WEBVTT 00:00:03.008 --> 00:00:05.658 (item:0:Chairman Gleeson calls meeting to order) This meeting of the Public Utility Commission of Texas 00:00:05.669 --> 00:00:07.919 will come to order. To discuss matters that have been 00:00:07.929 --> 00:00:11.089 duly posted with the Secretary of State for today 00:00:11.099 --> 00:00:14.409 March 21, 2024. Good morning, Shelah. Good morning 00:00:14.419 --> 00:00:18.260 Connie. So before we go through the Consent Agenda 00:00:18.269 --> 00:00:21.899 just a couple of things. (item:0:Chairman Gleeson give condolences to family of Former Commissioner Jo Campbell) One um, Former Commissioner 00:00:21.908 --> 00:00:24.539 Jo Campbell passed away on March 10th. I'm sure some 00:00:24.548 --> 00:00:28.089 of you had worked with her. She was a Commissioner 00:00:28.100 --> 00:00:33.130 here from 1985 till 1991. So just wanted to, uh to 00:00:33.139 --> 00:00:35.929 say that, if some of you hadn't heard. And express 00:00:35.939 --> 00:00:39.270 our sincerest condolences to, uh to her family in 00:00:39.279 --> 00:00:42.969 her passing. She was 92 years old. (item:0:Chairman Gleeson recognizes Commissioners Cobos and Glotfelty) And on a, on a 00:00:42.978 --> 00:00:45.529 positive note, our very own, uh Commissioner Lori 00:00:45.539 --> 00:00:49.039 Cobos is going to be inducted into the Sul Ross Hall 00:00:49.048 --> 00:00:52.770 of Honor on Saturday, um for distinguished alumni. 00:00:55.709 --> 00:00:58.810 Thank you. So congratulations Lori. That's a, that's a tremendous 00:00:58.819 --> 00:01:02.389 achievement. Thank you so much, I appreciate the recognition. 00:01:03.750 --> 00:01:05.620 And Jimmy's birthday was a couple of days ago. So 00:01:05.629 --> 00:01:08.549 happy birth, Happy belated Birthday Jimmy. There you 00:01:08.558 --> 00:01:11.028 go. Yeah, yeah. 00:01:14.879 --> 00:01:16.918 All right, Shelah. Will you take us through the Consent 00:01:16.930 --> 00:01:21.269 agenda, please? Yes. (item:0.1:Shelah Cisneros with Commission Counsel lays out Consent Agenda) Good morning, Commissioners. First, 00:01:21.278 --> 00:01:24.370 let me state that the Chairman filed a memo in Project 00:01:24.379 --> 00:01:29.250 No. 52761. Stating that he is recused from Items 00:01:29.260 --> 00:01:35.379 1, 2, 4, 10 and 12. And then for the Consent Agenda by 00:01:35.388 --> 00:01:37.680 individual ballot, the following items were placed 00:01:37.689 --> 00:01:43.198 on your Consent Agenda. Items 1-4, 8, 12, 13 00:01:43.209 --> 00:01:46.838 and 15. (item:0.1:Chairman Gleeson asks for motion to approve items on Consent Agenda) I would entertain a motion to approve the Consent 00:01:46.849 --> 00:01:48.099 Agenda as laid out by Shelah. 00:01:49.829 --> 00:01:53.409 So moved. Second. I have a motion and second. All those in favor, say aye. Aye. Opposed? 00:01:53.680 --> 00:01:57.980 Motion prevails. Okay, so we are going to start with 00:01:57.989 --> 00:02:01.260 Item No. 5. Shelah, will you lay out Item No. 00:02:01.269 --> 00:02:06.379 5 please? Yes. (item:5:Petition for emergency order appointing temporary manager to Blue Cereus, LLC under TWC & Commission Rule) Item 5 is Docket No. 56171. 00:02:06.388 --> 00:02:09.649 This is the petition for an emergency order appointing 00:02:09.659 --> 00:02:13.520 a temporary manager to Blue Cereus, LLC under Texas 00:02:13.528 --> 00:02:20.278 Water Code 13.4132 and Commission Rule 24.355. Commission 00:02:20.288 --> 00:02:22.899 Staff filed a petition to appoint a temporary manager 00:02:22.909 --> 00:02:25.960 to the utility. An emergency order was filed on February 00:02:25.969 --> 00:02:29.258 1st. The Commission provided notice of a hearing on 00:02:29.270 --> 00:02:31.860 the merits to consider the emergency order in this 00:02:31.868 --> 00:02:36.919 docket. Okay. So at this point, we will recess this meeting 00:02:36.929 --> 00:02:40.159 uh of the PUC and hold a separate hearing on this item. 00:02:40.429 --> 00:02:40.639 So 00:02:46.750 --> 00:02:52.330 For the Merits Hearing in Docket 56171. Which has 00:02:52.338 --> 00:02:54.588 been duly posted with the Secretary of State for today 00:02:54.599 --> 00:02:59.240 March 21, 2024. And I'll now turn it over to our Staff 00:02:59.528 --> 00:03:02.389 ALJ to conduct the hearing. Good morning Commissioners. 00:03:02.808 --> 00:03:07.278 I call to order Docket No. 56171, Commission Staff's 00:03:07.288 --> 00:03:10.179 petition for an emergency order. Appointing a temporary 00:03:10.189 --> 00:03:14.000 manager to Blue Cereus, LLC. Without a hearing, pursuant 00:03:14.008 --> 00:03:19.618 to Texas Water Code section 13.4132 and 16 Texas 00:03:19.629 --> 00:03:25.058 Administrative Code section 24.355. This is Christina 00:03:25.069 --> 00:03:27.558 Denmark assisting the Commissioners. And the purpose 00:03:27.569 --> 00:03:32.028 of this hearing is to determine whether to affirm, modify 00:03:32.038 --> 00:03:35.409 or set aside the emergency order. Issued by the Interim 00:03:35.419 --> 00:03:38.258 Executive Director in this docket on February 1st of 00:03:38.270 --> 00:03:42.949 2024. Which appointed CSWR Texas to temporarily manage 00:03:42.960 --> 00:03:47.439 and operate Blue Cereus. I'll go ahead and take appearances 00:03:47.449 --> 00:03:51.939 from counsel, if they would like to approach. (inaudible) 00:03:52.058 --> 00:03:52.939 on behalf of the Commission Staff. 00:03:54.960 --> 00:03:57.199 May I just jump in? When the parties approach, if you'll 00:03:57.210 --> 00:03:59.419 wait and, and please be sure to speak into the 00:03:59.429 --> 00:04:00.729 microphone for the Court Reporter. 00:04:11.949 --> 00:04:14.919 Good morning Michael Floriani for Blue Cereus, LLC. 00:04:16.709 --> 00:04:19.000 My apologies, let's try that one more time. John 00:04:19.009 --> 00:04:21.769 Lajzer on behalf of Commission Staff. Okay. 00:04:23.278 --> 00:04:25.730 Commissioners, we had a pre-hearing conference on March 00:04:25.738 --> 00:04:30.389 18th of 2024. And I admitted 19 exhibits from Commission 00:04:30.399 --> 00:04:34.819 Staff and two exhibits from Blue Cereus. The 21 exhibits 00:04:34.829 --> 00:04:38.108 should be in a binder before you. The parties agreed 00:04:38.119 --> 00:04:40.480 to limit opening and closing statements to 5 minutes 00:04:40.488 --> 00:04:43.329 each. The parties also agreed to the order for our 00:04:43.338 --> 00:04:46.750 four witnesses and agreed to limit testimony to a collective 00:04:46.759 --> 00:04:49.809 hour. We'll first have Dina Ferguson from Seguro Water 00:04:49.819 --> 00:04:54.540 Company. Second, Bob Ferguson of San Pedro Water Resources. 00:04:54.720 --> 00:04:57.709 Third, Judge Jimmy Allen Hall, Managing Member of Blue 00:04:57.988 --> 00:05:01.449 Cereus. And fourth, Kristen Robinson, employee and office 00:05:01.459 --> 00:05:02.559 manager of Blue Cereus. 00:05:05.509 --> 00:05:07.980 Blue Cereus asked to invoke the rule, Texas Rule of 00:05:07.988 --> 00:05:11.000 Evidence 614. To exclude witnesses from hearing other 00:05:11.009 --> 00:05:13.579 witness testimony, which I'll address in a few minutes. 00:05:14.269 --> 00:05:16.439 Let's go ahead and proceed with opening statements. 00:05:16.449 --> 00:05:18.178 And I'll follow up with the Commissioners to see if 00:05:18.189 --> 00:05:21.439 they have any questions before we proceed. Commission 00:05:21.449 --> 00:05:24.660 Staff, do you have an opening statement? I do Judge 00:05:24.689 --> 00:05:26.879 Denmark, but just one quick correction on the order. 00:05:26.889 --> 00:05:28.829 Would it be possible to take Bob Ferguson first versus 00:05:28.959 --> 00:05:31.970 Dina? Counsel, do you have a problem with us taking 00:05:31.980 --> 00:05:33.170 Bob instead of Dina first? No. 00:05:37.850 --> 00:05:40.309 That's, that's good. And Commission Staff does have an opening. 00:05:40.759 --> 00:05:43.420 Judge Denmark, John Lajzer on behalf of Commission Staff. 00:05:43.439 --> 00:05:45.970 Commission Staff requests the Commission affirm the 00:05:45.980 --> 00:05:49.850 appointment of CWR Texas as temporary manager for Blue 00:05:49.858 --> 00:05:54.750 Cereus, LLC, as ordered through the February 1, 2024 emergency 00:05:54.759 --> 00:05:57.778 order. Commission Staff issued its emergency order 00:05:57.790 --> 00:06:00.689 citing two grounds for abandonment, as defined under 00:06:00.699 --> 00:06:06.350 Texas Water Code section 13.402, Subpart F. Failure of 00:06:06.358 --> 00:06:09.160 a retail public water utility to pay an obligation 00:06:09.309 --> 00:06:12.329 that results in the utility receiving a notice of discontinuation 00:06:12.338 --> 00:06:15.988 for a necessary service. And hostility towards the Texas 00:06:16.000 --> 00:06:18.579 Commission of Environmental Quality or the Commission. 00:06:19.778 --> 00:06:24.100 Blue Cereus is the holder of CCN No. 11088 and 00:06:24.108 --> 00:06:27.819 operates two public water systems. San Pedro Village 00:06:28.048 --> 00:06:32.449 and La Coletta Estates. As a CCN holder, Blue Cereus 00:06:32.459 --> 00:06:34.988 is required to ensure continuous and adequate service 00:06:35.000 --> 00:06:38.980 to customers within its certificated area. Blue Cereus 00:06:39.278 --> 00:06:43.309 does not have its own water source. From 2009 through 00:06:43.319 --> 00:06:46.910 December 31, 2014, Blue Cereus secured access to 00:06:46.920 --> 00:06:50.129 potable water through written contracts with two wholesale 00:06:50.139 --> 00:06:53.660 providers. Seguro Water Company and San Pedro Water 00:06:53.670 --> 00:06:57.329 Resources Joint Venture. Those contracts expired by 00:06:57.338 --> 00:07:02.028 their natural terms on January 1, 2015. Presently 00:07:02.040 --> 00:07:06.230 Blue Cereus does not have a written contract securing 00:07:06.238 --> 00:07:09.920 access to a water source. Instead, Blue Cereus and the 00:07:09.928 --> 00:07:12.899 wholesalers have operated under a series of one year 00:07:12.910 --> 00:07:16.699 oral agreements. The absence of a written contract 00:07:16.709 --> 00:07:19.540 has resulted in multiple conflicts between Blue Cereus 00:07:19.548 --> 00:07:21.720 and the wholesalers, including disputes before this 00:07:21.730 --> 00:07:25.899 Commission and in District Court. On June 1, 2018, 00:07:25.910 --> 00:07:28.678 the wholesalers provided Blue Cereus its first notice 00:07:28.689 --> 00:07:31.660 of default and notice of termination. Citing delinquent 00:07:31.670 --> 00:07:37.040 bills exceeding $150,000. From August 18, 2018 through 00:07:37.048 --> 00:07:40.500 March 16, 2020, Blue Cereus was placed under temporary 00:07:40.509 --> 00:07:43.540 management. Over concerns that the fraying relationship 00:07:43.548 --> 00:07:46.399 between Blue Cereus and its wholesale providers. Would 00:07:46.410 --> 00:07:50.160 jeopardize the continuous and adequate service of water 00:07:50.170 --> 00:07:54.428 to Blue Cereus' customers. Commission Staff requests 00:07:54.439 --> 00:07:57.939 the Commission affirm the February 1, 2024 temporary 00:07:57.949 --> 00:08:01.959 management appointment. Because once again, those same 00:08:01.970 --> 00:08:07.470 concerns have resurfaced. On June 19, 2023, TCEQ issued 00:08:07.480 --> 00:08:10.428 an order requiring Blue Cereus to secure water purchase 00:08:10.439 --> 00:08:14.059 contracts for San Pedro Village and La Coletta Estates 00:08:14.088 --> 00:08:19.488 no later than January 11, 2024. On January 8, 2024, 00:08:19.500 --> 00:08:22.238 the Commission and Blue Cereus received a letter issued 00:08:22.250 --> 00:08:24.649 by the wholesalers. Wherein the wholesalers signaled 00:08:24.660 --> 00:08:27.649 their intention to terminate all business dealings 00:08:27.660 --> 00:08:31.689 with Blue Cereus. In that letter, the wholesalers commented 00:08:31.699 --> 00:08:35.269 that despite TCEQ's order, Blue Cereus had made no 00:08:35.279 --> 00:08:39.178 effort to secure or negotiate water purchase contracts. 00:08:39.950 --> 00:08:43.190 Commission Staff confirmed that Blue Cereus' access 00:08:43.200 --> 00:08:46.479 to potable water would be terminated by the wholesalers 00:08:46.489 --> 00:08:51.259 no later than February 1, 2024, absent action by the 00:08:51.269 --> 00:08:55.340 Commission. To date, Blue Cereus has failed to provide 00:08:55.349 --> 00:08:58.178 a water purchase contract for either public water system 00:08:58.190 --> 00:09:01.969 under its CCN. Instead, Blue Cereus argues that a SOAH 00:09:01.979 --> 00:09:05.099 order setting an interim rate and a now void settlement 00:09:05.109 --> 00:09:09.229 agreement in Docket 50239. Take the place or amount 00:09:09.239 --> 00:09:12.599 to a water purchase contract. The same argument was 00:09:12.609 --> 00:09:16.558 rejected by TCEQ during the June 2023 hearing. That 00:09:16.570 --> 00:09:20.750 resulted in TCEQ order requiring Blue Cereus to obtain 00:09:20.759 --> 00:09:24.619 a written purchase contract. The Commission should similarly 00:09:24.629 --> 00:09:28.509 reject this argument today. The absence of a written 00:09:28.519 --> 00:09:30.950 water purchase contract for the public water systems 00:09:30.960 --> 00:09:34.869 under Blue Cereus' CCN. Present a clear and actionable threat 00:09:34.879 --> 00:09:38.668 to Blue Cereus' ability to ensure continuous and adequate 00:09:38.678 --> 00:09:41.969 service to its customers. This is tantamount to abandonment 00:09:41.979 --> 00:09:45.340 under the Water Code and Commission rules. For this 00:09:45.349 --> 00:09:48.048 reason, Commission Staff requests Commission affirm 00:09:48.058 --> 00:09:51.538 the February 1, 2024 emergency order appointing CSWR 00:09:51.548 --> 00:09:55.070 Texas as temporary manager for Blue Cereus, for a term 00:09:55.090 --> 00:09:57.178 of no longer than 360 days. 00:10:00.009 --> 00:10:02.808 Blue Cereus, would you like to proceed? Thank you. My 00:10:02.820 --> 00:10:05.918 name is Michael Floriani. I represent Blue Cereus, LLC. 00:10:06.519 --> 00:10:09.379 I am new to this case. The prior attorney for Blue 00:10:09.389 --> 00:10:13.239 Cereus, LLC unfortunately became very ill in January of 00:10:13.250 --> 00:10:16.798 this year and passed away very recently. So there are 00:10:16.808 --> 00:10:19.820 many things that have happened in this case recently 00:10:20.729 --> 00:10:25.178 and for which I'm still learning the facts. So I beg 00:10:25.190 --> 00:10:25.710 your 00:10:30.779 --> 00:10:32.219 thank you. 00:10:33.889 --> 00:10:36.719 Our position, this position of Blue Cereus is that 00:10:36.729 --> 00:10:39.969 the temporary manager is not necessary. And that the 00:10:39.979 --> 00:10:43.158 emergency temporary manager that was appointed on February 00:10:43.168 --> 00:10:46.678 1st was also not necessary. Because the Public Utility 00:10:46.690 --> 00:10:49.178 Commission has failed to meet their burden of showing 00:10:49.190 --> 00:10:52.460 that there is an emergency. And that there's the basis 00:10:52.469 --> 00:10:55.168 of that is that there was no abandonment by the utility. 00:10:55.649 --> 00:10:59.820 We will show that the perceived emergency is the creation 00:10:59.830 --> 00:11:03.149 of the wholesaler with whom Blue Cereus has had a long-standing 00:11:03.158 --> 00:11:08.489 dispute. That dispute was settled in June of 2022 under 00:11:08.500 --> 00:11:12.869 docket zero, Docket No. 502139 with a mediated settlement 00:11:12.879 --> 00:11:17.460 agreement. That mediated settlement agreement was reported 00:11:17.469 --> 00:11:20.509 by the mediators as a final settlement in that case. 00:11:21.418 --> 00:11:23.918 Under the terms of that settlement agreement, which 00:11:23.928 --> 00:11:28.399 is Exhibit 1 of Blue Cereus, LLC. There was a complete 00:11:28.408 --> 00:11:33.000 divorce between the wholesaler and Blue Cereus, LLC. And 00:11:33.009 --> 00:11:36.570 it was a position by which Blue Cereus, LLC would take 00:11:36.580 --> 00:11:39.279 over the assets of the wholesaler for one subdivision. 00:11:39.808 --> 00:11:42.308 And then the wholesalers would take over the retail 00:11:42.479 --> 00:11:45.460 connections portion for Blue Cereus for another subdivision. 00:11:45.469 --> 00:11:48.479 So they would essentially acquire each other's assets 00:11:48.489 --> 00:11:50.759 and have no further business with each other ever in 00:11:50.769 --> 00:11:51.308 the future. 00:11:53.038 --> 00:11:56.779 In November of this year, of last year. I'm sorry, 2023. 00:11:56.918 --> 00:12:00.918 One of the wholesalers filed a report attempting to unilaterally 00:12:00.928 --> 00:12:03.899 repudiate that mediated settlement agreement which 00:12:03.908 --> 00:12:09.658 is a contract. The this issue was raised in the hearing 00:12:09.668 --> 00:12:14.298 in June of 2023 but that there was no determination 00:12:14.308 --> 00:12:17.428 whether that settlement agreement was void. Counsel 00:12:17.440 --> 00:12:20.590 for the PUC has said that it's a now void settlement. 00:12:20.969 --> 00:12:23.519 In the position of Blue Cereus is that is an enforceable 00:12:23.529 --> 00:12:26.548 agreement that they intend to enforce. And if that 00:12:26.558 --> 00:12:29.460 agreement is enforced, there's no emergency. Because 00:12:29.469 --> 00:12:32.889 the perceived emergency here is the wholesaler coming 00:12:32.899 --> 00:12:35.899 forward under this docket number and saying they have 00:12:35.908 --> 00:12:39.869 no contract in place with Blue Cereus, LLC. And reserve the 00:12:39.879 --> 00:12:43.418 right to stop providing potable water to them for resale. 00:12:44.509 --> 00:12:47.899 Our position is that the wholesalers are themselves 00:12:47.908 --> 00:12:50.940 public utilities that provide potable water. They're 00:12:50.950 --> 00:12:54.489 subject to the regulation of this Commission. And that 00:12:54.500 --> 00:12:57.210 this action should be brought against the wholesaler 00:12:57.219 --> 00:12:59.700 who is the one threatening to cut off water supplies 00:12:59.710 --> 00:13:02.609 to retail customers. We will show that we have complied 00:13:02.619 --> 00:13:05.629 with the terms of the media settlement agreement. Seek 00:13:05.639 --> 00:13:08.700 enforcement of that and have not created any emergency 00:13:08.710 --> 00:13:10.369 with the retail customers. Thank you. 00:13:12.750 --> 00:13:14.529 Commissioners, do you have any questions before we 00:13:14.538 --> 00:13:15.080 proceed? 00:13:17.538 --> 00:13:20.190 At this time, we'll swear in the 4 witnesses. And 00:13:20.200 --> 00:13:22.769 then I'm going to ask the witnesses to excuse themselves 00:13:22.779 --> 00:13:25.210 from the Commissioner's hearing room. Could our 4 00:13:25.219 --> 00:13:27.369 witnesses please approach? 00:13:29.019 --> 00:13:29.519 Thank you. 00:13:32.619 --> 00:13:36.119 Thank you. Perfect. And for the record, Ms. 00:13:36.129 --> 00:13:38.529 Ferguson will not be here today and will not be. She will 00:13:42.570 --> 00:13:46.969 be, okay. Mr. and Mrs. Ferguson. Judge Hall. Please raise right your 00:13:46.979 --> 00:13:50.389 hand, please raise your right hand. Do you swear or 00:13:50.399 --> 00:13:53.210 affirm the testimony you give today will be the truth, 00:13:53.219 --> 00:13:57.119 the whole truth and nothing but the truth. I do. I 00:13:57.129 --> 00:14:01.168 so swear. Okay. At this time, I'm going to invoke the 00:14:01.178 --> 00:14:03.808 rule. Judge Hall, you may stay because the rule wouldn't 00:14:03.820 --> 00:14:07.200 apply to you. And we're starting with Mr. Ferguson, 00:14:07.210 --> 00:14:10.399 correct? You can go ahead and stay since you're the 00:14:10.408 --> 00:14:13.989 first witness. Mr. Ferguson. Ms. Robinson. 00:14:15.658 --> 00:14:18.639 When you do leave this room, you may not. Not Mrs. 00:14:18.649 --> 00:14:20.288 Robinson, Mrs. Ferguson. Sorry. 00:14:21.950 --> 00:14:28.000 My name is actually Robinson Ferguson. Okay. When you do leave this 00:14:28.009 --> 00:14:30.418 room, you may not converse about this docket with each 00:14:30.428 --> 00:14:33.200 other. Or with any other person other than the attorneys 00:14:33.210 --> 00:14:36.219 in this case, except by permission of the Commission. 00:14:36.538 --> 00:14:39.139 And you may not read any report of or comments on the 00:14:39.149 --> 00:14:41.859 testimony in this case while the rule is invoked. 00:14:44.168 --> 00:14:47.979 So I guess I'm just gonna ask at this time, you will 00:14:47.989 --> 00:14:51.200 leave the Commissioner's hearing room. And if you can 00:14:51.210 --> 00:14:53.519 find a location out there where you can't hear the 00:14:53.529 --> 00:14:56.080 testimony and someone will come grab you when it's 00:14:56.090 --> 00:15:00.168 your turn to testify. 00:15:05.798 --> 00:15:06.408 Certainly. 00:15:17.989 --> 00:15:18.298 It's enough? 00:15:20.928 --> 00:15:21.580 Okay. 00:15:23.129 --> 00:15:25.808 Just a reminder to try to speak into the microphones. 00:15:27.000 --> 00:15:28.918 With the big note in front of it, that says please 00:15:28.928 --> 00:15:32.960 speak into it. Commission Staff, you may proceed with 00:15:32.969 --> 00:15:33.908 your question. Thank you, Your Honor. 00:15:35.899 --> 00:15:38.190 Good morning Mr. Ferguson. Hi. Can you please state your 00:15:38.200 --> 00:15:42.369 name for the record? Robert B. Ferguson. And who 00:15:42.379 --> 00:15:46.320 is your current employer? I am self-employed. Okay. Do 00:15:46.330 --> 00:15:49.820 you have a role or title with San Pedro Water Resources 00:15:49.830 --> 00:15:52.969 Joint Venture? Yes I do, manager. Okay. And how long 00:15:52.979 --> 00:15:56.599 have you served in this capacity? Since I've owned the 00:15:56.609 --> 00:16:00.649 system? I guess it would be 2005. Okay. And that was 00:16:00.658 --> 00:16:02.239 my next question. How long have you owned the company? 00:16:02.619 --> 00:16:05.879 2005. Okay. Can you give me a brief description of 00:16:05.889 --> 00:16:10.070 what San Pedro Water Resources Joint Venture is? San 00:16:10.080 --> 00:16:14.558 Pedro Water Resources Joint Venture is a joint venture 00:16:14.788 --> 00:16:18.869 of, I'd have to get the chart to look at it. Of 00:16:19.500 --> 00:16:23.759 two companies that, that I do own and control. One 00:16:23.769 --> 00:16:32.229 being a LLC and the other being a corporation, I think. 00:16:32.599 --> 00:16:35.940 And has that entity San Pedro Water Resources ever 00:16:35.950 --> 00:16:41.599 gone by any other name? No. Which public 00:16:41.609 --> 00:16:44.710 water systems does San Pedro Water Resources currently 00:16:44.719 --> 00:16:50.519 serve? It serves San Pedro Village. Does it serve any 00:16:50.529 --> 00:16:54.729 other public water systems? No. Who, what are the names 00:16:54.739 --> 00:16:59.219 of the clients of San Pedro Water Resources? Blue Cereus. Are there 00:16:59.229 --> 00:17:00.719 any other clients? No. 00:17:02.450 --> 00:17:04.459 Can you give me a brief description of what Segura 00:17:04.469 --> 00:17:10.420 Water Company is? Segura Water Company is an LLC owned 00:17:10.430 --> 00:17:15.838 by Dina Robinson Ferguson and myself. Okay. What position 00:17:15.848 --> 00:17:18.219 if any do you presently hold at Seguro Water Company? 00:17:18.229 --> 00:17:20.779 Vice President. How long have you held that position? 00:17:23.718 --> 00:17:29.378 Couple of years. Okay. What about from 2009 to 2014, 00:17:29.388 --> 00:17:31.708 did you still hold the title of Vice President or did 00:17:31.718 --> 00:17:33.448 you have a different role? I think I might have been 00:17:33.458 --> 00:17:36.269 President. I mean, that's a good while back. I can't 00:17:36.278 --> 00:17:39.189 remember. Okay. I'm going to try to get through these 00:17:39.199 --> 00:17:41.199 questions as quickly as possible. And make sure I'm 00:17:41.209 --> 00:17:43.719 responsive and responsible with everybody's time here 00:17:43.729 --> 00:17:46.180 today. As hearing me speak for five minutes is enough 00:17:46.189 --> 00:17:48.739 for a lifetime. But let's get the big question out 00:17:48.750 --> 00:17:51.979 of the way first. As we sit here today March 21, 00:17:51.989 --> 00:17:55.449 2024, is there currently a written contract between 00:17:55.459 --> 00:17:58.519 Blue Cereus, LLC and San Pedro Water Resources Joint 00:17:58.529 --> 00:18:01.430 Venture. Concerning the provision of wholesale water 00:18:01.439 --> 00:18:05.108 to Blue Cereus. No, there is no contract. Has there 00:18:05.118 --> 00:18:09.880 ever been a written contract? The original contract 00:18:09.890 --> 00:18:17.390 written 2009, expired in 2014. And then that's the only 00:18:17.400 --> 00:18:21.539 written contract we've ever had. Okay. Well, let's go 00:18:21.549 --> 00:18:23.000 ahead and talk about those exhibits. 00:18:25.019 --> 00:18:28.568 I'm going to present to you copies of Exhibits 14 and 00:18:28.578 --> 00:18:31.219 15. These are Commission Staff's Exhibits 14 and 15. 00:18:34.588 --> 00:18:37.858 All right. Can you tell the court what you were just 00:18:37.868 --> 00:18:42.640 handled? Yes, I was handed Exhibit 14, Agreement to 00:18:42.650 --> 00:18:45.368 Sell and Purchase Water between Seguro Water Company, 00:18:45.380 --> 00:18:50.588 LLC and Blue Cereus, LLC. And I believe you were handed the 00:18:50.598 --> 00:18:53.368 other one, what's that other one? Yes sir. What's Exhibit 15th, Agreement to Sell and 00:18:53.380 --> 00:18:56.670 Purchase Water between San Pedro Canyon Water Resources 00:18:56.890 --> 00:19:01.088 and Blue Cereus, LLC? Okay. And are these the two contracts 00:19:01.098 --> 00:19:03.259 you were just referring to in your previous testimony? 00:19:03.539 --> 00:19:06.699 Yes, it is. Okay. Go ahead and take a real quick moment 00:19:06.709 --> 00:19:07.930 to just scan through it. 00:19:11.650 --> 00:19:16.670 Let me know if you believe, let's focus on. I believe 00:19:16.680 --> 00:19:20.420 it's going to be Exhibit No. 15, which is San Pedro. 00:19:21.009 --> 00:19:25.439 Let's tell me if you believe that that is a complete 00:19:25.449 --> 00:19:29.279 record of the agreement between the parties? Yes, it 00:19:29.289 --> 00:19:29.809 is. 00:19:31.519 --> 00:19:33.689 If you'll notice on signature 00:19:35.299 --> 00:19:41.500 Mr. Hall had permission to sign my name Okay. Well, thank 00:19:41.509 --> 00:19:45.719 you for that clarification. Here, when you take a look 00:19:45.729 --> 00:19:47.739 at both of these contracts. Would you agree with me 00:19:47.750 --> 00:19:52.848 that they are largely identical? Yes. Ok. And apart 00:19:52.858 --> 00:19:55.140 from the name of the wholesale entity and the date 00:19:55.259 --> 00:19:58.259 it was, these contracts were signed. Is there a difference 00:19:58.269 --> 00:20:01.739 in the rate of water for a base rate or a volumetric 00:20:01.750 --> 00:20:07.469 rate in these contracts? I believe so. I'd have to 00:20:07.479 --> 00:20:10.318 look at the contracts and reread them they're old. 00:20:20.430 --> 00:20:27.239 Let's see water. Yes, yes. Ok. Let's go ahead and focus 00:20:27.250 --> 00:20:29.618 on Exhibit 15 for now. I believe you may have already 00:20:29.630 --> 00:20:32.430 testified to this. But can you just confirm for the 00:20:32.439 --> 00:20:37.559 court, when did this contract expire? This contract 00:20:37.568 --> 00:20:38.719 expired, 00:20:41.618 --> 00:20:44.809 expiration date I think in 2014. 00:20:53.699 --> 00:20:57.098 Term of contract effective date. 00:21:03.368 --> 00:21:09.630 Yes. This uh contract expired 11:59, December 31, 2014. 00:21:10.650 --> 00:21:12.618 Since we're looking at that same general section. I 00:21:12.630 --> 00:21:16.140 believe that's Article 4 of the Exhibit No. 15 00:21:16.150 --> 00:21:18.338 there. Can you also tell me if there is a provision 00:21:18.348 --> 00:21:20.489 that would have permitted the parties to extend the 00:21:20.500 --> 00:21:21.739 term of this contract? 00:21:35.299 --> 00:21:38.910 I don't see a section that extended it. Okay. Let me 00:21:38.920 --> 00:21:42.459 rephrase the question. If you take a look at Article 00:21:42.529 --> 00:21:47.150 4, Section 4.1, Subpart C-Data termination and Renewal. 00:21:48.049 --> 00:21:51.848 Does this contract permit the parties to upon mutual 00:21:51.858 --> 00:21:54.799 agreement, extend the terms for a length of time? 00:21:56.660 --> 00:21:59.500 However, the parties may therefore renew this agreement 00:21:59.509 --> 00:22:03.729 for a subsequent 5 years by mutual consent executed 00:22:03.739 --> 00:22:07.160 in writing. At least 30 days prior to the expiration 00:22:07.420 --> 00:22:10.539 of this agreement. To your knowledge, did either party 00:22:10.549 --> 00:22:13.680 seek to extend the contract by reaching mutual consent 00:22:13.689 --> 00:22:15.880 and reducing that consent to writing? No. 00:22:19.170 --> 00:22:23.078 All right. Do you know if the 2009 contract discusses 00:22:23.088 --> 00:22:24.799 how payment disputes would be addressed? 00:22:33.309 --> 00:22:37.108 Section 3.4, in the event any controversy between the 00:22:37.118 --> 00:22:40.420 two parties. Payment of money under this article, Blue 00:22:40.430 --> 00:22:43.670 Cereus shall make payment in full as billed by San Pedro 00:22:43.680 --> 00:22:46.739 Water Resources. And shall identify in writing the portion 00:22:46.750 --> 00:22:49.910 of the payment that it disputes. Ok. Go ahead and keep 00:22:49.920 --> 00:22:52.150 your finger on that section for right now. But I'm 00:22:52.160 --> 00:22:54.430 going to ask you one more question about this 2009 00:22:54.439 --> 00:22:59.479 contract before we go on. Did the 2009 contract specify 00:22:59.489 --> 00:23:03.420 average maximums for annual delivery of water that 00:23:03.430 --> 00:23:06.239 Blue Cereus could obtain through this agreement with 00:23:06.250 --> 00:23:07.598 San Pedro Water Resources. 00:23:14.920 --> 00:23:20.059 I think it does. I would direct your attention to Article 00:23:20.068 --> 00:23:21.779 2, you may find the answer there. 00:23:27.699 --> 00:23:31.118 Okay. Requirements, okay. The maximum delivery 00:23:32.939 --> 00:23:37.539 shall not exceed 60,000 gallons. Monthly delivery of 00:23:37.549 --> 00:23:40.910 2 million gallons and not to exceed 24 million gallons 00:23:40.920 --> 00:23:47.969 a year. Ok. And did this contract contain or concern, 00:23:47.979 --> 00:23:51.348 include perhaps minimum and volumetric water rates? 00:23:52.969 --> 00:23:56.068 Yes, it did. And what was the base rate? 00:24:00.259 --> 00:24:04.338 Monthly minimum charge for zero gallons would be $1,100. 00:24:04.430 --> 00:24:09.239 Okay. I'm gonna go ahead and hand you Exhibits 18 and 00:24:09.250 --> 00:24:12.949 7. But as I said, go ahead and keep a, keep a 00:24:12.959 --> 00:24:16.279 finger on, on that contract still. And 00:24:24.400 --> 00:24:26.309 can you please tell the court where you're just handed? 00:24:26.608 --> 00:24:31.279 Exhibit 7, Blue Cereus' August 2018 Water Bill 00:24:31.289 --> 00:24:36.029 from San Pedro Water Resources J.V. In Exhibit 18, June 00:24:36.039 --> 00:24:41.529 1, 2018, Notice of Default and Notice of Termination. 00:24:41.588 --> 00:24:43.479 Let's go ahead and start with that one. Let's go ahead 00:24:43.489 --> 00:24:46.750 and start with No. 18. Can you briefly summarize 00:24:46.759 --> 00:24:49.660 the purpose of this letter? The purpose of this letter 00:24:49.670 --> 00:24:55.519 was, we were going on the basis of there was a no 00:24:55.529 --> 00:24:58.969 written contract. So we were going on the basis of 00:24:59.170 --> 00:25:06.729 of uh oral contracts. So this is the termination of 00:25:06.739 --> 00:25:10.779 any and all contracts with Blue Cereus. 00:25:12.289 --> 00:25:16.009 Ok. And why was San Pedro Water Resources terminating 00:25:16.019 --> 00:25:21.209 all contracts oral or otherwise? We couldn't come to agreement 00:25:21.910 --> 00:25:24.380 in a written contract. 00:25:26.209 --> 00:25:29.489 Okay. Was there any concern about the past due balances? 00:25:29.769 --> 00:25:31.380 Yes, there was but. 00:25:32.900 --> 00:25:37.219 Yes, there was. Okay. I believe that this version here 00:25:37.229 --> 00:25:41.140 has a particular page flagged, I believe it's Attachment 00:25:41.150 --> 00:25:43.900 B. Can you describe to the court what Attachment B 00:25:43.910 --> 00:25:45.709 is to Exhibit 18? 00:25:52.439 --> 00:25:56.259 It, it shows the balance. Let's see Attachment B you say? 00:25:56.269 --> 00:25:57.380 Correct. Okay. 00:26:03.259 --> 00:26:03.949 Yes, okay. 00:26:05.858 --> 00:26:08.199 Yes, it shows the balance due. 00:26:10.949 --> 00:26:14.459 Ok. And what was the amount of the past due balance 00:26:14.469 --> 00:26:17.039 in the last entry on that exhibit? The last 00:26:24.689 --> 00:26:31.858 entry is, as of the last date on this is April 2018. For the 00:26:31.868 --> 00:26:38.338 balance due of $39,419.54. What's the first date on 00:26:38.348 --> 00:26:42.989 that list? First date on this list would be January 00:26:44.078 --> 00:26:49.640 2014. And was that during the contract term for Exhibit 00:26:49.650 --> 00:26:51.289 No. 15 that we just looked at? 00:26:54.009 --> 00:26:57.059 18. I'm, I'm sorry. Let me rephrase that question. Were any 00:26:57.068 --> 00:27:00.219 of those dates included on Attachment B on Exhibit 00:27:00.229 --> 00:27:04.509 18 within the contract term. For the written contract 00:27:04.519 --> 00:27:07.358 that you testified as the only written contract between 00:27:07.368 --> 00:27:12.299 San Pedro Water Resources and Blue Cereus? Yes. Ok. How 00:27:12.309 --> 00:27:15.568 many months? I would have to count them. 00:27:18.930 --> 00:27:24.108 January 14 to April 18. My math is right, that's 00:27:24.118 --> 00:27:29.439 four years and four months. Well let me just clarify 00:27:29.449 --> 00:27:32.618 during the written period. The written period expired 00:27:32.630 --> 00:27:36.799 on, I believe you testified December 31, 2014. Okay, 00:27:36.809 --> 00:27:46.068 December 31, 14 would be $11,006.85. And I believe 00:27:46.078 --> 00:27:49.900 you testified that or testified that there was a mechanism 00:27:49.910 --> 00:27:52.150 by which payment disputes would be handled in the written 00:27:52.160 --> 00:27:52.650 contract? 00:27:54.400 --> 00:27:59.338 Yes. Based on the exhibit you have there. Did Blue Cereus 00:27:59.630 --> 00:28:03.098 follow the terms of the written contract, pursuant to 00:28:03.108 --> 00:28:06.009 the payment disputes section and the 2009 contract? 00:28:07.269 --> 00:28:08.640 No. Ok. 00:28:10.449 --> 00:28:13.608 Now go ahead and take a look at Exhibit No. 7. 00:28:19.838 --> 00:28:23.779 Is this largely the same as what we saw in Attachment 00:28:23.789 --> 00:28:24.059 B? 00:28:30.118 --> 00:28:34.900 Yes. Okay. The first portion though, does it provide 00:28:34.910 --> 00:28:40.479 a matrix if you will. That has the breakdown for how 00:28:40.489 --> 00:28:43.598 each monthly bill was charged? Yes, it does. Ok. 00:28:48.279 --> 00:28:50.939 Has Blue Cereus resolved its past due balance with San 00:28:50.949 --> 00:28:52.959 Pedro Water Resources for the provision of wholesale 00:28:52.969 --> 00:28:55.660 water as identified in either of these exhibits? No 00:28:57.939 --> 00:29:02.969 Do you have a number uh, that uh remains in arrears 00:29:02.979 --> 00:29:03.959 by Blue Cereus? 00:29:05.858 --> 00:29:07.539 Yes. What is that number? 00:29:17.828 --> 00:29:21.180 That would be due through July of '18. That's the last 00:29:21.189 --> 00:29:28.890 that I have here. Would be, let me see. San Pedro. Yes, $48,527.18 00:29:29.539 --> 00:29:33.328 Ok. I'm gonna hand you another exhibit. This is Respondent's 00:29:33.338 --> 00:29:34.170 Exhibit 1. 00:29:37.049 --> 00:29:39.699 Have you seen this document before? Yes. Can you please 00:29:39.709 --> 00:29:42.848 identify this document? Yes, this is an agreement in 00:29:42.858 --> 00:29:49.368 principle. From a mediation of June the 3rd 2022. 00:29:50.088 --> 00:29:50.509 Ok. 00:29:52.439 --> 00:29:55.630 And you'll see in this document that there are some 00:29:55.949 --> 00:29:58.750 responsibilities and requirements of each party. Based 00:29:58.759 --> 00:30:01.809 on this document, what was expected or required of 00:30:01.818 --> 00:30:04.140 San Pedro Water Resources that is? 00:30:08.000 --> 00:30:16.618 We were to, to submit a SDM application to transfer 00:30:16.630 --> 00:30:18.400 to swap these systems. 00:30:21.719 --> 00:30:26.199 Well, were you required to submit an STM or Blue Cereus? No. 00:30:27.430 --> 00:30:30.469 Blue, Blue Cereus Okay. What were the obligations of the wholesalers in 00:30:30.779 --> 00:30:31.578 this document? 00:30:43.939 --> 00:30:47.029 Our obligations, the first thing would be that we would 00:30:47.039 --> 00:30:51.199 have to have a complete application. 00:30:53.140 --> 00:30:58.789 To from Blue Cereus so that we could submit that 00:30:58.818 --> 00:31:03.009 to the one of the agencies. I don't know if it was 00:31:03.019 --> 00:31:06.459 the PUC or the TCEQ. But we would have to 00:31:06.469 --> 00:31:11.719 have that complete in order to move forward. 00:31:13.930 --> 00:31:18.000 Did either you as individually or as a representative 00:31:18.009 --> 00:31:22.150 of San Pedro Water Resources ever receive a draft version 00:31:22.160 --> 00:31:25.479 of the STM? We received a draft 00:31:26.989 --> 00:31:31.799 from Mr. Hall representing Blue Cereus, but the draft 00:31:31.809 --> 00:31:36.039 was incomplete. It did not have the income numbers 00:31:36.049 --> 00:31:40.259 on it. Did you advise Blue Cereus that the draft STM was 00:31:40.269 --> 00:31:40.759 incomplete? 00:31:44.689 --> 00:31:48.380 I can't remember, I think so. Ok. 00:31:49.969 --> 00:31:54.078 Did Blue Cereus ever make the incomplete STM complete? 00:31:56.019 --> 00:31:59.689 No. Did San Pedro Water Resources or Blue Cereus ever submit 00:31:59.699 --> 00:32:03.959 the draft STM to the PUC for review? No. You've had 00:32:03.969 --> 00:32:06.130 a chance to take a look at this agreement in principle. 00:32:06.140 --> 00:32:08.519 Does this agreement in principle concern the purchase 00:32:08.529 --> 00:32:12.729 of wholesale water? No. Did San Pedro Water Resources 00:32:12.739 --> 00:32:14.949 enter into this agreement in principle with the intent 00:32:14.959 --> 00:32:17.539 that this document serve as a contract for the provision 00:32:17.549 --> 00:32:20.568 of wholesale water from San Pedro Water Resources to 00:32:20.578 --> 00:32:21.818 Blue Cereus? No. 00:32:23.420 --> 00:32:27.880 Is this agreement in principle still valid? No. Why? 00:32:28.509 --> 00:32:34.108 Because of No. 4 Blue Cereus and water wholesalers 00:32:34.118 --> 00:32:36.809 agree to work together. To ensure a smooth transfer 00:32:36.818 --> 00:32:41.269 of this amendment or a new CCN for both systems. Okay. 00:32:41.289 --> 00:32:45.209 And that's the reason why it's, it's not valid? Was one 00:32:45.219 --> 00:32:48.529 and then number 15 also. The parties of the agreement 00:32:48.539 --> 00:32:51.338 of this document represented the entire agreement between 00:32:51.348 --> 00:32:54.239 the parties. There are no other verbal contract, verbal 00:32:54.250 --> 00:32:57.660 or written agreements between them to mock that, modify 00:32:57.670 --> 00:33:00.559 this agreement. And each party will act diligently and 00:33:00.568 --> 00:33:04.529 in good faith included, but not limited to. Without 00:33:04.539 --> 00:33:08.108 further consideration, executing and delivering additional 00:33:08.118 --> 00:33:11.920 documents. And taking such action that will be reasonably 00:33:11.989 --> 00:33:14.509 necessary to carry out the purpose and intent of this 00:33:14.519 --> 00:33:18.809 agreement, and to fulfill the obligations of the respective 00:33:18.818 --> 00:33:22.868 parties. And San Pedro Water Resources, do you feel 00:33:22.880 --> 00:33:25.449 that you acted diligently pursuant to this agreement? 00:33:26.608 --> 00:33:27.068 Yes. 00:33:28.729 --> 00:33:32.269 Can you tell me why you feel Blue Cereus did not? Because 00:33:32.279 --> 00:33:37.588 we didn't get the, the complete application from Blue 00:33:38.029 --> 00:33:43.848 Cereus and Blue Cereus did not act in good faith. Our, this agreement 00:33:43.858 --> 00:33:49.209 was done in June and here it is June of 2022 and 00:33:49.219 --> 00:33:56.420 here it is March 21, 2024. When did San Pedro Water 00:33:56.430 --> 00:33:58.729 Resources withdraw from this agreement? 00:34:01.019 --> 00:34:08.929 I think it was in November of 2023. Like you, my math 00:34:08.938 --> 00:34:11.179 is also bad. I got into law because I can't count. 00:34:11.188 --> 00:34:13.199 But I think I can count the number of months. I believe 00:34:13.208 --> 00:34:16.739 that would be 17 months between the adoption and termination. 00:34:16.750 --> 00:34:19.699 Is that your memory as well? Yes. Okay. And I know I 00:34:19.708 --> 00:34:22.510 broke the cardinal rule of saying I had no more questions 00:34:22.519 --> 00:34:24.360 over exhibits. But I do have one last one 00:34:26.309 --> 00:34:27.918 and I'm going to hand you this last exhibit. Here. 00:34:30.300 --> 00:34:32.179 Can you identify the document I just placed in front 00:34:32.188 --> 00:34:35.179 of you? Yes. This is a letter from Segura Water Company 00:34:35.188 --> 00:34:39.559 and San Pedro Water Resources J.V. Okay. I want to focus 00:34:39.570 --> 00:34:42.918 on the closing of this letter. And if you would, if 00:34:42.929 --> 00:34:45.760 you could read the last paragraph for me? The last 00:34:45.769 --> 00:34:50.820 paragraph of this, this letter uh states. Wholesalers 00:34:50.829 --> 00:34:53.418 have made a six year effort to establish a contract 00:34:53.429 --> 00:34:56.458 with Blue Cereus for the sale of drinking water. That effort 00:34:56.469 --> 00:35:00.949 has not resulted in any, in any constructive progress 00:35:00.958 --> 00:35:04.949 towards establishing a contract. As a result, the wholesalers 00:35:04.958 --> 00:35:09.250 will not be able to continue to provide drinking water 00:35:09.260 --> 00:35:13.168 to Blue Cereus. What's the date on this, on this document? 00:35:13.438 --> 00:35:17.148 The date on this, of this document is January the 8th 00:35:17.610 --> 00:35:19.389 2024. Okay. 00:35:20.969 --> 00:35:23.519 There's a couple of other dates in there. I believe 00:35:23.530 --> 00:35:27.579 you um identified January 15, 2024. Can you explain 00:35:27.719 --> 00:35:29.300 why that date is in there? 00:35:31.429 --> 00:35:33.280 Would you repeat the question please, sir? Sure. Let 00:35:33.289 --> 00:35:36.159 me specify that better. I believe you will see kind 00:35:36.168 --> 00:35:39.219 of in the middle of that exhibit. There is a reference 00:35:39.228 --> 00:35:45.188 to a January 15, 2024 date. What event are you referencing 00:35:45.199 --> 00:35:49.659 in this letter on January 15th? On January the 15th? 00:35:52.840 --> 00:35:57.489 Ok. Yes. What we're, I'll read the paragraph. Since 00:35:57.500 --> 00:36:01.500 the effective date of the TCEQ order. Wholesalers anticipate, 00:36:01.570 --> 00:36:05.219 anticipated Blue Cereus would reach out for negotiations. 00:36:05.300 --> 00:36:07.820 To come to agreement that would provide, that would 00:36:07.829 --> 00:36:10.849 provide continuous and reliable water service to the 00:36:10.860 --> 00:36:11.708 customers of Blue Cereus. 00:36:13.260 --> 00:36:17.610 No personnel, executives or legal counsel representing 00:36:17.619 --> 00:36:21.938 Blue Cereus made efforts to open negotiation. The deadline 00:36:21.949 --> 00:36:26.280 for Blue Cereus to acquire a contract by order is January 00:36:26.289 --> 00:36:31.929 15, 2024. So taking these last two paragraphs in 00:36:31.938 --> 00:36:37.438 combination. If a temporary manager had not been appointed 00:36:37.500 --> 00:36:39.969 on February 1, 2024. 00:36:41.599 --> 00:36:44.188 Would San Pedro Water Resources have turned off the 00:36:44.199 --> 00:36:48.320 water to Blue Cereus? I would say the water would be 00:36:48.329 --> 00:36:49.898 in peril. Okay. 00:36:52.688 --> 00:36:55.929 Thank you. I'll pass the witness. Mr. Floriani, you may 00:36:55.938 --> 00:36:57.228 proceed. Thank you. 00:37:01.090 --> 00:37:04.739 Now Mr. Ferguson. You're testifying on behalf of both 00:37:04.750 --> 00:37:08.389 San Pedro Water Resources Joint Venture and Segura 00:37:08.639 --> 00:37:14.889 Water Company LLC, correct? Yes, I am. Now the, would 00:37:14.898 --> 00:37:18.750 you agree that historically. Those two companies have 00:37:18.760 --> 00:37:22.469 provided potable water to Blue Cereus for resale to 00:37:22.478 --> 00:37:26.168 retail customers? Yes. And that the resale of those 00:37:26.179 --> 00:37:29.648 takes place in the La Coletta Estate subdivision and 00:37:29.659 --> 00:37:33.938 the San Pedro Village subdivision, correct? Yes. And 00:37:34.000 --> 00:37:38.458 the there's been as you've outlined. A long-standing 00:37:38.469 --> 00:37:41.869 dispute between your two companies and Blue Cereus LLC, 00:37:41.878 --> 00:37:47.079 correct? Correct. And in fact, litigation was undertaken 00:37:47.699 --> 00:37:52.139 and regarding your attempts to collect those amounts. 00:37:52.148 --> 00:37:55.300 That you allege were past due under the prior exhibit, 00:37:55.309 --> 00:37:59.969 correct? Correct. And is it true that after the termination 00:37:59.978 --> 00:38:03.099 of the written contract or after it expired under its 00:38:03.110 --> 00:38:06.398 terms. That you entered into a series of oral contracts 00:38:06.409 --> 00:38:09.659 with Blue Cereus, LLC to provide potable water for resale? 00:38:11.750 --> 00:38:16.050 That was Mr. Hall's uh interpretation. And, 00:38:18.039 --> 00:38:21.059 but after the, the written contract expired under 00:38:21.070 --> 00:38:23.570 its terms. You continued to provide the water to Blue 00:38:23.579 --> 00:38:28.329 Cereus LLC, correct? Yes, for the customers of La Coletta 00:38:28.340 --> 00:38:32.458 Estates and San Pedro Village. But, but you were paid 00:38:32.469 --> 00:38:37.019 by Blue Cereus LLC, correct? Correct. And is it true that 00:38:37.030 --> 00:38:39.909 they paid you monthly for the water you provided, even 00:38:39.918 --> 00:38:41.789 after the written contract expired? 00:38:43.438 --> 00:38:46.389 Yes, but not the same amount every month according 00:38:46.398 --> 00:38:49.289 to the contract. And is it true you didn't issue invoices 00:38:49.300 --> 00:38:52.349 to Blue Cereus, LLC after the contract for the amounts that 00:38:52.360 --> 00:38:55.039 you were alleged to? And that is true. 00:38:56.668 --> 00:38:59.360 And is it true that even during the contract period 00:38:59.369 --> 00:39:02.708 you didn't issue invoices to Blue Cereus, LLC? That is 00:39:03.360 --> 00:39:08.659 true. Now you in Blue Cereus, LLC appeared under Docket No. 00:39:08.739 --> 00:39:12.139 502139, correct.? 00:39:16.128 --> 00:39:20.599 Which document, which docket is that? Is that the, all these 00:39:20.610 --> 00:39:24.668 numbers confuse me? Is that SOAH Order No. 12? That 00:39:24.679 --> 00:39:29.570 was part of it? Okay, yes. And you agree that your disputes 00:39:29.579 --> 00:39:33.239 regarding past amounts due and rates were brought before 00:39:33.418 --> 00:39:38.360 SOAH? Correct. And that SOAH issued an order on December 00:39:38.369 --> 00:39:43.409 10, 2021, which determine the exact amount that Blue 00:39:43.418 --> 00:39:46.760 Cereus, LLC was to pay your two companies for the potable 00:39:46.769 --> 00:39:51.969 water, correct? On an interim basis. But the SOAH order 00:39:51.978 --> 00:39:55.469 did specify the exact amounts that were to be paid, 00:39:55.478 --> 00:40:00.110 correct? Correct. And is it your testimony that under 00:40:00.119 --> 00:40:03.478 that SOAH order you have no duty to provide water, 00:40:03.648 --> 00:40:05.958 potable water to Blue Cereus LLC? 00:40:08.909 --> 00:40:11.570 Would you rephrase the question? Is it your testimony 00:40:11.579 --> 00:40:15.239 that under SOAH Order 12, that you have no duty to 00:40:15.250 --> 00:40:17.780 provide water to Blue Cereus, LLC? 00:40:19.978 --> 00:40:22.688 That was an interim rate contract. And 00:40:24.500 --> 00:40:27.579 that was issued, what was the date that was issued? 00:40:27.590 --> 00:40:33.590 December 10, 2021. 2021, right. And that obligated Blue Cereus 00:40:33.599 --> 00:40:35.949 to pay a specific amount for the water you provided, 00:40:35.958 --> 00:40:38.708 correct? Correct. And for you to provide the water 00:40:38.719 --> 00:40:42.849 to Blue Cereus, correct? Correct. And about six months 00:40:42.860 --> 00:40:46.188 after that order was entered, you went through the 00:40:46.199 --> 00:40:49.000 mediation process with the State Office of Administrative 00:40:49.010 --> 00:40:52.099 Hearings. And you were represented by counsel at that 00:40:52.110 --> 00:40:54.550 time, correct? Correct. And when I say you, I'm talking 00:40:54.559 --> 00:40:57.188 about the two businesses that you're representing today, 00:40:57.199 --> 00:41:00.099 correct? Correct. And your counsel at that time was 00:41:00.110 --> 00:41:04.780 Selena Romero. Correct. And you entered, you mediated on June 00:41:04.789 --> 00:41:08.860 3, 2022, correct? Correct. And you entered into a 00:41:08.869 --> 00:41:13.909 written agreement on the 17th day of June 2022 memorializing 00:41:13.918 --> 00:41:15.320 your mediation agreement, correct? 00:41:17.619 --> 00:41:22.309 Memorializing which agreement? I'll refer you to Exhibit 00:41:22.320 --> 00:41:24.610 1 that you have in front of you. Which is entitled 00:41:24.619 --> 00:41:27.648 agreement in principle between Blue Cereus and Wholesalers. 00:41:34.688 --> 00:41:37.780 Okay, now I'm looking at the agreement. Would you look 00:41:37.789 --> 00:41:41.610 at page two. And does it say that it's signed and agreed 00:41:41.619 --> 00:41:44.469 to on the 17th day of June 2022? 00:41:47.349 --> 00:41:49.809 Yes, it is signed that day. And is it true that the 00:41:49.820 --> 00:41:53.708 mediators issued a mediation report to SOAH. Saying 00:41:53.719 --> 00:41:55.849 that the case was settled and that you had reached 00:41:55.860 --> 00:41:58.969 an agreement? This agreement was. No, that's not the 00:41:58.978 --> 00:42:01.500 question. Okay, ask me again. I'm sorry. Is it true, the 00:42:01.510 --> 00:42:04.619 mediators filed a report with SOAH saying you completed 00:42:04.628 --> 00:42:06.260 mediation and reached an agreement? 00:42:08.628 --> 00:42:13.389 I don't know that answer. Now part of this agreement 00:42:13.398 --> 00:42:16.728 was that well, the fundamental part of this agreement. 00:42:16.739 --> 00:42:20.449 Was that you would have no if, if effectuated. You 00:42:20.458 --> 00:42:22.619 would never have another contract with Blue Cereus 00:42:22.628 --> 00:42:23.409 again, correct? 00:42:25.869 --> 00:42:30.938 Provided we went through these uh steps. Right. And 00:42:30.949 --> 00:42:34.628 this was a step by step process. Sure. And if you'd gone 00:42:34.639 --> 00:42:40.458 through the process, ultimately you would have turned 00:42:40.469 --> 00:42:44.958 over the assets of Seguro Water Company to Blue Cereus. 00:42:45.179 --> 00:42:47.668 So that they could provide the potable water directly 00:42:47.679 --> 00:42:51.668 to the customers, correct? Of which system? From your 00:42:51.840 --> 00:42:56.168 Seguro system, San Pedro Village. Correct. And you 00:42:56.179 --> 00:42:59.019 then also in exchange for that. Would have received 00:42:59.289 --> 00:43:03.599 the retail customers of Blue Cereus, LLC for the other 00:43:03.610 --> 00:43:07.079 water system, correct? Correct. So you would, if this 00:43:07.090 --> 00:43:09.539 was effectuated you would never be in business again 00:43:09.550 --> 00:43:12.699 directly with Blue Cereus LLC, correct? Correct. And 00:43:12.708 --> 00:43:15.289 then therefore, you would never have to have any contracts 00:43:15.300 --> 00:43:18.260 with them ever again, correct? Correct. And your testimony 00:43:18.269 --> 00:43:26.159 is that in November of 2023 you unilaterally declared 00:43:26.168 --> 00:43:29.809 that this mediation agreement was void, correct? Yes 00:43:29.820 --> 00:43:33.679 I did. And it was void as of November of 2023, correct? 00:43:33.969 --> 00:43:36.929 Correct. Is there a specific event in November 2023 00:43:36.938 --> 00:43:39.019 that required you to say that it was a void? 00:43:40.728 --> 00:43:45.550 There were many events, yes. In November of 2023? No, 00:43:45.559 --> 00:43:48.849 no. Not in November of 23. Why did, why in November 00:43:48.860 --> 00:43:52.519 of 23, did you declare it void? Because we went through 00:43:52.530 --> 00:43:58.418 some things at, at Seguro that was not operate and 00:43:58.429 --> 00:44:07.510 maintain. In section of three, and also we felt, felt. 00:44:07.530 --> 00:44:12.139 We had reached out to Mr. Hall over some 00:44:12.179 --> 00:44:15.438 down hole pump issues that were capital improvements. 00:44:15.958 --> 00:44:22.360 And there was no agreement, no back and forth of what 00:44:22.369 --> 00:44:26.539 we do about that. So in turn to, to provide water for 00:44:26.550 --> 00:44:32.208 the customers of Blue Cereus. We went in and 00:44:33.610 --> 00:44:37.228 reinstituted the wells. Because the well pumps down 00:44:37.289 --> 00:44:42.059 hole went, went out. And Mr. Hall said that was our issue, 00:44:42.070 --> 00:44:48.878 not his. And uh all, all communication with him was 00:44:48.889 --> 00:44:50.769 referred to his 00:44:52.668 --> 00:44:56.728 lady that, that took care of it. I, I don't know what 00:44:56.739 --> 00:44:59.909 her. What her manager, office manager, whatever she 00:44:59.918 --> 00:45:03.769 was. So there was no, no more contact with Mr. Hall. 00:45:03.780 --> 00:45:08.550 That was uh so and we had been at this, this. Well 00:45:08.559 --> 00:45:11.019 again this, this document was written in June 3, 00:45:11.030 --> 00:45:16.090 '22 and now it's November '23. And we still don't have 00:45:16.099 --> 00:45:20.579 anything. Now after this agreement, you were continued 00:45:20.590 --> 00:45:23.289 to be represented by Selena Ramiro, correct? 00:45:25.739 --> 00:45:30.250 I think Ms. Romero. No, no. Well at some point after this 00:45:30.260 --> 00:45:32.699 agreement, you discharged her and hired Clint Buck 00:45:32.708 --> 00:45:35.360 to represent your company, correct? Yes, yes. Yes. And then, 00:45:35.510 --> 00:45:38.500 and then you also at some point discharged Mr. Buck 00:45:38.510 --> 00:45:41.409 and they're now proceeding pro se, correct? Correct. 00:45:42.039 --> 00:45:46.898 And has any prior fact ever determined this mediation 00:45:46.909 --> 00:45:49.179 agreement to be void or invalid? 00:45:52.909 --> 00:45:57.128 Redirect? You asked me to ask it again? Yes. No trier 00:45:57.139 --> 00:46:00.010 of fact has ever determined this mediation agreement 00:46:00.019 --> 00:46:01.849 to be invalid or void, correct? 00:46:04.030 --> 00:46:08.139 According to this agreement? When I say try our fact 00:46:08.148 --> 00:46:12.289 I mean, a court or Commission or an administrative 00:46:12.300 --> 00:46:16.389 authority? Let me rephrase it. It's your opinion this 00:46:16.398 --> 00:46:20.289 is void, correct? Yes. And it's the opinion of, of 00:46:20.300 --> 00:46:22.119 your wife that it's void, correct? 00:46:24.119 --> 00:46:27.739 You'd have to ask her, not me. And it calls, calls for speculation. His wife 00:46:28.530 --> 00:46:31.519 will testify, and she could provide that to you. Ok. This is you stating 00:46:31.530 --> 00:46:35.340 your opinion that Articles 4 and 15 have not been 00:46:35.349 --> 00:46:38.300 complied with by my client and it is thus void, correct? 00:46:38.800 --> 00:46:42.019 That is correct. But no trier fact has ever determined 00:46:42.030 --> 00:46:44.090 that there's been noncompliance, correct? 00:46:45.688 --> 00:46:49.188 I would think three, part of three. But if three the language 00:46:49.199 --> 00:46:51.309 is, is not clear. 00:46:54.000 --> 00:46:58.820 Now, you in the letter that was written by and signed 00:46:58.829 --> 00:47:01.898 by you on January 8. You said that you're not able 00:47:01.909 --> 00:47:04.139 to continue to provide drinking water to Blue Cereus, 00:47:04.148 --> 00:47:08.039 correct? Correct. And you understand that if the Public 00:47:08.050 --> 00:47:10.659 Utility Commission prevails in this hearing. That a 00:47:10.668 --> 00:47:13.260 temporary administrator will be appointed for Blue 00:47:13.539 --> 00:47:16.668 Cereus, correct? Correct. And that they would expect 00:47:16.679 --> 00:47:20.179 you to provide water to them for these retail customers, 00:47:20.188 --> 00:47:23.539 correct? Correct. And have you agreed to provide the 00:47:23.550 --> 00:47:27.260 water to the administrator, temporary administrator? 00:47:27.869 --> 00:47:32.050 Yes. Manager? And uh why would you agree to provide 00:47:32.059 --> 00:47:33.239 it to them and not to Blue Cereus? 00:47:36.320 --> 00:47:38.329 We have no long 00:47:41.059 --> 00:47:46.878 negotiation with them. We're under the purview, I would 00:47:46.889 --> 00:47:51.320 think of the PUC, state agency and we'll have rules 00:47:51.329 --> 00:47:55.978 to follow. And we feel like it is in the best interest 00:47:55.989 --> 00:47:59.840 of the customers and the best interest of the wholesalers. 00:47:59.849 --> 00:48:04.360 To continue, to provide service through the temporary 00:48:04.369 --> 00:48:09.659 manager. Because we will be under the purview and oversight 00:48:09.668 --> 00:48:13.800 of the PUC and along with the TCEQ. So do you 00:48:13.809 --> 00:48:16.699 agree that if the temporary manager is appointed, you'll 00:48:16.708 --> 00:48:19.250 have a duty to provide water to them for their retail 00:48:19.260 --> 00:48:24.349 customers? We are working on a contract with them as 00:48:24.360 --> 00:48:24.849 we speak. 00:48:26.579 --> 00:48:26.728 Um 00:48:28.829 --> 00:48:31.800 now there's been a temporary manager appointed in this 00:48:31.809 --> 00:48:35.800 case before, correct? Yes. And there's been two before, 00:48:35.809 --> 00:48:38.929 one of which was Lynn Sherman, correct. Correct. And 00:48:38.938 --> 00:48:41.409 did you cooperate with Mr. Sherman when he was the 00:48:41.418 --> 00:48:46.418 temporary manager of Blue Cereus? Yes, we did. Isn't 00:48:46.429 --> 00:48:48.978 it true that while he was temporary manager, you threatened 00:48:48.989 --> 00:48:51.378 to cut off the water supply to the retail customers? 00:48:52.500 --> 00:48:55.519 Yes, yes we did. Isn't it true that he filed a report 00:48:55.530 --> 00:48:58.659 saying that your actions were reprehensible? Sure, he 00:48:58.668 --> 00:49:03.739 did. We will, every time I would have to call to be 00:49:03.750 --> 00:49:08.570 paid, the PUC Staff. At that time, it was Elena Zermio 00:49:09.360 --> 00:49:13.500 to get a check. The for the system to be able 00:49:13.510 --> 00:49:18.659 to pay the utility bills and the operating expenses. 00:49:18.829 --> 00:49:24.260 So one morning we turned off the water. Missed the, we turned 00:49:24.269 --> 00:49:27.110 it off that morning, we turned it back on that afternoon. 00:49:27.119 --> 00:49:30.369 The PUC Staff said do you need any documents or 00:49:30.378 --> 00:49:33.039 anything like that? We just wanted to be paid on a 00:49:33.050 --> 00:49:37.458 regular basis from Mr. Sherman. That's all it was and 00:49:37.469 --> 00:49:40.030 it was just that one day. And the water went back on 00:49:40.039 --> 00:49:42.329 I think at 4:15 that afternoon. 00:49:44.539 --> 00:49:45.438 Pass the witness. 00:49:48.659 --> 00:49:52.039 Mr. Ferguson, I just have a couple more points of clarification. 00:49:53.239 --> 00:49:56.418 When I take a look at respondents exhibit number one. 00:49:58.610 --> 00:50:01.389 and I believe you just were asked some questions about 00:50:01.559 --> 00:50:04.989 assets that would be transferred from the wholesalers 00:50:05.090 --> 00:50:08.579 I believe Seguro. in exchange for a public water system 00:50:08.659 --> 00:50:10.789 from Blue Cereus, what was the name of that public 00:50:10.800 --> 00:50:11.429 water system? 00:50:13.260 --> 00:50:19.110 We would, we would surrender to Mr. Hall. The, the uh 00:50:19.119 --> 00:50:25.579 uh Seguro Water Systems. Now, it troubles me prepping 00:50:25.590 --> 00:50:28.070 for this case, looking at this document. 00:50:29.619 --> 00:50:33.360 Because the arguments I'm hearing suggest that as it 00:50:33.369 --> 00:50:36.159 stands right now these assets have already transferred. 00:50:37.000 --> 00:50:41.070 Do you presently have ownership and control of the 00:50:41.079 --> 00:50:44.239 San Pedro Village Public Water System. Yes, I do. Of 00:50:44.250 --> 00:50:45.619 the public water system? 00:50:47.489 --> 00:50:50.148 Let me rephrase the question. Do you presently as of 00:50:50.159 --> 00:50:54.780 March 21, 2024, have control of the asset formerly 00:50:54.789 --> 00:50:59.579 owned by Blue Cereus, San Pedro Village. Do you have control 00:50:59.590 --> 00:51:03.760 of that public water system? Yes. You have control? 00:51:04.079 --> 00:51:07.030 I have the, the. 00:51:08.889 --> 00:51:14.070 I have the, the uh the plants, both plants are under 00:51:14.079 --> 00:51:17.539 under my control. Ok. I think there's some confusion. 00:51:17.750 --> 00:51:20.550 And there's two similar names here. There are, there's 00:51:20.559 --> 00:51:25.610 the retail portion and then there's the wholesale portion. 00:51:25.619 --> 00:51:26.050 Correct. 00:51:27.849 --> 00:51:33.579 I control the wholesale uh, uh portions of uh San 00:51:33.719 --> 00:51:40.179 of San Pedro and the uh, uh Seguro. But as it stands 00:51:40.188 --> 00:51:42.829 right now, you do not control the retail side? No, 00:51:42.949 --> 00:51:45.878 no. I do not control the retail side of either system. 00:51:46.820 --> 00:51:49.539 Pass the witness. No further questions. Commissioners, do you 00:51:49.550 --> 00:51:50.708 have any questions? 00:51:55.639 --> 00:51:59.079 Mr. Ferguson, you're released and may step out. Quick 00:51:59.090 --> 00:52:01.668 reminder to not speak to anyone about this docket other 00:52:01.679 --> 00:52:04.519 than the attorneys. Until the conclusion of all testimony. 00:52:04.929 --> 00:52:06.659 Thank you for your time. Thank you. 00:52:09.398 --> 00:52:10.708 Do you want to grab Mrs. Ferguson? 00:52:43.898 --> 00:52:43.929 Okay. 00:52:48.119 --> 00:52:52.340 Counselors, before we call this witness. We're approaching 00:52:52.349 --> 00:52:56.550 close to an hour. Is this witness needed to offer anything 00:52:56.559 --> 00:52:59.969 further? Unfortunately yes. This witness is going 00:52:59.978 --> 00:53:02.809 to be necessary. I apologize for the lengthiness. 00:53:22.628 --> 00:53:25.438 Are we back on the record? Yes. Commission Staff, you 00:53:25.449 --> 00:53:26.050 may proceed. 00:53:28.159 --> 00:53:29.878 Perfect. Good morning Mrs. Ferguson. Can you please state your 00:53:29.889 --> 00:53:33.199 name for the record? My name is Dina Robinson Ferguson. 00:53:33.309 --> 00:53:37.320 And who is your current employer? I am self-employed. 00:53:37.719 --> 00:53:40.840 Do you have a current title or role at Seguro Water Company? 00:53:40.878 --> 00:53:46.039 Yes. What is that role? I am an Executive Officer of 00:53:46.070 --> 00:53:48.438 Segura and part Owner. Ok. And how long have you 00:53:48.449 --> 00:53:49.539 served in that capacity? 00:53:53.639 --> 00:53:57.030 Four or five years or so. Ok. Have you held any 00:53:57.039 --> 00:54:00.409 other position with Segura Water, that predates your 00:54:00.418 --> 00:54:03.539 current position? What positions were those? I was 00:54:03.550 --> 00:54:09.300 doing some contract work as an employee. Ok. And when 00:54:09.309 --> 00:54:12.809 did your time as a contract employee, when did that 00:54:12.820 --> 00:54:16.280 start? When I purchased part of the company. And when 00:54:16.289 --> 00:54:16.688 was that? 00:54:19.688 --> 00:54:23.599 I want to say it was probably around 2019, maybe '20. 00:54:23.610 --> 00:54:26.840 I don't, I don't recall exactly. And have you ever 00:54:26.849 --> 00:54:31.219 held a position at San Pedro Water Resources? I have 00:54:31.228 --> 00:54:35.550 provided administrative services as a contract employee 00:54:35.559 --> 00:54:41.030 also. Okay. I asked a similar question. As of today, March 00:54:41.039 --> 00:54:44.059 21st 2024, is there currently a written contract between 00:54:44.070 --> 00:54:46.949 Blue Cereus, LLC and Segura Water Company concerning 00:54:46.958 --> 00:54:50.019 the provision of wholesale water to Blue Cereus? No. Has 00:54:50.030 --> 00:54:54.039 there ever been a contract to that effect? Yes. 00:54:54.349 --> 00:54:56.039 Ok. I'm gonna hand you an exhibit. 00:55:00.159 --> 00:55:02.610 And what I've just handed over is Commission Staff 00:55:02.619 --> 00:55:05.519 Exhibit 14. I believe I've already provided opposing 00:55:05.530 --> 00:55:08.898 counsel a copy. Were you involved? Well first, can 00:55:08.909 --> 00:55:12.559 you please tell me what this exhibit is? This is a 00:55:12.590 --> 00:55:16.110 purchase contract as it's titled the Agreement to Sell 00:55:16.119 --> 00:55:18.918 and Purchase Water between Segura Water Company LLC 00:55:19.139 --> 00:55:22.469 and Blue Cereus, LLC. Now if I understand your previous 00:55:22.478 --> 00:55:24.639 testimony, you were not involved in the negotiations 00:55:24.648 --> 00:55:27.148 of this contract, but are you familiar with its terms? 00:55:27.500 --> 00:55:30.809 I was not involved and I am partially familiar with 00:55:30.820 --> 00:55:33.438 its terms as just a layman. I'm not an attorney. 00:55:36.590 --> 00:55:39.168 As a, as a layman but also as an executive of Segura 00:55:39.378 --> 00:55:42.469 Water. Is this contract still valid and binding against 00:55:42.478 --> 00:55:46.369 Segura Water? No, sir. And why is that? It expired 00:55:46.519 --> 00:55:51.228 on December 31, 2014. And the provisions that allowed 00:55:51.239 --> 00:55:54.679 for renewal or extension were never taken never, never 00:55:54.688 --> 00:55:58.579 happened to my knowledge. You are asking or answering 00:55:58.590 --> 00:56:00.219 my questions before I can ask them, I appreciate that. 00:56:00.228 --> 00:56:03.719 And so do the Commissioners. And so again, to your knowledge 00:56:03.728 --> 00:56:07.579 no one has ever moved to extend the term of this contract 00:56:07.938 --> 00:56:10.978 Not to my knowledge. I'm gonna hand you two more exhibits. 00:56:15.809 --> 00:56:20.030 I'm just handing you Exhibits 18 and 6. 00:56:22.628 --> 00:56:26.079 Can you please tell the court what you were just handed? 00:56:27.019 --> 00:56:30.179 Does it matter which one's 1st? Let's start with 18 and then 00:56:30.228 --> 00:56:35.829 go to 6. Exhibit 18 is titled June 1st 2018, Notice 00:56:35.840 --> 00:56:37.639 of Default and Notice of Termination. 00:56:39.219 --> 00:56:44.148 Ok, and Exhibit No. 6. Is titled Blue Cercus August 00:56:44.159 --> 00:56:48.289 2018 Water Bill from Segura Water Company LLC. Were 00:56:48.300 --> 00:56:52.418 you involved in the generation or the submission of 00:56:52.429 --> 00:56:53.418 Exhibit No. 18? 00:56:59.820 --> 00:57:07.679 Um, just probably as an ancillary person. At that 00:57:07.688 --> 00:57:10.969 time, I did not own or hold an executive office with 00:57:11.239 --> 00:57:14.539 Segura Water Company. Ok. Well, let's take a look at 00:57:14.550 --> 00:57:17.320 Exhibit 6. Then can you identify that document one 00:57:17.329 --> 00:57:21.840 more time? It's a water bill that was generated on 00:57:21.849 --> 00:57:28.030 or about August of 2018. Ok. And as of August 1st 2018 00:57:28.039 --> 00:57:30.458 what was the total past due balance allegedly owed 00:57:30.469 --> 00:57:37.860 by Blue Cereus to Segura? $117,498.22. Has Blue Cereus 00:57:37.878 --> 00:57:40.179 ever resolved this past due balance? 00:57:42.039 --> 00:57:46.059 No. Does this document identify a base rate? Yes. Ok. I 00:57:46.079 --> 00:57:48.840 want you to go ahead and take another peek back at 00:57:48.849 --> 00:57:51.269 what we previously talked about, Exhibit No. 14. 00:57:51.489 --> 00:57:54.789 Can you tell me if there are provisions concerning 00:57:54.800 --> 00:57:59.599 volumetric rates? Yes. Is there a base rate or a minimum 00:57:59.610 --> 00:58:04.750 monthly rate? Yes. Ok. And just for point of clarification, 00:58:06.010 --> 00:58:08.688 if Blue Cereus had to use zero gallons of water in, let's 00:58:08.699 --> 00:58:12.708 say March of 2014. What would they have been charged 00:58:12.719 --> 00:58:13.070 by Segura? 00:58:19.840 --> 00:58:23.019 Um in Exhibit 14, the contract to sell and purchase 00:58:23.030 --> 00:58:29.938 water. Um, item 3.02 identifies a monthly volumetric 00:58:29.949 --> 00:58:34.789 water rate. Um and that would be $3400 as a monthly 00:58:34.800 --> 00:58:38.250 minimum charge for zero gallons. To your knowledge, 00:58:38.260 --> 00:58:41.199 to your knowledge. Was there ever a month where Blue 00:58:41.208 --> 00:58:44.208 Cereus was only charged the minimum rate by Segura 00:58:44.260 --> 00:58:48.820 Water? Not as far as my knowledge, no. Go ahead and 00:58:48.829 --> 00:58:50.820 set that aside for one second. Let's take a look at 00:58:50.829 --> 00:58:52.619 Commission Staff Exhibit No. 13. 00:58:55.659 --> 00:58:57.639 And can you go ahead and identify that document, please? 00:58:58.579 --> 00:59:03.829 This is identified as in uh PUC docket 50239, SOAH 00:59:03.849 --> 00:59:08.599 order number 12. Now, if you would turn to, there's 00:59:08.610 --> 00:59:10.559 a couple of pages in front that are not numbered. But 00:59:10.570 --> 00:59:13.320 if you can turn to the numbered page three, there's 00:59:13.329 --> 00:59:16.478 a, a last paragraph there on SOAH Order 12. That begins 00:59:16.610 --> 00:59:20.309 lastly Blue Cereus and wholesalers. Uh could you read 00:59:20.320 --> 00:59:22.679 that contract, uh that provision real quick? 00:59:25.260 --> 00:59:26.119 Page 3? 00:59:29.000 --> 00:59:31.760 Lastly, Blue Cereus and the wholesalers are currently 00:59:31.769 --> 00:59:34.300 negotiating the terms of a wholesale water contract. 00:59:34.309 --> 00:59:37.889 I'm going go ahead and stop you right there. This document 00:59:37.898 --> 00:59:41.769 was signed on December 10, 2021. At that time were 00:59:41.780 --> 00:59:46.269 Blue Cereus and Segura Water presently in negotiations 00:59:46.280 --> 00:59:48.208 for a water wholesale contract? 00:59:50.159 --> 00:59:52.329 What was the time frame again? I believe this document 00:59:52.340 --> 00:59:54.360 was signed and you can check me. I think it's on page 00:59:54.369 --> 00:59:56.769 six of that document. I believe it's December 10th 00:59:56.780 --> 01:00:00.559 2021, and I'll repeat the question. On December 10th 01:00:00.570 --> 01:00:03.929 2021, were the parties engaged in negotiations for 01:00:03.938 --> 01:00:05.000 a water purchase contract? 01:00:08.780 --> 01:00:12.039 I honestly don't recall at that time. I mean there 01:00:12.050 --> 01:00:17.079 were intermittent occasions when um we would request 01:00:17.090 --> 01:00:23.878 mediation or discussion or proposal to talk about those 01:00:23.889 --> 01:00:26.750 things. And I don't recall if any of that was actively 01:00:26.760 --> 01:00:29.958 occurring at that time in December of '21. Would it 01:00:29.969 --> 01:00:33.329 be fair to say that if there had been negotiations 01:00:33.340 --> 01:00:36.869 in and around December of 2021. That those negotiations 01:00:36.878 --> 01:00:40.119 did not produce a water purchase contract? Correct. 01:00:40.300 --> 01:00:45.269 Ok. That paragraph also contains a figure that Blue 01:00:45.280 --> 01:00:48.030 Cereus would pay Seguro while the parties were working 01:00:48.039 --> 01:00:50.239 towards a written contract. Can you identify that figure? 01:00:50.628 --> 01:00:54.949 Yes, it's $3400 per month. I, I told the last witness 01:00:54.958 --> 01:00:57.349 I'm bad at math. I'm telling you the same thing is 01:00:57.360 --> 01:00:59.809 that amount higher, lower or identical to the base 01:00:59.820 --> 01:01:04.010 rate identified in either the 2009 contract or exhibit 01:01:04.019 --> 01:01:06.489 six, which is the balance sheet? It's identical. Ok 01:01:06.639 --> 01:01:09.219 You previously testified there was not a month that 01:01:09.228 --> 01:01:12.000 Blue Cereus was only charged the base rate. Would Seguro 01:01:12.179 --> 01:01:14.878 have agreed to a flat rate contract for the provision 01:01:14.889 --> 01:01:18.889 of wholesale water in 2021 for an indefinite basis? 01:01:20.039 --> 01:01:24.070 What you're asking, would we have? Would you have? 01:01:24.280 --> 01:01:26.969 It's difficult to say anything that's speculative, 01:01:26.978 --> 01:01:31.110 but I would venture to guess, no. Okay. And why, why 01:01:31.119 --> 01:01:36.199 is that? It's an inadequate amount in order 01:01:36.208 --> 01:01:40.958 to perpetually manage the business and maintain the 01:01:40.969 --> 01:01:44.398 equipment, and in order to make the system reliable. 01:01:45.340 --> 01:01:49.438 Would you anticipate that had the, um exhibit number 01:01:49.449 --> 01:01:53.789 14 been renewed? Or been on, I guess it's now third 01:01:53.800 --> 01:01:57.199 renewal as we are now 10 years out so its expiration 01:01:57.688 --> 01:02:01.208 uh that the base rate would have increased? Yes. 01:02:02.929 --> 01:02:05.780 Uh and again, just as a refresher, that base rate and 01:02:05.789 --> 01:02:11.079 that 2009 contract is? $3400 per month. Let's go ahead 01:02:11.090 --> 01:02:13.619 and take a look at Exhibits 9 and 10. 01:02:18.000 --> 01:02:19.579 And let me hand those to you. 01:02:41.860 --> 01:02:43.898 Can you please identify what you've just been handed? 01:02:44.668 --> 01:02:47.639 Exhibit 9 is titled Letter from Seguro Water Company 01:02:47.648 --> 01:02:52.050 LLC and San Pedro Water Resources J.V. And Exhibit 10 01:02:52.059 --> 01:02:55.978 is titled Correspondence from Dina Ferguson. Ok. On 01:02:55.989 --> 01:02:58.648 Exhibit 9, can you briefly summarize why Seguro 01:02:58.659 --> 01:03:00.519 sent this letter to the Commission and Blue Cereus? 01:03:02.958 --> 01:03:06.610 Ok. So Exhibit 9 is a letter that was prepared and 01:03:06.619 --> 01:03:14.398 dated um January 8th 2024. And it is um a notice to 01:03:14.409 --> 01:03:18.469 Blue Cereus from both San Pedro Water Resources and 01:03:18.510 --> 01:03:24.289 Segura Water Company. It identifies um historical activities 01:03:24.300 --> 01:03:28.800 that occurred generally beginning in January of 2018. 01:03:29.458 --> 01:03:34.199 That were efforts made uh unsuccessfully to resolve 01:03:34.219 --> 01:03:34.800 um 01:03:36.360 --> 01:03:39.438 uh let's see here. 01:03:41.478 --> 01:03:44.239 I guess let me just identify in each paragraph. On 01:03:44.250 --> 01:03:47.938 the letter January 18th, we started meeting with um 01:03:48.809 --> 01:03:52.159 I say we as Seguro. Although I was not an owner at 01:03:52.168 --> 01:03:55.199 the time, I was present at that meeting. In August of 01:03:55.208 --> 01:04:02.909 '21, Blue Cereus provided as an order from the then 01:04:02.918 --> 01:04:06.590 Chairman of the Public Utility Commission. A docket 01:04:06.599 --> 01:04:10.199 that identified a plan of action in order to acquire 01:04:10.208 --> 01:04:14.688 an alternate water source. That would um alleviate both 01:04:14.699 --> 01:04:18.188 San Pedro and Seguro from having to provide water. 01:04:18.769 --> 01:04:23.199 Um, in June of 22 it identifies in the letter here 01:04:23.300 --> 01:04:29.478 that um the wholesalers and Blue Cereus. I uh entered into 01:04:29.489 --> 01:04:32.559 an agreement in principle, commonly referred to as 01:04:32.570 --> 01:04:38.360 the settlement agreement in 50239. Um I believe even 01:04:38.369 --> 01:04:40.728 in the opening statements. I understand that, that was 01:04:40.739 --> 01:04:45.070 an agreement that was basically affected an asset swap 01:04:45.079 --> 01:04:51.010 involving an STM application. Um In June of 2023 the 01:04:51.019 --> 01:04:55.489 Texas Commission on Environmental Quality issued um 01:04:55.500 --> 01:05:01.039 default order in um their action. TCEQ specific docket 01:05:01.050 --> 01:05:05.500 number and the SOAH docket number there. Um And that 01:05:05.510 --> 01:05:09.250 paragraph also states that the order provided for a 01:05:09.260 --> 01:05:12.769 six month deadline to finalize a contract with a water 01:05:12.780 --> 01:05:16.510 provider for the public drinking water systems. 01:05:16.800 --> 01:05:21.728 And um that the next paragraph identifies that since 01:05:21.739 --> 01:05:26.208 that order went into effect. The wholesalers had not 01:05:26.219 --> 01:05:29.909 received any communication whatsoever from Blue Cereus. 01:05:29.918 --> 01:05:33.668 In regards to an attempt to enter into any kind of 01:05:33.679 --> 01:05:37.079 mediation or negotiation or proposal for terms of a 01:05:37.090 --> 01:05:40.469 contract to purchase water from the wholesalers. And 01:05:40.478 --> 01:05:44.539 that the wholesalers in the final paragraph. Identify 01:05:44.550 --> 01:05:48.039 that following the six year effort to establish a contract 01:05:48.050 --> 01:05:51.719 with Blue Cereus. That there has been that that result 01:05:51.728 --> 01:05:55.429 has, has resulted in no constructive progress towards 01:05:55.438 --> 01:05:58.449 the establishment of a contract. And that the wholesalers 01:05:58.458 --> 01:06:00.628 will not be able to provide drinking water to Blue 01:06:00.639 --> 01:06:03.739 Cereus going forward. So the last part I want to just expand 01:06:03.750 --> 01:06:07.199 upon a bit. Did Seguro intend on terminating its provision 01:06:07.208 --> 01:06:09.849 of wholesale water to Blue Cereus at some point after 01:06:09.860 --> 01:06:14.688 this letter? Yes, sir. What was that? We had not 01:06:14.699 --> 01:06:18.938 set a specific date in mind. We understand the critical 01:06:18.949 --> 01:06:21.918 nature of providing drinking water to over 100 households 01:06:21.929 --> 01:06:26.168 through Blue Cereus distribution system. So when this 01:06:26.179 --> 01:06:30.559 letter was sent to Blue Cereus, we also forwarded it 01:06:30.570 --> 01:06:33.628 in um, email correspondence to both the Texas Commission 01:06:33.639 --> 01:06:36.208 on Environmental Quality and the Public Utility Commission 01:06:36.219 --> 01:06:39.889 Staff that we've been working with. In order to help 01:06:39.898 --> 01:06:43.449 or to hope I, I should say. That there would be some 01:06:43.458 --> 01:06:47.489 sort of a regulatory solution to this. In order to prevent 01:06:47.708 --> 01:06:50.208 um, the wholesalers from having to turn off the water. 01:06:50.260 --> 01:06:52.300 Let's take a look at Exhibit No. 10. And can you 01:06:52.309 --> 01:06:56.360 tell me briefly what that is? It's identified as correspondence 01:06:56.369 --> 01:06:57.869 from Dina Ferguson? That would be me. 01:07:00.039 --> 01:07:05.739 Ok. And does this exhibit contain communications between 01:07:05.750 --> 01:07:10.059 you on behalf of Seguro and the wholesalers? And representatives 01:07:10.070 --> 01:07:13.860 of the Office here at the division, at the Commission? Yes. It's an 01:07:13.869 --> 01:07:18.378 email correspondence between myself and Nemat Muntahan. 01:07:19.019 --> 01:07:24.719 Ok. And what was the nature of that communication? 01:07:26.019 --> 01:07:30.699 Um, the initial email at the bottom of page one here 01:07:30.708 --> 01:07:36.519 is my initial correspondence to uh Nema and various 01:07:36.530 --> 01:07:40.800 personnel at TCQ, including also Bob Ferguson, who 01:07:41.030 --> 01:07:44.958 is the owner and executive for representing uh San 01:07:44.969 --> 01:07:48.719 Pedro Water Resources. And it's sharing our January 01:07:48.728 --> 01:07:51.679 letter that I just described with those agencies and 01:07:51.688 --> 01:07:56.389 those personnel. Um The next uh email above that is 01:07:56.398 --> 01:08:03.478 from Nema and he is requesting that we commit to keeping 01:08:03.489 --> 01:08:06.228 the water on at least until February 1st for which 01:08:06.239 --> 01:08:08.860 I go ahead. And that's, and that's kind of the point 01:08:08.869 --> 01:08:10.918 I want to want to stop you there just for time's sake. 01:08:10.929 --> 01:08:14.619 And, and ask you did you agree to hold the water 01:08:14.628 --> 01:08:19.199 on until at least February 1, 2024? Yes. Ok. If the 01:08:19.208 --> 01:08:22.279 commission had not entered an emergency order, would 01:08:22.289 --> 01:08:24.838 seguro have turned off the water on February 1st. 01:08:27.000 --> 01:08:29.279 You know, I hate to say that out loud because it sounds 01:08:29.289 --> 01:08:34.109 so harsh. Um and callous. Um because like I said, we 01:08:34.119 --> 01:08:36.838 do take it very serious, our obligation to continue 01:08:36.850 --> 01:08:40.659 to provide water, but because of the legal remedies 01:08:40.668 --> 01:08:45.500 that we had sought to resolve, um and not seeing any 01:08:45.509 --> 01:08:47.500 progress and the efforts that we've made towards that. 01:08:47.509 --> 01:08:51.569 We were coming to a point and still are um where we 01:08:51.579 --> 01:08:55.938 just cannot continue to do this as a nonprofit or charitable 01:08:55.948 --> 01:09:00.547 act. All right, I'll pass the witness. Mr. Floriani, any 01:09:00.559 --> 01:09:04.850 questions? Yeah, you really Mrs. Ferguson. You really 01:09:04.859 --> 01:09:07.208 didn't answer the last question. So, is your answer 01:09:07.220 --> 01:09:09.548 that you would have shut off the water? I'm sorry, 01:09:09.560 --> 01:09:11.859 what was the last question again? I said, you really 01:09:11.869 --> 01:09:14.119 never answered the last question that was asked of 01:09:14.128 --> 01:09:16.539 you. You said you'd hate to say it out loud and you 01:09:16.548 --> 01:09:18.810 didn't want to provide free services. But is your answer 01:09:18.819 --> 01:09:20.048 you would have shut off the water? 01:09:24.759 --> 01:09:28.109 I feel at this point the answer is yes. So you would 01:09:28.119 --> 01:09:30.439 have denied the service to the retail customers because 01:09:30.449 --> 01:09:33.298 of your dispute with Blue Cereus. Our customer is not the 01:09:33.310 --> 01:09:36.399 retail customers. Our customer is Blue Cereus. But you understand 01:09:36.409 --> 01:09:38.458 cutting off the water is cutting it off to a retail 01:09:38.470 --> 01:09:41.350 customer, correct? I understand us, cutting off the water is 01:09:41.359 --> 01:09:43.958 cutting off the water to the distribution system that 01:09:43.970 --> 01:09:47.199 provides that water. Once that water leaves our facility 01:09:47.208 --> 01:09:50.599 and our plant, it no longer is ours. And you understand 01:09:50.608 --> 01:09:53.837 that Blue Cereus is exclusive source of water for its 01:09:53.849 --> 01:09:56.707 retail customers what you provided, correct? 01:10:01.350 --> 01:10:04.628 Again, once that water leaves our plant in the, in the 01:10:04.640 --> 01:10:07.270 specifics of. You're not, not responding to my question. You understand that you are 01:10:07.279 --> 01:10:10.759 the only source of potable water for Blue Cereus to 01:10:10.770 --> 01:10:13.949 provide to its retail customers? Currently yes. And 01:10:13.958 --> 01:10:16.069 at the time you threatened to cut it off, you were 01:10:16.079 --> 01:10:17.539 the exclusive source, correct? 01:10:19.189 --> 01:10:22.470 Yes. I, I don't consider it a threat. I'm sorry. 01:10:24.859 --> 01:10:28.720 Now the you said you've been involved in these water 01:10:28.729 --> 01:10:32.350 companies for four or five years as a, as an officer 01:10:32.359 --> 01:10:36.689 an employee, correct? As an officer, yes. And how long 01:10:36.699 --> 01:10:38.560 were you involved with the companies prior to that 01:10:38.569 --> 01:10:42.729 as an employee or a contract employee? Began around 01:10:42.979 --> 01:10:47.310 2017. And you understand that the contracts that you've 01:10:47.319 --> 01:10:51.159 testified to the written contract terminated in 2014 01:10:51.168 --> 01:10:52.829 before you were ever involved, correct? 01:10:54.378 --> 01:10:57.020 Again, I'm not an attorney. So I, you know, there are 01:10:57.029 --> 01:11:00.208 a lot of other things within that contract. But it 01:11:00.220 --> 01:11:03.949 does state in there that the contracts expire without 01:11:03.958 --> 01:11:06.628 additional action on that date. But you were not involved 01:11:06.640 --> 01:11:11.119 with the companies at that time in 2014, correct? No sir. And 01:11:11.128 --> 01:11:13.909 uh you weren't involved in the series of oral agreements 01:11:13.918 --> 01:11:16.770 between your companies and Blue Cereus that took place 01:11:16.779 --> 01:11:18.689 after 2014, correct? 01:11:22.359 --> 01:11:25.588 I feel like your question is presuming that I agree 01:11:25.600 --> 01:11:29.810 that there were oral contracts. If there were any agreements 01:11:29.819 --> 01:11:32.100 you were not part of them though, correct? I would not have 01:11:32.109 --> 01:11:36.409 been part of anything prior to 2017. And the Exhibit 01:11:36.418 --> 01:11:39.708 6 which you testified to is a bill that you created 01:11:39.720 --> 01:11:44.189 dated August 1st 2018, correct? Which Exhibit? 6? Six. 01:11:49.289 --> 01:11:52.930 August of 2018, yes. And the terms of that bill are 01:11:52.939 --> 01:11:56.039 the same payment terms as outlined in the original 01:11:56.048 --> 01:11:58.680 contract, correct? Yes. 01:12:00.350 --> 01:12:05.439 Now the you've submitted two exhibits from 2018 stating 01:12:05.449 --> 01:12:08.039 that Blue Cereus was not in compliance with the payment 01:12:08.048 --> 01:12:11.548 agreement, correct? I didn't submit any exhibits. You've 01:12:11.560 --> 01:12:14.560 testified as to two exhibits as authentic and created 01:12:14.569 --> 01:12:18.479 by your company. That Blue Cereus did not make payments 01:12:18.489 --> 01:12:20.149 to you in 2018, correct? 01:12:23.628 --> 01:12:26.939 Say the question again. You've testified as to two 01:12:26.949 --> 01:12:29.609 exhibits created by your company and your company's 01:12:29.619 --> 01:12:33.350 attorney. Stating that in 2018, Blue Cereus did not 01:12:33.359 --> 01:12:35.939 comply with payment terms of an agreement, correct? 01:12:39.470 --> 01:12:43.418 Of the 2009 agreement? Of any. Written agreement. 01:12:46.079 --> 01:12:46.779 Any agreement? 01:12:48.569 --> 01:12:50.548 I think I'd have to have more specifics about which 01:12:50.560 --> 01:12:53.509 agreement you're talking about. Let me make it simple. 01:12:53.520 --> 01:12:57.970 In 2018, you stated that that Blue Cereus was delinquent 01:12:57.979 --> 01:13:00.838 in making payments to your companies, correct? Yes. 01:13:01.208 --> 01:13:04.640 And also you had an attorney state that they were delinquent, 01:13:04.649 --> 01:13:06.239 correct? That's in the other exhibit. 01:13:07.829 --> 01:13:14.029 Yes. And in December of 2021 you were part of a SOAH order 01:13:14.039 --> 01:13:17.359 which set the rates by which my client had to pay your 01:13:17.369 --> 01:13:20.890 companies, correct? That was effective in December 01:13:20.899 --> 01:13:26.439 of 2001, yes. 2021, correct? Yes sorry, I said 2001. And in June 01:13:26.449 --> 01:13:30.009 of 2022 you entered into a mediated settlement agreement 01:13:30.020 --> 01:13:33.899 with my client. Whereby you would exchange assets and 01:13:33.909 --> 01:13:36.798 have no further business with each other. If the agreement 01:13:36.810 --> 01:13:38.060 was effectuated, correct? 01:13:40.319 --> 01:13:42.989 Yes. And if that agreement was effectuated, there would 01:13:43.000 --> 01:13:46.869 be no need for any contracts between you and my client 01:13:46.878 --> 01:13:47.829 in the future, correct? 01:13:49.529 --> 01:13:53.500 If it had come to completion and the parties had separated 01:13:53.509 --> 01:13:57.458 the business interest, yes. Well um, 01:13:59.199 --> 01:14:03.680 state the question again. Question is if that agreement 01:14:03.689 --> 01:14:07.000 from June of 2022 was effectuated. That there would 01:14:07.009 --> 01:14:09.918 have been no need for any contracts whatsoever between 01:14:09.930 --> 01:14:12.899 your companies and my client ever again, correct? Not 01:14:12.909 --> 01:14:15.850 for payments going forward. However, the past due payments 01:14:15.859 --> 01:14:18.838 have never been cured. So it's your testimony that 01:14:18.850 --> 01:14:22.439 the mediation agreement didn't address all issues including 01:14:22.449 --> 01:14:23.319 past payments? 01:14:25.319 --> 01:14:29.739 Agreed. And in November of 2023 you unilaterally declared that 01:14:29.750 --> 01:14:34.289 the mediation agreement was void, correct? We terminated 01:14:34.310 --> 01:14:36.930 that agreement. And by what authority did you terminate 01:14:36.939 --> 01:14:40.029 that agreement? As the owner and executive of Segura 01:14:40.279 --> 01:14:43.100 Water Company. And I believe that agreement, that notification 01:14:43.109 --> 01:14:48.569 was also executed by Bob Ferguson. The managing partner 01:14:48.579 --> 01:14:51.878 for San Pedro Water Resources Joint Venture. And Mr. 01:14:51.899 --> 01:14:54.649 Ferguson is your husband, correct? Yes. And you and 01:14:54.659 --> 01:14:57.869 Mr. Ferguson in November determined that that mediation 01:14:57.878 --> 01:15:01.409 agreement was no longer valid, correct? No, we didn't 01:15:01.418 --> 01:15:03.899 say it was no longer valid. We said we terminated it. 01:15:04.750 --> 01:15:09.140 Okay. And, and then you said now you have a duty to have 01:15:09.149 --> 01:15:12.220 gone undergone contract negotiations with us over the 01:15:12.229 --> 01:15:14.899 last several months, correct? I did not say that. You said it 01:15:14.909 --> 01:15:18.930 in your letter that has been admitted as an exhibit. 01:15:19.069 --> 01:15:22.329 The letter dated January 8th 2024. 01:15:24.020 --> 01:15:25.140 Wait, which exhibit is that? 01:15:32.140 --> 01:15:36.628 I found it. You have it? Exhibit 9? Exhibit 9. Okay. 01:15:37.020 --> 01:15:39.628 And so you're presuming what? Well, I'm not presuming 01:15:39.640 --> 01:15:43.838 I'll just read what you wrote you. You said in June 01:15:43.850 --> 01:15:48.439 of 2023 the Texas Commission on Environmental Quality 01:15:48.449 --> 01:15:50.979 and State Office of Administrative Hearing. Determined 01:15:50.989 --> 01:15:53.418 B.C. does not have a contract to purchase water from 01:15:53.430 --> 01:15:55.680 your company in violation of the Texas Administrative 01:15:55.689 --> 01:15:59.470 Rules. And then you go on to say you anticipated my 01:15:59.479 --> 01:16:02.338 client would reach out for negotiations with you to 01:16:02.350 --> 01:16:04.798 come to an agreement that would provide water, correct? 01:16:04.930 --> 01:16:07.949 We were hopeful. Why didn't you reach out to my client 01:16:07.958 --> 01:16:08.659 to negotiate? 01:16:10.739 --> 01:16:13.270 I don't have an order against us from the State of 01:16:13.279 --> 01:16:16.208 Texas stating that I'm required to have a contract. 01:16:16.458 --> 01:16:20.418 I don't have any compliance issues with the TCEQ. Is 01:16:20.430 --> 01:16:23.079 it true that the reason we're here today is because 01:16:23.088 --> 01:16:26.579 you threatened to terminate the water supply to Blue 01:16:26.588 --> 01:16:31.199 Cereus LLC? I have not threatened anything. You stated that 01:16:31.208 --> 01:16:33.588 you would turn it off though, correct? Yes, sir. And 01:16:33.600 --> 01:16:36.829 you wouldn't be able to provide continue potable drinking 01:16:36.838 --> 01:16:40.039 water to my client? Yes. And you stated in the email 01:16:40.048 --> 01:16:43.869 to the Commission. That it's been admitted as an exhibit 01:16:43.878 --> 01:16:47.319 that you will at least provide it until February 1st 01:16:47.329 --> 01:16:51.168 of 2024, correct? Correct. Did you reach an agreement 01:16:51.180 --> 01:16:53.819 with the Commission or with the temporary manager to 01:16:53.829 --> 01:16:56.810 provide water after February 1, 2024? 01:16:58.569 --> 01:17:03.259 Did we? Yes. Like when? I mean, I didn't even know who that 01:17:03.270 --> 01:17:07.270 was until after the appointment was done. I guess I'm 01:17:07.279 --> 01:17:09.399 asking a yes or no question. Do you have an agreement 01:17:09.409 --> 01:17:12.489 with the temporary manager to provide water? We have 01:17:12.500 --> 01:17:16.918 an interim understanding, yes. And what is an interim understanding 01:17:16.930 --> 01:17:17.609 in your mind? 01:17:19.208 --> 01:17:24.430 We said we'll keep the water on and we didn't want 01:17:24.439 --> 01:17:30.000 any changes in anything. Until the temporary manager 01:17:30.009 --> 01:17:34.279 through today's process would be affirmed by the Commission. 01:17:34.329 --> 01:17:36.739 And if the temporary manager is affirmed and appointed 01:17:36.750 --> 01:17:40.239 for 365 days. Do you agree to provide potable water 01:17:40.250 --> 01:17:43.439 to the temporary manager under the SOAH order scheduled 01:17:43.449 --> 01:17:48.060 payment? No, sir. So it's you, you can decide at any 01:17:48.069 --> 01:17:51.640 time hereafter today that you want, you can stop providing 01:17:51.649 --> 01:17:55.829 water to the temporary manager? No. Will you agree 01:17:55.838 --> 01:17:59.298 to provide them water? We are working towards that 01:17:59.310 --> 01:18:02.600 end. Yes, sir. So you're saying you might, if they 01:18:02.609 --> 01:18:04.000 agree in a contract? 01:18:05.640 --> 01:18:08.539 We are working towards an agreement for that provision. 01:18:08.668 --> 01:18:11.208 On a long term basis under their management of Blue 01:18:11.399 --> 01:18:11.449 Cereus. 01:18:14.798 --> 01:18:17.489 Pass the witness. I'm going to go ahead and offer you a chance to take 01:18:17.500 --> 01:18:19.779 a look at Exhibit No. 8. Which I believe you 01:18:19.789 --> 01:18:22.829 were just asked questions about by opposing counsel. 01:18:23.489 --> 01:18:25.199 I'm going to go ahead and hand it to you. I didn't 01:18:25.708 --> 01:18:28.850 haven't handed to you yet. Now you have it. Can you 01:18:28.859 --> 01:18:32.199 please tell the court what document I just handed you? 01:18:32.649 --> 01:18:40.350 It's titled the TCEQ Order Docket number 2022-0010-PWS-E. 01:18:41.399 --> 01:18:44.500 Now we at the state do a couple of weird things when 01:18:44.509 --> 01:18:46.699 it comes to numbering pages. If you would turn to, 01:18:46.708 --> 01:18:50.350 I believe the second full page that has the mailing 01:18:50.359 --> 01:18:56.588 list. Let me know when you find it. Yes, sir. Ok. Can 01:18:56.600 --> 01:19:00.569 you tell me if you identify Seguro Water Company as 01:19:00.579 --> 01:19:04.628 being an identified recipient of this order? We're 01:19:04.640 --> 01:19:08.069 not? Nor is San Pedro Water Resources. My very next 01:19:08.079 --> 01:19:12.649 question, thank you for that. I'm gonna have you turn 01:19:12.659 --> 01:19:15.850 a bit further to page five, the numbered page five. 01:19:19.640 --> 01:19:23.159 And actually keep your finger there. My apologies. 01:19:23.350 --> 01:19:28.418 Let's go ahead and talk about going back on that mailing 01:19:28.430 --> 01:19:31.770 list. Is there a section that identifies a respondent? 01:19:34.000 --> 01:19:35.298 On the mailing list? Correct. 01:19:37.168 --> 01:19:40.628 Yes. Who is the respondent? Our Brian Daniel, attorney 01:19:40.640 --> 01:19:44.069 for Blue Cereus, LLC? Ok. Now going back to page number 01:19:44.079 --> 01:19:48.779 five. Yes. Ok. And there should be a numbered paragraph 01:19:48.789 --> 01:19:52.759 number two. Within 180 days after the effective date 01:19:52.770 --> 01:19:55.489 of this order. Respondent shall secure water purchase 01:19:55.500 --> 01:19:58.878 contracts for both La Coleta Estates and San Pedro Village. 01:19:58.890 --> 01:20:01.640 In accordance with 30 Texas Administrative Code section 01:20:01.649 --> 01:20:05.310 290.45. I believe the answer is going to be obvious. 01:20:05.458 --> 01:20:07.958 But are you the respondent identified in this paragraph? 01:20:07.970 --> 01:20:10.930 No, sir. Who is? 01:20:12.588 --> 01:20:13.569 As I just read 01:20:15.270 --> 01:20:19.239 our Brian Daniel representing attorney for Blue Cereus, 01:20:19.259 --> 01:20:24.168 LLC. So does this order obligate any of the wholesalers 01:20:24.180 --> 01:20:28.060 here today, Seguro or San Pedro Water Resources to 01:20:28.069 --> 01:20:32.899 negotiate and affect a contract? No. Pass the witness. No further questions. 01:20:32.909 --> 01:20:34.600 Commissioners, do you have any questions? 01:20:36.829 --> 01:20:40.048 Ok. This should conclude our witnesses at this time. 01:20:40.259 --> 01:20:42.579 Any other questions by the Commissioners? 01:20:44.399 --> 01:20:48.140 Let's move on forward. Your, your excused to sit down. 01:20:50.430 --> 01:20:53.600 Do I need to go back to the sequestration or? Now that 01:20:53.609 --> 01:20:55.909 we're done with witnesses, you're welcome to take a 01:20:55.918 --> 01:21:01.259 seat. Ok. Could be something against him. Ok. 01:21:14.140 --> 01:21:17.439 May I proceed? Yeah, just let me make sure it does. 01:21:18.600 --> 01:21:20.869 Yeah. I, I have no objection to the new procedure. 01:21:21.128 --> 01:21:22.489 I wanna make sure that's still happening. 01:21:25.939 --> 01:21:26.239 Gotta go. 01:21:33.128 --> 01:21:36.899 May I proceed? Yes, you may proceed. Call Jimmy Allen 01:21:36.909 --> 01:21:37.890 Hall as a witness. 01:21:40.208 --> 01:21:42.918 Would you please state your name for the record? Jimmy 01:21:42.930 --> 01:21:46.100 Allen Hall. How are you currently employed? I'm Judge 01:21:46.109 --> 01:21:48.588 of Hayes County Court of Law, Number 1 Texas. And 01:21:48.600 --> 01:21:51.000 how long have you been so employed as that Judge? Since 01:21:51.048 --> 01:21:54.810 January 1st of 2023. And what is your connection if 01:21:54.819 --> 01:22:01.878 any with Blue Cereus, LLC. I am the President and Member 01:22:01.890 --> 01:22:06.048 of Blue Cereus, LLC. And would you briefly state your 01:22:06.060 --> 01:22:09.989 employment history prior to you becoming a Judge? I've 01:22:10.000 --> 01:22:14.819 been a licensed attorney for 41 1/2 years. I started 01:22:14.829 --> 01:22:17.579 out at the Texas Department of Water Resources, a predecessor 01:22:17.759 --> 01:22:22.390 to the TCEQ. Did everything I could there, water quality 01:22:22.399 --> 01:22:26.649 hazardous waste, um even cross training and water rights 01:22:26.779 --> 01:22:30.739 um on site sewage facilities, section 401 section, 01:22:30.750 --> 01:22:34.600 404 requirements, open records. Any, almost any and 01:22:34.609 --> 01:22:37.539 everything. I went into private practice with the Bickerstaff 01:22:37.548 --> 01:22:40.829 firm after that helped create the Barton Springs, Edwards 01:22:41.168 --> 01:22:45.079 Conservation District. Represented river authorities 01:22:45.329 --> 01:22:49.159 and counties and other persons with water issues. I 01:22:49.168 --> 01:22:50.810 left that firm in 01:22:52.779 --> 01:22:57.759 1987-'88. Went to Scannon Buckle where I did more water 01:22:57.770 --> 01:23:01.878 work, secured discharge bands on the Highland Lakes. 01:23:01.890 --> 01:23:05.628 Defeated a hazardous waste permit uh for salt dome 01:23:05.640 --> 01:23:08.909 hazardous waste facility near Lake Houston. Became 01:23:08.918 --> 01:23:12.899 board certified in ministry law in 1989. Represented 01:23:12.989 --> 01:23:16.539 doctors, nurses and other occupational licenses uh 01:23:16.548 --> 01:23:20.359 with special counsel to the Edwards Aquifer Authority on 01:23:20.369 --> 01:23:25.378 the initial permitting process they went through. 01:23:25.958 --> 01:23:29.298 And have been doing quite a bit of litigation over 01:23:29.310 --> 01:23:33.259 that time um and became a solo practitioner in 2005. 01:23:35.539 --> 01:23:39.759 Now, you heard the testimony of Robert and Dina Ferguson 01:23:39.770 --> 01:23:42.779 today, correct? Correct. And you heard them declare 01:23:42.789 --> 01:23:45.199 that the mediated settlement agreement that you reached 01:23:45.208 --> 01:23:50.199 with them on June 17th 2022 is void or terminated, 01:23:50.208 --> 01:23:53.539 correct? I did hear that. And do you believe that agreement 01:23:53.548 --> 01:23:56.579 to have been terminated? I do not. And do you believe 01:23:56.588 --> 01:23:59.838 the agreement is void? I do not. Has any prior of fact 01:23:59.850 --> 01:24:02.548 ever determinated that this agreement is void or has been 01:24:02.560 --> 01:24:07.560 terminated? It has not. Now as part of the, would you 01:24:07.569 --> 01:24:11.319 explain in brief what this mediated settlement agreement 01:24:11.329 --> 01:24:17.350 did in June of 2022? It was an attempt with negotiations. 01:24:17.418 --> 01:24:22.319 There was myself and my engineer Don Roscher for Blue 01:24:22.329 --> 01:24:27.750 Cereus, Selena Romero and Bob Ferguson for the water 01:24:27.759 --> 01:24:29.789 utilities. And I'm going to call them water utilities. They're 01:24:29.798 --> 01:24:32.810 not wholesalers under the, the statute. They are defined 01:24:32.819 --> 01:24:39.168 as water utilities. Blue Cereus is a reseller under 13.002, 01:24:39.180 --> 01:24:40.649 Subpart 23. 01:24:42.289 --> 01:24:45.579 We negotiated this agreement. We did prior to this 01:24:45.588 --> 01:24:49.390 mediated settlement agreement, work on a contract. 01:24:49.399 --> 01:24:51.560 The big stumbling blocks are the Ferguson's wanted 01:24:51.569 --> 01:24:53.588 to be able to terminate water any time they wanted 01:24:53.600 --> 01:24:57.000 to, in essence. Given the obligation that Blue Cereus 01:24:57.220 --> 01:25:00.350 has as a CCN and a provider of potable drinking water 01:25:00.359 --> 01:25:02.640 I couldn't agree to that. I needed notice and some 01:25:02.649 --> 01:25:06.970 sort of opportunity, you know, some means to secure 01:25:06.979 --> 01:25:07.489 water. 01:25:09.229 --> 01:25:14.039 And the other big issue was from Blue Cereus' perspective 01:25:14.048 --> 01:25:17.649 was having access to the master meter. I got trained 01:25:17.659 --> 01:25:20.739 as to how to calculate line loss. I have to have that 01:25:20.750 --> 01:25:23.458 master meter number to see what's lost in the lines 01:25:23.470 --> 01:25:26.979 after it leaves the plant into my customers homes and 01:25:26.989 --> 01:25:30.239 residences. I even offered to buy the mass demeter 01:25:30.250 --> 01:25:33.259 and put it in a different location. But none. Well 01:25:33.270 --> 01:25:35.979 with respect to the agreement itself. Well, basically 01:25:35.989 --> 01:25:40.329 the agreement itself. The idea was put out, hey why 01:25:40.338 --> 01:25:43.859 don't we just divorce. Mr. Floriani, he's a divorce 01:25:43.869 --> 01:25:46.418 attorney, Divorce and 01:25:48.729 --> 01:25:50.979 Blue Cereus was given the option to pick one system 01:25:50.989 --> 01:25:53.009 and I picked La Coleta Estates. Because I know many of the 01:25:53.020 --> 01:25:57.250 customers out there uh fairly well. And the agreement 01:25:57.259 --> 01:26:01.449 was to as that exchange. And as part of that asset exchange 01:26:01.458 --> 01:26:04.069 would you receive the source of water for one system. 01:26:04.079 --> 01:26:07.149 And then convey the retail connections for another 01:26:07.159 --> 01:26:10.390 system back to the wholesalers. Correct. We go through 01:26:10.399 --> 01:26:13.579 the STM process as I stated in here. And then I have contacted 01:26:13.588 --> 01:26:16.569 Staff of the PUC or whether we needed one for both 01:26:16.579 --> 01:26:18.588 systems and they said yes. Even though it just says 01:26:18.600 --> 01:26:21.159 one in here. Now you heard Mr. Ferguson testify this 01:26:21.168 --> 01:26:25.060 morning that you did not act in good faith in dealing 01:26:25.069 --> 01:26:29.399 with them. After the execution of this agreement in 01:26:29.418 --> 01:26:34.854 June of 2022, correct? I say that it's not true. And as part 01:26:34.864 --> 01:26:38.333 of this June of 2022 agreement, it created an obligation 01:26:38.345 --> 01:26:41.634 to exchange documents for review and execution, correct? 01:26:41.645 --> 01:26:45.253 Correct. And do you have an obligation to provide a 01:26:45.284 --> 01:26:49.284 draft STM to the wholesalers within one month after 01:26:49.293 --> 01:26:51.963 the execution of this agreement on the 17th day of 01:26:51.975 --> 01:26:55.414 June 2022, correct? Correct. And did you provide that 01:26:55.423 --> 01:26:58.664 draft document to their attorney at the time? I did. 01:26:59.000 --> 01:27:02.489 And uh did you provide any requested information from 01:27:02.500 --> 01:27:05.970 that attorney regarding the execution and affectation 01:27:05.979 --> 01:27:10.449 of this agreement? Yes. We had a series of exchange 01:27:10.458 --> 01:27:15.418 of emails getting the draft, underlying draft STM which 01:27:15.430 --> 01:27:18.789 is provided by both parties. Both sides have to sign 01:27:18.798 --> 01:27:22.878 it. I gave it to Ms. Romero. We exchanged information 01:27:22.890 --> 01:27:25.989 or emails and I sent her more information. And I gave 01:27:26.000 --> 01:27:28.729 her everything she asked for. It was only subsequent 01:27:28.939 --> 01:27:31.020 when Mr. Buck got involved that they needed this 01:27:31.029 --> 01:27:33.970 financial information but. Well let me stop you there. 01:27:33.979 --> 01:27:37.289 So you provided everything that Ms. Romero asked you 01:27:37.298 --> 01:27:39.350 to provide, correct? That's absolutely correct. And 01:27:39.359 --> 01:27:42.180 then when they discharged Ms. Romero. Their new attorney 01:27:42.390 --> 01:27:45.140 Mr. Buck asked for additional information that's not part 01:27:45.149 --> 01:27:48.000 of the mediation, correct? Right, they had. What did 01:27:48.009 --> 01:27:50.600 he ask for? Well they said, well we had some time 01:27:50.609 --> 01:27:53.458 to get up to speed. So it took a month or two 01:27:53.779 --> 01:27:56.000 they asked for the financial information, which is 01:27:56.009 --> 01:27:58.628 an attachment. Which I did provide them because the 01:27:58.640 --> 01:28:01.479 temporary manager was in place before I did not have 01:28:01.489 --> 01:28:05.569 all the expenditures. So I provided them 10 years of 01:28:05.579 --> 01:28:08.759 past financial information. With a gap in there when 01:28:08.770 --> 01:28:11.020 the temporary manager, but I gave them everything I 01:28:11.029 --> 01:28:15.140 had in QuickBooks. Printed report, sent send and sent 01:28:15.149 --> 01:28:20.310 it to uh Branscomb Law Firm. Then and I'll also point out. 01:28:20.859 --> 01:28:25.668 That the transferee is also obligated to project five 01:28:25.680 --> 01:28:29.279 years into the future. That's their job, not the transfer's 01:28:29.289 --> 01:28:33.140 job. And in addition to communicating with their two 01:28:33.149 --> 01:28:36.029 attorneys post mediation agreement, did you also communicate 01:28:36.039 --> 01:28:39.409 with the Fergusons? I did. And what was the nature of 01:28:39.418 --> 01:28:44.739 those communications? Well, we had communications repeatedly 01:28:44.918 --> 01:28:48.529 because of the failures of their plant. And we had to 01:28:48.539 --> 01:28:53.539 issue boil water notices of compliance with the TCEQ rules. 01:28:53.668 --> 01:28:56.699 As well as coordinate when things are going to be fixed. 01:28:57.359 --> 01:28:58.418 And even if 01:29:00.979 --> 01:29:05.909 no, that's enough. And so were boil water notices issued 01:29:05.918 --> 01:29:08.970 to your retail customers after this agreement was signed 01:29:08.979 --> 01:29:11.930 in June of 2022? Yes, several. I think for La Coletta 01:29:12.060 --> 01:29:16.619 we had 7 due to plant failures at La Coletta and 01:29:16.628 --> 01:29:22.458 3 at San Pedro Village. Now, were you surprised 01:29:22.470 --> 01:29:27.180 when you saw the communication from Ms. Robinson terminating, 01:29:27.189 --> 01:29:29.680 attempting to terminate this mediation agreement in 01:29:29.689 --> 01:29:36.319 November of 2023? Actually, no, I was not surprised. 01:29:36.329 --> 01:29:38.949 I was disappointed, saddened but not surprised given 01:29:38.958 --> 01:29:42.319 her past behavior. Is it your testimony that this mediation 01:29:42.329 --> 01:29:45.430 agreement is a valid contract that settles all of the 01:29:45.439 --> 01:29:49.430 disputes you had with the two wholesalers? Yes, in 01:29:49.759 --> 01:29:53.319 paragraph six of that settlement agreement. The lawsuit 01:29:53.329 --> 01:29:57.208 pending in Del Rio that we filed. To dispute their 01:30:00.810 --> 01:30:01.909 fanciful, 01:30:03.739 --> 01:30:07.949 illusory trying to collect for back amounts which Bob 01:30:08.060 --> 01:30:11.838 Ferguson never agreed to. That would dismiss that, that 01:30:11.850 --> 01:30:14.579 would resolve everything in the past. As Bob Ferguson 01:30:14.588 --> 01:30:16.729 like to say that's water under the bridge. Let's not 01:30:16.739 --> 01:30:23.208 deal with it and settle up the other dock dockets here. 01:30:23.720 --> 01:30:26.539 They would get their rights approved by the PUC for 01:30:26.548 --> 01:30:29.949 their system. And we would get our rates for the La Coletta 01:30:29.958 --> 01:30:33.588 Estates system separate. We've divorced, we split the 01:30:33.600 --> 01:30:38.319 sheets. And is it your intent to seek legal enforcement 01:30:38.329 --> 01:30:41.970 of this mediation agreement? Absolutely. By specific performance? 01:30:42.418 --> 01:30:45.449 Specific performance as well as actual damages? And if this 01:30:45.458 --> 01:30:49.909 mediation agreement is enforced by a, a appropriate 01:30:49.918 --> 01:30:53.430 forum, would there be any need for any contracts between 01:30:53.439 --> 01:30:56.009 you and the two wholesalers? No, we wouldn't have any 01:30:56.020 --> 01:30:59.878 relationship we wouldn't need a contract. And, um 01:31:00.128 --> 01:31:03.569 is it your position that the two wholesalers are themselves 01:31:03.579 --> 01:31:06.668 public utilities which are subject to jurisdiction 01:31:06.810 --> 01:31:11.789 of this Commission? Yes. It's if you Docket 50769 01:31:11.798 --> 01:31:15.548 with the then temporary manager, Lynn Sherman and I filed 01:31:15.560 --> 01:31:19.000 with the PUC and interpreting Chapter 13 of the Texas 01:31:19.009 --> 01:31:23.640 Water Code. That they provide potable water. And therefore 01:31:23.649 --> 01:31:26.588 they should have a CCN just like Central Texas Water 01:31:26.600 --> 01:31:29.779 Supply up on Still Hollow. Providing water to one of 01:31:29.789 --> 01:31:32.918 my former clients, Kempner Water Supply. Has Blue Cereus 01:31:33.180 --> 01:31:36.619 LLC ever cut off water to any of its retail customers? 01:31:38.689 --> 01:31:43.449 No, other than we never cut it off. We only did 01:31:43.458 --> 01:31:46.899 it in one case and it was requested by the owner. Because 01:31:46.909 --> 01:31:52.539 they vacated the house, it was empty. But you didn't 01:31:52.588 --> 01:31:54.350 want to pay bills anymore, so we turned it off. You've 01:31:54.359 --> 01:31:57.600 never terminated any water from any retail customer 01:31:57.609 --> 01:32:00.789 even for non payment of bills, correct? That's correct. 01:32:00.798 --> 01:32:02.798 We've taken people to court but we've never turned, 01:32:02.958 --> 01:32:06.338 actually turned the water off. That's cruel and unusual. 01:32:06.539 --> 01:32:11.009 And has the two companies that provide you water, in 01:32:11.020 --> 01:32:16.259 fact, cut off water supplies to you before? Yes, 01:32:16.270 --> 01:32:20.039 as Ms. Ferguson testified. They turned it off or I don't 01:32:20.048 --> 01:32:24.369 know Mr., Mr. Ferguson, one of the two. And when Mr. Sherman 01:32:24.378 --> 01:32:29.250 was the temporary manager, um you have a monthly cycle. 01:32:29.259 --> 01:32:31.659 You can't really change that because people pay their 01:32:31.668 --> 01:32:34.489 bills on a monthly cycle. You read the meters on a 01:32:34.500 --> 01:32:36.640 monthly cycle, you send the bills out and they pay 01:32:36.649 --> 01:32:39.569 a monthly cycle. Mrs. Ferguson contacted Mr. 01:32:41.399 --> 01:32:44.579 Sherman and said I want it sooner and gave him five 01:32:44.588 --> 01:32:46.708 days notice. He was in the middle of a rate case before 01:32:46.720 --> 01:32:50.109 this agency and couldn't get it to it immediately. 01:32:50.119 --> 01:32:55.409 But she turned the water off anyway. Now, after this 01:32:55.418 --> 01:32:59.359 agreement was effectuated in November of 2022 you were 01:32:59.369 --> 01:33:02.539 elected as a Judge, correct? Yes. And you took office 01:33:02.548 --> 01:33:05.509 in January 2023, correct. That's correct. And at that 01:33:05.520 --> 01:33:08.659 point, you weren't allowed to practice law related 01:33:08.668 --> 01:33:11.489 to this case, correct? Correct. And you hired an attorney 01:33:11.500 --> 01:33:14.470 Mr. Daniel to represent you at that time? Yes. And he 01:33:14.479 --> 01:33:17.000 was the one that was exchanging information with the 01:33:17.009 --> 01:33:20.770 Ferguson's attorneys, correct? Yes. And Mr. Daniels 01:33:20.779 --> 01:33:24.509 recently passed away and you've not had access to his 01:33:24.588 --> 01:33:27.770 emails and communications file with respect to the 01:33:27.779 --> 01:33:30.588 attorneys for the Ferguson's, correct? That's correct. 01:33:32.259 --> 01:33:35.899 He um when I got, I think I got the notice of the termination 01:33:35.909 --> 01:33:39.418 in the mail on, I think it was the 14th of January 01:33:39.899 --> 01:33:45.859 or the alleged termination. I contacted Mr. Daniel. 01:33:45.869 --> 01:33:47.958 He sent me a text, I'll get back to you when I 01:33:47.970 --> 01:33:51.399 see it back. Get back him on the slopes with my children. 01:33:51.720 --> 01:33:54.449 I didn't hear back from him. So I contact him on February 01:33:54.458 --> 01:33:57.989 1st when hey, I got just notice there's a temporary 01:33:58.000 --> 01:34:01.298 manager. And I got a text message back from his wife 01:34:01.310 --> 01:34:02.930 who's also the financial secretary. 01:34:05.180 --> 01:34:09.708 From my, from my church that Brian was deadly ill and 01:34:09.720 --> 01:34:12.399 he died on March 6th, and we had his funeral last Friday. 01:34:13.659 --> 01:34:17.579 Now, but even though there may have been communications 01:34:17.588 --> 01:34:21.579 through your attorney over the last year plus. You, 01:34:21.689 --> 01:34:24.409 you are aware of a term of communications in the form 01:34:24.418 --> 01:34:28.739 of 22 emails to their then attorneys. Conveying all 01:34:28.750 --> 01:34:31.859 of the information required under this media, correct? 01:34:31.869 --> 01:34:34.869 Correct, as well as the subsequent one with the branch 01:34:34.890 --> 01:34:37.918 confirmed. And I didn't have time last night to print 01:34:37.930 --> 01:34:40.878 out or count those. But I did uh communicate with Mr. 01:34:40.890 --> 01:34:43.628 Buck and I can't remember the associate's name as well 01:34:43.640 --> 01:34:47.939 as Rhonda Jolly. And she and I had numerous conversations 01:34:47.979 --> 01:34:52.989 up through November of 2022 to try to get it uh settled 01:34:53.000 --> 01:34:56.680 or something. And she floated the idea after Bob 01:34:56.689 --> 01:35:01.140 Ferguson blurted out, just buy me out. Um and she put 01:35:01.149 --> 01:35:04.588 together something and said it to me. And unfortunately 01:35:04.600 --> 01:35:05.930 I was very sick at the time and I 01:35:07.500 --> 01:35:11.668 send it on to Mr. Daniel and I never got back to 01:35:11.680 --> 01:35:14.899 it in 2023. Pass the witness. 01:35:17.289 --> 01:35:19.430 Good morning Judge Hall. I'm going to try to keep this 01:35:19.439 --> 01:35:22.119 very brief. But I do want to ask you a very quick 01:35:22.128 --> 01:35:24.489 question about respondent's exhibit number one. And 01:35:24.500 --> 01:35:26.350 I believe you have a copy of that in front of you. 01:35:26.359 --> 01:35:28.779 If not, I can provide. Is that the mediated settlement 01:35:28.810 --> 01:35:32.470 agreement? That is. Is it your testimony that this 01:35:32.479 --> 01:35:37.390 document is effective today as we stand? It sure is. 01:35:37.579 --> 01:35:42.029 Ok. And by nature of it being effective, what portions 01:35:42.399 --> 01:35:45.779 of the current CCN. Do you presently own as the owner 01:35:45.789 --> 01:35:52.458 of Blue Cereus? I don't, Blue Cereus doesn't own the CCN. It 01:35:52.470 --> 01:35:58.500 holds it in trust for the public utility and the State of Texas. 01:35:59.140 --> 01:36:03.779 And the two portions are separate. One is labeled San 01:36:03.789 --> 01:36:07.069 Pedro Villas. The other one is labeled La Coletta 01:36:09.199 --> 01:36:11.890 Estates. I'm not sure if that was quite answers my question, 01:36:11.899 --> 01:36:14.319 but it was a bad question. So let me rephrase it. As 01:36:14.329 --> 01:36:18.369 it stands today March 21st 2024, which of the two public 01:36:18.378 --> 01:36:23.418 water systems you just identified still remain part 01:36:23.770 --> 01:36:27.859 of the Blue Cereus CCN number 11088? 01:36:29.779 --> 01:36:34.949 The as I stated, the San Pedro Village Water System. 01:36:36.199 --> 01:36:38.509 I don't know the PWS number off the top of my head. 01:36:38.520 --> 01:36:41.890 The La Coletta Estate's water distribution system both 01:36:41.899 --> 01:36:45.289 off of US highway 90 West outside of Del Rio. Now 01:36:45.298 --> 01:36:48.069 this is where I get a little confused. Because your 01:36:48.079 --> 01:36:51.548 previous testimony and the questions given by your 01:36:51.560 --> 01:36:54.789 counsel when cross-examined the witnesses. Has been 01:36:54.798 --> 01:36:59.100 that this document is already effective as of today. 01:36:59.569 --> 01:37:03.859 Doesn't this document agree to transfer San Pedro Village 01:37:03.869 --> 01:37:08.720 to the wholesalers? Yes, by effective. I apologize, 01:37:08.729 --> 01:37:11.789 you misunderstand. Effective means it's still in force 01:37:11.798 --> 01:37:16.088 in effect yet to be fully executed. The process and 01:37:16.100 --> 01:37:20.180 the end of the road is PUC Commissioners approving 01:37:20.189 --> 01:37:25.449 as required by Staff two STMs and the transfer. You 01:37:25.458 --> 01:37:27.699 can't, I've done this before. You can't transfer the 01:37:27.708 --> 01:37:32.180 assets until you have the PUC approval and then go 01:37:32.229 --> 01:37:35.220 file the requisite documents. If you noted here, 01:37:35.399 --> 01:37:39.039 the drafting of the transfer of the real estate and 01:37:39.048 --> 01:37:43.069 improvement documents are addressed in here. So it's 01:37:43.079 --> 01:37:46.180 effective, it hasn't been fully executed. It's just 01:37:46.189 --> 01:37:49.750 like if you had a loan for a car. It's effective until 01:37:49.759 --> 01:37:53.020 you make all the payments. The difference being when 01:37:53.029 --> 01:37:55.180 you take out a loan for a car, you can drive that 01:37:55.189 --> 01:37:57.798 car off the lot. You still have to pay for it, but 01:37:57.810 --> 01:38:00.159 you can drive that car off the lot. So let me ask 01:38:00.168 --> 01:38:04.220 you this. Well, maybe I used a bad analogy. Perhaps 01:38:04.470 --> 01:38:06.850 but I will still ask you the question. As it stands 01:38:06.859 --> 01:38:09.239 today, do you have ownership and control of Seguro 01:38:09.359 --> 01:38:13.060 Water Company or its assets, the wholesale system they 01:38:13.069 --> 01:38:13.659 possess? 01:38:17.479 --> 01:38:19.819 No, and I don't know why you're asking that question. 01:38:19.829 --> 01:38:21.979 Well, isn't that the asset that you would have traded 01:38:21.989 --> 01:38:25.979 for San Pedro Village? Yes. All of the conditions precedent 01:38:25.989 --> 01:38:28.890 in a contract, all have to be satisfied before it is 01:38:28.899 --> 01:38:33.289 finally executed. Sometimes executed gets confused 01:38:33.298 --> 01:38:36.418 with signing. But until all the terms are satisfied 01:38:36.539 --> 01:38:40.569 then the ownership of the assets would transfer. There's 01:38:40.579 --> 01:38:43.560 no contemplation in either of the agreement that Blue 01:38:43.569 --> 01:38:47.759 Cereus would own the, the entity, the membership 01:38:47.770 --> 01:38:51.289 interest in San Pedro or Seguro Water Company LLC or 01:38:51.298 --> 01:38:56.699 any of the partnership interest in the San Pedro Water 01:38:56.708 --> 01:39:00.060 Resources Joint Venture. This is just a trade of assets. 01:39:00.069 --> 01:39:05.048 But it has to be done in compliance with PCU, PUC 01:39:05.458 --> 01:39:10.500 rules almost at TCEQ. And the Texas Property Code on 01:39:10.509 --> 01:39:12.829 the conveyances of real property and the improvements 01:39:12.838 --> 01:39:15.489 they're on. But what are those assets from Seguro that 01:39:15.500 --> 01:39:18.729 you would have obtained, had this contract or had this 01:39:18.739 --> 01:39:22.088 agreement in principle rather gone through to its fruition? 01:39:22.609 --> 01:39:25.779 Well, it may still if we have our way in any specific 01:39:25.789 --> 01:39:30.208 performance. The assets that Blue Cereus would pick up would 01:39:30.220 --> 01:39:33.350 be the, as Mr. Ferguson said the plant which is a 01:39:33.359 --> 01:39:36.829 storage tank, pressure tank, chlorinated master meter. 01:39:37.039 --> 01:39:40.119 Which I did offer to buy from him. The lot in question 01:39:40.128 --> 01:39:43.989 the real property question in exchange for the distribution 01:39:44.000 --> 01:39:47.239 system at San Pedro Village. But right now, you do 01:39:47.250 --> 01:39:48.859 not have control of those assets? 01:39:50.739 --> 01:39:53.430 Those assets I have control of the San Pedro Village 01:39:53.439 --> 01:39:58.270 Water Distribution System. Blues Cereus does. You have control 01:39:58.279 --> 01:40:01.729 of the Seguro wholesale assets? No, that's not your question. 01:40:01.739 --> 01:40:05.418 You asked me a compound question. I cut out one part 01:40:05.628 --> 01:40:09.378 and answered that part. I do not have control over anything 01:40:09.390 --> 01:40:13.189 owned by Segura Water Company LLC. Which you would agree 01:40:13.199 --> 01:40:16.109 that as it stands today includes the wholesale plan? 01:40:16.909 --> 01:40:21.140 Absolutely. Ok. Does this agreement actually define 01:40:21.149 --> 01:40:25.409 a term called the effective date? I'm sorry, I didn't 01:40:25.418 --> 01:40:29.009 hear your question. Sure. Let me rephrase it. Is there 01:40:29.020 --> 01:40:32.838 a term of or title the effective date that is used 01:40:32.850 --> 01:40:33.689 in this agreement? 01:40:35.739 --> 01:40:41.250 Yes, it's on paragraph 14. What is, what gets you to the effective 01:40:41.259 --> 01:40:42.720 date? It's the 01:40:45.180 --> 01:40:50.720 PUC approval of the final STM or CCN applications. 01:40:50.890 --> 01:40:55.918 Or any other thing that PUC says we need to do. We 01:40:55.930 --> 01:40:59.878 being the two parties to the three parties to this 01:40:59.890 --> 01:41:05.319 agreement. So it's not as simple as just on June 17th 01:41:05.329 --> 01:41:08.810 2020. Blue Cereus and the wholesalers agreed that this 01:41:08.819 --> 01:41:11.329 is how we're going to divide the pot. You still needed 01:41:11.338 --> 01:41:14.699 to have the PUC's blessing, the Commissioner's blessing. 01:41:15.359 --> 01:41:18.279 In order for this agreement to be completely effective 01:41:18.390 --> 01:41:22.168 and divorce the assets. As your counsel previously spoke. 01:41:22.229 --> 01:41:24.489 Well again you're using effective, which can be confusing. 01:41:24.500 --> 01:41:30.189 It would be fully finalized and completed upon PUC's 01:41:30.529 --> 01:41:35.039 approval. Of therefore allowing the legal transfer of 01:41:35.048 --> 01:41:39.878 the assets. At what point did you transfer or I should 01:41:39.890 --> 01:41:42.739 I should rephrase. Let me withdraw that question. Have 01:41:42.750 --> 01:41:46.029 you ever submitted the draft STM to the PUC for its 01:41:46.039 --> 01:41:52.220 review? No, an STM is a transferor and a transferee. Blue 01:41:52.229 --> 01:41:53.909 Cereus would be the transferor. 01:41:55.689 --> 01:41:58.359 And in the San Pedro Village would be the San Pedro 01:41:58.369 --> 01:42:00.579 Water Resource Joint Venture would be the transferee. 01:42:00.588 --> 01:42:03.878 We both have to sign it and both have to submit it. 01:42:04.489 --> 01:42:07.378 Blue Cereus agreed in paragraph nine to do the first 01:42:07.390 --> 01:42:11.029 draft. The draft, initial draft of the STM which I 01:42:11.039 --> 01:42:14.569 did. I sent it to Ms. Romero. It was a day or 01:42:14.579 --> 01:42:18.970 two late because we got notice I was working with my 01:42:18.979 --> 01:42:21.350 engineer the week before. But we got notice that my 01:42:21.359 --> 01:42:24.588 mother in law was dying so I couldn't finish it up. 01:42:24.600 --> 01:42:27.810 Sent Ms. Romero an email and she said, fine, give 01:42:27.819 --> 01:42:29.509 it to me as soon as you can. And I did just 01:42:29.520 --> 01:42:32.279 shortly thereafter. It may have been the 18th, 19th 01:42:32.289 --> 01:42:35.359 or 20th. I don't remember. But there was no heartburn 01:42:35.369 --> 01:42:40.189 on either side. They understand people die. So if I'm 01:42:40.199 --> 01:42:43.149 understanding your testimony correctly. And you submitted 01:42:43.329 --> 01:42:46.329 a draft STM within 30 days of this agreement. That 01:42:46.338 --> 01:42:49.628 would have been, let's say on or around July 15th, 01:42:49.640 --> 01:42:53.149 16th, 17th of 2022. Well 30 days would have been the 01:42:53.159 --> 01:42:56.600 17th, which is a Sunday. So I sent the email to Ms. 01:42:56.619 --> 01:42:59.548 Romero on the 18th because I couldn't finish up because 01:42:59.560 --> 01:43:01.329 my mother-in-law was dying and I had to be with my 01:43:01.338 --> 01:43:03.909 wife. But I shortly a day or two later I did. 01:43:06.649 --> 01:43:10.588 Why have you not sought to enforce this agreement, 01:43:10.600 --> 01:43:14.548 if it is in fact still enforceable. In the more than 01:43:14.560 --> 01:43:18.689 a year and a half since submitting that STM. Well, 01:43:18.699 --> 01:43:22.069 several reasons, one as you pointed out that my, I 01:43:22.079 --> 01:43:24.359 testified. I was elected to the bench and it's a full 01:43:24.369 --> 01:43:28.890 time job. Two, I have had an attorney. Unfortunately 01:43:29.029 --> 01:43:31.628 he can't be here today because he dead, working on it. 01:43:32.079 --> 01:43:37.359 Three, Mrs.. Ferguson was the instigator of the TCEQ enforcement 01:43:37.369 --> 01:43:40.759 action. She was on the Zoom there at the hearing because 01:43:40.770 --> 01:43:43.708 she used to work at the TCEQ and she loves to go 01:43:43.878 --> 01:43:46.970 make messes. And I don't know why she doesn't like me 01:43:46.979 --> 01:43:49.430 but she sure as hell doesn't like me. She gives me 01:43:49.439 --> 01:43:55.250 grief every time I turn around. And um we were dealing 01:43:55.259 --> 01:44:00.439 in 2023 with numerous boil water notice problems. And I 01:44:00.449 --> 01:44:03.250 only have so much bandwidth to devote to Blue Cereus. 01:44:03.739 --> 01:44:11.668 But my view was by Blue Cereus complying with requirement 01:44:11.680 --> 01:44:14.289 number nine of providing the draft. The ball was in 01:44:14.298 --> 01:44:17.720 their court. I had SOAH order number 12. 01:44:19.418 --> 01:44:22.159 As well as um 01:44:23.979 --> 01:44:27.359 the prior modification, modification of the written 01:44:27.369 --> 01:44:29.520 agreement. So the ball was in the court. 01:44:31.140 --> 01:44:33.878 I was happy to go forward, but I needed their next 01:44:33.890 --> 01:44:38.180 draft to comment on. And if it was acceptable sign 01:44:38.189 --> 01:44:45.399 I never got one. Nothing, zero, nada. And Ms. Jolly, she 01:44:45.409 --> 01:44:49.329 seemed to be taking a different course. Possibly getting 01:44:49.338 --> 01:44:53.199 rid of the mediate agreement whereby we should buy 01:44:53.259 --> 01:44:56.649 out completely. I'm sorry, who is Ms. Jolly? She was 01:44:56.659 --> 01:44:57.439 their attorney at the Branscomb firm. 01:44:59.378 --> 01:45:03.659 And I show in the record here that you only have two 01:45:03.668 --> 01:45:05.970 exhibits that were submitted on behalf of Blue Cereus. 01:45:06.079 --> 01:45:09.579 Those exhibits are the agreement in principle marked 01:45:09.588 --> 01:45:13.168 as exhibit one and then a list of dates marked as exhibit 01:45:13.180 --> 01:45:16.659 two. Is there a reason why the draft STM or the 22 01:45:16.668 --> 01:45:19.418 emails you referenced earlier were not submitted as 01:45:19.430 --> 01:45:20.020 exhibits? 01:45:22.079 --> 01:45:25.600 Probably not enough time and focus and my attorneys 01:45:25.609 --> 01:45:28.680 as he just announced to the court, he's very new. I 01:45:28.689 --> 01:45:31.009 did send all of them to Mr. Montahan. 01:45:33.418 --> 01:45:39.319 Neema. So he's got them all PUC has it, but they 01:45:39.329 --> 01:45:41.250 will not act on it. You can but they have not been 01:45:41.259 --> 01:45:44.270 entered as exhibits in this hearing. No, but I testified 01:45:44.279 --> 01:45:46.350 that I did it. That's in my court. That's sufficient 01:45:46.359 --> 01:45:46.979 testimony. 01:45:48.529 --> 01:45:51.548 I'm under oath. I, I'm a firm believer in seeing is 01:45:51.560 --> 01:45:55.430 believing. But I don't see a draft STM but I will take 01:45:55.439 --> 01:46:00.199 you at your word. I think I sent a couple to you as well, sir. I don't have 01:46:00.208 --> 01:46:02.890 a copy but you may send one after the hearing, if you 01:46:02.899 --> 01:46:06.798 so choose. I'll copy the TCEQ and the PUC. 01:46:07.439 --> 01:46:10.310 I am going to move over to what should hopefully be my last 01:46:10.319 --> 01:46:13.430 two exhibits. And those are going to be Commission Staff's 01:46:13.439 --> 01:46:16.539 exhibits 16 and 17. I go ahead and have them combined 01:46:16.560 --> 01:46:18.819 over to you now. Ok. 01:46:23.838 --> 01:46:27.470 Now, I'm unsure since I do recognize you do have a 01:46:27.479 --> 01:46:31.140 day job that is not Blue Cereus. But have you ever 01:46:31.149 --> 01:46:34.930 seen a document such as the one currently identified 01:46:34.939 --> 01:46:38.359 as Exhibit 16. I've seen this one specifically. Okay, 01:46:38.369 --> 01:46:40.850 can you please explain to the court what this document 01:46:40.859 --> 01:46:44.470 is? It's a complaint filed by one of the customers 01:46:46.069 --> 01:46:49.829 Mr. Terpak with the PUC about the water going off due to the failure 01:46:49.838 --> 01:46:53.220 at the Segura Water Company water plant. Is that the 01:46:53.229 --> 01:46:58.289 totality of what this complaint mentions? No. Does 01:46:58.298 --> 01:47:02.640 this complaint reference in any capacity CSWR Texas 01:47:03.430 --> 01:47:06.119 or more specifically their appointment as temporary 01:47:06.128 --> 01:47:06.708 manager Blue 01:47:09.310 --> 01:47:12.869 Cereus. Yes, it said he received a letter from CSWR Texas Utility 01:47:12.878 --> 01:47:15.609 Operating Company. And what was the date of this complaint? 01:47:17.289 --> 01:47:21.640 It looks like March 6th. Ok. And you would agree that 01:47:21.649 --> 01:47:25.520 that is at least a month by my count a month and 01:47:25.529 --> 01:47:29.770 five days after the appointment of the temporary manager, 01:47:29.779 --> 01:47:30.239 correct? 01:47:32.060 --> 01:47:35.668 You take judicial notice of that. Ok. I'll take that 01:47:35.680 --> 01:47:39.869 as a yes. There is a section in here. We immediately 01:47:39.878 --> 01:47:42.859 contacted Blue Cereus. Who told us Blue Cereus is still 01:47:42.869 --> 01:47:45.918 handling all customer accounts as far as I've heard 01:47:45.930 --> 01:47:49.180 from Mr. Hall despite the ongoing litigation disputes 01:47:49.189 --> 01:47:51.439 with the wholesalers. If I hear anything differently 01:47:51.479 --> 01:47:53.958 I will let you know as soon as possible. Have I read 01:47:53.970 --> 01:47:59.520 that correctly? Yeah. Ok. Since it references a Mr. Hall 01:47:59.779 --> 01:48:02.939 I'm assuming you did not issue this statement. By chance 01:48:02.949 --> 01:48:05.449 do you know who handles customer complaints for Blue 01:48:05.798 --> 01:48:08.949 Cereus? Probably Ms. Robinson. Ok. And she is not here to 01:48:08.958 --> 01:48:12.628 testify today, correct? Ok. When were you provided 01:48:12.640 --> 01:48:14.640 notice of the appointment of the temporary manager 01:48:14.649 --> 01:48:15.350 for Blue Cereus? 01:48:19.088 --> 01:48:25.220 I think I got an email in on the 1st of February 01:48:25.229 --> 01:48:27.708 and I called you that day, I think. In fact, you did. 01:48:27.720 --> 01:48:33.359 Yes. So I'll go on. This complaint continues so now 01:48:33.369 --> 01:48:35.569 we have a bill from Blue Cereus due at the end of 01:48:35.579 --> 01:48:39.009 March. Do we pay them? Have I read that correctly? 01:48:40.168 --> 01:48:42.270 Yeah. I want you to take a look at exhibit number 17 And 01:48:42.279 --> 01:48:44.289 please tell me if you can identify what that document 01:48:44.298 --> 01:48:47.859 is. It's an invoice. Ok. What is the date of this invoice? 01:48:49.418 --> 01:48:53.119 February 29th. Ok. Who submitted this invoice? Blue 01:48:54.180 --> 01:48:58.390 Cereus. And you would agree that February 29, 2024 is after 01:48:58.399 --> 01:49:00.140 the appointment of the temporary manager for Blue 01:49:00.529 --> 01:49:04.250 Cereus? That's correct. Ok. Why did Blue Cereus continue 01:49:04.259 --> 01:49:07.789 to issue bills? If you look under the term service from 01:49:09.009 --> 01:49:15.770 January 13th to 2/10. The I made the Executive Decision 01:49:15.779 --> 01:49:19.560 that it would be a total pain in the rear. I experienced 01:49:19.569 --> 01:49:23.310 with the prior temporary manager of keeping the accounting 01:49:23.319 --> 01:49:27.060 and bookkeeping correct. To do the this last segment 01:49:27.069 --> 01:49:30.520 because it does include the majority of the time with 01:49:30.759 --> 01:49:34.479 prior to February 1st. And that's how when our, our 01:49:35.020 --> 01:49:38.789 beta reader goes out once a month and I couldn't make 01:49:38.798 --> 01:49:41.298 him go back out on January 31st. Because I didn't know 01:49:41.310 --> 01:49:46.060 until February 1st. So not to rock the boat. I made 01:49:46.069 --> 01:49:48.458 that executive decision to do it. Because personally 01:49:48.470 --> 01:49:53.418 I don't believe the order is valid because it's unconstitutional 01:49:53.430 --> 01:49:57.180 for lack of due process and taking property without 01:49:57.189 --> 01:50:01.250 compensation. So it's your testimony that the executive 01:50:01.259 --> 01:50:04.930 order filed on an emergency basis that is somehow a 01:50:05.390 --> 01:50:09.338 authority that is outside of the scope of the Executive 01:50:09.350 --> 01:50:12.579 Director of the Public Utility Commission. That's my 01:50:12.588 --> 01:50:14.569 legal opinion, correct. Ok. 01:50:18.458 --> 01:50:22.220 Do you feel that by continuing to bill Blue Cereus 01:50:22.270 --> 01:50:26.509 customers during the period where a temporary manager 01:50:26.520 --> 01:50:30.509 has been appointed could create confusion among the 01:50:30.520 --> 01:50:31.819 Blue Cereus customer base? 01:50:34.140 --> 01:50:36.699 I don't have a feeling one way or the other. I will 01:50:36.708 --> 01:50:42.890 tell you my opinion. Ok. Based on exhibit 16, has your 01:50:42.899 --> 01:50:48.378 decision to issue a bill to Blue Cereus customers during 01:50:49.220 --> 01:50:52.859 CSWR Texas temporary management of Blue Cereus caused 01:50:52.869 --> 01:50:55.979 confusion amongst Blue Cereus' customers? 01:51:00.539 --> 01:51:03.770 I would say the confusion is the issuance of the temporary 01:51:03.779 --> 01:51:04.939 or the emergency order. 01:51:07.918 --> 01:51:09.509 I'll continue. Um 01:51:11.659 --> 01:51:13.798 So now we have a bill from Blue Cereus due at the 01:51:13.810 --> 01:51:16.509 end of March. Do we pay them? Do we send that bill 01:51:16.520 --> 01:51:19.779 and remit to CSWR? Without social media we would have 01:51:19.789 --> 01:51:24.378 no idea if they may or may not be any change. Now 01:51:24.390 --> 01:51:27.689 have I read that correctly? Yes, it's in the record. 01:51:27.789 --> 01:51:30.939 Would you agree with me that this customer appears 01:51:30.949 --> 01:51:34.579 confused as to who he should be paying during the temporary 01:51:34.588 --> 01:51:39.789 management period? Yes. I'll pass the witness. No further questions. 01:51:39.859 --> 01:51:41.369 Commissioners, any questions? 01:51:43.289 --> 01:51:45.000 I don't think we have any questions, Judge Denmark. 01:51:45.189 --> 01:51:47.418 This might be a good time to take, uh like a 45 01:51:47.430 --> 01:51:49.489 minute break for the Court Reporter and for folks 01:51:49.500 --> 01:51:53.949 to get some lunch. So why don't we come back uh, recess 01:51:53.958 --> 01:51:58.600 and come back time certain. Let's say 12:15. 01:52:06.600 --> 01:52:07.208 (silence) 01:52:25.838 --> 01:52:28.918 The question is whether to allow the parties five minutes 01:52:28.930 --> 01:52:30.890 for closing arguments or whether you'd like to go and 01:52:30.899 --> 01:52:34.680 take a break now before the closing arguments? I'd 01:52:34.689 --> 01:52:36.509 say this seems to have taken a little longer than we 01:52:36.520 --> 01:52:38.180 anticipated. So why don't we just break now and come 01:52:38.189 --> 01:52:40.310 back and hear closing arguments? All right. So we'll 01:52:40.319 --> 01:52:42.378 stand in recess until 12:15. 01:52:51.149 --> 01:52:56.060 Ok. We will reconvene at 12:21 and I will turn it back 01:52:56.069 --> 01:53:00.259 over to our ALJ. Good afternoon Commissioners. I call 01:53:00.270 --> 01:53:03.668 back to order Docket No. 56171, Commission Staff's 01:53:03.680 --> 01:53:05.489 petition for an emergency order. 01:53:07.359 --> 01:53:11.180 Commissioners, do you have any questions? I did and 01:53:11.189 --> 01:53:13.708 witnesses thank you for coming back up. I guess just 01:53:13.720 --> 01:53:14.859 a couple of things. First, 01:53:16.390 --> 01:53:20.600 The draft STM that we've heard about. Is there any 01:53:20.609 --> 01:53:23.509 chance of movement on this, do you think? I just want 01:53:23.520 --> 01:53:25.979 to kind of ask each of you? Is there any chance to 01:53:25.989 --> 01:53:29.168 come to an agreement on the, the swapping of these 01:53:29.180 --> 01:53:33.489 assets at this point in your opinion? If we gave you 01:53:33.500 --> 01:53:39.189 more time to work it out? No. Yes. As as we stated 01:53:39.199 --> 01:53:42.159 we're bound on enforcing about specific performance 01:53:42.649 --> 01:53:45.529 we have a binding contract. We tend to go forward because 01:53:45.539 --> 01:53:47.829 it would resolve the problem we have. 01:53:50.000 --> 01:53:52.048 As, as far as Segura no, we don't, we 01:53:52.060 --> 01:53:54.259 don't see that that's got an opportunity to move forward. 01:53:54.270 --> 01:53:58.069 It's been since June of 2022 when that agreement was 01:53:58.079 --> 01:54:01.899 executed. Yes, an initial draft, partial, partially 01:54:01.909 --> 01:54:04.458 completed was provided within the 30 days in there. 01:54:05.338 --> 01:54:11.048 The, the agreement in principle was um a an 11th hour 01:54:11.449 --> 01:54:15.189 agreement in a mediation. It was orchestrated by the 01:54:15.369 --> 01:54:19.220 alternative dispute resolution team within SOAH. 01:54:19.229 --> 01:54:24.600 It was on a Friday um when we started the mediation 01:54:24.609 --> 01:54:28.979 um we mean the wholesalers came in with the idea that 01:54:28.989 --> 01:54:34.418 it would be an all day event. The the actual mediators 01:54:34.430 --> 01:54:37.439 had to dismiss themselves at three o'clock in the afternoon 01:54:37.449 --> 01:54:42.128 or so, three or four. Mr Hall also dismissed himself 01:54:42.140 --> 01:54:46.229 late in the afternoon. But at the very end of obviously 01:54:46.239 --> 01:54:50.250 it often happens is on a Friday mediation discussion. 01:54:50.539 --> 01:54:54.520 Um you know, wanting to get something in place. We 01:54:54.529 --> 01:55:00.600 um talked about the idea of asset swap. And um while 01:55:00.609 --> 01:55:03.798 the complete settlement agreement, as you see it today 01:55:03.810 --> 01:55:07.390 was not executed that day. We worked through the 01:55:07.399 --> 01:55:11.029 weekend in a presentation that was limited in scope 01:55:11.039 --> 01:55:14.048 in order to prevent complications and roadblocks from 01:55:14.060 --> 01:55:17.289 it happening. We were hopeful that it would be an exit 01:55:17.298 --> 01:55:19.970 for the issues that the wholesalers and the retailer 01:55:19.979 --> 01:55:25.819 have had. Blues Cereus did provide that initial draft application 01:55:26.020 --> 01:55:29.128 with a lot of significant data and information as it's 01:55:29.140 --> 01:55:34.270 represented. Um it was never submitted because the 01:55:34.279 --> 01:55:37.609 financial data, partial financial data that's required 01:55:37.619 --> 01:55:40.548 as part of the application was provided in August of 01:55:40.560 --> 01:55:44.989 2023, 14 months after the execution of the agreement. 01:55:45.689 --> 01:55:49.109 In August of 23 the financial data that was provided 01:55:49.319 --> 01:55:52.899 was missing and lapse of income information. It only 01:55:52.909 --> 01:55:56.298 included expenses and that would not have met the sufficiency 01:55:56.310 --> 01:56:00.859 requirements as we know them. And um in order to have 01:56:00.869 --> 01:56:05.159 the application move forward. And so we did not, we 01:56:05.168 --> 01:56:09.909 opted not to sign the um application. That's not to 01:56:09.918 --> 01:56:12.390 say that Blue Cereus didn't have the opportunity to sign 01:56:12.399 --> 01:56:14.369 it at that point. To my knowledge, it's never been 01:56:14.378 --> 01:56:19.319 actually signed by Blue Cereus um for submission. And 01:56:19.329 --> 01:56:23.859 so it was then in November of 2023 that we provided 01:56:23.869 --> 01:56:27.009 that notice to terminate movement forward as we 01:56:27.020 --> 01:56:30.548 know that agreement. Ok. So just be clear, no benefit 01:56:30.560 --> 01:56:35.220 to offering more time to try to work this out. Not 01:56:35.229 --> 01:56:39.069 under that agreement no. It's too vague and minimal. 01:56:39.079 --> 01:56:42.539 It would have to be renegotiated. Do you see benefit 01:56:42.548 --> 01:56:44.899 to that? I mean, I, I guess what I'm asking is this 01:56:44.909 --> 01:56:46.918 so intractable at this point between these two parties 01:56:46.930 --> 01:56:50.310 that you don't see a way to get to an agreement, even 01:56:50.319 --> 01:56:51.140 if you started over? 01:56:52.649 --> 01:56:57.270 After 6 1/2 years, no sir. Additionally, we have legal 01:56:57.279 --> 01:56:59.430 representation at that time because we could afford 01:56:59.439 --> 01:57:01.609 it. Although we still owe a lot of money for that. 01:57:01.789 --> 01:57:03.699 At this time, we don't have legal representation and 01:57:03.708 --> 01:57:06.079 we would have to reengage that. In order to feel like 01:57:06.088 --> 01:57:09.319 we could enter even into negotiations. Due to all of 01:57:09.329 --> 01:57:13.338 the complexities and allegations and loopholes that 01:57:13.350 --> 01:57:16.319 are within two state agencies and civil issues between 01:57:16.329 --> 01:57:20.039 the two parties. I disagree wholeheartedly. Because 01:57:20.699 --> 01:57:25.739 in my experience over 41 plus years. The even 01:57:25.750 --> 01:57:28.109 before we reached the mediated settlement agreement 01:57:28.119 --> 01:57:30.600 in this case, it was intractable. But we reached a 01:57:30.609 --> 01:57:33.798 mediated settlement agreement and I refer people to 01:57:33.810 --> 01:57:38.250 mediation and then all the time. And I guess 90% of 01:57:38.259 --> 01:57:41.979 the time they come back. And I think at least between 01:57:42.259 --> 01:57:44.890 Mr. Ferguson and I, we Ferguson and I. We could work something 01:57:44.899 --> 01:57:50.579 out. But I, I think it's worth a valiant effort to 01:57:50.588 --> 01:57:55.329 do so rather than to spend a lot of time. And um 01:57:56.489 --> 01:57:58.500 you know, it's worth sitting down at the table without 01:57:58.509 --> 01:58:03.149 the uh pressure of a state agency looking down your 01:58:03.159 --> 01:58:07.509 throat, uh checking everything. But um you know, if 01:58:07.520 --> 01:58:11.819 there's a mediator that could work us through the agreement 01:58:11.829 --> 01:58:14.569 if anything. I disagree with the characterization of 01:58:14.579 --> 01:58:17.168 the mediation settle agreement by the Fergusons. But if 01:58:17.180 --> 01:58:20.229 there are things I made back to the same mediators 01:58:20.239 --> 01:58:23.649 to flush out anything or flesh out something that can 01:58:23.659 --> 01:58:26.430 be done. I'm willing to do the effort because I want 01:58:27.220 --> 01:58:29.770 it's my obligation or it's Blue Cereus obligation to 01:58:29.779 --> 01:58:32.979 hold over CCN. To make sure there's adequate continued 01:58:33.109 --> 01:58:37.140 supply of potable water. And I keep running into the 01:58:37.149 --> 01:58:39.829 problems with the facilities of the Ferguson's breaking 01:58:39.838 --> 01:58:42.180 down and they don't, they don't get fixed. 01:58:44.048 --> 01:58:46.548 Excuse me, may I ask a question? I don't know if it's. 01:58:46.720 --> 01:58:48.529 Here, hold on. So 01:58:50.708 --> 01:58:54.729 it's my understanding that perhaps the temporary manager 01:58:54.739 --> 01:58:59.548 may be interested in buying this utility. Do you have 01:58:59.560 --> 01:59:02.850 any interest in selling? I've had a discussion. We're 01:59:02.859 --> 01:59:07.470 gonna talk with the attorney for the temporary manager. 01:59:08.020 --> 01:59:12.489 And I did get a call from um, the January 8th letter 01:59:12.628 --> 01:59:15.350 January 8th letter I got on the 14th and the 18th. 01:59:15.359 --> 01:59:18.079 I got a letter from uh Central States saying, do you 01:59:18.088 --> 01:59:20.458 want to sell? I said you need to talk to the partisans 01:59:20.470 --> 01:59:23.548 because I don't own the top and bottom so to speak. 01:59:23.958 --> 01:59:27.579 And then the next thing I know temporary manager 01:59:27.588 --> 01:59:29.409 which causes me some heartburn to begin with. 01:59:31.029 --> 01:59:34.449 But um, if it's a reasonable price, sure. I'd love 01:59:34.458 --> 01:59:36.310 to get away from the Fergusons as fast as I can. 01:59:39.159 --> 01:59:41.779 My, my question is if there is an appointment of a 01:59:41.789 --> 01:59:44.350 temporary manager that does that preclude Blues Cereus from 01:59:44.359 --> 01:59:47.770 negotiating a swap as you're replying. I don't believe 01:59:47.779 --> 01:59:50.579 so. I'm just trying to see kind of where we are. Because 01:59:50.588 --> 01:59:52.708 my understanding is we don't have to make a decision 01:59:52.720 --> 01:59:55.359 in this docket today. So I'm just trying to procedurally 01:59:55.470 --> 01:59:58.000 figure out for myself and my colleagues kind of what 01:59:58.009 --> 02:00:01.619 our options are so. Do y'all have? I actually do have a question. Mr. 02:00:01.640 --> 02:00:05.409 Hall, in the findings of the fact that we've seen in 02:00:05.418 --> 02:00:08.500 this uh in this case. It looks like there's been a 02:00:08.509 --> 02:00:11.779 temporary manager appointed at least two times, two 02:00:11.789 --> 02:00:16.878 previous times, maybe three previous times. What 02:00:16.890 --> 02:00:19.909 what is the cause of temporary managers being appointed 02:00:19.918 --> 02:00:24.060 often in this case? Well, the cause is the Ferguson 02:00:24.069 --> 02:00:26.369 threatening to turn the water off and the PUC take 02:00:26.378 --> 02:00:30.000 the position that they don't have jurisdiction over 02:00:30.009 --> 02:00:33.649 these potable water supplier. My opinion and Mr. 02:00:33.759 --> 02:00:37.000 Sherman's opinion that we petition we filed in docket 02:00:37.009 --> 02:00:40.560 50769. Is you do and you should set their rates that 02:00:40.569 --> 02:00:42.600 we don't need a contract. They should be set by the 02:00:42.628 --> 02:00:46.088 PUC. And they prove up their case while we prove up 02:00:46.100 --> 02:00:50.189 our case separately. With respect to the repeated is 02:00:50.199 --> 02:00:52.579 because of the I think under the prior statute until 02:00:52.588 --> 02:00:57.918 they made it 365 days, it was 180 days. And the first 02:00:57.930 --> 02:01:00.359 appointment was to my certified operator out in Del 02:01:00.369 --> 02:01:04.229 Rio, Jane Whaley. And they, I hate to say the word but 02:01:04.239 --> 02:01:07.458 someone lied. And said that Blue Cereus agreed to Jane 02:01:07.470 --> 02:01:09.930 Whaley as a temporary manager. We didn't even know about 02:01:09.939 --> 02:01:13.449 it and Jane Whaley didn't have the bandwidth to do 02:01:13.458 --> 02:01:16.708 it. And so they renewed it. Don't you own this system? 02:01:16.720 --> 02:01:20.838 Aren't you the CCN holder? Yes of the. Then don't you have 02:01:20.850 --> 02:01:24.449 the obligation to provide this service? Yes. And I 02:01:24.458 --> 02:01:27.659 had an agreement with my good friend, former good friend 02:01:27.668 --> 02:01:30.918 Mr. Ferguson to do so. And it changed. I just, I just 02:01:30.930 --> 02:01:32.970 don't understand. I mean, you had said something during 02:01:32.979 --> 02:01:35.810 your testimony that since you got your new job as a 02:01:35.819 --> 02:01:39.588 as a Judge. You only have the bandwidth to devote so 02:01:39.600 --> 02:01:41.869 much time to Blue Cereus. And I don't think that's a 02:01:41.878 --> 02:01:46.720 very good standard for what consumers expect from their 02:01:46.729 --> 02:01:49.548 public utility delivering water service. I don't know. 02:01:49.560 --> 02:01:52.048 I just, do you want me to respond to that or is 02:01:52.060 --> 02:01:54.628 that a question? Uh no, that was my comment. 02:01:59.430 --> 02:02:01.689 Commissioners, any further questions? 02:02:05.359 --> 02:02:08.220 Commission Staff, you resting at this time? Yes. Commission 02:02:08.259 --> 02:02:11.128 Staff rests. Blue Cereus, are you resting at this time? Yes. 02:02:11.569 --> 02:02:14.819 Ok. We're going to go ahead and proceed with closing 02:02:14.829 --> 02:02:17.369 statements. Commission Staff, your five minute or less 02:02:17.378 --> 02:02:21.259 closing statement. Thank you. Thank you Judge Denmark, 02:02:21.449 --> 02:02:23.958 Commissioners. Thank you for your patience. During 02:02:23.970 --> 02:02:26.039 this overly long morning session. I will try to make 02:02:26.048 --> 02:02:28.869 this as quick as possible. You have heard a significant 02:02:28.878 --> 02:02:32.338 amount about contracts that did not in fact exist despite 02:02:32.350 --> 02:02:35.128 Blue Cereus' protestations to the contrary. Neither 02:02:35.140 --> 02:02:38.069 SOAH Order 12 nor the agreement in principle serve 02:02:38.079 --> 02:02:41.439 as a viable water purchase contract. Both documents 02:02:41.449 --> 02:02:43.989 fail to satisfy the requirements of title 30 Texas 02:02:44.000 --> 02:02:49.279 Administrative Code Section 290.45, Subpart F. Which 02:02:49.289 --> 02:02:51.878 defines a water purchase contract as a signed written 02:02:51.890 --> 02:02:54.869 document of specific terms agreeable to the water purchaser 02:02:54.878 --> 02:02:57.759 and the water wholesaler. A written water purchase 02:02:57.770 --> 02:03:01.298 contract must contain a specific terms such as daily 02:03:01.310 --> 02:03:04.220 and hourly, maximum draw rates and capacity requirements 02:03:04.229 --> 02:03:07.439 for the wholesalers. SOAH order 12 and the agreement 02:03:07.449 --> 02:03:11.509 in principle do not concern themselves with these requirements. 02:03:11.798 --> 02:03:14.390 Because they were never intended to be replacements 02:03:14.500 --> 02:03:17.500 for water purchase contracts. While the agreement in 02:03:17.509 --> 02:03:20.208 principle could have provided a source of water to 02:03:20.220 --> 02:03:23.439 Blue Cereus after the effective date. The trigger event 02:03:23.449 --> 02:03:26.680 for that effective date. The PUC's approval of the 02:03:26.689 --> 02:03:30.489 STM or CCN amendment for the San Pedro Village Public 02:03:30.500 --> 02:03:36.579 Water System has yet to be submitted. Had Blue Cereus 02:03:36.810 --> 02:03:40.798 arranged to renew its 2009 contracts for the wholesalers 02:03:40.810 --> 02:03:43.189 in five year increments as contemplated under those 02:03:43.199 --> 02:03:47.208 now expired contracts. Had Blue Cereus obtained new 02:03:47.220 --> 02:03:50.399 water purchase contracts when ordered by TCEQ in June 02:03:50.409 --> 02:03:53.859 of 2023 from any potential wholesaler. Not just the 02:03:53.869 --> 02:03:57.668 two who spoke today. Had Blue Cereus followed through 02:03:57.680 --> 02:04:00.989 fully on its obligations under the agreement in principle. 02:04:01.000 --> 02:04:04.509 So as to obtain their own source of water during the 02:04:04.520 --> 02:04:08.699 17 months between that agreement's adoption and the 02:04:08.708 --> 02:04:12.970 wholesaler's termination. Had any of these actions occurred 02:04:13.149 --> 02:04:16.069 the appointment of a temporary manager may not have 02:04:16.079 --> 02:04:20.378 been necessary but these things did not happen. And 02:04:20.390 --> 02:04:21.770 for that, we find ourselves here today. 02:04:23.489 --> 02:04:29.000 When actions are silent in action speak because there 02:04:29.009 --> 02:04:32.628 are no contracts. Blue Cereus is in violation of the 02:04:32.640 --> 02:04:37.759 June 19th 2023 TCEQ order which is a hostile act towards 02:04:37.770 --> 02:04:42.779 TCEQ. Because Blue Cereus continued to bill its customers 02:04:42.789 --> 02:04:47.220 and advise those customers that they and not CSWR Texas 02:04:47.470 --> 02:04:50.529 were the current operator of Blue Cereus after the 02:04:50.539 --> 02:04:53.539 February 1st appointment of a temporary manager. Blue 02:04:53.819 --> 02:04:55.939 Cereus has interfered with that appointment which is 02:04:55.949 --> 02:04:59.949 a hostile act towards the Commission. Because the wholesalers 02:04:59.958 --> 02:05:04.159 who sent their first notice of default in 2018. Have 02:05:04.168 --> 02:05:07.548 yet six years after the fact to be fully made whole. 02:05:08.759 --> 02:05:13.798 Blue Cereus continues to not fully pay its obligations because 02:05:13.810 --> 02:05:16.949 the wholesalers are not contractually bound to provide 02:05:16.958 --> 02:05:21.449 potable water for Blue Cereus, the January 8th 2024 02:05:21.458 --> 02:05:24.949 letter terminating all business dealings with Blue 02:05:25.239 --> 02:05:28.949 Cereus. Represents a clear and actionable threat to 02:05:28.958 --> 02:05:32.918 Blue Cereus' ability to provide continuous and adequate 02:05:32.930 --> 02:05:36.649 service to its customers. Whether viewed collectively 02:05:36.659 --> 02:05:39.168 or independently all of these actions and inactions 02:05:39.180 --> 02:05:42.048 by Blue Cereus. Constitute abandonment of the retail 02:05:42.060 --> 02:05:47.289 public water utility. Because Blue Cereus, LLC has been 02:05:47.298 --> 02:05:51.180 abandoned. The Commission should affirm the February 02:05:51.189 --> 02:05:56.829 1, 2024 appointment setting CSWR as a temporary manager 02:05:56.838 --> 02:06:00.798 for Blue Cereus. The appointment of a temporary manager 02:06:00.939 --> 02:06:03.759 is a very serious matter and should only be done when 02:06:03.770 --> 02:06:07.829 there are no other options available to address a viable 02:06:07.838 --> 02:06:10.399 and imminent threat to the public's well-being. At 02:06:10.989 --> 02:06:14.199 this moment, there are approximately 80 connections 02:06:14.208 --> 02:06:18.470 within Blue Cereus' CCN. 80 connections that because 02:06:18.479 --> 02:06:21.409 of Blue Cereus' failure to secure a source of water through 02:06:21.418 --> 02:06:24.850 a viable water purchase contract would not have had 02:06:24.859 --> 02:06:27.958 water for the last 50 days. If that emergency order 02:06:27.970 --> 02:06:33.060 had not been entered on February 1, 2024. These emergency 02:06:33.069 --> 02:06:35.458 conditions posing a threat to the continuous adequate 02:06:35.470 --> 02:06:39.439 service of Blue Cereus' customers remains so too. Does 02:06:39.449 --> 02:06:42.779 the need for a temporary manager? And for these reasons 02:06:43.020 --> 02:06:46.180 Commission Staff respectfully requests the Commission 02:06:46.189 --> 02:06:50.270 affirm the emergency order appointing CSWR Texas 02:06:50.279 --> 02:06:54.350 as temporary manager for Blue Cereus, LLC. Thank you. 02:06:56.529 --> 02:06:58.989 Blue Cereus, you may proceed. Thank you. May it please the Commission 02:06:59.239 --> 02:07:03.310 there are two steps to go through here as we see it. 02:07:03.319 --> 02:07:07.100 First, is there grounds for issuing an emergency order? 02:07:07.470 --> 02:07:11.100 And secondarily, should that emergency order the remedy 02:07:11.109 --> 02:07:13.939 of that order be the appointment of a temporary manager? 02:07:14.250 --> 02:07:18.259 Now first, with respect to the emergency and the grounds 02:07:18.270 --> 02:07:21.970 for doing an emergency order. It comes forward if there 02:07:21.979 --> 02:07:26.548 is discontinuation of retail service is imminent. And 02:07:26.560 --> 02:07:30.810 that both sides agree has happened because the wholesalers 02:07:30.819 --> 02:07:34.319 have unilaterally canceled an agreement that settles 02:07:34.329 --> 02:07:37.829 all of their disputes with my client. And announced 02:07:37.838 --> 02:07:40.259 that they will stop providing water to Blue Cereus. 02:07:40.850 --> 02:07:45.189 The testimony you heard from Mrs. Ferguson is that she 02:07:45.199 --> 02:07:48.239 agreed to provide water through February 1st and then 02:07:48.250 --> 02:07:51.729 she equivocated on whether she would continue to provide 02:07:51.739 --> 02:07:54.770 water to the temporary manager in the future. Her husband 02:07:54.779 --> 02:07:57.539 Mr. Ferguson agreed they would provide it. But Mrs. 02:07:57.548 --> 02:08:00.259 Ferguson said that depends on the negotiations that 02:08:00.270 --> 02:08:02.970 go on with the temporary manager. The testimony you 02:08:02.979 --> 02:08:06.140 also heard from Mr. Ferguson, is that under a prior 02:08:06.149 --> 02:08:09.548 temporary manager, they cut off the water supply. They 02:08:09.560 --> 02:08:12.729 have a history and pattern of wanting to maintain the 02:08:12.739 --> 02:08:15.609 right to cut off retail water. To get the contractual 02:08:15.619 --> 02:08:18.739 terms they want and not backing down from that. They 02:08:18.750 --> 02:08:21.810 have created this emergency. Now the question is, 02:08:21.819 --> 02:08:24.659 how do, how does this Commission resolve this emergency? 02:08:25.140 --> 02:08:28.609 And we would say, and point out that it's not by including 02:08:28.619 --> 02:08:32.640 a temporary manager for my client. First, statutorily 02:08:32.759 --> 02:08:35.128 they have to prove that my client has abandoned the 02:08:35.140 --> 02:08:39.930 utility. And the uh Texas Administrative Code, Section 02:08:39.939 --> 02:08:44.529 24.355(C) sets out a laundry list of seven items and 02:08:44.539 --> 02:08:47.039 they focused on one of those items. To prove that they've 02:08:47.048 --> 02:08:51.060 abandoned it. And that is pattern and displaying a pattern 02:08:51.069 --> 02:08:54.918 of hostility towards the Commission or repeatedly failing 02:08:54.930 --> 02:08:57.789 to respond to the Commission or the utility customers. 02:08:57.798 --> 02:09:00.699 First of all, there's been no testimony whatsoever 02:09:00.708 --> 02:09:03.310 that my client has failed in any way to respond to 02:09:03.319 --> 02:09:06.509 any of the customers. There's one customer complaint 02:09:06.579 --> 02:09:09.378 about wanting to know who to pay. That's, that's it. 02:09:09.548 --> 02:09:12.100 He has a history and pattern of treating his customers 02:09:12.109 --> 02:09:14.949 fairly and keeping the water supplies on to his customers. 02:09:15.520 --> 02:09:18.279 There's been no testimony whatsoever that my client 02:09:18.289 --> 02:09:21.289 has failed to respond to the Texas Public Utility Commission. 02:09:21.649 --> 02:09:24.789 The basis of their complaint is that my client hasn't 02:09:24.798 --> 02:09:29.588 complied with an order of the TCEQ. And under this statute 02:09:29.600 --> 02:09:32.509 they have to prove that the pattern of hostility is 02:09:32.520 --> 02:09:35.949 towards the Texas Public Utility Commission, not another 02:09:35.958 --> 02:09:39.750 state agency. So they're trying to shoe spoon non-compliance 02:09:39.759 --> 02:09:42.750 with the TCEQ order. To say that's proof that they've 02:09:42.759 --> 02:09:45.979 been hostile to the PUC. And that simply hasn't happened. 02:09:47.180 --> 02:09:51.829 That only became an issue in November of 2023 when 02:09:51.838 --> 02:09:54.680 the Ferguson's unilaterally and without cause attempted 02:09:54.689 --> 02:09:58.708 to repudiate this mediated settlement agreement. They 02:09:58.720 --> 02:10:02.229 did so without counsel, they're proceeding pro se and 02:10:02.239 --> 02:10:05.310 they've admitted there's no basis from any prior fact 02:10:05.319 --> 02:10:08.878 that says that the agreement is void or cancelable 02:10:08.890 --> 02:10:11.970 in any way. My client intends to enforce that agreement 02:10:11.979 --> 02:10:16.869 by specific performance. And if it is ordered so performed 02:10:16.890 --> 02:10:19.859 there will be no emergency. Because no contracts will 02:10:19.869 --> 02:10:23.048 be required between the parties and they can go forward 02:10:23.060 --> 02:10:25.958 and provide their own potable water according to their 02:10:25.970 --> 02:10:30.640 plans to their customers in the future. So our position 02:10:30.649 --> 02:10:34.479 is that the wholesalers in this case are public utilities. 02:10:35.000 --> 02:10:38.338 They meet the definition under the Texas Water Code, 02:10:38.350 --> 02:10:43.500 Section 13.002, Subsection 23 of a water and sewer utility 02:10:43.509 --> 02:10:47.298 or a public utility. Because they provide potable water 02:10:47.319 --> 02:10:49.829 for resale. And that's the key is that it's potable 02:10:49.838 --> 02:10:52.579 water. It's not raw water, it's not untreated water. 02:10:53.060 --> 02:10:55.739 They are subject to this Commission's jurisdiction 02:10:55.750 --> 02:10:58.979 as is my client. Putting a temporary manager in place 02:10:58.989 --> 02:11:01.588 today is not going to solve this problem. It's going 02:11:01.600 --> 02:11:04.878 to kick this problem over to the temporary manager. 02:11:04.890 --> 02:11:07.289 Who are going to have to deal with the same issues 02:11:07.298 --> 02:11:10.708 with the Fergusons about demands and threatens to 02:11:10.720 --> 02:11:14.079 shut off the water supply. Our position is that you 02:11:14.088 --> 02:11:17.229 should deny the temporary manager but issue an emergency 02:11:17.239 --> 02:11:19.699 order that you have jurisdiction to do. To bind the 02:11:19.708 --> 02:11:23.628 wholesalers to continue to provide water to my clients 02:11:23.640 --> 02:11:27.439 or to a temporary manager. Under the auspices of the 02:11:27.449 --> 02:11:31.399 prior SOAH order and according to your emergency jurisdiction. 02:11:31.509 --> 02:11:32.000 Thank you. 02:11:35.708 --> 02:11:37.289 Anything further Commissioners? 02:11:39.168 --> 02:11:41.779 We're adjourned. Thank you. Thank you. 02:11:43.699 --> 02:11:47.949 All right here. The Merits Hearing in Docket 56171 02:11:47.958 --> 02:11:50.930 is here by adjourned. And we will reconvene the regular 02:11:50.939 --> 02:11:53.819 Open Meeting of the PUC at 12:40. 02:11:59.378 --> 02:11:59.418 (silence) 02:12:30.326 --> 02:12:32.728 All right. We, we heard a lot of information there. 02:12:32.887 --> 02:12:35.197 Thoughts, comments? 02:12:40.097 --> 02:12:42.536 I mean the mediation agreement is sort of a private 02:12:42.548 --> 02:12:46.216 matter of, you know. An ancillary sort of issue on 02:12:46.228 --> 02:12:50.918 the side. And I think our focus here is on um the 02:12:50.927 --> 02:12:55.847 statutory language in the water code. And ultimately whether 02:12:55.857 --> 02:12:59.247 the Commission properly appointed a temporary manager 02:12:59.258 --> 02:13:06.788 under TWC 13.4132. And I believe they did because there 02:13:06.797 --> 02:13:09.907 was an abandonment of operations and that was as a 02:13:09.918 --> 02:13:11.226 result of failure to pay the bill. 02:13:13.217 --> 02:13:15.157 Blue Cereus is failing to pay their bills to the wholesale 02:13:15.168 --> 02:13:15.836 water supplier. 02:13:17.598 --> 02:13:21.217 I, I tend to agree. I think the, the Commission Staff 02:13:21.226 --> 02:13:25.987 presentation or was compelling. That, that 02:13:27.568 --> 02:13:31.458 the operations for the water utility have been abandoned. 02:13:31.887 --> 02:13:35.747 At least in regards to the retail side and how that 02:13:35.756 --> 02:13:38.987 affects the 80 meters, the 80 consumers that need water. 02:13:39.407 --> 02:13:42.928 And that I would be supportive of appointing a temporary 02:13:42.937 --> 02:13:46.976 manager, affirming the temporary manager. I would be 02:13:46.987 --> 02:13:49.627 supportive of affirming the temporary manager as well. 02:13:49.827 --> 02:13:52.678 I believe, you know, to me what's at issue here 02:13:52.687 --> 02:13:57.226 is the ratepayers or the customers. And um making sure 02:13:57.237 --> 02:14:00.708 that they have dependable and reliable service. And 02:14:00.717 --> 02:14:04.336 that they have um a temporary manager in place. And 02:14:04.348 --> 02:14:06.976 I think we've heard, you know, and was provided in 02:14:06.987 --> 02:14:09.498 the testimony that there is some evidence that they're 02:14:09.506 --> 02:14:12.976 interested in the long term in acquiring the system. 02:14:13.337 --> 02:14:16.536 Which, you know, the testimony here sounds to me 02:14:16.547 --> 02:14:19.847 like, you know, we very much need to move forward and 02:14:19.857 --> 02:14:22.077 do the kind of things that will address this. Not just 02:14:22.087 --> 02:14:24.446 in the short term, but also in the long term. Provide 02:14:24.456 --> 02:14:27.807 a more long term solution um and address the needs 02:14:27.817 --> 02:14:37.887 of the ratepayers. Is there a uh a option if we affirm 02:14:37.897 --> 02:14:41.006 the temporary manager. That we can ensure that duplicate 02:14:41.017 --> 02:14:44.547 bills do not get sent thus continuing, confusing the 02:14:44.557 --> 02:14:48.397 consumers? Or is that a, is that nothing unaddressed 02:14:48.557 --> 02:14:50.547 or is that not something we can address in this order? 02:14:51.597 --> 02:14:54.956 That's a good question Commissioner. I am going off my recollection 02:14:54.968 --> 02:14:57.446 and I don't have the order with me. But I do, I 02:14:57.456 --> 02:15:01.567 believe that I recall that for a previous order in 02:15:01.696 --> 02:15:04.778 which the Commission appointed a temporary manager 02:15:04.786 --> 02:15:08.756 for Blue Cereus. There may have been an ordering paragraph 02:15:08.767 --> 02:15:12.397 something to that effect. Um, specifying um 02:15:15.446 --> 02:15:17.587 the participation of the owner, what the owner could 02:15:17.597 --> 02:15:20.128 could or could not do in terms of operating the utility. 02:15:20.137 --> 02:15:22.067 And, and subject to check with you. We could go, we could go 02:15:22.077 --> 02:15:25.188 look at that. And um, if that is something the Commission 02:15:25.196 --> 02:15:28.587 would like to implement as an ordering paragraph. Then 02:15:28.597 --> 02:15:33.487 you would direct us to modify the emergency order and 02:15:33.498 --> 02:15:37.006 incorporate an ordering paragraph to that effect. But 02:15:37.017 --> 02:15:38.468 I would also ask that we give us a chance to go 02:15:38.476 --> 02:15:40.517 back and look at that. And if we need to brief you 02:15:40.528 --> 02:15:42.327 on that and bring it back, we will. But we could certainly 02:15:42.337 --> 02:15:43.067 look into that. 02:15:44.726 --> 02:15:45.107 Okay. 02:15:47.248 --> 02:15:49.778 Is everybody comfortable with that then? I mean, I 02:15:49.786 --> 02:15:51.908 think we ought to protect consumers in that regard. 02:15:51.918 --> 02:15:54.647 Eliminate some confusion if we can. If we can do that 02:15:54.658 --> 02:15:56.706 in an ordering paragraph, that would be my suggestion. 02:15:58.107 --> 02:16:00.547 Right. So I, I would say, you know, let us go back 02:16:00.557 --> 02:16:03.067 and research that and bring it back to you. We'll 02:16:03.077 --> 02:16:05.006 have to bring we'll, we'll need to work on an order 02:16:05.017 --> 02:16:07.357 regardless of the Commission's decision. And we can 02:16:07.367 --> 02:16:08.908 certainly look into that and bring it back to a future 02:16:08.926 --> 02:16:10.688 open meeting. Mr. Barksdale may have something 02:16:10.696 --> 02:16:12.908 to add here. Mister, sorry. 02:16:15.036 --> 02:16:18.997 Mr. Barksdale, go right ahead. Yes, Ms. Shelah. Chairman, 02:16:19.006 --> 02:16:20.918 Commissioners. Thanks very much Barksdale English on 02:16:20.927 --> 02:16:24.716 behalf of Commission Staff. The, the order appointing 02:16:24.727 --> 02:16:28.398 a temporary manager that relies on the statute that 02:16:28.406 --> 02:16:31.588 gives the duty and responsibility to issue bills to 02:16:31.596 --> 02:16:35.268 the temporary manager. So absent any other language 02:16:35.276 --> 02:16:38.117 that you all would insert into your order. We would 02:16:38.127 --> 02:16:42.307 find duplication of billing by Blue Cereus to be a violation 02:16:42.317 --> 02:16:45.877 of the, of that order. Ok, great. Thank you for that, 02:16:45.888 --> 02:16:46.987 for that Barksdale. 02:16:48.497 --> 02:16:51.406 All right. Then I think I agree with everybody. I would 02:16:51.418 --> 02:16:57.547 I would also say, you know. If CSWR is interested in 02:16:57.557 --> 02:17:01.828 in buying this utility, hopefully there's good engagement 02:17:01.838 --> 02:17:04.526 on, on moving forward that. You know, in the short 02:17:04.537 --> 02:17:08.256 term. (item:5:Motion to approve Commission's emergency order) So with that, I would entertain a motion to approve 02:17:08.268 --> 02:17:10.656 the Commission's emergency order that was entered into 02:17:10.668 --> 02:17:12.696 on February 1, 2024. 02:17:15.256 --> 02:17:17.297 So moved. Second. I have a motion and a second. All those in favor, say 02:17:17.328 --> 02:17:21.168 aye. Aye. Opposed? The motion prevails. Thank you to everyone. 02:17:25.627 --> 02:17:27.138 Okay. 02:17:30.187 --> 02:17:30.418 (silence) 02:17:34.828 --> 02:17:38.747 Shelah, I don't have anything on 6. So next would 02:17:38.756 --> 02:17:44.117 be Item 7. (item:7:Petition to appoint temporary manager for Marion J. Smith, DBA Smith Management Services) Item 7 is Docket No. 56252. This 02:17:44.127 --> 02:17:47.026 is the petition to appoint a temporary manager for 02:17:47.037 --> 02:17:51.727 Marion J. Smith, DBA Smith Management Services. Before 02:17:51.737 --> 02:17:54.127 you use a petition filed by Commission Staff to appoint 02:17:54.138 --> 02:17:56.958 a temporary manager for this utility. The Commission 02:17:56.966 --> 02:17:59.477 provided notice of a hearing on the merits to consider 02:17:59.487 --> 02:18:03.018 the petition in this docket. All right, we will recess 02:18:03.026 --> 02:18:05.117 this meeting of the PUC and hold a separate hearing 02:18:05.127 --> 02:18:05.977 on this item. 02:18:08.477 --> 02:18:11.297 This meeting of the Public Utility Commission of Texas 02:18:11.307 --> 02:18:15.398 will come to order. For the hearing on the merits in 02:18:15.406 --> 02:18:19.307 Docket 56252 which has been duly posted with the Secretary 02:18:19.317 --> 02:18:21.557 of State for March 21, 2024. 02:18:23.747 --> 02:18:26.776 I will turn it over to our Commission ALJ. Good afternoon 02:18:26.787 --> 02:18:31.006 Commissioners. I call to order Docket No. 56252, 02:18:31.018 --> 02:18:33.437 Commission Staff's petition to appoint a temporary 02:18:33.446 --> 02:18:37.328 manager for Marion J. Smith DBA Smith Management Services 02:18:37.338 --> 02:18:39.966 continuing until the Commission orders otherwise. 02:18:40.567 --> 02:18:43.148 This is Christina Denmark assisting the Commissioners. 02:18:43.156 --> 02:18:45.547 And the purpose of this hearing is to determine whether 02:18:45.557 --> 02:18:48.346 a temporary manager should be appointed. We had a pre 02:18:48.377 --> 02:18:51.888 hearing conference on March 18, 2024. And I admitted 02:18:51.898 --> 02:18:55.268 3 exhibits from Commission Staff. No witnesses 02:18:55.276 --> 02:18:58.747 were sworn at the pre hearing conference. At this time 02:18:58.756 --> 02:19:00.716 let's take the appearance starting with Commission 02:19:00.727 --> 02:19:04.268 Staff. Mildred Anaele for Commission Staff. Have 02:19:04.276 --> 02:19:07.006 we heard anything from the utility? No, we have not. 02:19:07.037 --> 02:19:11.177 Ok. We'll go ahead and proceed. Commission Staff, do 02:19:11.187 --> 02:19:15.458 you have any opening statements? I do not. Commissioners, 02:19:15.466 --> 02:19:18.867 do you have any questions? Commission Staff you don't 02:19:18.877 --> 02:19:20.107 have any witnesses, correct? 02:19:21.787 --> 02:19:23.196 Probably I should ask that first. 02:19:25.138 --> 02:19:28.287 All right. Commissioners no questions, correct? No. 02:19:29.148 --> 02:19:31.638 Commission Staff, any closing statements? No, I do 02:19:31.648 --> 02:19:34.276 not have any. All right, we're adjourned. Thank 02:19:34.287 --> 02:19:40.287 you. The Merits Hearing in Docket 56252 is hereby adjourned. 02:19:40.297 --> 02:19:43.346 And we will reconvene the open meeting of the PUC 02:19:43.357 --> 02:19:48.828 at 12:48pm and resume with Item No. 7. 02:19:56.297 --> 02:19:59.857 All right. So in this docket, um we have a few policy 02:19:59.867 --> 02:20:03.268 issues we need to need to run through quickly. 02:20:03.596 --> 02:20:06.156 So similar to what we've done in previous open meetings. 02:20:06.168 --> 02:20:08.037 My plan is to just run through those. Tell you what 02:20:08.047 --> 02:20:10.716 I think and if we all agree, we can move forward. So 02:20:11.117 --> 02:20:13.607 issue one, has the Commission Staff demonstrated the 02:20:13.617 --> 02:20:16.607 utility has abandoned operations. I believe it has. 02:20:18.078 --> 02:20:20.537 Item No. 2, should the Commission appoint South 02:20:20.547 --> 02:20:23.317 Plains as temporary manager of the utility? I believe 02:20:23.328 --> 02:20:26.817 the answer is yes. If the Commission appoints South 02:20:26.828 --> 02:20:29.307 Plains as temporary manager of the utility, should 02:20:29.317 --> 02:20:31.918 the appointment begin once the current temporary manager 02:20:31.927 --> 02:20:35.687 term expires? And should the term be indefinite? I 02:20:35.697 --> 02:20:39.697 believe the appointment of South Plains should be indefinite 02:20:39.706 --> 02:20:42.878 going forward. Item No. 4, should the Commission 02:20:42.887 --> 02:20:45.887 approve the proposed compensation rate? I believe it 02:20:45.897 --> 02:20:48.216 should. We should approve the proposed compensation 02:20:48.358 --> 02:20:52.277 for South Plains at $12 per connection per month. Item 02:20:52.287 --> 02:20:56.057 No. 5, should the Commission approve the proposed 02:20:56.067 --> 02:20:59.076 waiver of financial assurance? I believe it should. 02:20:59.596 --> 02:21:03.976 And finally, Item No. 6. If the Commission decides 02:21:03.988 --> 02:21:06.437 to appoint South Plains as temporary manager for the 02:21:06.447 --> 02:21:09.177 utility, what action should the, should the Commission 02:21:09.187 --> 02:21:11.687 take regarding this proceeding in an open meeting? 02:21:11.887 --> 02:21:15.118 And I believe we should make certain determinations 02:21:15.128 --> 02:21:19.758 and direct OPDM to draft an order accordingly. Any? I'm supportive 02:21:19.767 --> 02:21:23.476 of all of those. I am as well. I'm in agreement as 02:21:23.488 --> 02:21:27.618 well. Okay. (item:7:Motion to determine utility has abandoned operations, appoint South Plains as temporary manager & set compensation) Then I would entertain a motion to determine 02:21:27.628 --> 02:21:29.907 the utility as abandoned operations for the reasons 02:21:29.918 --> 02:21:32.858 cited in the petition. Appoint South Plains as temporary 02:21:32.868 --> 02:21:36.998 manager for the utility beginning March 29, 2024, 02:21:37.037 --> 02:21:39.897 until the commission orders otherwise. Set the temporary 02:21:39.907 --> 02:21:43.527 manager compensation for South Plains at $12 per connection 02:21:43.537 --> 02:21:46.618 per month as recommended by Commission Staff. Waive 02:21:46.628 --> 02:21:48.927 the requirement regarding the temporary manager's duty 02:21:48.937 --> 02:21:51.988 to post financial assurance with the Commission and 02:21:51.998 --> 02:21:55.466 direct OPDM to draft an order consistent with previous 02:21:55.476 --> 02:21:56.297 Commission orders. 02:21:58.657 --> 02:22:02.437 So moved. Second. A motion and second. All those in favor, say aye. Aye. Opposed? 02:22:02.447 --> 02:22:04.557 Motion prevails. Thank you. 02:22:14.096 --> 02:22:16.216 Item No. 8 was consented. 02:22:17.868 --> 02:22:20.258 Item No. 9. Shelah will you lay out Item No. 02:22:20.267 --> 02:22:23.037 9, please? Yes, sir. (item:9:Application of El Paso Electric Company for authority to reconcile fuel costs) Item 9 is Docket No. 02:22:23.047 --> 02:22:28.096 54142. This is the application of El Paso Electric Company 02:22:28.108 --> 02:22:31.508 for authority to reconcile fuel costs. Before you are 02:22:31.517 --> 02:22:35.517 two items. A proposal for decision from SOAH and a 02:22:35.527 --> 02:22:39.637 proposed order. The proposed order addresses the unanimous 02:22:39.647 --> 02:22:43.118 partial agreement among the parties. That resolved all 02:22:43.128 --> 02:22:45.596 but one of the issues between the parties in this docket. 02:22:45.637 --> 02:22:47.797 Proposed corrections were filed and corrections were 02:22:47.807 --> 02:22:51.387 made to the proposed order. The single contested issue 02:22:51.397 --> 02:22:54.336 that the parties did not reach agreement upon is addressed 02:22:54.346 --> 02:22:57.216 in the proposal for decision from SOAH. Parties filed 02:22:57.226 --> 02:22:59.878 exceptions and corrections to the proposal for decision. 02:23:00.096 --> 02:23:02.787 And the SOAH Administrative Law Judge filed a letter 02:23:02.846 --> 02:23:06.248 declined, declining to make the changes to the PFD. 02:23:06.258 --> 02:23:08.687 So the PFD is before you now as well as the proposed 02:23:08.697 --> 02:23:09.017 order. 02:23:10.677 --> 02:23:13.918 So this took a long time in my briefing actually. 02:23:14.437 --> 02:23:17.878 I came to the conclusion. I think the SOAH ALJ reached 02:23:17.887 --> 02:23:20.137 the correct decision in this case. I believe we should 02:23:20.147 --> 02:23:24.226 deny El Paso's request to recover the requested EIM 02:23:24.277 --> 02:23:27.927 costs under the special circumstances, exception for 02:23:27.937 --> 02:23:30.466 a fuel rule and approve the proposed order that addresses 02:23:30.476 --> 02:23:32.527 the stipulation and agreement of the parties. 02:23:35.868 --> 02:23:39.346 I'm in agreement as well. I am as well. I struggled with this one 02:23:39.358 --> 02:23:39.976 a little bit. 02:23:42.177 --> 02:23:47.206 Encouraging for consumers benefit participation in 02:23:47.216 --> 02:23:50.057 wholesale markets is absolutely critical, I think. 02:23:50.067 --> 02:23:55.437 And I think this is a unique challenge where that vertically 02:23:55.447 --> 02:23:59.248 integrated utility chose unilaterally to go into the 02:23:59.258 --> 02:24:01.047 Western market. 02:24:02.668 --> 02:24:05.238 I think this kind of falls through the cracks. I agree 02:24:05.248 --> 02:24:07.267 with you. It's not a fuel expense. It's pretty darn 02:24:07.277 --> 02:24:10.086 close though. When you're buying electricity, you're 02:24:10.096 --> 02:24:15.336 converting one resource to another. And, but I'm supportive 02:24:15.346 --> 02:24:17.527 that this is not the right place for it and that there's 02:24:17.537 --> 02:24:21.287 another place to do this. But I'm sympathetic to the 02:24:21.297 --> 02:24:23.836 challenges of getting into that wholesale market and 02:24:23.846 --> 02:24:27.988 where those costs would fall for recovery. Shelah, 02:24:27.998 --> 02:24:30.927 I believe on this one we need three motions for this? 02:24:31.418 --> 02:24:33.706 I think it's a good idea to do a motion separately 02:24:33.716 --> 02:24:36.047 for the PFD and one separately for the proposed order. 02:24:36.067 --> 02:24:38.918 Yes. (item:9:Motion to adopt PFD) Then I would entertain a motion to adopt the PFD. 02:24:40.476 --> 02:24:43.988 So moved. I second. A motion and a second. All those in favor, say 02:24:43.998 --> 02:24:48.258 aye. Aye. Opposed? Motion prevails. (item:9:Motion to approve proposed order) I'd entertain a motion to 02:24:48.267 --> 02:24:51.086 approve the proposed order that addresses the stipulation 02:24:51.096 --> 02:24:52.498 and agreements of the parties. 02:24:55.326 --> 02:24:57.346 So moved. Second. Motion and a second. All those in favor, 02:24:57.358 --> 02:25:01.427 say aye. Aye. Opposed? The motion prevails. (item:9:Motion to direct OPDM to draft final order incorporating all the Commission's decisions) And finally, I'd 02:25:01.437 --> 02:25:04.608 entertain a motion to direct OPDM to draft final order 02:25:04.618 --> 02:25:06.547 incorporating all the Commission's decisions in this 02:25:06.557 --> 02:25:11.397 proceeding. So moved. I second. I have a motion and second. All those 02:25:11.407 --> 02:25:15.057 in favor, say aye. Aye. Opposed? Motion prevails. 02:25:22.108 --> 02:25:24.907 Item No. 10, I'm recused from. So we'll come back 02:25:24.918 --> 02:25:27.368 to that. Item No. 11. Shelah, will you please lay 02:25:27.378 --> 02:25:33.387 out? Item number 11. (item:11:Application of TNMP to amend its CCN for the Pilot Point 138-kV transmission line project) Item 11 is Docket No. 55114. 02:25:33.397 --> 02:25:36.567 This is the application of Texas New Mexico Power Company 02:25:36.797 --> 02:25:39.668 to amend its certificate of convenience and necessity 02:25:39.817 --> 02:25:44.076 for the Pilot Point 138 KV transmission line project in 02:25:44.086 --> 02:25:47.267 Collin, Grayson and Denton counties. The Commission's 02:25:47.277 --> 02:25:51.187 order was filed February 1. Four Season Ranch Limited file 02:25:51.197 --> 02:25:54.498 a motion for rehearing. The Commission voted by individual 02:25:54.508 --> 02:25:57.418 ballot to add the motion for rehearing to this meeting, 02:25:57.826 --> 02:26:01.748 only to extend time to act on the motion. So before 02:26:01.758 --> 02:26:05.387 us is an extension of time motion for rehearing. I'm 02:26:05.397 --> 02:26:06.358 in favor of this. 02:26:08.517 --> 02:26:11.927 Okay. (item:11:Motion to extend time to act on motions for rehearing) I entertain a motion to extend time to act on the 02:26:11.937 --> 02:26:14.907 motions for rehearing to the maximum extent allowable 02:26:14.918 --> 02:26:15.706 by law. So 02:26:17.358 --> 02:26:21.047 moved. Second. Motion and a second. All those in favor, say aye. Aye. Opposed? 02:26:21.067 --> 02:26:27.206 Motion prevails. Items 12 and 13 were consented. Item 02:26:27.216 --> 02:26:30.826 14. Shelah, will you please lay out this item? (item:14:Petition of citizens of Livingston for fair and equitable rates to review City of Livingston's Rate Ordinance No. A-842) Item 14 is 02:26:30.836 --> 02:26:36.668 Docket No. 55661. Petition of citizens of Livingston 02:26:36.677 --> 02:26:39.988 for fair and equitable rates. To review city of the, 02:26:39.998 --> 02:26:44.537 City of Livingston's Rate Ordinance No. A-842. 02:26:44.647 --> 02:26:48.748 Before you is a SOAH proposal for decision. The petitioner 02:26:48.758 --> 02:26:51.378 filed exceptions to the proposal for decision. The 02:26:51.387 --> 02:26:53.937 SOAH ALJ did not file a letter in response to the 02:26:53.947 --> 02:26:57.027 exceptions. So before you now is the SOAH proposal 02:26:57.037 --> 02:26:59.647 for decision, the exceptions and replies to exceptions. 02:27:00.567 --> 02:27:04.508 So on this item, I agree with the PFD on the jurisdiction 02:27:04.517 --> 02:27:07.826 issue. I don't believe that the Commission has jurisdiction 02:27:07.836 --> 02:27:11.147 of appeals filed by in city residents regarding electric 02:27:11.157 --> 02:27:15.687 rates for municipal owned utility. And because of that 02:27:15.697 --> 02:27:18.248 I don't think it is necessary for us to address the 02:27:18.258 --> 02:27:21.508 signature requirement issues. And so if you agree with 02:27:21.517 --> 02:27:25.466 me on that, I think we should take finding of facts 02:27:25.476 --> 02:27:28.807 No. 25-27 and conclusions of law numbers 02:27:28.817 --> 02:27:31.258 9 and 9. And delete those from the PFD. 02:27:33.238 --> 02:27:38.677 I'm in agreement with your finding. I am as well. Okay, then. (item:14:Motion to adopt PFD in part & modify in part and direct OPDM to prepare final order) I would 02:27:38.687 --> 02:27:41.378 entertain a motion to adopt the PFD in part and modify 02:27:41.387 --> 02:27:44.897 in part. Directing OPDM to prepare a final order consistent 02:27:44.907 --> 02:27:45.836 with this discussion. 02:27:47.937 --> 02:27:51.427 So moved. Second. I have a motion and second. All those in favor, say aye. Aye. Opposed? 02:27:51.437 --> 02:27:56.336 The motion prevails. And Item No. 15 was consented. 02:27:56.346 --> 02:27:58.596 So at this point, we will move back up to Item No. 02:27:58.608 --> 02:28:01.358 10 and I will turn it over to Commissioner Cobos. Thank 02:28:01.397 --> 02:28:03.456 you, Chair Gleeson. Shelah, will you please lay out 02:28:03.466 --> 02:28:08.297 this item? Yes, ma'am. (item:10:Application of Oncor to amend its CCN for Ramhorn Hill-Dunham 345-kV transmission line) Item 10 is Docket No. 55067. 02:28:08.677 --> 02:28:11.637 This is the application of Oncor Electric Delivery 02:28:11.697 --> 02:28:17.437 LLC to amend it CCN for the Ramhorn Hill to Denham 02:28:17.447 --> 02:28:21.527 345-kV transmission line in Denton and Wise counties. 02:28:22.336 --> 02:28:24.287 Let's see, the Commission order was filed on February 02:28:24.297 --> 02:28:27.368 1st. The following parties filed a joint motion for 02:28:27.378 --> 02:28:30.758 rehearing La Stancia Investments LP, the town of 02:28:30.767 --> 02:28:35.498 North Lake, Seth Deleon, Jeff True, Benito Gonzalez, 02:28:35.836 --> 02:28:39.108 Jeremy and Katie Young. And the Commission voted by 02:28:39.118 --> 02:28:42.027 individual ballot to add the motion for a hearing to 02:28:42.037 --> 02:28:44.976 this meeting only to extend time to act on the motion. 02:28:45.988 --> 02:28:48.547 Thank you, Shelah. (item:10:Motion to extend time to act on motion for rehearing) I'm in favor of extending time to 02:28:48.557 --> 02:28:51.716 act on the motion for rehearing to the maximum permitted 02:28:51.726 --> 02:28:55.586 by law. I am as well. Okay. Do I have a motion? 02:28:55.966 --> 02:28:59.797 So moved. Second. I have a motion and a second. All 02:28:59.807 --> 02:29:03.516 in favor, say aye. Aye. All right, motion passes. I will 02:29:03.526 --> 02:29:06.177 now that brings us to the end of the contested case 02:29:07.236 --> 02:29:10.187 uh docket part of our agenda. And I'll hand over the 02:29:10.197 --> 02:29:12.796 meeting back to Chair Gleeson. Thank you, Commissioner 02:29:13.177 --> 02:29:15.956 Cobos. Shelah next up is Item 16, Public Comment. Did 02:29:15.966 --> 02:29:19.196 anyone from the public sign up to comment today? (item:16:Shelah Cisneros with Commission Counsel confirms there are no public comments) Chairman, 02:29:19.206 --> 02:29:22.187 no one signed up for Item 16. However, we did have 02:29:22.196 --> 02:29:26.126 one person sign up for Item 26. And that is the only 02:29:26.136 --> 02:29:28.985 item for which someone from the public signed up for 02:29:28.995 --> 02:29:32.187 comment. Ok, so we'll call that person up under Item 02:29:32.196 --> 02:29:38.977 26. Correct. (item:17:Chairman Gleeson lays out Project No. 53924) Next up is Item 17, Project 53924. Water 02:29:38.986 --> 02:29:41.637 and sewer utility rates after acquisition before is 02:29:41.647 --> 02:29:44.677 a proposal for adoption. So I'd ask Staff to come up 02:29:44.687 --> 02:29:46.727 to go through their proposal. 02:29:59.127 --> 02:30:00.677 David Smeltzer for Commission Staff. 02:30:03.736 --> 02:30:08.117 So we are initial note, we're at the six month deadline 02:30:08.127 --> 02:30:10.496 on this which is evidence of how tricky this has been. 02:30:10.506 --> 02:30:13.808 But we staff is hopeful that we will resolve this and 02:30:13.818 --> 02:30:16.977 get a final order today. So as not to have to start 02:30:16.986 --> 02:30:20.977 the project over again. Before you, we have a proposal 02:30:20.986 --> 02:30:25.088 for adoption and this is informed by the discussion 02:30:25.098 --> 02:30:28.078 that we had two open meetings ago. Where the Commission 02:30:28.088 --> 02:30:30.558 approves some general statutory interpretation and 02:30:30.568 --> 02:30:34.838 guidance on how we would interpret this rule. I, you 02:30:34.848 --> 02:30:37.332 know there, there was a, a letter filed last night 02:30:37.342 --> 02:30:40.111 by one of the stakeholders/ Saying that they wish some 02:30:40.121 --> 02:30:42.742 additional time for clarity on this. And I will say 02:30:42.752 --> 02:30:45.943 that there are new procedural provisions that are in 02:30:45.953 --> 02:30:48.943 this rule that hadn't been seen before. But I, I've 02:30:48.953 --> 02:30:50.371 talked to them since and I think we're going to be 02:30:50.381 --> 02:30:53.111 able to work out some time to get familiar with it. 02:30:53.121 --> 02:30:55.668 And I will say that the, the challenging thing before 02:30:55.677 --> 02:30:57.927 you with this rule. Is because we know that we have 02:30:57.937 --> 02:31:00.588 a duty under the statute to ensure that every rate 02:31:00.598 --> 02:31:03.736 is fair and reasonable in the context of these transactions. 02:31:03.897 --> 02:31:07.486 We can't use the process that we know that does that 02:31:07.496 --> 02:31:10.266 which is cost of service rate making. And so staff 02:31:10.276 --> 02:31:12.927 has attempted to design a streamlined of a process 02:31:12.937 --> 02:31:16.168 that's possible. That makes use of the existing procedural 02:31:16.177 --> 02:31:19.697 provisions in the STM rule. You know, you would, you 02:31:19.707 --> 02:31:21.766 would make the determination at the same time in the 02:31:21.776 --> 02:31:25.947 same hearing using the available facts and circumstances 02:31:25.957 --> 02:31:30.016 surrounding a trans the transaction. Facts and circumstances 02:31:31.117 --> 02:31:33.877 is not particularly limiting. I mean, I think we know 02:31:33.887 --> 02:31:36.838 what the best case scenario is, which would be, you 02:31:36.848 --> 02:31:39.526 know, a fully formed system that wants to buy a distress 02:31:39.536 --> 02:31:43.447 system. That just so happens to need repairs that are 02:31:43.457 --> 02:31:45.818 the estimated value of the difference in revenues between 02:31:45.828 --> 02:31:47.996 the two tariff rates, right? That's your onpay perfect 02:31:48.006 --> 02:31:50.727 scenario that we're never going to see. We also know 02:31:50.736 --> 02:31:53.127 what we don't want to see. Which is affiliates that 02:31:53.137 --> 02:31:56.467 are trying to move all of their rates to the one system 02:31:56.477 --> 02:31:58.496 that they have, that happens to have the higher rates. 02:31:58.558 --> 02:32:01.236 Without any justification that would be sort of skirting 02:32:01.338 --> 02:32:03.367 the ratepayer protections that come with the full rate 02:32:03.377 --> 02:32:06.078 case. And so those are the for sure yes, for sure 02:32:06.088 --> 02:32:08.496 no situations, right? And everything in the middle 02:32:08.506 --> 02:32:11.727 is going to depend on the facts and circumstances. 02:32:11.736 --> 02:32:14.786 Staff has provided some guidance about the questions 02:32:14.798 --> 02:32:17.387 that we are not going to take up during this hearing. 02:32:17.397 --> 02:32:20.486 Which involved things like requiring them to justify 02:32:20.496 --> 02:32:23.627 the rates of the tariff system, things as established 02:32:23.637 --> 02:32:25.907 cost of service, things like this. And then we've also 02:32:25.918 --> 02:32:27.937 provided additional language that says some things 02:32:27.947 --> 02:32:30.328 that the Commission can consider. For instance, in 02:32:30.338 --> 02:32:33.607 that dream scenario, if there are, if, if there is 02:32:33.617 --> 02:32:35.736 cost of service information available. That shows that 02:32:35.746 --> 02:32:37.808 repairs are needed. Of course, we would want to know 02:32:37.818 --> 02:32:40.168 that if there's information about how long it's been 02:32:40.286 --> 02:32:42.838 since the rate case, since rate cases have happened 02:32:42.848 --> 02:32:46.907 that would be relevant too. So I think that we, this 02:32:46.918 --> 02:32:48.727 is something that as we work through more cases. We 02:32:48.736 --> 02:32:51.647 may get additional clarity on what's required. But 02:32:51.657 --> 02:32:54.418 I think that for now we provided as much guidance um 02:32:54.427 --> 02:32:56.996 as we can in this docket and I'm happy to answer any 02:32:57.006 --> 02:32:59.828 questions that you guys have. Thanks David. I want 02:32:59.838 --> 02:33:02.598 to thank you and your team. Uh for all the hard work 02:33:02.607 --> 02:33:04.957 I think this is an example of uh you know, of a 02:33:04.967 --> 02:33:06.867 rule that came out of the Bill that, you know, there 02:33:06.877 --> 02:33:08.887 wasn't really that much discussion about during the 02:33:08.897 --> 02:33:10.927 Session. And the rule, promulgating the rule actually 02:33:10.937 --> 02:33:13.838 became, you know, somewhat difficult to uh to navigate. 02:33:14.058 --> 02:33:16.486 I'd also say thank you to all the, you know, folks 02:33:16.496 --> 02:33:20.036 that provided comments in this docket. All the private 02:33:20.048 --> 02:33:23.727 companies. I'd say thank you to um Public Counsel Yalman 02:33:23.736 --> 02:33:26.516 and her OPUC Staff for their valuable contributions. 02:33:26.526 --> 02:33:28.477 This, this took a lot to get it here. Like you said 02:33:28.486 --> 02:33:31.437 we're at the, at the six month deadline. I was pleased 02:33:31.447 --> 02:33:34.746 with how staff took our feedback and incorporated into 02:33:34.756 --> 02:33:37.986 the rule. So um I'm good with it. I'm prepared to approve 02:33:37.996 --> 02:33:39.918 it, but happy to listen to y'all's thoughts. 02:33:42.598 --> 02:33:45.467 I want to thank staff as well for their development 02:33:45.477 --> 02:33:49.197 of this rule. I think they did a great job. And like 02:33:49.207 --> 02:33:52.506 you stated, the Legislation provides a framework and 02:33:52.516 --> 02:33:54.236 we had to get in there and make some policy cuts and 02:33:54.246 --> 02:33:57.367 I think this puts us in the right direction as well. 02:33:58.357 --> 02:34:01.217 I feel like the staff did a great job in terms of 02:34:01.276 --> 02:34:04.617 kind of balancing between, you know, the two various 02:34:04.627 --> 02:34:08.617 scenarios that you described um very important. I think 02:34:08.627 --> 02:34:11.647 that we, we added the paragraph under scope of right 02:34:11.657 --> 02:34:14.637 review. That as you, as you noted, it's the kind of 02:34:14.647 --> 02:34:17.746 things that we're not going to, to review and consider. 02:34:17.848 --> 02:34:20.897 As well as, you know, spending the time to, you know 02:34:20.907 --> 02:34:23.266 in the second paragraph. Talk about the things that 02:34:23.276 --> 02:34:26.548 we would likely uh want to have information on and 02:34:26.558 --> 02:34:30.467 that we want, want to consider. Um I think just kind 02:34:30.477 --> 02:34:35.058 of moving forward in terms of, you know, what our challenges 02:34:35.068 --> 02:34:38.687 are, particularly with small systems. This can be a 02:34:38.697 --> 02:34:42.977 very, you know, great thing that in my mind, the Legislature 02:34:42.986 --> 02:34:46.933 has done. To enable, you know, some of those small struggling 02:34:46.943 --> 02:34:51.473 systems to um to be acquired and continue. And, and 02:34:51.482 --> 02:34:55.282 have the opportunity to be back to uh to be viable 02:34:55.293 --> 02:34:59.052 not only with um providing if you will kind of the 02:34:59.223 --> 02:35:04.727 initial upgrade. But also, you know, an ongoing um 02:35:04.736 --> 02:35:09.197 kind of stewardship and asset management so that those 02:35:09.207 --> 02:35:14.756 systems um will continue to provide um reliable service 02:35:14.766 --> 02:35:18.598 to the ratepayers. And, you know, companies that are 02:35:18.607 --> 02:35:22.437 thinking ahead being proactive in their, in their management 02:35:22.447 --> 02:35:26.772 and their stewardship. So, uh I think this is a very good 02:35:26.782 --> 02:35:30.423 step forward. It did make me kind of think about 02:35:30.433 --> 02:35:33.433 um capital improvement plans. And I know that that is 02:35:33.443 --> 02:35:36.262 something that we are working on, something that we've 02:35:36.272 --> 02:35:39.022 had a request in the past. And so, you know, I look 02:35:39.032 --> 02:35:40.842 forward to seeing that as we move forward. But I did 02:35:40.852 --> 02:35:42.703 want to thank you very much and I think this is going 02:35:42.713 --> 02:35:46.387 to be a really um great step forward. I think we took 02:35:46.397 --> 02:35:48.937 the measures that we needed in terms of protecting 02:35:48.947 --> 02:35:52.746 against some of those unintended outcomes. And uh for 02:35:52.756 --> 02:35:56.308 particularly for I think small rural systems, um this 02:35:56.318 --> 02:35:59.187 this is gonna really help to, to position those going 02:35:59.197 --> 02:36:01.996 forward to be, to provide continuous and reliable service 02:36:02.006 --> 02:36:03.107 for those ratepayers. 02:36:05.187 --> 02:36:08.367 I think it's a great effort and I appreciate all the 02:36:08.377 --> 02:36:12.016 staff work. Yeah. And in, in response to your comments 02:36:12.026 --> 02:36:15.197 Chairman. I, I had a more uh, excuse me uh, Kathleen. 02:36:17.078 --> 02:36:19.818 Commissioner. Things change around here, you know, how am I supposed 02:36:19.828 --> 02:36:25.318 to keep up? I, I have to, I had a, a staff 02:36:25.328 --> 02:36:27.568 completely agrees with your, with the sentiment. That 02:36:27.578 --> 02:36:29.526 the end goal is to get the hands of all of these 02:36:29.536 --> 02:36:32.427 systems into with, with entities that can manage them 02:36:32.437 --> 02:36:34.907 responsibly into, into the future in the long run. 02:36:35.048 --> 02:36:37.207 And I think that we were, we experienced challenge 02:36:37.217 --> 02:36:39.387 because there were from, from both sides, there was 02:36:39.397 --> 02:36:41.117 lots of language that was sent to me. Like oh, maybe 02:36:41.127 --> 02:36:43.227 these should be the criteria, these should be the considerations. 02:36:43.377 --> 02:36:46.727 And we thought it was premature to preestablish all of those 02:36:46.736 --> 02:36:49.838 things at this point. But, but we agree with that 02:36:49.848 --> 02:36:52.516 sentiment completely. Also I, I had originally when 02:36:52.526 --> 02:36:53.947 we thought this open meeting would be shorter. I had 02:36:53.957 --> 02:36:56.727 a longer layout that I had anticipated doing, but I 02:36:56.736 --> 02:36:59.516 cut it short. And so we previously talked about whether 02:36:59.526 --> 02:37:02.897 or not we would host a workshop or something. I'm going 02:37:02.907 --> 02:37:05.447 to leave it up to it's, it's a fairly small group 02:37:05.457 --> 02:37:07.798 of stakeholders that engage with us on this. So you 02:37:07.808 --> 02:37:09.276 guys know how to get a hold of me. Let me know 02:37:09.286 --> 02:37:11.078 if that would be helpful or if you guys want to meet 02:37:11.088 --> 02:37:13.828 with staff. To just talk about how we envision some 02:37:13.838 --> 02:37:15.687 of these things are a little bit more about what was 02:37:15.697 --> 02:37:17.286 intended behind this role. We really want to make sure 02:37:17.298 --> 02:37:21.786 everyone understands the intent. So I get a hold of 02:37:21.798 --> 02:37:23.526 me. If we need to have additional conversation, staff's 02:37:23.536 --> 02:37:27.016 always open to that. Thank you. Thanks David. With 02:37:27.026 --> 02:37:30.107 that. (item:17:Motion to approve proposed order) I will entertain a motion to approve the proposed 02:37:30.117 --> 02:37:33.016 order in Project 53294. 02:37:34.798 --> 02:37:37.427 So moved. Second. I have a motion and second. All those in favor, say 02:37:37.437 --> 02:37:40.168 aye. Aye. Opposed? The motion prevails. 02:37:42.078 --> 02:37:46.947 I don't have anything on 18 or 19. (item:20:Chairman Gleeson lays out Project No. 55999) So that would bring 02:37:46.957 --> 02:37:52.016 us to Item No. 20, Project 55999. Reports of the 02:37:52.026 --> 02:37:55.177 Electric Reliability Council of Texas. You know, ERCOT 02:37:55.187 --> 02:37:57.276 is here and wanted to give us an update under this 02:37:57.286 --> 02:38:00.217 item. So ERCOT Staff, please come on up. 02:38:16.447 --> 02:38:19.437 Good afternoon Woody. Good afternoon, Woody Rickerson 02:38:19.447 --> 02:38:19.558 ERCOT. 02:38:21.387 --> 02:38:24.808 So I'll give you a brief summary of the filing and 02:38:24.818 --> 02:38:26.957 then contritions. 02:38:29.016 --> 02:38:32.457 So on March 1st, ERCOT established four new GTCs. 02:38:33.736 --> 02:38:36.786 Those were to manage flow on two new IROLs. 02:38:38.677 --> 02:38:41.598 The IROLs with the limit flows both North to South 02:38:41.607 --> 02:38:47.536 and South to North from on certain lines. They 02:38:47.548 --> 02:38:51.637 IROLs which is an interconnection reliability operating 02:38:51.647 --> 02:38:53.407 limit. That's a NERC acronym. 02:38:56.088 --> 02:39:00.318 They are IROLs because if you were to overload them 02:39:00.328 --> 02:39:02.637 and the contingency occurs, you could have cascading 02:39:02.657 --> 02:39:06.036 outages. So that's what makes them IROLs. 02:39:08.536 --> 02:39:13.318 So one is for export, which would be a South to North 02:39:13.328 --> 02:39:18.977 flow. So it'd be exporting out of the valley. This 02:39:18.986 --> 02:39:23.286 is some, some characteristics of this one. It would 02:39:23.298 --> 02:39:27.947 occur during peak conditions. So when we are uh near 02:39:27.957 --> 02:39:32.236 scarcity for the entire system. This one, this one 02:39:32.246 --> 02:39:38.798 is most likely to occur um especially when the generation 02:39:39.088 --> 02:39:43.907 in the North or in the generation nNorth of the constraint 02:39:44.707 --> 02:39:47.897 is less than the load North of the constraint. Which 02:39:47.907 --> 02:39:50.746 is most, most of the load in ERCOT. So this is really 02:39:50.756 --> 02:39:53.967 relates to scarcity conditions across ERCOT. It's a resource 02:39:53.977 --> 02:39:57.207 adequacy. It's tied very closely to resource adequacy 02:39:57.217 --> 02:40:01.127 across the entire system. And so the IROL is to limit 02:40:01.367 --> 02:40:05.266 the flow out of the South. It's most likely to occur 02:40:05.276 --> 02:40:09.407 after the sun sets. Since there's a lot of solar generation 02:40:09.418 --> 02:40:11.607 in the north when we lose that solar generation in 02:40:11.617 --> 02:40:14.756 the North. We're losing a percentage of the North generation 02:40:14.887 --> 02:40:18.207 increases the flows from the South. If we were to have 02:40:18.217 --> 02:40:22.668 um strong wind conditions along the coast and not as 02:40:22.677 --> 02:40:25.266 much in the West, that would make it worse as well. 02:40:26.137 --> 02:40:29.496 But like I said, this, this export the South to North 02:40:29.506 --> 02:40:34.357 is most likely to occur when we have a uh scarcity 02:40:34.367 --> 02:40:39.157 condition. So high loads, Summer peak type loads. Now 02:40:39.168 --> 02:40:43.516 on the other side, the other IROL. Same same lines, same 02:40:43.526 --> 02:40:46.607 interface, but it's on import. So this would be flowed 02:40:46.617 --> 02:40:51.048 from North into the valley along the same interface. 02:40:51.506 --> 02:40:54.127 This is closer to the traditional valley issue that 02:40:54.137 --> 02:40:58.727 we've seen in the past. It would also occur at high 02:40:58.736 --> 02:41:03.377 load but it might not be after the sunsets. It would 02:41:03.387 --> 02:41:06.496 probably be during a low wind day, a high load, low 02:41:06.506 --> 02:41:10.048 wind or if we had some forced outages in the valley 02:41:11.157 --> 02:41:15.127 the force outage is South of the constraint. And the 02:41:15.137 --> 02:41:19.187 IROL would limit power that can flow North to South. 02:41:20.217 --> 02:41:23.486 So, because these are IROls NERC standards require 02:41:23.647 --> 02:41:27.276 ERCOT, have a plan to keep from exceeding those limits. 02:41:28.168 --> 02:41:30.467 And that plan includes shedding load. 02:41:32.177 --> 02:41:35.598 So when we think about the one from South to North. 02:41:36.907 --> 02:41:38.098 That's gonna occur 02:41:39.756 --> 02:41:45.727 in lockstep with um peak conditions. And so the load 02:41:45.736 --> 02:41:48.036 shed plan, there is a system wide load shed. 02:41:49.996 --> 02:41:54.828 It's approximately uh 250 megawatts across all of ERCOT 02:41:54.838 --> 02:41:59.578 for a 5% overload of the line. So we can't let it 02:41:59.588 --> 02:42:02.338 overload, contingency, overload. So you'd have to shed 02:42:02.348 --> 02:42:07.048 load before the overload occurs for the import. That 02:42:07.058 --> 02:42:09.986 would be a regional load shed South of the constraint. 02:42:11.026 --> 02:42:16.947 And um this would be a uh a load shed that would 02:42:16.957 --> 02:42:19.246 be spread among the the loads in the South. It would 02:42:19.256 --> 02:42:20.937 follow a transmission emergency. 02:42:23.457 --> 02:42:25.776 So the rest of the filing talks about some of the short 02:42:25.786 --> 02:42:30.308 term midterm, long term solutions to this. We can 02:42:30.677 --> 02:42:32.318 go into that as well if you want to. 02:42:34.298 --> 02:42:37.588 That's a summary. Thank you, Woody. Questions for 02:42:37.598 --> 02:42:41.668 Woody? Comments. I, I have a couple of questions if 02:42:41.677 --> 02:42:44.006 you don't mind. I sent some over to you. I'm not going 02:42:44.016 --> 02:42:47.647 to get into all of those. But I, 02:42:49.477 --> 02:42:53.927 I struggle with this after September 6th just to understand 02:42:53.937 --> 02:42:56.308 it. I know you all are trying to do what's right for 02:42:56.318 --> 02:42:59.746 reliability across the system. The way that I think 02:42:59.756 --> 02:43:02.516 about this from a generator perspective and tell me 02:43:02.526 --> 02:43:06.427 if I'm right or if I'm wrong. But that 02:43:07.967 --> 02:43:12.457 when you uh put the limit on this line, you're effectively 02:43:12.907 --> 02:43:13.607 um 02:43:15.437 --> 02:43:18.977 limiting generation in the South's ability to get to 02:43:18.986 --> 02:43:20.168 the market in the North. 02:43:22.048 --> 02:43:26.107 When generation in the North, it when you have high 02:43:26.197 --> 02:43:30.246 um forced outages in the North and very high load in 02:43:30.256 --> 02:43:30.828 the North. 02:43:36.677 --> 02:43:41.328 Any time the, anytime you're under. Ok. So first of all 02:43:41.338 --> 02:43:41.677 it's 02:43:43.227 --> 02:43:45.467 the subset of time we're talking about is under peak 02:43:45.477 --> 02:43:47.907 conditions. When we're in scarcity conditions, we're 02:43:47.918 --> 02:43:51.668 already very tight, right? So I mean, if we have a 02:43:51.677 --> 02:43:55.187 40,000 Megawatt load day, forced outages in the North 02:43:55.197 --> 02:43:57.756 won't matter because there's plenty correction. Ok 02:43:57.808 --> 02:44:02.387 Good point. So when we're under peak conditions, any 02:44:02.397 --> 02:44:06.578 time, the load in the North, North of the constraint 02:44:06.588 --> 02:44:09.617 exceeds the generation North of the constraint will 02:44:09.627 --> 02:44:13.357 have this issue under peak conditions. So that's really 02:44:13.377 --> 02:44:17.036 it's like most of Texas load, right? That is the majority 02:44:17.048 --> 02:44:19.977 of the ERCOT load. Yeah. So under peak conditions, 02:44:21.457 --> 02:44:24.786 when that load, not during the day, when there's plenty 02:44:24.798 --> 02:44:28.367 of solar, that's not a problem. When the sun sets, most 02:44:28.377 --> 02:44:31.776 of that solar is located North of the constraint. And 02:44:31.786 --> 02:44:34.457 so you'll see that go away. If you have a lot 02:44:34.467 --> 02:44:37.477 of wind in West Texas, it's not gonna be a problem 02:44:38.697 --> 02:44:43.477 if you have a day where the overall peak is not an 02:44:43.486 --> 02:44:47.897 85,000 Megawatt day. It's not gonna be a problem. So 02:44:47.907 --> 02:44:51.717 it's a, it's a subset of conditions. But the basic 02:44:51.727 --> 02:44:54.677 thing to remember is it's a resource adequacy issue 02:44:54.746 --> 02:44:56.137 North of the constraint. 02:44:57.707 --> 02:45:03.157 Right. I think I get that. I just I get it seems 02:45:03.168 --> 02:45:07.818 to me, I don't like operator actions that are necessary 02:45:07.828 --> 02:45:12.207 that impede the market. We have them for reliability 02:45:12.217 --> 02:45:15.016 of the entirety of the system. But to me, when I think 02:45:15.026 --> 02:45:18.308 about this, from a generator perspective. ERCOT is 02:45:18.318 --> 02:45:22.548 telling me that I can't sell power to the North because 02:45:22.558 --> 02:45:25.377 some other generator didn't do their maintenance and 02:45:25.387 --> 02:45:28.236 there they have high forced outages, right? High forged 02:45:28.427 --> 02:45:31.338 And that's a simplification because all of the other 02:45:31.348 --> 02:45:35.526 parameters have to be the same which is low, low wind 02:45:35.536 --> 02:45:38.526 in the North, high forced outages in the North, high 02:45:38.536 --> 02:45:41.756 load in the North. Very hot day towards the end of 02:45:41.766 --> 02:45:45.418 the day when the sun's going down. So but to me, it's 02:45:45.516 --> 02:45:45.717 a, 02:45:48.147 --> 02:45:52.736 it's an unfortunate happening that we've got to impair 02:45:52.798 --> 02:45:56.367 excess generation from being able to get to load, to 02:45:56.377 --> 02:46:00.578 lower prices and to serve load because we haven't planned 02:46:00.588 --> 02:46:04.397 well, you know. And I think it's a, it's a remnant 02:46:04.407 --> 02:46:05.168 of 02:46:07.207 --> 02:46:09.668 the growth that we're seeing in the market, the age 02:46:09.678 --> 02:46:13.137 of our fleet. And the uh, 02:46:15.418 --> 02:46:17.327 you know, I mean. I, when I, when I think about 02:46:17.336 --> 02:46:19.997 this in the uh transmission planning process. Did y'all 02:46:20.008 --> 02:46:23.557 all ever anticipate this happening in the in the planning 02:46:23.566 --> 02:46:29.106 process. Yeah, we went back and did a real in depth 02:46:29.117 --> 02:46:33.077 look at what we were doing. So if you think about this 02:46:33.086 --> 02:46:37.816 we, we should have been able to see this in 2018. If 02:46:37.827 --> 02:46:40.626 we, if we saw it in 2018, we'd have time for this 02:46:40.637 --> 02:46:44.178 line to have been built last year. So we went back 02:46:44.187 --> 02:46:46.396 and looked at the studies we did in 2018 and said, 02:46:46.407 --> 02:46:51.407 why did not, did we not see this in 2018? So some 02:46:51.418 --> 02:46:56.418 of the things that we found were that um the load growth 02:46:56.428 --> 02:46:59.546 north of the constraint exceeded any of our forecast 02:46:59.887 --> 02:47:04.816 So San Antonio central Texas, Dallas, that load growth 02:47:04.827 --> 02:47:08.017 was much more rapid and much more concentrated than 02:47:08.028 --> 02:47:11.787 we expected. That made the situation worse. We also 02:47:11.796 --> 02:47:17.997 had the Frontera Plant switch into the system. So usually 02:47:18.008 --> 02:47:22.457 if a 500 Megawatt plant comes online, you see it come 02:47:22.468 --> 02:47:24.396 three or four years in advance and you have time to 02:47:24.407 --> 02:47:27.948 plan around it. Well, now we had 500 megawatts South 02:47:27.957 --> 02:47:32.546 of the constraint appear with no time to plan for it. 02:47:33.287 --> 02:47:37.207 So that. You paid for that as excess generation. Yes. So 02:47:37.227 --> 02:47:41.856 that makes that makes this this export out much, much 02:47:41.867 --> 02:47:49.528 worse. Another thing was that uh 6400 megawatts 02:47:49.537 --> 02:47:53.816 of dispatchable generation in the North retired after 02:47:53.827 --> 02:48:00.816 2018. So that 6400 megawatts was not included or some 02:48:00.827 --> 02:48:03.008 of, most of it was not included, some of it. We we 02:48:03.017 --> 02:48:06.457 we knew about most of it was not included in that 2018 02:48:06.468 --> 02:48:12.017 study. And uh and lastly, there was somewhere between 02:48:12.028 --> 02:48:15.918 four and 5000 megawatts of wind and solar that came 02:48:15.928 --> 02:48:20.028 online rapidly after 2018 in the South. So you got 02:48:20.037 --> 02:48:22.617 extra generation in the South that wasn't anticipated 02:48:22.887 --> 02:48:25.827 generation retired in the North. It wasn't anticipated 02:48:25.876 --> 02:48:30.698 load growth in the North. That was beyond what we anticipated 02:48:31.187 --> 02:48:33.508 And then you also had a new plant show up in the 02:48:33.517 --> 02:48:37.146 south at a pretty good size plant that uh wasn't included. 02:48:37.867 --> 02:48:42.918 So all those things mean that the, the 28 the, the 02:48:42.928 --> 02:48:46.418 process we were using for system planning in 2018 doesn't 02:48:46.428 --> 02:48:49.517 meet our needs today. So I think maybe the, you know 02:48:49.528 --> 02:48:52.296 what are we gonna do about it? How do we change that 02:48:52.307 --> 02:48:55.468 What do we do to evolve that? And really, if you think 02:48:55.477 --> 02:49:00.968 about, um think about system planning, there are three 02:49:00.977 --> 02:49:06.008 parts to it. There's, there's generation, there's transmission 02:49:06.278 --> 02:49:10.267 and load. And really the only thing transmission does 02:49:10.278 --> 02:49:12.278 is connect generation to load. That's the only reason 02:49:12.287 --> 02:49:16.247 you need the transmission for the most part. If all 02:49:16.258 --> 02:49:18.238 generation was built near load, you wouldn't need a 02:49:18.247 --> 02:49:19.617 whole lot of, of transmission. 02:49:21.327 --> 02:49:23.738 What we've seen happen in the last five or six years 02:49:23.747 --> 02:49:27.218 is that generation can now be built much more quickly 02:49:27.227 --> 02:49:28.988 than it used to. It used to be four or five years 02:49:28.997 --> 02:49:30.968 three or four years for a plant to be built. Now, we 02:49:30.977 --> 02:49:34.356 see it being built in, uh you know, two or three years 02:49:34.367 --> 02:49:37.117 or even less in some cases. So the new generation shows 02:49:37.126 --> 02:49:39.727 up in a shorter time frame. And then on the other end 02:49:39.738 --> 02:49:42.747 of the line, you see load load shows up much more quickly 02:49:42.758 --> 02:49:46.847 now too and it shows up in big chunks. We'll see 1000 02:49:46.856 --> 02:49:51.678 Megawatt load show up in a matter of 1216 months. And 02:49:51.687 --> 02:49:55.057 so the problem you have now have is that transmission 02:49:55.066 --> 02:49:58.918 which sits in the middle of those is still a 3, 4, 5 year 02:49:58.928 --> 02:50:04.577 process. So what can we do to accelerate that 3, 4 or 02:50:04.586 --> 02:50:08.617 five year process so that it fits the generation and 02:50:08.626 --> 02:50:12.247 the load? And so some of the things we have done, um 02:50:12.816 --> 02:50:15.126 we have, we're exploring some, some new tools with 02:50:15.137 --> 02:50:19.948 vendors that will allow us to place generation anticipate 02:50:19.957 --> 02:50:21.796 where generation is gonna be and put that in planning 02:50:21.807 --> 02:50:24.836 cases. So there are generation expansion tools that 02:50:24.847 --> 02:50:27.376 you can run and say this is a place people will probably 02:50:27.387 --> 02:50:30.316 build generation. So because we don't know where generation 02:50:30.327 --> 02:50:32.477 is gonna be, we may have to start placing generation 02:50:32.488 --> 02:50:38.937 generation hubs. We're looking at plan at expanding 02:50:38.948 --> 02:50:42.077 our planning guides that tell us what we can currently 02:50:42.086 --> 02:50:44.937 put in cases. So there's planning guide rules that 02:50:44.948 --> 02:50:47.418 say if they don't, if, if developmental generation 02:50:47.428 --> 02:50:49.178 doesn't meet certain requirements. You can't put it 02:50:49.187 --> 02:50:51.847 in a planning case, we're gonna open that up and look 02:50:51.856 --> 02:50:56.896 at adding to that so that things that are not as developed 02:50:56.907 --> 02:51:00.066 not as have, haven't, haven't progressed as far can 02:51:00.077 --> 02:51:02.876 be included as well. That will help us get a better 02:51:02.887 --> 02:51:08.437 feel for where generations probably gonna be. And 02:51:08.448 --> 02:51:12.698 we're also looking at ways to, to incorporate uh more 02:51:12.707 --> 02:51:16.057 developmental generation that maybe is even further 02:51:16.066 --> 02:51:19.957 down the developmental path. Uh maybe some give people 02:51:19.968 --> 02:51:22.198 some incentive to move forward faster. So those are 02:51:22.207 --> 02:51:25.758 ways that we're trying to, to make sure we have cases 02:51:25.767 --> 02:51:29.517 that, that anticipate because if, if generation is 02:51:29.528 --> 02:51:32.836 gonna show up inside the planning criteria inside the 02:51:32.847 --> 02:51:34.678 planning horizon, we need to try to anticipate where 02:51:34.687 --> 02:51:40.307 they're going to be. Um on the load side, we're already 02:51:40.316 --> 02:51:43.077 bringing more load into the RTP cases, our regional 02:51:43.086 --> 02:51:45.918 transmission planning cases. So we had some pretty 02:51:45.928 --> 02:51:48.457 strict rules in 2018 about what kind of load you can 02:51:48.468 --> 02:51:52.948 include in a planning case. We are breaking those rules 02:51:52.957 --> 02:51:57.758 now and uh doing new things. In fact, the RTP case 02:51:57.767 --> 02:52:00.207 this year will have 50% more load in it than what it 02:52:00.218 --> 02:52:04.137 had last year, which is that will also help us anticipate 02:52:04.146 --> 02:52:06.617 where the transmission is gonna be needed. We're asking 02:52:06.626 --> 02:52:09.356 TSPs to give us more bus level information when they 02:52:09.367 --> 02:52:11.747 give us load, to give it to us at a bus level 02:52:11.758 --> 02:52:14.747 so we can make better decisions on transmission. We're 02:52:14.758 --> 02:52:18.617 also allowing TSP officers to sign letters to say we 02:52:18.626 --> 02:52:20.876 think this is load that needs to be included in your 02:52:20.887 --> 02:52:23.468 case, even though we don't have signed interconnection 02:52:23.477 --> 02:52:25.668 for that load, this is load, we are pretty sure is 02:52:25.678 --> 02:52:28.367 gonna be there. So we're doing all those things to 02:52:28.376 --> 02:52:34.207 try to try to uh get a, get, get ahead of both 02:52:34.218 --> 02:52:36.477 the generation of the load showing up in unanticipated 02:52:36.488 --> 02:52:42.198 places. And then with the transmission, um you know 02:52:42.968 --> 02:52:47.086 we've already put a team together to look at you guys 02:52:47.258 --> 02:52:50.508 approve the uh San Antonio export project late last 02:52:50.517 --> 02:52:54.468 year and that project will actually solve this problem 02:52:54.918 --> 02:52:56.758 But we're already moving ahead to try to anticipate 02:52:56.767 --> 02:52:59.008 what that next IROL is. So we've already put a team 02:52:59.017 --> 02:53:02.428 together. We're working with TSPs to put a, put a 02:53:02.437 --> 02:53:05.028 project together for what we think may be the next 02:53:05.037 --> 02:53:07.356 IROL. So we don't find ourselves in that, in that same 02:53:07.367 --> 02:53:10.617 situation again. So those are some proactive things 02:53:10.626 --> 02:53:13.508 we're doing to change the planning process to try to 02:53:13.517 --> 02:53:16.566 keep us out of this kind of situation in the future 02:53:16.577 --> 02:53:18.347 because this is not where we want to be, this is not 02:53:18.356 --> 02:53:21.856 where we want to operate the grid. But if you look 02:53:21.867 --> 02:53:25.017 back at 2018, there were some real reasons, some valid 02:53:25.028 --> 02:53:27.278 reasons why this didn't show up in the in that planning 02:53:27.287 --> 02:53:32.418 process. Clearly, clearly do do you all have any understanding 02:53:32.428 --> 02:53:36.278 of how much those these gcs will cost in terms of congestion 02:53:36.287 --> 02:53:37.497 on an annual basis? 02:53:39.347 --> 02:53:43.957 We don't have numbers calculated. No. Is that something 02:53:43.968 --> 02:53:50.687 that is calculable? I guess with assumptions built 02:53:50.698 --> 02:53:57.428 in that would necessarily be wrong. But um we can look 02:53:57.437 --> 02:54:01.407 at what happened last Summer and how often that was 02:54:01.418 --> 02:54:04.247 these constraints were binding before they were IROLs 02:54:04.597 --> 02:54:08.517 last Summer and we had that number from last year. 02:54:08.528 --> 02:54:13.347 So that's a good. So that's, but what's changed is 02:54:13.586 --> 02:54:18.028 load growth more. I mean, this Summer is gonna be a 02:54:18.037 --> 02:54:20.028 lot more load in the North than there was last Summer. 02:54:20.077 --> 02:54:24.657 And so um that, that's what made this more of a, of 02:54:24.668 --> 02:54:28.066 a problem this year than it was last year is there 02:54:28.258 --> 02:54:31.997 I mean, I'm going to bark up a tree here that I'm 02:54:32.008 --> 02:54:36.198 probably going to regret, but that's not a threat to 02:54:36.207 --> 02:54:40.758 you by any means. But are, are there, are there like 02:54:40.767 --> 02:54:43.856 storage solutions that could be, could happen like 02:54:43.867 --> 02:54:46.008 on the North and the South of these constraints that 02:54:46.017 --> 02:54:49.477 could because, because these things don't these constraints 02:54:49.488 --> 02:54:51.988 you're not anticipating to happen for a long time in 02:54:51.997 --> 02:54:56.126 terms of minutes or hours, right? I mean, this could 02:54:56.137 --> 02:55:00.617 be a 60 minute constraint or a. That's right. So we 02:55:00.626 --> 02:55:03.448 especially the export constraint, we think that's more 02:55:03.457 --> 02:55:06.207 like a, a one or two hour type thing as the sun 02:55:06.218 --> 02:55:09.977 sets, load starts falling off, constraint goes away 02:55:10.698 --> 02:55:13.718 So yeah, the answer to your question is yes. Anything 02:55:13.727 --> 02:55:18.977 we can do basically anything we can do to add generation 02:55:18.988 --> 02:55:19.597 to the North. 02:55:21.537 --> 02:55:25.948 Okay. Or decrease the load in the North demand response 02:55:25.957 --> 02:55:29.028 I mean, there may be things PUC can help with that 02:55:29.037 --> 02:55:32.827 would help us do one of those two things. And the third 02:55:32.836 --> 02:55:36.497 thing is increase the transfer capability across the 02:55:36.508 --> 02:55:39.457 constraint. That's the third part. So my, my my question 02:55:39.468 --> 02:55:41.816 here is a little bit more in depth. It deals with storage 02:55:42.037 --> 02:55:49.287 is charging storage as a load if that was coordinated 02:55:49.296 --> 02:55:52.597 in the North during this time or in the South, depending 02:55:52.606 --> 02:55:56.586 on which way the constraint is, is that a viable? It 02:55:56.597 --> 02:55:58.937 would that help? I don't know how you do that, but 02:55:59.577 --> 02:56:02.586 the answer is yes, because that storage becomes a load 02:56:03.437 --> 02:56:08.077 So let's take the uh valley exporting South to North 02:56:08.086 --> 02:56:12.387 right? If during that critical time, those critical 02:56:12.396 --> 02:56:17.146 couple hours batteries North of the constraint, if 02:56:17.157 --> 02:56:21.977 those batteries were to discharge that would that could 02:56:21.988 --> 02:56:25.887 very well solve this problem if the, if the quantity 02:56:25.896 --> 02:56:31.546 is right. Right. So yes. Okay. Well, I I know you're 02:56:31.557 --> 02:56:34.247 not where you want to be on this thing and uh I'm 02:56:34.258 --> 02:56:36.948 not where you wanna be either. So uh I'm appreciative 02:56:36.957 --> 02:56:40.037 you look at technologies and other types of solutions 02:56:40.046 --> 02:56:44.827 and encourage you to keep asking the questions of the 02:56:44.836 --> 02:56:48.566 labs, the universities, the vendors, the different 02:56:48.577 --> 02:56:53.247 technologies that are out there. Um You know, I suspect 02:56:53.258 --> 02:56:55.727 putting, you know, some technology in a transmission 02:56:55.738 --> 02:56:58.687 rate to solve this on a short term basis would be a 02:56:58.698 --> 02:57:03.356 unique policy. But if, if these congestion costs become 02:57:03.367 --> 02:57:06.117 in the hundreds of millions of dollars, technology 02:57:06.126 --> 02:57:10.796 might be a much less cost solution. So I look forward 02:57:10.807 --> 02:57:13.178 to working with you, you know, as we, we look through 02:57:13.187 --> 02:57:19.546 this in the future. Thanks. Commissioner Glotfelty great, great points. 02:57:19.918 --> 02:57:23.028 Woody, I really appreciate ERCOT making this filing because 02:57:23.037 --> 02:57:27.497 I think it's very important for the public, the Legislature 02:57:27.508 --> 02:57:31.296 the Commission, the stakeholders. To understand the 02:57:31.307 --> 02:57:34.218 situation that's going down in the valley with respect 02:57:34.227 --> 02:57:38.727 to this um import export constraint, uh constraints 02:57:38.738 --> 02:57:41.856 that you all have identified. You know, there's a few 02:57:41.867 --> 02:57:45.617 things I want to highlight. I, I know you um stated 02:57:45.626 --> 02:57:49.738 that um it's largely a resource adequacy North um in 02:57:49.747 --> 02:57:54.198 the North. Um I think that that becomes potentially 02:57:54.207 --> 02:57:56.907 an issue based on a confluence of events. Like you've 02:57:56.918 --> 02:57:59.227 said, if there's four outages, if there's low wind 02:57:59.238 --> 02:58:01.508 there, the solar drops off and it's still hot outside 02:58:01.896 --> 02:58:04.106 that kind of thing. But I, I wanna sort of explore 02:58:04.117 --> 02:58:06.307 because I think what's going on in the valley is, is 02:58:06.316 --> 02:58:09.778 largely a transmission issue coupled with accelerated 02:58:09.787 --> 02:58:15.097 low growth. So I know that in 2021 we ordered um transmission 02:58:15.106 --> 02:58:18.937 to be built into the valley over $1.3 billion of transmission 02:58:19.267 --> 02:58:21.428 um will be built in the Rio Grande Valley. Part of 02:58:21.437 --> 02:58:23.537 that is a large part of that is the new Greenfield 02:58:23.546 --> 02:58:26.778 project that um will be built that cuts it down the 02:58:26.787 --> 02:58:30.796 center and across the valley by AEP Texas. And that's 02:58:30.807 --> 02:58:35.977 supposed to be put in service um uh by 2027. And then 02:58:35.988 --> 02:58:38.428 we ordered the second circuit to be built on the Western 02:58:38.437 --> 02:58:41.836 part of the Rio Grande Valley um into the lower Rio 02:58:41.847 --> 02:58:45.258 Grande Valley. And, and so that should be completed 02:58:45.267 --> 02:58:48.767 sometime this year. And so I know that that those are 02:58:48.778 --> 02:58:52.157 intended to help with import rather than export. So 02:58:52.168 --> 02:58:54.316 that that's I think will help at least address some 02:58:54.327 --> 02:58:57.577 of the load growth down there um with respect to the 02:58:57.586 --> 02:59:00.767 additional infrastructure down there. You know, 02:59:00.778 --> 02:59:04.198 we're currently in the process of, of um implementing 02:59:04.207 --> 02:59:08.767 House Bill 5066 starting with the Permian Basin area. 02:59:09.278 --> 02:59:15.168 And so um that I believe will help accelerate the development 02:59:15.178 --> 02:59:18.428 of transmission to meet um the rapid low growth that 02:59:18.437 --> 02:59:21.617 we're experiencing throughout the state. Historically 02:59:21.626 --> 02:59:25.816 as you've say, as stated, ERCOT has, has used a conservative 02:59:25.827 --> 02:59:29.367 um process to plan transmission that's based largely 02:59:29.376 --> 02:59:31.546 on signed customer interconnection agreements. And 02:59:31.557 --> 02:59:33.807 it wasn't until the law was passed this past session 02:59:34.137 --> 02:59:39.168 House Bill 5066 that um allows the TDSPs to submit 02:59:39.247 --> 02:59:42.468 reasonable load data. Um that doesn't have to be supported 02:59:42.477 --> 02:59:45.448 by signed customer agreements so that ERCOT can then 02:59:45.557 --> 02:59:47.988 look at transmission projects to accommodate that load 02:59:47.997 --> 02:59:53.157 growth. And so, um I think that, that, you know, where 02:59:53.168 --> 02:59:55.557 we've been with respect to transmission planning to 02:59:55.566 --> 02:59:58.097 where we're at now, I think uh with, with respect to 02:59:58.106 --> 03:00:03.017 that Legislation will help identify um transmission 03:00:03.028 --> 03:00:05.396 projects more proactively. I know you referenced the 03:00:05.407 --> 03:00:08.146 RTP process and including more load growth. And I 03:00:08.157 --> 03:00:10.448 think that's already based, I think on y'all's incorporation 03:00:10.457 --> 03:00:14.738 of 5066 and an NPRR. That's kind of started to 03:00:14.747 --> 03:00:18.537 move through the process that will allow ERCOT to include 03:00:18.546 --> 03:00:21.968 additional load growth based on load submitted by 03:00:21.977 --> 03:00:26.517 TSPs that um is either signed off by the a TSP officer. 03:00:26.528 --> 03:00:30.477 Or um you know, has a customer interconnection agreement 03:00:30.488 --> 03:00:33.316 that's signed and, and so that will incorporate more 03:00:33.327 --> 03:00:36.778 load into the base cases that go into the RTP projects 03:00:36.787 --> 03:00:39.836 that will help identify this type of load that you're 03:00:39.847 --> 03:00:44.037 stating was not identified in 2018. So that, that should 03:00:44.046 --> 03:00:48.008 help. I think um you know, with respect to 5066. Again 03:00:48.017 --> 03:00:54.668 our uh CCN process got um shortened um 280 days from 03:00:54.678 --> 03:00:57.876 from one year. So that'll help our part of the um transmission 03:00:57.887 --> 03:01:00.347 build out process here at the Commission. I know um 03:01:00.356 --> 03:01:03.796 in discussions I've had with Kristi Hobbs that 03:01:03.807 --> 03:01:07.008 um ERCOT in the process of drafting NPRR to establish 03:01:07.017 --> 03:01:10.528 the econ economic criteria test um that was required 03:01:10.537 --> 03:01:15.227 by SB1281. I ask um if you could please deem that 03:01:15.238 --> 03:01:17.907 urgent to move that through the process once it's drafted 03:01:17.918 --> 03:01:21.546 and, and uh dropped into the stakeholder process. And 03:01:21.557 --> 03:01:25.468 you, you stated you've put a team together to proactively 03:01:25.477 --> 03:01:28.207 start looking at projects right after the CPS Energy 03:01:28.218 --> 03:01:31.218 Project. Um because I think load is just continuing 03:01:31.227 --> 03:01:34.238 to grow in, in South Texas and, and it won't stop at 03:01:34.247 --> 03:01:36.816 the CPS Energy Project and we must remain vigilant 03:01:36.827 --> 03:01:39.867 and, and um diligent in identifying future transmission 03:01:39.876 --> 03:01:43.977 projects down there. With respect to resource adequacy 03:01:43.988 --> 03:01:46.937 you know, I we have a lot of inter interconnection 03:01:47.207 --> 03:01:52.178 Q interest, right? Um Since last April of 23 there's 03:01:52.187 --> 03:01:55.037 about 7500 megawatts of new gas in the interconnection 03:01:55.046 --> 03:01:59.847 queue and over 335 gigawatts of new generation interest 03:01:59.856 --> 03:02:02.937 that's largely solar and storage. We're working 03:02:02.948 --> 03:02:06.376 on market design measures here um to provide that market 03:02:06.387 --> 03:02:08.767 certainty and regulatory certainty for investment in 03:02:08.778 --> 03:02:11.347 dispatchable generation, including today, we'll be 03:02:11.356 --> 03:02:14.418 looking at the Texas Energy Fund rules. So there, there's 03:02:14.428 --> 03:02:18.137 you know what I'm trying to summarize here is all of 03:02:18.146 --> 03:02:20.356 the actions that you know, we've taken, we're in the 03:02:20.367 --> 03:02:25.218 process of taking to um help accelerate transmission 03:02:25.227 --> 03:02:26.948 infrastructure build out throughout the state, but 03:02:26.957 --> 03:02:30.097 even in the valley and then also the resource adequacy 03:02:30.106 --> 03:02:32.727 related uh measures that we're, we're in the middle 03:02:32.738 --> 03:02:35.816 of trying to work on right now. You mentioned generation 03:02:35.827 --> 03:02:39.827 hubs. I think that's an excellent idea um to Commissioner 03:02:40.238 --> 03:02:43.057 Glotfelty's point on this sighting of storage on that 03:02:43.066 --> 03:02:46.046 sort of seam right there between San Antonio and Waco. 03:02:46.307 --> 03:02:49.296 With the development, large increase in data centers 03:02:49.307 --> 03:02:53.586 and and other types of um large um loads. I think it 03:02:53.597 --> 03:02:55.968 would be very important if ERCOT could come up with 03:02:55.977 --> 03:02:59.428 some kind of a strategy. I know the generator generation 03:02:59.437 --> 03:03:01.787 developers are very sophisticated and they can probably 03:03:01.796 --> 03:03:04.816 figure out where to site but any kind of assistance 03:03:04.827 --> 03:03:08.907 there, strategic assistance um to help address this 03:03:08.918 --> 03:03:11.928 issue in the valley. While we await, the CPS Energy 03:03:11.937 --> 03:03:14.668 transmission project would, would be very helpful. 03:03:14.678 --> 03:03:16.767 And what I mean, strategic, it's sort of like what 03:03:16.778 --> 03:03:19.586 you discussed about storage and you know, discharge 03:03:19.597 --> 03:03:23.157 charging other types of resources along that scene 03:03:24.086 --> 03:03:27.876 and then with respect to demand response, you know 03:03:27.887 --> 03:03:31.057 um this past Session, the Legislature passed Legislation 03:03:31.066 --> 03:03:34.646 that requires the crypto miners to um register at the 03:03:34.657 --> 03:03:40.057 PUC. However, I I would like for um Connie to and staff 03:03:40.066 --> 03:03:45.238 to include a um issue to get Legislative guidance on 03:03:45.247 --> 03:03:49.557 this issue with respect to um our, our authority, ERCOT's 03:03:49.566 --> 03:03:53.198 authority to be able to um require the crypto miners 03:03:53.207 --> 03:03:56.566 to get off the system during times of scarce conditions. 03:03:56.577 --> 03:03:58.586 And I and I say that I think it's important to get 03:03:58.597 --> 03:04:01.106 that guidance for the Legislature because as I've been 03:04:01.117 --> 03:04:04.918 working on the Permian Basin initiative. I mean 03:04:05.896 --> 03:04:10.968 ERCOT's looking at like nearly 7000 megawatts of crypto 03:04:11.028 --> 03:04:15.327 mining related, depend in the future and that's a lot 03:04:15.336 --> 03:04:18.267 of megawatts. A not, not just there but across the 03:04:18.278 --> 03:04:21.937 state and those megawatts are gonna have to be not 03:04:21.948 --> 03:04:24.997 only accommodated by our transmission system, but by 03:04:25.008 --> 03:04:28.327 generation. And, and so I think it's really important 03:04:28.336 --> 03:04:30.508 we start trying to get ahead of this issue because 03:04:30.517 --> 03:04:34.247 that's a massive amount of megawatts. And I mean, alone 03:04:34.258 --> 03:04:37.448 in the Permian Basin, that's a lot, much less throughout 03:04:37.457 --> 03:04:40.707 the state. There's probably a lot more. So I think 03:04:40.718 --> 03:04:42.928 getting guidance from the Legislature is gonna be important 03:04:42.937 --> 03:04:46.876 on this issue. And I would encourage staff, you 03:04:46.887 --> 03:04:49.247 know, Ramya, as you take the reins in the new Energy 03:04:49.258 --> 03:04:53.617 Efficiency Division/DR, I guess division. To 03:04:53.637 --> 03:04:57.557 work with ERCOT and try to find near term solutions that 03:04:57.566 --> 03:05:01.668 can help address this issue in the Valley. Because um 03:05:02.376 --> 03:05:05.278 in the next three years, we've got to be taking proactive 03:05:05.287 --> 03:05:09.258 action to mitigate this risk and dynamic line ratings 03:05:09.267 --> 03:05:11.957 is great. I think that that could help. I think in 03:05:11.968 --> 03:05:14.738 some respects as you've noted in your filing, um work 03:05:14.747 --> 03:05:16.918 continue to work with the TSPs to see if there's any 03:05:16.928 --> 03:05:19.718 workarounds where you go open breakers, things like 03:05:19.727 --> 03:05:23.126 that. Anything that we can look at that can help over 03:05:23.137 --> 03:05:26.928 the next three years to mitigate this issue um to help 03:05:26.937 --> 03:05:29.278 mitigate this issue, I think would be very helpful 03:05:29.566 --> 03:05:34.157 But um you know, happy to continue to work with you 03:05:34.218 --> 03:05:38.437 um on, on these issues um and would request that or 03:05:38.448 --> 03:05:42.517 co remain vigilant and proactive in trying to identify 03:05:42.528 --> 03:05:43.157 solutions. 03:05:48.287 --> 03:05:52.867 I was just going to, I guess comment on um on the 03:05:52.876 --> 03:05:55.687 notice itself, which is in management of risk. That's 03:05:55.698 --> 03:05:59.086 the very first step is that you've identified the risk 03:05:59.508 --> 03:06:02.827 and then to go back and kind of look at. Ok. How 03:06:02.836 --> 03:06:06.198 did we get here going back and looking at the 2018 03:06:06.207 --> 03:06:10.327 data. And then taking the actions that you did in evaluating 03:06:10.336 --> 03:06:14.428 each one of those processes and then looking at, OK 03:06:14.437 --> 03:06:17.928 what do we need to do differently? And then recognizing 03:06:17.937 --> 03:06:22.707 I think that that that process not only impacts what 03:06:22.718 --> 03:06:25.137 we're doing in the Valley in this particular situation. 03:06:25.336 --> 03:06:29.816 But also um gives us the opportunity to look at across 03:06:29.827 --> 03:06:34.907 the state, how our transmission planning process overall 03:06:35.157 --> 03:06:38.637 you know, can be improved and better um better address 03:06:38.657 --> 03:06:42.707 the, you know, what we're seeing in terms of, of overall 03:06:42.718 --> 03:06:46.767 growth as well as the the changing resource mix and 03:06:47.418 --> 03:06:50.327 and the timing associated with, you know, when the 03:06:50.336 --> 03:06:53.928 needs are in the various areas across the state. 03:06:54.626 --> 03:06:58.046 I thought it was, it was really good in your um in 03:06:58.057 --> 03:07:02.247 your notice that you not only looked at what the impact 03:07:02.258 --> 03:07:07.407 was and kind of explaining how we got here, but also 03:07:07.418 --> 03:07:10.767 looking at what we can do in the short term before 03:07:10.778 --> 03:07:13.718 some of these long term changes. Are able to take place 03:07:13.997 --> 03:07:16.887 And um you know, I think as, as others have kind of 03:07:16.896 --> 03:07:20.327 noted um this opportunity for demand response, particularly 03:07:20.336 --> 03:07:23.168 in the North, knowing that that's an opportunity um 03:07:23.178 --> 03:07:27.327 working with ERCOT and our energy efficiency group 03:07:27.367 --> 03:07:30.557 and seeing what that opportunity is not just to address 03:07:30.566 --> 03:07:34.126 this particular situation. But I think as you mentioned 03:07:34.296 --> 03:07:36.327 you know, the opportunity moving forward across the 03:07:36.336 --> 03:07:39.187 state. So I appreciate you putting this together. I 03:07:39.198 --> 03:07:43.218 think you did um and explained it very well and I think 03:07:43.227 --> 03:07:46.937 it's not just what is presented here, but obviously 03:07:46.948 --> 03:07:51.606 you are doing and ERCOT is doing much more um work and 03:07:51.977 --> 03:07:56.238 um thoughtful deliberation about this. Again, not 03:07:56.247 --> 03:07:59.787 specific to just this particular incident, but looking 03:07:59.796 --> 03:08:02.517 at it from a broader view across the state and I appreciate 03:08:02.528 --> 03:08:02.867 that. 03:08:04.508 --> 03:08:07.157 Thanks Woody, appreciate the filing. As I know you 03:08:07.168 --> 03:08:09.448 all will do continue to kind of work with our staff 03:08:09.457 --> 03:08:11.767 as you're looking at measures to, to address these 03:08:11.778 --> 03:08:15.738 issues. And um I appreciate everything that y'all are 03:08:15.747 --> 03:08:17.687 doing. I know, you know, we always wish we can find 03:08:17.698 --> 03:08:19.617 these things earlier, but it's important that we, that 03:08:19.626 --> 03:08:22.407 we've identified it and, and we're working to address 03:08:22.418 --> 03:08:24.336 it. So I really appreciate your work and everyone at 03:08:24.367 --> 03:08:28.117 ERCOT for this. And Connie, I guess add, add, add it 03:08:28.126 --> 03:08:30.448 to the list, the running growing list of things we 03:08:30.457 --> 03:08:33.678 need to address in our next agency report for the upcoming 03:08:33.687 --> 03:08:34.856 Legislative Ssession next year. 03:08:36.758 --> 03:08:37.977 Will do. Thanks y'all, appreciate it. 03:08:44.066 --> 03:08:46.957 So, we're going to do a slight detour. I've been told 03:08:46.968 --> 03:08:50.646 that I misspoke. I'm not going to place any blame on 03:08:50.657 --> 03:08:57.017 my staff or name by names, Tom Hunter. But I, I misspoke 03:08:57.028 --> 03:09:00.537 and transposed two numbers in a motion on Item 17. 03:09:00.546 --> 03:09:03.247 The water and sewer utility rates after acquisition 03:09:03.258 --> 03:09:06.968 rules. So we'll go back to that call that up and redo 03:09:06.977 --> 03:09:11.428 the motion. So this time we'll move back to Item 17, 03:09:11.437 --> 03:09:16.066 Project 53924. Water and sewer utility rates after 03:09:16.077 --> 03:09:20.738 acquisition. (item:17:Chairman Gleeson updates motion to approve proposed order in Project No. 53924) And I would entertain a motion to approve 03:09:20.747 --> 03:09:26.407 the proposed order in Project No. 53924, in this 03:09:26.597 --> 03:09:29.867 consistent with our discussion. And consistent with 03:09:30.316 --> 03:09:33.066 two last minute typo edits that someone not to be named, 03:09:33.077 --> 03:09:38.137 Tom Hunter sent us over as well that are. And authorize 03:09:38.146 --> 03:09:42.126 staff to make perfecting and non-substantive changes. Thank 03:09:42.137 --> 03:09:42.238 you. 03:09:44.418 --> 03:09:47.238 So moved. Second. I have a motion and second. All those in favor, say 03:09:47.247 --> 03:09:51.117 aye. Aye. Opposed? Motion prevails. All right. 03:09:58.907 --> 03:10:04.428 So I don't have anything on 21 or 22. (item:23:Chairman Gleeson lays out Project No. 55000) Item No. 23 03:10:04.437 --> 03:10:09.247 is Project No. 55000. Performance credit mechanism 03:10:09.528 --> 03:10:11.528 and staff had a filing in this project. 03:10:22.207 --> 03:10:25.918 Good afternoon. This is Harika Basaran with Staff. We filed 03:10:25.928 --> 03:10:28.907 memo based on instructions at the last open meeting. 03:10:29.198 --> 03:10:32.448 And Chris will go over the design elements, the content 03:10:32.457 --> 03:10:35.347 of that and my focus will be the next steps in the 03:10:35.356 --> 03:10:40.856 process. So Chris. Chris Brown, Commission Staff. 03:10:41.387 --> 03:10:45.356 So just kind of quickly summarizing this. So the first 03:10:45.367 --> 03:10:47.218 point we wanted to make is that we looked over the 03:10:47.227 --> 03:10:50.827 37 design parameters. We think this accurately describes 03:10:50.836 --> 03:10:55.727 the set of decisions that need to be made. Just 03:10:55.948 --> 03:10:58.577 confirming, we agree with the previous discussion about 03:10:58.586 --> 03:11:03.557 the absolute cost cap and then related to that, there's 03:11:03.566 --> 03:11:06.896 an open question of how to do the net calculation to 03:11:06.907 --> 03:11:12.258 ensure compliance with this cap. One of our main 03:11:12.267 --> 03:11:14.896 recommendations here is that certain design element 03:11:14.907 --> 03:11:17.758 decisions that affect the modeling be prioritized. 03:11:17.767 --> 03:11:21.336 That's numbers 1 through 15 and 19 through 21. 03:11:23.347 --> 03:11:26.327 We mentioned at least two items here that we think 03:11:26.336 --> 03:11:28.387 that we don't have a specific recommendation at this 03:11:28.396 --> 03:11:31.207 time, but we think they warrant additional consideration. 03:11:32.077 --> 03:11:37.418 And then on Item 37, market power mitigation. The default 03:11:37.428 --> 03:11:41.126 option is just kind of a blanket term that PUC and 03:11:41.137 --> 03:11:44.988 IMM will develop some guidelines. And we think a helpful 03:11:44.997 --> 03:11:47.296 starting point here would be for the IMM to provide 03:11:47.307 --> 03:11:50.778 input on what they view as valuable market mitigation 03:11:51.106 --> 03:11:56.617 rules. I think that's kind of the main substantive 03:11:56.626 --> 03:11:57.258 points, 03:12:01.807 --> 03:12:05.856 basically feedback. So I was just going to ask. So 03:12:05.867 --> 03:12:09.807 at what point in time do we have to make recommendations 03:12:09.816 --> 03:12:16.577 on these points? Is it now or is it um or we 03:12:16.586 --> 03:12:19.137 like taking this memo and letting you all run with 03:12:19.146 --> 03:12:21.457 it? And make those recommendations on the Commission's 03:12:21.468 --> 03:12:22.008 behalf? 03:12:24.657 --> 03:12:28.157 I mean I, I think it's, it's fine for us to give 03:12:28.168 --> 03:12:30.796 recommendations on what we think now. I think, you 03:12:30.807 --> 03:12:33.767 know, similar to what we discussed last time and Commissioner 03:12:34.157 --> 03:12:36.008 Cobos, you know, hit this pretty hard, you know, it's 03:12:36.017 --> 03:12:38.097 important to get feedback from stakeholders as well 03:12:38.106 --> 03:12:41.586 And so, um I would not want to just short circuit any 03:12:41.597 --> 03:12:45.046 options until we got um input from the market participants 03:12:45.057 --> 03:12:47.646 and, and others. So, but I think, yeah, if you have 03:12:47.657 --> 03:12:50.566 kind of preliminary thoughts to, to help kind of guide 03:12:50.767 --> 03:12:54.218 staff as they move forward and, and ERCOT and IMM absolutely 03:12:54.227 --> 03:12:57.407 I think, I think we should discuss them. I'm just wondering 03:12:57.418 --> 03:13:01.727 I think the idea, I think about when we're doing these 03:13:01.738 --> 03:13:04.657 doing these modeling exercises to understand the cost 03:13:04.918 --> 03:13:06.278 what the, 03:13:07.968 --> 03:13:12.528 uh, outliers are that we can get rid of. What are the 03:13:12.537 --> 03:13:16.887 um, um you know they um 03:13:19.448 --> 03:13:21.488 I mean, we talk about a number of seasons here. We 03:13:21.497 --> 03:13:25.247 talk about, you know, what's the high and the low? 03:13:25.258 --> 03:13:27.546 That makes sense, you know, how could you do that? 03:13:27.557 --> 03:13:32.468 Do we have to be bound by four seasons or, or 12 03:13:32.477 --> 03:13:34.816 months or could it be something different? And, and 03:13:34.827 --> 03:13:37.168 that's what I really think. I mean, could it be, 03:13:39.057 --> 03:13:44.137 could you, could you have 365 individual PCMs and 03:13:44.146 --> 03:13:48.796 have it done daily. And only pay for those, you 03:13:48.807 --> 03:13:52.577 know, during the peak time. And divide it by take 03:13:52.586 --> 03:13:54.856 your billion dollars and basically divide it and let 03:13:54.867 --> 03:13:57.988 everybody know. Then those are the ideas that I'm thinking 03:13:57.997 --> 03:14:00.856 about that are like, how would you do something really 03:14:00.867 --> 03:14:03.796 simple and not, uh, 03:14:05.307 --> 03:14:07.937 well, just to kind of see, you know, I mean, this is 03:14:07.948 --> 03:14:11.278 a very complex issue. I think the more simple we make 03:14:11.287 --> 03:14:11.557 it, 03:14:13.207 --> 03:14:16.928 you know. We might, it might work. I don't know. I 03:14:16.937 --> 03:14:19.847 don't know. I'm just, so that's one good feedback simpler 03:14:19.856 --> 03:14:23.468 right? So we heard that and then 1 billion is absolute 03:14:23.477 --> 03:14:26.928 So those two things, is there anything else like in 03:14:26.937 --> 03:14:30.086 our recommendations? And just to be clear, 1 billion 03:14:30.097 --> 03:14:31.387 is a net cap. Net cap. 03:14:33.086 --> 03:14:36.097 Yeah. And, and so I, you know, I, I read your memo 03:14:36.106 --> 03:14:40.028 and, and I zoomed in on the specific design parameters 03:14:40.037 --> 03:14:43.668 that you believe are foundational to um running the 03:14:43.678 --> 03:14:49.646 models and, but to your broader point on the net cost 03:14:49.657 --> 03:14:53.787 cap. I think it's important that as ERCOT moves forward 03:14:53.796 --> 03:14:57.468 with modeling that they take into consideration the 03:14:57.517 --> 03:15:01.077 annual $1 million hard cap on, on the impact on what 03:15:01.086 --> 03:15:04.528 that, how that cap will impact specific parameters 03:15:05.168 --> 03:15:10.008 And or, and also not only just the parameter but 03:15:10.028 --> 03:15:14.008 the default position that was submitted in ERCOT's paper. 03:15:14.017 --> 03:15:19.057 So um I can sort of just give you some thoughts on 03:15:19.066 --> 03:15:22.948 on these parameters, I think um for parameters one 03:15:22.957 --> 03:15:27.767 and two. And that's four seasons was a default and 03:15:27.778 --> 03:15:32.046 there was some, um, months that were provided for, 03:15:32.517 --> 03:15:36.727 um, a breakdown of seasons. Like Commissioner Glotfelty, I'm 03:15:36.738 --> 03:15:39.296 I'm wondering, you know, should four seasons be the 03:15:39.307 --> 03:15:43.198 baseline? What about two seasons and, and that, that 03:15:43.207 --> 03:15:46.367 being Winter and Summer being modeled? And when I think 03:15:46.376 --> 03:15:50.606 about Winter and Summer periods, I think about, you 03:15:50.617 --> 03:15:52.876 know, the fact that the Winter is December through 03:15:52.887 --> 03:15:56.477 February and the Summer is June through September. I 03:15:56.488 --> 03:15:59.347 think in the paper, there was a parenthetical that 03:15:59.356 --> 03:16:02.077 included like the entire year broken up into Winter 03:16:02.086 --> 03:16:04.077 and Summer. And I don't think that's an accurate depiction 03:16:04.086 --> 03:16:06.508 of what the winter and summer looks like. So I think 03:16:06.517 --> 03:16:11.988 running two seasons might be um a good evaluation from 03:16:11.997 --> 03:16:16.178 my perspective, uh the number of PUC hours per season 03:16:16.517 --> 03:16:19.077 um you know, we spend a lot of time looking at 30 03:16:19.086 --> 03:16:21.497 hours in the last two years and all of a sudden 60 03:16:21.508 --> 03:16:24.168 hours. So I'm, I'm, you know, curious to see what the 03:16:24.178 --> 03:16:27.017 stakeholders will think about the number of hours and 03:16:27.028 --> 03:16:30.137 and the introduction of EEA hours per season. Because 03:16:30.146 --> 03:16:32.707 the way I envisioned the PCM was to prevent us from 03:16:32.718 --> 03:16:37.586 even getting to EEA. So I, I'm trying to understand 03:16:37.597 --> 03:16:40.597 that part. But I'lI, I'll let ERCOT and the stakeholders 03:16:40.606 --> 03:16:43.606 sort of evaluate that new introduction because that 03:16:43.617 --> 03:16:47.296 that's something completely new that I have don't remember 03:16:47.307 --> 03:16:50.867 seeing or reading about in E3's prior analysis. 03:16:50.876 --> 03:16:53.997 And again, from a policy perspective, the whole point 03:16:54.008 --> 03:16:57.738 of having the PCM is to avoid EEA. So I 03:16:57.747 --> 03:17:02.086 don't know how EEA hours would be a good um measuring 03:17:02.097 --> 03:17:06.767 tool there. Metrics used to determine PC hours 03:17:06.876 --> 03:17:10.867 hours with lowest surplus of total valuable generation 03:17:10.876 --> 03:17:16.867 relative to load. I mean, when that sort of, I thought 03:17:16.876 --> 03:17:18.678 about some of the discussions we've had in the past 03:17:18.687 --> 03:17:22.117 and the impact of forced and planned outages on this 03:17:22.126 --> 03:17:25.057 kind of metric and what gaming opportunities could 03:17:25.066 --> 03:17:29.097 be presented there. We spend a lot of time talking 03:17:29.106 --> 03:17:32.646 about peak net load and how our focus of the PCM 03:17:32.657 --> 03:17:34.687 would be peak net load. As a matter of fact, it's referenced 03:17:34.698 --> 03:17:37.296 in our blueprint that we approved in January of 23 03:17:37.827 --> 03:17:41.678 So I really would like to see um scenarios run on peak 03:17:41.687 --> 03:17:45.437 net load as well, especially with the um solar ramp 03:17:45.448 --> 03:17:48.537 down and periods that we're experiencing and, and ramp 03:17:48.546 --> 03:17:54.106 up as we add more solar. Um the option of hours with 03:17:54.117 --> 03:17:57.497 lowest ORDC reserve contributions. Should I, I'm not 03:17:57.508 --> 03:17:59.287 sure if that should even be an option. I mean, we're 03:17:59.307 --> 03:18:02.187 ERCOT is carrying a lot of reserves right now through 03:18:02.198 --> 03:18:05.227 not only conservative operations but also ancillary 03:18:05.238 --> 03:18:10.687 services. So naturally the ORDC is going to be, you 03:18:10.698 --> 03:18:12.557 know, the payments we already see are gonna be lower 03:18:12.566 --> 03:18:15.537 because we're, we, we don't have a shortage in reserves. 03:18:16.117 --> 03:18:18.718 Our reserves are currently locked up in conservative 03:18:18.727 --> 03:18:23.586 operations and ancillary services. So I, I don't particularly 03:18:23.597 --> 03:18:26.557 think that option should be evaluated, but I'll, I'll 03:18:26.566 --> 03:18:30.557 let um ERCOT and the stakeholders move through that. 03:18:32.617 --> 03:18:36.758 PC generation duration based cap for conservative 03:18:36.767 --> 03:18:39.698 consecutive PC hours duration, limited resources. 03:18:39.707 --> 03:18:43.517 I'll let the stakeholders and ERCOT kind of work through 03:18:43.528 --> 03:18:45.637 that. I'm not real sure what that means. It, it, I 03:18:45.646 --> 03:18:50.396 read a footnote about batteries and, and 484 hour duration 03:18:50.407 --> 03:18:54.017 batteries. And um so I was trying to tie that in my 03:18:54.028 --> 03:18:56.437 mind together. I don't know what that means exactly 03:18:56.727 --> 03:18:59.238 But I think that should be further evaluated to 03:18:59.247 --> 03:19:02.718 make sure that um we're ensuring 03:19:04.508 --> 03:19:08.198 that the resources that bid into the forward market 03:19:08.207 --> 03:19:11.327 um generation resources bid in the forward market um 03:19:11.336 --> 03:19:15.207 will be able to address the high reliability risk hours. 03:19:16.247 --> 03:19:20.847 ERCOT wide PC requirement. Essentially the PC 03:19:20.856 --> 03:19:23.247 generation required to achieve a target reliability 03:19:23.258 --> 03:19:27.668 standard. Um I, I'm assuming that it will be based 03:19:27.678 --> 03:19:30.678 on one loss of load event for now because we haven't 03:19:30.687 --> 03:19:34.396 set a reliability standard yet. And this is one where 03:19:34.407 --> 03:19:37.988 I'm wondering what the impact of the $1 billion hard 03:19:37.997 --> 03:19:42.307 cap would have on, on this particular parameter. 03:19:43.437 --> 03:19:48.097 And the other part of this is on the blueprint, we 03:19:48.106 --> 03:19:50.577 say that the reliability service shall not be based 03:19:50.586 --> 03:19:54.238 on forward looking load forecasts made by ERCOT. So 03:19:54.247 --> 03:19:59.687 this forecast on the PC requirement is ex ante. Um 03:19:59.856 --> 03:20:03.887 And so I'm wondering how our blueprint language marries 03:20:03.896 --> 03:20:07.097 up with this recommendation if you're gonna be forward 03:20:07.238 --> 03:20:10.037 looking and with forecasts to come up with a PC requirement. 03:20:10.827 --> 03:20:16.117 Net cone determination framework. I'm wondering 03:20:16.296 --> 03:20:20.376 why that will be done ex post when ERCOT is conducting 03:20:20.388 --> 03:20:23.537 a cone study and should know what cone is at some point 03:20:23.567 --> 03:20:28.747 based on today's market um environment. And also 03:20:28.756 --> 03:20:32.216 I'm also wondering um on number 13, the demand curve 03:20:32.228 --> 03:20:35.586 the max annualized PC price 1.5 times net cone is 03:20:35.598 --> 03:20:37.857 a recommended default in there. I'm wondering what the impact 03:20:37.867 --> 03:20:41.228 of um the cost cap will have on that specific parameter. 03:20:42.808 --> 03:20:47.716 Allocation of system PC requirements across LSEs 03:20:47.728 --> 03:20:50.876 that's you know, based on load uh ratio share of system 03:20:50.957 --> 03:20:55.938 wide gross load during peak or during PC hours. Again 03:20:55.947 --> 03:20:59.625 I'm wondering how, you know, it seems like the the 03:20:59.637 --> 03:21:03.706 default framework is based on gross peak load. And 03:21:04.156 --> 03:21:06.727 I believe that we spend a lot of time talking about 03:21:06.736 --> 03:21:10.647 net peak load. So again, I think net peak load should 03:21:10.657 --> 03:21:14.598 be a focus there. And then finally, parameter number 03:21:14.607 --> 03:21:18.897 20 framework used to comply with net cost cap. Basically 03:21:18.907 --> 03:21:23.107 a comparison of the PCM um model to today's energy 03:21:23.117 --> 03:21:28.918 only market. Which um would put um ERCOT system at a 03:21:28.927 --> 03:21:32.716 market economic equilibrium reserve margin. So part 03:21:32.728 --> 03:21:35.427 of the filing talks about modeling the system to year 03:21:35.438 --> 03:21:40.527 2026. And I just wanna make sure that as, as you know 03:21:40.537 --> 03:21:43.478 E3's running their market equilibrium analysis 03:21:43.657 --> 03:21:48.067 for year 2026. That we have a clear understanding of 03:21:48.077 --> 03:21:51.327 what those assumptions they're making for year 2026 03:21:51.336 --> 03:21:55.657 are. Um because that's gonna be fundamentally important 03:21:55.668 --> 03:21:57.888 right? How many megawatts are they removing from the 03:21:57.907 --> 03:22:01.657 ERCOT system to reach market equilibrium? We heard a 03:22:01.668 --> 03:22:03.607 variety of megawatts the last time we went through 03:22:03.617 --> 03:22:06.067 this, this deliberation, what, what is the megawatts 03:22:06.077 --> 03:22:10.086 amount they're removing and why um are they factory 03:22:10.098 --> 03:22:15.527 in conservative operations. ECRS potentially DRS it 03:22:15.537 --> 03:22:18.737 should be in the market by 2026 and RTC plus B. 03:22:19.497 --> 03:22:22.848 What about new generation resources? We've had new 03:22:22.857 --> 03:22:27.836 gas generation announced um you know, storage solar 03:22:28.688 --> 03:22:32.367 and then also um transmission deliverability. What 03:22:32.376 --> 03:22:34.876 is the impact of the transmission constraints that 03:22:34.888 --> 03:22:38.918 appear throughout our system on delivering our generation 03:22:38.927 --> 03:22:42.756 across the system? You know, that's, that's also 03:22:42.768 --> 03:22:44.827 an important factor and that was part of our blueprint 03:22:44.836 --> 03:22:49.638 So I, I just wanna make sure that the base case starting 03:22:49.647 --> 03:22:55.058 point of this analysis that we understand what assumptions 03:22:55.067 --> 03:22:58.997 are made. I know that in E3's initial report, 03:22:59.006 --> 03:23:03.336 they provided us with a base case um set of assumptions 03:23:03.348 --> 03:23:06.287 where they worked off all their model runs. So we need 03:23:06.296 --> 03:23:08.888 to understand what those base case assumptions are 03:23:09.207 --> 03:23:11.716 and make sure that they're starting at a point that's 03:23:11.728 --> 03:23:14.037 truly reflective of year 2026. 03:23:18.006 --> 03:23:21.308 I, I guess from my standpoint, um where I see this 03:23:21.317 --> 03:23:26.046 study kind of going. Is, you know, identifying what 03:23:26.058 --> 03:23:30.418 provides the most value. And so the whole concept 03:23:30.427 --> 03:23:34.787 of going in and doing and setting certain initial values 03:23:34.796 --> 03:23:37.857 or default values. What the various parameters are 03:23:37.867 --> 03:23:40.518 that we're going to consider, you know, how many different 03:23:40.527 --> 03:23:45.077 scenarios are going to run to kind of see what change 03:23:45.086 --> 03:23:48.336 impacts each of the various parameters or how each 03:23:48.348 --> 03:23:51.077 of the various parameters impact the final outcome. 03:23:51.447 --> 03:23:55.537 Is all driven towards, you know, identifying and kind 03:23:55.546 --> 03:24:00.086 of building what will bring the most value. And to 03:24:00.098 --> 03:24:02.527 that extent, I would think that we would want to stay 03:24:02.537 --> 03:24:06.228 as flexible as we can. I personally think simple is 03:24:06.237 --> 03:24:10.277 always better. Um you know, in the blueprint and, and 03:24:10.287 --> 03:24:13.506 I think conceptually the thought was that this would 03:24:13.518 --> 03:24:18.867 be over time self correcting, right? And so to me, 03:24:18.876 --> 03:24:21.777 those are the most important concepts and things to 03:24:21.787 --> 03:24:26.707 remember. I would value the input that we get from 03:24:26.716 --> 03:24:29.268 the market participants, the people who, you know, 03:24:29.277 --> 03:24:32.447 actually, you know, live and breathe this every day 03:24:32.457 --> 03:24:35.067 as well as our staff and our market analysis group 03:24:35.388 --> 03:24:39.947 I would just lean uh away from discounting um 03:24:40.537 --> 03:24:44.577 things that might provide potential that because it 03:24:44.586 --> 03:24:49.777 all operates as collectively as a system in the analysis. 03:24:50.018 --> 03:24:52.688 I just want, wouldn't want to kind of forego something 03:24:52.938 --> 03:24:57.188 that um you know, inadvertently we, we lose value because 03:24:57.197 --> 03:25:01.497 we've, we've taken a position kind of at the outset 03:25:01.756 --> 03:25:05.537 that, you know, maybe we um should have given a little 03:25:05.546 --> 03:25:10.777 bit more thought too. So, um I'm also um very cognizant 03:25:10.787 --> 03:25:14.827 of and I think, um you know, every time we talk about 03:25:14.997 --> 03:25:19.897 PCM or any other work initiative, you know, we 03:25:19.907 --> 03:25:22.268 we began and in the conversation with real time 03:25:22.277 --> 03:25:26.107 co-optimization. And I think in my mind that is, you know 03:25:26.117 --> 03:25:29.348 1st, 1st on the list. It's something we absolutely 03:25:29.357 --> 03:25:32.987 have to achieve as well as, you know, we're doing this 03:25:32.997 --> 03:25:36.077 in order to address and to meet the needs that we identify 03:25:36.168 --> 03:25:39.617 with our, within our reliability standards. So, um 03:25:40.518 --> 03:25:42.876 it, it looks to me like we've kind of, you, you've 03:25:42.888 --> 03:25:46.497 kind of picked the things that in your mind will, you 03:25:46.506 --> 03:25:50.747 know, drive the um the, the actual cost of the PCM 03:25:50.777 --> 03:25:55.586 and, and then hopefully kind of as we move forward 03:25:55.598 --> 03:25:58.256 we'll continue to be cognizant of the time that we 03:25:58.268 --> 03:26:02.478 have, we identify the best work pro product we can 03:26:02.487 --> 03:26:07.466 in the time available. And um you know, oftentimes 03:26:07.617 --> 03:26:11.157 you know, you think about, I wanna get, you know, 100% 03:26:11.168 --> 03:26:14.478 of the value. But if you can do it in a, in 03:26:14.487 --> 03:26:17.668 a shorter amount of time, if it can be simpler and 03:26:17.677 --> 03:26:20.947 you can achieve, you know, maybe 80% of the value, 03:26:20.957 --> 03:26:23.728 sometimes that's a better, that's a better work product. 03:26:23.787 --> 03:26:26.268 And so in my mind, that's kind of what I'm looking 03:26:26.277 --> 03:26:28.827 for because I think we kind of understand that, that 03:26:28.836 --> 03:26:33.018 PCM in and of itself isn't, everything isn't gonna 03:26:33.027 --> 03:26:36.117 be the whole, you know, solution is gonna be part of 03:26:36.126 --> 03:26:39.697 the solution. And so I just wanna be um you know, as 03:26:39.707 --> 03:26:43.228 we move forward, being kind of open um again, get the 03:26:43.237 --> 03:26:47.168 input from, from our market analysis group, from our 03:26:47.716 --> 03:26:50.216 um uh the and from the stakeholders as we move forward 03:26:51.647 --> 03:26:55.147 So first, I'd say Harika, Chris, Werner thanks for, 03:26:55.157 --> 03:26:57.907 for the work on this. I'm, I'm good with your priorities. 03:26:57.918 --> 03:27:00.728 I'd say as we always talk about with any priorities 03:27:00.737 --> 03:27:03.506 as we get new information. Just, you know, be nimble 03:27:03.518 --> 03:27:06.478 and, and shift where, where you need to and just communicate 03:27:06.487 --> 03:27:10.027 that. Harika on the timeline, the only thing I, I might 03:27:10.037 --> 03:27:15.957 just add to it is um your, your third entry, 44 memo 03:27:15.966 --> 03:27:18.638 SCED files memo, summarizing Commission feedback from 03:27:18.647 --> 03:27:20.897 this open meeting. I may just add, you may want to 03:27:20.907 --> 03:27:23.157 circle up. I know this was a lot of information today. 03:27:23.168 --> 03:27:25.836 So I'd add this open meeting and then maybe some um 03:27:25.907 --> 03:27:28.787 additional meetings, maybe walk the hallway and talk 03:27:28.796 --> 03:27:31.418 to the Commissioners to get, get some feedback as well. 03:27:31.427 --> 03:27:34.707 We can incorporate that for the uh April 4th open meeting 03:27:34.716 --> 03:27:37.987 as well or April 4th filing. Ok. Absolutely. 03:27:39.638 --> 03:27:43.098 Chairman just said this has all been very helpful 03:27:43.107 --> 03:27:46.737 input for staff. And just to confirm what I, what I'm 03:27:46.747 --> 03:27:51.216 hearing is that the five bullet points at the end of 03:27:51.228 --> 03:27:56.228 staff's memo are acceptable for y'all to, for 03:27:56.237 --> 03:27:59.558 us to move forward on. And including I want to just 03:27:59.567 --> 03:28:04.777 specifically call out the final one which is us requesting 03:28:04.787 --> 03:28:09.558 on your behalf that the IMM file a set of default mitigation 03:28:09.567 --> 03:28:12.987 measures for your consideration discussion at the April 03:28:12.997 --> 03:28:15.947 11th meeting. Yes. Thank you. 03:28:19.367 --> 03:28:22.927 I just want to kind of follow up and um say. 03:28:22.938 --> 03:28:26.668 I'd love to talk to y'all a little bit more about the 03:28:26.677 --> 03:28:32.228 number of seasons. Um, and just see how we can think 03:28:32.237 --> 03:28:34.756 through these that they're not just bound by kind of 03:28:34.768 --> 03:28:39.657 the, the traditional seasons or the days and maybe 03:28:39.668 --> 03:28:42.808 see if we could get some sensitivities run that would 03:28:42.817 --> 03:28:47.357 show varied seasons, different numbers, different times 03:28:47.638 --> 03:28:51.938 and see if they actually help or hurt in any analysis 03:28:51.947 --> 03:28:53.836 So I'll just do that in the future. 03:28:56.518 --> 03:29:00.927 All right, thanks y'all. Thank you. Appreciate it. Sure. 03:29:03.497 --> 03:29:09.327 (item:24:Chairman Gleeson lays out Project No. 55837) Next up is uh Item 24, Project No. 55837. Review 03:29:09.336 --> 03:29:13.518 of value of lost load in ERCOT markets. ERCOT had 03:29:13.527 --> 03:29:17.827 a filing. Um I believe staff may also be coming up 03:29:20.317 --> 03:29:20.626 (silence) 03:29:24.787 --> 03:29:27.487 Rich, is this your first time at the, at the table? 03:29:28.348 --> 03:29:28.997 Yes, sir. 03:29:30.756 --> 03:29:31.487 Solid. 03:29:33.067 --> 03:29:35.126 Be sure to state your name for the record before you 03:29:35.138 --> 03:29:40.138 speak. Rich Parsons, Commission Staff and I'm not starting. 03:29:41.546 --> 03:29:46.058 That's why I didn't say my name. Hi Rebecca. Ryan King 03:29:46.098 --> 03:29:51.168 with ERCOT. Rebecca Zerwas with ERCOT. So last week ERCOT 03:29:51.177 --> 03:29:56.598 filed a memo which consisted of essentially a update 03:29:56.607 --> 03:30:01.247 on the value of lost load survey work plan as well as 03:30:01.256 --> 03:30:05.447 an overview of the communications strategy. We also 03:30:05.457 --> 03:30:10.237 included um the outreach emails that would go out to 03:30:10.247 --> 03:30:13.197 customers to illustrate how they will be communicated 03:30:13.537 --> 03:30:16.876 to ask them to take the survey as well as a copy 03:30:16.966 --> 03:30:20.817 of the survey itself. So I'm happy to kind of speak 03:30:20.827 --> 03:30:24.836 at a high level to the outreach plan uh and the work 03:30:24.848 --> 03:30:27.027 plan. And then uh Rich is here to kind of speak to 03:30:27.037 --> 03:30:28.277 the communication strategy. 03:30:30.037 --> 03:30:34.647 So the, the, the plan is that there will be a soft 03:30:34.657 --> 03:30:37.296 launch or the plan is to have a soft launch next week 03:30:37.308 --> 03:30:41.418 March 26th, I believe. Um and this soft launch will 03:30:41.427 --> 03:30:45.197 be uh what I mean by a soft launch is really to 03:30:45.207 --> 03:30:48.777 do two things. The first is that the plan will be 03:30:48.787 --> 03:30:53.817 to send out the survey to about 20,000 cohort of residential 03:30:53.827 --> 03:30:58.168 customers. And I think about uh 4000 commercial customers 03:30:58.867 --> 03:31:01.728 the purpose of this will be to get an understanding 03:31:01.737 --> 03:31:05.126 of what the response rate looks like. So the response 03:31:05.138 --> 03:31:09.558 rate will really inform if we want to get to say 1500 03:31:09.567 --> 03:31:14.037 residential customers. Approximately how many customers 03:31:14.046 --> 03:31:16.747 will we need to, to outreach to, to get that number. 03:31:16.756 --> 03:31:20.907 So that that initial sample back will really be impactful 03:31:20.918 --> 03:31:24.457 for that. And it's also the, the I guess the last 03:31:24.466 --> 03:31:27.817 opportunity to just make sure that all of the systems 03:31:27.827 --> 03:31:30.747 and the, the, the, the technical back and forth are 03:31:30.756 --> 03:31:33.268 are working as planned. So it's the, uh there has been 03:31:33.277 --> 03:31:36.006 a lot of work that, that plan beyond has done to make 03:31:36.018 --> 03:31:38.626 sure that, that that is working as necessary. But it's 03:31:38.638 --> 03:31:41.707 it's one more opportunity to kind of do that. The 03:31:41.716 --> 03:31:45.997 kind of official launch will begin a couple of weeks 03:31:46.006 --> 03:31:51.367 later on April 9th and that will be a more significant 03:31:51.376 --> 03:31:57.037 outreach to the CBCI cohort of customers. Again, the 03:31:57.046 --> 03:31:59.857 the precise number that will go out will be to some 03:31:59.867 --> 03:32:02.938 extent a function of what we think we need to send 03:32:02.947 --> 03:32:06.037 out to kind of meet that target. It may happen in 03:32:06.046 --> 03:32:09.457 one wave or maybe a couple of waves and so that will 03:32:09.466 --> 03:32:15.287 go out to a larger cohort of customers. Um about 6 03:32:15.296 --> 03:32:18.478 to 8 days later, there's a reminder that goes out saying 03:32:18.876 --> 03:32:21.668 you know, the survey has come, uh please take a look 03:32:21.677 --> 03:32:29.478 at it um and then starting, I guess in mid April, April 03:32:29.487 --> 03:32:34.407 16th or so, um if there's a need for a second cohort 03:32:34.418 --> 03:32:37.506 of CBCI customers, then that will be included as part 03:32:37.518 --> 03:32:41.927 of that roll out. And that's also where um plan beyond 03:32:41.938 --> 03:32:47.107 and ERCOT. We will be working with the non entity, municipally 03:32:47.117 --> 03:32:49.567 owned utilities that have agreed to partner with us 03:32:49.577 --> 03:32:52.126 There's about five that have been included and named 03:32:52.138 --> 03:32:54.796 in that memo. But because they will be required to 03:32:54.808 --> 03:32:57.688 send out the survey, there's a little bit more work 03:32:57.697 --> 03:33:00.067 that will be required to just make sure that they have 03:33:00.077 --> 03:33:05.506 what they need some support before they actually send 03:33:05.518 --> 03:33:10.697 out the survey invitation. The survey will be open 03:33:10.707 --> 03:33:14.567 till I think we're looking at around May 17th. So anyone 03:33:14.577 --> 03:33:18.808 that receives a survey, um usually the the expectation 03:33:18.817 --> 03:33:21.427 is after 48 hours, sometimes it it kind of falls to 03:33:21.438 --> 03:33:24.756 the bottom of the email list. But nonetheless, it would 03:33:24.768 --> 03:33:28.256 be open until mid May for that reporting to come back. 03:33:32.647 --> 03:33:36.506 a little bit about the outreach communication strategy 03:33:36.518 --> 03:33:39.638 here. We certainly want as much participation as we 03:33:39.647 --> 03:33:42.626 can get. We want people to be aware that this is coming 03:33:42.638 --> 03:33:45.107 and what it's all about and why they're receiving it. 03:33:45.438 --> 03:33:50.348 So, um beginning or on Tuesday of next week, to coincide 03:33:50.357 --> 03:33:53.077 with the soft launch, we'll be issuing a statewide 03:33:53.086 --> 03:33:56.457 press release telling folks about the survey what it 03:33:56.466 --> 03:33:59.336 is, what it's for, how it will be used, who's going 03:33:59.376 --> 03:34:03.457 to the randomized uh nature of it and, and who might 03:34:03.466 --> 03:34:07.287 be receiving it. We'll accompany that with some 03:34:07.296 --> 03:34:10.876 social media, of course. And we will also be posting 03:34:10.888 --> 03:34:14.848 a frequently asked questions on our Consumer Protection 03:34:14.857 --> 03:34:18.388 Division web page. And that will also include a tile 03:34:18.397 --> 03:34:19.938 on the home page. So all you have to do is go 03:34:19.947 --> 03:34:24.777 to puc.texas.gov, find the tile, click on it. And so 03:34:24.787 --> 03:34:29.157 folks who receive this and on their email and say, 03:34:29.168 --> 03:34:31.497 you know, what's this? Or they may have some questions 03:34:31.506 --> 03:34:34.817 they can quickly find out that information. We'll also 03:34:34.827 --> 03:34:39.388 include some contact information for consumer protection 03:34:39.397 --> 03:34:42.867 and for Office of Public Engagement. So they will 03:34:42.876 --> 03:34:46.336 all be available to answer questions about that. And 03:34:46.348 --> 03:34:48.546 uh I know Office of Public Engagement will be available 03:34:48.558 --> 03:34:50.867 to talk to, if there's any groups of people. It's a 03:34:50.876 --> 03:34:54.147 little hard to target any groups because it's randomized. 03:34:54.157 --> 03:34:57.037 But um Mike and his team will always be available for 03:34:57.046 --> 03:35:00.207 that type of thing. So they'll be fully up to speed 03:35:00.216 --> 03:35:06.668 on that. The messaging that we're crafting behind 03:35:06.677 --> 03:35:11.296 this because the survey was, was developed by the Department 03:35:11.308 --> 03:35:14.647 of Energy's Lawrence Berkeley National Labs. I was 03:35:14.657 --> 03:35:17.947 in contact with the team at LBNL and they provided 03:35:17.957 --> 03:35:20.927 me the outreach materials and language that they've 03:35:20.938 --> 03:35:24.876 used previously uh around the country and even working 03:35:24.888 --> 03:35:27.997 with. Uh I believe it's a ep in Texas on some, a 03:35:28.006 --> 03:35:31.567 similar survey. We're modeling our language after that 03:35:31.577 --> 03:35:34.256 to, you know, make sure people understand. This is 03:35:34.268 --> 03:35:37.876 not, this is not a new survey, this is not a one 03:35:37.888 --> 03:35:41.168 off survey, this is a widely used highly credible survey 03:35:41.177 --> 03:35:45.888 tool and we want people to understand um this is, this 03:35:45.897 --> 03:35:48.728 is something that, that is taken very, very seriously. 03:35:49.287 --> 03:35:54.888 And so it will the emails that will go out to potential 03:35:54.897 --> 03:35:59.506 participants will uh will state that this is a randomized 03:35:59.518 --> 03:36:02.107 selection process. They may wonder why, why am I getting 03:36:02.117 --> 03:36:05.777 this? It's randomized. We emphasize that participation 03:36:05.787 --> 03:36:11.487 is voluntary. We don't have to do it. And uh there's 03:36:11.497 --> 03:36:14.147 no impact whether you take it or not, there's no impact 03:36:14.157 --> 03:36:16.728 on your service and there's no impact on your billing 03:36:17.027 --> 03:36:21.037 Uh People will potentially wonder that uh we emphasize 03:36:21.046 --> 03:36:26.046 it's an important opportunity for Texas consumers to 03:36:26.327 --> 03:36:28.876 give us their opinion and their thoughts on what they 03:36:29.037 --> 03:36:32.457 how they value reliability, what, what cost they're 03:36:32.466 --> 03:36:38.466 willing to uh to pay for reliable electricity and uh 03:36:38.478 --> 03:36:42.506 the responses are anonymous and no personal information 03:36:42.518 --> 03:36:46.487 is attached to their responses. So it's, nobody's name 03:36:46.497 --> 03:36:49.126 is gonna pop up anywhere, contact information or anything 03:36:49.138 --> 03:36:52.268 like that. And again, we emphasize that, that this 03:36:52.277 --> 03:36:58.537 is a, a widely used survey tool. As, as Ryan said 03:36:59.427 --> 03:37:02.888 they will get a follow up email that we work with, 03:37:02.897 --> 03:37:06.348 with ERCOT and Plan Beyond and Brattle very closely 03:37:06.357 --> 03:37:10.317 on. If they don't complete it, you know, they do half 03:37:10.327 --> 03:37:11.817 of it and then they leave it. They'll get a follow 03:37:11.827 --> 03:37:14.466 up email or if they don't, if they disregard the first 03:37:14.478 --> 03:37:17.247 one, they'll get a second bite at the Apple 6 to 8 03:37:17.256 --> 03:37:21.638 days later. And then we'll have a, a social media 03:37:21.647 --> 03:37:25.787 campaign that will run for the duration that the surveys 03:37:25.796 --> 03:37:30.478 in the field. And it'll be different posts 2, 3, 4 times 03:37:30.487 --> 03:37:33.978 a week, interspersed with some of our other consumer 03:37:34.197 --> 03:37:39.978 um targeted social media. Encouraging people to take 03:37:39.987 --> 03:37:43.586 the survey, directing them to the Fa Qs and directing 03:37:43.598 --> 03:37:48.527 them to consumer protection or, and, or O pe, if they 03:37:48.537 --> 03:37:51.296 have questions, they want to talk to somebody. And 03:37:51.308 --> 03:37:53.957 so that's what we'll uh and that's what we'll be doing 03:37:56.296 --> 03:38:00.716 Ok, thanks. Um Just two things quickly. Uh One would 03:38:00.728 --> 03:38:03.938 be, you know, Chris, if you all start to get complaints 03:38:03.947 --> 03:38:06.228 or inquiries, you know, kind of keep us apprised. I 03:38:06.237 --> 03:38:09.117 think that may, you know, the, the descriptive statistics 03:38:09.126 --> 03:38:11.586 around the types of inquiries and complaints we're 03:38:11.598 --> 03:38:14.098 getting, may help us pivot if we need to on our communications 03:38:14.107 --> 03:38:17.177 and outreach. And then, um, this is obviously something 03:38:17.188 --> 03:38:20.817 that as folks get these surveys, they may call their 03:38:20.827 --> 03:38:24.147 you know, State Senators or Representatives. So I just 03:38:24.157 --> 03:38:27.336 you know, tell our GR team Brooke and Jess just 03:38:27.348 --> 03:38:29.497 make sure that all the members know in the Governor's 03:38:29.506 --> 03:38:32.497 Office that this is coming. And um, and what to do 03:38:32.506 --> 03:38:34.796 if they get inquiries from their constituents and how 03:38:34.808 --> 03:38:35.497 to reach us. 03:38:37.617 --> 03:38:38.626 Important points? 03:38:42.567 --> 03:38:46.397 Okay. I think that's it. Thanks y'all. Thank y'all. 03:38:51.367 --> 03:38:53.466 Chairman and Commissioners. Before we go to the next 03:38:53.478 --> 03:38:57.317 item, we're coming up on a 2, 2 hours back from 03:38:57.327 --> 03:38:59.216 our lunch break. This might be a good time to take 03:38:59.228 --> 03:39:02.796 a 15 minute break for the court reporter. I agree, 03:39:02.808 --> 03:39:06.888 Shelah. So why don't we recess until 2:25. 03:39:16.777 --> 03:39:21.638 We will reconvene the open meeting at 2:27pm. Okay. 03:39:21.647 --> 03:39:24.827 Next up we're gonna take the next two items out 03:39:24.836 --> 03:39:27.777 of order. (item:26:Chairman Gleeson lays out Project No. 55826) We're actually gonna take up No. 26 first, 03:39:27.888 --> 03:39:32.857 Project No. 55826. Texas Energy Fund in ERCOT Generation 03:39:32.867 --> 03:39:35.296 Loan Program. I think some of the discussion on this 03:39:35.308 --> 03:39:38.537 will bleed over into the discussion on the completion 03:39:38.546 --> 03:39:39.876 bonus. So 03:39:41.586 --> 03:39:45.808 Staff, if you want to lay out the proposal for adoption. Before we start Chairman 03:39:45.817 --> 03:39:47.957 I'm just going to note that we had one member from 03:39:47.966 --> 03:39:50.367 the public that did sign up to speak, but I believe 03:39:50.376 --> 03:39:53.817 they may have left. So just to have that on the record 03:39:53.827 --> 03:39:55.918 that the person that did sign up to speak, I believe 03:39:56.457 --> 03:39:58.716 is no longer here. Thank you for that Shelah. And if they return to the room 03:39:58.728 --> 03:40:00.168 we'll give them an opportunity to speak. 03:40:01.836 --> 03:40:05.107 Yes. Thank you Commissioners. Alison Fink for Commission Staff. 03:40:05.716 --> 03:40:11.947 The proposed order adopting new section 25.510 will 03:40:11.957 --> 03:40:15.107 establish the Texas Energy Fund in ERCOT Generation Loan 03:40:15.117 --> 03:40:19.107 Program. We briefed y'all on the key issues of 03:40:19.117 --> 03:40:21.447 this program at the last open meeting on March 7th. 03:40:21.777 --> 03:40:24.427 And then we filed a staff recommended adoption order 03:40:24.438 --> 03:40:28.296 on March 11th. Since then, we worked with your offices 03:40:28.308 --> 03:40:31.668 and stakeholders to make some final edits to the draft. 03:40:32.336 --> 03:40:34.598 There were these were small changes to help the 03:40:34.607 --> 03:40:37.796 rule better support the goals of the Texas Energy Fund. 03:40:38.577 --> 03:40:42.086 And we filed a revised staff recommended adoption order 03:40:42.098 --> 03:40:45.688 on March 19th. Since that filing on March 19th, we 03:40:45.697 --> 03:40:48.688 caught one minor item that calls for a small change 03:40:48.897 --> 03:40:51.367 to maintain consistency between the notice of intent 03:40:51.376 --> 03:40:54.527 and the actual application we recommend referring to 03:40:54.537 --> 03:40:58.607 the proposed name of the electric generating facility 03:40:58.617 --> 03:40:59.487 in the application. 03:41:01.086 --> 03:41:04.188 There are many people inside and outside of this agency 03:41:04.668 --> 03:41:08.077 to thank for contributing to this rule. And with the 03:41:08.086 --> 03:41:12.607 two Davids here, first and foremost and outside of 03:41:12.617 --> 03:41:17.037 us up here, at least 30 members of your staff also 03:41:17.046 --> 03:41:20.947 contributed. We had close collaboration with ERCOT 03:41:20.957 --> 03:41:24.037 and the support of our contractor Deloitte. It was 03:41:24.046 --> 03:41:28.188 a real team effort and we're very grateful for everyone's 03:41:28.197 --> 03:41:31.348 work on this. And staff recommends adoption of this 03:41:31.357 --> 03:41:36.947 rule. Thank you for that layout and yes, a lot of work. 03:41:37.037 --> 03:41:41.228 The, the number of calls that I'm sure you all fielded 03:41:41.237 --> 03:41:43.697 along with those of us sitting up here just over the 03:41:43.707 --> 03:41:46.357 last three days has been uh been a lot, a lot of 03:41:46.367 --> 03:41:48.796 input to develop this rule. You all did an amazing 03:41:48.808 --> 03:41:51.397 job. Thank you to everyone who provided comments on 03:41:51.407 --> 03:41:55.737 this. I filed a memo in this docket. The memo speaks 03:41:55.747 --> 03:41:58.617 for itself. It was, you know, I was persuaded by, by 03:41:58.626 --> 03:42:02.607 some commenters who talked about the PAF and POF um 03:42:02.617 --> 03:42:06.357 percentages. I think loosening those restrictions, 03:42:06.367 --> 03:42:10.737 those performance criteria from 90 to 85 and from 10 03:42:10.747 --> 03:42:14.987 up to 15 makes sense. It'll um you know, I'm worried 03:42:14.997 --> 03:42:17.348 that if we don't do that, it'll have a cooling effect 03:42:17.357 --> 03:42:19.836 a chilling effect on, on resources being willing to 03:42:19.848 --> 03:42:22.357 participate. And so that's something I definitely don't 03:42:22.367 --> 03:42:25.527 want to do. So, I feel like striking the balance between 03:42:25.537 --> 03:42:28.707 performance and ability to actually meet the performance 03:42:28.716 --> 03:42:31.247 criteria that those are the right metrics to go with. 03:42:31.256 --> 03:42:32.876 But happy to hear y'alls thoughts. 03:42:35.747 --> 03:42:39.237 I would agree as well. I think part of uh one 03:42:39.247 --> 03:42:42.287 of the changes was driven by, I guess the concern to 03:42:42.418 --> 03:42:44.367 if you will kind of work the kinks out in the first 03:42:44.376 --> 03:42:47.197 year when you're starting up a new uh facility. And 03:42:47.207 --> 03:42:49.907 I have personal experience on that and I can say that 03:42:49.918 --> 03:42:53.308 that is warranted. As well as I think one of the uh 03:42:53.327 --> 03:42:57.668 uh comments uh was that, you know, as a course of, 03:42:57.677 --> 03:43:01.188 of uh operation over the long term of an asset that 03:43:01.197 --> 03:43:03.997 there is a very comprehensive downtime that needs to 03:43:04.006 --> 03:43:07.918 be taken and that downtime in and of itself would have 03:43:07.947 --> 03:43:11.888 um, you know, allowed that asset not to meet the higher 03:43:11.897 --> 03:43:16.407 standards. So I, I agree because I, I feel like 03:43:16.418 --> 03:43:19.046 they're warranted. I still would point out that these 03:43:19.058 --> 03:43:22.966 are, are high performance standards. And so um, I 03:43:22.978 --> 03:43:25.457 think that, you know, our whole, whole, whole objective 03:43:25.466 --> 03:43:28.677 here. Is that you want, we want to incentivize dispatchable 03:43:28.688 --> 03:43:30.756 generation, something that's going to be available 03:43:30.768 --> 03:43:34.506 to the ERCOT market. And uh even, you know, with this 03:43:34.518 --> 03:43:37.497 change. I think that we very much meet that objective. 03:43:40.367 --> 03:43:42.777 I'm in agreement as well with your recommended changes 03:43:42.787 --> 03:43:45.777 in, in your memo Chair Gleeson. I think it's, you know 03:43:45.787 --> 03:43:48.987 we're trying to strike a balance here between ensuring 03:43:48.997 --> 03:43:54.058 that the dispatchable generation power plants are performing. 03:43:54.067 --> 03:43:57.957 If they are receiving these um monies from the Texas 03:43:57.966 --> 03:44:01.617 Energy Fund, but also try to make sure that we're not 03:44:01.626 --> 03:44:04.657 being overly restrictive to allow for the, you know 03:44:04.668 --> 03:44:08.037 first year um issues to be addressed in the power plant. 03:44:08.046 --> 03:44:12.086 The more the sort of 6 year, 8 year um overhauls 03:44:12.098 --> 03:44:15.947 that need to be done to the plant. But also, um recognizing 03:44:15.957 --> 03:44:19.938 that there's just gonna be um a need for um you know 03:44:19.947 --> 03:44:23.296 equipment maintenance and, and um those things on the 03:44:23.308 --> 03:44:29.497 plant. So I think your 85/15 split uh makes reasonable 03:44:29.506 --> 03:44:33.077 sense. And I would be fine with moving forward with adding 03:44:33.086 --> 03:44:37.376 that to the rule. Yeah I mean, I think that my experience 03:44:37.388 --> 03:44:39.808 on this was a start up of a generating plant that used 03:44:39.817 --> 03:44:42.487 a new turbine. And for the first year, it was actually 03:44:42.497 --> 03:44:45.126 really challenged. Because it was a brand new, really 03:44:45.138 --> 03:44:48.827 really efficient turbine. And I just think figuring 03:44:48.836 --> 03:44:50.827 out how we can give the benefit of the doubt, we want 03:44:50.836 --> 03:44:52.888 that facility long term in the market and figuring 03:44:52.897 --> 03:44:57.018 out how we can make that happen is, is the right thing 03:44:57.027 --> 03:45:00.638 to do. The intended goal to get those types of facilities 03:45:00.647 --> 03:45:03.907 on the system. Perfect. There are a couple of issues 03:45:03.918 --> 03:45:05.527 I know I talked to staff about that. I just want to 03:45:05.537 --> 03:45:08.177 go over verbally and I'll also be remiss if I didn't 03:45:08.207 --> 03:45:11.268 mention. We did receive two letters in this docket from 03:45:11.277 --> 03:45:14.438 members of the Legislature. One from Chairman Schwertner 03:45:14.447 --> 03:45:17.348 and then another from a group of both House Members 03:45:17.357 --> 03:45:20.407 and Senators yesterday. So I want to thank them for 03:45:20.418 --> 03:45:23.768 their input into this process as well. So one of 03:45:23.777 --> 03:45:27.447 the issues we talked about was the, the concept of 03:45:27.457 --> 03:45:30.918 senior debt and the idea that potentially there, there 03:45:30.927 --> 03:45:33.857 could be benefit from having. Even though the Bill 03:45:33.867 --> 03:45:36.336 says that the state has to be the senior debt, that 03:45:36.348 --> 03:45:38.737 potentially would there be benefit to allowing other 03:45:38.747 --> 03:45:41.228 senior debt. And I know we talked about this for a 03:45:41.237 --> 03:45:43.327 while. So maybe you just go through kind of the thoughts 03:45:43.336 --> 03:45:45.716 on not allowing other senior debt. Why that's the 03:45:45.728 --> 03:45:48.197 the proper way to approach this? Thank you Chairman 03:45:48.207 --> 03:45:50.777 Gleeson. This is David Gordon with Commission Staff. 03:45:50.927 --> 03:45:53.457 Yes. Well, we started off with a reading of the 03:45:53.466 --> 03:45:58.367 statute which notes that the loan um that the the the 03:45:58.376 --> 03:46:01.638 funds advanced must represent the senior secured debt 03:46:01.647 --> 03:46:05.638 of the facility. And we also keep in mind that these 03:46:05.647 --> 03:46:10.107 are public funds um subject to the public trust. And 03:46:10.497 --> 03:46:13.308 allowing another person to share that co-senior status could 03:46:13.317 --> 03:46:17.457 compromise the PUC's ability to recover. In case there 03:46:17.466 --> 03:46:20.336 had to be an event that required recovery. So we 03:46:20.348 --> 03:46:23.657 took a, an across the board position that the TEF 03:46:23.668 --> 03:46:27.537 Funds advanced would need to be the, the senior debt 03:46:27.546 --> 03:46:29.287 securing the facility. 03:46:31.836 --> 03:46:34.336 I think that's the right move. I think if we were only 03:46:34.348 --> 03:46:38.168 given 20% of the loan and the banks had to give 80% 03:46:38.177 --> 03:46:40.277 we'd have a challenge there. But the fact that we can 03:46:40.438 --> 03:46:45.657 provide up to 60% of the the loan is the right thing 03:46:45.668 --> 03:46:49.086 to put the the taxpayers, you know, in the primary 03:46:49.098 --> 03:46:52.497 position here. So I think that's right. Everybody was 03:46:52.506 --> 03:46:56.478 comfortable with things. Okay. So the next issue was 03:46:56.487 --> 03:46:58.527 around points of interconnection. We kind of talked 03:46:58.537 --> 03:47:02.586 about two issues there. I'll start with the idea of 03:47:02.598 --> 03:47:06.598 you know, new build versus upgrade and can you have 03:47:06.638 --> 03:47:10.506 a, a new point of interconnection that's needed at an 03:47:10.518 --> 03:47:13.888 existing site? That new point of interconnection 03:47:13.897 --> 03:47:18.737 is needed because of a reliability issue. And would 03:47:18.747 --> 03:47:20.957 that new point of interconnection require you to be 03:47:20.966 --> 03:47:25.348 considered a new build or will we consider, will we 03:47:25.357 --> 03:47:29.747 allow for the consideration of upgrades to existing 03:47:29.756 --> 03:47:32.567 facilities where a new point of interconnection is 03:47:32.577 --> 03:47:37.037 needed because of a reliability issue? Sure, this again 03:47:37.046 --> 03:47:40.558 is driven by the the language in the statute. This 03:47:40.567 --> 03:47:44.247 really is an issue because of the timing with which 03:47:44.256 --> 03:47:46.657 a borrower is going to get its deposit back or can 03:47:46.668 --> 03:47:49.897 get its deposit back. And the statute makes a distinction 03:47:49.907 --> 03:47:52.756 between new construction, which authorizes a three 03:47:52.768 --> 03:47:56.827 year or four year period with perhaps one year additional 03:47:56.836 --> 03:48:01.256 if extenuating, sorry. Extenuating circumstances support 03:48:01.268 --> 03:48:05.487 that or for upgrades. That's a three year period 03:48:05.497 --> 03:48:10.006 with a one year additional time phase. 03:48:12.157 --> 03:48:17.418 The reason that we think that the um 03:48:19.558 --> 03:48:21.978 when we concede that this, we think of the upgrade 03:48:21.987 --> 03:48:25.697 portion as uh building new generation units at an existing 03:48:25.707 --> 03:48:29.177 site and the statute talks about the time period that's 03:48:29.188 --> 03:48:32.138 relevant being the interconnect period or, or the completion 03:48:32.147 --> 03:48:34.897 period because an interconnection already exists. So 03:48:34.907 --> 03:48:37.506 to make the statute meaningful there, we took that 03:48:37.518 --> 03:48:40.836 cut. Now, there's a distinction if somebody is building 03:48:40.848 --> 03:48:44.018 a new generation resource, add an existing facility 03:48:44.407 --> 03:48:47.808 Um and they want to add a point of interconnection 03:48:47.817 --> 03:48:51.308 for reliability reasons. We don't want to exclude them 03:48:51.317 --> 03:48:55.586 So we include language in the rule that says you're 03:48:55.598 --> 03:48:58.256 going to be treated differently if you are required 03:48:58.268 --> 03:49:03.317 to create an additional point of interconnection. Okay. 03:49:03.527 --> 03:49:06.716 Is everybody comfortable with that? Yeah, absolutely. 03:49:06.728 --> 03:49:09.997 Okay. So, so just to kind of reiterate. You feel like 03:49:10.006 --> 03:49:12.418 the, the statute kind of binds us based on point of 03:49:12.427 --> 03:49:15.598 interconnection, a new point of interconnection. 03:49:15.647 --> 03:49:19.447 You know that that's new build and existing um is where 03:49:19.457 --> 03:49:22.836 the upgrades would be. That's correct Chairman. And 03:49:22.848 --> 03:49:25.918 then the last issue we talked about was around switchable 03:49:26.037 --> 03:49:29.006 units. This issue came up kind of to me in the 03:49:29.018 --> 03:49:32.487 last, last couple of days. The way the rule is, is 03:49:32.497 --> 03:49:36.247 currently proposed, switchable units um are prohibited 03:49:36.256 --> 03:49:38.907 from participating in this program. So why you talk 03:49:38.918 --> 03:49:42.018 through kind of the reasons for that. David, do you 03:49:42.027 --> 03:49:45.487 want to take that? Thank you, Mr. Chairman. David Smeltzer 03:49:45.497 --> 03:49:49.586 for Commission Staff. I would say that the, you know 03:49:49.598 --> 03:49:52.006 the, the folks that we spoke to in the last few days 03:49:52.018 --> 03:49:56.006 have had some concerns. Because they, they don't see. 03:49:56.228 --> 03:49:58.987 Can you speak in the microphone? I'm sorry, they don't see a preclusion of switchables in 03:49:58.997 --> 03:50:02.478 the text of SB2627. And I'm not going to pretend that 03:50:02.487 --> 03:50:04.506 there is one there. But I will say that staff's position 03:50:04.518 --> 03:50:08.617 on this issue originates from our position that we 03:50:08.626 --> 03:50:11.348 have articulated in prior open meetings, which is that 03:50:11.357 --> 03:50:15.787 this is public money. And 100%, we want 100% of the new 03:50:15.796 --> 03:50:19.018 capacity that's generated as part of this program to 03:50:19.027 --> 03:50:22.237 be dedicated to the ERCOT market. And I would say that when 03:50:22.247 --> 03:50:26.046 we look at the statute there isn't, it doesn't specifically 03:50:26.058 --> 03:50:28.918 dictate this outcome. But I think the vast majority 03:50:28.927 --> 03:50:31.427 of the classic principles of statutory interpretation 03:50:31.438 --> 03:50:33.677 support this outcome. And so for instance, when you 03:50:33.688 --> 03:50:36.447 look at the text, we see that this is to provide uh 03:50:36.457 --> 03:50:39.768 loans and finance upgrades for the ERCOT power region. 03:50:39.938 --> 03:50:41.897 And it also talks about adding increased capacity. 03:50:41.907 --> 03:50:45.737 And as we know, capacity is a measure of something 03:50:45.747 --> 03:50:47.388 that you build, that's there all the time as opposed 03:50:47.397 --> 03:50:49.237 to real power, which is their part of the time. We 03:50:49.247 --> 03:50:52.207 also know that the historical context for passing this 03:50:52.216 --> 03:50:55.567 Legislation was based on Winter Storm Uri and the perception 03:50:55.577 --> 03:50:58.638 that we need to bolster the, you know, generation fleet 03:50:58.647 --> 03:51:01.438 of this state. To ensure that we always have a sufficient 03:51:01.447 --> 03:51:03.888 capacity to avoid those sorts of outcomes in the future. 03:51:04.256 --> 03:51:06.247 And so this is part of the extended effort that the 03:51:06.256 --> 03:51:08.308 Legislature and the Commission have been working on 03:51:08.317 --> 03:51:11.247 together to, you know, ensure better outcomes in the 03:51:11.256 --> 03:51:15.466 future. So in addition to that, I think that there 03:51:15.478 --> 03:51:19.006 are the, the structure of the program presents unique 03:51:19.018 --> 03:51:22.848 risks that would exist for switchables. And I it would 03:51:22.857 --> 03:51:25.348 be very difficult to set up switchables to succeed in the 03:51:25.357 --> 03:51:27.728 context of this program. And by that, what I mean is 03:51:27.876 --> 03:51:31.247 by statute, we specifically have to require all of 03:51:31.256 --> 03:51:34.197 the recipients of these funds to enter in loan covenants 03:51:34.216 --> 03:51:37.107 and have certain performance metrics according to those 03:51:37.117 --> 03:51:39.927 loan covenants. One of the difficulties with switch 03:51:39.938 --> 03:51:43.348 you know, switchable units is they have indebted obligations 03:51:43.357 --> 03:51:47.688 to both us and SPP that make it impossible for us to 03:51:47.697 --> 03:51:49.888 know with any certainty when they're going to be here. 03:51:50.466 --> 03:51:54.607 And, and so if they were to not meet the performance 03:51:54.617 --> 03:51:57.296 standard that you had with any other type of unit, 03:51:57.308 --> 03:52:00.168 we would give them a cure period and they would go 03:52:00.177 --> 03:52:05.207 make necessary changes to um to come into compliance 03:52:05.216 --> 03:52:07.638 without defaulting on their loans. But if the, if the 03:52:07.647 --> 03:52:10.077 reason why you're not meeting the performance standard 03:52:10.216 --> 03:52:12.836 is because because of the nature of the entity that 03:52:12.848 --> 03:52:15.037 you are, that you're switchable. That's not something that 03:52:15.046 --> 03:52:17.018 would be able to be cured within any sort of reasonable 03:52:17.027 --> 03:52:19.348 period. So we would just be setting these entities 03:52:19.357 --> 03:52:23.957 up for risk of default and that, that's not a positive 03:52:23.966 --> 03:52:25.927 outcome for anyone. So we think it's the right policy 03:52:25.938 --> 03:52:28.747 call. And we also think that the Legislation specifically 03:52:28.756 --> 03:52:33.388 lists the considerations that were to, that were to 03:52:33.397 --> 03:52:36.138 consider. And on those list of considerations includes 03:52:36.147 --> 03:52:39.037 any other factors that the Commission finds reasonable. 03:52:39.046 --> 03:52:41.546 And so I think that the discussions we've had with 03:52:41.558 --> 03:52:43.617 you guys in prior open meetings about this, I believe 03:52:43.626 --> 03:52:47.768 supports the philosophy that we want this energy to 03:52:47.777 --> 03:52:50.787 be available to the grid at all times. And finally 03:52:50.796 --> 03:52:54.388 I think that it's worth noting that uh 03:52:56.107 --> 03:52:58.067 the proposition has been forwarded, you know, well 03:52:58.077 --> 03:53:00.457 do you even have to take a specific position on switchables. 03:53:00.466 --> 03:53:02.296 But we of course, have an obligation under the 03:53:02.308 --> 03:53:06.077 APA to respond to any comments that are filed publicly. 03:53:06.086 --> 03:53:08.688 And we did get specific comments filed from parties 03:53:08.697 --> 03:53:12.876 both recommending that we do or that we do not include 03:53:12.888 --> 03:53:15.348 switchables. And, you know, I think for the purposes of 03:53:15.357 --> 03:53:17.947 regulatory certainty, it's better not to hide the ball 03:53:17.957 --> 03:53:20.077 if we know that our performance standard is going to 03:53:20.086 --> 03:53:23.407 effectively exclude switchables by requiring the energy 03:53:23.418 --> 03:53:26.388 to be available to ERCOT grid at all times. It's better 03:53:26.397 --> 03:53:29.067 to be upfront about that and include that in the language 03:53:29.077 --> 03:53:33.197 directly rather than um set up an entity to go through 03:53:33.207 --> 03:53:35.626 the extensive process of filling out a loan application 03:53:35.638 --> 03:53:38.848 and going through due diligence. While we would know 03:53:38.857 --> 03:53:41.367 that we would not give them a loan because they're 03:53:41.376 --> 03:53:43.677 not able to do it. So we think that being transparent 03:53:43.688 --> 03:53:46.787 and open with potential applicants is always the best 03:53:46.796 --> 03:53:49.577 policy from a regulatory certain perspective. So those 03:53:49.586 --> 03:53:52.586 are the underlying factors driving staff's recommendation. 03:53:53.376 --> 03:53:56.737 So I, I agree with staff on this. I will say I 03:53:56.747 --> 03:54:00.716 did give consideration to the idea of, you know, just 03:54:00.728 --> 03:54:05.268 valuing switchables lower and therefore, you know, most 03:54:05.277 --> 03:54:07.756 likely they would only get this funding if we didn't 03:54:07.768 --> 03:54:10.447 have, you know, full subscription from units that would 03:54:10.457 --> 03:54:13.327 only serve ERCOT. But, but as I thought through it 03:54:13.336 --> 03:54:15.558 as I talked to staff and, and listen to some of the 03:54:15.567 --> 03:54:17.848 comments that came in on the other side of this. I 03:54:17.857 --> 03:54:21.506 just think the the defensible position on this is, 03:54:21.518 --> 03:54:23.876 is this money needs to be spent for resources that 03:54:23.888 --> 03:54:28.586 are wholly going to serve ERCOT. And, and that's I think 03:54:28.598 --> 03:54:31.077 that's just how we have to do this. I think this, this 03:54:31.086 --> 03:54:34.207 in ERCOT loan program is meant to be for resources 03:54:34.216 --> 03:54:37.058 that are going to serve ERCOT all the time. And so 03:54:37.117 --> 03:54:39.938 um so yeah, I agree with staff. Happy to hear y'all's 03:54:39.947 --> 03:54:44.117 thoughts. I think you'd have kind of the opposite argument 03:54:44.126 --> 03:54:48.177 for the non ERCOT loan program. If it was switchable to 03:54:48.626 --> 03:54:51.138 outside of ERCOT, switchable to inside ERCOT, you're doing 03:54:51.147 --> 03:54:53.407 the same thing. You're, you're eroding the value of 03:54:53.418 --> 03:54:56.317 what the Legislature created in those one areas and 03:54:56.327 --> 03:54:59.808 blurring that distinction line. So there are non ERCOT 03:54:59.817 --> 03:55:02.558 areas that, that will have a loan program in their 03:55:02.567 --> 03:55:05.427 in their own right? And I mean, I think you're, I think 03:55:05.438 --> 03:55:06.447 you're right on target there. 03:55:08.527 --> 03:55:10.787 Yeah, I think that's an important distinction in ERCOT 03:55:10.796 --> 03:55:14.157 outside of ERCOT. And also to note that I think 03:55:14.168 --> 03:55:16.987 the early completion bonus rule does not make a distinction 03:55:16.997 --> 03:55:22.188 between in and outside of ERCOT. So, um you know, based 03:55:22.197 --> 03:55:26.067 on my prior experience, you know, the, the um operation 03:55:26.077 --> 03:55:31.147 of switch generation between ERCOT and SPP is largely 03:55:31.157 --> 03:55:34.487 primarily dictated by the terms contractual terms of 03:55:34.497 --> 03:55:38.848 coordinations between ERCOT and SPP. And by way of 03:55:38.857 --> 03:55:43.177 those um agreements, it, it just simply or not, the 03:55:43.188 --> 03:55:47.037 units are simply not available 100% all the time um 03:55:47.728 --> 03:55:50.787 for ERCOT and while they are valuable units in terms 03:55:50.796 --> 03:55:54.466 of being able to switch back and forth um and providing 03:55:54.478 --> 03:55:59.268 reliability um in ERCOT, but also in parts of ERCOT 03:55:59.277 --> 03:56:02.787 I mean, parts of Texas that are not in ERCOT like SPP. 03:56:03.247 --> 03:56:09.138 I believe that uh said 2627 then the low interest 03:56:09.147 --> 03:56:13.777 rate loans for in ERCOT generation uh require that 03:56:13.787 --> 03:56:18.567 the units face ERCOT, 100% of the time and are available 03:56:18.577 --> 03:56:21.407 to ERCOT every day. 03:56:23.728 --> 03:56:27.077 I agree with your assessment as well. Again, each 03:56:27.086 --> 03:56:31.006 and every day um power that's available to ERCOT. And 03:56:31.216 --> 03:56:34.027 I think as, as everyone has mentioned, there will be 03:56:34.037 --> 03:56:36.657 some programs that will be available for those entities 03:56:36.668 --> 03:56:41.138 that are outside ERCOT as, as well as the bonus program. 03:56:42.117 --> 03:56:45.357 Okay. So that was the list of issues that I have. Did, 03:56:45.367 --> 03:56:47.647 did you all have any other issues you wanted to discuss? 03:56:49.216 --> 03:56:50.037 I have two 03:56:51.567 --> 03:56:55.407 if other Commissioners want to go first? So these aren't 03:56:55.418 --> 03:56:57.586 recommended changes. I just really wanted to make a 03:56:57.598 --> 03:57:00.796 statement on two issues following up on my comments 03:57:00.808 --> 03:57:04.117 from the last open meeting. So what I talked about 03:57:04.126 --> 03:57:09.907 was facilities at generating facilities being built 03:57:09.918 --> 03:57:12.247 at industrial facilities. So whether you call them 03:57:12.256 --> 03:57:17.418 a pun, you know what they, what they are, I'm thinking 03:57:17.427 --> 03:57:19.558 about this from an equipment standpoint about how you 03:57:19.978 --> 03:57:22.927 how you create optionality, but how you make these 03:57:22.938 --> 03:57:26.527 units more efficient. So if you have, 03:57:28.177 --> 03:57:30.077 if you have three 03:57:31.697 --> 03:57:36.697 combustion turbines at a cogeneration plant and only 03:57:36.707 --> 03:57:39.978 one of them is, is dedicated to ERCOT, say there are 03:57:39.987 --> 03:57:43.897 100 megawatts each that will not be eligible for this 03:57:43.907 --> 03:57:48.077 because it's not 50% of the facility. So I think this 03:57:48.086 --> 03:57:49.147 is something that, 03:57:50.668 --> 03:57:52.546 you know, the 03:57:54.506 --> 03:57:57.237 industrials ought to go talk to the Legislature about 03:57:57.247 --> 03:57:59.207 I mean, I think this is not the first time that this 03:57:59.216 --> 03:58:01.867 issue has come up. I think they have a point because 03:58:01.876 --> 03:58:05.216 optionality is really key, especially when you're dealing 03:58:05.228 --> 03:58:08.848 with steam offtake, which can reduce risk, two plants 03:58:08.857 --> 03:58:13.098 you know, reducing risk with, with a, 03:58:15.027 --> 03:58:20.938 a industrial host. It just makes sense capitally, but 03:58:20.947 --> 03:58:22.966 it doesn't make sense in the construct here. So I would 03:58:22.978 --> 03:58:26.966 encourage that discussion to happen and for us to be 03:58:26.978 --> 03:58:30.228 open about it in the future. And you know Commissioner 03:58:30.237 --> 03:58:34.327 Glotfelty, what I'd say to that. Is I think what you're, what 03:58:34.336 --> 03:58:36.756 you're illustrating there is probably more likely to 03:58:36.768 --> 03:58:39.857 happen than the anecdote I gave last time about a new 03:58:39.867 --> 03:58:43.037 1200 Megawatt facility. You know, 500 sting to serve 03:58:43.046 --> 03:58:47.216 the local, local load there behind the meter and then 03:58:47.228 --> 03:58:50.737 700 onto the onto the grid. And I think when we talked 03:58:50.747 --> 03:58:54.207 I talked to staff about trying to find a way around 03:58:54.216 --> 03:58:56.478 the definition of facility to accommodate what you're 03:58:56.487 --> 03:58:58.567 talking about. I just, I think we, we had a really 03:58:58.577 --> 03:59:00.876 hard time trying to figure out how to do that. But 03:59:00.888 --> 03:59:03.027 I agree, I mean, I think is as we look to next 03:59:03.037 --> 03:59:05.987 Session to the potential of getting an additional $5 03:59:05.997 --> 03:59:08.216 billion that this is something we should definitely 03:59:08.228 --> 03:59:10.867 talk to the Legislature about and to the industrials 03:59:10.876 --> 03:59:13.918 because I think your comment on optionality is important 03:59:13.927 --> 03:59:15.918 like I talked about geographic diversity. I think it 03:59:15.927 --> 03:59:18.157 is going to be important for this program. So if we 03:59:18.168 --> 03:59:21.296 can remove a barrier, come up with a way to easily 03:59:21.308 --> 03:59:24.918 have a line of what is in and what isn't on that 03:59:24.927 --> 03:59:27.418 issue. I think that would be beneficial. Great. I appreciate 03:59:27.427 --> 03:59:31.768 that we found that that experience in the possibility 03:59:31.777 --> 03:59:35.237 of that experience in, in a nuclear plant that's been 03:59:35.247 --> 03:59:38.098 proposed down on the Gulf Coast. Three units are there 03:59:38.107 --> 03:59:40.857 for steam one unit, you know, might be for electricity 03:59:40.867 --> 03:59:42.957 if they ever get that across the finish line, that 03:59:42.966 --> 03:59:45.677 would be ineligible for this type of structure. So 03:59:45.777 --> 03:59:48.207 I'm really appreciative of, of you thinking that way 03:59:48.216 --> 03:59:52.027 and, and and being supportive of that, the other one 03:59:52.037 --> 03:59:56.768 is, is a follow up to 03:59:59.427 --> 04:00:03.268 kind of our ADER. Okay. ADER is totally different than 04:00:03.277 --> 04:00:07.157 this. I know that but there were some comments that 04:00:07.168 --> 04:00:10.086 were submitted by USA Compression. That were kind of 04:00:10.098 --> 04:00:14.577 appealing to me, not in this day, but again, have to 04:00:14.586 --> 04:00:16.867 go to the Legislature to see if this happens. And that 04:00:16.876 --> 04:00:21.827 is if these critical facilities or these pipelines 04:00:21.836 --> 04:00:24.997 or. Well, let me say it doesn't have to be that if 04:00:25.006 --> 04:00:28.098 there are aggregated facilities that are of smaller 04:00:28.107 --> 04:00:32.768 amounts that can aggregate to over 100 megawatts, is 04:00:32.777 --> 04:00:35.888 that something we could fund in the future? And as 04:00:35.897 --> 04:00:40.808 we, as I think about the ADER pilot program on a really 04:00:40.817 --> 04:00:44.577 small scale. Something like this could be of value to 04:00:45.947 --> 04:00:50.157 to ERCOT on a large scale or on a medium scale. And 04:00:50.168 --> 04:00:53.367 it, it may set us kind of again at the, at the 04:00:53.376 --> 04:00:58.638 future of, of pushing these aggregated resources. I 04:00:58.647 --> 04:01:01.256 don't think there's statutory construct to do it in 04:01:01.268 --> 04:01:05.237 this I, I, I told them that I think it's a Legislative 04:01:05.247 --> 04:01:10.966 issue. But it's, it could be a really compelling opportunity 04:01:10.978 --> 04:01:14.918 for Texas in the large geographic area that we have 04:01:14.927 --> 04:01:17.497 a lot of dispersed resources, could have generators 04:01:17.506 --> 04:01:20.357 that could aggregate up to become 100 megawatts or 04:01:20.367 --> 04:01:24.046 more, so. Yeah, my staff and I met with them as well. 04:01:24.058 --> 04:01:26.466 And I think we more with the same feeling like this 04:01:26.737 --> 04:01:28.787 this is something that I think could be beneficial 04:01:28.796 --> 04:01:31.577 which is probably not right for this program. So I 04:01:31.586 --> 04:01:34.207 couldn't agree more. I'm totally in alignment with 04:01:34.216 --> 04:01:36.407 you on your feeling on that one as well. That's all 04:01:36.418 --> 04:01:38.848 I have. I'm really appreciative of the staff when you 04:01:38.857 --> 04:01:42.987 say 30 members of staff and, you know, working together 04:01:42.997 --> 04:01:47.966 on this. That's a, that's a high bar. I congratulate 04:01:47.978 --> 04:01:49.897 you all for doing it. I congratulate everybody for 04:01:49.907 --> 04:01:50.308 doing it. 04:01:53.388 --> 04:01:56.567 Just a great effort. I mean, I wanted to thank the 04:01:56.577 --> 04:01:59.407 staff as well. So you know the, the manpower that 04:01:59.418 --> 04:02:02.688 went into it, the woman power that went into it. 04:02:03.077 --> 04:02:07.168 The, um you know, the thoughtfulness, um the deliberation 04:02:07.177 --> 04:02:10.086 kind of that marriage between finance and engineering. 04:02:10.098 --> 04:02:13.888 So you know, the challenge right off the bat of, you 04:02:13.897 --> 04:02:16.216 know, getting the money out the door and then putting 04:02:16.228 --> 04:02:20.327 all of the um the procedurals and the, and the guidance 04:02:20.336 --> 04:02:22.622 that we're gonna need to make sure that, you know, 04:02:22.631 --> 04:02:26.381 not only do we, you know, select those projects that 04:02:26.393 --> 04:02:30.072 are of value to the grid, but also that, you know, 04:02:30.082 --> 04:02:33.001 as they move through the construction phase that they 04:02:33.013 --> 04:02:36.813 do so as expeditiously as possible. And that we end 04:02:36.822 --> 04:02:39.492 up, you know, I think the um the performance criteria 04:02:39.501 --> 04:02:41.881 that you know that, that staff developed. I mean 04:02:41.893 --> 04:02:45.552 it, it, it's, it's a new, it's a new approach. Something 04:02:45.563 --> 04:02:49.487 specific to uh to this work effort. And so it's like 04:02:49.497 --> 04:02:53.966 you know, we hit on every I think area that was expected 04:02:53.978 --> 04:02:59.058 from this incentive program. And so um I, I, I really 04:02:59.067 --> 04:03:01.067 think, you know, a lot of times, you know, Texas is 04:03:01.077 --> 04:03:03.918 out leading the way and they certainly are with this 04:03:03.927 --> 04:03:08.388 Texas Energy Fund. Can I say one other thing? So, um 04:03:08.598 --> 04:03:11.638 I, the, the completion bonus, the time frames for when 04:03:11.647 --> 04:03:15.077 we are hoping these facilities come online. Um I was 04:03:15.086 --> 04:03:19.787 with the President of Siemens yesterday, And uh and he said 04:03:19.796 --> 04:03:23.607 that uh good luck getting a combustion turbine before 04:03:23.707 --> 04:03:31.997 2031. So my point in that is to the market, if 04:03:32.006 --> 04:03:36.006 you all are seeing a massive delay in this major equipment 04:03:36.018 --> 04:03:39.018 I think that is something that really has to be conveyed 04:03:39.027 --> 04:03:43.447 to the Legislature and to us. So that we don't get in 04:03:43.457 --> 04:03:45.808 a bind so that we can really have an understanding 04:03:45.817 --> 04:03:48.168 is this program actually going to work in the time 04:03:48.177 --> 04:03:50.497 frame that the Legislature really wants it to work. 04:03:50.506 --> 04:03:52.888 And if not, what is the structural deficiency that 04:03:52.897 --> 04:03:55.716 won't allow us to make that happen? Yeah. And I think 04:03:55.728 --> 04:03:57.938 as the state, you know, depending on the financial 04:03:57.947 --> 04:04:01.256 situation of the state. As the Legislature looks, you 04:04:01.268 --> 04:04:03.768 know, to spend money next Session, potentially. You 04:04:03.777 --> 04:04:06.668 know, aiding in that as well and getting components 04:04:06.677 --> 04:04:09.716 if there's supply chain issues or, you know, we just 04:04:09.728 --> 04:04:11.732 can't get the components to get these Bill. Perhaps 04:04:11.742 --> 04:04:12.921 the state could also help there. 04:04:14.603 --> 04:04:17.603 I just wanted to thank staff as well. This is a monumental 04:04:17.612 --> 04:04:21.603 effort. I think this Legislation, Senate Bill 2627 04:04:21.631 --> 04:04:24.402 and the Texas Energy Fund is just critically important 04:04:24.412 --> 04:04:28.232 for our state. Our state's taxpayer dollars are backing 04:04:28.242 --> 04:04:32.313 up this program and the state has spoken loud and clear, 04:04:32.322 --> 04:04:35.162 our voters. That we need more dispatchable generation 04:04:35.171 --> 04:04:38.927 built in, in ERCOT. And they're willing to um stand behind 04:04:38.938 --> 04:04:42.058 with taxpayer money to ensure that we get those facilities 04:04:42.067 --> 04:04:46.688 built in ERCOT. And this is a first in kind program 04:04:46.697 --> 04:04:49.506 that the PUC has, has stood up and is in the 04:04:49.518 --> 04:04:53.287 process of standing up. And, and I just really want 04:04:53.296 --> 04:04:56.848 to thank staff and everybody that worked on this standing 04:04:56.857 --> 04:04:58.897 up. This program because this was a monumental effort 04:04:58.918 --> 04:05:02.478 at first in kind. And it was a very smooth process 04:05:02.487 --> 04:05:06.357 for me and understanding how the program was um being 04:05:06.367 --> 04:05:10.438 developed for the Legislation and the policy cuts that 04:05:10.447 --> 04:05:13.777 needed to be made along the way. And, and I mean, it 04:05:13.787 --> 04:05:17.497 was just, it was a, a very good process um in terms 04:05:17.506 --> 04:05:22.126 of developing it. But um you know, the the staff taking 04:05:22.138 --> 04:05:24.918 a strong position and creating the framework from a 04:05:24.927 --> 04:05:28.336 policy standpoint, it made my job a lot easier. And 04:05:28.348 --> 04:05:31.626 I, I just really want to thank you for your hard work. 04:05:31.918 --> 04:05:33.957 It was outstanding work. Thanks very much. Thank you 04:05:36.228 --> 04:05:38.756 All right. (item:26:Motion to approve proposed order) With that, I would entertain a motion to 04:05:38.768 --> 04:05:44.018 approve the proposed order in Project 55826, consistent 04:05:44.027 --> 04:05:47.927 with my memo in our discussion. So moved. Second. I have a motion 04:05:47.938 --> 04:05:52.518 and a second. All those in favor, say aye. Aye. Opposed? Motion prevails. 04:05:52.768 --> 04:05:55.067 Thanks y'all, great work. Thanks to everyone who participated 04:05:55.077 --> 04:06:00.947 in this and provided comments. Great work. All 04:06:00.957 --> 04:06:04.277 right. (item:25:Chairman Gleeson lays out Project No. 55812) So now we're gonna take up Item No. 25, Project 04:06:04.287 --> 04:06:08.688 No. 55812. Texas Energy Fund Completion Bonus Grant 04:06:08.697 --> 04:06:13.027 Program. Just real quickly. So we had a discussion 04:06:13.037 --> 04:06:17.567 on switchables in the in the last item. Switchables in this 04:06:17.577 --> 04:06:20.197 program. What are your thoughts on participation? 04:06:22.058 --> 04:06:26.647 You know, that this is something that um you know, 04:06:26.657 --> 04:06:28.537 whenever folks meet with us and we say we'll think 04:06:28.546 --> 04:06:30.728 about it. We always do. And we've been thinking about 04:06:30.737 --> 04:06:33.268 it in the last couple of days. And I think that a 04:06:33.277 --> 04:06:36.647 lot of the statutory context and issues that exist 04:06:36.657 --> 04:06:41.086 with including switchables in the loan program factored 04:06:41.098 --> 04:06:44.447 differently in the grant program. So I think that staff 04:06:44.457 --> 04:06:47.546 is working on its recommendation for next open meeting. 04:06:47.657 --> 04:06:50.277 But I think that if you look at the way that the 04:06:50.287 --> 04:06:53.586 bonus grant program is structured for the performance 04:06:53.598 --> 04:06:54.657 measure. It says, 04:06:56.987 --> 04:06:59.707 you know, we have to establish by rule, performance 04:06:59.716 --> 04:07:02.107 standards and then skip said for the performance during 04:07:02.117 --> 04:07:04.848 the 100 hours with the least quantity of operating 04:07:04.857 --> 04:07:08.848 reserves each year. And so, whereas the loan rule appears 04:07:08.857 --> 04:07:11.247 to contemplate that we would have full time in the 04:07:11.317 --> 04:07:13.688 ERCOT region. There's room for an interpretation of 04:07:13.697 --> 04:07:16.478 this statute that says that we're supposed to be looking 04:07:16.487 --> 04:07:21.107 at the 100 tightest hours. Another feature of this 04:07:21.117 --> 04:07:23.497 completion bonus grant rule that's different from the 04:07:23.506 --> 04:07:26.086 loan rule. Is that we don't give the money upfront, 04:07:26.207 --> 04:07:28.997 we give the money afterwards based on performance according 04:07:29.006 --> 04:07:32.827 to that performance standard. So that would, that could 04:07:32.836 --> 04:07:35.857 justify an interpretation or a policy preference for 04:07:35.867 --> 04:07:39.046 allowing units like switchables because they would 04:07:39.058 --> 04:07:43.077 not get any of the money that came from the Texas Energy 04:07:43.086 --> 04:07:46.157 Fund unless they were providing according to the performance 04:07:46.168 --> 04:07:49.438 standard energy to ERCOT. When we needed it under the 04:07:49.447 --> 04:07:52.438 during those 100 hours, which appear to be what's contemplated. 04:07:52.728 --> 04:07:56.728 And the last note that I'll make is my, the concerns 04:07:56.737 --> 04:07:59.558 that we expressed with regards to an entity not being 04:07:59.567 --> 04:08:03.126 able to live up to the covenant that they would have 04:08:03.138 --> 04:08:05.268 to the performance covenant under the loan agreement. 04:08:05.518 --> 04:08:07.927 That doesn't exist with the grant in the same way that 04:08:07.938 --> 04:08:10.966 it does with a loan because you don't get the money 04:08:10.978 --> 04:08:15.626 upfront. And so um Commission Staff is, is open to 04:08:15.638 --> 04:08:18.527 I mean, if you all want to provide guidance, you can. 04:08:18.537 --> 04:08:20.287 But if not, I would just say that Commission Staff 04:08:20.397 --> 04:08:21.546 does not, 04:08:23.617 --> 04:08:26.256 is not as you know, close minded to the idea that we 04:08:26.268 --> 04:08:28.037 would interpret here. We think the statute in the program 04:08:28.046 --> 04:08:30.657 is a lot more suited to the inclusion of switchables 04:08:30.668 --> 04:08:33.737 for the completion bonus grant program than for the 04:08:33.747 --> 04:08:37.046 loan program. So that those are, that's our additional 04:08:37.058 --> 04:08:40.098 analysis there. Yeah, and in our discussions and talking 04:08:40.107 --> 04:08:42.197 to my staff, I agree with, with what you're saying 04:08:42.207 --> 04:08:46.006 with your interpretation of the differences between 04:08:46.018 --> 04:08:48.966 the loan program and this this bonus grant program. 04:08:48.978 --> 04:08:51.607 So um like I said I, I agree with that. 04:08:53.876 --> 04:08:58.407 I do as well. I think that's right. Okay. Another meaningful 04:08:58.418 --> 04:09:00.247 difference, just since we've been working with stakeholders. 04:09:00.256 --> 04:09:03.537 I will say that this rule has been published for 10 04:09:05.527 --> 04:09:08.388 published publicly for 10 days with the idea with staff's 04:09:08.397 --> 04:09:10.918 recommendation and that switchables would be excluded. And 04:09:10.927 --> 04:09:13.308 just for context, staff has not been approached by 04:09:13.317 --> 04:09:17.647 any company or individual that intends to apply that 04:09:17.657 --> 04:09:20.827 desires to apply for a loan. But we have been approached 04:09:20.836 --> 04:09:23.707 by folks that are desired to apply for a grant that 04:09:23.716 --> 04:09:26.927 for a switchable. And so to the extent that that is meaningful 04:09:26.938 --> 04:09:29.966 input, um I wanted to communicate that as well. Thanks 04:09:29.978 --> 04:09:32.668 David. Thanks y'all, appreciate it. Thank you. Thank you 04:09:34.237 --> 04:09:39.006 Okay. I don't have anything on 27, 28, 29, 30 or 31. 04:09:39.018 --> 04:09:42.876 (item:32:Chairman Gleeson opens floor for ERCOT's Woody Rickerson to speak on the upcoming eclipse in April) Item No. 32. I believe ERCOT, Woody was gonna talk 04:09:42.888 --> 04:09:46.598 about the eclipse we have coming up uh on April 8th. 04:09:52.506 --> 04:09:56.427 Woody Rickerson with ERCOT. So 04:09:58.907 --> 04:10:03.716 Monday, April 8, 2024, total solar eclipse. We 04:10:03.728 --> 04:10:07.518 have a uh there's a good summary that is on the ERCOT 04:10:07.527 --> 04:10:12.027 website uh under the Ross committee. And uh there'll 04:10:12.037 --> 04:10:14.888 be another update in the April Ross if you may want 04:10:14.897 --> 04:10:15.577 to look at that. 04:10:17.867 --> 04:10:21.777 So the uh the eclipse will occur approximately between 04:10:21.787 --> 04:10:29.876 12:10 and 3:10. The sun coverage ranging from 81% to 04:10:29.888 --> 04:10:37.546 99% in Texas. The overall solar output will could be 04:10:37.558 --> 04:10:41.006 only 7.6% remaining. So it's a pretty uh pretty big 04:10:41.018 --> 04:10:45.058 ramp down. So ERCOT will preposture the system just like 04:10:45.067 --> 04:10:48.716 we did previously. As necessary to meet both the down 04:10:48.728 --> 04:10:53.857 ramp and the up ramp. We are fortunate that the 04:10:53.867 --> 04:10:58.747 solar eclipse is occurring in April, not August. Because 04:10:58.756 --> 04:11:01.537 it would be much more difficult to do this in August 04:11:01.546 --> 04:11:06.308 than it will be in April. The some of the activities 04:11:06.317 --> 04:11:10.626 leading up will start um about 11 days before the eclipse. 04:11:10.638 --> 04:11:12.447 We'll send out the first market notice, reminding the 04:11:12.457 --> 04:11:15.296 market. And there's a series of things that occur 10 04:11:15.308 --> 04:11:17.737 days and 7 days and 4 days. When you get 04:11:17.747 --> 04:11:20.888 down to 2 days before the eclipse uh prior to the 04:11:20.897 --> 04:11:22.018 next day's uh 04:11:23.867 --> 04:11:26.836 day ahead market. We'll review the forecast selections 04:11:26.848 --> 04:11:29.228 and ancillary service requirements for the eclipse 04:11:29.237 --> 04:11:34.037 hours and assess if any changes are needed. After 04:11:34.117 --> 04:11:37.668 one day before, after the dam clears and prior to d 04:11:37.737 --> 04:11:41.216 rock. We'll assess a sufficient capacity margin for 04:11:41.228 --> 04:11:43.808 the eclipse window. And if a forecast selection changes 04:11:43.817 --> 04:11:46.657 are needed. By that point, we should have a pretty 04:11:46.668 --> 04:11:48.518 good idea if it's gonna be a clear sky day or a 04:11:48.527 --> 04:11:50.947 cloudy day. A cloudy day actually would have of course 04:11:50.957 --> 04:11:55.817 less, less ramp. Lower, probably lower overall load 04:11:55.827 --> 04:11:59.348 too. The day of the eclipse at 10am, 2 hour 04:11:59.357 --> 04:12:02.728 two hours prior to the operating hour window. We'll 04:12:02.737 --> 04:12:05.367 assess forecast performance and we'll review all our 04:12:05.376 --> 04:12:08.768 parameters. We don't expect there to be any reliability 04:12:08.777 --> 04:12:09.407 problems. 04:12:10.938 --> 04:12:14.987 Any questions for Woody? No, I would say. I don't know 04:12:14.997 --> 04:12:17.497 if I forwarded it to you Woody. But Texas A&M's 04:12:17.506 --> 04:12:20.728 smart grid center did a visual simulation of what it 04:12:20.737 --> 04:12:25.336 would look like and the megawatts how they are detrimental 04:12:25.348 --> 04:12:29.277 to the system in totality as the eclipse happens across 04:12:29.287 --> 04:12:31.478 the state. If you go to the A&M Smart Grid 04:12:31.487 --> 04:12:33.867 Center website, it's there. It's pretty cool to see. 04:12:37.188 --> 04:12:40.546 Thanks Woody, appreciate it. 04:12:40.577 --> 04:12:40.668 (silence) 04:12:43.447 --> 04:12:47.617 (item:35:Chairman Gleeson lays out Project No. 55156) I don't have anything until Item No. 35, Project 04:12:47.626 --> 04:12:51.997 55156. Implementation of activities from the 88 Legislature. 04:12:52.006 --> 04:12:54.957 I think Connie, you have an update on our ledge tracker. 04:12:55.457 --> 04:12:59.228 I do. Um, this morning we went live on the agency website 04:12:59.237 --> 04:13:03.157 with an implementation tracker. From the home page 04:13:03.168 --> 04:13:06.197 you can scroll down to the Government Relations tile. 04:13:06.567 --> 04:13:09.527 That's where you'll find our one stop shop to keep 04:13:09.537 --> 04:13:12.987 up with implementation. It includes links to relevant 04:13:12.997 --> 04:13:15.987 Commission projects and key documents in those projects. 04:13:16.348 --> 04:13:20.228 We'll be updating this uh tracker periodically and 04:13:20.237 --> 04:13:22.897 I hope that helps anyone who's interested. Keep up 04:13:22.907 --> 04:13:25.546 with what we have going on here, which is, you know 04:13:25.558 --> 04:13:29.308 a few things. Yeah no. I think, yeah absolutely. 04:13:29.317 --> 04:13:31.966 And, and you know, having it more accessible. I think 04:13:31.978 --> 04:13:33.647 to everyone who's interested in what we're doing is 04:13:33.657 --> 04:13:36.827 is definitely a good move and so appreciate the work 04:13:36.836 --> 04:13:38.688 in and getting that up. Thanks to the GR team, our 04:13:38.697 --> 04:13:41.427 IT Staff, Comm Staff for, for doing all that. Appreciate 04:13:41.438 --> 04:13:47.207 it. I don't have anything on 36. (item:37:Chairman Gleeson opens up item for update from PUC Interim Executive Director, Connie Corona) 37 update from our Interim 04:13:47.216 --> 04:13:51.268 Executive Director. Thank you Commissioners. I am 04:13:51.277 --> 04:13:53.677 also pleased to report to you that as of Monday this 04:13:53.688 --> 04:13:56.638 week, we have extended our hours for consumer assistance 04:13:56.647 --> 04:14:00.777 by phone. Staff is now available to answer 8 to 04:14:00.787 --> 04:14:05.438 5, Monday through Friday. As well as by email or online 04:14:05.447 --> 04:14:09.876 form at any time. So that's something that we've 04:14:09.888 --> 04:14:15.327 been striving to get um into our schedule as we acquire 04:14:15.336 --> 04:14:18.756 more resources um in the agency. And, and we're able 04:14:18.768 --> 04:14:24.188 to accomplish that this week. Secondly, I am quite 04:14:24.197 --> 04:14:27.617 proud to announce that our very own Ellie Breed is 04:14:27.626 --> 04:14:30.397 being honored with the Rising Star Award from the Daily 04:14:30.407 --> 04:14:34.728 Texan Hall of Fame. During Ellie's time at the University 04:14:34.737 --> 04:14:38.107 of Texas, she served in a number of roles including 04:14:38.117 --> 04:14:41.997 Managing Editor of that publication. The Rising Star 04:14:42.006 --> 04:14:44.987 Award is given to recent graduates who have already 04:14:44.997 --> 04:14:48.546 in their short time in their career, made a significant 04:14:48.558 --> 04:14:51.668 contribution to their field. Um Ellie is currently 04:14:51.677 --> 04:14:56.558 serving as our Chief Press Officer and she is um indispensable 04:14:56.567 --> 04:14:59.427 to the staff, so we appreciate her very much. Absolutely, 04:14:59.438 --> 04:15:01.768 congratulations to her. I don't know if she's in the room. 04:15:02.697 --> 04:15:06.357 When you, when you see Ellie congratulate her. She, 04:15:06.367 --> 04:15:09.177 she does an amazing job. Our Comms team, you know 04:15:09.188 --> 04:15:12.836 since, since Winter Storm Uri has grown a lot. And 04:15:12.848 --> 04:15:15.836 you know, hiring Rich was, was great for us and 04:15:15.848 --> 04:15:17.796 he's been able to put together a great Comms team. 04:15:17.808 --> 04:15:19.638 So, um congratulations to her. 04:15:21.277 --> 04:15:23.497 I don't have anything else. The last thing I'll say 04:15:23.506 --> 04:15:27.796 is happy 1st day of March Madness. To those who celebrate 04:15:27.808 --> 04:15:30.857 this day as the tournament is going on. The one thing 04:15:30.867 --> 04:15:35.357 I would say is remember that the majority of the real 04:15:35.367 --> 04:15:37.598 stars in this year's tournament are in the Women's 04:15:37.607 --> 04:15:41.918 bracket. From JuJu Watkins at USC, to you know Paige 04:15:42.027 --> 04:15:45.938 Becker at UConn and Caitlin Clark at Iowa. Do yourself 04:15:45.947 --> 04:15:47.978 a favor and watch some Women's basketball because that's 04:15:47.987 --> 04:15:50.617 where the real stars are in this tournament. (item:40:Chairman Gleeson adjourns meeting) So with 04:15:50.626 --> 04:15:52.997 having no more business before us. This meeting of 04:15:53.006 --> 04:15:55.357 the Public Utility Commission of Texas is adjourned.