WEBVTT

00:00:07.160 --> 00:00:09.580
Good morning.  This meeting of the Public Utility Commission

00:00:09.580 --> 00:00:11.330
of Texas will come to order. To consider matters that

00:00:11.330 --> 00:00:13.140
have been duly posted with the Secretary of State of

00:00:13.140 --> 00:00:16.929
Texas for January 19, 2023. For the record, my name

00:00:16.929 --> 00:00:19.600
is Peter Lake. And I am joined today by Will McAdams,

00:00:19.609 --> 00:00:23.329
Lori Cobos, Jimmy, Glotfelty and Kathleen Jackson. The

00:00:23.339 --> 00:00:26.410
purpose of today's meeting is to resume our discussion

00:00:26.420 --> 00:00:31.160
on market design. And take a vote on selecting a reliability

00:00:31.160 --> 00:00:34.479
service to fulfill our statutory obligations under

00:00:34.479 --> 00:00:37.869
SB 3. We'll begin work on that right after public

00:00:37.869 --> 00:00:42.399
comment. Uh, as always public comment speakers will

00:00:42.399 --> 00:00:45.439
be limited to 3 minutes each. Mr. Journeay, do we have anyone

00:00:45.450 --> 00:00:47.469
from the public signed up to speak?

00:00:49.170 --> 00:00:51.619
Yes sir. We have one person signed up who indicate

00:00:51.619 --> 00:00:55.600
they'd like to speak on market design. All right, call

00:00:55.600 --> 00:00:57.659
him up. Mike Brothava?

00:01:02.030 --> 00:01:02.780
All set.

00:01:04.790 --> 00:01:07.159
I rarely get a comment out here sir.

00:01:08.840 --> 00:01:12.459
Most people have a harder time with the name. All right,

00:01:12.459 --> 00:01:14.969
welcome. Can you please state your name for the record

00:01:14.969 --> 00:01:17.280
and who you're with? (item:1:Mike Brasovan with Thigbe, LLC) Sure, my name is Mike Brasovan.

00:01:17.280 --> 00:01:20.640
I'm the President of Thigbe, LLC. We are broker that works

00:01:20.640 --> 00:01:22.760
with mainly residential customers around the state.

00:01:22.769 --> 00:01:25.969
Our mission is to help make markets work for those

00:01:25.969 --> 00:01:29.069
customers. So we do that by applying our energy expertise.

00:01:29.069 --> 00:01:31.269
Our time and our energy, to help you make sure that

00:01:31.269 --> 00:01:33.670
they pay as little as possible for this energy supplies

00:01:33.670 --> 00:01:36.810
that they need. So it's very important to us that a

00:01:36.819 --> 00:01:39.750
very functional, very efficient market is in place.

00:01:39.750 --> 00:01:42.730
So that we can help our customers save and, and help

00:01:42.739 --> 00:01:45.629
raise money for charities along the way. Um, I come

00:01:45.629 --> 00:01:49.189
before you today, I attended my first open meeting

00:01:49.189 --> 00:01:52.159
probably 30 years ago or almost 30 years ago. And

00:01:52.159 --> 00:01:54.030
in that time, I've seen some things. And one of those

00:01:54.030 --> 00:01:56.629
things I wanted to make sure you guys knew about. In

00:01:56.629 --> 00:02:00.209
about 1995, I attended a California Manufacturers Association

00:02:00.209 --> 00:02:02.879
meeting. And one of the themes of that meeting was

00:02:02.879 --> 00:02:06.459
Knight is right. And that referred to Commissioner Knight

00:02:06.469 --> 00:02:10.080
of the of the California, Texas Public Utility Commission.

00:02:10.219 --> 00:02:12.479
One of the things that was under debate at that time.

00:02:12.479 --> 00:02:15.099
Was whether or not the California Commission was going

00:02:15.099 --> 00:02:17.229
to be able to design a market that worked efficiently.

00:02:17.240 --> 00:02:20.210
Or if they should let the market work and allow bilateral

00:02:20.210 --> 00:02:22.900
contracting. Commissioner Knight was the only Commissioner

00:02:22.900 --> 00:02:25.539
that stood up and said it needs to be bilateral contracting.

00:02:25.539 --> 00:02:27.389
That's the only thing that's going to effectively work.

00:02:27.400 --> 00:02:31.099
Everybody or almost everybody probably, at the CMA agreed.

00:02:31.110 --> 00:02:34.259
Because they knew how markets worked. That did not occur.

00:02:34.270 --> 00:02:37.620
Uh, and I come before you today, asking that you make

00:02:37.620 --> 00:02:40.500
sure that it does occur in Texas. That whatever you

00:02:40.500 --> 00:02:44.449
put in place. Has the, gives the suppliers and the participants

00:02:44.449 --> 00:02:47.120
in the market the ability to bilaterally contract. To

00:02:47.120 --> 00:02:50.300
manage their risk effectively. If you don't do that,

00:02:50.310 --> 00:02:52.870
risk premiums are going to increase dramatically. My

00:02:52.870 --> 00:02:54.949
customers are gonna be wasting a lot of their hard

00:02:54.949 --> 00:02:58.039
earned money. Because people can't effectively participate

00:02:58.039 --> 00:03:01.020
in that market without that bilateral contracting capability.

00:03:01.030 --> 00:03:04.520
So I ask you to consider that. I also ask you to

00:03:04.520 --> 00:03:07.919
consider one other thing. Um you, I know you're constricted

00:03:07.919 --> 00:03:11.449
by SB 3 on the proposals that you need to put forward.

00:03:11.449 --> 00:03:13.740
But I would ask that you fulfill that obligation, but

00:03:13.740 --> 00:03:17.389
maybe consider going beyond that. And asking the Legislature

00:03:17.389 --> 00:03:20.560
for more leeway and how you approach this issue. Because

00:03:20.560 --> 00:03:24.300
the big issue issue to me, is for the free rider problem.

00:03:24.310 --> 00:03:26.759
People being able to dump into the, into the market

00:03:26.759 --> 00:03:30.270
and lower prices without concern about what the market

00:03:30.280 --> 00:03:33.969
price really is. Obviously renewables and wind generation

00:03:33.979 --> 00:03:37.775
are right up there. Uh, driving down that price, that

00:03:37.784 --> 00:03:41.044
suppliers get or generators gef for the power. Uh,

00:03:41.055 --> 00:03:44.125
and that needs to be addressed. I know that SB 3

00:03:44.125 --> 00:03:46.064
constrains your ability to address that. But I would

00:03:46.064 --> 00:03:49.305
encourage you to consider putting forward, requesting

00:03:49.305 --> 00:03:51.675
the ability to consider that as well. I think that

00:03:51.675 --> 00:03:54.164
would be important for the long term health of our

00:03:54.164 --> 00:03:57.270
market. And with that, I'm probably out of time. So

00:03:57.340 --> 00:04:00.550
if you have any questions for me, I would be glad to answer them. Thank

00:04:00.550 --> 00:04:01.259
you for your time.

00:04:07.719 --> 00:04:10.060
Anyone else signed up to, for public comment. No sir.

00:04:11.639 --> 00:04:14.879
All right. Thank you, Mr. Journeay. Public comment is

00:04:14.879 --> 00:04:19.449
now closed. (item:5:Order of Business) And we will pick up next with agenda items

00:04:19.449 --> 00:04:25.490
5, 6, and 7. Um, know that we've all had a full

00:04:25.490 --> 00:04:29.110
week to consider the discussion from last week's work

00:04:29.110 --> 00:04:34.110
session. And um, glad all of the Commissioners have

00:04:34.110 --> 00:04:40.319
filed memos to set the stage for this discussion. The

00:04:40.319 --> 00:04:42.639
as I mentioned earlier, the aim of today's business.

00:04:42.649 --> 00:04:46.199
Is to vote on the best reliability service to meet

00:04:46.199 --> 00:04:49.449
the long term reliability and adequacy needs in ERCOT,

00:04:49.449 --> 00:04:54.939
as defined in Section 18 of SB 3. In terms of order,

00:04:54.939 --> 00:05:01.410
of business, you'll have all seen my memo. And the uh,

00:05:01.420 --> 00:05:04.009
everybody's familiar with the concepts I've articulated.

00:05:04.009 --> 00:05:08.720
So I'd prefer to start out today's business with asking

00:05:08.720 --> 00:05:13.060
each of you to lay out your memos. Uh and we'll go

00:05:13.060 --> 00:05:16.310
through by order of appointment, if that's acceptable

00:05:16.310 --> 00:05:21.720
with you all. Uh and eventually have a discussion about

00:05:21.730 --> 00:05:25.850
uh, the concepts laid out. And I would hope then move

00:05:25.850 --> 00:05:30.120
to a portion of our business. Where we can

00:05:32.319 --> 00:05:36.029
look for the areas and the con, where the concepts and

00:05:36.029 --> 00:05:39.170
principles laid out in each of your memos. Can be aligned

00:05:39.170 --> 00:05:43.740
with this month, the longest memo for better or worse.

00:05:44.470 --> 00:05:48.279
But, but find the areas of common agreement, identify

00:05:48.290 --> 00:05:53.500
and agree on those. Discuss where there's the opportunity

00:05:53.500 --> 00:05:59.569
to edit what's in my memo. To reconcile with concepts

00:05:59.569 --> 00:06:02.579
or principles that you all think are important, uh

00:06:02.589 --> 00:06:07.350
if, if they're reasonable. Uh and then at the end of

00:06:07.350 --> 00:06:11.240
that sequence. Have a discussion about anything, any

00:06:11.240 --> 00:06:14.040
additional edits or additions, y'all would like to

00:06:14.040 --> 00:06:17.730
make. On top of the underlying foundation laid out in

00:06:17.730 --> 00:06:26.180
my memo. And once we have a working draft. I'd like to

00:06:26.189 --> 00:06:31.250
that everybody has, is comfortable with. And uh, it's

00:06:31.250 --> 00:06:34.029
an updated version of my memo. I'd like to call a recess,

00:06:34.029 --> 00:06:35.449
where I can finalize that

00:06:37.180 --> 00:06:42.829
with my Staff. And however, that whatever hour long period

00:06:42.829 --> 00:06:47.269
that is. Uh within file an updated version and circulate

00:06:47.279 --> 00:06:50.550
an updated version of my memo, incorporating all of

00:06:50.550 --> 00:06:55.379
y'all's feedback. Uh points that, which point I hope

00:06:55.379 --> 00:07:00.319
we could reconvene. And uh, discuss taking a vote on,

00:07:00.879 --> 00:07:05.139
uh the PCM that's laid out in my memo.

00:07:05.209 --> 00:07:09.040
The attributes in there, as edited and amended by the

00:07:09.040 --> 00:07:13.189
discussion. Everybody will get to see and participate

00:07:13.199 --> 00:07:15.879
in that. And of course we'll have time to review that

00:07:15.879 --> 00:07:19.779
during our extended recess. But that's my hope about

00:07:19.779 --> 00:07:23.149
how we can move through today's meeting. Get to a productive

00:07:23.149 --> 00:07:28.519
result, um that work for everybody? Yes sir. All right. With

00:07:28.519 --> 00:07:31.199
that, we'll start with memo layouts. (item:5:Commissioner McAdams Memo Layout) Commissioner McAdams?

00:07:31.209 --> 00:07:37.269
Thanks sir. Um, Mr. Chairman, members. Uh my memo focused

00:07:37.269 --> 00:07:42.810
on. Really trying to uh, not just set the table but also

00:07:42.810 --> 00:07:47.120
clear the table. Of certain components that I believe

00:07:47.129 --> 00:07:51.079
in order to focus our energies are not needed anymore.

00:07:51.089 --> 00:07:55.389
And as my memo alluded to um, we have real world, real

00:07:55.389 --> 00:07:59.699
time experience now to inform our decision. With Winter

00:07:59.699 --> 00:08:03.069
Storm Elliot that happened just before Christmas of

00:08:03.069 --> 00:08:06.660
this last year. Um, that storm swept across the country.

00:08:06.670 --> 00:08:09.769
It affected multiple ISOs. Multiple regions of

00:08:09.769 --> 00:08:13.339
the country. It tested the resiliency framework that

00:08:13.339 --> 00:08:17.550
FERC has imposed in those other ISOs. Uh, the

00:08:17.560 --> 00:08:22.500
deliverability of power, the energy supply of those

00:08:22.500 --> 00:08:28.389
generators. Um many of which uh, had forward capacity

00:08:28.389 --> 00:08:32.279
constructs. And as we all know, we have debated, debated

00:08:32.279 --> 00:08:36.769
forward capacity for years, um in Texas. We've never

00:08:36.779 --> 00:08:40.909
uh, ultimately moved in that direction. But we've certainly

00:08:40.909 --> 00:08:43.360
considered concepts that are familiar in other parts

00:08:43.360 --> 00:08:48.809
of the country, country here in this project. And um,

00:08:48.820 --> 00:08:53.289
and those are all based on forecast, Load forecast

00:08:53.299 --> 00:08:57.669
by an ISO. And the ultimate dependability of dispatchable

00:08:57.669 --> 00:09:01.450
generation or installed generation. Uh, to perform when

00:09:01.450 --> 00:09:05.240
you need it to perform. Winter Storm Elliott proved

00:09:05.250 --> 00:09:10.220
uh, that to be flawed, a flawed design. All designs

00:09:10.220 --> 00:09:13.309
have flaws and I'm not saying energy only is the best.

00:09:13.320 --> 00:09:16.259
I think that's exactly what we've spent 18 months trying

00:09:16.259 --> 00:09:21.610
to refine, to improve it. But forward capacity in um,

00:09:21.620 --> 00:09:25.450
ISO PJM. Um in uh, ISO New

00:09:25.450 --> 00:09:30.549
England. Um and, SBP even had issues but worked through

00:09:30.549 --> 00:09:34.330
the issues. Never entered Load shed, but as my memo

00:09:34.330 --> 00:09:38.940
alluded. Um and was demonstrated last week. PJM has held

00:09:38.940 --> 00:09:42.080
up as as the true success story in the country. Massive

00:09:42.080 --> 00:09:44.309
amount of generation has been stalled in a short period

00:09:44.309 --> 00:09:48.679
of time. The unfortunate fact is um, they had a massive

00:09:48.679 --> 00:09:52.330
amount of generation go on forced outage. Which one

00:09:52.330 --> 00:09:56.570
they missed their load forecast. And um, two what they

00:09:56.570 --> 00:09:58.950
were counting on didn't show up. Which caused them

00:09:58.960 --> 00:10:03.200
a tense night on December 23rd, going into Christmas Eve.

00:10:04.509 --> 00:10:08.080
So as a result of that, I think it's an excellent opportunity.

00:10:08.090 --> 00:10:14.169
Um to, to take the forward reliability market or mechanism,

00:10:14.470 --> 00:10:19.100
and the LSCRO off the table. Since the

00:10:19.100 --> 00:10:21.649
foundation of those concepts and no offense, I'm taking

00:10:21.649 --> 00:10:24.909
mine off the table. Um, to anybody's suggested proposals.

00:10:24.919 --> 00:10:27.889
Is foundationally you've got to be somewhat accurate

00:10:27.899 --> 00:10:30.870
on your forecast. And what we're learning today is the

00:10:30.870 --> 00:10:33.769
grid is changing so much. The Load experience is changing

00:10:33.769 --> 00:10:37.789
so much. Forecasts are hard to get right. And I see Pablo

00:10:37.789 --> 00:10:39.860
nodding over there and he's realizing just how hard

00:10:39.860 --> 00:10:45.639
his job is. Um and, and additionally with the vintage

00:10:45.649 --> 00:10:49.850
of the fleet, that we have. The dependability of that

00:10:49.850 --> 00:10:52.980
dispatchable generation that we have installed. That,

00:10:52.990 --> 00:10:55.820
that runs more often, that has more and wear and tear

00:10:55.820 --> 00:10:59.090
on the facilities. That may have fuel constraints occur,

00:10:59.100 --> 00:11:03.669
is that much more uncertain. And so as a result, I

00:11:03.669 --> 00:11:08.429
think we should as a formal action. Take FRM and Lucero

00:11:08.429 --> 00:11:13.539
off. I would additionally propose as uh, articulating

00:11:13.539 --> 00:11:18.320
the memo, uh tabling DEC. Because um, and I think

00:11:18.320 --> 00:11:21.210
this has come up in other memos, from my colleagues.

00:11:22.019 --> 00:11:26.000
We need to focus on retaining our dispatchable generation.

00:11:26.000 --> 00:11:29.629
We do not need to pressure those assets. And as came

00:11:29.629 --> 00:11:33.740
up in the 1,000 pages of comments. DEC would have the

00:11:33.750 --> 00:11:40.019
uh, the effect uh of making marginally, economically

00:11:40.019 --> 00:11:43.370
marginal facilities that much more uneconomic. Because

00:11:43.370 --> 00:11:46.320
they would be competing with the resource, that is receiving

00:11:46.330 --> 00:11:50.710
a subsidy in my view, an incentive. But bottom line

00:11:50.710 --> 00:11:54.779
is the, the value of that incentive would be uh baked

00:11:54.779 --> 00:11:58.600
into the bid of those megawatts coming onto the system.

00:11:58.610 --> 00:12:02.210
And um, and as asserted by stakeholders, have the effect

00:12:02.210 --> 00:12:05.240
of a production tax credit. For a subset of dispatchable

00:12:05.240 --> 00:12:07.649
generation, that theoretically could run all the time

00:12:08.250 --> 00:12:12.559
depending on the technology. So at this time I would,

00:12:12.610 --> 00:12:18.659
I would advocate for tabling my proposal of the DEC

00:12:18.669 --> 00:12:23.820
market design. Um and then focus on the production,

00:12:23.830 --> 00:12:27.200
uh the performance credit mechanism. And as I said in

00:12:27.200 --> 00:12:32.649
my memo, the PCM has great potential. Um, the problem

00:12:32.649 --> 00:12:34.940
is it has great potential for everybody and nobody

00:12:34.940 --> 00:12:38.700
can win everything, every argument. And so that's what

00:12:38.700 --> 00:12:41.750
I believe this exercise today is gonna help us, help

00:12:41.750 --> 00:12:46.320
us define what the PCM ultimately becomes. Those broad,

00:12:46.330 --> 00:12:48.860
that broad framework, those broad parameters. That will

00:12:48.860 --> 00:12:52.289
hold us accountable, and ERCOT accountable and the stakeholders

00:12:52.289 --> 00:12:56.139
accountable. As they attempt to advocate for their companies,

00:12:56.139 --> 00:12:59.960
for their industry positions. Um, but at the end of

00:12:59.960 --> 00:13:02.500
the day, we have to look out for the Texas consumer,

00:13:02.509 --> 00:13:06.559
on both the reliability side and the cost side. Um,

00:13:06.570 --> 00:13:09.970
and so I believe just for the sake of clarity, let's

00:13:09.970 --> 00:13:13.620
make the determination on PCM. Let's move forward and

00:13:13.620 --> 00:13:16.990
let's build in some concrete principles. That allow

00:13:16.990 --> 00:13:20.620
the greatest flexibility on the part of our grid administrator.

00:13:21.330 --> 00:13:25.470
Uh and the PUC staff, and this Commission, to continue

00:13:25.470 --> 00:13:28.850
to work the problem, evaluate the problem. And address,

00:13:28.860 --> 00:13:33.850
address each uh, component of that framework on an iterative

00:13:33.850 --> 00:13:37.309
basis. Um to produce the most the the optimal market

00:13:37.309 --> 00:13:41.730
design. As a part of that, I included certain principles

00:13:41.730 --> 00:13:45.429
that I considered important. The reliability standard,

00:13:45.440 --> 00:13:49.190
I've said it before, I'll say it again, we need a reliability

00:13:49.190 --> 00:13:52.330
standard. It is certainly implied in Senate Bill 3.

00:13:52.340 --> 00:13:54.899
Whether that's a target or a hard and fast standard,

00:13:54.899 --> 00:13:59.340
we need a goal. And in my view, that goal must inform,

00:13:59.350 --> 00:14:03.090
be informed by both the deliverability of megawatts

00:14:03.090 --> 00:14:05.690
across the system. Because you can't just overlay a

00:14:05.690 --> 00:14:09.100
copper sheet over the ERCOT system. There are known

00:14:09.100 --> 00:14:12.450
constraints out there. And the system will continue

00:14:12.450 --> 00:14:15.570
to have constraints, as new generation and loads are

00:14:15.580 --> 00:14:20.480
interconnected into the system. Um additionally, it

00:14:20.480 --> 00:14:25.049
is informed by the old uh, metric of resource adequacy.

00:14:25.059 --> 00:14:28.860
But those two have to be harmonized into a study. And

00:14:28.860 --> 00:14:34.289
I believe uh Astrape', which is our current uh consultant.

00:14:34.299 --> 00:14:40.129
Who focuses on this issue could rerun a study. Um given

00:14:40.139 --> 00:14:43.059
that, those parameters, those two parameters. It's not

00:14:43.059 --> 00:14:45.379
just one parameter that would inform a reliability

00:14:45.379 --> 00:14:47.870
standard, in my view. Which is resource adequacy is

00:14:47.870 --> 00:14:51.179
certainly part of it, but ultimate deliverability.

00:14:51.190 --> 00:14:53.830
And again, if you can't deliver the power. Then the

00:14:53.830 --> 00:14:56.919
Commission has to break logjams, to make sure that power

00:14:56.919 --> 00:15:00.120
is ultimately delivered to the end use consumer. And

00:15:00.120 --> 00:15:04.370
that should be a policy in the future. And that also

00:15:04.370 --> 00:15:07.440
means we're not bridging, building bridges to nowhere,

00:15:07.450 --> 00:15:10.480
in terms of transmission construction. But we are tearing

00:15:10.480 --> 00:15:14.409
down barriers to megawatts. Moving into systems that

00:15:14.409 --> 00:15:19.029
are badly in need of them uh, for reliability uh, purposes.

00:15:20.019 --> 00:15:25.399
Secondly, forecast as as you can gather. I am not a

00:15:25.399 --> 00:15:29.090
big fan of grid administrators having to make forecasts,

00:15:29.100 --> 00:15:32.169
and that also goes to the accreditation. We are trying

00:15:32.169 --> 00:15:36.370
to air away from accreditation. Um, we're trying to

00:15:36.370 --> 00:15:40.629
make people uh, prove themselves by their actual performance,

00:15:40.639 --> 00:15:44.870
and pay them accordingly. And so in my view, I'd like

00:15:44.879 --> 00:15:49.269
a principle enshrined definitively. That the grid administrator,

00:15:49.279 --> 00:15:51.870
that the PCM and the value of the PCM. Is

00:15:51.870 --> 00:15:55.259
not going to be based on some arbitrary Load forecast

00:15:55.269 --> 00:15:57.690
by the grid administrator. That will be informed by

00:15:57.690 --> 00:16:00.840
the collective market intelligence of the system. And

00:16:00.850 --> 00:16:04.789
all the traders, generators, and loads that will help

00:16:04.799 --> 00:16:08.230
inform that. And ultimately you're paid as a result

00:16:08.230 --> 00:16:10.389
of the performance. Which the proof's in the pudding.

00:16:10.389 --> 00:16:14.419
The system will either be reliable or it will not. Um,

00:16:15.190 --> 00:16:20.070
PC qualification. I believe this is an important high

00:16:20.070 --> 00:16:22.940
level determination that should be enshrined from the

00:16:22.940 --> 00:16:27.409
outset. That if you are dispatchable and you can be

00:16:27.409 --> 00:16:31.409
controlled by ERCOT. You provide value to the system

00:16:31.409 --> 00:16:35.529
to meet ultimate reliability. And therefore ultimate

00:16:35.529 --> 00:16:38.480
reliability is the goal, and that's what the value must

00:16:38.480 --> 00:16:43.399
be based upon. And so we need to uh, we need to

00:16:43.409 --> 00:16:48.840
qualify. That um, any resource that can be controlled

00:16:48.840 --> 00:16:52.450
or dispatched. Um and ERCOT knows they're there and

00:16:52.450 --> 00:16:56.080
that they will perform accordingly. Uh, qualifies to

00:16:56.080 --> 00:16:59.649
generate a PC during that high risk hour. One that

00:16:59.649 --> 00:17:03.610
will be a cost control feature on the system. But it

00:17:03.610 --> 00:17:08.549
will also um, allow technological innovation to help

00:17:08.549 --> 00:17:12.279
satisfy the ultimate goal of ensuring reliability. Because

00:17:12.279 --> 00:17:14.890
we don't know where technology is ultimately, ultimately

00:17:14.890 --> 00:17:19.779
going to head. But there's a lot of demand side uh,

00:17:19.789 --> 00:17:23.079
technologies that are going to allow us to combat future

00:17:23.079 --> 00:17:26.480
conditions, critical hours.

00:17:28.210 --> 00:17:31.980
Ultimately, Senate Bill 3 orders us to provide

00:17:31.980 --> 00:17:36.569
a service that copes for periods of low uh, intermittent

00:17:36.579 --> 00:17:37.210
output.

00:17:38.829 --> 00:17:43.170
This is the tie that makes the law legal. Um, so when

00:17:43.170 --> 00:17:46.859
we move forward, net peak load has to be a condition.

00:17:46.869 --> 00:17:50.309
Uh, just because of the statutory direction that we've

00:17:50.309 --> 00:17:56.339
received. Um dictating the, the hours that we're targeting

00:17:56.349 --> 00:18:01.049
for reliability purposes. Um, and then as a nuance to

00:18:01.049 --> 00:18:04.720
that. Because of our back cast analysis, because of comments

00:18:04.720 --> 00:18:08.720
from the IMM, that we received last week. You have

00:18:08.720 --> 00:18:12.210
to account for forced outages, when you're doing that

00:18:12.210 --> 00:18:16.069
calculation. Because forced outages is what you experienced

00:18:16.069 --> 00:18:19.369
during Winter. Because of the laws of thermodynamics,

00:18:19.380 --> 00:18:22.859
uh metal breaks during frigid conditions, bad things

00:18:22.859 --> 00:18:27.950
happen, gas freezes. So um net peak Load, if you're

00:18:27.950 --> 00:18:30.819
just taking it on its own. Would concentrate during

00:18:30.819 --> 00:18:34.150
the Summer hours. But if you account for thermal outages,

00:18:34.160 --> 00:18:38.380
it conforms more to the ORDC, um performance.

00:18:38.390 --> 00:18:43.130
And you see it overlay into Winter as well. So if ERCOT

00:18:43.200 --> 00:18:45.460
through their wisdom. Determines we need a seasonal

00:18:45.460 --> 00:18:48.339
approach or even a monthly approach. Accounting for

00:18:48.339 --> 00:18:53.180
net peak load. With a calculation for subtracting out

00:18:53.180 --> 00:18:56.819
forced outages, would allow us to meet certainly our

00:18:56.819 --> 00:19:01.369
high risk seasons which are Summer and Winter. And

00:19:01.369 --> 00:19:06.589
then um, almost lastly market power. Uh Mr. Chairman,

00:19:06.589 --> 00:19:09.319
I see in your memo, our thoughts are very much in alignment

00:19:09.329 --> 00:19:13.809
on market power. The central, the feature of the centrally

00:19:13.809 --> 00:19:16.910
cleared market. I think we need to make a determination

00:19:16.920 --> 00:19:21.390
on centrally cleared markets. Um, and I think that needs

00:19:21.390 --> 00:19:24.359
to be made at the outset. Just to manage expectations

00:19:24.359 --> 00:19:27.400
for the market. That market power abuse is a central

00:19:27.400 --> 00:19:30.440
component of the focus of the Commission, and ERCOT

00:19:30.470 --> 00:19:33.329
and their evaluation moving forward, and the stakeholders.

00:19:33.869 --> 00:19:38.460
Um but additionally, I believe uh transparency and

00:19:38.460 --> 00:19:43.000
clarity and, and frankly a prohibition on affiliated

00:19:43.000 --> 00:19:45.710
transactions needs to be a central view as well. So

00:19:45.710 --> 00:19:49.990
I believe your language aligns with mine. In terms of

00:19:49.990 --> 00:19:52.880
this is a focus for us, on a principled basis moving

00:19:52.880 --> 00:19:57.730
forward. And then finally um, for the feature of self-

00:19:57.730 --> 00:20:01.650
correction. In terms of the value that is and the, and

00:20:01.650 --> 00:20:04.369
the signal that is sent to the market. The goal is

00:20:04.369 --> 00:20:08.960
reliability. And um, the definition of reliability according

00:20:08.960 --> 00:20:15.250
to uh, E3 is economic equilibrium for our dispatchable

00:20:15.250 --> 00:20:19.440
generation community. So if you are at economic equilibrium

00:20:19.450 --> 00:20:24.369
for the purposes of the system. You should be a reliable

00:20:24.369 --> 00:20:28.019
system, you should be meeting that standard. And as

00:20:28.019 --> 00:20:31.119
a result, if you're at equilibrium. The value behind

00:20:31.119 --> 00:20:34.549
the PCs should be allowed to go to zero. To show we

00:20:34.549 --> 00:20:38.230
are not, we do not have a scarcity of resource adequacy

00:20:38.240 --> 00:20:41.829
or deficiency of resource adequacy on the system. So,

00:20:41.829 --> 00:20:44.410
I think that's a core component. If we want it to be

00:20:44.420 --> 00:20:47.650
self-correcting and self-leveling. Allow it to do so

00:20:47.660 --> 00:20:52.660
all the way down to no value add, on PCs. Uh in

00:20:52.660 --> 00:20:57.559
closing, I want to support with, with these additions

00:20:57.569 --> 00:21:03.750
on a principal basis, the PCM. Uh, I believe it can

00:21:03.750 --> 00:21:07.210
be harnessed for all sides. Both the generation community

00:21:07.220 --> 00:21:09.170
and the loads, but there's trade offs on both sides.

00:21:09.170 --> 00:21:12.440
Holding each component accountable to their behavior

00:21:12.440 --> 00:21:17.059
in real time. And on a performance basis, um not a

00:21:17.059 --> 00:21:20.420
forecasted basis. Not some crude target that we're

00:21:20.420 --> 00:21:23.990
gonna set out there. That is gonna be economically inefficient

00:21:24.000 --> 00:21:28.250
for our system. That, that requires everybody to pay

00:21:28.250 --> 00:21:30.619
more attention to the real time market, to the energy

00:21:30.619 --> 00:21:34.509
market. Where the system continues to be governed by

00:21:34.519 --> 00:21:37.700
energy price. But there is certainty out there. To a

00:21:37.700 --> 00:21:42.369
certain degree for our dispatchable resources. That

00:21:42.380 --> 00:21:45.109
that they, there will be money available. To provide

00:21:45.109 --> 00:21:47.779
an incentive to retain your generation, and then to

00:21:47.779 --> 00:21:52.279
build new. And with that I'll yield my time. (item:5:Chairman Lake Comments on Commissioner McAdams Memo Layout) Thank you

00:21:52.279 --> 00:21:55.720
for laying that out. I agree with everything you said

00:21:55.720 --> 00:21:59.289
in principle. A couple of details. We can nail down

00:21:59.289 --> 00:22:01.470
when you start aggregating all this. Yes sir. And I agree with

00:22:01.470 --> 00:22:04.900
every, in principle with everything you said. And all

00:22:04.900 --> 00:22:11.710
I will offer is uh, commendation to you. And, and walking

00:22:11.710 --> 00:22:14.160
through the different options that have been evaluated.

00:22:14.170 --> 00:22:17.680
And I agree need to be discarded at this point. Um,

00:22:18.390 --> 00:22:22.039
and as you said, and and well know. Both you and I

00:22:22.039 --> 00:22:29.430
had original proposals that, that we've advocated for.

00:22:29.440 --> 00:22:32.500
And I think it is a highlight of the process and how,

00:22:32.509 --> 00:22:35.769
how thorough and comprehensive the process. That this

00:22:35.769 --> 00:22:41.359
Commission has gone through. That we both worked through

00:22:41.359 --> 00:22:45.299
the pros and cons of each, trusted the analysis. Uh,

00:22:45.309 --> 00:22:49.099
we challenged the analysis, uh but ultimately did what

00:22:49.099 --> 00:22:51.289
we said, we were gonna do at the outset. We discarded

00:22:51.289 --> 00:22:55.809
the flaws of each. Uh, worked together as a Commission,

00:22:55.809 --> 00:22:59.380
with the Staff. To capture the features, the best components

00:22:59.380 --> 00:23:04.359
of each. And put those into the next generation and

00:23:04.359 --> 00:23:06.470
the next generation. And I think that's what the PCM

00:23:06.470 --> 00:23:10.289
delivers. So. Sir, and that was due to your leadership.

00:23:10.299 --> 00:23:14.559
(item:5:Commissioner McAdams follow-up comments on memo layout) Look, the PCM is a good faith effort at some kind of

00:23:14.559 --> 00:23:17.569
a hybrid. I don't think you can dispute. That this

00:23:17.569 --> 00:23:20.299
is some kind of a hybrid. This is not forward capacity

00:23:20.309 --> 00:23:23.930
as we're talking about this. This is something new.

00:23:23.940 --> 00:23:28.539
That um, that really does on a principal basis, it aligns

00:23:28.539 --> 00:23:32.180
well with the energy market. Subject to conditions we

00:23:32.180 --> 00:23:34.440
can put on there to prevent gaming by one side or the

00:23:34.440 --> 00:23:39.039
other. Um, it is an enhancement. It harnesses the features

00:23:39.049 --> 00:23:41.759
of our market which is a large and robust industrial

00:23:41.769 --> 00:23:46.579
uh, energy consumer segment. That has a lot of capabilities,

00:23:46.589 --> 00:23:49.680
that can participate robustly in this. And a new innovative

00:23:49.680 --> 00:23:53.259
retail market, that's coming along. Even NRG, with their

00:23:53.269 --> 00:23:57.309
their new capabilities. That's, that's proof of the

00:23:57.309 --> 00:24:01.589
vision that loads and gen need to be harmonized. In

00:24:01.589 --> 00:24:04.000
terms of their activity to meet reliability, and that's

00:24:04.000 --> 00:24:08.490
the goal. And this will like you said, bring a new level

00:24:08.490 --> 00:24:11.480
of accountability to both sides of that equation. Load

00:24:11.480 --> 00:24:15.460
and gen with the opportunity to be compensated for being

00:24:15.460 --> 00:24:18.220
reliable on both, on both sides of that. And as we heard

00:24:18.220 --> 00:24:22.009
from Pablo last week. This is a hybrid of features

00:24:22.009 --> 00:24:25.690
not only we evaluated, but features from other markets

00:24:25.690 --> 00:24:28.750
around the world. All of these components are known

00:24:28.759 --> 00:24:31.470
there's no grand mystery out there. It's just a new

00:24:31.470 --> 00:24:35.240
combination of the best components of different, different

00:24:35.240 --> 00:24:38.480
products we've seen around the world. Um, but thank

00:24:38.480 --> 00:24:40.210
thank you for that and thank you for laying that out.

00:24:41.549 --> 00:24:44.089
Any other comments or questions for Commissioner McAdams?

00:24:46.329 --> 00:24:50.799
All right, Commissioner Cobos. All right. Thank you. I'd like to open up just

00:24:50.799 --> 00:24:54.700
by thanking my fellow colleagues. Um Kathleen, I know

00:24:54.700 --> 00:24:58.140
you joined us after all the fun last Fall. But welcome

00:24:58.150 --> 00:25:02.849
um welcome to the, welcome to the party. And um but, you

00:25:02.849 --> 00:25:06.059
know, we we spent a lot of time and a lot of

00:25:06.059 --> 00:25:10.049
hard work. Went into developing a blueprint that had

00:25:10.059 --> 00:25:14.759
options. Um, a Load side reliability mechanism, dispatchable

00:25:14.759 --> 00:25:17.670
energy credit, and a backstop reliability service. And

00:25:17.670 --> 00:25:20.819
because we spent so much time evaluating a variety

00:25:20.819 --> 00:25:23.920
of options and ultimately approved a blueprint. That

00:25:23.920 --> 00:25:26.720
had different options in there. We, we now have the

00:25:26.720 --> 00:25:30.390
ability to combine all of those options that were in

00:25:30.390 --> 00:25:34.650
the blueprint to extract a hybrid, which is the performance

00:25:34.650 --> 00:25:39.349
credit mechanism. So because of our long deliberations,

00:25:39.359 --> 00:25:43.009
and thorough analysis of everything that we've done

00:25:43.009 --> 00:25:45.519
so far through market design. That's how we came up

00:25:45.519 --> 00:25:47.970
with this hybrid. Because we have a menu of options

00:25:47.980 --> 00:25:51.390
in the market design blueprint. And that was very important

00:25:51.390 --> 00:25:54.799
to me, as you well know Chairman. And so here we are

00:25:54.799 --> 00:25:58.769
today. And um I do want to thank, thank each and every

00:25:58.769 --> 00:26:00.859
one of you really, um, from a lot of my heart. I

00:26:00.859 --> 00:26:04.480
know this has been a tough deliberation. But as I said,

00:26:04.480 --> 00:26:07.980
a few open meetings ago. Market design, resource adequacy

00:26:07.980 --> 00:26:10.750
discussions are never easy. They're always contentious.

00:26:10.759 --> 00:26:13.519
Everybody always has a different perspective. But at

00:26:13.519 --> 00:26:18.660
the end of the day, we have to come together. To build

00:26:18.660 --> 00:26:21.650
consensus around something that we can, you know, put

00:26:21.650 --> 00:26:24.519
out there. That will improve and enhance our market.

00:26:25.140 --> 00:26:28.410
And I also want to thank the Staff. I know that everybody

00:26:28.410 --> 00:26:31.220
has been working very hard to provide us with information

00:26:31.220 --> 00:26:33.890
throughout this entire process. Connie and team, I

00:26:33.890 --> 00:26:36.390
wanna, I wanna thank the stakeholders in the market.

00:26:36.400 --> 00:26:40.390
That have been part of this process as well um. Throughout

00:26:40.400 --> 00:26:43.940
our deliberations and, and ERCOT. Um, ERCOT and their

00:26:43.940 --> 00:26:47.329
feedback throughout this process. So I thank you everybody

00:26:47.329 --> 00:26:50.269
involved, this has been a long road, it's been a tough

00:26:50.269 --> 00:26:54.640
road at times. But um, appreciate all the hard work

00:26:54.640 --> 00:26:56.450
that's gone into it. I know I certainly have dumped

00:26:56.450 --> 00:26:58.880
a lot of hard work into this myself. And I know that

00:26:58.880 --> 00:27:03.960
everybody sitting here has. (item:5:Commissioner Cobos Memo Layout) Um my memo um, is particularly

00:27:03.960 --> 00:27:07.900
focused on near term actions. Um, you know, from my

00:27:07.900 --> 00:27:09.920
perspective, given the time that it's gonna take to

00:27:09.920 --> 00:27:12.990
implement a long term liability plan. Like and I,

00:27:12.990 --> 00:27:15.619
and I say long term reliability plan because I'm viewing

00:27:15.619 --> 00:27:18.569
this as a package, right. Whether, you know, we ultimately

00:27:18.569 --> 00:27:22.420
implement PCM, you know, the Legislature passes something.

00:27:22.430 --> 00:27:27.099
Uh, you know, that that runs with or you know, it it's

00:27:27.099 --> 00:27:29.660
all a package in my opinion, all the framework. And

00:27:29.660 --> 00:27:32.930
so, given the time it's gonna take to implement a long

00:27:32.930 --> 00:27:37.859
term reliability plan. Um, I believe that the near

00:27:37.859 --> 00:27:40.039
term actions are almost as important as the long term

00:27:40.039 --> 00:27:43.369
actions. Um, that are ultimately taken by the PUC and/

00:27:43.369 --> 00:27:47.349
or the Legislature. To help drive new dispatchable generation

00:27:47.349 --> 00:27:50.809
investment and put new still on the ground. In order

00:27:50.809 --> 00:27:56.599
for, for the long term solution, PCM or other. To effectively

00:27:56.599 --> 00:28:00.289
work in the future we must unpack so we can appropriately

00:28:00.289 --> 00:28:03.799
pack for the future. And what that means from my perspective

00:28:03.799 --> 00:28:06.150
is that we must focus on the following year term actions.

00:28:06.160 --> 00:28:09.589
Enhancing operation reliability and flexibility through

00:28:09.589 --> 00:28:12.940
the optimization of ERCOT's ancillary service portfolio.

00:28:13.609 --> 00:28:16.470
Reducing and ultimately replacing RUC with existing

00:28:16.470 --> 00:28:19.690
market driven processes. To retain our long duration

00:28:19.690 --> 00:28:23.480
dispatchable thermal generation fleet. In order to continue

00:28:23.480 --> 00:28:26.079
to meet extreme weather conditions in the future. Especially

00:28:26.079 --> 00:28:29.990
the multi-day winter weather events. And letting the

00:28:29.990 --> 00:28:32.539
RDC work is intended to send market signals for new

00:28:32.539 --> 00:28:34.579
dispatchable generation investment in the interim.

00:28:36.630 --> 00:28:39.670
In my memo I focus on, you know, our discussion from

00:28:39.670 --> 00:28:42.900
last work session. Um some of ERCOT preliminary feedback.

00:28:42.910 --> 00:28:45.940
And the two options that we primarily talked about

00:28:45.940 --> 00:28:49.549
which were RMR and BRS. And highlighting my

00:28:49.549 --> 00:28:54.220
concerns with RMR, and my views on BRS. But ultimately,

00:28:54.230 --> 00:28:57.269
I believe that my, I would like for the blueprint to

00:28:57.269 --> 00:29:01.950
include um some direction to ERCOT. To go back and

00:29:01.950 --> 00:29:06.160
come back with options for our consideration. On near

00:29:06.160 --> 00:29:09.329
term actions to reduce and replace RUC. And I'm and

00:29:09.329 --> 00:29:12.400
I'm fine with what you've laid out in your memo, with

00:29:12.400 --> 00:29:15.700
one you know, slight variation. You know Pablo and

00:29:15.700 --> 00:29:19.400
team goes back and works on options, they consult with

00:29:19.400 --> 00:29:25.039
the ERCOT board. The ERCOT board may provide us a recommendation.

00:29:25.049 --> 00:29:27.619
But I would ask as we get a recommendation from the

00:29:27.619 --> 00:29:29.829
ERCOT board, that we get a recommendation. But we get

00:29:29.829 --> 00:29:34.799
a full menu of options that we, we can select from, including

00:29:34.799 --> 00:29:37.380
an ERCOT board recommendation. So that we have a full

00:29:37.380 --> 00:29:40.859
menu of options. So not just one solution a menu. Not just one, not

00:29:40.859 --> 00:29:45.400
just one. Um, and I say that because of the uh. Best

00:29:45.400 --> 00:29:48.940
in class we consider and then a menu. (item:5:Chairman Lakes Questions on Commissioner Cobos Memo) Uh, so what I'm

00:29:48.940 --> 00:29:54.500
hearing you say is the ERCOT staff goes back to evaluate.

00:29:54.509 --> 00:29:59.380
And provide a menu of options to uh, ensure liability

00:29:59.380 --> 00:30:03.730
with minimal RUCs. And provide a bridge of ancillary

00:30:03.730 --> 00:30:07.410
service or some combination of, of the tools available,

00:30:07.410 --> 00:30:11.730
including RMR. Evaluate those present that the, that menu

00:30:11.730 --> 00:30:13.869
to the board. The board makes the selection of what

00:30:13.869 --> 00:30:17.240
they think is the best recommendation. And sends that

00:30:17.240 --> 00:30:20.539
recommendation, plus the full menu to us for consideration. Yes.

00:30:21.619 --> 00:30:26.980
That works for me. (item:5:Commissioner Cobos continuation on Memo) Okay, um next stop in my memo. I

00:30:26.980 --> 00:30:29.940
I give some broad feedback on the long term reliability

00:30:29.950 --> 00:30:33.240
um plan. I think, I'm in agreement with Commissioner

00:30:33.240 --> 00:30:37.009
McAdams and you Chairman in your memo. I think um,

00:30:37.019 --> 00:30:40.000
from a long term liability stand point first and foremost.

00:30:40.000 --> 00:30:42.410
The commission should open a project to evaluate, establish

00:30:42.410 --> 00:30:46.470
an appropriate reliability standard. Um, for today's

00:30:46.470 --> 00:30:49.500
rapidly evolving, dynamic ERCOT grid. That properly balances

00:30:49.500 --> 00:30:53.150
reliability and consumer cost. And I want to stress

00:30:53.150 --> 00:30:57.069
rapidly evolving, dynamic grid. Because in my opinion,

00:30:57.079 --> 00:30:59.609
we should just not go straight to a 1 in 10 reliability

00:30:59.609 --> 00:31:03.619
standard. That is one important piece of information.

00:31:03.630 --> 00:31:07.470
But every other market in this country is looking to

00:31:07.470 --> 00:31:09.700
move away from the 1 in 10 reliability standard.

00:31:09.710 --> 00:31:13.519
Even though, you know, they all build to it. It's not

00:31:14.029 --> 00:31:19.089
it's not, it's not um, indicative of reliability as

00:31:19.089 --> 00:31:22.819
you just highlighted in the PJM market. You know, taking

00:31:22.819 --> 00:31:24.980
in account the whole system. I think you mentioned

00:31:24.980 --> 00:31:28.289
derivability. I think resiliency, I think is very

00:31:28.289 --> 00:31:32.670
important. So I think that we as ERCOT um, the Commission.

00:31:32.680 --> 00:31:36.880
Should take an avant-garde approach to ensuring that

00:31:36.880 --> 00:31:39.539
we have the reliability standard for the future. And

00:31:39.539 --> 00:31:42.769
I, and I think that starts with updating ERCOT reserve

00:31:42.769 --> 00:31:46.019
margin study. They conducted one in 2018, probably in

00:31:46.019 --> 00:31:48.670
conjunction with the Astrape'. But at least running that

00:31:48.670 --> 00:31:52.069
study as a foundational first step. So that we can build

00:31:52.069 --> 00:31:55.480
upon their, um, from that foundation and, and you know

00:31:55.480 --> 00:31:58.789
with other information. I think there's a lot of think

00:31:58.799 --> 00:32:00.519
tanks throughout this country. That are putting out

00:32:00.519 --> 00:32:04.309
white papers on a variety of ways to look at. Um, the

00:32:04.309 --> 00:32:07.309
industry now with, with the influx of renewables and

00:32:07.319 --> 00:32:10.700
and you know, thermal dispatchable generation and everything

00:32:10.700 --> 00:32:13.230
involved. So I'm in agreement, I think that needs to

00:32:13.230 --> 00:32:15.630
be a necessary first step. And I think we need to do

00:32:15.630 --> 00:32:20.390
it in a diligent um way um, as soon as we can

00:32:20.390 --> 00:32:23.539
but in a very diligent, thoughtful manner. Um, next

00:32:23.539 --> 00:32:26.230
stop is, you know, I laid out some general principles.

00:32:26.240 --> 00:32:30.900
That I think are important for, you know, whatever we

00:32:30.900 --> 00:32:32.809
end up doing in the long term. If we implement this

00:32:32.809 --> 00:32:38.089
PCM or whatever happens, um that we abide by general

00:32:38.099 --> 00:32:42.309
principles. And the first one in my opinion, is that

00:32:42.319 --> 00:32:46.349
the long term reliability action PCM or other be consistent

00:32:46.349 --> 00:32:48.950
with the ERCOT competitive electricity market, do no

00:32:48.950 --> 00:32:52.839
harm. That we protect the competitiveness of the wholesale

00:32:52.839 --> 00:32:57.049
and retail markets in ERCOT. And included in that, is

00:32:57.059 --> 00:32:59.869
establishing strong mitigation measures to help prevent

00:32:59.869 --> 00:33:02.019
gaming opportunities and market manipulation in the

00:33:02.019 --> 00:33:05.569
wholesale market. And ensure appropriate voluntary mitigation

00:33:05.569 --> 00:33:08.119
plans are in place to address future market conditions.

00:33:09.650 --> 00:33:12.220
Strong, we should establish strong mitigation measures

00:33:12.220 --> 00:33:14.470
to help prevent market power abuse and preserve customer

00:33:14.470 --> 00:33:19.130
choice. In other words that reps, that customers continue

00:33:19.130 --> 00:33:22.660
to have options and retail electric providers and products.

00:33:22.670 --> 00:33:26.299
Fixed rate products possible. Um, that would be market

00:33:26.299 --> 00:33:29.960
based, transparent and predictable. That it creates

00:33:29.960 --> 00:33:32.630
a transparent, stable price signal for new dispatchable

00:33:32.630 --> 00:33:35.539
generation investment. Creates transparent and predictable

00:33:35.539 --> 00:33:39.519
costs for LSC. So they can proactively hedge and manage

00:33:39.519 --> 00:33:42.559
their wholesale supply costs for their consumers, and

00:33:42.559 --> 00:33:46.849
avoid costs through demand response measures. That there

00:33:46.849 --> 00:33:49.720
needs to be a focus on existing, retaining our existing

00:33:49.720 --> 00:33:53.319
long duration dispatchable thermal generation. And we

00:33:53.319 --> 00:33:56.079
are able to maintain reliability with a higher penetration

00:33:56.079 --> 00:33:58.119
of intermittent renewable generation system. Which is

00:33:58.119 --> 00:34:00.490
net peak load, which I think we're in agreement with.

00:34:00.500 --> 00:34:04.220
And that we're able to maintain reliability during

00:34:04.220 --> 00:34:07.819
extreme weather conditions, especially the multiday

00:34:07.829 --> 00:34:12.309
extreme hot and cold weather um, events that we've experienced.

00:34:12.320 --> 00:34:17.030
And um, it includes a robust non-performance penalties.

00:34:17.039 --> 00:34:20.010
What does that mean? I mean, is it just, you know,

00:34:20.010 --> 00:34:21.920
you won't get the money if you're not there? I mean

00:34:21.920 --> 00:34:24.179
I think that needs to mean a little bit more than that.

00:34:24.190 --> 00:34:28.050
If we really want to ensure that um, that we're paying

00:34:28.050 --> 00:34:30.949
for performance but we're also maintaining reliability.

00:34:30.960 --> 00:34:37.340
(item:5:Commissioner McAdams Questions Commissioner Cobos Memo) On that, if we can ask on that Commissioner? So it if

00:34:37.340 --> 00:34:40.289
it's one of the implementations mechanisms is a must

00:34:40.289 --> 00:34:43.829
offer uh, in the day ahead. So you are exposed on a

00:34:43.829 --> 00:34:46.760
contractual basis to the value of whatever that is.,

00:34:46.760 --> 00:34:50.550
plus the PC. Is that sufficient in your mind at this

00:34:50.550 --> 00:34:53.710
stage? Um, as a as long as there's something of that

00:34:53.710 --> 00:34:59.019
nature. Some sort of penalty at the end that is structurally

00:34:59.019 --> 00:35:04.090
based. In the framework of the PCM that satisfies that

00:35:04.090 --> 00:35:04.650
condition?

00:35:06.159 --> 00:35:07.929
(item:5:Commissioner Cobos reponds to Commissioner McAdams Questions) I'm not gonna give a definitive answer right now because

00:35:07.929 --> 00:35:10.159
I think a lot of these principles need a lot of, a

00:35:10.159 --> 00:35:13.489
lot of evaluation and analysis and thoughtfulness.

00:35:13.500 --> 00:35:17.349
Um I think, you know, there's been a variety of potential

00:35:17.349 --> 00:35:19.469
penalties proposed. One of them is buying back your

00:35:19.469 --> 00:35:22.949
energy position, if you didn't show up. And so um,

00:35:22.949 --> 00:35:24.760
I would like to explore that. Because we want to make

00:35:24.760 --> 00:35:27.429
sure that we're paying for performance. But at the

00:35:27.429 --> 00:35:29.559
same time we want to make sure that we're getting a

00:35:29.559 --> 00:35:31.880
reliability value out of it, right? Not just okay,

00:35:31.880 --> 00:35:35.219
well I didn't get my money big deal, you know. (item:5:Chairman Lake Follow-up Comments to Questions) So it's

00:35:35.230 --> 00:35:37.920
fair to say that that's a decision point. We should

00:35:37.920 --> 00:35:43.230
list for implementation some combination of

00:35:45.679 --> 00:35:51.190
exposure, normal market exposure, and that loss clawback.

00:35:51.199 --> 00:35:53.960
Like PJM is gonna have $2 billion of clawbacks for

00:35:53.960 --> 00:35:58.829
non performance. That's pretty damn serious. Um or a

00:35:58.840 --> 00:36:02.079
non performance ability. Some ask as part of the implementation

00:36:02.079 --> 00:36:07.500
decision points. Ask ERCOT uh, when we get to implementation

00:36:07.500 --> 00:36:10.989
and TAC. To evaluate what's the best combination of

00:36:10.989 --> 00:36:14.769
those options, does that work for everybody? Okay.

00:36:14.780 --> 00:36:17.010
I think, I think I don't that's a complicated answer

00:36:17.010 --> 00:36:19.280
we're not gonna come up with today. But I think it's

00:36:19.289 --> 00:36:23.559
all of it's worth considering in depth and figuring

00:36:23.559 --> 00:36:26.309
out what the right combination is. (item:5:Commissioner Cobos Memo Comments continuation) It and finally,

00:36:26.309 --> 00:36:29.630
as we move forward, um, with ultimate implementation

00:36:29.630 --> 00:36:33.940
some point down the road. That we consider consumer

00:36:33.949 --> 00:36:38.769
cost impacts along the way. As we're selecting potentially

00:36:38.769 --> 00:36:42.769
technical parameters. Um that are key features to market

00:36:42.769 --> 00:36:44.860
design change. That at every step of the way, we're

00:36:44.860 --> 00:36:48.550
keeping all consumers in mind. Because the technical

00:36:48.550 --> 00:36:51.519
parameters and how they interact with each other. Are

00:36:51.519 --> 00:36:55.000
going to, you know, make it a success or failure. And

00:36:55.000 --> 00:36:57.869
costly or not as costly to consumers. So we have to

00:36:57.880 --> 00:37:00.780
every step of the way, we need to keep the consumers

00:37:00.780 --> 00:37:05.360
in mind. And um so I think, you know, just to sum

00:37:05.360 --> 00:37:08.280
it up. With respect to feedback on the blueprint and

00:37:08.280 --> 00:37:10.699
we can continue talking about this as you stated. We're

00:37:10.699 --> 00:37:12.460
kind of, kind of go through an iterative process here

00:37:12.460 --> 00:37:16.500
down the road. Um you know, having some defined um

00:37:16.500 --> 00:37:19.889
structure around um, near term actions in the blueprint.

00:37:19.889 --> 00:37:21.739
I think is important. I know we don't have the exact

00:37:21.739 --> 00:37:24.579
step. But at least the process of how ERCOT will go

00:37:24.579 --> 00:37:28.610
back, come up with options. ERCOT more provides a recommendation,

00:37:28.619 --> 00:37:31.730
Commission considers considers a full menu of options,

00:37:31.739 --> 00:37:34.630
by a certain time period. I think you suggested some

00:37:34.630 --> 00:37:38.699
time period that we can leave that open, for now. (item:5:Chairmain Lake Comments on possible ERCOT proposal) Just

00:37:38.710 --> 00:37:41.579
to that real quick I, I agree that we should ask ERCOT

00:37:41.579 --> 00:37:45.000
to bring us options, bridging options. For both short

00:37:45.000 --> 00:37:47.900
term reliability and also to hopefully mitigate the

00:37:47.900 --> 00:37:52.570
RUC issue. Um, after hearing from ERCOT and also looking

00:37:52.570 --> 00:37:55.369
at the ERCOT board meeting date. Because I think, I think it's

00:37:55.380 --> 00:37:59.510
important we incorporate, that independent boards expertise

00:37:59.519 --> 00:38:03.949
and experience. Uh I would, I would move off of my early

00:38:03.949 --> 00:38:07.360
March date. And just ask that ERCOT comes back to us

00:38:07.369 --> 00:38:10.340
at the next open meeting or shortly thereafter. With

00:38:10.340 --> 00:38:13.489
a proposed date that can allow them to do their analysis

00:38:13.500 --> 00:38:16.440
and incorporate board feedback. Does that work for

00:38:16.440 --> 00:38:16.730
ya'll? Yes.

00:38:19.139 --> 00:38:23.670
(item:5:Commissioner Cobos continues with Memo layout) Next stop with respect to you know, in the blueprint

00:38:23.670 --> 00:38:27.239
and the implementation of a PCM. Um, I believe that

00:38:27.239 --> 00:38:31.159
it's very important that. You may want to clarify on this,

00:38:31.159 --> 00:38:33.519
but the way I read your memo. Was that we would, you

00:38:33.519 --> 00:38:37.190
know, basically let ERCOT and the stakeholders come

00:38:37.190 --> 00:38:39.170
up with the framework for the PCM, and then bring

00:38:39.170 --> 00:38:42.909
it back to us. My perspective, I think that the Commission

00:38:42.920 --> 00:38:45.630
as, as the regulators and and responsible for a lot

00:38:45.630 --> 00:38:49.000
of different matters in the market. Um protecting customers,

00:38:49.000 --> 00:38:51.650
ensuring firm regulatory oversight over the market.

00:38:51.659 --> 00:38:54.280
That um, we need to be on the front end of making

00:38:54.289 --> 00:38:57.820
high level policy calls. Obviously working in concert

00:38:57.820 --> 00:39:00.369
with ERCOT as a, you know, bring us back information

00:39:00.369 --> 00:39:03.889
on implementation, analysis that we need along the way.

00:39:03.900 --> 00:39:08.480
And, and probably in the detailed technical implementation

00:39:08.489 --> 00:39:11.260
in the protocols and market rules. But I think the

00:39:11.260 --> 00:39:13.380
Commission needs to remain in the driver's seat. Of

00:39:13.380 --> 00:39:16.300
making the high policy, high level policy calls. That

00:39:16.300 --> 00:39:19.760
are going to impact the market, the state, the consumers.

00:39:19.769 --> 00:39:23.900
Um, that's what I believe how the process should run.

00:39:23.909 --> 00:39:26.099
And I'm open to hear your feedback on that. In case

00:39:26.110 --> 00:39:28.820
you want to clarify anything. (item:5:Chairman Lake Follow-up Comments on Memo) My intentions I said

00:39:28.820 --> 00:39:32.429
from I said before, I think it's one to reach a decision

00:39:32.429 --> 00:39:37.519
today. Tap the brakes let the Legislature, for the Legislature.

00:39:37.519 --> 00:39:40.110
To consider their options throughout the Legislative

00:39:40.110 --> 00:39:45.159
session. Um, if after that we do move on to an implementation

00:39:45.159 --> 00:39:50.590
phase. Um either after enhancement or, or other direction

00:39:50.590 --> 00:39:54.820
the Legislature. Uh send the decision point, send this

00:39:54.820 --> 00:39:59.380
directive and this, this blueprint to ERCOT. Ask them

00:39:59.380 --> 00:40:02.969
to bring to bear their technical expertise. Uh, and

00:40:02.969 --> 00:40:06.389
just as importantly, the market expertise from TAC and

00:40:06.389 --> 00:40:08.699
our market participants, include them in the process.

00:40:08.710 --> 00:40:12.159
of identifying additional decision points. They need

00:40:12.159 --> 00:40:18.659
to be considered providing us answers. And uh, and going

00:40:18.659 --> 00:40:21.179
through the process of answering those. Providing clarity

00:40:21.179 --> 00:40:23.760
and specifics about what each of these components needs

00:40:23.760 --> 00:40:28.429
to look like. Uh, work through their board uh and but

00:40:28.429 --> 00:40:32.400
at certain milestones bring us the responses. Uh they

00:40:32.400 --> 00:40:35.519
can't just disappear. Uh into the night and then show

00:40:35.519 --> 00:40:40.940
up sometime later with an answer. I think we, we need

00:40:40.940 --> 00:40:44.809
to my, my intention would be find the balance between

00:40:44.809 --> 00:40:47.519
leveraging the expertise at ERCOT and with our market

00:40:47.519 --> 00:40:51.980
participants. While also ensuring the PUC is involved

00:40:51.989 --> 00:40:56.730
at predetermined milestones. To provide feedback, uh

00:40:56.739 --> 00:41:00.269
correct course where necessary, uh and then eventually

00:41:00.280 --> 00:41:05.159
approve the final technical specifications. Um and, and

00:41:05.159 --> 00:41:09.050
finding that balance between leaning on the experts

00:41:09.050 --> 00:41:11.219
at ERCOT. Leaning on the market participants who

00:41:11.219 --> 00:41:14.329
are gonna be the ones that have to put their money

00:41:14.329 --> 00:41:16.610
and their investors money on the table. Get their feedback

00:41:16.610 --> 00:41:21.760
and input, but have predefined milestones. Or the Commission

00:41:22.590 --> 00:41:26.289
provides input, feedback, corrects course. And then of

00:41:26.289 --> 00:41:29.530
course, the ultimate decision making on, on the technical

00:41:29.530 --> 00:41:33.139
specs would reside in the Commission? Um that's, that's

00:41:33.150 --> 00:41:37.420
my intent. Does that makes sense to you all?

00:41:37.429 --> 00:41:42.250
Ultimate, ultimate decision making needs

00:41:42.250 --> 00:41:46.690
to be here. But we can't, we need to let TAC work.

00:41:46.699 --> 00:41:50.199
We need to let the experts work and strike a balance.

00:41:50.210 --> 00:41:54.510
(item:5:Commissioner Glotfelty Comments on Chairman Lake's Comments) You know, if that's what you mean uh, in the kind of

00:41:54.510 --> 00:42:00.190
the last set of bullets the implementation. Um, you know,

00:42:00.190 --> 00:42:02.329
I have some suggestions on which one should remain

00:42:02.329 --> 00:42:04.300
here and which ones should go to ERCOT. And we'd like

00:42:04.300 --> 00:42:08.309
to discuss those at the appropriate time. Sure, but

00:42:08.320 --> 00:42:14.019
go ahead and give us a sneak peek, in response to Lori's question. Well, I mean, I

00:42:14.030 --> 00:42:17.920
think, you know, determining so technical issues ought

00:42:17.920 --> 00:42:20.630
to be handed over to ERCOT. Determining the compliance

00:42:20.630 --> 00:42:24.889
period, determine the hours, determine the requirements

00:42:24.889 --> 00:42:31.079
for producing a credit. Um, forward market timing, but

00:42:31.079 --> 00:42:34.329
I think a lot of these others are policy calls. That

00:42:34.340 --> 00:42:37.650
should reside with us, the final call. And I guess as

00:42:37.650 --> 00:42:41.539
Commissioner Cobos said. Um you know, I might, I might

00:42:41.539 --> 00:42:44.829
be open to letting them come back with a menu of options,

00:42:44.840 --> 00:42:50.929
that we can choose from. Um, I don't know think. For example, what are the policy calls you're

00:42:50.929 --> 00:42:52.780
thinking about? Um,

00:42:55.150 --> 00:42:57.360
determine if there should be geographical requirements

00:42:57.360 --> 00:43:01.320
for PCMs? Sure. I don't know the answer to that. I don't

00:43:01.320 --> 00:43:04.940
either. I certainly want to have somebody do some analysis.

00:43:05.199 --> 00:43:08.380
Yes. So the question. Formed by the reliability standard

00:43:08.389 --> 00:43:13.199
you know, the run that Astrape' does. The question would be is

00:43:13.199 --> 00:43:16.730
the ERCOT process or is our contested case process

00:43:16.739 --> 00:43:19.650
best? And I mean I think that's a policy call, that we

00:43:19.650 --> 00:43:24.769
should be making. Um, for example determined demand curve

00:43:24.769 --> 00:43:29.969
parameters for each PCM compliance period. To me that is

00:43:30.050 --> 00:43:32.840
the demand curve is the crux of the capacity market

00:43:32.840 --> 00:43:36.539
here. And to leave that to ERCOT is not their role.

00:43:36.619 --> 00:43:39.159
Their role is to implement what we say is critical

00:43:39.159 --> 00:43:42.739
for the market. So those are ideas. (item:5:Chairman Lake Comments on Commissioner Glotfelty's Comments) I would say every

00:43:42.739 --> 00:43:45.380
one of these bullet points at the end of the decision

00:43:45.380 --> 00:43:48.349
points, if you will ultimately, we have to sign off

00:43:48.349 --> 00:43:54.489
on. I would, my point is, I think implementation should

00:43:54.500 --> 00:43:57.500
incorporate their technical feedback, market participants

00:43:57.500 --> 00:44:00.980
feedback for us to ultimately make a decision. And

00:44:00.980 --> 00:44:04.090
I think the question that I have versus the way I am

00:44:04.090 --> 00:44:07.960
assuming that you have laid this out. Is, is it in their

00:44:07.960 --> 00:44:12.510
proceeding? That they come to a decision and recommendation

00:44:12.510 --> 00:44:15.250
for us. Or is it in our proceeding, that they come to

00:44:15.250 --> 00:44:17.690
us with a recommendation? Where everybody else can have

00:44:17.690 --> 00:44:20.579
a recommendation as well. I think that's where the

00:44:20.590 --> 00:44:24.829
difference is. (item:5:Chairman Lake Continuing Comments on Commissioner Glotfelty's Comments) I think it could be a combination of

00:44:24.829 --> 00:44:28.880
the above, right. Like a reliability standard project

00:44:28.880 --> 00:44:34.530
here. But we, as you pointed out. We need their, not

00:44:34.530 --> 00:44:38.139
only their expertise and manpower. We need outside

00:44:38.139 --> 00:44:42.219
consultants. So it's probably gonna be a combination

00:44:42.219 --> 00:44:47.849
of both. (item:5:Commissioner Glotfelty  on Policy Calls) Um so I think, I think what I'm wanting is

00:44:47.860 --> 00:44:52.179
us to make the policy calls. And them uh, lead us on

00:44:52.179 --> 00:44:57.610
the implementation calls. And I think that um, it's important

00:44:57.610 --> 00:45:02.469
for us to. Maybe we just separate these out. As to, you

00:45:02.469 --> 00:45:05.110
know, who ensure that we know who the final decision

00:45:05.110 --> 00:45:08.559
maker is. And I mean I, I know there. I think the

00:45:08.559 --> 00:45:13.409
one thing that I think about is. When we get um, protocol

00:45:13.409 --> 00:45:17.400
changes over here. Um the ability to debate that is

00:45:17.400 --> 00:45:20.840
kind of a, it's kind of a foregone conclusion. That everyone's

00:45:20.840 --> 00:45:22.820
gonna be passed. They've already been debated over

00:45:22.820 --> 00:45:25.769
there and they've, they've passed the ERCOT board.

00:45:26.039 --> 00:45:30.059
And um I wanted to be a robust discussion, that we are

00:45:30.059 --> 00:45:34.010
allowed to have and policy calls. Uh that would develop

00:45:34.010 --> 00:45:36.960
the parameters of this implementation. (item:5:Chairman Lakes on Policy Calls) Okay, well I

00:45:36.969 --> 00:45:39.090
certainly don't think we're rubber stamping anything

00:45:39.099 --> 00:45:42.000
in the protocols. I think the ones that we directed

00:45:42.550 --> 00:45:46.829
them to go change. Everyone's expecting us to reaffirm

00:45:46.840 --> 00:45:50.289
what we directed them to do. But I don't think at any

00:45:50.289 --> 00:45:52.920
point. Protocol changes that weren't directed by the

00:45:52.920 --> 00:45:56.380
Commission are rubber stamped. Just like at the ERCOT

00:45:56.380 --> 00:46:00.409
board meeting. There's some that are uncontested and

00:46:00.409 --> 00:46:00.929
nobody's,

00:46:02.449 --> 00:46:04.280
nobody's really fighting over them. They're kind of

00:46:04.280 --> 00:46:07.719
cleanup changes. Those generally move pretty smoothly.

00:46:09.710 --> 00:46:16.190
Um I have a compromised position maybe. Fire away. Uh Okay. (item:5:Commissioner McAdams on Policy Calls) Um,

00:46:16.199 --> 00:46:20.559
PUC Staff is critical to this, in terms of their interaction

00:46:20.570 --> 00:46:23.139
with ERCOT Staff. And again this is a collaborative

00:46:23.150 --> 00:46:29.619
exercise team, uh exercise. And so given what we're discussing

00:46:29.619 --> 00:46:33.849
in your memo. Uh, PUC staff could devise a breakout

00:46:33.860 --> 00:46:38.820
plan. Of phased implementation decisions, which would

00:46:38.829 --> 00:46:41.969
involve. Again, going through ERCOT stakeholder, ultimate

00:46:41.980 --> 00:46:47.199
ERCOT board, but PUC Staff organized workshops.

00:46:47.210 --> 00:46:50.329
Delineate the roles and responsibilities of who is

00:46:50.329 --> 00:46:52.260
where? Just different buckets. Yes sir.

00:46:53.780 --> 00:46:57.730
And then kind of a strong man schedule that is subject

00:46:57.730 --> 00:47:00.389
to adjustment. Because we all know this stuff adjusts.

00:47:00.820 --> 00:47:03.880
Um and then when it comes back to us on a phase

00:47:03.880 --> 00:47:06.940
basis for approval. So that we can take it in chunks.

00:47:06.949 --> 00:47:09.550
So that we have a cost picture and we know exactly

00:47:09.550 --> 00:47:11.519
kind of what we're buying and when. Because this is

00:47:11.519 --> 00:47:14.690
a big old cow, I mean there's a lot going on there.

00:47:14.699 --> 00:47:20.639
Um and then uh, the market knows the plan at that point.

00:47:20.650 --> 00:47:23.429
And we can work on that over the next several months

00:47:23.440 --> 00:47:28.179
while the Legislature deems if we're messed up or not.

00:47:28.579 --> 00:47:32.800
I like the bucket, I'd almost say, I think that probably

00:47:32.800 --> 00:47:35.190
gets us where we need to go. I'd say that's probably

00:47:35.190 --> 00:47:37.050
the first step of implementation after we hear from

00:47:37.050 --> 00:47:41.099
the Legislature. Okay. Um does that make sense? I think

00:47:41.099 --> 00:47:44.789
so, you know, as long as the ultimate goal is that

00:47:44.800 --> 00:47:49.659
we we make the policy calls. Uh and uh they guide us

00:47:49.659 --> 00:47:53.630
on the technical implementation, um then I'm, I'm good

00:47:53.630 --> 00:47:57.250
with that. Yeah, I think in principle technical, not

00:47:57.260 --> 00:48:02.820
all of the decisions are made here. Um some of them

00:48:02.820 --> 00:48:04.510
are so technically clear, there's probably not room

00:48:04.510 --> 00:48:07.380
for a lot of debate. Some of them are cleanups that

00:48:07.380 --> 00:48:10.489
nobody is contesting, and it's not much reason for debate.

00:48:10.500 --> 00:48:13.559
But yes, ultimately all of the, all of the decisions

00:48:13.559 --> 00:48:17.440
need to be either made or approved here, ultimately.

00:48:18.679 --> 00:48:21.349
(item:5:Commissioner Cobos additional comments on Memo) So thank you for your feedback. You know, Commissioner

00:48:21.349 --> 00:48:23.469
McAdams I think, and that's what I was sort of thinking

00:48:23.469 --> 00:48:25.900
in my head and you beat me to it. Is, is trying

00:48:25.900 --> 00:48:28.150
to really delineate what are the policy calls we need

00:48:28.150 --> 00:48:31.119
to make here and in what venue? Probably projects

00:48:31.130 --> 00:48:32.980
you know, Commissioner Glotfelty I'm putting on my

00:48:32.980 --> 00:48:36.199
lawyer hat with contested cases, probably not a good idea.

00:48:36.210 --> 00:48:40.489
I use that interchangeable with a project, a whatever.

00:48:40.500 --> 00:48:43.719
It makes me, you know, there's a lot going on there.

00:48:43.719 --> 00:48:46.590
But anyway, but I get your point. And the point is that

00:48:46.599 --> 00:48:49.889
um, ultimately determining. What high level policy calls

00:48:49.889 --> 00:48:52.519
need to be made by the Commission and in what, what

00:48:52.519 --> 00:48:55.170
venue? You know, through what mechanisms, right. And

00:48:55.170 --> 00:48:59.949
having a plan, right? Creating buckets and, and um creating

00:48:59.949 --> 00:49:03.760
processes in those buckets. Of keeping some things here

00:49:03.760 --> 00:49:06.469
at the Commission. That need to be done via projects

00:49:06.480 --> 00:49:09.269
roll makings, etcetera. And something's getting farmed

00:49:09.269 --> 00:49:12.489
out to ERCOT. And and this is all subject again, as

00:49:12.500 --> 00:49:17.639
the Chairman has, has, you know prominently um highlighted.

00:49:17.929 --> 00:49:20.059
If we move forward with this implementation subject

00:49:20.059 --> 00:49:25.190
to Legislative feedback. Having a framework, um a plan

00:49:25.199 --> 00:49:28.739
I think is very important not only for our, you know,

00:49:28.739 --> 00:49:31.460
the Commission oversight and involvement. Interest process

00:49:31.460 --> 00:49:34.539
with ERCOT but also for the market. And and for them

00:49:34.539 --> 00:49:37.989
to know when certain actions are being taken and starting

00:49:37.989 --> 00:49:41.030
to provide regulatory certainty as soon as possible.

00:49:41.039 --> 00:49:44.989
Right? So in my mind, you know, and I don't have a

00:49:44.989 --> 00:49:47.489
definitive list right now. We can work with Staff when

00:49:47.489 --> 00:49:50.119
the time is appropriate. But you know, Commissioner

00:49:50.119 --> 00:49:52.780
Glotfelty's point. You know, I almost say, you know

00:49:52.780 --> 00:49:55.610
like determining a compliance period. I mean that has

00:49:55.610 --> 00:49:58.050
huge policy implications and market impacts. As many

00:49:58.050 --> 00:50:00.889
of the stakeholders have highlighted, low operating

00:50:00.889 --> 00:50:05.929
reserves as a compliance. You know, uh how you determine

00:50:05.940 --> 00:50:08.789
hours of highest reliability risk if you rely on tightest

00:50:08.800 --> 00:50:12.690
operating reserves. That creates all kinds of issues

00:50:12.699 --> 00:50:16.619
with um, you know, generation maintenance, potential

00:50:16.619 --> 00:50:19.530
gaming, there's all sorts of issues. Right? So depending

00:50:19.530 --> 00:50:22.159
on what comply, what, how you determine the highest

00:50:22.159 --> 00:50:25.130
reliability risk hours. Whether it's, you know, tight

00:50:25.130 --> 00:50:30.050
operating reserves. Uh, pete net Load as as you've highlighted.

00:50:30.050 --> 00:50:33.269
I think provided the back cast analysis. You know,

00:50:33.280 --> 00:50:37.559
that's how, you know, I think that decision on its

00:50:37.570 --> 00:50:41.900
end of itself has a lot of implications. Um, establishing

00:50:41.900 --> 00:50:44.480
the reliability standard. I think that, that is in our

00:50:44.489 --> 00:50:47.929
forum here, as as you've highlighted Chairman. Um, changes

00:50:47.929 --> 00:50:50.590
to the ORDC, VOL and SWAC, all those are

00:50:50.590 --> 00:50:54.989
definitely here. Um, those are policy calls and impact

00:50:54.989 --> 00:50:58.679
consumers and, and those need to remain here. And some

00:50:58.679 --> 00:51:00.719
of those concepts are even in our rules. So they absolutely

00:51:00.719 --> 00:51:03.030
have to remain here. So we can continue to talk about

00:51:03.030 --> 00:51:05.789
it. I'm not, you know, making cuts right now. But I'm

00:51:05.789 --> 00:51:08.559
just giving examples and market power abuse. That project

00:51:08.559 --> 00:51:12.429
that um, you know, Chairman you highlighted. That Connie

00:51:12.429 --> 00:51:16.000
and team would open to look at potential market power

00:51:16.000 --> 00:51:18.710
mitigation measures. But also ensuring that the retail

00:51:18.710 --> 00:51:22.510
market remains competitive. Through, you know, customer

00:51:22.510 --> 00:51:25.210
choice, with impacts of switching, collateral, etcetera.

00:51:25.219 --> 00:51:28.750
But anyway, examples, we can continue to refine that

00:51:28.750 --> 00:51:30.840
list and buckets. And what stays here and what goes

00:51:30.840 --> 00:51:34.739
to ERCOT later. Yeah. Again, I'd say that's the first step

00:51:34.739 --> 00:51:38.599
of any implementation, identifying the buckets. Does that

00:51:38.599 --> 00:51:43.960
makes sense to everybody? Does that work for staff? All right.

00:51:44.639 --> 00:51:51.380
Okay. All right. And then um I guess finally, I think

00:51:51.389 --> 00:51:55.510
well, RTC. That's not mentioned in the blueprint and

00:51:55.510 --> 00:51:58.079
I think ERCOT has paired that with implementation of

00:51:58.079 --> 00:52:01.780
PCM. I think that's important to highlight in the blueprint.

00:52:01.789 --> 00:52:05.519
Because not only would real time optimization introduce

00:52:05.530 --> 00:52:09.280
beneficial market efficiencies. But it also reduces

00:52:09.280 --> 00:52:13.659
consumer cost. And I know ERCOT's plan is to develop

00:52:13.659 --> 00:52:16.030
an updated plan on implementation by the end of March.

00:52:16.030 --> 00:52:19.500
And may be setting forth uh, you know, a requirement

00:52:19.500 --> 00:52:22.119
that ERCOT filed an updated implementation plan in

00:52:22.119 --> 00:52:26.469
April. Um and then once they kick start the RTC implementation

00:52:26.469 --> 00:52:30.469
process. That they file quarterly updates in the RTC

00:52:30.469 --> 00:52:34.730
Project 48540. Um, so that were apprised as to how

00:52:34.739 --> 00:52:38.940
RTC implementation is going, on a systematic, routine

00:52:38.940 --> 00:52:39.670
basis.

00:52:41.389 --> 00:52:43.320
Sorry, where's that timeline in your

00:52:46.019 --> 00:52:48.789
um it's not in my memo. It's just additional considerations

00:52:48.789 --> 00:52:51.219
I was thinking about. What to add to the blueprint. To

00:52:51.219 --> 00:52:54.650
kind of put some guardrails on, on the implementation

00:52:54.650 --> 00:52:57.719
of the long term plan. (item:5:Chairman Lake Questions on RTC & PCM) So you do want to implement

00:52:58.280 --> 00:53:03.340
or not? Well, yes. Okay. So, so what's the request?

00:53:03.349 --> 00:53:06.599
To include RTC in there, and some balance. What about?

00:53:06.619 --> 00:53:09.929
(item:5:Commissioner Cobos Comments on RTC & PCM) Oh that um, you know, that's going to be a part of

00:53:09.940 --> 00:53:11.920
the long term principles. Since ERCOT has paired it

00:53:11.920 --> 00:53:14.610
together with PCM. And I think that's important because

00:53:14.610 --> 00:53:18.449
it provides additional market efficiencies and um reduces

00:53:18.449 --> 00:53:21.730
consumer costs. And ERCOT is supposed to go back and

00:53:21.739 --> 00:53:24.130
update their implementation plan. How long it's gonna

00:53:24.139 --> 00:53:27.150
take to implement RTC. And they're going to do that

00:53:27.150 --> 00:53:29.380
by the end of March. So, having them file an updated

00:53:29.380 --> 00:53:33.340
plan in the project, that's been open for several years

00:53:33.340 --> 00:53:36.929
now, 48540. And then also requiring them to follow

00:53:36.929 --> 00:53:39.230
quarterly updates. To keep us informed on where they

00:53:39.230 --> 00:53:41.489
are with their RTC implementation. Because I think 

00:53:41.489 --> 00:53:44.940
RTC implementation is very important. As it paired with

00:53:44.949 --> 00:53:46.989
PCM mitigates consumer cost.

00:53:49.900 --> 00:53:51.929
Okay so, so you want

00:53:53.480 --> 00:53:59.269
it's somehow related to PCM. Um, update on a systems

00:53:59.280 --> 00:54:04.369
upgrade at ERCOT. A new requirement for quarterly updates,

00:54:04.389 --> 00:54:11.070
on the progress of that system upgrade. Yes, because

00:54:11.619 --> 00:54:14.130
ERCOT has paired PCM with RTC. I want to make

00:54:14.130 --> 00:54:16.159
sure that we're keeping checks and balances on that. 

00:54:16.980 --> 00:54:20.460
Paired? Well they, when they're filing they have said

00:54:20.460 --> 00:54:22.699
that PCM and RTC would be implemented together.

00:54:22.699 --> 00:54:26.280
And that's how E3 has modeled it. (item:5:Chairman Lake Follow-up Comments on RTC & PCM.) Uh, there was

00:54:26.280 --> 00:54:31.070
an assumption in E3s original analysis that

00:54:31.070 --> 00:54:33.820
RTC would eventually be implemented. And that they

00:54:33.820 --> 00:54:38.550
evaluated the market under those future conditions.

00:54:38.550 --> 00:54:42.659
Which I think is appropriate. I don't, I'm still not

00:54:42.659 --> 00:54:45.699
following where, where they link other than that. (item:5:Commissioner Cobos Follow-up Comments on PCM & RTC) Well

00:54:45.699 --> 00:54:48.000
ERCOT has said, that they're going to implement

00:54:48.000 --> 00:54:52.050
RTC and PCM. While PCM is not dependent on RTC.

00:54:52.059 --> 00:54:55.079
It's important I believe from my perspective. And if

00:54:55.079 --> 00:54:59.039
anybody disagrees, please let me know. Um that RTC,

00:54:59.039 --> 00:55:02.909
since it was modeled um, with the E3 report.

00:55:02.920 --> 00:55:05.449
And it obviously had consumer reduction impacts on

00:55:05.449 --> 00:55:08.300
the PCM. That we need to implement RTC because it

00:55:08.300 --> 00:55:11.769
creates market efficiencies and it reduces costs. And

00:55:11.769 --> 00:55:14.659
ERCOT is planning to implement it. And I think it's an

00:55:14.659 --> 00:55:17.840
important um, initiative that's running in parallel

00:55:17.840 --> 00:55:20.199
with PCM. Is what I understand from ERCOT and they're

00:55:20.199 --> 00:55:22.809
filing, and all the discussions I've had and testimony,

00:55:22.809 --> 00:55:25.150
given at the work session. Maybe it would be helpful

00:55:25.150 --> 00:55:31.539
if you could clarify. Um Pablo do you mind? Or whoever's best informed to clarify?

00:55:31.710 --> 00:55:33.920
(item:5:Commissioner Glotfelty Comments on PCM & RTC ) One other thing that I might add is on staffs memo.

00:55:33.920 --> 00:55:38.300
That they are, discussion of questions um after our

00:55:38.300 --> 00:55:41.150
last open meeting. It says Staff believes we need a

00:55:41.150 --> 00:55:43.130
reliability standard. Staff also believes that RTC

00:55:43.130 --> 00:55:46.329
should be a priority. Right, I think everybody agrees

00:55:46.329 --> 00:55:50.730
it's a priority. But last time we heard commentary

00:55:51.840 --> 00:55:54.210
from Commissioner Cobos said it was a concern. That

00:55:54.219 --> 00:55:56.360
because of those increases efficiencies. No. That would

00:55:56.360 --> 00:55:59.320
reduce incentives for generators. (item:5:Commissioner Cobos Comments on RTC) What I was trying

00:55:59.320 --> 00:56:01.489
to make sure is that the generators don't turn around

00:56:01.489 --> 00:56:03.900
and say that RTC prevented us from investing in

00:56:03.900 --> 00:56:07.159
our market. Because some of them have filed comments

00:56:07.159 --> 00:56:09.820
saying that it's not helpful for resource adequacy.

00:56:09.829 --> 00:56:11.860
And I was trying to confirm that, and make sure that

00:56:11.860 --> 00:56:14.059
I understood where everything was with implementation.

00:56:14.070 --> 00:56:18.130
With respect to um, you know, what their timeline was.

00:56:18.210 --> 00:56:20.730
Potentially EMS upgrade and the future could impact

00:56:20.730 --> 00:56:23.920
it. I was trying to do basically a full 360 review

00:56:23.920 --> 00:56:27.019
of RTC. I haven't had concerns with RTC,

00:56:27.019 --> 00:56:31.519
I just wanted to give it a full view. Uh number one,

00:56:31.519 --> 00:56:35.010
what are the benefits? Um, consumer cost benefits, market

00:56:35.010 --> 00:56:39.510
efficiency benefits. And I also wanted to ensure that

00:56:39.519 --> 00:56:42.260
you know, we are built, if we're gonna build a PCM. Subject

00:56:42.260 --> 00:56:44.789
to Legislative feedback, etcetera. That I don't want

00:56:44.789 --> 00:56:47.070
to hear later that RTC got in the way

00:56:47.070 --> 00:56:50.130
of investment. And I wanted to make sure that everything

00:56:50.130 --> 00:56:53.980
was sort of, you know, fully evaluated. Um and that's

00:56:53.980 --> 00:56:56.010
why I bring it up. Because if we're going to implement

00:56:56.010 --> 00:56:58.769
it, then I want to make sure that we're doing it. Um

00:56:58.780 --> 00:57:01.429
in an efficient manner and/or understand that were

00:57:01.429 --> 00:57:04.090
informed. Basically report ERCOT is, what they're updated

00:57:04.090 --> 00:57:09.949
plan is. And get quarterly updates.  (item:5:Chairman Lake Comments on RTC) To be clear, I don't, other than last week. I haven't

00:57:09.949 --> 00:57:12.340
heard anybody say that RTC is not a priority. And

00:57:12.340 --> 00:57:15.710
I certainly would never advocate that. So I think everybody

00:57:15.710 --> 00:57:17.750
is in agreement that RTC is a priority. And should

00:57:17.750 --> 00:57:23.710
move forward um, with all alacrity. I don't think anybody's

00:57:23.710 --> 00:57:27.900
arguing otherwise is certainly not our Staff. I just

00:57:27.909 --> 00:57:30.849
I just want an updated plan and quarterly updates. And my understanding

00:57:30.849 --> 00:57:35.760
is implementing one or the other. PCM and/or RTC are

00:57:35.760 --> 00:57:40.019
not technically related. They depending on different

00:57:40.030 --> 00:57:45.590
freeze times or other systems constraints. They can

00:57:45.590 --> 00:57:49.219
generally be implemented concurrently. But Pablo, can

00:57:49.219 --> 00:57:52.079
you provide some clarification on that? (item:5:Pablo Vegas for ERCOT, on RTC) Yeah. So I

00:57:52.090 --> 00:57:54.969
think we're aligned in terms of, I think the consistent

00:57:54.969 --> 00:57:57.570
perspective that RTC is important and that it's an

00:57:57.579 --> 00:58:02.320
urgent priority. It's not dependent on the development

00:58:02.320 --> 00:58:05.650
cycle for any of the Phase 2 market redesign options.

00:58:05.659 --> 00:58:08.090
In fact it likely would be delivered, RTC would be

00:58:08.090 --> 00:58:11.230
delivered after any of these. Because of the extensive

00:58:11.230 --> 00:58:14.659
complexity of building the RTC system changes. Will

00:58:14.670 --> 00:58:17.250
likely take longer than the Phase 2 market redesigns.

00:58:17.260 --> 00:58:20.199
So our intent is to get started on it with urgency.

00:58:20.199 --> 00:58:22.300
Try to get it done as quickly as possible. But there

00:58:22.300 --> 00:58:25.320
is not a link developmentally to any of the Phase 2

00:58:25.320 --> 00:58:28.719
market redesign items. The E3 model, the E3 assumptions

00:58:28.719 --> 00:58:31.269
assumed RTC was in place for their economic modeling.

00:58:31.449 --> 00:58:34.170
They stated, I think in last week's conversation that

00:58:34.179 --> 00:58:36.510
take it in or take it out, it affects them all equally.

00:58:36.519 --> 00:58:40.119
It's not really a factor whether in determining between

00:58:40.119 --> 00:58:43.929
the the different Phase 2 options. (item:5:Commissioner McAdams on RTC) Mr. Chairman, I

00:58:43.940 --> 00:58:48.750
think and look ERCOT's score mission, reliability. Um,

00:58:48.760 --> 00:58:53.539
given I think this would be something well suited for

00:58:53.539 --> 00:58:57.110
the board to deliberate on. Uh sooner rather than later.

00:58:57.110 --> 00:59:00.139
Just one of those front burner items as they get organized

00:59:00.150 --> 00:59:04.920
on the focus of Phase 2. What will they deliberate? At the

00:59:06.860 --> 00:59:12.599
risks to not implementing RTC exactly, concurrently

00:59:12.599 --> 00:59:16.110
to PCM. And this is where I'm going. Is because the market

00:59:16.110 --> 00:59:19.090
is complex. The ancillaries are being beefed up. 

00:59:19.090 --> 00:59:23.300
RTC as a functional purpose is to sink these varied

00:59:23.309 --> 00:59:29.340
tools up. Um, to one cost efficiently deploy resources.

00:59:29.349 --> 00:59:35.280
Um to uh serve reliability, but also what I worry about

00:59:35.280 --> 00:59:38.409
is PCM as we're moving forward. Again, everybody's gonna

00:59:38.409 --> 00:59:41.809
be trying to make commitment decisions. Based on one

00:59:41.809 --> 00:59:44.889
the value of energy, but two the likelihood of PCM is

00:59:44.889 --> 00:59:47.139
occurring. Either on a seasonal basis or monthly basis

00:59:47.139 --> 00:59:49.710
or whatever you guys recommend. I just want to make

00:59:49.710 --> 00:59:54.320
sure that that tool on a reliability basis is not necessary.

00:59:54.320 --> 00:59:58.909
Given this do dynamic of adders on high risk hours.

00:59:58.909 --> 01:00:00.980
I want to make sure that this is all sync'd up and

01:00:00.980 --> 01:00:03.570
this is something for the board to consider. Because

01:00:03.579 --> 01:00:06.090
the ultimate mission of the board is reliability. So

01:00:06.090 --> 01:00:10.179
do they need the tool. To make sure that all of these

01:00:10.179 --> 01:00:14.619
things are harmonized in real time? Yeah, it's completely

01:00:14.619 --> 01:00:17.750
separate so they don't. And so it, it will have its own

01:00:17.750 --> 01:00:20.559
developmental track, project schedule, all of that. Which

01:00:20.559 --> 01:00:24.010
we can bring updates to uh to the Commission at any

01:00:24.010 --> 01:00:26.360
time that you would like to see that. But it is completely

01:00:26.360 --> 01:00:29.000
independent from the other considerations. In terms

01:00:29.000 --> 01:00:33.519
of the design decisions, the parameters. On how PCM solution

01:00:33.519 --> 01:00:36.570
would be developed. So those can be separated conceptually

01:00:36.570 --> 01:00:39.199
in terms of their development risks and issues. But

01:00:39.199 --> 01:00:41.670
we can provide updates to this body as often as you like.

01:00:42.460 --> 01:00:45.809
I know the board's updated and what I'm hearing is

01:00:45.820 --> 01:00:49.730
I think regardless of what happens on the PCM

01:00:49.730 --> 01:00:52.750
or anything else, RTC is moving forward. And those systems

01:00:52.760 --> 01:00:56.010
don't. That's definitely what you're hearing is from

01:00:56.079 --> 01:00:59.829
what I'm hearing. Which is good, which is great. Uh

01:00:59.840 --> 01:01:03.519
I know, I know the board is updated at every board meeting,

01:01:03.530 --> 01:01:07.639
on an array of things. All of these projects including

01:01:07.639 --> 01:01:10.670
RTC. Uh would it, would it work for you Commissioner

01:01:10.670 --> 01:01:14.460
Cobos? If that update was relayed to your office? If

01:01:14.480 --> 01:01:17.469
you're at the board meetings for those updates. Right.

01:01:17.480 --> 01:01:22.590
But anyway. I guess RTC is a very expensive process

01:01:22.590 --> 01:01:27.420
as well. And so I want to know in your updated plan,

01:01:27.429 --> 01:01:29.940
how much it's gonna cost to finish the project? We

01:01:29.940 --> 01:01:31.630
include that in all of our updates, as well with the

01:01:31.630 --> 01:01:34.530
board. So we include project timeline, the schedule,

01:01:34.539 --> 01:01:37.809
project costs. And we do that at each of our major updates.

01:01:38.769 --> 01:01:42.980
Okay. Um all I'm looking for and I think you're committing

01:01:42.980 --> 01:01:45.059
to do that every board meeting. Which is, you know,

01:01:45.070 --> 01:01:48.260
every quarter, I think almost now. Um every other month.

01:01:48.260 --> 01:01:52.739
Yes sooner. Um, all I want to know is what's the updated

01:01:52.739 --> 01:01:55.880
plan? What's the updated cost and to have checks and

01:01:55.880 --> 01:01:57.949
balances on where this project is going? Like, is it

01:01:57.960 --> 01:02:01.449
is it on time? Is it, you know, staying on course with

01:02:01.449 --> 01:02:04.579
implementation? Because I do think, as we all agree. 

01:02:04.579 --> 01:02:08.110
RTC is important. And it's important to implement it

01:02:08.340 --> 01:02:11.880
um in parallel and as close as possible through PCM

01:02:11.880 --> 01:02:14.329
implementation. That ultimately happens because it

01:02:14.340 --> 01:02:19.170
helps mitigate consumer cost. So that is why I'm interested

01:02:19.170 --> 01:02:22.280
in the updates. And if that suffices for everybody else,

01:02:22.280 --> 01:02:24.960
then I'm good. I'm just interested in regular updates,

01:02:24.960 --> 01:02:27.690
and looking at an updated plan? Yeah, I think

01:02:27.699 --> 01:02:32.420
the board meets next month. Will be a full update on

01:02:32.429 --> 01:02:35.329
RTC, then presumably. Well, and we did communicate.

01:02:35.340 --> 01:02:37.710
We're planning to have kind of a refreshed perspective

01:02:37.710 --> 01:02:39.760
on the overall implementation plan and timeline by

01:02:39.760 --> 01:02:42.760
the end of March. So we would probably be given a status

01:02:42.760 --> 01:02:44.659
subject that, that's being developed. And then for the

01:02:44.659 --> 01:02:47.789
April meeting, we would have the completed analysis.

01:02:47.789 --> 01:02:50.239
For the next, for how we would implement RTC. Mr. Chairman,

01:02:50.239 --> 01:02:53.170
that also might be useful as Staff develops their implementation

01:02:53.170 --> 01:02:56.039
plan, those buckets. Uh and it's kind of on an iterative

01:02:56.329 --> 01:03:02.679
like in chunks. Um then RTC updates will, will help inform.

01:03:02.679 --> 01:03:05.880
Okay, this is what cost picture looks like. An implementation

01:03:05.880 --> 01:03:08.719
picture looks like, with RTC and without. And just

01:03:08.719 --> 01:03:12.309
show us how the development of the implementation plan

01:03:12.320 --> 01:03:15.789
is sinking up over this long term horizon. Over the

01:03:15.789 --> 01:03:18.699
next two years as we move on down the road. Making

01:03:18.699 --> 01:03:22.659
these decisions on an iterative basis. That way, uh

01:03:22.670 --> 01:03:25.809
the ERCOT board sees what's happening. Um and we see

01:03:25.809 --> 01:03:27.969
what's happening, in terms of major decisions that are

01:03:27.969 --> 01:03:32.079
being made. Okay. So I think we can, ERCOT staff can

01:03:32.079 --> 01:03:34.869
incorporate. If and when we do get to the implementation

01:03:34.869 --> 01:03:40.130
phase. In addition to the buckets, ERCOT could provide a incorporated

01:03:40.130 --> 01:03:44.449
that into the RTC update. How would, how would whatever implementation

01:03:44.460 --> 01:03:49.260
process lays out. Um and how those buckets end up being

01:03:49.260 --> 01:03:53.059
arrayed? How that syncs up with RTC and other systems

01:03:53.059 --> 01:03:55.789
upgrades. There's that's not the only thing going on.

01:03:55.800 --> 01:04:00.989
Um and in the meantime, um ERCOT can make sure Commissioner

01:04:00.989 --> 01:04:04.179
Cobos and all other Commission offices receives the

01:04:04.739 --> 01:04:07.219
updates. Same updates that the board does.

01:04:08.789 --> 01:04:13.739
Does that work? Good. All right, thanks Pablo.

01:04:16.809 --> 01:04:19.500
All right, that completes my comments for now.

01:04:21.019 --> 01:04:23.599
All right. I've got some thoughts on your request for

01:04:23.599 --> 01:04:25.789
a project on reliability standard. But I'll save that

01:04:25.800 --> 01:04:28.840
until any other questions or comments for Commissioner

01:04:28.840 --> 01:04:35.199
Cobos? Not right now. Okay. (item:13:Chairman Lake on Project for Reliability Standard) Your, your request to

01:04:35.440 --> 01:04:39.639
open a project on reliability standard, makes sense to

01:04:39.639 --> 01:04:45.380
me. Um, I would defer to Staff on resources. I mean

01:04:45.380 --> 01:04:48.159
it's something that's very clearly required. I think

01:04:48.159 --> 01:04:51.309
it's actually the first thing in Section 18 of SB 3.

01:04:51.320 --> 01:04:54.380
(item:17:Commissioner McAdams on discussion with Legislative members of Sunset Commission) Well and if Ms. Emily Johnson is out in the, the audience

01:04:54.380 --> 01:04:56.559
from Sunset Commission. And we have an app action item

01:04:56.559 --> 01:04:59.260
to develop reliability standard. And what that means

01:04:59.260 --> 01:05:04.030
before May. Is uh, is we're gonna try to get it done

01:05:04.030 --> 01:05:08.260
fast. Um, but they have views on. (item:17: Commission Executive Director on discussion with Legislative members of Sunset Commission) So Commissioners, I

01:05:08.260 --> 01:05:10.190
can provide an update on that. We've, Staff has had

01:05:10.190 --> 01:05:13.050
preliminary conversations with some members of the

01:05:13.050 --> 01:05:17.059
Sunset Commission. Um, just about the timeline of opening

01:05:17.059 --> 01:05:20.070
a rule and that this would not be completed by May

01:05:20.070 --> 01:05:22.449
1st. And they understand that we'll continue to communicate

01:05:22.449 --> 01:05:26.489
with them. And I think the the progress we're making

01:05:26.489 --> 01:05:28.590
today. I think meets the spirit of what they were trying

01:05:28.590 --> 01:05:31.219
to adopt. So we'll we'll go meet with all of them. And

01:05:31.230 --> 01:05:34.369
bring back any issues that they have to you all. And that's

01:05:34.380 --> 01:05:36.469
that's discussions with Legislative members of the

01:05:36.469 --> 01:05:39.219
Sunset. Correct. Legislative members and their, their

01:05:39.219 --> 01:05:39.849
Staffs.

01:05:42.599 --> 01:05:46.710
And of course at the end of the day. As as we've

01:05:46.719 --> 01:05:50.960
discussed this reliably standard is no small task.

01:05:50.969 --> 01:05:54.699
That requires robust technical analysis. Just to lay

01:05:54.699 --> 01:05:59.110
the foundation for you guys, I know we'll hear from

01:05:59.110 --> 01:06:01.929
Commissioner Glotfelty what is the right version? You

01:06:01.929 --> 01:06:05.210
gotta pick that first before you can even pick what

01:06:05.219 --> 01:06:09.420
the right one is. Uh, so it's you got to do a

01:06:09.420 --> 01:06:12.079
lot of, lot of calculus. Before you even get to the policy

01:06:12.079 --> 01:06:14.539
making part, the first policy making part. So it's

01:06:14.550 --> 01:06:20.500
it's a serious undertaking, so appreciate Sunset leadership

01:06:20.500 --> 01:06:23.690
understanding. That it's in order to do it right, It

01:06:23.690 --> 01:06:26.989
may take some time. And so what we'll do to the Commission

01:06:27.000 --> 01:06:29.309
and to the Staff of the Sunset Commission. Is provide

01:06:29.309 --> 01:06:32.219
them a work plan with estimated timelines to get to

01:06:32.219 --> 01:06:36.639
get the analysis and the rule done. Is that, and we

01:06:36.639 --> 01:06:38.630
can, as part of that, the first step would be opening

01:06:38.630 --> 01:06:43.550
a project. And staff can take care of that immediately? Yes.

01:06:45.820 --> 01:06:50.420
All right. Thank you Commissioner Cobos. (item:6:Commissioner Glotfelty Comments on Memo Layout) Commissioner

01:06:50.429 --> 01:06:55.420
Glotfelty, the floor is your. Thank you, appreciate this discussion today. Excited

01:06:55.429 --> 01:06:58.619
to see all five commissioners have memos, which is

01:06:58.630 --> 01:07:04.170
uh first for me. But I think that's uh, that's great.

01:07:04.179 --> 01:07:09.030
Um, clearly I've laid out some uh some concerns, uh

01:07:09.039 --> 01:07:12.800
and some ideas that I have. With regard to the PCM

01:07:12.800 --> 01:07:16.150
and the debate generally speaking. I'm not gonna

01:07:16.150 --> 01:07:20.829
get into all of them today. Um, I think what I'd like

01:07:20.829 --> 01:07:23.809
to do is just talk about the principles that I have.

01:07:23.809 --> 01:07:27.440
And uh, and then leave them up for debate for us. Uh,

01:07:27.449 --> 01:07:31.980
to see how we go forward. The first one would be, uh

01:07:31.989 --> 01:07:35.280
if a PCM is adopted, ensure that it's technologically

01:07:35.280 --> 01:07:39.679
neutral. Um with that, I mean that the distributed

01:07:39.679 --> 01:07:42.000
resources and energy efficiency should be allowed to

01:07:42.000 --> 01:07:45.670
compete for credits in our market. Just as they do for

01:07:45.679 --> 01:07:48.760
capacity credits and other markets. The discussion

01:07:48.760 --> 01:07:52.980
that we had initially was. Can they be used to decrease

01:07:52.989 --> 01:07:56.909
an amount of PCs that a generator needs to buy? And

01:07:56.909 --> 01:07:59.750
I think that puts them, I'm sorry, a Load needs to

01:07:59.750 --> 01:08:03.440
buy. Um, my view is that that's the wrong bucket for

01:08:03.440 --> 01:08:06.550
them to be in. They need to be able to access these

01:08:06.550 --> 01:08:09.690
credits as well. Uh, to potentially make more and more

01:08:09.690 --> 01:08:13.230
technologies available. Access the credits will produce

01:08:13.230 --> 01:08:15.530
the credits. Or I'm sorry, produce the credits, right.

01:08:15.539 --> 01:08:20.930
Um and, and uh, energy efficiency. Um, while I think

01:08:20.939 --> 01:08:23.500
you know, we haven't done a whole lot on that and Commissioner

01:08:23.500 --> 01:08:26.630
Jackson is gonna be leading up our efforts there. Um,

01:08:26.640 --> 01:08:29.470
in other markets, energy efficiency is available for

01:08:29.470 --> 01:08:32.430
capacity credit. So I think there are some models out

01:08:32.430 --> 01:08:36.250
there that we can look into. As to how that might progress

01:08:36.260 --> 01:08:40.289
uh, to provide those types of upgrades. So how would

01:08:40.289 --> 01:08:44.380
that work functionally? Uh, you know, I'm happy to

01:08:44.390 --> 01:08:50.829
um, give you the PJM energy efficiency structure on

01:08:50.829 --> 01:08:53.529
how they're available for capacity credits. But uh,

01:08:53.539 --> 01:08:56.520
I'm not, I think that it's way more technical than

01:08:56.520 --> 01:09:00.039
I understand. Uh, there's a formula in there. Um having

01:09:00.039 --> 01:09:02.489
not gone to Stanford Business School, I can't understand

01:09:02.489 --> 01:09:08.390
it. But I think you can. You can sure advocate for it. That's right. I

01:09:08.399 --> 01:09:12.489
think, I think the policy is that all of those resources.

01:09:12.489 --> 01:09:15.810
The more resources that are that are producing credits,

01:09:15.810 --> 01:09:22.409
the lower costs for consumers. Um secondly, um market

01:09:22.409 --> 01:09:26.119
power. Um, one more question on that, before I decipher

01:09:26.119 --> 01:09:30.600
this formula for everybody. Um would you, would you

01:09:30.600 --> 01:09:37.310
consider a. (item:6:Chairman Lake Questions on Commissioner Glotfelty Memo) Uh, one is this a decision point to be considered.

01:09:37.319 --> 01:09:42.760
Um, just like penalties or um anything else that can.

01:09:43.930 --> 01:09:48.619
If we get the implementation is the technical experts

01:09:48.619 --> 01:09:51.130
TAC and everybody else ultimately subject to the Commission

01:09:51.130 --> 01:09:56.100
decision? Should he be required to evaluate the ability

01:09:56.100 --> 01:10:00.350
to incorporate energy efficiency? Or is this something

01:10:00.350 --> 01:10:05.180
that you think PCM cannot be viable, cannot move forward

01:10:05.189 --> 01:10:09.020
unless that is required to be incorporated in? Like.

01:10:09.029 --> 01:10:13.920
The latter. Okay, so no vote without energy efficiency.

01:10:13.930 --> 01:10:17.159
So we, we and the reason for that is I don't believe

01:10:17.159 --> 01:10:21.560
that we can consider this, just a supply side issue.

01:10:21.569 --> 01:10:25.100
Supply side and demand side, solve the problem. And

01:10:25.100 --> 01:10:28.750
if we are allowing both sides to put competitive pressures

01:10:28.750 --> 01:10:31.079
on each other. I think we come to the better to a

01:10:31.079 --> 01:10:34.729
better solution for the consumer. Okay, second question.

01:10:34.739 --> 01:10:38.489
Would since it's an all or nothing requirement for

01:10:38.489 --> 01:10:43.399
you. Would you distinguish in that requirement uh, that

01:10:43.399 --> 01:10:47.130
they be controllable or non-controllable? I absolutely

01:10:47.130 --> 01:10:50.430
believe that uh, there's a dynamic there that has to

01:10:50.430 --> 01:10:54.539
be considered. So I don't know how energy efficiency

01:10:54.539 --> 01:10:57.220
is controllable. I do believe that demand resources

01:10:57.220 --> 01:11:00.119
should be controllable by ERCOT. So yes, I think that.

01:11:00.130 --> 01:11:03.640
And I think that exploration is how do, how do other

01:11:03.640 --> 01:11:07.449
markets provide energy efficient, provide capacity

01:11:07.449 --> 01:11:10.300
credits for energy efficiency. And that's something

01:11:10.300 --> 01:11:15.140
that we should, should um look at and adopt. That we're

01:11:15.140 --> 01:11:18.909
gonna adopt it, is the foregone conclusion. If we can't

01:11:18.909 --> 01:11:22.399
adopt it, that's the, if there's a challenge with that.

01:11:22.409 --> 01:11:25.130
So that sounds uh, the reason I ask is that it sounds

01:11:25.130 --> 01:11:26.989
like we're back at a decision point that needs to be

01:11:26.989 --> 01:11:32.250
considered. Especially with the different retail markets

01:11:32.260 --> 01:11:37.140
and different uh ISOs. Could be formulas, could be

01:11:37.149 --> 01:11:40.930
not universally applicable. Well I think, I think that's

01:11:40.930 --> 01:11:44.500
true. But I think energy efficiency and decreases demand.

01:11:45.100 --> 01:11:49.250
And I think that's the same in every market. So, understanding

01:11:49.260 --> 01:11:55.409
how energy efficiency will play in a PCM world. Um, and

01:11:55.420 --> 01:11:58.630
generate credits just like distributed resources can.

01:11:58.630 --> 01:12:03.710
We're adding, is what I think needs to be in the principle.

01:12:04.239 --> 01:12:06.880
Okay. I mean, my hesitation is that we've all been

01:12:06.880 --> 01:12:09.909
very clear that we have a very unique retail market.

01:12:09.920 --> 01:12:13.619
That doesn't look act or behave like any other retail

01:12:13.619 --> 01:12:17.020
market. And when you consider that a feature. Uh, so

01:12:17.020 --> 01:12:20.670
I'm, I'm hesitant. I think, I think that's not a, a

01:12:20.680 --> 01:12:23.359
retail market function that's a wholesale market function.

01:12:23.369 --> 01:12:29.640
If these retail um, structures are impacting the wholesale

01:12:29.640 --> 01:12:31.989
market than their wholesale market functions in my

01:12:31.989 --> 01:12:38.020
view. Sure but that's, that's the customer side of

01:12:38.020 --> 01:12:42.149
it. Right. Mhm. I mean that's the same thing, that we've

01:12:42.149 --> 01:12:44.979
been discussing about distributed resources on, on the

01:12:44.979 --> 01:12:48.180
distribution system. That want to play into the, into

01:12:48.180 --> 01:12:50.210
the wholesale market. I mean it's, it's a dichotomy

01:12:50.210 --> 01:12:53.699
that every market is going through. Um and that I think

01:12:53.699 --> 01:12:58.449
that um again. My, my belief is that energy efficiency

01:12:58.689 --> 01:13:04.390
um and distributed resources um should be available.

01:13:04.399 --> 01:13:08.390
To produce credits just as a generation side resources.

01:13:08.399 --> 01:13:11.029
Okay. And I'm, I'm happy to consider that as a decision

01:13:11.029 --> 01:13:15.819
point to be considered. Given the admitted uncertainty

01:13:15.829 --> 01:13:18.550
and unfamiliarity of how that would work with our retail

01:13:18.550 --> 01:13:22.420
market, our wholesale market, everything else. I hesitate

01:13:22.420 --> 01:13:25.279
to make it a deal breaker condition. But we can consider

01:13:25.279 --> 01:13:31.319
that as we continue the discussion. Considered that's good. Before

01:13:31.319 --> 01:13:35.569
you, one more question before you um, going on the

01:13:35.579 --> 01:13:41.359
DER concept. Uh, certainly understand why we want

01:13:41.369 --> 01:13:48.470
to incentivize those resources. Um, any concern that

01:13:50.289 --> 01:13:53.760
requiring those to be incorporated. Before we've even

01:13:53.760 --> 01:13:57.090
really gotten out of the gates on the pilot project.

01:13:57.090 --> 01:14:00.770
Might be putting the cart in front of horse a bit. Not one bit. If

01:14:00.770 --> 01:14:04.199
we've got a 3 or 4 year implementation timeframe.

01:14:04.210 --> 01:14:10.140
We've got uh 2 or 3 um, perhaps phases of the

01:14:10.149 --> 01:14:12.550
of the pilot project, if successful in year one. Which

01:14:12.550 --> 01:14:16.050
I expect it will be um, I think it will merge quite

01:14:16.050 --> 01:14:18.779
nicely into that multiyear implementation timeframe.

01:14:18.789 --> 01:14:23.819
(item:6:Commissioner McAdams comments on DER) Mr. Chairman, don't forget on the DER, and it's a broad

01:14:23.819 --> 01:14:26.590
bag. So within that you also have the Enchanted Rocks

01:14:26.590 --> 01:14:29.369
of the world to. Which have duration that will, that

01:14:29.369 --> 01:14:32.340
will play in ancillaries and stuff like that. So again

01:14:32.340 --> 01:14:35.020
that's just the distribution level cut off. In terms

01:14:35.020 --> 01:14:37.369
of what you're gonna see in the system. Sure, but there's

01:14:37.369 --> 01:14:39.750
also a lot. And they're already there, so they're already

01:14:39.760 --> 01:14:43.710
participating. Sure. Um, but I mean the reason we're

01:14:43.710 --> 01:14:45.520
doing a pilot project because we don't have all the

01:14:45.520 --> 01:14:49.489
answers. On how especially aggregated resources. Um, if we

01:14:49.489 --> 01:14:51.250
knew the answers, we wouldn't need the pilot project.

01:14:51.260 --> 01:14:55.159
Yeah, and and my point is, so the ADER pilot.

01:14:55.170 --> 01:14:57.319
You're absolutely right and that's just the small stuff.

01:14:57.329 --> 01:15:01.600
That's the sub megawatt one, megawatt activity. But

01:15:01.609 --> 01:15:04.229
you've got bigger participation out there again, like

01:15:04.229 --> 01:15:06.130
the enchanted rocks that are co locating with the 

01:15:06.130 --> 01:15:09.369
HGBs. That, that have more horsepower, that have more

01:15:09.369 --> 01:15:12.189
duration that are already playing outside of the 

01:15:12.189 --> 01:15:15.109
ADER pilot. That are within the bucket that you're

01:15:15.109 --> 01:15:16.739
talking about. Right, I mean. I think they're also, they're

01:15:16.739 --> 01:15:19.300
already wholesale market participants. Yes, sir. So I don't

01:15:19.310 --> 01:15:22.229
I don't, I don't know that, I would assume

01:15:22.229 --> 01:15:26.020
they don't need any special singling out. They're just

01:15:26.029 --> 01:15:28.670
there. They can come participate just like any other

01:15:28.680 --> 01:15:31.300
resource. Yeah, it's just the definition of generator.

01:15:32.920 --> 01:15:33.609
Okay, fair.

01:15:35.310 --> 01:15:41.949
Um okay. We can um, continue to discuss that. (item:6:Commissioner Glotfelty continuation on Memo) Two other components of market power.

01:15:41.949 --> 01:15:45.340
One of them is uh, in the way that we want to

01:15:45.340 --> 01:15:48.539
protect the citizens and ratepayers. I would request

01:15:48.539 --> 01:15:50.670
that the Attorney General's Office be involved in any

01:15:50.670 --> 01:15:54.029
market power reviews. That were uh, that were brought

01:15:54.029 --> 01:15:56.479
to this Commission. Um, they have a Consumer Protection

01:15:56.479 --> 01:16:00.649
Division that I think would be a valuable voice uh,

01:16:00.659 --> 01:16:04.369
protecting consumers here. I did not put ocpuc because

01:16:04.369 --> 01:16:06.239
I figured that they would be involved anyway. But that

01:16:06.239 --> 01:16:08.079
was an oversight. Clearly they will be involved, if

01:16:08.079 --> 01:16:10.140
it's if it's something that's over here. But I think

01:16:10.140 --> 01:16:15.170
the Attorney General as well. You asked them about that? I'm sorry. Have you asked the Attorney General about that?  I have not.

01:16:16.899 --> 01:16:24.579
Um uh finally, I think um as we uh move through a

01:16:25.859 --> 01:16:30.199
uh if PCM is finalized. I think while this is getting

01:16:30.199 --> 01:16:33.289
up and running. And while there is a concentration of

01:16:33.300 --> 01:16:36.399
performance credits with a small number of generators.

01:16:36.409 --> 01:16:39.380
That even though this is centrally cleared, I think

01:16:39.380 --> 01:16:44.239
we should um, uh prohibit affiliate transactions. Um,

01:16:44.250 --> 01:16:48.060
and I think that um it would be a, 5 years would

01:16:48.060 --> 01:16:53.069
be a, a time frame. That would allow the proliferation

01:16:53.069 --> 01:16:56.420
of credits from lots of different resources. So that

01:16:56.430 --> 01:17:02.720
um, we have competitively neutral driven um PCM market.

01:17:02.729 --> 01:17:08.859
And that um these are, the PCs are not are not concentrated

01:17:08.869 --> 01:17:11.819
among a few generators. Which in fact would challenge

01:17:11.819 --> 01:17:15.510
the retail side as well. I assume you're gonna have

01:17:15.510 --> 01:17:19.489
a comment on that. You've gotten, you've given me lots

01:17:19.489 --> 01:17:24.039
to work with Jimmy. Um, my hope and the reason I was

01:17:25.079 --> 01:17:29.430
focused on the central clearing. Is that in a properly

01:17:29.430 --> 01:17:33.699
functioning centrally cleared market. You don't know

01:17:33.699 --> 01:17:36.720
who your counter party is. I understand that. But the

01:17:36.720 --> 01:17:40.529
New York Stock Exchange has a market manipulation all

01:17:40.529 --> 01:17:44.159
the time, and it's still centrally cleared. So I think

01:17:44.170 --> 01:17:48.289
a ban on affiliate transactions, Commissioner McAdams

01:17:48.300 --> 01:17:51.800
used the same words, I think. Um uh, is something

01:17:51.800 --> 01:17:56.310
that we ought to consider as our principles. So do

01:17:56.310 --> 01:17:58.829
we need to talk to the SEC about the New York Stock

01:17:58.829 --> 01:18:01.529
Exchange? Because it's generally considered one of the

01:18:01.529 --> 01:18:07.270
most transparent liquid markets in the world. Uh, listen

01:18:07.279 --> 01:18:11.220
if, if they're not self dealing, then it won't

01:18:11.220 --> 01:18:15.189
matter. If they. I guess the point I'm trying to make

01:18:15.189 --> 01:18:18.939
is there's a big difference between an affiliate dealing

01:18:18.949 --> 01:18:22.649
with itself. How do you, how can we be sure that. Uh,

01:18:22.659 --> 01:18:25.899
the person that is putting the bids into your, uh

01:18:25.909 --> 01:18:29.460
transparent marketplace is not buying them on the computer

01:18:29.460 --> 01:18:33.960
right next to them. (item:6:Chairman Lake's follow-up questions on memo) Because they won't see anything

01:18:33.960 --> 01:18:36.409
other than the price and the quantity they offered.

01:18:36.430 --> 01:18:39.619
Especially if run it. And if they lowball them, they can buy at a

01:18:39.619 --> 01:18:43.069
low ball price, they can match there. So my affiliate

01:18:43.069 --> 01:18:46.710
transaction means that one person cannot. So that's not how markets work,

01:18:46.710 --> 01:18:50.949
actually. Okay, Peter. Especially not auctions. I appreciate that.

01:18:50.960 --> 01:18:55.229
But my concern still stands and I think that having

01:18:55.229 --> 01:19:00.010
an affiliate, um, transaction ban. Should be something

01:19:00.010 --> 01:19:03.229
that we should consider and have more meat around.

01:19:03.229 --> 01:19:06.149
Because I think it's unfair to some market participants.

01:19:06.159 --> 01:19:12.409
That um, and it might uh reduce the size of the retail

01:19:12.409 --> 01:19:16.829
market in Texas. And concentrate uh PC credits among

01:19:16.829 --> 01:19:21.899
a certain number of generators. So any, any consideration

01:19:21.899 --> 01:19:25.590
that there's a difference between affiliates dealing

01:19:25.590 --> 01:19:29.180
with themselves behind closed doors. With a bilateral

01:19:29.180 --> 01:19:34.359
contract that nobody can see, maybe a broker. Is there,

01:19:34.369 --> 01:19:40.010
is that different than submitting bids and offers in

01:19:40.010 --> 01:19:43.189
a centrally cleared exchange? Where you put it in and

01:19:43.189 --> 01:19:46.090
the guy next to you can put it in uh, at the

01:19:46.090 --> 01:19:49.029
computer next to you. But the best you can hope for

01:19:49.029 --> 01:19:52.619
is. That maybe I'll be allocated some of the quantity

01:19:52.619 --> 01:19:54.920
but also can't see any of the other bids. I can't see

01:19:54.920 --> 01:19:57.390
any of the other offers. Maybe. Are those the same thing or are

01:19:57.390 --> 01:19:59.060
they different? I don't know the answer to that. I'm

01:19:59.060 --> 01:20:02.239
not, I'm not a pro on, on how these markets are cleared.

01:20:02.250 --> 01:20:06.689
So all I'm trying to do is protect the consumer from

01:20:06.909 --> 01:20:10.140
manipulation. And protect the consumer, the retail market

01:20:10.140 --> 01:20:12.779
and the wholesale market. So any concerns that would

01:20:12.779 --> 01:20:17.090
remove liquidity? No. And so that. I mean I, I don't, I don't

01:20:17.090 --> 01:20:21.250
think it would. I think if everything's on the up and

01:20:21.250 --> 01:20:23.220
up. It shouldn't, they're gonna be going to the market

01:20:23.220 --> 01:20:26.460
anyway and buying things. so. Well, but if you, if you

01:20:26.460 --> 01:20:31.170
prohibit people from or you you force ERCOT to

01:20:31.170 --> 01:20:33.810
sort through the bids and offers and say. Even though

01:20:33.810 --> 01:20:36.869
these people can't see each other. They may know what

01:20:36.869 --> 01:20:40.319
the guy next to him put in. I'm gonna start instead

01:20:40.319 --> 01:20:46.260
of trading at $50 a megawatt hour to $51 mega, uh 

01:20:46.260 --> 01:20:49.789
a megawatt hour. Now because I have to remove all of

01:20:49.789 --> 01:20:54.789
these people that the spread goes from $40 to $80. I would

01:20:54.789 --> 01:20:58.180
be happy to request ERCOT to come back and tell us.

01:20:58.180 --> 01:21:02.840
How a uh a ban on affiliate transactions would impair

01:21:02.840 --> 01:21:05.390
the market. So that would be a decision point to be

01:21:05.390 --> 01:21:09.729
considered? Yes. (item:6:Commissioner Cobos questions ban on affiliate transactions) So can I ask because I know this is

01:21:09.729 --> 01:21:12.489
a big issue for me too. And I think, you know, the

01:21:12.500 --> 01:21:14.739
project that we've been talking about with. This is

01:21:14.739 --> 01:21:17.659
very important to me. Commissioner Glotfelty as well.

01:21:17.659 --> 01:21:20.789
That we have, you know, appropriate market power mitigation

01:21:20.789 --> 01:21:24.220
measures. I know um, central clearing is a foundation.

01:21:24.220 --> 01:21:29.069
I know both um, your memo and Commissioner McAdams memo

01:21:29.069 --> 01:21:33.199
talk about um no self-arrangements. And um, you know,

01:21:33.199 --> 01:21:35.899
continuing to explore what else we need. I think is

01:21:35.899 --> 01:21:39.180
important in the project. That I think will ultimately

01:21:39.189 --> 01:21:41.630
as we move forward to PCM and have, you know, part

01:21:41.630 --> 01:21:45.890
of what we do at the PUC. Having retail market related

01:21:45.899 --> 01:21:49.340
project where we evaluate additional market power mitigation

01:21:49.340 --> 01:21:52.510
measures. And you know, competitiveness in the retail

01:21:52.510 --> 01:21:56.420
market. Um would be the appropriate venue, I think. To

01:21:56.430 --> 01:21:59.930
continue to look at additional measures. Like you know,

01:21:59.939 --> 01:22:02.699
virtual transactions that the IMM suggested. Is that in conjunction

01:22:02.699 --> 01:22:04.960
with the Attorney General or in place of the Attorney

01:22:04.960 --> 01:22:09.020
General? Um, I mean at this point I think that's a PUC obligation. My

01:22:09.020 --> 01:22:12.319
view is that. (item:6:Commissioner Glotfelty on banning affiliate transactions) My thought was that the Attorney General should

01:22:12.319 --> 01:22:16.399
be involved, if there is a charge of market manipulation.

01:22:16.409 --> 01:22:20.130
Not at the front end, but if they're they have the

01:22:20.130 --> 01:22:23.869
legal views, the statutory obligation for consumer protection.

01:22:23.880 --> 01:22:27.220
I know we have some as well. We are short staffed um,

01:22:27.220 --> 01:22:31.140
and I think they could add a positive voice to the

01:22:31.140 --> 01:22:36.800
discussion. (item:6:Commissioner McAdams on banning affiliate transactions) I think what's happening here. Is one, on

01:22:36.800 --> 01:22:40.399
a on a principal basis. The language we have now in

01:22:40.399 --> 01:22:44.439
terms of no self-arrangement. Uh and the term of art

01:22:44.609 --> 01:22:49.149
was knowingly self-arranged. Which means you have premeditatedly

01:22:49.159 --> 01:22:53.390
uh self-arranged between your affiliate arms. Um and

01:22:53.390 --> 01:22:55.189
what Commissioner Glotfelty is saying we also need

01:22:55.189 --> 01:22:59.340
some teeth uh with that and, and some the accountability

01:22:59.340 --> 01:23:02.369
measures. And between the two, one is certainly something

01:23:02.369 --> 01:23:04.640
that can be worked out in implementation. How we apply

01:23:04.640 --> 01:23:08.350
those teeth. But on a principal basis I believe we

01:23:08.350 --> 01:23:13.470
have consensus. Thou shall not uh self arrange. Um,

01:23:13.479 --> 01:23:17.109
through a centrally cleared market. That could theoretically

01:23:17.109 --> 01:23:19.510
also have a bulletin board and all kinds of belts and

01:23:19.510 --> 01:23:24.119
suspenders, and bells and whistles. That ring, um when

01:23:24.130 --> 01:23:26.699
we can get somebody some increased power to watch for

01:23:26.699 --> 01:23:29.800
this stuff. I'm looking over at our independent market model.

01:23:30.079 --> 01:23:32.500
So we do have an IMM that's generally responsible

01:23:32.500 --> 01:23:36.170
for these kind of things. So we just need to be thinking about it. We also don't have any authority

01:23:36.170 --> 01:23:39.500
to compel the Attorney General to do anything. It would

01:23:39.500 --> 01:23:43.829
be a request. I'm not saying we compel. Be a cool job

01:23:43.840 --> 01:23:47.460
for them so well. And it's something to think about

01:23:47.460 --> 01:23:50.170
long term. I mean, you know, is you know, um you know.

01:23:50.170 --> 01:23:53.289
Thomas and team go to talk about our budget, with the

01:23:53.289 --> 01:23:57.100
Legislature Um recognizing that, you know, in the future

01:23:57.100 --> 01:23:59.710
we may need more resources for, you know, enforcement.

01:23:59.710 --> 01:24:03.180
And and um, you know, addressing these issues in the

01:24:03.180 --> 01:24:06.449
future. Because I view it as, you know, and you know

01:24:06.449 --> 01:24:08.630
maybe we can get to the discussion of who's involved

01:24:08.630 --> 01:24:12.109
later. But I view that um, the market power mitigation

01:24:12.109 --> 01:24:14.140
measures reside at the Commission. And we'll do, we

01:24:14.140 --> 01:24:17.319
can do a robust assessment of what else we need, um

01:24:17.319 --> 01:24:19.579
at the appropriate time in the future. But I do think

01:24:19.579 --> 01:24:22.039
that we need teeth, whatever the teeth may look like.

01:24:22.050 --> 01:24:25.729
And um you know, ensuring that the IMM can, can

01:24:25.739 --> 01:24:28.829
you know, do her job. And, and getting involved in, you

01:24:28.829 --> 01:24:30.819
know, any kind of market power market manipulation

01:24:30.819 --> 01:24:33.359
issues. And ensuring she has the resources to do it.

01:24:33.579 --> 01:24:35.960
And ultimately as she said, the last time. And this

01:24:35.960 --> 01:24:38.590
is not a topic for today. That she has the administrative

01:24:38.590 --> 01:24:42.029
penalties to actually make an effect, a deterrent effect.

01:24:42.039 --> 01:24:45.210
On on any kind of potential violations or violations

01:24:45.210 --> 01:24:48.810
that are that are found um by her office, and confirmed

01:24:48.810 --> 01:24:52.289
by the PUC. Yeah, I think that's a healthy part of

01:24:52.289 --> 01:24:56.060
our LER budget request. That's getting more resources

01:24:56.060 --> 01:25:00.119
for enforcement is not a new, not a surprise. And we're

01:25:00.130 --> 01:25:03.220
I know Staff working with the Legislature to get the resources

01:25:03.220 --> 01:25:07.359
we need. Is that fair? (item:6:Commission Staff comments on memo) Yes and indeed we are. And I

01:25:07.359 --> 01:25:11.020
think you know, we had a fairly robust discussion about

01:25:11.029 --> 01:25:14.619
market power mitigation during the open meeting last

01:25:14.619 --> 01:25:19.350
week. Um, several issues that the Commission has discussed

01:25:19.350 --> 01:25:22.489
this morning would be right for rulemaking. Um I would

01:25:22.489 --> 01:25:25.729
add in there to consideration of affiliate code of

01:25:25.729 --> 01:25:29.939
conduct. As we have used in some other aspects of our

01:25:29.939 --> 01:25:34.340
rules, to address this type of issue. All fair consideration.

01:25:34.350 --> 01:25:37.090
I think that's in our enforcement universe. That would

01:25:37.090 --> 01:25:40.340
be applied to all elements of market component, market

01:25:40.340 --> 01:25:43.510
activity. Not just the PCM, not just ancillaries,

01:25:43.510 --> 01:25:46.739
is not just anything else. And also last year, I specifically

01:25:46.739 --> 01:25:49.289
asked IMM, what additional resources we could advocate

01:25:49.289 --> 01:25:54.050
for, for her office. Uh, as we are at the Legislature.

01:25:54.060 --> 01:25:59.579
That's a work in process, but I think in principle.

01:26:00.310 --> 01:26:02.859
Yes everybody wants accountability, everybody wants

01:26:02.859 --> 01:26:09.819
enforcement. Um whether that needs to be um, a parallel

01:26:09.819 --> 01:26:14.220
activity applied universally or part of this blueprint,

01:26:14.229 --> 01:26:17.550
is an open question. (item:6:Commissioner Jackson on code of conduct) Mr. Chairman, I think we need the

01:26:17.550 --> 01:26:21.090
best performers. And I think we need to broaden the

01:26:21.090 --> 01:26:24.520
field. And I think we need to be very careful about

01:26:24.529 --> 01:26:28.560
anything that might potentially, as an unintended outcome

01:26:28.560 --> 01:26:31.319
narrow the field. So having what you mentioned this

01:26:31.319 --> 01:26:34.390
code of conduct for the affiliates, I think is appropriate

01:26:34.390 --> 01:26:38.340
to be done in a parallel manner. But very much need

01:26:38.340 --> 01:26:42.439
to broaden the field. Get are good performers to step

01:26:42.439 --> 01:26:45.399
forward, to build out new capacity, and to be there when

01:26:45.399 --> 01:26:50.640
we need them. Agreed. We need a robust set of reps too, right.

01:26:50.649 --> 01:26:53.039
So that's really the retail market we're talking about.

01:26:53.039 --> 01:26:56.340
And all of these measures are very important. So that

01:26:56.350 --> 01:26:58.939
we can continue to have a robust, competitive retail

01:26:58.939 --> 01:27:02.010
market. Because that is one of the central features

01:27:02.010 --> 01:27:04.520
of our today's competitive electricity market. Without

01:27:04.520 --> 01:27:07.869
the retail market then really know what we're doing,

01:27:07.880 --> 01:27:11.800
having a competitive market, right. Um so, you know,

01:27:11.800 --> 01:27:14.199
we continue discussion. But, but that's really what

01:27:14.199 --> 01:27:17.260
it's driven towards. And I think, I think we will have

01:27:17.260 --> 01:27:19.460
a lot of good information to have a robust discussion

01:27:19.460 --> 01:27:22.420
later on it if, whenever the time is appropriate. It's

01:27:22.420 --> 01:27:25.800
clearly focused for everybody. I think we've, we've

01:27:25.810 --> 01:27:29.579
addressed it both in the central clearing, and with

01:27:29.579 --> 01:27:32.039
the additional enforcement actions, and with additional

01:27:32.050 --> 01:27:37.579
resources for IMM. Um, and we can we can talk about

01:27:37.579 --> 01:27:39.560
the liquidity challenges later. But one of the big

01:27:39.569 --> 01:27:44.970
reasons um, the IMM is advocating for virtual players.

01:27:44.970 --> 01:27:47.739
Which I saw in some of the memos is because that additional

01:27:47.739 --> 01:27:52.119
liquidity, liquidity drives competition. Um, in every

01:27:52.119 --> 01:27:56.840
market universally, globally. That's not speculation.

01:27:56.850 --> 01:27:59.039
Um, and so it's

01:28:01.760 --> 01:28:07.430
managing self-dealing can be accomplished in a lot

01:28:07.430 --> 01:28:11.869
of ways. Pulling huge chunks of liquidity out of the

01:28:11.869 --> 01:28:18.050
market by banning affiliates in a centrally cleared

01:28:18.590 --> 01:28:23.930
venue. I think does more harm than good. Um, but I'd

01:28:23.930 --> 01:28:26.489
be happy to consider as one of the decision points.

01:28:26.489 --> 01:28:31.750
Asking ERCOT to evaluate and the IMM to evaluate ways

01:28:31.750 --> 01:28:34.630
to do that, without requiring it to be a ban. I would

01:28:34.630 --> 01:28:36.630
like that as a decision point in the future. I think

01:28:36.630 --> 01:28:39.909
that would be valuable. And I would ask that the Commission stay

01:28:39.909 --> 01:28:42.590
involved and have the project. So we can we because

01:28:42.590 --> 01:28:45.069
market power, I don't view this as an ERCOT issue.

01:28:45.069 --> 01:28:47.300
I view it as a Commission policy issue, that we have

01:28:47.300 --> 01:28:50.329
to retain here. And look at options that, you know,

01:28:50.340 --> 01:28:54.100
all options that have been profit here today. You know,

01:28:54.100 --> 01:28:56.380
Connie you offered one, you have some ideas. And we

01:28:56.380 --> 01:28:58.439
can get stakeholder comment and ultimately make something

01:28:58.439 --> 01:29:01.789
into a rulemaking. But I think that's for the future

01:29:01.800 --> 01:29:04.649
we need to stay involved. That that's our mission to

01:29:04.649 --> 01:29:07.609
protect the consumers. Um, we can get whatever feedback

01:29:07.609 --> 01:29:09.310
ERCOT can provide on it. But they don't really get

01:29:09.310 --> 01:29:12.340
involved in the retail market, other than settlement and protocols.

01:29:12.340 --> 01:29:15.069
We're the ones protecting the retail market and, and

01:29:15.069 --> 01:29:17.819
the consumers in it, so. And, and hopefully with the

01:29:17.819 --> 01:29:20.109
resources that we've asked for from Legislature and

01:29:20.109 --> 01:29:22.500
this all looks very different, starting September 1st.

01:29:22.510 --> 01:29:27.430
We have a lot more tools and we can assess how best

01:29:27.430 --> 01:29:31.020
to deploy them, going forward from the Commission side.

01:29:32.090 --> 01:29:37.670
Okay, all right. What else you got? (item:6:Commissioner Glotfelty continuation of memo) Uh, number three is reliability standard.

01:29:37.670 --> 01:29:41.220
I don't need to go into this. I think we've discussed

01:29:41.220 --> 01:29:45.260
it and agreed. That we're gonna have uh a Staff project

01:29:45.260 --> 01:29:48.239
here. It's gonna be open, deliberative. It's not gonna

01:29:48.239 --> 01:29:50.000
be assumed to be 1 in 10. But we're good to be

01:29:50.000 --> 01:29:53.079
looking at the different types of standards that are

01:29:53.079 --> 01:29:55.380
out there. The industry and in the world are moving towards.

01:29:55.649 --> 01:30:00.210
That, either one or a suite of that defined reliability

01:30:00.229 --> 01:30:03.189
that we expect on the system. One or any combination

01:30:03.189 --> 01:30:07.520
of the above. Absolutely, open to all of that. Uh, and

01:30:07.520 --> 01:30:14.289
finally accountability. Um I'm uh, I struggled with this

01:30:14.289 --> 01:30:20.079
one to be honest with you. But I uh, we've been promised

01:30:20.090 --> 01:30:24.369
we being the Commission, um the members of the Legislature,

01:30:24.380 --> 01:30:29.130
the Governor had been promised. That 4600 megawatts of uh, of

01:30:29.130 --> 01:30:33.779
new resources would become on the system. And um,

01:30:35.520 --> 01:30:42.380
what I would like is some um clawback. Um some ability

01:30:42.380 --> 01:30:45.449
to say that this isn't the right mechanism, if we don't

01:30:45.449 --> 01:30:51.500
see that that happens. Um and that um if PCs begin

01:30:51.500 --> 01:30:55.399
to go towards resources that end up closing down. Um,

01:30:55.409 --> 01:30:58.729
then we have some claw back mechanism. There are two

01:30:58.729 --> 01:31:02.079
peas in a pod. One of them is um, we've got commitments

01:31:02.079 --> 01:31:05.050
for resources, but we don't have any way to ensure

01:31:05.050 --> 01:31:07.689
that they're gonna be here. So if you want to play

01:31:07.689 --> 01:31:10.949
in the market, it's my hope that you can commit to

01:31:10.949 --> 01:31:16.350
it. Um and that um, you know, maybe it's not, the 

01:31:16.350 --> 01:31:18.810
PCM should be repealed as in my memo. But it's some

01:31:18.810 --> 01:31:23.039
mechanism that needs to be repealed. Um, in order to

01:31:23.050 --> 01:31:26.899
um, you know, satisfy the accountability of people

01:31:26.899 --> 01:31:28.970
just saying we're gonna put megawatts in the system.

01:31:30.220 --> 01:31:33.939
So point of clarification. I believe the testimony

01:31:33.939 --> 01:31:37.909
was, those megawatts will be put in the system. If the

01:31:37.909 --> 01:31:42.090
PCM, as contemplated and discussed is adopted, and

01:31:42.090 --> 01:31:44.619
the Legislature does not interfere in its implementation.

01:31:44.630 --> 01:31:47.289
So that's a, that's an important part of that statement.

01:31:47.300 --> 01:31:52.130
Um which we don't, we can't do anything about. Um,

01:31:52.140 --> 01:31:55.359
but important clarification. So it wasn't

01:31:57.180 --> 01:32:00.210
if, if a PUC vote happens, then tomorrow we start breaking

01:32:00.210 --> 01:32:05.539
ground. There's the Legislative part of it. Um, so

01:32:05.539 --> 01:32:10.229
how would you expect to hold uh, market participants

01:32:10.229 --> 01:32:12.140
accountable to the megawatt that they promised the

01:32:12.140 --> 01:32:17.180
Governor. (item:6:Chairman Lake on accountability) Uh, fair question. I'd say that their investors

01:32:17.180 --> 01:32:21.800
are the best way to do that. Because if those, those

01:32:21.800 --> 01:32:25.609
investors pony up a billion dollars to build a new

01:32:25.609 --> 01:32:31.539
resource, and then it shut down within five years. I

01:32:31.550 --> 01:32:34.409
think the were the least of that management teams

01:32:34.409 --> 01:32:37.229
problems. Those investors, regardless of the PCs they

01:32:37.229 --> 01:32:41.930
got. That's, that's a gross mismanagement of fiduciary

01:32:41.930 --> 01:32:44.659
duty. So I think that's a natural check in any market

01:32:44.659 --> 01:32:50.659
system. I don't know how you would distinguish. Um,

01:32:50.670 --> 01:32:54.050
and one if, if the megawatts that were promised

01:32:54.050 --> 01:32:57.329
by those who are making those promises, don't materialize.

01:32:57.329 --> 01:33:01.550
Then if we do the PCM right, somebody else is

01:33:01.550 --> 01:33:05.079
gonna step in and do that. Um, that's the cure. Perhaps.

01:33:05.880 --> 01:33:08.979
Well, the cure for high prices is high prices and the

01:33:08.979 --> 01:33:13.960
cure for low prices is low prices. Um, and I think that's,

01:33:13.970 --> 01:33:16.399
that's ideal. We have some market share constraints

01:33:16.399 --> 01:33:19.640
that may prohibit some folks, that can change over time.

01:33:19.640 --> 01:33:24.439
If somebody builds a certain number of megawatts, uh, as retirements

01:33:24.439 --> 01:33:29.869
that can change the 20% limit. Um, and I think that's

01:33:29.869 --> 01:33:33.569
that's the point of the exercise. If, if the people

01:33:33.569 --> 01:33:36.869
around the table now are involved now can't do it.

01:33:37.600 --> 01:33:41.689
The market, the designs should be sufficient to get.

01:33:41.699 --> 01:33:44.720
Brookfield infrastructure with 100 billion under management.

01:33:44.720 --> 01:33:46.909
should get capital partners with a trillion dollars

01:33:46.909 --> 01:33:51.670
under management. To look at ERCOT and say that's

01:33:51.680 --> 01:33:54.859
where we need to deploy our investment capital. Uh,

01:33:54.869 --> 01:33:58.720
so I think, and as we've always also talked about.

01:33:58.720 --> 01:34:04.060
I think the self-correcting mechanism is the, is the

01:34:04.060 --> 01:34:08.220
default repeal, right? If it turns out that everything's

01:34:08.220 --> 01:34:14.770
fine anyway or we have an oversupply or we need, we

01:34:14.770 --> 01:34:18.319
need 3000 to solve to, to provide stability. Instead

01:34:18.319 --> 01:34:23.659
of 5600, whatever it is, then the value of the 3000

01:34:23.659 --> 01:34:26.659
and first megawatts gonna plummet. Which is your, your

01:34:26.659 --> 01:34:30.220
point in your demand curve. So I think my hope and

01:34:30.220 --> 01:34:35.109
I think by design that is the de facto repeal. Uh, I

01:34:35.119 --> 01:34:39.850
don't know. Um I mean, I like the sentiment. I don't

01:34:39.850 --> 01:34:46.119
know how we can distinguish between PCM revenue.

01:34:47.970 --> 01:34:51.340
Well, I think your notion of tracking it. Like who's

01:34:51.340 --> 01:34:54.250
what's, I don't know that we can get into the books

01:34:54.250 --> 01:34:59.119
of these companies, especially private trading. Agreed. Uh,

01:34:59.130 --> 01:35:02.300
but you know, PJM does a pretty good job of tracking

01:35:02.300 --> 01:35:05.449
how many megawatts before and after. Uh and it's a

01:35:05.449 --> 01:35:12.699
lot. I don't know how we can distinguish PCM type mechanism

01:35:12.710 --> 01:35:15.890
delaying a retirement for five years. Which really

01:35:15.890 --> 01:35:20.569
helps us cover those five years. Eventually that resources

01:35:20.569 --> 01:35:24.649
it into life not competitive and it retires. How can

01:35:24.649 --> 01:35:31.210
we as a regular, regulator authoritatively say.

01:35:31.390 --> 01:35:32.819
The difference between

01:35:34.369 --> 01:35:38.260
yes, the PCM did its job of keeping that unit in ERCOT

01:35:38.260 --> 01:35:40.640
for another five years. And thank God it did because

01:35:40.640 --> 01:35:46.350
that was a key resource versus those, those guys played

01:35:46.350 --> 01:35:49.170
us for fools and we're gonna claw back the money. I

01:35:49.180 --> 01:35:52.060
don't know. That's a, that's an open question. Then, then

01:35:52.060 --> 01:35:54.229
can we put that into the implementation discussion?

01:35:54.239 --> 01:35:58.800
And uh, and see if a clawback, clawback mechanism is

01:35:58.800 --> 01:36:04.020
necessary. For plants that uh initially participate

01:36:04.020 --> 01:36:07.189
in the market and then closed down. I and the reason

01:36:07.189 --> 01:36:09.380
why I say this is. Because E3 sat up here and

01:36:09.380 --> 01:36:11.960
said, the most important challenge we're facing in

01:36:11.960 --> 01:36:16.550
the short term is retaining old plants. And uh, if

01:36:16.550 --> 01:36:21.359
someone's gonna get performance credits. Um and, and

01:36:21.359 --> 01:36:23.880
then leave the system. The consumer is the only one

01:36:23.880 --> 01:36:24.689
that loses.

01:36:26.529 --> 01:36:28.710
Yeah, I like the sentiment. But again, I don't know

01:36:28.720 --> 01:36:31.109
how to say. I mean, we heard from one generator, who

01:36:31.119 --> 01:36:37.319
who put notice up for leaving the market last

01:36:37.319 --> 01:36:41.430
month. Who said, this is what I need to come back. And

01:36:41.430 --> 01:36:43.890
we have other generators that are building without

01:36:43.890 --> 01:36:48.649
any subsidy. You know, and I think that that is. Not

01:36:48.649 --> 01:36:53.090
much, but. Well, no I mean. I think, and I'm thinking

01:36:53.090 --> 01:36:55.989
of WattBridge. I mean, they built 800 megawatts of

01:36:55.989 --> 01:36:59.000
natural gas, quick start natural gas fired power plants.

01:36:59.000 --> 01:37:02.229
And I would not shake a stick at, you know, 800 megawatts

01:37:02.229 --> 01:37:05.039
of sites. I'm glad to have them. But my point is

01:37:05.039 --> 01:37:07.489
the same generator. So the PCM is what I need to bring

01:37:07.489 --> 01:37:13.020
my very old clunky unit back. Also said, this unit shouldn't

01:37:13.020 --> 01:37:15.859
be in ERCOT for much longer. Like I want to get my

01:37:15.859 --> 01:37:18.189
investors need to get everything out of it. But eventually

01:37:18.189 --> 01:37:22.239
we have cleaner, better, faster technology. Um, so

01:37:22.239 --> 01:37:24.720
how, how do you parse it? I don't know. Um, and I'm

01:37:24.720 --> 01:37:28.729
also a little wary of the Australia problem. Where they

01:37:28.729 --> 01:37:34.329
put in a reliability standard, reliability requirement. (inaudible) But it

01:37:34.329 --> 01:37:37.079
was, it was a toggle. Like we're only gonna provide

01:37:37.090 --> 01:37:41.220
this revenue reliability mechanism, every once in a

01:37:41.220 --> 01:37:44.930
while. Right. Uh, that doesn't instill investor confidence

01:37:44.930 --> 01:37:48.760
I understand that. And, and so putting a repeal on it.

01:37:49.390 --> 01:37:55.960
So let's say this. Um, we can eliminate A, which is

01:37:55.960 --> 01:38:02.729
the PCM is repealed. Okay. Okay. Um B, ERCOT must

01:38:02.729 --> 01:38:06.079
report back, report and track the percentages of PCs

01:38:06.079 --> 01:38:08.729
for new build versus existing generation facilities.

01:38:08.850 --> 01:38:11.149
And new market entrants versus incumbent generation,

01:38:11.149 --> 01:38:14.279
and report to the PUC annually. Absolutely. Before and

01:38:14.279 --> 01:38:19.960
after, before implementation after built, after. Right

01:38:20.979 --> 01:38:25.409
Yes. I mean, I think a clear understanding of who is

01:38:25.420 --> 01:38:28.609
building and who is getting these credits. Is it just

01:38:28.609 --> 01:38:32.619
the old guys who have a concentration of existing generating

01:38:32.619 --> 01:38:38.289
units. Taking control more than we hope. O is it new

01:38:38.289 --> 01:38:43.220
guys coming in helping us with faster, quicker, efficient.

01:38:44.779 --> 01:38:48.329
I'm just wondering how accurately we can track that?

01:38:48.329 --> 01:38:51.659
Because as we discussed last work session and I think

01:38:51.670 --> 01:38:54.770
your, your question and your thought is is fair Jimmy.

01:38:54.779 --> 01:38:58.279
(item:6:Commissioner Cobos questions on tracking) Um, I'm just wondering how accurately we can, we can

01:38:58.279 --> 01:39:01.850
track it. Because as we heard last work session, the

01:39:01.859 --> 01:39:05.340
PC adder will be only one of several components that

01:39:05.340 --> 01:39:08.630
an investor will look at, right. So um, payments through

01:39:08.630 --> 01:39:14.170
ancillaries from fuel um, ORDC. Um, you know,

01:39:14.170 --> 01:39:16.869
if we continue to RUC, RDPA, and and uh,

01:39:16.869 --> 01:39:23.159
and even a PC adder. So um, you know, one general indication

01:39:23.159 --> 01:39:25.720
of what's being built and retired as a CDR report, right.

01:39:25.729 --> 01:39:29.060
Um that ERCOT provides us every, you know, twice a year.

01:39:29.069 --> 01:39:31.800
That's that's one, one measure high level. It's hard to

01:39:31.819 --> 01:39:34.930
sometimes tell like why folks are building and, and

01:39:34.930 --> 01:39:36.899
retire. And I think Mountain Creek is an example of

01:39:36.899 --> 01:39:40.279
a very old plant. That has a lot of capex and maintenance

01:39:40.279 --> 01:39:43.979
issues. That um, was at a point where it just needed

01:39:43.979 --> 01:39:47.930
to be retired. But we gotta figure out a way to systematically

01:39:47.939 --> 01:39:51.569
um you know, move resources in and out of our market.

01:39:51.569 --> 01:39:53.670
And that's why I think, you know, I've I've proffered

01:39:53.670 --> 01:39:56.760
the near term sort of focus on long duration generation

01:39:56.760 --> 01:39:59.869
fleet and preserving them so that we can get to a place

01:39:59.869 --> 01:40:03.130
where um we provide the certainty for new replacement

01:40:03.140 --> 01:40:07.800
generation down the road and um you know systematically

01:40:07.800 --> 01:40:10.289
move resources in and out. I mean some resources do

01:40:10.289 --> 01:40:11.949
need to leave the market because they're old but we

01:40:11.949 --> 01:40:14.279
gotta have something in place to bring in the replacement

01:40:14.279 --> 01:40:17.720
generation and not have a reliability gap. So I think

01:40:17.720 --> 01:40:20.600
to your point. I mean how can I think what you're trying

01:40:20.600 --> 01:40:25.069
to get at. Is, you know, there's been a guarantee of

01:40:25.069 --> 01:40:29.119
4600 megawatts under the right framework. We don't

01:40:29.119 --> 01:40:31.909
know what that right framework is right now. Um, you

01:40:31.909 --> 01:40:34.909
know, we we've heard various, you know, assumptions

01:40:34.909 --> 01:40:37.369
of what they could be from from the generation community.

01:40:37.380 --> 01:40:41.640
Um we, we can't force the generators to build. Because

01:40:41.640 --> 01:40:45.489
they're not regulated utilities. Um, but we want them

01:40:45.500 --> 01:40:48.500
to build. And, and basically want to make sure that what

01:40:48.500 --> 01:40:50.789
we're doing at the end of the day. The money we're

01:40:50.789 --> 01:40:54.199
spending, we're actually getting a return. And so how

01:40:54.199 --> 01:40:57.539
do we, how can we actually, you know, track that. Is

01:40:57.539 --> 01:41:00.829
something we can continue to figure out a way to, to

01:41:00.840 --> 01:41:03.880
do. Um so I'm not opposed, I'm just trying to, you

01:41:03.880 --> 01:41:06.869
know. Listen, I'm open. I think Mr. Chairman, you're

01:41:06.869 --> 01:41:11.970
open to some reporting from ERCOT. On uh, you know,

01:41:11.979 --> 01:41:14.449
how these new builds are coming in, in the system and

01:41:14.449 --> 01:41:16.960
what may be going out of the system. You know, maybe

01:41:16.960 --> 01:41:20.729
the CDR it may be something very specific. It's clear

01:41:20.739 --> 01:41:25.810
that uh, from the generators testimony. That the PCM

01:41:25.819 --> 01:41:29.229
is something that they say will compel them to build. Yes.

01:41:29.670 --> 01:41:33.960
Okay. Under the right framework. Under the right framework and without Legislative

01:41:33.970 --> 01:41:41.260
whatever. Um but the, all I want to do is make sure

01:41:41.260 --> 01:41:44.569
there's a tracking mechanism in place. That we can utilize

01:41:44.579 --> 01:41:49.590
to see that. 100%. Is it because, you know, we have one generator

01:41:49.590 --> 01:41:52.560
that at some point in time might hit a 20% cap. We

01:41:52.560 --> 01:41:55.210
don't want five generators with 20% of this market,

01:41:55.220 --> 01:41:59.369
that's not gonna be beneficial to our consumers. And

01:41:59.380 --> 01:42:02.649
you know, dropping that 20% that's not our call, that's

01:42:02.649 --> 01:42:07.449
the Legislature's call. But um, trying to better understand

01:42:07.449 --> 01:42:10.060
the types of resources, the ownership structures and

01:42:10.060 --> 01:42:12.300
who is competing for what. Is really important to me,

01:42:12.310 --> 01:42:16.409
in this debate. So the ERCOT IMM, regularly tracks

01:42:16.420 --> 01:42:19.189
the revenue that's brought into the market. Um, by

01:42:19.189 --> 01:42:23.050
the ORDC and ancillary services. And when we're hitting

01:42:23.050 --> 01:42:26.840
cone. So I suspect that will be if we get down the

01:42:26.840 --> 01:42:29.300
road where there's a PC market, that will be an additional

01:42:29.310 --> 01:42:33.020
tracking you do Carrie. And so that we'll be able to

01:42:33.020 --> 01:42:35.090
tell how much money is being put in the market, by the

01:42:35.100 --> 01:42:38.880
PC. That ultimately is put in the market. And then

01:42:38.880 --> 01:42:41.390
correspondingly see how much generation is entering

01:42:41.390 --> 01:42:44.640
the market. Via the CDR report or any other kind of

01:42:44.640 --> 01:42:47.350
granular reporting that ERCOT can provide, along the

01:42:47.350 --> 01:42:49.310
way, if that's the desire of the Commission.

01:42:51.229 --> 01:42:54.170
Yes, I'm sure Carrie can come up, and we'll come up with.

01:42:54.180 --> 01:42:58.569
Very effective ways to measure all that and enforce

01:42:58.569 --> 01:43:02.949
market manipulations. (item:6:Chairman Lake on tracking) But I would um, I would also

01:43:04.010 --> 01:43:07.369
double down, I mean, I would double down on the request

01:43:07.369 --> 01:43:09.789
for the tracking information. I'd put in the decision

01:43:09.789 --> 01:43:14.130
points, a requirement for ERCOT to develop a KPI. A measuring

01:43:14.130 --> 01:43:16.710
stick for success, whatever it is. I mean track this,

01:43:16.720 --> 01:43:23.100
but also bring us and the board. All of the above, the

01:43:23.100 --> 01:43:26.960
best KPI success metric, whatever you wanna call it.

01:43:26.960 --> 01:43:31.020
Combination so that if we can get this to the point.

01:43:31.020 --> 01:43:33.609
Where you can look over the first five years of implementation,

01:43:34.270 --> 01:43:37.109
you know, existing units before existing units after.

01:43:37.119 --> 01:43:40.149
Put a heat rate comparison whatever, but come up with

01:43:40.149 --> 01:43:43.050
a KPI. So over the first five years, the Commission

01:43:43.050 --> 01:43:45.489
and the Legislature can look at it. And say hey, this

01:43:45.489 --> 01:43:48.689
is how we define success on the front end. Here's the

01:43:48.689 --> 01:43:52.630
data like you've requested here and build on to that.

01:43:53.270 --> 01:43:57.220
Here's the data that defines that. And so we can look

01:43:57.220 --> 01:43:59.369
back and say this is what we said success would look

01:43:59.369 --> 01:44:02.439
like. Did we achieve that, yes or no? Uh, Mr. Chairman.

01:44:02.439 --> 01:44:05.210
(item:6:Commission Executive Director on tracking) I would just add so through the ERCOT budget process,

01:44:05.210 --> 01:44:08.909
we approve their performance metrics. And this was an

01:44:08.909 --> 01:44:11.909
issue that came up during Sunset, during the Sunset

01:44:11.909 --> 01:44:14.750
review of ERCOT. Us reviewing their performance metrics

01:44:14.750 --> 01:44:16.350
and coming up with new ones. So we can address this

01:44:16.350 --> 01:44:21.210
during that process. That's fine. Alright, that's that's

01:44:21.210 --> 01:44:26.060
a decision point. Plus a Staff request for to, to work

01:44:26.060 --> 01:44:29.460
with Sunset or to think about something like that.

01:44:29.470 --> 01:44:34.970
Um, as we go through the Sunset process. (item:6:Commissioner Glotfelty on clawback mechanism) Um and then

01:44:34.979 --> 01:44:38.180
uh you know, as the general component of this. This

01:44:38.180 --> 01:44:42.430
was the claw back mechanism. Um listen, maybe this

01:44:42.430 --> 01:44:47.020
isn't the place to have this um, in this implementation.

01:44:47.029 --> 01:44:49.579
Um I'll reserve the right to bring it back up in the

01:44:49.579 --> 01:44:53.109
future. Um if we don't see the resources come into

01:44:53.109 --> 01:44:56.520
this market or if we see market. If we see resources

01:44:56.520 --> 01:45:00.220
that are um expected to stay in the market and are

01:45:00.229 --> 01:45:03.840
advocating for this type of mechanism go away. Um,

01:45:03.850 --> 01:45:08.670
and I think that it's a important um,

01:45:10.310 --> 01:45:15.020
check and balance. And clawbacks happen as you said

01:45:15.020 --> 01:45:18.739
Mr. Chairman earlier. PJM had a clawback on of over

01:45:18.739 --> 01:45:23.470
$2 billion from generators. For non-performance. For non-performance

01:45:23.479 --> 01:45:28.069
that's right. Well, I see it so it is different but

01:45:28.069 --> 01:45:32.310
I see it as a similar issue. And I would request that

01:45:32.310 --> 01:45:37.840
we um, keep a claw back mechanism in our back pocket.

01:45:37.850 --> 01:45:43.430
As a possible market power um, mechanism to be considered

01:45:43.430 --> 01:45:47.539
in the future. If uh, if we if the market doesn't develop

01:45:47.539 --> 01:45:52.479
as we've expected. (item:6:Chairman Lake on clawback mechanism) Can we just include, I've added

01:45:52.479 --> 01:45:56.000
a bullet point on clear performance standards. To identify

01:45:56.000 --> 01:45:58.930
appropriate combination of penalties, clawbacks, other

01:45:58.930 --> 01:46:02.789
financial consequences, in cases of non-performance. That's excellent.

01:46:02.800 --> 01:46:04.989
That's acceptable. Let's, let's just not wait. Let's

01:46:04.989 --> 01:46:08.970
just put that in decision points. Okay. And then my

01:46:08.970 --> 01:46:11.399
last paragraph was just really about what are we gonna

01:46:11.399 --> 01:46:14.409
do in the interim? Um, I think we've addressed that.

01:46:14.409 --> 01:46:16.909
That we're gonna have to come up with some ideas and

01:46:16.909 --> 01:46:20.109
I think that, that's acceptable. So thank you for the

01:46:20.109 --> 01:46:25.529
discussion. Um and uh, look forward to Kathleen. Any

01:46:25.529 --> 01:46:26.520
other questions or comments for Jimmy?

01:46:30.180 --> 01:46:33.970
(item:6:Commissioner Jackson's memo layout) Ms. Jackson. Thank you. Um, I support the performance

01:46:33.970 --> 01:46:36.850
credit mechanism and agree with Staff's assessment in

01:46:36.850 --> 01:46:41.279
its January 5, 2023 memo. Uh, the ERCOT power region

01:46:41.279 --> 01:46:44.350
has both an operational flexibility problem and a resource

01:46:44.359 --> 01:46:48.470
adequacy problem, in my view. No single solution tailored

01:46:48.470 --> 01:46:51.989
to only one of these uh, issues will result in an effective

01:46:52.000 --> 01:46:55.039
outcome. Uh, we need to build on the ancillary service

01:46:55.039 --> 01:46:58.500
enhancements, approved as part of Phase 1 on the market

01:46:58.510 --> 01:47:01.180
design blueprint. And move forward with a design that

01:47:01.180 --> 01:47:04.569
will retain existing dispatchable generation and incentivize

01:47:04.569 --> 01:47:07.880
new dispatchable generation. Uh, the PCM is a performance

01:47:07.880 --> 01:47:10.609
based structure, that will provide a long term solution

01:47:10.609 --> 01:47:14.130
for reliability. By incentivizing new investment uh,

01:47:14.140 --> 01:47:16.779
to provide regulatory certainty. The PCM should be

01:47:16.779 --> 01:47:19.229
the sole market design remaining under consideration,

01:47:19.229 --> 01:47:22.420
which many of you have stated. Um, I suggest discussion

01:47:22.420 --> 01:47:25.649
on key principles, parameters, and a near term bridge.

01:47:25.649 --> 01:47:28.659
To be considered in a market design blueprint 2.0.

01:47:28.670 --> 01:47:33.100
And the Texas economy is thriving today, in large

01:47:33.100 --> 01:47:36.159
part because of the success of the competitive electric

01:47:36.159 --> 01:47:39.640
market. The PCM preserves our energy only market and

01:47:39.640 --> 01:47:42.020
will allow Texas to continue to garner the benefits

01:47:42.029 --> 01:47:45.340
of competition and innovation. Uh, there are many things

01:47:45.340 --> 01:47:48.510
that I think have been said today. Um, one of the things

01:47:48.510 --> 01:47:51.880
that I think um, that you brought forth. Was to make

01:47:51.880 --> 01:47:54.770
sure that we include milestones. I think you mentioned

01:47:54.770 --> 01:47:58.420
the key performance indicators. Um the need to um, be

01:47:58.420 --> 01:48:01.319
mindful of the role that energy efficiency can play.

01:48:01.319 --> 01:48:04.560
As we move forward and kind of design this. But um, I

01:48:04.560 --> 01:48:07.829
think we're headed down the right path. I think that

01:48:07.840 --> 01:48:11.739
it's important that we move forward and, and do as you've

01:48:11.739 --> 01:48:14.180
suggested. I think many of the things that we've discussed.

01:48:14.180 --> 01:48:18.989
In terms of um, what are those principles are well stated,

01:48:19.000 --> 01:48:24.090
and I endorse what we've talked about today. Thank

01:48:24.090 --> 01:48:26.390
you, ma'am. Questions, comments for Ms. Jackson?

01:48:28.300 --> 01:48:31.039
Can always rely on our engineer to be decisive in her

01:48:31.039 --> 01:48:38.470
assessment. Um, al right. We've covered Mr. Chairman?

01:48:38.479 --> 01:48:43.279
Yes, sir. Um, I may trade key principles for a break

01:48:43.289 --> 01:48:48.560
right now. If we could do that, but your call. Because

01:48:48.560 --> 01:48:51.560
I know you still have your memo to go through, and that

01:48:51.560 --> 01:48:55.670
may take a minute. No, no problem. Let's uh recess

01:48:55.670 --> 01:49:01.539
until 11:45 am. At that point we will take up the

01:49:02.560 --> 01:49:08.829
integration or attempt at integration. And um, hopefully

01:49:08.840 --> 01:49:12.539
uh do that. Get as far as we can on that. Then

01:49:12.539 --> 01:49:16.890
go to a full lunch recess. Where we'll get an updated

01:49:16.890 --> 01:49:23.390
version, aggregated uh, filed and circulated. And then

01:49:23.399 --> 01:49:26.750
come back after lunch and go from there. That work

01:49:26.760 --> 01:49:30.640
for everybody? Bless you sir. All right, we'll be back in 15 minutes.

01:49:30.649 --> 01:49:32.840
Twenty minutes, sorry, 11:45.

01:49:39.069 --> 01:49:42.550
All right, welcome back. We're meeting the Public Utility

01:49:42.550 --> 01:49:46.869
Commission of Texas is hereby reconvened. To continue

01:49:46.869 --> 01:49:50.960
discussion and deliberation. And to move to an eventual vote

01:49:50.970 --> 01:49:54.890
on our reliability service. All the Commissioners have

01:49:54.890 --> 01:49:57.789
laid out their memos. We've had a robust discussion, uh

01:49:57.800 --> 01:50:01.569
so far. Suspect we covered some of the things in the

01:50:01.569 --> 01:50:04.579
first part of our programming. That

01:50:06.109 --> 01:50:08.050
were anticipated to be covered in the second part of

01:50:08.050 --> 01:50:10.359
the programming. But that'll hopefully just moves along

01:50:10.359 --> 01:50:16.329
a little faster. (item:7:Chairman Lake on actions for updating memo) Um, as I laid out the top of our

01:50:16.329 --> 01:50:23.640
agenda. My hope now is to go through the memo, an updated

01:50:23.640 --> 01:50:29.189
version of the memo, I filed. With the goal of adjusting

01:50:29.189 --> 01:50:35.029
editing, adding to subtracting from. Uh, to get us to

01:50:35.029 --> 01:50:38.789
a document that can later today be contemplated for

01:50:38.789 --> 01:50:42.729
a vote. Our distinguished Staff has been updating in

01:50:42.739 --> 01:50:46.930
real time, as we've gone through this discussion. So

01:50:46.930 --> 01:50:47.539
I can,

01:50:49.359 --> 01:50:52.829
I'll provide those updates as I go through the bullet

01:50:52.829 --> 01:50:56.649
points. Uh, if it works for you all. I'll start at

01:50:56.649 --> 01:51:01.859
the top. I think a lot of what's in here. Has with

01:51:01.859 --> 01:51:04.430
the new additions we've already covered and hoping

01:51:04.430 --> 01:51:09.670
we have general agreement on. Um, and then we'll, we'll

01:51:09.670 --> 01:51:12.340
go through in here what, for what works now. And then

01:51:12.340 --> 01:51:15.090
once we get to the end of what everybody's on board

01:51:15.090 --> 01:51:17.710
with right now. Then we can circle back to any other

01:51:17.710 --> 01:51:21.500
additions, that you'll want to uh have considered to

01:51:21.510 --> 01:51:23.750
be added. Does that process work for everybody?

01:51:25.930 --> 01:51:26.619
All right.

01:51:29.060 --> 01:51:31.840
But we can ask questions along the way? Absolutely.

01:51:31.850 --> 01:51:37.310
Change. And my goal is Dave's doing real time. So change

01:51:37.310 --> 01:51:41.270
this, add that, pulled this out, add this in. Uh, is my

01:51:41.270 --> 01:51:46.100
hope that that's so this is a ongoing discussion. Um,

01:51:46.180 --> 01:51:53.239
and uh with a live document. So yes, by all means chime

01:51:53.239 --> 01:51:53.430
in.

01:51:55.569 --> 01:51:57.880
(item:7:Chairman Lake bullet points for updating memo) New addition at the top.

01:52:00.000 --> 01:52:06.819
Is bullet point added, based on Commissioner McAdams.

01:52:06.829 --> 01:52:12.390
And. Are you starting on page two? I'm sorry.  Page two. Yes. Okay.

01:52:12.390 --> 01:52:15.430
So above or below the, to meet the requirements of Senate

01:52:15.430 --> 01:52:21.250
Bill 3. Correct, that we've got started? Yes. Um,

01:52:22.289 --> 01:52:25.739
and above the Commission will recommend, added a bullet

01:52:25.739 --> 01:52:31.840
point per McAdams and Jackson memo. To table FRM,

01:52:31.840 --> 01:52:36.000
LSCRO, and DEC from any further consideration. We'll remove

01:52:36.000 --> 01:52:44.930
them. Hold heartedly support. Okay, uh we all covered that. Um, next new bullet

01:52:44.930 --> 01:52:47.979
point. Commission agrees to open a project to evaluate

01:52:47.979 --> 01:52:50.699
and establish an appropriate reliability standard.

01:52:51.359 --> 01:52:53.210
We've covered that thoroughly. Everybody good with

01:52:53.210 --> 01:52:56.779
that? And so it will remain, must consider both infrastructure

01:52:56.779 --> 01:52:59.510
adequacy. For the deliverability and resource adequacy

01:52:59.510 --> 01:53:01.930
within the system. Is that your intention, sir? I didn't

01:53:01.930 --> 01:53:03.689
have that in there, but I think we can. Say that one

01:53:03.689 --> 01:53:07.640
more time. I mean this is your. This is your language. This is your language.

01:53:08.079 --> 01:53:10.119
And I actually had a question about what that meant.

01:53:10.350 --> 01:53:13.949
Okay, okay. Infrastructure adequacy for the deliverability.

01:53:13.949 --> 01:53:17.989
Is that. So you're in the first paragraph?

01:53:19.819 --> 01:53:23.829
Defined reliability standard. So you're in the paragraph

01:53:23.829 --> 01:53:26.600
above or the defined reliability standard? Defined reliability

01:53:26.600 --> 01:53:31.050
standard. Line right next, right below that. Okay. Um.

01:53:32.060 --> 01:53:36.590
Yes, is that. So first of all, is that language acceptable?

01:53:36.600 --> 01:53:39.069
Yeah, I just didn't know what, I didn't know what you

01:53:39.069 --> 01:53:44.609
meant by. Uh you know, are we gonna consider deliverability

01:53:44.609 --> 01:53:47.949
across the ERCOT system. As a component of this

01:53:47.960 --> 01:53:52.859
discussion. Um, yes. Does that get in. That's a nod.

01:53:52.859 --> 01:53:56.920
I think to Will's point that. Do you want to add the deliverability

01:53:56.920 --> 01:53:59.649
of energy? No that's fine. That's totally fine.

01:53:59.659 --> 01:54:02.100
I just want to make sure that. To his point of, if you got

01:54:02.100 --> 01:54:08.489
a total (inaudible) man but also where it is. Um, so that's

01:54:08.500 --> 01:54:12.989
that's under a principle in the PCM. This is a

01:54:12.989 --> 01:54:16.810
new addition above that directing action. Oh, okay. I'm

01:54:16.810 --> 01:54:19.149
sorry. But same,

01:54:21.180 --> 01:54:24.130
same result. It's just it's the same concept. Just now

01:54:24.130 --> 01:54:26.699
that we've agreed to take action. Direct staff to open

01:54:26.699 --> 01:54:31.970
the project, and include that directive to action. Um, so

01:54:31.970 --> 01:54:34.369
those are the two new additions for action. And then

01:54:34.369 --> 01:54:37.000
third one is that the first paragraph you see there.

01:54:37.010 --> 01:54:39.279
Commission will recommend the creation reliability

01:54:39.279 --> 01:54:43.210
service etcetera, etcetera. Right above defined reliability

01:54:43.210 --> 01:54:48.960
standards. So that's as is. Can I ask, can I ask?

01:54:48.970 --> 01:54:53.550
I read the, the intro paragraph of your memo and referencing

01:54:53.550 --> 01:54:58.220
all the actions we've taken um under SB 3. With

01:54:58.220 --> 01:55:00.310
respect to weatherization, critical mapping. Those are

01:55:00.310 --> 01:55:02.819
all the litany of actions that you know we've taken.

01:55:02.819 --> 01:55:07.229
And I highlight is improving winter resiliency, you

01:55:07.229 --> 01:55:10.149
know. As you know, um Senate Bill 3, requires both being

01:55:10.149 --> 01:55:12.119
able to maintain reliability during extreme weather

01:55:12.119 --> 01:55:16.270
conditions and peak net Load. Um and I don't know how

01:55:16.270 --> 01:55:18.810
this stuff tails into what you're trying to draft. But

01:55:18.819 --> 01:55:22.119
you know in my mind, the way we continue to maintain

01:55:22.119 --> 01:55:25.489
reliability during extreme weather conditions. Is by

01:55:25.489 --> 01:55:28.140
ensuring um, these are all very important actions and

01:55:28.140 --> 01:55:31.329
certainly at a resiliency. But ensuring that we maintain

01:55:31.329 --> 01:55:34.949
our long duration thermal, generation fleet in the market.

01:55:34.960 --> 01:55:37.069
And that's why I think the near term is important

01:55:37.069 --> 01:55:40.880
so that we can continue to come to meet that, that

01:55:40.890 --> 01:55:45.689
other requirement of SB 3. And so um, that's how

01:55:45.689 --> 01:55:48.250
I'm viewing it. I don't know what that means in respect

01:55:48.250 --> 01:55:51.939
to. I would consider that addressed and directed in

01:55:51.939 --> 01:55:54.239
the last bullet point. In addition, Commission directs

01:55:54.239 --> 01:55:58.699
ERCOT at the bottom. Commission directs ERCOT to evaluate bridging

01:55:58.699 --> 01:56:01.159
options to retain existing assets, building generation,

01:56:01.170 --> 01:56:04.500
until PCM can be fully implemented. Report and file

01:56:04.500 --> 01:56:07.149
this project by March 1, 2023. I want to move that

01:56:07.149 --> 01:56:09.989
change that, that has been changed to. They need to

01:56:09.989 --> 01:56:13.659
bring us some dates to accommodate board input. Uh,

01:56:13.670 --> 01:56:17.100
to your original consideration of, and the discussion

01:56:17.100 --> 01:56:19.800
we had. Don't just, the board shouldn't just bring us

01:56:19.800 --> 01:56:23.159
a recommendation. They should, the sub bullet says

01:56:23.159 --> 01:56:25.439
they should bring options evaluated by ERCOT, as a

01:56:25.439 --> 01:56:29.199
bridge. Pros and cons of each. The preferred solution

01:56:29.199 --> 01:56:32.310
as voted on by the ERCOT board. And then timeline

01:56:32.310 --> 01:56:34.640
the next step. So I think that encompasses everything

01:56:34.640 --> 01:56:37.869
you asked for in your memo and in our discussion. Okay

01:56:37.880 --> 01:56:40.960
Yeah. Yes, thank you for highlighting that long list.

01:56:41.409 --> 01:56:42.579
Yeah, it's

01:56:44.579 --> 01:56:47.920
And there's a, there's a request to have the updated

01:56:47.920 --> 01:56:52.199
dates. Um give us a date, when they'll have the menu

01:56:52.199 --> 01:56:54.739
for us. And the board recommendation at our January

01:56:54.739 --> 01:56:57.010
26th Open Meeting. So they'll get back to us quickly

01:56:57.010 --> 01:57:00.770
on that. Okay. Um,

01:57:04.189 --> 01:57:05.060
the

01:57:06.760 --> 01:57:09.340
so that's. I think that, that incorporates the bridge.

01:57:09.369 --> 01:57:14.130
Directing action to move, move forward on that.

01:57:16.199 --> 01:57:18.789
Everybody with me so far? All right.

01:57:20.369 --> 01:57:25.630
Back at the top. Where Commission recommends reliability

01:57:25.630 --> 01:57:28.869
service etcetera, etcetera. New service to be based on

01:57:28.869 --> 01:57:32.289
the performance credit mechanism concept, as articulated

01:57:32.300 --> 01:57:35.220
in E3 report that includes the following principles.

01:57:35.229 --> 01:57:38.340
So let's go through these lists, see which of these

01:57:38.350 --> 01:57:41.210
are compatible with your, your thought, your thoughts.

01:57:41.210 --> 01:57:45.439
What's included, incorporated? Um, if anything needs

01:57:45.439 --> 01:57:47.689
to be edited or adjusted. This is the time to let me

01:57:47.689 --> 01:57:52.109
know and we'll, we'll work through these in real time.

01:57:52.760 --> 01:57:55.640
All right. Defined reliability standards sub bullet one.

01:57:55.890 --> 01:57:59.149
We just talked about that one. I think that works for everybody.

01:57:59.250 --> 01:58:06.189
Clear performance standards, um that's the reward generators

01:58:06.189 --> 01:58:08.899
for actual performance during hours of high reliable risk.

01:58:11.399 --> 01:58:15.029
So on, on that one Mr. Chairman. If I could jump in

01:58:15.029 --> 01:58:19.510
on the nuance of words. Uh, reward generator. Second

01:58:19.510 --> 01:58:22.479
word, generators for actual performance during hours

01:58:22.479 --> 01:58:26.510
of higher, highest reliability risk. Uh in the interest

01:58:26.520 --> 01:58:31.369
of and, and again, as per my memo. Leaving the ERCOT

01:58:31.369 --> 01:58:34.659
board uh, and ultimately the Commission options. Uh to

01:58:34.659 --> 01:58:39.989
evaluate how things qualify. Um change the word generators. To eligible resources.

01:58:42.569 --> 01:58:47.600
I would agree with that. Good. There you go, your government at

01:58:47.600 --> 01:58:49.399
work. That is good government.

01:58:53.430 --> 01:58:55.369
And Commissioner Glotfelty, I think that would address

01:58:55.369 --> 01:58:57.979
some of the concerns in your. That this is not just

01:58:57.979 --> 01:59:01.550
supply. It's, it's eligible resources. I think we need

01:59:01.550 --> 01:59:05.399
to define DERs and energy efficiency as eligible resources.

01:59:05.409 --> 01:59:08.350
Like and, and. It doesn't have to be in that.

01:59:10.810 --> 01:59:13.800
Can we put that in the decision points? As a thing to

01:59:13.800 --> 01:59:14.390
be defined?

01:59:16.189 --> 01:59:18.260
Let's keep going through these and I'll have to see

01:59:18.260 --> 01:59:20.979
that at the end. Okay. But to make sure, we're on the same

01:59:20.979 --> 01:59:21.319
page here.

01:59:22.899 --> 01:59:26.130
Um all right. Everybody good on unclear performance standards?

01:59:27.319 --> 01:59:32.939
Yes sir. All right. Dynamic sizing, be proportional to the system

01:59:32.939 --> 01:59:35.630
need with dynamic pricing and sizing. To ensure reliability

01:59:35.630 --> 01:59:40.340
needs are met without over procuring resources. I would

01:59:40.340 --> 01:59:43.899
also include this to be your no forecasting claws.

01:59:43.909 --> 01:59:44.350
Okay.

01:59:45.880 --> 01:59:49.270
I was gonna. This add, add a sub bullet that

01:59:49.270 --> 01:59:54.170
says the, this service shall not be based on forward

01:59:54.170 --> 01:59:59.689
looking forecast. Perfect. Does that work? Yes sir. Is there anything

01:59:59.689 --> 02:00:03.279
that needs to be put in there? If so if we, if

02:00:03.279 --> 02:00:07.430
the market over performs, the price goes to zero. That's

02:00:07.430 --> 02:00:10.470
in the, I tried to tackle that in the self-correcting. Okay

02:00:10.479 --> 02:00:15.840
Okay, got it. Yes, it's different, little further down.

02:00:20.310 --> 02:00:21.119
We're good over here?

02:00:24.350 --> 02:00:26.619
All right. Forward price signal, encourage investment

02:00:26.619 --> 02:00:29.319
in dispatchable generation. By guaranteeing the opportunity

02:00:29.319 --> 02:00:32.739
to compete for a pool of revenue based on performance.

02:00:32.750 --> 02:00:37.149
Um no, as we talked about the other day. There's no

02:00:37.149 --> 02:00:40.380
guarantee of revenue. No single company or resource

02:00:40.380 --> 02:00:44.510
would be guaranteed revenue. The only guarantee is

02:00:44.510 --> 02:00:48.390
there the opportunity to compete for a pool of revenue.

02:00:48.390 --> 02:00:53.149
That in that pool of revenue, when we get to the self-

02:00:53.149 --> 02:00:58.770
correcting. Will expand in times of low supply of dispatchable.

02:00:59.050 --> 02:01:05.100
Contract in times of excess supply. So that's an attempt

02:01:05.100 --> 02:01:09.899
to distinguish forward forecast procurement from

02:01:10.779 --> 02:01:15.250
an enabling mechanism. The options as we've discussed

02:01:15.260 --> 02:01:20.609
through, through the PCM. As attributed the option for

02:01:20.609 --> 02:01:24.489
both generators to offer and LSCs to procure. At some

02:01:24.489 --> 02:01:27.500
point, they have the option and ability to not the requirement

02:01:27.500 --> 02:01:34.130
to procure forward. Uh, as they best see fit. Uh,

02:01:34.130 --> 02:01:37.229
their financial and operational business model, and

02:01:37.229 --> 02:01:42.170
risk tolerance. Um, can we uh displace dispatchable

02:01:42.170 --> 02:01:46.260
generation with eligible resources here as well? Yes.

02:01:48.819 --> 02:01:53.100
Can we add encourage new investment? Because I think what

02:01:53.100 --> 02:01:55.569
I'm hearing is concerns earlier. That all the money

02:01:55.569 --> 02:01:57.760
would be just spent on existing generation when, you

02:01:57.770 --> 02:02:01.229
know, new investment. So really what we're trying to

02:02:01.229 --> 02:02:03.279
do is get new steel in the ground, right? So can we

02:02:03.279 --> 02:02:06.619
encourage investment in new.

02:02:08.939 --> 02:02:12.550
Of existing and investment in new eligible resources.

02:02:20.920 --> 02:02:22.829
Commissioner Glotfelty does that work?

02:02:30.159 --> 02:02:37.340
All right. Self-accreditation, require eligible resources

02:02:37.350 --> 02:02:41.210
to self commit. Instead of using an administratively

02:02:41.210 --> 02:02:44.340
assigned accreditation. And that's one of the core principles

02:02:44.340 --> 02:02:44.520
we've

02:02:46.409 --> 02:02:50.369
been focused on for a while. Again, should we put eligible

02:02:50.369 --> 02:02:54.449
resources. They did. Yeah. Oh, I'm sorry. I'm just going to. I cant do two things at once.

02:02:54.460 --> 02:02:58.260
Maybe it's not in this bullet too. But I thought

02:02:58.260 --> 02:03:00.810
I read in some of the comments. And I think I sort

02:03:00.810 --> 02:03:03.659
of looked at this issue in a way where you can under

02:03:03.659 --> 02:03:06.539
a credit. And kind of, you know,

02:03:08.270 --> 02:03:11.460
play the system and that doesn't help with reliability.

02:03:11.470 --> 02:03:13.989
You know, so that ultimately whatever the penalties

02:03:13.989 --> 02:03:17.989
are you, you under under credit yourself. So you're not

02:03:18.000 --> 02:03:20.939
too much at risk. And then that puts everybody at a

02:03:20.939 --> 02:03:25.000
reliability, sort of scramble. Um and that won't benefit

02:03:25.000 --> 02:03:30.609
us, but may benefit others. So maybe that goes into um

02:03:30.619 --> 02:03:32.970
I don't know if that's there, but and how to quite phrase

02:03:32.970 --> 02:03:34.619
it. But I want to make sure there's no potential for

02:03:34.619 --> 02:03:38.149
gaming that ultimately impacts reliability. Agreed. I think

02:03:38.149 --> 02:03:41.640
there's like you said. There's gotta be some forward.

02:03:42.409 --> 02:03:45.409
You got to be able to promise the resource in advance.

02:03:45.409 --> 02:03:49.409
That's what distinguishes it from the ORDC. So some degree. Whether that's

02:03:49.409 --> 02:03:53.699
stay ahead, we had with TBD. Um, but we put

02:03:53.699 --> 02:03:56.439
that I think we can add a bullet in market manipulation.

02:03:56.449 --> 02:04:01.510
Another sub bullet uh, examine bidding and offering

02:04:01.510 --> 02:04:09.310
behavior. To ensure or too limit and mitigate any market

02:04:09.310 --> 02:04:12.279
manipulation. Like you can't offer in one megawatt, 6

02:04:12.279 --> 02:04:15.170
months in advance and then change your to quantity 500.

02:04:15.239 --> 02:04:16.960
That kind of thing, that's what you're talking about?

02:04:16.970 --> 02:04:19.319
Yeah or under credit yourself. By saying I'm only gonna

02:04:19.319 --> 02:04:22.649
provide x amount. And but to try to minimize your risk

02:04:22.659 --> 02:04:25.560
and then yeah something like that. I'm trying to work

02:04:25.560 --> 02:04:27.829
through it in my head. But there's something there. I'd

02:04:27.829 --> 02:04:31.090
put that another sub bullet in market manipulation. And

02:04:31.090 --> 02:04:32.159
that could I mean.

02:04:33.720 --> 02:04:37.989
I think it's probably somewhere between both on definitely

02:04:37.989 --> 02:04:43.079
on quantity is somewhere between. You got to offer some

02:04:43.090 --> 02:04:47.470
amount. You know, it's tough to say you've got to have

02:04:47.470 --> 02:04:50.939
your full and final amount, in advance. But we definitely

02:04:50.939 --> 02:04:53.399
don't want to allow what you just described. With like

02:04:53.399 --> 02:04:57.020
a low ball one lot. And then you can play it however

02:04:57.020 --> 02:05:03.899
you like. Uh, so ask as part of the both in decision

02:05:03.899 --> 02:05:06.489
point and  and in a principle. To have some maybe it's

02:05:06.489 --> 02:05:08.859
a band and you can't move about 20 more than 20%. I

02:05:08.869 --> 02:05:11.699
don't know. But as a decision point, a principle and

02:05:11.699 --> 02:05:15.329
also a decision point. Determined limitations on 

02:05:16.449 --> 02:05:19.869
bids, offers and other market behavior. To eliminate

02:05:20.220 --> 02:05:24.390
to mitigate market power. Yeah, tying PC awards to

02:05:24.399 --> 02:05:29.569
forward offers, something along those lines. PC uh, piece. Let's

02:05:29.569 --> 02:05:30.979
see. Um I don't know.

02:05:33.939 --> 02:05:37.220
I guess under market power mitigation. PC awards must

02:05:37.220 --> 02:05:44.829
be proportionally uh, assigned based on uh, forward offers.

02:05:44.840 --> 02:05:47.779
Must. Quantity. There must be a forward offer requirement

02:05:47.779 --> 02:05:50.550
of some form of fashion, in order to be eligible for

02:05:50.560 --> 02:05:53.420
PCs. That's correct. I mean that's where we're headed.

02:05:53.430 --> 02:05:56.720
Yeah. So trying the PC award to a forward offer quantity.

02:05:56.729 --> 02:05:59.010
So mitigate that. I think what you said earlier, the

02:05:59.010 --> 02:06:04.220
one megawatt kind of deal. I think you got, you even

02:06:04.479 --> 02:06:07.869
saw that addresses a lot of things is. I think the forward

02:06:07.880 --> 02:06:12.029
procurement requirement. They must be offered as a

02:06:12.029 --> 02:06:15.270
key feature distinguishes this from just happening

02:06:15.270 --> 02:06:20.010
to show up in the ORDC. But also separately. There

02:06:20.010 --> 02:06:23.920
should be in one of the decision points. The best way,

02:06:24.729 --> 02:06:28.739
evaluate and identify the best way to mitigate market

02:06:28.739 --> 02:06:29.630
manipulation.

02:06:31.239 --> 02:06:36.060
Through, through most offer requirement. Yeah, bidding behavior.

02:06:38.670 --> 02:06:42.270
That work? I think so. We can smith that it out. It's a

02:06:42.279 --> 02:06:44.289
tough concept for me to wrap my mind around, right now.

02:06:44.289 --> 02:06:46.260
But okay.

02:06:49.409 --> 02:06:53.579
Okay. Enable, ensure against bidding and offering strategies

02:06:53.579 --> 02:06:56.550
to mitigate against potential abuse. Next bullet point

02:06:56.560 --> 02:07:00.000
under market power mitigation. PC awards must be reported,

02:07:01.409 --> 02:07:04.289
change it to the last thing I said. The um, must have

02:07:04.289 --> 02:07:07.970
a forward offer requirement. To avoid and mitigate

02:07:07.979 --> 02:07:13.430
market manipulation. Great. David, did you get that?

02:07:14.539 --> 02:07:17.229
Okay. That's why we're gonna have the recess. Yeah

02:07:18.680 --> 02:07:20.369
smooth this out. Um.

02:07:22.569 --> 02:07:26.399
All right. So I think we did self-accreditation.

02:07:28.210 --> 02:07:29.170
the

02:07:30.819 --> 02:07:32.750
Next we've got centrally cleared.

02:07:34.649 --> 02:07:36.539
Ensure affiliated generation

02:07:38.130 --> 02:07:40.619
and retail entities

02:07:42.140 --> 02:07:46.609
uh, do not self-arrange commitments by requiring all

02:07:46.609 --> 02:07:50.010
transactions to be cleared through a centralized ERCOT

02:07:50.369 --> 02:07:58.789
administered market. Let's change that to, ensure entities

02:07:58.800 --> 02:08:01.420
with affiliated eligible resources.

02:08:03.229 --> 02:08:03.899
Because you can,

02:08:05.439 --> 02:08:07.539
depending on how deep that rabbit holes goes. You can

02:08:07.550 --> 02:08:11.960
have a lot of opportunity for gamesmanship. Um.

02:08:16.180 --> 02:08:18.600
That's I think that's the principle. I think we get

02:08:18.600 --> 02:08:22.119
to the decision points. We can ask, that can be directive

02:08:22.119 --> 02:08:25.720
to evaluate ways to mitigate

02:08:27.560 --> 02:08:32.500
self-dealing within a centrally cleared market. Yeah.

02:08:32.500 --> 02:08:35.210
I think on a principal basis. You leave it broad and

02:08:35.210 --> 02:08:38.149
then we can narrow it down from there. But everybody

02:08:38.149 --> 02:08:42.109
in the market gets the self-arrangement becomes problematic.

02:08:42.119 --> 02:08:44.560
Depending on the construct of the central clearance.

02:08:44.569 --> 02:08:47.640
And/or the existence of bulletin boards, and declarations

02:08:47.640 --> 02:08:50.489
of how you're transacting whatever. Code of conduct

02:08:50.500 --> 02:08:54.409
affiliates, all of the above. Um, and if, if ERCOT

02:08:54.420 --> 02:08:56.789
come up with a very clever way to during some time

02:08:56.789 --> 02:09:01.970
period. To prevent or limit the amount of transactions

02:09:01.970 --> 02:09:04.890
between affiliates, that doesn't destroy liquidity.

02:09:05.159 --> 02:09:08.569
Please tell us about it. We'll put that in decision

02:09:08.569 --> 02:09:12.510
points. The principle is centrally clearing is a defining

02:09:12.510 --> 02:09:15.829
characteristic, conducting the decision points. We need

02:09:15.840 --> 02:09:17.890
this and we need you to answer these questions. And

02:09:17.890 --> 02:09:23.430
should that be all, who does this apply to? With the

02:09:23.439 --> 02:09:25.149
principal or the decision point?

02:09:26.689 --> 02:09:28.109
Good point. Um

02:09:29.819 --> 02:09:33.890
I'd say I'd say in the principles, what we consider

02:09:34.640 --> 02:09:38.500
a PCM. You can only call it PCM, if its centrally cleared.

02:09:38.979 --> 02:09:41.859
If it's something else, if it's not centrally cleared,

02:09:41.859 --> 02:09:44.130
then it's not what we would call a PCM. We've gotten

02:09:44.140 --> 02:09:48.970
off of the definition, that we agree that we're agreeing

02:09:48.979 --> 02:09:49.289
to.

02:09:51.310 --> 02:09:54.340
We, it has that characteristic, we require that characteristic,

02:09:54.350 --> 02:09:57.060
because of the market mitigation powers. Then once

02:09:57.060 --> 02:09:59.840
you get to, so that's in the definition of a PCM. Once

02:09:59.840 --> 02:10:02.670
you get to the decision points. We would require to

02:10:02.670 --> 02:10:07.090
be answered, evaluated, answered during any future implementation.

02:10:07.760 --> 02:10:11.649
That's when we add a section that says evaluate and

02:10:11.649 --> 02:10:16.159
identify methods to mitigate market power. Within the

02:10:16.159 --> 02:10:19.729
sentiment, within a centrally cleared system including

02:10:19.729 --> 02:10:24.220
but not limited to code of conduct. Uh market bidding

02:10:24.220 --> 02:10:29.859
behavior uh limitations. Or you know if, if ERCOT come

02:10:29.859 --> 02:10:32.210
up with a clever way to say only 20% of affiliates

02:10:32.210 --> 02:10:33.850
can trade with each other the first five years. If

02:10:33.850 --> 02:10:37.279
that doesn't destroy liquidity. But any, any of the

02:10:37.279 --> 02:10:41.090
above. Come, come up with the best ways to within this

02:10:41.090 --> 02:10:44.390
centrally cleared system, mitigate market power. And

02:10:44.390 --> 02:10:48.369
then bring good work with TAC on that. And bring us

02:10:48.380 --> 02:10:50.880
bring us options. So that would be the directive and

02:10:50.880 --> 02:10:53.329
the decision points. Does that work?

02:10:55.149 --> 02:10:57.130
And that tells what the project that Connie will have

02:10:57.130 --> 02:11:02.289
here for the when we evaluate it .Yeah, okay. That would be kind of an overwatch

02:11:02.300 --> 02:11:05.170
separate apart from the implementation here. But

02:11:05.170 --> 02:11:06.939
solving for the same thing.

02:11:09.289 --> 02:11:10.239
We're good on that?

02:11:12.239 --> 02:11:17.439
All right. Residual market, provide flexibility to market

02:11:17.439 --> 02:11:19.930
participants to fulfill their obligations and facilitate

02:11:19.939 --> 02:11:25.010
of actual performance. Pretty straightforward.

02:11:25.979 --> 02:11:28.359
Something we had in there for a while. We're good?

02:11:34.960 --> 02:11:38.750
Demand curve, achieved the specified reliability standard

02:11:38.750 --> 02:11:42.369
in a cost effective manner, as part of the residual

02:11:42.369 --> 02:11:45.500
market. So, can we talk about this one for a second? Sure.

02:11:45.510 --> 02:11:50.680
Um, so to me um, the demand curve is what makes this

02:11:50.680 --> 02:11:55.069
a capacity market. The demand curve is what tells what

02:11:55.069 --> 02:11:57.439
puts more megawatts into the market than we actually

02:11:57.439 --> 02:12:01.770
need. Or tells the market that we need more than uh.

02:12:02.409 --> 02:12:05.390
Establishes a reserve, how about that? Establishes a reserve.

02:12:06.270 --> 02:12:07.069
Um,

02:12:10.000 --> 02:12:15.890
so I think um it's just. I think we, we need

02:12:15.890 --> 02:12:20.050
to recognize that that's what this. Uh, slope demand

02:12:20.050 --> 02:12:24.899
curve actually does. And that we ought to have um, this

02:12:24.899 --> 02:12:28.069
shouldn't be kicked to ERCOT. Uh that, this is something

02:12:28.069 --> 02:12:33.310
that we own with input from our ERCOT. Um and perhaps

02:12:33.310 --> 02:12:36.710
that the slope demand. I don't know what the appropriate

02:12:36.720 --> 02:12:42.319
time frame is for uh, modification or understanding

02:12:42.319 --> 02:12:46.270
it. But I don't want this and I'll be totally clear.

02:12:47.039 --> 02:12:50.420
This PCM is a market mechanism that we're trying to

02:12:50.420 --> 02:12:54.630
thread a needle here. But if it doesn't work, I don't

02:12:54.630 --> 02:12:57.520
want the slope demand curve to become a capacity market.

02:12:57.529 --> 02:13:03.380
Just plain and dry. Just dumping money for no good purpose. Yes. Agreed, So my view, my view is

02:13:03.380 --> 02:13:09.170
that um, we need to make sure that um. Anyway that, that

02:13:09.170 --> 02:13:12.279
that was my point. That I wanted to say on the demand

02:13:12.279 --> 02:13:16.489
curve. And so I think, I think McAdams addresses a

02:13:16.489 --> 02:13:19.520
lot of that. And saying there can't be a minimum for

02:13:19.529 --> 02:13:24.260
there, can't be. If we truly have excess supply, it's

02:13:24.260 --> 02:13:28.659
gotta, it's gotta be. Okay. I think that that's probably fair.

02:13:29.890 --> 02:13:32.850
And even more so to mitigate your concern. Is the fact that

02:13:32.850 --> 02:13:35.329
I think we talked about earlier is what we're moving

02:13:35.329 --> 02:13:38.760
off the table. Um, that Commissioner McAdams highlighted

02:13:38.770 --> 02:13:43.060
for reliability market, um Lucero. Those are capacity

02:13:43.060 --> 02:13:46.119
markets and by putting them in there. That we're not

02:13:46.130 --> 02:13:48.270
we're tabling them or not considering them, as part

02:13:48.270 --> 02:13:51.800
of this PCM implementation. That hopefully will address

02:13:51.800 --> 02:13:54.560
your concern with the demand curve. It is because it's

02:13:54.560 --> 02:13:57.229
clearly not what the Commission would want.

02:14:00.770 --> 02:14:05.409
I spoke my piece. I'd also add the demand curve, additionally

02:14:05.409 --> 02:14:09.039
add something that was part of the IMMs contribution.

02:14:09.050 --> 02:14:13.210
Helps eliminate whiplash in between periods of excess

02:14:13.210 --> 02:14:16.060
supply and demand. Which we've seen in other grids. 

02:14:16.100 --> 02:14:21.680
MISO. Um so you're, you don't win periods of excess. You

02:14:21.680 --> 02:14:27.369
don't or some extra supply, there's value there. It's

02:14:27.369 --> 02:14:31.529
not entirely zero. If you have an abundance, over abundance

02:14:31.529 --> 02:14:35.220
it is zero or close to zero. But you don't go from

02:14:35.220 --> 02:14:39.810
zero price to cone and back. Which I think is another

02:14:39.819 --> 02:14:44.199
valuable, that's a valuable addition. Um, it's another

02:14:44.199 --> 02:14:46.710
feature of having the demand curve on the back end.

02:14:47.500 --> 02:14:52.609
Um and the option, the forward procurement option. Also,

02:14:52.609 --> 02:14:56.930
allows market participants to essentially forward hedge

02:14:56.930 --> 02:15:02.039
as much as they like, on both sides. Um, which would

02:15:02.050 --> 02:15:04.510
minimize the, I guess the actual use. The more, the

02:15:04.510 --> 02:15:08.649
forward hedging is there, the less actual use of the

02:15:08.649 --> 02:15:11.010
demand curve would be. Which I think of as a feature as

02:15:11.010 --> 02:15:15.529
well. Uh, what I like about what you wrote here is. Um,

02:15:15.539 --> 02:15:18.210
basing it on a reliability standard. I like that more

02:15:18.210 --> 02:15:21.100
than a ERCOT Load forecast. Because I know that was proposed

02:15:21.100 --> 02:15:23.300
in comments. And I think to avoid the volatility and

02:15:23.300 --> 02:15:25.960
potential for error. We gotta tie it to something concrete, if

02:15:25.970 --> 02:15:28.119
that's ultimately would end up doing with this curve.

02:15:28.130 --> 02:15:30.789
We could look at a reliability standard, I think that's

02:15:30.789 --> 02:15:34.409
the first probably. Which lines up with what was in

02:15:34.409 --> 02:15:36.819
my memo, under that forecast. You know, it's just based

02:15:36.819 --> 02:15:38.880
on that reliability standard, and that's how they compete

02:15:38.890 --> 02:15:43.359
for the reserves. That you will be uh, obligated to comply

02:15:43.359 --> 02:15:47.560
with. Your energy plus reserve. Mhm agreed.

02:15:49.159 --> 02:15:53.050
All right. Everybody good on that one? Uh, maintain the current

02:15:53.060 --> 02:15:55.899
ERCOT market. Protect ERCOT's robust competitive electric

02:15:55.909 --> 02:15:59.520
retail market that provides choice for consumers. Think

02:15:59.520 --> 02:16:03.649
this obviously focused on the retail, but also applies

02:16:03.659 --> 02:16:08.779
to dead real time energy market. The PCM is something

02:16:08.779 --> 02:16:12.319
separate and apart. It does not directly tie to impact,

02:16:13.199 --> 02:16:18.340
engage with, other in any way. Other than maybe having

02:16:18.340 --> 02:16:22.159
a similar utilizing the, the definition of day ahead

02:16:22.159 --> 02:16:25.369
as a forward procurement, definitely. But does not actively

02:16:25.380 --> 02:16:30.170
operate, interact with day ahead, real time, existing

02:16:31.289 --> 02:16:35.430
constructs, ancillaries and all that. Also everybody's

02:16:35.440 --> 02:16:38.299
on board with it, that's it. So the question that I

02:16:38.299 --> 02:16:40.879
have is. Should, is it appropriate to add a wholesale

02:16:40.879 --> 02:16:43.620
market there also? I mean, we want to protect this

02:16:43.620 --> 02:16:45.930
wholesale market, and we want it to work for the good

02:16:45.930 --> 02:16:50.920
of the retail market. And um. How would you phrase it?

02:16:51.799 --> 02:16:54.690
Um, protect ERCOT's robust, competitive wholesale

02:16:54.690 --> 02:16:57.559
market and retail electricity market that providing,

02:16:57.569 --> 02:17:01.290
that provides choices to consumers. That, if you will.

02:17:01.299 --> 02:17:04.620
I agree with Commissioner Glotfelty on that. I provided

02:17:04.620 --> 02:17:07.879
a pretty robust general principle myself. Um, that says

02:17:07.889 --> 02:17:11.450
uh and you can usually use maintained. So basically

02:17:11.450 --> 02:17:14.879
maintaining the current ERCOT competitive electricity

02:17:14.879 --> 02:17:18.920
market and underneath would be protecting or protects

02:17:19.709 --> 02:17:24.510
uh, the competitive of the competitiveness of the wholesale

02:17:24.510 --> 02:17:27.569
and retail markets in ERCOT. That's how I phrased it.

02:17:27.569 --> 02:17:30.780
And underneath I had strong mitigation measures um,

02:17:31.370 --> 02:17:35.379
to help prevent gaming opportunities and market manipulation.

02:17:35.379 --> 02:17:39.290
In the wholesale market and ensure appropriate BMPs are

02:17:39.290 --> 02:17:42.329
in place to address future market conditions. And then

02:17:42.329 --> 02:17:44.510
with respect to the retail market. Strong mitigation

02:17:44.510 --> 02:17:46.959
measures to help prevent market power abuse. And preserve

02:17:46.959 --> 02:17:50.180
customer choice, ie customers continue to have options

02:17:50.190 --> 02:17:53.729
on retail, electric providers and products. And I kind

02:17:53.729 --> 02:17:55.620
of was a little bit more fleshed out. I'm happy to

02:17:55.620 --> 02:17:57.579
just kind of, you know, property that language as we

02:17:57.579 --> 02:18:00.020
go back to script out. But I think the real key point

02:18:00.020 --> 02:18:03.489
here. Is just maintaining the current ERCOT competitive

02:18:03.489 --> 02:18:05.739
electricity market, and protecting the competitiveness

02:18:05.750 --> 02:18:10.360
of the wholesale and retail markets at ERCOT. Correct.

02:18:10.370 --> 02:18:12.850
I think everybody's saying the same thing. We'll work

02:18:12.850 --> 02:18:17.600
on the way to say it the most concisely. And I think we

02:18:17.600 --> 02:18:19.569
can some of the first half.

02:18:22.139 --> 02:18:25.899
Under market power mitigation we can um,

02:18:28.280 --> 02:18:32.479
we can move that to market power mitigation. Yes, I'll

02:18:32.489 --> 02:18:35.569
agree in principle and everything you said. We'll find

02:18:35.569 --> 02:18:37.000
the best, best way to polish it.

02:18:38.750 --> 02:18:42.229
All right. Self-correcting, established demand curve that

02:18:42.229 --> 02:18:44.149
results in the value of credits decreasing with market

02:18:44.149 --> 02:18:48.319
has excess. Generation lowering costs to consumers

02:18:49.200 --> 02:18:52.920
in periods of excess supply.

02:18:55.170 --> 02:18:58.420
I had excess supply there. I think we just covered that.

02:18:58.829 --> 02:19:00.510
Are going to say

02:19:02.850 --> 02:19:07.610
so lowering costs. Do you capped it off by uh, expanding

02:19:07.610 --> 02:19:13.500
that there is no minimum price? Um yeah, that was

02:19:13.500 --> 02:19:17.319
a separate sub bullet. If possible, that'd be a great

02:19:17.329 --> 02:19:23.489
signal. That once equilibrium is achieved value is um,

02:19:23.530 --> 02:19:24.569
goes away.

02:19:29.280 --> 02:19:35.129
How about we just say, can we just say no, no minimum price. Yeah.

02:19:35.139 --> 02:19:37.149
The demand curve cannot include a minimum price to

02:19:37.149 --> 02:19:40.360
allow obligations for LSCs to return to zero, a system

02:19:40.370 --> 02:19:43.600
equilibrium is achieved. Can we can, can we just

02:19:43.600 --> 02:19:47.850
say the no minimum price? More enlightning equilibrium

02:19:47.850 --> 02:19:49.340
could be a lightning rod on

02:19:50.989 --> 02:19:54.260
on how to define that. Happy to allow you to do. Okay.

02:19:57.440 --> 02:19:58.700
All right. We're good on that one?

02:20:01.659 --> 02:20:05.690
All right. Appropriately placed risk, place financial

02:20:05.690 --> 02:20:07.920
operating risk on profit seeking businesses instead

02:20:07.920 --> 02:20:11.920
of ERCOT or the consumers of Texas. I think that's a

02:20:11.920 --> 02:20:15.309
pretty high level concept. I struggle with this

02:20:15.309 --> 02:20:19.780
one a little bit. I do too. Um, just because I think that what

02:20:19.790 --> 02:20:22.899
we're doing in this instance. Is if we're guaranteeing

02:20:22.899 --> 02:20:25.950
some dollars, then we are actually putting this back

02:20:25.950 --> 02:20:30.239
on the consumer. So um, a energy only market shifts

02:20:30.250 --> 02:20:33.879
100% of the generation risk to the generation sector.

02:20:33.889 --> 02:20:36.979
Now what we're doing is we're shifting that back to

02:20:36.979 --> 02:20:43.809
the consumer. So um, all of the revenue earned in

02:20:43.809 --> 02:20:47.180
the energy only market is eventually passed on to consumers,

02:20:47.190 --> 02:20:50.549
through our LSEs. There's a key difference I

02:20:50.549 --> 02:20:54.760
think. I mean. This is me going back to us, when we

02:20:54.770 --> 02:20:58.079
restructured the market in '95. The goal was to make

02:20:58.079 --> 02:21:00.600
sure that captive ratepayers, we're not paying for

02:21:00.600 --> 02:21:04.590
generation in the state. And this moves us back somewhere

02:21:04.590 --> 02:21:08.350
towards that. Not at that totally. And you know, I

02:21:08.350 --> 02:21:10.690
don't know if we're gonna keep it or not. It's probably

02:21:10.690 --> 02:21:13.069
okay, but I want to just put a marker in there. That

02:21:13.069 --> 02:21:15.250
I don't think it's totally accurate what we're, what

02:21:15.250 --> 02:21:20.180
it says. So to Commissioner Glotfelty's point. Um, when

02:21:20.180 --> 02:21:22.620
the market got deregulated through Senate Bill 7.

02:21:22.629 --> 02:21:26.760
The risk was placed on, on the, you know private companies

02:21:26.760 --> 02:21:30.610
that, profit making companies. Now through the PCM we

02:21:30.610 --> 02:21:32.709
are transferring some of that risk to the consumers.

02:21:32.719 --> 02:21:36.250
Because we're requiring the LSCs that are, are serving

02:21:36.260 --> 02:21:39.340
directly to consumers where they be reps, co-op communities.

02:21:39.350 --> 02:21:43.729
Um to shoulder some of that risk by having to buy PCs.

02:21:43.739 --> 02:21:48.110
To meet their consumption um, during the highest the

02:21:48.110 --> 02:21:50.780
hours of highest reliability risk. So there is a shifting

02:21:50.790 --> 02:21:54.909
towards the consumers definitely. Um with this market

02:21:54.909 --> 02:21:57.159
design, so maybe it's just a matter of smithing out that

02:21:57.159 --> 02:21:58.760
language a little bit differently. And we can work on

02:21:58.760 --> 02:22:03.030
that. But that's the issue I kind of have to. So I'd

02:22:03.030 --> 02:22:05.329
say this brings increased

02:22:07.459 --> 02:22:11.899
accountability to the Load side. Because right now retailers

02:22:11.899 --> 02:22:16.020
have no obligation other than to send in an easy idea

02:22:16.020 --> 02:22:19.159
and collect a monthly check. They have no responsibility.

02:22:19.170 --> 02:22:21.819
I think that I think that minimum. I mean that's just

02:22:21.819 --> 02:22:25.139
like the grocery store has no obligation, other than

02:22:25.139 --> 02:22:28.190
to put bread on the shelf. Or a gas station only has

02:22:28.190 --> 02:22:32.430
to, you know, uh fill their tank. So it's not that

02:22:32.430 --> 02:22:35.700
easy. I mean it's, I mean not all of them do that.

02:22:35.700 --> 02:22:38.100
Most of them have some sort of risk management in place.

02:22:38.110 --> 02:22:40.290
But there's a subset that don't. That are gonna fly

02:22:40.290 --> 02:22:43.180
by night, and we have lots of rules that try to corral

02:22:43.180 --> 02:22:47.959
those, but they're still out there. And other than their

02:22:47.959 --> 02:22:51.729
own willingness to engage in risk management. They

02:22:51.729 --> 02:22:54.989
don't have any requirement to. So I think this brings

02:22:55.000 --> 02:22:59.989
more accountability to the Load side. In establishing

02:23:00.620 --> 02:23:02.770
a requirement that you're going to have to go by through

02:23:02.770 --> 02:23:06.440
a credit system. The commodity that you promised your

02:23:06.440 --> 02:23:11.299
customers and you collect money for every month. And

02:23:11.299 --> 02:23:12.680
I think that's a good thing. I think that's a good

02:23:12.680 --> 02:23:17.020
thing for consumers. And uh, in some ways I think that

02:23:17.020 --> 02:23:20.409
will help separate the wheat from the chaff. On who

02:23:20.409 --> 02:23:23.040
are the retailers that are actually good actors. Run

02:23:23.049 --> 02:23:25.850
good businesses, have good risk management, from the

02:23:25.850 --> 02:23:31.889
fly by nights. So I think is it at the same time.

02:23:31.889 --> 02:23:37.729
You can say that the generators would have access to

02:23:37.729 --> 02:23:47.670
a new pool of revenue that separates their, that gives

02:23:47.670 --> 02:23:51.049
them value for a forward obligation to be online,

02:23:51.049 --> 02:23:56.629
available. That's new. That's all resources, any eligible

02:23:57.209 --> 02:24:01.860
eligible resources. Any eligible resource. Uh, so that's

02:24:01.860 --> 02:24:04.709
new, that should be an enhancement. We want to be an

02:24:04.709 --> 02:24:05.379
enhancement.

02:24:07.389 --> 02:24:13.829
It doesn't rely, it doesn't force them to rely on physical

02:24:13.829 --> 02:24:18.209
scarcity to achieve revenues. Which we've talked about

02:24:18.219 --> 02:24:20.360
exhaustively. Uh,

02:24:21.940 --> 02:24:25.700
and it would only make sense if we put in the checks

02:24:25.700 --> 02:24:29.350
and balances that we're going through right now. Um,

02:24:29.860 --> 02:24:31.479
so I don't,

02:24:33.290 --> 02:24:37.440
it's, it's somewhere in the middle. I don't wanna,

02:24:37.450 --> 02:24:39.809
I'm not comfortable saying it dumps huge risk on the

02:24:39.809 --> 02:24:43.020
consumers. I think it moves retailer accountability

02:24:43.020 --> 02:24:46.370
up, a couple notches. And I think that's good. Uh, but

02:24:46.370 --> 02:24:49.399
I don't think it's just a a dump of risk on the

02:24:49.399 --> 02:24:51.719
consumers. I think it's moving risk outside of the

02:24:51.719 --> 02:24:54.860
control room. And now making market participants more

02:24:54.860 --> 02:24:57.090
accountable on both sides of the equation. Which I

02:24:57.100 --> 02:25:00.420
also think is good. But it's.

02:25:03.559 --> 02:25:06.090
Why don't you leave it as it is? And I'll think, if

02:25:06.090 --> 02:25:09.280
I can come up with a word or a few. We'll talk

02:25:09.280 --> 02:25:14.260
about it in the next, in the next round. My point is

02:25:14.270 --> 02:25:17.799
you know, I don't necessarily have to have a modification.

02:25:17.799 --> 02:25:21.180
But I want it to be a general understanding that. The

02:25:21.180 --> 02:25:24.569
pendulum is swinging here. It's not when we create

02:25:24.569 --> 02:25:27.239
this slope demand curve. You know, and we're over

02:25:27.239 --> 02:25:29.870
procuring a lot. This isn't the market over procuring.

02:25:29.870 --> 02:25:34.079
This is regulators, this is the regulators telling

02:25:34.120 --> 02:25:40.139
the market to do that. So and a the

02:25:40.149 --> 02:25:51.649
um, the your words. Um, the ability for, um, the pool

02:25:51.649 --> 02:26:00.209
of revenues. Um, is a um, that's, that's where the

02:26:00.209 --> 02:26:03.719
consumer has, you know, more risk in this process.

02:26:03.729 --> 02:26:06.950
So anyway, I'll come up with some language, see if

02:26:06.950 --> 02:26:11.530
it works. Um, and that, but that was my point. Okay.

02:26:11.540 --> 02:26:16.569
Well let us know, before we go back and. And

02:26:18.809 --> 02:26:22.360
refresh my memory Mr. Chairman. We already placed, because

02:26:22.360 --> 02:26:24.200
I don't have it in front of it. We already placed the

02:26:24.200 --> 02:26:27.889
condition. And again, I don't know it's in another section.

02:26:27.889 --> 02:26:31.840
But we said basically PC values are based not on forecast,

02:26:31.840 --> 02:26:34.569
but on actual performance. So we've already codified

02:26:34.569 --> 02:26:37.180
that in another section, right? And I was just thinking

02:26:37.190 --> 02:26:41.639
is it a, if we have, I'm great. Um but it, it

02:26:41.649 --> 02:26:45.020
it certainly does impact the risk profile on each actor.

02:26:45.030 --> 02:26:47.879
Again, we're not talking about some arbitrary forecast.

02:26:47.889 --> 02:26:51.790
This is based on both the generation and Load side

02:26:51.799 --> 02:26:55.700
um, for the purposes of reliability. So there's accountability

02:26:55.700 --> 02:26:57.840
on both sides of the generation. But if it's already

02:26:57.840 --> 02:27:03.090
in there, which I think it is, I'm good. Okay. Can we just the

02:27:03.090 --> 02:27:04.920
other, you know, and one thing that kind of factor

02:27:04.920 --> 02:27:07.350
into. That as I was thinking through this, yes. We were

02:27:07.350 --> 02:27:09.069
kind of thinking about load serving entities a lot

02:27:09.079 --> 02:27:12.760
and in the retail space. But there are load serving

02:27:12.760 --> 02:27:16.309
entities like, um, younis and co-ops that have a captive

02:27:16.309 --> 02:27:19.190
customer base. That will not be able to avoid these

02:27:19.190 --> 02:27:22.430
charges, right? As, as those LCSs that are not subject

02:27:22.430 --> 02:27:25.479
to the bad actor, you know, requirements um, that we

02:27:25.479 --> 02:27:27.760
have our. You know, collateral requirements on all

02:27:27.760 --> 02:27:30.559
the rules we've continuously updated in the last decade.

02:27:30.850 --> 02:27:33.010
For reps to be able to get certified and stay in our

02:27:33.010 --> 02:27:36.840
market. We have other LSCs like younies and coops that

02:27:36.840 --> 02:27:39.049
will have to absorb these costs, and pass them to their

02:27:39.049 --> 02:27:41.870
captive customer base. The only way for them to avoid

02:27:41.870 --> 02:27:44.139
is to move out of the service territory. And then you'll

02:27:44.139 --> 02:27:46.340
probably go somewhere else to capture it. But, but I guess

02:27:46.350 --> 02:27:50.290
just really recognizing that, I think not all LSC's

02:27:50.290 --> 02:27:53.379
are in the same bucket. Um, but I just wanted to highlight

02:27:53.379 --> 02:27:56.600
that. And again, we'll work on the language to see what

02:27:56.610 --> 02:27:58.950
makes sense. But just really, I think it's important

02:27:58.950 --> 02:28:00.270
to get that out there as well.

02:28:02.709 --> 02:28:07.750
Fair, fair point. Um all right. We'll come back to

02:28:07.750 --> 02:28:08.379
that one.

02:28:11.530 --> 02:28:14.469
Market power mitigation, this has been updated as part

02:28:14.469 --> 02:28:18.000
of our conversation. The last of the principles market

02:28:18.000 --> 02:28:20.879
power mitigation. First bullet stands, ensure competition

02:28:20.879 --> 02:28:23.420
innovation will continue to thrive in the ERCOT. By

02:28:23.420 --> 02:28:25.719
mitigating market power concern, especially regarding

02:28:25.719 --> 02:28:27.969
affiliate generation retail entities.

02:28:29.860 --> 02:28:33.770
Next bullet point. And I think the

02:28:38.129 --> 02:28:44.110
maintain features, maintain competitiveness of the

02:28:44.110 --> 02:28:48.200
hotel wholesale market and retail electric market. Is

02:28:48.200 --> 02:28:49.909
captured in the previous bullet point, like we talked

02:28:49.909 --> 02:28:54.860
about. This is about what to do the any PCM by definition.

02:28:54.860 --> 02:29:01.680
Must have robust market mitigation measures. Uh, second

02:29:01.680 --> 02:29:04.069
sub bullet. Ensure against bidding and offering strategies

02:29:04.079 --> 02:29:07.959
to mitigate against potential abuse, as we discussed.

02:29:07.969 --> 02:29:15.069
And um, the performance credit awards must be based on some

02:29:15.069 --> 02:29:16.739
form of forward offer.

02:29:18.879 --> 02:29:24.510
Some, some sort of forward offer. Forward offer quantity. Yes, yep.

02:29:25.760 --> 02:29:29.899
That work for everybody? Where are you putting? Uh, thought

02:29:29.899 --> 02:29:33.469
we were gonna have something, your sentence on clawbacks? Uh,

02:29:33.479 --> 02:29:38.129
decision points to me. Please go evaluate the best

02:29:38.129 --> 02:29:43.280
combination of market penalties, nonperformance penalties,

02:29:43.280 --> 02:29:45.540
clawbacks, etcetera. (inaudible) implementation.

02:29:47.159 --> 02:29:50.809
Please bring those that menu to us and we'll. That's the best

02:29:50.809 --> 02:29:54.170
combination that they're of? So I wonder if we can

02:29:54.170 --> 02:29:58.420
put maybe a general principle that says. Um robust,

02:29:58.420 --> 02:30:00.950
non performance penalties. And under that bullet, we

02:30:00.959 --> 02:30:04.770
sort of build the framework that covers some of the

02:30:04.770 --> 02:30:06.770
items that were raised today. Like what is the penalty?

02:30:07.559 --> 02:30:10.739
Well, I'm putting decision points. Because Commissioner

02:30:10.739 --> 02:30:12.959
McAdams had a question earlier about whether or not

02:30:12.969 --> 02:30:18.719
the, the very fact that you have a market, market. The

02:30:18.719 --> 02:30:21.200
market implements its own penalty

02:30:22.760 --> 02:30:25.190
in the event of nonperformance. Is that sufficient

02:30:25.200 --> 02:30:28.299
or not? To incentivize the behavior we want in the

02:30:28.299 --> 02:30:31.639
accountability we want. Without being so onerous that

02:30:31.649 --> 02:30:33.440
eligible resources are

02:30:35.059 --> 02:30:38.129
too, too scared to participate in the market. I don't

02:30:38.129 --> 02:30:40.329
know the answer. That's why I put. Yes, that that question

02:30:40.329 --> 02:30:43.600
is in there. It's just under the decision points, rather

02:30:43.600 --> 02:30:48.139
than deciding today. Exactly what combination and permutation

02:30:48.139 --> 02:30:51.049
of penalties is appropriate. Does that work? Okay, that's

02:30:51.049 --> 02:30:55.639
fine. Mr. Chairman before you move on. And I'm just thinking

02:30:55.639 --> 02:31:00.559
back and trying to establish certainty. Um, and to establish

02:31:01.159 --> 02:31:04.739
an anchor on, on the value of PCs and what we're talking

02:31:04.739 --> 02:31:07.600
about. But in terms of that principle of self-correction

02:31:07.610 --> 02:31:10.760
and again going to zero. And our objective is to set

02:31:10.770 --> 02:31:13.670
a reserve. And that is what we're trying to establish.

02:31:13.670 --> 02:31:17.319
We're gonna create a toggle, a lever that we can adjust.

02:31:17.329 --> 02:31:21.600
Depending on system reliability, that we feel is sufficient.

02:31:21.610 --> 02:31:26.639
And so um, in the spirit of going to zero. Uh, and

02:31:26.649 --> 02:31:32.799
not specifying equilibrium. Um, should we say uh,

02:31:32.809 --> 02:31:35.739
there is no minimum and values go to zero. When there

02:31:35.739 --> 02:31:39.559
are sufficient PCs generated to meet the reliability

02:31:39.559 --> 02:31:42.989
standard. Which includes the reserve margin, whatever

02:31:42.989 --> 02:31:46.659
that is. Again, that pegs it to the Commission goal,

02:31:46.670 --> 02:31:49.909
ERCOT's goal. Um,

02:31:51.629 --> 02:31:56.579
has it, if anything. I'd change it to excess or extreme

02:31:56.579 --> 02:32:02.270
excess. Because the uh, I think one of the benefits

02:32:02.270 --> 02:32:05.829
of that demand curve or that it is a tool. That can

02:32:05.829 --> 02:32:09.110
be used to establish the appropriate level of reserves.

02:32:09.110 --> 02:32:12.719
To achieve our desired reliability standard. But also

02:32:12.719 --> 02:32:16.299
prevents the whiplash that we've seen in MISO and PJM,

02:32:16.959 --> 02:32:21.809
and with problems. So uh, by by saying that essentially

02:32:21.809 --> 02:32:23.950
telling the marketplace. That even if you're not within

02:32:23.950 --> 02:32:26.270
that reserve margin. We're not gonna pay you full price.

02:32:26.270 --> 02:32:28.799
But there is some residual value, which is probably

02:32:28.799 --> 02:32:30.149
a stick around retention.

02:32:32.909 --> 02:32:34.040
But isn't that the reserve?

02:32:35.620 --> 02:32:38.379
Well, because it's big and broad, that includes like

02:32:38.379 --> 02:32:40.510
excess generation. That's I think that's the heart

02:32:40.510 --> 02:32:43.239
of the science of picking the slope of that demand

02:32:43.239 --> 02:32:48.639
curve. Um, and I do agree with the IMM. That we don't

02:32:48.639 --> 02:32:49.059
want

02:32:50.750 --> 02:32:56.540
the reserve actual usage, plus reserve. To be compensated

02:32:56.770 --> 02:33:00.600
and then the next megawatts zero. I think you want to

02:33:00.610 --> 02:33:02.959
glide path there. You want to make sure you can get

02:33:02.959 --> 02:33:05.600
to zero. You don't wanna have a minimum, agree with

02:33:05.629 --> 02:33:07.540
100% on that. But you don't want to because I think

02:33:07.540 --> 02:33:10.389
that's what I think MISO learned and probably PJM.

02:33:11.440 --> 02:33:17.270
Is what a vertical demand curve. Right, like that next megawatt is worth zero.

02:33:17.879 --> 02:33:22.180
And until the reserve or the growth in your Load gets

02:33:22.180 --> 02:33:27.139
there. Because there's nobody else around in that next

02:33:27.139 --> 02:33:32.260
couple of megawatts. The price goes straight to cone.

02:33:33.940 --> 02:33:36.319
But again, I think that's that's the art and science

02:33:36.319 --> 02:33:42.540
of determining the demand curve. Which is gonna be like

02:33:42.549 --> 02:33:46.319
Glotfelty said a key part. That's and, and something

02:33:46.319 --> 02:33:51.079
that's very policy driven. Highly technical but policy

02:33:51.079 --> 02:33:55.299
driven. And I think you would you achieve exactly what

02:33:55.299 --> 02:33:55.760
you're.

02:33:57.409 --> 02:33:59.930
Yeah I think we achieve what you're, you're seeking

02:33:59.940 --> 02:34:04.149
by requiring and defining PCMs. As having no minimum

02:34:05.110 --> 02:34:10.799
price for. Without deciding exactly how we can, we can

02:34:10.809 --> 02:34:15.610
achieve that today without having to decide exactly.

02:34:16.379 --> 02:34:20.309
When we exactly when it goes to zero and that may change.

02:34:20.309 --> 02:34:23.819
If you like, if you have monthly uh compliance periods

02:34:23.819 --> 02:34:26.440
that may, those demand curves will change month by month.

02:34:26.450 --> 02:34:29.969
Depending on on what you're seeking and then the characteristics

02:34:29.969 --> 02:34:30.600
of the grid.

02:34:34.389 --> 02:34:38.540
Okay. Uh we need to look at it and implementation then.

02:34:38.549 --> 02:34:42.209
I mean that the system needs to know when success is

02:34:42.209 --> 02:34:46.319
achieved. When victory is achieved, and values need to

02:34:46.319 --> 02:34:48.649
represent that. You know, it's like you're there and

02:34:48.649 --> 02:34:52.479
oh by the way. Whoever is over and above, you can go

02:34:52.479 --> 02:34:55.049
ahead and retire. I mean that's cool. And then we'll

02:34:55.049 --> 02:34:57.790
go into scarcity and there'll be a signal. It's like

02:34:57.799 --> 02:35:02.299
values there reinvest. Uh so anyway. Yes. And I think

02:35:02.309 --> 02:35:05.719
like Jimmy said. That's, that's a question of how steep

02:35:05.719 --> 02:35:08.870
is it? I think MISO and PJM learned, you don't want

02:35:08.870 --> 02:35:13.049
it to be 100% steep. Because then your, your whip lashing.

02:35:13.059 --> 02:35:16.309
And you end up going straight to cone. You don't want

02:35:16.309 --> 02:35:21.329
it to be such a flat glide path. That you're paying

02:35:21.329 --> 02:35:24.079
people for. No, you're paying resources to stick around

02:35:24.079 --> 02:35:27.579
for no discernible value. Glotfelty is concerned.

02:35:29.090 --> 02:35:33.229
Where the, where in the middle do we need to be.

02:35:33.229 --> 02:35:37.870
On any particular compliance period is exactly what

02:35:37.870 --> 02:35:40.209
you said. That's an implementation. That's a very big

02:35:40.219 --> 02:35:44.739
big part of implementation. Big policy call. Well in

02:35:44.739 --> 02:35:48.040
principle, it's gotta be a way to get to zero. And then,

02:35:48.040 --> 02:35:50.799
that'll hold everybody accountable and then we fight

02:35:50.799 --> 02:35:53.979
it out in implementation. Any, by definition any demand

02:35:53.979 --> 02:35:56.420
curve gets you to zero. It's just how quickly you get

02:35:56.420 --> 02:35:59.049
there. As long as you don't have a minimum price for it. I understand.

02:35:59.280 --> 02:36:02.540
Uh, so I think we're guaranteeing, you can get your statement

02:36:02.540 --> 02:36:06.250
guarantees that you can get to zero. Implementation

02:36:06.250 --> 02:36:07.190
question is how quickly.

02:36:09.569 --> 02:36:10.129
That work?

02:36:14.010 --> 02:36:17.879
Okay, uh I think that gets us through the principles.

02:36:19.350 --> 02:36:22.819
We've had some additions. If it works for ya'll,

02:36:23.020 --> 02:36:24.239
I'll go through the

02:36:25.750 --> 02:36:27.319
implementation decision points.

02:36:29.200 --> 02:36:29.780
Oh,

02:36:31.750 --> 02:36:35.510
commentary about the stakeholder process, ERCOT staff, and

02:36:35.510 --> 02:36:38.020
of course the ERCOT board. Uh,

02:36:40.459 --> 02:36:43.420
characterizing these decision points as the questions

02:36:44.420 --> 02:36:49.309
that need to be answered. Whenever implementation

02:36:49.309 --> 02:36:54.739
occurs. And of course this is not an exhaustive, exhaustive

02:36:54.739 --> 02:37:00.260
list. Would fully expect there be additions to this

02:37:00.260 --> 02:37:04.190
list from PUC Staff, ERCOT Staff um, stakeholders,

02:37:04.190 --> 02:37:09.399
and TAC. But to make sure that we, the Commission are

02:37:09.399 --> 02:37:12.329
alerting all of those interested parties. That at a

02:37:12.329 --> 02:37:15.979
minimum. These decision points must be addressed, evaluated,

02:37:15.989 --> 02:37:19.809
and an answer reached. Options presented to the Commission

02:37:19.809 --> 02:37:22.920
and answer reached. Based on our prior discussion, I

02:37:22.920 --> 02:37:25.069
think the umbrella paragraph of the list needs to be

02:37:25.069 --> 02:37:28.110
modified. Because it and I think this is where we came

02:37:28.110 --> 02:37:31.139
out on. With respect to what is held here and what's

02:37:31.139 --> 02:37:34.010
sent to ERCOT. It's not real clear at this point.

02:37:34.479 --> 02:37:37.120
Um we need to come up with a plan on what policy

02:37:37.120 --> 02:37:39.959
calls need to be made by the Commission. With implementation

02:37:39.959 --> 02:37:43.319
direction to ERCOT, and what what feedback. It's an iterative

02:37:43.319 --> 02:37:45.750
process. So I think it's written, it's it's still,

02:37:45.760 --> 02:37:49.149
you know, um indicating that we're just gonna ship

02:37:49.149 --> 02:37:50.959
it off to ERCOT. They're gonna figure it out and they're

02:37:50.959 --> 02:37:52.649
gonna send it back to us for a vote at the end.

02:37:52.649 --> 02:37:55.190
And, and that's definitely not what I heard we want.

02:37:55.200 --> 02:37:58.250
So I think we've got to modify that umbrella paragraph.

02:37:58.250 --> 02:38:02.799
To give us the flexibility of coming up with an implementation

02:38:02.809 --> 02:38:07.930
plan with buckets. And in that way we can work together

02:38:07.930 --> 02:38:10.540
with Staff on figuring out. What we hold here, what's sent to

02:38:10.549 --> 02:38:14.309
ERCOT. Um, how the process of implementation would work,

02:38:14.319 --> 02:38:17.129
if that is ultimately where we end up in the future.

02:38:18.950 --> 02:38:22.819
Agreed. Um, how about adding a line to the, at the end

02:38:22.819 --> 02:38:24.629
of that paragraph. Saying Commission will develop an

02:38:24.629 --> 02:38:30.030
implementation plan uh, with buckets designating which

02:38:30.030 --> 02:38:37.309
decision points should be led by PUC, ERCOT, and whichever

02:38:37.309 --> 02:38:41.709
combination require ERCOT technical support. And

02:38:41.709 --> 02:38:43.639
that's the first of my definition. That would be the

02:38:43.639 --> 02:38:46.440
first step of any implementation, identifying those

02:38:46.440 --> 02:38:46.879
buckets.

02:38:48.530 --> 02:38:51.270
We need to say buckets, I think that's what encapsulates

02:38:51.270 --> 02:38:52.290
the conversation earlier.

02:38:55.399 --> 02:38:57.500
We'll come up with something a little more. Never seen

02:38:57.500 --> 02:39:02.940
buckets in a PUC order, maybe categories. Wordsmith

02:39:02.940 --> 02:39:06.479
that. We'll wordsmith that. But does that address your concern? I think so

02:39:06.479 --> 02:39:09.870
I mean yeah, I think it does. I just yeah, I mean.

02:39:09.879 --> 02:39:12.450
It almost, I almost feel like that as a plant.

02:39:12.459 --> 02:39:17.610
That that umbrella paragraph you just said. But I'll.

02:39:17.620 --> 02:39:21.170
Certainly a vision too, I mean you guys.

02:39:22.719 --> 02:39:27.920
Yeah, I think in addition to, but at some point with

02:39:27.920 --> 02:39:31.930
deference to the Legislature. If we do reach, receive

02:39:32.250 --> 02:39:34.879
or get to the point we need to start implementation.

02:39:36.520 --> 02:39:41.690
You need an active clause in there to direct somebody

02:39:41.690 --> 02:39:43.649
to do something. Um,

02:39:45.840 --> 02:39:48.280
including in the first step of that being developed

02:39:48.690 --> 02:39:51.129
implementation plan with categories, categories, not

02:39:51.129 --> 02:39:55.000
buckets. To determine what decision points remain

02:39:55.010 --> 02:39:59.030
PUC, ERCOT, whichever combination requires ERCOT technical

02:39:59.030 --> 02:39:59.700
support.

02:40:01.680 --> 02:40:04.950
Is that? I'm not quite funneling that.

02:40:06.659 --> 02:40:09.610
The first step is to develop the buckets on which responsibility

02:40:09.610 --> 02:40:11.920
lies where. And we're gonna see that in the next draft?

02:40:12.790 --> 02:40:16.090
Yeah, he just wrote it right here. We're doing, David's

02:40:16.090 --> 02:40:20.680
doing real time. Um yeah, right here. That's in addition

02:40:20.750 --> 02:40:23.559
we'll look at it. I think that language sounds good

02:40:23.559 --> 02:40:26.200
to me. My, my whole what I'm wondering and I'll look

02:40:26.200 --> 02:40:29.840
at what Dave circulates. Is how it links up with that

02:40:29.840 --> 02:40:35.860
umbrella paragraph. And but we'll see what. You say umbrella paragraph, do you mean. I'm sorry

02:40:35.860 --> 02:40:38.459
this part right here. During implementation of the BCM

02:40:38.459 --> 02:40:39.239
at some point.

02:40:42.250 --> 02:40:44.329
Okay. I also want to be clear. I think that's also

02:40:44.329 --> 02:40:46.989
important. Because I want to say that we're not at some

02:40:46.989 --> 02:40:47.889
point in the future.

02:40:49.489 --> 02:40:52.959
That means not today. We're not we're being very clear

02:40:52.959 --> 02:40:57.010
that we're not kicking this thing off, implementation

02:40:57.010 --> 02:41:03.780
off today. 100% agree. So we'll wordsmith that and um, I think

02:41:03.780 --> 02:41:04.059
we can,

02:41:06.010 --> 02:41:09.579
I think we can get that resolved pretty easily. Yes. All

02:41:09.579 --> 02:41:10.000
right.

02:41:11.590 --> 02:41:16.770
Principles, determined PCM compliance period. Pretty

02:41:16.770 --> 02:41:20.040
easy check mark. Determine reliability standard associated

02:41:20.040 --> 02:41:26.280
with each PCM compliance period. Can I ask? So I don't

02:41:26.280 --> 02:41:29.760
necessarily have wordsmithing on these bullets. But

02:41:29.760 --> 02:41:33.200
my question within all of these, was who is going to

02:41:33.200 --> 02:41:37.360
do what? And that's what the sentence we just added,

02:41:37.620 --> 02:41:41.350
at the last part of that paragraph. Okay. Right after

02:41:41.350 --> 02:41:44.959
the during implementation sentence. Okay. It says

02:41:47.049 --> 02:41:50.479
as, as the first step to any implementation. The Commission

02:41:50.479 --> 02:41:54.610
will develop an implementation plan, identifying categories

02:41:54.620 --> 02:42:01.159
that. Got it. Designate which topic goes in which category.

02:42:02.129 --> 02:42:08.870
Doing categories work. I'm supportive of that. Okay. Is that first bullet just,

02:42:09.129 --> 02:42:14.059
so how will we determine the hours of highest reliability

02:42:14.069 --> 02:42:16.350
risk? Is that what you're capturing with that first

02:42:16.350 --> 02:42:20.110
one? The first one is what time period? Annually, I

02:42:20.110 --> 02:42:21.639
think we've all heard we don't want to do that. Is

02:42:21.639 --> 02:42:24.069
it monthly? Is it weekly? Is it some people propose

02:42:24.069 --> 02:42:26.299
daily. That's a big question. That's a key decision

02:42:26.299 --> 02:42:31.110
point. We need our ERCOT technical staff, TAC to evaluate

02:42:31.110 --> 02:42:34.870
that work through options. Provide a recommendation

02:42:34.879 --> 02:42:38.469
but ultimate decision on that. So that's. I think the

02:42:38.479 --> 02:42:42.729
first bullet should be. How will the hours of highest

02:42:42.729 --> 02:42:45.100
reliability risk be determined? Because then that's

02:42:45.100 --> 02:42:49.040
like, you know, it sounds like peak net Load is, is

02:42:49.040 --> 02:42:51.180
where everybody's headed with Staff recommendation.

02:42:51.180 --> 02:42:53.760
What you've recommended and I'm not disputing that.

02:42:53.760 --> 02:42:56.260
But I'm just saying that's what we need to determine

02:42:56.270 --> 02:42:59.329
and then take that. And whether it's seasonal, monthly,

02:42:59.329 --> 02:43:02.350
or whatever is the second, the first bullet on your.

02:43:03.959 --> 02:43:07.530
I was wondering about that too. Just because um, even

02:43:07.530 --> 02:43:10.450
Staff cited it. It's a statutory requirement and you've

02:43:10.450 --> 02:43:15.559
acknowledged the, the computation of determine how PCM

02:43:15.559 --> 02:43:20.450
hours are recalculated. Thus either on like uh, operational

02:43:20.450 --> 02:43:23.540
condition or a peak net Load condition. And so do you

02:43:23.540 --> 02:43:26.930
want that on a principal basis enshrined. Because the

02:43:26.930 --> 02:43:30.549
Legislature. Yeah, yeah. It is in uh, in determining

02:43:30.549 --> 02:43:33.559
but it's kind of determined because it's in Law.

02:43:35.350 --> 02:43:38.219
She's asking which one should go first? I think you're

02:43:38.219 --> 02:43:40.780
asking is it an open question or is it already decided?

02:43:41.430 --> 02:43:44.780
What do you think Mr. Chairman, you're the leader? For

02:43:44.790 --> 02:43:48.459
better or worse? Uh, I think that you have to answer

02:43:48.459 --> 02:43:51.870
both those questions simultaneously. Your compliance

02:43:51.870 --> 02:43:55.700
period will inform how many hours per compliance period.

02:43:56.559 --> 02:44:00.879
Right? And so I think those, those should this chicken

02:44:00.879 --> 02:44:04.790
and egg. Where you, you got to figure out how they enter.

02:44:04.799 --> 02:44:07.370
You need to evaluate how they interact and interplay

02:44:07.370 --> 02:44:10.030
with each other. And how that relates to what we're

02:44:10.030 --> 02:44:13.280
solving for. I think those I agree with Lori. Those

02:44:13.280 --> 02:44:16.360
are the first two things you've got to figure out, after

02:44:16.360 --> 02:44:21.879
the buckets. Um, but I think there they go hand and

02:44:21.879 --> 02:44:23.600
glove. Does that make sense?

02:44:25.719 --> 02:44:28.190
And I think I agree with you Lori. Those are the,

02:44:28.190 --> 02:44:32.610
are the two prime. Two questions that must be answered

02:44:32.610 --> 02:44:36.879
first. Okay, I think they're separate questions but

02:44:36.879 --> 02:44:40.930
they are joined at the hip. Right? Good?

02:44:43.270 --> 02:44:47.389
Um, after that determine reliability standard associated

02:44:47.389 --> 02:44:51.569
with each PCM compliance period. I think that's the

02:44:51.569 --> 02:44:53.819
art and science of that demand curve. And that again,

02:44:53.819 --> 02:44:58.120
will depend on your time frame. Can be very different

02:44:58.129 --> 02:45:01.170
for an annual versus a monthly versus a quarterly versus

02:45:01.180 --> 02:45:06.049
even a 3 month seasonal. Uh, but that's the next

02:45:06.059 --> 02:45:12.360
most important question. A new addition, per our previous conversation.

02:45:12.360 --> 02:45:14.260
Is identified the appropriate combination of penalties,

02:45:14.260 --> 02:45:17.120
clawbacks and other financial consequences. In case

02:45:17.120 --> 02:45:22.100
of non performance by performance credit recipients.

02:45:22.899 --> 02:45:23.780
Okay. That's

02:45:25.790 --> 02:45:28.340
I think that encompasses everybody's concerns about

02:45:30.159 --> 02:45:34.729
appropriate penalties or consequences for noncompliance.

02:45:35.579 --> 02:45:38.959
Without having to decide exactly which version is most

02:45:38.959 --> 02:45:44.260
appropriate right now. But in we know we'll have them.

02:45:46.120 --> 02:45:51.159
All right. Um next to the same spirit evaluate and identify

02:45:51.159 --> 02:45:54.100
the best way to mitigate market manipulation, through

02:45:54.100 --> 02:45:58.069
bidding behavior. This is the belt of the suspenders

02:45:58.069 --> 02:46:01.399
of the previous principle that we want. We by definition

02:46:01.399 --> 02:46:04.750
must have mechanisms to mitigate market manipulation.

02:46:04.760 --> 02:46:08.350
This is saying as a decision point ERCOT, TAC must

02:46:08.350 --> 02:46:13.569
bring us options on the best way to do that. Well,

02:46:13.579 --> 02:46:17.059
I'm sorry I still continue that believe that needs

02:46:17.059 --> 02:46:21.469
to be our policy decision. Because again, ERCOT. It will be

02:46:21.479 --> 02:46:24.120
once we get the buckets. We gotta, I mean. Okay. We're

02:46:24.120 --> 02:46:26.700
not deciding what goes in the buckets today. We're just

02:46:26.700 --> 02:46:29.750
identifying the questions that need to be answered. Okay, well

02:46:29.750 --> 02:46:31.559
I just don't know that ERCOT and stakeholders are

02:46:31.559 --> 02:46:33.250
the ones that should be bringing us options on how

02:46:33.250 --> 02:46:36.610
to mitigate power. Because ERCOT has, you know, they

02:46:36.610 --> 02:46:39.090
have some enforcement through now doing reliability

02:46:39.100 --> 02:46:42.700
uh functions that the TRE was doing. But like with

02:46:42.700 --> 02:46:46.600
respect to the retail market, um they don't really have

02:46:46.600 --> 02:46:49.700
a lot of you know kind of visibility into it. Other

02:46:49.700 --> 02:46:53.000
than settling it and test flighting reps into the market.

02:46:53.799 --> 02:46:56.399
You don't trust the retailers to tell us the best ways

02:46:56.399 --> 02:47:00.399
to ensure they don't manipulate the market. I think

02:47:00.399 --> 02:47:03.799
us yes, I don't know if the path through. So I think

02:47:03.799 --> 02:47:06.100
that that can be a peasy bucket. I mean that's where

02:47:06.500 --> 02:47:08.500
all I'm saying here is that that's the question that

02:47:08.500 --> 02:47:12.500
must be answered and evaluated. Um we can get that,

02:47:12.500 --> 02:47:18.100
I'd add IMM to the list at the top. As as

02:47:18.100 --> 02:47:20.700
somebody who can be participating, have their own bucket.

02:47:20.700 --> 02:47:24.000
Or participate in a bucket. Yeah, I just I was just

02:47:24.000 --> 02:47:26.600
hearing that, you know, maybe I heard you wrong. Um,

02:47:26.600 --> 02:47:28.899
that ERCOT and stakeholders have come to us some market

02:47:28.899 --> 02:47:30.700
mitigation measures. And I just continue to believe

02:47:30.700 --> 02:47:33.500
that that's our forum. But I think you're telling me

02:47:33.500 --> 02:47:37.000
what I want to hear. Yeah, it's it's 100% our policy

02:47:37.000 --> 02:47:39.899
decision, but if I'm not going to refuse to listen to

02:47:39.899 --> 02:47:42.100
good ideas from ERCOT. Yeah, I mean they can offer

02:47:42.100 --> 02:47:44.700
some. But I'm not what, I just don't want them driving

02:47:44.700 --> 02:47:45.799
the train. That's what I'm saying,

02:47:47.399 --> 02:47:51.299
Fair enough and I think we, we make that clear in the

02:47:51.299 --> 02:47:53.899
first step is identifying the categories and buckets.

02:47:55.000 --> 02:48:00.299
And we've added IMM to an entity eligible for buckets.

02:48:03.399 --> 02:48:04.000
All right.

02:48:09.399 --> 02:48:12.500
The I think the next one we can, we can combine the

02:48:12.500 --> 02:48:17.500
next one. Just make a note to do that. Uh code of

02:48:17.500 --> 02:48:19.500
conduct, this is just articulating code of conduct.

02:48:19.500 --> 02:48:23.100
Limited not, but not including but not limited to uh,

02:48:23.100 --> 02:48:28.299
self-dealing. We can put all that in one. Uh next up

02:48:28.299 --> 02:48:33.299
determine number of PCM hours per compliance period.

02:48:34.600 --> 02:48:37.700
Determine how PCM hours are calculated. Think that's

02:48:37.700 --> 02:48:39.500
to the question about net peak Load.

02:48:41.200 --> 02:48:46.299
Um I think everybody's triangulating on that pretty

02:48:46.299 --> 02:48:49.700
well. But I think it also wouldn't be bad to have the

02:48:49.700 --> 02:48:53.600
more analysis on that. Know exactly, let's lock that

02:48:53.600 --> 02:48:58.399
in based on some math or if it's net peak load. Plus

02:49:00.899 --> 02:49:04.899
(inaudible) Is that the same in each season? You

02:49:04.899 --> 02:49:08.299
know that I don't know yet. I just didn't know what

02:49:08.299 --> 02:49:10.500
you wanted in print, so that we can answer the ledge.

02:49:10.500 --> 02:49:14.100
And when they start talking about. I think it's I think

02:49:14.100 --> 02:49:16.500
this recognizes that it needs to be something associated

02:49:16.500 --> 02:49:21.299
with peak load. With some nuances on things like um

02:49:21.399 --> 02:49:26.200
it's forced outages and duration of batteries. I don't

02:49:26.200 --> 02:49:29.799
know how that that probably changes by season. And how

02:49:29.799 --> 02:49:32.299
that inter plays with the self accreditation of the

02:49:32.299 --> 02:49:37.200
batteries. So we just, we need to have thoughtful analysis

02:49:37.200 --> 02:49:37.799
on that.

02:49:39.700 --> 02:49:44.799
Alright, requirements for producing a performance credit.

02:49:45.500 --> 02:49:49.700
Um generally, generally the concept is online and available.

02:49:50.399 --> 02:49:56.399
What exactly are the, the technical specs on that?

02:49:56.399 --> 02:49:59.399
Is it per pricing period? Is it per 15 minute intervasl?

02:49:59.399 --> 02:50:01.799
What's, I'm sure there will be some details that need

02:50:01.799 --> 02:50:05.500
to be flushed out. But I think that's a general idea.

02:50:06.100 --> 02:50:14.600
Performance. Hmm. Yeah. Um, with within that bucket.

02:50:14.600 --> 02:50:19.200
Um, is that where the they will analyze the must offer?

02:50:19.200 --> 02:50:26.200
Ratio degree of commitment um or is that under another?

02:50:26.899 --> 02:50:28.299
I'd put it under that category. Yes.

02:50:32.700 --> 02:50:33.799
Alright. We're good with that? Yes sir.

02:50:36.200 --> 02:50:38.500
Determine if there should be geographic requirements

02:50:38.500 --> 02:50:41.500
for PCMs.. Uh again, I don't I don't know

02:50:41.500 --> 02:50:45.200
the answer. But uh, I know that there's a palpable fear

02:50:45.200 --> 02:50:49.799
out there for localized capacity obligations. Um but

02:50:49.799 --> 02:50:53.200
we have to be evaluated on a regional basis. So ERCOT

02:50:53.200 --> 02:50:57.399
needs to again the Astrape' study on the reliability standard.

02:50:57.399 --> 02:51:00.700
And uh that's kind of tied to the reliability standard.

02:51:00.700 --> 02:51:03.299
Whatever we determine is that reliability standard

02:51:03.299 --> 02:51:07.799
informs how healthy are our zonal, zone reliability

02:51:07.799 --> 02:51:14.299
is. And so it has to be analyzed. Agreed and I put

02:51:14.299 --> 02:51:17.200
that in there. So people know it's not a blanket assumption,

02:51:17.200 --> 02:51:20.799
it'll be system wide. And we don't care where you are.

02:51:21.600 --> 02:51:25.299
Maybe that's where we end up, but we need to ask the

02:51:25.299 --> 02:51:27.700
questions. And and work through the issues that you're

02:51:27.700 --> 02:51:32.299
identifying. That work for everybody? That's fine. I mean I think

02:51:32.299 --> 02:51:34.799
we got to just leave it broad, to see what works better.

02:51:35.500 --> 02:51:36.100
Look at it.

02:51:39.799 --> 02:51:44.000
Alright, conduct. Um, LOLP analysis determined the quantity

02:51:44.000 --> 02:51:46.500
of performance credits required to achieve reliability

02:51:46.500 --> 02:51:50.399
standard in each PCM period. This feels a little repetitive

02:51:50.399 --> 02:51:55.399
from above, but I think it's the same. On this sir, just

02:51:55.500 --> 02:51:59.100
clarity. This is not based on ERCOT's forecasting

02:51:59.100 --> 02:52:02.700
anything over and beyond the reserve margin, correct?

02:52:02.799 --> 02:52:06.500
That that LOLP I mean we're talking about the

02:52:06.500 --> 02:52:10.100
reserve margin, based on the reliability standard. And

02:52:10.100 --> 02:52:14.799
again, not kind of going on some sort of forward obligation.

02:52:16.000 --> 02:52:20.200
Yeah, I think it's. Yes. And I think it's repetitive from

02:52:20.200 --> 02:52:22.600
what we already said above. You got to determine

02:52:25.100 --> 02:52:28.700
determine reliability standard associated with each

02:52:28.700 --> 02:52:30.200
PCM compliance period. 

02:52:33.399 --> 02:52:37.299
and we'll lean on the previous statement. That work?

02:52:38.299 --> 02:52:42.299
All right, determined demand curve parameters for each

02:52:42.299 --> 02:52:49.000
PCM compliance period. Um, I think that's, that goes

02:52:50.200 --> 02:52:53.899
hand in glove with. I think that would be good right

02:52:53.899 --> 02:52:56.399
below the determined reliability standard associated

02:52:56.399 --> 02:53:00.700
with each PCM. It's a sequential thought

02:53:00.700 --> 02:53:02.500
process. Okay.

02:53:05.500 --> 02:53:07.600
Determine if modifications should be made to the 

02:53:07.600 --> 02:53:12.000
ORDC based on implementation of the PCM. If so what I

02:53:12.000 --> 02:53:13.799
think this was originally a Commissioner Glotfelty

02:53:13.799 --> 02:53:18.299
question, from an early stage of iterations. I would

02:53:18.299 --> 02:53:20.399
probably be on the latter end of the implementation.

02:53:20.399 --> 02:53:24.399
But I think it's a fair question to ask. Would ya'll

02:53:24.399 --> 02:53:27.799
think that the. I mean the ORDC might not

02:53:27.799 --> 02:53:32.100
go to zero. But if the PCMs are at zero.

02:53:32.100 --> 02:53:35.399
One of them's obviously with the intraday volatility and

02:53:35.399 --> 02:53:37.200
one of them's kind of dealing with long term. But again

02:53:37.200 --> 02:53:40.100
the ORDC is operationally focused so. That's what I mean.

02:53:40.100 --> 02:53:44.299
But even if you haven't, if you have met your your

02:53:44.299 --> 02:53:49.600
uh demand curve. You're hoping that both will go to

02:53:49.600 --> 02:53:54.600
zero, correct? I think if, if there's zero revenue in

02:53:54.600 --> 02:53:57.399
the market, then you get guaranteed exits the market

02:53:57.399 --> 02:54:01.299
right? So you don't want zero revenue, you want equilibrium revenue.

02:54:01.799 --> 02:54:04.700
I didn't mean zero revenue in the market. I meant that

02:54:04.700 --> 02:54:08.600
the ORDC does not get triggered on a daily basis.

02:54:09.700 --> 02:54:13.799
Yes. Yes. I think what we saw is that in the analysis

02:54:13.799 --> 02:54:17.500
is that by having a more reliable grid. The number

02:54:17.500 --> 02:54:19.500
of times we utilize the ORDC,

02:54:21.200 --> 02:54:23.600
which I think is great. But the, the experience in

02:54:23.600 --> 02:54:29.299
the other areas SPP, MISO, PJM. Is that even with their

02:54:29.299 --> 02:54:32.700
robust forward capacity system. They still need an ORDC.

02:54:32.700 --> 02:54:36.200
That's why they're launching them now. To possibly

02:54:36.200 --> 02:54:40.399
to a lesser degree than what we have right now. To signal

02:54:40.399 --> 02:54:45.899
operational ramping into these unknown situations. In MISO they're

02:54:46.000 --> 02:54:48.799
they have a PRA reserve auction that they hold just

02:54:48.799 --> 02:54:50.899
for the Summer right now. And they have the vertical

02:54:50.899 --> 02:54:53.700
demand curve that shot all the way to cones as you indicated earlier.

02:54:53.700 --> 02:54:57.299
They're moving towards a slope demand curve and expanding

02:54:57.299 --> 02:55:00.000
the seasons for the capacity market. But ultimately

02:55:00.000 --> 02:55:03.299
I think that's a little bit maybe a little bit different

02:55:03.299 --> 02:55:06.799
what we're talking about here with the ORDC. And I but

02:55:06.799 --> 02:55:09.399
anyway, I think that's a back end issue that we should

02:55:09.399 --> 02:55:11.299
assess here at the Commission. Yeah, I mean, I think there's

02:55:11.299 --> 02:55:14.299
bullets, right? And I appreciate it. And it's contemplated

02:55:14.299 --> 02:55:16.799
by E3. They said basically reevaluate all these

02:55:16.799 --> 02:55:20.000
different mechanisms in line PCM interaction. So, and

02:55:20.000 --> 02:55:22.700
I think this is the actual results will be very dependent

02:55:22.700 --> 02:55:27.899
on system conditions. In particular, if you have more

02:55:27.899 --> 02:55:31.799
extreme conditions in a particular compliance period.

02:55:31.799 --> 02:55:35.200
Or a year, you probably have a more active ORDC.

02:55:35.200 --> 02:55:40.399
Um, if more solar moves the critical times to after

02:55:40.399 --> 02:55:43.799
dark, that could change. Uh, there's no way for us to

02:55:43.799 --> 02:55:47.299
know that right now. But I think this question will

02:55:47.299 --> 02:55:51.299
be even more valuable with Glotfelty's tracking metrics.

02:55:51.299 --> 02:55:55.000
Because then you'll be able to see how much revenue

02:55:55.100 --> 02:56:00.500
under what system conditions are going to. Which resources

02:56:01.200 --> 02:56:05.100
and that total combined revenue is going to be, what

02:56:05.100 --> 02:56:08.500
drives investment decisions. And so I think this will

02:56:08.500 --> 02:56:11.600
be better informed by having that success metric, that

02:56:11.600 --> 02:56:15.600
KPI. And you can see what's driving or not driving.

02:56:15.600 --> 02:56:17.899
You will, we will be able to have a more informed vision

02:56:17.899 --> 02:56:22.700
of what's driving or not driving retention and investment.

02:56:22.700 --> 02:56:29.200
So good question to ask will be enhanced by um, the

02:56:30.100 --> 02:56:32.000
tracking of the information in the KPI.

02:56:33.600 --> 02:56:34.200
That work?

02:56:37.799 --> 02:56:40.399
Alright, determine changes what changes should be made

02:56:40.399 --> 02:56:45.399
evolve swap based on implementation of PCM. If so what?

02:56:45.399 --> 02:56:49.500
Same spirit, probably something on the back end of

02:56:49.500 --> 02:56:53.200
implementation. Everybody okay keeping that in there?

02:56:54.200 --> 02:56:56.899
Alright, requirements for generators participating

02:56:56.899 --> 02:57:00.299
offer into forward market. I think probably move that

02:57:00.299 --> 02:57:03.399
up the list. But I think that's consistent with the

02:57:04.200 --> 02:57:07.700
having some for determined. We we all want some forward

02:57:07.700 --> 02:57:10.399
requirement for eligible resources and changed that to eligible

02:57:10.399 --> 02:57:15.899
resources. Um, part of implications, figuring out exactly

02:57:15.899 --> 02:57:16.399
what that is.

02:57:18.100 --> 02:57:18.600
Fair?

02:57:20.799 --> 02:57:26.700
All right, determined forward market timing. Like that's

02:57:27.700 --> 02:57:32.299
uh that's part of the optionality for resources, LSCs,

02:57:32.299 --> 02:57:37.500
and resources to offer and procure credits,

02:57:39.200 --> 02:57:42.200
since it's optional. It's probably not a

02:57:44.799 --> 02:57:47.200
be a backbreaking, backbreaking decision for any of

02:57:47.200 --> 02:57:49.799
the LSCs we want. How far out in the future do we

02:57:49.799 --> 02:57:54.299
offer the ability for them to transact? It's a fair,

02:57:54.299 --> 02:57:56.799
I think it's an important question to ask. It's not

02:57:56.799 --> 02:58:01.100
gonna make or break the PCM. Important question to ask.

02:58:02.899 --> 02:58:04.799
and then finally determine the ability of virtual parties,

02:58:04.799 --> 02:58:07.500
to participate in the forward market. This is IMM

02:58:07.600 --> 02:58:10.600
original suggestion. A lot to be said for additional

02:58:10.600 --> 02:58:11.299
liquidity.

02:58:13.700 --> 02:58:20.000
Um some open questions on compliance and physical settlement

02:58:20.000 --> 02:58:23.000
and how that interacts with physical delivery or being

02:58:23.000 --> 02:58:27.600
physically online and available. That's the question.

02:58:27.700 --> 02:58:31.399
I don't, I don't know exactly the parameters and conditions

02:58:31.399 --> 02:58:34.000
of their participation. If the pros outweigh the cons,

02:58:34.000 --> 02:58:37.299
but I think that's an important one to decide. We're

02:58:37.299 --> 02:58:37.899
good with that?

02:58:39.799 --> 02:58:44.500
All right. That's everything I've got, um.

02:58:46.399 --> 02:58:49.600
The, you know, we have some other things too

02:58:52.299 --> 02:58:57.200
add the first thing I need to add. I think on the

02:58:57.200 --> 02:59:00.299
decision points is defined eligible resources.

02:59:02.399 --> 02:59:04.799
That was the one I was missing. So I'm glad you caught

02:59:04.799 --> 02:59:10.600
it, yep. And I'm trying to see what else. Okay, the

02:59:10.600 --> 02:59:14.000
next the next main section is the bridge, bridging direction

02:59:14.000 --> 02:59:16.000
I think we've we've covered that. Everybody's good

02:59:16.000 --> 02:59:23.299
with that language? Yes. And on the demand curve, when

02:59:23.299 --> 02:59:25.899
we say determined demand curve parameters for each

02:59:25.899 --> 02:59:29.000
PCM compliance period. That also makes the determination

02:59:29.000 --> 02:59:32.299
cone versus net cone. Uh and makes that recommendation.

02:59:32.299 --> 02:59:38.200
We had robust discuss what. Say that again. In terms of the demand curve

02:59:38.200 --> 02:59:42.299
cone versus net term, cone associated with the value.

02:59:42.299 --> 02:59:46.700
Yes sir. Okay, that's okay. Yeah, that's a good point.

02:59:47.799 --> 02:59:50.600
I mean, it's not written but that's part of the determination

02:59:50.600 --> 02:59:53.100
recommendation. That's part and parcel of making that

02:59:53.100 --> 02:59:53.700
determination.

02:59:55.700 --> 03:00:01.600
Alright. So that's, that's everything I've got at this

03:00:01.600 --> 03:00:07.299
point. What did you say on eligible resources? Define

03:00:07.299 --> 03:00:10.799
eligible resources, bring us all the options. What

03:00:10.799 --> 03:00:13.100
works? What doesn't work? You want to flush that out

03:00:13.100 --> 03:00:17.000
more? I do. I mean, I think it should be a principle

03:00:17.000 --> 03:00:21.700
that um the expectation is that all supply and demand

03:00:21.700 --> 03:00:26.399
resources are eligible. For the production of. Principle

03:00:26.399 --> 03:00:29.500
not a decision point. I think it's a principle that

03:00:29.500 --> 03:00:34.299
we should strive for that. Yes. Okay. So as you heard

03:00:34.299 --> 03:00:38.500
me say, I think um that's some I think it's a decision

03:00:38.500 --> 03:00:43.600
point on DER. We're doing a pilot project implementation.

03:00:43.600 --> 03:00:46.399
I think the the the pilot project will give us, like

03:00:46.399 --> 03:00:50.700
you said the results good, bad, otherwise. If we knew

03:00:50.700 --> 03:00:52.399
how it was gonna turn out we wouldn't need a pilot.

03:00:52.399 --> 03:00:55.299
Uh, but they think it's fair to say in the decision

03:00:55.299 --> 03:00:59.200
point or a sub bullet of identify or define eligible

03:00:59.200 --> 03:01:02.200
resources. I think it's fair to say upon completion

03:01:02.200 --> 03:01:05.799
of the pilot project, um

03:01:07.399 --> 03:01:13.100
evaluate compatibility with PCM. Um it's and in the

03:01:13.100 --> 03:01:17.799
meantime. I think you can take it as a soon but if

03:01:18.600 --> 03:01:23.200
if it needs clarification that any uh, was it enchanted

03:01:23.200 --> 03:01:28.600
rock. Any any of those DGR that currently participate

03:01:28.600 --> 03:01:31.399
participate in the wholesale market. Would be just as

03:01:31.399 --> 03:01:35.899
eligible as any other resource. Um, but I think that

03:01:35.899 --> 03:01:38.899
you need to make a distinction between the the aggregated

03:01:38.899 --> 03:01:41.799
resources. That we have a lot of remaining questions

03:01:41.799 --> 03:01:44.000
to answer and we need to see, we need to see how

03:01:44.000 --> 03:01:47.200
they behave. I think it's fair to say in the decision

03:01:47.200 --> 03:01:49.399
point, they need to be considered. Once we have the

03:01:49.399 --> 03:01:54.200
results of the pilot project. But I'm not comfortable

03:01:54.200 --> 03:01:56.899
saying that PCMs can't move forward unless they are

03:01:56.899 --> 03:01:59.000
by definition included. Because I don't know how the

03:01:59.000 --> 03:02:03.200
pilot projects going to turn out. Well I guess the pilot

03:02:03.200 --> 03:02:09.399
project um does not, in my opinion um uh, mitigate the

03:02:09.399 --> 03:02:13.399
fact that the enchanted rocks out there, are can participate

03:02:13.399 --> 03:02:16.500
in the market. So the virtual power plants is just

03:02:16.500 --> 03:02:22.799
one component of a type of resource. That could participate

03:02:22.799 --> 03:02:28.799
in this as a producer of PCs. I think again um, other

03:02:28.799 --> 03:02:31.000
markets have gone through this. They have said energy

03:02:31.000 --> 03:02:34.600
efficiency and demand response uh and distributed resources

03:02:34.600 --> 03:02:39.700
all achieve capacity credits. So I would think that

03:02:39.700 --> 03:02:44.500
putting that in here is um, what we need to do. To

03:02:44.500 --> 03:02:47.799
ensure that we have more people producing the credits.

03:02:47.799 --> 03:02:51.299
Thus protecting the consumer and lowering the costs.

03:02:52.200 --> 03:02:55.299
That's fine. But all of those other markets are built

03:02:55.299 --> 03:02:59.200
and structured entirely off of ISO generated forecasts

03:02:59.200 --> 03:03:03.399
Load demands. Which is the only way you can value energy

03:03:03.399 --> 03:03:06.600
efficiency or demand response. You've got to have it.

03:03:06.899 --> 03:03:09.500
Right here at the top of the page. You've got to have

03:03:09.500 --> 03:03:13.000
a forecast that your auction or capacity or whatever

03:03:13.000 --> 03:03:17.100
is driven off. By definition we're not PCM wouldn't

03:03:17.100 --> 03:03:21.500
have that. I think we need to work through the discussion

03:03:21.600 --> 03:03:28.700
about how uh demand resources, DERs. Energy efficiency.

03:03:28.799 --> 03:03:33.600
can be eligible for. Sure, like I said. So what again

03:03:33.600 --> 03:03:36.500
what I don't want. I don't think it's fair to just

03:03:36.500 --> 03:03:41.500
have DERs and energy efficiency. Reduce the amount

03:03:41.600 --> 03:03:47.299
of PCs that a low serving entity has to acquire. Reducing

03:03:47.299 --> 03:03:52.100
costs worked wonders for wind and solar. That's a hell

03:03:52.100 --> 03:03:54.700
of an incentive. That entire, I don't disagree that

03:03:54.700 --> 03:03:57.500
but that's just one incentive. I want to help the incentive

03:03:57.500 --> 03:04:00.799
for the distributed resources in the energy efficiency.

03:04:00.799 --> 03:04:05.399
To jump start those industries as well as valuable

03:04:05.500 --> 03:04:09.399
reliability components to our system. And that's fine.

03:04:09.399 --> 03:04:11.700
But just because you want to thing, doesn't mean that

03:04:11.700 --> 03:04:16.700
we can fit the PGM square peg into a ERCOT round hole. That

03:04:16.700 --> 03:04:19.799
doesn't mean we can't. And that's why I'm saying, I think

03:04:19.799 --> 03:04:22.500
it belongs in a decision point question to be answered,

03:04:22.500 --> 03:04:27.000
evaluated. And we can't say that something that by definition

03:04:27.000 --> 03:04:30.700
for demand response or energy efficiency. Requires the

03:04:30.700 --> 03:04:34.200
ISO to not only identify a future forecast in this

03:04:34.200 --> 03:04:39.000
case. An annual forecast and then procure resources

03:04:39.000 --> 03:04:43.200
to meet that forecast. Because there's no way to value

03:04:43.200 --> 03:04:47.100
that. I think you're, I think you're talking too much

03:04:47.100 --> 03:04:50.100
in the weeds. I wanna have a principle. I know what

03:04:50.100 --> 03:04:52.799
you want. But I'm saying my principle is that energy

03:04:52.799 --> 03:04:57.500
efficiency and demand response and distributed resources

03:04:57.500 --> 03:05:03.799
ought to be able to be eligible for credits. And that's

03:05:03.799 --> 03:05:06.899
fine. I know you really, really want that. But this

03:05:06.899 --> 03:05:09.600
doesn't fit what you're using an example of. What the

03:05:09.600 --> 03:05:14.100
other markets do. The PJM document. Yeah. That's fine.

03:05:14.100 --> 03:05:17.000
Then what we'll do. We'll create a Texas standard.

03:05:17.000 --> 03:05:22.700
You know, I think that we, we I don't know. I mean

03:05:22.700 --> 03:05:25.500
that's just that's my bottom line, is it? It needs

03:05:25.500 --> 03:05:30.100
to be included, as a evaluated. How we get them in there?

03:05:30.100 --> 03:05:33.500
We may not have the answer today, but we need it as

03:05:33.500 --> 03:05:39.500
a principle. That all resources are eligible to um, create.

03:05:39.500 --> 03:05:43.500
Every 90% of what you said I heard as a decision point.

03:05:43.500 --> 03:05:47.200
We need to evaluate how this could fit into PCM? How

03:05:47.200 --> 03:05:50.299
it could work? How we can make it work in the Texas

03:05:50.299 --> 03:05:55.500
market? And I'm fully supportive of that. What I'm not

03:05:55.500 --> 03:05:59.200
comfortable doing is saying that PCM will not work.

03:05:59.200 --> 03:06:05.500
Is not viable, unless the principle of it has some we

03:06:05.500 --> 03:06:08.500
don't know. I don't think I said that. You said it's

03:06:08.500 --> 03:06:10.700
got to be a principle. I said that it has to be

03:06:10.700 --> 03:06:16.200
a principle, that the that the PCM is technology neutral.

03:06:18.500 --> 03:06:24.899
And that um eligible resources I mean I can say, eligible

03:06:24.899 --> 03:06:29.700
resources which is the decision point. Um

03:06:32.899 --> 03:06:38.600
must um, be eligible to produce credits.

03:06:41.799 --> 03:06:46.100
Um the inside resources. Yeah. As just to opposed to just reduce

03:06:46.100 --> 03:06:49.600
the amount of credits needed to comply. I mean I were

03:06:49.600 --> 03:06:52.799
getting in the weeds. But I mean the point is we, want

03:06:52.799 --> 03:06:56.200
I mean I want these resources in the market. I don't

03:06:56.200 --> 03:06:58.500
know if y'all do or not. But I think that it's important

03:06:58.500 --> 03:07:04.700
to have them. Um you're giving them a, a revenue stream.

03:07:05.600 --> 03:07:09.200
To perhaps jump start something that everybody has

03:07:09.200 --> 03:07:12.299
said that we needed and we've lagged behind. So why

03:07:12.299 --> 03:07:18.399
would we um, you know. As Will said, NRG just went out

03:07:18.399 --> 03:07:20.600
and bought a company that does a lot of this demand

03:07:20.600 --> 03:07:24.000
response and energy efficiency. And you know. And they

03:07:24.000 --> 03:07:25.799
they deploy their, one of the best in the state of

03:07:25.799 --> 03:07:28.899
deploying it. They do that now. Why would we spend

03:07:28.899 --> 03:07:31.299
more taxpayer dollars or ratepayer dollars on something

03:07:31.299 --> 03:07:34.299
the market is already achieving for us. We saw a beautiful

03:07:34.299 --> 03:07:37.899
example of that on Friday, December 23rd. Where Load

03:07:37.899 --> 03:07:41.500
right at the critical time, flatlined, that's demand

03:07:41.500 --> 03:07:45.500
response driven by smart thermostat. Maybe. How else do you

03:07:45.500 --> 03:07:50.399
achieve that system wide? It wasn't us. That's fair. So I mean. So

03:07:50.399 --> 03:07:53.899
why is that a principal not to uh, to include in there?

03:07:54.500 --> 03:07:57.899
Um I think it's great as a decision point of value.

03:07:57.899 --> 03:08:02.600
Evaluate how these resources can be incorporated in

03:08:02.600 --> 03:08:06.200
the PCM. Do we get do we get the same result by

03:08:06.200 --> 03:08:10.299
including them on a cost reduction side? Just like

03:08:10.299 --> 03:08:12.200
wind and solar, that seemed to work pretty well. Do

03:08:12.200 --> 03:08:16.600
we need, do we achieve anything additional by building

03:08:16.600 --> 03:08:20.899
them into a construct. That unlike every other energy

03:08:20.899 --> 03:08:23.899
efficiency capacity construct. You have a forecast

03:08:23.899 --> 03:08:26.799
that you reduce from because at the end of the day.

03:08:26.799 --> 03:08:29.799
Increased revenue or decrease cross looks, cross looks

03:08:29.799 --> 03:08:32.700
all the same, on an income statement, at the bottom line.

03:08:32.700 --> 03:08:35.899
When you get to operating income. Well not necessarily

03:08:35.899 --> 03:08:38.200
if if you're but, but you're broadening the pool of

03:08:38.200 --> 03:08:41.000
who can get that generate that revenue. Happy to have

03:08:41.000 --> 03:08:44.399
that as a decision point question to be asked. Evaluate

03:08:44.399 --> 03:08:48.600
the options, bring the options to us. I don't know

03:08:48.600 --> 03:08:52.100
how we can claim that a defining characteristic. Is

03:08:52.100 --> 03:08:55.500
that it's technology neutral. Is that it includes an

03:08:55.500 --> 03:08:58.100
energy efficiency program. Just say it's technology

03:08:58.100 --> 03:08:58.500
neutral.

03:09:02.700 --> 03:09:06.799
If in what subject to all of the performance conditions.

03:09:07.600 --> 03:09:12.000
You know, um I don't know. I mean, I'll work on some

03:09:12.000 --> 03:09:15.100
language here for for you. But uh you know, I think

03:09:15.700 --> 03:09:17.600
it needs to be technology neutral. I think it's a good

03:09:17.600 --> 03:09:20.700
principle. The Legislature says it all the time. We

03:09:20.700 --> 03:09:22.899
all talk about all the above and whatever. It ought

03:09:22.899 --> 03:09:25.600
to be technology neutral. Okay. Technology neutral

03:09:25.600 --> 03:09:30.200
subject to the performance criteria outlined in the

03:09:30.200 --> 03:09:30.799
characteristic. Okay.

03:09:32.700 --> 03:09:35.100
So it's I mean, I'm just trying to make sure I understand.

03:09:35.100 --> 03:09:39.100
So you would like tech, tech neutral eligible resources

03:09:39.100 --> 03:09:43.899
and decide that later. Um and then we have to figure

03:09:43.899 --> 03:09:49.399
out. Whether that would be okay um, in conjunction with

03:09:49.399 --> 03:09:51.700
all the performance and penalties and everything going

03:09:51.700 --> 03:09:52.399
on there. I think that

03:09:55.500 --> 03:10:00.000
um we can put technology neutral in there as a principle.

03:10:00.700 --> 03:10:03.600
And then leave the rest of it in a decision. I'm fine

03:10:03.600 --> 03:10:08.899
with that. The I mean, make it make it work, you know.

03:10:08.899 --> 03:10:14.799
Uh the PCM strives to ensure all technology neutral

03:10:14.799 --> 03:10:18.399
resources can participate in this market. I don't know.

03:10:18.399 --> 03:10:22.500
I mean, technology neutral subject to performance standards

03:10:22.500 --> 03:10:27.100
and uh eligibility criteria. Fine, fine. Just one thing

03:10:27.100 --> 03:10:30.600
I want to say is that SB 3, um Section 18 C1

03:10:30.600 --> 03:10:34.200
does say it has to be dispatchable. So I'm sure

03:10:34.200 --> 03:10:37.399
there's you know, just FYI and a lot of little

03:10:37.399 --> 03:10:39.100
resources are. So just

03:10:41.299 --> 03:10:44.600
okay, so that narrows the scope for us to controllable

03:10:44.600 --> 03:10:45.500
Load resources.

03:10:48.299 --> 03:10:50.799
So, so like for example, they specifically say this

03:10:50.799 --> 03:10:53.500
cannot this energy efficiency cannot be dispatchable.

03:10:53.500 --> 03:10:57.100
It's got to be in place for this full operational year.

03:10:57.100 --> 03:11:00.200
And it is valued based off the number of megawatts

03:11:00.200 --> 03:11:04.000
pulled off of the ISO forecast. And but it's not

03:11:04.000 --> 03:11:06.299
something we dispatch in and out, it is a steady state

03:11:06.299 --> 03:11:10.000
benefit. Which doesn't sync up with what.

03:11:13.200 --> 03:11:21.899
So look in, right, in comments when Zach briefed us.

03:11:22.100 --> 03:11:24.500
And and their vision and their analysis was predicated

03:11:24.500 --> 03:11:28.100
upon any loads performing ancillaries. And that included

03:11:28.100 --> 03:11:35.500
the ECRS, CLRs, Nonspin components, demand response certainly

03:11:35.500 --> 03:11:38.000
has a dispatchable component. That is in a command and

03:11:38.000 --> 03:11:41.500
control framework that ERCOT utilizes. And that was

03:11:41.500 --> 03:11:43.799
baked into their analysis and that's exactly kind of

03:11:43.799 --> 03:11:47.299
what we're talking about. That's baked in and very controllable

03:11:47.299 --> 03:11:53.899
by them to meet that high risk out. 100%. Yeah, so by definition

03:11:53.899 --> 03:11:57.100
that's dispatchable dispatch. Why don't we separate

03:11:57.100 --> 03:12:04.500
it, on EEs energy efficiency. As a, as a discussion

03:12:04.500 --> 03:12:08.200
point that needs to be made later. But dispatchable

03:12:08.200 --> 03:12:14.299
resources, dispatchable demand side resources are eligible.

03:12:14.299 --> 03:12:19.200
And how about. Let's, let's put a fine point on that.

03:12:19.899 --> 03:12:23.100
Principle of the PCM is technology neutral subject

03:12:23.100 --> 03:12:28.500
to performance requirements. As outlined, and an established

03:12:28.500 --> 03:12:34.899
implementation, and the requirements of SB 3. So

03:12:34.899 --> 03:12:37.399
that's that's the universe of technology neutral.

03:12:37.399 --> 03:12:39.799
Doesn't say every resource on the planet, says these

03:12:39.799 --> 03:12:44.000
are this is the these are the guardrails. That's the

03:12:44.000 --> 03:12:49.700
principle and the decision points examine opportunities

03:12:49.700 --> 03:12:53.700
and identify ways to incorporate energy efficiency,

03:12:53.700 --> 03:12:58.600
into the PCM. Yes. And bring us options, that's a policy

03:12:58.600 --> 03:13:02.799
here. Yes. Okay. David, you get that.

03:13:05.600 --> 03:13:08.100
Dave is gonna get the gold star for today. Keeping

03:13:08.100 --> 03:13:08.799
track of all this.

03:13:10.500 --> 03:13:12.799
Alright. So we got those two things in there.

03:13:14.500 --> 03:13:17.100
We've gone through what is an existing we've got now.

03:13:17.100 --> 03:13:23.299
We've got an addition, other additions. Um you know

03:13:23.299 --> 03:13:25.200
I think this is this is the last step that we're gonna

03:13:25.200 --> 03:13:31.600
recess and yeah, you know, final version. Going back to the one that

03:13:31.600 --> 03:13:34.200
we were talking a little bit of time on and trying

03:13:34.200 --> 03:13:38.600
to figure out which one it is. Um appropriately placed

03:13:38.600 --> 03:13:41.000
risk somewhere in here. In the general principles,

03:13:41.000 --> 03:13:44.200
I just want to have a general principle um that talks

03:13:44.200 --> 03:13:48.299
about considering the impacts to all customers. Um

03:13:48.299 --> 03:13:52.799
so that means rep, coop, mounie. As we kind

03:13:52.799 --> 03:13:55.399
of, you know, we're going to consider the impacts on

03:13:55.399 --> 03:13:57.899
to the customers on costs. And maybe that's where maybe

03:13:57.899 --> 03:14:00.700
it gets, gets dovetailed into that appropriate place

03:14:00.700 --> 03:14:03.000
risk somewhere. But I just want to make sure as we're

03:14:03.000 --> 03:14:06.799
kind of looking at building this PCM. If we ultimately

03:14:06.799 --> 03:14:11.600
get to that point. That along the way, um as we finalize

03:14:11.600 --> 03:14:13.899
technical parameters and analyze the interaction between

03:14:13.899 --> 03:14:16.299
the technical parameters. That we can continue to think

03:14:16.299 --> 03:14:19.500
about the impacts on all customers. Maybe not customers

03:14:19.500 --> 03:14:21.600
that are served by different types of LSCs. But

03:14:21.600 --> 03:14:25.100
also different types of customers, residential um, small

03:14:25.100 --> 03:14:28.100
business, commercial, industrial. Um you know industrials

03:14:28.100 --> 03:14:30.700
are more sophisticated than residential. And but hopefully

03:14:30.700 --> 03:14:33.600
through ADR and all that one day. They can become

03:14:33.600 --> 03:14:37.299
more sophisticated. Um so I don't know how that dovetails

03:14:37.299 --> 03:14:40.600
in there. But I would like some sort of broader cost

03:14:40.600 --> 03:14:43.500
impact um somewhere in there. And maybe, maybe we can

03:14:43.500 --> 03:14:46.500
give you some language for one of those for your consideration.

03:14:46.500 --> 03:14:47.500
Maybe.

03:14:50.799 --> 03:14:53.600
So I mean on the appropriately placed risk. I can,

03:14:53.600 --> 03:14:56.899
I can go two ways on that. I think in some ways

03:14:56.899 --> 03:14:57.399
it's

03:14:59.600 --> 03:15:00.600
that's a

03:15:02.299 --> 03:15:05.299
admirable goal that doesn't necessarily belong in this

03:15:05.299 --> 03:15:07.799
list. I think it's assumed we've all been very clear

03:15:07.799 --> 03:15:10.399
from the beginning. That this is, this is all for the

03:15:10.399 --> 03:15:13.799
benefit of consumers. So I can see for the sake of

03:15:13.799 --> 03:15:17.299
clarity, just striking that appropriate place risk bucket.

03:15:17.299 --> 03:15:18.100
Because I think

03:15:19.799 --> 03:15:23.299
that that's addressed in all of the other things that

03:15:23.299 --> 03:15:29.100
define the PCM. Um and it made this may just muddy the

03:15:29.100 --> 03:15:32.600
water more. But I'm also if you, if you want

03:15:32.600 --> 03:15:36.000
to change that center. Place financial and operational

03:15:36.000 --> 03:15:38.100
risk on profit seeking businesses instead of ERCOT

03:15:38.200 --> 03:15:43.500
in order to protect all consumers of.

03:15:45.200 --> 03:15:48.000
Okay, we'll just let that work for everybody else?

03:15:49.799 --> 03:15:50.299
Thank you.

03:15:52.600 --> 03:15:56.500
What are we saying? I'm saying that unnecessarily muddies

03:15:56.500 --> 03:15:59.799
the water, all of the other characteristics. The principles

03:15:59.799 --> 03:16:02.799
of the questions is the suggestion withdrawn. So basically

03:16:03.100 --> 03:16:03.500
just

03:16:05.799 --> 03:16:09.100
we protect customers with market mitigation, all the

03:16:09.100 --> 03:16:11.100
things we listed like that protects customers. We don't

03:16:11.100 --> 03:16:13.899
need to eliminate appropriately placed. Risking the

03:16:13.899 --> 03:16:14.600
bullet underneath it.

03:16:18.799 --> 03:16:23.799
Right, good catch any other additions. Look forward

03:16:23.799 --> 03:16:24.600
to seeing the final bird.

03:16:26.299 --> 03:16:28.299
Anything else? I'm good. Anything else?

03:16:30.399 --> 03:16:31.000
Ms. Jackson?

03:16:32.899 --> 03:16:35.899
The timeline and next steps, steps you had mentioned

03:16:35.899 --> 03:16:39.100
mitigation and milestones. Did you want to say timeline

03:16:39.100 --> 03:16:42.500
milestones and take steps for implementing. Over the

03:16:42.500 --> 03:16:44.500
bridge? Yes. Or the

03:16:48.000 --> 03:16:53.700
for the plan. Staff plan. For the bridge, not the PCM.

03:16:54.299 --> 03:16:56.899
Yes, I think we've got that in here. Um

03:17:03.700 --> 03:17:07.899
uh, including the bring us a menu and a board recommendation

03:17:07.899 --> 03:17:11.200
plus options considered with pros and cons. Bring us

03:17:11.200 --> 03:17:14.899
the timeline to the January 26th open meeting for the

03:17:14.899 --> 03:17:19.899
bridge. Not the PCM, the bridge. The work that address

03:17:20.100 --> 03:17:20.899
what you need?

03:17:23.299 --> 03:17:26.100
All right, good. Glotfelty?

03:17:28.500 --> 03:17:34.200
Next draft. Alright, so you will compile Mr. Chairman,

03:17:34.200 --> 03:17:36.600
and then post, and then we can read. I feel like this

03:17:36.600 --> 03:17:38.799
is gonna be on David.

03:17:41.399 --> 03:17:45.600
Yeah, let's plan on we're gonna recess now. We'll reconvene

03:17:45.600 --> 03:17:50.100
at 2:15. Uh sorry for the lunch delay, but we'll be

03:17:50.100 --> 03:17:54.500
back here at 2:15. And as soon as we have these

03:17:54.500 --> 03:17:59.600
aggregated documents filed. We'll also have Staff make

03:17:59.600 --> 03:18:02.100
sure Staff can circulate to your individual offices.

03:18:02.100 --> 03:18:06.399
In the meantime, uh, we'll see every back here at 2:15

03:18:07.100 --> 03:18:07.799
Thanks.