WEBVTT
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Good morning.
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This meeting of the Public
Utility Commission of Texas
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will come to order to consider matters
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that have been duly toasted
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with the Secretary of State of Texas
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for October 21st, 2021.
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For the record, my name is Peter Lake.
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With me today are Will McAdams,
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Lori Cobos and Jimmy Glotfelty.
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First up on the agenda,
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we have docket number 51840.
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Mr. Smeltzer and Mr. English,
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would you please lay out
our proposal for adoption?
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Good morning,
Utility Commissioners,
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My name's Barksdale English,
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on behalf of Commission staff,
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the microphone is not on.
I don't hear that.
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The mic is not on.
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(indistinct chattering)
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Can anyone hear any of this?
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Can you hear me?
Yes.
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Is this now on?
We can hear it.
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Yes.
I can hear that.
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Can you hear me?
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All right.
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So, one more time, my
name is Barksdale English,
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on behalf of Commission staff,
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good morning, Chairman
and Commissioners.
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Before you today is the
staff's recommendation
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for the proposal for
adoption for a new rule,
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16 TAC, Chapter 25.55,
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it lays out our recommendation for
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weatherization preparation plans
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for the upcoming winter season.
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And we are happy to take any questions,
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comments and concerns
that you might have at this time.
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I appreciate that.
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First and foremost, I'll say thank you.
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Thank you to both of you gentlemen,
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and to all of the staff
who worked on this
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substantial and landmark rulemaking
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that was done on an
incredibly fast timeline.
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Thank you for all
your hard work on that.
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The bottom line,
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and the reason all that
hard work was put in
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on such a rapid
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timeline was because
we've got to make sure
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this is in place for this winter.
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And this rulemaking will be a big step
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to ensuring that the
physical resiliency of our grid
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is vastly improved this
winter over last winter.
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I would also wanna
thank our stakeholders
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and especially our generator
and transmission community,
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because they have largely
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been ahead of the curve
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in buttressing and
reinforcing their infrastructure
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ahead of this rulemaking.
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So, I appreciate their, not
only contributions to this,
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but also the efforts
they've made proactively.
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And the final thing
I'll say is that this is,
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so you've probably noticed,
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this is phase one of our rulemaking.
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This is an operational standard
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to be ready for this winter.
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A more robust
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and year round preparation standard
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is being developed by
ERCOT to be implemented later.
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I think that was a good suggestion
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of Commissioner Cobos,
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to stagger that rulemaking.
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So thank you again,
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open it up for questions or comments.
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I just wanna echo
the Chairman's ...
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Can you hear me?
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The Chairman's comments.
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Thank you very much to you Barksdale
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and David and the rest of the staff
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that worked on this very
critically important rule.
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It was quite a task
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to get the rule done
in time for the winter.
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And as the Chairman
said, I think it is
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a landmark rule on
weatherization because
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never before have we had
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such robust weatherization standards
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in place with enforcement authority.
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So, I think that is a huge step forward
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for the industry in
terms of weatherization
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to ensure we have
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a more resilient
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generation fleet and
a transmission system
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for the upcoming
winter and for the public.
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And so thank you very much.
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And thank you to the
industries for working with us
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on such a short turnaround time.
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All I can say is,
great job to staff.
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You turned this around in record time.
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I would say that,
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I hope the generators,
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and I have been assured
that the generators
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are ahead of the game on this
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and have proceeded
down a implementation plan
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in advance of the rule.
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Consumers are on the
other end of the hook on this.
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So let's get out there,
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let's start imposing this
standard, get 'em ready.
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Winter is around the corner, but thanks.
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I would echo the Chairman
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and my fellow Commissioners' comments
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on thanking the staff
and the participants too,
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for their efforts to do this quickly.
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If I go back and look
at the winter storm,
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to me, there's not one
issue that was the problem,
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but there's one major solution
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to our piece of this puzzle
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and that is winterization and
weatherization of these plants
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to make sure that when
we want them there,
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that they are there.
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So, I believe this is
absolutely the first step.
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I believe this absolutely
makes our system
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more reliable in wintertime,
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and I believe we're
absolutely on the right track
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to making this
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the standard for winterization
and weatherization.
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Again, weatherization,
so winter and summer,
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but we've historically
been a summer peak.
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Everything was ready for
summer, but not for winter.
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So, I applaud you
all for the efforts
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to think outside the box
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and to get this done quickly, thank you.
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With that, is there a motion
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to approve the proposal for adoption?
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So moved.
Seconded.
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All in favor, say, "Aye."
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Aye.
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Motion passed,
thank you, gentlemen.
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Next item is docket 52373,
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a review of wholesale
electric market design.
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As you all know, following
the memo last night,
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I apologize for the
late hour of the filing,
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that was a result of some IT challenges,
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which we can all see
will continue to plague us
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in various forms today.
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Before I get to the memo,
I do wanna touch on
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an item that's gonna come up
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at tomorrow's ERCOT board meeting
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regarding increasing the
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certain types of load that
can participate in non-spin.
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This has been
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a robust stakeholder
process to get to this point.
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The most important element is that
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it will bring more capacity
and more reserves
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into our margin of safety
this winter and next summer,
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which goes a long way
to ensuring reliability.
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And a lot of folks worked
hard to make sure that
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the way this is implemented is
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on a resource agnostic basis.
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And that's exactly the kind of principle
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we want to implement in this
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and I think going forward.
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So, I'll tip my hat to
all the stakeholders
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that have gotten us to this point.
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Regarding our market redesign memo.
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First and foremost, I wanna say,
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as we've discussed
extensively, this is a starting point.
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This is by no means exhaustive.
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This is just a starting point or a draft
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of a draft of a draft.
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I very much anticipate
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this being a dynamic and fluid document
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with y'all's input and
continued stakeholder input.
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The only thing I'm certain of
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is that I got a lot of this wrong
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and I'm sure the details will change.
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I anticipate staff, today
we can aggregate,
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we've identified the concepts
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that we want to focus on moving forward,
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to narrow the scope of this effort.
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And also importantly,
identify the concepts that we
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don't wanna focus on going forward.
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Importantly, I think we need,
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the four of us need to
identify key questions
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in this narrowed
scope, so staff can issue
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a formal straw-man draft early next week
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for stakeholders to respond to.
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I would ask the stakeholders to respond
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by November 1st on
this much narrower scope
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of items.
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We'll have more details about that
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when we do issue the formal
document early next week.
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As you all know,
there's no silver bullet.
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We've gotta use a combination of tools
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and please do not take my
memo as an endorsement
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of any single plan.
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I did my best to
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select the key elements
of what I think will work
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best to stabilize this ERCOT market.
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As for the meat of the memo itself,
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I'll lay out a couple of
thoughts at a higher level,
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and then look forward to having a
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detailed discussion with
you all about all of this.
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First of all, I'll start with
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concepts I think we
need to take off the table,
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that are not viable for
consideration going forward.
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The biggest of these is,
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what I think of as a
capacity market disguised
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as a new ancillary service.
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Even if
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a capacity market disguises
a new ancillary service
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and might solve
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our short term reliability problems,
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in the long run, if we continue to have
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increased intermittent
resources in our grid,
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it's just a bandaid on a bullet wound.
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It will not solve the problem longterm
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and the problem will only get bigger
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the longer we ignore
addressing it head on.
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These kinds of products,
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may be successful in retaining
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existing generating assets,
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but they've not been successful
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in incentivizing new generating
resources anywhere else
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and I doubt that they
would be successful here.
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As for what I think would
work, as you saw in my memo,
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ORDC, I think everybody would agree
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this is an improvement we can make.
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Certainly, it would drive revenues
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to reliable dispatchable resources
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during times of scarcity,
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that should help
retain our existing fleet,
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which is incredibly important.
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And it's also a market-based mechanism
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to bring more generation on sooner
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rather than out of
market action, like RUCs
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that we've had to rely
on these last months.
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And I think we should
make those changes too,
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to ORDC, as you saw in my memo.
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However, we've made
changes to ORDC before,
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and they clearly did not solve
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either the extreme weather problem
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or the blue sky scarcity problem.
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So, we've seen this maybe before,
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what's different this time?
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Well, I think it's a good
improvement to make,
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I don't think we can stop there.
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Thus, the LSE obligation.
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Philosophically, it's the only thing
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we've seen that, to my mind,
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integrates reliability
into the normal everyday
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functioning of the
market, absent of a crisis.
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It drives revenues to
reliable dispatchable assets
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that we need,
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without paying a lot of money for assets
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to sit on the sideline
and not generate power.
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And importantly, it leverages the
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competitive market
forces of our retail market.
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Functionally, there are two key parts
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of what I hope an LSE
obligation can become.
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First, an accreditation of resources
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by generator type.
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We have to be honest about
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how reliable different resources are.
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It is entirely unacceptable
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that on these blue sky days,
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that we expect 10,000 megawatts of wind
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and get 1,500 and
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in the absence of
any other problem,
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ERCOT controller, it is
scrambling to find resources.
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We've got to stop that
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way of doing business.
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We can not continue to run this state
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and this economy that way,
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our homes and businesses
need reliable power.
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We've gotta be honest about how reliable
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each resource type is.
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The accreditation is the first key part.
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And the second key part functionally,
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I see in this framework,
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is providing forward price signaling to
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the investor universe.
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You saw my memo, I'd suggest
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some percent of anticipated
load up to three years out.
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I targeted on that because right now,
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as of this morning, the price of power,
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a megawatt in Texas,
in the summer of 2025,
00:13:54.745 --> 00:13:56.203
it's 50% less than it is right now.
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And that's what the
financial markets are saying.
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I don't think any of us believes
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that a megawatt of power in Texas
00:14:04.330 --> 00:14:05.857
will be less valuable
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three years from now
than it is right now.
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It shouldn't be with
the growth we've got
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and the lack of dispatchable
resources we've got.
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So we need a mechanism like this
00:14:17.430 --> 00:14:20.400
to provide real financial
00:14:20.400 --> 00:14:23.670
price formation and price
signaling into the future,
00:14:23.670 --> 00:14:26.550
so investors can see
what a megawatt's worth.
00:14:28.619 --> 00:14:29.473
I picked three years,
00:14:29.473 --> 00:14:31.690
because investors need to see
00:14:31.690 --> 00:14:33.670
what they're gonna get from a megawatt
00:14:35.067 --> 00:14:38.473
when a new resource would come online.
00:14:40.101 --> 00:14:41.023
It takes at best,
00:14:42.090 --> 00:14:43.290
three years to get a new
00:14:44.916 --> 00:14:46.080
substantial dispatchable resource,
00:14:46.080 --> 00:14:48.310
permanent build connected.
00:14:48.310 --> 00:14:50.520
So, that's the framework
00:14:51.578 --> 00:14:52.800
and the logic behind three years.
00:14:52.800 --> 00:14:53.660
If I'm gonna finance
00:14:53.660 --> 00:14:57.560
a new dispatchable resource in Texas,
00:14:57.560 --> 00:14:59.762
what kind of megawatt am I gonna get?
00:14:59.762 --> 00:15:00.595
And I need something
I can take to the bank
00:15:00.595 --> 00:15:03.048
and show them that this
is real price formation,
00:15:03.048 --> 00:15:04.323
these are real
transactions in the future.
00:15:05.854 --> 00:15:08.263
There are obviously some
challenges with an LSE obligation.
00:15:09.446 --> 00:15:10.788
First and foremost,
00:15:10.788 --> 00:15:13.152
we've got to make sure
it does not open the door
00:15:13.152 --> 00:15:14.765
to market manipulation.
00:15:14.765 --> 00:15:16.113
The competitive retail market,
00:15:19.711 --> 00:15:21.887
it is not only a feature
of the ERCOT market,
00:15:21.887 --> 00:15:23.757
it is one of the crown
jewels of the ERCOT market.
00:15:23.757 --> 00:15:25.007
It is absolutely critical
00:15:25.982 --> 00:15:28.040
to the functioning of the
market and for our consumers.
00:15:28.040 --> 00:15:30.430
We absolutely have to protect that.
00:15:30.430 --> 00:15:32.876
And secondly, we have to make sure
00:15:32.876 --> 00:15:33.930
that we can incorporate,
00:15:33.930 --> 00:15:36.110
not just incorporate it, integrate
00:15:36.110 --> 00:15:38.900
fully demand response
into any LSE obligation
00:15:41.133 --> 00:15:41.966
that we put forward.
00:15:42.954 --> 00:15:45.179
If we can't, and there are
a variety of other questions
00:15:45.179 --> 00:15:46.096
that you still don't know,
00:15:46.096 --> 00:15:48.103
but if we can't get this
LSE obligation right,
00:15:49.773 --> 00:15:50.880
I'd rather not do it than do it wrong
00:15:52.164 --> 00:15:54.785
because doing it wrong would
maybe cause more damage.
00:15:54.785 --> 00:15:56.235
And if we can't get it right,
00:15:57.470 --> 00:15:59.670
the only other option
we have at that point,
00:16:00.950 --> 00:16:04.090
to truly establish reliability
in our grid would be to
00:16:06.073 --> 00:16:08.770
set some sort of fleet-wide
affirming standard,
00:16:08.770 --> 00:16:10.707
reliability standard,
00:16:10.707 --> 00:16:13.113
require all fleet-wide reliability.
00:16:14.260 --> 00:16:16.180
So, I'll stop there.
00:16:16.180 --> 00:16:17.460
Obviously, I know,
00:16:18.569 --> 00:16:20.533
I expect you all have
lots of thoughts and ideas.
00:16:21.610 --> 00:16:24.900
Jimmy, you've got a lot
of notes there, problems?
00:16:24.900 --> 00:16:27.290
Oh no, no, that was weeks ago.
00:16:27.290 --> 00:16:29.640
Oh good, I'm glad
you've got more sense then.
00:16:31.040 --> 00:16:33.200
I'll stop there and love to hear y'all's
00:16:33.200 --> 00:16:34.972
thoughts and comments.
00:16:34.972 --> 00:16:37.070
This is not on your
proposal, I thought.
00:16:38.280 --> 00:16:42.353
Yeah, so Mr. Chairman,
compliments on the matrix.
00:16:44.270 --> 00:16:45.103
So,
00:16:47.850 --> 00:16:48.790
the details
00:16:50.920 --> 00:16:51.923
and the detail column.
00:16:53.870 --> 00:16:56.340
I gotta tell you, just from the outset,
00:16:56.340 --> 00:16:58.420
I am not prepared on this day
00:16:58.420 --> 00:17:00.420
to endorse any details.
00:17:00.420 --> 00:17:01.700
Sure, it's
a starting point.
00:17:01.700 --> 00:17:03.207
I would strike that though.
00:17:04.300 --> 00:17:06.458
Well, we've
gotta get to it.
00:17:06.458 --> 00:17:08.213
I know, okay,
let's discuss this.
00:17:09.290 --> 00:17:11.543
From the standpoint
of a staff straw-man,
00:17:12.562 --> 00:17:15.575
because I don't want
staff unleashed, sorry staff,
00:17:15.575 --> 00:17:20.433
but on any particular
mechanics that are preordained.
00:17:21.269 --> 00:17:23.640
And I say that because
these are defined
00:17:24.700 --> 00:17:28.250
mechanical components
to the market design
00:17:28.250 --> 00:17:31.833
that began your
questions, man, I'm with ya.
00:17:32.895 --> 00:17:35.420
It's a well thought out, targeted.
00:17:35.420 --> 00:17:38.903
They trap, they drive
toward these points,
00:17:40.345 --> 00:17:42.420
but for the traders
watching this meeting,
00:17:42.420 --> 00:17:44.096
the detail column,
00:17:44.096 --> 00:17:45.930
I wanna make sure and affirm that again,
00:17:45.930 --> 00:17:48.190
I am not endorsing those details
00:17:49.110 --> 00:17:50.999
and just for the group
and you may not be either,
00:17:50.999 --> 00:17:53.763
it's a concept map that
you're articulating here.
00:17:57.888 --> 00:18:01.856
The ORDC, absolutely 100% agree.
00:18:01.856 --> 00:18:06.163
I believe that the MCL
should be adjusted out.
00:18:08.600 --> 00:18:11.560
Everything that we've heard
over the proceeding workshops
00:18:11.560 --> 00:18:13.183
leads us to that conclusion,
00:18:14.470 --> 00:18:19.240
that its status, set at 2000
megawatts of reserves
00:18:21.931 --> 00:18:24.245
is counter to the public interest
00:18:24.245 --> 00:18:25.858
in that it hides behind
00:18:25.858 --> 00:18:28.853
already sending the
public a conservation notice,
00:18:28.853 --> 00:18:29.690
which, what's the point of sending
00:18:29.690 --> 00:18:32.455
price responsive signals or sending
00:18:32.455 --> 00:18:35.190
price signals that you hope
00:18:35.190 --> 00:18:37.311
consumers will respond to,
00:18:37.311 --> 00:18:39.780
if you're already asking
them to conserve?
00:18:39.780 --> 00:18:43.490
Yes, not a lot of options.
It's counterintuitive.
00:18:43.490 --> 00:18:45.050
I believe we should offer up
00:18:45.940 --> 00:18:49.930
a range for study moving forward
00:18:49.930 --> 00:18:52.580
in the near term as a part
of your straw-man concept.
00:18:53.814 --> 00:18:56.174
And your questions asked for Brattle
00:18:56.174 --> 00:18:57.840
to provide us again those cost impacts
00:18:57.840 --> 00:19:00.023
as per your questions.
00:19:02.110 --> 00:19:03.580
Sure, can we pick
the scenarios together?
00:19:03.580 --> 00:19:04.630
Can we do that today?
00:19:05.694 --> 00:19:06.560
I'm ready for that.
00:19:06.560 --> 00:19:08.650
Because stakeholders
have told us
00:19:09.567 --> 00:19:10.554
lots of different versions.
00:19:10.554 --> 00:19:12.510
I wanna get at least a
series of numbers on paper.
00:19:12.510 --> 00:19:14.920
Absolutely ready.
All right.
00:19:14.920 --> 00:19:17.040
Moving on, just so
I can open up the field
00:19:17.040 --> 00:19:19.094
and end my comments.
00:19:19.094 --> 00:19:20.283
LSE obligations,
00:19:20.283 --> 00:19:22.422
since we're focused on these two topics
00:19:22.422 --> 00:19:23.383
and I agree with them.
00:19:24.433 --> 00:19:25.266
I'm definitely not ready to endorse
00:19:25.266 --> 00:19:26.583
an LSC obligation today.
00:19:27.625 --> 00:19:28.750
I have significant questions
00:19:28.750 --> 00:19:32.883
about what this would do to our market.
00:19:33.891 --> 00:19:36.100
They must be answered before
00:19:36.100 --> 00:19:37.640
any type of endorsement
00:19:39.206 --> 00:19:41.406
is considered by the
Commission, in my view.
00:19:43.051 --> 00:19:46.220
Market power, who
administers the program?
00:19:46.220 --> 00:19:50.810
Does the PUC become the
IRS and audit all these people?
00:19:50.810 --> 00:19:53.403
This is a wholly different
system from RECs.
00:19:54.658 --> 00:19:55.720
Nobody cares about
RECs, I'll say it publicly.
00:19:55.720 --> 00:19:57.643
I mean, they care, they buy them,
00:19:58.551 --> 00:20:02.233
but this is a requirement
and it's not just a requirement,
00:20:03.125 --> 00:20:04.233
it's a hard to get to requirement.
00:20:05.079 --> 00:20:06.219
You have to be dispatchable
00:20:06.219 --> 00:20:07.680
and what qualifies as dispatchable?
00:20:07.680 --> 00:20:10.383
And all roads lead into that
with the accreditation system.
00:20:12.578 --> 00:20:16.360
So, I would love to
have more study on this.
00:20:16.360 --> 00:20:18.913
My view of affirming
requirement, as you say,
00:20:19.940 --> 00:20:23.711
and put it together,
affirming requirement,
00:20:23.711 --> 00:20:26.686
either an LSE obligation
or a resource obligation,
00:20:26.686 --> 00:20:28.353
'cause that's what
you implied in your ...
00:20:29.222 --> 00:20:31.800
If we don't get here,
then we may end up there.
00:20:31.800 --> 00:20:33.200
No other option.
Right.
00:20:35.610 --> 00:20:39.890
With the amount of
intermittent only resources
00:20:39.890 --> 00:20:42.323
that are coming into the market,
00:20:43.191 --> 00:20:46.366
that will penetrate our
market in the very near future,
00:20:46.366 --> 00:20:49.220
in the next two years and
especially the next five years.
00:20:49.220 --> 00:20:52.010
And especially with
federal policy enhancing
00:20:52.010 --> 00:20:53.633
that market momentum,
00:20:55.490 --> 00:20:58.440
we have to have the
breathing room to study
00:20:58.440 --> 00:21:00.460
affirming requirement on
one side of the other, now.
00:21:00.460 --> 00:21:02.270
We have to be down the road
00:21:02.270 --> 00:21:05.455
in order to meet those
challenges some way.
00:21:05.455 --> 00:21:07.665
And it may not look exactly as proposed,
00:21:07.665 --> 00:21:08.632
it probably will not.
00:21:08.632 --> 00:21:11.723
And I would suggest it
will not, as proposed by E3.
00:21:12.870 --> 00:21:15.730
However, we've gotta
put the legwork in now
00:21:15.730 --> 00:21:17.000
to be on target
00:21:18.323 --> 00:21:20.612
for whatever that market
looks like in five years
00:21:20.612 --> 00:21:23.062
and it's gonna change
dramatically, we know this.
00:21:24.570 --> 00:21:26.258
And then whatever batteries do,
00:21:26.258 --> 00:21:27.970
in terms of technology and economics and
00:21:28.840 --> 00:21:29.790
the new innovations.
00:21:29.790 --> 00:21:33.163
So with that, I believe
we need to study this,
00:21:34.008 --> 00:21:37.170
but be ready to kill
this thing in its crib
00:21:37.170 --> 00:21:38.243
at any moment.
00:21:40.440 --> 00:21:43.445
No endorsement, no endorsement,
00:21:43.445 --> 00:21:46.175
indeed ask the right
questions, study them,
00:21:46.175 --> 00:21:48.020
have Brattle do the analysis,
00:21:48.020 --> 00:21:50.137
make recommendations,
00:21:50.137 --> 00:21:51.890
bring in a comprehensive
stakeholder process.
00:21:51.890 --> 00:21:53.863
I view the LSC obligation,
00:21:57.433 --> 00:21:58.723
it's almost like a drug
entering the market.
00:21:59.645 --> 00:22:00.631
It needs to be peer reviewed
00:22:00.631 --> 00:22:02.850
and everybody needs
to log every bomb in their
00:22:02.850 --> 00:22:05.470
arsenal at it and they need to defend it
00:22:05.470 --> 00:22:07.370
and find out a way where
we can get to a place
00:22:07.370 --> 00:22:09.080
that's in the public interest.
00:22:09.080 --> 00:22:11.087
So that's my view, sir, thank you.
00:22:13.286 --> 00:22:14.119
I very much appreciate that.
00:22:15.115 --> 00:22:18.056
I think between now and
our blueprint in December
00:22:18.056 --> 00:22:19.689
is where we need to
get comfortable with a
00:22:19.689 --> 00:22:21.559
thumbs up thumbs down on LSE.
00:22:21.559 --> 00:22:22.847
We don't have to have all the ...
00:22:22.847 --> 00:22:23.993
We don't have to have
everything answered.
00:22:25.158 --> 00:22:27.383
We have done an
exhaustive stakeholder input.
00:22:27.383 --> 00:22:29.350
We'll continue to do so, and in no way
00:22:29.350 --> 00:22:30.340
do I think the
00:22:32.289 --> 00:22:34.978
belly of that memo was the E3 proposal?
00:22:34.978 --> 00:22:35.883
Okay.
Big differences.
00:22:38.500 --> 00:22:39.432
So again, the starting point,
00:22:39.432 --> 00:22:41.282
but I think between now and December,
00:22:42.739 --> 00:22:45.460
I think the goal would be to
focus that stakeholder process
00:22:45.460 --> 00:22:48.640
on figuring out if we can
get to the comfort level
00:22:48.640 --> 00:22:52.773
on LSE obligation, thumbs
up, thumbs down by December.
00:22:53.660 --> 00:22:56.136
And we've still got a lot
of work to do after that.
00:22:56.136 --> 00:22:57.680
Yeah.
For sure.
00:22:57.680 --> 00:23:00.430
And then if not, if it's a
thumbs down in December,
00:23:00.430 --> 00:23:03.883
absolutely 100%
prepared to kill the idea,
00:23:04.752 --> 00:23:07.600
if we can't get to answers
that are satisfactory
00:23:07.600 --> 00:23:08.770
and then move towards
00:23:09.880 --> 00:23:12.243
the other reliability standard,
00:23:12.243 --> 00:23:14.455
which will also take
time, that's not something,
00:23:14.455 --> 00:23:15.288
but
00:23:17.396 --> 00:23:18.333
we've gotta do something.
00:23:19.182 --> 00:23:21.200
We've gotta pick something
and choose a course
00:23:21.200 --> 00:23:24.403
to go down a path to go down,
00:23:25.960 --> 00:23:26.793
relatively soon.
00:23:26.793 --> 00:23:28.933
We don't have the
luxury of years of studies.
00:23:30.060 --> 00:23:30.893
Okay.
Go.
00:23:32.071 --> 00:23:32.904
And if I could.
It's fine.
00:23:32.904 --> 00:23:36.014
Okay, so a lot of comments
00:23:36.014 --> 00:23:37.834
and I'm gonna try to parse this down
00:23:37.834 --> 00:23:40.153
and really, I have a lot of
very targeted comments.
00:23:41.553 --> 00:23:43.023
So first and foremost,
00:23:44.010 --> 00:23:46.360
I've said this many
times or I'll say it again.
00:23:48.120 --> 00:23:49.770
I think our focus should be
00:23:50.769 --> 00:23:53.640
on addressing
operational reliability issues
00:23:53.640 --> 00:23:57.764
that we have and will continue
to experience in the winter,
00:23:57.764 --> 00:23:59.314
and that is cold weather events
00:24:00.462 --> 00:24:01.970
and periods of time when we have
00:24:01.970 --> 00:24:05.188
higher than expected demand and/or
00:24:05.188 --> 00:24:09.683
lower than expected
generation output of all types.
00:24:10.727 --> 00:24:12.523
And I think that we're living that,
00:24:13.980 --> 00:24:16.833
we've been living
that or it's all types.
00:24:16.833 --> 00:24:18.920
And so those are the
two operational scenarios
00:24:18.920 --> 00:24:21.640
that I believe that we have
faced, we'll continue to face,
00:24:21.640 --> 00:24:23.440
and that has brought us here
00:24:23.440 --> 00:24:26.480
to this very desk today, to try to
00:24:27.970 --> 00:24:30.543
look at the market again with that lens.
00:24:31.569 --> 00:24:32.420
And underneath it all,
00:24:32.420 --> 00:24:35.570
to provide that
foundation of reliability that
00:24:37.810 --> 00:24:41.490
we believe the market, the leadership,
00:24:41.490 --> 00:24:45.090
the consumers, Texans,
expect and deserve
00:24:45.090 --> 00:24:46.323
and that's why we're here.
00:24:47.485 --> 00:24:48.585
So how do we get here,
00:24:50.340 --> 00:24:52.740
in this market construct
that we currently have?
00:24:54.182 --> 00:24:57.800
I will say, with respect
to all the proposals
00:24:57.800 --> 00:24:58.800
that we've received,
00:24:59.995 --> 00:25:03.130
all of them involved a
capacity market element,
00:25:03.130 --> 00:25:04.080
all of them.
00:25:04.080 --> 00:25:06.030
In one hand, it's a central procurement
00:25:07.781 --> 00:25:08.881
of resources by ERCOT.
00:25:09.804 --> 00:25:13.184
On the other hand, it's a
capacity obligation on LSEs,
00:25:13.184 --> 00:25:15.661
they have to go to the
bilateral market to fulfill.
00:25:15.661 --> 00:25:16.494
So there are both ...
00:25:16.494 --> 00:25:18.880
But the only difference
with the LSE obligation
00:25:18.880 --> 00:25:21.320
is that's the only one
where you're required
00:25:22.520 --> 00:25:24.663
to procure generation that
you actually plan on using,
00:25:25.852 --> 00:25:26.685
not sitting on the sideline,
00:25:26.685 --> 00:25:27.518
that is a key difference.
00:25:27.518 --> 00:25:29.370
Then hoping you have enough,
00:25:29.370 --> 00:25:30.370
so I'll get to that.
00:25:31.688 --> 00:25:36.363
Just to level set,
that is my perspective.
00:25:37.631 --> 00:25:39.600
All of them have a capacity market
00:25:39.600 --> 00:25:40.573
element to them.
00:25:41.524 --> 00:25:43.210
Matter of fact, the
LSE obligation is called,
00:25:43.210 --> 00:25:44.150
the bilateral capacity market.
00:25:44.150 --> 00:25:49.000
Okay, so as we look
at, what do we do next?
00:25:49.000 --> 00:25:51.143
How do we, and I completely agree.
00:25:52.289 --> 00:25:53.137
We've gotta do something.
00:25:53.137 --> 00:25:53.970
We have to attack the issues
00:25:53.970 --> 00:25:55.690
that we have on our table right now.
00:25:56.702 --> 00:25:57.535
But what I wanna do is,
00:25:57.535 --> 00:26:00.100
I wanna do it in a
targeted, strategic manner
00:26:01.572 --> 00:26:02.405
that solves the problems
00:26:02.405 --> 00:26:04.190
that we are actually
going to be facing now
00:26:05.037 --> 00:26:06.383
and in the future and have faced.
00:26:06.383 --> 00:26:09.205
Okay, so ORDC, 100% agree.
00:26:09.205 --> 00:26:11.500
We've lowered the price cap,
00:26:11.500 --> 00:26:14.988
we need to make
adjustments to make sure that
00:26:14.988 --> 00:26:18.353
the ORDC is sending the
price signals to the market,
00:26:18.353 --> 00:26:21.260
to incent investment
in existing generation.
00:26:21.260 --> 00:26:23.060
And what I mean by
that is additional units,
00:26:23.060 --> 00:26:25.390
the generation plants,
upgrades that squeeze out,
00:26:25.390 --> 00:26:27.750
shoot out more megawatts
per month from a plant
00:26:29.724 --> 00:26:31.409
and potentially some new generation.
00:26:31.409 --> 00:26:34.033
So ORDC reforms are necessary,
00:26:35.199 --> 00:26:36.910
but we must do so in a balanced manner
00:26:36.910 --> 00:26:40.090
that will drive investment
00:26:40.950 --> 00:26:42.453
in dispatchable generation.
00:26:43.998 --> 00:26:46.259
And from a reliability perspective,
00:26:46.259 --> 00:26:47.979
ensure that operating reserves
00:26:47.979 --> 00:26:49.229
are coming online earlier
00:26:50.082 --> 00:26:51.832
than when we are already in the A1,
00:26:53.450 --> 00:26:54.969
because the A1 is 2,300 megawatts
00:26:54.969 --> 00:26:57.083
and the ORDC kicks
in at 2,000 megawatts.
00:26:58.208 --> 00:27:00.390
So the MCL has to increase
00:27:00.390 --> 00:27:03.540
from a public policy
standpoint, the ORDC
00:27:03.540 --> 00:27:05.133
needs to kick in a lot sooner,
00:27:06.568 --> 00:27:07.920
and I think we're all in agreement.
00:27:07.920 --> 00:27:09.930
It's just a matter of
00:27:09.930 --> 00:27:13.640
what number, and I saw
your recommendation and
00:27:15.190 --> 00:27:17.018
that is a threshold.
00:27:17.018 --> 00:27:18.918
I think that is on the ERCOT matrix of
00:27:19.960 --> 00:27:22.200
when emergency purchase procedures start
00:27:23.962 --> 00:27:25.780
below 3000 megawatts.
00:27:25.780 --> 00:27:30.260
And so, I see where you
came up with that number
00:27:31.205 --> 00:27:32.163
and I think we should look at it.
00:27:34.355 --> 00:27:37.666
And so the other aspect of the ORDC
00:27:37.666 --> 00:27:40.333
with respect to policy considerations,
00:27:40.333 --> 00:27:41.593
the VOLL/price cap.
00:27:43.158 --> 00:27:46.650
We must set price cap/VOLL
00:27:48.426 --> 00:27:52.290
at a point where generation
that fails to perform
00:27:54.015 --> 00:27:56.030
will still have performance penalty.
00:27:56.030 --> 00:27:58.230
We must ensure that generators are
00:27:59.890 --> 00:28:02.540
held accountable for not showing up.
00:28:02.540 --> 00:28:05.075
Yeah, all types.
When they're supposed to.
00:28:05.075 --> 00:28:05.908
All types.
00:28:05.908 --> 00:28:08.970
And also that
00:28:09.837 --> 00:28:11.260
we are setting the
price cap and the VOLL
00:28:12.195 --> 00:28:13.778
at a point where we are still
00:28:13.778 --> 00:28:15.835
maintaining an incent demand response,
00:28:15.835 --> 00:28:17.440
that has been also very important
00:28:17.440 --> 00:28:19.440
for maintaining reliability on the grid.
00:28:21.100 --> 00:28:23.713
And as we move to the MCL agreement,
00:28:24.649 --> 00:28:26.270
we need to go up,
00:28:26.270 --> 00:28:29.340
I think we should at least
study 3,000 and 2,800
00:28:32.335 --> 00:28:33.270
and maybe a little bit higher
00:28:33.270 --> 00:28:35.263
if you wanna start it before.
00:28:36.130 --> 00:28:38.670
But those are some numbers in there
00:28:38.670 --> 00:28:39.510
that we need to look at
00:28:39.510 --> 00:28:42.170
if we're trying to set the
MCL at a place where
00:28:44.051 --> 00:28:46.151
we're not already in
emergency procedures.
00:28:47.750 --> 00:28:50.363
With respect to standard deviations,
00:28:52.157 --> 00:28:54.653
and shifting and extending the curve,
00:28:56.440 --> 00:29:00.142
there's a lot there, there's a lot there
00:29:00.142 --> 00:29:03.093
and I think we need
to see some analysis,
00:29:04.610 --> 00:29:07.060
because as you shift an extended curve,
00:29:07.060 --> 00:29:10.200
there is going to be more ORDC adders
00:29:10.200 --> 00:29:11.540
over a longer period of time,
00:29:11.540 --> 00:29:15.230
which could provide
price signals for investment
00:29:15.230 --> 00:29:18.035
in new and existing generation.
00:29:18.035 --> 00:29:18.885
But it could also
00:29:21.285 --> 00:29:24.036
provide ORDC adders
to renewable generation.
00:29:24.036 --> 00:29:26.240
And we as a committee,
and a megawatt is a megawatt.
00:29:26.240 --> 00:29:29.872
Megawatt is a megawatt when
we need a megawatt on the system
00:29:29.872 --> 00:29:30.760
to maintain our liability.
00:29:30.760 --> 00:29:32.770
But if the goal, the public policy goal
00:29:32.770 --> 00:29:35.531
of the condition is to
incent more investment
00:29:35.531 --> 00:29:36.620
in dispatchable generation,
00:29:36.620 --> 00:29:39.063
then we need to strike a
balance in there somewhere.
00:29:40.069 --> 00:29:41.493
So, I would suggest,
00:29:42.528 --> 00:29:43.890
as Commissioner McAdams has recommended,
00:29:43.890 --> 00:29:47.140
that we give Brattle some
very specific parameters
00:29:47.140 --> 00:29:48.740
to at least give us some context
00:29:50.950 --> 00:29:53.410
as to what those parameters would do
00:29:53.410 --> 00:29:57.320
with respect to consumer cost,
adding revenue to the market.
00:29:57.320 --> 00:29:59.503
So we have some
third party analysis of it.
00:30:00.677 --> 00:30:02.100
And so Brattle and
Estrate are perfectly veered
00:30:02.100 --> 00:30:04.011
to give us that context.
00:30:04.011 --> 00:30:06.440
I think if they can get it to
us before November 4th,
00:30:06.440 --> 00:30:08.030
the work session November 4th,
00:30:08.030 --> 00:30:09.450
I think that would be very ideal
00:30:09.450 --> 00:30:11.113
so we can start making decisions.
00:30:12.700 --> 00:30:15.950
I think 4,500, 3,000 and
the standard deviation,
00:30:15.950 --> 00:30:17.800
I'm fine with having them study that.
00:30:19.086 --> 00:30:20.650
I think that's a great starting point
00:30:20.650 --> 00:30:21.483
and thank you for recommending those.
00:30:21.483 --> 00:30:23.080
The other one that I would suggest
00:30:23.080 --> 00:30:24.200
that is interesting to me,
00:30:24.200 --> 00:30:27.700
and I know the MCL might scare people,
00:30:27.700 --> 00:30:29.552
but I have heard,
00:30:29.552 --> 00:30:31.660
a little bit from the
generation community
00:30:31.660 --> 00:30:33.560
and the consumer side that they are
00:30:34.860 --> 00:30:37.456
comfortable with the IMM's proposal.
00:30:37.456 --> 00:30:38.683
And so that's,
00:30:39.952 --> 00:30:42.150
in and of itself that you
can get some generation
00:30:42.150 --> 00:30:44.190
and some consumers to agree
00:30:44.190 --> 00:30:46.618
that that might produce
the result they want
00:30:46.618 --> 00:30:48.180
and be comfortable with it.
00:30:48.180 --> 00:30:50.120
And since the ERCOT IMM
00:30:51.139 --> 00:30:54.560
is in a neutral position to
provide us this kind of input,
00:30:54.560 --> 00:30:57.940
I think it's just another
piece of context.
00:30:57.940 --> 00:30:58.773
Look at that
00:31:00.360 --> 00:31:04.040
suggestion as well, your suggestion,
00:31:04.040 --> 00:31:06.220
and any other parameters that
00:31:06.220 --> 00:31:08.220
we can think of in the meantime,
00:31:08.220 --> 00:31:09.670
to have Brattle (indistinct).
00:31:10.890 --> 00:31:12.240
The other thing I will add,
00:31:13.250 --> 00:31:15.750
as we prepare to go to the winter
00:31:15.750 --> 00:31:18.693
and we wanna have all
the tools in our toolbox
00:31:18.693 --> 00:31:20.943
that we can have
to maintain reliability.
00:31:21.920 --> 00:31:23.090
My suggestion would be,
00:31:23.090 --> 00:31:26.220
since we do have the
rulemaking open right now
00:31:26.220 --> 00:31:27.880
for the price cap and our goal is
00:31:27.880 --> 00:31:30.310
to have that price cap
adjusted by January 1st,
00:31:30.310 --> 00:31:33.140
because that's when the
old cap at 2,500 goes away,
00:31:33.140 --> 00:31:35.140
and the new price cap kicks in.
00:31:35.140 --> 00:31:38.860
My suggestion would be
that we have ORDC reforms,
00:31:38.860 --> 00:31:39.900
however, have them in place
00:31:39.900 --> 00:31:41.047
by the beginning of the year in January
00:31:41.047 --> 00:31:42.847
and I think that's totally possible.
00:31:44.150 --> 00:31:47.120
All we need to do is
have an OBER approved,
00:31:47.120 --> 00:31:48.817
once we give them a directive.
00:31:48.817 --> 00:31:52.260
And that way, when we
enter the winter season,
00:31:52.260 --> 00:31:55.170
we have an ORDC in place that will
00:31:55.170 --> 00:31:58.180
signal more operating
reserves to come online
00:31:58.180 --> 00:32:00.960
before scarcity, to maintain reliability
00:32:00.960 --> 00:32:02.950
during the upcoming winter season,
00:32:02.950 --> 00:32:05.250
as an additional tool
to our arsenal of tools.
00:32:08.000 --> 00:32:08.833
So,
00:32:10.540 --> 00:32:12.093
the LSE obligation,
00:32:13.416 --> 00:32:16.053
I think I have a lot
of questions myself.
00:32:16.900 --> 00:32:20.410
I'm not prepared to
endorse it at this time.
00:32:20.410 --> 00:32:22.640
I questioned whether
in a short amount of time
00:32:22.640 --> 00:32:25.150
that we have from now until December,
00:32:25.150 --> 00:32:26.880
if we're gonna get all
the information we need
00:32:26.880 --> 00:32:30.343
to be sure that this path is
gonna give us what we want.
00:32:32.300 --> 00:32:33.870
We don't know until we know.
00:32:33.870 --> 00:32:36.297
I think we can ask a lot of questions,
00:32:36.297 --> 00:32:38.250
get comfortable,
00:32:38.250 --> 00:32:41.010
but until we're actually in
there building that framework,
00:32:41.010 --> 00:32:42.380
that's gonna take a little while.
00:32:42.380 --> 00:32:45.623
At least, I don't even wanna guess,
00:32:47.005 --> 00:32:48.470
it's gonna take a while
to build that framework.
00:32:48.470 --> 00:32:50.630
We're really not going to know
00:32:50.630 --> 00:32:53.240
whether that LSE
obligation is gonna produce
00:32:53.240 --> 00:32:57.060
the reliability benefits that we want
00:32:57.060 --> 00:32:59.610
until many years out.
00:32:59.610 --> 00:33:00.880
And the last thing I wanna do
00:33:00.880 --> 00:33:02.250
is spend a whole lot of time
00:33:02.250 --> 00:33:04.830
working on a very complex
market design change
00:33:06.550 --> 00:33:08.710
that will not give us the reliability
00:33:08.710 --> 00:33:10.950
and drive the investment that we needed
00:33:10.950 --> 00:33:12.910
and we are still
continuing to experience
00:33:12.910 --> 00:33:14.790
the operational and reliability issues
00:33:14.790 --> 00:33:16.340
that we are experiencing today.
00:33:17.760 --> 00:33:20.400
And so the accreditation process-
00:33:20.400 --> 00:33:23.740
I would say, the fear
of something not working
00:33:23.740 --> 00:33:27.407
is not a reason to avoid
trying to make it work.
00:33:27.407 --> 00:33:29.530
But in the meantime,
00:33:29.530 --> 00:33:32.528
we could have significant
impacts on our market,
00:33:32.528 --> 00:33:34.820
our retail market.
00:33:34.820 --> 00:33:37.620
We must ensure that market power
00:33:37.620 --> 00:33:39.363
is monitored by the ERCOT IMM.
00:33:40.300 --> 00:33:42.840
Market power is monitored
in a bilateral market
00:33:42.840 --> 00:33:46.003
that the IMM does
not have visibility into,
00:33:46.970 --> 00:33:49.720
and that the retail market is protected.
00:33:49.720 --> 00:33:51.890
And the retail market is
00:33:51.890 --> 00:33:54.650
when you squash on an LSE obligation,
00:33:54.650 --> 00:33:56.270
there's a lot of
complexities that's there;
00:33:56.270 --> 00:33:58.610
there's customer migration,
00:33:58.610 --> 00:34:01.580
customer switching, polar events,
00:34:01.580 --> 00:34:07.000
a lot of migration that
the LSEs will have to
00:34:07.000 --> 00:34:10.270
take into consideration as
they prepare on their obligation.
00:34:10.270 --> 00:34:13.340
And I wanna say one
thing that's very important.
00:34:13.340 --> 00:34:16.550
We've spent, we all have
in one form or fashion,
00:34:16.550 --> 00:34:18.970
spent a lot of time working on
00:34:18.970 --> 00:34:22.010
landmark securitization
00:34:23.000 --> 00:34:26.350
and to stabilize the ERCOT market.
00:34:26.350 --> 00:34:28.640
And part of that stabilization
00:34:28.640 --> 00:34:31.060
was to protect the integrity of our
00:34:31.060 --> 00:34:32.623
crown jewel retail market.
00:34:34.300 --> 00:34:36.120
And I wanna make sure that
00:34:36.120 --> 00:34:38.050
all this hard work we're putting in,
00:34:38.050 --> 00:34:39.090
that at the back end,
00:34:39.090 --> 00:34:40.690
we're not gonna come in and just
00:34:41.660 --> 00:34:44.390
all that hard work is gonna
be for nothing and destroyed
00:34:44.390 --> 00:34:47.263
because we're looking for reliability.
00:34:49.362 --> 00:34:51.020
(sighs) If it comes
off, it'll be a Texas talk
00:34:51.020 --> 00:34:52.577
in all the wrong places.
00:34:52.577 --> 00:34:54.640
(people laughing)
00:34:54.640 --> 00:34:56.420
I like that, and I'll say
00:34:57.429 --> 00:34:58.900
that if I feel like this
is gonna squeeze
00:34:58.900 --> 00:35:00.450
the independents and non-affiliates out,
00:35:00.450 --> 00:35:02.423
I will vote no on that thing today.
00:35:03.410 --> 00:35:06.570
That is a red line for me,
so it has to be addressed.
00:35:06.570 --> 00:35:08.480
I'll take it off the table today
00:35:08.480 --> 00:35:10.330
and make 'em go back
to the drawing board.
00:35:10.330 --> 00:35:12.376
Can't have it, in my view.
00:35:12.376 --> 00:35:13.767
And so, what I'd say ...
00:35:13.767 --> 00:35:16.067
That's exactly
what I've put in my memo.
00:35:16.067 --> 00:35:18.223
And I wanna say
Chairman, and thank you.
00:35:18.223 --> 00:35:20.495
I think conceptually what you're seeing,
00:35:20.495 --> 00:35:22.500
the overall picture
00:35:22.500 --> 00:35:24.278
where you're trying to head with this,
00:35:24.278 --> 00:35:26.200
I think that that's
00:35:27.080 --> 00:35:29.100
something we all can
agree in one form or fashion.
00:35:29.100 --> 00:35:31.670
The accreditation, we can
handle that accreditation
00:35:31.670 --> 00:35:32.540
in other policy
00:35:33.800 --> 00:35:37.163
decisions that we made with
respect to allocation of costs.
00:35:38.120 --> 00:35:39.720
There's other avenues to
00:35:39.720 --> 00:35:43.070
make sure that we develop
an all resources economy.
00:35:43.070 --> 00:35:46.200
I don't wanna use a very
complex market design change
00:35:46.200 --> 00:35:48.832
to make sure we're
all resourced together.
00:35:48.832 --> 00:35:49.839
Well, let's
get the other ones
00:35:49.839 --> 00:35:51.290
that are on the table.
Absolutely.
00:35:51.290 --> 00:35:53.216
If we can do it quicker, sooner
00:35:53.216 --> 00:35:54.522
and cleaner, absolutely.
00:35:54.522 --> 00:35:55.590
Absolutely,
but I will say that,
00:35:55.590 --> 00:35:57.603
and I agree with Commissioner McAdams,
00:35:58.960 --> 00:36:01.360
I don't want this to turn
into, and I know that it won't
00:36:01.360 --> 00:36:04.753
because we have a deadline
by the end of the year where ...
00:36:07.460 --> 00:36:08.960
I think it's gonna
take a little bit of time
00:36:08.960 --> 00:36:10.191
to answer all our questions
00:36:10.191 --> 00:36:11.920
and we're not gonna really know
00:36:11.920 --> 00:36:14.080
everything by the end
of the year on this option,
00:36:14.080 --> 00:36:17.063
is my belief, but I
wanna make sure that
00:36:17.063 --> 00:36:17.967
if we're not getting
satisfactory answers
00:36:17.967 --> 00:36:20.490
that we move this off the table,
00:36:20.490 --> 00:36:22.600
because I think the longer
we have it on the table
00:36:22.600 --> 00:36:25.670
and try to squeeze
out something out of it
00:36:25.670 --> 00:36:27.450
and not get comfortable,
get comfortable,
00:36:27.450 --> 00:36:29.120
the more uncertainty we
send out to the market,
00:36:29.120 --> 00:36:31.000
to the investment community.
00:36:31.000 --> 00:36:35.380
And so we've moved this
option once before off the table
00:36:35.380 --> 00:36:39.700
in 2013, 2013, without
a blink of an eye, okay.
00:36:39.700 --> 00:36:42.870
So, we've gotta make sure
that what has changed so much
00:36:42.870 --> 00:36:45.160
in this market, and there's
been a lot of change,
00:36:45.160 --> 00:36:46.600
there's been a significant integration
00:36:46.600 --> 00:36:49.530
of renewable generation,
we've had a devastating storm,
00:36:49.530 --> 00:36:51.370
but let's keep our eye on the ball
00:36:51.370 --> 00:36:53.670
and make sure that
we're delivering reliability
00:36:53.670 --> 00:36:56.893
in all the right places
and all the need.
00:36:58.564 --> 00:36:59.481
Chairman,
00:37:00.727 --> 00:37:01.980
can I ask you a procedural question
00:37:01.980 --> 00:37:03.097
and that is ...
Ask me anything you want.
00:37:03.097 --> 00:37:03.930
Are we gonna go through
00:37:03.930 --> 00:37:06.020
all of the components of your plan
00:37:06.020 --> 00:37:07.920
or are we just gonna do the first two?
00:37:09.220 --> 00:37:10.890
We can go through however many
00:37:12.109 --> 00:37:15.660
we want or more.
00:37:15.660 --> 00:37:17.710
Apparently there's some
new ideas on how to
00:37:17.710 --> 00:37:19.830
ensure accountability of resource.
00:37:19.830 --> 00:37:21.150
I'd love to hear those.
00:37:21.150 --> 00:37:22.013
My goal,
00:37:24.178 --> 00:37:27.243
by the end of this is to
have narrowed the scope.
00:37:27.243 --> 00:37:28.800
And to be clear,
00:37:28.800 --> 00:37:31.220
I'm not asking for
endorsements or for votes today.
00:37:31.220 --> 00:37:33.100
I'm asking for us to
00:37:33.100 --> 00:37:35.150
dramatically narrow the scope.
00:37:35.150 --> 00:37:38.400
We've heard what the stakeholders want.
00:37:38.400 --> 00:37:40.563
We need to start making
decisions about what this
00:37:40.563 --> 00:37:42.643
Commission wants.
Right, I agree.
00:37:43.680 --> 00:37:45.410
So I wanna, by
the end of the day,
00:37:45.410 --> 00:37:47.230
I wanna narrow the scope
00:37:47.230 --> 00:37:48.780
dramatically enough that we have
00:37:48.780 --> 00:37:51.470
a concentrated top list
of topics to talk about,
00:37:51.470 --> 00:37:53.730
so we can start making those decisions.
00:37:53.730 --> 00:37:55.060
We can get the questions
00:37:55.060 --> 00:37:58.670
and we need to specifically
give staff questions
00:37:58.670 --> 00:38:00.903
we want answered from the stakeholders.
00:38:01.928 --> 00:38:04.730
So, I know the staff is prepared to,
00:38:04.730 --> 00:38:08.313
by concept or by theme, for each idea,
00:38:09.819 --> 00:38:10.652
a list of questions for each one,
00:38:10.652 --> 00:38:12.120
we'll publish that next-
00:38:13.138 --> 00:38:14.100
But my question
was because I didn't ...
00:38:14.100 --> 00:38:18.670
I'll stop at my comments
on ORDC and LSE obligation
00:38:18.670 --> 00:38:20.010
because everybody else has,
00:38:20.010 --> 00:38:24.193
and we can go through
the others, subsequently.
00:38:26.530 --> 00:38:28.320
First of all, I wanna say,
00:38:28.320 --> 00:38:32.460
I appreciate your
leadership in doing this.
00:38:32.460 --> 00:38:34.320
It's never fun to be the first guy
00:38:34.320 --> 00:38:36.123
to get shot at all the time.
00:38:37.168 --> 00:38:39.740
Absolutely.
Yes, absolutely.
00:38:39.740 --> 00:38:41.060
I know what you're doing is,
00:38:41.060 --> 00:38:44.222
you're putting something
out there that can be shot at it,
00:38:44.222 --> 00:38:45.460
as you've said so eloquently, that
00:38:45.460 --> 00:38:47.470
all I know is the first
draft isn't gonna be right,
00:38:47.470 --> 00:38:49.432
but it still takes courage to do it
00:38:49.432 --> 00:38:50.293
and I appreciate that.
00:38:52.606 --> 00:38:55.370
There are a couple
of things that I premise
00:38:55.370 --> 00:38:57.440
my belief in this market on.
00:38:57.440 --> 00:38:58.573
So first of all,
00:39:00.852 --> 00:39:04.063
I believe that we should do no harm.
00:39:04.910 --> 00:39:07.890
I believe that we ought to be
enhancing the retail market.
00:39:07.890 --> 00:39:11.170
And I believe that all
resources are equal.
00:39:11.170 --> 00:39:12.970
A megawatt is a megawatt
00:39:12.970 --> 00:39:16.553
an electron is an electron,
especially in scarcity.
00:39:17.630 --> 00:39:18.463
And
00:39:20.880 --> 00:39:22.820
a megawatt hour or a kilowatt
00:39:22.820 --> 00:39:27.323
not used during
scarcity is equal as well.
00:39:28.820 --> 00:39:29.890
With that being said,
00:39:29.890 --> 00:39:33.320
I think we need a reliability standard.
00:39:33.320 --> 00:39:36.270
I think we have to tell
the market and the people
00:39:36.270 --> 00:39:39.230
that we are serious about
this, and without a specific.
00:39:39.230 --> 00:39:41.510
I don't know if it's one in 10
00:39:41.510 --> 00:39:43.893
or one in five or one in two.
00:39:44.922 --> 00:39:45.910
I don't know if it's ...
00:39:45.910 --> 00:39:47.870
I don't know what the number is,
00:39:47.870 --> 00:39:51.673
but to me, if you're not
aiming for something,
00:39:52.530 --> 00:39:54.203
then you're scattered everywhere.
00:39:55.496 --> 00:39:58.583
So, that would be first
thing: let's aim for something.
00:40:01.250 --> 00:40:03.980
Secondly, I wanna say that,
00:40:03.980 --> 00:40:07.130
with all of these
proposals that came in,
00:40:07.130 --> 00:40:08.893
including the LSE obligation,
00:40:09.890 --> 00:40:11.943
I don't have any idea what they cost.
00:40:13.170 --> 00:40:15.950
They're fantastic words on paper,
00:40:15.950 --> 00:40:19.533
but none of them say how
much they cost versus the other.
00:40:20.470 --> 00:40:22.730
These are ultimately things that we
00:40:22.730 --> 00:40:26.200
are costing the market or
putting money into the market
00:40:26.200 --> 00:40:28.640
and being paid for by consumers.
00:40:28.640 --> 00:40:31.560
So, we talk about
00:40:31.560 --> 00:40:33.880
putting additional revenues
in the generation sector.
00:40:33.880 --> 00:40:35.180
How many?
00:40:35.180 --> 00:40:38.270
How much money
versus another alternative?
00:40:38.270 --> 00:40:39.490
And I don't know the answer to that
00:40:39.490 --> 00:40:41.020
on any of the proposals,
00:40:41.020 --> 00:40:44.313
but think that Brattle needs
to help us quantify those.
00:40:46.000 --> 00:40:49.253
I don't have a problem paying
more if you're getting more,
00:40:51.270 --> 00:40:52.543
but if you're not,
00:40:53.394 --> 00:40:56.893
then I sense that that's
not a good decision to make.
00:40:59.490 --> 00:41:01.360
I think there's some things that
00:41:02.880 --> 00:41:05.670
ERCOT has on their agenda now
00:41:05.670 --> 00:41:09.523
that make what we're
doing over here a little bit ...
00:41:12.410 --> 00:41:13.460
Well, let me say it this way.
00:41:13.460 --> 00:41:15.910
We have to encourage
them to finish their
00:41:15.910 --> 00:41:18.340
co-optimization ASAP.
00:41:18.340 --> 00:41:21.540
We just don't know what's
gonna come out of that.
00:41:21.540 --> 00:41:23.190
And a lot of that affects
00:41:23.190 --> 00:41:25.110
what these load
responsibilities would be,
00:41:25.110 --> 00:41:27.393
or how much generation
we need in the market.
00:41:31.310 --> 00:41:34.010
Finally, as I've said in the past,
00:41:34.010 --> 00:41:37.000
we still have some
megawatts on the system
00:41:37.000 --> 00:41:40.253
that can't get to load because
of transmission constraints.
00:41:41.380 --> 00:41:44.967
And there are out of market mechanisms
00:41:44.967 --> 00:41:46.390
and reliability mechanisms
00:41:46.390 --> 00:41:49.120
that are being used
by ERCOT to limit that,
00:41:49.120 --> 00:41:51.720
that I hope we can help resolve in this.
00:41:51.720 --> 00:41:54.610
Again, I think a
electron is an electron,
00:41:54.610 --> 00:41:56.320
especially during scarcity;
00:41:56.320 --> 00:41:58.133
we need to think of that.
00:42:00.910 --> 00:42:04.020
I would say very specifically,
just a couple of things.
00:42:04.020 --> 00:42:05.077
One of 'em is,
00:42:08.270 --> 00:42:10.140
as we talk about this,
00:42:10.140 --> 00:42:13.450
I think we're doing a
lot of supply-side work
00:42:14.380 --> 00:42:16.770
and not much demand-side work.
00:42:16.770 --> 00:42:20.820
We are looking backwards to a
00:42:20.820 --> 00:42:24.600
vertically integrated, real
vertically integrated market,
00:42:24.600 --> 00:42:27.710
where all we look at is
how we deal with supply.
00:42:27.710 --> 00:42:30.240
The demand-side is really important
00:42:30.240 --> 00:42:31.713
and the demand-side from,
00:42:33.320 --> 00:42:38.250
whether it be price-responsive
demand of residentials,
00:42:38.250 --> 00:42:39.910
but all customer classes,
00:42:39.910 --> 00:42:42.763
if it deals with electric
vehicles and batteries,
00:42:44.130 --> 00:42:46.490
those are all things that I
think are forward-looking
00:42:46.490 --> 00:42:48.440
that we need to consider today,
00:42:48.440 --> 00:42:51.840
not just the backward-looking things,
00:42:51.840 --> 00:42:53.163
only on the supply-side.
00:42:54.780 --> 00:42:57.793
I feel two things are important.
00:42:58.920 --> 00:43:02.793
One of 'em is, I think we
need to pay for voltage.
00:43:04.620 --> 00:43:06.713
We haven't historically done that.
00:43:07.730 --> 00:43:10.747
Voltage is one of those
things where people said,
00:43:10.747 --> 00:43:12.520
"Well look, the market
doesn't even function.
00:43:12.520 --> 00:43:16.000
The transmission system
doesn't function unless you use it,"
00:43:16.000 --> 00:43:19.520
but there's a cost to it
and there's a value to it.
00:43:19.520 --> 00:43:20.550
And if we're in a market,
00:43:20.550 --> 00:43:23.863
we ought to pay for the
value of that component.
00:43:25.971 --> 00:43:28.390
I'll say specifically about
00:43:30.240 --> 00:43:33.090
the ORDC and the LSE obligation.
00:43:33.090 --> 00:43:35.830
I think ORDC is a no regrets action.
00:43:35.830 --> 00:43:38.100
I think we can agree that something
00:43:38.100 --> 00:43:40.890
needs to be modified here
and what those numbers are,
00:43:40.890 --> 00:43:41.940
I don't know.
00:43:41.940 --> 00:43:44.090
To get me comfortable on the number,
00:43:44.090 --> 00:43:46.690
part of that has to
be the study behind it
00:43:46.690 --> 00:43:48.740
and what we get for
it and what it costs.
00:43:50.900 --> 00:43:54.920
We must allow all generation types
00:43:54.920 --> 00:43:57.123
to collect ORDC
revenues during scarcity.
00:43:58.180 --> 00:44:02.200
That includes variable
resources, renewable resources.
00:44:02.200 --> 00:44:06.050
Again, my belief is an
electron's an electron.
00:44:06.050 --> 00:44:10.280
So, if they're producing,
00:44:10.280 --> 00:44:13.163
then they can get ORDC payments as well.
00:44:15.960 --> 00:44:19.230
So, supporting that and figuring out
00:44:19.230 --> 00:44:21.890
what the analysis that we need.
00:44:21.890 --> 00:44:26.130
The numbers are fine: MCL 3,000, 2,800.
00:44:26.130 --> 00:44:27.230
We might wanna do
00:44:28.804 --> 00:44:31.670
something that is extremely
low and extremely high
00:44:33.722 --> 00:44:34.555
to put a band ...
00:44:34.555 --> 00:44:35.860
Like a scenario analysis.
00:44:35.860 --> 00:44:38.330
That's right, as a comparison.
00:44:38.330 --> 00:44:41.933
Same thing, are we
going to 4,500 or 6,000?
00:44:44.220 --> 00:44:47.360
We might try some things
that don't seem logical
00:44:47.360 --> 00:44:53.010
as benchmarks or
bookmarks on either side
00:44:53.010 --> 00:44:54.940
so that we can understand
00:44:54.940 --> 00:44:57.110
what something really
high or extremely low does
00:44:57.110 --> 00:44:58.220
to the market.
00:44:59.850 --> 00:45:02.150
And then onto the LSE obligation.
00:45:02.150 --> 00:45:04.490
I think that it's a
massive market change.
00:45:04.490 --> 00:45:06.800
I'm not totally convinced it's needed
00:45:06.800 --> 00:45:09.860
as I have mentioned.
00:45:09.860 --> 00:45:11.290
My fear of market power
00:45:12.380 --> 00:45:15.440
is front and center on that.
00:45:15.440 --> 00:45:19.210
I don't want to go to four gentailers
00:45:19.210 --> 00:45:22.090
that have unregulated
monopolies in the state.
00:45:22.090 --> 00:45:24.480
I don't think that's good for consumers.
00:45:24.480 --> 00:45:28.323
It's complex, the duration
for implementation is long,
00:45:30.140 --> 00:45:33.620
and if we can do it sooner, great,
00:45:33.620 --> 00:45:36.973
but we'll have to see the
details and how that works.
00:45:38.700 --> 00:45:40.973
As Commissioner Cobos said,
00:45:42.580 --> 00:45:44.740
if it's detrimental to
00:45:44.740 --> 00:45:46.733
customer and retail competition,
00:45:47.610 --> 00:45:50.593
it's gonna be really hard
for me to get over that hump.
00:45:52.560 --> 00:45:54.570
20 years ago, 25 years ago,
00:45:54.570 --> 00:45:56.820
I spent time trying to help
create the retail market
00:45:56.820 --> 00:45:59.000
and I think it's been great.
00:45:59.000 --> 00:46:01.510
I wanna see a more robust retail market,
00:46:01.510 --> 00:46:03.203
not a smaller retail market.
00:46:06.550 --> 00:46:10.373
And then my last question on this is,
00:46:11.780 --> 00:46:14.300
I don't yet have any assurance
00:46:14.300 --> 00:46:16.600
that this will actually
incent new generation.
00:46:18.460 --> 00:46:21.330
What amount of new
generation we need, I don't know,
00:46:21.330 --> 00:46:24.800
because until we have a robust
demand response in this state
00:46:25.840 --> 00:46:30.827
that affects price, affects
supply needs, we won't know.
00:46:30.827 --> 00:46:33.900
But I believe, as in your
memo, demand response
00:46:33.900 --> 00:46:37.270
has to be used as
a grid reliability tool
00:46:37.270 --> 00:46:39.313
as often as we can use it.
00:46:40.320 --> 00:46:43.653
It does, it is a tool that
should be in the toolbox.
00:46:45.399 --> 00:46:48.030
And I think as we get new technologies,
00:46:48.030 --> 00:46:50.563
we spent billions of
dollars on smart meters.
00:46:51.660 --> 00:46:53.130
We don't know if they're
the right smart meters
00:46:53.130 --> 00:46:54.530
for the demand response, but
00:46:55.993 --> 00:46:57.810
that's what some claimed
00:46:57.810 --> 00:47:00.640
and we need to figure
out and push the envelope
00:47:00.640 --> 00:47:03.190
on technology to be a supply-side,
00:47:03.190 --> 00:47:05.540
a demand-side market.
00:47:05.540 --> 00:47:07.510
And almost every other product,
00:47:07.510 --> 00:47:10.313
we get to not buy
it if we don't want it,
00:47:11.620 --> 00:47:13.570
we get to go to another store.
00:47:13.570 --> 00:47:14.560
We get some of those here,
00:47:14.560 --> 00:47:17.830
but electricity is obviously
that fundamental right
00:47:17.830 --> 00:47:19.910
that we need and I believe that
00:47:19.910 --> 00:47:22.690
the demand-side increases reliability,
00:47:22.690 --> 00:47:24.920
demand-side functions
increase reliability,
00:47:24.920 --> 00:47:27.233
and a decreased cost for the market.
00:47:28.470 --> 00:47:29.303
Well put.
00:47:30.680 --> 00:47:32.390
If you'll all hear me,
00:47:32.390 --> 00:47:35.000
I've got some quick
thoughts on those comments
00:47:35.000 --> 00:47:36.670
and then I would suggest we
00:47:38.370 --> 00:47:40.680
start with the easy ones and
00:47:41.600 --> 00:47:43.710
give staff a list of
00:47:45.550 --> 00:47:47.670
concepts to consider,
00:47:47.670 --> 00:47:51.620
not endorsement, but
concepts to continue considering
00:47:51.620 --> 00:47:53.970
and then a list of
questions for each of those.
00:47:54.830 --> 00:47:56.053
Quick thoughts.
00:47:57.300 --> 00:48:00.700
ORDC, very much as I stated in my memo,
00:48:00.700 --> 00:48:04.180
very much want to see
some scenario analysis.
00:48:04.180 --> 00:48:06.200
I do want to be wary about
00:48:06.200 --> 00:48:08.263
over-engineering and overthinking this.
00:48:09.220 --> 00:48:11.570
The biggest point of error
00:48:11.570 --> 00:48:14.690
in any ORDC analysis is gonna be
00:48:14.690 --> 00:48:17.020
number of days or hours used.
00:48:17.020 --> 00:48:20.090
So, we can easily get
00:48:20.090 --> 00:48:23.640
caught up in over-engineering
standard deviations
00:48:23.640 --> 00:48:25.410
and some of the nuances.
00:48:25.410 --> 00:48:26.870
The biggest mistake is gonna be,
00:48:26.870 --> 00:48:28.930
how many hours that is used here?
00:48:28.930 --> 00:48:30.640
So those revenue productions are
00:48:31.700 --> 00:48:34.090
gonna be wrong, and so
00:48:34.960 --> 00:48:37.160
at some point we just
need to pick something
00:48:38.680 --> 00:48:41.213
and it doesn't have to be complicated.
00:48:44.500 --> 00:48:47.763
On the Ellis, I'll save it though,
00:48:49.273 --> 00:48:52.820
save that for last.
Thank you.
00:48:52.820 --> 00:48:53.893
Demand response.
00:48:55.714 --> 00:48:57.020
I've put it third on
my list for a reason:
00:48:57.020 --> 00:48:58.860
it's incredibly important.
00:48:58.860 --> 00:49:00.623
And I do want to,
00:49:03.700 --> 00:49:07.490
I guess, share the breadth
of what I'm thinking about.
00:49:07.490 --> 00:49:10.690
It's a little understated on
a grid in a Word document.
00:49:10.690 --> 00:49:12.510
But when I say upgrade
hardware and software,
00:49:12.510 --> 00:49:15.630
that's essential hardware
and software that runs,
00:49:15.630 --> 00:49:17.453
that collects the smart meter data.
00:49:18.320 --> 00:49:21.150
Doing that, upgrading that
00:49:21.150 --> 00:49:25.260
to increase the frequency of
the pings from that telemetry
00:49:25.260 --> 00:49:29.040
and being able to handle and
manage that increase in data
00:49:29.040 --> 00:49:31.970
is a massive, massive investment
00:49:31.970 --> 00:49:33.963
and it's a massive effort.
00:49:37.460 --> 00:49:38.620
It is no small feat.
00:49:38.620 --> 00:49:41.270
And I think the reason I focused on that
00:49:41.270 --> 00:49:42.600
was because
00:49:43.580 --> 00:49:46.430
that is the keystone that will unlock
00:49:47.390 --> 00:49:50.410
an extraordinary amount of
capability for demand response.
00:49:50.410 --> 00:49:52.840
And so it's a little understated
00:49:52.840 --> 00:49:55.280
as presented in the memo,
00:49:55.280 --> 00:49:58.780
but I do wanna highlight that that is
00:49:58.780 --> 00:50:01.863
a extraordinary large project.
00:50:03.010 --> 00:50:10.520
And I do want to make
sure that folks know that
00:50:10.520 --> 00:50:13.340
just because we need to
increase demand response,
00:50:13.340 --> 00:50:16.350
doesn't mean that we don't have
robust demand response now.
00:50:16.350 --> 00:50:19.350
We heard in our demand
response workshop that,
00:50:19.350 --> 00:50:22.320
from one of our largest
retailers, NRG, that
00:50:23.470 --> 00:50:25.900
the only constraint they have
to more demand response
00:50:25.900 --> 00:50:28.513
is price signaling and
customer willingness.
00:50:29.510 --> 00:50:31.060
There are areas we can improve,
00:50:32.188 --> 00:50:34.240
but we know it's happening;
00:50:34.240 --> 00:50:36.700
just because we can't
see it at the ERCOT level
00:50:36.700 --> 00:50:38.550
doesn't mean that it's not out there.
00:50:43.370 --> 00:50:45.023
As for the LSE obligation,
00:50:46.720 --> 00:50:50.050
we know, we don't know
00:50:50.920 --> 00:50:53.920
what any of these will
really do in practice to prices;
00:50:53.920 --> 00:50:55.040
even the ORDC.
00:50:55.040 --> 00:50:59.270
It's a huge margin of
error in trying to presume
00:50:59.270 --> 00:51:01.920
that we know how many
hours it'll be used every year.
00:51:03.389 --> 00:51:04.770
We've got a lot more
data about the stock market
00:51:04.770 --> 00:51:07.761
but nobody on the planet
can tell you what it's gonna do.
00:51:07.761 --> 00:51:09.270
Just to think we can
00:51:09.270 --> 00:51:12.263
predict the weather in the
power grid that accurately.
00:51:13.710 --> 00:51:16.560
We know we don't have enough
dispatchable power in Texas.
00:51:18.660 --> 00:51:20.370
The wind stopped blowing yesterday.
00:51:20.370 --> 00:51:23.510
Everything else is working
just fine, or as expected
00:51:23.510 --> 00:51:25.220
and prices went to $400.
00:51:25.220 --> 00:51:27.780
The market is set to go to $500.
00:51:27.780 --> 00:51:29.050
That's 100X pricing
00:51:30.700 --> 00:51:32.808
that customers will pay for
00:51:32.808 --> 00:51:35.476
because we don't have ...
The wind stopped blowing
00:51:35.476 --> 00:51:37.140
and we don't have enough
dispatchable resources.
00:51:37.140 --> 00:51:38.640
And while in the longterm,
00:51:38.640 --> 00:51:40.360
we obviously want to keep
00:51:41.510 --> 00:51:43.950
competitive retail market;
00:51:43.950 --> 00:51:47.130
in the short term, we
need to be prepared
00:51:47.130 --> 00:51:51.010
to face the possibility
that prices may go up
00:51:51.910 --> 00:51:53.990
because we don't have
enough of the supply we need.
00:51:53.990 --> 00:51:56.010
We know that, that's why we're here,
00:51:56.010 --> 00:51:57.380
but the cure for high prices
00:51:57.380 --> 00:51:59.863
in a properly functioning
market is high prices.
00:52:01.600 --> 00:52:02.433
The investment's signaled
00:52:02.433 --> 00:52:04.388
to bring more supply to our market,
00:52:04.388 --> 00:52:06.320
more dispatchable supply,
which is exactly why we're here.
00:52:06.320 --> 00:52:09.060
So while there may be
short term increases in price,
00:52:09.060 --> 00:52:11.500
we of course wanna minimize that,
00:52:11.500 --> 00:52:12.800
over the longterm,
00:52:12.800 --> 00:52:16.800
we need to provide the financial signal
00:52:16.800 --> 00:52:18.390
to get more investment
00:52:18.390 --> 00:52:21.153
and more dispatchable
supply in Texas, we have this.
00:52:23.958 --> 00:52:25.610
LSE, yes LSE obligation is a
00:52:26.920 --> 00:52:30.360
monumental change to the market,
00:52:31.810 --> 00:52:34.630
but we saw both this winter and
00:52:34.630 --> 00:52:35.820
in the extreme weather event
00:52:35.820 --> 00:52:38.930
and on the blue sky problems,
00:52:38.930 --> 00:52:41.600
blue sky day problems
we've had this summer
00:52:41.600 --> 00:52:43.580
and even this week that
00:52:44.890 --> 00:52:49.620
we can't not take drastic action.
00:52:49.620 --> 00:52:52.950
The lack of action in 2013
didn't work out so well.
00:52:52.950 --> 00:52:55.750
We've seen the ORDC movie
before, we know how that ends.
00:52:56.920 --> 00:53:00.170
So, I don't know how we can
00:53:01.050 --> 00:53:03.590
say we're doing our job without at least
00:53:03.590 --> 00:53:07.733
taking a serious, serious
look at something like this.
00:53:08.730 --> 00:53:10.720
And that's all I'm asking for
00:53:10.720 --> 00:53:12.720
over the next couple of months is to
00:53:14.180 --> 00:53:18.660
set a narrow focus on figuring
out what that LSE obligation,
00:53:18.660 --> 00:53:20.690
if we do it, should look like,
00:53:20.690 --> 00:53:23.350
so we can all get
comfortable with the problems
00:53:23.350 --> 00:53:24.430
identified in my memo,
00:53:24.430 --> 00:53:26.803
and you all have all
articulated so well.
00:53:31.758 --> 00:53:34.310
As I said at the beginning,
this is not the ESA proposal,
00:53:34.310 --> 00:53:36.003
this is not the NRG proposal.
00:53:38.591 --> 00:53:39.424
This is my version
00:53:39.424 --> 00:53:41.990
of what an LSE
obligation could look like.
00:53:41.990 --> 00:53:44.123
As you saw in the memo,
00:53:45.931 --> 00:53:49.560
one of the proposals is a
bulletin board type posting,
00:53:49.560 --> 00:53:51.883
centralized posting
for price transparency,
00:53:52.840 --> 00:53:55.660
so IMM and everybody else
00:53:55.660 --> 00:53:58.550
can see into bilateral transactions,
00:53:58.550 --> 00:53:59.720
so they can see what those prices are,
00:53:59.720 --> 00:54:01.340
so they can see who
the counterparties are,
00:54:01.340 --> 00:54:04.520
they can see what kind of
megawatts are moving where.
00:54:04.520 --> 00:54:07.273
That's middle of the
road on that spectrum.
00:54:08.760 --> 00:54:10.720
Under no circumstances can we leave,
00:54:10.720 --> 00:54:12.913
if we do something
like that, can we leave,
00:54:14.950 --> 00:54:16.650
leave the bilateral market for
00:54:16.650 --> 00:54:20.750
these types of credits in
the dark, absolutely not.
00:54:20.750 --> 00:54:22.330
On the most extreme end of the spectrum,
00:54:22.330 --> 00:54:24.680
which may very well be a viable choice,
00:54:24.680 --> 00:54:27.270
is to have all of these
credits be required
00:54:27.270 --> 00:54:30.911
to be traded in a centralized
location, run by ERCOT
00:54:30.911 --> 00:54:32.083
like the CRR options.
00:54:33.060 --> 00:54:34.900
So, there are no bilateral (indistinct).
00:54:34.900 --> 00:54:37.230
Everybody's gotta trade these credits
00:54:37.230 --> 00:54:38.773
on an open central exchange.
00:54:40.340 --> 00:54:42.675
I don't know what
the right answer is, but
00:54:42.675 --> 00:54:44.390
I think we have to start
asking these questions
00:54:44.390 --> 00:54:47.720
and figuring out where on
that spectrum might be suitable,
00:54:47.720 --> 00:54:51.563
and if it's viable, to get there.
00:54:56.640 --> 00:54:58.400
I'm sure we will have
more thoughts on that
00:54:58.400 --> 00:55:00.570
as we move through the morning.
00:55:00.570 --> 00:55:02.480
If y'all are game,
00:55:02.480 --> 00:55:04.960
how about we start with a few easy items
00:55:06.572 --> 00:55:08.700
to add to the list of questions,
00:55:08.700 --> 00:55:11.083
items to consider moving forward with,
00:55:11.940 --> 00:55:13.763
start with an easy one: FFRS.
00:55:15.063 --> 00:55:16.683
Do you wanna keep that moving forward?
00:55:17.585 --> 00:55:19.033
A question,
Mr. Chairman, procedural.
00:55:20.000 --> 00:55:22.210
Could we adopt and maybe rule
00:55:22.210 --> 00:55:25.313
as we move through
your list, it's a good list,
00:55:26.720 --> 00:55:30.970
to contextualize it, what
could be implemented,
00:55:30.970 --> 00:55:34.750
as Commissioner Cobos
has suggested, six months,
00:55:34.750 --> 00:55:36.810
in the next six months or a year?
00:55:36.810 --> 00:55:39.350
Can we do the list
and then look at what ...
00:55:39.350 --> 00:55:41.040
If you want to, but
as you discuss it,
00:55:41.040 --> 00:55:42.760
it might help us frame it.
00:55:42.760 --> 00:55:43.593
Sure.
00:55:43.593 --> 00:55:45.883
But, however you wanna do it.
00:55:45.883 --> 00:55:47.105
I don't really
wanna do it really.
00:55:47.105 --> 00:55:49.670
How I moved through my list
00:55:49.670 --> 00:55:51.180
to have a conversation with this,
00:55:51.180 --> 00:55:52.683
and I'm just trying to figure out
00:55:52.683 --> 00:55:55.170
what the most efficient
thing would be to do.
00:55:55.170 --> 00:55:56.990
As I discussed with ORDC,
00:55:56.990 --> 00:55:59.030
having something in
place by early January
00:55:59.030 --> 00:56:01.183
so we can get the online midterms going.
00:56:02.170 --> 00:56:05.270
I took a phased approach into it.
00:56:05.270 --> 00:56:07.790
So, I know we're talking
about broad market design,
00:56:07.790 --> 00:56:10.351
but as we're looking at market design,
00:56:10.351 --> 00:56:14.080
some of these features that
we may be interested in changing
00:56:14.080 --> 00:56:17.150
may take years or months
00:56:17.150 --> 00:56:18.900
and so we need to have interim measures
00:56:18.900 --> 00:56:19.850
all the way through
00:56:21.010 --> 00:56:23.340
to ensure that we maintain reliability
00:56:23.340 --> 00:56:25.805
and address the issues that we have
00:56:25.805 --> 00:56:28.105
and will continue to
experience along the way.
00:56:31.071 --> 00:56:31.904
So your next topic,
00:56:31.904 --> 00:56:34.230
I think it's actually the next topic
00:56:34.230 --> 00:56:35.700
I was gonna go to anyway, which is
00:56:35.700 --> 00:56:38.580
demand response NARS reforms.
00:56:38.580 --> 00:56:40.350
Okay, so I was gonna
start with the easy one,
00:56:40.350 --> 00:56:41.183
fast frequency response.
00:56:41.183 --> 00:56:42.905
We need to know what the
treatments are, yeah, yeah.
00:56:42.905 --> 00:56:43.930
Okay.
00:56:43.930 --> 00:56:45.270
That's fine, I mean ...
00:56:45.270 --> 00:56:46.290
So, is everybody comfortable
00:56:46.290 --> 00:56:47.543
continuing (indistinct)
Yes.
00:56:47.543 --> 00:56:49.570
A Response on the.
Absolutely.
00:56:49.570 --> 00:56:51.150
Stated timeline, all right,
00:56:51.150 --> 00:56:53.580
Let's get that on the list,
everybody's good with that.
00:56:53.580 --> 00:56:56.256
As long as all
resources can participate.
00:56:56.256 --> 00:56:57.310
(Will laughs)
00:56:57.310 --> 00:56:59.387
I think that's the plan.
00:57:00.780 --> 00:57:03.070
How about our ECRS ramping product
00:57:03.070 --> 00:57:04.360
that's currently under
development at ERCOT
00:57:04.360 --> 00:57:07.860
continue on current timeline,
implementation timeline?
00:57:07.860 --> 00:57:09.613
Yeah, I think we
don't have a choice
00:57:09.613 --> 00:57:11.878
and that would because
ERCOTs EMS upgrade,
00:57:11.878 --> 00:57:13.763
but I do wanna add a
little bit there on that.
00:57:15.218 --> 00:57:17.110
So I think the ERCOT
community reserve service
00:57:17.110 --> 00:57:19.050
is important.
00:57:19.050 --> 00:57:21.890
It is going to provide
00:57:21.890 --> 00:57:25.280
an opportunity for batteries,
quick-starts and loads
00:57:25.280 --> 00:57:27.250
to help with the ramping issues
00:57:27.250 --> 00:57:29.720
we're already experiencing.
00:57:29.720 --> 00:57:30.793
And so,
00:57:33.221 --> 00:57:36.767
ERCOT TCRS won't be
implemented until 2023 or 2024,
00:57:37.640 --> 00:57:39.650
because of the MS upgrade.
00:57:39.650 --> 00:57:42.290
However, I think that
it is incumbent upon us
00:57:42.290 --> 00:57:44.430
as we're starting to
experience these ramping issues
00:57:44.430 --> 00:57:46.430
to start thinking of an interim measure.
00:57:47.929 --> 00:57:48.762
What would that look like?
00:57:48.762 --> 00:57:52.010
I would direct ERCOT to
scrub down their existing fleet,
00:57:52.010 --> 00:57:55.370
I mean their existing
ancillary service product fleet,
00:57:55.370 --> 00:57:56.950
just to see what we can do
00:57:59.190 --> 00:58:01.360
with an existing AS product,
00:58:01.360 --> 00:58:03.870
which are a non-spin regulation service
00:58:03.870 --> 00:58:05.500
and see if there is something in there
00:58:05.500 --> 00:58:07.720
that they can create a subset of
00:58:07.720 --> 00:58:10.610
or some kind of requirement
where we can start incenting
00:58:13.100 --> 00:58:15.610
the opportunity to
address this ramping issue
00:58:15.610 --> 00:58:16.840
with a variety of technologies.
00:58:16.840 --> 00:58:18.410
How about we expand RRS?
00:58:20.057 --> 00:58:22.133
Where we do not
spend, that's up to ERCOT.
00:58:22.133 --> 00:58:23.555
I think they have ideas.
True.
00:58:23.555 --> 00:58:24.388
I don't wanna tie their hands.
00:58:24.388 --> 00:58:25.410
I wanna give them the opportunity
00:58:25.410 --> 00:58:29.340
to scrub down their
existing product list so that
00:58:29.340 --> 00:58:30.280
we can look for opportunities
00:58:30.280 --> 00:58:32.280
and I have a very specific idea in mind.
00:58:33.940 --> 00:58:36.380
So, what I mean by this is
00:58:36.380 --> 00:58:39.510
we're waiting for ECRS out
here and absolutely agree.
00:58:39.510 --> 00:58:41.247
Please have ERCOT continue to work on it
00:58:41.247 --> 00:58:43.023
and get it done sooner if they can.
00:58:44.370 --> 00:58:47.220
And that ancillary service
is gonna help us address
00:58:47.220 --> 00:58:50.330
the ramping issues
and in a combination with
00:58:50.330 --> 00:58:51.480
ECRS and Nomsten,
00:58:51.480 --> 00:58:52.880
I think we're gonna get a lot of value
00:58:52.880 --> 00:58:54.550
to address these and
the operational issues
00:58:54.550 --> 00:58:55.928
that we are already experiencing
00:58:55.928 --> 00:58:56.761
and continuing to experience
00:58:56.761 --> 00:58:58.793
with a higher level of
only the one system.
00:59:00.600 --> 00:59:01.590
But in the interim,
00:59:01.590 --> 00:59:04.330
I think we should have
ERCOT look at the AS products,
00:59:04.330 --> 00:59:06.200
figure out if there's a
subset they can carve out
00:59:06.200 --> 00:59:07.230
or some kind of requirements
00:59:07.230 --> 00:59:09.370
they could work with and incent,
00:59:09.370 --> 00:59:13.970
because the main ramping
issue we're going to experience,
00:59:13.970 --> 00:59:15.730
I think that we're
starting to experience,
00:59:15.730 --> 00:59:18.120
that you have brought up, is solar
00:59:18.120 --> 00:59:20.920
coming down off the
system in the evening,
00:59:20.920 --> 00:59:23.500
and you gotta get ahead of it, right.
00:59:23.500 --> 00:59:26.300
And ECRS is intended
to address that issue,
00:59:26.300 --> 00:59:27.603
however, it's petered out.
00:59:28.830 --> 00:59:31.340
And what I've heard
from the solar community,
00:59:31.340 --> 00:59:32.600
and I think this is where I'm going
00:59:32.600 --> 00:59:34.610
with the policy consideration of,
00:59:34.610 --> 00:59:37.610
okay, well if we're having to procure
00:59:37.610 --> 00:59:40.880
or do some kind of manual
workaround right now
00:59:40.880 --> 00:59:43.520
with our existing AS fleet to
address this ramping issue,
00:59:43.520 --> 00:59:46.340
then maybe you can look at causation,
00:59:46.340 --> 00:59:49.970
balancing out societal
benefits and cost causation.
00:59:49.970 --> 00:59:52.510
But there's a real
opportunity, I believe,
00:59:52.510 --> 00:59:55.070
as you've highlighted in your memo,
00:59:55.070 --> 00:59:58.230
that there's a lot of storage
in the interconnection queue
00:59:58.230 --> 00:59:59.980
and it's about a two hour duration.
01:00:01.040 --> 01:00:02.570
And what I have heard
from the solar community
01:00:02.570 --> 01:00:05.480
is that in fact, this combination
01:00:05.480 --> 01:00:08.950
of solar and storage
01:00:08.950 --> 01:00:12.890
can actually help smooth out this curve
01:00:13.930 --> 01:00:17.010
and our duck curve right now,
if they expand in the future,
01:00:17.010 --> 01:00:20.470
as will probably be in the
short term, maybe two hours.
01:00:20.470 --> 01:00:22.870
And so if we're gonna continue to get,
01:00:22.870 --> 01:00:25.520
if we're gonna continue to
have solar show up in ERCOT,
01:00:25.520 --> 01:00:27.920
which they do provide
a reliability benefit,
01:00:27.920 --> 01:00:30.460
it's that ramping issue we're
gonna have to deal with.
01:00:30.460 --> 01:00:32.563
How about we look for ways to incent,
01:00:35.726 --> 01:00:40.221
to provide an opportunity for
these co-located technologies
01:00:40.221 --> 01:00:42.100
to enter the market so we can reap
01:00:42.100 --> 01:00:45.060
the reliability and
operational benefits.
01:00:45.060 --> 01:00:47.770
And what I mean by this is that,
01:00:47.770 --> 01:00:51.330
if we can find a way to
allow this combination,
01:00:51.330 --> 01:00:54.453
solar and storage, to
enter the market now,
01:00:56.549 --> 01:00:59.924
before the OCRS AS product is in place,
01:00:59.924 --> 01:01:01.160
I think we're gonna get a
lot of operational benefits
01:01:01.160 --> 01:01:03.603
out of that co-location and right now,
01:01:04.900 --> 01:01:07.100
out of about 19,000 megawatts,
01:01:07.100 --> 01:01:08.400
that's in the solar queue,
01:01:09.730 --> 01:01:14.590
over 50% of it has storage with it.
01:01:14.590 --> 01:01:16.430
So it's a package.
Fantastic.
01:01:16.430 --> 01:01:18.454
Exactly, so how do we move
01:01:18.454 --> 01:01:22.200
these bundle technologies
into the market,
01:01:22.200 --> 01:01:25.190
because if we want solar to show up,
01:01:25.190 --> 01:01:27.210
we'd wanna preferably for them
01:01:27.210 --> 01:01:29.216
to show up with storage, right,
01:01:29.216 --> 01:01:30.049
so we don't have this big ramping issue.
01:01:30.049 --> 01:01:31.500
So, what can we do in the interim
01:01:32.400 --> 01:01:34.860
while we await ECRS to create
01:01:34.860 --> 01:01:37.760
an opportunity for solar and storage
01:01:39.030 --> 01:01:40.210
to get out of that queue
and enter the market
01:01:40.210 --> 01:01:42.599
and provide us that
reliable (indistinct)
01:01:42.599 --> 01:01:44.184
if we can.
Sure,
01:01:44.184 --> 01:01:45.017
it's certainly a problem
01:01:45.017 --> 01:01:47.956
and it's the problem that
ECRS has been built to address.
01:01:47.956 --> 01:01:48.800
There's a time lapse.
01:01:48.800 --> 01:01:52.310
I'm very, very wary of asking ERCOT
01:01:52.310 --> 01:01:55.763
to build something new while
they're building something new.
01:01:56.701 --> 01:01:57.534
It's not building
something new,
01:01:57.534 --> 01:02:00.057
it's looking at their existing fleet.
01:02:00.057 --> 01:02:01.730
I'm very comfortable
with asking them
01:02:01.730 --> 01:02:04.073
to expand an existing AS product.
01:02:05.400 --> 01:02:06.720
And also, do we wanna make sure
01:02:06.720 --> 01:02:08.210
the public understands that,
01:02:08.210 --> 01:02:11.260
even in the absence
of any action like that,
01:02:11.260 --> 01:02:14.220
solar and batteries today
01:02:14.220 --> 01:02:15.883
can participate in the market,
01:02:19.152 --> 01:02:22.550
in the energy market as
they choose, as they see fit.
01:02:22.550 --> 01:02:23.987
I think expanding the ORDC
01:02:25.030 --> 01:02:28.180
provides a big financial incentive
01:02:28.180 --> 01:02:31.380
for those batteries to start
discharging into the grid
01:02:31.380 --> 01:02:32.850
if we get into moments of scarcity.
01:02:32.850 --> 01:02:37.080
So there's a robust
mechanism and presumably,
01:02:37.080 --> 01:02:39.060
very soon there will be
increased revenues available
01:02:39.060 --> 01:02:41.113
for anyone who has batteries.
01:02:41.980 --> 01:02:44.280
So, I would certainly be okay
01:02:45.896 --> 01:02:47.508
thinking about expanding a product,
01:02:47.508 --> 01:02:50.040
but it's hard to ask
ERCOT to build something
01:02:50.040 --> 01:02:51.430
while they're building something else.
01:02:51.430 --> 01:02:53.190
And that's absolutely not
01:02:53.190 --> 01:02:54.277
what I'm asking ERCOT to do.
01:02:54.277 --> 01:02:56.970
I'm asking them to look
at their existing suite
01:02:56.970 --> 01:02:58.130
to see if there's something we can do
01:02:58.130 --> 01:03:00.080
with an existing AS product,
01:03:00.080 --> 01:03:03.610
so that we can send that
price signal and get those-
01:03:03.610 --> 01:03:06.400
Sure, they will be
considering bring in load
01:03:06.400 --> 01:03:08.090
and do non-spin tomorrow,
01:03:08.090 --> 01:03:10.643
which is a huge increase
in our margin of safety.
01:03:11.700 --> 01:03:14.260
And as a compromise.
01:03:14.260 --> 01:03:15.093
So,
01:03:16.490 --> 01:03:18.240
this goes hand in glove
01:03:18.240 --> 01:03:20.650
with a consideration that we had
01:03:20.650 --> 01:03:23.830
on firm fuel AS and possibly
01:03:23.830 --> 01:03:25.903
getting expedited in non-spin.
01:03:27.147 --> 01:03:28.297
I remember folding that in,
01:03:28.297 --> 01:03:29.740
and that would necessitate
a system change
01:03:29.740 --> 01:03:34.430
as per Kenan Ogelman,
his response to that.
01:03:34.430 --> 01:03:37.020
So it's all about the timeliness
01:03:37.020 --> 01:03:41.070
of the computing and
fixing their systems.
01:03:41.070 --> 01:03:44.030
So it could be a question of
where they could file comments
01:03:44.030 --> 01:03:46.023
as a part of your ECRS.
01:03:47.330 --> 01:03:50.872
Sure, let's add it to
the question list for ECRS.
01:03:50.872 --> 01:03:51.705
So that it could be taken up.
01:03:51.705 --> 01:03:53.330
Absolutely, and I
have had conversations
01:03:53.330 --> 01:03:54.240
with ERCOT about this,
01:03:54.240 --> 01:03:56.040
and I don't think it's gonna
take a system change.
01:03:56.040 --> 01:03:57.550
I think it's gonna just
take some tweaking
01:03:57.550 --> 01:03:58.383
of the market rules
01:03:58.383 --> 01:04:00.020
to be able to provide this avenue
01:04:01.010 --> 01:04:03.620
to open up an existing AS product
01:04:05.267 --> 01:04:08.445
a little bit more so we can
encourage these technologies.
01:04:08.445 --> 01:04:10.444
And I think it's important,
because it's gonna be years
01:04:10.444 --> 01:04:11.340
before we get ECRS,
01:04:11.340 --> 01:04:12.910
and let's start getting
these technologies in
01:04:12.910 --> 01:04:15.020
so that we can address both reliability
01:04:15.020 --> 01:04:17.405
and operational risks that
we're gonna experience
01:04:17.405 --> 01:04:19.820
because of more solar
showing up without batteries.
01:04:19.820 --> 01:04:21.700
Let's get them to come
across the finish line
01:04:21.700 --> 01:04:22.650
with the batteries.
01:04:23.780 --> 01:04:26.490
We'll add a question
about an interim
01:04:28.470 --> 01:04:33.540
to the ECRS concept, an
interim product adjustment
01:04:33.540 --> 01:04:36.130
within the existing AS suite
01:04:36.130 --> 01:04:37.450
that can be implemented
01:04:38.822 --> 01:04:39.780
to mitigate the
01:04:41.540 --> 01:04:42.373
duck curve.
01:04:45.019 --> 01:04:47.010
I think we need to ask about
01:04:47.010 --> 01:04:50.260
some pros and cons of
different durations for those,
01:04:50.260 --> 01:04:52.270
if it's batteries and it's ramping,
01:04:52.270 --> 01:04:53.150
is it two hour?
01:04:53.150 --> 01:04:56.797
One, two, four, six
or eight, I don't know.
01:04:58.523 --> 01:05:01.480
Right, and that's
where I'm hesitant
01:05:01.480 --> 01:05:04.343
because that's what ERCOT's
gonna work through on ECRS.
01:05:06.049 --> 01:05:09.040
And if we asked, and in
some ways asking them
01:05:09.040 --> 01:05:10.970
to solve that problem in non-spin
01:05:12.830 --> 01:05:15.826
and opening the hood up on non-spin
01:05:15.826 --> 01:05:18.833
to rejigger that market.
Does it need really ECRS?
01:05:18.833 --> 01:05:22.443
Well I mean, you're just
doing ECRS under a different ...
01:05:24.003 --> 01:05:26.512
You're doing the same
mechanic work under the hood,
01:05:26.512 --> 01:05:28.053
you're just doing it
under a different product.
01:05:29.411 --> 01:05:30.330
I think what
Commissioner Cobos said,
01:05:30.330 --> 01:05:32.573
the question is, can we wait that long?
01:05:33.473 --> 01:05:37.170
Can we wait for ECRS for three years
01:05:37.170 --> 01:05:38.970
for that type of product to come in?
01:05:39.884 --> 01:05:41.184
I've been one that I think
01:05:42.020 --> 01:05:43.960
that we have to find
an interim solution,
01:05:43.960 --> 01:05:46.700
whether it is the
expansion of an existing
01:05:46.700 --> 01:05:48.510
ancillary service,
01:05:48.510 --> 01:05:52.210
if it's lifting, if it's
lowering the durations
01:05:52.210 --> 01:05:54.920
or allowing batteries into
01:05:54.920 --> 01:05:57.350
different types of ancillary services,
01:05:57.350 --> 01:06:02.110
or in fact almost all
of them, then I'm for it.
01:06:02.110 --> 01:06:03.440
But I think that's a problem
01:06:03.440 --> 01:06:05.380
that we are gonna have to
solve sooner rather than later.
01:06:05.380 --> 01:06:08.663
And waiting till ECRS is completed,
01:06:09.520 --> 01:06:11.740
we're gonna be late to the game.
01:06:11.740 --> 01:06:14.680
And we'll continue to look for,
01:06:14.680 --> 01:06:16.730
use our existing tools to
deal with ramping issues
01:06:16.730 --> 01:06:18.680
that we're gonna continue to experience,
01:06:18.680 --> 01:06:19.513
because what we're
dealing with right now
01:06:19.513 --> 01:06:20.346
is the ramping issue.
01:06:20.346 --> 01:06:22.340
It's not a huge duck curve yet,
01:06:22.340 --> 01:06:24.740
but in the coming years
with 19,000 megawatts
01:06:24.740 --> 01:06:27.300
in the system, in the queue,
01:06:27.300 --> 01:06:29.530
we're gonna continue
to experience these-
01:06:29.530 --> 01:06:30.430
I'm aware of it.
01:06:31.411 --> 01:06:34.109
So, let's get ahead of the game
01:06:34.109 --> 01:06:36.571
and not wait around and
have an interim solution in place
01:06:36.571 --> 01:06:37.404
while we wait for ECRS,
01:06:37.404 --> 01:06:40.020
which I think is gonna provide
01:06:40.020 --> 01:06:43.832
those services to be able to
address the ramping issue.
01:06:43.832 --> 01:06:45.632
And like you said, when we get into,
01:06:47.850 --> 01:06:50.830
how can we look for accreditation
01:06:50.830 --> 01:06:52.660
in our existing energy only market?
01:06:52.660 --> 01:06:55.040
We can have a conversation about
01:06:55.040 --> 01:06:59.270
how ancillary services are allocated,
01:06:59.270 --> 01:07:01.160
what's the societal
benefit to the market
01:07:01.160 --> 01:07:02.390
by having these AS products
01:07:02.390 --> 01:07:06.173
versus who's calling
these calls for AS product.
01:07:07.130 --> 01:07:09.300
I think that's where we can find
01:07:09.300 --> 01:07:14.554
a policy-based forum and avenue
01:07:14.554 --> 01:07:15.807
to address some of these issues
01:07:15.807 --> 01:07:17.213
that you wanna try to
address for accreditation.
01:07:19.840 --> 01:07:20.690
Say that again.
01:07:22.476 --> 01:07:24.780
So, I don't wanna go
into a rabbit hole on this,
01:07:24.780 --> 01:07:25.730
'cause I know we've gotta keep moving,
01:07:25.730 --> 01:07:28.460
but you had asked me,
how can we get there?
01:07:28.460 --> 01:07:30.600
How can we require firming
01:07:31.450 --> 01:07:33.410
outside of accreditation in our current
01:07:33.410 --> 01:07:35.420
only energy only market?
Right.
01:07:35.420 --> 01:07:38.500
Well, one way is to
look at policy avenues
01:07:38.500 --> 01:07:39.500
that we would have in place
01:07:39.500 --> 01:07:42.170
through ancillary
service cost allocation.
01:07:42.170 --> 01:07:43.870
And I think that has been on the table.
01:07:43.870 --> 01:07:46.450
The Governor asked us to
look at it, we can look at it.
01:07:46.450 --> 01:07:47.960
We'd have to come up
with a policy-based ...
01:07:47.960 --> 01:07:50.040
So assigning existing
ancillary services
01:07:50.040 --> 01:07:51.323
cost to intermittent.
01:07:52.410 --> 01:07:56.140
Potentially, we have to
look at societal benefits,
01:07:56.140 --> 01:07:58.451
cost causation, capacity short.
01:07:58.451 --> 01:07:59.630
There's a lot of policy
ways to get there,
01:07:59.630 --> 01:08:00.703
where it is some ...
01:08:01.641 --> 01:08:04.032
Yeah, that's a whole
new can of worms.
01:08:04.032 --> 01:08:06.060
If we wanna do existing.
01:08:06.060 --> 01:08:06.893
I'm not saying existing,
01:08:06.893 --> 01:08:08.620
I'm saying as we get
new products in place
01:08:08.620 --> 01:08:11.020
that are geared towards
a very specific problem,
01:08:12.260 --> 01:08:15.660
like this ramping issue,
that's what I'm talking about.
01:08:15.660 --> 01:08:19.210
I think if you wanna look for avenues,
01:08:19.210 --> 01:08:20.400
there's avenues, right?
01:08:20.400 --> 01:08:22.940
During an accreditation
process to the LSE obligation,
01:08:22.940 --> 01:08:25.960
which I believe is gonna turn into
01:08:25.960 --> 01:08:29.343
potentially a litigated process.
01:08:30.730 --> 01:08:33.550
And there's the ancillary service avenue
01:08:33.550 --> 01:08:36.300
where we can look at who's benefiting,
01:08:36.300 --> 01:08:37.350
who's causing the cause,
01:08:37.350 --> 01:08:39.300
we can come up with a policy-based way
01:08:39.300 --> 01:08:41.420
of looking at those issues.
01:08:41.420 --> 01:08:43.476
That's a good question,
01:08:43.476 --> 01:08:45.143
well we'll have the
question on the list, Jimmy.
01:08:46.050 --> 01:08:47.950
I'm sorry.
Did you get a comment?
01:08:49.710 --> 01:08:52.414
I don't know, I'm
sure it'll come back to me.
01:08:52.414 --> 01:08:55.060
Okay, all right,
so for AT ECRS,
01:08:55.060 --> 01:08:56.470
we've added Lori's question
01:08:56.470 --> 01:08:58.990
to the list of questions
to be addressed,
01:08:58.990 --> 01:09:02.483
including from ERCOT,
most importantly from ERCOT.
01:09:03.790 --> 01:09:04.720
I do have one question
01:09:04.720 --> 01:09:07.473
or one maybe question we can pose,
01:09:11.278 --> 01:09:12.880
and this is specifically for ECRS.
01:09:14.258 --> 01:09:15.091
And as I understand it,
01:09:15.091 --> 01:09:16.960
there's a six hour requirement
for the existing proposal;
01:09:16.960 --> 01:09:19.650
what would be the benefit of
01:09:19.650 --> 01:09:21.530
either reducing that or eliminating that
01:09:21.530 --> 01:09:22.403
or extending it?
01:09:23.820 --> 01:09:27.150
Operational benefit,
not profit margin benefit.
01:09:27.150 --> 01:09:29.660
Operational
benefits, absolutely.
01:09:29.660 --> 01:09:30.560
That's consistent, right,
01:09:30.560 --> 01:09:33.070
because it's supposed
to be that's the footfall,
01:09:33.070 --> 01:09:35.806
it's the range of rampability.
01:09:35.806 --> 01:09:37.830
Right, yes, I wanna make sure
01:09:37.830 --> 01:09:40.389
we focus on the operational need.
01:09:40.389 --> 01:09:41.222
Absolutely.
01:09:41.222 --> 01:09:44.720
Not letting the
market duration design
01:09:44.720 --> 01:09:46.800
tail wag.
Agreed.
01:09:46.800 --> 01:09:47.910
The operational dog.
01:09:47.910 --> 01:09:51.370
Just because two hours happens to be the
01:09:51.370 --> 01:09:54.453
current duration of what
people can make money on.
01:09:55.780 --> 01:09:58.240
All right, other questions for ECRS?
01:09:58.240 --> 01:09:59.620
I've got obviously the quantity,
01:09:59.620 --> 01:10:02.900
what quantity should be procured
01:10:02.900 --> 01:10:04.700
and should it be seasonally-based?
01:10:04.700 --> 01:10:07.470
And if so, what metric?
01:10:07.470 --> 01:10:10.120
Lori's question has been added
01:10:11.120 --> 01:10:12.360
and then the question about,
01:10:12.360 --> 01:10:15.250
what is the appropriate operational
01:10:15.250 --> 01:10:18.690
or the appropriate duration
requirement for ECRS
01:10:18.690 --> 01:10:21.793
to address the operational need?
01:10:23.540 --> 01:10:27.179
Mr. Chairman, on
seasonally-based, you know what,
01:10:27.179 --> 01:10:29.721
I 100% agree with that.
I had a feeling.
01:10:29.721 --> 01:10:31.800
But I had thought that it'd
be a great policy proposal.
01:10:31.800 --> 01:10:35.013
It is that applied to all the unit?
01:10:36.630 --> 01:10:38.820
I'm trying to get my arms around
01:10:38.820 --> 01:10:40.830
the menu of ancillary services
01:10:40.830 --> 01:10:42.600
that we're either in process of creating
01:10:42.600 --> 01:10:44.283
or what we have existing today.
01:10:45.641 --> 01:10:47.953
And now feels right at 7,000.
01:10:51.233 --> 01:10:54.810
And so, as a doctrine
on the part of ERCOT
01:10:54.810 --> 01:10:57.550
or a taken
01:10:59.110 --> 01:11:00.780
component of the mechanics,
01:11:00.780 --> 01:11:04.690
price formation and
procuring enough resources
01:11:04.690 --> 01:11:06.410
to match seasonal variability,
01:11:06.410 --> 01:11:09.500
should it be sized to
seasonal variability?
01:11:09.500 --> 01:11:12.500
So, is that question
applied in your matrix
01:11:13.486 --> 01:11:14.319
to all those ancillary services?
01:11:14.319 --> 01:11:16.660
And if it is, that
question forms the policy.
01:11:16.660 --> 01:11:18.010
Or should it be a separate-
01:11:20.183 --> 01:11:23.820
I did it by product.
01:11:23.820 --> 01:11:25.390
If that's the way it
is, I'm good with it.
01:11:25.390 --> 01:11:27.789
Well, it may end
up being all of them.
01:11:27.789 --> 01:11:28.622
Okay.
01:11:28.622 --> 01:11:29.470
So, I just didn't even think
about a blanket approach.
01:11:29.470 --> 01:11:33.290
I just tried to pick where
seasonal would be the most.
01:11:33.290 --> 01:11:34.940
They just keep
on talking about it.
01:11:34.940 --> 01:11:36.920
Well, 500 sounds right.
Yeah.
01:11:36.920 --> 01:11:37.753
500 sounds right.
01:11:37.753 --> 01:11:41.662
I'd like to tie this to some
sort of weather forecasting.
01:11:41.662 --> 01:11:42.955
Yeah, I agree.
Or it's not okay.
01:11:42.955 --> 01:11:45.750
Okay, ECRS is a topic
01:11:45.750 --> 01:11:48.370
we would like to continue
to get questions on,
01:11:48.370 --> 01:11:49.653
any other questions?
01:11:51.950 --> 01:11:54.090
No, I think those
are the main ones
01:11:54.090 --> 01:11:54.982
from me and you.
01:11:54.982 --> 01:11:56.592
Same.
Thank you.
01:11:56.592 --> 01:11:58.133
All right, ECRS staff could.
01:11:59.570 --> 01:12:02.743
All right, let's go to some other ones,
01:12:04.315 --> 01:12:06.276
hopefully on the low-hanging fruit.
01:12:06.276 --> 01:12:07.510
And again, we're
not designating a timeline
01:12:07.510 --> 01:12:09.260
on that either, right, Mr. Chairman.
01:12:09.260 --> 01:12:12.240
No, can we circle back to that?
01:12:12.240 --> 01:12:14.170
My goal is to keep us focused
01:12:14.170 --> 01:12:18.140
on getting the list of concepts
we wanna limit the scope to,
01:12:18.140 --> 01:12:20.686
and then the questions we want staff
01:12:20.686 --> 01:12:21.519
to issue to stakeholders.
Yes, we're coming.
01:12:21.519 --> 01:12:23.260
One thing and I
guess, or a couple.
01:12:23.260 --> 01:12:25.440
So, will ERCOT just respond
to these asked questions
01:12:25.440 --> 01:12:27.167
regarding ...
Mm-hmm.
01:12:27.167 --> 01:12:29.223
Okay, maybe one question.
01:12:31.150 --> 01:12:33.320
How soon can, if they find
01:12:35.520 --> 01:12:38.300
a way to modify an existing AS product
01:12:38.300 --> 01:12:41.700
to address the ramping
issues while we wait for ECRS,
01:12:41.700 --> 01:12:44.400
how long will it take to implement?
01:12:44.400 --> 01:12:47.543
And what delay would
be caused on ECRS?
01:12:49.520 --> 01:12:50.980
Those are the same resources.
01:12:50.980 --> 01:12:52.636
If there was, I ...
01:12:52.636 --> 01:12:54.456
We'll have to ask the question.
01:12:54.456 --> 01:12:55.760
Yeah, I don't know
that there's a delay again,
01:12:55.760 --> 01:12:58.980
because ECRS is in the oven
right now, in the MS upgrade.
01:12:58.980 --> 01:13:00.230
It's in the system chain,
01:13:01.434 --> 01:13:04.206
this is an existing non-AS product
01:13:04.206 --> 01:13:05.582
that they're just gonna do some testing
01:13:05.582 --> 01:13:06.540
of market rules, potentially.
01:13:06.540 --> 01:13:11.035
So this bus is moving and
this won't get in the way,
01:13:11.035 --> 01:13:11.868
they're on two different-
01:13:11.868 --> 01:13:12.701
I'm not sure we know that,
01:13:12.701 --> 01:13:14.170
I think we need to ask that question.
01:13:14.170 --> 01:13:15.579
Okay, well.
Just ask the question.
01:13:15.579 --> 01:13:18.354
I've had many
conversations with their cockpit
01:13:18.354 --> 01:13:19.200
on financing questions.
01:13:19.200 --> 01:13:20.033
Good deal.
01:13:21.970 --> 01:13:24.400
Voltage support, how
do we feel about that?
01:13:24.400 --> 01:13:26.100
Jimmy, you had a pretty good idea.
01:13:27.592 --> 01:13:28.920
(Lori laughs)
Yeah, let's go.
01:13:28.920 --> 01:13:30.120
I had one
question about it.
01:13:30.120 --> 01:13:32.760
When you say a voltage
support product in that broad term,
01:13:32.760 --> 01:13:35.410
do you mean an inertia product as well?
01:13:35.410 --> 01:13:36.260
Yes.
Okay.
01:13:36.260 --> 01:13:37.739
Included in the service.
01:13:37.739 --> 01:13:39.930
So I think paying for it,
01:13:39.930 --> 01:13:44.540
but also maybe clarifying
what an inertia product is
01:13:44.540 --> 01:13:46.610
and understanding is
01:13:48.140 --> 01:13:49.790
synthetic inertia,
01:13:49.790 --> 01:13:51.860
what are the types of
inertia that are out there
01:13:51.860 --> 01:13:53.357
that might help the system?
01:13:53.357 --> 01:13:56.090
And then how would we
package them in a product?
01:13:56.090 --> 01:13:57.300
Would, the question was,
01:13:57.300 --> 01:14:01.077
an appropriate standard
metric for grid point capabilities.
01:14:01.077 --> 01:14:01.910
That's right.
To cover that?
01:14:01.910 --> 01:14:02.743
Yeah I think so.
01:14:03.910 --> 01:14:06.940
Are we done concluding
voltage support on the list?
01:14:06.940 --> 01:14:09.025
Like your questions yesterday.
01:14:09.025 --> 01:14:10.043
Any additional questions?
01:14:13.100 --> 01:14:16.373
All right, we've got three down, wow.
01:14:18.150 --> 01:14:18.983
All right.
01:14:22.590 --> 01:14:26.763
Winter ancillary product,
can we save that to ...
01:14:26.763 --> 01:14:30.560
That's complimentary with
where we ended up in December
01:14:32.180 --> 01:14:34.620
as in if we're comfortable with
01:14:36.102 --> 01:14:41.102
something like in the load
obligation that can address that
01:14:43.435 --> 01:14:46.010
and the timeframe, then
we don't need to do it.
01:14:46.010 --> 01:14:48.480
But I certainly, well, I
guess we'll just dive into that.
01:14:48.480 --> 01:14:51.830
I certainly think if
we're not comfortable
01:14:53.252 --> 01:14:54.085
with weatherization in winter,
01:14:54.085 --> 01:14:56.810
winter affirming being
addressed in whatever
01:14:56.810 --> 01:14:59.183
new product is developed,
01:15:03.080 --> 01:15:04.030
we can then
01:15:06.030 --> 01:15:09.940
divert to the ancillary product,
01:15:09.940 --> 01:15:12.040
the winter under the
Black Star framework.
01:15:13.406 --> 01:15:14.239
The only thing I'll add,
01:15:15.178 --> 01:15:17.340
is that if we ultimately got comfortable
01:15:17.340 --> 01:15:18.540
with the LSE obligation,
01:15:20.490 --> 01:15:22.560
we don't know how long it's
gonna take to implement it.
01:15:22.560 --> 01:15:23.810
It's really unknown.
01:15:23.810 --> 01:15:28.430
And so, my preference would be to have
01:15:28.430 --> 01:15:31.610
a winter resiliency product in place
01:15:31.610 --> 01:15:33.810
to at least address, not this winter,
01:15:33.810 --> 01:15:36.790
but the next winter,
because I don't wanna leave
01:15:38.187 --> 01:15:41.470
our market and the
public without some kind of
01:15:42.320 --> 01:15:45.400
confidence that we'll have
some product to address it.
01:15:45.400 --> 01:15:49.120
I think, we'll have
weatherization in place.
01:15:49.120 --> 01:15:51.100
And if we could have this winter fuel
01:15:51.100 --> 01:15:52.540
resiliency product in place,
01:15:52.540 --> 01:15:54.730
I think that could help
us address any potential
01:15:54.730 --> 01:15:56.877
gas availability issues in the future.
01:15:56.877 --> 01:16:00.330
And if we do end up going
with the LSE obligation,
01:16:00.330 --> 01:16:04.023
we can roll it in, or any
other proposal ultimately,
01:16:05.410 --> 01:16:08.170
or it stands alone and we have
01:16:10.500 --> 01:16:11.340
a product in place.
01:16:11.340 --> 01:16:14.783
I think it's a no
regrets option as well.
01:16:16.034 --> 01:16:19.600
And I would add it to go
ahead and add it to the list, now.
01:16:19.600 --> 01:16:21.033
Okay, it's a good point.
01:16:21.033 --> 01:16:22.923
Very good point, I'm
gonna add it to the list.
01:16:22.923 --> 01:16:24.156
Yeah, same.
01:16:24.156 --> 01:16:25.318
All right, questions related to
01:16:25.318 --> 01:16:27.018
winter ancillary services product.
01:16:29.450 --> 01:16:30.840
The first one I got was the definition
01:16:30.840 --> 01:16:33.390
of what firm in the winter
means, that's a big one.
01:16:35.545 --> 01:16:37.082
I think that's
a good question.
01:16:37.082 --> 01:16:37.960
Is it onsite, offsite?
01:16:37.960 --> 01:16:39.483
Or a combination thereof.
01:16:40.770 --> 01:16:43.843
Firm contracts
for gas, coal ...
01:16:46.700 --> 01:16:47.533
Okay,
01:16:48.390 --> 01:16:52.060
like most of them, how
should the costs be applied?
01:16:52.060 --> 01:16:55.216
I'd love to hear the
nuances of that, if we could.
01:16:55.216 --> 01:16:57.583
Right, I can
add that to the list.
01:16:57.583 --> 01:17:00.703
Question list for winter
ancillary services product.
01:17:01.920 --> 01:17:04.266
So defining it,
I think is important.
01:17:04.266 --> 01:17:06.590
What does it mean,
how will it be procured
01:17:08.663 --> 01:17:10.496
by ERCOT and how much?
01:17:11.446 --> 01:17:15.010
Procurement methodology
can be in that, okay.
01:17:15.010 --> 01:17:16.760
What quantity have we got on there?
01:17:17.822 --> 01:17:19.660
So do we do it in
a megawatt amount,
01:17:19.660 --> 01:17:23.723
like Black Star, or do we do it
as a dollar amount like ERS?
01:17:25.494 --> 01:17:26.327
That's a huge question.
01:17:26.327 --> 01:17:27.160
That's a good question.
01:17:27.160 --> 01:17:28.020
That's a huge question
01:17:28.903 --> 01:17:32.650
and how we procure it and how much,
01:17:32.650 --> 01:17:35.660
because if it depends on what kind of
01:17:36.510 --> 01:17:38.170
winter standard we're looking at,
01:17:38.170 --> 01:17:40.550
that could get to be a
really, really big number.
01:17:40.550 --> 01:17:41.970
Okay.
01:17:41.970 --> 01:17:44.025
Depending on what
kind of winter event
01:17:44.025 --> 01:17:44.858
you're preparing for.
01:17:44.858 --> 01:17:45.710
And duration, right?
01:17:45.710 --> 01:17:47.410
How many days are we preparing for
01:17:49.440 --> 01:17:52.333
and how long are these contracts?
01:17:53.380 --> 01:17:55.350
Right now, Black Star is two years.
01:17:55.350 --> 01:17:58.380
So how long are the contracts?
01:17:58.380 --> 01:18:00.103
And I think another question is,
01:18:05.380 --> 01:18:06.830
does ERCOT have the expertise
01:18:07.749 --> 01:18:09.399
to review these RFPs?
Balance.
01:18:10.590 --> 01:18:12.530
And/or should
they hire a third party
01:18:12.530 --> 01:18:16.133
independent consultant to
help them review the RFP?
01:18:16.133 --> 01:18:17.880
Not only from a cost perspective,
01:18:17.880 --> 01:18:20.680
but also on a verification perspective
01:18:20.680 --> 01:18:23.680
that these resources that
are going to participate
01:18:24.530 --> 01:18:25.363
and have submitted in our peak
01:18:25.363 --> 01:18:27.907
are in fact going to be able to be firm.
01:18:28.870 --> 01:18:30.263
Yeah, so what?
01:18:33.655 --> 01:18:35.238
I'm gonna put that.
01:18:36.090 --> 01:18:39.142
What auditing and validations,
01:18:39.142 --> 01:18:41.300
standard and methodology
should be used to
01:18:42.140 --> 01:18:42.980
affirm
01:18:45.490 --> 01:18:46.741
obligation.
01:18:46.741 --> 01:18:48.452
Yeah, something
like this last one.
01:18:48.452 --> 01:18:51.325
Yeah, okay does it work?
Works for me.
01:18:51.325 --> 01:18:53.200
Yeah, and Mr. Chairman,
01:18:53.200 --> 01:18:54.130
I know we've passed over these,
01:18:54.130 --> 01:18:57.125
but it applies to this one, same deal,
01:18:57.125 --> 01:18:59.320
especially on ECRS and voltage support.
01:18:59.320 --> 01:19:01.350
How should cost be applied?
01:19:01.350 --> 01:19:03.710
If that's the Rubicon
to be crossed on this,
01:19:03.710 --> 01:19:06.249
then let's have stakeholders,
01:19:06.249 --> 01:19:07.798
yeah and get that through.
01:19:07.798 --> 01:19:09.131
Okay, is that,
01:19:10.760 --> 01:19:12.460
where should cost be allocated for
01:19:14.006 --> 01:19:17.183
ECRS voltage support
and winter ancillary product?
01:19:17.183 --> 01:19:18.328
Does that work?
Yes.
01:19:18.328 --> 01:19:20.255
And I would add one more
question for the winter product,
01:19:20.255 --> 01:19:22.430
and that is, how quickly
can it be implemented?
01:19:22.430 --> 01:19:24.980
I've been told by a lot
of different stakeholders
01:19:24.980 --> 01:19:27.103
to have something in
place by next winter 2023,
01:19:27.964 --> 01:19:28.880
but I wanna make sure that we get
01:19:28.880 --> 01:19:30.580
a little more information on that.
01:19:31.910 --> 01:19:35.923
Yes, we certainly
wanna make sure it's ...
01:19:37.975 --> 01:19:40.323
Done in a time
efficient manner, not waiting.
01:19:41.296 --> 01:19:44.533
We're not two, three
winters out from getting it.
01:19:45.590 --> 01:19:46.783
Yes, I agree.
01:19:51.890 --> 01:19:54.833
I guess to your question,
to your point earlier, Will,
01:19:55.687 --> 01:19:58.532
for all of the things that
are a cost-specific question,
01:19:58.532 --> 01:19:59.820
but for all of these,
01:19:59.820 --> 01:20:02.120
we know we've got a
timeline for ECRS and FFS,
01:20:04.000 --> 01:20:06.240
but time to implementation
for voltage support
01:20:06.240 --> 01:20:07.073
in winter, yes.
01:20:11.318 --> 01:20:13.160
Right, everybody good so far?
01:20:13.160 --> 01:20:15.963
Yes.
All right, moving up.
01:20:17.371 --> 01:20:19.286
We've got page four and five done.
01:20:19.286 --> 01:20:20.223
Cautiously optimistic.
01:20:23.229 --> 01:20:24.062
ERS, yes?
01:20:24.062 --> 01:20:25.249
That was my favorite one.
01:20:25.249 --> 01:20:26.243
Okay, here we go.
01:20:26.243 --> 01:20:28.044
(they talk over each other)
01:20:28.044 --> 01:20:29.544
Okay, so I think
01:20:32.000 --> 01:20:32.833
we need to look at ECRS.
01:20:32.833 --> 01:20:34.727
We need to look at the rules,
01:20:34.727 --> 01:20:36.590
but I think we need to
take some interim steps
01:20:36.590 --> 01:20:38.390
for this winter.
Okay.
01:20:38.390 --> 01:20:41.923
And what I mean
by that, is that,
01:20:44.400 --> 01:20:45.950
based on my review of the rule,
01:20:47.197 --> 01:20:51.237
ERCOT has a $50 million annual cost cap,
01:20:52.631 --> 01:20:54.190
and they have four contract periods.
01:20:54.190 --> 01:20:57.040
The contract period for
the winter is coming up,
01:20:57.040 --> 01:20:59.240
and that is for December,
January, February.
01:21:00.379 --> 01:21:02.730
ERCOT has issued an
RFP for that contract period.
01:21:02.730 --> 01:21:04.740
However, they have until November 8th
01:21:05.656 --> 01:21:06.960
to modify their contract period.
01:21:06.960 --> 01:21:09.860
And so we have some time
to give ERCOT some direction
01:21:09.860 --> 01:21:10.693
for this winter.
01:21:12.428 --> 01:21:14.970
And what I mean by direction is that
01:21:16.090 --> 01:21:17.490
I would like to direct ERCOT
01:21:17.490 --> 01:21:20.320
to use more of that annual budget
01:21:21.210 --> 01:21:25.250
for that winter contract period.
01:21:25.250 --> 01:21:27.637
And we can work with them on coming up
01:21:27.637 --> 01:21:28.779
with an appropriate amount,
01:21:28.779 --> 01:21:31.177
because I wanna make
sure that it's balanced
01:21:31.177 --> 01:21:33.630
so that we're gonna increase
that amount that's appropriate
01:21:33.630 --> 01:21:35.913
for the winter contract
period, potentially,
01:21:35.913 --> 01:21:38.013
but I don't wanna set
ourselves very short
01:21:38.980 --> 01:21:40.520
for the summer
01:21:40.520 --> 01:21:42.640
and the rest of the contract
periods throughout the year.
01:21:42.640 --> 01:21:45.360
So we can work with ERCOT
in coming up with an amount,
01:21:45.360 --> 01:21:48.270
to direct them to add more
money from their annual budget
01:21:49.510 --> 01:21:51.083
to that winter contract period.
01:21:52.389 --> 01:21:55.504
And also, based on
my review of the rule,
01:21:55.504 --> 01:21:59.620
the rule says that the
ERS product is intended
01:21:59.620 --> 01:22:02.378
to be used in an EEA event.
01:22:02.378 --> 01:22:05.710
I think the language is
that is, doesn't say, "Must."
01:22:05.710 --> 01:22:07.580
It doesn't say, "Shall."
01:22:07.580 --> 01:22:10.030
From my perspective, I
think we can direct ERCOT
01:22:10.030 --> 01:22:14.767
to go ahead and deploy
ERS before we enter EA1.
01:22:16.660 --> 01:22:18.660
But if from a legal standpoint,
01:22:18.660 --> 01:22:19.870
there are still some concerns,
01:22:19.870 --> 01:22:23.390
I think staff has some
procedural options
01:22:23.390 --> 01:22:25.100
that we can exercise
01:22:25.100 --> 01:22:28.080
to waive that rule
requirement for this winter,
01:22:28.080 --> 01:22:30.060
so we can add more load resources
01:22:30.060 --> 01:22:32.070
to reduce demand on the system
01:22:32.070 --> 01:22:34.690
in this upcoming winter
season to maintain reliability.
01:22:34.690 --> 01:22:36.320
Let's get a
question out there on the
01:22:36.320 --> 01:22:38.110
illegal interpretation.
01:22:38.110 --> 01:22:39.570
Yeah,
01:22:39.570 --> 01:22:41.790
a clarifying question,
you're talking about
01:22:43.153 --> 01:22:45.940
a change to the existing contracts or
01:22:46.830 --> 01:22:49.300
directing ERCOT to
adjust the contract terms
01:22:49.300 --> 01:22:52.400
of the contracts that will be applicable
01:22:52.400 --> 01:22:53.327
for the winter season?
01:22:53.327 --> 01:22:56.520
Adjust the contracts, take
out EA event from the contract.
01:22:56.520 --> 01:22:59.070
Okay, so we're not
changing existing contracts.
01:22:59.070 --> 01:23:00.660
We would be considering
01:23:00.660 --> 01:23:03.810
what mechanisms, procedural
mechanisms we can use
01:23:03.810 --> 01:23:07.030
to direct ERCOT to change
the upcoming contracts.
01:23:07.030 --> 01:23:08.730
We're not messing
with existing contracts.
01:23:08.730 --> 01:23:10.757
So my understanding is that
01:23:12.810 --> 01:23:15.363
we can direct 'em to add
more money right now,
01:23:16.208 --> 01:23:18.339
because the RFP, we've
got the number of rate,
01:23:18.339 --> 01:23:19.357
they can change the RFP.
01:23:20.283 --> 01:23:23.400
That ERCOT can adjust
the existing contracts
01:23:23.400 --> 01:23:25.250
and Kenan, please,
01:23:25.250 --> 01:23:28.170
if you wanna get up here
and please give us your input,
01:23:28.170 --> 01:23:31.656
that they could just go in
there and adjust the contract,
01:23:31.656 --> 01:23:32.717
and take out the EA bit.
01:23:38.486 --> 01:23:40.583
Yeah, so everything
I'm about to say
01:23:41.825 --> 01:23:44.408
cannot go on with ERCOT public.
01:23:45.294 --> 01:23:46.270
Everything I'm about to say is
01:23:46.270 --> 01:23:49.961
applicable to the future contracts.
01:23:49.961 --> 01:23:53.490
So, we have issued the RFP for
01:23:53.490 --> 01:23:56.343
December, January, February, March,
01:23:57.300 --> 01:23:59.770
but we can update the RFP.
01:23:59.770 --> 01:24:03.100
We need to do that before November 8th.
01:24:03.100 --> 01:24:03.933
Okay.
01:24:03.933 --> 01:24:05.570
We believe,
01:24:05.570 --> 01:24:07.490
I think there's some additional legal
01:24:08.800 --> 01:24:10.203
hurdles to jump through,
01:24:11.508 --> 01:24:14.350
but we believe we have
that authority already to
01:24:15.975 --> 01:24:19.133
adjust the dollar
amounts in that contract.
01:24:22.420 --> 01:24:25.220
I will just caveat that with,
01:24:27.100 --> 01:24:29.810
we very often exhaust all the bids.
01:24:29.810 --> 01:24:33.120
So initially we might not get any more,
01:24:33.120 --> 01:24:34.880
but it does send a signal
01:24:36.250 --> 01:24:38.623
for the program to grow going forward.
01:24:39.469 --> 01:24:41.780
But I just wanna be
cautious on that front,
01:24:41.780 --> 01:24:44.360
that we may not get more megawatts
01:24:45.720 --> 01:24:48.753
just because we increased
the budget initially.
01:24:51.600 --> 01:24:54.360
That does mean that we
are taking dollars away
01:24:54.360 --> 01:24:56.640
from future procurements.
01:24:56.640 --> 01:24:58.690
Yeah, that's a
concern we don't wanna ...
01:24:58.690 --> 01:25:00.190
We need to buttress for winter,
01:25:00.190 --> 01:25:03.528
but we don't wanna leave
ourselves high and dry
01:25:03.528 --> 01:25:04.361
for the spring and summer.
01:25:04.361 --> 01:25:05.620
Which is why I believe
01:25:05.620 --> 01:25:07.030
you should open up the ERS rule
01:25:07.030 --> 01:25:09.748
as part of our list on the blueprint
01:25:09.748 --> 01:25:11.705
and evaluate that program.
01:25:11.705 --> 01:25:15.840
And while we're in there, we
can adjust for what we do here.
01:25:15.840 --> 01:25:18.780
What is procedurally,
01:25:18.780 --> 01:25:21.430
what would be required to increase that
01:25:21.430 --> 01:25:23.113
annual amount in the budget?
01:25:24.150 --> 01:25:28.160
Procedurally, the
total annual budget
01:25:28.160 --> 01:25:30.223
is set by substantive rule,
01:25:31.492 --> 01:25:35.240
so there would need to be a
change in the substantive rule,
01:25:35.240 --> 01:25:38.420
either eliminating the cap
01:25:38.420 --> 01:25:40.800
or putting a new cap in place
01:25:42.186 --> 01:25:44.140
or defining other parameters
that the Commission-
01:25:44.140 --> 01:25:46.330
Right, but we can
open that rule up
01:25:46.330 --> 01:25:49.027
and get it closed
before, not November 8th,
01:25:49.027 --> 01:25:50.873
but the next procurement period.
01:25:52.100 --> 01:25:53.350
Or at least by the summer.
01:25:53.350 --> 01:25:54.774
By the summer, yeah.
01:25:54.774 --> 01:25:55.780
So, the RP will go up
01:25:55.780 --> 01:26:00.620
late April, early May for
the summer procurement.
01:26:00.620 --> 01:26:01.620
That sounds right.
01:26:03.580 --> 01:26:06.883
The new four procurements
go four, two, four.
01:26:09.321 --> 01:26:11.210
So, the summer one would be
01:26:11.210 --> 01:26:16.210
in the April timeframe is
when the RFP would go.
01:26:16.660 --> 01:26:20.420
RFP would go out
in March, March 1.
01:26:20.420 --> 01:26:21.732
For the summer?
01:26:21.732 --> 01:26:23.646
The RFP would.
01:26:23.646 --> 01:26:24.777
Because it closes in May.
01:26:24.777 --> 01:26:26.522
Well, when do you have,
01:26:26.522 --> 01:26:27.830
up until what deadline can be?
01:26:27.830 --> 01:26:29.653
I guess if it goes out in March,
01:26:29.653 --> 01:26:31.570
do you still have, like
you noted for the winter,
01:26:31.570 --> 01:26:33.887
there's a grace period
where you could still
01:26:33.887 --> 01:26:34.747
make a change to the RFP?
01:26:36.260 --> 01:26:37.210
Could we do that?
01:26:39.297 --> 01:26:40.497
Yes, just like the beginning
where they do do now,
01:26:40.497 --> 01:26:43.113
we consider the RFP after March 1, yes.
01:26:44.199 --> 01:26:46.080
Cool, we'll aim for
March 1st, and we've got it
01:26:46.080 --> 01:26:47.980
if we need a grace period ...
01:26:47.980 --> 01:26:49.723
Let me just for the record,
01:26:50.940 --> 01:26:55.510
he said that while we would
have to issue the RFP March 1,
01:26:55.510 --> 01:26:58.980
we could update the RFP
01:26:58.980 --> 01:27:02.953
to reflect a higher budget later.
01:27:05.190 --> 01:27:07.913
All right, so
what do we need?
01:27:10.360 --> 01:27:11.853
What's the ask specifically,
01:27:13.127 --> 01:27:14.633
and then let's get comfort
level around the table.
01:27:15.684 --> 01:27:16.913
I think the ask is,
01:27:16.913 --> 01:27:18.617
have ERCOT modify their RFP,
01:27:18.617 --> 01:27:20.730
to add some extra
dollars to see if we can
01:27:20.730 --> 01:27:22.680
lure in some more of the load resources
01:27:24.209 --> 01:27:27.510
for this upcoming
winter, with the goal being
01:27:29.310 --> 01:27:31.720
reducing demand on the system,
01:27:31.720 --> 01:27:34.020
without any reserves it's
reducing demand on the system
01:27:34.020 --> 01:27:36.870
during the winter season
to help us maintain reliability.
01:27:39.230 --> 01:27:41.080
The second important piece to that is
01:27:42.750 --> 01:27:46.860
having ERCOT work with
their existing contracts.
01:27:46.860 --> 01:27:48.110
I know there's some legal
01:27:49.234 --> 01:27:51.433
review that needs to be done,
01:27:52.307 --> 01:27:53.920
but based on my
interpretation of the rule,
01:27:53.920 --> 01:27:57.210
there's not a strict
requirement to use it in EA1,
01:27:57.210 --> 01:27:59.557
but even if the ultimate
conclusion is that
01:28:01.763 --> 01:28:03.384
ERCOT were not comfortable ...
01:28:03.384 --> 01:28:04.924
So you're talking
about the contracts
01:28:04.924 --> 01:28:07.003
that have already been
executed or in place now?
01:28:09.210 --> 01:28:11.410
... Probos is asking
us to change the RFP,
01:28:12.270 --> 01:28:13.820
to reflect two things:
01:28:13.820 --> 01:28:17.080
one increased budget, and two,
01:28:17.080 --> 01:28:20.673
earlier deployment prior to ...
01:28:21.800 --> 01:28:23.980
EEA Commissions.
EEA, right.
01:28:23.980 --> 01:28:25.690
Yes.
And that's the legal hurdle
01:28:25.690 --> 01:28:27.950
that we've gotta pass,
because of that rule.
01:28:27.950 --> 01:28:30.850
Well there's a
legal hurdle in that
01:28:30.850 --> 01:28:33.423
if you believe the
language restricts you to EA.
01:28:34.341 --> 01:28:35.520
I'm not sure it's a tight restriction,
01:28:35.520 --> 01:28:37.470
but even if you believe it is,
01:28:37.470 --> 01:28:39.210
we have procedural mechanisms
01:28:40.230 --> 01:28:42.970
to waive that
requirement for the winter.
01:28:42.970 --> 01:28:44.490
Connie, can you speak to D?
01:28:44.490 --> 01:28:49.490
Yes, we do have
a number of mechanisms
01:28:50.040 --> 01:28:52.750
that we can bring before the Commission
01:28:52.750 --> 01:28:56.740
regarding whether there was a strict
01:28:56.740 --> 01:28:58.250
prohibition on releasing those
01:28:59.773 --> 01:29:01.643
ERS megawatts before EA.
01:29:02.644 --> 01:29:05.240
But even if your
review says that
01:29:06.240 --> 01:29:08.140
the ruling, which is a
little bit more restricted
01:29:08.140 --> 01:29:11.120
then I believe there
are procedural avenues
01:29:11.120 --> 01:29:15.380
to allow us to wave that rule
requirement for the winter.
01:29:15.380 --> 01:29:16.520
That's correct, the Commission
01:29:16.520 --> 01:29:18.773
can waive its own rules with the costs.
01:29:20.330 --> 01:29:23.120
Okay, so we've got
a request to ERCOT
01:29:23.120 --> 01:29:26.210
for budget, options to increase budget,
01:29:26.210 --> 01:29:28.350
including, please include
in that current budget
01:29:28.350 --> 01:29:31.610
for the winter and what
01:29:33.290 --> 01:29:35.260
the remaining funds under
01:29:36.757 --> 01:29:39.007
the existing budget, so
how high could we go?
01:29:40.641 --> 01:29:42.050
And then the second request is,
01:29:42.050 --> 01:29:46.820
what contract changes
to future contract language
01:29:46.820 --> 01:29:48.280
would be needed to move
01:29:49.282 --> 01:29:53.800
deployment of ERS out
of emergency conditions
01:29:55.725 --> 01:29:58.400
and a recommendation on where on the PRC
01:29:59.497 --> 01:30:00.997
spectrum you would deploy ERS.
01:30:01.860 --> 01:30:04.070
Yeah, and I think that's a
policy decision for us, right?
01:30:04.070 --> 01:30:05.383
So we know that,
01:30:07.580 --> 01:30:09.832
we're in a watch advisory
01:30:09.832 --> 01:30:11.232
at 25 kW, 2,500, below 3000.
01:30:13.240 --> 01:30:17.033
So it's a policy call there
in where we wanna have,
01:30:18.591 --> 01:30:20.270
at what point we would
wanna have ERS deployment.
01:30:20.270 --> 01:30:23.030
One thing to consider
is, irrespective of that,
01:30:23.030 --> 01:30:25.680
a lot of ERS does early deploy
01:30:25.680 --> 01:30:28.563
and they will take actions
to come off the system early.
01:30:29.600 --> 01:30:33.150
But if we provide ERCOT
with some flexibility,
01:30:33.150 --> 01:30:36.560
we can get the other rest of the loads
01:30:36.560 --> 01:30:40.330
to come out and help us
reduce demand on the system
01:30:40.330 --> 01:30:42.180
before we enter emergency conditions.
01:30:44.460 --> 01:30:45.750
It's a policy choice,
01:30:45.750 --> 01:30:47.701
but we're gonna have to
make it before November 8th.
01:30:47.701 --> 01:30:48.534
Yes.
01:30:49.374 --> 01:30:50.857
You know where I am,
01:30:50.857 --> 01:30:52.993
I'm happy to do 3000 for everything-
01:30:55.100 --> 01:30:56.607
3,000 MCL,
01:30:56.607 --> 01:31:00.490
ERs deploy post 3000
or sub 3000 reserves.
01:31:00.490 --> 01:31:01.880
Yeah, I mean there's a time gap
01:31:01.880 --> 01:31:03.730
between the ORDC and the ERS,
01:31:03.730 --> 01:31:05.080
but hopefully it'll all line up
01:31:05.080 --> 01:31:08.720
to be in place by
January, philosophically.
01:31:08.720 --> 01:31:11.020
It makes a lot of sense to me that
01:31:11.020 --> 01:31:12.920
wherever your MCL is,
01:31:12.920 --> 01:31:16.090
just at that point,
everything goes, right.
01:31:16.090 --> 01:31:18.670
You need to be, if your MCL
01:31:18.670 --> 01:31:20.263
is where you're hitting your high cap,
01:31:21.750 --> 01:31:22.780
that's the end of the road.
01:31:22.780 --> 01:31:24.980
You need to fire every
bullet you've got at that point,
01:31:24.980 --> 01:31:26.600
including ERS.
01:31:26.600 --> 01:31:29.750
And after that, it's only after that
01:31:29.750 --> 01:31:32.220
is when you start asking people to
01:31:32.220 --> 01:31:34.560
turn off their own doing businesses.
01:31:34.560 --> 01:31:37.153
Yeah, I agree with the
high level policy approach.
01:31:38.590 --> 01:31:39.783
And does that mean in ERS,
01:31:41.970 --> 01:31:46.200
all resources can play in
that, and in all durations?
01:31:46.200 --> 01:31:49.600
I'd say for right now,
let's do the winter,
01:31:49.600 --> 01:31:52.350
let's stick with whatever
the existing framework is,
01:31:52.350 --> 01:31:55.810
for the rule, just for
the sake of expediency,
01:31:55.810 --> 01:31:58.273
but for the substantive rule change,
01:31:59.160 --> 01:32:01.580
let's get some feedback on that.
01:32:02.543 --> 01:32:03.376
Yeah.
Does that work?
01:32:03.376 --> 01:32:04.209
Yeah, okay that's fine.
01:32:04.209 --> 01:32:06.593
Yeah, I think that's
a great approach.
01:32:07.773 --> 01:32:09.140
I think as we open up the rulemaking,
01:32:09.140 --> 01:32:10.773
we'll have to look at important issues
01:32:10.773 --> 01:32:14.513
like the cost cap, program
participants, deployment,
01:32:15.570 --> 01:32:18.500
and we can explore all
those long-term issues in that.
01:32:18.500 --> 01:32:19.850
Yeah, and I will,
01:32:19.850 --> 01:32:23.020
I'll go ahead and channel
our industrial partners
01:32:23.020 --> 01:32:26.410
in saying that the more
we expect to use ERS
01:32:27.770 --> 01:32:31.700
and the sooner we move
it out that PRC spectrum,
01:32:31.700 --> 01:32:34.150
the more expensive these
megawatts are gonna get.
01:32:36.730 --> 01:32:38.030
I'm comfortable with that,
01:32:40.205 --> 01:32:41.038
but if we're paying for it,
01:32:41.038 --> 01:32:44.463
we should expect to be able to use it.
01:32:46.810 --> 01:32:47.643
All right.
01:32:49.312 --> 01:32:51.062
Anything else on ERS?
01:32:53.134 --> 01:32:53.983
Are you sure she didn't
need anything to throw?
01:32:53.983 --> 01:32:55.646
I'd say that
01:32:55.646 --> 01:32:56.860
you're doing a heck of job as Chairman.
01:32:56.860 --> 01:32:58.465
So where are we at on here?
01:32:58.465 --> 01:33:00.470
All right.
So I think we've got ...
01:33:00.470 --> 01:33:02.090
RFP's gonna get modified.
01:33:02.090 --> 01:33:03.980
Well, let's ask
Kennan what he thinks.
01:33:03.980 --> 01:33:07.171
Yeah, what do you think?
(people laughing)
01:33:07.171 --> 01:33:10.320
So RP is gonna get modified.
01:33:10.320 --> 01:33:12.680
And there's two paths
that we're looking down.
01:33:12.680 --> 01:33:15.720
One is completely within our control,
01:33:15.720 --> 01:33:17.433
and that is the budget.
01:33:18.370 --> 01:33:22.383
However, there is still
this outstanding question
01:33:22.383 --> 01:33:26.480
of whether or not it's legal for us to
01:33:27.670 --> 01:33:29.620
deploy earlier.
01:33:29.620 --> 01:33:32.940
So we're gonna, I believe
get further instruction,
01:33:32.940 --> 01:33:34.527
either in the form that it is ...
01:33:34.527 --> 01:33:35.860
PUC staff will provide
01:33:35.860 --> 01:33:36.693
procedural
01:33:38.956 --> 01:33:40.463
options to accommodate that change.
01:33:41.650 --> 01:33:44.390
Because even if
your legal department
01:33:44.390 --> 01:33:46.430
is uncomfortable with the rule language,
01:33:46.430 --> 01:33:48.887
there are avenues to
waive our own requirement.
01:33:48.887 --> 01:33:50.737
And we're meeting next week.
01:33:55.520 --> 01:33:58.630
Yes, well we'll review it
01:33:59.468 --> 01:34:02.070
and discuss it with
ERCOT's legal counsel
01:34:02.070 --> 01:34:05.090
and bring to you a response next week.
01:34:06.048 --> 01:34:08.880
All right, can you
01:34:08.880 --> 01:34:09.713
bring
01:34:10.910 --> 01:34:12.023
options?
01:34:14.170 --> 01:34:16.190
Next meeting will be the 28th.
01:34:18.400 --> 01:34:20.220
Can you all bring options
01:34:20.220 --> 01:34:22.714
to each individual office before that?
01:34:22.714 --> 01:34:23.547
Yeah.
01:34:23.547 --> 01:34:24.442
The day or two before that,
01:34:24.442 --> 01:34:26.313
so we can discuss at our next meeting.
01:34:26.313 --> 01:34:27.146
Absolutely.
01:34:30.890 --> 01:34:32.940
All right, where
are we on the ERS?
01:34:32.940 --> 01:34:35.623
So Kenan's got those two questions?
01:34:36.650 --> 01:34:39.170
Connie's got the procedural options
01:34:41.062 --> 01:34:42.580
that will be presented
01:34:42.580 --> 01:34:44.010
to each of our offices individually,
01:34:44.010 --> 01:34:44.870
so we can discuss
01:34:48.301 --> 01:34:49.201
next open meeting.
01:34:54.590 --> 01:34:58.130
So, let's call that the immediate action
01:34:58.130 --> 01:35:00.270
for this winter on ERS.
Yes, sir.
01:35:00.270 --> 01:35:01.400
For the broader
01:35:02.620 --> 01:35:03.453
ERS reform,
01:35:05.727 --> 01:35:06.560
I feel confident at this point,
01:35:06.560 --> 01:35:08.560
we were on the list of
items to be considered.
01:35:09.570 --> 01:35:12.690
What questions for stakeholders
01:35:12.690 --> 01:35:14.210
that will be due November 1st,
01:35:14.210 --> 01:35:17.150
not, if you can answer right, yeah.
01:35:17.150 --> 01:35:20.343
Thank you.
(people laughing)
01:35:20.343 --> 01:35:21.974
But feel free to chime in,
01:35:21.974 --> 01:35:22.816
to make your comment.
01:35:22.816 --> 01:35:24.570
Mr. Chairman, you've got
a good question on there.
01:35:24.570 --> 01:35:26.620
One thing, I wonder
if we could consider,
01:35:28.200 --> 01:35:32.150
should the deployment of MCRS
01:35:32.150 --> 01:35:35.040
in the context of a
question, be the subject
01:35:37.816 --> 01:35:39.016
of a question related to
01:35:40.170 --> 01:35:41.840
MCL, okay.
01:35:41.840 --> 01:35:46.780
Should ERS always
be deployed after MCL?
01:35:46.780 --> 01:35:48.690
I think the response is gonna be yes,
01:35:48.690 --> 01:35:50.710
but where I'm going with that is,
01:35:50.710 --> 01:35:53.920
should we consider having it adjusted,
01:35:53.920 --> 01:35:55.020
the deployment of ERS,
01:35:58.760 --> 01:36:02.030
based as a percentage
of seasonal peak net load
01:36:02.030 --> 01:36:03.763
forecast in the SARA?
01:36:04.720 --> 01:36:06.350
So I'm hearing
two questions.
01:36:06.350 --> 01:36:07.649
Yes, sir.
01:36:07.649 --> 01:36:08.482
When should it be deployed?
01:36:08.482 --> 01:36:10.990
When should ERS be deployed and
01:36:10.990 --> 01:36:14.770
what quantity of ERAs should be procured
01:36:14.770 --> 01:36:16.030
seasonally or ...
01:36:16.030 --> 01:36:17.400
That's fine, keep it broad
01:36:17.400 --> 01:36:18.690
in that way they come in.
01:36:18.690 --> 01:36:20.450
You want more specific?
No, sir.
01:36:20.450 --> 01:36:22.970
But overall, what I'm wondering is,
01:36:22.970 --> 01:36:26.116
should that be a moving
target and not a fixed target?
01:36:26.116 --> 01:36:26.949
You know what I'm saying?
01:36:26.949 --> 01:36:27.893
Should it float?
01:36:30.149 --> 01:36:33.020
What methodology
should be used
01:36:33.020 --> 01:36:35.260
to set quantity to be procured?
01:36:35.260 --> 01:36:36.650
To set quantity and
01:36:38.130 --> 01:36:40.523
period use.
01:36:41.570 --> 01:36:43.000
And when it's deployed.
Yes, sir.
01:36:43.000 --> 01:36:44.600
Several questions.
Yes.
01:36:44.600 --> 01:36:46.860
All right, got that.
01:36:46.860 --> 01:36:48.200
All right,
01:36:48.200 --> 01:36:50.530
do you have a question on this duration?
01:36:50.530 --> 01:36:52.160
Yeah, I was just ...
01:36:52.160 --> 01:36:56.210
I think that the question was,
01:36:56.210 --> 01:36:57.830
how do we incent longer duration,
01:36:57.830 --> 01:37:01.186
what is the duration optimum here?
01:37:01.186 --> 01:37:03.880
I mean, I think Will
said it right, which is,
01:37:03.880 --> 01:37:06.870
having this spectrum
of the suite of tools,
01:37:06.870 --> 01:37:10.680
having them fluid, as in the day,
01:37:10.680 --> 01:37:13.530
where we're trying to get as many
01:37:13.530 --> 01:37:16.420
tools in there early, so we avoid
01:37:16.420 --> 01:37:18.670
the biggest event at the end.
01:37:18.670 --> 01:37:20.100
This is the most important.
01:37:20.100 --> 01:37:21.340
Question about resources,
01:37:21.340 --> 01:37:24.230
what load resources qualify for ERS?
01:37:24.230 --> 01:37:26.440
Yeah, I think
that would be right
01:37:26.440 --> 01:37:29.060
and if there's a duration requirement,
01:37:29.060 --> 01:37:30.013
what's the optimum?
01:37:30.960 --> 01:37:32.340
The duration of
load, essentially
01:37:32.340 --> 01:37:34.249
in load sharing,
self-imposed load sharing.
01:37:34.249 --> 01:37:36.131
Correct, would
definitely have to be.
01:37:36.131 --> 01:37:37.381
Okay, got it.
01:37:39.240 --> 01:37:41.830
So my biggest
questions, I think,
01:37:41.830 --> 01:37:44.330
and they may be baked
into some of these is first,
01:37:45.700 --> 01:37:48.380
I think there's two
ways of looking at it:
01:37:48.380 --> 01:37:53.070
should we modify the annual cost cap or
01:37:53.070 --> 01:37:55.310
should we procure ERS
01:37:56.520 --> 01:38:01.430
on a seasonal basis,
based on net peak load
01:38:01.430 --> 01:38:03.440
or some other form that's more targeted
01:38:03.440 --> 01:38:04.790
like Mr. McAdams was saying,
01:38:04.790 --> 01:38:06.870
'cause right now
we're at this cap, right.
01:38:06.870 --> 01:38:09.880
Should we just continue
to buy X amount of
01:38:10.990 --> 01:38:14.430
load resources or should we
modify how we procure them
01:38:14.430 --> 01:38:18.150
into a more targeted,
01:38:18.150 --> 01:38:21.933
seasonal approach,
based on net peak load?
01:38:25.213 --> 01:38:26.300
'Cause otherwise,
we're just throwing out
01:38:26.300 --> 01:38:28.770
a megawatt number
without it being tied to-
01:38:28.770 --> 01:38:29.650
And you can
ask that now, or ...
01:38:29.650 --> 01:38:31.757
I think that's included.
01:38:31.757 --> 01:38:32.590
Well, I'm definitely
gonna include that,
01:38:32.590 --> 01:38:34.910
I have general orders ...
01:38:34.910 --> 01:38:37.103
Yeah, but I
think that's included
01:38:37.103 --> 01:38:37.936
in the question we're asking, isn't it?
01:38:37.936 --> 01:38:39.014
Right, it is, I just
wanted to clarify it more.
01:38:39.014 --> 01:38:39.847
The question
01:38:39.847 --> 01:38:40.876
should have been wrote down, right?
01:38:40.876 --> 01:38:42.061
Yeah, I just wanted to clarify
01:38:42.061 --> 01:38:44.104
the way I was thinking about it.
01:38:44.104 --> 01:38:47.230
I think deployment,
program participation
01:38:47.230 --> 01:38:49.110
are key in that.
01:38:49.110 --> 01:38:51.910
And I think Commissioner
McAdams' question about
01:38:51.910 --> 01:38:53.180
when will it be deployed.
01:38:53.180 --> 01:38:55.680
You're deploying it
earlier outside of EA1,
01:38:55.680 --> 01:38:58.690
but you wanna do it in
concert with the ORDC
01:38:59.670 --> 01:39:01.370
so that there's some kind of
01:39:02.480 --> 01:39:03.880
reliability sort of synergy,
01:39:07.470 --> 01:39:12.470
just reliability spectrum, right?
01:39:13.549 --> 01:39:15.543
So yes, it should all sync up.
01:39:17.990 --> 01:39:19.460
Is that?
01:39:19.460 --> 01:39:21.150
What I wanted
to clarify is what
01:39:21.150 --> 01:39:24.400
Commissioner McAdams
alluded to, and that is
01:39:25.260 --> 01:39:27.050
a lot of these questions that
01:39:27.050 --> 01:39:31.360
we have identified
for ERS seem to be
01:39:32.680 --> 01:39:36.140
fundamental design questions
for ERS going forward.
01:39:36.140 --> 01:39:38.670
And I wanted to clarify whether you want
01:39:39.980 --> 01:39:44.620
those to appear on the
upcoming round of comments,
01:39:44.620 --> 01:39:49.430
or if you want to defer them
to an ERS board meeting?
01:39:49.430 --> 01:39:51.350
Let's get those
questions out there now.
01:39:51.350 --> 01:39:54.908
Okay, and then we
can just roll that again.
01:39:54.908 --> 01:39:57.307
And it'll still be valid ...
An ongoing process.
01:39:57.307 --> 01:39:59.157
Does that work?
It works for me.
01:40:00.310 --> 01:40:02.830
Okay.
All right.
01:40:02.830 --> 01:40:04.510
Looking at the look
on Connie's face,
01:40:04.510 --> 01:40:05.420
staff's not gonna be required
01:40:05.420 --> 01:40:06.820
to answer all these questions.
01:40:06.820 --> 01:40:08.546
Absolutely not.
They don't ride on anything.
01:40:08.546 --> 01:40:10.300
All right, okay.
We will
01:40:10.300 --> 01:40:12.810
provide more specifics
when we issue the question.
01:40:12.810 --> 01:40:13.643
Okay.
01:40:13.643 --> 01:40:16.363
The concepts and
question list next week,
01:40:17.860 --> 01:40:19.530
but in the spirit of
01:40:19.530 --> 01:40:21.260
dramatically narrowing the scope
01:40:21.260 --> 01:40:23.263
on all of this for all of us,
01:40:24.271 --> 01:40:27.080
I think we'll primarily
be asking for
01:40:28.390 --> 01:40:32.720
very abbreviated stakeholder comments,
01:40:32.720 --> 01:40:35.720
preferably in the form of an
executive summary, a one pager.
01:40:37.900 --> 01:40:40.570
And of course we can
follow up on good ideas
01:40:42.530 --> 01:40:43.990
and we'll have
01:40:43.990 --> 01:40:45.990
more conversations like this, and we can
01:40:47.820 --> 01:40:49.770
invite specific stakeholders
01:40:49.770 --> 01:40:52.570
who have compelling ideas
to come to this Commission.
01:40:52.570 --> 01:40:55.473
Okay.
All right, ERS.
01:40:56.861 --> 01:40:58.268
Are we good?
Yes.
01:40:58.268 --> 01:40:59.733
Good, thank you.
01:41:02.370 --> 01:41:03.510
Connie, hang on.
01:41:03.510 --> 01:41:04.343
Sorry.
01:41:05.790 --> 01:41:09.020
I suspect we're gonna
need you in a minute.
01:41:09.020 --> 01:41:12.820
All right, we are moving up the chart.
01:41:12.820 --> 01:41:14.610
How about we dive in
to everybody's favorite,
01:41:14.610 --> 01:41:15.603
demand response?
01:41:17.990 --> 01:41:19.560
So, I have a question.
01:41:19.560 --> 01:41:21.190
Earlier, when you were talking
about upgrading the system,
01:41:21.190 --> 01:41:23.680
are you talking about Smart Meter Texas?
01:41:23.680 --> 01:41:25.110
That's exactly
what I've got here.
01:41:25.110 --> 01:41:26.359
Okay.
01:41:26.359 --> 01:41:27.660
So I wanna be
clear that this is ...
01:41:27.660 --> 01:41:28.920
Where are we on now?
01:41:28.920 --> 01:41:30.520
Just demand response.
Okay.
01:41:30.520 --> 01:41:31.370
Does that work?
01:41:32.776 --> 01:41:35.740
I wanna be clear, this is an upgrade to
01:41:35.740 --> 01:41:38.560
centralized hardware and software.
01:41:38.560 --> 01:41:39.393
As you pointed out,
01:41:39.393 --> 01:41:42.470
we spent a ton of money
putting distributed hardware
01:41:42.470 --> 01:41:45.833
while we're out in the
field to capture this data.
01:41:46.960 --> 01:41:50.530
From my understanding,
the bottleneck is
01:41:50.530 --> 01:41:52.030
at the centralized
01:41:52.880 --> 01:41:55.230
aggregation dissemination point.
01:41:55.230 --> 01:41:58.330
What we've discussed this, and if you'll
01:41:58.330 --> 01:42:01.160
explain the, I guess,
01:42:01.160 --> 01:42:03.410
I've got a good sense
of what we're solving for:
01:42:03.410 --> 01:42:06.303
better telemetry, more
granular load shed,
01:42:09.051 --> 01:42:11.363
and the first part more frequent.
01:42:13.807 --> 01:42:15.950
And it's just more frequent data about
01:42:15.950 --> 01:42:20.860
our distributed grid,
is I think the, like I said,
01:42:20.860 --> 01:42:22.290
the key that unlocks
01:42:22.290 --> 01:42:24.540
all sorts of capabilities
for demand response
01:42:28.610 --> 01:42:31.160
and enables the marketplace
01:42:31.160 --> 01:42:34.530
to capture that demand
response, to encourage it,
01:42:34.530 --> 01:42:35.860
to innovate around it
01:42:35.860 --> 01:42:37.490
rather than us trying to regulate it,
01:42:37.490 --> 01:42:40.250
which I think is a much
more productive exercise.
01:42:40.250 --> 01:42:42.470
So, I know what we're solving for,
01:42:42.470 --> 01:42:44.180
at least what I'm solving for.
01:42:44.180 --> 01:42:45.700
I'll defer to Connie on
01:42:45.700 --> 01:42:48.730
what kind of upgrades are required
01:42:48.730 --> 01:42:51.520
to achieve that improvement in telemetry
01:42:51.520 --> 01:42:52.870
and frequency of telemetry.
01:42:54.390 --> 01:42:56.960
So, Smart Meter Texas
01:42:56.960 --> 01:43:01.900
is a joint endeavor
by and for TDUs.
01:43:01.900 --> 01:43:07.660
And they have employed
a single vendor to run that
01:43:08.920 --> 01:43:12.310
centralized hub for Smart Meter Texas.
01:43:12.310 --> 01:43:13.143
So,
01:43:16.040 --> 01:43:19.260
the bottlenecks for the data
01:43:19.260 --> 01:43:23.663
could in fact reside there
and some probably do.
01:43:24.920 --> 01:43:26.200
There's also
01:43:27.700 --> 01:43:31.200
located at each individual TDSP,
01:43:31.200 --> 01:43:33.490
their own meter management system
01:43:33.490 --> 01:43:35.630
that could also be the source
01:43:35.630 --> 01:43:39.513
of some of the limitations
we see in the telemetry.
01:43:40.940 --> 01:43:44.580
So I would imagine that
upgrades would be required
01:43:44.580 --> 01:43:45.923
in both spots.
01:43:47.920 --> 01:43:51.360
And we have TDU folks
here that could probably
01:43:51.360 --> 01:43:54.140
speak to a greater detail if you'd like.
01:43:54.140 --> 01:43:55.713
Okay.
Sure,
01:43:59.312 --> 01:44:00.145
Perhaps we could use you both,
01:44:00.145 --> 01:44:01.107
you are welcome to come up and do this,
01:44:01.107 --> 01:44:02.579
you don't have to.
01:44:02.579 --> 01:44:03.633
I'm good.
(Peter laughs)
01:44:03.633 --> 01:44:06.966
(they all talk at once)
01:44:10.517 --> 01:44:12.933
For the record, my
name is Liz Jones.
01:44:14.144 --> 01:44:15.513
I'm employed by Oncor.
01:44:18.613 --> 01:44:22.140
There are a lot of things
that could be done differently
01:44:22.140 --> 01:44:26.146
with the AMS system and
with the Smart Meter Texas.
01:44:26.146 --> 01:44:29.120
I would encourage you all,
01:44:29.120 --> 01:44:33.200
as you think about what
things you want to envision,
01:44:33.200 --> 01:44:37.030
that you make time and space for
01:44:37.030 --> 01:44:40.733
a cost benefit analysis
on those changes.
01:44:41.830 --> 01:44:45.120
There is a frequent misconception
01:44:45.120 --> 01:44:47.370
from my perspective on
01:44:47.370 --> 01:44:52.370
whether SMT and AMS is
necessary for demand response.
01:44:53.840 --> 01:44:55.710
When this was originally started
01:44:55.710 --> 01:45:00.710
in 2008, 2009, 2010, 2011 timeframe,
01:45:00.840 --> 01:45:03.990
I think that there was a firm belief
01:45:03.990 --> 01:45:06.900
that Zigbee, which is a
particular kind of protocol,
01:45:06.900 --> 01:45:08.890
would be the necessary gateway
01:45:08.890 --> 01:45:12.330
to enable demand response
in the mass markets.
01:45:12.330 --> 01:45:15.950
And that that would
have to work hand in hand
01:45:15.950 --> 01:45:18.070
with the meter data.
01:45:18.070 --> 01:45:21.760
It is Oncor's perspective,
01:45:21.760 --> 01:45:24.800
and it is evidence that
we presented in the last
01:45:24.800 --> 01:45:27.700
SMT case that
01:45:27.700 --> 01:45:31.150
the meter interaction is not necessary
01:45:31.150 --> 01:45:33.520
for demand response in mass markets.
01:45:33.520 --> 01:45:35.706
And that in fact, Zigbee has not been
01:45:35.706 --> 01:45:38.880
the golden ticket that
we all thought it would be
01:45:38.880 --> 01:45:41.372
10 years ago, but rather
01:45:41.372 --> 01:45:44.900
internet-based applications
01:45:44.900 --> 01:45:47.560
are much more effective and much faster.
01:45:47.560 --> 01:45:49.780
Now, the meter data
01:45:49.780 --> 01:45:53.940
is the trust and verify piece of that
01:45:53.940 --> 01:45:55.903
and so it can be available,
01:45:56.980 --> 01:46:00.480
but I don't think, and I have not seen
01:46:01.370 --> 01:46:05.375
my work on AMS and SMT;
01:46:05.375 --> 01:46:09.410
that has to be the exclusive
mechanism by which this occurs.
01:46:09.410 --> 01:46:13.710
And so, we are supportive
of doing what you want
01:46:15.420 --> 01:46:17.240
and we could make necessary upgrades
01:46:17.240 --> 01:46:19.030
to enable the kind of functionality
01:46:19.030 --> 01:46:21.670
that I think you all are envisioning.
01:46:21.670 --> 01:46:24.090
It is not clear to me that that is
01:46:24.090 --> 01:46:25.743
the most cost effective way
01:46:25.743 --> 01:46:27.213
of getting where you wanna be.
01:46:28.430 --> 01:46:29.530
Thank you very much.
01:46:32.190 --> 01:46:34.313
As I mentioned at
the top of the meeting,
01:46:34.313 --> 01:46:36.660
we heard this in our demand
response workshop, that
01:46:36.660 --> 01:46:40.100
there's a lot of demand
response happening now.
01:46:40.100 --> 01:46:42.520
Just because ERCOT can't see it,
01:46:42.520 --> 01:46:44.860
doesn't mean it's not there.
01:46:44.860 --> 01:46:47.410
Price responded part of
the internet applications,
01:46:47.410 --> 01:46:52.143
smart thermostats, et cetera, is ...
01:46:54.480 --> 01:46:56.803
We keep hearing this is,
01:46:57.670 --> 01:46:59.820
do we need to do anything.
01:46:59.820 --> 01:47:02.230
I'm afraid to ask, but if
it's already happening
01:47:02.230 --> 01:47:05.653
and the capabilities are there
through other mechanisms,
01:47:07.010 --> 01:47:09.550
the internet applications,
smart thermostats, et cetera,
01:47:09.550 --> 01:47:11.513
or REP developed software,
01:47:13.060 --> 01:47:15.103
are we overthinking this?
01:47:16.870 --> 01:47:19.510
So, I'm not the best
person to answer that, right?
01:47:19.510 --> 01:47:21.720
Because we do not, in fact,
01:47:21.720 --> 01:47:24.780
administer any demand response programs.
01:47:24.780 --> 01:47:26.730
Through energy
efficiency, we write checks,
01:47:26.730 --> 01:47:28.510
but that's not the same thing.
01:47:28.510 --> 01:47:31.830
I think it's perfectly reasonable to ask
01:47:31.830 --> 01:47:34.700
competitive service
providers and retailers
01:47:34.700 --> 01:47:36.770
and qualified scheduling entities,
01:47:36.770 --> 01:47:39.261
who are also a big piece of this puzzle,
01:47:39.261 --> 01:47:41.870
what they think.
01:47:41.870 --> 01:47:44.583
But, at this point ...
01:47:44.583 --> 01:47:45.416
We did that.
Okay.
01:47:45.416 --> 01:47:47.115
In July, or
whatever it was.
01:47:47.115 --> 01:47:48.790
Right, and you know you've
gotten the right answers.
01:47:48.790 --> 01:47:51.850
I'm gonna tell you that
as an initial gating item,
01:47:51.850 --> 01:47:56.550
I don't think it is the
AMI SMT technology
01:47:56.550 --> 01:47:58.130
that is impeding it.
01:47:58.130 --> 01:48:02.580
I think that there are
product development issues
01:48:02.580 --> 01:48:06.630
around demand response and
mass market demand response
01:48:06.630 --> 01:48:08.830
that haven't been fleshed out,
01:48:08.830 --> 01:48:10.716
and that's a different problem.
01:48:10.716 --> 01:48:11.549
Okay.
01:48:11.549 --> 01:48:12.510
On this, Mr. Chairman,
01:48:12.510 --> 01:48:16.500
and it sounds like moving forward,
01:48:16.500 --> 01:48:19.020
this is definitely a high value
target, demand response,
01:48:19.020 --> 01:48:22.350
as a component of redesign,
you've asked good questions.
01:48:22.350 --> 01:48:23.790
I think so, but I keep hearing
01:48:23.790 --> 01:48:24.880
that it's already happening.
01:48:24.880 --> 01:48:27.870
I know, but why
not just keep it on list?
01:48:27.870 --> 01:48:29.190
Continue moving forward with the data.
01:48:29.190 --> 01:48:30.023
Sure.
01:48:30.023 --> 01:48:31.470
You've got your questions.
01:48:31.470 --> 01:48:33.260
Yeah, I think
we've gotta refine,
01:48:33.260 --> 01:48:35.504
but we can refine our questions saying,
01:48:35.504 --> 01:48:39.040
what technical specifications
01:48:39.940 --> 01:48:42.410
are needed or improvements to
01:48:44.090 --> 01:48:45.710
what technical specifications
01:48:45.710 --> 01:48:48.140
should we be solving for
01:48:48.140 --> 01:48:50.893
to enhance demand response?
01:48:54.950 --> 01:48:57.223
What hardware,
01:48:58.110 --> 01:49:01.250
centralized hardware
and software upgrades,
01:49:01.250 --> 01:49:03.369
because I don't wanna play the game of,
01:49:03.369 --> 01:49:04.202
we need ...
Correct.
01:49:04.202 --> 01:49:06.780
30 million new meters in
Texas, we already did that.
01:49:06.780 --> 01:49:08.780
What centralized hardware and software
01:49:09.630 --> 01:49:13.953
changes are needed to
enhance demand response?
01:49:15.760 --> 01:49:18.230
And depending on
the answer you get
01:49:18.230 --> 01:49:19.523
to those two questions,
01:49:20.490 --> 01:49:23.960
the TDUs are in a better
position to come forward
01:49:23.960 --> 01:49:25.380
and talk to you about
01:49:26.310 --> 01:49:29.272
how we would accomplish the changes
01:49:29.272 --> 01:49:31.107
that others have recommended.
01:49:31.107 --> 01:49:32.350
Fair enough.
01:49:32.350 --> 01:49:33.800
I think that's great.
01:49:33.800 --> 01:49:36.869
I'm with you, Chairman Lake,
01:49:36.869 --> 01:49:39.990
I know there's a lot
of capability out there
01:49:40.970 --> 01:49:42.400
with respect to demand response,
01:49:42.400 --> 01:49:44.960
especially with all this
technological revolution,
01:49:44.960 --> 01:49:48.780
with smart meters and apps
and everything out there.
01:49:48.780 --> 01:49:51.440
And so, when I start thinking
about demand response
01:49:51.440 --> 01:49:53.170
and how we can better
01:49:54.390 --> 01:49:56.170
capture those opportunities
01:49:56.170 --> 01:49:58.380
and use them for reliability purposes
01:49:58.380 --> 01:50:00.020
and at least have some visibility
01:50:00.020 --> 01:50:02.810
so that ERCOT can take
them into consideration,
01:50:02.810 --> 01:50:04.970
the demand response
penetration into consideration
01:50:04.970 --> 01:50:06.140
for reliability purposes,
01:50:06.140 --> 01:50:07.540
it starts getting great for me
01:50:07.540 --> 01:50:09.530
because I hear these great ideas
01:50:09.530 --> 01:50:11.810
and we heard 'em all
at the work session,
01:50:11.810 --> 01:50:15.860
but what can we as a Commission do to
01:50:15.860 --> 01:50:16.930
help this move along?
01:50:16.930 --> 01:50:21.310
Is it ERCOT technical specifications,
01:50:21.310 --> 01:50:22.563
rule changes?
01:50:24.088 --> 01:50:25.980
I think there's
some merit to
01:50:25.980 --> 01:50:27.300
the notion that the best thing we can do
01:50:27.300 --> 01:50:28.910
is stay out of the way.
01:50:28.910 --> 01:50:30.270
Perhaps.
Yeah.
01:50:30.270 --> 01:50:33.087
Well, and on that Mr. Chairman,
01:50:33.087 --> 01:50:35.160
and I think it might fit.
01:50:35.160 --> 01:50:37.070
Didn't make the original list, but
01:50:37.070 --> 01:50:40.620
node pricing for load resources
versus the zonal pricing.
01:50:40.620 --> 01:50:43.333
Again, that plays into
your telemetry argument,
01:50:43.333 --> 01:50:47.190
getting that right command
and control signal, is that ...
01:50:47.190 --> 01:50:50.570
I think that's more about
matching up the prices,
01:50:50.570 --> 01:50:53.450
demand response, participant
or resources received
01:50:53.450 --> 01:50:55.200
with the rest of the market.
01:50:55.200 --> 01:50:56.033
Yes, sir.
01:50:56.033 --> 01:50:58.210
And sending the right signal for them to
01:50:58.210 --> 01:51:00.870
turn up the thermostat
or whatever, real time.
01:51:00.870 --> 01:51:03.470
And there's a little bit
of a thorny issue there
01:51:03.470 --> 01:51:05.480
because when
01:51:05.480 --> 01:51:07.860
this Commission made
the initial determination
01:51:07.860 --> 01:51:09.910
of how to transition
to the nodal market,
01:51:11.160 --> 01:51:12.950
one of the pieces was that
01:51:12.950 --> 01:51:15.720
retail pricing would occur zonally,
01:51:16.910 --> 01:51:18.520
and that was intended to be
01:51:18.520 --> 01:51:20.160
a protection for the retail market
01:51:20.160 --> 01:51:21.590
and also for the retail customers.
01:51:21.590 --> 01:51:23.200
To cushion the
blow of node, right?
01:51:23.200 --> 01:51:26.520
Yes, and so the last
time we talked about this
01:51:26.520 --> 01:51:28.740
and it has been a recurring theme
01:51:28.740 --> 01:51:31.083
in some of the ERCOT activities,
01:51:32.230 --> 01:51:34.940
there was some
difficulty in understanding
01:51:34.940 --> 01:51:37.320
or accomplishing something where
01:51:37.320 --> 01:51:42.102
a customer is being
charged on a zonal basis,
01:51:42.102 --> 01:51:45.250
but is being paid.
Right.
01:51:45.250 --> 01:51:47.840
MDR on an LMP basis.
01:51:47.840 --> 01:51:50.830
And so that's not an unsolvable problem,
01:51:50.830 --> 01:51:52.385
but it is a problem.
01:51:52.385 --> 01:51:53.860
And it's more of,
01:51:53.860 --> 01:51:55.540
again, as we heard from the workshop,
01:51:55.540 --> 01:51:56.770
that's more of a long-term,
01:51:56.770 --> 01:51:58.260
they gotta do a system.
01:51:58.260 --> 01:52:00.770
Yeah, is it worth having
a question in there?
01:52:00.770 --> 01:52:01.940
Yes, sir.
01:52:01.940 --> 01:52:02.835
Pros and cons,
01:52:02.835 --> 01:52:05.335
please address the pros
and cons of switching from
01:52:06.596 --> 01:52:08.930
zone pricing to LNP pricing.
Yes, sir.
01:52:08.930 --> 01:52:11.360
And I wonder if
this is a proper fit,
01:52:11.360 --> 01:52:14.310
'cause I'm sure we've all heard
01:52:14.310 --> 01:52:17.210
through various stakeholder
conversations about
01:52:17.210 --> 01:52:20.690
how we can utilize customer aggregations
01:52:20.690 --> 01:52:22.560
to turn them into virtual power plants.
01:52:22.560 --> 01:52:25.780
That's, I think, a form
of kind of new thinking
01:52:25.780 --> 01:52:28.810
of how we can take all
this demand response
01:52:28.810 --> 01:52:31.510
and use it in a cumulative basis
01:52:33.030 --> 01:52:34.580
to reduce demand on the system.
01:52:35.970 --> 01:52:38.620
And ERCOT already has
rules about aggregation.
01:52:38.620 --> 01:52:42.180
It might be constructive
to have an opportunity,
01:52:42.180 --> 01:52:44.580
or create an opportunity for a workshop
01:52:44.580 --> 01:52:49.060
for ERCOT to discuss
with interested parties,
01:52:49.060 --> 01:52:50.830
what the existing rules are.
01:52:50.830 --> 01:52:52.153
And maybe at the conclusion of that,
01:52:52.153 --> 01:52:55.930
there's an opportunity to
discuss potential change.
01:52:55.930 --> 01:52:57.810
You mean a ERCOT
stakeholder workshop?
01:52:57.810 --> 01:52:58.643
Yes.
Yep, okay.
01:52:58.643 --> 01:53:02.043
And then maybe come back to us
01:53:02.043 --> 01:53:05.628
with some kind of a
roadmap for us to consider
01:53:05.628 --> 01:53:07.278
on how we could help.
01:53:07.278 --> 01:53:09.242
It gives a menu of
options, if nothing else.
01:53:09.242 --> 01:53:11.760
And I'm sensitive,
as you all are,
01:53:11.760 --> 01:53:13.430
to making work for ERCOT.
01:53:13.430 --> 01:53:14.930
I just think ERCOT,
01:53:14.930 --> 01:53:17.890
the expertise regarding current roles
01:53:17.890 --> 01:53:21.103
resides at ERCOT and it could
be best communicated there.
01:53:22.830 --> 01:53:23.997
Fair enough.
01:53:25.647 --> 01:53:29.038
We can address that
offline with ERCOT, I think.
01:53:29.038 --> 01:53:30.360
But if everybody's on board with ERCOT,
01:53:30.360 --> 01:53:31.310
asking them to
01:53:33.872 --> 01:53:37.601
have a workshop to
investigate specific ...
01:53:37.601 --> 01:53:39.682
I mean, we do want
the questions on this list
01:53:39.682 --> 01:53:40.515
about technical specifications,
01:53:40.515 --> 01:53:42.930
specific hardware,
software upgrades needed,
01:53:42.930 --> 01:53:44.920
pros and cons of
01:53:45.761 --> 01:53:49.913
general to LNP pricing
for demand response.
01:53:50.930 --> 01:53:55.210
And then we can also
separately ask ERCOT to
01:53:56.614 --> 01:54:00.770
hold a workshop with the stakeholders on
01:54:03.478 --> 01:54:06.310
what works and doesn't work
01:54:06.310 --> 01:54:09.060
with the existing rules of DPPs
01:54:09.060 --> 01:54:13.093
or aggregated resources,
01:54:14.190 --> 01:54:15.301
does that work?
01:54:15.301 --> 01:54:17.218
Great.
Sounds great.
01:54:18.143 --> 01:54:19.393
Thank you, Liz.
01:54:23.760 --> 01:54:24.980
All right, so I think we've got
01:54:24.980 --> 01:54:27.798
the zone and LND addressed,
01:54:27.798 --> 01:54:29.250
we've got hardware, software,
01:54:29.250 --> 01:54:30.700
telemetry issues addressed.
01:54:30.700 --> 01:54:32.030
Last one is
01:54:32.030 --> 01:54:35.160
performance standard for
energy efficiency program.
01:54:35.160 --> 01:54:37.010
I'm coming at this
from a pretty high level.
01:54:37.010 --> 01:54:38.490
I know we spent a lot of money on this,
01:54:38.490 --> 01:54:40.673
as Liz said, they write checks.
01:54:43.030 --> 01:54:45.867
And I'm not entirely sure if
01:54:47.080 --> 01:54:47.930
the rate payers are getting
01:54:47.930 --> 01:54:50.133
the highest bang for your buck on this.
01:54:51.400 --> 01:54:53.590
We know that we have a very concentrated
01:54:55.580 --> 01:55:01.670
avenues to ... In
Texas energy use,
01:55:01.670 --> 01:55:05.672
it's, I guess, the top three in summer:
01:55:05.672 --> 01:55:06.505
air conditioning, air conditioning,
01:55:06.505 --> 01:55:07.843
air conditioning, in
winter it's heating.
01:55:09.590 --> 01:55:12.583
So I really just wanna open to,
01:55:13.720 --> 01:55:15.523
and this is why I ask the question,
01:55:15.523 --> 01:55:19.610
what is the highest
performance standard we can set
01:55:19.610 --> 01:55:21.610
to get the highest value
01:55:21.610 --> 01:55:22.913
for our rate payer dollar?
01:55:24.040 --> 01:55:26.540
I know a lot of the
participants in those programs
01:55:27.690 --> 01:55:29.890
almost always hit their
performance bonuses,
01:55:31.492 --> 01:55:36.053
which makes me think
there's room for improvement.
01:55:36.053 --> 01:55:37.300
They're not small
performance bonuses.
01:55:37.300 --> 01:55:38.550
No, they're not.
Oh.
01:55:40.370 --> 01:55:45.077
So, on that one, I'll
go and open up first.
01:55:45.077 --> 01:55:46.112
Right, go for it.
01:55:46.112 --> 01:55:46.945
I'll try to set the table.
01:55:46.945 --> 01:55:48.600
I believe there should be,
01:55:48.600 --> 01:55:51.462
as a part of the bones of a
01:55:51.462 --> 01:55:53.850
greater market reform effort,
01:55:53.850 --> 01:55:57.100
EECRF reform to the degree that
01:55:58.520 --> 01:56:00.290
we also have to recognize
what we're dealing with.
01:56:00.290 --> 01:56:01.730
We are dealing with
01:56:01.730 --> 01:56:05.740
very specific constraints in statute,
01:56:05.740 --> 01:56:07.440
and we're also dealing with
01:56:07.440 --> 01:56:11.500
very specific, and a
very large substantive rule
01:56:12.789 --> 01:56:14.789
that goes a lot of different directions.
01:56:15.890 --> 01:56:17.070
I believe when we're talking about
01:56:17.070 --> 01:56:18.647
enhancements to this market
01:56:18.647 --> 01:56:21.250
and any new revenues, and Mr. Chairman,
01:56:21.250 --> 01:56:24.160
you may go and say,
"Hey, let's look at it all."
01:56:24.160 --> 01:56:27.150
But I'd say in terms of the near-term,
01:56:27.150 --> 01:56:30.870
when we consider new
revenues or augmentation to
01:56:30.870 --> 01:56:33.204
what we're already
paying out to the market,
01:56:33.204 --> 01:56:36.080
dollar we're talking about more dollars,
01:56:36.080 --> 01:56:38.310
then there should be again,
01:56:38.310 --> 01:56:42.120
specific performance standards
outside of the existing rule.
01:56:42.120 --> 01:56:43.210
This should be considered;
01:56:43.210 --> 01:56:45.173
again, who participates in it.
01:56:46.680 --> 01:56:48.770
And there's something, there's already
01:56:48.770 --> 01:56:51.970
a filing out there that may
become a contested case
01:56:51.970 --> 01:56:54.140
so I don't think I can
talk about that here,
01:56:54.140 --> 01:56:57.580
in terms of just the
application of those programs
01:56:57.580 --> 01:56:59.110
on a seasonal basis,
01:56:59.110 --> 01:57:02.220
which lines up with earlier
conversations we had
01:57:02.220 --> 01:57:03.350
from our workshops.
01:57:03.350 --> 01:57:06.700
But my point is, how
the retailers and the
01:57:07.880 --> 01:57:11.310
transmission distribution
service providers interact.
01:57:11.310 --> 01:57:14.970
And again, how retailers,
with their aggregated DR
01:57:14.970 --> 01:57:16.970
could actually perform
01:57:16.970 --> 01:57:18.730
on a dollar for dollar basis
01:57:18.730 --> 01:57:20.253
with any new monies coming in.
01:57:21.330 --> 01:57:23.280
Again, in the command
and control construct,
01:57:23.280 --> 01:57:25.210
managed by the TDSBs,
01:57:25.210 --> 01:57:27.023
that we can actually account for,
01:57:27.896 --> 01:57:29.896
on a more granular basis within the CDR.
01:57:30.890 --> 01:57:32.953
Sure, so
what's the question.
01:57:32.953 --> 01:57:33.790
How are we gonna
capture that in a question?
01:57:33.790 --> 01:57:34.623
So.
01:57:35.703 --> 01:57:38.404
We need a question.
01:57:38.404 --> 01:57:39.670
I'm hoping on
avoiding some hate mail
01:57:39.670 --> 01:57:40.970
with the way I couch that.
01:57:42.742 --> 01:57:43.575
There's no avoiding
the hate mail,
01:57:43.575 --> 01:57:44.727
if we're doing our jobs right.
01:57:44.727 --> 01:57:46.470
I know, I was
trying to manage it.
01:57:46.470 --> 01:57:48.020
We're getting toward Christmas.
01:57:54.905 --> 01:57:56.050
So I definitely wanna hear
01:57:56.050 --> 01:57:58.350
from the stakeholders and ERCOT,
01:57:58.350 --> 01:58:01.740
what is the necessary
command and control.
01:58:01.740 --> 01:58:03.890
And you have
that, I believe, sort of.
01:58:03.890 --> 01:58:05.017
Well, I think it covers ...
01:58:05.017 --> 01:58:07.267
But what is the necessary
command and control
01:58:08.300 --> 01:58:13.887
to utilize demand, resources,
01:58:13.887 --> 01:58:15.573
demand response resources,
01:58:16.640 --> 01:58:17.750
to ensure reliability,
01:58:17.750 --> 01:58:19.720
to ensure an enhanced reliability?
01:58:19.720 --> 01:58:20.800
Correct.
Right.
01:58:20.800 --> 01:58:22.430
Just because you've got
01:58:22.430 --> 01:58:25.010
a Tesla plugged in and ORDC kicks in,
01:58:25.010 --> 01:58:27.310
and you decide to start
making some money on it,
01:58:27.310 --> 01:58:29.000
that doesn't necessarily help
01:58:29.935 --> 01:58:31.960
ERCOT's ability to
01:58:31.960 --> 01:58:33.940
enhance reliability 24 hours in advance,
01:58:33.940 --> 01:58:34.880
48 hours in advance.
01:58:34.880 --> 01:58:38.370
How could additional resources
01:58:38.370 --> 01:58:40.020
in EECRF
01:58:42.560 --> 01:58:43.560
be applied
01:58:44.870 --> 01:58:47.080
and broadened to include
01:58:48.380 --> 01:58:52.120
greater participation by
the competitive market
01:58:54.640 --> 01:58:56.510
within the managed programs
01:58:58.060 --> 01:59:00.720
of the regulated utilities?
01:59:00.720 --> 01:59:01.563
Is that broad enough for it,
01:59:01.563 --> 01:59:03.413
that would elicit some response?
01:59:04.899 --> 01:59:05.810
I think that's right.
01:59:05.810 --> 01:59:08.120
One of my questions, and I think,
01:59:08.120 --> 01:59:09.680
as you looked under the hood,
01:59:09.680 --> 01:59:13.290
is whether we should allocate
some of the existing funds
01:59:16.200 --> 01:59:18.420
underneath or the TDs have
01:59:19.680 --> 01:59:20.837
from the spectrum of programs
01:59:20.837 --> 01:59:23.973
under the energy efficiency umbrella.
01:59:24.840 --> 01:59:27.770
Should we allocate funds from
01:59:27.770 --> 01:59:29.090
some programs where
we're not getting that much
01:59:29.090 --> 01:59:30.640
bang for our buck
01:59:30.640 --> 01:59:33.933
to REP demand response type programs,
01:59:35.076 --> 01:59:38.540
delivered from a broad
spectrum of stakeholders
01:59:38.540 --> 01:59:41.460
and I thought that that
might be a more efficient use
01:59:41.460 --> 01:59:43.363
of that energy efficiency money.
01:59:44.330 --> 01:59:47.031
And then also looking
at program participation
01:59:47.031 --> 01:59:48.410
and I think right now
it's more residential,
01:59:48.410 --> 01:59:49.410
it's not commercial,
01:59:50.254 --> 01:59:53.793
and it's largely geared
towards the summer.
01:59:55.320 --> 01:59:59.440
I think there is, in SP3,
there's an ability for
01:59:59.440 --> 02:00:00.770
TDUs to offer
02:00:01.830 --> 02:00:03.980
to have a low membered program
02:00:03.980 --> 02:00:05.480
for the winter, for non-residential,
02:00:05.480 --> 02:00:07.172
which I won't get into
02:00:07.172 --> 02:00:08.050
because that's part
of the contested case,
02:00:08.050 --> 02:00:09.500
that's before the Commission.
02:00:11.142 --> 02:00:12.200
But I guess,
02:00:12.200 --> 02:00:14.290
I think your overall question is great:
02:00:14.290 --> 02:00:17.840
accountability performance standards,
02:00:17.840 --> 02:00:19.340
where should those dollars be going?
02:00:19.340 --> 02:00:20.861
Where do we get
02:00:20.861 --> 02:00:24.093
a bigger bang for our
buck, who can participate?
02:00:26.136 --> 02:00:29.400
And should we be
modifying these programs
02:00:30.710 --> 02:00:34.950
to better target seasons,
especially summer and winter?
02:00:34.950 --> 02:00:35.800
Can we do that
02:00:35.800 --> 02:00:37.830
in the second round of these questions
02:00:37.830 --> 02:00:40.650
after we get responses on
the biggest bang for the buck?
02:00:40.650 --> 02:00:41.570
Sure.
02:00:41.570 --> 02:00:45.393
Really the way I envisioned
this is to add this rule,
02:00:46.404 --> 02:00:49.830
2521, I believe, to the blueprint.
02:00:49.830 --> 02:00:52.570
And so we can open up the rule
02:00:53.580 --> 02:00:55.740
as part of our ...
02:00:55.740 --> 02:00:57.733
As we get there, yeah.
Yeah, as we get there.
02:00:57.733 --> 02:00:58.566
Okay.
02:01:00.705 --> 02:01:02.405
And I agree, and
it's a big rule, Mr,
02:01:02.405 --> 02:01:04.400
and you'd spend years inside that.
02:01:04.400 --> 02:01:05.914
All right, let's start
02:01:05.914 --> 02:01:07.411
with the bang for the buck questions,
02:01:07.411 --> 02:01:09.260
and then after November
1st, let's see what we've got.
02:01:09.260 --> 02:01:11.380
And then we can start
asking the questions
02:01:11.380 --> 02:01:15.489
about how we allocate,
does that work?
02:01:15.489 --> 02:01:16.873
I know our stenographer needs a break.
02:01:17.738 --> 02:01:20.537
Did we ask what
the amount should be?
02:01:22.539 --> 02:01:24.588
I mean, I think-
02:01:24.588 --> 02:01:26.914
That would be valuable.
That's a good ...
02:01:26.914 --> 02:01:27.997
Well, I mean,
02:01:29.442 --> 02:01:30.540
is that something we wanna ask for,
02:01:30.540 --> 02:01:33.300
or we just need to set because ...
02:01:33.300 --> 02:01:35.000
I've got a good idea that
02:01:35.000 --> 02:01:37.284
certain segments would think
02:01:37.284 --> 02:01:38.380
whatever it is, bigger is better.
02:01:38.380 --> 02:01:40.290
Well, I think there's
02:01:41.350 --> 02:01:43.550
some analysis that could go into that.
02:01:43.550 --> 02:01:44.730
Fair enough.
02:01:44.730 --> 02:01:47.214
That we ought to
determine what that amount is.
02:01:47.214 --> 02:01:48.047
I think, where it hadn't been
02:01:48.047 --> 02:01:50.270
increased in many, many years
02:01:50.270 --> 02:01:54.250
and that we ought to at
least get some perspective
02:01:54.250 --> 02:01:57.263
on what a viable amount would be.
02:01:58.223 --> 02:02:00.340
Fair enough, can
we add that to the ...
02:02:00.340 --> 02:02:02.530
And when we say amount,
02:02:02.530 --> 02:02:07.530
are we talking about
energy efficiency goals,
02:02:07.750 --> 02:02:12.750
dollar amount or ducking
megawatt hours or in dollars?
02:02:13.121 --> 02:02:14.876
What should the method
be, and what quantity?
02:02:14.876 --> 02:02:16.826
Yeah, I mean, I
was thinking dollars,
02:02:18.330 --> 02:02:21.180
but obviously we want both
sides of the equation to work.
02:02:22.370 --> 02:02:23.203
We can see
02:02:24.146 --> 02:02:26.490
if we can, yeah, aggregate all of it,
02:02:26.490 --> 02:02:27.810
see where that leads us.
02:02:27.810 --> 02:02:30.660
And Connie, am I right that
02:02:30.660 --> 02:02:31.930
some of those dollars are used
02:02:31.930 --> 02:02:35.500
for demand response as
well in the TDE programs?
02:02:35.500 --> 02:02:38.310
I believe there are load
management programs.
02:02:38.310 --> 02:02:40.971
So, the other
question that I thought
02:02:40.971 --> 02:02:43.562
I had asked this a few months ago was,
02:02:43.562 --> 02:02:45.380
if we're trying to create more robust
02:02:45.380 --> 02:02:48.823
demand response
programs within the market,
02:02:49.690 --> 02:02:51.480
can these dollars be dedicated
02:02:51.480 --> 02:02:52.980
to energy efficiency programs?
02:02:54.010 --> 02:02:55.811
And I'd like to know what people think.
02:02:55.811 --> 02:02:58.011
I think the market's
already solving that problem.
02:02:58.011 --> 02:02:58.844
The demand response program,
02:02:58.844 --> 02:02:59.810
then use all these dollars for
02:02:59.810 --> 02:03:02.780
whatever that larger number
would be for energy efficiency.
02:03:02.780 --> 02:03:04.980
And Chairman, I'm not sure
02:03:04.980 --> 02:03:08.810
if you'd like to just lay out
02:03:08.810 --> 02:03:13.140
for some of our online
viewers and the general public,
02:03:13.140 --> 02:03:15.510
the distinction between demand response
02:03:15.510 --> 02:03:17.063
and energy efficiency,
02:03:21.675 --> 02:03:22.850
is that something
you'd like to speak to,
02:03:22.850 --> 02:03:23.683
Commissioner McAdams?
02:03:23.683 --> 02:03:27.030
Well, the way I'd
use energy efficiency is
02:03:27.030 --> 02:03:29.823
megawatts that we consider saved,
02:03:31.320 --> 02:03:34.283
that again, we are
taking off the system,
02:03:36.432 --> 02:03:37.480
but again, we're paying for that.
02:03:37.480 --> 02:03:39.810
And there is a public interest finding
02:03:39.810 --> 02:03:41.370
in the rule and the statute
02:03:41.370 --> 02:03:45.913
that it is designed to assist
low income consumers,
02:03:46.790 --> 02:03:49.710
enhance their energy
efficiency in their home
02:03:49.710 --> 02:03:53.250
and let them participate
in these programs.
02:03:53.250 --> 02:03:56.840
Again, the cost of those programs are
02:03:56.840 --> 02:03:58.990
socialized throughout
the broader system.
02:03:58.990 --> 02:04:01.060
And we approve those rates every year
02:04:01.963 --> 02:04:04.080
where that socialized cost is spread.
02:04:04.080 --> 02:04:07.344
What we're talking about
with demand response ...
02:04:07.344 --> 02:04:08.370
And one thing
I might add on that is,
02:04:08.370 --> 02:04:10.720
when you make those
energy efficiency upgrades,
02:04:11.956 --> 02:04:13.783
they stay in place.
That's right.
02:04:14.730 --> 02:04:16.250
So, these are
not a daily modification.
02:04:16.250 --> 02:04:18.310
Those are things that happen
02:04:18.310 --> 02:04:20.921
in spades, which forms the problem.
02:04:20.921 --> 02:04:21.840
For the folks watching at home,
02:04:21.840 --> 02:04:26.540
in practice, that's
paying for someone to
02:04:26.540 --> 02:04:28.250
get a new air conditioner that uses
02:04:28.250 --> 02:04:30.540
fewer megawatts for
the same cooling ability,
02:04:31.486 --> 02:04:33.288
that's a 15 year old.
That's right.
02:04:33.288 --> 02:04:35.040
15 year old air conditioner.
02:04:35.040 --> 02:04:37.573
Exactly, so
think measures that will,
02:04:39.660 --> 02:04:42.200
on a very long-term if not permanently
02:04:42.200 --> 02:04:45.400
decrease the amount of
energy use in that location.
02:04:45.400 --> 02:04:46.800
That's right.
02:04:46.800 --> 02:04:49.673
So again, the nuance
of demand response is
02:04:49.673 --> 02:04:52.110
this is a controllable energy resource.
02:04:52.110 --> 02:04:54.230
Again, energy
efficiency is always there.
02:04:54.230 --> 02:04:57.050
It's steady state, it's
megawatts taken off the system,
02:04:57.050 --> 02:04:59.210
but demand response could again be
02:04:59.210 --> 02:05:02.670
a command and control
asset of the system.
02:05:02.670 --> 02:05:05.110
In practice, it's a
consumer of power
02:05:06.600 --> 02:05:08.060
deciding they'd rather
02:05:08.970 --> 02:05:10.550
at a certain price point,
02:05:10.550 --> 02:05:12.670
sell their power back into the grid
02:05:12.670 --> 02:05:14.920
either by consuming less,
02:05:14.920 --> 02:05:17.760
or by reverting to their
own backup generation
02:05:17.760 --> 02:05:20.050
to continue whatever operations they ...
02:05:20.050 --> 02:05:22.180
And just for the
greater public.
02:05:22.180 --> 02:05:24.320
That happens
constantly, all the time.
02:05:24.320 --> 02:05:26.250
Yeah, and to put it
in context right now,
02:05:26.250 --> 02:05:28.120
we account for somewhere
in the neighborhood
02:05:28.120 --> 02:05:29.507
and it's on our cost chart
02:05:30.424 --> 02:05:32.870
of a TDS load management megawatt hours,
02:05:32.870 --> 02:05:37.257
300 megawatts at peak, that's there
02:05:37.257 --> 02:05:40.693
and it's accounted
for at EEA2 conditions.
02:05:41.750 --> 02:05:44.210
So that's the other
issue we need to explore,
02:05:44.210 --> 02:05:47.080
is when those load management
programs are at fault.
02:05:47.080 --> 02:05:50.061
Well, that's part of that
case now, it's getting ...
02:05:50.061 --> 02:05:52.200
Okay, we don't wanna
open that right now.
02:05:52.200 --> 02:05:53.423
Well, in the rule.
02:05:54.539 --> 02:05:56.000
Yeah, when we
get to that point.
02:05:56.000 --> 02:05:58.402
If we add it to the
blueprint and open a rule,
02:05:58.402 --> 02:05:59.290
I think that something we can look at.
02:05:59.290 --> 02:06:00.890
Okay, absolutely.
02:06:00.890 --> 02:06:02.030
Anything else on demand response?
02:06:02.030 --> 02:06:04.291
I know our stenographer needs a break
02:06:04.291 --> 02:06:05.870
and I wouldn't mind one either.
02:06:05.870 --> 02:06:06.703
Have we got a list of questions?
02:06:06.703 --> 02:06:07.560
Yeah, I think so.
02:06:08.462 --> 02:06:09.295
Good, all right.
02:06:09.295 --> 02:06:12.013
Let's take a 15 minute
break and reconvene at 11:55.
02:06:13.090 --> 02:06:13.923
Yes, sir.
02:06:15.810 --> 02:06:17.356
All rise.
02:06:17.356 --> 02:06:20.773
(indistinct chattering)
02:06:27.228 --> 02:06:28.061
For those
02:06:29.620 --> 02:06:30.900
brave enough to
02:06:32.200 --> 02:06:34.993
hang in there as we continue
through this day, thank you.
02:06:36.098 --> 02:06:37.440
I hope you're in health.
02:06:37.440 --> 02:06:40.491
We've got a good
... I think we made
02:06:42.330 --> 02:06:43.580
a lot of progress so far.
02:06:44.484 --> 02:06:45.934
We've got two key items left.
02:06:48.660 --> 02:06:49.930
Ambitiously, I'm gonna say,
02:06:49.930 --> 02:06:52.430
let's try to get this knocked out by
02:06:53.750 --> 02:06:55.333
one o'clock, 1:15ish?
02:07:01.930 --> 02:07:02.830
Let's tackle ORDC.
02:07:03.955 --> 02:07:05.853
I think we've all discussed that,
02:07:07.360 --> 02:07:08.390
the high level points.
02:07:08.390 --> 02:07:10.690
I think everybody's
generally aligned on that.
02:07:11.757 --> 02:07:14.233
I think the big, what questions?
02:07:15.094 --> 02:07:17.493
I mean, I think we know
that the top questions is,
02:07:18.873 --> 02:07:20.623
we wanna see some scenario analysis
02:07:21.940 --> 02:07:23.570
and I'd like to be able to give
02:07:23.570 --> 02:07:28.743
very specific numbers
to our consultant groups.
02:07:30.034 --> 02:07:31.670
You know my numbers
02:07:31.670 --> 02:07:33.463
and if possible, I think it was,
02:07:34.440 --> 02:07:35.807
we'll have another crack at this,
02:07:35.807 --> 02:07:38.357
but it may just be the
most straightforward thing
02:07:38.357 --> 02:07:40.030
to just have each of
us submit one scenario
02:07:40.030 --> 02:07:43.608
we'd like analyzed and
we'll have four scenarios
02:07:43.608 --> 02:07:44.970
that they can bring back to us
02:07:44.970 --> 02:07:46.220
and we can go from there.
02:07:53.293 --> 02:07:54.193
You saw my numbers
02:07:57.554 --> 02:08:00.593
in the memo, I briefly
give you the logic.
02:08:02.431 --> 02:08:03.264
HCAP and VOLL,
02:08:04.750 --> 02:08:06.190
the VOLL concept
02:08:10.648 --> 02:08:12.848
is extraordinarily
academic in assuming that
02:08:13.957 --> 02:08:14.790
the value of a margin electron
02:08:14.790 --> 02:08:16.820
is the same for every
person, every business,
02:08:16.820 --> 02:08:18.033
every moment in time,
02:08:19.349 --> 02:08:20.443
but we've got to pick something.
02:08:21.659 --> 02:08:22.759
I think 4,500 keeps us
02:08:23.760 --> 02:08:26.280
a good way away from the
02:08:26.280 --> 02:08:29.740
extraordinarily punitive $9,000.
02:08:29.740 --> 02:08:32.203
But it's still, as Miss
Cobos pointed out,
02:08:33.441 --> 02:08:34.320
a substantial number
02:08:35.920 --> 02:08:37.220
that will incentivize demand response
02:08:37.220 --> 02:08:38.563
as we move up that curve.
02:08:40.941 --> 02:08:44.570
The 3000 megawatt MCL,
my logic there is right now
02:08:44.570 --> 02:08:46.970
we enter emergency
conditions at, I think 2,000?
02:08:48.472 --> 02:08:50.783
2,000, 2,300.
2,300.
02:08:51.960 --> 02:08:53.763
My logic there is, let's ...
02:08:54.820 --> 02:08:57.170
We don't like, we don't
wanna do emergencies.
02:08:57.170 --> 02:08:59.120
We wanna get away from this
crisis-based business model,
02:08:59.120 --> 02:09:02.320
so let's build in one
major, a big unit trip.
02:09:02.320 --> 02:09:05.140
So at 3,000 we can
still have one unit trip,
02:09:05.140 --> 02:09:07.773
one of our biggest units
trip, machinery breaks,
02:09:08.685 --> 02:09:11.560
and we're still, we're still okay.
02:09:11.560 --> 02:09:12.860
We've still got a cushion.
02:09:13.810 --> 02:09:16.010
Call it N minus one,
minus one, if you will.
02:09:17.260 --> 02:09:20.233
And then, no change
to the standard deviation.
02:09:21.381 --> 02:09:22.897
I'll just refer to
what I've said earlier
02:09:22.897 --> 02:09:23.820
about over-engineering.
02:09:23.820 --> 02:09:24.920
We're more likely to be wrong
02:09:24.920 --> 02:09:26.420
on the number of hours used per year
02:09:26.420 --> 02:09:29.610
than we are on the standard deviation.
02:09:29.610 --> 02:09:31.290
And most importantly, I think,
02:09:31.290 --> 02:09:32.845
don't quote me on this,
02:09:32.845 --> 02:09:37.553
but the last analysis I saw
was under this framework
02:09:39.195 --> 02:09:41.441
with Kenan, we were looking at it.
02:09:41.441 --> 02:09:42.473
You don't need to come up, but I think,
02:09:44.230 --> 02:09:45.540
under this curve
02:09:47.020 --> 02:09:48.413
at 6,500,
02:09:49.384 --> 02:09:51.030
where we currently start deploying AS,
02:09:51.030 --> 02:09:53.333
this would result in a $50 adder.
02:09:54.500 --> 02:09:56.450
It's around the $50.
Yeah, so that's yeah,
02:09:56.450 --> 02:09:59.210
roughly 50, so it's 6,500 where
02:09:59.210 --> 02:10:00.790
we are currently operating
02:10:00.790 --> 02:10:03.040
on our new framework,
conservative framework.
02:10:04.616 --> 02:10:05.520
That's where we get worried,
02:10:05.520 --> 02:10:08.080
that's where we, as a
marketer, are getting worried
02:10:08.080 --> 02:10:09.483
and we start deploying AS.
02:10:11.924 --> 02:10:14.200
If you've got $50 on top of the
02:10:14.200 --> 02:10:17.253
energy price, the realtime price,
02:10:19.070 --> 02:10:22.080
you're very quickly gonna be moving
02:10:22.080 --> 02:10:25.650
into the $100, $200, $300 range.
02:10:25.650 --> 02:10:28.290
We know we get demand response from
02:10:28.290 --> 02:10:30.040
some of the controllable load, like
02:10:30.890 --> 02:10:32.160
crypto mining and
02:10:35.760 --> 02:10:38.780
data centers at $200 unless
02:10:40.087 --> 02:10:43.023
there's just some
extraordinary degrade problem.
02:10:44.469 --> 02:10:48.662
$200, $300, every unit
should be on and moving,
02:10:48.662 --> 02:10:51.001
and it's a demand
response question from there.
02:10:51.001 --> 02:10:52.040
So, I'll stop there.
02:10:52.040 --> 02:10:53.529
That's the scenario I would submit.
02:10:53.529 --> 02:10:54.362
All right.
02:10:54.362 --> 02:10:57.570
One last component,
Mr. Chair, for discussion is
02:10:59.082 --> 02:11:01.530
the backcast scenario for Brattle.
02:11:01.530 --> 02:11:04.120
Again, those years or scenarios
02:11:04.120 --> 02:11:08.073
where they'll do the
overlay to determine the cost.
02:11:08.073 --> 02:11:08.906
I would throw it out,
02:11:10.645 --> 02:11:13.003
2019 is a big year for ERCOT,
02:11:13.003 --> 02:11:14.550
because again, we were at 9,000,
02:11:14.550 --> 02:11:17.310
the economy was roaring at that time,
02:11:17.310 --> 02:11:19.520
low growth was still
in its normal trajectory,
02:11:19.520 --> 02:11:22.940
it was before COVID
distortions occurred.
02:11:22.940 --> 02:11:26.370
ORDC did engage with
those weather patterns.
02:11:26.370 --> 02:11:27.570
So I would submit that,
02:11:27.570 --> 02:11:31.430
just in terms of a near
term backcast scenario,
02:11:31.430 --> 02:11:33.910
we view 2019 is a significant year
02:11:33.910 --> 02:11:35.510
just to give Brattle guidance
02:11:36.424 --> 02:11:38.358
on what to measure this against,
02:11:38.358 --> 02:11:39.474
with what do you think of this?
02:11:39.474 --> 02:11:40.840
Would it be conditions?
Yes, sir.
02:11:40.840 --> 02:11:41.710
Sure.
Yeah,
02:11:41.710 --> 02:11:43.240
'cause it's just how you apply
02:11:43.240 --> 02:11:45.260
the numbers that we're gonna talk about.
02:11:45.260 --> 02:11:47.160
Yep, yeah,
good, good point.
02:11:48.991 --> 02:11:50.241
Why don't we ask them ...
02:11:51.327 --> 02:11:54.245
If they have any other
years, that they would ...
02:11:54.245 --> 02:11:55.078
This is a base case.
Yeah.
02:11:55.078 --> 02:11:58.520
Worst, call that
extreme heat summer case,
02:11:58.520 --> 02:12:00.730
and you can almost call this year,
02:12:00.730 --> 02:12:03.103
the summer of best case, right?
02:12:04.220 --> 02:12:06.534
And it's one of the ...
Went down pretty well, yeah.
02:12:06.534 --> 02:12:08.184
Things I love about Arvin Wood,
02:12:10.370 --> 02:12:12.730
the financial model or anything else,
02:12:12.730 --> 02:12:16.510
zero scenarios, two years
ago, any predictive model had
02:12:18.978 --> 02:12:21.613
a very mild 2021 summer,
it was $6 natural gas.
02:12:23.260 --> 02:12:25.743
I wish I had $6 gas in my model.
02:12:27.840 --> 02:12:30.973
Yes, we'll ask for a base
case, worst case, best case.
02:12:31.850 --> 02:12:33.680
Do you have numbers, that you'd submit?
02:12:33.680 --> 02:12:35.480
So at high range,
02:12:35.480 --> 02:12:38.950
I would like high cap considered at six.
02:12:38.950 --> 02:12:41.410
Given the panacea comments we had
02:12:41.410 --> 02:12:43.860
from that again, that
memo that we filed,
02:12:43.860 --> 02:12:46.453
that was TIAC's comment threshold.
02:12:47.326 --> 02:12:48.640
Because again, we're trying
to find that happy medium,
02:12:48.640 --> 02:12:51.180
where we actually see
price responsive behavior
02:12:51.180 --> 02:12:54.760
from our industrial
load, starting to turn off.
02:12:54.760 --> 02:12:56.010
So depending on the price
02:12:56.010 --> 02:12:57.961
for the value of a semiconductor,
02:12:57.961 --> 02:12:59.077
which is way high right now,
02:12:59.077 --> 02:13:00.500
'cause nobody can get semiconductors.
02:13:00.500 --> 02:13:01.830
Or Bitcoin.
Calculate that,
02:13:01.830 --> 02:13:02.830
or Bitcoin.
02:13:03.890 --> 02:13:08.793
So, $6,000 high cap,
one of those scenarios.
02:13:10.200 --> 02:13:11.093
And then,
02:13:12.530 --> 02:13:15.760
I agree with you, building
in a margin of error
02:13:16.681 --> 02:13:19.490
to where on MCL?
02:13:19.490 --> 02:13:23.960
3,000, definitely okay
with that being a mark.
02:13:23.960 --> 02:13:28.680
2,750 is what I would
advocate that we have
02:13:28.680 --> 02:13:29.900
baked in there because again,
02:13:29.900 --> 02:13:32.260
it was a historical line
02:13:32.260 --> 02:13:34.847
that they were targeting in the past.
02:13:34.847 --> 02:13:35.793
For NCL?
Yes, sir.
02:13:41.942 --> 02:13:44.259
And that would also account for D rates,
02:13:44.259 --> 02:13:46.720
that would also be
ahead, that would be within
02:13:46.720 --> 02:13:50.140
already a control room advisory status
02:13:50.140 --> 02:13:51.650
under existing conditions,
02:13:51.650 --> 02:13:54.173
but ahead of control room watch status.
02:13:56.560 --> 02:13:59.963
And then on the high end
for MCL, if we wanna say,
02:14:02.669 --> 02:14:04.070
I don't know, subject
to opinion on this,
02:14:04.070 --> 02:14:06.070
because I think 3,000 needs to be
02:14:06.070 --> 02:14:09.360
that intermediate step: 3,100 or 3,050.
02:14:09.360 --> 02:14:11.360
I realize, I know that Carrie Bivins
02:14:11.360 --> 02:14:14.019
is not enjoying this
conversation right now
02:14:14.019 --> 02:14:14.852
because we're arbitrarily
02:14:14.852 --> 02:14:15.685
pulling numbers out of the air,
02:14:15.685 --> 02:14:16.770
but just to show a spectrum
02:14:16.770 --> 02:14:19.320
so that we can see cost impacts.
02:14:19.320 --> 02:14:20.913
3,100 or 3,050?
02:14:22.448 --> 02:14:23.750
I can't say (mumbles) ...
02:14:23.750 --> 02:14:25.239
If you're gonna have a
higher, then go to higher.
02:14:25.239 --> 02:14:26.072
Okay 3,100.
02:14:27.220 --> 02:14:28.240
Okay, so y'all are covering
02:14:28.240 --> 02:14:31.146
almost all the spectrums
I can think of, but ...
02:14:31.146 --> 02:14:31.979
(they all laugh)
02:14:31.979 --> 02:14:33.765
But let's see if I can
sneak one in here,
02:14:33.765 --> 02:14:34.598
but I'll let you finish,
as you probably have ...
02:14:34.598 --> 02:14:36.440
Well yeah, and so just
02:14:36.440 --> 02:14:39.280
wanna make sure
everybody sees a demarcation
02:14:40.200 --> 02:14:42.480
control room advisory exists for 3,000
02:14:43.620 --> 02:14:46.370
megawatts of reserves down to 2,500
02:14:47.234 --> 02:14:49.990
under current operating
protocols within ERCOT.
02:14:49.990 --> 02:14:53.380
Sub 2,500, that's in a
control room watch status.
02:14:53.380 --> 02:14:56.720
So as you think of adjusting that MCL,
02:14:56.720 --> 02:14:59.830
and we're also considering
tying ERS deployment in that,
02:14:59.830 --> 02:15:02.330
that's what you're gonna
start seeing activate
02:15:02.330 --> 02:15:04.250
within ERCOT's systems.
02:15:04.250 --> 02:15:07.003
So, I'll stop there.
02:15:08.120 --> 02:15:12.263
Okay, so I think you've
covered some spectrums.
02:15:13.150 --> 02:15:17.520
You're trying to avoid
the watch and the advisory
02:15:17.520 --> 02:15:19.420
and you have to be above 3,000.
02:15:19.420 --> 02:15:22.160
So just for a matter of just seeing
02:15:22.160 --> 02:15:23.560
where that puts us, I think.
02:15:25.410 --> 02:15:27.663
I mean, I don't wanna say 3,200.
02:15:28.599 --> 02:15:31.070
I mean, you're trying to
avoid getting below 3,000,
02:15:31.070 --> 02:15:33.103
I'd say 3,200, right?
Okay.
02:15:34.915 --> 02:15:37.882
And so 3,200,
02:15:37.882 --> 02:15:39.399
3,000
02:15:39.399 --> 02:15:42.444
and I would say probably
in my opinion, 2,800,
02:15:42.444 --> 02:15:44.455
'cause that's the other MCL
02:15:44.455 --> 02:15:46.855
that we got a lot in
comments rather than 2,750.
02:15:48.842 --> 02:15:52.129
I'll settle on 2,800.
On your load?
02:15:52.129 --> 02:15:53.164
Yes, sir.
02:15:53.164 --> 02:15:53.997
And then I would also,
02:15:53.997 --> 02:15:55.933
because I mentioned this earlier is so,
02:15:57.041 --> 02:15:59.298
Curtis Washington, (indistinct) as well,
02:15:59.298 --> 02:16:02.520
that the IMM one, so
that would be 1,430,
02:16:02.520 --> 02:16:04.640
but understanding that
there's a lot of interaction
02:16:04.640 --> 02:16:07.090
where that's not actually
the main sales trigger.
02:16:08.892 --> 02:16:10.892
Certainly, that's 14 ...
02:16:14.335 --> 02:16:17.083
1,430 as MCL, so you have this spectrum.
02:16:18.148 --> 02:16:19.170
Available 1,430 is MCL.
02:16:19.170 --> 02:16:21.270
Right, but the way
the ORDC interacts
02:16:21.270 --> 02:16:23.341
with the VOLL being a lot higher.
02:16:23.341 --> 02:16:24.174
Certainly.
It's actually not.
02:16:24.174 --> 02:16:25.856
That's why Kenan was like.
02:16:25.856 --> 02:16:28.493
If I have to go explain
this to the government,
02:16:29.635 --> 02:16:31.322
they're coming around to the legislature
02:16:31.322 --> 02:16:32.960
on how we work this,
and it's very tough to sell.
02:16:32.960 --> 02:16:34.340
Which one?
I'm talking about
02:16:34.340 --> 02:16:36.360
the IMM's proposal right now.
02:16:36.360 --> 02:16:37.590
I mean, I'm sure there's merit.
02:16:37.590 --> 02:16:38.640
I'm just saying that,
02:16:39.930 --> 02:16:41.680
I don't even understand this thing.
02:16:42.847 --> 02:16:43.680
Okay.
(Lori laughs)
02:16:43.680 --> 02:16:45.542
But get a transcript.
Well.
02:16:45.542 --> 02:16:47.553
(they all laugh)
02:16:47.553 --> 02:16:50.131
(Lori's voice is drowned by laughter)
02:16:50.131 --> 02:16:51.149
Okay, so ...
02:16:51.149 --> 02:16:52.020
I know there's some merit
02:16:52.020 --> 02:16:53.136
to sticking to the
basics for twice a week,
02:16:53.136 --> 02:16:54.974
and it's very easy to
over-engineer this stuff.
02:16:54.974 --> 02:16:56.249
Yeah.
All right.
02:16:56.249 --> 02:16:57.815
I was just putting it in there,
02:16:57.815 --> 02:16:59.200
because it's from a third party neutral
02:17:00.772 --> 02:17:01.931
party that I've heard
02:17:01.931 --> 02:17:04.233
both the generation side
and the consumer cost side.
02:17:05.570 --> 02:17:06.620
Good data point to have.
Good data point to have.
02:17:06.620 --> 02:17:07.707
Sure.
02:17:07.707 --> 02:17:08.720
Not because I'm 100% behind it.
02:17:08.720 --> 02:17:11.410
I need to see spectrums
and figure out where I land.
02:17:11.410 --> 02:17:13.970
So I think as a matter of due diligence,
02:17:13.970 --> 02:17:15.930
because it is a third
party, you're providing them
02:17:15.930 --> 02:17:17.960
a proposal that
02:17:21.127 --> 02:17:23.860
I guess would maybe
provide the incentive,
02:17:23.860 --> 02:17:26.625
in their opinion, for
dispatchable generation
02:17:26.625 --> 02:17:29.212
and (indistinct) solve the generation
02:17:29.212 --> 02:17:31.011
and starting the flow of customers
02:17:31.011 --> 02:17:32.640
that they would be comfortable with it.
02:17:32.640 --> 02:17:34.580
I would like to at
least see what it does.
02:17:34.580 --> 02:17:35.900
Yes, and along those lines,
02:17:35.900 --> 02:17:38.440
will you add to the
request for this analysis
02:17:38.440 --> 02:17:39.890
to not only show the
02:17:40.830 --> 02:17:45.426
additional revenue
contributed to the marketplace,
02:17:45.426 --> 02:17:46.643
which is, I think what
we're all solving for here,
02:17:48.040 --> 02:17:52.000
under the base case,
best case, worst case,
02:17:52.000 --> 02:17:54.093
can weather condition scenarios,
02:17:55.216 --> 02:17:57.480
but also have the analysis show
02:17:59.049 --> 02:18:02.770
the ORDC at or at 6,500 megawatts,
02:18:02.770 --> 02:18:06.177
what will that be across all spectrums?
02:18:06.177 --> 02:18:07.850
Because what I'm solving for in this
02:18:08.857 --> 02:18:10.623
is a market base rocking,
02:18:11.900 --> 02:18:15.780
getting units on
sooner rather than later
02:18:15.780 --> 02:18:18.450
so these generators
02:18:18.450 --> 02:18:22.690
can operate their businesses
at a reasonable profit
02:18:22.690 --> 02:18:25.933
without the grid having
to get to the brink,
02:18:26.940 --> 02:18:29.290
get away from that
crisis-based business model.
02:18:30.620 --> 02:18:32.528
So in terms of price caps,
02:18:32.528 --> 02:18:34.141
I think you've covered the spectrum.
02:18:34.141 --> 02:18:38.224
I think let's look at
6,000, let's look at 4,500.
02:18:39.730 --> 02:18:42.100
And I think for the sake of
02:18:42.100 --> 02:18:44.632
following through on the IMM's proposal,
02:18:44.632 --> 02:18:46.650
you have to decouple it, so you'd have,
02:18:46.650 --> 02:18:51.034
I believe a 20,000 VOLL?
20,000 VOLL.
02:18:51.034 --> 02:18:52.234
And a 5,000 price cap.
02:18:53.558 --> 02:18:55.507
Okay, that's a good
scenario, that's all right.
02:18:55.507 --> 02:18:58.000
And in terms of
standard deviations,
02:18:58.000 --> 02:18:59.587
I think we don't include one.
02:19:00.846 --> 02:19:01.679
And I don't think any of us
02:19:01.679 --> 02:19:03.343
have looked at any of that.
02:19:03.343 --> 02:19:04.456
No, it's all right,
02:19:04.456 --> 02:19:05.289
just stick with the current.
02:19:05.289 --> 02:19:06.940
Stick with the current,
02:19:06.940 --> 02:19:11.940
see what we get.
Can you do one?
02:19:12.130 --> 02:19:14.440
I think that we
covered a lot of scenarios
02:19:14.440 --> 02:19:16.250
and I wanna see what the data looks like
02:19:16.250 --> 02:19:18.270
when we run the scenario,
02:19:18.270 --> 02:19:20.360
so I don't need to add another one
02:19:21.550 --> 02:19:23.633
and we'll see where this analysis goes.
02:19:24.830 --> 02:19:26.210
All righty.
02:19:26.210 --> 02:19:28.897
Staff got everything they need?
02:19:30.890 --> 02:19:34.343
I could repeat back from
the Chairman's memo.
02:19:35.750 --> 02:19:40.213
HCAP and VOLL at 4,500 and MCL at 3,000.
02:19:42.620 --> 02:19:44.123
Commissioner McAdams,
02:19:46.230 --> 02:19:48.970
you had VOLL at 6,000.
Correct.
02:19:48.970 --> 02:19:50.833
And HCAP at 4,500.
02:19:53.190 --> 02:19:56.846
So, still under the
scenario of VOLL and HCAP
02:19:56.846 --> 02:19:58.046
at same level, so 6,000.
02:20:03.743 --> 02:20:04.643
And MCL,
02:20:06.323 --> 02:20:07.320
2,800
02:20:09.663 --> 02:20:11.586
and 3,100.
That's correct.
02:20:11.586 --> 02:20:12.792
3,200.
Oh yeah.
02:20:12.792 --> 02:20:16.542
(they speak over each other)
02:20:17.725 --> 02:20:19.690
Okay, and then
02:20:19.690 --> 02:20:21.810
the IMM scenario.
Mm-hmm.
02:20:24.412 --> 02:20:25.820
Yes.
02:20:25.820 --> 02:20:28.700
Y'all merged.
Correct.
02:20:28.700 --> 02:20:29.700
Thank you.
02:20:31.355 --> 02:20:33.389
All right, good.
Yes.
02:20:33.389 --> 02:20:36.380
Yes, and we need to get
those back before November 4th.
02:20:36.380 --> 02:20:38.080
Yeah, November 1st.
02:20:38.080 --> 02:20:40.330
Yes, exactly, as
soon as possible.
02:20:40.330 --> 02:20:42.143
But sooner
would be preferable.
02:20:42.143 --> 02:20:43.783
Exactly.
All right.
02:20:44.893 --> 02:20:46.403
I think the other questions,
02:20:47.930 --> 02:20:50.347
ORAC is pretty
straightforward this morning?
02:20:52.773 --> 02:20:54.073
Does the current ...
02:20:55.936 --> 02:20:56.920
I'll throw one out there
02:20:57.857 --> 02:20:59.330
that was litigated in the past.
02:20:59.330 --> 02:21:02.300
Does the current curve form
02:21:04.180 --> 02:21:09.090
satisfy the current
market needs?
02:21:09.090 --> 02:21:12.680
Meaning, that they consolidated
the curves in the past,
02:21:12.680 --> 02:21:14.340
should it be opened back up
02:21:16.000 --> 02:21:17.852
to more than ...
02:21:17.852 --> 02:21:18.917
If you want it
on the question list,
02:21:18.917 --> 02:21:20.441
we can put on the question list.
02:21:20.441 --> 02:21:22.889
All right, put it
on the question list.
02:21:22.889 --> 02:21:23.722
So evaluate whether or not
02:21:23.722 --> 02:21:25.200
we'd go from a blended curve
02:21:26.690 --> 02:21:28.947
to seasonal curves.
That's the question.
02:21:30.990 --> 02:21:31.823
All right.
02:21:35.570 --> 02:21:37.503
One item left on my list.
02:21:39.449 --> 02:21:41.140
I laid up a lot of thoughts on
02:21:42.800 --> 02:21:44.480
at the beginning of this meeting,
02:21:44.480 --> 02:21:49.280
the only other
thing I'll add is that
02:21:50.690 --> 02:21:53.640
much like I'm trying
to think of the ORDC
02:21:55.321 --> 02:21:57.280
as the way to bring, it is a
market-based mechanism
02:21:57.280 --> 02:22:02.040
to bring units on when
we're in scarcity events
02:22:02.040 --> 02:22:04.363
or there's a threat of a scarcity event.
02:22:10.030 --> 02:22:12.498
I think we can do better than
02:22:12.498 --> 02:22:15.148
requiring generators to
build their entire businesses
02:22:16.126 --> 02:22:18.260
and billion dollar investments on
02:22:18.260 --> 02:22:20.970
trying to guess how many hours a year
02:22:20.970 --> 02:22:22.973
they're gonna be in the scarcity event.
02:22:25.760 --> 02:22:28.540
I spoke about the forward
price formation, et cetera
02:22:29.376 --> 02:22:31.150
before, I won't belabor that point,
02:22:31.150 --> 02:22:33.900
but I'd like in a perfect world,
02:22:33.900 --> 02:22:35.858
I know we're far from a perfect world,
02:22:35.858 --> 02:22:38.860
is power generators
should build their business
02:22:38.860 --> 02:22:43.560
on the forward obligation
and those agreements
02:22:45.172 --> 02:22:47.890
and get the ORDC
bonus for being reliable
02:22:47.890 --> 02:22:49.910
when we really, really need 'em.
02:22:50.766 --> 02:22:53.030
At that point and so I'll stop there
02:22:53.030 --> 02:22:55.203
with the first question
we need to ask is,
02:22:56.140 --> 02:22:59.350
do we wanna include LSE obligation
02:22:59.350 --> 02:23:03.803
on the list of concepts
to ask questions about?
02:23:03.803 --> 02:23:05.703
I think we absolutely have to consider
02:23:07.240 --> 02:23:12.463
this and for the reason
I stated earlier, I think
02:23:13.802 --> 02:23:17.343
fear is not a reason to
not dig into a valid concept.
02:23:18.410 --> 02:23:21.270
And then, if we're
gonna have it on the list,
02:23:21.270 --> 02:23:22.463
what questions we wanna ask,
02:23:23.330 --> 02:23:24.163
I'll open it up.
02:23:26.493 --> 02:23:28.003
I would just
like to clarify that,
02:23:30.183 --> 02:23:31.016
this is where I'm coming from,
02:23:31.016 --> 02:23:32.923
it's not coming from Peter. (laughs)
02:23:36.229 --> 02:23:37.763
Well, I won't get into that,
02:23:37.763 --> 02:23:40.926
but I think yeah, let's ask questions.
02:23:40.926 --> 02:23:43.930
I mean, if you want it
evaluated, we can ask questions,
02:23:43.930 --> 02:23:46.003
but at the same token ...
02:23:49.910 --> 02:23:51.880
So, it sounds like a lot of
02:23:51.880 --> 02:23:53.520
the rest of the proposals
that were submitted
02:23:53.520 --> 02:23:55.440
or are just not being considered,
02:23:55.440 --> 02:23:56.900
for a variety of reasons.
Yeah.
02:23:56.900 --> 02:23:58.333
For a variety of reasons.
02:23:59.789 --> 02:24:00.823
But,
02:24:02.470 --> 02:24:04.752
what I don't want to happen is,
02:24:04.752 --> 02:24:06.410
because we have one left on the table
02:24:08.320 --> 02:24:10.440
that that's the only one
we're gonna (indistinct).
02:24:10.440 --> 02:24:12.540
What I would like to send
02:24:13.858 --> 02:24:15.873
a message to the
stakeholder community is,
02:24:17.140 --> 02:24:20.790
you've probably heard there's
concern with your proposal.
02:24:20.790 --> 02:24:23.053
It's too limited, it's
holding out resources.
02:24:25.560 --> 02:24:28.350
There's different
criticisms you've heard
02:24:28.350 --> 02:24:31.460
from your peers in the
stakeholder community,
02:24:31.460 --> 02:24:32.563
from the Commission.
02:24:34.570 --> 02:24:38.530
We have two avenues, right now, I think,
02:24:38.530 --> 02:24:40.260
and then one of them, it seems
02:24:40.260 --> 02:24:42.650
that would involve,
I'm not saying yes or no,
02:24:42.650 --> 02:24:44.640
I'm just saying one of
them seems to involve
02:24:44.640 --> 02:24:47.329
a central procurement
of resources, right.
02:24:47.329 --> 02:24:48.678
That's kind of the ...
02:24:48.678 --> 02:24:50.258
When you say
central procurement,
02:24:50.258 --> 02:24:53.515
that's the ERCOT Inc.
procuring resources.
02:24:53.515 --> 02:24:55.404
So those are the proposals
that we've gotten, right.
02:24:55.404 --> 02:24:57.550
They're also a central procurement.
02:24:57.550 --> 02:24:59.430
And some of them involve
02:24:59.430 --> 02:25:00.830
going through the day ahead market,
02:25:00.830 --> 02:25:03.720
which would be significantly
delayed by the EMS,
02:25:03.720 --> 02:25:05.070
which is not helpful.
02:25:05.070 --> 02:25:07.040
And some of them
involve procuring resources
02:25:07.040 --> 02:25:09.023
like we do today for ERS,
02:25:10.580 --> 02:25:13.163
but for generation
sources, so there's that side.
02:25:14.435 --> 02:25:15.580
And then we have the LSE obligation
02:25:15.580 --> 02:25:18.097
imposes an obligation on the LSEs
02:25:18.097 --> 02:25:20.687
to go and meet that
obligation in the lateral market.
02:25:20.687 --> 02:25:21.520
(indistinct) says,
02:25:21.520 --> 02:25:23.477
requiring them to be fully hedged.
02:25:25.345 --> 02:25:26.460
So,
02:25:26.460 --> 02:25:28.080
is there something out there
02:25:29.680 --> 02:25:31.230
that you haven't thought about,
02:25:32.470 --> 02:25:33.720
hearing this conversation
02:25:33.720 --> 02:25:36.300
that you can coalesce
around and bring us
02:25:36.300 --> 02:25:38.070
that will address the concerns
02:25:40.044 --> 02:25:41.033
that have been raised,
02:25:42.930 --> 02:25:45.450
that helps us achieve
this foundation level
02:25:46.651 --> 02:25:49.880
of reliability without having to
02:25:51.127 --> 02:25:52.677
significantly change our market
02:25:54.080 --> 02:25:54.913
to get there.
02:25:55.937 --> 02:25:57.440
So, if you're hearing
me, please, please,
02:25:57.440 --> 02:26:00.588
please maybe coalesce and think
02:26:00.588 --> 02:26:02.401
if there was anything you
02:26:02.401 --> 02:26:04.470
might've thought about blending together
02:26:04.470 --> 02:26:06.030
and coming up with something,
02:26:06.030 --> 02:26:08.910
because I don't wanna
just go down a path
02:26:08.910 --> 02:26:13.090
with one option because
the other ones didn't work.
02:26:13.090 --> 02:26:14.440
Sure.
02:26:14.440 --> 02:26:16.283
We need to leave the door open.
02:26:17.570 --> 02:26:18.550
In that spirit,
02:26:18.550 --> 02:26:21.393
I would propose adding
a question to this list.
02:26:22.630 --> 02:26:25.280
What would a fleet-wide generator
02:26:25.280 --> 02:26:27.643
firming standard look like?
02:26:30.474 --> 02:26:32.060
And that can be as simple as saying,
02:26:32.060 --> 02:26:34.220
all generators in ERCOT must have
02:26:34.220 --> 02:26:37.630
60% of their nameplate
capacity firmed up through
02:26:37.630 --> 02:26:40.530
either onsite, through
standard operations
02:26:40.530 --> 02:26:43.980
or through storage or through
02:26:45.320 --> 02:26:48.420
some sort of offsetting agreement with
02:26:48.420 --> 02:26:49.823
a dispatchable resource.
02:26:51.054 --> 02:26:52.307
I don't know, but in
the spirit of saying,
02:26:52.307 --> 02:26:55.250
"Hey, if this LSE
obligation doesn't work out,
02:26:55.250 --> 02:26:57.050
we're thinking about a backup plan."
02:26:58.033 --> 02:26:58.866
So we can get some feedback on that.
02:26:58.866 --> 02:27:00.120
I'd be interested to see that.
02:27:00.120 --> 02:27:00.953
And whatever
02:27:03.070 --> 02:27:04.839
new approach is provided,
02:27:04.839 --> 02:27:08.410
ultimately there one is that is open to
02:27:10.180 --> 02:27:13.480
resources that would
be available immediately
02:27:16.943 --> 02:27:20.174
and that existing
double drive investment
02:27:20.174 --> 02:27:22.320
and existing generation
and new generation
02:27:22.320 --> 02:27:23.773
and demand response,
02:27:25.690 --> 02:27:27.700
that will not be
intrusive in the market,
02:27:27.700 --> 02:27:30.003
that at least comes in at the price cap.
02:27:32.610 --> 02:27:35.720
Some kind of concept that addresses
02:27:35.720 --> 02:27:37.090
the issues that have been raised
02:27:37.090 --> 02:27:38.570
throughout all our conversations
02:27:38.570 --> 02:27:39.783
and even today.
Sure.
02:27:42.070 --> 02:27:44.976
That's what I would like to see
02:27:44.976 --> 02:27:46.626
is some other proposal out there.
02:27:49.460 --> 02:27:50.363
I fear that,
02:27:52.420 --> 02:27:54.014
well, I shouldn't say fear
02:27:54.014 --> 02:27:56.264
but I wouldn't say I
don't fear, but (laughs)
02:28:01.040 --> 02:28:03.547
at some point our existing generation
02:28:03.547 --> 02:28:04.443
has to make some money.
02:28:04.443 --> 02:28:06.460
There were many years without ...
02:28:06.460 --> 02:28:07.950
To be fair,
02:28:07.950 --> 02:28:09.470
all of our major generators
02:28:09.470 --> 02:28:13.110
post substantial annual profits
02:28:13.110 --> 02:28:15.283
operating income in
their annual reports,
02:28:16.920 --> 02:28:18.560
the public innings we can see.
02:28:18.560 --> 02:28:20.030
Okay, so ...
02:28:20.030 --> 02:28:22.083
And from
their Texas market.
02:28:22.083 --> 02:28:23.950
I'm just saying over
the spectrum of the
02:28:23.950 --> 02:28:27.713
20-30 year asset life of
these generation plants,
02:28:29.070 --> 02:28:30.530
there have been some dry years
02:28:30.530 --> 02:28:32.860
based on all the information
historically we've gotten
02:28:32.860 --> 02:28:34.400
in the past now.
02:28:34.400 --> 02:28:35.610
And we've gotta make sure
02:28:35.610 --> 02:28:37.397
that we're sending a signal
02:28:37.397 --> 02:28:38.870
to keep our existing generation fleet
02:28:39.840 --> 02:28:42.300
on the system, because we need 'em
02:28:43.290 --> 02:28:45.060
and the generators
in order to go out there
02:28:45.060 --> 02:28:48.650
and be able to finance
these big, expensive assets
02:28:48.650 --> 02:28:50.220
that'll be around for 20 to 30 years
02:28:50.220 --> 02:28:52.080
are going to need
to have a price signal,
02:28:52.080 --> 02:28:54.750
and they're gonna need
to make some money, right.
02:28:54.750 --> 02:28:57.192
So I don't wanna just
02:28:57.192 --> 02:28:59.370
move off proposals on the table,
02:28:59.370 --> 02:29:01.270
because they might make money.
02:29:01.270 --> 02:29:04.431
They have to make money
to be in this business.
02:29:04.431 --> 02:29:06.800
So anyway, I'm gonna end it with just,
02:29:06.800 --> 02:29:09.080
there is some other concept out there
02:29:10.660 --> 02:29:12.870
that could address our concerns.
02:29:12.870 --> 02:29:13.940
Please come forward,
02:29:13.940 --> 02:29:15.440
we would love to hear about it.
02:29:15.440 --> 02:29:17.930
Okay, got that, the staff?
02:29:17.930 --> 02:29:19.513
Yes.
All right.
02:29:21.840 --> 02:29:23.240
From Monday, Mr. Chairman,
02:29:25.515 --> 02:29:27.010
like your question number
one, how do we ensure ...
02:29:27.010 --> 02:29:29.953
Okay, back to my original
statement and just reaffirm,
02:29:31.193 --> 02:29:34.110
I believe we need to
examine a firming requirement.
02:29:34.110 --> 02:29:39.760
And the proposal as
constructed at hand now
02:29:39.760 --> 02:29:42.200
is a LSE obligation,
02:29:42.200 --> 02:29:44.320
but essentially it's a
firming requirement
02:29:44.320 --> 02:29:46.240
on load serving instincts.
02:29:46.240 --> 02:29:50.780
And in order to address future needs,
02:29:50.780 --> 02:29:53.060
we need to have analysis conducted,
02:29:53.060 --> 02:29:54.860
so this is an opportunity.
02:29:54.860 --> 02:29:57.920
I believe we should move
forward and analyze this.
02:29:57.920 --> 02:30:00.960
So, in that spirit, with your questions,
02:30:00.960 --> 02:30:02.640
how do we ensure the continued viability
02:30:02.640 --> 02:30:04.010
of the competitive market?
02:30:04.010 --> 02:30:05.283
Absolutely essential.
02:30:06.360 --> 02:30:07.193
Well, that's number one.
02:30:07.193 --> 02:30:08.863
I can't answer
that, and I'm out.
02:30:10.170 --> 02:30:12.020
How do we prevent market manipulation
02:30:12.020 --> 02:30:13.760
by affiliated gentailers
02:30:13.760 --> 02:30:15.580
at the expense of independent retailers?
02:30:15.580 --> 02:30:17.830
Again, speaking to
the competitive health
02:30:17.830 --> 02:30:19.480
of the energy only market design,
02:30:21.103 --> 02:30:22.350
like how do we ensure
demand response resources
02:30:22.350 --> 02:30:25.213
can participate fully
at all points in time?
02:30:26.150 --> 02:30:28.280
Absolutely critical in my view,
02:30:28.280 --> 02:30:29.950
so everybody hears that.
02:30:29.950 --> 02:30:31.630
If there is so much a semblance
02:30:31.630 --> 02:30:34.930
of pulling up a ladder
on a independent retailer
02:30:34.930 --> 02:30:36.960
being able to innovate their way
02:30:36.960 --> 02:30:40.100
into a firming construct,
to where they have
02:30:40.100 --> 02:30:42.460
DR or DG, that's a problem
02:30:42.460 --> 02:30:44.710
and we have to address
that on the front end.
02:30:46.370 --> 02:30:48.040
What is the appropriate
accreditation level
02:30:48.040 --> 02:30:48.873
for each resource?
02:30:48.873 --> 02:30:50.720
Again, speaking to that issue,
02:30:50.720 --> 02:30:52.240
what is the appropriate segment of time
02:30:52.240 --> 02:30:53.480
for each obligation?
02:30:53.480 --> 02:30:56.290
Months, weeks, 24 hour operating day,
02:30:56.290 --> 02:30:58.150
12 hour segments, or hourly?
02:30:58.150 --> 02:31:01.010
Again, speaking to the
liquidity or capital requirements
02:31:01.010 --> 02:31:02.070
for new market entrants,
02:31:02.070 --> 02:31:04.403
and that's a crucial question,
02:31:04.403 --> 02:31:08.060
because again, if
you're a small fish retailer
02:31:08.060 --> 02:31:09.250
and you wanna get in,
02:31:09.250 --> 02:31:10.770
that's gonna be a barrier to entry.
02:31:10.770 --> 02:31:12.690
And again, the health of our market
02:31:12.690 --> 02:31:15.000
has always been the doors wide open,
02:31:15.000 --> 02:31:18.260
so we have a competitively
healthy market.
02:31:18.260 --> 02:31:23.260
Well, again the non-gentailer
segment has shrunk over time
02:31:23.360 --> 02:31:25.643
so we're watching that carefully,
02:31:25.643 --> 02:31:28.640
but it's crucial in our consideration.
02:31:28.640 --> 02:31:30.963
So in that vein,
02:31:34.220 --> 02:31:35.870
another technical question,
02:31:35.870 --> 02:31:39.410
what mechanism will ensure
those receiving revenue streams
02:31:39.410 --> 02:31:43.213
for the reliability services
perform adequately?
02:31:44.940 --> 02:31:49.573
Again, the meaningful
penalties must be in place,
02:31:49.573 --> 02:31:50.823
so how do we address that
02:31:51.660 --> 02:31:52.713
within the proposal?
02:31:54.980 --> 02:31:56.530
And how should we address that?
02:32:00.610 --> 02:32:02.850
And how will the reliability
needs of the system
02:32:02.850 --> 02:32:05.010
be determined and how
will objective standards
02:32:05.010 --> 02:32:07.600
around the value of the reliability
02:32:07.600 --> 02:32:11.430
providing assets be
set on an ongoing basis?
02:32:11.430 --> 02:32:12.950
And that gets to the heart of it.
02:32:12.950 --> 02:32:15.460
What problem are we attempting to solve
02:32:15.460 --> 02:32:16.863
for a 1 in 10 standard?
02:32:19.540 --> 02:32:20.840
I mean, that's always been
02:32:21.892 --> 02:32:23.900
the devil in the detail
on this argument.
02:32:23.900 --> 02:32:25.813
Can I drop a footnote on that?
02:32:25.813 --> 02:32:26.646
Go ahead.
02:32:26.646 --> 02:32:28.154
I think as part
of this evaluation,
02:32:28.154 --> 02:32:29.404
we need to have
02:32:30.714 --> 02:32:32.514
Brattle and Strope and ERCOT develop
02:32:34.310 --> 02:32:38.970
options on reliability
standards or targets
02:32:40.244 --> 02:32:41.077
and bring them to us,
02:32:41.077 --> 02:32:42.610
so that we can at least have an idea
02:32:43.501 --> 02:32:44.923
of what we can put our pin on,
02:32:45.810 --> 02:32:46.914
and it doesn't have to be
02:32:46.914 --> 02:32:47.747
the 1 in 10 reliability standard.
02:32:47.747 --> 02:32:49.408
We could look at a more
granular, seasonal standard.
02:32:49.408 --> 02:32:50.871
That's a good idea.
02:32:50.871 --> 02:32:53.070
Ones that are focused on
dispatchable configuration.
02:32:53.070 --> 02:32:54.670
So, I think we need to have them
02:32:56.458 --> 02:32:57.560
put a study together
02:32:57.560 --> 02:33:01.253
that strictly by options
for our evaluation.
02:33:02.240 --> 02:33:03.600
Can we add a menu
02:33:06.353 --> 02:33:09.589
of reliability standards to the list.
02:33:09.589 --> 02:33:10.640
I'd like to see the top three
02:33:12.900 --> 02:33:15.493
global versions of
reliability standards.
02:33:16.656 --> 02:33:17.489
Does that work?
02:33:17.489 --> 02:33:18.964
Yeah, because the Europeans
02:33:18.964 --> 02:33:19.797
are having to face this right now.
02:33:19.797 --> 02:33:22.643
It'd be interesting to see
how these things are tweaked.
02:33:23.750 --> 02:33:24.607
Yeah, I mean
02:33:24.607 --> 02:33:28.320
the Europeans, the
Chinese are in a massive,
02:33:28.320 --> 02:33:29.663
UK, France,
02:33:31.510 --> 02:33:34.900
a massive energy crisis
because of the same,
02:33:34.900 --> 02:33:36.270
the penetration of intermittence,
02:33:36.270 --> 02:33:38.167
the lack of new dispatchable.
02:33:40.100 --> 02:33:41.647
This is not a unique problem,
02:33:41.647 --> 02:33:43.570
but we hopefully will be,
02:33:43.570 --> 02:33:45.874
we need to be ahead
of the curve on this.
02:33:45.874 --> 02:33:48.930
So just to make sure that
we have enough information,
02:33:48.930 --> 02:33:50.770
because I think we might find
02:33:50.770 --> 02:33:52.650
that there's a lot of 1 in 10 out there,
02:33:52.650 --> 02:33:54.553
and I wanna kind of get away from that
02:33:54.553 --> 02:33:56.048
and think outside the box.
02:33:56.048 --> 02:33:56.881
So let's look at
02:33:57.730 --> 02:33:59.860
maybe a standard that's based on
02:33:59.860 --> 02:34:02.583
some kind of dispatchable
generation foundation,
02:34:03.720 --> 02:34:05.390
some kind of option there.
02:34:05.390 --> 02:34:06.550
How about this?
02:34:06.550 --> 02:34:10.150
We need three options
for reliability standards
02:34:11.617 --> 02:34:13.670
from local examples or proposals.
02:34:13.670 --> 02:34:16.523
None of the three can be
1 in 10 or one in anything.
02:34:17.429 --> 02:34:19.400
Okay.
Something there.
02:34:19.400 --> 02:34:20.358
Maybe?
02:34:20.358 --> 02:34:21.580
That's gonna narrow the field.
02:34:21.580 --> 02:34:23.657
Well, the seasonality.
Well, yeah.
02:34:23.657 --> 02:34:24.490
I mean, we know what that looks like.
02:34:24.490 --> 02:34:25.643
We don't need somebody to tell us
02:34:25.643 --> 02:34:26.693
what that looks like.
02:34:29.120 --> 02:34:29.953
All right.
02:34:32.814 --> 02:34:35.230
Okay, as we move
forward again, near-term
02:34:36.391 --> 02:34:37.860
and this is such a broad concept.
02:34:37.860 --> 02:34:39.970
It has far reaching consequences
02:34:39.970 --> 02:34:42.783
if it grows out of the crib.
02:34:44.300 --> 02:34:47.470
What assurances from
the public utility Commission
02:34:47.470 --> 02:34:49.810
need to be made to help stabilize
02:34:49.810 --> 02:34:52.300
both retail and wholesale markets
02:34:52.300 --> 02:34:55.983
in the event of a LSE
obligation being imposed?
02:34:58.795 --> 02:35:00.490
What do you
mean by stabilized?
02:35:00.490 --> 02:35:03.690
Again, if say
02:35:03.690 --> 02:35:05.320
liquidity dries up?
02:35:05.320 --> 02:35:07.020
What do those independents,
02:35:07.020 --> 02:35:09.580
non-affiliated,
non-gentailers need to hear
02:35:11.560 --> 02:35:13.554
that assures them,
02:35:13.554 --> 02:35:14.410
that they have a place in this market
02:35:14.410 --> 02:35:15.660
under this new construct,
02:35:17.230 --> 02:35:20.010
a covenant between the state and that
02:35:21.406 --> 02:35:24.510
non-aligned, non-affiliated
segment of the market.
02:35:27.080 --> 02:35:28.966
Okay.
Put it to bed.
02:35:28.966 --> 02:35:30.241
What?
02:35:30.241 --> 02:35:31.110
You can go
ahead if you want to.
02:35:31.110 --> 02:35:33.290
Yeah, I have a couple thoughts
02:35:33.290 --> 02:35:37.410
and one of them is on questions
02:35:37.410 --> 02:35:39.850
for the LSE obligation, that would be.
02:35:39.850 --> 02:35:42.980
So what is a rational
and realistic timeline
02:35:42.980 --> 02:35:46.040
for implementation at the PUC as well as
02:35:46.040 --> 02:35:48.780
every component of that at ERCOT?
02:35:52.810 --> 02:35:53.833
Yes,
02:35:57.819 --> 02:36:00.004
can we save that for round two,
02:36:00.004 --> 02:36:02.127
until we get more
specifics on what we ...
02:36:02.127 --> 02:36:03.070
'cause it changes dramatically, right.
02:36:03.070 --> 02:36:04.610
I don't know, does it?
02:36:04.610 --> 02:36:05.443
I guess it does.
02:36:06.900 --> 02:36:08.130
So, if we're gonna
have a centralized
02:36:08.130 --> 02:36:11.273
clearing exchange
that needs to be built out
02:36:11.273 --> 02:36:14.004
where only these credits
can be traded through that,
02:36:14.004 --> 02:36:15.364
that's very different than saying
02:36:15.364 --> 02:36:16.197
churches are gonna do an audit mechanism
02:36:16.197 --> 02:36:17.253
on a bulletin board.
02:36:18.602 --> 02:36:19.565
That is very true.
02:36:19.565 --> 02:36:20.519
Well, that's a good
point, so let's go for this.
02:36:20.519 --> 02:36:22.783
So let me ask you this in dovetail
02:36:22.783 --> 02:36:24.133
to your idea, Commissioner.
02:36:25.497 --> 02:36:30.080
So in SPP, this came
up in prelude to a
02:36:30.080 --> 02:36:33.390
regional state committee meeting.
02:36:33.390 --> 02:36:35.680
SPP, does it, does this,
02:36:35.680 --> 02:36:38.950
they manage the centralized
clearing house in-house,
02:36:38.950 --> 02:36:40.090
it's incredibly complicated.
02:36:40.090 --> 02:36:42.573
Their staff takes no ...
02:36:43.465 --> 02:36:44.440
I mean, it makes no bones about it.
02:36:44.440 --> 02:36:47.520
And then they outsource different advice
02:36:47.520 --> 02:36:49.850
capabilities to a consultant, so
02:36:49.850 --> 02:36:52.400
is that appropriate on
this front end to ask,
02:36:52.400 --> 02:36:55.650
is this the state's job
to administer this thing?
02:36:55.650 --> 02:36:57.710
'Cause that's a big
question for me as a ...
02:36:57.710 --> 02:36:59.346
You tell me the answer.
02:36:59.346 --> 02:37:00.220
I mean, I'd put
that in the same bucket
02:37:00.220 --> 02:37:02.171
like round two.
Round two.
02:37:02.171 --> 02:37:03.750
Because if we decide we need
02:37:03.750 --> 02:37:06.620
a centrally clear must offer in,
02:37:06.620 --> 02:37:08.897
you can only trade these credits
02:37:08.897 --> 02:37:10.350
in a place where everybody
gets the same chance to bid
02:37:10.350 --> 02:37:13.680
and everybody can see
the prices that are traded,
02:37:13.680 --> 02:37:15.470
that's a different implementation
02:37:16.585 --> 02:37:17.418
than a bulletin board audit system.
02:37:17.418 --> 02:37:18.810
Okay.
02:37:18.810 --> 02:37:20.310
But if we get to that point,
02:37:21.270 --> 02:37:24.080
depending on where we're
in, I'm 100% comfortable
02:37:24.080 --> 02:37:25.480
asking that question, but
02:37:26.320 --> 02:37:29.820
completely outsourcing
the development of that
02:37:33.157 --> 02:37:34.853
to the market industry.
02:37:35.925 --> 02:37:37.590
Yeah, I mean, there's a huge universe
02:37:37.590 --> 02:37:40.775
of companies that do
this and they do it all,
02:37:40.775 --> 02:37:42.993
if this was all they
do all day, every day,
02:37:42.993 --> 02:37:43.826
I'd be more than
happy to outsource that,
02:37:43.826 --> 02:37:45.593
management of that,
and ask that question,
02:37:46.490 --> 02:37:49.483
but yes, let's get
some scope on the ...
02:37:52.290 --> 02:37:54.620
Let's narrow what we're comfortable with
02:37:55.987 --> 02:37:57.640
before we try to get
02:37:57.640 --> 02:37:59.593
in the weeds on implementation,
02:38:00.839 --> 02:38:01.672
does that work, does that makes sense?
02:38:01.672 --> 02:38:02.505
Yes, it does.
02:38:07.125 --> 02:38:08.900
I think it's really
important for us
02:38:08.900 --> 02:38:11.300
to ask the question as you posed here,
02:38:11.300 --> 02:38:13.530
what's the appropriate
accreditation level
02:38:13.530 --> 02:38:14.380
for each resource?
02:38:14.380 --> 02:38:15.223
I think it's,
02:38:16.150 --> 02:38:18.770
what are the attributes of
them that we are gonna value?
02:38:18.770 --> 02:38:22.210
Whether it be on-site storage from gas,
02:38:22.210 --> 02:38:23.570
what is it?
02:38:23.570 --> 02:38:26.283
And how's it applied
equally across the board,
02:38:27.420 --> 02:38:28.680
I think is really ...
02:38:28.680 --> 02:38:30.680
When you say
equally, what are you ...
02:38:31.800 --> 02:38:33.703
Well, I mean
equally in terms of,
02:38:34.674 --> 02:38:37.190
if you put up a battery at one resource
02:38:37.190 --> 02:38:38.256
and a battery in another,
02:38:38.256 --> 02:38:41.880
if they are alike, they
get a like accreditation.
02:38:41.880 --> 02:38:42.920
Okay, sure, sure.
02:38:42.920 --> 02:38:45.720
Universal application of
accreditation standards.
02:38:45.720 --> 02:38:46.656
Yeah, yeah, yeah.
Okay.
02:38:46.656 --> 02:38:48.514
I'm fearful
02:38:48.514 --> 02:38:50.673
of who would do that.
02:38:52.040 --> 02:38:58.830
But, I'll save
that for next time.
02:38:58.830 --> 02:39:01.633
And the one thing that I
wanna bring up on the ...
02:39:02.720 --> 02:39:04.350
So, I really don't have anything else
02:39:04.350 --> 02:39:05.890
on the LSE obligation.
02:39:05.890 --> 02:39:07.980
I really think it's, for me,
02:39:07.980 --> 02:39:09.980
the greatest hurdle is what does it,
02:39:09.980 --> 02:39:12.190
does it decimate the retail market?
02:39:12.190 --> 02:39:13.697
How do we deal with that?
02:39:14.830 --> 02:39:17.627
All the other issues that
you all have brought up
02:39:17.627 --> 02:39:18.520
are secondary issues to me
02:39:18.520 --> 02:39:22.080
and I believe that we are on track for
02:39:22.080 --> 02:39:24.580
asking the right questions.
Okay, correct.
02:39:24.580 --> 02:39:27.750
The other issue is,
02:39:27.750 --> 02:39:30.923
what proposals are out there
if we decide to scrap this?
02:39:32.860 --> 02:39:35.980
My view on this is
02:39:38.890 --> 02:39:43.628
there are proposals out there that
02:39:43.628 --> 02:39:46.160
ensure that existing megawatts
02:39:46.160 --> 02:39:48.010
that are on the system don't go away.
02:39:49.681 --> 02:39:53.973
We're in a transition period.
02:39:53.973 --> 02:39:57.191
What I don't want is to incent a market
02:39:57.191 --> 02:39:59.320
and people to come to invest capital
02:40:00.174 --> 02:40:03.310
for a 20 year project or a 20 year asset
02:40:03.310 --> 02:40:04.970
that in five years goes away.
02:40:04.970 --> 02:40:07.470
We've been through the
stranded cost issue before.
02:40:09.610 --> 02:40:11.640
And there's no assurance
02:40:11.640 --> 02:40:13.640
that they would ever
get recovery on that,
02:40:13.640 --> 02:40:14.990
like they have in the past.
02:40:15.977 --> 02:40:18.220
But if there's a way
to incent existing units
02:40:18.220 --> 02:40:20.300
that are on the system,
02:40:20.300 --> 02:40:23.423
for a short period of
time, a transition time ...
02:40:25.485 --> 02:40:27.060
I hate to use this,
02:40:27.060 --> 02:40:31.250
but Cash For Clunkers was the name.
02:40:31.250 --> 02:40:32.930
At least in the old ...
02:40:32.930 --> 02:40:35.710
You'd turn in your old car
and you'd get cash for it,
02:40:35.710 --> 02:40:37.010
but keep it running,
02:40:37.010 --> 02:40:39.530
keep the things that are
running on the system
02:40:39.530 --> 02:40:41.530
before we have to build something new.
02:40:41.530 --> 02:40:43.150
Allow demand response to work,
02:40:43.150 --> 02:40:44.900
allow the batteries to work.
02:40:44.900 --> 02:40:47.720
So all I'm saying is,
if we're not looking at
02:40:50.050 --> 02:40:51.510
an LSE obligation,
02:40:51.510 --> 02:40:53.440
that might be something
that I would propose
02:40:53.440 --> 02:40:55.490
that we at least look
as an interim measure
02:40:55.490 --> 02:40:57.030
of megawatts on the system.
02:40:57.030 --> 02:40:58.516
Cash For Clunkers.
Yes, sir.
02:40:58.516 --> 02:40:59.923
Okay.
02:41:01.880 --> 02:41:03.470
I'm highly confident
02:41:03.470 --> 02:41:05.848
I don't wanna do something like that.
02:41:05.848 --> 02:41:07.098
I understand.
02:41:08.580 --> 02:41:09.550
And in the interim,
02:41:09.550 --> 02:41:12.910
or if this is not what works, I think
02:41:14.190 --> 02:41:16.523
Lori, the question around what else.
02:41:18.750 --> 02:41:21.330
My question I already said
is fleet wide firm extend,
02:41:21.330 --> 02:41:23.360
I'd rather do that straight away.
02:41:23.360 --> 02:41:24.676
At the end of the day,
02:41:24.676 --> 02:41:25.509
don't we have Cash For Clunkers?
02:41:25.509 --> 02:41:27.650
It's called Reliability Must Run?
02:41:27.650 --> 02:41:29.487
You wanna retire your
clunker, and we're like,
02:41:29.487 --> 02:41:32.081
"We're gonna pay you a
rate of return to keep that
02:41:32.081 --> 02:41:32.914
thing running."
Yeah, in a sense,
02:41:32.914 --> 02:41:34.575
we did run it.
02:41:34.575 --> 02:41:36.992
(they laugh)
02:41:40.105 --> 02:41:41.573
Okay, fair enough.
02:41:41.573 --> 02:41:43.589
Anyway, that's my view.
02:41:43.589 --> 02:41:44.970
All right.
02:41:44.970 --> 02:41:46.550
Okay, so I have
02:41:46.550 --> 02:41:48.420
a variety of things I wanna address.
02:41:48.420 --> 02:41:50.849
And one thing I wanna just go back to
02:41:50.849 --> 02:41:52.249
and just to level set again.
02:41:55.740 --> 02:41:57.300
We centrally procure right now,
02:41:57.300 --> 02:42:00.270
load resources through
the ODRS, let's not be
02:42:00.270 --> 02:42:01.424
too scared.
Centrally procured ...
02:42:01.424 --> 02:42:02.827
Centrally procuring ...
Non-spend and
02:42:02.827 --> 02:42:04.710
Delivery.
RRS, yeah.
02:42:04.710 --> 02:42:07.230
Okay, so we do a lot of
central procurement already,
02:42:07.230 --> 02:42:10.980
so let's not to be too, just overhead,
02:42:10.980 --> 02:42:12.770
fearful (laughs) of ...
02:42:12.770 --> 02:42:14.700
Sure, but I'm
confident if the legislature
02:42:14.700 --> 02:42:18.281
wanted a capacity market,
they would have put that in SP3.
02:42:18.281 --> 02:42:20.450
Right, but this is a
competitive auction mechanism
02:42:20.450 --> 02:42:23.230
that I'm looking for,
not a capacity market
02:42:23.230 --> 02:42:24.903
that's open to all resources.
02:42:26.810 --> 02:42:28.240
I shouldn't say looking for,
02:42:28.240 --> 02:42:29.530
but that's what the other ...
02:42:29.530 --> 02:42:30.930
They're very much different.
02:42:33.000 --> 02:42:33.833
So, okay.
02:42:33.833 --> 02:42:35.620
So, let me just get away
from those concepts right now,
02:42:35.620 --> 02:42:37.713
so that we can get to these questions.
02:42:38.560 --> 02:42:40.490
Okay, so with respect,
02:42:40.490 --> 02:42:42.120
I'm with Commissioner Glotfelty,
02:42:42.120 --> 02:42:47.090
the two primary issues
that are, out of many,
02:42:47.090 --> 02:42:49.190
that we need to focus
on, at least preliminarily
02:42:49.190 --> 02:42:50.940
is the impact of the retail market.
02:42:52.475 --> 02:42:53.750
And, as a subset to that,
02:42:53.750 --> 02:42:56.260
what is the impact to customer choice
02:42:56.260 --> 02:42:58.703
as we have customers
switching, migration,
02:43:02.037 --> 02:43:04.007
and how would we monitor
02:43:04.007 --> 02:43:07.260
market power in a bilateral market?
02:43:07.260 --> 02:43:09.320
What mechanisms can we put in place
02:43:09.320 --> 02:43:11.700
to ensure that the ERCOT IMM
02:43:13.380 --> 02:43:15.720
can do her job, okay,
02:43:15.720 --> 02:43:18.170
monitor market power in
a bilateral market, okay.
02:43:21.180 --> 02:43:23.903
Then I would look at ...
02:43:26.200 --> 02:43:28.290
I know we need to wait
on the implementation
02:43:28.290 --> 02:43:31.143
and scope a little bit more
of the main elements of it.
02:43:35.130 --> 02:43:36.550
How will the proposal
02:43:37.420 --> 02:43:42.183
address realtime market
operational reliability issues?
02:43:43.410 --> 02:43:45.860
That's the other issue I
really wanna understand.
02:43:47.026 --> 02:43:49.710
How does it
impact it or enhance it?
02:43:49.710 --> 02:43:51.240
How would it
address, I'm sorry.
02:43:51.240 --> 02:43:54.940
How would it address realtime market
02:43:54.940 --> 02:43:57.540
operational reliability issues?
02:43:57.540 --> 02:43:59.260
I really want that
answer because I think
02:43:59.260 --> 02:44:00.610
that's what we've been dealing with,
02:44:00.610 --> 02:44:02.090
that's what we continue to deal with.
02:44:02.090 --> 02:44:05.290
And I'm wondering how it
all works in the construct,
02:44:05.290 --> 02:44:07.670
fair game?
Sure.
02:44:07.670 --> 02:44:10.425
I've got a pretty good idea
02:44:10.425 --> 02:44:11.760
what the stakeholder response would be.
02:44:11.760 --> 02:44:12.760
We've got two stakeholders
that say it's great,
02:44:12.760 --> 02:44:15.042
and the rest of 'em
are saying it's horrible
02:44:15.042 --> 02:44:16.180
because it's not their idea.
02:44:16.180 --> 02:44:17.503
My short answer would be,
02:44:20.517 --> 02:44:24.597
ECRS addresses realtime and whatever ...
02:44:25.460 --> 02:44:27.120
AS, expanded AS, expanded RS,
02:44:27.120 --> 02:44:30.940
that addresses realtime
operational concerns.
02:44:30.940 --> 02:44:33.423
And that's why you pair 'em together.
02:44:34.330 --> 02:44:36.430
This provides
02:44:37.450 --> 02:44:41.220
accountability and honest accountability
02:44:41.220 --> 02:44:42.870
of resource reliability standards
02:44:43.750 --> 02:44:47.049
by type and provides forward
02:44:47.049 --> 02:44:51.980
investment price formation signals for
02:44:51.980 --> 02:44:54.570
people to make those
billion dollar decisions
02:44:55.520 --> 02:44:56.720
to build new generation.
02:44:57.911 --> 02:44:59.561
And Sam would say, he knew all,
02:45:00.600 --> 02:45:02.600
watching from Massachusetts or wherever,
02:45:03.843 --> 02:45:04.820
but he would say we're trying to solve
02:45:04.820 --> 02:45:06.093
for two issues, right?
02:45:07.871 --> 02:45:08.704
And I can't remember the order,
02:45:08.704 --> 02:45:11.043
but one was solving for
duck, that curve again,
02:45:12.191 --> 02:45:15.040
that variability within the new
resource mix that will come.
02:45:15.040 --> 02:45:16.190
And that's the realtime
02:45:17.330 --> 02:45:19.170
performance basis and operational
02:45:21.830 --> 02:45:23.223
incentive system.
02:45:24.361 --> 02:45:27.510
And then we are
attempting with this proposal
02:45:27.510 --> 02:45:29.990
to solve for the other problem,
02:45:29.990 --> 02:45:32.900
which is the long-term on aggregate
02:45:34.617 --> 02:45:38.659
dispatchability capabilities
of the grid in general,
02:45:38.659 --> 02:45:39.492
not on a performance basis,
02:45:39.492 --> 02:45:42.830
not on a specific technical
performance basis,
02:45:42.830 --> 02:45:43.920
but on a dispatch-
02:45:43.920 --> 02:45:45.360
Resources, have
long-term resources.
02:45:45.360 --> 02:45:46.270
Yeah, great resources.
02:45:46.270 --> 02:45:47.817
And I'll say,
02:45:47.817 --> 02:45:50.308
the second helps the first.
02:45:50.308 --> 02:45:52.413
Yes, theoretically.
Yeah.
02:45:53.457 --> 02:45:54.618
So let me ask you this,
02:45:54.618 --> 02:45:56.853
if in fact it would incent,
02:45:58.148 --> 02:45:59.210
and maybe we turn this into a question
02:45:59.210 --> 02:46:04.118
and I'm gonna try and
figure out how to do this,
02:46:04.118 --> 02:46:05.260
because what I'm wondering is,
02:46:05.260 --> 02:46:06.853
if we have this LSE obligation,
02:46:08.037 --> 02:46:09.620
and we have more dispatchable
generation ultimately,
02:46:09.620 --> 02:46:11.103
or some incremental increase,
02:46:12.100 --> 02:46:13.910
how does that LSE obligation account
02:46:13.910 --> 02:46:16.090
for the increased
amount of forced outages
02:46:16.090 --> 02:46:18.163
that we've seen in the summer?
02:46:19.580 --> 02:46:21.880
We've had a little
bit of that go on too,
02:46:21.880 --> 02:46:24.300
so I'd want to forget
about the fact that
02:46:24.300 --> 02:46:26.940
we need to add it, and that through ORDC
02:46:26.940 --> 02:46:29.180
will add money to
the market to hopefully
02:46:29.180 --> 02:46:30.640
pay for maintenance and
02:46:31.845 --> 02:46:34.010
upgrade some of
these existing facilities
02:46:34.010 --> 02:46:35.630
and take care of that.
02:46:35.630 --> 02:46:37.588
Just looking, so first,
02:46:37.588 --> 02:46:38.421
just because you provide money
02:46:38.421 --> 02:46:39.660
doesn't mean it goes to maintenance.
02:46:40.520 --> 02:46:41.550
It could go to the shareholders,
02:46:41.550 --> 02:46:42.800
it could go to dividends ...
02:46:42.800 --> 02:46:44.747
Well, that's where
the penalties come in.
02:46:44.747 --> 02:46:45.612
Right.
02:46:45.612 --> 02:46:46.814
Well, I mean, I've
already seen that.
02:46:46.814 --> 02:46:48.590
You're just dumping
money on performing assets,
02:46:48.590 --> 02:46:50.550
we don't have any control
over where that money goes.
02:46:50.550 --> 02:46:52.100
That's right.
02:46:52.100 --> 02:46:53.988
So, let me just backup.
02:46:53.988 --> 02:46:56.030
I think just asking that question
02:46:56.030 --> 02:46:58.520
will cover all of those sub-issues like
02:46:58.520 --> 02:47:01.377
these specific operational
scenarios and also ...
02:47:01.377 --> 02:47:03.197
Okay, so what's the question?
02:47:03.197 --> 02:47:07.210
So, how will the LSE obligation
02:47:08.290 --> 02:47:10.900
address or maybe not address,
02:47:10.900 --> 02:47:12.940
but how will the LSC obligation
02:47:14.410 --> 02:47:17.550
assist ERCOT with realtime market
02:47:17.550 --> 02:47:20.800
operational reliability
issues, including
02:47:24.070 --> 02:47:25.890
winter cold weather,
which I have an answer.
02:47:25.890 --> 02:47:28.240
I mean, we know we
don't have an accreditation.
02:47:30.632 --> 02:47:32.780
Time periods where we have
higher than expected demand,
02:47:32.780 --> 02:47:35.660
lower than expected
generation output of all types.
02:47:35.660 --> 02:47:36.493
And,
02:47:39.060 --> 02:47:40.880
for times when we have,
02:47:40.880 --> 02:47:43.200
which I guess gets baked in there,
02:47:43.200 --> 02:47:46.500
times of higher than
expected for status.
02:47:46.500 --> 02:47:48.839
Well, is that covered
under my question?
02:47:48.839 --> 02:47:49.672
Yes.
02:47:49.672 --> 02:47:51.244
What mechanism
will ensure those
02:47:51.244 --> 02:47:52.400
receiving revenue streams,
02:47:52.400 --> 02:47:55.717
where the reliability services
perform inadequately-
02:47:55.717 --> 02:47:57.364
Penalties, yeah.
Penalties.
02:47:57.364 --> 02:47:58.620
We even have those questions.
02:47:58.620 --> 02:48:00.390
Yeah, I really
want my question.
02:48:00.390 --> 02:48:01.815
Sure.
Okay.
02:48:01.815 --> 02:48:02.860
Have you got it? Okay.
02:48:02.860 --> 02:48:04.263
The other one is,
02:48:05.820 --> 02:48:08.963
how will the LSE obligation
incent demand response?
02:48:10.840 --> 02:48:13.400
Will it result in ultimately
02:48:13.400 --> 02:48:15.083
disbanding the ERS program?
02:48:16.330 --> 02:48:18.630
I mean, how does it
impact of the ERS program?
02:48:20.414 --> 02:48:21.885
I don't know.
Do we continue having-
02:48:21.885 --> 02:48:23.220
I don't know that
there's any relation.
02:48:23.220 --> 02:48:26.623
I would not, under my
proposal, I would not ...
02:48:27.938 --> 02:48:30.820
I don't know that the
other two would interact.
02:48:30.820 --> 02:48:32.750
I don't know why you
would ever not wanna have
02:48:32.750 --> 02:48:33.583
any ERS programs.
02:48:33.583 --> 02:48:34.416
Well, I'm just wondering,
02:48:34.416 --> 02:48:35.249
because if you're moving
02:48:35.249 --> 02:48:36.780
all the resources to get accredited,
02:48:38.488 --> 02:48:41.970
are we still gonna have the
broad suite of AS services?
02:48:41.970 --> 02:48:44.100
Because presumably, this LSE obligation
02:48:44.100 --> 02:48:46.319
would provide us with an intermittent,
02:48:46.319 --> 02:48:48.729
a significant amount
of reliability where
02:48:48.729 --> 02:48:51.152
we wouldn't need as
many ancillary services.
02:48:51.152 --> 02:48:53.107
So no, at no point
would I propose
02:48:53.107 --> 02:48:57.170
getting rid of ERS or
the existing AS suite
02:48:57.170 --> 02:49:00.090
as currently constructed and anticipated
02:49:00.090 --> 02:49:02.410
with the fast frequency and ECRS.
02:49:02.410 --> 02:49:05.726
Okay, so then let's stay
with the broader question,
02:49:05.726 --> 02:49:07.704
the demand response.
Okay.
02:49:07.704 --> 02:49:08.871
And then ...
02:49:10.726 --> 02:49:11.812
What was the question?
02:49:11.812 --> 02:49:15.620
How would demand response
02:49:16.910 --> 02:49:19.504
participate in LSE obligation?
02:49:19.504 --> 02:49:21.987
And I guess that ... <v
->Does the question,
02:49:21.987 --> 02:49:24.160
how do we ensure
demand response resources
02:49:24.160 --> 02:49:26.390
can participate fully
and at all points in time,
02:49:26.390 --> 02:49:27.440
address that concern?
02:49:29.290 --> 02:49:30.630
Sure, that's okay.
02:49:33.810 --> 02:49:35.140
Let's see, so
02:49:35.140 --> 02:49:38.040
the other burning
question I have is about
02:49:39.420 --> 02:49:44.940
the industrial consumers
and how would that impact
02:49:47.920 --> 02:49:49.293
their ability to ...
02:49:50.520 --> 02:49:52.970
So, what happens with respect to
02:49:54.376 --> 02:49:55.680
business site?
02:49:55.680 --> 02:49:57.490
What is the economic
development impact on this?
02:49:57.490 --> 02:50:00.544
Because I think that we
have a lot of industrial,
02:50:00.544 --> 02:50:02.459
large commercial consumers coming in
02:50:02.459 --> 02:50:04.400
and they may have to be ...
02:50:04.400 --> 02:50:06.840
They're part of this
entire LSE obligation,
02:50:06.840 --> 02:50:09.610
so I really wanna
understand what impact it has
02:50:10.888 --> 02:50:14.453
on the large commercial
industrial consumers.
02:50:16.660 --> 02:50:19.302
They're gonna have to plan
to have X amount of power.
02:50:19.302 --> 02:50:22.180
In terms of their
requirement to participate
02:50:22.180 --> 02:50:24.800
or their ability to participate
in demand response
02:50:24.800 --> 02:50:25.633
or both?
02:50:26.670 --> 02:50:28.320
Their requirement (indistinct).
02:50:30.063 --> 02:50:31.490
Any transmission mode,
02:50:31.490 --> 02:50:32.630
that it would apply to everybody.
02:50:32.630 --> 02:50:36.650
Any option two transmission level LSE
02:50:36.650 --> 02:50:39.881
would be required to have the same ...
02:50:39.881 --> 02:50:40.740
Firm equivalent.
Yeah.
02:50:40.740 --> 02:50:42.190
Okay, so what is the impact
02:50:44.203 --> 02:50:45.443
on those businesses,
02:50:46.980 --> 02:50:48.330
from a society perspective.
02:50:49.303 --> 02:50:50.490
I guess it's
02:50:52.070 --> 02:50:55.600
business specific
and would probably be
02:50:56.890 --> 02:50:59.810
any negative impact of actually
having to hedge their book
02:51:01.170 --> 02:51:04.600
or their demand, which
most of them promise
02:51:04.600 --> 02:51:07.040
and pinkie swear they do it anyway.
02:51:07.040 --> 02:51:10.746
Any negative impact of
increased administrative cost
02:51:10.746 --> 02:51:15.800
or perceived burden
would be offset by
02:51:17.498 --> 02:51:19.920
the dramatic increase of reliability
02:51:21.000 --> 02:51:23.500
by knowing that we're incentivizing
02:51:23.500 --> 02:51:25.500
and getting real price formation on
02:51:28.140 --> 02:51:29.543
dispatchable generation.
02:51:29.543 --> 02:51:30.913
Okay, well can we ask them?
02:51:30.913 --> 02:51:32.412
Sure.
Okay.
02:51:32.412 --> 02:51:33.499
I'm sure they'll be available.
02:51:33.499 --> 02:51:34.873
I just wanna make
sure we're looking at it
02:51:34.873 --> 02:51:37.211
in a 360 perspective of all the impacts.
02:51:37.211 --> 02:51:39.725
Obviously the goal
would be to have it in place
02:51:39.725 --> 02:51:41.680
when you do reliability,
02:51:41.680 --> 02:51:42.970
but I wanna make
sure we're looking at it
02:51:42.970 --> 02:51:44.820
holistically on all
the different impacts,
02:51:44.820 --> 02:51:46.470
not just on the retail market and
02:51:48.700 --> 02:51:51.740
market abuse, those
are very critical, important,
02:51:51.740 --> 02:51:52.860
critically important issues,
02:51:52.860 --> 02:51:55.495
but we gotta look at
them very holistically
02:51:55.495 --> 02:51:57.920
because of the pronounced
impact it would have
02:51:57.920 --> 02:51:59.837
on the existing market.
02:52:00.809 --> 02:52:02.248
Okay, agreed.
For my opinion,
02:52:02.248 --> 02:52:03.397
okay.
All right.
02:52:03.397 --> 02:52:06.701
I think those are all my
questions or statements that ...
02:52:06.701 --> 02:52:08.220
Do the staff have all
the clarification they need
02:52:08.220 --> 02:52:11.770
on questions that have been
submitted on this topic so far?
02:52:11.770 --> 02:52:13.513
Okay, all right.
02:52:17.760 --> 02:52:20.270
Let me offer some quick thoughts
02:52:21.620 --> 02:52:24.370
if, for nothing else, to just
provide some clarification
02:52:24.370 --> 02:52:26.483
for you all and our stakeholders.
02:52:31.220 --> 02:52:34.720
Everyone has highlighted
02:52:34.720 --> 02:52:36.330
the concern to retail market
02:52:38.460 --> 02:52:40.470
and demand response.
02:52:40.470 --> 02:52:42.060
That's why those were
the first three questions
02:52:42.060 --> 02:52:43.580
on our list, and
02:52:45.756 --> 02:52:47.810
I'm gonna be absolutely clear that
02:52:47.810 --> 02:52:50.600
if I do not get satisfactory answers
02:52:50.600 --> 02:52:54.220
to those three questions,
this thing's dead on arrival.
02:52:54.220 --> 02:52:55.630
Like I said, at the beginning,
02:52:55.630 --> 02:52:57.930
I'd rather not implement
this than do it wrong
02:52:59.226 --> 02:53:00.490
and cause more harm than good.
02:53:00.490 --> 02:53:02.690
Full-stop, not even to think about it,
02:53:02.690 --> 02:53:05.495
if we don't get
satisfaction for the answers
02:53:05.495 --> 02:53:07.793
to those three questions,
out of the gates.
02:53:09.460 --> 02:53:11.288
The small fish problem,
02:53:11.288 --> 02:53:13.880
we've heard a lot about
independent retailers,
02:53:13.880 --> 02:53:16.790
a lot of concern about
being able to forecast load
02:53:16.790 --> 02:53:19.060
and what they're, I think
at the most simple level,
02:53:19.060 --> 02:53:20.610
just say, like I said,
02:53:20.610 --> 02:53:22.850
nominate a load share
ratio from the CDR,
02:53:22.850 --> 02:53:24.050
which needs improvement.
02:53:25.792 --> 02:53:27.142
On that, Mr. Chairman, so
02:53:28.190 --> 02:53:29.880
your list was comprehensive
02:53:31.400 --> 02:53:32.233
and
02:53:34.170 --> 02:53:36.440
okay, so load forecasting,
02:53:36.440 --> 02:53:39.223
we have all shared
comments, I've filed memos.
02:53:40.398 --> 02:53:42.045
CDR and SARA needs to be reworked.
02:53:42.045 --> 02:53:43.490
You use the same
accreditation standard
02:53:43.490 --> 02:53:45.240
that you use in this, for those.
02:53:45.240 --> 02:53:46.540
Okay.
So they match up.
02:53:46.540 --> 02:53:48.210
So the question is,
02:53:48.210 --> 02:53:51.340
is that a component of everything
we're talking about doing,
02:53:51.340 --> 02:53:54.080
in terms of a more
specific drill down CDR,
02:53:54.080 --> 02:53:55.540
again, on a seasonal basis
02:53:55.540 --> 02:53:56.700
rather than the twice year standard.
02:53:56.700 --> 02:53:58.500
Yeah, absolutely.
Okay,
02:53:58.500 --> 02:54:00.180
so we are gonna open up that.
02:54:00.180 --> 02:54:01.370
Yeah, in parallel.
02:54:01.370 --> 02:54:02.203
I mean, I think
02:54:04.956 --> 02:54:06.780
that's not market in and of itself.
02:54:06.780 --> 02:54:09.140
I'd say that yes, very, very deliberate
02:54:09.140 --> 02:54:11.570
in my thinking that the
accreditation standard,
02:54:11.570 --> 02:54:14.740
whatever it's five credits
or 10 credits for wind
02:54:14.740 --> 02:54:16.400
and 60 credits for solar or whatever,
02:54:16.400 --> 02:54:18.410
whatever you use in this
accreditation standard,
02:54:18.410 --> 02:54:20.677
you use for the new and improved CDR.
02:54:22.810 --> 02:54:24.820
And so
02:54:24.820 --> 02:54:26.942
the simplest version is
saying, load share ratio
02:54:26.942 --> 02:54:30.470
of what we think your load's
gonna be in three years,
02:54:30.470 --> 02:54:31.313
by example.
02:54:32.835 --> 02:54:35.820
Not gonna count on individual businesses
02:54:35.820 --> 02:54:37.063
for whatever they think.
02:54:39.200 --> 02:54:41.000
They usually have load forecast
02:54:41.000 --> 02:54:43.100
and customer forecast
for their investors,
02:54:44.302 --> 02:54:45.910
more than a year out.
02:54:45.910 --> 02:54:48.470
So, somebody's making a
prediction in that business,
02:54:48.470 --> 02:54:50.623
how many customers they
think they're gonna have.
02:54:52.100 --> 02:54:52.940
And
02:54:55.039 --> 02:54:55.872
I wouldn't ask,
02:54:57.472 --> 02:54:58.305
I think I put it in here.
02:54:58.305 --> 02:55:00.010
The escalating obligation, right?
02:55:00.010 --> 02:55:02.080
Three years out, it's incented to
02:55:02.080 --> 02:55:05.160
ask for 100% procurement,
but some small amount,
02:55:05.160 --> 02:55:10.160
some 50%, 30%, 60, something out there.
02:55:10.280 --> 02:55:13.951
So you're not required
to have a perfect visibility
02:55:13.951 --> 02:55:17.630
or perfect answer on
what your load's gonna be
02:55:17.630 --> 02:55:18.463
down the road.
02:55:18.463 --> 02:55:21.100
And as you can see,
from what I laid out,
02:55:21.100 --> 02:55:24.660
that obligation would
narrow in on 100% percent
02:55:24.660 --> 02:55:27.040
as you got closer to the operating day.
02:55:27.040 --> 02:55:30.283
And even within the month,
02:55:31.440 --> 02:55:33.160
that's where the realtime
and the day ahead market
02:55:33.160 --> 02:55:34.520
still perform a valuable function,
02:55:34.520 --> 02:55:35.560
because even a month ahead,
02:55:35.560 --> 02:55:38.733
you're not gonna be 100%
accurate on your load forecast.
02:55:39.730 --> 02:55:44.730
We just need people
procuring the product
02:55:44.860 --> 02:55:47.890
they assured their customers
they were gonna deliver
02:55:47.890 --> 02:55:49.690
when they took the customer's money.
02:55:51.960 --> 02:55:53.153
Barriers to entry.
02:55:54.680 --> 02:55:57.212
Definitely don't want 'em too high,
02:55:57.212 --> 02:55:58.593
but we also don't want 'em too low.
02:55:59.807 --> 02:56:01.610
And I think there is some merit
02:56:05.183 --> 02:56:06.880
to having a kind of,
if you could call it,
02:56:06.880 --> 02:56:08.933
if you will, market-based credit check.
02:56:09.930 --> 02:56:13.900
If you can't get some sort of financing
02:56:13.900 --> 02:56:16.320
or convince investors
that your game plan
02:56:18.630 --> 02:56:20.550
is worthy, then I'm not sure
02:56:20.550 --> 02:56:24.053
we want that credit
risk in our marketplace.
02:56:24.053 --> 02:56:27.370
And if any business model has
02:56:28.672 --> 02:56:31.293
a 50% drop in customers
anticipated three years out,
02:56:34.705 --> 02:56:36.100
that's no business proposal
02:56:36.100 --> 02:56:38.748
that anybody actually
stands behind, right?
02:56:38.748 --> 02:56:40.640
So, we don't want barriers
to entry that are too high,
02:56:40.640 --> 02:56:42.733
but I'm okay having some.
02:56:45.670 --> 02:56:49.440
Penalties, absolutely key part of it,
02:56:49.440 --> 02:56:52.300
lack of procuring, whatever
mechanism of credits
02:56:52.300 --> 02:56:56.360
or whatever mechanism when
deciding lack of procuring those
02:56:56.360 --> 02:56:57.760
would be on the LSE side;
02:56:57.760 --> 02:56:59.270
lack of performance on
02:56:59.270 --> 02:57:01.623
whatever generating
assets sold those credits.
02:57:02.860 --> 02:57:07.210
And if that asset doesn't
perform on the operating day,
02:57:07.210 --> 02:57:09.060
penalty goes to the generating asset.
02:57:10.150 --> 02:57:12.660
Substantial in both cases,
02:57:12.660 --> 02:57:14.223
but a lot to flesh out there.
02:57:15.963 --> 02:57:17.613
The accreditation,
02:57:19.590 --> 02:57:21.490
that's a key part of this whole thing.
02:57:24.090 --> 02:57:25.610
I'd say the most important part about it
02:57:25.610 --> 02:57:29.390
is being honest about
the reliability of our assets.
02:57:29.390 --> 02:57:32.130
We had a 100X increase
in prices for customers
02:57:32.130 --> 02:57:35.287
yesterday and today,
in the day ahead market,
02:57:35.287 --> 02:57:39.720
because on average
diversified wind portfolio
02:57:39.720 --> 02:57:41.810
across a mammoth state like Texas
02:57:41.810 --> 02:57:45.640
is expected to produce between
10 and 12,000 megawatts
02:57:45.640 --> 02:57:49.293
over peak and yesterday we got 1,500.
02:57:50.730 --> 02:57:52.560
We've gotta be honest about
02:57:52.560 --> 02:57:54.800
these assets not being
reliable and we've gotta
02:57:54.800 --> 02:57:56.450
hold the marketplace accountable.
02:57:57.640 --> 02:57:59.687
In terms of implementation,
02:57:59.687 --> 02:58:03.307
we've tabled a request
for the details on that.
02:58:03.307 --> 02:58:04.880
And so we narrow the focus
02:58:06.520 --> 02:58:09.050
what we really are comfortable with,
02:58:09.050 --> 02:58:11.430
or what we're interested
in learning more about.
02:58:11.430 --> 02:58:13.890
I would say that there's
certainly some merit
02:58:13.890 --> 02:58:16.840
in a phased-in process with price caps.
02:58:16.840 --> 02:58:21.550
We know, or waive
penalties in the early stages.
02:58:21.550 --> 02:58:24.350
We know we don't have
enough dispatchable power
02:58:24.350 --> 02:58:27.220
in Texas, if there's
a liquidity problem,
02:58:27.220 --> 02:58:28.170
to your point Will,
02:58:29.590 --> 02:58:31.940
that could really, really be dangerous
02:58:31.940 --> 02:58:34.940
in terms of prices
spiraling out of control.
02:58:34.940 --> 02:58:36.620
So you could certainly
do some price caps
02:58:36.620 --> 02:58:39.290
in the first few years to ensure that
02:58:39.290 --> 02:58:42.380
there's definitely revenue
there for those generators,
02:58:42.380 --> 02:58:45.650
but it's not exposing LSEs to some
02:58:47.580 --> 02:58:49.683
just unmitigated price spikes.
02:58:51.380 --> 02:58:52.770
And finally, I'll say
02:58:54.947 --> 02:58:56.750
the retirements is a concern.
02:58:56.750 --> 02:58:59.280
This, I think I already see
02:58:59.280 --> 02:59:01.150
should help that if we
make those changes,
02:59:01.150 --> 02:59:02.200
that should help keep
02:59:04.170 --> 02:59:06.220
interviews for life
assets in the market.
02:59:07.303 --> 02:59:09.590
And if we do find an acceptable version
02:59:09.590 --> 02:59:11.053
of an LSE obligation,
02:59:12.025 --> 02:59:14.290
that would definitely keep dispatchable,
02:59:14.290 --> 02:59:16.490
that's a huge incentive
for dispatchable resources
02:59:16.490 --> 02:59:17.910
to stay in the market,
02:59:17.910 --> 02:59:19.800
if they're being rewarded for the
02:59:22.691 --> 02:59:25.883
reliability they bring
to the marketplace.
02:59:26.920 --> 02:59:28.373
Timeline TBD.
02:59:30.160 --> 02:59:31.970
So, just wanted to lay that out
02:59:33.320 --> 02:59:34.930
to address some of the
concerns around the table,
02:59:34.930 --> 02:59:37.600
but also, and I'm, by no
way saying that solves them,
02:59:37.600 --> 02:59:40.300
but also to make sure our
stakeholders have a sense of
02:59:43.060 --> 02:59:44.160
the framing I'm thinking about.
02:59:44.160 --> 02:59:46.580
Again, this would only be 100% of
02:59:50.920 --> 02:59:55.920
expected load, not a reserve
margin or a capacity factor.
02:59:56.420 --> 02:59:59.220
That's why we have AS,
that's why we have ERS;
02:59:59.220 --> 03:00:00.620
that's our margin of safety.
03:00:07.202 --> 03:00:08.400
Outside of the concerns,
03:00:08.400 --> 03:00:10.400
the very valid concerns of market power,
03:00:11.239 --> 03:00:12.420
market manipulation and demand response,
03:00:12.420 --> 03:00:16.203
which we've addressed thoroughly,
03:00:17.210 --> 03:00:22.210
I'm curious to know, other
than the accounting mechanism
03:00:22.240 --> 03:00:26.010
and the administrative transaction,
03:00:26.010 --> 03:00:29.397
how this is different
for a fully hedged LSE.
03:00:31.290 --> 03:00:33.080
We're not asking them
to buy any more power
03:00:33.080 --> 03:00:35.843
than they expect to use at 100%.
03:00:38.765 --> 03:00:40.826
I guess the question is ...
There's a penalty on this.
03:00:40.826 --> 03:00:42.311
Are they
actually fully hedged,
03:00:42.311 --> 03:00:43.360
what's the definition of fully hedged?
03:00:43.360 --> 03:00:45.470
100% of your
expected load, right.
03:00:45.470 --> 03:00:47.088
I know.
03:00:47.088 --> 03:00:48.930
But are they?
03:00:48.930 --> 03:00:51.153
Is a very good question.
Yeah.
03:00:53.482 --> 03:00:56.132
The world is about
definitions: net carbon footprint,
03:00:59.053 --> 03:01:00.040
it's all about that.
What we heard on our ...
03:01:00.040 --> 03:01:02.690
We had a very liberated
intermittent panel
03:01:02.690 --> 03:01:04.854
to talk about intermittent resources
03:01:04.854 --> 03:01:06.533
and every one of them
had gas behind the meter.
03:01:08.618 --> 03:01:10.118
It was offset, but it's still,
03:01:11.010 --> 03:01:12.640
it's still producing.
03:01:12.640 --> 03:01:14.590
So, I'll leave it there.
03:01:14.590 --> 03:01:15.920
Any other questions
03:01:15.920 --> 03:01:19.283
or we wanna put it on a
list or closing comments?
03:01:21.150 --> 03:01:24.065
Other than, so I think I
got an answer from you
03:01:24.065 --> 03:01:24.898
on load forecasting.
03:01:24.898 --> 03:01:26.889
We're still gonna have to look at that
03:01:26.889 --> 03:01:29.049
as a part 25505 long-term
03:01:29.049 --> 03:01:30.949
because it has to be reopened and thus
03:01:32.020 --> 03:01:33.370
we can address that.
03:01:33.370 --> 03:01:36.320
Okay, transmission
prioritization for dispatchability,
03:01:36.320 --> 03:01:39.927
you want that, is that part
of this, or how do you ...
03:01:39.927 --> 03:01:41.614
I think that's a
separate action.
03:01:41.614 --> 03:01:43.590
You've taken a great lead on that
03:01:43.590 --> 03:01:45.642
and continue to follow up on it.
03:01:45.642 --> 03:01:47.971
Okay, I just wanna make
sure it didn't fall off the plate.
03:01:47.971 --> 03:01:50.220
No, no, no, I mean, I
don't think of it as a ...
03:01:50.220 --> 03:01:52.016
Market design.
Piece of the market.
03:01:52.016 --> 03:01:52.849
I got it, okay.
03:01:52.849 --> 03:01:54.700
And I'd also,
another element of that
03:01:54.700 --> 03:01:56.416
is transmission planning.
03:01:56.416 --> 03:01:58.173
I don't think it's a piece of
the mechanics in the market,
03:01:59.191 --> 03:02:00.024
but improve as we ...
03:02:00.024 --> 03:02:01.480
We sat up here and heard all the reasons
03:02:01.480 --> 03:02:02.600
why we can't ...
Right.
03:02:02.600 --> 03:02:05.625
Build new transmission, import.
03:02:05.625 --> 03:02:08.060
(Lori responds indistinctly)
03:02:08.060 --> 03:02:10.130
We can't build new
transmission because it's
03:02:10.130 --> 03:02:12.281
unreliable right now,
03:02:12.281 --> 03:02:13.114
but we need to make it more reliable,
03:02:13.114 --> 03:02:14.758
so we've got to build more transmission,
03:02:14.758 --> 03:02:16.221
but we can't build more transmission.
03:02:16.221 --> 03:02:17.054
Okay.
03:02:17.054 --> 03:02:18.103
So I think that that process,
03:02:20.171 --> 03:02:24.247
from tip to tail needs to
be redesigned at ERCOT.
03:02:24.247 --> 03:02:25.080
And then unless,
03:02:25.080 --> 03:02:26.420
and maybe we're thinking the same thing.
03:02:26.420 --> 03:02:29.720
I was just gonna ask on the
03:02:29.720 --> 03:02:31.930
prioritization of work and then phases
03:02:31.930 --> 03:02:34.385
but if you're not ready
to cross that bridge now,
03:02:34.385 --> 03:02:35.218
and we'll talk about that in a minute,
03:02:35.218 --> 03:02:36.703
I'll leave that, okay.
03:02:37.703 --> 03:02:38.536
I think that
03:02:38.536 --> 03:02:40.550
everything that you've
gone through with your list,
03:02:40.550 --> 03:02:43.053
I think that's the end
of our want to design.
03:02:44.042 --> 03:02:45.300
I had come up with a list for things
03:02:45.300 --> 03:02:48.360
for Brattle to do and I
think we agreed to them
03:02:49.350 --> 03:02:51.807
conducting the reliability standard,
03:02:51.807 --> 03:02:54.436
and giving somebody the analysis.
03:02:54.436 --> 03:02:55.269
Is there anything not included
03:02:55.269 --> 03:02:58.480
on our list of questions for them?
03:02:58.480 --> 03:03:01.059
I think we've covered
everything we talked:
03:03:01.059 --> 03:03:03.479
the reliability standard,
the scenario analysis.
03:03:03.479 --> 03:03:05.280
I think we got everything.
03:03:05.280 --> 03:03:06.873
We might wanna get them
to give us their perspective
03:03:06.873 --> 03:03:10.284
on the LSE obligation,
how it would fit in our market,
03:03:10.284 --> 03:03:12.295
questions we could ask,
they've done it before.
03:03:12.295 --> 03:03:13.580
I know they had a lot
of negative comments,
03:03:13.580 --> 03:03:16.793
but to really give us some
additional updated feedback.
03:03:17.840 --> 03:03:21.010
And included with
that, I'd ask what
03:03:22.380 --> 03:03:24.370
their opinion on what
works and what doesn't work
03:03:24.370 --> 03:03:26.853
in the SPP version,
it's a different market.
03:03:28.677 --> 03:03:29.920
Australia is doing a similar thing.
03:03:29.920 --> 03:03:31.820
What's worked, it's very new.
03:03:31.820 --> 03:03:34.370
What's worked, what hasn't
worked, et cetera, yeah.
03:03:35.784 --> 03:03:37.833
I mean, I think it might be
helpful for context as well.
03:03:39.130 --> 03:03:40.210
And I know they're conducting
03:03:40.210 --> 03:03:42.563
an ancillary service
study as part of SP3.
03:03:43.886 --> 03:03:45.510
It's my understanding,
where there's (indistinct)
03:03:45.510 --> 03:03:48.591
they're gonna have that
to us by the end of the year.
03:03:48.591 --> 03:03:50.960
I think that's important
as we continue to look at
03:03:51.850 --> 03:03:54.700
how we plan for the future
on the ancillary service side.
03:03:55.811 --> 03:03:57.280
So, I think those are all the items
03:03:57.280 --> 03:03:59.310
I had on the list for Brattle, but
03:04:00.230 --> 03:04:02.280
with respect to your
transmission issues.
03:04:03.902 --> 03:04:04.980
I think I see that a little bit outside
03:04:04.980 --> 03:04:07.160
of the market design discussion,
03:04:07.160 --> 03:04:08.940
but I did wanna circle back up
03:04:08.940 --> 03:04:10.340
on the interconnection queue
03:04:11.840 --> 03:04:13.660
discussion we had at the
workshop, in your memo
03:04:13.660 --> 03:04:17.835
and just to understand
where we're headed, really.
03:04:17.835 --> 03:04:19.355
Yeah, so I've got
a bit of an update,
03:04:19.355 --> 03:04:21.653
but I'll save it unless
you wanna close this out
03:04:21.653 --> 03:04:22.486
or whatever you're doing.
03:04:22.486 --> 03:04:23.319
I'm good.
03:04:23.319 --> 03:04:24.380
Yeah, if you can
give us an update,
03:04:24.380 --> 03:04:25.480
it'd be great and then
03:04:26.436 --> 03:04:27.478
we'll wrap it up.
03:04:27.478 --> 03:04:29.433
I have been able to
communicate with ERCOT and
03:04:30.530 --> 03:04:32.576
not every stakeholder.
03:04:32.576 --> 03:04:33.409
I mean, people are gonna say,
03:04:33.409 --> 03:04:34.740
"Well, you didn't talk to me,"
03:04:34.740 --> 03:04:36.610
but the wireless companies and
03:04:37.493 --> 03:04:39.733
a representative from the Noe segment.
03:04:41.929 --> 03:04:44.440
We did have substantive conversations
03:04:44.440 --> 03:04:46.730
in terms of the mechanics
on how we could proceed
03:04:46.730 --> 03:04:49.630
in order to satisfy concerns raised
03:04:49.630 --> 03:04:51.450
during the previous workshop.
03:04:51.450 --> 03:04:54.520
And after discussing the idea
03:04:54.520 --> 03:04:56.650
with these stakeholders,
I believe this is something
03:04:56.650 --> 03:05:00.110
that we could and
should move forward with.
03:05:00.110 --> 03:05:03.310
And in my view, the Commission could
03:05:03.310 --> 03:05:06.590
direct ERCOT to prioritize
interconnection projects
03:05:06.590 --> 03:05:09.953
at transmission voltage, key
nuance transmission voltage,
03:05:12.616 --> 03:05:13.910
and it should follow
the following order.
03:05:13.910 --> 03:05:16.366
And the reason
03:05:16.366 --> 03:05:20.290
this will not have a
discriminatory practical effect
03:05:20.290 --> 03:05:21.373
is because,
03:05:25.015 --> 03:05:25.848
according to all stakeholders
03:05:25.848 --> 03:05:27.853
who are managing
their individual systems,
03:05:28.740 --> 03:05:32.110
there is no barrier
right now at present
03:05:32.951 --> 03:05:34.670
to a dispatchable
resource deploying now,
03:05:34.670 --> 03:05:36.930
it's the economics (indistinct) project
03:05:38.576 --> 03:05:40.126
that is the determining factor.
03:05:41.430 --> 03:05:43.550
Prioritization of that would not
03:05:45.070 --> 03:05:49.240
change the expeditious nature of their
03:05:50.465 --> 03:05:52.230
interconnection and energization.
03:05:52.230 --> 03:05:54.537
It is simply, they did say,
03:05:54.537 --> 03:05:56.370
"Look, if you wanna
send the market signal,
03:05:56.370 --> 03:05:58.200
it's a market signal."
03:05:58.200 --> 03:06:00.530
The grandfathering clause is key to that
03:06:00.530 --> 03:06:02.580
on at what stage of the process
03:06:02.580 --> 03:06:07.470
those resources that
have achieved financial
03:06:07.470 --> 03:06:10.430
and technical viability in their studies
03:06:10.430 --> 03:06:11.263
could move forward.
03:06:11.263 --> 03:06:12.920
And again, this is different
03:06:13.796 --> 03:06:14.629
than the non-ERCOT regions
03:06:14.629 --> 03:06:16.320
who have to deal with those RTOs.
03:06:16.320 --> 03:06:18.020
And man, those studies are a bear,
03:06:19.500 --> 03:06:21.793
just what I've experienced
over on the SVP side.
03:06:22.642 --> 03:06:26.880
So my proposal, and
ask me questions on this,
03:06:26.880 --> 03:06:29.810
is to prioritize, any
orders should prioritize
03:06:29.810 --> 03:06:33.740
based on three things, and in order.
03:06:33.740 --> 03:06:36.390
Non-inverter-based resources, okay.
03:06:36.390 --> 03:06:37.473
And that's your ...
03:06:39.470 --> 03:06:41.380
That's not your intermittents,
that's not your batteries.
03:06:41.380 --> 03:06:42.970
Those are based on inverters
03:06:42.970 --> 03:06:47.620
and whatever type and
technological capability
03:06:47.620 --> 03:06:48.840
of the inverter.
03:06:48.840 --> 03:06:52.390
And that changes,
the inverters typically
03:06:52.390 --> 03:06:55.420
change the technical studies that go on
03:06:55.420 --> 03:06:56.253
as a part of
03:06:57.490 --> 03:06:59.030
the TSP evaluations.
03:06:59.030 --> 03:07:00.950
So non-inverter-based resources,
03:07:00.950 --> 03:07:03.890
and then second, dispatchable
inverter-based resources.
03:07:03.890 --> 03:07:06.290
Those were those projects
paired with batteries.
03:07:07.616 --> 03:07:11.450
And then finally, the interment
inverter-based resources,
03:07:11.450 --> 03:07:13.130
so intermittent only.
03:07:13.130 --> 03:07:15.620
Because again, those
wind towers inverter-based,
03:07:15.620 --> 03:07:19.310
solar inverter based, you
would not have a battery
03:07:20.500 --> 03:07:24.353
co-located or joined with that project.
03:07:25.350 --> 03:07:28.310
Would you assign
a duration to the
03:07:28.310 --> 03:07:29.693
solar plus storage?
03:07:30.530 --> 03:07:33.340
And I would stand to
my four hour on that.
03:07:33.340 --> 03:07:34.940
The only thing I would say is,
03:07:35.794 --> 03:07:37.625
based on my conversation
with the storage community,
03:07:37.625 --> 03:07:38.995
there are no four-hour batteries.
03:07:38.995 --> 03:07:40.173
Correct.
03:07:40.173 --> 03:07:41.010
So, in order to be able to reap
03:07:41.010 --> 03:07:42.930
the operational benefits of
03:07:44.040 --> 03:07:46.853
having solar and
storage coupled together,
03:07:48.560 --> 03:07:50.070
gain the reliability benefits
03:07:50.070 --> 03:07:52.010
of those combined technologies,
03:07:52.010 --> 03:07:53.750
and also get that operational
03:07:55.050 --> 03:07:58.434
lead that we need at
the backend with ramping,
03:07:58.434 --> 03:08:01.173
I would maybe loosen
that a little bit to two.
03:08:03.452 --> 03:08:04.490
So, I talked to
(indistinct) as well
03:08:04.490 --> 03:08:07.770
and other project developers who, again,
03:08:07.770 --> 03:08:09.870
yes, there are two
hours or nine, I think,
03:08:09.870 --> 03:08:12.130
two hour capable projects that had
03:08:12.130 --> 03:08:14.710
that battery component.
03:08:14.710 --> 03:08:16.300
But again, this isn't gonna send them
03:08:16.300 --> 03:08:17.240
to the back of the line.
03:08:17.240 --> 03:08:20.680
And let me just describe
the grandfathering condition
03:08:20.680 --> 03:08:22.780
and this may change
the dynamics for them.
03:08:24.110 --> 03:08:27.300
I would leave the mechanics
of implementation up to ERCOT,
03:08:27.300 --> 03:08:29.550
'cause I believe that
they are well prepared
03:08:29.550 --> 03:08:31.163
to impose such a thing,
03:08:32.468 --> 03:08:34.159
but I believe the process we would need
03:08:34.159 --> 03:08:36.313
would need a certain
amount of grandfathering.
03:08:37.295 --> 03:08:39.403
And that should be based on projects,
03:08:40.710 --> 03:08:43.100
ready-to-go projects
that could be energized
03:08:43.100 --> 03:08:44.133
in a timely way.
03:08:47.463 --> 03:08:49.613
And we would make
that fully collateralized
03:08:51.160 --> 03:08:53.340
and then have a notice to proceed.
03:08:53.340 --> 03:08:56.940
So again, in terms of those
steps through the studies,
03:08:56.940 --> 03:08:59.400
that shows that they
are financially viable
03:08:59.400 --> 03:09:01.180
and then also technically viable.
03:09:01.180 --> 03:09:04.300
Again, they're entering that
final stage of ERCOT's study
03:09:04.300 --> 03:09:06.593
which would be ...
03:09:09.287 --> 03:09:10.120
I'm sorry.
03:09:11.023 --> 03:09:12.073
Yeah, ERCOT's screen.
03:09:13.220 --> 03:09:14.350
Screen them.
Yeah.
03:09:14.350 --> 03:09:16.720
The final four to five months stage.
03:09:16.720 --> 03:09:20.760
So, you're either in or you're out.
03:09:20.760 --> 03:09:23.350
And again, we're
trying to flesh this out,
03:09:23.350 --> 03:09:24.380
it's not gonna prevent them,
03:09:24.380 --> 03:09:27.836
it's not gonna reset
'em or anything like that.
03:09:27.836 --> 03:09:29.170
And we have to establish
a threshold somewhere,
03:09:29.170 --> 03:09:31.170
because again, this is a market signal.
03:09:31.170 --> 03:09:33.487
We're trying to send some
type of preference for the market
03:09:33.487 --> 03:09:35.910
and ERCOT says that they prefer
03:09:35.910 --> 03:09:38.040
having that headroom of four hours.
03:09:38.040 --> 03:09:40.840
Two hour guys are fine,
and they're gonna match up,
03:09:40.840 --> 03:09:44.320
and especially with what
we're considering on ORDC,
03:09:44.320 --> 03:09:45.600
those guys are gonna come in
03:09:45.600 --> 03:09:47.750
because they're gonna
be hitting that ORDC.
03:09:50.700 --> 03:09:52.800
I think you're
heading in the right direction.
03:09:52.800 --> 03:09:54.670
And I'm willing to
continue working on this
03:09:54.670 --> 03:09:56.673
and formalize that.
03:09:59.048 --> 03:09:59.881
Yes, I think ...
03:09:59.881 --> 03:10:01.077
The order is gonna be simple
03:10:01.077 --> 03:10:02.520
in terms of a policy contract.
03:10:02.520 --> 03:10:03.955
I think you're absolutely
heading the right direction.
03:10:03.955 --> 03:10:06.992
I'd love to see it in writing, I guess.
03:10:06.992 --> 03:10:08.410
Okay.
I guess, in a memo form.
03:10:08.410 --> 03:10:10.130
Fine, I'll formalize a memo.
03:10:10.130 --> 03:10:11.840
To the duration standard,
03:10:11.840 --> 03:10:13.090
as a treatment we covered
03:10:14.653 --> 03:10:16.703
when we talked about concerning DCRS,
03:10:17.564 --> 03:10:18.397
I think the key point is,
03:10:18.397 --> 03:10:21.700
we need to identify
the operational need,
03:10:21.700 --> 03:10:24.920
and then set that as the standard,
03:10:24.920 --> 03:10:28.050
not set the standard
based on existing technology
03:10:28.050 --> 03:10:30.570
that may or may not
address the operational need.
03:10:30.570 --> 03:10:31.915
Right.
03:10:31.915 --> 03:10:33.060
And a key part of that is
03:10:33.060 --> 03:10:34.420
one of the features of batteries
03:10:34.420 --> 03:10:36.540
is that they're highly modular.
03:10:36.540 --> 03:10:39.270
So, if you've got a bunch
of two-hour batteries
03:10:39.270 --> 03:10:41.833
and we need four hours, stack 'em up.
03:10:43.346 --> 03:10:46.300
If there's a challenge with that,
03:10:46.300 --> 03:10:49.230
you can also aggregate them.
03:10:49.230 --> 03:10:50.813
There's nothing preventing
03:10:50.813 --> 03:10:54.710
battery operators or
storage companies right now
03:10:54.710 --> 03:10:57.510
to aggregating multiple
batteries and then
03:10:57.510 --> 03:11:01.133
offering that or offering that up.
03:11:02.204 --> 03:11:03.290
So, I think we always wanna keep
03:11:03.290 --> 03:11:05.860
the operational need as our North Star.
03:11:06.812 --> 03:11:07.830
So, let me just
start taking away,
03:11:07.830 --> 03:11:09.420
'cause again, this is a building block
03:11:09.420 --> 03:11:11.210
and then we'll have a memo to consider
03:11:11.210 --> 03:11:14.380
with an actual proposal on it.
03:11:14.380 --> 03:11:17.260
But, it's 18 months on general, all in
03:11:18.096 --> 03:11:19.700
for the study period.
03:11:19.700 --> 03:11:23.933
Okay, from ERCOT to
the TSPs, back to ERCOT.
03:11:24.974 --> 03:11:27.700
First three months,
that's ERCOT's screening,
03:11:27.700 --> 03:11:29.060
and then it goes over to ...
03:11:29.060 --> 03:11:31.300
Or it could be happening concurrent
03:11:31.300 --> 03:11:35.990
with a typically year-long
to a 15 month process
03:11:35.990 --> 03:11:37.686
for the TSPs.
03:11:37.686 --> 03:11:38.600
And if we want to,
we can get Liz up here,
03:11:38.600 --> 03:11:39.560
but I'm sure she'll be proud
03:11:39.560 --> 03:11:41.809
to hear me give this book report.
03:11:41.809 --> 03:11:44.430
(people laughing)
03:11:44.430 --> 03:11:47.100
One of the decisive
points for the study,
03:11:47.100 --> 03:11:49.430
where you get a battery on board,
03:11:49.430 --> 03:11:52.840
is it, in fact, it affects
the stability study.
03:11:52.840 --> 03:11:55.950
And again, that's that new
inverter that gets put on there.
03:11:55.950 --> 03:11:57.360
And so when that happens,
03:11:57.360 --> 03:11:59.640
that's typically a one month
03:11:59.640 --> 03:12:01.320
extension on that process
03:12:01.320 --> 03:12:03.040
because they have to
go back and reanalyze
03:12:03.040 --> 03:12:07.233
that component of the four
studies that they typically run.
03:12:08.616 --> 03:12:11.270
So, I don't think this just
03:12:11.270 --> 03:12:14.350
automatically resets the
whole process for everybody,
03:12:14.350 --> 03:12:17.473
but it does reset
certain components of it.
03:12:19.018 --> 03:12:20.190
And what I'm thinking about,
03:12:20.190 --> 03:12:22.280
and this is what I told the TSPs,
03:12:22.280 --> 03:12:24.240
I'm trying to establish a standard
03:12:24.240 --> 03:12:25.990
that everybody's accustomed to.
03:12:25.990 --> 03:12:28.820
And they typically see surges of
03:12:28.820 --> 03:12:30.830
interconnection requests
03:12:30.830 --> 03:12:33.573
when new transmission
lines are built to new areas.
03:12:34.642 --> 03:12:36.240
We just authorized a
whole lot of transmission
03:12:36.240 --> 03:12:37.720
for south Texas.
03:12:37.720 --> 03:12:40.250
And it's gonna be a
resource-rich area of the state
03:12:40.250 --> 03:12:43.240
for different resources, solar or wind.
03:12:43.240 --> 03:12:44.930
And it's close to load centers.
03:12:44.930 --> 03:12:47.100
I see that as being a lucrative area
03:12:47.100 --> 03:12:49.883
for generators to move
into, and that's a good thing.
03:12:51.030 --> 03:12:52.440
So if we get ahead of this
03:12:52.440 --> 03:12:54.760
and we establish a policy purpose now,
03:12:54.760 --> 03:12:57.420
then we could see some
real benefits from this
03:12:57.420 --> 03:13:00.370
that shouldn't hang
people up in the future.
03:13:00.370 --> 03:13:02.230
I mean, they just talk to their banks
03:13:02.230 --> 03:13:04.914
and start talking about
the latest available
03:13:04.914 --> 03:13:06.500
investible technologies and batteries
03:13:06.500 --> 03:13:08.110
that they could go look at them.
03:13:09.891 --> 03:13:11.800
So, I'll formalize that-
That'll be great.
03:13:11.800 --> 03:13:13.190
We'll talk about it.
03:13:13.190 --> 03:13:14.557
Works for me.
Thank you for doing that.
03:13:14.557 --> 03:13:15.480
Yes, ma'am.
03:13:15.480 --> 03:13:16.480
Good deal.
03:13:18.130 --> 03:13:20.540
1:11, I think that
03:13:22.040 --> 03:13:24.053
concludes all our business for today.
03:13:25.352 --> 03:13:27.060
And as such, this meeting
03:13:27.060 --> 03:13:28.860
of the Public Utility
Commission of Texas
03:13:28.860 --> 03:13:32.670
is hereby adjourned.
(gavel whacks)