-: Hey.
Let's go back on the record
and the Commissioners have asked to
have some additional questions for ERCOT witnesses.
So let's do that.
And then just to give a heads up,
we're gonna take after that's complete,
we're going to take one party out of order
because Ms. Coleman had indicated that
TIEC's witness, Mr. Griffey,
had some unavailability tomorrow,
and we agreed to accommodate that.
When we're done with the ERCOT witnesses,
we're gonna proceed with TIEC
this afternoon instead of tomorrow.
Will: Your honor, do you want all three
or some subset of that?
-: What's your pleasure?
Will: Mr. Ogelman
and Mr. Taylor for me.
Good to go?
Man: Go.
Yes, sir.
-: Mr. Ogelman question to you.
Given Ms. Lori Simpson's testimony
on the Exelon proposal,
given ERCOT settlement extracts
that you were able to listen to,
a question as to the mechanics of that.
I noticed ERCOT did not, chose not to cross examine.
Is that a feasible proposal?
-: Yes.
And as I stated in my rebuttal testimony,
that is a calculation that we can make.
I think the outstanding question will be,
and ERCOT doesn't take a position on this
one way or the other,
but does it meet your goals of calculating exposure?
-: Right.
So next question.
Given
the two tracks possibly on net versus not net,
does netting live within this proposal mechanically?
Can you go and evaluate a net scenario
within a verification system as envisioned by Ms. Simpson?
-: So this is also again, kind of conditional,
but there are circumstances under which
there's some netting that can happen under that,
but there would be some business arrangements
where I don't know if I would be netting or not.
It just depends on the position of the load serving entity
within the QSE.
So, I mean,
Ms. Simpson is using our settlement extracts.
So if it were to capture that through a trade
or something like that,
it's possible that we could net things.
But I can't promise you that
under all business arrangements, everything gets netted.
And again, netting is kind of up to y'all
to determine how that exactly works.
Will: Okay.
That's my questions.
Thank you.
Anything?
-: Is that it? -: That's it.
-: Thank you.
-: Thank you both.
-: Thank you.
-: All right.
And just so you all know where we're headed,
we're gonna get whatever work we can get done
between now and six o'clock.
So we'll recess for the night at six o'clock tonight.
Man: I just also wanted to make clear
that our witnesses will be here tomorrow
in case the Commissioners
have any follow-up questions.
Will: All right.
Thank you.
-: Thank you.
TIEC.
Woman: Mister, can you state your name
for the record please?
-: Charles Griffey.
Woman: Mr. Griffey, are you the same Charles Griffey
that offered direct testimony in this docket?
-: Yes.
Woman: And in front of you,
do you have what's been pre-marked
and pre admitted as TIEC exhibit one?
Charles: Yes.
-: And do you recognize that
to be your testimony in this docket?
Charles: Yes, I do.
-: And if you were asked the same questions today,
would your answers be the same?
Charles: Yes.
-: And we will offer Mr. Griffey for cross.
Man: Thank you.
Calpine.
Man: No questions, your honor.
-: Coalition.
Man: No questions, your honor.
-: 174 Power.
Woman: No questions, your honor.
-: EDF.
Man: No questions, your honor.
-: NG.
Man: No questions, your honor.
-: Exelon.
Woman: No questions, your honor.
-: Just Energy.
Woman: No questions, your honor.
-: NRG.
Woman: No questions, your honor.
-: Rayburn.
Woman: No questions, your honor.
-: Tenaska.
Man: No questions, your honor.
-: Texpo.
Man: No questions.
-: TXU and Luminant?
Man: No questions, your honor.
-: LCRA.
Woman: No questions, your honor.
-: East Texas.
Man: No questions, your honor.
-: Golden Spread.
Man: No questions, your honor.
-: South Texas.
Man: No questions, your honor.
-: Austin.
Man: No questions.
-: Lubbock.
Man: No questions.
(indistinct)
Man: No questions, your honor.
-: Let's see here.
ERCOT?
Man: No questions, your honor.
-: Staff.
Man: No questions, your honor.
-: Well, somebody got shy between yesterday and today.
(all laugh)
-: Commissioners, do you have any questions for Mr. Griffey?
Jimmy: I do not.
-: You did a great job, Mr. Griffey.
(all laugh) -: Universal acclaim.
Woman: Everyone agrees with that.
(all laugh)
-: All right.
That puts back on track for
NRG.
Yes, Ms. Stover? -: Yes.
Thank you, your honor.
Andrea Stover on behalf of NRG.
Mr. Barnes, can you state your name for the record?
Bill: Bill Barnes.
-: And are you the same witness that offered
direct testimony on behalf of NRG in this docket?
-: I am.
And you have in front of you
what's been pre-marked as NRG exhibit one.
Is that the testimony you provided?
Bill: It is.
-: And if I asked you the same questions today,
would your answers be the same?
Bill: They would be.
-: (indistinct) witness.
Man: Thank you.
Calpine.
(indistinct)
(Peter coughs)
Coalition.
(Peter ahems)
Man: No questions.
-: 174 Power.
Woman: No questions, your honor.
-: EDF.
Man: No questions, your honor.
-: NG.
Man: No questions, your honor.
-: Exelon.
Woman: No questions.
-: Just Energy.
Woman: No questions.
-: Rayburn.
Woman: No questions, your honor.
-: Tenaska.
Man: No questions, your honor.
-: Texpo.
Man: No questions.
-: TIEC.
Woman: No, your honor.
-: TXU and Luminant.
Man: No questions, your honor.
-: LCRA.
Woman: No, your honor.
-: East Texas.
East Texas.
That sounds like a no.
Golden Spread.
Man: No questions, your honor.
-: South Texas.
Man: No questions.
-: Austin.
Man: No questions, your honor.
-: Lubbock.
Man: No questions.
-: OPA.
Man: No questions, your honor.
-: ERCOT.
Man: No questions, your honor.
-: Staff.
No questions, your honor.
-: Wow.
Commissioners.
-: I just have one question.
On page four of your testimony on line 20, it talks,
you suggested the Commission should determine
the types of costs eligible for securitization
in the proceeding.
Can you give us examples of some of those costs
that you are thinking about that that we should consider?
-: Yes.
Those costs have been discussed at length today in terms of,
obviously we know that the categories of that,
that this legislation is required to cover with
ancillary service costs above 9,000
and the reliability of deployment (indistinct).
But the eligibility of what should be included
in terms of those costs
and our strong view is that there should be a rigid process
to document or to verify
which you've heard numerous testimony on the need to have
ERCOT data involved so there is a credible,
independent third party that can validate that information.
And so that's really what we're focused on
in that testimony we're referring to.
-: But it is.
So it's not really anything more than
the big broad categories.
Bill: That's correct.
-: Okay. Okay.
That's all.
-: Just something to kind of bring up.
So in your testimony (indistinct) where exactly,
you have summary of it here.
But you stated that a determination of eligible costs
should not occur until ERCOT has finalized all resettlements
related to the operating days during the period of emergency
so that the (indistinct) have final amounts
of eligible causes invoice for ERCOT.
So basically until all disputes,
including court proceedings are completely completed,
is that your position?
-: We were, we are referring to
for the operating days in question
that's including the period of emergency,
there have been numerous data calculation changes
in terms of meter data and resettlements,
which have resulted in increased amounts
and changes in settlement amounts,
even with recent resettlements that have occurred.
And now that I believe we've reached the true-up
or will very soon pass the true-up portion for these,
I think those settlements will start to kind of lock down.
Now, there is certainly prospect of additional disputes.
I think ERCOT has extended the dispute window.
Those amounts could change in the future,
but we are really referring to the known resettlements
that have already been approved to have that complete.
We were certainly in support of moving forward
with this process
and
securing the distributions as quickly as possible
so that we can get that financial relief
to support the wholesale market.
-: So your reference to disputes
was basically the settlement speeds (indistinct).
-: Correct.
And the resettlements that have occurred recently
that those numbers should be included in the final amounts.
-: Okay. Thank you.
Bill: Yep.
-: Mr. Barnes,
in regards to the Exelon verification proposal,
their metrics and evaluation, again,
those data sets that are publicly available
and can be accessed.
Do you believe, in your view, in NRG's view,
does that proposal hold water in terms of a component
of a verification process?
Is that a workable solution?
-: Now, just to be clear.
Your question is about the use
of ERCOT settlement extract data.
Will: Correct.
-: To be the basis for the information
that's provided and are verified,
not whether netting or no netting is appropriate policy.
Will: That's correct.
-: Okay.
Yes.
We believe that the information that is available
to market participants through their settlement extracts,
through their settlement statements,
it can and should be the basis for the computation
of the amounts that are eventually approved.
And that I think that works under a netting
or a no netting scenario that may require,
as ERCOT has alluded to in their testimony
and rebuttal testimony,
the market participant may need to provide
additional information to direct ERCOT
in how to either net that information together
or pull it out if it's not netted.
So it may require additional information
provided by the market participant,
so that ERCOT knows how to do the math on their own data,
that they charged us for.
Will: And that depends on the level of complexity
of the QSEs involved, the breadth of their
number of counterparties that they have?
-: I think
we have all come to appreciate the complexity of how
individual corporate structures work and the impact
of transactions across affiliates and LACs.
So yes, that would, I think definitely require
that information to be provided to ERCOT
and that the data that they have available
to be able to use, to be able to do those calculations
should be available.
But they would need additional information to do so.
Will: Okay.
-: Another question.
You wrote in your testimony, you discussed
the number of true-up proposals on an annual basis
that ERCOT has proposed.
Can you tell us what the effect of more or less of those
would be on a load serving entity?
-: Yes.
Our testimony touched on two different things.
One is the nature of the structure of the uplift charge
being on a volumetric basis
and then the frequency of the true-ups.
The complexity
on the retail market is when you have an amount or a fee
that's changing frequently
because we have to price and budget
all those costs in, right?
And so we understand ERCOT's need to pursue a fee
or pursue an amount or a structure that's stable,
that provides the lowest cost for financing.
However, that shifts risks onto the LACs
because those amounts as they vary,
and if they are subject to frequent true-ups,
that means we have to price that risk in on our side.
Right?
So in our view, what's ultimately the most important thing
is what the end use customer sees
in terms of their price, right?
And so there's risk on ERCOT's side,
which is why they proposed the structure of the fee
the way they did, which is a fixed amount,
and they wanna be able to true that up, right?
So they can show potential investors in the bonds
that there's a more stable revenue stream
coming back to them to get lower rates.
But that shifts risks to the retail market
where now we have to figure out
if that fee is gonna change on a daily basis
from 20 cents to 25 cents to 30 cents back down to 10 cents.
Right?
That has to be factored in and priced in
for our retail contracts that are forward-looking
four months, six months, a year out, right?
So we will have to bake that risk in.
Same with the true-up process.
So we really looked at the admin fee as
a model for how this could work,
which is a budgeted amount
that ERCOT has to collect known in advance,
a fee that's designed based on forecasted load volumes
and set at a specific amount,
and is really only subject to true-up
when the load values changed
and they resettle like they would normally do
on an initial, final and a true-up amount.
So our preference is
a structure, a fee structure that is easier
for market participants to predict
so that we can price that in an easier way
and not have to pass on risk onto consumers.
Jimmy: And how often would you predict
or suggest a true-up?
Would that be annually, or every six months?
-: (indistinct) annual true-up,
and our recognizing ERCOT's
concerns and need to have a stable fee,
our recommendation was that you could design
a volumetric fee that slightly over-collects
so that you have a surplus to really manage
any potential variability
and also manage any need to have to go
and true-up or go back and resettle things
you could build a contingency,
and that would be used to keep that fee stable.
We would basically trade off predictability
and a stable fee for a slightly higher amount
to make sure that we had that buffer in there.
But we think with that mechanism,
with a potential conservative design
then an annual true-up should be sufficient.
-: Thank you. -: If there needs to be.
-: And this may be an over simplification, but okay.
You suggested the annual.
ERCOT's obviously looking more granular process.
But again, we have monthly auctions on a lot of stuff
that retail providers have to take into account
that sort of establishes that baseline
as you're going through.
And again, that would be on
and that fluctuates on a seasonal basis too.
Again, those load volumes are gonna--
Bill: Yep.
-: Would that give you heartburn?
-: We have...
So.
Good comparison here.
There are a lot of very variable products,
variability of
energy costs,
variability of energy prices, of congestion pricing as well.
The difference is there were mechanisms
to hedge those costs.
Price of energy changes every 15 minutes,
price of congestion changes every 15 minutes,
but there is a well-formed in developed bilateral market
to hedge energy prices on a forward basis,
next day, next month,
Valliere, you know, Colliers and then seeing with CRRs.
You can purchase and hedge CRRs monthly
and in three-year auctions.
So there's ability to hedge those in
that have been developed
and it's a fairly sophisticated
and well-developed market to do that.
For fees and charges like this that are more,
we consider a kind of uplift, it's cost to serve load
and when they vary it can be difficult
and a struggle to hedge those costs.
Peter: Do you have any redirect?
Andrea: No, your honor.
Peter: Okay, you rest.
Andrea: Yes.
Peter: Okay.
Thank you, sir.
Now we're ready for Rayburn.
-: And your honor,
I would note that we had brought Mr. Braun up to the table.
Our understanding is that cross was waived of Ms. Carrie,
but she is in the room and available.
Peter: Thank you.
-: Mr. Braun, would you please state your name
and title for the record?
-: My name's David Braun.
I'm the CFO for Rayburn Country Electric Cooperative.
-: And are you the same David K. Braun
who submitted pre-filed direct testimony
in this proceeding as Rayburn exhibit number two?
David: Yes, I am.
-: And do you have that exhibit in front of you?
David: Yes, I do.
-: Okay.
If I asked you all the same questions today,
would your responses be the same?
David: Yes, they would.
-: Your honor, I tender the witness for cross examination.
-: Thank you.
Calpine.
Man: We have no question.
-: Coalition.
Man: No questions, your honor.
-: 174 Power.
Woman: No questions, your honor.
-: EDF Energy.
Man: No questions, your honor.
-: NG.
Man: No questions, your honor.
-: Exelon.
Woman: No questions, your honor.
-: Just Energy.
Woman: No questions, your honor.
-: NRG.
Andrea: Yes, sir.
Just a few.
(man coughs)
Andrea: Good afternoon, Mr. Braun.
David: Hi.
-: Andrea Stover on behalf of NRG.
Is it correct that Rayburn is currently outstanding amounts
owed to ERCOT for the period of emergency?
-: Yes.
The mounts that have been billed
the total amounts billed from ERCOT have not all been paid.
Andrea: And can you estimate
how much Rayburn currently owes?
-: The amount that ERCOT shows that Rayburn owes
is approximately 640 million.
Andrea: Okay.
And do you have an estimate of when Rayburn
intends to pay those amounts back?
-: We, our plan is to pay those back
once securitization is completed.
Andrea: Okay.
And do you have an estimate of when
securitization will be completed?
-: So as you've heard of the ERCOT expert talk about,
securitization is a long drawn out process.
We have been working already several months,
so I don't know the end time
of when that will actually happen.
But so I can't really speculate as to exactly
how long that would be.
Andrea: But you think maybe months or years?
-: So
let's certainly hope months and not years.
Andrea: Okay.
If Rayburn were ultimately able to securitize amounts
under Subchapter M, do you have N, as in Nebraska,
do you have an estimate of what those costs would be
that that Rayburn would seek to securitize?
-: So, in my testimony, I put in approximately 206 million,
which is the total amount of the ancillary charges
that ERCOT has charged us plus the RDPA.
And
so we would start at that number.
Andrea: And have you reviewed section 39 159B of
PURA that was adopted under 4492?
-: I'm sure I've looked at it,
but I certainly wouldn't care to speculate on what it says.
Andrea: Okay.
No further questions.
-: Thank you
Tenaska.
Man: No questions.
-: Texpo.
Man: No questions, your honor.
-: TIEC.
Woman: No, your honor.
-: TXU.
Man: No questions, your honor.
-: LCRA.
Woman: No questions, your honor.
-: East Texas.
Golden Spread.
Man: No questions, your honor.
-: South Texas.
Man: No questions.
-: Austin.
Man: No questions, your honor.
-: Lubbock.
Man: No questions, your honor.
-: OPA.
Man: No questions, your honor.
-: ERCOT.
-: Yes, your honor.
Elliot Clark for ERCOT.
Mr. Braun, you were just answering some questions about
securitizing some of Rayburn's costs for the storm,
and you have hired a consultant to help you with that?
David: Yes.
-: And under Senate bill 1580,
you don't have to get a financing order from the Commission,
do you?
David: No, I do not.
-: So the only person or the only entity
that needs to approve it is the board of the co-op,
is that right?
David: Yes.
Them and the market.
-: Okay.
You said the, an answer to one of the questions,
that your testimony says your exposure is 206 million,
and that's where you would start here
if you were allowed to securitize under 4492.
Is that right?
David: That is correct.
-: Okay.
You have your testimony there in front of you.
Can you turn to page five?
David: Yes.
-: Do you recall when your attorney was questioning ERCOT
that she used a defined term,
for purposes of our conversation today,
she called it "Relevant costs".
David: Yes.
-: Okay.
And everyone agreed that relevant costs means
ancillary service costs above the $9,000 cap
and the RDPAs, correct?
David: That is correct.
-: And your testimony in which you say
Rayburn's costs are 208 million
includes more than those relevant costs, doesn't it?
-: So it includes all of those, all of the ancillary charges.
Elliot: Okay.
So the number you gave is more than the relevant costs?
-: Yes.
Elliot: Okay.
And you did not provide an amount in your testimony
of the relevant cost as far as it goes
for ancillary service costs above the system-wide offer cap.
Correct?
-: We did not.
We did not have those numbers available.
Elliot: Okay.
And the amount of the relevant costs for Rayburn
above the $9,000 cap is actually $57.1 million, correct?
-: I do not know that.
I saw that in ERCOT's testimony.
-: You saw that in Mr. Ogelman's testimony, right?
-: Yes. -: Okay.
Do you have any evidence to dispute that amount?
-: No, I do not.
Like I said, we have not calculated what the amount is
over the 9,000.
Elliot: Okay.
You haven't gone to check Mr. Ogelman's math?
-: No, we have not.
-: Okay.
Assuming it is accurate
then the relevant costs for Rayburn
would actually be $94.9 million approximately.
Correct?
David: That's your calculation?
Yes.
-: Well, it's 57.1 million plus 37.8 million.
David: And I'm assuming the 37.8 million
is my share of the uplift.
Elliot: That's your RDPAs
and that's in your testimony pretty clearly, correct?
-: Yes, correct. -: Okay.
So the $37.8 million number you agree with
and the $57.1 million you can't dispute, correct?
-: Correct.
Elliot: So if I add those together,
that's a 94.9 million approximately, okay?
-: Okay.
Elliot: And it's not the $208.9 million
that you put in your testimony, is it?
-: No.
And I was very clear in my testimony
of what that number was.
-: Okay.
So if we look at the relevant costs
that could be securitized under 4492,
it's less than half of the numbers you put
in your testimony, right?
David: Yes.
If you look at 206 versus 57, yes.
-: If you were allowed to participate in
and receive uplift proceeds under Subchapter N,
would you be concerned that
Rayburn's current status might create some credit risks
that would downgrade that debt?
-: No, I don't think so.
Elliot: Have you been told by any bank
that you cannot securitize $650 million?
-: No.
Elliot: Have you been told by any bank
that they won't do business with you?
-: No.
Elliot: Have you approached the bank?
-: No.
We haven't got that far in the process yet.
Elliot: Okay.
And you can't tell us as you sit here today
when you might finish that process?
-: No.
-: Now, I understand that there's been some testimony
from the PUC staff about a potential path forward
that would allow Rayburn to opt out under Subchapter N.
And are you aware of that?
David: Yes.
-: Does Rayburn want to do that?
-: I have no idea.
My first hearing of it was today so
I don't have an answer for you
nor am I authorized to speak for the board.
Elliot: No further questions.
-: Thank you.
Peter: Staff.
Man: No questions, your honor.
-: Commissioners?
Oh, and also, so Commissioner's office,
would you bring your other witness up
just in case they may have
questions for her as well, please.
-: Thank you, Ms. Carey.
Mr. Braun, and this may be for either one of you.
On your direct testimony, page five,
as to the question of is Rayburn in default with ERCOT?
You answered no.
I believe ERCOT may dispute that
so by definition, that is a dispute.
In terms of the functionality
of processing securitization for 4492, in this instance,
is your interpretation or reading of the mechanics
of this process as laid out in the legislation,
are all disputes to be settled before we can move forward
with issuing bonds
as it relates to 4492?
-: I don't really know the answer to that
because I haven't really
thought about whether or not I'm slowing down that process
by potentially having a dispute.
So I can't really...
I don't know that I know the answer.
Will: Okay.
Go ahead, Commissioner.
-: So are you?
Okay.
What charges are you disputing?
Are you disputing the 640 million, a portion of that amount,
or does any of the amount that you're disputing
with ERCOT currently right now include
RDPA charges and ancillary service costs above $9,000?
-: Yes.
It includes that plus energy charges as well.
-: Okay.
So if the costs that you're currently,
I believe trying to securitize are in dispute right now,
how does, you know, what?
David: So.
-: Can you explain?
-: Sure.
So we are moving forward with securitization,
assuming that we are going to try to securitize
the full 865 million that ERCOT billed us
for those six days.
If we end up
with a dispute resolution that reduces that amount,
then our goal is to have, allow for our pre-payment
in our securitization to prepay that balance back.
And if not, then
we would have to figure out a different way
to use those proceeds,
to make sure that it goes back to those consumers.
-: I'm just trying to figure out how we can get an accurate,
you know, an estimate of the eligible costs,
given this dispute and the significant differences
in money that I think, you know,
Rayburn says that they incur 208 million, I believe,
ERCOT says they incurred 94.9.
It's over 50% difference there
on the charges that would be part of this proceeding.
And so,
you know, in terms of timing
and not delaying this transaction,
I'm trying to understand how...
I'm trying to peel back the layers of what's going on
in your situation that could impact how we move forward
and (indistinct) market close this transaction.
-: So I think the first step is we have to go back through
and calculate what we think the amount should be
of ancillary charges that exceed the $9,000 cap.
Once we know what that number is,
then if it's close to the number that ERCOT has calculated,
then I think we all move forward on 4492.
Will: So here's a chicken or the egg question for you.
-: Yes.
-: In terms of
1580,
do you believe that as per the conditions of 1580,
you are required to avail yourself
of that financing mechanism first,
and then whatever is left over go into 4492, or?
What's your interpretation?
-: So
let me back up
and take the second half of that first,
if that's all right.
So 4492 is very specific
about the charges that can be securitized.
So it's not dependent at all on what I can or may
or won't be able to do under 1580.
So 4492 stands on its own
and the amount that I would be able to participate in
as securitization would be calculated
based on the specifics under 4492.
The challenge as has been talked about today as well is
is that for me to opt out of 4492,
I have to have all of my ERCOT invoices paid,
and the only way I can do that is to have 1580
and do a securitization.
And there's this timing issue going on
that we've talked about a little bit.
So, and I don't know,
I don't know how to resolve that issue.
-: And you just stated that the cooperative
hasn't talked to any banks and hasn't taken
any steps to try to move forward with (indistinct).
-: No.
That's a poor...
If I left that impression, my apologies.
Lori: Okay.
-: We have contracted with lawyers,
with securitization lawyers,
with a financial consulting firm
that's leading a securitization effort.
We are
putting together and the offering document
is working on a first draft of that
offering document right now.
The financial consultants are already starting
to pre-market the securitization.
So...
And we've actually talked with the rating agencies as well
to try to get onto their calendar to prepare to get
the securitization rated.
So there are a lot of things going on.
The challenge is is I don't know how long
all those things are going to take.
So when somebody asks me how long it's going to be,
I'm a little hesitant to sit there and give you
a number of weeks or months
when I don't know exactly how long that's going to be.
-: Okay.
And going back to your prior statement about going,
you know, you will go back and recalculate the costs
that you incurred during the period of emergency
for RDPA and ancillary service costs above this walk.
And if you go back and you determine that
the costs were actually closer to the number
that ERCOT has submitted in the rebuttal testimony,
you will walk away.
But if they're not, I mean,
you could potentially make the decision to
dispute those charges all the way up to a ADR
setting at ERCOT that could result in,
if you're not happy with their decision in ADR,
and appeal to the Commission.
So how does that impact?
I mean, so I'm just.
-: Yeah, you, it sounds like, you know the process
as well or better than I do.
So yes, that's all going to take time.
And
I think it's important
that we get the amounts correct
but we also get it done as quickly as we can.
But it's important to get it correct as well.
You know, we provide power to about 250,000
rural Texans.
Many of them are economically disadvantaged.
We want to do our very best for those consumers
and so we're trying to make sure
that we get the amounts right.
-: Just one question, and that is,
if you got clarity on your ability to opt out from ERCOT,
would you all be happy to do all of your financing,
all your securitization through the 1580 mechanism?
-: So,
I don't really know the answer to that
because I think in reality,
what it really is going to boil down to
is our ability to securitize the full 865
and whether or not the market
will actually allow us to do that.
That's probably the biggest unknown for us at this point.
And so in reality,
I'm trying to do everything that we can do to make sure that
somehow we can securitize all of this
so that ERCOT gets paid in full.
-: While keeping options that both securitizations
may be necessary.
David: And that's the challenge
is that the timing of the two don't work well together.
-: Okay.
Thank you.
-: So according to ERCOT's view, you're,
and again, this is ERCOT's assertion, not yours,
$94 million would qualify under RTPA and ancillary services,
at least that's how I took that line of questioning.
So that'd be 94 million out of 2.1 million
and I'm trying to ascertain in terms of the 2.1 billion,
out of the total
boat that we could securitize here.
And
if we establish a process and we provide a opt-out process
as required under the law,
does Rayburn intend to apply under your interpretation
of the law?
I'm sorry,
to opt out or not opt out.
And you have said that you don't know yet.
Is that accurate?
-: That is correct.
Will: Okay.
-: That's a board decision.
That's not for me to determine.
-: But at the end of the day,
would you say it as a higher priority that you don't get
billed twice on any type of
one you securitize under 1580
and you're under the cost burden of 1580 to pay off
that financing mechanism.
But then also, you know, if you have not opted out,
you're also paying a securitization
of the rest of the market.
So in terms of the priority of this Commission,
is that what you would advise our priorities should be?
-: So
I think my advice to the Commission is
is to figure out a way that I pay only the
invoices that I owe ERCOT through a securitization process.
So whether that's 1580 or 4492.
And I don't really
want to under 4492, if I don't opt out and then,
and I can't participate in 4492,
then I'm stuck with the full amount that I owe ERCOT
plus I'm gonna pay,
or our consumers are going to pay for
a share of
those uplift charges.
And
my goal is to at least keep that from happening.
Jimmy: Couldn't you just
use the 1580
for everything but the 94 million?
-: So that,
in my mind, that is the best outcome
that I could possibly have.
-: So.
Well,
it may be your best, but is it best for the market,
which is, I think is the bigger question?
-: And so I'm trying really hard to...
So
I'm advocating for our consumer members.
-: Right. -: So.
Okay?
And I realize that we're
a participant in the wholesale market as well.
And so we certainly
enjoy the benefits of a
well operated market
and we don't take that lightly either.
But it just doesn't seem fair for
Rayburn to pay all of the costs that we owe ERCOT
plus a share of other people's uplift charges
if I don't get to participate in 4492.
So if I'm participating in 4492,
then I'm going to pay my share of everybody's uplift charge
that participates in 4492.
Lori: And the only way you don't pay the uplift charges
is if you opt out?
-: That is correct.
-: Okay.
So given your understanding of 1580
and possible functionality of policy here,
is there a way to securitize under 1580, again,
depending on the appetite of the market for your bonds,
and then refinance a portion of that by opting into 4492,
because those interests will be lower?
I don't know.
I'm trying to square this. -: So.
Right.
I mean, that's certainly a possibility just like
if we end up disputing the invoices with ERCOT
and they agree that there was an error in the pricing
or whatever, and so we would,
I think I mentioned before, that we would try our best
to have the securitization under 1580
that would allow for a prepayment without penalty.
So that would essentially do the same thing.
We then would basically participate in the securitization
under 4492, make a (indistinct) payment
on the securitization under 1580,
if that's available as well.
And that's all assuming that the market is okay
with these prepayments, which is not a standard.
It's not, what I'm understanding,
is not some of the standard language
in a typical securitization.
-: Seems that as an initial matter might be a good idea
to go back and recalculate your cost for RDPA charges
and ancillary service costs (indistinct)
as soon as possible so that you can figure out
where you stand with ERCOT in the settlement dispute,
and you can give us a little bit more of an idea
of where things stand.
Because if you're not happy with where you are,
then I know you can't give you an answer right now,
but this could turn into a more elongated process at ERCOT
potentially that, you know, we're having to move forward,
and it seems like you need to square up your costs with.
You can go back and recalculate them
and see where you stand
in terms of that settlement dispute.
-: Yes.
And so you're talking about just
the amount that would be eligible under 4492?
-: Right. -: Yes.
-: At least so we have a better figure
if you agree with ERCOT, if you don't.
If you don't agree with them,
then that turns into its own process, potentially,
depending on how your board or whoever makes a decision
on how far they wanna carry that dispute up.
So that would at least give us an idea
of whether you have a definite number
or those charges during the period of emergency
so we can at least have
some clue as to what, you know,
how much you're asking for in 4492
in terms of securitization.
David: Yes.
-: Right. -: I agree.
-: Okay.
Peter: Any redirect?
Woman: Just very briefly, your honor.
Peter: Go ahead.
-: Now,
Mr. Braun, as we know, you're not a lawyer.
Your remarks represent
your expertise as a CFO and you were not intending
to convey any legal conclusions
to the Commission, correct?
David: Correct.
-: Okay.
That's all I have.
-: Okay.
Thank you very much.
(indistinct)
-: Commissioners, we have not talked about
what time we wanna start tomorrow morning.
Nine o'clock or some other time?
What is your pleasure?
(indistinct)
Jimmy: Yes, nine o'clock.
-: Okay.
Is there?
Yes, sir, Mr. (indistinct).
-: Excuse me, your honor.
Mr. Ogelman has told me that he does have some clarification
that he would like to add.
It doesn't have to be done tonight.
It can easily be done tomorrow.
But on the issue of how netting would affect
using Ms. Simpson's calculations.
So he just needs to add some clarification on that.
(indistinct)
Jimmy: Tomorrow.
Will: Tomorrow's confirmed.
Lori: It's fine.
Will: Tomorrow.
-: All right.
Remind me.
We'll take that up first thing tomorrow morning.
And to the extent you can sit in the same place,
that would help me a little bit.
(all laugh)
-: Try to do that.
Yes, ma'am?
Woman: Your honor, just for the record.
Rayburn rests.
-: Thank you for that.
And we'll see you tomorrow morning at nine.
Man: Thank you.