WEBVTT 00:07.280 --> 00:10.582 This meeting of the Public Utility Commission of Texas will come to order to consider 00:10.646 --> 00:14.326 matters that have been duly posted with the secretary of state for today, 00:14.438 --> 00:17.686 July 11, 2024. Good morning, 00:17.718 --> 00:20.210 everybody. Good morning, Sheila. Connie Barksdale. 00:20.910 --> 00:24.134 So we're going to do things a little different. 00:24.222 --> 00:27.138 We're going to take up item a first, 00:27.294 --> 00:30.910 but then we're going to take up item 19 after that. 00:31.210 --> 00:34.594 And we're also going to break at 1130. 00:34.642 --> 00:37.986 We have to go into closed session. So we're going to break at 1130 for 00:38.018 --> 00:42.018 that and most likely come back, adjourn closed session, 00:42.154 --> 00:45.802 then recess the public meeting until 01:00 I think this will be a 00:45.826 --> 00:49.154 longer open meeting. So we'll come back at one, assuming we get there 00:49.322 --> 00:52.106 first order of business, as you all can count. 00:52.218 --> 00:54.980 12345. So, 00:55.600 --> 00:57.380 Commissioner Yaltman, welcome. 00:58.920 --> 01:02.144 It's already on. Thank you. We had to practice his counting 01:02.192 --> 01:03.660 in the hallway. By the way, 01:05.560 --> 01:08.992 he is an aggie. He is. He kept skipping 01:09.016 --> 01:12.248 a number. So excited to be here. Thank you, 01:12.264 --> 01:16.152 Courtney. We're excited to have you here. So first up, we, you know, 01:16.176 --> 01:20.016 we're going to call up item a, which is a review of ERCOT. 01:20.208 --> 01:23.152 And, Connie, I'll have you lay out your memo first. But, you know, again, 01:23.256 --> 01:26.824 for everybody, as everyone knows, you know, this area of Texas, 01:26.872 --> 01:31.008 and Texas is dealing with a lot, you know, human tragedy, human loss and property 01:31.064 --> 01:34.480 loss as well. You know, I talked to the governor's office. 01:34.520 --> 01:38.120 I've talked to lieutenant governor. You know, we're going to figure 01:38.160 --> 01:41.456 this out. You'll hear from all the utilities this morning. 01:41.528 --> 01:45.112 They'll lay out what they have gone through and their efforts 01:45.176 --> 01:48.904 to assess and restore their systems. We'll ask them questions. 01:48.992 --> 01:52.320 But I want to assure everybody this will be the first step in this process, 01:52.400 --> 01:55.752 not the last step. And we will probably end up 01:55.776 --> 01:59.440 filing a report as we head into the legislative session about 01:59.480 --> 02:03.296 our learnings and potentially some legislative solutions that we may need. 02:03.448 --> 02:06.928 So with that, Connie, unless anyone else would like to 02:06.944 --> 02:10.592 say anything. All right, Connie, 02:10.616 --> 02:13.580 would you like to lay out your memo? Good morning, chairman and commander. 02:13.600 --> 02:17.100 Commissioners. First, for those who are interested 02:17.140 --> 02:20.164 in following along some of the discussions today, 02:20.332 --> 02:25.440 items related to Hurricane ERCOT are filed in project number 56793. 02:26.020 --> 02:29.540 Centerpoint filed their presentation last night, 02:29.580 --> 02:33.004 and it's available to view online as they give it in just a 02:33.012 --> 02:36.964 few minutes. Also in that project yesterday, 02:37.052 --> 02:40.990 I filed a memo advising impacted utilities that staff 02:41.070 --> 02:44.646 intends to exercise limited enforcement discretion on certain 02:44.718 --> 02:48.262 administrative rules and deadlines so that the utilities 02:48.326 --> 02:51.830 can focus on service restoration. The discretion 02:51.870 --> 02:55.310 applies to the prescribed timelines for certain routine matters, 02:55.470 --> 02:59.046 such as deadlines for filing reports and responding to new 02:59.118 --> 03:03.062 requests for new service. The enforcement discretion applies 03:03.126 --> 03:06.000 through July 26, as specified in the memo, 03:06.150 --> 03:09.628 and list the rules to which it applies. Again, 03:09.684 --> 03:13.564 the purpose of this is to ensure restoration efforts take precedence over routine 03:13.612 --> 03:17.028 matters inconsistent with what we've done historically in similar 03:17.084 --> 03:20.628 situations. That is correct. Any questions for 03:20.644 --> 03:24.364 Connie? Okay. Then we'll go 03:24.372 --> 03:28.200 ahead and start calling up the utilities. So first we're going to hear from AEP. 03:39.230 --> 03:41.010 Good morning, Chad. Good morning. 03:44.630 --> 03:47.534 (item:A: Chad Burnett, AEP Texas, Beryl Efforts, 56937) SSo I think you know my name is Chad Burnett. I'm the vice president of 03:47.582 --> 03:51.590 regulatory and finance for AP Texas. I am 03:51.670 --> 03:54.878 excited to come here today to share with you an 03:54.894 --> 03:59.310 update on our storm recovery efforts and the preparations that we made in anticipation 03:59.350 --> 04:03.272 of Hurricane barrel. As you know, AP Texas has 04:03.296 --> 04:06.720 the greatest coastal exposure of any utility in the state of Texas. 04:06.800 --> 04:10.624 Our footprint goes all the way down to Brownsville, 04:10.752 --> 04:14.064 basically at the southern tip of the Rio Grande Valley, all the way up to 04:14.232 --> 04:18.060 Bay City El Campo area, which is just southwest of Houston. 04:18.399 --> 04:21.760 And so, you know, what was unique about barrel is the fact 04:21.800 --> 04:25.192 that it posed a threat to our entire coastal service 04:25.256 --> 04:28.570 territory as it changed course throughout its development. 04:29.510 --> 04:32.710 So before I talk about how our storm recovery progress is going, I'd like to 04:32.750 --> 04:36.022 start by giving you a timeline of the preparations that we 04:36.046 --> 04:39.370 did going into this. So before every hurricane season, 04:39.790 --> 04:43.222 we do hurricane drills with our staff to 04:43.246 --> 04:46.006 make sure that they're prepared for the season. And we did that this year on 04:46.038 --> 04:49.726 April 23. And again, that was an opportunity 04:49.758 --> 04:53.942 for everybody to kind of practice what it would be like during a catastrophic event, 04:54.046 --> 04:56.450 to be ready to coordinate and all of those things. 04:57.630 --> 05:01.174 But coming back to Barrel, starting on Wednesday, July 3, 05:01.222 --> 05:04.782 which was five days before landfall, we initiated 05:04.806 --> 05:08.366 the level one incident command system in accordance with the FEMA 05:08.478 --> 05:10.930 national Incident management system guidelines. 05:12.430 --> 05:16.670 Anticipating that bear would make landfall somewhere on our coast, we alerted 05:16.750 --> 05:20.422 the commission as well as our community leaders that we had initiated this structure and 05:20.446 --> 05:24.674 began making preparations for what would be the first hurricane of the 2024 05:24.742 --> 05:28.994 season on Friday, July 5, three days before landfall. 05:29.162 --> 05:33.082 The weather projection was assuming that barrel would make landfall near 05:33.106 --> 05:37.106 the Brownsville area, and we started making preparations 05:37.258 --> 05:40.210 for that. And so we did some estimations, 05:40.370 --> 05:43.874 assuming what kind of damage we would take, what it would take 05:43.922 --> 05:47.410 resources to restore power, get equipment back in store. 05:47.490 --> 05:51.018 And we were planning for, again, three days before we 05:51.034 --> 05:53.590 were assuming it was going to hit down in the valley area. 05:55.120 --> 05:59.016 At this point, we also started coordinating with our state and local emergency operations centers 05:59.128 --> 06:02.512 and working with our community leaders to ensure that we had the 06:02.536 --> 06:06.568 latest list of cooling centers and critical care facilities to help prioritize 06:06.624 --> 06:10.136 our restoration efforts. By Saturday, 06:10.248 --> 06:13.872 which was two days before landfall, the weather projections had shifted 06:13.976 --> 06:17.740 and barrel was now expected to make landfall just north of Corpus Christi, 06:18.280 --> 06:22.182 still impacting the rest of our Laredo and RGV districts. 06:22.376 --> 06:26.562 By this time, we had secured approximately 4500 resources, 06:26.626 --> 06:29.826 or about 1200 crews that would be coming in from Ohio, 06:29.898 --> 06:33.522 Indiana, Michigan, Oklahoma, Arkansas, Louisiana and across 06:33.586 --> 06:37.298 the state of Texas to help. By Sunday morning, 06:37.354 --> 06:40.946 one day before landfall, the weather projections had once again changed, 06:41.018 --> 06:44.466 and this time it shifted, and it looked like barrel was going to make landfall 06:44.538 --> 06:48.104 somewhere between Palacios and Matagora in 06:48.112 --> 06:52.128 our northern Corpus Christi district. By this time, we had already established a gateway 06:52.184 --> 06:56.160 center at the regional fairgrounds in Robstown and had checked in 06:56.200 --> 06:59.448 approximately 2700 personnel that had come in 06:59.504 --> 07:02.816 to help work the storm. When Hurricane barrel 07:02.848 --> 07:07.120 finally made landfall Monday morning, we had approximately 35,000 07:07.200 --> 07:09.900 customers out of service who had lost power, 07:10.600 --> 07:14.804 and the biggest impacts were near Bay City, Palacios and El Campo. 07:14.992 --> 07:17.560 I'm happy to report to you that as of this morning, 07:18.580 --> 07:23.124 we now have 94% of our customers restored and 07:23.172 --> 07:26.732 we're still working today and throughout until we get power restored to 07:26.756 --> 07:30.092 everybody. Now, earlier this week, I had the opportunity to 07:30.116 --> 07:33.868 tour the damage in the communities of Palacios, Bay City and El Campo, 07:34.044 --> 07:37.460 and to visit the mobile command centers that we set up in the Bay City 07:37.500 --> 07:40.946 Fairgrounds and the El Campo service center. I was shocked 07:40.978 --> 07:44.322 by some of the damage that I had seen, but I was impressed by the 07:44.346 --> 07:48.026 restoration operations that were taking place. I saw sections 07:48.058 --> 07:51.138 of lines with poles snapped in, two lines on the 07:51.154 --> 07:55.330 ground, and evidence of flooding. I also saw roofs damaged, 07:55.410 --> 07:58.210 signs destroyed, and significant tree debris. 07:58.370 --> 08:01.226 But one thing that caught my eye was the fact that even in the midst 08:01.258 --> 08:05.394 of all of that, there were several lines that had recently been reconstructed 08:05.522 --> 08:09.256 using our modern design standards that were still intact and 08:09.288 --> 08:11.780 appeared to have weathered the storm just fine. 08:12.080 --> 08:15.160 And this is a preview of what you will see in our upcoming resiliency plan 08:15.200 --> 08:19.168 filing, because it really does show that some of the newer designs that we're seeing 08:19.264 --> 08:22.780 coming out can make a difference in making the system more resilient. 08:24.520 --> 08:28.176 At the staging center in Bay City, I also saw a steady 08:28.208 --> 08:30.864 stream of trucks and crews coming in to pick up poles, 08:30.912 --> 08:34.488 materials and supplies needed for their assignments before heading back out 08:34.504 --> 08:38.447 to the field. I saw coordination and collaboration between 08:38.503 --> 08:41.951 the service crews, assessment teams, construction crews and 08:41.975 --> 08:45.479 vegetation crews with a clear focus on one mission, 08:45.599 --> 08:48.859 which is to restore power as quickly and safely as possible. 08:49.319 --> 08:52.815 This occurred despite the communication challenges that they 08:52.847 --> 08:56.887 encountered due to poor cellular service in the area. So before I 08:56.903 --> 09:00.063 close, I just wanted to share with you one story that happened during our restoration 09:00.111 --> 09:03.972 operations that I hope will stick with you. I know as commissioners you will 09:03.996 --> 09:07.724 likely hear everything that goes wrong in a storm restoration event. 09:07.892 --> 09:11.560 I think it's important to balance that with a story of something that went right. 09:12.020 --> 09:15.796 So on Monday, after barrel hit, we learned that the city of El Campo's 09:15.828 --> 09:20.452 water treatment center, as well as their hospital had lost power from 09:20.476 --> 09:24.188 the storm. AP Texas crews worked well into the night and 09:24.204 --> 09:28.164 were able to restore power to both locations before there was a loss of water 09:28.212 --> 09:31.680 pressure in the town or any backup issues from their sewage system. 09:32.180 --> 09:35.556 After finishing that job around 10:00 p.m. the crew still 09:35.588 --> 09:39.236 had to drive nearly 2 hours back to Corpus for their hotel because there 09:39.268 --> 09:42.720 wasn't any available lodging near that site. 09:43.460 --> 09:46.644 So on Tuesday morning's EOC call, the city manager and 09:46.652 --> 09:50.276 the public works director shared their great appreciation for our line workers 09:50.348 --> 09:54.172 late night efforts which allowed them to avoid having to pay for 09:54.196 --> 09:58.112 a temporary generator that would have needed had they not been restored 09:58.276 --> 10:01.848 by Tuesday afternoon. Municipal Judge Michelle Roy reached out 10:01.984 --> 10:06.152 and asked if they could provide a lunch to our line workers 10:06.256 --> 10:09.728 to show their appreciation. So yesterday, the local 10:09.784 --> 10:13.140 Rotary club and approximately 3000 10:13.440 --> 10:17.104 citizens arranged a lunch to serve 300 line workers 10:17.192 --> 10:19.580 on national line Worker Appreciation Day. 10:21.040 --> 10:24.344 One quote I wanted to share, El Campo City manager Courtney 10:24.392 --> 10:27.888 Sladek said, I can't give enough props to your linemen for cranking it 10:27.904 --> 10:31.540 out today. AEP's response to the storm was very much appreciated 10:31.660 --> 10:36.020 and there are pictures and videos of this event on our social media accounts. 10:36.180 --> 10:39.652 And it's stories like this that remind us of the dedication and commitment that our 10:39.676 --> 10:43.840 line crews make every single day despite working in these dangerous conditions. 10:44.500 --> 10:48.108 So overall, I am so proud of the team and the efforts that went 10:48.124 --> 10:51.676 into restoring electricity to our communities and our customers. 10:51.868 --> 10:55.020 We were fortunate this time. Barrel just clipped the northern 10:55.060 --> 10:58.522 part of our service territory, but again, we were under threat for 10:58.546 --> 11:02.282 the entire coastline. So even though we were lucky 11:02.306 --> 11:05.066 with this storm, I want to leave you with the message that we were prepared. 11:05.138 --> 11:08.362 We had made a lot of preparations before the 11:08.386 --> 11:11.890 event even happened, and that's due to the large efforts 11:11.930 --> 11:15.234 of our planning and logistics team. So with that, I want 11:15.242 --> 11:18.002 to thank you for giving me the opportunity to share that and happy to take 11:18.026 --> 11:21.590 any questions you might have. Thank you, Chad. Commissioners questions 11:22.140 --> 11:25.764 (item:A: Commissioner's Questions to Chad Burnet, AEP TEXAS, Beryl, 56793) Chad, you mentioned that 94% have already been restored. How many 11:25.812 --> 11:28.156 customers are left that are without power. 11:28.348 --> 11:31.980 It's, it's just over 2000 customers are left without power 11:32.020 --> 11:35.788 right now. Okay. When, when do you expect to have them restored? We have an 11:35.804 --> 11:39.148 ETR. We're shooting for the, by the end of the day we'll have 95%. 11:39.204 --> 11:42.692 There may still be some 95%, I guess, of all the customers that 11:42.716 --> 11:46.292 can take power. We hope that will happen today, but there may still 11:46.316 --> 11:50.210 be a little bit of cleanup that our crews will stick around afterwards. Thank you. 11:53.470 --> 11:57.046 In a look back, 11:57.158 --> 12:00.758 will you all be able to tell us what 12:00.854 --> 12:04.342 types of polls you had problems with? We're going to get into this 12:04.366 --> 12:07.734 discussion with resiliency a lot more again and again. 12:07.782 --> 12:10.974 Is it spun concrete poles? Is it composite 12:11.022 --> 12:14.486 structures? I think it would be good for us to 12:14.518 --> 12:18.604 know that if we are going to continue to have problems with wood poles along 12:18.652 --> 12:22.508 the coast or in these hurricane prone areas. You know what the cost differential 12:22.564 --> 12:26.172 is, what the resiliency story is to get polls that 12:26.196 --> 12:29.372 you don't have to put up every single time. So as you all are 12:29.396 --> 12:32.732 going through that post analysis, will you make sure that 12:32.756 --> 12:36.252 you let us know and let the staff know on our project the types of 12:36.276 --> 12:39.860 poles that you're seeing damaged and the voltages of those. 12:39.980 --> 12:42.796 Yeah, we'll be happy to do that. I'll tell you that just real quickly. 12:42.868 --> 12:46.516 What we're learning is that by putting in our new standards, have bigger poles, 12:46.548 --> 12:50.268 obviously, and putting them closer together. But like you said, there's a material component 12:50.284 --> 12:52.668 to that as well. And all of that we'll certainly be happy to share with 12:52.684 --> 12:56.316 you and will be included in our resiliency plan filing. One other 12:56.348 --> 13:00.340 thing, and that is when you all were preparing on Friday and 13:00.380 --> 13:03.588 Saturday, you said you had crews coming in from all of these other states. 13:03.684 --> 13:08.436 Were those primarily AEP companies that were providing that 13:08.508 --> 13:11.804 mutual assistance? It was not only AEP. We did pull a 13:11.812 --> 13:15.384 lot from the AEP, but we used a lot of business partners across the mutual 13:15.432 --> 13:18.792 systems system. And I know there were a lot of business partners that came in 13:18.816 --> 13:22.376 from other parts as well. And I just want to point out, I mean, 13:22.408 --> 13:26.360 mutual assistance is an imperfect but 13:26.440 --> 13:30.448 very, very well oiled machine, the way 13:30.544 --> 13:34.568 it works across these systems. And somehow 13:34.624 --> 13:37.656 it just, it kind of happens. The people that know how to deal with mutual 13:37.688 --> 13:40.968 assistance, actually it works. I went out to one 13:40.984 --> 13:44.652 of our center points, mutual assistance centers, and they were 13:44.676 --> 13:48.380 just getting set up. But there's a 13:48.420 --> 13:51.964 reason for everything, and the reason is how 13:51.972 --> 13:54.244 do you get people in? How do you get them lined up? How do you 13:54.252 --> 13:57.756 get them safety procedures, how do you get them assigned to teams? 13:57.788 --> 14:01.860 How do you get them fed? How do you get them sleeping 14:02.020 --> 14:05.320 per OSHA rules? And then how do you get them out? 14:05.660 --> 14:09.052 And it may be at some 14:09.076 --> 14:13.004 point in time again in this process, good to have EEI 14:13.092 --> 14:16.640 or the utilities come in and really explain how that is 14:16.680 --> 14:22.480 driven. Give the staff a good understanding of that because it's 14:22.520 --> 14:26.080 hard to do, it's hard to plan, but when it happens, it's pretty 14:26.120 --> 14:29.704 amazing. And I 14:29.792 --> 14:33.352 spent many, I had many text messages with Judith, 14:33.456 --> 14:37.080 and they were great. She was great on giving us information there. 14:37.120 --> 14:39.940 So thank you. Thanks. 14:41.410 --> 14:44.706 Just a quick question on materials and supplies. 14:44.858 --> 14:48.386 You know, we've seen that that's been an issue just across the 14:48.418 --> 14:51.122 system in terms of infrastructure maintenance and development. 14:51.226 --> 14:55.018 So any issues with getting the supplies in 14:55.034 --> 14:58.186 order to affect the restoration? 14:58.338 --> 15:02.178 We didn't with our storm, and I should have said this earlier, when we do 15:02.354 --> 15:05.882 getting into hurricane season, our procurement folks build up an 15:05.906 --> 15:09.380 inventory anticipation of our storm needs. And so 15:09.420 --> 15:12.800 we had kind of built up, you know, a material supply 15:13.340 --> 15:16.684 inventory already. But yeah, through this storm, we had enough 15:16.732 --> 15:19.600 of what we needed to be able to restore. And again, 15:20.220 --> 15:23.852 candidly, we got lucky that we only had a portion of our service territory 15:23.876 --> 15:27.028 that were, that was exposed by this. But we did have the 15:27.044 --> 15:30.516 materials we needed. One question, and it's 15:30.548 --> 15:33.956 one I'll ask, of all the utilities coming forth, you mentioned 15:33.988 --> 15:37.188 the water treatment center, and I know those are definitely on your list of critical. 15:37.324 --> 15:40.572 Do you have water districts in your service area? 15:40.716 --> 15:43.844 Yes, and we were coordinating with those as well. That was one of 15:43.852 --> 15:46.796 the first things we do, you know, making sure that we've got, you know, 15:46.868 --> 15:50.172 our local contacts with the local community. So you have an accurate list of what 15:50.196 --> 15:53.836 those are? Yeah, our community affairs managers are actively 15:53.868 --> 15:57.356 at keeping that updated. Thank you, Thomas. 15:57.428 --> 16:01.120 I would just ask one other thing, and that is as all the utilities that 16:01.160 --> 16:04.780 talk, and that is as staff is working 16:05.480 --> 16:08.928 on our next project on this for 16:08.944 --> 16:12.112 the utilities who really give us an idea, I hope we can get 16:12.136 --> 16:15.048 this from cities and munis and co ops as well. 16:15.104 --> 16:18.400 But how many of the fallen 16:18.440 --> 16:21.504 trees were in the right of way and how many were outside the right of 16:21.512 --> 16:25.448 way? It's going to be really important for us to understand that and the 16:25.504 --> 16:27.580 effectiveness of vegetation management, 16:29.510 --> 16:32.942 these plans, and if we can actually do anything about some of 16:32.966 --> 16:36.726 those trees. I think I was astonished in Houston about the 16:36.758 --> 16:40.342 number of large trees that were pulled up by the root ball as 16:40.366 --> 16:43.942 opposed to broken at the top. And it 16:43.966 --> 16:47.542 was, it's just pretty amazing. These are, you know, these aren't ones that 16:47.646 --> 16:50.830 just require chainsaws. You know, you have to have cranes to get them out of 16:51.330 --> 16:54.582 the road. And so it's kind of a different kind of storm from my 16:54.606 --> 16:57.310 perspective. Absolutely. And I think, you know, 16:57.430 --> 17:01.126 as we talk about kind of the next phase of our review and 17:01.198 --> 17:04.454 assessment of everyone, we'll cast a wide net initially. You know, we got 17:04.462 --> 17:07.502 to figure out what went wrong, what can be improved. And a lot of that's 17:07.526 --> 17:11.230 going to be talking to folks who do this well, both in the state 17:11.270 --> 17:14.846 and out of the state because I'm sure there are other places, 17:14.877 --> 17:18.165 you know, there are other places Florida that deals with this a lot and, 17:18.238 --> 17:21.300 you know, we can probably learn a lot from, from other places as well. 17:21.598 --> 17:25.136 Thank you, Chad. Thanks. All right, 17:25.165 --> 17:28.472 TNMP, do you want me to bring that up right now? What's that? 17:28.496 --> 17:32.176 Florida. Florida. Yeah. So just, I had 17:32.208 --> 17:35.568 put a, for everybody in the audience, I had put a 17:35.704 --> 17:39.512 PowerPoint presentation that FPL had given me about resiliency 17:39.536 --> 17:44.992 on their system. They started in 2024 17:45.056 --> 17:48.496 or 25, five after they had 17:48.688 --> 17:51.976 26, after they had four. They had two category four 17:52.008 --> 17:55.184 hurricanes. And this is not 17:55.232 --> 17:59.768 an inexpensive and it's not a short term fix 17:59.824 --> 18:02.820 on the system, but resiliency works. And, 18:03.800 --> 18:07.256 you know, this has some significant 18:07.408 --> 18:11.056 reductions in the time and 18:11.088 --> 18:14.488 expense to get systems back up if you harden them the correct way, if you 18:14.504 --> 18:18.428 put in the right poles in the right places, spacing different 18:18.484 --> 18:21.884 types of poles other than just wood poles, I think it would be great to 18:21.972 --> 18:25.308 have them at least part of our discussion. But this was something that I 18:25.324 --> 18:28.924 had had for months and was going to 18:29.092 --> 18:32.492 share it with you all during our resiliency discussion. But clearly 18:32.516 --> 18:36.356 that's here. Definitely. And I'm sure there are things that work there 18:36.388 --> 18:39.308 that maybe wouldn't work here. We'll find a Texas solution, obviously. But, yeah, we can 18:39.324 --> 18:43.422 learn a lot from other places and further, too, I guess the, the presentation that 18:43.446 --> 18:47.398 you gave everybody, and I think a point that's well made is, 18:47.534 --> 18:51.934 you know, they're reporting that along with better hurricane performance, their investments 18:51.982 --> 18:56.254 improve their daily reliability and they're staying here by over 40%. 18:56.342 --> 19:00.150 So shoring up the system in anticipation that 19:00.190 --> 19:03.886 management of risk for that critical 19:03.918 --> 19:07.134 event that you're trying to pay for that worst case scenario also 19:07.182 --> 19:10.838 helps shore up your ongoing reliability, which is something we 19:10.854 --> 19:13.130 can always use. Very good point. 19:14.110 --> 19:17.902 (item:A: Stacy Whitehurst, TNMP, Beryl Efforts, 56793) Good morning, Stacy. Good morning. Thank you. For the record, my name is Stacey Whitehurst. 19:17.926 --> 19:20.518 I'm the vice president of regulatory affairs for TNP. 19:20.694 --> 19:24.650 Good morning. Chairman, commissioners and congratulations on your appointment. 19:25.350 --> 19:28.390 First of all, our hearts and prayers go out to all Texans that have been 19:28.430 --> 19:32.694 impacted by Hurricane Barrel. I wish to outline our preparedness and restoration 19:32.742 --> 19:36.008 efforts during this challenging time leading 19:36.024 --> 19:39.672 up to Hurricane Barrel. TNP took comprehensive steps to prepare for potential 19:39.736 --> 19:42.780 impacts, including having our hurricane drill in May. 19:44.160 --> 19:47.720 TNP subscribes to an advanced weather analytics service that provides 19:47.760 --> 19:51.920 weather analysis on potential weather events that could impact our service territory. 19:52.080 --> 19:55.552 We received notifications when a tropical disturbance is identified 19:55.616 --> 19:59.608 in the Caribbean, Gulf of Mexico or the Atlantic Ocean and we received one 19:59.664 --> 20:03.028 for when Barrel was just a disturbance. We closely monitor 20:03.084 --> 20:06.044 the weather forecast and the development of Hurricane Barrel. 20:06.172 --> 20:09.788 In addition, TNP participated in the early situational weather call 20:09.844 --> 20:13.880 set up by the Texas Department of Energy Management to ensure readiness 20:17.820 --> 20:21.396 after the tietum call on Friday, TNP activated its 20:21.428 --> 20:24.396 emergency operations plan on Saturday. 20:24.508 --> 20:28.828 In addition to our Gulf coast area employees, we had arranged for additional transmission 20:28.924 --> 20:32.790 and distribution line crews to be deployed on 20:32.830 --> 20:35.690 Sunday afternoon. Furthermore, 20:36.150 --> 20:40.558 as vegetation management crews were staged strategically within our service territory 20:40.694 --> 20:44.438 as part of our preparedness strategy, we began mobilizing internal resources 20:44.494 --> 20:48.750 from other service areas and had additional contractor crews on standby 20:48.910 --> 20:52.382 expecting Hurricane Barrel to intensify or shift closer to our service 20:52.446 --> 20:56.486 territory. While initial projections in the previous 20:56.558 --> 21:00.244 week had Hurricane Barrel making landfall further south, Hurricane Barrel 21:00.332 --> 21:04.604 may landfall in Matagora Hurricane Barrel's path moved towards TNP 21:04.652 --> 21:08.124 service territory. TNP's service territory is approximately 23 21:08.172 --> 21:11.772 miles from where Barrel made landfall, but swiftly turned to our service 21:11.836 --> 21:15.228 territory, hitting the Sweeney in west Columbia areas and 21:15.244 --> 21:18.596 then moving northeasterly through Angleton, Dixonson and Texas 21:18.628 --> 21:22.172 City area. Once the wind speeds dropped to a level that 21:22.236 --> 21:25.782 allowed damage assessments to begin, TNP mobilized 21:25.846 --> 21:28.670 to assess damages and initiate restoration efforts. 21:28.830 --> 21:32.222 Our dedicated crews are working tirelessly under difficult conditions to 21:32.246 --> 21:35.770 restore power as quickly and safely as possible. 21:36.150 --> 21:39.742 We deploy resources strategically to address critical infrastructure needs 21:39.846 --> 21:43.430 and prioritize restoration in affected areas. We had a peak 21:43.470 --> 21:47.170 customer outage of approximately 116,000 customers on Monday. 21:47.470 --> 21:50.774 We had eight transmission outages and had all but two restored 21:50.822 --> 21:54.280 on Tuesday, with the remaining two restored on Wednesday. 21:54.780 --> 21:58.956 The number of restoration workers that were on site were as follow. We had 21:59.028 --> 22:02.676 74 internal T and P linemen. We brought 22:02.708 --> 22:06.188 in 192 contract linemen and 22:06.324 --> 22:09.720 had 250 mutual assistant linemen 22:10.500 --> 22:14.164 contracted VM workers. We brought in 176 22:14.212 --> 22:17.940 contracted VM and mutual assistant VM 22:17.980 --> 22:21.840 102 contract damage 22:21.880 --> 22:24.992 assessors. We had 50 of those 22:25.056 --> 22:28.936 and we had internal damage assessors of 20 and 22:28.968 --> 22:32.392 we had used drone to help 22:32.456 --> 22:35.912 survey the area. We continue to add additional 22:35.936 --> 22:40.104 vegetation management and alignment over the last two days we've added an additional 120 22:40.192 --> 22:43.640 vegetation management ftes and we've seen that significant number 22:43.680 --> 22:47.268 of the damages were caused by falling and uprooted trees that have 22:47.284 --> 22:49.440 been brought down our infrastructure, 22:50.540 --> 22:54.660 broken and down poles, broken cost arms and down conductor. 22:54.740 --> 22:58.732 We are able to start repair the work but 22:58.756 --> 23:01.640 the vegetation management must be cleared out first. 23:02.340 --> 23:05.516 We have approximately 57,000 customers being reported out 23:05.548 --> 23:09.188 on our website. We are having to mainly close outage tickets in 23:09.204 --> 23:12.522 our AMS when received from outside assistance. We have 23:12.546 --> 23:15.802 been analyzing our AMS meter data and based on that data 23:15.946 --> 23:19.770 we can tell you that we have 75% of the customers 23:19.930 --> 23:23.658 with power to the meter. This morning. TNP is able to 23:23.674 --> 23:27.470 communicate with the meter and has been able to retrieve nightly interval data. 23:28.010 --> 23:31.626 Our main staging area is in Texas City at the Tanger mall with 23:31.658 --> 23:35.750 multiple material being staged throughout our service territory. 23:39.230 --> 23:42.670 TNP restorations are going on 24 hours a day with 23:42.710 --> 23:46.062 crews working 16 hours shifts. We continue to 23:46.086 --> 23:49.206 provide update on social media and our website. 23:49.318 --> 23:53.022 Customers can contact us through our IVR, talk to an 23:53.046 --> 23:55.766 agent, report an outage through tnp.com dot. 23:55.958 --> 24:00.062 Once we determined that there were external phone service issues throughout 24:00.086 --> 24:03.608 our service territory make it impossible for customers to call 24:03.694 --> 24:07.196 TNP directly and report through our IVR, we determined that 24:07.228 --> 24:12.436 customers could email us TMP, set up a new email address hurricanemp.com 24:12.548 --> 24:16.476 and posted this on social media and notify local officials 24:16.548 --> 24:20.480 of this TNP is providing regular updates on 24:20.940 --> 24:24.300 the tedium calls, provided updates to state local leaders, 24:24.380 --> 24:27.884 including having someone staffed at the state operations center. 24:28.052 --> 24:31.922 We understand that the restoration efforts affect our retail electric providers 24:31.946 --> 24:36.018 as well. We have provided the following information to our retail providers. 24:36.154 --> 24:40.162 We have stopped disconnects for nonpayment in the Gulf coast at this time. 24:40.346 --> 24:43.722 For non AMS service orders we continue to complete 24:43.906 --> 24:47.430 in our Gulf coast service territory where safety is not an issue. 24:48.490 --> 24:51.570 For AMS service orders, we're trying to complete all AMS 24:51.610 --> 24:54.874 service orders in our Gulf coast service area. 24:55.042 --> 24:58.944 All service orders that do not complete through this automated automated 24:58.992 --> 25:02.176 system will be dispatched to the field and complete if technicians are able 25:02.208 --> 25:05.792 to access the area and completely work and complete the 25:05.816 --> 25:09.740 work safely. For billing and usage. 25:10.200 --> 25:14.320 TMP has been is attempting to generate billing and usage transactions 25:14.400 --> 25:17.728 and files for all the AMSI easy 25:17.744 --> 25:21.260 ids in our Gulf coast area. If actual data is not available, 25:21.720 --> 25:25.592 we are we are estimating where available 25:25.736 --> 25:29.192 when we know we use our outage information to prevent 25:29.256 --> 25:32.768 normal estimation and generating files and when we 25:32.784 --> 25:36.816 generate those files, we're actually inserting zero 25:36.928 --> 25:39.340 readings in those 15 minutes intervals. 25:40.560 --> 25:44.296 We will attempt to obtain actual data and send replacement files if and 25:44.328 --> 25:47.872 when it becomes available. We know that our customers 25:47.936 --> 25:51.516 want and need their power back on as soon we understand 25:51.588 --> 25:56.060 their frustrations. Our employees are some of these same customers 25:56.100 --> 25:59.788 that have no power. Our goal is to have the bulk of the customers 25:59.964 --> 26:03.428 up this weekend, but understand areas with significant 26:03.604 --> 26:07.396 damage may go into next week. We are constantly 26:07.428 --> 26:11.076 discussing real time needs with our field supervisors and making sure the needs for 26:11.108 --> 26:14.596 additional resources, materials or other needs are being addressed as a top 26:14.628 --> 26:18.414 priority. The restoration and leadership team is in constant communication 26:18.462 --> 26:21.966 with each other and are in the Gulf coast right now. TMP is 26:21.998 --> 26:25.518 working hard to get everyone restored as soon as possible. I want 26:25.534 --> 26:29.286 to thank all the men and women at TNP, our mutual assistant partners and 26:29.318 --> 26:32.878 contractors that are assisting. I appreciate the opportunity to talk to 26:32.894 --> 26:35.582 you and open for questions. Thank you, (item:A: Commissioner's Questions to Stacy Whitehurst, AEP Texas, Beryl, 56793) 26:35.606 --> 26:39.302 Stacey. Something that caught my attention. So you were talking about crews generally, 26:39.326 --> 26:42.582 but then you talked about vegetation management crews. So I think that's an 26:42.606 --> 26:45.438 important point. So when you send crews out, 26:45.494 --> 26:49.246 that's not like a crew of different folks 26:49.278 --> 26:52.542 that can address different issues. That's why the assessment phase is so important, 26:52.606 --> 26:55.998 because you have to assess the situation first, what needs to be addressed so 26:56.014 --> 26:59.590 you can send the proper type of crew to address that issue. That's correct. 26:59.670 --> 27:03.438 I know there's frustration that people will see our linemen on the 27:03.454 --> 27:07.208 side of the road and just in their vehicles, but the problem is 27:07.334 --> 27:10.844 they're having to wait for our vegetation management to clear all the 27:10.892 --> 27:14.628 trees that are maybe in the road or causing 27:14.684 --> 27:18.480 issues that they can't, that keeps them from going into and, 27:18.780 --> 27:22.380 you know, setting new poles, setting fixing cross arms, 27:22.420 --> 27:25.892 or pulling conductor. Did the assessment 27:25.956 --> 27:29.228 phase this time take about as much as it typically does 27:29.324 --> 27:33.360 historically? Did something cause it to take longer? It was about 27:33.740 --> 27:37.420 the same time. The problem was, is the amount 27:37.460 --> 27:41.120 of vegetation, uprooted trees was a lot 27:42.180 --> 27:45.960 more than we expected. With these types of winds, 27:46.500 --> 27:50.820 you know, with all the weather that's been down there between freezes and, 27:50.900 --> 27:54.532 you know, pinchot, drought and heavy rains, some of these 27:54.636 --> 27:58.388 shallow rooted trees that are very large just kind 27:58.404 --> 28:01.968 of tumbled over into our service territory and trying to 28:01.984 --> 28:05.512 understand from our vegetation guys, how long it takes 28:05.536 --> 28:09.384 to actually cut some of these large trees to make path is 28:09.552 --> 28:12.912 hard to estimate. Thank you, commissioners. That might be 28:12.936 --> 28:15.888 good to ask the Forest Service for a little help in understanding that a little 28:15.904 --> 28:19.288 bit more. So, Stacey, you said that 28:19.464 --> 28:22.256 75% of your customers are restored today. Yes, 28:22.288 --> 28:25.696 ma'am. So how many customers are out and how 28:25.728 --> 28:29.036 many will be restored by this weekend and how many will be left till next 28:29.068 --> 28:33.100 weekend? So we have 30,000 that are still out and 28:33.220 --> 28:37.356 working on trying to get the final numbers 28:37.388 --> 28:41.068 on when those customers can be out. But we're expecting, 28:41.204 --> 28:44.684 we're bringing additional crews and we're trying to get the majority of those back 28:44.732 --> 28:48.476 on this weekend with some left to next weekend. 28:48.508 --> 28:52.372 So for the customers that are left to next week that 28:52.396 --> 28:56.452 can't be restored, what are, like, the general reasons 28:56.516 --> 28:59.364 why they can't be restored till next week? 28:59.452 --> 29:02.972 So we have extensive damage on our backbone 29:02.996 --> 29:06.780 of our primary. Our primary distribution system, where we've had a significant 29:06.940 --> 29:10.924 number of poles that we're having to clear trees 29:10.972 --> 29:15.068 from. Then we've had issues. We're trying to get line spotters, 29:15.124 --> 29:18.900 the mark line, so when we go replace poles, we're not hitting 29:19.060 --> 29:22.622 natural gas lines or. Or telephone cables and stuff like that. 29:22.646 --> 29:26.310 And so obviously, there's a significant need for line spotting 29:26.350 --> 29:29.494 and marking right now. Yeah. Is there a way, 29:29.622 --> 29:32.974 or have you all been communicating with those 29:33.022 --> 29:36.830 customers that they may be out till next week? We're looking 29:36.870 --> 29:39.526 at trying to get that accomplished right now. 29:39.678 --> 29:42.902 Okay. Again, and I didn't 29:42.926 --> 29:48.116 ask this of Chad with AEP, but y'all, do you all have mobile 29:48.228 --> 29:52.548 DG? We do not have mobile generation. We're waiting for the roles 29:52.564 --> 29:56.280 to be final. Yeah, that was my understanding. But I would be interested in knowing 29:57.140 --> 29:59.812 for the utilities that do have mobile DG, 29:59.996 --> 30:03.120 how many they have and how many they've deployed and where. 30:03.940 --> 30:07.268 Thank you. We know Centerpoint has mobile general, so I'm 30:07.284 --> 30:09.200 sure we can cover that with them. Yes. 30:10.380 --> 30:13.640 Commissioners, the same question. Do y'all have the water 30:13.680 --> 30:16.848 districts in your area or no? We do. And as part of 30:16.864 --> 30:19.760 our EOP, we identify critical loads, 30:19.800 --> 30:24.048 and that does include water and 30:24.104 --> 30:27.728 wastewater. And obviously, we do serve some of those customers at 30:27.744 --> 30:31.860 the distribution and transmission level, so those are prioritized. 30:35.120 --> 30:38.496 So same question. Any problem getting any kind of materials and 30:38.608 --> 30:43.018 do you have a system? We have an integrated material supplier 30:43.194 --> 30:46.938 named Irby, and they work very closely, making sure that we 30:46.954 --> 30:49.978 have access to all the additional materials that we need. 30:50.034 --> 30:53.594 And they're providing deliveries on a 30:53.602 --> 30:56.986 constant basis throughout our service territory or our staging areas for our materials. 30:57.018 --> 31:00.882 Staging areas. So not really waiting on materials either because 31:01.066 --> 31:04.706 of the delivery or the system in terms of identifying 31:04.738 --> 31:08.202 where it is or actually getting the. That's correct. Basically kind 31:08.226 --> 31:11.842 of what, as AEP said, during getting ready for this 31:11.866 --> 31:15.402 type of season, we do increase our material supply 31:15.546 --> 31:18.818 stock so that we're ready. Obviously, there are certain 31:18.874 --> 31:23.338 items that take a little longer to get that we try to such a transformers 31:23.474 --> 31:27.122 that we try to go ahead and have as many as we can because 31:27.146 --> 31:30.986 it's obviously a hard time to get during transformers and things like that 31:31.018 --> 31:34.668 in certain materials when all the utilities are trying to get the 31:34.684 --> 31:36.480 same material at the exact same time. 31:40.620 --> 31:45.080 Thank you, Stacey. Thank you. We'll call up entergy. 31:58.460 --> 32:01.540 Morning, Ellie. It's been requested that I put the, 32:01.700 --> 32:05.340 the Florida power and light document that I handed you all 32:05.380 --> 32:08.796 in the docket number so we will get that filed today. That's a good suggestion. 32:08.828 --> 32:11.960 Your staff always on top of it for you. There you go. (item:A: Eliecer Viamontes, Entergy, Beryl Efforts, 56793) 32:12.740 --> 32:15.920 Morning, Alan. Good morning, Chairman, commissioners. Good morning. 32:17.620 --> 32:21.320 Olivia Montez, president CEO of Enterd Texas. 32:21.780 --> 32:25.292 Thank you for the opportunity for me to be 32:25.316 --> 32:29.100 here today. Before I say anything else, I want to thank first 32:29.140 --> 32:32.716 and foremost our customers for their understanding and let them 32:32.748 --> 32:36.220 know how much we appreciate serving them. We know that Hurricane 32:36.260 --> 32:40.228 barrel disrupted their lives and businesses and damaged their properties. 32:40.404 --> 32:44.236 We, too, live in the communities that we serve. In those communities have been 32:44.308 --> 32:48.572 supportive. At the peak of the storm, we had 252,000 32:48.636 --> 32:52.148 customers without power. And today, less than three days since the 32:52.164 --> 32:56.512 hurricane cleared our territory, we've been able to reduce that to 105,000 32:56.616 --> 33:00.448 with 60% restored. I am truly grateful 33:00.504 --> 33:03.976 for our hardworking crews. Their dedication and commitment are the 33:04.008 --> 33:07.752 reasons why we can safely restore power as quickly as possible 33:07.856 --> 33:11.552 after a severe weather event. I'm happy to report that 33:11.576 --> 33:14.872 there have been zero injuries while responding to 33:14.896 --> 33:18.344 this event. Hurricanes, as you know, can create many unsafe conditions, 33:18.432 --> 33:22.028 and there is a lot of pressure to move quickly. Safety is a way 33:22.044 --> 33:25.516 of life at Entergy, and it's integrated in everything that we do. 33:25.708 --> 33:29.620 I want to touch on the actions we took in preparation for the storm. 33:29.780 --> 33:33.420 As you know, Entergy, Texas is a non ERCOT utility that serves 33:33.460 --> 33:36.820 27 counties in southeast Texas. As a Gulf coast 33:36.900 --> 33:40.676 utility, we are storm ready year round and storm 33:40.708 --> 33:44.236 response is part of our culture. Prior to Hurricane 33:44.268 --> 33:47.980 Burroughs landfall on July 8, we activated our emergency plans on July 33:48.060 --> 33:51.600 3 and our storm command center on July 6. 33:52.020 --> 33:55.572 Additionally, we readied our employees pre stage resources, 33:55.676 --> 33:59.476 and throughout the year, we ensure we have sufficient supplies up 33:59.508 --> 34:01.920 to a category for a major storm. 34:02.780 --> 34:06.372 Now I want to move to the storm itself 34:06.476 --> 34:09.900 and the impacts to our service area. So, first of all, every storm is 34:09.940 --> 34:14.351 unique. We experience sustained winds of 60 34:14.456 --> 34:18.496 gusts that were north of 85, even had a tornado that 34:18.527 --> 34:21.420 touched down on the edge of our service area near Jasper. 34:21.760 --> 34:24.840 The eye of the storm passed directly through Montgomery county, 34:24.920 --> 34:27.900 specifically the woodlands and the Conroe areas. 34:28.440 --> 34:32.295 These are the most densely populated parts of our service area and 34:32.368 --> 34:36.024 are heavily wooded. In areas where lines are not underground, 34:36.072 --> 34:39.527 flying vegetation due to winds and trees falling, especially from outside 34:39.583 --> 34:43.138 of the right of way, were especially impactful across 34:43.194 --> 34:47.234 the service area. We experienced the following 385 34:47.282 --> 34:50.826 poles, 190 transformers over 2000 spans of 34:50.858 --> 34:54.282 wire 44 substation, many of these 34:54.346 --> 34:58.242 affecting industrial facilities, but notably none affect any 34:58.346 --> 35:01.630 major refineries or any major chemical plants. 35:02.450 --> 35:05.986 And then seven out of eight major transmission ties between the western 35:06.018 --> 35:09.532 and eastern portion of our service territory 35:09.596 --> 35:13.092 were lost, leaving one tie line from the north remaining to 35:13.116 --> 35:16.300 our western region load pocket. And finally, 35:16.340 --> 35:19.804 none of our generation facilities were forced out as a result of 35:19.812 --> 35:23.172 the storm. Now let's talk about storm response. 35:23.316 --> 35:26.980 I want to start first of all with an incredible example of 35:27.020 --> 35:30.796 how our employees are keeping the lights on for customers. Monday night after the 35:30.828 --> 35:33.890 storm had passed, we lost our last tie into our western region, 35:33.980 --> 35:37.870 which includes the Woodlands and Conroe. This required a significant 35:38.030 --> 35:42.078 amount of communication, coordination and precision for 35:42.094 --> 35:45.286 the teams to manually balance a 60 hz frequency in the region 35:45.398 --> 35:48.782 and during the overnight hours to avoid a load shed event while 35:48.806 --> 35:52.158 our crews work to get the tie line restored and achieve system 35:52.254 --> 35:55.490 stability. I'm extremely proud of that outcome. 35:55.830 --> 35:59.158 Starting on Monday afternoon of the storm, we began damage assessment 35:59.214 --> 36:02.428 and restoration efforts. Once a was safe to do so, we had 36:02.444 --> 36:05.708 a goal of restoring 50% by the end of 36:05.724 --> 36:09.492 the day yesterday, which we were able to surpass and we're at 60%. 36:09.556 --> 36:13.460 As mentioned earlier, we have a workforce of over 2400 36:13.620 --> 36:17.116 working on restoration efforts, which includes entergy employees, 36:17.308 --> 36:20.556 embedded contractors and mutual assistance crews as well. 36:20.708 --> 36:24.148 We continue to restore power around the clock and expect to have the 36:24.164 --> 36:28.046 last set of customers in the most heavily affected areas restored by Sunday 36:28.118 --> 36:32.318 night, with few exceptions. From a customer communication standpoint, 36:32.414 --> 36:36.662 we know that it's important to provide trusted and timely information during emergency situations 36:36.686 --> 36:39.806 so that customers can plan and make important decisions for their households 36:39.838 --> 36:43.006 and businesses. This is why we stayed in contact 36:43.078 --> 36:46.142 with customers prior, throughout and after the storm, 36:46.326 --> 36:49.726 using direct calls, text messages, alerts on the entergy app, 36:49.798 --> 36:53.664 and multiple updates on our website and social media platforms. Prior to 36:53.672 --> 36:57.232 the storm, we had multiple press releases on the planning, preparation and 36:57.256 --> 36:59.944 also safety reminders, down wires, generators, 37:00.032 --> 37:04.096 etcetera. We held daily calls with elected and local officials to provide detailed 37:04.128 --> 37:08.080 updates and information to pass on to their constituents and communities. 37:08.240 --> 37:12.064 We held multiple media interviews, several of which I did personally, both in English 37:12.112 --> 37:15.648 and in Spanish. We consistently updated our view outage map on the 37:15.664 --> 37:19.226 Entergy website, which kept customers informed not 37:19.258 --> 37:22.858 only the extent of the damage and estimated restoration 37:22.914 --> 37:26.482 times, but it also helped customers understand the general progress and 37:26.506 --> 37:30.194 where other resources might be available in terms of having power 37:30.242 --> 37:32.670 generally restored geographically. 37:33.330 --> 37:36.770 And we also had our call center available 24/7 during 37:36.810 --> 37:40.034 and after the storm. So clearly the restoration 37:40.122 --> 37:43.362 is still underway. We have a lot of work to do and as you can 37:43.386 --> 37:47.142 see from my attire, I'll be headed back in the field after 37:47.166 --> 37:50.406 the open meeting to support our field workers and continue to lead 37:50.438 --> 37:54.230 the restoration effort. Looking back where we are right 37:54.270 --> 37:58.046 now, and we also have a process where 37:58.078 --> 38:01.782 we from a continuous improvement go through, what could we 38:01.806 --> 38:04.886 have done better that is part of our culture and something that we will plan 38:04.918 --> 38:09.166 to do after the storm. What stands out to me is that this 38:09.198 --> 38:12.520 storm is further evidence of why hardening the grid is so 38:12.560 --> 38:16.096 important, because that investment serves to reduce the extent and 38:16.128 --> 38:20.144 duration of outages and reduces overall storm costs during 38:20.192 --> 38:23.536 the event its clear transmission was affected. 38:23.728 --> 38:26.864 It's imperative that we focus on efforts to enhance the transmission 38:26.952 --> 38:29.860 system. Down trees and flying vegetation, 38:30.200 --> 38:33.816 which damage lines, often from outside of the right of way, as mentioned 38:33.848 --> 38:36.910 earlier, are a major contributor of the outages, 38:37.570 --> 38:40.634 and we should continue to explore how best to manage that risk, 38:40.762 --> 38:43.510 which can affect even hardened facilities. 38:44.090 --> 38:48.666 And lastly, and it's clear once again that adequate local generation 38:48.858 --> 38:52.138 is critical to maintaining the system reliability 38:52.194 --> 38:55.338 and stability, especially in the case that I mentioned where you 38:55.354 --> 39:00.090 had transmission lines compromised. Without Montgomery 39:00.130 --> 39:03.880 county power station in the region, we would have not 39:03.920 --> 39:07.776 had any other alternatives and likely would have experienced a significant load 39:07.808 --> 39:11.104 shed event. So, commissioners, I am proud of the response 39:11.152 --> 39:14.220 that the men and women of enterd Texas have undertaken. 39:14.600 --> 39:18.032 I appreciate that what 39:18.096 --> 39:21.300 southeast Texans have experienced with the storm. 39:21.960 --> 39:25.460 I know it's extremely challenging and frustrating to be without power, 39:26.040 --> 39:29.590 especially during the summer heat, and safely restoring 39:29.630 --> 39:33.570 service for our customers is and will continue to be our top priority. 39:33.870 --> 39:37.486 So with that, thank you for your time today and happy to answer any questions. 39:37.598 --> 39:41.374 (item:A: Comissioner's Questions to Eliecer Viamontes, Entergy, Beryl, 56793) Thank you. Ellie. So you talked about local generation. Did any of your generating 39:41.422 --> 39:45.126 facilities have sustained any damage or have any issues? No damage 39:45.158 --> 39:48.502 at all. Not even Orange county, which was the one. There were no 39:48.526 --> 39:52.150 damages. Thank you, commissioners. Ellie, 39:52.190 --> 39:55.350 so you mentioned, just as I've been asking, the prior 39:55.390 --> 39:57.998 company, 60% have been restored today, 39:58.094 --> 40:01.502 105,000 are still without power. But you're thinking by 40:01.526 --> 40:05.334 this weekend everybody will be back to restored power? Yeah. Our goal was 40:05.382 --> 40:08.902 50% yesterday, which we're at 60% now Friday to be 40:08.926 --> 40:12.078 roughly 75% or better, and then have the 40:12.094 --> 40:16.870 vast majority over 90% by the end of this week and there's always carryover. 40:17.030 --> 40:20.776 As mentioned earlier, you can have multiple poll damages. Multiple trees 40:20.928 --> 40:24.616 will certainly double up and triple up on crews, whatever it takes. 40:24.648 --> 40:28.000 Once you get to that last set of customers that have extreme 40:28.040 --> 40:31.448 damage, there is a balance in terms of making sure we do 40:31.464 --> 40:35.232 it safely. As you know, expediting that work 40:35.336 --> 40:39.024 can cause more issues and can actually prolong the restoration event, 40:39.072 --> 40:42.136 which is the last thing we want to do. So, yes, it could be minimal 40:42.168 --> 40:46.214 carryover, but we expect by Sunday night I have to be essentially restored. 40:46.382 --> 40:49.750 Thank you. I saw online it looks like 40:49.790 --> 40:52.798 you all put out information for your customers to know when 40:52.814 --> 40:56.950 they were going to get back online by area. Does that just started yesterday 40:57.110 --> 41:00.846 or when was that first posted? We did that, I believe, and I apologize 41:00.878 --> 41:04.342 because the night you're getting, I think it was the previous night that 41:04.366 --> 41:07.822 we did that. And, you know, you don't have all the 41:07.846 --> 41:11.760 information available, but we understand customers needed 41:11.800 --> 41:15.820 information to make decisions and that's why they're estimated no later than times. 41:16.480 --> 41:19.992 As we complete the damage assessment, as we get more 41:20.016 --> 41:23.192 refined information, we make those adjustments and then 41:23.216 --> 41:27.200 we directly communicate to customers after we have established 41:27.240 --> 41:30.416 those general estimated restoration times. It's a dynamic. 41:30.448 --> 41:32.900 I think those customers are appreciative of that knowledge. 41:35.000 --> 41:38.466 So you mentioned that there was significant damage 41:38.498 --> 41:39.950 in the transmission system. 41:41.690 --> 41:45.410 Tree related. When I think about the structures that were impacted, 41:45.490 --> 41:49.778 we know about half a dozen or so over the 25,000 transmission 41:49.834 --> 41:53.490 structures that we have. But there were a lot of line sections that were impacted, 41:53.650 --> 41:57.786 many due to vegetation. Five out of the six transmission poles 41:57.818 --> 42:01.298 that were compromised were due to vegetation 42:01.354 --> 42:05.180 outside of the right of way. So of course, 42:05.340 --> 42:08.852 energy service area is sometimes in rural areas and 42:08.876 --> 42:12.240 particularly the transmission that serves the more populated areas. 42:12.700 --> 42:15.956 And one of the things that we saw in north 42:16.028 --> 42:19.876 Texas and was kind of reported to us is that you bring in 42:19.908 --> 42:23.220 lots of folks from outside the area to 42:23.260 --> 42:26.524 help, but you need to have that experienced team 42:26.572 --> 42:30.166 member with them, particularly when they're going out in 42:30.198 --> 42:33.570 areas where they're not familiar with. And there could be, you know, 42:34.910 --> 42:38.650 different challenges. So has that proven to be any 42:40.710 --> 42:44.758 challenge in this restoration in terms of having the adequate number 42:44.814 --> 42:48.550 of entergy folks with our outside people 42:48.590 --> 42:52.654 that are coming in to help? The majority that of 42:52.702 --> 42:57.172 resources that we secured early on in the storm were entergy 42:57.316 --> 43:00.600 employees and contractors who know our system very well. 43:01.500 --> 43:05.356 We did not need to process them or safety onboard them because they 43:05.388 --> 43:09.068 already know the standards that we abide to. And that provided a 43:09.084 --> 43:13.080 significant amount of efficiencies early on in the restoration process. 43:13.860 --> 43:14.800 Thank you. 43:16.620 --> 43:20.240 Ellie. How significant is it that 43:21.500 --> 43:25.148 when the storm hit landfall came across 43:25.244 --> 43:28.588 centerpoint territory and still in entergys territory that it was still 43:28.604 --> 43:32.012 a hurricane? So that's, I mean, for those that 43:32.036 --> 43:35.540 aren't familiar with that area, it's 120 miles from the coast 43:35.580 --> 43:38.740 or something like that. Commissioner, I was surprised. I've seen 43:38.780 --> 43:41.908 many storms in my career coming from south Florida, 43:42.004 --> 43:45.980 and the sustained winds keeping 43:46.020 --> 43:49.198 up that far inland was surprising. 43:49.374 --> 43:52.782 And the 43:52.846 --> 43:56.014 northeast quadrant of the storm was the section that hit, 43:56.062 --> 43:59.086 which is the one that carries the biggest punch. That's the dirty side 43:59.118 --> 44:02.890 of the storm from my experience. So you combine 44:03.390 --> 44:07.494 that fact with the most densely area of our service territory 44:07.582 --> 44:10.742 that also happens to be one of the most densely vegetated areas 44:10.806 --> 44:14.256 as well. You literally have that perfect combination that 44:14.328 --> 44:17.704 has caused the numbers to certainly 44:17.832 --> 44:21.552 seem higher given a category one, but the damage is real. 44:21.616 --> 44:25.416 You've seen pictures and have seen firsthand the vegetation. I've seen 44:25.448 --> 44:28.688 it throughout this week myself. I think it was 44:28.704 --> 44:32.020 a combination of factors that contributed to the number of outages. 44:32.840 --> 44:36.680 Thank you. I hope you'll be personally involved as we look at this coming 44:36.720 --> 44:40.660 from Florida power and light and having experience on the ground there. 44:41.320 --> 44:43.820 Your experience will be great. Happy to help. 44:45.080 --> 44:47.100 Thanks, Ellie. Appreciate it. Thank you. 44:47.960 --> 44:50.380 And finally, we'll hear from Centerpoint. 44:52.960 --> 44:54.740 Good morning, Jason. Good morning. 44:57.800 --> 45:00.760 Good morning. Chairman Gleason and commissioners and the newest commissioner. 45:00.800 --> 45:04.336 Congratulations. (item:A: Jason Ryan, CenterPoint, Beryl Efforts, 56793) My name is Jason Ryan, executive vice 45:04.368 --> 45:07.912 president with Centerpoint Energy. We are still in 45:07.976 --> 45:11.144 emergency operations, but I think it's important that we appear today 45:11.192 --> 45:15.100 and appreciate the time to update you and the public on 45:15.720 --> 45:19.504 the status of restoration at Centerpoint Energy. 45:19.552 --> 45:23.208 We have the privilege to serve almost 3 million homes and 45:23.224 --> 45:26.536 businesses in the Houston area. And I mean the privileged 45:26.648 --> 45:30.464 word intentionally. So. Let me start off by talking to 45:30.552 --> 45:33.952 our customers that are still out. We know that we 45:33.976 --> 45:37.344 still have a lot of work to do and we will not stop the work 45:37.472 --> 45:41.064 until it is done to our customers that not only have 45:41.112 --> 45:44.740 power out but have significant property damage, 45:45.080 --> 45:48.340 damage from the trees that we've talked about coming up from the roots. 45:48.800 --> 45:51.620 Our hearts go out to you. Our hearts go out to our community. 45:52.040 --> 45:54.992 And we know that after restoration is done, we have a lot of work to 45:55.016 --> 45:58.370 do to support the community to get back on their feet. 45:59.190 --> 46:03.078 I also want to say that since yesterday was national line Workers Appreciation 46:03.134 --> 46:07.486 Day, call out the line workers that have done a tremendous job 46:07.678 --> 46:10.930 with the restoration efforts so far, and I'll detail that work. 46:13.030 --> 46:17.126 So far, no serious incidents or fatalities. 46:17.318 --> 46:20.790 And with the number of mutual assistance crews and the dangerous 46:20.830 --> 46:25.280 conditions that we've got. I think that's a feat of worth mentioning at the beginning. 46:26.180 --> 46:30.200 Also, I'll mention at the beginning as it relates to customers so that they're aware. 46:30.500 --> 46:34.604 We did early on stop processing disconnection 46:34.652 --> 46:38.452 requests from the retail electric providers and we'll continue to assess 46:38.596 --> 46:41.880 when that should begin under the terms of our tariff going forward. 46:43.620 --> 46:47.480 So let me detail a little bit 46:47.820 --> 46:51.216 of the, the event and then I'll go into 46:51.288 --> 46:55.296 our preparation and restoration work. You do have a slide deck that 46:55.328 --> 46:59.192 I prepared to give you some hopefully 46:59.216 --> 47:02.180 helpful visuals as we have the discussion. 47:06.400 --> 47:10.600 First, I guess we've heard a little bit about the storm, but it 47:10.640 --> 47:14.112 was unique in a couple of different ways and the 47:14.136 --> 47:17.942 visual on page two helps to provide that. You know, it was a 47:17.966 --> 47:21.478 storm that formed very east 47:21.574 --> 47:26.070 in the Atlantic. It formed early, it strengthened 47:26.190 --> 47:30.174 quickly, was one of the stronger hurricanes ever to form this 47:30.222 --> 47:34.490 early in the hurricane season and was clearly unpredictable. 47:35.950 --> 47:39.622 We'll talk to meteorological experts after 47:39.766 --> 47:42.582 this event and get their take on it, too. But I think one of the 47:42.606 --> 47:46.768 things to point out that the map shows is the significant hurricane 47:46.824 --> 47:50.792 force winds that were felt throughout the entirety of our service 47:50.856 --> 47:53.896 territory. As Commissioner Glatfelty has already referenced, 47:54.008 --> 47:57.920 you know, we were on the path 47:57.960 --> 48:01.336 that is probably one of the worst paths a hurricane could take, 48:01.528 --> 48:04.928 which is coming onshore 48:05.064 --> 48:08.936 in the Matagorda area, very close to our service territory. 48:08.968 --> 48:11.460 Our service territory is outlined in the black there, 48:12.560 --> 48:15.696 which means that the entirety of the greater Houston area 48:15.768 --> 48:19.584 was on the dirty side of the storm. And that what that means is as 48:19.712 --> 48:22.856 the storm swirls from right to left, you've got 48:22.888 --> 48:27.032 the strongest winds, most of the tornadic activity 48:27.216 --> 48:30.992 and the most severe weather coming up on the right side of the 48:31.016 --> 48:34.536 eye wall. So that was happening throughout the 48:34.568 --> 48:37.964 entirety of our service territory. What the map shows is that 48:38.012 --> 48:41.612 the entire 5000 square mile service territory of 48:41.636 --> 48:45.812 Houston was in that dirty side of the storm. 48:45.996 --> 48:48.868 And the one thing I'll point out, I know it's a little hard to see, 48:49.044 --> 48:52.560 but there are wind speeds that are there on the various dots. 48:52.900 --> 48:56.436 The wind speed at Intercontinental Airport was 83 miles an 48:56.468 --> 49:00.028 hour. That is higher than Hurricane Ike. 49:00.124 --> 49:04.094 Wind speed at Intercontinental airport. Right. So Hurricane Ike 49:04.142 --> 49:07.926 being a major category two storm versus this being category 49:07.998 --> 49:11.170 one, the wind speeds were higher further inland. 49:12.030 --> 49:15.430 As the hurricane continued to go through Entergy's area into 49:15.470 --> 49:19.286 east Texas, there was more cyclonic activity with the 49:19.318 --> 49:22.790 storm than the entirety of some storm 49:22.830 --> 49:26.606 seasons, hurricanes. There were 67 tornado 49:26.638 --> 49:29.892 watches issued by the National Weather Service. As that storm continued 49:29.916 --> 49:33.716 to push inland. So again, it was a hurricane. 49:33.828 --> 49:37.540 I'll set aside whether it was a category one, two, three or four hurricane. 49:37.580 --> 49:40.720 It was a significant hurricane as it came ashore. 49:42.420 --> 49:45.960 As it left our system midday on Monday, 49:46.340 --> 49:49.892 we had 2.26 million customers out of our, 49:49.916 --> 49:52.480 almost 3 million customers that we serve. 49:53.910 --> 49:57.222 Let me talk a little bit about the planning in advance of the 49:57.246 --> 50:00.854 storm. So as the other utilities have described, 50:00.902 --> 50:04.934 we also have a comprehensive planning process at Centerpoint Energy. 50:05.062 --> 50:08.430 It doesn't start only in the event 50:08.590 --> 50:12.158 of a storm. We do comprehensive training every 50:12.214 --> 50:15.766 year. Your staff is involved many times in 50:15.798 --> 50:19.390 that training process as well. We did that earlier 50:19.510 --> 50:23.070 this year. As the 50:23.810 --> 50:27.434 storm formed, we started tracking it about nine 50:27.482 --> 50:31.458 days out, knowing that 50:31.474 --> 50:35.130 there was great uncertainty in the path, that it was something that we should 50:35.290 --> 50:38.970 keep our eyes on. As the path started 50:39.050 --> 50:43.058 to shift, especially after the 4 July, 50:43.234 --> 50:45.892 we started calling on mutual assistance crews. 50:46.026 --> 50:49.144 We started with about 3000 mutual assistance 50:49.192 --> 50:52.448 crews that we asked to come and pre position in 50:52.464 --> 50:56.060 the greater Houston area. And what I mean by that, it's important 50:57.080 --> 51:01.096 we don't ask those crews to come into the direct 51:01.288 --> 51:04.976 path of the storm. So I'm not saying we ask them to pre position at 51:05.008 --> 51:08.352 different places in Houston. That wouldn't be what we 51:08.376 --> 51:12.056 ever asked them to do. They pre positioned outside of our service 51:12.128 --> 51:15.784 territory. So as soon as it was safe to do so, they could come into 51:15.872 --> 51:19.416 our staging sites. As the 51:19.448 --> 51:23.056 path looked like it was one of those worst case scenarios, we upped that 51:23.088 --> 51:26.336 mutual assistance request to a little bit greater than 51:26.368 --> 51:30.240 10,000 crews. To give you an order of magnitude, 51:30.280 --> 51:34.880 that's about eight times the workforce of Centerpoint 51:34.920 --> 51:37.220 energy on any given day. 51:39.920 --> 51:43.672 That brought our total workforce up to 51:43.776 --> 51:47.424 about 12,000 men and women that could 51:47.592 --> 51:52.340 address this storm. We also opened 18 staging sites 51:53.240 --> 51:57.024 that were located strategically throughout our service territory where 51:57.192 --> 52:00.712 they could be closest to the work when they end their work every 52:00.736 --> 52:02.700 day and they start their work every morning. 52:04.440 --> 52:07.580 I'll talk a little bit more about the staging sites in a little bit. 52:08.240 --> 52:12.416 We also immediately started to deploy our temporary 52:12.448 --> 52:16.928 emergency generation. I would have brought a list 52:17.104 --> 52:19.616 if I knew you were going to ask that question about where they were deployed. 52:19.648 --> 52:23.464 I'll get you a list to your offices. But they are in facilities 52:23.552 --> 52:27.500 like cooling centers, hospitals, senior living facilities 52:27.960 --> 52:32.378 and water facilities. We continue to look for ways 52:32.434 --> 52:35.650 to deploy those assets and the way they can best 52:35.690 --> 52:37.910 help our community going forward. 52:39.290 --> 52:43.450 Also on the slide, I mentioned that we have very limited 52:43.530 --> 52:45.470 issues with materials availability. 52:46.450 --> 52:49.882 I unfortunately was speaking to you a little less than two months 52:49.906 --> 52:53.962 ago about the May 16 de Racho that hit 52:53.986 --> 52:57.890 the greater Houston area as well. We are able to replenish supplies 52:58.670 --> 53:02.054 from that storm to be prepared for this one. 53:02.182 --> 53:05.970 So there are no material issues causing any delays with restoration. 53:06.350 --> 53:09.910 The one thing that we have asked for help with are for braces 53:09.990 --> 53:13.774 for poles. So not every pole that has some damage 53:13.822 --> 53:17.198 needs to be replaced in real time. You can brace it 53:17.334 --> 53:21.054 and come back later. And so we have asked for some assistance having 53:21.102 --> 53:23.740 more braces for poles during this event. 53:26.840 --> 53:30.776 Let me talk a little about the damage that we saw from 53:30.808 --> 53:33.840 the storm. Slides four and 53:33.880 --> 53:37.704 five show some of that. We did not have 53:37.752 --> 53:40.832 material damage to our transmission system, nor did 53:40.856 --> 53:44.432 we see material damage to substations. We did not 53:44.456 --> 53:47.666 see flooding of substations like we've seen in some 53:47.698 --> 53:51.426 past storms. This was a storm 53:51.498 --> 53:54.950 that was largely debris on the distribution system. 53:55.570 --> 54:05.402 So you see some pictures that show that on 54:05.426 --> 54:08.578 page five you see some of our work 54:08.674 --> 54:12.114 to date. We have completed the vast 54:12.162 --> 54:15.690 majority of our damage assessment work and expect to finish 54:15.730 --> 54:19.146 that today. Let me pause a little bit about the 54:19.178 --> 54:22.578 importance of that damage assessment work that's done in 54:22.594 --> 54:25.190 the first couple of days post storm. 54:26.170 --> 54:29.770 In order to effectively utilize not only Centerpoint's crews, 54:29.810 --> 54:33.466 but the more than 10,000 crews that we brought in from 54:33.498 --> 54:37.730 other places. We need to know what kind of crews to send 54:37.850 --> 54:41.682 where. That's what our damage assessment workers do in the 54:41.746 --> 54:45.082 early days after a storm. Not every crew 54:45.106 --> 54:48.530 is the same. If I have substantial damage to distribution 54:48.570 --> 54:52.250 poles, if I've got poles on the ground, I need to send a construction 54:52.290 --> 54:56.322 crew. If I've got 250 poles on the ground like we 54:56.346 --> 54:59.870 do in some places, I need to send significant construction crews. 55:00.250 --> 55:04.458 If I have trees on lines, I need to send vegetation 55:04.514 --> 55:08.640 management crews to go in and clear those trees. If I can 55:08.760 --> 55:12.296 quickly restore service by 55:12.328 --> 55:15.832 doing minor work on facilities, I can send much smaller 55:15.856 --> 55:19.256 crews out to do that. We can't start sending 55:19.288 --> 55:23.000 crews out until we get that damage assessment done. That damage 55:23.040 --> 55:26.168 assessment looks like people walking, 55:26.304 --> 55:29.576 literally walking. As of the end of yesterday, 55:29.648 --> 55:32.380 8500 miles of distribution lines. 55:33.600 --> 55:37.744 We have flown distribution lines with helicopters. 55:37.832 --> 55:40.860 We have used drones to help us with that assessment as well. 55:41.480 --> 55:44.864 So I know it's incredibly frustrating to see mutual assistance 55:44.912 --> 55:47.980 crews in the early days waiting to do the work, 55:48.480 --> 55:52.000 but we can't effectively rely on that 55:52.040 --> 55:55.576 workforce if we don't know where to send them. If we send a 55:55.608 --> 55:59.992 construction crew somewhere where a smaller crew could do the work, we're ineffectively 56:00.056 --> 56:03.900 using that workforce. So I'm happy to report that 56:04.200 --> 56:07.856 by the end of the day yesterday, we're 85% complete with that damage assessment work. 56:07.888 --> 56:11.648 We'll finish it today. And we are restoring customers 56:11.784 --> 56:15.440 actively with our mutual assistance crews. You see 56:15.480 --> 56:18.680 on the next page some of the staging sites. 56:18.720 --> 56:22.820 You see the dots on the map, exactly where those staging sites are. 56:24.050 --> 56:27.282 Commissioner Glotfield, he mentioned he came to a staging site on Tuesday, the day after 56:27.306 --> 56:30.746 the storm. That is where we do our initial 56:30.818 --> 56:34.418 intake of crews that are coming onto our system. 56:34.594 --> 56:38.746 It's where they get safety briefings. It's where they learn about different 56:38.818 --> 56:41.946 design specifications for the work that they're going to be doing. 56:42.018 --> 56:45.310 Things like how much clearance 56:45.610 --> 56:49.612 on a roadway crossing do they need to do to comply with local 56:49.676 --> 56:53.012 or state regulations? Right. They're coming in from out of state. They're not used to 56:53.036 --> 56:56.300 working on our system, so we brief them on all of that. This is where 56:56.340 --> 56:59.932 they come every evening when they're done with work, park their 56:59.956 --> 57:03.252 trucks, get their food, get bused to a 57:03.276 --> 57:06.748 hotel. The next day they're bused back to that staging site, 57:06.884 --> 57:10.660 they get their food for the day, they get their work plans, and they exit. 57:10.700 --> 57:16.130 So these staging sites are fairly significant logistical hubs. 57:16.830 --> 57:20.854 We had the initial staging site set up less than half a day, 57:20.942 --> 57:24.486 or about half a day after the storm cleared our system. So a lot of 57:24.518 --> 57:28.678 work goes into putting those together. You can't put them together before 57:28.734 --> 57:32.694 the storm hits. Right. So the big tents where crews 57:32.862 --> 57:36.462 get briefings and get their food can't be put up before the 57:36.486 --> 57:40.558 hurricane. So you see a lot of that activity, right, in those early 57:40.614 --> 57:42.310 hours after the storm leaves. 57:44.210 --> 57:47.802 On the next page, you see just a 57:47.826 --> 57:51.418 list of our significant mutual assistance crews. I wanted you 57:51.434 --> 57:54.482 to have the names of those companies. We're very thankful that they 57:54.506 --> 57:57.802 send their men and women to help the greater 57:57.826 --> 58:02.390 Houston area. Finally, let me get into restoration stats. 58:02.810 --> 58:06.650 You see that on page eight. So as 58:06.690 --> 58:10.512 of today, we have restored more 58:10.536 --> 58:14.500 than 50% of the outages. So we've restored 58:15.320 --> 58:18.280 about 1.2 million homes and businesses. 58:18.440 --> 58:21.740 There's a little over 1 million homes and businesses 58:22.040 --> 58:25.992 left to be restored. So I 58:26.016 --> 58:29.672 like to rely on data as a good way to 58:29.816 --> 58:34.368 judge readiness. We have never restored more 58:34.384 --> 58:38.232 than a million customers a little over two days after a 58:38.256 --> 58:42.080 hurricane before. And you can only do that with significant 58:42.200 --> 58:45.472 readiness. We know we still have a lot of work to 58:45.496 --> 58:49.140 do. We communicated to our customers last night. 58:49.480 --> 58:53.192 We expect to have another 400,000 customers on by the end 58:53.216 --> 58:56.416 of the day tomorrow. We expect to 58:56.448 --> 59:00.282 have another 350,000 customers on, on by 59:00.306 --> 59:03.946 the end of the day on Sunday. That takes you to 59:03.978 --> 59:07.426 about 80% restoration by the end 59:07.538 --> 59:11.390 of the weekend. We continue to assess 59:11.810 --> 59:15.146 our workforce needs. If we believe that 59:15.178 --> 59:18.682 we can effectively onboard additional crews in 59:18.706 --> 59:21.390 order to speed up the work, we will. 59:22.530 --> 59:26.498 That leaves about 500,000 customers that we currently 59:26.594 --> 59:29.844 expect to have outages that go into next 59:29.892 --> 59:33.964 week. We issued a communication to customers 59:34.012 --> 59:37.972 today that said that by noon we 59:37.996 --> 59:41.764 will start providing estimated restoration times for those customers 59:41.812 --> 59:45.080 that are going to have outages that go into next week. 59:45.700 --> 59:49.308 We will update those estimated restoration times 59:49.404 --> 59:53.000 as we get better information on what those customers 59:53.140 --> 59:54.100 should expect. 59:57.800 --> 01:00:02.020 Let me talk a little bit about communications with our customers. 01:00:02.600 --> 01:00:05.928 We did, as of the end of the day yesterday, 01:00:06.104 --> 01:00:09.140 27 media interviews. 01:00:09.920 --> 01:00:14.432 We had 72 social media posts keeping customers 01:00:14.576 --> 01:00:18.272 advised of the work that we were doing, the process 01:00:18.376 --> 01:00:22.092 that we were going through, where they 01:00:22.156 --> 01:00:25.372 were in the process, in an outage map that 01:00:25.396 --> 01:00:29.172 we posted. Are you in the assessment phase? Are you 01:00:29.196 --> 01:00:33.324 in the phase where your outage is being assigned to accrue 01:00:33.492 --> 01:00:37.492 for that work? We also encouraged 01:00:37.556 --> 01:00:40.940 customers to sign up for our power alert service so that they could 01:00:41.100 --> 01:00:44.620 personally get these estimated restoration times when we push 01:00:44.660 --> 01:00:49.094 them out by either phone call, text or 01:00:49.142 --> 01:00:52.334 email so they're no longer relying on just press 01:00:52.382 --> 01:00:56.030 releases to understand when their estimated 01:00:56.070 --> 01:00:57.570 restoration times are. 01:00:59.390 --> 01:01:02.810 So again, we know 01:01:03.630 --> 01:01:07.566 that some of the hardest hit areas are along the 01:01:07.598 --> 01:01:11.488 coast and up the I 45 01:01:11.544 --> 01:01:15.536 corridor, up to the Woodlands. So we will be communicating to 01:01:15.568 --> 01:01:19.272 customers so they have situational awareness as we go into next week 01:01:19.416 --> 01:01:25.424 where they are with that estimated restoration time in 01:01:25.432 --> 01:01:29.220 the spirit of continuous improvement. We always do. After action 01:01:29.720 --> 01:01:33.536 reviews, we have started to document 01:01:33.648 --> 01:01:37.240 our lessons learned and I'm happy to talk 01:01:37.280 --> 01:01:40.446 about that either today, Orlando, as this process continues. 01:01:40.478 --> 01:01:43.966 I know, Chairman Gleason, this is not the first and last time we'll have this 01:01:43.998 --> 01:01:47.982 discussion, but know that we 01:01:48.006 --> 01:01:51.558 are undertaking that process as we speak and we will do a full after action 01:01:51.614 --> 01:01:54.718 review at the end. Let me go ahead 01:01:54.734 --> 01:01:59.174 and close again by acknowledging to the customers 01:01:59.342 --> 01:02:03.366 that are out as we speak and especially to those customers that 01:02:03.398 --> 01:02:06.664 will have outages for an extended period of time past 01:02:06.712 --> 01:02:10.376 this weekend. We know we have a lot of work to do. Our crews 01:02:10.408 --> 01:02:14.260 are working around the clock, 16 hours work shifts. 01:02:14.560 --> 01:02:17.696 We will continue to assess whether or not we have the right number of 01:02:17.728 --> 01:02:21.120 crews and whether we should bring additional ones in. And we will not 01:02:21.160 --> 01:02:23.420 stop our work until the work is done. 01:02:25.240 --> 01:02:29.020 (item:A: Commissioner's Questions to Jason Ryan, CenterPoint, Beryl, 56793) Thanks, Jason. Just before questions, just made one comment. 01:02:29.780 --> 01:02:32.724 At the outset, you talked about rebuilding the infrastructure, 01:02:32.772 --> 01:02:37.012 rebuilding the community. I'd say a third leg 01:02:37.036 --> 01:02:40.460 of that stool is rebuilding trust a little bit. And I think that really 01:02:40.500 --> 01:02:44.092 starts with effective communication. You touched a little on communication. 01:02:44.276 --> 01:02:48.092 As I've thought about this. I would strenuously urge you all to 01:02:48.156 --> 01:02:51.628 get out. Once everything is restored, get out into the community. 01:02:51.804 --> 01:02:55.084 I don't know if that's town halls or what it looks like, 01:02:55.172 --> 01:02:58.870 but go talk to your customers. Go talk to those residents about 01:02:58.910 --> 01:03:02.406 what happened, about, you know, ways that you feel you all can improve. 01:03:02.478 --> 01:03:05.918 Get feedback from them about their view on what 01:03:05.934 --> 01:03:09.570 can be improved. I think that will make the next time that there's a storm, 01:03:09.870 --> 01:03:13.254 make this go a lot better, because as we learned at this commission, 01:03:13.342 --> 01:03:16.798 you know, after Yuri, communication is the key 01:03:16.814 --> 01:03:19.814 to everything. I mean, you know, the infrastructure is going to break. Things are going 01:03:19.822 --> 01:03:23.462 to happen, but if people feel they're being effectively communicated 01:03:23.526 --> 01:03:27.230 with, it makes it a lot easier to go 01:03:27.270 --> 01:03:30.774 through it. And so I'd say get out in the community and go talk to 01:03:30.862 --> 01:03:34.438 your customers. I appreciate that. We're fully supportive of that. 01:03:34.454 --> 01:03:37.198 And we'll make sure we coordinate with your office so you know what we're doing. 01:03:37.254 --> 01:03:40.838 Thank you, commissioners. Yeah, Jason. 01:03:40.894 --> 01:03:44.342 So you laid out the statistics that I've been asking for from the 01:03:44.366 --> 01:03:48.992 other companies, and essentially what you're saying is that you 01:03:49.016 --> 01:03:52.632 still have over 50% of the power outages out right 01:03:52.656 --> 01:03:55.448 now when you provided a timeline through the end of the weekend, about half a 01:03:55.464 --> 01:03:58.832 million extending into next week. Constant communication with 01:03:58.856 --> 01:04:01.976 them, I think is important, as you've laid out, y'all are doing so they can 01:04:02.008 --> 01:04:05.672 plan accordingly to get to a safe place if 01:04:05.696 --> 01:04:08.832 they need to. And so what 01:04:08.856 --> 01:04:12.128 are some of the reasons why that you're seeing, based on 01:04:12.144 --> 01:04:15.618 your damage assessments, that it's taking longer to get to these half a 01:04:15.634 --> 01:04:19.130 million customers? So those are in 01:04:19.170 --> 01:04:22.990 areas where we are having to rebuild the infrastructure. 01:04:23.530 --> 01:04:28.030 So in areas where it's removing 01:04:28.450 --> 01:04:32.434 debris on the distribution system, what I mean by that is largely 01:04:32.562 --> 01:04:35.790 vegetation, trees, 01:04:36.290 --> 01:04:39.762 limbs, some in the right of way, some outside the right of 01:04:39.786 --> 01:04:44.086 way. Commissioner, I will request that our folks keep good records on 01:04:44.198 --> 01:04:47.730 what's what so that we can give order of magnitude where that was. 01:04:50.390 --> 01:04:53.638 That is the kind of restoration that we will accomplish 01:04:53.694 --> 01:04:57.610 by the end of this weekend, where we have to rebuild 01:04:58.270 --> 01:05:01.694 large spans of infrastructure with 01:05:01.742 --> 01:05:05.182 poles that snapped in half laying on the ground. You've got 01:05:05.206 --> 01:05:08.472 a couple pictures of that kind of damage. That is 01:05:08.496 --> 01:05:12.176 the kind of work that's going to lead to those extended 01:05:12.248 --> 01:05:15.980 power outages. So as we, 01:05:16.480 --> 01:05:20.288 again, as we continue to assess 01:05:20.344 --> 01:05:23.456 our workforce needs and whether or not we 01:05:23.488 --> 01:05:27.000 need to bring more people in. We will accelerate those 01:05:27.040 --> 01:05:30.376 estimated restoration times, and we're going to start 01:05:30.488 --> 01:05:34.194 communicating with customers today that are going to experience those 01:05:34.242 --> 01:05:38.162 extended outages. Based on your review of your pre hurricane 01:05:38.226 --> 01:05:41.962 inventory for materials and equipment, do you think that you have enough 01:05:42.026 --> 01:05:45.898 equipment and materials to rebuild this infrastructure? 01:05:46.074 --> 01:05:48.986 We do. The one thing, 01:05:49.018 --> 01:05:52.818 and I know we're working with Tietum on this as of this morning, we want 01:05:52.834 --> 01:05:56.386 to make sure we have sufficient diesel fuel for our emergency 01:05:56.458 --> 01:05:59.604 generation because we expect this 01:05:59.692 --> 01:06:01.760 extended outages in certain areas. 01:06:03.020 --> 01:06:05.948 I don't want to say that we have a concern about it right now because 01:06:06.004 --> 01:06:09.500 we are working through the appropriate channels there as we, 01:06:09.580 --> 01:06:13.100 we don't have any material concerns. There's that fuel 01:06:13.140 --> 01:06:16.372 concern that we're working through. But certainly, as we have 01:06:16.396 --> 01:06:19.996 any unmet needs, we will work with our mutual assistant partners 01:06:20.148 --> 01:06:23.494 and through state and federal channels to make sure those 01:06:23.542 --> 01:06:26.670 unmet needs get met. Okay. With respect to the fuel 01:06:26.710 --> 01:06:30.478 concerns, is there anything that can be done by 01:06:30.494 --> 01:06:34.246 the commission, anything that can help you get 01:06:34.278 --> 01:06:38.366 those resources so we're working the right channels. If we end up with some roadblocks, 01:06:38.398 --> 01:06:41.638 we'll be back in touch with your office for sure. Fantastic. And back to the 01:06:41.654 --> 01:06:44.770 mobile DG discussion. So I understand. 01:06:45.270 --> 01:06:47.730 How many mobile DG units do you all have? 01:06:48.400 --> 01:06:51.616 So we have 17 large ones. And what I mean 01:06:51.648 --> 01:06:55.420 by that is either 30 megawatt or five 01:06:55.920 --> 01:07:00.040 megawatt units. Those are best used 01:07:00.200 --> 01:07:03.720 during load shed, but we are looking for 01:07:03.760 --> 01:07:07.576 opportunities to use those units to pick up 01:07:07.768 --> 01:07:11.816 parts of circuits where there may 01:07:11.848 --> 01:07:15.994 still be damage going up to the substation. But you can mid 01:07:16.042 --> 01:07:19.146 circuit and pick homes up. So as we 01:07:19.258 --> 01:07:22.746 make progress on our restoration work, we will continue 01:07:22.818 --> 01:07:26.270 to look for opportunities to use those mid circuit. 01:07:27.210 --> 01:07:31.230 We then have more than a dozen smaller units, 01:07:31.770 --> 01:07:34.390 two and a half megawatt units. 01:07:34.730 --> 01:07:38.266 1. We have a vendor that allows 01:07:38.298 --> 01:07:41.732 us to bulk up on that on a 01:07:41.756 --> 01:07:45.380 temporary basis when we need them for storms like this, so that those smaller units 01:07:45.420 --> 01:07:49.044 aren't just sitting in a yard somewhere. So we are working 01:07:49.092 --> 01:07:54.356 with that vendor. As we identify homes 01:07:54.388 --> 01:07:58.644 or businesses or critical facilities that can use those 01:07:58.772 --> 01:08:02.436 smaller units, we will bulk up as the 01:08:02.468 --> 01:08:06.280 need requires. We have also requested, 01:08:06.610 --> 01:08:10.586 through mutual assistance, some additional generation. 01:08:10.778 --> 01:08:14.338 So we've got sufficient generation for 01:08:14.434 --> 01:08:17.801 the needs that have been identified so far. We continue to work 01:08:17.866 --> 01:08:21.870 with critical facilities like water facilities 01:08:22.290 --> 01:08:25.322 to avoid boil water notices. You know, 01:08:25.345 --> 01:08:28.706 a lot of facilities like that that are critical have 01:08:28.738 --> 01:08:30.470 their own backup generation, 01:08:31.700 --> 01:08:35.196 but in extended outages, we have to be concerned about whether that 01:08:35.228 --> 01:08:38.627 backup generation will be sufficient to power through the entire 01:08:38.684 --> 01:08:42.560 event. So we're working very closely with those critical facilities, 01:08:43.060 --> 01:08:46.532 working very closely with our government officials to make 01:08:46.555 --> 01:08:49.932 sure that we're aware of what the status is of 01:08:50.036 --> 01:08:53.924 any generation that they may have as backup for those facilities 01:08:54.011 --> 01:08:57.176 that they're concerned about. I have 01:08:57.268 --> 01:09:00.904 members of my team embedded in the emergency operations centers of many 01:09:00.952 --> 01:09:04.688 cities and many counties right now, so that the information flow 01:09:04.743 --> 01:09:08.095 in that regard is seamless. We have a 01:09:08.127 --> 01:09:11.504 priority desk in our emergency operations center 01:09:11.671 --> 01:09:15.344 that exists solely to take those 01:09:15.392 --> 01:09:19.416 kinds of requests and work them. Whether we can accelerate 01:09:19.608 --> 01:09:23.496 restoration of our facilities, if there's 01:09:23.608 --> 01:09:27.787 a concern about those backup generation facilities 01:09:27.868 --> 01:09:31.636 failing, or whether or not we can use our own 01:09:31.773 --> 01:09:35.129 backup generation to go and augment what they have. 01:09:35.429 --> 01:09:39.787 So, Jason, you mentioned the large ones can only be used when there's load shed. 01:09:39.948 --> 01:09:43.821 Per the commission's rules. Are the twelve smaller ones subject 01:09:43.885 --> 01:09:47.908 to the same? So it's not really rule 01:09:47.948 --> 01:09:51.881 based, commissioner. It's really more just that a 30 megawatt 01:09:52.026 --> 01:09:56.762 unit is more likely to be useful at a substation to 01:09:56.786 --> 01:10:00.034 pick up entire circuits during load shed. 01:10:00.202 --> 01:10:03.506 When there's damage on those circuits from a storm like this, 01:10:03.658 --> 01:10:07.346 they are less useful in that scenario. But again, 01:10:07.418 --> 01:10:10.750 we look to make sure that we can utilize all of our assets. 01:10:11.050 --> 01:10:14.226 So if this storm, which didn't happen 01:10:14.298 --> 01:10:17.780 this time, if this storm had caused 01:10:17.940 --> 01:10:21.560 significant transmission level damage 01:10:21.980 --> 01:10:24.520 and left substations without power, 01:10:25.500 --> 01:10:28.200 but circuits that could take power, 01:10:28.540 --> 01:10:32.560 that's when these 30 megawatt units could be used in a storm scenario, 01:10:33.180 --> 01:10:36.644 that's not this storm. Okay. Yeah. I just asked because, 01:10:36.732 --> 01:10:40.708 you know, there's a lot of frustration, as you said, and there's 01:10:40.764 --> 01:10:44.206 a lot of discussion about out there, about the mobile gen units that your company 01:10:44.278 --> 01:10:47.830 has, like 30 of them. I think it's going to be really important to 01:10:47.870 --> 01:10:50.998 really explain, you know, why you 01:10:51.014 --> 01:10:54.758 can't use some of them right now. When you deployed 01:10:54.854 --> 01:10:58.182 the mobile gen units, it sounds like based on your damage assessments of 01:10:58.206 --> 01:11:01.758 where strategically you can actually use them. But I think it's 01:11:01.774 --> 01:11:06.062 going to be really important to provide that information in the after action report, 01:11:06.246 --> 01:11:09.472 as you know, the issues with not 01:11:09.496 --> 01:11:12.776 being able to use all of them when 01:11:12.808 --> 01:11:15.660 they were deployed, where they were deployed, and, 01:11:16.400 --> 01:11:20.464 you know, it's all in your presentation that amongst the critical care customers, 01:11:20.512 --> 01:11:24.540 there's education centers. Did I read that correctly? 01:11:25.800 --> 01:11:27.460 That's correct. So we have, 01:11:29.680 --> 01:11:33.626 even though school is out, you have some facilities that 01:11:33.658 --> 01:11:37.386 might be serving as daycares in the community or 01:11:37.418 --> 01:11:39.670 providing other services in the community. 01:11:40.250 --> 01:11:44.298 So we are looking at how 01:11:44.354 --> 01:11:47.750 to lessen the impact on the community of power outages 01:11:48.130 --> 01:11:51.994 and how to get the community back to normal quicker. 01:11:52.162 --> 01:11:56.378 And so opening up facilities like that that provide those 01:11:56.434 --> 01:11:59.930 kinds of services are critically important as well. 01:12:01.830 --> 01:12:05.342 Jason, just real quick on a follow up to the mobile gen comments. So if 01:12:05.366 --> 01:12:09.006 some of your units aren't really made for something like this, 01:12:09.118 --> 01:12:12.854 can you, through mutual assistance, use other 01:12:12.982 --> 01:12:16.998 tdus mobile gen units? Yes, sir. Did you do that in this case? 01:12:17.174 --> 01:12:20.662 We did that in the May de Racho, and we've done it here, too, 01:12:20.846 --> 01:12:23.942 I believe. I don't know how many encore has sent, but we have 01:12:23.966 --> 01:12:27.348 asked for mutual assistance from Encore. In that regard. I think it would be 01:12:27.364 --> 01:12:31.044 helpful, as you're showing where you located these, 01:12:31.172 --> 01:12:34.620 to differentiate between your assets and then encore's assets 01:12:34.700 --> 01:12:36.640 would be helpful. We'll do. 01:12:38.500 --> 01:12:41.040 You mentioned the water districts. Sorry, Jimmy. 01:12:43.660 --> 01:12:47.012 As the length of time prolongs, if they did have their own generation, 01:12:47.076 --> 01:12:51.084 do they then contact you? Do you reach out? Cause I think after Directo was 01:12:51.132 --> 01:12:54.612 some miscommunication. Has that gap been filled from your side? 01:12:54.716 --> 01:12:58.764 Yes. So some are reaching out to us. We are also proactively reaching 01:12:58.812 --> 01:13:02.400 out. So we have a way for 01:13:03.180 --> 01:13:06.516 our local governments, water districts 01:13:06.548 --> 01:13:10.172 included, to submit to us proactively 01:13:10.276 --> 01:13:13.860 their critical facilities. That list 01:13:13.900 --> 01:13:17.628 is long. And so in a storm like this, we keep track 01:13:17.684 --> 01:13:21.396 of which of those critical facilities has 01:13:21.428 --> 01:13:25.628 power, which one doesn't. As you could imagine, oftentimes when 01:13:25.684 --> 01:13:29.320 they don't have power and they proactively call us, 01:13:29.700 --> 01:13:32.868 we are also proactively reaching out to them. And like 01:13:32.884 --> 01:13:36.212 I said, we've got people embedded in all of the local 01:13:36.276 --> 01:13:40.076 emergency operations centers, and that's where that information can bubble up 01:13:40.108 --> 01:13:43.938 as well. I won't say that the gap is perfectly closed, 01:13:44.124 --> 01:13:47.566 but we're in active communication with that group 01:13:47.598 --> 01:13:48.530 of customers. 01:13:51.830 --> 01:13:54.330 Hi, Jason. Good morning, commissioner. 01:13:55.710 --> 01:13:57.490 A couple things. First of all, 01:13:59.510 --> 01:14:03.062 again, I think a lot of this is after 01:14:03.126 --> 01:14:06.566 action. Like when we're looking back, how do we make sure that this is 01:14:06.598 --> 01:14:09.888 better next time? I know the lieutenant governor, the governor, 01:14:09.974 --> 01:14:13.720 the mayor have all, they're all going to be able to 01:14:14.100 --> 01:14:17.612 voice their views to you all. There's a lot of displeasure in 01:14:17.636 --> 01:14:21.040 west Houston and east Houston and in north Houston, 01:14:21.660 --> 01:14:23.880 and I'm not, 01:14:25.260 --> 01:14:28.520 you know, I think that comes with the territory, so to speak. 01:14:28.820 --> 01:14:31.564 It's hard to plan for these when you don't know if they're coming, 01:14:31.652 --> 01:14:34.892 and it's expensive if you plan for them and they 01:14:34.916 --> 01:14:37.610 don't come, it's expensive for right payers. 01:14:39.390 --> 01:14:43.294 What I hope you all can do on a hurricane 01:14:43.342 --> 01:14:45.610 like this one is, 01:14:46.510 --> 01:14:50.078 I don't understand how you get, how you ensure you have 01:14:50.094 --> 01:14:54.330 the right mix of vegetation management folks versus linemen. 01:14:55.110 --> 01:14:58.934 It's great to say we have 10,000 linemen, but if you need 10,000 vegetation 01:14:58.982 --> 01:15:02.840 management folks and $5,000, 5000 linemen, 01:15:03.380 --> 01:15:06.764 it'd be great to try to understand that in the context of a storm 01:15:06.812 --> 01:15:10.812 like this, with all of this vegetation challenge as 01:15:10.836 --> 01:15:14.332 we go forward to think about that, is that the 01:15:14.356 --> 01:15:17.652 right mix? Might be, might not be, but I'd 01:15:17.676 --> 01:15:20.708 like to explore that with you all. Yes, sir. Fully support 01:15:20.764 --> 01:15:24.476 that. So the other one is Mark, 01:15:24.508 --> 01:15:28.094 Stellen county. As we go through this, the one thing that 01:15:28.142 --> 01:15:31.694 we cannot lose sight of is the fact 01:15:31.742 --> 01:15:36.046 that these linemen are people and that I 01:15:36.078 --> 01:15:39.650 haven't heard of a single incident, at least a death, 01:15:40.110 --> 01:15:43.590 which would tell me that that's a good 01:15:43.630 --> 01:15:47.438 thing. If we get through this storm and 01:15:47.454 --> 01:15:51.494 the restoration with maybe 20,000 01:15:51.582 --> 01:15:55.204 additional people touching the system every single 01:15:55.252 --> 01:15:58.860 day for a week and a half or two weeks, we are 01:15:58.900 --> 01:16:02.772 actually very blessed that nobody has an incident. And we 01:16:02.796 --> 01:16:06.020 need to keep that in mind. And I think as we write up our report 01:16:06.100 --> 01:16:09.964 and our story to the legislature, the human life toll that 01:16:10.012 --> 01:16:13.780 the storm took is important, but also on the restoration because they're the ones who 01:16:13.820 --> 01:16:16.520 are climbing the poles every day. 01:16:17.260 --> 01:16:20.452 So if you have incidents on that or you have ideas or 01:16:20.476 --> 01:16:24.332 thoughts on how to include that, how you can do safety briefings better 01:16:24.396 --> 01:16:28.332 or how they've worked versus other utilities, I think all of that is important 01:16:28.396 --> 01:16:32.236 in our after action report. Yes, sir. We'll work with your 01:16:32.268 --> 01:16:36.156 office and staff on that as well. You know, again, I know customers 01:16:36.188 --> 01:16:39.204 are frustrated at how long it may take, 01:16:39.252 --> 01:16:42.436 especially in these prolonged outage areas. Safety is 01:16:42.468 --> 01:16:45.958 our top priority. As you mentioned, these men and 01:16:45.974 --> 01:16:49.694 women are working 16 hours shifts. It's important that they take the other 01:16:49.742 --> 01:16:52.950 eight to rest because these are dangerous 01:16:52.990 --> 01:16:56.142 conditions. It's hot out there. That's a 01:16:56.166 --> 01:17:00.126 safety issue as well. A lot of these crews don't come from places where 01:17:00.158 --> 01:17:03.782 it feels like 110 degrees. So if 01:17:03.806 --> 01:17:06.878 our customers see crews standing on the side of 01:17:06.894 --> 01:17:10.754 the road or in their trucks, it may be to cool 01:17:10.802 --> 01:17:14.466 off, take break, stay safe. That's what we stress with 01:17:14.498 --> 01:17:18.390 these crews that come in from, not the Gulf coast area, 01:17:18.810 --> 01:17:22.914 to make sure that we can end this event with no serious 01:17:22.962 --> 01:17:24.230 injuries or fatalities. 01:17:27.210 --> 01:17:30.786 Certainly want to make sure that people get their power on as quickly 01:17:30.818 --> 01:17:34.698 as possible. And you talked about about a half a million people 01:17:34.874 --> 01:17:39.094 would go into next week any 01:17:39.142 --> 01:17:42.574 idea geographically, where that is? Is it across the surface area 01:17:42.622 --> 01:17:45.290 or is it in specific areas? 01:17:45.870 --> 01:17:50.450 So some of the harder hit areas are 01:17:50.870 --> 01:17:52.450 the Magorda County, 01:17:53.790 --> 01:17:57.622 Brazoria county, parts of Galveston county where 01:17:57.646 --> 01:18:02.132 the storm originally came ashore with 01:18:02.156 --> 01:18:05.360 those high sustained winds that went 01:18:05.700 --> 01:18:09.140 across the I 45 corridor or up the I 45 01:18:09.180 --> 01:18:12.612 corridor. Once you get kind of inside the loop, I have a 01:18:12.636 --> 01:18:16.580 map that I'm happy to share with you that shows that. 01:18:16.740 --> 01:18:20.204 And that is going to be how we communicate 01:18:20.252 --> 01:18:24.380 these estimated restoration times with customers. If they're in these particular 01:18:24.500 --> 01:18:28.268 harder hit areas, they're going to be out the longest. 01:18:28.324 --> 01:18:32.372 Most likely there will be small pockets 01:18:32.556 --> 01:18:36.164 throughout the 5000 sq mi of our service territory that have 01:18:36.212 --> 01:18:40.012 some prolonged outages. But the 01:18:40.076 --> 01:18:43.800 vast majority of them are going to be in those areas that I just described. 01:18:44.580 --> 01:18:49.200 So in terms of restoration, and again, going back 01:18:49.820 --> 01:18:52.988 and doing the after action report, one of the things that 01:18:53.004 --> 01:18:56.154 I'd be interested and you talked about how we have to get in and do 01:18:56.242 --> 01:19:00.202 the assessment first. Right. But obviously 01:19:00.266 --> 01:19:03.858 we're doing, I would think, many assessments. 01:19:04.034 --> 01:19:07.498 And so, you know, what is that process in terms of, 01:19:07.634 --> 01:19:11.146 you know, how do we carve out the service area to determine, 01:19:11.218 --> 01:19:14.754 you know, how many assessments we should be doing at one time and then, 01:19:14.882 --> 01:19:18.298 or progressively, and then as soon as that part of the assessment is 01:19:18.314 --> 01:19:21.724 done, being able to get in and actually start the restoration work. 01:19:21.772 --> 01:19:25.228 So a little bit more detail on the process and if there 01:19:25.244 --> 01:19:28.604 is opportunities there, you know, for continuous 01:19:28.652 --> 01:19:31.080 improvement. Yes, ma'am. And I also think that, 01:19:32.580 --> 01:19:36.316 again, going back to the communication, we can 01:19:36.348 --> 01:19:39.892 communicate earlier with our customers in advance of these storms, 01:19:39.956 --> 01:19:43.236 the process that we'll use so that they understand it a bit 01:19:43.268 --> 01:19:46.460 more. We have a process that we use. 01:19:46.500 --> 01:19:50.460 We implemented our plans. That's what allowed us to achieve 01:19:50.540 --> 01:19:54.428 50% restoration within two 01:19:54.484 --> 01:19:58.548 days after the storm. But we can do better to communicate customers 01:19:58.604 --> 01:20:02.908 for what they should expect to see and expect to not see. 01:20:03.084 --> 01:20:06.828 That assessment is critically important to be done 01:20:06.884 --> 01:20:10.380 to effectively use our crews, but it has added 01:20:10.540 --> 01:20:14.142 some confusion by our customers of what 01:20:14.166 --> 01:20:17.942 it is that we're doing when they don't see crews actively working because they're 01:20:17.966 --> 01:20:21.814 waiting on those assessments to be completed. So that is part of the better 01:20:21.862 --> 01:20:25.530 communication that we can do with our customers so they know what to expect. 01:20:26.350 --> 01:20:30.110 When Hurricane Ike was the last major hurricane to hit our system 01:20:30.230 --> 01:20:34.010 from a wind event hurricane, that was in 2008, 01:20:34.710 --> 01:20:38.622 more than 15 years ago. And our service territory has grown a 01:20:38.646 --> 01:20:41.070 lot, population wise, since then. 01:20:41.370 --> 01:20:45.898 So we need to take that into account in terms of how we communicate and 01:20:45.914 --> 01:20:50.002 to make sure that we're clearly explaining to customers what they should expect, 01:20:50.186 --> 01:20:53.802 especially in the early days when 01:20:53.826 --> 01:20:57.546 there are still so many customers out. I think people can accommodate 01:20:57.578 --> 01:21:00.474 just about anything if they know what's going on. And so, 01:21:00.522 --> 01:21:04.610 so important that we talk about the types of communication that 01:21:04.730 --> 01:21:08.618 you're addressing as well as that ongoing real 01:21:08.674 --> 01:21:12.146 time communication that's available through the 01:21:12.178 --> 01:21:14.710 tracker, which I know you're working on as well. Agreed. 01:21:15.570 --> 01:21:19.258 Thank you. Yeah, I'd say, I mean, you know, we've been fortunate. Like you 01:21:19.274 --> 01:21:23.270 said, we had Harvey in before that we haven't had anything since then. 01:21:23.610 --> 01:21:27.810 But, you know, and I think as we had discussed, you know, using the same 01:21:27.930 --> 01:21:31.072 kind of playbook for communications, probably outdated. You know, 01:21:31.146 --> 01:21:35.476 folks, the public expects more communication, 01:21:35.548 --> 01:21:39.468 more frequent communication, different modes of communication. And so I think 01:21:39.564 --> 01:21:42.900 it's definitely incumbent on all of us to look at the way we communicate going 01:21:42.940 --> 01:21:46.324 forward because this commission, 01:21:46.492 --> 01:21:49.612 the governor, legislative leadership, the speaker 01:21:49.716 --> 01:21:53.628 and the lieutenant governor expect improvements in all of this. And I know 01:21:53.764 --> 01:21:56.320 the residents deserve and demand it. 01:21:56.960 --> 01:22:00.696 We'll be working very closely with you and all the utilities and other folks 01:22:00.728 --> 01:22:04.488 that we can help bring their expertise and understanding to bear to make 01:22:04.504 --> 01:22:08.144 sure that we help mitigate the impact of future storms like this. 01:22:08.232 --> 01:22:11.984 Yes, sir. Anything else for Jason? Thank you, 01:22:11.992 --> 01:22:13.340 Jason. Thanks for being here. 01:22:15.200 --> 01:22:19.712 So I'd say to all the companies, reiterate those thanks 01:22:19.856 --> 01:22:23.212 to the line workers and those crews, both from Texas and those that came 01:22:23.236 --> 01:22:26.692 in from other states for their efforts in restoring the 01:22:26.716 --> 01:22:30.188 system as quickly as possible. And I'd also be remiss if 01:22:30.204 --> 01:22:33.764 I didn't thank all the folks at the state operations center. That's our staff, 01:22:33.852 --> 01:22:37.892 that's all the staff from the utilities, from other sister agencies 01:22:37.956 --> 01:22:41.636 that have been working 24 hours shifts since last weekend 01:22:41.668 --> 01:22:44.548 or maybe even before to prepare for this. 01:22:44.604 --> 01:22:47.400 And so we thank them for all their efforts as well. 01:22:48.870 --> 01:22:54.910 Mister chairman, I have one thing to say, and that is each 01:22:55.030 --> 01:22:58.150 utility service territory in the state of Texas has its 01:22:58.190 --> 01:23:01.638 own unique weather challenges. And we've seen 01:23:01.814 --> 01:23:06.782 hurricanes, we've seen fires, we've seen other 01:23:06.846 --> 01:23:10.422 types of tornadoes and other things that affect the 01:23:10.446 --> 01:23:14.364 citizens of Texas in a similar way, but a different 01:23:14.422 --> 01:23:18.072 type of event. You know, I think about this in terms of 01:23:18.096 --> 01:23:21.576 the fires up in the panhandle, and I 01:23:21.608 --> 01:23:25.032 hope that as we are looking at this event, we can maybe put 01:23:25.056 --> 01:23:28.320 in place some kind of structure that we can look at all of those events. 01:23:28.360 --> 01:23:31.616 I think all of the citizens kind of understand, you know, deserve that. 01:23:31.648 --> 01:23:35.608 If we're looking into something that's causing havoc, wreaking havoc 01:23:35.704 --> 01:23:38.296 on the Gulf coast that in other parts of the state they get the same 01:23:38.368 --> 01:23:41.548 benefit. Absolutely. You know, we'll have to address kind of 01:23:41.564 --> 01:23:44.780 the acute onset issues that this brought forth. 01:23:44.940 --> 01:23:48.124 I think a comprehensive look at all the different types of issues that 01:23:48.212 --> 01:23:51.436 different tdus deal with in various areas of the state is well 01:23:51.468 --> 01:23:53.880 worth our time. Thank you. Okay. 01:23:55.420 --> 01:23:58.828 All right, so now we'll move on to the agenda. So, 01:23:58.964 --> 01:24:02.644 like I said, we're going to take up item number 19 1st. But before 01:24:02.692 --> 01:24:06.356 that, Sheila, will you take us through the consent agenda and the 01:24:06.388 --> 01:24:10.200 recusal list, which for the first time, I do not lead. 01:24:10.940 --> 01:24:13.840 I'm not the leader in the clubhouse on the number of recusals. 01:24:17.180 --> 01:24:21.076 Good morning. Commissioners recusal memos were filed in project 01:24:21.148 --> 01:24:24.356 number 52761. The chairman 01:24:24.388 --> 01:24:28.492 is recused from items 18 and 19, and commissioner Yaltman is 01:24:28.516 --> 01:24:31.116 recused from items 816, 01:24:31.268 --> 01:24:35.250 1819, and 24 through 27. 01:24:35.670 --> 01:24:38.886 By individual ballot, the following items are placed on your 01:24:38.918 --> 01:24:42.494 consent agenda. Items 13, 11, 01:24:42.662 --> 01:24:45.854 13, 14, 17, 23, 01:24:45.902 --> 01:24:49.550 24, and 26, and also by individual ballot, 01:24:49.590 --> 01:24:53.518 the commissioners voted to place items on the consent agenda for the 01:24:53.534 --> 01:24:56.982 rolls and project section. No one signed up to speak on those items, 01:24:57.086 --> 01:25:00.300 and so the commissioner is voted to also place items 01:25:00.340 --> 01:25:03.428 39 and 42 on the consent agenda. Thank you, 01:25:03.444 --> 01:25:07.148 Sheila. I'd entertain a motion to approve the consent agenda as described 01:25:07.164 --> 01:25:10.708 by Sheila. So moved. Aye. Second. I have a motion. A second. All those in 01:25:10.724 --> 01:25:14.920 favor say aye. Opposed. Motion prevails. 01:25:15.860 --> 01:25:19.164 So item 19 I am recused from. So I will turn 01:25:19.332 --> 01:25:23.140 the meeting over to Commissioner Kobos. All right, thanks, 01:25:23.180 --> 01:25:26.300 chair Gleason. Sheila, can you please lay out item number 19? 01:25:26.760 --> 01:25:30.368 (item:19:Sheila lays out Docket 54657) Yes, ma'am. Item 19 is docket number 01:25:30.424 --> 01:25:33.616 54657. This is the application of the 01:25:33.648 --> 01:25:37.368 city of Lubbock, acting by and through Lubbock power and light to change 01:25:37.424 --> 01:25:41.008 rates for wholesale transmission service. Before you is a 01:25:41.024 --> 01:25:44.416 SOA proposal for decision. Lubbock power and Light and the 01:25:44.448 --> 01:25:48.176 Office of Public Utility, council and commission staff each filed exceptions 01:25:48.208 --> 01:25:51.828 to the PFD. The SOA ALJ filed a letter in response to 01:25:51.844 --> 01:25:55.908 the exceptions and did not recommend any changes to the PFD. The commission voted 01:25:55.924 --> 01:25:59.244 to grant oral argument in this docket, and commissioner Copas 01:25:59.292 --> 01:26:02.452 filed a memo in the Stockholm. Thank you, Sheila. Before we move 01:26:02.476 --> 01:26:06.028 forward with laying out the party's oral argument, 01:26:06.084 --> 01:26:10.180 I would like to recognize city councilman from district number six in 01:26:10.300 --> 01:26:13.360 Lubbock, Tim Collins, who's here with us today. 01:26:16.350 --> 01:26:17.610 Thank you for being here. 01:26:19.950 --> 01:26:23.366 And various members of the Lubbock Power and Light board 01:26:23.398 --> 01:26:27.134 of directors. So as my memo lays out, 01:26:27.182 --> 01:26:30.550 I voted to hear oral argument in this case. I propose that we give 01:26:30.590 --> 01:26:34.766 each party ten minutes to provide their arguments, and that 01:26:34.918 --> 01:26:37.918 given the complexity of the issues in this case, 01:26:38.094 --> 01:26:41.574 that my preference would be to defer the ultimate decision on this case to a 01:26:41.582 --> 01:26:42.940 future open, open meeting date. 01:26:44.760 --> 01:26:48.536 Are you good with this path forward, Commissioner Jackson? Yes, I am. 01:26:48.648 --> 01:26:51.860 Okay, great. Sheila, can you please call up the parties? 01:26:52.360 --> 01:26:55.920 Yes, ma'am. And for this, for oral arguments 01:26:55.960 --> 01:26:59.552 for both Lubbock and. I'll just. I'll just preview this for SP's 01:26:59.576 --> 01:27:02.464 as well. We're going to do this a little bit differently. Rather than calling up 01:27:02.472 --> 01:27:06.000 the parties individually, we're going to have all the parties come up at once just 01:27:06.040 --> 01:27:09.028 for a more efficient way of conducting oral argument. 01:27:09.164 --> 01:27:12.796 So at this time, will the representatives for OPUC, 01:27:12.868 --> 01:27:16.220 LPNL and commission staff come up? And just for 01:27:16.260 --> 01:27:19.596 order of oral argument, under our procedural rules, the party 01:27:19.628 --> 01:27:23.556 that bears the burden of proof can open 01:27:23.668 --> 01:27:27.300 and close the argument. So we will start with the applicant, 01:27:27.460 --> 01:27:31.500 followed by OPUC and then commission staff in order for oral 01:27:31.540 --> 01:27:32.240 arguments. 01:27:34.550 --> 01:27:38.286 All right, so we will 01:27:38.318 --> 01:27:42.046 start with Lubbock power and light, if possible. Chairman and commissioners, 01:27:42.078 --> 01:27:44.370 I'd like to reserve three minutes for rebuttal. 01:27:46.070 --> 01:27:48.878 Sorry, Rosalind Duberstein, on behalf of Lubbock power and light. 01:27:48.974 --> 01:27:51.782 Yeah, we won't have rebuttal. We're just giving ten minutes for all argument. 01:27:51.846 --> 01:27:53.850 Okay, thank you. Commissioner, 01:27:55.590 --> 01:27:58.490 is it possible to close per the commission's rules? 01:27:59.640 --> 01:28:02.968 Yes. So, under our procedural rules, the party with burden 01:28:02.984 --> 01:28:06.460 of proof is allowed to both open and close. 01:28:06.760 --> 01:28:10.056 And so with the presiding 01:28:10.088 --> 01:28:13.832 officers permission, would you be reserving 01:28:13.856 --> 01:28:16.472 time at the tail end of that for that? Yes, that's fine. All right. 01:28:16.536 --> 01:28:20.368 (item:19:Rosalind Duberstein, LP&L, 54657) Thank you, commissioner. Good morning. Chairman and commissioners. 01:28:20.424 --> 01:28:24.568 Rosalind Duberstein, counsel for Lubbock power and light. On several 01:28:24.624 --> 01:28:28.602 issues presented in this proceeding, the ALJ reached correct conclusions supported 01:28:28.626 --> 01:28:32.674 by the evidence. However, the PFD's recommendation regarding the debt 01:28:32.722 --> 01:28:36.746 service coverage ratio used to calculate the return is incorrect 01:28:36.818 --> 01:28:40.762 and unreasonable. In its application, LPNL requested 01:28:40.786 --> 01:28:44.842 a 1.5 debt service coverage, or DSC ratio, to calculate the 01:28:44.866 --> 01:28:48.850 rate of return. This request is lower than LPNL's 01:28:48.890 --> 01:28:52.830 current commission approved DSC ratio of 1.75. 01:28:53.380 --> 01:28:57.052 A 1.5 DSC ratio is supported by the record evidence, 01:28:57.196 --> 01:29:01.212 specifically by LPNL's bond covenants, and by the criteria of 01:29:01.236 --> 01:29:04.732 the RFP. Despite this, the ALJ recommends limiting 01:29:04.796 --> 01:29:08.000 LP's DSC ratio to 1.25. 01:29:08.300 --> 01:29:11.796 The most crucial takeaway I have for you today is that a 01:29:11.828 --> 01:29:15.428 1.25 DSC ratio will create severe 01:29:15.484 --> 01:29:19.156 financial risk for LP and L and will cause LP and L to 01:29:19.188 --> 01:29:23.054 operate at a loss. A 1.25 DSC ratio 01:29:23.102 --> 01:29:26.450 is the minimum required by LPNL's bond covenants. 01:29:26.750 --> 01:29:29.766 Use of this minimum to calculate the return would 01:29:29.798 --> 01:29:33.286 provide no room for error. It would put LPNL 01:29:33.318 --> 01:29:36.702 at risk of violating its bond covenants and incurring a 01:29:36.726 --> 01:29:39.926 credit rating downgrade. This would jeopardize LPNL's 01:29:39.958 --> 01:29:43.430 ability to borrow in the future and to continue contributing 01:29:43.470 --> 01:29:47.408 to transmission build out in Texas. Like any MoU, 01:29:47.544 --> 01:29:51.360 LP and L needs sufficient return dollars or margin over 01:29:51.400 --> 01:29:55.820 and above its actual operating expenses to meet its debt service needs. 01:29:56.400 --> 01:29:59.760 This is taken directly from staff's testimony in this case, 01:29:59.880 --> 01:30:03.040 and it is widely known as a fundamental standard for 01:30:03.080 --> 01:30:06.288 determining the appropriate rate of return for an MoU. 01:30:06.464 --> 01:30:10.328 In fact, the PFD emphasizes this fundamental standard and 01:30:10.344 --> 01:30:14.102 then contradicts itself by recommending a DSC ratio that 01:30:14.126 --> 01:30:18.222 would be insufficient to cover LPNL's debt service costs and its 01:30:18.246 --> 01:30:21.130 O and M by $3.4 million. 01:30:21.550 --> 01:30:24.810 LPNL outlines this calculation and its exceptions. 01:30:25.190 --> 01:30:28.422 This $3.4 million deficit based purely on 01:30:28.446 --> 01:30:31.774 an inability to cover debt service and O and M does 01:30:31.822 --> 01:30:35.690 not meet the fundamental standard for an appropriate rate of return. 01:30:36.070 --> 01:30:39.758 Adopting a 1.25 DSC ratio will put put only more of a 01:30:39.774 --> 01:30:43.158 penalty on Lubbock customers than they already bear 01:30:43.214 --> 01:30:47.130 with that 3.4 million necessary to maintain transmission assets. 01:30:47.670 --> 01:30:51.438 The ALJ also erred in not applying a 0.25 adder 01:30:51.494 --> 01:30:54.694 to the DSC ratio. The RFP permits a 01:30:54.702 --> 01:30:58.174 0.25 adder if a utility can show the cost effective 01:30:58.222 --> 01:31:02.022 utilization of short term debt as a reasonable alternative to 01:31:02.046 --> 01:31:05.780 long term financing. Since its last TCOSP proceeding, 01:31:05.900 --> 01:31:09.572 LPNL's use of a form of short term debt saved transmission 01:31:09.636 --> 01:31:13.196 ratepayers $3 million in debt service. No party 01:31:13.268 --> 01:31:16.668 disputes this key fact. The ALJ focuses on 01:31:16.684 --> 01:31:20.468 the conversion from short term to long term to disallow the adder, 01:31:20.604 --> 01:31:24.780 but that conversion was the strategic utilization of short term debt. 01:31:24.900 --> 01:31:29.164 It resulted in cost savings, and that would not have been possible but for 01:31:29.252 --> 01:31:32.430 the short term debt. This evidence, in combination 01:31:32.510 --> 01:31:35.470 with the financial insufficiency of the ALJ's DSC, 01:31:35.550 --> 01:31:38.670 is an unreasonable and financially harmful result 01:31:38.750 --> 01:31:42.142 for LP and L. As you know, the opportunity for an 01:31:42.166 --> 01:31:45.670 adder is a recent revision to the RFP and a deviation from 01:31:45.710 --> 01:31:49.622 many years of precedent where a 0.25 adder was presumed reasonable for 01:31:49.646 --> 01:31:53.542 mous. LPNL has presented sufficient evidence to meet 01:31:53.566 --> 01:31:57.912 the criteria of the adder in the most up to date RFP however, 01:31:57.976 --> 01:32:01.936 if the commission finds LPNL's cost effective use of a short term debt alternative 01:32:02.008 --> 01:32:05.584 does not satisfy that criteria, it begs the question, 01:32:05.672 --> 01:32:09.192 what will qualify for the adder? The RFP change has far 01:32:09.256 --> 01:32:12.780 reaching implications for mous and may warrant clarification. 01:32:13.360 --> 01:32:17.208 As a final and crucial point, LPNL's projected $3.4 01:32:17.264 --> 01:32:21.168 million deficit does not include the hold harmless credit required 01:32:21.224 --> 01:32:24.656 by the settlement in docket number 47576. 01:32:24.848 --> 01:32:28.288 Staff and OPEC's focus on that credit is a red herring. 01:32:28.424 --> 01:32:31.648 The claim that LPNL's requested DSC ratio is based on 01:32:31.664 --> 01:32:35.376 the credit is blatantly false. As opux witness specifically 01:32:35.408 --> 01:32:39.240 conceded in testimony, the hold harmless credit is not included 01:32:39.280 --> 01:32:42.984 in LPNL's requested tcoss. In this case, the hold harmless 01:32:43.032 --> 01:32:47.016 credit is not and has never been funded out of tcos revenues. 01:32:47.168 --> 01:32:51.284 The credit is only paid by LPNL's native load customers 01:32:51.372 --> 01:32:54.692 in Lubbock. Here are the key facts for the 01:32:54.716 --> 01:32:58.372 hold harmless credit. LP and L has been paying it in compliance 01:32:58.436 --> 01:33:01.120 with the settlement. This is easily verifiable. 01:33:01.420 --> 01:33:05.452 LPNL has never recovered that credit in tcost and it is 01:33:05.476 --> 01:33:08.708 not proposing to do so in this docket. This is equally 01:33:08.764 --> 01:33:12.356 verifiable in the last commission approved tcoas rates and 01:33:12.388 --> 01:33:16.078 the rates requested in this proceeding. Discussion of the hold harmless 01:33:16.134 --> 01:33:19.926 credit in the application has been misconstrued throughout this proceeding. 01:33:20.078 --> 01:33:23.830 The concern that's mentioned in LPNL's direct testimony is not 01:33:23.870 --> 01:33:27.814 that the hold harmless credit is in any way recovered through TCOS rates. 01:33:27.982 --> 01:33:31.646 The concern is that LPNL does not have if LPNL, 01:33:31.678 --> 01:33:35.422 excuse me, does not have tcos rates that are based on a 01:33:35.446 --> 01:33:38.774 sufficient DSC ratio, then its retail customers 01:33:38.822 --> 01:33:42.076 will be forced to subsidize subsidize. But those same customers are 01:33:42.108 --> 01:33:45.404 already funding the hold harmless. This will increase the penalty 01:33:45.452 --> 01:33:49.340 those customers already have to pay. LPNL respectfully urges 01:33:49.380 --> 01:33:53.124 the commission to evaluate these verifiable facts regarding the hold harmless 01:33:53.172 --> 01:33:56.812 credit and approve an appropriate DSC ratio that will 01:33:56.836 --> 01:34:00.180 not impose this deficit on LP and L. I will 01:34:00.220 --> 01:34:03.932 note that there are additional concerns about the consequences of this decision, 01:34:04.076 --> 01:34:07.900 which are addressed in the letter from the chair of LPNL's board, Gwen Stafford. 01:34:07.940 --> 01:34:11.908 It was filed in the stock in on June 10 and in summary, 01:34:12.084 --> 01:34:16.052 LPNL contends that adopting the 1.5 DSC ratio that's 01:34:16.156 --> 01:34:19.972 substantiated in the application is a reasonable outcome. It will 01:34:19.996 --> 01:34:23.948 give LP and l appropriate financial protection and will not impose unfair costs 01:34:23.964 --> 01:34:27.572 on transmission ratepayers. LPNL respectfully asks the 01:34:27.596 --> 01:34:31.500 commission to reject the ALJ's DSC recommendation 01:34:31.660 --> 01:34:35.292 and instead approve a ratio that will not risk LPNL's financial 01:34:35.396 --> 01:34:39.196 stability or harm its retail customers. I'm available 01:34:39.268 --> 01:34:42.676 for questions and I have representatives from LPNL here with me today as 01:34:42.708 --> 01:34:43.840 well. Thank you. 01:34:46.740 --> 01:34:50.236 All right, let me pause for just a moment and record. You'll have three minutes 01:34:50.268 --> 01:34:53.560 and 335. Thank you. All right, 01:34:56.500 --> 01:34:59.962 the next party that senator speak is the office of Public Utility Council. 01:35:00.026 --> 01:35:03.450 If you'll state your name for the record, please. Good morning commissioners. 01:35:03.490 --> 01:35:06.710 (item:19:Julie Davis, OPUC, 54657) Julie Davis, special counsel with the Office of Public Utility Council. 01:35:08.050 --> 01:35:11.162 I'll keep my comments brief. I have two points that I'd 01:35:11.186 --> 01:35:14.850 like to address. The first, speaking to the debt service coverage ratio, we agree 01:35:14.890 --> 01:35:18.190 with the ALJ that the 1.25 is appropriate. 01:35:18.730 --> 01:35:22.602 I believe we and staff are aligned on this. The direct testimony of Mister Harvey 01:35:22.626 --> 01:35:26.726 hall clearly identifies the hold harmless payment as a category of debt. 01:35:26.838 --> 01:35:30.910 And despite what council would have you think, our statement continues. 01:35:31.030 --> 01:35:34.638 While we admit that the hold harmless payment is not a specific line 01:35:34.694 --> 01:35:38.126 item in the requested revenue requirement, LPNL is requesting 01:35:38.158 --> 01:35:41.894 a DSE of 1.5 to provide sufficient revenues to meet the cash 01:35:41.942 --> 01:35:45.206 obligation that the hold harmless payment supposedly 01:35:45.238 --> 01:35:48.878 is included in. So we do believe that that hold harmless payment 01:35:48.934 --> 01:35:52.646 is being a basis for that debt, and we think that's inappropriate to make 01:35:52.678 --> 01:35:55.570 the recipients of a benefit pay for that benefit. 01:35:56.270 --> 01:36:00.710 This was a condition of settlement and docket number 47576 01:36:00.790 --> 01:36:04.078 and we believe that the commission's decision in this case, along with the 01:36:04.094 --> 01:36:06.770 ALJ, should uphold that settlement as it is. 01:36:07.430 --> 01:36:10.798 Further, the ALJ's recommendation in the PFD won't cause a 01:36:10.814 --> 01:36:14.526 perverse use of short term debt by other agencies, as LPNL would have everyone 01:36:14.598 --> 01:36:17.832 think. The rate filing package clearly requires a 01:36:17.856 --> 01:36:21.608 showing that the debt was a reasonable alternative to long term financing, 01:36:21.744 --> 01:36:25.120 and while we don't contest that at the time it was, it no longer is 01:36:25.160 --> 01:36:28.528 being used as that. Utilities that use short term debt 01:36:28.584 --> 01:36:32.112 as a mechanism to simply achieve a higher DSE ratio will 01:36:32.136 --> 01:36:35.620 not be in a difficult position to prove that that funding was reasonable. 01:36:36.440 --> 01:36:39.496 Adopting LPNL's position in this case would mean that 01:36:39.528 --> 01:36:42.768 any utility that has ever used short term debt could argue for the 01:36:42.784 --> 01:36:46.278 additional 0.25%, which undercuts the change 01:36:46.374 --> 01:36:49.766 to that policy. The second point I'd like to make 01:36:49.798 --> 01:36:52.886 goes to the ALJ's recommendations regarding the recovery of 01:36:52.918 --> 01:36:56.142 pilot in this case. We disagree with the ALJ on that point, and I'd like 01:36:56.166 --> 01:37:00.094 to speak a bit to that. Generally, the law does recognize 01:37:00.142 --> 01:37:04.126 allowances for mous like LPNL to collect general fund transfers, 01:37:04.238 --> 01:37:08.222 but unlike the other cases LPNL relies on in its briefing, the LJ 01:37:08.286 --> 01:37:12.822 found that public Utility Regulatory act section 35.009 01:37:12.886 --> 01:37:16.158 instead applies in this case, and that's because LPNL is required to have 01:37:16.174 --> 01:37:19.558 a CCN for transmission facilities in ERCOT. 01:37:19.734 --> 01:37:23.230 This section creates a specific condition when mous can recover payments 01:37:23.270 --> 01:37:27.110 in lieu of taxes, just as some background those pilot fees 01:37:27.150 --> 01:37:30.814 compensate municipalities for property tax revenue they otherwise can't 01:37:30.862 --> 01:37:34.290 collect from an entity due to some tax exempt status. 01:37:35.930 --> 01:37:39.850 35.009 says in relevant part that Maus can recover pilot 01:37:39.890 --> 01:37:43.826 fees it pays to cities through wholesale taxes, unless their governing 01:37:43.858 --> 01:37:47.282 body is also the governing body of that taxing entity. And in this case, 01:37:47.306 --> 01:37:51.070 it's undisputed that LPNL is governed by the city of Lubbock. 01:37:51.410 --> 01:37:54.986 The ALJ's recognize that LPNL's governing body is the governing 01:37:55.018 --> 01:37:58.762 body of that taxing entity. However, determine the 01:37:58.826 --> 01:38:02.154 outcome, which is the natural occurrence of this statute would be absurd 01:38:02.202 --> 01:38:05.682 because it does exactly what it's designed to do. We recognize that 01:38:05.706 --> 01:38:08.786 change is difficult in this, LPNL's first rodeo on this, 01:38:08.898 --> 01:38:12.298 but this is the natural result of applying that statute. 01:38:12.474 --> 01:38:16.066 So this argument really turns on whether or not the absurdity doctrine is being 01:38:16.098 --> 01:38:20.026 properly applied. And we argue that case law, not only from the United 01:38:20.098 --> 01:38:23.858 States Supreme Court, but the Texas Supreme Court, weighs in favor of finding that 01:38:23.874 --> 01:38:26.390 the absurdity doctrine should not apply in this case. 01:38:27.340 --> 01:38:30.580 The absurdity doctrine itself sets a high bar to counter the natural 01:38:30.620 --> 01:38:34.516 outcome of legislation that, while inconvenient, broad, or even unattended, is nonetheless 01:38:34.588 --> 01:38:38.660 clear. Further, the ALJ found that no ambiguity 01:38:38.700 --> 01:38:42.908 in the statute existed, and LPNL did not argue that such an ambiguity existed. 01:38:43.044 --> 01:38:45.828 As a result, this may be an unanticipated outcome, 01:38:45.884 --> 01:38:49.356 particularly at the time the statute was passed, but it is the application 01:38:49.388 --> 01:38:52.774 of law, and we would caution the commission from 01:38:52.822 --> 01:38:56.142 reading into the statute rules or words that do 01:38:56.166 --> 01:38:59.254 not exist that would change its meaning. 01:38:59.422 --> 01:39:03.158 So we urge the commission to find that this pilot should not be 01:39:03.294 --> 01:39:06.610 recovered and should also be removed from the cash working capital. 01:39:07.030 --> 01:39:10.930 I'll conclude my statements there, but I'm happy to take any questions. Thank you. 01:39:13.990 --> 01:39:18.016 All right, the last party to Senate for oral argument is commissioned staff. 01:39:18.128 --> 01:39:20.060 Will you state your name for the record? Yes. 01:39:22.200 --> 01:39:25.832 (item:19:Andrew Aus, Comission Staff, 54657) Andy Ous for commission staff. Good morning, 01:39:25.856 --> 01:39:29.112 chairman and commissioners. My name is Andy Aus. I am a one of the attorneys 01:39:29.136 --> 01:39:32.464 who had the pleasure to work on this very complex and important docket for commission 01:39:32.552 --> 01:39:35.856 staff. Just by way of introduction. 01:39:36.048 --> 01:39:39.160 I went to tech for law school, so I did spend three 01:39:39.240 --> 01:39:42.580 years in Lubbock. I think it's a great city with even better people. 01:39:43.120 --> 01:39:47.102 But staff does find themselves at odds with 01:39:47.166 --> 01:39:50.774 LPNL and Lubbock regarding a couple of issues with this 01:39:50.822 --> 01:39:54.014 docket. You've already heard both parties before 01:39:54.062 --> 01:39:57.166 me talk about the debt service coverage ratio. I'll talk about 01:39:57.198 --> 01:40:00.366 that first, with the hold harmless payment being up. 01:40:00.558 --> 01:40:04.102 I'll mention the hold harmless payment first and then move into the short term 01:40:04.246 --> 01:40:07.702 debt issue afterwards. And then I will touch briefly on the 01:40:07.726 --> 01:40:11.504 assignment of debt to transmission function, that is 01:40:11.552 --> 01:40:15.032 before the commission today. With regard to the hold harmless 01:40:15.096 --> 01:40:18.824 payment agreed upon in docket number 47,576, 01:40:18.952 --> 01:40:22.912 the company stated that it needs the additional 25 x coverage in order to 01:40:22.936 --> 01:40:26.216 recover the 22 million a year payment. It pays 01:40:26.248 --> 01:40:29.856 for the hold harmless payment and accordingly, this was the reason why LP 01:40:29.888 --> 01:40:33.024 and L requested a 1.5 x dsc ratio 01:40:33.192 --> 01:40:38.082 because this payment was an integral part of the commission order in docket number 47576. 01:40:38.256 --> 01:40:41.726 The hold harness payment is in no way a cost of LP 01:40:41.838 --> 01:40:44.966 providing transmission service. It is a payment to ERCOT 01:40:44.998 --> 01:40:49.030 transmission customers to mitigate the increased cost those customers would face 01:40:49.150 --> 01:40:52.798 as a result of LP and L transferring load into the ERCOT system. 01:40:52.934 --> 01:40:56.886 Accordingly, the hold harmless payment should not be used as a justification for 01:40:56.918 --> 01:41:00.326 LP and L to increase rates for the very customers it 01:41:00.358 --> 01:41:03.910 agreed to hold harmless. Moving on to the short term debt 01:41:03.950 --> 01:41:07.326 issue for the debt service coverage ratio, 01:41:07.478 --> 01:41:10.918 we believe that the SOA ALJ's decision in the PFD 01:41:10.974 --> 01:41:14.614 regarding the treatment of short term debt is correct. LP and L and 01:41:14.622 --> 01:41:18.134 there are exceptions to the proposal for the decision, states that by adopting 01:41:18.182 --> 01:41:21.606 the rule as set forth in the PFD, it would create an artificial 01:41:21.638 --> 01:41:25.294 requirement that every MoU always must employ a short 01:41:25.342 --> 01:41:28.598 term debt during the test year to qualify for the 0.25 01:41:28.654 --> 01:41:31.534 x adder staff does not agree with this assessment. 01:41:31.702 --> 01:41:35.510 Staff evaluates an MoU's use of short term debt and whether the MoU 01:41:35.550 --> 01:41:38.710 utilized such debt prudently and in cost effective manner 01:41:38.790 --> 01:41:42.222 during the test year. LPNL's direct revolving note program, 01:41:42.326 --> 01:41:45.990 otherwise known as DRNP, which staff agrees was short term debt, 01:41:46.070 --> 01:41:49.598 ended in August of 2021. If LPNL is 01:41:49.614 --> 01:41:53.046 allowed to rely on past instances of prudent short term debt use, 01:41:53.158 --> 01:41:57.128 LPNL is effectively arguable that any past non current short 01:41:57.184 --> 01:42:00.800 term debt should allow an MoU to qualify for this 0.25 01:42:00.840 --> 01:42:05.000 x adder. Staff again reiterates that a 1.25 x DSC 01:42:05.080 --> 01:42:08.528 ratio leaves LP with the ability to cover 100% of 01:42:08.544 --> 01:42:11.528 its debts while maintaining a 25% cushion, 01:42:11.664 --> 01:42:14.856 simply because LPNL's bond covenants require a 01:42:14.888 --> 01:42:18.136 1.25 DSC ratio does not mean that LPNL 01:42:18.168 --> 01:42:22.522 lacks a financial cushion. A DSC ratio of of 1.25 x 01:42:22.626 --> 01:42:25.850 would allow LPL to cover more than 100% of its debts. 01:42:25.970 --> 01:42:29.786 In other words, the 25% cushion is already contemplated here. 01:42:29.978 --> 01:42:33.546 LPNL next argues that by adopting a 1.25 DSC 01:42:33.618 --> 01:42:37.378 ratio, it will be forced to operate at a loss staff know. So the 01:42:37.394 --> 01:42:40.962 result of this rate proceeding will be a commission authorized revenue requirement and the 01:42:40.986 --> 01:42:44.138 LPNL, and that LPNL has a number of tools available, 01:42:44.314 --> 01:42:47.998 including the filing of interim tcost proceedings up to two times per year, 01:42:48.094 --> 01:42:51.650 that would allow to adjust and timely recover transmission costs. 01:42:52.150 --> 01:42:56.134 I'm going to move on briefly to another issue before the 01:42:56.142 --> 01:42:59.582 commission for consideration, and that is the assignment of debt to the 01:42:59.606 --> 01:43:02.330 transmission function. Specifically in this case, 01:43:02.830 --> 01:43:06.318 staff respectfully disagrees with the SOA ALJ regarding the decision 01:43:06.374 --> 01:43:09.878 to allow LPNL to assign higher cost debt service to 01:43:09.894 --> 01:43:13.504 the transmission function, which would result in different rates of 01:43:13.702 --> 01:43:17.412 for different utility functions. The PFD misapplies the burden of 01:43:17.436 --> 01:43:20.820 proof, resulting in a proposal that violates pura 35.004 01:43:20.860 --> 01:43:24.516 A and 16 TAC section 25 192 C, 01:43:24.668 --> 01:43:28.332 and it would interfere with the competitive market and conflicts with commission's 01:43:28.356 --> 01:43:32.348 rate filing package. A. Utilities financing cost is a system 01:43:32.404 --> 01:43:36.036 wide cost properly applied on a total company basis when setting 01:43:36.068 --> 01:43:40.346 rates, and neither LPNL nor the PFD cites to any exception 01:43:40.468 --> 01:43:44.110 to this practice. It is undisputed that LPNL's debt obligations, 01:43:44.190 --> 01:43:48.110 which consist of general obligation and revenue bonds, are financing 01:43:48.150 --> 01:43:51.942 cost for the LPNL system as a whole, with these bonds 01:43:51.966 --> 01:43:55.598 being backed by LPNL revenues from any source in the LPNL system, 01:43:55.694 --> 01:43:59.582 not just revenues originating either from transmission or from distribution 01:43:59.646 --> 01:44:02.830 services. LPNL's debt issuances are still 01:44:02.870 --> 01:44:06.694 backed by the revenues from its entire system. They are system wide cost and 01:44:06.702 --> 01:44:10.998 the cost of repayment cannot reasonably be associated with any single function 01:44:11.094 --> 01:44:15.582 as LPNL and the PFD propose. Pura section 35004 01:44:15.646 --> 01:44:19.430 A requires a utility to provide wholesale transmission service 01:44:19.550 --> 01:44:23.230 at rates comparable to its own use of its system. By allowing 01:44:23.270 --> 01:44:27.414 LPNL to assign higher cost debt to the transmission function and lower cost 01:44:27.462 --> 01:44:31.334 debt to the distribution function. LPNL's transmission service customers 01:44:31.382 --> 01:44:34.770 across ERCOT would be burdened by rates that are based on a higher 01:44:34.810 --> 01:44:38.418 rate of return than rates for LPNL's distribution customers. 01:44:38.594 --> 01:44:42.186 The effects of this is to inappropriately and inequitably shift the 01:44:42.218 --> 01:44:45.418 system wide financing costs from LPNL's local distribution 01:44:45.474 --> 01:44:48.730 customers onto all other customers in the ERCOT system, 01:44:48.850 --> 01:44:52.658 which is unreasonably discriminatory on its face because LPNL, 01:44:52.714 --> 01:44:56.018 acting as a distribution service provider, essentially pays itself 01:44:56.074 --> 01:45:00.192 for the transmission service it receives from LPNL acting as 01:45:00.216 --> 01:45:03.792 a transmission service provider. Using the LPNL system, 01:45:03.856 --> 01:45:07.368 rate of return for transmission and distribution service, as recommended 01:45:07.424 --> 01:45:11.128 by staff, produces a wholesale transmission rate for LPNL that 01:45:11.144 --> 01:45:14.992 are comparable to the LPNL's own use of its system, as the same 01:45:15.056 --> 01:45:18.352 overall rate of return is applied for both transmission and 01:45:18.376 --> 01:45:22.120 distribution services. Further, of note, many tsps are 01:45:22.160 --> 01:45:25.808 non opt in entities that own and operate generation resources 01:45:25.864 --> 01:45:30.134 in the competitive wholesale market. Adopting the precedent proposed in the PFD 01:45:30.182 --> 01:45:34.486 would open the door to allowing these entities to shift the higher cost of financing 01:45:34.598 --> 01:45:38.598 associated with the generation resources into regulated transmission rates, 01:45:38.694 --> 01:45:41.902 effectively subsidizing their competitive operations through 01:45:41.926 --> 01:45:45.610 their regulated rates. Such an outcome would clearly harm 01:45:45.950 --> 01:45:49.366 competitive generation providers who have no captive customers to 01:45:49.398 --> 01:45:52.760 shift cost onto and theme, and it would impair 01:45:52.800 --> 01:45:57.208 the healthy functioning of the wholesale market as a whole. If adopted, 01:45:57.264 --> 01:46:00.832 the PFD proposal might also open the door to allowing investor owned 01:46:00.856 --> 01:46:04.728 utilities to assign higher cost equity financing to transmission 01:46:04.784 --> 01:46:08.744 customers outside of their distribution footprint. This could result in an entire 01:46:08.792 --> 01:46:12.368 new avenue of disputes as parties review and litigate the financing 01:46:12.424 --> 01:46:15.984 situation associated with each and every utility project, 01:46:16.112 --> 01:46:19.862 a burdensome and I contentious process that is unnecessary 01:46:19.926 --> 01:46:23.430 if these financing costs are properly recognized and treated 01:46:23.470 --> 01:46:27.030 as the system wide cost that they are. And with that, 01:46:27.070 --> 01:46:28.450 I thank you for your time. 01:46:39.550 --> 01:46:40.850 Give me just a moment. 01:46:43.400 --> 01:46:46.776 Are you ready? All right. Roslyn Duberstein, 01:46:46.808 --> 01:46:50.192 LPNL I'll start with the assignment of debt. In responding to 01:46:50.216 --> 01:46:54.128 that issue, staff has not relied on any precedent or citation for 01:46:54.144 --> 01:46:57.672 the total company basis rationale, and the ALJ correctly acknowledged 01:46:57.736 --> 01:47:01.872 this. Whereas LPNL's direct assignment of the transmission 01:47:01.936 --> 01:47:05.856 debt to the transmission function correlates to the projects that the debt 01:47:05.888 --> 01:47:09.056 has funded. This is in line with direct assignment 01:47:09.088 --> 01:47:12.336 and the cost causation principles that are outlined in the RFP and 01:47:12.368 --> 01:47:15.696 generally accepted in rate making commission staff 01:47:15.768 --> 01:47:20.420 makes the claim that LPNL is assigning higher cost debt to the transmission function. 01:47:20.760 --> 01:47:25.552 This is plainly incorrect. The evidence has shown that the 2.76 01:47:25.616 --> 01:47:28.968 interest rate that's assigned to the transmission function for the test year 01:47:29.064 --> 01:47:32.432 is actually lower cost of debt than LPNL's last five issuances 01:47:32.536 --> 01:47:36.480 since 2014, and that is available in the record evidence. 01:47:36.640 --> 01:47:39.848 LPNL cannot selectively assign higher cost 01:47:39.904 --> 01:47:43.800 debt. ERCOT must issue debt when their larger infrastructure 01:47:43.840 --> 01:47:47.640 projects and capital needs are present. I'll move on 01:47:47.680 --> 01:47:50.340 to the pilot issue raised by OPEC. 01:47:52.440 --> 01:47:56.104 If the commission were to find against the ALJ 01:47:56.192 --> 01:48:00.136 on this issue, it would overturn a longstanding practice 01:48:00.168 --> 01:48:03.970 of ERCOT, including a pilot transfer in their TCR rates. 01:48:04.470 --> 01:48:08.374 While the legislative history is of course not binding, it is highly 01:48:08.462 --> 01:48:11.990 informative in this situation. It shows that 01:48:12.110 --> 01:48:15.622 this was designed to be a completely separate taxing jurisdiction 01:48:15.686 --> 01:48:19.330 and that it's for projects that are outside of the city limits. 01:48:20.030 --> 01:48:23.582 This would be an overhaul of the types of 01:48:23.606 --> 01:48:27.654 transfers that have been routinely included in TCR 01:48:27.702 --> 01:48:31.500 rates, and an application of a statute that we've never seen before. 01:48:32.320 --> 01:48:35.936 I will say that the ALJ, and in a different recent 01:48:36.088 --> 01:48:39.760 TCR proceeding 52715 found 01:48:39.880 --> 01:48:43.740 against this argument and that the commission affirmed that decision. 01:48:44.400 --> 01:48:48.808 Also, OPEC's witness in this case has historically promoted 01:48:48.864 --> 01:48:52.752 the inclusion of pilot even after this legislation was enacted. So I think 01:48:52.776 --> 01:48:56.570 the position seems inconsistent, consistent with precedent and the routine 01:48:56.610 --> 01:49:00.282 inclusion of pilot in TCR rates. Finally, on the debt service 01:49:00.346 --> 01:49:01.430 coverage ratio, 01:49:03.690 --> 01:49:07.290 the hold harmless credit is a consideration in the overall finances 01:49:07.330 --> 01:49:11.026 for LPNL for both its retail customers and its TCR. 01:49:11.058 --> 01:49:14.402 It is not the basis for the DSC ratio. 01:49:14.466 --> 01:49:18.274 Request 1.25 is the minimum required 01:49:18.322 --> 01:49:22.078 by the bond covenants, and if LPNL has 01:49:22.254 --> 01:49:26.374 any error or anything that slips up, they risk violating 01:49:26.462 --> 01:49:29.878 those bond covenants. That is the number one rationale. 01:49:30.014 --> 01:49:33.662 The adder is supported by the short term debt, as I 01:49:33.686 --> 01:49:34.610 mentioned earlier. 01:49:36.710 --> 01:49:40.210 Excuse me, sorry. As I mentioned earlier, 01:49:40.550 --> 01:49:43.890 it may warrant some clarification as to the recent RFP change 01:49:44.190 --> 01:49:47.608 because LPNL has shown that they've used short 01:49:47.664 --> 01:49:51.784 term debt and they've done so in a cost effective manner. No party 01:49:51.872 --> 01:49:55.216 has disputed this fact. So it is unclear how that is not a 01:49:55.248 --> 01:49:58.968 reasonable and cost effective use of short term debt. It is inherently 01:49:59.064 --> 01:50:03.040 in lieu of long term debt because LPNL specifically utilized 01:50:03.080 --> 01:50:06.580 short term debt at that time instead of long term financing. 01:50:06.960 --> 01:50:10.566 I would also say that staffs argument with regard to 01:50:10.728 --> 01:50:14.050 maybe limiting the short term debt to use during the test year or 01:50:14.130 --> 01:50:18.082 any other timeliness limitation. There's no such thing in the language of the 01:50:18.106 --> 01:50:20.790 RFP that's reading in something that is not there, 01:50:21.170 --> 01:50:24.258 and they have conceded that 01:50:24.274 --> 01:50:28.322 it was the cost effective use of short term debt. So we 01:50:28.346 --> 01:50:31.870 would ask the commission not to impose any test year 01:50:32.530 --> 01:50:36.056 time requirements when they do not exist in the RFP. 01:50:36.218 --> 01:50:39.572 That's not in line with the general financing that would 01:50:39.596 --> 01:50:43.156 be required. There's an overall financing strategy 01:50:43.188 --> 01:50:47.020 over the course of many years. It couldn't possibly be limited. So we ask that 01:50:47.140 --> 01:50:49.040 you grant the 1.5. Thank you. 01:50:52.340 --> 01:50:55.960 All right, that concludes oral arguments. Okay. 01:50:57.540 --> 01:51:01.316 And I would request that we defer decision to 01:51:01.348 --> 01:51:04.700 future open meeting. Y'all are good with that? 01:51:04.780 --> 01:51:07.680 Yes. All right, thank you all. 01:51:18.540 --> 01:51:22.052 So, Sheila, it is 1128 and 32 seconds. 01:51:22.076 --> 01:51:25.740 So I think that's all we're going to get through before we meet 01:51:25.780 --> 01:51:29.862 with the attorney general at 1130. So like 01:51:29.886 --> 01:51:32.742 I said at the outset, we have a time certain to meet with our outside 01:51:32.806 --> 01:51:36.014 attorneys at 1130, and then we'll take a lunch. 01:51:36.182 --> 01:51:40.590 So what we'll do is we'll convene our closed session, 01:51:40.750 --> 01:51:44.350 then come back out and start the open meeting back 01:51:44.390 --> 01:51:48.054 up, but not take. Not start back up on the contested case 01:51:48.102 --> 01:51:51.294 docket until 01:00 time certain. Does that work for everybody? 01:51:51.462 --> 01:51:54.696 Okay, then. Having convened a duly noticed 01:51:54.728 --> 01:51:59.384 open meeting, the commission will now, at 11:29 a.m. 01:51:59.512 --> 01:52:02.712 on July 11, 2024, hold a closed session pursuant 01:52:02.736 --> 01:52:05.520 to chapter 551 of Texas Government Code. 01:52:05.680 --> 01:52:10.208 It will consult with its attorney pursuant to section 551.071 01:52:10.224 --> 01:52:15.392 of the Code, deliberate personnel matters pursuant to section 551.074 01:52:15.416 --> 01:52:20.666 of the Code, and deliberate security matters pursuant to section 551.076 01:52:20.698 --> 01:52:31.954 of the Code. We'll be back at 01:00 okay, 01:52:32.002 --> 01:52:35.234 we will reconvene our open meeting at 01:05 01:52:35.322 --> 01:52:39.074 p.m. so just a bit of procedural 01:52:39.242 --> 01:52:42.866 stuff to cover. We have some folks 01:52:42.898 --> 01:52:45.170 that want to comment on item number number 16. 01:52:45.630 --> 01:52:49.302 So I'm going to take that out of order so we can hear from them 01:52:49.366 --> 01:52:53.302 and then deliberate that docket so they don't have to sit here 01:52:53.326 --> 01:52:57.110 the rest of the time. And then because we grant oral 01:52:57.150 --> 01:53:00.414 argument on the SP's case, and we are going 01:53:00.422 --> 01:53:04.102 to give them 15 minutes, I'm going to take that up at the end of 01:53:04.126 --> 01:53:07.766 the contested case dockets. End of the contested case dockets. Got it. 01:53:07.838 --> 01:53:11.352 Okay. All right. Sheila, will you call up 01:53:11.416 --> 01:53:14.448 item number 14, please? Item number 16, please. 01:53:14.544 --> 01:53:18.472 (item:16: Sheila lays out Docket 56354) Yes, sir. Item 16 is ducat number 56354. 01:53:18.536 --> 01:53:21.800 This is the application of undying, LLC for authority 01:53:21.840 --> 01:53:25.968 to change rates. Commission staff filed an appeal of order number three. The commission 01:53:26.024 --> 01:53:29.272 heard oral argument from the parties at the June 13 meeting, but did 01:53:29.296 --> 01:53:32.440 not take action on the appeal at that time. The appeal 01:53:32.480 --> 01:53:35.586 is before you now, and Chairman Gleason filed a memo in this document. 01:53:35.648 --> 01:53:38.686 And as you mentioned, we have two members from the public, 01:53:38.758 --> 01:53:41.650 or perhaps parties that signed up to speak on this item. 01:53:42.710 --> 01:53:46.238 Ed, I also believe is the mayor from League city here 01:53:46.254 --> 01:53:47.010 as well, 01:53:49.390 --> 01:53:52.374 and the mayor from the. Nice to have you, sir. All right, 01:53:52.422 --> 01:53:56.022 so since this is a bit untraditional, do you want. 01:53:56.126 --> 01:53:58.566 At what time limit do you want to set for public comments on this. 01:53:58.598 --> 01:54:02.472 Let's do two minutes. Two minutes. All right. And just so everybody 01:54:02.496 --> 01:54:05.872 knows, typically we don't take public comment on contested cases, but I know you 01:54:05.896 --> 01:54:09.620 all were told to show up today and so happy to hear from you. 01:54:09.960 --> 01:54:13.248 Yes, sir. Yes, sir. Would you like to start with the mayor? Yes, sir. 01:54:13.344 --> 01:54:25.780 All right, if you'll come up with. 01:54:33.290 --> 01:54:36.538 I'm Ken Panton and I'm the mayor of Beach City. 01:54:36.634 --> 01:54:39.790 And I do appreciate, 01:54:40.090 --> 01:54:43.610 mister chairman and commissioners, for allowing us to speak. 01:54:43.650 --> 01:54:47.170 It's just really nice of you to do that for 01:54:47.210 --> 01:54:51.190 us. As you're aware, 01:54:51.770 --> 01:54:55.228 Undyne used test year April 20 April 1, 01:54:55.284 --> 01:54:57.828 2022 to March 31, 01:54:57.884 --> 01:55:01.200 2023 for proposed rate increase. 01:55:02.300 --> 01:55:05.676 And Undyne stated this test period was 01:55:05.788 --> 01:55:09.828 to reduce time and expense required to prepare 01:55:09.884 --> 01:55:13.484 new rate code. In order to change rates, 01:55:13.612 --> 01:55:16.740 the commission requires that the application 01:55:16.900 --> 01:55:20.276 be based on a test year as the most recent 01:55:20.348 --> 01:55:24.712 twelve month period beginning 01:55:24.816 --> 01:55:28.776 on the first day of a calendar or fiscal year quarter 01:55:28.928 --> 01:55:32.368 for which operating data for a retail public utility 01:55:32.464 --> 01:55:36.400 are available. It is clear that the test year 01:55:36.520 --> 01:55:39.540 that Undyne used does not meet this requirement. 01:55:40.160 --> 01:55:43.968 And on April 29, as per the April 01:55:44.024 --> 01:55:48.002 29, 2024, as per the record, commission staff 01:55:48.186 --> 01:55:51.674 filed a recommendation that Undyne should cover the period 01:55:51.762 --> 01:55:55.482 from January 1 through December 31, 01:55:55.546 --> 01:55:58.842 2023, unless operating 01:55:58.906 --> 01:56:02.666 data is not available and that Undine 01:56:02.738 --> 01:56:06.346 has not sufficiently demonstrated that operating data 01:56:06.498 --> 01:56:11.098 for the period covering April 1 through December 31, 01:56:11.194 --> 01:56:13.510 2023, was unavailable. 01:56:16.400 --> 01:56:19.616 On behalf of the residents of Bay Ridge 01:56:19.648 --> 01:56:23.416 Oaks, Houston Point and Ocean park 01:56:23.528 --> 01:56:27.832 in Beach City, that Undyne, we ask 01:56:27.976 --> 01:56:31.896 that Undyne's application be denied. 01:56:32.088 --> 01:56:35.176 So I appreciate it, and thank you very much that 01:56:35.208 --> 01:56:38.152 you all let us speak today. Thank you, sir. Thank you for being here. 01:56:38.216 --> 01:56:39.870 Thank you, sir. Thank you. 01:56:42.250 --> 01:56:46.458 All right, there's one other person that signed up to speak, and I'm 01:56:46.474 --> 01:56:49.834 trying to butcher this name, but the first name is Anders. The last 01:56:49.882 --> 01:56:53.482 name may be Moomoolitus. Said it 01:56:53.506 --> 01:56:57.070 perfect. Welcome. How do you do? 01:56:58.090 --> 01:57:01.458 My name is Anders Dimitri Moomilitas. I am a resident 01:57:01.514 --> 01:57:05.348 down in Beach City and we've had a 01:57:05.514 --> 01:57:09.420 never ending list of troubles with this particular utility. 01:57:10.080 --> 01:57:13.456 And it wasn't just them. There was the utility before them as well. 01:57:13.568 --> 01:57:17.272 The last price increase that came was, I believe, in 2017 01:57:17.336 --> 01:57:20.620 or 2018 when it was still owned by 01:57:22.440 --> 01:57:26.280 Niro. I believe Niro utility. 01:57:26.400 --> 01:57:29.536 Now, the price increase came and we were 01:57:29.568 --> 01:57:33.390 expecting, you know, that to be put towards capital improvements. 01:57:33.690 --> 01:57:37.442 We've had a distressed water system for 01:57:37.546 --> 01:57:41.066 many decades now. It's been triaged 01:57:41.178 --> 01:57:44.402 with patch after patch after patch, but never a 01:57:44.426 --> 01:57:48.402 fix. And definitely never a change. And now 01:57:48.426 --> 01:57:52.306 they've come across and they're asking for another price increase to 01:57:52.338 --> 01:57:55.910 bring this up. And we were told very specifically and pointedly 01:57:56.600 --> 01:58:00.264 on that first price increase with Niro that if we came 01:58:00.312 --> 01:58:03.912 and appealed to the Public Utilities Commission, that they 01:58:03.936 --> 01:58:07.872 were going to jack our rates even higher and 01:58:07.896 --> 01:58:11.552 to not come here. So it was kind of an intimidation tactic. And now 01:58:11.576 --> 01:58:15.660 we've been told by undying directly that 01:58:15.960 --> 01:58:19.480 they are not. They're not bound to do 01:58:19.520 --> 01:58:22.780 these things. You know, this increase is coming one way or another. 01:58:23.260 --> 01:58:26.668 They're not very interested in bringing that up. And I 01:58:26.684 --> 01:58:30.180 have problems with this because in my job, you know, 01:58:30.260 --> 01:58:32.760 I do work in compliance and accounting. 01:58:33.420 --> 01:58:36.700 And seeing some of the numbers that have come through, 01:58:36.820 --> 01:58:40.740 we found three different sets of numbers 01:58:40.780 --> 01:58:44.940 about their test, their test year numbers. We noticed. 01:58:45.020 --> 01:58:48.430 We got our notice that came to us, 01:58:48.500 --> 01:58:51.150 which was drastically different, much higher. 01:58:51.530 --> 01:58:55.714 And then Undine had sent a representative out, Rick Melcher 01:58:55.882 --> 01:58:59.874 was senior vice president of 01:59:00.002 --> 01:59:03.762 PR, I believe, who came to our community and tried to 01:59:03.786 --> 01:59:06.482 tell our community that this is going to be a very small, 01:59:06.546 --> 01:59:10.306 effective rate increase, and it does not seem 01:59:10.338 --> 01:59:13.350 that way. So thank you. Thank you for being here, sir. 01:59:15.300 --> 01:59:18.860 Okay, so, as Sheila said, I filed a memo in this 01:59:18.900 --> 01:59:22.572 docket, you know, really focusing on the burden of proof 01:59:22.636 --> 01:59:26.260 that undine has. And so, 01:59:26.340 --> 01:59:29.860 you know, and not feeling like we can grant the good 01:59:29.900 --> 01:59:33.600 cause exception to the test year requirement. Do you have any thoughts on the memo? 01:59:34.340 --> 01:59:37.280 I'm in agreement with your recommendations. Your memo. 01:59:38.580 --> 01:59:40.760 I'm also in agreement with your recommendations, 01:59:43.140 --> 01:59:46.604 and I will entertain a motion to grant, in part, staff's appeal of order 01:59:46.652 --> 01:59:50.348 number three, consistent with my memo in this discussion. So moved. 01:59:50.484 --> 01:59:53.564 Aye. Second. Have a motion? A second. All those in favor say aye. 01:59:53.732 --> 01:59:57.240 Opposed. Motion prevails. Thank you both for being here today. 01:59:59.580 --> 02:00:03.140 All right, Sheila, let's start back over at the top. So I think that 02:00:03.220 --> 02:00:06.812 item one was consented. So that brings us to item number two. Will you lay 02:00:06.836 --> 02:00:11.036 that out for us? Yes, sir (item:2: Sheila lays out Docket 54662). Item two is docket number 54662. 02:00:11.148 --> 02:00:15.036 This is the petition of Highlander SM one LLC 02:00:15.228 --> 02:00:19.348 to amend crystal clear special utility districts CCN 02:00:19.404 --> 02:00:23.012 in Hays county by streamlined expedited release. Before you 02:00:23.036 --> 02:00:26.396 is a motion by the petitioner requesting to withdraw the application. 02:00:26.548 --> 02:00:30.092 No responses were filed to the motion, but the petitioner stated in their 02:00:30.116 --> 02:00:33.682 motion that they had conferred with crystal Clear said, and that crystal clear does 02:00:33.706 --> 02:00:37.642 not oppose the withdrawal. And Chairman Gleason filed a memo in this docket. 02:00:37.826 --> 02:00:41.546 So same thing in this memo. I recommended that the commission find good 02:00:41.578 --> 02:00:45.110 cause exception to allow the petitioner to withdraw its petition. 02:00:45.410 --> 02:00:49.110 Thoughts? Agreed? I agree as well. 02:00:51.090 --> 02:00:54.794 Then I will entertain a motion to find that good cause exists to grant 02:00:54.842 --> 02:00:58.324 the motion to withdraw and dismiss this petition without prejudice, 02:00:58.372 --> 02:01:01.068 consistent with my memo. So moved. 02:01:01.204 --> 02:01:04.200 Aye. Second motion a second. All those in favor say aye. 02:01:04.540 --> 02:01:07.440 Opposed. Motion prevails. Thank you. 02:01:11.340 --> 02:01:14.572 So item that takes us to 02:01:14.596 --> 02:01:18.040 item twelve. Item twelve is not going to be taken up, 02:01:18.820 --> 02:01:22.336 so that'll bring us to item 15. Sheila, 02:01:22.388 --> 02:01:24.100 you weigh out item 15, please? 02:01:25.680 --> 02:01:29.112 Yes, sir. And just may I add one thing? 02:01:29.176 --> 02:01:30.848 Can we go back to twelve for just a moment so I can give the 02:01:30.864 --> 02:01:34.400 commissioners an update? Commissioner advising filed a draft preliminary 02:01:34.480 --> 02:01:37.904 order in this docket. We would like some additional time just to review 02:01:37.952 --> 02:01:40.576 that and bring it back to you at a future of a meeting. I just 02:01:40.608 --> 02:01:43.048 want to put that out there in case there are any questions from the parties. 02:01:43.184 --> 02:01:46.584 Thank you for that clarification. And then we'll go back to 15, if that's all 02:01:46.592 --> 02:01:50.266 right with you. Absolutely. All right. 02:01:50.338 --> 02:01:54.514 (item:15:Sheila lays out Docket 56328) Docket number 15 is 56328. The ratepayers 02:01:54.562 --> 02:01:58.026 appeal of the decision by crossroads utility services 02:01:58.218 --> 02:02:01.770 and south puta water control and improvement district number one 02:02:01.810 --> 02:02:05.058 to change rates. Before you is a proposal for decision that 02:02:05.074 --> 02:02:08.666 recommends dismissal of this appeal. No corrections or exceptions were 02:02:08.698 --> 02:02:11.722 filed if filed, a memo recommending changes to the order. 02:02:11.826 --> 02:02:15.204 And Chairman Gleason also filed a memo. So, 02:02:15.292 --> 02:02:18.452 memo, basically to adopt the PFD consistent with commission 02:02:18.516 --> 02:02:21.300 council's memo. Thoughts? Approved. 02:02:21.420 --> 02:02:25.156 Agreed? Yeah, I'm agreed with that. Then I will entertain a motion to adopt the 02:02:25.188 --> 02:02:29.212 PFD consistent with my memo and commission council's memo. So moved. 02:02:29.316 --> 02:02:33.260 Second. Have a motion. A second. All those in favor say aye. Aye. Opposed? 02:02:33.420 --> 02:02:34.880 Motion prevails. 02:02:37.340 --> 02:02:40.822 Okay, so that'll take us to item 20. 02:02:40.926 --> 02:02:44.374 Sheila, will you lay out item 20, please? (item:20:Sheila lays out Docket 54812) Item 20 02:02:44.422 --> 02:02:47.918 is docket number 54812. The application of El 02:02:47.934 --> 02:02:52.286 Paso electric to update schedule number Covid-19 in 02:02:52.318 --> 02:02:55.758 compliance with docket number 52195. 02:02:55.894 --> 02:02:59.518 Before you is a SOA proposal for decision. The city of El Paso 02:02:59.574 --> 02:03:03.142 filed exceptions to the PFD. The SOA ALJ filed 02:03:03.166 --> 02:03:06.640 a letter stating that she does not recommend any changes to the PFD. 02:03:06.760 --> 02:03:10.296 and I filed a memo recommending changes to the order. Thank you, Sheila. 02:03:10.328 --> 02:03:13.568 So I initially will say I 02:03:13.584 --> 02:03:16.912 thought about consenting this, and then as I talked about it and thought about it 02:03:16.936 --> 02:03:20.216 more, I know another one of these is either going to be filed 02:03:20.288 --> 02:03:23.456 or has been filed. I was a little struck as odd 02:03:23.488 --> 02:03:26.464 that we were going to keep booking Covid-19 expenses. 02:03:26.552 --> 02:03:29.992 I thought that was a little strange. And so we worked through it in 02:03:30.016 --> 02:03:33.810 my briefing, and I know that there's. It's authorized in an order, 02:03:35.510 --> 02:03:38.990 but I really think we need to talk about how long and 02:03:39.030 --> 02:03:42.886 in the order that was signed. There's no end 02:03:42.918 --> 02:03:46.070 date for this, which I thought was odd as well. 02:03:46.230 --> 02:03:50.410 And so, you know, after the briefing, I think we're in a position that 02:03:50.710 --> 02:03:54.246 I'm going to say we should approve this, but I think we need to 02:03:54.318 --> 02:03:57.752 have commission, council, and staff look at how long we 02:03:57.776 --> 02:04:01.032 should be doing this, and if there's a way that we can 02:04:01.056 --> 02:04:04.688 go back into that project potentially and have an end date to this, 02:04:04.744 --> 02:04:09.104 because I don't know, going into 23, 02:04:09.192 --> 02:04:12.232 24, 25, what kind of COVID related expenses we're 02:04:12.256 --> 02:04:15.704 going to have. And so, like I 02:04:15.712 --> 02:04:19.048 said, I'm in favor of moving forward with this, but I think we 02:04:19.064 --> 02:04:22.706 need to maybe look at this expense going forward and 02:04:22.778 --> 02:04:26.530 how appropriate it is. I'm in agreement. 02:04:26.570 --> 02:04:29.962 I think that's prudent. I had the same thoughts as well as where's 02:04:29.986 --> 02:04:33.070 the end date? I'm good. 02:04:33.370 --> 02:04:36.466 So I don't know what the right path forward for this. I know, 02:04:36.498 --> 02:04:39.786 Sheila, we talked about posting project number 02:04:39.818 --> 02:04:43.338 50664 for a future open meeting once you 02:04:43.354 --> 02:04:46.618 all kind of look into what a path forward might be for us to address 02:04:46.674 --> 02:04:51.302 that order. The initial. Yes, sir. We will work on that and confer 02:04:51.326 --> 02:04:55.174 with you on bringing this back to the future. But meaning for project number 50664. 02:04:55.222 --> 02:04:59.070 Okay. Thank you. I might say that this is also another reason not to settle, 02:04:59.150 --> 02:05:02.678 not to have black box settlements. You're almost going to 02:05:02.694 --> 02:05:04.010 get me to agree with you. 02:05:05.590 --> 02:05:09.934 Okay. And just to clarify and taking 02:05:09.982 --> 02:05:13.670 action on the PFD at this point. Correct. So with that, 02:05:13.710 --> 02:05:17.344 I'd entertain a motion to adopt the PFD with the changes to the order 02:05:17.392 --> 02:05:21.448 recommended by commission council. So moved. A second. 02:05:21.544 --> 02:05:24.224 A motion. A second. All those in favor say aye. Aye. 02:05:24.312 --> 02:05:26.660 Opposed? Motion prevails. 02:05:28.080 --> 02:05:31.352 All right, we're going to skip over 21 02:05:31.376 --> 02:05:35.160 and save that for the end. So, Sheila, that'll bring us to item number 22. 02:05:35.200 --> 02:05:37.260 Will you lay out item number 22, please? 02:05:38.320 --> 02:05:42.502 (item:22: Sheila lays out Docket 55995) Item number 22 is second number 55995, 02:05:42.646 --> 02:05:45.998 the compliance filing for Centerpoint concerning rider, 02:05:46.094 --> 02:05:49.870 SRC and ADFEt refund of system restoration 02:05:49.950 --> 02:05:53.766 charges before you as a proposed order. No corrections or 02:05:53.798 --> 02:05:57.374 exceptions were filed. Chairman Gleason filed a memo in this docket. 02:05:57.542 --> 02:06:00.570 Follow another memo. Thoughts, comments on the memo? 02:06:01.150 --> 02:06:03.650 I'm in agreement with your recommendations in your memo. 02:06:04.630 --> 02:06:07.384 I am as well, supportive. 02:06:07.472 --> 02:06:10.760 Okay. I'll entertain a motion to modify 02:06:10.800 --> 02:06:14.300 the proposed order consistent with my memo. So move 02:06:14.760 --> 02:06:18.136 a motion a second. All those in favor say aye. Aye. Opposed? 02:06:18.248 --> 02:06:19.500 Motion prevails. 02:06:21.400 --> 02:06:24.584 All right, Sheila, I think that'll take us to item 02:06:24.672 --> 02:06:27.848 number 25. We lay 02:06:27.864 --> 02:06:31.320 out item number 25, please. (item:25:Sheila lays out Docket 56225) Item 25 is ducat 02:06:31.360 --> 02:06:35.014 number five. 6225, the application of El Paso to 02:06:35.062 --> 02:06:38.414 update its generation cost recovery rider 02:06:38.502 --> 02:06:42.382 related to Newman. Unit six before you, is it draft preliminary order. 02:06:42.446 --> 02:06:45.870 And chairman Gleason filed a memo in this docket as well. Filed a 02:06:46.370 --> 02:06:49.090 memo in this docket. Thoughts, comments on the memo? 02:06:50.430 --> 02:06:53.170 I'm in agreement with your findings on the briefing issues. 02:06:54.630 --> 02:06:58.798 I am as well. I think that you're filing 02:06:58.854 --> 02:07:03.160 each one of these memos consistent with the number of recusals 02:07:03.200 --> 02:07:06.936 that you have. And I think that's great. I'm trying to carry my weight. 02:07:07.088 --> 02:07:10.180 That's what I'm trying to do. That's what we do in my office. Totally supportive. 02:07:11.280 --> 02:07:15.176 Supportive of your memo. Thank you. I will entertain a motion 02:07:15.208 --> 02:07:18.168 to approve the preliminary order consistent with my memo. 02:07:18.304 --> 02:07:21.856 So move aye. Second. I have a motion in a second. All those in favor 02:07:21.888 --> 02:07:25.020 say aye. Aye. Opposed? Motion prevails. 02:07:25.440 --> 02:07:28.514 26 was consented, Sheila. That will bring us to item 02:07:28.562 --> 02:07:33.858 number 27. (item:27:Sheila lays out Docket 56693) Yes. Item 27 is docket number 56693. 02:07:33.994 --> 02:07:37.522 The application of Entergy Texas to amend its 02:07:37.586 --> 02:07:41.938 certificate of convenience and necessity to construct a portfolio of dispatchable 02:07:41.994 --> 02:07:45.790 generation resources. Before you is a draft preliminary order. 02:07:46.210 --> 02:07:49.970 So I was okay with the draft preliminary order and 02:07:50.010 --> 02:07:52.190 would approve it. Happy to hear any thoughts. 02:07:53.900 --> 02:07:56.900 I was okay with it as well. Yeah, I'm in agreement as well. 02:07:57.020 --> 02:08:00.692 Very much need the generation. I think we should 02:08:00.716 --> 02:08:04.492 approve it. It's incumbent upon the competitors in this market out 02:08:04.516 --> 02:08:07.676 there and everybody else to prove that the costs are warranted and the generation 02:08:07.708 --> 02:08:11.236 is needed. And I expect them to do it. Okay. All right, 02:08:11.268 --> 02:08:14.532 then I'd entertain a motion to approve the preliminary order consistent 02:08:14.556 --> 02:08:17.756 with our discussion. So moved. Second. I have a motion. A second. 02:08:17.788 --> 02:08:20.370 All those in favor say aye. Aye. Opposed? 02:08:20.910 --> 02:08:24.206 Motion prevails. Okay, so we are going to 02:08:24.238 --> 02:08:27.850 go back to item number 18, 02:08:28.390 --> 02:08:31.926 an item which I'm recused, and I will turn it over to Commissioner 02:08:31.958 --> 02:08:35.710 Kobos. All right, thank you. Sheila. Can you please lay out item 02:08:35.750 --> 02:08:40.582 number 18? (item:18:Sheila lays out Docket 52728) Item number 18 is docket 52728, 02:08:40.646 --> 02:08:43.878 the application of the city of college station to change 02:08:43.934 --> 02:08:47.592 rates for wholesale transmission service. The commission's order on 02:08:47.616 --> 02:08:50.456 rehearing in this docket was filed on May 23. 02:08:50.608 --> 02:08:54.576 The city of College Station filed a timely second motion 02:08:54.608 --> 02:08:58.060 for rehearing, and Commissioner Kobos filed a memo in this docket. 02:08:58.360 --> 02:09:01.960 Yes. So the memo essentially would grant the second 02:09:02.000 --> 02:09:05.940 motion for a hearing for limited purposes and making the clarifying changes in the memo. 02:09:07.520 --> 02:09:11.470 I think the clarifications are right on. I agree as well. 02:09:12.410 --> 02:09:16.402 All right. With that, I would entertain a motion to grant 02:09:16.426 --> 02:09:20.250 the second motion for rehearing to make the clarifications set 02:09:20.290 --> 02:09:23.698 forth in my memo and issue out an order on rehearing. Shall move 02:09:23.794 --> 02:09:26.162 aye. Second. All in favor say aye. 02:09:26.266 --> 02:09:29.178 Aye. Any opposed? All right, 02:09:29.274 --> 02:09:33.386 motion passes. All right then, 02:09:33.538 --> 02:09:37.066 next we will finish out by calling up item number 02:09:37.138 --> 02:09:39.870 21. Sheila, will you lay out item 21, please? 02:09:40.610 --> 02:09:43.994 (item:21:Sheila lays out Docket 55255) This is docket number five 5255. The application 02:09:44.082 --> 02:09:47.834 of Southwestern Public Service Company to amend its CCN 02:09:47.962 --> 02:09:51.138 to construct generation facilities in Lamb County, Texas and 02:09:51.154 --> 02:09:54.938 Lea County, New Mexico. Let's see before 02:09:54.994 --> 02:09:58.826 you is a SOA proposal for decision. All the parties filed exceptions. 02:09:58.938 --> 02:10:02.388 The SOA ALJ filed a response that recommended Anhejdehe recommended 02:10:02.444 --> 02:10:06.540 adding one ordering paragraph to the PFD. The commission voted to hear 02:10:06.580 --> 02:10:09.892 oral argument in this docket. Chairman Gleason filed a memo 02:10:09.916 --> 02:10:13.388 in the stocket. I'll leave 02:10:13.404 --> 02:10:16.788 it to you there. Thank you, Sheila. So follow the 02:10:16.804 --> 02:10:19.412 memo on this one. You know, we spent a lot of time, my briefing on 02:10:19.436 --> 02:10:22.844 this pretty complex issue. So my 02:10:23.012 --> 02:10:26.388 request would be that we hear oral argument today 02:10:26.484 --> 02:10:29.690 and then I make a decision on this at a future open meeting, 02:10:29.730 --> 02:10:33.218 if you are good with that. Yes. Sheila, 02:10:33.234 --> 02:10:36.082 will you call up everyone for oral argument, please? 02:10:36.226 --> 02:10:40.154 Yes. We have six parties that have signed up for oral argument 02:10:40.202 --> 02:10:44.550 as we did previously for the LP nautical. We'll have all the parties come up 02:10:44.890 --> 02:10:48.282 for the order. We will start with the party that bears the burden 02:10:48.306 --> 02:10:52.346 of proof. In this case, the applicant commission staff traditionally goes last 02:10:52.498 --> 02:10:56.690 hope for the parties know the order in between those. So let's see 02:10:57.830 --> 02:10:59.890 parties go ahead and come on up to the table. 02:11:23.480 --> 02:11:24.900 All right, we'll start with the company. 02:11:27.120 --> 02:11:30.432 (item:21:Andrea Stover, SPS, Docket 55255) Good morning. Andrea Stover, on behalf of SP's and with 02:11:30.456 --> 02:11:33.912 me today is Adrian Rodriguez, president of 02:11:33.936 --> 02:11:36.500 SP's and Brooke Trammell, vice president, 02:11:36.880 --> 02:11:39.940 regional vice president of regulatory and pricing. 02:11:43.200 --> 02:11:46.838 Mister chairman and commissioners, SP's appreciates the opportunity 02:11:46.894 --> 02:11:50.366 to speak to you today about the merits of its CCN application pending 02:11:50.398 --> 02:11:53.606 in docket 55255 and to answer 02:11:53.638 --> 02:11:57.150 any questions the commissioners may have. Like much of the rest of Texas 02:11:57.190 --> 02:12:00.926 in the country, SP's is facing significant load growth on its system 02:12:01.118 --> 02:12:04.366 and it must also meet the requirements of the Southwest power pool, 02:12:04.558 --> 02:12:08.006 including complying with the planning reserve margin instituted 02:12:08.118 --> 02:12:11.528 recently. SP's takes its obligation to 02:12:11.544 --> 02:12:14.820 serve its customers safely and reliably very seriously. 02:12:15.160 --> 02:12:18.664 And it keeps that obligation top of mind 02:12:18.712 --> 02:12:22.480 as it plans its future capacity needs in 2022. 02:12:22.560 --> 02:12:26.424 As impacts from the pandemic were receding, the extent of SPSS future 02:12:26.472 --> 02:12:30.536 load growth began to crystallize. Its load projections for 2026 02:12:30.608 --> 02:12:34.384 and 2027, coupled with SPP's increased planning reserve margin 02:12:34.432 --> 02:12:38.250 from 12% to 15%, spurred SP's into action, 02:12:38.330 --> 02:12:41.870 and it issued a request for proposal for generation capacity. 02:12:42.930 --> 02:12:46.402 Ultimately, SP's conducted an 02:12:46.426 --> 02:12:49.986 RFP overseen by an independent evaluator, which was open 02:12:50.018 --> 02:12:53.602 to all types of generation resources to evaluate 02:12:53.706 --> 02:12:57.530 the bids. SP's used quantitative and qualitative criteria and 02:12:57.570 --> 02:13:01.298 analyzed the potential solutions using a sophisticated power planning model 02:13:01.314 --> 02:13:04.714 called encompass. SP's selected 02:13:04.762 --> 02:13:07.910 the most reliable and economic options among the beds, 02:13:08.570 --> 02:13:12.586 and its recommended portfolio includes the life extension of two existing 02:13:12.618 --> 02:13:16.730 gas plans, the three self build solar projects, 02:13:16.890 --> 02:13:20.914 a single self build battery project, and two ppas, one with an existing 02:13:20.962 --> 02:13:24.418 generation, a gas natural gas generation, and one with a 02:13:24.474 --> 02:13:28.124 new battery project. Each of 02:13:28.132 --> 02:13:31.076 the resources in the recommended portfolio reflect different benefits, 02:13:31.188 --> 02:13:34.260 including dispatchability, zero fuel costs, 02:13:34.420 --> 02:13:38.280 and significant tax credits that will be passed directly back to customers. 02:13:40.980 --> 02:13:44.980 The SP's selected the recommended portfolio based on the available alternatives 02:13:45.060 --> 02:13:47.680 that were provided in response to the RFP. 02:13:48.060 --> 02:13:51.236 It did not compare the bids to other hypothetical resources 02:13:51.348 --> 02:13:54.982 that were not available to build. We appreciate the 02:13:55.006 --> 02:13:58.590 hard work of the administrative law judges, and we support the PFDs recommendation 02:13:58.630 --> 02:14:02.534 to approve the SP's billed solar projects and to grant SP's a good cause exception 02:14:02.622 --> 02:14:05.918 so that it may flow those tax credits back to customers as 02:14:05.934 --> 02:14:09.870 soon as possible. However, we disagree with the PFD's 02:14:09.990 --> 02:14:13.774 conclusions on three issues. First, we request that 02:14:13.782 --> 02:14:16.610 the commission approve the proposed self build battery project. 02:14:17.070 --> 02:14:21.292 This project provides critically needed dispatchable energy to 02:14:21.316 --> 02:14:24.840 serve SP's customers and to meet the SPP planning reserve margin. 02:14:25.380 --> 02:14:28.812 SPSS selection of the battery involved rigorous analysis of the resources bid 02:14:28.836 --> 02:14:32.480 into the RFP and was a reasonable choice among the available options. 02:14:33.380 --> 02:14:37.108 Second, we asked the commission to reject the imposition of performance guarantees for 02:14:37.124 --> 02:14:40.836 the solar projects, which are unprecedented, unnecessary, and not 02:14:40.868 --> 02:14:42.040 supported by the record. 02:14:43.950 --> 02:14:48.222 The guarantees are particularly problematic because there's no provision to address force majeure 02:14:48.286 --> 02:14:51.610 scenarios in which SP's has no control. 02:14:52.590 --> 02:14:56.134 The removal of these guarantees will not relieve SP's of its obligation to ensure 02:14:56.182 --> 02:14:59.790 the solar projects are operated prudently and available to the greatest extent 02:14:59.830 --> 02:15:03.206 possible. And finally, we request 02:15:03.238 --> 02:15:06.582 the commission reject the requirement that SP's flow tax credits to 02:15:06.606 --> 02:15:10.060 customers before it begins recovering its costs for these projects. 02:15:10.480 --> 02:15:14.200 SP's proposed to flow tax credits to customers through its fuel clause so that 02:15:14.240 --> 02:15:18.100 customers would realize those benefits as quickly as possible 02:15:18.840 --> 02:15:22.272 because SP's will likely have to transfer credits in order to realize their 02:15:22.296 --> 02:15:25.840 benefits. Because of its current tax position, it's doing so, 02:15:25.960 --> 02:15:29.608 and it's flowing those credits to customers before it 02:15:29.624 --> 02:15:32.060 will be able to realize it themselves. 02:15:33.320 --> 02:15:37.054 But the tax credits are benefits intended to offset the cost. The projects 02:15:37.102 --> 02:15:40.942 themselves and to credit customers before those costs are reflected in SP's rates 02:15:40.966 --> 02:15:44.930 would be inequitable. I'm going to reserve the balance of my time to close 02:15:45.270 --> 02:15:47.090 as the applicant. Thank you. 02:15:51.350 --> 02:15:53.530 All right, which party is going to go next? 02:15:58.470 --> 02:16:01.638 (item:21:Jule Davis, OPUC, Docket 55255) Good afternoon commissioners. Julie Davis, special counsel with the Office of 02:16:01.654 --> 02:16:05.048 Public Utility Council. I appreciate the opportunity to speak today on 02:16:05.064 --> 02:16:08.976 these issues. While we understand where the ALJ was coming from and agree with 02:16:09.008 --> 02:16:12.488 several of the findings, we disagree with the overall conclusion and urge the commission 02:16:12.544 --> 02:16:16.360 to reject the application in its entirety. As a preliminary matter, 02:16:16.400 --> 02:16:19.672 though, I do want to address the letter issued by President Adrian 02:16:19.736 --> 02:16:23.312 Rodriguez. This letter should not be included in the record for the case and should 02:16:23.336 --> 02:16:26.680 not be considered by the commission. One it is procedurally 02:16:26.720 --> 02:16:30.610 inappropriate. No puck joined the letter filed late last night in response. 02:16:30.950 --> 02:16:34.620 Mister Rodriguez is a licensed attorney in the state of Texas and has practiced 02:16:34.646 --> 02:16:38.126 before. This commission is fully aware of the procedural requirements 02:16:38.278 --> 02:16:41.486 when a party is allowed to give exceptions to the PFD. 02:16:41.558 --> 02:16:44.822 Reply to the exceptions to the PFD and we 02:16:44.846 --> 02:16:48.254 see that this letter is nothing more than adding arguments 02:16:48.382 --> 02:16:52.446 outside the bounds of the procedural schedule set. For that reason, we ask 02:16:52.477 --> 02:16:55.790 that this letter be clearly kept out of the official record and precludes from being 02:16:55.830 --> 02:16:59.790 offered as evidence or considered by the commission pursuant to section 02:16:59.830 --> 02:17:03.814 20010 60 of the Texas Government Code and under 16 02:17:03.902 --> 02:17:05.930 tact 22.226. 02:17:07.270 --> 02:17:10.852 Going to the substance of the case before us today, the RFP 02:17:10.902 --> 02:17:14.726 clearly favored renewable resources and was fundamentally flawed. 02:17:14.758 --> 02:17:17.806 As a result. While it was technically open to 02:17:17.838 --> 02:17:21.644 all resources, it was placed on Excel's webpage for renewable developers. 02:17:21.781 --> 02:17:25.263 Every page listed this as a renewable RFP. 02:17:25.432 --> 02:17:29.200 So while it was technically open to all resources, it was clearly 02:17:29.240 --> 02:17:31.896 indicative of a preference for renewable energy. 02:17:32.088 --> 02:17:35.816 Further, SP's did not propose any self build thermal projects for 02:17:35.848 --> 02:17:39.064 consideration, nor did it solicit bids from thermal developers 02:17:39.191 --> 02:17:42.480 to counteract influential statements favoring renewables from its 02:17:42.520 --> 02:17:45.820 leadership on its webpage and again in the RFP itself. 02:17:46.360 --> 02:17:49.824 So it's no surprise today that thermal resources are not before us 02:17:49.912 --> 02:17:53.459 and were not seriously considered by SP's in developing this renewable 02:17:54.480 --> 02:17:58.392 recommended portfolio. Conveniently, it also meant that it didnt 02:17:58.415 --> 02:18:01.912 compare the cost of potential thermal development to the relatively high prices 02:18:01.936 --> 02:18:04.218 of the resources in the CCN today. 02:18:05.600 --> 02:18:09.272 To my second point, SP's has not shown that the self build solar projects 02:18:09.296 --> 02:18:13.088 will improve service to customers. SPSS load forecast 02:18:13.224 --> 02:18:16.709 has load forecasts have changed throughout 02:18:16.750 --> 02:18:20.262 this proceeding. Initially, they showed a need starting in 02:18:20.286 --> 02:18:24.861 2024, increasing to 947 mw in 2027. 02:18:25.004 --> 02:18:28.406 That was later adjusted to start in 2026 up to 02:18:28.438 --> 02:18:32.126 606 mw. That was the number used in the RFP. 02:18:32.316 --> 02:18:37.486 Further adjusted showing a need starting in 2025 up to 948 02:18:37.518 --> 02:18:40.781 mw in 2027. So in pinning down the improvement 02:18:40.806 --> 02:18:44.100 to service, it's been hard to get a baseline for more than a couple months. 02:18:45.000 --> 02:18:48.352 To this point, though, OPEC does not believe there will be an improvement in 02:18:48.376 --> 02:18:52.232 service, particularly when the projected capacity need is at its highest. 02:18:52.415 --> 02:18:56.248 In looking at the data SP's provided, opux expert lined 02:18:56.263 --> 02:18:59.072 up the hours from both sets of data and looked at when the load was 02:18:59.096 --> 02:19:02.592 at least 95% the annual peak demand for 02:19:02.656 --> 02:19:06.008 76 hours. SPSs own data showed that the net generation of 02:19:06.022 --> 02:19:09.218 the solar facilities will be at or below zero megawatt 02:19:09.272 --> 02:19:12.962 output for 162 hours. Net generation will 02:19:12.986 --> 02:19:15.750 be at or below 25% of rated capacity. 02:19:17.010 --> 02:19:20.962 Opex expert also looked at the hours when SPSs firm load obligations 02:19:21.026 --> 02:19:25.049 were within 606 SPSs annual peak for 2027. 02:19:25.090 --> 02:19:29.066 And again, that's the number used in the RFP. We found that 02:19:29.098 --> 02:19:32.650 net generation of the solar facilities will be at 0 mw for 02:19:32.690 --> 02:19:36.770 552 hours and at or below 25% 02:19:36.808 --> 02:19:40.129 of rated capacity for 759 hours. 02:19:40.290 --> 02:19:44.290 So if you think about it, if you had a car that didn't start three 02:19:44.330 --> 02:19:47.129 times out of the ten you needed to, even if you had another vehicle, 02:19:47.170 --> 02:19:51.274 you'd probably reconsider that car. To my third point, 02:19:51.322 --> 02:19:55.210 SP's has not proven that the resources are economical and will lower consumer 02:19:55.250 --> 02:19:59.070 costs. SP's cannot definitively support its position because 02:19:59.730 --> 02:20:03.850 it again did not consider any thermal resources in this RFP. 02:20:04.150 --> 02:20:07.774 Even as a comparison, in looking at the cost per credit 02:20:07.822 --> 02:20:11.510 capacity, the solar facilities cost well above $2,000 per kilowatt 02:20:11.550 --> 02:20:15.334 each, and in one case reaching almost 3000 kilowatt, or $3,000 02:20:15.382 --> 02:20:18.846 per kilowatt. And as the ALJ agreed, the battery is 02:20:18.958 --> 02:20:23.130 very expensive at roughly $2,700 per kilowatt. 02:20:23.430 --> 02:20:26.930 Even accounting for the ITCs, the battery cost is at 02:20:28.070 --> 02:20:31.200 $1,900 per kilowatt of equipment credit capacity. 02:20:32.420 --> 02:20:36.148 Finally, SBS suggests that the avoidance of fines for having 02:20:36.204 --> 02:20:40.628 lower capacity than required is somehow a savings to consumers. 02:20:40.724 --> 02:20:43.836 And in the same way, I would save money today by not running a red 02:20:43.868 --> 02:20:47.612 light. Only if it was true that I budget for bad driving. There's a 02:20:47.636 --> 02:20:51.452 difference between a savings and avoiding a new cost. Because the 02:20:51.476 --> 02:20:54.940 RFP was flawed, SP's did not and could not prove the economics of the self 02:20:54.980 --> 02:20:58.622 build projects. And the data SP's provided shows 02:20:58.646 --> 02:21:01.862 that consumer would bear significant financial burden for resources that 02:21:01.886 --> 02:21:05.070 will disproportionately underperform. And for these reasons, 02:21:05.110 --> 02:21:08.518 OPEC respectfully requests that the commission reversed 02:21:08.534 --> 02:21:11.958 the findings of the ALJ as appropriate and denied the application in 02:21:11.974 --> 02:21:13.610 its entirety. Thank you. 02:21:16.750 --> 02:21:18.850 All right, which party will go next? 02:21:20.390 --> 02:21:24.762 (item:21:Ben Hallmark, TIEC, Docket 55255)Ben Hallmark for TIEC. Thank you for the opportunity to provide oral argument. 02:21:24.906 --> 02:21:28.186 This is a complex case, as the chairman noted, and we 02:21:28.218 --> 02:21:31.714 appreciate you giving it the time that it deserves. Now, you're going to hear a 02:21:31.722 --> 02:21:35.458 lot of arguments today back and forth about potential costs and potential benefits. 02:21:35.514 --> 02:21:38.442 And I think it can be at some level easy to get lost in the 02:21:38.466 --> 02:21:41.826 clutter in a big case like this. So I think it's important to 02:21:41.938 --> 02:21:45.466 start at the sort of bedrock place which is 02:21:45.498 --> 02:21:48.728 what the legislature has told us that a CCNA requires. 02:21:48.864 --> 02:21:52.960 The commission may only grant an amendment, a CCN amendment 02:21:53.080 --> 02:21:56.952 if the commission finds that the certificate is necessary for 02:21:56.976 --> 02:22:00.376 the service, accommodation, convenience or safety of the public. 02:22:00.568 --> 02:22:03.688 SP's has unequivocally failed to show that 02:22:03.704 --> 02:22:07.552 the battery is necessary and should be approved. It's a 02:22:07.576 --> 02:22:10.816 purchase of a 36 megawatt battery, 02:22:10.888 --> 02:22:14.128 but given where they're putting it, it will only be able to 02:22:14.144 --> 02:22:18.056 provide 24 accredited capacity. It would 02:22:18.088 --> 02:22:22.200 be about 2.5 times the cost of a CT 02:22:22.320 --> 02:22:26.536 per kilowatt of accredited capacity, even assuming the 02:22:26.568 --> 02:22:30.208 full investment tax credit. And it would only have half 02:22:30.264 --> 02:22:33.620 the useful life of a CT 20 years versus 40 years. 02:22:34.320 --> 02:22:37.936 Glaringly, SP's, despite stating that they would run 02:22:37.968 --> 02:22:42.130 the battery to provide energy arbitrage savings, has not provided 02:22:42.240 --> 02:22:45.710 any energy savings analysis in this case whatsoever. 02:22:45.870 --> 02:22:49.358 To be clear, this is not the case where you usually see, which is 02:22:49.454 --> 02:22:53.158 someone like me arguing with the utility that your energy savings analysis 02:22:53.214 --> 02:22:56.566 is flawed. This is a case where there is no energy savings 02:22:56.598 --> 02:23:00.182 analysis. SP's selection so there 02:23:00.206 --> 02:23:03.246 is simply in our view, no basis in the record to 02:23:03.278 --> 02:23:06.542 support certificating this battery as the ALJ is found 02:23:06.726 --> 02:23:10.192 now, SPSS selection of the solar project also suffers from 02:23:10.216 --> 02:23:13.376 flaws, including a failure to consider adding any 02:23:13.448 --> 02:23:16.860 new thermal resources to its system to meet the need. 02:23:17.280 --> 02:23:20.792 The result is three solar facilities that would provide accredited 02:23:20.856 --> 02:23:24.320 capacity at a cost that is roughly 4.5 02:23:24.400 --> 02:23:27.824 times spss estimate of the cost of a CT, 02:23:27.952 --> 02:23:30.552 again on a per kilowatt hour basis. 02:23:30.736 --> 02:23:34.374 This type of purchase places substantial risk 02:23:34.472 --> 02:23:37.914 on ratepayers but given its heavy rate based cost, 02:23:37.962 --> 02:23:41.962 it could also be a boon to shareholders. And of course the solar facilities are 02:23:41.986 --> 02:23:45.378 not dispatchable and will only provide capacity when the sun is 02:23:45.394 --> 02:23:48.882 shining. However, given the potential for the 02:23:48.906 --> 02:23:52.570 benefits of production tax credits and avoided energy costs from the solar 02:23:52.610 --> 02:23:56.674 plants, we come down differently than ERCOT. While we appreciate 02:23:56.722 --> 02:24:00.674 their concerns, we believe that with the proper rate making protections, 02:24:00.722 --> 02:24:04.650 ratepayer protections, the solar plants can be approved and meet 02:24:04.690 --> 02:24:06.030 CCN muster. 02:24:07.490 --> 02:24:10.826 You heard earlier a comment that it would be unprecedented 02:24:10.938 --> 02:24:13.910 to have a performance guarantee applied. 02:24:14.210 --> 02:24:17.906 But I'd like to point out also that it would be completely unprecedented 02:24:17.938 --> 02:24:21.538 for this commission to approve a capital intensive renewable 02:24:21.594 --> 02:24:25.194 project without ratepayer protections, including a cost cap 02:24:25.322 --> 02:24:29.202 and a minimum production guarantee. This commission has also in the past 02:24:29.346 --> 02:24:32.522 adopted a cost cap or capacity resource over the 02:24:32.546 --> 02:24:36.234 utilities objection. So we believe that our recommendations, 02:24:36.322 --> 02:24:40.450 which were partially adopted by the PFD, are well within the bounds of commission 02:24:40.530 --> 02:24:41.150 policy. 02:24:44.450 --> 02:24:49.098 Before I move on, there is one particular assertion 02:24:49.194 --> 02:24:52.832 in Mister Rodriguez's letter from yesterday that I'd like to address. He referenced a 02:24:52.856 --> 02:24:56.540 partial stipulation in SPSS parallel PPA case. 02:24:57.040 --> 02:25:00.544 I just wanted to clarify that it's partial because while the parties 02:25:00.592 --> 02:25:03.856 agreed to the extension of the natural gas PPA in that case, 02:25:03.968 --> 02:25:07.688 the parties did not agree to the battery PPA, in that case the 02:25:07.744 --> 02:25:12.104 interveners in that case, at least the retail ratepayer interveners 02:25:12.272 --> 02:25:15.940 all opposed that battery, just like all of the interveners. 02:25:16.600 --> 02:25:19.946 Retail rate payers in this case oppose the battery. In fact, 02:25:20.018 --> 02:25:23.058 it's worth taking a step back to reflect on the fact that you have a 02:25:23.074 --> 02:25:26.738 pretty broad cross section of interveners in this case. You have OPEC 02:25:26.874 --> 02:25:30.762 representing residential and small commercial, you have AXM representing 02:25:30.786 --> 02:25:34.378 the cities and the affected territory, and you have tiec. 02:25:34.554 --> 02:25:37.906 None of us want this battery approved and none of 02:25:37.938 --> 02:25:41.310 us are asking you to approve the solar facility without the conditions. 02:25:44.180 --> 02:25:47.652 So how did we get here? One of the most important issues in 02:25:47.676 --> 02:25:51.388 this case that was flagged in the preliminary order is how these proposed 02:25:51.444 --> 02:25:55.268 facilities compare to all viable alternatives when 02:25:55.284 --> 02:25:59.108 it comes to providing reliability on a cost effective basis. 02:25:59.204 --> 02:26:01.800 It's in the preliminary order of paragraph 22, 02:26:02.300 --> 02:26:05.860 but we don't know how the proposed facilities compare to adding 02:26:05.900 --> 02:26:09.862 new thermal capacity to spss system. That evidence is just 02:26:09.926 --> 02:26:14.238 not in this case. SP's didn't consider any new thermal options 02:26:14.374 --> 02:26:18.158 as part of the RFP process. We have discussed in detail 02:26:18.294 --> 02:26:22.374 how that came to be in our brief, but the bottom line is 02:26:22.422 --> 02:26:25.966 that SP's and their self bell team could 02:26:25.998 --> 02:26:29.358 have offered natural gas resources out of the RFP. They admit that, 02:26:29.414 --> 02:26:33.238 after all, they like to tout that this is an all source solicitation. So yes, 02:26:33.294 --> 02:26:37.436 they could have offered a natural gas options at their existing sites, 02:26:37.588 --> 02:26:41.120 but they didn't do that. They only offered solar and batteries. 02:26:41.500 --> 02:26:44.652 So what you have before you is an application requesting 02:26:44.676 --> 02:26:48.732 to spend $770 million in ratepayer money on additions 02:26:48.756 --> 02:26:53.068 that are for capacity, where the utility never modeled a single 02:26:53.164 --> 02:26:55.840 new thermal addition as an alternative. 02:26:56.420 --> 02:26:59.828 There is no economic analysis in this case showing that solar and 02:26:59.844 --> 02:27:03.500 battery resources are better fits than natural gas options. 02:27:03.660 --> 02:27:07.132 None. Instead, we just have conclusory arguments 02:27:07.196 --> 02:27:10.780 that it made sense to grab the solar and batteries because tax credits 02:27:10.820 --> 02:27:13.884 made them attractive. There's not an analysis that actually 02:27:13.932 --> 02:27:17.716 shows they're more economic. And we know that utilities continue 02:27:17.788 --> 02:27:21.204 to build natural gas resources like the CT. This commission recently 02:27:21.292 --> 02:27:25.164 certificated for El Paso Electric, but SP's didn't consider those 02:27:25.212 --> 02:27:28.838 options. We've also seen conclusory arguments that it may have 02:27:28.854 --> 02:27:32.086 been difficult to get air permits, but we have not seen an analysis 02:27:32.118 --> 02:27:35.238 showing that that couldn't happen. And again, utilities are building 02:27:35.334 --> 02:27:38.566 plants, and we know that the cited provisions of the Clean 02:27:38.598 --> 02:27:41.890 Air act do not even apply to cts in most cases. 02:27:42.470 --> 02:27:45.806 So we think that that's a problem and that feeds 02:27:45.838 --> 02:27:48.950 directly into the need for conditions on the solar plants 02:27:48.990 --> 02:27:53.388 under the facts of this case. So we end up with these three solar facilities 02:27:53.564 --> 02:27:57.052 selected as capacity resources. But they constitute a 02:27:57.076 --> 02:28:00.532 very expensive method of obtaining a relatively small amount of 02:28:00.556 --> 02:28:04.108 accredited capacity, if you view them as capacity resources. 02:28:04.164 --> 02:28:07.588 If we go down that frame that SP's wants us to go down, they are 02:28:07.604 --> 02:28:10.676 providing accredited capacity again, counting degradation 02:28:10.748 --> 02:28:14.124 at over four times the per kilowatt of a CT. 02:28:14.292 --> 02:28:17.308 So in isolation, you would never do that, right? No, 02:28:17.444 --> 02:28:21.442 but there is the potential for offsetting PTC and energy savings, 02:28:21.546 --> 02:28:25.130 which are not something you get out of a CT. However, the extent 02:28:25.170 --> 02:28:28.386 to which those benefits will accrue, I should say not to the 02:28:28.418 --> 02:28:31.986 extent with respect to energy savings. However, the extent to which 02:28:32.018 --> 02:28:35.194 those benefits will accrue cannot be reliably predicted in the future. 02:28:35.322 --> 02:28:38.914 It turns on how much output these plants are actually going to provide. 02:28:39.082 --> 02:28:42.762 It turns with respect to energy savings on what lnps they're 02:28:42.786 --> 02:28:46.740 going to avoid years and years and years into the future. So absent 02:28:46.780 --> 02:28:51.860 conditions, there is a risk that the plants won't perform is 02:28:51.980 --> 02:28:55.148 the risk that the plants don't perform is purely on 02:28:55.164 --> 02:28:58.892 the ratepayers. If the plants are approved and put in rate base, SBS will 02:28:58.916 --> 02:29:02.956 earn a hefty return on them estimated at over 833 million, 02:29:03.108 --> 02:29:06.412 regardless of performance. Now this 02:29:06.436 --> 02:29:09.716 is the risk that comes from choosing a capital intensive method of 02:29:09.748 --> 02:29:13.142 obtaining capacity. Given these asymmetric risks, 02:29:13.206 --> 02:29:17.518 and given that potentially cheaper options were not adequately considered, 02:29:17.654 --> 02:29:21.398 conditions are necessary here. The PFD recognized 02:29:21.454 --> 02:29:24.710 this in adopting a minimum production guarantee. However, 02:29:24.790 --> 02:29:28.270 it did not recommend a cost cap. We believe a cost 02:29:28.310 --> 02:29:31.758 cap is necessary for the same reasons that the PFD adopted the 02:29:31.774 --> 02:29:35.606 minimum production guarantee. Here, the projects pose an unreasonable risk 02:29:35.638 --> 02:29:38.728 to ratepayers of being an unreasonably expensive 02:29:38.824 --> 02:29:42.776 option to provide capacity, and the prospect of cost overruns 02:29:42.808 --> 02:29:46.800 just pushes that risk even higher. And for the same reasons, 02:29:46.920 --> 02:29:50.280 it's not adequate. As I imagine SP's will argue 02:29:50.400 --> 02:29:53.420 that you can have an after the fact prudence review. 02:29:53.960 --> 02:29:57.544 SP's is the one that chose this extremely expensive way of 02:29:57.592 --> 02:30:01.180 obtaining capacity, and its shareholders stand to gain from that choice. 02:30:01.560 --> 02:30:05.580 Therefore, it it should not matter, especially given the absence of consideration 02:30:05.620 --> 02:30:09.636 of alternatives, whether the reason if these plants are to underperform 02:30:09.708 --> 02:30:13.476 or have cost overruns was outside of SBS's control or 02:30:13.508 --> 02:30:17.468 not. Certainly it's not in ratepayer control, and our argument is 02:30:17.484 --> 02:30:21.800 that we should not bear 100% of the risk for this type of acquisition. 02:30:25.140 --> 02:30:29.278 As I noted, all of the previous renewable projects this commission is approved 02:30:29.414 --> 02:30:32.730 were agreed to under settlements with conditions. 02:30:33.150 --> 02:30:36.310 We would also note that the conditions that TIEC 02:30:36.350 --> 02:30:39.718 and AXM are proposing here would not shift all of the 02:30:39.734 --> 02:30:43.350 risk to shareholders. SP's would still be able to put the full estimated 02:30:43.430 --> 02:30:46.814 cost of the plants, including the contingency, into rate base, 02:30:46.942 --> 02:30:50.046 and it would only be on the hook for the minimum production guarantee. 02:30:50.158 --> 02:30:53.870 If it failed to reach an output level that it projects, it will meet in 02:30:53.910 --> 02:30:58.102 90% of the modeled cases. This is about balancing risk 02:30:58.166 --> 02:31:01.290 and trying to find a win win on a renewable project. 02:31:03.710 --> 02:31:07.510 With respect to the battery. However, we believe there are no conditions 02:31:07.590 --> 02:31:11.110 that can save that. The battery was added at the end of the process 02:31:11.230 --> 02:31:15.366 after SP's had already selected the solar facilities. SP's forced 02:31:15.398 --> 02:31:19.462 the battery into its model based on its theory at the time that it 02:31:19.486 --> 02:31:23.298 needed about 70 extra capacity or so, which I'll get 02:31:23.314 --> 02:31:27.042 to in a minute. When the battery was forced into the model, it was compared 02:31:27.106 --> 02:31:30.818 only to other batteries, no other types of resources. 02:31:30.994 --> 02:31:35.154 The battery cost almost 3.5 times as much as a CT per kilowatt 02:31:35.202 --> 02:31:38.762 hour of capacity without the ITC. And even if you treat the 02:31:38.786 --> 02:31:42.362 ITC as an offset to capital cost, as I mentioned, it's nearly 02:31:42.386 --> 02:31:45.762 2.5 times with the ITC and 02:31:45.786 --> 02:31:49.158 the battery only lasts 20 years. SP's has provided again 02:31:49.254 --> 02:31:52.422 no energy savings to justify the battery, even though it 02:31:52.446 --> 02:31:54.810 says it will operate it for energy arbitrage. 02:31:55.110 --> 02:31:58.462 SP's can't tell you what they think the battery would provide in terms of 02:31:58.486 --> 02:32:01.998 energy savings therefore. But what we do know is that whatever that number 02:32:02.054 --> 02:32:05.422 would be, SP's would seek to retain 10% of it under the 02:32:05.446 --> 02:32:08.810 off system sales margin sharing as an additional issue. 02:32:09.230 --> 02:32:12.462 Further, SPSS decision to add the battery was based on 02:32:12.486 --> 02:32:15.736 a load forecast that it no longer considers accurate. 02:32:15.888 --> 02:32:19.592 So as I mentioned, they evaluated the RFP 02:32:19.656 --> 02:32:22.672 using the spring 2023 forecast, and after they had 02:32:22.696 --> 02:32:26.136 selected the batteries, they decided that under that forecast they needed 02:32:26.168 --> 02:32:29.872 an additional 70 capacity or so. So this was 02:32:29.896 --> 02:32:33.440 the rationale to sort of reach out and pick these batteries as opposed to using 02:32:33.480 --> 02:32:36.568 the modeling process. They were right sized according to 02:32:36.584 --> 02:32:39.994 SP's at that time. However, then comes 02:32:40.042 --> 02:32:44.146 the summer 2023 forecast in which SP's now has a much greater 02:32:44.178 --> 02:32:47.682 need. So they are no longer right sized to meet that need. 02:32:47.786 --> 02:32:51.746 And SP's is now planning a ten RFP for 02:32:51.778 --> 02:32:56.590 this year of up to ten gigawatts. Which obviously raises substantial 02:32:57.130 --> 02:33:00.266 concerns that there may be additional costs coming down the pipe for 02:33:00.298 --> 02:33:04.040 ratepayers, making it more important that we get this right and nothing 02:33:04.070 --> 02:33:06.840 acquire extremely expensive small batteries. 02:33:07.300 --> 02:33:10.452 Now to take a step back, as you may have seen in our briefing, 02:33:10.516 --> 02:33:14.468 we don't believe that SP's has actually proven up their need 02:33:14.524 --> 02:33:18.172 conditions, their need contentions with respect to the 02:33:18.196 --> 02:33:21.500 battery. We think there's been a problem with a lack of transparency around 02:33:21.540 --> 02:33:24.804 those load forecasts. But as the PFD recognized, 02:33:24.892 --> 02:33:28.404 you don't really need to reach the details of that issue because 02:33:28.452 --> 02:33:32.086 there's simply no support work for the battery under any of these forecasts 02:33:32.118 --> 02:33:32.970 in the record. 02:33:36.110 --> 02:33:39.462 Again, just to make clear, in addition to 02:33:39.486 --> 02:33:43.014 these other issues with the battery, it is a 36 02:33:43.062 --> 02:33:46.542 megawatt battery that they're putting at a location where it can only provide 02:33:46.606 --> 02:33:50.190 24 capacity, assuming you also approve the solar. 02:33:50.230 --> 02:33:53.646 So that's an additional problem. So we would submit that under 02:33:53.678 --> 02:33:57.802 these facts, the only way that SPSs battery could be approved is 02:33:57.826 --> 02:34:01.338 if the CCN test was the utility has a need, it should be 02:34:01.354 --> 02:34:04.570 allowed to acquire any resource it wants, regardless of whether 02:34:04.610 --> 02:34:08.226 the size or economics makes sense and regardless 02:34:08.258 --> 02:34:11.474 of what alternatives were considered. But that is not the CCN 02:34:11.522 --> 02:34:15.270 standard. Indeed, as I mentioned, with the ten gigawatt 02:34:15.930 --> 02:34:19.234 RFP coming down the pike, it's especially important 02:34:19.322 --> 02:34:23.146 that ratepayers not be stuck with with unduly expensive resources in 02:34:23.178 --> 02:34:26.362 this case. If SP's believes that batteries are part of a 02:34:26.386 --> 02:34:30.274 solution going forward, we would urge them to bring those back 02:34:30.402 --> 02:34:34.074 as part of that next RFP process, support them with adequate 02:34:34.122 --> 02:34:37.530 analysis, and let the commission and the parties take a look at them at that 02:34:37.570 --> 02:34:40.618 time. But this battery does not pass muster under the 02:34:40.634 --> 02:34:44.058 CCN test and we ask that you deny it. Thank you 02:34:44.074 --> 02:34:44.830 very much. 02:34:48.060 --> 02:34:49.880 All right, which party is next? 02:34:52.780 --> 02:34:56.252 (item:21: Sergio Herrera, AXM, Docket 55255) Mister chairman. Commissioner Sergio Herrera for 02:34:56.276 --> 02:34:59.972 AXM AXM echoes the points and the 02:34:59.996 --> 02:35:03.196 concerns raised by Mister Hallmark and Miss Davis in regards to the letter 02:35:03.228 --> 02:35:06.676 filed with Mister Rodriguez yesterday, so I won't repeat those 02:35:06.708 --> 02:35:10.252 same arguments. My main focus today is to 02:35:10.276 --> 02:35:13.602 stress what the PMD largely got right and the 02:35:13.626 --> 02:35:18.066 one critical thing that it got wrong. First, the PFD correctly recommended 02:35:18.178 --> 02:35:21.698 that the proposed battery project should be denied. The battery project 02:35:21.754 --> 02:35:25.202 is simply too expensive for providing only 24 02:35:25.226 --> 02:35:28.810 accredited capacity. I would like to add that the cities 02:35:28.850 --> 02:35:32.642 that comprise AXM and SBS have 02:35:32.666 --> 02:35:36.306 a very good working relationship, something that we work towards and we're very proud 02:35:36.338 --> 02:35:39.828 of, so we don't take the recommended denial of this project 02:35:39.924 --> 02:35:43.572 lightly. However, the commission serves as a substitute for 02:35:43.596 --> 02:35:46.988 competition, and regardless of whether SP's is proposing the 02:35:47.004 --> 02:35:50.708 battery project to meet a capacity need or for an economic 02:35:50.804 --> 02:35:53.840 reason, costs must always be considered. 02:35:54.220 --> 02:35:58.460 For these reasons, Aggs emerges the commission to adopt the PFD's recommendation 02:35:58.540 --> 02:36:02.132 to deny spss proposed battery project in 02:36:02.156 --> 02:36:05.902 regards to the solar project outside of the PFD's failure to 02:36:05.926 --> 02:36:09.750 recommend a cost gap, the PFD correctly recommends what the record 02:36:09.790 --> 02:36:13.766 evidence in this case demonstrates, and that is that approval of the solar projects 02:36:13.838 --> 02:36:17.558 is reasonable if approval is conditioned upon certain 02:36:17.614 --> 02:36:20.870 customer safeguards. Specifically, the PFD correctly 02:36:20.910 --> 02:36:24.918 recommended that approval of the solar projects should be conditioned 02:36:25.094 --> 02:36:28.654 upon a minimum output guarantee to protect ratepayers 02:36:28.702 --> 02:36:32.736 against asymmetric risks presented in the event SBS's objections 02:36:32.888 --> 02:36:37.472 proved incorrect and the PFD correctly recommended that 02:36:37.536 --> 02:36:41.880 approval should be conditioned upon a production tax credit or PTC guarantee 02:36:42.000 --> 02:36:45.880 so that customers receive 100% of the ptcs earned by the solar 02:36:45.920 --> 02:36:49.432 project, and that there is no delay in crediting ptcs 02:36:49.456 --> 02:36:52.992 to customers. Any delay in crediting customers with the benefit 02:36:53.016 --> 02:36:56.336 of these ptcs would result in customer forgoing the 02:36:56.368 --> 02:36:59.936 benefit of these initial ptcs because the ptcs 02:36:59.968 --> 02:37:03.552 are only available for ten years. Moreover, the benefit 02:37:03.576 --> 02:37:07.064 of the ptcs is largely what makes the solar 02:37:07.112 --> 02:37:10.712 projects potentially more economic than alternative and 02:37:10.816 --> 02:37:14.568 dispatchable sources of generation that have significantly lower 02:37:14.624 --> 02:37:16.300 upfront capital costs. 02:37:18.120 --> 02:37:21.426 What the PFD got wrong is that it failed to recommend a cost 02:37:21.488 --> 02:37:24.886 gap as a third condition for approval for the solar 02:37:24.918 --> 02:37:28.918 projects. During the hearing, SBS admitted that a cost contingency 02:37:29.014 --> 02:37:33.390 is already built into its projected $702 million construction 02:37:33.430 --> 02:37:37.630 cost for the solar project. Therefore, AXM's recommended $720 02:37:37.670 --> 02:37:41.614 million cost cap for the solar projects would provide SBS with 02:37:41.662 --> 02:37:45.006 additional breathing room in the event that the company incurred additional 02:37:45.038 --> 02:37:48.356 cost pressures not covered by its contingency that's already 02:37:48.428 --> 02:37:52.252 built into its cost projection. Ultimately, 02:37:52.356 --> 02:37:55.972 ratepayers must be able to rely upon SBS's expertise in 02:37:55.996 --> 02:37:59.652 constructing any type of generation resource, and to do so on budget, 02:37:59.716 --> 02:38:03.652 but especially ones such as the solar project that has such high upfront capital 02:38:03.716 --> 02:38:07.156 costs. It's important to remember, 02:38:07.228 --> 02:38:10.948 and Mister Hallmark touched on this as well, that even if SBS misses the 02:38:10.964 --> 02:38:14.482 mark on its projections and the solar projects fail to provide the 02:38:14.506 --> 02:38:17.858 ptcs, the energy benefits and the fuel savings 02:38:17.874 --> 02:38:21.194 that the company projects they will provide, SBS will still earn 02:38:21.242 --> 02:38:25.074 a return of and on its investment. For this reason, 02:38:25.202 --> 02:38:28.610 a cost cap in conjunction with the PTC and 02:38:28.650 --> 02:38:32.750 output guarantee that is recommended to the PFD is crucial. 02:38:33.490 --> 02:38:37.018 At bottom, none of the conditions that AXM is urging the 02:38:37.034 --> 02:38:41.508 commission to adopt, not the outlet guarantee, not the PTC guarantee, 02:38:41.644 --> 02:38:45.396 and not the cost cap, hold SP's to a higher or some 02:38:45.508 --> 02:38:48.980 unfair standard. AXMS recommended conditions wouldn't 02:38:49.020 --> 02:38:52.140 require SP's to construct the solar projects at a lower 02:38:52.180 --> 02:38:56.052 cost than the company projected. They wouldn't require for the solar projects 02:38:56.076 --> 02:38:58.960 to produce more energy than SP's projected, 02:38:59.580 --> 02:39:03.460 nor would they require the solar projects to produce more ptcs 02:39:03.620 --> 02:39:07.010 than SBS projected. The conditions AXM has advocated for, 02:39:07.050 --> 02:39:11.130 and is advocating for, are simply there to safeguard against the fact that if 02:39:11.210 --> 02:39:14.362 SPSS projections miss the mark and prove wrong, 02:39:14.466 --> 02:39:17.882 rate payers will be stuck footing the bill for a very 02:39:17.946 --> 02:39:21.458 expensive and potentially underperforming non dispatchable generation 02:39:21.514 --> 02:39:24.770 resource. At the end of the day, the cities that comprise 02:39:24.810 --> 02:39:28.910 AXM rely upon the commission to hold the utilities accountable. 02:39:29.250 --> 02:39:32.908 These conditions for approval of the solar projects will help do just that, and in 02:39:32.924 --> 02:39:36.596 a fair manner. For these reasons, AXM urges the commission to 02:39:36.628 --> 02:39:40.164 adopt a $720 million cost cap as 02:39:40.212 --> 02:39:43.028 outlined in the direct testimony of Mister Scott Norwood. 02:39:43.164 --> 02:39:47.284 AXM also urges the commission to adopt the PFD's recommendation to deny 02:39:47.412 --> 02:39:50.684 the battery project and to adopt the PFD's recommendation 02:39:50.732 --> 02:39:55.100 to condition approval of the solar projects on an output and PTC guarantees. 02:39:55.220 --> 02:39:56.080 Thank you. 02:39:59.350 --> 02:40:03.250 All right, is the next party going to be golden spread? Yes. All right. 02:40:03.670 --> 02:40:07.102 (item:21:Todd Kimbrough, GSEC, Docket 55255) Good afternoon, Mister chairman. Commissioners Todd Kimbrough here 02:40:07.126 --> 02:40:10.958 today on behalf of Golden Spread electric cooperative golden 02:40:10.974 --> 02:40:14.878 spread's perspective on these proposed projects differs somewhat 02:40:14.934 --> 02:40:19.150 from TIC, AXM and OPEC simply 02:40:19.190 --> 02:40:22.878 because we are uniquely situated as a neighboring utility 02:40:23.054 --> 02:40:26.230 to SP's and come with that 02:40:26.270 --> 02:40:29.422 perspective in mind. And as a result, Golden Spread's 02:40:29.446 --> 02:40:34.010 focus has been particularly heavy on the operational impacts of the proposed projects. 02:40:34.750 --> 02:40:38.142 Golden spread does not address the questions of economics or the 02:40:38.166 --> 02:40:41.942 proposed projects or cahps, or any of the things that you've been hearing about 02:40:42.126 --> 02:40:42.930 prior. 02:40:45.430 --> 02:40:49.292 Probably somewhat obviously, as a member of SPPA, 02:40:49.426 --> 02:40:52.912 Golden Sprite is particularly interested in the issues of planning, reserve margins 02:40:52.936 --> 02:40:56.580 and some of the things that were outlined by Mister Rodriguez's letter yesterday, 02:40:56.880 --> 02:41:00.280 and we'll want to spend some time talking about that in the course 02:41:00.320 --> 02:41:03.696 of this afternoon. It's probably best to 02:41:03.728 --> 02:41:07.552 actually start by just walking through the unusual chronology of the 02:41:07.576 --> 02:41:11.280 selection of the proposed projects. The proposed projects use 02:41:11.320 --> 02:41:14.632 old sites at Planx in Cunningham, where 60 to 70 02:41:14.696 --> 02:41:18.900 year old plants experienced unplanned outages in the summer of 2022. 02:41:19.800 --> 02:41:23.856 In the docket, we learned that SP's had considered retiring these units 02:41:23.928 --> 02:41:27.232 several years prior, 20 17 20 18 20 19, 02:41:27.336 --> 02:41:31.752 something like that, but chose not to do so. We also learned that SP's 02:41:31.816 --> 02:41:35.768 engineering reports began identifying problems at those plants 02:41:35.904 --> 02:41:40.456 decade or more prior. SP's did not issue rfps 02:41:40.568 --> 02:41:43.656 or file a CCN application for new generation at those 02:41:43.688 --> 02:41:46.854 points in time in the past passed. It only came after 02:41:46.902 --> 02:41:49.650 the units failed in the summer of 2022, 02:41:51.110 --> 02:41:54.566 about four months after the unplanned outages of those old units. 02:41:54.678 --> 02:41:57.942 This would have been in November of 22, SP's issued 02:41:57.966 --> 02:42:01.542 the RFP for the replacement capacity and 02:42:01.566 --> 02:42:04.718 for previously unforecasted load growth. The proposed projects 02:42:04.734 --> 02:42:08.158 are the result of that RFP. About seven 02:42:08.214 --> 02:42:11.000 months later, summer of 2023, 02:42:11.190 --> 02:42:14.676 SP's had evaluated the RFPs and filed the 02:42:14.748 --> 02:42:18.404 application that is underlying this docket in 02:42:18.412 --> 02:42:22.180 the course of the hearing. In this docket, SP's actually testified, 02:42:22.260 --> 02:42:25.740 though, that a proper resource planning time 02:42:25.780 --> 02:42:29.036 horizon is something more in the line of five to ten years, 02:42:29.228 --> 02:42:33.588 not 18 months. This is especially noteworthy 02:42:33.644 --> 02:42:37.590 again when we think about the fact that those 02:42:37.670 --> 02:42:41.550 60 to 70 year old plants at plant X and Cunningham had 02:42:41.590 --> 02:42:45.886 known problems and SP's itself had begun considering retirement. 02:42:46.078 --> 02:42:47.690 About five years ago, 02:42:49.990 --> 02:42:53.670 about two months after filing the CCN, SP's began 02:42:53.750 --> 02:42:58.010 the SPP interconnection study processes for the proposed projects. 02:42:58.390 --> 02:43:01.894 So at the time of the application, the potential transmission interconnection 02:43:01.942 --> 02:43:05.562 costs for the projects were unknown and the application assumed 02:43:05.586 --> 02:43:06.710 them to be zero. 02:43:08.930 --> 02:43:12.546 Some, but not all, of the SPP interconnection studies have 02:43:12.578 --> 02:43:16.202 been completed by the time of the SOA hearing. There are in fact still a 02:43:16.226 --> 02:43:19.842 few SPP studies that remain incomplete, and the potential for 02:43:19.866 --> 02:43:23.346 interconnection costs remains. If upgrades and 02:43:23.378 --> 02:43:27.442 other interconnection costs are required, it is possible that some of those may actually get 02:43:27.466 --> 02:43:30.160 assigned to SP's neighbors, including golden sprout. 02:43:32.100 --> 02:43:36.132 I think it's fair to say the process of selecting the proposed projects 02:43:36.316 --> 02:43:39.356 and the related diligence likely would have been quite different 02:43:39.468 --> 02:43:42.716 had the five to ten year planning horizon been used instead 02:43:42.748 --> 02:43:46.028 of the roughly twelve month process that was actually used 02:43:46.084 --> 02:43:50.164 here. It's noteworthy in the PFD, the ALJ's note 02:43:50.212 --> 02:43:53.764 I'm quoting here, the ALJ's find that SP's provided little 02:43:53.812 --> 02:43:57.380 explanation for why it was only in 2022 that SP's 02:43:57.420 --> 02:44:00.760 discovered a need for capacity as early as 2024. 02:44:04.620 --> 02:44:08.420 Had a five to ten year planning horizon been used instead, 02:44:08.580 --> 02:44:12.324 there would have been a lot more options and a lot more information available in 02:44:12.332 --> 02:44:14.800 the course of the selection process here. 02:44:15.460 --> 02:44:18.860 SP's in the course of this docket testified that thermal projects 02:44:18.900 --> 02:44:22.644 and projects at other sites outside of the old plant X and Cunningham 02:44:22.732 --> 02:44:26.268 locations could not be used because the interconnection process would 02:44:26.284 --> 02:44:29.860 have taken too long, given the quick process and quick turn 02:44:29.940 --> 02:44:33.852 around for their need. Somewhat obviously, 02:44:33.876 --> 02:44:36.988 with a five to ten year planning horizon, there would have been time for these 02:44:37.044 --> 02:44:40.548 interconnection studies to have occurred, and that would have opened the door to potential 02:44:40.604 --> 02:44:44.640 thermal projects and potential projects from other third party entities. 02:44:47.070 --> 02:44:50.526 Going back to the SPP aspect of that, and going 02:44:50.558 --> 02:44:54.166 back to Mister Rodriguez's letter from yesterday, that's particularly 02:44:54.198 --> 02:44:57.358 noteworthy because different types of technology and different projects get 02:44:57.414 --> 02:45:00.970 different capacity credits for purposes of the planning reserve margin. 02:45:01.790 --> 02:45:05.134 As a rough shorthand, you should expect a higher capacity 02:45:05.222 --> 02:45:08.806 credit for a nuclear plant than you should for a solar, and so on, 02:45:08.838 --> 02:45:10.770 and it's going to vary technology to technology. 02:45:14.000 --> 02:45:17.896 A five to ten year planning horizon also would have given SPP 02:45:18.008 --> 02:45:21.760 enough time to give us comprehensive analyses of the interconnection 02:45:21.800 --> 02:45:25.304 costs. It would have given some surety to neighbors like golden spread 02:45:25.432 --> 02:45:28.504 that there wouldn't be potential interconnection costs shifted 02:45:28.552 --> 02:45:29.820 onto the neighbors. 02:45:33.480 --> 02:45:37.032 All of this has actually then led golden spread to recognize the 02:45:37.056 --> 02:45:40.600 need for certain conditions. If these projects are approved 02:45:42.140 --> 02:45:46.380 first, SP's should accept all risks and costs associated 02:45:46.460 --> 02:45:50.196 with the upgrades derived from the SPP interconnection 02:45:50.228 --> 02:45:54.400 facility studies for each of the proposed projects. 02:45:54.980 --> 02:45:58.948 SP's should also accept all costs associated with 02:45:59.004 --> 02:46:02.380 compliance with pending NERC and IEEE standards for 02:46:02.420 --> 02:46:07.004 new ibrs. Each of these projects are inverter based resources that 02:46:07.132 --> 02:46:10.612 are pursuant to FERC order 901. That's the new 02:46:10.636 --> 02:46:13.932 order related to voltage ride through and frequency ride through for 02:46:13.956 --> 02:46:17.564 these proposed projects, lest there be any sort of transmission 02:46:17.652 --> 02:46:21.400 solution that then again is shifted on to neighboring utilities. 02:46:22.020 --> 02:46:25.220 And then lastly, SP's should be required to submit 02:46:25.260 --> 02:46:28.908 periodic reports to the commission on the status of the interconnection of 02:46:28.924 --> 02:46:32.816 the generation facilities, the determination of costs for 02:46:32.968 --> 02:46:37.528 any potentially needed modifications related to the interconnection costs, 02:46:37.704 --> 02:46:41.592 and then also with compliance with SPP, NERC and IEEE 02:46:41.656 --> 02:46:44.940 standards for those proposed projects. 02:46:45.840 --> 02:46:49.584 Again, golden spread does not dispute the fact that 02:46:49.712 --> 02:46:54.300 SP's, and frankly, utilities all through the region are needing new capacity. 02:46:55.040 --> 02:46:58.128 That I think is a truism. The question is, how do 02:46:58.144 --> 02:47:01.996 you do it in a way that doesn't have an adverse effect on your neighbors? 02:47:02.148 --> 02:47:05.340 And with that, I'm more than happy to answer any questions. 02:47:05.380 --> 02:47:06.120 Thank you. 02:47:08.620 --> 02:47:12.500 All right, and the last party or 02:47:12.540 --> 02:47:15.080 argument before we go back to the company is commission Stan. 02:47:16.180 --> 02:47:20.068 (item:21:David Hrncir, Comission Staff, Docket 55255) Good afternoon, commissioners. Thank you for providing staff with the opportunity to lay out 02:47:20.084 --> 02:47:23.620 some of the major issues that we've had throughout this document. While staff 02:47:23.660 --> 02:47:27.006 does not take a position on whether the commission should approve SBS's 02:47:27.038 --> 02:47:31.214 application, staff recommends that the commission impose certain conditions on these projects 02:47:31.262 --> 02:47:35.166 if they are approved. There are five major issues I want to go through today. 02:47:35.318 --> 02:47:39.038 The first is the weatherization standard. The second is the cost cap. 02:47:39.134 --> 02:47:42.158 The third the prudence review. The fourth, 02:47:42.294 --> 02:47:46.150 the treatment of production tax credits, or ptcs. And the final 02:47:46.270 --> 02:47:49.766 issue is how this commission treats the other rate 02:47:49.798 --> 02:47:53.048 making issues requested by SP's for the 02:47:53.064 --> 02:47:56.740 weatherization standard. Staff respectfully disagrees with the PFD. 02:47:57.200 --> 02:48:01.096 SP's proposes designing facilities to adhere to NERC reliability 02:48:01.168 --> 02:48:05.420 standard EOP 0121. 02:48:05.960 --> 02:48:09.672 Staff recommends that the commission require SP's to incorporate 02:48:09.816 --> 02:48:13.056 the ERCOT weatherization standards as laid out in our testimony 02:48:13.088 --> 02:48:16.608 and briefing into the design of the plant X located in 02:48:16.624 --> 02:48:19.994 land county. Generally, it benefits the public 02:48:20.042 --> 02:48:23.210 interest to have the most resilient and weatherized grid 02:48:23.250 --> 02:48:26.930 in Texas as possible. This can be achieved through following 02:48:27.050 --> 02:48:30.938 these ERCOT weatherization standards, which are the established parameters 02:48:30.994 --> 02:48:34.770 for most of the state. ERCOT sets these 02:48:34.810 --> 02:48:38.698 guidelines because Texas is a region that has its own unique 02:48:38.754 --> 02:48:42.530 extreme weather patterns and although Plan X is not included 02:48:42.570 --> 02:48:46.592 in the ERCOT weather zone, it borders the zone directly and 02:48:46.616 --> 02:48:50.016 would be relying on weatherization standards that were established 02:48:50.128 --> 02:48:53.380 based off of the weather in the county right next door, 02:48:53.920 --> 02:48:58.112 rather than relying on solely federal government standards, as argued by 02:48:58.176 --> 02:49:01.504 SP's staff urges this commission to apply 02:49:01.552 --> 02:49:04.980 the ERCOT weatherization standards as they're developed in Texas. 02:49:05.920 --> 02:49:09.326 The second issue is on the cost captain. 02:49:09.348 --> 02:49:12.390 Staff respectfully disagrees with the PFD regarding the cost cap. 02:49:12.810 --> 02:49:16.338 Specifically, staff recommends that a cost cap of 100% 02:49:16.394 --> 02:49:19.830 of the total estimated costs of the four projects be applied. 02:49:20.490 --> 02:49:22.390 As identified by TIEC. 02:49:23.130 --> 02:49:27.282 Staff's recommendations for cost cap aligns with commission precedent established 02:49:27.346 --> 02:49:31.218 in previous capacity cases. Ultimately, staff's recommendation 02:49:31.274 --> 02:49:35.468 aims to establish a guardrail that would prevent SP's from overspending 02:49:35.634 --> 02:49:39.432 on a project at the expense of its customers, and imposing such 02:49:39.456 --> 02:49:43.220 a cap should be seen as a necessary precaution in this case. 02:49:44.040 --> 02:49:47.760 The third issue is the prudence review. Staff agrees with the PFD 02:49:47.880 --> 02:49:51.264 and appreciates spss lack of opposition to staff's recommendation 02:49:51.312 --> 02:49:54.480 that the commission select a third party consultant to conduct a prudence 02:49:54.520 --> 02:49:58.500 review. Fourth issue is the production tax credits. 02:49:58.840 --> 02:50:02.268 Here, commission staff agrees with PFDEM that flowing 02:50:02.324 --> 02:50:06.292 the grossed up ptcs to ratepayers as eligible fuel expenses 02:50:06.436 --> 02:50:09.684 as they are earned is the most efficient method 02:50:09.732 --> 02:50:13.540 to ensure that ratepayers receive the full benefits of any 02:50:13.580 --> 02:50:17.676 approved facilities in a timely fashion. This recommendation is consistent 02:50:17.708 --> 02:50:21.600 with what this commission has done with the hale and Sagamore wind projects. 02:50:22.020 --> 02:50:25.252 If the commission agrees with SP's and determines that customers should receive 02:50:25.316 --> 02:50:29.198 credits once cost recovery commences, then the 02:50:29.214 --> 02:50:32.726 commission should ensure that any or SP's should ensure that any credits 02:50:32.798 --> 02:50:37.222 earned prior to commencement of cost recovery are preserved in a regulatory liability 02:50:37.366 --> 02:50:40.686 for the benefit of the ratepayers and not kept by 02:50:40.718 --> 02:50:44.398 SP's for its own benefit. Staff further recommends that 02:50:44.414 --> 02:50:48.134 the commission should not impose a condition on approval that SP's must not 02:50:48.182 --> 02:50:52.038 place the facilities into service until the commission has issued a final order in 02:50:52.054 --> 02:50:56.072 a rate proceeding. The treatment of these ptcs staff 02:50:56.136 --> 02:51:00.208 also recommends that the commission should not pre approve recovery of 02:51:00.264 --> 02:51:04.136 any transaction costs associated with the transfer of unused ptcs 02:51:04.248 --> 02:51:08.184 in this proceeding. The rules for implementing the iras 02:51:08.272 --> 02:51:11.904 new transfer provisions are still under development, so doing 02:51:11.952 --> 02:51:15.840 so would be premature. Instead, this commission should preserve 02:51:15.880 --> 02:51:19.800 its right to review the reasonableness of any transfer costs actually 02:51:19.880 --> 02:51:23.408 occurred in a future proceeding. And finally, 02:51:23.504 --> 02:51:26.712 the rate making issues SP's asked this commission to 02:51:26.736 --> 02:51:30.288 address several rate making issues in its application and staff supports the 02:51:30.304 --> 02:51:33.528 commission's determination during the discussions of the preliminary order in 02:51:33.544 --> 02:51:37.112 this case that, with the exception of ensuring ratepayers receive the 02:51:37.136 --> 02:51:40.344 full benefit of the ptcs and renewable energy 02:51:40.392 --> 02:51:44.048 credits in a timely fashion, that this commission will not address rate making 02:51:44.104 --> 02:51:48.552 issues in this proceeding as requested by SP's staff reiterates 02:51:48.656 --> 02:51:52.848 that rate making issues should generally be left to rate proceedings where actual 02:51:52.904 --> 02:51:57.040 costs are known and not addressed. In CCN proceedings like 02:51:57.080 --> 02:52:00.672 this one, where costs are only estimated, that's the conclusion 02:52:00.696 --> 02:52:03.752 of staff's issues. Thank you for giving me the time. Could you please put your 02:52:03.776 --> 02:52:06.980 name on the record? Oh, David Berlin for commission staff. 02:52:08.800 --> 02:52:11.910 All right, we will go back to SP's for the remaining time. 02:52:13.250 --> 02:52:16.698 (item:21:Andrea Stover, SPS, Docket 55255, Closing Remarks) Thank you, chairman and commissioners, for this opportunity. First, I'd like 02:52:16.714 --> 02:52:20.146 to start with the discussion that a lot of the intermediaries 02:52:20.178 --> 02:52:24.018 were addressing related to the identification of the need 02:52:24.074 --> 02:52:27.498 and the timing by SP's. As I mentioned in 02:52:27.514 --> 02:52:31.338 my opening statement, SP's during the pandemic 02:52:31.434 --> 02:52:35.368 and shortly thereafter, like a lot of utilities, was seeing a drop in load 02:52:35.514 --> 02:52:39.228 and was, as it came out of the pandemic, 02:52:39.324 --> 02:52:43.044 its load projections started to change. And in 2022 02:52:43.172 --> 02:52:46.708 that change became acute and it coincided with 02:52:46.724 --> 02:52:50.156 the SPP's change to its planning reserve margin, which it up from twelve 02:52:50.188 --> 02:52:53.724 to 15%. SP's does resource planning 02:52:53.852 --> 02:52:57.340 on a long term basis, five to ten years out. 02:52:57.460 --> 02:53:01.382 The issue is its load projections were changing rapidly 02:53:01.516 --> 02:53:05.506 given the conditions in the country after the pandemic. So the idea that 02:53:05.538 --> 02:53:09.378 they could have anticipated what was happening not only with its load growth, 02:53:09.474 --> 02:53:13.226 but with what was happening at SBP in 2019 is 02:53:13.258 --> 02:53:16.898 not realistic as it relates to the RFP 02:53:16.954 --> 02:53:20.394 process and the concerns that were raised by TIC and OPEC, 02:53:20.442 --> 02:53:24.442 primarily during the proceeding. The idea 02:53:24.506 --> 02:53:28.076 that some of the statements that were made by the, 02:53:28.098 --> 02:53:31.576 the company, the parent company of SP's and 02:53:31.608 --> 02:53:35.576 other folks at the company were 02:53:35.608 --> 02:53:39.088 somehow influencing what happened during the RFP process 02:53:39.264 --> 02:53:42.776 was dealt with during the proceeding, and there was no 02:53:42.808 --> 02:53:45.992 evidence to support that at all. In fact, when you look 02:53:46.016 --> 02:53:49.344 at the response to the RFP process, which was open to all resources, 02:53:49.392 --> 02:53:53.016 as I previously described, SP's received bids for natural 02:53:53.048 --> 02:53:56.242 gas, hydrogen, as well as batteries, 02:53:56.386 --> 02:54:00.306 solar and wind. It received bids from all types of resources and 02:54:00.338 --> 02:54:04.442 ultimately selected a PPA with a thermal resource 02:54:04.586 --> 02:54:08.434 and extended the lives of two natural gas plants. So this recommended 02:54:08.482 --> 02:54:11.722 portfolio includes thermal resources and other 02:54:11.786 --> 02:54:14.830 new dispatchable technologies like the batteries as well. 02:54:15.850 --> 02:54:19.980 Some of the criticism from the from the interviters has to do with SP's 02:54:20.060 --> 02:54:23.360 not proposing a natural gas facility in this proceeding. 02:54:24.340 --> 02:54:26.892 This goes back to what we were discussing before, 02:54:27.076 --> 02:54:30.600 where, because this need arrived 02:54:31.180 --> 02:54:34.412 on a very quick timeline. In order to be sure that they 02:54:34.436 --> 02:54:38.524 had the capacity in place by 2026 and 2027, 02:54:38.692 --> 02:54:42.380 they had to look at resources that they could build and have interconnected 02:54:42.420 --> 02:54:44.600 in a timely manner to meet those needs, 02:54:45.750 --> 02:54:49.830 natural gas facilities can take longer because of permitting 02:54:49.870 --> 02:54:53.254 issues, construction issues. And in SPP, 02:54:53.422 --> 02:54:56.918 the interconnection process takes up to seven 02:54:57.014 --> 02:55:00.718 years. So if you were to build a new gas plant at a 02:55:00.734 --> 02:55:03.410 greenfield site on a new interconnection point, 02:55:04.750 --> 02:55:08.030 there was extreme concern about being able to get that capacity 02:55:08.110 --> 02:55:11.746 online and serving its customers and meeting the 02:55:11.898 --> 02:55:16.266 needs of the PRM in time for the 2026 and 2027 02:55:16.338 --> 02:55:16.950 years. 02:55:22.650 --> 02:55:26.082 You know, the other issue is that the criticisms about 02:55:26.106 --> 02:55:29.826 the RFP, the PFD actually found that the RFP process 02:55:29.898 --> 02:55:33.082 was fair and reasonable. It took issue with SPSs selection of 02:55:33.106 --> 02:55:36.276 the battery, but it did not take issue with RFP process 02:55:36.348 --> 02:55:40.292 overall. And in fact, no party pointed to any part of the 02:55:40.316 --> 02:55:44.244 process, save the selection of the battery, as being unfair 02:55:44.292 --> 02:55:47.652 and reasonable. Or it also, you know, this process included 02:55:47.676 --> 02:55:51.276 an independent evaluator who oversaw everything that the company 02:55:51.348 --> 02:55:55.244 did in reviewing bids and making the selections. 02:55:55.372 --> 02:55:59.340 And no party took any issue with the independent evaluators assessment, 02:55:59.420 --> 02:56:02.320 which was that the RFP process was fair and reasonable. 02:56:06.060 --> 02:56:09.748 You know, Golden Spread has mentioned interconnection 02:56:09.804 --> 02:56:13.204 issues and concerns about costs that will be applied to it. 02:56:13.252 --> 02:56:17.732 To golden spread, should there be some further analysis from SPP 02:56:17.796 --> 02:56:20.280 related to interconnection? 02:56:21.060 --> 02:56:24.484 We've filed the reports from SPP that were associated 02:56:24.572 --> 02:56:27.652 with the cost of interconnection. There are 02:56:27.676 --> 02:56:30.360 no costs that are going to be uplifted to other customers. 02:56:31.020 --> 02:56:34.252 And the PFD recognized that and did not agree with 02:56:34.356 --> 02:56:40.012 golden spreads proposals related to those issues as 02:56:40.036 --> 02:56:44.060 it relates to the selection of the battery. The party's criticism 02:56:44.100 --> 02:56:47.652 of SPSs selection of the self build battery assumes that there was 02:56:47.676 --> 02:56:51.148 only one way to select resources and that it must be spit 02:56:51.204 --> 02:56:54.988 out of the model that SP's used to evaluate the different resources 02:56:55.084 --> 02:56:58.892 that it got through the RFP process. But the model is a 02:56:58.916 --> 02:57:02.420 tool. It is a tool to evaluate the projects, 02:57:02.540 --> 02:57:05.772 to see how they fit within the larger portfolio of resources that 02:57:05.796 --> 02:57:09.080 SP's has, and to determine whether or not they were economic. 02:57:10.020 --> 02:57:13.440 For example, in reviewing the RFP results, 02:57:13.780 --> 02:57:17.348 SP's took the bid. I'm sorry. The bid evaluation team discovered 02:57:17.364 --> 02:57:21.734 that the model was required to select more costly and lower scoring projects 02:57:21.822 --> 02:57:25.174 to fill a small capacity need in 2026. This would 02:57:25.182 --> 02:57:27.758 have resulted if they had just let the model run that way. It would have 02:57:27.774 --> 02:57:30.970 resulted in much higher cost projects being proposed. 02:57:31.550 --> 02:57:34.838 So they looked at that. The team included, then decided to include 02:57:34.894 --> 02:57:38.478 an assumption for a Mattix two life extension and re 02:57:38.494 --> 02:57:42.686 optimize the model. This lowered total systems cost substantially, 02:57:42.758 --> 02:57:47.960 about $43 million in the present value revenue requirement cost. 02:57:48.340 --> 02:57:52.284 The team then re optimized the model to assume short term capacity purchases 02:57:52.372 --> 02:57:56.052 as a proxy for the life extension of Cunningham two. This further 02:57:56.116 --> 02:58:00.204 lowered the system costs for SP's. Those were actions 02:58:00.252 --> 02:58:03.972 that the SP's bid evaluation team took in managing the 02:58:03.996 --> 02:58:07.640 model. They did not just let the model make those decisions on its own. 02:58:08.420 --> 02:58:12.184 No party complained about the choice of the life extensions 02:58:12.272 --> 02:58:16.144 as part of the recommended portfolio. Those were very 02:58:16.192 --> 02:58:19.816 economic decisions to make. They're gas, they're thermal. 02:58:19.848 --> 02:58:23.728 Plants that the companies now allow will continue to run and provide 02:58:23.784 --> 02:58:25.380 good service to its customers. 02:58:27.200 --> 02:58:31.048 After it made those decisions to extend the lives of Cunningham two 02:58:31.104 --> 02:58:34.552 and Maddox two, SP's then directed the model to evaluate 02:58:34.576 --> 02:58:39.002 the battery resources after the model had selected a 02:58:39.026 --> 02:58:43.098 much larger solar and battery project that was located in the northern part of SP's 02:58:43.154 --> 02:58:46.618 service territory, so a good distance away from the load 02:58:46.714 --> 02:58:50.154 growth that it's seeing on its system and would likely 02:58:50.202 --> 02:58:53.666 be subject to congestion. It decided 02:58:53.738 --> 02:58:57.506 that so that project had low qualitative scores 02:58:57.538 --> 02:59:01.832 in terms of whether or not that project was going to serve SP's needs. 02:59:02.016 --> 02:59:05.416 The evaluation team identified the battery resources as an alternative 02:59:05.488 --> 02:59:08.696 because they were of a comparable cost. So the battery resources 02:59:08.808 --> 02:59:13.856 did not cost more than the other. The other project that the model 02:59:13.888 --> 02:59:17.672 would have selected and then used that 02:59:17.776 --> 02:59:21.312 and re optimized the model again and 02:59:21.336 --> 02:59:23.900 evaluated the battery project in that context. 02:59:25.320 --> 02:59:28.416 Although the parties argued that the only right way to select a resource 02:59:28.448 --> 02:59:31.568 was the for the model to choose the resource, no party argued that 02:59:31.584 --> 02:59:35.528 SP's should have proposed the larger solar and battery project if they 02:59:35.544 --> 02:59:39.304 were so convinced that the model needed to choose the projects that 02:59:39.352 --> 02:59:42.660 SP's brought forward, one would think that that's what they would have 02:59:43.000 --> 02:59:46.232 proposed. The fact that SP's made judgment calls 02:59:46.256 --> 02:59:49.824 about how and when to optimize the model so that the portfolio best meets SP's 02:59:49.872 --> 02:59:53.512 needs was evaluated and selected does not mean that the selection of the battery 02:59:53.536 --> 02:59:57.520 project was unreasonable. Instead, it indicates that SP's team was thorough 02:59:57.560 --> 03:00:01.152 and thoughtful about right sizing the project. Mister Hallmark 03:00:01.176 --> 03:00:05.216 brought up the right sizing issue and both OPEC 03:00:05.248 --> 03:00:09.192 and TiUC had mentioned the load forecast issue again. 03:00:09.296 --> 03:00:13.672 I think we're all familiar with the fact that load forecasts are increasing exponentially 03:00:13.776 --> 03:00:17.096 every time they are performed. Given electrification and 03:00:17.128 --> 03:00:20.282 other economic forces 03:00:20.346 --> 03:00:24.710 that are affecting the amount of load that utilities are seeing on the system, 03:00:25.290 --> 03:00:28.458 SP's wanted to be forthcoming about its load projections. 03:00:28.594 --> 03:00:32.722 So it obviously presented its load projections that 03:00:32.746 --> 03:00:36.322 it was relying on when it issued the RFP and made 03:00:36.346 --> 03:00:40.106 the selection of the resources it did, and during that time it 03:00:40.138 --> 03:00:43.506 chose the recommended portfolio because it met those 03:00:43.578 --> 03:00:47.280 needs without, you know, being oversized. 03:00:48.260 --> 03:00:51.572 We, during the proceeding, we were forthcoming about 03:00:51.636 --> 03:00:54.852 our updated load projections which indicated 03:00:54.916 --> 03:00:58.196 a greater need. The parties would have you believe that because we now 03:00:58.228 --> 03:01:02.452 have a greater need, that means that the load projections 03:01:02.516 --> 03:01:05.796 no longer justify the projects that we're coming forward to ask 03:01:05.828 --> 03:01:10.474 for approval of, which seems to be illogical. 03:01:10.652 --> 03:01:14.934 If our need continues to get greater, how is it that it's appropriate 03:01:14.982 --> 03:01:18.370 to reject these resources that will help us meet this growing need? 03:01:18.670 --> 03:01:22.590 The company has plans to come forward with another RFP as 03:01:22.630 --> 03:01:26.886 mentioned, and it intends to do 03:01:26.918 --> 03:01:30.318 everything it can and continue to 03:01:30.414 --> 03:01:33.662 make robust analyses to choose the right projects to 03:01:33.686 --> 03:01:37.792 bring before the commission. It would really appreciate guidance 03:01:37.936 --> 03:01:41.808 from all of you and the best way to do that. It believes 03:01:41.824 --> 03:01:45.220 that it had done so in this application and 03:01:45.880 --> 03:01:49.640 does not believe that what the parties have proposed, which is to compare 03:01:49.760 --> 03:01:53.432 the resources that were bid into this RFP to projects 03:01:53.456 --> 03:01:56.960 that were not available to it, there were no thermal, there were no 03:01:57.000 --> 03:02:00.568 large thermal resources that were proposed besides the ones 03:02:00.584 --> 03:02:04.170 that we selected. And there was not any indication 03:02:04.210 --> 03:02:07.922 that we would have been able to build any thermal resources in time to 03:02:07.946 --> 03:02:11.474 meet the need that we identified. I think I'm out of time, 03:02:11.522 --> 03:02:14.794 (item:21:Chairman Gleeson to Hallmark & Herrera, Cheaper Alternatives, Docket 55255) sso thanks to 03:02:14.842 --> 03:02:18.898 each of you for your comments. Before I open it up, just really 03:02:18.954 --> 03:02:22.130 quickly. So Mister Hallmark, 03:02:22.250 --> 03:02:26.586 Mister Herrera, just real quick, help me understand your 03:02:26.618 --> 03:02:30.422 position on the solar facilities. So if 03:02:30.446 --> 03:02:33.606 a cost cap was put in place in addition to what's 03:02:33.678 --> 03:02:37.478 in the, in the, what came in the PFD from the ALJ, 03:02:37.654 --> 03:02:40.250 you'd be okay with the solar facility, 03:02:40.750 --> 03:02:44.086 but you still say that there would be 03:02:44.158 --> 03:02:47.582 cheaper alternatives? A CT would still be cheaper, is that correct? 03:02:47.766 --> 03:02:51.438 Well, a CT could potentially be cheaper. 03:02:51.574 --> 03:02:54.416 We don't know because there's not an analysis in the case, but it could potentially 03:02:54.448 --> 03:02:59.120 be cheaper, at least on, I'm talking about the capital cost component 03:02:59.160 --> 03:03:02.872 of it, the sort of the installed cost versus solar. If you compare 03:03:02.936 --> 03:03:05.260 the amount of accredited capacity you're getting, 03:03:05.960 --> 03:03:10.152 but you know, like I've said, there is the potential for the ptcs 03:03:10.176 --> 03:03:13.020 and energy savings to sort of make up the difference. 03:03:13.800 --> 03:03:17.232 And we understand that and we understand that's why SP's proposed them. 03:03:17.376 --> 03:03:20.794 And our view is, is that if the protections 03:03:20.842 --> 03:03:24.722 are in place, that these would be acceptable resources, 03:03:24.786 --> 03:03:28.378 the solar facilities, to provide 03:03:28.434 --> 03:03:32.670 capacity, even though the CT may ultimately be cheaper? 03:03:33.370 --> 03:03:36.578 Under the facts of this case, we think so, yes. And we have 03:03:36.594 --> 03:03:39.510 a similar view. Our cost cap is a little bit different. 03:03:39.890 --> 03:03:43.610 But in general along the lines, if we can take advantage 03:03:43.650 --> 03:03:46.260 of the PTC and the fuel savings, 03:03:46.380 --> 03:03:50.364 and put those as ratepayer protections in the form of conditions along 03:03:50.412 --> 03:03:53.852 with a cost cap, then AXM would 03:03:53.876 --> 03:03:56.000 be comfortable with the approval of the solar project. 03:03:56.980 --> 03:04:01.028 Commissioners? Yes, Andrea, I have a couple of questions 03:04:01.124 --> 03:04:05.164 for SP's. So there's two 03:04:05.332 --> 03:04:08.468 reasons why you feel you have a capacity. One is the 03:04:08.524 --> 03:04:11.798 load growth that is changing since the pandemic and 03:04:11.814 --> 03:04:15.006 is increasing as time goes 03:04:15.038 --> 03:04:18.326 on. Is that load growth that you're talking about? 03:04:18.518 --> 03:04:22.222 Is it SP's Texas specific, or is 03:04:22.246 --> 03:04:25.342 it the whole system? For SP's, the load 03:04:25.366 --> 03:04:29.910 growth is occurring across the system. There is maybe 03:04:29.950 --> 03:04:33.870 more market increase on the New Mexico side, but it is, they are experiencing load 03:04:33.910 --> 03:04:37.580 growth across the system, and they're receiving large 03:04:38.000 --> 03:04:41.520 interconnection requests from customers, as well as just generalized 03:04:41.600 --> 03:04:46.032 increased load growth. So the 03:04:46.096 --> 03:04:49.976 SPP prms, at least the one that applies to this case, is the 03:04:50.048 --> 03:04:53.576 increase from where SPP took action to increase the summer 03:04:53.608 --> 03:04:56.664 PRM from 12% to 15%. That happened in October 03:04:56.712 --> 03:05:00.792 of 22. And so when 03:05:00.816 --> 03:05:04.570 the company looks to meet SPP's planning reserve margin requirements, 03:05:04.730 --> 03:05:07.882 does it look to meet those requirements on 03:05:07.906 --> 03:05:11.818 a system wide basis like SP's 03:05:11.874 --> 03:05:15.258 system wide basis, or on sort of a jurisdictional basis? 03:05:15.314 --> 03:05:18.642 Texas, New Mexico, the company looks to 03:05:18.666 --> 03:05:21.870 meet those requirements on a system wide basis. 03:05:22.530 --> 03:05:26.410 You know, it. I don't know if you're referring to the fact that there's been 03:05:26.450 --> 03:05:29.872 some discussion in the proceeding about the fact that we've got 03:05:29.976 --> 03:05:33.856 certain resources that were not approved in Texas but 03:05:33.888 --> 03:05:37.528 were approved in New Mexico. And it 03:05:37.544 --> 03:05:39.900 was the company's position in the proceeding that, 03:05:40.480 --> 03:05:44.312 you know, when it initially did the analysis of what its needs were, 03:05:44.456 --> 03:05:47.800 it looked, looked at it from a New Mexico 03:05:47.840 --> 03:05:51.536 basis, mainly to include those resources that had not been previously 03:05:51.568 --> 03:05:55.078 approved in Texas. But then it also looked at it from a 03:05:55.134 --> 03:05:57.366 Texas basis as well. 03:05:57.558 --> 03:06:02.326 And it's the company's position that it's not appropriate 03:06:02.478 --> 03:06:05.966 to attribute capacity from resources that are 03:06:05.998 --> 03:06:09.486 not being recovered from customers in the jurisdiction 03:06:09.638 --> 03:06:13.630 in Texas. But overall, when it 03:06:13.670 --> 03:06:17.750 has concerns or when it's interacting with SPP 03:06:17.910 --> 03:06:21.748 and there's a determination of the planning reserve margin, it's on a system 03:06:21.804 --> 03:06:22.720 wide basis. 03:06:24.380 --> 03:06:27.280 Okay. Thank you. Sure. 03:06:31.620 --> 03:06:35.588 Would it be possible for me to speak to the cost cap questions 03:06:35.604 --> 03:06:38.068 that you asked? Tic and axm? 03:06:38.204 --> 03:06:42.244 Sure appreciate it. I just want to note, 03:06:42.412 --> 03:06:45.698 you know, this commission has, the last time it 03:06:45.764 --> 03:06:48.930 instituted a cost cap, it did so in, 03:06:49.870 --> 03:06:53.230 I think it was a SWepco case. It was related to, it was a capacity 03:06:53.270 --> 03:06:57.250 case, but it was related to wholesale capacity. 03:06:57.670 --> 03:07:01.366 And most recently, in docket 42487, 03:07:01.438 --> 03:07:04.174 the commission decided that a cost cap was not appropriate. 03:07:04.342 --> 03:07:08.318 And in part because there was concerns about whether if 03:07:08.334 --> 03:07:12.146 the cost cap was set too low, that entergy might not 03:07:12.198 --> 03:07:16.154 proceed with the plant. And that plant was very sorely needed. 03:07:16.282 --> 03:07:19.562 This is a similar situation here. This capacity is sorely needed on the 03:07:19.586 --> 03:07:22.390 SP's system. And if there's a cost cap, 03:07:23.290 --> 03:07:26.354 it's not suggesting that that would necessarily be the case. 03:07:26.402 --> 03:07:30.170 But we wouldn't want to be in a situation where it might turn 03:07:30.210 --> 03:07:32.778 into something that the company wouldn't be able to pursue. 03:07:32.914 --> 03:07:36.986 Because cost increase. SP's is very concerned about the cost to customers. 03:07:37.178 --> 03:07:40.482 And in fact, in the case, its projections are 03:07:40.506 --> 03:07:43.730 that customers are not going to pay anything for the recommended 03:07:43.770 --> 03:07:46.802 portfolio, likely until 2036. 03:07:46.946 --> 03:07:50.418 And even then resident the impact to residential customers is going to be 03:07:50.434 --> 03:07:54.218 $1.78. So a lot 03:07:54.234 --> 03:07:57.870 of the cost discussion that was happening today was surrounding 03:07:58.610 --> 03:08:02.018 was quoting costs that don't account for the PTCs 03:08:02.194 --> 03:08:05.588 or the energy savings from the solar. 03:08:05.764 --> 03:08:08.480 From the solar project. So I just wanted to make that clear. 03:08:09.660 --> 03:08:13.080 Mister chairman, May. I'm sorry, I did have one question. 03:08:13.780 --> 03:08:18.980 The whole subject of weatherization came up and I guess there was a recommendation 03:08:19.020 --> 03:08:22.440 that we follow ERCOT standards. Would you be agreeable to that? 03:08:23.500 --> 03:08:26.732 You know, I think SP's opposed that during the proceeding. 03:08:26.796 --> 03:08:30.262 Mainly because it believes that the NARC requirements 03:08:30.326 --> 03:08:34.422 are sufficient. But I don't. You know, I don't know if either 03:08:34.566 --> 03:08:38.742 Mister Rodriguez or Mister want to speak to that on the ERCOT 03:08:38.766 --> 03:08:40.090 weatherization standards. 03:08:46.870 --> 03:08:50.358 May I ask something related to that too? Because in 03:08:50.414 --> 03:08:53.558 a prior docket, in Entergy's OCAP's docket, we applied 03:08:53.574 --> 03:08:57.102 the ERCOT weatherization standardization. And I'm noticing 03:08:57.246 --> 03:09:00.910 had been through my reading that three of the proposed plants are 03:09:01.070 --> 03:09:04.782 in two of the solar and one of them one of the batteries that do 03:09:04.806 --> 03:09:09.734 Betsy go. So I'm wondering how we can extrapolate ERCOT 03:09:09.862 --> 03:09:13.090 standards into New Mexico. Right. I think. 03:09:13.390 --> 03:09:16.998 May I provide a clarification on staff's position for 03:09:17.014 --> 03:09:20.358 the weatherization standards? So staff's 03:09:20.374 --> 03:09:23.518 position is just for plant x, which is the one located in 03:09:23.534 --> 03:09:26.878 Texas. So those weatherization standards we. But not for 03:09:26.894 --> 03:09:32.246 the ones in New Mexico. Thank you Mister 03:09:32.278 --> 03:09:35.310 Homer. I think I understand. I'm good with your position. 03:09:35.430 --> 03:09:38.918 It was kind of on a different. I was looking for something different 03:09:39.014 --> 03:09:42.286 when I asked you to what Miss Stover provides. So I think I'm 03:09:42.318 --> 03:09:45.526 good on this. Actually, I just wanted to clarify one thing on the SWEpcO case, 03:09:45.558 --> 03:09:48.728 if that's okay. I think it was misstated. I think we're okay. I think we're 03:09:48.744 --> 03:09:51.620 okay. Appreciate it. Any other questions? 03:09:52.720 --> 03:09:55.928 Okay. Thanks to each of you. So, yeah, 03:09:55.984 --> 03:09:58.780 like I said, a lot going on in this case, 03:09:59.520 --> 03:10:03.460 obviously. And so I think another meeting 03:10:04.520 --> 03:10:07.328 to kind of delve through all this would be helpful for me and, I think 03:10:07.344 --> 03:10:08.220 for everybody. 03:10:11.200 --> 03:10:14.896 All right, so that'll take us to the end of the contested 03:10:14.928 --> 03:10:18.820 case proceedings. That will move us to rules and projects. 03:10:19.160 --> 03:10:22.752 (item:28:Public Comment) Item number 28, Sheila. Is anyone signed up to 03:10:22.776 --> 03:10:26.088 give public comment? Yes, we have several people that have signed 03:10:26.104 --> 03:10:29.328 up for public comment. We'll see if everyone's still 03:10:29.344 --> 03:10:32.020 in the room. Let's start with. 03:10:32.880 --> 03:10:36.224 I don't know if that's the first name. Correct. It looks like Camille. 03:10:36.272 --> 03:10:37.020 Cool. 03:10:39.410 --> 03:10:42.510 Did I mispronounce it? Cook. Cook. I'm sorry? 03:10:44.050 --> 03:10:47.490 Cook. C o o k e? No. C o o k. Got it. 03:10:47.530 --> 03:10:48.190 All right. 03:10:51.250 --> 03:10:54.522 Yeah. Thank you. And just before you start, just clarify three minutes for each 03:10:54.546 --> 03:10:58.034 person, all right? Yeah. My name is Camille Cook. 03:10:58.082 --> 03:11:01.154 Thank you. Good afternoon, commissioners. My name is Camille 03:11:01.162 --> 03:11:04.452 Cook, and I work with public citizens Texas office. I'm here to speak 03:11:04.476 --> 03:11:08.220 about Hurricane Barrel and center point. What's been happening in Houston 03:11:08.260 --> 03:11:11.612 since Monday morning has been an absolute disaster, a disaster that could 03:11:11.636 --> 03:11:15.428 have been avoided. Centerpoint had days to prepare for barrel's approach, 03:11:15.564 --> 03:11:18.852 and even before that, months and years of evidence of 03:11:18.876 --> 03:11:22.332 weak resilience and had months and years of evidence of weak resiliency in their 03:11:22.356 --> 03:11:25.812 infrastructure. With each new storm, Texans are losing more 03:11:25.836 --> 03:11:28.964 and more confidence in center point. It seems like every year there is another 03:11:29.012 --> 03:11:32.366 storm that wreaks more havoc on the city than the last storm. I mean, 03:11:32.398 --> 03:11:35.662 at this point, it is becoming a monthly thing. People are still recovering from the 03:11:35.686 --> 03:11:39.030 thunderstorms that knocked out power in May. The third largest city in the country should 03:11:39.070 --> 03:11:42.438 not be plagued by resiliency issues like this. What may be 03:11:42.454 --> 03:11:45.942 the most reprehensible, though, is the lack of communication with the many Texans who rely 03:11:45.966 --> 03:11:49.606 on Centerpoint. I get it. It's difficult to fully weatherize every 03:11:49.638 --> 03:11:52.806 single wire and poll in Houston, but the kind of communication we've seen 03:11:52.838 --> 03:11:56.686 has been absolutely too low. 72 social media posts does not replace 03:11:56.718 --> 03:12:00.414 the lack of a working outage map. Why hadn't it been up on Monday? 03:12:00.502 --> 03:12:04.102 And why hadn't it been up before this storm? This lack of accountability to 03:12:04.126 --> 03:12:07.798 the people for something as pivotal to modern american life as electricity is 03:12:07.814 --> 03:12:10.782 a shame. And the weakest and most vulnerable in our society will pay for this 03:12:10.806 --> 03:12:14.926 lack of accountability with their lives. Y'all commissioners exist 03:12:14.958 --> 03:12:18.382 to protect the weakest and most vulnerable Texans from utility incompetence. 03:12:18.526 --> 03:12:21.630 Y'all have the power to ensure that reliability and resiliency standards 03:12:21.670 --> 03:12:25.146 are methadone upheld. Advanced and ready, y'all can 03:12:25.178 --> 03:12:28.362 ensure that homes in Texas are more energy efficient, that wires and poles 03:12:28.386 --> 03:12:31.922 in sugar land and Manchester are more resilient, and that 03:12:31.946 --> 03:12:35.426 centerpoint is communicating to Texans in a clear and responsible way. 03:12:35.618 --> 03:12:39.122 Chairman Gleason and all of y'all, I appreciate y'all's comments on the importance of 03:12:39.146 --> 03:12:43.162 communication. I want to end by asking one question. If Centerpoint 03:12:43.186 --> 03:12:46.266 is not beholden to the public, to the average texan seeking a better life, 03:12:46.338 --> 03:12:49.528 who is centerpoint beholden to? Thank you. Thank you 03:12:49.544 --> 03:12:53.520 for being here. You're welcome. The next 03:12:53.560 --> 03:12:57.180 person that signed up to speak is Dave Cortez. 03:12:58.760 --> 03:13:02.072 No, Hendeli. All right. The next person is, 03:13:02.096 --> 03:13:04.580 I believe, is it Michelle Christensen? 03:13:17.890 --> 03:13:21.990 Yes. Good afternoon, I'm Michelle Christensen. 03:13:24.250 --> 03:13:27.510 Thank you for allowing me the opportunity to speak before the commission today. 03:13:28.250 --> 03:13:31.674 As a concerned rate payer and member of the Windermere Oaks Water Supply 03:13:31.722 --> 03:13:35.730 Corporation, I feel compelled to bring to your attention the ongoing 03:13:35.770 --> 03:13:39.838 mismanagement of our small utility, which serves just 300 taps. 03:13:39.994 --> 03:13:44.210 Without immediate intervention, we face a very real prospect of bankruptcy. 03:13:44.830 --> 03:13:48.006 Currently, Windermere has four open cases with the PUC and 03:13:48.038 --> 03:13:51.558 has recently hired a new law firm, John Carlton, 03:13:51.734 --> 03:13:55.598 incurring significant legal expenses for unnecessary matters. 03:13:55.774 --> 03:14:00.086 Despite the final order of the rate appeal, setting the legal budget at $3,000, 03:14:00.238 --> 03:14:04.038 Windermere has already exceeded this amount by $48,000 03:14:04.094 --> 03:14:07.760 this year and is on track to spend a over $100,000. 03:14:08.100 --> 03:14:11.644 This mirrors the previous situation where rates were raised 03:14:11.772 --> 03:14:15.628 to cover excessive legal fees. While significant resources 03:14:15.684 --> 03:14:19.492 are spent on paying attorneys, crucial upgrades to the utility continue 03:14:19.556 --> 03:14:23.080 to be neglected. During a recent board meeting, 03:14:23.860 --> 03:14:27.012 the contract operators of the utility reported that although the 03:14:27.036 --> 03:14:30.492 water quality meets all requirements, the nearly 40 year old 03:14:30.516 --> 03:14:34.376 pipes are in dire need of maintenance. It stands to reason why 03:14:34.448 --> 03:14:38.780 over the past three years we have repeatedly faced line breaks and water shutoffs. 03:14:39.160 --> 03:14:42.416 In March, the IR's initiated an investigation into the 03:14:42.448 --> 03:14:45.260 practices of Windermere Oaks Water Supply Corporation, 03:14:45.720 --> 03:14:49.176 specifically scrutinizing their non member income and financial 03:14:49.288 --> 03:14:52.700 management. Subsequently, the president and another 03:14:53.040 --> 03:14:57.112 board member resigned, followed by the secaret treasurer and an additional 03:14:57.136 --> 03:15:00.390 board member, leaving only the vice president in place. 03:15:01.330 --> 03:15:04.642 The vice president, the last remaining member of the board who was 03:15:04.666 --> 03:15:08.698 a board member that signed an agreement between the PUC staff and the utility 03:15:08.754 --> 03:15:11.910 in PUC docket 56 167, 03:15:12.250 --> 03:15:16.002 which was about Windermere failing to operate as a nonprofit corporation 03:15:16.066 --> 03:15:21.470 in compliance with Texas Water code section 13.00,211 03:15:21.770 --> 03:15:25.756 and section 24 included in the final commission order 03:15:25.828 --> 03:15:29.612 that Windemere was required to sub file various reports by 03:15:29.636 --> 03:15:33.108 June 1. However, to date, none of these required 03:15:33.164 --> 03:15:36.484 reports have been filed with Windermere, opting instead 03:15:36.532 --> 03:15:39.160 to repeatedly request extensions. 03:15:40.300 --> 03:15:43.492 On June 26, 2024, the ALJ in 03:15:43.516 --> 03:15:47.532 this case denied Windermere's latest extension request, finding the 03:15:47.556 --> 03:15:50.758 corporation out of compliance. Despite this, 03:15:50.854 --> 03:15:54.094 the vice president, who had agreed to the terms, failed to ensure 03:15:54.142 --> 03:15:57.318 the reports were filed by the additional deadline of July 8, 03:15:57.374 --> 03:16:01.094 2024, thereby causing the water system to miss 03:16:01.142 --> 03:16:04.566 this deadline. So not only did we 03:16:04.598 --> 03:16:07.846 fail to meet the agreed deadlines, but the new deadlines set by the 03:16:07.878 --> 03:16:11.390 ALJ. Finally, in PUC 03:16:11.470 --> 03:16:15.216 docket 56272, the compliance docket, 03:16:15.278 --> 03:16:19.972 the rate appeal related to refunds and surcharges Windermere failed 03:16:19.996 --> 03:16:24.164 to file an accurate report as they incorrectly reported refunds 03:16:24.332 --> 03:16:27.924 to customers who were not entitled to them and not charging surcharges 03:16:27.972 --> 03:16:31.916 to customers who should pay for them. In closing 03:16:31.948 --> 03:16:34.680 at can I do go ahead? Yes, please. 03:16:35.300 --> 03:16:39.084 In closing, at the most recent board meeting, the vice president stated that 03:16:39.212 --> 03:16:42.494 they have only four months of income left to pay their bills. 03:16:42.662 --> 03:16:46.230 This situation is dire and underscores a severe mismanagement 03:16:46.270 --> 03:16:49.886 and lack of direction in this member owned and controlled water system, putting this 03:16:49.918 --> 03:16:53.878 future at serious risk. Putting its future at serious risk thank 03:16:53.894 --> 03:16:57.486 you for allowing me to speak today and for any assistance you can provide us, 03:16:57.558 --> 03:17:00.574 including appointing a temporary manager. Thank you. 03:17:00.622 --> 03:17:04.022 Thank you for being here. The next person that signed up is 03:17:04.086 --> 03:17:05.370 Jamette Rosas. 03:17:18.200 --> 03:17:21.320 Good afternoon. Thank you for allowing me the opportunity 03:17:21.360 --> 03:17:24.656 to speak with the commission today on the issues with the Windermere Oaks 03:17:24.688 --> 03:17:28.144 Water Supply Corporation pursuant to Texas 03:17:28.192 --> 03:17:31.592 Water Code section 13.4132 03:17:31.696 --> 03:17:35.564 A and 16 Texas Administrative Code section 03:17:35.612 --> 03:17:38.812 24.355 a, one that the 03:17:38.836 --> 03:17:42.660 commission is vested with the authority to appoint a willing person to 03:17:42.700 --> 03:17:46.428 temporarily manage and operate a utility in instances where 03:17:46.444 --> 03:17:49.640 the utility has effectively abandoned its operations. 03:17:50.180 --> 03:17:55.120 Under 16 Texas Administrative Code section 24.355, 03:17:55.820 --> 03:17:59.460 actions constituting abandonment, but are 03:17:59.500 --> 03:18:03.076 not limited to a utility's failure to 03:18:03.108 --> 03:18:06.884 adequately maintain its facilities, failure to provide 03:18:06.972 --> 03:18:10.480 sufficient facilities leading to potential health hazards, 03:18:10.940 --> 03:18:15.020 extended outages or repeated service interruptions and 03:18:15.060 --> 03:18:18.764 demonstrating a pattern of hostility towards or repeatedly 03:18:18.812 --> 03:18:22.364 failing to respond to directives from the commission or 03:18:22.412 --> 03:18:26.326 inquiries from the utility's customers. The Windermere 03:18:26.398 --> 03:18:30.286 Board of directors has fiduciary responsibilities to 03:18:30.318 --> 03:18:33.790 act in the best interest of its members who are also its 03:18:33.830 --> 03:18:37.302 customers. Their continued neglect and mismanagement are 03:18:37.326 --> 03:18:41.670 not only a breach of these responsibilities, but will inevitably burden 03:18:41.750 --> 03:18:45.670 the members with additional unnecessary expenses and 03:18:45.710 --> 03:18:49.902 potential fines while jeopardizing the utility's ability to 03:18:49.926 --> 03:18:54.032 provide continuous service. This situation cannot continue. 03:18:54.216 --> 03:18:58.320 We believe it's necessary that the commission initiate proceedings 03:18:58.440 --> 03:19:02.640 to appoint a temporary manager to protect the assets of the corporation 03:19:02.800 --> 03:19:06.664 and ensure the reliable provision of utility services before 03:19:06.712 --> 03:19:11.420 the situation deteriorates further and leads to a potential bankruptcy. 03:19:11.920 --> 03:19:15.060 Thank you for allowing me to speak today. Thank you for being here. 03:19:16.690 --> 03:19:19.682 Person that signed up is Danny. And is it plunker? 03:19:19.746 --> 03:19:20.910 Yes. Okay. 03:19:29.610 --> 03:19:33.650 If I mispronounced it, please state your name for the record. It's Danny Flunker. 03:19:33.690 --> 03:19:36.986 F l u n k e r. Good afternoon, 03:19:37.018 --> 03:19:40.890 commissioners. My name is Danny Flunker, and I'm here today as a concerned member of 03:19:40.930 --> 03:19:44.582 Windham Roaks Water Supply Corporation and here to address serious issues 03:19:44.686 --> 03:19:48.170 that have affected our community and to request your urgent intervention. 03:19:48.590 --> 03:19:52.502 As some of you all may know, that we just had the PUC rate 03:19:52.526 --> 03:19:56.678 case 50788, and the commission found that the 71% rate hike was 03:19:56.734 --> 03:20:00.054 unjust and unreasonable. Over the past several years, our community 03:20:00.142 --> 03:20:03.230 has endured a tumultuous period where board members 03:20:03.270 --> 03:20:06.290 have spent millions to defend and conceal their misdeeds. 03:20:07.070 --> 03:20:11.056 Today, the board continues to violate the Text Public Information act. 03:20:11.208 --> 03:20:14.984 One of the new directors even admitted to deleting texts claiming they were personal, 03:20:15.112 --> 03:20:19.144 when in fact, they were business related. I requested the financial information 03:20:19.272 --> 03:20:23.180 in December of 2023 to assess the co op's financial health. 03:20:23.560 --> 03:20:27.624 In response, the board spent over $4,000 merely reviewing this request. 03:20:27.712 --> 03:20:31.176 To date, I have not received the requested information, and the board has 03:20:31.208 --> 03:20:34.752 recently engaged the Texas attorney general to once again conceal other 03:20:34.816 --> 03:20:38.208 public information from us. I would be remiss if I 03:20:38.224 --> 03:20:41.632 did not mention that this has been an unsuccessful and very costly approach 03:20:41.696 --> 03:20:44.220 to our board over the last several years. 03:20:45.120 --> 03:20:48.540 In closing, regarding Docket 55454, 03:20:49.280 --> 03:20:52.696 Windemere entered into an agreement with the commission staff acknowledging 03:20:52.728 --> 03:20:57.112 its failure to comply with several statutory requirements and, 03:20:57.136 --> 03:21:00.688 as the others had mentioned, that they've missed their deadlines 03:21:00.704 --> 03:21:04.852 for submitting the class D annual Report 2023 annual report for 03:21:04.876 --> 03:21:08.132 both June 1 and July 8, and they have 03:21:08.156 --> 03:21:11.284 not had an audit. In fact, I don't believe Winter has ever had a financial 03:21:11.372 --> 03:21:12.080 audit. 03:21:14.780 --> 03:21:19.036 The lack of financial transparency is alarming and raises significant concerns 03:21:19.068 --> 03:21:20.800 about the management of our resources. 03:21:21.820 --> 03:21:25.460 The current board has also spent over $48,000 in legal fees, 03:21:25.540 --> 03:21:28.624 March, April and May alone. I have requested 03:21:28.712 --> 03:21:32.368 January and February and have not. They have 03:21:32.384 --> 03:21:35.192 not been made available, and I request in June, and that has not been made 03:21:35.216 --> 03:21:39.608 available to me either. So they 03:21:39.624 --> 03:21:43.512 are on track at the $48,000 to spend more 03:21:43.536 --> 03:21:46.340 than any previous board in this fiscal year. 03:21:47.680 --> 03:21:51.032 Therefore, we formally request the appointment of an emergency manager to 03:21:51.056 --> 03:21:54.484 oversee the operations of our water out. Thank you. 03:21:54.612 --> 03:21:58.012 Thank you, sir. And the 03:21:58.036 --> 03:21:59.800 next person is Bruce Sorgen. 03:22:08.340 --> 03:22:11.868 Hello, commissioners. My name is Bruce Sorjen. In 2016, 03:22:12.044 --> 03:22:16.052 the Windermere Oaks Water Supply Corporation sold four acres that it owned in the Spicewood 03:22:16.076 --> 03:22:19.622 airport. The board sold it to a sitting director, who was also a realtor for 03:22:19.646 --> 03:22:23.702 $203,000. It was never marketed. 03:22:23.846 --> 03:22:27.942 She produced an extremely undervalued appraisal for $185,000 03:22:28.046 --> 03:22:31.358 by an appraiser who later testified in court that he never laid eyes on the 03:22:31.374 --> 03:22:34.930 land. Nor did he mention the word appraisal. 03:22:36.390 --> 03:22:40.170 Nor did he mention the word airport in the appraisal. He appraised it as farmland. 03:22:40.670 --> 03:22:44.006 This entire transaction was never mentioned on any 03:22:44.038 --> 03:22:47.772 agenda. The board claimed it was simply a clerical error. The next board 03:22:47.916 --> 03:22:51.700 spent more than $2 million of our money fighting not to get the land 03:22:51.740 --> 03:22:54.560 back. I ask you, why would they not want this land back? 03:22:55.580 --> 03:22:59.404 The four acres has since sold for more than $1.1 million. The said 03:22:59.452 --> 03:23:02.892 director was found guilty in district court, breach of fiduciary duty and 03:23:02.916 --> 03:23:06.412 conspiracy to harm the water company. As you 03:23:06.436 --> 03:23:08.600 know, this said about a four year rate appeal. 03:23:09.700 --> 03:23:12.240 Meanwhile, many struggle just to pay their water bill. 03:23:13.060 --> 03:23:16.788 Our current board is headed down the same road. We have six acres 03:23:16.844 --> 03:23:20.020 left that appraised in a 2016 forensic 03:23:20.060 --> 03:23:23.680 appraisal for $760,000. Now, today, 03:23:24.980 --> 03:23:28.900 the board is suddenly in a mad rush to sell this six acres. No appraisal, 03:23:28.980 --> 03:23:32.220 no marketing. Why? Last month, a buyer 03:23:32.260 --> 03:23:36.538 showed up at a WWSC board meeting, handed the directors 03:23:36.684 --> 03:23:39.918 three offers and walked out. The first offer was for 03:23:39.934 --> 03:23:43.010 a million dollars, and if signed in the next 19 hours, 03:23:43.470 --> 03:23:47.686 it was valid. After that, it was void. The second offer for $800,000, 03:23:47.758 --> 03:23:52.142 was good for 30 days if signed, and the third offer for $600,000 03:23:52.246 --> 03:23:55.606 for the 60 days if signed. It was a setup. 03:23:55.718 --> 03:23:59.230 The board knew what the details of the offer offers 03:23:59.270 --> 03:24:02.462 were before evening, opening envelopes. Without even opening 03:24:02.486 --> 03:24:05.856 the envelopes, did the board sign an offer. 03:24:05.928 --> 03:24:09.740 Who knows? They're blowing through legal fees like a teenager with a credit card, 03:24:10.200 --> 03:24:14.380 even engaging the attorney general in an attempt to block releasing information. 03:24:15.200 --> 03:24:19.152 The $3,000 annual budget that you gave them lasted about five minutes. 03:24:19.296 --> 03:24:22.856 They've spent $48,000, as others have said, in legal 03:24:22.888 --> 03:24:25.580 fees for March, April and May alone. 03:24:27.520 --> 03:24:30.768 I have here an anonymous letter sent to me last week by 03:24:30.784 --> 03:24:34.024 the vice president of the water board, claiming that we, 03:24:34.072 --> 03:24:37.700 quote, dissenters, have cost this community $1 million. 03:24:38.320 --> 03:24:41.312 More than ten people have resigned from the board in recent months. 03:24:41.376 --> 03:24:44.944 Recently, it was down to one director, who ran it for two months 03:24:44.992 --> 03:24:48.760 alone by himself. This lone director has since hand 03:24:48.800 --> 03:24:52.100 picked the replacements, refusing to have an election. 03:24:52.760 --> 03:24:56.440 This community has proven time and time again that there are too many bad actors 03:24:56.480 --> 03:24:59.530 that can't be trusted to run this water supply corridor corporation. 03:24:59.950 --> 03:25:03.966 It's time for this commission to step up and stop this dysfunction. I am asking 03:25:03.998 --> 03:25:07.030 this commission to install a temporary manager. Thank you. 03:25:07.150 --> 03:25:08.130 Thank you, sir. 03:25:11.230 --> 03:25:14.250 And the last person that signed up to speak is Norma Cortez. 03:25:25.480 --> 03:25:28.632 That concludes the public comment section. Thank you, Sheila. I want to thank each 03:25:28.656 --> 03:25:32.024 of you that showed up today, waited through the morning, through lunch, 03:25:32.072 --> 03:25:34.180 and sat through this. Thank you for coming. 03:25:41.560 --> 03:25:44.920 All right, so 29 will not be taken 03:25:45.000 --> 03:25:50.026 up. I don't have anything on 30 or 03:25:50.058 --> 03:25:53.018 31, so that'll bring us to item 32, 03:25:53.074 --> 03:25:57.790 (item:32:Chairman Gleeson lays out Project 55999) project number 5599, reports of ERCOT. 03:25:58.930 --> 03:26:01.870 So I think, Davita, if you'd like to come up. 03:26:07.650 --> 03:26:10.778 Good afternoon. Good afternoon, chairman and 03:26:10.794 --> 03:26:13.070 commissioners, the vita de wire with ERCOT. 03:26:15.170 --> 03:26:18.572 One topic that we wanted to remind you all 03:26:18.596 --> 03:26:22.292 of, and provide a public update on was the cancellation 03:26:22.396 --> 03:26:26.228 of the summer contract for capacity. ERCOT issued 03:26:26.244 --> 03:26:29.720 a market notice on June 21 announcing the cancellation. 03:26:30.620 --> 03:26:34.396 As I'm sure you'll all recall, we had been seeking up to 500 03:26:34.428 --> 03:26:37.660 capacity demand response capacity to provide relief on 03:26:37.700 --> 03:26:41.364 certain transmission constraints. In response 03:26:41.412 --> 03:26:45.416 to the RFP that we issued, we received submissions 03:26:45.448 --> 03:26:48.648 totaling 21.5 mw. Based on the 03:26:48.664 --> 03:26:52.232 size of the response and the operational complexity and expense 03:26:52.256 --> 03:26:55.500 that would have been incurred, we decided to cancel the RFP. 03:26:56.400 --> 03:26:59.752 And I'm here available to answer any questions or take back any questions 03:26:59.776 --> 03:27:02.580 that I'm unable to answer, if you have any, 03:27:03.440 --> 03:27:06.432 commissioners. Debbie, 03:27:06.456 --> 03:27:10.252 does the expectation still that ERCOT 03:27:10.276 --> 03:27:14.380 will work with the stakeholders to come up with some kind of a framework using 03:27:14.420 --> 03:27:17.916 the lessons learned from the prior two demand response RFPs? 03:27:18.068 --> 03:27:21.520 Yes, ma'am. Absolutely. And I'll note that 03:27:21.820 --> 03:27:25.052 some of the lessons learned from the winter RFP, 03:27:25.156 --> 03:27:28.708 particularly with respect to process and making sure that 03:27:28.724 --> 03:27:32.124 you all were informed and involved from before the get go, 03:27:32.252 --> 03:27:35.718 were ones that we tried to incorporate in the summer. And we intend, 03:27:35.894 --> 03:27:39.038 when we have the resources to do so, to put those in the protocols so 03:27:39.054 --> 03:27:41.870 that everybody has a better understanding of the process going forward. 03:27:42.030 --> 03:27:45.046 And we will follow up with you all to make sure that if there are 03:27:45.078 --> 03:27:48.182 other lessons learned, that you want to make sure that we're incorporating, that we do 03:27:48.206 --> 03:27:51.606 so. Yeah, I think this process was much better 03:27:51.638 --> 03:27:53.370 this time around. Thank you. Thank you. 03:27:56.030 --> 03:27:59.286 All right. The other topic is earlier this week, 03:27:59.318 --> 03:28:02.928 and I apologize for the timing of the filing. We filed it as 03:28:02.944 --> 03:28:06.224 soon as we were able. We filed an update 03:28:06.272 --> 03:28:09.816 regarding the good cause exception that you all graciously 03:28:09.848 --> 03:28:13.432 granted us with respect to the timelines for issuing a request for 03:28:13.456 --> 03:28:17.600 proposal for must run alternatives to the CPS Bronag 03:28:17.680 --> 03:28:21.200 units one through three that CPS 03:28:21.280 --> 03:28:25.032 announced they were planning to retire at the end of March of next 03:28:25.096 --> 03:28:28.578 year. We filed a timeline consistent with the order that 03:28:28.594 --> 03:28:32.098 you all issued, and I am available to answer any questions or 03:28:32.194 --> 03:28:35.898 address any comments that you have, commissioners questions, 03:28:35.954 --> 03:28:37.150 comments on the timeline. 03:28:39.570 --> 03:28:42.190 Glad you're doing it. Thank you. 03:28:43.530 --> 03:28:47.602 Thank you, Divia. Thank you. We'll submit a market notice with this 03:28:47.626 --> 03:28:50.738 timeline as well as the filing that we've already made. Thank you. 03:28:50.794 --> 03:28:54.880 Thank you. So next, 03:28:55.380 --> 03:28:58.476 (item:33:Chairman Gleeson lays out Project 54445) so I know we don't have any protocols to adopt, but I'm going to call 03:28:58.508 --> 03:29:02.028 up project number 54,445, review of protocols adopted by 03:29:02.044 --> 03:29:06.040 the independent organization. Rebecca, you want to come up? 03:29:12.180 --> 03:29:15.956 So I know in response to the board 03:29:15.988 --> 03:29:19.566 adopting 1224 PotoMac, the IMM 03:29:19.638 --> 03:29:23.014 filed comments earlier this week. I don't want to 03:29:23.022 --> 03:29:26.254 get into a back and forth between ERCOT and Potomac, 03:29:26.302 --> 03:29:29.798 but I did want to offer up. If ERCOT feels 03:29:29.814 --> 03:29:34.078 it's appropriate and would like to respond to those filed comments, please do so. 03:29:34.254 --> 03:29:37.370 ERCOT can work on a response and follow before the next open meeting. 03:29:38.350 --> 03:29:40.050 Rebecca is there was for ERCOT. 03:29:42.590 --> 03:29:46.170 And I know typically we ask for things to be filed a week out. 03:29:47.270 --> 03:29:50.742 Show some grace on this. Try, I would 03:29:50.766 --> 03:29:54.182 say try to get it a week out, but if you can, it's understandable as 03:29:54.206 --> 03:29:57.358 well. Now that you 03:29:57.374 --> 03:30:00.822 brought this up, Chairman Gleason, I'm wondering because we're, I guess, on the 03:30:00.846 --> 03:30:04.454 way to consider this NPRR at the July 25 open 03:30:04.502 --> 03:30:08.410 meeting. I'm wondering if we should allow stakeholders 03:30:09.680 --> 03:30:12.808 respond to the IMM or provide any additional comments 03:30:12.864 --> 03:30:17.140 that we may want to consider over here before we take up the protocol. 03:30:17.880 --> 03:30:21.576 Yeah, I mean, my feeling, I'll just say my feeling, personally, I, you know, 03:30:21.608 --> 03:30:25.408 a lot of what was raised in that filing, I think is ERCOT specific. 03:30:25.584 --> 03:30:29.376 And so I think my preference. You know, we had the whole stakeholder 03:30:29.408 --> 03:30:33.056 process out at ERCOT. I think if everyone's okay with that, I think my preference 03:30:33.128 --> 03:30:35.540 would be to let ERCOT respond to the. 03:30:37.410 --> 03:30:40.590 And leave it at that. I'm with you. 03:30:41.370 --> 03:30:43.430 That's okay. That's fine. Okay. 03:30:44.770 --> 03:30:47.310 Okay. We will file comments in response. Thank you. 03:30:50.490 --> 03:30:54.594 (item:34: Chairman Gleeson lays out Project 54584) Next. Up is item 34, project 54,584 03:30:54.642 --> 03:30:58.114 reliability standard for the ERCOT market. The discussion on cost 03:30:58.162 --> 03:31:01.972 of new entry Chris 03:31:02.116 --> 03:31:05.360 good afternoon. You all follow the memo. 03:31:09.340 --> 03:31:12.600 Good afternoon commissioners. I'm Warner Roth with commission staff. 03:31:13.460 --> 03:31:16.604 At the request of the commission, during a previous open meeting, 03:31:16.732 --> 03:31:20.060 staff filed a memo providing our recommendation on the cone study 03:31:20.100 --> 03:31:23.836 results for this open meeting. In this assessment, 03:31:23.948 --> 03:31:27.838 Brattle used a reveal preference methodology to identify 03:31:27.934 --> 03:31:31.782 which generation resource technologies have been built recently in ERCOT and 03:31:31.806 --> 03:31:35.370 which resources are in the interconnection queue and will be built in the foreseeable future. 03:31:36.310 --> 03:31:39.710 From this, Brattle identified an aero derivative combustion 03:31:39.750 --> 03:31:43.134 turbine located in Harris county as the recommended reference 03:31:43.182 --> 03:31:46.046 technology. Through its analysis, 03:31:46.118 --> 03:31:49.486 Brattle calculated that the cone for this arrow derivative CT 03:31:49.638 --> 03:31:52.690 would be approximately $293 per kilowatt year. 03:31:53.400 --> 03:31:56.832 They provided a couple of alternative calculations, including cone values 03:31:56.856 --> 03:32:00.584 that have been used in PJM, an alternative reference technology with 03:32:00.632 --> 03:32:04.280 a solar plus battery hybrid, and the sensitivity around a conventional 03:32:04.320 --> 03:32:07.608 combustion turbine. The values for all these technologies are included in 03:32:07.624 --> 03:32:11.896 staffs memo adjusted the 2020 $6 given 03:32:11.928 --> 03:32:15.328 the current uses for this cone value, staff recommends that 03:32:15.344 --> 03:32:19.240 the reference technology not be changed from a conventional frame turbine at this time, 03:32:19.360 --> 03:32:23.368 and we recommend that you use the $162 per kilowatt year value 03:32:23.464 --> 03:32:26.848 for a conventional combustion turbine that Brattle used as a comparison point 03:32:26.904 --> 03:32:30.760 in its cone assessment. So there are currently two 03:32:30.800 --> 03:32:34.384 primary uses for cone in this context. First, it's tied to 03:32:34.432 --> 03:32:37.744 peakernet margin. If the reference technology is 03:32:37.792 --> 03:32:41.576 changed, we believe that this formula would need to be 03:32:41.688 --> 03:32:44.984 reviewed thoroughly. Currently, the Peakernet margin accumulates 03:32:45.032 --> 03:32:48.860 for any settlement interval where the real time energy price exceeds ten 03:32:48.900 --> 03:32:52.276 times the natural gas price index. Essentially, this aligns when 03:32:52.388 --> 03:32:56.180 a conventional CT would expect earned revenues 03:32:56.220 --> 03:32:59.040 in excess of the cost for that unit to operate. 03:32:59.940 --> 03:33:03.732 Copying this formula over to a different technology without a thorough review would not be 03:33:03.756 --> 03:33:07.444 appropriate. And as an easy to understand example, a solar 03:33:07.492 --> 03:33:11.348 storage hybrid would have different operating costs and would earn different revenues at 03:33:11.364 --> 03:33:14.998 different times of the year. So simply copying a 03:33:15.134 --> 03:33:19.326 solar storage hybrid into this speakernet margin calculation would not be appropriate. 03:33:19.518 --> 03:33:23.310 The differences between an error derivative ct and conventional frame CT are 03:33:23.350 --> 03:33:27.302 less extreme, but they still need to be fully understood. All else being equal, 03:33:27.406 --> 03:33:30.958 if both technologies are earning similar margins over their operating costs, 03:33:31.014 --> 03:33:33.210 the industry should be picking the cheaper technology. 03:33:34.790 --> 03:33:39.134 The reference technology will also play an important role in the market design discussions 03:33:39.262 --> 03:33:43.022 around the reliability standard and the performance credit mechanism. Picking a 03:33:43.046 --> 03:33:46.238 more expensive technology would impact the analysis of the PCM, 03:33:46.374 --> 03:33:50.406 as the outcome would need to provide for the necessary price signal to incentivize investment 03:33:50.478 --> 03:33:53.930 that builds the new reference technology to achieve the reliability standard. 03:33:54.390 --> 03:33:58.010 This should not be done without explicit commission direction. To do so, 03:33:58.830 --> 03:34:02.590 and to end the memo, staff provided several considerations for future 03:34:02.630 --> 03:34:06.256 iterations of the cone study. First, staff recommends 03:34:06.288 --> 03:34:09.792 that the study should include the determination of cone values for 03:34:09.816 --> 03:34:13.020 several technologies as recommended by ERCOT at the last open meeting, 03:34:13.560 --> 03:34:17.080 within the context of the broader market design review, this should also 03:34:17.120 --> 03:34:20.632 include an assessment on the expected revenues each technology would expect to 03:34:20.656 --> 03:34:24.088 earn in an energy only market. To better inform the commission on 03:34:24.184 --> 03:34:27.792 whether the current market design is providing necessary investment incentives and 03:34:27.816 --> 03:34:30.300 if not, what targeted adjustments would be needed. 03:34:31.080 --> 03:34:34.312 Next, we believe that geographic diversity absolutely needs 03:34:34.336 --> 03:34:38.120 to be considered in future cone studies, even if the current interconnection 03:34:38.160 --> 03:34:41.760 queue shows a high concentration of resources being built within a single 03:34:41.800 --> 03:34:45.856 area. This cone value is being used to assign 03:34:45.888 --> 03:34:49.888 a cone for the entire ERCOT footprint. And so having a cone established based off 03:34:49.904 --> 03:34:54.272 of a technology located within a specific zone may not show 03:34:54.296 --> 03:34:57.240 the true cost of new entry for the entire ERCOT footprint. 03:35:00.580 --> 03:35:04.212 And just as a couple of examples, miso calculates the 03:35:04.236 --> 03:35:07.500 cone each year for each of the local resource zones, so it has ten different 03:35:07.540 --> 03:35:11.052 cone values that it uses. And then, looking at Brattle's 03:35:11.076 --> 03:35:14.940 most recent cone assessment for PJM, they provided four cone values that capture 03:35:14.980 --> 03:35:18.172 differences in the constrained areas of the PJM footprint, so it is common 03:35:18.196 --> 03:35:21.794 to have multiple geographic areas when determining cone 03:35:21.852 --> 03:35:25.054 for different isos. Next, 03:35:25.182 --> 03:35:29.742 when the commission conducts its system wide offer cAp program review in 2026, 03:35:29.886 --> 03:35:33.542 staff recommends that the commission consider whether the low system wide offer cap 03:35:33.606 --> 03:35:37.054 is further needed. During the emergency 03:35:37.102 --> 03:35:41.038 pricing program rulemaking, some stakeholders provided comments that recommended the 03:35:41.054 --> 03:35:44.814 elimination of peaker net margin and the LCAP, as they felt these efforts 03:35:44.902 --> 03:35:48.948 will be duplicative of the consumer protection value that the emergency pricing program 03:35:49.004 --> 03:35:52.284 provides. And to be clear, staff is not recommending the elimination 03:35:52.332 --> 03:35:55.700 of the LCAP at this time. But given its ties to cone, we recommend 03:35:55.780 --> 03:35:59.484 that the ongoing need be considered during the review of the commission's system wide offer 03:35:59.532 --> 03:36:03.380 cap programs. And as a last note, ERCOT has requested guidance 03:36:03.420 --> 03:36:06.492 on the timeframe for updating cone. Staff recommends 03:36:06.516 --> 03:36:09.836 that, at a minimum, that a cone study should be conducted every five years 03:36:09.948 --> 03:36:13.012 to align with the review of the system wide offer cat programs and the broader 03:36:13.036 --> 03:36:16.614 market design, if approved in the current reliability standard rulemaking. 03:36:16.782 --> 03:36:20.770 And with that, I'm happy to take any questions. Thanks, Werner. Appreciate it. 03:36:21.270 --> 03:36:23.798 Just quickly. So, to the reference technology, 03:36:23.934 --> 03:36:26.570 Brattle's recommended technology, they're a derivative, 03:36:27.550 --> 03:36:31.038 so the thinking behind that is that's what's currently being built is what you 03:36:31.054 --> 03:36:34.606 said, correct? Yes, that's correct. That is the cost for a new 03:36:34.638 --> 03:36:38.278 era derivative to be built. Yes. To your knowledge, 03:36:38.334 --> 03:36:41.732 are new era derivatives actually being built in Texas. 03:36:41.916 --> 03:36:45.316 And while I can't speak to every single era derivative CT that's out there 03:36:45.348 --> 03:36:49.708 in the interconnection queue, my understanding that they are primarily refurbished technologies 03:36:49.764 --> 03:36:53.364 and Brattle was not able to ascertain 03:36:53.412 --> 03:36:57.156 the cost of that, as that is some competitively sensitive information for those 03:36:57.188 --> 03:37:00.972 that are building those. So that is not the technology that's 03:37:01.036 --> 03:37:04.820 being prevalently built? I would say no. Okay. I do think some 03:37:04.900 --> 03:37:08.888 were bid into the TEF application. So that 03:37:08.944 --> 03:37:12.496 goes to, you know, and I talked to a number of stakeholders about this as 03:37:12.528 --> 03:37:16.200 we talk about timing, of updating this. I think, I don't want to do this 03:37:16.240 --> 03:37:19.480 too often, but I think perhaps after we set 03:37:19.520 --> 03:37:23.700 the first one, maybe the next time we shorten that because we'll have TEF, 03:37:24.000 --> 03:37:29.088 but we'll also have the build of facilities 03:37:29.184 --> 03:37:32.358 that are not TEF, but are looking to get the completion bonus. 03:37:32.464 --> 03:37:36.546 So we'll have a wide breadth of information that will come not too 03:37:36.578 --> 03:37:39.602 soon after we have to adopt this. So I think the way I sit right 03:37:39.626 --> 03:37:43.074 now, and I'll be honest, and, you know, I'm not ready to make a decision 03:37:43.122 --> 03:37:45.674 on all this today. I still have. I want to talk to ERCOT some more 03:37:45.722 --> 03:37:49.670 and staff and some stakeholders. But I think, as I said today, 03:37:50.650 --> 03:37:53.498 you know, we are going to get a lot more information. So I think the 03:37:53.554 --> 03:37:57.042 first iteration of update may need to come sooner than we 03:37:57.066 --> 03:38:00.464 would, you know, on an ongoing basis. And I'm in agreement, 03:38:00.512 --> 03:38:04.820 based on my discussions with ERCOT and Brattle, their snapshot 03:38:05.720 --> 03:38:09.376 that they took for the preferred or the reveal preference 03:38:09.448 --> 03:38:12.976 technology only looks back three years. And what's in the interconnection queue 03:38:13.008 --> 03:38:16.144 right now, they have no visibility into the TEF. So I think that 03:38:16.192 --> 03:38:19.648 that's important to have a broader snapshot of 03:38:19.744 --> 03:38:23.300 what's actually being built more into the future. 03:38:25.170 --> 03:38:28.722 I think the other thing you're going to see is we have an aging fleet, 03:38:28.866 --> 03:38:32.590 right? And so a lot of your baseload generation would 03:38:32.890 --> 03:38:36.042 not necessarily be the peakers. It might be the 03:38:36.066 --> 03:38:39.630 alternative technology that staff is recommending. 03:38:41.490 --> 03:38:45.710 And also, I think there was some work that was done by Brattle on 03:38:46.890 --> 03:38:50.204 the alternative costs that kind of supports what staff 03:38:50.252 --> 03:38:51.720 is recommending on the. 03:38:54.700 --> 03:38:58.240 Not the roct, but the frame Ct. 03:38:59.220 --> 03:39:03.212 Werner, as far as in the analysis, the useful 03:39:03.276 --> 03:39:08.572 life of these facilities was pegged at. What was 03:39:08.596 --> 03:39:11.852 it 20 years. I believe it was 20 years, yes. And typically, 03:39:11.956 --> 03:39:15.036 we do this on 30 years. Is that correct? 03:39:15.068 --> 03:39:18.500 Correct. I know different parts of the country 03:39:18.540 --> 03:39:22.708 do it in different ways. The last assessment I saw was 25 years, 03:39:22.724 --> 03:39:25.996 but I would need to go back and confirm that. So what I got from 03:39:26.028 --> 03:39:29.972 ERCOT and Brattle was that they recognized that 03:39:30.116 --> 03:39:33.140 power generation plants, their life cycle is like 30, 03:39:33.180 --> 03:39:36.692 40 years plus, but they set the amortization period 03:39:36.756 --> 03:39:40.268 at 20 years because that's when the generators want to be able to recover their 03:39:40.324 --> 03:39:41.610 costs of the plant. 03:39:43.510 --> 03:39:46.782 So it's not necessarily the life of the plant, but when the generator want 03:39:46.806 --> 03:39:48.210 to recover their costs, 03:39:53.590 --> 03:39:57.182 I think you start to see. I think that's right. I think you have, 03:39:57.286 --> 03:40:00.638 once you get beyond 20 years, you have banks that increase 03:40:00.694 --> 03:40:04.542 financing costs. If you're going beyond 20 years for facilities, you also 03:40:04.606 --> 03:40:07.520 have outages that you increase beyond 20 years. 03:40:07.640 --> 03:40:10.888 But also remember that the plant that you put in in 03:40:10.904 --> 03:40:14.280 year one is not the same plant that you're running in year 20 because 03:40:14.320 --> 03:40:17.688 of maintenance that's happened over those 20 years. Sure, 03:40:17.744 --> 03:40:21.184 I think. But shortening it is just, I think, is more indicative 03:40:21.232 --> 03:40:24.808 of changing that variable is going to 03:40:24.824 --> 03:40:28.456 have an impact on the analysis if we've done different timelines in the past. 03:40:28.528 --> 03:40:32.410 So comparing those to previous assessments, you're not necessarily 03:40:32.450 --> 03:40:36.098 comparing apples to apples. I think that's fair. Yeah. And in 03:40:36.114 --> 03:40:40.070 fact, that is something that I requested from Arkady and Brattle is to provide us. 03:40:40.450 --> 03:40:44.202 I won't get into the preferred technology just yet, 03:40:44.266 --> 03:40:47.858 but my thoughts on that. But with respect to the amortization 03:40:48.034 --> 03:40:51.706 period, to look at something like between 20 03:40:51.738 --> 03:40:55.946 and 30 years, like a 25 year period, just to kind of get an 03:40:55.978 --> 03:40:59.684 idea for competitive purposes, of the magnitude of the impact of just 03:40:59.732 --> 03:41:03.068 extending it a little bit out because the 03:41:03.084 --> 03:41:07.148 amortization period has a direct dollar impact 03:41:07.244 --> 03:41:09.680 on the ultimate cone figure. 03:41:12.380 --> 03:41:14.360 So I would like to see 25 years. 03:41:16.500 --> 03:41:19.772 You'd like to see what it looked like, but yes. And then 03:41:19.796 --> 03:41:23.480 make the decision whether it makes sense, whether it's 20 or 25 years. 03:41:24.430 --> 03:41:27.286 Yeah, because I think we're seeing the plants stay out there for, like, 03:41:27.438 --> 03:41:30.566 more than 40 years. Actually, a lot of the plants I've toured recently are like 03:41:30.598 --> 03:41:33.610 50 to 60 years old. So, I mean, 03:41:35.230 --> 03:41:36.770 I just like to see the figure. 03:41:39.470 --> 03:41:41.330 Other questions for Warner. 03:41:44.590 --> 03:41:47.262 One other thing that I like, maybe not so much of a question. Well, 03:41:47.326 --> 03:41:51.660 a question and then a request. Did y'all look at the 03:41:52.440 --> 03:41:56.860 impacts of levelized real versus nominal dollar 03:41:59.600 --> 03:42:03.320 analysis? Chris Brown 03:42:03.360 --> 03:42:07.008 Commission staff so all the values recorded in this table are in constant 03:42:07.064 --> 03:42:09.780 2020, $6. So there's. 03:42:10.520 --> 03:42:14.580 They're all adjusted and updated for inflation pegged to 2026. 03:42:15.500 --> 03:42:19.444 Yeah, I'd like to see the. Once we figure out what reference technology 03:42:19.572 --> 03:42:23.380 that we're going to use, whether, you know, I know you all recommended a frame 03:42:23.420 --> 03:42:27.320 CT, I would like to see what the 03:42:27.980 --> 03:42:31.892 real levelized real dollar impact is for frame CT, 03:42:31.956 --> 03:42:35.412 because the way I understand real versus nominal is that nominal is 03:42:35.436 --> 03:42:39.580 taking, you know, you're looking out to the longer horizon, 03:42:39.660 --> 03:42:43.052 and that's capturing inflation, inflation that could be out there in the future and 03:42:43.076 --> 03:42:46.348 applying it earlier in the period of the life of the plant. 03:42:46.404 --> 03:42:50.268 So real is actually the actual cost of the plant, year by 03:42:50.324 --> 03:42:53.812 year inflation or not. So it 03:42:53.836 --> 03:42:58.044 seems to be a little bit more accurate 03:42:58.092 --> 03:43:01.420 on what the costs are on an annual basis, the real, 03:43:01.460 --> 03:43:03.796 the levelized real dollar figure. 03:43:03.908 --> 03:43:07.422 So I would like to see that. And I requested that from ERCOT and Brattle 03:43:07.446 --> 03:43:10.810 as well, on whatever reference technology, or we could apply it to 03:43:11.230 --> 03:43:15.326 the CT frame you all proposed, just for comparative analysis. 03:43:15.518 --> 03:43:18.222 We'll take that back and we'll be sure to come to the next open meeting 03:43:18.286 --> 03:43:19.570 ready to discuss that. 03:43:22.750 --> 03:43:25.390 So I'm going to, you know, I'll take the next two weeks. Like I said, 03:43:25.430 --> 03:43:29.086 talk to staff, talk to ERCOT. I'm going to reach out to certain stakeholders to 03:43:29.118 --> 03:43:32.900 talk to. I think it's probably, probably also 03:43:33.400 --> 03:43:37.200 something to think about if we would want to hear from any stakeholders next 03:43:37.240 --> 03:43:40.620 time, so. But I'd like to give them 03:43:40.920 --> 03:43:45.100 an appropriate amount of time to get prepared to actually come speak. So I'd ask 03:43:45.440 --> 03:43:48.832 if you want to hear from anyone, please let everyone know, 03:43:48.896 --> 03:43:52.144 maybe by the 18th week out. I don't want 03:43:52.152 --> 03:43:55.248 to just spring this on, folks, so we have a good discussion. 03:43:55.304 --> 03:43:59.130 Does that work? Warner, 03:43:59.170 --> 03:44:00.950 Chris, thank you. Appreciate it. 03:44:07.450 --> 03:44:12.402 (item:35:Chairman Gleeson lays out Project 55826) Next up is item 35 55, project number 5862. 03:44:12.466 --> 03:44:16.394 Texas Energy fund in ERCOT generation 03:44:16.442 --> 03:44:17.310 loan program. 03:44:22.370 --> 03:44:25.362 David, good afternoon. Good afternoon, commissioners. 03:44:25.506 --> 03:44:29.194 David Smeltzer, commission staff this should be 03:44:29.242 --> 03:44:32.770 an easy rulemaking. As you know, we previously adopted a rule 03:44:32.890 --> 03:44:36.310 for the Texas Energy fund in ERCOT loan program. 03:44:36.770 --> 03:44:40.250 When that rule was posted to the secretary of state's website, there was an administrative 03:44:40.290 --> 03:44:45.106 error leaving off some of that text. So the staff is proposing a 03:44:45.178 --> 03:44:48.480 rulemaking to readopt the rule exactly as we adopted 03:44:48.530 --> 03:44:52.612 it before. But we have to go through the formal rulemaking process. So this 03:44:52.636 --> 03:44:56.556 is the proposal for publication for that. And I would emphasize this does not affect 03:44:56.628 --> 03:44:59.716 any ongoing applications, application processes, 03:44:59.748 --> 03:45:05.124 and should result in no changes to the rule as adopted. We are just working 03:45:05.172 --> 03:45:08.940 to correct this quick error. Thank you. 03:45:09.020 --> 03:45:12.148 Will result in no changes. Well, obviously you 03:45:12.164 --> 03:45:15.136 can adopt staff recommends no changes. Yeah. 03:45:15.288 --> 03:45:18.992 Yeah. Okay. I just like said, I wanted to have 03:45:19.016 --> 03:45:21.448 you up here just so we'd make that clear so no one got nervous that 03:45:21.464 --> 03:45:24.664 we were making changes. Correct. And for clarification for stakeholders, 03:45:24.792 --> 03:45:27.808 the version of the rule that is posted that, you know, 03:45:27.824 --> 03:45:31.360 that was signed and in the interchange and is posted on the commission's 03:45:31.400 --> 03:45:35.864 website is the correct version of the rule that 03:45:35.912 --> 03:45:39.016 you should look to. And then when we complete this rulemaking, 03:45:39.168 --> 03:45:43.006 the version on the secretary's website will align with the rule that we previously adopted 03:45:43.038 --> 03:45:45.854 and everyone will be on the same page. 03:45:45.942 --> 03:45:48.690 Okay. Thank you. Thank you. 03:45:50.750 --> 03:45:53.210 I don't have anything on 3637. 03:45:53.670 --> 03:45:57.526 Sorry. I need the commission to vote to approve publication 03:45:57.558 --> 03:46:02.130 in the register. I would entertain a motion to approve publication. 03:46:02.430 --> 03:46:06.410 So moved. Second. A motion. A second. All those in favor say aye. 03:46:07.050 --> 03:46:10.590 Opposed? Motion prevails. Thanks, David. Thank you. Appreciate you. 03:46:11.290 --> 03:46:15.306 I don't have anything on 3637-3839. Was consented. 03:46:15.338 --> 03:46:18.650 (item:40:Chairman Gleeson lays out Project 55718) That brings us to item 45 5718, 03:46:18.810 --> 03:46:22.650 reliability plan for the Permian Basin. Yes, chairman, 03:46:22.810 --> 03:46:26.830 I was going to call Arkada, too. Commissioner Kobos. 03:46:33.020 --> 03:46:36.040 Hi, Christy. All right. Good afternoon, commissioners. 03:46:36.540 --> 03:46:38.120 Christy Hopps with ERCOT. 03:46:41.460 --> 03:46:45.420 Christy? Yes. If you can, please lay out your July monthly report, 03:46:45.540 --> 03:46:48.916 some of the highlights that have happened recently since the last report. 03:46:49.068 --> 03:46:52.508 Absolutely. So it's been a little bit since we've given you an update. 03:46:52.564 --> 03:46:55.876 Just want to kind of recap where we've been 03:46:56.028 --> 03:46:59.282 and the progress that's been made of. So, as you recall, 03:46:59.426 --> 03:47:02.970 you directed us late last year in the direction 03:47:03.010 --> 03:47:07.490 from HB 5066 to do a transmission reliability 03:47:07.610 --> 03:47:10.150 study for the Permian Basin region. 03:47:10.730 --> 03:47:14.378 I'd like to take a moment here to really thank my staff for the 03:47:14.394 --> 03:47:17.538 amount of work that they've done. It's been a fast and furious 03:47:17.594 --> 03:47:20.270 six months for them to get to where we are today. 03:47:20.770 --> 03:47:24.210 Also appreciate the cooperation with the TSPs and the. The consumers 03:47:24.250 --> 03:47:28.130 of the region providing us the information that we needed to get this 03:47:28.250 --> 03:47:30.430 study timely provided for you. 03:47:31.730 --> 03:47:35.002 We did a study scope that was laid out earlier 03:47:35.066 --> 03:47:38.274 this year. We studied load growth forecasted for 03:47:38.322 --> 03:47:40.830 2030 and 2038. 03:47:41.250 --> 03:47:43.550 And just to put that kind of in perspective, 03:47:44.090 --> 03:47:47.586 the previous load forecast that we had studied based on 03:47:47.698 --> 03:47:49.870 purely assigned interconnection and I. 03:47:51.280 --> 03:47:56.232 The last study we've done was just over 16,000 03:47:56.256 --> 03:47:59.768 information we received from the S and P global study as well as 03:47:59.824 --> 03:48:03.584 the TSP's in the area. The amount of load that we studied 03:48:03.712 --> 03:48:07.504 grew over 40% to just under 24,000 03:48:07.552 --> 03:48:11.048 mw for 2030 and just over 26,000 03:48:11.104 --> 03:48:13.180 mw for 2038. 03:48:14.160 --> 03:48:17.352 To put that in perspective, what does that mean? 03:48:17.496 --> 03:48:20.936 The Permian Basin is now about the size of the 03:48:20.968 --> 03:48:25.208 coast region, which has cities like Houston, Galveston and Victoria, 03:48:25.304 --> 03:48:29.072 as well as the north central zones, Dallas Fort Worth 03:48:29.096 --> 03:48:32.320 area and Waco. So we're talking about a large 03:48:32.400 --> 03:48:36.264 amount of load in the Permian Basin region. And that region also 03:48:36.392 --> 03:48:40.032 does not have a lot of conventional generation located in it. 03:48:40.216 --> 03:48:43.960 What that brings us to is the need for a lot of both local 03:48:44.040 --> 03:48:47.992 improvements to the transmission system as well as import pass to 03:48:48.016 --> 03:48:50.940 transfer power across the state to the region. 03:48:52.080 --> 03:48:55.660 We have had numerous meetings with TSP's. 03:48:56.320 --> 03:48:59.880 It's been monthly updates to the regional planning group. We most 03:48:59.920 --> 03:49:03.608 recently held a workshop where we went back through the entire kind 03:49:03.624 --> 03:49:07.100 of study process. The assumptions that were made, decisions that were made, 03:49:07.560 --> 03:49:11.092 reviewed that at the end of June and then opened 03:49:11.116 --> 03:49:15.100 up for one last comment period with the stakeholder process and 03:49:15.220 --> 03:49:19.228 that closed yesterday. So we're processing any final comments that 03:49:19.244 --> 03:49:22.860 we received. We're now working to finalize 03:49:22.940 --> 03:49:26.052 our report, which we are on track to file by the end of the 03:49:26.076 --> 03:49:30.220 month. We're right now getting target filing that by July 25 03:49:30.380 --> 03:49:34.018 here at the commission. So we're just over two weeks out 03:49:34.164 --> 03:49:37.854 from getting that report finalized for you. Some of 03:49:37.862 --> 03:49:40.770 the highlights as I mentioned, 03:49:41.190 --> 03:49:44.878 quite a bit of transmission needs both in the local area as 03:49:44.894 --> 03:49:48.310 well as those import pass. Because of the incredible 03:49:48.350 --> 03:49:52.166 low growth not only in that region but as well as across the state. 03:49:52.358 --> 03:49:56.374 We have expanded our study planning process to also look at higher 03:49:56.422 --> 03:49:59.966 voltage transmission. Currently the highest voltage that's operated in the 03:50:00.038 --> 03:50:03.374 IS 345. Our planners took a look at options 03:50:03.422 --> 03:50:06.810 for 500 kv as well as 765 kv. 03:50:07.190 --> 03:50:10.958 And we've got information related to all 03:50:10.974 --> 03:50:13.982 of those that we'll be including in our report for you, 03:50:14.126 --> 03:50:16.646 for your consideration. Thank you. 03:50:16.678 --> 03:50:20.158 Christy, if I could just real quick. I was just told that 03:50:20.254 --> 03:50:23.566 our court reporter would really appreciate a 15 minutes break. I know we're 03:50:23.598 --> 03:50:26.944 near the end but want to take care of our court reporter and so maybe 03:50:26.992 --> 03:50:29.632 thank you for your layout and then if we could just take a 15 minutes 03:50:29.656 --> 03:50:33.100 break. So let's take a recess until 318. 03:50:41.920 --> 03:50:45.120 We will reconvene our open meeting at 320 03:50:45.240 --> 03:50:48.680 and continue our discussion on item 40, 03:50:48.760 --> 03:50:50.620 reliability plan for the permit. 03:50:51.650 --> 03:50:54.546 Christy, were you done with your report? Right. I was just, you know, kind of 03:50:54.578 --> 03:50:57.730 what's, what's next? So we. As I said, 03:50:57.770 --> 03:51:00.674 we just closed comment. The final comment period yesterday. 03:51:00.722 --> 03:51:04.350 The team will be taking a look at those addressing any of those questions, 03:51:04.690 --> 03:51:07.330 we'll be finalizing our report. We, 03:51:07.370 --> 03:51:10.610 the project is on the agenda one last 03:51:10.650 --> 03:51:14.034 time at the July RPG meeting, just really so we can address any 03:51:14.082 --> 03:51:16.710 questions or comments that came in that we need to address. 03:51:17.320 --> 03:51:20.700 And we'll be filing our report with you all and then be prepared to 03:51:21.000 --> 03:51:24.424 help answer questions, participate in your workshops. 03:51:24.592 --> 03:51:28.048 The next steps here. Great. And so are you anticipating 03:51:28.104 --> 03:51:31.904 that the plan will still be filed no later than July 25? That's correct. 03:51:31.992 --> 03:51:35.816 Okay. And so you'll have an rpg discussion one 03:51:35.848 --> 03:51:39.256 last time, collect some stakeholder feedback. My understanding from our 03:51:39.288 --> 03:51:42.922 staff is that we'll provide feedback to the stakeholders at that rpg meeting on what 03:51:42.946 --> 03:51:46.394 our next steps will be here at the commission once the plan is filed 03:51:46.442 --> 03:51:50.230 here. So, you know, 03:51:51.530 --> 03:51:54.714 we received a filing recently from Texoga 03:51:54.762 --> 03:51:58.370 on ERCOT's division of the plan into 03:51:58.410 --> 03:52:02.362 2030 and 2038. Can you touch 03:52:02.386 --> 03:52:05.850 on that again as to why the plan was divided into those phases? 03:52:06.010 --> 03:52:09.452 That was a part of the initial scope and that was the way the forecast 03:52:09.516 --> 03:52:12.852 data was provided to us. And so we, 03:52:12.956 --> 03:52:16.868 we took that study approach, which we communicated 03:52:16.924 --> 03:52:21.132 since the beginning. What we see in 03:52:21.156 --> 03:52:24.276 the 2030 plan is, 03:52:24.348 --> 03:52:28.292 you know, a need for a substantial amount of the local transmission 03:52:28.396 --> 03:52:32.360 to serve the local needs. As we extend 03:52:32.740 --> 03:52:36.700 that into the 2038 forecast, that's when we start adding additional 03:52:36.740 --> 03:52:40.476 import path capability into the region for the additional load growth 03:52:40.508 --> 03:52:41.400 that we see. 03:52:42.860 --> 03:52:43.760 Okay, 03:52:46.260 --> 03:52:49.516 so you allude 03:52:49.548 --> 03:52:54.040 to some information on the high voltage lines in Miso. 03:52:54.580 --> 03:52:58.876 And is that, are those, are those cost estimates for 03:52:59.028 --> 03:53:03.132 the current 765 in Miso, or are they for the long range transmission 03:53:03.196 --> 03:53:07.020 planning discussions that are happening right now in tranche? I believe it's the long range, 03:53:07.060 --> 03:53:10.612 but I will confirm that and get back to you. Another thing that we've 03:53:10.636 --> 03:53:13.668 been doing in the interim that was, you know, just initial 03:53:13.724 --> 03:53:17.676 estimates. We've also reached out to different providers 03:53:17.788 --> 03:53:21.412 that have been working in 765, 03:53:21.556 --> 03:53:25.612 development or implementation, and getting additional cost estimates 03:53:25.636 --> 03:53:29.716 that we'll be able to provide a range to help validate 03:53:29.788 --> 03:53:33.400 that information that we obtained from ISO. 03:53:35.100 --> 03:53:39.020 In your presentation for the various options, 345, 765, 03:53:39.060 --> 03:53:42.420 500, you include an addition that says 03:53:42.460 --> 03:53:46.356 additional new dynamic reactive devices required in 03:53:46.388 --> 03:53:49.880 your report that you filed the final plan at the commission. 03:53:50.550 --> 03:53:53.750 Can you provide us any kind of an average cost that that may 03:53:53.790 --> 03:53:57.126 be? Because I would hate to have any, you know, 03:53:57.278 --> 03:54:00.774 surprise costs added to the overall total cost 03:54:00.822 --> 03:54:04.650 of the plan. Right. That would be a part of the report. Okay, 03:54:05.150 --> 03:54:05.890 great. 03:54:09.270 --> 03:54:10.530 Let's see here. 03:54:14.350 --> 03:54:18.418 Also as part of your cost estimates, and I 03:54:18.434 --> 03:54:22.090 understand you're providing the high voltage aspect as an additional option 03:54:22.130 --> 03:54:26.578 to consider to complete that last leg to 03:54:26.594 --> 03:54:27.830 get to 2038. 03:54:30.370 --> 03:54:33.954 I know you're going to provide some data on that and I guess some of 03:54:33.962 --> 03:54:37.282 the information you've gotten so far from Miso and whatever you can 03:54:37.386 --> 03:54:40.810 at this point because you're still in the process of completing the higher voltage study. 03:54:40.850 --> 03:54:44.028 That will be done a few months after we 03:54:44.044 --> 03:54:47.572 approve a plan. I don't know about 03:54:47.596 --> 03:54:51.148 in this plan that you file, but definitely in 03:54:51.164 --> 03:54:54.396 the study that you file. I think it's going to be really important to 03:54:54.428 --> 03:54:58.892 understand what supporting transmission infrastructure, 03:54:58.956 --> 03:55:03.284 facilities, equipment will be needed to take 03:55:03.412 --> 03:55:07.160 the system from 345 to 500 or 765. 03:55:07.630 --> 03:55:10.694 What are those additional components to help us step 03:55:10.742 --> 03:55:13.090 up to the higher voltage and what is that cost? 03:55:15.870 --> 03:55:18.158 And that's all I have. I'll open it up to any questions that you all 03:55:18.174 --> 03:55:21.598 may have commissioned. Yeah, I got a couple. I got, I do 03:55:21.614 --> 03:55:25.486 have a couple. One of them is on your slide number eleven. You talk 03:55:25.518 --> 03:55:29.342 about 765. I see that you have it on the other slides as 03:55:29.366 --> 03:55:32.726 well. But you say that total new right away is approximately 03:55:32.758 --> 03:55:36.242 1200. A 20% adder was included for the new 03:55:36.266 --> 03:55:40.482 lines. Why did you add 20% for 03:55:40.506 --> 03:55:43.914 the new right away? A 20% adder? So the reason 03:55:43.962 --> 03:55:47.498 for, and we did that on each of 03:55:47.514 --> 03:55:51.242 the options that's included and the reason for that is right 03:55:51.266 --> 03:55:55.310 now we're giving you estimates from, you know, point a to point b. 03:55:56.410 --> 03:55:59.320 Right. Recognizing that after the, once land is approved, 03:55:59.360 --> 03:56:02.760 then the transmission service providers have to go through their routing 03:56:02.800 --> 03:56:05.888 process, acquiring land. And what we've 03:56:05.944 --> 03:56:09.472 been observing is the days of building straight transmission 03:56:09.536 --> 03:56:13.672 lines are no longer. And that helps to account for variations 03:56:13.736 --> 03:56:17.768 that the TSP's may have to accommodate. I would say that that 03:56:17.864 --> 03:56:21.816 is probably right in most of Texas. But as you get out into West Texas 03:56:21.968 --> 03:56:28.010 where there are less trees, less structures, there's less impediments, 03:56:28.350 --> 03:56:31.850 it might, 20% may be high when you get out there. 03:56:32.270 --> 03:56:35.970 It's not a big deal. But I note that because 03:56:36.630 --> 03:56:39.974 the 765 line, which I'm totally in favor of, 03:56:40.102 --> 03:56:43.406 could be as little as 1000 miles. The 20% 03:56:43.518 --> 03:56:46.718 additional adds 250 miles of 765. 03:56:46.774 --> 03:56:50.940 So 1000 miles quite a bit. 03:56:51.840 --> 03:56:58.120 Do you all in your study, are you going to have the 03:56:58.160 --> 03:57:01.288 total capacity volume? 03:57:01.464 --> 03:57:04.488 I don't know if that's the right word of import or 03:57:04.544 --> 03:57:06.940 export. We're working through that. Okay. 03:57:08.640 --> 03:57:11.912 On a per voltage basis. Right. So what we're trying to 03:57:11.936 --> 03:57:15.820 lay out is as much information as possible. Now some of it may 03:57:16.220 --> 03:57:19.364 not be all in this report. Right as we start taking 03:57:19.412 --> 03:57:22.956 a look at the broader system. But the benefits of 03:57:23.068 --> 03:57:26.876 higher voltage are not just, you know, reduced right aways in the 03:57:26.908 --> 03:57:30.324 cost. There are a lot of additional benefits, as you're 03:57:30.372 --> 03:57:33.852 alluding to that we need to take a look at for the whole 03:57:33.956 --> 03:57:35.720 picture right now. 03:57:37.660 --> 03:57:43.350 I guess the final question that I have is I 03:57:43.390 --> 03:57:47.102 expect you all to come back with a 345 solution. Do you all. 03:57:47.286 --> 03:57:50.958 We will have a. So are you talking about for the permian or 03:57:50.974 --> 03:57:54.254 are you talking about for the entire state, the Permian? Yes, 03:57:54.302 --> 03:57:56.610 we have a 345 solution. 03:57:57.670 --> 03:58:00.770 And I guess, let me back up the way we're laying out the report. 03:58:01.310 --> 03:58:04.766 There are, if you think about a menu, no matter 03:58:04.838 --> 03:58:08.752 what decision you make about the import pass, they are common 03:58:08.856 --> 03:58:12.320 amongst all. And so we'll lay that out for you. No matter which 03:58:12.360 --> 03:58:15.624 option you take, these are definite routes 03:58:15.712 --> 03:58:19.008 that are needed. And then if 03:58:19.024 --> 03:58:22.660 you stay with 345, you need this additional piece to be added. 03:58:23.040 --> 03:58:27.260 Or if you go to a higher voltage, you need less 345 03:58:27.720 --> 03:58:31.032 and underbuild and this additional 03:58:31.056 --> 03:58:35.178 build for the higher voltage. So we're going to lay out those options so 03:58:35.354 --> 03:58:39.186 it hopefully will make it easier for you as you're reviewing through those. 03:58:39.338 --> 03:58:42.898 And will you have a final recommendation or will you just be laying out the 03:58:42.954 --> 03:58:46.178 options for us to look at? We will be laying out 03:58:46.194 --> 03:58:48.990 the options for you to consider. Okay. 03:58:49.650 --> 03:58:52.506 So it sounds very similar to a prior process we've had. 03:58:52.618 --> 03:58:56.098 Yes. So I have one question. Sorry. On the. 03:58:56.234 --> 03:58:59.890 On the 345, the 500 and then the 765. 03:59:00.010 --> 03:59:03.562 So you'll have the capital cost. Okay. But you alluded 03:59:03.586 --> 03:59:07.242 to there are other benefits. So you also going to define 03:59:07.306 --> 03:59:10.722 what those other benefits are to the best of our ability in 03:59:10.746 --> 03:59:14.258 this plan, but that is ongoing work for the entire state. 03:59:14.394 --> 03:59:18.442 So we recognize this is new 03:59:18.506 --> 03:59:22.698 territory for the last time, a step up change in 03:59:22.714 --> 03:59:26.380 the system. You know, we're, before many folks in this room were probably 03:59:26.420 --> 03:59:30.116 even born. So we want 03:59:30.148 --> 03:59:34.120 to make sure we're laying out all of the information that you need 03:59:34.780 --> 03:59:38.840 both, you know, right of ways, miles costs 03:59:39.340 --> 03:59:42.540 and a whole host of other benefits. There's stability, 03:59:42.660 --> 03:59:45.964 voltage benefits between the different voltages as well. 03:59:46.012 --> 03:59:49.368 So line loss. Yes, exactly. Resiliency. 03:59:49.484 --> 03:59:52.024 Right. Okay. So you're going to try to quantify that. Yes. 03:59:52.112 --> 03:59:55.176 Okay. So do you have anybody at ERCOT 03:59:55.208 --> 03:59:58.792 that's really supporting 500, 03:59:58.856 --> 04:00:02.280 765 or do you have most engineers that are, like, 04:00:02.320 --> 04:00:05.420 falling back, like. Well, 345 is a safe solution? 04:00:06.080 --> 04:00:09.960 I would say if I had to survey an informal 04:00:10.000 --> 04:00:14.104 survey based off of discussions, I've had. At first there was some 04:00:14.152 --> 04:00:17.994 hesitancy. But once we're starting to see the results and 04:00:18.042 --> 04:00:22.186 the potential savings and benefits, there's excitement 04:00:22.338 --> 04:00:25.626 about being a part of this opportunity to provide a better 04:00:25.698 --> 04:00:29.226 solution for the consumers of Texas. Okay. And at this point 04:00:29.258 --> 04:00:32.230 in time, HVDC is not being considered. 04:00:32.770 --> 04:00:36.042 You looked at it initially, but for this, it's not an 04:00:36.066 --> 04:00:39.362 application you're considering. It is not. And the reason why? 04:00:39.506 --> 04:00:43.476 One was because. Because of several reasons. 04:00:43.668 --> 04:00:47.452 The main one being the market design changes that would have to 04:00:47.476 --> 04:00:50.708 come along with it. And we're seeing the need for this 04:00:50.764 --> 04:00:54.172 increased transmission in the near term. 04:00:54.316 --> 04:00:58.012 And so knowing the process needed 04:00:58.036 --> 04:01:01.516 to go through market design changes to be able to operate that in the ERCOT 04:01:01.548 --> 04:01:04.320 market, we felt would be longer. 04:01:05.990 --> 04:01:09.582 The bigger issue would be actually getting converter stations. So I've 04:01:09.606 --> 04:01:12.950 recently heard that the supply 04:01:12.990 --> 04:01:16.350 chain backlog on those is quite some. 04:01:16.390 --> 04:01:18.730 It's like over 22,033. 04:01:19.630 --> 04:01:22.290 So I yielded my questions and now I have more. 04:01:22.990 --> 04:01:26.890 So you've done your due diligence on looking at 04:01:27.390 --> 04:01:31.268 supply chain to some degree for the converters 04:01:31.454 --> 04:01:35.296 that Jimmy just referred to. Have you looked at what 04:01:35.328 --> 04:01:38.672 supply chain looks like for 500, 345 kv auto 04:01:38.696 --> 04:01:42.300 transformers versus 765 04:01:42.680 --> 04:01:45.840 345 auto transformers? We are looking at that. 04:01:45.960 --> 04:01:49.728 So far, I've gotten feedback from one utility and 04:01:49.784 --> 04:01:53.584 we've got outreach to a vendor, some vendors 04:01:53.712 --> 04:01:57.482 and additional utilities to try and get different information 04:01:57.576 --> 04:01:59.330 so we can give you a good range, 04:02:00.430 --> 04:02:03.974 maybe a good idea to understand how many vendors there are. 04:02:04.142 --> 04:02:07.770 Because I've heard that there's only two vendors that actually make those 04:02:08.510 --> 04:02:12.838 two manufacturers that make those higher voltage auto transformers. 04:02:12.894 --> 04:02:15.982 So which leads me to kind of 04:02:16.006 --> 04:02:19.462 just, you know, in your exchange with Commissioner Glotfield. Just so 04:02:19.486 --> 04:02:22.836 I understand. So your plan will have a baseline 04:02:22.958 --> 04:02:27.312 set of common transmission projects that will be 345 04:02:27.336 --> 04:02:30.940 kv transmission projects and the local projects that will be needed, 04:02:31.360 --> 04:02:34.580 you know, just to support the heart of the plan. 04:02:34.880 --> 04:02:39.264 And then there will be optionality for 04:02:39.312 --> 04:02:42.856 the imports. Correct. But the imports from 04:02:42.888 --> 04:02:47.080 the top of coming in from the north side, those have always been 345 04:02:47.120 --> 04:02:50.618 kv. Are you looking at higher voltage coming in from 04:02:50.634 --> 04:02:53.818 the top or is it just 345 kv? I guess. Are we 04:02:53.834 --> 04:02:57.098 just only looking at higher voltage for the long line coming into the permian for 04:02:57.114 --> 04:03:00.390 the long lines? Okay. Water needed. Okay. 04:03:02.610 --> 04:03:05.430 All right. I think that's all the questions I really have this time. 04:03:09.850 --> 04:03:13.218 All right, thank you. I'll get your report soon. Thank you. Thank you, 04:03:13.234 --> 04:03:16.748 Chrissy. (item:41:Chairman Gleeson lays out Project 56000) That will take us 04:03:16.804 --> 04:03:20.148 to item 41, project number 5600. 04:03:20.284 --> 04:03:23.000 Firm fuel supply service, Harka. 04:03:31.900 --> 04:03:35.868 Good afternoon, Harika. Basaran commission staff and I have Tyler Nicholson 04:03:35.924 --> 04:03:39.596 with me. He will go over the core of the memo 04:03:39.628 --> 04:03:42.310 and I will talk about the process and the next steps. 04:03:43.490 --> 04:03:47.026 Good afternoon, commissioners. So last week, 04:03:47.178 --> 04:03:50.754 staff filed a memo providing its recommendations for 04:03:50.762 --> 04:03:54.322 the firm fuel supply service program parameters for the 2024 to 04:03:54.346 --> 04:03:57.866 2025 contract period, which is the third such 04:03:57.978 --> 04:04:01.218 period. In consultation with 04:04:01.234 --> 04:04:04.730 the independent market monitor in ERCOT, staff recommends the following 04:04:04.810 --> 04:04:08.594 for the upcoming contract period. Basically, 04:04:08.682 --> 04:04:12.818 we recommend keeping the status quo from the last two contract periods of 04:04:12.874 --> 04:04:16.850 the megawatt procurement quantity having a no megawatt limit, 04:04:16.930 --> 04:04:20.474 the budget cap being 54 million, the obligation 04:04:20.522 --> 04:04:23.658 period being a max of 48 hours and a single clearing price 04:04:23.714 --> 04:04:28.150 mechanism. The big change is the offer cap price 04:04:28.690 --> 04:04:32.100 changing to 12,240 /mw based off 04:04:32.140 --> 04:04:35.680 current fuel oil prices compared to the previous years. 04:04:36.740 --> 04:04:40.140 And another thing we are recommending to ERCOT, and we already started 04:04:40.220 --> 04:04:43.700 discussion to maybe perform a new survey. We think 04:04:43.740 --> 04:04:47.972 that this market now in the third year, it's still the same players 04:04:48.076 --> 04:04:51.700 and it has not been any new entrance or any 04:04:51.740 --> 04:04:55.252 new thing. We really think that we concerned about the competitiveness 04:04:55.316 --> 04:04:58.838 of this market. So we just want to ERCOT 04:04:58.934 --> 04:05:02.742 to do another survey. How can we expand it? How can we 04:05:02.766 --> 04:05:06.462 have new solutions and just look at the 04:05:06.486 --> 04:05:07.930 program again overall. 04:05:09.310 --> 04:05:13.198 So I'm in favor of the recommendation. I'm good with everything. 04:05:13.374 --> 04:05:16.570 I do think we need to look at ways to expand this program. 04:05:16.990 --> 04:05:20.050 So I think a survey is a good idea to do that again, 04:05:20.790 --> 04:05:24.064 to see what barriers we may have and how we may be able to expand 04:05:24.112 --> 04:05:26.460 this for the next procurement period. 04:05:28.080 --> 04:05:32.664 I think. I would disagree 04:05:32.712 --> 04:05:35.872 with that. I mean, I think the question. I mean, it's been less than 04:05:35.896 --> 04:05:39.840 a year since we went through this discussion about how we get 04:05:40.000 --> 04:05:44.008 in the first firm fuel procurements, and there was 04:05:44.064 --> 04:05:48.140 one issue about the. 04:05:49.240 --> 04:05:52.816 On the gas supply system, you know, where the resource resides on 04:05:52.848 --> 04:05:57.192 that system and is there interruptible power between them and the 04:05:57.216 --> 04:06:00.896 resource? I think we found that when we 04:06:00.928 --> 04:06:04.056 made that decision that there 04:06:04.088 --> 04:06:08.032 couldn't be anything in between the resource and 04:06:08.136 --> 04:06:10.820 the firm fuel storage facility. 04:06:11.120 --> 04:06:15.192 We got zero responses. And the question becomes, 04:06:15.376 --> 04:06:19.432 if those are the responses that we want in 04:06:19.456 --> 04:06:23.288 the system, do we need to go back and do a whole new survey to 04:06:23.304 --> 04:06:27.168 do that, or do we need to adjust? Adjust what? We thought 04:06:27.224 --> 04:06:31.192 we just adjust what we had done 04:06:31.216 --> 04:06:34.360 before and say, look, there are other 04:06:34.480 --> 04:06:38.512 natural gas facilities that can provide firm fuel service in 04:06:38.536 --> 04:06:41.598 addition to just diesel or fuel oil. 04:06:41.734 --> 04:06:45.246 And can we do that today without a 04:06:45.278 --> 04:06:49.010 survey? Is really, I guess what my question is. I think we can. 04:06:49.830 --> 04:06:53.014 I think we know this is out there, and I 04:06:53.022 --> 04:06:55.398 think a survey would just help us confirm that. 04:06:55.494 --> 04:06:58.854 Okay. And I guess I would add, because we had a 04:06:58.902 --> 04:07:02.730 pretty extensive conversation, and I think to your point, Commissioner Glotfield, 04:07:04.270 --> 04:07:07.956 we made a decision not to have certain, you know, you know, 04:07:08.148 --> 04:07:11.060 resources behind LDC's because the fact of the matter, 04:07:11.100 --> 04:07:14.756 what hasn't changed is that the rover commission prioritizes residential gas. 04:07:14.868 --> 04:07:18.412 Electric plants are not prioritized. What hasn't changed either is that 04:07:18.516 --> 04:07:21.732 ERCOT doesn't have visibility into the natural gas system. So there 04:07:21.756 --> 04:07:25.596 were some clear issues that came up when 04:07:25.788 --> 04:07:29.960 we went through this entire deliberation that resulted in us ultimately 04:07:30.340 --> 04:07:33.882 not looking at those types of supply arrangements that we 04:07:33.906 --> 04:07:36.602 spend a lot of time looking at. So unless we're going to be okay with 04:07:36.626 --> 04:07:40.322 moving resources out from behind LDC's or we're going to get some 04:07:40.346 --> 04:07:43.802 additional visibility into the gas system that we don't 04:07:43.826 --> 04:07:46.586 have now, then I'm not sure what a survey is going to get us. 04:07:46.658 --> 04:07:48.882 At the end of the day, we're going to end up at .1 unless we're 04:07:48.906 --> 04:07:52.714 willing to take on more risk, willing to 04:07:52.722 --> 04:07:55.550 take on more risk to get more firm fuel out there. But, 04:07:55.890 --> 04:07:58.964 you know, I just feel that at the end of the day, we have 04:07:58.972 --> 04:08:02.204 to kind of take a step back and look at the fact that even 04:08:02.252 --> 04:08:05.468 with the amount of firm fuel we have right now, we've never even used all 04:08:05.484 --> 04:08:09.300 of it. And that's because it's been very 04:08:09.460 --> 04:08:13.300 actually strategic, the use of it because of 04:08:13.380 --> 04:08:16.852 the curtailment with the pipeline that runs through the center of Texas and that it's 04:08:16.876 --> 04:08:19.120 been like clockwork and it's worked well, 04:08:19.740 --> 04:08:24.040 I think, you know, I'm not opposed to expanding. Expanding is fine. 04:08:24.220 --> 04:08:27.936 But to what? And for what? And how when 04:08:28.048 --> 04:08:31.568 there's additional risk that we're going to take on that we clearly saw from all 04:08:31.584 --> 04:08:35.100 of ERCOT analysis that went on for months. And so 04:08:35.480 --> 04:08:39.128 my thing is, you know, I don't know what a survey is 04:08:39.144 --> 04:08:42.696 going to get us other than, you know, there's still interest out 04:08:42.728 --> 04:08:46.496 there from firm fuel supply arrangements that we. 04:08:46.568 --> 04:08:49.780 That can't comply with ERCOT's existing process. And if we 04:08:50.240 --> 04:08:53.800 modify the process, then what does that look like? And what 04:08:53.840 --> 04:08:57.048 risks are we going to shoulder as the regulators over here at the end of 04:08:57.064 --> 04:09:01.140 the day for this very important product 04:09:01.440 --> 04:09:05.280 that is still. I get it. No liquidity, 04:09:05.400 --> 04:09:09.232 you know, it's not competitive enough. I'm wondering if there's changes that could be 04:09:09.256 --> 04:09:12.792 made within the existing product. Right now that can be made, 04:09:12.856 --> 04:09:16.778 that can make the product more competitive, because I 04:09:16.794 --> 04:09:20.306 just feel like. I feel like we've had this circular sort of 04:09:20.338 --> 04:09:23.978 situation going on for the last two years, and I'm 04:09:23.994 --> 04:09:27.298 just wondering, like, what the survey gets us 04:09:27.314 --> 04:09:30.490 at the end of the day. But back to .1 and debating this out and 04:09:30.530 --> 04:09:33.706 trying to figure out how we're going to make this work or Jimmy this in. 04:09:33.738 --> 04:09:37.030 So we're going to be okay. From a risk standpoint, 04:09:38.890 --> 04:09:42.580 maybe what end up is changing the program. Maybe just become 04:09:42.620 --> 04:09:45.996 a cost based program just for certain specific units 04:09:46.148 --> 04:09:49.868 and it's not a competitive product. So we don't have to 04:09:50.004 --> 04:09:53.300 go through this. Maybe that will be an option if we, again, 04:09:53.380 --> 04:09:56.844 after the survey, and again, we will run the survey before 04:09:57.012 --> 04:10:01.364 it goes out with every office and we'll get your feedback about questions 04:10:01.532 --> 04:10:04.452 we may be asking. But at the end, then we can make a decision. 04:10:04.556 --> 04:10:07.890 And this could be a more like a course based program. 04:10:11.070 --> 04:10:14.810 So cost based program for the existing dual fuel capability 04:10:15.710 --> 04:10:18.610 would make it more competitive within what we have now. 04:10:19.310 --> 04:10:23.050 But I think my broader comments were just on trying to 04:10:23.550 --> 04:10:26.886 go out beyond. It would be great to do 04:10:26.918 --> 04:10:30.214 that. Right. I mean, but, I mean, it's tough. 04:10:30.382 --> 04:10:33.670 I think what we found, the information we got the last time around, is that 04:10:34.650 --> 04:10:38.082 there's a lot we don't know and a lot we just don't have 04:10:38.106 --> 04:10:42.030 jurisdiction over certain things that put us, the commission 04:10:42.530 --> 04:10:46.310 and ERCOT, in a tough position to, you know, 04:10:46.610 --> 04:10:50.018 go and pay for those arrangements. And at the end of the day, 04:10:50.034 --> 04:10:53.898 we may have no control over any of it. So I 04:10:53.914 --> 04:10:57.962 think just a couple things. A survey would help me, just as another data point. 04:10:58.026 --> 04:11:01.746 When that last decision, when the risk tolerance was talked about last time, I wasn't 04:11:01.778 --> 04:11:05.426 up here. And so I think it would be helpful to me to know what 04:11:05.458 --> 04:11:08.234 else is out there. I think there's a chance we may be able to get 04:11:08.282 --> 04:11:12.202 more for less money than we're currently paying potentially. And so 04:11:12.226 --> 04:11:15.514 I'd like to know that, because I think risk is a trade off. 04:11:15.602 --> 04:11:19.306 And so for me personally, I think a survey is 04:11:19.338 --> 04:11:22.178 worth it to get that data point to know what's out there and what we 04:11:22.194 --> 04:11:25.980 could avail ourselves of, and then we can make another determination about the risk profile 04:11:26.020 --> 04:11:30.120 that we're willing to take on. And is that something that we can do for 04:11:30.860 --> 04:11:33.908 this winter? No, no, no. This is for the following. 04:11:34.084 --> 04:11:37.660 So I guess that begs the question, if we have winter storm 04:11:37.740 --> 04:11:39.800 URi number two this winter, 04:11:41.300 --> 04:11:44.772 the risk that I see is that we don't take the pipeline 04:11:44.836 --> 04:11:48.780 storage piece of this as firm fuel, and because 04:11:48.820 --> 04:11:52.722 we're doing a survey and. Sounds kind of 04:11:52.746 --> 04:11:56.550 administrative, but it's, you know, it's part of the bar process. 04:11:58.930 --> 04:12:02.706 I mean, I will. I think we know what the universe is out 04:12:02.738 --> 04:12:06.106 there. I totally respect that. You weren't sitting 04:12:06.138 --> 04:12:09.570 up here. You were sitting right there, though, 04:12:09.650 --> 04:12:13.138 and I was. My vote didn't count down there. 04:12:13.274 --> 04:12:17.082 True. So I just. Again, I would 04:12:17.106 --> 04:12:20.196 say that I think we know what going to get in this. You know, 04:12:20.268 --> 04:12:23.388 I know you want that information. I appreciate that. I'm not 04:12:23.484 --> 04:12:27.500 totally dead set. I just. I'm a little weary that if we go on 04:12:27.540 --> 04:12:31.068 this new survey, then we're going to lose a whole nother 04:12:31.124 --> 04:12:34.636 year. You know? I don't know. 04:12:34.828 --> 04:12:37.972 I don't. I don't know that we. Why would we lose another year, David? 04:12:37.996 --> 04:12:40.852 I can't tell you. Surveys. I don't think it takes that long. I don't think 04:12:40.876 --> 04:12:44.462 we lose another year. Hello again. 04:12:44.526 --> 04:12:48.230 David Dwyer with ERCOT. I did want to point out that 04:12:48.310 --> 04:12:51.958 currently in the protocols, the protocols specify what resources 04:12:52.054 --> 04:12:55.646 are qualified to provide the service. So if you 04:12:55.678 --> 04:12:59.166 wanted to expand for this next year, we would have to get a good cause 04:12:59.198 --> 04:13:03.410 exception to the existing protocols and all that that entails. 04:13:04.310 --> 04:13:07.582 We've already started talking with staff about potential timing for the 04:13:07.606 --> 04:13:10.776 survey. If you all want to move forward with that, we think we could 04:13:10.808 --> 04:13:14.168 conduct it likely in the October to November timeframe, 04:13:14.224 --> 04:13:17.832 get y'all results in November and December for you all to decide whether or not 04:13:17.856 --> 04:13:21.152 you'd want to change the qualifications. If so, we'd be able 04:13:21.176 --> 04:13:25.700 to pull out a protocol and have it through the stakeholder process before 04:13:26.160 --> 04:13:29.752 the issuance of the RFP for next year, next year 04:13:29.776 --> 04:13:32.820 being the next winter obligation period after the upcoming one. 04:13:36.670 --> 04:13:40.326 Listen, mister chairman, I appreciate that you 04:13:40.358 --> 04:13:44.130 want that information, and I'll defer to you on this. I just. 04:13:45.390 --> 04:13:48.734 I think we're going to get 80 04:13:48.782 --> 04:13:51.050 or 90% of what we already know. 04:13:52.030 --> 04:13:55.302 But I'm happy to defer to you and let you get the survey 04:13:55.326 --> 04:13:58.038 and let you get the data that you need to make the decision. Yeah. 04:13:58.054 --> 04:14:01.016 And like I said, I think you're right. I'd just like to confess to. 04:14:01.118 --> 04:14:04.732 I'd like to know the University of what's out there. If we 04:14:04.756 --> 04:14:08.548 redo the survey, is there additional information 04:14:08.644 --> 04:14:12.004 or questions that we'd ask after being, as we've 04:14:12.052 --> 04:14:17.532 operated it for a couple of years, is there any different questions 04:14:17.556 --> 04:14:21.116 that we might ask that we didn't think about asking at the onset? 04:14:21.228 --> 04:14:25.036 That's actually a topic that we've raised with staff. They talked 04:14:25.068 --> 04:14:28.808 about barriers to entry. Our past surveys were kind of 04:14:28.904 --> 04:14:32.576 asking what resources exist and are interested in providing 04:14:32.608 --> 04:14:36.328 the service. Exploring what barriers to entry there are 04:14:36.424 --> 04:14:40.352 would involve different questions, and we're happy to develop those. And as staff mentioned, 04:14:40.376 --> 04:14:43.240 I'm sure there will be a process to run those by you all. 04:14:43.320 --> 04:14:46.328 I think we are thinking more than just what's out there. Like, 04:14:46.384 --> 04:14:50.192 thinking more creatively, thinking more out of the box. I think 04:14:50.216 --> 04:14:51.420 there's value to that. 04:14:58.450 --> 04:15:01.150 I think a survey is a great idea, mister chairman. 04:15:02.450 --> 04:15:03.870 Thank you, commissioner. 04:15:07.130 --> 04:15:11.658 And I'm fine with that. Yeah. I mean, I am, but it's 04:15:11.674 --> 04:15:15.002 just, you know, having gone through this a few times, I'm like, kind of like 04:15:15.066 --> 04:15:18.042 Commissioner Gotfeldy. I'm like, I don't know we're gonna get. But I respect the fact 04:15:18.066 --> 04:15:20.338 that you want to kind of see, and we'll just kind of figure it out 04:15:20.354 --> 04:15:23.178 as long as it's not applying for this winner. Yeah, plenty of time. And we 04:15:23.194 --> 04:15:26.466 will work with all of you before we publish the survey and get your 04:15:26.498 --> 04:15:29.710 feedback as well. You said risk tolerance. That's a good idea. 04:15:31.330 --> 04:15:33.802 In that concept of. Let's ask about the barriers. 04:15:33.866 --> 04:15:37.602 Exactly. Thank you, Haru. 04:15:37.706 --> 04:15:40.110 Thanks, Tyler. Thank you, David, for coming up. 04:15:41.810 --> 04:15:45.084 All right, item number 42 is consented. I don't have 04:15:45.132 --> 04:15:48.356 anything until item 53. That would 04:15:48.388 --> 04:15:51.880 (item:53:Update from Executive Director Connie Corona) be an update from our commission council and executive director. 04:15:55.820 --> 04:15:59.560 Good afternoon, commissioners. Just one brief item. 04:16:00.300 --> 04:16:04.756 Staff will be hosting a staff led workshop on 04:16:04.828 --> 04:16:08.720 the performance credit mechanism parameters that recently. 04:16:09.110 --> 04:16:13.070 That we recently received comment on. That will be on 04:16:13.190 --> 04:16:16.010 July 25 after the next open meeting. 04:16:18.310 --> 04:16:21.502 Thank you, Connie. All right. 04:16:21.566 --> 04:16:25.142 And for me, as we discussed at previous 04:16:25.206 --> 04:16:29.086 HIPAA meeting, we scheduled additional meetings this year to give us maximum 04:16:29.118 --> 04:16:32.606 flexibility, particularly for the many rules and projects 04:16:32.638 --> 04:16:35.632 that are in front of the commission in addition to the tested cases. 04:16:35.816 --> 04:16:39.560 Right now, we have two meetings in July. Today's meeting, the 25th. 04:16:39.680 --> 04:16:43.152 We have three scheduled for August, the first, the 15th 04:16:43.176 --> 04:16:46.608 and 29th. I've converted Connie and Barksdale, 04:16:46.704 --> 04:16:49.840 and we agree that while there's a lot of upcoming work for the commission, 04:16:50.000 --> 04:16:53.512 that in the next two months, it's best to just have two meetings in 04:16:53.536 --> 04:16:57.272 August. We can accomplish the work in two meetings. And so with 04:16:57.296 --> 04:17:01.314 your agreement, we'll cancel the August 1 meeting but keep the August 04:17:01.362 --> 04:17:03.670 15 and August 29 meetings. 04:17:04.690 --> 04:17:07.430 I think we're probably all okay with that. All right. 04:17:08.370 --> 04:17:11.914 Jimmy will be here. That's the way 04:17:11.922 --> 04:17:15.590 to end Sheila on a high note. All right. Something everybody likes. 04:17:16.330 --> 04:17:19.786 Okay. With there being no further business before us today this May. And the public 04:17:19.818 --> 04:17:21.810 Utility commission of Texas is hereby adjourned.