and not putting

02:17:57.837 --> 02:18:00.289
ourselves in a position where we're now tied to A P

02:18:00.298 --> 02:18:01.939
A rule requirements and have to move through a rule

02:18:01.949 --> 02:18:05.158
making process to meet all those deadlines while we're

02:18:05.167 --> 02:18:07.738
still trying to process all of your cost assessments

02:18:07.748 --> 02:18:12.790
and market impact. So I mean, the tail can't wag the

02:18:12.799 --> 02:18:15.280
dog. Are you all understanding what I'm saying?

02:18:17.218 --> 02:18:20.088
I think Kenan does too. He's, he's worked here before

02:18:20.099 --> 02:18:25.168
or in OPUC certainly. So Commissioner Cobos, you're

02:18:25.179 --> 02:18:29.610
saying basically, um you use the administrative uh

02:18:29.620 --> 02:18:35.000
timeline and you back out of that because you, you

02:18:35.009 --> 02:18:38.218
want, you want everything in place and all the studies

02:18:38.229 --> 02:18:42.069
completed before you initiate the rulemaking timeline

02:18:42.280 --> 02:18:44.799
so that you can frame what you're enshrining in rule

02:18:44.808 --> 02:18:45.489
Is that accurate

02:18:49.629 --> 02:18:52.750
Kenan? (item:25.2:Kenan Ögelman's response to Commissioner McAdams on timelines) You may have an answer to that. I mean, I think

02:18:52.759 --> 02:18:56.019
there are a lot of the timelines work around minimums

02:18:56.030 --> 02:19:01.629
and, and uh I items getting started on, on on the administrative

02:19:01.638 --> 02:19:08.058
side. So, uh again, um there is room to honor what

02:19:08.069 --> 02:19:12.190
you describe and still have something operating concurrently

02:19:12.200 --> 02:19:16.709
I think on the back end, the timing has to align with

02:19:16.718 --> 02:19:20.138
uh giving you the information on any decision you want

02:19:20.418 --> 02:19:26.879
to make. But um I think uh a lot of the requirements

02:19:26.888 --> 02:19:30.679
are minimum timelines as, as I recall. Connie, what

02:19:30.690 --> 02:19:33.530
do you think administrative. I'm sorry. Connie, what

02:19:33.540 --> 02:19:36.148
do you think about that administrator? (item:25.2:Connie Corona's to Commissioner McAdams on prework prior to the APA process) I think it's

02:19:36.158 --> 02:19:41.318
important to remember that um a Commission rulemaking

02:19:41.328 --> 02:19:47.138
project typically has a lot of pre work that goes on

02:19:47.208 --> 02:19:51.609
before the APA process. And so that's the part that

02:19:51.619 --> 02:19:57.427
would parallel the uh the ERCOT development process

02:19:57.439 --> 02:20:01.940
And then once we've reached a level of certainty about

02:20:01.950 --> 02:20:06.558
um the cost impacts, for example, um that's when we

02:20:06.569 --> 02:20:12.280
would proceed with a formal proposal um under the 

02:20:12.290 --> 02:20:15.940
APA. But prior to that, we would be working on rule

02:20:15.950 --> 02:20:19.799
language and trying to capture, you know, what, what

02:20:19.808 --> 02:20:23.360
uh parameters belong in the rule, things of that nature

02:20:23.540 --> 02:20:28.360
So it it would just the APA process um would

02:20:28.370 --> 02:20:31.838
kick in, you know, once we have that certainty from

02:20:31.888 --> 02:20:35.668
so it would be a scoping theory. Okay. I, I guess I

02:20:35.679 --> 02:20:38.968
just want to make sure that the scoping period properly

02:20:38.979 --> 02:20:42.509
incorporates a completed cost assessment, right? That

02:20:42.519 --> 02:20:45.000
you know, I mean, we have to do the cost assessment

02:20:45.009 --> 02:20:48.638
because of HB1500 right? And, and so we wanna make

02:20:48.649 --> 02:20:53.429
sure that we honor that analysis in and are not, you

02:20:53.440 --> 02:20:57.540
know, scoping ahead without taking into consideration.

02:20:57.549 --> 02:21:01.379
(item:25.2:Connie Corona's response to Commissioner Cobos on milestones anchoring the timeline) Certainly. And I would consider that to be one of the

02:21:01.388 --> 02:21:05.819
um the milestones that, that we anchor the whole timeline

02:21:05.829 --> 02:21:11.829
around, right, that we work with Kenan to um line up

02:21:11.838 --> 02:21:15.739
their timeline for the cost analysis so that you all

02:21:15.750 --> 02:21:18.940
have enough time to consider it before you pro formally

02:21:18.950 --> 02:21:22.940
propose a rule. I was just going to ask. So where does

02:21:22.950 --> 02:21:26.569
the IMM's cost analysis come into play? Is that in

02:21:26.579 --> 02:21:27.579
parallel with

02:21:29.388 --> 02:21:30.040
ERCOT's?

02:21:32.349 --> 02:21:37.569
(item:25.2:Connie Corona on IMM cost analysis) Yes I, I believe that um that can take place concurrently.

02:21:37.579 --> 02:21:41.709
But again, you know, as, as we do, we will be working

02:21:41.718 --> 02:21:45.229
sort of in a three way conversation with the IMM to

02:21:45.239 --> 02:21:48.540
ensure that, that all parties are, are getting their

02:21:48.549 --> 02:21:52.638
time for due diligence. (item:25.2:Commissioner Glotfelty on IMM study) And can we commit and accept

02:21:52.649 --> 02:21:56.069
that we are that ERCOT and the IMM studies are going

02:21:56.079 --> 02:21:56.870
to be separate?

02:21:59.540 --> 02:22:02.209
I don't know that, that we're prepared to address that

02:22:02.218 --> 02:22:04.519
today.

02:22:08.968 --> 02:22:12.418
I think it's my belief that two data points on the

02:22:12.429 --> 02:22:15.489
metrics of ACM with a cap on it are more important

02:22:15.500 --> 02:22:18.709
and more valuable than just one. So having

02:22:20.530 --> 02:22:24.000
the IMM do a study and ERCOT do a study independently would

02:22:24.009 --> 02:22:27.540
be valuable to me at whatever point we want to have

02:22:27.549 --> 02:22:30.019
that discussion we can, but it doesn't have to be today

02:22:31.058 --> 02:22:34.360
we appreciate receiving, receiving that guidance. Yeah

02:22:34.370 --> 02:22:40.739
I mean, so yeah, I see it working. (item:25.2:Commissioner McAdams on IMMs cost analysis) You need two data

02:22:40.750 --> 02:22:45.588
points to verify the biases or, or um highlight the

02:22:45.599 --> 02:22:48.319
biases of one over the other, you know, because you're

02:22:48.329 --> 02:22:50.290
gonna question both. All right, what assumptions did

02:22:50.299 --> 02:22:53.860
we use? How did you go about that analysis to see um

02:22:53.870 --> 02:22:56.718
where you meet in the middle between Kenan's analysis

02:22:56.729 --> 02:22:59.709
and ultimately carries. So it, we're kind of pursuing

02:22:59.718 --> 02:23:02.399
that approach a little bit with ball because again

02:23:02.629 --> 02:23:05.610
uh, Pete Warrington's analysis is producing what could

02:23:05.620 --> 02:23:11.259
be implied balls or certainly will. Um, and then we'll

02:23:11.269 --> 02:23:13.429
have a ball study coming back to see where we're at

02:23:13.440 --> 02:23:13.769
So,

02:23:15.659 --> 02:23:18.620
so you're saying you're good with two studies? Yeah

02:23:18.799 --> 02:23:22.159
Well it studies each other. Yeah. And I guess they can run

02:23:22.168 --> 02:23:26.709
concurrently at the same time frame. Yes ma'am. But not losing

02:23:26.769 --> 02:23:29.709
the, I guess what you talked about earlier, which was

02:23:30.290 --> 02:23:35.120
you know, Staff and IMM and ERCOT working together and getting

02:23:35.129 --> 02:23:39.909
in, put along the way. I think we can have two studies

02:23:39.918 --> 02:23:44.058
that are a appropriately um independent of one another

02:23:44.069 --> 02:23:46.338
without being in total isolation.

02:23:50.610 --> 02:23:55.209
Uh Yes. Now on the hard one, I just, I have one

02:23:55.509 --> 02:23:58.500
I have one more thing I did ONC as well. Ok. Go

02:23:58.509 --> 02:24:02.750
ahead. Ok. (item:25.2:Commissioner McAdams on PCM) One of the thing Madam Chair, when thinking

02:24:02.759 --> 02:24:08.088
about PCM was uh we now have 1500 conditions that are

02:24:08.099 --> 02:24:13.638
statutory. Um this, this Commission boy

02:24:13.649 --> 02:24:17.468
I'm getting tired. I spent a lot of time um on development

02:24:17.479 --> 02:24:20.338
of PCM and working on a blueprint in collaboration

02:24:20.349 --> 02:24:24.009
with ERCOT. Uh We heavily negotiated that we all signed

02:24:24.019 --> 02:24:26.569
it um as you'll recall through the leadership of Chairman

02:24:26.579 --> 02:24:31.440
Lake. And uh I think it's important to recognize what

02:24:31.450 --> 02:24:34.769
guides and governs the gray areas that statute did

02:24:34.780 --> 02:24:38.759
not address on PCM and recognize that the blueprint

02:24:38.769 --> 02:24:43.239
still controls in those areas and should guide our

02:24:43.250 --> 02:24:48.668
our path forward. Um And I, and I just wanted to stress

02:24:48.679 --> 02:24:51.418
and, and hear from the Commission that that's still

02:24:51.429 --> 02:24:53.110
the intention, that's still the policy.

02:24:55.000 --> 02:24:59.149
Yes. And so that's what I try to capture or get with

02:24:59.159 --> 02:25:02.149
respect to feedback from Commission Staff in my memo.

02:25:04.269 --> 02:25:07.349
I can lay that out if you like or. (item:25.2:Commissioner Cobos lays out her memo) Really um my

02:25:07.360 --> 02:25:12.530
memo was intended to further engage Commission Staff

02:25:12.540 --> 02:25:17.709
in the um PCM development and in strawman and wanted

02:25:17.718 --> 02:25:21.468
to solicit their feedback to make sure that um from

02:25:21.479 --> 02:25:23.269
their perspective, that all the decision points and

02:25:23.280 --> 02:25:26.159
milestones are were captured. Obviously looking

02:25:26.168 --> 02:25:29.110
at the um blueprint as Commissioner McAdams identified

02:25:29.120 --> 02:25:31.450
there are some areas in there that weren't covered

02:25:31.459 --> 02:25:36.819
by 1500 and then um to try to sort of start breaking

02:25:36.829 --> 02:25:39.088
down what stays here and the Commission rulemaking

02:25:39.099 --> 02:25:42.058
process goes over to the ERCOT stakeholder process or

02:25:42.069 --> 02:25:44.718
involves both processes. Ultimately, I guess all protocols

02:25:44.729 --> 02:25:48.649
have to come over here for approval and um and also

02:25:48.659 --> 02:25:51.679
get their thoughts on how PCM will work with the reliability

02:25:51.690 --> 02:25:54.729
standard from their perspective. So just getting more

02:25:54.739 --> 02:25:59.329
feedback from them um based on on your filing, Kenan.

02:25:59.870 --> 02:26:02.509
Is what I was looking for in my memo. So we

02:26:02.519 --> 02:26:04.808
could just kind of have a robust package of information

02:26:04.819 --> 02:26:07.259
as we look to um help build straw band.

02:26:09.280 --> 02:26:12.718
So, uh I mean, (item:25.2:Kenan Ögelman's response to Commissioner Cobos on working with Commission Staff) the, the plan has always been to work

02:26:12.729 --> 02:26:17.879
very closely with Commission Staff. Even prior

02:26:17.888 --> 02:26:22.558
to putting out uh the, the straw man publicly. I

02:26:22.569 --> 02:26:26.700
do think there are uh uh and, and the other aspect

02:26:26.709 --> 02:26:30.790
would be to uh Commissioner McAdams' point, honor the

02:26:30.799 --> 02:26:35.450
decisions that have been already made. So that,

02:26:35.679 --> 02:26:41.110
that will be a package that we would plan to a create

02:26:41.149 --> 02:26:45.239
then be uh work with the Commission Staff on and then

02:26:45.250 --> 02:26:48.829
release publicly and it have it go through another

02:26:48.838 --> 02:26:53.899
iteration uh stakeholders uh that are uh market participants

02:26:53.909 --> 02:26:58.349
and external to ERCOT or the Public Utility Commission.

02:26:58.649 --> 02:27:03.280
So I believe we would accommodate all of the elements

02:27:03.290 --> 02:27:07.110
that you expressed Commissioner Cobos. And in what

02:27:07.120 --> 02:27:08.239
you just described.

02:27:11.509 --> 02:27:13.769
I had just a couple of things and these are a little

02:27:13.780 --> 02:27:18.019
bit more specific um really just kind of um coming

02:27:18.030 --> 02:27:22.769
off of what you uh proposed in your decision points.

02:27:23.259 --> 02:27:26.088
And so, um you know, they all, they all look, they

02:27:26.099 --> 02:27:28.729
all look good. Uh I did have a comment on, on two

02:27:28.739 --> 02:27:34.049
of them. (item:25.2:Chairwoman Jackson on success metric) One being uh the success metric. Um You

02:27:34.058 --> 02:27:36.360
know, my experience has been when you do a project

02:27:36.519 --> 02:27:39.338
there's a lot of value gained. If you, if you kind

02:27:39.349 --> 02:27:42.739
of incorporate in upfront in the process, what those

02:27:42.750 --> 02:27:46.308
metrics will be as you move forward in, in, in the

02:27:46.319 --> 02:27:49.218
design process and, and in this case, in the straw

02:27:49.229 --> 02:27:53.759
model. So I know that you um you did recommend maybe

02:27:53.769 --> 02:27:56.599
addressing those in a separate project, but I can see

02:27:56.610 --> 02:28:00.558
a lot of value and actually ERCOT in incorporating

02:28:00.569 --> 02:28:04.269
those upfront and actually determining what those metrics

02:28:04.280 --> 02:28:07.299
are. You know, again, upfront is kind of part of the

02:28:07.308 --> 02:28:12.899
strawman process. I believe we can honor that request

02:28:13.799 --> 02:28:17.338
(item:25.2:Chairwoman Jackson on the billion dollar cap) And then secondly, I guess, um you had an additional

02:28:17.349 --> 02:28:21.808
decision point, um that was, was kind of pointed toward

02:28:21.819 --> 02:28:25.540
addressing the monitoring evaluation and control of

02:28:25.549 --> 02:28:29.790
the cap. Um You kind of noted that this Commission

02:28:29.799 --> 02:28:33.530
direction as to how the cap would be identified would

02:28:33.540 --> 02:28:37.610
be defined and how the term net works. And then this

02:28:37.620 --> 02:28:41.088
is in reference to the billion dollar cap. And um you

02:28:41.099 --> 02:28:44.509
said that this would most likely be necessary before

02:28:44.579 --> 02:28:47.429
the monitoring evaluation and control could be designed

02:28:47.558 --> 02:28:50.229
And my only thought there would be if a could come

02:28:50.239 --> 02:28:54.149
to us with a recommendation of what that might be.

02:28:54.750 --> 02:28:57.530
And then we can kind of go forward with that as opposed

02:28:57.540 --> 02:29:00.629
to just us developing and have y'all do a recommendation

02:29:00.638 --> 02:29:06.099
and come to us again. I think uh I'm happy to take

02:29:06.110 --> 02:29:10.329
that instruction and I believe we can deliver a recommendation.

02:29:10.338 --> 02:29:15.218
(item:25.2:Kenan Ögelman on interpreting instructions) I guess the only other feedback I would offer is

02:29:15.229 --> 02:29:19.049
that there may need to be some iteration um to this.

02:29:19.058 --> 02:29:23.610
We are at some level interpreting the instructions

02:29:23.620 --> 02:29:28.588
you gave us. When uh PUC was approved, there

02:29:28.599 --> 02:29:33.218
may be dynamics that have changed around the statutory

02:29:33.229 --> 02:29:38.069
requirements. So I just would want to make sure I allowed

02:29:38.239 --> 02:29:42.909
you uh enough, sufficient time to iterate and provide

02:29:42.918 --> 02:29:47.588
some policy guidance if, if need be. Um But we're happy

02:29:47.599 --> 02:29:53.569
to in a straw man lay our best uh best opinion around

02:29:53.579 --> 02:29:57.120
that. But ultimately, I would want to acknowledge that

02:29:57.129 --> 02:30:01.450
you get it perfectly right. Given the high level policy

02:30:01.459 --> 02:30:04.049
considerations that are involved here, I just think

02:30:04.058 --> 02:30:06.218
there's always value in getting the operator kind of

02:30:06.229 --> 02:30:09.138
engaged and particularly at the onset. So I appreciate

02:30:09.149 --> 02:30:12.218
that. And again, I, I guess I had a, a question, I

02:30:12.229 --> 02:30:16.588
guess for Connie. Do you think that we need to set

02:30:16.599 --> 02:30:21.168
up a separate project specifically for uh PCM? (item:25.2:Connie Corona's response to Chairwoman Jackson on making separate projects) Yes

02:30:21.179 --> 02:30:24.519
I do. I believe that it would be advisable to set up

02:30:24.530 --> 02:30:29.729
separate projects for PCM, the ancillary services

02:30:29.739 --> 02:30:34.759
methodology and the upcoming topic of DRRS. Staff

02:30:34.769 --> 02:30:37.950
will plan to set up a separate project for each of

02:30:37.959 --> 02:30:39.019
those. 

02:30:41.690 --> 02:30:45.209
So what I'm hearing is that PUC Staff will open a new

02:30:45.218 --> 02:30:49.000
project specifically for PCM and that ERCOT will

02:30:49.009 --> 02:30:51.769
work with Staff to develop a straw man to identify

02:30:51.780 --> 02:30:55.030
what will be needed in rule making and what will we

02:30:55.040 --> 02:30:59.700
develop through the stakeholder process. If I can get

02:30:59.709 --> 02:31:03.379
Staff to respond back to me specifically on for my

02:31:03.388 --> 02:31:07.780
memo by next open meeting on the three questions that

02:31:08.388 --> 02:31:11.629
I posed? Absolutely, we'll prepare that for the next

02:31:11.638 --> 02:31:14.409
open meeting. Did we give you enough time to lay that out? Yes ma'am.

02:31:15.899 --> 02:31:22.269
So I do have one for Kenan. (item:25.2:Commissioner Glotfelty on demand response and energy efficiency) And that is during the discussion of the PCM.

02:31:23.308 --> 02:31:26.040
There was, I think a little debate about whether we

02:31:26.049 --> 02:31:29.929
could include demand response and energy efficiency

02:31:29.940 --> 02:31:33.860
and get those, those technology and providers be able

02:31:33.870 --> 02:31:39.429
to receive PUC performance credits. I think at some

02:31:39.440 --> 02:31:42.040
point in time, we have to come and readdress that issue

02:31:42.049 --> 02:31:45.280
I don't think it's totally solved but it that up for

02:31:45.290 --> 02:31:49.450
your thoughts. I know some of them are maybe systemic

02:31:49.459 --> 02:31:51.940
issues on how to do energy efficiency, demand response

02:31:51.950 --> 02:31:55.450
might be easier, but I just want to put a place marker

02:31:55.459 --> 02:31:57.569
out there. That's something that I'd like to discuss

02:31:57.579 --> 02:32:00.459
as we go down this road in the blueprint, we were strategically

02:32:00.468 --> 02:32:01.579
ambiguous around that.

02:32:04.009 --> 02:32:06.190
Yeah, I I, and that's one of the ones I think that

02:32:06.200 --> 02:32:10.120
there we might have to iterate around. Um But I absolutely

02:32:10.200 --> 02:32:15.000
would welcome the opportunity to at least propose something

02:32:15.040 --> 02:32:20.530
and let you offer critique. Yeah, absolutely. Thank

02:32:20.540 --> 02:32:22.319
you. I, you

02:32:23.860 --> 02:32:27.269
Okay. (item:46:Chairwoman Jackson opens discussion for dispatchable reliability service) Well, next, we'll discuss the dispatchable, dispatchable

02:32:27.280 --> 02:32:30.879
reliability reserve service. Um ERCOT filed a letter

02:32:30.888 --> 02:32:35.950
requesting guidance on the DRRS. Chad, will you

02:32:35.959 --> 02:32:39.149
please come up and provide an overview of your filing.

02:32:45.870 --> 02:32:50.968
(item:46:Chad Seely with ERCOT on letter Legislators filed) Chad Seely with ERCOT. So we obviously saw the letter that they

02:32:50.979 --> 02:32:55.808
um Legislative members filed. Uh And we wanted to obviously

02:32:55.819 --> 02:32:57.968
respond and have that information for the Commission's

02:32:57.979 --> 02:33:01.450
consideration on, on where we are with implementing

02:33:01.459 --> 02:33:05.468
DRRS right now. We have uh an NPRR that is sitting at

02:33:05.479 --> 02:33:09.888
TAC right now. Uh NPRR1203, that would be ready for

02:33:09.899 --> 02:33:12.838
Board's consideration here in December. And of course

02:33:12.888 --> 02:33:15.860
Commission consideration probably at the February open

02:33:15.870 --> 02:33:19.799
meeting under current processes. And part of that

02:33:19.808 --> 02:33:22.700
letter was also indicating to the Commission as far

02:33:22.709 --> 02:33:25.829
as the project work to implement. 1203 has already

02:33:25.838 --> 02:33:30.918
started as we get prepared to implement the DRRS as

02:33:30.929 --> 02:33:34.620
part of the subset of nonspin, we have to start ramping

02:33:34.629 --> 02:33:37.479
up the project team for that. And in order to comply

02:33:37.489 --> 02:33:42.239
with the December 1, 2024 deadline, of course, recognizing

02:33:42.250 --> 02:33:44.069
the letter that was submitted to the Commission, we

02:33:44.079 --> 02:33:47.159
wanted to highlight if the Commission wants to change

02:33:47.344 --> 02:33:50.456
course on where we are right now with that existing

02:33:50.475 --> 02:33:54.036
protocol change, then we need guidance from the Commission

02:33:54.045 --> 02:33:56.986
on how to proceed. We would ultimately, if the Commission

02:33:56.995 --> 02:34:00.736
wanted us to move course, withdraw that NPRR and then

02:34:00.745 --> 02:34:04.456
start to work on DRRS as a stand alone product. And

02:34:04.465 --> 02:34:06.594
of course, in that letter, we highlighted like kind

02:34:06.605 --> 02:34:09.050
of the duration that it would to ultimately implement DRRS

02:34:09.060 --> 02:34:12.300
the as well as a stand alone product. Of course, with

02:34:12.310 --> 02:34:15.351
the stakeholders. We've all acknowledged that ultimately

02:34:15.361 --> 02:34:18.652
long term, having THERS as a stand alone product is

02:34:18.662 --> 02:34:21.290
the best course of action. But we were constrained

02:34:21.300 --> 02:34:24.371
because of the December 1st statutory deadline that

02:34:24.380 --> 02:34:28.251
we went down this path of making a subcategory of nonspin

02:34:29.370 --> 02:34:32.110
And I'll see if Kenan wants to add anything else Yeah, I

02:34:32.120 --> 02:34:35.440
mean, the only other thing I, I would add. (item:46:Kenan Ögelman with ERCOT on commitment to a standalone product) Is that ERCOT

02:34:35.450 --> 02:34:40.829
did as part of 1203 commit to delivering a stand alone

02:34:40.838 --> 02:34:46.040
product. But there would be this interim, uh not stand

02:34:46.049 --> 02:34:50.750
alone product that existed that did not align with

02:34:50.759 --> 02:34:55.519
the letter that was filed. And I think that's where

02:34:55.530 --> 02:34:58.149
uh there, there's a real challenge for us.

02:35:00.549 --> 02:35:03.950
So, um I know we've had the presentation for ERCOT

02:35:03.959 --> 02:35:07.290
but we also have uh Carrie Bivens here today, the Independent

02:35:07.299 --> 02:35:09.269
Market Monitor. And I know it's important to have a

02:35:09.280 --> 02:35:12.459
three way conversation with the Commission, ERCOT and

02:35:12.468 --> 02:35:14.899
the IMM about this market chain. So I was wondering

02:35:14.909 --> 02:35:17.989
if Carrie would come on up and um and then we can

02:35:18.000 --> 02:35:19.780
maybe have a discussion afterwards.

02:35:27.069 --> 02:35:30.129
(item:46:Carrie Bivens, IMM with Potomac Economics on standalone product) Good afternoon. Carrie Bivens with Potomac Economics

02:35:30.459 --> 02:35:35.290
We agree that a stand alone product is the best

02:35:35.299 --> 02:35:38.679
way to go from an accuracy of pricing standpoint, from

02:35:38.718 --> 02:35:41.379
most accurately being able to address the reliability

02:35:41.388 --> 02:35:44.388
needs. We understand the statutory deadline. So when

02:35:44.399 --> 02:35:48.610
we gave our TAC opinion, um we supported the approval

02:35:48.620 --> 02:35:52.450
of 1203 understanding that there is this deadline target

02:35:52.459 --> 02:35:57.280
to hit. Um We still have some questions about how much

02:35:57.290 --> 02:36:00.030
DRRS is gonna be procured and how it's going to be deployed

02:36:00.290 --> 02:36:02.620
And we'd like ERCOT to address that next year. I'm

02:36:02.629 --> 02:36:05.468
sure they will do that before the implementation of

02:36:05.479 --> 02:36:06.239
the service.

02:36:09.950 --> 02:36:13.179
So in terms of optimal implementation, um of course

02:36:13.190 --> 02:36:16.040
you're concerned not only with economics but also efficiency.

02:36:16.579 --> 02:36:20.479
And so do you have specific thoughts about that? Yes

02:36:20.489 --> 02:36:21.049
Um

02:36:24.159 --> 02:36:28.558
(item:46:IMM Carrie Bivens' response to Chairwoman Jackson on economics & efficiency) The service was really envisioned as a stand alone

02:36:28.569 --> 02:36:32.179
product. At least as we envisioned it when we were

02:36:32.190 --> 02:36:34.959
thinking about a similar product, the uncertainty product

02:36:35.360 --> 02:36:38.940
and we think that best addresses the reliability need

02:36:39.239 --> 02:36:42.808
Um I think that conversation needs to be had about

02:36:42.819 --> 02:36:45.959
how nonspin and DRRS are gonna interact in the future

02:36:45.968 --> 02:36:47.979
And so that's kind of part of that review we'd like

02:36:47.989 --> 02:36:52.049
to see go going forward next year. But as far as

02:36:52.058 --> 02:36:55.899
accuracy of pricing, it's, it's an inefficient inefficiency

02:36:55.909 --> 02:37:01.129
It's not accurate to have um services that have constraints

02:37:01.138 --> 02:37:04.909
within them, but give them all the same price. They're

02:37:04.918 --> 02:37:07.489
different services with different requirements, but

02:37:07.500 --> 02:37:10.500
they all get the same price and that is a market design

02:37:10.509 --> 02:37:10.959
issue.

02:37:12.509 --> 02:37:13.489
That is a what issue?

02:37:15.700 --> 02:37:15.959
A market design issue. Yes.

02:37:17.519 --> 02:37:20.370
But we have that with current services we have that

02:37:20.379 --> 02:37:22.690
with already. Yes, we do. Yes.

02:37:25.450 --> 02:37:29.530
So, in your opinion, the stand alone is the product

02:37:29.540 --> 02:37:29.979
Yes,

02:37:32.679 --> 02:37:36.450
I agree. I understand. But the world is not perfect

02:37:36.459 --> 02:37:39.629
and you have statutory conditions that we must comply

02:37:39.638 --> 02:37:42.888
with. Well, I think the letter says that

02:37:44.429 --> 02:37:46.888
what's being delivered doesn't comply with the statute

02:37:46.899 --> 02:37:49.379
and the statutory deadline itself is not, I mean, if

02:37:49.388 --> 02:37:52.450
you're delivering the wrong product according to what

02:37:52.459 --> 02:37:56.159
the authors of the Bill said, then you're not really

02:37:56.168 --> 02:37:58.370
complying. I mean, you're not complying in general

02:37:59.588 --> 02:38:01.790
Right. So that's why I thought they didn't care about

02:38:01.799 --> 02:38:04.069
the statutory deadline. If you meet the deadline and

02:38:04.079 --> 02:38:05.718
give them what they don't want, you're not really meeting

02:38:05.729 --> 02:38:09.120
the. So, so you think it was more about reaching the

02:38:09.129 --> 02:38:11.968
right policy outcome? I know, you know, part of the

02:38:11.979 --> 02:38:14.429
discussion, what we've had today on a number of different

02:38:14.440 --> 02:38:18.638
other subjects is um you know, the impact to real time

02:38:18.649 --> 02:38:22.569
co optimization. And so, you know that I think is another

02:38:22.579 --> 02:38:24.668
issue that is gonna kind of come up. And I didn't know

02:38:24.679 --> 02:38:27.729
if op wanted to jump in and kind of comment on that

02:38:27.739 --> 02:38:31.860
at the beginning. (item:46:Kenan Ögelman's response to Chairwoman Jackson on real time optimization) On, on real time optimization. Um

02:38:32.049 --> 02:38:36.668
We're gonna use up resources one way or the other.

02:38:36.679 --> 02:38:40.989
The timing of what we use for DRRS versus

02:38:41.000 --> 02:38:44.058
real time co optimization might might shift around

02:38:44.069 --> 02:38:48.979
a little bit. But for example, if I don't do the, uh

02:38:49.110 --> 02:38:54.668
if I don't do DRRS by um December 1, 2024

02:38:54.679 --> 02:38:59.200
it does free up resources in in that window to work

02:38:59.209 --> 02:39:03.040
on real time co optimization or something else. Um

02:39:03.049 --> 02:39:07.558
On the back end, it might be a more difficult fit for

02:39:07.569 --> 02:39:11.849
DRRS. And that's why I think in the earlier

02:39:11.860 --> 02:39:15.718
conversation that we had this morning giving us some

02:39:15.729 --> 02:39:19.399
flexibility around the exact timing relative to real

02:39:19.409 --> 02:39:24.780
time co optimization is, is really important. Again

02:39:24.790 --> 02:39:30.088
I'll emphasize that ERCOT also sees real value in a

02:39:30.099 --> 02:39:32.239
stand alone product. And that's why we committed to

02:39:32.250 --> 02:39:36.429
working on that, you know, even after we deliver something

02:39:36.440 --> 02:39:43.450
December uh uh 2024. Um So it, it's there, there's

02:39:43.459 --> 02:39:47.110
risk to real time co optimization. It just exists at

02:39:47.120 --> 02:39:50.599
a different time of the design. If I don't have to

02:39:50.610 --> 02:39:56.940
do a December 1, 2024 DRRS, that means the resources

02:39:56.950 --> 02:40:00.229
I was going to use to code and bring all that forward

02:40:00.239 --> 02:40:06.030
are free to work on other things earlier. But again

02:40:06.040 --> 02:40:09.239
there's going to be this kind of convergence of three

02:40:09.250 --> 02:40:13.468
major projects in the back end. And that is where we

02:40:13.479 --> 02:40:17.819
need some flexibility to manage everything. And with

02:40:17.838 --> 02:40:24.088
the with the DRRS and, and PCM, as we discussed earlier.

02:40:24.099 --> 02:40:27.808
again, maintaining the priority for real time, correct

02:40:28.959 --> 02:40:31.588
So Kenan just to really understand flexibility on the

02:40:31.599 --> 02:40:34.399
back end and the convergence uh the, the uh performance

02:40:34.409 --> 02:40:37.179
measure that we approved earlier says DRRS would be

02:40:37.190 --> 02:40:40.399
implemented prior to or closely aligned with RTC.

02:40:40.679 --> 02:40:43.979
Is that, I mean, does your concern fit in with that

02:40:44.929 --> 02:40:48.329
performance measure? (item:46:Kenan Ögelman's response to Commissioner Cobos on DRRS alignment with RTC) I think that requirement is something

02:40:48.338 --> 02:40:53.159
we can honor. It's just I I would be very scared of

02:40:53.168 --> 02:40:56.058
delivering all three things on one day. So if I have

02:40:56.069 --> 02:40:59.000
months on either side where I could bring something

02:40:59.009 --> 02:41:03.030
in early or something in a little bit uh on the other

02:41:03.040 --> 02:41:06.399
side of real time co optimization, we believe that

02:41:06.409 --> 02:41:09.429
gives us the best flexibility to deliver a quality

02:41:09.440 --> 02:41:13.259
effective product, three quality effective products

02:41:13.429 --> 02:41:18.159
versus trying to, you know, cram it all into one delivery

02:41:19.569 --> 02:41:21.468
I guess that the thought is, you know, you want to

02:41:21.479 --> 02:41:24.899
keep real time optimization in 2026 but you don't want

02:41:24.909 --> 02:41:27.599
DRS dragging out forever where you hit another EMS

02:41:27.610 --> 02:41:30.269
upgrade. And we end up how we were with the ECRS where

02:41:30.280 --> 02:41:32.879
it was delayed for years upon years because not just

02:41:32.888 --> 02:41:35.569
the EMS upgrade but other things happened, we just

02:41:35.579 --> 02:41:38.259
don't want to, you know, go into extra innings over

02:41:38.269 --> 02:41:40.409
and over again on the DRRS that's why that's the whole

02:41:40.418 --> 02:41:43.110
goal of the performance measure, right? And I think

02:41:43.120 --> 02:41:47.088
you know, based on, you know, to bring it up again

02:41:47.379 --> 02:41:50.179
your October12th comments say that you can develop

02:41:50.190 --> 02:41:53.899
a stand alone product and um would commit to even putting

02:41:53.909 --> 02:41:57.179
it in further, OK? KRS and everything to ensure that

02:41:57.190 --> 02:42:00.009
the service aligns with the delivery of RTC. So I'm

02:42:00.019 --> 02:42:02.489
just trying to understand if it, what's changed since

02:42:02.530 --> 02:42:05.218
October 12th. (item:46:Kenan Ögelman's response to Commissioner Cobos on risking co-optimization) So, so nothing's changed. I mean, what

02:42:05.229 --> 02:42:09.409
I said was uh in, in that if I can have some

02:42:09.418 --> 02:42:13.718
time on either side, I'm still in my opinion, delivering

02:42:14.829 --> 02:42:19.530
in, in line with real time co optimization. Um but

02:42:19.790 --> 02:42:23.259
I'm not putting real time co optimization at risk.

02:42:23.269 --> 02:42:27.940
So I'm not asking for years, I'm asking for months

02:42:27.950 --> 02:42:31.450
uh in, in terms of flexibility and maybe that wasn't

02:42:31.459 --> 02:42:35.099
very clear and and I appreciate it. Thank you. But

02:42:35.110 --> 02:42:37.968
I do see as long as I have months on either side

02:42:37.979 --> 02:42:41.379
of real time customization, I believe I can deliver

02:42:41.388 --> 02:42:45.218
those things on time if that aligns with your thinking

02:42:45.269 --> 02:42:47.338
Yes. No. Thank you for the clarification. I appreciate

02:42:47.349 --> 02:42:47.558
it.

02:42:50.769 --> 02:42:53.200
(item:46:Commissioner McAdams thoughts on precedent) I would assert that the product that is being delivered

02:42:53.209 --> 02:42:56.138
is a matter of interpretation, but that the deadline

02:42:56.149 --> 02:42:59.780
is black letter law and this is a terrible precedent

02:42:59.790 --> 02:43:04.530
that invites ad hoc lawmaking through Legislative letters.

02:43:04.540 --> 02:43:07.120
I know because I've helped draft some of those letters

02:43:07.129 --> 02:43:09.338
in my career and

02:43:11.088 --> 02:43:15.709
terrible precedent but respectful of the body.

02:43:18.899 --> 02:43:22.718
Oh I'm, I'm for stand alone product as best we can

02:43:22.729 --> 02:43:26.679
get the best product that we can as fast as we can

02:43:27.679 --> 02:43:31.500
stand up. So I think what I'm hearing is that we're

02:43:31.509 --> 02:43:34.319
interested in reaching the right policy outcome and

02:43:34.329 --> 02:43:37.329
want to guard against impacting the schedule for implementing

02:43:37.338 --> 02:43:41.120
uh RTC plus B, RTC plus B should still be

02:43:41.338 --> 02:43:44.849
um our priority. And with that,

02:43:47.569 --> 02:43:51.909
I think we'll move on. And um we'll be taking Item 26

02:43:51.918 --> 02:43:56.558
later in the agenda with Item 34. (item:27:Chairwoman Jackson lays out Project No. 54445) And so next up is

02:43:56.569 --> 02:44:02.979
Item No. 27, Project No. 54445. This is the Commission's

02:44:02.989 --> 02:44:06.319
Project for rules adopted by ERCOT. Shelah, do we have

02:44:06.329 --> 02:44:08.870
anyone from the public signed up to speak on Item No. 

02:44:08.879 --> 02:44:11.700
27? No, ma'am. Okay.

02:44:14.200 --> 02:44:18.319
PUC Staff filed a memo regarding one alignment, Nodal

02:44:18.349 --> 02:44:23.418
operating guide revision request, uh 259 and recommended

02:44:23.429 --> 02:44:28.079
approval of this revision to the ERCOT rules. Harika

02:44:28.149 --> 02:44:33.509
is here if we have any questions. If not, I would enter

02:44:33.519 --> 02:44:35.030
Do you have any questions?

02:44:38.209 --> 02:44:42.099
I do not. Okay. (item:27:Motion to approve proposed order) And if not, I would entertain a motion

02:44:42.110 --> 02:44:46.239
to approve the proposed order. And can I can I, I want

02:44:46.250 --> 02:44:49.190
to make sure that we reading the right thing. The proposed

02:44:49.200 --> 02:44:53.479
order will just approve an OGRR 259. Is that right

02:44:53.819 --> 02:44:54.700
Ok, thank you.

02:44:57.629 --> 02:45:01.168
I move. Ok. I have a motion. Second. And a second. All in favor,

02:45:01.179 --> 02:45:07.030
say aye, aye. Motion passes. (item:28:Chairwoman Jackson lays out Project No. 54584) Next up is Item No. 28, Project

02:45:07.040 --> 02:45:10.629
number 54584. This is the Commission's project for

02:45:10.638 --> 02:45:13.459
the reliability standard. Shelah, do we have anyone

02:45:13.468 --> 02:45:16.429
from the public signed up to speak on Item No. 28?

02:45:16.599 --> 02:45:20.138
No, ma'am. No one signed up to speak. PUC Staff filed

02:45:20.149 --> 02:45:23.709
a memo and ERCOT filed a letter. Let's first hear

02:45:23.718 --> 02:45:28.769
from ERCOT and then PUC Staff. Woody, could you

02:45:28.780 --> 02:45:30.040
come on up and um,

02:45:32.558 --> 02:45:35.030
tell us if you have any comments regarding your filing.

02:45:35.610 --> 02:45:35.950
(item:28:ERCOT's Woody Rickerson on rerunning errors) Woody Rickerson, 

02:45:38.120 --> 02:45:45.329
ERCOT. So yes, uh the uh 48 scenarios that we filed have errors

02:45:45.879 --> 02:45:48.429
and we're going to, we found the errors, we're rerunning

02:45:48.440 --> 02:45:53.040
those now. So the priority is to rerun those and resubmit

02:45:53.308 --> 02:45:57.129
those. And the second priority would be to implement

02:45:57.360 --> 02:45:59.370
some of the things that our

02:46:00.899 --> 02:46:05.739
goal is to do. You expect to have any timing impact

02:46:05.750 --> 02:46:09.399
on the overall outgoing ongoing work with the reliability

02:46:09.409 --> 02:46:12.989
standard. No, I don't think it will affect the timing

02:46:14.168 --> 02:46:16.299
still expect to have those results at the same time

02:46:16.308 --> 02:46:16.450
frame.

02:46:19.418 --> 02:46:21.299
(item:28:Commissioner McAdams on ERCOT's rerunning errors) Madam Chair, in my view, this is a good thing. I'm

02:46:21.308 --> 02:46:23.129
glad they caught it, first of all. And then it's an

02:46:23.138 --> 02:46:27.718
opportunity to refine it and help improve the menu

02:46:27.729 --> 02:46:29.940
of considerations that the Commission can then look

02:46:29.950 --> 02:46:36.308
at, I think, look, I'd like to compliment ERCOT and

02:46:36.319 --> 02:46:39.218
Staff, the rest of your team for creating this framework

02:46:39.599 --> 02:46:42.979
for us to start discussions on the reliability standard

02:46:42.989 --> 02:46:48.829
and responding to basically Staff's memo. Requesting

02:46:48.838 --> 02:46:51.388
more information and our original memo requesting more

02:46:51.399 --> 02:46:53.620
information about the inputs and outputs of the modeling

02:46:53.629 --> 02:46:58.338
exercise. I believe this this does constitute an open

02:46:58.349 --> 02:47:01.479
and transparent process to deliberate on such an important

02:47:01.489 --> 02:47:04.179
issue. I think it's playing a very important role in

02:47:04.459 --> 02:47:07.030
all the other projects that we've been discussing.

02:47:07.079 --> 02:47:10.849
Um I also appreciate the alternative view that Staff

02:47:10.860 --> 02:47:15.929
has presented in collaborating with us on these new

02:47:15.940 --> 02:47:19.610
inputs. Now that ERCOT has explained the variables

02:47:19.620 --> 02:47:21.799
that go into the s model. I would like for the Commission

02:47:21.808 --> 02:47:25.110
to request as a part of this stakeholder feedback.

02:47:25.120 --> 02:47:27.829
So again, we can start getting that Woody to help inform

02:47:28.319 --> 02:47:30.808
that next leg after we get the results back from your

02:47:30.819 --> 02:47:34.329
rerun. So hopefully, we don't lose any time. I do think

02:47:34.338 --> 02:47:37.110
it would be value to kind of bring up Staff maybe at

02:47:37.120 --> 02:47:40.429
this time. Werner to kind of go through, you know,

02:47:40.440 --> 02:47:43.250
some of the um or Brendan whoever is going to be the

02:47:43.290 --> 02:47:45.049
speaker. Well, they're coming out Madam Chair. (item:28:Commissioner Glotfelty on ERCOT's root cause analysis) I just

02:47:45.058 --> 02:47:48.129
want to point out to you that in this ERCOT did a root

02:47:48.138 --> 02:47:51.729
cause analysis. Which you have mentioned many times up

02:47:51.739 --> 02:47:54.519
here and I have said we don't do very often but you

02:47:54.530 --> 02:47:56.569
and your engineering background, I wanted to point

02:47:56.579 --> 02:48:00.759
out that that is being utilized in this process. Excellent.

02:48:00.769 --> 02:48:04.370
So identify the issue, go back and correct it and prevent

02:48:04.379 --> 02:48:05.769
it from happening again. Excellent.

02:48:08.370 --> 02:48:11.299
Okay. So whoever is going to make the press, I guess

02:48:12.250 --> 02:48:14.759
Brendan you're going to do it. Take it away sir. Take it, take it, take away.

02:48:14.769 --> 02:48:17.668
with what you've kind of been working on. (item:28:Brendan Ok with Commission Staff on memo concerning reliability standard study) Brendan Ok

02:48:17.679 --> 02:48:20.918
with Commission Staff. Staff filed a memo to offer

02:48:20.929 --> 02:48:23.690
some suggestions for the reliability standard study

02:48:24.159 --> 02:48:27.030
This includes some additional scenarios and formatting

02:48:27.040 --> 02:48:30.379
changes and these suggestions were discussed with our

02:48:30.399 --> 02:48:34.450
ERCOT. So to start, uh Commission Staff recommends

02:48:34.459 --> 02:48:37.690
that the 2023 prompt here study should be conducted

02:48:37.700 --> 02:48:40.629
as soon as possible to see a cost comparison between

02:48:40.638 --> 02:48:45.610
the two studies. Next, we recommend that the 1

02:48:45.620 --> 02:48:49.558
in 5 LOLE scenarios be replaced by 1 in 8

02:48:49.569 --> 02:48:53.489
LOLE scenarios. 1 in 5 as a base case can be

02:48:53.500 --> 02:48:56.959
a bit misleading because uh an additional 3000 megawatts

02:48:57.790 --> 02:49:01.009
um are retired just to get there, uh which isn't included

02:49:01.019 --> 02:49:05.769
in the table. Next, uh Commission Staff recommends

02:49:05.780 --> 02:49:09.200
that ERCOT should perform this analysis with uh different

02:49:09.209 --> 02:49:11.829
sets of weather assumptions to better account for more

02:49:11.838 --> 02:49:16.319
recent uh weather trends. So we propose adding uh scenarios

02:49:16.329 --> 02:49:19.759
that use just 15 years of historical weather data.

02:49:20.940 --> 02:49:24.388
Um Next, regarding weatherization effectiveness, Commission

02:49:24.399 --> 02:49:27.479
Staff recommends that ERCOT provide additional sensitivities

02:49:27.489 --> 02:49:30.899
on the expected level of reduction in weather related

02:49:30.909 --> 02:49:35.459
outages. (item:28:Brendan Ok on considering metrics holistically) Next, when setting a reliability standard

02:49:35.468 --> 02:49:38.739
we think that the Commission should consider all metrics

02:49:38.750 --> 02:49:42.500
holistically um as the exceedance probabilities depend

02:49:42.509 --> 02:49:45.849
on the chosen duration and magnitude threshold. Uh

02:49:45.899 --> 02:49:50.989
So Commission should go scenario by scenario and um

02:49:51.000 --> 02:49:53.610
consider the exceeding probabilities associated with

02:49:53.620 --> 02:49:57.069
each scenario uh rather than rely on a fixed set of

02:49:57.079 --> 02:50:02.049
probability. Then for cost uh in PURA there's a $1

02:50:02.058 --> 02:50:04.579
billion cap on the cost of performance credits. If

02:50:04.588 --> 02:50:07.700
PCM is going to be the method in which we meet the

02:50:08.239 --> 02:50:10.899
reliability standards, then we need analysis on the

02:50:10.909 --> 02:50:14.239
level of lole that can be achieved with this cap in

02:50:14.250 --> 02:50:17.979
place. And lastly, we just propose some formatting

02:50:17.989 --> 02:50:21.229
changes to help better interpret the results. That's

02:50:21.360 --> 02:50:23.509
all I have. (item:28:Commissioner McAdams on achieving a reliability standard) Madam Chair, that kind of goes hand in glove

02:50:23.519 --> 02:50:25.200
with what you were talking about earlier. It will help

02:50:25.209 --> 02:50:30.329
inform uh how we know the PCM and achieving a reliability

02:50:30.338 --> 02:50:33.489
standard can be done under the constraints of the statute

02:50:33.500 --> 02:50:36.519
So we know how to try to refine this or make recommendations

02:50:36.530 --> 02:50:39.069
to the Legislature later on to achieve the desired

02:50:39.079 --> 02:50:43.940
outcome in statute. Well I was um, I was particularly

02:50:43.950 --> 02:50:47.040
pleased to see the work that you did on the probabilities

02:50:47.049 --> 02:50:51.069
of exceeds. And I think that was a, a very kind of

02:50:51.079 --> 02:50:53.959
unique approach and quite frankly, one that we hadn't

02:50:53.968 --> 02:50:57.979
thought about before. And I know that you uh, worked

02:50:58.049 --> 02:51:01.700
closely with, with ERCOT on these kind of, you know

02:51:01.829 --> 02:51:04.179
in, in kind of drafting them and before he even brought

02:51:04.190 --> 02:51:07.349
them before us, but I did want to give Woody an opportunity

02:51:07.360 --> 02:51:10.030
to kind of kind of weigh in and, and tell us what

02:51:10.040 --> 02:51:12.679
you think about kind of these additional additions

02:51:12.690 --> 02:51:16.379
that are now part of the reliability study. Oh yeah

02:51:16.388 --> 02:51:19.888
I think those conditions are in line with what we expect

02:51:19.899 --> 02:51:20.729
that next step.

02:51:23.319 --> 02:51:26.440
I think a very excellent job on y'all's behalf. Lori

02:51:26.459 --> 02:51:26.709
Did you?

02:51:28.690 --> 02:51:32.418
(item:28:Commissioner Cobos' appreciation for Commission Staff and ERCOT) No, no, I don't. I want to thank Staff for raising

02:51:32.429 --> 02:51:36.129
these additional issues for consideration and in the

02:51:36.149 --> 02:51:40.120
I guess last leg of the scenario analysis and also

02:51:40.129 --> 02:51:44.540
want to thank Woody for their continued work on the

02:51:44.549 --> 02:51:46.500
reliability standard. It seems like it's generally

02:51:46.509 --> 02:51:48.979
all on track and that I think is the underpinning and

02:51:48.989 --> 02:51:53.468
of um all the market reform measures that we're looking

02:51:53.479 --> 02:51:55.530
to implement over the course of the next few years

02:51:55.540 --> 02:51:58.110
So thank you for keeping everything on track.

02:51:59.799 --> 02:52:02.888
(item:28:Chairwoman Jackson's final thoughts to Commission Staff and ERCOT) Okay. So good recommendations worthy of being included

02:52:02.899 --> 02:52:06.549
in the analysis. Excellent work, I think by Staff. And

02:52:06.558 --> 02:52:09.700
um as we said earlier ERCOT, um please continue to

02:52:09.709 --> 02:52:11.838
work with Staff as you develop the modeling inputs

02:52:11.849 --> 02:52:14.159
and assumptions of the reliability.

02:52:17.659 --> 02:52:22.888
Okay. (item:29:Chairwoman Jackson lays out Project No. 54585) Next up is Item No. 29, Project No. 54585.

02:52:22.909 --> 02:52:25.099
This is the Commission's project for the emergency

02:52:25.110 --> 02:52:28.110
pricing program. Shelah, do we have anyone from the

02:52:28.120 --> 02:52:31.790
public sign up to speak on Item No. 29? No, ma'am.

02:52:33.679 --> 02:52:37.058
Okay. (item:29:Chairwoman Jackson opens discussion on generators recovering costs while in EPP) I believe we should have a discussion today on

02:52:37.069 --> 02:52:40.030
the question of whether the ability of a generator

02:52:40.049 --> 02:52:43.489
to recover its reasonable verifiable operating cost

02:52:43.700 --> 02:52:46.290
while the emergency pricing program is in effect should

02:52:46.299 --> 02:52:49.780
be, should be capped. Our goal is to have a discussion

02:52:49.790 --> 02:52:52.299
today with the intention of voting on the final rule

02:52:52.308 --> 02:52:55.229
at our November 30th meeting to ensure that the program

02:52:55.239 --> 02:52:57.979
is in place for the upcoming Winter. I believe we have

02:52:57.989 --> 02:53:01.549
David Smeltzer with PUC Staff here. And David, could

02:53:01.558 --> 02:53:05.668
you please kick off our discussion? Sure. Thank you.

02:53:06.229 --> 02:53:09.399
(item:29:David Smeltzer with Commission Staff on emergency pricing program) David Smeltzer, Commission Staff. I want to thank the

02:53:09.409 --> 02:53:12.489
Chair for uh the Chair and the uh Commission for bringing

02:53:12.500 --> 02:53:15.009
up this issue today so we can set ourselves up for

02:53:15.019 --> 02:53:20.329
success for next time. The, the issue that

02:53:20.338 --> 02:53:22.409
we want to discuss as the Chair forecasted was brought

02:53:22.418 --> 02:53:25.069
up by Commissioner McAdams at the open meeting. When

02:53:25.079 --> 02:53:28.808
we first laid out the proposal for publication and

02:53:28.819 --> 02:53:31.620
in short, the design of this program and for anyone

02:53:31.629 --> 02:53:33.909
listening, there are a lot of contested issues within

02:53:33.918 --> 02:53:37.058
the rulemaking such as we'll measure verifiable costs

02:53:37.069 --> 02:53:39.690
or what the time frame should be, what counts as emergency

02:53:39.700 --> 02:53:42.319
conditions, all these will be handled a future time

02:53:42.329 --> 02:53:45.769
So don't, if I key in on any of those words, don't

02:53:45.888 --> 02:53:47.819
read, read into that, it's just, we're just having

02:53:47.829 --> 02:53:50.418
a discussion on this one issue. And so the structure

02:53:50.429 --> 02:53:53.540
of this program generally under the statute requires

02:53:53.549 --> 02:53:57.360
in any rolling 24 hour period. If we're at H cap for

02:53:57.370 --> 02:54:00.519
12 hours, then the emergency pricing program kicks

02:54:00.530 --> 02:54:03.360
in and while the emergency pricing program is in effect

02:54:03.629 --> 02:54:07.468
under the proposal, the, the cap on energy prices will

02:54:07.479 --> 02:54:12.229
go down down to the L cap which is 2000 however, should

02:54:12.239 --> 02:54:14.489
generators. We never want generators to operate at

02:54:14.500 --> 02:54:17.239
a loss. And so should they have under the statute?

02:54:17.250 --> 02:54:21.899
Reasonable verifiable operating costs that exceed $2000

02:54:21.929 --> 02:54:24.459
they can submit those costs to ERCOT for review and they

02:54:24.468 --> 02:54:26.860
can be compensated and made whole for those costs.

02:54:27.179 --> 02:54:30.250
And so one issue that was pointed out is there are

02:54:30.259 --> 02:54:33.450
a lot of input commodity costs that may exceed our

02:54:33.459 --> 02:54:36.040
ability to regulate in our regulatory scope. And so

02:54:36.049 --> 02:54:38.509
Commissioner McAdams had asked for briefing on whether

02:54:38.519 --> 02:54:41.750
or not um we should put some sort of cap or otherwise

02:54:41.799 --> 02:54:45.440
try and manage those costs. Commission Staff believes

02:54:45.450 --> 02:54:47.888
that the statute provides the use of the word reasonable

02:54:47.899 --> 02:54:50.149
statute provides us authorization to consider this

02:54:50.159 --> 02:54:54.120
discussion if we like. Although, um you know, ultimately

02:54:54.129 --> 02:54:55.909
that's a legal interpretation that you guys have authority

02:54:55.918 --> 02:54:58.509
over and Commission Staff after reviewing comments

02:54:58.519 --> 02:55:02.588
and sort of brainstorming to sort of help this discussion

02:55:02.599 --> 02:55:04.549
we think that there are a number of approaches that

02:55:04.558 --> 02:55:08.069
you could take to this if you like the two, the two

02:55:08.079 --> 02:55:11.700
pure approaches would be either exactly as proposed

02:55:11.709 --> 02:55:15.588
No cap. Um This would allow the recovery of verifiable

02:55:15.599 --> 02:55:18.819
operating costs, you know, whatever, whatever they

02:55:18.829 --> 02:55:20.690
end up being so long as they're verified through our

02:55:20.780 --> 02:55:24.974
that's normal, normal verification process. (item:29:David Smeltzer on hard cap) And you

02:55:24.985 --> 02:55:27.843
could also put on a hard cap, which is no one goes

02:55:27.854 --> 02:55:32.274
over h cap for your recovery of operating costs regardless

02:55:32.284 --> 02:55:34.674
We think that is the ceiling of what should reasonably

02:55:34.683 --> 02:55:40.620
be recovered during an emergency period. The and, and

02:55:40.629 --> 02:55:42.450
Commission Staff would say that if we consider

02:55:42.459 --> 02:55:45.360
that cost, we should also consider um in a, in a soon

02:55:45.370 --> 02:55:48.450
future rulemaking, adopting a similar policy for other

02:55:48.459 --> 02:55:51.599
contexts in which uh verifiable costs are recovered

02:55:51.610 --> 02:55:53.819
such as when the caps in effect or units are wrecked

02:55:54.479 --> 02:55:56.829
(item:29:David Smeltzer on hybrid approaches) The next couple of approaches that I provided in your

02:55:56.838 --> 02:55:59.569
brief materials are what I would consider hybrid approaches

02:55:59.769 --> 02:56:03.308
which is, there would be a cap but there would be conditions

02:56:03.319 --> 02:56:05.808
upon which you could go above that cap and sort of

02:56:05.929 --> 02:56:09.489
working through them. There could be some additional

02:56:09.500 --> 02:56:13.610
tests or affirmations by the companies in question

02:56:13.759 --> 02:56:16.019
that their costs are in fact verifiable so that we

02:56:16.030 --> 02:56:18.259
know that they're focusing on the fact that they have

02:56:18.269 --> 02:56:20.629
verifiable costs and that they didn't have control

02:56:20.638 --> 02:56:23.280
over those costs. Adding a little bit more scrutiny

02:56:23.290 --> 02:56:27.649
we could require some body other than other than ERCOT

02:56:27.659 --> 02:56:32.450
Staff to verify the results of that, verify the cost

02:56:32.459 --> 02:56:34.819
basically check the receipts and that could be ERCOT

02:56:34.829 --> 02:56:37.030
or it could be the Commission or excuse me. The ERCOT

02:56:37.040 --> 02:56:40.479
Board or Commission or just some path of escalation

02:56:40.870 --> 02:56:44.209
(item:29:David Smeltzer on good cause exception and or reasonability analysis) And then the next option that we considered is that

02:56:44.218 --> 02:56:47.540
the Commission could do something like a full good

02:56:47.549 --> 02:56:51.250
cause exception and or reasonability analysis that

02:56:51.259 --> 02:56:55.370
considered all the facts. And before electing to

02:56:55.379 --> 02:56:59.370
allow people to increase the cost of 5000, um the last

02:56:59.379 --> 02:57:02.190
option that we put is one that um we thought of is

02:57:02.200 --> 02:57:04.509
I I if you are concerned about cost being too long

02:57:04.530 --> 02:57:09.849
under the proposed rule, um the length of time in which

02:57:09.879 --> 02:57:12.479
the emergency cap stays in place is either, is the

02:57:12.489 --> 02:57:17.179
is the greater of 72 hours or 24 hours after ERCOT exits

02:57:17.190 --> 02:57:19.870
emergency conditions. And so of course, the longer

02:57:20.360 --> 02:57:22.950
that you are in the emergency pricing program, the

02:57:22.959 --> 02:57:25.929
longer you're exposed to this situation where costs

02:57:25.940 --> 02:57:28.269
could be higher. So you could instead focus on limiting

02:57:28.280 --> 02:57:32.120
ex by reducing the time frame or tinkering with another

02:57:32.129 --> 02:57:35.179
numbers otherwise. So I think these are the sorts of

02:57:35.190 --> 02:57:37.690
different options that could be considered. And I think

02:57:37.700 --> 02:57:41.019
if we don't necessarily need full resolution on that

02:57:41.030 --> 02:57:43.968
today, although if you all have resolution that would

02:57:43.979 --> 02:57:45.879
be helpful, but commission staff was just hoping for

02:57:45.888 --> 02:57:48.429
some insight to sort of take your temperature on these

02:57:48.440 --> 02:57:51.440
issues. And the sorts of considerations that you might

02:57:51.468 --> 02:57:55.138
think about is cost protection for consumers, regulatory

02:57:55.149 --> 02:57:58.888
certainty for people that are in the market and sort

02:57:58.899 --> 02:58:01.950
of the efficiency of administrative processes that

02:58:01.959 --> 02:58:04.299
each of these would involve. And so some of them are

02:58:04.500 --> 02:58:06.899
quick checks that are ERCOT does using existing processes

02:58:06.909 --> 02:58:10.009
some of them might require a more extended investigation

02:58:10.269 --> 02:58:14.329
by the Commission or some of the body. And so I think

02:58:14.338 --> 02:58:17.940
that those are, that's sort of the, the sort of considerations

02:58:17.950 --> 02:58:20.418
I think you might think about um joining us today if

02:58:20.429 --> 02:58:22.259
you want to have, we're, we're just here to talk about

02:58:22.269 --> 02:58:24.979
policy if you need. And then also ERCOT is prepared

02:58:24.989 --> 02:58:28.649
to discuss how their current verification process works

02:58:28.659 --> 02:58:32.610
Should that be of interest to you or how um how we

02:58:32.620 --> 02:58:34.379
can get this in place? And I will also note that one

02:58:34.388 --> 02:58:37.110
of staff's priorities is to get this in place by this

02:58:37.120 --> 02:58:40.519
winter. And in order to do so eventually ERCOT will

02:58:40.530 --> 02:58:43.388
be able to automate this process. But they recommended

02:58:43.399 --> 02:58:46.088
in their comments, some provisions that can be put

02:58:46.099 --> 02:58:48.304
in place immediately that would allow them to manually

02:58:48.315 --> 02:58:51.554
implementing program for this winter. So we also want

02:58:51.565 --> 02:58:54.963
to be if we, if we cook up something too complicated

02:58:55.054 --> 02:58:58.384
it would be my recommendation, not, not to jeopardize

02:58:58.394 --> 02:59:02.604
their ability to enact this program this winter without

02:59:02.614 --> 02:59:06.819
needing big technical reworks or protocol revision

02:59:06.829 --> 02:59:09.690
So hopefully the rule can be self executing. So this

02:59:09.700 --> 02:59:12.918
is the the range of considerations that I would recommend

02:59:12.929 --> 02:59:14.989
you think about and I'm happy to answer questions.

02:59:15.209 --> 02:59:16.829
Um Should you have them?

02:59:19.200 --> 02:59:20.979
Would you like to kick off the discussion? Thank you

02:59:20.989 --> 02:59:23.860
Madam Chair and David thanks for the layout. Appreciate

02:59:23.870 --> 02:59:27.519
it. You framed it well. (item:29:Commissioner McAdams on a viable path forward) I, I'm a believer and I

02:59:27.530 --> 02:59:30.308
preach the gospel. Don't let perfect be the enemy of

02:59:30.319 --> 02:59:33.459
the good serve the purpose of this winter. This Commission

02:59:33.468 --> 02:59:36.668
should develop some type of viable path forward that

02:59:36.679 --> 02:59:40.579
can be expediently implemented. So thank you for framing

02:59:40.588 --> 02:59:44.019
it that way. High level members, I believe we need

02:59:44.030 --> 02:59:48.780
some type of a cap on the the verifiable cost, but

02:59:48.790 --> 02:59:52.250
you can approach that for a number of directions. Um

02:59:54.418 --> 02:59:58.620
and under certain circumstances, the options I'm leaning

02:59:58.629 --> 03:00:00.838
toward in the menu that Staff has presented, which

03:00:00.849 --> 03:00:04.569
was very good is requiring Commissioner ERCOT Board

03:00:04.579 --> 03:00:08.069
approval of recovery of verifiable costs above cap

03:00:08.079 --> 03:00:11.179
or requiring a good cause exception, which I understand

03:00:11.429 --> 03:00:15.808
there's a hair around that or a reasonableness determination

03:00:16.379 --> 03:00:20.870
by somebody for the recovery of expenses above the

03:00:20.879 --> 03:00:24.780
cap. And I think the policy imperative there and the

03:00:24.790 --> 03:00:29.088
feature is that some type of check to where special

03:00:29.099 --> 03:00:34.540
scrutiny comes down upon those receipts or those costs

03:00:34.668 --> 03:00:36.929
that rise above the cap and,

03:00:38.530 --> 03:00:42.030
and the way I approach this from is I believe the most

03:00:42.040 --> 03:00:45.819
likely uh event that the emergency pricing program

03:00:45.829 --> 03:00:50.700
envisions is a fuel uh event, fuel related event, especially

03:00:50.709 --> 03:00:54.588
12 hours, not necessarily uh contiguous hours, but

03:00:54.599 --> 03:00:57.888
um something of that duration, fuel is going to be

03:00:57.899 --> 03:01:00.030
involved somewhere along the line in the ERCOT system.

03:01:00.040 --> 03:01:01.909
And I'm trying to draw upon the lessons that we learned

03:01:01.918 --> 03:01:06.290
from Uri um just requires a little bit of a pause uh

03:01:06.299 --> 03:01:10.299
when this happens so that we can start providing transparency

03:01:10.308 --> 03:01:13.838
in daylight on the transactions that may be involved

03:01:13.918 --> 03:01:17.759
and whatever market behavior is involved so that hopefully

03:01:17.769 --> 03:01:21.030
better angels will prevail um and, and cost containment

03:01:21.040 --> 03:01:25.379
pressure uh related to the impacts of that for consumers

03:01:25.388 --> 03:01:29.629
are brought to bear. Welcome any thoughts. Commissioner

03:01:29.638 --> 03:01:31.649
McAdams. Thank you for your leadership on this issue

03:01:31.659 --> 03:01:34.509
(item:29:Commissioner Cobos on protecting consumers) I, I'm sort of sitting at a blend of three and option

03:01:34.519 --> 03:01:39.750
three and four and um agree with you that I think there

03:01:39.759 --> 03:01:45.299
should be a cap. However, if those costs, if there

03:01:45.308 --> 03:01:50.058
are costs that exceed the cap, they must be verifiable

03:01:50.069 --> 03:01:53.058
reasonable, verifiable. And there needs to be a process

03:01:53.069 --> 03:01:59.418
for review that um it includes um not just ERCOT Staff

03:01:59.429 --> 03:02:04.468
review, but ERCOT Staff review um Board approval and

03:02:04.479 --> 03:02:07.138
ultimately commission approval because these costs

03:02:07.149 --> 03:02:09.588
can be very high. And, and as I've said before, in

03:02:09.599 --> 03:02:14.569
other discussions. Um Our, our mission is to protect

03:02:14.579 --> 03:02:18.168
the consumers. And so ultimately, we should be in a

03:02:18.179 --> 03:02:22.729
position where we are reviewing and determining whether

03:02:22.860 --> 03:02:26.388
um the border proof costs are reasonable and verifiable

03:02:26.399 --> 03:02:29.808
and making that cut at the back end. So, um and the

03:02:29.819 --> 03:02:34.259
reason I involved option three is because um it wouldn't

03:02:34.269 --> 03:02:36.940
hurt to have the attestation from the generation company

03:02:36.950 --> 03:02:41.819
from the CEO just to have that as additional um affirmation

03:02:44.530 --> 03:02:47.849
(item:29:Chairwoman Jackson on duration of the event) I think the part of what you discussed that um kind

03:02:47.860 --> 03:02:51.459
of, I guess drew my attention was, I think it was they

03:02:51.468 --> 03:02:54.629
called it option six, which is where you kind of ask

03:02:54.638 --> 03:02:58.690
the question about the duration of, of the event. And

03:02:58.700 --> 03:03:01.088
so if you're kind of thinking about what the overall

03:03:01.099 --> 03:03:05.468
cost is to the consumer, it's that area under the curve

03:03:05.599 --> 03:03:08.899
And so if we can go in and actually, you know, put

03:03:08.909 --> 03:03:13.659
some boundaries that we think are um that are sufficient

03:03:13.668 --> 03:03:16.690
and, and, and again, if we can, if we can do it

03:03:16.700 --> 03:03:19.679
based on some sort of exceeding probability or something

03:03:19.690 --> 03:03:22.290
that we can kind of tie back to what we think is

03:03:22.299 --> 03:03:26.700
reasonable for a duration of an event, then we are

03:03:26.879 --> 03:03:30.360
kind of like automatically going to be able to reduce

03:03:30.370 --> 03:03:34.860
the impact regardless of what cap we impose. That was

03:03:34.879 --> 03:03:37.290
one of Madam Chair, that was one of my default positions

03:03:37.299 --> 03:03:40.879
was to look at that one and consider reducing that

03:03:40.888 --> 03:03:43.799
into again, another reasonable range. Reducing the

03:03:43.808 --> 03:03:47.250
duration. And also, and this may be in the rule and

03:03:47.429 --> 03:03:53.579
but what is emergency conditions, I guess emergency

03:03:53.588 --> 03:03:55.120
operations, how is that defined?

03:03:58.509 --> 03:04:03.259
Werner's here. Sorry. (item:29:Commission Staff's Werner Roth to Commissioner Cobos on emergency condition) Werner Roth, Commission Staff. So that wasn't clearly

03:04:03.269 --> 03:04:06.468
laid out and how we had to find that there's um some

03:04:06.479 --> 03:04:10.780
commenters had suggested that that be tied to um load

03:04:10.790 --> 03:04:13.019
shed. Some have suggested that that be tied to any

03:04:13.030 --> 03:04:15.808
kind of um energy emergency alert situation. So just

03:04:15.819 --> 03:04:18.088
we would need to clearly define the direction we're

03:04:18.099 --> 03:04:21.349
wanting to go with that. But um I'd say the initial

03:04:21.360 --> 03:04:23.729
stance was at any point in ee a is kind of what

03:04:23.739 --> 03:04:26.409
we were leaning to initially because we would not want

03:04:26.418 --> 03:04:28.280
even if we're not necessarily in load shed, there would

03:04:28.290 --> 03:04:30.690
not necessarily be a desire to come out of this program

03:04:30.700 --> 03:04:33.349
And so we're clear of the entirety of the emergency

03:04:33.360 --> 03:04:33.860
operations.

03:04:36.418 --> 03:04:38.250
I'm interested to hear from you all and what you all

03:04:38.259 --> 03:04:41.489
think that appropriate threshold is for emergency conditions

03:04:41.500 --> 03:04:45.509
I'm sorry, on which piece? On all of it. All of it. (item:29:Commissioner Glotfelty on concerns with caps) I

03:04:45.519 --> 03:04:49.899
kind of lean towards option one or two, which is less

03:04:49.909 --> 03:04:53.308
command and control and more

03:04:55.019 --> 03:04:58.799
the challenge that I find is if you're a generator

03:04:58.808 --> 03:05:02.489
and you're providing, I know we need a cap, but we

03:05:02.500 --> 03:05:04.679
just don't yet have a handle on gas prices. We don't

03:05:04.690 --> 03:05:06.899
have a handle on how that works. It's going to happen

03:05:07.069 --> 03:05:10.519
It may not, it may not and therefore putting a cap

03:05:10.530 --> 03:05:12.610
on something that we don't know what the costs are

03:05:12.620 --> 03:05:17.790
going to be. Is it fair to put that burden on a

03:05:17.799 --> 03:05:20.638
generator that we're trying to actually incent to be

03:05:20.649 --> 03:05:24.179
in the system? But that, that's one of the features

03:05:24.190 --> 03:05:28.808
of the market you created in 1995. I wish we had done

03:05:28.838 --> 03:05:32.338
the gas on too. But the risk is borne by the generator.

03:05:33.079 --> 03:05:36.959
That I understand that. I understand that. And thus

03:05:37.120 --> 03:05:40.000
that's why I think that if you set a reasonable cap

03:05:40.009 --> 03:05:43.750
or if you put no cap, it's verifiable through the settlement

03:05:43.759 --> 03:05:44.440
process

03:05:46.338 --> 03:05:49.679
to, to me, that's it. We shouldn't bear that burden.

03:05:49.888 --> 03:05:52.509
That's a market function that so ERCOT ought to bear

03:05:52.519 --> 03:05:56.088
it one way or the other. ERCOT ought to verify it.

03:05:56.569 --> 03:06:00.099
Um, and bringing that over here is just gonna add months

03:06:00.110 --> 03:06:05.149
and months and months to some process. So that's where

03:06:05.159 --> 03:06:05.808
I stand.

03:06:10.250 --> 03:06:15.040
(item:29:Commissioner Cobos on real costs to consumers) These could be real costs and they will be. And so

03:06:16.440 --> 03:06:20.899
again, I assert that we, our mission is to protect

03:06:20.909 --> 03:06:22.790
the consumers and if we're just going to leave it out

03:06:22.799 --> 03:06:25.290
at ERCOT, then we have no checks and balances and these

03:06:25.299 --> 03:06:28.190
could be exceptional fuel costs. (item:29:Commissioner McAdams on statutory authority and constrained activities) Not just that poor

03:06:28.338 --> 03:06:31.379
ERCOT, they're going to have to deal with the gas markets

03:06:32.968 --> 03:06:35.500
the Public Utility Commission in Texas and, and Railroad

03:06:35.509 --> 03:06:37.829
Commission has, has said they, they cannot control

03:06:37.838 --> 03:06:41.049
this. You know, they do not have the statutory authority.

03:06:41.058 --> 03:06:44.509
This is one of the few mechanisms that could exist

03:06:44.519 --> 03:06:48.069
for any agency to try to constrain these activities.

03:06:48.099 --> 03:06:51.918
And uh how are you constraining them, transparency

03:06:51.929 --> 03:06:53.799
trying to bring, like, show us your receipts. How did

03:06:53.808 --> 03:06:56.979
this go? How long, um what kind of hedging options

03:06:56.989 --> 03:06:59.379
did you have? Are those absorbed or contemplated in

03:06:59.388 --> 03:07:03.009
this? Uh what type of firm contracts did you have at

03:07:03.019 --> 03:07:08.168
the time? I mean, to their business practices? Well

03:07:08.179 --> 03:07:11.138
when something is over 12 hours, that becomes important

03:07:11.149 --> 03:07:14.229
right? I mean, that's, yeah, you obviously hope that

03:07:14.250 --> 03:07:18.409
uh uh the financial markets will see that.

03:07:20.690 --> 03:07:25.879
So um I don't know, I just um I know David has

03:07:25.888 --> 03:07:28.250
thoughts, David is always good. So just to help juice

03:07:28.259 --> 03:07:32.599
the discussion a little bit to the extent that uh you

03:07:32.610 --> 03:07:36.259
know. (item:29:David Smeltzer on ERCOT giving Commission EPP performance summary after EPP event) Some part of the goal of this is the review of

03:07:36.269 --> 03:07:38.259
the costs, right? And that can take place in different

03:07:38.269 --> 03:07:41.168
levels. And then some part of that is the transparency

03:07:41.179 --> 03:07:43.870
which may or may not have to do with review of those

03:07:43.879 --> 03:07:47.509
costs beforehand. But the report like under the proposed

03:07:47.519 --> 03:07:51.329
rule, it currently requires after an EPP event for ERCOT

03:07:51.530 --> 03:07:54.790
to report Commission, a summary of the events that

03:07:54.799 --> 03:07:58.870
triggered the EPP an analysis EPP performance. The number

03:07:58.879 --> 03:08:02.099
of generators have filed for cost recovery in the total

03:08:02.110 --> 03:08:04.519
dollar amounts of costs recovered with this mechanism

03:08:04.610 --> 03:08:07.838
and any recommendations to modify or improve the emergency

03:08:07.849 --> 03:08:10.110
price program. But there's no reason why it has to

03:08:10.120 --> 03:08:14.429
stop at that. And so to the extent that it's the shed

03:08:14.440 --> 03:08:18.718
light on, we could also brainstorm some additional

03:08:18.729 --> 03:08:21.229
items that could be reported after the fact for sort

03:08:21.239 --> 03:08:23.929
of policy making transparency purposes that would not

03:08:23.940 --> 03:08:27.989
slow down the recovery of costs in real time. So that

03:08:28.489 --> 03:08:32.769
gas prices above a, you know, that accomplish your

03:08:32.909 --> 03:08:34.549
goals. But I just wanted to. Yeah. Yeah. Well, no,

03:08:34.558 --> 03:08:37.338
no, no. (item:29:Commissioner McAdams on triangulating the system) So it helps triangulate for the Commission

03:08:37.610 --> 03:08:40.700
what just occurred on the system, our system that we're

03:08:40.709 --> 03:08:43.849
attempting to manage, uh, is it just North Texas that

03:08:43.860 --> 03:08:46.829
is affected? Is it just uh a subset of North Texas

03:08:46.838 --> 03:08:50.459
generators along one line that is affected? It helps

03:08:50.468 --> 03:08:55.360
us identify how acute a problem is and, and how ultimately

03:08:55.370 --> 03:08:58.319
we can try to solve for that. Um

03:09:00.690 --> 03:09:03.790
I think as David said, the way I would interpret what

03:09:03.799 --> 03:09:06.440
David just said was. You could put in there something

03:09:06.450 --> 03:09:10.269
on gas prices so that ERCOT would put a report as part

03:09:10.280 --> 03:09:14.968
of their report to us after the event that after analyzing

03:09:14.979 --> 03:09:19.069
the generators, you know, there was a, I do a common

03:09:19.079 --> 03:09:24.459
metric on the percentage of gas prices above Henry

03:09:24.549 --> 03:09:27.319
House or I don't know what it would be. But, uh you

03:09:27.329 --> 03:09:33.509
know, uh it's informative in nature, we're not, doesn't

03:09:33.649 --> 03:09:35.829
start not practical checks and balances.

03:09:37.918 --> 03:09:40.750
And at any point today, if we decide like these are

03:09:40.759 --> 03:09:42.819
these are questions that we would like answered or

03:09:42.829 --> 03:09:47.509
get additional briefing on things before. Um, we, we

03:09:47.519 --> 03:09:52.088
we could do that. So I'm not trying to force and, and

03:09:52.099 --> 03:09:55.729
I'm sorry to introduce this, uh, issue of controversy

03:09:55.739 --> 03:09:57.308
(item:29:Commissioners dialogue on fuel costs) Um, but

03:09:59.149 --> 03:10:02.829
consumers paid tens of billions of dollars last time

03:10:03.099 --> 03:10:07.239
I mean, on an event that was partially induced through

03:10:07.250 --> 03:10:10.950
fuel se security because of fuel security. And, uh

03:10:11.849 --> 03:10:14.299
a policy was written in the law, they actually wrote

03:10:14.308 --> 03:10:15.638
that one in the law. I mean,

03:10:17.149 --> 03:10:23.588
this needs to be solved or addressed but whatever you're

03:10:23.599 --> 03:10:26.759
exactly right, it needs to be solved. We need to solve

03:10:26.769 --> 03:10:30.129
the piece of it that's within our pie. And that is

03:10:30.138 --> 03:10:33.290
looking at the cost at a certain point. Right. I don't

03:10:33.299 --> 03:10:35.679
want to get into their books either, but at some point

03:10:35.690 --> 03:10:39.629
we have to be able to determine what's going on. Um

03:10:40.129 --> 03:10:42.000
listen, I don't have a problem with looking at the

03:10:42.009 --> 03:10:44.519
books. I really don't or the receipts or whatever.

03:10:44.530 --> 03:10:48.058
But if we, if we really have to get in there and

03:10:48.069 --> 03:10:50.709
look at those, I don't know. I just, I think we're

03:10:50.718 --> 03:10:54.968
going to be just better not happen all the time. I

03:10:55.030 --> 03:10:57.489
understand that. I understand that. But what are you

03:10:57.549 --> 03:11:00.530
what are you going to do if gas prices go up to

03:11:01.569 --> 03:11:06.290
18 bucks during an event? We'll just take the highest

03:11:06.299 --> 03:11:08.979
that they've been in the last decade or so? 12 bucks

03:11:09.909 --> 03:11:15.579
And, uh, so they show, we, we pay $12 for, mm BTU

03:11:15.638 --> 03:11:16.659
And what are you gonna say,

03:11:18.468 --> 03:11:20.440
you can say, ok, because you proved it.

03:11:22.409 --> 03:11:25.759
So without any other type of, without any type of review

03:11:25.769 --> 03:11:31.468
process, um, you can't do investigations or, uh, it's

03:11:31.479 --> 03:11:34.099
very hard to, there's no data gathering, there's no

03:11:34.110 --> 03:11:37.500
evidentiary gathering. There's no go to the A G on

03:11:37.509 --> 03:11:40.149
price gouging. There's no nothing. You just let them

03:11:40.159 --> 03:11:40.940
run away with it.

03:11:44.558 --> 03:11:48.679
I see some, some points to that. I mean, the, what

03:11:48.690 --> 03:11:51.409
you're saying is the only place that we get the information

03:11:51.418 --> 03:11:53.759
is from the generator because we don't get it from

03:11:53.769 --> 03:11:57.459
the gas guy. That's, I think that's a good point. I

03:11:57.468 --> 03:12:01.308
mean, I think that uh there's value in that, in that

03:12:01.319 --> 03:12:01.950
piece of it,

03:12:07.049 --> 03:12:09.388
David. Do you have what you need? Okay.

03:12:12.149 --> 03:12:15.209
Crystal clear as usual. (item:29:David Smeltzer on high level of scrutiny on the verifiability of the costs) No I mean, so what I'm

03:12:15.218 --> 03:12:18.879
what I'm hearing is the Commission generally is interested

03:12:18.888 --> 03:12:21.569
in making sure that there is a high level of scrutiny

03:12:21.579 --> 03:12:24.769
on the verifiability of the costs. So we will explore

03:12:24.780 --> 03:12:26.709
something in the option

03:12:28.370 --> 03:12:30.799
3 to 4 range and we'll continue discussions on that

03:12:30.918 --> 03:12:32.679
about how we can make sure that we're all confident

03:12:32.690 --> 03:12:34.829
in the verifiability of costs. We're interested in

03:12:34.838 --> 03:12:39.259
exploring limited, limiting the exposure through reconsideration

03:12:39.269 --> 03:12:42.860
of maybe the timeline. And so that sort of option six

03:12:42.870 --> 03:12:45.399
territory. And I will say that

03:12:46.950 --> 03:12:49.558
I think that we will be, we will look at limiting the

03:12:49.569 --> 03:12:52.540
time frame, but we're also wanting to be cognizant

03:12:52.549 --> 03:12:55.808
of the effect of how this will affect day ahead markets

03:12:55.819 --> 03:12:58.168
And so we don't want to like tighten it too much. Um

03:12:58.179 --> 03:13:01.790
So that will be part of our thinking on that. Um And

03:13:01.799 --> 03:13:04.190
the third thing we are hearing, uh I forgot what I

03:13:04.200 --> 03:13:06.729
was talking about the first two. But oh may maybe,

03:13:06.959 --> 03:13:09.540
(item:29:David Smeltzer on robust reporting) maybe making sure that we're getting robust reporting

03:13:09.718 --> 03:13:14.120
um in some way so that we're able to do um after

03:13:14.129 --> 03:13:17.799
the fact analysis of and and shed light on it and bring

03:13:17.808 --> 03:13:23.500
transparency. And so that cluster of so so a cap but

03:13:23.509 --> 03:13:26.659
with the ability to make sure that there is verifiability

03:13:26.959 --> 03:13:30.459
on that cap will be sounds like the starting position

03:13:30.468 --> 03:13:33.940
for Staff analysis with the idea that we could receive

03:13:33.950 --> 03:13:36.399
additional briefing or direction at the next open meeting

03:13:36.409 --> 03:13:38.659
to finalize the decision. And it sounds like that fits

03:13:38.668 --> 03:13:42.134
within the spirit and letter of the law. I mean, again, that

03:13:42.144 --> 03:13:46.405
reasonable, reasonable verifiable cost. So this forms

03:13:46.565 --> 03:13:49.513
what we are supposed to give to give meaning to all

03:13:49.524 --> 03:13:52.043
of the words. And so it doesn't just say verifiable

03:13:52.054 --> 03:13:53.504
cost, it says reasonable. So you're right. I mean,

03:13:53.575 --> 03:13:55.444
the fact that it's reasonable suggests that this isn't

03:13:55.454 --> 03:13:59.579
just carte blanche, there needs to be, you know, we

03:13:59.588 --> 03:14:01.718
need to be thinking about it in that way. So can I

03:14:01.729 --> 03:14:02.388
add one more?

03:14:04.168 --> 03:14:07.599
The definition of emergency conditions is very important.

03:14:07.610 --> 03:14:11.909
Because along with the duration that drives the magnitude

03:14:11.918 --> 03:14:15.838
of the cost? So that's something we need to really

03:14:15.849 --> 03:14:16.418
think about.

03:14:18.138 --> 03:14:20.940
Yeah. (item:29:David Smeltzer on duration of an emergency condition) And so we will, we will think about that and

03:14:20.950 --> 03:14:25.370
consistent with our excuse me alongside our discussion

03:14:25.379 --> 03:14:28.159
our thinking about what the duration would be. And

03:14:28.168 --> 03:14:31.610
so if anyone afterwards, if they have additional thoughts

03:14:31.620 --> 03:14:34.979
or they want to chat about it, more learn about how

03:14:34.989 --> 03:14:36.739
we're thinking about it before we get to next open

03:14:36.750 --> 03:14:38.479
meeting. Happy to do that. Otherwise we'll brief you

03:14:38.489 --> 03:14:43.370
as part of part of the open meeting on that. Thanks

03:14:45.808 --> 03:14:49.849
Agreed. Thank you. That's fine. Ok, thanks David. Thank

03:14:49.879 --> 03:14:53.759
you. Thank you all. Okay. (item:30:Chairwoman Jackson lays out Project No. 55222) Next up is Item No. 30, Project

03:14:53.769 --> 03:14:57.849
number 55222. This is the Commission's project for

03:14:57.860 --> 03:15:01.530
its RFP for a contractor to act as the wholesale electric

03:15:01.540 --> 03:15:04.739
market monitor for the ERCOT region. Shelah, do we

03:15:04.750 --> 03:15:07.360
have anyone from the public sign to speak on Item No. 

03:15:07.370 --> 03:15:12.009
30? No, ma'am. PUC Staff filed a memo with a proposed

03:15:12.019 --> 03:15:15.610
order. We have Barksdale English and Jay Stone here.

03:15:15.729 --> 03:15:19.489
Barksdale and Jay, will you please um provide your

03:15:19.500 --> 03:15:24.979
recommendation? (item:30:Jay Stone with Commission Staff on updating language to the RFP) Good afternoon Chairman and Commissioners.

03:15:24.989 --> 03:15:30.468
Jay Stone, Commission Staff. I bring you uh Project 55222.

03:15:30.799 --> 03:15:35.418
Originally seeking delegation of authority for the

03:15:36.088 --> 03:15:40.138
Executive Director to enter negotiate and sign a contract

03:15:40.759 --> 03:15:47.290
Um while drafting the RFP, we made some changes to

03:15:47.299 --> 03:15:53.190
the language within the RFP. House Bill 1500 says if ERCOT

03:15:53.200 --> 03:15:56.138
makes changes, we need, it needs to come in front of

03:15:56.149 --> 03:16:03.540
the Commissioners. We have since, since um for transparency

03:16:03.549 --> 03:16:06.959
they want to bring it to the Commissioners and explain

03:16:06.968 --> 03:16:11.239
the changes that were made to the RFP from the previous

03:16:11.250 --> 03:16:13.239
contract. And with that,

03:16:16.179 --> 03:16:20.000
I'll give it to Barksdale. Thanks Jay. (item:30:Barksdale English with Commission Staff reflects on IMM contract, HB1500 changes) Barksdale English for Commission Staff. I'm

03:16:20.009 --> 03:16:24.989
here as the Administrator of the IMM contract and I

03:16:25.000 --> 03:16:29.058
started that role uh two years ago when um I stepped

03:16:29.069 --> 03:16:31.860
into this role as the Head of the Enforcement Division

03:16:31.870 --> 03:16:35.019
for the Commission. And so this is um you know, that

03:16:35.030 --> 03:16:37.808
that was right in the middle of our current contract

03:16:37.819 --> 03:16:40.750
uh two years into the current contract. So this was

03:16:40.759 --> 03:16:43.888
really my first opportunity to kind of do a soup to

03:16:43.899 --> 03:16:46.829
nuts. Look at what's in the scope of work and make

03:16:46.838 --> 03:16:49.750
sure that it, um you know, it has been updated to align

03:16:49.759 --> 03:16:52.190
with kind of how we're thinking today versus how we

03:16:52.200 --> 03:16:54.489
were thinking four years ago or maybe even eight years

03:16:54.500 --> 03:16:57.780
ago. And, and as Jay mentioned, there were also

03:16:57.790 --> 03:17:01.129
some, you know, hugely substantive changes to the enabling

03:17:01.138 --> 03:17:04.388
statute for the Market Monitor uh that were adopted

03:17:04.399 --> 03:17:08.759
in HB1500 uh which needed to be addressed in this

03:17:08.769 --> 03:17:12.870
scope of work. So, uh the, the changes that we made

03:17:12.879 --> 03:17:15.950
and filed at the end of September in the request for

03:17:15.959 --> 03:17:20.588
proposals reflect the efforts to first make sure that

03:17:20.599 --> 03:17:25.120
the language made sense was clear, reflected the expectations

03:17:25.129 --> 03:17:29.088
of commission staff in terms of its role in overseeing

03:17:29.099 --> 03:17:32.540
this contract and to implement the, the legislation

03:17:32.549 --> 03:17:37.579
that was adopted this past session. Um I recognize

03:17:37.588 --> 03:17:42.058
that there has been some um some concern expressed

03:17:42.069 --> 03:17:46.058
in the public about how those changes may impact the

03:17:46.069 --> 03:17:48.940
independence of the market monitor. (item:30:Barksdale English confirming changes made or proposed do not curtail the IMM's ability) And I want to say

03:17:48.950 --> 03:17:52.019
on the record that none of the changes that I made

03:17:52.030 --> 03:17:55.799
or that anybody on the review team proposed or, or

03:17:55.808 --> 03:18:00.259
agreed with intended to curtail the market monitor's

03:18:00.269 --> 03:18:06.440
ability to do its work independent of the um of the

03:18:06.450 --> 03:18:09.968
industry because we need that independent eye to make

03:18:09.979 --> 03:18:15.569
sure that we've got uh a well functioning market that's

03:18:15.579 --> 03:18:17.968
efficient and that folks aren't taking advantage of

03:18:17.979 --> 03:18:20.540
any loopholes that might exist that we didn't know

03:18:20.549 --> 03:18:27.218
about previously. So with, with that understanding

03:18:27.229 --> 03:18:30.929
in mind and hearing how folks were interpreting our

03:18:30.940 --> 03:18:35.138
changes, um we went back and we looked at the changes

03:18:35.149 --> 03:18:37.950
that we've made and, and want to suggest to you uh

03:18:37.959 --> 03:18:43.250
a handful of additional things to fix in a final contract

03:18:43.259 --> 03:18:47.159
Should you authorize Thomas to go out and, and award

03:18:47.168 --> 03:18:50.370
and execute a contract so that the language in the

03:18:50.379 --> 03:18:53.149
final contract really reflects exactly what our intention

03:18:53.159 --> 03:18:57.540
is. So if, if you'll permit me chair, I'd like to lay

03:18:57.549 --> 03:19:02.409
out four changes that we're recommending um in the

03:19:02.418 --> 03:19:06.459
final to, to be included in the final contract. Um

03:19:06.468 --> 03:19:08.399
And please interrupt me at any time if you want to

03:19:08.409 --> 03:19:10.329
talk about them one at a time or if you want to

03:19:10.338 --> 03:19:12.668
take them all of it at the end, it's, you know, at

03:19:12.679 --> 03:19:17.338
your prerogative. (item:30:Barksdale English on retaining the name Independent Market Monitor) The first thing that we're recommending

03:19:17.349 --> 03:19:20.769
is to retain the name Independent Market Monitor. We

03:19:20.780 --> 03:19:24.989
had initially proposed to re label the contract wholesale

03:19:25.000 --> 03:19:26.899
electric market monitor because that's what it says

03:19:26.909 --> 03:19:29.370
in the statute. We spent a lot of time thinking about

03:19:29.379 --> 03:19:32.138
what the exact words in the statute are and how to

03:19:32.149 --> 03:19:35.838
best reflect the expectations of the statute in the

03:19:35.849 --> 03:19:41.459
contract. So we um I made the change to, to relabel

03:19:41.468 --> 03:19:44.799
it wholesale electric market monitor. I've heard the

03:19:44.808 --> 03:19:49.429
concerns that have been expressed and to kind of close

03:19:49.440 --> 03:19:53.040
off any confusion or any concern that might still exist

03:19:53.299 --> 03:19:55.979
We're recommending that we retain the title Independent

03:19:55.989 --> 03:19:56.918
Market Monitor.

03:19:59.468 --> 03:20:03.370
(item:30:Barksdale English on notification of 3rd party contacts the IMM for services) The second item that we would like to see in the final

03:20:03.379 --> 03:20:07.569
contract is a codification of the current practice

03:20:07.579 --> 03:20:12.058
um that our contractor Potomac Economics follows which

03:20:12.069 --> 03:20:16.190
is to notify us anytime that a third party. And that

03:20:16.200 --> 03:20:21.370
means anybody outside of uh PUC or ERCOT requests uh somebody

03:20:21.379 --> 03:20:24.819
from Potomac Economics to address them on issues related

03:20:24.829 --> 03:20:28.290
to the Market Monitor services here in the region.

03:20:28.679 --> 03:20:32.190
This is a long standing practice. It's not controversial

03:20:32.808 --> 03:20:36.579
You know, we've seen press articles from former directors

03:20:36.588 --> 03:20:41.780
of Potomac who have said that they did this and there

03:20:41.790 --> 03:20:46.540
was, you know, no effort from Commission Staff to influence

03:20:46.549 --> 03:20:49.799
the message that they were sharing with, with those

03:20:49.808 --> 03:20:54.030
3rd parties. There's been no approval process. It's

03:20:54.040 --> 03:20:57.000
really just about situational awareness and good contract

03:20:57.009 --> 03:21:01.918
management. Understanding what your contractor is doing

03:21:01.929 --> 03:21:05.030
a contractor that's being paid, you know, upwards of

03:21:05.040 --> 03:21:08.259
$4.5 million a year, understanding what they're doing

03:21:08.269 --> 03:21:10.579
what they're spending their time on is important. And

03:21:10.588 --> 03:21:13.718
it's just, it's sound contract management practice

03:21:14.209 --> 03:21:18.959
not intended to restrict the information or the message

03:21:18.968 --> 03:21:21.950
that the Market Monitor has been asked to speak about.

03:21:22.620 --> 03:21:25.379
And so that's the, the second change that we'd like

03:21:25.388 --> 03:21:27.360
to see made in this final contract.

03:21:29.290 --> 03:21:34.929
(item:30:Barksdale English on setting expectations) The third is really um it's about setting expectations

03:21:34.940 --> 03:21:38.709
in terms of the Executive Director's authority to terminate

03:21:38.718 --> 03:21:43.909
a contract for cause or for convenience or to request

03:21:43.918 --> 03:21:47.429
that the contractor providing these services replace

03:21:47.440 --> 03:21:52.989
the Director. Our standard terms and contracts allow

03:21:53.000 --> 03:21:57.870
the Executive Director to take this action. Recognizing

03:21:57.879 --> 03:22:02.959
how important this contract is to um to not only my

03:22:02.968 --> 03:22:06.088
staff but to all of the Commission to you all, to the

03:22:06.099 --> 03:22:11.069
public to ERCOT. To what we'd like to propose is that instead

03:22:11.079 --> 03:22:16.168
of um simply allowing the Executive Director to unilaterally

03:22:16.179 --> 03:22:20.549
make this decision without any public awareness. So

03:22:20.558 --> 03:22:23.379
we would propose that the Executive Director file a

03:22:23.388 --> 03:22:27.709
memo in advance of an open meeting, stating his intention

03:22:27.718 --> 03:22:33.168
to take one of these actions, post that for your next

03:22:33.299 --> 03:22:35.558
open meeting, so that a discussion can happen if you

03:22:35.569 --> 03:22:38.750
want one to happen and delay taking any action until

03:22:38.759 --> 03:22:41.558
after that open meeting. So so as to ensure that we

03:22:41.569 --> 03:22:44.379
can receive your feedback and if the public has any

03:22:44.388 --> 03:22:46.280
comments also receive the public's comment.

03:22:48.190 --> 03:22:51.679
(item:30:Barksdale English on protocol development and updated language) And the final change um is a little bit more of a

03:22:51.690 --> 03:22:56.909
new nuanced one. There's a, a specific term in the

03:22:56.918 --> 03:23:00.709
current contract that talks about um the Independent

03:23:00.718 --> 03:23:04.250
Market Monitors ability um and requirement to work

03:23:04.259 --> 03:23:10.319
with ERCOT. To um propose changes that would improve

03:23:10.329 --> 03:23:12.979
the efficiency of the market. The way I personally

03:23:12.989 --> 03:23:16.940
read the read, the current contract is to require the

03:23:16.950 --> 03:23:19.979
Market Monitor to work with ERCOT. If ERCOT requests

03:23:19.989 --> 03:23:23.290
it, I don't think that's good contract management because

03:23:23.299 --> 03:23:27.009
then I lose control over, over contractor who's, who's

03:23:27.019 --> 03:23:30.799
using a lot of repair public money to do this really

03:23:30.808 --> 03:23:35.009
important work. And so I had proposed to place in there

03:23:35.259 --> 03:23:39.440
uh language that would require um our direction to

03:23:39.450 --> 03:23:42.530
the, to allow the Market Monitor to go forward to write

03:23:42.540 --> 03:23:45.569
those protocols. And, and as you know, protocol development

03:23:45.579 --> 03:23:48.338
is time intensive, it takes a, it takes a lot of work

03:23:48.349 --> 03:23:50.918
to actually write those words down and it takes a long

03:23:50.929 --> 03:23:53.319
time to actually usher through the stakeholder process

03:23:53.329 --> 03:23:56.138
And so for good contract management purposes only,

03:23:56.440 --> 03:23:59.138
I wanted to make sure that um we had a check on

03:23:59.149 --> 03:24:01.950
that. Again hearing the concerns that have been

03:24:01.959 --> 03:24:05.899
expressed in public. I recognize the, the specific

03:24:05.909 --> 03:24:09.909
words that I put in there um are misleading and, and

03:24:09.918 --> 03:24:13.308
um I want to walk those back and, and ask that the

03:24:13.319 --> 03:24:17.290
market monitor, just take a beat to consider the appropriateness

03:24:17.299 --> 03:24:20.218
of ERCOT S requests to work with them, to develop new

03:24:20.229 --> 03:24:23.329
protocols, to make sure that the work is appropriate

03:24:23.338 --> 03:24:25.799
It's in line with everything that we're trying to achieve

03:24:25.808 --> 03:24:29.280
here. Um And just make sure that there's some thoughtfulness

03:24:29.290 --> 03:24:32.649
about that process. Those are the four changes that

03:24:32.659 --> 03:24:36.190
we're recommending being included in a final contract.

03:24:36.209 --> 03:24:39.979
In addition to um you know, kind of the more kind

03:24:40.019 --> 03:24:43.009
of nuts and bolts, semantics and grammar and, you know

03:24:43.019 --> 03:24:46.649
kind of nonscented its that, that we made relative

03:24:46.659 --> 03:24:49.849
to the current contract with that. I'm happy to take

03:24:49.860 --> 03:24:52.190
your questions, receive your slings and arrows and

03:24:52.200 --> 03:24:56.168
find a way forward. Well I, I guess I'll speak first. 

03:24:56.179 --> 03:24:59.549
And first thank you for the work on this contract. 

03:24:59.558 --> 03:25:04.179
(item:30:Chairwoman Jackson's thoughts on the recommendations) You laid out four issues. Um, I guess 4 changes

03:25:04.190 --> 03:25:09.239
that you are recommending. Uh I'm good with, um, with

03:25:09.250 --> 03:25:13.179
three of them, um, would recommend on the second one

03:25:13.759 --> 03:25:16.909
where you talk about, you know, the need to codify

03:25:17.450 --> 03:25:19.979
and I understand your rationale, which is understanding

03:25:19.989 --> 03:25:23.058
what uh the person that we are contracting with is

03:25:23.069 --> 03:25:26.870
doing. However, it's my personal belief that, um, this

03:25:26.879 --> 03:25:29.299
is, it's not necessary to include this as a part of

03:25:29.308 --> 03:25:33.000
the contract. We already have a long standing and

03:25:33.009 --> 03:25:35.269
I think functioning as you've been able to find out

03:25:35.500 --> 03:25:38.870
uh long-standing process, um, that's been in place

03:25:38.879 --> 03:25:42.709
over a decade, um, that, you know, we've been successful

03:25:42.718 --> 03:25:46.000
in doing it through this informal process. So, um,

03:25:46.009 --> 03:25:50.190
save that one change. I'm, I'm good with the other

03:25:50.200 --> 03:25:53.110
three, but I would definitely recommend that we go

03:25:53.120 --> 03:25:57.549
back and, and make sure we continue with our existing

03:25:57.558 --> 03:26:03.159
process. Which is um, you know, one that is informal

03:26:03.168 --> 03:26:06.079
rather than actually codifying it in the contract.

03:26:08.000 --> 03:26:11.679
(item:30:Commissioner McAdams thoughts on the recommendations) Madam Chair I, I agree with what you just said and

03:26:11.690 --> 03:26:15.860
and I support that change if, if I could recommend

03:26:15.870 --> 03:26:21.540
the consideration of one more tweak. And I think Barksdale,

03:26:21.549 --> 03:26:24.308
Jay, Thomas. I think, have done a great job in trying

03:26:24.319 --> 03:26:27.290
to find a middle approach, given the feedback that

03:26:27.299 --> 03:26:29.629
we've had from the Legislature, which we heard loud

03:26:29.638 --> 03:26:36.259
and clear. It was, it was a clear letter but, um

03:26:36.269 --> 03:26:38.750
I would like to propose one thing. I, I realize that

03:26:38.759 --> 03:26:42.379
the statute reads um, the Independent Organization

03:26:42.388 --> 03:26:45.940
may not, but you substantially modify the Market Monitor's

03:26:45.950 --> 03:26:48.929
contract unless the modification is approved by the

03:26:48.940 --> 03:26:51.668
majority of the Commissioners. I realize that says

03:26:51.679 --> 03:26:56.579
the independent organization. But a again, the,

03:26:57.780 --> 03:27:01.629
the application of ultimate approval of the final contract

03:27:03.200 --> 03:27:07.259
if modified by ERCOT, by the Commissioners, that isn't

03:27:07.269 --> 03:27:10.888
necessarily synced up with what they have said. They

03:27:10.899 --> 03:27:15.519
want transparency, uh which, which is available. I

03:27:15.530 --> 03:27:18.569
mean, it's enshrined in your contract process, but

03:27:18.579 --> 03:27:20.299
ultimately, they want a full vote of the Commission

03:27:20.308 --> 03:27:23.759
and you are building in a process to have that anyway

03:27:23.769 --> 03:27:29.058
having the Executive Director post um come in brief

03:27:29.239 --> 03:27:31.588
but I think that last step should at least be and I

03:27:31.599 --> 03:27:34.338
understand it is somewhat a deviation from established

03:27:34.349 --> 03:27:38.558
contractual uh, conditions of the state. But I believe

03:27:38.569 --> 03:27:40.259
we at least need to have a, a full vote of the

03:27:40.269 --> 03:27:45.159
Commission given the um, the interests of the Legislature

03:27:45.168 --> 03:27:48.019
and full visibility and accountability at the Commission.

03:27:49.269 --> 03:27:52.679
What do you guys think? I'm in agreement. And so I

03:27:52.690 --> 03:27:55.200
think what you're saying, Commissioner McAdams. Is that

03:27:55.899 --> 03:27:59.129
ultimately, you want the Commissioners to approve any

03:27:59.138 --> 03:28:03.179
termination of the Independent Market Monitor, the

03:28:03.190 --> 03:28:06.000
Executive Director will still come in, make their recommendation

03:28:06.138 --> 03:28:08.838
Ultimately, a vote of the Commission is held a formal

03:28:08.849 --> 03:28:10.819
vote. Yes. Yes, agreed.

03:28:12.388 --> 03:28:12.849
Okay.

03:28:16.179 --> 03:28:20.549
(item:30:Commissioner Cobos' thoughts on the recommendations) I would like to just emphasize a couple of things

03:28:20.558 --> 03:28:24.200
and I think Barksdale, you highlighted this in the

03:28:24.209 --> 03:28:29.849
um, section of um, the language that reads, um requiring

03:28:29.860 --> 03:28:32.838
the IMM to work with the, with ERCOT if appropriate

03:28:33.440 --> 03:28:35.649
And, and I think that's important if appropriate is

03:28:35.659 --> 03:28:39.808
important because we wanna make sure that the IMM continues

03:28:39.819 --> 03:28:41.750
to have an independent role. And I know you highlighted

03:28:41.759 --> 03:28:46.780
that, um I think, you know, it, it's also important

03:28:46.790 --> 03:28:50.968
um for the IMM to have an independent role as um, the

03:28:50.979 --> 03:28:55.269
IMM works with the PUC on any role and protocol changes

03:28:55.280 --> 03:28:59.620
that the Commission endorses. So that same spirit

03:28:59.860 --> 03:29:03.229
um as it applies to ERCOT needs to move over to us

03:29:03.239 --> 03:29:04.849
even though we're the contract managers, the whole

03:29:04.860 --> 03:29:07.049
role, the whole point of the IMM is to be independent

03:29:07.058 --> 03:29:13.370
of, of um ERCOT and even some of our own policies to

03:29:13.379 --> 03:29:16.229
provide a separate voice, they're not independent from

03:29:16.239 --> 03:29:18.379
us from a contractual standpoint, but they are independent

03:29:18.388 --> 03:29:21.290
from us from a policy perspective. So I just wanted

03:29:21.299 --> 03:29:25.459
to emphasize that. Are you asking for the contract

03:29:25.468 --> 03:29:30.088
to specifically state that the Market Monitor should

03:29:30.099 --> 03:29:33.259
only work with Commission Staff to implement Commission

03:29:33.269 --> 03:29:36.979
approved. Endorsed is what it says. Endorsed

03:29:39.200 --> 03:29:42.190
policies if it's appropriate to do so.

03:29:45.838 --> 03:29:47.679
Yes. Say that again again, I'm I'm aware.

03:29:50.069 --> 03:29:53.808
Okay. Barksdale laid out some language. It talks about

03:29:53.819 --> 03:29:56.500
requiring the IMM to work with ERCOT if appropriate

03:29:56.509 --> 03:30:01.468
to develop new Nodal protocols and delete the requirement

03:30:01.479 --> 03:30:03.860
PUC Staff must direct ERCOT before it may work with

03:30:03.888 --> 03:30:07.620
ERCOT or the IMM for work. And what Barksdale was saying

03:30:07.629 --> 03:30:11.149
is that if appropriate is important because I'm emphasizing

03:30:11.159 --> 03:30:14.750
because, you know, in some cases, it may not be possible

03:30:14.759 --> 03:30:18.200
because the IMM has a separate voice from ERCOT, right

03:30:18.579 --> 03:30:23.429
And so um we're all in agreement with that, right?

03:30:23.440 --> 03:30:26.838
And so as I, as I was looking at Page 7 of

03:30:26.849 --> 03:30:32.718
the RFP language, it states um the IMM will insist that

03:30:32.729 --> 03:30:36.429
the, the puc would develop in a role language or protocols

03:30:36.440 --> 03:30:39.968
that implement market efficiencies or design projects

03:30:40.259 --> 03:30:44.429
that have been endorsed by the commission. So I think

03:30:44.440 --> 03:30:47.009
that's great and the IMM should work with the Commission

03:30:47.759 --> 03:30:50.909
but it's also important that the IMM continue to have

03:30:50.918 --> 03:30:55.329
an independent voice as well in this. And so what,

03:30:55.338 --> 03:30:57.329
what are you saying to do with number eight there?

03:30:58.610 --> 03:31:02.009
Um I mean, II, I like to carry that same spirit over

03:31:02.019 --> 03:31:04.530
from the ERCOT language over here because I wanna make

03:31:04.540 --> 03:31:07.870
sure that the IMM continues to have an independent

03:31:07.879 --> 03:31:13.860
voice, independent policy voice. That's what I'm saying

03:31:13.870 --> 03:31:16.729
So if you're going to say if it's appropriate or should

03:31:16.739 --> 03:31:18.879
we be saying that if it's appropriate the Commission

03:31:20.450 --> 03:31:23.360
I'm just wondering, I mean, I would, I would agree

03:31:23.370 --> 03:31:26.120
I have no problem with an IMM telling me that

03:31:26.129 --> 03:31:28.549
my policy is not going to have the intended effect

03:31:28.950 --> 03:31:33.190
that I expected to. Welcome to the market reform discussions

03:31:33.200 --> 03:31:36.049
I heard that all for the whole year. Yeah. So I think

03:31:36.058 --> 03:31:39.799
that's, I think that's a valuable point. Barksdale, were you gonna say?

03:31:41.959 --> 03:31:46.069
Forgive me for interrupting. (item:30:Barksdale English's follow-up to the Commissioner's comments on the recommendations) And I 100% agree with

03:31:46.079 --> 03:31:49.759
how you're talking about a Commissioner Glotfelty that prior

03:31:49.769 --> 03:31:52.849
to the Commission's endorsement of a policy, we want

03:31:52.860 --> 03:31:55.069
that feedback, we want to know what we're getting wrong

03:31:55.679 --> 03:31:59.838
We want to be guided and by their expertise, deep,

03:31:59.849 --> 03:32:04.709
deep, deep bench on how to make the best policy decisions

03:32:05.379 --> 03:32:08.308
once it's been endorsed by the Commission.

03:32:11.110 --> 03:32:14.860
For me, that's appropriateness. But what does endorse

03:32:14.870 --> 03:32:17.709
mean approved or end like that's another word that

03:32:17.718 --> 03:32:20.959
I need clarified. You know, I think we're trying to

03:32:20.968 --> 03:32:23.418
be a little bit vague on purpose because we don't want

03:32:23.429 --> 03:32:27.058
to tie your hands to require a vote on each and every

03:32:27.069 --> 03:32:31.899
single thing that you do to direct or guide market

03:32:31.909 --> 03:32:32.610
design.

03:32:34.239 --> 03:32:37.620
But also to say that something is endorsed means it

03:32:37.629 --> 03:32:41.370
rises above the level of, oh, Barksdale's got, you

03:32:41.379 --> 03:32:44.129
know, a crazy idea. Why don't you go spend 100 hours

03:32:44.138 --> 03:32:44.780
working on it.

03:32:46.829 --> 03:32:51.659
And saying that you think this is too restrictive,

03:32:51.739 --> 03:32:56.049
the language that Barksdale put in here. Can we have Staff kind

03:32:56.058 --> 03:32:59.829
of way in here, I'd appreciate it. (item:30:PUC Executive Director Thomas Gleeson to Commissioners on the recommendations) I think when it comes to the PUC, it is

03:32:59.838 --> 03:33:04.649
appropriate to say that the IMMs analysis remains

03:33:04.659 --> 03:33:11.069
independent. But the IMMs work as it pertains to Commission

03:33:11.079 --> 03:33:15.468
sponsored, Commission endorsed programs or policies

03:33:15.479 --> 03:33:19.759
is still at Staff's direction. As the contract administrator

03:33:20.579 --> 03:33:24.190
for this contract, the analysis is independent. That

03:33:24.200 --> 03:33:27.299
is not, there's no contention about that. That is what

03:33:27.308 --> 03:33:29.500
it says in the rule of the analysis is independent

03:33:29.629 --> 03:33:32.929
but the IMM works in our direction and with our oversight

03:33:33.929 --> 03:33:36.829
So I don't want to tie Staff's hands through this on

03:33:36.838 --> 03:33:40.269
what we can do from a proper contract management standpoint

03:33:40.280 --> 03:33:43.579
for invoices that we sign off on and a contract that

03:33:43.588 --> 03:33:46.750
I sign. (item:30:Commissioner Cobos' follow-up to Thomas Gleeson) And that's not necessarily what I'm trying

03:33:46.759 --> 03:33:49.200
to do. I just want to be clear that as we, as

03:33:49.209 --> 03:33:54.940
we emphasize on the in the ERCOT forum that if it's appropriate

03:33:54.950 --> 03:33:58.159
to work with ERCOT, the emphasis is that you still

03:33:58.168 --> 03:34:00.750
have an independent voice at ERCOT and Independent

03:34:00.759 --> 03:34:03.459
analysis, right? And so that would carry over here

03:34:03.468 --> 03:34:07.549
But understanding that the contract oversight lays

03:34:07.558 --> 03:34:09.780
over here. (item:30:Thomas Gleeson's follow-up to Commissioner Cobos' response) But I think it's different because they

03:34:09.790 --> 03:34:12.790
are the IMM is independent, wholly independent from

03:34:12.899 --> 03:34:15.879
ERCOT. They are not wholly independent from the PUC.

03:34:15.888 --> 03:34:18.950
Their analysis is independent. And so we need to make

03:34:18.959 --> 03:34:19.610
that clear.

03:34:24.058 --> 03:34:27.549
So what are you saying? So I'm saying that if you want

03:34:27.558 --> 03:34:29.909
to add similar language to what we say around ERCOT,

03:34:30.099 --> 03:34:33.209
we need to be clear that the analysis that is done

03:34:33.218 --> 03:34:37.129
by the IMM on Commission endorsed projects remains

03:34:37.138 --> 03:34:40.899
independent. To your point, Commissioner Glotfelty. If Potomac

03:34:41.099 --> 03:34:44.709
disagrees or, or whoever we end up going with. That's

03:34:44.718 --> 03:34:47.370
one thing, but that work is still done in our direction.

03:34:47.379 --> 03:34:51.888
We can direct the IMM to do work as a contractor. They

03:34:51.899 --> 03:34:53.959
are our vendor for this contract. She didn't get to

03:34:53.968 --> 03:34:56.218
pick and choose. That's right.

03:34:57.808 --> 03:35:01.079
(item:30:Chairwoman Jackson's follow-up on the recommendations) And part of that directed work would be kind of what

03:35:01.088 --> 03:35:03.629
we talked about today is that we want to get engagement

03:35:03.679 --> 03:35:06.929
with the three, right? We want ERCOT, Staff and the

03:35:06.940 --> 03:35:10.500
IMM. So we, we want to make sure that whatever language

03:35:10.509 --> 03:35:14.129
that we're talking about here gives us the flexibility

03:35:14.138 --> 03:35:17.009
to do that because we've got a lot of work ahead that's

03:35:17.019 --> 03:35:21.888
gonna depend on us being able to draw on her expertise.

03:35:24.229 --> 03:35:26.040
Yeah. I I'm try, I'm not trying to change the language

03:35:26.049 --> 03:35:28.179
necessary. I'm just trying to capture the spirit and

03:35:28.190 --> 03:35:32.239
clarify as Thomas has done. Yeah. So, so can I be very

03:35:32.250 --> 03:35:32.849
specific?

03:35:34.540 --> 03:35:38.829
We passed the PCM. She does an analysis that says the

03:35:38.838 --> 03:35:43.588
PCM is gonna cost X plus $12 billion.

03:35:45.718 --> 03:35:49.500
Is she allowed to do that? (item:30:Thomas Gleeson's response to Commissioner Glotfelty's IMM specific question) Yes, because that, that

03:35:49.509 --> 03:35:51.569
is in our direction, we would direct her regardless

03:35:51.579 --> 03:35:54.479
of what the outcome of the analysis is, but we can

03:35:54.489 --> 03:35:57.429
direct the IMM to do that analysis. I think what is

03:35:57.440 --> 03:36:00.159
different from ERCOT. Is the change that we're talking

03:36:00.168 --> 03:36:03.440
about there is ERCOT cannot tell her to just go

03:36:03.450 --> 03:36:06.190
do something and, and Potomac has to do it. Totally

03:36:06.200 --> 03:36:08.718
agree. I just agree with the ERCOT side and I just want to

03:36:08.729 --> 03:36:13.479
make sure on our side that if we, if we agree that

03:36:13.808 --> 03:36:18.110
ACM is the right policy for the state, it's still valuable

03:36:18.120 --> 03:36:22.440
to have an independent market monitors view. If it's

03:36:22.450 --> 03:36:26.649
different from ours, if directed, say where, where

03:36:26.659 --> 03:36:28.860
do you see differences and they come back and give

03:36:28.870 --> 03:36:31.229
us that? Yes. And I would argue, not only is it valuable

03:36:31.239 --> 03:36:36.418
it's, it's the point. Okay. So, yes. (item:30:Commissioner McAdams' follow-up on the recommendations language) So I, I think we're

03:36:37.049 --> 03:36:39.940
one, we're not changing anything. We may be talking

03:36:39.950 --> 03:36:42.799
past each other on semantics. The analysis is not

03:36:42.808 --> 03:36:45.989
affected, the Commission still orders the projects

03:36:46.000 --> 03:36:49.489
that the analysis is performed over Legislatures watching

03:36:49.500 --> 03:36:52.540
the Commission, everybody's watching everybody. And

03:36:52.549 --> 03:36:56.659
um, you know, Carrie's voice is independent and God knows

03:36:56.668 --> 03:37:00.888
she is, you know, on point on criticizing or supporting.

03:37:00.899 --> 03:37:06.479
So we get what we need. Yeah, all I was trying to

03:37:06.489 --> 03:37:09.569
do is capture the spirit and clarify, get a clarification

03:37:09.579 --> 03:37:11.849
into there and understand what's happening and Thomas

03:37:11.860 --> 03:37:14.290
has explained. So I'm not trying to change the language

03:37:14.579 --> 03:37:17.239
I, I just was trying to get clarification and fully

03:37:17.250 --> 03:37:20.849
understand what was happening. Okay. Very good. Good talk.

03:37:23.700 --> 03:37:27.558
(item:30:Barksdale English on preparing revisions to the recommendations) So Chair, um we'll, we'll prepare a revision to the

03:37:27.569 --> 03:37:31.909
order that's before you, that reflects the conversation

03:37:31.918 --> 03:37:37.088
here that specifically um removes the codification

03:37:37.099 --> 03:37:44.409
of the notification language. Um requires uh a formal

03:37:44.418 --> 03:37:48.668
vote at an open meeting of the Executive Director's

03:37:48.750 --> 03:37:51.838
authority to terminate a contract. Or sorry. I shouldn't

03:37:51.849 --> 03:37:55.489
call it that. I should say get your approval for his

03:37:55.500 --> 03:37:59.500
recommendation to terminate a contract and and the

03:37:59.509 --> 03:38:02.940
remaining items will remain the same. And we understand

03:38:03.729 --> 03:38:08.459
the, the, the vision here in terms of independent analysis

03:38:09.679 --> 03:38:14.040
work being done at the direction of of contract management

03:38:14.049 --> 03:38:14.440
Staff.

03:38:16.379 --> 03:38:19.349
Did I capture the, the conversation correctly?

03:38:21.569 --> 03:38:23.000
Yes. Yes. Thank you.

03:38:24.509 --> 03:38:28.290
We're going to move forward. Thank you. I think Shelah

03:38:28.299 --> 03:38:32.819
if it's appropriate to take a vote now. Then we can

03:38:32.829 --> 03:38:36.668
prepare that order for you to sign today. (item:30:Motion to revise proposed order with discussion, edits proposed by Staff) So, so a

03:38:36.679 --> 03:38:40.620
motion to draft a proposed order consistent with the

03:38:40.629 --> 03:38:44.459
discussion? Revise the proposed order with the discussion

03:38:44.468 --> 03:38:47.968
and with the edits proposed by Commission Staff, I believe.

03:38:48.819 --> 03:38:53.229
And to authorize delegation to the Executive Director

03:38:53.239 --> 03:38:56.690
to sign and negotiate, negotiate and sign the contract.

03:38:57.668 --> 03:39:01.780
You spoke most about this. So moved. Second. We have

03:39:01.790 --> 03:39:05.149
a motion and a second. All in favor, say aye. Aye. Motion

03:39:05.159 --> 03:39:09.729
passes. Thank y'all. Thank you so much. I don't have

03:39:09.739 --> 03:39:13.329
anything on Item No. 31. (item:32:Chairwoman Jackson lays out Project No. 55407) Next up is Item No. 

03:39:13.338 --> 03:39:17.759
32, Project number 55407. This is the Commission's

03:39:17.769 --> 03:39:20.929
rule making regarding the Texas Backup Power Package

03:39:20.940 --> 03:39:24.569
Advisory Committee. Shelah, do we have anyone from

03:39:24.579 --> 03:39:27.638
the public signed up to speak on Item No. 32? No

03:39:27.649 --> 03:39:30.899
ma'am. No one signed up to speak. You see Staff filed

03:39:30.909 --> 03:39:35.079
a memo and proposal for adoption. David Smeltzer

03:39:35.088 --> 03:39:38.540
and David Gordon are here. Can you please provide

03:39:38.549 --> 03:39:41.329
us with a brief overview of Staff's recommendation.

03:39:42.079 --> 03:39:44.088
Yes thank you, ma'am. And good afternoon Commissioners.

03:39:44.099 --> 03:39:47.120
(item:32:Dave Gordon with Commission Staff on proposal for adoption) This is David Gordon with Commission Staff. This is

03:39:47.129 --> 03:39:51.659
a proposal for adoption for new rule 25.515 which

03:39:51.668 --> 03:39:54.168
would establish the Texas Backup Power Package Advisory

03:39:54.179 --> 03:39:54.649
Committee.

03:39:56.468 --> 03:39:59.610
We issued the public of the proposal for publication

03:39:59.620 --> 03:40:02.808
in September. And since we've received comments in

03:40:03.319 --> 03:40:05.388
light of those comments, we've made two significant

03:40:05.399 --> 03:40:09.718
changes to the rule. (item:32:Dave Gordon on changes to the rule) First, all of the Commission's

03:40:09.729 --> 03:40:12.218
written or the Committee's written recommendations

03:40:12.229 --> 03:40:14.940
uh will need to be made available publicly. And then

03:40:14.950 --> 03:40:18.610
secondly, we removed the Executive Director's ability

03:40:18.620 --> 03:40:21.500
to remove a committee member. So only the Commission

03:40:21.509 --> 03:40:24.168
can remove the Committee Member. And I just want to

03:40:24.179 --> 03:40:27.409
note uh there's one type of graphical error in the

03:40:27.418 --> 03:40:31.579
proposal for adoption uh on page four, line 17. There's

03:40:31.588 --> 03:40:36.120
a reference of Texas Government Code, Section 2001 that

03:40:36.129 --> 03:40:38.709
should actually be changed to Texas Government Code,

03:40:38.718 --> 03:40:43.569
Chapter 2110. Chapter 2110 is the law that allows us

03:40:43.579 --> 03:40:47.409
to establish this Committee. With that change, we

03:40:47.418 --> 03:40:50.030
recommend approval of the proposal for adoption, but

03:40:50.040 --> 03:40:53.049
I'm happy to take any questions or explain any part

03:40:53.058 --> 03:40:57.610
of the, the PFA. This was one I thought looked good.

03:40:59.440 --> 03:41:01.418
(item:32:Motion to approve proposal for adoption with changes) Subject to any discussion. I would move to approve the proposal for

03:41:01.429 --> 03:41:06.909
adoption. With his change. With the, with the changes

03:41:07.259 --> 03:41:11.138
I support that. And I second that proposal with the

03:41:11.149 --> 03:41:13.649
hope that we get more than three members more in the

03:41:13.940 --> 03:41:14.370
9ish range.

03:41:16.379 --> 03:41:19.739
The attention is to fully empanel the committee. Okay.

03:41:19.750 --> 03:41:23.079
We have a motion and a second. All in favor, say aye.

03:41:23.168 --> 03:41:27.329
Aye. Motion passes. I don't have anything on Item No.

03:41:27.338 --> 03:41:31.829
33. Chairman? Yes. Before we go on to Item 34. May I

03:41:31.838 --> 03:41:36.579
just jump in and suggest that perhaps we take 15

03:41:36.588 --> 03:41:39.700
recess. Take a 15 minute break for everyone to have

03:41:39.729 --> 03:41:41.780
a go to the hallway and for the Court Reporter to have

03:41:41.790 --> 03:41:44.819
a break. Okay. Yeah. Thank you for reminding that. Okay.

03:41:44.829 --> 03:41:48.879
(item:32:Chairwoman Jackson pauses Open Meeting, for 15 minute break) We'll take a 15 minute break so we will be back and

03:41:48.888 --> 03:41:51.079
just go off the record. Yes. Yes.