WEBVTT 00:00:12.660 --> 00:00:15.070 This meeting of the public, excuse me, This meeting 00:00:15.070 --> 00:00:16.760 of the Public Utility Commission of Texas will come 00:00:16.760 --> 00:00:18.890 to order to consider matters that have been duly posted 00:00:18.890 --> 00:00:21.949 by the secretary of State of Texas for november 3rd 00:00:21.960 --> 00:00:26.100 2022. For the record, my name is Will McAdams and I'm 00:00:26.100 --> 00:00:28.980 joined today by commissioners Lori Cobos, Jimmy Glotfelty 00:00:28.980 --> 00:00:33.250 and Kathleen Jackson. Peter Lake, our chairman is unable 00:00:33.250 --> 00:00:35.409 to attend today's meeting and he's out for personal 00:00:35.409 --> 00:00:38.909 leave. At this time I'd entertain a motion to excuse 00:00:38.909 --> 00:00:39.630 his absence. 00:00:41.289 --> 00:00:47.060 2nd 2nd, all those in favor say aye, aye, none opposed. 00:00:49.189 --> 00:00:52.679 Mr. Journeay, please walk us through the consent items for today. 00:00:55.070 --> 00:00:58.030 Good morning commissioners, by individual ballot following 00:00:58.030 --> 00:01:04.030 items were placed on your consent agenda: 2-5, 7 00:01:04.069 --> 00:01:16.209 11 14 15 18 19 20 22 23 28 31 33 39. Thank 00:01:16.209 --> 00:01:18.980 you. At this time, I'll entertain a motion to approve 00:01:18.980 --> 00:01:22.739 the items just listed by Mr. Journeay, do I have a second? 00:01:23.739 --> 00:01:27.719 I second. Thank you All those in favor say aye, those 00:01:27.719 --> 00:01:29.310 opposed motion passes 00:01:31.400 --> 00:01:35.230 Um items that will not be taken up today. We will not 00:01:35.230 --> 00:01:45.030 be taking up items 12 and 30 um public comment. We 00:01:45.030 --> 00:01:49.469 will begin oral comments related to a specific uh item 00:01:49.480 --> 00:01:53.370 will be heard uh when that item is taken up. This is 00:01:53.370 --> 00:01:56.170 for general comments only. When we get to oral comments 00:01:56.170 --> 00:01:58.590 on specific items, stakeholders should not approach 00:01:58.599 --> 00:02:01.579 the table unless oral comment has specifically been 00:02:01.579 --> 00:02:04.060 granted or they have been invited by a commissioner. 00:02:04.069 --> 00:02:07.689 Speakers will be limited to three minutes, Mr Journeay 00:02:07.719 --> 00:02:11.090 Do we have anyone for public comment to speak today 00:02:11.099 --> 00:02:14.800 No sir no one has signed up this morning. Okay 00:02:16.340 --> 00:02:22.860 um items 2, 3, 4 and 5 have been consented. Um Next 00:02:22.860 --> 00:02:25.469 up we'll take up item number six. Mr Journeay Will 00:02:25.469 --> 00:02:34.090 you lay out this item. (item:6:53744) Item six is docket 53744, its a request 00:02:34.090 --> 00:02:36.960 to paul and linda Royal for an appointment of a temporary 00:02:36.960 --> 00:02:41.259 manager of the Lago vista Water system. uh proposal 00:02:41.259 --> 00:02:44.030 for decision was filed on september 22nd and the ALJ 00:02:44.030 --> 00:02:46.599 filed a correction memo on october 28th. 00:02:48.180 --> 00:02:51.349 Okay this item is simple enough and in the spirit of 00:02:51.360 --> 00:02:54.379 discussion I'd entertain entertain any thoughts on 00:02:54.379 --> 00:03:00.110 this. Um At this time. Sure I believe that we should 00:03:00.110 --> 00:03:03.139 adopt the PFD granting the dismissal of the Royals 00:03:03.139 --> 00:03:07.530 petition without prejudice but modify the PFD uh to 00:03:07.530 --> 00:03:12.150 dismiss the petition for muteness under 16 TAC 22.2 00:03:12.150 --> 00:03:16.240 81 subsection D. Subsection 11 Because the temporary 00:03:16.240 --> 00:03:18.979 manager has already been appointed by T. C. Q. The 00:03:18.979 --> 00:03:21.979 rails asked for requested appointment of a temporary 00:03:21.979 --> 00:03:24.710 manager from the commission T. C. Q. And the Attorney 00:03:24.710 --> 00:03:28.530 General's Office. On September 1st, the TCQ issued 00:03:28.530 --> 00:03:31.750 an order appointing a temporary manager for Lago vista 00:03:31.759 --> 00:03:34.580 The TCQs appointment of a temporary manager renders 00:03:34.580 --> 00:03:37.620 the Royals petition with the commission moot. Uh We 00:03:37.620 --> 00:03:40.669 appreciate the petitioners um efforts that they have 00:03:40.669 --> 00:03:44.259 made um to ensure that the Lago vista water system 00:03:44.259 --> 00:03:46.569 continues to operate. They have personally volunteered 00:03:46.569 --> 00:03:50.819 their time and money um to do so and um this the 00:03:50.830 --> 00:03:53.689 petition is moved at this point given the TCQ 00:03:53.699 --> 00:03:58.330 Um Issuance of a temporary manager and um we can move 00:03:58.330 --> 00:04:02.569 forward as as such. Yeah pending in any other thoughts 00:04:02.569 --> 00:04:05.219 I I agree TCQ has already taken action on this 00:04:05.219 --> 00:04:09.419 so clear cut case of uh in in my view dismissal for 00:04:09.419 --> 00:04:13.580 muteness with that I will entertain a motion to adopt 00:04:13.580 --> 00:04:16.100 a P. F. Ds recommendation to dismiss the case but it 00:04:16.100 --> 00:04:19.209 should be modified to reflect reflect dismissal on 00:04:19.209 --> 00:04:22.610 muteness grounds rather than for failure to prosecute 00:04:22.970 --> 00:04:28.699 go second. All those in favor. I all those opposed 00:04:28.709 --> 00:04:29.730 motion passes 00:04:31.810 --> 00:04:34.709 number seven has been consented this time will take 00:04:34.709 --> 00:04:40.259 up item. Uh Well actually I don't have anything for 00:04:40.259 --> 00:04:44.769 items eight or nine. Do any of you. Okay great. Um 00:04:45.050 --> 00:04:48.560 if none will move on to item number 10 mr Journeay 00:04:48.560 --> 00:04:51.370 will you lay this item out please? (item:10:52195) Item 10 is docket 00:04:51.370 --> 00:04:54.639 52195. It's the application El paso electric company 00:04:54.639 --> 00:04:57.920 to change rates. El paso electric filed a motion for 00:04:57.920 --> 00:05:03.889 rehearing of your previous order. This one is this 00:05:03.889 --> 00:05:06.860 one is unfortunate but I'd entertain any discussion 00:05:06.860 --> 00:05:10.050 or thoughts on this right now. I I believe that we 00:05:10.050 --> 00:05:12.800 should deny the motion for rehearing. We already approved 00:05:12.800 --> 00:05:15.910 the settlement agreement is based on a black box agreement 00:05:15.920 --> 00:05:19.230 and el paso has now filed these corrections to their 00:05:19.230 --> 00:05:22.240 tariff and hasn't supported any provided any evidence 00:05:22.240 --> 00:05:25.470 to support the changes. And at this time I think that 00:05:25.480 --> 00:05:29.319 the best move would be to just deny the motion. I know 00:05:29.319 --> 00:05:31.589 you have got some thoughts on black box agreement. Yeah, I love 00:05:31.589 --> 00:05:35.089 black box agreements especially because we can't see 00:05:35.089 --> 00:05:38.750 what's in them and that includes the positive nature 00:05:38.750 --> 00:05:41.910 and the negative nature. So I think that uh in the 00:05:41.910 --> 00:05:45.189 spirit of my black box memo that I know never filed 00:05:45.199 --> 00:05:49.459 but um I would agree with Commissioner Cobos and deny 00:05:49.459 --> 00:05:52.720 the request and and that's why I believe this is somewhat 00:05:52.720 --> 00:05:56.050 unfortunate. Um I believe were somewhat constrained 00:05:56.060 --> 00:05:59.670 here. The parties knew what they were signing on to 00:05:59.680 --> 00:06:03.550 um frankly they had more visibility than we did. Uh 00:06:03.560 --> 00:06:07.019 so we have to go on the information that is in the 00:06:07.019 --> 00:06:09.800 record and and that's what our decision on approval 00:06:09.800 --> 00:06:13.730 was based upon. So I concur with my colleagues. Mr 00:06:13.730 --> 00:06:17.920 Jackson, I agree as well. Okay great. Um at this time 00:06:17.920 --> 00:06:23.230 I will entertain a motion to uh uh deny El Paso Electric's 00:06:23.230 --> 00:06:28.160 motion for rehearing, do I have a second? All those 00:06:28.160 --> 00:06:32.060 in favor say aye, those opposed motion passes 00:06:33.639 --> 00:06:35.459 Number 11 was consented. 00:06:37.009 --> 00:06:39.579 Number 12 Mr Journeay will you please lay out we're 00:06:39.579 --> 00:06:42.939 not taking up, I'm sorry, we're not taking up number 00:06:42.939 --> 00:06:48.560 12 good catch. Um number 13 Mr Journeay Will you lay 00:06:48.560 --> 00:06:52.930 out this item. (item:13:52715) Item 13 is docket 52715, it's the application 00:06:52.930 --> 00:06:56.420 of Denton Municipal Electric to change rates for wholesale 00:06:56.420 --> 00:06:59.279 transmission service. Denton filed an appeal of SOAH 00:06:59.279 --> 00:07:02.829 order number five that set interim rates. There's a 00:07:02.829 --> 00:07:08.360 couple of issues at play here. Um Certainly of significance 00:07:08.370 --> 00:07:09.269 and welcome any thoughts 00:07:11.829 --> 00:07:16.189 I can go first again. Um So I believe that we should 00:07:16.199 --> 00:07:19.129 deny the appeal in part regarding the commission's 00:07:19.129 --> 00:07:21.800 authority to set the commission does have authority 00:07:21.800 --> 00:07:25.639 to set interim rates for municipal owned utility um 00:07:25.649 --> 00:07:30.459 trying hotel rates and granted in part because Denton 00:07:30.459 --> 00:07:33.670 appeal of SOAH order number five, setting the interim 00:07:33.670 --> 00:07:36.939 rates due to the fact that the ALJ didn't follow the 00:07:36.939 --> 00:07:40.529 commission's procedural rules with respect to the commission's 00:07:40.529 --> 00:07:43.149 authority to set interim rates for M. O. U. S. And 00:07:43.149 --> 00:07:47.899 T. Cost cases. Um PURA 35.004 subsection D 00:07:47.899 --> 00:07:51.819 Provides the commission with the authority to set wholesale 00:07:51.829 --> 00:07:56.730 rates and based on this authority, there is a implied 00:07:56.730 --> 00:08:00.879 authority that the commission's um ability to set permanent 00:08:00.879 --> 00:08:03.519 rates um provide the commission with implied authority 00:08:03.519 --> 00:08:05.879 to set interim or temporary rates. And there is some 00:08:05.879 --> 00:08:10.000 case law to support the commission's position on on 00:08:10.000 --> 00:08:15.029 this issue um namely PUC versus corpus Christi. And 00:08:15.040 --> 00:08:17.930 the PUC has relied on this court case in the past to 00:08:17.930 --> 00:08:23.930 set interim rates in um in rate cases. So I believe 00:08:23.930 --> 00:08:27.790 that we today we we find that um we do have the 00:08:27.790 --> 00:08:30.870 authority to set interest rates in this case. However 00:08:30.879 --> 00:08:35.519 based on the commission's procedural roles um didn't 00:08:35.519 --> 00:08:38.559 do not, the ALJ did not provide notice and opportunity 00:08:38.559 --> 00:08:41.419 for hearing. Um in the order that was issued, there 00:08:41.419 --> 00:08:43.860 wasn't um, you know, any kind of language that said 00:08:43.860 --> 00:08:47.159 that if you wanted to request a hearing that you can 00:08:47.159 --> 00:08:50.990 do so by a certain deadline. And so even though it 00:08:51.000 --> 00:08:53.580 didn't, and the parties have had an opportunity to 00:08:53.580 --> 00:08:57.679 file briefs and provide all argument which would essentially 00:08:57.679 --> 00:09:00.710 be happening again at this hearing. They haven't received 00:09:00.710 --> 00:09:03.039 that notice, an opportunity for an actual hearing that 00:09:03.039 --> 00:09:08.110 our procedural rules require. And so, um I would um 00:09:08.200 --> 00:09:15.379 I guess uh grant the appeal in that respect. So, but 00:09:15.379 --> 00:09:19.230 it would be a uh there would be a limiting fact on 00:09:19.230 --> 00:09:21.409 the granting of the appeal. Is is that what I'm hearing 00:09:21.409 --> 00:09:26.529 you're saying uh pertaining to SOAH taking it up providing 00:09:26.529 --> 00:09:29.419 notice and and hearing under our procedural rules? 00:09:29.429 --> 00:09:36.299 Yes, I agree with that. I believe this is an important 00:09:36.299 --> 00:09:39.580 decision in terms of our affirmation that we have the 00:09:39.580 --> 00:09:43.000 ability to set wholesale rates for municipal utilities 00:09:43.009 --> 00:09:47.899 um uh to to do anything otherwise would be a significant 00:09:47.909 --> 00:09:53.179 uh limiting policy change on the commission. And uh 00:09:53.190 --> 00:09:55.759 you know, I just don't believe we can we can do that 00:09:55.759 --> 00:09:59.759 especially at this time um when we're trying to make 00:09:59.769 --> 00:10:03.299 all utilities in the ERCOT and system and in the state 00:10:03.309 --> 00:10:07.370 uh, work together for reliability and to ensure reliability 00:10:07.370 --> 00:10:11.769 long term. Any other thoughts. Yeah, I would just add 00:10:11.769 --> 00:10:16.250 that obviously this has gone back for some time. We've 00:10:16.250 --> 00:10:19.480 had this in front of us for a little while. Uh Denton's 00:10:19.480 --> 00:10:23.549 last t cost rate was approved in 2005. Staff thinks 00:10:23.549 --> 00:10:27.000 they're overturning on that space. So clearly I think 00:10:27.009 --> 00:10:30.850 we I you know, support the staff's effort to try to 00:10:30.850 --> 00:10:33.220 get them in when we can get them in without these with 00:10:33.220 --> 00:10:36.029 these challenges, interim rights are absolutely appropriate 00:10:36.029 --> 00:10:40.870 in my opinion. And um one positive that I think should 00:10:40.870 --> 00:10:43.889 be cited for the record is that we will be subject 00:10:43.889 --> 00:10:47.620 to a trip once the final rates go in. So the company 00:10:47.620 --> 00:10:51.039 will not lose anything that it's afforded and the customers 00:10:51.039 --> 00:10:54.730 will not be overcharged or undercharged uh during that 00:10:54.860 --> 00:10:58.659 period. So, so we'll know that uh the rights will be 00:10:58.669 --> 00:11:01.320 um just and reasonable when that happens 00:11:02.960 --> 00:11:05.860 at this time. I'll entertain a motion to grant the 00:11:05.860 --> 00:11:08.129 appeal of order number five with instruction to O. 00:11:08.129 --> 00:11:10.889 P. D. M. To prepare an order consistent with our discussion 00:11:10.899 --> 00:11:18.039 at the Dais. I would modify the motion to um to deny 00:11:18.039 --> 00:11:22.309 the appeal in part um with respect to finding that 00:11:22.320 --> 00:11:24.129 the commission has the authority to set interim rates 00:11:24.129 --> 00:11:28.549 in wholesale uh service rate cases for municipally 00:11:28.549 --> 00:11:32.179 owned utilities and granted in part with respect to 00:11:32.179 --> 00:11:35.100 the fact that the ALJ didn't follow the commission's 00:11:35.100 --> 00:11:38.169 procedural rule. And I think that works too in terms 00:11:38.169 --> 00:11:41.929 of the mechanics uh message sent. So I have a motion 00:11:41.929 --> 00:11:44.730 Yeah, I believe that's right. I have a motion. Do I 00:11:44.730 --> 00:11:49.639 have a second? All those in favor say, aye, aye. All 00:11:49.639 --> 00:11:51.539 those opposed motion passes, 00:11:53.409 --> 00:11:57.799 number 14. Number 15 were consented. Uh number 16, 00:11:57.809 --> 00:12:01.789 docket number 53354. Mr Will you please lay that out 00:12:01.789 --> 00:12:06.539 for us? (item:16:53354) Item 16 is docket 53354, It's a tariff filing 00:12:06.539 --> 00:12:09.830 for TMP related to a change in deployed meter 00:12:09.830 --> 00:12:13.379 technology uh that was approved by the commission of 00:12:13.379 --> 00:12:16.019 previous document proposed order was filed on july 00:12:16.019 --> 00:12:22.750 11th. Okay, this is a single issue um proceeding. Uh 00:12:23.799 --> 00:12:28.120 so let's talk about what constitutes a standard meter 00:12:28.129 --> 00:12:28.990 Any thoughts? 00:12:30.559 --> 00:12:34.419 Well, it is an unfortunate situation. Right? TMPs 00:12:34.419 --> 00:12:36.970 meters, the advanced meters that they have in place 00:12:36.970 --> 00:12:42.940 or had in place. Um We're I guess Based on AT&T Service 00:12:42.940 --> 00:12:46.899 three G. Service that ATT canceled. And so um they're 00:12:46.899 --> 00:12:49.519 in the process of replacing those meters and their 00:12:49.519 --> 00:12:52.720 existing vendor Itron um is having supply chain issues 00:12:52.720 --> 00:12:55.259 and so we're not really sure what meters have been 00:12:55.259 --> 00:12:57.840 replaced and which ones still need to be replaced but 00:12:57.850 --> 00:13:03.129 um, TMP seeking a tariff revision um so that they can 00:13:03.139 --> 00:13:07.470 basically use certain charges to charge for the standard 00:13:07.470 --> 00:13:10.299 meters and standard meters are advanced meters under 00:13:10.309 --> 00:13:14.629 the definition and the rules um and apply these these 00:13:14.629 --> 00:13:17.399 fees that they basically want to use for. They want 00:13:17.399 --> 00:13:21.379 to use lower priority blue band and reconnect fees to 00:13:21.379 --> 00:13:25.669 charge the customers for standard meters um across 00:13:25.669 --> 00:13:30.059 the board, uh there's some confusion between standard 00:13:30.059 --> 00:13:32.529 meters and nonstandard meters and nonstandard meters 00:13:32.529 --> 00:13:37.899 are obviously not AMS meters. Um I think the best thing 00:13:37.899 --> 00:13:42.490 to do here is to um deny the tariff filing because 00:13:42.500 --> 00:13:45.559 essentially we just can't cut and paste fees from one 00:13:45.559 --> 00:13:50.769 area of our tariff and apply them to um standard meters 00:13:50.779 --> 00:13:54.370 Uh cut and paste fees from one section of our tariff 00:13:54.370 --> 00:13:57.919 that apply to standard meters and apply them across 00:13:57.919 --> 00:14:02.049 the board as nonstandard meters. And so I think the 00:14:02.049 --> 00:14:04.009 cleanest thing to do here is to deny the revision and 00:14:04.009 --> 00:14:08.830 let them continue to charge the customers for standard 00:14:08.830 --> 00:14:13.889 meters, which are lower fees anyway. But um you know 00:14:13.899 --> 00:14:17.309 TMP is continuing to file progress reports on, you 00:14:17.309 --> 00:14:21.009 know, in a separate project on their replacement of 00:14:21.019 --> 00:14:23.509 the 3 AT&T 3G meters. And we need to make 00:14:23.509 --> 00:14:25.570 sure we keep track of that and the next time that 00:14:25.750 --> 00:14:28.500 TMP comes in for a D C R. F or rate case 00:14:28.500 --> 00:14:31.889 we need to be cognizant of the fact that um they may 00:14:31.889 --> 00:14:34.809 be charging for standard meters when the customer may 00:14:34.809 --> 00:14:38.110 not have an advanced meter. Standard meter equals advanced 00:14:38.110 --> 00:14:40.350 meter. And those customers may not have an advanced 00:14:40.350 --> 00:14:41.850 meter at this time because we just don't know where 00:14:41.850 --> 00:14:46.740 they're at in terms of replacing meters. I know from 00:14:46.740 --> 00:14:50.320 my view, look there was two years notice lead time 00:14:50.330 --> 00:14:53.669 given to the utility by the network provider by A. 00:14:53.669 --> 00:14:58.465 T and T. So um for especially for other utilities, 00:14:58.475 --> 00:15:01.434 this will continue to happen. Um telecommunications 00:15:01.434 --> 00:15:04.205 technology will continue to evolve. Uh service for 00:15:04.205 --> 00:15:07.404 advanced meters will continue to evolve and thus make 00:15:07.414 --> 00:15:11.914 uh advanced meters obsolete at certain points to where 00:15:11.914 --> 00:15:15.504 they cannot meet the definition theoretically of a 00:15:15.504 --> 00:15:18.044 standard meter, which is an advanced meter. And so 00:15:18.044 --> 00:15:20.315 you have to stay ahead of this and you have to develop 00:15:20.315 --> 00:15:22.174 plans to stay ahead of this. And I think that's the 00:15:22.174 --> 00:15:27.539 central point behind. Again, we are somewhat limited 00:15:27.549 --> 00:15:29.799 in what actions we can take. This is certainly the 00:15:29.799 --> 00:15:32.809 simplest approach just to blanket deny this at this 00:15:32.809 --> 00:15:36.610 time. Um but for everyone else, you've got to stay 00:15:36.610 --> 00:15:38.809 ahead of this and you've got to develop plans and update 00:15:38.809 --> 00:15:41.899 the commission on what your plans are uh if you seek 00:15:41.899 --> 00:15:46.500 to recover um under this framework and I agree with 00:15:46.500 --> 00:15:49.600 you commissioner. Any other thoughts? I mean we're 00:15:49.600 --> 00:15:51.570 sympathetic to supply chain issues. But I think to 00:15:51.570 --> 00:15:55.190 your point that um you know, they had advanced notice 00:15:55.200 --> 00:15:57.769 you know, you have to be proactive and plan ahead of 00:15:57.769 --> 00:16:00.990 time and this just seems like a discombobulated way 00:16:00.990 --> 00:16:07.279 of trying to um recoup fees for for these meters after 00:16:07.279 --> 00:16:11.700 the fact. Yes. Well I think another point is um what 00:16:11.700 --> 00:16:14.980 is kind of like that demarcation because I mean what's 00:16:14.980 --> 00:16:20.750 really the issue and the and causing the the problem 00:16:20.759 --> 00:16:24.879 is the telecommunication telecommunication linkage 00:16:24.889 --> 00:16:28.200 not necessarily the meter itself, but the ability for 00:16:28.200 --> 00:16:31.090 the 3G System that no longer operates the 00:16:31.090 --> 00:16:34.009 network, the network. And as I think as you pointed 00:16:34.009 --> 00:16:38.789 out there was ample opportunity and you know, not just 00:16:38.799 --> 00:16:43.039 this utility but people across that whole service area 00:16:43.039 --> 00:16:48.470 were made aware um you know, well before the time that 00:16:48.480 --> 00:16:51.070 they needed to maybe potentially take action. So I 00:16:51.070 --> 00:16:53.629 think kind of going forward and in this case as well 00:16:53.629 --> 00:16:56.279 we need to make that delineation between the actual 00:16:56.279 --> 00:16:59.139 meters themselves and what their capability is versus 00:16:59.139 --> 00:17:01.789 the ability to connect, connect to it. And I think 00:17:01.799 --> 00:17:05.559 you know in my mind that connectivity piece of it really 00:17:05.559 --> 00:17:08.589 kind of falls to utilities and they need to be forward 00:17:08.589 --> 00:17:14.089 thinking. One other point sir we talked about that 00:17:14.099 --> 00:17:17.430 that might be helpful of besides the point that the 00:17:17.430 --> 00:17:19.559 commissioner Jackson just made that the meter, the 00:17:19.559 --> 00:17:21.940 character of the meter hasn't changed. The communications 00:17:21.940 --> 00:17:25.309 part of the advanced metering system is what has has 00:17:25.319 --> 00:17:29.589 gone but also non standard metering is a service customers 00:17:29.589 --> 00:17:32.569 need to request and none of these customers have requested 00:17:32.569 --> 00:17:35.880 non standard meter service Well and then t and I mean 00:17:35.890 --> 00:17:38.779 TMP can also refile his request for tariff provisions 00:17:38.779 --> 00:17:42.190 when it's updated its information uh in a new docket 00:17:42.200 --> 00:17:43.430 can it not? 00:17:45.240 --> 00:17:47.970 I don't know if they get these meters but then I don't 00:17:47.970 --> 00:17:52.480 know that you need to follow tariff revision but in 00:17:52.480 --> 00:17:55.210 that communication piece both you are talking about 00:17:55.220 --> 00:17:58.440 I mean it's required as one of the AMS functionality 00:17:58.440 --> 00:18:02.119 there so you the communication piece um that's critical 00:18:02.119 --> 00:18:05.140 to this point um has to be there for it to be 00:18:05.140 --> 00:18:08.559 an advanced meter. Well the definition advanced meter 00:18:08.559 --> 00:18:11.690 service and the rule includes communications as part 00:18:11.700 --> 00:18:14.789 of that system. Yes, well and we're gonna be relying 00:18:14.789 --> 00:18:17.710 more heavily. Look bottom line is this commission has 00:18:17.710 --> 00:18:20.880 for years and especially now has high hopes for the 00:18:20.880 --> 00:18:24.450 capabilities of so called advanced meters and we need 00:18:24.450 --> 00:18:27.019 their capabilities to be augmented and increased as 00:18:27.019 --> 00:18:31.329 new technologies become available um but as old technologies 00:18:31.329 --> 00:18:36.170 make the system's obsolete temporarily we need utilities 00:18:36.170 --> 00:18:38.299 to develop plans to stay ahead of the curve, we've 00:18:38.299 --> 00:18:41.069 got to stay ahead of this um and I think that's the 00:18:41.069 --> 00:18:45.859 central point of our decision here uh with that I will 00:18:45.869 --> 00:18:49.460 entertain a motion a motion to deny TNPs request 00:18:49.460 --> 00:18:51.640 for tariff adjustments for the reasons stated at the 00:18:51.640 --> 00:18:56.200 dais. So moved. Do we have a 2nd 2nd, all those in 00:18:56.200 --> 00:19:01.920 favor say aye, I all those opposed motion passes. Next 00:19:01.920 --> 00:19:05.970 item is item number 17, docket number 00:19:08.069 --> 00:19:13.490 yep, docket number 5377 mr Journeay please lay out 00:19:13.500 --> 00:19:18.460 (item:17:53377) Item 17 is docket 53377. Its complaint of ENGIE 00:19:18.460 --> 00:19:21.390 energy marketing and Viridity Energy against ERCOT 00:19:21.700 --> 00:19:25.569 you have two items posted under this uh item number 00:19:25.569 --> 00:19:28.839 one is a preliminary order. Uh The second is commission 00:19:28.839 --> 00:19:32.349 staff filed an appeal of order number 17. Yeah. And 00:19:32.349 --> 00:19:36.430 and before the discovery issue I would recommend and 00:19:36.440 --> 00:19:39.730 that's what I propose. We take up first the draft preliminary 00:19:39.730 --> 00:19:44.769 order. Um Is there any discussion on the DPO 00:19:44.769 --> 00:19:49.990 as it stands? Um If not, I will entertain a motion 00:19:49.990 --> 00:19:57.089 to approve the draft uh preliminary order. A 2nd 2nd 00:19:57.099 --> 00:20:00.970 All those in favor say aye, I all those opposed that 00:20:00.980 --> 00:20:04.660 passes. Um And now on the discovery matter, I would 00:20:04.660 --> 00:20:08.839 like to hear your thoughts uh this this is not a clear 00:20:08.839 --> 00:20:13.440 cut cut and dry um And an issue and I'll admit I 00:20:13.450 --> 00:20:16.849 was a bit out of my depth on this. Um I am 00:20:16.849 --> 00:20:20.170 not an attorney um but I have attempted to act like 00:20:20.180 --> 00:20:25.740 one. any thoughts I think that just leaves me. Right 00:20:25.750 --> 00:20:30.589 Okay, so nice, nice backing into it. Commissioner McAdams 00:20:30.599 --> 00:20:36.259 um Well, I believe that we should grant the appeal 00:20:36.259 --> 00:20:39.680 in part and denied in part and the granting grant staffs 00:20:39.680 --> 00:20:44.210 appeal in part because ENGIEs commission for deposition 00:20:44.220 --> 00:20:50.519 was to depose the commission or commission staff and 00:20:50.529 --> 00:20:53.759 uh the commission can't be deposed. Um you know, given 00:20:53.759 --> 00:20:57.579 our quasi judicial um role in this matter and commission 00:20:57.579 --> 00:21:00.759 staff. Um Well that's that's a very broad term that 00:21:00.759 --> 00:21:04.940 could be anybody in any division. And um you know, 00:21:04.950 --> 00:21:09.250 commission staff is not an entity that um has to designate 00:21:09.250 --> 00:21:13.269 a representative to be deposed. They're not like corporation 00:21:13.279 --> 00:21:17.490 So um the commission has the commission for a deposition 00:21:17.490 --> 00:21:22.680 as written. Um I think we we can't grant that, we should 00:21:22.680 --> 00:21:27.720 grant staff's appeal on on that um as written. I don't 00:21:27.720 --> 00:21:31.130 think we can move forward with with allowing ENGIE 00:21:31.140 --> 00:21:35.230 to depose the commission and commission staff. Uh The 00:21:35.230 --> 00:21:38.579 denial in part would be because staff's request for 00:21:38.589 --> 00:21:44.890 um protective order is too broad and um that's that's 00:21:44.890 --> 00:21:47.029 where I land. And Stephen you're making some interesting 00:21:47.029 --> 00:21:52.099 faces. So I'm wondering if I'm saying something. Okay 00:21:53.019 --> 00:21:59.069 okay. Um Alright, so um denying staff's appeal in part 00:21:59.079 --> 00:22:01.180 because commission staff's request for a protective 00:22:01.180 --> 00:22:03.000 order was true broad. They're basically saying you 00:22:03.000 --> 00:22:06.609 can't oppose the commission um or the commission staff 00:22:06.609 --> 00:22:11.150 And ultimately um if um N. G. Were to request to depose 00:22:11.150 --> 00:22:13.920 specific commission staff by name, as fact witnesses 00:22:13.930 --> 00:22:19.259 um even if they could ultimately do that and the protective 00:22:19.259 --> 00:22:23.960 order. Um I think as requested is just too broad. Yes 00:22:23.970 --> 00:22:31.410 Okay. Uh Welcome any other thoughts high level. I believe 00:22:31.420 --> 00:22:37.220 that we should attempt where possible to discourage 00:22:37.230 --> 00:22:42.509 uh blanket fishing expeditions um to where parties 00:22:42.519 --> 00:22:46.559 have to have some type of reasonable knowledge on who 00:22:46.569 --> 00:22:52.069 is informed on the matters related to the case. And 00:22:52.069 --> 00:22:56.089 so um I agree with you commissioner. I I believe the 00:22:56.099 --> 00:22:59.740 request for a protective order just on a blanket basis 00:22:59.750 --> 00:23:04.960 is too broad. Um However, it's incumbent upon the uh 00:23:04.970 --> 00:23:09.599 the appealing or petitioning party to know who they 00:23:09.599 --> 00:23:14.289 want to hear um factual information from the subject 00:23:14.289 --> 00:23:19.970 matter, expert related to the case. And so um I support 00:23:19.980 --> 00:23:25.309 the nuance of your approval in part and rejection in 00:23:25.309 --> 00:23:27.849 part any other thoughts. 00:23:30.269 --> 00:23:31.640 I followed the lead of our lawyer. 00:23:35.069 --> 00:23:39.809 So given the mechanics of this and what we've addressed 00:23:39.819 --> 00:23:43.069 which we've addressed the high level issues uh some 00:23:43.069 --> 00:23:47.640 of the others we have not addressed. Um I believe we 00:23:47.640 --> 00:23:50.519 can and should entertain a motion to grant in part 00:23:50.529 --> 00:23:54.380 and denying part staffs appeal consistent with the 00:23:54.390 --> 00:23:59.730 discussion from the dais. So do I have a 2nd 2nd? All 00:23:59.730 --> 00:24:03.660 those in favor say aye all those opposed motion passes 00:24:04.549 --> 00:24:09.880 Numbers 18 19 agenda items 18 19 and 20 were consented 00:24:09.890 --> 00:24:14.730 Uh Number 21 is docket number 53691. Mr Journeay will 00:24:14.730 --> 00:24:19.859 you laid out this item. (item:21:53691) Item 21 is docket 53691. It's 00:24:19.859 --> 00:24:22.470 an agreed reported violation relating to commission 00:24:22.470 --> 00:24:25.279 staff's investigation of step concerning violations 00:24:25.279 --> 00:24:29.839 of the uh PURA Commission rules in ERCOT protocols 00:24:29.849 --> 00:24:35.539 A revised proposed order was filed on july 19th. Okay 00:24:35.549 --> 00:24:39.380 Um the foremost issue is should the commission approve 00:24:39.380 --> 00:24:45.210 the proposed order uh have any thoughts? Yes but adding 00:24:45.210 --> 00:24:48.589 back conclusion of law number eight to state that stack 00:24:48.589 --> 00:24:51.750 violated. PURA and the commission's rules as a basis 00:24:51.750 --> 00:24:54.079 for the administrative penalty assessed in the proposed 00:24:54.079 --> 00:24:59.019 order. So I support that on the basis of consistency 00:24:59.029 --> 00:25:03.140 um that we have done this previously under docket number 00:25:03.140 --> 00:25:08.900 53492 Jaxa. And um I just want to make sure that the 00:25:08.910 --> 00:25:11.819 commission is currently composed is consistent policy 00:25:11.829 --> 00:25:14.519 application approach so I agree with the commissioner 00:25:14.529 --> 00:25:19.210 any other views. Um well with that, I would entertain 00:25:19.210 --> 00:25:22.150 a motion to approve the proposed order with modification 00:25:22.150 --> 00:25:23.329 consistent with our discussion. 00:25:25.190 --> 00:25:29.569 You have a second. Uh that's time all in favor say 00:25:29.569 --> 00:25:35.180 aye. All those opposed motion passes number 22 has 00:25:35.180 --> 00:25:41.150 been consented. # 23 has been consented. Uh This time 00:25:41.160 --> 00:25:46.369 docket number item number 24. docket number 54225. 00:25:46.650 --> 00:25:51.250 Mr Journeay will you lay out this item. (item:24: 54225) Item 24 is docket 00:25:51.250 --> 00:25:54.880 54225. It's an investigation of Texas Excel Property 00:25:54.880 --> 00:25:58.119 Management Corporation for violations of PURA and Commission 00:25:58.119 --> 00:26:01.829 Rules. Commission staff filed a motion to open a formal 00:26:01.829 --> 00:26:06.079 investigation. Uh barksdale, would you please approach 00:26:12.809 --> 00:26:16.200 At this time I would request that you discuss this 00:26:16.200 --> 00:26:19.279 further. Where is this headed? Good morning Commissioners 00:26:19.289 --> 00:26:21.900 Uh This is Barkdale English on behind the commission's 00:26:23.859 --> 00:26:24.450 I'm sorry 00:26:28.029 --> 00:26:31.019 good morning commissioners. This is barksdale english 00:26:31.019 --> 00:26:33.309 on behalf of commission staff. Thank you. Commissioner 00:26:33.309 --> 00:26:37.490 McAdams this is a strange one. Um we don't typically 00:26:37.490 --> 00:26:41.089 have to come to you to seek permission to open a formal 00:26:41.089 --> 00:26:44.190 investigation and the reason why we're having to do 00:26:44.190 --> 00:26:47.849 this today is because over the last year we have tried 00:26:47.849 --> 00:26:51.180 unsuccessfully to reach out to Texas Excel property 00:26:51.180 --> 00:26:54.799 management company through our normal and formal investigative 00:26:54.799 --> 00:26:58.960 process requesting information, things like their current 00:26:58.960 --> 00:27:01.440 lease is uh, the arrangements that they have with the 00:27:01.440 --> 00:27:05.289 retail electric provider. And up until sunday night 00:27:05.299 --> 00:27:09.150 actually, we had not really had any substantive conversation 00:27:09.160 --> 00:27:13.250 So I'm pleased that the filing of this motion to open 00:27:13.250 --> 00:27:15.789 a formal investigation has gotten their attention and 00:27:15.789 --> 00:27:17.789 they have started to provide some information, but 00:27:17.789 --> 00:27:20.640 it's incomplete to the requests that we've been asking 00:27:21.410 --> 00:27:25.579 It's also serving a little bit as a notice to the public 00:27:25.579 --> 00:27:29.880 at large that there seems to be, um, a business model 00:27:29.880 --> 00:27:33.630 that might be taking root in the state where property 00:27:33.630 --> 00:27:37.210 management companies that are leasing out either single 00:27:37.210 --> 00:27:40.779 family homes or apartment units that are separately 00:27:40.779 --> 00:27:46.170 metered are requiring their tenants to use the retail 00:27:46.170 --> 00:27:48.450 electric provider that the property management company 00:27:48.450 --> 00:27:52.099 selects for them on its face. It might seem like a 00:27:52.099 --> 00:27:55.069 good deal to the tenant because they can move in without 00:27:55.069 --> 00:27:57.789 having to deal with the rep having to get their electricity 00:27:57.789 --> 00:28:00.619 turned on set up. All that stuff kind of might seem 00:28:00.619 --> 00:28:04.190 to minimize the administrative hassle on their end 00:28:04.200 --> 00:28:08.529 However, doing so violates two extremely important 00:28:08.529 --> 00:28:13.039 tenets of our market. The first is that every customer 00:28:13.049 --> 00:28:15.789 every retail customer in a competitive choice area 00:28:15.789 --> 00:28:18.240 is granted by statute, the right to choose their own 00:28:18.240 --> 00:28:20.319 providers so that they can get the services that they 00:28:20.319 --> 00:28:24.609 want at the price that they need. The second is that 00:28:24.619 --> 00:28:27.769 um when they don't choose, don't have the ability to 00:28:27.769 --> 00:28:30.880 choose their retail electric provider, They're not 00:28:30.880 --> 00:28:35.599 considered the customer record um to the rep and that 00:28:35.609 --> 00:28:39.339 systematically um prevents them from accessing any 00:28:39.339 --> 00:28:43.730 of our customer protection rules. And so you can imagine 00:28:43.730 --> 00:28:47.069 a situation where a tenant in one of these apartment 00:28:47.069 --> 00:28:50.630 buildings has their power turned off without any advance 00:28:50.630 --> 00:28:55.019 notice for reasons that they don't understand and not 00:28:55.029 --> 00:28:58.400 being able to do anything to remedy that situation 00:28:58.400 --> 00:29:00.980 prior to having their power shut off. That's just one 00:29:00.980 --> 00:29:04.920 example of of how not being the customer of record 00:29:04.920 --> 00:29:09.200 is a is a bad deal for our retail customers in their 00:29:09.210 --> 00:29:14.670 power region. So we're here before you asking to open 00:29:14.670 --> 00:29:17.490 a formal investigation so that we have a little bit 00:29:17.490 --> 00:29:22.539 more kind of authority, both from a legal standpoint 00:29:22.549 --> 00:29:28.130 as well as from a public perception standpoint to encourage 00:29:28.140 --> 00:29:32.609 and then if not successful, compel Texas excel property 00:29:32.609 --> 00:29:35.519 management company to respond to our request for information 00:29:35.900 --> 00:29:39.759 and participate in this investigation or face the consequences 00:29:39.769 --> 00:29:42.970 of having a formal report on a violation be brought 00:29:42.980 --> 00:29:43.670 before you 00:29:45.430 --> 00:29:45.970 many times 00:29:47.599 --> 00:29:51.250 seems like the right thing to do. We've got these folks 00:29:51.259 --> 00:29:55.170 uh we have to protect the public in the sense and clearly 00:29:55.170 --> 00:29:58.029 if they're not even able to access our customer protection 00:29:58.029 --> 00:30:01.509 rules. Um you know, I mean we have to give them that 00:30:01.509 --> 00:30:06.039 opportunity and um you know, I think Barksdale as 00:30:06.039 --> 00:30:08.740 you said that perhaps this is a new area that that 00:30:08.740 --> 00:30:12.720 we might need to see um if there are challenges in 00:30:12.720 --> 00:30:16.690 this space going forward, if this is a new um problem 00:30:16.690 --> 00:30:20.490 that we must look at, maybe the legislature acts, maybe 00:30:20.490 --> 00:30:24.450 we, you know, change our, modify our rules, but clearly 00:30:24.460 --> 00:30:27.410 you can't violate PURA by just telling people they 00:30:27.410 --> 00:30:31.500 don't have a choice. That's that's a misinterpretation 00:30:31.500 --> 00:30:35.970 of our rules and our laws of the state. So I'm full 00:30:35.970 --> 00:30:38.970 support of uh doing the investigation and and making 00:30:38.970 --> 00:30:44.150 it clear that if they are doing what they perhaps maybe 00:30:44.150 --> 00:30:47.650 doing it is unfair to consumers and violates our law 00:30:47.680 --> 00:30:51.619 and nobody else should do it either. Yeah, I mean, 00:30:51.630 --> 00:30:54.769 in my view, I think there's protections for all parties 00:30:54.779 --> 00:31:00.240 by initiating a formal uh enforcement um proceeding 00:31:00.250 --> 00:31:05.190 simply because we have an interest in trying to address 00:31:05.190 --> 00:31:08.220 situations offline, but when they have broad reaching 00:31:08.220 --> 00:31:14.349 policy impacts as described by barksdale, um we need 00:31:14.349 --> 00:31:17.190 the transparency of a formal process and proceeding 00:31:17.200 --> 00:31:20.960 an investigation and that that benefits everyone consumers 00:31:20.970 --> 00:31:23.490 as well as, you know, the property management company 00:31:23.500 --> 00:31:27.450 um because they they have the protections of law and 00:31:27.460 --> 00:31:31.960 PUC substance of rules um that govern that. So, uh 00:31:31.970 --> 00:31:34.089 no, I I believe this is the best approach forward. 00:31:35.160 --> 00:31:38.960 Absolutely agree and appreciate you coming to us for 00:31:38.960 --> 00:31:42.559 this request and we need to make sure that um customers 00:31:42.559 --> 00:31:46.660 are protected and that um you know, these companies 00:31:46.660 --> 00:31:49.819 that are these everyone is following the law. And so 00:31:49.819 --> 00:31:51.789 I'm fully supportive you moving forward with your formal 00:31:51.789 --> 00:31:55.339 investigation. I think two good points here made first 00:31:55.339 --> 00:31:58.599 of all, the formal investigation as you stated will 00:31:58.599 --> 00:32:03.569 provide facts on for both parties, both sides of the 00:32:03.579 --> 00:32:07.710 of the coin, so to speak. Um and then also kind of 00:32:07.720 --> 00:32:10.730 moving forward, it will give us an idea of if there 00:32:10.730 --> 00:32:13.970 are, you know, other vulnerabilities out there that 00:32:13.970 --> 00:32:16.690 we need to address and if there's anything um that 00:32:16.690 --> 00:32:20.170 we need to do in our rules or or otherwise again to 00:32:20.170 --> 00:32:23.160 prevent the same thing from, you know, continuing to 00:32:23.160 --> 00:32:26.480 happen. Well, thank you for bringing this forward. 00:32:26.490 --> 00:32:31.680 If I could just address 1 other thing with comments 00:32:31.690 --> 00:32:34.609 from you, Commissioner Glotfelty new Commissioner Jackson 00:32:34.609 --> 00:32:37.359 about whether our rules and your statute might be sufficient 00:32:37.369 --> 00:32:40.099 at this time. I'm happy to say that we do have. Well 00:32:40.099 --> 00:32:42.380 I'm not happy to say that we have three other investigations 00:32:42.380 --> 00:32:46.549 but I do um happily report that that our rules have 00:32:46.549 --> 00:32:49.630 been sufficient enough to encourage those other entities 00:32:49.630 --> 00:32:54.140 to work with us. And so at this time we're not making 00:32:54.140 --> 00:32:56.759 any recommendations about rule changes or statute changes 00:32:56.759 --> 00:33:01.819 because we think the authorities there. Okay, um at 00:33:01.819 --> 00:33:04.119 this time I will entertain a motion to grant staff's 00:33:04.119 --> 00:33:07.700 motion to open a formal investigation. Do I have a 00:33:07.700 --> 00:33:11.589 2nd 2nd. All those in favor say, aye, I all those opposed 00:33:11.599 --> 00:33:16.039 motion passes, Thank you very much. uh at this time 00:33:16.039 --> 00:33:20.180 I don't have anything on items 25 through 31. Do any 00:33:20.180 --> 00:33:26.069 of you Good. Um at this time, happy to take up item 00:33:26.069 --> 00:33:29.750 number 32 Project number 53911. Mr Journeay please 00:33:29.750 --> 00:33:34.940 lay that out for us. (item:32:53911) Item 32 is project 53911 aggregate 00:33:34.950 --> 00:33:39.980 distributed Energy Resources. ERCOT Pilot Project Commission 00:33:39.980 --> 00:33:43.630 staff has filed two items under this item. The first 00:33:43.630 --> 00:33:47.650 is a memo and proposed registration form for the aggregated 00:33:47.660 --> 00:33:51.680 distributed energy resources. The second is a memo 00:33:51.690 --> 00:33:56.000 with ERCOT governing document for the aggregated distributed 00:33:56.000 --> 00:34:00.920 energy resources, ERCOT pilot project. Well, I'm happy 00:34:00.920 --> 00:34:04.440 to sit in the chair with the gavel on this day, it's 00:34:04.440 --> 00:34:07.460 been a long time coming, but frankly a short time coming 00:34:07.470 --> 00:34:10.219 Um a massive amount of work has gone on in a short 00:34:10.219 --> 00:34:12.699 amount of time by some dedicated stakeholders and ERCOT 00:34:12.699 --> 00:34:16.760 staff uh ERCOT board of directors has thoroughly reviewed 00:34:16.760 --> 00:34:19.510 it, considered the policy implications, the reliability 00:34:19.510 --> 00:34:25.599 implications um and the framework is, is clearly established 00:34:25.599 --> 00:34:31.769 to safely reliably um initiate this uh this pilot which 00:34:31.769 --> 00:34:36.460 will have the benefit of allowing us to experiment 00:34:36.469 --> 00:34:40.750 um and and pursue a policy approach which was initiated 00:34:40.760 --> 00:34:43.869 I believe when Senate Bill seven was passed uh and 00:34:43.869 --> 00:34:48.730 deregulation was contemplated uh within ERCOT 00:34:48.739 --> 00:34:53.320 and that overarching policy principle was to put consumers 00:34:53.329 --> 00:34:57.079 more in control of their energy future and uh this 00:34:57.079 --> 00:34:59.969 certainly allows them to do that through both the Load 00:34:59.969 --> 00:35:05.019 side and potentially the resource side now, um we've 00:35:05.019 --> 00:35:08.039 got a lot to find out, we're going to take it slow 00:35:08.050 --> 00:35:11.389 As Chairman Lake has repeatedly pointed out throughout 00:35:11.389 --> 00:35:14.380 this process, we are not going to jeopardize system 00:35:14.380 --> 00:35:19.869 reliability, uh the intended effect um from some of 00:35:19.869 --> 00:35:23.599 us who were there from the beginning in terms of forming 00:35:23.599 --> 00:35:26.869 our thoughts and policy on this were to enhance reliability 00:35:26.880 --> 00:35:29.550 and the resiliency of the overall system and that's 00:35:29.550 --> 00:35:33.480 what we hope to achieve. Um I'd like to thank Commissioner 00:35:33.480 --> 00:35:36.920 Glotfelty for being there every step of the way for 00:35:36.920 --> 00:35:40.949 this and providing me the encouragement to keep at 00:35:40.949 --> 00:35:45.079 it and and thus um keep our attention fixed to the 00:35:45.090 --> 00:35:48.760 pilot task force who has worked so hard to develop 00:35:48.769 --> 00:35:53.860 the foundational rules of of the project. Um Commissioner 00:35:53.860 --> 00:35:57.449 do you have any thoughts? I'm just happy that we get 00:35:57.449 --> 00:36:02.110 to approve this again, but approving what the ERCOT 00:36:02.110 --> 00:36:05.489 board has already approved, I think they did. I think 00:36:05.489 --> 00:36:08.210 the the staff has done a great job, I think the stakeholders 00:36:08.210 --> 00:36:11.070 have done a great job. I think your leadership is exceptional 00:36:11.070 --> 00:36:15.309 in this, I think that um this puts us in a driver's 00:36:15.309 --> 00:36:18.389 seat of leading again, leading in this area. We're 00:36:18.389 --> 00:36:22.130 gonna learn a lot from this. Um This in my opinion 00:36:22.130 --> 00:36:26.639 I hope we learn enough that this avenue grows um but 00:36:26.639 --> 00:36:29.289 we'll take that step as it comes and get that information 00:36:29.289 --> 00:36:34.369 and make sure our system remains reliable. Um and that 00:36:34.380 --> 00:36:38.070 we continue to look for ways to provide choices to 00:36:38.070 --> 00:36:41.409 consumers and new types of power plants that will help 00:36:41.420 --> 00:36:44.590 the system both in cost and reliability. So I'm excited 00:36:44.590 --> 00:36:50.210 to to support the effort. Well I want to thank you 00:36:50.210 --> 00:36:52.139 Commissioner McAdams and Commissioner Glotfelty for 00:36:52.139 --> 00:36:55.190 your leadership on this very important effort. Um This 00:36:55.190 --> 00:36:58.349 is a great day today to be able to continue to move 00:36:58.349 --> 00:37:02.860 this A. D. R. Um process forward and um I also want 00:37:02.860 --> 00:37:05.000 to thank the PUC staff and the task force that were 00:37:05.000 --> 00:37:08.579 involved in helping you guys come to this um important 00:37:08.590 --> 00:37:11.369 place I think like like both of you have said we have 00:37:11.369 --> 00:37:16.400 a lot to learn and um and I do think that ultimately 00:37:16.409 --> 00:37:19.579 learning what will enhance and improve reliability 00:37:19.579 --> 00:37:21.989 on the demand side of the reliability equation is extremely 00:37:21.989 --> 00:37:26.829 important and what ERCOT does best is lead lead through 00:37:26.829 --> 00:37:30.239 innovation and technological innovation were progressive 00:37:30.239 --> 00:37:33.230 market and I think this step shows that we are continuing 00:37:33.230 --> 00:37:36.710 to push forward um and leading in the United States 00:37:36.719 --> 00:37:41.130 on progressive technical innovation um market initiatives 00:37:41.130 --> 00:37:43.079 and I'm excited to see where this goes 00:37:44.769 --> 00:37:48.530 well. I think an exciting time and certainly a pilot 00:37:48.539 --> 00:37:51.460 is a great achievement but in some ways it's just the 00:37:51.460 --> 00:37:54.739 beginning right and it's gonna be important kind of 00:37:54.739 --> 00:37:57.789 moving forward that we get thoughts and ideas and we 00:37:57.789 --> 00:38:03.590 get engagement um, by, by the consumer and that uh 00:38:03.599 --> 00:38:05.929 collaboratively, we all kind of work together in the 00:38:05.929 --> 00:38:08.849 analysis again, keeping that, you know, North Star 00:38:08.849 --> 00:38:12.559 true as I think Peter Lake always says in terms of 00:38:12.570 --> 00:38:15.940 reliability, being, being first and foremost and number 00:38:15.940 --> 00:38:19.409 one, uh, we know, I think in Texas that it's not one 00:38:19.409 --> 00:38:22.869 big answer, it's a lot of little answers and that we 00:38:22.869 --> 00:38:25.309 want to be innovative, we're gonna be collaborative 00:38:25.630 --> 00:38:28.599 And I think, you know, one of the things that kind 00:38:28.599 --> 00:38:33.269 of strikes me about this particular part of the solution 00:38:33.280 --> 00:38:36.639 is the engagement of the individual because when the 00:38:36.650 --> 00:38:40.059 individual engages and understands then they become 00:38:40.059 --> 00:38:43.889 supportive and then whether it is energy efficiency 00:38:43.889 --> 00:38:46.250 energy conservation, all the various things that we 00:38:46.250 --> 00:38:49.690 know we need kind of moving forward, they become more 00:38:49.690 --> 00:38:53.460 engaged in the process. So to me this is this is very 00:38:53.460 --> 00:38:57.349 exciting. I also appreciate the leadership of everyone 00:38:57.360 --> 00:38:59.500 on the commission and also the commission staff and 00:38:59.510 --> 00:39:01.980 ERCOT that's worked on this and really look forward 00:39:01.980 --> 00:39:06.389 to seeing the outcomes and the opportunities and as 00:39:06.389 --> 00:39:09.909 we move forward. So 11 other thing that I want to say 00:39:09.909 --> 00:39:15.989 is uh, if you recall when we got started um, ERCOT 00:39:16.019 --> 00:39:20.710 and this is Kenan we uh, this was originally a, we 00:39:20.710 --> 00:39:24.280 can't do anything beyond 10 megawatts uh statewide 00:39:24.590 --> 00:39:28.989 and um, what it shows to me is that we're conservative 00:39:28.989 --> 00:39:31.400 in the way we think about how we ensure reliability 00:39:31.400 --> 00:39:35.429 in the state, but we can work together and realize 00:39:35.429 --> 00:39:41.219 if that's the right amount or the right um, uh, process 00:39:41.219 --> 00:39:43.190 to get to the amount we, we've expanded that to 80 00:39:43.190 --> 00:39:46.829 megawatts, it's different areas, keep that 10 Megawatt 00:39:46.840 --> 00:39:49.670 um limit, but I think that's great. That wouldn't have 00:39:49.670 --> 00:39:51.349 happened if we just threw it out there and said we 00:39:51.349 --> 00:39:54.190 were gonna do this and it's the collaboration that 00:39:54.190 --> 00:39:56.670 made it happen and that's where I'm really proud that 00:39:56.679 --> 00:39:59.949 uh, that, that everybody got in the room, everybody 00:39:59.949 --> 00:40:03.610 was expeditious about this great leadership. Um they 00:40:03.610 --> 00:40:08.300 listened to ERCOT on the reliability function and they 00:40:08.309 --> 00:40:11.539 sought ways to accommodate both sides of that equation 00:40:11.539 --> 00:40:14.079 and I think they've come to a great solution, this 00:40:14.079 --> 00:40:16.820 was a victory for the stakeholder process all the way 00:40:16.820 --> 00:40:20.440 around from the commission to ERCOT staff to the industry 00:40:20.440 --> 00:40:22.960 stakeholders, to the average everyday consumers who 00:40:22.969 --> 00:40:27.260 were able to are able to participate and it's just 00:40:27.260 --> 00:40:30.320 one of, of a framework, energy efficiency and others 00:40:30.320 --> 00:40:32.719 to come that are going to be moving forward at both 00:40:32.719 --> 00:40:37.119 the commission and ERCOT um and within a dynamic industry 00:40:37.119 --> 00:40:41.650 that is evolving every day. So yeah, this, this is 00:40:41.650 --> 00:40:44.230 gonna be fun to watch, big things, have small beginnings 00:40:44.239 --> 00:40:46.610 and uh, I think this is gonna be a big thing one 00:40:46.610 --> 00:40:51.579 day um, members pending any other comments, I would 00:40:51.579 --> 00:40:53.719 gladly entertain a motion to approve the governing 00:40:53.719 --> 00:40:55.360 document and registration form 00:40:57.679 --> 00:41:00.750 have a second. All those in favor say aye I all those 00:41:00.750 --> 00:41:05.849 opposed motion passes item number 33 has been consented 00:41:06.260 --> 00:41:11.550 um Okay I do not have anything on items 34 through 00:41:11.559 --> 00:41:13.219 36 do any of you 00:41:15.369 --> 00:41:20.420 um Now at this time we have an update from ERCOT on 00:41:20.420 --> 00:41:23.969 the Brazos bankruptcy proceeding um chad would you 00:41:23.969 --> 00:41:27.210 like to come up and please give us that uh whatever 00:41:27.210 --> 00:41:28.829 the latest update is 00:41:30.480 --> 00:41:32.130 Until now we're on night of 37 00:41:33.659 --> 00:41:38.260 Okay yeah I'm 37 steven you need to lay that out Oh 00:41:38.820 --> 00:41:45.000 so long legally I just well yeah, it's out of 37 is 00:41:45.010 --> 00:41:51.130 um stuff about ERCOT Okay, now chad you may lay out 00:41:51.130 --> 00:41:54.679 your update. (item:37:Update from ERCOT) Good morning commissioners chad Seeley 00:41:54.679 --> 00:41:58.090 ERCOT general counsel and with me to the right is sean 00:41:58.090 --> 00:42:00.809 taylor ERCOT Chief financial Officer. We wanted to 00:42:00.809 --> 00:42:05.150 discuss the Brazos adversary proceeding and the ERCOT 00:42:05.150 --> 00:42:08.260 settlement that is part of the Brazos bankruptcy plan 00:42:08.269 --> 00:42:12.019 that we that will be presented to the court on november 00:42:12.019 --> 00:42:15.639 14th as part of the confirmation hearing. So yesterday 00:42:15.639 --> 00:42:19.320 I filed a letter along with a 15 slide presentation 00:42:19.329 --> 00:42:22.030 and two projects for the commission. We also electronically 00:42:22.030 --> 00:42:25.130 submitted to each of your offices. This presentation 00:42:25.130 --> 00:42:29.429 is also located on ERCOT website under the dedicated 00:42:29.440 --> 00:42:32.030 ERCOT web page dealing with the Brazos settlement 00:42:32.039 --> 00:42:35.420 we've been very transparent with the market coming 00:42:35.420 --> 00:42:39.599 out of mediation in mid september about the framework 00:42:39.610 --> 00:42:42.690 around this ERCOT settlement regarding this adversary 00:42:42.690 --> 00:42:44.389 proceeding in bankruptcy court, 00:42:45.929 --> 00:42:49.280 So you have the presentation in front of you were happy 00:42:49.280 --> 00:42:51.409 to go through each slide to make sure the commission 00:42:51.409 --> 00:42:54.030 understands the settlement framework. We've obviously 00:42:54.030 --> 00:42:56.519 been coordinating with the commission from day one 00:42:56.519 --> 00:42:59.599 when this bankruptcy was filed, which was March 1st 00:42:59.610 --> 00:43:03.380 of 2021 so here we are, you know, 18 months later. 00:43:03.389 --> 00:43:05.789 Now, coming to the end of the bankruptcy proceeding 00:43:05.789 --> 00:43:08.500 with that confirmation hearing on november 14th, we've 00:43:08.500 --> 00:43:10.750 been coordinating with your counsel, the Attorney General's 00:43:10.750 --> 00:43:13.920 Office every step of the way to make sure that this 00:43:13.929 --> 00:43:17.969 ERCOT settlement reflects the objectives that the commission 00:43:17.969 --> 00:43:21.420 desires and that frankly the wholesale market needs 00:43:21.420 --> 00:43:25.030 to ensure that entities don't avail themselves of adversary 00:43:25.030 --> 00:43:27.920 proceedings in the bankruptcy court and not pay ERCOT 00:43:27.920 --> 00:43:31.489 invoices and we believe we've achieved all those objectives 00:43:31.489 --> 00:43:34.929 with this ERCOT settlement framework. We also believe 00:43:34.929 --> 00:43:37.670 that the statutory objectives coming out of the last 00:43:37.670 --> 00:43:40.639 legislative session have been achieved as well. Um 00:43:40.650 --> 00:43:43.099 I do think it's important to highlight a couple of 00:43:43.110 --> 00:43:45.989 the settlement framework so that the commission has 00:43:45.989 --> 00:43:47.820 a full appreciation, of course, we're here today to 00:43:47.820 --> 00:43:50.570 answer any questions that you may have as we move forward 00:43:50.570 --> 00:43:52.539 with closing out this issue. Hopefully in front of 00:43:52.539 --> 00:43:56.400 the bankruptcy court on November 14. So with that, 00:43:56.400 --> 00:43:57.880 I'll turn to the presentation 00:44:00.960 --> 00:44:06.420 So again, Brazos filed bankruptcy, March 1st 2021 00:44:06.429 --> 00:44:10.619 after winter storm Uri, ERCOT filed a proof of claim 00:44:10.630 --> 00:44:14.460 in the bankruptcy court for approximately $1.9 billion 00:44:14.460 --> 00:44:17.530 Those were the unpaid settlement voices dealing with 00:44:17.530 --> 00:44:21.679 the charges coming out of the winter storm as we move 00:44:21.679 --> 00:44:25.340 forward in litigation in the bankruptcy court, there 00:44:25.340 --> 00:44:29.369 was a lot of discovery expert witnesses and we actually 00:44:29.380 --> 00:44:33.530 began trial in february of this year and trial went 00:44:33.539 --> 00:44:37.690 for about a week and a half with both sides offering 00:44:37.699 --> 00:44:41.099 uh their witnesses in front of the court, about a week 00:44:41.099 --> 00:44:44.750 and a half into the preceding. The bankruptcy judge 00:44:44.760 --> 00:44:48.190 really encourage the parties to go to mediation. And 00:44:48.190 --> 00:44:51.059 the reason why the judge was encouraging the parties 00:44:51.059 --> 00:44:53.320 to go to mediation is that the judge recognized the 00:44:53.320 --> 00:44:56.730 complexity of this issue, a cooperative being in bankruptcy 00:44:56.730 --> 00:44:59.949 court, the interest of ERCOT and the state, we're trying 00:44:59.949 --> 00:45:04.449 to recover $1.9 billion dollars and where he was likely 00:45:04.449 --> 00:45:07.579 headed with the outcome in those decisions. And so 00:45:07.579 --> 00:45:11.110 we stood back. Both parties agreed to go to mediation 00:45:11.119 --> 00:45:14.050 and for about six months we were in mediation, working 00:45:14.059 --> 00:45:15.920 on the framework of the settlement that's presented 00:45:15.920 --> 00:45:19.670 to the court. When ERCOT decided to go to mediation 00:45:19.679 --> 00:45:23.119 they wanted to ensure that it was going to achieve 00:45:23.130 --> 00:45:25.690 the Legislature and the commission's overall objectives 00:45:25.690 --> 00:45:28.670 and protecting the competitive wholesale market and 00:45:28.670 --> 00:45:32.550 then the last legislative session, PURA 39.160 was 00:45:32.550 --> 00:45:36.170 added that dealt with the impacts of a defaulting market 00:45:36.170 --> 00:45:39.760 participant. And so we were very cognizant of the legislature's 00:45:39.760 --> 00:45:42.739 decision to put that framework in place and the relationship 00:45:42.750 --> 00:45:45.269 between ERCOT and the commission when we have a defaulting 00:45:45.269 --> 00:45:47.719 entity. But in the world of bankruptcy, when you're 00:45:47.719 --> 00:45:51.500 going through a restructuring and you come out of a 00:45:51.500 --> 00:45:54.900 restructuring, you're not in default. So when you look 00:45:54.900 --> 00:45:58.090 at that provision in 39.160 it talks about the actions 00:45:58.090 --> 00:46:00.909 that ERCOT must take and that the commission must take 00:46:00.920 --> 00:46:03.889 It's premised on the fact that there is in fact a default 00:46:03.900 --> 00:46:06.119 and when you're in bankruptcy court going through again 00:46:06.119 --> 00:46:08.980 a reorganization that we hope will be confirmed a mid 00:46:08.980 --> 00:46:12.219 november, Brazos will not be in default. But we took 00:46:12.219 --> 00:46:15.210 that framework that the legislature wanted and use 00:46:15.210 --> 00:46:18.349 that as part of our objectives in the mediation and 00:46:18.349 --> 00:46:20.460 we believe we've accomplished what the legislature 00:46:20.460 --> 00:46:23.119 wanted with that framework which is ultimately when 00:46:23.119 --> 00:46:27.550 Brazos is reorganized and transitions after this bankruptcy 00:46:27.559 --> 00:46:30.550 they will no longer have generation and they will no 00:46:30.550 --> 00:46:34.130 longer schedule Load they will be a pure transmission 00:46:34.130 --> 00:46:36.849 and distribution cooperative. Once this transition 00:46:36.849 --> 00:46:37.449 occurs 00:46:40.750 --> 00:46:44.300 some other key features as part of the mediation principles 00:46:44.300 --> 00:46:46.469 When we stepped into mediation was to ensure that there 00:46:46.469 --> 00:46:49.300 would be no default uplift to the rest of the market 00:46:49.309 --> 00:46:54.900 Brazos is needed to pay for the invoices And the 00:46:54.909 --> 00:46:57.269 charges that it incurred during Winter Storm Uri. 00:46:57.280 --> 00:47:00.199 And so that was a fundamental economic principle that 00:47:00.199 --> 00:47:03.000 we took into mediation that the rest of the market 00:47:03.010 --> 00:47:07.300 would not be uplifted the 1.9 billion that was due 00:47:08.730 --> 00:47:11.329 But we also recognize that, you know, is needed to 00:47:11.329 --> 00:47:14.019 play pay its invoices and that the market needed to 00:47:14.019 --> 00:47:18.199 recover the 1.9 billion. And so we had to consider 00:47:18.210 --> 00:47:21.989 settlement options in which every participant through 00:47:21.989 --> 00:47:24.820 ERCOT would have an option to decide how it wanted 00:47:24.820 --> 00:47:27.510 to get its money back based on the time and value of 00:47:27.510 --> 00:47:31.929 that money ultimately 100%. If a mark participant wanted 00:47:31.929 --> 00:47:35.050 to achieve that recovery was on the table and we were 00:47:35.050 --> 00:47:37.539 not going to give that up. The more participants wanted 00:47:37.539 --> 00:47:41.559 to elect to get money back faster that they would have 00:47:41.559 --> 00:47:44.360 to take a discount. And so we knew we had to incorporate 00:47:44.360 --> 00:47:46.750 that framework into the mediation and in order for 00:47:46.750 --> 00:47:50.030 the mediator to come up with a feasibility plan for 00:47:50.030 --> 00:47:52.800 Brazos to exit the bankruptcy. And of course it's 00:47:52.800 --> 00:47:56.969 not just about ERCOT $1.9 billion claim against Brazos. Brazos has 00:47:56.980 --> 00:48:00.139 hundreds of millions of others claims from creditors 00:48:00.139 --> 00:48:02.349 as part of this bankruptcy. And when you go through 00:48:02.349 --> 00:48:04.909 a reorganization, you're dealing with all the creditors 00:48:04.920 --> 00:48:07.469 and how to resolve all those issues. So the mediation 00:48:07.469 --> 00:48:11.139 had the overlay of all the creditors having to figure 00:48:11.139 --> 00:48:13.840 out what is the best approach for Brazos to exit. 00:48:17.110 --> 00:48:19.329 During winter storm Uri the commission authorized 00:48:19.329 --> 00:48:24.269 us to use 800 million as part of the crr funds To 00:48:24.269 --> 00:48:26.610 pay the market for the extraordinary costs that came 00:48:26.610 --> 00:48:29.230 out of Winter Storm Uri. And we did that, the amount 00:48:29.230 --> 00:48:32.619 that was associated with Brazos's short pay was approximately 00:48:32.619 --> 00:48:36.369 600 million. So the 1.9 billion, that is the proof 00:48:36.369 --> 00:48:40.909 of claim. Approximately 600 million of that is earmarked 00:48:40.920 --> 00:48:44.230 tied to the crr funds that we used pursuant to the 00:48:44.230 --> 00:48:46.750 commission's direction during that time. And so we 00:48:46.750 --> 00:48:48.760 knew that was an important consideration going into 00:48:48.760 --> 00:48:52.440 mediation, that we need to get that money Back and 00:48:52.440 --> 00:48:55.219 put it back into its place where it needed to go. Which 00:48:55.219 --> 00:48:57.599 is a combination of what securitization sub chapter 00:48:57.599 --> 00:49:01.699 M was about to help replenish the crr funds give liquidity 00:49:01.699 --> 00:49:04.630 to the market. But we wanted to get that 600 million 00:49:04.630 --> 00:49:06.780 back as soon as we could. And so that was an important 00:49:06.780 --> 00:49:09.710 consideration as far as the immediate recovery of getting 00:49:09.710 --> 00:49:13.489 that 600 million back on in a timely fashion. And then 00:49:13.489 --> 00:49:16.019 there were other litigation issues that we had to consider 00:49:16.019 --> 00:49:19.340 the risk of ERCOT being in bankruptcy and how to resolve 00:49:19.340 --> 00:49:23.150 that mediation. There's at the time of the event, ERCOT 00:49:23.150 --> 00:49:27.030 had approximately 350 million of collateral that Brazos 00:49:27.030 --> 00:49:29.929 had for ERCOT And we applied that and distributed that 00:49:29.929 --> 00:49:33.090 to the market through the adversary proceeding Bank 00:49:33.099 --> 00:49:36.610 uh Brazos was alleging that those were fraudulent 00:49:36.610 --> 00:49:39.739 transfers which is called the pre petition claim and 00:49:39.750 --> 00:49:42.230 it was asserting that that was also a risk that we 00:49:42.230 --> 00:49:44.780 had to take in consideration to try to resolve that 00:49:44.780 --> 00:49:47.900 as part of the mediation as well. Those were the key 00:49:47.900 --> 00:49:49.969 economic principles that we were considering going 00:49:49.969 --> 00:49:54.199 into the mediation back in March of this year. On the 00:49:54.199 --> 00:49:58.889 non economic side to achieve the legislature's objectives 00:49:58.889 --> 00:50:02.340 coming out of the last session, we knew that could 00:50:02.340 --> 00:50:04.679 not be the same entity going forward coming out of 00:50:04.679 --> 00:50:08.010 this bankruptcy and that they should not be able to 00:50:08.010 --> 00:50:11.110 schedule Load or generation and therefore create any 00:50:11.110 --> 00:50:13.780 future potential risk into the wholesale market. And 00:50:13.780 --> 00:50:17.190 so that was obviously just as important as the economic 00:50:17.190 --> 00:50:19.960 principles that I talked about a few minutes ago, ensuring 00:50:19.960 --> 00:50:23.590 that Brazos understood that its consequence of filing 00:50:23.590 --> 00:50:26.429 bankruptcy had repercussions and that we could not 00:50:26.429 --> 00:50:28.670 live with um are participant continued to move forward 00:50:28.670 --> 00:50:31.820 as a counter party with ERCOT with the potential risk 00:50:31.829 --> 00:50:35.139 for the wholesale market. And we also knew that part 00:50:35.139 --> 00:50:37.750 of that meant having appropriate senior management 00:50:37.750 --> 00:50:41.760 changes as well. So these were all the key fundamental 00:50:41.760 --> 00:50:45.210 economic and non economic principles that ERCOT believed 00:50:45.210 --> 00:50:47.480 it wanted to achieve when it went into mediation in 00:50:47.480 --> 00:50:50.440 March and again that mediation took about six months 00:50:50.449 --> 00:50:55.010 some of the Market participants were able to intervene 00:50:55.019 --> 00:50:57.769 and participate in that mediation and provide value 00:50:57.780 --> 00:50:59.769 again, working with the Commission, the Attorney General's 00:50:59.769 --> 00:51:02.730 Office providing value and then ultimately Brazos 00:51:02.730 --> 00:51:05.300 and the member co ops all part of that mediation to 00:51:05.300 --> 00:51:08.309 try to come up with a resolution, so in august of this 00:51:08.309 --> 00:51:12.570 year, the mediator gave the party's kind of the last 00:51:12.579 --> 00:51:15.989 proposal to see if we could work this deal out and 00:51:15.989 --> 00:51:18.239 we were ultimately able to work out a settlement than 00:51:18.239 --> 00:51:21.280 it is now incorporated as part of the Brazos plan 00:51:22.420 --> 00:51:25.639 So what is that overview? Again, it's very consistent 00:51:25.639 --> 00:51:29.170 with what the initial principles were that ERCOT stepped 00:51:29.170 --> 00:51:32.750 into mediation back in back in March. The first thing 00:51:32.750 --> 00:51:36.750 I wanted to focus on is the 600 million for the crr 00:51:36.750 --> 00:51:40.369 funds that we drew on. ERCOT is going to get that money 00:51:40.369 --> 00:51:44.599 back and we will apply it to pay down securitization 00:51:44.599 --> 00:51:48.039 in bonds and we will replenish the remaining piece 00:51:48.050 --> 00:51:51.079 of the CRR funds that is lacking to get us back to 00:51:51.079 --> 00:51:53.900 the fully loaded amount that was there before we applied 00:51:53.900 --> 00:51:56.440 at during Winter Storm Uri, I want to turn it over 00:51:56.440 --> 00:51:58.349 to sean to see if he wants to add any more context 00:51:58.349 --> 00:52:01.739 about our plan to move forward with applying it sub 00:52:01.739 --> 00:52:04.590 chapter in bonds and the structure of what we were 00:52:04.590 --> 00:52:06.630 able to do working with the commission when we went 00:52:06.630 --> 00:52:09.159 through that proceeding with the Texas comptroller 00:52:10.119 --> 00:52:15.409 Thanks chad when we issued the debt to identify yourself 00:52:15.409 --> 00:52:18.579 for the record. Oh sorry sean taylor ERCOT Chief financial 00:52:18.579 --> 00:52:22.780 Officer when we issued the debt to the comptroller 00:52:22.780 --> 00:52:25.369 the $800 million to subchapter m one of the things 00:52:25.369 --> 00:52:27.650 that we built into that agreement was the ability to 00:52:27.650 --> 00:52:30.929 pay pre pay that debt or pay down that debt without 00:52:30.929 --> 00:52:33.840 penalty during a period of time that is held by the 00:52:33.840 --> 00:52:35.909 comptroller. We're looking at the first three years 00:52:35.909 --> 00:52:38.769 in that case. What that allows us to do is to take 00:52:38.769 --> 00:52:41.289 this money that we're going to get in from Brazos and 00:52:41.289 --> 00:52:44.920 pay down approximately $375 million of that balance 00:52:44.929 --> 00:52:48.769 which will then reduce the rates that the market participants 00:52:48.769 --> 00:52:51.219 have to pay going forward. We'll be able to directly 00:52:51.219 --> 00:52:54.070 apply that money and reduce those monthly charges that 00:52:54.070 --> 00:52:57.929 they are currently receiving. The remaining $225 million 00:52:57.929 --> 00:53:00.789 is the gap that is on ERCOT balance sheet right now 00:53:00.800 --> 00:53:04.260 for the CRRs that we use that will fully replenish 00:53:04.260 --> 00:53:06.929 those CRRs and ERCOT will be completely whole 00:53:09.610 --> 00:53:12.309 Fortunately with the ability to get the $600 million 00:53:12.309 --> 00:53:15.679 dollars in on the effective date of the plan that allows 00:53:15.679 --> 00:53:18.030 us to do both of those things in the immediate future 00:53:20.840 --> 00:53:23.400 Of course, as we move forward to apply those funds 00:53:23.400 --> 00:53:25.980 to pay down the subchapter M bonds is a very public 00:53:25.980 --> 00:53:29.119 process. We'll be talking to the board will be presenting 00:53:29.119 --> 00:53:31.769 that information to the commission will be working 00:53:31.769 --> 00:53:34.000 with commission staff on how we move forward with that 00:53:34.000 --> 00:53:37.360 process which we anticipate early next year to do that 00:53:38.500 --> 00:53:41.869 So once you take out the 600 million you're left with 00:53:41.869 --> 00:53:43.860 what to do to the market participants. These are what 00:53:43.860 --> 00:53:46.619 we call the eligible marked incidents that have a claim 00:53:46.630 --> 00:53:49.730 through ERCOT as a result of Brazos short pay in the 00:53:49.730 --> 00:53:54.070 market and that is approximately the 1.3 billion that's 00:53:54.070 --> 00:53:56.940 left. I'm talking about slide five here if you're falling 00:53:56.940 --> 00:54:01.889 along in the presentation um again, going back to the 00:54:01.900 --> 00:54:06.329 settlement principles how to structure A way in which 00:54:06.340 --> 00:54:09.800 mark participants had the option to get 100% recovery 00:54:09.800 --> 00:54:13.550 on their claim or to take a discount if they wanted 00:54:13.550 --> 00:54:17.000 to get that money back sooner rather than the time 00:54:17.000 --> 00:54:19.639 frame that was being proposed. And so if you look at 00:54:19.639 --> 00:54:24.070 slide six, we came up with four overall options for 00:54:24.070 --> 00:54:27.219 the mark participants to elect and we just completed 00:54:27.219 --> 00:54:30.130 the election process last week. I'll turn it over to 00:54:30.130 --> 00:54:33.760 Sean to highlight the important features of all four 00:54:33.760 --> 00:54:36.329 of these options that was presented to these eligible 00:54:36.329 --> 00:54:38.639 market participants to go through and elect how they 00:54:38.639 --> 00:54:41.409 wanted to receive their money. Go ahead. Thanks. And 00:54:41.409 --> 00:54:43.949 as chad previously mentioned, we did want to give the 00:54:43.949 --> 00:54:46.289 market participants that flexibility to choose among 00:54:46.289 --> 00:54:49.750 these options. The first option, which is option one 00:54:49.750 --> 00:54:53.630 which is the accelerated cash recovery option allows 00:54:53.630 --> 00:54:56.099 for that discounted rate but to recover that money 00:54:56.099 --> 00:55:00.920 in an accelerated manner, It allows for a 65% nominal 00:55:00.920 --> 00:55:06.489 recovery of the amounts owed And it is in three components 00:55:06.500 --> 00:55:09.099 The first is approximately 43%, which would be on the 00:55:09.099 --> 00:55:12.849 effective date of the plan. The second is after the 00:55:12.849 --> 00:55:15.940 sale of generation assets which has an outside date 00:55:15.940 --> 00:55:18.940 of one year after the effective date of the plan, that's 00:55:18.940 --> 00:55:21.659 approximately 9%. And then the last component is an 00:55:21.659 --> 00:55:23.989 annual payment starting on the first anniversary of 00:55:23.989 --> 00:55:29.989 effective date which is equal to 13% across 12 years 00:55:30.000 --> 00:55:35.239 This timeline ties to the funding Proposal from Brazos 00:55:35.239 --> 00:55:38.840 that is also in the plan which we'll discuss in a minute 00:55:38.849 --> 00:55:41.869 But that is why this has these three separate components 00:55:41.880 --> 00:55:45.590 The second option is the ability for them to recover 00:55:45.590 --> 00:55:48.030 the full nominal amount and so that's a market participant 00:55:48.030 --> 00:55:50.500 deferred recovery options. So that allows for 100% 00:55:50.500 --> 00:55:54.550 recovery That's paid across 30 years and it's a little 00:55:54.550 --> 00:55:57.090 bit weighted more heavily towards the last part of 00:55:57.090 --> 00:55:59.429 those years. It's in three separate components. The 00:55:59.440 --> 00:56:02.179 first five years are at a specific rate the middle 00:56:02.190 --> 00:56:04.880 20 years or at a specific rate in the last five years 00:56:04.880 --> 00:56:08.360 are at a higher, slightly higher rate of payment. The 00:56:08.360 --> 00:56:12.940 third option was for those who have a smaller claim 00:56:12.940 --> 00:56:16.289 to allow them a one time payment which would be 63% 00:56:16.289 --> 00:56:19.650 of the amount owed. It would be 63% of the amount that 00:56:19.659 --> 00:56:24.909 they of their claim capped at $63,000. So some $10,000 00:56:24.909 --> 00:56:28.059 claim. So they had a claim greater than 10,000. They 00:56:28.059 --> 00:56:31.929 could reduce that claim to $10,000 and collect $6300 00:56:31.929 --> 00:56:34.920 as well as we'll see what the results. Option one and 00:56:34.920 --> 00:56:37.059 option three were the ones that were the primary ones 00:56:37.059 --> 00:56:40.019 selected by market participants. Option four was for 00:56:40.019 --> 00:56:42.539 that greater level of flexibility which allowed the 00:56:42.539 --> 00:56:46.039 market participants to select between both the accelerated 00:56:46.039 --> 00:56:49.760 and deferred option one and option two and divide their 00:56:49.760 --> 00:56:52.889 claim among those two options if it suited them best 00:56:53.530 --> 00:56:56.920 And any market participant that did not select an option 00:56:56.929 --> 00:57:00.550 was defaulted to the option to the deferred 30-year 00:57:00.550 --> 00:57:03.050 recovery option as well. And we'll see the numbers 00:57:03.050 --> 00:57:06.329 of those in a minute. How many that applied to A couple 00:57:06.329 --> 00:57:09.050 of things before we turn into slide seven where Sean 00:57:09.050 --> 00:57:11.070 talks about the primary funding, going again back to 00:57:11.070 --> 00:57:15.219 option two, ERCOT did not want to make any election 00:57:15.219 --> 00:57:17.679 choices for these eligible participants. It's their 00:57:17.679 --> 00:57:20.659 money, they get to choose how they wanted to get paid 00:57:20.659 --> 00:57:22.670 back in the time in which they wanted to get that paid 00:57:22.670 --> 00:57:25.289 back. So it was critically important when we set up 00:57:25.300 --> 00:57:28.840 the options here that every eligible participant could 00:57:28.840 --> 00:57:33.099 get 100% of their claim back. And the time frame in 00:57:33.099 --> 00:57:38.119 which option two is 30 years ultimately is faster than 00:57:38.119 --> 00:57:41.420 our default uplift process. And the protocols. So let's 00:57:41.420 --> 00:57:52.739 assume that Brazos did not pay the $1.3 billion 2.5 00:57:52.739 --> 00:57:56.269 million a month. That's 30 million a year. That would 00:57:56.269 --> 00:58:00.239 take 43 years to recover that for the entire market 00:58:00.539 --> 00:58:04.139 And so with this framework, the eligibility to get 00:58:04.139 --> 00:58:07.659 that back on a faster time frame is a benefit to those 00:58:07.659 --> 00:58:11.960 market incidents if they so choose to seek 100% recovery 00:58:11.969 --> 00:58:14.340 of their claim. And that was the framework in which 00:58:14.340 --> 00:58:17.349 we set up this election notice process not knowing 00:58:17.349 --> 00:58:19.989 how mark dissidents wanted to handle the time value 00:58:19.989 --> 00:58:22.829 of money. And so they were given the option that if 00:58:22.829 --> 00:58:26.780 everybody wanted to select option two And the full 00:58:26.780 --> 00:58:30.599 1.3 billion was recognized that is still a faster time 00:58:30.599 --> 00:58:33.679 frame than the default uplift process under our protocols 00:58:35.199 --> 00:58:37.469 And if it was the full 1.9 of the claim, that would 00:58:37.469 --> 00:58:38.849 have been over 60 years 00:58:41.849 --> 00:58:43.969 On the next slide on slide seven. When we're talking 00:58:43.969 --> 00:58:47.079 about the primary funding sources, as I mentioned before 00:58:47.079 --> 00:58:49.780 these funding sources are linked to how that option 00:58:49.780 --> 00:58:53.409 one recovery actually works. So there are three primary 00:58:53.409 --> 00:58:57.500 funding sources that are identified. The first is a 00:58:57.500 --> 00:59:08.269 little bit over 1.1, almost $1.2 billion 16 members 00:59:08.269 --> 00:59:12.559 15 of them. Oh, Brazos money Of those three will be 00:59:12.559 --> 00:59:15.650 paying with cash. The others will be securitizing through 00:59:15.650 --> 00:59:18.190 Senate Bill 1580, there will be three separate security 00:59:18.199 --> 00:59:21.010 plans for three separate securitizations which are 00:59:21.010 --> 00:59:24.119 currently on schedule for the December January timeline 00:59:24.820 --> 00:59:28.619 The second component is the generation asset sale. 00:59:28.630 --> 00:59:32.039 They will be selling their three generation assets 00:59:32.050 --> 00:59:36.610 of that sale. 100 and 16.6 is being allocated to this 00:59:36.610 --> 00:59:39.960 market participant payment. And that recovery if for 00:59:39.960 --> 00:59:43.889 some reason there's not enough money from that sale 00:59:43.900 --> 00:59:46.599 then the current plan is for that. It is assumed to 00:59:46.599 --> 00:59:50.590 be recovered any shortfall recovered by the rural utility 00:59:50.590 --> 00:59:55.909 services. They are us they contingency uh X. A note 00:59:55.920 --> 00:59:59.750 associated with this process. The last component is 00:59:59.750 --> 01:00:03.329 the annual payment and that total $166 million. It's 01:00:03.329 --> 01:00:11.309 about $13.8 million T&D. Operations from Brazos as 01:00:11.309 --> 01:00:16.110 we move forward. All of this is also back stopped with 01:00:16.110 --> 01:00:18.860 the T and D assets of Brazos. So if there's a failure 01:00:18.860 --> 01:00:22.980 to pay then there's awesome the ability to use those 01:00:22.980 --> 01:00:26.590 assets to fund these reducing the risk of failure payment 01:00:26.590 --> 01:00:32.050 to market participants. Chad mentioned of that $1.15 01:00:32.059 --> 01:00:37.309 billion 509.7 or approximately 600 million associated 01:00:37.309 --> 01:00:43.019 with the crr monies will be going to pay down the subchapter 01:00:43.019 --> 01:00:48.150 M bonds. That $375 million $225 million dollars of 01:00:48.150 --> 01:00:52.280 crr funds. The rest of the amounts for all of these 01:00:52.289 --> 01:00:56.860 will be allocated between the recovery options. So 01:00:56.860 --> 01:00:58.960 for the accelerated recovery, the market participants 01:00:58.969 --> 01:01:02.039 convenience cash recoveries, those lump payments, those 01:01:02.039 --> 01:01:04.960 will be paid in accordance with the schedule on the 01:01:04.969 --> 01:01:07.889 timeliness that we get these monies in from Brazos 01:01:07.900 --> 01:01:11.280 The remaining amount is allocated to an escrow account 01:01:11.280 --> 01:01:14.000 to pay that cash deferred recovery option across the 01:01:14.000 --> 01:01:16.969 next 30 years. So all the money comes in and gets, 01:01:17.039 --> 01:01:20.570 gets transferred out to market participants or gets 01:01:20.570 --> 01:01:23.170 put into that escrow account, which is the joint escrow 01:01:23.170 --> 01:01:26.059 account with Brazos and ERCOT 01:01:29.090 --> 01:01:31.510 Ok, so Shawn's kind of walked through the economic 01:01:31.510 --> 01:01:35.150 side on on slot eight, you know, again I highlighted 01:01:35.150 --> 01:01:37.340 when we went into mediation, the non economic principles 01:01:37.340 --> 01:01:39.269 and what we're trying to achieve and the settlement 01:01:39.280 --> 01:01:42.699 encapsulates those non economic provisions and there 01:01:42.699 --> 01:01:45.260 on slide eight again, Brazos will no longer be a 01:01:45.260 --> 01:01:48.239 financial counter party with ERCOT ever again, that's 01:01:48.239 --> 01:01:52.010 part of the plan. Once this transition completes again 01:01:52.010 --> 01:01:55.940 they will only be a wires company going forward. Um 01:01:55.949 --> 01:01:58.219 it will take some time to go through that transition 01:01:58.510 --> 01:02:02.409 but in order to start to mitigate that potential risk 01:02:02.409 --> 01:02:05.000 going forward as a counter party, we put features in 01:02:05.000 --> 01:02:08.639 the ERCOT settlement on how they ultimately phase out 01:02:08.650 --> 01:02:12.309 and the first one is that they will no longer act as 01:02:12.320 --> 01:02:15.820 the qualified schedule, Anthony's scheduling the Load 01:02:15.829 --> 01:02:19.679 by March of next year. And so they will have to find 01:02:19.679 --> 01:02:22.929 a third party qualified and scheduling entity to handle 01:02:22.929 --> 01:02:25.730 that scheduling Load and again, if you go back to the 01:02:25.739 --> 01:02:28.320 beginning of the statutory framework, it's about the 01:02:28.320 --> 01:02:31.280 commission's authority to stop scheduling Load So we're 01:02:31.280 --> 01:02:34.730 achieving that objective through the transition browsers 01:02:34.730 --> 01:02:37.320 will sell all the generation assets, Shawn's talked 01:02:37.320 --> 01:02:39.690 about the economic side that will take a little bit 01:02:39.690 --> 01:02:43.670 of time Brazos has retained its experts to start working 01:02:43.670 --> 01:02:47.219 on that. Uh it could, you know, bleed into the end 01:02:47.219 --> 01:02:50.820 of next year. We will allow them to continue to schedule 01:02:50.820 --> 01:02:54.159 that generation, but there is a backstop in which they 01:02:54.170 --> 01:02:56.929 have to get a qualified and scheduling to even schedule 01:02:56.929 --> 01:02:59.159 that generation if somehow they're still retaining 01:02:59.159 --> 01:03:03.349 those assets. Brazos does have a handful of power 01:03:03.349 --> 01:03:07.500 purchase agreements. So and we have put backstop matches 01:03:07.510 --> 01:03:11.559 in the plan as well on that those retained agreements 01:03:11.559 --> 01:03:14.579 cannot be extended after a certain period and you cannot 01:03:14.579 --> 01:03:18.469 increase the capacity materially and eventually those 01:03:18.480 --> 01:03:21.489 those agreements will go away as well. And that a third 01:03:21.489 --> 01:03:24.650 party will have to handle any type of scheduling associated 01:03:24.650 --> 01:03:29.050 with those retained agreements. And then on slide nine 01:03:29.059 --> 01:03:32.369 these are the changes in the senior management that 01:03:32.380 --> 01:03:35.960 Brazos disagreed through, through the, through the mediation 01:03:35.969 --> 01:03:39.869 Uh I think the last bullet point about going forward 01:03:39.869 --> 01:03:43.750 as as Brazos reorganizes those limitations on who 01:03:43.750 --> 01:03:46.590 can be in those leadership positions are part are all 01:03:46.599 --> 01:03:48.670 part of the ERCOT settlement as well. 01:03:51.280 --> 01:03:54.570 So on slide 10 you know, I indicated that we we went 01:03:54.570 --> 01:03:57.889 through this election notice process that started in 01:03:57.900 --> 01:04:04.480 September 20 and went for a month And in 755 election 01:04:04.480 --> 01:04:07.920 notices were distributed to eligible market incidents 01:04:07.929 --> 01:04:11.030 These are the entities that are due money from brasses 01:04:11.039 --> 01:04:13.730 And going back to what Sean and I have talked about 01:04:13.730 --> 01:04:16.420 the four options in which they selected on this election 01:04:16.420 --> 01:04:18.780 notice. I'll turn it over to Sean to talk about the 01:04:18.780 --> 01:04:22.199 table and what ultimately all this means. This is information 01:04:22.199 --> 01:04:24.949 that will ultimately present to the court as part of 01:04:24.949 --> 01:04:29.159 the confirmation hearing on November 14. Thanks chad 01:04:29.170 --> 01:04:31.690 As you look at this table on this page as chad said 01:04:31.690 --> 01:04:33.949 we took about a month to allow market participants 01:04:33.949 --> 01:04:37.019 to respond to our request after we sent out the election 01:04:37.019 --> 01:04:41.389 notice forms to them. And that ended on October 21 01:04:41.389 --> 01:04:43.590 In this table across the top, you can see the count 01:04:43.590 --> 01:04:45.719 of these election forms. Those counts as a percent 01:04:45.719 --> 01:04:48.539 of total the dollars represented by those election 01:04:48.539 --> 01:04:52.449 forms reaching that total of $1.3 billion and as I 01:04:52.449 --> 01:04:55.190 mentioned before options one option three were the 01:04:55.190 --> 01:04:59.030 most popular options. You can see we have the total 01:04:59.039 --> 01:05:01.619 election notice in the first row. Then we have the 01:05:01.619 --> 01:05:04.900 return notices by option and then the not return notices 01:05:04.909 --> 01:05:11.079 So we got some received 747 155 notices back. So 98% 01:05:11.079 --> 01:05:15.880 of the notices and that represented 99.95% of the dollars 01:05:15.880 --> 01:05:21.170 Only 606 $100,000 was not returned in an election notice 01:05:21.170 --> 01:05:25.739 option. The option one that accelerated option was 01:05:25.750 --> 01:05:28.210 over half of the forms that we received back. And that 01:05:28.210 --> 01:05:31.880 represented over 96% of the dollars that we're talking 01:05:31.880 --> 01:05:35.340 about. The second most popular option. That option 01:05:35.340 --> 01:05:39.469 three was over 40% of the respondents. And since that 01:05:39.469 --> 01:05:41.469 is the smaller dollar amounts, that was only a little 01:05:41.469 --> 01:05:43.309 over a million dollars. But those are people who will 01:05:43.309 --> 01:05:46.250 be receiving the one time payment. We only received 01:05:46.250 --> 01:05:50.519 34 notices back. So less than 5% for people who selected 01:05:50.530 --> 01:05:53.610 the deferred option and that represented approximately 01:05:53.610 --> 01:05:58.809 a third of a percent. So only $4.4 million option four 01:05:58.809 --> 01:06:00.579 There were two people that selected the ability to 01:06:00.579 --> 01:06:04.300 split the two people that selected. It did not split 01:06:04.300 --> 01:06:07.590 their funds. So one of them was fully for the accelerated 01:06:07.590 --> 01:06:09.690 option and that was almost the entire amount that's 01:06:09.699 --> 01:06:12.829 represented here. The other selected the deferred option 01:06:12.829 --> 01:06:16.280 fully. That was only for a little over $1500. So in 01:06:16.280 --> 01:06:19.179 reality you take that 41 a half million dollars and 01:06:19.179 --> 01:06:24.159 added to the option 11.2 billion plus the convenience 01:06:24.159 --> 01:06:26.710 cash recovery option of a million dollars. And you 01:06:26.710 --> 01:06:31.730 end up with over 99 a half percent of this being covered 01:06:31.739 --> 01:06:34.389 by the accelerator of the convenience cash option from 01:06:34.389 --> 01:06:37.150 a dollar perspective so there's about $5 million that 01:06:37.150 --> 01:06:39.530 was in the bucket to be distributed over the 30 year 01:06:39.530 --> 01:06:43.150 plan for that deferred option as chad mentioned we 01:06:43.150 --> 01:06:47.679 will file the details of this with the court and what 01:06:47.679 --> 01:06:50.000 that will be is that ERCOT recovery appendix, it will 01:06:50.000 --> 01:06:53.010 show the summary of this information then by option 01:06:53.019 --> 01:06:56.300 all the market participants who elected that option 01:06:56.309 --> 01:06:59.070 and that payment schedule in the case of the accelerated 01:06:59.070 --> 01:07:01.369 the payment schedule for those 12 years in the case 01:07:01.369 --> 01:07:03.599 of the deferred for that 30 years in the case of the 01:07:03.599 --> 01:07:06.559 comedians cash that one time payment So all of that 01:07:06.559 --> 01:07:09.139 will serve as the record for when, when the payments 01:07:09.139 --> 01:07:12.230 are due to market participants for up to 30 years from 01:07:12.239 --> 01:07:14.920 ERCOT defining the dollar amounts by year that they 01:07:14.920 --> 01:07:18.239 will receive as well as these other payment dates. 01:07:20.519 --> 01:07:24.900 So slides 11 through 12 are what I call the additional 01:07:24.900 --> 01:07:28.219 backstop features for the browsers bankruptcy plan 01:07:28.230 --> 01:07:32.400 So we had the economic and non economic settlement 01:07:32.409 --> 01:07:35.010 in early September and the market knew about that but 01:07:35.010 --> 01:07:39.050 we weren't done Negotiating with Brazos on the backstop 01:07:39.050 --> 01:07:41.420 features because this is the plan that has to operate 01:07:41.429 --> 01:07:46.329 for 30 years and and beyond to ensure that the market 01:07:46.329 --> 01:07:49.400 gets the money back consistent with the settlement 01:07:49.409 --> 01:07:52.150 and so these were negotiations that occurred starting 01:07:52.150 --> 01:07:55.199 in September after the first version of the plan was 01:07:55.199 --> 01:07:57.579 officially filed with the court all the way up until 01:07:57.579 --> 01:08:01.110 last week when Brazos on Thursday filed its amended 01:08:01.110 --> 01:08:04.119 plan for the court, I'm not gonna go through each one 01:08:04.119 --> 01:08:07.489 of them, but I did want to highlight on slide 11, the 01:08:07.489 --> 01:08:11.300 last two points are critically important. So again 01:08:11.300 --> 01:08:14.460 Brazos will ultimately transition to a wires company 01:08:14.469 --> 01:08:19.090 So the issue of technology on the transmission and 01:08:19.090 --> 01:08:22.560 distribution sides came up and how should that be managed 01:08:22.569 --> 01:08:25.760 for example, batteries being used as a transmission 01:08:25.760 --> 01:08:29.119 or distribution asset. And so we had to think through 01:08:29.119 --> 01:08:31.670 that issue because we're talking about a plan that 01:08:31.680 --> 01:08:36.100 operates forever for Brazos and so that that point 01:08:36.109 --> 01:08:38.930 is raised here that it allows Brazos the flexibility 01:08:38.930 --> 01:08:41.899 to use those assets for transmission or distribution 01:08:41.899 --> 01:08:44.539 purposes, but those assets cannot be offered into the 01:08:44.539 --> 01:08:46.979 wholesale market for energy or ancillary services. 01:08:47.210 --> 01:08:50.189 And so it's complementary with the last bullet point 01:08:50.399 --> 01:08:53.600 that there's very specific language that brad's shall 01:08:53.600 --> 01:08:56.920 never own or operate generation assets or electric 01:08:56.920 --> 01:08:59.560 energy storage facilities for the purposes offering 01:08:59.560 --> 01:09:02.899 into the market. So this allows ERCOT from planning 01:09:02.899 --> 01:09:05.979 purposes to look at, you know, as the Brazos area 01:09:05.979 --> 01:09:09.590 grows to leverage technology that is useful on the 01:09:09.590 --> 01:09:12.270 transmission distribution asset on the transmission 01:09:12.270 --> 01:09:14.640 and distribution side. It doesn't hinder Brazos to 01:09:14.640 --> 01:09:18.800 be able to perform its core wires company function 01:09:18.810 --> 01:09:21.380 but it cannot offer those assets into the market depending 01:09:21.380 --> 01:09:24.319 on where we evolve with our wholesale market over time 01:09:26.949 --> 01:09:30.170 On slide 12 I talked about the two retained agreements 01:09:30.170 --> 01:09:32.359 that impact the ERCOT region. There's another one over 01:09:32.359 --> 01:09:34.729 in the maestro reason this this is the restrictions 01:09:34.729 --> 01:09:38.039 on the retained agreements um critically important 01:09:38.039 --> 01:09:41.449 is the distribution of T. D. Asset proceeds if there 01:09:41.449 --> 01:09:43.890 is a default under the plan and I'll turn it over to 01:09:43.890 --> 01:09:46.779 sean to talk about how this feature works, which is 01:09:46.779 --> 01:09:49.029 really the fundamental backstop to ensure that the 01:09:49.029 --> 01:09:52.000 market gets its money of somehow Brazos is not able 01:09:52.000 --> 01:09:54.619 to pay under the structure that we talked about on 01:09:54.619 --> 01:09:58.859 the previous slides and what this provides for is that 01:09:58.859 --> 01:10:01.760 Brazos is prohibited from distributing the proceeds 01:10:01.760 --> 01:10:04.810 from its T and D assets to anyone other than a valid 01:10:04.810 --> 01:10:07.960 lien holder before fulfilling the obligations under 01:10:07.960 --> 01:10:11.750 this plan to market participants and ensuring that 01:10:11.760 --> 01:10:13.939 in the case of the deferred Since we're looking at 01:10:13.939 --> 01:10:17.720 30 years that that is has enough cash balance and their 01:10:17.720 --> 01:10:19.909 projected cash balances in there with the assets in 01:10:19.909 --> 01:10:22.100 there and the investments to make sure that those payments 01:10:22.100 --> 01:10:25.310 are fulfilled. And so that is the strongest backstop 01:10:25.310 --> 01:10:27.289 that we have to make sure that the market participants 01:10:27.310 --> 01:10:30.079 for the next 30 years will receive all of their money 01:10:32.689 --> 01:10:35.710 And on slide 13 it's a more nuanced issue dealing with 01:10:35.710 --> 01:10:38.489 what if one of the co op members under Brazos is a 01:10:38.489 --> 01:10:41.359 defaulting member. I'm not gonna go into all the legalese 01:10:41.359 --> 01:10:45.020 around that but we put in place a third party bankruptcy 01:10:45.020 --> 01:10:48.630 monitor that will that will look at those pro practices 01:10:48.670 --> 01:10:51.520 Present those information to the court, make sure that 01:10:51.520 --> 01:10:55.000 ERCOT included and if those measures aren't being achieved 01:10:55.000 --> 01:10:57.789 there are financial consequences to Brazos in order 01:10:57.789 --> 01:11:00.310 to get into compliance. And so that was another important 01:11:00.310 --> 01:11:02.979 feature that we had to work through over the last month 01:11:04.289 --> 01:11:05.470 So where are we now 01:11:08.140 --> 01:11:12.399 on friday? ERCOT did vote to approve the Brazos's 01:11:12.399 --> 01:11:17.470 plan which includes the ERCOT settlement. Also on Friday 01:11:17.739 --> 01:11:20.430 28 was the objection deadline for parties to file any 01:11:20.430 --> 01:11:23.579 objections, although there were some objections with 01:11:23.579 --> 01:11:27.170 the overall Brazos bankruptcy plan. There were no 01:11:27.170 --> 01:11:29.970 specific objections on the ERCOT settlement piece which 01:11:29.970 --> 01:11:33.850 is incorporated into the plan. And then as we've indicated 01:11:33.850 --> 01:11:37.579 ERCOT will be going to the confirmation hearing uh 01:11:37.590 --> 01:11:40.489 and sean taylor will be presenting evidence around 01:11:40.489 --> 01:11:42.899 the election notice process that we're talking today 01:11:42.899 --> 01:11:46.250 about in front of the court and we are hopeful that 01:11:46.250 --> 01:11:49.369 the judge will confirm the Brazos bankruptcy plan 01:11:49.369 --> 01:11:51.710 and that we can move forward with execution of that 01:11:51.720 --> 01:11:55.729 plan based upon representations from Brazos and where 01:11:55.729 --> 01:11:58.359 they are with their securitization framework with their 01:11:58.359 --> 01:12:01.989 co op members. Uh they're anticipating securitizing 01:12:01.989 --> 01:12:05.159 towards the end of the year or in january and at that 01:12:05.159 --> 01:12:08.380 point we would receive that first major payment that 01:12:08.380 --> 01:12:10.810 would again be distributed to Mark participants but 01:12:10.810 --> 01:12:14.010 also the 600 million that would ultimately apply to 01:12:14.010 --> 01:12:16.859 the CR funds and sub chapter M bonds. 01:12:18.680 --> 01:12:21.329 The last slide is just a calendar that reflects kind 01:12:21.329 --> 01:12:23.659 of where we've been and where we are. As we head toward 01:12:23.659 --> 01:12:28.689 November 14, we're happy to answer any questions. Thank 01:12:28.689 --> 01:12:33.909 you chad. Uh Just one question from from my seat um 01:12:33.920 --> 01:12:38.829 in terms of ERCOT and and becoming whole in the aftermath 01:12:38.829 --> 01:12:42.890 of Uri as it relates to the Brazos situation 01:12:43.489 --> 01:12:47.880 Um just to confirm, the final decision will be made 01:12:47.890 --> 01:12:52.649 by the bankruptcy judge in terms of executing the agreement 01:12:52.659 --> 01:12:56.630 that has been negotiated, correct, correct. Um In terms 01:12:56.630 --> 01:13:00.300 of replenishment of crr and sub chapter in pending 01:13:00.300 --> 01:13:05.579 that approval. When does ERCOT staff hope to see execution 01:13:05.590 --> 01:13:09.590 of those funds and and have CR are replenished. Is 01:13:09.590 --> 01:13:14.710 that Q two Q three ultimately what is your target? 01:13:14.720 --> 01:13:18.289 Know that? I think we're in that that 600 million in 01:13:18.289 --> 01:13:21.750 that first payment. And so as soon as browse is able 01:13:21.750 --> 01:13:23.890 to securitize and get the funding from the rest of 01:13:23.890 --> 01:13:26.619 the co op members which they anticipate by the end 01:13:26.619 --> 01:13:29.949 of the year or january and we will receive that payment 01:13:30.380 --> 01:13:33.739 and be able to apply it to replenish the CR funds and 01:13:33.739 --> 01:13:37.529 move forward with the sub chapter M bonds? That's 01:13:37.529 --> 01:13:40.279 a little bit that takes a that's a multi step process 01:13:40.279 --> 01:13:45.510 to to basically calling on the bonds and do a reallocation 01:13:45.520 --> 01:13:48.020 will obviously be working with the commission on doing 01:13:48.020 --> 01:13:50.800 that. But we'll be able to make the cr funds whole 01:13:50.810 --> 01:13:53.409 almost immediately as soon as we get those funds and 01:13:53.409 --> 01:13:56.270 then move forward with the sub chapter in on process 01:13:56.279 --> 01:13:58.529 So sean do you want to speak to that piece that the 01:13:58.529 --> 01:14:01.640 target is still for Q. One for the pay down of the 01:14:01.640 --> 01:14:04.000 sub chapter and bonds assuming that we get the money 01:14:04.000 --> 01:14:06.460 and in a timely enough manner to do so. There's chad's 01:14:06.460 --> 01:14:09.859 that. It's a A series of events and includes notification 01:14:09.859 --> 01:14:12.270 process and everything else that we have to comply 01:14:12.270 --> 01:14:14.899 with. But our goal is still to do that in Q. one 01:14:14.909 --> 01:14:16.760 Okay. Members. Any questions 01:14:18.789 --> 01:14:22.210 I'd like to remind the commission? No action is necessary 01:14:22.210 --> 01:14:28.229 at this time. Um We will uh discuss in executive session 01:14:28.229 --> 01:14:32.720 other matters related to litigation. But this in my 01:14:32.720 --> 01:14:36.939 opinion was a good and timely report. Uh bankruptcy 01:14:36.939 --> 01:14:39.369 judge has away decision in front of them. It looks 01:14:39.369 --> 01:14:42.789 like much work has been conducted by all parties going 01:14:42.789 --> 01:14:46.600 into that decision and um thank you for the work you've 01:14:46.600 --> 01:14:49.539 done and the detail you've been able to provide to 01:14:49.539 --> 01:14:53.770 the public at this time. Thank you. Thank you. 01:14:55.770 --> 01:14:57.470 Alright, um 01:15:00.829 --> 01:15:04.880 Number 38 discussion discussion possible action regarding 01:15:04.880 --> 01:15:08.069 implication of state and federal legislation. Uh I 01:15:08.079 --> 01:15:10.699 don't have anything here for the remainder of the agenda 01:15:10.710 --> 01:15:12.890 but we'll be going into closed session today. Does 01:15:12.890 --> 01:15:14.710 anyone else have anything for the remainder of the 01:15:14.710 --> 01:15:19.369 agenda. Okay. Number 39 was consented and we don't 01:15:19.369 --> 01:15:24.020 have anything else um at this time having convened 01:15:24.020 --> 01:15:26.630 a duly noticed open meeting, the commission will now 01:15:26.630 --> 01:15:30.909 at 10 46 AM on november 3rd 2020 to hold a closed 01:15:30.920 --> 01:15:33.600 session, pursuant to chapter 551 of the Texas, government 01:15:33.600 --> 01:15:40.470 code section is 551 point oh 71. Section 551.74 and 01:15:40.470 --> 01:15:42.770 551.76. 01:15:46.109 --> 01:15:46.819 Okay. 01:15:48.659 --> 01:15:49.170 Um 01:15:56.250 --> 01:15:59.520 the closed session is hereby concluded at 11 04 am 01:15:59.520 --> 01:16:02.310 on november 3rd 2022 the commission will resume its 01:16:02.310 --> 01:16:05.609 public meeting after discussions in closed session 01:16:05.619 --> 01:16:07.960 I will now entertain a motion to delegate authority 01:16:07.960 --> 01:16:12.520 to Chairman Lake to write and an updated letter demonstrating 01:16:12.520 --> 01:16:15.329 the commission's approval and support for ERCOT authority 01:16:15.329 --> 01:16:19.329 to enter into the settlement and that we do not oppose 01:16:19.340 --> 01:16:21.720 this settlement. Do I have a motion 01:16:24.350 --> 01:16:27.479 all those in favor say, aye, aye. All those opposed 01:16:27.489 --> 01:16:28.369 motion passes 01:16:31.600 --> 01:16:33.380 there being no further business to come before the 01:16:33.380 --> 01:16:35.310 commission. This meeting of the Public Utility Commission 01:16:35.310 --> 01:16:36.770 of Texas is hereby adjourned