WEBVTT

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Good morning this meeting of the Public Utility Commission

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of Texas will come to order to consider matters have

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been duly posted with the Secretary of State of Texas

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for november 10th 2022 for the record. My name is Peter

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lake and with me today are Will McAdams Lori Cobos

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Jimmy Glotfelty, and Kathleen Jackson before we get

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started I would like to wish a happy birthday to United

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States Marine Corps and ahead of tomorrow we'd like

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to offer our gratitude to all of the veterans, all

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of our veterans, all the veterans, our staff especially

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Commissioner. McAdams Happy veterans day sir.

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At this point we will begin with public comment as

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always. Oral comments related to specific agenda items

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will be heard when that item is taken up. This segment

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is for general comments only when we do get to oral

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comments on specific agenda items, stakeholders should

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not approach the table unless oral argument has previously

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been granted or they have been invited by a commissioner

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As always speakers will be limited to three minutes

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each. Mr. Journeay do we have anyone from the public

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signed up to speak? Is there No one signed up this

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morning. Thank you sir. Public comment is now closed

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I interject one thing. So just so everyone's aware

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our court reporter is attending virtually today because

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they were all contagious and I asked them not to come

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We're of course happy to accommodate remote working

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for our court reporter due to illness regardless of

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how contagious. Well they said they were hacking just

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assume thank you. Mr Will you please bring up,

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I'm sorry. (item:2:52487) First item um item number two is docket

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52487 is the application of energy Texas to amend

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the CCN for a power plant proposal for decision was

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filed on september 26th in response to exceptions or

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replies that so ALJ has filed a memo on October 27th

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to modify and clarify their discussion in the PFD.

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I have a memo with proposed changes to the PFD. Thank

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you sir. This is obviously a big item with a lot of

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moving pieces. So I look forward to hearing from everybody

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on all of these elements. I do think that the

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the cost the cost cap is something that would be challenging

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in this inflationary environment. Um but happy to hear

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discussion uh and given the need for replacement, I'm

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not, the other thing I'm

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I feel pretty confident about is that we shouldn't

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delay it uh due to the all right, but just you want

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to start out with those two points and a lot of other

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pieces of this. So look forward to hearing your thoughts

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and comments.

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All right, well, um I guess I will go since I'm I

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think Commissioner McAdams will be looking at me because

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I cover my soap. So just for two. Thank you. So um

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just to kind of lay the backdrop of this case under

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PURA 37 056 and reviewing energy Texas CCN application

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The commission must consider certain criterion factors

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that must be way to determine whether a certificate

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is necessary for the service accommodation, convenience

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or safety of the public. Uh based on the statutory

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criteria and factors. I believe that the commission's

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review of Energy Texas CCN application for the Orange

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County Advanced Power Station hinges upon whether there

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is a need for additional service in E. T. I. Service

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territory and whether oh caps will result in the probable

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improvement of service or lowering of costs for E.

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T. S. Customers. After weighing these important factors

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I believe that oh caps is needed and would result in

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the probable improvement of service and in the long

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run would lower costs for consumers. E. T. S. Consumers

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with respect for the need for additional service. Um

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I believe that the need for additional services is

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driven by the need to replace uh generation resulting

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from the deactivation of generation exploration of

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the P. P. A. And expected low growth in energies Eastern

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Service territory. Uh The primary driver um is the

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deactivation of Sabine 13 and four by 2026 that results

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in the loss of 1163 megawatts of generation. Um Just

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for further background on these three units. Uh Sabine

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one and three are currently part of entities um plan

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to the activation plan and they are you know vintage

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plans are you know six from the sixties. Um, Sabin

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one is 61 years old. Sabine three is 60 years old.

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Um The party's focus more so on Sabine four which is

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a 50 year old plant that was built in 1974. And based

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on my review of the record um you know, Sabine four

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has experienced a lot of issues over the recent past

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with respect to um not being a valuable I think for

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the first um There it's experienced a lot of horse

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strategies and part of the reason is is there's just

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aging issues going on with the with the plant. And

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and I believe that if you leave the Sabine four to

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continue to run um you know, till it's 60 that you

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could put um the reliability at risk and introduce

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service territory ultimately um with and of course

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there's the expiration of the kerrville P. P. A. That

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would result in the need to replace 243.3 megawatts

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of generation capacity. Um T I estimated Load growth

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um forecast also is um an important factor to consider

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in the need for additional service because even if

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ultimately I think um the it was established in the

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record that there will be an incremental 132 megawatts

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left after replacing the generation the low growth

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in energy service territory, especially industrial

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Load growth would outstrip that incremental megawatts

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Um So I believe again in some that there is a need

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for additional service um Again driven by the need

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to replace the generation the exploration of the P

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P. A. And the low growth and entered the service. Uh

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Energy Texas service territory, specifically in the

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eastern region. Um and just to be clear um the prudence

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E of the deactivation of the Sabine plants and depreciation

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rate, those are issues that will ultimately be reviewed

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in entered in a future energy Texas rate case with

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respect to the probable improvement of service. Um

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I believe that oh caps will result in the probable

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improvement of service and will provide reliability

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benefits associated with the fuel storage capabilities

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of the spindletop facility. Um as I was mentioning

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earlier, um in general, Sabine four has was available

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for approximately 30 days for the first six months

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of 2022. Um unless and during that time it was operating

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in less than its full capacity during all those days

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The outage rate over the past five years has increased

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50 there. You know, as I mentioned, significant age

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related issues, valve issues, tube leaks a lot a lot

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of issues going on with the plant that again, would

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put the reliability. Um entreaties, reliability, able

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to ability to private service at risk by continuing

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to leave this plant in service. Um Oh caps takes advantage

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of the fuel storage and swing capability of the vast

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spindletop storage facility which has provided longstanding

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effective and reliable fuel storage capabilities during

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constrained natural gas and periods and extreme weather

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events. Um And because o caps will be located near

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the site of existence, the bean plant, um, the all

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caps will be able to be interconnected to spindletop

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and um so you get to capitalize on that vast fuel storage

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capability with respect to the other prongs of lowering

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costs in uh for consumers ultimately, um I think the

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evidence in the record showed that there would be fuel

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cost savings resulting from low caps um that are projected

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to offset or break even the total cost of the unit

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in a in an 8 to 10 year time frame of the

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unit, the life of the unit and the unit is assumed

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to be a 30 year life. Um no party has challenged that

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the lower costs, the lower cost energy generated by

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oh, caps can be expected to displace the higher cost

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energy generated by um the less efficient generation

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So, um, in the long run, I think there will be consumer

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cost savings um ultimately, with a more efficient,

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new, more efficient plan that's replacing, you know

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some very old plants. So, um, you know, we've established

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from my perspective, I believe that they're, the evidence

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has established that the plan is needed for additional

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service um for the probable improvement of of service

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and in the long run um, a lowering of costs to consumers

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with respect to hydrogen. Um, you know, I I think that

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hydrogen has a great potential in state of Texas. You

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know, I've I've spent a lot of time looking at the

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issue. Um, you know, I think that we have the infrastructure

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resources export capability um, to become a leader

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in hydrogen in the state and innovation is still going

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on in the hydrogen space today. And there's been a

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lot of discussion, a lot of attention on the issue

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and I commend energy energy for being progressive in

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um trying to be one of the first utilities, I think

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in the country to um add this new technology to the

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power plant. Um, however, and I'm open to discussion

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on this. However, I think, um as I sit here today as

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a regulator, um, and have to evaluate whether the addition

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of hydrogen um, would be in the best interest of ratepayers

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at this time. Um, I don't think that there is enough

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evidence to show that the addition of hydrogen to go

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caps is cost effective or cost competitive with natural

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gas. Um, as established in the record, the hydrogen

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component is $91 million 90.7 million. It's been rounded

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to $91 million. I think energy is expecting a co fire

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The plant has proposed to co fire oh, caps, uh, with

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30% hydrogen, I think ultimately converted to full

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hydrogen. Um, evidence in the record shows that potentially

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that the the average price of hydrogen is more than

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double the cost of burning the equivalent amount of

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natural gas and the dual fuel capability of hydrogen

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Um, and my from my perspective, is not needed for reliability

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because caps will be connected to the spindletop, which

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is a vast fuel storage. Um, it provides vast fuel storage

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capabilities. And um, ultimately, um, from an emissions

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standpoint, there is evidence in the record that the

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capability will in fact potentially increase the emissions

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um from the plant and um, so

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I don't I wouldn't include hydrogen as part of the

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CCN approval because of those facts that I just laid

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out. I don't think there's enough evidence to support

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it this time. However, um, at the time where there

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could be a case made from a cost effective, from a

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cost standpoint, um, cost efficiency, reliability,

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emissions standpoint. Um, energy um, can come back

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and policy see an amendment for the addition of the

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hydrogen to the plant. And why I think a CC amendment

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is important is because it's another fuel source. It's

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similar to what we did in in the SPS case, because

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ultimately the plan would be to convert the plant to

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full hydrogen. Right, so that's the hydrogen issue

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Um, you know, the the so L. J. Did recommend a cost

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cap and conditions, um, and with respect to the cost

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cap. Um, and I'm open to discussion on this point as

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well, I would support imposing a cost cap due to the

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persistent cost escalations and because of the significant

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risk and costs at the rate payer space because of those

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escalations. And I think a cost cap um, in this case

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would be important to protect the ratepayers from continued

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escalations that could happen after we approve this

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case. Ultimately, I know we will address these issues

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in a rate case, but we have President Strong president

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plant in the Montgomery county power station where

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we introduce Montgomery power station where we imposed

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a cost cap as well. So you're saying imposed? Not opposed

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Okay, because I'm hearing in my left ear impose. Okay

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Um, so, and, and so I think that from my perspective

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I think we're, we're gonna prove this CCN application

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We need to strike a balance between um, you know, having

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energy build this new efficient, reliable plant

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and also protecting the right pairs from the significant

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cost and risk. I feel that if we don't put a cost

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cap, that we could be in a position where we're, I

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mean writing a blank check and so that's where I stand

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there and where, where I would start with respect to

00:14:21.799 --> 00:14:26.220
the cost cap, opening discussion consideration. Um

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the last number that was put in the evidentiary record

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was 1.58 million. And um, because I would not be in

00:14:35.470 --> 00:14:39.100
favor of adding the hydrogen that cost would be um

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deducted from the cost cap and the transmission facilities

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I think, uh, that would ultimately result in um,

00:14:52.370 --> 00:15:01.370
1.388 At 1.5 to 1.4. Yes, about 1.388. Because the

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cost cap, you would extract the hydrogen extract the

00:15:03.679 --> 00:15:08.429
transmission upgrades that would end up at 1.388 billion

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That would also include in that 1.38 billion a. F.

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U. D. C. Allowance for funds used during construction

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so that you're capturing the all in cost of the plant

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not only the steel and the materials that go into building

00:15:22.370 --> 00:15:24.909
the plant but also the interest that is you that is

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paid uh on the money that's being used to build a plant

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And that would also include the contingency reserve

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And that's consistent with pFT PFT would include those

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costs in the cost cap. So, if you end up at 1.388

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billion,

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I would Reckon still recommend 1.588 to allow for a

00:15:49.440 --> 00:15:52.389
margin of headroom for market escalation.

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So, what I would recommend is 1.58. Even with the reduction

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or the deduction of hydrogen transmission so that you

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have some headroom for market escalation. Now, I will

00:16:05.879 --> 00:16:09.879
say that even with a cost cap interview would have

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a little bit higher one, because to account for market

00:16:15.509 --> 00:16:21.120
escalation took out for market escalation supply chain

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and those types of issues. And so ultimately, um, At

00:16:26.620 --> 00:16:30.179
1.58, even if the commission were to impose that cost

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cap entity would still have to come in in a future

00:16:33.149 --> 00:16:36.899
rate case. And and prove that costs were prudently

00:16:36.899 --> 00:16:41.879
incurred just and reasonable up to that cost cap. And

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so that's where I would start. Of course, that's open

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to discussion with respect to the conditions. Um, I

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I'm good with the conditions. I think the heat rate

00:16:53.679 --> 00:16:57.279
guarantee is unopposed and that's just basically memorializing

00:16:57.279 --> 00:17:02.289
in the final order that the, that the heat rate that's

00:17:02.289 --> 00:17:06.740
guaranteed in energies um, PPC agreement. Um, memorializing

00:17:06.740 --> 00:17:09.849
the final order, the transmission condition, which

00:17:09.849 --> 00:17:12.660
basically, um, would remove the transmission upgrade

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costs, interconnection costs, um, and would require

00:17:17.319 --> 00:17:20.180
a separate CCN for those costs. And then there's a

00:17:20.180 --> 00:17:24.289
weatherization condition that, um, I would support

00:17:24.289 --> 00:17:27.819
as well. Um, I think it's a little stringent with respect

00:17:27.819 --> 00:17:33.519
to um, you know, energy being a non ERCOT utility are

00:17:33.519 --> 00:17:35.799
weatherization preparation requirements don't apply

00:17:35.799 --> 00:17:38.490
to them, but I think that the weatherization of all

00:17:38.490 --> 00:17:42.819
caps using, you know, reasonable utility practices

00:17:42.819 --> 00:17:44.799
should meet the conditions experienced during winter

00:17:44.799 --> 00:17:48.269
storm year. So that's my position on the conditions

00:17:48.269 --> 00:17:51.230
I think I'm in favor of imposing those conditions as

00:17:51.230 --> 00:17:54.299
well, nicely laid out. Obviously the cost Captain hydrogen

00:17:54.299 --> 00:17:58.859
or Key seemed to be the key talking points. Uh, generally

00:17:58.869 --> 00:18:02.960
agree with everything else. Uh, in terms of the weatherization

00:18:02.960 --> 00:18:06.380
I think that the Uri standard or just, I mean, I'd

00:18:06.380 --> 00:18:09.829
also be happy at having them adhere to the same standards

00:18:09.829 --> 00:18:13.779
as ERCOT They've clearly been willing to do the right

00:18:13.779 --> 00:18:16.940
thing and ensure that asset is weather eyes and hardened

00:18:16.940 --> 00:18:21.400
against, hardened against extreme weather to go either

00:18:21.400 --> 00:18:25.500
way on those other thoughts, comments, I appreciate

00:18:25.500 --> 00:18:29.299
that. Uh Lori Thanks for laying that out. I uh agree

00:18:29.299 --> 00:18:33.680
with a lot of what you said. Um I take this issue

00:18:33.690 --> 00:18:37.700
in a couple of different chunks um and I want to lay

00:18:37.700 --> 00:18:41.279
out my thoughts um and how I get there and then what

00:18:41.279 --> 00:18:48.410
I have to totally dismiss from my thoughts. Okay, Uh

00:18:48.420 --> 00:18:53.220
in 2010 the US Department of Justice started an investigation

00:18:53.220 --> 00:18:56.609
into enter Jeez for anticompetitive practices on their

00:18:56.609 --> 00:19:01.099
transmission system that facilitated them joining the

00:19:01.099 --> 00:19:05.099
midwest I. S. O. The way that they got out of using

00:19:05.099 --> 00:19:08.220
their transmission system for anticompetitive practices

00:19:08.230 --> 00:19:12.329
was the joining of the midwest. I totally supported

00:19:12.329 --> 00:19:16.920
that. Clearly energy over the years has said many,

00:19:16.930 --> 00:19:21.369
many, many times that the midwest I. S. O. Brings hundreds

00:19:21.380 --> 00:19:23.799
or not, they haven't said that, they said 25 million

00:19:23.799 --> 00:19:27.009
here, they've said millions of dollars here and tens

00:19:27.009 --> 00:19:29.519
of millions of dollars in other places of benefits

00:19:29.519 --> 00:19:34.380
too, consumers in the energy service territory. Okay

00:19:34.390 --> 00:19:37.210
so that's the entirety of energy service territory

00:19:37.220 --> 00:19:41.769
So I'm not I'm a competitive market guy. I think competitive

00:19:41.769 --> 00:19:44.940
markets are the things that make a lot of these issues

00:19:44.940 --> 00:19:50.509
go away that we're having to deal with because um you

00:19:50.509 --> 00:19:53.109
get sometimes you get a different answer on things

00:19:53.119 --> 00:19:57.549
Um in a competitive market is it cost is the cost benefit

00:19:57.549 --> 00:20:00.900
the same when you have 100% rate recovery than if you

00:20:00.910 --> 00:20:03.599
are in a competitive market. And your assertion is

00:20:03.599 --> 00:20:09.839
on energy Texas So, in in energy Texas Um, so yes,

00:20:09.849 --> 00:20:13.009
that's what I'm saying. Energy Texas is not a competitive

00:20:13.009 --> 00:20:17.430
market. The legislature has acted on that. We, one

00:20:17.430 --> 00:20:19.400
of the first things that I did was I asked if people

00:20:19.400 --> 00:20:22.450
wanted competition in the Southeast and energy service

00:20:22.450 --> 00:20:28.289
territory and we got one. Yes. So, um what that means

00:20:28.289 --> 00:20:32.799
is that energy has an obligation to serve, we have

00:20:32.799 --> 00:20:37.410
a compact between the commission, the consumers and

00:20:37.410 --> 00:20:40.779
energy to provide reliable, affordable electricity

00:20:40.779 --> 00:20:44.950
in that region. The joining of the R. T. O. I think

00:20:44.960 --> 00:20:47.369
is not an issue that can be considered in this case

00:20:47.380 --> 00:20:50.990
as much as I want it to be. It's not um, I

00:20:50.990 --> 00:20:55.650
think that um the fact that I would love competitive

00:20:55.660 --> 00:20:58.400
markets down there cannot be considered in this case

00:20:58.400 --> 00:21:01.609
as much as I wanted to. So where does that bring me

00:21:01.619 --> 00:21:08.119
That brings me to? Um the most compelling argument

00:21:08.119 --> 00:21:13.140
for me in this issue was the need for additional voltage

00:21:13.140 --> 00:21:16.609
support down in the southeastern part of their service

00:21:16.609 --> 00:21:21.509
territory. Um in 2003, I led the blackout investigation

00:21:21.509 --> 00:21:24.849
on the northeastern United States and as you have plant

00:21:24.859 --> 00:21:27.670
outages and you have voltage collapse, you can have

00:21:27.670 --> 00:21:31.079
a massive outage as we saw 50 million people in the

00:21:31.079 --> 00:21:34.779
United States and Canada um had their power out because

00:21:34.789 --> 00:21:37.069
one plant was down and you had a voltage collapse on

00:21:37.069 --> 00:21:40.460
the transmission system from another in an industrial

00:21:40.460 --> 00:21:44.559
heavy area, you need a lot of voltage support. And

00:21:44.559 --> 00:21:47.440
I think the Sabine plant uh, with the shutting down

00:21:47.450 --> 00:21:50.859
of Sabine for which I don't think 60 year useful life

00:21:50.859 --> 00:21:55.049
is worthwhile is accurate. Um, I think it is a shorter

00:21:55.059 --> 00:22:00.150
useful life. Um, and therefore I think that um, adding

00:22:00.150 --> 00:22:03.529
this plant is valuable for reliability, adding this

00:22:03.529 --> 00:22:08.710
plant is valuable for economics uh, in the area and

00:22:08.710 --> 00:22:12.769
for economic development in the area, I think the hydrogen

00:22:12.769 --> 00:22:15.900
component is a little bit ahead of its time. I wish

00:22:15.900 --> 00:22:21.680
it wasn't. Um, I really want um, US us being Texas

00:22:21.680 --> 00:22:26.380
to be a leader in this area. I think, you know, there

00:22:26.380 --> 00:22:29.240
are not that many hydrogen powered plants in the US

00:22:29.250 --> 00:22:34.279
Um, most of them are co fired as a percentage um, right

00:22:34.279 --> 00:22:38.190
now, as I understand it. Um, according to the record

00:22:38.200 --> 00:22:42.009
um, blending hydrogen is a higher cost and a higher

00:22:42.009 --> 00:22:46.390
emissions profile. And I think that that would come

00:22:46.390 --> 00:22:50.240
down naturally as this becomes more of an accepted

00:22:50.240 --> 00:22:52.890
technology. Those are gonna have to work, you're gonna

00:22:52.890 --> 00:22:54.779
have to bring the emissions down if you're gonna want

00:22:54.789 --> 00:22:58.150
this type of technology in nonattainment areas and

00:22:58.150 --> 00:23:01.730
I think that's uh, that's important, but I'm not yet

00:23:01.730 --> 00:23:04.900
prepared to put hydrogen on the table at least in this

00:23:04.900 --> 00:23:08.519
docket Um, at this time, I do believe that they can

00:23:08.519 --> 00:23:11.980
come back, they can add the CCN just like we did um

00:23:11.990 --> 00:23:15.750
when we converted another plant. Um, but I do believe

00:23:15.750 --> 00:23:18.910
that it is a viable option for fueling in the future

00:23:19.460 --> 00:23:26.029
just not today. Um, a lot of things worry me about

00:23:26.029 --> 00:23:30.240
this, you know, was the RFP competitive? Not really

00:23:30.250 --> 00:23:35.049
Um, does the applicant have any ability to modify that

00:23:35.059 --> 00:23:40.480
No, you know, they have to, they're stuck with their

00:23:40.480 --> 00:23:43.990
one response to their to their RFP and that was themselves

00:23:45.210 --> 00:23:52.710
So, um, I think finally on the, on the cost cap, um

00:23:53.339 --> 00:23:56.470
my view is if we're gonna do this, we gotta do it

00:23:56.470 --> 00:23:58.569
and we have to give them flexibility to do it right

00:23:58.579 --> 00:24:01.650
Um, so I'm opposed to the cost cap. I know we'll have

00:24:01.650 --> 00:24:03.819
a second bite of that apple when, when these costs

00:24:03.819 --> 00:24:06.960
go in rates and, and that is the appropriate place

00:24:06.970 --> 00:24:11.160
for in my opinion to have that discussion. Um, so I

00:24:11.160 --> 00:24:14.039
would, uh, there are numerous modifications that I

00:24:14.039 --> 00:24:16.829
would put in here. I would agree with the weatherization

00:24:16.829 --> 00:24:19.079
the coastal zone management, you know, modification

00:24:19.150 --> 00:24:23.480
ERCOT require the ERCOT version or what they requested

00:24:23.970 --> 00:24:28.130
I'm sorry, say that again. I think ERCOT

00:24:30.529 --> 00:24:34.920
Um, and uh, you know, I would, I would support the

00:24:34.920 --> 00:24:38.569
CCN was with some changes which, you know, we can continue

00:24:38.569 --> 00:24:40.940
to discuss and and lay out as we move towards the motion

00:24:40.940 --> 00:24:48.140
but you know, the, in the end, um, the legislature

00:24:48.150 --> 00:24:51.509
the market participants have have spoken about what

00:24:51.509 --> 00:24:53.490
they think about competition in that area and it's

00:24:53.490 --> 00:24:57.750
not available yet. So, um we have to think affordable

00:24:57.759 --> 00:25:01.099
reliable and that gives energy the benefit of the doubt

00:25:01.109 --> 00:25:06.660
to uh to build a power plant there and um so that's

00:25:06.660 --> 00:25:08.869
where I am. So I would support the CCM.

00:25:10.839 --> 00:25:14.680
Thank you sir. With modifications. I appreciate the

00:25:14.680 --> 00:25:19.130
point. Mr McAdams Thank you sir. Mr Chairman. So I

00:25:19.140 --> 00:25:23.490
believe Commissioner Cobos did an able job of articulating

00:25:23.490 --> 00:25:27.740
the need for the project as envisioned um in the order

00:25:27.750 --> 00:25:33.279
Uh I believe as my colleagues expressed concern that

00:25:33.289 --> 00:25:36.640
hydrogen is is a technology that may not be right as

00:25:36.640 --> 00:25:39.559
of today. So therefore in terms of approving it, I

00:25:39.559 --> 00:25:43.119
believe that is that is one that we can defer to another

00:25:43.130 --> 00:25:46.329
today, another proceeding um to where we can better

00:25:46.329 --> 00:25:49.950
evaluate the capabilities and features of the technology

00:25:49.960 --> 00:25:55.730
um when they are more defined um in terms of the cost

00:25:55.730 --> 00:26:00.900
gap. So my non negotiable is I believe after determining

00:26:00.900 --> 00:26:04.140
that there is a need uh then we need to be expeditious

00:26:04.150 --> 00:26:09.339
and satisfying that need. And so I uh I feel for energy

00:26:09.339 --> 00:26:13.890
in terms of moving forward and um fulfilling their

00:26:13.900 --> 00:26:19.269
uh their timetable for constructing the plant and fulfilling

00:26:19.269 --> 00:26:21.289
their obligations to counter parties that would enable

00:26:21.289 --> 00:26:24.930
them to construct the plant. So, um I have concern

00:26:24.930 --> 00:26:29.569
about offering up modifications that would delay that

00:26:29.579 --> 00:26:35.299
in in ways. So, um, so as to the cost cap, this

00:26:35.299 --> 00:26:40.519
has become a there is precedent um in its use and its

00:26:40.519 --> 00:26:45.190
virtue and its protections for consumers. Um I do air

00:26:45.190 --> 00:26:48.539
on the side of providing headroom and a high inflationary

00:26:48.539 --> 00:26:53.519
high uh supply chain disrupted environment for the

00:26:53.519 --> 00:26:56.500
purposes of energy and their contractor uh to to actually

00:26:56.500 --> 00:27:01.299
build this. Um So I want there to be flexibility. The

00:27:01.309 --> 00:27:06.390
calculation used by the LJ to determine benefit. Um

00:27:07.099 --> 00:27:10.490
Those those data points were changing by the minute

00:27:10.500 --> 00:27:14.309
as they attempted to complete that evaluation. And

00:27:14.309 --> 00:27:16.420
so I think at the end of the day, the commission is

00:27:16.420 --> 00:27:18.910
left with the unenviable position of making a value

00:27:18.910 --> 00:27:21.819
judgment. And we have to do that every day. And so

00:27:21.819 --> 00:27:25.880
the last uh submission in the record within the evidentiary

00:27:25.880 --> 00:27:30.869
record is the 1.58 figure. And that's why we're here

00:27:30.869 --> 00:27:32.880
That's why we're sitting at the diocese to make those

00:27:32.880 --> 00:27:37.910
calls. Um I believe in order to, You know, me, I'm

00:27:37.910 --> 00:27:40.730
always setting tables and splitting babies at them

00:27:40.740 --> 00:27:44.869
I believe, in order to comport this proceeding with

00:27:44.869 --> 00:27:49.289
the precedence of uh of the recent past, um I would

00:27:49.289 --> 00:27:53.839
err toward uh the 1.58 to provide that headroom um

00:27:53.849 --> 00:27:57.640
under a cost cap basis. Yes. Yes, sir.

00:28:00.000 --> 00:28:01.849
Can I add one thing. Um

00:28:03.380 --> 00:28:08.220
so as I noted, and you also verified the 158 is in

00:28:08.220 --> 00:28:13.240
evidence, right? And it was submitted on I believe

00:28:13.250 --> 00:28:18.150
June 27, 2022. Since then, energy has filed 1/4 escalation

00:28:18.150 --> 00:28:20.940
report. It's not an evidence, but I do just want to

00:28:20.940 --> 00:28:26.289
note that their estimate for natural gas only was 1.48

00:28:27.700 --> 00:28:30.529
Just this context not changing by the minute.

00:28:32.380 --> 00:28:37.049
Okay, thanks for letting out um Miss Jackson,

00:28:38.569 --> 00:28:41.289
I want them to build a plant and I want them to

00:28:41.289 --> 00:28:44.019
have the flexibility to do what they need to do um

00:28:44.019 --> 00:28:48.549
their aging infrastructures um that need to be replaced

00:28:48.559 --> 00:28:53.329
There's a growing industrial um, part of Texas. Many

00:28:53.329 --> 00:28:56.299
of the benefits that come with reliable power supply

00:28:56.309 --> 00:28:59.200
are beyond just the cost of generating the power there

00:28:59.200 --> 00:29:02.250
the jobs and the businesses that its support and the

00:29:02.250 --> 00:29:07.069
reliability that it brings. Um I would be in favor

00:29:07.069 --> 00:29:09.869
of not having a cost cap and as you mentioned earlier

00:29:09.869 --> 00:29:12.660
there will be an opportunity at the end for them to

00:29:12.660 --> 00:29:16.490
come in with the rate structure. Um because I feel

00:29:16.490 --> 00:29:21.049
like it's important, this is a large gas fired combined

00:29:21.049 --> 00:29:23.930
cycle facility that's needed and I think they need

00:29:23.930 --> 00:29:26.029
to have the flexibility to do it. I don't feel like

00:29:26.029 --> 00:29:29.660
that, you know, just quite frankly sitting here myself

00:29:29.660 --> 00:29:32.109
with the data that we have, that we're able to project

00:29:32.109 --> 00:29:34.700
what is actually needed, you know, at a given point

00:29:34.700 --> 00:29:38.680
in time. Um, and actually put a cap on it. I know

00:29:38.680 --> 00:29:41.369
we have one power plant in the recent past that maybe

00:29:41.369 --> 00:29:43.740
there was a cost cap, but my understanding is prior

00:29:43.740 --> 00:29:47.359
to that, you know, this was not, you know, the will

00:29:47.359 --> 00:29:50.240
of, of the commission and not a something that was

00:29:50.240 --> 00:29:53.720
typically done. And uh, so, so my preference would

00:29:53.720 --> 00:29:56.900
be that we move forward as you stated, and that has

00:29:56.900 --> 00:30:00.730
been, um, uh, we've proven the need and that we move

00:30:00.730 --> 00:30:03.190
forward and we build this plant, uh, that there not

00:30:03.190 --> 00:30:07.670
be a cost cap. Um, I'm in favor of imposing the heat

00:30:07.670 --> 00:30:11.049
rate guarantee as they've stated here and providing

00:30:11.049 --> 00:30:13.809
the weatherization of the ERCOT standard is fine. I

00:30:13.819 --> 00:30:17.049
actually think that you're a standard that they, uh

00:30:17.059 --> 00:30:19.390
kind of offered up is maybe in some ways a little bit

00:30:19.390 --> 00:30:22.059
more stringent, but uh, I think it demonstrates that

00:30:22.059 --> 00:30:24.730
they're thinking about it and they recognize the need

00:30:25.250 --> 00:30:28.180
Um, I do need to offer up my thoughts on hydrogen,

00:30:28.190 --> 00:30:30.089
which is a little bit different than everybody else

00:30:30.089 --> 00:30:34.259
has has submitted here. Um, what energy stated is that

00:30:34.259 --> 00:30:38.059
they are, they're advocating hydrogen for reliability

00:30:39.190 --> 00:30:44.039
and you know, it it's a perfect, it's a perfect area

00:30:44.049 --> 00:30:47.049
for hydrogen to be considered. The pipelines are already

00:30:47.049 --> 00:30:49.900
in place, their hydrogen producers that are already

00:30:49.900 --> 00:30:55.259
there. The cavern storage is ideal for it to be used

00:30:55.269 --> 00:31:00.200
as a dual fuel and they're also there and there's a

00:31:00.200 --> 00:31:02.950
provision in PURA for us to consider this in terms

00:31:02.960 --> 00:31:08.789
of, um, of approving, uh, the dual fuel capabilities

00:31:08.789 --> 00:31:12.730
and, and fuel storage capabilities. Um, and that of

00:31:12.730 --> 00:31:18.809
course is is pure Section 37.56 C four E, which states

00:31:18.809 --> 00:31:21.640
you know, the probable improvement service, including

00:31:21.640 --> 00:31:24.670
any potential economic or reliability benefits associated

00:31:24.670 --> 00:31:27.700
with dual fuel and fuel storage capabilities in areas

00:31:27.710 --> 00:31:31.039
outside of the ERCOT power grid. So clearly it was

00:31:31.039 --> 00:31:34.730
something that the legislature um, wanted us to consider

00:31:35.289 --> 00:31:39.490
um, and you know, I don't know what the future is gonna

00:31:39.490 --> 00:31:43.589
be of natural gas or of hydrogen, but at any point

00:31:43.589 --> 00:31:47.549
in time, if that plant has the dual fuel capability

00:31:47.559 --> 00:31:50.029
and it's sitting right there next to those storage

00:31:50.029 --> 00:31:52.230
and there happens to be sure there's plenty of natural

00:31:52.230 --> 00:31:55.140
gas storage, but there happens to be some, some hydrogen

00:31:55.140 --> 00:31:57.789
storage, there's gonna be analyzers, there's gonna

00:31:57.789 --> 00:32:02.130
be flow meters on those fuel sources. But when it heads

00:32:02.130 --> 00:32:04.180
to that turban, that turbine is just gonna pick up

00:32:04.180 --> 00:32:06.779
and it's gonna run as it normally did. There's not

00:32:06.779 --> 00:32:09.950
gonna be a, um, you know, as it's kind of envisioned

00:32:09.950 --> 00:32:14.230
here, there's, there's not gonna be a, um, you know

00:32:14.240 --> 00:32:17.240
skipping the beat. There's not gonna be a need to either

00:32:17.240 --> 00:32:21.890
curtail the power generation or um, potentially at

00:32:21.890 --> 00:32:24.880
some point in the future, um, disrupt the flower pin

00:32:24.890 --> 00:32:30.490
um, to, to an area that's very critical and power disruption

00:32:30.500 --> 00:32:34.359
means a whole lot different in industrial facility

00:32:34.369 --> 00:32:36.819
than it does just flipping the lights been on and off

00:32:36.829 --> 00:32:40.029
So, um, I think it's a unique opportunity. I think

00:32:40.029 --> 00:32:42.079
they're uniquely positioned because they have the,

00:32:42.089 --> 00:32:45.490
they have the cabin storage, they have, um, hydrogen

00:32:45.490 --> 00:32:48.460
capability already, their production capability, they

00:32:48.460 --> 00:32:51.349
have the pipelines in place. Um, they have stated that

00:32:51.349 --> 00:32:54.640
putting it in now is um, less costly. It's half the

00:32:54.640 --> 00:32:59.269
downtime is having to do it later. And I personally

00:32:59.269 --> 00:33:02.720
think that it would be a, it's an innovative move.

00:33:02.730 --> 00:33:06.470
It's something that Texas should consider and that

00:33:06.470 --> 00:33:09.569
this project I think is an optimal one for it to move

00:33:09.569 --> 00:33:15.210
forward and be done in. Thank you, Ma'am, the good

00:33:15.210 --> 00:33:17.950
thoughts all and especially thank you for laying out

00:33:17.950 --> 00:33:22.339
the thoughts on the hydrogen Jackson. The certainly

00:33:22.519 --> 00:33:27.890
it has tremendous opportunity, especially both as a

00:33:27.900 --> 00:33:32.660
redundant dual fuel source. Uh, but above and beyond

00:33:32.660 --> 00:33:38.619
that, hydrogen in Texas is, is uniquely a unique opportunity

00:33:38.619 --> 00:33:41.650
because of everything MS Jackson said, the resources

00:33:41.650 --> 00:33:44.490
we have, the infrastructure we have in place. We're

00:33:44.490 --> 00:33:48.869
very well suited to be a leader on that. Uh, and even

00:33:48.869 --> 00:33:51.930
more importantly, in the face of federal regulations

00:33:51.930 --> 00:33:55.960
that are demanding zero emissions without providing

00:33:55.960 --> 00:34:00.259
any reliable substitute and were under threat of the

00:34:00.259 --> 00:34:04.519
federal government of losing coal plants. Uh, if the

00:34:04.519 --> 00:34:08.269
federal government is gonna push for zero emissions

00:34:09.079 --> 00:34:13.519
that's reliable hydrogen is an outstanding candidate

00:34:14.070 --> 00:34:17.889
Um, no matter how many emissions, something got another

00:34:17.900 --> 00:34:20.150
type of resource has, it's not reliable. It doesn't

00:34:20.150 --> 00:34:23.219
matter. So, I think there is tremendous potential for

00:34:23.219 --> 00:34:27.559
hydrogen in general and hydrogen in Texas. Uh, and

00:34:27.559 --> 00:34:31.210
like you said, they're even even in the midst of the

00:34:31.210 --> 00:34:33.670
natural gas epicenter of the country, there's, there's

00:34:33.670 --> 00:34:39.840
still benefits of dual fuel. Uh, but I am, I'm, I would

00:34:39.849 --> 00:34:44.269
also want to see, uh, if it's, if we're going to improve

00:34:44.269 --> 00:34:48.739
that money, uh, ratepayer expenses, I'd want to see

00:34:48.750 --> 00:34:54.150
a lot more analysis, a lot more meat on the bone in

00:34:54.150 --> 00:34:57.559
terms of what the true benefits are. And what does

00:34:57.559 --> 00:35:00.280
that look like going forward? Like this? Like, like

00:35:00.289 --> 00:35:03.679
great hydrogen right now, doesn't, it doesn't like

00:35:03.679 --> 00:35:05.750
you, like you pointed out that it's not a big help

00:35:05.760 --> 00:35:09.409
but the whole, I mean, how you get the hydrogen is

00:35:09.409 --> 00:35:13.349
a huge part of this entire value chain. And so if we're

00:35:13.349 --> 00:35:15.989
gonna spend that kind of money, I really want to see

00:35:15.989 --> 00:35:20.650
that kind of a lot more in depth analysis on what it

00:35:20.650 --> 00:35:23.909
currently looks like and what the potential for both

00:35:23.909 --> 00:35:27.050
the emissions and the economics to look like going

00:35:27.050 --> 00:35:32.300
forward. Uh, but I am eager to get to the point where

00:35:32.300 --> 00:35:36.000
we can start building hydrogen. Uh, and everything

00:35:36.000 --> 00:35:40.070
you said MS Jackson agree with on the, on the opportunities

00:35:40.079 --> 00:35:43.230
and the great potential we have for that. I'm just

00:35:43.230 --> 00:35:49.030
not not sure this money in this docket right now is

00:35:49.030 --> 00:35:53.730
the right time and place to spend it. Can I ask Commissioner

00:35:53.730 --> 00:35:57.139
Jackson a question obviously as our resident engineer

00:35:57.139 --> 00:36:02.300
here, um, who spent time in the Southeast, um, the

00:36:02.309 --> 00:36:07.320
other uses of hydrogen down in the Southeast primarily

00:36:07.320 --> 00:36:12.630
in the industrial complex, um are there issues associated

00:36:12.630 --> 00:36:17.360
with like curtailment challenges? So, during jury we

00:36:17.360 --> 00:36:20.400
had order of curtailment issues when it came to natural

00:36:20.400 --> 00:36:23.460
gas pipeline. So who could get curtailed first if there

00:36:23.460 --> 00:36:28.119
was a um uh, a force majeure problem or something like

00:36:28.119 --> 00:36:30.860
that? Did those things ever come up on hydrogen pipelines

00:36:30.860 --> 00:36:34.590
in the Southeast that you know of or has it, is it

00:36:34.599 --> 00:36:38.980
amply produced down there? So it and so probably overproduced

00:36:38.989 --> 00:36:42.630
compared to the need. It probably just about matches

00:36:42.630 --> 00:36:46.739
the need and sometimes it's been critical path in terms

00:36:46.739 --> 00:36:49.719
of getting facilities back up and had the power to

00:36:49.719 --> 00:36:52.929
get back up, but not necessarily the hydrogen. So,

00:36:52.940 --> 00:36:56.159
you know, it's just part of the overall material balance

00:36:56.170 --> 00:37:00.420
Um it is, you know, a consequence of theirs, it's refining

00:37:00.420 --> 00:37:04.289
and chemical complex in that area. And so it is, if

00:37:04.289 --> 00:37:08.719
you will a product of the refining process, Um, I think

00:37:08.719 --> 00:37:12.340
the point here for me is that this is a unique opportunity

00:37:12.340 --> 00:37:14.889
because we are building a major facility and if you

00:37:14.889 --> 00:37:17.250
look at what is kind of happening in other parts of

00:37:17.250 --> 00:37:20.099
the world and as you will know, there's a plan in Brazil

00:37:20.099 --> 00:37:24.800
and one in Russia, um the perfect match is the combined

00:37:24.800 --> 00:37:28.730
cycle facility and this plant that we're building today

00:37:28.739 --> 00:37:31.659
is going to be in service, hopefully for another 50

00:37:31.659 --> 00:37:36.360
years. So, again, just an opportunity because the resources

00:37:36.360 --> 00:37:41.030
are there, um the infrastructure is, is already there

00:37:41.039 --> 00:37:45.659
um to kind of have the opportunity to go in and make

00:37:45.659 --> 00:37:48.389
the investment and of course, you know, is the chairman

00:37:48.400 --> 00:37:52.989
um laid out, I mean the big 50 million $60 million

00:37:52.989 --> 00:37:56.000
question, $91 million question is is this the investment

00:37:56.000 --> 00:37:58.730
gonna be worth it? And you know, it's like a lot of

00:37:58.730 --> 00:38:01.030
things, it's not worth it if you need it, but if you

00:38:01.030 --> 00:38:04.099
do need it and if it comes in and it provides the

00:38:04.099 --> 00:38:06.710
reliability that you needed, it keeps that plan online

00:38:07.280 --> 00:38:09.760
and it very much is worth it, but I don't have a

00:38:09.760 --> 00:38:11.980
crystal ball, I don't know that that will ever happen

00:38:11.989 --> 00:38:15.050
But if you have an opportunity to do something new

00:38:15.059 --> 00:38:18.989
if you know that um, emissions um is going to be challenging

00:38:18.989 --> 00:38:20.719
going for it in the future, we're gonna have to do

00:38:20.719 --> 00:38:23.849
that balance between NOx and Sox and all of the things

00:38:23.849 --> 00:38:28.010
that we have to balance. Um then just again, wanted

00:38:28.010 --> 00:38:31.739
to bring up that this is very much an opportunity to

00:38:31.739 --> 00:38:37.030
be able to do that and kind of get started with some

00:38:37.030 --> 00:38:38.000
of this technology,

00:38:40.000 --> 00:38:42.099
I really appreciate where you're coming from and I

00:38:42.849 --> 00:38:46.199
um as I said, I spent a lot of time looking at

00:38:46.199 --> 00:38:49.480
this issue and I do believe that there's great potential

00:38:49.480 --> 00:38:53.099
for hydrogen Texas I am a firm believer in innovation

00:38:53.110 --> 00:38:56.639
and new technologies and new resources and I think

00:38:56.639 --> 00:38:59.179
hydrogen is gonna have a space in our future in Texas

00:38:59.190 --> 00:39:03.130
Um, as you know, we're undergoing an energy transition

00:39:03.139 --> 00:39:07.789
Um, you know, power companies like energy Texas are

00:39:07.789 --> 00:39:11.440
looking at blending hydrogen for their generation production

00:39:11.440 --> 00:39:13.360
whether it's blending it with natural gas is great

00:39:13.360 --> 00:39:17.280
hydrogen or nuclear pink hydrogen or with solar and

00:39:17.280 --> 00:39:20.909
wind as green hydrogen. And and industrial consumers

00:39:20.920 --> 00:39:24.429
are looking to um, utilize hydrogen to lower their

00:39:24.429 --> 00:39:27.289
carbon emission footprints to meet their decarbonization

00:39:27.289 --> 00:39:30.139
at zero goals as well. So there there is a lot of

00:39:30.139 --> 00:39:32.800
interested in hydrogen and a lot of innovation and

00:39:32.809 --> 00:39:35.449
R and D happening today. The federal government is

00:39:35.449 --> 00:39:39.480
very interested in hydrogen um, and have passed laws

00:39:39.489 --> 00:39:44.019
um promoting and to looking to stimulate that technology

00:39:44.030 --> 00:39:46.369
and I'm excited to see where it goes. I just think

00:39:46.369 --> 00:39:50.380
as a regulator here today, we have to think about um

00:39:50.380 --> 00:39:56.260
whether it's uh, the cost is worth adding right now

00:39:56.269 --> 00:39:59.900
and just like any other technology we've looked at

00:39:59.900 --> 00:40:03.110
in the past, I mean solar was once there right, um

00:40:03.119 --> 00:40:06.309
with respect to costs and capital costs and those costs

00:40:06.309 --> 00:40:08.880
eventually, those capital costs go down and they become

00:40:08.889 --> 00:40:11.389
cost effective and those technologies can enter our

00:40:11.389 --> 00:40:14.500
market, whether it's ERCOT or non ERCOT you know, our

00:40:14.500 --> 00:40:19.309
state promotes and embraces technological innovation

00:40:19.320 --> 00:40:24.780
Um, but as a regulator here today, we have to ensure

00:40:24.780 --> 00:40:28.690
that the application that we're approving here today

00:40:28.699 --> 00:40:32.449
um, will be in the best interests of the public repairs

00:40:34.849 --> 00:40:39.090
Mr Chairman if I'm a process clarifying question and

00:40:39.090 --> 00:40:44.000
this may be for general counsel. Um so uh hydrogen

00:40:44.010 --> 00:40:51.000
withstanding. Um if we remove the cost gap today, isn't

00:40:51.000 --> 00:40:54.000
that the underpinning for much of the evaluation in

00:40:54.000 --> 00:40:58.389
the PFD And from a process standpoint, do we reject

00:40:58.400 --> 00:41:01.980
the PFD today and go back to square one? And is that

00:41:01.989 --> 00:41:06.309
defeat the timetable in terms of moving forward for

00:41:06.309 --> 00:41:07.380
energies purposes?

00:41:11.590 --> 00:41:14.980
As I understand what the judges said, they said without

00:41:14.980 --> 00:41:17.900
a cost cap put on here, the cost could go way up

00:41:17.909 --> 00:41:22.949
and that that uncertainty makes it hard for that judge

00:41:22.949 --> 00:41:27.199
to say that that this plant meets procedurally. I think

00:41:27.210 --> 00:41:31.380
what commissioner we can we can modify the PFD get

00:41:31.380 --> 00:41:34.579
it approved today and get this project moving without

00:41:34.579 --> 00:41:37.780
a cost cap. As a matter of procedure. No, absolutely

00:41:37.780 --> 00:41:40.429
You can disagree with the L. J. That the cost cap is

00:41:40.429 --> 00:41:43.849
necessary that other criteria with imperial you evaluate

00:41:43.860 --> 00:41:47.739
drive the decision in the other direction. Good question

00:41:47.829 --> 00:41:53.780
And speaking of the cost cap, I know we always keep

00:41:53.789 --> 00:41:57.460
consumer costs in mind uh and in a non competitive

00:41:57.469 --> 00:42:02.130
market that brings to its own unique challenges. Uh

00:42:02.139 --> 00:42:08.920
but uh as Commissioner Cobos laid out. So so well,

00:42:08.929 --> 00:42:12.340
initially the need is there and it's it's needed. Now

00:42:12.340 --> 00:42:15.380
the cost benefits the the long run cost benefits are

00:42:15.380 --> 00:42:18.070
there with improved efficiency. Then there's a commitment

00:42:18.070 --> 00:42:22.550
to that efficiency and just this morning our october

00:42:22.550 --> 00:42:27.150
C. P. I inflation numbers came out at 7.7% and that

00:42:27.150 --> 00:42:31.329
was an improvement and we're ranking somewhere behind

00:42:31.329 --> 00:42:37.090
Egypt in inflation. So uh you know the stock market

00:42:37.090 --> 00:42:42.199
was down like the Dow was down 1000 points or 600 points

00:42:42.199 --> 00:42:48.170
yesterday. It's up another 1000 points today. And so

00:42:48.179 --> 00:42:52.260
while I do have always concerns for cost burden on

00:42:52.260 --> 00:42:57.429
the consumers, I don't feel comfortable trying to play

00:42:57.429 --> 00:43:01.110
the inflation metrics anymore than I'd feel comfortable

00:43:01.110 --> 00:43:04.219
playing the stock market. That's that's based off them

00:43:04.230 --> 00:43:08.909
those metrics, you know, down 600 up 1000. I think

00:43:08.909 --> 00:43:13.530
it's just it's just really really hard to peg a number

00:43:13.539 --> 00:43:17.789
Um and and try to get in front of this inflation

00:43:19.369 --> 00:43:23.059
and that's that's really underpinning why I I don't

00:43:23.059 --> 00:43:27.980
want a cost cap. Uh But most importantly, what Commissioner

00:43:27.980 --> 00:43:31.409
Glotfelty said is at the end of this process, there

00:43:31.409 --> 00:43:35.849
is a tried and true and robust mechanism to ensure

00:43:35.849 --> 00:43:37.929
that undue costs are not being

00:43:39.789 --> 00:43:45.199
put on our consumers. And I know energy, I think after

00:43:45.199 --> 00:43:48.559
hearing this discussion, regardless of how this PFD

00:43:48.570 --> 00:43:54.099
or this action comes out, knows that this commission

00:43:54.099 --> 00:43:58.869
staff and these commissioners will be watching closely

00:43:58.880 --> 00:44:03.039
to make sure that this plant if it's approved, is built

00:44:04.119 --> 00:44:09.550
as economically as possible and in the most expeditious

00:44:09.559 --> 00:44:14.130
economic manner possible. Uh So I mean that's that's

00:44:14.139 --> 00:44:17.389
I hear the point on the cost cap, I just I just

00:44:17.400 --> 00:44:20.960
I can't get comfortable trying to play that inflation

00:44:20.969 --> 00:44:24.219
I think there's one other thing that I want to say

00:44:24.219 --> 00:44:30.360
about uh kind of dovetails with that, in my view, historically

00:44:30.360 --> 00:44:33.119
building power plants and transmission facilities,

00:44:33.130 --> 00:44:37.369
um, the largest cost component of these is labor. Um

00:44:37.380 --> 00:44:40.719
we are entering an area where we've got tight labor

00:44:40.719 --> 00:44:44.420
markets, but also we've passed Washington has passed

00:44:45.000 --> 00:44:48.070
hundreds of billions of dollars of tax credit for infrastructure

00:44:48.079 --> 00:44:51.309
which is going to put more pressure on the limited

00:44:51.309 --> 00:44:53.639
labor supply, that's building industrial facilities

00:44:53.650 --> 00:44:57.630
So, so we have to give them some flexibility in that

00:44:57.630 --> 00:45:01.489
regard. This is not a uh in my opinion, something that

00:45:01.489 --> 00:45:04.369
they know exactly what that price is going to be because

00:45:04.369 --> 00:45:09.559
the labor market changes changes all the time and you

00:45:09.559 --> 00:45:11.969
can't stop in the middle of it. Now, I'm glad we're

00:45:11.969 --> 00:45:15.949
not building a $28 billion Vogel plant, we're building

00:45:15.949 --> 00:45:20.659
a $1.3 billion natural gas fired plant. And um, I think

00:45:20.659 --> 00:45:23.960
that's a reasonable thing, but to cap costs in that

00:45:23.960 --> 00:45:27.510
sense, during this time. Mr chairman, I agree with

00:45:27.519 --> 00:45:30.079
you know, the way that interest rates are swinging

00:45:30.079 --> 00:45:32.869
in this. But to me, it's the labor issue, that's really

00:45:32.869 --> 00:45:36.730
the bulk of the challenge. And if we could put a cost

00:45:36.730 --> 00:45:39.559
cap on, on labor, you know, I think a lot of people

00:45:39.559 --> 00:45:43.380
would do it, but I think it's on unrealistic. I mean

00:45:43.380 --> 00:45:47.880
it's a tough call, right? I mean, look, I like to keep

00:45:47.889 --> 00:45:51.710
rate related matters out of CCN criteria CCN cases

00:45:51.719 --> 00:45:56.179
but as you know, I think President has shown in some

00:45:56.179 --> 00:45:58.769
cases for very expensive plants and and there's two

00:45:58.769 --> 00:46:04.010
cases, a big one um uh plant that was about that amount

00:46:04.010 --> 00:46:07.960
of the cost cap, about 1.55 and entered the agreed

00:46:07.960 --> 00:46:11.289
to one in M. C. P. S a little bit over 800

00:46:11.289 --> 00:46:16.019
million. You know, the commission in the past um has

00:46:16.030 --> 00:46:18.909
imposed cost caps to protect the ratepayers, right

00:46:18.920 --> 00:46:21.349
And and I recognize the backdrop of what we're dealing

00:46:21.349 --> 00:46:24.150
with right now right with respect to inflation supply

00:46:24.150 --> 00:46:27.349
chain and all of those, you know, situations and market

00:46:27.349 --> 00:46:31.679
escalations and energy hasn't locked in their their

00:46:31.679 --> 00:46:35.289
contract yet, the pricing and until they get I guess

00:46:35.300 --> 00:46:40.030
approvable and I understand that and and But also I

00:46:40.030 --> 00:46:42.539
do know that the board approved a much higher amount

00:46:42.550 --> 00:46:47.010
to spend on this project and so than than the 1.58

00:46:47.019 --> 00:46:51.150
And so that's that to me, I'm just, you know, ultimately

00:46:51.150 --> 00:46:53.780
I want this plant built, right? And it's needed and

00:46:53.780 --> 00:46:56.380
I want I want it to get done is, you know, an

00:46:56.380 --> 00:47:00.760
expeditious efficient manner. Um I'm not trying to

00:47:00.760 --> 00:47:03.880
stop the plant from being built with a cost cap. All

00:47:03.880 --> 00:47:06.789
I'm trying to do is make sure that there's some protection

00:47:06.789 --> 00:47:09.679
for the financial risk involved in building the plant

00:47:09.679 --> 00:47:11.980
because right now building a plant in an inflationary

00:47:11.980 --> 00:47:14.619
supply chain constricted environment, it's just gonna

00:47:14.619 --> 00:47:18.230
cost more, right, it's going to cost more. And and

00:47:18.230 --> 00:47:23.699
that's the environment we're in right now. And my I

00:47:23.699 --> 00:47:25.340
don't want to stop the plan. So ultimately, if the

00:47:25.340 --> 00:47:28.639
commission's will is to just Move this to the to the

00:47:28.639 --> 00:47:32.710
rate case and and deal with it there, I mean, we're

00:47:32.710 --> 00:47:37.210
gonna see a lot higher number than 1.58. And and so

00:47:37.219 --> 00:47:41.130
yeah, but I'd also have I'd rather see that number

00:47:41.139 --> 00:47:46.409
in the rate case and put a microscope on it. I'd rather

00:47:46.409 --> 00:47:51.630
have the plant and the rate case then hit a cap and

00:47:51.630 --> 00:47:53.789
not have a plant and then have to reconsider whether

00:47:53.789 --> 00:47:57.400
or not we can move the cap and the plants well, if

00:47:57.400 --> 00:47:59.719
you hit the cap and they go over the cap, then the

00:47:59.719 --> 00:48:01.650
company would have to eat the cost. So I think they

00:48:01.650 --> 00:48:04.079
would expect that would stop the plant, you know,

00:48:05.969 --> 00:48:08.119
and I don't want to stop the plant, but I'm just saying

00:48:08.130 --> 00:48:13.670
logistically that I think we've look this inflationary

00:48:13.670 --> 00:48:17.050
environment is far from ideal. Uh we all know that

00:48:17.059 --> 00:48:20.349
and I think the priority, if the priority, which I

00:48:20.349 --> 00:48:22.380
think it is, is getting the plant, I think we need

00:48:22.380 --> 00:48:28.469
to empower them to get there as fast as they can. And

00:48:28.469 --> 00:48:33.010
use the the very robust tools we have on the back end

00:48:33.019 --> 00:48:37.170
to ensure that it was built efficiently. And economically

00:48:37.179 --> 00:48:40.039
we're gonna have to cross this line repeatedly. I mean

00:48:40.039 --> 00:48:44.269
as uh the reserve margins and the the other I. S. O

00:48:44.269 --> 00:48:47.130
S increase the requirements. Um they're gonna have

00:48:47.130 --> 00:48:49.309
to build more power plants and so we're gonna have

00:48:49.309 --> 00:48:53.610
to get over this hurdle in a high inflationary uh snarled

00:48:53.610 --> 00:48:57.420
supply chain environment for everybody. So I think

00:48:57.420 --> 00:49:00.380
this feedback is good. Um I agree with you, mr. Chairman

00:49:00.389 --> 00:49:03.219
I just don't want this deal to blow up in any way

00:49:03.230 --> 00:49:06.139
on the way to ultimate construction. I mean, the need

00:49:06.139 --> 00:49:08.320
is there and that's the paramount decision. We have

00:49:08.320 --> 00:49:13.929
to decide which I believe we have decided. Um So yeah

00:49:13.940 --> 00:49:16.329
I just I just wanna make sure from a process standpoint

00:49:16.340 --> 00:49:20.809
we have not pulled a string that online's the product

00:49:20.820 --> 00:49:26.789
that is is to be approved um for potential appeal and

00:49:26.800 --> 00:49:30.210
looked at that plant needs to be built and sooner rather

00:49:30.210 --> 00:49:33.690
than later. Okay, so, all right, and and, you know

00:49:33.690 --> 00:49:36.489
as I laid out the case, I put the cost cap down

00:49:36.489 --> 00:49:40.079
sort of a stake to have this robust conversation um

00:49:40.090 --> 00:49:42.940
to see where y'all felt, how you how you feel about

00:49:42.940 --> 00:49:45.949
the cost cap, at what amount I did as much due diligence

00:49:45.949 --> 00:49:47.800
I can if I had to approve a cost cap where where

00:49:47.800 --> 00:49:51.340
I might land. Um But I don't want to stop the project

00:49:51.349 --> 00:49:53.650
and I respect the will of the commission to move forward

00:49:53.650 --> 00:49:56.659
without a cost cap. It's it's just, you know, out of

00:49:56.659 --> 00:50:00.019
my due diligence, my experience, you know, representing

00:50:00.019 --> 00:50:02.550
consumers that, that, that's just, you know, kind of

00:50:02.550 --> 00:50:05.570
where I came in at it. But you know, with this regulator

00:50:05.570 --> 00:50:07.380
hat that I have on here, I want this plan to move

00:50:07.380 --> 00:50:10.000
forward and I respect the will of the commission on

00:50:10.000 --> 00:50:12.239
this issue. I really just wanted to put a stake in

00:50:12.239 --> 00:50:16.920
the ground and kind of see where there's no doubt it's

00:50:16.920 --> 00:50:19.630
an important issue that needs thorough discussion.

00:50:20.449 --> 00:50:22.909
Thank you for bringing up and laying it out so thoroughly

00:50:24.610 --> 00:50:28.969
Uh, I think in terms of the issues at hand, uh, understand

00:50:28.980 --> 00:50:33.789
the general sentiment to that we need the plant. Uh

00:50:33.800 --> 00:50:38.650
it does not need to be delayed for any uh consideration

00:50:38.650 --> 00:50:41.849
of new federal legislation. It

00:50:43.630 --> 00:50:47.199
does not at this time, need the hydrogen component

00:50:47.210 --> 00:50:52.750
but with a wholehearted encouragement to the applicant

00:50:52.760 --> 00:50:56.980
to come back in the future with more data, more analysis

00:50:56.980 --> 00:51:02.940
more forward looking, uh insight on economics and emissions

00:51:02.949 --> 00:51:06.059
so we can hopefully lay the groundwork for a future

00:51:06.059 --> 00:51:10.949
of hydrogen in Texas just not yet in this docket I'm

00:51:10.949 --> 00:51:14.739
certainly for that. I'm certainly for that. Yes, ma'am

00:51:15.489 --> 00:51:20.059
Uh, and to move forward to modify the PFD to remove

00:51:20.059 --> 00:51:25.679
any cost cap, given the extraordinary inflation inflationary

00:51:25.690 --> 00:51:29.809
environment. We're in once in a half century type inflation

00:51:29.809 --> 00:51:32.730
environment with

00:51:35.159 --> 00:51:38.679
direct commentary to the applicant that and I'm sure

00:51:38.679 --> 00:51:41.289
they know this, that this commission these commissioners

00:51:41.289 --> 00:51:44.340
and our staff will be watching closely on the back

00:51:44.340 --> 00:51:48.190
end to ensure consumers are getting uh efficiently

00:51:48.190 --> 00:51:51.519
build an economic asset in exchange for their ratepayer

00:51:51.519 --> 00:51:55.329
dollars thing. I know they're listening and appreciate

00:51:55.329 --> 00:52:03.849
that point. Is that all of that weatherization, weatherization

00:52:05.940 --> 00:52:08.559
requiring a weatherization standard consistent with

00:52:08.610 --> 00:52:12.929
ERCOT coastal zone instead of the more amorphous you're

00:52:12.929 --> 00:52:15.070
a standard that works correct

00:52:17.820 --> 00:52:23.929
guarantee, guarantee and transmission condition with

00:52:23.929 --> 00:52:26.909
respect to interview would have to come back for CCM

00:52:26.909 --> 00:52:29.269
proceedings associated transmission.

00:52:31.780 --> 00:52:35.739
Alright, we've got adopting commission Counsel's memo

00:52:35.739 --> 00:52:40.090
and the SOAH LJ's exceptions letter agreed agreed

00:52:43.480 --> 00:52:46.130
we've got all the considerations for this. PFD. I hope

00:52:46.130 --> 00:52:48.909
somebody wrote that down too.

00:52:50.739 --> 00:52:55.210
Do we have a motion to approve the PFD as amended by

00:52:55.210 --> 00:52:59.860
commission counsel and modified per our discussion

00:52:59.869 --> 00:53:05.550
at the dais along the lines of the bullet points. I

00:53:05.550 --> 00:53:09.929
just laid up second, got a motion and a second all

00:53:09.929 --> 00:53:15.730
in favor say aye hai don't oppose motion passes, thank

00:53:15.730 --> 00:53:18.280
you all for the work. Thank you staff for all the work

00:53:18.280 --> 00:53:26.300
on that. Um these are big cases, big docket Uh at this

00:53:26.300 --> 00:53:31.380
point the uh we obviously have some remaining items

00:53:31.380 --> 00:53:34.769
on our agenda because we don't have enough going on

00:53:34.769 --> 00:53:38.329
today. The Sunset Commission required ERCOT Staff either

00:53:38.329 --> 00:53:41.610
exit interviews today so we will recess this meeting

00:53:41.610 --> 00:53:46.170
until a relevant ERCOT staff can return from the Sunset

00:53:46.170 --> 00:53:52.980
Commission offices, we will reconvene at 12:15 p.m.

00:53:52.989 --> 00:53:55.570
Today. At this point we're recessing

00:54:01.179 --> 00:54:03.960
this meeting of the public utility commission Texas

00:54:03.960 --> 00:54:07.949
is here called back to order, appreciate y'all's understanding

00:54:07.949 --> 00:54:12.190
about the delays needed for our recess, glad to have

00:54:12.190 --> 00:54:17.139
the team back with us. Uh at this point we will pick

00:54:17.139 --> 00:54:21.949
up our agenda. (item:3:52933) Mr. Journeay, Next item please, sir. Item

00:54:21.949 --> 00:54:28.079
three is project 52933 Calendar year 2020 reports of

00:54:28.079 --> 00:54:32.019
the electric reliability council of Texas, ERCOT filed

00:54:32.019 --> 00:54:34.130
a request for the input of the commission on ERCOT

00:54:34.150 --> 00:54:38.260
bylaws and german link has filed a memorandum in this

00:54:38.260 --> 00:54:41.599
matter. Thank you sir. Uh as I'm sure all of you have

00:54:41.599 --> 00:54:47.199
seen, I did follow memo uh recently um certainly I'm

00:54:47.199 --> 00:54:50.849
not gonna read through the entire thing but I hope

00:54:50.860 --> 00:54:55.630
my general thoughts are clear and that the uh legislation

00:54:55.630 --> 00:55:00.730
from last session SB two in particular uh made it absolutely

00:55:00.730 --> 00:55:03.239
abundantly clear that the legislature in the state

00:55:03.239 --> 00:55:06.909
of Texas one ERCOT to be governed by the independent

00:55:06.909 --> 00:55:10.949
board that is selected uh via selection committee from

00:55:10.960 --> 00:55:14.500
the governor, lieutenant governor and speaker. Uh that

00:55:14.510 --> 00:55:18.469
that's apparent to me and in response to the request

00:55:18.469 --> 00:55:22.420
for input uh and in order to fill our obligation to

00:55:22.429 --> 00:55:26.900
provide that input on ERCOT bylaws offer up the thoughts

00:55:27.079 --> 00:55:29.690
in that memo and most importantly and

00:55:32.099 --> 00:55:35.960
in the conclusion that memo, it the bullet points at

00:55:35.960 --> 00:55:39.809
the end of the second page, encapsulate the key principles

00:55:39.809 --> 00:55:44.360
that I really want to ask your thoughts on and ask

00:55:44.360 --> 00:55:52.250
for eventually a a vote to approve that issue, a statement

00:55:52.260 --> 00:55:56.619
of input reflecting those bullet points. Uh But the

00:55:56.630 --> 00:56:00.079
bottom line is while our market participants and corporate

00:56:00.090 --> 00:56:05.480
members play a critical role and offer unique insight

00:56:05.489 --> 00:56:11.920
that no other source can provide. The Legislature was

00:56:11.920 --> 00:56:14.710
clear that they need to continue to contribute to the

00:56:14.719 --> 00:56:18.480
market market process and and and be part of those

00:56:18.480 --> 00:56:23.630
deliberations but they can no longer control the market

00:56:23.630 --> 00:56:28.690
in which they generate profits. Uh I'll stop there

00:56:28.690 --> 00:56:31.239
Look forward to hearing thoughts and comments.

00:56:33.340 --> 00:56:39.119
Mr Chairman, I very much appreciate, appreciate the

00:56:39.119 --> 00:56:42.860
memo. Um the sentiments expressed in the memo uh and

00:56:42.869 --> 00:56:46.190
the four points um that you're asking us to consider

00:56:46.199 --> 00:56:51.099
as a statement of intent. Um I support or a statement

00:56:51.099 --> 00:56:54.349
of input not necessarily intended. Uh I support ERCOT

00:56:54.369 --> 00:56:57.639
endeavors um to amend their bylaws under the changes

00:56:57.639 --> 00:57:01.550
to pure uh certainly enacted by Senate Bill two and

00:57:01.550 --> 00:57:05.409
I look forward the final version after these uh these

00:57:05.409 --> 00:57:10.159
discussions and collaboration between the two um ultimately

00:57:10.159 --> 00:57:13.610
to fulfill the spirit and intent of the legislation

00:57:13.619 --> 00:57:18.210
and the the independence of the board uh in governance

00:57:18.219 --> 00:57:23.920
from that of the industry, appreciate the sauce. Uh

00:57:23.929 --> 00:57:27.880
Mr Chairman, I appreciate your your memo um support

00:57:27.880 --> 00:57:32.019
it. Um I I think the legislature acted last session

00:57:32.030 --> 00:57:35.489
on the structure of ERCOT um out of need for the future

00:57:35.489 --> 00:57:40.019
market the reliability um of the consumers of our state

00:57:40.030 --> 00:57:44.190
Um I believe that that your memo and the requested

00:57:44.190 --> 00:57:47.260
changes are a reflection of the authority given to

00:57:47.260 --> 00:57:50.389
us and market and the new board as a result of that

00:57:50.659 --> 00:57:54.570
um And totally believe that they're within their responsibilities

00:57:54.579 --> 00:57:57.920
and that um like every other market around the United

00:57:57.920 --> 00:58:01.179
States almost I think everyone has an independent board

00:58:01.190 --> 00:58:05.000
Uh I may be mistaken on that but and they work um

00:58:06.090 --> 00:58:09.630
I think uh as a result of Senate Bill two, we have

00:58:09.630 --> 00:58:12.219
never had a better board at our cotton. I think the

00:58:12.219 --> 00:58:14.820
board, the professionals that are on there are solely

00:58:14.820 --> 00:58:17.780
looking out for the best interests of Texans. Texas

00:58:17.780 --> 00:58:21.829
consumers and reliability of the system. And just by

00:58:21.829 --> 00:58:24.210
the caliber of people that are sitting on that board

00:58:24.210 --> 00:58:26.269
we know that we're moving in the right direction and

00:58:26.280 --> 00:58:31.110
I believe that's incredibly important and that we would

00:58:31.119 --> 00:58:34.460
have never had software executives sitting on the archive

00:58:34.460 --> 00:58:38.039
board when we have you know, such a a deep software

00:58:38.050 --> 00:58:43.179
challenge or or um deep software need and understanding

00:58:43.179 --> 00:58:46.119
at ERCOT to manage the market, having things like that

00:58:46.119 --> 00:58:52.300
is is really good. Um and valuable. Um I do have one

00:58:52.300 --> 00:58:57.739
cautionary note um and that is that as I've said before

00:58:57.750 --> 00:59:01.610
um R. T. O. S. Can become extremely powerful and insulated

00:59:02.929 --> 00:59:08.000
and um as I've said um other not this R. T. O

00:59:08.000 --> 00:59:11.329
But and other ones are where many projects go to die

00:59:11.340 --> 00:59:16.409
Um I know Pablo won't won't let that happen here and

00:59:16.409 --> 00:59:21.079
uh and nor will we but um These things have a have

00:59:21.079 --> 00:59:25.429
a way of getting away from us and um ERCOT has over

00:59:25.429 --> 00:59:29.789
800 employees now. Um we hope and I believe it's our

00:59:29.789 --> 00:59:32.650
responsibility in conjunction with them to make sure

00:59:32.650 --> 00:59:35.730
that they're all doing what we see fit to ensure that

00:59:35.739 --> 00:59:38.780
we have a functioning, reliable and economic marketplace

00:59:38.789 --> 00:59:44.019
and that the bylaws, uh the input from tack, um these

00:59:44.019 --> 00:59:46.380
things are part of that process that we believe are

00:59:46.380 --> 00:59:50.059
critical to having a really, you know, continued great

00:59:50.059 --> 00:59:54.219
market in this state and um having the professionals

00:59:54.219 --> 00:59:57.449
on the board that come from power and gas, they know

00:59:57.449 --> 01:00:00.769
that they don't know everything. So having tak having

01:00:00.769 --> 01:00:03.579
industry input is is will be critically important for

01:00:03.579 --> 01:00:08.440
them as we go forward. So, um so with that little cautionary

01:00:08.440 --> 01:00:11.199
note, I support the effort and would totally support

01:00:11.199 --> 01:00:14.190
the motion when it comes up that uh that we approve

01:00:14.190 --> 01:00:17.380
these bylaw changes, we'll put on all counts. Thank

01:00:17.380 --> 01:00:21.670
you, sir, thank you mr Chairman, thank you for your

01:00:21.670 --> 01:00:24.309
memo as well and um providing us with your perspective

01:00:24.309 --> 01:00:27.760
on this very important issue, um you know, the specific

01:00:27.769 --> 01:00:30.230
redline changes are not before us today for approval

01:00:30.239 --> 01:00:35.099
um but like as I stated, um you know, as those ERCOT

01:00:35.099 --> 01:00:37.849
board approval board approved by laws come back to

01:00:37.849 --> 01:00:41.510
the final approval, um you know, will be presented

01:00:41.510 --> 01:00:44.730
with those changes um here at the commission for final

01:00:44.730 --> 01:00:49.090
approval and our our review Under Pura is modified

01:00:49.090 --> 01:00:52.989
by Senate Bill two consistent with the letter and spirit

01:00:52.989 --> 01:00:58.360
of the law. Um as stated in your memo, you're the principles

01:00:58.369 --> 01:01:01.489
the bulleted principles you've set forth. Um I you

01:01:01.489 --> 01:01:04.739
know, I think you you believe is as we've stated um

01:01:04.750 --> 01:01:06.920
based on your review of the law and due diligence that

01:01:06.929 --> 01:01:09.869
that those principles capture the letter and spirit

01:01:09.869 --> 01:01:14.739
of the law in PURA Um I strongly agree with your with

01:01:14.739 --> 01:01:19.010
your guiding principle regarding the preservation of

01:01:19.010 --> 01:01:22.530
the air cots um that that the air cardboard must preserve

01:01:22.530 --> 01:01:26.440
the stakeholder process and can eliminate tech. Um

01:01:26.449 --> 01:01:29.739
and the desire to provide um your desire to provide

01:01:29.739 --> 01:01:32.059
a stakeholder community with the comfort that that

01:01:32.059 --> 01:01:35.150
is not the commission's intent. You still want to have

01:01:35.150 --> 01:01:37.780
a meaningful robust stakeholder process and the board

01:01:37.780 --> 01:01:41.559
can't eliminate tech. Um you know, I

01:01:43.360 --> 01:01:48.219
I know you want to issue a statement of intent um and

01:01:48.219 --> 01:01:51.539
I generally agree with the bulleted points. It is a

01:01:51.550 --> 01:01:53.349
little bit of unprecedented in nature, right? Because

01:01:53.349 --> 01:01:56.949
we have new legislation and um the board is seeking

01:01:56.949 --> 01:02:01.269
our guidance and um like I said, I generally support

01:02:01.280 --> 01:02:05.130
the intent of your bullet prince bulleted principles

01:02:05.139 --> 01:02:08.900
that you set out in your memo and um you know, we'll

01:02:08.900 --> 01:02:10.989
we'll evaluate the specific redline changes when they

01:02:10.989 --> 01:02:13.480
come back with us under the lens of Perez modified

01:02:13.489 --> 01:02:17.039
by S. P. Two and the letter and spirit of wall.

01:02:19.059 --> 01:02:23.070
Thank you for those thoughts, thoughts MS Jackson also

01:02:23.070 --> 01:02:27.179
support your memo and the items that you've laid out

01:02:27.179 --> 01:02:30.070
and I feel like it fully meets the requirement in the

01:02:30.070 --> 01:02:34.539
spirit of Senate Bill two. Thank you ma'am, I appreciate

01:02:34.539 --> 01:02:38.780
the thoughts. I know the legislature has been watching

01:02:38.780 --> 01:02:42.789
this issue closely and will continue to do so. Uh,

01:02:42.800 --> 01:02:49.059
and I know our board knew the ERCOT board new though

01:02:49.059 --> 01:02:53.300
they may be, has already developed a great appreciation

01:02:53.300 --> 01:02:57.630
for the value of TAC and the market participants. Uh

01:02:57.639 --> 01:03:00.670
and they is not only just our intent to enshrine and

01:03:00.670 --> 01:03:04.969
codify market participant contributions to market and

01:03:04.969 --> 01:03:08.840
the market rules process, but I'm also know that is

01:03:08.840 --> 01:03:11.929
the intent of the ERCOT board to do so and they they

01:03:11.929 --> 01:03:15.230
have been consistent and vocal about that. So I have

01:03:15.230 --> 01:03:17.980
every confidence that they will continue to lean heavily

01:03:17.980 --> 01:03:22.380
on the market participants uh, regardless of of what

01:03:22.380 --> 01:03:26.920
bylaws changes may come uh, if there are other thoughts

01:03:26.920 --> 01:03:31.269
or comments uh entertain a motion to issue a statement

01:03:31.269 --> 01:03:33.840
of input on the archive bylaws that incorporates the

01:03:33.840 --> 01:03:38.079
bullet points on page two of my amendment some moved

01:03:39.730 --> 01:03:43.909
2nd 2nd got a motion and a second all in favor say

01:03:43.909 --> 01:03:49.889
aye. All right, all opposed say nay, none opposed motion

01:03:49.889 --> 01:03:51.449
passes. Thank you. All.

01:03:53.420 --> 01:03:58.179
Next item please. Mr Journeay um, item four is the

01:03:58.190 --> 01:04:00.300
general ERCOT matter. I don't know if we have anything

01:04:00.300 --> 01:04:03.550
under that. I don't have anything on item four. (item:5:52373) Item

01:04:03.559 --> 01:04:07.500
five is project 52373. Review, Hotel electric market

01:04:07.500 --> 01:04:13.280
design requested commission project to review uh The

01:04:13.289 --> 01:04:16.539
Market reform report prepared by Energy and Environmental

01:04:18.639 --> 01:04:19.860
Thank you. Mr Journeay

01:04:22.130 --> 01:04:28.829
main event given staff filed a memo asked them to come

01:04:28.829 --> 01:04:31.099
up and lay out their memo for the commission please

01:04:36.260 --> 01:04:39.360
Thank you Ben Haigwood Commission staff. Um As you

01:04:39.360 --> 01:04:42.829
noted this morning, staff did file a commissioned study

01:04:42.829 --> 01:04:47.039
prepared by Energy and Environmental Economics titled

01:04:47.050 --> 01:04:50.570
Assessment of Market reform options to enhance reliability

01:04:50.570 --> 01:04:55.449
of the market system in 52373 filed along with that

01:04:55.460 --> 01:04:57.929
is the memo recommending that the commission issue

01:04:57.929 --> 01:05:01.230
a request for public comment. Open a new project to

01:05:01.230 --> 01:05:05.760
receive comments along with a list of suggested questions

01:05:05.769 --> 01:05:09.039
Um So say a little bit about the process in terms of

01:05:09.039 --> 01:05:12.920
how we got here um following the issuance of the RFP

01:05:12.920 --> 01:05:15.219
and the execution of the contract with the three. In

01:05:15.219 --> 01:05:20.030
May 2021 they're consultants have conducted uh extensive

01:05:20.030 --> 01:05:23.789
consultations with commissioners and PUC staff. Um

01:05:23.800 --> 01:05:26.789
The purpose of these meetings has been to both refined

01:05:26.789 --> 01:05:30.079
design concepts presented in the commission work sessions

01:05:30.090 --> 01:05:32.989
to ensure that each one was accurately represented

01:05:32.989 --> 01:05:36.389
and assessed and to establish uniform quantitative

01:05:36.389 --> 01:05:39.309
inputs that are modeled in the study And comprise a

01:05:39.309 --> 01:05:43.340
base case for a 2026 projections over which market

01:05:43.340 --> 01:05:46.900
design proposals could be assessed um Throughout the

01:05:46.900 --> 01:05:49.360
development each potential design, the commission is

01:05:49.360 --> 01:05:54.130
focused on developing designs that are reliable market

01:05:54.130 --> 01:05:57.989
based. Um Procure power from reliable sources at the

01:05:57.989 --> 01:06:02.550
lowest cost um retain and incentivize dispatchable

01:06:02.550 --> 01:06:04.949
generation that's capable of performing in times of

01:06:04.960 --> 01:06:08.940
great reliability need throughout the year. Um the

01:06:08.940 --> 01:06:12.679
study establishes the base case for 2020 sticks with

01:06:12.679 --> 01:06:15.679
uniform quantitative assumptions. These include all

01:06:15.679 --> 01:06:18.280
the phase one changes that this commission is adopted

01:06:18.280 --> 01:06:21.300
and are currently being implemented. Um and then layers

01:06:21.300 --> 01:06:23.550
different market designs over that base case for a

01:06:23.550 --> 01:06:28.699
fair comparison. Um The quantitative component of the

01:06:28.699 --> 01:06:31.679
modeling uses the servant model that's exclusively

01:06:31.690 --> 01:06:36.849
um issued by a strap. Um It represents thousands of

01:06:36.849 --> 01:06:38.989
years of different conditions through combinations

01:06:38.989 --> 01:06:42.550
of weather outages, other market variables including

01:06:42.550 --> 01:06:45.550
high stress scenarios that are specifically listed

01:06:45.550 --> 01:06:49.710
in sp three. Um In terms of the content of the study

01:06:49.719 --> 01:06:54.829
um There is there is a robust quantitative and qualitative

01:06:54.829 --> 01:06:58.869
assessment of each design. It examines both the expected

01:06:58.869 --> 01:07:04.260
cost and reliability outcomes. Um You'll see an assessment

01:07:04.260 --> 01:07:08.079
of a Load serving entity reliability obligation. Um

01:07:08.090 --> 01:07:10.420
This has been refined and modified compared to the

01:07:10.420 --> 01:07:14.110
concept that was discussed in the work session. Um

01:07:14.119 --> 01:07:16.880
You'll also see a forward reliability market which

01:07:16.880 --> 01:07:19.110
shares many characteristics, characteristics of the

01:07:19.110 --> 01:07:22.309
L. S. C. R. O. But it is centrally procured by ERCOT

01:07:22.309 --> 01:07:26.239
as opposed to bilaterally arranged. Um You will see

01:07:26.239 --> 01:07:29.269
an assessment of the backstop reliability service in

01:07:29.269 --> 01:07:32.469
which ERCOT would procure additional generation resources

01:07:32.480 --> 01:07:36.820
up to a reliability standard a dispatchable energy

01:07:36.820 --> 01:07:40.309
credit design which has also undergone technical changes

01:07:40.320 --> 01:07:43.980
um since it was introduced and a performance credit

01:07:43.980 --> 01:07:47.130
mechanism. Um this is a design that emerged during

01:07:47.130 --> 01:07:50.170
our mini discussion that draws on complementary elements

01:07:50.179 --> 01:07:54.210
from other design proposals. Um the principles and

01:07:54.210 --> 01:07:56.579
the commissioner's blueprint expressed openness to

01:07:56.579 --> 01:07:59.630
a hybrid design that draws on compatible elements um

01:07:59.639 --> 01:08:04.039
which was the genesis of the PCM design. Um so the

01:08:04.039 --> 01:08:07.369
questions for comment um direct specific focus to the

01:08:07.369 --> 01:08:10.929
PCM design which was developed throughout these consultations

01:08:10.940 --> 01:08:13.739
and as is laid out in the memo and his staff's assessment

01:08:13.750 --> 01:08:16.649
this design satisfies the principles of the blueprint

01:08:16.659 --> 01:08:20.069
and commission staff um would like to hear from stakeholders

01:08:20.069 --> 01:08:23.329
regarding this design specifically because it was developed

01:08:23.340 --> 01:08:26.390
in the process of completing the study. So with that

01:08:26.390 --> 01:08:29.500
we look forward to discussion and reading the comments

01:08:29.510 --> 01:08:33.420
probably over thanksgiving break, Please read the study

01:08:33.420 --> 01:08:38.930
before you submit comments most importantly of all

01:08:38.930 --> 01:08:41.340
of this, that is by far the most important point. Please

01:08:41.350 --> 01:08:46.569
read the study before commenting. Thank you Ben and

01:08:47.170 --> 01:08:50.180
I appreciate you laying out the technical process.

01:08:50.180 --> 01:08:53.239
The consultants went through robust analysis using

01:08:53.239 --> 01:08:56.350
the server model with the strap a that has been used

01:08:56.359 --> 01:09:00.210
in ERCOT for years, uh consistent, it's a well known

01:09:00.210 --> 01:09:03.159
product and all of our market participants are familiar

01:09:03.159 --> 01:09:08.260
with but before I get to my uh comments and thoughts

01:09:08.260 --> 01:09:10.649
on the actual product. I do want to build on what you

01:09:10.649 --> 01:09:15.689
said and remind folks about the entire Spectrum of

01:09:15.689 --> 01:09:19.729
the process. We have been through uh first and foremost

01:09:19.729 --> 01:09:25.100
this effort started 18 months ago with landmark legislation

01:09:25.100 --> 01:09:27.659
from the legislature after one of the most devastating

01:09:27.659 --> 01:09:33.189
tragedies in Texas history. Uh and the speed with which

01:09:33.189 --> 01:09:38.350
the legislature evaluated and enacted such substantial

01:09:38.350 --> 01:09:41.520
reform was remarkable and truly, and only in Texas

01:09:41.529 --> 01:09:46.460
kind of kind of outcome. The governor signed that legislation

01:09:46.460 --> 01:09:51.399
into law in June of 2021 and we have been working at

01:09:51.399 --> 01:09:55.409
a breakneck pace since then to implement the immediately

01:09:55.409 --> 01:10:00.670
actionable operational reforms and changes uh and start

01:10:00.670 --> 01:10:04.630
laying the groundwork for this longer term reliability

01:10:04.640 --> 01:10:10.449
reform, all in response to the legislation from the

01:10:10.449 --> 01:10:14.779
2021 session and acted after that storm. Uh most specifically

01:10:14.779 --> 01:10:21.199
but not limited to SB three. Uh we went through, I

01:10:21.199 --> 01:10:24.550
think it's fair to say rigorous, certainly felt rigorous

01:10:24.560 --> 01:10:29.350
process last summer and fall of dozens of hours of

01:10:29.359 --> 01:10:34.090
public workshops, hundreds if not thousands and thousands

01:10:34.090 --> 01:10:37.859
of pages of public comment, which was through the fall

01:10:37.869 --> 01:10:42.729
and summer and fall of 2021, which were just and many

01:10:42.729 --> 01:10:47.300
hours of deliberations with this commission before

01:10:47.300 --> 01:10:51.649
Miss Jackson got here. Uh many, many hours of deliberation

01:10:52.189 --> 01:10:56.300
resulting in the blueprint that was adopted unanimously

01:10:56.300 --> 01:11:00.260
last december from there, we launched the process that's

01:11:00.270 --> 01:11:04.170
been described so aptly with the consultants uh which

01:11:04.180 --> 01:11:09.020
I think it's fair to say has been a rigorous and very

01:11:09.029 --> 01:11:13.939
very well executed analysis by, by the consultants

01:11:13.939 --> 01:11:18.170
we contracted and I'll see you I think are the public

01:11:18.170 --> 01:11:21.819
will see that reflected in the report and the work

01:11:21.819 --> 01:11:26.199
product. And that brings us to where we are today,

01:11:26.199 --> 01:11:30.949
where we have gone through the public, extensive public

01:11:30.949 --> 01:11:33.800
common, extensive deliberations in public. We've gone

01:11:33.800 --> 01:11:36.779
through the quantitative and qualitative analysis.

01:11:36.779 --> 01:11:40.039
We've iterated from where we started with the original

01:11:40.039 --> 01:11:42.920
concepts from, from the blueprint in december. And

01:11:42.920 --> 01:11:46.939
now we've, we've gotten to the end of that part of

01:11:46.939 --> 01:11:51.500
our process and have a pretty compelling concept I

01:11:51.510 --> 01:11:56.140
think. And I'll share my thoughts on that moment terribly

01:11:56.149 --> 01:12:00.390
before I do that. I do want to offer a wholehearted

01:12:00.390 --> 01:12:06.159
thanks to staff. Then Haigwood maddie heath hard. There

01:12:06.159 --> 01:12:13.350
she is. Arc, uh Rebecca's otherwise jess, heck, rich

01:12:13.350 --> 01:12:20.000
Parsons, some somewhere uh, thomas Gleason. And of

01:12:20.000 --> 01:12:23.550
course Connie Corona, who is all of our conscious and

01:12:23.550 --> 01:12:25.890
of course is actually in charge at the end of the day

01:12:27.159 --> 01:12:31.869
These, these commissioners and this agency owe you

01:12:31.869 --> 01:12:38.229
all a tremendous thanks. Has it been a gargantuan amount

01:12:38.229 --> 01:12:43.600
of work to get where we are today? And it has been

01:12:43.600 --> 01:12:47.399
worked well done. The public will see that in the output

01:12:47.409 --> 01:12:51.239
of what was published this morning or posted this morning

01:12:52.220 --> 01:12:55.810
and more importantly, the people of Texas. Ou all you

01:12:55.810 --> 01:13:00.579
few tremendous thanks for all of the work you have

01:13:00.579 --> 01:13:04.270
done to get us to this point. This is a remarkable

01:13:04.270 --> 01:13:09.760
milestone for market the market, but also for the state

01:13:09.760 --> 01:13:13.380
of Texas and you're to be commended and thanks for

01:13:13.380 --> 01:13:16.069
that, that's a given around the clock.

01:13:22.659 --> 01:13:24.520
Thank you all very, very much

01:13:27.750 --> 01:13:34.010
at the most fundamental level the PCM requires in my

01:13:34.010 --> 01:13:37.979
mind anyone who sells power to a household or business

01:13:37.989 --> 01:13:41.890
in an archive to guarantee that they are buying that

01:13:41.890 --> 01:13:45.699
power from a reliable source for the first time ever

01:13:46.220 --> 01:13:49.329
The companies that sell you power that you send your

01:13:49.329 --> 01:13:52.359
money to each month when you pay your electric bill

01:13:53.220 --> 01:13:57.680
well now actually be required to ensure they can deliver

01:13:57.680 --> 01:13:59.989
that power. If this isn't active,

01:14:01.810 --> 01:14:04.939
if they don't, they will be held accountable and penalized

01:14:04.939 --> 01:14:10.329
accordingly. This would be a fundamental change in

01:14:10.340 --> 01:14:13.289
the underlying principles of archive. But importantly

01:14:13.289 --> 01:14:15.970
it would not interfere with the existing market mechanisms

01:14:15.970 --> 01:14:20.750
it would not interfere or disrupt the day ahead market

01:14:20.750 --> 01:14:24.550
the real time energy market or existing bilateral contracts

01:14:24.550 --> 01:14:28.390
and arrangements. This is a comprehensive solution

01:14:28.399 --> 01:14:33.020
It's not a band aid, this ensures system wide reliability

01:14:33.029 --> 01:14:36.079
and sets a clear reliability standard.

01:14:38.479 --> 01:14:42.579
This design proposed design is a market based solution

01:14:42.579 --> 01:14:47.229
which means that it utilizes market forces to drive

01:14:47.229 --> 01:14:52.489
better and more efficient technology and reduces costs

01:14:52.489 --> 01:14:53.609
for consumers.

01:14:55.220 --> 01:14:59.310
This is intended and is I believe, designed to be self

01:14:59.310 --> 01:15:02.260
correcting. As the old oil field saying goes, the cure

01:15:02.260 --> 01:15:05.000
for high prices is high prices. The cure for low prices

01:15:05.000 --> 01:15:08.460
is low prices if in the future. If this were to be

01:15:08.460 --> 01:15:15.020
enacted and ERCOT has too much reliable power, the

01:15:15.020 --> 01:15:18.819
prices of these concerns, these proposed credits would

01:15:18.819 --> 01:15:22.399
drop minimizing the impact on consumers. But if ERCOT

01:15:22.399 --> 01:15:25.239
is short of reliable power, the price of these credits

01:15:25.239 --> 01:15:28.930
will move higher, incentivizing investment to get the

01:15:28.930 --> 01:15:32.390
power we need, all of which should happen without interference

01:15:32.390 --> 01:15:36.199
from us, the regulator or or the broader government

01:15:36.199 --> 01:15:36.859
apparatus.

01:15:38.939 --> 01:15:41.890
And one of the most fundamental concepts of this is

01:15:41.890 --> 01:15:43.880
something that Commissioner McAdams has been talking

01:15:43.880 --> 01:15:47.079
about for a while and I've recently developed a much

01:15:47.079 --> 01:15:51.090
greater appreciation for which is the separation of

01:15:51.100 --> 01:15:55.220
economic scarcity from physical scarcity. Uh I know

01:15:55.220 --> 01:15:59.229
he'll speak to this in more detail, but at the highest

01:15:59.229 --> 01:16:02.659
level it's incredibly important. I think that PCM achieves

01:16:02.659 --> 01:16:10.720
this to harness those market forces allow the mechanics

01:16:10.720 --> 01:16:13.659
of supply and demand to drive prices higher when we're

01:16:13.659 --> 01:16:16.789
short of reliable power to incentivize that generation

01:16:17.460 --> 01:16:21.359
But separating that economic scarcity from the physical

01:16:21.359 --> 01:16:24.600
scarcity so we can incentivize that the resources we

01:16:24.600 --> 01:16:27.470
need, the performance we need without requiring the

01:16:27.470 --> 01:16:30.520
grid to go to the brink. And we don't rely on that

01:16:30.529 --> 01:16:35.289
old crisis based business model anymore. Um That's

01:16:35.300 --> 01:16:38.369
I'm glad you've been harping on that and like I said

01:16:38.380 --> 01:16:40.930
throughout this process, I've developed a much greater

01:16:40.930 --> 01:16:45.560
appreciation for that concept. The P. C. M. I believe

01:16:45.560 --> 01:16:49.810
is truly accommodation of the best components from

01:16:49.810 --> 01:16:52.359
each of the concepts of the blueprint adopted last

01:16:52.359 --> 01:16:56.739
december, as we've said all along the goal was to capture

01:16:56.739 --> 01:16:59.529
the features of each of those concepts, discard the

01:16:59.529 --> 01:17:03.229
flaws and we have and I think we've ended up with a

01:17:03.229 --> 01:17:06.729
better product in the PCM than any of the individual

01:17:06.739 --> 01:17:08.840
original products that were put in the front end of

01:17:08.840 --> 01:17:12.649
this process. Some of those key features that were

01:17:12.649 --> 01:17:16.409
captured throughout this process, starting with some

01:17:16.420 --> 01:17:19.600
some concepts that commissioner McAdams brought to

01:17:19.600 --> 01:17:22.430
us. Most importantly is the notion you'll see in the

01:17:22.430 --> 01:17:26.789
PCM of earn it, don't assign it. We want to pay for

01:17:26.789 --> 01:17:31.439
performance. We're going to avoid the administrative

01:17:31.439 --> 01:17:34.890
exercise of arbitrarily assigning percentages to certain

01:17:34.890 --> 01:17:40.119
types of resources and all of the non-spin that has

01:17:40.130 --> 01:17:43.430
burdened and delayed so many other efforts to develop

01:17:43.430 --> 01:17:47.770
reliability products under the PCM construct. If you

01:17:47.770 --> 01:17:50.260
want to be paid for being reliable, you gotta commit

01:17:50.260 --> 01:17:53.000
in advance and you gotta be there when you say you're

01:17:53.000 --> 01:17:53.840
gonna be there.

01:17:57.380 --> 01:18:01.899
There is no notion in the PCM of a capacity payment

01:18:01.909 --> 01:18:05.729
just for sitting on the sidelines. We only under PCM

01:18:05.729 --> 01:18:09.770
would pay for what we really need and when we need

01:18:09.770 --> 01:18:12.720
it, this would not pay

01:18:14.369 --> 01:18:18.399
owners for just owning something. It would only provide

01:18:18.399 --> 01:18:25.069
reliability revenues for performance and in addition

01:18:25.079 --> 01:18:29.930
if the wind is blowing and the sun is shining and we

01:18:29.930 --> 01:18:33.170
have plenty of reserves then archive will continue

01:18:33.170 --> 01:18:36.930
to capture those low cost resources and and utilize

01:18:36.930 --> 01:18:40.050
those benefits of those resources, they have fantastic

01:18:40.050 --> 01:18:43.350
benefits and we would hope to continue to capture them

01:18:43.350 --> 01:18:45.880
We'll continue to capture if generators under the PCM

01:18:45.880 --> 01:18:50.770
construct do not perform as they promised in advance

01:18:50.779 --> 01:18:52.810
Not only do they lose out on that revenue, they'll

01:18:52.810 --> 01:18:54.159
be penalized heavily.

01:18:55.939 --> 01:19:01.220
And most importantly, the P C. M concept would move

01:19:01.220 --> 01:19:05.970
the financial risk and operational risk of generation

01:19:05.979 --> 01:19:10.409
market out of the ERCOT control room and into the private

01:19:10.409 --> 01:19:14.430
businesses that make money by evaluating and managing

01:19:14.430 --> 01:19:19.220
risk where it belongs. In addition, uh, Commissioner

01:19:19.220 --> 01:19:22.090
McAdams brought to us the concept of a residual market

01:19:22.100 --> 01:19:25.899
which you will also see in the, in the PCM concept

01:19:26.510 --> 01:19:30.909
which is a tremendous measure that provides flexibility

01:19:30.909 --> 01:19:34.489
and optionality for our market participants. We heard

01:19:34.489 --> 01:19:38.270
abundant frustration with the notion of being forced

01:19:38.270 --> 01:19:41.699
to forecast or forced to procure in advance. And the

01:19:41.699 --> 01:19:45.689
PCM concept makes that a voluntary optional notion

01:19:45.699 --> 01:19:49.180
So there's the opportunity for our LLcs to hedge if

01:19:49.180 --> 01:19:52.529
they like. Uh, there's an opportunity for generators

01:19:52.529 --> 01:19:57.170
to procure revenue for offering their credits in advance

01:19:57.170 --> 01:19:59.970
of the operating period. But there's no requirement

01:19:59.979 --> 01:20:03.350
however, at the end of the day, there is a requirement

01:20:03.350 --> 01:20:05.460
that all of the L. S. C. S in ERCOT in this

01:20:05.460 --> 01:20:06.630
PCM construct,

01:20:08.300 --> 01:20:12.010
all of the L. S. C. S in archive in aggregate will

01:20:12.010 --> 01:20:15.449
purchase the performance credit equivalent of the net

01:20:15.460 --> 01:20:18.930
peak load so that we know during the tightest hours

01:20:18.939 --> 01:20:22.569
when we need reliability the most the market market

01:20:22.579 --> 01:20:28.180
will have it, which gives certainty to the investor

01:20:28.180 --> 01:20:31.529
community and the generator community to know that

01:20:31.539 --> 01:20:37.210
there will be a dedicated pool of revenue for reliable

01:20:37.210 --> 01:20:41.550
resources to compete for. There's no guarantee of payment

01:20:41.550 --> 01:20:45.319
But there's a, there, if PCM were enacted, there would

01:20:45.329 --> 01:20:48.600
be a guarantee that there is a pot of revenue for reliable

01:20:48.600 --> 01:20:51.970
resources to go compete for. And I know everybody up

01:20:51.970 --> 01:20:58.869
here agrees with the notion that reliable means a performance

01:20:58.869 --> 01:21:02.060
standard if it's got an on switch and it can turn on

01:21:02.069 --> 01:21:05.579
gas, coal, nuclear battery, hydrogen, hydrogen. We

01:21:05.579 --> 01:21:09.909
talked about earlier hydrogen dispatchable uh, anything

01:21:09.909 --> 01:21:12.390
that's reliable, We want that to be tech agnostic,

01:21:13.180 --> 01:21:18.590
which is, and so that residual concept provides flexibility

01:21:18.600 --> 01:21:23.390
optionality for our consumers from commissioner. Cobos

01:21:25.520 --> 01:21:29.470
very, very nicely concurring with your time at a consumer

01:21:29.479 --> 01:21:33.890
advocate, you have consistently reminded us to be aware

01:21:33.890 --> 01:21:37.579
of market manipulation and the potential for self dealing

01:21:38.189 --> 01:21:42.600
at the expense of our consumers. Uh, and that's something

01:21:42.600 --> 01:21:45.920
I know we've all acknowledged is a potential challenge

01:21:45.930 --> 01:21:47.029
and a concern

01:21:49.340 --> 01:21:56.869
as contemplated. Uh, the PCM would be, uh, at, at much

01:21:56.869 --> 01:22:01.510
at the, at your suggestion and guidance centrally cleared

01:22:01.869 --> 01:22:07.510
And so all of the transactions that these perform related

01:22:07.510 --> 01:22:09.770
to these performance credits, contemplate performance

01:22:09.770 --> 01:22:12.850
credits would happen at ERCOT ERCOT would be the central

01:22:12.850 --> 01:22:16.350
exchange. Uh, much like the new york stock exchange

01:22:16.359 --> 01:22:20.720
ERCOT wouldn't buy or sell any actual performance credits

01:22:20.720 --> 01:22:24.449
as contemplated in the PCM, but they would simply be

01:22:24.449 --> 01:22:28.159
the central clearinghouse where market participants

01:22:28.170 --> 01:22:33.470
could offer uh and by the credits at the prices and

01:22:33.470 --> 01:22:37.500
the timing that they see fit. Uh of course with the

01:22:37.500 --> 01:22:39.170
residual market requirement at the end.

01:22:41.069 --> 01:22:44.930
By doing that, by having that centrally cleared mechanism

01:22:44.930 --> 01:22:47.590
that provides transparency, minimizes self dealing

01:22:48.329 --> 01:22:51.810
requires accountability for all of our market participants

01:22:51.819 --> 01:22:54.869
which at the end of the day protects consumers and

01:22:54.869 --> 01:22:59.329
ensures reliability. The bottom line in my mind that

01:23:00.670 --> 01:23:02.850
pull out my pencil and look at this from a cost benefit

01:23:02.850 --> 01:23:05.949
analysis is

01:23:07.479 --> 01:23:10.850
simply answering the question, how much reliability

01:23:10.850 --> 01:23:12.670
would we get for? How much money

01:23:14.359 --> 01:23:16.789
as you can see in the executive summary of this report

01:23:16.800 --> 01:23:19.199
and throughout the report,

01:23:20.979 --> 01:23:27.170
if implemented, the PCM would deliver ERCOT a 10 times

01:23:27.170 --> 01:23:33.100
improvement in reliability for about 2 to 3% an increase

01:23:33.100 --> 01:23:39.430
in cost, which is a tremendous deal Going beyond that

01:23:39.430 --> 01:23:42.829
If you look at figure 34 on page 75, you'll see that

01:23:42.840 --> 01:23:46.760
if we eliminate reliability payments to intermittent

01:23:46.760 --> 01:23:51.130
resources, The PCM would deliver that same 10 times

01:23:51.130 --> 01:23:55.420
improvement in reliability for less money than we would

01:23:55.420 --> 01:23:58.630
expect to pay without the PCM.

01:24:00.810 --> 01:24:06.189
So based on what I know today, I believe as a result

01:24:06.189 --> 01:24:09.800
of the public process we ran in the summer and fall

01:24:09.800 --> 01:24:15.520
of 2021 and the all the analysis and iteration throughout

01:24:15.529 --> 01:24:19.699
2022 I believe that the PCM is the best mechanism to

01:24:19.699 --> 01:24:23.539
fulfill our obligation under SB three and to ensure

01:24:23.539 --> 01:24:30.170
long term reliability in ERCOT what we need to hear

01:24:30.170 --> 01:24:32.819
from the stakeholders and most importantly the general

01:24:32.819 --> 01:24:39.609
public, just like the board of ERCOT must be required

01:24:39.609 --> 01:24:42.529
to listen to TAC and the market participants. We too

01:24:42.529 --> 01:24:47.369
at the commission want a need to hear from the experts

01:24:47.369 --> 01:24:50.159
who operate these generators that run these companies

01:24:50.170 --> 01:24:55.539
that own the relationships with the customers. Uh So

01:24:55.550 --> 01:25:02.680
later on I will ask the commission for uh emotion at

01:25:02.680 --> 01:25:05.920
the appropriate time to open a new project dedicated

01:25:05.920 --> 01:25:10.420
to just this report and also to issue a notice of comment

01:25:10.430 --> 01:25:12.970
to solicit input from the general public and our market

01:25:12.970 --> 01:25:18.430
participants. Uh If that moves forward, the PUC homepage

01:25:18.430 --> 01:25:25.210
will have a link to a dedicated web page for the general

01:25:25.210 --> 01:25:29.319
public and market participants to utilize. Uh if that

01:25:29.319 --> 01:25:33.239
goes forward, we'll launch if the motion moves forward

01:25:33.250 --> 01:25:36.970
today will launch that website later today, it includes

01:25:36.970 --> 01:25:39.729
comments for the general public on exactly how to submit

01:25:39.729 --> 01:25:43.079
comments, directions on how to make sure your comments

01:25:43.090 --> 01:25:46.289
are properly filed to make that as easy as possible

01:25:46.300 --> 01:25:49.149
And as part of that request for a notice for comment

01:25:49.689 --> 01:25:54.199
I would ask my fellow commissioners to consider an

01:25:54.199 --> 01:25:58.979
extended public comment period of 35 days instead of

01:25:58.979 --> 01:26:01.930
the normal 30 to accommodate the thanksgiving holidays

01:26:02.520 --> 01:26:06.189
uh which would would make public comment due at december

01:26:06.189 --> 01:26:12.090
15th at noon, I've offered a lot of thoughts uh and

01:26:12.090 --> 01:26:12.260
I

01:26:13.770 --> 01:26:16.750
have tried to make it clear that this while this is

01:26:16.750 --> 01:26:19.829
certainly uh what I think is the best mechanism, this

01:26:19.829 --> 01:26:24.189
is at this point merely a contemplated product. And

01:26:24.189 --> 01:26:27.199
I look forward to hearing your thoughts and comments

01:26:28.430 --> 01:26:32.319
as we go through this discussion. Thank you. Mr Chairman

01:26:32.329 --> 01:26:36.109
Um you know, I would first like to say I very much

01:26:36.109 --> 01:26:40.750
appreciate it in value the work of of the three um

01:26:40.760 --> 01:26:45.170
throughout the process, especially their analysis um

01:26:45.180 --> 01:26:48.960
they have taken pains to incorporate our input as unwieldy

01:26:48.960 --> 01:26:51.579
and sweeping as it has been over the course of the

01:26:51.579 --> 01:26:57.729
last year. I know our office has been unwieldy um but

01:26:57.739 --> 01:27:00.810
I would like to remind the public that no model is

01:27:00.810 --> 01:27:05.630
perfect um nor series of models, the foundation of

01:27:05.630 --> 01:27:08.960
the analysis um on what constitutes equilibrium in

01:27:08.960 --> 01:27:13.920
the study uh and the report is based on a view um

01:27:13.930 --> 01:27:16.369
and this is not to be alarming, this is to assuage

01:27:16.369 --> 01:27:21.859
any concern that their model needs 11 gigawatts of

01:27:21.869 --> 01:27:24.710
current thermal generation to retire over the next

01:27:24.710 --> 01:27:27.439
three years to make these numbers work out. That is

01:27:27.439 --> 01:27:30.260
not to say that we are going to see 11 gigawatts of

01:27:30.260 --> 01:27:33.350
thermal generation retire over the next three years

01:27:33.359 --> 01:27:37.199
and um I want to point that out so that the public

01:27:37.199 --> 01:27:39.930
should not feel we have an immediate reliability problem

01:27:39.939 --> 01:27:43.300
We do not uh the purpose of our work is to prevent

01:27:43.310 --> 01:27:46.710
a reliability problem as far in advance as is possible

01:27:46.720 --> 01:27:50.359
um and I believe we're doing that. The recommendation

01:27:50.369 --> 01:27:54.939
Uh the recommendation that we see in the report that

01:27:54.949 --> 01:27:59.109
that we are potentially choosing another path as alluded

01:27:59.109 --> 01:28:01.369
to in the staff memo. And by the way I'd like to

01:28:01.380 --> 01:28:03.619
echo your thoughts on staff work, the way they have

01:28:03.619 --> 01:28:07.250
captured and articulated a potential consensus position

01:28:07.260 --> 01:28:12.029
is admirable and and did a poor job. But the recommendation

01:28:12.029 --> 01:28:15.520
in the report uh follows market designs from other

01:28:15.520 --> 01:28:18.130
parts of the country that I believe we've all over

01:28:18.130 --> 01:28:20.659
the last year and a half of our short career at the

01:28:20.659 --> 01:28:23.720
Public utility commission have had opportunity to observe

01:28:23.729 --> 01:28:28.920
interact with work with. Um I'm the Texas representative

01:28:28.930 --> 01:28:30.810
to the governing board of the Southwest power pool

01:28:30.810 --> 01:28:34.470
and I can tell you that right now Spp and Miso north

01:28:34.470 --> 01:28:37.670
capacity markets are currently in bidding wars for

01:28:37.670 --> 01:28:41.289
the same pool of finite dispatchable resources um that

01:28:41.289 --> 01:28:46.109
are declining by the day despite uh those forward capacity

01:28:46.109 --> 01:28:50.159
obligations because of cost pressure and price pressure

01:28:50.159 --> 01:28:54.310
from renewable resources that are low cost and can

01:28:54.310 --> 01:29:00.289
be installed quickly. So California I. S. O. Um I mentioned

01:29:00.289 --> 01:29:03.340
these others I. S. O. S. Because every grid in the

01:29:03.340 --> 01:29:06.739
country has the same challenges and is trying to solve

01:29:06.750 --> 01:29:09.829
the same problem. We all have different time horizons

01:29:09.829 --> 01:29:13.590
for which we must solve for. But California I. S. O

01:29:13.590 --> 01:29:16.050
To their credit has been trying to manage through um

01:29:16.060 --> 01:29:21.210
uh a state policy framework where they've been in a

01:29:21.220 --> 01:29:25.729
resource. Adequacy condition bordering on crisis for

01:29:25.729 --> 01:29:29.140
over two years and they still don't have another path

01:29:29.140 --> 01:29:32.539
forward um with a forward within a forward capacity

01:29:32.539 --> 01:29:35.869
construct than to beg their neighbors for energy from

01:29:35.869 --> 01:29:42.920
their systems. And I'm not saying I I S. O. New England

01:29:42.930 --> 01:29:46.130
has an extremely robust forward capacity market and

01:29:46.130 --> 01:29:48.340
that hasn't prevented them from going into this winter

01:29:48.340 --> 01:29:52.439
without um what could constitute adequate fuel supplies

01:29:52.449 --> 01:29:56.020
to make it through a sustained cold weather period

01:29:56.029 --> 01:29:59.949
um and again, extremely robust forward capacity. So

01:29:59.949 --> 01:30:04.539
in my view, um in deliberation here, after the analysis

01:30:04.550 --> 01:30:07.359
however grateful I am, I do not consider a forward

01:30:07.359 --> 01:30:09.850
capacity construct as the right solution for Texas

01:30:10.460 --> 01:30:13.720
and that's because we are different. Our weather is

01:30:13.720 --> 01:30:16.979
volatile. I would say it is possibly more volatile

01:30:16.979 --> 01:30:19.319
than other areas of the country, certainly California

01:30:19.329 --> 01:30:24.550
um which enjoys a lot more uh nice weather than we

01:30:24.550 --> 01:30:27.189
do. So we've chosen to live here and we're making a

01:30:27.189 --> 01:30:31.649
success of it. And uh I can tell you with a great

01:30:31.649 --> 01:30:34.270
degree of certainty that the weather that we experience

01:30:34.270 --> 01:30:37.600
in Texas changes from one day to the next. And I can't

01:30:37.600 --> 01:30:41.329
tell what tomorrow's weather is gonna be even now and

01:30:41.329 --> 01:30:43.510
I think weatherman would back me up on that. It's a

01:30:43.510 --> 01:30:47.050
challenging environment. We also have more installed

01:30:47.050 --> 01:30:52.220
megawatts of intermittent energy than uh in any other

01:30:52.220 --> 01:30:55.100
i. S. O. Any other grid in the country. And I don't

01:30:55.100 --> 01:30:58.069
think that's gonna change nothing in our in our interconnection

01:30:58.069 --> 01:31:00.779
queue indicates that that will slow down and we will

01:31:00.779 --> 01:31:06.090
continue to be a leader in this area. Thus the uh the

01:31:06.090 --> 01:31:09.359
necessity for a Texas based solution. That's why I

01:31:09.369 --> 01:31:13.729
really value um staff's approach in articulating a

01:31:13.739 --> 01:31:16.770
path, a potential path forward that at the end of the

01:31:16.770 --> 01:31:22.159
day I would value stakeholder input on um the P C M

01:31:22.170 --> 01:31:25.340
on a principal basis fundamentally appears to create

01:31:25.350 --> 01:31:29.800
a unique solution for our needs. Uh Believe me um for

01:31:29.800 --> 01:31:32.130
the public E three has pointed that out to us. It is

01:31:32.130 --> 01:31:35.890
certainly unique and uh and we'll need to be worked

01:31:35.890 --> 01:31:38.670
through for the purposes of implementation but we have

01:31:38.670 --> 01:31:41.460
a staff at ERCOT and the PUC that is absolutely able

01:31:41.460 --> 01:31:44.720
to do that. It has a requirement that loads, purchase

01:31:44.720 --> 01:31:48.350
enough power to satisfy our needs plus reserves but

01:31:48.350 --> 01:31:52.390
does not do so on a forward basis. It allows both loads

01:31:52.390 --> 01:31:56.010
injun to make their business decisions based on the

01:31:56.010 --> 01:31:59.010
best available information possible going into the

01:31:59.010 --> 01:32:03.970
operating day, it cures. Um it solves for operating

01:32:03.970 --> 01:32:08.000
day conditions um that constitute high risk hours and

01:32:08.010 --> 01:32:11.069
you really don't know what that is um in an intermittent

01:32:11.069 --> 01:32:14.109
heavy environment until the wind stops blowing or sun

01:32:14.109 --> 01:32:17.220
stops shining at the most inopportune times and that

01:32:17.220 --> 01:32:20.659
means that both loads and jin have to remain flexible

01:32:20.670 --> 01:32:26.069
to meet those conditions as we go into the day um since

01:32:26.069 --> 01:32:28.250
we are considering affirming requirement that loads

01:32:28.250 --> 01:32:31.159
purchase enough capacity to cover for high risk hours

01:32:31.170 --> 01:32:34.600
albeit settled after the operating day. This has the

01:32:34.600 --> 01:32:37.520
feature of creating a fungible product that can be

01:32:37.520 --> 01:32:40.670
bought sold or swapped contributing to forward price

01:32:40.670 --> 01:32:44.390
formation which our current market mechanisms as it

01:32:44.399 --> 01:32:49.020
has been identified do not send. Um and this would

01:32:49.029 --> 01:32:52.199
be a feature of those other markets that we are gladly

01:32:52.199 --> 01:32:53.039
incorporating.

01:32:54.810 --> 01:32:57.710
Uh since we are also discussing an obligation for loads

01:32:57.710 --> 01:33:00.689
to procure enough dispatchable capacity plus a reserve

01:33:00.699 --> 01:33:03.970
that accounts for conservative operations. This implies

01:33:03.970 --> 01:33:06.800
that there would be capacity that can sell credits

01:33:06.810 --> 01:33:10.529
um because they are available but not actually used

01:33:10.529 --> 01:33:13.779
to dispatch energy uh into the market. This would help

01:33:13.779 --> 01:33:16.220
negate the need for out of market actions on the part

01:33:16.220 --> 01:33:20.479
of the grid administrator, which is a goal that all

01:33:20.479 --> 01:33:26.300
of us want to achieve. And in my view um on on

01:33:26.300 --> 01:33:30.500
a principal basis, This truly is a hybrid of two models

01:33:31.350 --> 01:33:34.800
uh energy only versus capacity and adopts many of the

01:33:34.800 --> 01:33:38.449
best features from both. Um it would allow us to cope

01:33:38.449 --> 01:33:40.960
with extreme variability of power supplies in an energy

01:33:40.960 --> 01:33:44.199
portfolio that is only becoming more dominated by intermittent

01:33:44.199 --> 01:33:48.109
resources. And perhaps most importantly, it gives us

01:33:48.109 --> 01:33:51.720
the opportunity to expedite implementation of a market

01:33:51.720 --> 01:33:55.920
design modification in uh in light of an enormous magnitude

01:33:55.930 --> 01:33:59.409
of renewable energy deployment within ERCOT over the

01:33:59.409 --> 01:34:04.300
next two years. So um it's a timely evaluation. I look

01:34:04.300 --> 01:34:07.420
forward to substantive conversations and discussions

01:34:07.420 --> 01:34:10.930
and input from the public over the next month. And

01:34:10.930 --> 01:34:14.069
I would also highlight that throughout this process

01:34:14.079 --> 01:34:18.869
uh we've seen competing studies filed and um the I

01:34:18.869 --> 01:34:23.229
C F report, we're not deaf to those. Um that analysis

01:34:23.239 --> 01:34:27.680
has identified criticisms of the way uh ERCOT as an

01:34:27.680 --> 01:34:33.399
I. S. O uh computes and forms the data that informs

01:34:33.409 --> 01:34:37.630
our resource adequacy goals. Um those criticisms were

01:34:37.630 --> 01:34:40.569
well taken by me, we have all discussed some of the

01:34:40.569 --> 01:34:45.989
shortcomings of how that data is formed, um what accredited

01:34:45.989 --> 01:34:49.640
capacity goes into that, how well that holds up into

01:34:49.640 --> 01:34:54.069
high risk scenarios net peak Load days, um and that's

01:34:54.069 --> 01:34:59.199
why reforms have already been uh evaluated in are being

01:34:59.199 --> 01:35:02.529
considered for implementation at market in conjunction

01:35:02.529 --> 01:35:05.710
with ERCOT staff and staff of the Public utility commission

01:35:06.060 --> 01:35:09.260
uh so that we have better numbers for a more well informed

01:35:09.270 --> 01:35:13.479
and efficient reliability standard, um and that would

01:35:13.479 --> 01:35:18.149
obviously need to be uh refined on the way to ultimate

01:35:18.149 --> 01:35:20.850
implementation with this. I look forward to all these

01:35:20.850 --> 01:35:22.800
conversations. We're gonna need to address a lot of

01:35:22.800 --> 01:35:27.810
questions. Um we also in staffs memo, I considered

01:35:27.810 --> 01:35:32.149
it a value of a feature of the memo that it asks

01:35:32.149 --> 01:35:35.130
stakeholders for input in terms of potential, more

01:35:35.130 --> 01:35:39.930
near term solutions to solve for opera operational

01:35:39.939 --> 01:35:44.439
um problems sooner rather than later. What can we do

01:35:44.439 --> 01:35:47.279
in the near term on the road to ultimate implementation

01:35:47.289 --> 01:35:50.670
of this long term energy solution and market based

01:35:50.670 --> 01:35:54.270
solution and so I think that will be invaluable over

01:35:54.270 --> 01:35:57.640
the next month, but I want to stop there and and hear

01:35:57.640 --> 01:36:01.020
other thoughts from, from you, thank thank you Commissioner

01:36:01.020 --> 01:36:04.289
McAdams for those thoughts laying them out. So that's

01:36:04.289 --> 01:36:08.680
an articulate manner. The uh I will comment that I

01:36:08.689 --> 01:36:11.619
believe you are underselling the efforts that you have

01:36:11.619 --> 01:36:14.739
engaged on over the last year to work with ERCOT on

01:36:14.739 --> 01:36:19.770
enhancing our forecasting are CDR sarah, you and your

01:36:19.770 --> 01:36:23.529
team have been engaged on that with ERCOT staff and

01:36:23.539 --> 01:36:26.750
one of them it is still a work in progress but the

01:36:26.760 --> 01:36:29.819
progress we have seen to date has yielded tremendous

01:36:29.819 --> 01:36:32.439
improvements and so I'm not gonna let you get away

01:36:32.439 --> 01:36:35.369
with understanding, let me push back on that, I would

01:36:35.369 --> 01:36:39.550
consider that effort a true success story for the ERCOT

01:36:39.550 --> 01:36:43.659
staff, the stakeholders, PUC staff, everyone acknowledges

01:36:43.659 --> 01:36:45.869
the shortcomings of the current system and they all

01:36:45.869 --> 01:36:48.520
have a common goal to make it better and and that's

01:36:48.520 --> 01:36:53.119
what's underway. Thank you for leaving that other thoughts

01:36:53.119 --> 01:36:56.510
and comments. Thank you mr Chairman and Commissioner

01:36:56.510 --> 01:37:00.310
McAdams um for so eloquently laid out this new novel

01:37:00.310 --> 01:37:03.439
hybrid model that will be receiving comments on um

01:37:03.439 --> 01:37:05.829
just at a high level I think from my perspective, you

01:37:05.829 --> 01:37:08.340
know, you highlighted, you know, legislation reform

01:37:08.340 --> 01:37:11.979
after um our legislation was passed after winter storm

01:37:12.119 --> 01:37:15.829
occurred last session and um you know, from my perspective

01:37:15.840 --> 01:37:18.909
you know what we're solving for today through Phase

01:37:18.909 --> 01:37:22.279
two. Market redesign um is for long term reliability

01:37:22.279 --> 01:37:25.369
in a state that has high economic and population growth

01:37:25.380 --> 01:37:29.060
a large amount of intermittent renewable generation

01:37:29.069 --> 01:37:31.970
And when I say large, I mean largest in the country

01:37:31.979 --> 01:37:36.140
right? Um we we lead the country in wind plus solar

01:37:36.149 --> 01:37:40.779
and and new technologies like storage. Um, This long

01:37:40.779 --> 01:37:43.939
term long term reliability effort is also focused on

01:37:43.949 --> 01:37:47.189
the new to the need to attract new flexible gas generation

01:37:47.189 --> 01:37:50.239
and retain our existing flexible generation and exist

01:37:50.250 --> 01:37:55.270
24/7 base load generation. So from my lens and perspective

01:37:55.279 --> 01:37:59.220
what we're evaluating here is focused towards the future

01:37:59.229 --> 01:38:05.369
in a ever changing dynamic grid. Um rather than trying

01:38:05.369 --> 01:38:08.380
to solve for the specific problems that we encountered

01:38:08.380 --> 01:38:12.359
during winter storm Uri with associated with weatherization

01:38:12.369 --> 01:38:14.800
and gas issues and and everything that went on there

01:38:14.800 --> 01:38:17.359
We've taken a litany of actions to address those issues

01:38:17.369 --> 01:38:19.649
through our comprehensive weatherization preparation

01:38:19.649 --> 01:38:23.779
requirements, the, the introduction of a first in class

01:38:23.779 --> 01:38:26.770
firm fuel product um that we're currently working on

01:38:26.770 --> 01:38:30.409
two to scale up. Um you know, critical Load designation

01:38:30.409 --> 01:38:32.750
with our efforts um working through that with road

01:38:32.750 --> 01:38:36.909
commission or caught um, turk there's so many so much

01:38:36.909 --> 01:38:40.539
work has gone into focusing on winter storm Uri um

01:38:40.539 --> 01:38:44.420
that has resulted in real benefits that we've started

01:38:44.420 --> 01:38:47.420
to experience during this past winter and we'll experience

01:38:47.430 --> 01:38:52.199
for the future going forward. Um Phase two market redesign

01:38:52.850 --> 01:38:55.220
we're facing a future as commissioner McAdams noted

01:38:55.229 --> 01:39:00.850
where every market in the country is focused on maintaining

01:39:00.850 --> 01:39:03.989
reliability in the future um with a tremendous amount

01:39:03.989 --> 01:39:07.770
of renewables on the system with aging thermo dispatchable

01:39:07.770 --> 01:39:10.689
generation and the need to incent more dispatchable

01:39:10.689 --> 01:39:13.369
generation on the system and that's every market whether

01:39:13.369 --> 01:39:17.380
it's um a Load serving obligation market like California

01:39:17.380 --> 01:39:20.729
spp to capacity market, we're all in the same boat

01:39:20.729 --> 01:39:23.970
here. Um but I think from our perspective here in ERCOT

01:39:23.979 --> 01:39:27.319
we continue to lead lead, lead in the United States

01:39:27.329 --> 01:39:30.359
leading the world in innovation and planning for the

01:39:30.359 --> 01:39:32.600
future and show the rest of the country that we can

01:39:32.600 --> 01:39:36.449
get it done. Um you know that we have very intense

01:39:36.449 --> 01:39:40.710
weather here. Uh one can only look to this past summer

01:39:41.210 --> 01:39:43.880
Um where are ERCOT successfully was able to maintain

01:39:43.880 --> 01:39:47.850
reliability um and in a way that um could show the

01:39:47.850 --> 01:39:50.380
rest of the country that we can handle 80,000 gigawatts

01:39:50.380 --> 01:39:53.420
of power and still maintain reliability and that that's

01:39:53.420 --> 01:39:56.090
a success story and we were doing things well and I

01:39:56.090 --> 01:39:59.899
appreciate you highlighting um the current state of

01:39:59.899 --> 01:40:04.250
our liability status in ERCOT um you know for the public

01:40:04.260 --> 01:40:07.239
it's important as they read through this report that

01:40:07.250 --> 01:40:11.600
they do not focus on, you know the 1.25 L. E. That's

01:40:11.609 --> 01:40:15.399
underpinned by the market equilibrium study that you

01:40:15.399 --> 01:40:18.479
highlighted the removal of 11,000 megawatts of coal

01:40:18.479 --> 01:40:20.859
and gas generation as a direct result of solar and

01:40:20.859 --> 01:40:25.989
gas, that is an economic exercise and 1.25 is not the

01:40:25.989 --> 01:40:29.229
current state of our reliability status in ERCOT In

01:40:29.229 --> 01:40:32.329
fact, if you read the three report closely, it shows

01:40:32.329 --> 01:40:34.600
that we're actually very reliable today and would in

01:40:34.600 --> 01:40:39.029
fact be very reliable in 2026. Um, so thank you for

01:40:39.029 --> 01:40:42.229
highlighting that um, with respect to E three and the

01:40:42.229 --> 01:40:44.630
analysis that we've been undergoing um through this

01:40:44.630 --> 01:40:47.500
process, extensive thorough analysis. Um, no doubt

01:40:47.510 --> 01:40:49.640
and I do want to thank them and I think Commissioner

01:40:49.640 --> 01:40:55.020
McAdams um, you know, noted the unyielding of interaction

01:40:55.020 --> 01:40:58.279
that his office has had with the three. Well, I can

01:40:58.289 --> 01:41:01.800
echo that. I mean I've had some very extensive conversations

01:41:01.800 --> 01:41:04.539
with the three, probably hundreds of questions, um

01:41:04.550 --> 01:41:10.689
many hours of dialogue and um, you know, ultimately

01:41:10.689 --> 01:41:13.630
they did the best I think they could um with honor

01:41:13.630 --> 01:41:16.979
with addressing the just tremendous amount of questions

01:41:16.979 --> 01:41:21.319
that we had. However, um, that is E three's report

01:41:21.329 --> 01:41:25.619
Um, it is not the commission's report and um, and that's

01:41:25.619 --> 01:41:30.210
why it's important for us to hear the public, um, and

01:41:30.210 --> 01:41:36.119
and and and give the public an opportunity to um extensively

01:41:36.119 --> 01:41:39.810
evaluate this report that's going, that provides recommendations

01:41:39.819 --> 01:41:44.050
that um, will have a tremendous impact on our state

01:41:44.060 --> 01:41:48.149
and the people that live in our state. So I really

01:41:48.149 --> 01:41:51.289
encourage the public to take a good hard look at that

01:41:51.289 --> 01:41:55.060
report, the underlying analysis and assumptions and

01:41:55.069 --> 01:42:00.979
as we focus our um questions um for stakeholder comment

01:42:01.819 --> 01:42:04.989
um Chairman, I I you know, I I know you have been

01:42:04.989 --> 01:42:08.189
working very hard to come up with the PCM model and

01:42:08.189 --> 01:42:10.199
I and I do think it's very important to get comments

01:42:10.199 --> 01:42:12.739
on the P. C. M. Model and I think you and Commissioner

01:42:12.739 --> 01:42:15.659
McAdams have laid out some highlighted some important

01:42:15.659 --> 01:42:20.430
features of of the PCM model and um I'm very much looking

01:42:20.430 --> 01:42:24.310
forward to hearing from the public and the stakeholders

01:42:24.319 --> 01:42:27.189
on their views of the PCM model as it is a very

01:42:27.189 --> 01:42:31.119
novel concept, it hasn't, I think Mr McAdams noted

01:42:31.130 --> 01:42:33.960
um he three did a fine job of noting and and I

01:42:33.960 --> 01:42:36.560
know that based on my experience in the market that

01:42:36.569 --> 01:42:39.850
um it's not been done anywhere in the United States

01:42:39.850 --> 01:42:44.750
or the world, so this is truly novel and um case of

01:42:44.750 --> 01:42:48.359
first impression and definitely want to hear from you

01:42:48.359 --> 01:42:53.270
on, you know, your perspective um in response to commission

01:42:53.279 --> 01:42:57.300
staff's questions now, to your point Commissioner McAdams

01:42:57.310 --> 01:43:01.210
about near term solutions, I think that's very important

01:43:01.220 --> 01:43:05.909
right, because of the novelty and uh of the PCM model

01:43:05.920 --> 01:43:09.569
we need to be thinking proactively, I think the public

01:43:09.579 --> 01:43:14.609
the legislature expect for this phase to market redesign

01:43:14.619 --> 01:43:18.909
to take off quickly swiftly and be implemented in that

01:43:18.920 --> 01:43:25.890
fashion and so um I commend staff for the questions

01:43:25.890 --> 01:43:28.949
they've put together and um and in all their work,

01:43:28.960 --> 01:43:31.159
I know they've been working extensively with my office

01:43:31.159 --> 01:43:36.649
as well and um would offer that um as we look at

01:43:36.659 --> 01:43:40.079
you know, the additional considerations or what what

01:43:40.079 --> 01:43:43.100
can how can we stage out this broader market reform

01:43:43.109 --> 01:43:47.819
um effort and implementation that we keep all options

01:43:47.819 --> 01:43:51.560
on the table in terms of how can we start getting um

01:43:52.310 --> 01:43:58.220
near term solutions in place? Um as you know, my colleagues

01:43:58.220 --> 01:44:01.930
know and mr Jackson um you probably came to know, I

01:44:01.930 --> 01:44:04.789
I proposed the backstop reliability service at E three

01:44:04.789 --> 01:44:09.449
has evaluated I cf has evaluated both reports have

01:44:09.449 --> 01:44:12.500
come back showing that it provides reliability, it's

01:44:12.500 --> 01:44:15.819
inexpensive, it's the fastest implementation that can

01:44:15.829 --> 01:44:18.909
um that it's the fastest market reform implementation

01:44:18.909 --> 01:44:22.489
that we put in the market. And so I want to leave

01:44:22.489 --> 01:44:24.859
that on the table as a potential near term solution

01:44:24.869 --> 01:44:28.189
um as we look to stage out this broader market before

01:44:29.159 --> 01:44:33.859
and with respect to the Ancillary services and that

01:44:33.859 --> 01:44:36.109
being an option of maybe looking at existing Ancillary

01:44:36.109 --> 01:44:40.869
service, um I do wanna take one Ancillary service off

01:44:40.880 --> 01:44:44.250
the table and that is Nonspin and the reason I say

01:44:44.250 --> 01:44:49.130
that is because um most recently the ERCOT I mm has

01:44:49.130 --> 01:44:51.750
expressed concerns with some behavior in the Nonspin

01:44:51.750 --> 01:44:56.119
market and and what I mean by that is not competitively

01:44:56.140 --> 01:44:58.409
and that's gonna be highlighted in the state of the

01:44:58.409 --> 01:45:02.010
market report and until those issues are addressed

01:45:02.010 --> 01:45:04.329
and buttoned up by the commission, I do not think we

01:45:04.329 --> 01:45:07.500
need to move forward with adding more uh Nonspin as

01:45:07.500 --> 01:45:10.880
a potential near term solution um to help us bridge

01:45:10.880 --> 01:45:14.520
to the next um whatever the next broader implementation

01:45:14.520 --> 01:45:20.659
is. Um so that that is my view, given what has been

01:45:20.659 --> 01:45:22.819
highlighted by the ERCOT hmm, I don't think as a matter

01:45:22.819 --> 01:45:26.800
of due diligence, um that we should be looking to increase

01:45:26.810 --> 01:45:29.810
Nonspin at this time, we need to button up that issue

01:45:29.819 --> 01:45:33.890
So I would take that off the table um as a potential

01:45:33.890 --> 01:45:38.479
option. So, um and I like the term near term solution

01:45:38.489 --> 01:45:44.329
because I think um bridges and products that can appear

01:45:44.340 --> 01:45:47.500
and disappear don't provide market certainty that that

01:45:47.500 --> 01:45:51.300
is the truism in our industry and that's not the, what

01:45:51.300 --> 01:45:53.050
we're trying to do here, We're trying to create market

01:45:53.050 --> 01:45:57.310
certainty. So I think a near term solution and I say

01:45:57.310 --> 01:46:00.250
near term solution, like BRS or other solutions we

01:46:00.250 --> 01:46:04.289
ultimately look at, could start enhancing reliability

01:46:04.289 --> 01:46:07.739
and start sending market signals now for new investment

01:46:07.739 --> 01:46:10.560
While we await a broader market solution that the commission

01:46:10.560 --> 01:46:12.829
ultimately if the commission ultimately decides on

01:46:12.829 --> 01:46:16.659
one. Right? So that that's just something that I appreciate

01:46:16.670 --> 01:46:20.199
you highlighting Commissioner McAdams and I wanted

01:46:20.199 --> 01:46:24.340
to, you know, sort of emphasize and highlight and and

01:46:24.340 --> 01:46:26.890
I certainly look forward to those comments as well

01:46:26.890 --> 01:46:30.060
and I have specific language for questions that I would

01:46:30.060 --> 01:46:34.119
like staff to consider as well. Um you have additional

01:46:34.119 --> 01:46:37.220
questions, you'd like to add staff questions. Well

01:46:37.220 --> 01:46:40.939
I would like to actually um sort of change the way

01:46:40.949 --> 01:46:44.680
um make modifications to staff questions so we're not

01:46:44.680 --> 01:46:46.520
we're not going to change the staff questions, you're

01:46:46.590 --> 01:46:49.989
welcome to add additional questions and we can direct

01:46:50.000 --> 01:46:53.909
the notice for comment to have additional questions

01:46:53.909 --> 01:46:56.699
on top of the staff questions. But I know the staff

01:46:56.699 --> 01:46:59.319
worked very hard and we're very thoughtful and deliberate

01:46:59.319 --> 01:47:03.250
about laying out those very specific questions. So

01:47:03.260 --> 01:47:07.890
we would be happy to hear thoughts on additional questions

01:47:07.899 --> 01:47:15.409
Uh And your notion of of your concerns with integrity

01:47:15.409 --> 01:47:19.590
of the Nonspin market are well founded. I'm aware of

01:47:19.590 --> 01:47:23.689
the I. M. M. S concerns there. Uh I think and I

01:47:23.689 --> 01:47:26.489
think that should be addressed in the appropriate venue

01:47:26.489 --> 01:47:29.069
and addressed as quickly as possible. We don't want

01:47:29.079 --> 01:47:32.220
any corner of our market to have anything other than

01:47:32.229 --> 01:47:36.729
full uh to be anything other than a fully fair and

01:47:36.729 --> 01:47:42.310
transparent market uh do think that that should be

01:47:42.310 --> 01:47:48.920
addressed. I don't, I know that we should shut down

01:47:48.920 --> 01:47:53.409
Nonspin because their concerns and I think those rely

01:47:53.409 --> 01:47:56.390
ensuring reliability and utilizing their services are

01:47:56.399 --> 01:48:01.289
are separate from the I. M. S. Investigations to potential

01:48:02.220 --> 01:48:05.000
market manipulation. So I certainly don't think we

01:48:05.000 --> 01:48:07.579
need to shut down non stem Ancillary services because

01:48:07.579 --> 01:48:11.039
there's potential for a problem. Uh and I certainly

01:48:11.039 --> 01:48:15.310
don't think we should direct the public to not consider

01:48:15.310 --> 01:48:18.000
an option when we're asking them to consider options

01:48:18.000 --> 01:48:21.479
for short term bridges. I understand and I'm not trying

01:48:21.479 --> 01:48:24.050
to shut down the Nonspin market obviously provides

01:48:24.060 --> 01:48:28.199
a reliable product and service that we've been relying

01:48:28.199 --> 01:48:32.680
on. My point is is that if there's issues that the

01:48:32.680 --> 01:48:36.779
I m m is investigating that are driven by factors such

01:48:36.779 --> 01:48:39.289
as a higher amount of ancillary services, then I don't

01:48:39.289 --> 01:48:42.340
know that's an issue. I don't know if looking to increase

01:48:42.340 --> 01:48:46.649
Nonspin at this point. It's a fine opinion to have

01:48:46.649 --> 01:48:49.800
I'm not gonna direct the public to disregard an opportunity

01:48:49.810 --> 01:48:52.640
or a question that staff has answered so noted in your

01:48:52.640 --> 01:48:56.140
opinion is noted, but I do want to make sure the public

01:48:56.140 --> 01:48:59.810
knows that the questions as staff laid out, including

01:48:59.810 --> 01:49:04.250
all options for a bridging solution which very well

01:49:04.250 --> 01:49:07.560
may be an operational need. I asked him to comment

01:49:07.560 --> 01:49:11.590
on all potential opportunities for bridging solution

01:49:11.590 --> 01:49:15.609
including starting with BRS and going down through

01:49:15.609 --> 01:49:19.909
the uh it's not really a list, just any, anything that

01:49:19.909 --> 01:49:22.699
could address that potential operational need. Sure

01:49:22.699 --> 01:49:26.159
And and you know, obviously the mm can comment on this

01:49:26.170 --> 01:49:29.619
project as well. So, um with respect to the list of

01:49:29.619 --> 01:49:33.119
PCM questions, I do want to add one question and that

01:49:33.119 --> 01:49:36.729
is um what is the impact of the PCM on consumer costs

01:49:36.739 --> 01:49:42.789
I know E three has uh run their analysis on cost and

01:49:43.760 --> 01:49:47.460
but I would like for the stakeholders and the public

01:49:47.470 --> 01:49:51.590
to evaluate that cost run and give us, you know, their

01:49:51.590 --> 01:49:54.529
their thoughts on the cost impacts of the P. C. M.

01:49:54.539 --> 01:49:56.789
I think it's important. I think all we've heard in

01:49:56.789 --> 01:49:59.460
the last several months is that consumer cost is a

01:49:59.470 --> 01:50:04.029
very very important um aspect of what we implement

01:50:04.039 --> 01:50:06.869
from uh face to market redesign. So I would like to

01:50:06.869 --> 01:50:14.819
ask that question. Okay so You you're not satisfied

01:50:14.819 --> 01:50:20.350
with the cost analysis of the provided by E three or

01:50:20.359 --> 01:50:24.319
you want other stakeholders to retain other consultants

01:50:24.329 --> 01:50:29.720
or? So E three's report is E three's report not my

01:50:29.720 --> 01:50:34.970
report and and not you know not r and I have analysis

01:50:34.970 --> 01:50:38.250
and assumptions that um I have looked at and I have

01:50:38.250 --> 01:50:42.189
my own opinions but I I I would like the public that

01:50:42.199 --> 01:50:45.689
the public that's going to be incurring costs with

01:50:45.689 --> 01:50:49.380
respect to this market redesign to let us know what

01:50:49.380 --> 01:50:51.819
they believe are the cost impacts. Because we can't

01:50:51.819 --> 01:50:54.899
just take E three's cost impact analysis at face value

01:50:54.909 --> 01:50:57.390
We need to hear from the stakeholders in the market

01:50:57.390 --> 01:50:59.409
is going to be operating in this market design what

01:50:59.409 --> 01:51:02.710
they believe the cost impacts are. And not only that

01:51:02.850 --> 01:51:06.689
they need to look at the cost analysis that ran and

01:51:06.689 --> 01:51:09.770
provided their feedback on whether that is actually

01:51:09.770 --> 01:51:14.600
the cost of PCM or any other model. Not just PCM but

01:51:14.600 --> 01:51:17.000
we're asking for questions first of all, nobody up

01:51:17.000 --> 01:51:20.069
here is taking anything from me three at face value

01:51:20.359 --> 01:51:23.390
I'm not saying that at all. I just said I just said

01:51:23.390 --> 01:51:27.600
that nobody on this commission or this staff is taking

01:51:27.609 --> 01:51:30.069
anything at face value. We all spend as you just said

01:51:30.069 --> 01:51:34.680
we all spent hours and hours with our consultants poking

01:51:34.680 --> 01:51:37.340
prodding questioning all of the inputs, all of the

01:51:37.340 --> 01:51:40.789
assumptions and every single commissioner up here had

01:51:41.039 --> 01:51:44.840
multiple chances to provide feedback on what assumptions

01:51:44.840 --> 01:51:46.810
were wrong, what assumptions were right where they

01:51:46.819 --> 01:51:49.869
disagreed, agreed or not not everybody agreed on every

01:51:49.869 --> 01:51:52.239
assumption and we triangular staff triangulated that

01:51:52.239 --> 01:51:54.729
the best they can. So I don't want the public to think

01:51:54.729 --> 01:51:57.680
that in any way this is just slapped together with

01:51:57.680 --> 01:52:01.720
some duct tape. This is this is hours and hours, months

01:52:01.729 --> 01:52:06.399
of analysis iteration feedback to get to the assumptions

01:52:06.399 --> 01:52:09.239
that go on this baseline model that beings and that

01:52:09.239 --> 01:52:13.199
drive these costs. That being said no model is perfect

01:52:13.210 --> 01:52:16.159
and no model can guarantee future outcomes. It's the

01:52:16.159 --> 01:52:20.060
best approximation with the best information we have

01:52:20.060 --> 01:52:23.449
on what future scenarios may look like. I agree with

01:52:23.449 --> 01:52:29.520
that. So If it is perfectly fair to ask the public

01:52:29.520 --> 01:52:33.289
and our market participants to evaluate the assumptions

01:52:33.289 --> 01:52:37.819
and inputs that went into each of these models and

01:52:37.819 --> 01:52:44.220
that we directed E. 3 to use on on PCM the LSE

01:52:44.220 --> 01:52:46.909
the frm the BRS on any and all of them by all

01:52:46.909 --> 01:52:50.590
means. Not only were we not only asking them to evaluate

01:52:50.590 --> 01:52:53.810
those assumptions, inputs but question those tell us

01:52:53.810 --> 01:52:57.479
if we did something wrong by all means, but under no

01:52:57.479 --> 01:53:01.079
circumstances they don't want the public or our market

01:53:01.079 --> 01:53:03.670
participants to think that these costs assumptions

01:53:03.670 --> 01:53:07.310
are wrong. There come they are arrived to casually

01:53:07.310 --> 01:53:11.050
or without intense analysis and scrutiny because they're

01:53:11.050 --> 01:53:14.890
not these these are the result of months and months

01:53:14.979 --> 01:53:20.949
and thousands and thousands of model runs uh to get

01:53:20.949 --> 01:53:24.409
to these results, these cost results, these reliability

01:53:24.409 --> 01:53:27.420
results. So I want to make it perfectly clear that

01:53:27.420 --> 01:53:31.350
none of this is just slapped together or is put together

01:53:31.350 --> 01:53:34.260
in any way other than thorough, deliberate and comprehensive

01:53:34.260 --> 01:53:39.560
manner. If you would like to add a question about asking

01:53:39.569 --> 01:53:44.500
the public to comment and opine on assumptions, inputs

01:53:44.500 --> 01:53:48.500
that went into each of the model design concepts. Uh

01:53:48.510 --> 01:53:52.090
I think everybody would be happy to include that in

01:53:52.090 --> 01:53:56.079
the list of questions uh for any and all of the of

01:53:56.079 --> 01:54:00.680
the model concepts. Uh But like I said I do not want

01:54:00.689 --> 01:54:05.789
to give the impression that we the staff certainly

01:54:05.789 --> 01:54:07.829
doesn't think they're wrong, they wouldn't have recommended

01:54:07.829 --> 01:54:09.960
it for any of, they wouldn't have published this or

01:54:09.960 --> 01:54:12.199
filed this if they thought any of the math was wrong

01:54:12.199 --> 01:54:14.460
and I certainly I don't think there's anything wrong

01:54:14.470 --> 01:54:18.859
or incorrect in here. But I would welcome input from

01:54:18.859 --> 01:54:23.560
the public on their thoughts on our inputs and assumptions

01:54:23.569 --> 01:54:25.979
Is that something you'd like to add to the questions

01:54:25.989 --> 01:54:29.300
Sure. I mean I I my perspective just on adding that

01:54:29.300 --> 01:54:33.590
question. um really well and I do want to assure you

01:54:33.590 --> 01:54:36.779
that I don't think anybody here has taken those cost

01:54:36.789 --> 01:54:40.029
figures or analysis from E three at face value. We

01:54:40.029 --> 01:54:42.409
have spent a lot of time talking to the three about

01:54:42.420 --> 01:54:45.770
those assumptions and analysis. And to be fair, you

01:54:45.770 --> 01:54:49.760
know, we might have differences opinions on what we

01:54:49.770 --> 01:54:54.930
on what the analysis assumptions produces. But you

01:54:54.930 --> 01:54:57.560
know, my my perspective on this for asking this specific

01:54:57.560 --> 01:55:00.689
question is because it is a very important question

01:55:00.699 --> 01:55:05.550
all of, especially in this high inflationary period

01:55:05.550 --> 01:55:08.420
that we're in with with just costs and everybody cares

01:55:08.420 --> 01:55:11.960
about cost impacts right now. And that's the only reason

01:55:11.960 --> 01:55:14.600
I wanted a separate question so that we can understand

01:55:14.609 --> 01:55:17.470
if we're missing anything, if we're missing anything

01:55:17.470 --> 01:55:19.970
out there that could impact costs because the last

01:55:19.979 --> 01:55:22.680
I mean, this is not attributed just the PCM, it applies

01:55:22.680 --> 01:55:27.100
to all designs um but because we're just asking um

01:55:27.109 --> 01:55:30.810
specific questions for PCM that's the only reason that

01:55:30.819 --> 01:55:35.100
I've added it there to to the PCM um list and of

01:55:35.100 --> 01:55:37.810
questions and so that's where I'm coming from? I mean

01:55:37.810 --> 01:55:39.590
I think I think that makes perfect sense that work

01:55:39.590 --> 01:55:43.590
for y'all All right, then you got the question. Alright

01:55:44.260 --> 01:55:49.220
any other questions you'd like to add? Um Well, you

01:55:49.220 --> 01:55:53.460
know, the last question in in staffs memo about delays

01:55:53.460 --> 01:55:57.869
and implementation um you know, it I know you don't

01:55:57.869 --> 01:56:00.710
want to change your questions but really what I'm looking

01:56:00.710 --> 01:56:04.079
for is is how can we do it more efficiently and quickly

01:56:04.090 --> 01:56:07.250
rather than, you know, I think we've reached a point

01:56:07.250 --> 01:56:11.250
where we're ready to move forward and and not delay

01:56:11.260 --> 01:56:15.079
And so I would rather ask more specific, more specific

01:56:15.079 --> 01:56:18.239
question about how can you implement a near-term solution

01:56:18.250 --> 01:56:20.369
and what are the specific next steps to get it done

01:56:20.369 --> 01:56:23.619
more quickly and efficiently? Um you know, how would

01:56:23.619 --> 01:56:27.329
that differ from question 8? Well, question 8 um

01:56:29.699 --> 01:56:34.609
I think it's it's um let me have my set here that

01:56:42.720 --> 01:56:45.880
I think the, the way the question is written, it's

01:56:45.890 --> 01:56:50.880
um intend the way I would say it's in result um driven

01:56:50.890 --> 01:56:54.210
in my opinion, in that if it delays, if it delays uh

01:56:54.220 --> 01:56:57.789
the ultimate solution discarded. And so I would rather

01:56:57.789 --> 01:57:01.119
not focus on discarding anything and looking at near

01:57:01.119 --> 01:57:03.250
term solutions and figuring out how to get it done

01:57:03.250 --> 01:57:06.770
quickly and efficiently um and be given next steps

01:57:06.770 --> 01:57:09.779
from the public stakeholders on how to get that done

01:57:10.210 --> 01:57:13.630
Okay. I still don't know how that would differ. Question

01:57:13.630 --> 01:57:15.609
Aid for those who don't have this in front of them

01:57:15.609 --> 01:57:19.489
says if the commission adopts a market design with

01:57:19.489 --> 01:57:22.890
a multiyear implementation timeline and there are several

01:57:22.890 --> 01:57:27.800
options in the three reports of a multi timeline, if

01:57:27.800 --> 01:57:30.170
the commission adopts a market designed with a multiyear

01:57:30.170 --> 01:57:32.300
implementation timeline, is there a need for a short

01:57:32.300 --> 01:57:36.170
term bridge product or service like the backstop reliability

01:57:36.170 --> 01:57:40.229
service to maintain system reliability equivalent to

01:57:40.229 --> 01:57:44.670
a 10, 1 in 10 L O E or other reliability standard

01:57:44.680 --> 01:57:49.770
one. Is there a need for a bridging bridge product

01:57:50.180 --> 01:57:50.739
Last question

01:57:52.880 --> 01:57:55.010
if so, what product or service should be considered

01:57:55.789 --> 01:58:00.430
It's actually question item. Okay, so what would you

01:58:00.439 --> 01:58:03.010
I just feel like the first sentences in result driven

01:58:03.020 --> 01:58:05.899
of, you know, the near term solution is gonna delay

01:58:05.899 --> 01:58:08.109
something. Let's just go ahead and move it off the

01:58:08.109 --> 01:58:11.060
table. I'd rather just know about whatever near term

01:58:11.060 --> 01:58:13.090
solution it is. How can we get it done quickly and

01:58:13.090 --> 01:58:15.430
efficiently? What are the specific next steps to get

01:58:15.430 --> 01:58:18.210
it done quickly and efficiently? I don't think that

01:58:18.220 --> 01:58:20.289
really, I mean if you're looking at existing Ancillary

01:58:20.289 --> 01:58:22.479
services or even the backstop, I don't know how that

01:58:22.479 --> 01:58:25.670
would delay anything when you know every other proposal

01:58:25.680 --> 01:58:29.189
is a multiyear implementation. Okay, so first of all

01:58:29.189 --> 01:58:31.239
we're not changing staff questions like I said, they've

01:58:31.239 --> 01:58:33.789
been deliberately and thoroughly thought out through

01:58:33.789 --> 01:58:37.289
Welcome at, to add additional questions. Again, I don't

01:58:37.289 --> 01:58:41.140
know what you would change for those watching at home

01:58:41.140 --> 01:58:45.159
if implementing a short term design as a bridge solution

01:58:45.159 --> 01:58:48.270
delays the ultimate multiyear implementation solution

01:58:48.270 --> 01:58:50.890
should it be considered? I think that's a very fair

01:58:50.890 --> 01:58:54.359
question to ask about resource allocation at r i s

01:58:54.359 --> 01:58:58.680
o any of these products or concepts would require the

01:58:58.680 --> 01:59:01.529
same group of people and resources at market to build

01:59:01.529 --> 01:59:05.079
and implement them. They those people can't be in two

01:59:05.079 --> 01:59:09.640
places at one time. So it may be very fair to say

01:59:09.640 --> 01:59:12.869
the short term need is more imminent than the longer

01:59:12.869 --> 01:59:15.279
term need. And so that group of people needs to focus

01:59:15.279 --> 01:59:18.680
on a short term bridging solution, if that mechanism

01:59:18.689 --> 01:59:20.939
if it is determined that we do actually need a bridging

01:59:20.939 --> 01:59:26.989
mechanism, but it's also fair to ask that if we have

01:59:26.989 --> 01:59:30.409
a longer term product that we as a commission decide

01:59:30.420 --> 01:59:34.640
is the solution we want to pursue. Is that trade off

01:59:34.640 --> 01:59:37.729
of a of reallocating that team and those resources

01:59:37.729 --> 01:59:40.619
in market for the short term bridging solution. Is

01:59:40.619 --> 01:59:44.689
that trade off worth the delay in implementing the

01:59:44.689 --> 01:59:47.479
longer term solution? I don't know the answer to that

01:59:47.489 --> 01:59:49.479
I want to know what the public thinks, I want to know

01:59:49.479 --> 01:59:52.890
what ERCOT thinks. It's a it's a fair question to ask

01:59:53.319 --> 01:59:53.810
Okay,

01:59:56.180 --> 01:59:59.300
sure, sure. Okay, I Alright, and thank you for explaining

01:59:59.300 --> 02:00:01.890
that a little bit more. Sure, that is a fair question

02:00:01.890 --> 02:00:04.260
to ask, I guess what I would then say is that a

02:00:04.260 --> 02:00:08.539
new question about how can a near term solution be

02:00:08.539 --> 02:00:11.140
built quick in an efficient manner in order to start

02:00:11.140 --> 02:00:13.729
sending market signals for investment in new and dispatchable

02:00:13.729 --> 02:00:18.880
generation while while a multi year market design is

02:00:18.880 --> 02:00:19.930
implemented by ERCOT

02:00:22.569 --> 02:00:26.380
if a near term short term really call it short term

02:00:26.380 --> 02:00:29.170
bridge product or service is determined to be needed

02:00:29.180 --> 02:00:33.020
What is the fastest most efficient way to implement

02:00:33.020 --> 02:00:37.960
that service. Got it. Ben. Thank you sir.

02:00:39.779 --> 02:00:43.869
Anything else? All right, thank you ma'am. Other thoughts

02:00:43.869 --> 02:00:44.659
and comments.

02:00:47.560 --> 02:00:50.149
Thank you. Mr Chairman. I think the goal we all share

02:00:50.149 --> 02:00:54.279
is reliability, making sure the lights stay on. Texas

02:00:54.279 --> 02:00:57.220
is successful today because we have a viable economy

02:00:57.220 --> 02:01:00.479
fueled by a competitive power market. It's important

02:01:00.479 --> 02:01:04.210
that we continue to foster competition and we can do

02:01:04.210 --> 02:01:06.649
this by providing more certainty so reliable power

02:01:06.649 --> 02:01:10.260
producers will start investing in Texas. The good news

02:01:10.260 --> 02:01:12.869
is that we've made more changes to the grid than we

02:01:12.869 --> 02:01:15.430
have in decades and those changes are already showing

02:01:15.430 --> 02:01:19.609
results. Even better news is that we have completed

02:01:19.609 --> 02:01:22.350
a comprehensive assessment of the grid and now we are

02:01:22.359 --> 02:01:24.590
armed with the data and the science, we need to make

02:01:24.590 --> 02:01:28.510
positive and impactful change. We know Texas is growing

02:01:28.720 --> 02:01:31.619
at least 1000 people are coming to Texas every day

02:01:31.630 --> 02:01:35.010
Major businesses relocating here are existing manufacturing

02:01:35.010 --> 02:01:38.770
sector growing and expanding and no one is bringing

02:01:38.770 --> 02:01:42.479
any megawatts with them. Texas is growing in our full

02:01:42.489 --> 02:01:45.710
fuel mix. It continues to change wind, solar, natural

02:01:45.710 --> 02:01:50.020
gas, hydrogen energy efficiency, energy conservation

02:01:50.029 --> 02:01:53.550
Yes, energy conservation is a fuel supply and we need

02:01:53.560 --> 02:01:56.760
all of them. Winter storm Uri highlighted the fact

02:01:56.760 --> 02:01:59.090
that we don't always know what's coming, but we need

02:01:59.090 --> 02:02:02.539
to be prepared in the eye of the storm report after

02:02:02.539 --> 02:02:05.239
hurricane Harvey Governor Abbott issued the challenge

02:02:05.239 --> 02:02:08.319
to future proof. Texas We don't know what's coming

02:02:08.329 --> 02:02:11.039
whether it's hurricanes, tornadoes, wildfires, flooding

02:02:11.039 --> 02:02:14.699
or other disasters but we know we need to be prepared

02:02:14.710 --> 02:02:17.430
to future proof our state, we need to future proof

02:02:17.430 --> 02:02:21.180
our grid just in time supply is no longer an option

02:02:21.189 --> 02:02:23.640
We need to move away from our current way of doing

02:02:23.640 --> 02:02:27.489
things to a performance based approach, Incentivize

02:02:27.489 --> 02:02:30.829
performance and provide more certainty so that reliable

02:02:30.829 --> 02:02:34.079
power producers will invest in Texas creating more

02:02:34.079 --> 02:02:37.090
dispatchable generation and enhance reliability for

02:02:37.090 --> 02:02:41.199
our grid. I'd like to recognize my fellow for commissioners

02:02:41.199 --> 02:02:44.159
who started this process long before I got here. I

02:02:44.159 --> 02:02:46.880
know each of you along with our dedicated staff have

02:02:46.880 --> 02:02:49.899
devoted your time talent and engagement to this historic

02:02:49.899 --> 02:02:53.569
market redesign. I agree with the design proposal laid

02:02:53.569 --> 02:02:57.560
out in the staff memo as the performance credit mechanism

02:02:58.180 --> 02:03:01.859
The performance credit mechanism design proposal meets

02:03:01.859 --> 02:03:04.319
the objectives and fulfills the requirements of Senate

02:03:04.319 --> 02:03:06.699
Bill three and is aligned with the principles from

02:03:06.699 --> 02:03:10.789
the market design blueprint, both quantitative results

02:03:10.800 --> 02:03:13.649
the data and the science and qualitative results from

02:03:13.649 --> 02:03:16.779
the analysis support. Moving forward with the PCM design

02:03:17.300 --> 02:03:20.420
In my mind, the PCM is a hybrid incorporating some

02:03:20.420 --> 02:03:24.210
of the best elements from the BRS and the decks. PCM

02:03:24.210 --> 02:03:28.539
is performance based and it's a Texas two step process

02:03:28.550 --> 02:03:31.659
step one, you bid it, you say you're gonna be there

02:03:31.670 --> 02:03:35.210
You commit step to in order to get paid, you have to

02:03:35.210 --> 02:03:39.319
show up and earn it Another critical tool in our toolbox

02:03:39.319 --> 02:03:42.510
to support grid resiliency in our fast growing status

02:03:42.520 --> 02:03:45.880
energy conservation demand response is automatically

02:03:45.890 --> 02:03:48.840
integrated in the PCM approach providing the perfect

02:03:48.840 --> 02:03:52.069
mechanism to support energy conservation. Built in

02:03:52.069 --> 02:03:55.489
demand response empowers consumers. It provides a direct

02:03:55.489 --> 02:03:58.560
correlation between reducing their demand and reducing

02:03:58.560 --> 02:04:01.880
their costs By relying on market based mechanisms.

02:04:01.890 --> 02:04:05.460
The companies in market will then be empowered to develop

02:04:05.460 --> 02:04:08.659
innovative and creative strategies to incentivize their

02:04:08.659 --> 02:04:11.720
customers to reduce demand when conservation is needed

02:04:11.720 --> 02:04:15.819
The most the goal we are share is long term reliability

02:04:15.829 --> 02:04:18.170
Making sure we have the power we need today for our

02:04:18.170 --> 02:04:21.109
Children and our Children's Children. I look forward

02:04:21.109 --> 02:04:24.220
to hearing and reviewing your comments. This is a historic

02:04:24.220 --> 02:04:27.109
opportunity and it's so important for the public to

02:04:27.109 --> 02:04:32.210
engage. Thank you MS Jackson. Well put and I know it

02:04:32.220 --> 02:04:35.579
hasn't been touched on yet but the the built in demand

02:04:35.579 --> 02:04:38.869
conservation is a key feature that all of our offices

02:04:38.869 --> 02:04:42.479
and teams have kept in mind throughout this process

02:04:42.489 --> 02:04:45.119
It's not about just building more steel on the ground

02:04:45.119 --> 02:04:47.819
That's important. We want and need more steel on the

02:04:47.819 --> 02:04:52.399
ground. But we also have been mindful of keeping uh

02:04:52.409 --> 02:04:55.630
and leveraging both sides of the equation, reducing

02:04:55.630 --> 02:05:00.069
demand and increasing reliable supply. Thank you for

02:05:00.069 --> 02:05:03.760
highlighting that other thoughts, comments.

02:05:05.479 --> 02:05:10.579
I have a few. Um but I will be short. I won't

02:05:10.590 --> 02:05:15.859
uh belabor this. Um uh first of all I want to go

02:05:15.859 --> 02:05:18.140
back and one of the first things that I said when I

02:05:18.140 --> 02:05:19.720
became a commissioner and we started talking about

02:05:19.720 --> 02:05:24.010
market design was um I do not believe me personally

02:05:24.010 --> 02:05:26.430
I do not believe winter storm Uri was a market failure

02:05:26.439 --> 02:05:29.550
Um A lot of different issues went into the failure

02:05:29.560 --> 02:05:32.890
that week that day. Um but that doesn't mean we can't

02:05:32.890 --> 02:05:37.060
act and I think we must act. The Legislature said we

02:05:37.060 --> 02:05:39.539
need to act the I. C. F. Report said we need to

02:05:39.539 --> 02:05:42.750
act. This report says we need to act. So moving forward

02:05:42.760 --> 02:05:47.960
it's clear that something has to be done. We are facing

02:05:47.960 --> 02:05:50.600
challenges that we've never faced before. As are other

02:05:50.600 --> 02:05:54.500
markets with non dispatchable resources with tax credits

02:05:54.510 --> 02:05:59.500
as you all know, um with the passage of bills in Washington

02:05:59.500 --> 02:06:03.010
wind, solar, existing nuclear and storage, I'll have

02:06:03.010 --> 02:06:06.029
tax credits now. So the only one that doesn't is gas

02:06:06.739 --> 02:06:09.939
Um well cole you're right, that's that's dirt. But

02:06:09.949 --> 02:06:14.449
you know, uh anyway, uh things that can get built.

02:06:14.460 --> 02:06:16.949
How about that? So at this point in time, I think coal

02:06:16.949 --> 02:06:21.840
is hard to get built. But um, so I think that um

02:06:21.850 --> 02:06:25.439
you know, us finding a mechanism that can allow um

02:06:25.449 --> 02:06:30.600
gas plants to get built um in this state would be hugely

02:06:30.600 --> 02:06:35.880
valuable. My preference as of today is a backstop reliability

02:06:35.880 --> 02:06:39.600
service combined with a deck. I think it's innovative

02:06:39.600 --> 02:06:42.779
and creative. I think we ought to think I would ask

02:06:42.779 --> 02:06:46.729
the public as their, as they are commenting to talk

02:06:46.729 --> 02:06:49.850
about how we might expand the deck program, not to

02:06:49.850 --> 02:06:53.239
a full capacity market, but expand it. So we get different

02:06:53.250 --> 02:06:56.510
attributes of services that we want. Um, that might

02:06:56.520 --> 02:07:01.579
help the market. Um, so if you expand the, uh, if you

02:07:01.579 --> 02:07:05.079
reduce the hours or or increase the heat rates, change

02:07:05.079 --> 02:07:07.899
all these things, how many more or less Megawatt might

02:07:07.899 --> 02:07:11.239
you get for different uh, um, attributes of the deck

02:07:11.250 --> 02:07:16.170
I also think we should um, have some comments on if

02:07:16.180 --> 02:07:20.229
I believe we should add small modular reactors to the

02:07:20.239 --> 02:07:23.270
uh, the availability for dex. I think it sends a signal

02:07:23.279 --> 02:07:26.010
across the country that we're open for those types

02:07:26.010 --> 02:07:30.010
of reactors when they're approved by the NRC and they're

02:07:30.020 --> 02:07:31.920
they're ready for this market that they will get some

02:07:31.920 --> 02:07:38.109
sort of, if, if they will, they will. Um, so I, I'd

02:07:38.109 --> 02:07:43.489
love to see those two um, additional comments as, as

02:07:43.489 --> 02:07:46.680
folks, um, give their thoughts to the

02:07:48.909 --> 02:07:56.630
um, I, I guess the specific question is, what um, uh

02:07:57.649 --> 02:08:04.420
how would um, modifications in the deck proposal benefit

02:08:04.430 --> 02:08:08.229
Um, adding more megawatts or less megawatts and would

02:08:08.239 --> 02:08:14.689
a uh, is this the same question? I'm trying to combine

02:08:14.689 --> 02:08:17.800
the questions but okay, so first of all, I don't, I

02:08:17.800 --> 02:08:21.100
don't wanna, again, I don't want to sell short the

02:08:21.100 --> 02:08:24.069
analysis has been done the decks analysis that is in

02:08:24.069 --> 02:08:28.960
the three report to Commissioner McAdams credit. Uh

02:08:28.970 --> 02:08:33.449
no, no, but it was just like every other part of this

02:08:33.449 --> 02:08:35.909
report, it started out as one version and went, you

02:08:35.909 --> 02:08:37.800
know, we tried a different set of inputs analysis,

02:08:37.800 --> 02:08:40.970
the scope of it changed and I mean to your credit,

02:08:40.970 --> 02:08:42.949
you went through the process, we all went through the

02:08:42.949 --> 02:08:47.899
process humility is key to this job. MR chairman. What

02:08:47.930 --> 02:08:51.149
I'm not gonna put parameters on what the industry,

02:08:51.199 --> 02:08:55.449
let's make a question about SmR Well, so the first

02:08:55.449 --> 02:09:02.609
thing is if we, if we expand the ability of more resources

02:09:02.609 --> 02:09:06.390
to be eligible for debt participation, what would that

02:09:06.390 --> 02:09:09.970
do to megawatts? Uh, being built into the in the state

02:09:10.210 --> 02:09:14.829
to expand to what that's what I want to know is if

02:09:14.829 --> 02:09:17.960
we're gonna, if we expand it, will it add more megawatts

02:09:17.970 --> 02:09:21.819
or will it not add megawatts? Okay, I feel like this

02:09:21.819 --> 02:09:24.180
was a question for a three a while back but we can

02:09:24.180 --> 02:09:30.359
certainly, it was probably given to E three. So I want

02:09:30.359 --> 02:09:32.420
the industry view because I think there's going to

02:09:32.420 --> 02:09:37.390
be different views of if the qualification eligibility

02:09:37.390 --> 02:09:42.149
qualification for the most current version of dex is

02:09:42.149 --> 02:09:47.029
expanding is expanded to just in general, you know

02:09:47.039 --> 02:09:50.579
I mean, you know, do you want to expand the quantity

02:09:50.579 --> 02:09:56.430
of decks procured? I want to see if we, if we, if

02:09:56.430 --> 02:10:02.420
we modify the um parameters by the about the facilities

02:10:02.420 --> 02:10:06.130
that are eligible to receive decks right now. So if

02:10:06.130 --> 02:10:09.600
we're, if we're just trying to get storage, we minimum

02:10:09.609 --> 02:10:12.390
we minimize it. If we want something longer, you know

02:10:12.390 --> 02:10:15.539
is it an eight hour, is it a 24 hours and three

02:10:15.539 --> 02:10:19.529
days in a five day resource? I want Now I want people

02:10:19.529 --> 02:10:22.689
to come and say, what will it do to the market? Will

02:10:22.689 --> 02:10:25.020
it add more megawatts to the market or not? Okay, so

02:10:25.029 --> 02:10:29.199
let's see if if any given commenter could expand eligibility

02:10:29.199 --> 02:10:31.260
qualifications to whatever they wanted, how would they

02:10:31.260 --> 02:10:34.460
do? And what would it well, when what in their own

02:10:34.689 --> 02:10:39.199
analysis, what would the result be? Do you want a separate

02:10:39.199 --> 02:10:43.300
question or a corollary to that question, adjusting

02:10:43.300 --> 02:10:46.420
the quantity of decks procured because that's a finite

02:10:46.420 --> 02:10:49.260
quantity in this in all of the versions of this? And

02:10:49.260 --> 02:10:51.529
again, there have been multiple versions of debt qualifications

02:10:51.529 --> 02:10:53.579
I don't want the public to think that we just read

02:10:53.579 --> 02:10:57.449
it once. If we expand the deck quantities, what would

02:10:57.449 --> 02:10:58.409
be the appropriate number?

02:11:00.359 --> 02:11:04.470
The appropriate amount you want to expand the eligibility

02:11:04.479 --> 02:11:08.729
and the quantity? Yes. Okay.

02:11:12.850 --> 02:11:15.920
Make it whatever they want and see what happens. I

02:11:15.930 --> 02:11:20.770
mean within reason, I mean I'm you got that Ben? All

02:11:20.770 --> 02:11:23.699
right. You want to do anything on SmR? I just want

02:11:23.699 --> 02:11:25.979
to Yeah, I want to know what the industry thinks about

02:11:25.979 --> 02:11:28.720
adding SmR to deck. Would it be an incentive to to

02:11:28.720 --> 02:11:29.720
come to Texas.

02:11:31.550 --> 02:11:35.079
Okay, Okay. I'm getting I'm thinking back to where

02:11:35.079 --> 02:11:39.149
you started off with your initial merging of the questions

02:11:39.869 --> 02:11:40.770
included

02:11:42.319 --> 02:11:44.819
asking stakeholders to expand eligibility of decks

02:11:44.819 --> 02:11:48.970
to whatever they want, especially including SmR small

02:11:49.199 --> 02:11:52.569
small modular reactors and do whatever quantity they

02:11:52.569 --> 02:11:55.779
want. How would they do it? And what do they think

02:11:55.789 --> 02:11:59.939
the results would be great that work? And MR chairman

02:11:59.949 --> 02:12:04.890
so all of this is doable. Uh, this is the economics

02:12:04.899 --> 02:12:08.260
of 25 pages of filing too. So everyone's gonna have

02:12:08.260 --> 02:12:11.550
to make a business decision on, on a word basis how

02:12:11.550 --> 02:12:14.020
much they're gonna dedicate to each question and that

02:12:14.039 --> 02:12:17.590
will help inform us on, you know? Yeah, they're welcome

02:12:17.600 --> 02:12:19.899
They're welcome to hire as many consultants as they

02:12:19.899 --> 02:12:23.210
want to run as much methods they wanted to put the

02:12:23.210 --> 02:12:28.420
result in 25 pages. I have two more things to say.

02:12:28.420 --> 02:12:34.250
One quick, just point a point of order, point of clarification

02:12:35.119 --> 02:12:40.289
as currently constructed for the LSE the frm and the

02:12:40.289 --> 02:12:44.760
PCM. All of those would include S. M. R. S. As eligible

02:12:44.760 --> 02:12:49.949
resources to compete given their dispatchable nature

02:12:50.029 --> 02:12:53.409
Whether those can get permitted anytime soon is a different

02:12:53.409 --> 02:12:57.159
question, as you fairly pointed out. And I'm very enthusiastic

02:12:57.449 --> 02:12:59.949
as enthusiastic as I am about hydrogen. I am about

02:12:59.949 --> 02:13:05.829
S. M. R. S. Um, but it's just like we do have

02:13:05.829 --> 02:13:08.609
a company that's announced in SmR here in Texas. So

02:13:08.760 --> 02:13:12.340
it's great. I would hope they participate in whatever

02:13:12.340 --> 02:13:15.649
market product that we end up procuring, but just want

02:13:15.649 --> 02:13:18.359
to clarify everyone that those, there's nothing preventing

02:13:18.359 --> 02:13:20.819
them from operationally participating in any of those

02:13:20.819 --> 02:13:24.949
first three concepts. What else you got? Um so two

02:13:24.949 --> 02:13:27.800
more things. One of them is question three. What's

02:13:27.800 --> 02:13:30.149
the appropriate reliability standard to achieve goals

02:13:30.149 --> 02:13:35.319
stated in question two um, is the one in 10 L O

02:13:35.319 --> 02:13:40.850
L E a reasonable standard to set. Um this is not a

02:13:40.859 --> 02:13:44.449
issue that we're going to resolve today. Every market

02:13:44.460 --> 02:13:48.500
is is going through it. But I wanted to add a voice

02:13:48.510 --> 02:13:53.850
Um I wanted to to read something here from, from one

02:13:53.850 --> 02:13:56.470
of our senior vice president, one of their longest

02:13:56.479 --> 02:14:00.779
serving members. Mark lobby, he's their chief engineer

02:14:00.789 --> 02:14:04.420
He said uh he in this report that I read which was

02:14:04.420 --> 02:14:07.789
an rto insider, he said that he agreed the need to

02:14:07.789 --> 02:14:12.680
move beyond the one in 10 day construct. Uh he said

02:14:12.680 --> 02:14:15.909
it was that that construct is solely based upon random

02:14:15.909 --> 02:14:19.569
equipment failures as opposed to weather. We obviously

02:14:19.569 --> 02:14:22.039
have weather as a challenge, whether it be for non

02:14:22.039 --> 02:14:24.880
dispatchable resources or long term outages like we

02:14:24.880 --> 02:14:28.329
had during winter storm Uri, whether it's not random

02:14:28.340 --> 02:14:31.020
sometimes it's a bit predictable and we need to start

02:14:31.020 --> 02:14:33.729
book ending that maybe through climate change models

02:14:33.739 --> 02:14:38.569
and all that to develop different scenarios, things

02:14:38.569 --> 02:14:42.359
like no nuclear is available or is it really cold or

02:14:42.359 --> 02:14:45.750
do we have a forest fire? It's too windy in Iowa all

02:14:45.750 --> 02:14:48.340
of these scenarios help drive? What are our transmission

02:14:48.340 --> 02:14:51.729
needs? How big do we need? How big of a solution do

02:14:51.729 --> 02:14:55.739
we need to solve this problem? This is the point Mark

02:14:55.739 --> 02:14:59.329
lobby said it used to be that capacity was king.

02:15:00.979 --> 02:15:05.109
The king has no clothes lobby continued its energy

02:15:05.119 --> 02:15:08.210
and essential grid services. Great minds think alike

02:15:08.220 --> 02:15:10.739
I want us to think we need to focus on performance

02:15:10.739 --> 02:15:14.779
not capacity. That's that's my point is that we we

02:15:14.789 --> 02:15:18.270
we are thinking about how to do that and it's clear

02:15:18.270 --> 02:15:21.939
that moving away from something that's just totally

02:15:21.939 --> 02:15:26.130
capacity based is something that will help us move

02:15:26.140 --> 02:15:31.079
this debate forward. Um We're only trying to get it

02:15:31.079 --> 02:15:34.819
right for ourselves. So um so the last thing I have

02:15:34.819 --> 02:15:37.760
to say is this is that is that an additional question

02:15:37.760 --> 02:15:41.109
And you just emphasizing question just emphasizing

02:15:41.119 --> 02:15:43.449
that we want people's input on that. That's that's

02:15:43.460 --> 02:15:46.500
absolutely agree. That's an important question. I'm

02:15:46.500 --> 02:15:48.569
glad staff put the E. U. E. In there is that is

02:15:48.569 --> 02:15:52.510
a example. There are many others McAdams has mentioned

02:15:52.510 --> 02:15:56.560
this multiple times during our time here and the E

02:15:56.560 --> 02:15:59.600
Three study has different versions of that included

02:16:00.000 --> 02:16:03.420
So again emphasis not a new question but emphasis for

02:16:03.420 --> 02:16:08.039
those commenting to provide input on all possible improvements

02:16:08.039 --> 02:16:12.090
to L. O. L. O. L. E. In question three. Right. Right

02:16:12.100 --> 02:16:17.270
okay. Final thing is um these any changes to our market

02:16:17.279 --> 02:16:24.039
are hard um All these new models are ah

02:16:25.729 --> 02:16:28.850
somebody throws out a new market design. Um It gets

02:16:28.850 --> 02:16:31.399
chewed up and spit out over and over and over again

02:16:31.409 --> 02:16:37.059
The P. C. M. Maybe that the L. S. E. Maybe that

02:16:37.069 --> 02:16:40.180
um in the end I think we we come to the right

02:16:40.180 --> 02:16:45.100
decision. But what I hope is that as we get what what

02:16:45.100 --> 02:16:49.059
I commit is that if comments come back from our industry

02:16:49.059 --> 02:16:52.850
that say the PCM is the right design that I will move

02:16:52.850 --> 02:16:57.649
away from the deck and backstop liability service towards

02:16:57.649 --> 02:17:00.559
that. I also hope that you all do the same. That you

02:17:00.559 --> 02:17:05.500
all are not totally set in your ways that the PCM is

02:17:05.500 --> 02:17:08.510
the way to go if industry comes back and says this

02:17:08.510 --> 02:17:10.719
is not the way to go. And I just hope that we

02:17:10.719 --> 02:17:15.219
can utilize that to make the most of the comments that

02:17:15.219 --> 02:17:18.590
we're gonna get uh throughout these next 35 days. Absolutely

02:17:18.590 --> 02:17:22.399
and I appreciate that commitment from you up front

02:17:22.409 --> 02:17:26.360
and I'll also commit that like I said in my comments

02:17:26.370 --> 02:17:30.319
based on what I know now I think the PCM is the

02:17:30.319 --> 02:17:33.149
best path forward. But that's not only we're not we

02:17:33.149 --> 02:17:35.590
don't just we're not just asking for public comment

02:17:35.600 --> 02:17:40.430
and market participants. We need public input and insight

02:17:40.430 --> 02:17:42.940
from market participants. And there are a lot of unknowns

02:17:42.940 --> 02:17:46.979
out there. And if if the universe of experts and the

02:17:46.979 --> 02:17:49.379
public come back and say there's a fatal flaw that

02:17:49.389 --> 02:17:52.889
y'all didn't think of then by all means I want to drop

02:17:52.889 --> 02:17:56.219
the thing that doesn't work and recalibrate to something

02:17:56.219 --> 02:18:00.090
that does work. So I wholeheartedly committed to that

02:18:00.100 --> 02:18:04.790
And I see you nodding as well. Absolutely. No predetermined

02:18:04.790 --> 02:18:08.510
outcomes here. Um, this is a first of its kind, the

02:18:08.520 --> 02:18:13.819
Texas edition of the car that we build, um, Texas Yeah

02:18:13.920 --> 02:18:18.610
The bottom line is, uh, the public and this industry

02:18:18.620 --> 02:18:20.899
which is incredibly dynamic and sophisticated, will

02:18:20.899 --> 02:18:23.639
tell us where we're wrong and I expect to see that

02:18:23.649 --> 02:18:26.600
I have no doubt they're doing uh, we'll do a lot of

02:18:26.610 --> 02:18:30.500
chewing. Uh, I've still got the scars from last fall

02:18:31.170 --> 02:18:34.719
So with that, I appreciate the effort that's gone into

02:18:34.719 --> 02:18:37.100
it. I don't agree with it all, but I'm, I'm here to

02:18:37.100 --> 02:18:40.610
learn those first when we went from, uh, from a zonal

02:18:40.610 --> 02:18:43.260
to a Nodal market. I mean, we didn't know how it was

02:18:43.260 --> 02:18:45.090
gonna happen if it was gonna be great, but guess what

02:18:45.090 --> 02:18:47.729
It's worked out well, so as we go through this, we

02:18:47.729 --> 02:18:51.139
gotta learn, we we have to listen to experts and I'm

02:18:51.139 --> 02:18:54.610
eager to hear back from the, from the industry agreed

02:18:54.620 --> 02:18:57.129
on all points. Thank you for letting that out. We've

02:18:57.139 --> 02:19:01.040
got your additional question, Ben, Right, That's your

02:19:01.040 --> 02:19:02.139
question, Commissioner Cobos

02:19:04.549 --> 02:19:09.870
mine's pretty concise. It's beautifully written as

02:19:09.870 --> 02:19:19.540
your memos, jimmy, Thank you. Uh, A lot to digest in

02:19:19.540 --> 02:19:24.940
this report. A lot to digest in these last 12, 14,

02:19:24.950 --> 02:19:31.340
18 months of work. Um, as you said, jimmy, the the

02:19:31.350 --> 02:19:34.469
legislation, the legislature and the Governor S. B

02:19:34.469 --> 02:19:41.540
three directed us to go make it reliable. Uh they directed

02:19:41.540 --> 02:19:45.090
us to take action and we've we've done that and I think

02:19:45.090 --> 02:19:50.549
I met, or we were moving along that pathway in a measured

02:19:50.559 --> 02:19:55.540
thoughtful way. Not reckless, but not a never ending

02:19:55.549 --> 02:19:58.770
cycle of studies. I think we've struck a nice balance

02:19:58.770 --> 02:20:06.590
between the two and so. I'm, oh, I think we're in a

02:20:06.600 --> 02:20:12.319
good spot and I think we're on track with the timetable

02:20:12.540 --> 02:20:16.280
and timeline we've laid out Maddie's timeline. Um,

02:20:17.100 --> 02:20:23.280
any any other thoughts, comments, uh, Mr Chairman,

02:20:23.280 --> 02:20:26.540
I would just like to say, since I uh, basically white

02:20:26.540 --> 02:20:31.409
lighted some some of our neighboring grids. And uh

02:20:32.159 --> 02:20:36.090
these these regulatory jobs are not easy. And uh, I

02:20:36.090 --> 02:20:39.600
think everybody working at a diet like this all around

02:20:39.600 --> 02:20:42.459
the country is doing the best they can with the best

02:20:42.459 --> 02:20:45.809
available information that they have with the tools

02:20:45.819 --> 02:20:50.040
that God and the legislatures give them. And um, and

02:20:50.040 --> 02:20:53.690
it's it's a tough challenge. And um, I think this is

02:20:53.690 --> 02:20:57.600
a debate that is going on at every one of these tables

02:20:57.610 --> 02:21:00.649
And um, I just commend you for your leadership, the

02:21:00.659 --> 02:21:04.110
work of the staff, the collaboration of ERCOT um, E

02:21:04.110 --> 02:21:07.100
three, uh, in helping us get to a point where we can

02:21:07.100 --> 02:21:10.879
move forward with potentially the best solution we

02:21:10.879 --> 02:21:13.250
can come up with the best available tools we have at

02:21:13.250 --> 02:21:16.879
our disposal. Well, I appreciate that. I want to echo

02:21:16.879 --> 02:21:20.950
that too. You know, I was here during 2011 through

02:21:20.950 --> 02:21:23.559
2013 of the Commission when the commission embarked

02:21:23.559 --> 02:21:27.909
on a Resource Adequacy Market redesign effort back

02:21:27.909 --> 02:21:29.899
then. And that was when the O. R. D. C. Was born

02:21:29.899 --> 02:21:34.450
and and you know, the the whole debate and evaluation

02:21:34.450 --> 02:21:38.290
was contentious and ultimately, I mean these are contentious

02:21:38.290 --> 02:21:41.319
issues and and they're always going to be right. And

02:21:41.319 --> 02:21:44.879
so, um, I think what we've done in the last year and

02:21:44.879 --> 02:21:49.059
a half is monumental in terms of evaluating or identifying

02:21:49.059 --> 02:21:54.840
solutions and um creating solutions that um, you know

02:21:54.840 --> 02:21:57.840
will provide some kind of reliability um, benefit from

02:21:57.840 --> 02:22:01.319
our perspective. And ultimately I think, you know,

02:22:01.319 --> 02:22:04.590
I do want to say and emphasize that um you know, I

02:22:04.590 --> 02:22:08.500
do think that coming up with the PCM is a great step

02:22:08.500 --> 02:22:12.530
forward in trying to um come up with some kind of hybrid

02:22:12.530 --> 02:22:15.870
and, and you know, I have a lot of unanswered questions

02:22:15.870 --> 02:22:18.450
and and thoughts and, and but you know, that's where

02:22:18.450 --> 02:22:21.579
the public comes in and they help us understand from

02:22:21.579 --> 02:22:25.020
their perspective what what they think and can provide

02:22:25.020 --> 02:22:30.030
us with valuable feedback that we can use to um to

02:22:30.040 --> 02:22:33.770
move forward with on a principle based basis as highlighted

02:22:33.780 --> 02:22:38.180
in in the staffs memo and um, you know, we we, I

02:22:38.180 --> 02:22:40.200
think we just need to work together here with an open

02:22:40.200 --> 02:22:44.590
mind and um, you know, if some of us may not agree

02:22:44.590 --> 02:22:46.680
with all the policy, but we're going to get somewhere

02:22:46.690 --> 02:22:50.040
we're going to get we're going to achieve a solution

02:22:50.040 --> 02:22:52.319
at some point that we put out there to the public in

02:22:52.319 --> 02:22:57.690
january. And so um I look forward to the comments and

02:22:57.700 --> 02:23:00.930
um hearing from the stakeholders on on the report and

02:23:01.209 --> 02:23:03.930
um look forward to continue to work with each and every

02:23:03.930 --> 02:23:06.709
one of you to drive to that end result. That's very

02:23:06.709 --> 02:23:09.399
important for the people of Texas. Absolutely. Well

02:23:09.399 --> 02:23:14.459
put, thank you for learning that summarizing all these

02:23:14.469 --> 02:23:20.239
these efforts so nicely. Um and and thank all of you

02:23:20.250 --> 02:23:23.840
for commissioners, your offices, your staff, your teams

02:23:23.979 --> 02:23:25.950
This has been a tremendous amount of work. And now

02:23:25.950 --> 02:23:29.069
we're gonna hopefully let the market participants go

02:23:29.069 --> 02:23:33.229
do some work. Tell us what they think. Any closing

02:23:33.229 --> 02:23:34.250
comments from staff.

02:23:37.500 --> 02:23:40.440
No, look forward to seeing the comments and working

02:23:40.440 --> 02:23:45.030
through it with people if I might just make an announcement

02:23:45.290 --> 02:23:48.819
Um we will be recording the questions that that you

02:23:48.819 --> 02:23:52.530
all have discussed. The staff questions one through

02:23:52.530 --> 02:23:56.229
nine will remain as they appeared in the memo, then

02:23:56.229 --> 02:23:58.690
we will be adding the questions discussed here on the

02:23:58.690 --> 02:24:03.510
diet. Um and that notice of comment will be filed in

02:24:03.520 --> 02:24:08.020
a new project later this afternoon, assuming the most

02:24:08.030 --> 02:24:13.030
motion passes. Yeah, thank you. Thank you for that

02:24:13.030 --> 02:24:19.569
Segway Connie as always in charge. Um Uh at this point

02:24:19.579 --> 02:24:23.649
is there a motion to open a new project for the E

02:24:23.649 --> 02:24:27.120
three report and issue a request for comment on the

02:24:27.120 --> 02:24:29.719
staff memo, as amended with the two questions that

02:24:29.719 --> 02:24:34.059
we've identified as the second. Got a motion in a second

02:24:34.059 --> 02:24:37.510
All in favor, say, aye, aye. None opposed motion passes

02:24:38.559 --> 02:24:44.040
Thank you. We have no further business. Before the

02:24:44.040 --> 02:24:45.940
commission to this meeting, the Public Utility Commission

02:24:45.940 --> 02:24:48.579
of Texas is hereby adjourned.