-: Good morning.
This meeting of The Public Utility Commission of Texas
will come to order
to consider matters that have been duly posted
with the Secretary of State of Texas for December 2nd, 2021.
For the record, my name is Peter Lake,
and with me today, are Will McAdams,
Lori Cobos and Jimmy Glotfelty.
Today, we have several
contested case items rulemaking projects to attend to.
We will then go into closed session, take a break.
And after that break,
we will reconvene for the second half
of today's programming,
which is our work session to discuss market redesign
under agenda item 18.
So, that is our game plan for the day.
And Mr. Janae,
could you please walk us through today's Consent Agenda?
-: Good morning, Commissioners by individual Gallup.
The following items were placed on your Consent Agenda.
7, 27 and 28.
Commissioner Cobos is recused from item seven.
-: Thank you, sir.
Is there a motion to approve the items
just described by Mr. Janae?
-: So moved. -: Second
-: All in favor, say aye.
Aye. -: Aye.
None opposed, the motion passes at this time.
Like to open for public comment,
or comments related to a specific agenda item will be heard
when that item is taken up,
this is for general comments only.
Speakers will be limited to three minutes each.
Mr. Janae, do we have anyone from the public
signed up to speak?
-: No one signed on the sheet, sir.
-: Thank you, sir.
In that case, public comment is now closed,
we will not be taking up items four, 11, 14, 16, and 17,
which brings us to our regular agenda.
Mr. Janae, could you lay out our first item.
-: Item one is Docket 50404,
Petition Of Sterling Deason O'donnell
and/or related entity to amend the Marilee SUD CCN
by expedited release
the Commission issued an order on October 12th.
Marilee SUD filed a motion for rehearing on November 5th,
we've asked y'all to extend time to act.
-: Thank you, sir, seems pretty straightforward.
Any thoughts, comments,
or motion to extend time to act on the motion for rehearing
before the maximum period about Labella?
-: Yes, sir, I would move to extend time.
-: Is there a second?
-: Second.
-: All in favor, say aye.
Aye. -: Aye.
None opposed, motion passes, next item, please.
-: Item two is Docket 51545, Petition of Compass Datacenters
to amend Rockett SUD CCN by expedited release
the Commission issued an order on October 12th.
The Rockett SUD filed a motion for rehearing
on the November 5th,
we've asked y'all to extend time to act on the motion.
-: Thank you, sir.
Who has comments
or a motion similar set up, thoughts, comments, or motion
to extend time to act on the motion for rehearing?
-: I would allow it and move to extend time.
-: And is there a second?
-: Second.
-: All in favor, say aye.
-: Aye. -: Aye.
None opposed, the motion passes.
Item number three please. Mr.-
-: Item three is Docket 52090,
Petition of Redbird Development
to Amend Dobbin Plantersville WFC certificate
by expedited release
the Commission issued an order on October 12th,
Dobbin Plantersville WFC
filed a motion rehearing on the 5th,
we've asked you to extend time to act on the motion.
-: Similar set up, thoughts, comments, motion
to extend time to maximum rehearing
to the maximum extent, blah, blah, blah.
-: Same thing here on this one, I would need to extend.
-: Is there a second. -: Second.
All in favor, say aye.
-: Aye. -: Aye.
-: None opposed, motion passes.
Getting the hang of this.
All right, nothing on five and six, seven was consented,
it brings us to item number eight.
-: Item eight is Docket 52689,
is the Expedited Petition of CenterPoint and others
for a load management program and an accounting order.
I will note that a revised agreement
and other documents filed by the utility yesterday.
-: Thank you, sir.
As is something we've discussed before,
you got a lot of feedback on that
as much as you may know, Janae noted,
a lot of the feedback was received yesterday
leaving little time to fully vet.
I know there were budget caps put in part of your requests.
-: Yes, sir.
-: But that being said a lot of things around here
moving fast and furious,
so far from the only ones falling things
with little time to review.
Two big things to consider,
establishing establishment of the regulatory asset
and then approval of the plans,
I think we certainly want to, well, first of all,
thank you for the feedback the TDUs and especially voltage
and also ERCOT for their feedback
and the input in response to the questions from the dyes.
I think the regulatory asset
certainly needs to be established.
We need all the tools we can get this winter.
The plans,
I'm really curious to hear y'all's thoughts on today,
I can see going both ways on those
given the new nature of this and the tight timelines,
but I certainly,
think it's something the pricing is consistent with the IRS,
it's similar to the framework,
similar to our summer program,
so, I think it's been helpful to see all of that laid out,
well, clearly, it's helpful to have the budget caps,
but would welcome your thoughts and comments.
-: Yep, thank you, Chairman Lake.
And I think your layout of the two main decision points
is well set forth.
With respect to the approval of the accounting order
to establish a regulatory asset,
I think that is an action we can take today, and should,
as you described to allow the utilities
to implement this program
as sort of a testing bed for this upcoming winter.
I would stop there.
I think ultimately they will have to come in
in their next rate case and justify their costs.
And I don't know if I would get involved
in actually approving all the specifics
in their plan at this time.
-: Okay, any thoughts, comments?
-: Boy, that sounds like a prudent action.
I like it.
Just thought.
-: The action part or the prudent part?
-: Both.
(members laughing)
-: All right.
-: I'm kind of the naysayer here, I don't like it.
-: Any other?
Prudence or the action?
-: Well, I think it was thrown in at the last minute.
We're trying to look at ECRF next year,
we're trying, in my opinion, the market ought to be moving
to a lot of these demand-response programs
and the utilities
ought to be using ECRF for energy efficiency.
And I just feel if this was a real pilot program,
it would be one and a half megawatts,
10 megawatts and 20 megawatts.
But what we have is one and a half, 10 and 300,
that's a lot of megawatts.
And I know service territories are very different.
But I struggle that I don't think
this is really just a pilot program.
Does this become a full program
that we end up integrating into something else
without full discussion?
Is it something that we change in three months,
which doesn't really give certainty?
So, those are the questions
that I'm kind of wrangling with here
on this kind of dropped, I think it was 11, when was this?
When did we get this?
Less than 30 days ago.
So.
-: All very fair concerns.
Can I highlight something you said at the very beginning?
-: You may.
-: The demand response should be moving to the market,
I think, is that the- <v ->That's what I said.
-: And ECRF should be at the TDU level?
-: That's what I believe.
-: So, I wanna highlight that, I think that's exactly right,
and I think that's where we need to move philosophically
across the board.
So, that's an, I think that's an incredibly important point
that shouldn't go by the wayside.
So, I agree with that, thank you for highlighting that.
As for overgrown pilot program,
that just becomes part of the, absorbed into the mass.
I guess I'm thinking of this less as a pilot program
than an effort to use every tool we've got this winter
until we can get the broader reforms in place
and implement it.
So, I certainly don't think of this
as something that is ongoing forever.
-: Right.
I don't recall,
we've obviously all read a lot in the last couple of days,
papers flying around.
I also, if I recall, ERCOT had a problem implementing it.
So, I have some question about that,
but also would wonder if that is the case.
And if they have a trouble implementing it,
then again, how do we justify doing it?
-: So, I noticed that as well,
and if any action we take,
I think we need to include ordering paragraphs
to address that information,
I think it's an information challenge for ERCOT.
-: Right.
-: Certainly to address that.
-: Is that settlement issue as well?
-: There's a pricing issue involved there.
-: Yeah.
-: Can that be addressed, or is that a lost order?
-: That's why I have concerns,
'cause I don't know if it can be addressed or not.
I haven't heard anything from-
-: I'm gonna ask, or whoever appropriate from ERCOT can.
-: Kanaan Gallman with ERCOT.
So, we currently
don't digest the magnitude of these programs,
and there's a request that we do a price adjustment
for their deployment,
and that's the area that we have a challenge in.
So, it's a pricing issue
as well as will flow all the way through to settlements.
And I also think that doing the price correction by,
say, January,
really is not in our scope of work at this point.
So, that would also be a challenge.
So, I think that's the extent of the comments
as I remembered them.
-: Can't be done or would be really hard to do?
Can't be done, okay.
-: Just being honest there, Gallman,
I mean, we're building a car at 60 miles per hour here,
moving into this winter.
-: Yeah, I mean that price adjustment component either,
it's not that you can't implement what's been asked,
it's the pricing adjustment that can't be done for January.
Yeah.
-: Can it be known if you had more time?
Could you do it after January?
-: We could, so, it is absolutely doable,
it's technically doable,
it's a matter of moving resources to implement that.
-: Where are you gonna move resources from?
I'm sorry, Commissioner.
-: No. -: Don't apologize.
-: So.
-: Whatever the next thing is.
-: It is not something we have designed at this point,
that adjustment, and the resources that it would move
are off of the settlement team
and the market design team on that front.
-: Which are focused on securitization
and variety of other matters.
-: Correct.
-: Where does that leave you?
-: That leaves me struggling with how we take resources
off these more important projects to do something like this.
And maybe there's another,
a couple hundred megawatts we can find somewhere
if we need it.
But I struggle with implementing a new program very quickly
knowing what we know from ERCOT.
That's where I am.
-: Can it be implemented?
Can we get those megawatts without the price adjustment?
-: Yeah, I mean, the proposal does not,
in any way, tie itself to the price adjustment.
I may be able to make a very clunky adjustment,
but that might not align market conditions
to the actual price.
But you could get those megawatts, we just wouldn't be,
the price adjustment would need to come later
and the project schedule.
-: Wait a moment, is that something-
-: That would move me in the direction of saying,
yeah, this is great, let's go forward.
-: Okay, so, there's no scenario
where this should move forward on this timeframe?
-: Well, there could be, but I haven't heard it yet,
to satisfy me.
-: Okay, what.
Well, I mean, the settlement issues are concerned,
I don't know if we may need to hear from center point.
-: So, and the key thing here,
is it's not about settling the program,
it's the price adjustment
and settling the rest of the market, that is the issue.
Man: Yeah, absolutely.
-: So, the proposals from the TDUs could all get implemented,
that's not, we wouldn't be in the way of doing that.
-: So, you've noted this issue
from an implementation standpoint,
and a TCPA has noted this
from a impact on pricing for generation.
Those are the two angles on this issue
that I think have been presented to us.
-: Good morning,
Commissioner Sam Chang with CenterPoint Energy.
Commissioner Glotfelty, just one clarification,
as part of the revised settlement, we did agree
to lower the 300 megawatt upper boundary to 150.
Glotfelty: Oh, okay, thank you.
-: As it relates to information that ERCOT needs,
I have been conferring with ERCOT's counsel
regarding specific language.
And I believe our caught provided some sample language
in its comments and analysis, and we're happy
to have the Commission incorporate that kind of language
as it relates to information sharing.
With regard to pricing those and price formation,
that's really not ordeal, that's not part of our program,
that's more of something KCPA raised.
-: Which goes to demand response in the market.
Right.
-: And TDUs.
Thoughts on how to resolve this?
-: Yes, sir.
Non-negotiable, I think, and I believe we're all there,
we don't wanna siphon resources away
from real-time, operational mechanics
that are being worked through
for the purposes of the winter.
Because we need those megawatts
that we know how they perform to perform as expected.
-: Regular marking function.
-: Yes, sir.
-: Okay.
-: So again, if, if Kanaan can tell us,
which I believe he is, you can move forward
to where this program and project
will not disrupt the functions
of the personnel associated with market operations.
It will not siphon away resources,
because I wanna count on the megawatts that I know
are gonna be able to be there.
-: So, I mean, I think the programs can go forward,
it's just the price adjustment.
-: Yeah. -: That was requested by TCPA,
would not be able to go forward in the January timeframe.
-: Later, and maybe clunky.
-: Yes.
And they've requested a series of other price corrections,
and it could delay that,
those are some other issues
we'd have to have to talk through.
But I think January is not a possibility,
it puts at risk some of the other price corrections
that were asked for this summer.
-: Given the small amount of megawatts
that we're talking about,
I mean, how big of an impact is it on a price correction?
Is it something significantly large?
We're looking at maybe 170 megawatts or less.
-: Well, low reserves that counts for a lot.
-: Yeah, I would say if I'm far away from the steep part
of the operating reserve demand curve,
the impact is small, but these programs are most likely,
gonna be deployed at the very edge
of the operating reserve demand curve
where the curve is extremely steep.
So, even 100 megawatts can make a dramatic price change.
Now, there's other price adjustments at play,
and they may be sufficient
to override what these programs do.
And the proposal before you to change ORDC,
may diminish that amount.
So, you're thinking about increasing MCL
and lowering HCAP,
those things might make that impact much smaller,
I have not studied those impacts.
We can try and take a very quick look at that
if it's helpful.
-: Input from staff, and I suspect you've got some thoughts.
-: Good morning, Chairman, Commissioners,
Rustin Tawater for Commission staff,
we continue to support the programs
and echo what ERCOT and Mr. Chang from CenterPoint had said,
that was one of the reasons why we couldn't agree
to include the language the TPCA had suggested,
because we weren't able to confirm with ERCOT
that it would be workable,
which is why ultimately,
it didn't make it into the settlement that we signed on to.
-: Rebecca, the Redbird Commission staff,
there is an NPR that has been approved several years ago
that would implement this.
And through the ERCOT stakeholder PRS Project,
I don't think it's something ERCOT has prioritized
for implementation this time.
It is dated and staff would support
having that implemented ASAP as resources permit.
I don't know if that's something y'all wanna consider
delaying the capacity available for this winter.
-: Thank you, Andreas Madrona for TCPA.
And these are exactly the concerns we've raised,
and the ERCOT just says exactly our concern.
We don't know what the impact is,
we don't know what the pricing impact is,
and there hasn't been any analysis of that
incorporated into this settlement,
and that's what our concern was.
We know we still have serious concerns about this
because we don't know how it's gonna impact the prices,
we don't know
how it's gonna impact degeneration going forward,
and the willingness to come in
and further invest in this market
if we keep on putting these programs
where you have rate payer funded capacity
essentially being paid in,
as opposed to letting the market
provide for this it's demand response.
That said, we're, not gonna oppose the settlement,
we want to leave this to the Commission,
this is exactly the concerns that we have.
And Director (indistinct) was completely correct
that if NPR 1006 had been implemented,
this would have been able to been accounted for.
And that's, we had asked that that be done,
and that this program and these programs
could then be incorporated to that and we could know
and tell you what we think the actual price impact would be.
Unfortunately, because it hasn't been done, we can't.
-: Perhaps one salient point that we need to focus on here,
is that these pricing issues
and pricing impacts will come into play
if the load management programs are actually deployed.
-: EA2. And EA2.
So, we know we're doing everything we can
to avoid emergency conditions, so.
-: Which would be after the right payer
funded ERs load management- -: That's right.
-: Which we already do.
-: Right. -: Very similar mechanism.
-: So, in terms of distorting price formation,
again, which we are going to depend on
to incent the right behavior
building into scarcity conditions that is less of a concern
other than the impacts on forwards
and how people are hedging, is that accurate?
-: Break glass in case of emergency at 3000 PRC.
-: Less.
-: Lower.
-: We're distorting the hell out of prices at 3000 MCL.
And then when we deploy ERs,
and then if EA2 is even lower than that,
we've kind of crossed.
As you often say, we were crossed that Rubicon
well before we get EA2.
-: Could I.
I think.
We have already said that if there is an EA2,
there's load shed,
and when there is load shed, the price is at the max.
So, on the front end,
you will get the price formation you need
without an adjustment.
Where this ends up being an issue, is on the backend.
As the load is returning, it's not instantaneous,
and that's where the adjustment would happen.
So, we are halfway there already,
it's that back half that there's some concern around.
-: Somebody new stepped up.
-: I just won't have all the resources at hand,
if you have any other questions.
-: Additional thoughts.
-: Mr. Chairman, just, sorry to interrupt,
just briefly on another point
that Commissioner Glotfelty had made,
we did have concerns about these costs
and being able to review them for prudence later.
We did include that term in the settlement and stipulation
that any cost associated with these programs
would be reviewed for reasonableness
in the next base-rate proceeding.
So, we will have an opportunity to go back and look
after the programs have been deployed,
if they are, which we hope.
-: It's the only thing that makes me sleep at night.
(members laughing)
-: You sleep at night?
Too much to do. -: A lot of dreams.
-: Yes, ma'am.
-: Hi, Carrie Collier-Brown
with the Alliance for Retail Markets.
We also signed on to the settlement,
and thank everybody for working with us
on the issues that had raised.
And just wanted to bring to your attention
that the three TDUs were part of this particular docket,
but Oncor already also has a program
that was within their EECRF
that you guys approved at the last open meeting.
And I think that you expressed,
or we expressed, and we talked about last time,
that it would be helpful
if all of those programs are as consistent as possible.
And for the reps, I think there's only one area
where the three programs from AEP Oncor, or I'm sorry,
AEP TNMP and CenterPoint differ from Oncor's program,
is that Oncor's program does not provide for notification
to the rep of record when their customer enrolls
or is deployed under this program.
And just wanted, I'd had some conversations with Oncor
and I think that they probably need some guidance,
or it'd be helpful to get some guidance from y'all
on whether Oncor should also provide notification
to the rep of record.
-: Thank you, one more thing to work on.
Yes, sir.
-: Good morning, I'm Garry Jones with Oncor.
If ordered by the Commission,
we'll be happy to notify the reps
and follow the side protocol.
-: Do you have to be ordered?
Garry: Yes.
-: We'll make it. -: Okay.
We'll put Mr. Janae, but for belts and suspenders,
I think we'd all be comfortable
ordering that notification of rep of record.
All things considered with an order,
a belt insist the Janae belt and suspenders order
for notice of rep of record,
including ordering paragraphs of notification to ERCOT,
as ERCOT, the information sharing as ERCOT requested,
we added those ordering paragraphs along those lines of,
and I've got some language here that I'll lay out for you.
With those two considerations initially,
I'm okay moving forward with this
with a third condition to your concerns
that the Commission considers this winter only,
and that ERCOT and staff work together
to bring back a debrief on what timeframe.
I could see how it worked by next July.
-: I think that's workable.
-: So, we can.
And I mean, I almost want to say a kill switch like this.
I don't know if we can put that in the ordering,
but this is authorized for one time only,
pending farther, I guess there's some (indistinct)
-: I love this.
-: How does that set?
-: That works for me.
I think the main thing that I was focused on,
is just approving the accounting order,
setting up the regulatory asset,
letting the TDUs move forward
as sort of a test run for this inter only,
and then having a post-mortem.
-: Yeah, that's it actually.
-: I don't know where it came from.
But, okay, so, doing that afterwards,
the analysis to make sure that, just see how it worked out,
and see if that's a program
that I think that we can benefit from in the future,
with respect to ordering Oncor to provide notice,
I am happy to do that as well.
-: Okay.
-: Yes, so, approve the regulatory asset,
establish the regulatory asset,
not approve the plan was brutal part of the action.
-: That's right.
-: And who do you wanna order
to give us something to do a post-mortem?
-: I think the request was to Commission staff
to work with ERCOT to provide that post-mortem,
let's say June 1st.
So, we'll have to work for going to the summer.
-: Sure.
-: Well, maybe the TDUs too, right?
Since we'll have the data.
-: Yeah, I think staff can work with ERCOT and the TDUs
to provide an update and review of the program performance
and capacity procured and pricing by June.
-: Yeah, I think that's a good point,
I'll hope that they would staff in ERCOT
would receive all but cooperation and help they need.
How does that sit?
I know you don't like it,
but would at least make you feel better?
-: It makes me feel better when you pass it.
(members laughing)
-: All right, as for the paragraphs,
awarding paragraphs related to notification to ERCOT,
I'd offer for y'all's consideration,
the first paragraph that each TDU must notify ERCOT
the TDUs total procured load management capacity
at least one business day before the start of the program.
And each TDU must update ERCOT
as to the impact on the TDU initiative deployments
on the amount of load management capacity
and deployment hours remaining.
So, our God knows what's going on when it's going on.
Does that language work for you?
-: Agreeable. -: Yes.
-: And.
All right, is there a motion
to issue an order to authorize the TDUs
to establish a regulatory asset to record reasonable costs
associated with their respective load managements
with the inclusion of the two ordering paragraphs
as I just laid out?
And in order to Oncor to provide a notice of rep of record
and direction to staff to work with ERCOT
to provide a postmortem analysis by June 1st, 2022
with acknowledgement that this is a one-time
this-winter-only deployment,
and in the absence of further action from the Commission
will not be an ongoing program.
-: So, I would suggest you modify your motion
to limit the costs
that can be included in a regulatory asset
to cost incurred before.
I believe they said this was going to February 28th.
So that no cost after that day
can be included in the regulatory asset,
I think that will stop the program moving forward.
-: We'll include that in any motion offered,
is there such a motion?
-: So moved.
-: Second.
-: All in favor, say, aye.
-: Aye.
-: Aye, any opposed?
-: No.
-: Motion passes.
Thank you very much.
Next up, item number nine, Mr. Janae.
-: Item nine is project 38533.
It's the PUC review of ERCOT budget,
Commission staff has filed a memo with a proposed order
on the November 30th.
-: Thank you, sir.
We've got a,
as Mr. Janae has said, we gotta a memo file,
addresses 2022, 2023 budget system administration fee,
any updates cases,
any questions, comments on the side of that.
-: There you go.
-: Comments here.
-: Yes, sir.
-: So, I support the budget approval
with a caveat that since I'm fairly new at this,
but have spent time with RTOs
all across the country for many years,
I believe that they get bloated
and get extraordinary expenses
and have a very poor record of doing metrics
to determine their success for the market,
for doing timelines for individual processes.
And hope that we can work with a new board
in an effort to find some set of metrics
that we can all agree to
that can be better informative to us and to all stakeholders
on not only the market metrics,
which I think they do a good job of,
but the ERCOT performance metrics
that I think are important for me to understand,
that's a pretty important input
into budgets going forward for me.
-: Well put, couldn't say it better,
and I'm glad that we're keeping
the system administration fee flat for the time being,
and I know the new board
would welcome your input on sorting out all of those issues
and working to optimize the organization.
Any other thoughts, comments?
-: Yeah, so, I support the approval of the budget.
And I also would like to make some comments
with respect to the tremendous amount of work
that ERCOT has on their plate, a growing amount of work.
Not only through all of the projects
that they prioritize now,
finishing the implementation of securitization,
any market design, implementation
that we direct them to complete.
And I just really wanted to stay mindful and vigilant
that we cannot let the ERCOT budget
and their lack of resources or inability to hire staff
get in the way of our tremendous, consistent
and strong efforts to maintain grid reliability.
And so, that we've had ongoing discussions
about the impacts on settlement staff, the EMS upgrade,
we're keeping this staff fee flat, that's great.
But at the same time, if there is a need to hire more staff,
if there is a need to hire contractors,
I really would like to strongly encourage ERCOT
to continue to communicate with their board and with us
because we cannot let you know staff shortages
or anything get in the way
of us maintaining rigor liability.
Because we heard over and over,
the EMS upgrade it's taken a while,
it's on time, it's under budget,
but it's got to stay on time, it has to stay under budget,
it is essentially a big project
in the middle of our market redesign
that we're having to work around,
any other proposals that we ultimately adopt
will have an impact on settlement staff
and that's going to cause delays too.
So, I just want to make sure
that ERCOT is doing everything they can to get resources,
to address these high,
extremely, critically important high-priority items.
The other thing,
kind of a minor issue that I wanted to bring up,
I noted in the correspondence
that we reviewed for this meeting
that ERCOT experiencing new demands
related weatherization stability assessments
for interconnecting generators,
interconnection study increases in grid forecasting.
As a matter of due diligence
to look for other streams of revenue,
I would like for ERCOT to evaluate
whether the interconnection study fees should be increased
and any fees that should be increased,
because if they're under a tremendous amount of pressure
to conduct interconnection studies,
we wanna make sure that that fee is appropriate.
-: Yeah, absolutely.
-: I have heard that they are low in ERCOT.
-: More barriers to entry,
we don't want too high barrier to entry.
-: Right.
-: But we want some barrier to the entry.
-: But we wanna make sure that we're up to parody
with the other ISOs and RTOs.
-: Agreed.
Like any organization,
it's a balance between having the resources you need
without being bloated and inefficient,
that's challenging the organization,
and I agree that that needs to be looked at,
and I'm sure the new board would also welcome your input
on that kind of improvement.
And like we've all got a board meeting next week.
So, I know the new board will welcome all of this input
and we'll work to optimize that organization.
We don't wanna gut it, and we don't want it bloat it,
we need to make it
the highest performing organization it can be
to deliver the services required for citizens in ERCOT.
All right.
-: One last comment, Mr. Shawn,
I appreciated the opportunity
to be able to speak to the ERCOT budget.
I think that the fact that we are discussing it here
signals that the Commission is going to be more active,
especially in this period
where the board is orienting itself
to the governance of ERCOT, subject to SB 2.
So, this budget,
gratefully, ERCOT staff has organized it in a way
where we can maintain the current feed levels,
but in the future, make a good faith assessment
of what those needs need to be moving forward,
especially in light of any type of redesign
and reform effort directed from the Commission.
I think we need to be diligent
and proactive with ERCOT staff
and what those individual programs are
and those individual costs associated with them.
We have all been active in this process,
leading up on those top-line issues that they look at EMS,
all of the settlement functions
in the settlement engine, moving forward.
Anything that would delay any type of reform effort,
but we're about to go into the weeds of reform now.
I mean, we're gonna transition to phase two,
which is implementation.
So, I appreciate the opportunity
to be diligent about what they need moving forward
and how much this is really gonna cost.
But in the past, under the deregulated construct,
we were able to bless more in the ERCOT budget,
but now, we're talking
about un-bundling a lot of regulatory functions
into more granular, specific ancillary service functions.
So, that's gonna incur costs,
that's gonna incur staff time to manage that.
Because again, the system becomes more proactive
rather than just reactive
to the way market participants behave
and the way all these products act together.
So, with that, I am comfortable with this budget,
appreciate the work that has gone into it at staff level
in both agencies, both ERCOT and PUC,
and look forward to it's approval.
-: Thank you.
Is there a motion to approve the proposed order?
-: So moved.
-: Second.
-: All in favor, say, aye.
-: Aye. -: Aye.
None opposed, motion passes, thank you, Casey.
Next item, please.
-: Item 10 is project 501830, is review
of certain retail electric customer protection rules,
I believe the memo was filed 2nd November.
-: Mr. Smeltzer.
-: Good morning, Commissioners,
David Smeltzer, Commission staff.
This is, as you know, the rulemaking
that started off with the premise of implementing HB 16,
which is the ban on wholesale index prices in our market
As part of developing this rulemaking, you asked us to,
and we did include a few additional customer protections
and also a few briefing questions.
With the tight schedule we've had,
this rule's a little bit behind
where we would like it to have been,
but if we're going to change the polar rate,
it would be good to do that by next year when it resets.
And so, and able to allow us
to get it right on the first try for next open meeting,
we filed a few brief questions.
Should you have any input on any of them?
We're happy to hear it,
if not, we can proceed under our best judgment.
But these were sort of the big policy questions
that Commissioner Cobos
in particular assets to file questions on,
but willing to hear input from anyone who may have it.
I'm happy to walk you guys through those,
or you have the memo.
-: Yeah.
I don't know if this is something you've spent a lot of,
or this area of the market
is something you spent a lot of time on,
so, happy to defer to you to take the lead on this.
-: Okay.
David, I think would be most helpful to go issue by issue
and just kind of give us the context
and then we can have a discussion
and give you direction on issue by issue,
or question by question there.
-: Sure.
So, the first issue is when we,
staff's proposal for what the polar rate should be
was to get out the realtime price component of it
the project team had proposed
going back and looking at the prior year
and getting an average of the wholesale price for that year.
So, it was still somewhat key
to what's going on in the market,
but then give a 20% increase on that
for the added risk that a rep takes
for the potential that they could have to assume
a large customer base all at once.
The first, one of the questions that you'd asked us to ask
was, well, if there spikes or anything,
do we need a year-over-year protection
to prevent it from increasing more than a certain amount?
Should that be the case?
That's the policy issue.
And I think, so, on one side of it,
the customer protection aspect of it,
on the other side of it, I think that the would argue, hey,
the customers are only here for one month
and they can change if they don't like it.
So, I think this is a just sort of a high-level
sort of policy question
for how we want polar rates to function.
-: So, yes.
And as I had explained
at the prior open meeting back in July,
this issue is a balance between protecting customers
and helping to ensure that the reps
who have to bring on new customers
as a result of a mass transition
are not financial impacted by serving as a polar,
provider of last resort.
And so, what I had suggested,
was including a safety threshold
so that we can further protect consumers
from swings and real-time settlement point prices.
As you may recall from Winter Storm Uri,
that was a tremendous impact
because of the wholesale price index plans
that were being delivered at the time.
And so, the safety threshold that I had presented
would provide additional protections
to help ensure that consumers are further protected
from significant swings in time settlement point prices.
So, I had thought about putting,
maybe like some kind of a percentage.
At the time, I didn't have an exact one,
I think for example, I put one out there, maybe 5%,
just as an added protection in case we were to have a year
where real-time settlement point of prices were very high.
So, that's the way I laid out the issue.
I continued to support a safety threshold,
I think is as a matter of due diligence
for further protection for the consumers,
and I'd be happy to hear your thoughts.
-: So, which threshold are you?
-: I mean, we could start it at 5% from year to year,
that was sort of what I had put out there,
it's a percentage safety threshold.
-: And staffs.
The staff have a benchmark.
-: I think the cap that was discussed
quite a bit in the comments was 20%.
And now I guess,
to the price premium for the polar calculation.
And so, that's what we were working with
and would put in our recommendation absent
for other direction.
-: Okay.
And that's based on stakeholder comment and your analysis,
and I'm happy to consider that as a good point.
-: Okay.
And that seems like a good starting point,
thank you for laying that out.
Other thoughts and comments on the first issue at hand?
-: Yeah.
So, it'll come up later as we move through the questions,
but I think the bill was specifically designed,
and I've engaged with one of the authors,
I'm not gonna say which, to perceive legislative intent.
They want us to continue to have flexibility in the market
to an extent.
They want us to address the problems
that were identified certainly,
but they don't want everything to be a nail
to where we tack it down so rigidly
that there is no flexibility
for the retail middlemen to negotiate better value
for the consumer disclosed value, known value,
rather than fixed means fixed.
But as long as you sign off
and you kind of understand the parameters
of what you're agreeing to, is transparency in contracting.
But let's stay on topic one and we'll debate that.
So, my point is caps sometimes have a distorting effect
in retail markets.
And again, it wasn't addressed necessarily in the statute.
So, at this time, but again, Commissioner, I bow,
your interest in protecting the consumer is paramount,
but at this time,
if it's not in the directive from the legislature,
should we impose this cap now,
or readdress it moving forward?
What are your thoughts?
-: Well, and thank you for speaking to legislative intent.
When I look at legislation, I read the letter of the law,
that that's what we have to do.
And so, with respect to HB 16,
there is specific language in there
that states that no provision in Piera 391110
shall be construed to prohibit the Commission
from adopting rules
that would provide a greater degree of customer protection.
-: That's true.
-: And under Piera 39101,
the Commission will ensure that retail customer protections
are established that entitled customer to say for liable
and reasonably priced electricity and protections.
So, we have brought it already under existing 39101
and HB 16 itself says that we can go above and beyond
the wholesale price index plan prohibition.
And so, based on my experience at OPEC,
I believe that we should do everything we can
to protect consumers in the future
should we have another major storm
that busts the seams in our retail market,
and we have consumers that are exposed to costs
that we can help to close the door on right now today.
-: Right, I hear you.
I'm trying to, at the minimum,
follow the clear directives of the statute.
Anything over and above,
we can absolutely certainly do and should consider it.
So, I bound that argument.
-: Jeremy.
-: Oh, boy.
-: Not totally the issue
that I have spent a whole lot of time
focusing on this week, I apologize.
-: No, we've all got a lot going on.
Yes, ma'am.
-: If it's helpful,
and it may be helpful to those watching and the public too,
this particular question is focused
solely on the calculation of the maximum allowed polar price
and wouldn't affect any general prices in the retail market.
So, that might be helpful
as you work through your discussion to keep that in mind.
-: And 20% is a significant percentage,
I mean, that's not a very tight threshold.
I mean, there's still some flexibility there.
-: That's right. -: It's not 5%.
-: Exactly.
I mean, I just threw that out there as an example.
-: I guess the first question is cap,
Should there be a cap?
If so, and I think, I mean, I think, yes,
what should that number be?
20%, 50%?
I mean, if prices don't move much in a year, 20% is a lot,
if they double in a year, 20% is not nearly enough.
-: Right.
-: And the reps getting,
are losing money.
-: And that's driven primarily by probably gas prices here,
is that right?
-: Now, it's 50% of the fleet that can change.
Gas prices can go,
they were a dollar, 50 two years ago.
-: That's my point.
-: Yeah.
-: So, I would rather base the percentage
on actual submitted stakeholder comments and documentation
that's in,
it's not a contested case, but it's in the record.
So, that's why I would lean towards 20%
because I'd rather not pick an arbitrary number.
-: I'm okay with that.
-: Me too. -: Yeah.
And knowing that you guys are interested in this,
I mean, the way we would implement it,
sort of a lesser of 20% of,
above the average prices from last year,
but it would also be capped.
So, it would just be a cap,
it wouldn't always go up 20% each year,
is what I'm trying to say.
-: And the average reduces a lot of the volatility.
-: Correct. -: As well.
-: And we will go back through the comments
and ensure that we've fully captured and considered,
in the draft order,
all of the comments related to this topic
so that you may select a number based on that record,
but our recommendation will come in at 20%.
-: Good deal.
-: Thank you.
-: Next item, Mr. Smeltzer.
-: So, another item that we had decided,
this was the fixed means, fixed conversation,
it's whether or not ancillary services charges
are a component of the price for a fixed-rate product.
And so, the issue there
is typically if they are under the rule,
if there are new charges that reps are not aware of,
they often are allowed to vary prices,
even in fixed rate contracts based on that,
I think staff's interpretation
has always been that ancillary services
are not one of those things that count as new.
But I think in a world where we're increasing the amount
of ancillary service that we purchase,
and there's also the possibility
that new ancillary services could be adopted,
the retail provider community
argues that they want flexibility to adjust prices
based on these new charges
would not have been predicted to them.
The other side of that argument broadly speaking,
is that our market design is trying to rest the risk
in public entities
and that the retail electric product community
sort of position a shield against consumers,
against that risk for consumers.
And so, I guess the question here,
is if new ancillary services are adopted or increased,
we want the risk of that price
to rest with the end consumers
or with the retail electric providers.
-: Thank you, Mr. Smeltzer again,
or former OPEC, I'll defer to you to.
-: Well, I was going to say that I was gonna defer
to Chairman Lake and Commissioner McAdams
to state where they are today
since they're the ones that introduced this concept.
And then I'll follow back up and- -: Sure.
As I've said, I mean, we've discussed many times,
fixed means fixed, and as Mr. Smeltzer nicely laid out,
price risk should lie on the private financial entity,
not on individual customers and households
and companies that are better at managing financial risks
will be rewarded with market share.
-: I agree, I agreed the last time we discussed it,
and I agree now, fixed means fixed.
-: Okay.
I would like to note something
that I think OPEC filed in their comments
and I've gone back and reviewed,
and that is an order that was issued in 2009,
adopting rule 25475.
The Commission's response to comments that were filed,
specifically stated that the Commission clarified basically
that fixed-rate product
or fees include fees approved by the Commission
and charges to load
such as ERCOT administrative fees and nodal fee
should it be charged with loads in the future.
Under that definition of fixed rate product,
ERCOT fees would not include ancillary services,
losses, or unaccounted for energy charges for TRE penalties.
So, the order adopting 25475 that we are replacing,
that was their position back then,
that fixed rate product
did not include ancillary service charges.
And so, those would not be able
to patent past through a fixed rate product.
-: Right, it's consistent.
-: Yes, Commission staff understands,
this as just providing a clarification
on what we already interpreted the lot to be,
but I guess there was enough ambiguity.
-: The stakeholders raised questions of him.
-: Yes, sir. -: Yeah.
-: Does this affect existing fixed-rate products,
or is this just perspective?
-: Sir, again, I think
that if that Commission staff's perspective
is that this is already what our interpretation of the law
would have been,
ancillary services are not something
that reps can vary the price of the contracts based on,
but this would clarify.
So, to the extent that we could be wrong about that,
this clarification
would only affect contracts moving forward,
but our interpretation is that it that's already the law now
with what we would argue if it ever came up in a case.
-: And I will say that,
recognizing the actions that we're taking this summer,
that I've had conversations with reps myself.
And the goal here is to try work really hard
to provide transparency
in ancillary service costs in the future work with ERCOT
as they look to approve their ancillary service methodology,
to ensure that we're providing as much transparency
going forward on the ancillary services
that ERCOT is procuring in the future.
I mean, we are expected to stay in conservative operations
so that that should provide some transparency
as to where we're headed.
ECRS has not been scoped out yet,
but as we reach the final stages of ECRS go-live,
making sure that we're providing more transparency
to the retail market
so they can adjust and hedge appropriately their costs.
-: Yeah, the one other thing that I would cite on this,
is if ancillary services are not, or are outside,
or we're making sure
that they go inside the component of the fixed rate,
these rates will be adjusted
at some point in time in the future with a risk premium
associated for ancillary services that are not included.
It's ultimately, the consumer is gonna pay this,
whether it is ancillary services
outside the fixed-rate contract
or within the fixed-rate contract.
And it's my view that the retail providers won't eat this,
these are market costs that are put on them
that will ultimately get passed through to the customer,
whether they do it now
or with prospective contracts going forward.
So, my point is, let's not go into this with blinders
that the reps are gonna eat this cost.
It's not gonna happen that way, these are system-wide costs,
ancillary services are system-wide costs
that go to all consumers.
-: Yes, but this does protect individual households
from extraordinary price spikes at certain moments in time.
-: Agreed, which we saw in February.
-: Right. -: Absolutely.
-: So, that's the consumer protection,
I think is so important here.
And there's a, as you pointed out,
there's an entire universe of financial markets,
risk products, options,
there's an entire universe of products
to help these retail provider companies mitigate that risk.
Call New York,
they've got all sorts of things they'll tell you.
Individual households don't have that ability,
and they shouldn't be expected to.
So, yes, some element of this will be passed on,
but the benefit to the consumer is eliminating the risk
of discrete extraordinary financial costs,
which is important.
All right, so, we got that issue addressed.
Do you have everything you need on that?
-: Yes, so, the answer to that is, yes, it should include,
fixed is fixed. -: Fixed is fixed.
-: Okay. -: Yes.
The next one is,
HB 16 specifically prohibited wholesale index products
for residential and small commercial customers
that allow these products to move forward
for large commercial and industrial customers
with the acknowledgement of risk.
Last time, we were asked to explore
additional customer protections,
one that we came up with
was maybe we would apply this acknowledgment of risk format
to residential small groups from customers
with a number of products,
like any index product, for instance.
But in the comments,
and I think it's one of the briefing questions,
it was suggested that perhaps these index products
are across the board,
more risky than customers should be exposed to.
So, there was the proposal.
So, our proposed PFP did not include this,
but one idea is that that just index products
should not be a part of the residential
and small commercial market.
And so, that is one that we did not necessarily receive
far from direction from you guys on one way or the other,
and one that I would not fame
to guess where you guys were on on it,
if I was writing an order.
-: All right, thank you, David.
And I believe a lot of the comments that were filed
expressed concern about prohibiting index products,
because many times,
a time of use products are often considered index products.
I think there's two ways of looking at this issue,
one is we add in a rule
that time of use products are still allowed
and index products are not.
But my concern is that I don't think
there are very many other types of index products
outside of time of use products out there,
I haven't heard of any really.
And Connie, please elaborate if you.
-: No, that's correct, I don't believe it's widely used,
it's mostly used for time of use,
which can arguably fall
into either the fixed or the variable,
depending on how it's structured,
it does not have to be an index product.
-: So, I would not wanna get,
I would not wanna prohibit time of use products.
And I think in our role, if we agree,
we could insert some language in there
that time of use products are still allowed.
We still wanna have innovation,
we still wanna have options for consumers,
but knowing what we saw with the wholesale price index plans
and knowing that even if an EFL has details in it
or an AOR that states how it works,
many residential and small commercial consumers
are still not gonna understand
what they're signing themselves up for.
-: Right.
-: And I wanna close the door on it, is my preference,
but I don't wanna close the door in time of use products,
but I'd be happy to hear your thoughts on the issue.
-: Yeah, I know we'll hear from our guests in a second,
I think, yes, index should not be allowed
for small residential, small commercial.
Index can be anything, right?
It can be a weighted average of Bitcoin in LIBOR, right?
But we do wanna accommodate that, the innovative product.
So, I would even expand the exception,
it's an exception for time of use,
to say any product based on your time calendar,
or any other finite metric, right?
Like you can't put more than 24 hours in the day,
but Bitcoin can go, who knows where.
So, expand, make sure we accommodate future products
that nobody's thought of yet.
-: Sure. -: For future retailers.
As long as it's in a fixed universe
or fixed some sort of fixed battery,
I don't know what the right language for that is,
but I wouldn't limit the exception to time of use,
I would open it up, okay.
-: Liberty, time of use in some language,
but we gotta be careful too,
'cause we can open the door to something
by just some general language,
but I'm willing to have that discussion with-
-: We can ask them to think about it.
-: Yeah, so, again, my initial comments on flexibility,
I just wanna make sure ERCOT has those innovative tools
that are coming online, time of use,
great examples for small commercial,
those freezers, and stuff like that, if they can sign up,
we can help manage these reliability constraints
in the near term.
And I just don't,
I wanna make sure we get that language right.
And I concur with you, Mr. Chairman,
we wanna make sure we leave it
broad enough to envision the future
of where the market's headed.
-: Stuff that we have thought of yet.
-: Yeah.
-: So, what I'm hearing,
is there's a sort of a line in the sand
and indexing to re real-time prices
and indexing to something like the NYMEX
is probably on one side of the line,
whereas time of use prices and other things like that
that are more structured to have less spiky risks
associated with them around the other side of the line,
and you want us to try and find-
-: More transparency,
more understand that are better understood by the consumers.
-: Okay, and so.
-: Volatility based, not like historically,
it's been just fine, I'd fix it on a quantity,
like I fixed universe,
I don't know the right language, right?
Like, I mean, past performance of health and wellness,
like turkey has extraordinary performance
until Thanksgiving, so, we wanna stay away from that.
-: But as long as- -: Is in the NYMEX category.
-: But like time of use is, or time of day is,
it was 24 hours in a day.
We know that's a fixed universe that can't,
that has no volatility, right?
It can't have volatility.
-: And Commissioner, I think we can work on rural language
to effectuate this
and also the concept between fixed and variable.
So, for example,
a fixed price is one that for certain,
that you'll be paying for the next X number of months
and that price during the course of a day
may be different in one hour than the next.
But you know, ahead of time that in the morning,
you're paying 6 cents and at peak you're paying 8 cents,
something like that,
that is a fixed product, it's also time of use.
So, I think we can work with language there.
-: Full fight staff and come up with something appropriate
that protects the customer
while also allowing innovative products
and future innovative products.
-: And variable,
having that variable month-to-month product out there
available in our definitions
covers a wide range of innovative products.
-: I'm suggesting we leave turkeys out of it
in the next iteration, please.
Yes. -: Yes, sir.
-: Thank you.
-: Yes ma'am.
-: Carrie Collier-Brown with the lions for retail markets
just wanted to make a couple of clarifications.
So, the rules have three different types of products,
fixed variable or indexed.
And to the time-of-use plans,
those could be fit in any of those three categories
depending on how it's going.
You know exactly what your price is gonna be
at certain times of the day, that would be fixed.
The different times of the day could be variable,
or it could be indexed to something.
And on index products,
my understanding, is that generally,
the index products offered to residential customers
are only time-of-use-type products,
but what their index to could be different things.
And I think my understanding from our members-
Lake: Example.
-: Is the most common,
is the products that are index to the NYMEX
so they would use the closing price
of the monthly NYMEX Natural Gas Futures Contract.
And this is a couple of months outdated
when I looked at this last time.
But for 2021,
that value range from between $2 and 50 cents to $4.
So, it's a type of indexed product
that is not particularly volatile
and does not have the same issues that were identified
by the legislatures,
the reason why they took, pretty bold action
to ban an entire product for certain customers.
-: Thank you.
I think Connie's point,
it's the nail on the head by saying that the fixed part
is the financial component, the cost.
When each of those finite costs are applied
is that can be variable,
but the amount of money the customer pays,
I think we don't want that to vary.
And that's the bottom line, I'm sure the staff can,
I know 'cause that makes sense.
-: Okay, I think we understand you.
My goal is to have language
that does not get in the way of time of use products.
I know your example, Carrie is NYMEX, I'm not sure that,
I don't know how much enrollment is out there
on that product.
I'm not sure that we're really causing any harm
by batting something like that,
but I don't wanna cause harm on his time of use product.
So, we could set it up in a way
where there's just through the EFL,
through customer information
that is transparent of how those are used.
I'm comfortable with that, I don't wanna stop innovation,
I don't wanna limit options for customers,
but I don't wanna have obscure indexes in the market.
-: And we totally understand that and agree with that.
The rules already provide, the EFL provide disclosures
even on the index time of use products
and the are requiring the reps to provide information
say on their website
where they can see exactly what that's going to be
based on that for that index.
-: I think the timing can be variable, the price can't be.
And the concern we're trying to address today,
is that natural gas in the U.K.
used to be $2 to $4 pretty regularly, now it's $40.
-: Understood. -: Those things change.
And that's what, is that pesky turkey, Jimmy?
So, I think that's what we're protecting against.
-: So, the second piece to that issue,
is so, how the issue of whether or not
we wanna have index products in the market,
I think the second piece
is whether we still wanna go without an AOR to it,
is that bear, or is it either or?
-: If we don't.
-: Yeah, if we don't have the products in the market,
then we would need an acknowledgement of risk.
But I think that that's sort of your,
I would suggest that you retain the acknowledgement of risk
if you are going to continue to allow them.
So, yeah.
-: But it is, sorry, isn't it a question of semantics though?
I mean, as long as we iron out the details on time abuse
and those allowable flexible plans, you still need an AOR.
I mean, I don't wanna Tucker Carlson
talking about people dialing down their thermostat again,
without their knowledge,
they need to know what they're signing up for all that.
-: Don't say that. -: I know, but he did.
-: The reps are required to provide.
-: Yes, Commissioner Cobos, the retail providers
provide sort of three documents to every enrolling customer.
You get an electricity facts label,
which is supposed to be the apples to apples,
nutritional label idea of the most important contract terms,
the actual contract, the terms of service,
and then your rights as a customer,
which is a summary of the customer protection rules.
The EFL is the thing that we've all,
the Commissioner has always encouraged customers
to use to compare plans.
And when they're shopping on power to choose website,
that's the thing that they can bring up in a PDF
and compare them side by side,
and that's where the disclosures are.
So, should you retain some ability
for reps to offer indexed products
if it's time of user or however you wanna do that,
and you want to provide customers and acknowledgment risk.
We suggest that a place that makes sense,
is to put that language in the electricity facts label,
because that's the thing customers see
when they're shopping.
And the other thing I'd point out,
is that's the rule that's open in this particular project,
is the disclosure rule 25.475.
I think that there've been some other suggestions
to put in as part of the enrollment process,
but that rule is 25.474, and it's really detailed
about exactly what the reps have to get consent for
and provide acknowledgement for in each type of enrollment,
whether it's door to door, or over the phone,
voice recordings,
electronic, where they'd have to actually click something.
If that's something that you wanna do,
my understanding, I mean we'd have to work with staff,
but that's not actually in this rulemaking,
but you could require the disclosure in the EFL,
which is in this rule-making.
-: Sure, and I think for fixed means fixed,
we don't need to worry about disclosure
for the price component.
-: Right.
-: If there can be variability on time as a metric,
volume, I suspect their play plans,
or it will be plans where you price varies
by how much you've used,
that's something that can that's,
those are the metrics or the variables
that we want to continue to allow to be adjusted
by individual companies.
Like we would want an acknowledgement of risk
on those variability.
-: And I think it's covered,
but also remember we heard testimony.
People are fine at two hours
when they get throttled for two hours,
it's when they get throttled for 10 hours on time of use
or where the pricing scheme or the usage scheme
is oriented to them.
They need to know what they're signing up for.
-: I agree with your point.
I think for a fixed rate product,
you don't need that extra language in the EFL,
that's straightforward.
I think even for a variable,
regular variable rate product it might make sense.
I think EFL will have some language
on how the price can vary.
And then for time of use,
having maybe some additional information
to explain how the time of use product,
and some kind of acknowledgement
of risk language in the EFL,
I think I'd be comfortable with that.
-: And I think as we designed Commissioners,
the sort of how to thread the needles
we discussed it on the different types of products,
I think we can try
and come up with a coherent proposal as well
on what additional language might be in the EFL.
I think what would be most useful for staff,
is if you think there are occasions
when we would want the customer
to take a sort of discreet affirmative action
to acknowledge it.
So, you can put additional texts in EFL
or in terms of service document.
Or for instance, with the large commercial customers,
the legislature made it clear
that they had to sign an acknowledgement of risk
as a separate statement.
And so, for some of these products,
do we like the idea of the customer
would have to proactively acknowledge the risk
as suggested by the name acknowledgement of risk
with a signature or digital stamp
or affirmation on a phone call.
So, that's sort of the guidance that we need,
whether or not you think just a written disclosure is enough
versus a proactive action on half of behalf of the customer.
-: Okay, so, I'm hearing that you would prefer
a separate acknowledgement of risk.
-: Or a proactive one,
we can't just scroll through the texts, the final print.
-: And even the box checking, you know what I mean?
-: Proactively, you say,
yes, I acknowledged the price of my power changes.
-: Okay.
-: Kind of like when you're going
through that rental agreement and stuff like that.
-: Okay.
-: Right, and it's a pain in the tail, but.
-: Okay, so, not just baking
in the inner energy electricity facts label
would be sufficient, you'd want an actual-
-: Proactive affirmation.
-: That makes sense, that makes sense.
I was trying to strike a balance here,
but I think if obviously going a step further
to ensure, even with time of use,
what you might be getting yourself into would be prudent.
-: Yeah, and to be clear,
we've moved on to question four of the memo.
-: I saw the light.
-: So, anything else you need from us, Mr. Smeltzer?
-: No, sorry, I think that does it on this, thank you.
-: I think your third question
asked about whether or not ancillary service charges
could be passed through to residential and small commercial,
that piece I think we might've already answered,
is that correct?
-: I believe the question is if,
so, we've we got fixed is fixed,
that would mean any product
that had an ancillary services passed through
would be variable.
And in that case, for a variable product
with ancillary services passed through,
would you require the acknowledgement of risk?
Lake: With the crisis to the answer,
your service is not variable,
just the time or the quantity is variable.
-: This is a, okay, so I think what Connie's saying,
it's a regular variable rate plan,
and not a time of use necessarily, not a fixed-rate product,
but if a residential small commercial consumer
signed up for a variable rate plan, could the rep
pass through ancillary service charges to them?
-: No, because doesn't that make it an index plan
when you shoot in your-
-: Verbal residential ranch.
-: Yeah.
-: What are we answering here?
-: So, conceivably, a rep could design a plan
and bill it as variable,
because it's a month-to-month plan
and the price changes month to month.
And the basis of that price change
would be ancillary services.
-: So, yeah, so there's three types of products, right?
There's the fixed-rate product,
there's a regular variable rate product
that's been in the market, that's been month a month, right?
And then now we've sort of,
what I'm hearing is eliminated index products,
but created sort of a separate category
for time-of-use products.
And so, I think what staff is asking,
is that regular variable rate product,
if you're a small commercial consumer
or a residential consumer kind of rep pass
through those ancillary service charges,
through those regular variable rate plans.
-: And I think with a variable rate plan,
usually, they can do whatever they want with it
on a month to month.
And so, this question framed in the way
that a trim made more sense
when we were still allowing all the index price plans.
Man: But we're not.
-: But we're not,
but they're still with the variable rate plan,
with the reps.
Unlike a fixed rate plan,
a variable rate plan plan has the escape patch
where it's month to month
and the customer can get out if they want to,
'cause they have to resign each month.
But it's whether or not for a type of plan like that,
do we still want this acknowledgement of Fritz concept
involved for residential class?
-: Great, I think even based on my experience at OPEC,
the residential consumers have no idea
what ancillary service charges are. I mean, they just won't,
even with an acknowledgement of risk.
Because of the fact that a lot of consumers
were getting very high electricity bills,
they were calling us to ensure that their high bill,
that it include ancillary services in there
and trying to understand
what ancillary service charges were.
Our primary experience during the winter storm,
was the pastor of ancillary service charges
to larger commercial consumers.
I would not allow ancillary service charges
to be passed through to residential
and small commercial consumers even with an AOR.
-: Agreed. -: Agreed.
-: Thank you.
-: Yeah, Commissioner, just for clarification,
maybe one way to think about it how it helps me,
is the difference between variable and indexed,
is that variable has a set rate for that month.
That rate could change
based on whatever the criteria is
that the customer agreed to for the next month.
So, the month to month, it's like a month to month,
but what your rate's going to be for each upcoming month.
Index has some kind of formula in it
where the rate can change based on what that formula is.
And that can be as we talked about the time of use,
where that rate is based on gas prices or something else.
So, just wanna make sure that you think that variable plans
that have always been in he market
that are essentially just a month-to month-rate
that the customer can get out of at any time
if they don't like what that upcoming rate is.
Is not up for discussion.
-: So, a key nuance is,
when do you pay for the ancillary services?
When you renew for the next month?
Is that baked into that point?
Or do you get the hit at the end?
When do you get the hit of the ancillary services charge?
-: Well, I'll say my understanding,
is that I'm not aware of residential customers
getting any pass-throughs of ancillary services.
-: Yeah, as I understand it,
I think that the customer knows what the rate is gonna be
for each upcoming month.
So, it would be, you wouldn't have paid a higher rate
than you anticipated for,
the month that you already use the electricity for it.
-: That's the question,
you would see it when you're renegotiating that next month,
because you're on month to month
and you're gonna see that ancillary service
and you have the ability to, it's like, hey, I'm out,
I'm going and I'm gonna get on a fixed rate plan somewhere.
-: Right, and I think-
-: How long do you have to choose?
-: Yeah, I don't know.
-: I mean, it's a month-to-month, right?
You can get out at any time
before that next month's different rate goes into it.
-: But does it matter?
-: When you see the next price for next month,
like, do you get it on the 31st at midnight,
or do you get 15th?
-: There, I forget the exact timeline,
but there's already requirements for how much of a heads up
that the reps have to provide the customers.
And Christina, has the exact timelines really quickly.
-: Hey, Christina Rollins with NRG.
So, for a variable rate product in the market,
a rep is obligated to show the customer the current rate
and make that rate available to the customer at all times.
They also have to show the one-year historical price
of that product, so that way, the customer can see, well,
what does that product do over the course of a year,
so I can better understand
what it means to sign up for that product?
So, they should be able to go either call their rep,
or access their current price online
so they can see that to determine,
do I wanna stay on this product
or do I wanna move to something else?
And like Carrie said,
the price where a variable rate product
holds true for the entire billing cycle.
So, it's not the scenario like what the index products
where the price literally was changing hour by hour
or every 15 minutes, day by day
during the course of a Winter Storm Uri.
So, that's what the index price formula lets you do,
is you can have a different price
from a day-to-day perspective.
And so, that's kind of the real difference.
-: But when, so, if in January,
the oil's price is gonna be eight cents,
but it can change in February.
When does he find out
that it's gonna be 15 cents in February?
-: So, reps approach that differently.
Some reps we'll let the customer know for quite some time
what the price will be for their next bill.
And some reps I guess, could in theory,
based on what the rule says today,
wait until right before that billing cycle
to change the price.
So, if you were looking at how long in advance,
you want the person to know that price,
that is something you could look at
probably in this existing rule.
So, the regular variable rate product
that's in our current rule.
One thing to note,
it's existed in our role for a long time.
The month-to-month aspect of the rate product
is actually there are a lot of low-income consumers
that sign up for month to month variable rate products.
And that's one benefit that I think of the product,
even though it can vary from month to month.
My understanding based on prior review of these products,
so, when we were looking at them back at OPEC
after the storm,
is that they have their place in the market
because of the sort of flexibility to provide customers
and low-income customers.
I personally not trying to get rid
of the variable rate product,
I just don't want ancillary service charges pass through
to residential, small commercial customers.
-: I think that's clear,
and we'll prepare a draft consistent
with your discussion today.
-: No, it works for me.
-: It works for me.
-: If we also a staff
to consider some requirement of next month notification,
so that in theory, on a variable rate,
you can't get your next month price at midnight on the 31st.
-: The other thing too,
I think there was legislation that was passed
that created a default renewal product
because of this situation with variable rate products
that there was some protective measures put in place to,
and Connie, do you wanna speak to that a little bit?
-: Yes.
We'll go back through the comments and take a look.
This is not a part of the rule
that we received comments on necessarily,
and was not noticed in our proposal,
but we'll go back and take a look at that.
And again, I just wanna remind all of our guests
that before I'm here today,
is for staff to dialogue with the Commissioners
and make sure staff is producing the work
Commissioners expect,
not to rework shop the entire customer protection rule.
-: Yeah, we'll go through all the comments
that were already filed.
Woman: Yes.
-: Thank you.
What type of the.
Yes, sir.
-: Thank you, Michael Juul on behalf of Octopus Energy.
And Chairman Lake,
we would strongly encourage your recommendation
that there be prior notice with regard to variable rates.
So, the customers know before the month starts,
what they're going to be charged.
Lake: Thank you, sir.
-: Thank you.
That's not in the scope of this boat.
Something we'll take up-
-: We've put comments on that in this as well.
-: We'll look at it, thank you, sir, thank you.
Anything else, Mr.
-: I think that's good.
I think that the next thing (indistinct)
-: That'll conclude business on 10, and we're not doing 11.
I don't have anything, there's nothing on 12 through 17.
That brings us to 19, 18 will be after the break, 19.
Mr. Smeltzer.
-: Hello, this is coming back to our proposal
for adoption for review of 25.505.
This is the HCAP rule
staff has prepared the $5,000 cap draft
as directed using some very Pythian and genius language
for the justification
that we've incorporated into the analysis in the preamble.
And it is prepared for your adoption.
-: I would just note, this is project 52631.
-: We covered this earlier this week,
other than the Pythian language.
-: I love the number, it works for me.
-: There you go.
Any other thoughts on this,
or a motion to approve the proposal for adoption?
-: So moved.
-: Second.
-: All in favor, say aye.
-: Aye. -: Aye.
-: Chairman, I just wanted to be very clear on the record,
that is your expectation,
this HCAP will be implemented on January 1st.
-: Yes.
-: At the request of ERCOT for clarification.
-: Yes.
-: Yes, great. -: Thank you.
-: All intend this to be implemented
on, or before January 1st motion has passed.
Thank all of you all, and especially staff.
This was a very, very quick turnaround in order to make sure
that it could be implemented by January 1st
before the price, the HCAP resets to 9,000.
Like, many, many, thanks for all the work on this.
-: Thank you.
-: Nothing on items 23, 26,
and it brings us to,
I think that brings us to item number 29,
project number 52805.
And Mr. Smeltzer, you're back up.
-: I thought there might've been one in there.
This is a proposal for publication that we have for you
for review of 16 PAC 27.170.
We refer to it as the Jay rule.
As far as we know, it just affects Jay Stone
and no one else.
So, this is to pull our advanced contracting
monitoring practices in line with statute,
excuse me, to pull our rule
in line with statute in our current practices.
This is just a codified current practices sort of deal,
there's not too much to say, but Jay's available
should we have any questions.
-: All right.
I think this conforms to,
we go to any thoughts, comments,
or a motion to approve the proposal for publication?
-: So moved.
-: Second.
-: All right.
All in favor, say, aye.
-: Aye. -: Aye.
-: None opposed, motion passes.
All right, thank you, sir.
-: Thank you. -: Thank you, Jay.
Item 30, we've got an update from our executive director.
-: Thank you, Mr. Chairman.
Commissioners, just a couple updates this morning.
First, I am happy to report
that we have filled our director of communications position,
Rich Parsons has accepted the job,
he has a wealth of experience,
he's a former newscaster
and previously worked at the Railroad Commission
and currently works
as the Director of Communications at HHSC.
We hit a home run with this hire, I'm glad to say
this is the equivalent of getting a five-star recruit,
which for those of you who follow Texas football,
explain what a five-star recruit is,
it's someone who comes in
and really helps our teams succeed in the near and longterm.
So, yeah, we're blessed to have him come
and be a part of our team,
he he'll begin at the beginning of January.
-: You should get used to,
you should look to baseball, or football.
-: No, it's a great analogy,
I'm just glad
he doesn't have to sit out a year before transferring.
-: That's true, we couldn't handle that,
I don't think my co would've let me do that, so.
And the second item of note,
is dealing with our mapping committee.
As you know, I chair that committee,
we have a report due on January 1st
that that's a statutory deadline.
We'll be preparing that and getting it approved,
hopefully at our December meeting,
which I think will be on the 17th of this month.
And then I wanna publicly thank
the members of that committee.
I asked that we have our January meeting
be a public meeting,
even though it's not required by statute.
I think it's important for us to publicly update everyone
on what our work has been.
So, at that meeting,
which will be sometime in the middle of January,
we'll go over the report
and get updates from our project teams
on everything that's been going on
and what we hope to do going forward.
And one of the other requests that I wanna thank them for,
is there's a statutory deadline
at the first map be completed September 1st.
I've asked our staff, Railroad staff, Tetum and ERCOT
that we produced that first map no later than April,
there are a number of other items in Senate Bill 3
that are pegged to that first map,
including some weatherization rules at other agencies.
And so, everyone agreed that the first map
would be out no later than April 1st,
and I wanna thank them for agreeing to what I asked for.
-: Outstanding on all fronts, but the higher,
the accelerated pace of work on the mapping committee,
I appreciate all of that work,
except y'all's (indistinct) for that joke.
-: Oh no, no, I appreciate.
-: Mr. Janae, we'll get to see,
when his team joined CSCC,
what five-start recruiting looks like.
-: That's a good skid
to talk about trading dads and families analogies
to trading coaches and football.
-: All right, thank you. -: What are you saying.
(members laughing)
-: That concludes business, sir, I am sorry.
We have convened in a duly notice open meeting.
So, the Commission will now,
at 11:02 a.m. on December 2nd, 2021, hold a closed session
pursuant to Chapter 501 of the Texas Government code,
the section 551.071, 551.074 and 551.076.
In that time, we will rearrange the room
and prepare for our second half of programming today
at our work session,
or to make sure we have adequate time for all of the above,
let's plan on reconvening at noon.
Thank y'all.