(item:1:Chairman Lake calls meeting to Order) Good morning. This meeting of the Public Utility Commission
of Texas will come to order. To consider matters that
have been duly posted with the Secretary of State of
Texas for February 16, 2023. For the record, my name
is Peter Lake. And I'm joined by Will McAdams, Lori Cobos,
Jimmy Glotfelty and Kathleen Jackson. Who recently
welcomed a new grandbaby, congratulations. Thank you. Mr. Journeay,
would you please walk us through the consent items onto today's
agenda? Good morning Commissioners. By individual ballot, (item:1:Consent Agenda items listed) the
following items were placed on your Consent Agenda.
2, 4, 5, 6, 7, 11, 12, 16, 17, 19, 20 and 28. And I need to
announce that Chairman Lake has recused himself from
item 19.
Is there a motion to approve the items just described
by Mr. Journeay?
(item:1:Consent Items approved) Motion and second. All in favor, say aye. Aye. None opposed.
Motion passes. We will not be taking up Item 9 today.
And we will begin after public comment on a discussion
on items 23 and 24. But let's start with our public comment.
Oral comments related to specific agenda item, will
be heard when that item is taken up. This portion of
our programming is for general comments only. When we
do get to oral comments on specific items. Stakeholders
should not approach the table unless oral argument
has been granted or they have been invited to the table
by a Commissioner. Speakers as always will be limited
to three minutes each. (item:1:No comments from public) Mr. Journeay, do we have anyone
from the public signed up to speak. No one has signed
up to speak this morning, sir. All right public comment
is now closed. (item:23:52373, Chairman Lake opens discussion) We'll start off as I said with items
23 and 24. Commissioner McAdams has a memo about, uh the
reliability standard for the ERCOT market. I turn it over to you. Thank you
sir. (item:23:52373, Commissioner McAdams' memo on reliability standard for the ERCOT market) Uh so, the memo was an attempt to cover a
little bit of history. Um that, uh this Commission has
experienced over the last 15 years. And um,
we have as the memo indicated. Uh, debated and struggled
with the concept of a mandatory reserve margin, a mandatory
reliability standard for some time. And um, that debate
was settled as, as I indicated with passage of Senate
Bill 3. And certainly reinforced with the, uh deliberations
that the Senate and the House have been making over
the last certainly 18 months. As they have questioned
us and what we are doing to comply with Senate Bill
3, and um restore confidence in the system. And a
reliability standard is required. Um, as the memo indicated
since uh 2011, um building blocks have been debated
and formalized and formed. To help us come to an ultimate
standard and adopt an ultimate standard. Those building
blocks really formed into uh in my view three core
parameters. The first was the value of lost Load. This
came up, Mr. Chairman the other day in the hearing. Um,
in terms of a high value of lost Load. And there was
some, I also file these memos for secondary purposes.
It helps, uh articulate some history and the complexity
around an issue. For not just us, but the broader public
and the Legislature to review. And see kind of the road
that the Commission has been down for so long. But
ultimately there was a misconception that the value
of lost Load is the high cap. Um one and the same.
Um, the high cap is different than the ultimate value
lost Load. Those are two different uh two different
numbers or can be. Um and that the high cap is the
ultimate safeguard in terms of price shock to consumers.
And we regulatorily set that. The value of lost Load
is a, is a mathematical construct. That helps uh set
um important frameworks, including um slope demand curves.
It helps signal the time lapse and the reserve cadence
of scarcity conditions.
Um it also signals the ultimate value our market places
on scarcity, scarce electrons and scarcity conditions.
So in 2013, the Commission um contracted with London
Economics to, to help frame what a process should look
like to ultimately establish the value lost Load. London
Economics provided a comparative analysis between other
systems, um other countries, other grids. That had ultimately
established vols, but how they went about it was conducting
consumer facing surveys. And also stakeholder based
survey, industry based surveys. To um provide a spectrum
of, of how the market ultimately sees that value. The
uh the produced outcomes from that survey were disparate
across all regions. In 2009, the Southwest US, Southwestern
United States which included Texas was surveyed. And
uh, their values of all ranged by consumer segment from
residential consumers who uh averaged a vol of $108
a megawatt. To um, commercial and industrial, CNI
customers who valued vol somewhere in the neighborhood
of 30,000 megawatts. And uh, industrial consumers who
placed vol somewhere around 8,000 megawatts. So you
could see the disparity in uh and how by consumer segment
people viewed the value of, of a scarce electron. But
the point of this was, it was informed by their experience
by their own businesses, by their own business plans.
Um, if you can imagine a CNI customer who is
a grocery store and has a large meat locker. What the
value of that spoiled meat maybe in Summer? Or a residential
consumer in Winter, what the value of that electron
is in a cold winter, when they want to stay warm? I
think uh, as we have repeatedly said, Winter storm Uri
changed the perspective for everyone in Texas. Who lived
through the experience and that is valuable information
that would certainly inform any future of vol study.
The important thing for London Economics is if you
want to do this right. You will conduct a consumer
survey to inform a range and then ultimately it is
a value judgment. For uh, the Commission or market to
set that. In 2013, the Commission declined to uh initiate
such a survey. They looked at the analytics of London
Economics and ultimately they just uh, set a vol at
a number which ultimately was $9000. But we have since
reduced that number and concurrence to our reduction
of high cap to $5000
Vol
is important to what we're doing now. And it's important
to where we are going in the next year and two years
with our Phase II market design.
The other metrics are the, or the other parameters
are the reliability metrics that should be considered,
as the memo articulated. Uh, we have a 0.1 loss of
Load expectation uh, as a standard right now. An informal
standard within ERCOT. That expectation makes no distinction
between the magnitude of the event in terms of duration
or numbers of megawatts that are lost. So there's really
no difference between one event which I experienced
the other day as a part of Winter Storm Mara, in the
land or Load shed pocket. Uh, or um or some grander
outage, like a Winter Storm Uri level event. There
is no distinction and we need a more uh targeted uh
reserve metric, reliability metric. And the final component
is the ultimate reserve margin. And the ultimate reserve
margin has, has much baked into that number, costs
are baked into that number. Analysis has been conducted
over the years to try to refine down. Not just the 13.75%
which is an informal target reserve margin, but an
economically optimal reserve margin. And those, those
outcomes have been disparate as my memo indicated. It's
gone from 9% to up to 12.25%. And now I think after
Uri, the Commission has determined that is somewhat
in uh potentially inadequate.
So of those three uh, key parameters, there's a couple
ways to proceed to get the Commission and ERCOT off
first base and underway. To formalize a uh a reliability
standard.
There is a top down approach and there is a bottom
up approach. Ultimately, a study and survey is certainly
a top down approach that can be pursued. To query our
consumer base. To query our industry, to establish a
range of what vol may look like. But from a bottom
up approach. And concurrent to any study, I believe
you can ask ERCOT to formalize a spectrum of scenarios
around each of our reliability metrics. That we would
like to consider which includes expected unserved energy,
loss of Load hours or a loss of Load probability of
0.1, which is an LOLE of 00.1 as well.
But on a more targeted basis under a 24 hour condition
or under a one event over 10 years condition over or
over a one event and one year condition. They can, they
can formalize a menu, a spectrum of scenarios that
can be modeled that will produce. Uh, if it's done by
Astrapé which is currently does this anyway to a certain
extent. Um, they can produce reserve margins as a part
of those models, because they run them through the serve
them studies. Uh, which account for weather, um weather
events, outage events and what the ultimate uh megawatt
duration impacts are, which produces an ultimate reserve
margin. And that reserve margin will also produce an
implied vol. An implied value of lost Load that is
uh set under those conditions. So as my memo alluded
to and what I would try to articulate here. As we can
pursue both on dual tracks. That are not uh they are
not interdependent on one another. But a top down track
in surveying the public and our industry and our stakeholders
and our consumer base. Helps afford the public the ability
to actually inform our decision on what they value
scarcity at. Which I think after Uri and with debate
that we have had around Phase II is important now.
Especially as we are underway, pending Legislative feedback
on a performance credit system.
And concurrent to that, we would pursue the bottom
up strategy of running the scenarios. ERCOT could provide
us with that data, help formalize technical conferences
and technical workshops at ERCOT. With ERCOT stakeholders,
TAC, PUC Staff to help determine a range of outcomes.
And ultimately a recommended preferred approach on
on a reliability metric over the next 8 months.
So ultimately, ultimately we get a recommendation from
the ERCOT Board of Directors on that preferred approach.
PUC Staff can then take that information along with
hopefully a produced survey result. To see if we are
in the same ballpark. In terms of what consumers are
valuing scarcity at, and what our industry is valuing
scarcity at and our grid administrator. And then they
could publish a proposal for publication at that time.
Which will then serve as the basis for a substantive
rulemaking. Which we could have accomplished um by
the Summer of the following year. Finally, hopefully
adopted. So in my view, that's a process and a framework
that could be pursued to provide maximum transparency,
maximum opportunity for stakeholder input and to help
break this down. In a way to where we can uh evaluate
both costs and benefits at each step, as we move towards
ultimate adoption.
And I'd love this opportunity for some real deliberation
amongst the Commission. Like I said, I do not expect
us to uh make a decision on anything today. But this
is an exercise to go back and ask ERCOT to potentially
put together a uh framework consistent with that idea.
If everyone agrees to it. Or pose questions to us so
that we can clarify that at the next open meeting. And
then ultimately make a decision on how to move forward.
Well, well put thank you for laying that out and thank
you for putting this memo together. (item:23:52373, Chairman Lake's comments on memo) I think today's
discussion is a question of process. Uh the big, big
decisions on this important issue or are yet to come.
As the most important part of this is the what you
started out with. Is that the Legislature directed
this, the Sunset Commission reinforced that. And so uh, that's
that's, there's clear direction that we will, will follow.
And uh as as everybody in this Commission, our Staff
knows. A reliability standard has been part and parcel
of all the work we've done on marketing design. That
has been part of that has been built into all of the
options we considered. Uh, so this is, this is not something
that, that is sneaking up on us. Uh we do have ERCOT
Staff here. Woody's here who can help inform how they
would handle their process and their uh and, and their
capabilities and resources at ERCOT. Uh Woody if you
would come on up. The, I think you, you in broad strokes
you've laid it out well. In terms of the best way to
move forward. Uh ERCOT clearly, I think as they have
in the past has engaged outside expertise and consultant.
Uh both for the survey and I think in your, in your
second step. I'll ask Woody what the second step that
Commissioner McAdams laid out. Is the analysis of different
scenarios which metrics are, are viable candidates for
consideration. What are the pros and cons of each metric?
Uh what is the right combination of metrics? Uh and
lay that out. Is that something that ERCOT can do completely?
And how also, would they need to also engage the consultant
to, to assist with that? (Item:23:52373, Woody Rickerson with ERCOT commenting on memo) Yeah so. Woody Rickerson with
ERCOT. So yes, we have uh we have the model to do
the analysis in house. And we have the training now
to also do that analysis. The training? We have, we've
completed the training. Our Staff is set up to start
that work. In fact, we think we can start to work in
March. Okay, excellent. Uh, I certainly wouldn't decline
outside expertise and insight on it. So I think we
can we can combine uh in house analysis with any, any
outside perspective. (item:23:52373, Woody Rickerson, ERCOT, responding to Chairman's questions) We'll have Astrapé there to assist
us. Model changes or things that we may need to do in
order to meet whatever the framework turns out to be.
(item:23:52373, Chairman Lake's follow-up to ERCOT comments) I think a big part of the benefit of outside consultants
is looking at best practices in other parts of the
country and around the world. Uh and obviously we, we're
all very focused on this market. So certainly we want
to include what the good ideas are around the world
and what the bad ideas are. So we can we can borrow
the good ideas and discard the bad ideas. Does that make
sense? And fit in with what you're thinking here? Yes sir. Okay.
And then in terms of timing, I'm glad to hear that
ERCOT team is prepared to move, move quickly. Um and I
don't know that, I guess it's a little early to put
a specific deadline or target on it. I just uh say
based on uh feedback in the direction of the Legislature
as soon as possible. Is what I would go for uh and
we'll and I think most importantly. Your, your suggestion
of having ERCOT and their consultant, uh whatever appropriate
parties are. Come back to at our, at our first March meeting
with questions. And to be answered in any direction
they need is the most important step we direct today.
Does that make sense? Yes sir.
Consistent with your thinking? Yes sir. Okay. Thoughts, comments? Sure. (item:23:52373,Commissioner Cobos comments on memo) Commissioner McAdams, thank
you so much for your leadership on this very important
issue. And um a couple of things, I think I really appreciate
you going back to project number 40,000. And refreshing
our memories of what went on in that project with respect
to the reliability standard. I personally was partially
at ERCOT and partially here during that time. And so
uh a lot of what happened then. Was we had the February
2011 rotating outages and then um almost entered into
rotating outages again in August of 2011. Because of
the record hot Summer we had. The hottest Summer in
Texas history. And so as a result of that um, ERCOT
and the Commission went to go scrub down exactly how
much power we had. How much reserve margins we actually
had. And that kicked off a resource adequacy deliberation
that went on for years. And as part of that resource
adequacy deliberation was a discussion of the reliability
standard. Um, where um, the Commission at the time
hired Brattle. And Brattle provided a report. And there
was a lot of discussion on, you know, do you go with
the economically optimal reserve margin? Or MERM
and, and you know what to do with, with what's the right
number of a reserve, reserve margin? And um, and thank
you for reminding me of the surveys. Yes, that the
Commission ultimately declined not to pursue a survey
process. Because it was extensive and the Commission
sort of felt like they wanted to kind of move on. And
ultimately I think what happened was that
there was generation announced somewhere in the middle
of all that. And sort of the steam behind getting a
reliability standard formalized, sort of lost its steam.
And that's why I believe the Commission ultimately
just went, didn't adopt a formal reliability standard.
Is that what it was? It was the panda plants that got built? Something like yeah, you know, for, for whatever reason.
The ones that declared bankruptcy in June. Yes sir. Right, so. Parts of it. Yeah. So there was, you know
some, some evolving facts that ultimately led to the
Commission not adopting a formal reliability standard.
As part of the project 40,000. So, but, but I think
what, what you've highlighted that's very important
is the underlying analytics that need to get done. And
the breadth of those analytics that are very important
to establishing a reliability standard. That are gonna
to take time, right? Time for ERCOT to conduct some
pieces of it in house, you know, some pieces of it
in conjunction with Astrapé or another consultant. To
try to do the best we can, to do our due diligence.
To find the best reliability standard for, for ERCOT.
And you know, the chairman mentioned, you know, we
have been, you know, sort of referring to the 1 and
10 reliability standard. It's not a formal um, standard
that we've adopted. But that's what we've been trying
to achieve, 1 and 10, 0.1 LOLE. And as we
know through our work in other markets and, and you
know that everything we've been observing throughout
the country. Other ISOs and RTOs
and, and regions are evaluating other metrics. Because
the 1 and 10 reliability standard alone isn't proving
to be the best metric. I mean, you could just look
at Winter Storm Elliott, with PJM. And the 1 and
10 reliability standard, I mean they lost 46,000 megawatts. Right.
MISO lost 50,000 megawatts. So you know, how we set our
reliability metric from a reliability perspective.
But I think we need to explore what other metrics can
be combined into, you know, one reliability metric.
That we build upon for the future through like you
said Phase II market design. And um, taking an account
a lot of new facts that we now have. Which are an
evolving resource mix on our grid. A lot more renewables,
the need for resiliency, all of those very important
factors. So I think that what you've highlighted are
you know, as part of your, you know, voll and reliability
metrics. Those are very important analytics that we
could start building now through analysis. That will help
us inform our ultimate decision down the road. Um,
and I think uh you know there is a need, there is
a desire to get this done as soon as possible. But
I think that ultimately everyone would probably want
us to do the best, most diligent process we could. To
identify the best reliability standard. And with respect
to the surveys, I know you mentioned other ISOs
and RTOs have done that. I believe we
discussed maybe MISO has done that. I'm happy to engage
with on my MISO side of the business. And figure out
what process they use to survey their customers in
their region. Um, so we can figure out the best, most
effective, efficient process to conduct that survey.
And um ultimately I think um you know the steps you
laid out and next steps I am in agreement. Um I would
offer that you know, whatever I can do to assist you
through this process, I'd be happy to, from my historical
perspective. And you know 40,000 and beyond and other
markets and MISO. So um stand here ready to help
and thank you for laying out this process. I think
this is fantastic. Awesome, thank you. Well put.
Thoughts, comments? (item:23:52373, Commissioner Jackson's comments on the memo) You made some excellent points and particularly the
fact that we're building on the work that's been done
in the past. And very much the need to go back and
touch base with the public, because now public expectation
has certainly changed. And you talked about a bottom
up and top down process of the best of both worlds.
And um you know, giving the task to ERCOT in terms
of developing this process. But I did want to ask you
a question. Is your expectation also in um, the development
of the scenarios that ERCOT also be um engaged in
that process in terms of having input into it? Yes,
ma'am. (item:24:53298, Commissioner McAdams response to Commissioner Jackson's question) In, in my view ERCOT Woody and his Staff are
critical to it. Because those uh those scenarios are
really based on operational contingencies. Um the,
I mean they need to come up with that menu because
they see what the system needs on a day to day basis.
And so what helps inform that threshold of hours, that
threshold of megawatts. That comes from their operational
experience on what, where we need to draw this line
in the future. And, and what we need to plan the
system to be able to meet. I think that's very insightful.
And I believe you also in your comments included the
market participants and stakeholders, including TAC
in that process. Yes sir. It's not exclusively ERCOT, it's
not exclusive PUC, it's market participants as well. And that's the point of TAC
is because that's informed by the universe of the market
which makes this whole experience work. Absolutely.
It's all those, all of those pieces contributing and
moving together. All right. Um, Woody do you need? Yeah, Jimmy.
(item:24:53298, Commissioner Glotfelty's comments on memo) Yeah, I just have a few things to say. First of all, um
totally appreciate you pushing this forward, definitely
need to do it. Um, as I've said in the past up
here, the loss of Load expectation, the 0.1 uh, metric
um, is uh inadequate from my opinion going forward.
And I think everybody in markets around the world knows
that. And um, it's just, it's something, it's the best
tool in the toolbox today, but we have other tools
that we ought to be looking at. And um, I'm glad we
are pushing forward if it's in this plan. Where we have
stakeholder comment, uh, market participant input,
um, that can bring up other ideas. EUE and
LOLH and all of these other acronyms that um, our
metrics that can be used today and could be used in
the future. Now, I think we're only gonna have one
that is going to satisfy our actual demand curve, um
if our PCM goes forward. But there are other metrics
that we can use that I would say that we should at
least continue to look at. And they can all be translated
into each other. Um but, but as we move to a system
that is more energy based. Um, and consumers um, they
don't understand capacity, they understand the electricity
that comes out of the socket. The energy side of things
keeping that in mind. And the one final thing is in
my opinion, the LOE, LOLE is primarily
a supply side component. Uh, there's a little bit of
demand side in there. And when you look at the uh, Astrapé's
uh, economically optimal reserve margin. There
is some demand response in there and some. And it would
be my view that we ensure that those get a good look
as well. Because they, if we're talking about energy
not just capacity but energy then that is a, is a huge
component of what we need to be looking at going forward.
And, and I think your memo in your direction does that.
And I suspect I'm hoping Woody you and, you and ERCOT
believe that that can be a valuable part of resource
adequacy going forward. Sure.
Well put, thank you.
(item:24:53298, Connie Corona with Commission Staff on reliability standard) Commissioners, Connie Corona, um, thank you for, for
this timely discussion. Um Staff has, has begun their
their internal work on, on scoping this project for
creation of reliability standard. I think the discussion
we've heard today is wholly consistent with um, what
we expected um, to be tasked with in this project. And
we are going to begin our um, information gathering
in earnest from, um, a variety of sources. And we'll
be bringing that back to you periodically over the
coming months. So Connie and just to refresh our memories
here. Last year, we modified PUC Rule 25509 to decouple
age cap and bowl. So we can move forward with bowl
and all those analytics without having to necessarily
conduct a rulemaking to adjustable or suitable.
Thank you for laying that out. (item:24:53298, Chairman Lake's question to Woody Rickerman with ERCOT) Woody, what other direction
or guidance do you need from us in order to move forward?
With the consultant and the taskings that you've heard
us discuss today on, on the ERCOT. Or do you have everything
you need to move forward and be prepared to bring a
report back to, to the March meeting, with updates and
any further direction ERCOT would need? (item:24:53298, Woody Rickerson, ERCOT, response to Chairman Lake) I think we have what
we need to start work. And we can bring back some preliminary
numbers in March. Okay. It won't be anywhere near the
final product, but we can bring back some. Where we are,
what the framework looks like, what some of the parameters
within the framework it looks like. Some proposals
for people to start looking at. Okay. And I think the
intent of I think, Commissioner McAdams memo and our discussion
up here. Is from March 9th, to be uh an update on
where we are in the process. And the scoping discussion
about what, what the universe of possibilities
look like. What what should we really drill down on?
And to Commissioner Glotfelty's point, there's a big world
out there with lots of different options, lots of combinations
and permutations. And so we certainly wanna see, see
what those look like. What are the what are the best
mix of options, duration, megawatts etcetera. Uh and
so I think that's, that's the intent of the March meeting. (item:24:53298, Commissioner McAdams question to Woody Rickerson with ERCOT) Yeah, the question
also Woody is this is a sanity check moment. Is there
anything in that memo in terms of this process scheme,
that doesn't work. That you think would uh I mean this
affords ERCOT's process to sort of engage now. TAC
to be involved to sort of evaluate this, this universe
of scenarios. Do you see it the same way I do or
do you have concerns? (item:24:53298, Woody Rickerson with ERCOT's response to Commissioner McAdams) Yeah, very much so. We had outlined
a process and your memo was pretty much in line with
what we were expecting it to be. What we expect to
work on. All right, everybody in good shape? Woody,
you got everything you need to have ERCOT move forward?
Thank you for being here.
Before we move to our next agenda item. We're gonna
have a special segment of public comment for Senator
Hughes, who's kind enough to join us today. Please come
on up. Yes sir.
Welcome sir. Thank you Mr. Chairman. Good morning Members.
Thank you for allowing me to visit with you this morning.
(item:1: Special Public Comments from Texas Senator Bryan Hughes) My first uh time at the PUC. Obviously, we were thankful
for your work. We follow it closely, we work with you
and certainly enjoy doing that. Uh, I'm here to speak
on some policy matters and I'm not here to, to visit
with you about ERCOT redesign or any of that. That
really, really important stuff you're working on and
we're all involved in that process. We thank you for
working with us and, and for the, the input we
can have. Uh, that is so important as you know, everybody
in this room, everybody in Texas knows. That's so important.
Uh, I feel that attention directed there may have caused
another even more time sensitive matter. An urgent
matter to be overlooked. I wrote you a letter actually
I didn't write you a letter, let me be precise. Uh, six members
of the Texas Senate, seven members of the Texas House
a bicameral. We wrote to you on January the 9th.
And uh I want to underscore and, and just make sure
I can get that in front of you. Because as, as important
as what you're doing is. This is a truly urgent, time
sensitive matter. It has to do with the Pirkey Power Plant.
Operated by SWEPCO and their parent company, AEP.
In my district not too far from Tyler, up in Hallsville,
Marshall over in East Texas. Uh plant with, by conservative
estimates, the most conservative estimates still over
20 years of life left. A clean, reliable plant. A cash
cow for the company and most importantly for our purposes
a reliable source of dispatchable power. While we're
working in ERCOT to get more dispatchable power.
What a tragedy for us to lose existing dispatchable
power, for those Texans living over in the Southwest
Power pool, many of whom I represent. That's what I'm
here to visit with you about today. You're familiar
with the issues, but I'm here because it's important
to me. And I know it is to you as well.
And so uh, this came up back in December. The Senate
Committee on State Affairs had a hearing in Marshall.
This was discussed at length and also I think y'all
talked about a little bit maybe at the Senate Business
and Commerce hearing last week. And again, we understand
we want more dispatchable power not less. But how ironic
if, if uh while we're, while we're working hard to get
more dispatchable power inside ERCOT. We lose it outside
ERCOT at the very time we're having this discussion. I
won't reread the letter, but we do want to make sure.
Because we're concerned that in the letter, we may
not have stressed the urgency of the situation. It
really is. SWEPCO is rushing toward a retirement
of this plant, one month from now. Uh, the Commission
is not yet scrutinized the underlying assumptions that
they're relying on, in making that decision. And that's
how bad the timing is. While the clock is running out
on your ability to do something about this. Now the
hearing to give you some context, you'll recall. What,
what they want to do is close this plant and then bring
in new uh wind, and a new wind and solar build. As
I understand the hearing on the wind and solar bill
is concluded in the briefings, is nearly complete. Uh,
and that's, that's gonna be before you in due course,
and you have a good system for these things. But because
of where we are in the process, before you get the report
from proposal from your ALJ. Before that happens,
if they're not stopped SWEPCO will have made perhaps
irreversible moves towards the closing of this plant.
This plant and the lignite mine that accompanies it.
Uh for, for so many reasons that would be really, really
bad. And again this process is being rushed by SWEPCO.
Now just to speak personally SWEPCO is has been
a great company. They are and they serve their customers
well. Uh there we have a great relationship with them
in Northeast Texas and other states where they serve.
Uh this uh we have supported them in the past, in the
past on rate matters. When they needed more generation.
We've always tried to help because what they wanted
was good for the ratepayers. It's always been that
way. This is a radical departure from the course of dealing
with them. That we have seen from SWEPCO for decades and
decades. We believe it's coming from their parent company.
We don't know that but I will just say is go a field
a little bit. The parent company AEP is, is the picture
of woke, capitalism and ESG virtue signaling to
the detriment of stockholders, in this case ratepayers.
And we believe that's exactly what's driving this decision.
And so that's why I'm here. That's why we wrote to
you. We want to stress to you how important this is.
Because again at least 20 years left of life on this
plant. It's there it's providing power that we all need.
Now the argument there there's some question about
what the feds are doing. Uh experts are clear that
because the option of asking for a 5 year extension
from the EPA. This is not something being forced
by the EPA. And while I will not speak to
testimony before this body so as to honor the rules.
I will direct you to testimony SWEPCO offered before
Arkansas's Commission. Where they did not where they
said the EPA was not the main driver for this
decision. So all that to say this is a big deal and
it's happening very very quickly. So I ask, are ask
very simply take a look at our letter. I think you'll
find a helpful information there. Your, your Staff so
wherever you know what's going on. We want to make
sure this decision is being made in the best interest
of Texas and Texas ratepayers and folks who need that
electricity. Folks who you serve. These folks happen
to be outside of our comfort. They're inside Texas and
you know about your authority. You have much more authority
outside of ERCOT as far as regulating these companies.
This is a monopoly granted that power by the State
and you have the statutory responsibility and the moral
responsibility to exercise that jurisdiction, which
you do. I'm not fussing at you but I do want to
strongly admonish you. This is time sensitive. It could
not be more urgent. So please take a look at the letter
and intervene, slow this process down. You have the
power to do it. Uh you have the power to do this
and if you don't uh it'll be too late. Thank you, I'll wait for questions. Thank you sir.
Any questions for the Senator? Thank you for being
here and thank you for highlighting the urgency of
the issue.
All right. Mr. Journeay, could you move us to the next item
on our agenda?
(item:3:52391, application of Liberty County Utilities for Water Series CCN) Our next item is Item No. 3, docket 52391. The
application of Liberty County Utilities for Water Series
CCN in Liberty County. A proposed order was filed on
January 23rd of this year. And I have a memo with proposed
changes to the order. Thank you sir. Any thoughts, comments
on this case. So in this case Staff filed a motion
for abatement in the docket, is that correct Stephen?
It is correct. Okay. (item:3:52391, Commissioner Cobos' comments) Um so based on my analysis of
the information that, the evidence that Liberty has
submitted into the record. With respect to the capital
improvements and financial assurance requirements.
I believe that that information is sufficient to prove
up those two items. And so from my perspective, I don't
think the abatement is necessary. I would move forward
with approving the revised proposed order. Um which
would approve Liberty County's amenities and application
for water and sewer in Liberty County. (item:3:52391, Commissioner McAdams' comments) Yeah, Commissioner
I agree. Um the on remand, this totally changed. The
evidentiary record was uh supplemented with um with
a certified uh financial an audited financial statement.
Cash on hand was uh certified. I mean we know that
the money and the wherewithal and the means are there
now. So I I agree, I think this is ready to go.
Certainly appreciate Staff wanting to get more time
to make sure it's done right. But I think based on
the information provided on remand, we're at a point
where we can approve the revised proposal. ((item:3:52391, Mr. Journeay's comments) I can just
let you know that, that there is a lot of concern inside
this agency. About this rule about financial insurance
plans. I've had talks with a bunch of people this week
outside of briefing. I think Staff is trying to bring
an issue to you all in another docket. They referenced
this in their motion to debate. Of course this was
filed before the consent list came out. Um and so I
I think we're good to move forward here. And, and and I want
to congratulate Staff doing their due diligence. I
mean, they they are trying to read our minds and I
do a good job. It's just uh we they've stated how difficult
it is. Yeah, this is good.
All right. Lori, do you have a motion? Um I would
make a motion to approve the revised proposed order.
Second. Got a motion and a second. All in favor, say aye. Aye.
(item:3:52391, Proposal approved) None opposed. The motion passes. Next item please sir. Next item
is
Item 8, which is our item with the hearing.
All right, we'll recess this meeting of the PUC to hold
a separate hearing on the item. We'll take a couple
of minutes. So we're now in recess, wait for that.
Hopes to get set up.
To post of the Secretary of State of Texas for February
16, 2023. We'll now turn it over to the Commission
ALJ for administration of the hearing. Good morning.
(item:8:54597, Hearing on temp mgr appointment for Northern Hills Dev. Co. Inc.) I call to order docket number 54597, which is the petition
for an order to appoint a temporary manager for Northern
Hills Development Company, Inc. continuing until the
commission orders otherwise. This is Katie Marks, assisting
the Commissioners. And the purpose of this hearing is
to determine whether a temporary manager should be
appointed. We had a pre-hearing conference yesterday
morning and I admitted three exhibits. Exhibit one is
a copy of the petition and all attachments. Exhibit
Two, the affidavit of Rose Ramirez and all attachments.
And Exhibit Three, a copy of the notice of hearing.
At this time, I'll take appearances of the parties starting
with Commission Staff. Jenna Keller for Commission Staff.
Cody Faulk on behalf of Texas Water Utilities. Have
either of y'all heard anything from the utility or a
representative of the utility since yesterday?
(item:8:54597, Cody Faulk with Texas Water Utilities concerning communication) Texas Water Utilities has been in communication with
the owner of the system and is attempting to coordinate
taking over temporary management. Okay. Either of y'all
have any opening statements? No. No. Witnesses? No. No. (item:8:54597, Cody Faulk, TWC follow-up comments) George
Freitag from the company of Texas Water Utilities
is available, should the Commission have any questions.
Commissioners, do y'all have any questions? No. No. Uh, closing
statements?
There being nothing else. We will adjourn. Thank you.
Thank you.
At 10:18. Resuming with Item 8, docket 54597. Thoughts,
comments on the pre-manager or a motion? No. (item:8:54597, Commissioner McAdams comments) Yeah, in
my view, I believe Staff demonstrated that the utility
abandoned operations and the temporary manager should
be appointed. Um the petition uh sufficiently address
the basis for the abandonment. So, uh I would move
that Texas Water Utilities be appointed as a temporary
manager for an indefinite term at a compensation of
$15 per connection per month. Uh, and finally I would
move that the Commission waive the financial assurance
requirement under 16 TAC 24.357, Subsection C. Including
a finding that the system's been abandoned. I would. All right. We've got a motion.
Do have a second? (item:8:54597, approved temp. manager) Motion and a second. All in favor, say aye. Aye.
None opposed. Motion passes. Thank you, thank you. Thank
you.
We're not taking up Item 9 today. You don't have
anything on 10, 11, or 12. I believe that brings us to
13, Mr. Journeay? Yes, sir. (item:13:54589, Rule Review possible changes) Item 13 is project 54589. It's a rule
review of Chapter 26 are substantive rules out the
telecommunication service providers. Commission Staff
has filed a memorandum seeking direction from the Commission.
I believe Mr. Smeltzer is gonna lay out, uh. Good afternoon
Commissioners. (item:13:54589, David Smeltzer, Commission Staff, on rule reviews) David Smeltzer, Commission Staff. Um, normally
I don't get up and talk about these rule reviews, but
we are amending our were requesting to amend our process
a little bit. Historically because of Texas Register
posting requirements. When we go through our statutorily
required 4-year rule review. Were not actually able
to amend or update any of the rules as part of that
process, which makes it. You know, it's less than optimal
exercise. And so this time around, we're first file
what we propose is to first file a preliminary notice.
Calling for ideas um from interested uh parties, um
you know, anyone who has suggestions. And we're gonna
pull internally for suggestions as well so that when
we do post our formal notice of the Chapter 20, Chapter
26 Rule Review. We might be able to incorporate low
hanging fruit changes. So uh the idea would be send
us all your ideas like you normally do. And if they're
big meaty policy ideas that warrant their own um project.
They will be handled the way they have. We'll catalog
them and bring them up when the Commission has a bandwidth.
But if there's little stuff um little tweaks or rule
changes or things that will just make life easier.
Uh we want to do that as part of our review process.
We think it'll be good um, process improvement and
the Chapter 26, which are telecom rules are the ones
that are next up. And so this is gonna be kind of
a test run. And so um uh if, if you guys are
in favor of this, we will make this our standard process
without sort of pestering you at this stage at the
open meeting in future rule reviews. I like it always
looking for ways to embrace continuous improvement.
Heard that from some engineers before. Thoughts, comments?
We've got enough work around here. Any innovations
are helpful, so
Thank you. All right, carry on. Thank you Mr. Smeltzer.
I don't have anything on 14. Which brings us to Item
15. Mr. Journeay? (item:15:52828, Golden Spread Electric Cooperative to change transmission rates) Item 15 is docket 52828 is
the application of Golden Spread Electric Cooperative
to change their wholesale transmission rates. A proposal
for decision was followed on October 25th of last year.
The ALJ's declined to make any changes in response to
exceptions.
Thank you sir. This is a bit of a meaty one. Thoughts,
comments?
Yeah, um. Mr. Chairman, members. (item:15:52828, Commissioner McAdams' comments) I had concerns about
this. Um my only, I'll lead off from the outset. I believe
we should adopt in part and reject in part, the PFD
before us. My issue with PFD is the inclusion of the
expenses um for the executive benefit restoration plan.
And for the rest for the purpose of transmission service
rates. These are discretionary costs um that exist
to attract and retain paid executives. Um although
Golden Spread does not have shareholders, these expenses
are more in line with the interests of the member cooperatives
than with the customers. Which as, as a T-costs uh matter
The customers are everyone in the system. It has been
the practice of the Commission to not include similar
experiences, expenses in other rate case uh contexts.
And I do not believe that we should do so here. Um
I really am concerned about the precedent that we're
establishing. Uh the nuance between a cooperative member
and a shareholder of a corporation is somewhat nuanced.
I'm a member of a cooperative, but I'll tell you, I
feel like I believe I'm a shareholder of that cooperative.
I mean, their their business operations um affect my
day to day life well being, um, profits. I mean, how
much I have to pay for an essential service. So I do
believe there's, there's somewhat of a of an apples
to apples comparison that could be made. I believe
that in the grand scheme of things. This is not a lot
of money in terms of a, of a T-cost filing, $422,105
for executive benefit restoration plan expenses. Um
but it's, it's not reasonable and necessary to provide
utility service to the public to the entire uh system.
Nor do I find that it's in the public interest. So
I'd I'd welcome any thoughts on it, but I certainly
have a motion. (item:15:52828, Commissioner Cobos' comments) I agree with Commissioner McAdams that
the inclusion of those costs I think were problematic
for me as well. Um, as you pointed out, we have a
long standing Commission precedent not to allow these
types of expenses to be included for ERCOT and non-ERCOT
utilities. And because these costs that the cooperative
is um, looking to include in their wholesale transmission
service rates are ultimately uplifted to all ratepayers
in ERCOT. I do not believe that the ratepayers in ERCOT
should be paying for these types of expenses that are
you know, not um, not directly related to providing
utility service. And so I, I would um, disallow and
remove the $422,105 from the revenue requirement consistent
with longstanding Commission precedent. And we want
to make sure that we move in the, in a consistent policy
direction. And um, that's what I said on that issue.
I'm, I'm good with the, the other two. The transmission
line and the operator transmission operation center.
Um, I do think we need to modify the PFD with respect
to the requested rate of return. And to clarify that
the, the basis for the reasonableness of the request
a rate of return is based on the supplemental evidence
that was filed. Not the presumption that was created
in the rate filing package for um for the co-ops that
um has been since been amended anyway. So that's
key difference. Thank you for pointing that out.
As such, Commissioner. Would you um uh allow or order
Golden Spreads. Uh if Golden Spreads, tariff needs
to be amended consistent with our decision, would you
direct them to do that? I just want to make sure that
the tariff is brought into alignment with, with those
changes. It's part of that. I'm also with throughout
for consideration the seasonal export prices um because
that's something we've, we've looked at before. Any
thoughts on that first, I'm hearing of that part on
So. Well, it's it's, we we made some changes to prohibit
that. And so if we're gonna be consistent on one side
of the table, I think we want to maintain that across
the board. May I jump in sir? Sir. (item:15:52828, Mr. Journeay's comments) We're gonna need to have Staff
calculate a new rate for us based on this disallowance.
At the same time. I think we need to make an adjustment
to their import export tariff. A project has been set
up after we changed that rule to allow um tariffs to
be brought up to that standard. But because we are
changing their rates here. And my understanding is
the rate in the import export tariff itself is based
in part on what the, what the rate is set in this
case. That we need to do, not only catch the neuticles
rate, the transmission service rate. But we need them
to figure out what the proper import export numbers
and that tariffs should be. And since we're going to
deal with that, we might as well get rid of the seasonality
um that the amendment to the rule recently directed.
Make it consistent with our previous ruling. That makes
sense that both of those calculations are intertwined.
So that's my understanding based on the this alignment
of the $422,000 and that will require recalculation.
And while we're at it, let's let's just do the recalculate
the import export tariff. Is that okay, carry on. Just
wanted to. That was that was part of the.
I heard Lori make a motion. Okay. Well, I don't know if I can because of this recalculation
do we have to bring you back? So I think that you
all made your decisions clear on on the decisions to
adopt in part and modify and part and reject in part.
Uh certainly make that vote with understanding that
we will and then delegate us authority to request Staff
to give us some new rate numbers um and uh and and
update this tariff. We will get those, we will modify
the order and bring it back to the future meeting for
you to actually vote on the actual rates. For the,
I asked for a motion to direct OPDM to prepare an order
consistent with our discussion. To disallow the retired
$420,000. Recalculate
and run revised numbers to account for that disallowance.
And prepare and either have OPDM Staff and/or Golden Spread
Prepare a new import export tariff. I can do that.
Um so, Mr. Chairman at this time I would move to accept
the PFD in part and reject the PFD in part. Consistent
with our discussion of the executive benefit uh restoration
plan expenses and if necessary authorize a number
run. If the rates needs to be recalculated as a result.
Additionally, if Golden Spreads tariff needs to be
amended consistent with our decision, I would direct
them to do that. As well as prepare a reconciliation
of the import export tariff. (item:15:52828, approved) That sounds like a good
motion. Got a second? Second. A motion and a second. All in
favor, say aye. Aye. None opposed, motion passes. Thank
you y'all.
Next item please, sir.
(item:18:53758, United Texas for CCN) The next item is Item 18, docket 53758. It's the application
of United Texas for CCN under PURA 37.051(c-1)
and 37.056(b)(2).
A draft preliminary order was filed yesterday. Thank
you sir. Another interesting pocket. Thoughts, comments?
I have a little bit to say here.
(item:18:53758, Commissioner Glotfelty's comments) Um I'm actually gonna read this because I wrote it
out because I'm uh just I found the words on my page
are, are the right ones. Um, I said this case is very
challenging for me. I have filed cases similar to this
in numerous states in my past life and it's never easy.
What I have found is that every state law is looking
inward, not outward. It is how can I build the best
system internally without the help of my neighbors
close or far. And unfortunately the laws that govern
how we deal with unique technologies such as HVDC
and planning permitting and operation are mostly
non existent in our state as well as every other state
around the, the US.
In my mind, HVDC lines can provide
the state with three things that our citizens need
and that our leadership has directed us to improve.
Resiliency as we can lean on other states and RTOs
to help us when we're down. Without jeopardizing
FERC jurisdiction. Reliability as they can help improve
voltage across the system and improve the amount of
distant resources available. Um, not affected by different
not affected by similar weather patterns. Um, to help
us ensure reliability across the system. And economic
reasons as they can help bring lower cost energy to
different areas of the state without a massive build
up of the lower voltage system. All of these things
are things that would improve our system for our consumers.
Our statute, in my mind draws a very bright distinction
between transmission lines and tie lines. Uh that's
not our statute, that's our rule. And this is where
we start to get a little muddy in the water. Um there's
specific things that need to happen for each individually
and no mention of CCNs for tie-lines. Um this is uh
this is uh deep mud, if you ask me. Um there are
numerous points uh in the filings that in my opinion
are right on target and we should be able to permit
these types of lines. Because if we really, really wanted
these types of lines, we would claim that we have the
authority to do so. The biggest barrier to HVDC
in this case is the right of first refusal law that
the Legislature has passed. I believe this handcuffs
me, I want to push this line and other lines, but this
law was passed and it's our job to implement the statute.
Since the right of first refusal and non-ERCOT areas
is pending review at the Supreme Court. There's quite
a bit of uncertainty about its effect outside of ERCOT
and perhaps inside. What I do believe is our process
and a denial will not stop this company and others
like it from seeking interconnection at FERC.
Uh and they will likely get it in my opinion and that's
gonna be very hard for us. Um we don't know what will
happen after that as to how a FERC ordered interconnection
and I right of first refusal work in tandem or work
against each other. We'll have to see if that happens.
We don't know if that will happen.
Um with all this said, um if I had the ability to
abate the docket to set it aside for new filings uh
to wait till ERCOT um files information about a study
that they would be required to do in the law or wait
till the Supreme Court rules. I would love to do that.
But I don't think we can, I think the law unfortunately
tells me that um that a right of first refusal is a
right of first refusal. And uh according to this docket
at this time, um I would have to support the Staff's
position on this.
We'll put uh philosophically everybody on this Commission
(item:18:53758, Chairman Lake's comments) we've, we've all spent a lot of time working on uh a
lot of, a lot of deliberations. A lot of hard work
on market design and and um philosophically, I think
everybody has, has put a lot of sweat into ensuring
competitive fair market places and that would extend
to transmission. Um, and so I think philosophically
everybody welcomes more competition, more technology
better. We've all been saying that for couple of years
now, but also see your point about the constraints
under current statute. Um thankfully we do have the
Legislature in session. Um, I'm highly confident that
some of those good folks will be asking, asking about
this issue. And they're, they're the ones who, who change
statue. Glad we have a transmission expert to send
to them.
Other thoughts, comments on this issue? (item:18:53758, Commissioner Cobos' comments) Commissioner
Glotfelty, thank you for your comments. I think, you
know, it's determined highlighted, we're always looking
for ways to um, you know, increased competition in
the market. Um, and and um, you know, competition delivers
you know, great results. And we've seen that historically
and I think, you know, I agree with you and, you know
at this time, the law is just not written to allow
this type of um, construct. And um ultimately, there's
you know, the law, the legal issue in the background
that needs to get settled and we've got the Legislature
in town. And um the the legal issue is really what
what we're dealing with right now is the pair of provisions
are written as they are. And um, we have to, you know
read PURA as we're assessing this case and and move
forward. And this is a very unprecedented request of
sort of, asking for rights and partial, you know, sort
of entry with the CCN II Phase, sort of CCN process.
That my understanding the Commission has not um dealt
with in the past. So, um ultimately, as I read the
Staff's draft preliminary order, I am in agreement
with with their ultimate conclusions. And we asked
for extensive briefing on this issue as well. And um
I think all of that combined leads me to the conclusion
of adopting the preliminary order.
Thoughts, comments? Perhaps a motion?
Uh, Mr. Chairman, I would move to adopt the draft preliminary
order. Okay. And, and I would second that with the remand
back to the ALJ. So that the ALJ can request
that reunited withdraw at CCN application or dismiss
the case. SOAH svante per um or per Commission Staff
motion to dismiss. Sure. Happy to make that motion. She's
got a second. All right. (item:18:53758, motion approved) We've got an amended motion and
a second. Yes. All right. All in favor, say aye. Aye.
None opposed. Motion passes.
That brings us next item please, Mr. Journeay. Next item
is (item:21:54502, ETT for Good Cause Extension of Rate Filing) Item 21, docket 54502 is the application of ETT for a good
cause extension of its rate filing requirements under
our rules and adoption of a rate settlement. A proposed
order was filed on January 13, and I have a memo with
proposed changes to the order. Thank you, sir. Thoughts
comments?
Sure. I'll give some preliminary feedback first. From
my perspective, (item:21:54502, Commissioner Cobos' comments) I think we have two options and one
is to um deny this extension and have ETT come
in for a full on rate case. Because their initial rates
were set in 2007, and based on the information that
I have read their investments have grown to $3.4 billion
about $3.4 billion that have not been subject to a comprehensive
rate review from the Commission. A lot has happened
since 2007, for the company. Um, in addition, you know
including the build out of press um, which massive
you know, expenses there and capital investment and
um lines that the company is built into the Lower Rio
Grande Valley and those are significant investments
as well a lot. I mean just we haven't gone through
this process and just for background, you know, the
initial rates are set in 2007. Ultimately ETT
came in a couple of years ago or so and entered into
a settlement agreement. That included um there agreement
to reduce the revenue requirement by all interim t-
costs proceedings, um, not recover rate case
expenses. And at the time, you know, the Commission
approved those settlements after that the other transmission
only utilities um orderly came in with the same sort
of framework. And um that was definitely much appreciated
when I was at OPAC and you know, we didn't have
the, we're, I mean we're at the point where all the
utilities were now coming in for the Legislation, the
PUC role that requires the companies to come in every
4 years. And um, so the transmission only framework
and the settlement of those those cases was certainly
appreciated. Because we were dealing with a ton of rate
cases at the time. Um as I sit here today um at
some point we've we've got to bring the these folks
in, right. We gotta bring the company in. And um either
from my perspective, either we do that now or we grant
this good cause extension and including ordering paragraph
that said that they can't come in for another extension
after this one.
(item:21:54502, Commissioner Glotfelty's comments) I um I think in this instance with the Staff burden,
with the challenges that we all face in terms of time.
That we that we grant the extension. Um to me if there's
a reduction in this and obviously a reduction um and
costs would benefit ratepayers um over this time. But
it's clear that if we do this, we need to say that
this is the last time. I mean, it's a uh it's important
that we get them in here for our duty as protecting
ratepayers. But I would offer my view is that we we
grant the good cause extension and uh make it known
that we'll see you in 2025. Yeah. (item:21:54502, Chairman Lake's comments) Certainly recognize
the burden on Staff. And we don't, we don't need to do
more work on them. But I appreciate the point that
this can't go on indefinitely. And there has been a
lot of change. And so if we do grant this one, it
is by definition the last one, the last extension.
(item:21:54502, Commissioner McAdams' comments) The point is is well made and well taken to. Uh this
reminds me of the uh of the old days before Senate
Bill 735. Where those they would never come in for
a comprehensive base rate proceeding. You know, they'd
go 9 years. Some of the IOUSs would go
9 years without a base rate proceeding and just
keep rolling the interim T-Costs and the DCRFs. And
uh so it's what you're suggesting is consistent with
State and Commission led policy. But as you were talking
I was just like man, that's just one more crushing
project for, for Staff at this time. So if we could
buy a little breathing space with the expectation that
look, this is this is it we got to get you in
the next time I'm comfortable.
I mean, I just don't want to continue to kick and kick
You're always gonna be busy. (item:21:54502, Commissioner Cobos' follow-up comments) Commission is always gonna
be busy two years ago. It's busy now. It's probably
gonna be busy in 2025. The Commission hated when we
did the scheduling Bill with 735. Put everybody on
a schedule and, and one thing to take into consideration
and I'm in agreement that it's fine moving forward.
If you guys are, you know, if everyone is in agreement
that this is the best thing to do right now. But we
have other rate cases that are coming in where were
you know, some, I've recused myself from. Some I'm gonna
be involved in. Where those ROEs are a lot lower and
here they're locked in at 9.6. And so um I'm just,
you know, while it is a reduction. Um they have a pretty
healthy ROE right now. That we need to look at at
some point and I mean we just got to make sure that
we do our job on our end. And do a comprehensive review
of everything that's been invested over the last several
years. And um look at um not only an OETT
Is partially owned by AAP, and we have transmission
only utilities that have certain um arrangements and
relationships with other utilities. And we would, you
know, as we've looked at other utilities and ring fencing.
That is something that maybe we should consider is
we move forward because there's a lot going on. It's
that that's underneath this hood that you know, my
preference is not is I don't want to continue to kick
this down the road. I'm fine with. Ultimately, the
Commission's desire to um you know, take a breather.
But you know, if we can include that paragraph, that
provision the ordering paragraph. I think that's really
important.
Makes sense for me. Can you give us a motion to that
effect? Yes, I would move to grant the good cause extension
of the rate filing requirement under 16 TAC 25.247. Adopt
the rate settlement agreement and include in the order
and ordering paragraph that states that ETT cannot
request another extension for filing application for
a comprehensive review. Got a motion. And I would second. (item:21:54502, motion approved) A motion and a second. All
in favor, say aye. Aye. None opposed. Motion passes. Thank
you Lori for laying out those options. Um and Jimmy
thank you for reminding us of the Staff. The extraordinary
amount of work that Staff has on their plate. I don't
have anything on Item 22. Which brings us to Item 23.
Um regarding wholesale electric market design particularly
want to
discuss the firm 2nd phase of our firm fuel. Uh I wish
I'd had time to probably should have filed a memo.
But it's been a busy week, been a busy year. Um it's
been a long year. It's been a long year. Um we, we
(item:23:52373, Chairman Lake's comments on firm fuel) we talked about this in the last meeting and obviously
this is, we've, we've seen the first phase of firm
fuel. We're all part of developing that. We've seen
it deployed now uh at least once, maybe twice. Yeah
For both Elliot and Mara, the most vulnerable points
in our uh in our grid. Uh it performed very well and
it's doing exactly what we expected to do and, and what
I believe that the Legislature expects. Uh we we still
owe our cost of information on the second phase of
firm fuel. Which is contemplated to expand eligibility
of generators participating in the program to be on
on site storage to include all sides storage with firm
transportation to the generating resource. The key as
as you all are well aware and have been briefed and
we discussed last time is the key decision point hinges
around what, what what is the definition of qualified
pipeline.
And I'll a layout where my thinking is at the moment.
But with of course the caveat that just like everything
in this marketplace, an ecosystem, it's nothing straightforward.
It's always always complex. Obviously the overarching
concern for this is deliverability of the gas. We want
to make sure that not on normal days, but in times
of when the system is under the most duress during
extreme cold conditions. When everybody else wants
gas, everybody else needs gas, that the natural gas
can be delivered to generating resources. That keeps
keeps the lights on, keeps the heaters running, keeps
our citizens warm on those very, very cold nights.
The Railroad Commission's curtailment rule introduces
a challenge because it prioritizes
LDCs ahead of generating resources. Generating resources
are now second, which is a dramatic improvement. Uh
and it's important to note that is a dramatic improvement
over the situation during Uri. But it presents a
challenge for Railroad Commission regulated pipelines.
Uh we have, as you all know, worked with the ERCOT
team, and outside counsel to do what I consider a pretty
thorough diligence process on evaluating all, all the
pros and cons. Uh and look at this from every angle
poked, prodded, pride to, to figure out what is truly
firm. Um
based on
the percent of total gas used by LDCs
and
the robust contract and disclosure requirements uh
included in the, in the, in the framework that ERCOT
and outside counsel has been prepared, has prepared
for us. I
I'm out of, I think I'm at a place where I'm comfortable
expanding the definition of qualified pipeline to include
uh, to, to strike the language that says must not be
surgically to curtailment. But that's, that's what we
need to have a discussion about. Uh, we, we heard
some information from, I think Kinder Morgan at the
last meeting about how much, how little gas actually
goes to the LDCs. Um, we dug into it and uh.
In the highest use periods during the Uri, a 32% of
natural gas demand was for residential. The next 40%
was for power plants. So that's, that's generally consistent
with system wide. There's some, there's some of course
some changes in extreme cold like that, but that's
the, the increasing demand was proportional between
LDCs and, and power plants throughout that event, relative
to each other. So, that gives me some comfort that
there's it's only a third. It's still a third, but
um, It's not 60% of the gas in an extreme event like
that would be uh prioritized ahead of power plants.
Um, so I'll we'll lay that out for, for consideration
discussion if we do. However, uh, open this up and
like I said, I'm, this is, this is why I
want to deliver it. I'm not, I'm not convinced necessarily
one way or the other, but we've got a lot more data
and information than we did last time we talked. If
we do strike the line about subject to curtailment
from the definition of qualifying pipeline. I could
only get comfortable with that if we pair that with
a strict penalty regime that would include clawback
for nonperformance. Like we have in in the Phase I
and some sort of penalty box, if you will for non-performance
for the gas, the pipeline company. If there's failure
to perform, that company is no longer eligible to participate
in the firm fuel product for some period of years.
Uh even, even if its curtailment, we've all heard that
curtailment won't be an issue, but if it turns out
it is an issue, guess what, you're out of the program.
Um, and finally, uh, would require a report on the
performance results each year, from ERCOT to the Commission.
So that this doesn't just get uh kind of sent off into
the wind and nobody keeps track of how well those interest
state pipelines are performing. Uh, would want to make
sure that every year the Commission is evaluating how
well they're performing. If this ratepayer money is
truly going to increase reliability of the natural
gas fuel, we need to keep the power plants running
so I'll stop there and open up. We'd love to hear your
thoughts, comments? Like I said, I'm
I'm laying in the same direction, uh, perhaps for a
little different reason. (item:23:52373, Commissioner Glotfelty's comments on firm fuel) Um, I think, um, two points
for me, um, one of them is, would we actually be able
to satisfy firm Load on the interstate system without
having intrastate gas put into it. And um, as I've
been told, the answer would be no, we would have a
very hard time satisfying our firm fuel requirement
if, if that wouldn't happen. Um, I feel like a parent
on this one. I want to like slap the wrist of the
intrastates and say no, this is the wrong thing.
We wanna, you're in time out. Um, but that's not in
the best interest of the consumers of the state. And
um, I just feel like we need to um allow them in
at this time. I'm totally uh supportive of your caveats
um, and penalty the penalty box. Yeah. And um, I think
that that would give us additional clarity over the
next few years as this, you know, happens. Um, and
you know, we need to get on with this. We are a
huge gas producer and I think that uh, this can provide
value and security to our power plants in the state.
Um, I hate that we have to do it, but I think
that we have to do it. Oh, so just unpack a little
bit here. So kind of things to think about, you know.
(item:23:52373, Commissioner Cobos' comments on firm fuel) Phase I, firm fuel has proven to be extremely beneficial
right? Um, those, those resources, the, the 19 that
were selected through firm fuel Phase I. Um, have
proven to be very beneficial in the last two cold weather
events because they allow these generation resources
to cycle off to on site fuel oil when we have received
gas pipeline curtailments and, you know, like clockwork
we're gonna get, you know, that we're gonna have a
cold when we have a cold weather event. We get a curtailment
notice from the pipeline and those plants have cycled
off and we've been able to maintain reliability more
specifically, um, Winter Storm Elliott. Which was devastating
to certain regions of our country, um, in, in Texas.
We during that very, you know, the second coldest weather
event we've had out of those 19 resources, we um only
used 8. And for 950 MW, um, and only on maybe one
or two days, we used the entire 48 hour duration. The
rest of it was up to an hour, I mean up to
a day. So what I'm, what I'm where I want to lay
this backdrop because it's important, number one for
me, is that I don't want to lose those resources in
the next RFP. Because we've opened it up and they get
outbid because we're gonna be setting ourselves short
if those plants are not in part of the firm fuel products
that are tremendously important along that pipeline
that curtails the gas pipeline that curtails if we
lose them, we're gonna put ourselves at risk by opening
the pull up even further. And I'm not saying we shouldn't
but I'm just, I don't think, I don't know that we've
talked about right, like if you, if you put out the
RFP for Phase II and it includes Phase I and Phase
II. What is the impact to the Phase I products,
the Phase I resources that are strategically targeted
resources to address the gas pipeline issue that we
consistently have like clockwork. Okay, so Phase I
as we know was for alternative on site fuel and um
one resource that owns a pipeline and storage filler.
What I would like to understand, just kind of in a
in a sort of strategic um step by step processes. Um
is there any more of that functionality out there?
We've sent a signal with the first RFP for Phase I
is there any more of that that functionality out there
The dual fuel capability? Uh because ERCOT when we
asked them to um gather information on what resources
were out there with that capability. They came back
with three buckets, one was existing ready to go pretty
much ready to go. The other one was in some form or
fashion. Uh maybe not as ready to go, have any have
any of those resources built up to the market signal
can we capture more of those resources. Um so I would
like, I mean, and I know this is gonna take time, but
maybe we do things in parallel to have ERCOT survey
to see if there's any more out there. Um, in that Phase
1, bucket meaning on site alternative fuel and you
know, pipeline ownership of some form or fashion and
the details of that. So that we get a picture of what
what we've sent a signal for what we can continue to
capture there. With respect to Phase II. Um, boy. Um
okay, so the current definition excludes the gas utility
pipelines that serve human needs. And I'm wondering
because I heard from ERCOT and, and I think Enterprise
/Kinder Morgan um, explained at the last open meeting.
That if we, we take out, if we do, if we don't
modify the proposed definition, we won't get any off
site arrangements. Well, I don't really know, I mean
I'm just going off of what I've heard, I mean, can
ERCOT survey to see what interstate pipeline configurations
out there? Would be interstate pipeline configurations
would be out there? That could participate if we were
not to change the proposed definition because what
I'm trying to figure out here is. Okay, so how big do
we need to build this product? Right, because we just
had a massive Winter Storm Elliott and we only use
950 megawatts, we are at 3000 megawatts with Phase
I. I mean, do we need to go to like 5000, 6000, 7000? I
mean we need to kind of think about what have we been
using. What makes sense to scale up and and incrementally
so that we're getting exactly what we need and not
over paying and over procuring and certainly and you
know this. Um, that my concern is um, I don't want to
pay for what these generation resources should, should
already be doing and what they're already doing. And
historically have been doing because ultimately all
those costs are uplifted to to load. And, and I don't
want to over procure and pay for things that you know
these companies should be doing anyway. Absolutely
This is designed to incentivize new behavior, not pay
for what people already doing. Let's go ahead and call
ERCOT up and Marcia. We have, we have questions.
It's a good point about the Phase I most vulnerable
on site being priced out, potentially priced out. If
the criteria is expanded. Thank you all for being
here. Good morning Chairman, Commissioners. (item:23:52373, Chad Seely, ERCOT, comments on fuel survey) Chad Seely with ERCOT.
Commissioner Cobos, I guess to the kind of your comments. Today
we are going out with a fuel survey that will cover
both Phase I expectations going forward. And to get
the additional information for the decision points
that we raised in our January memo for, for Phase II
which is the amount of storage capacity out there that
could drive the the procurement quantity for Phase
II, and also potentially the duration. So we're not
asking for the Commission to give us feedback on those
two pieces yet? Because we think the fuel survey will
be informative to that discussion down the road. How long will that take you think? Uh
we requested 10 days to get the information back from
generation resources that have natural gas. So So we'll
get that information back and in 10 days and be able
to assimilate that and hopefully come back and and
March and provide that information. Hopefully you can
provide before March.
Before the meeting, before the, before the March Open Meeting. That
satisfied your question about the survey? I think. Yeah
I think so, but just to better understand. So Phase
I is going out and seeing what, what regeneration
resources on site alternative fuel. Maybe some more
have been added. Some additional generation resources
have maybe are looking to build pipes or something
So Phase I is just, you know, a relook at what, what's
out there, is that? Yeah. So I let Davita to speak to
the details of the survey. But it, we've combined it
into one survey. So now to all of our generation resources
are supplied by natural gas to answer the questions
around future potential for Phase I but also to grab
the information for Phase II as well.
That's that's right. Um, we included questions that
we previously asked under a prior survey that informed
your decisions regarding the development of Phase I
So we're asking those same questions were also asking
additional new questions that are intended to give
y'all some granularity on the qualifying pipeline question
we ask what would qualify under the existing definition
What would qualify if we change the existing definition
to include those interest rates that are serving LDCs
and other human needs customers. That would answer
would be number of megawatt right? Yes. What resources
resources and what, what are their capacities? That's
right. And then we also ask additional questions that
are similar to questions that we asked previously and
we're sending it out today and in case there was additional
color that needed to be developed and put into the
survey based on this discussion. Okay, now that that
sounds like the exact sort of buckets of information
that I'd be interested in learning about. There's been
some maybe information that there's generation resources
that are looking to build lateral pipelines to a storage
facility that they own molecules um from is that is
that part of the questioning? We don't ask questions
that would distinguish between lateral pipelines and
single pipelines. We just ask, would you essentially
qualify under the current requirements which involved
a pipeline? If you have multiple, you would qualify
but we don't distinguish between multiple laterals
and individual. I think your other question was around
the procurement process and I think ultimately it would
be great to get to one clearing price. But I don't think
we envisioned Phase II this first round, you know,
being combined with Phase I because there are different
features in this framework as we've talked about in
the, in the in the filing at the last open meeting
and with the additional comments by by Chairman Lake
dealing with the third party uh and the impact on this
generation resource just sets a little bit different
features than dealing with the generation resource
that owns the storage in the pipeline infrastructure
So I think as we mature with this firm fuel service
we should try to optimize this into a single clearing
price. But I don't see how that would happen in this
first round. You would run to auctions correct to RFPs
that would go out okay. That would address your concern
about Atmos? Yes, it allows the Commission to see how
this Phase II is maturing and then further engage
the Commission on how we can optimize those into a
single single product. I really appreciate that clarification
I think that that does address my concerns and you
know, to have two different sets of firm fuel because
they, like you just said, they're very different characteristics.
We don't want to get in the way of the benefits that
the Phase 1 has provided by maybe in the future there's
some way to combine them, but I think what your approach
sounds good to me, definitely the separate procurement
permits the Commission to right size each one.
And so what what and I know this is probably a question
for us from a policy direction. I know the first firm
fuel Phase I was one year we'll have to decide if
we're gonna do, you know, one year, two years, three
years as part of the direction. Um, ultimately on this
next round that some, that a decision point you would
expect from us to and also the duration requirement
I think your survey field survey results will be very
helpful in understanding um, what's out there for the
duration requirement. So I appreciate that. I think
those are generally all the questions I had. Um, well
one thing actually, um, additional thing. And Chairman
you mentioned, you know, revenue callback penalty box
performance requirement. I think those are all good.
Um, if ultimately we end up at some point in the future
adding those pipeline arrangements. My, my only thought
and I've said this like in other forums is, you know
it's great and we call back the money and it's, and
it's good if folks go into a penalty box, but at the
end of the day who suffers, it's the people that are
without power that could potentially lose their lives
in a Winter event. So in my opinion, there needs to
be more than revenue call back in the penalty box.
There should be some kind of penalty involved. So that
that, you know, if they don't show up then we're left
without reliability and if they lose the money, great
But just something to think about. I don't have an
exactly an administrative penalty. In addition to call
back and penalty box, potentially something else. Um
maybe replacement power something else. Because at
the end of the day we lose on a reliability and the
consumers that are paying for this firm fuel product
lose out on electricity. If this doesn't all work right
That's my thoughts on it. At the end of the day. (item:23:52373, Commissioner McAdams' comments on firm fuel) This
is a market and market participants take calculated
risks on business plans, business decisions. Um, and
the firm fuel supply service is highly dependent on
geography and geographic regional availability to storage
and pipelines and redundant pipeline systems. To adequately
foster both competitive bids and competitive behavior
of service providers to our generation facilities.
And North Texas only has two real providers of
storage and pipeline services broadly. And both of
those are highly involved in human in supplying human
needs in that area and subject to Railroad Commission
policy. And if I can interrupt real quick, one of those
pipelines was actually owned and built by by the old
TXU. In order to serve the power plants in North Texas.
Which is now not in their hands. That's right. And um and there there
is a calculus that will go on here. Um that okay, so
they go into a penalty box, where else are our generators
in North Texas gonna go? Uh if they just pocket the
money and go into the penalty box, we have no other
options in North Texas. There is no infrastructure
available outside of those two suppliers. That are completely
subject to Railroad Commission's policy, which is not
harmonized with our own. I gotta tell you, I don't
know if I can get to the expansion. Um, and, but the
study will help, it'll help inform us into what degree
we're dealing with, um, of megawatts that could be
available. Uh, the plan and it's difficult because
it's a chicken or the egg situation. Kinder is making
taking great steps to try to build into that region.
And provide a storage apparatus that are North Texas
fleet would be able to avail themselves of and to foster
greater competition and give us more options, but we
don't have it yet. And um, and unfortunately they kind
of need a service like this in order to prove out the
business plan to build it. And uh, but at the end of
the day, the survey will help inform us if a phased
approach is still appropriate, like what is the universe
of megawatts of gas molecules of gas that that could
be drawn upon. And then, and then where is it? And
then what does that do for us in terms of an overall
number, a supply of firm fuel supply service that we
can count on. In the near-term right now we've got three
gigawatts. Uh, if we expand that to the now interest
state lines and then everybody that doesn't have human
needs, which I grant is not much. But let's see what
that number comes in at, is that four gigawatts? Or
is that potentially five gigawatts? Um, you know, when
you look at the magnitude of Uri and the amount
of curtailment we're getting there folks. We are getting
close. But if this is simply to expand it out to all
of our pipeline operators in Texas to support this
service, um with without the additional and you got
it. I mean, penalties are great, uh uh penalty box
is great. But ultimately, if there's, if we have nowhere
else to turn, they will, they will make the calculation
at some point to possibly make a decision that affects
our generators and that's problematic. Yeah, I hear
you. And that's what I said. I'm not, I'm not sold
one way or the other. Uh that's why this is this kind
of uh and I also. Um, I got some questions from Marcia.
But I think it just hypothetically, if we do strike
uh if we do expand the qualification definition. I'd
be very curious to see how many interstate pipelines
actually sign up with all the conditions in the penalty
box, we may may not get any. Well, in the competitive
areas, you might not get any, but in the other areas
where we have no other choice. Yeah, I'll sign up.
What are you gonna do to me, kick me out? Yeah. Well
and but those right. But also if they if they that's
why the the disclosure terms in the contract are such
a key part. So if, if they don't deliver there's
an automatic trigger. All right? We get to see we get
to see everything you were doing that pipeline in that
area. Uh which I imagine would would be a disincentive
for some of those pipelines. So I I don't know how
it would play out. Uh certainly recognize all your
all your points. Uh quick question for you Marcia. A
on the um on the first one, the disclosure in around
the force majeure language and the new. Could
you should you refresh the Commission on those requirements
for disclosure in the contemplated firm fuel contract.
Get the microphone if you would there. Um I think you
caught me. But just in case, (item:23:52373, Marcia Hook, Kirkland & Ellis, outside counsel for ERCOT) Marcia Hook, Kirkland and
Ellis, outside counsel for ERCOT. So on the disclosure
requirements, if there's a forced majeure event that
prevents the FFSSR from deploying it has to
file certain information a report with ERCOT. That
would contain, among other things, a copy of the relevant
agreement. If the failure to perform the force majeure
event resulted from some kind of curtailment or issue
with the storage. So they would have to file a copy
of the contract, any of the data. So a lot of the
data that they get their nomination data showing the
nominations that they submitted. The the volume data
that they get from the pipeline and a copy of the force
majeure notice that was provided to them. So this is
all in the category of if there's a curtailment or
some other operational issue that affects the storage
or transportation. Which is far more than we get now
which is, which is nothing. That's right. And as by
way of reminder, we've also added additional language
that would essentially strengthen the requirements
of the actual force majeure language. So that in order
to declare force majeure, the pipeline has to take
reasonable efforts and to avoid the force majeure event.
So there's additional substantive requirements that
would have to be baked into the contract in order for
it to qualify. And document those reasonable efforts
and disclose them. That's right, provide additional
information. And the goal there is to hopefully create
a contractual mechanism to decrease the number of force
majeure events and then also have a contractual requirement
to provide additional information. Because right now
in the market information that a customer on an interesting
pipeline gets when there's a forced measure event is
not quite as robust as one would hope so this would
get additional contractual rights there and that is
part of the requirement of qualifying as as a firm
transportation agreement reform storage agreement.
That's it would be a dramatic improvement status quo.
The other question I want to ask you is about the concept
of the penalties as with everything whether it's reliability
standard or market penalties. We want to strike the
balance between the uh punishment to disincentivize
behavior we don't want or you know, making sure we
have enough reliability without being so onerous that
the cost is a burden to the overly burdensome to the
businesses or the customers. Uh, do you have any thoughts
on that striking that right balance with any potential
penalties or or is that something that we need to put
some more thought into? Certainly. So we try to structure
the program in a way that disincentivize is through
not penalties, they are effectively penalties by virtue
of the clawback, but also proactively avoid. And so
For example, if you look at the PJM market and what
happened during Winter Storm Uri. It shows what happens
if you try and just rely on penalties. And unfortunately
you know, getting a billion dollars worth of potentially
up to a billion dollars worth of penalties. Ex Post
Commissioner Cobos' point doesn't help the people
that needed that power during the Winter storm. And
so we've taken the dual approach. The first part is
creating these additional substantive requirements
where we are actually getting into people's business.
And and looking and making sure there's actual substantive
requirements that they have to have a firm contract
they have to, the firm contract has to meet certain
substantive requirements and then going to the penalty
side to your point. We think that with the claw back
it does create quite a significant incentive for market
participants. To contract for the strongest arrangements
that they can uh you know, creating additional penalties
after that. In addition to that, it's at some point
there's diminishing marginal returns, right? Because
if you're already clawing back, you know, existing
program and there's some discussion about how much
claw back there would be. But the existing claw back
mechanisms are 15 or 90 days of claw back. And if you
have enough deployment, so that happens to you a couple
of times, you see how at some point. You know, 90 days
plus 90 days, it's 180 days of claw back. That could
be a substantial amount of the benefit that you got
from participating in the program in the first place.
So that's a pretty substantial penalty in and of itself
without even imposing the additional administrative
penalties. I see your point about the penalty. I mean
it's kind of like, you know, filing a lawsuit after
someone has died in a freak accident and you get the
money. You're not gonna get your loved one back, you
just get money, right? And so and if it's big enough
they'll fight you all the way to the Supreme Court.
So we don't want them to inappropriately benefit if
they're not actually contracting. And the clawback
achieves that. And so then the question is do you need
an even bigger hammer for deterrence purposes. That's
perhaps the policy question. But right now, the way
it's structured is designed to make sure that there's
an incentive for people to contract for the strongest
possible contractual arrangements. And then also that
they won't inappropriately benefit if they don't perform
or don't go out and enter those contractual arrangements.
What about um buying replacement power?
It's it's a bit of a challenge. The cost of cover idea
right? Because presumably if you're in a situation
where the FFSSRs have to deploy the ability to actually
procure replacement. Sorry, procure replacement power
might be limited. So certainly that it's possible that
you could um impute some kind of charge on them for
cost of cover and maybe even require a settlement,
some kind of settlement mechanism. But yeah. I mean
it's it's something that we can take back and think
about as we move forward with this framework. That the
thing I wanted to add too is with Phase I. We've deployed
it twice and we've had good to great performance. But
there are units as we get done with the obligation
period where we're gonna look at their availability
and how they acted and this 90 day or 15 day trigger
will come into place. We don't know what that will
mean as we move into the second RFP. So if you had
someone that is gonna get 90 days of claw back, they
may not think it's worth offering in the next time.
Based upon how we structured the clawback remedies
So we're still learning from this program. These are
very strong clawback revenue features and in Phase
I, they would be applied to Phase II. We've even
talked about um you know, how we handle Black Start
availability. And if you go through an event and it
impacts your availability, you know, these units are
getting paid every day through the obligation period.
If you fail to perform to a certain availability level
under the Black Start agreement, it starts to immediately
impact your ongoing payments and reduces that amount.
That's another feature we've talked about potentially
adding to this Phase II. It's not part of Phase I.
So there's lots of options here, but it gets to the
point of at what point are you disincentivizing anyone
to participate? And I think it's a balance that we
don't know yet, because we're only into one cycle of
this with the on site capability or the owned capability
when you're dealing with the third party. Obviously
it's a little more uncertainty. That's why we're up
here for the second time talking about this. And so
it's gonna be a balance of trying to strike those those
features not to disincentivize people from participating.
But making sure there's enough, you know, penalty framework
to say we really take this is the highest available
service and you're gonna get a premium for it. But
if you don't perform there's gonna be some claw back
and some other penalties associated with that. Yeah
it's worth noting that the penalty, the distinction
between the penalties applied to the generating resource
versus, and like in the notion of versus the pipeline
depending on the, there's different ways you can cut
that. Um, and just one point too, um, Commissioner McAdams you're
concerned about, you know, North Texas and the fact
that there may not be a lot of uh potential partners
for the FFSSR program up there. You know
the goal is hopefully that this creates a market pressure
even on the pipeline space to come along. Because they
have competitors, right? And if they see their competitors
are getting a windfall by virtue of participating as
supporters of this program, then the goal is that the
market incentives should help push them to make changes
and hopefully participate.
Fair point. We're creating a market with a price signal for
um, the market to react and respond to. And I think
that's important. I mean, I was just in Washington
D. C, where I spoke on an Electric Gas Coordination
panel. And everybody was really interested in knowing
about our firm fuel product. Because we're the only
region in the country that has one and especially with
the recent events in Winter Storm Elliot, where, you
know, in MISO, they lost, you know, 22 and 23 gigs of
gas. And a third of the them are shell went out and.
Um, I don't know what the breakdown exactly is or what
the reasoning in my, in PJM. But I think it was like
32 gigs of gas that went out during winter Storm Elliot
So these big regions are dealing with fuel availability
issues and are looking to um, you know, find ways to
find solutions and were, were sort of leading the charge
here in Texas in ERCOT in addressing these issues.
And so I had a lot of interest in, in the firm
fuel product and I think it's important. Because those
the gas availability issues specifically within MISO.
Where what drove those outages and there near um
coming close to entering into rotating outages. And
it's probably, it's probably a very similar dynamic
to North Texas. Because Marcellus being landlocked and
constrained because of lack of pipeline infrastructure.
Because of permitting and opposition to that network
You have limited uh, suppliers of a potential service
and so they are going to take calculated risks and
it, it's a tangle. But I appreciate us looking into this.
Yeah, one final thought. I think we, we know we need
to wait for the survey in terms of moving forward so
well, I think everybody wants to see the results of
that before we make any decision. And then I'd ask Marcia
and Chad team. To think think about the penalty
discussion we've had today. If if we do expand of the
qualification, just think through the pros and cons
of each and Marcia had pointed out some of those already.
Um and unintended consequences and just think through
those and of course get the survey's results back to
us as soon as they're ready. And and also any any perhaps
a memo on the on thoughts on potential penalties. Uh
One final point I didn't want to uh bring up is there's
been some conversation about including settlement only
destroy distributed generation resources for this.
That would be resources behind the citygate, which
means they're already priority. Uh So in the spirit
of Commissioner Cobos said saying we want to change
incentivize new behavior. Uh we'd just be paying them
for already being in priority gas. So I don't see any
reason to include them in this. My preference is to
focus on gas right now. Okay, Ya'll have everything
you need. Alright, appreciate the expedited focus on
that survey. Thank you for highlighting that, Commissioner Cobos.
Tthank you for being here. Thank you. Thank you. Thank
you. All right. I don't have anything on 24 in connection
believe you have some comments on Item 25. Short
update, sir. Uh So first of all, I'd like to commend
staff. Um Connie I'm looking at you, you're the head
of it. Um but your Staff's doing great work on DESR
projects. Um and I believe you recognize me sir on
54224 and 54233. (item:25: ,Commissioner McAdams' comments on updates) The
the point of my comments is to ask the Commission for
grace for more time. Staff is currently engaged in
good substantive dialogue with stakeholders about a
potential methodology for something that is slightly
less than the comprehensive approach I had described
earlier related to reliability standard. But it is also
less um well less uh disruptive to the current balance
between interested generators installing a transmission
versus distribution. But uh but having an effect of
trying to um make the two systems equitable and dispel
the notion that we are discriminating against resources
interconnecting at distribution. Because again, the
two policies are not in harmony and I think they are
making good headway. They could have a potential framework
um in the coming month or coming weeks uh depending
on the outcome of those conversations and I think we
should give them the headroom but I really appreciate
their work on this.
Makes sense to me. Thoughts, comments?
All right, thank you for taking the lead on that. I don't
have anything on 26 or 29. Uh so for Item 30. I
do want to highlight as we heard earlier. (item:30:41211, Chairman Lake announces Commissioner Cobos' MISO new governance role) Commissioner
Cobos is able to bring additional perspective from
her work in MISO in regards to reliability standard.
and it's a pleasure to announce that she has been selected
to play a new governance role at MISO. She'll serve
as a President of Energy Regional State Committee.
She's had a busy, busy time in Washington. She's also
gonna serve as the Secretary of the Organization of
MISO states and sit on the MISO Board Advisory Committee.
Just because she didn't have enough to do already.
Did you know that was gonna happen to you, when you
went up there? Or they just start happening? No, it happened before
they asked me to do it. And so, you know, I can't
say no to really big challenges apparently. And I believe
Commissioner McAdams also has a leadership role, don't
you? In the SPP? (item:30:41211, Commissioner McAdams' announces his new governance role) I do as of January 1st, I'm the
Treasurer for the Southwest Power Pool Regional State
Committee and as well as chair of the Resource Adequacy
the REAL team, within the SPP. So we'll be leading talks
about, oh and they and they love watching ERCOT by
the way. To see how we're working this Resource Adequacy
issue. I bet they do. But we'll be working on policy refinements within
Southwest Power Pool to ensure uh, resource adequacy
in the future. Looking at Creighton for the heads up,
heads up on these things. Good luck guys and gals. Uh, congratulations.
Uh, and congratulations. Uh, you're both clearly glutton
for punishment. Uh, already vastly busy and in both
cases, I know it's gonna be a lot of work. Has already
been a lot of work for you and will be for you.
But it's important work. And as we heard as we all know
and as we heard uh loudly from Senator Hughes earlier.
These, these may not be ERCOT and then maybe the parts
of Texas that are outside ERCOT but those are still
Texans. They are still under our jurisdiction is incredibly
important to keep uh keep the focus on their well being
and reliability as well. And we saw how important that
is uh in the Winter weather event over Christmas especially
in MISO. That was that was that was intense, so
congratulations both uh and good luck with the additional
work. Texas leads the way sir. Indeed in so many ways. We don't have anything
on 31 or 32. Mr. Chairman, could I, could I indulge
you to uh ask to allow me to invite Woody up here
again? I had sent some emails just about trying to
understand where the implementation of Senate Bill
1281 in the uh congestion cost savings test is uh
since we passed it here. What ERCOT is doing and what
their time frame is and you don't mind, I just make
sure for the record, we know which item this is coming
under. Uh huh No, I'm guessing 32. It's a 32 electric
reliability. There we go.
(item:32:Commissioner Glotfelty asks question to Woody Rickerson, ERCOT) Could you give us an update on where you all stand
internally with the uh congestion cost savings test
and kind of with the timeframe you see going forward
and how that would be implemented and when we would
get some information back? (item:32:Woody Rickerson, ERCOT, responds to questions) So we complete in 2022,
we completed the regional transmission plan but because
of the uncertainty about the economic test. We did
not include any economic analysis on those projects.
So the starting point in 2023 has been to take that
2022 set of projects and start evaluating those economically.
So we'll start taking those projects looking for any
of those projects. That could be an economic, we could
put the economic justified stamp on. In coordination
with that or in parallel with that. We've also asked
the TSPs to provide us with project that they
think might meet that economic standard as well. And
so that suite of projects, we're evaluating both with
the production cost test and with the temporary consumer
benefit test.
So that's that's where we are right now.
Now, if one of those projects meets the standard we
can bring it forward and as an endorsed economically
justified project so far, we haven't found one. But
we're just, we're in the middle of the process. And
uh you're developing in the process of developing the
new economic test, is that right? We are early in that
process as well. So when would you expect that to be
completed? And would you be using that in the 2023
plan or the next transmission plan? Um, the
next transmission plan has already started unfortunately.
Right. So we are in the process of doing an RFP bringing
in a consultant to help facilitate what then that consumer
congestion cost economic standards should be. We're
trying to expedite that. We're trying to do that quickly.
Um, but by the time we get that thing set, it won't
be in time for the 2023 regional transmission plan
but that doesn't mean. Okay. So the regional transmission
plan is an overall view of the entire grid that we
do every year. That looks out five years in the future
and looks for future transmission needs. So that project
is, it's a year long effort to put that out. So if
we get a new consumer congestion test defined by June
or July this year, it won't be in time to incorporate
into that project. However, doesn't mean we couldn't
start using it immediately on individual projects.
So I'm sorry. I think just a point of clarification
it may not be included in the RTP, but individual TSPs
can bring you an economic project for your regional
economic criteria. As soon as it's defined. Yeah, we'll
probably made some people flinch back home when I said
that. But as soon as it's defined, if we have the tools
we don't know what the definition is yet. So assuming
that we have the models and the software to implement
it, as soon as it's defined, we can start using it.
I should be careful about that because it may be something
completely new that we'd have to go out and have all
new software, all new training, maybe additional modeling
to be able to use it. But I can't really tell you
when we can start using it, I guess until I know what
it is.
Okay. I think we need to dig into this. I will dig
into it with you a little bit more clearly the intent
of the Legislature was uh to uh find congestion around
the system and eliminate it as best we can um in due
course. And I look forward to working with you on that.
So. Thanks Woody. Yeah, it sounds like it's uh integrating
the new process into existing processes that right.
So we are full speed ahead with the two tests we have
now. So those tests will find congestion and they can
recommend projects to eliminate that congestion. So
we're not ignoring congestion now. Which two test, are those again?
A production cost test and consumer benefit test.
Okay. And we have, we have the software, we have the
training, we have the models to fully utilize both
those tests right now. Um what this new standard, this
new test turns out to be um, will determine just how
quickly what's what's in that test will determine just
how quickly we can begin using the new, that new new
standard. It could be something very close to the consumer
benefit test and may not take a lot of changes in order
to start using it.
Sure you can get more details. And
so these are the big, the big pieces moving around
uh and complex systems. So it's I'm sure it's, I know
it's not uh it's as simple as flipping a switch but
obviously want want all of this in place sooner rather
than later. So finding that balance
this is where we need to go. Thanks Woody. Uh man that
covers 32. And I just I would be remiss if before I
forget to thank Peggy Hague for all her work. Board Member
on the natural gas. I know we closed that item earlier
but I want to thank her for her tremendous amount of
work and experience and expertise. So she's brought
to bear so many many things we've leaned on. We've
leaned heavily on her. Right Item 33.
Call up Tom Hunter to,
layout potential action regarding state, federal legislation
and litigation. Good morning. Chairman, Commissioners. (item:33:Tom Hunter, Commission Staff, concerning proposed EPA rule)
Before you today is a proposed proposed comments on
the draft EPA rule. Um these comments were drafted
by TCEQ. TCEQ has asked both the Commission and
Railroad Commission to join them in those comments.
The rule addresses the process that states must follow
in developing state implementation plans. Um to for
fossil fuel fired power plants, um greenhouse gas emissions
plans. Basically it is procedures and timelines generally
that will apply to states and um promulgating state
plans to to comply with EPA rules. Um you all have
a copy of the proposed comments. I provided a draft
another revised set of those comments yesterday. Sorry
for the late timing. But I just got them recently.
Uh the main points that the TCEQ makes is that basically
these rules eviscerate um some of the state authority
allowed under the Clean Air Act. Uh to meaningfully
review and and promulgate state implementation plans.
And so we are recommending that the Commission delegate
to the Executive Director authority to sign those comments
joint comments on behalf of the Commission. Happy to
answer any questions. Questions, comments? It's Groundhog
Day all over again. It's 2011. And uh as then I would
support delegation of that authority. So moved.
Got a motion and a second. All in favor, say aye. Aye. None
opposed. Motion pass. Well done Tom. Quickest item today.
I don't have anything else for the remainder of our
open portion of our meeting. So having convened a duly
noticed open meeting. Commission will now 11:35am on
February 16, 2023 hold a closed session, pursuant to Chapter
551 of the Texas Government Code, Section 551.071,
551.074 and 551.076. We'll be back in a bit.
Closed session is hereby concluded 11:45am on February
16,2023, and the Commission will resume its public
meeting. After deliberations in closed sessions. I will
entertain a motion to request Office of Attorney General
representation. The following EPA related matters,
First State of Texas versus EPA case number
23-60069 and anticipated future litigation regarding
the EPA's Federal implementation plan for ozone
transport for the 2015 Ozone National Ambient Air Quality
Standards. Do we have a motion? So moved. Second. Got a motion and a second. All in favor,
say aye. Aye. None opposed. Motion passes. Thank you
all. (item:38:Chairman Lake adjourns meeting) Having no further business before the Commission.
This meeting of the Public Utility Commission of Texas
is hereby adjourned.