WEBVTT

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(item:1:Chairman Lake calls meeting to Order) Good morning. This meeting of the Public Utility Commission

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of Texas will come to order. To consider matters that

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have been duly posted with the Secretary of State of

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Texas for February 16, 2023. For the record, my name

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is Peter Lake. And I'm joined by Will McAdams, Lori Cobos,

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Jimmy Glotfelty and Kathleen Jackson. Who recently

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welcomed a new grandbaby, congratulations. Thank you. Mr. Journeay,

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would you please walk us through the consent items onto today's

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agenda?  Good morning Commissioners. By individual ballot, (item:1:Consent Agenda items listed) the

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following items were placed on your Consent Agenda.

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2, 4, 5, 6, 7, 11, 12, 16, 17, 19, 20 and 28. And I need to

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announce that Chairman Lake has recused himself from

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item 19.

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Is there a motion to approve the items just described

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by Mr. Journeay?

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(item:1:Consent Items approved) Motion and second. All in favor, say aye. Aye. None opposed.

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Motion passes. We will not be taking up Item 9 today.

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And we will begin after public comment on a discussion

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on items 23 and 24. But let's start with our public comment.

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Oral comments related to specific agenda item, will

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be heard when that item is taken up. This portion of

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our programming is for general comments only. When we

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do get to oral comments on specific items. Stakeholders

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should not approach the table unless oral argument

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has been granted or they have been invited to the table

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by a Commissioner. Speakers as always will be limited

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to three minutes each. (item:1:No comments from public) Mr. Journeay, do we have anyone

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from the public signed up to speak. No one has signed

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up to speak this morning, sir. All right public comment

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is now closed. (item:23:52373, Chairman Lake opens discussion) We'll start off as I said with items

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23 and 24. Commissioner McAdams has a memo about, uh the

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reliability standard for the ERCOT market. I turn it over to you. Thank you

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sir. (item:23:52373, Commissioner McAdams' memo on reliability standard for the ERCOT market) Uh so, the memo was an attempt to cover a

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little bit of history. Um that, uh this Commission has

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experienced over the last 15 years. And um,

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we have as the memo indicated. Uh, debated and struggled

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with the concept of a mandatory reserve margin, a mandatory

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reliability standard for some time. And um, that debate

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was settled as, as I indicated with passage of Senate

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Bill 3. And certainly reinforced with the, uh deliberations

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that the Senate and the House have been making over

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the last certainly 18 months. As they have questioned

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us and what we are doing to comply with Senate Bill

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3, and um restore confidence in the system. And a

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reliability standard is required. Um, as the memo indicated

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since uh 2011, um building blocks have been debated

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and formalized and formed. To help us come to an ultimate

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standard and adopt an ultimate standard. Those building

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blocks really formed into uh in my view three core

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parameters. The first was the value of lost Load. This

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came up, Mr. Chairman the other day in the hearing. Um,

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in terms of a high value of lost Load. And there was

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some, I also file these memos for secondary purposes.

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It helps, uh articulate some history and the complexity

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around an issue. For not just us, but the broader public

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and the Legislature to review. And see kind of the road

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that the Commission has been down for so long. But

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ultimately there was a misconception that the value

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of lost Load is the high cap. Um one and the same.

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Um, the high cap is different than the ultimate value

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lost Load. Those are two different uh two different

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numbers or can be. Um and that the high cap is the

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ultimate safeguard in terms of price shock to consumers.

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And we regulatorily set that. The value of lost Load

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is a, is a mathematical construct. That helps uh set

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um important frameworks, including um slope demand curves.

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It helps signal the time lapse and the reserve cadence

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of scarcity conditions.

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Um it also signals the ultimate value our market places

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on scarcity, scarce electrons and scarcity conditions.

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So in 2013, the Commission um contracted with London

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Economics to, to help frame what a process should look

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like to ultimately establish the value lost Load. London

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Economics provided a comparative analysis between other

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systems, um other countries, other grids. That had ultimately

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established vols, but how they went about it was conducting

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consumer facing surveys. And also stakeholder based

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survey, industry based surveys. To um provide a spectrum

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of, of how the market ultimately sees that value. The

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uh the produced outcomes from that survey were disparate

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across all regions. In 2009, the Southwest US, Southwestern

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United States which included Texas was surveyed. And

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uh, their values of all ranged by consumer segment from

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residential consumers who uh averaged a vol of $108

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a megawatt. To um, commercial and industrial, CNI

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customers who valued vol somewhere in the neighborhood

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of 30,000 megawatts. And uh, industrial consumers who

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placed vol somewhere around 8,000 megawatts. So you

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could see the disparity in uh and how by consumer segment

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people viewed the value of, of a scarce electron. But

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the point of this was, it was informed by their experience

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by their own businesses, by their own business plans.

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Um, if you can imagine a CNI customer who is

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a grocery store and has a large meat locker. What the

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value of that spoiled meat maybe in Summer? Or a residential

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consumer in Winter, what the value of that electron

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is in a cold winter, when they want to stay warm? I

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think uh, as we have repeatedly said, Winter storm Uri

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changed the perspective for everyone in Texas. Who lived

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through the experience and that is valuable information

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that would certainly inform any future of vol study.

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The important thing for London Economics is if you

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want to do this right. You will conduct a consumer

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survey to inform a range and then ultimately it is

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a value judgment. For uh, the Commission or market to

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set that. In 2013, the Commission declined to uh initiate

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such a survey. They looked at the analytics of London

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Economics and ultimately they just uh, set a vol at

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a number which ultimately was $9000. But we have since

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reduced that number and concurrence to our reduction

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of high cap to $5000

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Vol

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is important to what we're doing now. And it's important

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to where we are going in the next year and two years

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with our Phase II market design.

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The other metrics are the, or the other parameters

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are the reliability metrics that should be considered,

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as the memo articulated. Uh, we have a 0.1 loss of

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Load expectation uh, as a standard right now. An informal

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standard within ERCOT. That expectation makes no distinction

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between the magnitude of the event in terms of duration

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or numbers of megawatts that are lost. So there's really

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no difference between one event which I experienced

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the other day as a part of Winter Storm Mara, in the

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land or Load shed pocket. Uh, or um or some grander

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outage, like a Winter Storm Uri level event. There

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is no distinction and we need a more uh targeted uh

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reserve metric, reliability metric. And the final component

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is the ultimate reserve margin. And the ultimate reserve

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margin has, has much baked into that number, costs

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are baked into that number. Analysis has been conducted

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over the years to try to refine down. Not just the 13.75%

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which is an informal target reserve margin, but an

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economically optimal reserve margin. And those, those

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outcomes have been disparate as my memo indicated. It's

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gone from 9% to up to 12.25%. And now I think after

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Uri, the Commission has determined that is somewhat

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in uh potentially inadequate.

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So of those three uh, key parameters, there's a couple

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ways to proceed to get the Commission and ERCOT off

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first base and underway. To formalize a uh a reliability

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standard.

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There is a top down approach and there is a bottom

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up approach. Ultimately, a study and survey is certainly

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a top down approach that can be pursued. To query our

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consumer base. To query our industry, to establish a

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range of what vol may look like. But from a bottom

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up approach. And concurrent to any study, I believe

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you can ask ERCOT to formalize a spectrum of scenarios

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around each of our reliability metrics. That we would

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like to consider which includes expected unserved energy,

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loss of Load hours or a loss of Load probability of

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0.1, which is an LOLE of 00.1 as well.

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But on a more targeted basis under a 24 hour condition

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or under a one event over 10 years condition over or

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over a one event and one year condition. They can, they

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can formalize a menu, a spectrum of scenarios that

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can be modeled that will produce. Uh, if it's done by

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Astrapé which is currently does this anyway to a certain

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extent. Um, they can produce reserve margins as a part

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of those models, because they run them through the serve

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them studies. Uh, which account for weather, um weather

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events, outage events and what the ultimate uh megawatt

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duration impacts are, which produces an ultimate reserve

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margin. And that reserve margin will also produce an

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implied vol. An implied value of lost Load that is

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uh set under those conditions. So as my memo alluded

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to and what I would try to articulate here. As we can

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pursue both on dual tracks. That are not uh they are

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not interdependent on one another. But a top down track

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in surveying the public and our industry and our stakeholders

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and our consumer base. Helps afford the public the ability

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to actually inform our decision on what they value

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scarcity at. Which I think after Uri and with debate

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that we have had around Phase II is important now.

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Especially as we are underway, pending Legislative feedback

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on a performance credit system.

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And concurrent to that, we would pursue the bottom

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up strategy of running the scenarios. ERCOT could provide

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us with that data, help formalize technical conferences

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and technical workshops at ERCOT. With ERCOT stakeholders,

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TAC, PUC Staff to help determine a range of outcomes.

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And ultimately a recommended preferred approach on

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on a reliability metric over the next 8 months.

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So ultimately, ultimately we get a recommendation from

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the ERCOT Board of Directors on that preferred approach.

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PUC Staff can then take that information along with

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hopefully a produced survey result. To see if we are

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in the same ballpark. In terms of what consumers are

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valuing scarcity at, and what our industry is valuing

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scarcity at and our grid administrator. And then they

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could publish a proposal for publication at that time.

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Which will then serve as the basis for a substantive

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rulemaking. Which we could have accomplished um by

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the Summer of the following year. Finally, hopefully

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adopted. So in my view, that's a process and a framework

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that could be pursued to provide maximum transparency,

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maximum opportunity for stakeholder input and to help

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break this down. In a way to where we can uh evaluate

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both costs and benefits at each step, as we move towards

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ultimate adoption.

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And I'd love this opportunity for some real deliberation

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amongst the Commission. Like I said, I do not expect

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us to uh make a decision on anything today. But this

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is an exercise to go back and ask ERCOT to potentially

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put together a uh framework consistent with that idea.

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If everyone agrees to it. Or pose questions to us so

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that we can clarify that at the next open meeting. And

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then ultimately make a decision on how to move forward.

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Well, well put thank you for laying that out and thank

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you for putting this memo together. (item:23:52373, Chairman Lake's comments on memo) I think today's

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discussion is a question of process. Uh the big, big

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decisions on this important issue or are yet to come.

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As the most important part of this is the what you

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started out with. Is that the Legislature directed

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this, the Sunset Commission reinforced that. And so uh, that's

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that's, there's clear direction that we will, will follow.

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And uh as as everybody in this Commission, our Staff

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knows. A reliability standard has been part and parcel

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of all the work we've done on marketing design. That

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has been part of that has been built into all of the

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options we considered. Uh, so this is, this is not something

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that, that is sneaking up on us. Uh we do have ERCOT

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Staff here. Woody's here who can help inform how they

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would handle their process and their uh and, and their

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capabilities and resources at ERCOT. Uh Woody if you

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would come on up. The, I think you, you in broad strokes

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you've laid it out well. In terms of the best way to

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move forward. Uh ERCOT clearly, I think as they have

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in the past has engaged outside expertise and consultant.

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Uh both for the survey and I think in your, in your

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second step. I'll ask Woody what the second step that

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Commissioner McAdams laid out. Is the analysis of different

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scenarios which metrics are, are viable candidates for

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consideration. What are the pros and cons of each metric?

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Uh what is the right combination of metrics? Uh and

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lay that out. Is that something that ERCOT can do completely?

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And how also, would they need to also engage the consultant

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to, to assist with that? (Item:23:52373, Woody Rickerson with ERCOT commenting on memo) Yeah so. Woody Rickerson with

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ERCOT. So yes, we have uh we have the model to do

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the analysis in house. And we have the training now

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to also do that analysis. The training? We have, we've

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completed the training. Our Staff is set up to start

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that work. In fact, we think we can start to work in

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March. Okay, excellent. Uh, I certainly wouldn't decline

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outside expertise and insight on it. So I think we

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can we can combine uh in house analysis with any, any

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outside perspective. (item:23:52373, Woody Rickerson, ERCOT, responding to Chairman's questions) We'll have Astrapé there to assist

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us. Model changes or things that we may need to do in

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order to meet whatever the framework turns out to be.

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(item:23:52373, Chairman Lake's follow-up to ERCOT comments) I think a big part of the benefit of outside consultants

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is looking at best practices in other parts of the

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country and around the world. Uh and obviously we, we're

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all very focused on this market. So certainly we want

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to include what the good ideas are around the world

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and what the bad ideas are. So we can we can borrow

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the good ideas and discard the bad ideas. Does that make

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sense? And fit in with what you're thinking here? Yes sir. Okay.

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And then in terms of timing, I'm glad to hear that

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ERCOT team is prepared to move, move quickly. Um and I

00:18:17.089 --> 00:18:19.660
don't know that, I guess it's a little early to put

00:18:19.660 --> 00:18:23.069
a specific deadline or target on it. I just uh say

00:18:23.069 --> 00:18:26.319
based on uh feedback in the direction of the Legislature

00:18:26.319 --> 00:18:29.960
as soon as possible. Is what I would go for uh and

00:18:29.960 --> 00:18:33.549
we'll and I think most importantly. Your, your suggestion

00:18:33.559 --> 00:18:38.130
of having ERCOT and their consultant, uh whatever appropriate

00:18:38.130 --> 00:18:42.289
parties are. Come back to at our, at our first March meeting

00:18:42.299 --> 00:18:44.750
with questions. And to be answered in any direction

00:18:44.750 --> 00:18:48.140
they need is the most important step we direct today.

00:18:48.720 --> 00:18:49.640
Does that make sense? Yes sir.

00:18:52.109 --> 00:18:55.589
Consistent with your thinking? Yes sir. Okay. Thoughts, comments? Sure. (item:23:52373,Commissioner Cobos comments on memo) Commissioner McAdams, thank

00:18:55.589 --> 00:18:57.569
you so much for your leadership on this very important

00:18:57.569 --> 00:19:02.180
issue. And um a couple of things, I think I really appreciate

00:19:02.180 --> 00:19:05.720
you going back to project number 40,000. And refreshing

00:19:05.720 --> 00:19:09.099
our memories of what went on in that project with respect

00:19:09.099 --> 00:19:12.359
to the reliability standard. I personally was partially

00:19:12.359 --> 00:19:15.990
at ERCOT and partially here during that time. And so

00:19:16.000 --> 00:19:20.109
uh a lot of what happened then. Was we had the February

00:19:20.109 --> 00:19:26.000
2011 rotating outages and then um almost entered into

00:19:26.000 --> 00:19:30.150
rotating outages again in August of 2011. Because of

00:19:30.150 --> 00:19:32.519
the record hot Summer we had. The hottest Summer in

00:19:32.519 --> 00:19:37.049
Texas history. And so as a result of that um, ERCOT

00:19:37.049 --> 00:19:39.319
and the Commission went to go scrub down exactly how

00:19:39.319 --> 00:19:42.789
much power we had. How much reserve margins we actually

00:19:42.789 --> 00:19:46.440
had. And that kicked off a resource adequacy deliberation

00:19:46.440 --> 00:19:49.369
that went on for years. And as part of that resource

00:19:49.369 --> 00:19:52.240
adequacy deliberation was a discussion of the reliability

00:19:52.240 --> 00:19:55.519
standard. Um, where um, the Commission at the time

00:19:55.519 --> 00:19:59.720
hired Brattle. And Brattle provided a report. And there

00:19:59.720 --> 00:20:02.049
was a lot of discussion on, you know, do you go with

00:20:02.049 --> 00:20:05.670
the economically optimal reserve margin? Or MERM

00:20:05.670 --> 00:20:08.930
and, and you know what to do with, with what's the right

00:20:08.930 --> 00:20:12.970
number of a reserve, reserve margin? And um, and thank

00:20:12.970 --> 00:20:15.230
you for reminding me of the surveys. Yes, that the

00:20:15.240 --> 00:20:17.670
Commission ultimately declined not to pursue a survey

00:20:17.670 --> 00:20:20.190
process. Because it was extensive and the Commission

00:20:20.190 --> 00:20:22.890
sort of felt like they wanted to kind of move on. And

00:20:22.890 --> 00:20:25.250
ultimately I think what happened was that

00:20:27.390 --> 00:20:30.609
there was generation announced somewhere in the middle

00:20:30.609 --> 00:20:32.849
of all that. And sort of the steam behind getting a

00:20:32.849 --> 00:20:36.759
reliability standard formalized, sort of lost its steam.

00:20:36.769 --> 00:20:39.769
And that's why I believe the Commission ultimately

00:20:39.769 --> 00:20:43.490
just went, didn't adopt a formal reliability standard.

00:20:44.769 --> 00:20:48.490
Is that what it was? It was the panda plants that got built?
Something like yeah, you know, for, for whatever reason.

00:20:48.490 --> 00:20:52.119
The ones that declared bankruptcy in June. Yes sir.
Right, so. Parts of it. Yeah. So there was, you know

00:20:52.119 --> 00:20:56.190
some, some evolving facts that ultimately led to the

00:20:56.200 --> 00:20:58.849
Commission not adopting a formal reliability standard.

00:20:58.849 --> 00:21:02.309
As part of the project 40,000. So, but, but I think

00:21:02.309 --> 00:21:05.099
what, what you've highlighted that's very important

00:21:05.109 --> 00:21:09.430
is the underlying analytics that need to get done. And

00:21:09.430 --> 00:21:12.670
the breadth of those analytics that are very important

00:21:12.670 --> 00:21:15.650
to establishing a reliability standard. That are gonna

00:21:15.650 --> 00:21:19.069
to take time, right? Time for ERCOT to conduct some

00:21:19.069 --> 00:21:22.259
pieces of it in house, you know, some pieces of it

00:21:22.269 --> 00:21:24.549
in conjunction with Astrapé or another consultant. To

00:21:24.549 --> 00:21:27.029
try to do the best we can, to do our due diligence.

00:21:27.029 --> 00:21:30.190
To find the best reliability standard for, for ERCOT.

00:21:30.220 --> 00:21:32.589
And you know, the chairman mentioned, you know, we

00:21:32.589 --> 00:21:34.339
have been, you know, sort of referring to the 1 and

00:21:34.339 --> 00:21:37.789
10 reliability standard. It's not a formal um, standard

00:21:37.789 --> 00:21:39.759
that we've adopted. But that's what we've been trying

00:21:39.759 --> 00:21:43.849
to achieve, 1 and 10, 0.1 LOLE. And as we

00:21:43.849 --> 00:21:46.309
know through our work in other markets and, and you

00:21:46.309 --> 00:21:48.460
know that everything we've been observing throughout

00:21:48.460 --> 00:21:52.140
the country. Other ISOs and RTOs

00:21:52.140 --> 00:21:56.650
and, and regions are evaluating other metrics. Because

00:21:56.650 --> 00:21:59.920
the 1 and 10 reliability standard alone isn't proving

00:21:59.920 --> 00:22:01.750
to be the best metric. I mean, you could just look

00:22:01.750 --> 00:22:04.819
at Winter Storm Elliott, with PJM. And the 1 and

00:22:04.819 --> 00:22:09.740
10 reliability standard, I mean they lost 46,000 megawatts. Right.

00:22:09.750 --> 00:22:15.539
MISO lost 50,000 megawatts. So you know, how we set our

00:22:15.549 --> 00:22:18.079
reliability metric from a reliability perspective.

00:22:18.079 --> 00:22:21.269
But I think we need to explore what other metrics can

00:22:21.269 --> 00:22:25.059
be combined into, you know, one reliability metric.

00:22:25.059 --> 00:22:28.349
That we build upon for the future through like you

00:22:28.349 --> 00:22:32.200
said Phase II market design. And um, taking an account

00:22:32.210 --> 00:22:36.630
a lot of new facts that we now have. Which are an

00:22:36.630 --> 00:22:40.880
evolving resource mix on our grid. A lot more renewables,

00:22:40.880 --> 00:22:43.529
the need for resiliency, all of those very important

00:22:43.529 --> 00:22:46.200
factors. So I think that what you've highlighted are

00:22:46.210 --> 00:22:48.869
you know, as part of your, you know, voll and reliability

00:22:48.869 --> 00:22:51.880
metrics. Those are very important analytics that we

00:22:51.880 --> 00:22:56.289
could start building now through analysis. That will help

00:22:56.289 --> 00:23:00.849
us inform our ultimate decision down the road. Um,

00:23:00.859 --> 00:23:03.230
and I think uh you know there is a need, there is

00:23:03.230 --> 00:23:05.470
a desire to get this done as soon as possible. But

00:23:05.470 --> 00:23:08.089
I think that ultimately everyone would probably want

00:23:08.089 --> 00:23:10.970
us to do the best, most diligent process we could. To

00:23:10.970 --> 00:23:13.710
identify the best reliability standard. And with respect

00:23:13.710 --> 00:23:17.140
to the surveys, I know you mentioned other ISOs

00:23:17.140 --> 00:23:19.460
and RTOs have done that. I believe we

00:23:19.470 --> 00:23:22.150
discussed maybe MISO has done that. I'm happy to engage

00:23:22.150 --> 00:23:25.220
with on my MISO side of the business. And figure out

00:23:25.220 --> 00:23:28.410
what process they use to survey their customers in

00:23:28.410 --> 00:23:31.210
their region. Um, so we can figure out the best, most

00:23:31.210 --> 00:23:33.980
effective, efficient process to conduct that survey.

00:23:34.630 --> 00:23:37.920
And um ultimately I think um you know the steps you

00:23:37.920 --> 00:23:41.279
laid out and next steps I am in agreement. Um I would

00:23:41.279 --> 00:23:43.500
offer that you know, whatever I can do to assist you

00:23:43.500 --> 00:23:46.180
through this process, I'd be happy to, from my historical

00:23:46.190 --> 00:23:50.089
perspective. And you know 40,000 and beyond and other

00:23:50.089 --> 00:23:53.359
markets and MISO. So um stand here ready to help

00:23:53.359 --> 00:23:55.150
and thank you for laying out this process. I think

00:23:55.160 --> 00:23:57.930
this is fantastic. Awesome, thank you. Well put.

00:24:00.750 --> 00:24:04.769
Thoughts, comments? (item:23:52373, Commissioner Jackson's comments on the memo)
You made some excellent points and particularly the

00:24:04.769 --> 00:24:08.440
fact that we're building on the work that's been done

00:24:08.450 --> 00:24:12.660
in the past. And very much the need to go back and

00:24:12.660 --> 00:24:15.559
touch base with the public, because now public expectation

00:24:15.559 --> 00:24:19.339
has certainly changed. And you talked about a bottom

00:24:19.339 --> 00:24:22.079
up and top down process of the best of both worlds.

00:24:22.390 --> 00:24:26.710
And um you know, giving the task to ERCOT in terms

00:24:26.720 --> 00:24:30.410
of developing this process. But I did want to ask you

00:24:30.410 --> 00:24:35.220
a question. Is your expectation also in um, the development

00:24:35.230 --> 00:24:41.519
of the scenarios that ERCOT also be um engaged in

00:24:41.519 --> 00:24:45.839
that process in terms of having input into it? Yes,

00:24:45.839 --> 00:24:48.960
ma'am. (item:24:53298, Commissioner McAdams response to Commissioner Jackson's question) In, in my view ERCOT Woody and his Staff are

00:24:48.960 --> 00:24:52.440
critical to it. Because those uh those scenarios are

00:24:52.450 --> 00:24:57.710
really based on operational contingencies. Um the,

00:24:58.390 --> 00:25:02.150
I mean they need to come up with that menu because

00:25:02.150 --> 00:25:05.509
they see what the system needs on a day to day basis.

00:25:05.519 --> 00:25:09.319
And so what helps inform that threshold of hours, that

00:25:09.329 --> 00:25:12.190
threshold of megawatts. That comes from their operational

00:25:12.190 --> 00:25:15.140
experience on what, where we need to draw this line

00:25:15.150 --> 00:25:18.720
in the future. And, and what we need to plan the

00:25:18.720 --> 00:25:22.480
system to be able to meet. I think that's very insightful.

00:25:23.269 --> 00:25:27.509
And I believe you also in your comments included the

00:25:27.519 --> 00:25:29.779
market participants and stakeholders, including TAC

00:25:29.779 --> 00:25:31.759
in that process. Yes sir. It's not exclusively ERCOT, it's

00:25:31.759 --> 00:25:34.839
not exclusive PUC, it's market participants as well. And that's the point of TAC

00:25:34.839 --> 00:25:38.309
is because that's informed by the universe of the market

00:25:38.319 --> 00:25:41.960
which makes this whole experience work. Absolutely.

00:25:41.970 --> 00:25:45.869
It's all those, all of those pieces contributing and

00:25:45.880 --> 00:25:51.670
moving together. All right. Um, Woody do you need? Yeah, Jimmy.

00:25:51.670 --> 00:25:54.289
(item:24:53298, Commissioner Glotfelty's comments on memo) Yeah, I just have a few things to say. First of all, um

00:25:54.299 --> 00:25:57.500
totally appreciate you pushing this forward, definitely

00:25:57.500 --> 00:26:00.039
need to do it. Um, as I've said in the past up

00:26:00.039 --> 00:26:05.309
here, the loss of Load expectation, the 0.1 uh, metric

00:26:05.319 --> 00:26:10.880
um, is uh inadequate from my opinion going forward.

00:26:10.890 --> 00:26:14.190
And I think everybody in markets around the world knows

00:26:14.190 --> 00:26:18.440
that. And um, it's just, it's something, it's the best

00:26:18.450 --> 00:26:21.269
tool in the toolbox today, but we have other tools

00:26:21.279 --> 00:26:25.220
that we ought to be looking at. And um, I'm glad we

00:26:25.220 --> 00:26:29.380
are pushing forward if it's in this plan. Where we have

00:26:29.390 --> 00:26:32.900
stakeholder comment, uh, market participant input,

00:26:32.910 --> 00:26:37.309
um, that can bring up other ideas. EUE and 

00:26:37.309 --> 00:26:41.410
LOLH and all of these other acronyms that um, our

00:26:41.410 --> 00:26:43.759
metrics that can be used today and could be used in

00:26:43.759 --> 00:26:46.119
the future. Now, I think we're only gonna have one

00:26:46.119 --> 00:26:50.000
that is going to satisfy our actual demand curve, um

00:26:50.009 --> 00:26:53.950
if our PCM goes forward. But there are other metrics

00:26:53.950 --> 00:26:56.420
that we can use that I would say that we should at

00:26:56.420 --> 00:26:59.859
least continue to look at. And they can all be translated

00:26:59.859 --> 00:27:04.390
into each other. Um but, but as we move to a system

00:27:04.390 --> 00:27:11.470
that is more energy based. Um, and consumers um, they

00:27:11.470 --> 00:27:13.680
don't understand capacity, they understand the electricity

00:27:13.680 --> 00:27:16.009
that comes out of the socket. The energy side of things

00:27:16.049 --> 00:27:20.529
keeping that in mind. And the one final thing is in

00:27:20.529 --> 00:27:23.509
my opinion, the LOE, LOLE is primarily

00:27:23.509 --> 00:27:26.759
a supply side component. Uh, there's a little bit of

00:27:26.759 --> 00:27:30.059
demand side in there. And when you look at the uh, Astrapé's

00:27:30.059 --> 00:27:35.559
uh, economically optimal reserve margin. There

00:27:35.559 --> 00:27:38.799
is some demand response in there and some. And it would

00:27:38.799 --> 00:27:42.509
be my view that we ensure that those get a good look

00:27:42.509 --> 00:27:46.299
as well. Because they, if we're talking about energy

00:27:46.309 --> 00:27:50.319
not just capacity but energy then that is a, is a huge

00:27:50.319 --> 00:27:52.950
component of what we need to be looking at going forward.

00:27:52.950 --> 00:27:55.700
And, and I think your memo in your direction does that.

00:27:55.700 --> 00:27:59.259
And I suspect I'm hoping Woody you and, you and ERCOT

00:27:59.259 --> 00:28:02.789
believe that that can be a valuable part of resource

00:28:02.789 --> 00:28:04.299
adequacy going forward. Sure.

00:28:06.150 --> 00:28:08.500
Well put, thank you. 

00:28:10.529 --> 00:28:14.329
(item:24:53298, Connie Corona with Commission Staff on reliability standard) Commissioners, Connie Corona, um, thank you for, for

00:28:14.329 --> 00:28:18.440
this timely discussion. Um Staff has, has begun their

00:28:18.450 --> 00:28:21.849
their internal work on, on scoping this project for

00:28:21.849 --> 00:28:25.119
creation of reliability standard. I think the discussion

00:28:25.119 --> 00:28:29.250
we've heard today is wholly consistent with um, what

00:28:29.250 --> 00:28:34.599
we expected um, to be tasked with in this project. And

00:28:34.599 --> 00:28:39.079
we are going to begin our um, information gathering

00:28:39.079 --> 00:28:44.619
in earnest from, um, a variety of sources. And we'll

00:28:44.619 --> 00:28:46.950
be bringing that back to you periodically over the

00:28:46.950 --> 00:28:51.849
coming months. So Connie and just to refresh our memories

00:28:51.849 --> 00:28:57.700
here. Last year, we modified PUC Rule 25509 to decouple

00:28:57.710 --> 00:29:01.339
age cap and bowl. So we can move forward with bowl

00:29:01.339 --> 00:29:04.140
and all those analytics without having to necessarily

00:29:04.140 --> 00:29:07.460
conduct a rulemaking to adjustable or suitable.

00:29:09.539 --> 00:29:14.619
Thank you for laying that out. (item:24:53298, Chairman Lake's question to Woody Rickerman with ERCOT) Woody, what other direction

00:29:14.619 --> 00:29:18.170
or guidance do you need from us in order to move forward?

00:29:18.170 --> 00:29:22.670
With the consultant and the taskings that you've heard

00:29:22.670 --> 00:29:26.509
us discuss today on, on the ERCOT. Or do you have everything

00:29:26.509 --> 00:29:29.970
you need to move forward and be prepared to bring a

00:29:29.980 --> 00:29:35.119
report back to, to the March meeting, with updates and

00:29:35.119 --> 00:29:38.160
any further direction ERCOT would need? (item:24:53298, Woody Rickerson, ERCOT, response to Chairman Lake) I think we have what

00:29:38.160 --> 00:29:41.289
we need to start work. And we can bring back some preliminary

00:29:42.750 --> 00:29:47.380
numbers in March. Okay. It won't be anywhere near the

00:29:47.390 --> 00:29:50.930
final product, but we can bring back some. Where we are,

00:29:50.940 --> 00:29:53.119
what the framework looks like, what some of the parameters

00:29:53.119 --> 00:29:55.819
within the framework it looks like. Some proposals

00:29:55.819 --> 00:29:59.130
for people to start looking at. Okay. And I think the

00:29:59.140 --> 00:30:02.720
intent of I think, Commissioner McAdams memo and our discussion

00:30:02.720 --> 00:30:06.900
up here. Is from March 9th, to be uh an update on

00:30:06.900 --> 00:30:09.250
where we are in the process. And the scoping discussion

00:30:09.250 --> 00:30:14.130
about what, what the universe of possibilities

00:30:14.130 --> 00:30:16.740
look like. What what should we really drill down on?

00:30:16.750 --> 00:30:20.079
And to Commissioner Glotfelty's point, there's a big world

00:30:20.079 --> 00:30:22.390
out there with lots of different options, lots of combinations

00:30:22.390 --> 00:30:25.549
and permutations. And so we certainly wanna see, see

00:30:25.549 --> 00:30:28.900
what those look like. What are the what are the best

00:30:28.910 --> 00:30:34.740
mix of options, duration, megawatts etcetera. Uh and

00:30:34.740 --> 00:30:39.049
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

00:30:39.049 --> 00:30:41.789
also Woody is this is a sanity check moment. Is there

00:30:41.789 --> 00:30:44.960
anything in that memo in terms of this process scheme,

00:30:44.970 --> 00:30:49.430
that doesn't work. That you think would uh I mean this

00:30:49.430 --> 00:30:53.769
affords ERCOT's process to sort of engage now. TAC

00:30:53.779 --> 00:30:58.019
to be involved to sort of evaluate this, this universe

00:30:58.029 --> 00:31:01.980
of scenarios. Do you see it the same way I do or

00:31:01.990 --> 00:31:05.059
do you have concerns? (item:24:53298, Woody Rickerson with ERCOT's response to Commissioner McAdams) Yeah, very much so. We had outlined

00:31:05.059 --> 00:31:09.220
a process and your memo was pretty much in line with

00:31:09.220 --> 00:31:11.839
what we were expecting it to be. What we expect to

00:31:11.839 --> 00:31:16.880
work on. All right, everybody in good shape? Woody, 

00:31:16.880 --> 00:31:19.119
you got everything you need to have ERCOT move forward?

00:31:19.119 --> 00:31:19.990
Thank you for being here.

00:31:21.569 --> 00:31:24.869
Before we move to our next agenda item. We're gonna

00:31:24.869 --> 00:31:28.019
have a special segment of public comment for Senator

00:31:28.019 --> 00:31:31.839
Hughes, who's kind enough to join us today. Please come

00:31:31.839 --> 00:31:32.890
on up. Yes sir.

00:31:44.069 --> 00:31:47.450
Welcome sir. Thank you Mr. Chairman. Good morning Members.

00:31:47.460 --> 00:31:50.970
Thank you for allowing me to visit with you this morning.

00:31:50.970 --> 00:31:55.549
(item:1: Special Public Comments from Texas Senator Bryan Hughes) My first uh time at the PUC. Obviously, we were thankful

00:31:55.549 --> 00:31:57.859
for your work. We follow it closely, we work with you

00:31:57.859 --> 00:32:01.769
and certainly enjoy doing that. Uh, I'm here to speak

00:32:01.769 --> 00:32:05.230
on some policy matters and I'm not here to, to visit

00:32:05.230 --> 00:32:08.680
with you about ERCOT redesign or any of that. That

00:32:08.690 --> 00:32:11.799
really, really important stuff you're working on and

00:32:11.799 --> 00:32:14.549
we're all involved in that process. We thank you for

00:32:14.849 --> 00:32:18.779
working with us and, and for the, the input we

00:32:18.779 --> 00:32:22.039
can have. Uh, that is so important as you know, everybody

00:32:22.039 --> 00:32:24.700
in this room, everybody in Texas knows. That's so important.

00:32:24.710 --> 00:32:30.960
Uh, I feel that attention directed there may have caused

00:32:30.970 --> 00:32:35.259
another even more time sensitive matter. An urgent

00:32:35.259 --> 00:32:38.730
matter to be overlooked. I wrote you a letter actually

00:32:38.740 --> 00:32:42.650
I didn't write you a letter, let me be precise. Uh, six members

00:32:42.650 --> 00:32:45.079
of the Texas Senate, seven members of the Texas House

00:32:45.079 --> 00:32:49.220
a bicameral. We wrote to you on January the 9th.

00:32:49.230 --> 00:32:53.019
And uh I want to underscore and, and just make sure

00:32:53.019 --> 00:32:55.250
I can get that in front of you. Because as, as important

00:32:55.250 --> 00:32:58.240
as what you're doing is. This is a truly urgent, time

00:32:58.240 --> 00:33:01.089
sensitive matter. It has to do with the Pirkey Power Plant.

00:33:01.099 --> 00:33:04.880
Operated by SWEPCO and their parent company, AEP.

00:33:04.890 --> 00:33:07.519
In my district not too far from Tyler, up in Hallsville,

00:33:07.519 --> 00:33:12.240
Marshall over in East Texas. Uh plant with, by conservative

00:33:12.250 --> 00:33:14.920
estimates, the most conservative estimates still over

00:33:14.930 --> 00:33:19.559
20 years of life left. A clean, reliable plant. A cash

00:33:19.559 --> 00:33:23.210
cow for the company and most importantly for our purposes

00:33:23.220 --> 00:33:28.130
a reliable source of dispatchable power. While we're

00:33:28.130 --> 00:33:30.819
working in ERCOT to get more dispatchable power.

00:33:30.829 --> 00:33:34.759
What a tragedy for us to lose existing dispatchable

00:33:34.759 --> 00:33:38.009
power, for those Texans living over in the Southwest

00:33:38.009 --> 00:33:40.009
Power pool, many of whom I represent. That's what I'm

00:33:40.009 --> 00:33:42.000
here to visit with you about today. You're familiar

00:33:42.000 --> 00:33:44.430
with the issues, but I'm here because it's important

00:33:44.430 --> 00:33:45.900
to me. And I know it is to you as well.

00:33:45.910 --> 00:33:50.430
And so uh, this came up back in December. The Senate

00:33:50.430 --> 00:33:52.549
Committee on State Affairs had a hearing in Marshall.

00:33:52.740 --> 00:33:57.589
This was discussed at length and also I think y'all

00:33:57.589 --> 00:33:59.529
talked about a little bit maybe at the Senate Business

00:33:59.529 --> 00:34:02.740
and Commerce hearing last week. And again, we understand

00:34:02.740 --> 00:34:07.019
we want more dispatchable power not less. But how ironic

00:34:07.019 --> 00:34:09.920
if, if uh while we're, while we're working hard to get

00:34:09.920 --> 00:34:14.269
more dispatchable power inside ERCOT. We lose it outside

00:34:14.269 --> 00:34:16.929
ERCOT at the very time we're having this discussion. I

00:34:16.929 --> 00:34:20.010
won't reread the letter, but we do want to make sure.

00:34:20.010 --> 00:34:23.809
Because we're concerned that in the letter, we may

00:34:23.809 --> 00:34:27.320
not have stressed the urgency of the situation. It

00:34:27.320 --> 00:34:30.730
really is. SWEPCO is rushing toward a retirement

00:34:30.730 --> 00:34:34.780
of this plant, one month from now. Uh, the Commission

00:34:34.780 --> 00:34:37.260
is not yet scrutinized the underlying assumptions that

00:34:37.260 --> 00:34:40.360
they're relying on, in making that decision. And that's

00:34:40.360 --> 00:34:43.570
how bad the timing is. While the clock is running out

00:34:43.570 --> 00:34:46.110
on your ability to do something about this. Now the

00:34:46.110 --> 00:34:49.019
hearing to give you some context, you'll recall. What,

00:34:49.030 --> 00:34:52.579
what they want to do is close this plant and then bring

00:34:52.579 --> 00:34:56.929
in new uh wind, and a new wind and solar build. As

00:34:56.929 --> 00:34:59.329
I understand the hearing on the wind and solar bill

00:34:59.329 --> 00:35:02.329
is concluded in the briefings, is nearly complete. Uh,

00:35:02.340 --> 00:35:04.369
and that's, that's gonna be before you in due course,

00:35:04.369 --> 00:35:07.230
and you have a good system for these things. But because

00:35:07.230 --> 00:35:11.639
of where we are in the process, before you get the report

00:35:11.650 --> 00:35:15.579
from proposal from your ALJ. Before that happens,

00:35:15.590 --> 00:35:20.079
if they're not stopped SWEPCO will have made perhaps

00:35:20.090 --> 00:35:23.730
irreversible moves towards the closing of this plant.

00:35:23.739 --> 00:35:26.719
This plant and the lignite mine that accompanies it.

00:35:26.730 --> 00:35:29.849
Uh for, for so many reasons that would be really, really

00:35:29.849 --> 00:35:32.679
bad. And again this process is being rushed by SWEPCO.

00:35:32.880 --> 00:35:36.239
Now just to speak personally SWEPCO is has been

00:35:36.239 --> 00:35:39.090
a great company. They are and they serve their customers

00:35:39.090 --> 00:35:42.800
well. Uh there we have a great relationship with them

00:35:42.809 --> 00:35:45.210
in Northeast Texas and other states where they serve.

00:35:45.219 --> 00:35:49.309
Uh this uh we have supported them in the past, in the

00:35:49.309 --> 00:35:52.349
past on rate matters. When they needed more generation.

00:35:52.349 --> 00:35:54.909
We've always tried to help because what they wanted

00:35:54.909 --> 00:35:57.699
was good for the ratepayers. It's always been that

00:35:57.699 --> 00:36:02.429
way. This is a radical departure from the course of dealing

00:36:02.429 --> 00:36:04.760
with them. That we have seen from SWEPCO for decades and

00:36:04.760 --> 00:36:07.869
decades. We believe it's coming from their parent company.

00:36:07.869 --> 00:36:10.969
We don't know that but I will just say is go a field

00:36:10.969 --> 00:36:14.429
a little bit. The parent company AEP is, is the picture

00:36:14.429 --> 00:36:18.739
of woke, capitalism and ESG virtue signaling to

00:36:18.739 --> 00:36:22.380
the detriment of stockholders, in this case ratepayers.

00:36:22.380 --> 00:36:25.820
And we believe that's exactly what's driving this decision.

00:36:25.829 --> 00:36:28.190
And so that's why I'm here. That's why we wrote to

00:36:28.190 --> 00:36:31.059
you. We want to stress to you how important this is.

00:36:31.059 --> 00:36:34.190
Because again at least 20 years left of life on this

00:36:34.190 --> 00:36:39.480
plant. It's there it's providing power that we all need.

00:36:39.489 --> 00:36:42.219
Now the argument there there's some question about

00:36:42.219 --> 00:36:46.400
what the feds are doing. Uh experts are clear that

00:36:46.590 --> 00:36:49.469
because the option of asking for a 5 year extension

00:36:49.469 --> 00:36:53.039
from the EPA. This is not something being forced

00:36:53.039 --> 00:36:55.360
by the EPA. And while I will not speak to

00:36:55.360 --> 00:36:58.230
testimony before this body so as to honor the rules.

00:36:58.239 --> 00:37:01.059
I will direct you to testimony SWEPCO offered before

00:37:01.070 --> 00:37:04.119
Arkansas's Commission. Where they did not where they

00:37:04.119 --> 00:37:06.500
said the EPA was not the main driver for this

00:37:06.500 --> 00:37:10.849
decision. So all that to say this is a big deal and

00:37:10.849 --> 00:37:15.429
it's happening very very quickly. So I ask, are ask

00:37:15.429 --> 00:37:19.530
very simply take a look at our letter. I think you'll

00:37:19.530 --> 00:37:23.739
find a helpful information there. Your, your Staff so

00:37:23.739 --> 00:37:25.880
wherever you know what's going on. We want to make

00:37:25.880 --> 00:37:29.099
sure this decision is being made in the best interest

00:37:29.099 --> 00:37:32.190
of Texas and Texas ratepayers and folks who need that

00:37:32.190 --> 00:37:35.400
electricity. Folks who you serve. These folks happen

00:37:35.400 --> 00:37:38.760
to be outside of our comfort. They're inside Texas and

00:37:38.760 --> 00:37:41.570
you know about your authority. You have much more authority

00:37:41.570 --> 00:37:44.360
outside of ERCOT as far as regulating these companies.

00:37:44.360 --> 00:37:47.119
This is a monopoly granted that power by the State

00:37:47.130 --> 00:37:49.989
and you have the statutory responsibility and the moral

00:37:49.989 --> 00:37:52.610
responsibility to exercise that jurisdiction, which

00:37:52.610 --> 00:37:54.969
you do. I'm not fussing at you but I do want to

00:37:54.969 --> 00:37:58.659
strongly admonish you. This is time sensitive. It could

00:37:58.659 --> 00:38:02.639
not be more urgent. So please take a look at the letter

00:38:02.650 --> 00:38:05.989
and intervene, slow this process down. You have the

00:38:05.989 --> 00:38:08.780
power to do it. Uh you have the power to do this

00:38:08.780 --> 00:38:15.460
and if you don't uh it'll be too late. Thank you, I'll wait for questions. Thank you sir.

00:38:16.800 --> 00:38:21.099
Any questions for the Senator? Thank you for being

00:38:21.099 --> 00:38:24.030
here and thank you for highlighting the urgency of

00:38:24.030 --> 00:38:24.579
the issue.

00:38:32.329 --> 00:38:35.230
All right. Mr. Journeay, could you move us to the next item

00:38:35.230 --> 00:38:36.230
on our agenda?

00:38:40.079 --> 00:38:44.280
(item:3:52391, application of Liberty County Utilities for Water Series CCN) Our next item is Item No. 3, docket 52391. The

00:38:44.280 --> 00:38:46.730
application of Liberty County Utilities for Water Series

00:38:46.730 --> 00:38:50.730
CCN in Liberty County. A proposed order was filed on

00:38:50.739 --> 00:38:54.369
January 23rd of this year. And I have a memo with proposed

00:38:54.369 --> 00:38:58.449
changes to the order. Thank you sir. Any thoughts, comments

00:38:58.449 --> 00:39:03.400
on this case. So in this case Staff filed a motion

00:39:03.400 --> 00:39:05.909
for abatement in the docket, is that correct Stephen?

00:39:05.920 --> 00:39:11.130
It is correct. Okay. (item:3:52391, Commissioner Cobos' comments) Um so based on my analysis of

00:39:11.130 --> 00:39:14.880
the information that, the evidence that Liberty has

00:39:14.880 --> 00:39:16.989
submitted into the record. With respect to the capital

00:39:16.989 --> 00:39:19.179
improvements and financial assurance requirements.

00:39:19.590 --> 00:39:22.530
I believe that that information is sufficient to prove

00:39:22.530 --> 00:39:27.309
up those two items. And so from my perspective, I don't

00:39:27.309 --> 00:39:29.639
think the abatement is necessary. I would move forward

00:39:29.639 --> 00:39:33.730
with approving the revised proposed order. Um which

00:39:33.730 --> 00:39:36.010
would approve Liberty County's amenities and application

00:39:36.010 --> 00:39:40.210
for water and sewer in Liberty County. (item:3:52391, Commissioner McAdams' comments)
Yeah, Commissioner

00:39:40.219 --> 00:39:47.539
I agree. Um the on remand, this totally changed. The

00:39:47.539 --> 00:39:52.840
evidentiary record was uh supplemented with um with

00:39:52.840 --> 00:39:57.340
a certified uh financial an audited financial statement.

00:39:57.349 --> 00:40:04.349
Cash on hand was uh certified. I mean we know that

00:40:04.360 --> 00:40:06.800
the money and the wherewithal and the means are there

00:40:06.800 --> 00:40:10.039
now. So I I agree, I think this is ready to go.

00:40:10.769 --> 00:40:12.960
Certainly appreciate Staff wanting to get more time

00:40:12.960 --> 00:40:15.480
to make sure it's done right. But I think based on

00:40:15.480 --> 00:40:17.599
the information provided on remand, we're at a point

00:40:17.599 --> 00:40:21.030
where we can approve the revised proposal. ((item:3:52391, Mr. Journeay's comments)
I can just

00:40:21.030 --> 00:40:25.489
let you know that, that there is a lot of concern inside

00:40:25.489 --> 00:40:29.280
this agency. About this rule about financial insurance

00:40:29.280 --> 00:40:33.590
plans. I've had talks with a bunch of people this week

00:40:33.599 --> 00:40:37.769
outside of briefing. I think Staff is trying to bring

00:40:37.769 --> 00:40:40.059
an issue to you all in another docket. They referenced

00:40:40.059 --> 00:40:42.380
this in their motion to debate. Of course this was

00:40:42.389 --> 00:40:46.590
filed before the consent list came out. Um and so I

00:40:46.599 --> 00:40:49.550
I think we're good to move forward here. And, and and I want

00:40:49.550 --> 00:40:52.250
to congratulate Staff doing their due diligence. I

00:40:52.250 --> 00:40:56.190
mean, they they are trying to read our minds and I

00:40:56.199 --> 00:41:01.650
do a good job. It's just uh we they've stated how difficult

00:41:01.650 --> 00:41:04.239
it is. Yeah, this is good.

00:41:06.840 --> 00:41:10.349
All right. Lori, do you have a motion? Um I would

00:41:10.349 --> 00:41:12.670
make a motion to approve the revised proposed order.

00:41:13.280 --> 00:41:15.960
Second. Got a motion and a second. All in favor, say aye. Aye.

00:41:17.289 --> 00:41:21.010
(item:3:52391, Proposal approved) None opposed. The motion passes. Next item please sir. Next item

00:41:21.019 --> 00:41:21.869
is

00:41:24.099 --> 00:41:27.550
Item 8, which is our item with the hearing.

00:41:29.920 --> 00:41:32.619
All right, we'll recess this meeting of the PUC to hold

00:41:32.619 --> 00:41:37.409
a separate hearing on the item. We'll take a couple

00:41:37.409 --> 00:41:39.309
of minutes. So we're now in recess, wait for that.

00:41:41.420 --> 00:41:42.739
Hopes to get set up.

00:41:58.639 --> 00:42:01.190
To post of the Secretary of State of Texas for February

00:42:01.190 --> 00:42:03.920
16, 2023. We'll now turn it over to the Commission

00:42:03.920 --> 00:42:06.619
ALJ for administration of the hearing. Good morning.

00:42:06.690 --> 00:42:10.860
(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

00:42:10.860 --> 00:42:14.110
for an order to appoint a temporary manager for Northern

00:42:14.110 --> 00:42:16.780
Hills Development Company, Inc. continuing until the

00:42:16.780 --> 00:42:20.010
commission orders otherwise. This is Katie Marks, assisting

00:42:20.010 --> 00:42:21.880
the Commissioners. And the purpose of this hearing is

00:42:21.880 --> 00:42:23.889
to determine whether a temporary manager should be

00:42:23.889 --> 00:42:26.619
appointed. We had a pre-hearing conference yesterday

00:42:26.619 --> 00:42:29.550
morning and I admitted three exhibits. Exhibit one is

00:42:29.550 --> 00:42:32.250
a copy of the petition and all attachments. Exhibit

00:42:32.250 --> 00:42:35.260
Two, the affidavit of Rose Ramirez and all attachments.

00:42:35.269 --> 00:42:37.960
And Exhibit Three, a copy of the notice of hearing.

00:42:37.969 --> 00:42:40.559
At this time, I'll take appearances of the parties starting

00:42:40.559 --> 00:42:44.099
with Commission Staff. Jenna Keller for Commission Staff.

00:42:44.400 --> 00:42:47.460
Cody Faulk on behalf of Texas Water Utilities. Have

00:42:47.469 --> 00:42:49.539
either of y'all heard anything from the utility or a

00:42:49.539 --> 00:42:51.860
representative of the utility since yesterday?

00:42:54.610 --> 00:42:57.789
(item:8:54597, Cody Faulk with Texas Water Utilities concerning communication) 
Texas Water Utilities has been in communication with

00:42:57.800 --> 00:43:01.230
the owner of the system and is attempting to coordinate

00:43:01.239 --> 00:43:05.639
taking over temporary management. Okay. Either of y'all

00:43:05.639 --> 00:43:12.289
have any opening statements? No. No. Witnesses? No. No. (item:8:54597, Cody Faulk, TWC follow-up comments) George

00:43:12.289 --> 00:43:14.380
Freitag from the company of Texas Water Utilities

00:43:14.380 --> 00:43:16.530
is available, should the Commission have any questions.

00:43:16.570 --> 00:43:21.920
Commissioners, do y'all have any questions? No. No. Uh, closing

00:43:21.920 --> 00:43:22.579
statements?

00:43:24.760 --> 00:43:27.369
There being nothing else. We will adjourn. Thank you.

00:43:28.780 --> 00:43:29.199
Thank you.

00:43:38.309 --> 00:43:45.909
At 10:18. Resuming with Item 8, docket 54597. Thoughts,

00:43:45.909 --> 00:43:51.489
comments on the pre-manager or a motion? No. (item:8:54597, Commissioner McAdams comments) Yeah, in

00:43:51.489 --> 00:43:53.989
my view, I believe Staff demonstrated that the utility

00:43:54.000 --> 00:43:56.179
abandoned operations and the temporary manager should

00:43:56.179 --> 00:43:59.920
be appointed. Um the petition uh sufficiently address

00:43:59.920 --> 00:44:04.000
the basis for the abandonment. So, uh I would move

00:44:04.010 --> 00:44:06.460
that Texas Water Utilities be appointed as a temporary

00:44:06.460 --> 00:44:09.789
manager for an indefinite term at a compensation of

00:44:09.789 --> 00:44:13.440
$15 per connection per month. Uh, and finally I would

00:44:13.440 --> 00:44:15.539
move that the Commission waive the financial assurance

00:44:15.539 --> 00:44:20.699
requirement under 16 TAC 24.357, Subsection C. Including

00:44:20.699 --> 00:44:25.010
a finding that the system's been abandoned. I would. All right. We've got a motion.

00:44:25.010 --> 00:44:28.929
Do have a second? (item:8:54597, approved temp. manager) Motion and a second. All in favor, say aye. Aye.

00:44:29.139 --> 00:44:31.989
None opposed. Motion passes. Thank you, thank you. Thank

00:44:31.989 --> 00:44:32.309
you.

00:44:34.550 --> 00:44:37.510
We're not taking up Item 9 today. You don't have

00:44:37.510 --> 00:44:41.139
anything on 10, 11, or 12. I believe that brings us to

00:44:41.139 --> 00:44:45.960
13, Mr. Journeay? Yes, sir. (item:13:54589, Rule Review possible changes) Item 13 is project 54589. It's a rule

00:44:45.960 --> 00:44:50.219
review of Chapter 26 are substantive rules out the

00:44:50.230 --> 00:44:53.820
telecommunication service providers. Commission Staff

00:44:53.820 --> 00:44:56.960
has filed a memorandum seeking direction from the Commission.

00:44:58.460 --> 00:45:03.130
I believe Mr. Smeltzer is gonna lay out, uh. Good afternoon

00:45:03.130 --> 00:45:06.619
Commissioners. (item:13:54589, David Smeltzer, Commission Staff, on rule reviews)
David Smeltzer, Commission Staff. Um, normally

00:45:06.619 --> 00:45:08.670
I don't get up and talk about these rule reviews, but

00:45:08.670 --> 00:45:12.460
we are amending our were requesting to amend our process

00:45:12.460 --> 00:45:15.460
a little bit. Historically because of Texas Register

00:45:15.460 --> 00:45:17.880
posting requirements. When we go through our statutorily

00:45:17.880 --> 00:45:21.050
required 4-year rule review. Were not actually able

00:45:21.050 --> 00:45:23.389
to amend or update any of the rules as part of that

00:45:23.389 --> 00:45:27.010
process, which makes it. You know, it's less than optimal

00:45:27.010 --> 00:45:30.079
exercise. And so this time around, we're first file

00:45:30.090 --> 00:45:33.219
what we propose is to first file a preliminary notice.

00:45:33.230 --> 00:45:38.309
Calling for ideas um from interested uh parties, um

00:45:38.320 --> 00:45:40.110
you know, anyone who has suggestions. And we're gonna

00:45:40.110 --> 00:45:42.789
pull internally for suggestions as well so that when

00:45:42.789 --> 00:45:47.050
we do post our formal notice of the Chapter 20, Chapter

00:45:47.050 --> 00:45:49.570
26 Rule Review. We might be able to incorporate low

00:45:49.570 --> 00:45:52.469
hanging fruit changes. So uh the idea would be send

00:45:52.469 --> 00:45:55.349
us all your ideas like you normally do. And if they're

00:45:55.349 --> 00:46:00.409
big meaty policy ideas that warrant their own um project.

00:46:00.420 --> 00:46:02.360
They will be handled the way they have. We'll catalog

00:46:02.369 --> 00:46:05.309
them and bring them up when the Commission has a bandwidth.

00:46:05.320 --> 00:46:08.699
But if there's little stuff um little tweaks or rule

00:46:08.699 --> 00:46:10.730
changes or things that will just make life easier.

00:46:10.739 --> 00:46:14.170
Uh we want to do that as part of our review process.

00:46:14.170 --> 00:46:16.780
We think it'll be good um, process improvement and

00:46:16.780 --> 00:46:19.780
the Chapter 26, which are telecom rules are the ones

00:46:19.780 --> 00:46:21.570
that are next up. And so this is gonna be kind of

00:46:21.570 --> 00:46:26.619
a test run. And so um uh if, if you guys are

00:46:26.619 --> 00:46:29.739
in favor of this, we will make this our standard process

00:46:29.739 --> 00:46:32.530
without sort of pestering you at this stage at the

00:46:32.530 --> 00:46:37.010
open meeting in future rule reviews. I like it always

00:46:37.079 --> 00:46:40.360
looking for ways to embrace continuous improvement.

00:46:40.369 --> 00:46:43.320
Heard that from some engineers before. Thoughts, comments?

00:46:43.340 --> 00:46:45.969
We've got enough work around here. Any innovations

00:46:45.969 --> 00:46:47.489
are helpful, so

00:46:49.539 --> 00:46:53.139
Thank you. All right, carry on. Thank you Mr. Smeltzer.

00:46:54.789 --> 00:46:58.440
I don't have anything on 14. Which brings us to Item

00:46:58.449 --> 00:47:02.679
15. Mr. Journeay? (item:15:52828, Golden Spread Electric Cooperative to change transmission rates) Item 15 is docket 52828 is

00:47:02.679 --> 00:47:05.880
the application of Golden Spread Electric Cooperative

00:47:05.889 --> 00:47:09.159
to change their wholesale transmission rates. A proposal

00:47:09.159 --> 00:47:13.010
for decision was followed on October 25th of last year.

00:47:13.010 --> 00:47:16.739
The ALJ's declined to make any changes in response to

00:47:16.739 --> 00:47:17.469
exceptions.

00:47:19.230 --> 00:47:23.630
Thank you sir. This is a bit of a meaty one. Thoughts,

00:47:23.630 --> 00:47:24.150
comments?

00:47:26.579 --> 00:47:31.690
Yeah, um. Mr. Chairman, members. (item:15:52828, Commissioner McAdams' comments) I had concerns about

00:47:31.699 --> 00:47:38.059
this. Um my only, I'll lead off from the outset. I believe

00:47:38.059 --> 00:47:41.070
we should adopt in part and reject in part, the PFD

00:47:41.070 --> 00:47:46.079
before us. My issue with PFD is the inclusion of the

00:47:46.079 --> 00:47:49.849
expenses um for the executive benefit restoration plan.

00:47:50.519 --> 00:47:53.469
And for the rest for the purpose of transmission service

00:47:53.469 --> 00:47:57.340
rates. These are discretionary costs um that exist

00:47:57.340 --> 00:48:02.269
to attract and retain paid executives. Um although

00:48:02.269 --> 00:48:05.119
Golden Spread does not have shareholders, these expenses

00:48:05.130 --> 00:48:09.329
are more in line with the interests of the member cooperatives

00:48:09.340 --> 00:48:14.510
than with the customers. Which as, as a T-costs uh matter

00:48:14.519 --> 00:48:19.010
The customers are everyone in the system. It has been

00:48:19.010 --> 00:48:21.340
the practice of the Commission to not include similar

00:48:21.340 --> 00:48:25.429
experiences, expenses in other rate case uh contexts.

00:48:25.429 --> 00:48:28.929
And I do not believe that we should do so here. Um

00:48:28.940 --> 00:48:31.940
I really am concerned about the precedent that we're

00:48:31.949 --> 00:48:36.719
establishing. Uh the nuance between a cooperative member

00:48:36.730 --> 00:48:40.989
and a shareholder of a corporation is somewhat nuanced.

00:48:41.000 --> 00:48:43.989
I'm a member of a cooperative, but I'll tell you, I

00:48:43.989 --> 00:48:47.650
feel like I believe I'm a shareholder of that cooperative.

00:48:47.659 --> 00:48:53.059
I mean, their their business operations um affect my

00:48:53.059 --> 00:48:56.619
day to day life well being, um, profits. I mean, how

00:48:56.619 --> 00:48:59.929
much I have to pay for an essential service. So I do

00:48:59.929 --> 00:49:03.150
believe there's, there's somewhat of a of an apples

00:49:03.150 --> 00:49:06.199
to apples comparison that could be made. I believe

00:49:06.199 --> 00:49:08.900
that in the grand scheme of things. This is not a lot

00:49:08.900 --> 00:49:14.639
of money in terms of a, of a T-cost filing, $422,105

00:49:14.639 --> 00:49:18.260
for executive benefit restoration plan expenses. Um

00:49:18.269 --> 00:49:21.380
but it's, it's not reasonable and necessary to provide

00:49:21.380 --> 00:49:25.730
utility service to the public to the entire uh system.

00:49:25.739 --> 00:49:29.550
Nor do I find that it's in the public interest. So

00:49:29.550 --> 00:49:31.460
I'd I'd welcome any thoughts on it, but I certainly

00:49:31.460 --> 00:49:35.559
have a motion. (item:15:52828, Commissioner Cobos' comments) I agree with Commissioner McAdams that

00:49:35.570 --> 00:49:38.409
the inclusion of those costs I think were problematic

00:49:38.409 --> 00:49:41.659
for me as well. Um, as you pointed out, we have a

00:49:41.670 --> 00:49:43.920
long standing Commission precedent not to allow these

00:49:43.920 --> 00:49:47.579
types of expenses to be included for ERCOT and non-ERCOT

00:49:47.590 --> 00:49:51.530
utilities. And because these costs that the cooperative

00:49:51.530 --> 00:49:55.039
is um, looking to include in their wholesale transmission

00:49:55.039 --> 00:49:58.099
service rates are ultimately uplifted to all ratepayers

00:49:58.110 --> 00:50:01.010
in ERCOT. I do not believe that the ratepayers in ERCOT

00:50:01.010 --> 00:50:04.690
should be paying for these types of expenses that are

00:50:04.699 --> 00:50:10.480
you know, not um, not directly related to providing

00:50:10.480 --> 00:50:15.010
utility service. And so I, I would um, disallow and

00:50:15.010 --> 00:50:19.820
remove the $422,105 from the revenue requirement consistent

00:50:19.820 --> 00:50:22.130
with longstanding Commission precedent. And we want

00:50:22.130 --> 00:50:25.519
to make sure that we move in the, in a consistent policy

00:50:25.519 --> 00:50:29.039
direction. And um, that's what I said on that issue.

00:50:29.039 --> 00:50:33.519
I'm, I'm good with the, the other two. The transmission

00:50:33.519 --> 00:50:37.710
line and the operator transmission operation center.

00:50:38.219 --> 00:50:41.039
Um, I do think we need to modify the PFD with respect

00:50:41.039 --> 00:50:45.219
to the requested rate of return. And to clarify that

00:50:45.230 --> 00:50:49.139
the, the basis for the reasonableness of the request

00:50:49.139 --> 00:50:52.409
a rate of return is based on the supplemental evidence

00:50:52.420 --> 00:50:55.340
that was filed. Not the presumption that was created

00:50:55.340 --> 00:50:59.269
in the rate filing package for um for the co-ops that

00:50:59.280 --> 00:51:02.019
um has been since been amended anyway. So that's 

00:51:02.019 --> 00:51:02.769
key difference. Thank you for pointing that out.

00:51:05.829 --> 00:51:11.659
As such, Commissioner. Would you um uh allow or order

00:51:11.659 --> 00:51:15.449
Golden Spreads. Uh if Golden Spreads, tariff needs

00:51:15.449 --> 00:51:17.489
to be amended consistent with our decision, would you

00:51:17.489 --> 00:51:19.699
direct them to do that? I just want to make sure that

00:51:19.699 --> 00:51:22.849
the tariff is brought into alignment with, with those

00:51:22.849 --> 00:51:27.460
changes. It's part of that. I'm also with throughout

00:51:27.469 --> 00:51:34.920
for consideration the seasonal export prices um because

00:51:34.920 --> 00:51:37.469
that's something we've, we've looked at before. Any

00:51:37.469 --> 00:51:42.269
thoughts on that first, I'm hearing of that part on

00:51:42.800 --> 00:51:48.170
So. Well, it's it's, we we made some changes to prohibit

00:51:48.170 --> 00:51:54.150
that. And so if we're gonna be consistent on one side

00:51:54.150 --> 00:51:56.170
of the table, I think we want to maintain that across

00:51:56.170 --> 00:52:03.079
the board. May I jump in sir? Sir. (item:15:52828, Mr. Journeay's comments) We're gonna need to have Staff

00:52:03.090 --> 00:52:06.079
calculate a new rate for us based on this disallowance.

00:52:06.769 --> 00:52:11.000
At the same time. I think we need to make an adjustment

00:52:11.000 --> 00:52:15.320
to their import export tariff. A project has been set

00:52:15.320 --> 00:52:19.960
up after we changed that rule to allow um tariffs to

00:52:19.960 --> 00:52:22.679
be brought up to that standard. But because we are

00:52:22.679 --> 00:52:25.400
changing their rates here. And my understanding is

00:52:25.400 --> 00:52:29.179
the rate in the import export tariff itself is based

00:52:29.179 --> 00:52:33.349
in part on what the, what the rate is set in this

00:52:33.349 --> 00:52:37.849
case. That we need to do, not only catch the neuticles

00:52:37.849 --> 00:52:39.960
rate, the transmission service rate. But we need them

00:52:39.960 --> 00:52:44.230
to figure out what the proper import export numbers

00:52:44.230 --> 00:52:46.400
and that tariffs should be. And since we're going to

00:52:46.400 --> 00:52:49.039
deal with that, we might as well get rid of the seasonality

00:52:49.320 --> 00:52:52.900
um that the amendment to the rule recently directed.

00:52:53.599 --> 00:52:56.710
Make it consistent with our previous ruling. That makes

00:52:56.710 --> 00:52:59.250
sense that both of those calculations are intertwined.

00:52:59.250 --> 00:53:02.570
So that's my understanding based on the this alignment

00:53:02.570 --> 00:53:06.309
of the $422,000 and that will require recalculation.

00:53:06.309 --> 00:53:08.670
And while we're at it, let's let's just do the recalculate

00:53:08.670 --> 00:53:13.329
the import export tariff. Is that okay, carry on. Just

00:53:13.329 --> 00:53:15.159
wanted to. That was that was part of the.

00:53:18.309 --> 00:53:22.000
I heard Lori make a motion. Okay. Well, I don't know if I can because of this recalculation

00:53:22.000 --> 00:53:23.769
do we have to bring you back? So I think that you

00:53:23.769 --> 00:53:26.409
all made your decisions clear on on the decisions to

00:53:26.409 --> 00:53:30.650
adopt in part and modify and part and reject in part.

00:53:30.659 --> 00:53:33.940
Uh certainly make that vote with understanding that

00:53:33.940 --> 00:53:36.750
we will and then delegate us authority to request Staff

00:53:36.750 --> 00:53:41.869
to give us some new rate numbers um and uh and and

00:53:41.869 --> 00:53:44.630
update this tariff. We will get those, we will modify

00:53:44.630 --> 00:53:46.940
the order and bring it back to the future meeting for

00:53:46.940 --> 00:53:50.489
you to actually vote on the actual rates. For the,

00:53:52.949 --> 00:53:59.829
I asked for a motion to direct OPDM to prepare an order

00:53:59.829 --> 00:54:03.219
consistent with our discussion. To disallow the retired

00:54:03.219 --> 00:54:05.280
$420,000. Recalculate

00:54:06.820 --> 00:54:09.690
and run revised numbers to account for that disallowance.

00:54:11.650 --> 00:54:16.940
And prepare and either have OPDM Staff and/or Golden Spread

00:54:16.940 --> 00:54:22.050
Prepare a new import export tariff. I can do that.

00:54:22.059 --> 00:54:25.119
Um so, Mr. Chairman at this time I would move to accept

00:54:25.119 --> 00:54:28.199
the PFD in part and reject the PFD in part. Consistent

00:54:28.199 --> 00:54:31.829
with our discussion of the executive benefit uh restoration

00:54:31.829 --> 00:54:34.710
plan expenses and if necessary authorize a number

00:54:34.710 --> 00:54:37.539
run. If the rates needs to be recalculated as a result.

00:54:37.730 --> 00:54:39.690
Additionally, if Golden Spreads tariff needs to be

00:54:39.690 --> 00:54:41.610
amended consistent with our decision, I would direct

00:54:41.610 --> 00:54:46.539
them to do that. As well as prepare a reconciliation

00:54:46.550 --> 00:54:50.119
of the import export tariff. (item:15:52828, approved) That sounds like a good

00:54:50.119 --> 00:54:53.119
motion. Got a second? Second. A motion and a second. All in

00:54:53.119 --> 00:54:56.739
favor, say aye. Aye. None opposed, motion passes. Thank

00:54:56.739 --> 00:54:57.139
you y'all.

00:54:58.690 --> 00:55:00.690
Next item please, sir.

00:55:03.159 --> 00:55:08.289
(item:18:53758, United Texas for CCN) The next item is Item 18, docket 53758. It's the application

00:55:08.289 --> 00:55:15.219
of United Texas for CCN under PURA 37.051(c-1)

00:55:15.219 --> 00:55:17.949
and 37.056(b)(2).

00:55:19.519 --> 00:55:24.300
A draft preliminary order was filed yesterday. Thank

00:55:24.300 --> 00:55:28.559
you sir. Another interesting pocket. Thoughts, comments?

00:55:29.900 --> 00:55:31.550
I have a little bit to say here.

00:55:35.250 --> 00:55:37.500
(item:18:53758, Commissioner Glotfelty's comments) Um I'm actually gonna read this because I wrote it

00:55:37.500 --> 00:55:43.300
out because I'm uh just I found the words on my page

00:55:43.309 --> 00:55:48.050
are, are the right ones. Um, I said this case is very

00:55:48.050 --> 00:55:50.940
challenging for me. I have filed cases similar to this

00:55:50.940 --> 00:55:53.619
in numerous states in my past life and it's never easy.

00:55:53.630 --> 00:55:56.360
What I have found is that every state law is looking

00:55:56.360 --> 00:56:00.500
inward, not outward. It is how can I build the best

00:56:00.510 --> 00:56:03.489
system internally without the help of my neighbors

00:56:03.500 --> 00:56:06.909
close or far. And unfortunately the laws that govern

00:56:06.909 --> 00:56:08.960
how we deal with unique technologies such as HVDC

00:56:08.960 --> 00:56:11.949
and planning permitting and operation are mostly

00:56:11.949 --> 00:56:14.929
non existent in our state as well as every other state

00:56:14.940 --> 00:56:16.539
around the, the US.

00:56:18.329 --> 00:56:21.130
In my mind, HVDC lines can provide

00:56:21.130 --> 00:56:23.969
the state with three things that our citizens need

00:56:23.980 --> 00:56:26.500
and that our leadership has directed us to improve.

00:56:26.510 --> 00:56:30.010
Resiliency as we can lean on other states and RTOs

00:56:30.010 --> 00:56:33.409
to help us when we're down. Without jeopardizing

00:56:33.409 --> 00:56:36.980
FERC jurisdiction. Reliability as they can help improve

00:56:36.980 --> 00:56:39.280
voltage across the system and improve the amount of

00:56:39.280 --> 00:56:46.090
distant resources available. Um, not affected by different

00:56:46.099 --> 00:56:49.119
not affected by similar weather patterns. Um, to help

00:56:49.119 --> 00:56:53.340
us ensure reliability across the system. And economic

00:56:53.340 --> 00:56:56.030
reasons as they can help bring lower cost energy to

00:56:56.030 --> 00:56:57.989
different areas of the state without a massive build

00:56:57.989 --> 00:57:00.280
up of the lower voltage system. All of these things

00:57:00.280 --> 00:57:04.309
are things that would improve our system for our consumers.

00:57:05.420 --> 00:57:08.369
Our statute, in my mind draws a very bright distinction

00:57:08.369 --> 00:57:11.469
between transmission lines and tie lines. Uh that's

00:57:11.480 --> 00:57:16.690
not our statute, that's our rule. And this is where

00:57:16.690 --> 00:57:21.199
we start to get a little muddy in the water. Um there's

00:57:21.199 --> 00:57:24.420
specific things that need to happen for each individually

00:57:24.420 --> 00:57:29.659
and no mention of CCNs for tie-lines. Um this is uh

00:57:29.670 --> 00:57:36.210
this is uh deep mud, if you ask me. Um there are

00:57:36.210 --> 00:57:39.400
numerous points uh in the filings that in my opinion

00:57:39.400 --> 00:57:41.429
are right on target and we should be able to permit

00:57:41.440 --> 00:57:45.199
these types of lines. Because if we really, really wanted

00:57:45.199 --> 00:57:47.199
these types of lines, we would claim that we have the

00:57:47.199 --> 00:57:50.760
authority to do so. The biggest barrier to HVDC

00:57:50.760 --> 00:57:53.909
in this case is the right of first refusal law that

00:57:53.909 --> 00:57:57.670
the Legislature has passed. I believe this handcuffs

00:57:57.670 --> 00:58:02.559
me, I want to push this line and other lines, but this

00:58:02.559 --> 00:58:05.590
law was passed and it's our job to implement the statute.

00:58:06.179 --> 00:58:09.130
Since the right of first refusal and non-ERCOT areas

00:58:09.130 --> 00:58:11.599
is pending review at the Supreme Court. There's quite

00:58:11.599 --> 00:58:15.059
a bit of uncertainty about its effect outside of ERCOT

00:58:15.059 --> 00:58:19.980
and perhaps inside. What I do believe is our process

00:58:19.989 --> 00:58:23.519
and a denial will not stop this company and others

00:58:23.519 --> 00:58:26.170
like it from seeking interconnection at FERC.

00:58:27.900 --> 00:58:30.639
Uh and they will likely get it in my opinion and that's

00:58:30.639 --> 00:58:34.260
gonna be very hard for us. Um we don't know what will

00:58:34.260 --> 00:58:38.590
happen after that as to how a FERC ordered interconnection

00:58:38.590 --> 00:58:41.869
and I right of first refusal work in tandem or work

00:58:41.869 --> 00:58:44.360
against each other. We'll have to see if that happens.

00:58:44.369 --> 00:58:45.539
We don't know if that will happen.

00:58:47.860 --> 00:58:53.139
Um with all this said, um if I had the ability to

00:58:53.139 --> 00:58:56.800
abate the docket to set it aside for new filings uh

00:58:56.809 --> 00:59:01.750
to wait till ERCOT um files information about a study

00:59:01.750 --> 00:59:04.250
that they would be required to do in the law or wait

00:59:04.250 --> 00:59:07.139
till the Supreme Court rules. I would love to do that.

00:59:07.150 --> 00:59:10.980
But I don't think we can, I think the law unfortunately

00:59:10.989 --> 00:59:17.230
tells me that um that a right of first refusal is a

00:59:17.230 --> 00:59:21.039
right of first refusal. And uh according to this docket

00:59:21.039 --> 00:59:25.050
at this time, um I would have to support the Staff's

00:59:25.050 --> 00:59:26.000
position on this.

00:59:28.739 --> 00:59:33.030
We'll put uh philosophically everybody on this Commission

00:59:33.039 --> 00:59:37.989
(item:18:53758, Chairman Lake's comments) we've, we've all spent a lot of time working on uh a

00:59:38.000 --> 00:59:41.340
lot of, a lot of deliberations. A lot of hard work

00:59:41.349 --> 00:59:46.639
on market design and and um philosophically, I think

00:59:46.650 --> 00:59:50.989
everybody has, has put a lot of sweat into ensuring

00:59:51.010 --> 00:59:55.449
competitive fair market places and that would extend

00:59:55.449 --> 00:59:59.150
to transmission. Um, and so I think philosophically

00:59:59.150 --> 01:00:01.530
everybody welcomes more competition, more technology

01:00:01.539 --> 01:00:05.050
better. We've all been saying that for couple of years

01:00:05.050 --> 01:00:09.710
now, but also see your point about the constraints

01:00:09.710 --> 01:00:14.289
under current statute. Um thankfully we do have the

01:00:14.289 --> 01:00:19.489
Legislature in session. Um, I'm highly confident that

01:00:19.500 --> 01:00:24.150
some of those good folks will be asking, asking about

01:00:24.150 --> 01:00:27.940
this issue. And they're, they're the ones who, who change

01:00:27.940 --> 01:00:32.269
statue. Glad we have a transmission expert to send

01:00:32.269 --> 01:00:32.510
to them.

01:00:34.210 --> 01:00:37.739
Other thoughts, comments on this issue? (item:18:53758, Commissioner Cobos' comments) Commissioner

01:00:37.739 --> 01:00:40.420
Glotfelty, thank you for your comments. I think, you

01:00:40.420 --> 01:00:42.210
know, it's determined highlighted, we're always looking

01:00:42.210 --> 01:00:46.070
for ways to um, you know, increased competition in

01:00:46.070 --> 01:00:52.000
the market. Um, and and um, you know, competition delivers

01:00:52.010 --> 01:00:54.940
you know, great results. And we've seen that historically

01:00:54.949 --> 01:00:58.579
and I think, you know, I agree with you and, you know

01:00:58.579 --> 01:01:01.639
at this time, the law is just not written to allow

01:01:01.650 --> 01:01:07.110
this type of um, construct. And um ultimately, there's

01:01:07.110 --> 01:01:10.789
you know, the law, the legal issue in the background

01:01:10.800 --> 01:01:14.349
that needs to get settled and we've got the Legislature

01:01:14.349 --> 01:01:18.980
in town. And um the the legal issue is really what

01:01:18.989 --> 01:01:22.420
what we're dealing with right now is the pair of provisions

01:01:22.420 --> 01:01:27.570
are written as they are. And um, we have to, you know

01:01:27.579 --> 01:01:30.880
read PURA as we're assessing this case and and move

01:01:30.880 --> 01:01:33.739
forward. And this is a very unprecedented request of

01:01:33.739 --> 01:01:36.949
sort of, asking for rights and partial, you know, sort

01:01:36.949 --> 01:01:40.460
of entry with the CCN II Phase, sort of CCN process.

01:01:40.460 --> 01:01:44.610
That my understanding the Commission has not um dealt

01:01:44.610 --> 01:01:49.780
with in the past. So, um ultimately, as I read the

01:01:49.789 --> 01:01:52.380
Staff's draft preliminary order, I am in agreement

01:01:52.380 --> 01:01:55.800
with with their ultimate conclusions. And we asked

01:01:55.800 --> 01:01:58.840
for extensive briefing on this issue as well. And um

01:01:58.840 --> 01:02:01.969
I think all of that combined leads me to the conclusion

01:02:01.969 --> 01:02:04.050
of adopting the preliminary order.

01:02:07.940 --> 01:02:10.260
Thoughts, comments? Perhaps a motion?

01:02:12.730 --> 01:02:18.530
Uh, Mr. Chairman, I would move to adopt the draft preliminary

01:02:18.530 --> 01:02:22.389
order. Okay. And, and I would second that with the remand

01:02:22.389 --> 01:02:25.340
back to the ALJ. So that the ALJ can request

01:02:25.340 --> 01:02:28.079
that reunited withdraw at CCN application or dismiss

01:02:28.079 --> 01:02:32.530
the case. SOAH svante per um or per Commission Staff

01:02:32.530 --> 01:02:35.869
motion to dismiss. Sure. Happy to make that motion. She's

01:02:35.869 --> 01:02:41.559
got a second. All right. (item:18:53758, motion approved) We've got an amended motion and

01:02:43.389 --> 01:02:47.849
a second. Yes. All right. All in favor, say aye. Aye.

01:02:48.119 --> 01:02:49.570
None opposed. Motion passes.

01:02:52.880 --> 01:02:56.579
That brings us next item please, Mr. Journeay. Next item

01:02:56.579 --> 01:03:01.530
is (item:21:54502, ETT for Good Cause Extension of Rate Filing) Item 21, docket 54502 is the application of ETT for a good

01:03:01.539 --> 01:03:05.289
cause extension of its rate filing requirements under

01:03:05.289 --> 01:03:09.639
our rules and adoption of a rate settlement. A proposed

01:03:09.639 --> 01:03:12.510
order was filed on January 13, and I have a memo with

01:03:12.519 --> 01:03:17.000
proposed changes to the order. Thank you, sir. Thoughts

01:03:17.010 --> 01:03:17.610
comments?

01:03:19.489 --> 01:03:22.679
Sure. I'll give some preliminary feedback first. From

01:03:22.679 --> 01:03:27.329
my perspective, (item:21:54502, Commissioner Cobos' comments) I think we have two options and one

01:03:27.329 --> 01:03:33.039
is to um deny this extension and have ETT come

01:03:33.039 --> 01:03:36.480
in for a full on rate case. Because their initial rates

01:03:36.480 --> 01:03:41.050
were set in 2007, and based on the information that

01:03:41.050 --> 01:03:44.750
I have read their investments have grown to $3.4 billion

01:03:44.760 --> 01:03:49.530
about $3.4 billion that have not been subject to a comprehensive

01:03:49.530 --> 01:03:52.369
rate review from the Commission. A lot has happened

01:03:52.369 --> 01:03:55.829
since 2007, for the company. Um, in addition, you know

01:03:55.829 --> 01:04:00.369
including the build out of press um, which massive

01:04:00.380 --> 01:04:03.420
you know, expenses there and capital investment and

01:04:03.429 --> 01:04:07.159
um lines that the company is built into the Lower Rio

01:04:07.159 --> 01:04:10.750
Grande Valley and those are significant investments

01:04:10.750 --> 01:04:14.380
as well a lot. I mean just we haven't gone through

01:04:14.380 --> 01:04:16.719
this process and just for background, you know, the

01:04:16.730 --> 01:04:20.170
initial rates are set in 2007. Ultimately ETT

01:04:20.179 --> 01:04:24.269
came in a couple of years ago or so and entered into

01:04:24.269 --> 01:04:29.590
a settlement agreement. That included um there agreement

01:04:29.590 --> 01:04:32.960
to reduce the revenue requirement by all interim t-

01:04:32.960 --> 01:04:38.090
costs proceedings, um, not recover rate case

01:04:38.090 --> 01:04:40.059
expenses. And at the time, you know, the Commission

01:04:40.059 --> 01:04:43.139
approved those settlements after that the other transmission

01:04:43.150 --> 01:04:46.750
only utilities um orderly came in with the same sort

01:04:46.750 --> 01:04:51.289
of framework. And um that was definitely much appreciated

01:04:51.289 --> 01:04:53.400
when I was at OPAC and you know, we didn't have

01:04:53.409 --> 01:04:55.789
the, we're, I mean we're at the point where all the

01:04:55.789 --> 01:04:59.179
utilities were now coming in for the Legislation, the

01:04:59.190 --> 01:05:01.579
PUC role that requires the companies to come in every

01:05:01.579 --> 01:05:05.599
4 years. And um, so the transmission only framework

01:05:05.599 --> 01:05:08.010
and the settlement of those those cases was certainly

01:05:08.010 --> 01:05:10.500
appreciated. Because we were dealing with a ton of rate

01:05:10.500 --> 01:05:14.369
cases at the time. Um as I sit here today um at

01:05:14.369 --> 01:05:16.630
some point we've we've got to bring the these folks

01:05:16.630 --> 01:05:19.860
in, right. We gotta bring the company in. And um either

01:05:19.869 --> 01:05:23.250
from my perspective, either we do that now or we grant

01:05:23.250 --> 01:05:25.730
this good cause extension and including ordering paragraph

01:05:25.730 --> 01:05:28.099
that said that they can't come in for another extension

01:05:28.110 --> 01:05:29.090
after this one.

01:05:33.230 --> 01:05:39.190
(item:21:54502, Commissioner Glotfelty's comments) I um I think in this instance with the Staff burden,

01:05:39.199 --> 01:05:41.670
with the challenges that we all face in terms of time.

01:05:41.670 --> 01:05:46.539
That we that we grant the extension. Um to me if there's

01:05:46.539 --> 01:05:51.400
a reduction in this and obviously a reduction um and

01:05:51.400 --> 01:05:55.099
costs would benefit ratepayers um over this time. But

01:05:55.110 --> 01:05:57.630
it's clear that if we do this, we need to say that

01:05:57.630 --> 01:06:00.719
this is the last time. I mean, it's a uh it's important

01:06:00.719 --> 01:06:03.610
that we get them in here for our duty as protecting

01:06:03.610 --> 01:06:08.099
ratepayers. But I would offer my view is that we we

01:06:08.110 --> 01:06:11.900
grant the good cause extension and uh make it known

01:06:11.900 --> 01:06:16.289
that we'll see you in 2025. Yeah. (item:21:54502, Chairman Lake's comments) Certainly recognize

01:06:16.289 --> 01:06:18.250
the burden on Staff. And we don't, we don't need to do

01:06:18.260 --> 01:06:21.880
more work on them. But I appreciate the point that

01:06:21.880 --> 01:06:25.420
this can't go on indefinitely. And there has been a

01:06:25.420 --> 01:06:30.619
lot of change. And so if we do grant this one, it

01:06:30.619 --> 01:06:34.489
is by definition the last one, the last extension.

01:06:34.500 --> 01:06:39.059
(item:21:54502, Commissioner McAdams' comments) The point is is well made and well taken to. Uh this

01:06:39.059 --> 01:06:43.099
reminds me of the uh of the old days before Senate

01:06:43.099 --> 01:06:46.219
Bill 735. Where those they would never come in for

01:06:46.219 --> 01:06:48.329
a comprehensive base rate proceeding. You know, they'd

01:06:48.329 --> 01:06:51.010
go 9 years. Some of the IOUSs would go

01:06:51.010 --> 01:06:54.440
9 years without a base rate proceeding and just

01:06:54.440 --> 01:06:59.059
keep rolling the interim T-Costs and the DCRFs. And

01:06:59.070 --> 01:07:04.150
uh so it's what you're suggesting is consistent with

01:07:04.150 --> 01:07:08.670
State and Commission led policy. But as you were talking

01:07:08.670 --> 01:07:10.469
I was just like man, that's just one more crushing

01:07:10.469 --> 01:07:14.460
project for, for Staff at this time. So if we could

01:07:14.460 --> 01:07:17.090
buy a little breathing space with the expectation that

01:07:17.099 --> 01:07:19.440
look, this is this is it we got to get you in

01:07:19.440 --> 01:07:21.150
the next time I'm comfortable.

01:07:25.210 --> 01:07:27.809
I mean, I just don't want to continue to kick and kick

01:07:27.820 --> 01:07:29.670
You're always gonna be busy. (item:21:54502, Commissioner Cobos' follow-up comments) Commission is always gonna

01:07:29.670 --> 01:07:32.449
be busy two years ago. It's busy now. It's probably

01:07:32.449 --> 01:07:34.639
gonna be busy in 2025. The Commission hated when we

01:07:34.639 --> 01:07:37.500
did the scheduling Bill with 735. Put everybody on

01:07:37.500 --> 01:07:39.980
a schedule and, and one thing to take into consideration

01:07:39.980 --> 01:07:42.889
and I'm in agreement that it's fine moving forward.

01:07:42.900 --> 01:07:45.860
If you guys are, you know, if everyone is in agreement

01:07:45.860 --> 01:07:49.059
that this is the best thing to do right now. But we

01:07:49.059 --> 01:07:51.320
have other rate cases that are coming in where were

01:07:51.329 --> 01:07:53.679
you know, some, I've recused myself from. Some I'm gonna

01:07:53.690 --> 01:07:57.429
be involved in. Where those ROEs are a lot lower and

01:07:57.429 --> 01:08:02.480
here they're locked in at 9.6. And so um I'm just,

01:08:02.489 --> 01:08:06.539
you know, while it is a reduction. Um they have a pretty

01:08:06.539 --> 01:08:09.119
healthy ROE right now. That we need to look at at

01:08:09.119 --> 01:08:11.179
some point and I mean we just got to make sure that

01:08:11.179 --> 01:08:14.769
we do our job on our end. And do a comprehensive review

01:08:14.780 --> 01:08:16.670
of everything that's been invested over the last several

01:08:16.670 --> 01:08:21.029
years. And um look at um not only an OETT

01:08:21.029 --> 01:08:24.310
Is partially owned by AAP, and we have transmission

01:08:24.310 --> 01:08:28.319
only utilities that have certain um arrangements and

01:08:28.319 --> 01:08:30.800
relationships with other utilities. And we would, you

01:08:30.800 --> 01:08:33.550
know, as we've looked at other utilities and ring fencing.

01:08:33.829 --> 01:08:36.489
That is something that maybe we should consider is

01:08:36.500 --> 01:08:39.810
we move forward because there's a lot going on. It's

01:08:39.819 --> 01:08:43.479
that that's underneath this hood that you know, my

01:08:43.479 --> 01:08:46.659
preference is not is I don't want to continue to kick

01:08:46.659 --> 01:08:49.060
this down the road. I'm fine with. Ultimately, the

01:08:49.060 --> 01:08:53.909
Commission's desire to um you know, take a breather.

01:08:53.920 --> 01:08:58.600
But you know, if we can include that paragraph, that

01:08:58.609 --> 01:09:00.739
provision the ordering paragraph. I think that's really

01:09:00.739 --> 01:09:01.300
important.

01:09:03.029 --> 01:09:06.220
Makes sense for me. Can you give us a motion to that

01:09:06.220 --> 01:09:13.729
effect? Yes, I would move to grant the good cause extension

01:09:13.739 --> 01:09:21.199
of the rate filing requirement under 16 TAC 25.247. Adopt

01:09:21.210 --> 01:09:25.260
the rate settlement agreement and include in the order

01:09:25.270 --> 01:09:28.449
and ordering paragraph that states that ETT cannot

01:09:28.449 --> 01:09:31.020
request another extension for filing application for

01:09:31.029 --> 01:09:36.739
a comprehensive review. Got a motion. And I would second. (item:21:54502, motion approved) A motion and a second. All

01:09:36.739 --> 01:09:39.920
in favor, say aye. Aye. None opposed. Motion passes. Thank

01:09:39.920 --> 01:09:45.359
you Lori for laying out those options. Um and Jimmy

01:09:45.359 --> 01:09:50.050
thank you for reminding us of the Staff. The extraordinary

01:09:50.050 --> 01:09:53.449
amount of work that Staff has on their plate. I don't

01:09:53.449 --> 01:09:58.939
have anything on Item 22. Which brings us to Item 23.

01:09:58.949 --> 01:10:05.340
Um regarding wholesale electric market design particularly

01:10:05.340 --> 01:10:06.189
want to

01:10:08.680 --> 01:10:14.840
discuss the firm 2nd phase of our firm fuel. Uh I wish

01:10:14.840 --> 01:10:17.529
I'd had time to probably should have filed a memo.

01:10:17.529 --> 01:10:24.100
But it's been a busy week, been a busy year. Um it's

01:10:24.109 --> 01:10:28.939
been a long year. It's been a long year. Um we, we

01:10:28.949 --> 01:10:31.300
(item:23:52373, Chairman Lake's comments on firm fuel) we talked about this in the last meeting and obviously

01:10:31.300 --> 01:10:35.470
this is, we've, we've seen the first phase of firm

01:10:35.470 --> 01:10:38.930
fuel. We're all part of developing that. We've seen

01:10:38.930 --> 01:10:44.279
it deployed now uh at least once, maybe twice. Yeah

01:10:44.289 --> 01:10:48.069
For both Elliot and Mara, the most vulnerable points

01:10:48.069 --> 01:10:54.770
in our uh in our grid. Uh it performed very well and

01:10:54.770 --> 01:10:57.819
it's doing exactly what we expected to do and, and what

01:10:57.819 --> 01:11:02.369
I believe that the Legislature expects. Uh we we still

01:11:02.380 --> 01:11:06.310
owe our cost of information on the second phase of

01:11:06.310 --> 01:11:10.979
firm fuel. Which is contemplated to expand eligibility

01:11:10.989 --> 01:11:15.390
of generators participating in the program to be on

01:11:15.399 --> 01:11:19.449
on site storage to include all sides storage with firm

01:11:19.449 --> 01:11:23.239
transportation to the generating resource. The key as

01:11:23.239 --> 01:11:26.399
as you all are well aware and have been briefed and

01:11:26.409 --> 01:11:29.670
we discussed last time is the key decision point hinges

01:11:29.670 --> 01:11:32.390
around what, what what is the definition of qualified

01:11:32.390 --> 01:11:33.140
pipeline.

01:11:34.840 --> 01:11:40.409
And I'll a layout where my thinking is at the moment.

01:11:40.420 --> 01:11:43.739
But with of course the caveat that just like everything

01:11:43.739 --> 01:11:47.010
in this marketplace, an ecosystem, it's nothing straightforward.

01:11:47.010 --> 01:11:53.069
It's always always complex. Obviously the overarching

01:11:53.069 --> 01:11:55.989
concern for this is deliverability of the gas. We want

01:11:55.989 --> 01:12:00.159
to make sure that not on normal days, but in times

01:12:00.159 --> 01:12:02.640
of when the system is under the most duress during

01:12:02.649 --> 01:12:05.609
extreme cold conditions. When everybody else wants

01:12:05.609 --> 01:12:08.970
gas, everybody else needs gas, that the natural gas

01:12:08.979 --> 01:12:13.489
can be delivered to generating resources. That keeps

01:12:13.500 --> 01:12:15.630
keeps the lights on, keeps the heaters running, keeps

01:12:15.630 --> 01:12:19.010
our citizens warm on those very, very cold nights.

01:12:20.189 --> 01:12:23.079
The Railroad Commission's curtailment rule introduces

01:12:23.079 --> 01:12:25.350
a challenge because it prioritizes

01:12:27.470 --> 01:12:30.409
LDCs ahead of generating resources. Generating resources

01:12:30.409 --> 01:12:33.100
are now second, which is a dramatic improvement. Uh

01:12:33.109 --> 01:12:36.229
and it's important to note that is a dramatic improvement

01:12:36.229 --> 01:12:40.850
over the situation during Uri. But it presents a

01:12:40.850 --> 01:12:45.180
challenge for Railroad Commission regulated pipelines.

01:12:45.739 --> 01:12:48.810
Uh we have, as you all know, worked with the ERCOT

01:12:48.810 --> 01:12:53.859
team, and outside counsel to do what I consider a pretty

01:12:53.859 --> 01:12:58.189
thorough diligence process on evaluating all, all the

01:12:58.189 --> 01:13:03.739
pros and cons. Uh and look at this from every angle

01:13:03.750 --> 01:13:08.729
poked, prodded, pride to, to figure out what is truly

01:13:08.729 --> 01:13:10.960
firm. Um

01:13:13.039 --> 01:13:14.510
based on

01:13:16.380 --> 01:13:19.869
the percent of total gas used by LDCs

01:13:21.479 --> 01:13:22.310
and

01:13:23.909 --> 01:13:30.289
the robust contract and disclosure requirements uh

01:13:30.300 --> 01:13:33.109
included in the, in the, in the framework that ERCOT

01:13:33.109 --> 01:13:36.039
and outside counsel has been prepared, has prepared

01:13:36.039 --> 01:13:37.750
for us. I

01:13:39.289 --> 01:13:42.140
I'm out of, I think I'm at a place where I'm comfortable

01:13:42.149 --> 01:13:45.390
expanding the definition of qualified pipeline to include

01:13:45.399 --> 01:13:49.430
uh, to, to strike the language that says must not be

01:13:49.430 --> 01:13:52.680
surgically to curtailment. But that's, that's what we

01:13:52.680 --> 01:13:56.409
need to have a discussion about. Uh, we, we heard

01:13:56.409 --> 01:13:59.180
some information from, I think Kinder Morgan at the

01:13:59.180 --> 01:14:03.949
last meeting about how much, how little gas actually

01:14:03.949 --> 01:14:11.439
goes to the LDCs. Um, we dug into it and uh.

01:14:13.130 --> 01:14:17.260
In the highest use periods during the Uri, a 32% of

01:14:17.260 --> 01:14:22.239
natural gas demand was for residential. The next 40%

01:14:22.239 --> 01:14:30.949
was for power plants. So that's, that's generally consistent

01:14:30.960 --> 01:14:33.720
with system wide. There's some, there's some of course

01:14:33.720 --> 01:14:35.500
some changes in extreme cold like that, but that's

01:14:35.510 --> 01:14:40.420
the, the increasing demand was proportional between

01:14:40.430 --> 01:14:45.159
LDCs and, and power plants throughout that event, relative

01:14:45.159 --> 01:14:48.720
to each other. So, that gives me some comfort that

01:14:48.729 --> 01:14:52.430
there's it's only a third. It's still a third, but

01:14:52.439 --> 01:14:57.699
um, It's not 60% of the gas in an extreme event like

01:14:57.699 --> 01:15:01.079
that would be uh prioritized ahead of power plants.

01:15:01.090 --> 01:15:07.680
Um, so I'll we'll lay that out for, for consideration

01:15:07.680 --> 01:15:12.039
discussion if we do. However, uh, open this up and

01:15:12.039 --> 01:15:16.090
like I said, I'm, this is, this is why I

01:15:16.090 --> 01:15:19.079
want to deliver it. I'm not, I'm not convinced necessarily

01:15:19.079 --> 01:15:21.399
one way or the other, but we've got a lot more data

01:15:21.399 --> 01:15:24.859
and information than we did last time we talked. If

01:15:24.859 --> 01:15:31.039
we do strike the line about subject to curtailment

01:15:31.050 --> 01:15:35.449
from the definition of qualifying pipeline. I could

01:15:35.460 --> 01:15:41.319
only get comfortable with that if we pair that with

01:15:41.329 --> 01:15:46.829
a strict penalty regime that would include clawback

01:15:46.829 --> 01:15:51.569
for nonperformance. Like we have in in the Phase I

01:15:52.560 --> 01:16:00.659
and some sort of penalty box, if you will for non-performance

01:16:00.659 --> 01:16:03.380
for the gas, the pipeline company. If there's failure

01:16:03.380 --> 01:16:07.699
to perform, that company is no longer eligible to participate

01:16:07.699 --> 01:16:10.399
in the firm fuel product for some period of years.

01:16:10.409 --> 01:16:14.920
Uh even, even if its curtailment, we've all heard that

01:16:14.920 --> 01:16:16.710
curtailment won't be an issue, but if it turns out

01:16:16.710 --> 01:16:18.560
it is an issue, guess what, you're out of the program.

01:16:18.569 --> 01:16:27.430
Um, and finally, uh, would require a report on the

01:16:27.430 --> 01:16:29.829
performance results each year, from ERCOT to the Commission.

01:16:29.840 --> 01:16:36.800
So that this doesn't just get uh kind of sent off into

01:16:36.800 --> 01:16:41.489
the wind and nobody keeps track of how well those interest

01:16:41.489 --> 01:16:44.220
state pipelines are performing. Uh, would want to make

01:16:44.220 --> 01:16:48.199
sure that every year the Commission is evaluating how

01:16:48.199 --> 01:16:50.430
well they're performing. If this ratepayer money is

01:16:50.430 --> 01:16:56.329
truly going to increase reliability of the natural

01:16:56.329 --> 01:17:00.170
gas fuel, we need to keep the power plants running

01:17:00.220 --> 01:17:03.949
so I'll stop there and open up. We'd love to hear your

01:17:03.949 --> 01:17:07.600
thoughts, comments? Like I said, I'm

01:17:09.609 --> 01:17:13.289
I'm laying in the same direction, uh, perhaps for a

01:17:13.289 --> 01:17:17.479
little different reason. (item:23:52373, Commissioner Glotfelty's comments on firm fuel) Um, I think, um, two points

01:17:17.479 --> 01:17:23.600
for me, um, one of them is, would we actually be able

01:17:23.600 --> 01:17:27.859
to satisfy firm Load on the interstate system without

01:17:27.859 --> 01:17:31.949
having intrastate gas put into it. And um, as I've

01:17:31.949 --> 01:17:34.229
been told, the answer would be no, we would have a

01:17:34.229 --> 01:17:36.979
very hard time satisfying our firm fuel requirement

01:17:36.979 --> 01:17:41.600
if, if that wouldn't happen. Um, I feel like a parent

01:17:41.609 --> 01:17:44.329
on this one. I want to like slap the wrist of the

01:17:44.329 --> 01:17:47.310
intrastates and say no, this is the wrong thing.

01:17:47.319 --> 01:17:51.609
We wanna, you're in time out. Um, but that's not in

01:17:51.609 --> 01:17:55.810
the best interest of the consumers of the state. And

01:17:55.819 --> 01:18:00.689
um, I just feel like we need to um allow them in

01:18:00.689 --> 01:18:05.600
at this time. I'm totally uh supportive of your caveats

01:18:05.609 --> 01:18:10.909
um, and penalty the penalty box. Yeah. And um, I think

01:18:10.909 --> 01:18:13.510
that that would give us additional clarity over the

01:18:13.510 --> 01:18:18.350
next few years as this, you know, happens. Um, and

01:18:18.359 --> 01:18:21.739
you know, we need to get on with this. We are a

01:18:21.739 --> 01:18:24.970
huge gas producer and I think that uh, this can provide

01:18:24.970 --> 01:18:28.140
value and security to our power plants in the state.

01:18:28.149 --> 01:18:32.020
Um, I hate that we have to do it, but I think

01:18:32.020 --> 01:18:37.350
that we have to do it. Oh, so just unpack a little

01:18:37.350 --> 01:18:40.770
bit here. So kind of things to think about, you know.

01:18:40.770 --> 01:18:44.140
(item:23:52373, Commissioner Cobos' comments on firm fuel) Phase I, firm fuel has proven to be extremely beneficial

01:18:44.149 --> 01:18:48.770
right? Um, those, those resources, the, the 19 that

01:18:48.779 --> 01:18:53.789
were selected through firm fuel Phase I. Um, have

01:18:53.800 --> 01:18:57.060
proven to be very beneficial in the last two cold weather

01:18:57.060 --> 01:18:59.760
events because they allow these generation resources

01:18:59.760 --> 01:19:05.390
to cycle off to on site fuel oil when we have received

01:19:05.399 --> 01:19:09.300
gas pipeline curtailments and, you know, like clockwork

01:19:09.310 --> 01:19:11.079
we're gonna get, you know, that we're gonna have a

01:19:11.079 --> 01:19:14.000
cold when we have a cold weather event. We get a curtailment

01:19:14.000 --> 01:19:16.949
notice from the pipeline and those plants have cycled

01:19:16.949 --> 01:19:19.920
off and we've been able to maintain reliability more

01:19:19.920 --> 01:19:23.770
specifically, um, Winter Storm Elliott. Which was devastating

01:19:23.779 --> 01:19:28.300
to certain regions of our country, um, in, in Texas.

01:19:28.310 --> 01:19:32.029
We during that very, you know, the second coldest weather

01:19:32.029 --> 01:19:36.890
event we've had out of those 19 resources, we um only

01:19:36.899 --> 01:19:46.199
used 8. And for 950 MW, um, and only on maybe one

01:19:46.199 --> 01:19:48.989
or two days, we used the entire 48 hour duration. The

01:19:48.989 --> 01:19:52.609
rest of it was up to an hour, I mean up to

01:19:52.609 --> 01:19:56.430
a day. So what I'm, what I'm where I want to lay

01:19:56.430 --> 01:19:59.460
this backdrop because it's important, number one for

01:19:59.460 --> 01:20:02.520
me, is that I don't want to lose those resources in

01:20:02.520 --> 01:20:04.909
the next RFP. Because we've opened it up and they get

01:20:04.909 --> 01:20:07.029
outbid because we're gonna be setting ourselves short

01:20:07.039 --> 01:20:10.050
if those plants are not in part of the firm fuel products

01:20:10.060 --> 01:20:13.130
that are tremendously important along that pipeline

01:20:13.130 --> 01:20:15.710
that curtails the gas pipeline that curtails if we

01:20:15.710 --> 01:20:18.500
lose them, we're gonna put ourselves at risk by opening

01:20:18.500 --> 01:20:21.579
the pull up even further. And I'm not saying we shouldn't

01:20:21.579 --> 01:20:23.819
but I'm just, I don't think, I don't know that we've

01:20:23.819 --> 01:20:25.829
talked about right, like if you, if you put out the

01:20:25.829 --> 01:20:28.590
RFP for Phase II and it includes Phase I and Phase

01:20:28.590 --> 01:20:31.579
II. What is the impact to the Phase I products,

01:20:31.590 --> 01:20:36.100
the Phase I resources that are strategically targeted

01:20:36.109 --> 01:20:39.369
resources to address the gas pipeline issue that we

01:20:39.369 --> 01:20:45.479
consistently have like clockwork. Okay, so Phase I

01:20:45.489 --> 01:20:50.260
as we know was for alternative on site fuel and um

01:20:50.270 --> 01:20:53.020
one resource that owns a pipeline and storage filler.

01:20:54.159 --> 01:20:56.560
What I would like to understand, just kind of in a

01:20:56.569 --> 01:21:01.340
in a sort of strategic um step by step processes. Um

01:21:01.350 --> 01:21:03.819
is there any more of that functionality out there?

01:21:03.829 --> 01:21:06.689
We've sent a signal with the first RFP for Phase I

01:21:07.199 --> 01:21:10.810
is there any more of that that functionality out there

01:21:10.810 --> 01:21:14.470
The dual fuel capability? Uh because ERCOT when we

01:21:14.470 --> 01:21:18.699
asked them to um gather information on what resources

01:21:18.699 --> 01:21:20.670
were out there with that capability. They came back

01:21:20.670 --> 01:21:23.770
with three buckets, one was existing ready to go pretty

01:21:23.770 --> 01:21:26.180
much ready to go. The other one was in some form or

01:21:26.180 --> 01:21:29.510
fashion. Uh maybe not as ready to go, have any have

01:21:29.510 --> 01:21:32.510
any of those resources built up to the market signal

01:21:32.510 --> 01:21:38.100
can we capture more of those resources. Um so I would

01:21:38.100 --> 01:21:40.010
like, I mean, and I know this is gonna take time, but

01:21:40.010 --> 01:21:43.569
maybe we do things in parallel to have ERCOT survey

01:21:43.569 --> 01:21:47.800
to see if there's any more out there. Um, in that Phase

01:21:47.800 --> 01:21:53.199
1, bucket meaning on site alternative fuel and you

01:21:53.199 --> 01:21:56.100
know, pipeline ownership of some form or fashion and

01:21:56.109 --> 01:21:59.239
the details of that. So that we get a picture of what

01:21:59.239 --> 01:22:01.829
what we've sent a signal for what we can continue to

01:22:01.829 --> 01:22:09.289
capture there. With respect to Phase II. Um, boy. Um

01:22:09.300 --> 01:22:13.359
okay, so the current definition excludes the gas utility

01:22:13.359 --> 01:22:17.720
pipelines that serve human needs. And I'm wondering

01:22:17.720 --> 01:22:20.640
because I heard from ERCOT and, and I think Enterprise

01:22:20.640 --> 01:22:23.510
/Kinder Morgan um, explained at the last open meeting.

01:22:23.520 --> 01:22:28.029
That if we, we take out, if we do, if we don't

01:22:28.029 --> 01:22:30.630
modify the proposed definition, we won't get any off

01:22:30.630 --> 01:22:34.819
site arrangements. Well, I don't really know, I mean

01:22:34.819 --> 01:22:37.920
I'm just going off of what I've heard, I mean, can

01:22:37.920 --> 01:22:41.630
ERCOT survey to see what interstate pipeline configurations

01:22:41.630 --> 01:22:45.630
out there? Would be interstate pipeline configurations

01:22:45.630 --> 01:22:49.159
would be out there? That could participate if we were

01:22:49.159 --> 01:22:52.449
not to change the proposed definition because what

01:22:52.449 --> 01:22:55.289
I'm trying to figure out here is. Okay, so how big do

01:22:55.289 --> 01:22:57.329
we need to build this product? Right, because we just

01:22:57.329 --> 01:23:01.949
had a massive Winter Storm Elliott and we only use

01:23:01.949 --> 01:23:05.109
950 megawatts, we are at 3000 megawatts with Phase

01:23:05.109 --> 01:23:09.189
I. I mean, do we need to go to like 5000, 6000, 7000? I

01:23:09.199 --> 01:23:13.289
mean we need to kind of think about what have we been

01:23:13.289 --> 01:23:16.750
using. What makes sense to scale up and and incrementally

01:23:16.760 --> 01:23:20.119
so that we're getting exactly what we need and not

01:23:20.119 --> 01:23:23.029
over paying and over procuring and certainly and you

01:23:23.029 --> 01:23:26.539
know this. Um, that my concern is um, I don't want to

01:23:26.539 --> 01:23:30.500
pay for what these generation resources should, should

01:23:30.500 --> 01:23:32.260
already be doing and what they're already doing. And

01:23:32.260 --> 01:23:35.359
historically have been doing because ultimately all

01:23:35.359 --> 01:23:38.439
those costs are uplifted to to load. And, and I don't

01:23:38.439 --> 01:23:40.680
want to over procure and pay for things that you know

01:23:40.680 --> 01:23:42.930
these companies should be doing anyway. Absolutely

01:23:42.930 --> 01:23:45.050
This is designed to incentivize new behavior, not pay

01:23:45.050 --> 01:23:46.800
for what people already doing. Let's go ahead and call

01:23:46.800 --> 01:23:51.800
ERCOT up and Marcia. We have, we have questions.

01:23:55.270 --> 01:23:59.270
It's a good point about the Phase I most vulnerable

01:23:59.279 --> 01:24:04.850
on site being priced out, potentially priced out. If

01:24:06.470 --> 01:24:09.970
the criteria is expanded. Thank you all for being

01:24:09.970 --> 01:24:14.079
here. Good morning Chairman, Commissioners. (item:23:52373, Chad Seely, ERCOT, comments on fuel survey) Chad Seely with ERCOT.

01:24:14.090 --> 01:24:18.489
Commissioner Cobos, I guess to the kind of your comments. Today

01:24:18.489 --> 01:24:21.449
we are going out with a fuel survey that will cover

01:24:21.449 --> 01:24:25.800
both Phase I expectations going forward. And to get

01:24:25.810 --> 01:24:28.859
the additional information for the decision points

01:24:28.859 --> 01:24:31.899
that we raised in our January memo for, for Phase II

01:24:31.899 --> 01:24:34.869
which is the amount of storage capacity out there that

01:24:34.869 --> 01:24:37.899
could drive the the procurement quantity for Phase

01:24:37.899 --> 01:24:40.489
II, and also potentially the duration. So we're not

01:24:40.489 --> 01:24:43.170
asking for the Commission to give us feedback on those

01:24:43.170 --> 01:24:45.409
two pieces yet? Because we think the fuel survey will

01:24:45.409 --> 01:24:49.460
be informative to that discussion down the road. How long will that take you think? Uh

01:24:49.470 --> 01:24:52.789
we requested 10 days to get the information back from

01:24:52.800 --> 01:24:57.520
generation resources that have natural gas. So So we'll

01:24:57.520 --> 01:24:59.680
get that information back and in 10 days and be able

01:24:59.680 --> 01:25:02.810
to assimilate that and hopefully come back and and

01:25:02.810 --> 01:25:05.430
March and provide that information. Hopefully you can

01:25:05.430 --> 01:25:06.569
provide before March.

01:25:09.010 --> 01:25:15.579
Before the meeting, before the, before the March Open Meeting. That

01:25:15.579 --> 01:25:19.079
satisfied your question about the survey? I think. Yeah

01:25:19.079 --> 01:25:21.010
I think so, but just to better understand. So Phase

01:25:21.010 --> 01:25:23.289
I is going out and seeing what, what regeneration

01:25:23.289 --> 01:25:26.449
resources on site alternative fuel. Maybe some more

01:25:26.449 --> 01:25:29.750
have been added. Some additional generation resources

01:25:29.750 --> 01:25:32.619
have maybe are looking to build pipes or something

01:25:32.619 --> 01:25:36.449
So Phase I is just, you know, a relook at what, what's

01:25:36.449 --> 01:25:39.359
out there, is that? Yeah. So I let Davita to speak to

01:25:39.359 --> 01:25:42.500
the details of the survey. But it, we've combined it

01:25:42.500 --> 01:25:45.739
into one survey. So now to all of our generation resources

01:25:45.739 --> 01:25:48.779
are supplied by natural gas to answer the questions

01:25:48.779 --> 01:25:52.430
around future potential for Phase I but also to grab

01:25:52.430 --> 01:25:54.670
the information for Phase II as well.

01:25:57.329 --> 01:26:00.529
That's that's right. Um, we included questions that

01:26:00.529 --> 01:26:03.800
we previously asked under a prior survey that informed

01:26:03.800 --> 01:26:06.510
your decisions regarding the development of Phase I

01:26:07.090 --> 01:26:11.220
So we're asking those same questions were also asking

01:26:11.229 --> 01:26:14.250
additional new questions that are intended to give

01:26:14.250 --> 01:26:18.569
y'all some granularity on the qualifying pipeline question

01:26:18.579 --> 01:26:21.920
we ask what would qualify under the existing definition

01:26:21.930 --> 01:26:25.619
What would qualify if we change the existing definition

01:26:25.630 --> 01:26:28.380
to include those interest rates that are serving LDCs

01:26:28.380 --> 01:26:31.479
and other human needs customers. That would answer

01:26:31.479 --> 01:26:36.380
would be number of megawatt right? Yes. What resources

01:26:36.729 --> 01:26:40.890
resources and what, what are their capacities? That's

01:26:40.890 --> 01:26:44.130
right. And then we also ask additional questions that

01:26:44.130 --> 01:26:46.420
are similar to questions that we asked previously and

01:26:46.819 --> 01:26:49.319
we're sending it out today and in case there was additional

01:26:49.319 --> 01:26:51.250
color that needed to be developed and put into the

01:26:51.250 --> 01:26:54.760
survey based on this discussion. Okay, now that that

01:26:54.760 --> 01:26:58.350
sounds like the exact sort of buckets of information

01:26:58.359 --> 01:27:02.420
that I'd be interested in learning about. There's been

01:27:02.420 --> 01:27:07.470
some maybe information that there's generation resources

01:27:07.470 --> 01:27:11.170
that are looking to build lateral pipelines to a storage

01:27:11.170 --> 01:27:15.020
facility that they own molecules um from is that is

01:27:15.020 --> 01:27:20.090
that part of the questioning? We don't ask questions

01:27:20.090 --> 01:27:23.039
that would distinguish between lateral pipelines and

01:27:23.050 --> 01:27:26.970
single pipelines. We just ask, would you essentially

01:27:26.970 --> 01:27:30.590
qualify under the current requirements which involved

01:27:30.600 --> 01:27:33.460
a pipeline? If you have multiple, you would qualify

01:27:33.470 --> 01:27:36.220
but we don't distinguish between multiple laterals

01:27:36.220 --> 01:27:40.439
and individual. I think your other question was around

01:27:40.449 --> 01:27:44.210
the procurement process and I think ultimately it would

01:27:44.210 --> 01:27:47.069
be great to get to one clearing price. But I don't think

01:27:47.069 --> 01:27:51.520
we envisioned Phase II this first round, you know,

01:27:51.520 --> 01:27:54.789
being combined with Phase I because there are different

01:27:54.789 --> 01:27:57.840
features in this framework as we've talked about in

01:27:57.840 --> 01:28:00.699
the, in the in the filing at the last open meeting

01:28:00.710 --> 01:28:04.289
and with the additional comments by by Chairman Lake

01:28:04.300 --> 01:28:07.960
dealing with the third party uh and the impact on this

01:28:07.960 --> 01:28:10.479
generation resource just sets a little bit different

01:28:10.479 --> 01:28:12.779
features than dealing with the generation resource

01:28:12.779 --> 01:28:15.430
that owns the storage in the pipeline infrastructure

01:28:15.430 --> 01:28:18.399
So I think as we mature with this firm fuel service

01:28:18.399 --> 01:28:20.829
we should try to optimize this into a single clearing

01:28:20.829 --> 01:28:23.489
price. But I don't see how that would happen in this

01:28:23.489 --> 01:28:27.739
first round. You would run to auctions correct to RFPs

01:28:27.739 --> 01:28:29.939
that would go out okay. That would address your concern

01:28:29.939 --> 01:28:34.640
about Atmos? Yes, it allows the Commission to see how

01:28:34.640 --> 01:28:38.560
this Phase II is maturing and then further engage

01:28:38.560 --> 01:28:40.649
the Commission on how we can optimize those into a

01:28:40.649 --> 01:28:44.029
single single product. I really appreciate that clarification

01:28:44.029 --> 01:28:46.350
I think that that does address my concerns and you

01:28:46.350 --> 01:28:49.640
know, to have two different sets of firm fuel because

01:28:49.640 --> 01:28:51.939
they, like you just said, they're very different characteristics.

01:28:51.949 --> 01:28:55.439
We don't want to get in the way of the benefits that

01:28:55.449 --> 01:28:59.149
the Phase 1 has provided by maybe in the future there's

01:28:59.149 --> 01:29:01.489
some way to combine them, but I think what your approach

01:29:01.489 --> 01:29:06.270
sounds good to me, definitely the separate procurement

01:29:06.279 --> 01:29:10.630
permits the Commission to right size each one. 

01:29:10.640 --> 01:29:13.939
And so what what and I know this is probably a question

01:29:13.939 --> 01:29:16.670
for us from a policy direction. I know the first firm

01:29:16.670 --> 01:29:19.819
fuel Phase I was one year we'll have to decide if

01:29:19.819 --> 01:29:22.840
we're gonna do, you know, one year, two years, three

01:29:22.840 --> 01:29:27.000
years as part of the direction. Um, ultimately on this

01:29:27.000 --> 01:29:30.180
next round that some, that a decision point you would

01:29:30.180 --> 01:29:33.380
expect from us to and also the duration requirement

01:29:33.380 --> 01:29:36.140
I think your survey field survey results will be very

01:29:36.140 --> 01:29:39.300
helpful in understanding um, what's out there for the

01:29:39.300 --> 01:29:42.970
duration requirement. So I appreciate that. I think

01:29:42.970 --> 01:29:46.439
those are generally all the questions I had. Um, well

01:29:46.439 --> 01:29:50.159
one thing actually, um, additional thing. And Chairman

01:29:50.159 --> 01:29:53.100
you mentioned, you know, revenue callback penalty box

01:29:53.109 --> 01:29:55.979
performance requirement. I think those are all good.

01:29:55.989 --> 01:30:00.449
Um, if ultimately we end up at some point in the future

01:30:00.460 --> 01:30:03.810
adding those pipeline arrangements. My, my only thought

01:30:03.810 --> 01:30:07.060
and I've said this like in other forums is, you know

01:30:07.060 --> 01:30:09.680
it's great and we call back the money and it's, and

01:30:09.680 --> 01:30:12.119
it's good if folks go into a penalty box, but at the

01:30:12.119 --> 01:30:14.069
end of the day who suffers, it's the people that are

01:30:14.069 --> 01:30:17.460
without power that could potentially lose their lives

01:30:17.470 --> 01:30:21.659
in a Winter event. So in my opinion, there needs to

01:30:21.659 --> 01:30:24.199
be more than revenue call back in the penalty box.

01:30:24.199 --> 01:30:26.399
There should be some kind of penalty involved. So that

01:30:26.399 --> 01:30:30.500
that, you know, if they don't show up then we're left

01:30:30.500 --> 01:30:34.229
without reliability and if they lose the money, great

01:30:34.239 --> 01:30:36.329
But just something to think about. I don't have an

01:30:36.329 --> 01:30:38.850
exactly an administrative penalty. In addition to call

01:30:38.850 --> 01:30:45.140
back and penalty box, potentially something else. Um

01:30:45.149 --> 01:30:48.470
maybe replacement power something else. Because at

01:30:48.470 --> 01:30:50.789
the end of the day we lose on a reliability and the

01:30:50.789 --> 01:30:52.850
consumers that are paying for this firm fuel product

01:30:52.850 --> 01:30:57.949
lose out on electricity. If this doesn't all work right

01:30:57.960 --> 01:31:02.869
That's my thoughts on it. At the end of the day. (item:23:52373, Commissioner McAdams' comments on firm fuel) This

01:31:02.869 --> 01:31:05.680
is a market and market participants take calculated

01:31:05.680 --> 01:31:11.279
risks on business plans, business decisions. Um, and

01:31:11.289 --> 01:31:14.239
the firm fuel supply service is highly dependent on

01:31:14.250 --> 01:31:19.699
geography and geographic regional availability to storage

01:31:19.710 --> 01:31:24.069
and pipelines and redundant pipeline systems. To adequately

01:31:24.069 --> 01:31:28.920
foster both competitive bids and competitive behavior

01:31:28.930 --> 01:31:33.960
of service providers to our generation facilities.

01:31:33.970 --> 01:31:39.449
And North Texas only has two real providers of

01:31:39.449 --> 01:31:43.449
storage and pipeline services broadly. And both of

01:31:43.449 --> 01:31:48.960
those are highly involved in human in supplying human

01:31:48.960 --> 01:31:51.859
needs in that area and subject to Railroad Commission

01:31:51.859 --> 01:31:55.800
policy. And if I can interrupt real quick, one of those

01:31:55.800 --> 01:32:00.810
pipelines was actually owned and built by by the old

01:32:00.810 --> 01:32:03.380
TXU. In order to serve the power plants in North Texas.

01:32:03.380 --> 01:32:08.789
Which is now not in their hands. That's right. And um and there there

01:32:08.789 --> 01:32:13.729
is a calculus that will go on here. Um that okay, so

01:32:13.729 --> 01:32:16.439
they go into a penalty box, where else are our generators

01:32:16.439 --> 01:32:19.609
in North Texas gonna go? Uh if they just pocket the

01:32:19.609 --> 01:32:22.149
money and go into the penalty box, we have no other

01:32:22.149 --> 01:32:25.119
options in North Texas. There is no infrastructure

01:32:25.119 --> 01:32:28.460
available outside of those two suppliers. That are completely

01:32:28.460 --> 01:32:31.869
subject to Railroad Commission's policy, which is not

01:32:31.869 --> 01:32:34.500
harmonized with our own. I gotta tell you, I don't

01:32:34.500 --> 01:32:38.109
know if I can get to the expansion. Um, and, but the

01:32:38.109 --> 01:32:42.100
study will help, it'll help inform us into what degree

01:32:42.100 --> 01:32:45.069
we're dealing with, um, of megawatts that could be

01:32:45.069 --> 01:32:49.899
available. Uh, the plan and it's difficult because

01:32:49.899 --> 01:32:53.739
it's a chicken or the egg situation. Kinder is making

01:32:53.750 --> 01:32:56.810
taking great steps to try to build into that region.

01:32:56.810 --> 01:33:01.680
And provide a storage apparatus that are North Texas

01:33:01.689 --> 01:33:06.060
fleet would be able to avail themselves of and to foster

01:33:06.060 --> 01:33:09.439
greater competition and give us more options, but we

01:33:09.439 --> 01:33:12.939
don't have it yet. And um, and unfortunately they kind

01:33:12.939 --> 01:33:15.550
of need a service like this in order to prove out the

01:33:15.550 --> 01:33:20.199
business plan to build it. And uh, but at the end of

01:33:20.199 --> 01:33:23.550
the day, the survey will help inform us if a phased

01:33:23.550 --> 01:33:26.649
approach is still appropriate, like what is the universe

01:33:26.649 --> 01:33:30.659
of megawatts of gas molecules of gas that that could

01:33:30.659 --> 01:33:34.680
be drawn upon. And then, and then where is it? And

01:33:34.680 --> 01:33:37.020
then what does that do for us in terms of an overall

01:33:37.020 --> 01:33:41.470
number, a supply of firm fuel supply service that we

01:33:41.470 --> 01:33:44.529
can count on. In the near-term right now we've got three

01:33:44.529 --> 01:33:49.289
gigawatts. Uh, if we expand that to the now interest

01:33:49.289 --> 01:33:52.050
state lines and then everybody that doesn't have human

01:33:52.050 --> 01:33:56.229
needs, which I grant is not much. But let's see what

01:33:56.229 --> 01:33:58.829
that number comes in at, is that four gigawatts? Or

01:33:58.829 --> 01:34:02.640
is that potentially five gigawatts? Um, you know, when

01:34:02.640 --> 01:34:05.939
you look at the magnitude of Uri and the amount

01:34:05.939 --> 01:34:09.439
of curtailment we're getting there folks. We are getting

01:34:09.439 --> 01:34:14.109
close. But if this is simply to expand it out to all

01:34:14.109 --> 01:34:18.560
of our pipeline operators in Texas to support this

01:34:18.560 --> 01:34:23.149
service, um with without the additional and you got

01:34:23.149 --> 01:34:27.609
it. I mean, penalties are great, uh uh penalty box

01:34:27.609 --> 01:34:31.449
is great. But ultimately, if there's, if we have nowhere

01:34:31.449 --> 01:34:34.640
else to turn, they will, they will make the calculation

01:34:34.640 --> 01:34:38.250
at some point to possibly make a decision that affects

01:34:38.250 --> 01:34:43.380
our generators and that's problematic. Yeah, I hear

01:34:43.380 --> 01:34:46.000
you. And that's what I said. I'm not, I'm not sold

01:34:46.000 --> 01:34:48.260
one way or the other. Uh that's why this is this kind

01:34:48.260 --> 01:34:53.720
of uh and I also. Um, I got some questions from Marcia.

01:34:53.720 --> 01:34:59.140
But I think it just hypothetically, if we do strike

01:34:59.149 --> 01:35:03.319
uh if we do expand the qualification definition. I'd

01:35:03.319 --> 01:35:05.829
be very curious to see how many interstate pipelines

01:35:05.829 --> 01:35:08.500
actually sign up with all the conditions in the penalty

01:35:08.500 --> 01:35:13.260
box, we may may not get any. Well, in the competitive

01:35:13.260 --> 01:35:16.189
areas, you might not get any, but in the other areas

01:35:16.189 --> 01:35:18.300
where we have no other choice. Yeah, I'll sign up.

01:35:18.310 --> 01:35:23.739
What are you gonna do to me, kick me out? Yeah. Well

01:35:23.739 --> 01:35:28.680
and but those right. But also if they if they that's

01:35:28.680 --> 01:35:35.350
why the the disclosure terms in the contract are such

01:35:35.350 --> 01:35:39.489
a key part. So if, if they don't deliver there's

01:35:39.489 --> 01:35:43.359
an automatic trigger. All right? We get to see we get

01:35:43.359 --> 01:35:45.399
to see everything you were doing that pipeline in that

01:35:45.399 --> 01:35:50.359
area. Uh which I imagine would would be a disincentive

01:35:50.369 --> 01:35:52.699
for some of those pipelines. So I I don't know how

01:35:52.699 --> 01:35:57.909
it would play out. Uh certainly recognize all your

01:35:57.920 --> 01:36:01.369
all your points. Uh quick question for you Marcia. A

01:36:01.369 --> 01:36:08.539
on the um on the first one, the disclosure in around

01:36:08.539 --> 01:36:10.970
the force majeure language and the new. Could

01:36:10.970 --> 01:36:14.810
you should you refresh the Commission on those requirements

01:36:14.810 --> 01:36:19.229
for disclosure in the contemplated firm fuel contract.

01:36:21.079 --> 01:36:26.350
Get the microphone if you would there. Um I think you

01:36:26.350 --> 01:36:28.600
caught me. But just in case, (item:23:52373, Marcia Hook, Kirkland & Ellis, outside counsel for ERCOT) Marcia Hook, Kirkland and

01:36:28.600 --> 01:36:32.329
Ellis, outside counsel for ERCOT. So on the disclosure

01:36:32.329 --> 01:36:34.960
requirements, if there's a forced majeure event that

01:36:34.960 --> 01:36:38.729
prevents the FFSSR from deploying it has to

01:36:38.739 --> 01:36:42.229
file certain information a report with ERCOT. That

01:36:42.229 --> 01:36:45.970
would contain, among other things, a copy of the relevant

01:36:46.210 --> 01:36:49.810
agreement. If the failure to perform the force majeure

01:36:49.810 --> 01:36:53.079
event resulted from some kind of curtailment or issue

01:36:53.079 --> 01:36:56.140
with the storage. So they would have to file a copy

01:36:56.140 --> 01:36:59.510
of the contract, any of the data. So a lot of the

01:36:59.520 --> 01:37:02.579
data that they get their nomination data showing the

01:37:02.579 --> 01:37:06.189
nominations that they submitted. The the volume data

01:37:06.189 --> 01:37:10.420
that they get from the pipeline and a copy of the force

01:37:10.420 --> 01:37:13.210
majeure notice that was provided to them. So this is

01:37:13.210 --> 01:37:16.029
all in the category of if there's a curtailment or

01:37:16.029 --> 01:37:19.130
some other operational issue that affects the storage

01:37:19.130 --> 01:37:22.880
or transportation. Which is far more than we get now

01:37:22.890 --> 01:37:26.050
which is, which is nothing. That's right. And as by

01:37:26.050 --> 01:37:29.250
way of reminder, we've also added additional language

01:37:29.270 --> 01:37:32.619
that would essentially strengthen the requirements

01:37:32.630 --> 01:37:35.369
of the actual force majeure language. So that in order

01:37:35.369 --> 01:37:39.029
to declare force majeure, the pipeline has to take

01:37:39.039 --> 01:37:43.909
reasonable efforts and to avoid the force majeure event.

01:37:43.920 --> 01:37:46.289
So there's additional substantive requirements that

01:37:46.289 --> 01:37:48.500
would have to be baked into the contract in order for

01:37:48.500 --> 01:37:50.840
it to qualify. And document those reasonable efforts

01:37:50.840 --> 01:37:53.310
and disclose them. That's right, provide additional

01:37:53.310 --> 01:37:57.539
information. And the goal there is to hopefully create

01:37:57.539 --> 01:38:02.520
a contractual mechanism to decrease the number of force

01:38:02.520 --> 01:38:05.670
majeure events and then also have a contractual requirement

01:38:05.670 --> 01:38:08.329
to provide additional information. Because right now

01:38:08.609 --> 01:38:12.779
in the market information that a customer on an interesting

01:38:12.779 --> 01:38:16.050
pipeline gets when there's a forced measure event is

01:38:16.060 --> 01:38:20.100
not quite as robust as one would hope so this would

01:38:20.100 --> 01:38:24.039
get additional contractual rights there and that is

01:38:24.039 --> 01:38:27.289
part of the requirement of qualifying as as a firm

01:38:27.289 --> 01:38:30.140
transportation agreement reform storage agreement.

01:38:31.210 --> 01:38:36.090
That's it would be a dramatic improvement status quo.

01:38:36.100 --> 01:38:39.340
The other question I want to ask you is about the concept

01:38:39.340 --> 01:38:43.000
of the penalties as with everything whether it's reliability

01:38:43.000 --> 01:38:46.350
standard or market penalties. We want to strike the

01:38:46.350 --> 01:38:51.689
balance between the uh punishment to disincentivize

01:38:51.699 --> 01:38:55.010
behavior we don't want or you know, making sure we

01:38:55.010 --> 01:38:58.399
have enough reliability without being so onerous that

01:38:58.409 --> 01:39:02.100
the cost is a burden to the overly burdensome to the

01:39:02.100 --> 01:39:04.779
businesses or the customers. Uh, do you have any thoughts

01:39:04.779 --> 01:39:08.640
on that striking that right balance with any potential

01:39:08.640 --> 01:39:12.489
penalties or or is that something that we need to put

01:39:12.489 --> 01:39:16.989
some more thought into? Certainly. So we try to structure

01:39:17.000 --> 01:39:20.800
the program in a way that disincentivize is through

01:39:20.810 --> 01:39:24.050
not penalties, they are effectively penalties by virtue

01:39:24.050 --> 01:39:27.720
of the clawback, but also proactively avoid. And so

01:39:27.729 --> 01:39:30.039
For example, if you look at the PJM market and what

01:39:30.039 --> 01:39:32.680
happened during Winter Storm Uri. It shows what happens

01:39:32.680 --> 01:39:36.659
if you try and just rely on penalties. And unfortunately

01:39:37.090 --> 01:39:39.670
you know, getting a billion dollars worth of potentially

01:39:39.670 --> 01:39:42.960
up to a billion dollars worth of penalties. Ex Post

01:39:43.029 --> 01:39:46.130
Commissioner Cobos' point doesn't help the people

01:39:46.130 --> 01:39:49.529
that needed that power during the Winter storm. And

01:39:49.529 --> 01:39:52.649
so we've taken the dual approach. The first part is

01:39:52.659 --> 01:39:55.020
creating these additional substantive requirements

01:39:55.020 --> 01:39:58.159
where we are actually getting into people's business.

01:39:58.159 --> 01:40:01.020
And and looking and making sure there's actual substantive

01:40:01.020 --> 01:40:03.970
requirements that they have to have a firm contract

01:40:04.020 --> 01:40:06.710
they have to, the firm contract has to meet certain

01:40:06.710 --> 01:40:09.619
substantive requirements and then going to the penalty

01:40:09.619 --> 01:40:13.920
side to your point. We think that with the claw back

01:40:13.930 --> 01:40:17.869
it does create quite a significant incentive for market

01:40:17.869 --> 01:40:21.409
participants. To contract for the strongest arrangements

01:40:21.409 --> 01:40:25.739
that they can uh you know, creating additional penalties

01:40:25.750 --> 01:40:29.149
after that. In addition to that, it's at some point

01:40:29.149 --> 01:40:31.920
there's diminishing marginal returns, right? Because

01:40:31.930 --> 01:40:35.090
if you're already clawing back, you know, existing

01:40:35.090 --> 01:40:38.409
program and there's some discussion about how much

01:40:38.420 --> 01:40:41.439
claw back there would be. But the existing claw back

01:40:41.439 --> 01:40:45.670
mechanisms are 15 or 90 days of claw back. And if you

01:40:45.670 --> 01:40:49.020
have enough deployment, so that happens to you a couple

01:40:49.020 --> 01:40:53.060
of times, you see how at some point. You know, 90 days

01:40:53.060 --> 01:40:56.079
plus 90 days, it's 180 days of claw back. That could

01:40:56.090 --> 01:40:59.840
be a substantial amount of the benefit that you got

01:40:59.840 --> 01:41:01.699
from participating in the program in the first place.

01:41:01.699 --> 01:41:05.079
So that's a pretty substantial penalty in and of itself

01:41:05.770 --> 01:41:07.880
without even imposing the additional administrative

01:41:07.880 --> 01:41:10.279
penalties. I see your point about the penalty. I mean

01:41:10.279 --> 01:41:12.689
it's kind of like, you know, filing a lawsuit after

01:41:12.689 --> 01:41:15.140
someone has died in a freak accident and you get the

01:41:15.140 --> 01:41:16.800
money. You're not gonna get your loved one back, you

01:41:16.800 --> 01:41:20.699
just get money, right? And so and if it's big enough

01:41:20.699 --> 01:41:22.579
they'll fight you all the way to the Supreme Court.

01:41:22.689 --> 01:41:27.180
So we don't want them to inappropriately benefit if

01:41:27.180 --> 01:41:29.619
they're not actually contracting. And the clawback

01:41:29.630 --> 01:41:32.930
achieves that. And so then the question is do you need

01:41:32.939 --> 01:41:36.859
an even bigger hammer for deterrence purposes. That's

01:41:36.869 --> 01:41:39.229
perhaps the policy question. But right now, the way

01:41:39.229 --> 01:41:41.890
it's structured is designed to make sure that there's

01:41:41.890 --> 01:41:44.220
an incentive for people to contract for the strongest

01:41:44.229 --> 01:41:47.189
possible contractual arrangements. And then also that

01:41:47.199 --> 01:41:51.670
they won't inappropriately benefit if they don't perform

01:41:51.680 --> 01:41:54.579
or don't go out and enter those contractual arrangements.

01:41:54.590 --> 01:41:59.710
What about um buying replacement power? 

01:42:01.949 --> 01:42:04.600
It's it's a bit of a challenge. The cost of cover idea

01:42:04.609 --> 01:42:09.880
right? Because presumably if you're in a situation

01:42:09.880 --> 01:42:13.510
where the FFSSRs have to deploy the ability to actually

01:42:13.520 --> 01:42:17.529
procure replacement. Sorry, procure replacement power

01:42:17.539 --> 01:42:22.170
might be limited. So certainly that it's possible that

01:42:22.170 --> 01:42:26.670
you could um impute some kind of charge on them for

01:42:26.670 --> 01:42:29.050
cost of cover and maybe even require a settlement,

01:42:29.050 --> 01:42:33.460
some kind of settlement mechanism. But yeah. I mean

01:42:33.460 --> 01:42:35.590
it's it's something that we can take back and think

01:42:35.590 --> 01:42:37.909
about as we move forward with this framework. That the

01:42:37.909 --> 01:42:43.180
thing I wanted to add too is with Phase I. We've deployed

01:42:43.180 --> 01:42:47.380
it twice and we've had good to great performance. But

01:42:47.380 --> 01:42:50.199
there are units as we get done with the obligation

01:42:50.199 --> 01:42:52.920
period where we're gonna look at their availability

01:42:52.930 --> 01:42:56.779
and how they acted and this 90 day or 15 day trigger

01:42:56.779 --> 01:42:59.590
will come into place. We don't know what that will

01:42:59.590 --> 01:43:04.140
mean as we move into the second RFP. So if you had

01:43:04.140 --> 01:43:07.000
someone that is gonna get 90 days of claw back, they

01:43:07.000 --> 01:43:09.609
may not think it's worth offering in the next time.

01:43:09.619 --> 01:43:13.380
Based upon how we structured the clawback remedies

01:43:13.390 --> 01:43:16.029
So we're still learning from this program. These are

01:43:16.029 --> 01:43:19.039
very strong clawback revenue features and in Phase

01:43:19.039 --> 01:43:21.970
I, they would be applied to Phase II. We've even

01:43:21.970 --> 01:43:25.220
talked about um you know, how we handle Black Start

01:43:25.229 --> 01:43:29.100
availability. And if you go through an event and it

01:43:29.100 --> 01:43:31.329
impacts your availability, you know, these units are

01:43:31.329 --> 01:43:33.890
getting paid every day through the obligation period.

01:43:33.899 --> 01:43:37.460
If you fail to perform to a certain availability level

01:43:37.470 --> 01:43:39.779
under the Black Start agreement, it starts to immediately

01:43:39.779 --> 01:43:43.609
impact your ongoing payments and reduces that amount.

01:43:43.619 --> 01:43:45.930
That's another feature we've talked about potentially

01:43:45.930 --> 01:43:49.090
adding to this Phase II. It's not part of Phase I.

01:43:49.640 --> 01:43:52.380
So there's lots of options here, but it gets to the

01:43:52.380 --> 01:43:56.170
point of at what point are you disincentivizing anyone

01:43:56.170 --> 01:43:58.159
to participate? And I think it's a balance that we

01:43:58.159 --> 01:44:01.739
don't know yet, because we're only into one cycle of

01:44:01.739 --> 01:44:05.979
this with the on site capability or the owned capability

01:44:05.989 --> 01:44:08.119
when you're dealing with the third party. Obviously

01:44:08.119 --> 01:44:09.789
it's a little more uncertainty. That's why we're up

01:44:09.789 --> 01:44:12.079
here for the second time talking about this. And so

01:44:12.079 --> 01:44:14.689
it's gonna be a balance of trying to strike those those

01:44:14.689 --> 01:44:17.909
features not to disincentivize people from participating.

01:44:17.920 --> 01:44:22.729
But making sure there's enough, you know, penalty framework

01:44:22.739 --> 01:44:25.899
to say we really take this is the highest available

01:44:25.899 --> 01:44:28.520
service and you're gonna get a premium for it. But

01:44:28.520 --> 01:44:30.670
if you don't perform there's gonna be some claw back

01:44:30.670 --> 01:44:32.989
and some other penalties associated with that. Yeah

01:44:33.000 --> 01:44:35.909
it's worth noting that the penalty, the distinction

01:44:35.909 --> 01:44:37.920
between the penalties applied to the generating resource

01:44:37.920 --> 01:44:41.039
versus, and like in the notion of versus the pipeline

01:44:42.079 --> 01:44:45.210
depending on the, there's different ways you can cut

01:44:45.210 --> 01:44:50.770
that. Um, and just one point too, um, Commissioner McAdams you're

01:44:50.770 --> 01:44:54.289
concerned about, you know, North Texas and the fact

01:44:54.289 --> 01:44:59.289
that there may not be a lot of uh potential partners

01:44:59.300 --> 01:45:03.310
for the FFSSR program up there. You know

01:45:03.319 --> 01:45:06.539
the goal is hopefully that this creates a market pressure

01:45:06.550 --> 01:45:11.289
even on the pipeline space to come along. Because they

01:45:11.289 --> 01:45:14.489
have competitors, right? And if they see their competitors

01:45:14.500 --> 01:45:18.960
are getting a windfall by virtue of participating as

01:45:18.960 --> 01:45:22.560
supporters of this program, then the goal is that the

01:45:22.569 --> 01:45:26.340
market incentives should help push them to make changes

01:45:26.340 --> 01:45:28.000
and hopefully participate.

01:45:30.000 --> 01:45:34.810
Fair point. We're creating a market with a price signal for

01:45:34.819 --> 01:45:37.470
um, the market to react and respond to. And I think

01:45:37.470 --> 01:45:40.579
that's important. I mean, I was just in Washington

01:45:40.579 --> 01:45:42.899
D. C, where I spoke on an Electric Gas Coordination

01:45:42.899 --> 01:45:46.119
panel. And everybody was really interested in knowing

01:45:46.119 --> 01:45:48.949
about our firm fuel product. Because we're the only

01:45:48.960 --> 01:45:53.520
region in the country that has one and especially with

01:45:53.529 --> 01:45:56.180
the recent events in Winter Storm Elliot, where, you

01:45:56.180 --> 01:45:59.550
know, in MISO, they lost, you know, 22 and 23 gigs of

01:45:59.560 --> 01:46:04.640
gas. And a third of the them are shell went out and.

01:46:04.649 --> 01:46:06.810
Um, I don't know what the breakdown exactly is or what

01:46:06.810 --> 01:46:09.329
the reasoning in my, in PJM. But I think it was like

01:46:09.340 --> 01:46:12.920
32 gigs of gas that went out during winter Storm Elliot

01:46:12.920 --> 01:46:16.020
So these big regions are dealing with fuel availability

01:46:16.020 --> 01:46:20.789
issues and are looking to um, you know, find ways to

01:46:20.789 --> 01:46:23.319
find solutions and were, were sort of leading the charge

01:46:23.319 --> 01:46:27.010
here in Texas in ERCOT in addressing these issues.

01:46:27.010 --> 01:46:29.470
And so I had a lot of interest in, in the firm

01:46:29.470 --> 01:46:31.899
fuel product and I think it's important. Because those

01:46:31.909 --> 01:46:35.039
the gas availability issues specifically within MISO.

01:46:35.039 --> 01:46:41.189
Where what drove those outages and there near um

01:46:41.199 --> 01:46:45.689
coming close to entering into rotating outages. And

01:46:45.699 --> 01:46:48.489
it's probably, it's probably a very similar dynamic

01:46:48.489 --> 01:46:52.069
to North Texas. Because Marcellus being landlocked and

01:46:52.069 --> 01:46:55.279
constrained because of lack of pipeline infrastructure.

01:46:55.279 --> 01:46:59.640
Because of permitting and opposition to that network

01:46:59.649 --> 01:47:04.520
You have limited uh, suppliers of a potential service

01:47:04.529 --> 01:47:07.340
and so they are going to take calculated risks and

01:47:07.350 --> 01:47:11.800
it, it's a tangle. But I appreciate us looking into this.

01:47:11.810 --> 01:47:15.279
Yeah, one final thought. I think we, we know we need

01:47:15.279 --> 01:47:18.710
to wait for the survey in terms of moving forward so

01:47:18.720 --> 01:47:20.850
well, I think everybody wants to see the results of

01:47:20.850 --> 01:47:23.689
that before we make any decision. And then I'd ask Marcia

01:47:23.689 --> 01:47:25.739
and Chad team. To think think about the penalty

01:47:25.739 --> 01:47:29.859
discussion we've had today. If if we do expand of the

01:47:29.859 --> 01:47:34.430
qualification, just think through the pros and cons

01:47:34.430 --> 01:47:37.079
of each and Marcia had pointed out some of those already.

01:47:37.090 --> 01:47:41.329
Um and unintended consequences and just think through

01:47:41.329 --> 01:47:44.109
those and of course get the survey's results back to

01:47:44.109 --> 01:47:48.670
us as soon as they're ready. And and also any any perhaps

01:47:48.670 --> 01:47:52.649
a memo on the on thoughts on potential penalties. Uh

01:47:52.659 --> 01:47:56.640
One final point I didn't want to uh bring up is there's

01:47:56.649 --> 01:48:01.789
been some conversation about including settlement only

01:48:01.789 --> 01:48:04.409
destroy distributed generation resources for this.

01:48:04.420 --> 01:48:09.720
That would be resources behind the citygate, which

01:48:09.720 --> 01:48:13.529
means they're already priority. Uh So in the spirit

01:48:13.529 --> 01:48:16.319
of Commissioner Cobos said saying we want to change

01:48:16.460 --> 01:48:19.710
incentivize new behavior. Uh we'd just be paying them

01:48:19.710 --> 01:48:23.210
for already being in priority gas. So I don't see any

01:48:23.220 --> 01:48:27.210
reason to include them in this. My preference is to

01:48:27.210 --> 01:48:31.630
focus on gas right now. Okay, Ya'll have everything

01:48:31.630 --> 01:48:36.460
you need. Alright, appreciate the expedited focus on

01:48:36.460 --> 01:48:38.859
that survey. Thank you for highlighting that, Commissioner Cobos.

01:48:39.550 --> 01:48:41.970
Tthank you for being here. Thank you. Thank you. Thank

01:48:41.970 --> 01:48:45.989
you. All right. I don't have anything on 24 in connection

01:48:45.989 --> 01:48:48.560
 believe you have some comments on Item 25. Short

01:48:48.560 --> 01:48:52.609
update, sir. Uh So first of all, I'd like to commend

01:48:52.609 --> 01:48:56.300
staff. Um Connie I'm looking at you, you're the head

01:48:56.300 --> 01:49:01.140
of it. Um but your Staff's doing great work on DESR

01:49:01.149 --> 01:49:04.340
projects. Um and I believe you recognize me sir on

01:49:04.340 --> 01:49:10.340
54224 and 54233. (item:25: ,Commissioner McAdams' comments on updates) The

01:49:12.640 --> 01:49:15.319
the point of my comments is to ask the Commission for

01:49:15.319 --> 01:49:17.779
grace for more time. Staff is currently engaged in

01:49:17.779 --> 01:49:22.319
good substantive dialogue with stakeholders about a

01:49:22.329 --> 01:49:25.220
potential methodology for something that is slightly

01:49:25.220 --> 01:49:27.909
less than the comprehensive approach I had described

01:49:27.909 --> 01:49:31.869
earlier related to reliability standard. But it is also

01:49:31.880 --> 01:49:40.300
less um well less uh disruptive to the current balance

01:49:40.300 --> 01:49:45.569
between interested generators installing a transmission

01:49:45.579 --> 01:49:49.770
versus distribution. But uh but having an effect of

01:49:49.779 --> 01:49:56.390
trying to um make the two systems equitable and dispel

01:49:56.390 --> 01:50:01.130
the notion that we are discriminating against resources

01:50:01.140 --> 01:50:03.630
interconnecting at distribution. Because again, the

01:50:03.630 --> 01:50:09.279
two policies are not in harmony and I think they are

01:50:09.289 --> 01:50:13.399
making good headway. They could have a potential framework

01:50:13.409 --> 01:50:18.069
um in the coming month or coming weeks uh depending

01:50:18.069 --> 01:50:22.710
on the outcome of those conversations and I think we

01:50:22.710 --> 01:50:25.159
should give them the headroom but I really appreciate

01:50:25.159 --> 01:50:25.909
their work on this.

01:50:27.539 --> 01:50:29.989
Makes sense to me. Thoughts, comments?

01:50:31.529 --> 01:50:35.399
All right, thank you for taking the lead on that. I don't

01:50:35.399 --> 01:50:40.819
have anything on 26 or 29. Uh so for Item 30. I

01:50:40.829 --> 01:50:44.329
do want to highlight as we heard earlier. (item:30:41211, Chairman Lake announces Commissioner Cobos' MISO new governance role) Commissioner

01:50:44.329 --> 01:50:48.060
Cobos is able to bring additional perspective from

01:50:48.060 --> 01:50:51.710
her work in MISO in regards to reliability standard.

01:50:52.470 --> 01:50:56.560
and it's a pleasure to announce that she has been selected

01:50:56.560 --> 01:50:59.909
to play a new governance role at MISO. She'll serve

01:50:59.909 --> 01:51:02.539
as a President of Energy Regional State Committee.

01:51:03.170 --> 01:51:07.109
She's had a busy, busy time in Washington. She's also

01:51:07.109 --> 01:51:09.810
gonna serve as the Secretary of the Organization of

01:51:09.810 --> 01:51:14.260
MISO states and sit on the MISO Board Advisory Committee.

01:51:14.840 --> 01:51:17.359
Just because she didn't have enough to do already.

01:51:17.369 --> 01:51:19.260
Did you know that was gonna happen to you, when you

01:51:19.260 --> 01:51:22.500
went up there? Or they just start happening? No, it happened before

01:51:22.510 --> 01:51:26.060
they asked me to do it. And so, you know, I can't

01:51:26.060 --> 01:51:30.380
say no to really big challenges apparently. And I believe

01:51:30.380 --> 01:51:33.189
Commissioner McAdams also has a leadership role, don't

01:51:33.189 --> 01:51:37.819
you? In the SPP? (item:30:41211, Commissioner McAdams' announces his new governance role) I do as of January 1st, I'm the

01:51:37.829 --> 01:51:41.800
Treasurer for the Southwest Power Pool Regional State

01:51:41.800 --> 01:51:46.739
Committee and as well as chair of the Resource Adequacy

01:51:46.750 --> 01:51:52.869
the REAL team, within the SPP. So we'll be leading talks

01:51:52.880 --> 01:51:55.609
about, oh and they and they love watching ERCOT by

01:51:55.609 --> 01:51:58.119
the way. To see how we're working this Resource Adequacy

01:51:58.130 --> 01:52:01.779
issue. I bet they do. But we'll be working on policy refinements within

01:52:01.779 --> 01:52:05.380
Southwest Power Pool to ensure uh, resource adequacy

01:52:05.380 --> 01:52:09.770
in the future. Looking at Creighton for the heads up,

01:52:09.800 --> 01:52:14.210
heads up on these things. Good luck guys and gals. Uh, congratulations.

01:52:14.220 --> 01:52:18.229
Uh, and congratulations. Uh, you're both clearly glutton

01:52:18.229 --> 01:52:22.829
for punishment. Uh, already vastly busy and in both

01:52:22.829 --> 01:52:26.520
cases, I know it's gonna be a lot of work. Has already

01:52:26.520 --> 01:52:29.439
been a lot of work for you and will be for you.

01:52:29.439 --> 01:52:33.020
But it's important work. And as we heard as we all know

01:52:33.020 --> 01:52:36.609
and as we heard uh loudly from Senator Hughes earlier.

01:52:36.609 --> 01:52:39.369
These, these may not be ERCOT and then maybe the parts

01:52:39.369 --> 01:52:41.489
of Texas that are outside ERCOT but those are still

01:52:41.489 --> 01:52:44.250
Texans. They are still under our jurisdiction is incredibly

01:52:44.260 --> 01:52:50.609
important to keep uh keep the focus on their well being

01:52:50.609 --> 01:52:53.149
and reliability as well. And we saw how important that

01:52:53.149 --> 01:52:57.630
is uh in the Winter weather event over Christmas especially

01:52:57.630 --> 01:53:02.649
in MISO. That was that was that was intense, so

01:53:02.659 --> 01:53:07.489
congratulations both uh and good luck with the additional

01:53:07.489 --> 01:53:14.430
work. Texas leads the way sir. Indeed in so many ways. We don't have anything

01:53:14.430 --> 01:53:18.300
on 31 or 32. Mr. Chairman, could I, could I indulge

01:53:18.300 --> 01:53:23.390
you to uh ask to allow me to invite Woody up here 

01:53:23.390 --> 01:53:26.579
again? I had sent some emails just about trying to

01:53:26.579 --> 01:53:29.560
understand where the implementation of Senate Bill

01:53:29.569 --> 01:53:34.449
1281 in the uh congestion cost savings test is uh

01:53:34.460 --> 01:53:36.829
since we passed it here. What ERCOT is doing and what

01:53:36.829 --> 01:53:40.840
their time frame is and you don't mind, I just make

01:53:40.840 --> 01:53:42.649
sure for the record, we know which item this is coming

01:53:42.649 --> 01:53:51.260
under. Uh huh No, I'm guessing 32. It's a 32 electric

01:53:51.260 --> 01:53:52.689
reliability. There we go.

01:53:54.850 --> 01:53:57.000
(item:32:Commissioner Glotfelty asks question to Woody Rickerson, ERCOT) Could you give us an update on where you all stand

01:53:57.000 --> 01:54:01.220
internally with the uh congestion cost savings test

01:54:01.220 --> 01:54:03.289
and kind of with the timeframe you see going forward

01:54:03.289 --> 01:54:05.340
and how that would be implemented and when we would

01:54:05.350 --> 01:54:12.609
get some information back? (item:32:Woody Rickerson, ERCOT, responds to questions) So we complete in 2022,

01:54:12.619 --> 01:54:17.020
we completed the regional transmission plan but because

01:54:17.029 --> 01:54:20.250
of the uncertainty about the economic test. We did

01:54:20.250 --> 01:54:24.810
not include any economic analysis on those projects.

01:54:25.760 --> 01:54:30.449
So the starting point in 2023 has been to take that

01:54:30.460 --> 01:54:36.159
2022 set of projects and start evaluating those economically.

01:54:37.609 --> 01:54:40.600
So we'll start taking those projects looking for any

01:54:40.600 --> 01:54:43.390
of those projects. That could be an economic, we could

01:54:43.390 --> 01:54:47.789
put the economic justified stamp on. In coordination

01:54:47.789 --> 01:54:49.659
with that or in parallel with that. We've also asked

01:54:49.659 --> 01:54:53.140
the TSPs to provide us with project that they

01:54:53.140 --> 01:54:57.739
think might meet that economic standard as well. And

01:54:57.739 --> 01:55:02.569
so that suite of projects, we're evaluating both with

01:55:02.569 --> 01:55:06.300
the production cost test and with the temporary consumer

01:55:06.300 --> 01:55:07.460
benefit test.

01:55:09.279 --> 01:55:11.380
So that's that's where we are right now.

01:55:12.909 --> 01:55:17.760
Now, if one of those projects meets the standard we

01:55:17.760 --> 01:55:21.550
can bring it forward and as an endorsed economically

01:55:21.550 --> 01:55:25.779
justified project so far, we haven't found one. But

01:55:25.779 --> 01:55:29.989
we're just, we're in the middle of the process. And

01:55:30.000 --> 01:55:33.390
uh you're developing in the process of developing the

01:55:33.390 --> 01:55:36.720
new economic test, is that right? We are early in that

01:55:36.720 --> 01:55:39.329
process as well. So when would you expect that to be

01:55:39.329 --> 01:55:44.649
completed? And would you be using that in the 2023

01:55:44.659 --> 01:55:49.989
plan or the next transmission plan? Um, the

01:55:50.000 --> 01:55:52.649
next transmission plan has already started unfortunately.

01:55:52.659 --> 01:55:58.869
Right. So we are in the process of doing an RFP bringing

01:55:58.869 --> 01:56:04.449
in a consultant to help facilitate what then that consumer

01:56:04.460 --> 01:56:08.609
congestion cost economic standards should be. We're

01:56:08.609 --> 01:56:10.909
trying to expedite that. We're trying to do that quickly.

01:56:10.920 --> 01:56:15.899
Um, but by the time we get that thing set, it won't

01:56:15.899 --> 01:56:20.380
be in time for the 2023 regional transmission plan

01:56:20.979 --> 01:56:23.649
but that doesn't mean. Okay. So the regional transmission

01:56:23.649 --> 01:56:26.739
plan is an overall view of the entire grid that we

01:56:26.739 --> 01:56:30.750
do every year. That looks out five years in the future

01:56:30.760 --> 01:56:35.239
and looks for future transmission needs. So that project

01:56:35.239 --> 01:56:40.189
is, it's a year long effort to put that out. So if

01:56:40.189 --> 01:56:48.210
we get a new consumer congestion test defined by June

01:56:48.210 --> 01:56:51.760
or July this year, it won't be in time to incorporate

01:56:51.760 --> 01:56:54.390
into that project. However, doesn't mean we couldn't

01:56:54.390 --> 01:56:57.630
start using it immediately on individual projects.

01:56:59.189 --> 01:57:03.029
So I'm sorry. I think just a point of clarification

01:57:03.039 --> 01:57:08.850
it may not be included in the RTP, but individual TSPs

01:57:08.850 --> 01:57:11.000
can bring you an economic project for your regional

01:57:11.909 --> 01:57:16.079
economic criteria. As soon as it's defined. Yeah, we'll

01:57:16.260 --> 01:57:18.340
probably made some people flinch back home when I said

01:57:18.340 --> 01:57:23.909
that. But as soon as it's defined, if we have the tools

01:57:23.920 --> 01:57:27.630
we don't know what the definition is yet. So assuming

01:57:27.630 --> 01:57:30.369
that we have the models and the software to implement

01:57:30.369 --> 01:57:32.640
it, as soon as it's defined, we can start using it.

01:57:32.649 --> 01:57:36.149
I should be careful about that because it may be something

01:57:36.159 --> 01:57:39.239
completely new that we'd have to go out and have all

01:57:39.239 --> 01:57:42.970
new software, all new training, maybe additional modeling

01:57:42.979 --> 01:57:46.520
to be able to use it. But I can't really tell you

01:57:46.529 --> 01:57:48.869
when we can start using it, I guess until I know what

01:57:48.869 --> 01:57:49.489
it is.

01:57:53.189 --> 01:57:56.250
Okay. I think we need to dig into this. I will dig

01:57:56.250 --> 01:57:58.739
into it with you a little bit more clearly the intent

01:57:58.739 --> 01:58:04.180
of the Legislature was uh to uh find congestion around

01:58:04.180 --> 01:58:08.390
the system and eliminate it as best we can um in due

01:58:08.390 --> 01:58:10.279
course. And I look forward to working with you on that.

01:58:10.289 --> 01:58:15.220
So. Thanks Woody. Yeah, it sounds like it's uh integrating

01:58:15.220 --> 01:58:18.909
the new process into existing processes that right.

01:58:18.920 --> 01:58:22.260
So we are full speed ahead with the two tests we have

01:58:22.260 --> 01:58:27.619
now. So those tests will find congestion and they can

01:58:27.619 --> 01:58:31.649
recommend projects to eliminate that congestion. So

01:58:31.659 --> 01:58:35.649
we're not ignoring congestion now. Which two test, are those again?

01:58:35.649 --> 01:58:38.399
A production cost test and consumer benefit test.

01:58:43.520 --> 01:58:49.130
Okay. And we have, we have the software, we have the

01:58:49.130 --> 01:58:52.420
training, we have the models to fully utilize both

01:58:52.420 --> 01:58:57.939
those tests right now. Um what this new standard, this

01:58:57.939 --> 01:59:02.310
new test turns out to be um, will determine just how

01:59:02.310 --> 01:59:05.340
quickly what's what's in that test will determine just

01:59:05.340 --> 01:59:08.890
how quickly we can begin using the new, that new new

01:59:08.890 --> 01:59:11.859
standard. It could be something very close to the consumer

01:59:11.859 --> 01:59:16.899
benefit test and may not take a lot of changes in order

01:59:16.899 --> 01:59:17.640
to start using it.

01:59:20.970 --> 01:59:22.539
Sure you can get more details. And

01:59:25.739 --> 01:59:29.449
so these are the big, the big pieces moving around

01:59:29.460 --> 01:59:33.880
uh and complex systems. So it's I'm sure it's, I know

01:59:33.880 --> 01:59:37.600
it's not uh it's as simple as flipping a switch but

01:59:37.609 --> 01:59:40.739
obviously want want all of this in place sooner rather

01:59:40.739 --> 01:59:43.489
than later. So finding that balance

01:59:45.760 --> 01:59:52.149
this is where we need to go. Thanks Woody. Uh man that

01:59:52.149 --> 01:59:57.640
covers 32. And I just I would be remiss if before I

01:59:57.640 --> 02:00:00.920
forget to thank Peggy Hague for all her work. Board Member

02:00:00.920 --> 02:00:03.829
on the natural gas. I know we closed that item earlier

02:00:03.840 --> 02:00:06.729
but I want to thank her for her tremendous amount of

02:00:06.729 --> 02:00:08.729
work and experience and expertise. So she's brought

02:00:08.729 --> 02:00:12.479
to bear so many many things we've leaned on. We've

02:00:12.489 --> 02:00:16.729
leaned heavily on her. Right Item 33.

02:00:18.539 --> 02:00:20.720
Call up Tom Hunter to,

02:00:22.250 --> 02:00:27.609
layout potential action regarding state, federal legislation

02:00:28.189 --> 02:00:32.149
and litigation. Good morning. Chairman, Commissioners. (item:33:Tom Hunter, Commission Staff, concerning proposed EPA rule)

02:00:32.159 --> 02:00:35.720
Before you today is a proposed proposed comments on

02:00:35.720 --> 02:00:39.300
the draft EPA rule. Um these comments were drafted

02:00:39.300 --> 02:00:42.609
by TCEQ. TCEQ has asked both the Commission and

02:00:42.609 --> 02:00:44.850
Railroad Commission to join them in those comments.

02:00:44.869 --> 02:00:48.560
The rule addresses the process that states must follow

02:00:48.569 --> 02:00:53.420
in developing state implementation plans. Um to for

02:00:53.420 --> 02:00:58.130
fossil fuel fired power plants, um greenhouse gas emissions

02:00:58.130 --> 02:01:02.890
plans. Basically it is procedures and timelines generally

02:01:02.899 --> 02:01:08.100
that will apply to states and um promulgating state

02:01:08.100 --> 02:01:12.590
plans to to comply with EPA rules. Um you all have

02:01:12.590 --> 02:01:15.069
a copy of the proposed comments. I provided a draft

02:01:15.079 --> 02:01:18.119
another revised set of those comments yesterday. Sorry

02:01:18.119 --> 02:01:20.479
for the late timing. But I just got them recently.

02:01:20.489 --> 02:01:23.970
Uh the main points that the TCEQ makes is that basically

02:01:23.970 --> 02:01:26.590
these rules eviscerate um some of the state authority

02:01:26.590 --> 02:01:30.989
allowed under the Clean Air Act. Uh to meaningfully

02:01:30.989 --> 02:01:33.789
review and and promulgate state implementation plans.

02:01:33.789 --> 02:01:36.619
And so we are recommending that the Commission delegate

02:01:36.619 --> 02:01:39.050
to the Executive Director authority to sign those comments

02:01:39.060 --> 02:01:41.979
joint comments on behalf of the Commission. Happy to

02:01:41.979 --> 02:01:46.739
answer any questions. Questions, comments? It's Groundhog

02:01:46.739 --> 02:01:52.090
Day all over again. It's 2011. And uh as then I would

02:01:52.100 --> 02:01:56.380
support delegation of that authority. So moved.

02:02:00.529 --> 02:02:04.329
Got a motion and a second. All in favor, say aye. Aye. None

02:02:04.329 --> 02:02:08.770
opposed. Motion pass. Well done Tom. Quickest item today.

02:02:09.979 --> 02:02:11.710
I don't have anything else for the remainder of our

02:02:11.720 --> 02:02:17.069
open portion of our meeting. So having convened a duly

02:02:17.079 --> 02:02:20.279
noticed open meeting. Commission will now 11:35am on

02:02:20.279 --> 02:02:23.390
February 16, 2023 hold a closed session, pursuant to Chapter

02:02:23.390 --> 02:02:26.489
551 of the Texas Government Code, Section 551.071, 

02:02:26.489 --> 02:02:31.789
551.074 and 551.076. We'll be back in a bit.

02:02:40.449 --> 02:02:44.060
Closed session is hereby concluded 11:45am on February

02:02:44.060 --> 02:02:46.310
16,2023, and the Commission will resume its public

02:02:46.310 --> 02:02:50.619
meeting. After deliberations in closed sessions. I will

02:02:50.619 --> 02:02:52.810
entertain a motion to request Office of Attorney General

02:02:52.810 --> 02:02:55.380
representation. The following EPA related matters,

02:02:55.380 --> 02:02:58.420
First State of Texas versus EPA case number

02:02:58.430 --> 02:03:04.989
23-60069 and anticipated future litigation regarding

02:03:05.000 --> 02:03:07.560
the EPA's Federal implementation plan for ozone

02:03:07.560 --> 02:03:11.550
transport for the 2015 Ozone National Ambient Air Quality

02:03:11.670 --> 02:03:16.060
Standards. Do we have a motion? So moved. Second. Got a motion and a second. All in favor,

02:03:16.060 --> 02:03:20.039
say aye. Aye. None opposed. Motion passes. Thank you

02:03:20.039 --> 02:03:22.550
all. (item:38:Chairman Lake adjourns meeting) Having no further business before the Commission.

02:03:22.550 --> 02:03:24.590
This meeting of the Public Utility Commission of Texas

02:03:24.590 --> 02:03:25.859
is hereby adjourned.