WEBVTT 00:00:02.040 --> 00:00:04.330 Good morning. This meeting of the Public Utility Commission 00:00:04.330 --> 00:00:06.110 of Texas will come to order to consider matters that have 00:00:06.110 --> 00:00:08.179 been duly posted with the Secretary of State of Texas 00:00:08.179 --> 00:00:10.429 for November 30, 2021. For the record, my name is 00:00:10.429 --> 00:00:12.480 Peter Lake. And with me today are Will McAdams, Lori Cobos, 00:00:12.480 --> 00:00:16.179 and Jimmy Glotfelty. At this time, we'll open 00:00:16.179 --> 00:00:18.339 for public comment, oral comments related to a specific 00:00:18.339 --> 00:00:21.019 agenda item will be heard when that item is taken 00:00:21.019 --> 00:00:23.190 up. This is for general comments only. Speakers will 00:00:23.190 --> 00:00:26.600 be limited to three minutes each. Mr. Journeay, do we 00:00:26.600 --> 00:00:29.739 have anyone from the public signed up to speak? 00:00:29.739 --> 00:00:31.982 No, sir. No one signed up this morning. 00:00:32.006 --> 00:00:32.530 Thank you, sir 00:00:32.850 --> 00:00:38.039 Public comment is now closed. We'll start on our formal 00:00:38.049 --> 00:00:42.939 agenda item number one, please, sir. 00:00:42.939 --> 00:00:45.509 I just would like to note on item number one, sir, 00:00:45.509 --> 00:00:47.710 that Commissioner Cobos has recused herself. 00:00:47.734 --> 00:00:48.460 Thank you 00:00:49.240 --> 00:00:53.070 Alternate rate making mechanisms for water and 00:00:53.070 --> 00:00:55.560 sewer utilities. Mr. Smeltzer, you filed a proposal 00:00:55.560 --> 00:00:57.467 for adoption. Can you lay that out for us? 00:00:57.491 --> 00:00:58.119 Yes, sir. 00:00:58.130 --> 00:01:02.929 David Smeltzer, Commission staff. This is the last piece 00:01:02.929 --> 00:01:04.980 of Legislative implementation that we have from the 00:01:04.980 --> 00:01:07.799 86th Session, so good to finally get that box checked. 00:01:07.810 --> 00:01:10.579 This is a key rulemaking that we have to try and 00:01:10.579 --> 00:01:13.459 help our water utilities and specifically, our 00:01:13.459 --> 00:01:16.069 smaller water utilities, you know, a lot of times 00:01:16.069 --> 00:01:19.510 they have a hard time with standardized rate making 00:01:19.510 --> 00:01:21.799 packages because they either don't have enough information 00:01:21.799 --> 00:01:23.879 or they don't have the ability to get counsel to help 00:01:23.879 --> 00:01:26.159 them work through it. So this just provides a few alternatives. 00:01:26.620 --> 00:01:30.230 Some of the changes that were made since the last draft 00:01:30.230 --> 00:01:32.549 were all focused on trying to make it easier for staff 00:01:32.549 --> 00:01:35.430 to review and trying to take down barriers and streamline 00:01:35.430 --> 00:01:37.939 the process. So the most significant barriers were, 00:01:37.950 --> 00:01:40.689 we eliminated a year long waiting period 00:01:40.689 --> 00:01:42.469 that they had to wait after their rate case to make 00:01:42.469 --> 00:01:45.069 it so they can come in and get the infrastructure built 00:01:45.069 --> 00:01:47.730 that they need. We added some more formulas in it for 00:01:47.730 --> 00:01:51.650 clarity. We eliminated some, a lot of potentially complicating 00:01:51.650 --> 00:01:54.450 variables, such as, like multi step six and things like 00:01:54.450 --> 00:01:56.760 that. And we also added a provision for the recovery 00:01:56.760 --> 00:01:59.290 of rate case expenses while making sure that we deferred 00:01:59.290 --> 00:02:02.379 that to the next full rate case so that it could be 00:02:02.379 --> 00:02:05.560 done quickly and efficiently without, you know 00:02:06.040 --> 00:02:07.819 increasing the rate cases will be required in that 00:02:07.819 --> 00:02:10.750 provision. So, we think that it's a much better 00:02:10.750 --> 00:02:12.919 product than it started off with and happy to answer 00:02:12.919 --> 00:02:13.804 any questions. 00:02:13.828 --> 00:02:16.250 Thank you, sir. Appreciate you laying 00:02:16.250 --> 00:02:19.460 that out. A long time coming. And we have a lot of 00:02:19.460 --> 00:02:24.610 things with this agency. A lot of times media and Leg 00:02:24.610 --> 00:02:28.680 focuses on the power side of the building. But the 00:02:28.680 --> 00:02:31.590 water and wastewater is just as important, it's a key part 00:02:31.590 --> 00:02:34.360 of what makes Texas work. And this will go a long way 00:02:34.840 --> 00:02:37.870 especially to improving how our water and wastewater 00:02:37.870 --> 00:02:40.599 systems work, especially as regards the system improvements 00:02:40.610 --> 00:02:44.000 to ensure and enhance quality of service. Think it's a 00:02:44.009 --> 00:02:46.749 big, big step forward. Thoughts or comments? 00:02:46.773 --> 00:02:48.169 No, I agree with you 00:02:48.169 --> 00:02:50.780 Mr Chairman. I think the ultimate goal of the policy 00:02:50.780 --> 00:02:55.780 was to allow a streamlined and expedited mechanism 00:02:55.789 --> 00:03:01.650 for at-need systems to be able to perform badly 00:03:01.650 --> 00:03:05.259 needed upgrades to their system, to improve the quality 00:03:05.439 --> 00:03:09.379 of the service and the water for their consumers and 00:03:09.389 --> 00:03:13.479 to do it in a way that is gradual on a schedule 00:03:13.490 --> 00:03:16.210 through the mechanisms that staff and stakeholders 00:03:16.210 --> 00:03:19.650 have worked so tirelessly over the last two years to 00:03:20.039 --> 00:03:23.379 to frame. And, at the end of the day, our goal 00:03:23.379 --> 00:03:27.530 was always to be able to allow these systems to 00:03:27.539 --> 00:03:31.439 impose or to build in those upgrades without 00:03:31.439 --> 00:03:35.199 the sticker shock to the consumer, and I think 00:03:35.199 --> 00:03:40.129 this is a great step forward. Good job, Mr. Smeltzer. 00:03:40.129 --> 00:03:42.159 I'm in agreement with all of it and ready to move forward. 00:03:42.740 --> 00:03:45.319 In that case, is there a motion to approve the proposal 00:03:45.319 --> 00:03:46.327 for adoption? 00:03:46.351 --> 00:03:47.101 So moved. 00:03:47.125 --> 00:03:47.682 Second. 00:03:47.706 --> 00:03:49.400 All in favor say aye. Motion 00:03:49.400 --> 00:03:54.750 passes. Thank you, sir. I don't have anything on Items 00:03:54.750 --> 00:04:01.240 two through 5. Bring us to item number six. Mr. 00:04:01.240 --> 00:04:04.639 Journeay. 00:04:04.639 --> 00:04:08.889 Relating to electric service emergency 00:04:08.889 --> 00:04:11.733 and operations plans, I know Mr Smeltzer's got-- 00:04:11.757 --> 00:04:12.960 That's item 5 sir. 00:04:14.139 --> 00:04:16.449 I might have botched the cover sheet there. Sorry, 00:04:16.449 --> 00:04:17.700 guys. 00:04:17.724 --> 00:04:19.881 Item number six? 00:04:19.905 --> 00:04:21.500 Yeah, So that is the 00:04:21.500 --> 00:04:23.410 correct item. It was just item number five. I think. 00:04:23.439 --> 00:04:25.373 Project 51841. 00:04:25.397 --> 00:04:28.230 Yes. Project 51841. Would you lay that out 00:04:28.230 --> 00:04:29.806 for us, Mr Smeltzer? 00:04:29.830 --> 00:04:32.360 This was a Barksdale initiative 00:04:32.839 --> 00:04:36.470 Good morning, Commissioners. Barksdale English 00:04:36.470 --> 00:04:38.500 on behalf of Commission staff. And I have Mackenzie 00:04:38.500 --> 00:04:42.879 Nunez here with me as well. Before you is a proposal 00:04:42.879 --> 00:04:45.750 for publication which implements portions of Senate 00:04:45.750 --> 00:04:48.980 Bill 3 that came out of the 87th legislature that 00:04:48.980 --> 00:04:53.149 made revisions to an existing statute that requires 00:04:53.149 --> 00:04:56.730 certain of our regulated entities on the power side 00:04:56.730 --> 00:05:00.990 to provide emergency operations plans. The Legislature 00:05:00.990 --> 00:05:03.370 wanted to make sure that we were getting regular annual 00:05:03.370 --> 00:05:07.560 updates from these utilities and to make sure 00:05:07.560 --> 00:05:10.430 that they were staying current with best practices 00:05:10.430 --> 00:05:12.949 and that all of our regulated entities were doing 00:05:12.949 --> 00:05:15.129 the best job possible to make sure that they were prepared 00:05:15.129 --> 00:05:19.160 to be able to operate and respond to extreme weather 00:05:19.160 --> 00:05:23.220 events, the changes that you have before you in 00:05:23.220 --> 00:05:26.579 this proposal for publication look extensive since 00:05:26.579 --> 00:05:29.829 its title to repeal and replace. But in fact, many 00:05:29.829 --> 00:05:33.180 of the provisions that are in here are current in the 00:05:33.180 --> 00:05:35.779 existing rule. They've just been reorganized to make 00:05:35.779 --> 00:05:39.279 it a little bit more logical and to start to frame 00:05:39.279 --> 00:05:42.850 out an outline for how staff would like to see these 00:05:42.850 --> 00:05:45.250 emergency operations plans be filed in the future. 00:05:45.939 --> 00:05:50.589 We consulted with a lot of folks to help us understand 00:05:50.589 --> 00:05:54.569 some best practices, and with Mackenzie's help 00:05:54.579 --> 00:05:59.329 we got really deep into some emergency management 00:05:59.329 --> 00:06:02.680 best practices we worked with TDEM, the Texas 00:06:02.689 --> 00:06:06.879 Department of Emergency Management. We used FEMA resources 00:06:06.879 --> 00:06:10.329 to try to help really inform us on what were the current 00:06:10.339 --> 00:06:14.899 best models for not only responding to imminent hazards 00:06:14.899 --> 00:06:18.639 but also for interoperability between agencies, private 00:06:18.639 --> 00:06:21.819 companies and the public. So we've come up with this 00:06:21.819 --> 00:06:25.250 model as our first step in this rulemaking process 00:06:25.250 --> 00:06:28.750 We do imagine that this will take a second phase likely 00:06:28.750 --> 00:06:31.889 later into 2022, possibly into 23, depending on the 00:06:31.889 --> 00:06:35.829 workload of the Commission. And with that, I am happy 00:06:35.829 --> 00:06:38.399 to answer any questions that you might have. One thing 00:06:38.399 --> 00:06:41.399 I would like to mention is that this morning I placed 00:06:41.399 --> 00:06:45.759 before you an amendment to what was posted last 00:06:45.759 --> 00:06:50.600 night. It's on page 12, line 17. It corrects 00:06:50.600 --> 00:06:54.779 some language that we had inadvertently changed, which 00:06:54.790 --> 00:06:58.850 we believe may have altered the applicability 00:06:58.850 --> 00:07:02.240 of a particular section to the rule that we thought 00:07:02.240 --> 00:07:05.339 was inappropriate. 00:07:05.339 --> 00:07:08.779 Thank you. Appreciate all the hard work on this. And 00:07:08.779 --> 00:07:11.439 under 00:07:11.439 --> 00:07:14.759 an extraordinary workload already. Questions, comments? 00:07:15.240 --> 00:07:16.666 Barksdale, Mackenzie. 00:07:16.690 --> 00:07:18.870 I just want to commend staff 00:07:18.879 --> 00:07:21.509 Barksdale, you and your team, for your work on this 00:07:21.509 --> 00:07:24.550 rule. It's It's a critically important rule, having 00:07:24.550 --> 00:07:26.689 worked on this rule years ago when it was first put 00:07:26.689 --> 00:07:31.089 in place, it is great to see that we 00:07:31.089 --> 00:07:34.500 are making improvements to the rule and moving it up 00:07:34.509 --> 00:07:37.329 and into priority, per the legislation that 00:07:37.329 --> 00:07:41.939 was passed this past legislative session. 00:07:41.939 --> 00:07:44.377 All right. 00:07:44.401 --> 00:07:46.839 Great job. 00:07:46.839 --> 00:07:50.160 Is there a motion to approve the proposal for publication? 00:07:50.540 --> 00:07:51.538 So moved. 00:07:51.562 --> 00:07:52.304 Second. 00:07:52.328 --> 00:07:55.475 All in favor say aye. Motion passes. 00:07:55.499 --> 00:07:58.209 Are you sure you don't want to ask us to rewrite 00:07:58.209 --> 00:08:02.209 the proposal and come back in two weeks with something 00:08:02.209 --> 00:08:04.839 different, sir? 00:08:04.839 --> 00:08:13.610 Sure. Barksdale. Well, belay that motion 00:08:13.620 --> 00:08:16.688 I didn't make it. 00:08:16.712 --> 00:08:20.660 Let's do that, Barksdale. Thank you 00:08:20.670 --> 00:08:25.339 Yes, sir. Thank you very much. 00:08:25.339 --> 00:08:28.660 All right. Items seven through 10, I don't have anything. 00:08:29.740 --> 00:08:36.330 Item number--or 7 through 9. Sorry, I got, on item 10, we have 00:08:36.340 --> 00:08:38.870 I think an update from, staff's been working on this 00:08:38.870 --> 00:08:41.039 rule. 00:08:41.039 --> 00:08:47.129 Update from Project 52312. 00:08:47.129 --> 00:08:51.289 Oh. the penalties. Yeah, sorry, I 00:08:51.289 --> 00:08:53.940 came up with that agenda. Yeah, I think that we just wanted to provide 00:08:53.940 --> 00:08:56.610 some clarity on the administrative penalty rule. 00:08:56.610 --> 00:08:58.779 I think there's been a lot of buzz in the press and 00:08:58.779 --> 00:09:00.870 other places about the weatherization rule not having 00:09:00.870 --> 00:09:03.110 penalties yet, so we wanted to clarify while we are 00:09:03.110 --> 00:09:06.750 working on the rulemaking, you know, it takes time 00:09:06.750 --> 00:09:09.950 to do these things, our million dollar penalty authority 00:09:09.950 --> 00:09:11.909 that was given to us by SB3 is in effect by 00:09:11.909 --> 00:09:14.950 statute, and Barksdale and his team will use it if 00:09:14.950 --> 00:09:18.470 necessary. So before the December 1, you know, before 00:09:18.470 --> 00:09:20.120 the filing date, when all the attestation are due, we 00:09:20.120 --> 00:09:22.210 wanted to make it crystal clear that, you know, staff 00:09:22.220 --> 00:09:25.919 believes it has that authority. And we think that's 00:09:25.919 --> 00:09:28.379 an important clarification. And also, I think that 00:09:28.389 --> 00:09:30.190 in one of the themes that we saw in the 00:09:30.190 --> 00:09:35.120 comments was that a lot of folks are under the impression 00:09:35.129 --> 00:09:40.159 that they can't be penalized until after a reasonable 00:09:40.169 --> 00:09:43.580 period, a reasonable cure period, and the proposal 00:09:43.580 --> 00:09:45.929 that we are going to be bringing to you has staff's 00:09:45.929 --> 00:09:48.299 interpretation of the statute, which is, if you look 00:09:48.299 --> 00:09:51.830 at it, we shall give a penalty if you don't cure 00:09:51.830 --> 00:09:54.360 within a reasonable period of time. So it's we have 00:09:54.360 --> 00:09:57.549 to, but you know, if there's something like a, 00:09:58.039 --> 00:10:00.100 you know, bad faith efforts or repeated violations 00:10:00.100 --> 00:10:03.320 of the same nature that are our standard, we may issue 00:10:03.320 --> 00:10:06.820 a penalty for violations of our rule, holds, and so 00:10:06.830 --> 00:10:08.750 we just wanted folks to not have any illusions. We 00:10:08.750 --> 00:10:10.980 take this weatherization seriously, and they should 00:10:10.980 --> 00:10:11.993 do. 00:10:12.017 --> 00:10:15.080 And if power plants don't winterize, there'll 00:10:15.080 --> 00:10:17.090 be penalty. There will be penalties. The penalty will 00:10:17.090 --> 00:10:20.139 be significant. This winter. 00:10:20.139 --> 00:10:22.292 Any other thoughts., Barksdale? 00:10:22.316 --> 00:10:23.980 I just want to say that 00:10:23.990 --> 00:10:26.360 I spent about an hour with my team yesterday morning 00:10:26.360 --> 00:10:29.240 reviewing the kind of internal administrative process 00:10:29.240 --> 00:10:31.490 for how we're going to be reviewing the winter weather 00:10:31.490 --> 00:10:34.490 readiness reports that are due on the first. We've 00:10:34.500 --> 00:10:37.889 been working very closely with ERCOT, Keith Rogus's 00:10:37.889 --> 00:10:40.679 team and the Infrastructure division has set up a 00:10:40.690 --> 00:10:43.549 great way for us to be able to have real time visibility 00:10:43.549 --> 00:10:46.850 into the data that's going to be turned in. So we're 00:10:46.850 --> 00:10:49.370 feeling very synchronized with the ERCOT on how all 00:10:49.370 --> 00:10:51.669 this information is going to flow from the entities 00:10:51.669 --> 00:10:56.139 to ERCOT to the Commission. And I believe that we 00:10:56.139 --> 00:10:59.559 are, we've got the foundation for making sure that 00:10:59.559 --> 00:11:01.629 we've got a good compliance regime in place for this 00:11:01.629 --> 00:11:02.520 winter. 00:11:02.544 --> 00:11:05.240 Nicely put, that's something that shouldn't 00:11:05.240 --> 00:11:07.509 be understated. Not only do we have the authority to 00:11:07.509 --> 00:11:10.399 implement the penalties, but the process in place to 00:11:10.399 --> 00:11:13.179 identify the weatherization efforts that have been 00:11:13.179 --> 00:11:17.090 implemented and, as importantly, any gaps in those 00:11:17.090 --> 00:11:20.629 weatherization. So thank you for making sure that we 00:11:20.629 --> 00:11:22.909 have a process in place to streamline between the 00:11:22.909 --> 00:11:25.120 power plant to ERCOT to the Commission to make sure 00:11:25.120 --> 00:11:27.500 that any gaps in weatherization are identified, identified 00:11:27.500 --> 00:11:31.929 quickly, and either remedied or penalties levied so 00:11:31.929 --> 00:11:36.909 that we know our power plant fleet will be in better 00:11:36.909 --> 00:11:39.110 shape this winter than last winter. 00:11:39.134 --> 00:11:39.860 Yes, sir. 00:11:40.419 --> 00:11:41.902 Yes, sir. Thank you. 00:11:41.926 --> 00:11:44.529 Any thoughts or comments? 00:11:44.539 --> 00:11:47.840 And mine is, mine's just a question. And that is 00:11:47.850 --> 00:11:53.419 have we given any parameters by which we think 00:11:53.429 --> 00:11:59.429 levels of penalties are appropriate for different 00:11:59.429 --> 00:12:03.690 types of violations. I bring this up, as a, 00:12:03.690 --> 00:12:08.059 I think back. I was part of the process when we, 00:12:08.539 --> 00:12:13.759 when, after the 2003 blackout after FERC rules 00:12:13.759 --> 00:12:19.070 were made mandatory, they have million 00:12:19.070 --> 00:12:21.409 dollar, FERC has million dollar a day penalty authority 00:12:21.409 --> 00:12:24.220 as well. But to my knowledge, none of it's ever been 00:12:24.220 --> 00:12:26.750 used in that regard. There have been penalties, obviously 00:12:26.750 --> 00:12:30.690 but the million dollar per day penalty is a, it's 00:12:30.690 --> 00:12:35.750 a very stiff stick and I just didn't 00:12:35.750 --> 00:12:38.279 know if there was any parameters around that. Is that 00:12:38.279 --> 00:12:42.000 there occurring, you know, for the entity 00:12:42.000 --> 00:12:47.259 that reoccurring and is not satisfying the 00:12:47.259 --> 00:12:50.950 intent or the willful nature of rules like this. Or 00:12:50.960 --> 00:12:53.419 you know, have we had that discussion yet or is it 00:12:53.429 --> 00:12:56.065 pretty much a blank slate at this point in time? 00:12:56.089 --> 00:12:56.960 Typically 00:12:56.960 --> 00:13:00.490 the Commission has not publicized any kind of matrix 00:13:00.500 --> 00:13:03.809 you know, kind of set formula for how it calculates 00:13:03.809 --> 00:13:06.210 its penalties. The one exception being in the state 00:13:06.210 --> 00:13:09.450 safety world, we do have formulas that are transparent 00:13:09.450 --> 00:13:12.940 to the industry and part of that is because the nature 00:13:12.940 --> 00:13:16.720 of each individual violation is rather unique. And 00:13:16.720 --> 00:13:20.419 so we take a very fact specific approach for determining 00:13:20.419 --> 00:13:25.190 those penalty amounts, they are formula based in 00:13:25.190 --> 00:13:28.269 terms of, you know, kind of the number of violations 00:13:28.269 --> 00:13:31.450 multiplied by, you know, kind of a penalty per violation 00:13:31.460 --> 00:13:34.500 and then multiplied by the number of days, and 00:13:34.500 --> 00:13:37.539 then we look at that number and determine the reasonableness 00:13:37.539 --> 00:13:40.049 of it. I've got one open case right now that I can't 00:13:40.049 --> 00:13:43.649 get into too many specifics, but the formula would 00:13:43.649 --> 00:13:47.620 have calculated a penalty of something like $42 million 00:13:47.629 --> 00:13:50.120 and it was just it was wholly unreasonable. And so 00:13:50.120 --> 00:13:53.070 we came back off of that to something that was more 00:13:53.070 --> 00:13:56.389 appropriate to, you know, the entity at play, its 00:13:56.389 --> 00:14:01.700 financial resources and and the value of an administrative 00:14:01.700 --> 00:14:06.480 penalty not necessarily being to fill the general revenues 00:14:06.480 --> 00:14:09.419 coffers. That's not my primary concern. My primary 00:14:09.419 --> 00:14:11.789 concern is getting compliance with the rules because 00:14:11.789 --> 00:14:14.909 that's what the public is interested in. Secondly, 00:14:14.909 --> 00:14:17.350 I would also say that this is our first year with this 00:14:17.350 --> 00:14:20.570 rule in place, and we need some experience learning 00:14:20.570 --> 00:14:23.330 what those violations look like before, I would feel 00:14:23.330 --> 00:14:26.129 comfortable coming up with some sort of matrix. Of 00:14:26.129 --> 00:14:29.700 course, if you all decide that there's a good policy 00:14:29.700 --> 00:14:32.649 reason for determining what a classification system 00:14:32.649 --> 00:14:35.200 might look like we'll do our best to take a crack at it. 00:14:35.200 --> 00:14:38.580 I'm not advocating for one yet. And I think 00:14:38.590 --> 00:14:42.250 we need to just follow your lead and suggest that maybe 00:14:42.250 --> 00:14:44.269 we take some time and look at them and see what comes 00:14:44.269 --> 00:14:48.759 in. But you know, I'm open, and I just appreciate your 00:14:48.769 --> 00:14:50.485 efforts in this regard. 00:14:50.509 --> 00:14:52.600 I would also highlight that 00:14:52.610 --> 00:14:55.669 many of these facilities, most of these facilities, subject 00:14:55.669 --> 00:15:00.750 to this inspection, subject to this rule and 00:15:00.750 --> 00:15:04.039 other rules that we have taken up recently are also 00:15:04.039 --> 00:15:06.929 subject to enforcement penalties by TCEQ, you know 00:15:06.929 --> 00:15:10.340 for environmental standards. And right now, the way 00:15:10.350 --> 00:15:15.480 the regulatory discretion allowed to enforcement 00:15:15.490 --> 00:15:21.860 to size the penalties accordingly to the infraction 00:15:22.240 --> 00:15:26.970 is, mirrors TCEQ's process where they go in, and again, 00:15:27.840 --> 00:15:33.100 if we adopt a blanket formula and they have not, 00:15:33.110 --> 00:15:35.789 then we may restrict ourselves to where the penalties 00:15:35.789 --> 00:15:39.440 does not outweigh the cost of just running to fail. 00:15:39.450 --> 00:15:43.370 And again, we don't want to run to fail. So, I 00:15:43.379 --> 00:15:46.519 believe that's why TCEQ and EPA has never gone 00:15:46.519 --> 00:15:51.549 down that road, not sure what (???) did, but in future 00:15:52.039 --> 00:15:56.590 I'd like to leave us the flexibility to cater a penalty 00:15:56.600 --> 00:16:00.036 that deters, you know, bad action. 00:16:00.060 --> 00:16:01.929 So Commissioners 00:16:01.929 --> 00:16:06.519 on, just to, I do wanna let you guys know that we, as 00:16:06.519 --> 00:16:09.360 part of, you had asked Commissioner Glotfelty, if we had considered 00:16:09.360 --> 00:16:10.990 this. And so I want to let you know that several of 00:16:10.990 --> 00:16:14.639 the commenters did file comments suggesting, suggesting 00:16:14.639 --> 00:16:16.610 possible classification regimes. So you'll be able to 00:16:16.610 --> 00:16:18.539 have a more sort of thoughtful discussion of that when 00:16:18.539 --> 00:16:21.360 we get the draft to you, where you can sort of hear 00:16:21.360 --> 00:16:23.309 the other side of the coin to what we've been articulating 00:16:23.309 --> 00:16:25.019 because maybe they'll change your mind, right? 00:16:25.019 --> 00:16:27.649 That's always, it's always a chance. And also just to 00:16:27.659 --> 00:16:30.710 flesh out Barksdale's discussion, I want to say the 00:16:30.710 --> 00:16:33.590 we, as part of it, we do have statutory and in our rules 00:16:33.590 --> 00:16:36.960 factors that go towards sort of mitigating and aggravating 00:16:36.960 --> 00:16:40.440 factors that are considered in every case. And so that 00:16:40.440 --> 00:16:43.320 list is available to you if interested. 00:16:43.344 --> 00:16:44.549 Well, I just 00:16:44.549 --> 00:16:47.009 want to echo Commissioner McAdams statements. I 00:16:47.009 --> 00:16:50.870 think it's important to maintain enforcement flexibility 00:16:50.879 --> 00:16:53.570 these administrative penalties that, the administrative 00:16:53.570 --> 00:16:55.860 penalty authority that the Legislature 00:16:55.860 --> 00:16:58.980 provided us is extremely important, the number 00:16:58.980 --> 00:17:01.580 one goal is to maintain a reliable and resilient grid. 00:17:02.039 --> 00:17:05.869 And so I don't want to tie our hands either. And, you 00:17:05.869 --> 00:17:08.160 know, come up with some kind of calculation that ultimately 00:17:08.160 --> 00:17:11.079 becomes the cost of doing business for the entities 00:17:11.079 --> 00:17:13.940 that are required to comply with the weatherization 00:17:13.940 --> 00:17:17.150 preparedness standards. Our number one priority is 00:17:17.150 --> 00:17:21.119 to maintain reliability for the public. And that's 00:17:21.119 --> 00:17:23.670 what we need to use the administrative penalty authority for. 00:17:23.670 --> 00:17:28.890 Let me clarify one thing. And that is, when 00:17:28.900 --> 00:17:32.269 NERC got this authority, it was a very big 00:17:32.269 --> 00:17:35.059 stick for the industry to comply with these regulations. 00:17:35.440 --> 00:17:40.069 To my knowledge, NERC has never and none of the 00:17:40.069 --> 00:17:43.329 regional entities have ever levied $1 million dollar 00:17:43.329 --> 00:17:47.700 a day penalty. So my point is not to tie the hands 00:17:47.700 --> 00:17:51.119 My point is to say that, you know, if you get to 00:17:51.119 --> 00:17:54.299 some level of infraction. You know, you're gonna be 00:17:54.299 --> 00:17:58.210 fined. You know, if we have a million dollar 00:17:58.210 --> 00:18:01.839 a day authority and for the next 20 years, biggest 00:18:01.839 --> 00:18:04.960 fine, we ever give is $50,000 a day. Well, guess what? 00:18:05.599 --> 00:18:08.700 Everybody knows that it's just $50,000 a day and the semantics 00:18:08.700 --> 00:18:11.769 of $1 million dollars a day goes by the wayside. So 00:18:12.140 --> 00:18:15.910 it's my hope that we use the full extent of our 00:18:15.910 --> 00:18:19.089 penalty authority when the when an infraction warrants 00:18:19.089 --> 00:18:23.539 that. And it's not just a placeholder, for, you know 00:18:23.539 --> 00:18:24.447 some-- 00:18:24.471 --> 00:18:27.220 Absolutely and my primary hope is we don't 00:18:27.220 --> 00:18:29.319 have a lot of infractions. We have a lot of compliance. 00:18:29.329 --> 00:18:33.109 But to the extent we do have infractions, flexibility 00:18:33.119 --> 00:18:38.349 does not mean leniency. At the end of the day, 00:18:38.359 --> 00:18:44.039 thanks to these efforts, our generation fleet will 00:18:44.039 --> 00:18:46.579 be much more resilient this winter than it was last winter. 00:18:46.579 --> 00:18:51.299 And Commissioners, we understand the policy 00:18:51.299 --> 00:18:53.440 direction from the statute, and I hear very loud and 00:18:53.440 --> 00:18:56.000 clear your discussion right now that the full 00:18:56.000 --> 00:18:58.869 range of penalties needs to be on the table and applied 00:18:58.869 --> 00:18:59.821 appropriately. 00:18:59.845 --> 00:19:01.142 All day, every day. 00:19:01.166 --> 00:19:02.539 All day, every day 00:19:02.789 --> 00:19:07.440 Okay. All right. Thank you, gentlemen. Next up, we 00:19:07.440 --> 00:19:13.450 have item 11. Project number 52345. Mr Smeltzer, you're up. 00:19:13.460 --> 00:19:16.140 Thank you, sir. That may have been item 10. I may have 00:19:16.160 --> 00:19:16.921 botched that as well. 00:19:16.945 --> 00:19:18.589 All right, we're gonna go by project numbers 00:19:20.640 --> 00:19:25.079 We filed things late. So this is, this is one 00:19:25.079 --> 00:19:29.250 of the key, this is one of our statutory deadlines. 00:19:29.259 --> 00:19:33.289 We have until December 1 to adopt this. So that's 00:19:33.289 --> 00:19:39.230 worth knowing that that's tomorrow, so we got in 00:19:39.230 --> 00:19:41.579 there. So this is the key, like one of 00:19:41.579 --> 00:19:43.400 the key coordination efforts that we've had between 00:19:43.400 --> 00:19:45.730 agencies. I mean, as everyone knows, one of the 00:19:45.730 --> 00:19:49.210 failings, from the state's perspective in February 00:19:49.210 --> 00:19:51.240 coming out of Uri was a lack of coordination between 00:19:51.240 --> 00:19:53.890 the electric and gas industries. We got clear direction 00:19:53.890 --> 00:19:56.480 from the Legislature. That can't happen again. And 00:19:56.480 --> 00:20:00.990 one of the, one of the aspects of that was the, 00:20:01.000 --> 00:20:04.720 you know, electricity not going to the gas people that 00:20:04.720 --> 00:20:07.140 we needed to be sending gas to the electric people 00:20:07.140 --> 00:20:08.720 that needed to make the electricity. So it's sort of 00:20:08.720 --> 00:20:12.210 a cycle and so in our effort to get past that, we've 00:20:12.210 --> 00:20:15.210 been meeting regularly. Our project team has been meeting 00:20:15.210 --> 00:20:17.900 with members from the Railroad Commission twice a week. 00:20:17.910 --> 00:20:20.049 Learning each other's language, learning how things 00:20:20.240 --> 00:20:23.150 overlapped with one another, and that's just 00:20:23.150 --> 00:20:25.450 this one critical load project team that, you know 00:20:25.450 --> 00:20:27.079 the mapping team and other teams have been meeting 00:20:27.089 --> 00:20:31.440 regularly as well, so I think that the, we offered 00:20:31.440 --> 00:20:34.039 a proposal for publication. And the Railroad Commission 00:20:34.039 --> 00:20:36.519 offered a proposal for publication a couple of months ago 00:20:36.519 --> 00:20:39.500 and I think that there was a general sense that it 00:20:39.500 --> 00:20:42.319 needed to be a little bit tighter, this is all 00:20:42.319 --> 00:20:45.119 about, this rule is all about sort of information, what 00:20:45.119 --> 00:20:46.700 folks need, when they need it, and how they're going 00:20:46.700 --> 00:20:48.930 to get to it. And so people wanted a lot more clarity 00:20:48.930 --> 00:20:51.619 on those things. So I think later today we're expecting 00:20:51.619 --> 00:20:54.250 the Railroad Commission to adopt their version of the 00:20:54.250 --> 00:20:56.700 rule, and it's gonna have a lot of tightening of the 00:20:56.700 --> 00:20:59.210 aspects that they control. So, like the number of entities 00:20:59.210 --> 00:21:03.390 that are eligible to be critical entities and 00:21:03.400 --> 00:21:06.349 the ability to opt out. Those are gonna 00:21:06.349 --> 00:21:09.099 be tightened significantly. But it's premature for 00:21:09.099 --> 00:21:10.569 me to discuss that in too much detail because they're 00:21:10.569 --> 00:21:13.809 adopting it later today. On our side, we also made 00:21:13.809 --> 00:21:17.079 a number of changes that I think people are gonna like 00:21:17.089 --> 00:21:19.150 or you know, it's going to make it more effective. 00:21:19.150 --> 00:21:21.630 We added a definition of energy emergency, and 00:21:21.630 --> 00:21:24.119 it's sort of a, it's an odd definition, but it's because 00:21:24.119 --> 00:21:25.720 we wanted to make sure that it was clear that this 00:21:25.720 --> 00:21:28.940 captures areas outside of ERCOT. I think that the 00:21:28.940 --> 00:21:31.609 focus has been on the ERCOT, but I think the Legislature 00:21:31.609 --> 00:21:35.009 made clear that our efforts and the critical gas area 00:21:35.009 --> 00:21:37.869 need to be Statewide. So you know and that's true 00:21:37.869 --> 00:21:40.829 because we need the map of critical infrastructure 00:21:40.829 --> 00:21:43.779 to be Statewide, we need the weatherization requirements 00:21:43.779 --> 00:21:46.740 for both us and the natural gas industry to apply Statewide 00:21:46.740 --> 00:21:49.970 and some of those are tied to this critical, you know 00:21:49.980 --> 00:21:50.913 gas investigation. 00:21:50.937 --> 00:21:52.500 I'm sure FERC will appreciate this to. 00:21:52.500 --> 00:21:58.549 That's right. And, yes, that's right, and 00:21:58.559 --> 00:22:00.599 you know, all the utilities statewide 00:22:00.599 --> 00:22:02.569 need this information for their loadshed purposes 00:22:02.579 --> 00:22:04.680 And on that point specifically, I will say that we 00:22:04.680 --> 00:22:08.009 were cognizant our friends from SPP SWEPCO pointed 00:22:08.009 --> 00:22:09.990 out to us that they do have these FERC obligations 00:22:09.990 --> 00:22:11.910 So we did put language in the rule. We didn't want 00:22:11.910 --> 00:22:14.049 to create a conflict of laws to where, if they are 00:22:14.049 --> 00:22:16.619 taking actions to follow the directions of 00:22:16.619 --> 00:22:19.880 their regional transmission organization, that is not 00:22:19.880 --> 00:22:21.880 going to be a compliance issue with this rule. So we 00:22:21.880 --> 00:22:24.769 need, we're trying to organize between all these different 00:22:24.769 --> 00:22:26.509 entities. So we want it to be clear that they 00:22:26.509 --> 00:22:29.410 need to be collecting this information and using it 00:22:29.410 --> 00:22:30.980 to the extent that they can, but it's not going to 00:22:30.980 --> 00:22:34.049 impede their federal obligations. Some other things 00:22:34.049 --> 00:22:37.059 that I think are definite improvements, last time at 00:22:37.059 --> 00:22:39.380 the rule, the last version of the joint effort 00:22:39.380 --> 00:22:43.500 didn't have a very consolidated away for 00:22:43.500 --> 00:22:45.269 the information to flow. But we've worked with Railroad 00:22:45.269 --> 00:22:47.269 Commission, and they're gonna be laying out today a one 00:22:47.269 --> 00:22:50.369 form solution. So the natural gas operators can 00:22:50.369 --> 00:22:52.559 just fill out one form. It's got all the information 00:22:52.640 --> 00:22:55.250 that are that our TDUs, MOUs, and Co-Ops say that 00:22:55.250 --> 00:22:57.930 they need, and they're going to be able to email it 00:22:57.930 --> 00:23:00.890 to their coop and send it to ERCOT. We will have, 00:23:00.900 --> 00:23:03.799 the two agency rules and ERCOT will have access 00:23:03.799 --> 00:23:06.569 to this through a unified portal for ease of use. And 00:23:06.569 --> 00:23:09.099 it should be a lot easier for the utilities to sort 00:23:09.099 --> 00:23:11.460 of integrate this data and use it in a meaningful way. 00:23:11.839 --> 00:23:14.950 The other thing is, you know, we put some 00:23:14.950 --> 00:23:17.930 more boundaries on the exchange of information, and 00:23:17.930 --> 00:23:20.609 so, you know, the, if your designated critical as a 00:23:20.609 --> 00:23:23.450 critical natural gas operator, you want to know that 00:23:23.460 --> 00:23:26.460 and so we had required our utilities to tell them 00:23:26.460 --> 00:23:28.500 that right away, our utilities asked for a little bit 00:23:28.500 --> 00:23:31.309 more time, and so we're giving them 10 days to sort 00:23:31.309 --> 00:23:34.039 of let people know, 00:23:34.039 --> 00:23:36.259 did they get all the information they need and what 00:23:36.259 --> 00:23:39.200 further information do they need? But we also recognize 00:23:39.200 --> 00:23:42.609 that our utilities, it's probably, I've never done it, 00:23:42.609 --> 00:23:45.599 but it's hard probably to integrate and classify all 00:23:45.599 --> 00:23:47.680 these different sorts of loads. So we put in a provision 00:23:47.680 --> 00:23:50.230 that allows them to update that later. So as you know 00:23:50.230 --> 00:23:52.630 the different seasons come, they're gonna have more 00:23:52.630 --> 00:23:55.619 flexibility and the ability to sort of, you know, get 00:23:55.619 --> 00:23:59.349 it right. We also added some clarity around the 00:23:59.349 --> 00:24:02.430 self designation process. Before it was not 00:24:02.430 --> 00:24:04.910 clear, you know, so we've had this huge effort over 00:24:04.910 --> 00:24:06.730 the last couple months to get all of the natural gas 00:24:06.730 --> 00:24:09.400 facilities to be filling out this voluntary form, and 00:24:09.400 --> 00:24:12.269 we didn't want all of that to suddenly be rendered 00:24:12.269 --> 00:24:14.410 moot. And so we made it clear that the utilities can 00:24:14.410 --> 00:24:17.269 continue to use the voluntary designations for as long 00:24:17.269 --> 00:24:19.730 as they need to before they can integrate this new 00:24:19.730 --> 00:24:21.849 data. We didn't want to put on, we didn't want to put 00:24:21.849 --> 00:24:24.589 a hard deadline because we wanted to give them the 00:24:24.589 --> 00:24:27.279 flexibility to use the information that they have available 00:24:27.279 --> 00:24:33.319 to them as best they can. We also, yeah, clarified (mumbled). 00:24:33.319 --> 00:24:35.319 So I think those are some of the big changes 00:24:35.319 --> 00:24:38.440 that we made, if you have any questions, I'm happy 00:24:38.440 --> 00:24:41.190 to answer them. And I also want to just recognize that, 00:24:41.200 --> 00:24:43.640 bad form on me for missing it on the water rule earlier, 00:24:43.640 --> 00:24:46.450 but, you know, on the water rule, you know that that 00:24:46.460 --> 00:24:49.589 that one started off with Emily Sears getting 00:24:49.589 --> 00:24:53.559 the project started, and in the final legs, Darryl 00:24:53.559 --> 00:24:55.900 Tietjen, and Keith Rogas and Tammy Benter put a huge amount 00:24:55.900 --> 00:24:58.059 of hours on that, and it wouldn't have gotten to the 00:24:58.059 --> 00:25:00.880 finish line without Mackenzie Arthur and Connie Corona 00:25:00.890 --> 00:25:03.230 making me take a day off, and like, picking up 00:25:03.230 --> 00:25:05.150 the draft and running with it, and they did the ,same 00:25:05.160 --> 00:25:07.750 they did the same on this draft. The project team here 00:25:07.750 --> 00:25:10.690 on the Railroad Commission was Natalie Dubiel and Haley 00:25:10.690 --> 00:25:12.670 Cochran. Our friends from the Railroad Commission. 00:25:12.839 --> 00:25:15.490 They're great. We met with them often, and 00:25:15.490 --> 00:25:18.099 then also, you know, our markets experts Eureka 00:25:18.099 --> 00:25:20.069 Busman and Rama put in a lot of hours, and they're 00:25:20.069 --> 00:25:22.730 also coordinating with ERCOT to make sure that any 00:25:22.730 --> 00:25:26.019 of the designation issues at ERCOT are also lining 00:25:26.019 --> 00:25:29.099 up with our efforts here. We also had a Romney Orama 00:25:29.099 --> 00:25:32.539 Swami Albert and Nabarage who are engineers, were 00:25:32.539 --> 00:25:35.000 all working with sonnet. And again would have made it 00:25:35.009 --> 00:25:38.119 past the finish line without Rebecca, Connie and Mackenzie 00:25:38.119 --> 00:25:40.730 helping get this draft together, last minute. So I just 00:25:40.730 --> 00:25:44.319 wanted to thank all those staffers for their 00:25:44.319 --> 00:25:45.710 contributions. 00:25:45.734 --> 00:25:49.130 Well put, I'll echo those thanks. 00:25:49.140 --> 00:25:52.559 I can't conceive how many countless hours went 00:25:52.559 --> 00:25:55.460 into this. I know there were a lot of hours over Thanksgiving 00:25:56.440 --> 00:25:59.400 from the team. Thank you. That's not the 00:25:59.400 --> 00:26:02.259 way we want to spend Thanksgiving. But thank you so 00:26:02.259 --> 00:26:06.059 much for your work on this critical rule. 00:26:06.440 --> 00:26:08.680 I know y'all were meeting with Natalie and her team 00:26:08.690 --> 00:26:11.660 at the Railroad Commission multiple times a week for months. 00:26:12.539 --> 00:26:16.890 So that is no small effort. And that is just 00:26:16.890 --> 00:26:20.019 a small indication of amount of cooperation between 00:26:20.019 --> 00:26:23.690 the Commission and the Railroad Commission. I appreciate 00:26:23.690 --> 00:26:27.460 their efforts as well. The rule was written to 00:26:27.460 --> 00:26:30.269 parallel the rule that we expect from them this afternoon 00:26:31.339 --> 00:26:35.390 And this is a fundamental part of why the Texas power 00:26:35.390 --> 00:26:38.059 grid will be more resilient this winter than last winter. 00:26:38.440 --> 00:26:40.589 It's a fundamental change between the relationship 00:26:40.599 --> 00:26:43.640 between natural gas industry and the electric generation 00:26:43.640 --> 00:26:48.170 industry. For the first time ever, we've got 00:26:48.539 --> 00:26:52.319 our utilities, our power transmission, power lines 00:26:52.319 --> 00:26:55.369 and poles companies. We'll know where the critical 00:26:55.380 --> 00:27:01.009 natural gas facilities are from production to conveyance 00:27:01.119 --> 00:27:05.930 gathering and midstream to power plants, 00:27:05.940 --> 00:27:09.349 we'll know where the big pieces are that are 00:27:09.349 --> 00:27:11.569 required to stay on. That will cover the vast majority 00:27:11.569 --> 00:27:16.019 of gas generation in the state, which is critical to 00:27:16.019 --> 00:27:17.930 keep the power plants running, which, of course, is 00:27:17.940 --> 00:27:21.289 critical to keep the gas facilities running, the 00:27:21.289 --> 00:27:24.569 circular reference you mentioned earlier 00:27:24.730 --> 00:27:27.470 And for the first time ever, both of those industries 00:27:27.470 --> 00:27:30.140 will know where the key pieces are and how to keep 00:27:30.140 --> 00:27:33.809 both sides of that equation functioning in an extreme 00:27:33.809 --> 00:27:36.339 winter event. 00:27:36.339 --> 00:27:40.670 The bottom line is we'll have a much more resilient 00:27:40.670 --> 00:27:44.609 grid this winter, both on the gas supply side and on 00:27:44.619 --> 00:27:48.259 the power generation side. As we talked about earlier, 00:27:48.269 --> 00:27:51.609 with Barksdale's efforts, implementation is just as important 00:27:51.619 --> 00:27:54.789 as having the rule in place. And the single form for 00:27:54.789 --> 00:27:57.400 information submittal is a big part of streamlining 00:27:57.400 --> 00:28:03.630 that process, and we have a lot of this information 00:28:03.630 --> 00:28:07.240 already, as you mentioned, Smeltzer, as we've 00:28:07.240 --> 00:28:10.539 discussed in the various work sessions, in some parts 00:28:10.539 --> 00:28:16.240 of the state, we went from 10 or 15 critical 00:28:16.240 --> 00:28:19.720 natural gas facilities to over 700 at which point we 00:28:19.720 --> 00:28:21.849 have too many critical natural gas facility. So some 00:28:21.849 --> 00:28:24.869 of this effort is making sure, going in this winter, 00:28:24.869 --> 00:28:27.269 we can focus on the ones that are truly critical 00:28:28.140 --> 00:28:31.859 and this is not the end of this process. As our mapping 00:28:31.859 --> 00:28:34.670 process moves forward, we'll get more specific and 00:28:34.670 --> 00:28:37.589 more granular detail about the vast natural gas supply 00:28:37.589 --> 00:28:40.519 chain in our state, so we can bring even more precision 00:28:40.519 --> 00:28:43.400 and accuracy to critical infrastructure, natural gas 00:28:43.400 --> 00:28:46.369 infrastructure to keep the gas flowing to the power 00:28:46.369 --> 00:28:50.160 plants, which can keep the lights and heat on in our 00:28:50.160 --> 00:28:53.960 homes in extreme weather events. So thank you, thanks 00:28:53.960 --> 00:28:55.980 to our entire staff. Thank you for the Railroad Commission 00:28:55.980 --> 00:28:59.759 leadership and their staff for the work on this, tremendous, 00:28:59.769 --> 00:29:03.190 tremendous effort that fundamentally changes the way 00:29:03.700 --> 00:29:09.980 we deliver Gas and Power in Texas. Connie? 00:29:09.990 --> 00:29:14.089 Chairman, if I may, I wanted to echo the thanks that David 00:29:14.089 --> 00:29:17.890 put out to the PUC staff and the Railroad Commission 00:29:17.890 --> 00:29:21.630 staff. I do want to clarify that that day, he said 00:29:21.630 --> 00:29:27.500 he took off was Sunday. I'd also like to thank each 00:29:27.500 --> 00:29:30.730 of your offices and your respective staffs for 00:29:30.730 --> 00:29:35.799 being available to us on an as-needed basis, whenever 00:29:35.809 --> 00:29:39.799 and however we needed to bounce ideas off of each 00:29:39.799 --> 00:29:42.819 of you and your advisors to make sure we got the 00:29:42.819 --> 00:29:47.069 best rule possible. And to the experts in the industry 00:29:47.069 --> 00:29:50.359 who were answering our technical questions pretty much 00:29:50.359 --> 00:29:51.987 around the clock for the last few weeks. 00:29:52.011 --> 00:29:52.630 Yeah, 00:29:52.630 --> 00:29:55.089 thank you, Connie, and there's no shortage of thanks 00:29:55.089 --> 00:29:59.799 about the utilities and only gas sector. Those companies 00:29:59.799 --> 00:30:03.220 in both industries provided a lot of information. Put 00:30:03.220 --> 00:30:05.869 in a lot of work to get to the point we are 00:30:05.869 --> 00:30:09.210 today. This was not a straightforward process. 00:30:09.210 --> 00:30:12.829 It was not an easy process. And so we commend both 00:30:12.829 --> 00:30:16.960 of those industries for helping us deliver this fundamental 00:30:16.960 --> 00:30:20.720 change to the way gas and power works in Texas. Thoughts, 00:30:20.720 --> 00:30:21.511 comments? 00:30:21.535 --> 00:30:23.930 I want to echo the chairman's statements. 00:30:23.940 --> 00:30:28.170 Having worked through the February 2011 event and 00:30:28.180 --> 00:30:32.859 Winter Storm Yuri, this rule is a landmark rule 00:30:33.240 --> 00:30:38.099 that for the first time ever will recognize 00:30:38.099 --> 00:30:42.240 the importance of the inter-relationship between electric 00:30:42.250 --> 00:30:46.329 generation and the natural gas supply system and will 00:30:46.329 --> 00:30:49.339 go a long way to ensuring that we have a reliable and 00:30:49.339 --> 00:30:52.940 resilient grid in the future. 00:30:52.940 --> 00:30:56.859 Yeah. Thank you, Mr Chairman, I just want to highlight, 00:30:56.859 --> 00:30:59.029 I think we've all been reading the newspapers. I mean 00:30:59.029 --> 00:31:02.660 it's part of our responsibilities here is to be responsive 00:31:02.670 --> 00:31:06.190 to the public concerns. I think it is important 00:31:06.190 --> 00:31:09.000 to emphasize as a part of this proceeding. Many thanks 00:31:09.000 --> 00:31:12.430 to the staffs of both respective agencies, that 00:31:12.430 --> 00:31:15.579 of the Legislature, the Governor's office, those responsible 00:31:15.579 --> 00:31:18.509 for passing the landmark legislation that allowed us 00:31:18.519 --> 00:31:21.279 to come together. It's important to realize that we 00:31:21.279 --> 00:31:24.170 are acting in concert with the Texas Railroad Commission 00:31:24.779 --> 00:31:29.710 and they are our partners in forming a consistent policy 00:31:29.710 --> 00:31:32.019 approach that allows the government to move forward 00:31:32.029 --> 00:31:35.579 and ensure that the people of Texas, and especially 00:31:35.579 --> 00:31:39.640 the ERCOT system in this particular case, remain 00:31:39.640 --> 00:31:44.119 safe during weather-related or any natural disaster 00:31:44.130 --> 00:31:48.230 that may come along to impact service. With 00:31:48.230 --> 00:31:51.700 this rule, I want to highlight that I believe our utilities 00:31:51.700 --> 00:31:55.140 have the discretion to prioritize those natural gas 00:31:55.150 --> 00:31:58.589 entities that are designated as critical, so that no 00:31:58.589 --> 00:32:01.339 matter what scenario comes along, they can adjust in 00:32:01.339 --> 00:32:04.839 a timely way to ensure that the lights, the heat, the 00:32:04.839 --> 00:32:09.109 electric service remains on so that, you know, people 00:32:09.109 --> 00:32:12.279 remain safe. I would like to compliment the work that 00:32:12.279 --> 00:32:15.440 Railroad Commission has done, this has not been 00:32:15.450 --> 00:32:18.920 easy for them. They have a vast industry that they 00:32:18.930 --> 00:32:22.720 regulate as well with a lot of small and mid sized 00:32:22.720 --> 00:32:26.460 actors. I mean, truly mom and pop businesses out there 00:32:26.470 --> 00:32:29.509 that they're trying to get their arms around. But ultimately 00:32:29.519 --> 00:32:33.980 they've made vast strides in accounting for storage 00:32:33.990 --> 00:32:39.160 transmission, and production to allow 00:32:39.170 --> 00:32:41.559 us to have the numbers that we need to move forward 00:32:41.559 --> 00:32:45.619 into this winter and safely say that the heat is gonna 00:32:45.619 --> 00:32:51.240 stay on. Those consumers and ERCOT will have service. 00:32:51.390 --> 00:32:56.190 And I would just like to compliment the unified 00:32:56.190 --> 00:32:58.700 effort and the unified approach that both agencies 00:32:58.700 --> 00:33:03.740 have taken over the last six months. 00:33:03.740 --> 00:33:07.589 You know, I hate to be a broken record here, but 00:33:07.589 --> 00:33:11.710 I appreciate the staff as well. I don't know that 00:33:11.710 --> 00:33:14.309 I yet have an appreciation of how many hours go into 00:33:14.309 --> 00:33:17.289 it. But when you say all those names and all the weekends 00:33:17.289 --> 00:33:20.740 and nights and all of that, getting emails from you 00:33:20.740 --> 00:33:24.269 in wee hours of the morning, I begin to learn how 00:33:24.269 --> 00:33:27.299 much time goes into this. So I very much appreciate 00:33:27.299 --> 00:33:33.970 that. I echo all of my colleagues comments. 00:33:33.980 --> 00:33:37.380 You know, I think this is an important rule, this 00:33:37.380 --> 00:33:42.769 is critical to address issues from this 00:33:42.769 --> 00:33:46.700 past year. This is a paradigm shift in how these industries 00:33:46.700 --> 00:33:51.720 are working together, and I think following 00:33:51.730 --> 00:33:54.220 what the Legislature told us to do, it's important 00:33:54.220 --> 00:33:56.329 that we get it done. So and I think we've done it 00:33:56.329 --> 00:34:00.660 in a fair and right way. 00:34:01.240 --> 00:34:04.930 The one thing that I want to say that sticks out in 00:34:04.930 --> 00:34:10.130 my mind as a result of this is, when I was 00:34:10.139 --> 00:34:12.909 helping build gas fired power plants, the best place 00:34:12.909 --> 00:34:15.880 to locate a power plant was where there was transmission 00:34:15.889 --> 00:34:18.460 which I think we understand how secure transmission 00:34:18.460 --> 00:34:23.360 is, gas, and water. And we've got two of them under control 00:34:23.360 --> 00:34:26.050 and one of them is to better perhaps understand how 00:34:26.659 --> 00:34:32.840 the megawatts that are created using water in big steam 00:34:32.840 --> 00:34:35.710 boilers or heat recovery steam generators or all that 00:34:35.719 --> 00:34:38.429 might be affected in the future in terms of critical 00:34:38.429 --> 00:34:42.050 infrastructure. A lot of these gas plants take effluent 00:34:42.050 --> 00:34:45.340 water from wastewater treatment plants from cities 00:34:45.349 --> 00:34:47.619 which seemed to have some problems this past winter 00:34:47.619 --> 00:34:50.489 as well, and it might be an area to explore going 00:34:50.489 --> 00:34:53.199 forward, but obviously not part of this rule. Let's 00:34:53.199 --> 00:34:54.940 get this one done, and that's something that we can 00:34:54.940 --> 00:34:57.021 think about in the future. But thank you. 00:34:57.045 --> 00:34:57.730 And to your 00:34:57.730 --> 00:34:59.869 point, Commissioner. Once we you know, we're going 00:34:59.869 --> 00:35:01.960 to get more information from this mapping initiative, 00:35:01.960 --> 00:35:07.199 but we will revisit this rule as needed, once or more 00:35:07.199 --> 00:35:09.340 than once if we need to. We got to get it right, 00:35:09.340 --> 00:35:11.289 and so we'll keep coming back to it as we need to. 00:35:11.300 --> 00:35:13.900 And I do appreciate all the credit, but the the late 00:35:13.900 --> 00:35:16.260 night hours are often due to the, you know, Rebecca 00:35:16.260 --> 00:35:18.889 and I both have children under two, and so they 00:35:18.889 --> 00:35:21.070 are they're the maybe the most active members of the 00:35:21.070 --> 00:35:22.498 project team. 00:35:22.522 --> 00:35:26.719 Well, well put. Mr Smeltzer and Jimmy 00:35:26.719 --> 00:35:28.889 I will say thankfully, Texas Water Development 00:35:28.889 --> 00:35:31.489 Board has a robust state water planning process that 00:35:31.500 --> 00:35:36.550 takes a concerted account for power generation. 00:35:36.550 --> 00:35:38.547 Under your leadership as well, I'm sure. 00:35:38.571 --> 00:35:39.409 Well, that was there 00:35:39.409 --> 00:35:41.564 long long before I got there. 00:35:41.588 --> 00:35:43.519 But we know who perfected both of them. 00:35:43.519 --> 00:35:47.469 Commission staff is happy to take credit for that as well if needed. 00:35:47.840 --> 00:35:50.329 Make sure the public understands that the water 00:35:50.329 --> 00:35:55.590 issue is not just languishing out there. There 00:35:55.590 --> 00:36:01.039 have been substantial efforts on that. All right, is 00:36:01.039 --> 00:36:05.019 there a motion to approve the proposal for adoption? 00:36:05.030 --> 00:36:06.270 So moved. 00:36:06.294 --> 00:36:06.902 Second. 00:36:06.926 --> 00:36:10.039 All in favor say aye. None 00:36:10.039 --> 00:36:14.889 oppose, the motion passes. Well done, Mr Smeltzer. Team, 00:36:14.900 --> 00:36:19.210 thank you all. So, so much. An incredible effort. I 00:36:19.210 --> 00:36:21.920 don't have anything on the next item. Which brings 00:36:21.920 --> 00:36:27.880 us to project 52631, rule concerning the establishment 00:36:27.880 --> 00:36:31.989 of H-Cap under 25.505 We've held off on 00:36:31.989 --> 00:36:34.769 this because we've had a lot of discussions and analysis 00:36:34.769 --> 00:36:41.130 on, yeah, discussion analysis on the RDC changes. 00:36:41.130 --> 00:36:44.329 Obviously H-CAPS are part of that. We want to make 00:36:44.329 --> 00:36:50.570 sure. I think that Mr Cobos, good, good insight 00:36:50.579 --> 00:36:52.650 that we want to make sure this we want to address by 00:36:52.659 --> 00:36:55.340 this particular element of the rule by the end of the 00:36:55.340 --> 00:36:59.760 calendar year. Want to make sure we take formal action 00:36:59.760 --> 00:37:04.170 on it this Thursday at our open meeting, but ahead 00:37:04.170 --> 00:37:07.340 of that want to get, have a conversation about what 00:37:07.340 --> 00:37:09.550 that, what you all think about that H-Cap number, 00:37:09.559 --> 00:37:13.619 any updated thoughts so we can give staff 00:37:13.619 --> 00:37:17.659 some direction as they prepare the proposal for adoption. 00:37:18.130 --> 00:37:20.949 I know, we started Commissioner McAdams took leadership 00:37:20.949 --> 00:37:25.425 on this with an initial-- He did, didn't he? 00:37:25.449 --> 00:37:27.340 I did. I took a swing 00:37:27.730 --> 00:37:29.845 We'll see if I did anything. 00:37:29.869 --> 00:37:32.820 Well done that. It's not easy. Started 00:37:32.820 --> 00:37:35.940 out at 4500. There have been discussions which 00:37:35.949 --> 00:37:40.980 50% off of the 9000 we had when we all walked 00:37:40.980 --> 00:37:44.969 into this job that we've had a lot of different scenarios 00:37:44.969 --> 00:37:47.949 run a lot of different, and we don't H-Cap is the 00:37:47.949 --> 00:37:50.099 only thing we need to solve today. There are a lot 00:37:50.099 --> 00:37:52.340 of other variables that go into the RDC equation 00:37:53.130 --> 00:37:57.239 So I know you started 4500 have been a lot of discussion 00:37:57.239 --> 00:38:02.280 about various different numbers. I'll open it up for 00:38:02.280 --> 00:38:07.869 discussion. Loved to hear your thoughts first. 00:38:07.869 --> 00:38:10.389 Well, sir, there have been many conversations 00:38:10.389 --> 00:38:14.059 since our our last workshop where we discussed H-Cap 00:38:14.059 --> 00:38:19.639 ORDC specifically. I think, firstly 00:38:19.639 --> 00:38:23.739 we need to recognize, okay, what is ORDC? 00:38:23.739 --> 00:38:27.460 Is it the saving grace for reliability moving 00:38:27.460 --> 00:38:31.130 forward? Meaning resource adequacy, because again 00:38:31.130 --> 00:38:36.889 you ably articulated that it is not designed to 00:38:36.900 --> 00:38:41.960 incent the building of new generation on its own. 00:38:41.969 --> 00:38:51.000 Man, the holidays. And with that, are we 00:38:51.000 --> 00:38:57.230 designing ORDC moving forward to account for rucking, 00:38:57.239 --> 00:39:03.329 to account for competitive forces of increased 00:39:03.329 --> 00:39:08.230 solar penetration coming in. So, in my view, and I 00:39:08.230 --> 00:39:12.289 have asserted that ORDC was a stabilizing force, 00:39:12.820 --> 00:39:17.989 should be designed and implemented, changes 00:39:17.989 --> 00:39:20.610 should be implemented with the intent, with the goal 00:39:20.639 --> 00:39:26.070 of stabilizing our existing fleet, providing them revenues 00:39:26.070 --> 00:39:31.289 and the right price incentives to behave the 00:39:31.289 --> 00:39:37.369 way they should in the real time market, so 00:39:37.369 --> 00:39:42.000 that they are online when we believe scarcity, the 00:39:42.010 --> 00:39:44.449 likelihood, the probability of scarcity is growing. 00:39:45.320 --> 00:39:51.440 We have continually said that the longer tails 00:39:51.449 --> 00:39:58.039 go out, renewables do benefit to an extent. 00:39:58.420 --> 00:40:02.929 Now, ORDC, in theory, would not engage until 00:40:02.949 --> 00:40:06.849 the bulk of renewables are not performing as they 00:40:06.849 --> 00:40:10.829 normally do. Again, wind. Primarily driven by wind. 00:40:11.409 --> 00:40:14.889 Yes, sir. And again, that will be sort of a wind 00:40:14.889 --> 00:40:19.019 scenario. Right? Because wind drops off at night. 00:40:19.019 --> 00:40:21.900 Especially in the winter, as it gets caught in like 00:40:21.900 --> 00:40:24.530 the summer. The load goes up as it gets colder and 00:40:24.530 --> 00:40:25.338 the sunsets early. 00:40:25.362 --> 00:40:26.989 And then that cold front phenomenon 00:40:27.000 --> 00:40:31.889 that you see. So I view ORDC as 00:40:31.889 --> 00:40:35.769 a component of the broader framework that we are discussing 00:40:35.769 --> 00:40:41.329 here. So I am not trying to bake a whole lot 00:40:41.909 --> 00:40:49.019 in to what ORDC should accomplish. I insist we 00:40:49.019 --> 00:40:53.739 need to use it to stabilize the current market 00:40:53.739 --> 00:40:58.969 conditions within ERCOT, provide our generators with 00:40:58.969 --> 00:41:02.030 a reasonable expectation that they will have adders 00:41:02.030 --> 00:41:05.730 at the right time so that they prepare and execute 00:41:05.809 --> 00:41:10.940 as we expect them to. And so I stand by my memo 00:41:11.409 --> 00:41:15.019 from last week, and I do believe that given the 00:41:15.019 --> 00:41:20.050 feedback that I've had a MCL of 3000 provides 00:41:20.050 --> 00:41:24.280 us, again, that breathing room to where it is advanced 00:41:24.289 --> 00:41:30.750 from EEA conditions. And we also have the ability 00:41:30.750 --> 00:41:36.849 to build in reserve metrics that we follow to appropriately 00:41:36.849 --> 00:41:41.809 deploy ERS after the MCL. Which again, for those 00:41:41.809 --> 00:41:45.849 in the broader public, the minimum contingency level 00:41:45.960 --> 00:41:50.409 implies that high cap is achieved, and so scarcity 00:41:50.409 --> 00:41:54.760 pricing, the prices are in effect. I also believe that 00:41:54.760 --> 00:42:00.820 5000 is an appropriate level, given the the insistence 00:42:00.829 --> 00:42:05.309 of load resources that they need higher prices again 00:42:05.309 --> 00:42:10.539 to, they need to see higher prices to justify turning 00:42:10.539 --> 00:42:14.269 off their facilities and responding to real time price 00:42:14.269 --> 00:42:19.570 conditions. And it's not the 6000, but it's also not 00:42:19.579 --> 00:42:27.179 4500, and historically 5000 was was an enormous number. 00:42:27.190 --> 00:42:31.469 Over the history of the deregulated market design. 00:42:31.480 --> 00:42:35.869 And it still is compared to other ISOs 00:42:35.880 --> 00:42:36.748 in this country. 00:42:36.772 --> 00:42:38.630 What's the next highest? 00:42:38.730 --> 00:42:44.159 Well, so SPP is 2000. Just to put it in context. Now 00:42:44.159 --> 00:42:46.695 PJM, may be 14,000, but I do not... 00:42:46.719 --> 00:42:49.030 I heard a lot of things about that. 00:42:49.030 --> 00:42:53.139 There's a lot of things about PJM, so 00:42:53.150 --> 00:42:56.590 with that, I would, again, I'm setting the table. Those 00:42:56.590 --> 00:42:59.579 are, that's the prism that I'm viewing ORDC 00:42:59.579 --> 00:43:00.932 through at this time. 00:43:00.956 --> 00:43:02.960 So we don't need to figure out 00:43:02.960 --> 00:43:08.320 MCL today, but you're saying, you're basing, H-Cap 5000. 00:43:09.000 --> 00:43:11.081 Also throwing, your saying 3000 MCL? 00:43:11.105 --> 00:43:12.289 I would also point 00:43:12.289 --> 00:43:15.619 out, sir, some have asserted the separation of VOLL. 00:43:16.400 --> 00:43:20.369 As a part of this rulemaking, we did not separate value 00:43:20.369 --> 00:43:24.300 of lost load from high cap. So again, it's not addressed 00:43:24.309 --> 00:43:27.280 in the rulemaking. So I don't think we have an open 00:43:27.280 --> 00:43:31.059 door to address the VOLL as a part of the calculation 00:43:31.070 --> 00:43:34.409 for ORDC at this time, and we can speak 00:43:34.409 --> 00:43:37.030 to staff about that, and correct me if I'm wrong, but 00:43:37.030 --> 00:43:40.820 again, we just changed the number, and there are constraints 00:43:40.820 --> 00:43:44.389 upon this Commission that we cannot take up at this 00:43:44.389 --> 00:43:48.679 time without going through and then reopening scarcity 00:43:48.679 --> 00:43:49.650 pricing. 00:43:49.674 --> 00:43:52.610 So I hadn't thought about that in this context 00:43:53.099 --> 00:43:54.760 because I haven't been following the other discussion 00:43:54.760 --> 00:43:57.000 but I'd say, you know, the two sort of questions you 00:43:57.000 --> 00:43:59.360 wanna ask yourself about this usually are we impacting 00:43:59.360 --> 00:44:02.869 people in a way that, are we impacting people 00:44:02.869 --> 00:44:04.670 that wouldn't have been impacted otherwise under the 00:44:04.670 --> 00:44:08.309 proposal? Or we imposing a much higher regulatory burden 00:44:08.320 --> 00:44:10.960 than we would have been otherwise. 00:44:10.969 --> 00:44:13.320 And I guess sort of another relevant question 00:44:13.320 --> 00:44:16.150 is always like did the stakeholders or did 00:44:16.150 --> 00:44:18.929 the public have adequate notice that a change 00:44:18.929 --> 00:44:23.320 might be adopted? And so I'm inclined to think that 00:44:23.329 --> 00:44:26.789 there might be some fudge room on this because if absolutely 00:44:26.789 --> 00:44:29.219 needed. But I would say that the messaging from the 00:44:29.219 --> 00:44:31.530 dais on this rule was pretty clear about what you guys 00:44:31.530 --> 00:44:36.010 wanted this rule to be, so I mean, we'll 00:44:36.019 --> 00:44:38.460 write the draft you guys want us to write, but... 00:44:38.484 --> 00:44:42.710 I think, well pu. But I think for the purpose of the Thursday 00:44:42.719 --> 00:44:47.800 it's H cap, and, we've also, this Commission has also 00:44:47.800 --> 00:44:51.789 recognized that we're, at the moment in an extraordinary 00:44:51.789 --> 00:44:54.300 set of circumstances. We've expedited rulemaking before 00:44:54.989 --> 00:44:58.489 to achieve key goals. So 00:44:58.489 --> 00:45:03.199 the overall objective is to reduce H-Cap before, as 00:45:03.199 --> 00:45:06.230 Commissioner Cobos highlighted, before it resets in 00:45:06.230 --> 00:45:09.980 January to make sure the people of Texas are not exposed 00:45:09.980 --> 00:45:13.239 to those extraordinary high prices when the when the 00:45:13.250 --> 00:45:15.889 calendar rolls over 2022. So that's the overarching 00:45:15.889 --> 00:45:21.139 objective. ORDC is the, agree with many 00:45:21.139 --> 00:45:24.550 your comments on that, and I'm perfectly comfortable 00:45:24.559 --> 00:45:28.800 for the purpose of H-cap of 5000. Any other thought? 00:45:29.190 --> 00:45:31.579 Thank you, Chairman Lake and Commissioner McAdams, 00:45:31.590 --> 00:45:35.159 for your thoughts on the H-Cap. 00:45:35.170 --> 00:45:37.780 Many of the comments you've made, Commissioner McAdams 00:45:37.780 --> 00:45:41.869 and Chairman Lake, I agree with. You know, ORDC 00:45:41.869 --> 00:45:46.019 is a tool that's been in the market for 00:45:46.019 --> 00:45:49.650 several years now. And it's an important reliability 00:45:49.650 --> 00:45:52.809 tool that we've had in our market since about 2013. 00:45:53.289 --> 00:45:58.110 And, you know, we've got to balance the ORDC 00:45:58.110 --> 00:46:01.460 in a way that we are bringing reserves online earlier, 00:46:01.469 --> 00:46:04.710 we're still incenting demand response participation. 00:46:05.280 --> 00:46:09.289 We are using the ORDC as an operational 00:46:09.289 --> 00:46:13.250 reliability tool by having reserves come on that 00:46:13.250 --> 00:46:16.929 would normally be reupped in the recent past,. 00:46:16.940 --> 00:46:19.690 And to also account for the additional reserves 00:46:19.690 --> 00:46:22.780 that ERCOT is carrying, through their conservative 00:46:22.789 --> 00:46:26.909 operations to maintain a higher margin of reliability 00:46:27.579 --> 00:46:32.699 And so the goal of the ORDC, I agree 00:46:32.699 --> 00:46:36.719 is, you know, both an operational reliability tool 00:46:36.900 --> 00:46:43.030 as far as a revenue adequacy tool, I don't 00:46:43.030 --> 00:46:46.739 believe that the ORDC is not necessarily 00:46:46.739 --> 00:46:51.119 intended to drive new Greenfield investment, but 00:46:51.119 --> 00:46:54.389 as you commented, the ORDC will help stabilize 00:46:54.389 --> 00:46:59.280 the existing generation and potentially drive investment, 00:46:59.280 --> 00:47:03.039 incremental investment in existing generation like 00:47:03.050 --> 00:47:06.119 upgrades, adding additional unit to an existing 00:47:06.119 --> 00:47:08.630 power plant or uprates, which will squeeze out more 00:47:08.630 --> 00:47:13.530 megawatts from an existing power plant. While you 00:47:13.530 --> 00:47:15.869 know, we recognize this fact, I think it's important 00:47:15.869 --> 00:47:19.059 to again note that the changes that we're making to 00:47:19.059 --> 00:47:21.929 ORDC through our reform efforts here are very 00:47:21.929 --> 00:47:26.139 important. They are, you know, we don't want to minimize 00:47:26.139 --> 00:47:28.579 the importance of the changes we're making to ORDC 00:47:28.579 --> 00:47:32.880 because these are every parameter of the 00:47:32.880 --> 00:47:36.280 ORDC, whether it's the H-cap, the minimum contingency 00:47:36.280 --> 00:47:39.260 level or even a consideration of a standard deviation 00:47:39.260 --> 00:47:42.239 which is not on the table right now, have been highly 00:47:42.250 --> 00:47:46.079 contested debated issues in the past. So what we are 00:47:46.079 --> 00:47:49.320 doing here, we are taking extraordinary aggressive action 00:47:49.320 --> 00:47:54.059 to reform the ORDC to maintain operational reliability 00:47:54.070 --> 00:47:57.500 and drive revenue adequacy to existing generation. 00:47:57.980 --> 00:48:01.469 And it is by no means low hanging fruit. And so I 00:48:01.469 --> 00:48:04.880 wanted to again reiterate that to the public, to 00:48:04.880 --> 00:48:09.280 the stakeholders out there. And so, given all those 00:48:09.280 --> 00:48:13.989 comments I, you know, with respect to the H-cap itself, 00:48:14.469 --> 00:48:18.309 I am an agreement, I think 5000 seems to 00:48:18.309 --> 00:48:21.820 be a good a good spot, I know the 6000 was 00:48:21.820 --> 00:48:24.400 was considered only to help drive more demand response 00:48:24.400 --> 00:48:27.550 on the system. But to try to sort of, you know, really 00:48:27.559 --> 00:48:34.340 gear the ORDC to incent operational 00:48:34.340 --> 00:48:37.000 liability and revenue adequacy to dispatchable generation 00:48:37.000 --> 00:48:40.329 resources. I think that is a good starting point 00:48:40.340 --> 00:48:42.780 to go ahead and modify our proposal for adoption and 00:48:42.780 --> 00:48:47.239 insert in there. Right now, at this time, I'm at 00:48:47.239 --> 00:48:50.400 a 3000 MCL as well. Because of the fact that 00:48:50.409 --> 00:48:53.070 that would bring on the operational reserve demand 00:48:53.070 --> 00:48:57.210 curve earlier to get reserves on earlier on the system 00:48:57.210 --> 00:49:01.190 to maintain reliability so we can help prevent conservation 00:49:01.510 --> 00:49:06.440 and emergency events. And so that's that's where I'm 00:49:06.440 --> 00:49:08.929 at right now. And I continue to reiterate that I think 00:49:08.940 --> 00:49:13.849 we should adopt the rule, you know, this 00:49:13.849 --> 00:49:16.329 Thursday so we can get the price cap in place before 00:49:16.329 --> 00:49:19.840 January 1, but also to go ahead and approve 00:49:19.849 --> 00:49:22.449 ORDC changes in a timely fashion so that we can 00:49:22.449 --> 00:49:25.590 have the ORDC, the modified ORDC in place 00:49:25.590 --> 00:49:27.909 for this winter so that we can ensure that reserves 00:49:27.909 --> 00:49:31.050 come on earlier, that we're driving demand response 00:49:31.059 --> 00:49:36.090 participation, and helping, using the ORDC to 00:49:36.099 --> 00:49:39.590 help maintain reliability this upcoming winter season. 00:49:40.869 --> 00:49:45.869 Nicely said. 00:49:45.869 --> 00:49:49.820 Thank you. Appreciate all your comments. Appreciate 00:49:49.820 --> 00:49:54.170 your work, Commissioner McAdams. I'm totally okay 00:49:54.170 --> 00:49:59.599 with doing a price cap at 5000. The one thing 00:49:59.599 --> 00:50:02.559 that I do want to say is, you know, I think 00:50:02.559 --> 00:50:07.389 all of these changes that we are considering are 00:50:07.860 --> 00:50:16.730 expensive. Expensive is relative 00:50:16.739 --> 00:50:21.670 to problems. We're trying to to push off 00:50:21.670 --> 00:50:24.530 problems so that they do not appear this winter, and 00:50:24.530 --> 00:50:26.440 they do not appear on the system. And I think it's 00:50:26.440 --> 00:50:31.230 warranted based upon what we've, what we have experienced, 00:50:31.230 --> 00:50:34.880 what all Texans have experienced, so I think this 00:50:34.880 --> 00:50:39.369 is the right policy to move forward at 5000 and at 3000 00:50:39.369 --> 00:50:45.849 MCL. I have some other thoughts that 00:50:45.849 --> 00:50:48.429 I want to explore in the future. Some other analysis. 00:50:48.860 --> 00:50:51.690 That it is probably not the right time, because we're 00:50:51.690 --> 00:50:55.099 kind of, we're in a unique time, and I think we need 00:50:55.099 --> 00:50:59.409 to do what's right for today. So 00:50:59.409 --> 00:51:02.969 I'm supportive of this effort and appreciate your 00:51:02.980 --> 00:51:03.633 efforts. 00:51:03.657 --> 00:51:05.639 One factoid, if I may, Mr. Chairman 00:51:05.639 --> 00:51:09.190 on that note, talking about it with staff earlier, 00:51:09.559 --> 00:51:14.130 ORDC has been modified, we believe 10 times since 00:51:14.130 --> 00:51:16.038 its inception. 00:51:16.062 --> 00:51:18.674 Eight years ago. 00:51:18.698 --> 00:51:19.889 2014. 00:51:19.900 --> 00:51:23.699 So I just want to highlight that for the 00:51:23.699 --> 00:51:27.000 public, but also the stakeholders who are gonna naturally 00:51:27.000 --> 00:51:30.380 clamor at our door, this is inadequate or, you know 00:51:30.380 --> 00:51:33.059 this is low hanging fruit, or any of the arguments that 00:51:33.059 --> 00:51:36.289 will be made, but this is a tool that was always 00:51:36.289 --> 00:51:40.820 designed to be moved dependent on the conditions 00:51:40.829 --> 00:51:44.280 of the grid. And we are taking the appropriate action 00:51:44.289 --> 00:51:47.780 with this move. And I think we have consensus on 00:51:47.780 --> 00:51:51.760 this dais to that effect. But it's not to say that 00:51:51.769 --> 00:51:54.449 it cannot be refined still further, not necessarily 00:51:54.449 --> 00:51:59.880 to the, that is not a threat to our generation community. 00:52:00.099 --> 00:52:03.030 That is, no, we're going to continue to look at this 00:52:03.039 --> 00:52:06.619 in the near term, over the next two years, as the broader 00:52:06.619 --> 00:52:09.099 framework evolves that we're considering as a part 00:52:09.099 --> 00:52:10.594 of the the redesign effort here. 00:52:10.618 --> 00:52:11.500 Absolutely. That's 00:52:11.500 --> 00:52:13.429 a promise to our citizens that we're going to 00:52:13.429 --> 00:52:15.630 continue to balance reliability with affordability. 00:52:16.650 --> 00:52:19.260 Great comments. Yes, and and well put Commissioner 00:52:19.260 --> 00:52:21.800 McAdams. We have performed many surgeries on ORDC 00:52:21.800 --> 00:52:25.880 in the last, you know, seven years or so, 00:52:25.889 --> 00:52:28.429 and, I think it's a matter of due diligence. We 00:52:28.429 --> 00:52:30.590 should continue to examine the ORDC in the future 00:52:30.590 --> 00:52:33.360 to make sure we are striking that balance between reliability 00:52:33.360 --> 00:52:36.877 and customer affordability. 00:52:36.901 --> 00:52:38.980 Well put on all 00:52:38.980 --> 00:52:43.590 accounts. Jimmy always appreciate you reining in our 00:52:43.590 --> 00:52:45.969 relentless pursuit for reliability and reminding us 00:52:45.969 --> 00:52:50.110 that affordability is still important. And 00:52:51.449 --> 00:52:56.099 well put on the promise to keep reviewing this 00:52:56.099 --> 00:53:00.170 and balancing reliability and affordability. And I'll 00:53:00.170 --> 00:53:03.739 close by highlighting what Commissioner Cobos said in 00:53:03.739 --> 00:53:06.480 that a big part of this is moving MCL out. 00:53:07.150 --> 00:53:12.840 We're reducing almost 50% the high cap price that our 00:53:12.849 --> 00:53:16.840 homes and businesses are exposed to, while at the same 00:53:16.840 --> 00:53:22.269 time moving that price point further out from 00:53:22.269 --> 00:53:28.119 the 00 supply. And so we're reducing liability and 00:53:28.119 --> 00:53:31.090 exposure both on the, to our citizens and our 00:53:31.090 --> 00:53:35.010 businesses, both on the degree of the price, of 00:53:35.010 --> 00:53:37.750 the extreme price that can be charged. But we're also 00:53:37.750 --> 00:53:41.480 making sure that our marketplace gets that price sooner 00:53:42.050 --> 00:53:45.380 and so that all resources are brought to bear, the generation 00:53:45.750 --> 00:53:49.929 that, the generation fleet that comes in at various 00:53:49.929 --> 00:53:53.340 price points, the demand response, that all of these 00:53:53.340 --> 00:53:55.659 resources are brought to bear through market based 00:53:55.659 --> 00:53:59.650 mechanisms. Before as Commissioner Cobos said, before 00:53:59.650 --> 00:54:02.159 we ask citizens to turn off their homes and businesses 00:54:02.739 --> 00:54:04.840 which is a big departure from the way business has 00:54:04.840 --> 00:54:07.659 been done in the past, and that's something 00:54:07.659 --> 00:54:10.159 that is extremely important. It should not be overlooked 00:54:10.170 --> 00:54:12.710 in our in our efforts that are being made today and in 00:54:12.710 --> 00:54:17.210 conjunction with ERS. Again, another extraordinary 00:54:17.210 --> 00:54:21.030 move that is a dramatic departure from business as 00:54:21.030 --> 00:54:25.289 usual. That goes a long way to increasing reliability 00:54:25.289 --> 00:54:28.150 of their power grid. Thank you all for all the work 00:54:28.150 --> 00:54:31.289 on this. In terms of direction to staff, I think 00:54:31.300 --> 00:54:35.269 what y'all need from us is that 5000 number. 00:54:35.280 --> 00:54:37.630 Yes, sir, this feels like it's a big decision where it's going 00:54:37.630 --> 00:54:40.320 to affect a lot of money. So right now we have 00:54:40.320 --> 00:54:42.809 enough direction to write a draft. But the way we would 00:54:42.809 --> 00:54:44.840 do that would be to go back and look at this transcript 00:54:44.840 --> 00:54:48.210 and try and pick out the key points of this extended 00:54:48.210 --> 00:54:51.349 discussion. If you would prefer, one of you could 00:54:51.349 --> 00:54:54.690 make a definitive policy statement right now about 00:54:54.690 --> 00:54:57.329 the motivations for developing this, or file a memo 00:54:57.329 --> 00:54:59.519 that says, like these are the reasons why we think 00:54:59.519 --> 00:55:01.679 this strikes the right balance. If you want. We're 00:55:01.679 --> 00:55:03.960 happy. It's just whether or not you want to control 00:55:03.960 --> 00:55:06.360 the messaging that goes into this draft or if you want 00:55:06.360 --> 00:55:08.630 staff to do the policy analysis based on the discussion 00:55:08.630 --> 00:55:10.989 you just had, we're happy to go either way. Does my 00:55:10.989 --> 00:55:11.587 question-- 00:55:11.611 --> 00:55:13.429 What I'm hearing is you expect us to get 00:55:13.429 --> 00:55:14.661 sued and you want to-- (laughter). 00:55:14.685 --> 00:55:15.880 I'm not saying, what I'm saying 00:55:15.880 --> 00:55:19.190 is if we miss the mark, I'd rather find out about that 00:55:19.190 --> 00:55:20.348 before Thursday. 00:55:20.372 --> 00:55:22.043 Aren't you glad you filed that memo? 00:55:22.067 --> 00:55:24.261 So glad. I'm going to get deposed. 00:55:24.285 --> 00:55:27.429 They didn't tell you that in this job application? 00:55:27.440 --> 00:55:29.889 We have sufficient direction to move forward. If that's 00:55:29.889 --> 00:55:32.065 what you, if that's your preference. 00:55:32.089 --> 00:55:33.639 Can you draft something 00:55:33.650 --> 00:55:36.197 and circulate it down the hall? 00:55:36.221 --> 00:55:37.860 We sure can. We, you 00:55:37.860 --> 00:55:39.429 know, we don't want to, we want to be careful about 00:55:39.429 --> 00:55:41.659 open meetings act, so if we're gonna be getting, we 00:55:41.659 --> 00:55:45.389 could take substantive input from any two of you. 00:55:45.389 --> 00:55:48.719 How about I take a crack at it and 00:55:48.909 --> 00:55:55.139 we'll say we, after the extreme weather events Of February 00:55:55.139 --> 00:55:59.710 2021, this Commission recognized that the extremely 00:55:59.710 --> 00:56:04.559 high price of 9000 was an extraordinary liability on 00:56:04.570 --> 00:56:08.659 market participants and customers of ERCOT. Therefore 00:56:10.829 --> 00:56:13.869 with the intention of reducing that financial liability 00:56:13.869 --> 00:56:16.050 to all market participants and customers in ERCOT 00:56:16.630 --> 00:56:21.969 while also maintaining appropriate market signals and 00:56:21.969 --> 00:56:25.510 price signals for both generators and demand response 00:56:25.510 --> 00:56:29.860 participants in ERCOT, the Commission is asking staff 00:56:29.869 --> 00:56:36.559 to strike that balance at an H-cap of $5, 000 in order 00:56:36.559 --> 00:56:39.460 to ensure appropriate generation brought to the market 00:56:40.630 --> 00:56:43.340 using market-based, brought to bear using market-based 00:56:43.340 --> 00:56:46.849 mechanisms while also incentivizing demand response 00:56:47.829 --> 00:56:54.489 while limiting extraordinary financial liability 00:56:54.489 --> 00:56:59.449 for all participants and customers of ERCOT. 00:56:59.449 --> 00:57:04.079 Good answer. That will save staff a considerable 00:57:04.079 --> 00:57:09.641 amount of time. Thank you, Anything else? 00:57:09.665 --> 00:57:12.530 For the record, I don't 00:57:12.530 --> 00:57:17.179 even own a cell phone. We're good. 00:57:17.190 --> 00:57:21.130 Thank you. Thanks, sir. 00:57:21.130 --> 00:57:24.230 That's all we need, all the business we need 00:57:24.230 --> 00:57:29.260 to cover on that item. I don't have anything else.. 00:57:30.630 --> 00:57:34.099 So there being no further business before the Commission 00:57:34.099 --> 00:57:35.949 this meeting, the Public Utility Commission of Texas 00:57:35.949 --> 00:57:37.900 is hereby adjourned.