Lake: Morning, all thank you for being here. As we did ahead
of the summer season, Brad and I are holding another
press conference to provide an update on grid operations
reliability and actions here at the Commission.
At both ERCOT and the PUC, we are operating
at lightning speed to improve operations, enhance our
grid and ensure reliability for this winter. For the
first time ever, we have gotten improved checks and
balances to ensure a higher level of reliability than
we've ever had. As we did this summer, we will continue
to operate with a margin of safety and enhance reserves.
In addition to having reserves available to call in
response to real time conditions. In addition, will
continue to operate with an abundance of caution, as
we did this summer. In addition, we've made a number
of changes that will both protect consumers and enhance
reliability. Recently, the Commission reduced the highest
price that can possibly be charged in ERCOT from the
infamous $9000 a megawatt hour to $5000 a megawatt
hour. Starting January 1st, those extraordinarily high
prices can never be charged again. In addition, we
are moving, we have already taken the action to move
our largest demand response electricity conservation
program to earlier stages of our emergency conditions,
the bottom line being that for the first time ever
we're going to use every possible electron before we
start asking Texans to turn down their homes and businesses.
We've got more generators in ERCOT than we've ever
had before. And importantly, in conjunction with the
Railroad Commission, we passed a rule that designates
critical natural gas infrastructure so that we know
we will have the most important natural gas facilities
across the entire natural gas supply chain flowing
gas this winter. This is an unprecedented coordination
between both the Public Utility Commission and the
Railroad Commission and never before achieved cooperation
between the natural gas industries and the power generation
industries. Most importantly, for the first time ever
we're requiring winterization of power plants in Texas.
This rule was passed
over a month ago and it will require Power plants to
have been winterized by December 1, attest to ERCOT
they are winterized and above and beyond that, ERCOT
will be conducting inspections to confirm that our
power plant fleet is winterized for this winter. ERCOT
will be starting those inspections soon, and I'll let
Brad address that process.
Brad: Good. Thank you. In fact
those weatherization inspections have already begun.
On December 1, we received atteststations from
CEOs of generators and transmission service providers
throughout the industry, throughout Texas, that attested
to us that they were prepared for the winter. We began
on December 2 with those inspections. During this
inspection cycle, between the December 2 and December
29, we intend to inspect over 300 generating units
and some 50, or rather, I should say, 21 transmission
providers. In those inspections, we'll have
them completed, as I said by the 29th, those inspections
will comprise 85% of the lost megawatt hours during
the storm. We are currently in the middle, as I said
of the process. We have inspected over 55 generator
units to date. We have also inspected two of the transmission
service providers.
Lake: In addition to all of these efforts, we are increasing
penalties for violations of those winterization standards
to up to $1 million dollars per day, which an unprecedented
level of penalty, and I will remind folks that that
is $1 million dollars per day per incident.
We're grateful for the generators who have been proactive
in preparing their power plants for this winter, which
is the majority of our fleet. Those who have not been
proactive will be penalized swiftly and heavily.
As a culmination of all of these efforts, the ERCOT
grid is stronger and more reliable than ever. We go
into this winter knowing that because of all these
efforts, the lights will stay on. No other power grid
has made as remarkable changes and as such, an incredibly
short amount of time as we have,
and we will continue to improve our grid in our market.
The Commission is in the midst of substantial long
term market improvements to ERCOT. In conjunction
with the Railroad Commission, we will continue mapping
more granularly the natural grass critical
infrastructure across the state,
and importantly, in conjunction with TDEM and under
the leadership of Chief Kidd, the Texas Energy Reliability
Council is up and running to enhance communication
and planning between state agencies, the electric industry
and the natural gas industry. And for the first time
ever in the event of an emergency, representatives
from ERCOT, the PUC, the Railroad Commission, Texas
Department of Transportation, and TCEQ will be shoulder
to shoulder in our state operations center to ensure
that those agencies and those industries have a central
point of communication to provide the best possible
services to Texans. That has never happened before
and, as you can imagine, is a dramatic improvement
in our emergency response and management capabilities.
Texans should know that they have the best grid that this
state has ever had going into this winter.
They deserve to keep their lights on, and we will continue
working to ensure that happens. Happy to take some
questions.
1: Chairman. A lot of critics up to the point of this new rule (indistinct)
have likened the situation to having a brand new
beautiful heavy duty pickup truck with no gas in it or
no diesel to make it go. Are we gonna be able
to start this engine?
Lake: Absolutely. The new rule from
the Railroad Commission
removes any opt out ability for the most large volume
important pieces of natural gas supply chain from the
wellhead to pipelines to processing plants. And those
facilities represent over 80% of daily production natural
gas in this state.
1: I was gonna say, percentage-wise, worst
case scenario, we have another February.
What's protected? Will we have a need for,
will that be enough to keep the grid running or will
we have to start rolling blackouts under this scenario?
Lake: Our power plant
fleet doesn't use nearly 80% of daily production on
a daily basis. Of course, it goes up and down, but
it's nowhere close to 80%
1: Today, can you say there
will not be a repeat of February?
Lake: The lights are going
to stay on this winter. We have the combination
of all of these efforts, any one of these efforts would
be on its own extraordinary. The combination of all
of these reforms, these new rules, these new operating
protocols are unprecedented not only in ERCOT, but
any other grid in America.
1: (indistinct)--these
inspections that have already started, describe to
us, A) will you allow media to go along with you
on some of these inspections, and 2) can you describe
what are you doing? What are you looking for?
Brad: So the
weatherization is a process of determining whether
they put the right equipment in place to protect sensitive
equipment or processes within their facilities.
We have started a group within ERCOT
to show that we have the right emphasis on weatherization.
We've appointed an individual who was vice president
over grid operations and planning. Now we have started
a group called Planning and Weatherization to
put the focus on weatherization. And we've hired in
to that group about a dozen individuals to perform
these inspections and to plan them throughout the year
and to set standards in place. Those 12 individuals
also have brought in to large firms, contracting firms
that have specific experience on weatherization of
power plants. How it should be done, what are the right
processes and the best practices? So as we go into
these power plants, what would be looking for is, for
example, have they put wind breaks around the
right facilities to make sure that a wind chill doesn't
cause some problems with equipment. Have they put thermal
blankets on the right types of equipment to make sure
those thermal blankets keep those facilities warm?
Have they appropriately set heat tracing in place so
that pipes don't freeze up during cold weather? They
will be inspecting that type of equipment with the
knowledge they have and the experience they have on
these facilities. So far, our experience has been good.
At each of the facilities, there's been a lot of cooperation
by the generating companies. They have been very assistive
to us. They've made sure that they walked through the
processes and been able to show us each of the things
that we wanted to see. In areas where we have found
problems that need to be addressed, they've been very
cooperative in quickly addressing those issues. So
I feel very good so far about the inspections that
have been done as well as cooperation we've received
out of both the generation and the transmission companies.
No red flags. We have done. As I said, about 55 of the
inspections on the generation side to date. Remember
we started on December 2. So in that time we've done
roughly 55 of those. We've started on December 7
with the transmission companies and we've done two
of those transmission companies.
2: Chairman, you said, and the governer
said, that the lights will stay on and
that you guarantee it. This goes against the ERCOT
report. So where's the disconnect and is the ERCOT report false?
Lake: Sorry, which ERCOT report?
2: The latest one that projects
the, this winter preparedness.
Lake: The Sarah report, I think
is what you're referencing. So there's a big difference
between the Sarah report and an operational prognosis.
The Sarah Report is a scenario analysis that evaluates
a wide range of possibilities. And that is just a simple
arithmetic of what kind of discount factor goes here
and in what kind of scenario. It does not incorporate
all of the extraordinary measures I've outlined today.
That's a report that's been part of ERCOT for
a long time, and that's something that we will continue
to look at to improve the precision and granularity
of that report, but it's a scenario analysis
not a prediction tool, and it doesn't incorporate
these extraordinary measures.
2: (indistinct) saying the scenario analysis is false?
Lake: It's excellent for scenario analysis. It's not a promise
of an outcome. So there's are lots of scenarios
in there, by example, that show vast reserve of extra
power, right? There's some that show, there's a scenario
where it could be low power and tight grid conditions.
It's just like any other scenario. There's
there's multiple possible outcomes. When we look at
all of the efforts we've made, the assets we have in
ERCOT now, and I mean, it's hard to understate
how much reform we have implemented in such a short
amount of time. But when you look at all of that and
we look at the realities on the ground in front of
us, yes, we can say the lights are gonna stay on.
2: How many generators have submitted their weatherization
plans? Do you know how many more are going to and how
are you keeping track of which ones are submitting
them and when they're going to that timeline?
Brad: So those Operation plans came in with their attestations
and we received atteststations on December 1.
We expected to receive about 855 attestations
We've received about 97% of those on time
If you were still remaining to be dealt with that 97%
of those generation atteststations came on time. Also
these atteststations are coming from the CEOs of these
companies. We wanted to make sure that we had the highest
level executive engaged in actually signing on the
dotted line that their generation was ready and prepared
for this winter. Of the transmission companies, roughly,
I believe about 54 transmission companies we expected
to receive attestation from. We have received 100%
of those.
2: So for the 3% that didn't submit their weatherization
plans yet. Are you tracking to make sure they're going
to turn that in?
1: Yes, we've been discussing those
3% with the PUC.
3: So just, you're saying that so far, only
3%, all but 3% have submitted their weatherization plans?
Brad: That is correct
4: Chairman. You mentioned that the PUC
is working with the Railroad Commission to map out
critical natural gas infrastructruate, but (indistinct) Media
hasn't gotten any indication of what the weatherization.
requirements might be for those natural gas facilities
You know, like electricity providers can be weatherize
all they want. But if they don't have the fuel that they
need, how much does it actually matter? Do you have
any knowledge of what the weatherization requirements
and deadlines might be on the natural gas side?
Lake: So I'll defer to
the Railroad Commission on their rulemaking processes.
I will say two things. The natural gas ecosystem is
a vastly larger supply chain and ecosystem than power
plants. Power plants are discrete unit, they're
large very complicated units. That's a discrete
unit in one location. The natural gas system incorporates
thousands of miles of pipelines, hundreds of processing
plants, compressor stations and thousands of producing
wells. Which is why the mapping committee that's in
conjunction with the Railroad Commission and the PUC
is meeting, at a minimum, monthly. Their subgroups or
working groups, are meeting weekly, at least weekly,
and they'll be providing a public facing meeting of
that mapping committee early in 2022. And so there
will be an update on that in early 2022. And,
like I said, the the most important part of this winter
is we know that the big, biggest swath of the largest
producers and conveyors and natural gas are designated
critical infrastructure. We're going to keep improving
and refining that with natural, with the mapping of
the natural gas supply chain.
4: So they're designated as critical as in,
you know, their power isn't going to be turned off in an
emergency. But the PUC gotten any sort of reassurance
from the Railroad Commission that those critical facilities
have made any significant winterization efforts? Is that--
Lake: We know that's in process. We have
great communication with all members of the Railroad
Commission. I meet with Commissioner Wright weekly, speak
with Chairman Christian regularly, as well as Commissioner
Craddick. So we've got great communication and we've,
we are assured that's in process. Again, I'll defer
to their agency for their specifics of the rulemaking.
4: Is it safe to say, though, the PUC is
confident that those critical natural gas
facilities in an emergency will still be able to supply
the necessary natural gas?
Lake: Yes, yes, there was a remarkable,
again, that's a remarkable culmination of work between
both Railorad Commission and the PUC, in addition
to the natural gas industry and the electric industry
that's never ever happened before.
3: Chairman, I think
what we're trying to get to is that a lot of pipelines
froze up, gas couldn't get to these facilities. Are
we sure that these lines are gonna freeze up again?
And I guess that may be a question more for Brad because
that was the problem. So, yeah, we won't turn off the
power. It will be critical infrastructure, but still
the lines froze up. What's gonna keep them from freezing up again?
Lake: There were lots of problems, to be clear, that's
the key element of the Railroad Commission rule from
last month is that the biggest producers conveyors
of gas, we'll keep the power on and therefore have
the power they need to ensure those, that they can operate
those facilities. That process is in place and it will
be implemented this winter. So, I mean, that's, and
that covers 80, over 80% of the daily production of
gas in Texas. If you remember, think about it,
if you remember, the first problem we had last
Spring was that we went from one of our transmission
companies went from 11 critical natural gas facilities
to over 800. So in many ways, that's an over
abundance of caution. And we need to have a more fine
tuned designation of what is truly critical. What are
the high volume so we can keep the most important ones
on without overwhelming the system?
Unknown: Okay, got time for one more question.
5: Speaking of that,
Commissioner, you mentioned the transmission projects
and the Governor has directed you to essentially direct
ERCOT to build out the transmission projects, and
these come with companies that come with high costs
and they take a long time to develop. So what are you
doing to get these one off the ground and to get these
done in an expedited fashion?
Lake: So lots of things. Commissioner
Cobos, one of my colleagues, has done extraordinary job leading
the development of major transmission into the Rio
Grande Valley, where we have for a long time have known
that there are stranded generating assets that can't
get their power to the rest of the state. And so she
quite simply took charge and cut through the red tape
that had prevented that, and she ought to be commended
for that. Commissioner Glotfelty has a vast amount
of experience in the power transmission business, and
he's taking a lead on transmission
process planning at ERCOT. So there'll be improvement
on the process side as well. And Commissioner McAdams
has taken the lead on improving how we connect generators
to the grid. So we're approaching the transmission
problem from every angle. Each of my colleagues has
done an excellent job taking on those leadership roles.
And so, yes, while big transmission projects take a
long time to build, it's safe to say we've cut through
more red tape and made more progress than we've
ever seen at ERCOT before.
5: Can you put that in a years situation? Like I mean
what are we talking about? You've expedited it by years?
You expedited about months? Or do we not know?
Lake: Oh, years when you add up, all the different stages
have been reduced by different amounts of time, absolutely
years. And we're going to continue improving that process
at ERCOT. So the next transmission project and the
next one can be expedited with the appropriate checks
and balances for costs and land use, et cetera, in place,
but we're we're moving forward on the transmission
the state needs.
Thank y'all.