WEBVTT

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(item:0:Chairman Gleeson calls meeting to order) This meeting of the Public Utility Commission of Texas will come to order. To consider

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matters that have been duly posted with the Secretary of State for

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July 25, 2024. Good morning

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Shelah, Connie, Barksdale. (item:0:Chairman Gleeson lays out the flow for today’s agenda) So

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Commissioners, what I'd like to do this morning is start

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with Public Comment. I don't know if we have anyone signed up, but we're

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going to let Shelah run through the Consent Agenda. And then

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start with public comment and then bring up the Beryl

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related items first. This way, anyone that's here for that can get

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through that and then leave, and then we'll take up the rest of the agenda

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in order, if that works for everybody? Okay.

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Shelah, will you run us through the Consent Agenda please? Yes.

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Good morning. Commissioners recusal memos were filed in project

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No. 52761. The Chairman is recused from Items

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3, 4, 5, 9 and 10. Commissioner Hjaltman is

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recused from Items 2 and 7. By individual ballot,

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the following items are placed on your Consent Agenda:

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Items 1, 3, 4, 5 and 8.

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Also by individual ballot, the Commissioners voted to place Items on

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the Consent Agenda, and no one signed up to speak on these Items.

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Those are Items 13, 14, 16 and 24.

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Thank you, Shelah. (item:0.1:Chairman Gleeson asks for motion to approve items on Consent Agenda) I'd entertain a motion to approve the consent items

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just laid out by Shelah. So moved. Second.

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Have a motion and second. All those in favor say aye. Aye.

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Opposed? Motion prevails. All right. I'll call up

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Item No. 11 for General Public Comment. Shelah, do we have anyone signed

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up? (item:11:Shelah Cisneros confirms 1 person has signed up for General Public Comments) Yes Chairman, one person signed up to speak under Item number

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11. I believe it's Savant Moore.

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And one question is that, are we sticking with the three minute time limit?

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Yes, we'll do three minutes. All right. Good morning, sir. If you could state your

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name and who you represent. (item:11:Houston resident Savant Moore gives Public Comments concerning CenterPoint's response to Hurricane Beryl) Good morning Commissioner. Hopefully governor

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of you watching this? My name is Savant Moore. I'm a public servant for the

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city of Houston. Today I come on behalf of everyone in my city

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of Houston, asking you to do the impossible, holding american

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corporation accountable, ensure they show us the same respect

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they give their shareholders. We are their customers. I stand before

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you to highlight a grave injustice my city endured after

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Hurricane barrel. While the CEO of Centerpoint and the

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VP of utilities went a few hours to two days without

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power, my community suffered nine to 14

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days, and some on northeast Houston still do not have power.

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Our seniors, who depend on electricity for oxygen and insulin,

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were left vulnerable and struggling. We must remember the 24 lives

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lost, half of which were directly due to power loss.

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Let us take a moment to honor their memory. Rest in peace,

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Maria Laredo Russell, Richardson Sarah Elizabeth Elston

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Johnny Courtney J. Michael Taylor Charles

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Richard Anderson Sr. Candy York Oscar Rodriguez James

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Edward Butcher Brian Keith Taylor Pamela Jarrett

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Thomas Fermin Vergara William Carreras Judy agreed

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to Leroy Lyons Michael Lehrer David Smith

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Rebecca Smith Charles Yanez Ethel Carter Michael

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Pervette Rachel Ross electricity was created

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in the late 18 hundreds, yet we still haven't figured out power outage

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solutions. This situation reveals a severe lack

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of vegetation management and disaster preparedness. By Centerpoint,

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I asked, what will this board and the governor do to protect Texans lives

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from such mismanagement? To prevent further tragedies and

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prolonged power outages, I propose the following immediate

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actions. Enhanced vegetation management increase the

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frequency and scope of tree trimming and vegetation clearance

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around power lines to reduce the risk of outages caused by fallen

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branches. Deployment of mobile power units. Strategically position

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mobile generators in temporary power units in high risk areas.

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Priority restoration for critical needs establish a clear,

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prioritized restoration plan that focuses first on areas with

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hospitals, senior centers and individuals relying on medical

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equipment. Improve communication systems. Implement robust

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real time communication channels to keep residents informed.

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Pre storm inspections. Conduct thorough pre storm

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inspections of infrastructure to identify and address potential

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weak points that could fail during severe weather.

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Lastly, pre stage restoration teams have teams ready

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and pre stage in strategic locations to quickly begin power restoration.

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This is a bipartisan issue and a Texas issue, and we

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need to find a solution to quickly, because it's not a question if

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the next storm is coming, if there will be another power outage,

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it's when and when will we be prepared. We must act swiftly

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to protect our communities and prevent further loss of life.

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Let's honor the memory of those we lost by ensuring this never happens

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again. In closing, I leave you with the scripture. Do not

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merely listen to the word and so deceive yourselves.

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Do what it says. James 122 the

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purpose of human life is to serve and to show compassion and the

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will to help others. May God bless you, and may God bless Texas.

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Thank you. Thank you for being here this morning. Thank you for your comments,

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sir.

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We have no one else signed up. That's correct. Thank you,

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Sheila. So I think the way

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I talk to Connie, I think the, and Sheila, I think the best way to

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do this, I'm going to call up items number, items 32 and seven together,

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and then we'll take up item 33 directly after that.

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(item:32:Chairman Gleeson lays out Project No. 56793) So I would call up Item 32, that's Docket 56793:

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Issues related to disaster resulting from Hurricane Beryl.

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(item:7:Chairman Gleeson lays out Application of CenterPoint Energy Houston Electric, LLC for approval of Transmission Distribution System Resiliency Plan) And Item 7, that is Docket No. 56548,

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Application of CenterPoint Energy Houston Electric, LLC for

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approval of its Transmission Distribution System Resiliency Plan. And

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ask CenterPoint to come up. I would also

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like to thank just a few people who submitted letters in

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this. So we received letters related to barrel from

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a joint letter from Senator Miles, Senator Alvarado, and Senator

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Cook. And we also received a letter from Houston's Mayor,

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John Whitmire. So I want to thank them for their input as well. Mr. Chairman,

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may I say something about Docket 7

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which is what we just brought up? Is that right? So we brought up 32

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and Item 7. Yeah. Oh, Item 7.

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Okay, I'll wait on Docket No. 7 until that time. Jason?

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(item:32:CenterPoint's Executive VP Jason Ryan gives update on Project 56793) Good morning, Chairman Gleeson and Commissioners. I'm Jason Ryan,

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Executive Vice President at CenterPoint Energy. I have with me today Jason

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Wells, our CEO. Tony Gardner, our Chief Customer Officer

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and Randy Pryor, VP of our Electric Operations.

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Who was also Incident Commander during the

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response to Hurricane Beryl. Let me

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before I turn it over to our CEO,

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provide a little bit of information to you, but more importantly,

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the public who's watching. On some information that we filed yesterday

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in Project 56793.

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So Item No. 16 in that Project is

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the presentation that you all have before you, and that, I understand will be

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on the screen for the public that's watching, but for people that want a copy

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of it, it's in Project 56793, and it's

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Item No. 16 there.

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We also provided our initial set

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of factual documents to help aid in the Commission's

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review of what happened during the storm,

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leading up to the storm and after during restoration.

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That is Item No. 17 in that same Project,

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in Project 56793. And I'd

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call your attention maybe to a couple of things just to orient the

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material. In Tab No. 3 of that document

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is a timeline of relevant

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facts. It's the beginning of our production

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of those relevant facts to the Commission. Things like how many

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mutual assistance crews did we call on, when did they show

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up in the Houston area to begin work, how many agents

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we had in our call center day by day. That kind of

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factual information is under Tab 3.

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Then under Tabs 7 through 19,

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we lay out a day by day with both

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those factual statistics of call center agents and outages,

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and how many customers we've restored, how much of the emergency generation was used day

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by day, but also our communications to our customers

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broken up day by day, both in our press releases,

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other public information posted on our website, social media.

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So you have all that content there in tabs seven through 19.

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Under Tab 20 is how our incident

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command is structured, again to orient you to

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the work that Randy led as Incident Commander.

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Going back to the front part, though, relevant to what we'll present

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today, is some of our go forward information. Under tab

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one is the new communications program that

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we will have in place for the next storm. And going forward,

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under tab two is our screenshots of the new outage

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tracker that will be going live by August 1.

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So that gives a little bit of information about what we provided yesterday.

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We hope that providing that information early will allow

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the fact finding and after action report to proceed quicker,

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because I know that the schedule you have laid out in your report to the

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Legislature is going to require us to move with some urgency. So we wanted to

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provide this information now, and I know that we'll

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keep providing information going forward. So with that

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if it's okay with you Chairman, I'll turn it over to our CEO. That's perfect.

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Thank you, Jason. I think just for. So this goes somewhat smoothly, if we

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could withhold our questions until they finish their presentation. I've told them they have

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about 30 minutes or so to lay out their presentation.

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Mr. Chairman, I do have a comment about the resiliency plan docket. I'm happy

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to go whenever you want at the end. Yeah, let's let them lay it

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out, and then we can bring, we can talk through those dockets. Okay. Good morning,

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Jason. (item:32:CenterPoint's CEO Jason Wells gives apology to CenterPoint's customers and their Pillars of Action) Good morning Chairman Gleeson, Commissioners. I'm Jason

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Wells, CEO of Centerpoint Energy. Thank you for the opportunity to

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be here in front of you this morning. It is my privilege,

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the privilege of all of our leaders and employees to serve our customers in

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the greater Houston area. As you all know,

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Hurricane Beryl left widespread devastation in the greater Houston

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region. Including extensive power outages,

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with many of our customers experiencing uncertain wait times for

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restoration. In times of emergency, our responsibility

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is to respond quickly, to communicate clearly,

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to provide accurate information, and to restore power

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as rapidly and safely as we can.

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I take personal accountability for the areas where we fell

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short of our customers expectations. Most importantly,

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I want to apologize to our customers for the frustration we caused.

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We will do better. While we cannot

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erase the frustrations and difficulties so many of our customers endured,

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I and my entire leadership team will not make excuses.

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We will improve and act with a sense of urgency before

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turning to our commitments to improve. I do want to take a moment

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to acknowledge and thank all of the incredible work of

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our vegetation line and support employees,

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as well as our local contractors and mutual assistance crews who worked

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in incredibly challenging conditions to restore power in

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terms of areas for improvement. I commit that starting immediately,

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we will improve our communications with our customers and will take

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specific actions to build the most resilient coastal grid in the

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country. Slide three summarizes our

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initial plan. Additional details can be found on slide 15.

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Our pillars of action fall into three categories,

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improvements in resiliency, improvements in communication,

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and greater collaboration with local partners and emergency

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responders. Each pillar of action is designed to

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specifically address issues for the remainder of this hurricane season

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and beyond to improve the resiliency

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of our system, which my colleague Randy will expand on shortly.

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We are especially focused on enhancing our vegetation management efforts

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and as of July 16, we had nearly doubled our vegetation

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management workforce to immediately address the higher risk areas of

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vegetation throughout the rest of this calendar year.

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To improve our communications with our customers and to address one of

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the primary criticisms we received in our response to Hurricane barrel,

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we will launch a new cloud based outage tracker on August 1.

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Tony will provide more details about this new tool and other actions we

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will take in just a minute.

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To strengthen our community partnerships and improve on our emergency response coordination

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year round. We will be hiring a new senior leader to

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join our executive team whose expertise is intended to help

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us make the necessary improvements in every aspect of our

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emergency and storm response.

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We'll also be taking additional actions based on internal reviews,

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independent analysis and counsel from emergency

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response and communications experts,

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as well as through additional feedback from this body, our customers,

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our elected officials and our community leaders.

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Going forward, our most important priority today in the months ahead

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will be to improve our emergency response with a sense of urgency to

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re earn your trust, as well as the trust of the millions of people who

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depend on us. Our company and the thousands

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of men and women of CenterPoint will remain tireless in our efforts

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to strengthen our system and better serve the community that

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we are all proud to call home. I'll now turn it over to Tony

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to cover our action plan. (item:32:CenterPoint's Sr. VP Chief Customer Officer Tony Gardner gives CenterPoint's Action Plan) Good morning Commissioners.

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My name is Tony Gardner. I'm the Senior Vice President Chief Customer Officer here at

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CenterPoint. As Chief Customer Officer, it's a critical part of my job to

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represent the voice of the customers in how we plan and conduct our business.

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Since Beryl made landfall, I've personally reviewed hundreds of customer complaints

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and hurt their frustrations that they shared with us in the ways

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in which we communicated and did not meet their expectations.

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I'll personally carry forward those voices as we execute actions

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that Jason summarized my entire organization will be

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laser focused on improving our overall customers experience for

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our communities that we have the privilege to serve. Slide 5

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lists the five key areas we've identified for improvement in our customer communications,

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and I want to use Slide 6 to focus on the actions we will take

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to address in some of those areas.

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First, you heard Jason talk about the launch of our

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new cloud based outage tracker by August 1, which will accommodate

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the new level of increased traffic that we can expect during significant storm events.

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This is where our prior outager failed. It was a physical,

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server based system which simply could not handle the traffic during elevated

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storm level events. Our new outage tracker will allow customers to

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see outages based on their counting city or by their zip code.

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The application will be mobile friendly and mobile responsive.

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After we've launched a new outage tracker, we will continue to make sure that we

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engage with our customers and community leaders to get feedback so that we

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can continually make sure that we improve on that application.

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Second, as a part of our effort to dramatically improve our public

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communications, we brought in industry experts to help us develop

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an at emergency preparedness and response communications playbook.

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This communication playbook will include daily press briefings,

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press releases, public advertising, social media and

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other tools to engage and inform our customers more effectively during times

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or major storms when they need to hear from us the most.

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While these specific communications will be led by our corporate communications

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arm and our organization, it will be closely coordinated with the customer

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communications to ensure that we maximize every possible tool to

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keep our customers informed and updated.

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Third, we are committed to making sure that we provide our

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customers restoration guidance to our impacted service territories

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24 hours after a storm has left our service territory.

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That guidance will be refined and communicated daily and

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our customers will know, based on our situational awareness, where we are in our

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restoration efforts. In addition, we will also continue to

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drive the adoption of power alert service to increase our ability to push

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information to our customers in a timely manner. We recognize that some customers

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experienced delays receiving their power alert service messages during Hurricane

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Beryl and we're taking the necessary measures to make sure that we can provide

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the appropriate capacity to accommodate the use of that

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tool during our storms. One thing I would like to

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stress to this body is that because our marketplace,

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the way our marketplace is structured, we only have contact information for

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about 42% of our customers.

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That's because we only have direct contact if those customers

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sign up for power alert services through us or if the reps pass

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that information on to us to help increase the effectiveness of

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our direct communications, we may ask you all to

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change policy so that we can get contact information from

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our reps so that we can improve upon the number of

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customers that we can push power alert service notifications to

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during storm level events.

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Fifth, to address the lengthy hold times that our customers endured

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during Hurricane Beryl, we'll increase our call center staffing by more than

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165% compared to our normalized levels. To make

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sure that we can reduce our wait times for our customers.

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Each of our call center agents will continue to go through additional training

18:29.484 --> 18:32.940
during storm season to make sure that they can provide customers

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the level of service that they've come to expect and that they deserve.

18:37.580 --> 18:41.004
In addition, we'll be leveraging speech analytics to monitor

18:41.052 --> 18:44.764
our customers experience while they're dealing with our contact center agents during

18:44.812 --> 18:48.068
storms so that we can make sure we provide them the right level of the

18:48.084 --> 18:51.170
right level of customer support and meet their expectations.

18:52.230 --> 18:55.390
In closing, this is just the start of our efforts to rearn our customers

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trust. We know that we have a long way to go to make sure that

18:58.454 --> 19:02.490
we can meet our customers expectations, but we're definitely committed to doing so.

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And with that, I'd like to turn things over to Randy and he'll talk to

19:05.614 --> 19:08.758
you about how we went through making sure that we restored our power for our

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customers during the storm event.

19:13.910 --> 19:16.756
Good morning and thank you, Tony.

19:16.868 --> 19:20.452
(item:32:CenterPoint's VP of Operations & Incident Commander Randy Pryor on the restoration of power after Hurricane Beryl) My name is Randy Pryor and I oversee our distribution projects and

19:20.476 --> 19:24.412
grid modernization programs here at Centerpoint. I thank you for the

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chance to speak here today. I served as the incident commander during

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the storm, overseeing our preparation, response and restoration efforts.

19:32.900 --> 19:36.204
So let's begin with what happened. We began tracking

19:36.252 --> 19:39.996
Hurricane Beryl, prepping for impact nine days before Beryl made

19:40.028 --> 19:43.682
landfall as a storm began approaching Texas.

19:43.826 --> 19:46.430
Can you speak into the microphone a little more? I'm sorry.

19:49.330 --> 19:52.962
As a storm approached Texas, forecast initially showed that

19:52.986 --> 19:56.802
our service area and Greater Houston would be spared a direct

19:56.946 --> 19:59.470
impact by the worst of the hurricane.

19:59.810 --> 20:03.950
Nonetheless, we remain vigilant. We plan for impact

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and secured 3000 mutual assistant crew members, all of

20:08.614 --> 20:12.510
whom would be arriving from locations safely outside of the projected

20:12.550 --> 20:15.622
path of the storm. We also coordinated with

20:15.646 --> 20:19.518
utilities across Texas and our regions to ensure resources

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would be available if need be. As the forecast

20:23.598 --> 20:27.350
trajectory changed, we quickly called on additional

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mutual assistance crews under agreements that are in

20:30.606 --> 20:34.550
place well before any major event to substantially increase

20:34.630 --> 20:38.070
our crews. As shown on page eight.

20:39.090 --> 20:42.650
Early in the morning on Monday, July 8, Hurricane Beryl

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made landfall as a powerful category one hurricane.

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It brought heavy rains and flooding. Winds up to 97

20:51.194 --> 20:54.030
knocked out power to over 2 million of our customers.

20:54.570 --> 20:58.122
The powerful combination of extreme winds, along with the

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weakened trees and other vegetation, caused significant damage to

21:01.474 --> 21:04.748
our communities. Along with the company's electrical lines,

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distribution poles and other equipment.

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And with Burl, the extent of trees falling was greater

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than what might have been anticipated in previous storms due to additional stress

21:17.900 --> 21:21.520
from winter freezes and droughts. Over the last several years,

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the greater Houston area was hit directly by the dirty side of

21:26.276 --> 21:29.760
the hurricane and sustained strong winds for an extended period

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of time and far inland. To put the

21:33.008 --> 21:37.160
impact in context, Beryl had peak wind gusts of 97

21:37.200 --> 21:42.952
mph winds recorded along the coast of 91

21:42.976 --> 21:46.340
Bush Intercontinental Airport at 83 mph.

21:46.880 --> 21:50.040
Once the storm had passed through the area and it was safe to do so,

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we began immediately dispatching our crews to respond and

21:53.328 --> 21:56.420
assess the damage in accordance with our protocols.

21:57.590 --> 22:00.966
Now let me talk about our response and restoration efforts.

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As shown on slide nine, we activated

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and deployed over 15,000 centerpoint and mutual assistance

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crew members. These incredible men and

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women worked 16 hours shifts in hot, humid and

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at times stormy conditions. I want to thank these frontline workers

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from here in Houston and across our state and

22:22.934 --> 22:26.694
the nation for the service and dedication in restoring power

22:26.742 --> 22:30.222
to our communities. We also coordinated with the

22:30.246 --> 22:33.798
Texas Division of Emergency Management and other local partners

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to prioritize hospitals, assisted living centers,

22:37.334 --> 22:41.566
cooling centers and water treatment facilities over

22:41.598 --> 22:45.110
the course of restoration. We ultimately set up 22

22:45.150 --> 22:48.770
staging sites to coordinate and direct our restoration efforts,

22:49.190 --> 22:52.902
although we had to shut one down due to threats of violence against our

22:52.926 --> 22:56.678
crews. We deployed mobile generators at 28

22:56.734 --> 23:00.110
sites across Greater Houston to various critical facilities,

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including those I mentioned before going on

23:03.694 --> 23:07.350
to page ten. During our restoration efforts, we replaced

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over 3000 distribution poles,

23:10.270 --> 23:14.060
walked over 8500 circuit miles to repair damage,

23:14.230 --> 23:17.776
and removed or trimmed more than 35,000 trees and

23:17.808 --> 23:20.936
or other vegetation. As we turn

23:20.968 --> 23:24.048
to slide eleven, in terms of the

23:24.064 --> 23:28.120
pace of our restoration, we restored over 1 million customers

23:28.200 --> 23:31.648
within the first 48 hours. While the thousands on

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the ground worked incredibly hard to restore power and achieve significant

23:35.248 --> 23:39.288
impact in the first 48 hours, it is clear we must

23:39.344 --> 23:42.696
continue to enhance the resiliency of our system to

23:42.728 --> 23:44.820
support faster restoration times.

23:45.880 --> 23:49.664
We have engaged in industry experts in emergency response

23:49.752 --> 23:53.536
to conduct an extensive review of our emergency response

23:53.568 --> 23:58.024
programs. This effort is intended to develop key learnings

23:58.152 --> 24:01.340
to support rapid restoration of critical customers,

24:01.840 --> 24:05.820
improve the speed which we resolve public safety issues,

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and improve end to end processes from mutual assistance,

24:09.726 --> 24:13.730
crew activation to crew and work dispatch.

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Once this study is complete, we will share these learnings and

24:18.230 --> 24:21.806
recommendations with the commission and other relevant local and

24:21.838 --> 24:25.766
state stakeholders. More immediately, we will

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use innovative damage modeling to assist and strategically deploy

24:30.110 --> 24:33.758
our crews and overhaul our processes for work assignments

24:33.894 --> 24:36.650
and staging site selections.

24:37.230 --> 24:40.822
The goal here is very simple we intend to

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enhance and have available tools to restore power to

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as many people as quickly as we can and as safely as possible.

24:49.830 --> 24:53.062
Given the effect of the vegetation that had on our system,

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one of the core programs we will be immediately expanding

24:57.102 --> 25:00.510
is our vegetation management work. Over the past

25:00.550 --> 25:04.624
five years, we have spent over 220 million in vegetation management,

25:04.792 --> 25:07.660
covering more than 25,000 circumahs.

25:08.240 --> 25:11.288
Given the impact that extreme weather is having on

25:11.304 --> 25:15.312
our vegetation, it is clear than ever before that

25:15.336 --> 25:18.760
we must expand this effort. And that is

25:18.800 --> 25:22.368
what we will most urgently do in terms of

25:22.384 --> 25:26.192
the critical role of mutual assistance and the invaluable relationships we

25:26.216 --> 25:29.260
have with utilities across the state and the region.

25:29.570 --> 25:33.550
We will be evaluating how we can better mobilize these critical assets.

25:34.130 --> 25:38.390
And lastly, given the impact the storm had on our essential services,

25:38.930 --> 25:42.626
we will be adding temporary generation units to deploy

25:42.738 --> 25:46.082
and provide power to critical care facilities and

25:46.106 --> 25:50.122
other critical infrastructure. These critical facilities and

25:50.146 --> 25:53.746
essential services depend on us, and we will work

25:53.778 --> 25:57.282
closely with them over the coming days and weeks to identify how

25:57.306 --> 26:00.416
we can best ensure that they have the backup power that

26:00.448 --> 26:03.816
they need. We will work tirelessly

26:03.968 --> 26:07.260
to strengthen the resiliency of our grid,

26:08.280 --> 26:11.184
take further steps to address vegetation risk,

26:11.312 --> 26:15.460
and better coordinate and improve our emergency restoration efforts.

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My commitment to the community that I am so proud to serve

26:20.480 --> 26:23.600
is that we will learn, we will take action,

26:23.760 --> 26:27.286
and we will get better. Thank you, and I'll turn

26:27.318 --> 26:30.702
things back over to Jason for some final words. Thank you,

26:30.726 --> 26:34.006
Tony and Randy. (item:32:CenterPoint's CEO Jason Wells gives commitment to strengthen their system & best serve the community) Commissioners, you have my commitment

26:34.038 --> 26:38.390
that our leadership team will work urgently to strengthen our system and

26:38.430 --> 26:41.530
best serve the community we love and are proud to call our home.

26:42.070 --> 26:46.182
As shown on Slide 13, we will be taking these messages from here to our

26:46.206 --> 26:50.290
communities to engage with them on ways we will improve our service moving forward.

26:50.920 --> 26:54.168
We have already started the small group listening sessions and

26:54.184 --> 26:57.784
I look forward to personally being involved in more of these and other

26:57.832 --> 27:01.112
activities over the next few months. Thank you for your

27:01.136 --> 27:04.768
time today and we will update you on the status of our initial action plan

27:04.824 --> 27:08.048
every month and provide a copy of the independent after action

27:08.104 --> 27:11.808
review before the end of October. We're happy to answer any questions you

27:11.824 --> 27:15.048
may have about this material, about our plan to create the most resilient

27:15.104 --> 27:19.452
coastal grid in the country. Thank you all for being here.

27:19.636 --> 27:22.480
Commissioner Glotfelty, I know you had questions on resiliency.

27:23.100 --> 27:27.220
(item:7:Commissioner Glotfelty's thoughts on recalling CenterPoint's Resiliency Plan)Yeah. So I wanted to say something about Docket No. 7,

27:27.260 --> 27:30.532
the resiliency plan. And that is, I was prepared

27:30.556 --> 27:34.116
today to propose that we call recall the CenterPoint Resiliency

27:34.148 --> 27:36.600
Plan from SOAH and hear it at the Commission.

27:38.540 --> 27:42.268
Because of this storm and because of the urgency of the

27:42.324 --> 27:45.842
issue with which we face

27:45.906 --> 27:49.194
here, I feel like the focus of the

27:49.282 --> 27:52.586
resiliency measures. The specific projects contained in the resiliency

27:52.618 --> 27:56.018
plan should be looked at by us very specifically and very

27:56.074 --> 27:59.482
clearly. We must be able to satisfy the timelines of the

27:59.506 --> 28:03.602
Governor and the state leadership to ensure that this resiliency plan

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is correct and achieves the goal that they have set out and we

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have set out for this territory.

28:12.150 --> 28:16.094
I understand that there's a request from parties to continue

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negotiations on this to come to a settlement.

28:19.230 --> 28:22.094
And instead of asking for us to recall that today,

28:22.182 --> 28:25.462
I would suggest that we let them play out and see what we get from

28:25.486 --> 28:29.014
a settlement. I know Mr. Chairman, you as, you said at the last meeting

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settlements are good. Let's see if we can find a

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settlement here. I want to ensure that we have

28:36.214 --> 28:39.700
the right, as in the law, to modify any plan that's presented to

28:39.740 --> 28:43.212
us. Even if there's a settlement, we must be

28:43.236 --> 28:46.924
willing to bring this back to the Commission to get deeper into the specifics

28:47.012 --> 28:50.572
of how we will ensure resiliency on the CenterPoint system and all

28:50.596 --> 28:53.924
of the systems and all of the resiliency plans to ensure

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that the goals of our Legislature and our reliability are set.

28:57.356 --> 29:01.092
So let's let it go forward, let it see

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how it comes back to us. But we should be very diligent

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about taking these on ourselves as a Commission and hearing the hearings

29:08.994 --> 29:12.562
here as opposed to SOAH. (item:7:Chairman Gleeson to Jason Ryan concerning abatement) I completely agree with

29:12.586 --> 29:15.850
you. Before the request to abate came,

29:15.930 --> 29:19.682
I had a similar sentiment that we probably need to bring this here so we

29:19.706 --> 29:22.830
could hear the case and preside over it.

29:23.530 --> 29:27.466
One question I have, I assume part of the request for abatement is also will

29:27.498 --> 29:31.316
you all be amending the provisions that are

29:31.348 --> 29:34.836
in the resiliency plan that you filed? That's correct.

29:35.028 --> 29:38.540
So what is the thought process behind asking to abate

29:38.580 --> 29:42.260
it, rather than just withdraw it and come up with a new

29:42.420 --> 29:44.760
plan and submitting something new?

29:46.300 --> 29:50.180
So we're certainly open to either. I think as we have discussions

29:50.220 --> 29:53.812
with parties over the next couple of days, let us land on

29:53.836 --> 29:57.034
an agreed path with the parties. I think obviously there are going to

29:57.042 --> 30:00.466
be learnings from our after action. There can be

30:00.658 --> 30:04.306
information and learnings coming out of your own report that

30:04.378 --> 30:07.642
we should incorporate in that, and so we'll work with the

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parties. Maybe there are some things that should move forward immediately,

30:11.530 --> 30:15.990
and we can reach an agreement on that and maybe file an amended

30:16.530 --> 30:20.216
plan for the things that maybe should be informed by the work that

30:20.298 --> 30:23.716
our independent assessment is going to show, and that your assessment will show,

30:23.748 --> 30:28.468
too. Okay. (item:7:Commissioner Cobos' thoughts on recalling CenterPoint's Resiliency Plan) So, if you will. So I

30:28.484 --> 30:33.000
came in sort of thinking that the company should withdraw their application and

30:33.540 --> 30:37.556
wait to hear feedback from the Commission, from the Texas Legislature, from your independent

30:37.588 --> 30:41.372
consultant, so that your resiliency plan is robust

30:41.436 --> 30:44.640
based on lessons learned from the Beryl.

30:45.140 --> 30:48.580
And the reason that I believe that it's important to do that is

30:48.620 --> 30:52.200
because you know under your CCN, you have an obligation to serve.

30:52.360 --> 30:55.080
You have an obligation to provide continuous and adequate service.

30:55.240 --> 30:58.568
Getting a resiliency plan approved does not stop you from doing what you should be

30:58.584 --> 31:02.464
doing already to maintain continuous and adequate service for your customers

31:02.512 --> 31:05.592
in your service territory. So in my opinion,

31:05.736 --> 31:09.260
you can move forward with the actions you're already taking, and you list it out

31:09.720 --> 31:13.328
to provide enhanced resiliency for your service territory and

31:13.424 --> 31:17.450
come back and refile a a more robust resiliency plan

31:17.490 --> 31:20.910
that takes into consideration all of the feedback from

31:21.530 --> 31:25.138
the Commission, the Legislature, and your independent consultant. That's my opinion.

31:25.274 --> 31:28.858
I think if we move forward right now, we're not doing a

31:28.874 --> 31:32.150
service to what all the information,

31:32.610 --> 31:35.378
all the work that we're doing, we're going to be doing at the commission through

31:35.394 --> 31:38.706
the investigation, the feedback from the Legislature. You just

31:38.738 --> 31:42.182
hired an independent consultant. We want to make sure we get this right.

31:42.306 --> 31:47.614
But at the same time, you move forward with your resiliency measures and immediately,

31:47.782 --> 31:51.646
and ultimately, when you do file a resiliency

31:51.678 --> 31:55.610
plan, then I'm open to the commission hearing the hearing. But at this time,

31:57.230 --> 32:00.966
I don't see that it provides us any real benefit other than

32:01.158 --> 32:04.910
not taking all the information that we'll get in the coming months into

32:04.950 --> 32:06.770
account when we consider your plan.

32:11.000 --> 32:14.900
Any other questions on the resiliency plan aspect of this?

32:15.800 --> 32:18.328
(item:7:Chairman Gleeson to Jason Ryan on abatement timeline) So I think in your request for abatement, one of the things you put in

32:18.344 --> 32:21.100
there was you provide an update in October.

32:23.240 --> 32:26.688
I'd submit that October may be too long for an

32:26.704 --> 32:30.232
update. If the abatement moves forward and you don't withdraw, I think

32:30.336 --> 32:32.942
probably need to communicate a little more frequently than that.

32:33.136 --> 32:36.978
Leave that out there as some food for thought. Yes, sir. We appreciate

32:37.034 --> 32:40.722
the feedback. We will work with parties over

32:40.746 --> 32:43.990
the next couple of days and provide an update next week.

32:44.730 --> 32:48.810
I completely agree with the assessments that we need to see amendments

32:48.850 --> 32:52.058
to this plan based on our independent review and based on

32:52.074 --> 32:55.258
y'all's review as well. So message heard on that.

32:55.354 --> 32:58.738
We'll update you next week. Okay, thank you. Commissioners, any general

32:58.794 --> 33:00.700
questions about Beryl?

33:01.600 --> 33:04.808
Thoughts, maybe? (item:7:Commissioner Cobos general thoughts on Hurricane Beryl response) So,

33:04.944 --> 33:08.088
you know, I think it's great that y'all came with a bunch

33:08.104 --> 33:10.976
of information is what you're going to do next. A lot of what I heard

33:11.008 --> 33:14.104
seems like things y'all should have already been doing, right? I mean, you know,

33:14.192 --> 33:17.992
you're the second largest utility in the state, operating in multiple states,

33:18.136 --> 33:21.392
have a lot of experience with hurricanes. These are all things that I think,

33:21.456 --> 33:23.872
you know, some of the things that I heard today are things that the company

33:23.936 --> 33:26.898
should have already been thinking about and doing. You know, as you know,

33:26.914 --> 33:30.470
I went down to Houston and towards some of the aftermath

33:30.810 --> 33:34.390
and it was devastating. Right. And y'all know, y'all were firsthand there.

33:35.490 --> 33:38.930
So, you know, the processes and procedures that

33:38.970 --> 33:42.410
are laid out in the presentation, they're great to hear. But ultimately,

33:42.490 --> 33:45.418
at the end of the day, I think that your performance will be judged by

33:45.434 --> 33:49.162
your actions and the results from those actions. And, you know,

33:49.226 --> 33:53.070
accountability is very important. I think that y'all have all experienced express the desire

33:53.110 --> 33:56.302
to be held accountable and to take the actions and to

33:56.326 --> 33:59.934
start building and regaining trust with your community, with state and local

33:59.982 --> 34:03.918
leaders, the Commission. So I appreciate all of

34:03.934 --> 34:07.230
that. But at the end of the day, actions speak louder than words.

34:07.310 --> 34:10.542
So we need to get through the hurricane season and that's what needs to

34:10.565 --> 34:14.118
happen, and these actions need to be taken. And we hope that

34:14.134 --> 34:17.277
you do. But I think in general Chairman, if you will.

34:17.333 --> 34:22.217
I think, you know, CenterPoint is here before us today. But there

34:22.234 --> 34:26.018
are utilities in hurricane prone areas that

34:26.114 --> 34:30.242
I think should, should be taking some of these lessons that CenterPoint

34:30.266 --> 34:33.786
has laid out today into account as well. You know, and everybody,

34:33.858 --> 34:37.210
you know, all these utilities in this hurricane prone area should be thinking about

34:37.370 --> 34:41.389
what are they doing right now to prepare for the next hurricane and storm?

34:41.850 --> 34:45.330
What process and procedures work to prepare for Beryl?

34:45.790 --> 34:48.942
What can they do that they didn't do to prepare for Beryl to be

34:48.966 --> 34:51.170
better prepared for the next storm and hurricane?

34:52.190 --> 34:56.254
What are you doing to accelerate and adequately fund vegetation

34:56.302 --> 34:59.886
management and what is the status of

34:59.998 --> 35:04.262
that post barrel in your service territories and

35:04.446 --> 35:08.170
ensuring you have the appropriate manpower and funding to get that done?

35:09.150 --> 35:12.090
What are you doing to accelerate distribution, pole replacement?

35:12.850 --> 35:16.310
And if you have transmission lines that were impacted, I know you all didn't.

35:16.610 --> 35:19.874
What are you doing to ensure that the transmission lines

35:19.962 --> 35:23.402
are hardened and able to withstand the next

35:23.426 --> 35:26.930
storm or hurricane? What are you doing to proactively plan for pre

35:26.970 --> 35:31.258
staging and deployment of mutual assistance crews? What measures can be taken

35:31.434 --> 35:34.946
to restore more power, to restore power more quickly?

35:34.978 --> 35:38.568
From a manpower standpoint, if you lease mobile generation units,

35:38.634 --> 35:42.020
what are you doing to optimize the use of those existing mobile generation units?

35:42.140 --> 35:46.292
They're units that the Commission authorized

35:46.396 --> 35:48.920
and the utilities are earning a rate of return. So

35:49.260 --> 35:54.652
I mean, we approved at least CenterPoint's based on the notion that CenterPoint

35:54.676 --> 35:58.508
is in hurricane prone area, and these units would help with restoration of

35:58.524 --> 36:02.484
power. And so we

36:02.532 --> 36:06.132
need for the utilities that own the mobile generation units to develop a plan to

36:06.156 --> 36:09.948
optimize the use of the units and take lessons learned.

36:10.044 --> 36:13.000
If they're too big, get smaller ones. I mean,

36:13.980 --> 36:17.960
make sure you have the right sizes to address your critical care facilities and other

36:18.420 --> 36:21.836
customers that are critical, including water utilities and districts.

36:21.988 --> 36:25.588
What are you doing to ensure that your outage trackers are working 24/7

36:25.764 --> 36:28.876
CenterPoint's gone to a cloud based system. I think that's

36:28.908 --> 36:32.156
great. You know, you need redundancy. You need the ability to stay still,

36:32.228 --> 36:35.468
continue to have access to that outage tracker if the Internet goes down. I know

36:35.524 --> 36:38.860
during the storm, Xfinity and Spectrum went down.

36:38.900 --> 36:42.080
So what can you do to ensure that your outage tracker continues to work?

36:42.420 --> 36:45.748
What are you doing to ensure you communicate with your customers and the

36:45.764 --> 36:48.908
public prior to, during and after the storm? Because as you

36:48.924 --> 36:52.196
noted, only 42% of your customers are signed

36:52.228 --> 36:55.444
up to be on your power alert service. So what are you

36:55.452 --> 36:59.108
doing to get the word out? And you. Not every customer has the

36:59.124 --> 37:02.972
ability to sign up for the power service. And so how

37:02.996 --> 37:06.700
do you communicate to them? The daily press calls.

37:06.740 --> 37:10.516
The daily calls. Information to push out in multiple language,

37:10.708 --> 37:14.268
I think is really important. English, Spanish, and whatever other predominant languages

37:14.324 --> 37:18.828
in your service territory. And what

37:18.844 --> 37:22.404
are you doing to increase your emergency response? And so

37:22.492 --> 37:25.958
CenterPoint laid out steps that they're taking and implementing through a

37:25.974 --> 37:29.110
plan. I think that's important for all utilities in hurricane prone

37:29.150 --> 37:33.030
areas. What are you doing to ensure you communicate with water utilities and districts

37:33.150 --> 37:36.422
during a power outage? And, you know,

37:36.486 --> 37:39.838
ensuring that you understand what their needs are. If they

37:39.854 --> 37:42.966
have backup power, they don't have backup power, etcetera.

37:43.158 --> 37:46.710
If you're a utility in ERCOT like CenterPoint, what are you doing to ensure

37:46.750 --> 37:50.170
you communicate with your reps in your service territory to get customer information?

37:51.040 --> 37:54.768
And duly noted on the suggested change on the rule language, that's something for

37:54.784 --> 37:57.976
us to take into consideration as you don't have a direct relationship with

37:58.008 --> 38:02.020
customers. In the meantime, what can you do to coordinate

38:02.320 --> 38:06.152
with reps to get that customer information? And so all of these,

38:06.216 --> 38:09.632
all of these measures that I've laid out today

38:09.736 --> 38:13.392
are not just important for CenterPoint, they're important for all of the electric utilities that

38:13.416 --> 38:17.042
serve customers in hurricane prone areas. And maybe

38:17.066 --> 38:20.690
there's an opportunity as CenterPoint moves forward with lessons learned and

38:20.810 --> 38:24.322
implementing best practices and procedures for these utilities

38:24.386 --> 38:28.354
to engage in sort of a collaborative group to learn from each other

38:28.522 --> 38:32.498
and prepare. I mean, if you did well during this

38:32.514 --> 38:36.562
hurricane, that doesn't mean you'll do well the next hurricane. And so what

38:36.586 --> 38:39.314
can you learn from each other? To be better prepared in the future is going

38:39.322 --> 38:42.920
to be critically important as we move forward to get through this hurricane season

38:43.260 --> 38:46.844
and for the future. So that's my general

38:46.892 --> 38:51.160
comments. Thank you.

38:52.340 --> 38:56.316
(item:7:Commissioner Jackson's thoughts on Hurricane Beryl response and infrastructure) I'd just like to speak to the process, and I guess from my background and

38:56.348 --> 39:00.252
management of risk, I kind of see it as

39:00.396 --> 39:03.684
kind of twofold. One is, you know,

39:03.732 --> 39:07.200
shoring up that infrastructure, hardening so

39:07.240 --> 39:12.000
that in the event of an incident, the infrastructure

39:12.080 --> 39:15.176
is strong so that it could sustain the event.

39:15.248 --> 39:18.100
So that's one aspect of management of risk.

39:18.680 --> 39:21.968
The other is that, you know, we don't know what's going to

39:21.984 --> 39:25.152
come at us, whether it's a tornado or a hurricane or some

39:25.176 --> 39:28.800
other type of event, but we also need to be prepared

39:28.840 --> 39:31.660
to respond and recover quickly.

39:32.130 --> 39:35.310
And so oftentimes after an event,

39:35.890 --> 39:39.554
one of the things that an entity will take responsibility for

39:39.642 --> 39:43.866
themselves. And I noticed that you are doing an independent

39:43.978 --> 39:48.010
review. And although there's not a scope provided of

39:48.050 --> 39:51.194
the folks who are actually going to do the review, it talks about some of

39:51.202 --> 39:54.938
the work that they did in other areas and that they

39:54.994 --> 39:58.350
focused on evaluating the root causes

39:58.850 --> 40:01.510
of the outage, response delays,

40:02.050 --> 40:05.178
and really kind of did that at

40:05.194 --> 40:09.218
the front end of the investigation. And so I

40:09.234 --> 40:13.330
guess my expectation would be that you would take ownership

40:13.450 --> 40:17.550
of that, recognizing that, yes, it's important that we get input from

40:17.850 --> 40:21.322
customers, that we meet their expectation, that we meet public expectation,

40:21.386 --> 40:24.810
but also expect that there be, there would be an expectation

40:24.890 --> 40:28.666
from the utility that

40:28.858 --> 40:33.042
you would want to define and understand the

40:33.066 --> 40:36.506
root causes, whether they are a need

40:36.538 --> 40:40.602
to better harden your infrastructure from a physical standpoint or if

40:40.626 --> 40:43.858
there are things that can be done in order to better,

40:43.914 --> 40:48.642
to be able to better respond quickly. And oftentimes

40:48.666 --> 40:52.816
at kind of the front end of that root cause analysis is

40:53.008 --> 40:56.984
looking at the system and asking that question, you know, how well

40:57.152 --> 41:00.328
am I able to feel like I have a good map,

41:00.384 --> 41:04.216
a good identification of the system? How well are

41:04.248 --> 41:07.696
my it systems able to communicate with themselves

41:07.768 --> 41:11.488
so that we can go out, gather information quickly,

41:11.664 --> 41:13.900
analyze it and triage it,

41:14.800 --> 41:17.944
either. And that benefits you, whether it's on an ongoing

41:17.992 --> 41:21.504
basis or whether it's something that you're doing in response

41:21.552 --> 41:25.048
to an incident like this. And so I guess I

41:25.064 --> 41:29.152
did have a direct question, and that is, do you expect

41:29.216 --> 41:32.656
to do a root cause analysis as part of this independent

41:32.688 --> 41:36.168
review? Yes, ma'am. And then I

41:36.184 --> 41:37.900
guess as a follow up to that,

41:40.600 --> 41:43.056
in terms of the things that you've kind of laid out. And I know that

41:43.088 --> 41:46.672
this is kind of just at the beginning stages, and you're totally focusing on,

41:46.816 --> 41:50.456
you know, the outcome of barrel. But the expectation, I would think,

41:50.488 --> 41:53.472
would be that this would be for the system as a whole, you know,

41:53.496 --> 41:56.872
that going forward as an outcome of this root cause

41:56.896 --> 42:00.864
analysis, it wouldn't just be the part of the distribution system that

42:00.912 --> 42:04.384
is pointed towards Beryl. You would be looking at everything. You would be doing a

42:04.392 --> 42:08.832
very comprehensive review in

42:08.976 --> 42:12.460
kind of like the area of communications.

42:13.210 --> 42:16.754
I know that passive communications is good.

42:16.802 --> 42:18.698
You want to be able to go in and you want to be able to

42:18.714 --> 42:22.114
look at the outage tracker. But I think what we've seen in some other

42:22.162 --> 42:25.450
areas is that you kind of need that one two punch.

42:25.610 --> 42:29.314
You need something that's not just passive, but it's also active that

42:29.362 --> 42:33.538
provides information to the customers. And you

42:33.554 --> 42:37.306
kind of mentioned one of the challenges that you have in terms of getting

42:37.498 --> 42:40.978
directly the information of your customers. And I

42:40.994 --> 42:44.906
think that's something that would very much needs

42:44.938 --> 42:49.154
to be addressed and needs to be resolved. But there's

42:49.202 --> 42:52.482
also additional communication that's ongoing with emergency

42:52.546 --> 42:55.986
management. And so I would suggest

42:56.058 --> 42:59.474
and ask you as kind of a leadership role if

42:59.562 --> 43:03.370
you might be willing to work with emergency management in some

43:03.410 --> 43:07.102
sort of overall comprehensive ring down

43:07.206 --> 43:10.334
emergency alerting system that could be used not

43:10.382 --> 43:14.078
just for power outages, but for other things that might impact

43:14.134 --> 43:17.486
a community. And I think there are other parts of Texas where that has been

43:17.518 --> 43:20.598
done successfully that you could take a look at,

43:20.654 --> 43:23.770
particularly the Southeast Texas Alerting Network.

43:24.230 --> 43:27.598
Which has been in place, you know, for probably, you know,

43:27.614 --> 43:29.010
for over ten years,

43:30.930 --> 43:34.610
having multiple ways of being able to get out information, not only

43:34.650 --> 43:38.234
going directly to your side and looking at the outage tracker,

43:38.322 --> 43:41.762
but also being able to work directly with emergency

43:41.826 --> 43:45.146
management. Because at the end of the day, they are the ones that are

43:45.178 --> 43:48.978
obligated to tell the public what they need to do to be protective of

43:48.994 --> 43:51.750
their own safety. So I think that partnership would be valid.

43:52.610 --> 43:57.846
I would just kind of end with, you know, something that was

43:57.878 --> 44:02.310
put in place and a report that was done after

44:02.390 --> 44:06.614
Hurricane Harvey, and it was done by the Texas

44:06.662 --> 44:10.062
section of the American Society of Civil Engineers, the eye of the

44:10.086 --> 44:14.050
Storm report, and I was always so proud of our Texas section because,

44:14.750 --> 44:18.390
as you know, ASCE does this infrastructure report card.

44:18.550 --> 44:22.246
And yes, they do go out and they grade how well the

44:22.278 --> 44:26.014
infrastructure is in a given state and particularly in Texas.

44:26.142 --> 44:30.022
But they have taken, you know, many measures moving forward to improve

44:30.126 --> 44:33.622
the grade. And I think that's what we expect here is we expect an

44:33.646 --> 44:37.690
improvement in the grade. And one of the quotes

44:38.270 --> 44:41.422
that was in this report, in the eye of the storm

44:41.446 --> 44:45.142
report after Harvey came from Governor Abbott and

44:45.166 --> 44:48.606
he said, we need to future proof Texas. We don't know what's coming at

44:48.638 --> 44:51.586
us, but we need to be for whatever it is. And I think that's my

44:51.618 --> 44:55.426
expectation here, is this needs to be a part of future proofing our

44:55.458 --> 44:59.522
state moving forward. It's not just about barrel. It's about all the things

44:59.586 --> 45:04.410
that impact us. Putting in a very robust system

45:04.490 --> 45:08.130
by which we can not only strengthen and harden the

45:08.170 --> 45:12.106
physical assets, but we can also be prepared from a response standpoint

45:12.138 --> 45:15.898
to be able to utilize technology, utilize partnerships, to be

45:15.914 --> 45:19.030
able to quickly. So it really doesn't

45:19.070 --> 45:22.702
matter what the event is. Texas is prepared and we future

45:22.766 --> 45:26.358
proof start. So thank you for the work that you've done so far,

45:26.454 --> 45:30.262
and I look forward to seeing your updates, and I look forward to seeing the

45:30.286 --> 45:34.038
progress that we're going to be making. (item:7:Jason Wells' response to the Commissioners on CenterPoint incorporating their recommendations) Thank you, Commissioner. We couldn't agree more.

45:34.174 --> 45:38.110
You know, we manage a system that faces numerous natural

45:38.150 --> 45:41.934
hazards, and we have to mitigate and harden our system to

45:41.982 --> 45:45.690
all of those risks, as well as be much better at responding to emergencies

45:45.730 --> 45:49.306
when they occur and communicating throughout. We will conduct a thorough root cause

45:49.338 --> 45:52.950
analysis across the full spectrum of our responsibility,

45:53.490 --> 45:56.590
and we'll incorporate those recommendations. Thank you,

45:57.930 --> 46:01.186
Commissioners. (item:7:Commissioner Hjaltman to Jason Wells concerning CenterPoint's new system and critical infrastructure) Looking at

46:01.218 --> 46:05.082
Tab 20, and it looks like your incident kind of Command

46:05.186 --> 46:08.936
Flow Chart. Is this what the new system

46:08.968 --> 46:12.312
will be looking like? Is that correct? No, Commissioner.

46:12.336 --> 46:15.740
this, this was a system that we implemented last year.

46:17.040 --> 46:20.144
You know, one of the things that I recognized when we stepped in,

46:20.192 --> 46:24.104
when I stepped in the role last year as COO is that we hadn't fully

46:24.232 --> 46:28.304
implemented the National Incident management system incident command structure across

46:28.432 --> 46:32.104
the company. That was an improvement we put in place in 2023.

46:32.192 --> 46:36.258
There is still a lot more work we need to do, which is why we

46:36.354 --> 46:40.210
have initiated and will search for and will hire a

46:40.250 --> 46:44.034
senior executive emergency management professional to continue to accelerate the

46:44.122 --> 46:47.586
adoption of the ICS structure. Okay. And will that include

46:47.698 --> 46:51.714
more point contacts for particular critical

46:51.762 --> 46:55.098
infrastructure or to try to narrow

46:55.154 --> 46:58.906
so, you know, you don't have so many people going different directions? It's going to

46:58.938 --> 47:02.580
one point contact to help eliminate that confusion. Yes,

47:02.620 --> 47:05.892
Commissioner, we know we frustrated our critical facility

47:05.956 --> 47:09.444
partners with chaotic communication

47:09.532 --> 47:12.780
around restoration times, coordination with when they could expect service,

47:12.860 --> 47:16.828
coordination with when, and if we could provide mobile generation

47:16.884 --> 47:21.244
backup, all of that will be immediately streamlined for this hurricane

47:21.292 --> 47:25.148
season, and we will continue to improve on

47:25.204 --> 47:28.030
preparation for future storm seasons.

47:30.970 --> 47:32.910
(item:7:Commissioner Hjaltman to Jason Wells on vegetation) One final question on the vegetation.

47:34.530 --> 47:38.146
Houston is a very different city from most in Texas and has

47:38.178 --> 47:42.210
different rules. Do y'all run into issues with the city

47:42.290 --> 47:45.666
on tree management and then municipalities as well,

47:45.698 --> 47:49.258
and then cities within Houston itself? Is that an issue that needs to

47:49.274 --> 47:52.474
be addressed? I do think it. Thank you for that question,

47:52.522 --> 47:56.480
Commissioner. I do think we do need to look at vegetation management broadly. There's clearly

47:56.520 --> 47:59.660
more we can do. We've proposed more to do here.

48:00.120 --> 48:03.260
We will have more recommendations about what we can do in this process.

48:03.600 --> 48:07.936
But trees, as you know, are personal property of

48:07.968 --> 48:10.832
homeowners, local, state government.

48:11.016 --> 48:14.320
Right. We do not have the ability to trim

48:14.360 --> 48:18.100
trees outside of our right of way. You know, we worked with

48:18.680 --> 48:21.580
one of our largest vegetation management companies.

48:22.760 --> 48:25.944
Their calculation was nearly 60% of

48:25.992 --> 48:29.608
the vegetation they removed were trees or full trees

48:29.784 --> 48:32.992
that had fallen from outside of the right of way. So I do think

48:33.096 --> 48:37.024
the issue of vegetation management is broader and requires

48:37.072 --> 48:40.512
the attention of everybody that will be impacted by

48:40.536 --> 48:43.980
this. (item:7:Chairman Gleeson to Jason Wells on vegetation) Jason, just a quick follow up to that.

48:44.280 --> 48:47.778
But you all do have a program, correct, that if

48:47.794 --> 48:50.122
there are dead trees outside of your right of way that you think could be

48:50.146 --> 48:54.026
hazardous, you go contact that landowner and then work

48:54.058 --> 48:56.634
with them to see if they'll allow you to cut down those trees, correct?

48:56.762 --> 49:00.670
That's correct, Chairman. You know, historically, the utilities

49:01.010 --> 49:04.170
have conducted vegetation management on annual cycles.

49:04.330 --> 49:07.466
I don't think that's reflective of the risk that our system faces. Last year,

49:07.498 --> 49:11.322
we implemented a high hazard tree program and significantly expanded

49:11.346 --> 49:15.052
the scope. It was part of the nearly 30% increase in

49:15.076 --> 49:18.652
vegetation management spend that we initiated last year.

49:18.796 --> 49:22.956
And we are going to use that program and accelerate

49:22.988 --> 49:27.116
it as we reduce this risk going forward. But we have to work with landowners

49:27.228 --> 49:30.900
and get their consent on those trees. Yeah. You know, when I went out

49:31.060 --> 49:34.640
with Jason to, I think we were in Bellaire.

49:35.180 --> 49:38.984
I was actually somewhat shocked to see that there was maybe

49:39.032 --> 49:42.120
18 inches of span between a distribution line

49:42.200 --> 49:46.056
on either side and these 25 foot trees and

49:46.088 --> 49:49.664
hedges everywhere. And so I think that's good to expand that because I think you

49:49.672 --> 49:53.320
have an opportunity here, you know, coming off of an event like this where landowners

49:53.360 --> 49:57.088
will probably be more willing in response to this event to work with you to

49:57.184 --> 50:00.472
take down those trees. Yes, sir. Commissioner Glotfelty?

50:00.616 --> 50:02.780
(item:7:Commissioner Glotfelty to Jason Wells concerning vegetation management) Yeah, I have a bunch of questions here.

50:05.090 --> 50:08.834
I'll follow up on vegetation management. My issue

50:08.882 --> 50:12.706
that I've espoused

50:12.738 --> 50:16.070
on since I became a Commissioner, the first rate case

50:16.610 --> 50:21.938
was SWEPCO, and they got

50:21.994 --> 50:25.030
dinged by me because of the vegetation management practices.

50:25.850 --> 50:29.418
I think the mindset of vegetation

50:29.474 --> 50:32.780
management has to be we use every technology,

50:34.000 --> 50:37.824
we find every crew that we can and that

50:37.872 --> 50:41.432
we don't skimp on this. I know that there's an

50:41.456 --> 50:45.080
issue between capital costs and o and m costs,

50:45.160 --> 50:48.424
and it always impacts vegetation management.

50:48.592 --> 50:52.296
But I'd like you all to become a leader in

50:52.328 --> 50:55.368
this. You all do have a very compact

50:55.424 --> 50:58.034
territory and you can lead.

50:58.202 --> 51:01.634
So I hope you all take technologies, I hope you become

51:01.682 --> 51:05.418
a leader in this and show the rest of the country the best

51:05.474 --> 51:08.618
practices on this. There are a lot of them there, and you all can implement

51:08.674 --> 51:12.050
them. And then tell us that because you can not only lead

51:12.130 --> 51:16.274
for your service territory, you can be the leader and show every other utility and

51:16.322 --> 51:19.562
every other co op and every other muni in this state how

51:19.626 --> 51:23.270
best to be, how to be the best vegetation management company

51:23.450 --> 51:27.654
in the state. And with that comes a challenge,

51:27.702 --> 51:31.566
which is vegetation management crews are not easy to

51:31.598 --> 51:34.686
get. I understand that. So I would

51:34.718 --> 51:38.982
ask that you all look at is it economic to bring some more in house

51:39.086 --> 51:42.942
and have them be part of your system, of your team so

51:42.966 --> 51:46.206
that you're not just hiring out crews? And I would say the

51:46.238 --> 51:49.504
same with linemena. If you look around,

51:49.552 --> 51:52.660
if you drive around Houston, as I know you all do, I do.

51:53.840 --> 51:58.800
I see more contractor trucks than I see Centerpoint

51:58.840 --> 52:03.144
trucks. And I know historically there has been a long term

52:03.312 --> 52:07.408
reason for that, and that is to share costs between utilities when

52:07.464 --> 52:10.744
these crews are not being used on your system.

52:10.832 --> 52:14.260
So in other words, another company can pick up some of those costs.

52:15.090 --> 52:18.990
It's my belief that many of your contractors have

52:20.930 --> 52:24.670
their employees on your system 365 days a year.

52:25.770 --> 52:29.210
And that ought to be an area where you all look at bringing those in

52:29.250 --> 52:33.322
house so you have control over them and

52:33.346 --> 52:36.830
we have oversight over them. Otherwise, it's just another contract.

52:37.490 --> 52:41.910
That's the way I see it. So I know you all have big contractors there,

52:42.310 --> 52:45.526
but I think you should look to bring some of those in house if it's

52:45.558 --> 52:49.086
economic to do so, you all should bring them in house so they're directly under

52:49.118 --> 52:52.526
your control. Thank you, Commissioner. We hear

52:52.558 --> 52:59.246
the charge and intend to rise to the occasion with

52:59.278 --> 53:03.222
respect to vegetation management. It offers no relief to our customers who

53:03.246 --> 53:06.250
experience the anger and frustration with Hurricane Beryl,

53:06.550 --> 53:10.298
we recognize the need to move move from annual cycles to more targeted

53:10.394 --> 53:13.150
technology based tree trimming.

53:14.050 --> 53:18.130
We had implemented a predictive modeling system using

53:18.170 --> 53:23.058
the latest technology with lidar weather

53:23.114 --> 53:27.658
stations at a granular level that track ground

53:27.714 --> 53:30.666
saturation, rainfall levels,

53:30.698 --> 53:34.420
canopy growth to target trees of highest risk.

53:35.240 --> 53:39.096
Unfortunately, that system is available after hurricane

53:39.128 --> 53:43.112
Beryl passed through, but that system will be utilized

53:43.256 --> 53:46.320
to inform the vegetation that we've outlined in our commitments today,

53:46.440 --> 53:50.016
as well as our vegetation moving forward. And we continue to intend

53:50.048 --> 53:53.176
to learn from others with respect to

53:53.288 --> 53:56.740
bringing vegetation and line crews in house.

53:57.320 --> 54:01.168
We are actively working that process a little over three

54:01.224 --> 54:05.548
years ago when I joined the company. We recognize the need to significantly

54:05.644 --> 54:09.052
increase our level of investment in our Houston electric system.

54:09.236 --> 54:12.920
We nearly doubled our capital investment overnight.

54:13.500 --> 54:16.796
The only way that we could conduct that work efficiently at that time

54:16.868 --> 54:20.356
was to utilize the support of outside contractors.

54:20.508 --> 54:23.804
As we look forward and see the need for

54:23.892 --> 54:27.092
continued investment well into the future, it is time

54:27.196 --> 54:30.432
to look at bringing more of those resources in house. And so we will come

54:30.456 --> 54:33.940
back to you with a specific recommendation on that front.

54:34.640 --> 54:38.616
Thank you. Thank you for the commitment on vegetation management

54:38.688 --> 54:41.832
as well. I know there are new technologies out there that you all

54:41.856 --> 54:45.376
are using. It's also important to be the

54:45.408 --> 54:48.888
best user of the best technology. So I believe that you

54:48.904 --> 54:50.060
all have that commitment.

54:53.080 --> 54:56.424
(item:7:Commissioner Glotfelty to Jason Wells concerning smart meters) You all have, you all

54:56.472 --> 55:00.160
spent a few hundred million dollars a couple years ago, a decade ago,

55:00.200 --> 55:03.480
on smart meters. Were they any value in this

55:03.560 --> 55:07.160
hurricane? I mean, I continue to hear that people say the outage

55:07.200 --> 55:10.100
tracker was out. I had no clue when it was coming back on.

55:11.280 --> 55:14.728
Wasn't the plan for smart meters many

55:14.784 --> 55:18.504
years ago that you could help track outages and help provide information

55:18.592 --> 55:21.820
to customers? And was that a total failure?

55:23.870 --> 55:27.478
Commissioner, the smart meters were useful in our restoration efforts.

55:27.574 --> 55:31.170
However, they were not useful to our customers, and for that, I apologize.

55:32.870 --> 55:36.654
As Tony outlined, we experienced

55:36.742 --> 55:40.718
significant demand on our outage tracker during

55:40.734 --> 55:43.250
the de Racho restoration response,

55:44.150 --> 55:47.442
demand that our own internal servers couldn't handle.

55:47.566 --> 55:50.674
We committed to bringing cloud based outage tracker

55:50.722 --> 55:54.466
online by August 1, which has historically been the

55:54.498 --> 55:58.386
start of hurricane season. And that two month implementation

55:58.498 --> 56:01.786
is faster than what has happened in the industry previously.

56:01.858 --> 56:04.786
That's why we can make the commitment sitting in front of all of you today

56:04.858 --> 56:08.242
that we will have an outage tracker on August 1. When we do have

56:08.266 --> 56:12.430
that outage tracker, the meters will provide benefit.

56:13.020 --> 56:16.440
In the interim. We knew our customers needed some form of information

56:16.980 --> 56:20.972
as we were building this new outage tracker, and we used maps that

56:20.996 --> 56:24.916
were more tied to the circuit level. That created frustration

56:25.068 --> 56:28.788
at the address or meter level.

56:28.924 --> 56:32.116
And that was a reflection of this period of

56:32.148 --> 56:35.844
time between when we had to take down our old outage tracker before we

56:35.852 --> 56:39.210
can bring our new outage tracker up. As I said, at this start of August.

56:40.910 --> 56:44.530
(item:7:Commissioner Glotfelty to Jason Wells on outage trackers) Yeah, I think we saw a lot of online folks say,

56:44.990 --> 56:48.086
your outage tractor says, tracker says, my house is

56:48.118 --> 56:51.510
online and I'm not. And the nesting problem there,

56:51.550 --> 56:55.390
as you all call it, I hope that gets fixed in this

56:55.510 --> 57:00.462
outage tracker. The other thing is, so in

57:00.526 --> 57:04.142
this new world of technology, I can't

57:04.166 --> 57:08.044
help but think about things like ways,

57:08.172 --> 57:11.412
ways for traffic and accidents. Everybody that's a

57:11.436 --> 57:15.012
crowdsourced tool that everybody can input information

57:15.116 --> 57:18.884
in. And if there's a technology like that that can

57:18.932 --> 57:22.708
help you all figure out, you all have to do the assessments before you

57:22.724 --> 57:26.172
can send crews out. But if you could crowdsource that and

57:26.196 --> 57:29.532
get the customers who have

57:29.556 --> 57:33.000
the meters to help you do that, it might speed up the process.

57:33.310 --> 57:36.670
I'm thinking differently here. I don't know if that works or not.

57:36.790 --> 57:40.966
But the fact is, you know, for you all to walk 8000

57:41.038 --> 57:45.942
miles of distribution lines is hard and

57:46.126 --> 57:49.654
it delays some of the restoration.

57:49.742 --> 57:53.190
Not all of it, but some of it. And if there was a better way

57:53.230 --> 57:57.078
to use the community in that process, it might be kind

57:57.094 --> 58:00.320
of a leading edge technology that you can show the world.

58:00.780 --> 58:04.360
Yes, Commissioner. We hear the charge and fully agree.

58:04.660 --> 58:08.572
We've begun to use aerial resources, whether they

58:08.596 --> 58:12.044
are helicopter or drone. We are,

58:12.132 --> 58:15.956
as we think forward to our customer platforms, looking at

58:16.068 --> 58:19.524
ways for customers to report and send photos of damage

58:19.612 --> 58:23.684
so that we can prioritize lines down and other

58:23.852 --> 58:27.054
safety related items that come up in, in a restoration

58:27.102 --> 58:30.422
response. And so we will be opening the aperture as wide

58:30.446 --> 58:33.758
as possible to bring the latest technology to bear to accelerate restorations

58:33.814 --> 58:37.670
moving forward. Great. Thank you. (item:7:Commissioner Glotfelty to Jason Wells concerning mutual assistance and prestaging of crews) I wanted to

58:37.830 --> 58:44.110
shift topics here a little bit to mutual

58:44.150 --> 58:47.646
assistance and pre staging of crews.

58:47.758 --> 58:51.406
I think there's, you know, I've said this

58:51.558 --> 58:55.232
to y'all individually, that there are a lot of things that

58:55.256 --> 58:57.940
went wrong here and a lot of things that you all need to fix.

58:58.800 --> 59:02.380
I don't think that you all were 100% wrong. I think there are some things

59:03.480 --> 59:09.008
that were done to industry standard and that would

59:09.024 --> 59:12.192
be challenges for every utility in every community in a

59:12.216 --> 59:16.016
situation like this, the pre staging of

59:16.048 --> 59:19.792
crews and mutual assistance. So it's my understanding that

59:19.816 --> 59:23.496
mutual assistance is you

59:23.528 --> 59:27.040
have to call a regional mutual assistance group,

59:27.120 --> 59:31.376
which everyone's a member of, and request crews and

59:31.408 --> 59:34.696
they make a determination as to whether the storm

59:34.728 --> 59:38.640
is actually going to happen in your territory and that they release them off

59:38.680 --> 59:42.280
their system. So if that's

59:42.320 --> 59:46.216
correct, there are there a lot of variables that are not in your control when

59:46.248 --> 59:48.800
you try to recover crews for mutual assistance?

59:49.900 --> 59:53.836
Commissioner, there is competition for resources, but one of the great hallmarks

59:53.868 --> 59:55.920
of this industry is the cooperation.

59:57.140 --> 01:00:00.740
You know, as Randy had mentioned, we were coordinating

01:00:00.780 --> 01:00:04.396
with our Texas Gulf coast peers pre staging

01:00:04.428 --> 01:00:07.876
nearly 15,000 mutual assistance crews along the Gulf coast.

01:00:07.988 --> 01:00:11.316
There is variability to a path of a storm. It is

01:00:11.348 --> 01:00:14.920
important to pre stage crews out of harmony, harm's way so they're not negatively

01:00:14.960 --> 01:00:19.144
impacted. And that coordination

01:00:19.272 --> 01:00:23.704
continues all the way up until landfall, which is why we can redirect

01:00:23.872 --> 01:00:27.272
to where they're most needed very efficiently. Now, that's not to say

01:00:27.296 --> 01:00:30.672
that there's room for improvement and that will be a focus of

01:00:30.696 --> 01:00:34.528
ours, but the coordination is widespread so that

01:00:34.624 --> 01:00:37.900
the industry can respond to where it's needed most.

01:00:38.970 --> 01:00:42.522
But isn't it right that you have to request those crews and they

01:00:42.546 --> 01:00:46.098
have to be released from the utility that they're working on in

01:00:46.114 --> 01:00:49.490
order to help you respond? That is a correct

01:00:49.530 --> 01:00:52.354
statement, but I will say at the same time,

01:00:52.522 --> 01:00:55.954
not only are we in coordination with the regional mutual

01:00:56.002 --> 01:01:00.230
assistance providers, I was in close coordination with the national EEI

01:01:00.570 --> 01:01:04.194
mutual assistance team as well. And there

01:01:04.242 --> 01:01:07.456
is a procedure to releasing those crews,

01:01:07.528 --> 01:01:10.740
but there is also means in which we can

01:01:11.280 --> 01:01:15.104
request and get additional crews

01:01:15.192 --> 01:01:16.740
to help with the restoration process.

01:01:18.320 --> 01:01:22.192
Randy, did you want to add something? (item:7:Randy Pryor's response to Commissioner Glotfelty's question requesting of resources & prestaging of crews) Well, I was just going to

01:01:22.376 --> 01:01:25.180
confirm exactly what Jason just conveyed.

01:01:26.880 --> 01:01:29.984
The requesting utility, in this case us

01:01:30.152 --> 01:01:34.162
CenterPoint, did make our request for the resource and then

01:01:34.266 --> 01:01:38.314
the providing. Utilities do have to make decisions

01:01:38.362 --> 01:01:42.498
based on potential weather threats that they're seeing either currently or

01:01:42.554 --> 01:01:45.482
forecasted to see in the next few days. Right.

01:01:45.586 --> 01:01:49.506
To be able to provide that availability and then there's a matching

01:01:49.698 --> 01:01:53.426
that's provided there. And then, of course, outside of our rmags,

01:01:53.458 --> 01:01:57.442
we do have other agreements with utility providers to secure resources that

01:01:57.466 --> 01:02:00.170
we did do as well in advance of this event.

01:02:01.510 --> 01:02:05.038
And am I right to say that there is competition for crews when you have

01:02:05.054 --> 01:02:08.534
a storm such as this? Yeah, I would say early on in the pre

01:02:08.582 --> 01:02:11.974
staging. Right. I mean, because everybody's kind of anticipating,

01:02:12.062 --> 01:02:15.518
you know, what the impacts are going to be and of course,

01:02:15.614 --> 01:02:18.766
you know, everybody's predictive models are, you know,

01:02:18.878 --> 01:02:22.830
have variables. Right. So in the likelihood of any major events,

01:02:22.910 --> 01:02:26.070
you know, those, those impacted utilities, and you just can't

01:02:26.110 --> 01:02:29.854
think of the immediate Gulf coast because these storms do have pass,

01:02:30.022 --> 01:02:33.526
you know, through Texas, through the midwest, et cetera.

01:02:33.638 --> 01:02:37.414
So, you know, that's what folks have to consider when they're considering.

01:02:37.502 --> 01:02:41.662
While there may be devastation along the Gulf Coast, Midwest utilities two

01:02:41.686 --> 01:02:45.446
and three days later are also dealing with tornadic activities from the

01:02:45.478 --> 01:02:48.950
same storm event. So those considerations are made.

01:02:49.110 --> 01:02:52.796
But, you know, getting back to initially, yes, I would

01:02:52.828 --> 01:02:55.548
say typically the resources are there,

01:02:55.604 --> 01:02:58.940
but after the event is

01:02:58.980 --> 01:03:02.452
where we really aggregate based on the impacts, the customers

01:03:02.516 --> 01:03:05.676
impacted and the number of events and then be able to work through

01:03:05.708 --> 01:03:10.160
those resources to be able to allocate to where the most specific needs are.

01:03:10.580 --> 01:03:14.380
And is it true that if you have a crew that drives in from,

01:03:14.540 --> 01:03:17.574
so as I understand, mutual assistance, what you want to do is you get,

01:03:17.622 --> 01:03:20.750
you want to get the closest crews to come help you first. And then,

01:03:20.790 --> 01:03:24.550
so you say 100 miles, you get whatever and then 200 miles and then 500

01:03:24.590 --> 01:03:28.014
miles in 1000 miles. If you get crew, if it's a big enough storm and

01:03:28.022 --> 01:03:31.718
you get crews from 1000 miles and they're driving 12 hours to

01:03:31.734 --> 01:03:33.250
get to Houston, Texas,

01:03:35.230 --> 01:03:38.690
they cannot drive into Houston. Come to your staging yard,

01:03:39.670 --> 01:03:43.636
pick up a ticket and just go out on your system. Is that correct?

01:03:43.828 --> 01:03:47.052
There are rules that require required rest periods if

01:03:47.076 --> 01:03:50.972
that's what you're referencing. So if crews are driving, let's say 1000

01:03:51.036 --> 01:03:54.532
miles, typically that's a two day drive, right? On average it's

01:03:54.556 --> 01:03:58.324
about 500 miles a day. These are large trucks compared

01:03:58.372 --> 01:04:02.480
to smaller vehicles. So on average, the utility

01:04:02.900 --> 01:04:05.932
looks at about 500 miles per day.

01:04:05.996 --> 01:04:10.190
So 1000 miles out, meaning they arrive two days depending

01:04:10.230 --> 01:04:13.406
on that time of day that they arrive. Right. I mean, if they arrive

01:04:13.478 --> 01:04:17.446
in at later in the day after 608:00

01:04:17.518 --> 01:04:20.710
they are required to have, you know, a rest period to be able to start

01:04:20.750 --> 01:04:24.598
the next day. So in that case, we will utilize our onboarding

01:04:24.734 --> 01:04:28.406
and we have brief training, safety orientation

01:04:28.478 --> 01:04:31.750
for those crews to be able to utilize that. And then they require

01:04:31.790 --> 01:04:35.728
their respiratory. And are those rules, OSHA rules? Is that governed by

01:04:35.744 --> 01:04:39.352
the, there are OSHA rules applied to that. So the

01:04:39.376 --> 01:04:42.192
complaint that I've heard is that, you know, we saw a bunch of trucks sitting

01:04:42.216 --> 01:04:45.496
there. We couldn't put them out on the system right away. Some of

01:04:45.528 --> 01:04:49.112
that may be because assessments weren't done yet.

01:04:49.176 --> 01:04:52.296
Some of it may be because of OSHA rules. I mean, there's more

01:04:52.328 --> 01:04:54.020
than just a,

01:04:57.160 --> 01:05:00.180
they're sitting there because, because you don't have anything for them to do.

01:05:01.530 --> 01:05:04.630
(item:7:Jason Wells' response to Commissioner Glotfelty's question on restoration and crews response times) Commissioner, they come to help with restoration. I mean,

01:05:06.050 --> 01:05:11.010
this is what they do. This is what they live to do. And there

01:05:11.050 --> 01:05:13.910
are a variety of reasons why trucks can be parked.

01:05:14.890 --> 01:05:19.762
A specific job site may still require incremental

01:05:19.786 --> 01:05:23.790
vegetation work before it's made safe to begin the construction.

01:05:24.090 --> 01:05:27.920
There are incidences where maybe the construction

01:05:28.260 --> 01:05:31.436
is more profound than what was originally

01:05:31.468 --> 01:05:33.680
assessed and they waiting on materials.

01:05:35.420 --> 01:05:38.692
But these crews get to work as quickly

01:05:38.716 --> 01:05:41.640
and as safely as we can to deploy them on our system.

01:05:42.020 --> 01:05:46.100
They work tirelessly to bring service back

01:05:46.140 --> 01:05:50.700
online for our customers, and they were working hard immediately

01:05:50.740 --> 01:05:53.802
in this storm, which is why I, we were able to restore more than a

01:05:53.826 --> 01:05:57.430
million customers within the first 24 or 48 hours.

01:05:58.690 --> 01:06:00.110
Just have a couple more.

01:06:03.290 --> 01:06:06.666
When you do your storm

01:06:06.698 --> 01:06:10.010
drills, do you have third party evaluators there that give

01:06:10.050 --> 01:06:13.578
you real third party evaluations as

01:06:13.594 --> 01:06:17.034
to how you're doing and what you think? The room for improvement? Or do

01:06:17.042 --> 01:06:20.612
you all just pat each other on the back and say,

01:06:20.716 --> 01:06:24.748
we did good this time? (item:7:Jason Wells' response to Commissioner Glotfelty's question on 3rd party assessments) No, sir. We don't currently utilize

01:06:24.804 --> 01:06:28.680
third parties to assess. We have hired emergency

01:06:29.580 --> 01:06:33.516
management experts to come in and offer best practices,

01:06:33.668 --> 01:06:37.164
help shape the drills,

01:06:37.332 --> 01:06:41.068
provide feedback, but it's not as formal as

01:06:41.084 --> 01:06:44.690
a third party assessment, and that is something we're considering moving forward.

01:06:45.070 --> 01:06:48.486
I was appreciate, I appreciate the team members that

01:06:48.518 --> 01:06:51.822
you brought on board, former FEMA people Manny Miranda

01:06:51.846 --> 01:06:55.550
from Florida Power and light. I think they provide a very,

01:06:55.630 --> 01:06:59.542
very valuable view that can be hopefully incorporated

01:06:59.606 --> 01:07:03.330
quickly to the benefit of the consumers and the company

01:07:03.990 --> 01:07:07.326
so that these things are dealt

01:07:07.358 --> 01:07:10.108
with a little bit better in the future. Yes,

01:07:10.124 --> 01:07:14.140
sir. (item:7:Commissioner Glotfelty to Tony Gardner on communication) I think I have one

01:07:14.180 --> 01:07:21.520
last thing, and that is communications

01:07:22.860 --> 01:07:26.804
was poor. I don't know how else to put it, but I

01:07:26.812 --> 01:07:29.800
think you all know that. I think you all have committed to changing it.

01:07:33.340 --> 01:07:36.612
The fact that you all don't have contact with

01:07:36.636 --> 01:07:44.532
all of the customers, I think, is you

01:07:44.556 --> 01:07:47.240
all have equipment on their premises,

01:07:47.700 --> 01:07:51.620
so they are your customers. And if you don't have the information

01:07:51.700 --> 01:07:55.284
to your customers, then that's your fault. And I know you want

01:07:55.292 --> 01:07:58.940
to change that. And I know as we've restructured this

01:07:58.980 --> 01:08:02.256
industry, most of the contact has gone to the retail electricity

01:08:02.278 --> 01:08:05.708
provider. You all are still the bread and butter of

01:08:05.724 --> 01:08:08.932
Houston, Texas, distributing electricity. So I

01:08:08.956 --> 01:08:14.480
hope you all find the way to become

01:08:18.420 --> 01:08:22.036
critical to your customers. So as a chief customer officer

01:08:22.108 --> 01:08:26.323
and you only know 40% of your customers, that's a challenging

01:08:26.412 --> 01:08:30.502
role to fill. You know the way we've structured the industry.

01:08:30.645 --> 01:08:34.398
Yeah. Absolutely, Commissioner. We make sure

01:08:34.412 --> 01:08:37.270
that we continue to reach out to our customers, trying to get some more contact

01:08:37.350 --> 01:08:40.518
information. We're constantly making sure that we encourage our customers to

01:08:40.533 --> 01:08:43.590
sign up for power services. But we're at the mercy of the market.

01:08:43.670 --> 01:08:47.126
Right. And that's why I'm asking you guys today to help us

01:08:47.158 --> 01:08:50.326
change policy so that we can reach out and get more information

01:08:50.398 --> 01:08:53.814
from our retail electric providers. As you all may very well know,

01:08:53.942 --> 01:08:57.390
we do reach out to them constantly and ask for permission to get

01:08:57.430 --> 01:09:00.518
customer contact information, but we may need a little bit more

01:09:00.533 --> 01:09:03.486
of a push from a policy perspective so that we can contain more of that

01:09:03.518 --> 01:09:06.902
information. And we'll only use it during emergency procedures.

01:09:06.966 --> 01:09:10.478
Right. We won't market things to customers. We won't do anything inappropriate. We just

01:09:10.493 --> 01:09:12.798
want to make sure that we can communicate with our customers and share with them

01:09:12.814 --> 01:09:16.358
the right level of information so that they can take action and respond and

01:09:16.374 --> 01:09:19.689
make sure they can do things to secure their families during strong level events.

01:09:20.279 --> 01:09:21.220
Thank you.

01:09:24.920 --> 01:09:29.928
(item:7:Commissioner Glotfelty to Jason Wells on CenterPoint's system terms of wind speed) I think the one other thing is, I won't get into this, but understanding

01:09:29.984 --> 01:09:33.439
what you design your system to in terms of wind speed,

01:09:33.560 --> 01:09:37.376
things like that, I'd love to hear in the future if it's

01:09:37.448 --> 01:09:40.368
150 miles an hour wind speed, if it's 120 miles an hour,

01:09:40.424 --> 01:09:43.640
and what the difference is, what's the difference in cost, what's the difference in value

01:09:43.680 --> 01:09:47.758
to the consumers? And so I think, as Jason,

01:09:47.814 --> 01:09:51.126
you have said, the canopy grows, we've got a lot of trees. The storm

01:09:51.158 --> 01:09:55.050
was obviously, we were on the dirty side of the storm. This hasn't happened before.

01:09:55.710 --> 01:09:59.334
But understanding that our weather

01:09:59.382 --> 01:10:02.606
is changing, we have to be more diligent

01:10:02.638 --> 01:10:06.078
in that. And I encourage you to reach out to me and

01:10:06.174 --> 01:10:09.690
let me know what you're, how you all are dealing with that piece.

01:10:09.990 --> 01:10:13.488
Commissioner, we proactively took the steps in

01:10:13.504 --> 01:10:17.272
2022 to move to constructing at

01:10:17.296 --> 01:10:20.896
the national standard for high wind and extreme ice

01:10:20.928 --> 01:10:24.656
loading. So new construction does meet those

01:10:24.688 --> 01:10:28.816
new standards moving forward. We can provide the detail around that. And the

01:10:28.848 --> 01:10:32.504
plans that we've put in place with respect to the resiliency investments

01:10:32.592 --> 01:10:36.472
are addressing the historical investments

01:10:36.496 --> 01:10:39.880
we have made in our system prior to making that proactive change.

01:10:41.940 --> 01:10:45.476
(item:7:Commissioner Glotfelty gives his concerns to all providers in hurricane prone zones) I guess I'll close with, I know this storm hurt.

01:10:45.508 --> 01:10:48.948
It hurt a lot of people. I think we had, you know,

01:10:49.084 --> 01:10:51.948
folks died as a result,

01:10:52.004 --> 01:10:55.680
just like in Winter Storm Uri. I think that's,

01:10:56.900 --> 01:11:00.852
it's horrible that it happened. I think this is

01:11:00.876 --> 01:11:03.916
not just a wake up call to Centerpoint. This is a wake up call to

01:11:03.948 --> 01:11:07.532
Entergy. This is a wake up call to TNMP. This is a wake up

01:11:07.556 --> 01:11:12.028
call to TXU. This is a wake up call to every utility

01:11:12.204 --> 01:11:15.560
around our state that they have to take serious.

01:11:16.260 --> 01:11:19.500
The storms that are facing their system, the challenges that are facing their

01:11:19.540 --> 01:11:22.884
systems, whether it be a wildfire that's going to let their customers go out,

01:11:22.972 --> 01:11:26.564
or a big storm, or a de Racho, I don't care what it is,

01:11:26.692 --> 01:11:29.998
you all know your system the best, but you all have to

01:11:30.014 --> 01:11:33.798
do better. The customers deserve better, and we all are giving

01:11:33.854 --> 01:11:37.210
you a return that expects better.

01:11:38.390 --> 01:11:40.958
I know you all can do it, I really do, and I hope you all

01:11:40.974 --> 01:11:43.970
will lead in that regard. You have my commitment. Thank you.

01:11:45.150 --> 01:11:48.558
(item:7:Commissioner Cobos to Jason Wells on CenterPoint's presentation) I have a couple of specific questions that I want to ask.

01:11:48.734 --> 01:11:51.570
So, in your presentation on page 15,

01:11:53.550 --> 01:11:56.990
under the phase two near term actions,

01:11:58.530 --> 01:12:02.226
you lay out that you're going to target the

01:12:02.258 --> 01:12:05.634
first 350 of 2000 incremental distribution

01:12:05.682 --> 01:12:09.510
line miles with higher risk vegetation.

01:12:10.490 --> 01:12:13.350
And on the next page you break out,

01:12:15.530 --> 01:12:19.450
or you state that vegetation management or vegetation is a major driver of long duration

01:12:19.490 --> 01:12:22.956
outages during barrel approximately 2000, or, I'm sorry,

01:12:22.988 --> 01:12:26.932
1900 total distribution circuits. So is

01:12:26.956 --> 01:12:30.508
the 20 1900 total distribution circuits that you've identified,

01:12:30.564 --> 01:12:33.960
those are the higher vegetation, vegetation risk

01:12:34.380 --> 01:12:37.800
circuits? Those are our total circuits on our system.

01:12:38.140 --> 01:12:42.044
What we're targeting is the 2000 miles on

01:12:42.132 --> 01:12:45.644
those circuits that present the highest or highest risk,

01:12:45.772 --> 01:12:49.550
which we've tried to demonstrate

01:12:49.590 --> 01:12:53.430
here on slide 16. This is the new technology I referenced earlier

01:12:53.510 --> 01:12:57.490
with the LIDAR scan that looks at the density of

01:12:58.750 --> 01:13:02.166
vegetation in and around our lines.

01:13:02.318 --> 01:13:05.810
The darker green is the heavier density,

01:13:06.390 --> 01:13:09.662
and also overlay. As I said, there's multiple variables that lead

01:13:09.686 --> 01:13:13.270
to tree failure, and you can see that the three month cumulative

01:13:13.350 --> 01:13:17.238
rainfall in some cases was 400% of historical totals.

01:13:17.294 --> 01:13:20.170
You could see kind of the concentration of that,

01:13:20.790 --> 01:13:24.662
the darker blue over the, and if you sort of marry it

01:13:24.686 --> 01:13:27.902
up with the vegetation that is the most dense,

01:13:28.086 --> 01:13:31.758
those are the trees that are most susceptible to failure in

01:13:31.774 --> 01:13:35.614
the wind. And we saw that as we back tested the results

01:13:35.742 --> 01:13:39.738
of Hurricane Beryl. The largest intensity of outages were in

01:13:39.754 --> 01:13:42.990
that area. We're using that, those analytics

01:13:43.290 --> 01:13:46.370
to address the highest risk

01:13:46.410 --> 01:13:49.230
vegetation on those 2000 miles before the end of the year.

01:13:49.970 --> 01:13:53.530
Okay. Okay, so the 350 is a portion

01:13:53.570 --> 01:13:57.538
of that highest risk? That's correct. What we can accomplish by August 31.

01:13:57.674 --> 01:14:01.146
Okay, and then the

01:14:01.178 --> 01:14:04.394
remainder will be by December 31.

01:14:04.562 --> 01:14:05.910
That's right. Okay.

01:14:09.770 --> 01:14:12.914
I'm wondering if you could add a little bit more than 350

01:14:12.962 --> 01:14:16.306
years, that just the maximum amount you all determined right now through

01:14:16.338 --> 01:14:19.498
your capabilities, by the end of August, I want

01:14:19.514 --> 01:14:23.186
to exceed expectations. Our intention is to do more.

01:14:23.338 --> 01:14:26.746
This is also a time though where we have to respond to storms

01:14:26.778 --> 01:14:30.050
in the interim. And so we're balancing what we think is

01:14:30.090 --> 01:14:33.558
a very aggressive target with one that we can achieve.

01:14:33.654 --> 01:14:37.502
Okay. (item:7:Commissioner Cobos to Jason Wells on mobile generation units) So with respect to acquiring more

01:14:37.606 --> 01:14:41.726
mobile generation units in the past, prior to you assuming your

01:14:41.758 --> 01:14:45.310
role as CEO, I visited with your prior CEO and he

01:14:45.350 --> 01:14:49.654
stated that it's sometimes difficult to get mobile DG

01:14:49.702 --> 01:14:54.750
units because you're in competition with other various

01:14:54.790 --> 01:14:57.888
stakeholders like the oil and gas industry, other utilities

01:14:57.944 --> 01:15:01.392
that are in hurricane prone areas. Do you believe that

01:15:01.416 --> 01:15:05.296
you'll be able to get the increased smaller mobile

01:15:05.328 --> 01:15:09.296
gen units that you're recommending or

01:15:09.408 --> 01:15:13.440
proposing to do? I mean, is this in the works right now?

01:15:13.600 --> 01:15:17.184
Is there really that competition out there through, you know,

01:15:17.232 --> 01:15:20.176
mobile DG acquisition still? Yes,

01:15:20.208 --> 01:15:23.274
Commissioner, I do think we can continue and we're committed to increasing

01:15:23.322 --> 01:15:27.630
the size of our small mobile gen facility for restorations.

01:15:28.370 --> 01:15:31.618
I think our previous CEO was referring to competition for

01:15:31.634 --> 01:15:35.170
the larger mobile gen units that are often are really dedicated

01:15:35.210 --> 01:15:38.990
to load shed type events. You know, in this storm,

01:15:39.290 --> 01:15:43.026
we utilized 18 of our own, the full fleet of

01:15:43.058 --> 01:15:46.898
the small mobile generation units that we have. We were able to

01:15:46.914 --> 01:15:50.908
secure another twelve from our neighboring utilities and

01:15:50.924 --> 01:15:55.280
we think we can and are committed to securing more for future restorations.

01:15:55.780 --> 01:15:59.452
Okay, back to the critical care customers

01:15:59.476 --> 01:16:02.924
and at risk customers. That's an area that just

01:16:02.972 --> 01:16:07.996
resonates with me. And I know in your proposed next

01:16:08.028 --> 01:16:11.428
steps for communications, I really do hope that they are involved

01:16:11.484 --> 01:16:15.644
in the critical care customers. At risk customers

01:16:15.692 --> 01:16:19.160
like nursing homes, hospitals, assisted living,

01:16:19.460 --> 01:16:23.236
all of those type of facilities that have the

01:16:23.268 --> 01:16:27.164
critical care and at risk customers are involved in the communication efforts going

01:16:27.212 --> 01:16:31.044
forward. It's just critically important that we restore

01:16:31.092 --> 01:16:34.972
these types of customers in an accelerated, prioritized manner and

01:16:35.076 --> 01:16:37.680
maintain communication with them during storms,

01:16:38.020 --> 01:16:41.534
prior to, during and after storms. And I know you all

01:16:41.542 --> 01:16:44.878
have made that commitment, but I just want to stress that one more time

01:16:44.934 --> 01:16:48.774
and, you know, whether it's through your communication channels

01:16:48.862 --> 01:16:53.038
or preparation through mobile DG, whatever it is that you

01:16:53.054 --> 01:16:56.822
can do to make sure these types of customers don't lose power or quickly

01:16:56.846 --> 01:16:59.918
restore the power. Commissioner,

01:16:59.934 --> 01:17:03.078
you have my commitment. Our performance was not where

01:17:03.094 --> 01:17:06.980
it needs to be and we will get better. We have 8600

01:17:07.520 --> 01:17:11.184
critical facility customers on our system. We started working

01:17:11.232 --> 01:17:14.712
with them on

01:17:14.736 --> 01:17:18.264
July 7 before the storm. That's insufficient.

01:17:18.352 --> 01:17:22.140
We need to be working with them year round on preparation and coordination.

01:17:22.720 --> 01:17:25.688
And you have my commitment that we will do that moving forward.

01:17:25.824 --> 01:17:29.336
Yeah, coordinated may be with the city as well. Like if there's something that

01:17:29.368 --> 01:17:33.190
they can do to help, you know, if they are without power, maybe getting water,

01:17:33.530 --> 01:17:37.030
oxygen, whatever it is, that they need there to sustain the

01:17:37.570 --> 01:17:39.870
short duration power outage.

01:17:43.370 --> 01:17:46.706
(item:7:Commissioner Glotfelty's thoughts on mobile generation units) Can I just, I hope we can have that discussion about mobile

01:17:46.738 --> 01:17:50.242
general a little bit more in the future. I don't want to use this form

01:17:50.306 --> 01:17:53.522
for that, but for you all

01:17:53.546 --> 01:17:57.178
to own the responsibility to provide mobile and for every

01:17:57.314 --> 01:18:00.750
critical customer in the region I think is not

01:18:02.210 --> 01:18:05.670
perhaps what was intended with the mobile generation language.

01:18:06.130 --> 01:18:09.510
And I hope that's not what you're striving to be the best,

01:18:12.970 --> 01:18:14.790
the savior to everybody there.

01:18:16.090 --> 01:18:20.110
You all know that I have a difference of agreement on how mobile general

01:18:20.610 --> 01:18:23.906
happens and why I think that it should be to the folks

01:18:23.938 --> 01:18:27.338
that do generation and not the t and D folks. But I hope we can

01:18:27.354 --> 01:18:30.426
have a deeper discussion about that and how it's used and why

01:18:30.458 --> 01:18:34.482
it's used and how

01:18:34.506 --> 01:18:37.882
it's, obviously, it's paid for in rates, but I would really like to

01:18:37.906 --> 01:18:41.370
dig into that a little bit more. (item:7:Chairman Gleeson to Jason Wells concerning mobile gen and CenterPoint's moratorium) Yeah, I think we have to.

01:18:41.450 --> 01:18:44.890
We allowed them to rate base hundreds of millions of dollars in mobile general.

01:18:44.930 --> 01:18:48.710
So I think it's incumbent on us to dig deep into and how it's performing

01:18:49.460 --> 01:18:53.100
in the storm. Jason, just a couple

01:18:53.140 --> 01:18:57.228
things really quickly. So I think you put out publicly a DNP

01:18:57.284 --> 01:19:00.572
moratorium until the 29th, until Monday. Yes, sir.

01:19:00.596 --> 01:19:03.692
Can you talk through how you came up with that date and if you've had

01:19:03.716 --> 01:19:07.560
any consideration about potentially extending that moratorium?

01:19:08.100 --> 01:19:13.316
Yes, sir. We originally came up with that date assuming

01:19:13.348 --> 01:19:17.348
that the full recovery of Hurricane barrel would

01:19:17.364 --> 01:19:20.492
be completed. Restoration has occurred, but our communities and

01:19:20.516 --> 01:19:24.388
customers are still recovering, and so we intend

01:19:24.524 --> 01:19:27.828
to extend that moratorium through the end

01:19:27.844 --> 01:19:31.200
of next week. I think that's advisable.

01:19:32.100 --> 01:19:35.948
(item:7:Chairman Gleeson to Jason Wells on transmission concerns) So, you know, during the direct show, you had some transmission issues

01:19:36.124 --> 01:19:39.884
during this storm. Some transmission issues. Do you know the issue?

01:19:40.012 --> 01:19:43.152
The facility, facilities that had issues during the directo,

01:19:43.256 --> 01:19:47.020
are those the same facilities that you saw go down during barrel?

01:19:47.640 --> 01:19:51.264
Chairman, thanks for the question. And no, there were no structural issues

01:19:51.352 --> 01:19:54.552
with respect to the facilities that were

01:19:54.576 --> 01:19:57.872
impacted by Beryl and de Racho. When we put

01:19:57.896 --> 01:20:01.168
up temporary transmission poles, as we had to after de

01:20:01.184 --> 01:20:04.296
Racho, temporary is a bit of a misnomer.

01:20:04.488 --> 01:20:07.682
Those structures are built to a high wind standard

01:20:07.866 --> 01:20:11.202
and worked without issue in

01:20:11.226 --> 01:20:15.034
Hurricane Beryl. We did have one circuit lockout

01:20:15.122 --> 01:20:19.650
in both Hurricane Beryl and in the derecho.

01:20:19.810 --> 01:20:23.098
The lockout in that case was, in both instances,

01:20:23.194 --> 01:20:26.338
a tree coming in contact with our line that was outside of our right of

01:20:26.354 --> 01:20:29.402
way. But as soon as we cleared that, that vegetation,

01:20:29.466 --> 01:20:31.230
we were able to re energize the line.

01:20:33.260 --> 01:20:36.468
(item:7:Chairman Gleeson to Jason Wells concerning CenterPoint having a Town Hall and unacceptable violence) You know, you talked about communication I know last time you all were in front

01:20:36.484 --> 01:20:40.068
of us. I advise that at some point in the near future doing

01:20:40.164 --> 01:20:43.420
a town hall to communicate directly with your customers. I still hope that's under

01:20:43.460 --> 01:20:46.652
consideration and you plan to do that. And I'm glad you talked about

01:20:46.676 --> 01:20:50.068
the reps, you know, in the aftermath of the storm. I talked to a

01:20:50.084 --> 01:20:53.300
number of reps in the association. I mean, they're there to help.

01:20:53.380 --> 01:20:57.002
You know, they have their own call centers that if you provide them material,

01:20:57.076 --> 01:20:59.894
you know, they can help and calls can be directed to them.

01:21:00.022 --> 01:21:03.534
They have those customer relationships. So I'm glad to hear that you're

01:21:03.662 --> 01:21:05.982
going to try to work with them, because I know in the middle of the

01:21:06.006 --> 01:21:09.262
storm, in the middle of the crisis, is not the time to be trying

01:21:09.286 --> 01:21:12.566
to figure out the systems for dealing with crisis communication.

01:21:12.638 --> 01:21:16.014
The time for that's, you know, between the storms, because we know another one's coming.

01:21:16.062 --> 01:21:19.302
So I'd say, you know, work on those systems. They're there to

01:21:19.326 --> 01:21:22.476
help. And I'd like an update on that piece. Yes, sir. For my office.

01:21:22.558 --> 01:21:26.840
definitely. Violence,

01:21:26.960 --> 01:21:30.760
you know, we saw, we read a lot of stories

01:21:30.840 --> 01:21:34.584
about line, you know, line workers being attacked. Can you.

01:21:34.752 --> 01:21:37.016
I don't know that I have a full picture of that. I know at one

01:21:37.048 --> 01:21:40.584
point, I think in the presentation, you said you'd actually take down

01:21:40.672 --> 01:21:44.224
one of your staging sites because of violence. I know another one was,

01:21:44.312 --> 01:21:48.102
I think, moved farther out, which caused some delays. Can you talk through just

01:21:48.176 --> 01:21:51.290
what the lineworker's experience was during this?

01:21:51.370 --> 01:21:54.946
Thank you, Chairman. You know, the vast majority of our customers

01:21:55.018 --> 01:21:59.026
that came in contact with our linemen offered

01:21:59.058 --> 01:22:01.630
grace and patience and appreciation.

01:22:01.930 --> 01:22:05.354
Unfortunately, there were numerous instances of

01:22:05.402 --> 01:22:08.870
threats and acts of violence against our line workers.

01:22:09.290 --> 01:22:13.030
As Randy mentioned, we had to demobilize the staging site

01:22:13.580 --> 01:22:17.440
because of the very credible threat of drive by shootings.

01:22:18.020 --> 01:22:21.348
We had multiple instances of guns being pulled and put

01:22:21.364 --> 01:22:23.560
in the chest of our line workers.

01:22:24.780 --> 01:22:28.244
We had very active threats around the community, sometimes throwing

01:22:28.292 --> 01:22:31.996
rocks. I want to acknowledge the

01:22:32.028 --> 01:22:35.444
work of law enforcement. They did an incredible job

01:22:35.532 --> 01:22:38.652
of keeping our lineworker safe. But I think what's

01:22:38.676 --> 01:22:42.200
important here is not only is that behavior not tolerable

01:22:42.980 --> 01:22:46.532
in society, it's counterproductive to the restoration,

01:22:46.676 --> 01:22:49.400
but it jeopardizes future restorations.

01:22:49.820 --> 01:22:53.660
These crews that come to help our communities through mutual assistance

01:22:53.780 --> 01:22:57.800
don't have to be here. They come because they want to help.

01:22:58.540 --> 01:23:01.972
And I think there's more we can do collectively to keep these

01:23:01.996 --> 01:23:05.504
crews safe as they perform this vital work to restore service

01:23:05.572 --> 01:23:08.992
to our customers. Absolutely and I think that experience is

01:23:09.016 --> 01:23:12.488
something you need to make sure you communicate to your customers as well, that it

01:23:12.504 --> 01:23:15.904
is counterproductive to what you all are trying to do in

01:23:15.912 --> 01:23:19.232
the restoration effort. (item:7:Chairman Gleeson's thoughts on upcoming hearings) I think that would be really helpful as well. The last thing

01:23:19.256 --> 01:23:23.112
I'll say is we have two hearings coming up next week.

01:23:23.256 --> 01:23:26.984
We have a legislative session in less than six months that's going to start.

01:23:27.152 --> 01:23:30.696
I would look at those as opportunities. We have a few

01:23:30.848 --> 01:23:34.370
legislative staffers here from the House and the Senate.

01:23:35.150 --> 01:23:38.890
Please bring forth items that need to be addressed in statute.

01:23:40.030 --> 01:23:43.254
You know, anything that's there that could have helped during this,

01:23:43.342 --> 01:23:46.534
let us know, let the legislature know. Talk about that, because I think you

01:23:46.542 --> 01:23:50.510
have a real opportunity here to get some statutory change and regulatory change,

01:23:50.590 --> 01:23:53.038
but we need to know what those things are. So I'd urge you to look

01:23:53.054 --> 01:23:56.374
at those as opportunities to communicate what those changes might be

01:23:56.422 --> 01:23:59.130
and then continue to work with us to get those done.

01:23:59.250 --> 01:24:02.514
Absolutely. Thank you, chairman. All right. Any other questions,

01:24:02.562 --> 01:24:06.418
comments? Thank you. (item:7:Commissioner Glotfelty's questions on injuries or fatalities) Just one. And that is, did y'all have

01:24:06.434 --> 01:24:10.242
any serious accidents on the system, or did everybody make

01:24:10.266 --> 01:24:11.670
it home to their families?

01:24:13.890 --> 01:24:16.750
Fortunately, we had no significant injuries and fatalities.

01:24:17.410 --> 01:24:21.298
We had a handful of illnesses and motor vehicle incidents,

01:24:21.394 --> 01:24:24.790
but no significant injuries and fatalities during the entire restoration,

01:24:25.250 --> 01:24:29.234
and that should be applauded. Yes, absolutely. Thank you

01:24:29.242 --> 01:24:30.950
y'all for being here. Thank you.

01:24:38.810 --> 01:24:43.066
All right Commissioners, like I said. I'll bring up next Item 33.

01:24:43.098 --> 01:24:46.378
Just a bit of housekeeping, you know, and we

01:24:46.394 --> 01:24:49.716
did this last time too. In conversations with our, with our Court Reporters who work really

01:24:49.748 --> 01:24:53.460
hard for us. We'll be taking breaks anywhere between, after every

01:24:53.500 --> 01:24:56.924
hour and a half to 2 hours. To make sure that they have time to

01:24:57.052 --> 01:25:00.396
recover from this. So my plan is to probably

01:25:00.428 --> 01:25:03.100
try to go, if we can get through a couple items in the next 15

01:25:03.180 --> 01:25:05.880
minutes or so, and then take a 10 or 15 minute break.

01:25:06.780 --> 01:25:10.708
(item:33:Chairman Gleeson lays out Project No. 56822) So next I'd call up Item 33. That's Docket 56822,

01:25:10.764 --> 01:25:13.964
Investigation of Emergency Preparedness and Response by Utilities

01:25:14.012 --> 01:25:18.094
in Houston and the surrounding communities. Connie, you filed a memo.

01:25:18.262 --> 01:25:21.486
(item:33:PUC Executive Director Connie Corona lays out her memo on Staff's proposed scope & approach to the investigation) I did. Good morning Commissioners. On Monday, I filed

01:25:21.518 --> 01:25:25.930
a memo outlining staffs proposed scope and approach to the investigation.

01:25:26.230 --> 01:25:30.062
It identifies 7 primary focus areas for investigation.

01:25:30.246 --> 01:25:34.230
And notes that one of our objectives will be to develop recommendations for

01:25:34.310 --> 01:25:37.090
utilities and to share with the Legislature.

01:25:37.630 --> 01:25:41.432
We'll also be looking to see what changes we can make to Commission Rules.

01:25:41.616 --> 01:25:45.128
And if we identify actions that we can take in the short term

01:25:45.184 --> 01:25:48.504
before the December 1 deadline, we will certainly bring

01:25:48.552 --> 01:25:52.224
those to you. Our timeline contemplates spending

01:25:52.272 --> 01:25:55.580
the month of August, collecting data through requests for information

01:25:56.080 --> 01:26:00.016
which we'll issue to electric and water service providers in the Greater

01:26:00.048 --> 01:26:03.416
Houston area. We also will invite

01:26:03.488 --> 01:26:08.114
other impacted entities like retail electric providers, communications providers

01:26:08.282 --> 01:26:11.946
and industry groups. To respond to RFIs and tell us

01:26:11.978 --> 01:26:15.642
about the impact of the storm on their services and operations,

01:26:15.826 --> 01:26:19.950
on their response and any recommendations to inform the investigation.

01:26:20.730 --> 01:26:24.922
Our timeline also contemplates a workshop in October. For

01:26:24.946 --> 01:26:28.402
the purpose of collecting best practices from SME,

01:26:28.466 --> 01:26:32.850
subject matter experts, regarding the storm preparedness and response.

01:26:33.270 --> 01:26:36.854
And finally, I want to announce that Staff is in the process

01:26:36.942 --> 01:26:40.494
of developing an online portal. To invite

01:26:40.542 --> 01:26:43.782
public comment from residents and businesses in the

01:26:43.806 --> 01:26:47.142
Houston area. That will be live in the

01:26:47.166 --> 01:26:51.130
next couple of weeks. So that folks can go online,

01:26:51.870 --> 01:26:55.518
sort of fill out an online form to share their

01:26:55.654 --> 01:26:58.936
experiences and perspectives with staff

01:26:59.128 --> 01:27:02.300
for the investigation. (item:33:Chairman Gleeson's thoughts on PUC Executive Director Connie Corona's memo) I think that's all good.

01:27:02.800 --> 01:27:06.512
You know, I think we do a pretty good job of communicating with our state

01:27:06.576 --> 01:27:09.980
elected officials, obviously the Houston delegation in this case.

01:27:10.400 --> 01:27:13.896
I also urge you all our Governmental Relations Staff, you know,

01:27:13.968 --> 01:27:17.704
we received a letter from Mayor Whitmire. To reach out to local

01:27:17.832 --> 01:27:21.272
elected officials as well to make sure we get their input. You know, they're the

01:27:21.296 --> 01:27:25.074
closest on the ground to those constituents. And so I think it's important that we

01:27:25.082 --> 01:27:28.242
hear from them as well. We will certainly do that. Thank you.

01:27:28.386 --> 01:27:32.390
Commissioners? (item:33:Commissioner Cobos' thoughts on PUC Executive Director Connie Corona's memo) Yeah, I'm in agreement with the Chairman. Pursuant to

01:27:32.690 --> 01:27:36.162
Mayor Whitmeyer's letter, I think it's important that you send RFIs

01:27:36.226 --> 01:27:40.070
to the cities and the critical care facility operators.

01:27:41.290 --> 01:27:42.990
Will do. Thank you.

01:27:44.730 --> 01:27:45.950
Questions or comments?

01:27:50.380 --> 01:27:54.252
Okay. Thank you, Connie. You know, continue to keep us apprised of

01:27:54.316 --> 01:27:57.396
how it's going. Thank you. All right,

01:27:57.428 --> 01:28:01.588
Shelah. That brings us to our contested case dockets.

01:28:01.764 --> 01:28:04.996
So Item 1 was consented.

01:28:05.188 --> 01:28:08.820
So that will bring us to Item 2. If you'll lay out Item 2,

01:28:08.860 --> 01:28:12.460
please? Yes, Chairman. (item:2:Application of Southwestern<br />Public Service Company to amend its CCN to construct generation facilities in Lamb County, TX and Lea County, NM) Item 2 is Docket

01:28:12.500 --> 01:28:16.016
No. 55255. This is the application

01:28:16.088 --> 01:28:19.752
of Southwestern Public Service Company to amend its certificate of

01:28:19.776 --> 01:28:23.680
convenience and necessity to construct generation facilities in Lamb

01:28:23.720 --> 01:28:27.160
County, Texas and Lea County, New Mexico. Before you

01:28:27.200 --> 01:28:30.576
is a proposal for decision from SOAH. All the parties filed

01:28:30.608 --> 01:28:33.848
exceptions and the SOAH ALJ filed a response.

01:28:33.984 --> 01:28:37.488
That recommended adding one ordering paragraph to the PFD. The Commission

01:28:37.544 --> 01:28:41.088
heard oral argument in this proceeding at the July 11 meeting and

01:28:41.104 --> 01:28:44.776
Chairman Gleeson filed a memo in this docket. (item:2:Chairman Gleeson lays out his memo) So as I noted

01:28:44.808 --> 01:28:48.088
in my memo, you know, this is a hard case. I agreed with the

01:28:48.104 --> 01:28:51.580
ALJ in a number of places. There are a few where I didn't.

01:28:52.360 --> 01:28:56.100
You know, I disagree with the ALJ's conclusion that

01:28:56.680 --> 01:29:00.288
SPS adequately considered alternatives to

01:29:00.304 --> 01:29:03.640
the solar facility. I honestly do. And that the process was

01:29:03.680 --> 01:29:05.460
necessarily fair and reasonable.

01:29:07.050 --> 01:29:10.482
I agreed with the conditions that the ALJ

01:29:10.546 --> 01:29:14.350
put forth. As I said in my memo, I'd recommend,

01:29:14.690 --> 01:29:18.190
if we're going to go with the third party consultant review. That we

01:29:18.690 --> 01:29:24.150
ask the parties for more detailed language to include in that order concerning

01:29:24.450 --> 01:29:28.402
favored nation clause. I think we need one in here as well. I think

01:29:28.426 --> 01:29:31.962
it's important that we get our ratepayers get the same considerations

01:29:32.026 --> 01:29:35.120
that you New Mexico customers do. I think,

01:29:35.160 --> 01:29:38.420
you know, they've agreed to the NERC weatherization standards.

01:29:38.720 --> 01:29:42.112
I think that's appropriate in this case. And the

01:29:42.136 --> 01:29:44.848
one that I keep going back and forth on that we heard about was the

01:29:44.864 --> 01:29:48.656
cost cap. When I wrote the memo, I was leaning

01:29:48.688 --> 01:29:53.208
in favor of a cost cap. Probably vacillated a

01:29:53.224 --> 01:29:55.340
time or two since then on it.

01:29:58.570 --> 01:30:01.890
I'm happy to hear y'all's thoughts on the memo. And, you know,

01:30:01.930 --> 01:30:05.282
particularly on the cost cap. I can go either way on

01:30:05.306 --> 01:30:08.746
it. So, you know, where I land will

01:30:08.778 --> 01:30:11.230
definitely be informed by what you all think.

01:30:13.050 --> 01:30:16.722
Okay. (item:2:Commissioner Cobos' thoughts on Chairman Gleeson's memo) Chairman Gleeson, I'm in general agreement with your

01:30:16.866 --> 01:30:20.362
memo. I ultimately, I tend to agree that the

01:30:20.386 --> 01:30:23.834
RFP process could have been handled a little bit better with respect

01:30:23.922 --> 01:30:28.200
to taking a more broad view

01:30:28.240 --> 01:30:30.952
of resources out there in the all source RFP.

01:30:31.136 --> 01:30:35.120
I think just on its face, looking at the language in the RFP,

01:30:35.280 --> 01:30:39.160
it seemed to really favor renewable resources and

01:30:39.200 --> 01:30:43.200
resources that ultimately were constrained by the timeline

01:30:43.320 --> 01:30:46.580
that they were under, that the utility was under to be able to

01:30:47.000 --> 01:30:51.042
effectively interconnect resources in time to meet a capacity need.

01:30:51.226 --> 01:30:55.150
The capacity need was on the radar for a while. These utilities,

01:30:55.570 --> 01:30:59.074
the generation units, rather, that the utility was

01:30:59.122 --> 01:31:04.202
seeking to retire, have been known for a while. So the

01:31:04.226 --> 01:31:07.506
competitive RFP process and spss

01:31:07.698 --> 01:31:12.138
identification of a capacity need could

01:31:12.154 --> 01:31:16.480
have been done better. But I understand that the

01:31:16.940 --> 01:31:20.148
company needs the solar facilities to be able to comply with

01:31:20.164 --> 01:31:24.124
the Summer PRM requirements, not only the existing 15%,

01:31:24.212 --> 01:31:28.360
but also upcoming Summer PRM requirements from SPP.

01:31:29.380 --> 01:31:33.148
So I got to a place where I was comfortable with the three proposed

01:31:33.204 --> 01:31:37.548
solar projects. I would agree that the

01:31:37.604 --> 01:31:41.200
company hasn't carried the burden proof on the battery facility.

01:31:41.830 --> 01:31:45.410
I do believe that battery storage provides

01:31:45.750 --> 01:31:49.094
reliability benefits during

01:31:49.142 --> 01:31:52.130
critical hours of the day. We've seen that in ERCOT,

01:31:52.550 --> 01:31:56.510
but unlike in ERCOT, when a vertically integrated utility comes

01:31:56.550 --> 01:32:00.686
before the Commission with the CCN to get

01:32:00.718 --> 01:32:04.846
approval for a facility to meet a capacity need,

01:32:04.998 --> 01:32:08.858
we have to establish that additional that that facility will

01:32:08.874 --> 01:32:12.330
result in probable improvement of additional service and

01:32:12.410 --> 01:32:15.930
lowering of cost for consumers. In this case, since it's so small and

01:32:15.970 --> 01:32:19.442
expensive, I don't believe that they've established their case

01:32:19.506 --> 01:32:23.030
for additional that it will result in the probable improvement of

01:32:23.410 --> 01:32:25.510
service and lowering a cost.

01:32:26.010 --> 01:32:30.178
So, in your place, with respect

01:32:30.234 --> 01:32:33.590
to the review of the PFD,

01:32:34.340 --> 01:32:37.764
and agree with the conditions, with the addition of

01:32:37.852 --> 01:32:41.468
the most favored nations clause and the

01:32:41.484 --> 01:32:46.036
weatherization standards that the company is committed to comply with from

01:32:46.068 --> 01:32:49.708
NERC, I think that is appropriate. We can have a

01:32:49.804 --> 01:32:53.640
cost cap deliberation in a minute, but I do want to provide some

01:32:54.100 --> 01:32:57.320
guidance as a commissioner covering SPP.

01:32:58.820 --> 01:33:02.332
Serving on the RSC for SPP over

01:33:02.356 --> 01:33:06.084
the course of last year. We've been having many discussions

01:33:06.132 --> 01:33:09.868
about increasing SPP or

01:33:09.924 --> 01:33:14.100
Summer PRM and the establishment of a Winter PRM and SPP.

01:33:14.260 --> 01:33:17.988
In a couple of weeks, I will have to go to an RSC meeting

01:33:18.084 --> 01:33:21.716
in St. Louis to vote on whether

01:33:21.828 --> 01:33:25.308
the whether SPP should increase their Summer PRM from 15%

01:33:25.364 --> 01:33:28.490
to 16% starting in the Summer of '26

01:33:28.830 --> 01:33:32.686
and whether they should establish a Winter PRM of

01:33:32.718 --> 01:33:36.318
36% starting in the Winter seasons of '26-'27

01:33:36.494 --> 01:33:40.654
and '27-'28. And I

01:33:40.662 --> 01:33:43.734
think it's really important that the utility starts planning

01:33:43.782 --> 01:33:47.030
now, immediately in their next RFP, to start complying

01:33:47.070 --> 01:33:50.846
with these PRMs. Because I will say that whether Texas opposes those PRMs

01:33:50.878 --> 01:33:54.162
or nothing, they're very likely to be approved by the

01:33:54.186 --> 01:33:58.266
SPP RSC. And right after that, the SPP is already starting

01:33:58.298 --> 01:34:02.290
to discuss going from to 17%

01:34:02.410 --> 01:34:06.418
Summer PRM and about a 44% Winter PRM

01:34:06.554 --> 01:34:09.710
for the two next Winter seasons. So,

01:34:10.010 --> 01:34:13.258
you know, the PRMs are increasing. The demands

01:34:13.274 --> 01:34:16.490
of meeting those planning reserve margin requirements

01:34:16.530 --> 01:34:19.796
in SPP are increasing. So the LSEs,

01:34:19.828 --> 01:34:23.160
the load serving entities, and SPP, like SP's,

01:34:23.460 --> 01:34:27.460
will either have to build the capacity or go buy the capacity from

01:34:27.540 --> 01:34:31.028
another merchant generator out there that has excess capacity to

01:34:31.044 --> 01:34:35.396
sell to them. And that's going to be more and more difficult as many LSEs

01:34:35.588 --> 01:34:38.956
start to compete to buy that excess capacity.

01:34:39.148 --> 01:34:42.924
So, you know, solar is certainly very helpful to meet

01:34:42.972 --> 01:34:46.162
Summer PRMs, and at times it

01:34:46.186 --> 01:34:50.350
is helpful in the Winter. But ultimately you need to get accredited

01:34:50.850 --> 01:34:54.882
capacity to meet the Winter PRMs.

01:34:55.066 --> 01:34:58.554
So more dispatchable generation is going to

01:34:58.562 --> 01:35:02.018
be very important. And battery storage is dispatchable. But if you're going

01:35:02.034 --> 01:35:05.802
to look at battery storage, it needs to be big enough to actually

01:35:05.866 --> 01:35:09.226
help meet those

01:35:09.258 --> 01:35:12.754
Winter PRMs, but also cost effective. And given the fact

01:35:12.802 --> 01:35:16.658
that the generation fleet is aging and some of it's retiring,

01:35:16.714 --> 01:35:20.190
you know, thermal dispatchable generation is definitely

01:35:21.530 --> 01:35:25.106
you know, an area that the company needs to prioritize in their next

01:35:25.138 --> 01:35:28.674
RFP and upcoming RFPs, because those Winter PRMs are coming. They're coming

01:35:28.722 --> 01:35:33.010
fast, and the Winter seasons overall

01:35:33.050 --> 01:35:37.202
are just riskier. SPPs taking that in consideration as they look

01:35:37.226 --> 01:35:40.744
at their I accredited accreditation

01:35:40.832 --> 01:35:44.456
methodologies that they're putting forth for us, we feel assurance at the next

01:35:44.488 --> 01:35:47.976
ERCOT meeting. So the company needs to start planning.

01:35:48.048 --> 01:35:51.816
Right? They need to start planning. These PRMs are coming in.

01:35:51.928 --> 01:35:54.696
And I get it. Y'all are under pressure. You know, you have,

01:35:54.848 --> 01:35:58.216
and you're not the only company that has parent companies that want cleaner

01:35:58.248 --> 01:36:02.040
energy. There's many companies out there that want that. Right? And so you're under

01:36:02.080 --> 01:36:05.568
pressure from your potentially your parent company.

01:36:05.744 --> 01:36:09.240
You have other states that you operate in that want. That have

01:36:09.280 --> 01:36:13.216
clean energy goals, like New Mexico and large customers out

01:36:13.248 --> 01:36:16.536
there. You know, they have corporate sustainability goals and they want to meet them.

01:36:16.568 --> 01:36:19.512
And you as a utility, they're your customers. You want to provide them with these

01:36:19.536 --> 01:36:23.056
types of resources. And ultimately, you know,

01:36:23.168 --> 01:36:25.580
you want to take advantage of federal incentives,

01:36:26.280 --> 01:36:30.008
you know, that money that's out there and. But you

01:36:30.024 --> 01:36:33.774
can't lose sight of that. We have to focus on maintaining reliability and meeting those

01:36:33.822 --> 01:36:37.518
Winter PRMs. And so I really, you know, to put it

01:36:37.534 --> 01:36:41.094
simply, I think, as I've said, you know, you need to make sure that you

01:36:41.102 --> 01:36:45.010
have enough dispatchable generation to keep the lights on during the Winter and

01:36:45.670 --> 01:36:49.366
keep moving forward with that in consideration. As you move forward with

01:36:49.398 --> 01:36:53.350
your upcoming RFPs, make sure they're competitive. Make sure that,

01:36:53.510 --> 01:36:56.558
you know, there's no perception that they're just intended

01:36:56.654 --> 01:36:59.958
to be for renewable generation. But I have faith that

01:36:59.974 --> 01:37:03.078
y'all will move forward in looking at those options.

01:37:03.174 --> 01:37:07.110
And I just wanted to provide that perspective.

01:37:07.150 --> 01:37:10.806
As the SPP RSC member, I know y'all are fully aware

01:37:10.838 --> 01:37:14.310
of these upcoming PRMs, but just as a reminder,

01:37:14.430 --> 01:37:17.982
it's important not only for SPP maintain reliability there,

01:37:18.046 --> 01:37:20.742
but that is the expectation we have in Texas. We got to keep the lights

01:37:20.766 --> 01:37:23.780
on in the Winter. Thank you, Commissioner.

01:37:25.160 --> 01:37:28.260
(item:2:Commissioner Glotfelty's thoughts on Chairman Gleeson's memo) Yeah, I would appreciate your memo.

01:37:28.560 --> 01:37:31.808
I think you laid out all the issues quite well. Kind of

01:37:31.824 --> 01:37:36.060
where I've landed on this is approve the solar, deny the batteries.

01:37:36.640 --> 01:37:40.256
I'm not supportive of the minimum

01:37:40.288 --> 01:37:43.620
production guarantee and the cost cap.

01:37:43.920 --> 01:37:47.608
I think. I mean, I want to. I want to be there because

01:37:47.664 --> 01:37:50.978
I think the RFP process for utilities is always

01:37:51.034 --> 01:37:54.722
flawed. Utilities always pick themselves. So let's not,

01:37:54.906 --> 01:37:58.194
you know, fool ourselves. But the place

01:37:58.242 --> 01:38:01.790
to solve that issue is in their rate base, in their rate case.

01:38:02.370 --> 01:38:06.346
And if they. If we. I just

01:38:06.378 --> 01:38:09.586
think that's the decision should be yes or no,

01:38:09.778 --> 01:38:12.570
and then hold their feet to the fire when the rate case comes around.

01:38:12.650 --> 01:38:16.442
So I think the weatherization guarantee should actually be

01:38:16.466 --> 01:38:19.170
the ERCOT standard, not the NERC standard.

01:38:21.190 --> 01:38:25.670
I know we don't have much leg to stand on here, but it's

01:38:25.710 --> 01:38:28.838
further up north than where our ERCOT standard goes.

01:38:28.894 --> 01:38:31.838
And those people are no less important to us as a commission.

01:38:31.934 --> 01:38:35.206
So that, and the most favored nation, you know,

01:38:35.238 --> 01:38:38.970
guarantee, I think, is important. So all of these issues,

01:38:40.630 --> 01:38:43.170
I'm not totally beholden to.

01:38:44.560 --> 01:38:48.472
They are bigger than just this one case. They're issues that this Commission

01:38:48.576 --> 01:38:50.580
has to discuss at some point in time. So,

01:38:52.000 --> 01:38:55.336
you know, wherever that leads us today, I'm happy to

01:38:55.528 --> 01:38:59.504
find that common ground. Absolutely. And, you know, in my briefing, I discussed,

01:38:59.592 --> 01:39:03.020
you know, an ERCOT standard. Since we do that kind of by region,

01:39:03.480 --> 01:39:06.760
I ended up getting to a place where I felt like, I don't know what

01:39:06.800 --> 01:39:10.482
standard we would actually apply to, to everything. And so I think

01:39:10.506 --> 01:39:13.306
this is a good. Since they've agreed to this, I think this is a good

01:39:13.338 --> 01:39:17.470
step. (item:2:Commissioner Jackson's thoughts on Chairman Gleeson's memo) Well, I'm in

01:39:18.290 --> 01:39:21.786
agreement with your memo for the most part. I also wanted to hear

01:39:21.818 --> 01:39:25.430
what other thoughts and ideas folks had on the cost cap.

01:39:25.730 --> 01:39:29.538
I feel like that's kind of a big step. But in this particular and

01:39:29.554 --> 01:39:33.330
unique case, because of the background, and I think what,

01:39:33.450 --> 01:39:37.206
you know, has been mentioned is, in terms of the planting reserve

01:39:37.238 --> 01:39:39.850
margin and how we anticipate that growing over time,

01:39:40.870 --> 01:39:44.718
there's likely some

01:39:44.894 --> 01:39:48.190
reason to protect the consumer in terms

01:39:48.230 --> 01:39:51.942
of the investment. And so the cost cap may

01:39:51.966 --> 01:39:55.850
be a good idea. I know a lot of times we want to

01:39:56.350 --> 01:40:00.254
reserve a lot of these actions to the right

01:40:00.302 --> 01:40:03.060
case. But in this particular situation,

01:40:04.600 --> 01:40:08.680
you know, the answer could likely have been, you didn't follow

01:40:08.720 --> 01:40:11.976
the process. And the answer is no. I don't think we want that

01:40:12.008 --> 01:40:15.856
to be the case because we know that they actually need the

01:40:15.888 --> 01:40:20.128
generation, they need it in a given timeframe. And so

01:40:20.304 --> 01:40:24.080
solar is, at this point in time, the option

01:40:24.120 --> 01:40:28.368
moving forward. But I do think that it's reasonable because

01:40:28.424 --> 01:40:32.000
we do want to protect the ratepayer because

01:40:32.080 --> 01:40:35.928
of the fact that they didn't necessarily follow

01:40:35.984 --> 01:40:39.224
the process, that a cost cap

01:40:39.272 --> 01:40:43.648
might be appropriate, and that

01:40:43.664 --> 01:40:47.528
would enable them to go ahead and get the solar reserve, the battery

01:40:47.664 --> 01:40:51.320
for another determination on down the road and then

01:40:51.360 --> 01:40:53.390
protect the consumer with the cost cap.

01:40:56.210 --> 01:40:59.594
So Commissioner Glotfelty, if we didn't have a cost

01:40:59.642 --> 01:41:03.146
cap, could you get behind the production

01:41:03.178 --> 01:41:03.990
guarantee?

01:41:07.690 --> 01:41:14.434
So I

01:41:14.442 --> 01:41:16.714
guess part of the challenge is I don't know how it works. I don't know

01:41:16.722 --> 01:41:20.298
how it takes into consideration forced and unforced outages. I don't

01:41:20.314 --> 01:41:23.898
know how it takes into consideration weather. So those are

01:41:23.914 --> 01:41:28.450
the challenges that I have. If we have an appropriate accommodation and

01:41:28.610 --> 01:41:32.530
a fairness component to that. Yes, I can deal

01:41:32.570 --> 01:41:36.162
with that. I don't think, I just feel like we're dealing

01:41:36.186 --> 01:41:40.250
with mechanical systems here. Solar is not necessarily mechanical. I understand

01:41:40.330 --> 01:41:43.070
that. But mechanical systems fail.

01:41:45.270 --> 01:41:48.690
We have to have that recognition. We want them to maintain them. But,

01:41:49.390 --> 01:41:52.982
so, yeah, I mean, I can do that. I mean,

01:41:53.006 --> 01:41:56.806
(item:2:Chairman Gleeson's thoughts on cost cap) I agree. For me in this case, you know, in the trade off

01:41:56.838 --> 01:42:00.342
between risk, between the different parties, I think

01:42:00.486 --> 01:42:03.414
I feel like more of the risk has to be on SPS.

01:42:03.542 --> 01:42:07.614
And so I'm okay if we don't implement

01:42:07.782 --> 01:42:11.046
a cost cap and we deal with, with that in the prudence in the base

01:42:11.078 --> 01:42:14.702
rate case, if everyone's okay with everything,

01:42:14.806 --> 01:42:18.494
with the rest of the memo, I can support that.

01:42:18.582 --> 01:42:22.470
(item:2:Commissioner Cobos' thoughts on 100% production tax credit guarantee) Yeah, and I think that the 100% production tax credit guarantee

01:42:22.510 --> 01:42:25.854
is critically important because that's one of the underpinnings for

01:42:25.902 --> 01:42:29.230
making the solar projects cost effective because of the fuel savings and the tax

01:42:29.270 --> 01:42:32.650
savings. And so

01:42:33.150 --> 01:42:37.140
I think that's a critical component of the conditions. And the minimum

01:42:37.220 --> 01:42:40.644
production guarantee is also very important

01:42:40.732 --> 01:42:44.044
because those can flow through, back through the customers. And I think in the past,

01:42:44.092 --> 01:42:47.428
when SPS came in for their big WIM projects

01:42:47.564 --> 01:42:50.652
several years ago. There was similar language put in through the

01:42:50.716 --> 01:42:53.636
Commission order that approved those projects.

01:42:53.668 --> 01:42:56.924
So it's a framework that I think we've had in place before in

01:42:56.932 --> 01:43:00.412
the past, and it was put in place to make sure that those

01:43:00.476 --> 01:43:04.726
PTC benefits flow back through to

01:43:04.758 --> 01:43:07.050
the customers. And,

01:43:08.670 --> 01:43:11.694
you know, we want to make sure that they flow through

01:43:11.742 --> 01:43:15.030
to all customers because there are some back end issues and I won't get into

01:43:15.070 --> 01:43:18.654
them right now, that sometimes

01:43:18.742 --> 01:43:23.094
ends up being sort of more of the PTC benefits

01:43:23.142 --> 01:43:26.094
flow through to larger customers rather than residential customers.

01:43:26.142 --> 01:43:29.776
But I, I want to make sure that we get that framework

01:43:29.808 --> 01:43:32.912
in place and I could go either way on the cost cap. I hear you,

01:43:32.936 --> 01:43:36.264
Commissioner Jackson. We have a mixed precedent

01:43:36.392 --> 01:43:39.100
at the commission on cost caps. And,

01:43:40.040 --> 01:43:43.752
you know, SPS in the past has agreed to one in the WIM projects

01:43:43.776 --> 01:43:47.664
through settlement agreement. So it's not like a new first

01:43:47.712 --> 01:43:50.912
case of impression for SPS. I would

01:43:50.936 --> 01:43:53.622
just say that if we do put one in,

01:43:53.776 --> 01:43:57.070
that AFUDC has to be included.

01:43:58.650 --> 01:44:02.242
So I'm okay without imposing the cost cap if you know, like you say,

01:44:02.266 --> 01:44:05.586
we can have the production

01:44:05.778 --> 01:44:06.750
guarantee.

01:44:11.330 --> 01:44:14.634
Okay, so I

01:44:14.722 --> 01:44:17.762
think we have agreement. Sounds like we have agreement. Okay.

01:44:17.906 --> 01:44:21.394
(item:2:Motion to deny & modify parts of the PFD consistent with memo and discussion) Then I will entertain a motion to deny in part and modify in

01:44:21.402 --> 01:44:24.522
part the PFD consistent with my memo in our discussion,

01:44:24.666 --> 01:44:27.722
and delegate to OPDM the authority to issue an

01:44:27.746 --> 01:44:31.070
order regarding the third party prudence reviews discussed in my memo.

01:44:31.570 --> 01:44:35.402
So moved. I second. Have a motion and second. All those

01:44:35.426 --> 01:44:38.790
in favor say aye. Opposed? Motion prevails.

01:44:41.690 --> 01:44:45.710
(item:2:Chairman Gleeson recesses open meeting) So Shelah, I think this is probably a good point to take a little recess.

01:44:46.210 --> 01:44:49.156
So 10, 15 minutes.

01:44:49.308 --> 01:44:53.092
So why don't we come back at 11:30? So we'll

01:44:53.116 --> 01:44:54.880
stand in recess till 11:30.

01:44:58.580 --> 01:45:02.080
(item:2:Chairman Gleeson reconvenes open meeting) We will reconvene our open meeting at 11:33.

01:45:02.940 --> 01:45:06.476
Shelah, I believe that brings us to Item No. 6. Will lay out

01:45:06.508 --> 01:45:10.268
Item No. 6, please? Yes, sir. (item:6:Application of Southwestern Electric Power Company to amend its distribution cost recovery factor) Item 6 is Docket No.

01:45:10.324 --> 01:45:14.134
56511. The application of Southwestern Electric

01:45:14.182 --> 01:45:18.246
Power Company to amend its distribution cost recovery factor.

01:45:18.398 --> 01:45:21.950
Before you as a proposal for decision. Let's see.

01:45:21.990 --> 01:45:25.918
Cities advocating reasonable deregulation filed exceptions. The ALJ

01:45:25.974 --> 01:45:29.638
filed a letter in response to the exception stating that no changes to

01:45:29.654 --> 01:45:32.730
the PFD are warranted. And Chairman Gleeson filed a memo.

01:45:33.350 --> 01:45:36.638
So simple correction memo. Happy to

01:45:36.654 --> 01:45:39.992
hear any thoughts or answer any questions? Good catch.

01:45:40.016 --> 01:45:43.944
I'm in agreement. I'm in agreement as well. Okay. (item:6:Motion to approve proposed order consistent with Chairman Gleeson's memo) I would entertain

01:45:43.992 --> 01:45:48.056
a motion to approve the proposed order consistent with my memo. So moved.

01:45:48.168 --> 01:45:51.176
I second. Motion and a second. All those in favor say aye. Aye.

01:45:51.248 --> 01:45:54.656
Opposed? Motion prevails. Okay, so the

01:45:54.688 --> 01:45:58.384
next Items up are 9 and 10. I'm recused from those, so I

01:45:58.392 --> 01:46:01.792
will turn this over to Commissioner Cobos. Thank you, Chairman Gleeson.

01:46:01.856 --> 01:46:05.528
Shelah, will you please lay out Item No. 9? Yes, ma'am. (item:9:Application of Energywell Texas, LLC for a Retail Electric Provider Certificate) Item 9

01:46:05.584 --> 01:46:09.056
is Docket No. 5651. The application of

01:46:09.088 --> 01:46:13.480
Energywell Texas, LLC for Retail Electric Provider

01:46:13.520 --> 01:46:17.500
Certificate. Before you is an appeal of Order No. 2.

01:46:18.400 --> 01:46:21.760
Finding the application deficient, establishing deadlines, and an

01:46:21.800 --> 01:46:25.460
opportunity to cure and denying request for good cause exception.

01:46:26.200 --> 01:46:28.980
And the appeal is before the Commission now.

01:46:30.010 --> 01:46:32.950
(item:9:Motion for extension of time to act on appeal) I would move to extend time to act on the appeal.

01:46:34.770 --> 01:46:38.910
I agree as well. All right. Do I

01:46:39.450 --> 01:46:42.670
have a motion? Do I have second? Second. Okay.

01:46:42.970 --> 01:46:46.790
All in favor? Say aye. Aye. Great. Motion passes.

01:46:47.490 --> 01:46:50.750
Okay. Item No. 10. Shelah, please lay that one out.

01:46:52.010 --> 01:46:56.512
(item:10:Investigation of Berkshire Communities, LLC for violations of PURA and Commission Rules) Item No. 10 is Docket No. 56786. This is the investigation

01:46:56.576 --> 01:47:00.576
of Berkshire Communities, LLC for violations of PURA

01:47:00.608 --> 01:47:04.216
and Commission rules. Before you is a motion from Commission Staff to

01:47:04.248 --> 01:47:07.784
open a formal investigation of Berkshire Communities, LLC.

01:47:07.952 --> 01:47:11.208
Commission Staff has opened an informal investigation

01:47:11.344 --> 01:47:14.592
for possible violations. Related to the unauthorized

01:47:14.656 --> 01:47:18.312
resell of electricity and denial of tenants rights to choose a

01:47:18.336 --> 01:47:21.694
retail provider in areas of the state that are subject to

01:47:21.742 --> 01:47:24.862
retail customer choice. Commission Staff requests that the

01:47:24.886 --> 01:47:28.878
commission issue an order to open a formal investigation. So

01:47:28.894 --> 01:47:32.134
that they may determine which affiliated business entity is the proper

01:47:32.222 --> 01:47:34.838
respondent in this docket. All right. Thank you,

01:47:34.854 --> 01:47:38.566
Shelah. (item:10:Motion to grant Commission Staff's authorization to institute a formal investigation) I would grant Commission Staff's motion to authorize Commission

01:47:38.638 --> 01:47:42.062
Staff to institute a formal investigation of Berkshire for possible

01:47:42.126 --> 01:47:46.102
violation of PURA and the Commission's rules. And direct OPDM

01:47:46.126 --> 01:47:50.034
to develop and order consistent with the Commission's decision to grant the relief

01:47:50.082 --> 01:47:53.554
requested in Commission Staff's motion. I'm supportive.

01:47:53.722 --> 01:47:56.630
I'm supportive as well. Okay. Same. All right.

01:47:57.170 --> 01:48:01.590
Do I have a motion? I so moved. So moved. A second?

01:48:01.890 --> 01:48:04.746
I second. All right. All in favor say aye.

01:48:04.818 --> 01:48:07.906
Aye. Motion passes, thank you. I will

01:48:07.938 --> 01:48:11.178
now hand the gavel back to Chairman Gleeson. Thank you,

01:48:11.194 --> 01:48:15.220
Commissioner Cobos. So that concludes the contested

01:48:15.260 --> 01:48:19.600
case portion of our agenda. So we'll move into Rules and Projects.

01:48:20.540 --> 01:48:23.372
(item:11:Shelah Cisneros confirms no one has signed up to speak on Rules & Projects) Shelah, I think you said no one signed up to speak on any rules or

01:48:23.396 --> 01:48:27.452
projects. That's correct. Okay, so based on consents

01:48:27.516 --> 01:48:31.188
and where we don't have anything to discuss. (item:18:Chairman Gleeson lays out Project No. 54445) I think that'll take us to

01:48:31.244 --> 01:48:34.476
Item No. 18. That is Docket

01:48:34.508 --> 01:48:38.930
54445, Review of protocols adopted by the independent organization.

01:48:40.710 --> 01:48:44.366
So, you know, we have 13 revisions

01:48:44.398 --> 01:48:48.302
in front of us. Twelve of them, I would say. Not a

01:48:48.326 --> 01:48:52.770
lot, if anything, to discuss. Then we have NPRR1224.

01:48:53.590 --> 01:48:57.310
So I think the way I'd like to do this is if we end up

01:48:57.350 --> 01:49:00.446
at a place where we approve 1224,

01:49:00.518 --> 01:49:04.152
we can just have one motion for. For all the

01:49:04.176 --> 01:49:07.792
approvals. If we end up taking a different action, then we'll

01:49:07.816 --> 01:49:11.080
probably need two motions. One to approve the other twelve, and then

01:49:11.120 --> 01:49:14.900
another for whatever action we take on 1224. Does that work for everybody?

01:49:15.800 --> 01:49:18.192
Didn't quite understand it. We're going to do all of the other ones in one

01:49:18.216 --> 01:49:21.584
motion, and then. So I don't want to do anything yet, because if

01:49:21.632 --> 01:49:25.528
we end up approving 1224, we can just add that to the existing.

01:49:25.704 --> 01:49:27.620
To the existing. To that motion.

01:49:29.360 --> 01:49:32.776
So we asked for ERCOT staff,

01:49:32.968 --> 01:49:36.640
for the IMM-Dr. Patton's here, and for PUC Staff

01:49:36.680 --> 01:49:40.220
to come up and go over their comments.

01:49:40.640 --> 01:49:44.384
The way we're going to run this, we'll have ERCOT go first, then Dr. Patton,

01:49:44.432 --> 01:49:47.712
then PUC Staff. And then if ERCOT

01:49:47.736 --> 01:49:51.376
has anything to close on, we'll allow them time. We've read

01:49:51.408 --> 01:49:55.008
everything, so I'd say five minutes is preferable. No more than ten, if that

01:49:55.024 --> 01:49:58.478
works for everybody. Okay, so if y'all want to come up.

01:49:58.614 --> 01:49:59.410
Woody?

01:50:15.510 --> 01:50:17.130
(item:18:ERCOT's Woody Rickerson on ECRS, NPRR1224, $750 floor and working with IMM) Woody Rickerson with ERCOT.

01:50:19.310 --> 01:50:22.280
All right, so I want to start with some background information. Try to go quickly

01:50:22.320 --> 01:50:26.312
here. ECRS isn't a new idea concept was included

01:50:26.336 --> 01:50:29.820
in a future ancillary service paper released back in 2012.

01:50:30.160 --> 01:50:34.832
The need for ECRS was recognized over a decade ago and

01:50:34.856 --> 01:50:38.760
is anchored in ERCOT. Being a relatively small grid with high penetration

01:50:38.840 --> 01:50:42.784
levels of renewables. Prior to June 2023,

01:50:42.832 --> 01:50:46.064
ECRS capacity was actually being purchased within

01:50:46.232 --> 01:50:49.812
responsive reserve ancillary service. Fundamentally,

01:50:49.996 --> 01:50:53.412
ECRS is a reliability tool. When ERCOT

01:50:53.436 --> 01:50:57.188
buys ECRS, it's buying a capability, not necessarily a capacity,

01:50:57.244 --> 01:51:00.676
although it comes with a capacity. When ERCOT holds ECRS,

01:51:00.708 --> 01:51:04.140
it holds a guarantee of ten minute ramping capability.

01:51:04.300 --> 01:51:08.400
When we release that ECRS, we're also releasing that guarantee.

01:51:09.140 --> 01:51:12.520
The market may or may not have that capability.

01:51:13.430 --> 01:51:16.838
The immune analysis shows that over the last twelve

01:51:16.894 --> 01:51:20.142
months, ECRS was deployed. The resulting system

01:51:20.326 --> 01:51:23.810
was short ten minute ramping 15% of the time.

01:51:24.790 --> 01:51:28.398
So keep in mind, that was even with a more conservative

01:51:28.454 --> 01:51:32.382
release of ECRS. So 15% of the time, that ten

01:51:32.406 --> 01:51:36.410
minute ramping wasn't there. So why is that important?

01:51:37.550 --> 01:51:40.054
First of all, ERCOT doesn't have synchronous ties,

01:51:40.182 --> 01:51:43.838
interconnections. Other regions like MISO,

01:51:43.894 --> 01:51:48.534
New York, New England, all of which are monitored by Potomac Economics

01:51:48.662 --> 01:51:52.022
all have those ties. Those areas can lean

01:51:52.046 --> 01:51:56.210
on those import capability. ERCOT doesn't have that luxury. ERCOT provides

01:51:58.270 --> 01:52:01.902
or ECRS provides much of that function that synchronous

01:52:01.926 --> 01:52:05.690
ties provide. Secondly, ERCOT's an island.

01:52:06.240 --> 01:52:09.872
It's actually one of the smallest of the three major interconnections. So a

01:52:09.896 --> 01:52:13.864
1200 megawatt forced outage has a much bigger impact

01:52:13.992 --> 01:52:17.860
on ERCOT frequency than it would have in a larger interconnect.

01:52:18.160 --> 01:52:22.256
Therefore, ERCOT has to protect that frequency more so than

01:52:22.288 --> 01:52:25.728
other regions. And lastly,

01:52:25.784 --> 01:52:28.380
ERCOT has a high penetration level of solar and wind,

01:52:28.960 --> 01:52:32.524
so those resource types come with more variability in output.

01:52:32.672 --> 01:52:35.680
ERCOT depends heavily on wind and solar forecast.

01:52:36.740 --> 01:52:40.724
An example would be just a wind ramp that we expect that

01:52:40.772 --> 01:52:44.636
arrives 30 minutes late that can cause significant

01:52:44.748 --> 01:52:48.252
operational problems. ECRS is one of

01:52:48.276 --> 01:52:51.720
the tools that helps us mitigate that risk of forecast errors.

01:52:52.500 --> 01:52:55.852
Those risks don't exist to that same level in

01:52:55.876 --> 01:52:59.062
other regions as well. So that's a another risk that's unique

01:52:59.086 --> 01:53:02.850
to ERCOT. At a high level.

01:53:03.430 --> 01:53:07.142
What the immune system has proposed reduces the

01:53:07.166 --> 01:53:11.250
amount of time ERCOT has access to ECRS.

01:53:11.870 --> 01:53:14.130
It puts more risk on system operations.

01:53:14.830 --> 01:53:17.810
And really, if you think about it, holding any ancillary service product,

01:53:18.190 --> 01:53:22.730
holding any ancillary service product out of the market, is withholding.

01:53:23.720 --> 01:53:28.304
But when we talk about responsive reserve withholding, responsive reserve withholding

01:53:28.432 --> 01:53:31.928
regulation, that's deemed okay because of the high

01:53:31.984 --> 01:53:35.380
need for reliability.

01:53:35.800 --> 01:53:38.540
ERCOT would put ECRS in that same category.

01:53:39.240 --> 01:53:43.860
ECRS is a high need reliability tool,

01:53:44.680 --> 01:53:48.900
and the reliability trade off is worth some cost of withholding.

01:53:49.930 --> 01:53:53.670
Now, we agree with the IMM that there's room for improvement,

01:53:54.490 --> 01:53:58.550
and we think improvement can be made without some significant risk

01:53:58.930 --> 01:54:02.626
in reliability. The NPRR1224

01:54:02.658 --> 01:54:06.866
40 megawatt threshold for release provides

01:54:06.898 --> 01:54:10.562
some of that improvement. And just keep in

01:54:10.586 --> 01:54:13.850
mind, too, that the 40 megawatt trigger is actually the

01:54:13.890 --> 01:54:17.880
third trigger. It's a new third trigger for

01:54:18.000 --> 01:54:21.220
releasing ECRS. Two triggers already exist.

01:54:21.680 --> 01:54:25.360
ERCOT will already release ECRS if frequency deviations

01:54:25.400 --> 01:54:29.168
are seen, and ERCOT also will release ECRS if

01:54:29.184 --> 01:54:33.272
the forecasted ramp deficiencies are known. So if we look into the future and see

01:54:33.296 --> 01:54:36.448
your ramp deficiency, we'll release ECRS. And that's a lot

01:54:36.464 --> 01:54:39.584
of what IMM wants us to do more of. And I think

01:54:39.632 --> 01:54:42.782
in the Summer of 2023, that was not as established as it

01:54:42.806 --> 01:54:46.610
is now. So there already have been improvements made to.

01:54:47.110 --> 01:54:50.454
To release ECRS, as we see forecasted ramp

01:54:50.502 --> 01:54:54.822
problems. So NPRR1224 sets

01:54:54.846 --> 01:54:59.046
up that third trigger with a 40 megawatt deficiency after ten minutes.

01:54:59.198 --> 01:55:02.502
I think if you were to move that trigger down to something like 5 MW

01:55:02.526 --> 01:55:06.734
or no megawatts, it would result in a substantial number of unnecessary

01:55:06.782 --> 01:55:10.568
deployments. So, as a system operator,

01:55:10.624 --> 01:55:15.100
we don't want our operators deploying manually deploying ECRS

01:55:15.880 --> 01:55:19.496
every day or twice a day, and then having to bring it back

01:55:19.528 --> 01:55:23.072
in. We want to make sure the ECRS is deployed during material

01:55:23.136 --> 01:55:26.184
shortages, not during small ramp periods, which the five

01:55:26.232 --> 01:55:29.220
megawatt trigger would force us to deploy more often.

01:55:30.120 --> 01:55:34.012
As a grid operator, we just don't want our operators in the situation where we're

01:55:34.036 --> 01:55:38.440
doing that repeatedly every day. Concerning the $750 floor,

01:55:39.340 --> 01:55:42.836
ERCOT did rely on market participant input and attack processes

01:55:42.868 --> 01:55:47.020
for setting that floor. We continue to believe that there

01:55:47.060 --> 01:55:50.200
is some risk in demand fluctuations

01:55:51.060 --> 01:55:54.260
if a low floor is

01:55:54.340 --> 01:55:57.788
coupled with a low trigger. So those two things together

01:55:57.884 --> 01:56:01.770
could cause demand fluctuations. As you release ECRS,

01:56:02.550 --> 01:56:05.790
demand that has responsive to prices,

01:56:05.830 --> 01:56:10.062
comes back on, prices go up, it goes off. You have these fluctuations

01:56:10.086 --> 01:56:13.342
that could occur during critical periods of the day. We want

01:56:13.366 --> 01:56:15.970
to avoid that. So we do think there is some risk there.

01:56:19.910 --> 01:56:23.130
The IMM has argued that releasing ECRS,

01:56:23.910 --> 01:56:26.650
and you see this a lot in the comments, in most cases,

01:56:27.580 --> 01:56:31.812
doesn't mean ERCOT will lose ECR's capability, or generally

01:56:31.996 --> 01:56:36.044
doesn't result. Those comments are.

01:56:36.212 --> 01:56:37.680
You find those throughout.

01:56:39.020 --> 01:56:42.772
I think in the most recent comments, we see 85% of the time when

01:56:42.796 --> 01:56:46.420
ECRS is released. There isn't a problem with retaining

01:56:46.460 --> 01:56:50.640
the ten minute ramp, but that means 15% of the time there is,

01:56:51.950 --> 01:56:55.398
and we can't operate the system. Looking back at

01:56:55.414 --> 01:56:58.850
what happened, we operate the system going forward.

01:57:00.190 --> 01:57:03.022
So I didn't need car insurance yesterday because I didn't get in a wreck,

01:57:03.126 --> 01:57:06.610
but I had it and I'll carry it going forward as well.

01:57:06.910 --> 01:57:09.010
And ECRS is much like that.

01:57:10.030 --> 01:57:13.566
We don't know what's going to happen tomorrow. That's why we

01:57:13.598 --> 01:57:17.206
carry that ecrs as an insurance policy. If we could

01:57:17.238 --> 01:57:20.780
buy ancillary services for what we needed yesterday,

01:57:21.120 --> 01:57:24.512
we could run a very efficient market. But that's just not the way the

01:57:24.536 --> 01:57:25.500
system works.

01:57:28.840 --> 01:57:31.968
Having said all that, I mean, we agree with

01:57:31.984 --> 01:57:35.600
the IMM, the deployment could be improved, especially when compared against the performance

01:57:35.680 --> 01:57:39.472
from 2023. So, no doubt about it, and we're

01:57:39.496 --> 01:57:43.504
willing to work on that. And I think we've already made improvements to improve

01:57:43.592 --> 01:57:47.656
that. We've been working with the IMM and

01:57:47.688 --> 01:57:51.500
market participants on those improvements for the last six months.

01:57:52.400 --> 01:57:56.224
TAC asked ERCOT to review the ECRS quantities in December

01:57:56.272 --> 01:57:59.952
2023. So we started that several months

01:57:59.976 --> 01:58:03.984
ago. ERCOT determined that the quantities being procured were appropriate

01:58:04.032 --> 01:58:07.960
for the risk. Those risks are the things I talked about for isolated grid

01:58:08.000 --> 01:58:12.050
with high penetration renewables, no synchronous connections.

01:58:13.150 --> 01:58:16.090
During this review, ERCOT met with IMM's staff.

01:58:16.630 --> 01:58:20.850
In fact, many of the concepts in 2024 were originally proposed

01:58:21.430 --> 01:58:24.130
by the IMM. So,

01:58:24.870 --> 01:58:28.930
ultimately, the framework laid out in 1224

01:58:29.230 --> 01:58:33.370
represents a balanced improvement over what happened in the past

01:58:33.710 --> 01:58:36.680
that can be used as ERCOT gets ready for. For RTC.

01:58:37.260 --> 01:58:40.996
So that's what I got. Thank you, Woody. And before

01:58:41.028 --> 01:58:44.276
we get into questions. Woody, I would want to recognize and thank

01:58:44.308 --> 01:58:48.868
Senator Menendez and Zafarini for sending us a letter relating

01:58:48.924 --> 01:58:51.980
to NPRR1224. (item:18:Chairman and Commissioners questions to Woody Rickerson, NPRR1224) So,

01:58:52.100 --> 01:58:56.040
when this was initially proposed, there was no offer floor.

01:58:56.700 --> 01:59:00.316
Can you talk to me why? Talk me through kind of why not?

01:59:00.468 --> 01:59:05.006
Why there was no offer floor originally? So we

01:59:05.038 --> 01:59:08.374
left a space, there was an anticipation

01:59:08.422 --> 01:59:11.542
there would be an offer floor, but we wanted to get market participant feedback on

01:59:11.566 --> 01:59:15.326
what the offer floor would be. So the NPRR

01:59:15.438 --> 01:59:18.950
was written so that that offer floor could be filled

01:59:18.990 --> 01:59:21.090
in after market participant input.

01:59:21.830 --> 01:59:25.702
So just one piece, maybe, of constructive feedback

01:59:25.886 --> 01:59:28.874
that wasn't apparent to me, I would say, and honestly, you know,

01:59:28.882 --> 01:59:31.706
I'm not going to follow this as closely as everyone who's in every you know,

01:59:31.738 --> 01:59:35.850
committee meeting. I thought you all were completely agnostic

01:59:35.930 --> 01:59:40.082
to that, to be honest. And is it still fair to say. Fair for

01:59:40.106 --> 01:59:43.698
me to say that the part of this revision

01:59:43.834 --> 01:59:46.962
that is most important to ERCOT is the

01:59:46.986 --> 01:59:48.990
trigger? That's correct. Okay,

01:59:49.930 --> 01:59:53.202
Commissioners, questions for Woody? (item:18:Commissioner Cobos' thoughts and question for Woody Rickerson on offer floor & working with IMM) Yeah, and thank you for

01:59:53.266 --> 01:59:56.236
emphasizing that. It wasn't clear to me either,

01:59:56.348 --> 01:59:59.900
Chairman Gleason. It seems to me like the offer floor

01:59:59.940 --> 02:00:03.412
came up discussion because there was some discussion

02:00:03.436 --> 02:00:06.596
of potentially lower offer floor that the IMM put out there.

02:00:06.628 --> 02:00:10.300
And so the market sort of reacted and came up with a

02:00:10.340 --> 02:00:13.628
different offer floor if there was going to

02:00:13.644 --> 02:00:17.428
be an offer floor. So, you know, as the

02:00:17.484 --> 02:00:21.008
conversation sort of evolved to the board, it became unclear.

02:00:21.044 --> 02:00:24.720
Clear where. You know, at least now

02:00:24.760 --> 02:00:28.272
we're clear where ERCOT really stood in terms of what's most

02:00:28.336 --> 02:00:32.300
important from this entire exercise, because from my perspective,

02:00:32.680 --> 02:00:36.760
based on where we left off, when ERCOT got their 2024 ancillary

02:00:36.800 --> 02:00:39.816
service methodology approved, ERCOT committed to

02:00:39.848 --> 02:00:43.440
work with the IMM and the stakeholders to improve

02:00:43.520 --> 02:00:47.118
the deployment of ecrs to better balance, you know,

02:00:47.214 --> 02:00:50.446
making sure you still have resources when you need

02:00:50.478 --> 02:00:54.566
them for the reliability risks that you laid out, but also

02:00:54.718 --> 02:00:58.430
releasing ecrs a little bit earlier,

02:00:58.510 --> 02:01:01.742
a little bit more, to mitigate

02:01:01.806 --> 02:01:05.686
any potential artificial pricing in the market. And that was the

02:01:05.718 --> 02:01:09.438
exercise. Right? That was the exercise that I

02:01:09.454 --> 02:01:13.432
believe that the group collectively, ERCOT, IMM, our Staff.

02:01:13.536 --> 02:01:17.800
Embarked on to try to rebalance the ECRS deployment,

02:01:17.840 --> 02:01:21.936
where you're still getting your reliability tool, but, you know,

02:01:22.088 --> 02:01:25.340
consumer costs, pricing concerns are mitigated.

02:01:25.720 --> 02:01:29.168
And so the deployment trigger was really where I thought

02:01:29.264 --> 02:01:32.984
our focus was. And somewhere along the way, given potential,

02:01:33.072 --> 02:01:36.672
probably, back and forth discussions on an offer floor, is how

02:01:36.696 --> 02:01:41.636
we ended up with the seven offer floor. And ERCOT seemed

02:01:41.668 --> 02:01:43.360
to really,

02:01:44.940 --> 02:01:49.052
really advocate for the $750 offer floor. But what I'm hearing from you today

02:01:49.196 --> 02:01:53.076
is that the deployment trigger, as you just said, is the most important piece

02:01:53.108 --> 02:01:55.980
of this NPRR for ERCOT. That's correct.

02:01:56.060 --> 02:01:56.760
Okay.

02:01:59.140 --> 02:02:00.080
Commissioners?

02:02:06.990 --> 02:02:10.970
Actually, I'll wait for my comments till after Dr. Patton goes and Staff goes.

02:02:11.630 --> 02:02:12.930
I might do the same thing.

02:02:16.230 --> 02:02:18.250
Dr. Patton, thank you for being here this morning.

02:02:19.350 --> 02:02:21.850
You're welcome. It's on. Okay.

02:02:22.430 --> 02:02:27.302
(item:18:IMM & Potomac Economics President Dr. David Patton, NPRR1224) Well, I appreciate the invitation to come, and I

02:02:27.326 --> 02:02:31.002
apologize in advance for the

02:02:31.026 --> 02:02:35.290
difficulty. This is a complex issue, and you're

02:02:35.330 --> 02:02:39.346
hearing things from ERCOT. You're hearing things that are diametrically opposed

02:02:39.458 --> 02:02:40.350
from me.

02:02:42.730 --> 02:02:46.842
It may surprise you to say there are a lot of things that ERCOT

02:02:46.906 --> 02:02:51.114
and I agree on in this issue, but at the outset, I think it's important

02:02:51.202 --> 02:02:54.688
to acknowledge. Just to put this,

02:02:54.794 --> 02:02:59.340
this into context, the market performance that impacted

02:02:59.380 --> 02:03:03.920
by the deployment of ECRS in 2023 was calamitous.

02:03:04.500 --> 02:03:08.520
I've never seen something as bad as what happened in 2023.

02:03:10.220 --> 02:03:13.320
This one issue doubled energy prices.

02:03:13.860 --> 02:03:17.260
It would have been hard for me to suggest something that would have

02:03:17.300 --> 02:03:21.206
that magnitude of an impact on the market

02:03:21.278 --> 02:03:24.582
performance, the competitiveness and the efficiency of prices. And so the

02:03:24.606 --> 02:03:28.326
priority has to be to fix this, not just iterate

02:03:28.398 --> 02:03:31.530
and improve and make it a little bit better.

02:03:32.190 --> 02:03:36.254
And we know how to fix this. And so that's why we

02:03:36.302 --> 02:03:39.566
disagree with what's in the NPRR, both elements, the deployment

02:03:39.598 --> 02:03:43.174
trigger and the offer floor, because what the NPRR would do

02:03:43.222 --> 02:03:47.276
is institutionalize a fairly large share of the dysfunction

02:03:47.308 --> 02:03:50.916
that we saw in 2023. And in some respects,

02:03:51.108 --> 02:03:54.900
there are conditions under which the NPRR could result in worse

02:03:54.940 --> 02:03:58.308
performance of the markets than occurred in 2023. Because in

02:03:58.324 --> 02:04:01.640
2023, we didn't have a $750 offer floor.

02:04:02.100 --> 02:04:05.964
And that offer floor, under a lot of conditions, could do more to distort prices

02:04:06.012 --> 02:04:09.040
than failing to deploy ECRS.

02:04:09.780 --> 02:04:13.160
So I want to talk about the things that have really confused people.

02:04:13.960 --> 02:04:17.280
I've said multiple times that refusing to deploy

02:04:17.400 --> 02:04:22.104
ECRS demonstrably undermines

02:04:22.152 --> 02:04:25.712
reliability. We've been evaluating

02:04:25.896 --> 02:04:29.760
the operations of the ERCOT market since the early two thousands. In fact,

02:04:29.800 --> 02:04:32.888
that's when we first started working with ERCOT and with the PUC,

02:04:32.984 --> 02:04:36.592
is the very first big report we did was on operations.

02:04:36.656 --> 02:04:40.466
And I think we had 15 recommendations for, for how to improve operations

02:04:40.538 --> 02:04:44.098
and reliability of the system. And we do the same sort of evaluation in all

02:04:44.114 --> 02:04:47.450
the other markets, because the operating actions,

02:04:47.570 --> 02:04:51.110
and this is one of them, the decision to deploy

02:04:51.730 --> 02:04:55.338
reserves has a huge impact on the performance of the market and

02:04:55.394 --> 02:04:58.034
how cost effectively you're maintaining reliability.

02:04:58.202 --> 02:05:02.266
Now, this is a new product, so it's not surprising that people are confused

02:05:02.378 --> 02:05:05.498
about whether deploying ECRS is good

02:05:05.514 --> 02:05:09.466
for reliability or bad for reliability. The assumption is

02:05:09.658 --> 02:05:13.442
when you deploy ECRS, somehow you've lost access to

02:05:13.466 --> 02:05:17.090
resources and you've diminished reliability. And so

02:05:17.210 --> 02:05:20.426
from an operator perspective, I can understand the

02:05:20.458 --> 02:05:24.098
appeal of having a bank of resources sitting there that you can deploy

02:05:24.194 --> 02:05:28.042
when. When you really feel like you need it. The problem with

02:05:28.066 --> 02:05:31.522
that is that if

02:05:31.546 --> 02:05:34.850
you don't deploy ECRS before,

02:05:35.010 --> 02:05:38.842
the real time market can no longer do its job, which we

02:05:38.866 --> 02:05:41.590
refer to as SCAD sked, has one job,

02:05:42.130 --> 02:05:45.306
to send dispatch instructions to the generators that will

02:05:45.338 --> 02:05:48.190
meet the demand on the system optimally.

02:05:49.250 --> 02:05:52.562
What the trigger in this NPRR does is say, we're going to let

02:05:52.586 --> 02:05:56.394
the SCAD run out of resources, and for up to ten

02:05:56.442 --> 02:06:00.596
minutes, by at least 40 mw. So we're going to intentionally prevent

02:06:00.668 --> 02:06:03.840
SCAD from doing its job if we adopt this trigger.

02:06:04.380 --> 02:06:07.800
And when you do that, a couple things happen. One is

02:06:09.420 --> 02:06:13.140
you're no longer sending dispatch instructions to generators that are

02:06:13.180 --> 02:06:17.164
adequate. And so now you're leaning on regulation to

02:06:17.212 --> 02:06:20.172
keep supply and demand imbalance. That's not the purpose of regulation.

02:06:20.276 --> 02:06:23.356
Regulation is intended to address situations

02:06:23.388 --> 02:06:27.290
where maybe generators are running lower than the instruction you gave them.

02:06:27.410 --> 02:06:31.338
Like, it's no. RTO should design their real time market

02:06:31.394 --> 02:06:34.850
to run out of resources so that you then have to lean on regulation,

02:06:34.930 --> 02:06:37.630
because then you're closer to a frequency event.

02:06:38.370 --> 02:06:42.170
The regulation keeps you out of the frequency event by incrementing

02:06:42.210 --> 02:06:45.530
up generation when supply and demand are in balance.

02:06:45.690 --> 02:06:49.434
So the number one priority should, from a reliability standpoint,

02:06:49.482 --> 02:06:53.520
should be not to let sched run out of resources. Now, when sched does

02:06:53.560 --> 02:06:57.696
run out of resources, it has the very unappealing side effect that

02:06:57.888 --> 02:07:01.416
you get price spikes, because sched thinks the lights are about to go

02:07:01.448 --> 02:07:06.240
out. And so that's why in 2023, we repeatedly saw $5,000

02:07:06.280 --> 02:07:09.260
prices that were sustained for a very long period of time.

02:07:09.560 --> 02:07:12.856
Because to sched, it looks like

02:07:12.888 --> 02:07:16.632
the system is going down, but it only looks like that because we're

02:07:16.656 --> 02:07:20.320
not giving it additional resources so that it can meet the load.

02:07:22.100 --> 02:07:25.716
Now, one of the reasons for the

02:07:25.748 --> 02:07:30.084
offer floor is, I think there's a concern that if you release ECRS

02:07:30.132 --> 02:07:33.828
resources and allow sched to

02:07:33.924 --> 02:07:37.220
meet the load, that obviously prices are going to be much lower

02:07:37.340 --> 02:07:40.740
and maybe they'll be too low. But there's

02:07:40.780 --> 02:07:44.188
been no analysis by anybody that suggests that prices are going

02:07:44.204 --> 02:07:47.638
to be too low if we release ECRS resources.

02:07:47.694 --> 02:07:51.894
In fact, we, in our rebuttal comments, did an analysis showing what ORDC

02:07:51.942 --> 02:07:56.654
would do in these intervals where we're actually short of reserves and

02:07:56.822 --> 02:08:00.470
the prices are efficient. If you're significantly short

02:08:00.510 --> 02:08:04.206
of ten minute reserves, price would average dollar 900 and go

02:08:04.238 --> 02:08:08.174
all the way up to $5,000. So there's

02:08:08.222 --> 02:08:12.300
no evidence that ORDC will not do its job and needs to be supplemented somehow

02:08:12.340 --> 02:08:16.196
by an offer floor that would bolster prices. Now, the important

02:08:16.268 --> 02:08:20.140
thing with the 85% number that ERCOT

02:08:20.180 --> 02:08:23.620
mentioned is that 85% of the time when

02:08:23.660 --> 02:08:26.120
we released ECRS, there was no shortage.

02:08:26.540 --> 02:08:30.436
And when there is no shortage, there should be no shortage pricing.

02:08:30.588 --> 02:08:34.164
So any price effect you get from the $750 offer

02:08:34.212 --> 02:08:37.324
floor is a pure distortion, and that's 85% of

02:08:37.332 --> 02:08:41.890
the time. Now, 15% of the time there is a shortage. And Woody

02:08:42.390 --> 02:08:45.646
just mentioned that the 15% is

02:08:45.678 --> 02:08:49.110
because we released ECRS. That's not true. The 15%

02:08:49.270 --> 02:08:52.582
is a shortage that existed because of supply and demand.

02:08:52.646 --> 02:08:56.606
And whether you release ECRS or don't, you're going to see those shortages. And those

02:08:56.638 --> 02:09:00.770
are the periods where we demonstrated that the ORDC sets prices

02:09:01.070 --> 02:09:04.262
adequately. So I was encouraged that

02:09:04.286 --> 02:09:08.024
the Staff recommendation was not to accept the $750

02:09:08.072 --> 02:09:12.128
offer floor because that's the most unambiguously unreasonable

02:09:12.184 --> 02:09:15.680
part of the NPRR. But the deployment trigger is very,

02:09:15.720 --> 02:09:20.300
very important, and it's important to understand why

02:09:20.600 --> 02:09:24.664
adopting a deployment trigger that lets get go short hurts

02:09:24.712 --> 02:09:27.860
reliability. And there's two reasons.

02:09:28.320 --> 02:09:31.572
When you release ECRS, you're not losing reserves.

02:09:31.736 --> 02:09:35.484
And you heard that over and over that we need reserves.

02:09:35.532 --> 02:09:38.412
We need to hold these things. We don't want to deploy them because we need

02:09:38.436 --> 02:09:41.540
to have them so that we can deploy them. When you deploy them,

02:09:41.580 --> 02:09:44.844
you get spinning reserves on the system. There's no way you lose

02:09:44.892 --> 02:09:48.212
reserves. You have to ramp when you deploy these resources.

02:09:48.276 --> 02:09:52.276
If they turn on some gas turbines, let's say you

02:09:52.308 --> 02:09:55.716
ramp down other resources on the system who provide you spinning

02:09:55.748 --> 02:09:59.504
reserves. Now, why is that a good thing from a reliability standpoint,

02:09:59.552 --> 02:10:03.416
that's a good thing because then when unexpected things happen on the system,

02:10:03.608 --> 02:10:07.168
SCAD can immediately start ramping those resources up. Like you

02:10:07.184 --> 02:10:10.672
get response right away if you hold them

02:10:10.696 --> 02:10:14.088
as ECRS and wait for the operator to press the button.

02:10:14.264 --> 02:10:17.000
If it's a gas turbine, you have to wait ten minutes for it to come

02:10:17.040 --> 02:10:20.672
on. So it provides less reliability value, which is why the

02:10:20.696 --> 02:10:23.816
demand curves for spinning reserves are always higher than

02:10:23.848 --> 02:10:28.256
for non spinning. They provide more value to the system. And when you deploy ECRS,

02:10:28.408 --> 02:10:32.780
you're creating spinning reserves. So it's a good thing from a reliability standpoint.

02:10:33.440 --> 02:10:37.112
But there's two other very important things, and these are nuanced, and I'm

02:10:37.136 --> 02:10:40.736
not sure people recognize that this is going on. One thing we

02:10:40.768 --> 02:10:44.616
saw when we looked at what units will ramp down

02:10:44.768 --> 02:10:48.112
if you deploy ECRS. Most of

02:10:48.136 --> 02:10:51.658
those resources are gas turbines that are fast ramping

02:10:51.754 --> 02:10:55.610
and batteries. Now, that should scare you that batteries

02:10:55.690 --> 02:10:59.890
are the ones ramping down when you deploy ECRS. What that means is

02:11:00.050 --> 02:11:03.746
when we don't deploy ECRS and sched gets really tight and

02:11:03.778 --> 02:11:07.418
prices go up, we start dispatching our batteries. We don't want

02:11:07.434 --> 02:11:10.834
to be dispatching our batteries under those circumstances. If we're not short,

02:11:10.922 --> 02:11:14.394
we want to preserve the state of charge of the batteries. So when prices jump

02:11:14.442 --> 02:11:17.912
up to 3000 and $4,000 load curtails

02:11:17.936 --> 02:11:21.144
that shouldn't be curtailing, which Woody mentioned. Batteries start

02:11:21.192 --> 02:11:24.816
running that shouldn't be running. And all of this is being done to

02:11:24.848 --> 02:11:28.920
preserve gas turbines that are sitting there that are

02:11:28.960 --> 02:11:32.312
much better suited to provide SCAd the flexibility that

02:11:32.336 --> 02:11:35.824
it needs. And ultimately, if you keep doing that, if you keep

02:11:35.872 --> 02:11:38.500
not deploying the ECRS, you think,

02:11:39.280 --> 02:11:43.144
I can see how it appears that the system is more reliable because I'm looking

02:11:43.192 --> 02:11:46.956
at resources that. That I can press a button and deploy, but the system is

02:11:46.988 --> 02:11:50.900
less reliable if I've diminished my supply by running

02:11:50.940 --> 02:11:53.440
batteries out of their state of charge in the meantime.

02:11:56.220 --> 02:12:00.436
So that hopefully explains why our

02:12:00.468 --> 02:12:03.560
reliability conclusion about this deployment trigger is.

02:12:04.820 --> 02:12:08.716
We come to a very different conclusion than ERCOT operators. And it's just that

02:12:08.908 --> 02:12:12.388
I think we're looking at the secondary and tertiary effects of

02:12:12.484 --> 02:12:15.796
deploying or not deploying, rather than just simply do I have

02:12:15.828 --> 02:12:18.520
resources that I can turn to.

02:12:20.860 --> 02:12:24.280
So the last thing I would say is,

02:12:27.260 --> 02:12:28.600
on this trigger,

02:12:30.540 --> 02:12:34.540
you may wonder why it was on the list of potential triggers that

02:12:34.580 --> 02:12:37.728
we produced. We never proposed a ten minute delay,

02:12:37.924 --> 02:12:40.540
but the trigger that we,

02:12:41.800 --> 02:12:44.864
that we preferred was a price based trigger, which,

02:12:44.952 --> 02:12:47.300
which would trigger before your short,

02:12:48.080 --> 02:12:51.952
a very small shortage, we thought would. Would not have

02:12:51.976 --> 02:12:55.224
a big distortion. The problem with that is, once we started doing

02:12:55.272 --> 02:12:58.920
simulation, the simulations, the effects of

02:12:58.960 --> 02:13:02.544
waiting until sched goes short became clear. It was

02:13:02.632 --> 02:13:05.290
much larger than. Than my intuition,

02:13:05.710 --> 02:13:09.662
which is why we're now opposed to it. And ERCOT has

02:13:09.686 --> 02:13:12.766
a deployment trigger right now that when it forecasts it can't meet the ramp in

02:13:12.798 --> 02:13:16.222
sched, it will deploy ECRS in concept. And they said this

02:13:16.246 --> 02:13:19.798
in their comments, in concept, that's pretty similar to

02:13:19.814 --> 02:13:23.870
the trigger I would like you to impose in this NPRR, which is

02:13:24.030 --> 02:13:27.838
if SCAD sees five or ten minutes from now that it's going short to

02:13:27.934 --> 02:13:30.462
release the ECRS to avoid the shortage.

02:13:30.646 --> 02:13:34.446
But for some reason, that trigger has not worked

02:13:34.518 --> 02:13:37.774
like we've even this year. We've already incurred over

02:13:37.822 --> 02:13:41.414
half a billion dollars of cost by having sched

02:13:41.462 --> 02:13:45.062
go short and remain short for extended periods of time when

02:13:45.086 --> 02:13:48.382
ECRS is not being released. And I

02:13:48.406 --> 02:13:51.790
can't tell you why that trigger doesn't ensure

02:13:51.870 --> 02:13:55.010
that SCED doesn't go short, but it doesn't.

02:13:55.480 --> 02:13:58.696
And this new trigger, if you move

02:13:58.728 --> 02:14:02.160
it back, basically 15 minutes, so you deploy the ECR

02:14:02.200 --> 02:14:05.500
s before you're short, it'd make a huge

02:14:06.040 --> 02:14:09.640
difference. And if you don't believe you should be,

02:14:09.800 --> 02:14:12.952
if you don't believe you should be deploying ECRS early.

02:14:13.056 --> 02:14:16.544
I don't understand how you can think the next

02:14:16.592 --> 02:14:20.342
NPRR, which would permanently deploy ECRS, is a good idea,

02:14:20.456 --> 02:14:23.978
which ERCOT has supported or has said positive

02:14:24.034 --> 02:14:28.270
things about, because that would make ECRS available

02:14:29.330 --> 02:14:32.786
when it doesn't even look like sched needs it. So what I'm

02:14:32.818 --> 02:14:36.050
proposing is I feel like a much less aggressive

02:14:36.090 --> 02:14:39.970
approach than the next NPRR, which would

02:14:40.010 --> 02:14:43.362
permanently deploy ECRS. So with

02:14:43.386 --> 02:14:46.760
that, I'm going to. I'll wrap up, and I'm happy to take

02:14:46.850 --> 02:14:50.200
questions. Thank you, Dr. Patton. Commissioners, questions?

02:14:50.700 --> 02:14:54.160
Doctor Patton, are you referring to NPRR1232 as the next NPRR?

02:14:54.460 --> 02:14:55.840
Yes. Okay.

02:14:58.860 --> 02:15:02.560
I have a question, and it's for Woody and Dr. Patton.

02:15:03.820 --> 02:15:07.428
ECRS. What percentage of ECRS now is

02:15:07.484 --> 02:15:09.564
batteries going into the system? Woody?

02:15:09.652 --> 02:15:13.132
30%. Okay. And how does that play? If you're moving

02:15:13.196 --> 02:15:16.920
over, like Dr. Patton's notes show,

02:15:16.960 --> 02:15:20.416
and you move it over when it's triggered so that it's

02:15:20.448 --> 02:15:23.980
seen, how does that work? Because if you're turning on a battery, aren't you?

02:15:25.960 --> 02:15:28.020
The charge is now being used.

02:15:30.000 --> 02:15:33.560
Yeah. So this is another confusing part of this equation.

02:15:33.720 --> 02:15:37.056
When you deploy ECRS, it doesn't mean anything's going to turn on. It just

02:15:37.088 --> 02:15:40.898
makes it visible to SCED, and then SCAD makes the economic

02:15:40.994 --> 02:15:44.714
decision, do I want to turn that on or not? And the portion of the

02:15:44.722 --> 02:15:48.298
ECRS that's deployed, that's batteries, probably won't turn on because their offer

02:15:48.354 --> 02:15:52.550
prices tend to be high. The portion of the ECRS that are gas turbines,

02:15:52.890 --> 02:15:57.250
those are the ones that probably will turn on because their

02:15:57.290 --> 02:16:00.882
costs are much, much lower than the batteries. So that's

02:16:00.906 --> 02:16:04.776
why when I talk about deploying ECRS, I skip

02:16:04.938 --> 02:16:08.244
a couple of steps and go straight to, we're going to see some gas turbines

02:16:08.292 --> 02:16:12.560
turn on as a result. Okay. Is that

02:16:13.020 --> 02:16:15.640
in your agreement, too? Yes. Okay.

02:16:18.060 --> 02:16:19.520
I'm totally confused.

02:16:21.860 --> 02:16:25.420
I apologize. But as much as I've known

02:16:25.460 --> 02:16:29.020
and learned about the system, this coming to us at the

02:16:29.060 --> 02:16:32.368
end, I thought I could get my head around

02:16:32.424 --> 02:16:36.456
it. I believe 50%

02:16:36.486 --> 02:16:39.191
of what Woody says and 50% of what you say,

02:16:39.334 --> 02:16:41.299
but I can't reconcile the two.

02:16:43.600 --> 02:16:46.860
I believe Woody and agree with Woody on reliability,

02:16:47.558 --> 02:16:51.136
that the frequency is an issue, we're not connected to other systems,

02:16:51.208 --> 02:16:54.704
that this might be a tool that's needed. Dr. Patton, I don't know

02:16:54.752 --> 02:16:57.992
why it matters to anybody about when batteries

02:16:58.056 --> 02:17:01.549
discharge. Our market is a market, and it's intended to

02:17:01.589 --> 02:17:05.227
discharge when the price is right for that battery and

02:17:05.349 --> 02:17:08.741
or that resource. And I sense

02:17:08.843 --> 02:17:12.261
what we have done, what we've created over time. You all

02:17:12.365 --> 02:17:16.004
please comment on this. It is so damn many

02:17:16.037 --> 02:17:20.021
ancillary services that we've created and we

02:17:20.045 --> 02:17:23.647
pull from them and we don't stand within strict guidelines of them.

02:17:24.308 --> 02:17:28.191
So the market doesn't know we're giving operators flexibility to

02:17:28.216 --> 02:17:31.520
this because of reliability challenges like last Summer,

02:17:31.638 --> 02:17:35.272
which is not this Summer. In terms of temperature, in terms

02:17:35.296 --> 02:17:37.780
of resources, in terms of forced outages.

02:17:38.400 --> 02:17:42.500
And we need to use this ancillary service study

02:17:43.280 --> 02:17:46.848
to define what these markets are for and why they are being

02:17:46.904 --> 02:17:50.959
used. So that's my statement. I have

02:17:51.000 --> 02:17:54.420
no clue where I stand on this. I really don't.

02:17:54.799 --> 02:17:58.446
Can I answer your question? Yeah. Okay. The batteries

02:17:58.598 --> 02:18:01.388
and I, I mean, to be honest,

02:18:01.468 --> 02:18:05.540
I'm not surprised that, that this is why I apologize

02:18:05.606 --> 02:18:08.894
first thing I said when I got up here, because this, this is, this is

02:18:08.902 --> 02:18:10.170
a very difficult issue.

02:18:12.670 --> 02:18:16.302
The batteries are, it's important to think

02:18:16.325 --> 02:18:19.662
about what did we do before ERCOT and why weren't we seeing outages

02:18:19.726 --> 02:18:23.110
and so forth. What happened before ERCOT is these gas turbines

02:18:23.150 --> 02:18:26.814
that are being procured as ERCOT were held by market participants

02:18:26.861 --> 02:18:30.606
who would self commit them as they saw prices go up. So we

02:18:30.638 --> 02:18:34.308
did not see SCAD routinely run out of resources because we relied

02:18:34.350 --> 02:18:37.910
on participants acting in their own best interest to make more

02:18:37.950 --> 02:18:41.118
supply available when the real time market needs it. But now we're buying so much

02:18:41.134 --> 02:18:44.325
of this and sequestering it that that response is

02:18:44.358 --> 02:18:47.558
hindered. And so now we're seeing SCAD start to run out of resources. Now,

02:18:47.574 --> 02:18:52.120
the reason running the batteries is bad from a reliability standpoint is

02:18:52.940 --> 02:18:56.972
if a battery's opportunity costs are $1,000 or $1,500 or

02:18:57.036 --> 02:19:00.276
whatever it is, there is a point in time where

02:19:00.348 --> 02:19:03.876
it's worthwhile to discharge the battery,

02:19:04.066 --> 02:19:07.441
use it up, and then you don't have it anymore because it's really

02:19:07.492 --> 02:19:11.180
needed at that point in time. But that's not what's

02:19:11.218 --> 02:19:15.000
happening here. What's happening here is prices should be $80.

02:19:15.480 --> 02:19:19.200
We shouldn't be running the batteries, but we're printing $1,000

02:19:19.240 --> 02:19:22.799
price or 2000 or 3000 solely because we've let sched

02:19:22.840 --> 02:19:26.672
run out of resources. So we've created the illusion that this is

02:19:26.696 --> 02:19:30.263
a dire circumstance where we should be running the batteries.

02:19:30.392 --> 02:19:32.660
But it's a manufactured.

02:19:33.200 --> 02:19:36.976
Why is the ORDC flat? Because isn't that

02:19:37.008 --> 02:19:40.366
the trigger that's supposed to encourage people to

02:19:40.528 --> 02:19:44.575
put more resources into SCED? Yes, it's flat

02:19:44.634 --> 02:19:48.066
because by our operating procedure,

02:19:48.178 --> 02:19:51.426
we are allowing SCED to run out of resources so

02:19:51.458 --> 02:19:55.030
that the SCED price is shooting up,

02:19:56.130 --> 02:19:59.402
and it's completely out of sync with how many reserves we had.

02:19:59.506 --> 02:20:03.082
See, ORDC can see all of the resources, and it's

02:20:03.106 --> 02:20:06.964
going to, the prices in ORDC are going to go up when we

02:20:07.012 --> 02:20:10.572
are truly running out of resources. SCED can only see what we let

02:20:10.596 --> 02:20:13.788
it see. So SCED can't see the ECRS resources.

02:20:13.844 --> 02:20:17.428
It can't see anything that's offline

02:20:17.564 --> 02:20:20.612
longer than ten minutes. It doesn't even know it's there.

02:20:20.756 --> 02:20:24.716
And so our job should be to allow SCED

02:20:24.748 --> 02:20:28.092
to do its job, to give it resources when it needs resources. And then if

02:20:28.116 --> 02:20:32.166
we start to run out of resources, the ORDC will let prices rise and

02:20:32.238 --> 02:20:36.246
get the market response. That's why I keep calling these

02:20:36.278 --> 02:20:39.742
things artificial shortages, because you look at ORDC and

02:20:39.766 --> 02:20:43.170
ORDC says everything's fine, and SCED says,

02:20:44.190 --> 02:20:48.078
we're about to go into a blackout. Prices are $5,000.

02:20:48.134 --> 02:20:51.850
It's just one of those two is right and one is wrong.

02:20:53.550 --> 02:20:56.930
So I think, I agree with a lot of what's going on here.

02:20:59.390 --> 02:21:03.330
There are things that happen on the system where you need ECRS.

02:21:04.510 --> 02:21:07.166
You need to be able to have it in your pocket as an insurance policy

02:21:07.238 --> 02:21:10.690
to deploy it. It's happened twice in the last two weeks.

02:21:12.390 --> 02:21:16.558
So we had fire at a large plant,

02:21:16.654 --> 02:21:19.930
caused some problems, deployed ECRS.

02:21:20.390 --> 02:21:24.740
We also had a failover problem with the software where

02:21:25.400 --> 02:21:28.460
base points were having problems, and we deployed ECRS.

02:21:28.800 --> 02:21:32.424
And so the basic high level rub

02:21:32.472 --> 02:21:36.456
we have with the IMM is that under what the IMM

02:21:36.488 --> 02:21:39.608
is proposing, we would run without ECRS more

02:21:39.664 --> 02:21:42.584
often. We wouldn't have ECRS.

02:21:42.632 --> 02:21:46.032
We would deploy it more often under your rules than what we have now.

02:21:46.216 --> 02:21:49.472
Now the argument is, it's okay, ERCOT, because you're going to have

02:21:49.496 --> 02:21:53.200
all that stuff on existing resources. But it's not

02:21:53.240 --> 02:21:56.808
all the time. It's most of the time, but not all

02:21:56.824 --> 02:22:00.192
the time. So I don't want to sit here and have

02:22:00.216 --> 02:22:04.296
to explain to the PUC we're going

02:22:04.328 --> 02:22:07.340
into why we went into emergency operations last week,

02:22:09.200 --> 02:22:12.512
and that part of the time,

02:22:12.696 --> 02:22:16.502
that's why we need to keep it. There's a, there's an argument to say

02:22:16.566 --> 02:22:19.918
that any ancillary service that you hold is withholding from

02:22:19.934 --> 02:22:24.606
the market, and yet we withhold responsive reserve regulation

02:22:24.678 --> 02:22:28.542
to some extent. Those are always held in

02:22:28.566 --> 02:22:32.302
reserve, and that's artificial, that's an artificial shortage. That's a,

02:22:32.326 --> 02:22:37.014
that's withholding from the market. And we would count ECRS in that same category.

02:22:37.182 --> 02:22:40.768
Now, 1232 doesn't release all of ECRS. It's only a

02:22:40.784 --> 02:22:44.536
portion of it. So it's not the super aggressive

02:22:44.688 --> 02:22:47.440
dump it all out into the market that we agreed to, it's only a portion

02:22:47.480 --> 02:22:50.952
of it. And so to characterize it as all of ECRS,

02:22:51.056 --> 02:22:54.816
that's not correct either. So. But that's the. I think

02:22:54.888 --> 02:22:59.160
at the highest level, it's ECRS

02:22:59.200 --> 02:23:03.256
is a reliability tool. We need to keep it as

02:23:03.448 --> 02:23:07.926
there's a point where it makes sense to

02:23:07.998 --> 02:23:11.814
cash it in for reliability, for more resources.

02:23:11.982 --> 02:23:15.806
But the point is different between what the IMM is suggesting

02:23:15.838 --> 02:23:18.942
and what we are. We want to hold on to it longer and use it

02:23:18.966 --> 02:23:22.102
longer. And the IMM argument is you really don't

02:23:22.126 --> 02:23:26.262
need to hold on to it that long. You can rely on the market to

02:23:26.286 --> 02:23:29.750
provide that. Just real quick, let's try to just constrain our comments to

02:23:29.830 --> 02:23:32.744
this NPRR and not talk about things that are in front of us, if you

02:23:32.752 --> 02:23:36.304
may ask. And I don't want to get into just this endless point counterpoint

02:23:36.352 --> 02:23:39.872
here. I still want to hear from Staff, and then we

02:23:39.896 --> 02:23:43.232
still need to discuss, so. (item:18:Dr. David Patton's additional thoughts on ECRS) Can I just

02:23:43.296 --> 02:23:46.500
connect the dots between what he said and what I said briefly, please?

02:23:48.840 --> 02:23:52.216
It's virtually the case that you have these reserves all the

02:23:52.248 --> 02:23:55.432
time after you deploy them. And that's the

02:23:55.456 --> 02:23:58.798
part that's confusing. There's no way you lose them.

02:23:58.934 --> 02:24:02.302
The worst case scenario is you

02:24:02.326 --> 02:24:05.990
turn on gas turbines and you ramp down one slow ramping

02:24:06.030 --> 02:24:10.166
steam unit, and it takes longer than ten minutes to get those megawatts

02:24:10.198 --> 02:24:13.566
when you need them. But the point of the analysis we

02:24:13.598 --> 02:24:16.890
provided you is that never happens.

02:24:17.710 --> 02:24:21.518
We have many marginal units that will turn down, so you

02:24:21.534 --> 02:24:24.858
can get those resources within ten minutes. And the resources that are

02:24:24.874 --> 02:24:28.722
ramping down are combined cycles, gas turbines and

02:24:28.786 --> 02:24:32.274
batteries. So I would say I

02:24:32.282 --> 02:24:35.650
would be surprised if we could find any instances where we've lost

02:24:35.690 --> 02:24:38.970
the reserves because we've deployed them. And I think that's a

02:24:39.010 --> 02:24:42.538
super important part of your thought process when

02:24:42.554 --> 02:24:46.442
you think about should we allow for these resources

02:24:46.506 --> 02:24:51.004
not to be deployed, because they will still be there. They'll be more valuable

02:24:51.172 --> 02:24:54.316
to respond to every of the contingencies that Woody listed than

02:24:54.348 --> 02:24:58.120
they are sitting offline in the form of gas turbines.

02:24:58.500 --> 02:25:01.240
You don't lose the reserve, you may lose the capability.

02:25:03.860 --> 02:25:06.480
There's a difference. Other questions of Dr. Patton?

02:25:08.740 --> 02:25:11.548
Just an observation. You know,

02:25:11.684 --> 02:25:15.116
there's this issue with, as both of you all are highlighting,

02:25:15.148 --> 02:25:18.604
you know, all ancillary services are reserving capacity out of the market.

02:25:18.652 --> 02:25:21.628
Right. And I know, you'd want to get into things that are not before us,

02:25:21.644 --> 02:25:24.844
but I'm just wondering, we're talking about ECRS today, and in the future,

02:25:24.892 --> 02:25:28.600
we're going to have DRRS even more capacity held out of the market.

02:25:29.020 --> 02:25:32.892
So are we going to be back here in, you know, another year

02:25:32.916 --> 02:25:36.972
or year and a half, whenever that is, and be having the same discussion?

02:25:37.076 --> 02:25:40.892
So back to Commissioner Glotfelty. His broader point is we

02:25:40.916 --> 02:25:44.794
really need to get to a place through the ancillary service study

02:25:44.962 --> 02:25:48.978
and obviously with the ultimate implementation of RTC.

02:25:49.154 --> 02:25:52.842
But in the meantime, to start really thinking about, you know,

02:25:52.986 --> 02:25:56.530
what are the triggers for deploying all of the ancillary services

02:25:56.610 --> 02:26:00.202
and have a real clear map going forward, because it

02:26:00.226 --> 02:26:04.310
sounds like as we stack on more ancillaries,

02:26:05.170 --> 02:26:08.670
that we're going to end up in the same conundrum,

02:26:09.140 --> 02:26:12.716
potentially. And I know we want to hear from

02:26:12.748 --> 02:26:15.244
Staff, but could you expound a little bit more on what you just said?

02:26:15.292 --> 02:26:19.004
Which was you're not losing capacity, but you're losing capability?

02:26:19.172 --> 02:26:22.000
Yeah. I mean, if you, when you deploy ECRS

02:26:22.580 --> 02:26:26.000
the amount of capacity that you have is the same.

02:26:26.860 --> 02:26:30.068
You were holding it, now you let it go. The total amount of capacity is

02:26:30.084 --> 02:26:33.436
the same. But what you may be giving up is

02:26:33.468 --> 02:26:37.736
the ten minute ramp that ERCOT comes with a guarantee that

02:26:37.768 --> 02:26:41.112
it is ten minute rampable when you release it

02:26:41.136 --> 02:26:43.340
into the wild, into the, into the market.

02:26:44.520 --> 02:26:47.992
It resides in other places. It resides on units that

02:26:48.016 --> 02:26:51.824
may not ramp in ten minutes. And there may be some combination

02:26:51.992 --> 02:26:55.392
out there that means that you've lost the capability that

02:26:55.416 --> 02:26:58.896
you wanted to buy. We buy it for the capability,

02:26:59.088 --> 02:27:02.624
not for the capacity. And so why is that capability so important

02:27:02.752 --> 02:27:06.456
in the environment that we have today, which is the

02:27:06.528 --> 02:27:10.224
resource mix that you talked about? Well, I mean, it's forced outages,

02:27:10.312 --> 02:27:13.928
large force outages for ramp problems

02:27:13.984 --> 02:27:16.880
when you have wind or solar ramps that don't occur when you expect. So,

02:27:16.920 --> 02:27:20.840
things like that, when you need to respond quickly with some capacity. You can't rely

02:27:20.920 --> 02:27:24.424
on a slow ramping capacity that

02:27:24.472 --> 02:27:28.408
lives out on some units. You need to rely on fast

02:27:28.464 --> 02:27:30.768
ramping ERCOT capable,

02:27:30.864 --> 02:27:34.688
qualified capacity. And by keeping it longer,

02:27:34.744 --> 02:27:37.340
you maintain that guarantee that you have that.

02:27:38.400 --> 02:27:42.096
But isn't just releasing it, it allows it to just be there

02:27:42.128 --> 02:27:44.180
when you need it, not actually deploy it,

02:27:46.920 --> 02:27:49.740
but reserves. I mean, it may actually run.

02:27:50.560 --> 02:27:54.072
So the ECRS capacity with that capability may

02:27:54.096 --> 02:27:58.080
actually start running and the reserves that it

02:27:58.120 --> 02:28:00.660
displaces move to slower moving units.

02:28:03.120 --> 02:28:06.400
Now, I would agree with the IMM that in a lot of cases that

02:28:06.440 --> 02:28:10.544
doesn't occur. In a lot of cases, you have high priced batteries that sit there

02:28:10.712 --> 02:28:14.460
and provide that ten minute capability, and that's great.

02:28:15.200 --> 02:28:18.804
But I'm concerned, and I think all of our concerned,

02:28:18.852 --> 02:28:22.396
that it's not true all the time. And the

02:28:22.428 --> 02:28:25.732
times when it's not true are the ones that will burn us,

02:28:25.796 --> 02:28:29.532
potentially. And that's the reason we

02:28:29.556 --> 02:28:32.572
would like to hold onto it longer. Not all the time,

02:28:32.636 --> 02:28:36.204
but hold on to it longer. And like I

02:28:36.212 --> 02:28:39.012
said, there are a lot of improvements that we can make. We can use our

02:28:39.036 --> 02:28:43.316
triggers more effectively. We can not

02:28:43.388 --> 02:28:47.536
have the problems we had last year, but there is a fundamental

02:28:47.568 --> 02:28:50.420
disagreement here on how we're doing this.

02:28:52.840 --> 02:28:56.216
So David, I just want to walk through your comments. Just a thought exercise

02:28:56.248 --> 02:28:59.488
just real quickly. So one of the things you talk about is, you know,

02:28:59.504 --> 02:29:03.648
one of the justifications for this is the reduction in your own numbers from 12.5

02:29:03.704 --> 02:29:06.680
billion down to 5.7 if this had been in place last year.

02:29:06.800 --> 02:29:10.636
And I think on the previous page you talk about you ran last year

02:29:10.728 --> 02:29:14.548
with the new deployment trigger with $100

02:29:14.644 --> 02:29:18.380
offer floor, and that got you down to 3.6 billion.

02:29:18.420 --> 02:29:22.100
Is that all correct? And so you have a statement here that you say,

02:29:22.180 --> 02:29:25.324
we shouldn't do this simply that that is a dubious exercise

02:29:25.372 --> 02:29:28.560
and we shouldn't do that simply because it's a perceived improvement.

02:29:29.540 --> 02:29:33.348
If we had had costs that were either 5.7

02:29:33.404 --> 02:29:37.192
or 3.6 billion, compared to 12.5,

02:29:37.356 --> 02:29:39.940
that's a perceived. That's not an actual improvement?

02:29:41.720 --> 02:29:46.272
Yeah, I've been searching for the right analogy. It's like your

02:29:46.296 --> 02:29:49.672
house is on fire, so you put some water in it, now your kitchen's

02:29:49.696 --> 02:29:53.040
on fire. And so you say, well, this is a big improvement, so we'll stop

02:29:53.080 --> 02:29:56.392
at that. You know, we'll be happy with that.

02:29:56.536 --> 02:29:59.320
Well, no, I mean, you should put the fire out in your kitchen,

02:29:59.360 --> 02:30:03.032
too. If I can't think

02:30:03.056 --> 02:30:07.368
of a market dysfunction that is produced a $3.6 billion

02:30:07.544 --> 02:30:11.072
inefficiency in any market, I mean,

02:30:11.096 --> 02:30:14.960
I could be overlooking something. But if all we ever saw in this

02:30:15.000 --> 02:30:19.912
market was a $3.6 billion artificial set

02:30:19.936 --> 02:30:23.540
of prices, we would have said, this is horrible.

02:30:23.960 --> 02:30:27.400
And so, I mean, the only reason anybody thinks that's an improvement

02:30:27.440 --> 02:30:30.828
is because last year was so much worse.

02:30:30.944 --> 02:30:34.964
And. But it's not hard to drive the 3.6

02:30:35.012 --> 02:30:38.268
down to zero. We just have to make the resources

02:30:38.324 --> 02:30:42.028
available. And I do think it's important to say

02:30:42.124 --> 02:30:46.200
we have analysis in the rebuttal comments to ERCOT showing that

02:30:47.340 --> 02:30:51.116
the megawatts that you've deployed are there and are more

02:30:51.148 --> 02:30:55.052
available to the system to respond to every contingency that ERCOT

02:30:55.076 --> 02:30:58.490
is worried about. He says he wants to guarantee it will be there in ten

02:30:58.530 --> 02:31:01.786
minutes. But if you turn on a turbine and distribute

02:31:01.898 --> 02:31:05.162
those megawatts among combined cycles, turbines and

02:31:05.186 --> 02:31:08.714
batteries, you're going to be able to get that ten minute capability

02:31:08.802 --> 02:31:12.314
in two minutes. There's only

02:31:12.362 --> 02:31:16.002
one scenario where it may not be there, where it all shows up

02:31:16.026 --> 02:31:19.250
on an old steam unit, like a single steam

02:31:19.290 --> 02:31:22.480
unit, and then maybe it'll take 15 minutes to get it, rather than ten minutes

02:31:22.530 --> 02:31:25.000
to get it, but that just doesn't happen.

02:31:28.220 --> 02:31:31.772
So I would say, from a reliability perspective, there's no argument

02:31:31.836 --> 02:31:35.800
for delaying the deployment of ECRS.

02:31:36.220 --> 02:31:39.836
And if you don't delay the deployment and

02:31:39.868 --> 02:31:43.516
let sched go into shortage, that's where the $3 billion are

02:31:43.548 --> 02:31:48.026
coming from, is the price spikes that SCAD is

02:31:48.148 --> 02:31:51.230
producing, that the ORDC is not producing,

02:31:51.350 --> 02:31:54.886
or sched thinks it's short, but you're not actually short.

02:31:54.958 --> 02:31:58.814
And so the way to drive that to zero is to

02:31:58.862 --> 02:32:03.246
deploy the ERCOT more further

02:32:03.318 --> 02:32:06.974
ahead of time. Is it fair to say, in that analysis,

02:32:07.022 --> 02:32:10.758
if you had run last year with the new deployment trigger,

02:32:10.854 --> 02:32:14.392
but with an offer of zero instead of 100, it would even be less

02:32:14.416 --> 02:32:16.020
than $3.6 billion?

02:32:19.200 --> 02:32:22.400
It would be less, but I suspect

02:32:22.440 --> 02:32:24.960
it would probably just go down to, like, 3 billion,

02:32:25.040 --> 02:32:28.880
because the impact of $100,

02:32:28.960 --> 02:32:33.300
when conditions are tight and prices would probably otherwise be $70,

02:32:33.720 --> 02:32:36.872
that impact is probably a pretty small share of

02:32:36.896 --> 02:32:40.212
the $3.6 billion. So, just to recap,

02:32:40.316 --> 02:32:43.480
it would have gone potentially from 12.5 down to three

02:32:43.780 --> 02:32:47.260
last year. Yeah. Okay. And are those

02:32:47.300 --> 02:32:51.156
real dollars paid for by consumers, or are those wholesale

02:32:51.188 --> 02:32:54.628
market? I mean, where do they kind of reside in this wholesale retail

02:32:54.764 --> 02:32:58.680
picture? That's a great question, because there's been a lot of

02:32:59.500 --> 02:33:01.400
misreporting of this number.

02:33:04.990 --> 02:33:08.110
You know, are consumers going to pay that cost this year?

02:33:08.270 --> 02:33:11.810
No, they'll pay part of it. So the

02:33:12.750 --> 02:33:16.382
settlements that are happening through the ERCOT markets are going to generate

02:33:16.486 --> 02:33:20.462
real cost immediately. But if you think about how

02:33:20.486 --> 02:33:24.250
we're serving customers, we have retail

02:33:24.870 --> 02:33:28.326
LSEs that are serving most of our customers, and they're

02:33:28.358 --> 02:33:31.924
contracting for electricity forward.

02:33:32.092 --> 02:33:35.120
They don't want to just be buying in the spot market for the most part.

02:33:35.620 --> 02:33:39.508
And if you look at what happened to the forward prices, they doubled for

02:33:39.524 --> 02:33:42.460
the next two summers. Once you got into, like,

02:33:42.500 --> 02:33:46.520
July and August, and people saw these price spikes being caused by this problem.

02:33:47.060 --> 02:33:50.188
All of the forward prices skyrocketed.

02:33:50.324 --> 02:33:52.600
So the customers,

02:33:53.300 --> 02:33:57.062
they're not going to bear it contemporaneously. But their

02:33:57.126 --> 02:34:01.022
rates, when the LSEs have to sign new

02:34:01.046 --> 02:34:04.182
bilateral contracts, are all going to be much, much higher

02:34:04.366 --> 02:34:07.662
because those forward prices are all triggered based on the

02:34:07.686 --> 02:34:11.270
spot prices in ERCOT. So it's hard to say how much of this

02:34:11.310 --> 02:34:14.542
cost would eventually arrive on consumers. But the longer the

02:34:14.566 --> 02:34:18.210
problem goes on, the larger the share of the costs

02:34:18.510 --> 02:34:22.332
hit Texas consumers. And that's even with the addition of

02:34:22.526 --> 02:34:25.568
ten gigawatts of batteries and solar. I mean,

02:34:25.704 --> 02:34:29.820
that's where I have this one disconnect. And that is if

02:34:31.080 --> 02:34:34.544
I get that. So, like, if you're in a fixed price

02:34:34.592 --> 02:34:37.968
contract, if your rep, they're going to go procure power in

02:34:37.984 --> 02:34:40.820
a fixed price, you know, PPA,

02:34:44.440 --> 02:34:47.448
that's not going to deviate, and their price to the consumer is not going to

02:34:47.464 --> 02:34:51.200
deviate during that year. But what you're saying is, well, when that contract runs

02:34:51.240 --> 02:34:54.992
out, if you continue to show these higher costs

02:34:55.016 --> 02:34:58.500
in the market, they're going to be included in the next contract price.

02:34:59.560 --> 02:35:02.872
But that's assuming that's everything static, is that right? I mean,

02:35:02.896 --> 02:35:06.104
that's where. So if we're adding all of these

02:35:06.152 --> 02:35:10.512
resources, we should be driving down the price in

02:35:10.536 --> 02:35:14.208
those out years. And totally agree with you. Historically, that would

02:35:14.224 --> 02:35:17.506
be right if it took two years, 18 months to 24

02:35:17.538 --> 02:35:20.738
months to build a gas turbine. But these plants are coming

02:35:20.794 --> 02:35:24.506
on in six months. So I'm

02:35:24.538 --> 02:35:27.594
just wondering, you know, as these contracts go out further and further,

02:35:27.762 --> 02:35:31.190
is it realistic to think that they're actually going to see that same thing?

02:35:31.970 --> 02:35:35.778
Yeah, so that. So the way the forward prices are

02:35:35.794 --> 02:35:39.554
going to move is they're going to be based on expectations, and expectations are

02:35:39.562 --> 02:35:43.182
going to be driven by what people just saw, which is the

02:35:43.206 --> 02:35:46.918
volatile prices. And we're still seeing some of those volatile prices in 2024.

02:35:46.974 --> 02:35:49.450
But conditions are milder, so not as much.

02:35:50.710 --> 02:35:54.478
And the expectations are going to be informed by the new resources coming in.

02:35:54.654 --> 02:35:58.102
Where a problem like this really affects the

02:35:58.126 --> 02:36:02.126
performance of the market is when things get tight. And it's important

02:36:02.278 --> 02:36:05.850
to utilize your resources, all of your resources,

02:36:06.550 --> 02:36:10.096
to avoid, you know, price volatility. Then it.

02:36:10.128 --> 02:36:14.660
Then it really hits you now with the solar coming in and

02:36:15.720 --> 02:36:18.784
not having, whatever, 90 days of

02:36:18.832 --> 02:36:22.380
over 100 temperatures and more batteries,

02:36:22.800 --> 02:36:25.440
we're going to have a little bit of surplus and we're not going to see

02:36:25.480 --> 02:36:29.968
conditions where it becomes critical to

02:36:30.024 --> 02:36:33.328
use every megawatt you have. And sked is not going to

02:36:33.344 --> 02:36:37.038
run out of resources nearly as often. So the problem with

02:36:37.054 --> 02:36:40.510
this NPRR will diminish, I believe,

02:36:40.590 --> 02:36:44.010
except if we see, like really unusual weather conditions.

02:36:46.270 --> 02:36:49.886
But that is not to say we shouldn't plan

02:36:49.918 --> 02:36:53.526
to operate the system in a way that when we do get into conditions like

02:36:53.558 --> 02:36:57.010
this, we don't see costs spike and prices spike.

02:36:58.510 --> 02:37:02.080
Those forward prices are also going to be driven by the load.

02:37:02.580 --> 02:37:05.844
I mean, the tremendous load growth that has started being

02:37:05.892 --> 02:37:09.052
reported in the last six, eight months, it's got to have a big factor

02:37:09.076 --> 02:37:12.668
in what those forward prices are. And so that may move you in

02:37:12.684 --> 02:37:16.028
the other direction. If that load growth eats up

02:37:16.044 --> 02:37:19.564
a lot of the growth that we're seeing in solar that serves the peak,

02:37:19.612 --> 02:37:23.732
then we could be back into situations where the

02:37:23.756 --> 02:37:27.092
deployment makes a much bigger difference. Just, it's very,

02:37:27.196 --> 02:37:30.388
it's highly uncertain, you know, this, what the costs

02:37:30.404 --> 02:37:33.828
are likely to be. That's one of my nervousness about the scenarios.

02:37:33.884 --> 02:37:37.172
You were asking me about where we were looking at 2023,

02:37:37.236 --> 02:37:40.860
like what we may actually see in 2025,

02:37:40.980 --> 02:37:42.520
if you approve this is,

02:37:44.540 --> 02:37:47.160
I'd have a hard time telling you what that number may be.

02:37:47.500 --> 02:37:51.436
So I don't want people to bank on the

02:37:51.468 --> 02:37:55.686
analysis of 2023 and as

02:37:55.718 --> 02:37:59.670
if there's some certainty around those costs. Because your

02:37:59.710 --> 02:38:03.398
number is not actually what it was to procure ECRS, it was

02:38:03.494 --> 02:38:06.742
what it did to the market, correct? Which is why your numbers were

02:38:06.766 --> 02:38:10.310
always two different numbers. Yeah. So we spent $600

02:38:10.350 --> 02:38:12.250
million to buy ECRS

02:38:13.590 --> 02:38:17.286
and then there was the effect on the deployment decisions on

02:38:17.318 --> 02:38:21.380
the energy price. So. Yeah, two different buckets

02:38:21.420 --> 02:38:24.908
of cost. So Dr. Patton, your combined cost then comes

02:38:24.964 --> 02:38:28.676
from not only the procurement of the ECRS, the $600 million.

02:38:28.868 --> 02:38:32.480
But as you spend $600 million and

02:38:32.940 --> 02:38:36.300
you have more power reserved in ancillary

02:38:36.340 --> 02:38:40.348
services, including ECRS. That creates higher

02:38:40.404 --> 02:38:43.944
energy prices. So now the opportunity costs

02:38:44.012 --> 02:38:47.752
that you lose or the opportunity cost of not being available

02:38:47.816 --> 02:38:51.128
to the real time market causes ancillary service prices

02:38:51.184 --> 02:38:54.648
to go up. So, right? Because you're going to pay,

02:38:54.704 --> 02:38:58.448
or maybe pay more for ancillaries because the opportunity cost

02:38:58.504 --> 02:39:01.984
is now higher because the energy prices are higher. So that's how you came up

02:39:01.992 --> 02:39:05.912
with your combined. Yes, I didn't

02:39:06.016 --> 02:39:09.858
cost impact. My numbers aren't combined, they're simply the,

02:39:10.024 --> 02:39:13.702
the energy impacts. So I don't include the

02:39:13.726 --> 02:39:14.810
600 million.

02:39:16.670 --> 02:39:19.838
But you're right. I mean, the ancillary service study is going to be

02:39:19.854 --> 02:39:23.022
really important. We've developed a probabilistic model to

02:39:23.046 --> 02:39:26.342
try to quantify based on the risks that are being managed on the

02:39:26.366 --> 02:39:29.158
system, how much of this do we really need? And I think we're going to

02:39:29.174 --> 02:39:32.930
come to a conclusion that we need less than what's currently being procured.

02:39:33.870 --> 02:39:35.610
And as you procure less,

02:39:37.890 --> 02:39:41.338
and that's based upon what? That you think we're going to have

02:39:41.354 --> 02:39:44.650
to procure less. That's based on a probabilistic

02:39:44.690 --> 02:39:48.870
analysis of all of the issues

02:39:49.250 --> 02:39:53.750
that create reliability risks, contingencies, forced outages on the system,

02:39:54.130 --> 02:39:57.906
forecast errors for wind, for solar, forecast errors for

02:39:57.938 --> 02:40:01.346
load. It puts all those things together and then

02:40:01.378 --> 02:40:03.110
says, you know,

02:40:05.770 --> 02:40:09.858
how much reserve do we need to procure to meet a reliability requirement

02:40:09.914 --> 02:40:12.590
like the one that you all are considering?

02:40:13.730 --> 02:40:17.082
But you're right. As you buy more, the price for

02:40:17.106 --> 02:40:21.866
that reserve product will go up exponentially because there

02:40:21.898 --> 02:40:25.394
aren't a lot of suppliers who are capable of providing

02:40:25.442 --> 02:40:29.098
it. And as that pool of resources gets tighter and

02:40:29.114 --> 02:40:32.456
tighter, the price goes up sharply, which is why we

02:40:32.488 --> 02:40:36.160
paid 600 million much higher than what most RTO's are paying

02:40:36.200 --> 02:40:39.552
for their ten minute reserves. But then the consequence

02:40:39.576 --> 02:40:43.000
of that is we have more resources being held out of the energy market,

02:40:43.080 --> 02:40:46.952
and that's really what we're more concerned about and what this NPRR is

02:40:47.016 --> 02:40:50.860
focused on. Okay. Harika thank you for waiting patiently

02:40:51.240 --> 02:40:53.832
through this. Why don't you go ahead and lay out the memo that you all

02:40:53.856 --> 02:40:59.294
filed earlier this week? (item:18:Commission Staff's Harika Basaran lays out Staff's memo, NPRR1224) Harika Basaran from Staff. so

02:40:59.382 --> 02:41:03.222
I just want to first go over the process and Staff understanding.

02:41:03.326 --> 02:41:06.250
So ECRS was implemented last Summer,

02:41:06.590 --> 02:41:09.918
then IMM raised. Harika, would you speak into the microphone a little more? Thank you.

02:41:09.974 --> 02:41:13.862
Then IMM raised significant concerns and then stakeholders.

02:41:13.926 --> 02:41:18.050
Staff, ERCOT. This issue was discussed.

02:41:18.470 --> 02:41:23.064
Our understanding when we talk with IMM and ERCOT was

02:41:23.152 --> 02:41:26.416
there were three solutions based on the time to take to

02:41:26.448 --> 02:41:30.160
implement them. One of them really, I think IMM's preferred

02:41:30.200 --> 02:41:33.856
solution was, like David said. Long term, revisit the whole

02:41:33.888 --> 02:41:37.728
methodology, the quantity of that $600 million.

02:41:37.864 --> 02:41:41.288
But however, ERCOT did not agree to that. But I think at

02:41:41.304 --> 02:41:44.496
the end, parties agreed that let's take this up

02:41:44.528 --> 02:41:48.322
under as study, which we will. Another tool, solutions,

02:41:48.426 --> 02:41:52.002
again provided by IMM was as

02:41:52.026 --> 02:41:55.626
an idea concept, a medium term solution,

02:41:55.698 --> 02:41:59.610
maybe a standing deployment of ECRS in SCAD

02:41:59.650 --> 02:42:03.098
all the time with an overflow. But this could have system

02:42:03.154 --> 02:42:06.682
changes at that time when this was discussed by ERCOT or by the

02:42:06.706 --> 02:42:10.074
cuisis. In the short term, I think ERCOT

02:42:10.122 --> 02:42:14.188
agreed to explore further. IMM's proposal

02:42:14.244 --> 02:42:17.600
was release portion of it based on under generation.

02:42:18.220 --> 02:42:22.052
So then ERCOT agreed to explore those solutions and

02:42:22.076 --> 02:42:26.180
then they submitted NPRR1224. And when they submitted it.

02:42:26.300 --> 02:42:30.124
There was no overflow and the trigger was 30 megawatt.

02:42:30.172 --> 02:42:34.332
And ten minutes in the stakeholders

02:42:34.396 --> 02:42:38.372
process, the 30 megawatt was increased

02:42:38.396 --> 02:42:42.436
to 40. And then floor added thousand.

02:42:42.628 --> 02:42:46.236
And that new addition of the floor really changed the whole discussions.

02:42:46.308 --> 02:42:49.556
Like all what we are discussing here about the trigger, I think that

02:42:49.588 --> 02:42:52.440
got lost. The focus became more on the floors.

02:42:56.100 --> 02:42:59.364
So Staff's position is on the

02:42:59.412 --> 02:43:02.588
trigger. We did not hear much discussion

02:43:02.644 --> 02:43:06.798
or objections to that trigger in the stakeholders process.

02:43:06.934 --> 02:43:09.490
Except IMM. I may be wrong, but.

02:43:09.790 --> 02:43:13.902
And on that one, we really wanted the first ERCOT and the stakeholders,

02:43:14.086 --> 02:43:17.838
if it was acceptable for them. So ERCOT gets more experience

02:43:17.934 --> 02:43:22.030
with ECRS and then they can adjust it like incremental improvements.

02:43:22.190 --> 02:43:25.622
So that's what we want Commission to balance reliability

02:43:25.686 --> 02:43:29.382
needs ERCOT Woody says with economics. However, on the

02:43:29.406 --> 02:43:33.224
offer floor, we don't think any floor is necessary.

02:43:33.312 --> 02:43:37.300
That was not one of the concepts at the origin.

02:43:37.640 --> 02:43:41.860
And we think ORDC should take care of the scarcity.

02:43:42.480 --> 02:43:45.896
And also we lots of

02:43:46.048 --> 02:43:50.544
estimation were based ASDCs demand curves under RTC.

02:43:50.712 --> 02:43:54.336
However, we think that if you can take only one part of

02:43:54.488 --> 02:43:57.690
RTC as if it's in effect which the, you know,

02:43:57.770 --> 02:44:01.266
value of the reserves, but you don't look the efficiencies it will bring.

02:44:01.378 --> 02:44:04.794
It's not really one sided. So that's why we have problems with that

02:44:04.842 --> 02:44:08.082
approach. And we

02:44:08.106 --> 02:44:11.906
also think that ORDC was adjusted again with the floors regarding

02:44:11.938 --> 02:44:15.906
the bridge solution. So it was made really to add more revenue

02:44:16.058 --> 02:44:19.018
to the system. And it's going to be in effect all this summer. So there

02:44:19.034 --> 02:44:22.456
is another tool already there. So we did it on the think

02:44:22.488 --> 02:44:26.620
any floor is necessary. So staff preferred option is

02:44:27.360 --> 02:44:31.032
just implement the trigger without any overflows. So it can be

02:44:31.056 --> 02:44:34.920
implemented as soon as possible. The provided option

02:44:34.960 --> 02:44:38.712
too, if you want. Not preferred option, but if

02:44:38.736 --> 02:44:42.200
there is a floor, it will be between nonspin 75 and RAC. That was

02:44:42.240 --> 02:44:45.648
brought up in the stakeholder discussions as well. So that's why I

02:44:45.664 --> 02:44:49.194
am making it. And then I don't want

02:44:49.202 --> 02:44:52.110
to talk about the next NPRR. You don't want to discuss that? Okay.

02:44:53.490 --> 02:44:57.218
That's all I have. (item:18:Chairman Gleeson's thoughts on Commission Staff's memo) So Harika, in my discussions with

02:44:57.234 --> 02:45:01.670
ERCOT, they would like to see this done by August 1.

02:45:02.370 --> 02:45:05.030
That's a date that's important to them.

02:45:05.370 --> 02:45:09.762
So why, why not just reject this NPRR

02:45:09.906 --> 02:45:13.820
and just tell them that we think it's appropriate to use that

02:45:13.860 --> 02:45:17.100
trigger so that they can meet their date. If you're,

02:45:17.140 --> 02:45:20.548
if you don't think the floor is appropriate. That brings us the

02:45:20.564 --> 02:45:23.732
same solution, so we are okay. Yeah. If that's the will of the

02:45:23.756 --> 02:45:27.044
Commission. Woody, could you implement this without the NPRR,

02:45:27.092 --> 02:45:30.268
with that kind of guidance from the, from the dais?

02:45:30.364 --> 02:45:33.480
Yes. Any questions of Harika?

02:45:35.980 --> 02:45:38.800
Okay. All right, thanks, y'all. Appreciate it.

02:45:44.270 --> 02:45:47.694
So, as they step away, I'm going to talk a little bit about

02:45:47.742 --> 02:45:51.478
process. The process for this NPRR

02:45:51.614 --> 02:45:55.062
did not work for me at all. So I know this

02:45:55.086 --> 02:45:59.790
came up under NPRR1186. Where Commissioners

02:45:59.830 --> 02:46:03.382
at the time felt that a lot of information came in post

02:46:03.446 --> 02:46:06.942
board decision. I would argue that some of the most pertinent

02:46:07.006 --> 02:46:09.570
information I heard came in post board decision.

02:46:09.870 --> 02:46:12.918
And I don't know how Commissioner Cobos feels as a

02:46:12.934 --> 02:46:16.182
Board Member. But as the Chair of this Commission and a Board Member,

02:46:16.366 --> 02:46:20.102
that doesn't work for me. I need to have all the information

02:46:20.246 --> 02:46:24.182
that I can have at the Board. Because I think it is important for me

02:46:24.326 --> 02:46:27.662
to be able to tell the Board what I think so that

02:46:27.686 --> 02:46:31.054
if they pass something they know well, perhaps it

02:46:31.102 --> 02:46:33.530
may get rejected at the PUC.

02:46:34.110 --> 02:46:37.970
I didn't have all the information. Not one of us said a word

02:46:38.390 --> 02:46:41.198
about this NPRR in the Board Meeting,

02:46:41.334 --> 02:46:45.718
except for Courtney as the OPUC. And I

02:46:45.734 --> 02:46:49.278
think, for me, that does a disservice to the board process. If I

02:46:49.294 --> 02:46:52.982
were them, I would be upset if we don't approve this

02:46:53.046 --> 02:46:57.416
today. And I don't think we're solving for what

02:46:57.448 --> 02:47:01.152
the Board, how the Board feels necessarily. But I think

02:47:01.176 --> 02:47:04.672
it is important for me to make sure I have full information when

02:47:04.696 --> 02:47:08.856
I go to that Board Meeting. So I've talked to Connie, I've talked to ERCOT.

02:47:08.928 --> 02:47:12.280
I've talked to some stakeholders. We have got to figure this out,

02:47:12.360 --> 02:47:15.632
because in the last two weeks, I've heard the one thing that's

02:47:15.656 --> 02:47:19.072
been consistent from everyone is there are parts of this process,

02:47:19.176 --> 02:47:23.152
from a protocol getting sponsored or revision getting sponsored,

02:47:23.256 --> 02:47:26.744
to the day we adopt, reject or remand.

02:47:26.872 --> 02:47:28.620
That doesn't work for someone.

02:47:29.600 --> 02:47:33.200
So I don't know what you all feel about

02:47:33.240 --> 02:47:37.136
how this worked, but if I had had the information I have today

02:47:37.328 --> 02:47:40.456
at the Board last month. I would have said some things

02:47:40.568 --> 02:47:44.512
in response to what was before the Board, and I

02:47:44.536 --> 02:47:48.320
need that going forward. So I've asked Connie to engage with everyone,

02:47:48.400 --> 02:47:51.962
with stakeholders, with ERCOT, with the ERCOT board,

02:47:52.106 --> 02:47:55.562
with us. We've got to figure out a way to fix this because this is

02:47:55.586 --> 02:47:59.106
not working for me. And what I'm really concerned about is I've started

02:47:59.138 --> 02:48:02.866
to hear some rumblings. That there's concerns

02:48:02.898 --> 02:48:06.498
about the way RTC is being done. And

02:48:06.594 --> 02:48:11.010
we have held RTC up as the panacea

02:48:11.050 --> 02:48:14.386
that is going to save us from so many things. We have got to get

02:48:14.418 --> 02:48:18.308
that right. We've got it. Whatever that looks like, it has got to be right.

02:48:18.484 --> 02:48:22.124
And if we're here in 2026 and we're in the exact same

02:48:22.172 --> 02:48:25.548
spot on any part of RTC, that's going to be a

02:48:25.564 --> 02:48:28.972
failure, in my view. So I don't know what it looks like.

02:48:29.076 --> 02:48:32.420
I'm asking everyone in this audience to help us figure this

02:48:32.460 --> 02:48:35.044
out, because I've heard from a lot of you that I'm looking at right now

02:48:35.132 --> 02:48:38.880
that there are parts of this that don't work. I've heard zero solutions.

02:48:39.180 --> 02:48:43.218
So if you're going to come and say there's a problem, I need thoughts

02:48:43.274 --> 02:48:46.786
on how to fix it. And again, we're not solving for giving people what

02:48:46.818 --> 02:48:50.770
they want. We're solving to give everyone an opportunity to have full information

02:48:50.930 --> 02:48:54.522
and have a voice in this process so the Board and the Commission

02:48:54.666 --> 02:48:57.634
can make a proper decision. So,

02:48:57.802 --> 02:49:01.178
you know. With that, I will say where the reason I

02:49:01.194 --> 02:49:04.290
didn't file a memo on this is. Because, honest to God, until yesterday,

02:49:04.330 --> 02:49:07.590
I didn't really know where I, where I sat on it.

02:49:08.550 --> 02:49:12.382
Based on this conversation, you know, I would say a

02:49:12.406 --> 02:49:15.958
reduction from 12.5 billion down to 3

02:49:16.014 --> 02:49:20.678
billion is not, is a

02:49:20.694 --> 02:49:23.702
good move. I think if you're out, if one of the rooms in your house

02:49:23.726 --> 02:49:26.558
is on fire and one of them has people in it and the others don't,

02:49:26.694 --> 02:49:29.326
you know, you put the fire out in the one where the people are.

02:49:29.398 --> 02:49:33.054
And so I wouldn't view that $3 billion as

02:49:33.222 --> 02:49:37.078
inefficiency for ERCOT. I view that as the cost of reliability.

02:49:37.134 --> 02:49:40.454
And I'm going to rely on them, the people

02:49:40.502 --> 02:49:43.970
who operate the grid, to tell us what they need.

02:49:44.270 --> 02:49:47.622
And so, for me, I think the proper way to move forward is

02:49:47.646 --> 02:49:51.078
to reject this NPRR. And I'm okay

02:49:51.174 --> 02:49:54.670
with the trigger at 40 mw for ten

02:49:54.710 --> 02:49:58.070
minutes. And if they can implement that without this,

02:49:58.230 --> 02:50:02.252
that's kind of where I stand. But again, the process to

02:50:02.276 --> 02:50:05.040
get here was inadequate.

02:50:05.460 --> 02:50:08.920
So happy to hear your thoughts. Chairman Gleeson,

02:50:09.700 --> 02:50:13.548
you know, the process is tough, right? I mean, it's an

02:50:13.564 --> 02:50:17.588
evolving process. I feel like information becomes available leading up to the board,

02:50:17.764 --> 02:50:21.920
after the board. And so with NPRR1186,

02:50:22.300 --> 02:50:25.520
I felt like it was the same information all the way through,

02:50:25.910 --> 02:50:29.126
in some respects, from stakeholder comments all the way till they got to us.

02:50:29.158 --> 02:50:33.470
The only difference was we accepted comments here from the stakeholders versus,

02:50:33.590 --> 02:50:37.090
you know, 11 or 1224 in this instance.

02:50:37.390 --> 02:50:40.206
But to your point,

02:50:40.358 --> 02:50:44.662
you know, hearing more from the stakeholders, you know, I know our staff

02:50:44.726 --> 02:50:48.390
works very hard in digging into these policy

02:50:48.470 --> 02:50:52.054
matters over at ERCOT, and they certainly have opinions and I think

02:50:52.182 --> 02:50:56.158
having more engagement with them, I know I certainly do on my

02:50:56.294 --> 02:50:59.814
SPP and formerly miso matters, it would be good.

02:50:59.982 --> 02:51:03.462
But also, you know, from ERCOT as well. I mean, it was

02:51:03.486 --> 02:51:06.822
unclear to me where they stood on the offer floors

02:51:06.966 --> 02:51:10.102
up until, like, I got briefed this week.

02:51:10.286 --> 02:51:13.798
And so, you know, I came to find out that

02:51:13.814 --> 02:51:17.182
the offer floors wasn't really as important as a deployment trigger, but it seemed

02:51:17.206 --> 02:51:21.228
like the offer were important to them. And so I

02:51:21.244 --> 02:51:25.228
just feel like we need to get very candid feedback all the

02:51:25.244 --> 02:51:28.148
way leading to the board and all the way over here. Otherwise we're going to

02:51:28.164 --> 02:51:31.520
end up in these, you know, again, conundrums over and over again. Right.

02:51:31.820 --> 02:51:34.796
And so the board did what they did.

02:51:34.948 --> 02:51:38.644
They had the information that they had before them at the time and took

02:51:38.692 --> 02:51:41.900
action on the information that was presented to them

02:51:41.940 --> 02:51:45.802
at the time of the board meeting. And since then, the information has continued to

02:51:45.826 --> 02:51:49.274
evolve and we have to make a decision at

02:51:49.282 --> 02:51:52.706
the back end as sort of the judges of approving,

02:51:52.818 --> 02:51:56.338
rejecting or remanding these NPRRs based on the best available

02:51:56.434 --> 02:52:00.034
information we have before us. And oftentimes, I think that even at the board

02:52:00.082 --> 02:52:03.722
meetings, we're still processing, like for

02:52:03.746 --> 02:52:07.434
this one, it sounded like you were and I still was for NPRR1224 still

02:52:07.482 --> 02:52:10.428
processing the information. And,

02:52:10.604 --> 02:52:13.988
you know, not to mention we have a lot of other things.

02:52:14.044 --> 02:52:17.356
We're still processing a lot of other work that we're still working on.

02:52:17.468 --> 02:52:20.012
So this NPRR is not the only thing we're working on. We have a lot

02:52:20.036 --> 02:52:23.100
going on. And sometimes at board meetings, we still have to process

02:52:23.260 --> 02:52:26.956
what's being presented to us and come to a conclusion of where we

02:52:26.988 --> 02:52:30.308
sit as Commissioners on these NPRRs

02:52:30.364 --> 02:52:34.204
and market rules that come before us for final approval

02:52:34.292 --> 02:52:37.506
or I rejection or remand. So it's

02:52:37.538 --> 02:52:41.098
tough, you know, and but I think to your point, I'm in

02:52:41.114 --> 02:52:44.026
agreement. We have to have the best available information we can.

02:52:44.178 --> 02:52:48.122
We had attack recommended NPRR

02:52:48.306 --> 02:52:50.670
and the board. That's what they had before them.

02:52:50.970 --> 02:52:54.658
And but, you know, I think just having more candid conversations

02:52:54.714 --> 02:52:57.946
as to where people really sit and what they really want versus what they don't

02:52:57.978 --> 02:53:01.404
really need is very important so that we could decipher

02:53:01.452 --> 02:53:04.508
these issues and not end up in these situations over and over again in the

02:53:04.524 --> 02:53:07.668
future to the actual decision on the

02:53:07.684 --> 02:53:11.292
NPRR. I'm with you. We need to make a decision

02:53:11.436 --> 02:53:14.572
that actually has an impact this summer,

02:53:14.676 --> 02:53:18.084
and that's the exercise that we embarked in. And somehow,

02:53:18.132 --> 02:53:21.600
along the way, we went off into the pastures. And so

02:53:22.220 --> 02:53:25.956
we need to get back on track and get a meaningful change

02:53:26.028 --> 02:53:29.468
in place by August. And that meaningful change needs to

02:53:29.484 --> 02:53:33.484
come by way of a deployment trigger, a modified, an additional

02:53:33.532 --> 02:53:37.340
trigger. So a third trigger for ERCOT

02:53:37.380 --> 02:53:41.084
to use as its discretion. And I'm open

02:53:41.172 --> 02:53:44.332
to. I hear the IMM's concerns on the

02:53:44.356 --> 02:53:47.476
40 megawatt under generation. Our staff is saying

02:53:47.548 --> 02:53:50.788
this started as 30 megawatt under generation. I kind

02:53:50.804 --> 02:53:54.822
of, in some ways, I may want to consider the 30 megawatt

02:53:54.886 --> 02:53:59.290
under generation as an incremental improvement

02:54:00.510 --> 02:54:04.094
towards, you know, deploying the ECRS

02:54:04.142 --> 02:54:07.566
a little bit earlier. So 40, 30 megawatt under generation,

02:54:07.638 --> 02:54:11.022
I think, is on the table for me. But whatever we ultimately decide needs

02:54:11.046 --> 02:54:13.926
to be implemented by August 1. And I don't think we need an offer floor.

02:54:14.038 --> 02:54:17.646
The offer floor is, my understanding, was introduced because potentially,

02:54:17.678 --> 02:54:20.900
as I kind of understand, is because the IMM was

02:54:21.520 --> 02:54:26.100
proposing 100. But the offer floor really serves no purpose. The ORDC

02:54:26.480 --> 02:54:30.104
is what values are operating reserves during scarcity

02:54:30.152 --> 02:54:33.848
conditions. And we have taken really aggressive action with the ORDCs in the

02:54:33.864 --> 02:54:37.456
last two years with the ORDC in the last two years by not

02:54:37.488 --> 02:54:41.432
only implementing the price floors, but also implementing

02:54:41.456 --> 02:54:45.120
the shifts that we implemented during our market reform discussion. So we

02:54:45.160 --> 02:54:48.306
have made the ORDC more aggressive

02:54:48.378 --> 02:54:53.538
in pricing scarcity conditions and lack

02:54:53.554 --> 02:54:57.098
of reserves, operating reserve shortages during

02:54:57.194 --> 02:55:00.746
scarcity conditions. So, in my opinion,

02:55:00.858 --> 02:55:04.122
that's the tool we've relied on. That's the tool we've been modifying.

02:55:04.306 --> 02:55:07.810
And I don't see why we have to have another

02:55:07.930 --> 02:55:15.038
mechanism to price the value of reserves through an offer floor for

02:55:15.214 --> 02:55:18.646
ECRS. So I think the main

02:55:18.678 --> 02:55:22.102
focus here is a deployment trigger, and those two options are what I would put

02:55:22.126 --> 02:55:24.886
on the table as long as we get something done by August 1. And so

02:55:24.918 --> 02:55:29.782
that means that, like you, it would mean rejecting the

02:55:29.806 --> 02:55:32.990
NPRR so we can get something in place. And maybe, you know,

02:55:33.030 --> 02:55:36.414
like Harika mentioned, you know, we're making improvements

02:55:36.462 --> 02:55:39.948
along the way until we get more information from the ancillary service study in RTC.

02:55:40.004 --> 02:55:43.412
Maybe we start at. Maybe we start at 40, maybe we start

02:55:43.436 --> 02:55:47.612
at 30, but maybe next year we come back and see how it's performing

02:55:47.796 --> 02:55:51.012
and see if there's any modifications that need to be done

02:55:51.036 --> 02:55:54.628
to the deployment trigger that we can, you know, have ERCOT do, because it is

02:55:54.644 --> 02:55:57.948
a new ancillary service product, and they're learning along the way, and we want to

02:55:57.964 --> 02:56:01.588
make sure they have it as a reliability tool, but we also want to make

02:56:01.604 --> 02:56:04.798
sure that it's being used efficiently as well.

02:56:04.894 --> 02:56:08.534
And so we're going to have this issue too, with other ancillary services we

02:56:08.582 --> 02:56:12.782
introduce into the market. So I see this as a continued conversation

02:56:12.846 --> 02:56:16.510
until we get to RTC.

02:56:16.550 --> 02:56:19.214
And I'm in agreement with you as well on the fact that we need to

02:56:19.222 --> 02:56:22.454
have more visibility into RTC. It's such a massive project,

02:56:22.542 --> 02:56:26.094
and I know ERCOT's full steam ahead in implementing, and that's great,

02:56:26.262 --> 02:56:30.254
but I myself have heard concerns about the ancillary service demand

02:56:30.302 --> 02:56:33.240
curves and where it's headed, and we need to kind of know where it's at,

02:56:33.280 --> 02:56:35.496
because we don't want to get saddled at the back end with a bunch of

02:56:35.528 --> 02:56:38.800
controversy with what they look at when we've been, you know,

02:56:38.840 --> 02:56:42.592
like you said, telling everyone, this is, this is the holy grail,

02:56:42.736 --> 02:56:46.448
you know, for having a more efficient market, and it's going to solve problems like

02:56:46.464 --> 02:56:50.380
getting rid of ruck and better pricing ancillaries and,

02:56:50.680 --> 02:56:54.016
you know, all of that. So having a process for more

02:56:54.048 --> 02:56:57.202
visibility into the RTC implementation,

02:56:57.266 --> 02:57:01.130
I think at this stage is important, as ERCOT sort of rounds the corner

02:57:01.170 --> 02:57:04.618
in their final stretch to getting RTC off the

02:57:04.634 --> 02:57:05.190
ground.

02:57:09.410 --> 02:57:12.778
You've heard what I think. I support you Mr. Chairman,

02:57:12.834 --> 02:57:16.802
and your solution. And we'll follow

02:57:16.866 --> 02:57:20.282
your lead on that. I think it's a

02:57:20.306 --> 02:57:23.516
great idea. I made it at the board when I was on there,

02:57:23.548 --> 02:57:25.320
so I'm all for it.

02:57:28.860 --> 02:57:31.324
I'm supportive of, I guess,

02:57:31.412 --> 02:57:35.000
rejecting and, you know, putting the

02:57:35.740 --> 02:57:39.124
trigger in place, as ERCOT had recommended in doing it by August

02:57:39.172 --> 02:57:43.040
1. Recognizing that, you know, we have RTC

02:57:44.300 --> 02:57:47.372
that's coming and we need something to be in place,

02:57:47.436 --> 02:57:50.568
this is definitely an improvement. Improvement. I'd like

02:57:50.584 --> 02:57:54.352
to speak more to, I think, what you talked about in terms

02:57:54.416 --> 02:57:58.580
of the need for information, for decision making

02:57:59.200 --> 02:58:03.024
earlier in the process, and to me, the word

02:58:03.072 --> 02:58:06.192
process is the key. I mean, everything that

02:58:06.216 --> 02:58:10.060
we do, we need to make our decisions

02:58:10.360 --> 02:58:13.400
based on good data and good science. Because the better the data,

02:58:13.440 --> 02:58:16.080
the better the science. The better the science, the better the policy.

02:58:16.660 --> 02:58:19.748
And having a process that's well

02:58:19.804 --> 02:58:23.684
defined, that has, you know, every once in a while, it's just

02:58:23.772 --> 02:58:26.004
good to go in and review that process,

02:58:26.132 --> 02:58:29.916
particularly if we see in this particular situation, and we've seen it

02:58:29.948 --> 02:58:33.748
maybe in NPRR1186 as well, that it's not working

02:58:33.924 --> 02:58:37.732
in the way that we feel like it should. And it

02:58:37.756 --> 02:58:40.922
could be that just times are changing. It could be that we have

02:58:41.076 --> 02:58:44.934
more initiatives that we are trying to execute at the same time.

02:58:45.102 --> 02:58:49.110
And so we need to go in and we need to evaluate

02:58:49.270 --> 02:58:52.790
and maybe change the process. And I think that's not just incumbent

02:58:52.830 --> 02:58:57.438
on us, but it's also incumbent on our

02:58:57.494 --> 02:59:00.614
market participants and our stakeholders to help in that.

02:59:00.782 --> 02:59:04.090
And so I think you're definitely on point

02:59:04.550 --> 02:59:07.750
that we need to take a look at the process,

02:59:08.770 --> 02:59:12.410
the way that things move through TAC, the way that we get

02:59:12.450 --> 02:59:15.866
information, the way that we do the evaluation. Recognizing,

02:59:15.898 --> 02:59:20.074
again, that it's not just one issue, that all of them are interrelated

02:59:20.162 --> 02:59:23.986
and the outcomes of all of them impact the

02:59:24.098 --> 02:59:28.554
performance of the system as a whole as we move forward. So very

02:59:28.602 --> 02:59:32.452
much agree with you that we need to evaluate

02:59:32.476 --> 02:59:37.028
the process. We need to make that a top priority. And in

02:59:37.044 --> 02:59:40.300
this particular decision, I do agree that we should

02:59:40.460 --> 02:59:44.000
reject and then have the

02:59:44.340 --> 02:59:48.080
40 mw for the two scattered rolls implemented.

02:59:49.300 --> 02:59:50.520
There's no floor.

02:59:52.100 --> 02:59:55.684
Okay, sorry. I think we have agreement.

02:59:55.732 --> 02:59:59.280
So. Okay. So what I think I'm going to do

02:59:59.360 --> 03:00:03.384
is make, like I said, make two motions. So the first one

03:00:03.432 --> 03:00:07.304
would we have, you know, we have a filing from, from yesterday.

03:00:07.392 --> 03:00:11.248
So I think we vote on those first and

03:00:11.264 --> 03:00:14.744
then we can vote on 1224 separately severed out. (item:18:Motion to approve the proposed order file by Staff on 07/18/24, NPRR1224) So I

03:00:14.752 --> 03:00:18.480
entertain a motion to approve the proposed order filed on this project by Staff

03:00:18.560 --> 03:00:22.192
on July 18, 2024. So moved. I

03:00:22.216 --> 03:00:25.114
second. Have a motion and a second. All those in favor say aye. Aye.

03:00:25.282 --> 03:00:29.178
Opposed? Motion prevails. (item:18:Motion to reject NPRR1224 for reasons discussed, NPRR1224) I'd entertain

03:00:29.234 --> 03:00:32.626
a motion to reject NPRR1224 for the

03:00:32.658 --> 03:00:36.698
reasons we have discussed. So moved. Second.

03:00:36.794 --> 03:00:39.314
Have a motion and a second. Those in favor say aye.

03:00:39.402 --> 03:00:42.230
Aye. Opposed? Motion prevails.

03:00:46.330 --> 03:00:50.172
(item:18:Executive Director Connie Corona confirms instructions from Commission, NPRR1224) Chairman, if I may echo back the instruction I heard.

03:00:50.346 --> 03:00:54.616
And that is staff is

03:00:54.688 --> 03:00:58.704
to engage with the stakeholders in an effort

03:00:58.752 --> 03:01:02.840
to improve the information flow to the Board and

03:01:02.880 --> 03:01:06.456
to the Commission without porting the

03:01:06.488 --> 03:01:09.380
entire stakeholder process over here.

03:01:10.160 --> 03:01:14.440
Correct, yes. So we

03:01:14.480 --> 03:01:18.412
look forward to hearing, hearing from folks on their ideas.

03:01:18.596 --> 03:01:23.820
We would certainly entertain any

03:01:23.900 --> 03:01:28.532
solutions that are brought forward by a

03:01:28.556 --> 03:01:32.196
joint effort among the stakeholders. So that

03:01:32.228 --> 03:01:36.520
would be an instruction to go off and brainstorm,

03:01:37.140 --> 03:01:40.492
bring some potential solutions back to staff that

03:01:40.516 --> 03:01:44.046
we can then share with the Commission. You know, perhaps that's

03:01:44.078 --> 03:01:47.610
something that can be undertaken at TAC.

03:01:48.230 --> 03:01:51.934
Okay, thank you, Connie and I will apologize to everybody.

03:01:52.022 --> 03:01:54.878
We have a workshop after this on PCM,

03:01:54.934 --> 03:01:58.370
so we're going to keep pushing through today. so.

03:01:58.710 --> 03:02:02.406
All right. (item:19:Chairman Gleeson lays out Project No. 54584) I think that brings us to Item 19. That's Docket

03:02:02.438 --> 03:02:06.250
No. 54584, Reliability standard for the ERCOT market.

03:02:08.520 --> 03:02:11.936
Werner? I think ERCOT

03:02:11.968 --> 03:02:14.460
staff is perhaps also coming up.

03:02:33.050 --> 03:02:36.834
Go ahead, Werner. Thanks. (item:19:Commisison Staff's Werner Roth on redefining the recommendation of rejecting the Brattle study) Werner Roth, Commission Staff.

03:02:36.962 --> 03:02:41.234
No long prepared remarks this month. But last

03:02:41.282 --> 03:02:45.426
month or during the last open meeting, Commission Staff had recommended rejecting

03:02:45.458 --> 03:02:48.706
the Brattle default technology of an error derivative

03:02:48.778 --> 03:02:51.962
combustion turbine. We felt that the justification for doing so had not

03:02:51.986 --> 03:02:55.106
been well presented and recommending sticking with the frame CT that was used

03:02:55.138 --> 03:02:58.248
in the 2012 cone study. Since then, ERCOT's

03:02:58.434 --> 03:03:02.076
filed a couple like, filed the Brattle study and filed an additional

03:03:02.148 --> 03:03:05.732
memorandum on top of that. And we would like to refine

03:03:05.796 --> 03:03:09.316
our recommendation to capture everything that went into the 2012 study and carry that

03:03:09.348 --> 03:03:12.708
over to the 2024 recommendation. Namely maintain the

03:03:12.724 --> 03:03:16.276
use of the frame combustion turbine, sticking with the 20 year

03:03:16.388 --> 03:03:20.668
life of the. For the recovery of costs, and using

03:03:20.764 --> 03:03:23.956
level real dollars. So that would make the

03:03:23.988 --> 03:03:27.268
new staff recommendation with, as was filed in the ERCOT memo,

03:03:27.324 --> 03:03:30.200
of $140 per kilowatt year.

03:03:31.980 --> 03:03:34.200
Okay. Commissioners, thoughts?

03:03:36.220 --> 03:03:40.444
(item:19:Commisisoner Cobos' thoughts on Commission Staff's recommendation) I appreciate ERCOT filing the supplemental information regarding

03:03:40.492 --> 03:03:44.164
the frame CT and also appreciate staff's analysis of

03:03:44.212 --> 03:03:47.756
the frame CT. I think that the cost

03:03:47.788 --> 03:03:51.350
of new entry is based on the

03:03:51.430 --> 03:03:55.890
least cost of entering the market. Right. And so I

03:03:56.990 --> 03:04:01.454
have a lot of concerns with using the new era derivative, LM 6000,

03:04:01.542 --> 03:04:05.062
because that's just not what's being built right now. We don't have the

03:04:05.086 --> 03:04:08.614
discounted refurbished rates because that's not information

03:04:08.702 --> 03:04:12.810
that brattle is able to get from the generators. But ultimately,

03:04:13.270 --> 03:04:16.726
our. Our cone figure has been

03:04:16.758 --> 03:04:19.932
based on a frame CT because it's a. The least cost of entry into the

03:04:19.956 --> 03:04:23.668
market. And so from my perspective, I would hinge

03:04:23.684 --> 03:04:28.468
our cone on a frame CT and I

03:04:28.484 --> 03:04:31.876
would stay with a 20 year amortization because that's the industry

03:04:31.948 --> 03:04:36.164
standard of sort of amortizing

03:04:36.332 --> 03:04:40.212
not only not the life of the unit, but when generators expect to get their

03:04:40.236 --> 03:04:42.120
money back. And I think that's reasonable.

03:04:43.710 --> 03:04:47.118
But with respect to the dollars, I would go with level real. That's kind

03:04:47.134 --> 03:04:49.910
of where I would start. I'm open to discussion on it only because that is

03:04:49.950 --> 03:04:53.662
the actual cost per year of that

03:04:53.766 --> 03:04:57.430
unit, rather than using nominal, because nominal could

03:04:57.470 --> 03:05:00.982
add cost to the earlier years of the unit that don't actually

03:05:01.046 --> 03:05:05.170
exist, like inflation. And so I would

03:05:05.590 --> 03:05:08.862
start with a frame CT 20 year

03:05:08.886 --> 03:05:12.610
amortization on real dollars, which would put you at 140.

03:05:17.550 --> 03:05:18.610
Any thoughts?

03:05:23.550 --> 03:05:26.810
Commissioner Jackson, anything to add? (item:19:Commisisoner Jackson's thoughts on Commission Staff's recommendation) So,

03:05:27.910 --> 03:05:31.614
I guess in ERCOT's evaluation, because they went back to Brattle.

03:05:31.782 --> 03:05:35.470
Okay. And you said, okay, what would Brattle come up with

03:05:35.550 --> 03:05:38.970
in terms of, you know, if this were a cone CT.

03:05:39.270 --> 03:05:42.886
I guess you actually presented a 25 year life,

03:05:43.038 --> 03:05:46.470
but then added in the real realization,

03:05:46.590 --> 03:05:51.610
and so your capture was 134.

03:05:52.030 --> 03:05:55.370
Okay. And then if you backed out

03:05:57.150 --> 03:06:00.966
what the impact would be on the 25 back

03:06:00.998 --> 03:06:03.970
to the 20 year life, you would land at 140.

03:06:04.350 --> 03:06:08.174
So 140 would be for the cone frame

03:06:08.222 --> 03:06:11.846
CT for real levelization and for

03:06:11.878 --> 03:06:14.966
20 year life? Yes.

03:06:15.038 --> 03:06:18.542
And so your evaluation

03:06:18.646 --> 03:06:20.770
is consistent with that?

03:06:21.910 --> 03:06:25.774
Yes. And so I

03:06:25.782 --> 03:06:29.020
guess, from my perspective, that that's a good starting point.

03:06:31.160 --> 03:06:35.648
I think we've had a number of different evaluations

03:06:35.824 --> 03:06:39.464
that have come up with some different ranges, and I think this falls within that

03:06:39.512 --> 03:06:42.552
range. And so, to me,

03:06:42.696 --> 03:06:45.792
20 year life makes sense. We've heard that that

03:06:45.816 --> 03:06:49.152
was favored by the financial community.

03:06:49.336 --> 03:06:51.968
I think, for some of the reasons that we've talked about, if you're going to

03:06:51.984 --> 03:06:55.374
do this more frequently, that the real levelization makes more

03:06:55.422 --> 03:06:59.342
sense. And then, of course, continuing to use the

03:06:59.366 --> 03:07:03.278
frame CT, I think, I think makes sense at

03:07:03.294 --> 03:07:07.470
this particular time as we kind of establish

03:07:07.510 --> 03:07:12.774
the cone and utilize it in the kind of activities

03:07:12.822 --> 03:07:16.382
that we're talking about and the references that we're talking about for

03:07:16.406 --> 03:07:17.810
the rest of the market design.

03:07:19.800 --> 03:07:23.120
(item:19:Commisisoner Hjaltman's thoughts on Commission Staff's recommendation) I agree with Commissioner Jackson's thinking. I think I was looking

03:07:23.160 --> 03:07:27.032
at kind of providing a range of 146 to

03:07:27.056 --> 03:07:30.872
150 or a little higher with

03:07:30.896 --> 03:07:34.528
the most recent data coming from ERCOT. I was going to go a

03:07:34.544 --> 03:07:38.940
little lower afterwards. So, in the same area.

03:07:42.920 --> 03:07:44.060
Thank you, Jimmy.

03:07:45.990 --> 03:07:48.690
(item:19:Chairman Gleeson's' question and thoughts on Commission Staff's recommendation) So Werner, just to be clear.

03:07:49.350 --> 03:07:52.942
Your recommendation as you sit here now is use the frame CT value of

03:07:52.966 --> 03:07:56.094
140 and to look at this next

03:07:56.142 --> 03:07:59.950
in 2026? Yes, that is correct. In the reliability

03:07:59.990 --> 03:08:03.686
standard rulemaking, which we will have for you, the BFA next month.

03:08:03.798 --> 03:08:07.030
We do have something in there that would, in 2026,

03:08:07.070 --> 03:08:09.810
would require an update to the cost of new entry.

03:08:10.160 --> 03:08:14.472
Okay. I'm comfortable as well with the frame CT and

03:08:14.496 --> 03:08:18.040
reviewing this in two years in 2026 and using the 140

03:08:18.080 --> 03:08:21.648
for planning purposes. So do

03:08:21.664 --> 03:08:24.900
you need anything else? Can you provide one more comment?

03:08:26.160 --> 03:08:30.032
(item:19:Commisisoner Cobos' additional thoughts on Commission Staff's recommendation) So, I know that we're going to use this configure for the reliability

03:08:30.096 --> 03:08:33.416
standard and the updated cost assessment for PCM, but I think

03:08:33.448 --> 03:08:36.786
that we should also consider, consider the impact

03:08:36.858 --> 03:08:40.874
that this new cone figure has on peaker net margin. And I say that because,

03:08:41.042 --> 03:08:44.794
you know, as you all know, Chairman Gleason, we sit at the board meetings

03:08:44.882 --> 03:08:48.322
and, you know, and get these updates from the IMM. And the

03:08:48.346 --> 03:08:51.470
IMM has, you know,

03:08:51.850 --> 03:08:55.338
continuously said, well, we've been exceeding cone for, you know, three, four years in a

03:08:55.354 --> 03:08:58.850
row. Whatever has been provided to us. And there's always a question of, well,

03:08:58.890 --> 03:09:02.420
why aren't we seeing new build? Well, we know that for one,

03:09:02.500 --> 03:09:06.124
the 105 was, you know, hasn't been updated in twelve years.

03:09:06.292 --> 03:09:09.716
And so, and that, that's not what we're

03:09:09.748 --> 03:09:12.500
seeing in the market in terms of the cost of new entry. So I'm just

03:09:12.540 --> 03:09:15.812
wondering, in order to have a true, at least a better,

03:09:15.876 --> 03:09:19.836
more updated perspective of the cost of new entry

03:09:19.948 --> 03:09:23.460
as we get these updates from the IMM, if we should

03:09:23.500 --> 03:09:27.342
actually use the, the updated number in the peaker net margin. I know that

03:09:27.436 --> 03:09:29.962
that has impacts to the LCAP and all that. I'm not trying to get into

03:09:29.986 --> 03:09:33.602
that. I just feel like that the peaker net margin from the perspective

03:09:33.626 --> 03:09:38.242
of revenue in the market to incent new build and retention of existing generation

03:09:38.386 --> 03:09:42.146
is our barometer of where things sit. And we as

03:09:42.178 --> 03:09:45.778
policy makers, board members use that kind

03:09:45.794 --> 03:09:49.338
of think about that barometer as we

03:09:49.514 --> 03:09:52.898
think about or assess how our market is looking in

03:09:52.914 --> 03:09:56.288
terms and sending new build. And so that's

03:09:56.304 --> 03:09:59.128
just one thing I wanted to kind of put in there is, you know,

03:09:59.264 --> 03:10:02.816
something to consider. Yeah. So as I understand what we're doing today, this,

03:10:02.848 --> 03:10:06.472
this is just for planning purposes as we move forward, as Warner said, and there

03:10:06.496 --> 03:10:09.900
will be a different process to work through pternet margin.

03:10:12.680 --> 03:10:16.460
Good afternoon, Rebecca. (item:19:ERCOT's Rebecca Zerwas on protocol revision request) Rebecca Zerwas for ERCOT.

03:10:17.400 --> 03:10:20.880
We have been discussing the possibility of a protocol revision request,

03:10:20.960 --> 03:10:24.648
one to implement. We asked for the feedback and I know you'll provided earlier on

03:10:24.664 --> 03:10:28.736
the every five year cadence. And the other item is to cone right

03:10:28.768 --> 03:10:32.168
now stops at the board and to bring it in front of the commission if

03:10:32.184 --> 03:10:36.112
we did change cone. So I think that's something we could consider adding

03:10:36.296 --> 03:10:39.672
the conversation for the peaker net margin use of cone in the protocol.

03:10:39.776 --> 03:10:42.952
Yeah. And that's an important point, I think. And I think what I've gotten

03:10:42.976 --> 03:10:46.642
from staff is that we really need to be involved in the cone updates

03:10:46.706 --> 03:10:50.434
and, you know, the two year and the five

03:10:50.482 --> 03:10:54.026
year, that's where we ultimately go. That's something that,

03:10:54.058 --> 03:10:57.030
I mean, the cone figure drives so many different,

03:10:58.610 --> 03:11:02.362
you know, areas of our market that the commission has to absolutely be involved

03:11:02.386 --> 03:11:04.190
in that. Okay.

03:11:06.050 --> 03:11:09.590
All right, you good Werner? Perfect. Thanks, y'all. Appreciate it.

03:11:11.460 --> 03:11:15.156
So before we call up Texas RE on 23.

03:11:15.268 --> 03:11:19.396
I'm going to just quickly call up Item No. 28. Commissioner Glotfelty

03:11:19.428 --> 03:11:23.012
has a nuclear update. (item:28:Chairman Gleeson lays out Project No. 55421) So I would call 28. That's Project

03:11:23.076 --> 03:11:26.620
No. 55421, Texas Advanced Nuclear Reactor

03:11:26.660 --> 03:11:30.564
Working Group. And I was told it's a brief update, so we'll do that now. Very

03:11:30.612 --> 03:11:33.800
brief. (item:28:Commisisoner Glotfelty gives his Nuclear Working Group update) Since October, our 18 members have been working,

03:11:34.580 --> 03:11:38.526
meeting often. Getting a lot of work done. Hearing from guest speakers

03:11:38.718 --> 03:11:42.158
and delegating ideas to four subcommittees. The four subcommittees that have

03:11:42.174 --> 03:11:46.382
been working through are regulatory and ERCOT market design, demand and end users,

03:11:46.446 --> 03:11:49.090
higher ed, development and manufacturing.

03:11:49.670 --> 03:11:53.650
They've each met monthly, sometimes weekly, over the last ten months.

03:11:54.950 --> 03:11:58.078
With the help of over with hundreds

03:11:58.094 --> 03:12:02.050
of people. Well, I wouldn't say hundreds, but well over 100

03:12:03.000 --> 03:12:04.020
each week.

03:12:05.760 --> 03:12:09.344
The numbers of hours of brain power to create

03:12:09.472 --> 03:12:12.960
and come to some ideas at this level,

03:12:13.040 --> 03:12:17.100
at the subcommittee level has been great. We've got forms

03:12:17.480 --> 03:12:21.352
created for different ideas. They have all been submitted from

03:12:21.536 --> 03:12:25.580
this ad hoc subcommittee level to the final, to the committee.

03:12:26.600 --> 03:12:29.692
That this Commission set up, approved as requested

03:12:29.716 --> 03:12:33.180
by the Governor. We'll be providing discussions

03:12:33.220 --> 03:12:37.068
with each one of the members. We'll be filing more information

03:12:37.244 --> 03:12:41.276
in the docket number. But I just want you to know the subcommittee process is

03:12:41.308 --> 03:12:45.236
concluding and we're getting more towards this funnel of actual

03:12:45.308 --> 03:12:49.600
ideas and the writing of a report. So you'll see these ideas at ASAP.

03:12:49.900 --> 03:12:52.828
(item:28:Chairman Gleeson's thoughts on Commissioner Glotfelty's nuclear update) Like I said last time you gave an update, the advancement of nuclear seems to

03:12:52.844 --> 03:12:55.970
be one of the few things that everyone I talk to agrees about. So,

03:12:56.790 --> 03:13:00.478
great work. Look forward to seeing what comes out of it. And as

03:13:00.494 --> 03:13:04.198
we've talked about before, you know, if anything coming out of

03:13:04.374 --> 03:13:08.174
the report needs to be added to our agency report and

03:13:08.182 --> 03:13:12.530
our legislative recommendations, you know, please let Staff know. Absolutely perfect. Staff has been

03:13:13.070 --> 03:13:16.690
helping us on this, so. Absolutely. Great, thank you.

03:13:17.230 --> 03:13:21.228
All right, now. (item:23:Chairman Gleeson lays out Project No. 56022) We will cycle back to Item 23. That's Docket No.

03:13:21.284 --> 03:13:24.924
56022, Calendar year 2024

03:13:24.972 --> 03:13:27.840
reports of the Texas Reliability Entity.

03:13:33.900 --> 03:13:37.680
Joseph, go ahead. (item:23:Texas RE's VP & COO Joseph Younger gives an overview of the 2023 Reliability, Performance & Regional Risk Assessment Report) Good afternoon Chair, Commissioners.

03:13:38.820 --> 03:13:42.412
Joseph Younger, I'm the Vice President and Chief Operating

03:13:42.476 --> 03:13:45.740
Officer at Texas RE. With me is

03:13:45.820 --> 03:13:49.660
David Penney, who's our Director of Reliability Services.

03:13:50.640 --> 03:13:54.544
We're here to provide you with a brief overview of our

03:13:54.672 --> 03:13:58.832
2023 reliability, performance and regional risk assessment

03:13:59.016 --> 03:14:03.152
report. Which we filed in the project, along with

03:14:03.296 --> 03:14:07.104
some slides from the presentation that David's going to talk to in a little bit.

03:14:07.272 --> 03:14:10.192
But before I did that, I did want to just take the opportunity to,

03:14:10.216 --> 03:14:14.250
again, thank you all for, for providing

03:14:14.290 --> 03:14:17.442
us this opportunity to continue this collaboration. A couple

03:14:17.466 --> 03:14:20.150
of years ago, Commissioner Glotfelty was very,

03:14:21.010 --> 03:14:24.754
very influential in starting and growing this relationship.

03:14:24.802 --> 03:14:28.114
And giving us opportunities not just to come here to the open meeting,

03:14:28.162 --> 03:14:32.130
but also interact with Staff. And collaborate

03:14:32.170 --> 03:14:36.130
on all the things that we're seeing and on our shared reliability

03:14:36.170 --> 03:14:39.756
and security mission. So that's been really important and fruitful and has

03:14:39.788 --> 03:14:43.364
continued with you now on our Board, Chair Gleeson. So we really

03:14:43.412 --> 03:14:47.036
appreciate that. Turning to the report just

03:14:47.068 --> 03:14:50.160
to kind of briefly set the stage before David walks through it.

03:14:50.460 --> 03:14:54.060
This report is an annual report that Texas RE

03:14:54.220 --> 03:14:58.196
produces. It's done solely by our region, and it focuses

03:14:58.308 --> 03:15:01.572
on providing an independent look at reliability and

03:15:01.596 --> 03:15:05.028
security metrics of the bulk power system in the ERCOT

03:15:05.084 --> 03:15:08.482
interconnection. There's two aspects to the report

03:15:08.626 --> 03:15:12.138
that I want to highlight, and David's going to touch on in more detail.

03:15:12.314 --> 03:15:15.882
First, it looks at, we take a lot of data in, and so it looks

03:15:15.906 --> 03:15:19.074
at trends in the data and how the system,

03:15:19.162 --> 03:15:22.546
the bulk power system, is performing and focuses

03:15:22.578 --> 03:15:26.034
on trends in that data. And then we use that data to

03:15:26.122 --> 03:15:29.482
identify and assess known and emerging risks for

03:15:29.506 --> 03:15:33.148
our region and provide that information. And for us, this assessment,

03:15:33.204 --> 03:15:37.252
along with other documents like the CMEP IP that we talked about back

03:15:37.276 --> 03:15:41.676
in January when we were here. There are key input into our

03:15:41.708 --> 03:15:44.548
risk based compliance programs, our outreach programs,

03:15:44.604 --> 03:15:47.640
all that we do. So it's a fundamental part of our work.

03:15:48.220 --> 03:15:51.276
So, as I mentioned, we filed this in the project along

03:15:51.308 --> 03:15:54.916
with David's slides. So with that, I'll turn it over to David

03:15:54.948 --> 03:15:58.206
to kind of talk through the details of the report and then take any questions

03:15:58.238 --> 03:16:00.970
you may have. Thank you. It's a pleasure to be here today.

03:16:02.030 --> 03:16:05.438
(item:23:Texas RE's Director of Reliability Services David Penney gives information on 10 year report on ERCOT's interconnection) As Joseph mentioned my name is David Penney, Director of Reliability

03:16:05.494 --> 03:16:09.270
Services. And with the help of Mark Henry and other folks on my team,

03:16:09.310 --> 03:16:12.662
were largely responsible for the data collection

03:16:12.686 --> 03:16:16.366
and the analysis of that data in relation to this report. So, I guess

03:16:16.398 --> 03:16:20.574
a little bit of a background for you. There's NERC committee called the RISC,

03:16:20.622 --> 03:16:23.810
the Reliability Issues Steering Committee. That's composed

03:16:23.850 --> 03:16:27.498
of NERC and industry executives that go through a process every two

03:16:27.554 --> 03:16:30.738
years or so to identify key risks to the

03:16:30.754 --> 03:16:34.538
bulk power system. In their most recent report, they identified five

03:16:34.594 --> 03:16:38.602
risk areas. Grid transformation, resilience to

03:16:38.626 --> 03:16:41.470
extreme events, cyber and physical security,

03:16:42.010 --> 03:16:45.458
critical infrastructure, interdependencies and energy

03:16:45.514 --> 03:16:49.620
policy. And so what we do, and the way we try to format

03:16:49.660 --> 03:16:52.876
this report and the analysis related to it. Is we take

03:16:52.988 --> 03:16:57.020
all the data that we collect from transmission, outage and performance data

03:16:57.100 --> 03:17:01.012
generation, outage performance data protection system performance

03:17:01.116 --> 03:17:05.156
data, frequency data, event analysis, and so forth,

03:17:05.268 --> 03:17:08.804
we cast a wide net, and then we look at that data

03:17:08.852 --> 03:17:12.660
and analyze it to see how it answers the question of how is the grid

03:17:12.700 --> 03:17:15.798
performing in relation to the these risk areas? And that's kind of

03:17:15.814 --> 03:17:20.078
the way the report is structured. As Joseph mentioned,

03:17:20.214 --> 03:17:23.742
we're one of, we've been writing this report for ten

03:17:23.806 --> 03:17:27.302
years, and it's a solely focused on the ERCOT interconnection. And it's

03:17:27.326 --> 03:17:31.182
kind of a companion report to the NERC state of reliability

03:17:31.246 --> 03:17:35.410
report, which looks at similar assessments nationwide.

03:17:36.430 --> 03:17:39.638
So, with that being said, I kind of want to step you through some of

03:17:39.654 --> 03:17:43.416
the performance metrics that we look at and how we rated them and

03:17:43.488 --> 03:17:47.632
where things are trending. When we look at different indicators,

03:17:47.776 --> 03:17:51.400
we try to sign it a basic rating. Whether it's improving,

03:17:51.480 --> 03:17:54.352
whether it's stable, if it's something we need to monitor,

03:17:54.496 --> 03:17:57.848
or if, in worst cases, if it's actionable, if we're foreseeing multi

03:17:57.904 --> 03:18:01.432
years of declining trends. So, a few

03:18:01.456 --> 03:18:05.654
things to highlight for you is in the significant improvement

03:18:05.712 --> 03:18:09.150
areas we've seen. One of the big ones is around resource weatherization.

03:18:09.930 --> 03:18:13.282
In the post Uri world. A lot of activity was undertaken with

03:18:13.306 --> 03:18:16.722
Senate Bill 3. ERCOT's activities related to their site

03:18:16.786 --> 03:18:19.770
visits. Now, last year,

03:18:19.930 --> 03:18:23.426
the dirt weather station EOP standards were approved. So there's

03:18:23.458 --> 03:18:26.738
been a lot of activity in relation to that. And we're seeing the fruits of

03:18:26.754 --> 03:18:30.290
all that labor. If you look at the actual grid performance during

03:18:30.410 --> 03:18:34.566
Winter Storm Elliott, Winter Storm Heather most recently. The fleet is responding

03:18:34.598 --> 03:18:37.970
and we're seeing the improvements that are necessary.

03:18:38.470 --> 03:18:41.758
That does not mean we need to rest on our laurels and stop, but we

03:18:41.774 --> 03:18:45.350
are seeing the improvements related to that. Another area

03:18:45.390 --> 03:18:48.974
we're seeing significant improvement is in the area of primary frequency

03:18:49.022 --> 03:18:53.422
response. Primary frequency response is a

03:18:53.446 --> 03:18:57.094
function of when we have a major grid disturbance, like a significant

03:18:57.182 --> 03:19:00.956
loss of generation, the grid has to respond by arresting

03:19:00.988 --> 03:19:04.380
that frequency decay, and that's how we measure it using PFR.

03:19:04.500 --> 03:19:08.076
And that's mandated by a couple of the NERC standards, the Bowel 0031

03:19:08.108 --> 03:19:11.612
in particular. It's interesting to see the improvement in the

03:19:11.636 --> 03:19:16.396
PFR numbers, especially in light of the

03:19:16.468 --> 03:19:19.924
changes in the resource mix that we're seeing as we get further and further away

03:19:19.972 --> 03:19:22.852
from conventional units and migrate towards the renewable fleet.

03:19:22.956 --> 03:19:25.830
And I think a lot of the credit that we're seeing due to those improvements

03:19:25.870 --> 03:19:29.926
is how ERCOT has looked at performance requirements for batteries

03:19:29.958 --> 03:19:33.550
in particular, because that is what's providing a large tranche of the

03:19:33.670 --> 03:19:37.038
ancillary services that are providing this improvement. And we're seeing the fruits of

03:19:37.054 --> 03:19:40.390
that as well. We had lots of discussions

03:19:40.430 --> 03:19:43.886
earlier today about resilience, and a couple of the resilience metrics.

03:19:43.918 --> 03:19:47.630
We look at the numbers. We're seeing one of the big drivers in

03:19:47.670 --> 03:19:51.346
transmission outage rates and events pares down to two main areas,

03:19:51.478 --> 03:19:53.350
weather and equipment failures.

03:19:54.610 --> 03:19:57.830
The numbers we're seeing, if you look at the year over year trends,

03:19:58.850 --> 03:20:02.186
the rates are fairly stable, which is probably both good and

03:20:02.218 --> 03:20:05.962
bad, because we're not improving, but we're also not

03:20:05.986 --> 03:20:09.778
getting any worse. But we are still seeing fairly level trends in

03:20:09.834 --> 03:20:13.390
relation to weather caused outages and equipment failure type outages.

03:20:14.450 --> 03:20:16.430
A couple areas we're monitoring,

03:20:17.700 --> 03:20:21.156
again, we've had lots of discussion earlier today about solar ramps being

03:20:21.188 --> 03:20:24.404
one of the big ones. As the commission well knows,

03:20:24.452 --> 03:20:27.396
our summer risk hours are no longer at peak.

03:20:27.508 --> 03:20:31.092
They're during those solar down ramp periods and the

03:20:31.276 --> 03:20:34.972
mora. And the other reports that ERCOT puts out show

03:20:34.996 --> 03:20:38.956
that some of those same numbers, that the probability of EEA, or capacity

03:20:39.028 --> 03:20:42.444
deficiencies, are during those solar down ramp periods. And if you

03:20:42.452 --> 03:20:46.888
look at the raw numbers from last year, we were seeing downramp magnitudes

03:20:47.024 --> 03:20:50.048
of 7500 mw or more per hour.

03:20:50.224 --> 03:20:53.576
This year, they've gone even higher. We've seen some

03:20:53.608 --> 03:20:56.928
hours that are close to 10,000 mw an hour. And so

03:20:57.024 --> 03:21:00.336
I think ERCOT's taking the appropriate steps through the changes they're

03:21:00.368 --> 03:21:04.060
making, the ancillary service methodologies, and what they're procuring

03:21:04.400 --> 03:21:08.382
to mitigate those risks. But it's something that's going to have to

03:21:08.536 --> 03:21:12.530
continue to be monitored, because it's only getting worse as the solar penetration

03:21:12.610 --> 03:21:16.442
increases. Another area we're looking at, or monitoring

03:21:16.466 --> 03:21:19.698
very closely, is related to human error. When you,

03:21:19.754 --> 03:21:23.554
when you look at some of the raw data for protection system

03:21:23.602 --> 03:21:27.034
miss operations and events, a large

03:21:27.082 --> 03:21:31.106
percentage, more than 50% or higher, of the cause

03:21:31.138 --> 03:21:35.028
code, the root cause analysis, and contributing cause analysis we do, those events

03:21:35.124 --> 03:21:38.956
has a human performance or human error component to them. And I think

03:21:38.988 --> 03:21:43.220
it goes back to discussions we've had many times around the

03:21:43.260 --> 03:21:47.476
aging of the utility personnel, the new technologies we're implementing,

03:21:47.508 --> 03:21:51.200
there's a lot of human error aspects, and it's something we have to monitor closely.

03:21:52.180 --> 03:21:56.324
Another area we're monitoring pretty closely is around generation, conventional generation

03:21:56.372 --> 03:22:01.068
forced outage rates. We've seen an increasing trend for

03:22:01.124 --> 03:22:04.556
both simple cycle gas units, but more importantly,

03:22:04.588 --> 03:22:08.180
with our coal and lignite fleet. Look at the year over year trends.

03:22:08.220 --> 03:22:11.596
Those horse tide rates are increasing. And I think from

03:22:11.628 --> 03:22:14.676
the analysis we've done in the background related to that,

03:22:14.788 --> 03:22:18.356
a lot of that has to do goes back to the changing resource mix,

03:22:18.428 --> 03:22:22.012
because those units, when they were built back in the seventies and eighties,

03:22:22.156 --> 03:22:25.758
were designed to be base loaded. That's not how we're operating them today.

03:22:25.814 --> 03:22:29.166
They get cycled up and down every night. That creates

03:22:29.198 --> 03:22:32.350
wear and tear on the mechanical systems, changes their capacity

03:22:32.390 --> 03:22:35.478
factors, and that's resulting in the increase in forced outage rates. So that's

03:22:35.574 --> 03:22:39.806
what we're seeing is happening there. One last area that we're monitoring

03:22:39.838 --> 03:22:43.982
pretty closely is around physical security. We saw a very large uptick

03:22:44.046 --> 03:22:47.230
in 2023 with physical security type reported

03:22:47.310 --> 03:22:50.486
events, in particularly particular ballistic events,

03:22:50.598 --> 03:22:54.466
gunfire type accidents. And if you look at the 2024 numbers

03:22:54.498 --> 03:22:58.338
to date, we've already exceeded the

03:22:58.354 --> 03:23:01.714
count so far in 2024, has already exceeded what we saw all of last year.

03:23:01.802 --> 03:23:05.226
So it's definitely not going away. It's getting worse. It's something we have to keep

03:23:05.258 --> 03:23:08.866
hold on. The one area that we addressed is

03:23:08.898 --> 03:23:13.130
actionable, is well known. It's IBR

03:23:13.250 --> 03:23:16.658
voltage ride through issues. And I know the commission is well aware

03:23:16.674 --> 03:23:20.342
of what's happening with NOGRR245, as well as the

03:23:20.486 --> 03:23:24.134
NERC standards that are being developed under FERC order 901.

03:23:24.262 --> 03:23:27.030
So I don't want to go into a lot of details there, but there's definitely

03:23:27.070 --> 03:23:31.010
activity going on that's going to hopefully address this stuff in the future.

03:23:31.990 --> 03:23:35.398
So, as Joseph mentioned, we take this analysis and

03:23:35.414 --> 03:23:38.810
the trends that we do, and we look at it. We identify

03:23:39.150 --> 03:23:42.930
risk focus areas that we want to address.

03:23:43.840 --> 03:23:46.904
And a couple of the things that we identified this year that I

03:23:46.912 --> 03:23:50.360
want to just highlight real quickly. IBR voltage ride through

03:23:50.400 --> 03:23:53.352
issues is one. Physical security, which I mentioned.

03:23:53.536 --> 03:23:57.072
Remote access is another area that's highly critical to

03:23:57.096 --> 03:24:01.184
us. Gas, electric interdependencies, supply chain.

03:24:01.312 --> 03:24:04.400
And then a new one that we added this year was the integration of large,

03:24:04.440 --> 03:24:07.976
flexible loads. When we look at these risk areas,

03:24:08.048 --> 03:24:11.838
we try to evaluate them on two basic criteria. One is

03:24:11.854 --> 03:24:15.198
the likelihood of it, and we're basing that likelihood

03:24:15.254 --> 03:24:19.046
rating on are the number of occurrences we're seeing increasing

03:24:19.118 --> 03:24:22.726
or decreasing. Are there any documented cases of risk?

03:24:22.878 --> 03:24:26.710
Or. And most important, are there any existing controls in place to mitigate

03:24:26.750 --> 03:24:29.998
that risk? And then the consequence or impact of

03:24:30.014 --> 03:24:33.558
that risk focus area is fairly simple. Is it localized to

03:24:33.574 --> 03:24:37.896
a small geographic area or to one entity entity, or is it widespread

03:24:38.088 --> 03:24:41.140
or potentially involving multiple entities?

03:24:42.040 --> 03:24:45.376
So the basic question around these risk focus areas is, what are we doing about

03:24:45.408 --> 03:24:48.704
it? So over the past year and

03:24:48.872 --> 03:24:51.896
previously, we conduct multiple webinars.

03:24:51.928 --> 03:24:55.808
We had over a dozen webinars in 2023, and we planned a similar number

03:24:55.824 --> 03:24:59.144
of webinars this year on one or more of these risk focused

03:24:59.232 --> 03:25:03.208
risk topics. There's been two, two NERC alerts that

03:25:03.224 --> 03:25:07.408
have been issued, one related to cold weather and one related to IBR data

03:25:07.464 --> 03:25:10.460
collection of settings for voltage and frequency ride through.

03:25:10.800 --> 03:25:14.336
We've had multiple workshops, an IBR

03:25:14.408 --> 03:25:18.820
workshop last year and our, we have our ongoing winter weatherization workshop

03:25:19.560 --> 03:25:22.800
also this month or next month, excuse me. We have a physical and cybersecurity

03:25:22.840 --> 03:25:26.780
workshop that we're working on. And then through our compliance monitoring program

03:25:27.690 --> 03:25:32.338
in 2023, we had well over 200 entity

03:25:32.394 --> 03:25:36.354
engagements on specific requirements related to these risk focus areas,

03:25:36.402 --> 03:25:39.030
and we're planning a similar number for this year.

03:25:39.650 --> 03:25:43.538
A couple of other things to mention real quickly on

03:25:43.554 --> 03:25:47.010
the data collection side is we recently

03:25:47.170 --> 03:25:51.594
have completed a questionnaire on the remote access issue to

03:25:51.682 --> 03:25:55.810
all the dark entities nationwide, worldwide. Where we ask them, the specific question

03:25:55.930 --> 03:26:00.026
is, do you allow entities or companies outside of your organization

03:26:00.098 --> 03:26:04.034
to access your systems for the purposes of monitoring,

03:26:04.162 --> 03:26:08.150
operational control or maintenance of the system? And the results are

03:26:09.090 --> 03:26:12.986
interesting to say the least, as far as the number that

03:26:13.018 --> 03:26:16.466
shows up. And the other thing real quickly to

03:26:16.498 --> 03:26:19.694
mention is there's currently a project going on at the NERC

03:26:19.742 --> 03:26:23.118
level. It's called the Interregional Transmission Capability Study. It's kind

03:26:23.134 --> 03:26:26.302
of an outfall of winter storm Elliott, where they're looking at

03:26:26.326 --> 03:26:30.198
transfer capabilities between regions and between the interconnections to see

03:26:30.214 --> 03:26:33.862
if we can mitigate or eliminate the risk that Winter Storm Elliot and Winter

03:26:33.886 --> 03:26:37.558
Storm Uri posed. So that's kind of it in

03:26:37.574 --> 03:26:40.690
a nutshell of what's in the report. Again,

03:26:41.150 --> 03:26:44.302
as Joseph mentioned, it's available for the Commissioner if you have any questions.

03:26:44.326 --> 03:26:48.176
Just feel to reach out. Thanks for that. Just one quick question. Yes sir.

03:26:48.288 --> 03:26:51.712
(item:23:Chairman Gleeson's question on electric gas coordination) You talked about electric gas coordination. One of the things I think we've

03:26:51.736 --> 03:26:55.432
been lauded for is our electric supply chain map, and we've

03:26:55.456 --> 03:26:59.200
talked to federal officials about that. To your knowledge, when you talk to other

03:26:59.240 --> 03:27:03.064
REs, has anyone else adopted something similar to that map? I have not seen that

03:27:03.112 --> 03:27:06.864
with the companies I've talked to. I know we do. When we look at

03:27:07.032 --> 03:27:10.354
infrastructure interdependencies, I know gas electric has gotten a lot of

03:27:10.362 --> 03:27:14.282
the press and the conversation, but we can't lose sight of the other

03:27:14.466 --> 03:27:18.030
industries that depend on that. We depend on in particular

03:27:18.330 --> 03:27:21.730
because we collect through the GAD system, we collect outage

03:27:21.770 --> 03:27:25.002
data related to fuel, lack of fuel issues, but we also look

03:27:25.026 --> 03:27:28.610
at water supply issues that can affect a plant on or offline,

03:27:28.650 --> 03:27:32.762
and also telecom issues that can affect an entity's ability to control

03:27:32.826 --> 03:27:36.018
or monitor their system. So we're looking at a wide breadth of things and not

03:27:36.034 --> 03:27:39.202
just focused on gas. Commissioners,

03:27:39.266 --> 03:27:42.946
questions? Thank you. Thanks, y'all. Appreciate it.

03:27:43.018 --> 03:27:43.990
Thank you very much.

03:27:47.450 --> 03:27:51.178
All right, Shelah. I think that brings us to Item 34.

03:27:51.354 --> 03:27:55.386
Is that right? Okay. (item:34:Chairman Gleeson lays out Project No. 50664) So Item 34 is Docket No.

03:27:55.458 --> 03:27:59.946
50664, Issues related to the state of disaster

03:28:00.018 --> 03:28:03.468
for coronavirus disease 2019. So this came up in

03:28:03.484 --> 03:28:07.268
our discussions around El Paso last time that went into it.

03:28:07.444 --> 03:28:12.480
I had questions about regulatory assets being booked for COVID.

03:28:13.100 --> 03:28:16.612
So what we have. We have a second draft order filed in this docket

03:28:16.636 --> 03:28:20.444
today. That would require utilities

03:28:20.492 --> 03:28:23.572
to stop booking COVID related expenses as of the

03:28:23.596 --> 03:28:26.548
date of this order. And I think we talked about it in terms of El

03:28:26.564 --> 03:28:29.588
Paso. So everyone was in agreement with this?

03:28:29.684 --> 03:28:32.860
Agreed. Okay. (item:34:Motion to approve the proposed order filed on this project on July 24) Then I will entertain a motion

03:28:32.900 --> 03:28:36.572
to approve the proposed order filed in this project on July 24.

03:28:36.676 --> 03:28:40.212
So moved. I second. I have a motion and a second. All those in favor

03:28:40.236 --> 03:28:43.280
say aye. Aye. Opposed? Motion prevails.

03:28:43.700 --> 03:28:47.852
Okay. (item:38:Chairman Gleeson opens up item for update from Executive Director, Deputy Executive Director or Commission Counsel) The last thing I have is No. 38, an update

03:28:47.916 --> 03:28:51.124
from our Executive Director, Deputy Executive

03:28:51.212 --> 03:28:53.620
Director and Commission Counsel.

03:28:55.280 --> 03:28:58.616
(item:38:PUC Deputy Executive Director Barksdale English gives updates on TX Energy Funds, New Director of DCE and workshop that follows the Open Meeting) Thank you, Chairman. Three quick updates.

03:28:58.768 --> 03:29:03.216
First, just a brief reminder that the loan

03:29:03.248 --> 03:29:06.408
applications for the Texas Energy Funds in ERCOT

03:29:06.464 --> 03:29:10.472
loan program are due on Saturday, July 27

03:29:10.496 --> 03:29:13.616
at 11:59 p.m. Central daylight time.

03:29:13.688 --> 03:29:18.182
So to all the eligible applicants, please get those applications in.

03:29:18.376 --> 03:29:21.650
Last time I looked, which was probably about 50 hours ago now,

03:29:21.770 --> 03:29:25.258
we had somewhere around ten or twelve applications submitted.

03:29:25.394 --> 03:29:29.950
Another 60 in flight. So we're hoping that these last

03:29:30.450 --> 03:29:33.906
72 hours or so, we'll see a good flurry of activity

03:29:33.978 --> 03:29:37.506
on the TEF portal. The second

03:29:37.618 --> 03:29:40.994
thing that really gives me a lot of pleasure to announce.

03:29:41.082 --> 03:29:45.112
is that Connie and I have decided on

03:29:45.176 --> 03:29:48.936
who the next Director for the Division of Compliance and Enforcement

03:29:48.968 --> 03:29:53.180
will be. And I'm very pleased to announce that our very own John Lajzer

03:29:53.640 --> 03:29:56.700
will be elevated to that position starting August 1.

03:29:57.320 --> 03:30:00.976
JB's been with the PUC for about 6 months now in the Enforcement

03:30:01.008 --> 03:30:04.864
Division. He's been a great asset. He comes from a long

03:30:04.912 --> 03:30:08.472
line of enforcement jobs prior to the PUC. So he's going to bring

03:30:08.496 --> 03:30:11.258
a lot of experience and knowledge in that regard on both sides of the table,

03:30:11.314 --> 03:30:14.682
which is great. And he also has the added benefit of

03:30:14.826 --> 03:30:18.234
being a PUC baby. As his dad was an employee

03:30:18.282 --> 03:30:21.178
here back in the days when Daryl Teigen still had a mustache.

03:30:21.314 --> 03:30:24.906
So I'd like to just welcome JB

03:30:25.058 --> 03:30:28.442
to the position and thank you for

03:30:28.506 --> 03:30:31.510
stepping up. That's amazing. Congratulations.

03:30:33.370 --> 03:30:37.060
I will say just real quick. You know, it's hard to take a job

03:30:37.100 --> 03:30:40.556
like that, because the last guy that had it was amazing at it. Big shoes

03:30:40.588 --> 03:30:43.988
to fill, so. That was you

03:30:44.004 --> 03:30:48.092
Barksdale. Oh, that was me? I mean, you're talking

03:30:48.116 --> 03:30:51.260
to the guy who's got the world's best boss coffee mug out here,

03:30:51.300 --> 03:30:54.668
so. And then the last thing to announce

03:30:54.724 --> 03:30:58.404
is as you mentioned, Chairman. There is a workshop following

03:30:58.492 --> 03:31:01.806
this meeting. And given the time and and how long we think

03:31:01.838 --> 03:31:05.566
that workshop will start. If assuming there's not much more

03:31:05.718 --> 03:31:09.550
to occur here in this meeting. Then perhaps we can all gather here

03:31:09.630 --> 03:31:12.870
back at 2:00pm to start that

03:31:12.910 --> 03:31:16.454
workshop, if that's okay with everybody? We expect somewhere between

03:31:16.502 --> 03:31:19.182
two and a half and 3 hours for that. So, trying to get everybody out

03:31:19.206 --> 03:31:22.558
on time. Our agenda is posted online for anybody

03:31:22.574 --> 03:31:25.686
who wants to follow the bouncing ball at home. And that's it.

03:31:25.758 --> 03:31:29.768
Perfect. Thank you, Barksdale. (item:38:Chairman Gleeson adjourns meeting) Okay, I don't have anything else.

03:31:29.904 --> 03:31:32.304
With there being no further business in front of us. This meeting of the Public

03:31:32.352 --> 03:31:34.280
Utility Commission of Texas is hereby adjourned.