WEBVTT
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(banging)
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Good afternoon.
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And welcome back to the
second half of this meeting
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of the Public Utility
Commission of Texas.
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This is the part of our
programming where
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we as a Commission discuss
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our market redesign efforts.
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Apologies for the late
posting of the memo last night,
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but it was a full, full day.
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Hell, it's been a full six months.
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As I highlighted in that,
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this Commission has taken
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an extraordinary
amount of action to date,
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to make significant reforms
that are enhancing resiliency
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for the people who live in
ERCOT and for the State of Texas.
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I would challenge anyone to
find another grid, RTO, ISO,
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in the world that has
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implemented as much meaningful reform
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as quickly as this Commission has
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in the last six to eight months.
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And we're not finished.
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We still have work to do.
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But I don't want to let that go
unnoticed and unrecognized.
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This is...
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Well, we started April, May.
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April 16 for me and
a week later for you.
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And that, yeah, it has
been breakneck since then.
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Both in legislative implementation
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and operational improvements
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and in the changes we've made to ERS and
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we're quickly gonna be making with ORDC,
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and the high cap that we did today
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to reduce financial
liability to customers.
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Those, like I said,
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I think it would be
hard to find any other
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grid in the world that's
moved as quickly,
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as decisively and as with
much impact as we have
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in the last six to eight months.
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Lori and Jimmy got to
join the party a little later,
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but that this, there have been
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tremendous accomplishments so far.
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And I want to thank
you all, thank our staff,
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thank the team at ERCOT
for helping make that happen.
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The second thing I want to
highlight is something Jimmy,
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I know you care a lot about,
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and I made sure to
mention that in the memo,
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is that this discussion
is about operation
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or market redesign changes.
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There are still significant
operational improvements
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that can be made at ERCOT.
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Transmission planning is
something of importance to you.
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I know Lori's efforts in
the Rio Grande Valley
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have made big progress.
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That's another tremendous
accomplishment.
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The list is too long to go through.
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Highlight the need that
we have to improve that.
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And there are a variety of
other operational improvements.
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But I want the public to know that
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we're addressing the
market design element
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in addition to the operational
improvements that can be made
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and we will continue to do so
as we move into the new year.
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We have
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been through an extraordinary process,
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an incredible amount
of stakeholder feedback,
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a tremendous amount of time
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from everybody on this Commission,
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considering market redesign efforts.
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I've spent hours hearing,
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we've all spent countless
hours hearing for stakeholders,
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reading stakeholder input.
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I've listened, we've all listened to
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input and thoughts
from each other for hours.
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Many, many hours.
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And at the end of the day,
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as the chairman and
leader of this Commission,
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my job is to gather,
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evaluate all that
information, all that feedback,
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discard the ideas that
we don't think are viable,
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capture the productive ideas,
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synthesize those, aggregate those,
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and help drive this Commission to
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a productive and meaningful reform.
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As you all know more than anybody,
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that's not an easy task.
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We've had a lot of ideas
that were discarded.
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Some pretty easily.
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Some took a little more deliberation.
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But it's important that the public know
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that we've been through a lot of ideas
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that weren't worthy of
this market and this reform.
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Today, we need to talk about
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the ideas and concept that
these four Commissioners
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think are viable in addressing
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both the extreme weather event
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and the blue sky problem that we have.
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In addition to, of course,
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the infrastructure reform
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and weatherization reform we've taken.
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And we need to continue moving towards
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a point where we can
put a flag in the ground and
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establish a blueprint
that shows a path forward
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to build on the substantial
progress we've made
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and continue to implement
meaningful reform in ERCOT.
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At the highest level,
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we know we need more dispatchable power.
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We have, I think, almost
120,000 megawatts
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of installed capacity when
we only need 75 or 80,000.
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The problem is, it's not dispatchable.
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A big portion that can
vanish relatively quickly.
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We know that Commissioner
McAdams has made
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a very good point multiple times about
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the avalanche of the intermittency
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that creates that challenge.
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We know we need more dispatchable.
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How much do we need and how do we get it
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at the highest level?
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I think we need to comprehensively
address the problem.
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We need to buy substantially
or incentivize substantially
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all of the dispatchable power we need.
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We don't necessarily have to treat
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all of that.
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Those can be distinguished
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with different performance standards.
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But we need to address
the whole problem,
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not parts of the problem.
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Where do we get that dispatchable power?
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Do we get it through the load side?
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Do we get it through the gen side?
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Do we get it through the
centrally procured at ERCOT?
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There've been many, many
proposals across the spectrum.
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We can certainly, and
I've certainly considered
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generation side affirming standards.
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We can require affirming performance
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or dispatchability
metric on all generations,
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60, 70% over a weekly or monthly basis,
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which require our
entire fleet to firm up
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and increase their level of reliability.
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We could even go so far as to curtail,
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as other industries have
done in the past in Texas,
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to ensure that,
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both for stability and for reliability,
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we have enough dispatchable
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available at all times.
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Those are heavy handed, regulatory moves
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that do not capture and
leverage market forces.
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So I don't think those
are the best options,
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not to mention they're
tremendously expensive.
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But those are options on the table.
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We've heard a lot about
centrally procured products.
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As Commissioner
Glotfelty so eloquently says,
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cash for clunkers.
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And I think we've all
heard about how that's,
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we've all expressed
concern with those models.
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And of course, we've
heard about the load side,
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some version of a load side
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procurement of a requirement
for that dispatchable power.
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As you saw in
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my memos and my straw man, I think the,
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some version of a load
side reliability mechanism
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is the most effective and
productive product for ERCOT.
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It leverages market forces.
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It utilizes resources that,
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or pays resources that
are being used in general,
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rather than holding them back,
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and it leaves a lot of
the decision-making
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about portfolio construction
to market participants,
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not the regulators.
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There are lots of different
versions of LSE obligations
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and I don't claim to know which one
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is exactly the perfect model right now.
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I do know that of all of our proposals,
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none of them are ready-made
and perfectly packaged,
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ready to go right now.
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And it's not my proposal or
your proposal or your proposal.
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We need to take the best
elements of all of these
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and move forward to the next version
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and iterate moving forward.
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It's not either or.
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It's, how do we put
all the puzzle pieces,
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the right puzzle pieces together?
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And in that spirit, I took
the approach of looking at
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all of the proposals or
the most recent proposals.
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And as you saw, I mean, we've got the
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phase one elements of ORDC,
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ERS we've already
taken substantial action on,
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a firm fuel product, I think,
is something that we all agree
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needs to be developed.
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But the bigger questions
come in phase two.
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In my most recent straw
man or draft of a straw man,
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I paired a concept similar
to Lori, which you proposed.
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I know you didn't, you
wanted to update the name.
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So did the best I could.
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Similar to Brattle's option number two,
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with some version of an LSE obligation
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based on a set of principles.
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None of these principles are,
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those lists are not
exhaustive by any means.
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And I hope today we can
expand those principles.
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Edit them if elements
need to be removed.
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But I want to make sure
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or get to a point where we can identify
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the principles and the mechanisms that
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we as a Commission think need to be
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the foundation of the mechanism,
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the reliability mechanism
we move forward with.
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As you know, I've got
great reservations about
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a backstop mechanism.
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But there's some elements
of it that I'm concerned about.
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Largely that it's a,
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it's withholding
resources from the market.
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We're paying people to
not participate in the market.
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It's not the most
economically efficient version.
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And we'd have to also sit there
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with a lot of generation
on the sideline while
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customers pay 4,000,
five, $4,500 a megawatt
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and not utilize those resources until
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the high cap is reached.
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But that is also a feature of it.
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So that backstop doesn't interfere
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with normal market dynamics.
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And that's a tough trade-off.
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But at the end of the day I think
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that is a product we
need to ensure reliability
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as a bridge to an
eventual LSE obligation.
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I like the features of the backstop,
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and the fact that it can be hopefully
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implemented relatively quickly.
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And so I think that's a key
part of us moving forward
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is some sort of backstop mechanism.
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I appreciate all the
work you've put into that.
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The second part of that, of
course, is the LSE obligation.
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We've discussed my
original version of that
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and I'll be the first to say
that is not the right answer.
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I think the sizing of it's too big,
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in addition to some other concerns.
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I think some version of an
LSE obligation is the way to go.
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Not that version.
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And not,
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but I think there, like any of these,
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there are some features that
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could be beneficial in some
version of an LSE obligation.
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We heard a lot about the
deck program last time.
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I think the deck program
as currently constructed
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has all of the problems
that we heard last time,
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and it's not something
as a standalone product
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that would solve a problem.
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We don't need to solve our problem.
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We heard plenty about that last time.
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But I think the deck program has
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some very important
features that can be leveraged
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and incorporated in some
version of an LSE obligation.
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Most importantly, you're
paying for what you use.
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It's a very important
part of that proposal.
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It has a forward price signal,
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which as you saw in my last,
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in my original straw man,
I think is very important.
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It has performance standards
and penalties and testing,
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which I think is a key feature.
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It's built on a familiar framework
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that can be implemented
quickly, which is a,
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not only a feature, but a highlight.
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That's a very important element.
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We've heard about the
implementation challenges
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of a lot of these.
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The penalty structure
at cost of new entry
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is something that I think is
a very clever mechanism,
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an important one, and should be applied
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not only to non-compliance
on the load side,
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but for non-performance
on the generator side.
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That's a very clever
and effective mechanism
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as part of the deck proposal.
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And it's self-correcting.
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It's designed so that
at cost of new entry,
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where the noncompliance
penalty matches costs of new entry,
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that first new unit is
very, very expensive.
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But over time, as more supply
comes in to meet demand,
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the price goes down and
the sizing is also dynamic.
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So I would like to
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move forward with some
version of an LSE obligation
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based on principles like that.
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The last I heard was
that the deck wasn't,
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you were focused on deck as packaged,
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which is why I didn't incorporate
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all of those principles
into last night's edition.
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But I'm happy to.
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And I would not want to
consider an LSE obligation without
00:15:16.190 --> 00:15:18.260
studying how those
principles can be leveraged
00:15:18.260 --> 00:15:21.023
and incorporated into
any future LSE obligation.
00:15:23.020 --> 00:15:26.593
But as you know, I
think that as packaged,
00:15:28.241 --> 00:15:30.550
it's not gonna solve our problems
00:15:30.550 --> 00:15:33.240
and not gonna be a silver bullet.
00:15:33.240 --> 00:15:35.130
And that's what I want to talk about.
00:15:35.130 --> 00:15:37.530
What are the principles,
what are the mechanisms
00:15:38.570 --> 00:15:45.540
that we need to put
forward and can allow us to
00:15:45.540 --> 00:15:47.230
build a foundation, plant a flag,
00:15:47.230 --> 00:15:48.563
to chart a course forward,
00:15:49.640 --> 00:15:53.860
so that in addition to all of
the reform we've made so far,
00:15:53.860 --> 00:15:55.250
we can also show the markets,
00:15:55.250 --> 00:15:58.820
we can show our legislature,
our state leadership,
00:15:58.820 --> 00:16:02.370
and most importantly,
the citizens of Texas that
00:16:02.370 --> 00:16:05.850
we're continuing to make longterm reform
00:16:05.850 --> 00:16:09.393
that will comprehensively
solve the problem at hand.
00:16:11.000 --> 00:16:12.293
Jimmy, I know you've,
00:16:14.610 --> 00:16:16.020
my sense is you
00:16:17.560 --> 00:16:19.170
also think there are
features and elements
00:16:19.170 --> 00:16:21.083
of the deck proposal that can be,
00:16:23.760 --> 00:16:26.110
that should be captured in further study
00:16:26.110 --> 00:16:31.110
and rolled into an LSE obligation.
00:16:31.270 --> 00:16:33.570
I think that's the sense
I've gotten from you.
00:16:36.104 --> 00:16:38.293
Lori, I know you've also thought about
00:16:40.720 --> 00:16:41.937
the elements that can be captured.
00:16:41.937 --> 00:16:46.920
And I also want to say another
element of your proposal,
00:16:46.920 --> 00:16:48.780
the backstop mechanism,
00:16:48.780 --> 00:16:51.570
is the net load highlighting
the net load variability.
00:16:51.570 --> 00:16:53.598
This is a great sizing mechanism.
00:16:53.598 --> 00:16:55.780
I think we need to focus on that as well
00:16:55.780 --> 00:16:57.123
in any LSE obligation.
00:16:59.875 --> 00:17:04.875
So I think, I feel confident
you like the idea of a backstop
00:17:04.970 --> 00:17:06.420
since you published the memo.
00:17:08.482 --> 00:17:12.010
I don't quite have a sense of
your thoughts on the backstop.
00:17:12.010 --> 00:17:15.046
I've got a pretty good sense
of your thoughts on the deck.
00:17:15.046 --> 00:17:15.879
I'm not sure about the backstop.
00:17:15.879 --> 00:17:18.623
So that's what we're here for.
00:17:19.580 --> 00:17:20.850
Let's talk about it.
00:17:20.850 --> 00:17:22.300
Let's see what works, what doesn't work,
00:17:22.300 --> 00:17:24.350
what people like,
what people don't like,
00:17:25.716 --> 00:17:30.716
and move towards mechanisms
based on certain principles
00:17:30.930 --> 00:17:34.750
and we can hopefully
keep this train moving
00:17:34.750 --> 00:17:35.950
in a positive direction.
00:17:37.232 --> 00:17:39.790
With that, I'll open up
to thoughts or comments.
00:17:39.790 --> 00:17:41.290
Yeah, I guess I'll go first.
00:17:42.318 --> 00:17:44.490
Just to make some clarifying statements.
00:17:44.490 --> 00:17:45.590
I think you noted that
00:17:48.190 --> 00:17:51.323
I had originally proposed
the strategic reliability service.
00:17:52.650 --> 00:17:54.438
The reason I use strategic is because
00:17:54.438 --> 00:17:56.410
the service would be used strategically
00:17:56.410 --> 00:17:57.950
and I used reliability service
00:17:57.950 --> 00:18:01.363
'cause it's the term, the
phrase is embodied in SB3.
00:18:04.050 --> 00:18:06.650
Over the last week or so I think
00:18:08.422 --> 00:18:09.820
there may be some
that have turned that into
00:18:09.820 --> 00:18:11.110
what they believe it is.
00:18:11.110 --> 00:18:12.670
And so really what it is
00:18:12.670 --> 00:18:15.087
is a backstop reliability mechanism,
00:18:15.087 --> 00:18:17.020
backup reliability service,
00:18:17.020 --> 00:18:19.920
backup reserve service,
whatever you want to call it.
00:18:19.920 --> 00:18:21.320
That is the concept.
00:18:21.320 --> 00:18:22.820
What I'm focused on is the principles.
00:18:22.820 --> 00:18:24.750
So I don't want to get
caught on semantics
00:18:24.750 --> 00:18:26.470
of what the name is
00:18:26.470 --> 00:18:28.770
because I feel like some
people out there have
00:18:31.000 --> 00:18:33.460
knowingly misconstrued
what I'm trying to do
00:18:33.460 --> 00:18:35.790
and turned it into a
proposal that it's not.
00:18:35.790 --> 00:18:40.790
And so I'm happy to
call it whatever it's called.
00:18:41.100 --> 00:18:42.336
Backstop--
Call it whatever
00:18:42.336 --> 00:18:43.169
you want to call it.
00:18:43.169 --> 00:18:45.510
That's your--
Backstop reliability service
00:18:45.510 --> 00:18:47.633
because reliability service is in SB3.
00:18:50.040 --> 00:18:52.005
So I just wanted to clarify that.
00:18:52.005 --> 00:18:53.005
I think that
00:18:54.190 --> 00:18:56.350
I'm tired of going back
and forth on semantics.
00:18:56.350 --> 00:18:59.630
And so that's what it is.
00:18:59.630 --> 00:19:00.930
I've laid out the principles of it.
00:19:00.930 --> 00:19:02.230
I've spent a lot of time at least
00:19:02.230 --> 00:19:05.910
laying out the framework
for it in terms of
00:19:05.910 --> 00:19:07.560
some of the major questions in there,
00:19:07.560 --> 00:19:09.490
what types of resources,
who would pay for it,
00:19:09.490 --> 00:19:11.470
how would it be paid for.
00:19:11.470 --> 00:19:14.380
What's very important to
me from this mechanism
00:19:14.380 --> 00:19:16.010
is that it's sized appropriately
00:19:16.010 --> 00:19:18.409
to a specific reliability need.
00:19:18.409 --> 00:19:21.210
Now, I mentioned
peak net load variability.
00:19:21.210 --> 00:19:25.100
I don't want to create a
mechanism that is out-sized.
00:19:25.100 --> 00:19:27.913
I still very much care
about consumer costs.
00:19:30.310 --> 00:19:35.250
But one thing I do want
to mention as well is that
00:19:37.700 --> 00:19:39.380
we really would have to evaluate
00:19:39.380 --> 00:19:41.540
how quickly it would get implemented,
00:19:41.540 --> 00:19:46.400
but also evaluate how
much and based on what.
00:19:46.400 --> 00:19:47.460
I had initially sort of
00:19:47.460 --> 00:19:49.540
put out an example of the SARA report
00:19:49.540 --> 00:19:51.910
and some of the numbers in the red that
00:19:54.130 --> 00:19:58.250
the mechanism could be used to fill
00:19:58.250 --> 00:20:00.360
a specific reliability need.
00:20:00.360 --> 00:20:03.640
However, the last thing
I would want to do is
00:20:05.170 --> 00:20:07.680
withhold resources from the market
00:20:07.680 --> 00:20:10.580
and create a reliability
risk in the near term.
00:20:10.580 --> 00:20:13.920
So I want to make sure that
00:20:13.920 --> 00:20:16.690
if we are going to use this as a bridge,
00:20:16.690 --> 00:20:18.210
that we study it a little bit further
00:20:18.210 --> 00:20:19.590
to make sure we're not creating
00:20:19.590 --> 00:20:21.850
a near term reliability risk,
00:20:21.850 --> 00:20:25.140
and that maybe there is
something else we could use
00:20:25.140 --> 00:20:30.140
to complement this
mechanism to fill potentially
00:20:30.808 --> 00:20:32.960
as a joint bridge.
00:20:32.960 --> 00:20:35.810
Because I think really if
you pull out the resources,
00:20:35.810 --> 00:20:40.560
the goal would be to
efficiently raise energy prices
00:20:40.560 --> 00:20:42.310
to drive, send the forward signal
00:20:42.310 --> 00:20:45.400
that new generation is needed and
00:20:47.374 --> 00:20:49.520
so that's how you
would drive investment.
00:20:49.520 --> 00:20:54.150
And so we have 13,000
megawatts of natural gas
00:20:54.150 --> 00:20:56.210
in the interconnection queue.
00:20:56.210 --> 00:20:59.000
I would want to be sure
that we're gonna have
00:20:59.850 --> 00:21:02.730
some announcement
soon, some investment soon,
00:21:02.730 --> 00:21:07.730
because what I was looking
for with this bridge mechanism,
00:21:08.680 --> 00:21:12.440
whether it's standalone,
market enhancement, or a bridge,
00:21:12.440 --> 00:21:17.760
is to create, to ensure
we have reliability
00:21:17.760 --> 00:21:21.780
while we implement or evaluate,
00:21:21.780 --> 00:21:25.223
continue to evaluate
more long-term solutions.
00:21:26.550 --> 00:21:28.980
So I will stop there.
00:21:28.980 --> 00:21:30.640
I know, well, let me add,
00:21:30.640 --> 00:21:33.100
I know that there has been
some correspondence filed
00:21:33.100 --> 00:21:34.900
that my proposal could
00:21:36.060 --> 00:21:38.290
be paired with decks.
00:21:38.290 --> 00:21:41.400
I know that's not anything
we've fully evaluated yet but
00:21:44.375 --> 00:21:45.680
I read through some of the filings
00:21:45.680 --> 00:21:48.570
and I know that we have
some stakeholders here that
00:21:49.725 --> 00:21:51.440
would probably be
happy to talk to that issue.
00:21:51.440 --> 00:21:53.320
But I just want to make sure that
00:21:53.320 --> 00:21:54.980
we're kind of turning over every stone
00:21:54.980 --> 00:21:56.620
and we're being open-minded of how
00:21:56.620 --> 00:21:59.770
it could all work together
to get to an eventual
00:21:59.770 --> 00:22:00.770
long-term milestone.
00:22:02.060 --> 00:22:02.893
Thank you.
00:22:04.280 --> 00:22:05.637
Thoughts? Comments?
00:22:09.470 --> 00:22:11.823
I'm happy to state
some comments.
00:22:13.410 --> 00:22:18.410
I appreciate the time that
everybody's put into this.
00:22:20.163 --> 00:22:24.950
It's pretty darn important, obviously,
00:22:24.950 --> 00:22:26.520
as a result of what
happened in February,
00:22:26.520 --> 00:22:29.130
but also for the economic
development of our state
00:22:29.130 --> 00:22:31.293
and for the benefit of the consumers.
00:22:33.358 --> 00:22:37.900
I am still very wary
00:22:37.900 --> 00:22:40.840
of what a load serving entity
obligation would look like
00:22:40.840 --> 00:22:43.860
and would do to the
market and do to retailers.
00:22:43.860 --> 00:22:46.720
But I'm willing to go along with
00:22:46.720 --> 00:22:49.920
a deeper dive on the analysis of that.
00:22:49.920 --> 00:22:52.800
One thing that I have struggled with is
00:22:52.800 --> 00:22:56.640
I haven't seen any analytics
behind supporting any of these.
00:22:56.640 --> 00:22:58.790
So I don't know how
they affect the market.
00:22:58.790 --> 00:23:02.030
I don't know how to
compare one versus the other,
00:23:02.030 --> 00:23:04.010
except for on one filing versus another
00:23:04.010 --> 00:23:06.060
or one person's
opinion versus the other.
00:23:07.210 --> 00:23:09.470
That's not the way I have
historically made decisions.
00:23:09.470 --> 00:23:13.530
I like to have them
grounded in analytics.
00:23:13.530 --> 00:23:15.570
That's what happens
when you're trying to build
00:23:15.570 --> 00:23:16.920
a billion dollar power plant.
00:23:16.920 --> 00:23:18.300
It's grounded in analytics.
00:23:18.300 --> 00:23:20.810
They look at the market,
they look at the revenues.
00:23:20.810 --> 00:23:25.300
And that's the way markets function.
00:23:25.300 --> 00:23:28.973
They have to have robust
analytics behind them.
00:23:31.670 --> 00:23:34.950
I really, really like the deck proposal.
00:23:34.950 --> 00:23:37.570
I think it's a great innovation
00:23:37.570 --> 00:23:41.870
that can help Texas be
a leader in this new world,
00:23:41.870 --> 00:23:44.250
this new world that we're looking at,
00:23:44.250 --> 00:23:45.850
that everybody's looking at,
00:23:45.850 --> 00:23:50.173
which is lots of
intermittent renewables,
00:23:52.140 --> 00:23:54.320
cost pressures going downwards,
00:23:54.320 --> 00:23:57.453
which put pressure on
dispatchable resources.
00:23:58.530 --> 00:24:01.430
And I think that the
deck idea is really good.
00:24:01.430 --> 00:24:06.430
I've searched long and
far to find examples of that
00:24:06.550 --> 00:24:08.591
that have worked and
have been successful.
00:24:08.591 --> 00:24:12.150
And I have found a few,
and I think one of them,
00:24:12.150 --> 00:24:14.107
I'm no pro on it but--
00:24:15.108 --> 00:24:16.200
Better hope you're a pro.
00:24:16.200 --> 00:24:17.033
I'm not.
00:24:18.610 --> 00:24:20.620
There's a project that was in Queensland
00:24:20.620 --> 00:24:23.130
called the Queensland
Gas Certificate Program.
00:24:23.130 --> 00:24:24.880
And it was in New Zealand
00:24:24.880 --> 00:24:27.250
and it was intended to spur
00:24:27.250 --> 00:24:30.460
natural gas fire generation
from coal scenes.
00:24:30.460 --> 00:24:31.833
Very specific.
00:24:32.810 --> 00:24:34.480
And it worked very well.
00:24:34.480 --> 00:24:35.677
Went from like two,
00:24:38.168 --> 00:24:40.660
2% of the market to 20% of the market.
00:24:40.660 --> 00:24:43.990
It was a very similar
type program as the deck.
00:24:43.990 --> 00:24:48.990
And I think it has a very good
likelihood of success here.
00:24:50.990 --> 00:24:52.760
And want that to be one of the things
00:24:52.760 --> 00:24:54.460
that we study going forward.
00:24:56.794 --> 00:24:59.670
I understand when you tell load
00:24:59.670 --> 00:25:02.820
they have to subscribe to
something, that's an obligation.
00:25:02.820 --> 00:25:06.240
So I think the semantics of the
00:25:06.240 --> 00:25:07.720
load serving entity obligation
00:25:07.720 --> 00:25:09.620
and the deck program being a small part
00:25:09.620 --> 00:25:14.620
of a load serving entity obligation are,
00:25:14.741 --> 00:25:18.733
they are somewhat the same,
but it has to do with amounts,
00:25:20.870 --> 00:25:22.050
characteristics of the resource
00:25:22.050 --> 00:25:24.400
that you're striving to resolve.
00:25:24.400 --> 00:25:26.860
So like I said,
00:25:26.860 --> 00:25:30.210
I'm on board with trying
to do a deeper dive.
00:25:30.210 --> 00:25:34.260
We have to do something
deeper on the LSE obligation
00:25:34.260 --> 00:25:36.750
for me to totally
understand how it works.
00:25:36.750 --> 00:25:40.350
We have to do something
much deeper on the deck program
00:25:40.350 --> 00:25:42.720
to understand how it's gonna affect
00:25:42.720 --> 00:25:44.670
demand response and energy efficiency
00:25:44.670 --> 00:25:46.280
and who's gonna play in these games
00:25:46.280 --> 00:25:48.130
and how it's gonna affect the market.
00:25:51.230 --> 00:25:53.200
And I say that.
00:25:53.200 --> 00:25:55.810
There are a lot of issues that I have
00:25:55.810 --> 00:25:59.440
that are operational issues at ERCOT,
00:25:59.440 --> 00:26:01.840
that I think will have a
major effect on the market.
00:26:01.840 --> 00:26:04.720
They are not major operational changes.
00:26:04.720 --> 00:26:09.310
I don't think February was a
failure of the ERCOT market.
00:26:09.310 --> 00:26:11.240
There were failures within the market.
00:26:11.240 --> 00:26:13.040
There were failures
within the gas system.
00:26:13.040 --> 00:26:16.183
But the entire market,
in my opinion, did not fail.
00:26:19.610 --> 00:26:23.090
Things that we talked about
at the open meeting earlier.
00:26:23.090 --> 00:26:28.090
How we are gonna work on
energy efficiency programs.
00:26:28.260 --> 00:26:32.300
How are we gonna give
every bit of the market access
00:26:32.300 --> 00:26:36.390
to demand response
functions and resources?
00:26:36.390 --> 00:26:39.290
So we're going from a market where,
00:26:39.290 --> 00:26:42.470
a system where shutting off load
00:26:42.470 --> 00:26:45.640
was the worst thing you could ever do,
00:26:45.640 --> 00:26:47.180
because it was a utility doing it
00:26:47.180 --> 00:26:48.810
and it was a dire circumstance,
00:26:48.810 --> 00:26:51.230
to somebody voluntarily saying,
00:26:51.230 --> 00:26:53.343
oh yeah, I'll do that for money.
00:26:54.190 --> 00:26:55.510
We've got to give them the chance
00:26:55.510 --> 00:26:58.520
because there's a cost reduction
00:26:58.520 --> 00:27:00.070
and there's a reliability benefit.
00:27:00.070 --> 00:27:01.473
So we have to get there.
00:27:05.520 --> 00:27:06.950
That's demand response.
00:27:06.950 --> 00:27:08.364
Energy efficiency.
00:27:08.364 --> 00:27:10.870
Energy efficiency by definition
00:27:10.870 --> 00:27:15.490
will lower the amount of
megawatts we need forever.
00:27:15.490 --> 00:27:17.830
And we don't even know
what those megawatts are.
00:27:17.830 --> 00:27:21.063
But if we don't have a robust
energy efficiency mechanism,
00:27:22.440 --> 00:27:24.210
we're gonna oversize and
00:27:24.210 --> 00:27:26.160
the market will oversize and overspend.
00:27:27.950 --> 00:27:30.680
Transmission, I came
in to this Commission.
00:27:30.680 --> 00:27:32.630
I love dealing with transmission issues.
00:27:32.630 --> 00:27:34.630
Unless we know that all the megawatts
00:27:34.630 --> 00:27:36.830
that are being produced
can get to the load,
00:27:36.830 --> 00:27:38.380
we don't know how much we need.
00:27:39.410 --> 00:27:40.690
We need more transmission.
00:27:40.690 --> 00:27:43.410
We need to solve generic
transmission constraints.
00:27:43.410 --> 00:27:46.570
We need more data to be
open to the public on that.
00:27:46.570 --> 00:27:51.570
We need to solve this
transmission planning effort to allow,
00:27:51.870 --> 00:27:55.160
to get our underlying
understanding of how much we need.
00:27:55.160 --> 00:27:56.633
I have just a few more.
00:27:58.630 --> 00:28:03.133
As we move towards from a
supply sided system where just,
00:28:04.220 --> 00:28:06.150
it was vertically integrated utilities
00:28:06.150 --> 00:28:09.163
and now it's generators and reps,
00:28:10.360 --> 00:28:14.020
gentailers, as we call them,
are providing resources.
00:28:14.020 --> 00:28:17.820
The lines between what a utility does
00:28:17.820 --> 00:28:20.890
and what a consumer
does are being blurred.
00:28:20.890 --> 00:28:23.670
The transmission and distribution
systems are being blurred
00:28:23.670 --> 00:28:26.070
as consumers become generators of power
00:28:26.070 --> 00:28:28.040
and put that back on the system.
00:28:28.040 --> 00:28:29.400
We have to account for that.
00:28:29.400 --> 00:28:32.360
And I don't know how these
mechanisms account for that.
00:28:32.360 --> 00:28:34.763
That's, again, that's part of my issue.
00:28:37.680 --> 00:28:39.650
Promoting an individual's right
00:28:39.650 --> 00:28:41.780
or these companies rights to
00:28:42.770 --> 00:28:45.510
interconnect at the
distribution level voltage
00:28:46.700 --> 00:28:47.900
with certainty to understand.
00:28:47.900 --> 00:28:51.360
We have this at the large
generator interconnection process.
00:28:51.360 --> 00:28:53.470
We don't have that at the lower voltage
00:28:53.470 --> 00:28:54.580
or distribution voltage.
00:28:54.580 --> 00:28:57.243
We need that because
we need those megawatts.
00:28:59.132 --> 00:29:00.720
Two more things.
00:29:00.720 --> 00:29:01.852
Let me just say.
00:29:01.852 --> 00:29:03.210
Well, three more things.
00:29:03.210 --> 00:29:04.223
One of them is,
00:29:06.510 --> 00:29:07.693
as I understand it,
00:29:09.050 --> 00:29:12.123
ERCOT still gives no
capacity value to storage.
00:29:14.450 --> 00:29:16.040
That may be because they haven't
00:29:16.040 --> 00:29:17.890
had much storage on the ERCOT system.
00:29:19.870 --> 00:29:20.930
But it's coming.
00:29:20.930 --> 00:29:24.960
And it seems to me like that
is a very important component
00:29:24.960 --> 00:29:27.720
of understanding how
many megawatts we need,
00:29:27.720 --> 00:29:30.060
is to understand how
many megawatts we have.
00:29:30.060 --> 00:29:32.110
If we don't have this,
00:29:32.110 --> 00:29:35.260
if 30% of the queue
is storage coming in,
00:29:35.260 --> 00:29:37.070
we got to have a better understanding
00:29:37.070 --> 00:29:39.143
of what that capacity value is.
00:29:41.310 --> 00:29:45.760
Utilizing ELCC, effective
load carrying capability,
00:29:45.760 --> 00:29:47.650
important, get it done.
00:29:47.650 --> 00:29:51.970
We got to understand the
megawatt picture better.
00:29:51.970 --> 00:29:54.620
We can't do any of these
proposals, in my opinion,
00:29:54.620 --> 00:29:56.160
until we understand this baseline
00:29:56.160 --> 00:29:58.710
or the market will not respond
00:29:58.710 --> 00:30:00.770
to what's needed in the,
00:30:00.770 --> 00:30:02.760
what is needed for reliability,
00:30:02.760 --> 00:30:04.733
if they don't have those numbers.
00:30:05.870 --> 00:30:09.573
And finally looking
forward, the question is,
00:30:11.400 --> 00:30:14.230
I mean, we see all
these electric vehicles.
00:30:14.230 --> 00:30:16.500
They may be this new future of storage.
00:30:16.500 --> 00:30:17.970
They may be generators.
00:30:17.970 --> 00:30:19.730
They're consumers as well.
00:30:19.730 --> 00:30:22.980
Same with Tesla power
walls and batteries.
00:30:22.980 --> 00:30:25.380
And I think we're kind of
00:30:25.380 --> 00:30:28.040
thinking in the old world of
00:30:28.040 --> 00:30:31.250
loss of load expectation numbers.
00:30:31.250 --> 00:30:35.923
What is our reliability megawatt metric?
00:30:37.040 --> 00:30:39.240
And I think that as we go forward
00:30:39.240 --> 00:30:40.363
and look at these,
00:30:41.760 --> 00:30:44.643
the deck proposal, the LSE obligation,
00:30:46.560 --> 00:30:49.990
I think we need to look at
them progressively going forward
00:30:49.990 --> 00:30:53.273
with all of these as a
part of that analysis.
00:30:56.890 --> 00:30:59.533
I'm fearful that we will
make the wrong decisions.
00:31:00.380 --> 00:31:03.763
We will impact, everything
we do impacts the market.
00:31:05.190 --> 00:31:09.120
Everything that we do
addresses price formation.
00:31:09.120 --> 00:31:11.460
It helps it and it destroys it.
00:31:11.460 --> 00:31:14.110
Every generator, every
transmission line, everything.
00:31:15.950 --> 00:31:21.816
So I think with that,
Commissioner Cobos,
00:31:21.816 --> 00:31:24.920
I want to understand
more about the economics
00:31:24.920 --> 00:31:27.340
of what the strategic reserve is.
00:31:27.340 --> 00:31:30.700
I'm wary of pulling
megawatts out of the system.
00:31:30.700 --> 00:31:34.510
And I understand,
mostly from Sam at Brattle,
00:31:34.510 --> 00:31:36.300
I understand that
00:31:36.300 --> 00:31:38.900
one way to show the market that you need
00:31:38.900 --> 00:31:42.360
more dispatchable
resources to pull a bunch out.
00:31:42.360 --> 00:31:45.510
So it's not being priced
in the day to day market.
00:31:45.510 --> 00:31:47.720
It's there for standby,
and it's the standby,
00:31:47.720 --> 00:31:49.053
it's there for reserve.
00:31:50.190 --> 00:31:51.810
Seems foreign to me.
00:31:51.810 --> 00:31:53.030
It seems like people,
00:31:53.030 --> 00:31:54.650
when they want to invest in the market,
00:31:54.650 --> 00:31:55.760
they want to be in the market,
00:31:55.760 --> 00:31:58.403
not just get paid for standing by.
00:32:02.940 --> 00:32:06.293
So with that, I think that kind of,
00:32:07.478 --> 00:32:09.260
let me just say one other thing.
00:32:09.260 --> 00:32:12.700
As we've discussed about the
load serving entity obligation,
00:32:12.700 --> 00:32:13.643
I have,
00:32:16.172 --> 00:32:18.400
kind of the way I view it
00:32:18.400 --> 00:32:22.118
or the way I've characterized
it for myself is that
00:32:22.118 --> 00:32:25.313
when the legislature created
the retail market in Texas,
00:32:26.290 --> 00:32:29.910
they wanted retail electric providers to
00:32:31.810 --> 00:32:34.090
be new entrants into this market,
00:32:34.090 --> 00:32:37.070
we wanted them to
provide creative services,
00:32:37.070 --> 00:32:40.760
bundling, different
pricing, all of this,
00:32:40.760 --> 00:32:42.340
and they were not required to bring
00:32:42.340 --> 00:32:43.590
generation to the market.
00:32:44.870 --> 00:32:46.050
They could go to the market.
00:32:46.050 --> 00:32:48.993
We separated and
unbundled those for a reason.
00:32:50.000 --> 00:32:53.290
The load serving entity
obligation is kind of, to me,
00:32:53.290 --> 00:32:56.160
like you've got to take a loaf
of bread to the grocery store
00:32:56.160 --> 00:32:57.823
in order to buy a loaf of bread.
00:32:59.360 --> 00:33:02.990
And sometimes it has a hard--
00:33:02.990 --> 00:33:04.603
Including deck obligations.
00:33:05.910 --> 00:33:08.580
It's a version of a load serving entity.
00:33:08.580 --> 00:33:09.810
Well--
A load serving entity.
00:33:09.810 --> 00:33:11.130
I don't necessarily think that,
00:33:11.130 --> 00:33:13.650
but I think as, if we're
trying to show that
00:33:14.980 --> 00:33:16.990
100% of the load obligation
00:33:16.990 --> 00:33:19.840
plus a reserve margin is taken care of,
00:33:19.840 --> 00:33:22.380
then that's when you have
to show that you have it
00:33:22.380 --> 00:33:24.300
in order to be able to
buy it from the market.
00:33:24.300 --> 00:33:26.550
Again, that's just the
way I characterize it.
00:33:27.400 --> 00:33:29.030
I want to look through this.
00:33:29.030 --> 00:33:34.030
I want to do this underlying
base analysis of this
00:33:34.660 --> 00:33:36.550
that I don't think we've done yet and
00:33:37.950 --> 00:33:39.937
I'm eager to get on with that
00:33:39.937 --> 00:33:43.375
and to narrow the thought
and to get on with it.
00:33:43.375 --> 00:33:44.375
Thank you.
00:33:45.483 --> 00:33:46.316
Yes, sir.
00:33:47.250 --> 00:33:48.363
Thanks, Commissioner.
00:33:49.760 --> 00:33:52.280
I think it's fair to
say the last few days,
00:33:52.280 --> 00:33:53.520
and certainly the last few months,
00:33:53.520 --> 00:33:55.320
have been challenging for all of us.
00:33:56.440 --> 00:33:58.590
Think you captured
that well, Mr. Chairman.
00:33:59.810 --> 00:34:06.120
As we had started out, I
feel now we have ended up
00:34:06.120 --> 00:34:09.530
at a similar place asking
similar questions about
00:34:10.750 --> 00:34:15.570
what the impacts of any reform
may have on the market and
00:34:16.890 --> 00:34:19.030
what do reforms under consideration
00:34:19.030 --> 00:34:20.780
do to the wholesale price of power.
00:34:22.820 --> 00:34:24.820
Does it have the result of eliminating
00:34:24.820 --> 00:34:26.373
the competitive retail market?
00:34:27.690 --> 00:34:30.920
Does it create an unregulated
and unaccountable system
00:34:30.920 --> 00:34:33.350
of monopolies
controlling one of our most
00:34:33.350 --> 00:34:34.973
important essential services?
00:34:36.100 --> 00:34:38.340
Does it guarantee that we build enough
00:34:38.340 --> 00:34:42.000
dispatchable generation to
meet demand in a timely way
00:34:42.000 --> 00:34:43.740
that actually meets the demand?
00:34:43.740 --> 00:34:45.240
Because that's been one of the
00:34:46.970 --> 00:34:48.520
symptoms of our system,
00:34:48.520 --> 00:34:50.990
that we're always behind the eight ball
00:34:50.990 --> 00:34:53.800
and trying to catch up
to increasing load growth
00:34:53.800 --> 00:34:55.940
'cause we're growing so fast.
00:34:55.940 --> 00:34:58.116
And then the pressures of intermittence
00:34:58.116 --> 00:35:01.453
on the system at that time.
00:35:02.350 --> 00:35:04.610
We have looked to other models
00:35:04.610 --> 00:35:09.610
across the country and
across the globe for examples.
00:35:09.836 --> 00:35:14.010
And anecdotally, again,
you can get this through
00:35:14.010 --> 00:35:16.070
the Energy Information Administration
00:35:16.070 --> 00:35:18.870
or drill down onto those
systems themselves.
00:35:18.870 --> 00:35:20.660
They have higher costs.
00:35:20.660 --> 00:35:24.280
And I think it's relatively easy to say
00:35:24.280 --> 00:35:27.060
that one of the driving
forces of moving business
00:35:27.060 --> 00:35:31.060
and peoples to Texas
has been low energy costs.
00:35:31.060 --> 00:35:34.230
So that has been a virtue
of the ERCOT system
00:35:34.230 --> 00:35:35.700
that has been absolutely essential
00:35:35.700 --> 00:35:38.380
to the economic growth
and success of Texas
00:35:38.380 --> 00:35:39.743
over the last two decades.
00:35:41.550 --> 00:35:43.820
The only conclusion that I can draw
00:35:43.820 --> 00:35:46.110
from this thought exercise,
00:35:46.110 --> 00:35:48.080
and oh, by the way, in those systems,
00:35:48.080 --> 00:35:49.630
this is what I struggle with,
00:35:49.630 --> 00:35:52.410
in those systems, we
see declining reserves.
00:35:52.410 --> 00:35:54.160
At least I watch SPP every day
00:35:54.160 --> 00:35:56.430
and they've had
declining reserve margins,
00:35:56.430 --> 00:35:57.550
which has been disconcerting.
00:35:57.550 --> 00:36:01.190
I mean, they have a lot
of these backstop features
00:36:01.190 --> 00:36:02.543
that we're discussing.
00:36:03.930 --> 00:36:05.130
Declining reserve margins
00:36:05.130 --> 00:36:09.510
and in some of the systems
cases, less reliability.
00:36:09.510 --> 00:36:11.650
Now, that could come from other things.
00:36:11.650 --> 00:36:13.943
If you put everything side by side.
00:36:15.350 --> 00:36:16.193
But you see it.
00:36:17.460 --> 00:36:19.170
So the only conclusion I can draw
00:36:19.170 --> 00:36:22.930
from this thought exercise
is that we need another way.
00:36:22.930 --> 00:36:24.650
I mean, we're producing and consuming
00:36:24.650 --> 00:36:26.330
10% of the power of this country,
00:36:26.330 --> 00:36:29.323
and we're the preeminent
economic power on this planet.
00:36:30.220 --> 00:36:31.410
Just in Texas.
00:36:31.410 --> 00:36:35.100
So we have always been unique.
00:36:35.100 --> 00:36:36.930
We have always held
ourselves out to be unique.
00:36:36.930 --> 00:36:38.590
So we need a Texas way.
00:36:38.590 --> 00:36:40.710
And this has been the
hallmark of our state
00:36:40.710 --> 00:36:41.710
since the beginning.
00:36:42.880 --> 00:36:45.951
And I propose the dispatchable portfolio
00:36:45.951 --> 00:36:50.951
standard deck system
as a first in the nation,
00:36:51.887 --> 00:36:54.440
first of its kind proposal,
00:36:54.440 --> 00:36:56.730
harnessed from the aeolian concept
00:36:56.730 --> 00:37:00.160
because it's a targeted approach
00:37:00.160 --> 00:37:02.113
rather than a broad approach.
00:37:04.680 --> 00:37:09.100
But it's targeted consistent with
00:37:09.100 --> 00:37:11.320
the track that we're already pursuing
00:37:11.320 --> 00:37:13.500
in light of the menu and spectrum
00:37:13.500 --> 00:37:15.400
of the ancillary service products
00:37:15.400 --> 00:37:17.610
that we're already pursuing.
00:37:17.610 --> 00:37:20.740
Because again, those are all
different performance values
00:37:20.740 --> 00:37:22.730
that we are seeking
on an individual basis.
00:37:22.730 --> 00:37:24.220
So bundled together,
00:37:24.220 --> 00:37:26.723
it is a broad framework for reliability.
00:37:29.810 --> 00:37:31.600
As a targeted approach,
00:37:31.600 --> 00:37:34.300
given the concerns raised
by Brattle and yourself,
00:37:34.300 --> 00:37:35.560
which are valid,
00:37:35.560 --> 00:37:36.910
about the dan--
And others.
00:37:36.910 --> 00:37:38.980
And others, yeah, and others.
00:37:38.980 --> 00:37:40.170
All of that.
00:37:40.170 --> 00:37:41.920
About the danger of distorting
00:37:41.920 --> 00:37:43.420
the substitute good principle.
00:37:45.940 --> 00:37:48.540
I would urge that we should not consider
00:37:48.540 --> 00:37:50.483
this policy position in isolation.
00:37:51.820 --> 00:37:56.820
Given what we know
about Brattle's second option
00:37:56.900 --> 00:38:00.860
or Commissioner Cobos'
backstop reliability service.
00:38:00.860 --> 00:38:01.693
Sure, yes.
00:38:01.693 --> 00:38:03.440
Reliability service backstop.
Okay.
00:38:04.664 --> 00:38:08.649
As outlined, this could
be harnessed to capture
00:38:08.649 --> 00:38:10.950
the older, less efficient units,
00:38:10.950 --> 00:38:12.030
or at least a portion of them,
00:38:12.030 --> 00:38:14.560
also new units, depending on
whatever the performance value
00:38:14.560 --> 00:38:15.890
that we're seeking there,
00:38:15.890 --> 00:38:19.140
so that we mitigate the dangers again
00:38:19.140 --> 00:38:22.293
of the substitute good concerns.
00:38:23.150 --> 00:38:26.090
Thus ensuring we do
not lose our existing fleet,
00:38:26.090 --> 00:38:28.620
but allow these units
to be retired over time
00:38:28.620 --> 00:38:30.898
as new generation
and economic conditions
00:38:30.898 --> 00:38:32.373
continue to dictate.
00:38:33.770 --> 00:38:34.780
So with that, Mr. Chairman,
00:38:34.780 --> 00:38:36.760
I was disappointed
that the deck proposal
00:38:36.760 --> 00:38:38.260
did not make the outline.
00:38:38.260 --> 00:38:41.860
I am disappointed because I believe,
00:38:41.860 --> 00:38:44.970
man, an hour and a half
for an idea, first of its kind,
00:38:44.970 --> 00:38:46.383
last workshop.
00:38:47.320 --> 00:38:50.663
If we could be allowed
to continue this exercise.
00:38:51.813 --> 00:38:52.670
And as you can tell,
00:38:52.670 --> 00:38:57.090
and as we've said throughout this point,
00:38:57.090 --> 00:39:01.970
I have moved toward,
we need a load obligation.
00:39:01.970 --> 00:39:03.740
Gen versus load.
00:39:03.740 --> 00:39:05.040
I believe the statute
00:39:07.201 --> 00:39:10.923
has more allowance
for load requirements.
00:39:12.330 --> 00:39:15.400
And thus it affords
us better optionality
00:39:15.400 --> 00:39:18.123
in pursuing resource adequacy options.
00:39:19.270 --> 00:39:24.270
So I know your intention is
to take something off the table.
00:39:25.170 --> 00:39:26.740
I do have core principles.
00:39:26.740 --> 00:39:28.330
We have all discussed them
00:39:28.330 --> 00:39:31.040
and I can articulate them here.
00:39:31.040 --> 00:39:34.320
We have a difference of opinion in how
00:39:34.320 --> 00:39:39.320
revenues designed to incent
generation should be used,
00:39:39.430 --> 00:39:43.250
spread across a broad
existing generation,
00:39:43.250 --> 00:39:44.373
the generation fleet,
00:39:45.660 --> 00:39:48.850
or targeted for new or
00:39:48.850 --> 00:39:51.683
next generation technology,
best available technology.
00:39:53.770 --> 00:39:57.280
I do believe that if we're
allowed to pursue this,
00:39:57.280 --> 00:40:01.370
we can answer fundamental
concerns and questions
00:40:01.370 --> 00:40:05.650
raised by stakeholders
and market participants,
00:40:05.650 --> 00:40:09.930
to where Texas might
be able to blaze a path
00:40:09.930 --> 00:40:12.410
for the world to follow because everyone
00:40:12.410 --> 00:40:14.770
is having the same problems.
00:40:14.770 --> 00:40:16.530
Everyone has not cracked the code.
00:40:16.530 --> 00:40:18.773
No one has cracked the code on this.
00:40:20.110 --> 00:40:21.600
Sam's flying all over the world.
00:40:21.600 --> 00:40:23.260
So is everybody else
flying all over the world,
00:40:23.260 --> 00:40:24.970
giving advice on how we solve this
00:40:24.970 --> 00:40:26.220
and nobody's done it yet.
00:40:27.970 --> 00:40:28.803
For the future.
00:40:28.803 --> 00:40:30.630
Because the numbers are so large
00:40:30.630 --> 00:40:32.530
in terms of intermittent technologies
00:40:32.530 --> 00:40:34.210
penetrating all markets,
00:40:34.210 --> 00:40:36.073
no one has to deal with it at scale.
00:40:37.020 --> 00:40:40.220
So I would ask,
00:40:40.220 --> 00:40:44.390
I beg that a deck portion
similar to what you had,
00:40:44.390 --> 00:40:48.570
the LSE obligation, the
backstop reserve service,
00:40:48.570 --> 00:40:50.520
and potentially a deck proposal
00:40:50.520 --> 00:40:53.270
could be studied over
the next six months
00:40:53.270 --> 00:40:55.410
so that we could have, again,
00:40:55.410 --> 00:40:57.720
we've got consulting
groups coming in here,
00:40:57.720 --> 00:41:00.330
economists telling
us that this could work.
00:41:00.330 --> 00:41:03.363
And I don't want to kill
the baby in the crib on this.
00:41:05.960 --> 00:41:08.236
And I'll leave it at that, sir.
00:41:08.236 --> 00:41:10.280
And I'd like to
follow up because
00:41:11.280 --> 00:41:13.170
I think both Commissioner Glotfelty
00:41:13.170 --> 00:41:15.520
and Commissioner McAdams
made some good points.
00:41:17.350 --> 00:41:19.310
We've done a tremendous amount of work
00:41:19.310 --> 00:41:21.330
over the last several
months and Chairman,
00:41:21.330 --> 00:41:23.080
you've definitely highlighted that.
00:41:24.780 --> 00:41:26.193
All of these proposals,
00:41:27.180 --> 00:41:29.470
the LSE obligation introduced originally
00:41:29.470 --> 00:41:31.820
by NRG in late September,
00:41:31.820 --> 00:41:34.893
introduced in your memo
in sort of later October.
00:41:35.755 --> 00:41:38.840
I mean, even the deck
program that we've had
00:41:40.190 --> 00:41:42.110
on our plate for a few weeks,
00:41:42.110 --> 00:41:43.110
maybe a couple of weeks.
00:41:43.110 --> 00:41:44.203
Two.
Two weeks.
00:41:46.160 --> 00:41:48.833
We've gotten extensive
comments on the LSE obligation
00:41:48.833 --> 00:41:50.885
over the last five weeks.
00:41:50.885 --> 00:41:52.663
Since your memo.
00:41:54.590 --> 00:41:56.303
A lot of commentary there.
00:41:57.510 --> 00:42:00.320
I know I myself have
expressed deep concern with it
00:42:00.320 --> 00:42:01.800
from a variety of perspectives
00:42:01.800 --> 00:42:04.130
and I know that there
have been comments filed
00:42:04.130 --> 00:42:06.480
that attempt to address
those concerns as well.
00:42:08.790 --> 00:42:12.970
But I feel like, and even
with the deck program,
00:42:12.970 --> 00:42:14.253
I feel like,
00:42:15.490 --> 00:42:18.050
I strongly believe that I need more time
00:42:18.050 --> 00:42:20.290
to evaluate these options.
00:42:20.290 --> 00:42:22.890
We've had them on the table for weeks.
00:42:22.890 --> 00:42:27.890
And what we're doing here
has prolific impacts on our state,
00:42:29.470 --> 00:42:32.500
our market, our consumers, the public.
00:42:32.500 --> 00:42:35.350
And I would just like
more time to digest
00:42:36.810 --> 00:42:39.520
these proposals and how
they can work together,
00:42:39.520 --> 00:42:43.053
whether it's my bridge
and both proposals or,
00:42:44.870 --> 00:42:48.810
I proffered the bridge to
give us more time to evaluate.
00:42:48.810 --> 00:42:51.770
But I also want to make
sure that it's studied too,
00:42:51.770 --> 00:42:53.560
because as I said earlier,
00:42:53.560 --> 00:42:55.410
I want to make sure, one,
ERCOT can get it done
00:42:55.410 --> 00:42:57.440
in a time efficient manner.
00:42:57.440 --> 00:42:58.950
Secondly, I want to be able to make sure
00:42:58.950 --> 00:43:00.230
it's right sized so we're not,
00:43:00.230 --> 00:43:03.090
and it's gonna work in a
way that does not create
00:43:03.090 --> 00:43:05.180
any near term reliability issues,
00:43:05.180 --> 00:43:09.670
and that's not impacting
pricing in a negative way.
00:43:09.670 --> 00:43:11.530
So even with my proposal,
00:43:11.530 --> 00:43:14.520
I know I've laid a lot of
parameters there that I think
00:43:14.520 --> 00:43:18.720
would be palatable for a
broad stake of consumers.
00:43:18.720 --> 00:43:21.500
It's by no means the last stop.
00:43:21.500 --> 00:43:24.793
I would like it to get
more comments on it
00:43:24.793 --> 00:43:27.200
because we actually haven't
gotten formal comment
00:43:27.200 --> 00:43:28.400
on the deck proposal.
00:43:28.400 --> 00:43:31.280
I know you've gotten
maybe phone calls and
00:43:31.280 --> 00:43:32.885
commentary.
Got a lot of comments.
00:43:32.885 --> 00:43:34.180
Not formal.
00:43:34.180 --> 00:43:35.560
On the formal, yes sir.
00:43:35.560 --> 00:43:36.880
But on the deck proposal,
00:43:36.880 --> 00:43:39.920
I think it's all been sort
of just nothing on record.
00:43:39.920 --> 00:43:40.753
Nothing on record.
00:43:40.753 --> 00:43:43.904
I know there's concerns and
let's get them on the record
00:43:43.904 --> 00:43:47.263
and do a deeper dive into,
00:43:50.460 --> 00:43:52.331
are there aspects of the deck program
00:43:52.331 --> 00:43:57.331
or the deck, DPS deck
program that can be
00:43:57.430 --> 00:44:00.240
modified to make it more palatable?
00:44:00.240 --> 00:44:05.240
Are there aspects that can be
used in a broader obligation?
00:44:05.600 --> 00:44:07.160
We just need to think about this more
00:44:07.160 --> 00:44:08.270
of how it could all work together.
00:44:08.270 --> 00:44:11.713
I know that last night I read about how,
00:44:12.640 --> 00:44:14.790
some comments that were sent over,
00:44:14.790 --> 00:44:18.940
how my backstop reliability
service can work with decks.
00:44:18.940 --> 00:44:23.161
I know, Chairman Lake,
we've talked about that too.
00:44:23.161 --> 00:44:24.570
And I know you have your concerns.
00:44:24.570 --> 00:44:29.570
But I would like to see how
we can maybe make it all work.
00:44:30.100 --> 00:44:32.477
And together.
00:44:32.477 --> 00:44:35.660
And I feel like we need some more time
00:44:35.660 --> 00:44:37.540
to get more input
00:44:38.930 --> 00:44:40.973
from not only the
stakeholders, but from some,
00:44:41.940 --> 00:44:43.750
whether it's Brattle, I know Brattle,
00:44:43.750 --> 00:44:46.473
Sam expressed some deep
concerns with the deck program.
00:44:48.813 --> 00:44:53.100
Nobody's had an opportunity
to refute those statements,
00:44:53.100 --> 00:44:55.113
publicly in the record.
00:44:56.200 --> 00:44:58.903
But also to get more
information from Sam and Brattle.
00:45:00.410 --> 00:45:03.940
My concerns, and it
could be broader than
00:45:03.940 --> 00:45:05.920
just the broader LSE obligation,
00:45:05.920 --> 00:45:07.700
Chairman Lake, that you proposed,
00:45:07.700 --> 00:45:10.060
but I want to make sure
that whatever we are doing
00:45:10.060 --> 00:45:14.220
to significantly modify our market
00:45:14.220 --> 00:45:17.100
is actually going to drive
new dispatchable generation
00:45:17.100 --> 00:45:18.700
and maintain our existing fleet.
00:45:19.970 --> 00:45:22.683
We need every megawatt,
whether it's existing or new,
00:45:23.560 --> 00:45:26.400
and I don't want any
unintended consequences
00:45:26.400 --> 00:45:30.030
and I don't want to
spend the next five years
00:45:30.030 --> 00:45:32.804
building something that
didn't get us anywhere
00:45:32.804 --> 00:45:34.920
that we're not at today.
00:45:34.920 --> 00:45:36.650
And I want to make sure we're actually
00:45:36.650 --> 00:45:39.761
getting something meaningful
for whatever we decide to do.
00:45:39.761 --> 00:45:42.611
And I think that's gonna
take a little bit more analysis,
00:45:43.695 --> 00:45:45.320
some more robust feedback,
00:45:45.320 --> 00:45:47.830
and really continuing
to roll up our sleeves and
00:45:49.220 --> 00:45:54.220
focus more on how all these
concepts can work together.
00:45:54.310 --> 00:45:55.706
And we're just gonna need
00:45:55.706 --> 00:45:56.550
a little bit more time because if I,
00:45:56.550 --> 00:45:58.800
right now, I mean, and you know this,
00:45:58.800 --> 00:46:01.336
I have concerns about
the LSE obligations but--
00:46:01.336 --> 00:46:02.770
Yeah, I know.
00:46:02.770 --> 00:46:04.520
You got concerns about everything.
00:46:04.520 --> 00:46:06.500
Well, I mean--
And okay.
00:46:06.500 --> 00:46:07.640
Thank you.
Well, that's the matter
00:46:07.640 --> 00:46:08.473
of due diligence.
00:46:08.473 --> 00:46:09.840
I mean, that is being diligent.
00:46:09.840 --> 00:46:13.000
My concern though is
00:46:13.000 --> 00:46:15.260
when in one breath you say
00:46:15.260 --> 00:46:18.830
we've got to do the
backstop as a bridge now
00:46:18.830 --> 00:46:21.650
because we need solutions now,
00:46:21.650 --> 00:46:24.300
then the next breath you say,
we need more time to study.
00:46:24.300 --> 00:46:26.120
We need more time to study.
00:46:26.120 --> 00:46:28.457
Well, I'm not just
gonna sit here and say,
00:46:28.457 --> 00:46:31.543
ERCOT, go procure 3000
megawatts to fill a hole.
00:46:31.543 --> 00:46:33.620
The way I deliberate,
00:46:33.620 --> 00:46:35.150
the way I make policy decisions,
00:46:35.150 --> 00:46:37.580
is by making sure that I
have holistic information
00:46:37.580 --> 00:46:39.870
and there's not any
unintended consequences.
00:46:39.870 --> 00:46:42.489
And that is what I want to
do, even with my proposal.
00:46:42.489 --> 00:46:44.280
Period.
00:46:44.280 --> 00:46:45.330
Thank you for that.
00:46:47.770 --> 00:46:48.670
Couple of thoughts
00:46:50.240 --> 00:46:52.090
in response to all of those comments.
00:46:54.850 --> 00:46:57.760
We know our actions impact the market.
00:46:57.760 --> 00:46:59.110
That's what we're here for.
00:47:00.010 --> 00:47:04.093
If actions weren't needed,
none of us would be here.
00:47:05.390 --> 00:47:08.780
If things were working smoothly,
none of us would be here.
00:47:08.780 --> 00:47:10.783
We wouldn't have SB3, wouldn't have SB2.
00:47:12.830 --> 00:47:15.653
Lack of action also has consequences.
00:47:16.800 --> 00:47:18.053
That is severe.
00:47:19.900 --> 00:47:24.873
And so while analysis and
due diligence is important,
00:47:26.550 --> 00:47:28.513
action is also important.
00:47:30.570 --> 00:47:32.057
Endless studies will not
help the people of Texas
00:47:32.057 --> 00:47:34.570
and it will not solve either
one of these problems.
00:47:34.570 --> 00:47:36.060
The blue sky problem or
00:47:37.500 --> 00:47:39.913
the extreme weather event problem.
00:47:42.840 --> 00:47:47.840
The low cost of power
is important to Texas.
00:47:51.040 --> 00:47:53.170
And it is a feature of our state.
00:47:53.170 --> 00:47:56.960
But it is far from the only
reason people move to Texas.
00:47:56.960 --> 00:48:00.690
And I don't want good
ideas to be sacrificed
00:48:00.690 --> 00:48:04.210
at the altar of no
prices can ever go up.
00:48:04.210 --> 00:48:05.520
We've got a great workforce.
00:48:05.520 --> 00:48:06.840
We've got low cost of living.
00:48:06.840 --> 00:48:08.620
We've got tremendous natural resources.
00:48:08.620 --> 00:48:09.600
We have a very
00:48:12.160 --> 00:48:14.030
efficient and light touched business,
00:48:14.030 --> 00:48:15.270
regulatory environment.
00:48:15.270 --> 00:48:17.160
There are a lot of reasons
people come to Texas.
00:48:17.160 --> 00:48:18.223
More than just ERCOT.
00:48:20.700 --> 00:48:24.000
As both of you said in
your opening comments,
00:48:24.000 --> 00:48:27.290
the deck concept is a load obligation.
00:48:27.290 --> 00:48:28.933
It is an LSE obligation.
00:48:30.673 --> 00:48:32.060
Is there any disagreement on that?
00:48:32.060 --> 00:48:33.530
No, sir.
I agree.
00:48:35.270 --> 00:48:38.280
And do you have any
disagreement on that?
00:48:38.280 --> 00:48:39.113
No.
00:48:42.230 --> 00:48:43.203
In a point,
00:48:44.120 --> 00:48:45.860
at a point like this,
00:48:45.860 --> 00:48:49.150
where we know we don't
have enough of a resource,
00:48:49.150 --> 00:48:50.380
at the most basic level,
00:48:50.380 --> 00:48:52.230
it's a question of supply and demand.
00:48:53.120 --> 00:48:54.930
If you don't have enough supply
00:48:54.930 --> 00:48:57.673
for the demand that you have,
00:48:58.990 --> 00:49:02.710
prices go up until the
market finds equilibrium.
00:49:02.710 --> 00:49:05.230
Amount of supply matches the demand.
00:49:05.230 --> 00:49:08.620
Usually overshoots it, which
drives prices back down.
00:49:08.620 --> 00:49:10.410
That's the way markets work.
00:49:10.410 --> 00:49:11.243
As you said.
00:49:12.990 --> 00:49:14.560
That's what's supposed to happen.
00:49:14.560 --> 00:49:15.860
Whether it's apples or widgets
00:49:15.860 --> 00:49:17.540
or barrels of oil or bushels of cotton.
00:49:17.540 --> 00:49:19.610
If you don't have enough of them,
00:49:19.610 --> 00:49:24.220
the higher prices are what incentivize
00:49:24.220 --> 00:49:25.860
getting more supply.
00:49:25.860 --> 00:49:28.170
On the other hand,
withdrawing that supply
00:49:29.370 --> 00:49:31.960
has the same impact from the other way.
00:49:31.960 --> 00:49:33.210
You're just moving supply and demand.
00:49:33.210 --> 00:49:34.960
Which way are you going?
00:49:34.960 --> 00:49:38.250
Some version of an LSE obligation
00:49:39.230 --> 00:49:43.693
increases or requires that
demand to be put there.
00:49:45.204 --> 00:49:48.014
And the deck obligation
is a very narrow demand.
00:49:48.014 --> 00:49:51.090
In a broader LSE obligation,
00:49:51.090 --> 00:49:53.203
it's a much higher level of demand.
00:49:54.616 --> 00:49:57.250
In the NRG original proposal,
00:49:57.250 --> 00:50:00.743
it was 120% of total need.
00:50:02.148 --> 00:50:04.690
And my proposal was 100% of peak load,
00:50:04.690 --> 00:50:06.070
which is, I think, probably too much,
00:50:06.070 --> 00:50:08.513
which is why I'm bringing it down.
00:50:08.513 --> 00:50:11.173
I want to focus more
on the net peak load.
00:50:12.480 --> 00:50:13.440
But at the end of the day,
00:50:13.440 --> 00:50:16.280
it's a matter of supply and demand and
00:50:17.150 --> 00:50:21.340
I don't want to sacrifice reliability
00:50:22.550 --> 00:50:25.403
for fear of temporarily raising prices.
00:50:27.290 --> 00:50:30.570
Because that'll dig
us deeper in this hole
00:50:30.570 --> 00:50:32.220
and not solve the problem at all.
00:50:35.230 --> 00:50:40.230
And I think we can all agree
that in any LSE obligation,
00:50:41.300 --> 00:50:44.820
there are market power control problems.
00:50:44.820 --> 00:50:45.653
Agreed?
00:50:47.500 --> 00:50:48.333
There can be.
00:50:48.333 --> 00:50:49.780
There's a potential for it, yeah?
00:50:49.780 --> 00:50:52.253
Yeah on, well,
I'll let you finish, sir.
00:50:53.090 --> 00:50:55.880
Including in a deck construct.
00:50:55.880 --> 00:50:59.870
There's a possibility for
market power problems
00:50:59.870 --> 00:51:03.690
if the same people have
the supply of power that
00:51:03.690 --> 00:51:05.210
they can withhold from people.
00:51:05.210 --> 00:51:08.620
It's a smaller percentage
under the existing framework,
00:51:08.620 --> 00:51:11.003
but it's the same challenge.
00:51:12.057 --> 00:51:13.980
Withholding's a possibility,
00:51:13.980 --> 00:51:15.920
self-dealing's a possibility.
00:51:15.920 --> 00:51:18.745
If the same people that
are creating the decks
00:51:18.745 --> 00:51:21.293
are the ones that need to buy it.
00:51:22.944 --> 00:51:26.440
It's the same principle of a problem.
00:51:26.440 --> 00:51:27.273
Yes?
00:51:27.273 --> 00:51:28.106
So.
00:51:29.200 --> 00:51:31.500
I'm not saying it can't be
mitigated in any of those,
00:51:31.500 --> 00:51:34.874
but it's just, it can
be mitigated in any
00:51:34.874 --> 00:51:37.489
LSE obligation.
Framework, yes.
00:51:37.489 --> 00:51:39.387
Yeah, just to remember, sir.
00:51:39.387 --> 00:51:45.640
So in a new concept,
nobody's there yet.
00:51:45.640 --> 00:51:47.120
Nobody's got the market power.
00:51:47.120 --> 00:51:48.460
So it's starting from scratch.
00:51:48.460 --> 00:51:51.500
And again, if you're only
building to meet growth,
00:51:51.500 --> 00:51:54.700
and we're talking about five
gigs or something like that,
00:51:54.700 --> 00:51:58.150
that's a small, that is
less than Vistra's 20% cap
00:51:58.150 --> 00:52:01.860
right now in terms of
total manipulative power
00:52:01.860 --> 00:52:02.930
in the market.
00:52:02.930 --> 00:52:06.400
So this is well within
the spectrum of our IMM
00:52:07.410 --> 00:52:09.840
to catch and mitigate.
00:52:09.840 --> 00:52:12.530
But I agree, all your points.
Sure, just like NRG's got
00:52:12.530 --> 00:52:14.190
twice as much load as they do gen,
00:52:14.190 --> 00:52:16.180
so they're gonna have to
buy it from somebody else.
00:52:16.180 --> 00:52:17.350
So there's just as much,
00:52:17.350 --> 00:52:20.130
they're just as vulnerable
to market manipulation
00:52:20.130 --> 00:52:22.510
as they would be
theoretically capable of it.
00:52:22.510 --> 00:52:24.702
Yes, sir, if they could
build a new power plant,
00:52:24.702 --> 00:52:26.306
that'd be great and then--
00:52:26.306 --> 00:52:27.350
I mean, they're
below their 20% cap.
00:52:27.350 --> 00:52:28.700
I know.
00:52:28.700 --> 00:52:29.696
They could build a new--
So they could build
00:52:29.696 --> 00:52:30.529
a new power plant
under the deck program,
00:52:30.529 --> 00:52:33.970
which is in the same
opportunity for self-dealing.
00:52:33.970 --> 00:52:36.320
So I want to make sure
we're not pretending
00:52:36.320 --> 00:52:39.896
one version of an LSE obligation
00:52:39.896 --> 00:52:43.870
has market manipulation
concerns but another one doesn't.
00:52:43.870 --> 00:52:45.500
Different scale, is that--
00:52:45.500 --> 00:52:46.826
That's fair, sir.
Fair?
00:52:46.826 --> 00:52:48.747
Fair?
Yeah, oh yeah.
00:52:48.747 --> 00:52:50.171
Fair?
00:52:50.171 --> 00:52:51.223
Sure.
00:52:55.530 --> 00:52:57.530
As I said at the beginning,
00:52:57.530 --> 00:53:00.540
there are a lot of elements
of the deck proposal
00:53:00.540 --> 00:53:03.713
I think are immensely valuable.
00:53:04.590 --> 00:53:07.813
And I know we've
covered that ad nauseum.
00:53:10.200 --> 00:53:13.280
The reason I didn't include those,
00:53:13.280 --> 00:53:14.890
I still have them here,
00:53:14.890 --> 00:53:16.710
I would have liked to have them here,
00:53:16.710 --> 00:53:19.430
is, and this is the question to you.
00:53:19.430 --> 00:53:23.080
Are you willing to consider
changes to the deck proposal
00:53:23.080 --> 00:53:24.720
as it currently exists?
00:53:24.720 --> 00:53:26.423
Or is it a take it or leave it,
00:53:27.910 --> 00:53:29.910
we can only do this version of the deck?
00:53:30.780 --> 00:53:31.613
Oh no.
00:53:31.613 --> 00:53:33.800
I mean, I've framed it as
00:53:33.800 --> 00:53:36.520
I need feedback from market participants
00:53:36.520 --> 00:53:39.800
on how this thing can
function moving forward.
00:53:39.800 --> 00:53:41.710
So open.
00:53:41.710 --> 00:53:43.872
I mean, whack away at it.
00:53:43.872 --> 00:53:44.873
Where are we gonna--
I don't want to
00:53:44.873 --> 00:53:46.707
whack away at it.
00:53:46.707 --> 00:53:49.640
I want to, because the
last I heard from you,
00:53:49.640 --> 00:53:52.390
it was take it or leave it as it exists.
00:53:52.390 --> 00:53:55.130
And it's good to hear
that that's not the case.
00:53:55.130 --> 00:53:57.900
It was over the nuance
of new versus existing, sir.
00:53:57.900 --> 00:53:59.070
And I would just argue,
00:53:59.070 --> 00:54:01.047
the more existing you get out there,
00:54:01.047 --> 00:54:04.610
the less potency and effect
you have for your decks.
00:54:04.610 --> 00:54:08.710
And again, the timely
installation of new generation.
00:54:08.710 --> 00:54:10.360
That's the whole reason.
Sure.
00:54:11.347 --> 00:54:14.563
And I'm perfectly, I mean,
00:54:14.563 --> 00:54:16.740
there's a sizing concern
00:54:18.120 --> 00:54:20.633
that I have with just
5,000 megawatts here,
00:54:20.633 --> 00:54:22.453
5,000 megawatts there.
00:54:23.400 --> 00:54:26.550
Doesn't solve a 67,000 megawatt problem.
00:54:26.550 --> 00:54:30.360
You still got 40 or 50,000
megawatts out there that
00:54:30.360 --> 00:54:32.350
can be stripped down and sold for parts
00:54:32.350 --> 00:54:34.120
or moved to South America or Africa
00:54:34.120 --> 00:54:36.160
where they don't have
emissions concerns.
00:54:36.160 --> 00:54:37.210
Happens all the time.
00:54:38.970 --> 00:54:40.310
And so that's a concern.
00:54:40.310 --> 00:54:42.010
We don't have to solve that today.
00:54:43.010 --> 00:54:44.430
I know we've had the conversation.
00:54:44.430 --> 00:54:46.030
Good, 'cause I don't
have the answer today.
00:54:46.030 --> 00:54:47.017
Trust me, so.
00:54:48.500 --> 00:54:51.407
But the key point is,
00:54:51.407 --> 00:54:52.957
and I think we've talked about,
00:54:54.950 --> 00:54:57.230
the decks are probably too small.
00:54:57.230 --> 00:54:58.810
E3's proposal's way too big.
00:54:58.810 --> 00:55:00.903
My proposal was too big.
00:55:01.780 --> 00:55:03.690
So I don't know what
the right answer is,
00:55:03.690 --> 00:55:06.330
but I think it's
somewhere in the middle.
00:55:06.330 --> 00:55:07.720
And so that's a question,
00:55:07.720 --> 00:55:09.390
another question for you,
00:55:09.390 --> 00:55:12.980
is in utilizing the features
of a deck program,
00:55:12.980 --> 00:55:17.980
is sizing and open to adjustment?
00:55:20.310 --> 00:55:21.890
Yes, sir.
00:55:21.890 --> 00:55:24.330
And I think that drives
at a central point.
00:55:24.330 --> 00:55:25.933
We develop a target.
00:55:26.910 --> 00:55:30.550
What we've got to
bring on to this system
00:55:30.550 --> 00:55:32.240
to meet load growth
00:55:32.240 --> 00:55:35.068
and actually develop a process for that.
00:55:35.068 --> 00:55:37.510
And I think that is incumbent.
That's one of the virtues,
00:55:37.510 --> 00:55:39.930
one of the attributes of this proposal,
00:55:39.930 --> 00:55:40.770
is that we do that.
00:55:40.770 --> 00:55:42.160
It's in both.
00:55:42.160 --> 00:55:45.883
So yeah, and to answer
your question sir, I'm open.
00:55:47.420 --> 00:55:48.330
Good to hear.
00:55:48.330 --> 00:55:49.163
Thank you.
00:55:50.327 --> 00:55:51.353
At the highest level.
00:55:55.280 --> 00:55:59.060
You stated earlier that you
believe whatever solution,
00:55:59.060 --> 00:56:04.060
the reliability mechanism
we eventually settle on
00:56:04.610 --> 00:56:06.000
needs to come on the load side.
00:56:06.000 --> 00:56:07.620
Yes, sir.
00:56:07.620 --> 00:56:10.370
So it sounds like
you're willing to commit
00:56:10.370 --> 00:56:12.380
to developing a load side mechanism.
00:56:12.380 --> 00:56:14.330
Yes, sir.
Of some form or fashion.
00:56:16.050 --> 00:56:17.700
Is that fair?
That is correct.
00:56:18.870 --> 00:56:19.703
I'm the same.
00:56:21.840 --> 00:56:23.620
Yes, I mean,
00:56:23.620 --> 00:56:25.447
I just need more time to
evaluate what that would look like.
00:56:25.447 --> 00:56:28.300
I'm not saying
which one it is, but.
00:56:28.300 --> 00:56:32.010
So just as importantly
as we're saying that
00:56:32.010 --> 00:56:34.880
is we're taking curtailment or load
00:56:34.880 --> 00:56:37.430
or generation fleet firming
standard off the table.
00:56:38.330 --> 00:56:39.330
If we're all gonna commit
00:56:39.330 --> 00:56:42.319
to a load side reliability mechanism,
00:56:42.319 --> 00:56:46.810
means we're not gonna
focus on the gen side.
00:56:46.810 --> 00:56:47.700
Correct, sir.
00:56:47.700 --> 00:56:49.270
With the caveat, 'cause
I don't want hem you in
00:56:49.270 --> 00:56:50.800
and managing the grid moving forward.
00:56:50.800 --> 00:56:52.559
I mean, if there's so
much solar coming on
00:56:52.559 --> 00:56:56.500
that reliability becomes an
issue, curtailment is always.
00:56:56.500 --> 00:56:58.000
Sure, thank you.
But yes.
00:57:00.380 --> 00:57:01.760
Okay.
00:57:01.760 --> 00:57:06.200
So that's, I mean, I think
right there, that's a big,
00:57:06.200 --> 00:57:07.480
if we're all willing to commit to
00:57:07.480 --> 00:57:10.050
a load side reliability mechanism,
00:57:10.050 --> 00:57:11.363
that's a substantial step.
00:57:12.740 --> 00:57:14.106
Yeah?
00:57:14.106 --> 00:57:15.856
As long as it's
all encompassing.
00:57:16.970 --> 00:57:19.630
In terms of all of the
resources that are available
00:57:19.630 --> 00:57:20.920
to participate in.
Yep, I mean,
00:57:20.920 --> 00:57:23.870
these are the principles that
I want to start checking off.
00:57:26.748 --> 00:57:29.080
I'm willing to commit, in the meantime,
00:57:29.080 --> 00:57:31.573
to the fastest possible
version of a backstop.
00:57:33.420 --> 00:57:34.920
The closer we can get it to a,
00:57:35.940 --> 00:57:39.063
not a wreck, but a
black start framework.
00:57:41.310 --> 00:57:44.050
Not to address the entire
problem, but as a backstop,
00:57:44.050 --> 00:57:48.040
I'm willing to do that or
commit to developing that.
00:57:48.040 --> 00:57:51.521
Ask ERCOT to, all of these
are us asking ERCOT to develop
00:57:51.521 --> 00:57:54.249
a product or a series or an option,
00:57:54.249 --> 00:57:56.043
a menu of options.
00:57:57.540 --> 00:57:59.049
I'm willing to do that.
00:57:59.049 --> 00:58:00.550
Okay, and I'm
willing to commit,
00:58:00.550 --> 00:58:01.700
I know we will all look at it,
00:58:01.700 --> 00:58:03.900
but I'm willing to work
with ERCOT personally
00:58:03.900 --> 00:58:06.830
and Brattle and all the
stakeholders as well to make sure,
00:58:06.830 --> 00:58:09.360
I know I laid out some parameters,
00:58:09.360 --> 00:58:11.370
but to make sure
that I refine it in a way
00:58:11.370 --> 00:58:15.370
that provides meaningful
reliability while we
00:58:15.370 --> 00:58:18.154
get some kind of a
load obligation in place.
00:58:18.154 --> 00:58:22.290
And that maintains your
liability in the near term.
00:58:22.290 --> 00:58:26.160
So I'm fully committed to doing that.
00:58:26.160 --> 00:58:27.710
Thank you.
00:58:27.710 --> 00:58:29.320
Will, I mean, Will and Jimmy.
00:58:29.320 --> 00:58:30.250
Yes, sir.
Well, you've got some
00:58:30.250 --> 00:58:32.050
hesitations about, I know you expressed
00:58:32.050 --> 00:58:33.793
some concerns about developing,
00:58:34.690 --> 00:58:36.620
pulling supply out when
we need supply, which--
00:58:36.620 --> 00:58:38.080
It's just, I have two concerns.
00:58:38.080 --> 00:58:39.850
One of them is about pulling out supply,
00:58:39.850 --> 00:58:42.540
but I'm willing to look
at the numbers behind it.
00:58:42.540 --> 00:58:44.740
There is a component of supply
00:58:44.740 --> 00:58:46.710
that doesn't get
dispatched on a daily basis.
00:58:46.710 --> 00:58:47.650
I understand that.
00:58:47.650 --> 00:58:49.760
So I don't know what
the market impact is.
00:58:49.760 --> 00:58:51.430
If it doesn't have a market impact,
00:58:51.430 --> 00:58:54.340
I'd be willing to look
at it more, for sure.
00:58:54.340 --> 00:58:56.700
If it has a major market impact then
00:58:59.080 --> 00:59:00.220
I think there just has to be more
00:59:00.220 --> 00:59:02.130
analysis and discussion about it.
00:59:02.130 --> 00:59:04.643
The other thing is I'm getting,
00:59:06.830 --> 00:59:08.330
I feel like I'm getting whiplashed here
00:59:08.330 --> 00:59:10.420
with all of these new
products that we're creating
00:59:10.420 --> 00:59:11.743
and all of this new,
00:59:13.334 --> 00:59:16.340
ERCOT's doing obviously black start and
00:59:17.420 --> 00:59:18.620
some ancillary services.
00:59:18.620 --> 00:59:22.620
We're adding more, we've
got ERS, firm fuel, backstop,
00:59:22.620 --> 00:59:24.610
all, I mean, God forbid.
00:59:24.610 --> 00:59:26.460
I almost feel like we're
creating niche markets
00:59:26.460 --> 00:59:28.010
instead of one big market.
00:59:28.010 --> 00:59:29.900
I tell you, if anything
happens after this,
00:59:29.900 --> 00:59:31.050
I mean, it's a miracle.
00:59:31.050 --> 00:59:33.420
I mean, it's a sign from God that
00:59:34.610 --> 00:59:37.130
something's definitely
wrong with the whole system.
00:59:37.130 --> 00:59:38.130
I mean.
00:59:38.130 --> 00:59:40.890
So all I'm saying
is I hope in this,
00:59:40.890 --> 00:59:42.930
we're not cannibalizing our own system
00:59:42.930 --> 00:59:45.520
and we're doing good for markets,
00:59:45.520 --> 00:59:48.170
doing good for the products
that we need for markets,
00:59:48.170 --> 00:59:49.510
as opposed to not.
00:59:49.510 --> 00:59:50.470
Oh, agreed.
But I can't get
00:59:50.470 --> 00:59:51.303
the whole thing around,
00:59:51.303 --> 00:59:52.710
I can't wrap my head around
00:59:52.710 --> 00:59:55.160
all of these new products this quickly.
00:59:55.160 --> 00:59:56.617
Well, Commissioner Glotfelty,
00:59:56.617 --> 00:59:58.160
and I understand what you're saying,
00:59:58.160 --> 01:00:00.050
but for instance, the firm fuel product,
01:00:00.050 --> 01:00:03.780
I mean, that is our
effort to try to make sure
01:00:03.780 --> 01:00:05.170
we have enough fuel available.
01:00:05.170 --> 01:00:06.610
That was a significant
part of the megawatts
01:00:06.610 --> 01:00:08.050
we lost during the winter.
01:00:08.050 --> 01:00:10.440
Ultimately, that standalone
product could get
01:00:10.440 --> 01:00:11.920
rolled into a broader concept
01:00:12.940 --> 01:00:15.130
and that's the way we
have been discussing it.
01:00:15.130 --> 01:00:19.243
And so that's just
one piece of it there.
01:00:20.360 --> 01:00:21.890
The ancillary services,
01:00:21.890 --> 01:00:24.240
ECRS is something that's
been in the oven for awhile.
01:00:24.240 --> 01:00:26.280
I mean, that wasn't our decision.
01:00:26.280 --> 01:00:27.920
ERCOT decided to move forward with it
01:00:27.920 --> 01:00:30.240
and it will serve a very
good purpose in the future
01:00:30.240 --> 01:00:32.700
when we have to address
more ramping issues
01:00:32.700 --> 01:00:36.643
as more solar comes on the
system, hopefully with storage.
01:00:38.070 --> 01:00:43.070
But I think that every action
on our consensus item,
01:00:43.273 --> 01:00:44.780
and even the broader concepts
01:00:44.780 --> 01:00:46.227
that we're evaluating right now,
01:00:46.227 --> 01:00:48.860
are really intended to either address
01:00:48.860 --> 01:00:51.250
specific reliability issues
that we've experienced
01:00:51.250 --> 01:00:52.350
and may continue to have in the future
01:00:52.350 --> 01:00:54.212
if we don't take action,
01:00:54.212 --> 01:00:58.490
but also to remain
vigilant and diligent about
01:00:58.490 --> 01:01:02.850
continuing to review
long-term changes that
01:01:03.740 --> 01:01:05.920
we may need in the future.
01:01:05.920 --> 01:01:08.037
I think we are, I think
what you're saying is,
01:01:08.037 --> 01:01:10.760
and I tend to agree with
what you're saying, I think,
01:01:10.760 --> 01:01:12.700
and I'm not gonna put
words in your mouth but
01:01:12.700 --> 01:01:14.050
there's a lot of pancaking.
01:01:15.180 --> 01:01:17.080
Good word.
We're pancaking.
01:01:17.080 --> 01:01:19.630
And I think if we're able to
01:01:21.220 --> 01:01:26.220
work to get in place a
effective conservative backstop
01:01:27.090 --> 01:01:30.233
and continue to
evaluate this obligation,
01:01:31.760 --> 01:01:35.310
then we can maybe buy the
market some time to breathe
01:01:35.310 --> 01:01:37.660
and kind of adjust to everything
01:01:37.660 --> 01:01:38.493
we're putting in the market.
01:01:38.493 --> 01:01:40.950
And then we could take that
analysis into consideration
01:01:40.950 --> 01:01:43.853
as we're formulating
more long-term policy.
01:01:44.730 --> 01:01:47.230
That's what I'm thinking,
just generally speaking.
01:01:48.150 --> 01:01:49.773
Absolutely fair concerns.
01:01:51.905 --> 01:01:52.760
But if we're gonna get it wrong,
01:01:52.760 --> 01:01:56.093
I'd rather have too much
reliability rather than not enough.
01:01:57.740 --> 01:01:59.640
Can be very expensive.
01:01:59.640 --> 01:02:03.280
And that's why it's
important that we ensure all
01:02:04.530 --> 01:02:06.520
resources are treated equally
01:02:06.520 --> 01:02:08.210
and that the market mechanism
01:02:08.210 --> 01:02:11.023
as articulated in the deck
program is self-correcting.
01:02:11.950 --> 01:02:14.223
So if we do mess with too much supply,
01:02:16.704 --> 01:02:19.230
cure for high prices is high prices.
01:02:19.230 --> 01:02:20.813
Well, when you say we,
01:02:22.277 --> 01:02:24.170
I don't remember what you
exactly said just a second ago,
01:02:24.170 --> 01:02:28.023
but it made me think about
the assignment of costs.
01:02:29.500 --> 01:02:31.580
I've said numerous times that
01:02:32.660 --> 01:02:37.500
I am very opposed to assigning costs.
01:02:37.500 --> 01:02:41.310
We have done things
in this market for years
01:02:41.310 --> 01:02:44.560
where we do it for
the good of all Texans.
01:02:44.560 --> 01:02:45.920
If we're gonna sign transmission costs,
01:02:45.920 --> 01:02:49.230
we've got to go back and do
it for every single generator.
01:02:49.230 --> 01:02:51.860
We've got to, if we're
gonna assign reliability costs,
01:02:51.860 --> 01:02:54.390
we're gonna have to do
it for the peak of the day.
01:02:54.390 --> 01:02:56.550
When that gas fired power plant trips
01:02:56.550 --> 01:02:58.950
or that nuclear plant trips, guess what?
01:02:58.950 --> 01:03:00.300
It's gonna be painful.
01:03:00.300 --> 01:03:02.780
It's gonna be very
painful for that resource.
01:03:02.780 --> 01:03:04.270
And that's why I'm opposed to it
01:03:04.270 --> 01:03:07.130
because I think reliability spread out
01:03:07.130 --> 01:03:09.540
across the entire system of consumers
01:03:09.540 --> 01:03:12.110
is a lower cost to
every single one of them
01:03:12.110 --> 01:03:14.620
than it is to assigning
a cost to somebody
01:03:14.620 --> 01:03:17.870
that doesn't say they're
gonna pay, they're gonna,
01:03:17.870 --> 01:03:20.510
that does not commit
they're gonna provide it
01:03:20.510 --> 01:03:22.610
and is not getting paid to provide it.
01:03:22.610 --> 01:03:24.020
And then we're gonna tag them and say,
01:03:24.020 --> 01:03:27.140
well, you get tagged because
you're not providing something
01:03:27.140 --> 01:03:28.660
that you say you're gonna,
01:03:28.660 --> 01:03:31.890
you don't even say you're
gonna provide the market.
01:03:31.890 --> 01:03:35.070
Providing voltage support is a market.
01:03:35.070 --> 01:03:36.700
There are companies that can go provide.
01:03:36.700 --> 01:03:40.280
You can put in all sorts of
equipment to provide voltage.
01:03:40.280 --> 01:03:43.590
That doesn't mean that cost
has to be borne by a generator.
01:03:43.590 --> 01:03:45.910
It doesn't, so I'm just,
01:03:45.910 --> 01:03:48.320
that's the one thing in your memo that
01:03:48.320 --> 01:03:50.386
I'm very passionate about
as you, as you can see.
01:03:50.386 --> 01:03:51.400
I know.
01:03:52.360 --> 01:03:55.763
And that's where I
would have a big concern.
01:03:56.620 --> 01:03:58.020
But in that same,
01:03:58.020 --> 01:04:00.563
Commissioner, respect
your thoughts on this.
01:04:02.130 --> 01:04:05.510
But again, the legislature spoke.
01:04:05.510 --> 01:04:07.940
I mean, the statute, the debate,
01:04:07.940 --> 01:04:09.740
it all led in that direction.
01:04:09.740 --> 01:04:11.853
So when I look at it,
01:04:11.853 --> 01:04:14.600
I'm just trying to do what the 181 folks
01:04:14.600 --> 01:04:16.150
and the Governor said.
01:04:16.150 --> 01:04:18.560
In writing, they
actually put it in writing,
01:04:18.560 --> 01:04:19.780
which is reassuring.
01:04:19.780 --> 01:04:20.680
I appreciate that.
01:04:24.520 --> 01:04:27.960
If you look at that
background and all the debate,
01:04:27.960 --> 01:04:32.960
it was oriented on a set
of resources that they felt,
01:04:33.910 --> 01:04:35.930
all right, they needed to pay a portion
01:04:35.930 --> 01:04:37.480
to get their product to market.
01:04:38.770 --> 01:04:40.283
But yeah, I hear you, sir.
01:04:43.770 --> 01:04:44.803
Well articulated.
01:04:46.500 --> 01:04:50.930
And we're not all going to
agree on everything every day.
01:04:50.930 --> 01:04:52.480
Reasonable people can disagree.
01:04:53.690 --> 01:04:55.340
Think we've hit it out of
the park on disagreeing
01:04:55.340 --> 01:04:57.573
so far these last few months.
01:04:58.980 --> 01:05:02.143
We have agreed on a lot
of important things. (laughs)
01:05:03.334 --> 01:05:05.210
Like I said, well articulated.
01:05:05.210 --> 01:05:06.660
You know how I feel about it.
01:05:07.640 --> 01:05:10.410
In the absence of a new resource
01:05:10.410 --> 01:05:13.920
that has 100%
correlation of dropping out,
01:05:13.920 --> 01:05:15.343
none of this would be a problem.
01:05:17.472 --> 01:05:19.083
But voltage and quick ramping.
01:05:21.150 --> 01:05:25.970
And that's an ECRS product
that's 18 to 24 months away.
01:05:25.970 --> 01:05:27.550
So we don't need to solve that today.
01:05:27.550 --> 01:05:31.090
Actually, the program
is 18 to 24 months away,
01:05:31.090 --> 01:05:34.410
but the products are on the grid today.
01:05:34.410 --> 01:05:36.810
The resources are coming on very fast.
01:05:36.810 --> 01:05:39.672
They will be here way ahead of ECRS.
01:05:39.672 --> 01:05:40.505
The intermittence.
01:05:40.505 --> 01:05:44.330
Well, the batteries and
the other voltage components
01:05:44.330 --> 01:05:46.720
that can help voltage across the system
01:05:46.720 --> 01:05:49.250
and that can provide
other ancillary services.
01:05:49.250 --> 01:05:51.550
They're gonna be here
before their product is.
01:05:53.010 --> 01:05:53.843
Sure.
01:05:58.043 --> 01:06:00.910
I've heard ad nauseum
about how intermittence
01:06:00.910 --> 01:06:04.840
can provide voltage supportive
if appropriately outfitted.
01:06:04.840 --> 01:06:08.290
And I look forward to them
implementing those technologies.
01:06:08.290 --> 01:06:10.050
In which case they
would not be responsible
01:06:10.050 --> 01:06:11.650
for the cost of voltage support.
01:06:12.990 --> 01:06:16.467
Voltage support, again,
as I in most markets--
01:06:17.380 --> 01:06:18.213
Sorry, no.
01:06:18.213 --> 01:06:19.860
We pay for voltage support.
01:06:19.860 --> 01:06:21.587
We pay for VARS.
01:06:21.587 --> 01:06:24.910
We pay for VARS which come from
01:06:26.190 --> 01:06:29.763
large thermal generating
plants, nuclear plants.
01:06:30.740 --> 01:06:32.430
But we paid for them for a reason.
01:06:32.430 --> 01:06:34.790
And that's because you have to reduce
01:06:34.790 --> 01:06:37.890
the amount of real
energy you're producing
01:06:37.890 --> 01:06:40.220
on the system to produce VARS.
01:06:40.220 --> 01:06:42.950
You produce VARS to
allow the transmission system
01:06:42.950 --> 01:06:45.420
to capture those and move those.
01:06:45.420 --> 01:06:47.330
So what you're doing
is you're compensating
01:06:47.330 --> 01:06:49.330
for a reduction of real energy
01:06:49.330 --> 01:06:51.080
that could be sold into the market.
01:06:52.470 --> 01:06:54.300
That's why you're doing it.
01:06:54.300 --> 01:06:56.963
And that is,
01:06:57.860 --> 01:07:00.093
to me, voltage support is a common good.
01:07:01.520 --> 01:07:03.340
Nobody does great unless we pay for it.
01:07:03.340 --> 01:07:05.823
It's not assigned to, if we pay for it,
01:07:07.810 --> 01:07:10.143
that is a huge step forward.
01:07:14.200 --> 01:07:17.640
But there is a market there for entity.
01:07:17.640 --> 01:07:19.490
Someone could go put on
a synchronous condenser
01:07:19.490 --> 01:07:23.250
and get paid for voltage
support if economics worked.
01:07:23.250 --> 01:07:24.300
And that would be it.
01:07:27.990 --> 01:07:30.130
So that's why I think what we're doing
01:07:30.130 --> 01:07:33.550
is telling somebody to do
something that they don't,
01:07:33.550 --> 01:07:35.380
they are never committing to do.
01:07:35.380 --> 01:07:37.050
So with that, Commissioner,
01:07:37.050 --> 01:07:40.210
do you believe it would be fair
01:07:41.720 --> 01:07:44.623
and legal, which would
be great to have both,
01:07:47.520 --> 01:07:50.630
if a intermittent resource
that does not provide
01:07:50.630 --> 01:07:55.460
on the face of its own
generation capability,
01:07:55.460 --> 01:07:58.120
if they were paired with
a system of batteries
01:07:58.120 --> 01:07:59.760
or whatever technology was available
01:07:59.760 --> 01:08:02.460
to where they could provide
their own voltage support,
01:08:03.310 --> 01:08:06.840
could they be exempted
from the cost causation?
01:08:06.840 --> 01:08:08.264
Maybe, maybe.
01:08:08.264 --> 01:08:09.375
Something to think about.
Tariff or whatever.
01:08:09.375 --> 01:08:10.740
Something to think about.
Okay, all right.
01:08:10.740 --> 01:08:11.573
Got it.
01:08:12.830 --> 01:08:15.810
So how would we
implement the voltage support?
01:08:15.810 --> 01:08:17.530
Is that through a rulemaking
01:08:17.530 --> 01:08:20.720
or what process would we
use to compensate, I guess?
01:08:20.720 --> 01:08:24.093
Initial thought is to direct
ERCOT to develop a product,
01:08:25.160 --> 01:08:27.200
both operational need
01:08:30.090 --> 01:08:33.933
and mechanism of implementation,
01:08:35.350 --> 01:08:39.623
and the cost assignment
and settlement of that cost.
01:08:41.110 --> 01:08:43.010
With any of these, we'd ask them to go
01:08:43.010 --> 01:08:46.560
develop such a product or
give us two or three options
01:08:46.560 --> 01:08:47.670
of what it could look like
01:08:47.670 --> 01:08:49.933
and then we'd evaluate
and iterate from there.
01:08:52.484 --> 01:08:54.470
And I think that's--
I think Brattle,
01:08:54.470 --> 01:08:56.580
forgive me if I'm
saying this out of school,
01:08:56.580 --> 01:08:58.000
but I think Brattle was looking
01:08:58.000 --> 01:09:00.360
and was gonna provide us
with some of the examples
01:09:00.360 --> 01:09:03.890
that other markets, how
they pay for voltage and
01:09:04.960 --> 01:09:06.653
they were gonna do that.
01:09:06.653 --> 01:09:08.960
Is that in process?
01:09:08.960 --> 01:09:10.410
It can be in process?
Yes.
01:09:11.318 --> 01:09:13.470
Usually not a market
product but compensated.
01:09:13.470 --> 01:09:15.370
Compensated
product, that's correct.
01:09:16.280 --> 01:09:17.600
All right.
01:09:17.600 --> 01:09:19.617
We'll look forward to
that, Sam, thank you.
01:09:22.350 --> 01:09:23.183
Okay.
01:09:24.080 --> 01:09:24.913
Thank you.
01:09:29.440 --> 01:09:33.440
Right now we've thus far agreed to
01:09:35.160 --> 01:09:37.410
develop a load side
reliability mechanism
01:09:37.410 --> 01:09:38.713
of some form or fashion,
01:09:39.550 --> 01:09:42.940
based on principles
that will articulate and
01:09:44.920 --> 01:09:46.853
agree to incorporate here shortly.
01:09:49.510 --> 01:09:52.690
I think we're all in support of
01:09:52.690 --> 01:09:57.163
developing a backstop
mechanism in the meantime.
01:09:59.030 --> 01:10:00.137
Is that something you--
01:10:00.137 --> 01:10:01.890
I'd look at, absolutely.
01:10:01.890 --> 01:10:03.740
Okay, not there yet but--
01:10:03.740 --> 01:10:05.192
Not there yet but
absolutely look at.
01:10:05.192 --> 01:10:06.540
Okay.
01:10:06.540 --> 01:10:08.940
So we're three out of four on that one.
01:10:08.940 --> 01:10:10.690
That's fair.
01:10:15.525 --> 01:10:17.760
I'm just gonna work
backwards up here.
01:10:17.760 --> 01:10:18.963
Firm fuel product.
01:10:19.960 --> 01:10:23.860
We all agree to commit to
developing a firm fuel product.
01:10:23.860 --> 01:10:25.040
Mm-hmm.
01:10:25.040 --> 01:10:25.873
Yes.
Yes, sir.
01:10:25.873 --> 01:10:28.290
On the general
frameworks in this memo.
01:10:28.290 --> 01:10:29.583
Yes, sir.
Yes.
01:10:31.020 --> 01:10:32.310
Voltage support product
01:10:34.000 --> 01:10:35.560
in process with Brattle.
01:10:35.560 --> 01:10:38.850
In principle, I'm hearing
we all agree to develop
01:10:38.850 --> 01:10:40.023
some form of that.
01:10:41.030 --> 01:10:44.410
Cost assignment and
settlement to be determined,
01:10:44.410 --> 01:10:46.900
pending analysis of other
01:10:48.330 --> 01:10:49.740
analog options and
01:10:52.600 --> 01:10:53.550
look at what,
01:10:53.550 --> 01:10:55.013
examination of what that
would look like in our market.
01:10:55.013 --> 01:10:56.786
Yes, absolutely.
Agreed?
01:10:56.786 --> 01:10:57.619
Agreed.
Agreed.
01:10:57.619 --> 01:10:59.023
Agreed? Agreed?
Yes.
01:11:00.250 --> 01:11:02.820
Fast frequency
response, ECRS in process.
01:11:02.820 --> 01:11:05.180
Anybody want to stop them in process?
01:11:05.180 --> 01:11:06.460
No.
01:11:06.460 --> 01:11:07.293
Accelerate if we could.
01:11:08.536 --> 01:11:11.913
On costs on that?
On costs on ECRS.
01:11:14.360 --> 01:11:15.309
Same thing.
01:11:15.309 --> 01:11:16.800
(laughing)
Sorry.
01:11:16.800 --> 01:11:18.172
Well, I think we'd have
to have a rulemaking
01:11:18.172 --> 01:11:21.210
'cause of the SB3 language
we need to implement.
01:11:21.210 --> 01:11:22.510
SB3 has clear language and
01:11:24.520 --> 01:11:26.610
we can open up a
rulemaking project next year
01:11:26.610 --> 01:11:27.490
and get that rolling.
01:11:27.490 --> 01:11:28.433
Okay, so.
01:11:29.970 --> 01:11:32.690
Don't take it, either one
of those off the table,
01:11:32.690 --> 01:11:34.273
accelerate if possible.
01:11:37.040 --> 01:11:39.200
Cost allocation, a cost assignment
01:11:40.340 --> 01:11:43.960
to be discussed as
part of rulemaking for
01:11:43.960 --> 01:11:46.910
in compliance with SB,
implementation with SB3, yeah?
01:11:46.910 --> 01:11:48.010
Agreed?
Yep.
01:11:48.010 --> 01:11:50.210
Agreed? Agreed? All right.
01:11:50.210 --> 01:11:52.520
ERS reform, I think we've
already done most of that.
01:11:52.520 --> 01:11:55.330
We've got to have to tighten
it up with the rule next year
01:11:55.330 --> 01:11:58.600
but the good cause
exception has done that.
01:11:58.600 --> 01:12:00.600
All right, nobody wants to reverse that?
01:12:03.420 --> 01:12:04.593
Demand response.
01:12:08.650 --> 01:12:10.323
So all the LMP pricing.
01:12:12.940 --> 01:12:16.270
Anybody opposed to asking
ERCOT to move in that direction?
01:12:16.270 --> 01:12:17.654
No, I like it.
01:12:17.654 --> 01:12:19.090
I felt it was handled.
Okay.
01:12:19.090 --> 01:12:20.270
Sure.
I'm for it.
01:12:20.270 --> 01:12:21.103
Okay.
01:12:22.070 --> 01:12:24.190
Energy efficiency performance standards.
01:12:24.190 --> 01:12:25.340
Getting more bang for our buck
01:12:25.340 --> 01:12:27.203
out of the same allocated dollars.
01:12:28.360 --> 01:12:30.730
Strong supporter of opening
up that rule for rulemaking
01:12:30.730 --> 01:12:32.320
and making sure we're getting
01:12:32.320 --> 01:12:34.520
a return on our investment
rate payer money.
01:12:35.660 --> 01:12:37.290
This is great,
I'm all about it.
01:12:37.290 --> 01:12:39.220
We need to open up that rule.
01:12:39.220 --> 01:12:40.170
I'm just looking at some of the people
01:12:40.170 --> 01:12:41.490
who are gonna be
involved in that rulemaking.
01:12:41.490 --> 01:12:43.683
Oh yeah.
This is great.
01:12:43.683 --> 01:12:44.516
Have to
01:12:44.516 --> 01:12:46.387
beat them off with this.
My comments from earlier
01:12:46.387 --> 01:12:47.350
in the open meeting,
01:12:47.350 --> 01:12:51.465
you can probably
assume that I'm for that.
01:12:51.465 --> 01:12:52.830
Mm-hmm.
(laughs)
01:12:52.830 --> 01:12:54.940
Yeah, I picked up on that.
01:12:54.940 --> 01:12:56.220
I'm slow, Jimmy, but not,
01:12:56.220 --> 01:12:57.621
not quite that slow.
You're not that slow.
01:12:57.621 --> 01:12:59.871
(laughing)
01:13:02.050 --> 01:13:04.090
All right, ORDC reform.
01:13:04.090 --> 01:13:05.463
Made some adjustments here.
01:13:07.080 --> 01:13:08.543
We've got our high cap set.
01:13:09.660 --> 01:13:13.023
As you can see, I
broke it into two phases.
01:13:15.490 --> 01:13:18.990
HCAP is official as of today.
01:13:18.990 --> 01:13:20.610
Great progress.
01:13:20.610 --> 01:13:22.960
The first step, and I think
we've had a lot of discussion
01:13:22.960 --> 01:13:25.980
about MCL at 3000
for many of the reasons
01:13:25.980 --> 01:13:27.720
that have been previously articulated.
01:13:27.720 --> 01:13:29.390
Everybody okay with that?
01:13:29.390 --> 01:13:30.340
Yes, sir.
Yes.
01:13:31.990 --> 01:13:34.485
And by rule, vol is at 5,000
01:13:34.485 --> 01:13:36.035
because that's what HCAP is at.
01:13:37.171 --> 01:13:38.960
And based on the analysis that I've seen
01:13:38.960 --> 01:13:42.680
and many discussions
with the Brattle team I think
01:13:44.630 --> 01:13:46.530
that essentially gets us back to even.
01:13:46.530 --> 01:13:48.720
The amount of revenue in the marketplace
01:13:48.720 --> 01:13:51.310
brought the highest price down,
01:13:51.310 --> 01:13:54.110
moving it out a bit, but that
just gets us back to even.
01:13:55.860 --> 01:13:56.960
And we know back to even, I mean,
01:13:56.960 --> 01:14:00.970
back to even gets our
generators, I guess,
01:14:00.970 --> 01:14:04.110
whole or back to where they were.
01:14:04.110 --> 01:14:06.850
But I know we want to
go above and beyond.
01:14:06.850 --> 01:14:08.720
We're not here to do status quo.
01:14:08.720 --> 01:14:12.147
So that's why I proposed
separating vol and HCAP
01:14:15.410 --> 01:14:17.660
early next year when
we can open up that rule
01:14:20.180 --> 01:14:21.640
to add more revenue.
01:14:21.640 --> 01:14:25.993
To go above and beyond just
getting back to even so that,
01:14:27.700 --> 01:14:29.450
I forgot to put your thing in here,
01:14:30.920 --> 01:14:31.820
go above and beyond.
01:14:31.820 --> 01:14:33.220
We want more revenues in the market,
01:14:33.220 --> 01:14:34.630
especially in times of scarcity.
01:14:34.630 --> 01:14:36.263
So let's move that vol up.
01:14:37.130 --> 01:14:42.130
It should not extend farther
out to the PCR reserves
01:14:42.400 --> 01:14:44.710
of who's getting those payments,
01:14:44.710 --> 01:14:47.620
but should increase the
area of under the curve
01:14:47.620 --> 01:14:50.580
so that those who are
there in the time of scarcity
01:14:50.580 --> 01:14:52.380
get more revenues than they used to.
01:14:53.520 --> 01:14:55.430
I don't know what that number is,
01:14:55.430 --> 01:14:57.640
but that was a part of the IMM proposal
01:14:57.640 --> 01:15:00.193
with that concept of
separating vol and HCAP.
01:15:01.320 --> 01:15:03.560
In principle, does that make sense?
01:15:03.560 --> 01:15:04.590
Yes, sir.
01:15:04.590 --> 01:15:07.380
May I suggest piggybacking,
01:15:07.380 --> 01:15:09.620
while the rule is open on this one,
01:15:09.620 --> 01:15:12.560
25-505 is a big rule.
01:15:12.560 --> 01:15:14.110
Could we consider splitting out
01:15:14.110 --> 01:15:17.970
the subsection E, I believe, in 25-505,
01:15:17.970 --> 01:15:20.980
which is the CDR Sara,
01:15:20.980 --> 01:15:22.850
so we get some reforms going there.
01:15:22.850 --> 01:15:25.930
So at least we have a
standalone rule on that.
01:15:25.930 --> 01:15:27.960
Not only yes,
but absolutely yes.
01:15:27.960 --> 01:15:30.330
And I think you'd be great
01:15:30.330 --> 01:15:32.290
to take charge of that.
Okay, cool.
01:15:32.290 --> 01:15:34.240
Congratulations.
Great, thank you.
01:15:35.080 --> 01:15:37.180
I can offer feedback.
Oh, cool.
01:15:37.180 --> 01:15:38.630
Yeah, well, I know
that's something
01:15:38.630 --> 01:15:40.610
you've cared about for a long time,
01:15:40.610 --> 01:15:42.780
and I know that's something that
01:15:44.431 --> 01:15:47.700
the market looks at, investors look at,
01:15:47.700 --> 01:15:52.620
and it is not painting the best picture.
01:15:52.620 --> 01:15:55.959
It is not the best version
of the product it could be.
01:15:55.959 --> 01:15:56.792
Yes, sir.
01:15:56.792 --> 01:15:57.940
Yes, absolutely do that.
01:15:57.940 --> 01:15:59.883
Let me see what I need to add here.
01:16:00.840 --> 01:16:04.160
And opening up as part of the ORDC,
01:16:04.160 --> 01:16:07.160
I don't know that we
need to put this in rule,
01:16:07.160 --> 01:16:10.250
but I would also ask that we have
01:16:10.250 --> 01:16:13.060
an automatic revisit built in,
01:16:13.060 --> 01:16:17.300
even if that's directing staff or ERCOT
01:16:17.300 --> 01:16:19.924
to present to the Commission,
01:16:19.924 --> 01:16:21.924
we don't have to figure this out now but
01:16:25.100 --> 01:16:28.000
present to the Commission
by December 1st
01:16:28.000 --> 01:16:30.220
of every odd number year,
01:16:30.220 --> 01:16:34.060
an assessment of the
efficacy of the ORDC,
01:16:34.060 --> 01:16:36.400
the balance and trade-offs
01:16:36.400 --> 01:16:40.520
between revenues to
generators, should we need,
01:16:40.520 --> 01:16:43.890
and how that is balanced
with cost on consumers.
01:16:43.890 --> 01:16:46.520
So that ahead of
every legislative session
01:16:46.520 --> 01:16:49.750
and at least on a regular basis,
01:16:49.750 --> 01:16:51.530
this Commission and future Commissions
01:16:51.530 --> 01:16:53.540
will be required to evaluate
01:16:53.540 --> 01:16:56.135
all that money that's being
pumped into that market.
01:16:56.135 --> 01:16:57.480
Good idea.
Does that make sense?
01:16:57.480 --> 01:16:58.680
Thank you for that idea.
01:17:01.770 --> 01:17:03.520
Hope Ben's writing this stuff down.
01:17:05.877 --> 01:17:06.710
All right.
01:17:08.070 --> 01:17:12.953
That covers every element,
I think, in that memo.
01:17:15.064 --> 01:17:16.253
We got ORDC visit.
01:17:17.450 --> 01:17:18.863
Sara, CDR.
01:17:20.710 --> 01:17:21.960
Chairman Lake?
Yes, ma'am.
01:17:21.960 --> 01:17:24.260
Can I add a couple of
items for consideration?
01:17:24.260 --> 01:17:25.634
Maybe two, three?
01:17:25.634 --> 01:17:26.563
Sure.
From my flow chart.
01:17:28.230 --> 01:17:30.720
I know that we have been,
01:17:30.720 --> 01:17:33.850
Encore currently has
distribution voltage reduction
01:17:33.850 --> 01:17:36.980
in place today that we
have directed ERCOT to use
01:17:36.980 --> 01:17:39.300
outside of emergency conditions.
01:17:39.300 --> 01:17:42.300
And I would like to continue to explore
01:17:42.300 --> 01:17:44.490
if we can add to our roles
01:17:45.800 --> 01:17:47.650
some kind of rate recovery mechanisms
01:17:47.650 --> 01:17:49.350
so that we can get some of the TDUs
01:17:49.350 --> 01:17:52.730
that are able to provide that
distribution voltage reduction
01:17:52.730 --> 01:17:54.403
to procure that equipment.
01:17:55.785 --> 01:18:00.190
If we can expand that capability
or look into expanding it,
01:18:00.190 --> 01:18:02.700
I think that would be
additional megawatts
01:18:02.700 --> 01:18:04.380
that we could take advantage of.
01:18:04.380 --> 01:18:06.850
Right now I think it's
maybe 300 megawatts,
01:18:06.850 --> 01:18:08.170
is that correct, Liz?
01:18:08.170 --> 01:18:09.320
500?
I couldn't say
01:18:09.320 --> 01:18:10.580
across the system.
01:18:10.580 --> 01:18:12.820
Okay, from Encore alone,
01:18:12.820 --> 01:18:15.000
I think we relied on--
01:18:15.000 --> 01:18:16.350
We're very
grateful to have that.
01:18:16.350 --> 01:18:17.530
Yes.
I appreciate y'all.
01:18:17.530 --> 01:18:21.130
And Encore has proactively
done that on their own.
01:18:21.130 --> 01:18:24.280
But if we can evaluate
whether other TDUs
01:18:24.280 --> 01:18:27.920
that are able to do it
based on their geographic
01:18:27.920 --> 01:18:30.910
service we can squeeze out--
Absolutely.
01:18:30.910 --> 01:18:34.500
Stated goal of maybe 1000
megawatts, 500 megawatts.
01:18:34.500 --> 01:18:35.670
Just expand that capability.
01:18:35.670 --> 01:18:37.110
I would like to add that to the list
01:18:37.110 --> 01:18:38.950
'cause that's on the demand side.
01:18:38.950 --> 01:18:40.500
Agree.
01:18:40.500 --> 01:18:41.790
In principle, yes.
01:18:41.790 --> 01:18:42.623
Thoughts?
01:18:43.590 --> 01:18:48.590
You want to establish it as
a precedent in rate recovery?
01:18:49.000 --> 01:18:51.510
Yeah, I think from
what I understand,
01:18:51.510 --> 01:18:53.360
densely populated service territories,
01:18:53.360 --> 01:18:54.400
it's gonna be difficult there.
01:18:54.400 --> 01:18:55.780
So some of the TDUs that are
01:18:55.780 --> 01:18:57.410
in the more densely populated areas.
01:18:57.410 --> 01:18:59.030
We wouldn't require the TDUs to do it,
01:18:59.030 --> 01:19:01.610
but should they have
the capability to do it,
01:19:01.610 --> 01:19:04.060
there would be a process
for them to be able to
01:19:05.620 --> 01:19:08.010
recover just and reasonable
prudently incurred costs
01:19:08.010 --> 01:19:08.910
for that equipment
01:19:10.060 --> 01:19:11.530
so that we can get more megawatts
01:19:11.530 --> 01:19:12.810
on the demand side reduction.
01:19:12.810 --> 01:19:16.529
Would you count
that in the CDR Sara?
01:19:16.529 --> 01:19:18.530
I mean, would you
count that as megawatts?
01:19:18.530 --> 01:19:20.680
I don't know if ERCOT
currently does that right now.
01:19:20.680 --> 01:19:22.970
I don't--
I don't think that...
01:19:22.970 --> 01:19:24.930
Do y'all count distribution
voltage reduction
01:19:24.930 --> 01:19:27.632
in your CDR reporting?
01:19:27.632 --> 01:19:29.039
I
don't believe so.
01:19:29.039 --> 01:19:32.090
We should and we have more.
01:19:32.090 --> 01:19:32.923
So that's the trigger.
01:19:32.923 --> 01:19:35.228
I mean, let's get the value out of it.
01:19:35.228 --> 01:19:37.628
I mean, we gotta--
Well, I want to do it.
01:19:37.628 --> 01:19:39.543
I want the megawatts when we need them.
01:19:40.492 --> 01:19:42.370
But it's when it gets tight,
01:19:42.370 --> 01:19:44.923
dear God, we're grateful
for Encore's megawatts.
01:19:46.320 --> 01:19:49.490
If we can do that, yes,
we should recognize that
01:19:49.490 --> 01:19:51.790
is part of the emergency.
01:19:51.790 --> 01:19:53.833
I wouldn't count them,
we don't like doing that
01:19:53.833 --> 01:19:54.970
on a regular basis.
For regular operation.
01:19:54.970 --> 01:19:56.877
That's not, yeah,
not regular operations
01:19:56.877 --> 01:19:58.843
but part of the emergency suite.
01:20:00.800 --> 01:20:01.783
Thoughts?
Fine.
01:20:04.350 --> 01:20:06.680
Let me just say, an additive to this.
01:20:06.680 --> 01:20:08.630
I mean, I think this is where,
01:20:08.630 --> 01:20:11.910
is a place where there
are some investments
01:20:11.910 --> 01:20:13.740
that need to be made by the TDUs.
01:20:13.740 --> 01:20:15.550
There's significant
megawatts that we can't get
01:20:15.550 --> 01:20:16.953
when we go to emergencies.
01:20:18.408 --> 01:20:19.830
Significant megawatts.
01:20:19.830 --> 01:20:21.920
So if we get to that,
01:20:21.920 --> 01:20:25.770
it clearly is a value
proposition, I think, will pay off.
01:20:25.770 --> 01:20:27.220
So would you want that
01:20:27.220 --> 01:20:28.880
part of a targeted approach on this one
01:20:28.880 --> 01:20:33.400
or a broader gleaning
megawatts on the TDU side?
01:20:33.400 --> 01:20:35.480
I think we get started
as a targeted approach
01:20:35.480 --> 01:20:37.300
and see what we can get.
01:20:37.300 --> 01:20:38.960
Maybe we open up a project
01:20:38.960 --> 01:20:41.076
and get some information from the TDUs.
01:20:41.076 --> 01:20:42.760
Yeah, I'm wondering what,
01:20:42.760 --> 01:20:44.933
I think in principle, yes, absolutely.
01:20:45.890 --> 01:20:47.050
I'm trying to think of the right venue
01:20:47.050 --> 01:20:49.150
because that may be
something where we ask
01:20:50.690 --> 01:20:54.130
open a project and ask OPDM
to think about the best way
01:20:54.130 --> 01:20:57.190
to incorporate that in
Commission operations.
01:20:57.190 --> 01:20:58.460
Sure.
01:20:58.460 --> 01:21:01.720
To your dynamic line
rating and those concepts,
01:21:01.720 --> 01:21:05.100
what is the best, I think those
are important to leverage.
01:21:05.100 --> 01:21:06.480
I don't know that we
need to require them,
01:21:06.480 --> 01:21:08.020
but perhaps incentivize.
01:21:08.020 --> 01:21:12.210
Is that a ERCOT ops
market design or is that a--
01:21:12.210 --> 01:21:13.410
It's not a market design.
01:21:13.410 --> 01:21:14.610
I mean, I think it's--
01:21:14.610 --> 01:21:16.980
It's over here?
Yeah, yeah.
01:21:16.980 --> 01:21:19.580
It's operational and it's happening.
01:21:19.580 --> 01:21:22.090
Some of the TDUs have
done a great job with it.
01:21:22.090 --> 01:21:23.220
Others have not.
01:21:23.220 --> 01:21:26.710
And I think we just
need to work through it
01:21:26.710 --> 01:21:27.770
and see what those issues are.
01:21:27.770 --> 01:21:30.750
If there are rate issues,
we need to be told.
01:21:30.750 --> 01:21:34.720
If not, we can keep pushing.
01:21:34.720 --> 01:21:35.553
Yeah.
01:21:35.553 --> 01:21:37.240
So the way, and just to clear it,
01:21:37.240 --> 01:21:39.060
'cause I see the distinction
you're making now,
01:21:39.060 --> 01:21:41.300
Chairman Lake, I would view this as more
01:21:41.300 --> 01:21:44.110
as part of an extra tool in our toolkit,
01:21:44.110 --> 01:21:45.750
kind of like ERS.
01:21:45.750 --> 01:21:49.353
Those tools we use when we
are trying to avoid conservation.
01:21:50.290 --> 01:21:51.910
If we can expand those megawatts
01:21:51.910 --> 01:21:54.085
on the distribution voltage reduction,
01:21:54.085 --> 01:21:56.560
again, we wouldn't
require every utility to do it,
01:21:56.560 --> 01:21:57.890
but the ones that were able to,
01:21:57.890 --> 01:22:00.510
and we could get some more megawatts,
01:22:00.510 --> 01:22:03.920
we can provide some pathway for them
01:22:03.920 --> 01:22:06.960
to be able to invest in those,
that additional equipment.
01:22:06.960 --> 01:22:07.793
Okay, well.
01:22:09.980 --> 01:22:12.020
Will you work with staff to figure out
01:22:12.020 --> 01:22:14.050
what the best venue for that is.
01:22:14.050 --> 01:22:16.829
In principle, we're all on
board on implementing that.
01:22:16.829 --> 01:22:17.912
Absolutely.
01:22:18.817 --> 01:22:20.440
The other item I was gonna add on there
01:22:20.440 --> 01:22:23.990
is distributed generation.
And what I mean by that,
01:22:23.990 --> 01:22:27.410
I know Commissioner
McAdams several months ago,
01:22:27.410 --> 01:22:28.860
even before I got to the PUC,
01:22:29.713 --> 01:22:32.420
based on two contested
case proceedings at the time
01:22:32.420 --> 01:22:34.320
that you asked to be dismissed,
01:22:34.320 --> 01:22:36.280
you asked for staff to open a project
01:22:36.280 --> 01:22:38.740
to look at distributed generation.
01:22:38.740 --> 01:22:40.380
Based on a lot of
feedback that I've gotten
01:22:40.380 --> 01:22:42.260
from distributed generation companies,
01:22:42.260 --> 01:22:45.350
microgrid related companies,
01:22:45.350 --> 01:22:48.160
I think there is some
opportunities there
01:22:48.160 --> 01:22:50.790
to evaluate streamlining
the interconnection process
01:22:50.790 --> 01:22:52.910
and making improvements there.
01:22:52.910 --> 01:22:56.360
And I think perhaps those
issues can get paired up
01:22:56.360 --> 01:22:57.770
with some of the issues
you were looking at.
01:22:57.770 --> 01:23:00.220
I know staff hasn't
yet opened up a project
01:23:00.220 --> 01:23:02.160
to evaluate that but that
would be something else
01:23:02.160 --> 01:23:04.550
that we can have staff evaluate.
01:23:04.550 --> 01:23:07.110
And as the moratorium
lives on January 4th,
01:23:07.110 --> 01:23:09.589
more data will be available for that.
01:23:09.589 --> 01:23:11.147
Okay.
01:23:11.147 --> 01:23:13.660
For detail.
So the project would
01:23:13.660 --> 01:23:16.010
incorporate that data to what?
01:23:16.010 --> 01:23:17.920
Evaluate our
interconnection procedures
01:23:17.920 --> 01:23:22.400
and work with ERCOT and TDU timelines.
01:23:22.400 --> 01:23:26.720
There seems to be some ad
hoc sort of procedures that go on.
01:23:26.720 --> 01:23:29.500
And I think you hear that
from distribute generation
01:23:29.500 --> 01:23:34.500
resources like micro
related type companies, DG,
01:23:35.320 --> 01:23:37.020
also storage.
Is that,
01:23:37.020 --> 01:23:39.630
yep, good, yes, yes.
01:23:39.630 --> 01:23:40.780
I think so.
01:23:40.780 --> 01:23:42.650
What my experience
is from what I've heard
01:23:42.650 --> 01:23:46.400
is some TDUs do it really well.
01:23:46.400 --> 01:23:47.680
And I say TDUs, I mean,
01:23:47.680 --> 01:23:50.920
co-ops, communities, whatever
the interconnection entity is.
01:23:50.920 --> 01:23:52.370
Some of them do it really well.
01:23:52.370 --> 01:23:55.370
Others are very slow,
very secretive about costs,
01:23:55.370 --> 01:23:59.070
very not timely,
01:23:59.070 --> 01:24:01.993
and finding a way, as I had said earlier
01:24:01.993 --> 01:24:04.990
when I first discussed market design,
01:24:04.990 --> 01:24:06.640
doing some sort of
standard inner connection
01:24:06.640 --> 01:24:08.720
at the distribution
level would be, I think,
01:24:08.720 --> 01:24:13.484
a very important component
because it all equals megawatts.
01:24:13.484 --> 01:24:15.980
It does.
01:24:15.980 --> 01:24:17.463
Then finally--
01:24:17.463 --> 01:24:18.616
Megawatts or what?
01:24:18.616 --> 01:24:20.499
There it is.
(laughing)
01:24:20.499 --> 01:24:21.640
We should have--
01:24:21.640 --> 01:24:23.450
On that, real
quick question, Lori.
01:24:23.450 --> 01:24:25.830
How would that, or should it or can it,
01:24:25.830 --> 01:24:29.180
overlap with the interconnect
work you all are doing?
01:24:29.180 --> 01:24:30.762
And with it--
I think it's different.
01:24:30.762 --> 01:24:32.880
A little bit different.
Ours is gonna be simpler.
01:24:32.880 --> 01:24:33.950
I hope.
01:24:33.950 --> 01:24:35.730
Okay, okay, just wanted
to ask the question.
01:24:35.730 --> 01:24:37.043
Okay, so that's...
01:24:38.541 --> 01:24:39.374
Okay.
01:24:40.617 --> 01:24:42.239
And one final one.
01:24:42.239 --> 01:24:44.220
Okay, so.
01:24:44.220 --> 01:24:46.010
DG interconnect, okay.
01:24:46.010 --> 01:24:48.976
That's on mine as well.
01:24:48.976 --> 01:24:50.447
Your ops list? Yeah.
01:24:50.447 --> 01:24:52.740
Go ahead.
And I have one final one
01:24:52.740 --> 01:24:54.473
that I think is worth exploring.
01:24:56.470 --> 01:25:01.380
FERC recently issued a for
quarter 22-22 that promotes
01:25:04.367 --> 01:25:08.470
eliminating barriers for
distribute generation resources
01:25:08.470 --> 01:25:11.370
and from getting into the market.
01:25:11.370 --> 01:25:13.390
DERS is often referred to distributed
01:25:13.390 --> 01:25:15.699
energy resources--
Talked about that before.
01:25:15.699 --> 01:25:19.311
And we're not
subject for jurisdiction.
01:25:19.311 --> 01:25:21.500
But I think the other markets
01:25:21.500 --> 01:25:22.877
are gonna be evaluating these issues.
01:25:22.877 --> 01:25:24.200
And what I mean by DERS,
01:25:24.200 --> 01:25:26.720
it's aggregations of customers
and how they can participate
01:25:26.720 --> 01:25:28.670
in real-time market ancillary services.
01:25:29.510 --> 01:25:32.520
As I've often said before to
you in public and to others
01:25:32.520 --> 01:25:34.230
is that I want to use this opportunity
01:25:34.230 --> 01:25:35.700
to not only ensure reliability,
01:25:35.700 --> 01:25:39.330
but to continue to innovate
and enhancing reliability.
01:25:39.330 --> 01:25:42.060
And so if the other
markets are looking at
01:25:44.040 --> 01:25:45.990
eliminating barriers to
this type of participation,
01:25:45.990 --> 01:25:49.040
I think it would be a good
idea to at least direct ERCOT
01:25:49.040 --> 01:25:52.260
to have a workshop and
start looking at best practices
01:25:52.260 --> 01:25:56.820
and barriers, opportunities
for customer aggregations
01:25:56.820 --> 01:25:59.260
or what are known
as virtual power plants,
01:25:59.260 --> 01:26:00.650
the distributed energy resources,
01:26:00.650 --> 01:26:03.500
and just kind of at least
get some momentum going
01:26:03.500 --> 01:26:06.450
out there at ERCOT
through by way of a workshop
01:26:06.450 --> 01:26:09.920
and maybe additional
stakeholder discussions,
01:26:09.920 --> 01:26:11.103
a task force or
something to evaluate it,
01:26:11.103 --> 01:26:12.720
because I don't want to fall behind
01:26:12.720 --> 01:26:14.440
from the rest of the United States.
01:26:14.440 --> 01:26:15.570
We innovate here at ERCOT.
01:26:15.570 --> 01:26:18.540
We lead and I want to make
sure we continue to do so.
01:26:18.540 --> 01:26:20.310
And this concept of
virtual power plants,
01:26:20.310 --> 01:26:24.680
well, I would like to see
personally a roadmap as to,
01:26:24.680 --> 01:26:26.450
basically once ERCOT has conversations
01:26:26.450 --> 01:26:29.050
with the stakeholders
as to what is the pathway,
01:26:29.050 --> 01:26:30.690
what are some challenges,
01:26:30.690 --> 01:26:33.260
and learn what some
of the pros and cons are.
01:26:33.260 --> 01:26:36.670
So I think that we capitalize
on the demand side.
01:26:36.670 --> 01:26:38.520
That's another demand.
Absolutely.
01:26:40.580 --> 01:26:43.040
I think the first question to answer is,
01:26:43.040 --> 01:26:45.410
what are the existing barriers?
01:26:45.410 --> 01:26:46.970
And I want to be very careful,
01:26:46.970 --> 01:26:50.467
as we have numerous
stakeholders who do this,
01:26:50.467 --> 01:26:54.140
I want to make sure
everyone has equal access,
01:26:54.140 --> 01:26:55.423
but not preferential.
01:26:56.380 --> 01:26:58.970
I catch folks from time to time saying
01:26:58.970 --> 01:27:01.600
we're preventing demand response,
01:27:01.600 --> 01:27:05.610
when that translates to actually mean
01:27:05.610 --> 01:27:09.170
you're not paying me extra
more than the next megawatt
01:27:09.170 --> 01:27:11.933
and I want a special
product just for me.
01:27:13.762 --> 01:27:17.360
I think it needs to be
equal, it needs to be on par,
01:27:17.360 --> 01:27:20.870
but it should all be on par.
01:27:20.870 --> 01:27:23.250
So I want it, let's make, let's check.
01:27:23.250 --> 01:27:24.863
Yes, let's move forward on that.
01:27:25.920 --> 01:27:27.210
Let's start with the barriers.
01:27:27.210 --> 01:27:29.973
Let's start with the
command and control needs.
01:27:31.200 --> 01:27:32.760
So it's not just a bonus.
01:27:32.760 --> 01:27:35.900
You've got to commit to,
01:27:35.900 --> 01:27:37.310
you've got to schedule just like
01:27:37.310 --> 01:27:38.910
anybody else who's getting paid.
01:27:41.060 --> 01:27:43.170
So we know if we're counting on that,
01:27:43.170 --> 01:27:46.510
your CTR, your Sara, if you're
counting on it being there,
01:27:46.510 --> 01:27:48.100
it dam sure better be there.
01:27:48.100 --> 01:27:49.843
Absolutely.
So schedule when you clear,
01:27:49.843 --> 01:27:51.300
is that right maybe?
01:27:51.300 --> 01:27:53.350
Well, I'm saying you--
01:27:53.350 --> 01:27:54.760
Just trying to make
it apples and apples,
01:27:54.760 --> 01:27:56.610
if I can, out of this stuff.
01:27:56.610 --> 01:27:58.960
Yeah. I don't know
that you have to be clear,
01:27:58.960 --> 01:28:02.460
but you have to be willing
to commit all those Teslas.
01:28:02.460 --> 01:28:05.991
You have to be willing to
commit all those power walls.
01:28:05.991 --> 01:28:07.640
I hear you.
To be there.
01:28:07.640 --> 01:28:09.040
You're commanding control.
01:28:09.040 --> 01:28:09.873
Woody needs to know
01:28:09.873 --> 01:28:11.420
if he's gonna call on these resources.
01:28:11.420 --> 01:28:12.590
I agree.
Absolutely.
01:28:12.590 --> 01:28:15.303
He can't be grabbing air.
01:28:16.370 --> 01:28:18.410
And I definitely
agree with that.
01:28:18.410 --> 01:28:19.890
We want to make sure
we understand the barriers,
01:28:19.890 --> 01:28:22.060
but also the operational risk involved.
01:28:22.060 --> 01:28:26.040
And I think by way of
working with ERCOT or
01:28:27.340 --> 01:28:29.500
creating some kind of forum where
01:28:29.500 --> 01:28:32.140
we are presented with information from
01:28:32.140 --> 01:28:34.820
a robust discussion with
ERCOT and stakeholders
01:28:34.820 --> 01:28:37.000
would be great because I'm definitely
01:28:37.000 --> 01:28:38.330
on the same page as you, Chairman Lake.
01:28:38.330 --> 01:28:41.720
I don't want to create any
unintended consequences,
01:28:41.720 --> 01:28:43.190
but I want to see if there's any rewards
01:28:43.190 --> 01:28:46.033
we can reap on an even playing field.
01:28:48.250 --> 01:28:50.330
Yeah, I think there's
tremendous opportunity there.
01:28:50.330 --> 01:28:52.023
And to the point you make,
01:28:53.610 --> 01:28:55.627
sometimes angrily and sometimes happily,
01:28:55.627 --> 01:28:58.610
(laughing)
01:28:58.610 --> 01:28:59.970
these resources should be,
01:28:59.970 --> 01:29:01.830
they should all be part of this.
01:29:01.830 --> 01:29:03.683
Both in economic reward,
01:29:04.770 --> 01:29:07.490
but if you're not there, you're
getting the same penalty.
01:29:07.490 --> 01:29:12.490
Whether it's in a cone deck
construct or whatever it is,
01:29:12.790 --> 01:29:15.040
you get the same economic reward
01:29:15.040 --> 01:29:17.810
and you get the same penalty pain
01:29:17.810 --> 01:29:19.813
as a unit tripping.
01:29:21.790 --> 01:29:23.323
Yeah, anything else.
01:29:24.172 --> 01:29:26.340
Have to be able to count on.
01:29:26.340 --> 01:29:29.963
Yeah, accountability
across the board.
01:29:30.990 --> 01:29:31.823
Will?
01:29:32.720 --> 01:29:33.723
I think so.
01:29:33.723 --> 01:29:35.810
I'm just trying not to
preclude basic elements
01:29:35.810 --> 01:29:37.400
of the old deck program.
01:29:37.400 --> 01:29:39.765
I just want some good to get
01:29:39.765 --> 01:29:41.900
dispatchable generation.
01:29:41.900 --> 01:29:44.640
DG stuff is more amorphous.
01:29:44.640 --> 01:29:47.400
So I'm not trying to
box in the deck program.
01:29:47.400 --> 01:29:49.320
No, no, no, I'm not--
I'll cross that hill.
01:29:49.320 --> 01:29:51.491
I think we--
I think that's one of the,
01:29:51.491 --> 01:29:53.380
but I think that's one of the
features of the deck program
01:29:53.380 --> 01:29:54.810
is you identify,
01:29:54.810 --> 01:29:59.000
we don't have to figure
all this out now but in
01:29:59.996 --> 01:30:02.960
any version of an LSE obligation,
01:30:02.960 --> 01:30:05.543
heavy, light, short, tall, whatever,
01:30:06.380 --> 01:30:09.400
you treat each of them equally,
01:30:09.400 --> 01:30:12.223
both in reward and punishment.
01:30:13.720 --> 01:30:17.600
And by doing that,
you're putting value to it,
01:30:17.600 --> 01:30:20.480
whether it's decks
you don't have to buy or
01:30:21.636 --> 01:30:23.020
a LSE obligation that you can offer.
01:30:23.020 --> 01:30:25.010
You can essentially self-insure.
01:30:25.010 --> 01:30:27.670
You're putting a value
on that demand response
01:30:27.670 --> 01:30:30.400
that's quantifiable and fungible,
01:30:30.400 --> 01:30:33.860
which I can't think of
anything more important
01:30:33.860 --> 01:30:36.670
or more that will do more to drive
01:30:36.670 --> 01:30:39.870
the quantifying demand response
01:30:39.870 --> 01:30:43.200
and incentivizing implementation
01:30:43.200 --> 01:30:45.900
of those demand response
technologies and aggregation.
01:30:45.900 --> 01:30:50.340
But you put a value
on it and tell people to,
01:30:50.340 --> 01:30:52.540
tell the market to go figure
out the best way to get those.
01:30:52.540 --> 01:30:54.140
I think, as a principle,
01:30:54.140 --> 01:30:57.300
if those aggregated systems
can perform like a power plant
01:30:57.300 --> 01:31:00.600
to Woody's satisfaction
and ERCOT operations,
01:31:00.600 --> 01:31:01.540
they're a power plant.
01:31:01.540 --> 01:31:03.476
I mean, if they work like a power plant,
01:31:03.476 --> 01:31:04.480
they're a plower pant.
01:31:04.480 --> 01:31:05.933
Pay them the same,
treat them the same.
01:31:05.933 --> 01:31:07.207
Absolutely.
01:31:07.207 --> 01:31:11.020
And I think that'll
get better reliability,
01:31:11.020 --> 01:31:11.920
more economically,
01:31:12.937 --> 01:31:14.720
and provide more incentive for those
01:31:14.720 --> 01:31:17.186
resources and technologies
than we've ever had.
01:31:17.186 --> 01:31:18.446
Yes, sir.
Absolutely.
01:31:18.446 --> 01:31:19.950
That's where I had
said earlier in my view
01:31:19.950 --> 01:31:22.200
that we're blurring the lines between
01:31:22.200 --> 01:31:25.380
consumers and providers on the system.
01:31:25.380 --> 01:31:27.160
It's not just supply and demand
01:31:27.160 --> 01:31:29.060
because the demand side is also gonna be
01:31:29.060 --> 01:31:30.550
a supplier at some point in time.
01:31:30.550 --> 01:31:33.370
So this roadmap gets blurry
01:31:35.605 --> 01:31:36.870
as we're gonna
01:31:36.870 --> 01:31:38.907
I don't think we will
get it right the first time
01:31:38.907 --> 01:31:40.760
and I don't think others will
01:31:40.760 --> 01:31:43.030
as we try to find out how these VPPs
01:31:43.030 --> 01:31:45.370
and other of those
distribution resources
01:31:45.370 --> 01:31:46.580
really fit into this market.
01:31:46.580 --> 01:31:50.220
But I think it's the signal
that we want to push for them.
01:31:50.220 --> 01:31:51.260
We want their megawatts,
01:31:51.260 --> 01:31:54.190
we want their demand
response as part of our market.
01:31:54.190 --> 01:31:56.380
Yes, absolutely and
01:31:56.380 --> 01:31:59.030
one very important point I want to make.
01:31:59.030 --> 01:32:01.900
Oftentimes in the media and the public,
01:32:01.900 --> 01:32:03.143
stakeholder comments,
01:32:04.740 --> 01:32:07.930
there's a lot of discussion
or points being made
01:32:07.930 --> 01:32:10.710
that we're not doing enough
on the demand response side.
01:32:10.710 --> 01:32:12.620
And I just really want to
01:32:13.700 --> 01:32:16.240
zoom in on the fact that
today we have discussed
01:32:16.240 --> 01:32:20.680
a lot of demand side improvements,
01:32:20.680 --> 01:32:24.520
and that is through long-term
improvements through ERS,
01:32:24.520 --> 01:32:25.893
emergency response service,
01:32:26.910 --> 01:32:29.010
the TDU energy efficiency
load management rule
01:32:29.010 --> 01:32:30.680
that we're gonna be evaluating,
01:32:30.680 --> 01:32:33.130
distributed generation
interconnection procedures
01:32:33.130 --> 01:32:35.870
to make sure that those
processes are streamlined,
01:32:35.870 --> 01:32:40.720
and evaluation of virtual power plants.
01:32:40.720 --> 01:32:44.113
And opening up
non-spend two 50% load.
01:32:44.113 --> 01:32:46.820
Right.
01:32:46.820 --> 01:32:50.640
Just as a matter of
operations, Mr. Chairman.
01:32:50.640 --> 01:32:52.330
I see Kenan and Christie over here,
01:32:52.330 --> 01:32:54.030
and I know they're
listening to all this,
01:32:54.030 --> 01:32:55.580
and this is a mountain of work.
01:32:56.460 --> 01:32:58.273
So as a rule,
01:33:00.401 --> 01:33:03.480
well, we all agreed
with what you have here.
01:33:03.480 --> 01:33:05.300
The framework that
we've kind of discussed.
01:33:05.300 --> 01:33:06.133
It's kind of--
We gotta add
01:33:06.133 --> 01:33:08.010
some principles to the bottom of that.
01:33:08.010 --> 01:33:12.104
But in terms of near
term ERCOT operations,
01:33:12.104 --> 01:33:15.027
where the workshops get going
01:33:15.027 --> 01:33:17.440
and what the stakeholders
start discussing,
01:33:17.440 --> 01:33:19.650
this is the priority
over the next two years.
01:33:19.650 --> 01:33:21.410
Is that accurate?
01:33:21.410 --> 01:33:23.860
Or are we gonna try to work
on all this at the same time?
01:33:23.860 --> 01:33:25.370
'Cause their bandwidth and resources
01:33:25.370 --> 01:33:26.270
has come into question
01:33:26.270 --> 01:33:28.253
and also the governance--
Yes, and.
01:33:29.206 --> 01:33:31.373
First part, yes.
01:33:32.450 --> 01:33:34.040
On your first comment.
01:33:34.040 --> 01:33:36.370
Yes, that framework
and whatever principles
01:33:36.370 --> 01:33:39.063
or everything we put
into that is paramount.
01:33:40.610 --> 01:33:43.630
These other, I guess, non-market design
01:33:44.610 --> 01:33:47.530
operational elements like CDR and Sara.
01:33:47.530 --> 01:33:49.293
That'll take some ERCOT resources,
01:33:50.410 --> 01:33:52.260
but I've got a pretty good hunch
01:33:52.260 --> 01:33:53.770
that you're gonna do a
lot of heavy lifting on that.
01:33:53.770 --> 01:33:58.269
Yeah, we'll provide
real practical feedback.
01:33:58.269 --> 01:34:01.020
(laughing)
01:34:01.020 --> 01:34:03.560
Yeah, my sense is you're gonna
01:34:03.560 --> 01:34:04.580
roll your sleeves up on that.
01:34:04.580 --> 01:34:06.000
Sure.
01:34:06.000 --> 01:34:09.130
Which is probably not
gonna be too much of this.
01:34:09.130 --> 01:34:11.423
That's not a huge
resource drain on them.
01:34:15.362 --> 01:34:17.410
The voltage reduction,
01:34:17.410 --> 01:34:20.483
that's probably an
OPDM rate making thing.
01:34:23.730 --> 01:34:24.730
Et cetera, so I'm not,
01:34:24.730 --> 01:34:26.730
yes, we don't want to overwhelm them
01:34:27.700 --> 01:34:29.220
and we want to be careful with that.
01:34:29.220 --> 01:34:30.053
And so,
01:34:31.610 --> 01:34:34.100
I want to, as part of
the next step of this
01:34:34.100 --> 01:34:35.940
between now and the 16th,
01:34:35.940 --> 01:34:39.100
I need to work with
your individual offices
01:34:39.100 --> 01:34:41.830
and them to figure out a more
01:34:43.270 --> 01:34:45.943
crystallized implementation system.
01:34:49.350 --> 01:34:50.512
I'm done.
01:34:50.512 --> 01:34:51.580
Thank you so much
for your consideration.
01:34:51.580 --> 01:34:52.600
Yes, ma'am.
01:34:52.600 --> 01:34:54.150
Thank you for laying those out.
01:35:00.842 --> 01:35:04.580
Pending discussion on
principles of LSE obligation,
01:35:04.580 --> 01:35:09.023
is there anything else in
this memo plus Lori's that,
01:35:10.510 --> 01:35:15.510
and the cost visualization
issue we'll have to work on,
01:35:16.150 --> 01:35:19.383
anything else on here that is not,
01:35:20.230 --> 01:35:22.280
we're not committed
to moving forward on?
01:35:34.282 --> 01:35:35.220
Other than principles, no sir.
01:35:35.220 --> 01:35:37.243
Yeah, I'm good.
That's it.
01:35:39.580 --> 01:35:41.647
I don't see anything right now.
01:35:41.647 --> 01:35:43.782
Okay, and this is, I
mean, this is a draft.
01:35:43.782 --> 01:35:47.190
Staff will be, we'll issue the final--
01:35:47.190 --> 01:35:48.560
Struggling for final comment?
01:35:48.560 --> 01:35:52.630
The final second
draft of the temporary
01:35:54.090 --> 01:35:55.023
work in progress.
01:35:57.550 --> 01:35:59.600
So there's still time.
01:35:59.600 --> 01:36:02.290
We'll have time to adjust.
01:36:02.290 --> 01:36:05.610
And then that will be the
last set of comments we take
01:36:07.655 --> 01:36:08.750
at the end of the year.
01:36:08.750 --> 01:36:09.583
All right.
01:36:10.685 --> 01:36:12.050
LSE obligation principles.
01:36:12.050 --> 01:36:14.790
We've committed to move forward,
01:36:14.790 --> 01:36:17.210
studying and developing
an LSE obligation
01:36:18.190 --> 01:36:20.723
or LSE reliability mechanism.
01:36:22.060 --> 01:36:24.790
What are the principles we want to ask
01:36:24.790 --> 01:36:27.630
ERCOT, Brattle, et cetera,
01:36:27.630 --> 01:36:32.183
to design that principle or
design that mechanism around?
01:36:33.050 --> 01:36:35.270
I've laid out some here.
01:36:35.270 --> 01:36:37.060
Obviously I know you
all have seen those.
01:36:37.060 --> 01:36:40.440
I would also submit the
01:36:40.440 --> 01:36:43.043
deck features I listed at the beginning.
01:36:46.180 --> 01:36:48.823
Especially the penalty at cone.
01:36:52.460 --> 01:36:53.320
Listing...
01:36:56.300 --> 01:37:00.370
Building on rec framework
as much as possible.
01:37:00.370 --> 01:37:02.290
I mean, in general, I think we want to
01:37:02.290 --> 01:37:04.883
utilize existing frameworks
as much as we can.
01:37:07.561 --> 01:37:11.063
A self-correcting, ensuring
that it's self-correcting.
01:37:12.056 --> 01:37:13.223
The cure for high price is a high price.
01:37:13.223 --> 01:37:15.760
That first, and that's the corollary
01:37:15.760 --> 01:37:19.920
of the cone penalty concept.
01:37:19.920 --> 01:37:22.930
The first one is you
don't have enough supply,
01:37:22.930 --> 01:37:24.330
you've got this much demand.
01:37:25.350 --> 01:37:26.840
That next one is cone.
01:37:26.840 --> 01:37:28.070
The next one's cone.
01:37:28.070 --> 01:37:30.510
But as you get closer to that demand
01:37:30.510 --> 01:37:32.020
and that market equilibrium,
01:37:32.020 --> 01:37:36.917
the marginal price per
H next unit decreases.
01:37:38.110 --> 01:37:40.880
And then you, so that kind of,
01:37:40.880 --> 01:37:41.790
make sure we incorporate
01:37:41.790 --> 01:37:43.763
that kind of self-correcting mechanism.
01:37:46.180 --> 01:37:47.280
Forward price signal,
01:37:47.280 --> 01:37:50.420
performance penalty, and
noncompliance penalty.
01:37:50.420 --> 01:37:52.500
If we're gonna ask
someone on the load side
01:37:52.500 --> 01:37:56.260
to procure something to ensure
01:37:56.260 --> 01:37:58.060
their customers receive
the reliable power
01:37:58.060 --> 01:37:59.410
that they've promised them,
01:38:00.640 --> 01:38:04.300
same penalty on the gen
side for not showing up.
01:38:04.300 --> 01:38:05.133
For not,
01:38:06.111 --> 01:38:11.111
they took revenue
for that reliability credit
01:38:11.200 --> 01:38:12.660
that they sold.
01:38:12.660 --> 01:38:15.190
If they don't show up, same penalty,
01:38:15.190 --> 01:38:16.990
or philosophically the same penalty.
01:38:20.468 --> 01:38:21.733
I mean, performance standards,
01:38:21.733 --> 01:38:22.960
that was something
you mentioned, I think,
01:38:22.960 --> 01:38:25.443
that was something in the--
Performance, yeah.
01:38:27.152 --> 01:38:28.310
A different issue.
01:38:28.310 --> 01:38:31.080
I would ask him to,
again, as a part of this,
01:38:31.080 --> 01:38:32.570
model two scenarios because I think
01:38:32.570 --> 01:38:33.760
it's important for scope
01:38:33.760 --> 01:38:36.930
so that we at least answer questions,
01:38:36.930 --> 01:38:41.163
which is a specific
performance standard or for all.
01:38:42.690 --> 01:38:44.250
All dispatchable generation,
01:38:44.250 --> 01:38:46.950
so that we can adequately be informed
01:38:46.950 --> 01:38:48.900
on crossing that river.
01:38:48.900 --> 01:38:53.457
Can I ask if you'd
consider asking for,
01:38:55.230 --> 01:38:57.430
or we have a sizing
question, a quantity,
01:38:57.430 --> 01:38:58.627
and then a compensation side.
01:38:58.627 --> 01:39:00.973
And I would like to explore,
01:39:05.883 --> 01:39:06.810
and you gotta be real careful about
01:39:06.810 --> 01:39:09.100
the principle of tech agnostic,
01:39:09.100 --> 01:39:11.100
which I think is important to all of us.
01:39:12.790 --> 01:39:16.953
Some bifurcated value of,
01:39:18.050 --> 01:39:19.890
by performance standards, I mean,
01:39:19.890 --> 01:39:21.400
the deck is designed for new,
01:39:21.400 --> 01:39:24.900
but the new part is just from
the performance standard.
01:39:24.900 --> 01:39:27.800
It doesn't technically say
it's gotta be a ribbon cutting.
01:39:30.133 --> 01:39:31.670
But to have some performance standard
01:39:31.670 --> 01:39:34.630
that has the deck
or the reliability credit
01:39:34.630 --> 01:39:36.460
or whatever it is valued more
01:39:36.460 --> 01:39:38.260
for a higher performance standard.
01:39:38.260 --> 01:39:39.773
Almost a bonus, if you will.
01:39:41.740 --> 01:39:43.390
I don't know that that,
01:39:44.610 --> 01:39:46.570
I don't know that that's the answer but
01:39:47.450 --> 01:39:52.450
at least consider the concept
of staggered valuation or--
01:39:52.940 --> 01:39:55.493
Or if you work through the ACP,
01:39:55.493 --> 01:39:57.470
sort of the value of the ACP
01:39:57.470 --> 01:39:59.620
or whatever that
concept is, which is cone,
01:40:00.680 --> 01:40:02.110
and work your way backward.
01:40:02.110 --> 01:40:03.480
If you're talking, because,
01:40:03.480 --> 01:40:06.240
if you're concerned about
batteries or something,
01:40:06.240 --> 01:40:08.920
that again, they're gonna
have a two hour duration
01:40:08.920 --> 01:40:10.959
or whatever that performance value is,
01:40:10.959 --> 01:40:13.080
and they're not providing as much,
01:40:13.080 --> 01:40:14.250
then that gets you into, okay,
01:40:14.250 --> 01:40:16.560
well, whatever is the standard metric
01:40:16.560 --> 01:40:19.650
that you want to assign and the value.
01:40:19.650 --> 01:40:23.523
So that maybe it's not
the full ACP value at first.
01:40:24.520 --> 01:40:29.053
And then it ratchets down as
more new generation comes in.
01:40:30.063 --> 01:40:31.650
Well, we want, yeah.
Know what I'm saying?
01:40:31.650 --> 01:40:34.500
Yeah, and that's, we want
that self-correcting mechanism
01:40:34.500 --> 01:40:36.070
that can be structured.
01:40:36.070 --> 01:40:37.720
I think we want it market driven.
01:40:39.570 --> 01:40:42.570
But I mean, for right
now, I think we all,
01:40:42.570 --> 01:40:43.403
all we need to
01:40:45.370 --> 01:40:47.070
agree to is that--
01:40:47.070 --> 01:40:48.640
Performance standard.
01:40:48.640 --> 01:40:51.170
We can pay more
for higher performance.
01:40:51.170 --> 01:40:52.500
Check.
01:40:52.500 --> 01:40:55.163
And still pay
something for existing.
01:40:56.750 --> 01:40:59.290
Deck value associated
with performance standard
01:40:59.290 --> 01:41:01.460
with degrees of performance--
Different performances.
01:41:01.460 --> 01:41:02.840
Degrees of performance.
Right, so.
01:41:02.840 --> 01:41:04.755
I know it's something
that's important to you
01:41:04.755 --> 01:41:05.870
is we don't want to dump money.
01:41:05.870 --> 01:41:06.960
All of us, cash for clunkers.
01:41:06.960 --> 01:41:08.120
We don't want to do that.
01:41:08.120 --> 01:41:09.410
Deck value associated, yeah.
01:41:09.410 --> 01:41:11.127
But we do want,
01:41:11.127 --> 01:41:13.950
and that's part of, I mean it's...
01:41:18.395 --> 01:41:20.380
And the other feature of, I think I put,
01:41:20.380 --> 01:41:21.780
I already put this in there.
01:41:24.190 --> 01:41:25.377
Performance standards.
01:41:28.509 --> 01:41:29.710
One of the features of the deck proposal
01:41:29.710 --> 01:41:33.660
is it's pay by performance.
01:41:33.660 --> 01:41:35.340
You gotta clear,
01:41:35.340 --> 01:41:36.920
I think as Aaron pointed out last time,
01:41:36.920 --> 01:41:40.510
it was like, it's based
on a net peak element.
01:41:40.510 --> 01:41:42.170
So it's important.
01:41:42.170 --> 01:41:44.220
You got to clear out
the important times.
01:41:44.220 --> 01:41:45.607
You gotta be in the market,
you gotta be available.
01:41:45.607 --> 01:41:47.980
You're not dispatch,
but you gotta be there.
01:41:47.980 --> 01:41:49.880
That's how you get paid.
01:41:49.880 --> 01:41:52.220
Doesn't have to look exactly like that.
01:41:52.220 --> 01:41:53.630
But that's important.
01:41:53.630 --> 01:41:54.950
Seems to make sense, yes.
01:41:54.950 --> 01:41:57.173
Yeah, that's a
tremendous feature.
01:41:58.320 --> 01:41:59.913
So I would include that.
01:42:00.960 --> 01:42:03.393
And I would also say you could pay,
01:42:04.280 --> 01:42:07.210
I mean, hell, problem may
take care of itself anyway.
01:42:07.210 --> 01:42:10.350
I don't know, we don't need
to figure it out today, but.
01:42:10.350 --> 01:42:11.443
And that may be,
01:42:12.690 --> 01:42:15.870
that may take care
of itself anyway in that,
01:42:15.870 --> 01:42:20.563
in order to clear, you've
gotta be lower heat rate.
01:42:23.010 --> 01:42:24.319
So anyway, we don't need to
01:42:24.319 --> 01:42:25.152
figure that out.
I think high level,
01:42:25.152 --> 01:42:26.260
as you say,
01:42:26.260 --> 01:42:29.740
associate that deck value
with a performance value
01:42:30.610 --> 01:42:33.540
of the machine of the facility.
01:42:33.540 --> 01:42:35.030
Yeah.
01:42:35.030 --> 01:42:35.920
Be open to
01:42:37.550 --> 01:42:39.600
higher payments for higher performance,
01:42:39.600 --> 01:42:41.280
lower payments, but some payment
01:42:41.280 --> 01:42:42.940
for lower performance slash existing.
01:42:42.940 --> 01:42:45.070
Okay, check.
Yeah.
01:42:45.070 --> 01:42:45.903
Work, Lori?
01:42:47.060 --> 01:42:48.460
I think that all sounds,
01:42:48.460 --> 01:42:50.750
I'm fine with what
we all are discussing.
01:42:50.750 --> 01:42:52.040
I think we're just scoping out
01:42:52.040 --> 01:42:54.053
at least some general
parameters right now.
01:42:59.830 --> 01:43:01.073
I think that that's,
01:43:04.090 --> 01:43:06.010
that's what I've got
for principles to include
01:43:06.010 --> 01:43:07.747
in the LSE obligation.
01:43:07.747 --> 01:43:12.747
And my intention is once
the staff version is published,
01:43:13.170 --> 01:43:15.930
we'll do kind of a brief,
01:43:15.930 --> 01:43:20.743
abridged version of stakeholder
comments for this one.
01:43:21.780 --> 01:43:24.750
I would ask that the stakeholders
01:43:24.750 --> 01:43:27.690
stick to the same parameters
of page number and format,
01:43:27.690 --> 01:43:32.677
but also limit their
responses to the LSE.
01:43:34.490 --> 01:43:36.317
The load side reliability mechanism
01:43:36.317 --> 01:43:38.030
and the backstop reserve mechanism,
01:43:38.030 --> 01:43:40.053
so we can concentrate on just those.
01:43:43.430 --> 01:43:46.480
And in that spirit,
if it works for y'all,
01:43:46.480 --> 01:43:48.890
I'm gonna put a subset of,
01:43:48.890 --> 01:43:52.980
in that left column of LSE obligation,
01:43:52.980 --> 01:43:57.630
I'm gonna put a subset of principles,
01:43:57.630 --> 01:44:00.970
not principles, versions
as flavors of an LSE.
01:44:00.970 --> 01:44:02.873
What kind of different
flavors of ice cream.
01:44:03.857 --> 01:44:05.660
One of them is decks. One
of them is proof of purchase.
01:44:05.660 --> 01:44:07.290
We heard the gentleman from Lubbock
01:44:07.290 --> 01:44:08.810
say it was the transmission studies
01:44:08.810 --> 01:44:10.480
that killed it and won
the proof of purchase.
01:44:10.480 --> 01:44:12.080
That proof of purchase was easy.
01:44:14.790 --> 01:44:16.930
My original proposal--
Do the assortment.
01:44:16.930 --> 01:44:18.493
Yes, sir.
And then the E3.
01:44:19.930 --> 01:44:21.810
With the understanding that
01:44:21.810 --> 01:44:23.990
none of those as
previously presented are
01:44:25.730 --> 01:44:27.313
the final product.
01:44:28.420 --> 01:44:31.110
But stakeholders tell us
01:44:31.110 --> 01:44:33.160
what the pros and
cons of each of these are
01:44:33.160 --> 01:44:34.524
and the best way.
01:44:34.524 --> 01:44:37.570
We know we're doing
some combination of these.
01:44:37.570 --> 01:44:39.713
So tell us what the best version is.
01:44:41.190 --> 01:44:42.310
Does that work for y'all?
01:44:42.310 --> 01:44:44.593
Yes.
That's appropriate.
01:44:44.593 --> 01:44:46.560
All right, any
other principles?
01:44:46.560 --> 01:44:49.880
I mean, these principles to include
01:44:51.860 --> 01:44:54.523
in our, I gotta come
up with a better name.
01:44:55.850 --> 01:44:57.803
We're renaming everything.
Straw man.
01:44:57.803 --> 01:45:01.720
LSE, I'm not good
at the naming stuff.
01:45:01.720 --> 01:45:03.360
I tried, but you know.
01:45:03.360 --> 01:45:06.250
Do we want to
put in on either--
01:45:06.250 --> 01:45:08.450
You could
have stakeholders.
01:45:08.450 --> 01:45:09.900
Jimmy, you kill me.
01:45:12.490 --> 01:45:15.530
Do we want to put in
parameters on the sizing to reflect,
01:45:15.530 --> 01:45:16.690
and this kind of goes for all of them,
01:45:16.690 --> 01:45:18.930
either on an annual or a seasonal basis?
01:45:18.930 --> 01:45:22.257
So that we head things
off at the pass on years out
01:45:22.257 --> 01:45:24.430
and all that kind of fluster.
01:45:24.430 --> 01:45:25.410
Or do you want to keep that in?
01:45:25.410 --> 01:45:27.450
I don't know.
So how about this.
01:45:27.450 --> 01:45:31.450
Forward pricing for a
year, no more than a year,
01:45:31.450 --> 01:45:33.023
which is an element of deck.
01:45:34.320 --> 01:45:35.153
Aim for,
01:45:36.690 --> 01:45:39.540
we need to figure out sizing.
01:45:39.540 --> 01:45:40.960
I don't know the answer to that.
01:45:40.960 --> 01:45:43.270
Like I said, I think my
original shot was too big.
01:45:43.270 --> 01:45:47.820
I think the kind of share,
the other one's too low.
01:45:47.820 --> 01:45:50.340
But I think the important
part is it's dynamic
01:45:50.340 --> 01:45:54.900
and it responds, and it doesn't
have to be net peak load,
01:45:54.900 --> 01:45:57.670
but that's because that peak load
01:45:57.670 --> 01:45:59.040
isn't just a blunt instrument.
01:45:59.040 --> 01:46:01.290
Hey, go buy everything
we could possibly need.
01:46:01.290 --> 01:46:03.460
It accounts for the intermittence.
01:46:04.796 --> 01:46:07.363
And the second part of that is,
01:46:08.921 --> 01:46:12.623
two follow-ons is one, if
we set a dynamic metric,
01:46:13.640 --> 01:46:15.890
we can just fire and forget.
01:46:15.890 --> 01:46:17.290
We don't have to
revisit it all the time.
01:46:17.290 --> 01:46:19.410
We don't have to resize it every year.
01:46:19.410 --> 01:46:20.402
This is the metric.
01:46:20.402 --> 01:46:21.620
This is what we're gonna do.
01:46:21.620 --> 01:46:22.730
And more importantly,
01:46:22.730 --> 01:46:25.550
and I think this is something
that you care about,
01:46:25.550 --> 01:46:27.673
is that if you do it on a dynamic,
01:46:28.910 --> 01:46:31.303
if you use a dynamic sizing tool,
01:46:33.050 --> 01:46:36.293
presumably around key
stress, periods of stress,
01:46:37.990 --> 01:46:42.250
that also gives you
an opportunity to utilize
01:46:42.250 --> 01:46:44.550
the 4CP phenomenon
01:46:44.550 --> 01:46:48.150
where people know that that's
where they either make money
01:46:48.150 --> 01:46:51.540
or they get penalized
if they don't show up.
01:46:51.540 --> 01:46:52.930
Yeah, that feeds in,
01:46:52.930 --> 01:46:54.910
that's what I was gonna ask next is,
01:46:54.910 --> 01:46:56.370
do you want, peak load,
01:46:56.370 --> 01:46:58.490
peak net load is kind of important.
01:46:58.490 --> 01:47:00.470
I think we've all identified that.
01:47:00.470 --> 01:47:03.210
So do you want as a principle
01:47:03.210 --> 01:47:06.310
that it should be based
around the past year's
01:47:06.310 --> 01:47:09.520
peak net load intervals
from the past year,
01:47:09.520 --> 01:47:11.310
or leave that open?
01:47:12.380 --> 01:47:13.660
'Cause I just want it reflective of
01:47:13.660 --> 01:47:15.710
actual load participation.
Yeah.
01:47:15.710 --> 01:47:16.550
I don't know if it's last year's
01:47:16.550 --> 01:47:18.677
or the projection for
this year and next year.
01:47:18.677 --> 01:47:19.510
I don't know.
01:47:19.510 --> 01:47:21.930
But yes, net peak load dynamic,
01:47:21.930 --> 01:47:23.950
based on some dynamic load metric.
01:47:23.950 --> 01:47:25.337
We don't have to
figure that out right now.
01:47:25.337 --> 01:47:27.030
Does that work for everybody?
01:47:27.030 --> 01:47:28.130
That's fine.
Yes.
01:47:30.670 --> 01:47:32.440
On the ACP portion,
01:47:32.440 --> 01:47:34.700
I thought this was a virtue,
01:47:34.700 --> 01:47:37.250
and I believe everybody did comment.
01:47:37.250 --> 01:47:38.193
Any penalty,
01:47:40.290 --> 01:47:42.520
firming obligations should
act as a circuit breaker
01:47:42.520 --> 01:47:45.683
and offset the cost of
ancillary services to it.
01:47:47.308 --> 01:47:51.030
That seems like a no brainer
to incorporate from the outset.
01:47:51.030 --> 01:47:52.053
Yeah, absolutely.
01:47:54.830 --> 01:47:56.300
Yeah, yeah.
01:47:56.300 --> 01:47:57.133
Just use,
01:47:59.640 --> 01:48:01.040
well, hold on.
01:48:01.040 --> 01:48:06.040
Yes and I think, I can't
remember if we talked about this.
01:48:06.310 --> 01:48:07.610
It may be in there,
01:48:07.610 --> 01:48:10.160
but not only use it to offset the cost,
01:48:10.160 --> 01:48:11.580
but to procure more
01:48:12.770 --> 01:48:15.463
so that you get your new
bill one way or the other.
01:48:17.690 --> 01:48:19.110
Does that make sense?
01:48:19.110 --> 01:48:20.670
Yeah, if you don't, I mean,
01:48:20.670 --> 01:48:22.180
if you're not getting the decks,
01:48:22.180 --> 01:48:25.120
if you're not getting generation
resulting from the decks,
01:48:25.120 --> 01:48:26.320
something needs to get built.
01:48:26.320 --> 01:48:27.500
If you're not getting
more dispatchable
01:48:27.500 --> 01:48:31.112
on the top end from your
reliability mechanism--
01:48:31.112 --> 01:48:31.945
I'm fine with that, yes sir.
01:48:31.945 --> 01:48:34.240
Take that penalty
and buy it on the backend.
01:48:34.240 --> 01:48:35.529
Yes.
Right.
01:48:35.529 --> 01:48:36.362
Does that work?
Yes.
01:48:36.362 --> 01:48:37.270
In principle?
Yes.
01:48:38.760 --> 01:48:39.753
Yeah.
Okay.
01:48:41.120 --> 01:48:42.362
Keep going.
That's all.
01:48:42.362 --> 01:48:44.173
How many was that?
01:48:45.052 --> 01:48:46.070
Got a lot.
01:48:46.070 --> 01:48:47.421
Don't ask.
Ben, did you catch that?
01:48:47.421 --> 01:48:49.671
(laughing)
01:48:50.520 --> 01:48:51.370
I think I'm done.
01:48:53.270 --> 01:48:56.183
Any other thoughts on
principles to be added?
01:48:57.740 --> 01:48:59.470
No, I think--
We got a lot.
01:48:59.470 --> 01:49:02.160
Yeah, I think y'all
came up with a suite of
01:49:02.160 --> 01:49:04.147
good starting principles.
01:49:04.147 --> 01:49:05.523
I don't have anything
to add at this time.
01:49:06.718 --> 01:49:07.551
I'm sorry?
I don't have anything
01:49:07.551 --> 01:49:09.218
to add at this time.
01:49:12.146 --> 01:49:13.147
Do you think it's helpful,
01:49:13.147 --> 01:49:15.910
and I know you laid out some
parameters for the backstop
01:49:15.910 --> 01:49:18.093
reserve mechanisms.
We can go through those too.
01:49:22.161 --> 01:49:25.213
And you did include some
of the main pieces that I had.
01:49:26.182 --> 01:49:28.932
I tried to but it was late, so.
01:49:29.890 --> 01:49:31.560
I guess the first one is
01:49:31.560 --> 01:49:34.100
procuring dispatchable
resources using a framework
01:49:34.100 --> 01:49:35.730
similar to an existing framework.
01:49:35.730 --> 01:49:38.780
And I think, and we talked about this
01:49:38.780 --> 01:49:41.910
and I think that the goal
here is to try to get this
01:49:41.910 --> 01:49:44.190
mechanism in place as soon as possible.
01:49:44.190 --> 01:49:46.870
And in my proposal I had put in
01:49:46.870 --> 01:49:47.900
kind of two options,
01:49:47.900 --> 01:49:50.840
a competitive RFP process
or a competitive auction.
01:49:50.840 --> 01:49:54.600
And I know in your memo,
you laid out potentially,
01:49:54.600 --> 01:49:56.870
I think black start and ERS are both
01:49:56.870 --> 01:49:59.650
competitive RFP processes at ERCOT.
01:49:59.650 --> 01:50:04.650
And maybe if there's some
feedback from Kenan as to,
01:50:04.680 --> 01:50:06.740
I know we've had this
discussion already and,
01:50:06.740 --> 01:50:09.290
but if there's additional
feedback you can provide us on
01:50:09.290 --> 01:50:13.580
maybe we use a black
start sort of framework,
01:50:13.580 --> 01:50:15.253
if that's any more efficient.
01:50:16.170 --> 01:50:18.320
Any added feedback on implementation
01:50:19.390 --> 01:50:20.450
in the most efficient manner?
01:50:20.450 --> 01:50:22.780
Is that--
I don't know that,
01:50:22.780 --> 01:50:24.340
happy to hear from Kenan,
01:50:24.340 --> 01:50:25.950
but I don't know that we
need to figure it out today.
01:50:25.950 --> 01:50:28.010
My only intention in saying that was
01:50:28.960 --> 01:50:29.793
get it in place.
01:50:29.793 --> 01:50:34.010
Use whatever we can to get
it in place as soon as possible.
01:50:34.010 --> 01:50:36.850
If we can use an existing RFP framework,
01:50:36.850 --> 01:50:39.430
anything like that, and
copy and paste from that,
01:50:39.430 --> 01:50:42.030
rather than build something
completely new from scratch,
01:50:42.030 --> 01:50:44.420
that was my intention on that.
01:50:44.420 --> 01:50:46.140
Which I think is your sentiment.
01:50:46.140 --> 01:50:48.330
I just said the same
thing more clumsily.
01:50:48.330 --> 01:50:49.163
That's fine.
01:50:50.337 --> 01:50:51.754
I think that the,
01:50:53.154 --> 01:50:54.343
I'm kind of going through here,
01:50:55.280 --> 01:50:59.020
so that takes care of
how we will procure SRS,
01:50:59.020 --> 01:51:01.543
what resources will qualify for SRS.
01:51:03.360 --> 01:51:06.500
I had in my proposal,
and I'm not sure there's
01:51:07.750 --> 01:51:12.450
anything in there yet,
but that's a key question.
01:51:12.450 --> 01:51:17.270
I had opened it up for new
and existing credited resources.
01:51:17.270 --> 01:51:20.580
And what I mean by that
are obviously weatherized.
01:51:20.580 --> 01:51:22.310
Generation resources
will have to be weatherized
01:51:22.310 --> 01:51:23.710
for our weatherization role.
01:51:25.770 --> 01:51:28.280
Potentially a review
of supply arrangement,
01:51:28.280 --> 01:51:29.260
fuel supplier arrangements.
01:51:29.260 --> 01:51:31.550
Just making sure the
resources we're getting
01:51:31.550 --> 01:51:33.800
are accredited and seasonally tested
01:51:33.800 --> 01:51:37.006
so that we could avoid the
cash for clunkers concept.
01:51:37.006 --> 01:51:38.800
We would not want clunkers to be
01:51:38.800 --> 01:51:40.670
part of this program.
Black start though, right?
01:51:40.670 --> 01:51:42.080
I mean, you want to test them.
01:51:42.080 --> 01:51:43.740
Yep, yep, seasonally.
Yep.
01:51:43.740 --> 01:51:45.640
In both of these, we want them tested.
01:51:46.500 --> 01:51:48.890
I would ask, in your original proposal,
01:51:48.890 --> 01:51:50.850
it was two hours or more.
01:51:50.850 --> 01:51:55.200
So very much like the idea of it being
01:51:55.200 --> 01:51:58.140
a broader universe of
assets we can include.
01:51:58.140 --> 01:52:00.141
I would put a cap on it.
01:52:00.141 --> 01:52:02.450
I would, I don't know what that is,
01:52:02.450 --> 01:52:06.143
but I don't, to avoid the cash
for clunkers phenomenon.
01:52:07.490 --> 01:52:09.580
I don't know what it is,
but say it's got to either,
01:52:09.580 --> 01:52:11.730
it either gotta be at, I
wouldn't say heat rate,
01:52:11.730 --> 01:52:13.963
but a start time or some,
01:52:14.900 --> 01:52:17.863
it can't be the,
01:52:19.440 --> 01:52:22.850
the haunted house cobweb
version of a generator
01:52:22.850 --> 01:52:23.890
sitting out there.
01:52:23.890 --> 01:52:24.723
It needs to be--
01:52:25.610 --> 01:52:27.672
Haunted house?
It needs to be performing,
01:52:27.672 --> 01:52:29.040
a well-performing asset.
01:52:29.040 --> 01:52:30.097
Yes, agreed.
01:52:30.097 --> 01:52:32.123
And I'm certainly open
to exploring that more.
01:52:32.123 --> 01:52:35.880
My initial, I guess,
01:52:35.880 --> 01:52:37.820
parameter that I put out
there was just intended
01:52:37.820 --> 01:52:39.370
to try to capture a little
bit more than peekers
01:52:39.370 --> 01:52:40.993
to give our kind of
01:52:40.993 --> 01:52:42.860
operational flexibility.
It's immensely valuable.
01:52:42.860 --> 01:52:45.286
Yes, agree with that.
But I can work with--
01:52:45.286 --> 01:52:46.140
Just book end it.
01:52:46.140 --> 01:52:47.263
Sure, okay.
01:52:51.500 --> 01:52:53.673
I think, let me see here.
01:52:54.630 --> 01:52:56.210
And oh, and one thing I do want to add
01:52:56.210 --> 01:52:58.710
is not only new and existing
dispatchable resources,
01:52:58.710 --> 01:53:01.200
but potentially demand response,
01:53:01.200 --> 01:53:02.650
depending on how we
set up the parameters.
01:53:02.650 --> 01:53:03.523
If there's a way,
01:53:04.410 --> 01:53:06.400
if there's an opportunity there,
01:53:06.400 --> 01:53:08.890
I don't want to close the
door, but I think it's gonna be,
01:53:08.890 --> 01:53:10.970
depending on when
you have to get synced up
01:53:10.970 --> 01:53:12.570
for how long and how many days.
01:53:12.570 --> 01:53:15.656
Yeah, I'm willing to
leave it in there but that's--
01:53:15.656 --> 01:53:17.667
We don't want to
cannibalize ERS either, so.
01:53:17.667 --> 01:53:18.811
We're getting--
01:53:18.811 --> 01:53:19.770
Right, okay.
Getting in the water.
01:53:19.770 --> 01:53:20.703
Okay. All right.
01:53:22.060 --> 01:53:24.010
Well, that is ERS.
01:53:24.010 --> 01:53:25.510
ERS is the backstop version of
01:53:26.874 --> 01:53:28.434
demand response or flood management.
01:53:28.434 --> 01:53:29.580
That's correct.
01:53:29.580 --> 01:53:31.080
Okay.
01:53:31.080 --> 01:53:32.210
When will it be deployed,
01:53:32.210 --> 01:53:33.570
that's your principle in here,
01:53:33.570 --> 01:53:35.340
reserves will be with
health in the market
01:53:35.340 --> 01:53:37.230
until HCAP is reached.
01:53:37.230 --> 01:53:39.920
I have been working
with ERCOT and Brattle
01:53:39.920 --> 01:53:43.630
on addressing the right
price point to bring them in.
01:53:43.630 --> 01:53:46.980
I think there are obviously
some feedback we've gotten
01:53:46.980 --> 01:53:48.580
that recommended the price cap,
01:53:48.580 --> 01:53:52.360
and the price cap is the
LMP plus the ORDC adder,
01:53:52.360 --> 01:53:54.730
'cause sometimes we
can be in tight conditions
01:53:54.730 --> 01:53:57.160
and the LMP is still
not at the price cap.
01:53:57.160 --> 01:54:00.370
But there are some
stakeholders out there
01:54:00.370 --> 01:54:01.970
believe they should be at
the market clearing price.
01:54:01.970 --> 01:54:04.420
So I want to make sure
that we scope that out
01:54:04.420 --> 01:54:07.230
in a way that doesn't
result in price reversal
01:54:07.230 --> 01:54:09.360
and negative price impacts.
01:54:09.360 --> 01:54:11.700
So I'll continue the discussion with
01:54:11.700 --> 01:54:13.480
Brattle and Kenan and stakeholders.
01:54:13.480 --> 01:54:16.330
It doesn't have to
be withheld to HCAP.
01:54:16.330 --> 01:54:18.360
Whatever it is, but
I think the principle
01:54:18.360 --> 01:54:23.360
needs to be withheld
until it's really a backstop.
01:54:23.740 --> 01:54:24.573
Yes.
01:54:24.573 --> 01:54:26.890
I don't know what the
exact price mechanism is, but.
01:54:27.834 --> 01:54:30.170
We can start at HCAP, but
I'm very much open to hearing
01:54:30.170 --> 01:54:32.231
if there are any negative consequences
01:54:32.231 --> 01:54:34.200
of deployment price cap.
01:54:34.200 --> 01:54:36.800
Yes, but let's make
sure it's, I agree,
01:54:36.800 --> 01:54:39.805
and we can sort that out
as part of the development.
01:54:39.805 --> 01:54:40.638
Sure.
01:54:40.638 --> 01:54:43.247
But it is important
that it is truly--
01:54:44.670 --> 01:54:45.880
Backstop.
Backstop.
01:54:45.880 --> 01:54:46.713
Absolutely.
01:54:46.713 --> 01:54:48.930
We don't want
to tell the market
01:54:48.930 --> 01:54:50.363
we're withholding supply.
01:54:52.120 --> 01:54:54.280
Break glass in case of emergency.
01:54:54.280 --> 01:54:59.040
And it's only coming out at MCL 3000,
01:54:59.040 --> 01:55:02.350
PRC, but we get nervous and say,
01:55:02.350 --> 01:55:05.210
ooh, 3500 PR is really tight.
01:55:05.210 --> 01:55:06.350
Let's dump it in there.
01:55:06.350 --> 01:55:07.550
That's what we want to avoid.
01:55:07.550 --> 01:55:09.363
Right, absolutely, agreed.
01:55:10.768 --> 01:55:11.601
Does that work?
01:55:11.601 --> 01:55:12.434
Yup.
Yes, sir.
01:55:12.434 --> 01:55:13.840
Okay, so continue exploring.
01:55:13.840 --> 01:55:16.501
Let me just, go on, finish.
01:55:16.501 --> 01:55:17.611
Go, I'm done.
01:55:17.611 --> 01:55:18.444
Please go.
01:55:18.444 --> 01:55:20.100
No, I was just gonna
say something about
01:55:21.330 --> 01:55:24.930
this is kind of off-market but the,
01:55:24.930 --> 01:55:29.530
as we look at this load
serving entity obligation
01:55:29.530 --> 01:55:31.230
and these other mechanisms that
01:55:31.230 --> 01:55:33.890
I think the question
that I would have is,
01:55:33.890 --> 01:55:35.950
mentioned this before that,
01:55:35.950 --> 01:55:40.040
so if we're requiring entities
01:55:40.040 --> 01:55:43.223
to provide a certain amount
of resources in the market,
01:55:44.060 --> 01:55:46.030
do we need, what is this,
01:55:46.030 --> 01:55:48.630
what is the need for our
scarcity pricing mechanism?
01:55:51.350 --> 01:55:52.700
At all?
01:55:52.700 --> 01:55:53.540
I think, I mean,
01:55:53.540 --> 01:55:56.630
if we got to 100% load
serving entity obligation,
01:55:56.630 --> 01:56:00.186
I would say that you would
have no reason to have,
01:56:00.186 --> 01:56:03.380
I mean, you could put a
price cap at 500 bucks or 1000,
01:56:03.380 --> 01:56:05.620
'cause you're basically
guaranteed on the supply side
01:56:05.620 --> 01:56:08.630
that there's no reason to have both.
01:56:08.630 --> 01:56:12.390
So all I'm saying here in
this part of this discussion is
01:56:12.390 --> 01:56:14.570
that's an issue that I'm
gonna bring up at a later time,
01:56:14.570 --> 01:56:16.550
once we figure out all this analytics
01:56:16.550 --> 01:56:18.150
and what these things look like.
01:56:19.900 --> 01:56:21.980
Tell me it's a--
How about this.
01:56:21.980 --> 01:56:22.813
I agree in principle.
01:56:22.813 --> 01:56:26.477
If we're, we don't need to over correct.
01:56:29.470 --> 01:56:31.340
Can we incorporate that analysis
01:56:31.340 --> 01:56:34.433
into the odd number year review of ORDC?
01:56:36.630 --> 01:56:38.590
And say--
Yeah, I think so.
01:56:38.590 --> 01:56:40.620
And say every two years
01:56:40.620 --> 01:56:42.670
when ERCOT and staff comes back
01:56:42.670 --> 01:56:46.120
and presents that to your
review of the new ORDC,
01:56:46.120 --> 01:56:47.833
part of that needs to be,
01:56:49.060 --> 01:56:51.780
part of that now
analysis needs to include
01:56:53.460 --> 01:56:56.990
historic utilization,
number of hours of ORDC,
01:56:56.990 --> 01:57:01.990
and analysis of efficacy
01:57:02.300 --> 01:57:05.433
under the market construct at that time.
01:57:05.433 --> 01:57:07.717
Does that make sense?
I think that's right.
01:57:07.717 --> 01:57:11.001
Because even under some
kind of a load serving obligation,
01:57:11.001 --> 01:57:12.300
you still have to have
operational reliability.
01:57:12.300 --> 01:57:13.640
You still have the real-time market
01:57:13.640 --> 01:57:16.280
and the ancillary market
working in constructs.
01:57:16.280 --> 01:57:18.560
So I think kind of bake it into
01:57:20.350 --> 01:57:23.020
your odd number year review.
01:57:23.020 --> 01:57:24.290
Think that makes sense.
Good for discussion.
01:57:24.290 --> 01:57:25.510
Yeah, absolutely.
01:57:25.510 --> 01:57:26.420
Well, I don't, I mean,
01:57:26.420 --> 01:57:28.940
I don't want these good
ideas to just drift away
01:57:28.940 --> 01:57:30.130
because we move on to other things.
01:57:30.130 --> 01:57:31.390
That's why I'm trying to build in
01:57:31.390 --> 01:57:33.463
a trigger and a mechanism so that we,
01:57:34.730 --> 01:57:37.130
or who, the next Commission.
01:57:37.130 --> 01:57:38.270
The next one.
01:57:38.270 --> 01:57:41.390
A review of performance
would be prudent of ORDC.
01:57:41.390 --> 01:57:43.870
And we've historically
had those from time to time,
01:57:43.870 --> 01:57:46.337
but a biannual review,
01:57:47.910 --> 01:57:49.750
and then those associated
01:57:50.920 --> 01:57:53.480
performance reviews is prudent.
01:57:53.480 --> 01:57:56.410
I mean, we need to do that anyway, so.
01:57:56.410 --> 01:57:58.237
And let me just
say it a different way.
01:57:58.237 --> 01:58:00.223
And that is, in my opinion,
01:58:02.570 --> 01:58:05.140
if we move towards something
like a capacity market,
01:58:05.140 --> 01:58:07.430
whatever that looks
like, whatever it's called,
01:58:07.430 --> 01:58:09.950
more guaranteed resources
in the market at price cap
01:58:09.950 --> 01:58:13.490
becomes something that
should go down much lower.
01:58:13.490 --> 01:58:14.980
Right.
01:58:14.980 --> 01:58:16.615
If we're guaranteeing
that the resources
01:58:16.615 --> 01:58:18.010
are gonna be in the market then--
01:58:18.010 --> 01:58:19.090
It has tended to, yeah.
01:58:19.090 --> 01:58:22.293
The need for scarcity
pricing becomes very thin.
01:58:24.110 --> 01:58:26.420
Operational issues set aside.
01:58:26.420 --> 01:58:28.320
But I mean...
01:58:30.810 --> 01:58:32.114
Good concept keep in mind.
And I am, in no way,
01:58:32.114 --> 01:58:33.349
endorsing a capacity market.
No way, me neither.
01:58:33.349 --> 01:58:35.599
(laughing)
01:58:36.460 --> 01:58:38.143
Another haunted house.
01:58:38.143 --> 01:58:39.870
(laughing)
01:58:39.870 --> 01:58:41.488
I appreciate your time.
01:58:41.488 --> 01:58:43.640
(laughing)
01:58:43.640 --> 01:58:45.393
Okay, so the
next one is sizing.
01:58:46.470 --> 01:58:47.410
The sizing of it.
01:58:47.410 --> 01:58:48.930
And I think in here, Chairman,
01:58:48.930 --> 01:58:50.920
like you have size to address
01:58:50.920 --> 01:58:53.150
the need based on
net peak load variability.
01:58:53.150 --> 01:58:54.803
That is an aspect of my proposal.
01:58:55.890 --> 01:58:56.773
Peak net load.
01:58:57.640 --> 01:58:59.380
The next one is establish
performance standards
01:58:59.380 --> 01:59:00.350
that are regularly tested.
01:59:00.350 --> 01:59:01.390
We already talked about that.
01:59:01.390 --> 01:59:04.000
So if we are gonna set this up to be
01:59:04.000 --> 01:59:05.440
one year forward on a seasonal basis,
01:59:05.440 --> 01:59:07.163
you'd want seasonal testing.
01:59:09.420 --> 01:59:13.390
Robust non-performance
penalties and clawbacks agreed.
01:59:13.390 --> 01:59:16.450
Definitely would want
to have a strong penalty
01:59:16.450 --> 01:59:18.140
and clawback of any payment
01:59:18.140 --> 01:59:21.243
if a resource fails to perform
under this mechanism.
01:59:22.260 --> 01:59:24.620
Cost allocation based
on load ratio share
01:59:24.620 --> 01:59:27.620
as measured by coincident
net peak load intervals.
01:59:27.620 --> 01:59:30.440
I think that is an effort that we're,
01:59:30.440 --> 01:59:33.370
I had included that aspect in there,
01:59:33.370 --> 01:59:34.980
to not only base it on net peak load
01:59:34.980 --> 01:59:36.710
consistent with what
we're trying to size
01:59:36.710 --> 01:59:39.430
this dynamic flexible tool too,
01:59:39.430 --> 01:59:42.323
but also in an effort to
address demand response.
01:59:44.110 --> 01:59:47.163
I think those are, I
agree with your principles.
01:59:48.050 --> 01:59:50.280
Let's see if there's anything else that
01:59:54.289 --> 01:59:55.870
is from my memo that
might need to be included.
01:59:55.870 --> 01:59:59.483
I think you captured the main points.
02:00:01.080 --> 02:00:01.913
Okay.
02:00:03.100 --> 02:00:04.270
I guess generally speaking,
02:00:04.270 --> 02:00:06.800
in terms of implementation
and considering
02:00:06.800 --> 02:00:08.180
this mechanism in conjunction
02:00:08.180 --> 02:00:10.290
with some form of modality obligation,
02:00:10.290 --> 02:00:12.197
it might be helpful to understand
02:00:12.197 --> 02:00:13.750
how they could work together.
02:00:13.750 --> 02:00:16.240
Let's just say it's broader,
02:00:16.240 --> 02:00:18.493
or maybe it's more
narrow and then broader.
02:00:19.820 --> 02:00:22.010
Maybe there's an interim way to use
02:00:22.010 --> 02:00:25.110
both in construct at the beginning.
02:00:25.110 --> 02:00:27.190
And then as you move
towards a broader framework,
02:00:27.190 --> 02:00:28.570
as we've gotten some common terms--
02:00:28.570 --> 02:00:29.860
In terms of the set, you mean?
02:00:29.860 --> 02:00:32.280
So that it shrinks proportional
02:00:32.280 --> 02:00:35.300
to whatever the performance
of the LSE obligation is
02:00:35.300 --> 02:00:36.303
in terms of new gen.
02:00:38.320 --> 02:00:40.824
So both are dynamic in sizing.
02:00:40.824 --> 02:00:42.083
We want to size them appropriately.
02:00:42.083 --> 02:00:43.623
We don't want to be overly gluttonous.
02:00:44.650 --> 02:00:46.680
So it's somewhat interrelated.
02:00:46.680 --> 02:00:50.403
Is there a way to make them
correspondingly complimentary?
02:00:51.580 --> 02:00:54.320
Say that five times fast.
02:00:54.320 --> 02:00:55.840
Is there a way to
02:00:56.930 --> 02:01:00.970
make them complimentary
in terms of dynamic
02:01:02.120 --> 02:01:05.300
sizing of both links?
I have no idea.
02:01:05.300 --> 02:01:08.777
Something to think about.
There's a potential to.
02:01:08.777 --> 02:01:11.217
And that can also change over time.
02:01:11.217 --> 02:01:15.410
As you said, the
backstop can be a bridge,
02:01:15.410 --> 02:01:18.260
so it may need to start bigger.
02:01:18.260 --> 02:01:20.469
And as whatever the sizing,
02:01:20.469 --> 02:01:22.833
I mean, well, I guess
think about it this way.
02:01:23.860 --> 02:01:24.880
The bridge is gonna be first.
02:01:24.880 --> 02:01:26.410
The backstop bridge is gonna be first.
02:01:26.410 --> 02:01:28.233
So let's size that for the need.
02:01:29.290 --> 02:01:31.743
There's the kind of immediate need.
02:01:32.800 --> 02:01:35.613
And then yes, they can be,
02:01:37.500 --> 02:01:42.370
have a correlated
sizing as they phase in.
02:01:42.370 --> 02:01:45.780
And yes, it's too much to figure out.
02:01:45.780 --> 02:01:46.700
I mean, we're not gonna figure it out.
02:01:46.700 --> 02:01:49.233
But yes, in principle,
yes let's-- Right.
02:01:49.233 --> 02:01:50.787
And I guess what I'm saying is
02:01:50.787 --> 02:01:51.950
we can get maybe some,
02:01:51.950 --> 02:01:54.470
is we add that question in there
02:01:54.470 --> 02:01:55.480
to the stakeholder comments.
02:01:55.480 --> 02:01:57.420
I think I'd like to learn a
little bit more about that
02:01:57.420 --> 02:01:59.050
because I know there's
been some contention on,
02:01:59.050 --> 02:02:01.750
well, the deck program is just for new
02:02:01.750 --> 02:02:03.710
and then SRS just for old.
02:02:03.710 --> 02:02:05.533
Is there any synergies we can gain?
02:02:06.380 --> 02:02:07.630
Well, I think that's, I mean,
02:02:07.630 --> 02:02:11.008
that's part of the
principles that we're--
02:02:11.008 --> 02:02:12.208
I mean, it's
on a steady scale.
02:02:12.208 --> 02:02:14.080
I mean, and how it's utilized.
02:02:14.080 --> 02:02:18.690
Well but that's,
yes, it depends on
02:02:18.690 --> 02:02:21.150
what the develop, what we
learn in the development process,
02:02:21.150 --> 02:02:25.120
but it's also, well, it's not either or.
02:02:25.120 --> 02:02:26.820
It's like--
By definition,
02:02:26.820 --> 02:02:30.610
your program will be old
just because it's here now
02:02:30.610 --> 02:02:32.043
and we need it now.
02:02:32.043 --> 02:02:34.639
I mean, it's facilities
that are on the ground.
02:02:34.639 --> 02:02:36.972
Existing.
Yeah, existing.
02:02:40.330 --> 02:02:44.450
The load reliability mechanism,
02:02:44.450 --> 02:02:46.840
may have some elements of existing.
02:02:46.840 --> 02:02:49.012
It may have some, it will have elements,
02:02:49.012 --> 02:02:50.570
it has to have elements in it.
02:02:50.570 --> 02:02:52.613
It has to, or we failed miserably.
02:02:54.320 --> 02:02:55.640
We don't know what that looks like yet,
02:02:55.640 --> 02:02:58.850
but yes, I absolutely
agree we should keep,
02:02:58.850 --> 02:03:03.700
we should consider how to size those
02:03:03.700 --> 02:03:05.210
in a complementary fashion.
02:03:05.210 --> 02:03:07.314
Okay, great. Thanks.
Does that work?
02:03:07.314 --> 02:03:08.674
Mm-hmm, yes sir.
02:03:08.674 --> 02:03:10.070
All right.
02:03:10.070 --> 02:03:10.903
Good deal.
02:03:10.903 --> 02:03:14.163
Any other thoughts or principles
on the backstop reserve?
02:03:15.160 --> 02:03:16.110
Nope.
No, sir.
02:03:17.120 --> 02:03:18.550
No, thank you.
02:03:18.550 --> 02:03:19.383
All right.
02:03:23.703 --> 02:03:24.536
I think that
02:03:26.140 --> 02:03:28.650
gets us pretty dam close to
02:03:28.650 --> 02:03:30.800
covering everything
we need to cover today.
02:03:32.520 --> 02:03:33.460
Anything else?
02:03:33.460 --> 02:03:36.010
I've said everything I
need to say, thank you.
02:03:36.010 --> 02:03:37.210
You ready to head home?
02:03:37.210 --> 02:03:39.040
No.
(laughing)
02:03:39.040 --> 02:03:39.920
I think we got a meeting tomorrow.
02:03:39.920 --> 02:03:41.879
We'll be back
tomorrow, yeah.
02:03:41.879 --> 02:03:42.984
Oh yeah, y'all do.
02:03:42.984 --> 02:03:45.234
(laughing)
02:03:46.530 --> 02:03:48.020
All right.
02:03:48.020 --> 02:03:50.473
None of this is easy,
none of it's straightforward.
02:03:51.930 --> 02:03:54.810
If it was easy, it would've
already been done.
02:03:54.810 --> 02:03:56.530
Can I ask one question about
02:03:58.170 --> 02:04:00.050
stakeholder feedback?
02:04:00.050 --> 02:04:03.663
What is the plan for finalizing this,
02:04:04.650 --> 02:04:08.200
refiling it and sending it out
for stakeholder comment?
02:04:08.200 --> 02:04:11.440
Ben has been
diligently incorporating
02:04:11.440 --> 02:04:14.500
the commentary and principles and notes
02:04:14.500 --> 02:04:15.823
from what I've, right?
02:04:16.810 --> 02:04:18.455
We're not going through all that again.
02:04:18.455 --> 02:04:19.737
(laughing)
02:04:19.737 --> 02:04:20.570
Got that all?
02:04:20.570 --> 02:04:22.430
It's all in there,
it's forwarded, so.
02:04:22.430 --> 02:04:23.263
Okay.
02:04:24.250 --> 02:04:26.650
So he'll provide an updated draft.
02:04:26.650 --> 02:04:29.720
I think he can circulate
those to the offices.
02:04:29.720 --> 02:04:33.280
I think it's pretty much
squared away on what we need
02:04:33.280 --> 02:04:34.763
and what we want to include.
02:04:36.110 --> 02:04:38.040
As in terms, I think we're gonna...
02:04:41.090 --> 02:04:41.923
Don't quote me on this,
02:04:41.923 --> 02:04:43.690
from what I remember the calendar
02:04:45.460 --> 02:04:48.300
called for stakeholder
comments by the 10th,
02:04:48.300 --> 02:04:49.700
which I know is a quick turnaround.
02:04:49.700 --> 02:04:51.850
But this whole thing
is a quick turnaround.
02:04:53.500 --> 02:04:55.580
And I would ask that under the same,
02:04:55.580 --> 02:04:58.060
we use the same abbreviated formatting
02:04:58.060 --> 02:05:00.960
for the stakeholder responses
that we've used in the past.
02:05:01.890 --> 02:05:05.250
And I would ask stakeholders
to limit their feedback
02:05:05.250 --> 02:05:08.597
to the phase two proposals.
02:05:11.140 --> 02:05:16.110
The load side, the load
reliability mechanism
02:05:16.110 --> 02:05:20.770
and the backstop
reserve-- Service.
02:05:20.770 --> 02:05:22.043
I really got to work
on the naming here.
02:05:22.043 --> 02:05:24.693
We'll come up with something.
We'll get something.
02:05:26.340 --> 02:05:27.510
Focus the comments on those,
02:05:27.510 --> 02:05:28.710
their feedback on those.
02:05:30.570 --> 02:05:33.410
And then in the meantime,
02:05:33.410 --> 02:05:38.180
we've got a list of, I guess,
non-market design elements
02:05:38.180 --> 02:05:41.513
I can follow up independently
with each of your offices on.
02:05:44.275 --> 02:05:47.647
And I will, as I promised, I will get,
02:05:48.890 --> 02:05:51.490
I will work on a more crystallized
02:05:51.490 --> 02:05:54.223
implementation methodology.
02:05:56.980 --> 02:06:01.343
I think a lot of it is
gonna go to ERCOT.
02:06:02.920 --> 02:06:07.920
But I know we all will stay involved.
02:06:09.470 --> 02:06:10.540
But I also know that
02:06:11.890 --> 02:06:13.943
we can't keep up this operational pace.
02:06:16.172 --> 02:06:17.020
And I'm glad we're making,
02:06:17.020 --> 02:06:20.423
we've made tremendous
progress, made some decisions.
02:06:21.500 --> 02:06:24.430
And we've got, I think, a
clear path forward that will
02:06:26.100 --> 02:06:29.960
implement the tremendous
changes we've made so far
02:06:29.960 --> 02:06:32.500
and continue to build on that as we move
02:06:33.850 --> 02:06:38.850
into the next phase of
this grand adventure.
02:06:41.400 --> 02:06:42.233
Yes, sir.
02:06:43.218 --> 02:06:44.160
That work?
Thank you.
02:06:44.160 --> 02:06:45.270
Thank you for your consideration.
02:06:45.270 --> 02:06:46.103
Yes, ma'am.
02:06:46.103 --> 02:06:47.550
Thank y'all for all
the hard work in this.
02:06:47.550 --> 02:06:48.383
This is--
02:06:48.383 --> 02:06:50.600
Thank you for
consideration, Chairman.
02:06:50.600 --> 02:06:51.433
Absolutely.
02:06:53.570 --> 02:06:55.890
None of this is, like I
said, none of it's easy.
02:06:55.890 --> 02:06:57.340
None of it's straightforward.
02:06:59.730 --> 02:07:01.270
All right.
02:07:01.270 --> 02:07:03.450
Having no further business
before this Commission,
02:07:03.450 --> 02:07:05.350
this meeting with Public
Utility Commission of Texas
02:07:05.350 --> 02:07:06.936
is hereby adjourned.
02:07:06.936 --> 02:07:09.436
(bangs gavel)