-: Maybe this meeting of the Public Utility Commission
will come to order to consider matters
that have been duly posted by the Secretary of State
of Texas on August 25th, 2021.
All nail, we will now take up and consider
Docket No. 52322 application of electric reliability
of Council of Texas Inc
for a debt obligation order
to uplift balances on PURA Chapter 39 Subchapter N
on order initiating a parallel docket
and for good cause exception.
At this time, I'll now hand the proceeding back
over to Judge Hunter Burkhalter
-: Okay, good morning.
Welcome to day two.
Before we get to the presentation of evidence,
we have at least one housekeeping matter.
Understand that counsel for Rayburn country and ERCOT
have been in discussions
and have something they would like to get on the record.
So please proceed.
-: Yes, your honor.
Good morning Commissioners, good morning, your honor.
I'm Justin Mirabal appearing on behalf
of Rayburn Country Electric Cooperative
in response to Commissioner Cobos' requests,
Rayburn committed to going back and reviewing
the ancillary services and RDP,
the reliability deployment price add or charges
that we're putting into HB 4492.
To expedite that process,
we've requested ERCOT provide the supporting documents
for their calculation and they've agreed to do that.
So we just wanted to advise the Commission
that that's the process that we're looking at right now.
Thank you.
-: Thank you.
-: Is there any other, yes sir.
-: Do you know when you might have an answer
to the evaluation of the data?
-: It really depends on what we get the workpapers.
-: Right.
-: And we can review that and we'll do it
as quickly as possible.
Thank you.
-: And just as a followup,
and this is not specific to Rayburn,
but thank you so much for being responsive to my request.
I suspect that Rayburn is not the only party
that has a settlement dispute
regarding those RDPA charges and AS costs over $9,000.
So I guess my general feedback on that is that
in order for us to be able to document exposure,
to move through, move forward with this transaction,
we're gonna have to have the settlement disputes,
you know, hopefully wrapped up
because if they're in dispute,
we don't know what documentation we're gonna get
to prove up exposure.
So I guess my general statement here
is that if parties have settlement disputes
and they plan to take...
to submit exposure documentation, in this case,
they need to take some proactive action
and try to get this wrapped up
so we can get exposure documentation in the record,
so they can be part of the securitization case.
Does that make sense to y'all?
-: Yeah, no, I think that's right.
Ultimately I'm still wrapping my mind around
the functionality mechanics,
and I'll have some questions for staff
that'll kind of help articulate that more
on how Rayburn and or Brazos,
again, those select entities that are in a unique situation
and have disputes with ERCOT that we know of
others may exist as well, but how they,
how they interplay in the 4492 and the timelines there,
and then how that also plays into the legislative
and the overall legislative intent of the bills.
Yeah, I think questions are gonna bear this out.
I think we need to talk through that some more.
-: Right.
I guess my concern is if there are settlement disputes
and you know, that there's a whole process at ERCOT,
that where you start with a settlement dispute
and you could take that settlement dispute
all the way up to an ADR process with ERCOT
that could ultimately end up
being appealed to the Commission.
So we won't have finality on those disputes
for weeks or months.
Meanwhile, we are moving forward with this case
and we will need documentation to prove up exposure.
So we need to have that documentation and those disputes
come to some sort of finality
to be able to get that documentation
and it's incumbent on the LSEs
I think that are looking to get this financing in this case.
-: I think that that comment and, you know,
doctrine is applied to this case needs to be well-taken.
I think it behooves all parties to some,
come to some type of timely resolution
on their disputes on the numbers,
so that at least this Commission,
once we do make final decisions on process
and applicability,
we at least have a view of how big the pie chart is
and how many different ways it's carved up.
And we've got to have that.
-: Okay, thank you.
-: Yeah, I'm in agreement.
I'm just, I wonder what the process
for us to learn that information is,
is it to request ERCOT to provide unsettled accounts,
or is it a request that interveners let us know,
you know, if they have disputes,
what would be the best way to understand that universe,
rather than just saying, y'all go off and solve it.
We want them to, obviously.
-: Do y'all have stats on any analysis
on how many you know settlement disputes involved,
the RDPA charges and, or AS costs over SOC.
-: Yeah.
-: Good morning Commissioners, (mumbles)
-: Yes, we obviously have the number
of settlement billing disputes and ADRs
related to the Winter Storm Uri,
I guess I would ask you all to think of those disputes
outside the context of the Nebraska docket.
Those disputes will take quite some time to resolve.
And the statute contemplates that if disputes are resolved,
then there has a payback mechanism.
And there's also litigation and the district courts
there's litigation at the third court of appeals
that will not be resolved within the timeframe
that the Commission needs to take action
on the Nebraska docket.
-: We're gonna have to take that in consideration
when we developed the process for exposure documentation.
-: There will be litigation disputes
that go on for many years as a result of Winter Storm Uri.
And there will be a process
depending on what those outcomes are,
whether we have to resettle in the market
or they're resolved finally,
that will be the resolution of those disputes.
And if somehow there are instances in which
we have to resettle the market and exchange money,
then there will be a way to reconcile that
outside the securitization framework.
-: Well, (indistinct) up here
(laughing)
and I can ask questions.
Okay, so 4492 and 1580 kind of all gets back to that.
The interplay between the two statutory additions.
So in reading the 4492 statute,
and that's the PURA 39652, the definition section.
One of the key provisions is the uplift balance provision
and how it applies.
And it refers to the amount of money that was uplifted
to the load serving entities, isn't that correct?
-: Correct.
-: Yeah.
And that definition goes on to exclude amounts securitized,
ed, so past tense.
Under Subchapter B section 41,
otherwise known as Senate bill 1580.
So I will confess, I am not an attorney.
I think everybody in this room knows that pretty well now,
but in terms of the functionality of the two,
of the two laws together,
I think you can't read them separately,
you have to read them together and as they were passed,
so as 1580 was enacted
with the express intent for cooperative specifically
to securitize their costs,
that's the way it kind of reads, is that your view?
-: Yes, it is my view.
-: Yeah.
So it sounds to me like cooperatives must use
Senate bill 1580, at least those that are in default,
but qualify under those provisions
must securitize under the 1580 process
before seeking any funds of 4492.
Is that a way to read this?
-: Yes.
I think that's probably the most reasonable way to read it
that the legislature intended specifically Rayburn
and Brazos to use 1580.
Now, I recognize that other co-ops have costs
coming out of Winter Storm Uri,
and they can use that mechanism as well.
But I believe the legislative intent
was for Rayburn and Brazos who are in payment breach
with ERCOT to utilize 1580
and not seek the funds under 4492.
I know there may be differences of opinions here,
and we can lay out the policy rationale
and post hearing briefing,
but I believe that was the overall design,
what the legislature did with those bills.
-: So in terms of those mechanics that are somewhat in
that the Commission is trying to sort through right now
that solves a bit of it,
because then they come out of default as asserted by ERCOT,
but then they can opt out.
-: Correct.
Now I recognize, assuming they can get the proper funding
to pay back the full debt to ERCOT under 1580
or through other financing mechanisms.
-: Yeah.
-: And to circle back to your point earlier about, you know,
litigation that's going on in parallel to this proceeding
and obviously settlement disputes
that are caught in ADR processes
when we issue out this order cause we have to issue it out
and by a set time per the statute,
the order is not subject to rehearing
and is subject to expeditious appeal to the district court
and to the Texas Supreme court.
And so once this bus leaves and all of this,
all these legal remedies are exhausted,
then the ship is sailed, so there's parallel,
somewhat related issues going on on the side disputes
ADRs litigation that ultimately even if they were,
it sounds like based on what you're telling me that,
but in kind of looking at the whole timeline,
even if they were settled in a way that,
or not settled rather,
and litigation occurred that required,
I guess what I'm getting at is that to some degree,
this order is gonna come out
and since it's has a very quick legal process for appeal,
I don't know that some of those other issues
are gonna have, what bearing it will have.
Do you have any feedback on that
and given the fact that this is, you know,
on an expeditious timeline?
-: Yeah, s I think, you know,
4492 is a separate mechanism for any of the disputes
related to any of the disputes
that came on a Winter Storm Uri.
The legislature wanted to provide an opportunity
to get money back to load serving entities
through the Nebraska docket.
And that's what the Commission is focused on
with this debt obligation order.
And as you heard yesterday from Mr. Atkins,
it's gonna take us some time to go through that public
or private market to get those funding
and we will proceed and distribute those proceeds.
As disputes start to play out,
whatever the finality of those that's a separate path.
It's a separate train that's not as fast
as the securitization train
and when those issues get resolved
and I don't know what the outcome are,
but to the extent there is something
where we have to resettle,
we will go and do that under our processes.
And the securitization will have already been funded
and whatever money we hold there,
we will have to look at what our financing mechanism is.
If there's prepayment, you know, penalties,
we will probably just hold that money and use it as a way
to offset the charges going forward as we collect that.
So there is a way to reconcile all the disputes,
those that got proceeds under 4492,
if it was resolved in their favor,
then they have to pay it back.
And again, we will may have to set that aside
and hold that as a way to deal with future uplift charges,
if there is a prepayment penalty in advance
for those bond holders.
-: Okay.
I'm just really trying to understand the impact
of what's going on at ERCOT with the settlement disputes
and ADR on what we're trying to do here
and getting exposure documentation.
And I think there's a variety of ways it sounds like
that you can account for it respectively.
-: There is a path forward that accounts for the litigation
and how that would be handled after we go
and securitize the funding for the Nebraska docket.
-: I was just gonna ask if,
is it possible for ERCOT to hold back
some of the proceeds of the bond,
the bond sale in the amount that you,
I don't know that this is fair,
but I just want to know if you can do it.
So in the disputed amount between Brazos and ERCOT
90 million say, disperse the rest of the bond proceeds.
So you don't have to resettle, ask entities for money back
if in fact the Brazos securitization
does not fulfill the entire obligation.
-: So I think you're talking about Rayburn and-
-: I'm sorry, Rayburn.
I'm sorry, I'm sorry.
-: I'd have to think through what that would mean.
And I don't know what the financial ramifications are
if you get that securitization funding,
you're holding that back in, you know,
a piece of the market is paying for those proceeds
that you're holding back.
So I just have to think through that a little bit more.
Okay.
-: It seems to me like if you can, you might,
we might save the market a step.
We might delay some funds.
It's a pretty short timeframe, correct.
We might delay the disbursement of some funds,
but it might resolve a resettlement component
that would be potentially even harder
for market participants to deal with later on down the line.
-: Sure.
I just would want more time to think about what the
on the financial side,
what the ramifications of that would be.
-: That'd be great.
If you could think about that and give us your comments,
that'd be great.
-: In terms of process and filing overall numbers
once disputes are settled,
if they are before September 23rd, that'd be great,
but maybe they're not, but in terms of filing,
I think it should be under this docket if those are,
if that is firmed up,
if we have certainty on what that looks like
between the parties, should that be under this file?
I would not do it under the parallel docket,
which is purely designed for the process
where we have submission for opt-out
and certification of costs.
-: Are you referring to the resolution of settlement dispute?
-: Yes, that's what I'm referring to
is where we would like that visible
for all parties to look at and say, all right, this,
because everybody's formulating their, you know,
back of the napkin, you know, pie chart
on what gonna be able to securitize here
and who gets what right.
-: I envisioned that being part
of our exposure documentation process and requirements
and the parallel docket,
because it's gonna be incumbent on the LSEs
to provide the exposure documentation.
My perspective is really on whether or not
all those (mumbles) and ADR processes
at ERCOT are gonna have any impact
on our exposure documentation process and requirements.
And if so, what can we do from our perspective
to give direction to move that along?
Ultimately it is gonna be incumbent on the LSEs
to provide us the exposure documentation
they want to get securitization in the docket.
So it's really, my feedback was just really,
I guess, a general statement that, you know,
you want to give us a more final set of documents,
probably be incumbent on the LSE to wrap up.
-: No.
-: It was the ADRs but if they haven't
sounds like ERCOT has a way to take care of it
in the back end in some way,
depending on what ultimately happens at the end of,
you know, being successful or not.
And so that's,
I think I envisioned that more in the parallel docket,
whatever they ultimately gives.
I'm just trying to understand what,
how, what impact that has on our exposure documentation.
-: Yeah, and I think, you know, my recommendation would be,
you can have a separate compliance docket
that comes out of this proceeding that requires reporting
by ERCOT, and it could be related to how ERCOT
resolves settlement billing disputes and ADRs
coming out of the Winter Storm Uri
during this period of emergency.
It's probably valuable to have reporting by ERCOT
on ultimately the distribution of the proceeds
and who gets that and put that in the record too.
So I would envision a separate compliance docket
potentially coming out of this proceeding
where we have an opportunity to come
and tell the Commission how we're implementing
the securitization.
-: You know, I like that idea.
-: I do too.
-: I think that's a good idea.
Thank you.
-: Okay.
-: And I think, you know, and post-hearing briefing,
we can address more around 1580 and 4492, and, you know,
kind of the policy rationale on how we believe
the two co-ops that are in payment breach with the ERCOT
and how that was supposed to be reconciled.
-: Okay, great.
-: Okay is there any other administrative matters
before we proceed with presentation of witnesses?
Sounds like not, we are ready for TXU and Luminant.
-: Your honor, yesterday at the end of the day,
I had asked for some clarify,
Mr. O'Gorman to give some clarification this morning
and we decided we would do that first thing this morning,
as I recall.
-: You're right, we do.
-: So with the Commission's permission,
I'd like to call Mr. O'Gorman back up to the stand
and just to give you some context on this Commissioners,
one of the highest priorities for ERCOT
is that we don't end up with an order
that we have to come back to you
in two months or three months
to say we can't implement that.
So we want, or are there some unintended consequences,
so we want to provide you with as much information
as we can right now, so that you're not surprised,
and we're not surprised when the order comes out.
And that's kind of the context
in which we're bringing Mr. O'Gorman back up
so he can clarify a couple of things that he said yesterday,
if that's permissible.
-: Your Honor, (indistinct)
We're absolutely fine with Mr. O'Gorman going up
and clarifying his testimony yesterday,
but we would like to potentially reserve the right
if necessary for redirect on Mr. O'Gorman
or to offer Ms. Simpson backup should we need to,
to clarify her plan.
So I just wanna mention that at the (indistinct)
-: I think it's fair recross.
I know what you mean is recross, but that,
I think that's a fair request.
So we'll honor that.
-: Mr. O'Gorman, can you clarify your remarks
from yesterday about the exposure issue
that you were just asked about by the Commissioners?
-: Yes, so I was asked set of questions,
I believe from Commissioner McAdams
about taking the Exelon proposal
and then possibly merging that with some netting.
So I think I need to,
for my testimony is we can implement Exelon's calculations.
They don't propose any netting in their calculations.
So I just wanna be very clear that
the netting we could do would be extremely limited
if you were to merge that the Exelon proposal
with some form of netting
for the purposes of calculating exposure
and in particular,
the limits would be that we would only be able
to do a calculation on exposure,
if a, the QSE contains only a single load serving entity
or multiple load serving entities that are affiliates,
b, that there are kind of no affiliated resource entities
in that QSE and that the load serving entity
affirms that the QSE costs were passed through.
So that's a pretty small population
where we could make that calculation.
And I don't feel I was very clear about those limits
when I was answering your question yesterday.
-: So as a practical matter,
let me use Tenaska, again as that example of complexity,
would you be able to calculate for affiliates with,
because they're acting as that QSE.
-: So Tenaska, which has many unaffiliated LSEs,
we would not be able to make that calculation.
It would be a very limited,
you would have to have a QSE or a subQSE
with only one LSE or all other ones being affiliates
of one another and no affiliated resource entities,
and this promise that the costs were passed through.
And that just seems very limited
and I know there's lots of settlement negotiations
going on around netting,
and I didn't want to mislead the Commission
in terms of what might be feasible.
-: So it sounds like what you've described as living
are the circumstances or the circumstances
on a limited basis that Commission staff witness
Carrie Bivens IMM provided in her testimony.
-: That is exactly correct.
-: Thank you.
-: Anything else you need to clarify, Mr. O'Gorman?
-: I don't believe so.
-: Okay, thank you.
-: (indistinct)
-: All right, thank you.
That is additional, further direct testimony.
So does anybody else have any cross examination
they'd like to conduct aligned to that?
All right, thank you, sir.
Now I think we're ready for the TXU LSEs and Luminant.
-: Good morning.
-: Good morning,
-: Bill Moore and Melissa Lorber
on behalf of the TXU LSEs and Luminant Energy.
I will present,
Ms. Frazier and Ms. Lorber will present Mr. Parker.
Ms. Frazier, would you state your name
for the record, please?
-: Amanda Frazier.
-: And are you the Amanda Frazier who offered exhibit one?
-: Yes.
-: And were certain portions of that TXU LSE exhibit one
struck by the judge's oral ruling
at the pre hearing conference?
-: They were.
-: And TXU LSEs exhibit four is your direct testimony
modified in accordance with the judge's oral ruling,
is that correct?
-: Yes.
-: And do you offer that TXU LSE exhibit four
subject to the offer of proof that we have made
regarding supplementation completion of that testimony?
Do you offer that as your testimony here today?
-: Yes.
-: Thank you.
-: Mr. Parker,
can you please state your full name for the record?
-: Matthew Parker.
-: And are you the Matthew Parker who offered
the pre-file written direct testimony TXU LSEs exhibit two?
-: I am.
-: And do you present TXU LSE exhibit two
as your direct testimony?
-: I do.
-: Your honor, as you know that TXU LSEs also offered
the direct testimony of Professor James Spindler,
which was also struck by your oral ruling.
That was exhibit three, which was not admitted.
We have also made an offer of proof on that exhibit,
but we are not presenting Professor Spindler here today.
-: Sure.
-: So with that we return to Mr. Parker and Ms. Frazier
for cross examination.
-: Thank you, Calpine?
-: (indistinct) questions.
-: Coalition?
-: No questions, Your Jonor.
-: 174 Power?
-: No questions, Your Honor.
-: EDF?
-: No questions, Your Honor.
-: NG resources?
-: No questions, Your Honor.
-: Exelon?
-: No questions.
-: Just Energy.
-: Yeah we do, Your Honor.
Good morning, Your Honor.
It's Catherine Webking for Just Energy.
Good morning Ms. Frazier and Mr. Parker.
I just have a very brief set of questions
for you Ms. Frazier, please.
Have you heard testimony in this proceeding
throughout all these days
about a possible prioritization
or distribution of proceeds based on those LSEs of customers
to whom charges these charges were made
or could have been made?
-: I believe you're referring to Calpine's testimony.
-: Yes, that's one example definitely.
-: Yes.
-: Are the total numbers of customers that Vistra
could have passed this through,
these charges through too different
than the number of customers
that you did pass these charges through for.
-: Yes.
-: And I didn't mean, I'm not trying to be tricky,
I can rephrase but are there instances where Vistra
and I think there's been other testimony to this effect
from other retail electric providers anyway,
that they did not necessarily pass these costs through
in all instances
where they may have had a contractual right to do so.
-: Yes.
-: And in order to examine those
that you could have passed them through,
you would have to somehow,
do you have any idea of how that would be proved up?
Would you have to look at the contracts and identify that?
-: Yeah, so I think that the proposal,
the proposal to repay charges from the uplift balance
to customers before paying them to LSEs is
it would be very complicated.
First, the statute already requires
that if a customer was subject to these charges
that you do pass through the charges to them.
So changing the order of that to require ERCOT
or some other entity to figure out that group of customers,
rather than having the LSE distribute that
back to the customers would be complicated.
You would have to have ERCOT look at all of the contracts
for those customers.
-: And would you understand,
let me just leave it there.
-: Thank you very much.
-: Thank you.
-: NRG?
-: No questions, Your Honor.
-: Rayburn?
-: No questions, Your Honor.
-: Tenaska?
-: No questions, Your Honor.
-: Texpo?
-: No questions, Your Honor.
-: TIEC?
-: No questions, Your Honor.
-: LCRA?
-: No questions, Your Honor.
-: East Texas?
-: No questions, Your Honor.
-: Golden Spread?
-: No questions, Your Honor.
-: South Texas?
-: No questions, Your Honor.
-: Austin?
-: No questions, Your Honor.
-: Lubbock?
-: No questions, Your Honor.
-: OPUC?
-: No questions, Your Honor.
-: ERCOT?
-: No questions, Your Honor.
-: Staff?
-: Staff has no questions, Your Honor.
-: All right, thank you, Commissioners.
-: I have a question,
Ms. Frazier, on page 48 of your modified testimony,
you on line 10,
you say determine that if netting applies
to the determination of exposure tub, lift balance costs,
then netting must also apply to the determination
of liability, if any, for the payment of uplift charges.
-: Yes.
-: Can you tell me how you think that would work
and what that would look like?
What would that require ERCOT to do
to make that happen on both sides of the equation?
-: Right, so the statute Commissioner,
and thank you for the question talks about payments by LSEs
on a load ratio share
that's the language that's used to determine
who's entitled to funds,
it's also the language that's used to entitle
to who pays back the funds.
And so our position is if something other than,
you know, load ratio share for LSEs
is used to determine who's eligible for the funds
that same process would have to be used
to determine who pays back the funds.
So for instance, in this proceeding,
parties have argued that ERCOT should net the RDPA charges
in ancillary services above 9,000
for entities who have both,
who have subsidiaries like Vistra does.
So Vistra has subsidiaries, Luminant generation,
and also the TXU, you know, retail brands
where the QSE received payments for RDPA
and for ancillary services above 9,000.
The LSEs paid those charges
but that's just one line item of the ERCOT bill.
So if you were looking at just those two numbers
on the ERCOT settlement statement, the Vistra company,
and you netted them, the Vistra companies would get zero.
Even though we lost money, I hate being the company up here
trying to argue that, you know, we're the biggest losers.
That's a terrible position for us to be in,
but it is the position that we're in and this version
where you do nothing but net one line item
against another line item would cause us to be entitled
to $0 in this proceeding.
And we think that that's not the way to do it,
but if you were to do that,
you should not subject those TXU LSEs
who got nothing from this proceeding
to having to recover those from its customers
and pay them back to ERCOT over the term of the loan,
because that would put them at a disadvantage
in the competitive market relative to all of the other LSEs
who would benefit from the securitization proceeding.
-: Thank you.
-: Do you have any redirect?
-: Yes, one question, your honor.
Ms. Frazier, Ms. Webking asks you about complications
that might arise from a customer's first type of approach.
Are there other approaches that have been argued
in this proceeding that would also lead to similar
types of complications?
-: Yes, my position is that if we're,
if the Commission determines
that we should do a netting approach,
then it should be done on an equitable basis,
which means we should look at everyone's hedges,
not just self scheduled ancillary services,
not just RDPA and ancillary services.
We should, let's look at contracts, let's see who hedged,
who had the opportunity to hedge
and how those should be netted.
Let's look at financial hedges,
not just this one charge type firm ERCOT,
and that would be incredibly complicated
and I don't think could be accomplished
in the short timeframe that the legislature has given us
to implement this statute.
-: That's all I have, your honor.
-: Any recross on that topic?
Any questions?
Thank you.
Thank you witnesses
Commissioners staff.
-: Staff calls to the stand Daryl Tyson
(mumbles), we were up so quickly.
-: Mr. Tyson, you are one of the ones
who the parties indicated they,
and they had no cross for.
So, because of that,
I cannot recall if I had you stand up
and I swore you in or not.
-: You did swear me in.
-: I did.
-: And just for the record, it is Tyson.
-: I'm sorry.
-: It's okay.
-: I think I knew that name it's forgotten.
-: I apologize as well, so.
-: So we are directly to you Commissioners
for any questions you may have for Mr. Tyson.
That makes it easy.
Thank you, sir.
-: I wanted the Charles Griffith treatment, thank you.
(laughing)
-: Staff calls to the stand Rebecca Zeross
Ms. Zeross please state your name for the record.
-: Rebecca Zeross.
-: You have been presented with the marked staff exhibit,
I thought your direct testimony
should be in front of you, correct?
-: Yes.
-: Will the answers provided in your testimony
be the same today as in your pre-filed testimony?
-: Yes, they would.
-: Her testimony has already been admitted to evidence
so staff submits the witness for cross examination.
-: Thank you, Calpine.
-: We just had questions Your Honor.
-: Go right ahead.
-: Good morning, Your Honor, members of the Commission,
Miguel Suazo with Husch Blackwell on behalf of Calpine.
Good morning, Ms. Zeross, how are you?
-: I'm fine.
-: I just have a few questions for you.
You recommend the various bits of information
be submitted to the Commission in making their decision
in the parallel docket, is that correct?
-: I do.
-: And is any of that information potentially protected
or confidential or, you know, CPI types of information?
-: It is, yes.
-: Are you familiar with the Commission's rules
on customer protection?
-: I am yes.
-: If someone was gonna submit information
that is typically protected customer information,
should it be submitted with that designation?
-: I would recommend that similar
to other reporting requirements about the Commission
that anything that's considered sensitive
or had identifying customer information
be submitted confidentially.
-: Okay, and that's to predict-
-: Ms. Zeross
would you scooch your microphone
a little bit closer to you please?
Thank you.
-: And that's to protect those customers'
sensitive information, correct?
-: Yes.
-: Okay, so the fact that it wasn't in your testimony,
it was just not because it doesn't matter,
it was just omitted for whatever reason.
-: I think the Commissions normal administrative
procedures rules would apply.
-: Okay.
Thank you for that.
A couple more questions.
Did you hear Calpine witness, Mr. Steven Schleimer testify?
-: I did.
-: And you're aware that Calpine's position as a customer
should be made whole first in this proceeding, correct?
-: I am.
-: Does staff agree with that position?
-: I think that's an illegal interpretation of the statute.
-: Whether customers should be paid
versus a legal interpretation.
-: I did not in the scope of my testimony look at that issue.
specifically no.
-: Okay so you don't know what staff position is.
-: I individually do not have a position of staff.
-: Okay, no further questions.
-: Thank you.
Coalition?
-: No question.
-: 174 Power?
-: No questions, Your Honor.
-: EDF?
-: No questions, Your Honor.
-: NG resources?
-: No questions, Your Honor.
-: Exelon?
-: No questions.
-: Just Energy?
-: No questions, Your Honor.
-: NRG Energy?
-: Yes, Your Honor.
-: Go right ahead.
-: Good morning Commissioners.
Andrea Russell on behalf of NRG.
Good morning, Ms. Zeross -: Good morning.
-: Ms. Zeross you testify regarding the process
by which entities may opt out of being obsessed, sorry,
assessed uplift charges, is that correct?
-: I do, yes.
-: And in your testimony, you state that you reviewed
PURA Chapter 39 Subchapter N
in preparing your testimony, correct?
-: Correct.
-: And in particular you looked at 39.653 D
which specifies that the Commission must develop
the process for certain market participants to opt out,
including municipal utilities, electric cooperatives,
river authorities, certain reps
and transmission voltage customers?
-: Correct yes.
-: To opt out these entities must pay all invoices
for usage during the period of emergency, correct?
-: Yes.
-: Did you read or review any other part of Chapter 39
in preparation for your testimony?
-: Specific to Subchapter N or HB 4492 or in general?
-: In particular section 39 159 B.
-: I did not read specific sections of PURA outside the bill
or my standard knowledge.
-: Your honor, may I approach?
-: Yes.
-: I've handed you a copy of HB 4492, is that correct?
-: Yes.
-: And can you turn with me to page four of the document?
And actually, if you look back on the previous page,
you'll see that's part of section 39 159
a starts on page three,
and then if you turn to page four
you can see on line four subsection B.
-: Yes.
-: Can you review that section for me?
-: Yes.
-: Thank you.
Now I know you're not a lawyer,
but based on your reading of this language,
is it your understanding that a market participant
that has not paid all amounts owed to ERCOT that had not,
can not continue to be a market participant in ERCOT?
-: Without looking at other parts of the statute,
I mean, this is.
-: Yeah, and I'm just asking based on the language here,
the language states that if a market participant
has not paid all amounts owed to ERCOT
it can not continue to be a market participant,
is that correct?
-: I mean, plain reading of the words on paper,
I think that's a broader conversation for statute as a whole
one thing that would go with it, sure.
-: Absolutely.
And do you have an opinion about whether or not
if an entity is not qualified to remain a market participant
in ERCOT under this section,
should they be able to receive proceeds
through the Subchapter and process?
-: I think if an entity is not paid in full,
it would not be eligible for funds under the statute.
-: Okay.
-: Just a couple other quick questions.
Have you had a chance to review the statement of position
that was filed by the joint interveners on August 12th?
-: I'm not familiar with that specific statement of position.
-: Your honor may I (mumbles) .
-: Yeah.
-: Thank you.
-: Do you recognize this document?
-: I do.
-: Okay.
So did you have a chance to review this
in preparing for your testimony?
-: I believe I've read this yes.
-: Okay.
And did you also read attachment a
which it provides a proposed opt-out notice
for transmission voltage level customers?
-: Yes.
-: Does this form provide a reasonable way
for transmission voltage level customers
to opt out of the uplift charges
that will be assessed pursuant to Subchapter N?
-: I feel like it provides basic information,
whether the Commission would determine the specific language
would be a requirement for all reps
to contact our customers,
I think would be a policy decision for the Commission.
-: Yeah, but overall,
do you believe it's reasonable
just in your personal opinion?
-: I'm sorry, I haven't memorized the details of the form.
It seems to contemplate that there would be also
an attached form for the customer to notice the rep.
And so I think it does extend perhaps
beyond my basic recommendation.
-: Okay.
All right.
Thank you.
No further questions, your honor.
-: All right. Thank you.
Rayburn?
-: (indistinct)
-: Good morning, Ms. Zeross
-: Good morning.
I'm (indistinct) representing Rayburn Countries Cooperative.
I just have one quick question.
Do you still have a copy of HB 4492 in front of you?
-: I do.
If you would turn please to Subchapter N
which is section 39 651,
and then I'm looking at subsection D,
which begins the proceeds of debt obligations issued.
-: Yes.
-: So if you go down to on my copy it's on line nine,
it says a load serving entity that receives proceeds
from debt obligations may use the proceeds solely
for the purposes of fulfilling payment obligations
directly related to such costs
and refunding such costs to retail customers
who have paid otherwise it would be obligated
to pay such costs, is that correct?
-: Yes.
-: Would you agree that that does imply
there would be a situation where an entity
might not have paid yet and uses the securitized funds
to make those payment obligations to ERCOT?
-: I wouldn't read that as specifically paying ERCOT
and fulfilling payment obligations
can be much more broad than that.
I think it could be to suppliers or other contractual things
behind that relationship.
-: Okay, thank you.
That's all I have.
-: Tenaska?
-: No questions, Your Honor.
-: Texpo?
-: No questions Your Honor.
-: TIEC?
-: No questions, Your Honor.
-: TXU and Luminant?
-: No questions Your Honor.
-: LCRA?
-: Yes Your Honor.
-: Good morning, Ms. Zeross
My name is Emily Jolly
and I'm here representing LCRA.
I wanna thank you for your testimony in this proceeding
and I have a few questions regarding your testimony
and you're generally familiar with LCRA
as a river authority that participates
in the ERCOT wholesale market.
-: Yes.
-: And LCRA also serves as a qualified scheduling entity
and has wholesale customers that include
municipally-owned utilities and electric cooperatives.
-: Yes.
-: And we can for ease of reference,
refer collectively to these types of entities
as non opt-in entities or NOIEs, can we agree on that?
-: Yes.
-: So I'd like to look beginning at page four
of your testimony in this proceeding line 13, are you there.
-: Are we page number four B stand four.
-: I'm looking at the page numbers at the top
page four of 12.
-: Okay.
-: And in this portion of your testimony,
you're describing the qualifications to be able to opt out.
And my questions today are all going to be generally
related to the opt-out process or NOIEs.
And you make a reference to having paid all invoices owed
in order to qualify.
Do you agree that the only invoices at issue
are those that are issued by ERCOT to a QSE
for any LSE that it represents?
-: I think there's a for NOIEs,
that usage should be to ERCOT, I think,
or entities specifically customers,
because the opt out does provide
for a transmission voltage customer served
by a wrapped opt-out,
but that usage would be to their rep.
-: Thank you, and to clarify,
I'm just asking specifically about the NOIEs.
-: Okay.
-: So you agree that here you're referring
specifically to an invoice that is owed to ERCOT?
-: Yes.
-: Thank you.
And then later in the same response you testify regarding
the consequences of an opt-out election.
Do you agree that a non-opt in entity load serving entity
choosing to opt out faces an all or nothing proposition?
In other words, either all of its load will be included
when ERCOT is allocating uplift charges,
or if it opts out that all of its load would be excluded?
-: For the non opt-in entities since they would be opting out
there, their entity as a whole
versus having specific customers make individual decisions
to opt out, that seems to be correct yes.
-: Thank you.
I also wanna look at page six of your testimony,
if you could turn to that
And here in the question that begins on line eight,
you describe a process for the parallel proceeding
and you're proposing here a 30 day proceedings
start to finish for the parallel docket.
Is that correct?
-: I think 30 days would be for parties
to file their application in that proceeding
because I know entities have intervened
now the Commission has made a determination
of the purpose of that parallel proceeding docket.
I think 30 days were an application
and then a timeline of procedural schedule
would be established, but 30 days of the application.
-: Okay, thank you for that clarification.
So is it fair to say that you are advocating
that the parallel proceeding be processed expeditiously?
-: Yes.
-: And would you agree as a policy matter
that the process in the parallel proceedings
should be efficient and not pose
an undue administrative burden on the Commission
or ERCOT or the parties themselves?
-: I agree.
I think some of the other timelines
considered for the opt-in and the documenting exposure
are covered in Ms. Bivens testimony.
-: Okay, but in general,
those are all goals that you support
from a policy standpoint.
-: I think the intent of this statute in general
was to process quickly internet abbreviated timeline.
So yes.
-: Thank you.
Also on page six with a question beginning on line 20,
you described the entities that are eligible to opt out,
and we've already talked about that a little bit,
but just wanted to clarify one additional point.
You agree that an individual retail customer
of a NOIE, for example,
an MOU customer or a cooperative customer
could not submit an application
to opt out under the statute.
-: The statute, the 39653 D
provision for individual customers to opt out
is limited to transmission voltage customers
served by a rep.
So it does not contemplate NOIE's customers opting out.
-: Thank you, and so you agree that for a NOIE,
the opt-out is actually determined at the entity level,
not an individual customer premise.
-: Yes.
-: Thank you.
So back on page four,
you talk a little bit about the right
to receive uplift financing.
And just to clarify, you agree that that's a right,
that is created solely under this legislation
house bill 4492?
-: I'm sorry, can you clarify your question?
-: Sure.
So an entity has no right outside of this statute
and the provisions of house bill 4492
to claim uplift financing?
-: I think the uplift financing of the debt obligation order
that will result from this proceeding
is self-contained to the sections added under HB 4492.
-: Okay, so 4492 is the sole conveyance of that, right
to receive proceeds.
-: For this specific financing order, yes.
Okay, I appreciate that clarification.
No further questions, thank you.
-: Thank you.
East Texas?
-: No questions, your honor.
-: Golden Spread?
-: Ms. Jolly asked my questions
-: Okay.
South Texas?
-: Yes, your honor.
-: Good morning, your honor, Commissioners
Carlos Carrasco for South Texas Electric Cooperative.
Good morning Ms. Zeross.
-: Good morning.
-: I just have a few questions for you on the opt-out process
you discussed in your testimony.
I know Ms. Jolly was asking you about NOIE's specifically,
and that's kind of gonna be my focus as well.
So in your testimony you say that NOIE's
have a designated QSE for settlement with archives,
is that correct?
-: Yes.
-: Okay and ERCOT knows which boundary meters
are associated with that specific NOIE's, correct?
-: Yes.
-: Okay and you also referred to that situation
with NOIE's and ERCOT knowing that
as the most simple paradigm when it comes to documentation
needed by ERCOT to facilitate the opt-out.
Is that correct?
-: Yes, because ERCOT has a relationship with an entity
as a whole versus settling on individual premises.
I think that's the most simple relationship.
-: Okay, and would you agree with me that a QSE
can represent more than one LSE?
-: Yes.
-: Okay, and for purposes of this proceeding,
do you think it's likely that a QSE will likely represent
several LSEs that have chosen to opt out?
-: I think as Mr. O'Gorman then testified
the QSE relationships one are not very transparent
at the staff level,
and it can go from very simplistic to a single QSE and LSE
to a QSE with multiple sub QSEs
and LSEs with multiple affiliations under it.
So that could be the case, but it's not necessarily a given.
-: Okay, but you would agree that it is possible.
-: Yes.
-: Okay, so for those situations where we have a single QSE
representing several LSEs that have chosen opt-out
and again, let's talk about this
in the context of NOIE's.
Again, you referred to this as the most simple paradigm
when it comes to documentation needed by ERCOT.
Do you think it's reasonable that a single QSE
would be able to submit documentation
on behalf of these LSEs for that process?
-: I think there are some LSEs who are,
some entities who may have designated a party
as their LSE as well.
And I think it would be appropriate for them
to file on behalf of them.
I don't know if it's appropriate for a QSE as a whole,
because if it's a QSE and not that LSE relationship,
it would be appropriate for the QSE
just to file for everyone under it.
-: Okay.
So for the situation where you have a single QSE
does represent all opt-out LSEs,
would that be reasonable for that QSE
to file that documentation on behalf of those LSEs?
-: So for a QSE to file instead of the LSE?
-: Right, for the QSE to submit that documentation
to the Commission and to ERCOT
so as to not administratively burden ERCOT or the Commission
as Ms. Jolly was talking about.
-: I don't think it would be inappropriate.
I would question if ERCOT can,
if that meets its qualifications to process that, yes.
-: Okay, no further questions.
-: Thank you.
Austin?
-: No questions, Your Honor.
-: Lubbock.
-: No questions, Your Honor.
-: OPUC?
-: No questions, Your Honor.
-: ERCOT?
-: No questions, Your Honor.
-: Commissioners?
-: (indistinct)
-: Okay.
-: Do you have any redirect, Mr. Walker?
-: No, your honor.
-: Thank you ma'am.
Who's your next witness?
-: Staff calls Carrie Bivens.
Good morning, Ms. Bivens.
Can you please state your name for the record?
-: Good morning Carrie Bivens.
-: And do you have in front of you,
what has been admitted as staff exhibit two?
-: Yes, I do.
-: And is that your direct testimony in this proceeding?
-: Yes, it is.
And Ms. Bivens just to clarify for the record
so as to avoid any confusion,
are you testifying on behalf of Commission staff
in this proceeding?
-: Yes, I am.
-: And so your opinions,
or your opinions in your testimony might be informed
by your position as the independent market monitor,
but they are staff's positions in this proceeding.
-: That is correct.
-: I tender the witness for cross examination.
-: Thank you.
Calpine?
-: Yes, Your Honor.
Thank you, your honor, members of the Commission,
Miguel Suazo with Husch Blackwell on behalf of Calpine.
Good morning Ms. Bivens.
-: Good morning.
-: Just a few questions for you.
Are you familiar with Calpine's position
in terms of making sure customers are made whole first?
-: Yes, I am.
-: Do you agree with that position?
-: I do not.
-: Okay, why not?
-: I do not think that is the best process
for the health of the entire wholesale market.
-: Okay.
Are you aware that Calpine proposes the LLC
is an ERCOT calculate the end use customer refund amounts?
-: Can you say that one more time?
-: Calpine proposes the ERCOT calculate the end use customer
refund amounts?
-: Yes, I am.
-: Okay.
So your testimony entails information
that you propose to be submitted in the parallel docket,
correct?
-: Correct.
-: And did you hear Calpine witness Steve Schleimer
testified earlier?
-: Yes.
-: And did you hear Ms. Zeross Was testify just now?
-: Yes.
-: And did you hear her say that information
that's proprietary or confidential in nature
should be submitted accordingly to the Commission?
-: I did hear that, yes.
-: And do you agree with that?
-: I'm not an expert in procedural submission
to the Commission.
-: But generally speaking confidential information
should be designated, would you say?
-: That seems fair.
-: Okay, thank you.
I'd also like to ask you a little bit about netting,
you advocate a netting approach
to determine analysis exposure
for purposes of allocating uplift, correct?
-: Yes.
-: Okay, and if an LSE gets proceeds,
then they have an opportunity to refund customers
those funds, correct?
-: Correct.
-: But if they don't get any of those proceeds,
then they don't get that opportunity.
-: Yes, not with uplift financing,
they would not have any proceeds to distribute.
-: And, you know,
I really appreciated the care
that you put into your testimony and the examples you gave
it really helped us and our client kind of think through
how that would work as you propose,
but I'd like to kind of walk through one hypothetical.
And so let's take two LSEs,
the first is part of a corporate family
that includes generation affiliates,
and the second would be a standalone LSE
with no generation affiliates.
And let's assume that both LSE serve end use customers
that are exposed to RDPA charges
and ancillary services above the system-wide offer cap.
If the Commission approves netting as you propose,
the customer over the first LSE is at risk
of having those costs but not being refunded
by the financing proceeds, is that accurate?
-: My focus is on the liquidity
and stability of the wholesale market.
-: Okay, so that's a yes.
-: Mm-hmm.
-: Okay.
-: Is that a neither yes or a no, instead of.
-: Yes.
-: But the second LSE customers will be funded,
will be refunded from the financing proceeds.
Do I have that right?
-: Or the LSE will use it to meet its payment obligations.
-: Okay, and so I guess, as my client proposes,
we're asking that the LSE verified that those costs
have been passed through is that you're understanding?
-: Say that one more time.
-: My client's proposing that the LSE verifies those costs.
-: Your Honor, I'm gonna object.
If he'd like to point the witness to the actual testimony
that he's talking about...
-: That would be helpful.
-: I'd like her to have it in front of her.
-: Okay let me try and move on.
I know we don't have that much time.
So let me see if I understand your testimony accurately,
just because an LSE received net payments from ERCOT
does not mean that that LSE actually made money, correct?
-: Because an LSE received net payments,
I need you to define made money.
-: So just because they received the net payments from ERCOT,
that doesn't actually mean that they profited
from those monies cause they could help other parties
or any number of things could happen to them.
-: I'm not aware of what goes on outside of ERCOT.
-: No further questions.
-: Thank you.
Coalition?
-: (indistinct)
-: 174 Power?
-: No questions, your honor.
-: EDF?
-: No questions, your honor.
-: NG Resources?
-: Yes, your honor.
Good morning, Ms. Bivens.
-: Good morning.
-: I am Steven Mac representing NG.
We just had a few questions for you to clarify,
clarify some numbers.
If you don't mind turning to page 18 of your testimony.
-: I'm there.
-: And on lines 21 through 24,
you mentioned the 2.1 billion figure in a new state
the legislature got that from IMM calculations
contained in the March 11th, 2021 letter to the Commission.
-: That is my understanding, yes.
-: Did you perform that calculation?
-: My team did.
-: And to clarify, was it a $2.1 billion figure or 1.9.
-: It was 1.9.
-: Okay.
Did you calculate or provide to the legislature
during the legislative process for this bill
the total charges?
-: No, I did not.
I was not asked to do so.
-: Have you calculated them since?
-: No, I have not.
-: Okay.
-: Did you calculate or provide to the legislature
I believe what you called the affiliate payments?
-: No, so my 1.9 billion was based on a counterparty netting,
which I note in a footnote on the next page.
There are cases in which counterparty netting
are not gonna be the same as the process
that I delineate my testimony
because that there are cases in which a QSE represents
non-affiliated LSEs.
-: Okay.
So did you calculate a counterparty netting
for the full eight to nine days of the emergency period?
-: No, I did not because that was never part of my testimony
to the legislature.
I was not concerned with those days.
-: And have you since perform that calculation?
-: I have not.
-: Do you have any idea of what that calculation
may results in.
What that figure may be?
-: I have not performed it.
-: Okay, thank you.
-: All right, thank you.
Exelon?
-: Yes, your honor I've got two questions.
Good morning, Ms. Bivens
Ms. Meghan Griffiths on behalf of Exelon
and Constellation New Energy.
-: Good morning.
-: Ms. Bivens, you are the Vice President
and Director of Potomac Economics
and serve as Vice President and Director
of the Independent Market Monitor, correct?
-: For the coverage region, yes.
-: And you have been in that position since 2020, correct?
-: Yes.
-: And prior to that, for 14 years,
you worked at ERCOT where you served in various positions
of increasing responsibility, correct?
-: Yes.
-: And when you left ERCOT,
you were the Director of Wholesale Operations?
-: Yes.
-: And in that position,
is it a correct characterization to say
that you provided direction for wholesale market operations
and some strategic direction over ERCOT's
day ahead market congestion revenue right auction
and demand integration?
-: Yes.
-: Okay, and then prior to working at ERCOT,
you served as an energy industry analysis
for the Federal Energy Regulatory Commission, correct.
-: Yes.
-: And you have a bachelor's of business administration,
correct?
-: Yes.
-: But you were not an electrical engineer, are you?
-: I am not.
-: And you are not a lawyer.
-: I'm not a lawyer.
-: Ms. Bivens, have you ever been employed
by an independent power producer
that owns and operates gas plants?
-: No.
-: Have you ever worked for an electric utility
that owns and operates gas plants?
-: No.
-: So is it a fair to assume that you have never had
responsibility for a gas supply procurement?
-: That's correct.
-: And so you have no experience buying and selling gas
for gas plants?
-: I agree.
-: And you've never negotiated gas supply contracts?
-: No.
-: Have you ever worked for a retail electric provider?
-: No.
-: So you have never then worked in electricity supply
procurement for a rep, correct?
-: No.
-: And so you've never negotiated wholesale
purchase power agreements?
-: Nope.
-: You have never negotiated or been directly involved
with financial or full requirements contracts for reps,
correct? -: That's correct.
-: And have you ever negotiated a financial hedge for a rep?
-: No.
-: Okay, Ms. Bivens from a policy perspective,
do you believe that it is important
for generation development in ERCOT
to have sufficient generation to serve the load in ERCOT?
-: Yes.
-: Okay, and Ms. Bivens would you agree with me
that gas supply was very scarce during Winter Storm Uri?
-: Yes.
-: And in fact it was so scarce that on February 12th, 2021,
the railroad Commission held an emergency meeting
and actually issued an emergency order
curtailing and modifying natural gas
utility curtailment priorities, correct?
-: I have no personal knowledge of that.
-: Okay.
Are you aware and that's fine
if you don't have personal knowledge,
but are you aware that the railroad Commission
issued an order that changed natural gas
utility curtailment priorities and elevated deliveries
of gas to electric generation facilities?
-: I believe I read a newspaper article to that effect.
-: Okay.
And we can then,
and are you aware that ERCOT issued a market notice
with that order?
-: No.
-: Okay.
Commission, I just would like for the record,
I'm gonna reference ERCOT market notice M-A021321-1,
which has the attached Railroad Commission order
that I was referencing.
And I just would like the Commission
to take administrative notice of it.
-: I'm gonna object to the request for official notice
under the Commission's procedural rules,
16 tech 22.222 specifically subsection D,
there is an allowance for official notice
of a Commission order or judicial notice
or official notice of subjects
that are within the jurisdiction of the Commission.
And first this exhibit is a Railroad Commission order,
not a PUC order.
And second, if you look at it,
it addresses rule two of the Railroad Commission's rules.
And that deals with the priority of natural gas deliveries,
which is not within the Commission's jurisdiction.
-: Okay, well, let me back up,
you indicated earlier you had some doc,
but when we started this morning,
you came by and said you had some documents that were,
maybe I thought I heard you say were gonna be demonstrative.
Is that so you are, that's not the purpose of this.
You were wanting an official notice.
-: I just want an official notice
of the Railroad Commission order,
which I think you actually can take.
-: I'm I holding the right, is is this?
-: It is, it was issued
and attached to an ERCOT market notice.
So I have the ERCOT market notice on top of it.
I don't think it's necessary to include
the ERCOT market notice, but you can,
and it has the referenced Railroad Commission order.
So that's why I have those for ease of the record.
-: All right, and then assigned me to the rule please.
-: Its 16 Tech 22.222 A and D.
-: And your honor,
she has mentioned that she is generally familiar
that the railroad Commission did issue the order.
This is the order that we were speaking of.
I think it would be good just to have it.
-: I'm not objecting to the foundation.
I'm objecting to the judicial notice of the order.
-: And on that point,
we can offer an officially into the record as evidence
rather than taking judicial notice.
I think it's just semantics.
-: And your argument is under,
recite your argument Lori..
-: Two arguments, the first is,
is that under A matters that can be officially noticed
or matters known within the jurisdiction of the Commission,
meaning the Public Utility Commission.
And so this order deals with natural,
the priority of natural gas deliveries,
which is not within the PUCs jurisdiction.
And then under D there can specifically be official notice
of Commission again PUC orders,
and this is a Railroad Commission order.
-: It also mentioned judicial
and administrative decisions generically.
Give me a minute to look at it.
Ms. Griffith,
I'm not familiar with Railroad Commission orders.
Walk me through what I'm looking at here.
-: Sure, you're looking at an emergency order
that was issued by the Railroad Commission.
-: What's the first page?
-: Look at the second page of the exhibit.
-: I understand that it's the order itself.
What is the first page?
-: The first on February 13th ERCOT issued a market notice
that goes out to the entire market that announced that
the Railroad Commission held an emergency meeting
to address the priority of gas deliveries in the market.
This is well known and then ERCOT also attached
the emergency order, so I have, yeah,
I think you can take notice of the market notice
and the Railroad Commission order,
or you can simply admit it into the record.
-: And if we're gonna move to admit,
I have an objection to that as well.
-: So what is the purpose that, you wanted notice taken?
-: Sure, I'm just trying to set a foundation
that gas supply was scarce and gas was really high,
which we all know,
but I just want to have it in the record.
She's already attested to part of that,
but I think it's good to have the official order.
-: All right, I'm gonna take,
I'm going to overrule the objection.
I'm gonna take official notice of it.
-: All right, thank you, Ms. Bivens.
And do we need to mark this as Exelon exhibit three?
Or do you want to take,
if you're gonna take judicial notice of that, your honor?
-: Yes.
-: Okay, thank you.
All right, and Ms. Bivens,
so we were talking about gas supply being scare.
So you do agree that gas supply was scarce
during the winter storm?
-: Yes.
-: Okay.
And in addition, isn't it the case that the Commission
during the Winter Storm adjusted the low wide
system offer cap specified in PUC rule 25.505
citing the fact that if the L-CAP was applied,
the provision of the L-CAP
that specified 50 times the natural gas price index value
may exceed the system-wide offer cap.
Are you generally familiar with the fact
that the Commission did that?
-: I think you mean the low system wide offer cap, but yes.
-: Yes, thank you for that clarification.
Okay, so, all right Ms. Bivens,
I'd like to turn to page 11 of your testimony.
And in your testimony,
you stated that the RDPA at are at issue in this proceeding
relates to the paying of real time reserves, correct?
-: What page?
-: I'm looking at page 11.
It might actually be on the prior page on page seven.
-: Yeah, it's on page seven.
I'm sorry, on this side of the page.
It's on page seven, line 10.
-: Yes.
-: All right.
And then you say the RDPA adder is the only adder
relevant to this proceeding, correct?
-: Yes.
-: All right, Ms. Bivens
do you agree that for grid reliability purposes,
it's important for gas plants in ERCOT to buy enough gas,
buy enough gas to serve at their high side limits
when electricity is it's scarce.
-: Objection relevance.
-: As a relevant.
-: I'm gonna tie this to her hypothetical on page 11
in just a minute, I'm setting a foundation to get.
-: Repeat the question for me, please.
-: Sure.
I said, for grid reliability purposes,
would you agree that it is important for gas plants in ERCOT
to buy enough gas to run
during an electricity scarcity event
like we had during Winter Storm Uri?
-: Overruled.
-: I'm not a reliability expert,
as you mentioned I'm not electrical engineer.
-: So you have no opinion and you do not know.
You think it might be reasonable for a gas plant
to offer operating reserves into the market,
but not have any gas to supply the plant
if it's called upon, is that your testimony?
-: I think no.
My testimony is that the generator should buy gas
that represents its expected level of operation,
which is not what you said.
You said the high sustained limit,
which is a different number.
-: Okay, no, fair enough.
So their expected level of operation.
And so if let's just say a gas plan has a 100 MW capacity
and they're anticipated,
they expect that they may be called upon.
Would you think it would be reasonable to buy enough gas
to serve that if called upon?
-: I think there'll be called upon
and there'll be dispatched a 100 MW, yes.
-: Okay.
And so and what would happen if the gas plant
was called upon and didn't have gas to deliver the energy
that it needed to deliver into the market?
-: That sounds like a forced outage.
-: I'm not talking about....
So that sounds like a forced outage.
So they would have a forced outage
or would they pay a penalty?
Would they pay a penalty if they were not able to supply
because they fail to have enough gas to offer into,
to deliver into the market?
-: Penalty, you need to define penalty.
-: You define it for me.
What would happen if the gas plant offered electricity
into the market and didn't have enough gas supply
to meet its offer, would it have to cover?
-: Do you say offer day ahead or offer real time?
I need some specifics.
-: Let's do day ahead and let's do real time.
-: If you offer a day ahead
and you have a day ahead obligation of 100 MW
and you don't generate 100 MW in real time,
then you do have to purchase that back.
I don't know if you consider that a penalty or not,
but that you have to purchase that energy back.
There's no penalty that I'm aware of in either case.
And if in real time you offer it and you're not available,
then you need to derate your unit or be forced offline.
-: Okay, so let's turn to your hypothetical on page 11.
And I'm referring to the hypothetical on page 11
lines 12 through 21.
-: Yes.
-: And you have a hypothetical
and I believe the point of your testimony
and the recommendation that you've made in this proceeding
is that you're focusing on liquidity issues, correct?
-: Yes.
-: All right, and so in your hypothetical,
you offer two companies A and B
that have the same load ratio share
and assume company A owns generation
that received the RDA adder payments
as part of the ancillary service imbalance settlement.
-: RDPA, yes.
-: RDPA.
And then you make the statement
because these payments are not for generated energy itself,
but are instead for energy that was not produced.
No monetary costs are associated
with presiding these reserves,
for example, no fuel was converted to electric energy.
Do you see that there?
-: Yeah, that's accurate.
-: Okay, and your position is that the generators
who offered operating reserves into the market
did not have to pay any fuel costs
if they did not burn it for electric energy,
is that correct?
-: These are not offers.
RDPA has nothing to do with offers,
it is the difference between
where you're dispatched by ERCOT
and what you have as your high limit.
And these RDPA payment represents
is not intended to compensate for any costs,
any monetary costs.
-: Let's talk about the expenses of the generator.
You're saying what you believe the RDPA payment represents,
but is it your position that the generator itself,
which received an RDPA payment had no operating costs
associated with fuel?
Is that your position?
-: For the purpose of reserves, that is accurate.
-: For the purpose of reserves, but you have no position.
It could very well be the case that the generator
that is offering operating reserves into the market
had to procure fuel in order to serve
if called upon, correct.
-: It's not an offer.
Reserves are not an offer.
-: We're talking about different things
and I'm not talking about reserves.
Isn't it the case that a generator
who is offering operating reserves,
if it gets called upon to deliver energy into the market
has fuel costs
and that it could have also had to procure fuel
in order to stand by and be ready to deliver
if the energy was called upon?
-: Objection, compound question.
-: I don't think it was.
Did you understand the question?
-: I did not, and also I disagree with how she's talking
about operating reserves, that's not how it works.
-: I'm asking you about actual costs of a generator.
And have you ever worked at a gas plant
or for a company that owns or operates gas plants?
-: No, but I am very familiar with cost of generators
because I'm a familiar with how you offer them
into a competitive market.
And my role as IMM we regularly review costs
and I have familiarity with the cost (mumbles)
-: So it is your belief as the IMM,
even though you've never worked for a gas plant
that generators have no fuel costs
associated with buying gas
if they're offering operating reserves into the market,
is that what you're testifying too here today?
-: So competitive markets mean that you offer your variable?
-: Would you please answer, this is it a yes or no question?
-: I disagree with your question.
I can't answer a question
because it doesn't make sense to me.
-: Okay, so let's break it down.
Is it the case that a generator
that is operating reserves into the market?
-: They don't offer operating reserves.
-: Okay, we're fighting with the semantics on that point.
-: It's not an offer.
-: They provide operating reserves, is that fair?
-: Yes.
-: Okay.
-: Provides operating reserves.
Okay, that's fair.
-: Okay, is it the case that a generator
that provides operating reserves has fuel costs
whether or not it's providing operating reserves
or delivering energy?
-: It has no variable fuel costs
for the proportion of the reserves
and those are the relevant costs.
-: It has no variable fuel costs under the ERCOT protocols,
correct?
-: Under the ERCOT protocols, sure.
-: Okay, but the generator may still have fuel costs,
correct?
-: Those not variable operating maintenance costs, no.
Not for reserves, reserves have no costs.
-: And we may have a fundamental disagreement on that.
-: We do.
-: You've never worked for a generator.
-: Objection, asked and answered.
-: Sustained.
-: That's fine, let's clarify.
So you had, and I think we've already established
that you never worked for a independent power producer
or an electric utility that owns thermal generation.
-: But I'm aware that you're trying to refer to fixed costs,
which do not belong in reserve payments.
And I think that I'm disagreeing with your description
of these costs for this particular purpose.
-: And are you disagreeing with it
because it's in the fixed payment,
are you saying that the cost just don't exist?
-: Because it's a fixed cost
and those don't belong in a competitive offer.
-: But the costs do, could potentially exist, correct?
-: And they get recovered in different ways,
not through the RDPA.
-: And if they get recovered in different ways,
they would get recovered through an energy payment
if they're disbatched, correct?
-: And energy payment or an ancillary service payment
in the day ahead market.
-: Okay, but if they're not dispatched
do they get recovered?
-: If they're not dispatched, they do not get recovered.
That's right, that's how the market works.
-: Thank you.
-: All right.
So let me then go to the other part of your hypothetical.
We're gonna turn back to that on page 11.
-: Yeah.
-: You said that assume company B,
and this is the company without generation.
It owns no generation and it only received uplift charges.
There are many factors to consider,
but given that the total amount that may be financed
is capped company B is more likely to be at risk of default
than company A because company A had a natural hedge
and company B had no ability to financially hedge.
Let's focus on that.
When you say natural hedge,
are you referring to the generation
that the companies of the company's affiliates?
-: The generator that was online, Yes
as a natural hedge.
-: Okay, and you say company B
the load serving entity without affiliated generation
had no ability to financially hedge.
And you say that unequivocally there,
were you here for the testimony of Mr. Carter yesterday?
-: Yes.
-: Okay.
And were you also here for the testimony
of Mr. O'Gorman.
-: Yes.
-: Earlier in the morning.
Okay, and both Mr. O'Gorman and Mr. Carter stated that they,
there are financial hedges in the market for LSEs.
Do you recall that testimony?
-: Yes, but not for RDPA.
-: But not for RDPA, okay.
And so your statement here
is that only with respect to RDPA.
-: You can hedge energy, you can hedge ancillary services,
you can hedge a number of things,
but you cannot hedge uplift.
-: That's right.
But for ancillary services,
you would say that company B
did have the ability to financially hedge, correct?
-: My testimony here,
I'm only speaking about the RDPA.
-: And I'm asking you about with respect
to ancillary services.
-: There are financial hedges for ancillary services.
They're not well-treated, they're illiquid,
but yes, they exist.
-: Those are the questions I have, thank you.
-: Thank you.
Just Energy?
-: Yes Your Honor.
(mumbling)
Good morning, Ms. Bivens -: Good morning.
-: Catherine Webking and here representing Just Energy.
I think it would be best given our time
just to just dive right in.
-: Okay.
-: So could we look at exhibit seven A
that's in front of you?
What I just handed you?
-: Yes.
-: This is an exhibit in the record, it's been admitted,
parties have copies.
Are you familiar with this document in general, Ms. Bivens?
-: I have not seen this before.
-: This is a response to an RFI that was asked
by Just Energy to ERCOT.
-: Okay.
-: So this document was produced by ERCOT.
-: Got it.
-: It is ERCOT's calculation underlying their display
of RDPA charges.
-: By QSE.
-: Yes.
-: Got it.
-: And monies paid from ERCOT for RDPA,
payments to reserves by QSE.
So if we look at this chart,
I just want to go through a little bit of discussion.
This is their representation that this is the,
these are the total RDPA charges
for the period of the emergency.
So that would be in the column there with a heading
L-A-R-D-A-S-I-R-N-A-M-T, correct?
-: No, I believe RTRDASIMT is the RDPA.
-: I'm sorry, is that not what I said?
I'm sorry, the RDPA charges.
-: The RDPA charges is the column on the far right.
-: Ms. Webking, did you provide a copy to the court reporter?
-: Yes, I did.
-: Okay, good.
I'm feeling a great deal of sympathy with these acronyms.
I just wanna make sure we know who they are.
(laughing)
-: Well, apologies.
Let me say I don't off the top of my head know
what the first column on the left is
the L-A-R-D-A-S-I-R-N-A-M-T is.
I know what R-T-R-D-A-S-I-M-T is off the top of my head
-: Fair enough, those are lengthy acronyms.
-: They are.
-: And we could go to the protocols.
And we just, just assume for me,
for the moment that ERCOT represented that.
-: This is the load allocated
real time deployment price setter amount?
-: Yes.
-: Okay.
-: So for each of these lines where it has a QSE,
and then in some places it has an SQ1,
for example under CPS energy or ConocoPhillips even,
could you explain just for everyone's understanding
what the SQs referred to.
-: Sub QSE.
-: And so ERCOT has data broken down for these elements
for RDPA by sub QSE, correct?
-: QSE and sub QSE, which are for all intents and purposes,
the same.
-: From ERCOT?
-: From an ERCOT perspective.
-: So from a data availability, they're all the same.
-: Yes.
-: Do you understand, or what is your understanding
of the purposes of sub QSEs in general?
-: Accounting.
-: Okay.
And so an individual entity that is serving
as a qualified scheduling entity for third party
may have a sub QSE for that third parties, is that common?
-: Yes, that is common.
-: And in fact, if we looked in this
and I'm not gonna take the time
because we have delicate minutes,
but there is a British petroleum sub QSE
that says Hudson next to it,
which is on page four, not quite to the middle.
-: I see that.
-: And Hudson is a Just Energy affiliate
that's part of the record in this case.
So would your common understanding of ERCOT operations
be that that would be the Hudson numbers
settled within BPs QSEs?
-: I have no special knowledge, but that sounds reasonable.
-: But if you were asked to look at the details of this
and you had access to all of this information within ERCOT
you could make those determination.
-: Whether the Hudson LSE is contained within the sub QSE
is that the question?
-: Yes.
-: And when we've heard about limitations
in the ability to make detailed calculations
down to each LSE,
the data for each LSE is available for ERCOT.
And in fact, to come up with this,
any of these QSE data for RDPA charges,
that's a sum of each of the LSEs load ratio share,
or the RDPA charges, correct?
-: Which column again, are you talking about?
The one that starts with LA?
-: Yes.
-: I'm not familiar with that determined.
It I'd have to look it up.
I don't have, like I said,
I don't have that memorized.
I know that the one on the right as a QSE level determinant.
-: Okay.
If we assume the one on the left is a QSE level determinant.
-: Then you just have it by QSE, you don't have it by LSE.
And if it's a determinant that only contains low data
and there is multiple LSEs, then it,
you wouldn't necessarily know how to apportion
that QSE level dollars down to the LSE level.
-: If you had the LSE extracts would say
what portion of the load ratio share was associated
with each LSE, correct?
-: I'm not familiar with those.
LSE extracts.
-: Okay.
And when you did your,
you didn't have this particular sheet
but you had similar data for the operating days
that you did your original calculations for,
for the legislature, which I might add,
you did very quickly in response to the timing.
Did you use this QSE level data?
-: We use the QSE level data,
and we netted that to the counterparty level.
-: Okay.
And counterparty at that point would be
the same financially responsible entity?
-: Yes, it would be a collection of QSEs
and LSEs account holders.
-: In the discussions about your understanding
of RDPA payments to reserves,
those are paid to all reserves
regardless of the type of generator that it is,
whether it's natural gas or coal or nuclear,
if there's room between the LSL and the HSL
or the operating level and the HSL that generator gets paid.
-: That's generally true.
For wind it's only if the wind is curtailed.
-: And so if we're looking at RDPA,
can you give a general idea of say on the 19th of that week,
on the Thursday of that week,
what levels the RDPA was sitting at in terms of our range?
-: It was a substantial portion of, I would say, you know,
$8,000 perhaps.
-: And is that a unique circumstance in your understanding
in ERCOT operation?
-: Yes, it is.
-: And with the entities that were paid that amount
for reserves,
would that have been an expected payment
under normal operations?
-: Under normal operations, no.
-: Okay, I'm gonna skip for a minute to your testimony
at page 19.
In there you have a proration methodology, is that correct?
-: Yes.
-: First of all,
whatever proration methodology is necessary
would only be necessary if the total amounts of exposures
to be allocated were more than $2.1 billion.
-: That's correct.
-: And is it conceivable in your mind
that under a netted scenario with some portion
of opt-outs that we would not get above 2.1 billion?
-: It's difficult to say again,
the $1.9 billion number that we presented previously
only represented for the RDPA payments two day window,
whereas the 4492 covers the entire week.
So we'd have to balance that fact that there's extra RDPA
with the fact that there might be some opt-outs,
it's difficult to say.
I think that the we'll probably still hit the CAP.
-: Have you looked to see which days
had actual positive RDPA payments?
-: Yes, and Thursday and Friday have the largest,
but they're by no means the only.
-: But Monday and Tuesday don't have any correct
or possibly even negative one of those days.
-: Definitely not negative.
I don't recall off the top of my head.
-: Okay, and the ideas
it starts hitting under the way
the world was working that week,
when there were excess reserves
that weren't being called upon to actually generate energy.
-: The RDPA, yeah those charges are generated
when there are reserves between what ERCOT is dispatching
and what's available to be dispatched.
-: The actual total of those RDPA charges and payments by day
are readily available to ERCOT and to you
and to anyone who wanted to look at it, correct?
-: Yes
-: And so when it,
so if we are in some proration methodology that's necessary,
so total exposure, let's say it ends up at $2.4 billion,
would your proration methodology kick in at that point?
-: Yes.
And are there other probation methodologies
that would be reasonable?
-: Yes.
-: And under your proration methodology,
the amount of funds and that's in your testimony,
would the amount of funds going to an individual LSE
could change dramatically between whether or not
we were just over the cap or just under the cap, correct?
-: That sounds right.
-: And is that still your testimony
is the best proration methodology?
-: Well, I will say that there is a scenario
that I was just recently considering
where there could be a situation
where an LSE has no pass through to end use customers.
And I think that that may needs to be considered
an proration methodology so that I think there might be
the proration methodologist should take into account
that there are LSEs that do not pass through
cost to customers.
-: And that would occur for a rep
that was predominantly serving
residential and small commercial customers.
For example, their amount of pass through if any,
would be much less than an RFP
that was serving primarily industrial customers,
for example.
-: That sounds right.
-: And actually in this securitization,
we could have municipalities involved also, right.
-: Good point.
-: And that, depending on how you characterize this pro
this idea of pass through or not
municipalities ultimately will pass through
all of these charges in theory, is that your understanding?
-: I'm not familiar with municipalities passing.
-: That could be claimed or not be claimed,
but if they said, you know, we only have our customers
to recoup this from.
So ultimately this would be passed through
to all our customers.
So under this scenario that municipality could come in
and get 100%.
-: Objection, your honor.
I think the witnesses already explained she doesn't
that she doesn't have any familiarity
with the municipalities.
Can Ms. Catherine rephrase.
-: I think she's trying to explore that
and if she continues to not know, we can,
we wouldn't find that out, so overrule.
You can recharge it if you feel like it,
if it's appropriate.
-: Yeah, my intention was to staff's intention
was to apply a proration methodology
that gives some preference to the idea
that there are end customers, that the reps are the,
the LSEs are gonna need to refund dollars to
under 4492 and to prioritize those
because they need to pay those dollars back
to the end use customers per the securitization bill.
-: But to the extent that ends up with entities who have the,
are bearing the full weight of these RDPA charges
and the answering service charges over 9,000
and not passing those through to those customers.
If you put them at the bottom of the stack
for funding or no funding,
then that would not help that entities liquidity in any way.
-: I could see a mixed proration method
where that there is some priority given to the pass through
and use customers given that that is the stated objective
of in 4492,
and as well as payments and for obligations
that were incurred.
So there's kind of two things that are noted in 4492.
And so I could see there being some mixed proration method
to allocate some funds in a proportional manner
and some funds in a way that gives priority
to those that have to pass through to end use customers
because they have to refund those dollars.
-: But whatever proration methodology is used,
would it be reasonable to have something
that dramatically changes the distribution of dollars
from if you were at 2.1 versus 2.11?
-: Can you say that one more time?
-: Yeah, it wasn't very hard.
If you have a proration methodology,
if you have a basic allocation of proceeds,
assuming we're at 2.09 billion,
and then if we end up at 2.11 billion,
would you expect that that fundamental allocation
would change dramatically?
-: I don't have an opinion.
-: Okay.
If we get back to,
if you don't do this itemization
of which customers could have been passed through
or were passed through,
then when we get to your listing of doing the calculation
of netting as recommended in your testimony,
I'm looking at page 16 of your testimony, 15 and 16.
-: Got it.
-: And it actually begins, I guess, some 14.
-: Yes.
-: But if we go through these steps,
each of these steps are known quantities
that can be verified by the LSE.
-: By the LSEs, yes.
-: And you step through the mechanisms
by which the LSEs could produce this data
that could be then review by the Commission.
-: Yes.
-: And, or possibly with your help or your staff's help,
depending on resource availability.
If you did not do the proration methodology
that you suggested in on page 19,
or looking into customer specific contracts,
the item you have there for number 11,
that talks about percentage of pass throughs
and that sort of thing
that would not be relevant to your netting proposal.
-: That's correct.
-: And with regard to the understanding
of how much subjectivity there is to these numbers
for the Commission to be able to verify
that when an LSE comes in and says, this was my exposure,
are there some base level data that is available
through ERCOT so that you or ERCOT
or whoever at the staff is working on this
would be able to have some verification
that that exposure is within the realm of reasonableness?
Let me phrase a little more specifically,
I'm not trying to be difficult.
For example, this happened with Rayburn in this case, right?
The original testimony from Rayburn
identified a number for RDPA and ancillary services
that was much higher and ERCOT was able to come in
and say that it's not,
that exceeds our understanding
of what these two charges would equate to.
-: Yes.
-: Okay, and ERCOT had the ability to do that
for that entity because they just had a single
presumably that LSE was only in one QSE
and there was nobody else involved.
So they were able to do that.
-: But they made some,
I assume they made some simplifying assumptions
so that they could get a reasonability number. Yes.
-: And so similar process could be done
with simplifying assumptions for the entire market.
-: I think you would need to spell out what you mean
by those simplifying assumptions
will this assumptions be that all QSEs
pass all uplift costs down to all LSEs.
That could be one.
I don't know how to apportion the QSE level,
build determinants <v ->Right, and ultimately-
-: Come up with some rubric for that.
-: But either way, no LSE should be able,
should be coming in and saying their exposure
was greater than their QSEs exposure.
-: I agree with that.
-: So we could do a QSE exposure calculation,
and at least have a not to exceed understanding.
-: It appears that ERCOT has already done
the QSE level exposure.
That's what this is, correct?
-: Right.
-: This exhibit that you showed me, yes.
-: And so if, if there was an example yesterday
about a 100 LSEs and a QSE,
is it your understanding that that's a common thing
or normal thing?
-: I mean, you can see NextEra here has 26.
I don't know that those are LSE QSEs, but.
-: But they're each separate QSEs.
-: They're each separate QSEs.
-: 100 LSEs under that sub QSE.
-: Yes so, and this is a case in which.
-: (indistinct) I can't have y'all talking over.
One at a time <v ->I'm sorry.
-: I apologize.
-: Go ahead and explain it.
-: There are cases in which,
such as all of these sub QSEs you see,
this is likely an entity that is giving
every unaffiliated entity its own QSE,
but there are other cases in which they'll, you know,
merge multiple LSEs within one QSE,
both scenarios exist.
-: And when we say multiple,
do you know how many LSEs there are in the market,
roughly operating.
-: I'm gonna guess somewhere around 80 to 100, but.
-: Okay.
-: Yeah.
-: So no one QSE has 100 LSEs?
-: No.
-: And in fact, in this list with these RDPA payments,
if you look at, and charges,
if you assume with me that the column
that has the load allocated starts with the LA
are the loads, then each of those, only those QSEs
that have a positive number in that,
or have a number in that column would be QSEs
that represent LSEs.
-: That's or for whatever reason the LSE had no load.
If it had no load.
-: Fair enough for that week.
-: For that week.
-: That would have allocated charges that would be part of.
-: If it had no load it would.
-: Yeah, that again, I apologize.
Go ahead.
-: If it had no load,
then it would not have any load allocated charges
during that week.
-: And this would be the entirety of the universe
based on my representation of this being ERCOT's response.
There's no other, other QSEs that would be involved.
-: Based on your representation, yes.
-: And we could perform, ERCOT could perform,
you could perform the same sort of calculation
for the ancillary service charges over 9,000 by each QSE,
correct?
-: Yes.
-: Ms. Webking.
I had anticipated we'll take a break at 11.
Should we wait for you to finish
or you have much more...
-: I think a break right now would be perfect, Your Honor.
-: Okay, let's do that.
And before we do break,
just this is our last witness.
I'm wondering, just for purpose of planning our day
by show of hands, could I see folks
who are still wanting to cross examine this witness?
Okay, so we still have some lifting to do, fair enough.
Let's take a 10 minute break.
Okay, we're back on the record after our break
and Ms. Webking, you may continue.
-: Thank you, your honor.
Welcome back, Ms. Bivens.
-: Thank you.
-: Just want to try to continue a little bit
from where we were
in terms of the ability of ERCOT or you and your staff
or someone to provide sort of a,
not to exceed at least review of what LSEs might submit
for their exposure.
And I think, I don't want to put words in your mouth,
but I think we established that at least at a QSE level,
you would be able to understand
what that not to exceed numbers should look like
with clarity from the Commission of what charges
should be included.
-: Yeah, I would like, I can't guarantee
that's gonna cover all cases
cause this is the first time I'm thinking of it like that,
but it seems like that would be broadly true.
-: And the LSEs would have the opportunity to come in
and explain if for some reason that wasn't the case.
But if you have an LSE who's not in this room
and who hasn't been participating in this
and they do a calculation
and submit all of their ancillary service charges,
instead of only those above 9,000,
you'd be able to recognize that.
-: Yes.
-: And for each LSE, once you know their load ratio share,
you would be able to identify what their RDPA charges
would have the maximum that they could have been.
-: The maximum they could have been, yes.
-: And the place where we run into limitations,
I think is ERCOT put an and in your testimony
is just that you can't make a positive averment
that their QSE actually charged that to them.
And so you need the LSE to come in
and make that representation one way or the other.
-: That's one issue.
-: And with regard to dollars proceeds out of this
that any LSE receives
one aspect of the legislation that kind of addresses
any potential double recovery is the section that requires
the load serving entity to flow through any proceeds
for these charges where the customer
has actually already paid for those charges, correct?
-: Can you tell me what you mean by flow through,
they have to remit excess payments.
-: They have to remit excess payments, yes.
And if a customer was charge for their portion of the RDPA
in some sort of an ancillary charge pass through contract,
for example, and that customer paid that amount,
then the LSE would credit the customer back.
-: That's my understanding.
-: Okay.
When we're looking at the proration,
if we end up at a number that say 2.3 billion
instead of 2.1 billion,
would another reasonable proration methodology
be to say, all right,
let's just take that ratio of 2.3 to 2.1.
So roughly 90% as a very rough number for this calculation
and each entity that documented exposure
would get 90% of their exposure.
-: That's one way to do it.
-: I have no further questions.
Thank you, Ms. Bivens -: Sure.
-: Thanks for your honors, Commissioners.
-: Thank you.
NRG?
-: Yes, Your Honor.
-: Good morning again Commissioners, your honor,
Andrea Russell on behalf of NRG.
Good morning, Ms. Bivens.
-: Morning.
-: I wanted to take a look again and...
Bless you.
clarify some of the testimony
that you gave just previously with Ms. Webking
related to page 19 of your testimony
and the proposal that you've got related to proration,
on line I think it's 11,
your part of your proposal says that each LSE
that applies to receive financing proceeds
will provide the amount of the relevant costs
that will ultimately pass through to the end use customer.
And that would be used to in the proration calculation,
is that correct?
-: Under this method, yes.
-: Okay, so are you aware that there are some reps
who may have a contractual right to pass through costs
to their customers,
but given the amount of costs that a customer may have
a customer may have incurred related to the storm
that some reps may have negotiated with their customers
and not charged all those costs or, you know,
put those customers on a payment plan
or made some other arrangements with their customers?
-: Yes.
-: Okay, but under this proposal,
that rep would not be able to include those obligations
if it was not actually passed through,
those costs were not passed through to the customer.
-: Under this method, yes.
-: So under this method,
if a rep has maybe primarily residential customers
and with fixed contracts and has no ability or, you know,
can't otherwise pass those costs through,
they would not be able to recover any costs
if your proration method was applied?
-: Yeah, so earlier I stated that
I could see a different method
that was more of a mixed method
that included some prioritization for end-use customers
that also included some dollars
for those who were not able to pass through those costs.
And would that mix method be maybe more
in keeping with your goal of promoting liquidity
in the market,
by allowing reps who may be shielded their customers
from these costs to be able to access some of these funds?
-: From the health of the wholesale market,
it's possible that that would,
that would help stabilize and prevent some future defaults.
-: And maybe more complete way
than what you proposed in your written testimony?
-: Yes.
-: Okay, great thank you.
No further questions.
-: Rayburn?
-: Just a few question, your honor.
Commissioners, your honor, Ms. Bivens,
Justin Mirabal
on behalf of Rayburn Country Electric Cooperative.
Ms. Bivens, I would like to start with your testimony
on page nine lines 22 through 26.
Just let me know when you get there.
-: Yes.
-: So in that section of your prepared direct testimony,
you recommended that a load serving entities
should calculate its exposure under Subchapter N
on a net basis taking into consideration
the larger corporate structure of an LSE
and the other market participants
within that corporate structure, is that correct?
-: Correct.
-: And you explained to your recommendation
regarding how to calculate an LSEs exposure
is based on a plain reading of Subchapter N of HB 4492,
is that right?
-: Yes.
-: So based on your testimony,
is it fair to say that you have reviewed
and you're familiar with HB 4492?
-: Yes.
Okay, I would like to jump ahead in your testimony
to page 20, lines 22 through 24.
Just let me know when you're there.
-: 20, page 20 yeah I'm there.
-: Page 20 lines 22 through 24.
-: Yes.
-: So in this section of your testimony
you discuss about whether to prorate
the securitization proceeds available under Subchapter N
and you recommended that if an LSE
is on the ERCOT short list, short pay list rather,
and has access to unique alternate financing opportunities
outside of sub-Chapter N,
that LSE should be prioritized lower than entities
that do not have access
to such alternate financing opportunities,
is that right?
-: Yes.
-: So is that recommendation to prioritize certain LSEs
above others?
Is that required under HB 4492?
I believe the Commission gets to choose the proration
and the prioritization method.
-: But is it required under the statute?
-: It's not required, no.
-: Thank you, Ms. Bivens, no further questions.
-: Tenaska?
-: No questions, your honor.
-: Texpo?
-: No questions, your honor.
-: TIEC?
-: No questions, your honor.
-: TXU and Luminant?
-: Yes, your honor.
-: Good morning, Ms. Bivens
My name is Bill Moore representing the TXU LSEs and Luminant
I think it's fair as reflected in your testimony
as you just agreed with counsel for Rayburn Country,
your recommendation with respect to netting,
you say is based upon a plain language reading
of the statute, is that correct?
-: Yes.
-: So do you have a copy of staff's exhibit four,
which is House Bill 4492?
-: Yes.
-: Could you turn to page 16 of House Bill 4492
Do you see the definition there of uplift balance?
-: Yes.
-: Paragraph four.
Great, could you read that definition for us please?
-: Uplift balance means an amount of money
not more than 2.1 billion that was uplifted
the load serving entities on the load ratio share basis
due to energy.
-: Could you go a little bit slow.
-: Sorry.
(laughing)
I have it memorized at this point, I apologize.
Uplift balance means an amount of money
of not more than 2.1 billion
that was uplifted to load serving entities
on a load ratio share basis due to energy consumption
during the period of emergency
for reliability deployment price at our charges
and ancillary service costs
in excess of the Commissions system-wide offer cap
excluding amount securitized under Subchapter D Chapter 41.
The term does not include amounts that were part
of the prevailing settlement point price
during the period of emergency.
-: Thank you.
So, one thing I noticed as you read that
you did not say the word net, is that correct?
-: Correct.
-: And that's because the word net does not appear
in that definition of uplift balance, is that correct?
-: Correct.
-: So would you refer in your testimony to page six of 21?
-: I'm there.
-: Great, there at line 20 on page six,
the question is asked,
please describe the costs included in the uplift balance
as defined in PURA section 39.6524, right?
-: Yes.
-: And that reference to PURA section 39.6.2
39.6524 is the definition that you just read,
is that correct?
-: Yes.
-: Now your answer to that question on lines 22 and 23 says,
tell me if I get this right,
the costs included in the uplift balance
are the net reliability deployment price adder,
RDPA charges,
and the net charges for day ahead ancillary services
for the amounts that were priced
over the system-wide offer cap, SW cap.
That's your testimony, right?
-: Yes.
-: Now in that answer, the word net appears twice,
is that right?
-: Yes.
-: And you just agreed with me that the definition
that is posed to which the question is posed
doesn't include the word net at all, isn't that right?
-: Yes. I included the entire reading of HB 4492
and the determination, so net.
-: Your testimony is the entire reading includes adding words
to the statute that don't appear, is that correct?
-: The word net does not appear, but the concept appears.
-: So the definition in the legislature,
in the legislation does not include the word net,
is that correct? -: Correct.
-: And the Q&A ask you to describe the definition
and you add the word net twice, is that correct?
-: Objection, asked and answered.
-: Sustained.
-: I have no further questions.
-: Okay, thank you.
LCRA?
-: No questions your honor.
-: East Texas?
-: Yes, your honor.
-: Good morning, Ms. Bivens
My name is Jacob Lawlor
and I represent East Texas Electric Cooperative.
And I had a few questions about the $2.1 billion cap
in the March 11th letter.
-: Okay.
-: On page 18 of your testimony,
you state that it is your understanding
that the legislature relied on the 1.9 billion number
from your March 11th letter in setting the $2.1 billion cap,
is that correct?
-: Yes.
-: And that number included the exposure
of all load serving entities in the ERCOT market,
is that correct?
-: Correct.
-: And that would include electric cooperatives
in the ERCOT market?
-: Yes.
-: Thank you, no further questions.
-: Thank you.
Golden spread?
-: No questions, your honor.
-: South Texas?
-: No questions, your honor.
-: Austin?
-: No questions, your honor.
-: Lubbock?
-: No questions your honor.
-: OPUC?
-: No questions, your honor.
-: ERCOT?
-: No questions, your honor.
-: Let's see here, Commissioners?
-: Ms. Bivens, the number that you alluded to
questions from East Tech,
that included all cooperatives in the ERCOT market
as was just asked.
And that includes those also in subject to Senate bill 1580.
-: The purpose of the March 11th letter to the Commission
was a different purpose and it was around pricing.
And so yes, we included all entities for that purpose.
-: Okay, so that was baked in to your number.
-: That was baked into my number, yeah.
That's includes all load serving entities, yes.
-: Ms. Bivens, I have a question
about Ms. Frazier's testimony and this,
I know you don't have it in front of you or perhaps
I just wanna read it to you and get your thought on how you,
if you agree with this or disagree this and perhaps why.
She writes that if netting applies
to the determination of exposure to uplift balanced cost
and netting must also be applied to the determination
of liability, if any, for payment of uplift charges,
how do you feel?
Do you believe that netting has to apply
on both sides of that?
-: I do not.
-: Can you tell me why?
-: Well one's a practical reason is
I don't know how you do that on the other side.
And I think the definition
of how the uplift proceeds are collected
is clear in the language and it does not reflect exposure
or any sort of net calculation
the same way that, you know, for instance,
how we netted the $1.9 billion number.
And there's no nothing in the,
my plain language reading of that 4492
would allow a different epileptic methodology.
-: Okay, thank you.
-: And then just as a clarifying question,
in an exchange that you had with Ms. Webking
on the number of load serving entities
in the ERCOT market,
you estimated that there were a hundred
load serving entities?
-: Off the top of my head, that's my estimate.
-: Okay, so in terms of the universe of entities,
it's only really 100 bit that are affiliated
in different forms with various QSEs
and that's where it becomes more complicated.
-: Yes.
-: Okay, all right.
-: Do you have any redirect?
-: Yes, your honor,
Ms. Bivens, do you remember the questions and answers
from Ms. Griffiths regarding the RDPA charges?
-: Yes.
-: At one point you stated that you disagreed
with the way the question was framed.
Why did you disagree?
-: The question was framed in such a way
as to describe these pigments to generators
in a way that is different from how they're actually used.
So this ancillary service and balance,
these RDPA payments are essentially in different payments
to ensure that the entities follow their base points,
they are not intended to recover any costs.
They're not part of the, you know,
this is not the energy costs, that's a whole separate thing.
These ASN balanced payments are simply
an indifference payment
and they do not reflect any sort of cost recovery.
And there's no basis on which to assume
that they are intended to recover any costs.
-: Okay, and then moving on,
do you recall that Ms. Webking asked you about,
was there a way to sort of set a cap on the,
she was talking about the relationship between QSE
QSEs and LSEs and she was trying to ask whether or not
there was a way to set a cap
and to say that the amount that a QSE had been invoiced
should not exceed the amount of the LSEs
of the combined total of the LSEs underneath it.
Can you think of any exception to that?
-: It's difficult to say,
because I cannot claim to know every QSE relationship
paradigm that might exist out there.
As I was asked that question and was thinking about,
you know, if you have two LSEs and a QSE,
and it seems to me as though the QSE costs would,
could not exceed those individual LSE costs.
-: Okay.
And then turning to the question that counsel for Rayburn
asked you about whether or not prioritizing
the remittance of the proceeds is required
under Subchapter N
What about the definition of the uplift balance
makes it a reality
that there's going to be a prioritization?
-: Yeah, I believe it's difficult to say,
as I was saying before about,
cause we don't know what the universe of the opt-outs are,
but given the fact that how this numb,
my understanding of how the 2.1 billion was arrived at
only includes a subset of the amount of time
that was actually included
in the definition of period of emergency and the bill.
And so the costs are likely to exceed 2.1 billion.
And so I think it is likely that there's gonna have to be
some proration or prioritization of financing funds.
-: Thank you, no further questions.
-: Thank you.
In light of the scope, within the scope of the redirect,
is there any one who wishes to do more cross?
Any other questions from Commissioners?
-: Thank you ma'am.
-: All right, we've reached the end of the road here.
I wanna talk about briefing, post-hearing briefing.
We've discussed it with the Commissioners
and here's what we're gonna require to post-hearing briefing
initial briefs will be due by September one,
limited to 15 pages.
Reply brief, limited to 10 pages due by September eight.
Is there any other, before I turn to the Commissioners,
is there any other business we need to take care of
before we adjourn?
All right then,
any other matters that Commissioners wanna address?
-: So just as a matter of course,
I'd love to hear other Commissioner's views on this,
but I think we might be on the same page.
We have seen a variety of arguments presented in evidence.
There is some consistency from parties
in terms of your arguments
for the purposes of our ability to digest your reply briefs
in a timely manner given the workload
that the Commission has in other projects and dockets,
if a consistent coordination could be had among parties
to prioritize your arguments in different ways,
to where we can,
to where it's not spread over 50 different parties
to where you can consolidate in thus we see the argument,
we see your counter arguments to what was presented today
and asked from us.
And that way we have less to read
and can form our opinions in a timely manner.
I think that would be an ask from myself,
I don't know how the other Commissioners feel about it.
-: I'm fine with that Commissioner McAdams.
I think we are dealing with a very short timeline
for briefing, and if we can limit the page limits
and get some coordination, that would be great.
I understand that a lot of issues are very important
to the different parties and a lot of information
was shared over the last day or so.
And so really trying to highlight any new information
that you feel you need to highlight
based on the hearing discussion that you want us to consider
or new information that supports prior arguments.
But I definitely agree with your direction.
-: Good, good.
-: Yeah, same.
I think to summarize that is just your pages really count,
so make them count and we'd appreciate that.
-: Okay. Well, thank you all very much.
I'll adjourn the hearing it,
and then you'll adjourn the meeting,
the hearing in 52322 is adjourned.
Thank you all very much.
-: This meeting of the Public Utility Commission
duly posted is hereby adjourned at 11:42 AM.