WEBVTT
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Good morning.
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Thank you for being here.
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My name is Peter Lake, chairman
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of the Public Utility
Commission of Texas.
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And with me today is Brad Jones,
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interim CEO of ERCOT.
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We wanna provide you all
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with an update on PUC
and ERCOT activities
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since the end of the legislative session
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and before we get to the hottest part
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of the summer.
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The three key things we wanna
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touch on today are stabilizing the grid
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for the summer, redesigning the market
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for the future and setting expectations
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for the remainder of the summer.
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Texans demand and deserve
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a reliable grid, and
that's our top priority.
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The Governor and the
legislature have spoken.
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They substantially reformed
ERCOT governance,
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they mandated weatherization
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and they required a
redesign of our market
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to enhance reliability,
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among many other initiatives.
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In addition, Governor
Abbott sent us a letter
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with additional guidance
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regarding reinforcing reliability
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of the grid this summer
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and offering strong
guidance on market redesign.
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The Public Utility Commission is taking
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robust action to
implement this legislation.
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We have 30 rulemaking projects underway
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at the moment, which is
an unprecedented effort
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in the recent history of this agency.
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First, let's talk about
stabilizing the grid
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for the summer.
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Out of the gates, we
fixed several problems
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that have plagued us in the past
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related to extraordinary
costs during emergencies
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and uncertainty around pricing
rules during emergencies.
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More importantly, going forward,
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the PUC has directed ERCOT
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to first improve the
margin of safety on the grid.
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We need a cushion of extra reserves
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going into the deepest,
hottest part of the summer.
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And second,
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we've directed ERCOT to operate
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with an abundance of caution.
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We have no room for error,
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and we've asked ERCOT to manage
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the grid accordingly.
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Brad can share how he's implementing
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those policy directives.
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Thank you, Chairman.
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So when I was asked to serve
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as the interim CEO at ERCOT,
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the first thing I did is to commit
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to both the Governor
and to the chair of the PUC
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that I would work to develop a plan
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that changes how ERCOT operates
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and improves the
reliability of the grid.
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Through legislation that was passed
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through this last session,
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and through the
direction of the Governor
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and the policy direction of the PUC,
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we have developed a plan we call
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the roadmap to
improving grid reliability.
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That roadmap is significant.
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It is deep.
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I hope that you take a close look
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at the roadmap because
there are a number of items
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on it that I think you
will be interested in.
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Let me walk you through a few
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of the things that we
have been focused on
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in developing that roadmap
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and completing the roadmap.
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Number one, as the chairman has said,
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we are operating in a
more reliable manner
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than we have ever done before.
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We are bringing more
generation across peak
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to be able to meet
the needs of all Texans
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and to keep our grid reliable.
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We are buying more ancillary services
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than we have in the past,
and we're also releasing
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those ancillary services
quicker to the market.
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And when necessary,
we'll call upon conservation
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because conservation is a tool
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that we intend to use.
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It's used across the country,
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it is used across the world,
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and it's a tool that helps us
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to keep our grid reliable.
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I want you to know that we will continue
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to provide you updates on that plan.
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Currently, we have completed 22
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out of the 60 initiatives.
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We intend to show to you each month,
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at the beginning of every month,
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where we are on those initiatives
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and provide you evidence
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of how we've completed
each of those items.
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So we intend to stay in
close communication with you
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as we deliver the elements of that plan.
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Thank you, Chairman.
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Thank you, Brad.
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We'll also highlight, when you say
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that you're bringing on more reserves
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and forcing more generation on
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in tight situations, I'd like to put
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some numbers to that.
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In bringing on more reserves, ERCOT,
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in July, has called
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38% more reserves
this year than last year.
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In August, they've already called
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or procured 56% more reserves
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for this August than
they did last August.
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In terms of forcing generators on
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when conditions demand it,
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in June, ERCOT called on
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over eight times as much generation
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to be forced on than in previous years.
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And in July, they
called on over 32 times
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as much generation
than they have previously.
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That is a substantial enhancement
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on the reserve capacity
and ability of our grid,
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and a strong enhancement
to our reliability.
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I also wanna highlight that
those operational changes
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are happening now,
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and they will enhance reliability
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for Texas this summer.
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Looking ahead, we have been tasked
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with redesigning the
ERCOT market for the future.
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Historically, our market has focused
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on affordability first,
reliability second,
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but now, reliability is first.
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Several decades ago,
our market was designed
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before intermittent
renewables were so prevalent.
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They're a beneficial part
of our generation fleet,
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but they have outpaced
our market design.
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And we must take that
new reality into account
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when we design our
new market for the future.
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In redesigning the ERCOT market,
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we're working off of
two guiding principles.
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First, reliability.
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And second, accountability.
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We want our market to pay
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for reliable electricity in any form,
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thermal dispatchable,
renewable with battery,
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fuel storage onsite, et cetera.
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There is a myriad of possibilities,
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but the emphasis is on
providing economic incentives
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for reliable electricity.
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Second, accountability.
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Our market needs to
provide economic incentives
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for generators who commit to showing up
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at a certain time and actually show up.
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Our focus
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will be on reliability
and accountability.
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What does this look like in practice?
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We don't know yet.
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There are a myriad of possibilities,
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in changing how generators are paid
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for producing electricity in Texas
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to adding new financial
products that reward reliability
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to allocating costs differently.
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And because there is such a wide range
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of possibilities, that's
why we're working
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with so many stakeholders
across the industry,
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across our consumer interest groups,
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to make sure that we hear all voices
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and take into account a
wide range of perspectives
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in redesigning this market.
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Finally, like to discuss
the expectations
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for the remainder of the summer.
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We are embarking on
once-in-a-generation reforms,
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and that takes time, but
the weather won't wait,
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so we need to be ready.
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We have more people in Texas than ever.
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That means higher demand
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for electricity than ever.
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We're expecting to set new
records in coming weeks.
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Brad can speak to the expectations
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as we move into August.
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Good, thank you.
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Just next week,
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we expect to have extremely high heat
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in the area, as well as
a high load expectation.
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Our load expectation could reach
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all-time highs for ERCOT.
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We're projecting somewhere around
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74,000 megawatt hours.
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The current record is 74,820.
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So we're getting very close
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to our all-time record.
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As it stands today,
looking at our conditions
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and what we expect to have next week,
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we expect to have a
sufficient amount of generation
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to serve all Texans.
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Thank you, Brad.
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It's gonna be tight for
the rest of the summer.
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We all know the heat is coming,
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but we're ready for it.
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In the meantime, we'll be redesigning
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the ERCOT market for the future
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so that Texas has a grid
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that reliably delivers affordable power.
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Overall, we're in a good position.
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We have clear direction
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and a strong mandate
from the legislature
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and the Governor.
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We have the tools we need to do the job,
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and we've got the
support of stakeholders
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and industry participants
across the board.
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Thank you.
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I'm happy to take
questions at this time.
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Chairman, just
discuss real quick.
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So as we discussed,
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we'll start here with
questions in the room,
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and then we'll go to our media
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joining us by phone.
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So, Don, if you wanna get those folks
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queued up, give 'em any
quick instructions you need to,
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then we'll start here in the room.
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Certainly.
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Ladies and gentlemen, if
you wish to ask a question,
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please press one, then zero
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on your telephone keypad.
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If you're using a speaker phone,
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please pick up the handset
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before pressing the numbers.
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Again, it'd be one, then zero.
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[Man In Black
Suit] Thank you, Don.
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So, Rudy, we'll start with you, and then
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just work our way across
the room, if that's okay.
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Chairman, you said that you,
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not quite sure how this new animal
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is going to look like,
but what is your vision
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for this new animal?
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In terms of
the market redesign?
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Yes, sir.
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I guess for the average consumer,
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we just heard this, and honestly,
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my eyes kinda glazed over
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a little bit.
(Brad laughs)
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And so I can imagine
(Brad laughs)
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that the person at home
is maybe going, "Huh?"
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Are the lights gonna stay on
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and is my bill going up?
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I think those are the two big questions
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that people at home wanna know.
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The lights are gonna stay on
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and your bill should not change.
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Our goal is to reallocate
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the payments that are
currently being made
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to the most reliable source of power.
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We don't wanna raise
costs, and we don't expect
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that we will raise costs.
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We're just shifting the payments
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to the generators that provide
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the most reliable electricity
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in the most accountable manner possible.
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And as a follow-up, Director,
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you mentioned that
we are entering August.
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It's gonna be bad.
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It's gonna be hot.
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But you're making a commitment right now
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we're not gonna get these alerts
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saying conserve your power,
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or could that still happen?
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So as I said, we believe
next week looks good.
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Based on all of our expectations,
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all of our forecasts, we believe
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we have plenty of generation to meet
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the needs of Texans.
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But going back to conservation,
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I believe that conservation is a tool
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that we need to keep in our toolbox.
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Conservation is a tool that allows us
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to talk to every Texan
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and have Texans help each other to keep
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the grid reliable.
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So when we need conservation,
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I intend to continue to use it
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as part of our conservative toolbox.
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So don't panic
if you get that notice?
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Please do not panic.
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It is something that is
used across the country,
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across the world.
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In June, when we issued our notice
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for conservation, at the same time,
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there were conservation
alerts on the West Coast,
00:11:48.320 --> 00:11:49.870
there were conservation alerts
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or requests on the East Coast
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and there was a
conservation alert in Chicago.
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So the exact same time we issued it,
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there were alerts throughout the country
00:11:59.640 --> 00:12:01.440
for the very same reason,
00:12:01.440 --> 00:12:03.650
in order to help the grid manager
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to keep the grid reliable.
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And when you say don't panic,
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it's the opposite.
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Conservation for electricity
00:12:10.890 --> 00:12:12.710
is about the little things
00:12:12.710 --> 00:12:15.510
for a few hours at a time.
00:12:15.510 --> 00:12:18.500
It's a simple thermostat change.
00:12:18.500 --> 00:12:20.430
It's waiting to run your dishwasher
00:12:20.430 --> 00:12:22.570
and your washing machine overnight
00:12:22.570 --> 00:12:24.460
instead of when you get home from work
00:12:24.460 --> 00:12:26.360
at five o'clock.
00:12:26.360 --> 00:12:28.000
It's closing your shades and blinds.
00:12:28.000 --> 00:12:30.290
It's the little things for a few hours,
00:12:30.290 --> 00:12:33.760
maybe a few days at
a time, and very much
00:12:33.760 --> 00:12:36.053
like Texas treats water conservation.
00:12:37.940 --> 00:12:39.870
Cities and water
providers across the state
00:12:39.870 --> 00:12:43.400
have summer restrictions
on lawn watering
00:12:43.400 --> 00:12:45.100
or washing your car.
00:12:45.100 --> 00:12:47.320
It's not much different than that.
00:12:47.320 --> 00:12:48.980
You understand the
reaction that people have
00:12:48.980 --> 00:12:50.850
when we got that conservation notice
00:12:50.850 --> 00:12:54.160
just on the heels of
a major crisis 'cause-
00:12:54.160 --> 00:12:56.880
Absolutely, and that's on us
00:12:56.880 --> 00:12:59.020
to communicate that better
00:12:59.020 --> 00:13:00.700
and communicate what that really means.
00:13:00.700 --> 00:13:02.330
And that's part of why we're here today,
00:13:02.330 --> 00:13:03.730
to make sure people understand
00:13:03.730 --> 00:13:07.720
that it's the opposite of panic.
00:13:07.720 --> 00:13:11.513
It's a few things for a
few hours here and there.
00:13:12.550 --> 00:13:14.850
It's no different than changing
00:13:14.850 --> 00:13:16.290
your lawn watering schedule
00:13:16.290 --> 00:13:18.423
when it gets to be the hot summer.
00:13:20.200 --> 00:13:21.540
[Man In Black Suit]
Anybody coming across here?
00:13:21.540 --> 00:13:23.180
Jeremy (mumbles).
00:13:23.180 --> 00:13:25.810
Chairman, at a recent
00:13:25.810 --> 00:13:27.700
Senate committee
hearing, you said the market
00:13:27.700 --> 00:13:29.520
needs to move away from a, quote,
00:13:29.520 --> 00:13:31.460
crisis-based business model.
00:13:31.460 --> 00:13:33.850
That there's only a financial reward
00:13:35.050 --> 00:13:37.440
the closer you get to crisis.
00:13:37.440 --> 00:13:39.370
Can you explain that a little bit more?
00:13:39.370 --> 00:13:41.610
A crisis-based business model
00:13:41.610 --> 00:13:44.070
doesn't sound too comforting
00:13:44.070 --> 00:13:46.080
when you're in the
business of reliability.
00:13:46.080 --> 00:13:47.410
It's not, and that's why
00:13:47.410 --> 00:13:49.083
we've gotta get away from it.
00:13:51.224 --> 00:13:53.210
When I say a crisis-based
business model,
00:13:53.210 --> 00:13:55.240
the part of the payment structures
00:13:55.240 --> 00:13:57.053
and the ERCOT market design,
00:13:57.900 --> 00:14:00.660
there's an element
that's essentially a bonus.
00:14:00.660 --> 00:14:05.060
And that bonus is only
paid in a meaningful way
00:14:05.060 --> 00:14:07.500
when the reserves on the grid
00:14:07.500 --> 00:14:10.170
get closer and closer to zero.
00:14:10.170 --> 00:14:13.500
And so through no fault of their own,
00:14:13.500 --> 00:14:16.990
the generators can only,
00:14:16.990 --> 00:14:19.950
private companies can
only generate revenue
00:14:19.950 --> 00:14:23.670
as Texas gets closer
and closer to the edge.
00:14:23.670 --> 00:14:25.530
And that's, as you said,
00:14:25.530 --> 00:14:29.250
that is not a good way
to run a reliable grid.
00:14:29.250 --> 00:14:32.020
And so that's why we're redesigning
00:14:32.020 --> 00:14:33.520
the entire thing from scratch.
00:14:34.470 --> 00:14:36.930
And then, well, that
segues into my follow-up.
00:14:36.930 --> 00:14:38.790
I know you don't have
the particulars yet,
00:14:38.790 --> 00:14:41.510
and obviously the sausage-making process
00:14:41.510 --> 00:14:44.060
needs to happen, but
just for perspective,
00:14:44.060 --> 00:14:45.180
how do you accomplish that?
00:14:45.180 --> 00:14:47.350
Do you foresee tweaking
00:14:47.350 --> 00:14:48.970
here and there or fine tuning,
00:14:48.970 --> 00:14:51.740
or does the market
need a major overhaul?
00:14:51.740 --> 00:14:53.710
The market needs
and will receive
00:14:53.710 --> 00:14:55.140
a major overhaul.
00:14:55.140 --> 00:14:57.300
We absolutely must move away
00:14:57.300 --> 00:14:59.430
from the crisis-based business model.
00:14:59.430 --> 00:15:04.160
And we want, as I
said, we wanna get
00:15:04.160 --> 00:15:05.540
the economic reward.
00:15:05.540 --> 00:15:07.840
If these private companies
are generating power
00:15:07.840 --> 00:15:10.700
in Texas, we want them to be paid
00:15:10.700 --> 00:15:13.870
for generating reliably and consistently
00:15:13.870 --> 00:15:17.130
without the grid having
to get to a crisis mode.
00:15:17.130 --> 00:15:19.210
So what form that
takes and the mechanics
00:15:19.210 --> 00:15:21.400
and what that looks like under the hood,
00:15:21.400 --> 00:15:22.530
we don't know yet.
00:15:22.530 --> 00:15:24.240
And there's a lot of implications there
00:15:24.240 --> 00:15:26.570
that impact stakeholders, customers
00:15:26.570 --> 00:15:30.350
and the companies that generate power.
00:15:30.350 --> 00:15:32.670
We need more companies
coming to Texas to generate power.
00:15:32.670 --> 00:15:34.230
Right now, we don't have any.
00:15:34.230 --> 00:15:35.750
Your timeline on all this?
00:15:35.750 --> 00:15:38.410
The market redesign will,
00:15:38.410 --> 00:15:40.790
the structure of it, will be established
00:15:40.790 --> 00:15:42.770
by the end of the year, if not sooner.
00:15:42.770 --> 00:15:45.010
Depending on which mechanism
00:15:45.010 --> 00:15:46.140
and gears need to be turned,
00:15:46.140 --> 00:15:48.003
the implementation could take longer,
00:15:49.310 --> 00:15:50.470
but I also wouldn't rule out
00:15:50.470 --> 00:15:52.710
a phased implementation.
00:15:52.710 --> 00:15:54.053
And Mr. Jones, if I may,
00:15:55.244 --> 00:15:57.563
in your 60-point roadmap
that you mentioned,
00:15:58.500 --> 00:16:01.263
one of the points concerns
transmission congestion,
00:16:02.140 --> 00:16:03.490
particularly in the valley.
00:16:03.490 --> 00:16:05.170
The valley export, as I understand it,
00:16:05.170 --> 00:16:08.240
is rated to carry about 6,000 megawatts,
00:16:08.240 --> 00:16:10.100
but at times, that line
00:16:10.100 --> 00:16:13.663
is constrained down to 650 or so.
00:16:15.390 --> 00:16:18.650
Why does ERCOT limit
00:16:18.650 --> 00:16:21.500
the amount of power that can
flow on these lines so much?
00:16:22.470 --> 00:16:23.820
So in answer to your question,
00:16:23.820 --> 00:16:27.170
it is fairly complex, but
I'll keep it very simple.
00:16:27.170 --> 00:16:30.050
We have to manage all
of the transmission lines
00:16:30.050 --> 00:16:33.090
to make sure that we're
not overloading any line.
00:16:33.090 --> 00:16:35.120
So in the valley, what
we have is a situation
00:16:35.120 --> 00:16:36.650
where there is local generation
00:16:36.650 --> 00:16:39.600
that helps support
the need-to-serve load.
00:16:39.600 --> 00:16:41.850
But if that local
generation is not available,
00:16:41.850 --> 00:16:44.470
if it has an outage, for some reason,
00:16:44.470 --> 00:16:46.810
we may have to constrain the power flows
00:16:46.810 --> 00:16:48.539
across those lines.
00:16:48.539 --> 00:16:50.170
Simply similar to if you hook
00:16:50.170 --> 00:16:52.110
too many Christmas lights together,
00:16:52.110 --> 00:16:53.160
you're gonna have a problem.
00:16:53.160 --> 00:16:54.880
You'll blow a fuse eventually.
00:16:54.880 --> 00:16:56.070
So we have to make sure
00:16:56.070 --> 00:16:58.370
that we're not overloading those lines.
00:16:58.370 --> 00:16:59.730
And in a situation, as I said,
00:16:59.730 --> 00:17:01.230
where we have generation out,
00:17:01.230 --> 00:17:03.650
possibly it could be
for a drought condition
00:17:03.650 --> 00:17:05.620
in the area, they aren't able to produce
00:17:05.620 --> 00:17:07.370
what we would like them to produce,
00:17:09.457 --> 00:17:13.260
we end up in a
less-than-reliable situation.
00:17:13.260 --> 00:17:14.770
So my focus has been,
00:17:14.770 --> 00:17:16.970
and this has really existed for 15 years
00:17:16.970 --> 00:17:19.010
because the valley has grown so fast
00:17:19.010 --> 00:17:20.950
over that time, we continue
00:17:20.950 --> 00:17:23.730
to be behind the curve
on building transmission
00:17:23.730 --> 00:17:24.750
to that area.
00:17:24.750 --> 00:17:26.640
So my team and I have been talking
00:17:26.640 --> 00:17:29.180
with the leadership of the Commission.
00:17:29.180 --> 00:17:31.050
We've also been talking
with the leadership
00:17:31.050 --> 00:17:32.790
of each of the transmission providers
00:17:32.790 --> 00:17:35.150
in that area to develop a plan
00:17:35.150 --> 00:17:36.970
for improving reliability,
00:17:36.970 --> 00:17:40.080
both into and out of the valley.
00:17:40.080 --> 00:17:41.180
And if I may follow up,
00:17:41.180 --> 00:17:43.040
not only in the valley, but any place
00:17:43.040 --> 00:17:46.033
behind one of these
GTC, general constraints,
00:17:48.410 --> 00:17:49.820
there's a lot more
generation coming out,
00:17:49.820 --> 00:17:52.133
particularly renewals.
And so I love that you used
00:17:52.133 --> 00:17:53.600
generic transmission constraint.
00:17:53.600 --> 00:17:55.530
I didn't expect to hear that today.
00:17:55.530 --> 00:17:56.470
But yes, you're exactly right.
00:17:56.470 --> 00:17:59.210
So my question is
as more wind, as more solar
00:17:59.210 --> 00:18:01.890
gets built and is built rather quickly,
00:18:01.890 --> 00:18:03.640
can ERCOT keep up?
00:18:03.640 --> 00:18:05.020
Can it play catch up?
00:18:05.020 --> 00:18:06.860
Or is congestion gonna get worse
00:18:06.860 --> 00:18:07.930
before it gets better?
00:18:07.930 --> 00:18:10.070
So that's our goal,
is to stay ahead of it.
00:18:10.070 --> 00:18:12.390
Our goal is to identify
where things are moving
00:18:12.390 --> 00:18:13.890
and to stay ahead of it.
00:18:13.890 --> 00:18:15.700
So we have to make sure that,
00:18:15.700 --> 00:18:16.940
for the valley, for example,
00:18:16.940 --> 00:18:19.040
if we're relying upon wind
00:18:19.040 --> 00:18:21.210
or solar generation in
another part of the state
00:18:21.210 --> 00:18:22.860
to serve that load,
00:18:22.860 --> 00:18:24.250
we have to make sure that that wind
00:18:24.250 --> 00:18:26.350
or solar generation
will be available to us
00:18:26.350 --> 00:18:27.830
at the time that we need it.
00:18:27.830 --> 00:18:29.620
So there's a lot of studies going on.
00:18:29.620 --> 00:18:30.980
It's not just the valley.
00:18:30.980 --> 00:18:32.550
I've got a keen focus on the valley
00:18:32.550 --> 00:18:34.810
because I believe we
have underserved that area
00:18:34.810 --> 00:18:37.630
for the last 15 years,
but there are other areas.
00:18:37.630 --> 00:18:40.240
And I would include Corpus
Christi as an example.
00:18:40.240 --> 00:18:42.830
Corpus Christi relies
on a significant amount
00:18:42.830 --> 00:18:44.700
of local generation.
00:18:44.700 --> 00:18:47.170
The transmission is
limited into the city.
00:18:47.170 --> 00:18:49.440
And so occasionally,
we can get into a bind
00:18:49.440 --> 00:18:51.830
if that generation is not available.
00:18:51.830 --> 00:18:53.007
And real quickly,
00:18:53.007 --> 00:18:55.910
the math on the calendar
always doesn't work out.
00:18:55.910 --> 00:18:57.470
You can build a wind project in a year,
00:18:57.470 --> 00:18:59.630
year 1/2, transmission line may take
00:18:59.630 --> 00:19:01.260
four, five, six.
00:19:01.260 --> 00:19:02.960
And so on the one hand, you're saying
00:19:02.960 --> 00:19:04.720
you're behind the curve,
00:19:04.720 --> 00:19:06.210
but the goal is to stay ahead.
00:19:06.210 --> 00:19:08.603
Those two comments don't mesh.
00:19:09.695 --> 00:19:10.910
So-
So you hit on exactly
00:19:10.910 --> 00:19:12.000
what we want to do.
00:19:12.000 --> 00:19:14.670
We want to look at our
transmission planning process
00:19:14.670 --> 00:19:16.670
to see if we can push at the edges
00:19:16.670 --> 00:19:18.640
of that planning process
so that we can create
00:19:18.640 --> 00:19:20.870
more opportunities to recognize
00:19:20.870 --> 00:19:24.830
that we may not see 3,000 megawatts
00:19:24.830 --> 00:19:27.610
that are planning to interconnect
in the next three years,
00:19:27.610 --> 00:19:29.250
but we may be able to project
00:19:29.250 --> 00:19:31.783
that we expect 6,000 in the next 10.
00:19:32.803 --> 00:19:34.720
And so if we can begin
to push at the edges
00:19:34.720 --> 00:19:36.380
of that transmission planning process,
00:19:36.380 --> 00:19:37.830
I believe we'll do a much better job
00:19:37.830 --> 00:19:38.663
of staying ahead.
00:19:38.663 --> 00:19:40.560
And part of improving
00:19:40.560 --> 00:19:42.560
that transmission planning process
00:19:42.560 --> 00:19:44.500
is focusing on dispatchable.
00:19:44.500 --> 00:19:47.240
So if you've got a
universe of wind farms
00:19:47.240 --> 00:19:49.120
and solar arrays,
00:19:49.120 --> 00:19:51.070
but some of them have battery backup,
00:19:51.070 --> 00:19:53.410
thus enhancing their dispatchability,
00:19:53.410 --> 00:19:55.590
we need to move them
to the front of the list.
00:19:55.590 --> 00:19:56.793
And so that's part of the process.
00:19:56.793 --> 00:19:59.760
It's not finalized yet, but like I said,
00:19:59.760 --> 00:20:02.840
this redesign focuses on reliability,
00:20:02.840 --> 00:20:05.360
and moving the transmission queue
00:20:05.360 --> 00:20:07.595
is part of that.
Thank you.
00:20:07.595 --> 00:20:09.180
[Man In Black Suit] The Texan.
00:20:09.180 --> 00:20:11.590
One of the Governor's
items for you guys
00:20:11.590 --> 00:20:14.760
was to have renewables compensate
00:20:14.760 --> 00:20:16.550
for their lack of generation
00:20:16.550 --> 00:20:18.603
through billing process, I think.
00:20:21.020 --> 00:20:23.360
Is there clarity on how that will come
00:20:23.360 --> 00:20:24.500
to fruition functionally,
00:20:24.500 --> 00:20:26.270
or is that still a work in progress?
00:20:26.270 --> 00:20:27.520
That's a work in progress.
00:20:27.520 --> 00:20:29.440
That's the under-the-hood mechanics
00:20:29.440 --> 00:20:31.950
that we're working through to drive
00:20:31.950 --> 00:20:33.730
to those ultimate goals
00:20:33.730 --> 00:20:35.650
of reliability and accountability.
00:20:35.650 --> 00:20:38.090
And that's also why
we're having the series
00:20:38.090 --> 00:20:41.400
of work sessions that are
open Commission meetings.
00:20:41.400 --> 00:20:44.020
We had the first one on market redesign
00:20:44.020 --> 00:20:46.430
in early July, where we're bringing
00:20:47.580 --> 00:20:50.430
a whole array of
stakeholders, renewables,
00:20:50.430 --> 00:20:53.300
dispatchables, the whole array,
00:20:53.300 --> 00:20:55.410
into this room so that everybody
00:20:55.410 --> 00:20:57.550
can be in front of the Commission,
00:20:57.550 --> 00:20:59.390
have ERCOT participating,
00:20:59.390 --> 00:21:01.190
and work through these details.
00:21:01.190 --> 00:21:02.143
Okay, one more.
00:21:03.280 --> 00:21:06.750
Since 2015 and up to 2023,
00:21:06.750 --> 00:21:09.798
the planned projects
that are going to be added,
00:21:09.798 --> 00:21:12.480
there's a lot of solar
and wind being added,
00:21:12.480 --> 00:21:13.900
but we've also seen a drop
00:21:13.900 --> 00:21:15.940
in natural gas and coal.
00:21:15.940 --> 00:21:18.840
Is there plans to
incentivize rebuilding,
00:21:18.840 --> 00:21:20.743
whether it's natural gas, coal plants,
00:21:21.600 --> 00:21:24.261
down the road, or is
that kind of just the way
00:21:24.261 --> 00:21:25.150
it's gonna be?
00:21:25.150 --> 00:21:27.810
Well, that's part of
the market redesign
00:21:27.810 --> 00:21:29.680
towards reliability and accountability.
00:21:29.680 --> 00:21:32.610
And like I said, we're
not in the business
00:21:32.610 --> 00:21:34.230
of picking winners and losers.
00:21:34.230 --> 00:21:35.923
We want to incentivize the result
00:21:35.923 --> 00:21:38.190
that Texas needs, reliable electricity
00:21:38.190 --> 00:21:39.670
on an accountable basis.
00:21:39.670 --> 00:21:44.360
And if that takes the
form of a gas plant
00:21:44.360 --> 00:21:46.050
with backup fuel storage
00:21:46.050 --> 00:21:48.610
and redundant supply,
that's more reliable.
00:21:48.610 --> 00:21:51.560
If that's a solar array with batteries
00:21:51.560 --> 00:21:54.400
attached to it, that's
reliable and dispatchable.
00:21:54.400 --> 00:21:57.768
So we're driving for the result.
00:21:57.768 --> 00:21:58.772
[Man In Blue Shirt] Okay.
00:21:58.772 --> 00:21:59.605
[Man In Black Suit]
Anybody else in the room?
00:21:59.605 --> 00:22:00.746
Yeah, (indistinct).
00:22:00.746 --> 00:22:02.010
[Man In Striped Tie]
Mr. Chairman, you've mentioned
00:22:02.010 --> 00:22:04.440
that there are 30 rulemaking
processes underway,
00:22:04.440 --> 00:22:05.610
and that sounds like a lot,
00:22:05.610 --> 00:22:06.710
but I guess I'm wondering
00:22:06.710 --> 00:22:09.830
did the legislature, did Texas do enough
00:22:11.000 --> 00:22:13.050
to update the grid?
00:22:13.050 --> 00:22:13.883
And is there anything else
00:22:13.883 --> 00:22:16.280
that the legislature can or should do
00:22:16.280 --> 00:22:18.459
at this point?
30's not enough?
00:22:18.459 --> 00:22:19.690
(group laughs)
00:22:19.690 --> 00:22:22.360
The legislature did a tremendous job
00:22:22.360 --> 00:22:26.480
in the most substantial energy reform
00:22:26.480 --> 00:22:28.363
in almost 1/4 century.
00:22:29.942 --> 00:22:32.070
They deliberated and
addressed a wide range
00:22:32.070 --> 00:22:36.270
of topics, considered
a variety of options.
00:22:36.270 --> 00:22:37.370
And at the end of the day,
00:22:37.370 --> 00:22:40.440
delivered exactly what
we, the Commission, needs
00:22:40.440 --> 00:22:42.840
to implement the changes to get Texas
00:22:42.840 --> 00:22:45.211
the result the state needs.
00:22:45.211 --> 00:22:47.437
And this question's
for both of you.
00:22:47.437 --> 00:22:49.630
More than 200 people died as a result
00:22:49.630 --> 00:22:52.690
of this February storm, at least.
00:22:52.690 --> 00:22:54.770
So I guess, respectfully,
00:22:54.770 --> 00:22:57.180
why should the public trust
00:22:57.180 --> 00:23:00.090
or believe that all of these updates
00:23:01.122 --> 00:23:02.720
will make the system better?
00:23:02.720 --> 00:23:04.170
Why should they have faith
00:23:05.685 --> 00:23:09.200
in both of these agencies
and in this process?
00:23:09.200 --> 00:23:12.970
Because we've
completely reorganized
00:23:12.970 --> 00:23:14.060
the way ERCOT is run
00:23:15.900 --> 00:23:17.460
in the existing market framework.
00:23:17.460 --> 00:23:21.690
As Brad mentioned, the
procurement of reserves
00:23:21.690 --> 00:23:25.480
and the ERCOT authority
to force generators on
00:23:26.400 --> 00:23:28.760
are tools that have been underutilized.
00:23:28.760 --> 00:23:30.980
And I think it's fair to say
00:23:30.980 --> 00:23:33.740
that that operation at
ERCOT has been turned
00:23:33.740 --> 00:23:36.940
180 degrees around.
00:23:36.940 --> 00:23:39.950
Like Jeremy said, when the previous
00:23:39.950 --> 00:23:41.930
crisis-based business model
00:23:41.930 --> 00:23:45.430
meant that the market demanded
00:23:46.741 --> 00:23:50.200
fewer reserves called later in time
00:23:51.150 --> 00:23:54.140
because that was what the
market design demanded.
00:23:54.140 --> 00:23:58.110
We've completely turned
that model on its head,
00:23:58.110 --> 00:24:02.750
and started calling
more reserves sooner.
00:24:02.750 --> 00:24:07.040
So that is an absolute 180-degree shift
00:24:07.040 --> 00:24:09.040
from the way we've done business before.
00:24:10.480 --> 00:24:11.990
And that's happening now.
00:24:11.990 --> 00:24:14.640
That makes the grid more
reliable for this summer.
00:24:14.640 --> 00:24:15.620
And in the meantime,
00:24:15.620 --> 00:24:18.780
we're working on redesigning
the market structure
00:24:18.780 --> 00:24:22.100
so we don't run into those
market-incentive problems
00:24:22.100 --> 00:24:23.670
in the future.
00:24:23.670 --> 00:24:25.106
Good, thank you.
00:24:25.106 --> 00:24:26.583
[Man In Black Suit]
One more in the room.
00:24:26.583 --> 00:24:27.540
[Man In Button-Down
Shirt] So one aspect
00:24:27.540 --> 00:24:28.640
of the 60-point plan
00:24:28.640 --> 00:24:30.160
and kind of the focus of the legislature
00:24:30.160 --> 00:24:32.030
has been weatherization.
00:24:32.030 --> 00:24:33.800
We kind of talked about
summer here today,
00:24:33.800 --> 00:24:35.470
and that sort of thing takes time,
00:24:35.470 --> 00:24:37.420
but looking ahead,
even to winter, again,
00:24:37.420 --> 00:24:39.200
just wondering if you
could kind of give an update
00:24:39.200 --> 00:24:41.077
on where that stands.
00:24:42.230 --> 00:24:44.585
Different generators.
00:24:44.585 --> 00:24:46.510
Implementing the
weatherization legislation
00:24:46.510 --> 00:24:47.853
is in process now.
00:24:48.690 --> 00:24:53.100
It will take the form
of roughly two phases.
00:24:53.100 --> 00:24:55.420
The first phase is
working with generators
00:24:55.420 --> 00:24:58.330
to account for the specific problems
00:24:58.330 --> 00:25:00.370
they had last winter
00:25:00.370 --> 00:25:02.950
and making sure those problems
00:25:02.950 --> 00:25:05.690
are fixed for the upcoming winter.
00:25:05.690 --> 00:25:06.560
The second phase
00:25:06.560 --> 00:25:10.490
will be a broader policy implementation
00:25:10.490 --> 00:25:12.640
that sets several levels
00:25:12.640 --> 00:25:16.700
of standards for
weatherization resiliency
00:25:16.700 --> 00:25:19.840
that will be implemented
more broadly over time.
00:25:19.840 --> 00:25:21.340
I would also note
00:25:21.340 --> 00:25:25.120
that this summer, ERCOT has initiated
00:25:25.120 --> 00:25:28.190
more site inspections
than they have in the past.
00:25:28.190 --> 00:25:29.570
Perhaps you could speak to that.
00:25:29.570 --> 00:25:32.050
Sure, so in the
past, we did not do
00:25:32.050 --> 00:25:33.300
summer weatherization checks.
00:25:33.300 --> 00:25:34.960
We began doing that this year.
00:25:34.960 --> 00:25:37.440
We checked over 31 units
00:25:37.440 --> 00:25:39.660
to make sure they were
ready for the summer season.
00:25:39.660 --> 00:25:41.090
In addition, we're getting prepared
00:25:41.090 --> 00:25:44.300
to do checks on all of the units
00:25:44.300 --> 00:25:46.500
that had problems
during the winter storm.
00:25:46.500 --> 00:25:48.210
So we'll go back, our intent to cover
00:25:48.210 --> 00:25:50.600
all of those units, as
well as a few others,
00:25:50.600 --> 00:25:52.840
to do those weatherization checks
00:25:52.840 --> 00:25:54.173
in advance of the winter.
00:25:57.320 --> 00:25:58.420
Okay, so we do
00:25:58.420 --> 00:26:00.190
have one question that came in
00:26:00.190 --> 00:26:02.930
from Brendan Gibbons
with San Antonio Report.
00:26:02.930 --> 00:26:04.593
And he asked, wanted to ask,
00:26:06.430 --> 00:26:08.516
Brad, can you give an update on why
00:26:08.516 --> 00:26:10.149
an usually large number of generators
00:26:10.149 --> 00:26:12.290
tripped offline in early June?
00:26:12.290 --> 00:26:14.270
Good, so I've tried to answer
00:26:14.270 --> 00:26:15.920
this question before
'cause we don't know
00:26:15.920 --> 00:26:19.570
exactly why the large
group of generators
00:26:19.570 --> 00:26:20.860
did trip off in June.
00:26:20.860 --> 00:26:23.410
We do know reasons
for each of the generators.
00:26:23.410 --> 00:26:25.030
They have reported that to us.
00:26:25.030 --> 00:26:27.410
We've also issued an RFI to them.
00:26:27.410 --> 00:26:30.300
About 60% of the responses have come in.
00:26:30.300 --> 00:26:31.900
We're waiting for the other responses.
00:26:31.900 --> 00:26:34.230
I think they're coming in by the 23rd,
00:26:34.230 --> 00:26:36.400
which should be this coming Friday.
00:26:36.400 --> 00:26:38.420
At that time, we'll do an analysis
00:26:38.420 --> 00:26:41.640
of those reasons, but
let me, without waiting
00:26:41.640 --> 00:26:43.180
for that analysis, let me tell you
00:26:43.180 --> 00:26:46.720
that there are a number
of potential reasons why
00:26:46.720 --> 00:26:48.060
these generators have been out.
00:26:48.060 --> 00:26:50.000
I've said it before.
00:26:50.000 --> 00:26:51.730
Possibly, it could be that some of them
00:26:51.730 --> 00:26:55.470
were affected by the very
cold weather in February.
00:26:55.470 --> 00:26:57.940
And that those units
are just now experiencing
00:26:57.940 --> 00:27:00.610
these failures, these
mechanical failures,
00:27:00.610 --> 00:27:02.960
because of the winter weather.
00:27:02.960 --> 00:27:05.030
Part of the reason could be that we
00:27:05.030 --> 00:27:07.650
have less time available today
00:27:07.650 --> 00:27:09.600
for these generators to take outages
00:27:09.600 --> 00:27:11.390
and to do regular repairs.
00:27:11.390 --> 00:27:13.470
It used to be that during
the summer and winter,
00:27:13.470 --> 00:27:15.730
they were needed by ERCOT and all Texans
00:27:15.730 --> 00:27:18.940
to operate, and that
the winter and the fall
00:27:18.940 --> 00:27:21.070
and the spring weather, there was time
00:27:21.070 --> 00:27:22.650
for them to take maintenance.
00:27:22.650 --> 00:27:25.670
Today, because the
wind generation is really
00:27:25.670 --> 00:27:28.630
at its maximum in
the spring and the fall,
00:27:28.630 --> 00:27:31.350
we need more dispatchable
generation in the spring
00:27:31.350 --> 00:27:33.420
and the fall, so that leaves less time
00:27:33.420 --> 00:27:36.090
for these generators to
do regular maintenance.
00:27:36.090 --> 00:27:39.790
Number three, and I
believe this is a part of it,
00:27:39.790 --> 00:27:42.890
is that we currently, in our market,
00:27:42.890 --> 00:27:46.350
aren't providing the adequate level
00:27:46.350 --> 00:27:49.080
of revenues for many generators to do
00:27:49.080 --> 00:27:51.110
the maintenance that
they should be doing.
00:27:51.110 --> 00:27:53.650
So there are many
older units in the system
00:27:53.650 --> 00:27:56.620
that perhaps aren't getting
the maintenance dollars
00:27:56.620 --> 00:27:59.260
because our market has been so efficient
00:27:59.260 --> 00:28:01.270
that it's difficult for
some of those generators
00:28:01.270 --> 00:28:03.120
to allocate the funds
00:28:03.120 --> 00:28:06.070
to keep those units operating.
00:28:06.070 --> 00:28:08.460
Those are the three
options that I've seen so far.
00:28:08.460 --> 00:28:09.580
We'll be looking into that
00:28:09.580 --> 00:28:10.710
as we get this information,
00:28:10.710 --> 00:28:12.874
and we'll get back to each of you.
00:28:12.874 --> 00:28:13.707
[Man In Black Suit]
So we'd like to go ahead
00:28:13.707 --> 00:28:16.420
and go to our media joining us by phone.
00:28:16.420 --> 00:28:17.770
So, Don, if you could
go ahead and bring in
00:28:17.770 --> 00:28:18.620
the first caller.
00:28:20.190 --> 00:28:21.023
Certainly.
00:28:21.023 --> 00:28:23.150
First, we're going to
the line of Lori Brown
00:28:23.150 --> 00:28:24.840
from Fox 4 Dallas.
00:28:24.840 --> 00:28:25.773
Please go ahead.
00:28:27.020 --> 00:28:28.890
Yes, I heard
you say in response
00:28:28.890 --> 00:28:31.760
to a question earlier that
the increased reliability
00:28:31.760 --> 00:28:34.500
is not going to cost consumers more.
00:28:34.500 --> 00:28:36.250
That sounds a little
too good to be true.
00:28:36.250 --> 00:28:37.800
A lot of experts have said more money
00:28:37.800 --> 00:28:39.230
needs to be invested in the grid
00:28:39.230 --> 00:28:40.930
to make it more reliable.
00:28:40.930 --> 00:28:43.190
So how will ERCOT increase reliability
00:28:43.190 --> 00:28:46.450
with no additional cost to consumers?
00:28:46.450 --> 00:28:48.073
So I wanna clarify that.
00:28:49.020 --> 00:28:52.500
When asked about the
future market redesign,
00:28:52.500 --> 00:28:54.950
we don't anticipate redesigning
00:28:54.950 --> 00:28:57.030
the market to increased cost.
00:28:57.030 --> 00:28:59.210
We want to reallocate the economics
00:28:59.210 --> 00:29:00.760
as they exist now
00:29:00.760 --> 00:29:05.060
to move the revenues companies receive
00:29:05.060 --> 00:29:08.220
to generators that
are more dispatchable.
00:29:08.220 --> 00:29:10.070
As for the increased reliability
00:29:10.070 --> 00:29:12.500
of this summer, those certainly come
00:29:12.500 --> 00:29:14.653
with increased costs.
00:29:15.700 --> 00:29:20.440
All in, the dollars
spent so far this summer
00:29:20.440 --> 00:29:24.380
for the dramatic
increases in both reserves
00:29:24.380 --> 00:29:27.570
and generators forced into service
00:29:27.570 --> 00:29:30.370
total less than $2 per person
00:29:30.370 --> 00:29:34.880
across all participants, members,
00:29:34.880 --> 00:29:36.693
or citizens within ERCOT.
00:29:40.029 --> 00:29:42.220
Okay, and with
the record heat expected
00:29:42.220 --> 00:29:45.220
next week, what are
the chances of a need
00:29:45.220 --> 00:29:46.993
to go to rolling blackouts?
00:29:48.770 --> 00:29:49.770
As I said, currently,
00:29:49.770 --> 00:29:51.800
we expect to have enough generation
00:29:51.800 --> 00:29:54.143
to serve the needs of
all Texans next week.
00:29:57.230 --> 00:29:58.505
Okay, thank you.
00:29:58.505 --> 00:29:59.673
[Man In Black Suit]
Don, next question, please.
00:30:00.570 --> 00:30:01.403
Thank you.
00:30:01.403 --> 00:30:03.060
And next, we're going to the line
00:30:03.060 --> 00:30:05.703
of James Downing, Power Markets Today.
00:30:06.590 --> 00:30:08.760
Yeah, my question is,
00:30:08.760 --> 00:30:11.087
is the capacity market
on the table at all?
00:30:12.780 --> 00:30:15.730
That was not
addressed in legislation
00:30:15.730 --> 00:30:18.250
that came out of the 87th legislature,
00:30:18.250 --> 00:30:22.036
so that is not
contemplated at this time.
00:30:22.036 --> 00:30:25.251
And then I
have another one, too.
00:30:25.251 --> 00:30:28.003
(mumbles) Has written
about how there's a lot of,
00:30:29.318 --> 00:30:30.900
about one of the issues
this winter as generally
00:30:30.900 --> 00:30:33.730
is that a lot of the housing in Texas
00:30:33.730 --> 00:30:35.550
has really poor insulation
00:30:35.550 --> 00:30:38.063
and it has (mumbles)
a lot of inefficiencies.
00:30:38.920 --> 00:30:41.122
Do you see any effort
for improving that?
00:30:41.122 --> 00:30:42.580
(mumbles)
00:30:42.580 --> 00:30:45.190
Maybe funding some retrofits
00:30:45.190 --> 00:30:47.233
to make housing more efficient?
00:30:48.400 --> 00:30:49.890
That's outside the scope
00:30:49.890 --> 00:30:52.120
of the legislation that
was passed this session,
00:30:52.120 --> 00:30:55.110
and would be a broader policy topic
00:30:55.110 --> 00:30:58.140
that a future legislature
would probably take up.
00:30:59.537 --> 00:31:00.370
Thank you.
Okay, thank you.
00:31:00.370 --> 00:31:01.463
Don, next question.
00:31:02.330 --> 00:31:04.340
Thank you. And once
again, if you have a question,
00:31:04.340 --> 00:31:05.640
please press one, zero.
00:31:05.640 --> 00:31:07.210
Next, we're going to the line
00:31:07.210 --> 00:31:10.540
of Mitchell Ferman, The Texas Tribune.
00:31:10.540 --> 00:31:11.583
Please go ahead.
00:31:13.620 --> 00:31:14.800
Chairman Lake,
00:31:14.800 --> 00:31:16.430
how do you get more companies
00:31:16.430 --> 00:31:19.140
to invest in power generation
00:31:19.140 --> 00:31:20.123
when you said you don't know
00:31:20.123 --> 00:31:22.253
what the market redesign will look like?
00:31:23.490 --> 00:31:25.870
Well, we're engaging
00:31:25.870 --> 00:31:27.460
with those stakeholders to find out
00:31:27.460 --> 00:31:30.500
what they need so we
can redesign the market
00:31:30.500 --> 00:31:32.570
to provide them
exactly those incentives.
00:31:32.570 --> 00:31:34.710
We don't have a hard or fast number
00:31:35.790 --> 00:31:37.930
and don't know the structure yet,
00:31:37.930 --> 00:31:39.210
but that's why we're running
00:31:39.210 --> 00:31:42.240
such a wide-reaching
and transparent process,
00:31:42.240 --> 00:31:46.890
to make sure our new market design
00:31:46.890 --> 00:31:52.070
encompasses the economics
those companies need.
00:31:52.070 --> 00:31:53.440
We need to make sure
00:31:54.787 --> 00:31:57.140
that their next investment dollar
00:31:57.140 --> 00:32:01.180
will be spent in more dispatchable
00:32:01.180 --> 00:32:02.530
or reliable power in Texas.
00:32:04.240 --> 00:32:05.880
And one more question.
00:32:05.880 --> 00:32:08.480
What are the challenges in communicating
00:32:08.480 --> 00:32:10.430
with the public that doesn't trust you?
00:32:12.870 --> 00:32:15.670
The challenges are extensive.
00:32:15.670 --> 00:32:18.940
We've got to regain their trust
00:32:18.940 --> 00:32:19.960
and we've gotta earn it.
00:32:19.960 --> 00:32:22.410
We're working hard to do that
00:32:22.410 --> 00:32:24.503
through more extensive communication,
00:32:26.500 --> 00:32:29.180
more clarity in our communication
00:32:29.180 --> 00:32:31.080
to make sure that the message
00:32:31.080 --> 00:32:33.430
that we're sending translates clearly
00:32:33.430 --> 00:32:37.550
from a very complex grid
management operation
00:32:37.550 --> 00:32:42.583
to language that everyday
folks will understand.
00:32:44.213 --> 00:32:45.623
And that's no small task,
00:32:46.580 --> 00:32:49.070
but we're dedicated to that mission,
00:32:49.070 --> 00:32:51.330
and we're well on our way, I think,
00:32:51.330 --> 00:32:52.683
to making that happen.
00:32:54.558 --> 00:32:55.599
Do you
have examples of how
00:32:55.599 --> 00:32:56.850
you're going to do that?
00:32:56.850 --> 00:32:59.100
I'd say this press
conference today
00:32:59.100 --> 00:33:00.900
is an example of that.
00:33:00.900 --> 00:33:05.333
Brad's roadmap to
reliability is another example,
00:33:07.230 --> 00:33:09.340
both of which are, as far as I know,
00:33:09.340 --> 00:33:12.220
unprecedented in recent history
00:33:12.220 --> 00:33:14.370
of the Public Utility
Commission and ERCOT.
00:33:18.418 --> 00:33:19.251
[Man In Black Suit]
Thank you, Mitchell.
00:33:19.251 --> 00:33:21.556
Don, next question, please.
00:33:21.556 --> 00:33:22.700
Next, we're going to the line
00:33:22.700 --> 00:33:25.463
of Andrew Moore, KCEN-TV.
00:33:27.760 --> 00:33:28.593
Good morning, guys.
00:33:28.593 --> 00:33:31.263
I have two questions here real quick.
00:33:32.210 --> 00:33:35.560
The first one was that
we've learned that currently,
00:33:35.560 --> 00:33:37.490
some thermal power generators
00:33:37.490 --> 00:33:40.230
only bid into the electricity market
00:33:40.230 --> 00:33:42.010
one day at a time,
00:33:42.010 --> 00:33:45.140
and so that bid depends
on current prices.
00:33:45.140 --> 00:33:46.880
And so you had previously asked ERCOT
00:33:46.880 --> 00:33:50.380
why they don't schedule
thermal generation
00:33:50.380 --> 00:33:51.290
several days out.
00:33:51.290 --> 00:33:53.040
It looks like they can't
00:33:53.040 --> 00:33:55.060
because there are these power generators
00:33:55.060 --> 00:33:57.620
only scheduling one day at a time.
00:33:57.620 --> 00:34:00.950
So would it be possible to change this
00:34:00.950 --> 00:34:02.560
so that some power generators
00:34:02.560 --> 00:34:04.700
bid three days its time, but maybe
00:34:04.700 --> 00:34:06.940
they would get a
capacity payment to cover
00:34:06.940 --> 00:34:09.200
certain costs over those three days
00:34:09.200 --> 00:34:10.800
so they don't risk losing money?
00:34:12.000 --> 00:34:14.380
We're evaluating
any and all options
00:34:14.380 --> 00:34:17.440
within the scope of the
legislation we were given.
00:34:17.440 --> 00:34:18.870
There's a variety, as I mentioned,
00:34:18.870 --> 00:34:20.390
there's a variety of mechanisms
00:34:20.390 --> 00:34:23.050
that we can use to incentivize
00:34:23.050 --> 00:34:24.853
reliability and accountability.
00:34:26.480 --> 00:34:27.990
Good, I really
have nothing to add
00:34:27.990 --> 00:34:29.630
to that, Chairman.
00:34:29.630 --> 00:34:31.020
I would just say that
00:34:31.020 --> 00:34:33.000
that is well down into
the details of the type
00:34:33.000 --> 00:34:36.000
of market design
changes we have to look at.
00:34:36.000 --> 00:34:38.140
And so the chairman and I
00:34:38.140 --> 00:34:40.930
are meeting on a weekly basis in person.
00:34:40.930 --> 00:34:42.270
We're also talking with each other
00:34:42.270 --> 00:34:45.360
several times a day, in fact.
00:34:45.360 --> 00:34:48.770
And we will be providing options
00:34:50.256 --> 00:34:51.850
to the Commission on the types
00:34:51.850 --> 00:34:54.700
of market design changes
that may be necessary.
00:34:54.700 --> 00:34:56.910
And the PUC will then provide us
00:34:56.910 --> 00:34:58.153
that policy guidance.
00:35:00.641 --> 00:35:02.020
Okay, and secondly,
00:35:02.020 --> 00:35:03.560
and this is for ERCOT,
00:35:03.560 --> 00:35:06.320
with our current available
power generators,
00:35:06.320 --> 00:35:09.130
so we're going into a
really hot week next week.
00:35:09.130 --> 00:35:11.250
Could you commit
right now, if you wanted,
00:35:11.250 --> 00:35:14.850
to having 80,000 megawatts an hour
00:35:14.850 --> 00:35:17.170
of power available
during the hottest weeks
00:35:17.170 --> 00:35:19.320
of summer, including next week,
00:35:19.320 --> 00:35:22.320
to stay ahead of those projections?
00:35:22.320 --> 00:35:23.790
Could we say right now, yeah,
00:35:23.790 --> 00:35:25.020
we're gonna pull the right levers?
00:35:25.020 --> 00:35:27.310
We're gonna have
80,000 megawatts an hour
00:35:27.310 --> 00:35:29.630
available all of next week to make sure
00:35:29.630 --> 00:35:30.630
that we are covered.
00:35:32.880 --> 00:35:34.237
I think you're confused
00:35:34.237 --> 00:35:35.920
that we need to do that early.
00:35:35.920 --> 00:35:37.410
By doing that early,
00:35:37.410 --> 00:35:39.830
we spend fuel in our generators
00:35:39.830 --> 00:35:41.140
that we don't need to spend.
00:35:41.140 --> 00:35:43.530
It becomes a problem for the market.
00:35:43.530 --> 00:35:45.020
We wanna make sure that we're taking
00:35:45.020 --> 00:35:46.600
the right actions at the right time.
00:35:46.600 --> 00:35:48.020
And so, for example,
00:35:48.020 --> 00:35:51.740
if a generating unit
takes eight hours to start,
00:35:51.740 --> 00:35:54.330
we will begin to call upon that unit
00:35:54.330 --> 00:35:56.410
probably nine hours in advance,
00:35:56.410 --> 00:35:57.880
but we won't call on that unit
00:35:57.880 --> 00:36:00.350
24 or 36 hours in advance
00:36:00.350 --> 00:36:03.360
because that would
be a waste of resources.
00:36:03.360 --> 00:36:04.910
So I understand your question,
00:36:04.910 --> 00:36:08.010
but the reason why we're
dispatching those units
00:36:08.010 --> 00:36:10.550
closer to the time is
we're watching the amount
00:36:10.550 --> 00:36:13.380
of time it takes for them
to come up and online,
00:36:13.380 --> 00:36:15.290
and we're making sure that we match that
00:36:15.290 --> 00:36:17.863
so that we don't waste
additional fuel resources.
00:36:19.300 --> 00:36:21.250
Well, okay,
within what you needed,
00:36:21.250 --> 00:36:23.880
are you confident you
could get 80,000 megawatts
00:36:23.880 --> 00:36:25.290
when you need it next week?
00:36:25.290 --> 00:36:28.600
Yes, we are confident.
Okay.
00:36:28.600 --> 00:36:29.433
[Man In Black Suit]
Okay, thank you, Andrew.
00:36:29.433 --> 00:36:30.280
Don, next question.
00:36:31.640 --> 00:36:32.473
Thank you.
00:36:32.473 --> 00:36:33.700
And next, we're going to the line
00:36:33.700 --> 00:36:35.970
of David Baker, Bloomberg News.
00:36:35.970 --> 00:36:36.803
Please go ahead.
00:36:38.350 --> 00:36:39.190
Yes, thanks.
00:36:39.190 --> 00:36:40.830
Just sort of a nuts and bolts question
00:36:40.830 --> 00:36:42.470
to follow up on that last one.
00:36:42.470 --> 00:36:45.040
You had mentioned earlier
in the press conference
00:36:45.040 --> 00:36:47.940
that you're gonna have
56% more power reserves
00:36:47.940 --> 00:36:49.653
for August than last year.
00:36:50.714 --> 00:36:51.547
Could you just put that in terms
00:36:51.547 --> 00:36:53.893
of megawattage for comparison?
00:36:57.740 --> 00:36:59.530
So I'll give you some numbers
00:36:59.530 --> 00:37:00.750
to work off of.
00:37:00.750 --> 00:37:02.650
So in the past, we have operated
00:37:02.650 --> 00:37:04.660
with roughly about 5,000 megawatts
00:37:04.660 --> 00:37:05.660
across the peak.
00:37:05.660 --> 00:37:09.700
This is 5,000 megawatts
that are not committed
00:37:09.700 --> 00:37:11.390
to serving energy in the market.
00:37:11.390 --> 00:37:15.500
So they are 5,000 of
additional reserve megawatts.
00:37:15.500 --> 00:37:16.700
So where we operated in the past,
00:37:16.700 --> 00:37:20.210
we began operating in early June
00:37:20.210 --> 00:37:24.650
with 6,500 megawatts across peak.
00:37:24.650 --> 00:37:26.890
In addition to setting
that minimum amount
00:37:26.890 --> 00:37:29.760
of generation that we will operate to,
00:37:29.760 --> 00:37:33.980
we have also purchased an
additional 1,500 megawatts
00:37:33.980 --> 00:37:35.750
of ancillary services in the form
00:37:35.750 --> 00:37:37.450
of what we call non-spin.
00:37:37.450 --> 00:37:40.480
And we are purchasing 500 megawatts
00:37:40.480 --> 00:37:42.500
of additional ancillary services
00:37:42.500 --> 00:37:45.680
in a separate category
called responsive reserves.
00:37:45.680 --> 00:37:49.310
So all total, we're bringing
2,000 megawatts on
00:37:49.310 --> 00:37:51.800
in our ancillary service categories,
00:37:51.800 --> 00:37:55.170
as well as making
sure that we have 6,500
00:37:55.170 --> 00:37:57.440
across those peak times.
00:37:57.440 --> 00:37:58.660
One last thing I would say
00:37:58.660 --> 00:38:01.050
is that we are also making sure now
00:38:01.050 --> 00:38:04.360
that we can release
those ancillary services
00:38:04.360 --> 00:38:05.820
to the market quicker.
00:38:05.820 --> 00:38:07.700
In the past, we had, by rule,
00:38:07.700 --> 00:38:09.970
we had to hold onto those longer.
00:38:09.970 --> 00:38:11.700
Now we'll be releasing those
00:38:11.700 --> 00:38:14.590
to the market quicker
to maintain reliability.
00:38:14.590 --> 00:38:16.630
And I'll also make
00:38:16.630 --> 00:38:19.820
an important note that previously,
00:38:19.820 --> 00:38:22.610
ancillary services, the
amount of ancillary services
00:38:23.470 --> 00:38:25.920
set to be procured on a certain date
00:38:25.920 --> 00:38:27.830
was set a year in advance.
00:38:27.830 --> 00:38:29.770
And when we say we're
doing business differently,
00:38:29.770 --> 00:38:32.350
that process has been changed
00:38:32.350 --> 00:38:34.813
so that now ancillary services,
00:38:35.840 --> 00:38:39.110
the amount of reserves being procured
00:38:39.110 --> 00:38:40.940
is set not only based on
00:38:40.940 --> 00:38:44.140
the historic anticipated need,
00:38:44.140 --> 00:38:46.460
but also on real-time conditions.
00:38:46.460 --> 00:38:47.460
Good, thank you, Chairman.
00:38:47.460 --> 00:38:49.650
One of the changes that we've made
00:38:49.650 --> 00:38:52.960
is when we see uncertain
weather conditions
00:38:52.960 --> 00:38:55.160
in the grid, and let me
give you an example.
00:38:56.360 --> 00:38:57.640
A few Mondays ago,
00:38:57.640 --> 00:39:00.980
we expected a weather
front to come through Dallas.
00:39:00.980 --> 00:39:02.650
That weather front was expected to rain
00:39:02.650 --> 00:39:05.120
about three o'clock in the afternoon.
00:39:05.120 --> 00:39:08.030
So our models showed that Dallas load
00:39:08.030 --> 00:39:10.840
was dropping by roughly
about 2,000 megawatts
00:39:10.840 --> 00:39:12.310
because of the rain.
00:39:12.310 --> 00:39:15.130
And behind the front,
we had wind picking up
00:39:15.130 --> 00:39:17.380
by another two to 3,000 megawatts.
00:39:17.380 --> 00:39:22.023
So a 5,000 megawatt
delta in our forecast.
00:39:23.140 --> 00:39:25.570
If we had failed.
00:39:25.570 --> 00:39:27.230
And in fact, we were exactly right
00:39:27.230 --> 00:39:28.063
on our forecast.
00:39:28.063 --> 00:39:29.640
But if we had failed,
00:39:29.640 --> 00:39:32.670
and even by two hours
had missed when that front
00:39:32.670 --> 00:39:34.360
came through Dallas,
00:39:34.360 --> 00:39:35.610
that front would have still been
00:39:35.610 --> 00:39:37.150
to the west of Dallas.
00:39:37.150 --> 00:39:38.530
It would have been hot in Dallas,
00:39:38.530 --> 00:39:41.050
so higher load in the Dallas area.
00:39:41.050 --> 00:39:43.040
The wind would have been less out west
00:39:43.040 --> 00:39:44.750
because the front had not cleared
00:39:44.750 --> 00:39:46.610
the western part of our state.
00:39:46.610 --> 00:39:48.330
That 5,000 megawatt difference
00:39:48.330 --> 00:39:51.090
could have had a
significant impact on us.
00:39:51.090 --> 00:39:54.560
So when we see uncertain
weather conditions
00:39:54.560 --> 00:39:57.130
that can change our
forecast dramatically,
00:39:57.130 --> 00:39:58.730
as I've expressed to you,
00:39:58.730 --> 00:40:02.160
we will be buying even
more ancillary services
00:40:02.160 --> 00:40:03.500
than what we're currently doing.
00:40:03.500 --> 00:40:04.840
So we'll go to the market,
00:40:04.840 --> 00:40:07.450
we'll pull in up to 1,500 megawatts
00:40:07.450 --> 00:40:09.930
of additional ancillary services.
00:40:09.930 --> 00:40:11.010
The bottom line
00:40:11.010 --> 00:40:14.420
is we're doing business differently.
00:40:14.420 --> 00:40:16.630
Margin of safety and
abundance of caution.
00:40:16.630 --> 00:40:17.790
And for the first time ever,
00:40:17.790 --> 00:40:20.150
ERCOT is taking into account
00:40:20.150 --> 00:40:22.630
real-time conditions in establishing
00:40:22.630 --> 00:40:24.310
the amount of reserves we need
00:40:24.310 --> 00:40:26.237
going into each and every day.
00:40:27.641 --> 00:40:29.443
[Man In Black Suit] Okay,
Don, next question, please.
00:40:30.350 --> 00:40:31.183
Thank you.
00:40:31.183 --> 00:40:32.570
And next, we're going to the line
00:40:32.570 --> 00:40:35.653
of Adela Uchida from CBS Austin.
00:40:37.990 --> 00:40:40.000
So good morning, everyone.
00:40:40.000 --> 00:40:41.600
My question to you.
00:40:41.600 --> 00:40:43.355
Sorry, I'm outside.
00:40:43.355 --> 00:40:44.188
(Brad laughs)
00:40:44.188 --> 00:40:45.850
You talked earlier during
the press conference
00:40:45.850 --> 00:40:46.950
about weatherization.
00:40:46.950 --> 00:40:51.020
I wanna know when
weatherization will be complete.
00:40:51.020 --> 00:40:53.780
If everyday Texans next winter
00:40:53.780 --> 00:40:57.207
would be able to say, "I
can depend on my grid?"
00:40:58.100 --> 00:40:59.820
And what about the natural gas plants
00:40:59.820 --> 00:41:02.163
that lost power during
the February blackout?
00:41:03.219 --> 00:41:04.513
As for weatherization,
the first phase
00:41:04.513 --> 00:41:06.650
that I referenced
earlier will be completed
00:41:06.650 --> 00:41:07.483
by this winter.
00:41:07.483 --> 00:41:09.610
The second phase will be implemented
00:41:09.610 --> 00:41:11.560
starting this fall
00:41:11.560 --> 00:41:15.800
and going throughout the next 12 months.
00:41:15.800 --> 00:41:18.800
As for natural gas,
I'd have to refer you to.
00:41:18.800 --> 00:41:20.370
I mean, the efforts,
00:41:20.370 --> 00:41:22.230
we're working with the
Railroad Commission on
00:41:22.230 --> 00:41:25.060
to map critical infrastructure
and natural gas.
00:41:25.060 --> 00:41:28.520
But as for the broader
natural gas conversation,
00:41:28.520 --> 00:41:30.970
I'd have to refer you to
the Railroad Commission.
00:41:31.820 --> 00:41:33.050
Right,
correct, but I'm asking
00:41:33.050 --> 00:41:35.080
not necessarily about
the plants themselves,
00:41:35.080 --> 00:41:36.380
but them being designated
00:41:36.380 --> 00:41:37.800
as critical infrastructure.
00:41:37.800 --> 00:41:40.910
I understand some of them lost power
00:41:40.910 --> 00:41:42.310
during the blackout because they
00:41:42.310 --> 00:41:43.763
weren't designated as such.
00:41:44.910 --> 00:41:46.530
That's correct.
00:41:46.530 --> 00:41:49.140
At the transmission
and distribution level,
00:41:49.140 --> 00:41:52.370
that critical infrastructure designation
00:41:52.370 --> 00:41:54.190
is being corrected as we speak.
00:41:54.190 --> 00:41:56.240
Yes.
Thoughts on that?
00:41:56.240 --> 00:41:57.690
Yeah, so first of all,
00:41:57.690 --> 00:42:01.940
the PUC is starting, I
believe today, perhaps.
00:42:01.940 --> 00:42:04.063
No, I think it's next week, the 26th,
00:42:05.125 --> 00:42:08.250
the PUC is starting a
poles and wires discussion.
00:42:08.250 --> 00:42:10.490
In that discussion will be part
00:42:10.490 --> 00:42:11.730
of this discussion associated
00:42:11.730 --> 00:42:14.288
with critical infrastructure,
00:42:14.288 --> 00:42:15.580
making sure that that is signed up
00:42:15.580 --> 00:42:18.820
as critical for each of
the wires companies.
00:42:18.820 --> 00:42:21.080
In addition to that effort, though,
00:42:21.080 --> 00:42:25.283
there were some loads
that were participating.
00:42:26.424 --> 00:42:27.670
By loads, I mean, for example,
00:42:27.670 --> 00:42:30.690
there were some gas facilities
00:42:30.690 --> 00:42:32.080
that were participating
00:42:32.080 --> 00:42:35.760
in our emergency responsive service,
00:42:35.760 --> 00:42:37.550
which means that they had participated
00:42:37.550 --> 00:42:39.460
and they received
payments for their willingness
00:42:39.460 --> 00:42:40.800
to shut off.
00:42:40.800 --> 00:42:43.460
We found out later
that some of those loads
00:42:43.460 --> 00:42:47.650
were actually critical for gas supply.
00:42:47.650 --> 00:42:49.940
And so now, just on this last Monday,
00:42:49.940 --> 00:42:52.670
we have offered up a rule change
00:42:52.670 --> 00:42:54.990
to the market that will require
00:42:54.990 --> 00:42:57.760
every load participating
in both our ERS,
00:42:57.760 --> 00:43:00.460
which is emergency responsive service,
00:43:00.460 --> 00:43:03.180
and our load responsive
service, both categories,
00:43:03.180 --> 00:43:06.650
we will require that
load to attest to us
00:43:06.650 --> 00:43:09.543
that they are not a
critical service load.
00:43:11.597 --> 00:43:12.479
[Man In Black Suit]
Okay, thank you.
00:43:12.479 --> 00:43:14.531
Don, next question, please.
00:43:14.531 --> 00:43:15.394
Thank you.
00:43:15.394 --> 00:43:16.490
And next, we're going to the line
00:43:16.490 --> 00:43:19.913
of Vince Sims, NBC 5 Dallas-Fort Worth.
00:43:21.370 --> 00:43:22.203
Yes, good morning.
00:43:22.203 --> 00:43:23.790
I think earlier you did talk about
00:43:23.790 --> 00:43:25.620
the summer spot checks
that you were doing
00:43:25.620 --> 00:43:27.250
in regards to that and
gave some information.
00:43:27.250 --> 00:43:28.540
If you could again say for us
00:43:28.540 --> 00:43:31.110
what these summer spot
checks were looking at,
00:43:31.110 --> 00:43:32.370
how many of these you did
00:43:32.370 --> 00:43:33.960
and what was found through this?
00:43:33.960 --> 00:43:35.220
Were there any issues
00:43:35.220 --> 00:43:37.260
or any of the plants down through this?
00:43:37.260 --> 00:43:39.680
So throughout the
30, more than 31 units
00:43:39.680 --> 00:43:42.840
that we inspected,
we reviewed their plans
00:43:42.840 --> 00:43:44.190
for summer preparedness,
00:43:44.190 --> 00:43:46.540
and we also were able to translate
00:43:46.540 --> 00:43:48.510
best practices that we have learned
00:43:48.510 --> 00:43:49.840
from other facilities.
00:43:49.840 --> 00:43:51.330
So we were able to communicate with them
00:43:51.330 --> 00:43:53.600
to review that they've met their own
00:43:53.600 --> 00:43:55.270
emergency operation plans,
00:43:55.270 --> 00:43:57.653
as well as improved those plans overall.
00:44:00.800 --> 00:44:01.633
[Man In Black Suit] Good.
00:44:01.633 --> 00:44:02.466
Don, can you give us
the next question, please?
00:44:02.466 --> 00:44:03.730
And also, Don, can you tell us
00:44:03.730 --> 00:44:05.480
how many more callers are in queue?
00:44:06.380 --> 00:44:08.378
That was the
final question in queue.
00:44:08.378 --> 00:44:10.090
Well, wonderful.
00:44:10.090 --> 00:44:12.170
Well, that concludes our broadcast day.
00:44:12.170 --> 00:44:13.850
So I wanna thank
everybody for being here
00:44:13.850 --> 00:44:15.820
and I wanna thank you both for the time,
00:44:15.820 --> 00:44:17.470
and have a lovely day.
00:44:17.470 --> 00:44:19.070
This concludes our conversation.
00:44:24.960 --> 00:44:25.793
Director.
00:44:27.244 --> 00:44:28.476
There we go.
00:44:28.476 --> 00:44:30.470
(man mumbles)
00:44:30.470 --> 00:44:31.387
Oh.