WEBVTT
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(gavel bangs)
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The meeting of the Public
Utility Commission of Texas
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will come to order to consider matters
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have been duly posted
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with the Secretary of State of Texas
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for August 26th, 2021.
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For the record, my name is Peter Lake.
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And with me today, Will
McAdams, Lori Cobos,
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and Jimmy Glotfelty.
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To get started,
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a brief logistics announcement,
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our next work session will
cover demand response.
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That will be in mid September.
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I know there was a lot
of comments this time
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on demand response,
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so appreciate it if you'll
hold your thoughts on that
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during this conversation
and save those comments
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for the dedicated work
session on demand response.
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And I know we'll be providing guidance
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part of the calendar next week
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for that demand response conversation
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in that work session.
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I think in general,
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our market's got a pretty well-developed
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commercial industrial and
transmission level demand response
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that of course,
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there's always something
we can improve on
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and we'll look forward
to suggestions there,
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there's a big unknown
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in the residential demand response world
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which have many of you highlighted.
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I look forward to hearing about that.
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Mechanics will come out next week,
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but I will also remind
folks that it would be very,
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very helpful to know
what demand response
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in the residential world
is already happening.
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So we can get a better sense
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of how much is being
addressed by market forces,
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where you of course
don't want to jump in
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and regulate something
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if market forces are
already solving the problem.
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So we'll,
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we will be grateful for
any and all information
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related to current
demand response activities,
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and level demand response
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in residential places going forward.
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Before we dive into
today's full business,
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I will first of all want to thank
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the stakeholders who
provided constructive,
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creative comments
as part of this exercise.
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Many of you,
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showed up in good faith
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and provided valuable input.
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You know who you are,
thank you very much.
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We're tackling an enormous challenge.
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And so we need and
appreciate all the help and insight
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we can get.
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And I think we're all grateful for the
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the people that showed up in good faith.
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There was another
subset of comments that
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primarily focused on preserving profits
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and incumbent business models.
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There is nothing in Senate Bill 2,
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or Senate Bill 3,
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about protecting businesses
or incumbent business models.
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As you know,
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it's very much related
to improving reliability
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and accountability for
the Texas power grid.
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So we will appreciate going forward,
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focusing on truly constructive changes.
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We don't need comments telling us
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that this crisis based business model
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is just fine and we
don't need any changes.
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You can save your breath.
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It's not the direction we
got from the legislature.
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And it's certainly not the changes
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that the people of Texas are demanding.
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With that we will move to
the public comment portion
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of this meeting.
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Invited oral testimony related
to a specific agenda item
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will be heard when
that item is taken up.
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This is for general comments
related to today's agenda.
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Do we have any public comment?
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We're not doing that for work sessions.
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I don't think so.
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We're focused on ERCOT
design features today.
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So unless you all, any
the rest of the Commission,
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has a desire to take up items
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one through three, five
through nine, 11 or 21,
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I think we can go ahead
and table those work.
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All right.
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It brings us to item number four.
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We'll bring up our first panel.
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Woody Rickerson, Kanun
Ottoman, and Barbara Clemenhagen.
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Good morning.
Good morning.
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Woody, looks
like you're up first.
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I believe
Woody's up first.
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I'm up first? All right.
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So on July 9th,
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we ERCOT sent a list of
ERCOT reliability initiatives
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to the PUC.
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I think it's been referred
to as ERCOT's wishlist.
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So what I'm gonna cover this morning
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are a four or five slides.
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We kind of break those
down into some categories
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and then we'll go over those.
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So this is all based on
that July 9th memorandum.
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So starting off with the first
group is market concepts.
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First of all, an item there
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is evaluate market design changes
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that would result in an
appropriate planning reserve margin.
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I think that's probably
the most important
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from a reliability perspective,
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having an appropriate
planning reserve margin,
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a big enough planning reserve margin
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is probably the most
important thing we have
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from a market design,
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gotta have a market that gives
us a planning reserve margin
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that ensures reliability.
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We've got studies that show
that a correlation between
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you know, 15, 16% reserve margin
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and a loss of load of
once in every 10 years.
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And as that reserve margin goes up,
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the loss of load
potential stretches out.
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If it's less than that,
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it's less than once
every 10 years and so.
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That's definitely a correlation
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that we're very interested in
from a reliability standpoint.
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So that's the first thing.
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And on any of these, if you
guys, you know, questions,
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we can stop and talk.
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On that Woody. Okay.
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This is gonna be a good day.
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I've been looking forward
to it all week. Okay.
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(people laughing)
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You're saying this is
more fun than security?
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It's much more fun.
(people laughing)
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I'll agree with that.
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Yeah.
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As it, can you
define for the record
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and for the Commission,
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because there's some
history behind the statement
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of a planning reserve margin.
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ERCOT does not have a,
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we have a target reserve margin.
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Can you explain the nuance
between what ERCOT has
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as a reserve margin
and the rest of the country
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and kind of how they
envisioned reserve margins?
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Well, they built
a reserve margin.
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We let the market
provide the reserve margin.
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Okay.
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(crosstalk)
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Right.
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So in terms of
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we try to provide a reserve margin.
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What feeds into that?
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Well, all the
generation online,
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Yup.
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that's synchronized with
the grid feeds into that.
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The complexity comes
from how do you count wind,
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what percentage,
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wind in the panhandle is
different from wind on the coast.
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So if it's a hundred megawatt
wind farm in the panhandle,
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what percentage do you count
of that for the reserve margin.
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Solar,
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same kind of concerns
during the, you know,
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what kind of, how does that
count toward the reserve margin?
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It's different for a
summer reserve margin
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when solar is a really
strong contributor.
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A winter reserve
margin, not as strong
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because the peaks usually occur outside
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of strong solar hours.
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So all those things are part of that.
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Is there a different
planning reserve margin
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for the fall and the
spring versus that summer
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and a winter evaluation
that we go through?
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There's not, is there?
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There's not a
different reserve margin,
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but we count them
differently in the CDR.
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Okay.
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So would you say,
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is it fair to say that there's kind of a
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a quasi reserve margin that you sort of,
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you as an operator
sort of have in your mind
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in those periods?
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Well, I mean
when we look at studies,
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the studies will correlate
a reserve margin
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to a loss of load potential.
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Right.
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And, you know, in past summers,
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when we've been down really low,
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we've had a loss of load
potential of one server.
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I think it end once every two years,
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you could expect from
a statistics standpoint,
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a loss of load event
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and a loss of load, we
mean a grid size loss of load.
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That's Statewide
load shed lights go out
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every other year.
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Right.
Under that.
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That's the
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statistically,
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that was what the
studies would show, yes.
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That's not what
we're aiming for, right?
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That's the point of this exercise.
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That's why that's
probably the first, you know,
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that a reserve margin
is the first bullet
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on this presentation too,
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because I think from
a reliability standpoint,
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that reserve margin is really the,
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what we're driving for.
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So you mentioned
it's incorporated
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related to Will's question
the CDR, that's a,
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I guess, a long
lead time analysis.
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How do,
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how do we or should we
incorporate real time conditions?
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Say for example, the zero
wind days we had in June
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or into that reserve margin analysis.
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Right.
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So that's actually in
the second bullet there
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is a, you know, improve,
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whatever market design
would come up with,
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we wanna improve incentives
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for the attraction retention of flexible
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and dispatchable resources.
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So, you know,
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as we continue to interconnect
inverter based resources,
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it's important we
maintain a fleet of flexible
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and dispatchable units
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and having a market that
has some incentives for those
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is important.
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There's a couple upcoming studies
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that we're gonna have to,
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we're gonna be releasing
that with detail, you know,
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what levels are
necessary for reliability.
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And also, a follow-up
study that will detail
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what kind of funding,
00:10:18.190 --> 00:10:20.880
what kind of market design
is necessary to attract those
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and make those viable.
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What level of dispatchable.
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Right.
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And how do
you define dispatchable?
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Dispatchable would be
that when we call on them
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that they can respond
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Does that
include batteries?
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Right.
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Yes.
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Of a certain hour duration?
00:10:39.380 --> 00:10:42.528
I charged batteries
dispatchable. So yeah.
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(people laughing)
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But do you all have a view
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on two hour, four hour, six hour,
00:10:50.210 --> 00:10:53.750
eight hour duration batteries yet?
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I mean, you may not have that yet but
00:10:55.180 --> 00:10:58.690
So we do have four
different ancillary services
00:10:58.690 --> 00:11:00.023
that are requirements.
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We, we just don't have enough right now.
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We're not, we don't
have a requirement
00:11:06.660 --> 00:11:08.140
that if you install a battery ERCOT,
00:11:08.140 --> 00:11:09.830
it's an eight hour discharge battery
00:11:09.830 --> 00:11:10.850
or a one hour discharge,
00:11:10.850 --> 00:11:12.390
there's no requirement that way.
00:11:12.390 --> 00:11:15.434
What we do is we take what people,
00:11:15.434 --> 00:11:17.340
what companies bring to us,
00:11:17.340 --> 00:11:18.860
and we incorporate them into the system
00:11:18.860 --> 00:11:20.670
wherever they fit.
00:11:20.670 --> 00:11:22.640
So there's not a requirement now,
00:11:22.640 --> 00:11:24.220
now that certainly could be
00:11:24.220 --> 00:11:26.900
a market design feature
00:11:26.900 --> 00:11:29.300
that there's an incentive
for a 10-hour battery,
00:11:29.300 --> 00:11:31.670
eight-hour battery,
or something else.
00:11:31.670 --> 00:11:33.463
And that's certainly something
that could be incorporated,
00:11:33.463 --> 00:11:35.060
but that's not something we have today.
00:11:35.060 --> 00:11:36.880
Got it. So let
me go back and ask,
00:11:36.880 --> 00:11:39.720
do you believe that a battery
00:11:39.720 --> 00:11:41.860
is considered dispatchable resource?
00:11:41.860 --> 00:11:42.693
Yes.
00:11:42.693 --> 00:11:43.800
Okay, thanks.
00:11:43.800 --> 00:11:45.800
Worth noting that one
of the features of batteries
00:11:45.800 --> 00:11:47.450
is the modular nature.
00:11:47.450 --> 00:11:51.660
So that even 4-hour
duration can be scaled
00:11:51.660 --> 00:11:54.103
to make it 8, 10, 12 hours.
00:11:57.209 --> 00:11:58.380
And what to follow on Jimmy's question
00:11:58.380 --> 00:12:00.190
in the definition of dispatchable
00:12:00.190 --> 00:12:02.670
does compressed air energy storage,
00:12:02.670 --> 00:12:05.840
pumped hydro co-located
with other resources.
00:12:05.840 --> 00:12:09.140
With that counter, is
that in play in Texas yet?
00:12:09.140 --> 00:12:11.010
We don't have
any of that in play yet.
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It could count.
00:12:12.137 --> 00:12:13.183
And I should back up a little bit.
00:12:13.183 --> 00:12:14.550
I said, I charged battery,
00:12:14.550 --> 00:12:18.170
I guess, charging a battery is
also a dispatchable resource.
00:12:18.170 --> 00:12:21.243
So it's a load resource at that point.
00:12:22.714 --> 00:12:23.696
So what do you,
00:12:23.696 --> 00:12:24.780
let me ask you a question real quick.
00:12:24.780 --> 00:12:27.423
Do you currently count
batteries in your CDR report?
00:12:29.450 --> 00:12:31.340
God, you got
me on the spot there.
00:12:31.340 --> 00:12:32.372
I know we are begin,
00:12:32.372 --> 00:12:34.316
there's talk on how to do that.
00:12:34.316 --> 00:12:36.754
I don't think it's in there yet,
00:12:36.754 --> 00:12:40.073
but that is part of what's
being considered at this point.
00:12:40.073 --> 00:12:41.900
Just for background purposes
00:12:41.900 --> 00:12:44.277
and for whoever's
watching from the public,
00:12:44.277 --> 00:12:47.200
what is currently
counted in the CDR report
00:12:47.200 --> 00:12:48.800
and what are the
requirements to be counted
00:12:48.800 --> 00:12:51.193
in the CDR report for those resources?
00:12:53.240 --> 00:12:54.073
Well.
00:12:54.073 --> 00:12:55.950
What type of resources
are currently included
00:12:55.950 --> 00:12:56.917
in the CDR report?
00:12:56.917 --> 00:12:57.750
And what are the requirements
00:12:57.750 --> 00:13:00.330
for those resources to
be included in your report?
00:13:00.330 --> 00:13:04.113
Nuclear fuel, coal fuel,
gas fuel, diesel fueled,
00:13:04.113 --> 00:13:08.050
any kind of thermal
generation is counted.
00:13:08.050 --> 00:13:09.473
Wind generation is counted,
00:13:11.650 --> 00:13:13.700
solar generation.
00:13:13.700 --> 00:13:15.250
If batteries aren't
counted at this point,
00:13:15.250 --> 00:13:16.573
they will be shortly.
00:13:21.460 --> 00:13:22.603
Load resources.
00:13:23.500 --> 00:13:25.280
What are the
requirements that have to be met
00:13:25.280 --> 00:13:26.710
to be counted in the CDR report?
00:13:26.710 --> 00:13:27.543
Well anything
00:13:27.543 --> 00:13:30.240
that's currently synchronized
to the system is counted.
00:13:30.240 --> 00:13:31.820
And then if you're
looking into future years,
00:13:31.820 --> 00:13:34.920
they have to meet certain
planning guide requirements.
00:13:34.920 --> 00:13:37.030
But my understanding
is that currently,
00:13:37.030 --> 00:13:39.213
if resource counted in the CDR report,
00:13:39.213 --> 00:13:41.740
you have to have an air
permit if you need one.
00:13:41.740 --> 00:13:44.390
Water rights
certification, if you need it,
00:13:44.390 --> 00:13:45.940
and an interconnection agreement.
00:13:45.940 --> 00:13:46.773
Right,
00:13:46.773 --> 00:13:47.850
those are the planning
guide requirements.
00:13:47.850 --> 00:13:49.560
So, for
renewable generation,
00:13:49.560 --> 00:13:50.710
all you really need to have
00:13:50.710 --> 00:13:52.310
is an interconnection agreement.
00:13:54.810 --> 00:13:56.640
There are some
planning guide requirements
00:13:56.640 --> 00:13:58.447
for solar and wind as well.
00:13:58.447 --> 00:14:00.693
I mean, we have a lot of generation.
00:14:00.693 --> 00:14:02.083
Wind and solar generation
00:14:02.083 --> 00:14:03.690
that are at different stages
00:14:03.690 --> 00:14:06.920
of the interconnection process.
00:14:06.920 --> 00:14:09.590
And when they reach a certain level,
00:14:09.590 --> 00:14:13.300
then they are able
to be part of the CDR.
00:14:13.300 --> 00:14:14.730
And at that level,
00:14:14.730 --> 00:14:16.440
will all of it get built?
00:14:16.440 --> 00:14:18.129
Or is there a certain percentage
00:14:18.129 --> 00:14:20.377
that ERCOT factors in will get built.
00:14:20.377 --> 00:14:22.993
Once it reaches that
level, we count all of it.
00:14:24.090 --> 00:14:25.640
But does all of it
actually get built?
00:14:25.640 --> 00:14:27.660
For the most part,
I think it does. Yes.
00:14:27.660 --> 00:14:28.720
Okay.
00:14:28.720 --> 00:14:29.553
'Cause I think when we look
00:14:29.553 --> 00:14:31.130
We tried to set
that level to the point
00:14:31.130 --> 00:14:33.220
where it was a pretty sure thing.
00:14:33.220 --> 00:14:34.053
Right.
00:14:34.053 --> 00:14:35.340
I think that's important to understand
00:14:35.340 --> 00:14:37.570
because you know the
planning reserve margin,
00:14:37.570 --> 00:14:40.070
you know, large planning reserve margins
00:14:40.070 --> 00:14:41.130
that we're expecting to have,
00:14:41.130 --> 00:14:43.090
but baked into the
planning reserve margins
00:14:43.090 --> 00:14:45.663
are renewable generation,
00:14:46.519 --> 00:14:47.960
that seems to just need an IA
00:14:47.960 --> 00:14:49.440
and maybe some planning requirements
00:14:49.440 --> 00:14:50.870
that may or may not get built,
00:14:50.870 --> 00:14:53.020
but it sounds like a good
percentage of it will get built
00:14:53.020 --> 00:14:55.063
based on your <v
Woody>Right.
00:14:55.063 --> 00:14:58.055
But then as you look at
the planning reserve margin,
00:14:58.055 --> 00:14:59.850
you know, what can he
actually count on to be there?
00:14:59.850 --> 00:15:02.650
So that was gonna
go to my question is
00:15:02.650 --> 00:15:06.320
so right now we're
sitting at 15 plus percent.
00:15:06.320 --> 00:15:08.821
So, and in the future,
according to the CDR,
00:15:08.821 --> 00:15:11.513
it's gonna go up exponentially a lot.
00:15:13.270 --> 00:15:14.910
But in that is,
00:15:14.910 --> 00:15:17.130
is your variable resource calculation
00:15:17.130 --> 00:15:18.600
and how that's accounted for.
00:15:18.600 --> 00:15:23.120
So as we move forward
and you may think about,
00:15:23.120 --> 00:15:25.310
again, that target
reserve margin
00:15:25.310 --> 00:15:27.795
that we try to build up to again,
00:15:27.795 --> 00:15:30.260
other ISO's set theirs like,
00:15:30.260 --> 00:15:32.620
and everybody else has
got to bring up their resources
00:15:32.620 --> 00:15:34.340
to comply with that.
00:15:34.340 --> 00:15:36.400
If that's kind of what
we're talking about,
00:15:36.400 --> 00:15:39.340
what is baked into it
and how do we bake it in?
00:15:39.340 --> 00:15:41.940
Well, and what component
of it, I know ERCOT
00:15:41.940 --> 00:15:43.878
It looks at the capacity
factor like you were just saying
00:15:43.878 --> 00:15:45.503
for wind and, you know,
00:15:45.503 --> 00:15:47.720
Gulf coast area versus panhandle wind,
00:15:47.720 --> 00:15:49.170
solar, different parts of, you know,
00:15:49.170 --> 00:15:50.850
different times of the
year, different seasons,
00:15:50.850 --> 00:15:53.210
but maybe it's worth
kind of zooming in on that
00:15:53.210 --> 00:15:54.890
to make sure we're
doing that appropriately
00:15:54.890 --> 00:15:55.897
on a seasonal basis,
00:15:55.897 --> 00:15:57.880
different locations
throughout the state,
00:15:57.880 --> 00:16:00.500
because if it's being baked
into the reserve margin,
00:16:00.500 --> 00:16:03.150
gotta make sure that we
have a real realistic picture
00:16:03.150 --> 00:16:04.540
of what were gonna to expect to have.
00:16:04.540 --> 00:16:07.550
And not on average with her
00:16:07.550 --> 00:16:08.760
Exactly
Or just skydiving.
00:16:08.760 --> 00:16:11.060
In the universe that we live in.
00:16:11.060 --> 00:16:12.730
And it might be
helpful, you know,
00:16:12.730 --> 00:16:13.610
I guess at what point,
00:16:13.610 --> 00:16:16.370
what ERCOT include
battery storage in the CDR,
00:16:16.370 --> 00:16:19.320
does it have to reach a
certain megawatt level?
00:16:19.320 --> 00:16:20.153
So we can, you know,
00:16:20.153 --> 00:16:23.660
as we have more and more
battery storage in or the market,
00:16:23.660 --> 00:16:26.000
you know, how should
we be accounting it
00:16:26.000 --> 00:16:28.030
for it in the CDR report?
00:16:28.030 --> 00:16:28.863
And also,
00:16:28.863 --> 00:16:32.630
should we be looking at
dispatchable generations differently
00:16:32.630 --> 00:16:34.380
within the CDR report
00:16:35.530 --> 00:16:38.130
and reflected in the
planning reservoirs?
00:16:38.130 --> 00:16:41.160
Yeah one of the
things you see sometimes is
00:16:41.160 --> 00:16:42.270
you might see a future year
00:16:42.270 --> 00:16:45.270
with a certain number of
plants that are gonna be built.
00:16:45.270 --> 00:16:46.580
And then we get to that future year.
00:16:46.580 --> 00:16:50.160
And some of those plants
have moved out a year
00:16:50.160 --> 00:16:52.020
and you see a peak bumping out
00:16:52.020 --> 00:16:53.010
from one year to the next.
00:16:53.010 --> 00:16:54.360
That doesn't mean
they're not going to be built.
00:16:54.360 --> 00:16:56.100
It just means that the initial estimate
00:16:56.100 --> 00:16:57.446
of when they were going to be built,
00:16:57.446 --> 00:16:59.810
they may get pushed out further.
00:16:59.810 --> 00:17:02.010
And so there may be
some changes we can make
00:17:04.373 --> 00:17:06.660
to maybe provide more
clarity there or something.
00:17:06.660 --> 00:17:10.130
And the
other side of the coin
00:17:10.130 --> 00:17:11.360
that you're talking about Lori
00:17:11.360 --> 00:17:14.810
is what the ice ford curves show
00:17:14.810 --> 00:17:17.883
is unlike most futures
curves that increase over time.
00:17:19.030 --> 00:17:22.140
Our current forward curves
over the next few years,
00:17:22.140 --> 00:17:27.510
ERCOT decrease in
value, which is of course
00:17:27.510 --> 00:17:29.290
a tremendous challenge for anybody who
00:17:29.290 --> 00:17:31.760
wants to bring new dispatchable power
00:17:31.760 --> 00:17:32.970
on there's no,
00:17:32.970 --> 00:17:37.290
there's literally no
market for revenues,
00:17:37.290 --> 00:17:39.220
which is part of the problem.
00:17:39.220 --> 00:17:42.700
And of course we want
the right kind of investment
00:17:42.700 --> 00:17:44.150
in our power fleet, but that's just,
00:17:44.150 --> 00:17:45.700
it's another version of
what you're talking about.
00:17:45.700 --> 00:17:49.270
People see that
increasing reserve margin
00:17:50.212 --> 00:17:51.690
and under the current construct,
00:17:51.690 --> 00:17:54.610
there's no rep no way to
generate revenue for dispatchable,
00:17:54.610 --> 00:17:57.170
as you can see that in the ice curves.
00:17:57.170 --> 00:17:58.267
Economically.
00:17:58.267 --> 00:18:01.350
So what are you, on that note
00:18:01.350 --> 00:18:05.633
from your view as an Operator,
00:18:06.920 --> 00:18:08.800
come next winter,
00:18:08.800 --> 00:18:10.980
again we will have gone through a summer
00:18:10.980 --> 00:18:15.431
of having a fair amount
of batteries on grid
00:18:15.431 --> 00:18:18.205
interacting within your system.
00:18:18.205 --> 00:18:20.367
Do you believe that you'll have
00:18:20.367 --> 00:18:22.180
and it may not be baked into the CDR,
00:18:22.180 --> 00:18:23.870
but from an operator perspective,
00:18:23.870 --> 00:18:26.320
you're gonna have something in mind,
00:18:26.320 --> 00:18:28.770
some view of how they will interact
00:18:28.770 --> 00:18:31.783
for the purposes of the winter season.
00:18:34.532 --> 00:18:37.460
And then is from your knowledge
00:18:37.460 --> 00:18:39.690
of staff considerations,
00:18:39.690 --> 00:18:43.660
will we have a better
foundation to build in batteries?
00:18:43.660 --> 00:18:46.140
So we ultimately as a regulator,
00:18:46.140 --> 00:18:49.190
can see a percentage of the CDR now
00:18:49.190 --> 00:18:51.630
going to dispatchable battery generation
00:18:53.020 --> 00:18:54.450
so that we can account for it
00:18:54.450 --> 00:18:57.820
in our consideration of
your target reserve margins.
00:18:57.820 --> 00:18:59.000
Well,
00:18:59.000 --> 00:19:01.294
as of December of this year,
00:19:01.294 --> 00:19:03.970
we will have changed our systems
00:19:03.970 --> 00:19:05.444
so that we can incorporate batteries.
00:19:05.444 --> 00:19:06.277
Right.
00:19:06.277 --> 00:19:07.667
So that's a major step.
00:19:07.667 --> 00:19:10.590
That's been a three-year effort
00:19:10.590 --> 00:19:14.653
to modify systems so that
we're ready for batteries.
00:19:16.850 --> 00:19:20.880
As far as the winter of 2022, 2023,
00:19:20.880 --> 00:19:24.090
I don't think batteries are gonna be
00:19:24.090 --> 00:19:25.669
a major player.
00:19:25.669 --> 00:19:26.502
Okay.
00:19:26.502 --> 00:19:28.490
There's just not enough hours,
00:19:28.490 --> 00:19:31.140
megawatt hours of energy there yet.
00:19:31.140 --> 00:19:31.973
When you think about,
00:19:31.973 --> 00:19:34.440
if we think about a Uri type event
00:19:34.440 --> 00:19:35.820
and you think about batteries
00:19:35.820 --> 00:19:39.463
having the ability to contribute four,
00:19:40.549 --> 00:19:41.393
10, 12 hours,
00:19:41.393 --> 00:19:44.820
I mean, that's still
useful on some days,
00:19:44.820 --> 00:19:47.450
certainly useful on a summer afternoon
00:19:47.450 --> 00:19:50.120
when we have scarcity conditions,
00:19:50.120 --> 00:19:52.200
but for a Uri type of winter event
00:19:52.200 --> 00:19:54.770
that lasts multiple days,
00:19:54.770 --> 00:19:57.630
there's just not enough
megawatt hours of energy
00:19:57.630 --> 00:19:58.689
available yet.
00:19:58.689 --> 00:20:01.340
It may be a few years before batteries
00:20:01.340 --> 00:20:05.200
are a real contributor,
a difference maker,
00:20:05.200 --> 00:20:06.880
during some kind of event like that.
00:20:06.880 --> 00:20:08.520
But just to
press further on that,
00:20:08.520 --> 00:20:11.060
in terms of your ability
to arrest a free-fall
00:20:11.060 --> 00:20:11.893
in generation,
00:20:11.893 --> 00:20:14.540
if something freezes
up in one part of the state
00:20:14.540 --> 00:20:18.000
or a plant trips for
some other condition,
00:20:18.000 --> 00:20:21.822
you would be able to use a
fast frequency response tool
00:20:21.822 --> 00:20:23.472
to arrest that free spot,
00:20:23.472 --> 00:20:25.810
free-fall almost instantaneously.
00:20:25.810 --> 00:20:26.643
Yes.
00:20:26.643 --> 00:20:29.415
For short duration
events that there's value.
00:20:29.415 --> 00:20:31.680
For long duration events,
00:20:31.680 --> 00:20:34.030
until there are many,
many more megawatt hours
00:20:34.030 --> 00:20:36.510
of energy installed capacity.
00:20:36.510 --> 00:20:39.280
That's just not gonna be a major player
00:20:39.280 --> 00:20:41.120
for a big long event like that.
00:20:41.120 --> 00:20:44.610
And which is really what
planning reserves and CDRs
00:20:44.610 --> 00:20:46.480
and stuff are looking at
00:20:46.480 --> 00:20:50.417
is kind of a steady state
long duration kind of events.
00:20:50.417 --> 00:20:54.270
Not those frequency
events or things like that,
00:20:54.270 --> 00:20:58.552
which batteries certainly
have a major role to play in that
00:20:58.552 --> 00:21:01.411
and will play a role in the short term.
00:21:01.411 --> 00:21:02.866
Okay.
00:21:02.866 --> 00:21:03.699
Woody,
00:21:03.699 --> 00:21:05.570
can I kind of address a broader concept?
00:21:05.570 --> 00:21:07.100
You mentioned the
planning reserve margin,
00:21:07.100 --> 00:21:09.680
and currently it's at, you
know, target reserve margin
00:21:09.680 --> 00:21:11.890
for across 13.75.
00:21:11.890 --> 00:21:14.360
Is that figure intended
00:21:14.360 --> 00:21:16.733
to meet a one in 10
reliability standard?
00:21:17.752 --> 00:21:18.923
Ah, roughly, yes.
00:21:19.910 --> 00:21:21.760
And then you said that
00:21:21.760 --> 00:21:23.310
ERCOT's latest study shows
00:21:23.310 --> 00:21:25.563
that we're actually at
a one and two-year?
00:21:26.870 --> 00:21:27.920
I said we have been down
00:21:27.920 --> 00:21:29.519
as low as that in the past.
00:21:29.519 --> 00:21:30.352
Not now.
00:21:31.270 --> 00:21:32.103
Well my understanding
00:21:32.103 --> 00:21:33.670
based on stakeholder
comments that were filed
00:21:33.670 --> 00:21:36.570
is that a report in February of 2019,
00:21:37.640 --> 00:21:39.160
almost three years ago,
00:21:39.160 --> 00:21:41.846
showed that we were at a one
00:21:41.846 --> 00:21:43.873
and two-year loss of load event.
00:21:46.400 --> 00:21:49.870
Well, when we had a
reserve margin of what was it,
00:21:49.870 --> 00:21:52.080
eight and a half or nine percent.
00:21:52.080 --> 00:21:52.913
Where we were.
00:21:52.913 --> 00:21:54.510
So would it make sense
00:21:54.510 --> 00:21:55.788
just so we could level set
00:21:55.788 --> 00:21:57.930
because this study is
about three years old
00:21:57.930 --> 00:22:01.166
to update that study,
to see where we're at,
00:22:01.166 --> 00:22:04.325
based on where we
are in the market today.
00:22:04.325 --> 00:22:05.240
And in terms of the study,
00:22:05.240 --> 00:22:08.733
is that the economically
optimal reserve margin study
00:22:08.733 --> 00:22:11.065
that kind of set that baseline down,
00:22:11.065 --> 00:22:12.753
cause it said it low.
00:22:14.387 --> 00:22:16.777
Is that kinda what, what
you had envisioned?
00:22:16.777 --> 00:22:18.443
It's a study hall by Brattle
00:22:18.443 --> 00:22:21.260
under ERCOT reliability standard.
00:22:21.260 --> 00:22:22.150
Yep.
00:22:22.150 --> 00:22:25.260
I think that's the one that
kind of establishes those tears
00:22:25.260 --> 00:22:27.780
when we get down to
economically optimal reserve margin,
00:22:27.780 --> 00:22:30.970
which is different than the
one in 10 reliability standard.
00:22:30.970 --> 00:22:31.803
Right.
00:22:31.803 --> 00:22:32.660
There's a, yeah.
00:22:32.660 --> 00:22:35.120
You just
trying to get a current
00:22:35.120 --> 00:22:36.890
loss of load probability
00:22:36.890 --> 00:22:40.491
based on today's grid posture.
00:22:40.491 --> 00:22:42.290
Is this like what it looks like today.
00:22:42.290 --> 00:22:44.470
Right, it might be helpful to,
00:22:44.470 --> 00:22:46.022
I don't know how long
that study would take,
00:22:46.022 --> 00:22:47.507
but it might be helpful
since the last study
00:22:47.507 --> 00:22:49.490
is about four years old to
see where we are today.
00:22:49.490 --> 00:22:50.970
Yeah, we're
gonna look into that.
00:22:50.970 --> 00:22:51.803
So we,
00:22:52.640 --> 00:22:54.630
We have a study
that's coming out shortly
00:22:54.630 --> 00:22:58.030
that shows that,
but that's part of that
00:22:58.963 --> 00:23:01.300
that reserve margin study
that we've been asked to do
00:23:01.300 --> 00:23:03.825
that will come out before
the end of this year,
00:23:03.825 --> 00:23:05.960
but that will they'll have
those kinds of numbers in there.
00:23:05.960 --> 00:23:06.793
That's right.
00:23:06.793 --> 00:23:07.807
That's your loss of load study.
00:23:07.807 --> 00:23:10.291
And is that an annual
process that you go through?
00:23:10.291 --> 00:23:13.031
This is actually
a special request
00:23:13.031 --> 00:23:15.483
that we're we're working on. Yeah.
00:23:16.745 --> 00:23:18.560
Okay. Great.
00:23:18.560 --> 00:23:20.760
I know you've got
a hard stop at 10:30,
00:23:20.760 --> 00:23:22.697
so keep going.
00:23:22.697 --> 00:23:24.250
Next one,
00:23:24.250 --> 00:23:26.240
develop financial incentives
for resource owners
00:23:26.240 --> 00:23:28.400
that maintain existing
or acquire new dual fuel
00:23:28.400 --> 00:23:32.083
capability onsite fuel
storage and or energy storage.
00:23:33.970 --> 00:23:34.803
For this item,
00:23:34.803 --> 00:23:37.530
the other small improvements
that ERCOT can begin
00:23:37.530 --> 00:23:41.270
like an NPRR that will
require Black Start Units
00:23:41.270 --> 00:23:43.650
to have onsite fuel.
00:23:43.650 --> 00:23:46.010
That's something that we do internally
00:23:46.010 --> 00:23:48.230
that we can work out
with market participants
00:23:48.230 --> 00:23:51.250
and that NPRR while
not filed will be shortly,
00:23:51.250 --> 00:23:54.401
but there are other broader
market considerations there
00:23:54.401 --> 00:23:59.145
that you know, dual
fuel capability onsite fuel,
00:23:59.145 --> 00:24:00.921
those certainly enhance reliability.
00:24:00.921 --> 00:24:03.450
And what, how there,
00:24:03.450 --> 00:24:05.850
what kind of incentives
are provided for that
00:24:05.850 --> 00:24:08.553
in a market design is certainly
something to think about.
00:24:10.449 --> 00:24:12.980
Establishing a minimum generation
00:24:12.980 --> 00:24:16.184
to deliverability requirement
for dispatchable generation
00:24:16.184 --> 00:24:18.460
in the transmission planning studies.
00:24:18.460 --> 00:24:21.607
So that is a rule change
that will be submitted
00:24:21.607 --> 00:24:22.993
maybe today.
00:24:25.152 --> 00:24:26.783
Dispatchable generation,
00:24:28.580 --> 00:24:30.534
what that does is it would require
00:24:30.534 --> 00:24:32.610
the dispatchable generation
and planning studies
00:24:32.610 --> 00:24:34.590
be dispatched at a minimum level,
00:24:34.590 --> 00:24:35.840
at least a minimum level.
00:24:35.840 --> 00:24:39.660
So if you have a 500
megawatt unit in a planning study
00:24:39.660 --> 00:24:43.110
and that 500 megawatt unit
causes a problem in the past,
00:24:43.110 --> 00:24:45.720
we might dispatch that
down to 300 megawatts
00:24:45.720 --> 00:24:46.690
and the problem goes away,
00:24:46.690 --> 00:24:51.090
but you lose 200 megawatts
of dispatchable megawatts.
00:24:51.090 --> 00:24:53.270
And so going forward
with those planning studies,
00:24:53.270 --> 00:24:54.700
that would be dispatched to the,
00:24:54.700 --> 00:24:58.160
at a higher level so that it would drive
00:24:58.160 --> 00:25:01.920
what would have been an
economic transmission project
00:25:01.920 --> 00:25:02.753
that you can now accept
00:25:02.753 --> 00:25:04.980
of getting that extra 200 megawatts out
00:25:04.980 --> 00:25:06.940
and economically driven project.
00:25:06.940 --> 00:25:10.020
Now it would become a
reliability driven project.
00:25:10.020 --> 00:25:11.511
So it's a shift,
00:25:11.511 --> 00:25:13.123
to make it a reliability driven project
00:25:13.123 --> 00:25:16.010
instead of economic project.
00:25:16.010 --> 00:25:17.390
And so that's a change
00:25:17.390 --> 00:25:18.700
that we are we are submitting
00:25:18.700 --> 00:25:21.340
into the binding rules documents.
00:25:21.340 --> 00:25:23.340
Now there'll be a planning guide change.
00:25:25.160 --> 00:25:25.993
And finally,
00:25:25.993 --> 00:25:27.860
the established operational requirements
00:25:27.860 --> 00:25:29.020
for private use networks
00:25:29.020 --> 00:25:33.413
during energy emergency
and scarcity conditions.
00:25:35.050 --> 00:25:39.090
Well, increasing demands for complex,
00:25:39.090 --> 00:25:41.602
I'll call it complex behind
the fence arrangements
00:25:41.602 --> 00:25:43.440
are driving part of this.
00:25:43.440 --> 00:25:45.270
We also saw during winter storm Uri
00:25:45.270 --> 00:25:47.820
that we had private use
networks that called us
00:25:47.820 --> 00:25:49.410
and said, hey, we can produce more power
00:25:49.410 --> 00:25:51.350
if you'll let us.
00:25:51.350 --> 00:25:53.540
And that's a great thing to do,
00:25:53.540 --> 00:25:55.840
but we need to get
that stuff squared away
00:25:55.840 --> 00:25:57.210
before a winter event
00:25:57.210 --> 00:25:59.130
and not try to do it on the fly.
00:25:59.130 --> 00:26:00.973
And so rules changes there,
00:26:01.996 --> 00:26:05.550
Bitcoin type load behind the fence.
00:26:05.550 --> 00:26:08.730
Those things are
deemed to be ironed out.
00:26:08.730 --> 00:26:10.860
We need to understand
how we're gonna do that.
00:26:10.860 --> 00:26:12.890
We've got internal
processes in place now
00:26:12.890 --> 00:26:14.300
to work through those,
00:26:14.300 --> 00:26:16.170
but if you'll seek some
market participants
00:26:16.170 --> 00:26:20.083
or some market changes
upcoming on those as well.
00:26:22.270 --> 00:26:27.270
Second group is a wire company concepts,
00:26:28.690 --> 00:26:31.019
so improve the ability of transmission
00:26:31.019 --> 00:26:34.070
and distribution
providers to rotate higher,
00:26:34.070 --> 00:26:36.990
higher levels of load shed.
00:26:36.990 --> 00:26:39.852
Maybe one of the most important
things we could talk about
00:26:39.852 --> 00:26:42.490
the ability to actually, when
we do need to shed load,
00:26:42.490 --> 00:26:45.450
to be able to rotate through that.
00:26:45.450 --> 00:26:48.770
We have a spring survey that
showed what could be shed
00:26:48.770 --> 00:26:51.903
and how quickly, what's
on the list can be shed.
00:26:53.044 --> 00:26:57.720
I fear that a new
critical load designations
00:26:57.720 --> 00:27:01.593
are going to put wire
companies in a bind.
00:27:02.510 --> 00:27:04.070
And so working through those issues
00:27:04.070 --> 00:27:08.780
is an important part of this.
00:27:08.780 --> 00:27:09.950
And I think there are,
00:27:09.950 --> 00:27:11.480
there are certainly
things that we can change
00:27:11.480 --> 00:27:14.861
and there's talk of
changing some of the ratios
00:27:14.861 --> 00:27:16.190
and things like that.
00:27:16.190 --> 00:27:17.370
But those are, that's a,
00:27:17.370 --> 00:27:18.970
that's a certainly an important,
00:27:18.970 --> 00:27:21.850
important change that
we need to make right now,
00:27:21.850 --> 00:27:24.605
on how we rotate load
00:27:24.605 --> 00:27:28.514
or how TSPs and wire
companies will take load.
00:27:28.514 --> 00:27:30.850
Woody on
that, on that point,
00:27:30.850 --> 00:27:31.683
very important point.
00:27:31.683 --> 00:27:34.630
And thank you for highlighting
the critical load aspect of,
00:27:34.630 --> 00:27:36.280
of that issue.
00:27:36.280 --> 00:27:37.400
In terms of, you know,
00:27:37.400 --> 00:27:39.560
as we have more and more facilities
00:27:39.560 --> 00:27:41.193
signing up to be critical load.
00:27:43.280 --> 00:27:45.480
One option,
00:27:45.480 --> 00:27:48.730
or potential solution
that we heard about
00:27:48.730 --> 00:27:52.730
at our last work
session, well, before that,
00:27:52.730 --> 00:27:55.003
on the TDU work
session, was segmentation.
00:27:55.940 --> 00:27:58.770
And the ability to
segment off critical load
00:27:58.770 --> 00:28:00.880
so that you can open up the line
00:28:00.880 --> 00:28:03.160
to rotate off more
customers that are not critical.
00:28:03.160 --> 00:28:05.073
Is that something ERCOT can look into?
00:28:06.180 --> 00:28:07.831
That's not really an ERCOT.
00:28:07.831 --> 00:28:09.747
We don't own the wires.
00:28:10.604 --> 00:28:13.750
We are looking at the
grid from a higher level
00:28:13.750 --> 00:28:14.890
and we're saying,
00:28:14.890 --> 00:28:18.100
okay, we need 10,000
megawatts of load shed.
00:28:18.100 --> 00:28:19.670
And we're calling the wireless companies
00:28:19.670 --> 00:28:21.460
and asking them to
do their proportion of it.
00:28:21.460 --> 00:28:24.910
Now, how they do that
is as an engineering,
00:28:24.910 --> 00:28:28.620
distribution engineering,
kind of a problem.
00:28:28.620 --> 00:28:31.640
So the segmentation, that kind of thing
00:28:31.640 --> 00:28:34.860
is something that the TSPs
are gonna have to address.
00:28:34.860 --> 00:28:36.440
Is there any
potential opportunities
00:28:36.440 --> 00:28:37.740
at the transmission level?
00:28:40.070 --> 00:28:43.910
There's most of
this is gonna be at the,
00:28:43.910 --> 00:28:46.032
there is, but the majority of it
00:28:46.032 --> 00:28:48.240
is gonna be at the distribution level.
00:28:48.240 --> 00:28:49.483
Okay, thank you.
00:28:55.430 --> 00:28:56.730
I would also say that
00:28:59.470 --> 00:29:04.540
that changes,
segmentation changes,
00:29:04.540 --> 00:29:08.370
they cost money, and
those are expensive.
00:29:08.370 --> 00:29:11.870
Those things aren't just
an engineering study.
00:29:11.870 --> 00:29:13.543
They are real changes in the field
00:29:13.543 --> 00:29:17.253
that require infrastructure changes.
00:29:19.010 --> 00:29:19.843
Let's see,
00:29:19.843 --> 00:29:24.490
evaluate increasing TSP
demand response programs.
00:29:24.490 --> 00:29:25.690
This is kind of goes to,
00:29:27.187 --> 00:29:30.150
there's megawatts,
various scarcity condition.
00:29:30.150 --> 00:29:32.860
There are megawatts out
there that could be accessed
00:29:32.860 --> 00:29:34.370
that we don't currently access
00:29:35.440 --> 00:29:37.000
for voltage reduction.
00:29:37.000 --> 00:29:38.580
Through voltage reduction,
00:29:38.580 --> 00:29:41.030
we can get access to megawatts
00:29:41.030 --> 00:29:42.550
that could be reduced on the system
00:29:42.550 --> 00:29:43.950
during a scarcity condition.
00:29:45.110 --> 00:29:46.083
Once again,
00:29:47.640 --> 00:29:49.250
I think that's
00:29:49.250 --> 00:29:51.720
that's something that
we ought to explore,
00:29:51.720 --> 00:29:53.350
but it does cost money to do that.
00:29:53.350 --> 00:29:56.240
It's not, they're
not free megawatts,
00:29:56.240 --> 00:29:59.220
but because they cost
money to install the equipment,
00:29:59.220 --> 00:30:00.290
to be able to do that.
00:30:00.290 --> 00:30:02.540
But they are megawatts that, you know,
00:30:02.540 --> 00:30:04.330
hundreds of megawatts even
00:30:04.330 --> 00:30:06.980
that we could reduce load
00:30:06.980 --> 00:30:09.153
and keep from having
any kind of load shed,
00:30:09.153 --> 00:30:12.470
because this is a,
this is not load shed.
00:30:12.470 --> 00:30:14.163
It's actually just reducing,
00:30:15.544 --> 00:30:18.010
it's reducing the
voltage of the megawatts
00:30:18.010 --> 00:30:19.060
that are out there,
00:30:19.060 --> 00:30:21.570
which actually reduces
the power requirements.
00:30:21.570 --> 00:30:24.180
And so we can get a real load reduction
00:30:24.180 --> 00:30:26.200
without anyone
seeing their lights go off
00:30:26.200 --> 00:30:27.720
by employing this.
00:30:27.720 --> 00:30:29.010
And how many
Woody,
00:30:29.010 --> 00:30:30.713
How many
megawatts, I'm sorry Lori.
00:30:32.290 --> 00:30:34.720
We spent a lot of time
talking about this issue
00:30:34.720 --> 00:30:37.850
at the TDU work session,
because I know ERCOT
00:30:37.850 --> 00:30:41.150
and I visited with you
and others there at ERCOT
00:30:41.150 --> 00:30:42.660
about this concept
00:30:42.660 --> 00:30:45.720
and how there could be
potential opportunities and benefits
00:30:45.720 --> 00:30:50.140
by increasing voltage
reduction with the TDUs.
00:30:50.140 --> 00:30:50.973
However,
00:30:51.880 --> 00:30:55.050
based on the feedback I
got at the TDU work session,
00:30:55.050 --> 00:30:59.030
it did not sound like there
was a lot of opportunity there.
00:30:59.030 --> 00:30:59.900
The general feedback,
00:30:59.900 --> 00:31:04.460
I know Encore has a
voltage reduction program and
00:31:05.410 --> 00:31:08.480
but it didn't seem like
there was a lot there
00:31:08.480 --> 00:31:10.850
from what the feedback
I got from the TDUs.
00:31:10.850 --> 00:31:12.310
Can you reconcile that for me?
00:31:12.310 --> 00:31:13.470
Well,
00:31:13.470 --> 00:31:17.900
I guess a lot is relative term there,
00:31:17.900 --> 00:31:19.220
we've seen studies that showed
00:31:19.220 --> 00:31:21.490
that there were several
hundred megawatts
00:31:21.490 --> 00:31:23.970
and that could be the difference between
00:31:23.970 --> 00:31:26.600
an EA2 and a load shed.
00:31:26.600 --> 00:31:29.180
So I'd much rather have
voltage reduction program in place
00:31:29.180 --> 00:31:30.050
than go into a load shed.
00:31:30.050 --> 00:31:32.170
But you need
special equipment, right?
00:31:32.170 --> 00:31:33.670
You need additional equipment
00:31:33.670 --> 00:31:35.289
that the TDU needs to invest in.
00:31:35.289 --> 00:31:36.200
That's right.
So,
00:31:36.200 --> 00:31:38.877
if we wanted to be able
to drive that kind of solution
00:31:38.877 --> 00:31:40.420
or assistance,
00:31:40.420 --> 00:31:43.640
we would have to provide
a cost recovery mechanism
00:31:43.640 --> 00:31:45.890
because I don't, it doesn't
sound like the TDUs
00:31:45.890 --> 00:31:48.010
will just go invest in this equipment.
00:31:48.010 --> 00:31:50.530
Encore has proactively
done that on their
00:31:50.530 --> 00:31:52.770
based on their own
business decision but,
00:31:52.770 --> 00:31:54.360
it doesn't sound like
00:31:54.360 --> 00:31:55.720
there's a lot of appetite for that
00:31:55.720 --> 00:31:58.250
based on the feedback I
got at the last work session.
00:31:58.250 --> 00:31:59.590
That's correct.
00:31:59.590 --> 00:32:01.493
It does, they're not free megawatts.
00:32:01.493 --> 00:32:04.730
They do cost infrastructure in order to,
00:32:04.730 --> 00:32:06.290
to get at them.
00:32:06.290 --> 00:32:10.540
But from a, from a
customer standpoint,
00:32:10.540 --> 00:32:14.890
customers would not feel
a difference in usability,
00:32:14.890 --> 00:32:17.030
it's megawatts that we
can take off the system
00:32:17.030 --> 00:32:18.403
without affecting anyone,
00:32:19.520 --> 00:32:20.750
but it does cost money.
00:32:20.750 --> 00:32:22.410
In ballpark, it's
like 300 megawatts.
00:32:22.410 --> 00:32:23.650
I think it's
more than that even.
00:32:23.650 --> 00:32:26.100
I think I remember
seeing studies that say six
00:32:26.100 --> 00:32:27.323
or 700 megawatts,
00:32:28.440 --> 00:32:29.273
potentially.
00:32:29.273 --> 00:32:30.380
I mean, that's a study.
00:32:32.100 --> 00:32:32.933
Okay.
00:32:32.933 --> 00:32:35.510
And we can look into cost per megawatt
00:32:35.510 --> 00:32:36.910
relative to other resources.
00:32:36.910 --> 00:32:37.743
Sure.
00:32:38.783 --> 00:32:42.140
The next thing here is implement
weatherization requirements
00:32:42.140 --> 00:32:43.586
for wire companies.
00:32:43.586 --> 00:32:47.003
We, we talk a lot about that,
00:32:47.003 --> 00:32:48.340
that that it's underway.
00:32:48.340 --> 00:32:49.690
We've got RFPs out.
00:32:49.690 --> 00:32:52.790
We got the, we're moving
forward with that now.
00:32:52.790 --> 00:32:55.330
So that's, that's
certainly moving forward.
00:32:56.640 --> 00:32:58.880
Require meter read
data to be sent to ERCOT
00:32:58.880 --> 00:33:00.980
for industrial customers,
00:33:00.980 --> 00:33:03.730
for industrial IDR meters
within the same timeframe
00:33:03.730 --> 00:33:05.414
as smart meter data.
00:33:05.414 --> 00:33:08.220
This will aid in our forecasting
00:33:08.220 --> 00:33:10.450
or the demand response for CP.
00:33:10.450 --> 00:33:12.470
So we could look at what happens today
00:33:12.470 --> 00:33:14.110
and make a forecast of
what happens tomorrow,
00:33:14.110 --> 00:33:15.560
if we had that data in
00:33:15.560 --> 00:33:17.240
that's really valuable data.
00:33:17.240 --> 00:33:20.310
I mean right now
we are, we are that
00:33:21.240 --> 00:33:24.080
we're not able to have
good strong for CP
00:33:24.080 --> 00:33:26.740
or demand response
forecasting based on prices.
00:33:26.740 --> 00:33:27.573
It's just
00:33:27.573 --> 00:33:29.660
What's the
largest impediment
00:33:29.660 --> 00:33:30.800
to getting that implemented?
00:33:30.800 --> 00:33:32.440
Just how long it takes.
00:33:32.440 --> 00:33:34.230
I mean, the forecast,
00:33:34.230 --> 00:33:36.780
the impediment is we don't
get the data fast enough
00:33:36.780 --> 00:33:37.613
to see it.
00:33:37.613 --> 00:33:40.230
What's the
impediment to getting
00:33:40.230 --> 00:33:41.120
that done?
00:33:41.120 --> 00:33:41.953
Okay.
00:33:41.953 --> 00:33:42.910
There's, there's two,
00:33:42.910 --> 00:33:44.830
there's an NPRR that's been passed
00:33:44.830 --> 00:33:47.690
and that makes this more possible.
00:33:47.690 --> 00:33:51.530
I think all the TSPs are
just not on the same page
00:33:51.530 --> 00:33:52.803
as far as adopting this.
00:33:52.803 --> 00:33:54.710
So it's something that once again,
00:33:54.710 --> 00:33:56.530
they have to spend money to go out
00:33:56.530 --> 00:33:57.690
and change these meters out
00:33:57.690 --> 00:33:59.490
and change their accounting systems.
00:34:01.561 --> 00:34:03.673
The road has been
cleared to do this now.
00:34:04.560 --> 00:34:07.550
The NPRRs have been
past the load profiling,
00:34:07.550 --> 00:34:09.820
working group has
done a lot of work here.
00:34:09.820 --> 00:34:11.560
They're actually gonna produce a matrix
00:34:11.560 --> 00:34:13.660
that shows what each TSP has
00:34:13.660 --> 00:34:15.910
and where they're going with it.
00:34:15.910 --> 00:34:18.364
So this is now changing
things in the field
00:34:18.364 --> 00:34:20.320
in order to make this work.
00:34:20.320 --> 00:34:22.100
Change and changing accounting systems
00:34:22.100 --> 00:34:23.390
so that they can read those meters.
00:34:23.390 --> 00:34:27.253
So that's the getting
20 TSPs to you know,
00:34:28.360 --> 00:34:30.110
adopt all of this and implement it.
00:34:31.404 --> 00:34:33.314
Okay.
00:34:33.314 --> 00:34:36.760
Dispatchable
generation concepts.
00:34:36.760 --> 00:34:39.110
So when I'm talking about dispatchable,
00:34:39.110 --> 00:34:41.833
I'm mainly talking about
thermal generation here.
00:34:44.120 --> 00:34:45.280
Number one on the list here,
00:34:45.280 --> 00:34:48.960
is improve the accuracy of
the current operating plan data
00:34:48.960 --> 00:34:50.160
from thermal generation.
00:34:51.020 --> 00:34:52.470
We just need better COP data.
00:34:53.400 --> 00:34:54.837
We, I can look at my,
00:34:54.837 --> 00:34:56.950
I can look at my COP data right now
00:34:56.950 --> 00:34:59.665
and beginning at 1:00 AM this morning,
00:34:59.665 --> 00:35:01.480
I don't have much.
00:35:01.480 --> 00:35:03.790
And so it's hard to do
studies for tomorrow
00:35:03.790 --> 00:35:06.720
when we don't know exactly
what generation is gonna run.
00:35:06.720 --> 00:35:08.070
So having better COP data
00:35:08.070 --> 00:35:10.905
will make us have
better reliability studies
00:35:10.905 --> 00:35:14.660
for the next day, two
days out, three days out,
00:35:14.660 --> 00:35:15.920
better outage coordination.
00:35:15.920 --> 00:35:16.950
Everything will be better,
00:35:16.950 --> 00:35:18.170
if we have better COP data.
00:35:18.170 --> 00:35:21.460
To make sure
we're hearing that correctly,
00:35:21.460 --> 00:35:22.970
as of 1:00 AM this morning,
00:35:22.970 --> 00:35:25.940
you had very little idea what generators
00:35:25.940 --> 00:35:28.553
were gonna be running
today and tomorrow?
00:35:31.120 --> 00:35:32.740
Yes.
00:35:32.740 --> 00:35:36.233
That's a great segue
into some questions.
00:35:38.060 --> 00:35:38.893
Okay.
00:35:38.893 --> 00:35:41.250
So what do you, before we lose you,
00:35:41.250 --> 00:35:42.880
I want to get you on the record on a,
00:35:42.880 --> 00:35:43.868
on a question.
00:35:43.868 --> 00:35:45.620
As an ERCOT Operator.
00:35:45.620 --> 00:35:47.490
That's what everybody
on that panel wants to hear.
00:35:47.490 --> 00:35:49.428
Yup.
(people laughing)
00:35:49.428 --> 00:35:51.550
You might wanna leave.
00:35:51.550 --> 00:35:54.500
Okay, so in the
foreseeable future, I mean,
00:35:54.500 --> 00:35:58.350
we can see this, with a
high degree of likelihood
00:35:58.350 --> 00:36:02.193
that it dominant resources
in the ERCOT region
00:36:02.193 --> 00:36:04.320
will soon be based on variable
00:36:04.320 --> 00:36:06.060
or intermittent sources of power,
00:36:06.060 --> 00:36:08.940
do you believe that
is in the near future?
00:36:08.940 --> 00:36:09.773
Yes.
00:36:09.773 --> 00:36:10.770
Okay.
00:36:10.770 --> 00:36:13.020
Do you believe ERCOT
needs a greater degree
00:36:13.020 --> 00:36:16.293
of command and control
capabilities to manage reliability?
00:36:17.920 --> 00:36:19.398
Yes.
00:36:19.398 --> 00:36:20.350
Okay so,
00:36:20.350 --> 00:36:22.630
so that's an important
premise that all this is,
00:36:22.630 --> 00:36:24.760
is somewhat based on any tools
00:36:24.760 --> 00:36:27.571
that we try to develop to give you
00:36:27.571 --> 00:36:29.500
should be with an eye
00:36:29.500 --> 00:36:32.480
toward enhancing your
command and control capability
00:36:32.480 --> 00:36:34.080
to smooth this out.
00:36:34.080 --> 00:36:35.720
Right.
00:36:35.720 --> 00:36:38.450
So how much
visibility into the future
00:36:38.450 --> 00:36:39.880
do you need as an operator?
00:36:39.880 --> 00:36:42.600
Do you feel comfortable with, with that,
00:36:42.600 --> 00:36:46.860
with that variable resource mix
00:36:46.860 --> 00:36:48.393
that maybe out there,
00:36:51.280 --> 00:36:54.590
what duration of a planning
horizon do you need?
00:36:54.590 --> 00:36:56.970
And that relates to
these COPs, you know,
00:36:56.970 --> 00:36:58.820
to know that someone's gonna be there,
00:36:58.820 --> 00:37:01.110
it's gonna be able to perform.
00:37:01.110 --> 00:37:02.920
Well, let me,
00:37:02.920 --> 00:37:04.710
let me make it distinct distinguished
00:37:04.710 --> 00:37:07.440
between renewable generation
and dispatchable generation.
00:37:07.440 --> 00:37:09.600
So wind and solar generation,
00:37:09.600 --> 00:37:14.023
their COP data is based on
a forecast that we give them.
00:37:15.070 --> 00:37:17.010
So they're putting
COP data in telling us
00:37:17.010 --> 00:37:18.030
when they're gonna run
00:37:18.030 --> 00:37:20.233
based on a forecast that we give them.
00:37:21.110 --> 00:37:24.860
And that forecast is based
on, you know, wind forecast,
00:37:24.860 --> 00:37:27.200
weather forecast, solar forecast.
00:37:27.200 --> 00:37:31.870
And so those forecast,
that COP data is I think
00:37:31.870 --> 00:37:33.950
the only way to improve that COP data
00:37:33.950 --> 00:37:36.333
is to have better <v
Will>Forecast.
00:37:36.333 --> 00:37:37.177
Better forecast.
00:37:37.177 --> 00:37:39.970
That's an educated
guess, not a guarantee.
00:37:39.970 --> 00:37:41.660
That's right.
00:37:41.660 --> 00:37:43.397
It's a, I mean as,
00:37:43.397 --> 00:37:45.525
and we have improved those forecasts
00:37:45.525 --> 00:37:46.358
over the years.
00:37:46.358 --> 00:37:48.350
Right.
But I mean,
00:37:48.350 --> 00:37:50.910
I think there's a limit
to how well you can,
00:37:50.910 --> 00:37:53.270
how well you can forecast the wind speed
00:37:53.270 --> 00:37:56.613
at a panhandle wind
turbine, three days from now.
00:37:56.613 --> 00:37:59.630
Also note that's
ERCOTS responsibility,
00:37:59.630 --> 00:38:03.840
not the generators, but
in the current framework.
00:38:03.840 --> 00:38:08.660
Do the generators conduct
any of their own forecasting?
00:38:08.660 --> 00:38:10.300
Yes, I'm sure they do.
00:38:10.300 --> 00:38:13.380
And there was a time when
they put in their own forecast
00:38:13.380 --> 00:38:14.970
and that was changed a few years ago
00:38:14.970 --> 00:38:17.370
to put in our forecast
because there was some,
00:38:17.370 --> 00:38:19.360
there were some problems with that.
00:38:19.360 --> 00:38:21.137
So now,
00:38:21.137 --> 00:38:22.880
Was that
like over forecasting
00:38:22.880 --> 00:38:24.140
or under forecasting?
00:38:24.140 --> 00:38:26.040
Typically,
over forecasting.
00:38:31.690 --> 00:38:32.523
So yeah,
00:38:32.523 --> 00:38:36.070
on the dispatchable side
in terms of an operational,
00:38:36.070 --> 00:38:39.957
you know, timeline
up, a look ahead.
00:38:39.957 --> 00:38:41.010
So I think,
00:38:41.010 --> 00:38:42.170
I think one.of the changes that was made
00:38:42.170 --> 00:38:43.410
with the recent legislation
00:38:43.410 --> 00:38:45.590
that helps in this command
and control kind of thing
00:38:45.590 --> 00:38:48.053
was the outages, the
approval of all outages,
00:38:48.053 --> 00:38:49.750
that was a big step forward.
00:38:49.750 --> 00:38:51.442
And I think that will help.
00:38:51.442 --> 00:38:54.813
We also have our outage evaluation,
00:38:55.733 --> 00:38:59.450
the being able to pull
outages or delay outages.
00:38:59.450 --> 00:39:01.510
That process is an important step.
00:39:01.510 --> 00:39:04.390
And we've used that
this year and it worked
00:39:06.090 --> 00:39:08.170
that advanced action
notice that we put out
00:39:08.170 --> 00:39:12.830
and the ability for the market
to voluntarily delay outages
00:39:12.830 --> 00:39:16.560
or bring outages back
early, or though that's a,
00:39:16.560 --> 00:39:18.770
that's a powerful tool that we have
00:39:18.770 --> 00:39:20.180
that still allows the market
00:39:20.180 --> 00:39:21.880
to make market-based decisions.
00:39:21.880 --> 00:39:24.803
So those are, those are
positive steps in that direction.
00:39:26.920 --> 00:39:27.753
Okay.
00:39:31.480 --> 00:39:33.650
So, I'll let you go on to RUC
00:39:33.650 --> 00:39:35.220
and kind of talk
through that concept too.
00:39:35.220 --> 00:39:36.642
So.
Okay.
00:39:36.642 --> 00:39:41.460
Yeah, evaluate removing
the, the RUC opt out provision,
00:39:41.460 --> 00:39:44.090
potential market change
that could have an effect
00:39:44.090 --> 00:39:47.850
on how units commit
in the day ahead market.
00:39:47.850 --> 00:39:48.683
Yeah.
00:39:52.710 --> 00:39:55.963
So right now they can opt out,
00:39:57.727 --> 00:39:59.990
and you still have a backstop
00:39:59.990 --> 00:40:03.500
where the described
reliability must run.
00:40:03.500 --> 00:40:04.540
And RUC, you know,
00:40:04.540 --> 00:40:06.550
and how these two kind of work together
00:40:06.550 --> 00:40:08.659
as a fail safe mechanism
00:40:08.659 --> 00:40:11.310
for ERCOT command and control currently.
00:40:11.310 --> 00:40:13.910
Well, reliability must run.
00:40:13.910 --> 00:40:15.470
Designation is for a plant
00:40:15.470 --> 00:40:17.050
that wants to leave
the system permanently.
00:40:17.050 --> 00:40:18.330
Permanently, right?
00:40:18.330 --> 00:40:20.991
And so if we think that
00:40:20.991 --> 00:40:23.840
if we do some studies that
show that that plant leaving
00:40:23.840 --> 00:40:25.310
is gonna leave a hole in the system,
00:40:25.310 --> 00:40:27.133
a reliability issue in the system,
00:40:28.250 --> 00:40:30.000
and maybe some
transmission needs to be built
00:40:30.000 --> 00:40:32.000
before that plant can retire.
00:40:32.000 --> 00:40:35.250
Then we may designate
them as a reliability must run
00:40:35.250 --> 00:40:37.100
until that transmission can be built,
00:40:37.986 --> 00:40:39.560
there have been times in the past
00:40:39.560 --> 00:40:42.020
when we use that reliability
must run designation
00:40:42.020 --> 00:40:43.990
for capacity reasons as well,
00:40:43.990 --> 00:40:46.080
so that you could use it in that.
00:40:46.080 --> 00:40:48.200
But most of
those RMR designations
00:40:48.200 --> 00:40:50.570
are primarily for voltage issues.
00:40:50.570 --> 00:40:51.403
Is that right?
00:40:51.403 --> 00:40:54.100
Voltage and
transmission issues, yeah right.
00:40:54.100 --> 00:40:54.933
So when ERCOT evaluates
00:40:54.933 --> 00:40:56.120
Not energy capacity issues?
00:40:56.120 --> 00:40:58.499
Not for capacity, no.
00:40:58.499 --> 00:41:00.920
That hasn't been used
in a while for capacity,
00:41:00.920 --> 00:41:03.530
but so the most recent RMR examples
00:41:03.530 --> 00:41:05.080
have all been for transmission.
00:41:07.820 --> 00:41:08.705
That addressed my question.
00:41:08.705 --> 00:41:09.770
I just wanted to highlight that you,
00:41:09.770 --> 00:41:11.270
when you evaluate an RMR,
00:41:11.270 --> 00:41:14.580
you mostly evaluate that requests
00:41:14.580 --> 00:41:16.940
from a transmission
bird reliability perspective.
00:41:16.940 --> 00:41:18.220
Right, yes.
00:41:18.220 --> 00:41:20.980
So that gets to cost
allocation, you know,
00:41:20.980 --> 00:41:22.940
and how you pay for this stuff.
00:41:22.940 --> 00:41:24.110
Right.
00:41:24.110 --> 00:41:27.469
And so RMR incredibly,
00:41:27.469 --> 00:41:30.070
it's viewed as incredibly
invasive in the market.
00:41:30.070 --> 00:41:32.903
You know, you're not
letting someone leave.
00:41:32.903 --> 00:41:36.223
Some would say nationalizing an entity.
00:41:38.470 --> 00:41:42.850
But so RUC, they can
opt out and they can leave.
00:41:42.850 --> 00:41:44.760
What's your default position
00:41:44.760 --> 00:41:47.173
if nobody wants to be RUC?
00:41:48.120 --> 00:41:50.390
Well, they can,
they can opt out of running.
00:41:50.390 --> 00:41:54.490
They can opt out of the
RUC frame, the RUC option.
00:41:54.490 --> 00:41:56.510
Yeah, so clarify that.
00:41:56.510 --> 00:41:57.770
So,
00:41:57.770 --> 00:42:00.540
if we're looking at tomorrow
00:42:00.540 --> 00:42:04.950
and we don't think there are enough,
00:42:04.950 --> 00:42:08.300
our studies show that there's
not a sufficient generation
00:42:08.300 --> 00:42:10.843
to match load and have reserves.
00:42:11.890 --> 00:42:13.220
Then we will RUC a unit,
00:42:13.220 --> 00:42:15.380
reliability unit commitment.
00:42:15.380 --> 00:42:18.093
So we'll require units to run.
00:42:20.090 --> 00:42:22.750
So those units then have the option
00:42:23.900 --> 00:42:26.519
if they take the,
00:42:26.519 --> 00:42:28.350
I need Kanun up here
to help me with this,
00:42:28.350 --> 00:42:30.690
but if they take the RUC,
00:42:30.690 --> 00:42:32.863
then they get paid for their costs.
00:42:34.180 --> 00:42:36.750
So they get their
operating costs or fuel costs
00:42:38.121 --> 00:42:41.583
they take that if however,
00:42:42.669 --> 00:42:44.760
they can also choose at this point,
00:42:44.760 --> 00:42:47.115
they can choose to opt out of that RUC
00:42:47.115 --> 00:42:51.070
and act like they've been
in the market the entire time
00:42:51.070 --> 00:42:53.770
and bid into the market.
00:42:53.770 --> 00:42:56.650
So that's the that's
the opt out provision
00:42:56.650 --> 00:42:58.830
is it's a, it's a way for them
00:43:03.104 --> 00:43:06.237
to opt out of, of
being required to run,
00:43:06.237 --> 00:43:07.740
they still have to run,
00:43:07.740 --> 00:43:10.040
but they can act like they
had bid into the market
00:43:10.040 --> 00:43:10.873
from the beginning.
00:43:10.873 --> 00:43:11.706
That's exactly what it was.
00:43:11.706 --> 00:43:12.930
Yeah, free call option.
00:43:12.930 --> 00:43:14.510
So you can take your cost
00:43:14.510 --> 00:43:18.141
or you can still opt out
of the cost only payment
00:43:18.141 --> 00:43:21.318
and have a chance
for some profitability.
00:43:21.318 --> 00:43:22.862
Is that fair, Kanun?
00:43:22.862 --> 00:43:25.890
Yes, I mean
Woody got it spot on.
00:43:25.890 --> 00:43:27.190
The only thing I would add
00:43:27.190 --> 00:43:29.950
is if you look at the incentives
00:43:29.950 --> 00:43:33.010
and tie this all back to
COPs and everything like that,
00:43:33.010 --> 00:43:36.510
the reason why this
is being suggested is
00:43:38.780 --> 00:43:41.110
RUC is at cost.
00:43:41.110 --> 00:43:42.380
You know, your costs are made whole,
00:43:42.380 --> 00:43:44.630
but you don't get any of the upside
00:43:45.950 --> 00:43:49.310
by having the ability
to buy yourself out.
00:43:49.310 --> 00:43:52.823
You don't necessarily need
to show what you're gonna do,
00:43:53.697 --> 00:43:54.730
ERCOT RUCs you.
00:43:54.730 --> 00:43:58.303
And then if there is
upside, you buy yourself out.
00:43:59.750 --> 00:44:02.150
And if there is just downside,
00:44:02.150 --> 00:44:04.070
you stick with the RUC.
00:44:04.070 --> 00:44:05.893
That that's the link to the other things
00:44:05.893 --> 00:44:09.580
that we had talked about in
terms of incentive structure.
00:44:09.580 --> 00:44:11.550
If you opt out of the RUC,
00:44:11.550 --> 00:44:15.180
does ERCOT still get
the value that they wanted
00:44:15.180 --> 00:44:16.468
when you were in RUC?
00:44:16.468 --> 00:44:17.560
Absolutely.
00:44:17.560 --> 00:44:19.860
Because the unit is saying I'll run
00:44:19.860 --> 00:44:24.200
and I'll run at the market prices.
00:44:24.200 --> 00:44:27.070
You don't need to claw back, you know,
00:44:27.070 --> 00:44:30.280
money I make in excess of my cost
00:44:30.280 --> 00:44:31.113
and things like that.
00:44:31.113 --> 00:44:35.922
So RUC is limited on upside return,
00:44:35.922 --> 00:44:37.827
but you don't have any downside.
00:44:37.827 --> 00:44:39.070
Right.
00:44:39.070 --> 00:44:41.050
So the unit runs regardless.
00:44:41.050 --> 00:44:43.670
And that's the
goal for ERCOT.
00:44:43.670 --> 00:44:46.380
They want to know that
those megawatts will be there.
00:44:46.380 --> 00:44:47.270
But in terms of,
00:44:47.270 --> 00:44:50.370
I think the challenge for
Woody and the operators is
00:44:50.370 --> 00:44:51.970
by having the opt out provision,
00:44:51.970 --> 00:44:56.370
a generator removes by
staying out of the COP,
00:44:56.370 --> 00:44:59.420
they eliminate their
price risk or minimize it
00:44:59.420 --> 00:45:02.170
because they can wait
and see, is that fair?
00:45:02.170 --> 00:45:03.210
Exactly.
00:45:03.210 --> 00:45:04.043
That's spot on.
00:45:04.043 --> 00:45:05.585
I mean, the unit is,
00:45:05.585 --> 00:45:09.020
and the owner are doing
what ERCOT needs.
00:45:09.020 --> 00:45:14.020
It's just the visibility
into what they might do
00:45:14.140 --> 00:45:17.110
going into real time
00:45:17.110 --> 00:45:19.570
is less clear or there's an incentive
00:45:19.570 --> 00:45:22.523
to wait and see what happens.
00:45:23.480 --> 00:45:27.040
Do you often
have generators
00:45:27.040 --> 00:45:29.143
that are in the RUC stay in it?
00:45:30.181 --> 00:45:32.130
Or do they always opt out
00:45:32.130 --> 00:45:33.150
to that energy price in the market?
00:45:33.150 --> 00:45:35.300
It completely depends on
00:45:35.300 --> 00:45:37.870
the real time pricing that's happening.
00:45:37.870 --> 00:45:38.703
So,
00:45:40.130 --> 00:45:45.830
if there is, if the
expectation is that,
00:45:45.830 --> 00:45:48.460
and in current status
00:45:48.460 --> 00:45:51.300
the real time price is high enough
00:45:51.300 --> 00:45:53.820
that there is a profit for them,
00:45:53.820 --> 00:45:57.800
there's every incentive
for them to opt out
00:45:57.800 --> 00:46:00.950
if that price can last long enough,
00:46:00.950 --> 00:46:04.626
if it's pretty clear that
that's not gonna happen,
00:46:04.626 --> 00:46:08.810
then you're likely to just
take the RUC instruction
00:46:08.810 --> 00:46:12.053
because otherwise
you would run it a loss.
00:46:13.190 --> 00:46:14.023
Okay, thanks.
00:46:14.023 --> 00:46:16.460
I know we have a few more
minutes left with Woody.
00:46:17.860 --> 00:46:20.200
So improving the
resource outage reporting
00:46:20.200 --> 00:46:22.576
and the outage
scheduler, I think that's a,
00:46:22.576 --> 00:46:26.490
a major area for we continue to work on
00:46:26.490 --> 00:46:28.330
improving the accuracy
of the end times of outages.
00:46:28.330 --> 00:46:31.720
I mean, that's a hard
call for generators to say,
00:46:31.720 --> 00:46:35.320
I need two weeks and then
it goes longer or go shorter.
00:46:35.320 --> 00:46:36.440
I mean, that's just something
00:46:36.440 --> 00:46:39.251
we'll continue to try to improve.
00:46:39.251 --> 00:46:40.084
Woody,
00:46:40.084 --> 00:46:41.917
does this all fit in to your
maintenance presentation
00:46:41.917 --> 00:46:44.110
you provided us at the open meeting,
00:46:44.110 --> 00:46:46.300
how ERCOT's gonna try to provide
00:46:46.300 --> 00:46:49.459
more visibility and
transparency into the outage,
00:46:49.459 --> 00:46:51.693
maintenance outage process?
00:46:52.690 --> 00:46:54.250
Yes, yes.
00:46:54.250 --> 00:46:55.900
Yeah, that particular bullet, you know,
00:46:55.900 --> 00:46:58.402
improve the accuracy of
the end times of outages.
00:46:58.402 --> 00:47:02.900
That is not exactly
in that, but this does,
00:47:02.900 --> 00:47:05.680
this does fit in, in what
we talked about earlier.
00:47:07.140 --> 00:47:08.456
Does your council expect
00:47:08.456 --> 00:47:10.360
to be following protocol
revisions this fall?
00:47:10.360 --> 00:47:11.193
Yes.
Okay.
00:47:11.193 --> 00:47:12.026
Yeah, we sure do.
00:47:12.026 --> 00:47:14.260
And the fact that
requiring all the reporting
00:47:14.260 --> 00:47:15.220
of all forced outages,
00:47:15.220 --> 00:47:18.600
that's NPRR1084 that has been filed.
00:47:18.600 --> 00:47:20.130
So that just means in the past,
00:47:20.130 --> 00:47:21.830
if a forced outage was
less than two hours,
00:47:21.830 --> 00:47:23.270
it didn't have to be filed.
00:47:23.270 --> 00:47:26.850
And now it does, or
if this passes, it will.
00:47:26.850 --> 00:47:28.750
A modification of the 60-day rule
00:47:28.750 --> 00:47:30.210
for outage disclosures
00:47:30.210 --> 00:47:34.580
that's that has been
soon to be filed NPRR
00:47:34.580 --> 00:47:38.100
that will this June through
September outage report
00:47:38.100 --> 00:47:40.340
that will make that a permanent report.
00:47:40.340 --> 00:47:42.730
So there, those are
some changes in those,
00:47:42.730 --> 00:47:44.745
but from a market design
standpoint, you know,
00:47:44.745 --> 00:47:47.233
outage reporting is a big,
00:47:48.260 --> 00:47:50.460
we've got to have
accurate outage reporting.
00:47:51.582 --> 00:47:54.400
Timely updates to HSLs
00:47:54.400 --> 00:47:56.240
to our high sustainability limits,
00:47:56.240 --> 00:47:58.335
to improve the PRC measurements,
00:47:58.335 --> 00:48:01.295
the physical response
capability measurements,
00:48:01.295 --> 00:48:05.853
NPRR1085 has been
filed along those lines.
00:48:07.720 --> 00:48:11.080
We did see some PRC
issues dUring winter storm Uri.
00:48:11.080 --> 00:48:13.113
So during the frequency event,
00:48:13.950 --> 00:48:14.851
we had a PRC
00:48:14.851 --> 00:48:17.960
that was higher than it
should have probably was.
00:48:17.960 --> 00:48:19.730
A reported PRC that was actually higher
00:48:19.730 --> 00:48:21.640
than it probably was.
00:48:21.640 --> 00:48:23.270
And I think part of that was a lag
00:48:23.270 --> 00:48:26.120
in getting those HSLs updated.
00:48:26.120 --> 00:48:28.860
And so NPRR1085,
00:48:28.860 --> 00:48:30.960
is currently in the market
participant process.
00:48:30.960 --> 00:48:32.450
They're looking in, debating it.
00:48:32.450 --> 00:48:34.350
I mean, there's a
good debate out there
00:48:34.350 --> 00:48:36.740
about a resource operator that
00:48:39.900 --> 00:48:41.890
spends time stabilizing a unit
00:48:41.890 --> 00:48:44.630
that's having problems
and then updating the HSL
00:48:44.630 --> 00:48:46.760
or you know, that's their main priority.
00:48:46.760 --> 00:48:50.760
And we would rather
have a generator online
00:48:50.760 --> 00:48:51.934
with an inaccurate HSL
00:48:51.934 --> 00:48:55.810
than have a generator offline.
00:48:55.810 --> 00:48:57.122
So we understand that,
00:48:57.122 --> 00:49:00.514
but there still is a need to
get that those HSLs updated
00:49:00.514 --> 00:49:02.373
in a more timely manner.
00:49:03.673 --> 00:49:06.560
We've got their
winterization requirements.
00:49:06.560 --> 00:49:07.930
Of course, you guys know about that,
00:49:07.930 --> 00:49:11.242
we're working diligently
with the BC staff
00:49:11.242 --> 00:49:13.160
on doing that.
00:49:13.160 --> 00:49:15.250
In fact, I've got an interview
00:49:15.250 --> 00:49:18.250
with the Director of
winterization right after this.
00:49:18.250 --> 00:49:20.320
So that's why I'm leaving,
00:49:20.320 --> 00:49:21.153
is to do that interview.
00:49:21.153 --> 00:49:22.112
That's important,
00:49:22.112 --> 00:49:24.052
we're gonna make sure you make it there.
00:49:24.052 --> 00:49:25.730
Establish a process
00:49:25.730 --> 00:49:27.991
where ERCOT can obtain proprietary
00:49:27.991 --> 00:49:30.553
and confidential natural gas delivery,
00:49:30.553 --> 00:49:32.700
limitation information.
00:49:32.700 --> 00:49:37.130
I think the mapping
process that's going on
00:49:37.130 --> 00:49:39.520
with the gas industry
is gonna help us a lot
00:49:39.520 --> 00:49:40.370
in that area.
00:49:40.370 --> 00:49:42.993
So we're looking forward
to seeing the results of that.
00:49:44.733 --> 00:49:45.566
And finally,
00:49:45.566 --> 00:49:48.763
for a inverter-based resource concepts,
00:49:52.100 --> 00:49:53.580
require inverter-based resources
00:49:53.580 --> 00:49:56.582
to have additional
reliability attributes,
00:49:56.582 --> 00:49:58.610
such as grid-forming capabilities.
00:49:58.610 --> 00:50:00.480
So inverters are changing,
00:50:00.480 --> 00:50:02.210
they're getting better and better.
00:50:02.210 --> 00:50:04.760
And it's important from a
market design standpoint,
00:50:05.950 --> 00:50:07.560
and from a reliability standpoint,
00:50:07.560 --> 00:50:11.220
that we continue to require the
newest and best requirements
00:50:11.220 --> 00:50:13.343
for inverters.
00:50:14.310 --> 00:50:15.600
The sooner we adopt those,
00:50:15.600 --> 00:50:16.710
and sometimes that may mean
00:50:16.710 --> 00:50:20.360
that you have to change PUC
accepted rule and a protocol,
00:50:20.360 --> 00:50:22.350
but it's the sooner we
can adopt those rules,
00:50:22.350 --> 00:50:24.212
the less grand following you have to do
00:50:24.212 --> 00:50:27.040
for old inverter standards.
00:50:27.040 --> 00:50:28.010
When you say
they're getting better,
00:50:28.010 --> 00:50:31.630
you related to, what
does that mean?
00:50:31.630 --> 00:50:32.463
Well they're in
00:50:32.463 --> 00:50:34.690
In terms of they're
just synthetic inertia or
00:50:34.690 --> 00:50:36.560
The characteristics
of synthetic inertia
00:50:36.560 --> 00:50:38.903
is one the,
00:50:40.050 --> 00:50:41.640
the characteristics of new inverters
00:50:41.640 --> 00:50:44.560
are provide more reliability
of the system basically.
00:50:44.560 --> 00:50:46.970
And so as we have a lot
of inverter based resources,
00:50:46.970 --> 00:50:48.250
it's important to have good standards
00:50:48.250 --> 00:50:49.820
for what those inverters are.
00:50:49.820 --> 00:50:51.260
And to let people know,
00:50:51.260 --> 00:50:53.460
if you're gonna build an
inverter base resource,
00:50:53.460 --> 00:50:56.340
this is the standard you need for the,
00:50:56.340 --> 00:50:57.200
for the inverter.
00:50:57.200 --> 00:50:59.210
And so the faster we
get those implemented
00:50:59.210 --> 00:51:00.770
from a reliability standpoint,
00:51:00.770 --> 00:51:03.013
the better off we're
gonna be in the long run.
00:51:05.030 --> 00:51:06.830
Improve Resource Outage reporting,
00:51:06.830 --> 00:51:08.350
and the added scheduler once again,
00:51:08.350 --> 00:51:09.820
for that's the same bullet
00:51:09.820 --> 00:51:12.000
as for the dispatchable generation,
00:51:12.000 --> 00:51:15.200
it's not as big a deal
for wind and solar
00:51:15.200 --> 00:51:16.150
because a lot of times,
00:51:16.150 --> 00:51:18.580
if you've got a hundred
turbines and you take three out,
00:51:18.580 --> 00:51:19.441
it's a derate.
00:51:19.441 --> 00:51:20.850
And you don't take
in the whole plan out.
00:51:20.850 --> 00:51:23.159
And so it's a little
different game there,
00:51:23.159 --> 00:51:24.760
but it's,
00:51:24.760 --> 00:51:27.570
it's still important to
have accurate outages.
00:51:27.570 --> 00:51:29.550
We've got the
weatherization requirements
00:51:29.550 --> 00:51:31.022
for wind and solar as well.
00:51:31.022 --> 00:51:34.490
Those are proceeding,
and I've got one item here.
00:51:34.490 --> 00:51:36.510
I didn't include in the original list.
00:51:36.510 --> 00:51:38.730
And that was to implement requirements,
00:51:38.730 --> 00:51:41.423
to provide and maintain
accurate dynamic models.
00:51:43.690 --> 00:51:45.590
We have a lot of trouble getting good,
00:51:45.590 --> 00:51:47.070
accurate dynamic models.
00:51:47.070 --> 00:51:51.260
And I think wind and solar owners
00:51:51.260 --> 00:51:54.570
also had the same treble
from the manufacturers,
00:51:54.570 --> 00:51:58.193
getting those, getting
those up-to-date accurate,
00:51:59.910 --> 00:52:00.920
dynamic models.
00:52:00.920 --> 00:52:02.997
And in order for us to
do those stability studies,
00:52:02.997 --> 00:52:06.030
we've got to have done
good accurate models
00:52:06.030 --> 00:52:08.383
and getting those is a challenge.
00:52:09.340 --> 00:52:10.173
All right,
00:52:10.173 --> 00:52:11.150
thank you Woody.
00:52:11.150 --> 00:52:14.793
Quick of when your remaining time,
00:52:15.800 --> 00:52:19.300
can you expand on the inertia challenge
00:52:19.300 --> 00:52:25.050
and how as we have
increasing share of generation
00:52:25.916 --> 00:52:27.640
from inverter based resources,
00:52:27.640 --> 00:52:30.530
how that balances with rotating mass,
00:52:30.530 --> 00:52:32.300
and if we can ever get to a point
00:52:32.300 --> 00:52:34.733
where we don't have rotating mass,
00:52:35.790 --> 00:52:37.910
just based on the physics of it.
00:52:37.910 --> 00:52:39.730
With the current
technologies that we have today,
00:52:39.730 --> 00:52:41.220
we'll never get away from that.
00:52:41.220 --> 00:52:42.760
Now, I'm not saying that in the future
00:52:42.760 --> 00:52:44.630
there won't be a time
when we can do that.
00:52:44.630 --> 00:52:46.030
And in fact,
00:52:46.030 --> 00:52:47.960
there are some very small
grids in different places
00:52:47.960 --> 00:52:49.590
that have gone.
00:52:49.590 --> 00:52:50.850
And why is that?
00:52:50.850 --> 00:52:52.890
Because of the grid
forming type inverters
00:52:52.890 --> 00:52:54.260
that they've been able to install.
00:52:54.260 --> 00:52:55.093
No, but why,
00:52:55.093 --> 00:52:56.980
why would we not be able to
get away from rotating mass
00:52:56.980 --> 00:52:58.180
with current technology?
00:52:59.520 --> 00:53:01.270
Because we don't have
those grid forming inverters
00:53:01.270 --> 00:53:02.110
installed here.
00:53:02.110 --> 00:53:03.681
I guess what is the benefit
00:53:03.681 --> 00:53:05.620
for the public and understand
00:53:05.620 --> 00:53:08.709
why is rotating mass
and that inertia required
00:53:08.709 --> 00:53:10.960
for stability?
00:53:10.960 --> 00:53:13.613
So the there's a,
00:53:15.140 --> 00:53:18.500
whenever you have it in balance of grid,
00:53:18.500 --> 00:53:21.990
of generation and
load, you lose load,
00:53:21.990 --> 00:53:24.710
or you lose generation,
load exceeds generation,
00:53:24.710 --> 00:53:27.780
frequency will decline.
00:53:27.780 --> 00:53:29.070
If you have low inertia
00:53:29.070 --> 00:53:31.540
that frequency declines very quickly.
00:53:31.540 --> 00:53:32.780
If you have higher inertia,
00:53:32.780 --> 00:53:35.100
the frequency will decay less quickly
00:53:35.100 --> 00:53:36.529
and relays and stuff are set
00:53:36.529 --> 00:53:41.055
so that you want that
decay and frequency
00:53:41.055 --> 00:53:42.750
to be slow, not fast,
00:53:42.750 --> 00:53:44.931
if you don't have any
inertia in the system
00:53:44.931 --> 00:53:47.190
that frequency falls off too quickly.
00:53:47.190 --> 00:53:48.140
So is it,
00:53:50.691 --> 00:53:52.890
I'm gonna put it in simple
terms I can understand or trust,
00:53:52.890 --> 00:53:54.230
see if I can get this right.
00:53:54.230 --> 00:53:58.360
Is that the rotating
mass provides the inertia
00:53:58.360 --> 00:54:00.940
as large rotating objects,
00:54:00.940 --> 00:54:05.480
provide the inertia a
heartbeat if you will,
00:54:05.480 --> 00:54:09.710
of that frequency throughout the grid.
00:54:09.710 --> 00:54:13.480
And as you have fewer and fewer
00:54:14.530 --> 00:54:15.650
pieces of rotating mass,
00:54:15.650 --> 00:54:18.200
that pulse, that heartbeat,
gets weaker and weaker.
00:54:19.070 --> 00:54:22.516
And as a frequency
00:54:22.516 --> 00:54:26.220
or gen and load come up and go down,
00:54:26.220 --> 00:54:28.990
it's harder to maintain that frequency
00:54:28.990 --> 00:54:31.090
and without substantial,
00:54:31.090 --> 00:54:33.840
without it sounds like
without enough of that inertia,
00:54:33.840 --> 00:54:35.823
that rotating mass inertia,
00:54:36.710 --> 00:54:39.360
you could lose control
frequency completely
00:54:39.360 --> 00:54:40.560
at some point down the road.
00:54:40.560 --> 00:54:41.393
Right.
00:54:41.393 --> 00:54:44.179
So that's really the
inertia keeps frequency
00:54:44.179 --> 00:54:45.930
from decaying too quickly.
00:54:45.930 --> 00:54:47.570
That's the bottom line.
00:54:47.570 --> 00:54:49.870
And fast decaying
frequency in the system
00:54:49.870 --> 00:54:52.619
is dangerous for reliability.
00:54:52.619 --> 00:54:54.860
(crosstalk)
00:54:54.860 --> 00:54:56.390
Causes the whole thing too?
00:54:56.390 --> 00:54:57.530
Right.
00:54:57.530 --> 00:55:00.580
So we have safeguards
for frequency going down.
00:55:00.580 --> 00:55:02.630
It takes time for those
safeguards to be deployed
00:55:02.630 --> 00:55:04.740
if frequency decays too quickly.
00:55:04.740 --> 00:55:07.570
Those safeguards can't
be deployed fast enough.
00:55:07.570 --> 00:55:09.620
So that's why we have a minimum inertia
00:55:09.620 --> 00:55:11.630
that we maintain all the time.
00:55:11.630 --> 00:55:14.843
And if you think
about the, you know,
00:55:15.860 --> 00:55:19.260
35,000 megawatts of
inverter-based resources we have now
00:55:19.260 --> 00:55:22.400
that don't have any of
that grid forming inverter,
00:55:22.400 --> 00:55:24.800
we have those,
those are there now.
00:55:24.800 --> 00:55:26.670
That's why I said with
the existing technologies
00:55:26.670 --> 00:55:27.920
that we have right now,
00:55:27.920 --> 00:55:30.164
we will have to maintain inertia.
00:55:30.164 --> 00:55:32.230
We'll have to have
synchronous generation
00:55:33.200 --> 00:55:36.240
And I was
gonna ask the question
00:55:36.240 --> 00:55:38.430
about batteries again, you know,
00:55:38.430 --> 00:55:41.450
synthetic inertia that
comes out of these,
00:55:41.450 --> 00:55:42.390
these newer batteries,
00:55:42.390 --> 00:55:44.958
they can solve frequency problems
00:55:44.958 --> 00:55:50.760
in a sub-cycle
instance, is that correct?
00:55:50.760 --> 00:55:51.593
In a short term
00:55:51.593 --> 00:55:52.928
And what
we're seeing, I mean,
00:55:52.928 --> 00:55:54.030
not everywhere,
00:55:54.030 --> 00:55:57.640
but from where we can
see and what we know about,
00:55:57.640 --> 00:56:00.140
you know, these larger
batteries that can happen.
00:56:00.140 --> 00:56:00.973
Right.
00:56:00.973 --> 00:56:02.510
Batteries are certainly a useful tool
00:56:02.510 --> 00:56:06.410
for short term frequency problems.
00:56:06.410 --> 00:56:07.510
So is that the thought process
00:56:07.510 --> 00:56:10.250
by creating the fast
frequency response service?
00:56:10.250 --> 00:56:11.083
That's right.
00:56:11.083 --> 00:56:12.154
That's the frequency responses for
00:56:12.154 --> 00:56:13.507
That wouldn't
replicate inertia
00:56:13.507 --> 00:56:15.222
in the long term.
00:56:15.222 --> 00:56:17.910
There is a longer
term inertia issue there.
00:56:17.910 --> 00:56:19.300
Yean, and that's
00:56:20.240 --> 00:56:22.370
but in the longer term
you're gonna have,
00:56:22.370 --> 00:56:27.080
if solve the short term
sub-cycle frequency issue,
00:56:27.080 --> 00:56:29.700
you'll have other tools at
your disposal on a longer term.
00:56:29.700 --> 00:56:30.533
Right.
00:56:32.470 --> 00:56:35.283
In the longer term
to resolve that issue,
00:56:36.150 --> 00:56:37.850
is that correct?
00:56:37.850 --> 00:56:39.830
If you have synchronous
generation online,
00:56:39.830 --> 00:56:40.877
you will.
Correct.
00:56:40.877 --> 00:56:42.930
Well, that's a good point.
00:56:42.930 --> 00:56:44.433
So to follow up,
00:56:46.590 --> 00:56:50.170
you're talking about interconnecting,
00:56:50.170 --> 00:56:53.040
all the the new
inverter-based technologies
00:56:53.040 --> 00:56:56.140
that are coming to the
system you would require
00:56:56.140 --> 00:56:59.690
the latest technology
that helps assist you
00:56:59.690 --> 00:57:00.903
and smoothing this out?
00:57:01.860 --> 00:57:03.770
So there are no
requirements today,
00:57:03.770 --> 00:57:04.823
but you're working on it?
00:57:04.823 --> 00:57:06.200
They are,
00:57:06.200 --> 00:57:07.220
we are working on them,
00:57:07.220 --> 00:57:08.560
but there are no requirements today.
00:57:08.560 --> 00:57:10.790
So that's an upcoming change.
Right.
00:57:10.790 --> 00:57:14.370
So how do we get at the 35,000 megawatts
00:57:14.370 --> 00:57:17.370
of inverter-based technologies
that's already in the ground?
00:57:18.520 --> 00:57:19.700
That's a good question.
00:57:19.700 --> 00:57:21.286
Yeah, no kidding.
00:57:21.286 --> 00:57:23.170
And do we
need to think about
00:57:23.170 --> 00:57:25.283
how we maintain,
00:57:27.696 --> 00:57:29.764
even with a financial incentive
00:57:29.764 --> 00:57:32.860
or scheduling protocols,
00:57:32.860 --> 00:57:36.715
to make sure that we at
a nodal basis or L&B basis
00:57:36.715 --> 00:57:39.100
don't ever get close
to that inflection point
00:57:39.100 --> 00:57:43.110
where the protocols gets too weak.
00:57:43.110 --> 00:57:43.943
You can,
00:57:43.943 --> 00:57:47.580
you can reliably operate
the grid with those,
00:57:47.580 --> 00:57:48.490
with those inverters,
00:57:48.490 --> 00:57:51.190
you just have to have synchronous
generation go with them.
00:57:51.190 --> 00:57:54.600
So it's not that they
pose a reliability issue.
00:57:54.600 --> 00:57:55.433
They just repose.
00:57:55.433 --> 00:57:56.910
They just pose a reliability issue
00:57:56.910 --> 00:57:58.673
if you don't have
synchronous generation.
00:57:58.673 --> 00:58:00.383
But what's the ratio?
00:58:02.443 --> 00:58:04.040
That, you know, we
have a ratio we run
00:58:04.040 --> 00:58:06.230
every second of the day that we watch.
00:58:06.230 --> 00:58:11.400
So it's 110 gigawatt
seconds is the minimum.
00:58:11.400 --> 00:58:15.600
And, you know, yesterday that ratio,
00:58:15.600 --> 00:58:18.970
that number was 350 gigawatt seconds.
00:58:18.970 --> 00:58:20.840
So we're way above it.
00:58:20.840 --> 00:58:23.850
There was a time in the fall of 2020
00:58:23.850 --> 00:58:27.190
when it got down to,
you know, 110 or 111,
00:58:27.190 --> 00:58:28.370
something like that.
00:58:28.370 --> 00:58:32.240
So we have reached
times when the system load
00:58:32.240 --> 00:58:36.243
is you know, in the
30,000 megawatt range,
00:58:37.390 --> 00:58:39.810
that a lot of that is
being supplied by wind
00:58:39.810 --> 00:58:42.700
and solar inverter based resources
00:58:42.700 --> 00:58:44.320
that we have to start
paying attention to that,
00:58:44.320 --> 00:58:48.520
we've never had to RUC
a unit, a synchronous unit,
00:58:48.520 --> 00:58:50.470
to maintain inertia,
00:58:50.470 --> 00:58:53.097
but we, we monitor it and we watch it
00:58:53.097 --> 00:58:54.810
and we've gotten close.
00:58:54.810 --> 00:58:56.560
We've gotten close once.
00:58:56.560 --> 00:58:58.096
Where we had to start thinking about it,
00:58:58.096 --> 00:59:00.880
but we didn't have, I mean, it didn't,
00:59:00.880 --> 00:59:02.120
we didn't have to.
00:59:02.120 --> 00:59:03.700
Would you say
that that possibility
00:59:03.700 --> 00:59:05.060
could increase in the future
00:59:05.060 --> 00:59:08.150
as we have more wind and even more solar
00:59:08.150 --> 00:59:09.430
coming onto the system?
00:59:09.430 --> 00:59:10.263
Certainly.
00:59:10.263 --> 00:59:13.357
Like the duck curve
situation in California
00:59:13.357 --> 00:59:16.410
does that translate into what
you're addressing right now?
00:59:16.410 --> 00:59:18.140
Because you have
wind, I'm sorry, not wind,
00:59:18.140 --> 00:59:20.910
but load coming off the
system towards the evening.
00:59:20.910 --> 00:59:21.743
Well.
00:59:23.671 --> 00:59:26.100
It's, well, when the solar drops off,
00:59:26.100 --> 00:59:28.750
it's not as big of an
issue as one that's on.
00:59:28.750 --> 00:59:31.507
So it'd beat the back
of a duck, I guess,
00:59:31.507 --> 00:59:32.853
if you wanna use that.
00:59:33.790 --> 00:59:35.802
But certainly as you,
00:59:35.802 --> 00:59:40.370
as the ratio of inverter base
to synchronous generation
00:59:40.370 --> 00:59:43.830
is that changes you can
expect that inertia value
00:59:43.830 --> 00:59:45.990
to continue to change as well.
00:59:45.990 --> 00:59:48.297
Are there transmission
related solutions
00:59:48.297 --> 00:59:51.510
that could help between
the balance there?
00:59:56.460 --> 00:59:57.550
Very limited.
00:59:57.550 --> 00:59:58.970
There are a couple of things you can do,
00:59:58.970 --> 01:00:00.150
but it's very, very limited.
01:00:00.150 --> 01:00:02.563
It's not a system wide fix.
01:00:04.660 --> 01:00:06.170
All right.
Thank you, Woody.
01:00:06.170 --> 01:00:07.620
We've kept you three minutes over.
01:00:07.620 --> 01:00:09.193
Oh, thank you.
01:00:09.193 --> 01:00:10.800
You better make that interview.
01:00:10.800 --> 01:00:12.423
It's important.
01:00:12.423 --> 01:00:13.757
Thanks, Kanun.
01:00:15.140 --> 01:00:16.590
Barbara, welcome.
01:00:16.590 --> 01:00:17.423
Thank you.
01:00:17.423 --> 01:00:19.032
The floor is yours.
01:00:19.032 --> 01:00:20.830
I'm really here today
01:00:20.830 --> 01:00:23.370
to kind of bring us back up to maybe,
01:00:23.370 --> 01:00:24.930
well, not really 30,000 feet,
01:00:24.930 --> 01:00:26.950
but an introduction to what's going on
01:00:26.950 --> 01:00:30.200
in the rest of the markets,
how ERCOT is similar,
01:00:30.200 --> 01:00:31.290
how ERCOT is different.
01:00:31.290 --> 01:00:32.751
And we'll kind of get
into some details on,
01:00:32.751 --> 01:00:36.600
on just market design
principles In general.
01:00:36.600 --> 01:00:38.860
If we can go to the first slide,
01:00:38.860 --> 01:00:42.226
CES covers all of the
North American markets
01:00:42.226 --> 01:00:43.570
including Mexico,
01:00:43.570 --> 01:00:46.430
I'm not really gonna
talk about Mexico today.
01:00:46.430 --> 01:00:48.060
You might know that their market reform
01:00:48.060 --> 01:00:51.356
has cratered under the
current administration
01:00:51.356 --> 01:00:53.070
in Mexico.
01:00:53.070 --> 01:00:55.610
So they, that market
design elements
01:00:55.610 --> 01:00:57.590
really haven't been implemented there,
01:00:57.590 --> 01:01:00.160
but we do look at all of the
other North American markets,
01:01:00.160 --> 01:01:03.310
and I've included details
on their market designs
01:01:03.310 --> 01:01:05.980
in this report and we'll
talk a little bit about those
01:01:05.980 --> 01:01:08.320
and how ERCOT differs,
and then really, you know,
01:01:08.320 --> 01:01:09.720
I think this should be interactive
01:01:09.720 --> 01:01:13.027
and linking sort of talk
about how differences
01:01:13.027 --> 01:01:14.460
and what the nuances are.
01:01:14.460 --> 01:01:16.090
Next slide.
01:01:16.090 --> 01:01:17.840
So, I first wanna kind of
01:01:17.840 --> 01:01:20.670
just get into the
fundamentals of market.
01:01:20.670 --> 01:01:22.720
Electricity is an unusual commodity
01:01:22.720 --> 01:01:25.957
and that it's instantaneously
produced and consumed.
01:01:25.957 --> 01:01:29.269
We don't have a lot of
storage in ERCOT yet.
01:01:29.269 --> 01:01:31.930
We are not a region
with a lot of pump storage
01:01:31.930 --> 01:01:33.770
or any other optionality
01:01:35.724 --> 01:01:37.730
on the hydro side.
01:01:37.730 --> 01:01:39.280
So we really are looking at
01:01:39.280 --> 01:01:42.030
kind of a keeping a
system perfectly in balance.
01:01:42.030 --> 01:01:44.467
And we also are looking
at keeping markets
01:01:44.467 --> 01:01:47.260
and reliability in balance.
01:01:47.260 --> 01:01:50.060
And that means you
don't want too much action
01:01:50.060 --> 01:01:51.074
on the reliability side,
01:01:51.074 --> 01:01:53.481
where out of market
activities are happening
01:01:53.481 --> 01:01:57.960
and you don't want the
markets to work in such a way
01:01:57.960 --> 01:01:59.980
that you compromise reliability.
01:01:59.980 --> 01:02:02.830
So you're always trying
to keep those in balance.
01:02:02.830 --> 01:02:05.800
The markets in ERCOT
are voluntary markets.
01:02:05.800 --> 01:02:08.230
They are dispatched on an economic basis
01:02:08.230 --> 01:02:11.330
now that's security
constraint economic basis.
01:02:11.330 --> 01:02:13.450
So the security constraint part
01:02:13.450 --> 01:02:15.323
is the reliability part that make sure
01:02:15.323 --> 01:02:17.903
that the grid security
is always in check.
01:02:17.903 --> 01:02:21.210
When units are dispatched,
01:02:21.210 --> 01:02:23.820
that market side is
based on offers and bids.
01:02:23.820 --> 01:02:26.560
So you have willing
buyers and willing sellers
01:02:26.560 --> 01:02:29.440
in the market that
are, have their prices.
01:02:29.440 --> 01:02:30.960
They have bids and offers in the market
01:02:30.960 --> 01:02:32.970
and they're sophisticated
buyers and sellers.
01:02:32.970 --> 01:02:35.700
This is not a market
that typically, you know,
01:02:35.700 --> 01:02:38.820
we're looking at unsophisticated
buyers and sellers.
01:02:38.820 --> 01:02:39.950
Occasionally we have people
01:02:39.950 --> 01:02:41.560
who don't understand the market rules,
01:02:41.560 --> 01:02:43.460
but for the most part,
01:02:43.460 --> 01:02:45.813
it's a very sophisticated market.
01:02:45.813 --> 01:02:49.190
On the other side,
the reliability construct,
01:02:49.190 --> 01:02:51.320
it's a mandatory construct.
01:02:51.320 --> 01:02:54.240
It's what he was spending
most of his time talking about.
01:02:54.240 --> 01:02:56.210
It's things where you don't wanna void,
01:02:56.210 --> 01:02:57.480
cascading outages.
01:02:57.480 --> 01:03:00.420
You want to ensure
that the system is stable.
01:03:00.420 --> 01:03:03.140
You're looking at
voltage, frequency, inertia,
01:03:03.140 --> 01:03:05.250
all of those things
are critically important.
01:03:05.250 --> 01:03:08.260
And that's a mandatory construct.
01:03:08.260 --> 01:03:09.874
They're relatively cost agnostic
01:03:09.874 --> 01:03:12.011
on the reliability side.
01:03:12.011 --> 01:03:14.493
Now, obviously ERCOT is not, you know,
01:03:16.760 --> 01:03:18.970
not thinking about costs
when they do things.
01:03:18.970 --> 01:03:21.180
But for the purposes of reliability,
01:03:21.180 --> 01:03:23.880
you're really not looking
at a market type construct.
01:03:23.880 --> 01:03:25.290
They're looking at supply and demand
01:03:25.290 --> 01:03:26.620
versus bids and offers.
01:03:26.620 --> 01:03:29.090
So they're looking at keeping
that supply and demand
01:03:29.090 --> 01:03:31.650
as well as reserves all in check.
01:03:31.650 --> 01:03:32.670
And they're really looking at it
01:03:32.670 --> 01:03:34.420
from an operational perspective
01:03:34.420 --> 01:03:36.582
versus a market perspective.
01:03:36.582 --> 01:03:38.250
And when it's in balance,
01:03:38.250 --> 01:03:41.640
you kind of get to this
economically optimal model
01:03:41.640 --> 01:03:42.675
and in ERCOT that
01:03:42.675 --> 01:03:46.770
that's really how we kind
of develop our reserves.
01:03:46.770 --> 01:03:48.183
That's not the way reserves,
01:03:49.040 --> 01:03:50.910
planning reserves are
developed in other markets.
01:03:50.910 --> 01:03:53.100
Other markets have
a different construct,
01:03:53.100 --> 01:03:54.870
but at under the energy only model,
01:03:54.870 --> 01:03:57.930
we really do kind of balance
that reliability and markets
01:03:57.930 --> 01:04:01.180
to come to an economically
optimal outcome.
01:04:01.180 --> 01:04:02.910
And that gives us our resource adequacy.
01:04:02.910 --> 01:04:04.420
So let's go to the next slide.
01:04:04.420 --> 01:04:05.253
So what happened?
01:04:05.253 --> 01:04:07.060
What happened in February?
01:04:07.060 --> 01:04:11.534
Well, in February we
saw snow and ice and cold
01:04:11.534 --> 01:04:15.530
and extremely dramatic
weather conditions.
01:04:15.530 --> 01:04:17.888
It was not a market issue.
01:04:17.888 --> 01:04:21.690
There were market outcomes
because of the issues,
01:04:21.690 --> 01:04:25.513
but it was a reliability
event driven by weather.
01:04:26.920 --> 01:04:28.910
And that led to high costs in the market
01:04:28.910 --> 01:04:30.700
that you have spent the last three days.
01:04:30.700 --> 01:04:33.340
I think Commissioner
Lake, you got the buy,
01:04:33.340 --> 01:04:35.753
which I'm sure your
colleagues are a little jealous.
01:04:35.753 --> 01:04:36.586
I would never call it that.
01:04:36.586 --> 01:04:38.042
(people laughing)
01:04:38.042 --> 01:04:40.589
Yeah, he's fresh.
01:04:40.589 --> 01:04:42.040
But yes,
01:04:42.040 --> 01:04:45.180
you get high costs and
low operating reserves.
01:04:45.180 --> 01:04:47.560
That's an event you
don't ever wanna happen.
01:04:47.560 --> 01:04:49.150
And that was event that frankly,
01:04:49.150 --> 01:04:51.370
the market could not cure.
01:04:51.370 --> 01:04:52.630
And we saw that.
01:04:52.630 --> 01:04:55.400
We saw that in February,
we have not seen
01:04:56.670 --> 01:04:58.960
many of those types of events
01:04:58.960 --> 01:05:01.680
across even North
America where, you know,
01:05:01.680 --> 01:05:04.710
you cannot fix something
through either market
01:05:04.710 --> 01:05:06.580
or at least reliability dispatch.
01:05:06.580 --> 01:05:08.441
So it was a really unique situation.
01:05:08.441 --> 01:05:13.270
I will credit ERCOT in the
fact that we did not end up in a,
01:05:13.270 --> 01:05:15.741
you know, cascading outage situation.
01:05:15.741 --> 01:05:19.780
So, you know, it
was a terrible event,
01:05:19.780 --> 01:05:24.353
but the imagining what would
have happened had we cascaded,
01:05:25.570 --> 01:05:29.030
would have been, you know,
just devastating for the State.
01:05:29.030 --> 01:05:31.853
So, go to the next slide.
01:05:33.520 --> 01:05:36.719
So that kind of led to
where we are today.
01:05:36.719 --> 01:05:38.524
(Barbara chuckles)
01:05:38.524 --> 01:05:40.128
For good reason.
01:05:40.128 --> 01:05:41.750
You know,
01:05:41.750 --> 01:05:44.620
the pendulum shifts a
little bit when you have a,
01:05:44.620 --> 01:05:47.440
have a major event in any market.
01:05:47.440 --> 01:05:50.260
And we always like to say that sort of,
01:05:50.260 --> 01:05:53.040
it's always a push and pull
between the reliability folks
01:05:53.040 --> 01:05:54.160
and the market folks on,
01:05:54.160 --> 01:05:56.620
on what the best outcomes are.
01:05:56.620 --> 01:05:59.140
And after a emergency event,
01:05:59.140 --> 01:06:02.200
you often see kind
of the operational side,
01:06:02.200 --> 01:06:04.732
there would be the reliability side,
01:06:04.732 --> 01:06:07.529
kind of weigh a little bit more
01:06:07.529 --> 01:06:09.230
in what they're doing.
01:06:09.230 --> 01:06:11.480
And we see more
out of market activities.
01:06:11.480 --> 01:06:14.855
So we're seeing more
reliability unit commitments
01:06:14.855 --> 01:06:17.649
this summer than we
have in any other summer,
01:06:17.649 --> 01:06:21.363
despite the fact that it's
actually been unseasonably cool.
01:06:22.320 --> 01:06:25.800
We're seeing more ancillary
services being purchased,
01:06:25.800 --> 01:06:28.910
all of those with good reason
01:06:28.910 --> 01:06:31.970
because of concerns
around grid security.
01:06:31.970 --> 01:06:36.850
But at some point we want to
get that pendulum back in order
01:06:36.850 --> 01:06:41.030
and determine kind of what
that longterm planning horizon
01:06:41.030 --> 01:06:44.762
is gonna look like,
what the market wants
01:06:44.762 --> 01:06:47.960
as far as kind of that system stability.
01:06:47.960 --> 01:06:52.210
And then we'll get that
resource adequacy back in check.
01:06:52.210 --> 01:06:53.043
Next slide.
01:06:55.560 --> 01:06:57.870
So you guys aren't alone.
01:06:57.870 --> 01:07:02.870
This list was developed
in 2000 or in 2018
01:07:04.260 --> 01:07:06.523
for a slide presentation I did
01:07:06.523 --> 01:07:08.773
for the Gulf Coast Power Association.
01:07:09.810 --> 01:07:13.230
And all of the RTOs are
facing very similar issues
01:07:13.230 --> 01:07:15.810
to what ERCOT is facing.
01:07:15.810 --> 01:07:17.920
This is not new, and
there's a lot to be learned
01:07:17.920 --> 01:07:20.608
from what the other RTOs/ISOs are doing.
01:07:20.608 --> 01:07:22.680
Most are facing challenges
01:07:22.680 --> 01:07:24.483
with higher renewable penetrations
01:07:24.483 --> 01:07:26.190
and looking at their markets
01:07:26.190 --> 01:07:28.770
as they see higher
renewable penetration,
01:07:28.770 --> 01:07:30.530
they're seeking market based solutions
01:07:30.530 --> 01:07:32.256
to incentivize flexible generation
01:07:32.256 --> 01:07:35.240
to balance the system
01:07:35.240 --> 01:07:38.653
as it brings in more
of that variable energy.
01:07:39.590 --> 01:07:42.390
They're looking at required,
01:07:42.390 --> 01:07:46.010
and expensive potentially,
new transmission investment
01:07:46.010 --> 01:07:49.463
to link wind and renewable
resources into the grid.
01:07:49.463 --> 01:07:52.360
Also transmission
necessary for congestion
01:07:52.360 --> 01:07:53.490
and other things,
01:07:53.490 --> 01:07:56.383
but significant new
transmission investment.
01:07:57.810 --> 01:07:59.530
Not so much here in Texas,
01:07:59.530 --> 01:08:02.528
because we're a single
state RTO, but you know,
01:08:02.528 --> 01:08:06.620
the RTOs are looking to balance state
01:08:06.620 --> 01:08:10.390
and other policies
that are extra market.
01:08:10.390 --> 01:08:11.470
Here you know,
01:08:11.470 --> 01:08:13.720
the best example is probably the ITC
01:08:13.720 --> 01:08:15.870
being an example of kind of something
01:08:15.870 --> 01:08:20.840
that bolsters certain
investments over others
01:08:20.840 --> 01:08:23.440
and might lead to, you
know, more of those,
01:08:23.440 --> 01:08:25.670
those renewables
being built than others.
01:08:25.670 --> 01:08:28.960
But you know, there's
a lot of local policies
01:08:28.960 --> 01:08:32.060
that do influence how markets react.
01:08:32.060 --> 01:08:33.710
And then finally, and this again,
01:08:33.710 --> 01:08:36.210
this list was developed in 2018
01:08:36.210 --> 01:08:37.600
and I kept it that way,
01:08:37.600 --> 01:08:39.300
but addressing field security
01:08:39.300 --> 01:08:43.490
and concerns related to
winter events and other events,
01:08:43.490 --> 01:08:47.290
we have been in the
Northeast talking about this
01:08:47.290 --> 01:08:50.806
for the last, you know, decade really
01:08:50.806 --> 01:08:53.412
following several
different winter events,
01:08:53.412 --> 01:08:55.670
New England suffers from sort of
01:08:55.670 --> 01:08:57.310
being at the end of the pipeline
01:08:57.310 --> 01:09:01.700
and often have fuel security
concerns throughout the winter.
01:09:01.700 --> 01:09:03.470
So there's a lot to be learned
01:09:03.470 --> 01:09:05.340
from those other markets
on what they're doing
01:09:05.340 --> 01:09:07.500
with regards to coordinate
good coordination
01:09:07.500 --> 01:09:12.160
between the pipeline companies
and the energy providers
01:09:12.160 --> 01:09:16.263
to ensure reliability during
those times of constraint.
01:09:17.730 --> 01:09:20.570
So this slide is a doozy,
01:09:20.570 --> 01:09:22.670
and I appreciate that
when you look at it,
01:09:23.560 --> 01:09:25.820
but I wanted to have
all the markets together
01:09:25.820 --> 01:09:28.130
so that we can have
a fulsome conversation
01:09:28.130 --> 01:09:31.410
about each market together.
01:09:31.410 --> 01:09:32.680
And I'm just gonna kind of run down
01:09:32.680 --> 01:09:37.070
on the left-hand side
each of the market types
01:09:37.070 --> 01:09:40.120
and elements, and kind
of talk a little bit about
01:09:40.120 --> 01:09:42.020
what each of the markets are doing.
01:09:42.020 --> 01:09:44.400
So the first one is a
centralized capacity market.
01:09:44.400 --> 01:09:46.600
There are centralized capacity markets
01:09:46.600 --> 01:09:52.820
and all but two markets in
some way shape or form,
01:09:52.820 --> 01:09:56.660
California has a supply side obligate
01:09:56.660 --> 01:09:57.985
or a load side obligation
01:09:57.985 --> 01:10:01.700
on their largest utilities
01:10:01.700 --> 01:10:03.420
and load serving entities.
01:10:03.420 --> 01:10:07.830
So they require them to
maintain a certain number amount
01:10:07.830 --> 01:10:11.623
of reserves and
contract for their supply.
01:10:13.070 --> 01:10:14.820
In the other RTOs,
01:10:14.820 --> 01:10:16.880
we see the Ontario is just developing
01:10:16.880 --> 01:10:19.290
a forward capacity market
01:10:19.290 --> 01:10:21.630
isn't incremental
forward capacity market.
01:10:21.630 --> 01:10:25.030
It is looking at new investments
01:10:25.030 --> 01:10:28.190
rather than writing capacity payments
01:10:28.190 --> 01:10:29.690
to existing generation.
01:10:29.690 --> 01:10:32.320
And then all of the Northeast markets,
01:10:32.320 --> 01:10:35.977
as well as MISO have
forward capacity markets
01:10:35.977 --> 01:10:39.640
and SPP has
obligations on the utilities,
01:10:39.640 --> 01:10:43.800
so that utilities are required
to maintain their reserves
01:10:43.800 --> 01:10:46.110
and contract for their reserves.
01:10:46.110 --> 01:10:49.720
So, it's only Alberta and ERCOT
01:10:51.270 --> 01:10:53.800
that don't have forward capacity market.
01:10:53.800 --> 01:10:56.060
That means that we
are energy only markets
01:10:56.060 --> 01:10:58.370
and you know it is a difference
01:10:58.370 --> 01:11:02.820
and it does drive to
what Brattle has looked at,
01:11:02.820 --> 01:11:05.720
which is the economically optimal model,
01:11:05.720 --> 01:11:09.460
which means at times you are
going to have scarcity events.
01:11:09.460 --> 01:11:10.920
In fact, that's where, you know,
01:11:10.920 --> 01:11:12.620
generators make their revenues
01:11:12.620 --> 01:11:15.200
in order make new investments.
01:11:15.200 --> 01:11:18.670
So the scarcity events
are somewhat required
01:11:18.670 --> 01:11:21.623
under the construct that ERCOT has.
01:11:22.470 --> 01:11:25.220
We certainly don't wanna
see events like February,
01:11:25.220 --> 01:11:28.370
but you know, sub
small price excursions
01:11:28.370 --> 01:11:30.320
when there are shortages in the market
01:11:30.320 --> 01:11:33.100
are really what drive
revenues for generators
01:11:33.100 --> 01:11:35.050
and drive investment in the future.
01:11:35.050 --> 01:11:36.230
And those forward curves
01:11:36.230 --> 01:11:38.030
that you were talking about earlier.
01:11:39.040 --> 01:11:42.940
The next contract is a day ahead market.
01:11:42.940 --> 01:11:46.173
Most of the markets
have day ahead markets.
01:11:49.263 --> 01:11:52.390
Canadian markets are just
developing day ahead markets,
01:11:52.390 --> 01:11:55.633
but all of the US markets
have day ahead markets.
01:11:56.610 --> 01:11:58.523
Financial Transmission Rights,
01:12:00.320 --> 01:12:04.990
pretty standard offerings
in all of the markets.
01:12:04.990 --> 01:12:06.150
Offline Reserve Market,
01:12:06.150 --> 01:12:08.860
that's your non-spinning reserve service
01:12:08.860 --> 01:12:09.693
in all markets.
01:12:09.693 --> 01:12:11.570
And that is actually a NERC requirement
01:12:11.570 --> 01:12:14.630
to have an offline reserve product.
01:12:14.630 --> 01:12:17.926
The next one is one that I, you know,
01:12:17.926 --> 01:12:21.200
we should talk about and
that's a ramping market
01:12:21.200 --> 01:12:24.770
that has been introduced
in MISO and in California,
01:12:24.770 --> 01:12:28.380
as they have seen new remote
renewables in their markets
01:12:28.380 --> 01:12:31.280
and having an ancillary
service ramping product
01:12:31.280 --> 01:12:32.650
in the market, first of all,
01:12:32.650 --> 01:12:35.040
provide some of those incentives
that we've been looking for
01:12:35.040 --> 01:12:36.870
for flexible generation.
01:12:36.870 --> 01:12:39.770
So the flexible generation
that exists in the market
01:12:39.770 --> 01:12:41.750
as well as potentially
new flexible generation,
01:12:41.750 --> 01:12:43.678
as we start to see some of that,
01:12:43.678 --> 01:12:45.460
that pricing in the market.
01:12:45.460 --> 01:12:48.680
And there's transparency for investors
01:12:48.680 --> 01:12:51.800
to know whether or not
they can earn in that market.
01:12:51.800 --> 01:12:55.520
But a ramping product
would help with those times
01:12:55.520 --> 01:12:57.073
when solar is coming down,
01:12:57.073 --> 01:13:00.012
when coming up in the
mornings and evenings.
01:13:00.012 --> 01:13:03.240
So it's certainly a
product that is something
01:13:03.240 --> 01:13:05.990
that we should be looking
at in the ERCOT Market,
01:13:05.990 --> 01:13:07.147
given the amount of renewables
01:13:07.147 --> 01:13:08.723
that have in the market.
01:13:09.570 --> 01:13:13.500
Real-time market, everybody
has real-time markets.
01:13:13.500 --> 01:13:16.090
In fact, it's you know,
01:13:16.090 --> 01:13:19.140
it's really where the
actual transactions
01:13:19.140 --> 01:13:22.933
between the conversion
of energy happens.
01:13:24.500 --> 01:13:26.720
Regulation markets are required,
01:13:26.720 --> 01:13:30.770
and some of them are contracted service,
01:13:30.770 --> 01:13:33.490
and some of them are in
the real-time market only,
01:13:33.490 --> 01:13:35.170
and not in the day ahead market.
01:13:35.170 --> 01:13:36.240
And we can talk a little bit
01:13:36.240 --> 01:13:39.140
about how those transactions happen
01:13:40.872 --> 01:13:42.807
and then synchronous reserve markets,
01:13:42.807 --> 01:13:46.283
we obviously have a
synchronous reserve market.
01:13:47.650 --> 01:13:49.732
So getting into market pricing.
01:13:49.732 --> 01:13:51.418
So before you move on,
01:13:51.418 --> 01:13:52.251
Yeah, sure.
01:13:52.251 --> 01:13:53.330
if we could ask questions
01:13:53.330 --> 01:13:54.860
Absolutely.
01:13:54.860 --> 01:13:56.510
Physical day-ahead markets.
01:13:56.510 --> 01:13:57.343
Yep.
01:13:57.343 --> 01:13:58.176
Okay.
01:13:58.176 --> 01:13:59.190
Who has those?
01:13:59.190 --> 01:14:01.370
So the markets that have
forward capacity markets
01:14:01.370 --> 01:14:03.434
to have forward obligations
01:14:03.434 --> 01:14:05.213
All of them?
01:14:06.400 --> 01:14:08.800
So New England does not.
01:14:08.800 --> 01:14:12.390
New England has a must offer
requirement in the real-time,
01:14:12.390 --> 01:14:14.913
but no must offer in
the day ahead market.
01:14:16.070 --> 01:14:18.850
But the other markets with
forward capacity markets
01:14:18.850 --> 01:14:21.360
do have a day-ahead offer obligation.
01:14:21.360 --> 01:14:23.583
There are not day-ahead
obligations in the markets
01:14:23.583 --> 01:14:26.480
that do not have a capacity markets.
01:14:26.480 --> 01:14:27.720
Do you happen
to know what the
01:14:27.720 --> 01:14:30.190
system wide offer cap is in Alberta?
01:14:30.190 --> 01:14:31.520
Do they have a system wide offer cap?
01:14:31.520 --> 01:14:34.110
Yeah, their
offer cap is a 2000.
01:14:34.110 --> 01:14:35.010
Okay. 2000 appears to be
01:14:35.010 --> 01:14:37.379
Oh wait,
wait, 1000 pardon me.
01:14:37.379 --> 01:14:38.570
Pardon me, 1000.
1000, 2000,
01:14:38.570 --> 01:14:40.840
kind of appears to be universal range.
01:14:40.840 --> 01:14:41.990
Is that accurate?
01:14:41.990 --> 01:14:43.211
Yeah, one to two,
01:14:43.211 --> 01:14:47.240
so the FERC went through
a market pricing rule,
01:14:47.240 --> 01:14:48.870
a scarcity pricing rule
01:14:48.870 --> 01:14:52.440
that many of the markets now
01:14:52.440 --> 01:14:56.267
have a verifiable option
above a thousand dollars
01:14:56.267 --> 01:14:58.750
that can go up to $2,000
01:14:58.750 --> 01:15:00.623
and then they'll have shadow prices
01:15:00.623 --> 01:15:03.560
that would actually take the
potential market prices higher,
01:15:03.560 --> 01:15:06.705
but the, the offer cap
is a thousand dollars
01:15:06.705 --> 01:15:11.340
or verifiable costs up to
$2,000 in most of the markets.
01:15:11.340 --> 01:15:13.200
And there's some nuances there,
01:15:13.200 --> 01:15:14.400
there's some differences there,
01:15:14.400 --> 01:15:19.060
but for example, SPP, you
can offer up to, you know,
01:15:19.060 --> 01:15:20.210
you can offer whatever you want,
01:15:20.210 --> 01:15:24.180
as long as you can
verify it, but you know.
01:15:24.180 --> 01:15:27.180
How unique are
we in this spectrum?
01:15:27.180 --> 01:15:29.713
And you might get to it.
01:15:32.620 --> 01:15:34.870
The ORDC Paradigm.
01:15:34.870 --> 01:15:36.970
Operating Reserve Demand Curve.
01:15:36.970 --> 01:15:37.803
So,
01:15:39.140 --> 01:15:42.666
there are penalty curves
in most of the markets,
01:15:42.666 --> 01:15:46.290
similar to the operating
reserve demand curve,
01:15:46.290 --> 01:15:47.960
they're administrative curves,
01:15:47.960 --> 01:15:48.860
they have penalty factors,
01:15:48.860 --> 01:15:51.230
and they're based on the probability
01:15:51.230 --> 01:15:53.012
of loss of load probability
01:15:53.012 --> 01:15:55.000
and the value of loss load.
01:15:55.000 --> 01:15:56.750
So similar constructs
01:15:57.760 --> 01:16:02.590
and PJM is introducing
starting in May of 2022,
01:16:02.590 --> 01:16:04.110
an operating reserve demand curve
01:16:04.110 --> 01:16:06.373
that actually goes up to $14,000.
01:16:07.240 --> 01:16:08.477
Wow.
Yes.
01:16:08.477 --> 01:16:09.923
That's expensive.
01:16:09.923 --> 01:16:11.814
And a capacity payment?
01:16:11.814 --> 01:16:13.500
And a capacity payment.
01:16:13.500 --> 01:16:15.823
Wow.
Yeah.
01:16:21.130 --> 01:16:22.308
Neat, for them.
01:16:22.308 --> 01:16:23.852
(people laughing)
01:16:23.852 --> 01:16:25.393
I wouldn't want to
be paying electric bills.
01:16:25.393 --> 01:16:26.476
Me neither.
01:16:27.445 --> 01:16:28.880
You know,
01:16:28.880 --> 01:16:31.320
we will be monitoring it as
it gets implemented to see,
01:16:31.320 --> 01:16:34.680
you know, what impact it
really has on real-time prices.
01:16:34.680 --> 01:16:36.730
My expectation is it's
gonna be, you know,
01:16:36.730 --> 01:16:40.584
pretty limited amount of events
01:16:40.584 --> 01:16:43.430
would get to anywhere
near that price, but it does.
01:16:43.430 --> 01:16:46.255
It's a longer curve.
01:16:46.255 --> 01:16:48.680
And then when there's
been a lot of comments in,
01:16:48.680 --> 01:16:51.260
in this docket talking about, you know,
01:16:51.260 --> 01:16:54.240
changing the slope of the curve
01:16:54.240 --> 01:16:57.410
and the PJM curve although
it does have that high cap,
01:16:57.410 --> 01:16:59.350
it takes a little longer
to get there. So.
01:16:59.350 --> 01:17:00.930
So if they get
into a big blizzard,
01:17:00.930 --> 01:17:03.990
which they're accustomed
to having in those areas
01:17:03.990 --> 01:17:05.480
and a lot of freeze,
01:17:05.480 --> 01:17:08.243
could they stay at 14,000
for awhile under that model?
01:17:10.149 --> 01:17:11.060
They could.
01:17:11.060 --> 01:17:12.897
Wow.
They could.
01:17:12.897 --> 01:17:15.710
Typically they handle
those reasons a little better
01:17:15.710 --> 01:17:17.053
than Texas does.
01:17:17.930 --> 01:17:20.210
So typically those events are, you know,
01:17:20.210 --> 01:17:22.120
they do have those types of events.
01:17:22.120 --> 01:17:25.030
They have fuels security type events,
01:17:25.030 --> 01:17:29.530
but typically they
resolve a little better
01:17:29.530 --> 01:17:31.010
than we've had experience.
01:17:31.010 --> 01:17:31.843
But obviously,
01:17:32.724 --> 01:17:34.080
they both the NERC
01:17:34.080 --> 01:17:37.250
has changed their
weatherization requirements
01:17:37.250 --> 01:17:38.100
for power plants.
01:17:38.100 --> 01:17:41.720
There's been new NERC
requirements put in place.
01:17:41.720 --> 01:17:44.100
And all of the Northeast
markets have really been
01:17:44.100 --> 01:17:46.948
spending a lot of time
on fuel security issues
01:17:46.948 --> 01:17:49.660
as it relates, especially the you know,
01:17:49.660 --> 01:17:52.770
as it relates to capacity that
is getting a capacity payment
01:17:52.770 --> 01:17:55.230
and ensUring that there's
a fuel security for those
01:17:55.230 --> 01:17:56.860
those units that have,
01:17:56.860 --> 01:17:59.230
that are making those
commitments into the market.
01:17:59.230 --> 01:18:01.450
That's part of
the paradox, right?
01:18:01.450 --> 01:18:06.160
Like the whether it's
2,000 or 9,000 or 14,000
01:18:06.160 --> 01:18:07.930
from a reliability standpoint,
01:18:07.930 --> 01:18:10.190
nobody ever wants to get there,
01:18:10.190 --> 01:18:13.580
but that ORDC is there
to provide the incentive
01:18:13.580 --> 01:18:16.190
and the revenues for people
who are able generators,
01:18:16.190 --> 01:18:19.613
who are able to provide
generation when it's needed most,
01:18:21.030 --> 01:18:22.416
but we never want to need it that badly.
01:18:22.416 --> 01:18:23.249
Yeah.
01:18:23.249 --> 01:18:24.090
I mean,
01:18:24.090 --> 01:18:25.790
the thing about these
high caps is first of all,
01:18:25.790 --> 01:18:27.050
nobody wants them.
01:18:27.050 --> 01:18:28.737
Generators don't want
them because it turns out that,
01:18:28.737 --> 01:18:30.310
you know, when it happens,
01:18:30.310 --> 01:18:32.140
typically some generators
are short and that's you know,
01:18:32.140 --> 01:18:34.160
where we're at, we're at high prices.
01:18:34.160 --> 01:18:38.300
So those generators are
having to resolve their obligations
01:18:38.300 --> 01:18:40.160
in the markets at very high prices.
01:18:40.160 --> 01:18:42.390
Loads don't want them
because there's very high prices.
01:18:42.390 --> 01:18:45.960
Now there's hedging around,
you know, the exposure to those,
01:18:45.960 --> 01:18:47.490
those prices.
01:18:47.490 --> 01:18:49.320
So why do
people keep doing them?
01:18:49.320 --> 01:18:53.970
Yeah, so we talk about the
operating reserve demand curve
01:18:55.050 --> 01:18:58.880
in absence of the hedges
that actually exist in the market.
01:18:58.880 --> 01:19:00.860
And we have to be, you know.
01:19:00.860 --> 01:19:02.550
Most thermal units,
01:19:02.550 --> 01:19:04.420
there's very few merchant thermal units.
01:19:04.420 --> 01:19:07.400
In fact, I can't think
of one right now.
01:19:07.400 --> 01:19:09.280
There are, there are some, you know,
01:19:09.280 --> 01:19:12.550
limited merchant units
in the ERCOT market,
01:19:12.550 --> 01:19:15.470
but everybody else is under
a financial hedge of some sort.
01:19:15.470 --> 01:19:17.690
So they are not actually getting
01:19:17.690 --> 01:19:19.330
the operating reserve demand curve.
01:19:19.330 --> 01:19:22.010
What the operating
reserve demand curve does,
01:19:22.010 --> 01:19:26.590
is it signals the need
for new generation
01:19:26.590 --> 01:19:29.100
and hopefully pushes
those forward curves up
01:19:29.100 --> 01:19:31.910
and pushes the value of the next PPA
01:19:31.910 --> 01:19:33.113
that someone signs.
01:19:34.040 --> 01:19:35.547
But for the most part you know it's,
01:19:35.547 --> 01:19:37.210
So, under
the current construct,
01:19:37.210 --> 01:19:41.220
the only way to send market signals
01:19:41.220 --> 01:19:45.318
for future generation,
for future new generation
01:19:45.318 --> 01:19:47.870
is by having a terrible crisis,
01:19:47.870 --> 01:19:49.750
which spikes they already see.
01:19:49.750 --> 01:19:53.650
Well, we hope
that we get nuance signals
01:19:53.650 --> 01:19:54.810
throughout the year
01:19:54.810 --> 01:19:57.218
that are not at $9,000 but maybe higher
01:19:57.218 --> 01:19:59.230
than the marginal costs of the market.
01:19:59.230 --> 01:20:02.200
So what you really want is margin.
01:20:02.200 --> 01:20:05.100
You want the market to
be above the marginal cost
01:20:05.100 --> 01:20:06.160
of units in the market
01:20:06.160 --> 01:20:09.210
and that clearing price to be higher
01:20:09.210 --> 01:20:10.500
than the marginal costs.
01:20:10.500 --> 01:20:12.810
So there is some
profitability in the market.
01:20:12.810 --> 01:20:14.850
So sounds like
we need to work on that.
01:20:14.850 --> 01:20:15.683
Yeah.
01:20:15.683 --> 01:20:16.516
Work on that part
01:20:16.516 --> 01:20:20.670
but there's also the only way
01:20:20.670 --> 01:20:22.567
under the current
construct, not just at ERCOT,
01:20:22.567 --> 01:20:25.330
but from what I understand other markets
01:20:25.330 --> 01:20:27.267
with the uniform price going,
01:20:27.267 --> 01:20:31.260
and the only way efficient units
01:20:31.260 --> 01:20:33.600
can have profitability
01:20:33.600 --> 01:20:37.280
is if there are other
more inefficient units
01:20:37.280 --> 01:20:40.240
that have higher
marginal operating costs
01:20:40.240 --> 01:20:42.496
to bring that price up.
01:20:42.496 --> 01:20:43.329
Yes.
01:20:43.329 --> 01:20:45.508
So marginal pricing in
the market is the weight
01:20:45.508 --> 01:20:46.877
(crosstalk)
01:20:46.877 --> 01:20:51.877
If we had all very
efficient thermal generation
01:20:51.950 --> 01:20:53.100
under the current construct,
01:20:53.100 --> 01:20:56.480
nobody would generate a profit
01:20:56.480 --> 01:20:58.993
unless there was a terrible crisis.
01:21:00.910 --> 01:21:03.464
And so, yeah, we have some work to do.
01:21:03.464 --> 01:21:05.690
I think people would withhold
01:21:05.690 --> 01:21:08.490
to create the crisis
to raise the prices.
01:21:08.490 --> 01:21:10.320
Oh yeah, we got some
work to do if that's the case.
01:21:10.320 --> 01:21:11.970
Well, I hope
that's not the case
01:21:11.970 --> 01:21:14.350
cause we don't wanna talk
about economic withholding
01:21:14.350 --> 01:21:19.200
that you know, but
people will retire assets.
01:21:19.200 --> 01:21:23.710
People will, you know, have seasonal,
01:21:23.710 --> 01:21:24.930
seasonally take off their units.
01:21:24.930 --> 01:21:27.440
So they won't be running
their units in seasons
01:21:27.440 --> 01:21:29.690
where they don't think
they can be profitable.
01:21:29.690 --> 01:21:32.600
So rather than sort of an a withholding,
01:21:32.600 --> 01:21:34.440
they may, you know, retire units.
01:21:34.440 --> 01:21:36.070
We certainly will see.
01:21:36.070 --> 01:21:37.720
And that's what drives us
01:21:37.720 --> 01:21:40.640
to this economically
optimal reserve margin,
01:21:40.640 --> 01:21:44.180
which is relatively low
from a comfort perspective
01:21:44.180 --> 01:21:46.680
of a typical system operator.
01:21:46.680 --> 01:21:49.930
So when you're looking
at kind of rattles, you know,
01:21:49.930 --> 01:21:51.150
study that came up
01:21:51.150 --> 01:21:53.540
with an economically
optimal reserve margin
01:21:53.540 --> 01:21:55.813
of 10 plus percent,
01:21:57.343 --> 01:22:01.110
that number for a lot of
system operators is you know,
01:22:01.110 --> 01:22:03.930
it's lower than we typically see
01:22:03.930 --> 01:22:05.500
in some of the other markets
01:22:05.500 --> 01:22:07.263
and a system operator often you know,
01:22:07.263 --> 01:22:08.400
will look at that.
01:22:08.400 --> 01:22:11.570
And it worked, and
that economic optimality
01:22:12.420 --> 01:22:14.810
basically requires certain times
01:22:14.810 --> 01:22:16.430
where you're going to have, you know,
01:22:16.430 --> 01:22:19.500
high prices and the
potential for loss of load.
01:22:19.500 --> 01:22:21.630
You hope that if it's
economically optimal,
01:22:21.630 --> 01:22:23.330
you don't get into
loss of load conditions,
01:22:23.330 --> 01:22:25.244
but you are going to
have those scarcity prices.
01:22:25.244 --> 01:22:26.880
And that's how the market,
01:22:26.880 --> 01:22:28.180
that's how the market operates.
01:22:28.180 --> 01:22:29.720
So when you get economically optimal,
01:22:29.720 --> 01:22:32.350
you are gonna have those
scarcity pricing events,
01:22:32.350 --> 01:22:35.800
which you know for
regulators and politicians,
01:22:35.800 --> 01:22:38.840
and as a recovering regulator myself,
01:22:38.840 --> 01:22:41.250
high prices are not fun
01:22:41.250 --> 01:22:43.950
because they become political issues.
01:22:43.950 --> 01:22:45.500
They become public issues.
01:22:45.500 --> 01:22:47.420
They affect load.
01:22:47.420 --> 01:22:51.020
They affect buyers in the
market and just mitigate that.
01:22:51.020 --> 01:22:53.220
But it's one of those,
one of those things,
01:22:53.220 --> 01:22:56.597
when we see sustained pricing events,
01:22:56.597 --> 01:22:59.950
it typically causes problems.
01:22:59.950 --> 01:23:03.050
And we end up in discussions like this,
01:23:03.050 --> 01:23:04.350
where we're talking about
01:23:04.350 --> 01:23:07.456
whether or not that's
the optimal market,
01:23:07.456 --> 01:23:08.405
that being said,
01:23:08.405 --> 01:23:11.252
the energy only market has
been extremely successful
01:23:11.252 --> 01:23:12.730
in Texas.
01:23:12.730 --> 01:23:16.150
It has driven prices very low.
01:23:16.150 --> 01:23:19.890
We have not seen a
excessive amount of retirements
01:23:19.890 --> 01:23:20.723
in the market.
01:23:20.723 --> 01:23:22.540
We are keeping units in the market.
01:23:22.540 --> 01:23:25.760
We have the event in February
01:23:25.760 --> 01:23:29.824
was not a event based on margins.
01:23:29.824 --> 01:23:32.337
It was a weather event that's you know,
01:23:32.337 --> 01:23:35.450
it was an operational
events, not a you know,
01:23:35.450 --> 01:23:37.650
event that we could have foreseen.
01:23:37.650 --> 01:23:41.020
We had great planning reserves
going into kind of you know,
01:23:41.020 --> 01:23:41.853
that event.
01:23:41.853 --> 01:23:44.700
But unfortunately the operating reserves
01:23:44.700 --> 01:23:46.510
didn't come to fruition.
01:23:46.510 --> 01:23:49.363
That was not really a market event,
01:23:50.600 --> 01:23:53.553
but certainly, you know we,
01:23:54.677 --> 01:23:55.860
we don't want those, you know,
01:23:55.860 --> 01:23:57.904
price excursions to
last a really long time.
01:23:57.904 --> 01:23:59.007
Sure, but
No one wants to see that.
01:23:59.007 --> 01:24:00.860
the only way new generators
01:24:00.860 --> 01:24:05.030
or new investment in a
dispatchable generation can happen
01:24:05.030 --> 01:24:06.207
is if we have these crisis events,
01:24:06.207 --> 01:24:08.000
say they put the price signals out there
01:24:08.000 --> 01:24:09.740
for the forward curves.
01:24:09.740 --> 01:24:10.573
Not,
01:24:10.573 --> 01:24:12.570
so we're not looking at crisis events.
01:24:12.570 --> 01:24:16.883
What we're looking for is the marginal,
01:24:17.950 --> 01:24:20.580
the prices in the market
to exceed the marginal cost
01:24:20.580 --> 01:24:23.070
of the existing generator,
such that there's a profit.
01:24:23.070 --> 01:24:23.903
Sure.
01:24:23.903 --> 01:24:26.790
So I guess the point is, as
long as we have the bonus,
01:24:26.790 --> 01:24:30.060
the RCD bonus associated with
01:24:31.870 --> 01:24:33.870
increasing scarcity,
01:24:33.870 --> 01:24:36.510
so you own revenues are only generated,
01:24:36.510 --> 01:24:37.800
profits are only generated
01:24:37.800 --> 01:24:41.873
the closer we moved to
running out of reserves.
01:24:43.120 --> 01:24:43.953
So,
01:24:43.953 --> 01:24:47.470
the profitability depends
on the efficiency of the units.
01:24:47.470 --> 01:24:50.120
So an efficient unit is
going to make more money
01:24:50.120 --> 01:24:53.260
than a less efficient
unit in the market.
01:24:53.260 --> 01:24:56.430
The operating reserve demand curve,
01:24:56.430 --> 01:24:59.398
as much as it does
influence profits in the market.
01:24:59.398 --> 01:25:02.180
It's not something any
investors looking at,
01:25:02.180 --> 01:25:05.809
because it is driven
by operational events.
01:25:05.809 --> 01:25:06.970
We heard earlier
01:25:06.970 --> 01:25:10.093
that that's what sets the
price signal for forward curves.
01:25:10.940 --> 01:25:12.040
So my question is,
01:25:12.040 --> 01:25:13.700
does anybody has any market out there?
01:25:13.700 --> 01:25:16.440
So the market
clearing price sets the price,
01:25:16.440 --> 01:25:18.290
the operating reserve demand curve
01:25:18.290 --> 01:25:21.327
sometimes influences
that market clearing price.
01:25:21.327 --> 01:25:26.120
But what investors are really looking at
01:25:26.120 --> 01:25:29.630
is the average market clearing price.
01:25:29.630 --> 01:25:31.310
Sometimes that is influenced
01:25:31.310 --> 01:25:33.090
by the operating reserve demand curve.
01:25:33.090 --> 01:25:35.700
But we've seen over the history of ERCOT
01:25:35.700 --> 01:25:37.870
up until sort of recent events
01:25:37.870 --> 01:25:39.740
that that operating reserve demand curve
01:25:39.740 --> 01:25:42.540
has not really been significant at all.
01:25:42.540 --> 01:25:45.010
And we are seeing investment
in the ERCOT market.
01:25:45.010 --> 01:25:46.940
We're seeing tremendous
amount of investment
01:25:46.940 --> 01:25:48.930
on the renewable side.
01:25:48.930 --> 01:25:51.430
What about
dispatchable reliable assets?
01:25:52.330 --> 01:25:54.213
So I would argue
that, you know,
01:25:54.213 --> 01:25:56.419
that renewable assets
do provide reliability.
01:25:56.419 --> 01:25:58.710
They are variable.
01:25:58.710 --> 01:26:00.477
Okay, please
reconcile that one for me,
01:26:00.477 --> 01:26:02.500
because we had a couple of days in June
01:26:02.500 --> 01:26:06.237
that we're zero output.
01:26:06.237 --> 01:26:07.150
So.
01:26:07.150 --> 01:26:08.970
And we all know what happened.
01:26:08.970 --> 01:26:10.730
So please explain how we reconcile that.
01:26:10.730 --> 01:26:12.540
So you are gonna have days now
01:26:12.540 --> 01:26:14.460
during that period in June,
01:26:14.460 --> 01:26:17.393
it was sunny and the solar did perform,
01:26:18.500 --> 01:26:21.740
and you did have a low wind event.
01:26:21.740 --> 01:26:23.930
And we do need to reconcile that
01:26:23.930 --> 01:26:26.320
with either storage
01:26:26.320 --> 01:26:28.547
or because we are gonna
it's variable generation.
01:26:28.547 --> 01:26:31.260
And there are times when
we're gonna have low,
01:26:31.260 --> 01:26:32.800
low wind events,
01:26:32.800 --> 01:26:35.410
which means you still need
that dispatchable generation.
01:26:35.410 --> 01:26:38.060
You need a balance in
the system of dispatchable
01:26:38.060 --> 01:26:41.210
and non-dispatchable
generation, but that,
01:26:41.210 --> 01:26:45.670
that low cost supply that
the variable energy resources
01:26:45.670 --> 01:26:47.900
are bringing into the market
01:26:47.900 --> 01:26:50.376
is bringing reliability into the market.
01:26:50.376 --> 01:26:52.100
It just requires,
01:26:52.100 --> 01:26:54.200
it just requires a workout
How?
01:26:55.090 --> 01:26:56.697
The same way any megawatt.
01:26:56.697 --> 01:26:59.200
I mean, a megawatt is a megawatt.
01:26:59.200 --> 01:27:00.033
Yeah, but it's not,
01:27:00.033 --> 01:27:01.995
but it's not moving forward.
01:27:01.995 --> 01:27:05.140
Again, it's all a game
as we heard from Woody.
01:27:05.140 --> 01:27:06.770
A percentage basis,
01:27:06.770 --> 01:27:09.230
when your dominant
resources intermittent,
01:27:09.230 --> 01:27:12.823
it becomes it economics work
against the laws of physics.
01:27:14.970 --> 01:27:16.610
We have to reconcile that.
01:27:16.610 --> 01:27:18.490
So it depends.
01:27:18.490 --> 01:27:20.470
So one of the things that we look at
01:27:20.470 --> 01:27:23.470
as you look at more variable resources
01:27:23.470 --> 01:27:24.690
coming into the market
01:27:24.690 --> 01:27:29.240
is how diverse that those
variable resources are.
01:27:29.240 --> 01:27:32.820
So we look at the
diversity of the fuel source,
01:27:32.820 --> 01:27:34.217
so solar wind,
01:27:34.217 --> 01:27:36.440
but we also look at
the geographic diversity
01:27:36.440 --> 01:27:39.860
because that creates more
reliability with those assets.
01:27:39.860 --> 01:27:42.300
So as you get more and more online,
01:27:42.300 --> 01:27:45.085
you get more coastal wind
that it does perform at peak.
01:27:45.085 --> 01:27:45.918
Sure.
01:27:45.918 --> 01:27:48.120
But you still have days where it's zero,
01:27:48.120 --> 01:27:49.600
which happened in June.
01:27:49.600 --> 01:27:53.363
And while on
average, it looks good,
01:27:54.480 --> 01:27:56.530
but in a day-to-day operation of a grid,
01:27:56.530 --> 01:27:58.460
you're skydiving.
01:27:58.460 --> 01:28:01.440
And if the shoot doesn't open once
01:28:01.440 --> 01:28:03.550
the rest of the day is
on average don't matter.
01:28:03.550 --> 01:28:04.383
Yeah.
01:28:04.383 --> 01:28:05.480
But that's why we
need a balanced system.
01:28:05.480 --> 01:28:07.650
That's why we also need
dispatchable generation
01:28:07.650 --> 01:28:09.800
in the system, we need
base load generation.
01:28:09.800 --> 01:28:11.883
You need a healthy mix of assets,
01:28:11.883 --> 01:28:14.245
but you can't discount the fact
01:28:14.245 --> 01:28:16.790
that when they perform
and are available,
01:28:16.790 --> 01:28:18.230
there are low cost.
01:28:18.230 --> 01:28:20.700
Love the price point,
love the carbon profile.
01:28:20.700 --> 01:28:23.610
But the challenge and
what I'm trying to ask is
01:28:23.610 --> 01:28:24.700
how do we get
01:28:24.700 --> 01:28:26.900
because right now we
can see the forward curves
01:28:26.900 --> 01:28:28.840
and the increase, like Lori said,
01:28:28.840 --> 01:28:32.935
the increase in that reserve margin
01:28:32.935 --> 01:28:35.240
is over the next four or five years
01:28:35.240 --> 01:28:37.690
is crushing the forward curves
01:28:37.690 --> 01:28:41.450
that investors and generators rely on
01:28:41.450 --> 01:28:45.430
to drive new investment
and dispatchable generation.
01:28:45.430 --> 01:28:48.150
So what, so we clearly
need to change something.
01:28:48.150 --> 01:28:49.030
Yeah.
01:28:49.030 --> 01:28:51.260
What has anybody else out there
01:28:51.260 --> 01:28:53.517
in any of these other markets globally?
01:28:53.517 --> 01:28:54.350
So that,
01:28:54.350 --> 01:28:56.620
that brings me back
to the ramping product
01:28:56.620 --> 01:29:00.045
that was introduced both
in MISO and in California,
01:29:00.045 --> 01:29:02.020
for that exact purpose.
01:29:02.020 --> 01:29:06.440
To incense dispatchable
generation and storage,
01:29:06.440 --> 01:29:08.176
to provide that ramping capability
01:29:08.176 --> 01:29:10.910
with a payment for that product
01:29:10.910 --> 01:29:13.430
to bring in those
resources that you need.
01:29:13.430 --> 01:29:16.010
And it's a market based solutions.
01:29:16.010 --> 01:29:19.490
So it provides a market that values
01:29:19.490 --> 01:29:22.540
the capabilities of the units.
01:29:22.540 --> 01:29:24.520
So we really wanna look at
01:29:24.520 --> 01:29:26.450
at products in the market,
01:29:26.450 --> 01:29:28.470
the value of the
capabilities of the unit,
01:29:28.470 --> 01:29:31.349
it's the same way we don't value
01:29:31.349 --> 01:29:35.830
the full range of
capacity for renewables,
01:29:35.830 --> 01:29:38.410
because we know that at
certain times of the year,
01:29:38.410 --> 01:29:39.243
they're not gonna be there.
01:29:39.243 --> 01:29:42.363
So in the CDR, they're
discounted tremendously.
01:29:43.410 --> 01:29:47.082
So we do discount those resources
01:29:47.082 --> 01:29:51.250
and we want to value the
dispatchability of other resources.
01:29:51.250 --> 01:29:53.190
And by introducing certain products,
01:29:53.190 --> 01:29:56.840
like a ramping product that will allow,
01:29:56.840 --> 01:29:59.550
that will create some
opportunity for these.
01:29:59.550 --> 01:30:00.383
how long is California
01:30:00.383 --> 01:30:01.800
had their ramping product in place?
01:30:01.800 --> 01:30:04.370
So California's
product came into place
01:30:04.370 --> 01:30:07.190
in the last couple of years.
01:30:07.190 --> 01:30:08.023
I don't know exactly when it was,
01:30:08.023 --> 01:30:10.620
I don't have the exact
implementation date
01:30:10.620 --> 01:30:12.970
and MISO has had
theirs just a tiny bit longer.
01:30:13.822 --> 01:30:15.300
So they have not had them
01:30:15.300 --> 01:30:17.430
for a significant amount of time.
01:30:17.430 --> 01:30:18.970
Obviously, California is going through
01:30:18.970 --> 01:30:21.867
an incredibly difficult period right now
01:30:21.867 --> 01:30:24.620
and are looking at
other options as well.
01:30:24.620 --> 01:30:27.800
I will say that, you know,
California struggles from,
01:30:27.800 --> 01:30:31.320
from problems that Texas doesn't have
01:30:31.320 --> 01:30:33.620
in the siting of generation.
01:30:33.620 --> 01:30:36.124
Siting dispatchable
generation in California,
01:30:36.124 --> 01:30:38.760
I think anybody
who's ever tried to do it
01:30:38.760 --> 01:30:42.060
can attest that it is
much more difficult
01:30:42.060 --> 01:30:44.700
to site generation
is much more difficult
01:30:44.700 --> 01:30:46.570
to site transmission in California.
01:30:46.570 --> 01:30:49.000
Texas has, you know,
unique characteristics
01:30:49.000 --> 01:30:52.240
that make it really
attractive to investors.
01:30:52.240 --> 01:30:53.470
So when we are,
01:30:53.470 --> 01:30:55.973
when we make create
the right market conditions,
01:30:56.880 --> 01:30:59.130
people will be quick to
move into the Texas market
01:30:59.130 --> 01:31:02.230
because it's so attractive
to be here as an investor
01:31:02.230 --> 01:31:06.810
because of, you know,
the market in Texas
01:31:06.810 --> 01:31:11.130
and the ability to site
generation in the state,
01:31:11.130 --> 01:31:15.010
they run the access
fuel supply in the state.
01:31:15.010 --> 01:31:17.490
And you know that
yes, we had some issues
01:31:17.490 --> 01:31:19.580
with regards to fuel supply,
01:31:19.580 --> 01:31:22.330
but they weren't related
to long-term infrastructure.
01:31:22.330 --> 01:31:24.133
They were related to
weatherization issues
01:31:24.133 --> 01:31:26.200
that we need to address.
01:31:26.200 --> 01:31:29.530
Barbara, what about
the ramping market in MISO?
01:31:29.530 --> 01:31:30.960
So the ramping market in MISO
01:31:30.960 --> 01:31:32.390
has been around a little bit longer.
01:31:32.390 --> 01:31:34.766
It's been a successful market.
01:31:34.766 --> 01:31:40.210
I, you know, I
think both of them,
01:31:40.210 --> 01:31:43.010
the California and the MISO markets
01:31:43.870 --> 01:31:48.870
are moving in a direction to
attract the right investment,
01:31:49.150 --> 01:31:51.603
but they haven't been
around long enough to,
01:31:52.948 --> 01:31:53.781
you know,
01:31:53.781 --> 01:31:56.220
sort of see the kind of
fruits of those markets as yet.
01:31:56.220 --> 01:31:57.190
And that's you know, I mean,
01:31:57.190 --> 01:31:59.203
that's as you introduce new markets,
01:32:00.150 --> 01:32:01.760
but it is creating some revenues
01:32:01.760 --> 01:32:03.890
for existing dispatchable generation
01:32:03.890 --> 01:32:08.040
that may have not
remained in the market.
01:32:08.040 --> 01:32:10.830
So you also have to look
at dispatchable generation.
01:32:10.830 --> 01:32:13.613
That's not being dispatched as often
01:32:13.613 --> 01:32:17.550
dispatchable generation
that may be offline,
01:32:17.550 --> 01:32:21.060
that would be offline
because of a ramping product.
01:32:21.060 --> 01:32:22.020
And in the MISO market,
01:32:22.020 --> 01:32:23.470
is it,
01:32:23.470 --> 01:32:27.050
are they dealing with a
tremendous amount of primarily wind
01:32:27.050 --> 01:32:30.230
or is it also solar? Is it on the rise?
01:32:30.230 --> 01:32:31.570
So it's mostly wind,
01:32:31.570 --> 01:32:33.550
although solar is on the
rise as much like ERCOT,
01:32:33.550 --> 01:32:35.567
you know solar, solar is more recent,
01:32:35.567 --> 01:32:37.860
we've seen more recent
solar developments.
01:32:37.860 --> 01:32:40.843
They also have a lot of
rooftop solar across their system
01:32:40.843 --> 01:32:43.127
based on kind of state incentive plans
01:32:43.127 --> 01:32:45.388
within the MISO footprint.
01:32:45.388 --> 01:32:49.270
So they do have been behind the meter
01:32:49.270 --> 01:32:50.960
so more behind the meter solar
01:32:50.960 --> 01:32:53.523
than they do utility scale solar,
01:32:54.520 --> 01:32:56.670
but they have a
significant amount of wind
01:32:56.670 --> 01:32:57.668
in the MISO market
01:32:57.668 --> 01:33:01.300
and SBP is also looking
at a ramping product.
01:33:01.300 --> 01:33:04.646
They have a proposal in play in SBP.
01:33:04.646 --> 01:33:06.270
And SBP as you well know,
01:33:06.270 --> 01:33:08.860
has a significant amount
of wind in their market
01:33:08.860 --> 01:33:11.620
and are looking, you
know, opportunistically
01:33:11.620 --> 01:33:14.410
at trying to manage that
through a ramping product.
01:33:14.410 --> 01:33:15.580
Is that,
01:33:15.580 --> 01:33:16.413
I'm sorry, go on.
01:33:16.413 --> 01:33:19.730
So we had some
discussion on the CDR report
01:33:19.730 --> 01:33:24.280
and you know how different
resources are factored in
01:33:24.280 --> 01:33:25.373
are there any,
01:33:28.230 --> 01:33:32.510
any aspects of other
markets in their reporting
01:33:32.510 --> 01:33:36.790
that we can look to to
improve our reporting here,
01:33:36.790 --> 01:33:38.680
with respect to CDR.
01:33:38.680 --> 01:33:40.220
SARA, do they have other reports
01:33:40.220 --> 01:33:43.460
that they may use for planning
01:33:43.460 --> 01:33:44.810
that we may wanna look to?
01:33:44.810 --> 01:33:47.390
Yeah, so, you know,
depending on the markets,
01:33:47.390 --> 01:33:50.340
they definitely have, you
know, long-term planning
01:33:50.340 --> 01:33:52.070
different long-term planning documents.
01:33:52.070 --> 01:33:56.683
I will say that the Texas
capacity demand reserves report,
01:33:57.690 --> 01:33:58.950
you know, there are,
01:33:58.950 --> 01:34:02.310
there are things that
might be improved in it.
01:34:02.310 --> 01:34:05.230
The ASPLI adequacy working
group has been talking about
01:34:05.230 --> 01:34:08.523
some of those potential
improvements at ERCOT.
01:34:09.410 --> 01:34:11.320
But some of the things that you know,
01:34:11.320 --> 01:34:13.937
we kind of have always
looked at the capacity demand
01:34:13.937 --> 01:34:17.120
for reserves report is as
sort of the best known fiction
01:34:17.120 --> 01:34:17.953
in the market.
01:34:17.953 --> 01:34:20.310
It's not, it's never gonna be right.
01:34:20.310 --> 01:34:25.234
It has develop MINT
has future forecasting
01:34:25.234 --> 01:34:29.430
that's typically is a
lot more generation
01:34:29.430 --> 01:34:32.680
than actually comes
into the market we see,
01:34:32.680 --> 01:34:35.550
you know, it's a
relatively low option
01:34:35.550 --> 01:34:37.630
to have an interconnect agreement.
01:34:37.630 --> 01:34:38.933
And if you don't have
01:34:38.933 --> 01:34:42.780
an engineering procurement
and construction agreement
01:34:42.780 --> 01:34:44.973
to build your plant,
01:34:46.010 --> 01:34:47.370
you know, that plant is
01:34:47.370 --> 01:34:52.012
and with a commercial
operation date, you know,
01:34:52.012 --> 01:34:54.649
it's not as likely that we're
gonna see those assets
01:34:54.649 --> 01:34:56.020
come into the market.
01:34:56.020 --> 01:34:59.450
So I think improving the requirements
01:34:59.450 --> 01:35:02.850
to be included in the capacity
demand reserves report
01:35:04.240 --> 01:35:08.700
and checking on those
units that are sort of have had
01:35:08.700 --> 01:35:10.440
outstanding interconnect agreements
01:35:10.440 --> 01:35:12.530
and have been in the,
01:35:12.530 --> 01:35:15.750
for lack of a better
term, queue for awhile,
01:35:15.750 --> 01:35:17.310
but have not been in constructed
01:35:17.310 --> 01:35:19.680
to ensure that we're not counting things
01:35:19.680 --> 01:35:21.210
that are never going to be built,
01:35:21.210 --> 01:35:22.530
because obviously a developer,
01:35:22.530 --> 01:35:24.835
when they're looking at building
01:35:24.835 --> 01:35:29.493
either a renewable or thermal assets,
01:35:30.828 --> 01:35:33.180
a developer wants to
build everything they've got,
01:35:33.180 --> 01:35:35.930
but there's a finite amount
of capital in the markets.
01:35:35.930 --> 01:35:40.211
And all of those projects
that are in the queue
01:35:40.211 --> 01:35:43.950
are not all going to get
that amount of capital.
01:35:43.950 --> 01:35:47.530
So not everything is gonna
get built in these markets.
01:35:47.530 --> 01:35:48.710
So that's one area.
01:35:48.710 --> 01:35:52.180
The other area that the
capacity demand reserves report
01:35:52.180 --> 01:35:53.180
probably suffers from
01:35:53.180 --> 01:35:56.670
and this is not actually
as much a renewable issue
01:35:56.670 --> 01:35:58.300
because we actually count renewable
01:35:58.300 --> 01:36:01.370
based on their historical
performance at peak,
01:36:01.370 --> 01:36:05.050
but there's a dispatch ability issue.
01:36:05.050 --> 01:36:07.180
And Woody talked a little bit about this
01:36:07.180 --> 01:36:10.320
when he was talking about
the transmission planning
01:36:10.320 --> 01:36:13.180
and making sure that units
were actually dispatchable
01:36:13.180 --> 01:36:15.150
as part of the reliability studies
01:36:15.150 --> 01:36:16.510
that we have for units.
01:36:16.510 --> 01:36:17.830
But when we look at the CDR,
01:36:17.830 --> 01:36:21.130
we count nameplate
capacity for the thermal units
01:36:21.130 --> 01:36:24.950
that are in the, in listed in the CDR.
01:36:24.950 --> 01:36:28.440
And oftentimes during
certain system conditions,
01:36:28.440 --> 01:36:31.460
not all of that, those
megawatts are dispatchable.
01:36:31.460 --> 01:36:33.170
We have congestion across the market.
01:36:33.170 --> 01:36:36.450
So we do need to maybe not in the CDR,
01:36:36.450 --> 01:36:38.920
that might not be the
document to look at this,
01:36:38.920 --> 01:36:42.460
but if you're really looking
at what's deliverable
01:36:43.330 --> 01:36:44.163
in a system,
01:36:44.163 --> 01:36:47.388
you do need to kind of
look at what happened
01:36:47.388 --> 01:36:50.930
during your peaks, not
just on the renewable side,
01:36:50.930 --> 01:36:51.938
but on the thermal side,
01:36:51.938 --> 01:36:56.740
what megawatts were
deliverable during those peaks,
01:36:56.740 --> 01:36:59.560
so that we have an
understanding on kind of a globe
01:36:59.560 --> 01:37:02.220
and that doesn't have to
be on a unit by unit basis.
01:37:02.220 --> 01:37:06.491
But looking at what was
deliverable in the market
01:37:06.491 --> 01:37:10.350
is critical when you're
in an energy only market,
01:37:10.350 --> 01:37:13.010
we get some of that
transparency in markets
01:37:13.010 --> 01:37:16.450
that have capacity
markets, because a,
01:37:16.450 --> 01:37:19.170
because of the nature
of the capacity market
01:37:19.170 --> 01:37:22.990
is that there are penalties,
if you don't perform.
01:37:22.990 --> 01:37:25.810
An asset owner who's
bidding into a capacity market
01:37:25.810 --> 01:37:27.520
is only going to bid the capacity
01:37:27.520 --> 01:37:29.640
that they know they can perform too.
01:37:29.640 --> 01:37:33.160
So they almost bid in those,
01:37:33.160 --> 01:37:35.070
those transmission and other limits
01:37:35.070 --> 01:37:36.940
that there are no end limits
01:37:36.940 --> 01:37:38.950
so that those may be seasonal limits,
01:37:38.950 --> 01:37:40.710
they may be limits that they know
01:37:40.710 --> 01:37:42.570
that they have for the asset.
01:37:42.570 --> 01:37:44.660
So they may only be bidding
01:37:44.660 --> 01:37:46.720
in a certain amount of their capacity
01:37:46.720 --> 01:37:48.150
into the capacity market.
01:37:48.150 --> 01:37:51.080
And that shows up
in that capacity market
01:37:51.080 --> 01:37:54.280
and shows up in the planning
for that reliable capacity.
01:37:54.280 --> 01:37:55.113
And they're accountable
01:37:55.113 --> 01:37:56.765
for what they put in there with penalty,
01:37:56.765 --> 01:37:58.000
associated penalties.
01:37:58.000 --> 01:37:58.988
Associated penalties
01:37:58.988 --> 01:38:03.050
because they're receiving a payment
01:38:03.050 --> 01:38:06.040
to be available and that
payment comes in advance
01:38:08.270 --> 01:38:12.480
but it does create a condition
where they are going to bid
01:38:12.480 --> 01:38:14.803
the capacity that they
know they can deliver.
01:38:15.860 --> 01:38:18.400
And what we account for an ERCOT
01:38:19.590 --> 01:38:22.610
is nameplate or discounted
01:38:24.030 --> 01:38:27.150
based on actual historical
on the renewable side.
01:38:27.150 --> 01:38:30.490
So the renewable is
basically accounting for
01:38:30.490 --> 01:38:32.347
kind of that deliverability,
01:38:32.347 --> 01:38:34.850
but we don't account
for that as much on them.
01:38:34.850 --> 01:38:38.050
Out of curiosity
in the capacity portfolio,
01:38:38.050 --> 01:38:42.633
say PJM or any others
defer to you on that.
01:38:42.633 --> 01:38:46.090
What percent of the generators
receiving capacity payments
01:38:46.090 --> 01:38:48.926
are dispatchable versus
weather dependent?
01:38:48.926 --> 01:38:53.700
So they take renewable,
01:38:53.700 --> 01:38:55.750
but they discount how
much they can offer
01:38:55.750 --> 01:38:56.590
into those markets.
01:38:56.590 --> 01:38:59.160
So it's kind of similar to
what we do in the CDR,
01:38:59.160 --> 01:39:01.817
you account for the
capacity that you might,
01:39:01.817 --> 01:39:04.659
not that many renewables
bid into the capacity market,
01:39:04.659 --> 01:39:07.630
because of those requirements.
01:39:07.630 --> 01:39:12.623
So we don't see as much
participation by renewable.
01:39:13.820 --> 01:39:16.140
We see a lot of demand response though,
01:39:16.140 --> 01:39:19.940
in those those markets,
because demand.
01:39:19.940 --> 01:39:22.310
So there's a lot of demand participation
01:39:22.310 --> 01:39:23.930
in the capacity markets.
01:39:23.930 --> 01:39:27.170
There's less intermittent
resource participation
01:39:27.170 --> 01:39:28.444
in the capacity markets.
01:39:28.444 --> 01:39:29.277
Okay, thanks.
01:39:29.277 --> 01:39:30.110
Barbara, can I,
01:39:30.110 --> 01:39:33.130
you touched on three issues
that I was trying to highlight
01:39:33.130 --> 01:39:36.420
to Woody earlier,
interconnection requirements
01:39:36.420 --> 01:39:38.107
to be included in the CDR report.
01:39:38.107 --> 01:39:38.980
And you're mentioning,
01:39:38.980 --> 01:39:40.110
I think you mentioned that, you know,
01:39:40.110 --> 01:39:43.742
can go get an IA pretty
easily with ERCOT.
01:39:43.742 --> 01:39:44.950
And from my understanding,
01:39:44.950 --> 01:39:47.138
and I've been kind
of curious about this,
01:39:47.138 --> 01:39:48.690
cause I've heard this in the past
01:39:48.690 --> 01:39:51.260
and I'm not sure how accurate it is,
01:39:51.260 --> 01:39:55.160
but are ERCOT's interconnection costs
01:39:55.160 --> 01:39:57.729
or fees they charge
some of the lower fees
01:39:57.729 --> 01:40:00.360
compared to other markets?
01:40:00.360 --> 01:40:01.290
Do you know that?
01:40:01.290 --> 01:40:05.690
I, I don't know
because the costs
01:40:05.690 --> 01:40:10.120
for interconnection
studies and those fees vary
01:40:10.120 --> 01:40:13.310
based on kind of a TDSP to TDSP
01:40:13.310 --> 01:40:16.048
kind of basis around the country.
01:40:16.048 --> 01:40:19.000
So there there's a lot of variability.
01:40:19.000 --> 01:40:22.070
I don't think ERCOT
is dramatically lower
01:40:22.070 --> 01:40:23.570
than other markets,
01:40:23.570 --> 01:40:26.703
but the cost of entry in
many ways in ERCOT,
01:40:27.588 --> 01:40:30.603
you know, for siting and you know,
01:40:33.713 --> 01:40:34.790
cost of labor,
01:40:34.790 --> 01:40:38.510
all sorts of other things
are really attractive in Texas.
01:40:38.510 --> 01:40:41.230
But, but I mean, in any market,
01:40:41.230 --> 01:40:45.230
the cost of kind of an
interconnection agreement is it's,
01:40:45.230 --> 01:40:47.610
it's not a material costs
01:40:47.610 --> 01:40:50.140
when you're looking at
building a power plant.
01:40:50.140 --> 01:40:53.450
So it's a relatively low cost option
01:40:53.450 --> 01:40:57.290
to create value for that development.
01:40:57.290 --> 01:41:01.470
Because now that development
is enabled in the market,
01:41:01.470 --> 01:41:05.050
it makes that proposed
development much more valuable
01:41:05.050 --> 01:41:08.080
for a developer or to either build that
01:41:08.080 --> 01:41:10.320
or take it to a lender
01:41:11.412 --> 01:41:15.150
to borrow capital for
that, for that project
01:41:15.150 --> 01:41:17.410
or to sell that development investment,
01:41:17.410 --> 01:41:20.320
because it's a development investment
01:41:20.320 --> 01:41:22.130
that it now has interconnect agreement
01:41:22.130 --> 01:41:24.820
has permits it's ready to go.
01:41:24.820 --> 01:41:26.270
So it creates value.
01:41:26.270 --> 01:41:27.760
And in most markets,
01:41:27.760 --> 01:41:29.915
a developer is at least going to get to
01:41:29.915 --> 01:41:31.490
an interconnect agreements,
01:41:31.490 --> 01:41:34.480
create that value
before it goes to lenders
01:41:35.900 --> 01:41:39.150
or buyers to actually
take it to the next level
01:41:39.150 --> 01:41:42.330
and actually enter
into an EPC agreement.
01:41:42.330 --> 01:41:44.180
So for renewable generation,
01:41:45.040 --> 01:41:46.510
it's to site?
01:41:46.510 --> 01:41:48.110
I mean, you really just need an IA.
01:41:48.110 --> 01:41:49.830
So any other type of thermal resource,
01:41:49.830 --> 01:41:51.940
it would be more expensive
process for the site.
01:41:51.940 --> 01:41:54.310
Yeah, so
for thermal resources,
01:41:54.310 --> 01:41:56.660
ERCOT print planning
criteria requires air permits
01:41:56.660 --> 01:42:00.700
and water in that
criteria to be included
01:42:00.700 --> 01:42:04.230
in the CDR for renewable.
01:42:04.230 --> 01:42:05.430
There I think is
01:42:06.520 --> 01:42:08.810
a land requirement.
01:42:08.810 --> 01:42:09.929
Yeah. Site control.
01:42:09.929 --> 01:42:14.130
And then, and then
obviously an assigned IA.
01:42:14.130 --> 01:42:16.200
So you mentioned
financial requirements earlier,
01:42:16.200 --> 01:42:18.070
and I know we've had
this discussion in the past
01:42:18.070 --> 01:42:20.860
on whether or not the wind
generation should be required
01:42:20.860 --> 01:42:24.620
to provide documentation
01:42:24.620 --> 01:42:26.970
showing they have the
financing in place for their project
01:42:26.970 --> 01:42:28.750
to be able to be included in CDR.
01:42:28.750 --> 01:42:31.140
In fact, my understanding
is there was an NPRR
01:42:31.140 --> 01:42:33.300
in the past that got
rejected by the board.
01:42:33.300 --> 01:42:36.470
Do you think that type of
requirement would be helpful
01:42:36.470 --> 01:42:38.240
in our CDR at this time?
01:42:38.240 --> 01:42:40.140
I know back then there
was an influx of wind
01:42:40.140 --> 01:42:42.803
and you know crisis going
on and there was you know,
01:42:43.653 --> 01:42:44.486
just different,
01:42:44.486 --> 01:42:47.240
a little bit of a different
backdrop to that discussion,
01:42:47.240 --> 01:42:50.450
but in today's market
and given the inflow
01:42:50.450 --> 01:42:51.283
of wind generation,
01:42:51.283 --> 01:42:54.070
do you think that it would
help solidify our numbers
01:42:54.070 --> 01:42:56.520
in our CDR report to
have such a requirement?
01:42:56.520 --> 01:42:58.803
So, I'm not sure.
01:43:01.340 --> 01:43:04.710
There are definitely
resources that are included
01:43:04.710 --> 01:43:09.163
in the CDR that
may never get built.
01:43:11.160 --> 01:43:14.070
Frankly it has actually
been the thermal resources
01:43:14.070 --> 01:43:16.839
that are the ones that
have kind of, you know,
01:43:16.839 --> 01:43:20.590
sort of trips tripped years.
01:43:20.590 --> 01:43:24.440
So they, there was a
planning for those units.
01:43:24.440 --> 01:43:26.970
We've seen a lot of the
renewable generation
01:43:26.970 --> 01:43:30.136
that has been in the
planning crew criteria
01:43:30.136 --> 01:43:32.010
eventually be built.
01:43:32.010 --> 01:43:35.790
It may not be in those first few years.
01:43:35.790 --> 01:43:38.200
The problem is that
01:43:39.650 --> 01:43:41.738
until you really have a COD,
01:43:41.738 --> 01:43:46.520
including it in those longterm planning
01:43:46.520 --> 01:43:47.833
and you know,
01:43:47.833 --> 01:43:50.010
and the COD is a
commercial operation data
01:43:50.010 --> 01:43:52.233
I try not to use acronyms, but anyway,
01:43:54.160 --> 01:43:56.260
you really are,
01:43:56.260 --> 01:43:58.920
there has to be a
discount factor to that,
01:43:58.920 --> 01:44:01.396
that category of planned resources
01:44:01.396 --> 01:44:03.520
and most people in the market,
01:44:03.520 --> 01:44:04.720
when they look at the CDR,
01:44:04.720 --> 01:44:07.730
they look at that section of the CDR
01:44:07.730 --> 01:44:09.890
with their own sort of lens on it,
01:44:09.890 --> 01:44:13.120
to determine how much
they're going to discount
01:44:13.120 --> 01:44:14.010
some of those,
01:44:14.010 --> 01:44:15.560
those projects that are in that queue.
01:44:15.560 --> 01:44:18.850
And everyone has a slightly
different perspective on it,
01:44:18.850 --> 01:44:20.663
but for ERCOT,
01:44:21.720 --> 01:44:23.340
they want to know,
01:44:23.340 --> 01:44:27.050
I mean that they have an
operating reserve requirement
01:44:27.050 --> 01:44:29.010
and they need to know, you know,
01:44:29.010 --> 01:44:31.040
where they're going to be down the road
01:44:31.040 --> 01:44:33.580
and have pretty reliable information.
01:44:33.580 --> 01:44:35.490
So the more ERCOT,
01:44:35.490 --> 01:44:38.710
data ERCOT can have on
commercial operation state,
01:44:38.710 --> 01:44:41.690
and including that in
their planning criteria,
01:44:41.690 --> 01:44:44.580
the better optics they're gonna have
01:44:44.580 --> 01:44:46.560
on where they might be sitting
01:44:46.560 --> 01:44:51.433
as it relates to their resource
adequacy in future years.
01:44:53.230 --> 01:44:54.795
Whether the CDR is the place to do that,
01:44:54.795 --> 01:44:55.821
I'm not sure.
01:44:55.821 --> 01:44:59.810
But ERCOT does need
to have a level of security
01:44:59.810 --> 01:45:04.170
that when they look at
a 21% reserve margin
01:45:04.170 --> 01:45:07.556
in future years,
that that's realistic.
01:45:07.556 --> 01:45:11.770
And I think at this point,
what we've seen is in,
01:45:11.770 --> 01:45:12.830
in the near terms,
01:45:12.830 --> 01:45:15.300
our reserve margins have
typically been between
01:45:15.300 --> 01:45:18.090
nine and 12%
01:45:18.090 --> 01:45:21.740
as we actually get into
kind of operating years.
01:45:21.740 --> 01:45:24.410
And rarely do we have, you know,
01:45:24.410 --> 01:45:28.670
kind of the 16 to 20%
that we actually see
01:45:28.670 --> 01:45:31.630
in the planning years.
01:45:31.630 --> 01:45:33.300
It's just the toughest
place to be at, right?
01:45:33.300 --> 01:45:36.610
Because it's determined
like was noting earlier
01:45:36.610 --> 01:45:39.143
that our forward
markets investors look at,
01:45:40.270 --> 01:45:42.580
it could be looking at our CDR months,
01:45:42.580 --> 01:45:45.040
amongst the host of
other sets of information.
01:45:45.040 --> 01:45:46.840
And when we put out that report
01:45:46.840 --> 01:45:49.023
and it shows high reserve margins,
01:45:49.900 --> 01:45:51.950
it sends a signal and
01:45:52.920 --> 01:45:54.682
or doesn't.
Not the way we wanna send.
01:45:54.682 --> 01:45:57.684
And so that's why
we're so interested
01:45:57.684 --> 01:45:59.980
in figuring out a way,
01:45:59.980 --> 01:46:02.210
if we're gonna continue
to have a CDR report
01:46:02.210 --> 01:46:06.460
that we provide a
more meaningful picture.
01:46:06.460 --> 01:46:07.660
Unlike a
lot of other markets
01:46:07.660 --> 01:46:12.110
to CDR in Texas does
to a certain extent create,
01:46:12.110 --> 01:46:13.343
it's a newsworthy item.
01:46:14.320 --> 01:46:19.458
Whether or not an
actual lender, or developer
01:46:19.458 --> 01:46:23.050
or you know, market
participant looks at that
01:46:23.050 --> 01:46:26.140
and is making an investment decision
01:46:26.140 --> 01:46:28.970
to not build because
reserve margins are high
01:46:28.970 --> 01:46:31.530
or to build because the
reserve margins are low.
01:46:31.530 --> 01:46:34.440
I think it's sophisticated
market participant looks at it
01:46:34.440 --> 01:46:36.254
under the lens that, that it is,
01:46:36.254 --> 01:46:41.254
and provides their own
discount and review of the CDR.
01:46:41.310 --> 01:46:46.170
But there is sort of
a public perspective
01:46:46.170 --> 01:46:49.660
that is probably the
more difficult perspective,
01:46:49.660 --> 01:46:54.660
which is the public sees
we've got 21% reserves.
01:46:55.130 --> 01:46:57.810
Why, why are we having high prices?
01:46:57.810 --> 01:47:00.240
Why are we,
Without power.
01:47:00.240 --> 01:47:01.450
Why is there no power?
01:47:01.450 --> 01:47:02.510
Why did my lights go off?
01:47:02.510 --> 01:47:05.379
I mean, my lights went
off this morning, so,
01:47:05.379 --> 01:47:07.220
but I don't think that
had anything to do
01:47:07.220 --> 01:47:08.608
with resource adequacy.
Right so,
01:47:08.608 --> 01:47:12.530
yeah, I mean it's definitely the case
01:47:12.530 --> 01:47:16.610
that generation resources,
resource owners,
01:47:16.610 --> 01:47:18.240
and investment investors out there
01:47:18.240 --> 01:47:19.590
look at a host of information,
01:47:19.590 --> 01:47:21.680
don't completely rely on the CDR report.
01:47:21.680 --> 01:47:22.513
But like you mentioned,
01:47:22.513 --> 01:47:24.736
the very critical aspect
of the CDR report
01:47:24.736 --> 01:47:27.840
is the public perspective on it.
01:47:27.840 --> 01:47:29.800
And the signal that does send
01:47:29.800 --> 01:47:31.750
when you see a high reserve margin
01:47:31.750 --> 01:47:33.990
that you're gonna have reliability.
01:47:33.990 --> 01:47:36.640
There's a
perception that it creates
01:47:36.640 --> 01:47:38.870
for everyone in the market,
01:47:38.870 --> 01:47:41.560
a little bit for the
sophisticated players
01:47:41.560 --> 01:47:42.830
cause they look at it and they,
01:47:42.830 --> 01:47:45.460
and they have their own view of it.
01:47:45.460 --> 01:47:48.550
But it does create, you know,
01:47:48.550 --> 01:47:50.860
to a certain extent an illusion
01:47:50.860 --> 01:47:54.360
of that planning criteria
01:47:54.360 --> 01:47:57.421
are the same as
operating criteria and that
01:47:57.421 --> 01:47:59.060
Certainly needs some work.
01:47:59.060 --> 01:48:00.004
It does.
01:48:00.004 --> 01:48:03.000
And you know, and that's
why we wanna make sure
01:48:03.000 --> 01:48:05.430
that we're looking at
things like deliverability,
01:48:05.430 --> 01:48:08.350
that we're looking at
what ERCOT actually does
01:48:08.350 --> 01:48:11.260
during peaks and analyzing
01:48:11.260 --> 01:48:14.250
the actual system conditions
01:48:14.250 --> 01:48:17.350
during the various
peaks throughout the year.
01:48:17.350 --> 01:48:18.183
So that,
01:48:19.290 --> 01:48:21.760
that you as regulators
01:48:21.760 --> 01:48:25.030
and the public have a
better understanding of,
01:48:25.030 --> 01:48:26.960
of where ERCOT is.
01:48:26.960 --> 01:48:28.640
Because we are an energy only market.
01:48:28.640 --> 01:48:31.980
We don't have that
forward commitments to
01:48:31.980 --> 01:48:34.560
for physical assets to be in place.
01:48:34.560 --> 01:48:38.080
We are basically a
voluntary market that's saying
01:48:38.080 --> 01:48:40.614
we look okay in three years.
01:48:40.614 --> 01:48:43.250
Do you think the
SARA report gets it there?
01:48:43.250 --> 01:48:45.450
Or do you think that
we need an additional
01:48:45.450 --> 01:48:47.680
even more near-term report?
01:48:47.680 --> 01:48:48.590
So that's SARA.
01:48:48.590 --> 01:48:50.350
SARA is your near-term report.
01:48:50.350 --> 01:48:54.050
And I think the SARA does
a good job of evaluating
01:48:54.910 --> 01:48:58.070
sort of the more operational criteria,
01:48:58.070 --> 01:49:01.790
typical outages during
those, those seasons.
01:49:01.790 --> 01:49:06.110
So when we're looking at the
seasonal aspects of reporting,
01:49:06.110 --> 01:49:08.620
first of all, we're a lot
closer to operating days.
01:49:08.620 --> 01:49:10.490
So the closer we can
get to operating day,
01:49:10.490 --> 01:49:12.510
the better the information is gonna be,
01:49:12.510 --> 01:49:15.220
you know what assets are
physically gonna be there,
01:49:15.220 --> 01:49:17.110
you have COD dates for the,
01:49:17.110 --> 01:49:19.780
so you're not including
planned resources
01:49:19.780 --> 01:49:21.270
unless they have a COD date,
01:49:21.270 --> 01:49:23.840
which is it within that window.
01:49:23.840 --> 01:49:27.640
So the SARA is actually
a much better perspective
01:49:27.640 --> 01:49:29.480
of where ERCOT is at
01:49:29.480 --> 01:49:32.623
because it is looking
at now it does have,
01:49:34.980 --> 01:49:36.520
it does have scenarios in it.
01:49:36.520 --> 01:49:38.800
And, you know, would depend on kind of
01:49:38.800 --> 01:49:41.310
what your view of the scenarios are.
01:49:41.310 --> 01:49:43.920
Whether you're gonna have a high outages
01:49:43.920 --> 01:49:47.640
or low wind or all those
other criteria it looks at,
01:49:47.640 --> 01:49:50.480
but it does give you a much
better operational perspective.
01:49:50.480 --> 01:49:54.963
The closer we get with those
planning reserve information
01:49:54.963 --> 01:49:57.530
to real time,
01:49:57.530 --> 01:50:00.500
the better we'd have better
knowledge we have around
01:50:00.500 --> 01:50:02.190
what our actual reserves are.
01:50:02.190 --> 01:50:03.750
Yup. All right. Thank you.
01:50:03.750 --> 01:50:05.085
This is an excellent slide.
01:50:05.085 --> 01:50:07.857
And then we got one
more panel before lunch so,
01:50:07.857 --> 01:50:09.587
we'll refer back to you to
01:50:09.587 --> 01:50:10.880
Yeah, I'm gonna move on,
01:50:10.880 --> 01:50:13.070
I think we've talked
about most of the issues
01:50:13.070 --> 01:50:14.210
that I had on the slide,
01:50:14.210 --> 01:50:16.340
one thing I did want to
just before I move on,
01:50:16.340 --> 01:50:18.590
well actually, I'll get
it on the next slide.
01:50:19.610 --> 01:50:24.180
So real-time co-optimization,
most of the markets
01:50:24.180 --> 01:50:28.860
in the North America
have real-time optimization
01:50:28.860 --> 01:50:32.640
and it's really important.
01:50:32.640 --> 01:50:34.023
And it's,
01:50:35.090 --> 01:50:37.910
it will drive some of the investment
01:50:37.910 --> 01:50:39.750
that we've been talking about
01:50:39.750 --> 01:50:42.950
to have quick start resources
01:50:42.950 --> 01:50:46.100
being dispatched in real-time,
01:50:46.100 --> 01:50:49.393
for both energy and reserves.
01:50:50.560 --> 01:50:53.830
So it does actually create
some of those opportunities
01:50:53.830 --> 01:50:56.883
that we've been looking
for for quick start units,
01:50:58.290 --> 01:50:59.970
as well as load and storage.
01:50:59.970 --> 01:51:02.250
So it really creates
a lot of opportunities
01:51:02.250 --> 01:51:04.340
for those flexible
megawatts that we need,
01:51:04.340 --> 01:51:07.290
whether it's load megawatts,
storage megawatts,
01:51:07.290 --> 01:51:08.770
or quick start,
01:51:08.770 --> 01:51:12.373
or other types of flexible
resources in the market.
01:51:13.770 --> 01:51:15.770
So I can't say more that
01:51:15.770 --> 01:51:18.730
that project moving forward is critical.
01:51:18.730 --> 01:51:21.150
And I know that ERCOT
had some delays, you know,
01:51:21.150 --> 01:51:24.120
much of it related to,
you know, this event,
01:51:24.120 --> 01:51:24.953
but frankly,
01:51:24.953 --> 01:51:26.730
this is a really good solution to solve
01:51:26.730 --> 01:51:28.970
for some of the problems
that we've been seeing
01:51:28.970 --> 01:51:30.930
and create some of those opportunities.
01:51:30.930 --> 01:51:33.240
It does have a corollary kind of con
01:51:33.240 --> 01:51:36.860
and that is that more
efficiency in the market
01:51:36.860 --> 01:51:40.930
may drive lower costs and
more efficiency in the market
01:51:40.930 --> 01:51:42.456
is kind of been, you know,
01:51:42.456 --> 01:51:45.830
the hallmark of Texas has
been we've been super efficient
01:51:45.830 --> 01:51:47.820
and had super low prices.
01:51:47.820 --> 01:51:52.640
And that is a concern that
many have expressed, you know,
01:51:52.640 --> 01:51:54.903
if this drives to lower prices,
01:51:55.877 --> 01:51:57.580
will we get those, those investments?
01:51:57.580 --> 01:51:59.246
So, you know, it's
01:52:01.000 --> 01:52:02.893
that that's just one of the concerns.
01:52:04.616 --> 01:52:06.340
And I can run through all of these
01:52:06.340 --> 01:52:08.080
or we can hit ones that,
01:52:08.080 --> 01:52:09.310
Why don't you
hit the highlight soon.
01:52:09.310 --> 01:52:10.460
Okay,
01:52:10.460 --> 01:52:14.630
so the first few are ones
01:52:14.630 --> 01:52:16.300
that we're already working on.
01:52:16.300 --> 01:52:17.930
So contingency reserve service,
01:52:17.930 --> 01:52:19.870
we have a sort of partial implementation
01:52:19.870 --> 01:52:21.440
of a contingency reserve.
01:52:21.440 --> 01:52:25.221
Again, a really critical
element that ERCOT needs
01:52:25.221 --> 01:52:26.960
in their toolbox
01:52:26.960 --> 01:52:29.600
is to have that
contingency reserve service
01:52:29.600 --> 01:52:31.630
that will provide some of the, you know,
01:52:31.630 --> 01:52:33.400
operational criteria
we're talking about with
01:52:33.400 --> 01:52:35.260
with ramping,
01:52:35.260 --> 01:52:40.210
it will be a service that they
can increase the amount
01:52:40.210 --> 01:52:43.130
that they need based on the
contingencies in the system.
01:52:43.130 --> 01:52:45.380
So if they're coming into a winter event
01:52:45.380 --> 01:52:47.170
and they haven't known a winter event,
01:52:47.170 --> 01:52:50.723
they can increase their
procurement of contingency reserve.
01:52:51.590 --> 01:52:54.630
So that's a, that's a critical part.
01:52:54.630 --> 01:52:55.703
And it also,
01:52:56.620 --> 01:52:57.510
there are some constraints
01:52:57.510 --> 01:52:59.410
on load participation in that program.
01:53:00.430 --> 01:53:01.263
And frankly,
01:53:01.263 --> 01:53:02.930
the more load you can get participating
01:53:02.930 --> 01:53:04.000
in all of these programs,
01:53:04.000 --> 01:53:06.030
because load provides a lot of value
01:53:06.030 --> 01:53:08.900
in the ancillary markets.
01:53:08.900 --> 01:53:09.920
So I know that, you know,
01:53:09.920 --> 01:53:11.900
ERCOT had some concerns around
01:53:11.900 --> 01:53:14.610
kind of the amount of load
that they're procuring right now,
01:53:14.610 --> 01:53:17.660
but I will say that load
is a critical element
01:53:17.660 --> 01:53:19.483
in any of these reserves services.
01:53:20.800 --> 01:53:22.230
Emergency pricing mechanism.
01:53:22.230 --> 01:53:25.890
We dealt with the
scarcity pricing mechanism
01:53:26.920 --> 01:53:28.430
in the previous docket,
01:53:28.430 --> 01:53:30.040
but one of the things
we didn't deal with is
01:53:30.040 --> 01:53:32.410
what happens once we
get into an emergency
01:53:32.410 --> 01:53:33.770
and the prices, you know,
01:53:33.770 --> 01:53:38.770
what is there going to be
a adjustment to the price
01:53:38.970 --> 01:53:40.380
when we're in conditions
01:53:40.380 --> 01:53:43.880
where that next megawatt
is just not available?
01:53:43.880 --> 01:53:46.350
And we ended up in
a sustained situation,
01:53:46.350 --> 01:53:49.900
and do we have
a, a auto-correct to,
01:53:49.900 --> 01:53:51.300
to get to a different level.
01:53:53.280 --> 01:53:55.370
Critical load standards,
We've you know,
01:53:55.370 --> 01:53:58.520
I think Woody talked
a lot about that, but
01:54:00.198 --> 01:54:02.240
it's very important first fuel security,
01:54:02.240 --> 01:54:04.256
and obviously the health and welfare
01:54:04.256 --> 01:54:07.450
to have critical loads designated,
01:54:07.450 --> 01:54:08.420
but we need to be careful
01:54:08.420 --> 01:54:10.700
on those critical load designations,
01:54:10.700 --> 01:54:13.000
because the more
loads that get designated
01:54:13.000 --> 01:54:14.430
and often after these events,
01:54:14.430 --> 01:54:16.820
you have a lot of people deciding
01:54:16.820 --> 01:54:17.880
that they're critical loads.
01:54:17.880 --> 01:54:19.800
We need to make
sure that the right loads
01:54:19.800 --> 01:54:22.890
and that the TDSPs have
the right tools in their toolbox
01:54:22.890 --> 01:54:26.963
to be able to more discreetly
manage those loads.
01:54:28.940 --> 01:54:30.970
And I'm not gonna go through,
01:54:30.970 --> 01:54:32.200
I think the rest of these
01:54:32.200 --> 01:54:35.266
we've already talked
about ramping service,
01:54:35.266 --> 01:54:37.873
but I'm certainly
available for questions.
01:54:39.986 --> 01:54:41.986
I think we
got to those first,
01:54:42.890 --> 01:54:43.723
go ahead.
01:54:43.723 --> 01:54:45.250
We did the questions.
01:54:45.250 --> 01:54:46.083
We're doing the questions
01:54:46.083 --> 01:54:47.670
all the way through.
Throughout.
01:54:47.670 --> 01:54:49.170
In the next slide,
01:54:49.170 --> 01:54:51.310
I'm kind of taught I just talk about
01:54:51.310 --> 01:54:54.760
existing things that are
going on in the market.
01:54:54.760 --> 01:54:56.653
The operating reserve demand curve.
01:54:57.750 --> 01:55:00.300
We've spent a lot of
time talking about it.
01:55:00.300 --> 01:55:02.470
It is, you know,
01:55:02.470 --> 01:55:06.240
it improves the price
signals in the market
01:55:06.240 --> 01:55:10.180
when we are truly in
scarcity, but it's not, it's not,
01:55:10.180 --> 01:55:12.310
it is, it is a just one element
01:55:12.310 --> 01:55:15.333
of the market of the energy only market.
01:55:16.744 --> 01:55:18.930
And I think we've had a
lot of discussions around
01:55:18.930 --> 01:55:21.190
kind of the,
01:55:21.190 --> 01:55:23.670
what the appetite is
for those high prices.
01:55:23.670 --> 01:55:26.740
So we need to talk a
little bit around kind of the,
01:55:26.740 --> 01:55:29.710
not just the operational
characteristics of the market,
01:55:29.710 --> 01:55:32.340
but the politics and
the public perception
01:55:32.340 --> 01:55:34.132
of having, you know, high prices
01:55:34.132 --> 01:55:36.015
and whether or not, you know,
01:55:36.015 --> 01:55:37.865
that sort of a sustainable situation.
01:55:39.330 --> 01:55:42.280
We've talked about
the CDR and with that,
01:55:42.280 --> 01:55:44.820
I am available for questions.
01:55:44.820 --> 01:55:46.860
All right. Thank
you very much, Barbara.
01:55:46.860 --> 01:55:48.638
Excellent presentation laying out
01:55:48.638 --> 01:55:50.460
a lot of complex ideas.
01:55:50.460 --> 01:55:54.763
Appreciate how you pack
a lot of information in there.
01:55:54.763 --> 01:55:56.403
I think at this point,
01:55:57.940 --> 01:55:58.840
we should go ahead
01:56:00.106 --> 01:56:02.050
and we will go ahead and
break for lunch right now
01:56:02.050 --> 01:56:06.293
and save the panels for when we return.
01:56:07.200 --> 01:56:10.066
I clearly did too short
of a lunch last time,
01:56:10.066 --> 01:56:11.166
we went in 45 minutes?
01:56:13.150 --> 01:56:14.060
Work for everybody?
01:56:14.060 --> 01:56:14.910
Yep.
Sure.
01:56:14.910 --> 01:56:15.855
Right.
01:56:15.855 --> 01:56:19.560
We will reconvene
at 12:15, the first item,
01:56:19.560 --> 01:56:22.330
we will get a Commission staff
01:56:22.330 --> 01:56:25.780
to we'll jump to weatherization item
01:56:25.780 --> 01:56:27.660
and then we'll return to our panels.
01:56:27.660 --> 01:56:28.510
See you all soon.