(item:1:Opening Comments by Chairman Peter Lake) afternoon, glad to see everyone here both here in person
and joining by phone. As you know, we're here to provide
an update on grid conditions going into this winter
Recently, ERCOT released its winter Sarah report. Our
new Ceo Pablo will discuss the details of that here
in a minute. But out of the gates, I wanna remind folks
about all of the reforms that we have put in place
especially ahead of last winter when we rapidly put
in new rules to require generators to weatherize. Uh
we follow that by inspections of generators across
the archive grid. In addition, we've built out and
mapped a critical supply chain and critical infrastructure
network to make sure that the natural gas supply chain
stays online at all times and ensures the gas continues
to flow to our generators and most importantly, we
have dramatically increased and improved communication
between the Railroad commission text dot t d M T C
A Q. PUC and archive and we saw the benefits of that
improved coordination and communication last winter
at the state operations center when turk worked hand
in hand across agencies across industries to ensure
that during the winter blast of february, we had adequate
gas, we had generators that were online when we needed
them to be online. Text dot was on standby to make
sure that roads were cleared to ensure reliable power
throughout the winter going into this winter, we're
even better prepared. We've put even stricter weatherization
standards in place this fall are ERCOT will continue
to inspect and increase its inspections of generators
and importantly for the first time ever. ERCOT has
developed and implemented a new firm fuel product That
guarantees that we have 3000, almost 3000 MW of firm-fuel
supplies to bolster and enhance our grid going into
this winter. We're better prepared than ever and at
(item:1:Comments on SARA by ERCOT CEO Pablo Vegas) this point I'll hand it over to Pablo to discuss the
SARA. Thank you Peter and good afternoon everybody
So I'd like just like to reiterate a key point here
because of the changes that have been initiated by
the legislature and the administration and because
of the actions taken by the PUC T and ERCOT over the
last year and a half, we are in a position where the
elements that are within our control related to the
reliability and the operation of the grid are as strong
as they've ever been going into this winter season
And the chairman has mentioned many of those items
and I'll add to that the scheduling of outages and
the maintenance periods that we talked about a little
bit a couple of months ago. Those continue to help
to ensure that we get the required maintenance on generators
so that we'll have reliable service throughout this
winter. We've also implemented some new Ancillary services
a fast frequency response service that helps to ensure
reliability and during operating conditions that change
rapidly. And so when we look at the Sarah report for
this winter, there's really a lot of similarities in
the, in the big picture as to what we saw in last
winter, Sarah report for all of the expected scenarios
we expect to have adequate supply to meet the needs
of the grid. And so that continues to be the same situation
this year as we saw last year. And for the majority
of the scenarios that are in the more extreme uh condition
scenarios, we still see adequate supply to meet the
reliable operation requirements of the grid. The key
changes between last year's and this year that I would
call your attention to one of the more significant
ones. As we see demand having grown, we see demand
upwards of about five gigawatts of 5000 megawatts more
than we saw in last year Sarah report and that's a
result of the incredible growth that Texas is experiencing
Texas is adding a city the size of corpus Christi every
single year in population and the associated economic
growth that comes with that is driving increased usage
on the grid. And so we see that reflected in the Sarah
report, we for the first time, I have included battery
storage as an element of resource that can help to
provide reliable service during the winter. We saw
the performance of batteries over the course of this
last year. So we included a modest amount of batteries
in the serra resource list that reflected what the
kind of performance we saw during some very extreme
weather events over the course of this last year. So
just under a giggle Water battery storage is included
on the supply side and then fundamentally the thermal
resources, thermal generators are relatively flat from
last year. So in spite of the increased growth on the
demand side, we're seeing fairly flat amounts on the
thermal generators. So that takes to the point where
the elements that are outside of our control, which
is what generation supplies get built and when those
elements as well as how fast demand grows in the state
those elements also outside of our control, those have
a pretty significant potential impact on the reliability
of the grid, which is why it's so critically important
that the work that we are pivoting to right now, which
is to ensure that the Phase two market redesign work
proceeds rapidly and clearly with an understanding
of everyone in the market and all the stakeholders
that that becomes our focus going forward to mitigate
the risks that exist in those most extreme of scenarios
which the CIA report currently shows is one of those
scenarios that could occur. And so we really want to
focus on making sure that we get that work proceeding
quickly and uh and address the benefits from there
But let me be clear that the actions that we've taken
over this last year and a half position us as best
as we have been to operate the grid reliably and we
expect through the forecast and the likely scenarios
that we'll see over the course of this winter to be
able to have enough supply to meet the reliability
needs across the grid. (item:1:Additional Comments from Chairman Peter Lake) Thank you Pablo as always, we'll
continue to operate the grid and the most reliable
manner possible. We will continue reliable operations
by having an expanded margin of safety with more reserves
and we continue to bring more generators online sooner
rather than later In the past 18 months because we've
had these reforms in place, we have avoided emergency
conditions or blackouts eight times we know the reforms
are working, we've seen the results and we're gonna
continue with those reforms and those and continue
those reliable operations. As Pablo said, we have always
known that we need a long-term solution because we
have more and more people and the same amount of reliable
dispatchable generation And that's why we're so focused
on continuing with the Phase two market redesign. Thank
you. Happy to take some questions. Yes ma'am. (item:2:Erin Douglas, Texas Tribune)
So there's still one emergency scenario that indicates
a risk of load shedding under the extreme scenarios
can you say what planning to do to address uh, that
particular shortfall. So really the majority of the
actions that we've taken over the course of this year
and a half are designed specifically to address any
risk of Load shed the most impactful of those being
the weatherization work that's taking place. So a lot
of the issues that we've talked about over the last
year and a half about what happened during your E was
the unavailability of expected resources to provide
generation during that storm. The weatherization work
that's going on was done successfully over the course
of last winter. We expected over 450 generating units
since that time and are continuing to inspect units
over the course of this winter, those inspections and
audits are showing that the work is getting done to
keep those generators operating during the most extreme
weather conditions. So we really think that that's
gonna have the most significant impact to mitigate
the potential for any kind of a load shed event. So
that coupled with having the firm fuel supply making
sure their generators have been able to take their
maintenance and a sequenced way that don't create new
risk. And of course the reliable operations that we've
been operating under on a day to day, week to week
basis and sharing that before the grid gets too close
to any kind of a reliability issue that we would bring
online supplemental resources to help support grid
reliability. Those actions are things that we're going
to continue to do to ensure that we don't get into
a scenario where there could be low chat in the and
quick follow up to that. How many inspections of those
generating units are still outstanding. So we are scheduled
to do for the PUC t rule about one third of the
generators each year. So we will do a little over 350
or so roughly each year as part of that inspection
cycle. So we just launched that cycle a couple of weeks
ago going into and we start doing, we do a good majority
of those in december and then we'll wrap up with those
in the earliest part of next year. We plan to get most
of those done in the next, in the next 4 to 6
weeks. (item:2:Question:why is the Reserve Margin lower this year compared to last year?)
Um so
I'm looking at it, forgive me if I'm misunderstanding
this, but it looks like the reserve margin is about
like 19,800 ISH 893 or something like that.
This is just overall um this is the number that you
are impairing, I guess this is a question for your
cut. Um it looks like the reserve margin is less than
the reserve margin from last year, which was about
8 22,060. can you Yeah, like why our reserve margin
is less when you're saying that this winter? Yeah,
it actually highlights exactly what really is probably
the most important issue to focus on today, which is
how do we sustainably create a market redesign that
is going to deliver the kind of reliability at the
kind of cost profile that we all expect. So what's
happening with this shrinking reserve margin is year
to year. We are developing more generation resources
The majority the majority of those resources are being
added to the ERCOT grid tend to be renewable resources
like solar and wind. Solar being the largest portion
of that coming online during the winter. Solar capacity
doesn't have the ability to deliver to the degree that
it can in the summer because of the nature of the weather
and the sun performance. So the amount that gets added
to the grid is not proportional to the amount that
gets planned in terms of expected generation supply
available. So that's one reason why. So the big majority
of the resources being added or solar, you don't get
the same value for solar in the winter. However the
demand is growing a city the size of corpus Christi
every single year. Economy is growing, businesses are
growing here which is fantastic but it does create
more demand on the grid and so that growth and demand
with not having the same amount of growth of dispatchable
generation. So that's a generation with an on off switch
generation that you can call on whenever you need it
regardless of what the weather conditions are. We're
not seeing the same amount of growth and that kind
of generation as we are in renewables. That's the reason
why that reserve margin is shrinking. That's the reason
why this phase to market redesign is so critical to
focus on and to get across the finish line
anyone else in the room.
Uh we can go to the phones um moderator, are you there
Yes I am. If you'd like to ask a question on the
phone, please press one and zero on your touch tone
phone, you'll hear an acknowledgement that you've been
placed into Q. And you can remove yourself from Q.
At any time by repeating the 10 command. If you're
on the speakerphone please pick up your handset before
pressing the numbers once again for any questions please
press one and then zero at this time. One moment please
for the first question and let them know to identify
themselves in the organization they represent. Yes
thank you. One moment we do have a few people queuing
up
and our first question will come from the line of bob
Seckler, please announce your affiliation. (item:2:Bob Sechler, Austin-American Statesman) Alright
I'm with the austin american statesman uh Mr lake.
You know you've expressed a lot of confidence in the
past that there would not be uh you know, a forced
power outages and I'm just curious can you, are you
um as confident for this one or that there will not
be absolutely I expect that we're going to continue
to do what we've done the last summer, the last winter
and the summer before that we've kept the lights on
in the summer immediately following Uri. We kept the
lights on last winter in the face of several winter
blasts and most importantly This summer we kept the
lights on in a record setting summer. The hottest summer
in Texas uh in recent memory if not ever. Where are
ERCOT set dozens and dozens of daily weekly seasonal
records and 10 plus all time records. Uh, so yes, we
we know that the reforms are working, we know that
these changes have had an impact and improve reliability
We expect they'll continue to do so.
So even though that one scenario is in there that could
have power outages, you think people should sort of
discount that and still be confident that there won't
be any. I mean that's in there, but you don't think
it's gonna happen. Remember these these this analysis
is arithmetic considering various different scenarios
We always will use every tool available. Uh including
calls for conservation. In addition, the basic arithmetic
of adding subtracting numbers doesn't account for the
many reforms we've put in place like better coordination
and communication with the Railroad Commission text
dot TC Q to make sure that roads are open to get
fuel supplies and workers to generation to better coordination
on the natural gas supply chain to make sure that the
key parts of that supply chain are online always. So
that disruptions in the natural gas system don't lead
to the outages that are contemplated in in that scenario
Uh So while the arithmetic is a good exercise and examining
various scenarios, it doesn't take into account the
comprehensive reforms we've put in place that will
make sure that this grid stays reliable
and the lights will stay on. Absolutely expect the
lights to stay on
and I think to add to add to that, I think it's
an important point that that that scenario is a call
out for the importance of making meaningful change
through this next phase in the market redesign. And
that's that's why I keep coming back to that, because
while this risk continues to persist and the risk could
continue to grow over time if we did nothing, I know
that we're not going to do that. So we need to, we
need to drive towards that change aggressively and
with focus and clarity and support across the board
so that we can make the kinds of changes so that everyone
can continue to feel confident that the grid will be
reliable and support their needs regardless of the
weather. Outside.
Thank you, we'll go next to the line of on my mat
of moe's book, please, Bushell, excuse me, please announce
your affiliation Hey, this is moses kut 90.5. Um, I
I guess my first question is looking at the three different
scenarios in the extreme risk scenarios. Um yeah, it
seems to me that the most extreme, there's like a column
may be, I'm curious why you don't include a column
1/4 column to look at extreme uh peak Load extreme
unplanned outages and extreme wind out, low wind wind
output. That's to say you look at high peak load, but
there's no extreme peak Load coupled with the other
kind of worst case scenarios. Why is that missing from
the report at some point, you can consider an infinite
combination of scenarios, but at some point the productivity
of considering those runs out the column the furthest
of the rights you're looking at their considers 77,000
megawatts over 77,000 megawatts of demand. And that's
what we that's what the demand was expected to be during
your e so I mean these these are robust scenarios at
take into account extreme circumstances, but there's
there's limited usefulness in infinite speculation
I'm also just kind of curious if this is just kind
of a question of style, but last year we heard a lot
about a conservative approach towards grid management
Um you seem to have dropped that that terminology for
the approach to in favor of aggressive approach, a
reliable approach. Does this still, is there some reason
to stop using the term conservative to to refer to
the management technique here or is that still, you
know, the word that you would choose? It's the same
technique and and and really the shift in the, in the
word is to try to be more clear about what it is
we're doing and it's we're making sure that we put
reliability at the forefront of everything that we
do and how we operate the grid and that's the main
reason because conservative could be misconstrued to
be mean some other driver of why we're doing it, whereas
reliable operations is is really the focus and but
it's the same actions and it's the same practices.
Thank you,
thank you. (item:2:Jeremy Rogalski, KHOU-TV Houston) And our next question will come from the
line of jeremy Rogalski, please announce your affiliation
gentlemen, Good afternoon with kutV CVS in Houston
This is from mr Vegas. Uh, on page four of the report
with the three extreme risk scenarios, would you identify
the third column as a winter storm Uri scenario?
It would look, so the third column where we have the
uh, the high peak load and extreme unplanned outages
extreme low wind output would characterize some of
the variables on the demand side. Similar to what Uri
would be. However, what's fundamentally different is
the amount of outages that would, uh, would be in place
because of the kind of weatherization efforts that
have taken place. And so there's some comparability
to it in terms of the demand side. But the overall
performance and the impacts of that I think would be
very different than what we experienced during jury
So to follow up, is it safe to say or not safe
to say that a winter storm, Uri type of scenario would
leave the grid in the red Specifically by 9000 MW and
changed. No, I don't think that would be a reasonable
assumption because a winter storm, Uri type of event
which is a sustained low temperature storm. We could
see an example of that in the first column where we
have an extreme even more severe weather demand during
a storm, which is at 80,000 MW, which if you look at
that's actually above even our peak in the summer and
we are a summer peaking state. So you could look at
that scenario and say okay with a sustained long event
at a very high level of demand and with expected renewable
performance um, and typical unplanned outages which
based on the weatherization work that we've done, we
would expect typical outages that you would see performance
continuing to support greater reliability in that scenario
So I think, I don't think it's fair to say that the
third column is a is a fury like scenario because all
three of them have characteristics of the Uri storm
event and the majority of them show that we would continue
to be able to keep reliability on throughout.
Are there any other questions on the phone?
There are no further questions from the phones.
We do. I'm sorry. We have a follow up from bob Sechler
(item:2:Unidentified - Are we prepared for 10 degrees colder than Uri) Okay, thank you. Part of the conversation around Winter
Storm Uri was that the grid was previously prepared
for the 2011 standards based on these new categories
and the work that's been done to the redesign, are
we prepared for another Uri or we prepared for a storm
that's gonna be 10° colder than that one. I expect
to be prepared for both of those because of the comprehensive
nature of all of these reforms and how they combined
together to be greater than the sum of the parts. Uh
not only do we have a winterized generation fleet now
which is a tremendous difference from both 2011 and
winter storm, you're in 2021 that's an absolute game
changer. We now have better coordination and, and mapping
of the natural gas supply chain. So we expect that
to work this winter. We now actually have another 3000
megawatts of, of fuel on site, physically on site of
the generator. We've got better coordination with text
dot so that the problems that that previously were
experienced in winter storms with access to natural
gas facilities, access to generators, access to coal
can be mitigated by the turk uh, council working in
conjunction like we did last winter uh, in in the State
Operations Center. So we, the comprehensive nature
of these reforms and the fact that they encompassed
not just the grid, but other, the natural gas industry
transportation, water all combined to ensure that were
more reliable than ever. Going into this winter
moderator, we can take the question. Okay, then we'll
go back to the line of bob Sechler. (item:2:Bob Sechler, Austin-American Statesman follow up questions) Hey, thank you
Uh two quick follow up the first is this, you know
back in october, the federal agency released the assessment
that kind of came to the same conclusion that given
in certain circumstances, severe circumstances, we
could and would have not have enough power. Uh, so
I just wanted to see if you, if you thought of that
is the same way you mentioned this one and sort of
that's just arithmetic that doesn't take into account
things like winterization, things like improve communication
and that type of thing. And the other question is sort
of related and that is uh, you know, this is, will
be the second report that says that, that, you know
we paged through the report and guess what? There's
there's red indicating not enough power. And you know
it sounds like, I mean you think that the public should
sort of just ignore that and just count that. And I'm
just curious what like that, you know, that that's
not something they necessarily should be concerned
about. And I'm just wondering how, how we should look
at that, given that reports seem to say one thing and
and you seem to say another.
I think actually I want that column to highlight for
everybody the importance of the changes that are needed
in the market design. That's you're bringing up a point
that I think we're all very consistently trying to
reflect as well, which is, it is critically important
to address the fact that there are scenarios, there
is a scenario where under the most extreme conditions
there could be not enough power that's not acceptable
We don't find that to be an acceptable circumstance
And that's why change is needed in the market design
in order to address that. So we're not trying to underplay
it at all. It does reflect a very low probability scenarios
So we want to be clear on what it is, it is
a low probability scenario. And so time back to what
you said about the Newark report. The report said the
same thing. It was a low probability scenario and we
believe that to be true. But the fact that it exists
calls out an issue that needs to be addressed an issue
that needs to be addressed Around the overall design
of the market and being able to continue to build dispatchable
generation to ensure there will always be enough power
And so we are emphasizing that we want to call that
out very clearly and we agree 100% with the point that
is an important data point for everyone to understand
And that's why this work that we're embarking on is
so important. And so back to your first question, the
differences between the scenarios. The first the report
is really based on just one scenario. And so the fact
that it shows a low probability likelihood of some
kind of a low shed event just like ours does. And there's
some differences in the numbers really is just a math
exercise on the basic assumptions but that the main
points on both the new york as well as our report is
that under the majority of scenarios we do expect reliable
operations this winter, but again, not to underscore
the importance of the fact that change is needed and
we're here to to let people know that we know how important
that is. And we're gonna continue to drive that change
until we see the results we need we get we want
anyone else on the phone.
Yes we'll go next to the line of we'll go back to
the line of Mr Buchele. (item:2:Mose Buchele, KUT Radio)
Hey thanks so much for taking the follow up. You know
obviously everyone's most concerned about the possibility
of blackouts but I was curious to to to get um some
more information on the potential likelihood of you
know uh conservation calls or energy emergency alerts
It looks like under most scenarios in the extreme assumptions
category that would be on the table. Um And you know
I just I guess I just like to get comments about that
given given extreme weather and some other sets of
circumstances we may expect um that that type of reaction
which is you know part of great operations. I assume
we'll continue to use every tool available to keep
the lights on including conservation alerts uh and
the industrial demand response and our voltage support
and every other resource we have to keep the lights
on. And while this math exercise does show some scenarios
uh that put us into emergency conditions we have reforms
and tools to mitigate the problems that are the that
would be outlined here. So we we expect we'll use the
tools we need to including conservation notices. if
either of you could also just explain a little bit
more why the the assessment chooses to not include
unplanned outages during your e in the in the thermal
generating outage assumption and maybe this, I mean
that was obviously a kind of super extreme event of
outages but there was a decision made to not include
that in the assumptions about where power plants might
go dark. Uh In the course of this winter our power
plants are, They have coordination with natural gas
so disruption of natural gas and freezing the generators
that was experienced during Uri and 2011 has been mitigated
and we saw the results of that last winter.
Thank you.
There are no further questions from the phones uh maybe (item:2:unidentified question on Reliability Standard)
is there a target amount of total resources you'd like
to see your target amount of thermal resources you'd
like to see on the grid available by max winter? The
way we think about it more is is really looking at
um overall loss of Load events is the term that we
use. And so we want to try to drive towards like a
very low likelihood of losing Load at any point in
time, whether it be winter summer or in between. And
so that's really more the metric that was the basis
for the E three study that was done uh in the last
couple of months was defining and they used a kind
of an industry standard loss of load, which was one
Every 10 years is something that has been used in other
markets around the world. And so they use that to come
up with the overall modeling that we saw in that that
assumption. And so we're really looking at it more
through that lens and saying a particular number of
megawatts from this source or from that source because
we really want to be more technology agnostic and how
this market evolves and allow them market to evolve
in a way that delivers the reliability outcomes that
we're looking for and those kinds of metrics drive
to those reliability outcomes.
That's an important point. We don't have a reliability
standard now that would dictate a goal of how much
reliable dispatchable generation we need and we fully
expect to keep the lights on like we have this winter
like we have in the past, but it's getting harder.
We have more people a new corpus Christi every year
and we have the same amount of reliable dispatchable
resources uh, with no target, no reliability standard
which is a key part of the Phase two reforms that this
commission is evaluated and discussed and is taking
public comment on now and that's a goal we need to
work towards and because it's getting harder and harder
to do this because we have more people, the same amount
of reliable resources is why this Phase two market
redesign is so important. Uh this is a long term problem
of lack of a reliable reliability standard but the
future is coming.
Thank you. Thank you.
We do have another follow up from the phone. If you'd
like to take it, that's fine. Back to the lineup. Mr
Buchele. (item:2:Mose Buchele, KUT Radio, follow up question) Hey there, sorry to keep popping back and
I, you know I just had a question for Chairman Lake
just about about PUC operations. Uh you mentioned um
not having a clear reliability standard. That was one
thing that was highlighted in the sunset staff report
last week. Another thing that that came up was just
uh the number of staff at PUC um it's recommended that
you have had to greatly increase your staff side. You
know what are you thinking about in terms of preparing
for winter and the staff side you have now and how
the agency might benefit from having more like other
resources. I guess you could say this staff has done
an incredible job in fulfilling the tasks they were
assigned with after winter storm Uri by the Legislature
It's a tremendous group of people but we've been given
a heavy burden and yes we need more staff. We need
more resources. We still have a lot of work to do and
so I wholeheartedly agree we need we need more great
folks like the people we have here.
Thank you. Thank you. Thank you. Thanks
no further questions