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Good morning, members of the ERCOT Board of Directors and guests. I'm Paul Foster, ERCOT Board Chair.

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Welcome to the October 17, 2023 Board of Directors meeting. I hereby call this meeting to order.

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This meeting is being webcast live to the public on ERCOT's website. Before we begin,

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I'd like to ask Interim PUC Chair Kathleen Jackson if she would like to call an open

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meeting of the Public Utility Commission of Texas to order.

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Thank you. 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 October 17, 2023. I'm

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Kathleen Jackson and I'm joined today by Commissioners Will McAdams and Lori Cobos.

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Commissioner Jimmy Glopfelty is joining us online.

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Thank you. Before moving on to today's business, I want to report that Novoraj Pokaral of the

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Office of Public Utility Commission is attending as alternate representative in the absence

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of Board Member Courtney Yaltman in accordance with my law section 4.3D. I would also like

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to highlight to committee members that the antitrust admonition and security map

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are included with posted meeting materials.

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The first order of business on today's agenda is Item 2.

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Notice of public comment, if any.

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Today's meeting agenda was posted publicly on October 10th

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and provided instructions for the public,

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for commenting in person.

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To date, no one has expressed interest in commenting.

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Is that still the case, Chad?

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That is correct, Chair.

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All right. Moving on to agenda item 3, the consent agenda. I'll turn it over to Chad

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to provide the budget impacts of the revision request.

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Thank you. Okay. On the consent agenda this morning, you have two items on the list.

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Neither one has an ERCOT staff impact. However, both do have a budget impact.

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So NPR 1184 is broken into two phases. The first phase is less than 10,000,

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and the second phase ranges from 100,000 to 150,000

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and will take six to nine months to implement after PEC approval.

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The SCR has a small budget impact of less than 10,000.

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We'll be happy to answer any questions.

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Okay, thank you, Chad.

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With that, does any board member wish to discuss or remove any item from the consent agenda?

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Hearing none, if there's no further discussion,

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I'll entertain a motion to approve the consent agenda as presented.

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Thank you.

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Second.

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Second.

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Okay.

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All in favor?

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Aye.

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Any opposed?

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That motion passes.

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Next is agenda item 4, August 31, 2023, general session meeting minutes.

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There's a draft in the meeting materials.

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Does anyone have any comments or wish to make a motion?

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I move to approve.

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Thank you.

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Second.

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All in favor?

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Aye.

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Any opposed? That passes. All right. Next agenda item five is the CEO update. And Pablo is

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up front.

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Good morning, everybody. Thank you very much for joining to discuss the important

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work that we are doing at ERCOT.

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All right. So my comments today on regards to the summer

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operations are going to be somewhat brief because we're going to have a detailed review

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of the detailed operational review a little bit later in the agenda today.

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So today I'm going to just cover some brief highlights from the summer, including a perspective

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on some of the higher pricing that we saw in the wholesale market this summer.

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I'm going to briefly review our progress on some of the market, key market and protocol

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focus areas that our team are working on.

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I'm going to review our current activities as we're preparing for our next winter peak

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season. And as always, I'd like to close with thank yous to our members of our team that

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have been really working and making tremendous progress on key issues.

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So the summer was really book-ended with challenges this year. The June summer board

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meeting when we met actually marked the first of 11 conservation type of calls that we

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made all summer. And it was book-ended at the end towards the last half of August

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and into September with 10 additional conservation calls.

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The peak heat that we experienced this summer during July and during August when we set

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10 new records on the system was managed very well because we had really great strong and

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consistent performance from thermal generators, from solar resources, as well as from wind

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resources and our energy storage resources throughout those periods.

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And in fact, when we had our peak, most of our peaks, those were not days that we had

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conservation calls if we had the performance of all of those resources working well.

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This summer we experienced some meaningful change in terms of when the scarcity period

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shifted from just a year ago at the same time.

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Last year, the scarcest period of time during the summer was during the gross peak on

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the system, which is around 3 or 4 p.m. in the afternoons in the summer, when the heat

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is at its maximum and demand is at its highest. We saw a change this year where that scare

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system tightest period actually shifted to later in the day to 7 or 8 o'clock at night

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as we were going through the solar ramp. And the reason being is that because during

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the gross peak, we saw so much addition of solar resources from this year compared

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to last year that those additional solar resources were able to pick up the

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energy requirements during the peaks in the afternoon. And so we didn't have scarcity during

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those periods. But we ended up having scarcity later in the day on the hot days when the

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heat remained into the evening, and we started to lose the energy from solar resources. That

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became the new scarcity and tightest period on the ERCOT grid. And that shift occurred

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for the first time this year.

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The intense heat that persisted this year was record

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setting through many parts of Texas. Here in Austin we had 42 days where we are above 105

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degrees. That breaks a record that was set back in 2011 when it was only 26 days back then.

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In 2021 we had zero days where load on the system was over 80 gigawatts. In 2022 we had one day

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where we hit 80 gigawatts, and this summer we had 49 days that we were over 80 gigawatts.

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The system was clearly stressed and stretched, but it held.

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I want to acknowledge the emergency operations that occurred on September 6th due to a combination

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of extreme heat that day, low wind, and an unusual wind condition where the west wind

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was less intense than the wind coming up from the coastal bend area, which set up

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for a transmission constraint between the San Antonio area and the coastal bend area

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where it was trying to get the wind generation resources up to meet the high demands in the

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central and northern parts of Texas. This led to some generation needing to be curtailed

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in order to manage that transmission congestion constraint, and which also led to an accelerating

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of lowering PRC and frequency decline that the control room was able to manage very

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skillfully by entering into EEA2 operations in order to access needed load response resources

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that are in our RRS service.

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To touch briefly on the cost this summer, there's been a lot of discussion about the

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higher prices that have been observed in the market this year.

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Dan and Kenan are going to cover that a little bit in detail later in the board

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meeting as well.

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But what I wanted to do is share a couple of perspectives on those prices.

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So top left shows the growth in demand.

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I think we've covered that pretty well.

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You can see from the awkward charts, 2021, the gray 2022,

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and the purple 2023, the peak demands in each of the months

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for the last few years.

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So you can see strong demand as we've just discussed.

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What hasn't been discussed as much is the fact that we are

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also increasing the amount of ancillary services that

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we procure in order to manage the real-time operational

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risk of operating the current market.

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And as you look at the graph on the top right, you can see the increased amount that is being

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paid for ancillary services from 2021 to 2022 and 2023.

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It's been reported that before that, I want to make sure it's clear that because more

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and more energy is being served by intermittent resources, the risk of a forecast miss in

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any given hour is increasing.

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And additionally, price response of loads are growing on the grid and can move their

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demand very quickly up and down as well in response to a variety of inputs, and we don't

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necessarily control those inputs.

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We just have to be ready to manage the impact of those changes.

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So the Ansari services that we procure have very specific operational purposes, and we

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buy them in an amount in order to manage those operational risks.

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We do it to manage frequency.

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to recover voltage and frequency should a large unit or large load instantly come offline.

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And they're utilized by the control room in order to manage the operational risks on the grid

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and to anticipate future operational risks that may occur during a giving operating day.

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They are not purchased or deployed specifically to influence wholesale prices.

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They are reliability tools.

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And they are deployed when they are needed in order to mitigate reliability risks on the systems.

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systems. So it's been reported that prices had increased by $8 billion this summer and

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attributed largely to the incremental ancillary services and in particular the ECRS service

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that we deployed this summer. Wholesale prices are really a function of the quantity of

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supply that is available to serve demand and the price bid that are offered by suppliers

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and by controllable load resources. Wholesale prices are not a good proxy for the retail

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costs that customers pay for electricity. In fact, in August we could see that nearly

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75% of all electric purchases and sales were transacted in advance in the day ahead market.

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In addition, we don't get visibility to all bilateral contracts and transactions that

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take place between suppliers and purchasers, and we generally estimate that on average

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90 to 95% of all energy transactions are hedged or purchased in advance at a

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So to conclude that costs have increased by $8 billion and

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assumes that somebody is paying for that $8 billion and

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that is an inaccurate way or an inaccurate conclusion to draw

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from the fact that wholesale prices were higher this summer.

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The actual cost associated with the increased ancillary

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services as shown on the top right on this slide, an

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incremental cost of $567 million this summer, that's

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the actual cost that was passed on to load and paid

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for by load directly.

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The drivers of price quantities is one of those key drivers.

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Price bids is another, and the bottom left shows a new pattern of increasingly higher

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price bids by resources that are able to build in opportunity costs into their price bids.

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And you'll see in 2021, we did not have any price bids that were over the $4,900 a megawatt

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hour level.

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In 2022, we started to see some through June, July and August, and in 2023, we saw quite

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a bit more, especially as we got into August during the very high scarcity periods of

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time that led to some of the higher pricing.

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The market is responding to the operational conditions as it is designed to do.

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When there is scarcity, as we experienced this summer due to extreme weather, due

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to economic load growth, we're going to see higher prices in an energy-only

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market which is designed to incentivize the development of new resources in order to meet

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those demands.

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So I'll pause on here if there's any questions before moving on to my next segment.

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Pablo, I have a question.

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Do you have a sense of how responsive load was to higher pricing?

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And I know that's a very difficult thing to measure, but can you comment a little

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bit on what happened when you issued these requests for conservation?

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Yeah, we saw really, I think, very strong response from load during the conservation

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periods this summer. We can look at it. We can measure some of them very clearly and

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specifically. We have the ability to see some of the online energy uses of some of the

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larger industrial loads on the system, and we could see them respond when those

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conservation calls, as well as when prices would get high.

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On the consumer level, the way that we typically measure and assess the performance

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We look at the expected forecast for energy usage

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during periods of time in the afternoon in advance.

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We look at what that forecast looked like before

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the call and then we look at how that curve changes

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in real time and we can attribute a significant

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portion of that to the response.

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And that can be from a variety of reasons.

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It can be from the ERCOT response that people

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are responding to but also a lot of the retail

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electric providers and transmission distribution

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companies have load management programs or demand response programs that

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customers can avail themselves of and they leverage those throughout the

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summer during the peak periods and so we saw really strong performance and

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benefit from those and we had to use them. Can we quantify that at all? It's

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we've seen you know on average so anywhere between 500 megawatts to 1500

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megawatts is a general kind of a range that we experience when we have one

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of those conservations. A couple of percent. That's right and that's just on

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the consumer side. On the industrial load, it's a little bit stronger. We see between

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2,000 and 3,000 megawatts sometimes on the industrial side.

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Second question, if I may. In the lower left-hand chart here, can you characterize who is bidding

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that dispatchable energy at the 4,900 and above megawatt hour level?

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Yeah. The type of resources that are able to build in an opportunity cost into their

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bidding strategy are those that have time or duration-limited elements to their energy

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supply. So energy storage, resources and batteries are able to do bidding of that nature. I believe

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pumped high.

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I think it's really beneficial for the audience. It's watching this to see the real data from

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this summer. Just to clarify and reiterate, the total cost of ancillary services this summer

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was just under $600 million. That was the incremental cost. So if you look

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at the chart, it's where about $1.2 billion total in 2023, and the increment over last

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year was $567 million.

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So that's the incremental cost this summer of ancillary services.

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That's very helpful.

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And so when you look at this, the real numbers compared to the $8 billion headline and all

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the underlying data that drove that $8 billion headline, that was inaccurate.

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Is that correct?

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Yeah.

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The $8 billion is just what the price of energy in the wholesale market was.

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because it was basically the price times the amount of energy being served, but that is

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not the cost that people were paying necessarily at those periods in time.

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And that's why the data that I shared around how much of the energy transactions are hedged

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and advanced, are done in the day ahead market, or outside of that, those are the actual

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costs that are being paid for by basically retailers who are purchasing and how suppliers

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are getting paid.

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Okay, I think that's important that the public knows that there is no $8 billion cost increment.

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So thank you.

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Yeah, thank you.

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Mr. Chairman, if that may?

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Yes.

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All right, Pablo.

231
00:16:32,150 --> 00:16:36,490
So it's important for the Commission to ask some questions, and we can either do it

232
00:16:36,490 --> 00:16:37,750
here in front of the full Commission.

233
00:16:38,430 --> 00:16:45,250
But affordability of energy is one of our primary responsibilities, next to reliability.

234
00:16:45,250 --> 00:16:50,990
And we've got to start digging into these numbers.

235
00:16:51,850 --> 00:16:55,550
But on August 25th, I was up at 11 p.m.

236
00:16:55,610 --> 00:17:00,510
And I took a screenshot of market prices at that time.

237
00:17:01,250 --> 00:17:09,630
And market prices in the day ahead averaged at $3,800 a megawatt hour.

238
00:17:10,450 --> 00:17:15,450
from 4 p.m. in the afternoon to 10 p.m. in the evening.

239
00:17:17,250 --> 00:17:18,990
And that's the day ahead.

240
00:17:19,970 --> 00:17:23,850
And so these hedges you're talking about were having to be procured

241
00:17:23,850 --> 00:17:27,670
because of the uncertainty on how the market would react

242
00:17:27,670 --> 00:17:30,410
as compared to system forecast,

243
00:17:31,130 --> 00:17:35,750
but also how ancillaries would be deployed the next day.

244
00:17:35,750 --> 00:17:42,990
And that's where we get into methodologies used by the system to both procure ancillaries

245
00:17:42,990 --> 00:17:44,010
and how they're used.

246
00:17:45,370 --> 00:17:52,190
And I think we would all recognize that the system is short of necessary capacity that

247
00:17:52,190 --> 00:17:57,710
we need to manage through a more volatile system which is more dependent on intermittent

248
00:17:57,710 --> 00:17:58,410
resources.

249
00:17:59,760 --> 00:18:04,630
But it's the uncertainty on how we're going to manage through that on a day-to-day

250
00:18:04,630 --> 00:18:13,250
basis that will drive up day ahead costs. And, again, that will not influence price

251
00:18:13,250 --> 00:18:19,370
responsive behavior to the degree that is desirable to us because we want them to respond

252
00:18:19,370 --> 00:18:23,470
in real time to real time prices so that they turn down their consumption.

253
00:18:23,930 --> 00:18:24,270
That's right.

254
00:18:24,350 --> 00:18:33,610
But if they've already locked in their energy at almost $4,000 a megawatt, then they're

255
00:18:33,610 --> 00:18:37,890
going to be as responsive to real-time prices because they've already booked that cost.

256
00:18:38,950 --> 00:18:45,030
So my question is, and we've talked about this at the Commission, it's important to

257
00:18:45,030 --> 00:18:52,310
recognize how the system is going to operate in a high-intermittent environment. And that's

258
00:18:52,310 --> 00:18:57,110
what you and your operators are dealing with on a day-to-day basis. Do we think we could

259
00:18:57,110 --> 00:19:05,830
issue some type or develop some type of guidance to the market and the system on how, given

260
00:19:05,830 --> 00:19:13,610
the penetration of renewables, you believe you will need to operate moving forward in

261
00:19:13,610 --> 00:19:20,350
proportion to that penetration with ancillaries so that those forwards can be, those forward

262
00:19:20,350 --> 00:19:24,230
prices can be managed accordingly based on that guidance.

263
00:19:24,410 --> 00:19:25,230
Is that possible?

264
00:19:25,230 --> 00:19:31,850
And I say guidance, it's a very specific word because it's not a protocol but it is

265
00:19:32,470 --> 00:19:36,890
how we believe we'll need to operate moving forward so that the operators continue to

266
00:19:36,890 --> 00:19:42,250
maintain flexibility but the market knows generally the doctrine that you're operating

267
00:19:42,250 --> 00:19:42,530
under.

268
00:19:43,050 --> 00:19:47,090
Yeah, I think I understand what you're asking and it makes a lot of sense.

269
00:19:48,510 --> 00:19:54,110
We want to try to signal to the market as clearly and as close to real time as

270
00:19:54,110 --> 00:19:59,130
possible what the expectations are in order to help them make the right decisions in terms

271
00:19:59,130 --> 00:20:03,910
of how they want to operate their assets, how they want to manage their portfolio of

272
00:20:05,070 --> 00:20:05,990
supply and demand.

273
00:20:06,170 --> 00:20:09,230
And so I think what you're asking for is very reasonable.

274
00:20:09,650 --> 00:20:13,350
And we desire to try to do that at ERCOT to try to help the market because essentially

275
00:20:13,350 --> 00:20:17,530
if we can be very clear and transparent in what those expectations are in terms

276
00:20:17,530 --> 00:20:21,330
of how many ancillary services and of what type and for what reasons and kind

277
00:20:21,330 --> 00:20:25,750
of layout, kind of a forecast of, here's what we expect to do because this is the kind

278
00:20:25,750 --> 00:20:29,710
of variability we want to manage, the size of the variability that we expect at differing

279
00:20:29,710 --> 00:20:33,930
points in time throughout the year, and then the associated products that we intend to

280
00:20:33,930 --> 00:20:37,730
purchase in order to manage that, the market can anticipate that and start to bring

281
00:20:37,730 --> 00:20:41,510
to bear the resources that are going to most efficiently deliver the services of

282
00:20:41,510 --> 00:20:41,850
those products.

283
00:20:41,910 --> 00:20:45,590
Because the products that I talked about that manage regulation versus those that

284
00:20:45,590 --> 00:20:50,130
manage the risk of a unit tripping versus those that might manage a forecast risk

285
00:20:50,130 --> 00:20:52,950
have different characteristics and different cost profiles.

286
00:20:53,530 --> 00:20:55,350
And with the right information in advance,

287
00:20:55,630 --> 00:20:58,010
or the best information in advance to try to optimize,

288
00:20:58,430 --> 00:21:01,710
we can be much more efficient in the cost of procuring those ancillary services,

289
00:21:01,750 --> 00:21:03,390
and that benefits the whole market.

290
00:21:03,510 --> 00:21:06,650
And so I agree wholeheartedly with what you're asking,

291
00:21:06,930 --> 00:21:10,370
and it is our intention to continue to improve the clarity

292
00:21:10,370 --> 00:21:12,450
around what we're going to do in our ancillary services

293
00:21:12,450 --> 00:21:14,330
to provide that clarity to the market.

294
00:21:16,370 --> 00:21:16,810
Julie?

295
00:21:18,510 --> 00:21:19,270
Yes, Julie.

296
00:21:19,270 --> 00:21:24,230
I would like to follow Will's question with something a little more specific.

297
00:21:25,030 --> 00:21:32,110
In terms of forecasting ancillary services for this summer or next summer, can you shed

298
00:21:32,110 --> 00:21:34,690
some color on the drivers?

299
00:21:35,030 --> 00:21:42,030
Like how much was the excessive heat in comparison to true increased load because of the economic

300
00:21:42,030 --> 00:21:43,510
growth in Texas, for example?

301
00:21:44,210 --> 00:21:48,990
And I may, I'll start an answer and I may ask Dan to weigh in on this as well.

302
00:21:49,530 --> 00:21:54,970
So in general what we do, we set the methodology at the start of the year looking ahead at

303
00:21:54,970 --> 00:21:58,770
the next year with an anticipation of the kind of resources that we expect to be on

304
00:21:58,770 --> 00:22:02,790
the grid throughout different parts of the season and really looking at the kind of

305
00:22:02,790 --> 00:22:05,910
expected load carrying capacities during various seasons.

306
00:22:06,050 --> 00:22:10,890
And so then we set out a method, the methodology we use says here's how much risk or forecast

307
00:22:10,890 --> 00:22:13,090
that we expect to try to manage and procure

308
00:22:13,090 --> 00:22:14,230
through ancillary services.

309
00:22:15,030 --> 00:22:18,530
And we essentially set kind of a floor on here.

310
00:22:18,910 --> 00:22:21,690
We don't expect it to be below this, but it can be higher.

311
00:22:22,290 --> 00:22:24,230
And those decisions are then made

312
00:22:24,230 --> 00:22:26,090
in more in a real-time fashion.

313
00:22:26,270 --> 00:22:28,410
And Dan, that's where you could jump in and help here,

314
00:22:28,510 --> 00:22:30,370
how we make those decisions throughout the year

315
00:22:30,370 --> 00:22:32,850
in terms of what to buy on a given day

316
00:22:32,850 --> 00:22:35,090
and what is the drivers of those decisions.

317
00:22:35,090 --> 00:22:42,750
Yes, so we basically this ancillary service methodology document that defines this minimal

318
00:22:42,750 --> 00:22:48,930
amount that we're going to buy for each hour of the year, we very rarely buy more than

319
00:22:48,930 --> 00:22:52,290
the amount that is designated in that document.

320
00:22:52,630 --> 00:22:57,970
And so each ancillary service has certain drivers because each ancillary service has

321
00:22:57,970 --> 00:23:00,430
to be provided by resources with certain characteristics.

322
00:23:00,430 --> 00:23:08,970
And so we buy a certain amount of each one based on the risks that those unique characteristics are needed to cover.

323
00:23:09,590 --> 00:23:19,110
And so, but we very rarely increase it more than those minimal amounts that are published in typically December type time frame.

324
00:23:20,690 --> 00:23:23,090
Is that a public document then or is it?

325
00:23:23,430 --> 00:23:24,750
Yes, I think so.

326
00:23:29,280 --> 00:23:33,000
Oh yeah, and it will come to the board in December for approval actually.

327
00:23:34,340 --> 00:23:45,820
Thank you. Pablo, following up on, I guess, everything that's being asked, one, first

328
00:23:45,820 --> 00:23:51,120
of all, it's great to have the IMM look at, you know, what's happened and based on that

329
00:23:51,120 --> 00:23:58,760
look at their advice and to hopefully implement what we can. ECRS is identified as an issue

330
00:23:58,760 --> 00:24:06,660
in their analysis as a distortion in terms of when the ancillary service came in and

331
00:24:06,660 --> 00:24:14,240
therefore the prices that were paid for it. That's one. Second, the analysis is really

332
00:24:14,240 --> 00:24:22,240
exposed always what happened and in the absence of a crisis then you look at pricing and affordability

333
00:24:22,240 --> 00:24:28,600
and of course that's a big issue but I think ex ante analysis is important

334
00:24:28,600 --> 00:24:37,320
because the cost of 4,900 dollars per megawatt hour is very high but the cost

335
00:24:37,320 --> 00:24:43,680
of not having power is infinite. So that has up type analysis that for

336
00:24:43,680 --> 00:24:47,920
example in my industry we do all the time is very important because the

337
00:24:47,920 --> 00:24:50,540
alternative is catastrophic.

338
00:24:51,120 --> 00:24:51,360
That's right.

339
00:24:52,140 --> 00:24:56,020
Maybe put those elements into the analysis to understand

340
00:24:56,020 --> 00:25:00,000
reliability and affordability as something that's

341
00:25:00,000 --> 00:25:00,680
actually connected.

342
00:25:01,160 --> 00:25:02,140
That's exactly right.

343
00:25:02,240 --> 00:25:03,300
They're intrinsically connected.

344
00:25:03,540 --> 00:25:06,800
And trying to assess the economics without understanding

345
00:25:06,800 --> 00:25:09,280
the underlying operational risks that are being

346
00:25:09,280 --> 00:25:11,800
managed and the decisions that are being made in real time

347
00:25:11,800 --> 00:25:15,360
to manage those risks doesn't really do justice to the

348
00:25:15,360 --> 00:25:19,740
overall picture of why the market is costing and pricing the way that it is.

349
00:25:20,120 --> 00:25:21,520
That's an excellent point, Carlos.

350
00:25:22,080 --> 00:25:26,580
We'll work to try to augment and supplement some of the analysis that comes out from an

351
00:25:26,580 --> 00:25:30,520
economic perspective to help tie that to the real-time operational risks that are being

352
00:25:30,520 --> 00:25:35,840
managed during those periods in order to help better quantify and qualify the impacts

353
00:25:35,840 --> 00:25:36,760
that the market has seen.

354
00:25:37,640 --> 00:25:43,620
And, of course, review how the, you know, ancillary services work and based on

355
00:25:43,620 --> 00:25:44,880
that try to adjust as we go.

356
00:25:44,880 --> 00:25:49,200
I mean, this is a system that has so many variables.

357
00:25:49,440 --> 00:25:53,000
It's not that there's parables and economists would look at it, right?

358
00:25:53,100 --> 00:25:56,740
It's not like steady state and things are normal.

359
00:25:57,000 --> 00:26:02,180
No, we're bursting in terms of demand, economic growth, record heat.

360
00:26:02,760 --> 00:26:06,360
I mean, just old installed capacity.

361
00:26:07,100 --> 00:26:11,520
It's just too many factors that are working in the system.

362
00:26:11,520 --> 00:26:16,780
And that's why I was saying match affordability and reliability together into the same equation.

363
00:26:17,060 --> 00:26:17,520
Absolutely.

364
00:26:17,900 --> 00:26:19,220
That's an excellent point, Carlos.

365
00:26:19,400 --> 00:26:19,660
Thank you.

366
00:26:20,580 --> 00:26:20,920
Pablo?

367
00:26:21,380 --> 00:26:21,560
Yes.

368
00:26:22,660 --> 00:26:27,620
And first you can correct me if my statement is wrong, because I'm not sure it's entirely

369
00:26:27,620 --> 00:26:35,120
right, but I view the ancillary services as kind of a backstop for underlying weakness

370
00:26:35,120 --> 00:26:38,900
in our market design, right, and which is why we're procuring more of them.

371
00:26:38,900 --> 00:26:44,800
Maybe not all ancillary services, but the fact that we're creating more and more ancillary

372
00:26:44,800 --> 00:26:49,260
services to me is indicative that the fundamental market design is not working.

373
00:26:50,280 --> 00:26:52,160
And how do we get beyond that?

374
00:26:52,260 --> 00:26:55,660
I know we talked a lot about PCM, everything seems to be kind of on hold.

375
00:26:55,880 --> 00:26:58,980
What's, first of all, do you agree with my premise?

376
00:26:59,240 --> 00:27:03,360
And then second of all, how do we fix the underlying market so we rely less on

377
00:27:03,360 --> 00:27:04,440
ancillary services?

378
00:27:04,440 --> 00:27:11,020
Yeah, I think I agree with the premise that the underlying market design hasn't recently

379
00:27:11,020 --> 00:27:17,880
been incentivizing a balanced mix of additional resources onto the grid, and that has led

380
00:27:17,880 --> 00:27:24,240
to a grid that has evolved to be more volatile and have more operational risk because the

381
00:27:24,240 --> 00:27:29,120
type of resources that are being incentivized are intermittent resources and those with

382
00:27:29,120 --> 00:27:35,320
shorter durations, and so the complexities of managing a growing demand and a very dynamic

383
00:27:35,320 --> 00:27:39,820
load environment with those types of resources becomes more and more challenging.

384
00:27:40,020 --> 00:27:45,100
So to manage that risk, we do have to increase the portfolio of ancillary services in order

385
00:27:45,100 --> 00:27:49,560
to anticipate any variation or issue that could happen across all of those factors.

386
00:27:50,220 --> 00:27:55,420
So I would agree that one leads to the conclusion that you put forth.

387
00:27:55,420 --> 00:28:03,340
I think the answer, there's a suite of solutions that are being developed today that are intended

388
00:28:03,340 --> 00:28:08,360
to start to address this. PCM is clearly one of those. PCM, as it's the performance credit

389
00:28:08,360 --> 00:28:15,040
mechanism, is a mechanism that's designed to provide a consistent revenue stream during

390
00:28:15,040 --> 00:28:21,880
the tightest periods on the grid throughout the year to generators or to load that can

391
00:28:21,880 --> 00:28:23,920
provide that at that point in time.

392
00:28:24,580 --> 00:28:30,560
And so the key behind it is that it's consistent, a consistent revenue reliability stream that

393
00:28:30,560 --> 00:28:36,160
could be planned on for many years, and it's not subject just to the volatility of an energy

394
00:28:36,160 --> 00:28:37,400
only market pricing model.

395
00:28:37,900 --> 00:28:41,900
So PCM certainly is part of that solution, and we're going to be continuing to advance

396
00:28:41,900 --> 00:28:46,560
PCM aggressively in order to try to incorporate the benefits it should bring.

397
00:28:46,560 --> 00:28:53,720
The legislature put forth legislation to incentivize dispatchable generation development,

398
00:28:53,820 --> 00:28:56,120
specifically in Senate Bill 2627.

399
00:28:56,780 --> 00:29:00,140
That is going to go before the public for a vote this November,

400
00:29:00,520 --> 00:29:04,460
because there's a portion that requires a constitutional amendment to do.

401
00:29:05,060 --> 00:29:10,540
And with support, that will incentivize through low-interest loans

402
00:29:10,540 --> 00:29:15,160
and completion bonuses the development of dispatchable generation resources,

403
00:29:15,160 --> 00:29:18,960
which are the ones that were not seen enough really come onto the grid in recent years.

404
00:29:19,700 --> 00:29:23,480
And then the changes that we're going to put forth, the operating reserve demand curve

405
00:29:23,480 --> 00:29:28,800
floor adder change, which is going to bring up the floor adders during times of scarcity,

406
00:29:29,320 --> 00:29:33,420
that's intended to also provide revenue to the types of resources that are operating

407
00:29:33,420 --> 00:29:38,700
during scarcity periods, which largely are dispatchable type resources in order

408
00:29:38,700 --> 00:29:43,220
to help give them revenue to stay operating and to stay active in the market versus

409
00:29:43,220 --> 00:29:47,580
if though they're considering potentially retiring or mothballing, the idea is provide

410
00:29:47,580 --> 00:29:49,780
the revenue to incentivize them to stay in the market.

411
00:29:50,260 --> 00:29:55,040
So we're doing a variety across the board between short-term changes in the energy only,

412
00:29:55,480 --> 00:29:59,700
the PCM, which is a longer-term reliability signal, and then hopefully with the passing

413
00:29:59,700 --> 00:29:59,980
of the

414
00:30:04,260 --> 00:30:10,360
We'll see those incentives combined to incentivize a more balanced development strategy going forward.

415
00:30:10,420 --> 00:30:12,900
And that's what we're looking forward to and what we're building towards.

416
00:30:14,260 --> 00:30:20,220
Mr. Chairman, if I may, just kind of sort of observation from Bob's statement.

417
00:30:21,340 --> 00:30:28,080
You know, I think all markets across the country are experiencing the same issues we are with respect to a higher penetration of renewable energy

418
00:30:28,080 --> 00:30:29,860
and less dispatchable generation being built.

419
00:30:30,160 --> 00:30:34,560
So whether that's an energy-only market or a capacity market, all markets are dealing

420
00:30:34,560 --> 00:30:35,220
with the same issues.

421
00:30:35,220 --> 00:30:40,780
So I'm not sure that it's a sign of one specific market structure failure, just case in point.

422
00:30:41,480 --> 00:30:47,580
Number two, I think what I've heard is the ancillary service methodology needs to

423
00:30:47,580 --> 00:30:52,620
be clearly set forth so that the LSEs and everybody can plan forward and hedge and

424
00:30:52,620 --> 00:30:54,440
to create some forward price stability.

425
00:30:54,440 --> 00:31:00,280
I think, you know, with the ancillary service methodology being approved in every year in

426
00:31:00,280 --> 00:31:07,400
December, I don't know that the market could really anticipate when and how much ECRS was

427
00:31:07,400 --> 00:31:13,400
going to be purchased, and so now going forward, you know, that procurement should become more

428
00:31:13,400 --> 00:31:19,160
stable and transparent, but we also have DRS coming up right behind that, and so understanding,

429
00:31:19,160 --> 00:31:26,140
I mean, you know, that ERCOT give the market as much advance notice as possible on how

430
00:31:26,140 --> 00:31:30,940
much DRS is going to be procured through that ancillary service methodology is really important

431
00:31:30,940 --> 00:31:35,760
because whether it's the ancillary service methodology that sets forth what and how

432
00:31:35,760 --> 00:31:44,280
much ERCOT's purchasing per year to maintain reliability or it's other costs that ERCOT

433
00:31:44,280 --> 00:31:49,340
is, you know, we're going to, you're going to talk about capacity contracts later. It's

434
00:31:49,340 --> 00:31:53,720
really important for the market to understand what these costs are going to be because

435
00:31:53,720 --> 00:31:58,980
if they can't hedge against them and plan forward, then those costs will be passed

436
00:31:58,980 --> 00:32:05,740
through to consumers. And especially with LSEs like Munis and co-ops that directly

437
00:32:05,740 --> 00:32:11,880
serve the consumers and retailers that have to bake those prices into their electricity

438
00:32:11,880 --> 00:32:17,580
So, the more in advance and transparent ERCOT can be through the ancillary service methodology

439
00:32:17,580 --> 00:32:23,340
and other market mechanisms, the better for everyone in terms of consumer cost and weighing

440
00:32:23,340 --> 00:32:24,000
in with reliability.

441
00:32:24,720 --> 00:32:26,340
Yes, I agree completely, Commissioner.

442
00:32:26,480 --> 00:32:27,900
I think that's our goal as well.

443
00:32:28,120 --> 00:32:33,360
And the DRRS service is going to be one that will be completed next December.

444
00:32:33,600 --> 00:32:36,500
So it will be largely leveraged into 2025.

445
00:32:36,500 --> 00:32:39,300
So we'll have an opportunity as we work through some of the ancillary service

446
00:32:39,300 --> 00:32:43,380
service methodology changes this year that's already started discussion at the public utility

447
00:32:43,380 --> 00:32:43,840
commission.

448
00:32:44,200 --> 00:32:48,040
That'll be part of the factoring for the incorporation of that new product as it comes online.

449
00:32:48,740 --> 00:32:49,560
Thank you.

450
00:32:52,510 --> 00:32:52,790
Thank you.

451
00:32:52,790 --> 00:32:52,910
Peggy.

452
00:32:53,510 --> 00:32:54,370
Yeah, thank you.

453
00:32:54,470 --> 00:32:54,690
Thank you, Pavel.

454
00:32:55,910 --> 00:33:02,690
So if I recall correctly, this slide says that we had the 10 peak demands in 2023.

455
00:33:02,690 --> 00:33:08,290
If I recall from the last meeting, we had 10 in 2020, summer of 2022.

456
00:33:08,290 --> 00:33:13,470
to. We have 11 new peaks last year and 10 peaks

457
00:33:13,470 --> 00:33:18,450
at this year. Yeah, which is incredible. A lot of growth.

458
00:33:18,670 --> 00:33:24,490
A lot of growth. And what are we projecting? Or do we have good numbers projected like

459
00:33:24,490 --> 00:33:28,810
the next two years out on the economic growth piece? Is it going to continue?

460
00:33:30,090 --> 00:33:36,390
So our estimates, when we disaggregated the demand growth that we saw this summer,

461
00:33:36,390 --> 00:33:42,670
we estimated approximately 60 percent of the demand growth to be coming from economic growth

462
00:33:42,670 --> 00:33:47,890
and roughly 40 percent coming from the higher extreme heat that we experienced this summer.

463
00:33:48,730 --> 00:33:53,530
And so if you look at that kind of that 60 percent of that demand growth, that's around

464
00:33:53,530 --> 00:33:56,970
3,000 megawatts of incremental growth from last year's peak.

465
00:33:57,490 --> 00:34:02,330
And so if we see something, I mean, what we are anticipating is that the pace of growth

466
00:34:02,330 --> 00:34:07,970
growth in Texas will continue at a similar pace as it has in the last few years. There's

467
00:34:07,970 --> 00:34:12,150
really no economic signals to indicate that that's going to change meaningfully. So we're

468
00:34:12,150 --> 00:34:14,850
anticipating that that kind of growth is going to continue going forward.

469
00:34:19,040 --> 00:34:19,380
Any other

470
00:34:19,380 --> 00:34:19,660
questions?

471
00:34:20,860 --> 00:34:21,180
Just one.

472
00:34:21,560 --> 00:34:21,920
Oh, Catherine.

473
00:34:23,380 --> 00:34:28,700
One of the things that I noticed during the summer, particularly from an operational

474
00:34:28,700 --> 00:34:34,880
standpoint, is how important it was to have all the tools in the toolbox, but

475
00:34:34,880 --> 00:34:40,740
but also the flexibility from an operating standpoint to be able to utilize those ancillary

476
00:34:41,400 --> 00:34:48,820
services when they were needed. Could you just maybe comment on kind of going forward

477
00:34:49,180 --> 00:34:55,580
what your vision is for maintaining flexibility and, you know, meeting all of the challenges

478
00:34:55,580 --> 00:35:02,040
that we are trying to kind of manage through this management of change and also to address

479
00:35:02,040 --> 00:35:03,140
it from a risk standpoint?

480
00:35:03,140 --> 00:35:11,080
Yes, it's I think that's a really good way to describe it and flexibility is becoming the most one of the most important

481
00:35:11,080 --> 00:35:17,440
attributes of a reliable grid in today's construct and that's not just in Texas. It's all throughout the US and throughout the

482
00:35:17,440 --> 00:35:24,200
world because flexibility is critical to manage the different drivers of change that are going on on the grid and it's

483
00:35:24,200 --> 00:35:29,320
It's not just the intermittency of certain renewable sources.

484
00:35:29,500 --> 00:35:35,640
It's not just the dynamic nature of the types of loads and large loads that are coming onto

485
00:35:35,640 --> 00:35:36,180
the system.

486
00:35:36,840 --> 00:35:39,960
It is all of those factors combined together.

487
00:35:40,520 --> 00:35:44,740
And in addition, a growing resource and energy storage resources, which are a tremendous

488
00:35:44,740 --> 00:35:48,980
value to the grid, and that we are learning how to leverage more effectively.

489
00:35:48,980 --> 00:35:56,300
And I think of 1186, which is a good example of trying to maximize the flexibility that

490
00:35:56,300 --> 00:36:02,120
we can get from all of the resources and harvesting the energy and energy storage resources fully.

491
00:36:02,560 --> 00:36:06,520
That's something that is important as we look forward to needing more and more flexibility

492
00:36:06,520 --> 00:36:08,140
on the grid going forward.

493
00:36:08,320 --> 00:36:13,200
So that will be something that we'll try to describe as we lay out the ancillary

494
00:36:13,200 --> 00:36:18,280
services, the characteristics of flexibility that they're providing us and the kinds

495
00:36:18,280 --> 00:36:22,280
of variability that they're helping us manage through, and our intention is to continue to

496
00:36:22,280 --> 00:36:26,200
use that portfolio fully in order to be able to manage all those issues.

497
00:36:26,700 --> 00:36:30,420
And I think it's important to note that during the scarcest periods and when we get to the

498
00:36:30,420 --> 00:36:34,380
actual tightest periods on the grid, we deployed all of those resources.

499
00:36:34,640 --> 00:36:39,480
So we get to progressive points as we get to being more and more scarce as the demand

500
00:36:39,480 --> 00:36:45,300
gets closer to the supply levels, and we start to release and utilize all of those

501
00:36:45,300 --> 00:36:50,780
resources to meet the capacity needs of the moment. They're really not designed to be

502
00:36:50,780 --> 00:36:56,680
capacity reserves. They're designed to meet specific operational flexibility needs. But

503
00:36:56,680 --> 00:37:00,620
when you get to a place where it's the only energy that's available, we use it. And we

504
00:37:00,620 --> 00:37:04,420
used all of the ancillary services that were available to us on multiple occasions

505
00:37:04,420 --> 00:37:09,340
in order to maintain reliability on the grid. And so it's critical that we think

506
00:37:09,340 --> 00:37:14,260
about them through that lens of flexibility. But in the end, we will use all of them

507
00:37:14,260 --> 00:37:16,720
as needed in order to serve the energy needs of the grid.

508
00:37:19,120 --> 00:37:21,680
Pamela, just one follow-up comment from earlier.

509
00:37:22,280 --> 00:37:27,500
And Commissioner Nicobo is correct that all markets are struggling with the impact of

510
00:37:27,500 --> 00:37:28,320
intermittent and the like.

511
00:37:28,480 --> 00:37:34,980
And the fundamental problem from all RTOs and ISOs is no one has taken on the impact

512
00:37:34,980 --> 00:37:36,940
of what subsidies do to a market.

513
00:37:37,660 --> 00:37:43,800
And we try to backfill it with ancillary services rather than designing a market

514
00:37:43,800 --> 00:37:47,800
that compensates based on different characteristics, right?

515
00:37:47,940 --> 00:37:50,740
So as long as subsidies are out there and they're out there in a massive way,

516
00:37:50,960 --> 00:37:53,700
as long as we ignore that from a market design standpoint,

517
00:37:54,360 --> 00:37:57,480
this is what we're going to have year after year, more and more ancillary services.

518
00:37:57,740 --> 00:38:03,060
So until we design a market structure that rewards for characteristics,

519
00:38:03,500 --> 00:38:05,160
we're going to continue to have this problem.

520
00:38:05,480 --> 00:38:07,840
I think that's an excellent point. I think there's two factors.

521
00:38:08,060 --> 00:38:12,780
I think the subsidies distort all of the markets through the lens that you're describing.

522
00:38:12,780 --> 00:38:16,760
And in addition, there is EPA regulation that creates a lot of uncertainty.

523
00:38:17,340 --> 00:38:21,420
And that uncertainty makes it very difficult for those who are trying to plan meaningfully

524
00:38:21,420 --> 00:38:25,500
large investments in dispatchable generation that would last for 30 to 40 years.

525
00:38:26,100 --> 00:38:31,340
The economics of how those units could run under differing scenarios of EPA that we talked

526
00:38:31,340 --> 00:38:36,520
about in our August meeting I think is another factor that's also slowing down the balanced

527
00:38:36,520 --> 00:38:40,740
growth of resources on the grid in the U.S., in Texas, as well as throughout the

528
00:38:40,740 --> 00:38:41,300
for us in the country.

529
00:38:43,480 --> 00:38:46,420
Mr. Chairman, just one follow-up thought for Pablo, if I may.

530
00:38:47,520 --> 00:38:50,780
We've been wrestling with this at the Commission for some time,

531
00:38:50,860 --> 00:38:52,740
and I know it's been discussed around the boardroom.

532
00:38:54,080 --> 00:39:01,900
We're trying to make market behavior respond as expected

533
00:39:01,900 --> 00:39:05,740
in the way the ERCOT system is being managed.

534
00:39:05,740 --> 00:39:11,420
and to respond in concert with the way the ERCOT system is being managed.

535
00:39:11,760 --> 00:39:17,360
And the ERCOT system can only be managed according to what the operators are seeing in real time.

536
00:39:17,620 --> 00:39:17,940
That's right.

537
00:39:19,000 --> 00:39:28,020
And without sufficient capacity, the flexibility is lacking for the grid administrator to be confident

538
00:39:28,020 --> 00:39:35,020
that they can meet minute-by-minute needs of the system on any given day.

539
00:39:35,840 --> 00:39:39,000
And I think part of the challenge is, and I think what we're seeing in the numbers,

540
00:39:40,040 --> 00:39:44,960
and maybe the discrepancy between what the IMM publishes

541
00:39:44,960 --> 00:39:48,580
and what ERCOT seeds from their market analytics,

542
00:39:48,920 --> 00:39:51,820
is the market is having trouble anticipating

543
00:39:51,820 --> 00:39:57,500
what the grid administrator believes they're going to need on any given minute, on any

544
00:39:57,500 --> 00:40:04,960
given day. And it is important to have that transparent forecasting, but forecasts can

545
00:40:04,960 --> 00:40:12,180
be wrong, methodologies can be wrong. And it's, we're uncharted waters because we

546
00:40:12,180 --> 00:40:19,900
are constrained by laws, substantive rules of the commission, and ERCOT protocols

547
00:40:19,900 --> 00:40:27,740
which have force, in terms of allowing the administrator the flexibility to adjust in real time

548
00:40:27,740 --> 00:40:33,520
and then giving guidance to the market so that they can anticipate how the control room will react.

549
00:40:34,280 --> 00:40:38,500
And I think that's what we're struggling with at each one of these meetings.

550
00:40:38,820 --> 00:40:44,760
And so all I can say is, Pablo, do you believe in the near term?

551
00:40:44,880 --> 00:40:47,400
And all this is based around market forces.

552
00:40:47,400 --> 00:40:55,220
And that's what all of the markets, PJM, ISO, SPP, even though those are filled with vertically

553
00:40:55,220 --> 00:41:02,120
integrated utilities, those are still predicated on market forces, not controlled by the regulators

554
00:41:02,120 --> 00:41:03,980
of those individual states.

555
00:41:04,660 --> 00:41:06,720
The market dictates how they respond.

556
00:41:07,580 --> 00:41:15,580
Do you believe that we can start publishing some type of guidance outside of our protocols

557
00:41:15,580 --> 00:41:21,620
to give the market a little bit more signals from what because ERCOT is

558
00:41:21,620 --> 00:41:25,740
farther ahead of every other system in the country and frankly every other

559
00:41:25,740 --> 00:41:30,100
system on the planet in terms of dealing with a high intermittent resource mix.

560
00:41:31,240 --> 00:41:36,560
Do you think we can start publishing that type of guidance in the next year

561
00:41:36,560 --> 00:41:41,640
to give a little bit more insight in how you believe you'll need to

562
00:41:41,640 --> 00:41:47,420
managed through the system, as these pressures only increase. And the reason I keep stressing

563
00:41:47,420 --> 00:41:53,300
that is because we're the test case for the country. I mean, FERC is looking to us, DOE

564
00:41:53,300 --> 00:41:59,040
is looking to us, everybody's looking to Texas to sort of manage through this. And everything

565
00:41:59,040 --> 00:42:03,500
you print is going to be important. And I know that's a lot to lay on you, and that's

566
00:42:03,500 --> 00:42:07,200
a lot to lay on your control room, but do you think we can start publishing that

567
00:42:07,200 --> 00:42:11,840
so that it helps smooth out the effects, like I described on that August 25th day,

568
00:42:12,520 --> 00:42:15,760
where we want price responsive behavior in real time.

569
00:42:16,260 --> 00:42:22,240
But the uncertainty is driving everybody just to secure themselves on price well in advance.

570
00:42:22,840 --> 00:42:26,120
I will certainly commit to following up on that question, Commissioner.

571
00:42:26,220 --> 00:42:31,000
I'd love to talk with the team and the control room and to get a sense for what we could put forward

572
00:42:31,000 --> 00:42:34,780
that would be helpful and continue to try to communicate openly

573
00:42:34,780 --> 00:42:40,220
what our intentions, our actions, our forecast, and what our plans are in order to help the

574
00:42:40,220 --> 00:42:44,120
market be better responsive and to be better able to understand what to expect.

575
00:42:44,400 --> 00:42:46,220
So I think it's an excellent question.

576
00:42:46,600 --> 00:42:50,800
I don't want to go too deep right here without having an opportunity to really work with

577
00:42:50,800 --> 00:42:51,680
the operations team.

578
00:42:51,920 --> 00:42:53,980
But I'd love to explore that question further.

579
00:42:54,260 --> 00:42:54,940
So thank you.

580
00:42:56,640 --> 00:42:57,560
Thank you, Pablo.

581
00:42:57,860 --> 00:43:01,060
I just have one quick question in that or really comment.

582
00:43:01,060 --> 00:43:07,120
And that is where the 8 million was erroneously reported.

583
00:43:08,920 --> 00:43:11,360
Not only did Kimba did that deliberately,

584
00:43:11,720 --> 00:43:16,500
that somehow they misinterpreted information that they got from ERCOT.

585
00:43:17,260 --> 00:43:23,900
Is there something that we can do to better communicate that data,

586
00:43:24,100 --> 00:43:28,900
that information, so that it gets reported correctly in the future?

587
00:43:28,900 --> 00:43:34,540
Yeah, I think there is an opportunity. When we start to look at the operational data and

588
00:43:34,540 --> 00:43:39,720
the economic data that gets published, I think there is a good opportunity to try to add

589
00:43:39,720 --> 00:43:46,480
to it an explanation of what it means beyond just what the numbers are. Because the pricing

590
00:43:46,480 --> 00:43:52,080
data is the pricing data. The $8 billion existed in the market. But the interpretation

591
00:43:52,080 --> 00:43:57,760
of that, what it means was misinterpreted and published in many headlines to say cost

592
00:43:57,760 --> 00:43:59,600
went up in the Texas market by $8 billion.

593
00:44:00,540 --> 00:44:06,660
And what that then draws people to conclude is that consumers and businesses paid $8 billion

594
00:44:07,060 --> 00:44:07,860
more this summer.

595
00:44:08,120 --> 00:44:10,820
And that was an incorrect conclusion to draw from that data.

596
00:44:11,160 --> 00:44:16,380
So I think there's definitely an opportunity as we publish this information to really add

597
00:44:16,380 --> 00:44:21,420
to the analysis what is the interpretation, what are the conclusions that we as ERCOT

598
00:44:21,420 --> 00:44:26,560
and as a commission draw from this information and be helpful to the audience, to the

599
00:44:26,560 --> 00:44:30,660
to the general public who really wants to understand what's happening on the electric

600
00:44:30,660 --> 00:44:34,200
grid and what's happening in the ERCOT market. I think that's an excellent point, Paul.

601
00:44:36,410 --> 00:44:40,310
Pablo, I'd like to, but I know you've got more for your report, but I'd like to try

602
00:44:40,310 --> 00:44:46,270
to put a bow on this part of the discussion. The big problem here, I mean, as Commissioner

603
00:44:46,270 --> 00:44:52,970
McAdams said, ERCOT is trying to manage through massive uncertainty, and that's

604
00:44:52,970 --> 00:44:58,890
reason it has all these products that have a cost is trying to make sure that we don't

605
00:44:58,890 --> 00:44:59,550
experience.

606
00:45:00,110 --> 00:45:05,130
The cost of a lack of reliability. So we're paying for reliability in addition to energy.

607
00:45:05,890 --> 00:45:16,050
And the reason we're having to do that is we have gale force winds coming from the federal government primarily that have heavy subsidies for intermittent power, which is hard to dispatch.

608
00:45:16,270 --> 00:45:28,630
And it's irregular in terms of its performance. The second thing is we've got the EPA with four new rules out that impede the development, the continued operation of legacy dispatchable assets

609
00:45:28,630 --> 00:45:33,130
assets, and also impede the construction of new dispatchable assets, which would solve

610
00:45:33,130 --> 00:45:34,390
a lot of this problem.

611
00:45:34,530 --> 00:45:39,910
You've got an EPA rule that increases demand on the grid, or that could increase demand

612
00:45:39,910 --> 00:45:40,250
on the grid.

613
00:45:40,390 --> 00:45:45,250
At the same time, the other four rules are destroying the supply of power available

614
00:45:45,250 --> 00:45:45,890
on the grid.

615
00:45:46,450 --> 00:45:49,850
And then you've got a market construct here in Texas that really doesn't quite

616
00:45:50,510 --> 00:45:56,950
get us to the point where we can incentivize the construction of new dispatchable generation

617
00:45:56,950 --> 00:45:58,690
to offset all those Gale Force wins.

618
00:45:59,530 --> 00:46:02,050
Is that a fair way to characterize where we are now?

619
00:46:02,230 --> 00:46:05,150
You've got all these factors that hurt the ability

620
00:46:05,150 --> 00:46:06,850
to have more dispatchable power,

621
00:46:07,250 --> 00:46:10,050
so that we don't have to worry about this uncertainty

622
00:46:10,050 --> 00:46:13,550
and would have good reliability at an affordable cost.

623
00:46:14,210 --> 00:46:15,770
Bill, I think that characterizes

624
00:46:15,770 --> 00:46:17,930
the supply side of the story very well.

625
00:46:18,110 --> 00:46:20,370
I think that describes the Gale Force wins

626
00:46:20,370 --> 00:46:21,730
that we're trying to work our way through

627
00:46:21,730 --> 00:46:23,710
and that investors and operators

628
00:46:23,710 --> 00:46:25,170
are trying to manage their way through

629
00:46:25,170 --> 00:46:27,850
in terms of what's possible given all of those conditions.

630
00:46:28,530 --> 00:46:33,990
I think when we talk about the long-term future for ERCOT, we have to talk about the supply

631
00:46:33,990 --> 00:46:38,210
as we are in this conversation, but then we also have to look at the role that transmission

632
00:46:38,210 --> 00:46:43,950
is going to play to help to potentially alleviate some of the pressures and the needs in

633
00:46:43,950 --> 00:46:47,650
the system and then also look at the demand side and see what we can do in terms of

634
00:46:47,650 --> 00:46:53,790
a more robust and holistic demand side capability that includes engaging consumers

635
00:46:53,790 --> 00:46:58,170
more in demand response programs, leveraging the potential of large

636
00:46:58,170 --> 00:47:01,610
industrials that have a tremendous opportunity to really manage their

637
00:47:01,610 --> 00:47:07,030
electric usage closely with ERCOT and then also of course, you know, low

638
00:47:07,030 --> 00:47:10,550
hanging fruit around energy efficiency and you know, smart investments on that

639
00:47:10,550 --> 00:47:13,930
front. I think we really need to look at the portfolio over the next few

640
00:47:13,930 --> 00:47:17,030
years in order to try to manage this because as you know, to build a

641
00:47:17,030 --> 00:47:22,150
power plant, you start the concept today and in, you know, two to four

642
00:47:22,150 --> 00:47:25,930
to five years, depending on the type of power plant, you'll have something come online.

643
00:47:26,390 --> 00:47:30,510
And so we really need to be thinking about what's the holistic set of solutions that

644
00:47:30,510 --> 00:47:32,970
we have available to us to manage this growing risk profile.

645
00:47:33,430 --> 00:47:34,290
Those are great points.

646
00:47:34,490 --> 00:47:34,750
Thank you.

647
00:47:37,300 --> 00:47:37,540
Okay.

648
00:47:38,140 --> 00:47:41,240
Thank you for the robust discussion and the questions.

649
00:47:41,580 --> 00:47:43,540
And obviously, this is very important to us.

650
00:47:43,860 --> 00:47:46,080
The economics of the ERCOT market are critical.

651
00:47:46,420 --> 00:47:49,860
They're reflected in our strategic priorities, and it's something that we want to make

652
00:47:49,860 --> 00:47:53,180
sure we're always as clear and as transparent as we can be as to what's happening

653
00:47:53,180 --> 00:47:56,020
and why the pricing is what it is fundamentally.

654
00:47:58,260 --> 00:47:59,640
I have just a couple more slides.

655
00:48:00,380 --> 00:48:01,780
I wanted to just touch briefly,

656
00:48:02,200 --> 00:48:04,160
really a reminder of kind of the key development

657
00:48:04,160 --> 00:48:06,240
and focus areas that we are working on.

658
00:48:06,300 --> 00:48:07,920
We went through many of these in detail

659
00:48:09,080 --> 00:48:10,240
in the August meeting,

660
00:48:10,340 --> 00:48:13,540
so I just want to refresh folks that the ORDC curve,

661
00:48:13,640 --> 00:48:14,300
which I talked about,

662
00:48:14,400 --> 00:48:16,500
that's actually going to be coming online here in November.

663
00:48:17,040 --> 00:48:21,040
And so that will be a new added revenue stream

664
00:48:21,040 --> 00:48:25,880
to try to incentivize and support reliability in the energy-only market.

665
00:48:26,500 --> 00:48:32,220
The DRRS, the new ancillary service is working through the TAC design process right now.

666
00:48:32,340 --> 00:48:34,120
We've had workshops on that.

667
00:48:34,500 --> 00:48:39,280
We intend to be communicating with PUCT staff and commissioners the intended design and

668
00:48:39,280 --> 00:48:43,260
construct for that, bring it back to the board in December on here's the approach

669
00:48:43,260 --> 00:48:47,080
we're going to take, and then we'll start working fervently on the actual development

670
00:48:47,080 --> 00:48:49,460
and coding of this to have it ready to go next December.

671
00:48:50,580 --> 00:48:54,200
PCM, as I talked about, is going through a scoping process right now.

672
00:48:54,300 --> 00:48:59,960
We plan to review that with the PUCT in November and then have a straw man design approach to

673
00:48:59,960 --> 00:49:04,520
bring back to the PUCT and we're working with market participants in January and February

674
00:49:04,520 --> 00:49:07,540
to really earnestly start the design work of PCM.

675
00:49:08,120 --> 00:49:11,040
Our goal is to have that design completed in 2024.

676
00:49:12,380 --> 00:49:17,560
And then the real-time co-optimization initiative, it should be the RTC plus

677
00:49:17,560 --> 00:49:22,540
be because we're incorporating the management of batteries in the state of charge inside

678
00:49:22,540 --> 00:49:28,080
of the real-time co-optimization engine. That is progressing forward as well. We've recently

679
00:49:28,080 --> 00:49:34,380
been focused on the interim state of charge issue in NPR 1186, and assuming if that gets

680
00:49:34,380 --> 00:49:37,800
approved by the board, or I think that was just approved this morning, that will

681
00:49:37,800 --> 00:49:43,080
now go forward and be developed. And then the reliability standard work is progressing

682
00:49:43,080 --> 00:49:48,400
very well. We've brought two different iterations of reliability standards to the Commission

683
00:49:48,400 --> 00:49:54,080
for Discussion. We filed and ran 48 different scenarios. We have a few additional proposed

684
00:49:54,080 --> 00:49:58,280
scenarios that we're going to be running through that add more inverter-based resources

685
00:49:58,280 --> 00:50:01,860
into some of the assumptions to see how the system would perform in that regard.

686
00:50:02,720 --> 00:50:08,300
There was an ERCOT and PUC staff workshop this past Friday to review that current analysis.

687
00:50:08,300 --> 00:50:12,900
And future work related to this is going to be incorporating the value of lost load,

688
00:50:13,060 --> 00:50:19,360
as well as developing a new cost of new entry study so that the costing side of this overall

689
00:50:19,360 --> 00:50:23,840
reliability standard process is as accurate and current as it needs to be.

690
00:50:25,500 --> 00:50:29,320
And then with regard to some of the kind of operating initiatives,

691
00:50:29,440 --> 00:50:33,880
you've been working on nodal operating guide revision request 245.

692
00:50:33,880 --> 00:50:39,260
This is a revision request that's focused on operating requirements for inverter-based resources,

693
00:50:39,560 --> 00:50:42,060
which are wind, solar, and battery resources.

694
00:50:42,980 --> 00:50:46,900
The IEEE organization, the National Engineering Standards Organization,

695
00:50:47,120 --> 00:50:49,600
has developed a standard called IEEE 2800,

696
00:50:50,040 --> 00:50:54,720
which sets essentially a uniform set of technical minimum requirements for the interconnection,

697
00:50:55,040 --> 00:50:57,880
the capability, and the performance of inverter-based resources

698
00:50:57,880 --> 00:51:00,800
that are connected to transmission and sub-transmission systems.

699
00:51:00,800 --> 00:51:04,360
And this is a recommended standard that they have

700
00:51:04,360 --> 00:51:04,620
produced.

701
00:51:04,800 --> 00:51:08,220
It is not required in any regulation or policy in

702
00:51:08,220 --> 00:51:10,240
Texas or outside of Texas at this point.

703
00:51:10,820 --> 00:51:13,920
So we are working through how to take elements of those

704
00:51:13,920 --> 00:51:16,560
standards and bring those into the operating guide

705
00:51:16,560 --> 00:51:19,640
requirements in Texas in order to help manage the

706
00:51:19,640 --> 00:51:22,660
stability and the increasing risks of stability

707
00:51:22,660 --> 00:51:24,120
that happen as more and more inverter based

708
00:51:24,120 --> 00:51:25,620
resources are running on the grid.

709
00:51:26,080 --> 00:51:27,580
We're working with the operators of those

710
00:51:27,580 --> 00:51:30,000
resources as well as with the OEMs that

711
00:51:30,000 --> 00:51:32,120
actually manufacture the underlying assets.

712
00:51:33,900 --> 00:51:40,300
And then large flexible loads, as I've talked about, this is a growing demand area on our

713
00:51:40,300 --> 00:51:40,700
system.

714
00:51:40,740 --> 00:51:42,940
It's something that we have to pay very close attention to.

715
00:51:43,600 --> 00:51:48,940
We're trying to also come up with requirements that ensure that large and flexible loads

716
00:51:48,940 --> 00:51:54,080
can ride through stability events on the grid because the loss of a large load is

717
00:51:54,080 --> 00:51:56,440
very similar to the loss of a generation supply.

718
00:51:56,660 --> 00:51:57,900
It electrically is the same.

719
00:51:57,900 --> 00:52:01,960
And so we really want to make sure that as we have more and more inverter-based resources

720
00:52:01,960 --> 00:52:06,400
and more and more large, flexible loads, the standards and the expectations around how

721
00:52:06,400 --> 00:52:09,000
to operate on the ERCOT grid are clear.

722
00:52:09,580 --> 00:52:15,960
And so that's something that we're working very closely with the developers of those

723
00:52:16,520 --> 00:52:18,320
assets and with the owners of those businesses.

724
00:52:20,750 --> 00:52:23,850
So let me move ahead into our winter preparedness activities.

725
00:52:24,270 --> 00:52:27,770
We'll pause if there's any questions on our current, and there's much more that's

726
00:52:27,770 --> 00:52:28,590
going on beyond these.

727
00:52:28,590 --> 00:52:33,150
These are the kind of the top market focused initiatives that we're going to keep in front

728
00:52:33,150 --> 00:52:37,830
of the board on a regular basis as well as a few of the protocol driven, more protocol

729
00:52:37,830 --> 00:52:40,810
and operating guide important issues that we're focused on.

730
00:52:41,170 --> 00:52:45,830
Mr. Chairman, Pablo, this is a really good look forward list.

731
00:52:46,050 --> 00:52:51,150
Could you just quickly tell us which of those might be implemented in 2024 and which

732
00:52:51,150 --> 00:52:53,350
ones are longer term or intermediate term?

733
00:52:53,990 --> 00:52:54,290
Yes.

734
00:52:54,290 --> 00:52:59,130
As the ORDC will be implemented this year, the DRRS will be implemented at the end of

735
00:52:59,130 --> 00:52:59,670
next year.

736
00:53:00,050 --> 00:53:05,070
Performance credit mechanism is tracking towards a 2026 completion date.

737
00:53:05,690 --> 00:53:08,830
Real-time co-optimization is tracking towards 2026 completion.

738
00:53:09,670 --> 00:53:14,630
The reliability standard should be completed in 2024, sometime in mid-2024.

739
00:53:15,550 --> 00:53:21,950
The Nogar 245, we're hoping to set standards related to that near the end of this year

740
00:53:21,950 --> 00:53:23,150
to the beginning of next year.

741
00:53:23,150 --> 00:53:27,390
and then the compliance dates go out into the future.

742
00:53:27,550 --> 00:53:28,830
And so we'll come back with more data

743
00:53:28,830 --> 00:53:30,770
on exactly how that is laying out,

744
00:53:30,990 --> 00:53:33,790
but that has further out compliance requirements

745
00:53:33,790 --> 00:53:36,250
because of the nature of potential changes

746
00:53:36,250 --> 00:53:38,410
that would be needed to existing assets

747
00:53:38,410 --> 00:53:40,130
to meet the requirements,

748
00:53:40,310 --> 00:53:42,730
as well as considerations for new assets

749
00:53:42,730 --> 00:53:44,950
that are connecting and the requirements for those.

750
00:53:45,050 --> 00:53:47,350
So that has longer term compliance dates.

751
00:53:47,810 --> 00:53:48,970
The reason I'm asking is,

752
00:53:48,970 --> 00:53:55,350
And as of this meeting, we have another board committee, technology and security.

753
00:53:55,570 --> 00:53:55,850
That's right.

754
00:53:56,030 --> 00:54:00,270
And I was wondering which of these might, you know, offline we could discuss which of

755
00:54:00,270 --> 00:54:03,750
these topics might better fit under technology and security.

756
00:54:04,130 --> 00:54:05,190
That's an excellent point.

757
00:54:05,490 --> 00:54:05,990
Excellent point.

758
00:54:06,610 --> 00:54:10,670
And then ideally we'd come to some agreement on the large flexible loads on what those

759
00:54:10,670 --> 00:54:12,850
kind of standards would be sometime in 2024 as well.

760
00:54:14,910 --> 00:54:19,070
I did want to mention that one of the things that ARCOT did was put together

761
00:54:19,070 --> 00:54:24,430
on those top five, the big five, I guess you call it, a workflow diagram as well as you

762
00:54:24,430 --> 00:54:29,370
came to the Commission and gave summaries on each of those initiatives. And so it's something

763
00:54:29,370 --> 00:54:36,150
that you have already kind of put in place, if you will, milestones, and you are tracking.

764
00:54:36,410 --> 00:54:40,590
And that is, of course, something that was filed with the Commission and continues to

765
00:54:40,590 --> 00:54:46,910
be updated by ERCOT so very much. You know, I think a good work effort in order

766
00:54:46,910 --> 00:54:52,070
to keep the commission informed as well as the public informed in terms of the progress

767
00:54:52,070 --> 00:54:56,650
that we're making and the milestones that we're meeting on those very important five

768
00:54:56,650 --> 00:54:57,510
top objectives.

769
00:54:57,970 --> 00:54:58,810
Thank you, Chair.

770
00:54:59,550 --> 00:55:01,690
That Chair Jackson, that's exactly right.

771
00:55:01,810 --> 00:55:05,430
So we're wanting to try to keep everybody informed as we progress and it also maintains

772
00:55:05,430 --> 00:55:09,530
the history of kind of the genesis for many of these projects as well as the milestones

773
00:55:09,530 --> 00:55:13,630
as they are achieved through that kind of tracking process and workflow document.

774
00:55:13,630 --> 00:55:16,030
So that is available and we'll keep that current.

775
00:55:19,380 --> 00:55:24,780
So as we look ahead to the winter, as we said before the summer even ends, we do begin preparing

776
00:55:24,780 --> 00:55:28,220
for the next peak season, which is going to be the winter season.

777
00:55:29,540 --> 00:55:36,100
One of the things that was remarkable in this preparation year is that we, as we

778
00:55:36,100 --> 00:55:42,300
looked at some of the analysis that came through the new monthly operational assessment

779
00:55:42,300 --> 00:55:48,180
of resource adequacy, which used to be done seasonally was the CERA report where we would

780
00:55:48,180 --> 00:55:53,420
look ahead at the subsequent season and we would put together and do modeling to assess

781
00:55:53,420 --> 00:55:59,620
different types of weather and resource availability scenarios in order to determine what kind of

782
00:55:59,620 --> 00:56:03,780
risks the system would be managing through under differing scenarios.

783
00:56:04,240 --> 00:56:09,160
It wasn't a forecast of expected outcomes, but it was really more modeling what our

784
00:56:09,160 --> 00:56:10,840
potential outcomes that could occur.

785
00:56:10,840 --> 00:56:16,600
We have moved that now to a monthly process, which allows us to be more granular and closer

786
00:56:16,600 --> 00:56:20,100
to the period in which the operating conditions will be occurring.

787
00:56:20,460 --> 00:56:25,580
And we're also focusing on being more granular when it comes to the risk assessments on an

788
00:56:25,580 --> 00:56:26,460
hourly basis.

789
00:56:26,920 --> 00:56:32,180
So now we look at a month, and we look at each of the operating hours in that month,

790
00:56:32,420 --> 00:56:37,140
and we run probabilistic models to assess what are the risks at each of the hours

791
00:56:37,140 --> 00:56:42,940
in those months under thousands of different weather scenarios and load and supply scenarios.

792
00:56:43,620 --> 00:56:48,860
And so that first Moira report was published for December in October.

793
00:56:49,240 --> 00:56:56,040
And so that report highlighted that the increased demand that we have seen on the grid since

794
00:56:56,040 --> 00:57:01,340
last year created higher probabilities of risk during certain hours in the winter,

795
00:57:01,720 --> 00:57:05,200
higher probabilities of emergency operations during peak hours.

796
00:57:05,200 --> 00:57:09,880
And those peak hours in the winter are very different than the peak hours in the summer.

797
00:57:10,480 --> 00:57:13,360
In the summer, the peaks are during the afternoon at the peak heat.

798
00:57:13,780 --> 00:57:19,820
And as I noted, the additional resources that have come onto the grid are very well-suited to help manage those peaks,

799
00:57:19,980 --> 00:57:21,280
the additional solar resources.

800
00:57:21,920 --> 00:57:26,800
Additionally, the energy storage resources are very helpful in managing the solar ramp.

801
00:57:27,180 --> 00:57:30,720
And so the more energy storage resources that come onto the Eurekaught grid,

802
00:57:30,720 --> 00:57:35,900
the more risk mitigation we'll see during those ramp periods of the peak heats in the summer to the evenings.

803
00:57:36,600 --> 00:57:40,980
The winter is very different. The peaks in the winter tend to occur early in the morning

804
00:57:40,980 --> 00:57:44,280
as everybody is getting up for the day and starting to use energy,

805
00:57:44,540 --> 00:57:46,920
but it's still very cold from an overnight cold winter.

806
00:57:47,260 --> 00:57:51,340
So there isn't solar energy available to meet those peaks during the winter.

807
00:57:51,940 --> 00:57:55,940
And then sometimes we'll have peaks in the evenings as everybody comes home

808
00:57:55,940 --> 00:57:59,060
and energy consumption goes back up again and the sun has set

809
00:57:59,060 --> 00:58:01,020
and it starts to get cold in the evening

810
00:58:01,500 --> 00:58:03,340
that we can see secondary peaks again

811
00:58:03,340 --> 00:58:04,240
in that period of time.

812
00:58:04,600 --> 00:58:06,600
So we don't get the benefit of what has been

813
00:58:06,600 --> 00:58:09,140
one of the fastest growing resources on the Eirikot grid

814
00:58:09,140 --> 00:58:12,600
which is solar energy resources during the winter peaks.

815
00:58:13,020 --> 00:58:15,360
And that's why the profile looks a little different

816
00:58:15,360 --> 00:58:17,100
in the winter than it does in the summer.

817
00:58:17,560 --> 00:58:19,400
And so as we did this analysis and saw

818
00:58:19,400 --> 00:58:20,840
during those early morning hours

819
00:58:20,840 --> 00:58:24,780
and in the evening hours, that higher elevated risk,

820
00:58:25,100 --> 00:58:26,620
we wanted to do everything we could

821
00:58:26,620 --> 00:58:31,340
in our portfolio of tools to try to manage and mitigate the potential risks of being an

822
00:58:31,340 --> 00:58:36,660
emergency operation. And so we have a protocol that allows us to look ahead at the next season.

823
00:58:36,940 --> 00:58:42,380
And if we think there could be a risk of elevated emergency operations, then we can

824
00:58:42,380 --> 00:58:49,160
issue an RFP to procure capacity, both supply capacity and or demand response capacity.

825
00:58:49,500 --> 00:58:54,680
And so it's open to both. And on the supply side, it really is focused on capacity

826
00:58:54,680 --> 00:58:58,320
that has either recently retired or recently mothballed

827
00:58:58,320 --> 00:58:59,920
that could potentially come back.

828
00:59:00,520 --> 00:59:03,060
And then on the energy, on the demand response side,

829
00:59:03,360 --> 00:59:06,340
it's really open to any net new demand response

830
00:59:06,340 --> 00:59:08,300
that could be made available during that season.

831
00:59:08,680 --> 00:59:10,180
That could be at the consumer level,

832
00:59:10,400 --> 00:59:12,080
all the way up through the industrial level.

833
00:59:12,360 --> 00:59:13,840
But it has to be net new,

834
00:59:14,080 --> 00:59:15,360
something that hasn't been part

835
00:59:15,360 --> 00:59:17,260
of our existing demand response programs,

836
00:59:17,620 --> 00:59:20,500
or part of existing retail electric provider

837
00:59:20,500 --> 00:59:23,060
or TDU demand response programs.

838
00:59:23,060 --> 00:59:26,920
because in that case, it wouldn't be net new and we would be basically procuring the same

839
00:59:26,920 --> 00:59:32,620
thing twice. So it wouldn't incrementally help the system, or not procuring it twice,

840
00:59:32,720 --> 00:59:38,280
but it wouldn't be an incremental help to the system. So that is the nature of why we

841
00:59:38,280 --> 00:59:44,460
did this RP for capacity. The 3,000 megawatt number came out of an analysis that said what

842
00:59:44,960 --> 00:59:49,380
would it take in terms of having that additional capacity during all of the different model

843
00:59:49,380 --> 00:59:54,920
runs that we ran. And in order to bring the risk of EEA operations, emergency operations

844
00:59:54,920 --> 01:00:00,000
down to below 10 percent. We use 10 percent as a threshold. It's the marker that

845
01:00:00,000 --> 01:00:04,340
So we use when we communicate with NERC, when we do our winter readiness assessment with NERC,

846
01:00:04,440 --> 01:00:10,080
if we are above a 10% risk profile, it comes out as a elevated risk, if we are below, it

847
01:00:10,080 --> 01:00:15,480
is considered a low risk. And so we wanted to try to drive that risk profile down to sub-ten

848
01:00:15,480 --> 01:00:21,180
to be low. And we used winter conditions that reflected similar conditions to last year's

849
01:00:21,180 --> 01:00:26,200
winter storm, Elliott, as an extreme condition to be able to manage through. And we used

850
01:00:26,200 --> 01:00:30,800
Elliott because Elliott was the type of storm. If you look back over time, there's been around

851
01:00:30,800 --> 01:00:35,860
four or so storms in the last 14 years or so that have been either similar or worse than

852
01:00:35,860 --> 01:00:40,920
a winter storm, Elliott. So it's not something that's highly improbable to occur. And so

853
01:00:40,920 --> 01:00:44,360
we thought it reasonable to try to make sure that the risk profile of the system

854
01:00:44,360 --> 01:00:49,460
was low during an event like that. And so those were the combination of factors

855
01:00:49,460 --> 01:00:53,420
as we did the analysis that led us to come to the conclusion that if we could get

856
01:00:53,420 --> 01:00:57,980
around 3,000 additional megawatts. It would help bring that risk profile down to two below

857
01:00:57,980 --> 01:01:02,980
10. In addition, and I'll open up for questions here. I'll just run through a couple things

858
01:01:02,980 --> 01:01:09,260
here because not too much is net new. In addition, we've got the weatherization, the new weatherization

859
01:01:09,260 --> 01:01:13,740
standards are going to go into effect this winter. Those standards apply to geographic

860
01:01:13,740 --> 01:01:21,440
parts of Texas to specific geographies and have actual temperature resiliency requirements

861
01:01:21,440 --> 01:01:25,460
for transmission and generation operators in each of those regions.

862
01:01:25,660 --> 01:01:29,480
And so as we do inspections, the requirements against what we're going to be inspecting

863
01:01:29,480 --> 01:01:32,460
will be looking at those specific requirements for the geography.

864
01:01:32,780 --> 01:01:36,020
So if a unit, if a power plant is up in the northern part of Texas,

865
01:01:36,480 --> 01:01:39,820
it'll have to be able to withstand colder temperatures because of that geography

866
01:01:39,820 --> 01:01:43,040
than a power plant would down in the Corpus Christi area of Texas.

867
01:01:43,520 --> 01:01:48,340
And so the weatherization standard is now tuned more finely to the weather risks in those regions.

868
01:01:48,340 --> 01:01:53,540
And so then the weatherization program will be assessing the weatherization itself against

869
01:01:53,540 --> 01:01:54,380
those new standards.

870
01:01:55,100 --> 01:02:00,160
And then one last thing I wanted to point out is that in NPRR 1176, this is actually

871
01:02:00,160 --> 01:02:06,300
changing the levels at which different emergency level operations are going to be established.

872
01:02:06,980 --> 01:02:11,980
And the reason we look at this, we have to run studies on the overall stability of

873
01:02:11,980 --> 01:02:12,360
the grid.

874
01:02:12,640 --> 01:02:17,400
And when you get down to very low levels of physical reserve capacity to be able

875
01:02:17,400 --> 01:02:22,600
to meet demand to PRC levels down in the 1,000 and 2,000 range where you're very, very

876
01:02:22,600 --> 01:02:27,200
close in a very scarce period, you have to run studies to make sure that the grid could

877
01:02:27,200 --> 01:02:33,800
withstand the loss of a large unit at that time and not trigger under frequency load

878
01:02:33,800 --> 01:02:35,780
shed if that situation were to occur.

879
01:02:36,380 --> 01:02:40,560
And so you look at the various stability characteristics of the grid during those

880
01:02:40,560 --> 01:02:45,960
low reserve periods of time and then run models to make sure that the grid

881
01:02:45,960 --> 01:02:48,160
could withstand that type of a change.

882
01:02:48,320 --> 01:02:52,720
And what we found, the last time we ran this model, I believe it was in 2014, that set the

883
01:02:52,720 --> 01:02:55,120
current EEA levels for the IRICOT grid.

884
01:02:55,580 --> 01:02:59,180
We have rerun those models with the current grid that we have in place today, which has

885
01:02:59,860 --> 01:03:04,880
significantly more inverter-based resources on the grid, which have different characteristics

886
01:03:04,880 --> 01:03:06,300
in how they support inertia.

887
01:03:06,920 --> 01:03:12,740
And when we ran some of those models, we realized we needed to be able to have

888
01:03:12,740 --> 01:03:18,640
that EEA-1 level at 1,500 megawatts in order to maintain stability at that level.

889
01:03:18,860 --> 01:03:23,540
And so if the grid had to ever get into a controlled load shed, we'd have to restore

890
01:03:23,540 --> 01:03:28,740
to 1,500 megawatts through load shed in order to be able to maintain stability on DERICOT

891
01:03:28,740 --> 01:03:29,020
grid.

892
01:03:29,400 --> 01:03:34,320
And then we spaced out the subsequent EEA levels above that at 500 megawatt increments.

893
01:03:34,600 --> 01:03:39,720
So at 2,000 would be an EEA level 2, and at 2,500 would be an EEA level 3.

894
01:03:40,400 --> 01:03:41,480
I'm sorry, I have the backwards.

895
01:03:41,480 --> 01:03:46,260
3 is at 1,500, 2 is at 2,001, would be at 2,500.

896
01:03:47,340 --> 01:03:51,720
So that change is going to be going into effect in November for the IRICOT grid, and that's

897
01:03:51,720 --> 01:03:57,380
based on recent studies to ensure we can operate reliably under very tight capacity conditions.

898
01:03:59,600 --> 01:04:00,280
I'll pause there.

899
01:04:00,440 --> 01:04:03,080
I think we've talked about many of these other factors, and I know there's some

900
01:04:03,080 --> 01:04:03,740
questions on this.

901
01:04:05,200 --> 01:04:10,140
Yes, so, Pablo, I know we're going to spend some time exploring further the RFP for

902
01:04:10,140 --> 01:04:13,880
capacity at our winter preparedness workshop on Friday, so I don't want to delve too deep.

903
01:04:14,060 --> 01:04:20,980
But I think one question out there that I've heard is how does the reliability standard

904
01:04:20,980 --> 01:04:26,540
that we're currently working on right now, ERCOT to run 48 scenarios on and we're trying

905
01:04:26,540 --> 01:04:33,140
to establish, marry up with the Mora that is now a monthly report, how are those

906
01:04:33,140 --> 01:04:38,080
two reports or the standard going to sync up with the Mora because is ERCOT to identify

907
01:04:38,080 --> 01:04:40,740
by 10% as a threshold to take action,

908
01:04:42,180 --> 01:04:44,180
how is this all going to sync up together?

909
01:04:44,480 --> 01:04:47,760
And we can further talk about it some more,

910
01:04:47,800 --> 01:04:48,460
but I'm just wondering,

911
01:04:48,580 --> 01:04:49,960
because there's a lot of confusion out there

912
01:04:49,960 --> 01:04:53,020
as to how everything aligns together.

913
01:04:53,960 --> 01:04:55,620
So thank you for bringing up the workshop.

914
01:04:55,740 --> 01:04:56,920
That's one of the things I did want to bring up.

915
01:04:57,000 --> 01:04:59,220
So this Friday there will be a workshop

916
01:04:59,220 --> 01:05:00,720
at the Public Utility Commission,

917
01:05:00,880 --> 01:05:02,800
an all day workshop where we'll be delving

918
01:05:02,800 --> 01:05:05,860
into the winter preparedness across the industry.

919
01:05:05,960 --> 01:05:06,820
And so we'll have participants

920
01:05:06,820 --> 01:05:11,000
investments from across the sector, including ERCOT, talking about the various activities

921
01:05:11,000 --> 01:05:14,660
that are taking place in order to make sure we're doing everything to manage the reliability

922
01:05:14,660 --> 01:05:18,620
of the grid this winter. In addition, we'll go deep into Q&A and questions around the

923
01:05:18,620 --> 01:05:25,240
R&P for capacity, which is relatively new. So when you think about the reliability standard,

924
01:05:25,780 --> 01:05:30,160
what it's going to do is it's going to create essentially a target. And it's going

925
01:05:30,160 --> 01:05:34,520
to have value through a couple of different time periods. You'll be able to assess

926
01:05:34,520 --> 01:05:37,220
based on the current resource mix that exists today

927
01:05:37,220 --> 01:05:40,220
and the assumptions of weather conditions

928
01:05:40,220 --> 01:05:42,600
and performance of those assets today.

929
01:05:43,080 --> 01:05:44,680
So you'll be able to have a current state view,

930
01:05:44,800 --> 01:05:46,400
are we today operating in a way

931
01:05:46,400 --> 01:05:48,920
that should meet this reliability standard when it's set?

932
01:05:49,420 --> 01:05:51,100
And then it'll have value in a future period

933
01:05:51,100 --> 01:05:55,020
because that's really the, I think, the most important value

934
01:05:55,020 --> 01:05:57,660
because you need to look ahead to see how the grid needs

935
01:05:57,660 --> 01:05:59,820
to either change or stay the same

936
01:05:59,820 --> 01:06:01,140
in order to be able to deliver

937
01:06:01,140 --> 01:06:03,400
that reliability standard in the future

938
01:06:03,400 --> 01:06:08,720
and it needs to help support the market signals that are going to be necessary to meet that

939
01:06:08,720 --> 01:06:10,300
reliability standard in the future.

940
01:06:10,920 --> 01:06:16,660
And so we will use that standard when it's completed to run models that assume what the

941
01:06:16,660 --> 01:06:21,380
resource mix will look like in three years and then determine whether it will be able

942
01:06:21,380 --> 01:06:26,980
to meet that reliability standard to help the market design parameters be established

943
01:06:26,980 --> 01:06:29,400
in such a way that helps us get to that in the future.

944
01:06:29,400 --> 01:06:35,020
The Mora is a little bit different in that the Mora is looking at two months ahead and

945
01:06:35,020 --> 01:06:36,900
it's really a scenario modeling exercise.

946
01:06:37,800 --> 01:06:42,120
And so what it's going to do is it's going to take the best information we have right

947
01:06:42,120 --> 01:06:47,120
now with the current resource mix and it's going to run the probabilities of entering

948
01:06:47,120 --> 01:06:50,500
different levels of scarcity as a grid.

949
01:06:50,960 --> 01:06:55,160
And you can look at that independently from the reliability standard because it will

950
01:06:55,160 --> 01:07:00,020
use similar modeling, the reliability standard will take the same set of resources, run it

951
01:07:00,020 --> 01:07:05,040
through a lot of scenarios and find how many outliers there are to the reliability standard

952
01:07:05,040 --> 01:07:05,700
that's established.

953
01:07:06,280 --> 01:07:11,560
So we could leverage and use parameters in the reliability standard as part of the

954
01:07:11,560 --> 01:07:15,880
Mora to describe the outcomes of various scenarios, and that's something we haven't

955
01:07:15,880 --> 01:07:19,600
talked about yet, how we would potentially integrate those two components.

956
01:07:19,700 --> 01:07:23,700
But they could be integrated because they'll be using very similar modeling tools, and

957
01:07:23,700 --> 01:07:31,240
And the objective is to define what are the characteristics of the grid under many different

958
01:07:31,240 --> 01:07:31,740
scenarios.

959
01:07:32,620 --> 01:07:32,860
Yeah.

960
01:07:33,060 --> 01:07:37,880
And one interesting point, because I've been thinking about this myself, is right now arguably

961
01:07:37,880 --> 01:07:41,400
you could say we are meeting the reliability standard, the one in 10, right, currently

962
01:07:41,400 --> 01:07:42,320
right now in our market.

963
01:07:43,300 --> 01:07:47,400
However, now we have a more report that say we have a higher than 10 percent chance

964
01:07:47,400 --> 01:07:52,300
if we experience weather like winter storm Elliott with our load growth being higher,

965
01:07:52,300 --> 01:07:55,280
that we could end up in emergency conditions

966
01:07:55,280 --> 01:07:56,400
and ERCOT has taken actions.

967
01:07:56,960 --> 01:07:58,800
So there could be a disconnect.

968
01:07:59,240 --> 01:08:01,960
And it's got to be integrated because in one hand,

969
01:08:02,020 --> 01:08:04,680
if you're meeting your liability standard that we've set,

970
01:08:05,260 --> 01:08:09,480
but you're more as showing that we're hitting that 10%

971
01:08:09,480 --> 01:08:11,460
and it's triggering ERCOT action,

972
01:08:11,960 --> 01:08:14,620
then there's got to be some kind of integration

973
01:08:14,620 --> 01:08:17,320
because there could be a potential disconnect

974
01:08:17,320 --> 01:08:21,000
and really trying to meet their overall reliability standards

975
01:08:21,000 --> 01:08:25,620
it's going to require regulatory certainty and an established reliability standard.

976
01:08:26,180 --> 01:08:29,880
But if we have a sort of a discrete report that's being issued out on a monthly basis

977
01:08:29,880 --> 01:08:34,180
that's triggering actions, we just got to be cognizant of how they marry up together.

978
01:08:34,680 --> 01:08:35,260
It's an observation.

979
01:08:35,580 --> 01:08:35,760
Yeah.

980
01:08:35,920 --> 01:08:39,600
And I think the key thing that we'll need to work on to be very clear on is being

981
01:08:39,600 --> 01:08:43,980
able to describe the temporal nature of each of these different reports that we have.

982
01:08:44,080 --> 01:08:47,380
And so what is the time value of the Moira report?

983
01:08:47,500 --> 01:08:49,940
It's giving us a perspective two months down the road.

984
01:08:49,940 --> 01:08:54,860
The reliability standard is really looking at points in time, like a spot point in time

985
01:08:54,860 --> 01:08:56,020
and a future point in time.

986
01:08:56,240 --> 01:08:59,880
So the time periods are really relevant to this in order to help understand what the data

987
01:08:59,880 --> 01:09:00,460
is communicating.

988
01:09:01,140 --> 01:09:03,280
And so we need to be very clear as we publish these reports.

989
01:09:03,720 --> 01:09:04,460
This is the time.

990
01:09:04,640 --> 01:09:06,940
This is what we should conclude from it or draw from it.

991
01:09:07,120 --> 01:09:11,400
And it's reasonable to conclude that, yes, you could have a system that has at over

992
01:09:11,400 --> 01:09:15,800
a 10-year period a certain characteristic, but in a future month at an extreme weather

993
01:09:15,800 --> 01:09:17,560
scenario could have operational challenges.

994
01:09:17,560 --> 01:09:20,480
And those are the discrepancies we need to be able to describe.

995
01:09:23,410 --> 01:09:28,530
Mr. Chairman, Pablo, if I may, just a question on weatherization.

996
01:09:28,910 --> 01:09:33,430
Weatherization was one of, I believe, one of the most successful policy collaborations

997
01:09:33,430 --> 01:09:39,410
that ERCOT has had with PUC for quite some time in terms of developing a standard

998
01:09:39,410 --> 01:09:46,530
that would be adhered to by our generation facilities and wires companies as well as inspected to.

999
01:09:46,530 --> 01:09:53,630
In your mind, for the purposes of this upcoming winter, do you have a benchmark of what you

1000
01:09:53,630 --> 01:09:55,590
consider would be a successful outcome?

1001
01:09:55,810 --> 01:10:00,690
Because again, the point of weatherization standards is to drive beneficial behavior

1002
01:10:00,690 --> 01:10:08,250
on the system, reduce overall weatherization related outages for the season.

1003
01:10:08,930 --> 01:10:13,210
What in your view is a good benchmark that the board and the commission can look at

1004
01:10:13,210 --> 01:10:14,330
for this upcoming winter?

1005
01:10:14,330 --> 01:10:16,150
Yeah, that's a great question.

1006
01:10:16,330 --> 01:10:19,570
So there's, I think, a couple of things that we'll want to talk about as we go through

1007
01:10:19,570 --> 01:10:21,170
the winter and then in a post analysis.

1008
01:10:21,450 --> 01:10:27,170
We'll want to take a look at what was the average kind of uptime or forced outage

1009
01:10:27,170 --> 01:10:30,030
rate for particular units and how has that changed over time.

1010
01:10:30,390 --> 01:10:33,570
So we can look at the performance of those units in prior winters and we can look at

1011
01:10:33,570 --> 01:10:34,910
the performance of those units this winter.

1012
01:10:35,290 --> 01:10:39,850
And we can see if there were extreme weather periods, how did it perform during those

1013
01:10:39,850 --> 01:10:40,530
weather periods?

1014
01:10:40,530 --> 01:10:45,230
and so actual outcomes in terms of uptime and forced outages I think is a great metric

1015
01:10:45,230 --> 01:10:47,450
for us to do in an ex post manner.

1016
01:10:48,030 --> 01:10:51,390
The other thing I think the real value in this is the learning and the collaboration

1017
01:10:51,390 --> 01:10:51,950
that happens.

1018
01:10:52,090 --> 01:10:58,670
So as we do the weatherization, actually the kind of what we find and then the changes

1019
01:10:58,670 --> 01:11:02,790
and the cures that are done as a result of finding components or things that are

1020
01:11:02,790 --> 01:11:03,810
not done.

1021
01:11:04,030 --> 01:11:06,930
So that learning and sharing that learning across the communities, whether it's on

1022
01:11:06,930 --> 01:11:09,610
the generation or the wire side, I think is a real value here.

1023
01:11:09,610 --> 01:11:11,550
So I think I'd like to do a recap afterwards.

1024
01:11:11,870 --> 01:11:13,310
When we complete the inspection period,

1025
01:11:13,410 --> 01:11:14,590
what did we find during the inspections?

1026
01:11:15,190 --> 01:11:17,050
How was that shared across the industry?

1027
01:11:17,810 --> 01:11:19,770
And does that continue to elevate the quality

1028
01:11:19,770 --> 01:11:21,470
of the weatherization program going forward?

1029
01:11:21,830 --> 01:11:23,130
Because I agree 100% with you.

1030
01:11:23,190 --> 01:11:25,110
I think it was a very well done collaboration.

1031
01:11:25,410 --> 01:11:27,550
And I think it's probably one of the most effective changes

1032
01:11:27,550 --> 01:11:29,190
we've done to ensure reliability

1033
01:11:29,190 --> 01:11:30,190
during the winter periods.

1034
01:11:33,520 --> 01:11:34,140
Navaraj, you had a?

1035
01:11:34,620 --> 01:11:34,900
Pablo,

1036
01:11:37,150 --> 01:11:38,670
I would like to ask you

1037
01:11:38,670 --> 01:11:42,050
about the 10% thing you mentioned earlier.

1038
01:11:42,050 --> 01:11:51,890
Is that a knock already defined, that 10% rule, or is that something ACOT protocol defined

1039
01:11:51,890 --> 01:11:53,190
that 10%?

1040
01:11:53,730 --> 01:11:55,670
I might need to phone a friend on that one.

1041
01:11:55,750 --> 01:12:01,410
I don't know if Dan or Woody, if either of you know whether that threshold is something

1042
01:12:01,410 --> 01:12:06,990
that has just been historically how we've communicated risk through the NERC reports

1043
01:12:06,990 --> 01:12:08,730
or if that's something that's defined by NERC.

1044
01:12:10,980 --> 01:12:12,120
I don't know for sure.

1045
01:12:12,120 --> 01:12:14,040
We can follow up on that for you, Naraj.

1046
01:12:14,280 --> 01:12:14,720
Thank you.

1047
01:12:14,880 --> 01:12:15,440
One more question.

1048
01:12:15,640 --> 01:12:20,620
I think Pablo was looking at a one in ten year event was the threshold that we were using.

1049
01:12:20,940 --> 01:12:21,380
Excuse me?

1050
01:12:21,540 --> 01:12:22,660
A one in ten year event.

1051
01:12:22,860 --> 01:12:23,680
That was the ten percent.

1052
01:12:25,300 --> 01:12:27,100
That was the basis for the ten percent?

1053
01:12:27,800 --> 01:12:33,160
My question is, is it an org defined rule or is the ACOT protocol defines that rule?

1054
01:12:37,020 --> 01:12:38,340
We'll follow up on that question.

1055
01:12:38,660 --> 01:12:38,920
Thank you.

1056
01:12:39,260 --> 01:12:40,240
Second question is,

1057
01:12:43,000 --> 01:12:44,500
what is the expected budget

1058
01:12:44,900 --> 01:12:46,000
to implement this?

1059
01:12:47,240 --> 01:12:48,160
If you have-

1060
01:12:48,160 --> 01:12:48,560
The expected budget?

1061
01:12:48,900 --> 01:12:49,140
Yes.

1062
01:12:49,280 --> 01:12:50,140
To implement which?

1063
01:12:51,600 --> 01:12:53,360
This 3000 megawatt of reserve.

1064
01:12:54,380 --> 01:12:56,900
We have not set a budget for this.

1065
01:12:57,040 --> 01:12:58,840
What we have done is issued an RFP

1066
01:12:58,840 --> 01:13:01,920
in order to understand what kind of resources

1067
01:13:01,920 --> 01:13:05,240
might be able to perform on a short notice like this.

1068
01:13:05,640 --> 01:13:08,700
And then we're going to take all of those bids

1069
01:13:08,700 --> 01:13:13,780
and we'll review what we with openly so that everybody can see these are the kinds of bids

1070
01:13:13,780 --> 01:13:14,400
that came in.

1071
01:13:14,700 --> 01:13:19,840
And then we'll have to make a judgment call on what is a reasonable cost to pay for incremental

1072
01:13:19,840 --> 01:13:22,720
reliability or incremental capacity that comes in.

1073
01:13:22,820 --> 01:13:27,600
So there's not a set budget for this process we haven't established minimums or caps at

1074
01:13:27,600 --> 01:13:28,280
this point in time.

1075
01:13:28,400 --> 01:13:32,340
And we're really, this is one of the first times we've done this and I think 2011

1076
01:13:32,340 --> 01:13:38,080
is the last time that IRCOT did an RFP for capacity like this and so we don't have

1077
01:13:38,080 --> 01:13:41,800
have a good history of understanding what kind of different bids will be seen through

1078
01:13:41,800 --> 01:13:42,100
this.

1079
01:13:42,780 --> 01:13:42,920
Yeah.

1080
01:13:43,120 --> 01:13:51,280
Because the reason why I ask is the reliability is something we are really concerned at the

1081
01:13:51,280 --> 01:13:54,500
meantime the cost for consumer that matters.

1082
01:13:55,540 --> 01:13:55,820
It does.

1083
01:13:56,040 --> 01:13:56,800
It absolutely does.

1084
01:13:56,920 --> 01:13:57,160
We agree.

1085
01:13:57,820 --> 01:13:58,100
That's right.

1086
01:13:58,160 --> 01:14:01,840
We didn't predispose it because we really were unsure what kind of bidding offers

1087
01:14:01,840 --> 01:14:02,700
we were going to see.

1088
01:14:02,780 --> 01:14:06,280
And so we wanted to understand that first and then try to make the best decision

1089
01:14:06,280 --> 01:14:07,760
with the information once we had it.

1090
01:14:11,830 --> 01:14:12,670
Any other questions?

1091
01:14:14,090 --> 01:14:14,690
Thank you.

1092
01:14:14,810 --> 01:14:15,210
Great question.

1093
01:14:17,970 --> 01:14:18,330
All right.

1094
01:14:18,490 --> 01:14:22,210
Well, then I'll just close like I'd like to in each of my reports

1095
01:14:22,210 --> 01:14:23,190
with a thank you.

1096
01:14:23,290 --> 01:14:25,130
I'd like to thank two groups in particular.

1097
01:14:25,650 --> 01:14:27,190
First, the ERCOT control room.

1098
01:14:27,530 --> 01:14:29,850
This summer was a stressful time.

1099
01:14:30,370 --> 01:14:33,770
They operated calmly and professionally

1100
01:14:33,770 --> 01:14:36,130
throughout some of the most difficult periods.

1101
01:14:36,270 --> 01:14:38,430
I think the ERCOT control room

1102
01:14:38,430 --> 01:14:39,810
has experienced during a summer period.

1103
01:14:39,810 --> 01:14:43,710
And so I want to thank Jimmy and Daryl and Brian, they're the leadership of that group

1104
01:14:43,710 --> 01:14:48,510
and there's over 50 operators that are in there 24 hours a day, seven days a year, every

1105
01:14:48,510 --> 01:14:53,210
holiday, every evening, making sure that grid reliability is delivered to Texas.

1106
01:14:53,990 --> 01:14:56,530
And then I want to thank those that led the development of the Moora Report.

1107
01:14:56,530 --> 01:14:59,830
support. It was a pretty significant change to shift over from our.

1108
01:15:00,000 --> 01:15:04,020
Report to the more report, and this team here really led that development, and so a big

1109
01:15:04,020 --> 01:15:07,800
thanks to that, because I think it's going to help with more transparent and more actionable

1110
01:15:07,800 --> 01:15:12,440
and more helpful information as to the risk profile of the grid on a going forward basis.

1111
01:15:13,480 --> 01:15:17,340
So thank you all for your questions. Thanks for the discussion today. And with that,

1112
01:15:17,400 --> 01:15:20,220
I'll conclude my report unless there's any final comments or questions.

1113
01:15:21,400 --> 01:15:23,780
Thank you, Pablo. Great report.

1114
01:15:27,350 --> 01:15:29,790
That was a great 15-minute report, by the way.

1115
01:15:33,560 --> 01:15:38,900
Next is Agenda Item 6, Summer 2023 Operational and Market Review.

1116
01:15:39,840 --> 01:15:43,600
Dan Woodfin and Kenan Ogerman are here to present this item.

1117
01:15:48,210 --> 01:15:48,670
Good morning.

1118
01:15:52,930 --> 01:15:56,030
I've got two pages of key takeaways from this presentation,

1119
01:15:56,210 --> 01:15:58,930
so I urge you to go look at those after the fact,

1120
01:15:58,970 --> 01:16:02,170
but we'll try to go through the actual meat of the presentation.

1121
01:16:02,950 --> 01:16:06,130
If you look at the line graphs on this first slide,

1122
01:16:06,130 --> 01:16:13,930
You'll see that back in 2022 there was a significant amount of heat in the middle of July.

1123
01:16:14,790 --> 01:16:18,610
And so when you compare this year to last year, temperatures were fairly, during that

1124
01:16:18,610 --> 01:16:21,090
two-week period, were fairly similar.

1125
01:16:21,310 --> 01:16:27,470
But then if you look across the remainder of the year, this year's temperatures were

1126
01:16:27,470 --> 01:16:32,110
significantly higher and stayed higher for pretty much the whole month of August and

1127
01:16:32,110 --> 01:16:32,850
through September.

1128
01:16:32,850 --> 01:16:38,970
And in fact, I heard yesterday that Chris had looked at the average temperatures for

1129
01:16:38,970 --> 01:16:46,590
the period from June to September, and 2023 was only a tenth of a degree cooler than 2011,

1130
01:16:46,690 --> 01:16:51,530
which is kind of the benchmark for hot summers that we hope we never experience again.

1131
01:16:51,650 --> 01:16:53,850
But this summer, on average, was almost as hot.

1132
01:16:55,050 --> 01:16:56,350
And that, of course, drove.

1133
01:16:56,490 --> 01:17:02,210
Then if you look at the bar charts, you see that kind of the darker bars are what

1134
01:17:02,210 --> 01:17:07,350
the peak demands were on each day last year and the lighter blue or what it was this year

1135
01:17:07,350 --> 01:17:12,050
and you can see that we had significantly higher peak demands through August and September

1136
01:17:12,050 --> 01:17:13,330
as compared to last year.

1137
01:17:15,910 --> 01:17:20,210
And so we expected to have higher demands this year.

1138
01:17:20,570 --> 01:17:25,550
Our forecasts were higher because of the increased economic growth in Texas, but we actually

1139
01:17:25,550 --> 01:17:32,010
saw it not only higher but sustained, you know, on day after day of those kind of high demands.

1140
01:17:34,950 --> 01:17:41,610
We've all, we've kind of seen this impressive graph of 11 new demands, new peak demands

1141
01:17:41,610 --> 01:17:44,750
that ratcheted up last year, 10 more this year.

1142
01:17:45,150 --> 01:17:52,530
What's really impressive to me is that we hit 49 times, we hit a demand for an hour

1143
01:17:52,530 --> 01:17:56,290
that was higher than our peak demand just last year.

1144
01:17:56,790 --> 01:18:01,590
And that kind of gives you an idea of just how sustained the heat was.

1145
01:18:04,200 --> 01:18:11,100
As Pablo mentioned earlier, we've looked in this kind of breaking out the growth between last year and this year

1146
01:18:11,100 --> 01:18:14,520
by different kinds of consumers.

1147
01:18:14,960 --> 01:18:19,100
And then because of the profiling process that we do as part of settlements,

1148
01:18:19,100 --> 01:18:27,160
we can break those out into residential, commercial, and then industrials, and the industrial class

1149
01:18:27,160 --> 01:18:34,820
has both the non-optin energies, entities, so folks like the Austin Energy and CPS San Antonio

1150
01:18:34,820 --> 01:18:40,540
and those kind is in this industrial class, but we've broken them out separate.

1151
01:18:41,060 --> 01:18:47,700
And so you can see in the upper left that the residential number of meters from residential

1152
01:18:47,700 --> 01:18:52,100
grew 2.6 percent. So that's a lot of that economic growth that we were talking about.

1153
01:18:52,460 --> 01:18:57,740
Of course, commercial and industrial consumers use more energy, but there's not as many

1154
01:18:57,740 --> 01:19:02,740
additional meters for the amount of growth that they have. But then, if you look down

1155
01:19:02,740 --> 01:19:10,420
in the bottom right, you see daily energy growth. You can see that actually that a lot

1156
01:19:10,420 --> 01:19:17,500
of that growth was in the industrial class. And not as much, especially, and I guess

1157
01:19:17,500 --> 01:19:19,600
There's a blue bar and a gray bar.

1158
01:19:20,240 --> 01:19:21,920
The gray bar is the weather adjusted.

1159
01:19:22,260 --> 01:19:29,160
So it's taking out the effects of growth due to weather being hotter this year

1160
01:19:29,160 --> 01:19:32,100
and just focusing in on how much load growth there was.

1161
01:19:32,500 --> 01:19:35,480
And you see that for residential, there actually wasn't much growth.

1162
01:19:35,680 --> 01:19:39,000
And the explanation of that is we've got a lot more rooftop solar,

1163
01:19:39,200 --> 01:19:43,040
which would reduce the energy consumption on those houses that have it.

1164
01:19:43,040 --> 01:19:52,920
But we've had improved energy efficiency of appliances and lighting and those kind of

1165
01:19:52,920 --> 01:19:53,220
things.

1166
01:19:53,760 --> 01:19:57,840
I mean at my house I had to put in a new air conditioner this year and it's a lot more

1167
01:19:57,840 --> 01:19:59,680
efficient than the air conditioner I had.

1168
01:19:59,860 --> 01:20:01,640
So I contributed to this.

1169
01:20:02,360 --> 01:20:07,140
And then you, so you see those kind of things and then from a peak perspective if you look

1170
01:20:07,140 --> 01:20:11,360
at the upper right there you can see kind of the growth in the peaks by class.

1171
01:20:11,360 --> 01:20:17,280
The peak also, there were a lot, I think there's been an increase in load management type programs

1172
01:20:17,280 --> 01:20:24,020
where people can, where your retailer may control your thermostat and cause you to use less on peak.

1173
01:20:24,440 --> 01:20:28,740
And so you see that kind of the impact of that is especially in the residential,

1174
01:20:29,160 --> 01:20:32,320
from a weather-adjusted perspective, we didn't see as much growth

1175
01:20:32,320 --> 01:20:34,380
as what you'd think we would for the number of meters.

1176
01:20:34,680 --> 01:20:38,080
And that's just because there's more efficiency being there.

1177
01:20:38,840 --> 01:20:43,080
industrial obviously was the biggest increase.

1178
01:20:46,860 --> 01:20:49,940
So Pablo mentioned this earlier, but this is a good graph to show.

1179
01:20:50,460 --> 01:20:55,500
So the top green line there is our peak demand across a typical afternoon

1180
01:20:55,500 --> 01:21:02,680
from one o'clock in the afternoon out to 2100.

1181
01:21:03,520 --> 01:21:10,420
And so you can see that, and then it also has the wind in the blue area there

1182
01:21:10,420 --> 01:21:18,060
and the gray is the solar. And so he mentioned that you see that shift in when the net load

1183
01:21:18,060 --> 01:21:23,200
peak on the system is from being kind of at five o'clock in the afternoon, it's shifted

1184
01:21:23,200 --> 01:21:27,700
out to being more of the seven o'clock hour. And why that's important, that when that net

1185
01:21:27,700 --> 01:21:34,960
load peak is, is that's kind of the time of maximum need for non-renewable generation.

1186
01:21:34,960 --> 01:21:44,860
So all this dispatchable generation that we talked about earlier, that's kind of the peak for how much is needed to be produced by those generators.

1187
01:21:45,320 --> 01:21:48,380
And so you can see that that has shifted out in time.

1188
01:21:49,260 --> 01:22:00,320
And in fact, if you look at the next slide, across, if we look on average for every day of the month over the last three years,

1189
01:22:00,320 --> 01:22:07,040
you can see that the 1,700-hour, especially in the early years,

1190
01:22:07,280 --> 01:22:09,080
were much higher.

1191
01:22:09,380 --> 01:22:13,340
But if you look at the green bar, that's the 2,100-hour,

1192
01:22:13,500 --> 01:22:16,060
and you can see each month of this year,

1193
01:22:16,520 --> 01:22:18,240
on average across all the days,

1194
01:22:18,740 --> 01:22:23,080
our peak actually was happening on our ending 2,100.

1195
01:22:23,760 --> 01:22:27,520
You can see this is not a one-day type thing.

1196
01:22:27,520 --> 01:22:30,320
It actually is occurring on average every day.

1197
01:22:33,370 --> 01:22:36,390
We issued several conservation calls this summer.

1198
01:22:38,190 --> 01:22:46,130
The blue bars here are the peak demands on each day, and the ones that are colored in

1199
01:22:46,670 --> 01:22:51,310
red are the ones on which we called for conservation.

1200
01:22:51,830 --> 01:22:57,810
You can see that those are not always the highest demand day, but they are typically

1201
01:22:57,810 --> 01:23:03,650
the highest net load days, which is the gray line graph that goes across.

1202
01:23:03,990 --> 01:23:10,930
Now, there are a couple that aren't because we were expecting worse conditions that actually happened.

1203
01:23:11,130 --> 01:23:14,730
So we're having to call these conservation appeals earlier in the day.

1204
01:23:15,070 --> 01:23:19,230
Sometimes the wind blows a little more or the load's a little less than what we expected.

1205
01:23:19,690 --> 01:23:25,290
But generally, they tend to line up very well for what the reason we're having to do them

1206
01:23:25,290 --> 01:23:32,430
is because of that highest net loads, which is kind of what you'd expect. We've got a

1207
01:23:32,430 --> 01:23:40,170
fixed amount of dispatchable generation, and when we're kind of needing the most of that,

1208
01:23:40,290 --> 01:23:41,830
that's when we're going to be the tightest.

1209
01:23:45,750 --> 01:23:49,070
One of the other things we noticed is, so

1210
01:23:49,070 --> 01:23:54,510
the blue bars on here are the average of all the days that we didn't ask for conservation.

1211
01:23:54,510 --> 01:23:57,950
This is the average amount of wind for each of those hours.

1212
01:23:58,770 --> 01:24:07,790
And the black bars are the average wind for that hour across those days that we had to ask for conservation.

1213
01:24:08,250 --> 01:24:14,550
And you can see a clear pattern that a lot of the reason we were having to ask for conservation on those days

1214
01:24:14,550 --> 01:24:20,690
is because those days we had less wind across those afternoon and early evening hours.

1215
01:24:21,930 --> 01:24:23,850
And that's kind of a key takeaway.

1216
01:24:24,170 --> 01:24:30,770
We've been noting this for several years that the difference between a tight day and a not-tight day tends to be how much the wind is blowing.

1217
01:24:31,350 --> 01:24:33,090
But this year it was very clear.

1218
01:24:37,670 --> 01:24:38,330
Force outages.

1219
01:24:38,970 --> 01:24:43,850
This has been a question I think we were asked last year during this presentation.

1220
01:24:44,030 --> 01:24:54,030
So we've put this in here that really it stayed pretty consistent between four and eight gigawatts over the course of kind of the tightest days of the summer.

1221
01:24:54,030 --> 01:24:59,950
It was a little higher earlier in the summer as some of the maintenance outages that were

1222
01:24:59,950 --> 01:25:05,610
done in the spring extended into the June timeframe and early July, but then once we

1223
01:25:05,610 --> 01:25:09,530
got into kind of the heat of summer, it stayed within the 48 gigawatt range.

1224
01:25:09,930 --> 01:25:15,970
There are a few days when it's higher and we put the net load on there in the green

1225
01:25:15,970 --> 01:25:21,750
graph because it makes it fairly clear why they were able to take more outages

1226
01:25:21,750 --> 01:25:27,810
on those days because there was more wind, it was a slightly lower load,

1227
01:25:30,050 --> 01:25:30,790
we didn't need

1228
01:25:30,790 --> 01:25:35,830
as much dispatchable generation on those days and so they were able to take more outages

1229
01:25:36,630 --> 01:25:41,710
to fix things that they might have operated through if it was a very tight day.

1230
01:25:46,590 --> 01:25:54,070
And so if you look at the amount of generation that we have available, so installed capacity

1231
01:25:54,070 --> 01:25:56,730
minus the outages that are going on.

1232
01:25:57,470 --> 01:26:01,410
This shows kind of whether the units were online or not.

1233
01:26:02,310 --> 01:26:09,330
And if you see, the gray bar was 2022, the blue line is this year.

1234
01:26:09,910 --> 01:26:15,310
And you can see there were a few days in the mid-July timeframe that I said that we

1235
01:26:15,310 --> 01:26:19,790
had fairly high temperatures in which all generation was online.

1236
01:26:19,790 --> 01:26:25,870
So if you look at where it's touching kind of the zero line there, those times that it's touching zero line,

1237
01:26:25,870 --> 01:26:32,290
that means that every generator, every dispatchable generator was online on those days.

1238
01:26:32,890 --> 01:26:37,450
And you see there was a few days in July last year in the middle of July that that was true.

1239
01:26:37,870 --> 01:26:43,990
You can see this summer there were a lot of days in which every generator we had that was available,

1240
01:26:43,990 --> 01:26:49,790
that was not on an outage was online and needed to be online to serve the demand.

1241
01:26:55,700 --> 01:27:00,160
One of the questions we had gotten was how much or what are batteries doing?

1242
01:27:00,340 --> 01:27:03,260
How much of ancillary services are being provided by batteries?

1243
01:27:03,560 --> 01:27:09,860
And so this graph shows that especially for regulations up service, regulation down service,

1244
01:27:10,560 --> 01:27:14,540
that the batteries are providing that, a lot of that in the purple bars.

1245
01:27:14,540 --> 01:27:17,860
the responsive reserve ancillary service.

1246
01:27:18,100 --> 01:27:22,720
So this is what we procure to protect against if a unit trips

1247
01:27:22,720 --> 01:27:23,920
and protect the frequency.

1248
01:27:24,340 --> 01:27:28,840
They're providing a good portion, 68%, 70% of that,

1249
01:27:29,400 --> 01:27:32,480
providing a little bit less at this point of ECRS

1250
01:27:32,480 --> 01:27:33,900
and not much non-spin.

1251
01:27:34,700 --> 01:27:37,040
But you can see that they really contributed significantly

1252
01:27:37,040 --> 01:27:40,100
to serving our ancillary service requirements this summer.

1253
01:27:40,100 --> 01:27:47,070
And this is kind of a busy graph, but I recognize this,

1254
01:27:47,230 --> 01:27:51,410
but it's really interesting to see on some of those tight days

1255
01:27:51,410 --> 01:27:53,790
what happened to the state of charge,

1256
01:27:55,310 --> 01:27:57,470
especially when we got into tight conditions,

1257
01:27:57,650 --> 01:28:02,550
and so it focused you in specifically on 9-6, so the EEA day.

1258
01:28:02,990 --> 01:28:08,230
You can see that the green dotted line shows that the state of charge

1259
01:28:08,230 --> 01:28:14,070
is going down a lot during that tightest time frame when prices went high in the evening.

1260
01:28:14,710 --> 01:28:19,430
And that's because that's exactly what you'd expect to happen. Those batteries were discharging

1261
01:28:19,430 --> 01:28:22,230
and serving energy on the system during that time frame.

1262
01:28:26,560 --> 01:28:32,520
So several days from a transmission perspective, we really didn't have a lot of issues at

1263
01:28:32,520 --> 01:28:38,520
all serving demand from overloading transmission lines or anything like that, except for the

1264
01:28:38,520 --> 01:28:43,880
one event that we talked about with the R&M committee yesterday, where there were several

1265
01:28:44,480 --> 01:28:52,480
days that that constraint was actually binding before the day that we had the EA event.

1266
01:28:53,140 --> 01:28:59,440
And really what was going on is you had very high demand in relative to the amount of

1267
01:28:59,440 --> 01:29:03,540
generation that was available in North, Central, and West Texas.

1268
01:29:03,540 --> 01:29:12,880
So basically all the generation was on in those areas and there was still a little bit of generation available in the south.

1269
01:29:13,560 --> 01:29:19,740
So trying to use all the generation, we try to transfer power into the north from those units in the south.

1270
01:29:19,820 --> 01:29:27,960
But there's a transmission constraint that's pretty significant that we would have to curtail generation in the south area there.

1271
01:29:27,960 --> 01:29:34,420
And so you'd see somewhat higher prices in the north and especially during that time frame.

1272
01:29:34,620 --> 01:29:37,480
And it really wasn't a problem when the sun was out.

1273
01:29:37,820 --> 01:29:41,660
So there's lots of generation in West Texas that's helping to serve that load.

1274
01:29:41,780 --> 01:29:46,040
But you'd get into the conditions I just described when the sun goes down.

1275
01:29:46,420 --> 01:29:49,600
And now the amount of generation you've got to serve the load

1276
01:29:49,600 --> 01:29:52,040
in that area is pretty well matched.

1277
01:29:52,320 --> 01:29:53,920
And you need a little more.

1278
01:29:54,660 --> 01:29:59,980
And so the other thing that happened in Kanan and Pablo Kanan

1279
01:30:01,500 --> 01:30:07,920
There were some hours in which it was strictly speaking that we were just out of capacity in

1280
01:30:07,920 --> 01:30:12,780
that north area, and that was what was causing the percentage strain to buy. There were other

1281
01:30:12,780 --> 01:30:21,120
hours where we were almost out and so to keep from overloading the constraint, we were having

1282
01:30:21,120 --> 01:30:28,040
used some of the very high offer price resources in the north, and so that actually set higher

1283
01:30:28,040 --> 01:30:33,780
prices over a larger number of hours than what we were actually in scarcity in the north

1284
01:30:34,420 --> 01:30:40,560
because we were having to select those higher offered prices to help not overload the constraint.

1285
01:30:45,920 --> 01:30:51,620
And then we did have one day that Pablo mentioned that we got into, that we did have to enter

1286
01:30:51,620 --> 01:30:56,240
into our emergency operations. In this day we had the situation that I just described

1287
01:30:56,240 --> 01:31:02,920
where, as the sun was going down, we basically ran out of capacity to serve the demand in

1288
01:31:02,920 --> 01:31:04,760
the north, central, and west areas.

1289
01:31:06,320 --> 01:31:14,140
That resulted in an overload of this critical transmission constraint, and the operators

1290
01:31:14,140 --> 01:31:20,240
had to balance between the risk of overloading that constraint and there being problems

1291
01:31:20,240 --> 01:31:24,780
there and not having enough capacity to serve the load and having to go into the A.

1292
01:31:24,780 --> 01:31:31,160
and they appropriately balanced those two, they declared an EEA, they started to curtail,

1293
01:31:31,260 --> 01:31:37,140
first they started to curtail generation in the, that south Texas to get the line overloaded

1294
01:31:37,140 --> 01:31:44,160
from being overloaded. Then they, that caused us to be short of capacity, frequency started

1295
01:31:44,160 --> 01:31:49,720
to drop and they appropriately declared an EEA too in order to take advantage of

1296
01:31:49,720 --> 01:31:55,340
load resources. We also did some switching actions to try to unload that transmission

1297
01:31:55,340 --> 01:32:00,260
constraint, and that helped us to bring back some of the generation that we'd had to curtail.

1298
01:32:01,140 --> 01:32:07,500
And so overall, we managed through this and got back out of EEA by 8.37 p.m.

1299
01:32:09,880 --> 01:32:10,480
We're,

1300
01:32:10,880 --> 01:32:17,180
as I mentioned yesterday with R&M, we're working on some mitigation plans for that

1301
01:32:17,800 --> 01:32:25,340
solution for that transmission constraint. And we're also, the frequency going down that

1302
01:32:25,340 --> 01:32:31,420
happened was actually, although we still seem to have some reserves on the system that should

1303
01:32:31,420 --> 01:32:36,900
have kept frequency high, we're having to, we're going to be sending some RFIs out

1304
01:32:36,900 --> 01:32:42,440
to the entities that showed they had headroom, but they can't have had headroom or the

1305
01:32:42,440 --> 01:32:45,900
frequency wouldn't have dropped. And so we're going to be doing some RFIs and

1306
01:32:45,900 --> 01:32:49,220
and potentially having to do a protocol revision

1307
01:32:49,220 --> 01:32:51,980
to tighten up the rules around reporting on that.

1308
01:32:53,460 --> 01:32:54,900
Dan, before you leave this page,

1309
01:32:55,740 --> 01:32:59,280
there's a person that has a paid subscription services

1310
01:32:59,280 --> 01:33:04,120
headline, I guess, to gain more paid subscriptions today.

1311
01:33:04,320 --> 01:33:06,940
As Erkaut Simmer review is misleading and incomplete.

1312
01:33:08,120 --> 01:33:10,020
And in here, on this particular subject,

1313
01:33:10,160 --> 01:33:11,580
he's got a paragraph that says,

1314
01:33:11,940 --> 01:33:15,040
the agency admitted that transmission constraints

1315
01:33:15,040 --> 01:33:20,260
were a major problem. South Texas winds were particularly strong that day, but ERCOT manually

1316
01:33:20,260 --> 01:33:26,720
and probably unnecessarily curtailed generation to avoid potentially overloading a transmission

1317
01:33:26,720 --> 01:33:31,520
line that could have delivered electricity to people who need it. This guy is not a physics

1318
01:33:31,520 --> 01:33:38,160
major, but tell us what would have happened had you not taken those actions so that the

1319
01:33:38,160 --> 01:33:42,600
people that are hearing this conversation will know what the truth is, because, I mean,

1320
01:33:42,600 --> 01:33:47,900
You've laid out the truth, but what would the alternative have been had had we not taken those actions?

1321
01:33:48,420 --> 01:33:50,000
I think that there is a

1322
01:33:50,520 --> 01:33:53,200
there's risk on both sides of that and

1323
01:33:53,660 --> 01:33:57,080
According to the North American electric reliability

1324
01:33:57,680 --> 01:34:01,740
Corporation rules we have to properly balance those risks

1325
01:34:01,740 --> 01:34:07,800
So there's risk of potentially low shed on one side and there's risk of potentially low shed on the other side

1326
01:34:07,800 --> 01:34:10,900
And so we have to balance those two things

1327
01:34:10,900 --> 01:34:16,860
I can't talk about some of the physics of it because it will quickly get into critical

1328
01:34:16,860 --> 01:34:18,600
energy infrastructure information.

1329
01:34:20,060 --> 01:34:22,460
But absolutely we've looked at this.

1330
01:34:22,880 --> 01:34:29,100
I think NERC and some of the regulators will agree that we did all the right things there

1331
01:34:29,100 --> 01:34:31,820
and really needed to do what we did.

1332
01:34:32,220 --> 01:34:32,680
Okay.

1333
01:34:33,000 --> 01:34:36,200
So there's nothing unfactual about the report that you got.

1334
01:34:36,420 --> 01:34:36,680
Absolutely.

1335
01:34:36,980 --> 01:34:39,900
I mean, the lack of factual data is in this newsletter.

1336
01:34:39,900 --> 01:34:40,620
or it sounds like.

1337
01:34:40,780 --> 01:34:47,340
I think there's a lot of misunderstanding about what exactly the requirements are.

1338
01:34:48,520 --> 01:34:50,580
But I can assure you we did the right things.

1339
01:34:51,120 --> 01:34:51,260
Yeah.

1340
01:34:51,480 --> 01:34:51,840
Thank you.

1341
01:34:55,550 --> 01:34:59,090
And I will turn it over to Kanan, but I will still be here if you have more questions

1342
01:34:59,090 --> 01:35:00,530
after his part.

1343
01:35:06,030 --> 01:35:06,530
Good morning.

1344
01:35:07,610 --> 01:35:15,370
So Dan, I think, has laid out very effectively how tight throughout the summer conditions

1345
01:35:15,370 --> 01:35:15,910
were.

1346
01:35:15,910 --> 01:35:26,550
We had extremely high load and we came very close to the edge in terms of managing the

1347
01:35:26,550 --> 01:35:28,850
system very frequently.

1348
01:35:29,910 --> 01:35:35,010
The corresponding pricing or market story aligns with that.

1349
01:35:35,470 --> 01:35:44,310
So when you look at the average hub prices or the average price for the ERCOT system,

1350
01:35:45,150 --> 01:35:56,890
You see that we were higher than what we experienced in 2022 in August and in June, but July, it

1351
01:35:56,890 --> 01:36:03,890
was slightly lower, I think, and that's because of that first half of the year, that half

1352
01:36:03,890 --> 01:36:06,410
of the month, I should say, that Dan described.

1353
01:36:06,410 --> 01:36:14,490
As a consequence of these high prices, we have seen Peekernet margin move up dramatically.

1354
01:36:14,770 --> 01:36:19,630
It's the highest it's been since the year in which we had winter storm URI.

1355
01:36:20,270 --> 01:36:29,950
So we are at, as of September 15th, we were at $239,000 for Peekernet margin.

1356
01:36:29,950 --> 01:36:43,510
I always want to make sure I share an announcement that at $315,000 of Pekernet margin by rule

1357
01:36:43,510 --> 01:36:46,570
we will go to a lower system-wide offer cap.

1358
01:36:47,310 --> 01:36:57,150
So that's the trigger of or circuit breaker to trigger a move from the $5,000 offer

1359
01:36:57,150 --> 01:37:00,990
offer cap that we see to a $2,000 offer cap.

1360
01:37:01,630 --> 01:37:03,790
So we are relatively close.

1361
01:37:05,390 --> 01:37:13,610
A winter event with high prices could tip us over and trigger the low cap.

1362
01:37:14,550 --> 01:37:21,410
So I think that's important, but from a revenue standpoint, generators made significant

1363
01:37:21,410 --> 01:37:24,850
revenue this summer if they were able to run.

1364
01:37:31,800 --> 01:37:40,540
One interesting thing here is that the reserves that we had on the system as a general trend

1365
01:37:40,540 --> 01:37:46,740
this summer versus 2022, the reserves were higher.

1366
01:37:47,200 --> 01:37:51,520
And we've been kind of walking through this story multiple times.

1367
01:37:51,520 --> 01:38:03,740
But when you put in a ECRS program that allows the operators to dispatch reserves when needed,

1368
01:38:04,360 --> 01:38:06,260
that's one contributing factor.

1369
01:38:07,860 --> 01:38:16,320
There could be other contributing factors in terms of reserves or congestion that could

1370
01:38:16,320 --> 01:38:24,120
also contribute here. But thematically, and I think this has been in the press, we had

1371
01:38:24,120 --> 01:38:33,200
more reserves yet higher prices. And that dichotomy has been discussed quite frequently.

1372
01:38:33,960 --> 01:38:40,280
And I have spoke about this yesterday, and I'd like to speak about that some more today

1373
01:38:40,280 --> 01:38:42,820
in terms of what's driving that.

1374
01:38:45,590 --> 01:38:50,510
So again this is another way of saying our

1375
01:38:50,510 --> 01:38:57,750
administrative pricing mechanisms did not trigger so much of the higher prices

1376
01:38:57,750 --> 01:39:07,690
this year as offers did. So when we had higher reserves but higher offers as

1377
01:39:07,690 --> 01:39:16,210
as well. And that was a contributing factor. Operating Reserve Demand Curve, the real-time

1378
01:39:17,590 --> 01:39:28,410
rerun in case ERCOT took action, that didn't contribute nearly as much as offers did in

1379
01:39:28,410 --> 01:39:39,270
2023. And the way you see that is the single line over the bar line, that is the percent

1380
01:39:40,240 --> 01:39:48,370
of the adders as a total. And you can see in 2022 that percent was much higher than in

1381
01:39:48,370 --> 01:39:50,190
any of the months in 2023.

1382
01:39:50,190 --> 01:39:50,390
3.

1383
01:39:58,340 --> 01:40:09,260
Dan mentioned congestion being a significant factor. Congestion, certainly in August, was

1384
01:40:09,260 --> 01:40:16,360
extremely high, especially in the south, that area that he highlighted in his presentation.

1385
01:40:17,040 --> 01:40:23,460
But also it's important to note that it's more difficult for our security constrained

1386
01:40:23,460 --> 01:40:28,820
economic dispatch engine to manage congestion when offers are high.

1387
01:40:29,740 --> 01:40:35,900
We have essentially circuit breakers on when security constrained economic

1388
01:40:35,900 --> 01:40:42,600
dispatch stops trying to solve congestion, and it is driven by the

1389
01:40:42,600 --> 01:40:49,020
offer price and the shift factor, or the impact individual units offer,

1390
01:40:49,020 --> 01:40:54,460
offer, or I should not say it's offer, an individual unit's ability to contribute to

1391
01:40:54,460 --> 01:41:03,740
relieving that congestion. If it has a high offer and a lowish shift factor impact on

1392
01:41:03,740 --> 01:41:13,560
the constraint, it will trigger what we call the shadow price caps that say, Sked, okay,

1393
01:41:13,560 --> 01:41:19,340
you've worked hard enough on trying to solve this through pricing and we're going to stop

1394
01:41:19,340 --> 01:41:27,660
because the pricing can spin out of control and there's a desire to have a cost cap to

1395
01:41:27,660 --> 01:41:36,480
consumers and that's where these shadow price caps come from. So those combinations really

1396
01:41:36,480 --> 01:41:46,020
impacted the pricing that you see. And we also had significant congestion that we saw in

1397
01:41:46,020 --> 01:41:53,480
all areas. But as you can see with the kind of very bright green, that south area congestion

1398
01:41:53,480 --> 01:41:56,740
was the most significant for this summer.

1399
01:42:02,300 --> 01:42:07,940
So when energy prices are high, their corresponding

1400
01:42:07,940 --> 01:42:17,480
Funding substitute service, which is ancillary services, tend to price at a high level also.

1401
01:42:18,900 --> 01:42:25,240
And again, we saw in 2023 very high prices for ancillary services.

1402
01:42:26,060 --> 01:42:32,880
This is, you know, as a generator or a provider of ancillary services, I have to weigh the

1403
01:42:32,880 --> 01:42:40,340
opportunity cost of providing energy versus ancillary services, and that is the primary

1404
01:42:40,340 --> 01:42:44,400
driver for the high ancillary service costs that we see.

1405
01:42:49,170 --> 01:42:58,790
One other thing that we wanted to look at is how well did the day ahead do at predicting

1406
01:42:58,790 --> 01:43:00,510
what was happening in real time?

1407
01:43:00,510 --> 01:43:08,370
So what you have is the real-time price overlaid with the day-ahead price.

1408
01:43:09,330 --> 01:43:14,110
And the day-ahead is never going to get everything exactly right.

1409
01:43:14,410 --> 01:43:22,790
It's a assumed system topology versus a real system topology.

1410
01:43:23,530 --> 01:43:32,410
There can be differences in wind output between what is expected in the day ahead and what

1411
01:43:32,410 --> 01:43:34,210
materializes in real time.

1412
01:43:35,030 --> 01:43:38,150
And similarly, the same thing can happen with load.

1413
01:43:38,650 --> 01:43:43,850
The key thing is that these things generally move in the same direction.

1414
01:43:43,850 --> 01:43:56,290
So the item that you would be kind of most concerned about is that this area between 622 and 629

1415
01:43:56,830 --> 01:44:02,350
where the gray line really spiked up and the teal line did not.

1416
01:44:02,710 --> 01:44:09,470
That means there was a mismatch between expectations from the market and what really happened.

1417
01:44:09,470 --> 01:44:16,410
Now this is going to happen from time to time just because of the various factors, the uncertainty

1418
01:44:16,410 --> 01:44:23,710
around intermittence, uncertainty around load, and uncertainty around the system topology.

1419
01:44:24,250 --> 01:44:28,950
But you don't want that happening consistently day after day after day.

1420
01:44:29,210 --> 01:44:30,990
And we don't see that.

1421
01:44:31,490 --> 01:44:36,810
But that was another item that we always like to look at for the summer.

1422
01:44:36,810 --> 01:44:44,670
So the convergence is what we would describe as within expectations or normal.

1423
01:44:48,860 --> 01:44:59,860
So, you know, the use by ERCOT of reliability unit commitment to commit resources has been a talking

1424
01:44:59,860 --> 01:44:59,960
Thank you.

1425
01:45:00,000 --> 01:45:08,940
The meeting point pretty much for all of 2023 and was a major talking point in 2022. What I

1426
01:45:08,940 --> 01:45:15,960
can say is with the very high prices that we saw, ERCOT was not in need of committing resources

1427
01:45:15,960 --> 01:45:22,880
through reliability unit commitment instruction. So the one, one of the positive stories from

1428
01:45:22,880 --> 01:45:30,280
the summer is that the amount of reliability unit commitment that we saw had dropped dramatically

1429
01:45:30,280 --> 01:45:36,560
relative to 2022. Now, that doesn't mean that we've solved the problem or anything like that,

1430
01:45:36,740 --> 01:45:46,500
but the high system prices led to people wanting to self-commit and their vision of what the

1431
01:45:46,500 --> 01:45:49,200
risk was aligned with ERCOT's vision.

1432
01:45:49,980 --> 01:45:53,300
Sometimes that is mismatched, and that's where we have to

1433
01:45:53,300 --> 01:45:58,280
step in and commit units through this reliability unit

1434
01:45:58,280 --> 01:45:59,240
commitment process.

1435
01:46:06,270 --> 01:46:10,150
And then the one other thing I wanted to share with you as

1436
01:46:10,150 --> 01:46:15,730
part of this is our collateral requirements went up

1437
01:46:16,710 --> 01:46:20,790
through the summer, primarily driven again by high

1438
01:46:20,790 --> 01:46:28,850
prices so I mean my short story would be our process worked as it should as prices

1439
01:46:28,850 --> 01:46:34,650
went up and risk went up to the market of a default we collected more collateral

1440
01:46:34,650 --> 01:46:42,410
of all forms in this the other I think item worth highlighting is you know we

1441
01:46:42,410 --> 01:46:49,210
do still break down unsecured credit here that will be going away or began

1442
01:46:49,210 --> 01:46:56,490
going away October 1st. So in the future, you're not likely to see the unsecured collateral

1443
01:46:57,070 --> 01:46:57,390
item.

1444
01:46:59,510 --> 01:47:07,450
And with that, that concludes my part. I'm happy to answer any questions, and I know

1445
01:47:07,450 --> 01:47:09,830
Dan is happy to answer any questions you may have.

1446
01:47:13,770 --> 01:47:22,090
Canon, one question. Do you believe our minimum ORDC signals to help negate the need for

1447
01:47:22,090 --> 01:47:28,810
Ruck will be moving forward. That happens this next month. Do you still believe, given

1448
01:47:28,810 --> 01:47:32,230
what you observed, and it may be too early, and if it's too early, you can say it's too

1449
01:47:32,230 --> 01:47:37,450
early, to say that it's still needed, given what we experienced after the launch of ECRS?

1450
01:47:38,010 --> 01:47:40,930
But what are your after-summer takeaways from that?

1451
01:47:42,090 --> 01:47:49,790
I mean, I would say for the summer, we didn't need it looking back. But, again, as prices

1452
01:47:49,790 --> 01:48:02,390
is moderate yet ERCOT, the operator sees shortages. I think there is a possibility that RUK reliability

1453
01:48:02,390 --> 01:48:08,490
unit commitment becomes a tool that we use more frequently, especially in the shoulder

1454
01:48:08,490 --> 01:48:16,470
months where we can move between high and low temperatures, high intermittent output

1455
01:48:16,470 --> 01:48:23,270
and low intermittent output. So I would say it's a little too early and we

1456
01:48:23,270 --> 01:48:29,150
should definitely follow up with you and report on that. Those floors do not go

1457
01:48:29,150 --> 01:48:33,490
into effect until November 1 so that they are not operating currently.

1458
01:48:33,950 --> 01:48:39,930
And a follow-up on Commissioner McAdams observation question. The

1459
01:48:39,930 --> 01:48:47,610
Commission also asked for subsequent reporting on the ORDC adders after they are implemented

1460
01:48:47,610 --> 01:48:53,090
to ensure that they're actually needed. So, you know, that's going to be a monitoring

1461
01:48:53,090 --> 01:48:56,730
mechanism that we continue to focus on to see if they're actually needed.

1462
01:48:57,610 --> 01:49:04,310
In observation, maybe a question. So in the past, ERCOT and could prospectively still

1463
01:49:04,310 --> 01:49:11,030
continue to do it, would Ruck units to meet a conservative operations threshold, 6,500.

1464
01:49:13,650 --> 01:49:18,990
And as you go forward, like this summer, the higher pricing was incenting self-commitment,

1465
01:49:19,110 --> 01:49:20,810
but you were also carrying more ancillaries.

1466
01:49:22,930 --> 01:49:27,950
So going forward, like in the fall, if you're continuing to carry a lot of ancillaries

1467
01:49:27,950 --> 01:49:33,150
and you're having that threshold that you want to lean on for conservative operations

1468
01:49:33,150 --> 01:49:39,650
I mean, will Rucky even still be needed because, you know, even though prices will moderate,

1469
01:49:40,190 --> 01:49:45,650
you're still carrying more and the whole goal of Rucky, I think, started with trying to

1470
01:49:45,650 --> 01:49:47,530
meet the conservative operations threshold.

1471
01:49:48,630 --> 01:49:54,010
So I'm going to make – do you want me to take shot at it and then you clean up for

1472
01:49:54,010 --> 01:49:54,570
me afterwards?

1473
01:49:54,790 --> 01:49:54,990
Okay.

1474
01:49:55,710 --> 01:50:01,910
So I think it's really important – and Dan raised this issue yesterday, but the

1475
01:50:01,910 --> 01:50:06,750
purpose for buying the ancillary services is to protect the system from

1476
01:50:06,750 --> 01:50:14,790
certain shocks, unexpected events, and things like that. So the way I like to

1477
01:50:14,790 --> 01:50:21,430
talk about it is we were rucking to protect the ancillary services so

1478
01:50:21,430 --> 01:50:26,310
they were still there if the event that we bought the ancillary services

1479
01:50:27,210 --> 01:50:35,570
So, from my perspective, if there's not enough resources committed in the day, we would still

1480
01:50:35,570 --> 01:50:43,090
be looking to use reliability unit commitment. Now, we would prefer resources self-commit

1481
01:50:43,090 --> 01:50:50,470
and we want to create the incentives for them to self-commit. But we wouldn't want

1482
01:50:50,470 --> 01:50:57,470
to automatically dip into ancillary services if we saw insufficient generation committed

1483
01:50:58,070 --> 01:51:04,510
because we are eroding our ancillary services and the event that they're there for hasn't

1484
01:51:04,510 --> 01:51:05,090
happened yet.

1485
01:51:05,830 --> 01:51:09,370
Dan, let me make sure I didn't miss anything.

1486
01:51:09,770 --> 01:51:16,830
No, I mean, I think that's right, the 6500 with more ancillary services, if everybody

1487
01:51:16,830 --> 01:51:21,450
is still committing the same amount that the market participants are still committing the

1488
01:51:21,450 --> 01:51:28,410
same amount to serve the load that they have been committing, and then if we buy more ancillary

1489
01:51:28,410 --> 01:51:34,930
services, then that amount ought to be enough to – the load plus 6500 isn't going to

1490
01:51:34,930 --> 01:51:39,590
be a binding constraint anymore. We won't have to do anything extra. If people start

1491
01:51:39,590 --> 01:51:46,170
committing less to serve the load, and then we're still getting enough to serve

1492
01:51:46,170 --> 01:51:48,570
of the ancillary services, you may have to rock.

1493
01:51:49,010 --> 01:51:51,150
I mean, that's basically what went on in 2021

1494
01:51:51,150 --> 01:51:53,030
when we bought more ancillary services

1495
01:51:53,030 --> 01:51:55,210
is people started to commit less.

1496
01:51:55,510 --> 01:51:58,030
With the ORDC change, that may and sent them

1497
01:51:58,030 --> 01:52:03,530
to continue to self-commit enough to serve the load.

1498
01:52:04,030 --> 01:52:06,850
I'm just wondering how the factors all interplay

1499
01:52:06,850 --> 01:52:08,190
with each other now going forward

1500
01:52:08,190 --> 01:52:10,190
as you're now carrying more ancillaries

1501
01:52:10,190 --> 01:52:13,030
because of ECRS and the addition.

1502
01:52:13,330 --> 01:52:15,390
And then you'll ultimately add DRS,

1503
01:52:15,390 --> 01:52:21,130
which arguably could be some of the same resources just recategorized into a different ancillary

1504
01:52:21,130 --> 01:52:29,070
service bucket, but you're carrying more ancillaries, that's, you know, a reservation of power that

1505
01:52:29,070 --> 01:52:34,010
has an impact on the real-time market that could have an impact on whether or not you're

1506
01:52:34,010 --> 01:52:38,930
actually capturing the higher energy price or the ORDC adder, which you've noted,

1507
01:52:39,030 --> 01:52:41,810
I think, in your presentation has been lower because of that effect.

1508
01:52:42,030 --> 01:52:44,690
So it's important just to kind of understand the factors.

1509
01:52:44,690 --> 01:52:48,770
that's what I was trying to peel back and as we go forward monitoring the actual success

1510
01:52:48,770 --> 01:52:54,750
of that adder and whether or not it needs to stay in there because if the moving pieces

1511
01:52:54,750 --> 01:53:01,910
stay the same, right, meaning the same sort of larger procurement of ancillaries to deal

1512
01:53:01,910 --> 01:53:07,390
with the volatility in the market from renewables, and those impacts, that impact on the real

1513
01:53:07,390 --> 01:53:12,010
time market and pricing, then we need to be mindful of how those, all those, and

1514
01:53:12,010 --> 01:53:14,790
And then ORDC, because ORDC is a different variable, right?

1515
01:53:15,010 --> 01:53:20,870
ORDC is driven by reserve levels on the system, and if we're carrying more reserves on the

1516
01:53:20,870 --> 01:53:23,310
system, then you're not going to really get those adders.

1517
01:53:23,510 --> 01:53:24,650
And so how does it all interplay?

1518
01:53:24,850 --> 01:53:30,570
And I think that's going to be really important to monitor going forward is, you know, carry

1519
01:53:30,570 --> 01:53:33,470
more ancillaries and the effects on the real-time market.

1520
01:53:33,730 --> 01:53:38,770
And I think we'll do that through our monitoring that we've asked for on the ORDC price

1521
01:53:38,770 --> 01:53:39,190
adders.

1522
01:53:39,190 --> 01:53:46,130
but I guess what I'm getting at is we had lower ruck this summer because of those variables

1523
01:53:46,130 --> 01:53:51,890
you described, but is that going to be the case going forward? You know, just understanding

1524
01:53:51,890 --> 01:53:56,490
is, you know, I think different, it almost seems like different factors are driving

1525
01:53:56,490 --> 01:54:05,170
higher ruck use that are now maybe not going to be as present because of the actions

1526
01:54:05,170 --> 01:54:07,250
being taken going forward.

1527
01:54:08,070 --> 01:54:13,170
Yeah, I mean, I would again emphasize the high energy prices

1528
01:54:13,970 --> 01:54:21,170
driving self-commitment and there was no necessity for ERCOT to ruck.

1529
01:54:21,490 --> 01:54:25,370
There also was nothing really left to ruck in many...

1530
01:54:25,370 --> 01:54:27,290
But what was driving those high energy prices?

1531
01:54:27,570 --> 01:54:31,430
So the higher prices were driven by the high load

1532
01:54:33,370 --> 01:54:40,910
and high offers. But I need to emphasize, like if those, in many instances, if the offers

1533
01:54:40,910 --> 01:54:51,730
had been lower, then ORDC would have kicked in and set a price. It's just that the circumstances

1534
01:54:51,730 --> 01:54:58,830
were such that the offers were above what the ORDC would have set the price at. So

1535
01:54:58,830 --> 01:55:02,390
So then it's just an offer that is the driver.

1536
01:55:03,770 --> 01:55:11,650
In shoulder months, you're less likely to see those shortage conditions and more likely

1537
01:55:11,650 --> 01:55:19,610
to see resources having a more difficult time deciding if they should self-commit for a

1538
01:55:19,610 --> 01:55:21,810
day or not self-commit.

1539
01:55:21,810 --> 01:55:29,070
So, I would not want to say what we saw this summer or I would want to avoid leading you

1540
01:55:29,070 --> 01:55:34,830
down a path thinking that what we saw this summer means no rucks for the fall and winter.

1541
01:55:35,310 --> 01:55:37,250
It would depend on the circumstances.

1542
01:55:38,030 --> 01:55:42,890
Then the last thing I think is important to add is I do think, I agree with you that

1543
01:55:42,890 --> 01:55:51,710
that we will try and tease out all of these factors as we talk about how ORDC is working.

1544
01:55:52,350 --> 01:55:57,430
I think you'll want to consider the ancillary service methodology and what ultimately comes

1545
01:55:57,430 --> 01:55:58,210
out from that.

1546
01:55:58,810 --> 01:56:05,850
So all of these things will dovetail together and absolutely need a review and explanation

1547
01:56:05,850 --> 01:56:10,590
and possibly shifts in where we go from a policy standpoint.

1548
01:56:10,590 --> 01:56:10,790
point.

1549
01:56:11,190 --> 01:56:18,990
So this gets to what we actually need, and this is going to come up during the reliability

1550
01:56:18,990 --> 01:56:22,070
standard evaluation that Woody and Team are working on.

1551
01:56:22,310 --> 01:56:27,490
But Dan, am I understanding you correctly from an operator's point of view to manage

1552
01:56:27,490 --> 01:56:32,030
through this high-volatile variable environment?

1553
01:56:32,030 --> 01:56:40,750
You believe your operators are looking for a conservative posture of PRC plus the ancillary

1554
01:56:40,750 --> 01:56:44,570
service suite in order to account for variability on the system.

1555
01:56:44,710 --> 01:56:50,490
And the reason I ask is because that helps inform the commission's decision on a target reliability

1556
01:56:50,780 --> 01:56:57,070
standard and then thus the reserves that this system needs to incent to come into the

1557
01:56:57,070 --> 01:56:59,050
system to meet day-to-day reliability.

1558
01:56:59,050 --> 01:57:00,130
I

1559
01:57:02,310 --> 01:57:10,370
mean, I think if the market mechanisms and the market incentives are driving the aggregate

1560
01:57:10,370 --> 01:57:16,490
generation to commit to serve load plus the ancillary service quantities that we're asking

1561
01:57:16,490 --> 01:57:22,930
for, then we'll never have to ruck specifically to get up to the 6,500, because we'll already

1562
01:57:22,930 --> 01:57:23,310
be there.

1563
01:57:23,350 --> 01:57:24,990
So you'll never have to ruck for capacity.

1564
01:57:25,230 --> 01:57:27,430
You'll ruck for to manage the services.

1565
01:57:27,430 --> 01:57:32,850
capacity but it would be just to get enough to survey us, we wouldn't have to

1566
01:57:32,850 --> 01:57:37,230
rub extra like we have been. Got it occasionally. Thank you.

1567
01:57:38,250 --> 01:57:43,810
I have a related but different question related to the high prices as the grid

1568
01:57:43,810 --> 01:57:47,170
gets more and more dependent on wind and solar which is harder to forecast

1569
01:57:47,170 --> 01:57:51,530
because we know weather is so hard to forecast. It's adding additional risk

1570
01:57:51,530 --> 01:57:57,290
into the market. Are the higher, what have you looked at what fraction of the

1571
01:57:57,290 --> 01:58:02,830
higher prices are basically offsetting that additional risk of the unknown wind and solar

1572
01:58:02,830 --> 01:58:04,510
that we experience each day.

1573
01:58:06,710 --> 01:58:07,270
You know what I'm saying?

1574
01:58:07,530 --> 01:58:08,330
It's not a predictable machine.

1575
01:58:08,330 --> 01:58:09,070
I understand the question.

1576
01:58:09,270 --> 01:58:10,290
He can turn on and off.

1577
01:58:10,490 --> 01:58:20,770
So again, the mechanisms are in place, but always need to be reviewed, about achieving

1578
01:58:20,770 --> 01:58:27,070
the prices that we want when reserves drop or are at certain levels.

1579
01:58:27,070 --> 01:58:29,430
And that is this operating reserve demand curve.

1580
01:58:30,010 --> 01:58:36,890
The other adjustment that we make is if we take out of market action, we pull that out

1581
01:58:36,890 --> 01:58:41,170
and try and make sure the market prices out as if we did not do that.

1582
01:58:41,670 --> 01:58:46,170
So those two things are there in terms of pricing.

1583
01:58:46,170 --> 01:59:00,070
But what we saw this summer is offer-based clearing prices and a much higher frequency,

1584
01:59:00,310 --> 01:59:01,750
I guess, is the right way to say it.

1585
01:59:02,330 --> 01:59:15,110
And I would say that the uncertainty is managed and priced in as we lose or gain

1586
01:59:15,110 --> 01:59:21,250
intermittent, or low does something that's unpredictable.

1587
01:59:22,530 --> 01:59:24,650
So I think that's there.

1588
01:59:24,930 --> 01:59:36,510
What is missing is a steady forward revenue stream, or understanding of a revenue stream

1589
01:59:36,510 --> 01:59:48,210
going forward that makes investors comfortable about putting down the capital and understanding

1590
01:59:48,210 --> 01:59:55,330
the risk to build what we need going forward. To me, that's the big piece that's missing

1591
01:59:55,330 --> 01:59:59,850
right now, as far as the real time or near real time.

1592
02:00:00,000 --> 02:00:07,620
Pretty well. I'm not saying that there aren't adjustments that need to be made. The missing

1593
02:00:07,620 --> 02:00:15,060
piece is how do you get that kind of comfort level with investing in the ERCOT footprint

1594
02:00:15,600 --> 02:00:22,880
over the long term so that we can meet load growth and get the characteristics that we're

1595
02:00:22,880 --> 02:00:23,500
looking for.

1596
02:00:29,910 --> 02:00:36,090
Thank you, Kenon. We're going to try to get back on track a little bit in terms of

1597
02:00:36,090 --> 02:00:36,430
time.

1598
02:00:38,590 --> 02:00:46,050
Next is agenda item 7, notice of additional capacity requests for winter 2023-24, load

1599
02:00:46,050 --> 02:00:50,330
season. Chad and Woody are here to present this item.

1600
02:00:51,410 --> 02:00:55,890
Yeah, Woody Richardson, I'll start this off. It's a discussion about the capacity for contract.

1601
02:00:58,870 --> 02:01:06,110
So there are really three takeaways here. We're looking to procure up to 3,000 megawatts

1602
02:01:06,110 --> 02:01:09,430
of additional generation and or demand response for this winter.

1603
02:01:10,430 --> 02:01:17,690
The RFP was driven by peak load growth since last winter, the proposed retirement system,

1604
02:01:17,790 --> 02:01:22,450
dispatchable units, and the low probability but high impact risk of an extreme winter

1605
02:01:22,450 --> 02:01:22,790
event.

1606
02:01:24,010 --> 02:01:31,090
And finally, we're not projecting emergency conditions this winter, however, we did see

1607
02:01:31,090 --> 02:01:38,830
in our analysis, that if we were to have an elite type storm again, there was a 20% chance

1608
02:01:38,830 --> 02:01:45,690
of entering into an EEA. It's an elevated chance. And, Mr. Precaro, your question earlier

1609
02:01:45,690 --> 02:01:53,490
about the 10%, that has been a traditional number that we have used when we were reporting

1610
02:01:53,490 --> 02:02:00,250
assessments to NERC. It's not an official threshold, but it's been a number that

1611
02:02:00,250 --> 02:02:04,690
But if your risk was above 10%, it was considered elevated.

1612
02:02:05,510 --> 02:02:10,150
And that goes into their winter assessment that they use for all regions, not just ERCOT.

1613
02:02:11,430 --> 02:02:13,150
So just a follow-up on that.

1614
02:02:17,590 --> 02:02:23,010
So the summary of ERCOT's analysis, we use the probabilistic reserve risk model.

1615
02:02:23,130 --> 02:02:27,870
That's the same model we use for Mora, not the greatest acronym.

1616
02:02:27,870 --> 02:02:34,710
But it performs a Monte Carlo simulation, shows probabilities for how much capacity you have

1617
02:02:34,710 --> 02:02:38,150
for different seasonal peak load days.

1618
02:02:39,250 --> 02:02:45,790
The simulations accounted for the demand growth experience in 2023, and then we forced in

1619
02:02:45,790 --> 02:02:48,850
the winter storm Elliott weather for this analysis.

1620
02:02:49,830 --> 02:02:56,310
So this analysis includes a storm like we had last year of that severity, the winter

1621
02:02:56,310 --> 02:03:01,350
storm, Elliott Storm. So what we found was that the highest risk hour for this hour was

1622
02:03:01,350 --> 02:03:09,070
8 a.m., which is traditionally in the winter, you see load peak early in the morning and

1623
02:03:09,070 --> 02:03:13,170
then there will be another peak late in the evening. Both of those peaks are outside the

1624
02:03:13,170 --> 02:03:21,510
solar output. So that's our highest risk hour is 8 a.m. The probability without having

1625
02:03:21,510 --> 02:03:28,450
with just the, with no additional capacity, the probability was right at 20% that if we

1626
02:03:28,450 --> 02:03:33,370
had a winter storm, Elliot type weather, there's a 20% chance we'd go into some kind of EA.

1627
02:03:35,150 --> 02:03:42,150
By adding 3,000 megawatts of additional capacity, that could be demand or generation that would

1628
02:03:42,150 --> 02:03:49,030
take it down to below that elevated level, 9.4%. So that was the basis, that was

1629
02:03:49,030 --> 02:03:53,230
the summary of the analysis. That's why we put the RFP out.

1630
02:03:56,250 --> 02:04:00,070
So some of the details, seeking

1631
02:04:00,070 --> 02:04:06,890
capacity from generation resources or demand response, the list of eligible generation

1632
02:04:06,890 --> 02:04:12,030
resources, demand response. The main thing I'd say about the demand response is we need

1633
02:04:12,030 --> 02:04:15,630
things that we wouldn't get otherwise. So we're not looking to pay for something

1634
02:04:15,630 --> 02:04:22,830
that would show up due to prices already. So this would be new sources. That's the important

1635
02:04:22,830 --> 02:04:28,590
part there. The procurement would be for a period from December 1st through January.

1636
02:04:30,850 --> 02:04:31,150
The

1637
02:04:31,150 --> 02:04:35,270
inservice date would be December 1st to January 9th, and it would go through the end of February.

1638
02:04:38,150 --> 02:04:42,310
Those are some of the details of the RFP. Are there any questions about those?

1639
02:04:43,190 --> 02:04:46,470
What do you mean I'll just highlight that again on the in-service dates?

1640
02:04:46,750 --> 02:04:55,110
Really we're trying to provide as much flexibility for resources to come into the program between

1641
02:04:55,110 --> 02:04:57,450
December 1st and January 9th.

1642
02:04:57,450 --> 02:05:02,330
The full obligation period if you enter December 1st is December 1st through the end of February.

1643
02:05:02,630 --> 02:05:09,230
But if a resource offers in and can't be there until January 1st and the cost is

1644
02:05:09,230 --> 02:05:12,190
reasonable as we go through the procurement decision, then we'll sign up that resource

1645
02:05:12,750 --> 02:05:17,650
on January 1st and have them available from January 1st through the end of February.

1646
02:05:18,170 --> 02:05:23,730
So again, I think the idea with the RFP was to provide as much flexibility as possible

1647
02:05:23,730 --> 02:05:26,570
to address the risks that we were seeing on the system.

1648
02:05:28,820 --> 02:05:30,900
So any other questions about the details here?

1649
02:05:34,270 --> 02:05:37,190
What weatherization are you assuming for the generation resources?

1650
02:05:37,690 --> 02:05:41,110
I mean, would these units be weatherized that have been mothballed and taken

1651
02:05:41,110 --> 02:05:45,130
out of the market to the phase two requirements that we have in place?

1652
02:05:46,550 --> 02:05:51,610
So you're talking about if we accepted an RFP from a generator, what's the weatherization

1653
02:05:51,610 --> 02:05:52,510
assumption for that?

1654
02:05:52,730 --> 02:05:52,950
Yes.

1655
02:05:53,250 --> 02:05:55,850
We assume 100% that it would be there.

1656
02:05:56,510 --> 02:05:56,790
Okay.

1657
02:05:58,830 --> 02:05:59,410
Thank you.

1658
02:06:01,660 --> 02:06:03,060
So what do you mean by on the next slide?

1659
02:06:04,020 --> 02:06:10,380
The next slide lays out the procurement timeline, which is aggressive to get us to December

1660
02:06:10,380 --> 02:06:17,080
first. Where we are right now is that we've received over 130 questions from stakeholders

1661
02:06:17,920 --> 02:06:23,580
interested in the RFP requirements, seeking additional clarity. So we're in the process

1662
02:06:23,580 --> 02:06:29,980
of developing those responses. Tomorrow, we will release our responses to those questions.

1663
02:06:30,620 --> 02:06:36,400
And then the commission has, as Pablo already alluded to, an all-day workshop on Friday

1664
02:06:36,400 --> 02:06:43,740
of the 20th, and as you'll see here on the procurement timeline, the workshop on the RFP

1665
02:06:43,740 --> 02:06:47,500
and the governing document has been added to the commission's overall workshop.

1666
02:06:48,040 --> 02:06:53,700
And that discussion will occur at around 2 p.m. on Friday afternoon, where we go through

1667
02:06:53,700 --> 02:06:58,600
those responses and answer any other questions from the stakeholders or the commission.

1668
02:06:59,340 --> 02:07:06,660
And then as we head into next week, we're given an opportunity to amend the RFP and the

1669
02:07:06,660 --> 02:07:07,660
other governing documents.

1670
02:07:07,860 --> 02:07:14,520
At that point, that is truly the final RFP that everybody is able to consider and decide

1671
02:07:14,520 --> 02:07:18,780
whether they want to offer in a proposal on November 6.

1672
02:07:19,280 --> 02:07:22,140
And then you see the rest of the timeline as we start to move forward.

1673
02:07:22,140 --> 02:07:28,860
board, the award notice on Friday, November 20th, and then an execution phase that again

1674
02:07:28,860 --> 02:07:34,260
could take us all the way up to January 9th as a target start date for any resources that

1675
02:07:34,260 --> 02:07:34,680
are eligible.

1676
02:07:36,340 --> 02:07:41,980
And then we'll come back in December and obviously update the board on whether we

1677
02:07:41,980 --> 02:07:44,820
signed any contracts under this process.

1678
02:07:45,960 --> 02:07:50,060
Woody and Chad, first of all, applaud the organization for coming up with this

1679
02:07:50,060 --> 02:07:50,560
concept.

1680
02:07:50,560 --> 02:07:56,320
But it does several things. One is it signals to the market and to the public that we have

1681
02:07:56,320 --> 02:08:03,500
a potential problem this winter because the market has not provided the level of dispatchable

1682
02:08:03,500 --> 02:08:10,500
resources that Texas needs. Secondly, it was designed in such a way to be able to stimulate

1683
02:08:10,500 --> 02:08:18,360
the addition of additional generation and or to acquire some new demand response.

1684
02:08:18,360 --> 02:08:25,520
So my question is, on the 130-some-odd questions that you have in, do you have a feel for how

1685
02:08:25,520 --> 02:08:29,020
much of those – how many of those questions are related – or what percentage of those

1686
02:08:29,020 --> 02:08:35,360
questions are related to bringing back generation versus demand response?

1687
02:08:35,780 --> 02:08:36,740
Do you have a feel for that?

1688
02:08:40,160 --> 02:08:45,860
The ones that I've seen, they're targeted on understanding the demand response side

1689
02:08:45,860 --> 02:08:49,860
of it, you know, energy storage, resources of opt-in questions.

1690
02:08:49,860 --> 02:08:53,120
We have posted all the questions on our website,

1691
02:08:53,400 --> 02:08:56,220
and so everybody is able to go look at what those questions are

1692
02:08:56,220 --> 02:08:58,040
as we develop those responses.

1693
02:08:58,980 --> 02:09:02,160
You know, I think we obviously listed in the market notice

1694
02:09:02,160 --> 02:09:04,280
when we came out on October 2nd,

1695
02:09:04,280 --> 02:09:08,280
all the resources that are either mothballed

1696
02:09:08,280 --> 02:09:10,800
or in some state of suspended operations,

1697
02:09:11,840 --> 02:09:14,100
recognizing that, you know, some of those

1698
02:09:14,100 --> 02:09:17,160
won't be able to come back, and so we recognize that.

1699
02:09:17,160 --> 02:09:25,160
And so we really think this is a good tool to see what demand response capability is out there that we're not already receiving through other programs.

1700
02:09:25,520 --> 02:09:28,880
We've allowed a lot of flexibility here for the demand side.

1701
02:09:29,120 --> 02:09:37,380
And so I think this will be a good use case to see how the demand side steps up, evaluates this proposal, and sees if they want to offer it.

1702
02:09:37,380 --> 02:09:43,860
Okay. Well, again, I applaud your disinitiative. I think it's well thought out. I think it does stimulate

1703
02:09:45,140 --> 02:09:50,280
innovative way of looking at providing for additional resources as we go into a tight winter.

1704
02:09:54,620 --> 02:10:00,260
Woody, have you identified the type of resource that you want? For example, ramping capability,

1705
02:10:01,000 --> 02:10:04,560
or are you just waiting to see what comes in? Question one, question two would be,

1706
02:10:05,620 --> 02:10:10,040
And how will you handle a non-performing resource as well?

1707
02:10:11,140 --> 02:10:13,660
So from a ramping standpoint, we will look at anything.

1708
02:10:14,160 --> 02:10:18,000
So we don't have a specification that says you have to be able to ramp up within a certain amount of time.

1709
02:10:18,100 --> 02:10:24,340
We would adjust when we ask for them based on what the ramping capability is if we were to get one or two or whatever.

1710
02:10:25,940 --> 02:10:30,160
Non-performance is, if we'd be able to handle that, they wouldn't get paid.

1711
02:10:30,160 --> 02:10:36,240
I mean, there will be clawbacks on that if we did call them and they didn't show up.

1712
02:10:39,440 --> 02:10:46,240
And of course, the demand response is done afterwards, that payment, so we would have

1713
02:10:46,240 --> 02:10:46,620
settlement.

1714
02:10:47,580 --> 02:10:51,520
Would there be penalty in addition to non-payment?

1715
02:10:53,700 --> 02:10:55,760
I don't believe there is a penalty.

1716
02:10:57,080 --> 02:10:57,960
Just non-payment.

1717
02:11:05,590 --> 02:11:05,890
Okay.

1718
02:11:06,070 --> 02:11:06,590
Other questions?

1719
02:11:06,590 --> 02:11:09,330
Thank you Woody, Chad.

1720
02:11:14,710 --> 02:11:23,370
Next up, be sure of, is Agenda Item 8, Independent Market Monitor

1721
02:11:23,370 --> 02:11:31,590
Report. IMM Director Kerry Bivens is here with us to present this item. Kerry?

1722
02:11:48,730 --> 02:11:54,090
Good morning everyone. It's Kerry Bivens with Potomac Economics. Happy to be here to give

1723
02:11:54,090 --> 02:11:59,230
my usual report. In fact, a lot of what I was going to cover, actually Kanan covered

1724
02:11:59,230 --> 02:12:05,010
in his summer review, so I'll skip through some of that quickly. I do want to go ahead

1725
02:12:05,010 --> 02:12:10,910
and address. I hadn't intended to talk about our ECRS analysis because that was done in

1726
02:12:10,910 --> 02:12:14,550
conjunction with the Ancillary Services methodology, which is not before you today.

1727
02:12:15,250 --> 02:12:21,550
But I did just want to kind of add a couple of thoughts. One is that when that

1728
02:12:21,550 --> 02:12:31,090
program was approved by the board and the business case for the new service had to do

1729
02:12:31,090 --> 02:12:38,730
with efficiency, adding market efficiency, and it had nothing to do with particular,

1730
02:12:40,470 --> 02:12:44,110
you know, ramping needs or net load or anything like that that we've been talking about.

1731
02:12:44,110 --> 02:12:51,650
But, you know, we know that this service has not increased efficiency because of the analysis

1732
02:12:51,650 --> 02:12:52,430
that we performed.

1733
02:12:52,990 --> 02:12:59,610
And the purpose of that was to show order of magnitude to understand, you know, what

1734
02:12:59,610 --> 02:13:03,490
are these costs and are they, you know, small or significant?

1735
02:13:04,230 --> 02:13:10,750
And we intend to provide red line comments to the Ansler services methodology to tweak

1736
02:13:10,750 --> 02:13:16,430
how the ECRS is purchased and how non-spin is purchased in order to bring that into alignment

1737
02:13:16,430 --> 02:13:20,370
with what we think are more reasonable reliability goals.

1738
02:13:21,270 --> 02:13:24,890
Real-time co-optimization will solve a lot of the issues that we identified, not all

1739
02:13:24,890 --> 02:13:26,870
of them, but a number of them.

1740
02:13:27,390 --> 02:13:31,750
And so we appreciate that IRCOT's continuing to work on that project, and that is going

1741
02:13:31,750 --> 02:13:33,290
to make a big difference eventually.

1742
02:13:34,030 --> 02:13:39,090
But we've got a ways to go until that comes, and so I hope that we can engage

1743
02:13:39,090 --> 02:13:42,530
you guys in December to talk more about the ancillary services methodology.

1744
02:13:45,150 --> 02:13:49,210
So we already talked a lot about prices. Of course, prices were very high in August.

1745
02:13:49,790 --> 02:13:54,110
Kanan talked about peak or net margin. That's about two and a half times cost of new entry.

1746
02:13:54,550 --> 02:13:58,850
It's a pretty substantial and remarkable result for a system that is meeting the one and

1747
02:13:58,850 --> 02:14:00,410
exceeding the one in 10 standard.

1748
02:14:03,210 --> 02:14:05,790
Ancillary services costs are up pretty drastically

1749
02:14:05,790 --> 02:14:12,190
for the summer. A lot of that is driven by ECRS, but also RRS because these are co-optimized

1750
02:14:12,190 --> 02:14:19,070
services in the day-to-day market. And when, you know, the supply of one service is restricted,

1751
02:14:19,330 --> 02:14:21,410
it tends to raise the prices of all the services.

1752
02:14:24,340 --> 02:14:26,360
We talked a lot about load trends, so I won't

1753
02:14:26,360 --> 02:14:30,440
go up too much about this other than to note that there's load growth in all zones.

1754
02:14:32,940 --> 02:14:37,060
And we also wanted to show the other side of the equation, which is also, which

1755
02:14:37,060 --> 02:14:41,580
is addition of capacity. There have been a substantial amount of capacity that has also

1756
02:14:41,580 --> 02:14:47,180
grown since the summer of 2021 to address some of the slow growth that we've seen.

1757
02:14:49,500 --> 02:14:54,080
I have a question on that. Is that a net new capacity or is that gross?

1758
02:14:55,160 --> 02:14:55,780
That's gross.

1759
02:15:00,300 --> 02:15:02,580
So, there's been a lot of stuff fall off, too.

1760
02:15:02,700 --> 02:15:08,860
No, I can't think of. We didn't have any retirements last year, and I think we only had one proposed

1761
02:15:08,860 --> 02:15:14,220
retirement this year. So, since 2021, I don't think that would be a significant difference.

1762
02:15:19,060 --> 02:15:25,060
Around low forecast error. So, with conservative operations, ARCOT is sometimes choosing the

1763
02:15:25,060 --> 02:15:29,860
most conservative forecast, and we can see that within the low forecast error. In the

1764
02:15:29,860 --> 02:15:35,700
afternoon and evening, especially at the peak hours, that's the blue line that's like above

1765
02:15:35,700 --> 02:15:43,820
all the other lines there. You can see it's pretty significantly in June and July and August

1766
02:15:43,820 --> 02:15:47,780
over forecasting by 1,600 to 3,200 megawatts of load.

1767
02:15:51,670 --> 02:15:55,350
And also there's been a lot of discussion of the thermal generation fleet and how it

1768
02:15:55,350 --> 02:16:00,830
performed this summer. So if we looked at last summer versus this summer to see

1769
02:16:00,830 --> 02:16:06,830
what was the generator performance and typically we always see, we typically see good performance

1770
02:16:06,830 --> 02:16:13,510
in summer because that is when outages, planned outages are low. It's, everybody's preparing

1771
02:16:13,510 --> 02:16:17,530
for the summer and the shoulder seasons and they want to be highly available to capture

1772
02:16:17,530 --> 02:16:27,970
summer pricing. We did see higher deratings and outages in June and, but pretty similar

1773
02:16:27,970 --> 02:16:30,270
for July, August, and September.

1774
02:16:31,050 --> 02:16:32,690
And so when you look at the monthly average,

1775
02:16:33,570 --> 02:16:35,270
whereas there might have been some days

1776
02:16:35,270 --> 02:16:36,790
in which we had high thermal outages,

1777
02:16:36,950 --> 02:16:38,390
we had other days in which they were low,

1778
02:16:38,730 --> 02:16:40,250
and if you look on an average basis,

1779
02:16:40,370 --> 02:16:43,050
the generator performance was pretty similar to last summer,

1780
02:16:43,570 --> 02:16:45,530
maybe with the exception of June

1781
02:16:45,530 --> 02:16:47,090
in which we did see higher outages.

1782
02:16:49,900 --> 02:16:50,980
That's my last slide.

1783
02:16:51,080 --> 02:16:52,000
Any questions for me?

1784
02:16:52,900 --> 02:16:56,640
Hey, Carrie, I've got a question.

1785
02:16:57,920 --> 02:17:04,900
Early in the presentation, you talked about commenting on the, or making changes to the

1786
02:17:04,900 --> 02:17:11,380
Ancillary Service methodology to get a reasonable rate of reliability, a more reasonable rate.

1787
02:17:11,620 --> 02:17:14,420
A more, yeah, more efficient procurement to meet the reliability.

1788
02:17:15,140 --> 02:17:15,300
Okay.

1789
02:17:16,480 --> 02:17:21,580
I guess my question is the Ancillary Service methodology will be completed in December

1790
02:17:21,580 --> 02:17:22,220
of this year.

1791
02:17:22,500 --> 02:17:22,960
That's right.

1792
02:17:22,960 --> 02:17:29,100
And the reliability standard won't be done until probably after that.

1793
02:17:29,340 --> 02:17:29,820
That's right.

1794
02:17:30,220 --> 02:17:31,860
So how do you marry up those two things?

1795
02:17:31,980 --> 02:17:35,820
How do you look forward to a future reliability standard

1796
02:17:37,390 --> 02:17:41,130
and make changes to the Ancillary Service methodology now?

1797
02:17:42,110 --> 02:17:46,370
So, in my view, a reliability standard is more of a planning metric.

1798
02:17:47,230 --> 02:17:51,530
And the Ancillary Services methodology is for the operating time horizon.

1799
02:17:51,530 --> 02:17:57,690
in. And so, those are different views. I would say that what we're trying to do in

1800
02:17:57,690 --> 02:18:02,890
our comments for the AS methodology is look at what is each service, what is it being

1801
02:18:02,890 --> 02:18:10,150
used for, and what are our recommendations for how to make modifications to those things

1802
02:18:10,150 --> 02:18:15,430
like, for instance, you know, I don't know if I want to get into all the details,

1803
02:18:15,430 --> 02:18:24,370
but just tweaking some of the quantities so that the better aligns with even the stated

1804
02:18:24,370 --> 02:18:30,970
goal of the service. For instance, ECRS is a 10-minute service, and it is used and deployed

1805
02:18:30,970 --> 02:18:36,910
for 10-minute net load ramps. And so we believe that 10-minute net load errors are the accurate

1806
02:18:37,750 --> 02:18:42,470
reliability metric to use for that methodology, not 30 minutes, as it currently does. That's

1807
02:18:42,470 --> 02:18:48,010
one example. And so it's things like that that we will be proposing to change and we'll

1808
02:18:48,010 --> 02:18:49,430
take that to WMS next month.

1809
02:18:51,960 --> 02:19:00,020
Kerry, when you go back to the previous slide where John asked the question about the new

1810
02:19:00,020 --> 02:19:07,840
generation that's come online, did you say that during this period, no generation would

1811
02:19:07,840 --> 02:19:08,520
come offline?

1812
02:19:09,840 --> 02:19:13,020
I can't remember off the top of my head. I'm trying to remember when we did our

1813
02:19:13,020 --> 02:19:18,240
annual report I think we had like I know we have one announcement right we have

1814
02:19:18,240 --> 02:19:25,920
Barney Davis announcement this year and it's so is that not offline yet it's not

1815
02:19:25,920 --> 02:19:32,080
offline yet there was I think there might have been one at the end of 2021 I

1816
02:19:32,080 --> 02:19:36,480
don't think there were in any 2022 this is 20,000 megawatts so any any

1817
02:19:36,480 --> 02:19:38,780
Any retirements we've had have been like 400 megawatts.

1818
02:19:38,780 --> 02:19:45,980
I was thinking it was already offline but it's just announced and we're trying to get

1819
02:19:45,980 --> 02:19:46,140
it.

1820
02:19:46,760 --> 02:19:48,800
We hope it will come back in through the RFP.

1821
02:19:54,910 --> 02:19:56,590
I have a couple of things.

1822
02:19:56,790 --> 02:20:00,790
One is I think the actual retirement since 2021 are about 1.2 gigawatts but I'll get

1823
02:20:00,790 --> 02:20:04,490
the exact breakdown of that so that it can be baked into the next analysis.

1824
02:20:04,490 --> 02:20:12,010
that would turn that, the dispatchable power negative in that graph or get it

1825
02:20:12,010 --> 02:20:18,730
close to negative or zero. Going, when you look at the cost of answering services

1826
02:20:18,730 --> 02:20:27,190
that's paid for in order to try to encourage reliability, to try to create

1827
02:20:27,190 --> 02:20:28,270
a reliable grid.

1828
02:20:30,370 --> 02:20:37,930
The offset to that is that there is a cost of an avoided load shed. And

1829
02:20:37,930 --> 02:20:42,990
so what is the value of that? Basically, Ancelary Services is paying for the avoidance of load

1830
02:20:42,990 --> 02:20:48,470
shed. How do you make those two together? I think you'd admit that reliability is important

1831
02:20:48,470 --> 02:20:51,150
and that ought to be the goal of any grid operator.

1832
02:20:51,710 --> 02:20:55,870
Of course, absolutely. Ancelary Services are very specific capacity products. They're

1833
02:20:55,870 --> 02:20:59,030
not general capacity products to meet a reliability standard.

1834
02:20:59,410 --> 02:21:02,150
They are very specific to follow the load

1835
02:21:02,150 --> 02:21:04,370
and to ensure that the frequency is followed,

1836
02:21:04,630 --> 02:21:07,510
or if a unit trips to be able to replace those megawatts.

1837
02:21:07,530 --> 02:21:08,470
But you can spell out reliability.

1838
02:21:09,250 --> 02:21:10,570
Yes, absolutely.

1839
02:21:10,870 --> 02:21:12,950
But what I'm trying to point out

1840
02:21:12,950 --> 02:21:16,410
is that they have very specific uses.

1841
02:21:17,150 --> 02:21:19,690
And those specific uses can be studied and analyzed

1842
02:21:19,690 --> 02:21:21,830
to determine how many do you need to meet them.

1843
02:21:22,230 --> 02:21:25,210
It actually has no, the reliability standard

1844
02:21:25,210 --> 02:21:27,150
is something that's completely different from that?

1845
02:21:28,190 --> 02:21:30,050
The reliability standard is different,

1846
02:21:30,050 --> 02:21:33,150
but these services are procured to ensure reliability.

1847
02:21:34,250 --> 02:21:37,310
And if you didn't do that, or if there's

1848
02:21:38,130 --> 02:21:42,030
criticism of the cost of it, the cost that they are offsetting

1849
02:21:42,030 --> 02:21:43,670
is avoided load shed.

1850
02:21:44,450 --> 02:21:46,150
And so we need to look at the value of that.

1851
02:21:46,290 --> 02:21:49,050
Somewhere that's got to be baked in to this analysis

1852
02:21:49,610 --> 02:21:51,610
is that those are done to avoid load shed,

1853
02:21:51,610 --> 02:21:54,770
because load shed has a cost to consumers.

1854
02:21:54,770 --> 02:22:00,790
the economy to people to physical health and so forth. Absolutely we should we

1855
02:22:00,790 --> 02:22:04,190
should absolutely procure enough to have a reliable grid we should have the

1856
02:22:04,190 --> 02:22:09,210
right services to meet the specific attributes that the grid needs but we

1857
02:22:09,210 --> 02:22:13,550
should not buy more than that more more megawatts is just more cost more

1858
02:22:13,550 --> 02:22:17,230
megawatts and you need to meet all of those attributes it's just additional

1859
02:22:17,230 --> 02:22:21,030
costs it's not actually buying you any additional reliability and it's not

1860
02:22:21,030 --> 02:22:25,410
actually in my opinion I think we would have been just as reliable this summer

1861
02:22:25,410 --> 02:22:29,790
without these excess ECRS megawatts. But that's looking backwards that's not

1862
02:22:29,790 --> 02:22:34,130
from the perspective of the control room operators got a deal with the

1863
02:22:34,130 --> 02:22:40,050
uncertainties of an intermittent grid power supply as well as potential

1864
02:22:40,050 --> 02:22:45,510
things that could go wrong. Yes I'm aware of that I just think that there

1865
02:22:45,510 --> 02:22:48,050
is a right amount to buy and we shouldn't buy more than that.

1866
02:22:51,720 --> 02:22:55,760
carry on the new unit capacity that is that all just nameplate like for the

1867
02:22:55,760 --> 02:23:01,360
wind and solar is that just nameplate or is that effective capacity I believe

1868
02:23:01,360 --> 02:23:06,660
it's cumulative summer it's summer summer capacity so it's their rated name

1869
02:23:06,660 --> 02:23:11,520
play it's not the ELCC number it's not the ELCC it's the summer max it's so

1870
02:23:11,520 --> 02:23:16,080
it's temperature adjusted and so 14,000 of that is wind and solar so you

1871
02:23:16,080 --> 02:23:20,140
see maybe a third of that if you're lucky right yeah it's just temperature

1872
02:23:20,140 --> 02:23:21,460
are adjusted nameplate for sure.

1873
02:23:22,140 --> 02:23:23,580
And that goes back to 21.

1874
02:23:23,820 --> 02:23:26,280
If you look at that compared to low growth from 21,

1875
02:23:26,880 --> 02:23:29,120
if you adjusted that down, I think

1876
02:23:29,120 --> 02:23:30,120
that would tell the story.

1877
02:23:41,210 --> 02:23:43,230
I do think in listening to the discussion today,

1878
02:23:44,270 --> 02:23:46,770
maybe it's for R&M or the board.

1879
02:23:46,990 --> 02:23:48,370
But it would be helpful to understand

1880
02:23:48,370 --> 02:23:50,710
the protocols around each of the ancillary services

1881
02:23:50,710 --> 02:23:54,930
and kind of the rules and engagement for each of these.

1882
02:23:56,010 --> 02:23:56,930
Yeah, we could do that.

1883
02:24:01,910 --> 02:24:03,170
Any other questions?

1884
02:24:03,170 --> 02:24:04,290
If

1885
02:24:07,430 --> 02:24:08,470
not, Gary, thank you.

1886
02:24:08,730 --> 02:24:09,010
Thank you.

1887
02:24:12,370 --> 02:24:13,090
All right.

1888
02:24:14,190 --> 02:24:19,350
At this time, I'd like to invite Cliff Lange, Chair of the Technical Advisory Committee,

1889
02:24:20,230 --> 02:24:23,670
to present an Agenda Item 9 TAC report.

1890
02:24:24,750 --> 02:24:29,450
There's one non-unanimous revision request as a voting item under the TAC report today.

1891
02:24:31,230 --> 02:24:36,210
NPRR 1188, which the Board remanded to TAC in August.

1892
02:24:36,210 --> 02:24:44,890
The Liability and Markets Committee discussed this NPRR yesterday, after Cliff reports on

1893
02:24:44,890 --> 02:24:53,790
tax recommendation on NPRR 1186, RNM Committee Chair Bob Flexin will report on the RNM Committee's

1894
02:24:53,790 --> 02:24:55,030
discussion and recommendation.

1895
02:24:56,390 --> 02:25:02,270
At yesterday's RNM Committee meeting, Stephanie Smith from EOLENLP addressed the RNM Committee,

1896
02:25:02,270 --> 02:25:10,170
And she is here again today if any board members or commissioners have questions for her or for her.

1897
02:25:10,390 --> 02:25:17,150
Dan Woodfin is also here to answer any questions regarding ERCOT's recommendation.

1898
02:25:18,350 --> 02:25:19,350
Cliff, please proceed.

1899
02:25:19,750 --> 02:25:20,890
All right. Good morning, everyone.

1900
02:25:22,230 --> 02:25:25,230
So a rather abbreviated tax summary for you this month.

1901
02:25:25,230 --> 02:25:30,710
We did have three revision requests and, of course, as Chair noted, one of which was

1902
02:25:30,710 --> 02:25:32,230
non-unanimous in that regard.

1903
02:25:32,910 --> 02:25:38,610
The first two NPRRs, 1184 and SCR824, you'd already taken up in your consent agenda.

1904
02:25:39,330 --> 02:25:44,510
1186 we'll discuss in a second and we'll talk about the TAC highlights at the end

1905
02:25:44,510 --> 02:25:45,710
of my presentation there.

1906
02:25:46,950 --> 02:25:52,570
Regarding NPRR 1186, as was noted, this one was remanded to TAC for consideration.

1907
02:25:52,570 --> 02:25:59,470
We had five sets of comments that we considered when we last met in September to discuss this

1908
02:25:59,470 --> 02:26:04,470
and our other items at that meeting, and of those five comments, one of which included

1909
02:26:04,470 --> 02:26:07,810
a set of comments filed by IRCOT that included language changes.

1910
02:26:09,530 --> 02:26:14,330
We spent time discussing the merits of those language changes and did have some questions

1911
02:26:14,330 --> 02:26:19,690
regarding the intent since the language did go beyond what was originally remanded

1912
02:26:19,690 --> 02:26:20,670
to TAC to consider.

1913
02:26:20,670 --> 02:26:26,290
We did spend a fairly significant amount of time talking about additional concepts that

1914
02:26:26,290 --> 02:26:32,630
were contained in the preamble to the language changes, but not being considered by TAC otherwise

1915
02:26:32,630 --> 02:26:35,730
in the context of the language changes that ERCOT submitted.

1916
02:26:36,410 --> 02:26:41,690
Those included discussing compliance metrics that were associated, potentially associated

1917
02:26:41,690 --> 02:26:43,030
with nonperformance.

1918
02:26:43,690 --> 02:26:47,970
We also asked questions about additional comments ERCOT had regarding limits to ancillary

1919
02:26:47,970 --> 02:26:53,630
service provision from energy storage resources and potential increases in the ancillary services

1920
02:26:54,170 --> 02:26:58,990
in the event that there was a failure to maintain state of charge. Again, those items were not

1921
02:26:58,990 --> 02:27:03,250
in the context of the revisions that you're going to be discussing today, but we're in

1922
02:27:03,250 --> 02:27:08,530
the preamble language that was discussed and did peak interest from TAC members. We had

1923
02:27:08,530 --> 02:27:13,950
an almost unanimous decision with one opposing vote. The reasons for those really revolved

1924
02:27:13,950 --> 02:27:19,490
around the necessity for penalties and whether that was something we needed to proceed with,

1925
02:27:19,950 --> 02:27:24,510
whether the NPRR was actually discriminatory towards one asset type, in this case energy

1926
02:27:24,510 --> 02:27:30,270
storage resources, and then lastly whether this was a waste of resources on the ERCOT

1927
02:27:30,270 --> 02:27:36,190
perspective in terms of taking away resources that would be needed for real-time co-optimization

1928
02:27:36,190 --> 02:27:39,210
plus battery storage changes that are upcoming.

1929
02:27:40,610 --> 02:27:44,490
Lastly, we had a couple of highlights here that I wanted to bring to your attention.

1930
02:27:44,690 --> 02:27:50,570
We did approve our major transmission elements list that was brought to us by the Reliability

1931
02:27:50,570 --> 02:27:51,730
Operations Subcommittee.

1932
02:27:52,310 --> 02:27:57,690
That seeds are what we call a height list or a high impact transmission element list.

1933
02:27:58,250 --> 02:28:03,430
And we also kicked off our process of doing our annual TAC and TAC subcommittee procedural

1934
02:28:03,430 --> 02:28:03,870
review.

1935
02:28:04,550 --> 02:28:07,550
We did have our subcommittees do their self-assessment.

1936
02:28:07,550 --> 02:28:12,490
We did have a meeting on October 13 to discuss those results, an informal meeting at that.

1937
02:28:12,970 --> 02:28:17,730
And we will discuss our findings at our upcoming meeting next week, and we will bring those

1938
02:28:17,730 --> 02:28:18,990
to RNM in December.

1939
02:28:19,710 --> 02:28:21,330
And that is it for our TAC report.

1940
02:28:21,510 --> 02:28:21,970
Any questions?

1941
02:28:28,770 --> 02:28:29,550
I guess not.

1942
02:28:29,710 --> 02:28:30,270
Thank you, Cliff.

1943
02:28:30,590 --> 02:28:31,390
Thanks very much.

1944
02:28:31,550 --> 02:28:32,110
You're quite welcome.

1945
02:28:36,100 --> 02:28:36,620
Okay.

1946
02:28:36,860 --> 02:28:41,360
I think we're looking for Bob to provide an update from the RNM on 1186.

1947
02:28:41,360 --> 02:28:48,780
Yes, so we did reconsider the NPR or 1186 following our prior meeting where the Board

1948
02:28:48,780 --> 02:28:55,320
had remanded to TAC of the deployment as you discussed during the August 30th R&M Committee

1949
02:28:55,320 --> 02:29:01,460
meeting and the August 31st Board meeting. So in addition to TAC reporting, we also

1950
02:29:01,460 --> 02:29:07,240
had ERCOT staff report and also Stephanie Smith present it again on behalf of Eolean.

1951
02:29:07,240 --> 02:29:12,660
So the commissioners, the committee members, IRCOT staff, and Stephanie Smith, we discussed

1952
02:29:12,660 --> 02:29:18,400
the changes that were proposed to NPRR 1186 following the remand attack that allowed

1953
02:29:18,400 --> 02:29:26,620
for resource flexibility and bidding for the Ancillary Service Award, the impacts

1954
02:29:26,620 --> 02:29:31,480
of the resources charging during emergency conditions, and non-distinction regarding

1955
02:29:31,480 --> 02:29:35,940
resource state of charge between scarcity intervals and non-scarcity intervals.

1956
02:29:35,940 --> 02:29:42,300
and the potential impacts that NPRR 1186 could have on investment and development of longer

1957
02:29:42,300 --> 02:29:48,100
duration batteries and qualifying scheduling entities and the management of reserves.

1958
02:29:48,840 --> 02:29:52,920
So we had a robust discussion with all those parties and all those different considerations.

1959
02:29:53,760 --> 02:29:59,440
I'll do a full report out later, but the R&M Committee did approve it unanimously.

1960
02:30:00,000 --> 02:30:06,980
And I feel that all parties had ample time to express their thoughts and considerations.

1961
02:30:07,780 --> 02:30:16,280
And the approval came with an attachment that ERCOT to look at potential penalty and mitigation

1962
02:30:16,280 --> 02:30:24,500
structures through another NPRR for nonperformance. So we have approved it down at the RNM level.

1963
02:30:24,500 --> 02:30:30,720
And again, if anybody from either ERCOT or Stephanie from EOLI will like to comment, please do so.

1964
02:30:30,840 --> 02:30:35,420
But we really did air it all out yesterday and reached the final conclusion.

1965
02:30:39,390 --> 02:30:46,190
Okay, so we have a recommendation from RNM to the Board to approve 1186.

1966
02:30:46,450 --> 02:30:47,190
Does anybody have any?

1967
02:30:47,770 --> 02:30:48,830
So let me just clarify.

1968
02:30:49,110 --> 02:30:53,810
I think Bob, your recommendation is to approve 1186 as recommended by TAAC.

1969
02:30:53,810 --> 02:30:59,210
And then there were these two other items that were discussed at R&M about the board designating

1970
02:30:59,210 --> 02:31:04,710
one or more priority NPRs to deal with the compliance and the financial penalties piece,

1971
02:31:04,810 --> 02:31:05,130
correct?

1972
02:31:05,530 --> 02:31:06,030
Yes, correct.

1973
02:31:06,310 --> 02:31:06,530
Okay.

1974
02:31:11,720 --> 02:31:14,640
So I would entertain a motion to approve.

1975
02:31:15,120 --> 02:31:15,800
So moved.

1976
02:31:16,360 --> 02:31:16,760
So moved.

1977
02:31:16,960 --> 02:31:17,000
Second.

1978
02:31:17,480 --> 02:31:17,920
Okay.

1979
02:31:18,180 --> 02:31:18,860
Motion to second.

1980
02:31:19,500 --> 02:31:20,340
All in favor?

1981
02:31:20,680 --> 02:31:20,900
Aye.

1982
02:31:21,700 --> 02:31:22,320
Any opposed?

1983
02:31:23,440 --> 02:31:24,180
Thank you.

1984
02:31:24,180 --> 02:31:31,720
I know that was a lot of hard work and effort from everyone involved, but confident we ended

1985
02:31:31,720 --> 02:31:32,540
up in the right place.

1986
02:31:32,560 --> 02:31:33,820
We came up with a better product.

1987
02:31:43,560 --> 02:31:50,060
Next is agenda item 10, load zone changes, request of lower Colorado River Authority,

1988
02:31:50,960 --> 02:31:52,500
and Chad will present this.

1989
02:31:53,040 --> 02:31:53,260
Yep.

1990
02:31:53,420 --> 02:31:57,420
I'm going to just do it from here so Penny, if you'll drive, try to catch us up.

1991
02:31:58,140 --> 02:32:02,220
So doing this on behalf of LCRA, this is a board voting item.

1992
02:32:02,220 --> 02:32:04,880
You have a decision template in your public materials.

1993
02:32:05,640 --> 02:32:12,820
This is really related to the BRASIS bankruptcy matter where BRASIS had to relinquish all the

1994
02:32:12,820 --> 02:32:16,300
load under its mark participant registrations.

1995
02:32:16,660 --> 02:32:23,080
And so LCRA has contracted with this one co-op member that was in BRASIS's area.

1996
02:32:23,540 --> 02:32:28,680
And LCRA now wants to align that load with its designated load zone.

1997
02:32:28,680 --> 02:32:35,080
There is a specific process in the protocols that authorizes the board to add, delete,

1998
02:32:35,220 --> 02:32:38,700
or change load zones, and that's what this request is.

1999
02:32:39,060 --> 02:32:42,160
There are competitive and no-e load zones across the system.

2000
02:32:42,620 --> 02:32:44,720
LCA has its own no-e load zone.

2001
02:32:45,520 --> 02:32:50,240
If the board moves forward to vote on this today, it will be effective 48 months following

2002
02:32:50,240 --> 02:32:55,580
this approval, and that's because we have a congestion revenue write auction that

2003
02:32:55,580 --> 02:33:00,640
That goes out three years and so gives certainty to those entities participating in the CRR

2004
02:33:00,640 --> 02:33:04,060
auctions on where that load is going to be in the model in future years.

2005
02:33:04,380 --> 02:33:07,180
So that's why it takes 48 months for it to become effective.

2006
02:33:07,900 --> 02:33:14,220
On slide three here you see just kind of a visual representation of the Hamilton load

2007
02:33:14,780 --> 02:33:20,700
in the upper right quadrant in blue and of course 48 months later it would turn

2008
02:33:20,700 --> 02:33:26,620
to yellow, which is represented here on the scale, is LCA's load zone, if the board approves

2009
02:33:26,620 --> 02:33:26,860
us.

2010
02:33:30,420 --> 02:33:34,060
And there is a representative from LCA here if the board members have any specific

2011
02:33:34,060 --> 02:33:37,060
questions to LCA on this load zone change.

2012
02:33:40,960 --> 02:33:42,100
Happy to answer any questions.

2013
02:33:45,670 --> 02:33:49,030
Do you want a motion? Yes. I'll move it.

2014
02:33:49,910 --> 02:33:52,410
Second. All right. We have a motion to second.

2015
02:33:52,530 --> 02:33:53,570
All in favor? Aye.

2016
02:33:54,770 --> 02:33:58,350
Any opposed? All right. It passes. Thank you.

2017
02:34:02,860 --> 02:34:05,520
Next, we have the committee reports.

2018
02:34:06,020 --> 02:34:10,840
First bill will present agenda item 11, finance and audit committee report.

2019
02:34:12,960 --> 02:34:14,000
Thank you, Mr. Chairman.

2020
02:34:14,840 --> 02:34:18,740
Finance and audit committee discussed several items yesterday.

2021
02:34:19,060 --> 02:34:23,600
First of all, let me state that there are no voting items that will be presented to

2022
02:34:23,600 --> 02:34:24,280
the board today.

2023
02:34:25,240 --> 02:34:29,280
The first thing we did was to review, was to talk about the fact that we will

2024
02:34:29,280 --> 02:34:35,900
have self-evaluation of the committee members that will be done sometime during our December

2025
02:34:35,900 --> 02:34:42,700
meeting. Secondly, we reviewed the most recent financial performance of the organization

2026
02:34:42,700 --> 02:34:50,560
as well as comparisons to the expected financial performance at the time the budget was considered

2027
02:34:50,560 --> 02:34:55,820
back in June. And I'll come back to that in just a minute. Lastly, or excuse me,

2028
02:34:55,820 --> 02:35:00,560
Additionally, we reviewed the status of our current investments and they'll comply with

2029
02:35:00,560 --> 02:35:01,500
our investment policy.

2030
02:35:02,040 --> 02:35:07,500
We also looked at our debt governance performance and have determined that we are in full compliance

2031
02:35:07,500 --> 02:35:08,540
with all debt governance.

2032
02:35:09,140 --> 02:35:15,360
Now, moving back to the financial performance of the organization, compared to what we expected

2033
02:35:15,360 --> 02:35:22,800
when we looked at the budget in June of this year, the organization has had positive

2034
02:35:22,800 --> 02:35:27,760
to financial performance that I think needs to be considered by the PUC when it looks

2035
02:35:27,760 --> 02:35:31,520
at the system administration fee for future years.

2036
02:35:32,100 --> 02:35:38,040
In particular, our interest income is about $27 million higher or expected to be $27 million

2037
02:35:38,040 --> 02:35:42,920
higher than what it was when the initial forecast were put together in June.

2038
02:35:45,100 --> 02:35:50,280
Our system admin fee revenues are higher by about $6 million because of additional

2039
02:35:50,280 --> 02:35:55,060
low during the summer months, as we've talked about several times during this meeting so far.

2040
02:35:55,580 --> 02:35:59,920
Expenses are $4 million favorable to a variety of factors, including lower

2041
02:35:59,920 --> 02:36:06,640
than budgeted insurance premiums. So the net net is we've got about $36 million more and resources

2042
02:36:06,640 --> 02:36:13,400
available to us at the beginning of 2025 than we expected to have when the budget was put

2043
02:36:13,960 --> 02:36:22,660
And so, if you were to prepare the budget today and present that to the PUC, you could

2044
02:36:22,660 --> 02:36:29,100
possibly come up with a system admin fee somewhere less than the 71 cents that we originally

2045
02:36:29,100 --> 02:36:32,900
proposed when this board approved the budget back in June.

2046
02:36:33,560 --> 02:36:38,740
So based on that, I've asked the, on behalf of the Finance and Audit Committee, I've

2047
02:36:38,740 --> 02:36:45,820
that ERCOT staff submit a revised rate calculation to the commission that includes the updated

2048
02:36:45,820 --> 02:36:51,300
2023 forecast during yesterday's FNA meeting as we anticipate that the commission is going

2049
02:36:51,300 --> 02:36:58,160
to address ERCOT's 2024-2025 budget request at its November 2nd open meeting.

2050
02:36:58,740 --> 02:37:04,400
I think that, you know, those additional resources should be made available to reduce

2051
02:37:04,400 --> 02:37:10,620
the impact of the cost of the system admin fee on the consumers of the state.

2052
02:37:10,920 --> 02:37:11,760
And that's my report.

2053
02:37:12,200 --> 02:37:12,400
All

2054
02:37:15,830 --> 02:37:16,010
right.

2055
02:37:16,130 --> 02:37:17,210
Any comments or questions?

2056
02:37:18,910 --> 02:37:28,170
So I just want to, based upon Chair Flores's F&A direction, we will add some additional

2057
02:37:28,170 --> 02:37:34,450
materials into the docket in which the commission is going to consider our fee proposal and

2058
02:37:34,450 --> 02:37:37,270
budget proposal before the November 2nd opening.

2059
02:37:43,550 --> 02:37:44,170
Thank you.

2060
02:37:44,290 --> 02:37:44,970
We appreciate that.

2061
02:37:45,310 --> 02:37:50,470
And the diligence going back and kind of looking at taking a second look, and that obviously

2062
02:37:50,470 --> 02:37:55,310
came out of the scrutiny that ERCOT did, looking at, you know, what we had that was

2063
02:37:55,310 --> 02:37:59,450
available when we actually put the budget together, ERCOT did, and then what's available

2064
02:37:59,450 --> 02:38:01,570
now and then taking that action.

2065
02:38:01,730 --> 02:38:03,150
So we very much appreciate that.

2066
02:38:06,800 --> 02:38:12,960
Next, Peggy Hig will present Agenda Item 12, which is the HRNG Committee report.

2067
02:38:13,720 --> 02:38:13,940
Peggy?

2068
02:38:14,340 --> 02:38:14,520
Yeah.

2069
02:38:15,220 --> 02:38:15,920
Thank you, Chairman.

2070
02:38:16,300 --> 02:38:17,120
This will be short.

2071
02:38:17,680 --> 02:38:21,620
We had no voting items in the Human Resources and Governance Committee meeting.

2072
02:38:22,120 --> 02:38:30,040
And the only item we discussed in the general session was the self-evaluation similar to

2073
02:38:30,040 --> 02:38:31,800
what Bill mentioned for FNA.

2074
02:38:32,060 --> 02:38:35,080
So that will be going out to committee members.

2075
02:38:35,080 --> 02:38:40,840
members, and we welcome input from many board members, and we will discuss that in the December

2076
02:38:41,720 --> 02:38:43,520
Human Resources and Governance Committee.

2077
02:38:45,000 --> 02:38:45,740
Thank you.

2078
02:38:46,300 --> 02:38:46,620
Okay.

2079
02:38:47,080 --> 02:38:47,400
Comments?

2080
02:38:47,680 --> 02:38:47,920
Questions?

2081
02:38:49,220 --> 02:38:50,120
Thank you.

2082
02:38:50,640 --> 02:38:57,140
Next, Bob will present Agenda Item 13, R&M Committee Report, which has one associated voting

2083
02:38:57,140 --> 02:38:57,400
item.

2084
02:38:58,280 --> 02:39:01,960
The item recording voting deals with the R&M Committee Charter.

2085
02:39:01,960 --> 02:39:07,700
The committee charter was revised to reflect the adjustment for formation of the technology

2086
02:39:07,700 --> 02:39:16,780
and security committee and also some additional revision requests recommended by TAG for board

2087
02:39:16,780 --> 02:39:17,140
approval.

2088
02:39:17,600 --> 02:39:22,740
So we made note of that maybe further updates in the language in the future as well as

2089
02:39:22,740 --> 02:39:26,040
revisions to the board policies and procedures of protocol section 21.

2090
02:39:26,040 --> 02:39:31,500
so recommending to the board to accept the adjustment to the RNM committee

2091
02:39:31,500 --> 02:39:40,360
charter all right motion by Bob I'll move it second by Julie all in favor any

2092
02:39:40,360 --> 02:39:47,580
opposed thank you that passes and next we also went through some additional

2093
02:39:47,580 --> 02:39:52,440
discussions on standing committee items weatherization updates system

2094
02:39:52,440 --> 02:39:58,540
planning and weatherization update. We reviewed the interconnection queue, the impact of regulatory

2095
02:39:58,540 --> 02:40:03,580
certainty on speculative generation, and the number of generation applications that have

2096
02:40:03,580 --> 02:40:09,620
commissioned into service and how they've been decreasing over time. We went through

2097
02:40:09,620 --> 02:40:15,320
the monthly resource adequacy report and use of the dispatchable generation energy storage

2098
02:40:15,320 --> 02:40:17,180
resources and capacity contracts.

2099
02:40:20,620 --> 02:40:24,180
We analyzed the probability of outages due to storm

2100
02:40:24,180 --> 02:40:27,740
and the weatherization assumptions for each of the scenarios,

2101
02:40:28,420 --> 02:40:32,880
and the mix of staff and contracted labor to perform the actual inspections of weatherizations.

2102
02:40:34,990 --> 02:40:40,430
The system's operations update in response to the latest solar eclipse,

2103
02:40:41,310 --> 02:40:44,810
we took a look at the generation down ramp of five megawatts

2104
02:40:44,810 --> 02:40:48,470
rather than a potential 12 megawatts in the plans to use the lessons learned

2105
02:40:48,470 --> 02:40:52,570
for the upcoming full solar eclipse in April of 2024.

2106
02:40:56,830 --> 02:41:00,590
We also took a look at the peak or net margin which we discussed here at the Board meeting

2107
02:41:00,590 --> 02:41:07,070
as well, and we also discussed the impact of energy storage resource capacity offers

2108
02:41:07,070 --> 02:41:10,950
as a factor in some of the high prices that ERCOT saw during the summer.

2109
02:41:15,130 --> 02:41:18,410
And then we took a look at a few high-profile projects.

2110
02:41:19,650 --> 02:41:24,410
We did an update on the reliability standard study where ERCOT filed simulation results

2111
02:41:24,410 --> 02:41:30,030
with the PUC for 48 scenarios and proposed additional scenario simulations.

2112
02:41:31,450 --> 02:41:36,690
We talked about real-time co-optimization update, projects are in flight with initial plans

2113
02:41:36,690 --> 02:41:41,770
to deliver in 2026, and our COD staff highlighted the need for stakeholder feedback, especially

2114
02:41:41,770 --> 02:41:49,270
regarding the incorporation of demand curves, and we had an update on the ADER pilot project

2115
02:41:49,270 --> 02:41:55,430
status and the staff report increased volumes of the ADRs in the program and have accepted

2116
02:41:56,030 --> 02:42:03,590
aggregation forms from 9 ADRs comprising ERCOT-wide energy at 8.3 megawatts and ERCOT-wide non-spin

2117
02:42:03,590 --> 02:42:07,650
of 2.7 megawatts. And that's the items for the report.

2118
02:42:10,110 --> 02:42:13,070
Okay. Thank you. Questions or comments?

2119
02:42:15,440 --> 02:42:20,620
Thank you, Bob. Next, we have John Swenson.

2120
02:42:20,620 --> 02:42:26,960
will present Agenda Item 14, the Technology and Security Committee Report. John?

2121
02:42:27,340 --> 02:42:32,560
Thank you, Mr. Chairman. We have one voting item, and that is the recommendation of the

2122
02:42:32,560 --> 02:42:39,520
Board to designate Committee Secretary, notably to designate Chad or his designee as Committee

2123
02:42:39,520 --> 02:42:45,330
Secretary. Am I going to have a motion? That does not require a Board vote, so let's

2124
02:42:45,330 --> 02:42:46,270
I'm sorry.

2125
02:42:46,270 --> 02:42:46,670
Any action?

2126
02:42:47,050 --> 02:42:47,330
Okay.

2127
02:42:47,930 --> 02:42:48,670
My understanding.

2128
02:42:49,750 --> 02:42:55,310
We had quite a, this was our first meeting, as you might imagine, and being a committee

2129
02:42:55,310 --> 02:43:00,050
comprised of four engineers, there was a lot of discussion about structure and scope

2130
02:43:00,050 --> 02:43:08,970
and process, and we did not conclude on a scope document yet, although there's been

2131
02:43:08,970 --> 02:43:10,670
a lot of good work done by the staff.

2132
02:43:10,670 --> 02:43:17,310
we will bring that forward to the next board meeting as part of our charter.

2133
02:43:18,050 --> 02:43:24,110
But suffice to say that the committee views that its scope is quite broad.

2134
02:43:25,270 --> 02:43:28,290
It's not the Information Technology and Security Commission.

2135
02:43:28,510 --> 02:43:30,870
It's the Technology and Security Committee.

2136
02:43:31,950 --> 02:43:36,110
And as such, we want to make sure that we are looking at it fairly holistically,

2137
02:43:36,110 --> 02:43:40,470
but not overlapping with things which rightly fall into the domain of RNM.

2138
02:43:41,050 --> 02:43:45,510
So we've got a little bit of work to figure out what fits where,

2139
02:43:46,190 --> 02:43:50,110
but we are looking forward to taking on, you know,

2140
02:43:50,210 --> 02:43:54,750
some future technology discussions and trying to understand how those would impact the grid going forward.

2141
02:43:55,490 --> 02:44:02,790
We also have some standing briefs that previously came to the board or came to RNM.

2142
02:44:02,790 --> 02:44:07,770
One to do with the technology OKRs which Giant reviewed with us

2143
02:44:07,770 --> 02:44:10,570
and I'm pleased to say are all in the green.

2144
02:44:10,950 --> 02:44:12,130
There are four of those.

2145
02:44:12,310 --> 02:44:14,350
There are 61 technology projects in total.

2146
02:44:14,870 --> 02:44:17,290
The four of them are at the OKR level.

2147
02:44:17,810 --> 02:44:24,270
Not all 61 are green, but the four that are at the OKR level are green.

2148
02:44:24,890 --> 02:44:32,010
We had an update on information technology from JP who's our management sponsor.

2149
02:44:32,010 --> 02:44:37,590
and and then we had an update on security from Betty and and we'll go into a

2150
02:44:37,590 --> 02:44:41,850
little bit more of that in in the executive session and that concludes my

2151
02:44:41,850 --> 02:44:42,130
report

2152
02:44:44,690 --> 02:44:55,770
okay comments or questions thank you next agenda item 15 annual membership

2153
02:44:55,770 --> 02:44:59,150
meeting announcement the 53rd annual meeting

2154
02:45:00,000 --> 02:45:02,640
December 11th, one week before the meeting.

2155
02:45:03,300 --> 02:45:08,540
ERCOT will send meeting notices to those who are members as of November 17th.

2156
02:45:08,540 --> 02:45:11,420
The date of record has set forth in the ERCOT bylaws.

2157
02:45:12,820 --> 02:45:17,660
And Chad will provide additional details. Okay, so you have a short presentation

2158
02:45:17,660 --> 02:45:21,140
here and the public materials that gives you the location

2159
02:45:21,800 --> 02:45:25,680
at Austin Marriott downtown. If you remember before COVID,

2160
02:45:25,680 --> 02:45:29,460
We used to have kind of a lunch annual meeting.

2161
02:45:29,660 --> 02:45:36,760
This time we're going to convert it to a late afternoon annual meeting from 4.30 to 7.

2162
02:45:36,880 --> 02:45:43,540
With a little bit of just a gathering at 4.30 to 5.30 before we actually kick off the meeting.

2163
02:45:44,220 --> 02:45:48,600
So we think it will be a great opportunity for the corporate members and invited guest speakers

2164
02:45:48,600 --> 02:45:53,400
and commissioners to all be there and talk about the end of the year activities

2165
02:45:53,400 --> 02:45:58,880
activities and looking to the future. Obviously, this is required of the Texas Business Organization

2166
02:45:58,880 --> 02:46:03,740
Code and our ERCOT bylaws to have an annual meeting every year and it coincides with the

2167
02:46:03,740 --> 02:46:07,860
board cycle. So we're checking the box of all those corporate governance regulations.

2168
02:46:08,620 --> 02:46:14,160
On the next slide, you just see a sample agenda. Again, starting at 4.30, just kind

2169
02:46:14,160 --> 02:46:19,860
of a registration reception and then kicking it off at 5.30 with Pablo and Paul kind

2170
02:46:19,860 --> 02:46:24,940
hosting this, along with a couple of guest speakers that we're out trying to get commitments

2171
02:46:24,940 --> 02:46:29,520
from. And I think this year we've started talking to TAC leadership, and I know they'll talk

2172
02:46:29,520 --> 02:46:34,940
about this at TAC next week, is trying to get the corporate members to get up and say

2173
02:46:34,940 --> 02:46:39,100
a couple words at the annual meeting as well. This is really all about the corporate

2174
02:46:39,100 --> 02:46:44,280
members and engagement with everyone. So I know my team has talked to TAC leadership

2175
02:46:44,280 --> 02:46:50,040
about having two corporate members get up and do some introduction speaking and engagement

2176
02:46:50,040 --> 02:46:54,180
with the rest of the members as well. I think they'll talk about that next week at TAC.

2177
02:46:54,600 --> 02:46:57,560
And so you see a little bit of here of what a sample agenda would look like.

2178
02:46:59,100 --> 02:47:03,040
And then the last slide is just obviously where this hotel is located is downtown.

2179
02:47:03,660 --> 02:47:07,980
We'll obviously have a lot more details as we get closer to mapping everything out

2180
02:47:07,980 --> 02:47:10,160
and give notice to the corporate members in November.

2181
02:47:15,120 --> 02:47:16,380
Okay, thank you.

2182
02:47:18,480 --> 02:47:23,520
The last item before we move into executive session is agenda item 16, other business.

2183
02:47:24,680 --> 02:47:28,960
Would any board member like to raise any other business?

2184
02:47:29,800 --> 02:47:31,620
Mr. Chairman, I do have one comment.

2185
02:47:32,040 --> 02:47:39,180
Back during the IMM report, I talked about retirements that we were aware of,

2186
02:47:39,220 --> 02:47:43,140
and I used an estimate of 1.2 gigawatts, the actual number of retirements,

2187
02:47:43,140 --> 02:47:49,480
or the amount, the quantity of retirement since September of 2021 is 1.259 gigawatts.

2188
02:47:49,720 --> 02:47:59,260
So that chart was either had a mistake or was not really candid in terms of that the net net

2189
02:47:59,260 --> 02:48:05,580
additions of dispatchable power. Thank you. That's what I thought. Those are all thermal too,

2190
02:48:05,720 --> 02:48:09,880
I believe. Well, all coal plants, yeah. Mostly coal and some gas.

2191
02:48:12,350 --> 02:48:13,610
Okay. Thank you, Bill.

2192
02:48:14,910 --> 02:48:20,350
All right. At this time, the board will adjourn general session and convene an executive session.

2193
02:48:21,350 --> 02:48:24,470
No voting items are anticipated during the executive session.

2194
02:48:24,990 --> 02:48:30,190
So general session will not reconvene after the conclusion of the executive session.

2195
02:48:30,930 --> 02:48:34,350
General session is now adjourned and the webcast will be concluded.

2196
02:48:35,090 --> 02:48:38,250
We'll take a five-minute break before convening an executive session.

2197
02:48:38,250 --> 02:48:39,710
Thank you for your attention, Chair Jackson.