WEBVTT

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(item:0.1:Chairwoman Jackson calls meeting to order) Good morning. This meeting of the Public Utility Commission

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of Texas will come to order. To consider matters that

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have been duly posted with the Secretary of State of

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Texas for June 15, 2023. For the record, my name is

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Kathleen Jackson. And I'm joined today by Will McAdams,

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Lori Cobos and Jimmy Glotfelty. (item:0.1:Chairwoman Jackson calls for a motion to excuse Commissioner Lake) Commissioner Lake is

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out today due to a personal matter. I would like to

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entertain a motion to excuse his absence.

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So moved. Second. I have a motion and a second. All in favor, say aye.

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Aye. Motion passes. Before we get started with the Agenda, (item:0.1:Chairwoman Jackson gives thank you to Staff and her thoughts on the future)

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obviously things look a little different up here today.

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I'm honored to have been named Interim Chair by Governor

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Abbott.  And I would like to thank Peter for his tireless

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dedication as Chairman for this agency and the State.

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For keeping the lights on and ensuring Texans have

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reliable and affordable power. It's been a joy to get

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to know so many of the Staff here at the PUC. Many

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of the stakeholders and members of the public. I'm

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extremely grateful as a Commissioner and as a Texan

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for everyone's hard work. We have a lot of work ahead

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including implementation of Legislation from the recently

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concluded legislative session and continuing to ensure

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the goal we all share. Reliable and affordable, essential

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utility services. I want to say thank you to Thomas,

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Connie, Haley and our GR team. And all of the many

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Staff that contributed in so many ways to the Legislative

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process on top of their existing work Load. Congratulations

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on a successful Session for the PUC. Our agency is

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well positioned because of our Staff. Your talent,

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your commitment and the work you do each and every

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day focused on success. I look forward to working with

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each of my fellow Commissioners. And all of you as we

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build upon our many accomplishments. And with that,

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I'd like to open it up for any comments, uh from my

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fellow Commissioners. (item:0.1:Commissioner McAdams' thanks to Commissioner Lake) Uh thank you Madam Chair. Uh 

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I, I'd like to echo your thanks to Chairman Lake or

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Commissioner Lake. Um it, it has been an extraordinary

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two years at the Public Utility Commission. Um I had

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the privilege to serve with him the entire time. Uh

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and he demonstrated extremely competent and able, and

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steady leadership during that extraordinary time. Where

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uh the Commission Staff, uh ERCOT, um the industry.

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Was asked to, to pick ourselves up. Put ourselves back

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together, um and reassure the public. That, that ubiquitous

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essential service that we call electricity will remain

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on and will, will remain reliable. Um he was an extremely,

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is an extremely dynamic leader. And uh the, the

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State owes him a debt of gratitude. And uh I just want

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to make sure that my thanks is demonstrated here. 

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(item:0.1:Commissioner Glotfelty gives congratulations to Chairwoman Jackson) Uh I, I would like to say congratulations to

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you. Um for, for being nominated as Chairman. Around

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this room, there are pictures of many women that have

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Chaired this Commission. And I think it's great that

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uh, that you're joining that club. So we look forward

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to working with you. Same. It's a team effort, appreciate it.

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All right. Thank you. (item:0.1:Commissioner Cobos thanks Commissioner Lake and congratulates Chairwoman Jackson) Um I would like to echo some

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of the statements from my fellow Commissioners. I'd

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like to thank Chairman Lake as well. Um for his hard

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work and leadership at the Commission. Um, after Winter

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Storm Uri, it certainly was one of the most critically

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uh difficult and important times in the Commission's

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history. And stepping into a job like that is, is no

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um is, is no easy job. And um, he stepped in and

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did the best he could to lead our agency um for the

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last two years. And implementing all the Legislation

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that was passed during Winter Storm Uri or post-Winter Storm

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Uri. And um, just like to thank him for his hard work and

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um leadership at the Commission. And, and chairing the

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Commission and also um congratulate you, um Chair Jackson.

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And um, I'm excited for you and I'm here to work with

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you. And wish you the best and we will continue to charge

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forward with all the work we have to do. Well, said.

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I'd like to say one other thing and that is good luck

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getting a new name plate. It might take a while.

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Well, appreciate everybody's kind words. And um, you

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know, just echo my thanks to Peter. And I look forward

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to working together, it's a team effort. And we're fortunate

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that we have so many talented and engaged and committed

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people uh to help the citizens across our state. We

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have a lot of work ahead but um very confident that

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we're going to get it accomplished. Um, so with that

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Mr Journeay, will you please walk us through the Consent

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Items on today's Agenda? (item:0.1:Chairwoman Jackson asks for motion to approve items on Consent Agenda) Good morning Commissioners.

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By individual ballot, the following items were placed

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on your Consent Agenda 10, 13, 16 and 17. And I need

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to announce that uh Commissioner Cobos is recused 

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from Item 16.

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I will entertain a motion to approve the items just

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described by Mr. Journeay.

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So moved. Second. Do I have a second? Do you have a second? Uh all in

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favor, say aye. Aye. Motion passes.

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(item:1:Chairwoman Jackson lays out instructions for public comment) Let's begin with Item No. 1, Public Comment. Oral

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comments related to a specific Agenda Item will be

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heard when that Item is taken up. This is for general

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comments. When we get to oral comments on specific

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Items, stakeholders should not approach the table unless

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an oral argument has been granted or they have been

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invited by a Commissioner. Speakers will be limited

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to 3 minutes each. (item:1:Mr. Journeay confirms there are no public comments) Mr. Journeay, do we have anyone

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from the public signed up to speak. No, ma'am. No one

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has signed up this morning. Okay. If not public comment

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is now closed. I will now call, uh call up 5 Items

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together. Items 2, 5, 6, 7 and 8. Uh Mr. Journeay, will you

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please lay, lay out each of these items? (item:2:51710, Petition of Honey Creek Venetian to amend Western Water Supply Corp's CCN) Item 2 is

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Docket 51710. Petition of Honey Creek Venetian uh

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LLC to amend Western Water Supply Corporation's CCN in

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Collin County by expedited release. A motion to withdraw

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the petition was filed on May 24.

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(item:5:53557, Petition of Honey Creek Venetian to amend Western Water Supply Corp's CCN by expedited release) Item 5 is Docket 53557 petition of Honey Creek Venetian

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LLC to amend Western Water Supply Corporation's CCN in Collin

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County by expedited release. The motion to withdrawal

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was filed on May 24. (item:6:53560, Petition of Honey Creek Venetian to amend Western Water Supply Corp's CCN by expedited release) Item 6 is Docket 53560. Petition

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of Honey Creek Venetian to amend Western Water Supply

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Corporation's CCN in Collin County by expedited release.

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A motion to withdrawal was filed on May 24. (item:7:53648, Petition of Venetian 141 Swisher to amend Western Water Supply Corp's CCN expedited release) Item 7

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is docket 53648 petition of Venetian 141 Swisher, LLC

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to amend Western Water Supply Corporation's CCN in Collin

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County by expedited release. The motion to withdraw

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was filed on May 24. (item:8:53703, Petition of Honey Creek Venetian to amend Western Water Supply Corp's CCN streamline expedited release) And Item 8 is Docket 53703.

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Petition of Honey Creek Venetian to amend

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Western Water Supply Corporation's CCN in Collin County

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by streamline expedited release. A motion to withdrawal

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was filed on May 24th.

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Do we have any thoughts on this one? Uh I certainly

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do. Uh and, and I'm glad we decided to take these uh

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all up together. (item:2:51710, Commissioner McAdams' comments on Honeycreek Venetian's petition to amend) (item:5:53557, Commissioner McAdams' comments on Honeycreek Venetian's petition to amend) (item:6:53560, Commissioner McAdams' comments on Honeycreek Venetian's petition to amend) (item:7:53648, Commissioner McAdams' comments on Honeycreek Venetian's petition to amend) (item:8:53703, Commissioner McAdams' comments on Honeycreek Venetian's petition to amend) I, I think you noticed some uh consistency

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in the motion um related to all 5 dockets. Um In

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my view, there's an issue I believe the Commission

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must address uh before approval of these orders. Primarily

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it is appropriate to utilize. Uh Is it appropriate

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whether, it is appropriate to utilize a different methodology

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to. Uh my apologies, Commissioners. I am looking at

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a different here. Um there is commonality in each of

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these dockets. The petitioner has filed a motion to

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withdraw its petition without prejudice. However, because

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the proposed order, orders were filed in each of the

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dockets before the petitioner filed its motion to withdraw.

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The Commission may grant a motion to withdraw without

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prejudice, only upon finding of good cause. Uh I recommend,

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that the Commission find that good cause exists to

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grant the motion to withdraw and dismiss the uh petitions.

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Because the petitioner no longer requests the release

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of its tract of land. Um and I have a uh motion.

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Uh I would certainly entertain any discussion. But

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in my view, this is a uh clean up effort on the

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5 uh proceedings. And I certainly have a motion to

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help in that. Unless anybody has countervailing thoughts.

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I would just throw in that the other good cause. Well

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this will relieve our work load at the federal district

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court. Great point, Mr. Journeay.

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Uh with that, (item:2:51710, Motion to grant motion to withdraw petitions) (item:5:53557, Motion to grant motion to withdraw petitions) (item:6:53560, Motion to grant motion to withdraw petitions) (item:7:53648, Motion to grant motion to withdraw petitions) (item:8:53703, Motion to grant motion to withdraw petitions) uh I would move that we find that good

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cause exists to grant the petitioner's motion to withdraw

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each of the petitions in the aforementioned dockets

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and grant the motion to withdraw in each of those dockets.

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And dismiss each of the petitions in those dockets

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without prejudice. Do I have a second? Second. All

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in favor, say aye. Aye. Motion passes. Thank you.

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Next up is Item No. 3. Uh Mr. Journeay, will you

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please lay out this item? (item:3:52877, Application of Vineyard Ridge Water Supply for authority to change its rates) Item 3 is Docket 52877.

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The application of Vineyard Ridge Water Supply for

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authority to change its rates. The revised proposed

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order was filed on May 3. Happy to take this one.

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Um (item:3:52877, Commissioner Cobos' thoughts on Vineyard Ridge Water Supply's application)
I believe the Commission should not approve the

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proposed order. Based on my review of the Texas Water

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Code and the facts of the case. The Commission should

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remand the case back to Docket Management for further

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processing. To seek to address whether 10% of the utilities

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ratepayers file complaints. And a hearing was required

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to be set under Texas Water Code, Section 13.1871, Subsection

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I. Under Texas Water Code 13.1872, Subsection C-2.

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A Class D water utility must comply with the procedures

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set forth in Texas Water Code 13.1871 for rate change.

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Uh specifically, Subsection I in, in that uh section

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of the Water Code. Requires that a Hearing be set, even

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if a hearing is not requested. If more than 10% of the

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utilities, ratepayers file complaints. Um Vineyard

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Ridge had 56 connections at the time the application

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was filed to change the rates. Um after ratepayers

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received the first notice of the utilities proposed

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rate change with an effective date of May 1, 2022.

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Twenty-two protests and four motions to intervene were

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filed. After ratepayers received their 2nd notice,

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of the utilities proposed rate change, with an updated

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effective date of August 1, 2022. Twenty-five protests and three

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motions to intervene were filed. Therefore, it appears

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that more than 10% of the rate payers complained about

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the utilities proposed rate, rates before the 91st day

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after the effective date of the rate change. Per the

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Texas Water Code um, section. But it is unclear from

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the record, whether the protests and interventions were

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from the utilities current ratepayers. Therefore, it

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is unclear whether the ALJ was required to set a Hearing.

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Unlike prior Commission, preliminary orders and final

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orders. The ALJ's proposed order does not address Texas

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Water Code 13.1871, Subsection I. Requirement for a hearing

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either through a finding effect, identifying the number

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of complaints or a conclusion of law addressing whether

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a hearing was required under the Water Code. If the

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minimum protest threshold under the Water Code was

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met, the Commission is statutorily required to set

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a hearing. Whether it's a formal hearing at SOAH or

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an informal hearing through a prehearing conference

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at the Commission. And then after the hearing, if the

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Commission finds that the proposed rates are not

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reasonable, the Commission shall set the hearing. So

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it's important to determine whether or not a hearing

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was required. And uh, based on my review of the facts

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it's not, even though it appears there was 10% more

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uh, greater than 10% of ratepayers. We don't know if

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they're actually ratepayers that filed the complaints

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um, ratepayers and utility. (item:3:52877, Motion to remand case back to Docket Management) So I would propose and

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move. That we um, remand the case back to Docket Management

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for further processing, consistent with my assessment.

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Any else? (item:2:51646, Commissioner McAdams’ thoughts on Vineyard Ridge Water Supply application) I agree. I, I'll bow toward your interest

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in, in clarity uh Commissioner. I, I was of the view

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that look. I, I believe we had uh, 10% of the

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ratepayers complaining um, to a degree. But as you

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as you clearly allude to. There's a question of law

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whether that constitutes that, that threshold to require

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that hearing. So um that I, I'd support the motion

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to remand back, and then seek clarity on whether the

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the statutory threshold was met.

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Okay.

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So you have a motion to remain the case to Docket Management

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for further process and consistent with our discussion.

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Uh, do I have a second? I'll second. All in favor, say aye. Aye. 

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Motion passes.

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Next up is Item 4. Mr. Journeay, will you please lay

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out this Item? (item:4:53336, Application of Big Easy Aqua for a CCN in Colorado County) Item 4 is Docket 53336. Application

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of Big Easy Aqua for a CCN in Colorado County. A proposed

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order was filed on May 24. And I have a memo with

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proposed changes to that order.

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Thank you, Steven. Any thoughts on this one? Um, it

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I'll, I'll take it. If anybody uh, if everybody is

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ok with it. (item:4:53336, Commissioner McAdams' comments on Big Easy Aqua's application) Look in, in my view, Big Easy Aqua's application

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is lacking in several respects. Um first, the utility

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has not filed a statutorily required capital improvements

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plan. And second, the utility may not have uh filed

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sufficient firm capital commitments. And third, the

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utility has requested a larger CCN that is, that is

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required for service. We have precedents established

00:14:22.080 --> 00:14:24.639
within this Commission on all three of those respects.

00:14:24.940 --> 00:14:27.899
Big Easy in my view, needs to file capital improvements

00:14:27.908 --> 00:14:30.950
plans. Showing how they plan to serve the area of their

00:14:30.960 --> 00:14:34.440
application. So far they have failed to do so and shown

00:14:34.450 --> 00:14:37.038
in the evidence where their engineering plans indicate.

00:14:37.308 --> 00:14:40.158
That the constructed distribution system can only serve

00:14:40.168 --> 00:14:45.009
40 of the 120 planned lots. Additionally, they have not

00:14:45.019 --> 00:14:47.298
provided evidence indicating that they have firm capital

00:14:47.308 --> 00:14:50.538
commitments to serve the entirety of the 120 planned

00:14:50.548 --> 00:14:55.308
lots. As such um I, I'd entertain any other thoughts

00:14:55.320 --> 00:14:57.649
on this. But I have a motion uh to act on the

00:14:57.658 --> 00:15:01.408
proposed order. Anybody else? I, I would just say.

00:15:01.418 --> 00:15:04.210
(item:4:53336, Commissioner Glotfelty's comments on Big Easy Aqua's application) Um, you know, these uh become more and more challenging

00:15:04.219 --> 00:15:07.619
in my opinion. As we have these rural neighborhoods

00:15:07.629 --> 00:15:10.940
that spring up, you know, are developing. You know

00:15:10.950 --> 00:15:14.428
massive plots of land, hundreds of acres or, or dozens

00:15:14.440 --> 00:15:19.538
of acres. And I think it's right that they are thinking

00:15:19.548 --> 00:15:23.808
long term about how to deploy a water wastewater system

00:15:23.820 --> 00:15:26.509
for the entirety of the community. Unfortunately, as

00:15:26.519 --> 00:15:29.908
you said, our precedent is serve what you have proof

00:15:29.918 --> 00:15:33.590
that you can build. Have money that you can build,

00:15:33.599 --> 00:15:36.590
show that you can own and operate, and then expand.

00:15:36.599 --> 00:15:39.190
And I, you know, maybe that's something we change in

00:15:39.200 --> 00:15:42.219
the future. But I think today the precedent is, is

00:15:42.229 --> 00:15:45.668
pretty firm, and pretty rigid, and pretty right? So

00:15:45.678 --> 00:15:49.469
I agree with you um on the, on the deficiencies of

00:15:49.479 --> 00:15:52.750
this order. Uh and support that motion. With, with that

00:15:52.759 --> 00:15:57.960
(item:4:53336, Commissioner McAdams' follow-up comments on Big Easy Aqua's application) I'd like to also say that, that. Um that puts

00:15:57.969 --> 00:16:00.379
a burden on the Commission or it puts an obligation

00:16:00.389 --> 00:16:05.250
on the Commission. To have our um bureaucratic process

00:16:05.259 --> 00:16:07.820
is as streamlined as possible. So that, that utility

00:16:07.830 --> 00:16:12.109
may come in and amend their CCN, as the expansion of

00:16:12.119 --> 00:16:15.200
that development occurs. So that we can quickly and

00:16:15.210 --> 00:16:19.548
expeditiously approve those expansions and ensure adequate

00:16:19.558 --> 00:16:23.298
and affordable services is provided. So I, I think

00:16:23.308 --> 00:16:26.500
that's, that's 100% alignment with. And we discussed that

00:16:26.509 --> 00:16:29.869
as this precedent was established as we all came on

00:16:29.879 --> 00:16:34.058
to the Commission. I, I'm in agreement. (item:4:53336, Commissioner Cobos' comments on Big Easy Aqua's application) I think the

00:16:34.070 --> 00:16:36.359
information that uh, Commissioner McAdams laid out

00:16:36.369 --> 00:16:38.969
is required by the Water Code and our Commission rules.

00:16:38.979 --> 00:16:42.149
And is consistent with our uh, Commission precedent.

00:16:42.158 --> 00:16:45.369
And um, as you stated Commissioner McAdams, I mean

00:16:45.379 --> 00:16:47.599
the utility has the ability to come back in and amend

00:16:47.609 --> 00:16:50.690
their CCN. As they are able to prove up the

00:16:50.700 --> 00:16:53.219
that service is needed for those additional plots of

00:16:53.229 --> 00:16:55.950
land. And so the door is not closed. It's just, you

00:16:55.960 --> 00:16:58.840
know we're, we're mitigating. We're, we're 

00:16:58.849 --> 00:17:03.019
following our process. To ensure that the service is

00:17:03.029 --> 00:17:06.118
provided to the public that needs it at the time. But

00:17:06.130 --> 00:17:08.529
uh the utility is always welcome to come back. And provide

00:17:08.539 --> 00:17:10.400
us with additional information and expand their service

00:17:10.410 --> 00:17:12.140
territory when they can do so.

00:17:14.358 --> 00:17:18.479
(item:4:53336, Mr. Journeay's comments on Big Easy Aqua's application) Chairman, can I make a point? Yes. I appreciate you talking

00:17:18.489 --> 00:17:21.597
about expediting our bureaucratic process. Our Staff

00:17:21.608 --> 00:17:24.739
works hard and we will never be streamlined. Until the

00:17:24.749 --> 00:17:29.318
regulated community educates themself on the law and

00:17:29.328 --> 00:17:33.689
our rules. And our filing packages and presents applications

00:17:34.410 --> 00:17:35.529
that are.

00:17:37.489 --> 00:17:39.699
I can't use the word I wanna use.

00:17:42.509 --> 00:17:46.289
That, that are competent. You know, Steven I, I under.

00:17:46.519 --> 00:17:52.439
(item:4:53336, Commissioner McAdams' thoughts on Big Easy Aqua's application) I appreciate the position of tough love. Do you? Um but um

00:17:54.170 --> 00:17:57.519
we, we've got all shapes and sizes of utilities. Especially

00:17:57.529 --> 00:18:00.098
in this, this area. Especially under the Water code.

00:18:00.328 --> 00:18:04.699
And um and we will not be rubber stamping any applications.

00:18:04.709 --> 00:18:08.979
But um we, we've made great efforts and that's part

00:18:08.989 --> 00:18:10.858
of our public engagement. Especially over the last

00:18:10.868 --> 00:18:15.130
two years, even in water. Um with our own uh internal

00:18:15.140 --> 00:18:18.059
divisions within the agency. To outreach and inform

00:18:18.068 --> 00:18:20.858
these utilities or prospective utilities of what is

00:18:20.868 --> 00:18:23.680
required. So that they know the information they need,

00:18:23.689 --> 00:18:26.394
need to come in the door with. So that they can apply,

00:18:26.404 --> 00:18:29.265
we can review and give expeditious approval and, or

00:18:29.275 --> 00:18:32.934
denial. Or offer up a remedy to, to cure the deficiencies.

00:18:33.255 --> 00:18:36.493
Um so I think we're doing the right things. It's just

00:18:36.505 --> 00:18:40.634
a matter of establishing that climate of regulatory

00:18:40.644 --> 00:18:45.250
oversight in this area under PUC uh guidelines. Which

00:18:45.259 --> 00:18:47.890
is different than other agencies in the past. But we're

00:18:47.900 --> 00:18:49.969
gonna get there. That's true, sir. I'll just note that

00:18:49.979 --> 00:18:52.828
many of these applications are put together by registered

00:18:52.838 --> 00:18:55.910
professional engineers or licensed attorneys. I hold

00:18:55.920 --> 00:18:59.578
both of those certificates in this State. I would say

00:18:59.588 --> 00:19:02.670
that I don't know that they are living up to their

00:19:02.680 --> 00:19:03.559
obligations. Absolutely.

00:19:05.199 --> 00:19:07.989
(item:4:53336, Chairwoman Jackson's comments on Big Easy Aqua's application) When I think further to your point, the importance

00:19:08.000 --> 00:19:11.108
here is that we have alignment. And that we move forward

00:19:11.118 --> 00:19:14.880
and make sure that the facilities that are being provided

00:19:14.890 --> 00:19:19.809
and being planned. Have the necessary elements for success

00:19:19.818 --> 00:19:22.809
and that being the Financial Assurance and the Capital

00:19:22.818 --> 00:19:25.703
improvement plan. And that the, the same time, you

00:19:25.713 --> 00:19:28.025
know, we're working as a staff and as you mentioned

00:19:28.035 --> 00:19:31.904
very hard uh per the guidelines and the standards to

00:19:31.914 --> 00:19:36.334
review those. So in my, in my mind it's it's a, it's

00:19:36.344 --> 00:19:39.414
a collaborative effort moving forward. To make sure

00:19:39.424 --> 00:19:42.334
that we have the information we need. So that the public

00:19:42.344 --> 00:19:46.844
is protected and also to be able to provide that service

00:19:46.854 --> 00:19:51.305
in a expeditious manner as we can. So, but thank you so

00:19:51.314 --> 00:19:55.670
much for bringing up this points. (item:4:53336, Connie Corona with Commission Staff's comments on Big Easy Aqua's application) Madam Chair, um may

00:19:55.680 --> 00:19:59.269
I just put a fine point on the comments of Commissioner

00:19:59.279 --> 00:20:04.588
McAdams. Um to state that he was referring both to our

00:20:04.598 --> 00:20:08.969
Division of Utility Outreach. Which exists um to help

00:20:08.979 --> 00:20:12.289
utilities who are not familiar with our processes to

00:20:12.299 --> 00:20:15.160
work their way through them. And of course, our subject

00:20:15.170 --> 00:20:19.328
matter experts remain available to answer any questions.

00:20:19.338 --> 00:20:23.689
And Utility Outreach can help um the applicants get

00:20:23.699 --> 00:20:25.949
in touch with those folks. To answer any questions they

00:20:25.959 --> 00:20:29.729
might have, before they bring in their application. Absolutely.

00:20:30.219 --> 00:20:32.680
I think that, that's an excellent point is that we are

00:20:32.689 --> 00:20:37.618
a resource. And uh the Staff is well respected across

00:20:37.630 --> 00:20:41.500
the State and uh has worked hard, and will continue

00:20:41.509 --> 00:20:44.549
to work hard. To make sure that we have again that those,

00:20:44.559 --> 00:20:47.239
those that information that we need. To make the decisions

00:20:47.250 --> 00:20:50.650
going forward to make sure we have the reliable service

00:20:50.660 --> 00:20:51.689
and the adequate service.

00:20:54.088 --> 00:20:57.180
So with that, you have a motion. I do. (item:4:53336, Motion to remand case back to Docket Management) Uh I would move not to act on the proposed

00:20:57.189 --> 00:20:59.578
order and remand it to docket management. So that Big

00:20:59.588 --> 00:21:03.279
Easy Aqua may file a capital improvements plan. And specify

00:21:03.289 --> 00:21:06.568
whether the firm capital commitments includes all phases

00:21:06.578 --> 00:21:10.318
of construction. And reduce the requested CCN acreage

00:21:10.328 --> 00:21:13.420
to those areas. That require a CCN for water service

00:21:13.430 --> 00:21:17.420
by Big Easy Aqua. Do I have a second? Second. All

00:21:17.469 --> 00:21:20.380
in favor, say aye. Aye. Motion passes.

00:21:25.699 --> 00:21:30.059
We've already taken up Items 5, 6, 7 and 8. Next up

00:21:30.068 --> 00:21:33.279
is Item 9. Mr. Journeay, will you lay out this Item 

00:21:33.289 --> 00:21:37.059
please? (item:9:54121, Application of Harrison Williams for temporary rates for nonfunctioning utility) Item 9 is Docket 54121. The application

00:21:37.068 --> 00:21:40.000
of Harrison Williams for temporary rates for nonfunctioning

00:21:40.009 --> 00:21:43.509
utility. A revised proposed order was filed on

00:21:43.519 --> 00:21:47.078
May 19. Uh Chairman Jackson has a memo and I have

00:21:47.088 --> 00:21:50.939
a memo with proposed changes to the order. Thank you. I did file,

00:21:50.949 --> 00:21:54.009
file a memo. (item:9:54121, Chairwoman Jackson's comments on Harrison Williams' application) Um here we have an application for temporary

00:21:54.019 --> 00:21:58.209
rates for a water utility. That was filed by the temporary

00:21:58.219 --> 00:22:01.469
manager Harrison Williams. Commission Staff has reviewed

00:22:01.479 --> 00:22:04.059
the record and worked with Mr. Williams to develop an

00:22:04.068 --> 00:22:07.769
agreed temporary rates. That are similar to the applications

00:22:07.779 --> 00:22:11.809
proposed rates. I agree with Commission Staff's recommendation

00:22:11.818 --> 00:22:14.640
that the temporary rates are reasonable. However, I

00:22:14.650 --> 00:22:17.868
did notice the Commission normally includes an additional

00:22:17.880 --> 00:22:21.598
ordering paragraph. That provides guidance on our reconciliation

00:22:21.608 --> 00:22:25.049
process for temporary rates. And this ordering paragraph

00:22:25.059 --> 00:22:28.858
was missing from the revised proposed order. Uh to make

00:22:28.868 --> 00:22:31.390
sure that this order is consistent with previous Commission

00:22:31.400 --> 00:22:34.439
orders on temporary rates. I'm suggesting adding this

00:22:34.449 --> 00:22:37.858
missing ordering paragraph. Um any additional thoughts

00:22:37.868 --> 00:22:38.608
on this one?

00:22:40.640 --> 00:22:43.959
I'm in agreement. I agree. Me too. I, I thought your memo

00:22:43.969 --> 00:22:47.160
memo captured the mechanics of how to move forward.

00:22:47.170 --> 00:22:51.598
Um and uh if you would entertain it, uh Madam Chair.

00:22:51.608 --> 00:22:54.400
(item:9:54121, Motion to approve proposed order as modified) I'd move to approve the proposed order as modified

00:22:54.410 --> 00:22:58.699
by Commission counsel and your memo. I would second that. Thank you. Okay

00:22:58.709 --> 00:23:01.519
All in favor, say aye. Aye. Motion passes.

00:23:05.449 --> 00:23:09.269
Item 10 was consented. Next Item is Item 11. Mr. Journeay, 

00:23:09.289 --> 00:23:13.759
will you lay out this item? (item:11:55098, Petition for an order appointing a temp. manager Channel Oaks Water System) Item 11 is Docket 55098.

00:23:13.769 --> 00:23:16.239
Petition for an order appointing a temporary manager

00:23:16.250 --> 00:23:19.140
for Channel Oaks Water System. Commission Staff filed

00:23:19.150 --> 00:23:21.670
a petition to appoint a temporary manager for the Channel

00:23:21.680 --> 00:23:23.979
Oaks Water System. And we have a Hearing scheduled

00:23:23.989 --> 00:23:24.660
on that petition.

00:23:35.979 --> 00:23:38.858
(item:11:55098, Chairwoman Jackson calls for recess to hold separate hearing) And we will recess this meeting of the PUC to hold a separate

00:23:38.868 --> 00:23:40.559
Hearing on this Item.

00:23:42.640 --> 00:23:44.969
(item:11:55098, Chairwoman Jackson calls merits hearing to order) This meeting of the Public Utility Commission of Texas

00:23:44.979 --> 00:23:47.328
will come to order. For the Merits Hearing in Docket

00:23:47.509 --> 00:23:51.709
No. 55098, which has been duly posted with the Secretary

00:23:51.719 --> 00:23:55.959
of the State of Texas for June 15, 2023. I will now

00:23:55.969 --> 00:23:59.880
turn it over to our Commission ALJ for the Administration

00:23:59.890 --> 00:24:02.269
of the Hearing. (item:11:55098, Commission ALJ lays out docket on petition for appointing a temporary manager for Channel Oaks WS) Good morning Commissioners. I call

00:24:02.279 --> 00:24:06.199
to order Docket No. 55098, which is Commission Staff's

00:24:06.209 --> 00:24:08.588
petition for an order appointing a temporary manager

00:24:08.598 --> 00:24:12.279
for Channel Oaks Water System LLC. Continuing until

00:24:12.289 --> 00:24:14.828
the Commission orders otherwise or until a receiver

00:24:14.838 --> 00:24:17.910
is appointed by the appropriate court. My name is Katie

00:24:17.920 --> 00:24:19.828
Marks, assisting the Commissioners. And the purpose

00:24:19.838 --> 00:24:22.828
of this Hearing is to determine whether a temporary

00:24:22.838 --> 00:24:25.709
manager should be appointed. We had a prehearing conference

00:24:25.719 --> 00:24:28.519
yesterday and I admitted the 14 exhibits prefiled

00:24:28.529 --> 00:24:33.338
by Commission Staff on June 5, 2023. I also admitted

00:24:33.348 --> 00:24:36.568
the 3 exhibits for Channel Oak, Oaks which are the

00:24:36.670 --> 00:24:39.588
3 items filed by Channel Oaks on June 6, 

00:24:39.598 --> 00:24:43.239
2023. At this time, we'll take the appearances of the

00:24:43.250 --> 00:24:45.118
party starting with Commission Staff.

00:24:47.949 --> 00:24:48.660
Good morning. I'm sorry. 

00:24:51.509 --> 00:24:53.880
(item:11:55098, Introductions from Mildred Anaele, Commission Staff & Pauline Jones, Channel Oaks WS) Good morning, Mildred Anaele for Commission Staff.

00:24:55.939 --> 00:24:59.939
For the utility? Oh, I'm sorry. Pauline Jones, uh Channel

00:24:59.949 --> 00:25:04.430
Oaks Water System. Um we will move into opening statements,

00:25:04.439 --> 00:25:08.799
Commission Staff. Good morning here. Um, (item:11:55098, Opening statement from Mildred Anaele, Commission Staff) we are here

00:25:08.809 --> 00:25:11.549
this morning to address Staff's petition to appoint

00:25:11.559 --> 00:25:15.479
a temporary manager to Channel Oaks Water System, LLC.

00:25:15.809 --> 00:25:20.809
Uh, and I will refer to them as COWS moving forward.

00:25:20.818 --> 00:25:25.689
Um, on May 2, 2023, the Commission issued an order modifying

00:25:25.699 --> 00:25:29.130
the emergency, uh emergency order issued by the Executive

00:25:29.140 --> 00:25:34.959
Director in this matter. On February 23rd, 2023, ordering

00:25:34.969 --> 00:25:39.338
COWS to file a sworn affidavit, stating the, stating the

00:25:39.348 --> 00:25:43.789
identity of an individual who has the authority

00:25:43.799 --> 00:25:48.199
to manage COWS. COWS has failed to file such an affidavit

00:25:48.209 --> 00:25:52.420
or otherwise identify a manager of COWS. Additionally

00:25:52.430 --> 00:25:57.170
on May 25, 2023, the Commission requested the Attorney

00:25:57.180 --> 00:26:00.858
General's Office bring suit to appoint a receiver. Because

00:26:00.868 --> 00:26:03.660
of COWS's failure to comply with the Commission's order,

00:26:03.699 --> 00:26:06.500
requiring it to identify a manager. And because the

00:26:06.509 --> 00:26:09.949
process to appoint a receiver may likely be a lengthy

00:26:09.959 --> 00:26:12.969
one. Commission Staff is requesting that the Commission

00:26:12.979 --> 00:26:17.578
issue an order identifying CSWR Texas as temporary

00:26:17.588 --> 00:26:21.519
manager of Channel Oaks. For a time period identified

00:26:21.529 --> 00:26:24.529
by the Commission or until a receiver is appointed.

00:26:24.539 --> 00:26:27.650
To ensure the continued operation of the utility and

00:26:27.660 --> 00:26:30.328
provision of continuous and adequate service to the

00:26:30.338 --> 00:26:31.059
customers.

00:26:32.828 --> 00:26:35.890
(item:11:55098, ALJ Marks swears in Pauline Jones, with Channel Oaks WS) Uh, Miss Jones. Yesterday, we discussed your capacity

00:26:35.900 --> 00:26:38.118
with the water system and your role as a representative

00:26:38.130 --> 00:26:40.598
here today. Given your position, I'm gonna go ahead

00:26:40.608 --> 00:26:43.469
and swear you in before we move into your opening statement.

00:26:43.729 --> 00:26:45.920
Um, if you'll raise your right hand and state your name

00:26:45.930 --> 00:26:48.729
for the record, please. Pauline Jones. Do you swear or

00:26:48.739 --> 00:26:50.750
affirm to tell the truth, the whole truth and nothing

00:26:50.759 --> 00:26:53.259
but the truth in this proceeding? I do. Thank you. You

00:26:53.269 --> 00:26:55.250
may proceed with an opening statement, if you have one.

00:26:55.630 --> 00:27:01.779
(item:11:55098, Opening Statement from Pauline Jones, Channel Oaks WS) Um my only statement is that um, uh. On May 11, uh

00:27:01.789 --> 00:27:04.699
Mary Maxey with the Channel Oaks Water System, uh the

00:27:04.709 --> 00:27:08.640
managing member of the LLC. Filed an affidavit indicating

00:27:08.650 --> 00:27:11.009
that Channel Oaks Water System had agreed to work with

00:27:11.019 --> 00:27:14.900
PUC. To secure an entity qualified to take over the

00:27:14.910 --> 00:27:18.699
Channel Oaks Water System. Um, that Pauline Jones,

00:27:18.709 --> 00:27:23.578
Keith Jones and Aaron Johnson, a Class B licensed operator.

00:27:23.588 --> 00:27:26.640
Have been identified as the new operators responsible

00:27:26.650 --> 00:27:31.170
for managing the utility. Um on May 16th, the PUC

00:27:31.180 --> 00:27:34.910
came out and discussed with property owners from Channel

00:27:34.920 --> 00:27:38.789
Oak subdivision. The um procedures that would be required

00:27:38.799 --> 00:27:42.689
to complete a sale, transfer, merger of the CCN. And

00:27:42.699 --> 00:27:45.809
explained that it could take up to a year to complete

00:27:45.828 --> 00:27:49.539
that actual transfer over. Um we feel like that we

00:27:49.549 --> 00:27:52.989
have identified the individual responsible to manage

00:27:53.000 --> 00:27:56.108
the utility and we have not violated the Commission's

00:27:56.118 --> 00:28:03.348
final order in Docket No. 54678. Um the Channel

00:28:03.358 --> 00:28:06.598
Oaks Water system was never notified, that the PUC

00:28:06.608 --> 00:28:09.160
was requesting that the Attorney General bring suit

00:28:09.170 --> 00:28:12.059
against Channel Oaks water system for the appointment

00:28:12.068 --> 00:28:17.588
of a receiver. Um I personally, Pauline Jones. Met with

00:28:17.598 --> 00:28:21.769
Phyllis Brown, who was contracted by the PUC to ensure

00:28:21.779 --> 00:28:24.838
compliance on all billing and record keeping issues

00:28:24.848 --> 00:28:28.598
with managing the water system. Um I trained with her.

00:28:28.608 --> 00:28:31.269
I have been working with Channel Oaks Water System

00:28:31.279 --> 00:28:36.078
since October of 2021. When PGMS was managing the

00:28:36.088 --> 00:28:40.348
system. And is responsible for all of the violations

00:28:40.358 --> 00:28:44.380
that we had leading up to there, uh removal or walk

00:28:44.390 --> 00:28:49.029
away from the system. And um I have been instrumental

00:28:49.039 --> 00:28:51.910
in bringing the water system into compliance with the

00:28:51.920 --> 00:28:57.189
TCEQ, the Groundwater Commission and the PUC. Since

00:28:57.199 --> 00:29:00.880
um I took over the water system in February, February

00:29:00.890 --> 00:29:05.368
8th of 2023. Um I have been working through the legal

00:29:05.380 --> 00:29:08.910
issues. Surrounding the Brian Maxey, DBA Channel Oaks

00:29:08.920 --> 00:29:13.838
Water System. That currently owns the CCN. And the uh

00:29:13.848 --> 00:29:17.108
max the assets, the assets from the Mac, Brian Maxey

00:29:17.118 --> 00:29:20.509
estate were not distributed properly. To the heirs or

00:29:20.519 --> 00:29:23.890
beneficiaries before closing the estate. And Channel

00:29:23.900 --> 00:29:27.299
Oaks Water System CCN and all assets of the Channel

00:29:27.309 --> 00:29:29.789
Oaks Water System should have been transferred out

00:29:29.799 --> 00:29:33.930
of the DBA at Brian Maxey's death. Um Mary Maxey and

00:29:33.939 --> 00:29:36.358
Carolyn Maxey have both stated that they are not the

00:29:36.368 --> 00:29:39.858
owner or the operator of the water system. And Channel

00:29:39.868 --> 00:29:43.469
Oaks Water System, LLC has been managing and operating

00:29:43.479 --> 00:29:46.348
the water system, and has been providing adequate water

00:29:46.358 --> 00:29:50.239
service to water customers. Um We are committed to

00:29:50.250 --> 00:29:53.949
continuing to work directly with the PUC. To secure

00:29:53.959 --> 00:29:59.500
an entity qualified to take over the CCN. Thank you

00:29:59.509 --> 00:30:01.430
Uh We'll move into the witnesses. (item:11:55098, Commission Staff and Channel Oaks WS state they do not have any witnesses) Commission Staff

00:30:01.439 --> 00:30:04.430
do you have any witnesses? No, we do not. Ms. Jones,

00:30:04.439 --> 00:30:06.430
do you have any additional witnesses? No, I do not.

00:30:06.439 --> 00:30:08.578
Thank you. Commissioners, do you have any questions?

00:30:09.068 --> 00:30:11.410
Yes. I, I have a few questions. Oh, sorry. You said

00:30:15.309 --> 00:30:19.150
Commissioners. Oh, I apologize. (item:11:55098, Commissioner McAdam's has a question for Commission Staff) As to the issue of notice um are, are they

00:30:19.160 --> 00:30:21.799
required to be noticed? No. Okay.

00:30:24.699 --> 00:30:27.838
There will be (inaudible) one of the petition to appoint a reserve

00:30:27.880 --> 00:30:30.328
as follow. I understand. Yeah. Okay.

00:30:32.750 --> 00:30:37.000
Any other questions, Commissioners? I don't think so. Um, we'll move into

00:30:37.009 --> 00:30:37.890
closing statements.

00:30:48.890 --> 00:30:53.578
(item:11:55098, Closing statement from Mildred Anaele with Commission Staff) Once again, um Commissioners. We are requesting that

00:30:53.588 --> 00:30:56.430
the Commission issue an order to appoint TSWR as

00:30:56.439 --> 00:30:59.868
temporary manager until the receivership process is

00:30:59.880 --> 00:31:04.709
concluded at the appropriate court. Uh the evidence

00:31:04.719 --> 00:31:08.180
on the record, shows that COWS failed to comply with

00:31:08.189 --> 00:31:13.969
the Commission issued order uh, in Docket 54678. Not

00:31:13.979 --> 00:31:19.088
once but twice. Um which require COWS to identify the

00:31:19.098 --> 00:31:23.489
appropriate individual. Um they state that they did

00:31:23.500 --> 00:31:26.430
but they did not specifically say who was to manage.

00:31:26.439 --> 00:31:29.348
They listed people, but they did not list who was the

00:31:29.358 --> 00:31:30.949
manager. Um

00:31:32.588 --> 00:31:35.890
because of the continued ambiguity, uh ambiguity.

00:31:38.279 --> 00:31:43.019
Um that remains as to who is in charge um of ensuring

00:31:43.029 --> 00:31:47.769
the as who is in. Sorry. Let me restart that. No problem.

00:31:48.358 --> 00:31:51.949
Um because of the continued ambiguity that remains

00:31:51.959 --> 00:31:55.250
as to who is in charge. Of ensuring the continued operation

00:31:55.259 --> 00:31:58.009
of the utility and the provision of continuous and

00:31:58.019 --> 00:32:02.209
adequate service to the customers. And because CSR

00:32:02.588 --> 00:32:07.439
uh, CSWR stands willing and able to temporarily manage

00:32:07.449 --> 00:32:11.549
COWS, and for the benefit of the customers in general

00:32:11.608 --> 00:32:13.739
Commission Staff requests that the Commission issue

00:32:13.750 --> 00:32:17.789
an order appointing CSWR as temporary manager of COWS,

00:32:17.799 --> 00:32:22.189
effective today, June 15, 2023. Continuing until the

00:32:22.199 --> 00:32:24.568
Commission orders otherwise or until a receiver is

00:32:24.578 --> 00:32:28.140
appointed. Thank you. Miss Jones, do you have a closing 

00:32:28.150 --> 00:32:33.838
statement? Yes. (item:11:55098, Closing statement from Pauline Jones with Channel Oaks WS) Um my only statement here. Is that um

00:32:34.140 --> 00:32:39.779
in February, CSWR we spoke with Sean Nichols and

00:32:39.789 --> 00:32:44.150
uh tried to have him take over the temporary management

00:32:44.160 --> 00:32:48.578
and operation of COWS. Um when, when he contacted Ms.

00:32:48.588 --> 00:32:52.049
Maxey back in February. Um they could have saved the

00:32:52.059 --> 00:32:57.229
homeowners and myself a lot of time and energy. But

00:32:57.239 --> 00:33:00.650
they were not willing to provide a licensed water operator

00:33:00.660 --> 00:33:04.259
or take over the management until they owned the utility.

00:33:04.500 --> 00:33:08.868
It is now in the statement from the uh that, that's

00:33:08.880 --> 00:33:15.049
in the docket. That Mr. uh Todd Thomas intends to purchase

00:33:15.059 --> 00:33:18.608
Channel Oaks through a STM proceeding. With the 

00:33:18.618 --> 00:33:22.969
PUC, um he made that statement on June 1, in the

00:33:22.979 --> 00:33:27.118
docket filings. And my question is this if, if he is

00:33:27.130 --> 00:33:30.634
interested in purchasing in doing a sale transfer

00:33:30.644 --> 00:33:36.334
man, uh merger. Then why not allow us the opportunity

00:33:36.354 --> 00:33:39.625
as the water system owner of the CCN for the 

00:33:39.634 --> 00:33:43.164
last 20 years. Although the PUC states that we don't 

00:33:43.174 --> 00:33:48.005
own it because it's in Brian Maxey's name, instead of

00:33:48.015 --> 00:33:53.568
the LLC. Why not negotiate with us and let us. We're

00:33:53.578 --> 00:33:57.868
more than happy to do a sale transfer, merger and sign

00:33:57.880 --> 00:34:01.689
it over to CSWR. But I don't want to give 

00:34:01.699 --> 00:34:05.390
it away. And if it's gonna go into receivership, then

00:34:05.660 --> 00:34:09.570
so be it. But I don't feel I need a temporary manager,

00:34:09.579 --> 00:34:14.809
to come in here and take over my business and run it.

00:34:14.820 --> 00:34:17.969
And for the property owners, I am providing that service

00:34:17.978 --> 00:34:20.878
for the property owners. I have been billing, I have

00:34:21.119 --> 00:34:24.840
put the TCEQ charges. I have done everything that

00:34:24.849 --> 00:34:28.280
the Public Utility Commission has asked me to do. And

00:34:28.289 --> 00:34:31.929
I don't see any reason. If they take it over with receivership,

00:34:31.938 --> 00:34:34.840
then so be it. We'll turn it over. But I don't see

00:34:34.849 --> 00:34:38.889
any reason to authorize them to come in and take over.

00:34:38.898 --> 00:34:42.800
And do what meter readings and billing? We're already

00:34:42.809 --> 00:34:47.648
doing that. So that's my statement. Thank you. If there's

00:34:47.659 --> 00:34:51.010
nothing else from anyone? One question of Staff. Has

00:34:51.019 --> 00:34:54.449
service meaningfully uh improved since this entire

00:34:54.458 --> 00:34:58.849
process began? I would like to ask um Celia (inaudible)

00:34:59.148 --> 00:35:04.159
to also step up. Great. But she'll have more information.

00:35:19.340 --> 00:35:21.409
Good morning. Will you please state your name for the

00:35:21.418 --> 00:35:24.438
record? Celia Eves for Commission Staff Division

00:35:24.449 --> 00:35:26.760
of Utility Outreach. I'm gonna swear you in as

00:35:26.769 --> 00:35:29.280
a witness. Uh, please raise your right hand. Do you

00:35:29.289 --> 00:35:31.250
swear, affirm to tell the truth, the whole truth and

00:35:31.260 --> 00:35:33.949
nothing but the truth in this proceeding? I do. Thank

00:35:33.958 --> 00:35:34.128
you.

00:35:35.769 --> 00:35:39.829
(item:11:55098, Commissioner McAdams' follow-up question to Commission Staff) Has the question is, has service meaningfully 

00:35:39.840 --> 00:35:44.978
improved since the PUC process was initiated? (item:11:55098, Celia Eves with Commission Staff) Since the 

00:35:44.989 --> 00:35:48.139
the PUC process, uh since we've uh have been working

00:35:48.148 --> 00:35:50.688
with the utility and stuff. You know, we, we have sent

00:35:50.699 --> 00:35:54.728
since Ms. Jones stated uh assistance contract. There are pending

00:35:54.739 --> 00:35:58.539
violations that we are aware of that are still pending

00:35:58.550 --> 00:36:01.119
with the Texas Commission on Environmental Quality.

00:36:01.530 --> 00:36:05.550
Um that I believe are, are still relevant issues at

00:36:05.559 --> 00:36:09.090
hand with regards to the continuous um an adequate

00:36:09.099 --> 00:36:11.840
service related to providing service to the customers.

00:36:12.010 --> 00:36:15.769
Um Ms. Jones stated that we, the division of utility

00:36:15.780 --> 00:36:19.800
outreach, as well as our public engagement, Mike Hogan and

00:36:19.809 --> 00:36:21.878
stuff. We actually attended a meeting, held a meeting

00:36:21.889 --> 00:36:27.260
with the customers of Channel Oaks Water. With regards

00:36:27.269 --> 00:36:32.360
to um a lot of, I guess concerns from the customers.

00:36:32.369 --> 00:36:37.090
About reliability, about understanding, about not understanding

00:36:37.099 --> 00:36:41.378
what was going on. But as well as issues with regards

00:36:41.389 --> 00:36:46.019
to how billing was occurring. As well as you know,

00:36:46.030 --> 00:36:49.418
who they needed, who was going to respond to specific

00:36:49.429 --> 00:36:51.780
requests for service. So there's a lot of, I guess

00:36:51.789 --> 00:36:55.000
customer concern with that regard. We actually attended

00:36:55.010 --> 00:36:58.469
that meeting. To try to make sure that we would clarify the

00:36:58.648 --> 00:37:01.789
PUC's jurisdiction. With regards to trying to work to

00:37:01.800 --> 00:37:04.128
ensure that there's continuous and adequate service.

00:37:04.277 --> 00:37:08.706
With regards to the fact that because there is an entity

00:37:08.717 --> 00:37:11.826
or someone out there. Representing that, you know, they

00:37:11.835 --> 00:37:14.126
are providing service for compensation. There's still

00:37:14.135 --> 00:37:18.967
the issue that this entity does not hold the CCN to

00:37:18.976 --> 00:37:24.416
provide service. And as the record will show, what's

00:37:24.427 --> 00:37:29.436
In the docket and stuff related to Docket 55098.

00:37:29.447 --> 00:37:32.914
And it's actually Item No. 2, Exhibit 2 and

00:37:32.923 --> 00:37:35.384
3. If you look at those exhibits, I think this

00:37:35.393 --> 00:37:39.063
is part of the concern. With regards to trying to determine

00:37:39.072 --> 00:37:42.463
what is going on and how we actually reach meaningful

00:37:42.474 --> 00:37:46.092
resolution for the customers. And ensure that there's

00:37:46.103 --> 00:37:48.793
continuous and adequate service. There's been a lot

00:37:48.802 --> 00:37:52.353
of unfortunately, in the emails was very lengthy email

00:37:52.364 --> 00:37:56.242
chain that's in that exhibit. With regards to who the

00:37:56.253 --> 00:38:01.000
owner is. The Maxey family has had an ongoing dispute

00:38:01.010 --> 00:38:05.110
about who actually is responsible for the utility. And

00:38:05.121 --> 00:38:08.581
who actually has the authority to potentially sell

00:38:08.590 --> 00:38:12.331
the assets of this utility. So the Division of Utility

00:38:12.340 --> 00:38:15.400
Outreach, we have reached out to numerous neighboring

00:38:15.409 --> 00:38:18.800
utilities. With regards to either doing temporary management,

00:38:18.811 --> 00:38:22.500
interest in the utility. But the question remains that

00:38:22.568 --> 00:38:26.217
even if we were to identify someone, potentially. There's

00:38:26.228 --> 00:38:28.847
still the issue of who would be authorized to actually

00:38:28.856 --> 00:38:31.376
transfer the assets. And because of that, you know

00:38:31.387 --> 00:38:34.947
there is concern. That are we going to have someone

00:38:34.958 --> 00:38:38.577
in place again to even address the transfer of the

00:38:38.586 --> 00:38:42.257
utility. But also address even some of the violations

00:38:42.268 --> 00:38:45.307
that are, that are related to what might be considered

00:38:45.318 --> 00:38:49.244
significant infrastructure improvements. For instance and again,

00:38:49.253 --> 00:38:54.753
this is not PUC, it's a Texas TCEQ compliance violation

00:38:54.764 --> 00:38:58.353
with regards to well capacity. So there are improvements

00:38:58.364 --> 00:39:02.485
there are issues. With regards to whether the lines

00:39:02.494 --> 00:39:05.304
are actually, that the lines actually are not properly buried.

00:39:05.313 --> 00:39:08.284
And so there's obviously infrastructure upgrades that

00:39:08.293 --> 00:39:11.144
need to be included and conducted with this utility.

00:39:11.264 --> 00:39:13.905
So it's important to identify someone who's actually

00:39:13.914 --> 00:39:17.391
going to have the ability to actually make those infrastructures

00:39:17.402 --> 00:39:19.451
improvement. To ensure that there's going to be continuous

00:39:19.460 --> 00:39:23.291
and adequate service to these customers. But again,

00:39:23.311 --> 00:39:25.731
with regards to trying to work to find a long term

00:39:25.740 --> 00:39:28.701
solution. You know, it potentially is again, someone

00:39:28.710 --> 00:39:31.740
needs to have the authority to actually hold the CCN.

00:39:31.751 --> 00:39:35.201
To legally be charging these customers and actually

00:39:35.210 --> 00:39:38.411
have the ability to invest in the needed infrastructure

00:39:38.501 --> 00:39:40.632
to ensure this continuous inadequate service.

00:39:44.329 --> 00:39:47.760
Anything else? Thank you Judge. (item:11:55098, ALJ adjourns hearing) And we are adjourned. Thank

00:39:47.769 --> 00:39:48.019
you.

00:39:52.829 --> 00:39:52.889
(silence)

00:40:09.090 --> 00:40:12.590
(item:11:55098, Chairwoman Jackson calls to adjourn merits hearing) Merit's Hearing in Docket 55098 is hereby adjourned

00:40:12.599 --> 00:40:14.969
at 10:12am.

00:40:17.329 --> 00:40:20.010
(item:11:55098, Chairwoman Jackson reconvenes open meeting) We will now reconvene the open meeting of the Public Utility

00:40:20.019 --> 00:40:26.039
Commission at 10:12am. Resuming with Docket No.

00:40:26.050 --> 00:40:32.148
11, with item 11, Docket 55098. Um, given what we've

00:40:32.159 --> 00:40:34.719
just heard, does anyone have any thoughts on this 

00:40:35.079 --> 00:40:36.228
uh or a motion?

00:40:37.989 --> 00:40:40.378
(item:11:55098, Commissioner Cobos' thoughts on the hearing) Commissioner McAdams, thank you for asking those questions.

00:40:40.389 --> 00:40:42.820
I think it highlighted a lot of very important information.

00:40:43.349 --> 00:40:47.030
Um and, and thank you Sheila. For your um feedback

00:40:47.039 --> 00:40:49.938
I think, you know, there's. And I appreciate the deep

00:40:49.949 --> 00:40:53.590
desire by um, Ms. Jones. And to want to continue to

00:40:53.599 --> 00:40:57.139
operate the utility and, and, um you know their,

00:40:57.148 --> 00:40:59.199
their efforts and hard work. That they've you know

00:40:59.208 --> 00:41:04.000
put forth in trying to maintain this um, utility and

00:41:04.010 --> 00:41:06.579
and service to the customers. It just appears that

00:41:06.909 --> 00:41:09.668
there's still a lot of underlying issues here. With

00:41:09.679 --> 00:41:13.070
respect to the, the law and legalities of who, who's

00:41:13.079 --> 00:41:18.079
the CCN holder. And that's a fundamental issue for

00:41:18.099 --> 00:41:21.369
us, right? To ensure that we have a clear CCN holder

00:41:21.378 --> 00:41:25.739
that can um, be you know responsive to the Commission.

00:41:26.019 --> 00:41:31.688
That can um be responsible for um providing service

00:41:31.699 --> 00:41:34.550
to the customers, continuous and adequate service.

00:41:34.559 --> 00:41:37.909
All of those are very important um fundamental issues

00:41:37.918 --> 00:41:40.510
for the Commission to consider. And you know, there's

00:41:40.519 --> 00:41:43.699
obviously issues out there on um infrastructure and

00:41:43.708 --> 00:41:47.090
the well. And, and I think our primary consideration

00:41:47.099 --> 00:41:49.989
here is to ensure that these customers have continuous

00:41:50.000 --> 00:41:54.898
and adequate service. And um that, that's where I will

00:41:54.909 --> 00:41:57.579
come from with respect to reaching this decision. Even

00:41:57.590 --> 00:42:00.260
though it is a difficult decision, I respect the desire

00:42:00.269 --> 00:42:03.019
of, of the family and everybody to maintain the, the

00:42:03.030 --> 00:42:05.648
utility. But I think ultimately, I, I think I would

00:42:05.659 --> 00:42:12.099
be in favor of um appointing a temporary manager, uh

00:42:12.110 --> 00:42:15.949
CSWR Texas. To, to get us in the, in the

00:42:15.958 --> 00:42:19.639
right path forward um with, with these uh utility and

00:42:19.648 --> 00:42:22.208
the services and, and for the customers that are being

00:42:22.219 --> 00:42:23.280
served in this area.

00:42:25.128 --> 00:42:28.139
(item:11:55098, Commissioner Glotfelty's on the hearing) Yeah, I think I'd fall in the same area. Emotionally

00:42:28.148 --> 00:42:31.648
I, I think uh what the residents have done to pick

00:42:31.659 --> 00:42:36.699
up. Uh you know, a pretty challenging situation um

00:42:36.878 --> 00:42:41.539
is. I'd love to side with them to keep doing this until

00:42:41.750 --> 00:42:46.159
the court decides. But I don't think by law we can

00:42:46.168 --> 00:42:49.989
do that. I think our obligation is continuous and adequate

00:42:50.000 --> 00:42:55.750
service. That the law is very clear that our responsibility

00:42:55.760 --> 00:42:59.688
is to the consumers, not necessarily to that owner.

00:43:00.289 --> 00:43:06.148
And that uh you know, hopefully CSWR ends up doing

00:43:06.159 --> 00:43:09.260
a sale, merger, transfer and buys it. And in fact, if

00:43:09.269 --> 00:43:10.909
they become the temporary manager, they're going to

00:43:10.918 --> 00:43:14.139
get a head start on that by upgrading the system. And

00:43:14.148 --> 00:43:20.699
it's clear that with 6000, 6000 connections uh nearby.

00:43:20.708 --> 00:43:24.050
That they do have the adequate ability to run the water

00:43:24.059 --> 00:43:30.289
system. So um I, I'm supportive of uh of um appointing

00:43:30.300 --> 00:43:34.119
CSWR as a temporary manager. And that it should be

00:43:34.128 --> 00:43:37.699
indefinite since this is not an emergency. That 180

00:43:37.708 --> 00:43:42.590
day temporary managers is not applicable. And in fact

00:43:42.599 --> 00:43:45.300
I can go further and say that, you know, I believe

00:43:45.309 --> 00:43:49.510
that they should be paid $15 per water connection per

00:43:49.519 --> 00:43:53.010
month. And that we should waive the requirement regarding

00:43:53.019 --> 00:43:55.878
the temporary manager's duty to post financial assurance.

00:43:55.889 --> 00:43:58.139
And that we should direct OPDM to draft an

00:43:58.148 --> 00:44:01.280
order consistent with previous Commission orders and

00:44:01.289 --> 00:44:06.148
our discussion. Boy, that's framed very much like a motion. And I would, yes. The was the only thing

00:44:06.159 --> 00:44:08.958
I would add. And I so move. Well, the only thing I would add is I

00:44:08.969 --> 00:44:12.250
wanna, I wanna take notice. That um the utility has

00:44:12.260 --> 00:44:14.360
been referred to the Office of Attorney General for

00:44:14.369 --> 00:44:16.429
appointment of a receiver due to its violation of a

00:44:16.438 --> 00:44:20.099
Commission final order. Yeah, absolutely. Look, um

00:44:20.309 --> 00:44:23.829
(item:11:55098, Commissioner McAdams' thoughts on the hearing) Madam Chair, if I may. Where I fall on, this is my

00:44:23.840 --> 00:44:27.679
my question was somewhat leading. Uh when there is confusion

00:44:27.688 --> 00:44:31.809
about ownership and um the processes of business. At

00:44:31.820 --> 00:44:33.889
the end of the day, we fall back to that overarching

00:44:33.898 --> 00:44:35.679
mission in the water code, continuous and adequate

00:44:35.688 --> 00:44:39.760
service. It is an essential service. Water service

00:44:39.769 --> 00:44:41.699
is not something we should take any more lightly than

00:44:41.708 --> 00:44:47.489
electricity service. And, and so there has been ample

00:44:47.619 --> 00:44:52.289
room in the regulatory timetable. To try to address

00:44:52.300 --> 00:44:55.989
some of the deficiencies highlighted by these residences,

00:44:56.000 --> 00:45:00.168
by these consumers. And, and so I think in an effort

00:45:00.179 --> 00:45:03.168
to comply with our overarching mission, I would support

00:45:03.179 --> 00:45:06.378
the motion proposed by Commissioner Glotfelty. So if

00:45:06.389 --> 00:45:09.889
if that was a motion, I second that motion. As amended

00:45:09.938 --> 00:45:13.139
by Commissioner Cobos. In recognizing the Attorney General's

00:45:13.148 --> 00:45:16.489
actions. (item:11:55098, Motion on amendments from the hearing) Okay, very good. We have a motion and a second.

00:45:16.500 --> 00:45:19.309
All in favor, say aye. Aye. The motion passes.

00:45:22.128 --> 00:45:27.340
I don't have anything on Item 12, unless y'all do. Um Item

00:45:27.349 --> 00:45:31.648
13 was consented. I don't have anything for Item 14.

00:45:33.590 --> 00:45:37.829
Okay. Next up is Item 15. Mr. Journeay, will you please

00:45:37.840 --> 00:45:40.688
lay out this item? Are we gonna take that up later

00:45:41.128 --> 00:45:41.148
Madam Chair?

00:45:44.090 --> 00:45:48.398
Or alternatively um, if you wanna take it in order

00:45:48.409 --> 00:45:51.978
we would request that you take a short recess. Okay.

00:45:51.989 --> 00:45:55.820
Well, we can move on and go to uh Item 18.

00:45:58.688 --> 00:46:02.260
(item:18:54957, Settlement agreement relating to the City of Austin, dba Austin Energy) Item 18 is Docket 54957. It's a settlement agreement

00:46:02.269 --> 00:46:05.409
relating to the City of Austin, doing business as Austin

00:46:05.418 --> 00:46:09.750
Energy. Uh violations of PURA, Commission rules and

00:46:09.760 --> 00:46:13.030
ERCOT nodal protocols. That are related to scheduling

00:46:13.039 --> 00:46:16.389
operation and generation resources. A proposed order

00:46:16.398 --> 00:46:19.280
was filed on May 12, and I have a memo with proposed

00:46:19.289 --> 00:46:20.438
changes to the order.

00:46:22.579 --> 00:46:25.909
Have any thoughts on this one? Uh I'll take

00:46:25.918 --> 00:46:28.639
this one if I can Madam Chair. Um

00:46:30.579 --> 00:46:32.668
(item:18:54957, Commissioner McAdams' thoughts on settlement agreement) there is an issue I believe the Commission must address

00:46:32.679 --> 00:46:37.050
before final approval of this order. Primarily, whether

00:46:37.059 --> 00:46:39.949
it is appropriate to utilize a different methodology.

00:46:39.958 --> 00:46:43.360
Uh to discourage excess revenues collected by Austin

00:46:43.369 --> 00:46:46.349
Energy, other than the default method. Which currently

00:46:46.360 --> 00:46:51.739
exists in Commissions Rule 16 TAC 22.246, Subsection

00:46:51.750 --> 00:46:55.750
K. Uh based on the party statements um and ERCOT's

00:46:55.760 --> 00:46:58.800
memorandum indicating support for a different distribution

00:46:58.809 --> 00:47:03.199
method. I believe it is appropriate for the Commission

00:47:03.208 --> 00:47:07.260
to direct Commission Staff to open a subsequent proceeding

00:47:07.269 --> 00:47:11.418
to address this issue. Um I'm certainly open to further

00:47:11.429 --> 00:47:14.659
discussion amongst my colleagues. However, if everyone

00:47:14.668 --> 00:47:18.579
is in agreement, I have a motion. Ultimately, I believe

00:47:18.760 --> 00:47:21.619
ERCOT is, is certainly an organization that is manpower

00:47:21.628 --> 00:47:27.639
constrained. Um we want expeditious um uh resolution

00:47:27.869 --> 00:47:32.188
of this issue. Um for the money to, to be appropriately

00:47:32.199 --> 00:47:36.478
transferred. Uh if, if there is a quicker way um then

00:47:36.489 --> 00:47:40.119
we need to establish what that looks like. Um and,

00:47:40.128 --> 00:47:43.269
and that's kind of where my thinking is on the topic.

00:47:43.280 --> 00:47:44.820
Would welcome any input.

00:47:46.760 --> 00:47:50.329
I'm in agreement. Okay. Uh if you would entertain a motion

00:47:50.340 --> 00:47:52.978
Madam Chair. (item:18:54957, Motion to approve order as modified) I would move to approve this order as

00:47:52.989 --> 00:47:55.760
modified by the Commission Counsel memo and our discussion

00:47:55.769 --> 00:48:02.750
today. Uh and require Austin Energy to disgorge the $23,462.53

00:48:03.260 --> 00:48:07.550
in excess revenues to ERCOT. And direct Commission Staff

00:48:07.559 --> 00:48:10.889
to open up a second proceeding. To determine the appropriate

00:48:10.898 --> 00:48:14.429
methodology to distribute the disgorged excess revenues.

00:48:14.889 --> 00:48:17.898
Second. We have a motion and a second. All in favor,

00:48:17.909 --> 00:48:23.030
say aye. Aye. Motion passes. We don't have anything

00:48:23.039 --> 00:48:30.679
on Item. I don't have anything on 19 or 20. Uh, 20?

00:48:30.688 --> 00:48:34.579
Is, is that what we're talking about? 21? Got it, got it.

00:48:34.590 --> 00:48:39.039
Thank you. Okay. So next up is (item:21:53298, Chairwoman Jackson lays out discussion points on reliability standard and bridging) Item 21 our wholesale

00:48:39.050 --> 00:48:42.550
electric market design implementation project. Uh we

00:48:42.559 --> 00:48:45.329
have two topics that we're going to discuss today under

00:48:45.340 --> 00:48:48.619
this project. The reliability standard and bridging

00:48:48.628 --> 00:48:52.139
solutions. Um let's talk about the reliability standard

00:48:52.148 --> 00:48:55.898
first and then we'll move on to bridging. Uh we have

00:48:55.909 --> 00:48:58.679
uh Woody Rickerson here with ERCOT. To provide us a

00:48:58.688 --> 00:49:02.688
preview of his presentation to the ERCOT Board on the

00:49:02.699 --> 00:49:06.188
reliability standard study, preliminary results. This

00:49:06.199 --> 00:49:08.739
is Project 53298.

00:49:10.739 --> 00:49:13.708
Um ERCOT is seeking confirmation from the Commission

00:49:13.719 --> 00:49:15.949
that we are aligned with their analytical approach.

00:49:16.010 --> 00:49:18.340
And so we can move forward and develop a list of future

00:49:18.349 --> 00:49:22.329
resource, mix scenarios for our evaluation. Uh thank

00:49:22.340 --> 00:49:26.378
you so much, Woody for being here today. Um and giving

00:49:26.389 --> 00:49:29.250
the presentation. (item:21:53298, Woody Rickerson with ERCOT, previewing ERCOT Board presentation) Morning Commissioners. I'll run through

00:49:29.260 --> 00:49:35.099
this very quickly. So if you uh put it on Slide 3.

00:49:35.780 --> 00:49:41.599
The uh the, the study is centered around the year 2026.

00:49:42.199 --> 00:49:46.199
So it uses a resource portfolio from the CDR that's

00:49:46.208 --> 00:49:49.250
based in 2026. So that would be all of our existing

00:49:49.260 --> 00:49:52.510
generation. Plus any new generation that meets the CDR

00:49:52.519 --> 00:49:58.719
standards for being implemented. We um we did limit

00:49:58.728 --> 00:50:02.909
wind, solar and batteries to their ELCC, their effective

00:50:02.918 --> 00:50:05.030
Load carrying capacity. Which is different than the

00:50:05.039 --> 00:50:11.228
CDR. And then we also uh remove some thermal capacity

00:50:11.239 --> 00:50:14.458
For the sake of modeling. So that we could have a range

00:50:14.469 --> 00:50:20.289
of results in the study. And we added in a combustion

00:50:20.300 --> 00:50:25.590
turbine capacity. To give us 24 different reserve margin

00:50:25.599 --> 00:50:26.228
levels.

00:50:27.739 --> 00:50:32.059
And then we evaluated each of those 24 levels for frequency

00:50:32.070 --> 00:50:34.659
duration and magnitude of events after running a Monte

00:50:34.668 --> 00:50:40.019
Carlo simulation. So that's the uh that's an overview

00:50:40.030 --> 00:50:45.409
of the preliminary results. If you look on um and like

00:50:45.418 --> 00:50:47.860
I said, these are all based on the frequency magnitude

00:50:47.869 --> 00:50:50.599
and duration framework that we've discussed before.

00:50:50.688 --> 00:50:55.309
On Slide 5, you'll see an overview. So we didn't

00:50:55.320 --> 00:51:00.519
provide all the results. We provided 5 of the 24

00:51:00.530 --> 00:51:04.719
scenarios and those are highlighted on Slide 5.

00:51:06.860 --> 00:51:11.369
And then Slides 6-10, provide the details

00:51:11.378 --> 00:51:14.010
for each of those 5 scenarios.

00:51:16.139 --> 00:51:21.719
And you can see as reserve margin increases the, the

00:51:21.728 --> 00:51:26.219
frequency of events becomes less frequent, frequent

00:51:26.228 --> 00:51:28.289
that you have in events. And the duration of

00:51:28.300 --> 00:51:30.679
will also go down, which is what you would expect as

00:51:30.688 --> 00:51:33.570
the reserve margin goes up. And that's illustrated

00:51:33.958 --> 00:51:38.269
in those Slides 6-10. And then the last part of

00:51:38.280 --> 00:51:42.458
the, the preliminary results was uh Slide 11. It talks

00:51:42.469 --> 00:51:46.340
about an exceedance probability. Exceedance probability

00:51:46.349 --> 00:51:50.800
is simply for each of the scenarios you can take the

00:51:50.809 --> 00:51:56.510
events. And an event is when the Load exceeds the capacity

00:51:57.039 --> 00:51:59.320
of more than 1000 Megawatt. So it's a, a Load sheed

00:51:59.329 --> 00:52:03.389
event. You take for each of the scenarios, you would

00:52:03.398 --> 00:52:09.208
rank the events, from the most impactful to the least

00:52:09.219 --> 00:52:12.739
impactful. And then one way of dealing with the most

00:52:12.750 --> 00:52:15.469
impactful events is you can have an exceedance probability.

00:52:16.139 --> 00:52:20.260
Where you can say I'm willing to overlook 1% of the

00:52:20.269 --> 00:52:25.119
worst events or maybe 2%. And that's one way of dealing

00:52:25.128 --> 00:52:28.478
with these outlier events and a probability distribution.

00:52:29.250 --> 00:52:32.030
So you're gonna have some tail events that are much

00:52:32.039 --> 00:52:35.168
worse than the vast majority of the results. And so

00:52:35.300 --> 00:52:38.039
part of the study is how do you, how do you deal

00:52:38.050 --> 00:52:41.869
with those? Now, one option is to say we're gonna include

00:52:41.878 --> 00:52:44.478
all of them, that's an option. And so that would be

00:52:44.489 --> 00:52:46.728
an exceedance probability of zero. We're gonna include

00:52:46.739 --> 00:52:50.340
everything. A 1% would say we're going to take out

00:52:50.739 --> 00:52:54.869
1% of the most impactful and build our standard below

00:52:54.878 --> 00:52:58.860
that. You can think of that 1% as a 1 in 100

00:52:58.869 --> 00:53:04.369
year event or maybe 2%. And so that's what we're, uh

00:53:04.378 --> 00:53:06.949
that's where we are at this point. Is we produce these

00:53:06.958 --> 00:53:09.708
preliminary results. We're ready to, to go forward

00:53:09.719 --> 00:53:15.079
with some more robust analysis. We'd like to have confirmation

00:53:15.090 --> 00:53:19.030
that the duration, frequency, magnitude framework that

00:53:19.039 --> 00:53:21.938
we're using. Is, is what we want to continue to use.

00:53:23.000 --> 00:53:26.199
And then we'd like to be able to bring back some of

00:53:26.208 --> 00:53:29.688
these scenarios and including the scenarios and different

00:53:29.699 --> 00:53:33.110
exceedance probabilities at different reserve margins

00:53:33.289 --> 00:53:37.159
and bring that back. And with those include cost, the

00:53:37.168 --> 00:53:41.510
cost associated with adding the capacity necessary

00:53:41.789 --> 00:53:44.010
to make each of those reserve margins work.

00:53:45.659 --> 00:53:48.398
So that's, that's what that's the guidance we're asking

00:53:48.409 --> 00:53:49.148
for at this point.

00:53:51.849 --> 00:53:51.869
Woody?

00:53:53.418 --> 00:53:55.708
(item:21:53298, Commissioner Cobos' thoughts on ERCOT presentation) Thank you so much for this preliminary overview of

00:53:55.719 --> 00:53:58.648
where, where you're headed. Obviously, this is important

00:53:58.659 --> 00:54:02.878
um work. We are required to set a reliability standard

00:54:03.039 --> 00:54:06.340
both by Senate Bill 3 and now, you know, House

00:54:06.349 --> 00:54:11.010
Bill 1500. Is definitely in alignment with this as well.

00:54:11.019 --> 00:54:14.309
And it's very important that we do a very robust review

00:54:14.320 --> 00:54:17.050
of the reliability standard. And I think that moving

00:54:17.059 --> 00:54:19.458
beyond just the 1 in 10 is very important. And I

00:54:19.469 --> 00:54:21.438
think that's the effort that you're trying to move

00:54:21.449 --> 00:54:25.429
in that direction with respect to duration and magnitude.

00:54:25.889 --> 00:54:28.860
And also I think you have referenced in here, you're

00:54:28.869 --> 00:54:31.409
also looking at energy sufficiency and you can look

00:54:31.418 --> 00:54:34.590
at unexpected expected, unserved energy. Which is also

00:54:34.599 --> 00:54:37.938
important. That is a, a metric that many of the ISOs

00:54:37.949 --> 00:54:42.969
out and nationally are looking at as well. Um with

00:54:42.978 --> 00:54:45.878
respect to the um

00:54:47.659 --> 00:54:50.668
I guess the, the overall direction. I, I think I'm comfortable

00:54:50.679 --> 00:54:53.128
with, with those metrics. And, and they're very capacity

00:54:53.139 --> 00:54:55.760
driven. But I think looking at the energy metric is

00:54:55.769 --> 00:54:59.958
also important. Um the exceedance probabilities, I think

00:54:59.969 --> 00:55:04.010
we can spend some time deliberating on that. Um but

00:55:04.019 --> 00:55:08.000
um how will you come up with the cost of the different

00:55:08.010 --> 00:55:11.340
reliability standards? (item:21:53298, Commissioner Cobos has dialogue with Woody Rickerson of ERCOT) ERCOT methodology

00:55:11.349 --> 00:55:14.619
of, of determining what the different metrics will

00:55:14.628 --> 00:55:18.909
cost? Well, the different levels required a different

00:55:18.918 --> 00:55:22.329
reserve margin which requires capacity to be added.

00:55:22.340 --> 00:55:25.179
And we'll go back to the E3 study and align our

00:55:25.188 --> 00:55:28.050
results with the E3 study where it talks about

00:55:28.059 --> 00:55:30.889
the, the cost to add additional capacity to the market.

00:55:31.099 --> 00:55:34.688
Yeah, that, that's what I'm wondering. Um okay, so

00:55:37.898 --> 00:55:41.019
that, that's an interesting perspective on that. So

00:55:41.030 --> 00:55:42.929
when you say going back to the E3 study, what

00:55:42.938 --> 00:55:44.978
exactly are you referring to? We'll make sure that

00:55:44.989 --> 00:55:49.000
our cost estimates for additional capacity are in alignment

00:55:49.010 --> 00:55:52.148
with what E3 did? Okay. So are you talking about

00:55:52.159 --> 00:55:55.059
the cost of new entry and the 935 for a CT?

00:55:55.878 --> 00:55:58.739
Yes. Okay. So that, that's where I think we need to peel

00:55:58.750 --> 00:56:02.909
back a little bit. Because I think based on a lot of

00:56:02.918 --> 00:56:06.369
discussions that happened this Session. That, that number

00:56:06.378 --> 00:56:11.659
may be drastically low. Um and I say that because um

00:56:12.059 --> 00:56:15.708
our number in the protocols is 105,000. And I

00:56:15.719 --> 00:56:19.699
know that ultimately, a lot of markets out there conduct

00:56:19.708 --> 00:56:22.478
an extensive cost of new entry study that they do on

00:56:22.489 --> 00:56:27.000
a periodic basis. And update in the interim along the

00:56:27.010 --> 00:56:31.760
way. Because the cost of new entry figure is based

00:56:31.769 --> 00:56:37.110
on deep analysis of capital costs, labor, equipment.

00:56:37.829 --> 00:56:40.360
These days, you'd have to take into account inflation,

00:56:40.369 --> 00:56:45.219
supply chain. So I, I'm just I'm a little bit, you

00:56:45.228 --> 00:56:49.300
know, because also House Bill 1500. Requires us to go

00:56:49.309 --> 00:56:52.918
back and calculate across a new entry in the net cone.

00:56:53.869 --> 00:56:56.909
I think that it's, you know, we gotta be careful about

00:56:56.918 --> 00:57:00.320
what we're using as cost for those metrics. And so

00:57:00.329 --> 00:57:03.050
I just want to provide you with that perspective. Because

00:57:03.059 --> 00:57:06.679
we have now House Bill 1500 that says we gotta calculate

00:57:06.699 --> 00:57:11.070
a net cone. And then we have all this other data through

00:57:11.079 --> 00:57:14.619
our extensive deliberations and, and look at cone. That

00:57:14.628 --> 00:57:19.148
we have to take into consideration. So um I know that

00:57:19.159 --> 00:57:22.449
the E3 study has some figures. But I'm not sure

00:57:22.458 --> 00:57:26.728
that those are gonna be the exact figures from my perspective.

00:57:26.739 --> 00:57:29.269
Well, we'll be very transparent in what we use and

00:57:29.280 --> 00:57:31.559
we can adjust that. That's almost almost an outcome

00:57:31.570 --> 00:57:33.989
of the study. It's not a uh it's not an input to

00:57:34.000 --> 00:57:36.860
the study. So as we look at the different reserve margins

00:57:36.869 --> 00:57:40.168
and we bring back to you different frequency durations.

00:57:40.820 --> 00:57:41.389
Um

00:57:43.378 --> 00:57:48.139
when we provide those, it will come with a amount of

00:57:48.148 --> 00:57:50.750
generation that needs to be added to achieve that.

00:57:51.389 --> 00:57:55.840
And then fixing a price to that is something uh obviously

00:57:55.849 --> 00:57:57.789
we'll be very transparent on what we use and we can

00:57:57.800 --> 00:58:01.289
change that. And I think you also uh it's gonna be

00:58:01.300 --> 00:58:06.019
tricky, because um there will be some generation retirements.

00:58:07.340 --> 00:58:11.050
And so uh the amount of generation that has to be added

00:58:11.059 --> 00:58:14.398
to attain a certain frequency magnitude and duration

00:58:14.628 --> 00:58:18.280
will be affected by obviously what retires in that

00:58:18.289 --> 00:58:21.250
same time period. And so I think there's gonna have

00:58:21.260 --> 00:58:23.969
to be a lot of thought going into uh what do you

00:58:23.978 --> 00:58:26.429
include in those final numbers as far as the additional

00:58:26.438 --> 00:58:30.719
capacity. Because some generation will inevitably retire

00:58:31.179 --> 00:58:35.340
and you have to replace that as well. Because of? Well

00:58:35.349 --> 00:58:37.409
for various reasons, some of this generation is very

00:58:37.418 --> 00:58:41.489
old, there are also some impending uh environmental

00:58:41.500 --> 00:58:44.179
regulations that may cause them to retire as well.

00:58:44.760 --> 00:58:48.119
So economic and regulatory impacts. So that'll have

00:58:48.128 --> 00:58:51.389
to be factored into this. But the, the value of the

00:58:51.398 --> 00:58:56.019
study is to say. For a reserve margin, this is the main

00:58:56.070 --> 00:58:59.099
two frequency and duration that you can expect for

00:58:59.110 --> 00:59:03.570
outages. And it's important to remember that for any

00:59:03.579 --> 00:59:08.208
given reserve margin, those numbers will change based

00:59:08.219 --> 00:59:12.949
on the composition of the generation fleet inside that

00:59:12.958 --> 00:59:13.769
reserve margin.

00:59:15.409 --> 00:59:19.699
So I mean, if you have a reserve margin that's composed

00:59:19.708 --> 00:59:23.539
the extreme would be all solar. Lower accredited units.

00:59:23.739 --> 00:59:26.250
All solar, you're obviously with nothing else, you're

00:59:26.260 --> 00:59:29.978
obviously gonna have a lot more events. Because at night

00:59:29.989 --> 00:59:34.099
you would have uh you know, outages every night. So

00:59:34.418 --> 00:59:38.070
the mix of generation that's in there is, is an important

00:59:38.079 --> 00:59:40.389
part of the reserve margin. And as we go forward in

00:59:40.398 --> 00:59:44.239
the future and then the portfolio mix changes, we'll

00:59:44.250 --> 00:59:47.119
have to continue to do this study. To make sure that

00:59:47.128 --> 00:59:50.889
we account for the new portfolio mix that's in there.

00:59:53.489 --> 00:59:56.619
(item:21:53298, Commissioner McAdams has dialogue with Woody Rickerson of ERCOT) So, so Woody uh just a kind of technical question for

00:59:56.628 --> 01:00:00.360
you. On, on Slide 12. When we look at those uh, uh

01:00:00.820 --> 01:00:05.378
exceedance probabilities. Um I assume on, on your dot

01:00:05.389 --> 01:00:09.929
plot chart. Uh the dot way to the right, way up top

01:00:09.938 --> 01:00:14.809
uh is Winter Storm Uri. That's at 15 hours of duration

01:00:14.820 --> 01:00:22.289
and uh 19,000 Megawatt hours of unserved energy. Actually

01:00:22.300 --> 01:00:25.739
that, that event would more closely be associated with

01:00:25.750 --> 01:00:30.719
the 2011 storm. That's 2011. That's my question. Okay.

01:00:30.728 --> 01:00:34.829
So that's a 1% exceedance probability event. And so

01:00:34.840 --> 01:00:38.958
what I want to be very clear about what. The treatment

01:00:38.969 --> 01:00:46.289
of Winter Storm Uri in this, in this time. So we even as you all

01:00:46.300 --> 01:00:49.369
know, we have implemented the weatherization standards

01:00:49.378 --> 01:00:52.579
since Winter Storm Uri. So how do you account for

01:00:52.590 --> 01:00:58.010
the effect the winterization efforts? How do you account

01:00:58.019 --> 01:01:01.409
for that in this study? So if you just use Winter Storm Uri

01:01:01.579 --> 01:01:05.860
as a historical marker. And put it with 2011 and you

01:01:05.869 --> 01:01:09.659
completely ignore the weatherization effects that are

01:01:10.699 --> 01:01:14.449
the effect the weatherization standard has had on reliability.

01:01:14.800 --> 01:01:19.590
Then you're going to, these graphs would look much worse.

01:01:20.809 --> 01:01:27.039
So Winter Storm Uri was left out that 72 hour outage

01:01:27.050 --> 01:01:31.898
of 20,000 megawatts, it's not in here. Because we included

01:01:31.909 --> 01:01:36.599
the weather. We, we, we didn't include it so that we

01:01:36.610 --> 01:01:39.208
would take into effect the, the weatherization that

01:01:39.219 --> 01:01:41.820
we have done, but 2011 was in there.

01:01:43.599 --> 01:01:45.809
Either way, you've got to, you've got to fill out the

01:01:45.820 --> 01:01:49.559
dot plot. Um with, with tail events included for right

01:01:49.570 --> 01:01:52.978
now, just so that we may see the concentration on,

01:01:52.989 --> 01:01:56.389
on where it's falling. And I think if you look at Slide

01:01:56.398 --> 01:02:00.429
17, you can see uh there's an explanation there of

01:02:00.438 --> 01:02:03.119
the bottling treatment of extreme winter storm events.

01:02:03.159 --> 01:02:07.539
Yeah. So, so how, how do we quantify what the next Uri

01:02:07.820 --> 01:02:12.050
is? That includes our weatherization and the weatherization

01:02:12.059 --> 01:02:14.050
of the pipeline system?

01:02:16.559 --> 01:02:21.039
What is that 1 in 100 year event look like? That's part of

01:02:21.050 --> 01:02:24.429
the next steps in the study. Is, is taking direction

01:02:24.438 --> 01:02:28.610
on, on how to account for, how effective. Not only the

01:02:28.619 --> 01:02:32.208
weatherization of the plants, but also the weatherization

01:02:32.219 --> 01:02:36.458
of the gas delivery system in fuel. And firm fuel. And firm fuel is

01:02:36.469 --> 01:02:39.039
another one. Exactly. So those will need to be factored

01:02:39.050 --> 01:02:41.530
into this as well. And so those are all subsequent

01:02:41.579 --> 01:02:44.519
areas that have to be factored into this. So these

01:02:44.530 --> 01:02:46.889
were preliminary results. That kind of gives everyone

01:02:46.898 --> 01:02:51.070
a feel for what we can produce? What the model can

01:02:51.079 --> 01:02:56.659
produce? Um how the framework would work. Um how are

01:02:56.668 --> 01:02:59.539
the, the different legs of the framework relate to

01:02:59.550 --> 01:02:59.929
each other?

01:03:03.139 --> 01:03:06.478
So point of clarification, I was you know, flipping

01:03:06.489 --> 01:03:09.559
to page. The Slide 12 very fast and didn't quite catch

01:03:09.570 --> 01:03:11.708
this picture. (item:21:53298, Commissioner Cobos has follow-up dialogue with Woody Rickerson of ERCOT) But, you know, Commissioner McAdams

01:03:12.300 --> 01:03:15.550
um was asking about the outlier with the 1%. So you're

01:03:15.559 --> 01:03:22.309
saying 2011 was falls in the 1%? 2011 would fall

01:03:22.320 --> 01:03:24.849
in that 1. No. Well,

01:03:26.789 --> 01:03:29.179
so I need you to be accurate on that Woody

01:03:32.458 --> 01:03:37.989
2011 event influenced all of these results.

01:03:38.000 --> 01:03:43.918
Sure. Okay because it, it created the outage rates that

01:03:43.929 --> 01:03:48.500
were used in the Monte Carlo simulations. Okay. So it's

01:03:49.139 --> 01:03:53.050
the 2011 event is not modeled as an event in, in this.

01:03:53.510 --> 01:03:55.809
It's not gonna show up as a single dot here. You can't

01:03:55.820 --> 01:03:58.188
look at a single dot and say that's the 2011 event.

01:03:58.199 --> 01:04:03.119
The 2011 event influenced all these events. If we had

01:04:03.128 --> 01:04:05.958
included Uri, it would have influenced all of these

01:04:05.969 --> 01:04:09.648
events as well. So I can't look at a single dot and

01:04:09.659 --> 01:04:12.869
say that one is that single event represents Winter

01:04:12.878 --> 01:04:16.918
Storm Uri. I can show you events that were similar

01:04:16.929 --> 01:04:22.378
to Winters Storm Uri. But so, so that when you do

01:04:22.389 --> 01:04:25.918
run the Monte Carlo simulation, you're running uh random

01:04:25.929 --> 01:04:28.579
draws from a bunch of different things and some of

01:04:28.590 --> 01:04:30.918
them produce events and some of them don't. And then

01:04:30.929 --> 01:04:34.360
when they do produce events, we chart it. (item:21:53298, Commissioner McAdams has follow-up dialogue with Woody Rickerson of ERCOT) But in, in

01:04:34.369 --> 01:04:37.610
your view, the exceedance probability most closely

01:04:37.619 --> 01:04:45.090
aligns with a 2011 in the 1%, uh range 

01:04:48.260 --> 01:04:50.889
of the simulations. Again, given the type of failures

01:04:50.898 --> 01:04:52.668
that were experienced and the type of weather conditions

01:04:52.679 --> 01:04:56.019
that were present. It would depend on the reserve margin.

01:04:56.289 --> 01:05:00.679
So for any given reserve margin, you can have a 1%

01:05:00.708 --> 01:05:03.789
exceedance probability. So if you're looking at some

01:05:03.800 --> 01:05:07.019
of the high reserve margins maybe uh like you see

01:05:07.030 --> 01:05:07.708
on

01:05:09.510 --> 01:05:15.340
Slide 10. Which is a reserve margin that produces a

01:05:15.349 --> 01:05:18.280
loss of Load event once every 143 years, which is a

01:05:18.289 --> 01:05:21.938
very high reserve margin. Uh the 1% of events that

01:05:21.949 --> 01:05:25.039
would be excluded by 1% would be much less. Than they

01:05:25.050 --> 01:05:29.648
would be at a uh a very low reserve margin. Like on

01:05:29.659 --> 01:05:33.800
Slide 6, where you have a reserve margin of 9%. Right.

01:05:34.679 --> 01:05:37.349
So that's the way to look at those that 1% exceedance

01:05:37.360 --> 01:05:40.199
probability. Now, if you were to go back and look at

01:05:40.208 --> 01:05:43.780
2011 and say, let's have a reserve margin that looks

01:05:43.789 --> 01:05:47.679
just like what we had in 2011. Then I could relate

01:05:47.688 --> 01:05:53.619
it to the actual event to, to adopt that uh would be

01:05:53.628 --> 01:05:56.938
correspond with the 2011 circumstances. Well, that's

01:05:56.949 --> 01:06:00.010
not included in this study. Can, can you contextualize

01:06:00.019 --> 01:06:02.898
at this point, I won't press you too hard. Uh to a

01:06:02.909 --> 01:06:05.780
0.1 loss of Load equilibrium event which you

01:06:05.789 --> 01:06:09.389
have modeled here. At somewhere around 18% reserves

01:06:09.628 --> 01:06:13.648
Uh again at 2026. And then the CDR we're showing we're

01:06:13.659 --> 01:06:20.668
gonna have 44% reserves in 2026. So look at slide um

01:06:25.449 --> 01:06:29.878
it's in the appendix. Yeah, I saw it. It's like 18.7.

01:06:30.168 --> 01:06:35.869
So those CDR says in 2026, 42.4% reserve margin. But

01:06:35.878 --> 01:06:40.239
now if you factor in the ELCCS for wind, solar

01:06:40.250 --> 01:06:43.478
and batteries. That drops down to 18.7%.

01:06:45.119 --> 01:06:48.398
So remember we can't use ELCCs in the CDR

01:06:48.409 --> 01:06:50.539
yet because we haven't changed the protocol. Right.

01:06:51.550 --> 01:06:55.860
So if you adjust the CDR 42.4% reserve margin to use

01:06:55.869 --> 01:07:01.128
ELCC, then you get 18.77% which is very close

01:07:01.139 --> 01:07:05.280
to Slide No. 8. So we're meeting our standard?

01:07:05.289 --> 01:07:07.728
We're almost sticking the landing? Right. And I think

01:07:07.739 --> 01:07:10.570
the important part to look at when you look at Slide

01:07:10.579 --> 01:07:14.199
8. Which is effectively what we'll have in 2026

01:07:15.829 --> 01:07:19.119
is look at some of those outlier events are those outlier

01:07:19.128 --> 01:07:22.760
events acceptable. Is that the magnitude of what you

01:07:22.769 --> 01:07:25.489
see there is that acceptable? And this is something

01:07:25.500 --> 01:07:29.039
we've always had at a 1 in 10 reserve market. And

01:07:29.050 --> 01:07:31.469
that's why we are moving to this new framework where

01:07:31.478 --> 01:07:35.159
we think about duration and we think about magnitude.

01:07:35.168 --> 01:07:38.389
Because frequency by itself has always at, at a 1

01:07:38.398 --> 01:07:41.668
in 10, we've always had these outlier events that were

01:07:41.679 --> 01:07:46.010
possible at 1 in 10. So this now informs us what

01:07:46.019 --> 01:07:48.760
the magnitude, what the duration of those events could

01:07:48.769 --> 01:07:49.119
be.

01:07:54.059 --> 01:07:55.989
(item:21:53298, Commissioner Glotfelty has dialogue with Woody Rickerson of ERCOT) I, I have a couple of questions if you don't mind.

01:07:56.280 --> 01:08:01.750
Um so uh I, I appreciate uh what you're doing here.

01:08:01.760 --> 01:08:06.159
I mean, I think y'all are um challenged with this just

01:08:06.168 --> 01:08:08.269
like every other part of the country is and I appreciate

01:08:08.280 --> 01:08:12.329
your work. And uh, uh I, I feel like you must be

01:08:12.340 --> 01:08:14.619
the weatherman. Where you're gonna get it wrong 100%

01:08:14.628 --> 01:08:16.829
of the time. But uh, we won't hold it against you.

01:08:16.838 --> 01:08:20.930
I promise you. It's a uh this is a academic exercise

01:08:20.939 --> 01:08:22.989
to figure out how we set the policy and I appreciate

01:08:23.000 --> 01:08:27.259
your efforts. Um is the CDR, the right beginning spot

01:08:27.270 --> 01:08:31.979
for this? Yes. Are all the inputs on the CDR, the right beginning

01:08:31.989 --> 01:08:34.449
for this. I believe. So. I mean, the CDR takes into

01:08:34.458 --> 01:08:36.939
account a generation that hasn't been built yet. That

01:08:36.949 --> 01:08:41.229
has a pretty sure chance of being built. Um It's our

01:08:41.239 --> 01:08:44.208
best weather forecast. Our, our best Load forecast

01:08:44.220 --> 01:08:46.680
going forward takes into account all the growth that

01:08:46.689 --> 01:08:48.949
we know of. Does it take into account a certain extent

01:08:48.958 --> 01:08:52.739
of ability as well, because of the Renewable Accreditation?

01:08:52.810 --> 01:08:57.048
It, it does not take into account durability, but we have

01:08:57.060 --> 01:08:59.119
rules in place. Oh, sorry.

01:09:01.128 --> 01:09:04.588
Go on Woody, I feel like this is a workshop. But we

01:09:04.600 --> 01:09:08.838
do have rules in place to make, make sure that deliver

01:09:08.899 --> 01:09:12.779
is there for our dispatchable units. And keep in mind we're

01:09:12.789 --> 01:09:18.838
talking about, you know, derating the ELCC takes the

01:09:18.850 --> 01:09:18.878
uh

01:09:20.788 --> 01:09:25.738
wind and solar play numbers well down, right

01:09:27.377 --> 01:09:31.809
Okay. Um second question. Um Does this take into consideration

01:09:31.818 --> 01:09:32.757
deliverability?

01:09:35.378 --> 01:09:41.500
Oh, I think that was answered. Um is uh so I see

01:09:41.509 --> 01:09:43.979
in the server model, we take out 8000 megawatts of

01:09:43.989 --> 01:09:48.659
coal. Right. And I think there's a question on that

01:09:48.668 --> 01:09:52.029
in my mind. And clearly that's a guesstimate based upon

01:09:52.039 --> 01:09:57.279
economics and, and epa regulations and such. Um if

01:09:57.289 --> 01:10:00.128
we created some sort of a backstop. To keep those megawatts

01:10:00.140 --> 01:10:06.128
in? Does that um change the math quite dramatically

01:10:06.140 --> 01:10:08.819
do you think? No, I don't think it does at all actually

01:10:08.829 --> 01:10:11.750
Uh if you look at um where is that?

01:10:13.298 --> 01:10:14.479
There is a uh

01:10:16.890 --> 01:10:24.560
slide 18. Mhm. Yeah. So taking 16,000 megawatts out

01:10:24.569 --> 01:10:29.020
of the generation stack is strictly a modeling exercise

01:10:29.489 --> 01:10:32.668
because we want to be able to produce this table. You

01:10:32.680 --> 01:10:36.378
see on Slide 18. That includes reserve margins as low

01:10:36.390 --> 01:10:40.619
as 9%. So the only way to do that is to remove

01:10:40.628 --> 01:10:43.640
some generation. Okay. Otherwise, if we hadn't removed

01:10:43.649 --> 01:10:45.850
the generation. If we kept it all in there, then this

01:10:45.859 --> 01:10:49.168
table would only be half as big, it would start at

01:10:49.180 --> 01:10:52.600
18%. So we wanted to see what it looked like at 9%.

01:10:52.798 --> 01:10:55.668
So this isn't a forecast that 8000 megawatts is gonna

01:10:55.680 --> 01:10:59.359
to be removed. It's simply a bottling exercise so that

01:10:59.369 --> 01:11:01.838
we can get some low reserve margins and some high reserve

01:11:01.850 --> 01:11:04.680
margins so that we can look at the three pillars at

01:11:04.689 --> 01:11:07.548
those reserve margins to see how reliability is. I

01:11:07.560 --> 01:11:11.430
think that, but, but is it isn't reliability changed

01:11:11.439 --> 01:11:15.029
if you have? I mean, maybe you're not, maybe I'm not

01:11:15.039 --> 01:11:17.560
totally understanding that and that is you're just

01:11:17.569 --> 01:11:20.509
you're just taking out a number, right? So in the model

01:11:20.520 --> 01:11:26.140
it's not a um well I, I guess this is my question.

01:11:26.149 --> 01:11:29.100
If we're doing ELCC on the, on the renewable

01:11:29.109 --> 01:11:34.310
resources. Are we doing some sort of a forced outage

01:11:34.319 --> 01:11:37.250
rate on these thermals? So that we get a apples and

01:11:37.259 --> 01:11:40.588
apples comparison. Yes. But that will show up, that will show

01:11:40.609 --> 01:11:42.409
up in the, in the, in the model, in the, in the

01:11:42.418 --> 01:11:44.869
random draws. And so really the difference that you're

01:11:44.878 --> 01:11:49.869
talking about is um let's say we take the 2 18% nothing

01:11:49.878 --> 01:11:53.239
retires and we have 18.77% reserve margin or we have

01:11:53.250 --> 01:11:56.958
8000 Megawatt retire and replace it with C T S. So

01:11:56.970 --> 01:12:02.449
those two portfolios are different. One's got old coal

01:12:02.458 --> 01:12:05.279
one's got new gas. So they are different. But the E

01:12:05.289 --> 01:12:08.470
L CCS for those units aren't that different. And so

01:12:08.479 --> 01:12:12.359
the results that we show here in the top half on page

01:12:12.369 --> 01:12:14.930
18 are not gonna be that different. They're not that

01:12:14.939 --> 01:12:17.739
different though? I mean, when you have rampable. Not,

01:12:17.750 --> 01:12:20.878
not when you compare it to in a high intermittent environment

01:12:20.890 --> 01:12:23.520
well, you can base Load those units and you still have

01:12:23.529 --> 01:12:27.539
the other C T s. And so if we had replaced the

01:12:27.548 --> 01:12:30.668
wind with C T s or something like that, then you would

01:12:30.680 --> 01:12:33.789
have a, something we'd have to worry about. But, uh

01:12:34.529 --> 01:12:40.458
now going forward, we can decide, you can help us decide

01:12:40.470 --> 01:12:44.359
you know what that retirement rate should be for 2026

01:12:44.369 --> 01:12:46.628
And we're gonna have to, that's gonna have to be factored

01:12:46.640 --> 01:12:49.470
into this. You're gonna have to decide, are we gonna

01:12:49.479 --> 01:12:53.369
lose 2468? How many megawatts 1000 Megawatt are we

01:12:53.378 --> 01:12:56.649
gonna lose? Because I just wonder if, you know, we

01:12:56.659 --> 01:12:59.819
think about EPA regulations are there ways that we

01:12:59.829 --> 01:13:06.759
could help, uh, manage capital costs for older units

01:13:06.770 --> 01:13:11.270
to allow them to run less and meet their EPA thresholds

01:13:11.279 --> 01:13:13.759
but continue to remain as part of the fleet when we

01:13:13.770 --> 01:13:15.890
need them. And clearly that's getting deep into the

01:13:15.899 --> 01:13:20.729
modeling, but clearly will help you think through that

01:13:21.140 --> 01:13:23.319
potentially. I think the other thing to keep in mind

01:13:23.329 --> 01:13:26.338
is when you think about the year 2026. You think about

01:13:26.659 --> 01:13:29.838
nothing retires, we've got an 18.7% reserve margin.

01:13:32.149 --> 01:13:37.680
What's 2027 look like it's going down. So even though

01:13:37.689 --> 01:13:41.739
we may be at that one in 10 threshold in 2026 the

01:13:41.750 --> 01:13:45.439
slope is downward. If nothing else is built, no, no

01:13:45.449 --> 01:13:48.579
no new dispatch generations built if, if our market

01:13:48.588 --> 01:13:51.779
is static but right. So that's something to keep in

01:13:51.789 --> 01:13:54.609
mind because, you know, we're going to be implementing

01:13:54.619 --> 01:13:57.949
a lot of, you know, Legislation.

01:13:59.798 --> 01:14:04.569
So, um it's important that I think that the, that we

01:14:04.579 --> 01:14:08.628
understand this is an iterative process, right? Um

01:14:09.539 --> 01:14:15.009
And ultimately, you know, we gotta remain open minded

01:14:15.020 --> 01:14:18.418
to that fact, but um I'll let you continue, I just

01:14:18.430 --> 01:14:22.640
have two very quick things. Um One of them is uh are

01:14:22.649 --> 01:14:25.680
you seeing any evidence around the region around the

01:14:25.689 --> 01:14:32.310
country that um the net number should be batteries

01:14:32.319 --> 01:14:36.729
instead of CTs? I don't have information on that.

01:14:37.239 --> 01:14:40.600
And I'm just wondering, you know, is that I'm thinking

01:14:40.609 --> 01:14:44.189
ahead, is that the future, is that good? Is that bad?

01:14:44.199 --> 01:14:48.000
Is that information that we should be discussing? Clearly

01:14:48.009 --> 01:14:49.409
a battery has

01:14:51.060 --> 01:14:55.600
a dispatchability time frame. That potentially a CT

01:14:55.609 --> 01:14:59.470
not consider. So I'm just, I'm asking the

01:14:59.479 --> 01:15:01.509
question because it's clearly something that's gonna

01:15:01.520 --> 01:15:04.729
be addressed in the future. And then the last question

01:15:04.739 --> 01:15:08.918
that I have was. Um so if we get this and we

01:15:08.930 --> 01:15:11.878
talked about this on the phone so this. Um I, I if

01:15:11.890 --> 01:15:16.489
we get this reserve margin can we use that reserve

01:15:16.500 --> 01:15:20.350
margin and take the next step and do an economically

01:15:20.359 --> 01:15:24.798
optimal reserve margin and determine what types of

01:15:24.810 --> 01:15:27.689
resources are most economically optable in the market?

01:15:27.699 --> 01:15:31.029
And I say this because demand response and energy efficiency

01:15:31.039 --> 01:15:33.569
and some of these other tools that are out there may

01:15:33.579 --> 01:15:37.100
be less expensive and they, they have a duration issue

01:15:37.109 --> 01:15:41.560
as well. But can we ultimately take this number and

01:15:41.569 --> 01:15:46.529
say, ok, you know, we the reserve margin provides this

01:15:46.539 --> 01:15:52.020
reliability metric and this is the economic, economic

01:15:52.029 --> 01:15:55.979
um spread of what these resources demand and supply

01:15:55.989 --> 01:15:58.109
would look like. Absolutely. I mean, I think that's

01:15:58.119 --> 01:16:00.159
one of the interesting things about the exceedance

01:16:00.168 --> 01:16:04.329
probabilities is perhaps some of the uh some of the

01:16:04.338 --> 01:16:08.100
events that you decide to or outside of a standard.

01:16:08.470 --> 01:16:12.838
Could be mitigated by something uh market related.

01:16:13.029 --> 01:16:16.100
But that still necessitate a value of loss Load, again

01:16:16.109 --> 01:16:20.930
a value of scarcity. And if the value will adjust when

01:16:20.939 --> 01:16:24.319
we start talking about different peaks that grow from

01:16:24.329 --> 01:16:28.029
summertime hours to the dead of winter, from three

01:16:28.039 --> 01:16:32.128
AM to six or nine AM when the batteries have run their

01:16:32.140 --> 01:16:36.180
discharge and we are without power. 3AM may be a

01:16:36.189 --> 01:16:38.878
great time for demand response until people start freezing

01:16:38.890 --> 01:16:42.250
depending on the duration. What, what is the status

01:16:42.259 --> 01:16:45.878
of the value of loss Load study? It's on ongoing meeting

01:16:46.689 --> 01:16:50.279
Have you hired an independent consultant? Yes. Okay. And who

01:16:50.289 --> 01:16:50.708
is that?

01:16:56.539 --> 01:17:01.399
It's um I can I, I. Have, have you picked yet? I

01:17:01.409 --> 01:17:01.708
think,

01:17:04.729 --> 01:17:07.159
I think I know who it is but I can, you haven't

01:17:07.168 --> 01:17:09.770
officially hired somebody? Ok. so you, you put out

01:17:09.779 --> 01:17:12.298
an RFP and are in the process of hiring?

01:17:13.838 --> 01:17:16.458
Ok, great. Um, that's an important piece of all this

01:17:16.470 --> 01:17:20.239
as well. Um, you know one, one question because we're talk

01:17:20.250 --> 01:17:22.680
I heard you all talk about seasonality, you know, Winter

01:17:22.689 --> 01:17:26.270
in Summer. And I think that's an important um factor

01:17:26.279 --> 01:17:28.088
that we got to look at and I know that's important

01:17:28.100 --> 01:17:30.989
to ERCOT and their evaluation, as I see on page 13.

01:17:31.390 --> 01:17:34.949
Um you know, there's an attempt to more accurately

01:17:34.958 --> 01:17:38.149
model reliability in the, in the Winter. You know,

01:17:38.159 --> 01:17:40.329
I know you started with the CDR report. I'm wondering

01:17:40.338 --> 01:17:44.509
as we go through, you know, this evaluation whether

01:17:44.520 --> 01:17:47.680
it's through this, you know, reliability standard study

01:17:47.689 --> 01:17:52.668
process or future iterations. Um but seasonality is

01:17:52.680 --> 01:17:56.548
very important. And how do we, I mean can we look

01:17:56.560 --> 01:18:00.039
at the SARA reports. And maybe come up with some kind

01:18:00.048 --> 01:18:03.890
of, you know, seasonal perspective on the reliability

01:18:03.899 --> 01:18:07.359
standard rather than the CDR? Uh I think the standard

01:18:07.369 --> 01:18:11.600
is gonna inform us on, on the, for example, if you

01:18:11.609 --> 01:18:16.470
look at slide number 25 so this is our 18% reserve

01:18:16.479 --> 01:18:20.819
margin, 1 to 10 year frequency. And if you look at

01:18:20.829 --> 01:18:23.779
that graph, you'll see a, a duration and a frequency

01:18:23.789 --> 01:18:28.798
chart for, I'm sorry, ADER the frequency across the

01:18:28.810 --> 01:18:33.289
top and duration on the Y axis. And the different bar

01:18:33.298 --> 01:18:36.229
colors represent summer and winter. So you can see

01:18:36.239 --> 01:18:39.869
as you build a reserve margin, the uh the summer events

01:18:39.878 --> 01:18:44.088
almost go away when you get above a frequency of one

01:18:44.100 --> 01:18:47.449
in 17 years. And so it's just the winter events. And

01:18:47.458 --> 01:18:50.750
so that kind of this study will, so I guess the short

01:18:50.759 --> 01:18:53.430
the short answer is when you look at those dot graphs

01:18:53.439 --> 01:18:56.509
those event graphs, we know that those events are summer

01:18:56.520 --> 01:19:01.180
or winter events. And so we will be able to focus on

01:19:01.189 --> 01:19:04.509
on a seasonal problem. So you will know if you're talking

01:19:04.520 --> 01:19:09.109
about a uh a frequency standard, that's one in 25 years

01:19:09.119 --> 01:19:11.600
that the events we're talking about are winter events

01:19:11.609 --> 01:19:15.000
Now, they're not summer events. I think that's very

01:19:15.009 --> 01:19:17.430
important because as we've well highlighted, you know

01:19:17.439 --> 01:19:20.859
the winter is, is where the health risk, public safety

01:19:20.869 --> 01:19:23.439
risk is. And it's very important we stay focused on

01:19:23.680 --> 01:19:25.838
on all seasons, but particularly the Winter.

01:19:30.060 --> 01:19:33.489
All good questions, all good thoughts and um just really

01:19:33.500 --> 01:19:36.350
appreciate you coming in. (item:21:53298, Chairwoman Jackson's thoughts on the dialogues & thoughts of the Commissioners) And um you know, asking the

01:19:36.359 --> 01:19:40.208
questions early on in the process. And uh I think,

01:19:40.548 --> 01:19:43.739
you know, kind of one of the objectives uh today was

01:19:43.750 --> 01:19:46.529
to uh give you kind of like the green light to move

01:19:46.539 --> 01:19:49.250
forward. So that you could put together this list of

01:19:49.259 --> 01:19:51.989
scenarios to come back to us. And we could take a look

01:19:52.000 --> 01:19:55.489
at it and then um you know, agree that that is the

01:19:55.500 --> 01:19:58.600
comprehensive list or maybe add some. That we want to

01:19:58.609 --> 01:20:02.029
have different scenarios run to see the different outcomes.

01:20:02.039 --> 01:20:04.229
Um but I think the other thing that you were hoping

01:20:04.239 --> 01:20:09.149
was um to kind of know that we were in agreement with

01:20:09.199 --> 01:20:12.930
the um proposed treatment of the low prob probability

01:20:12.939 --> 01:20:15.729
events using the exceeding probability methodology

01:20:15.739 --> 01:20:18.949
So I think I can say that we, we we're all kind

01:20:18.958 --> 01:20:22.909
of aligned with that. And uh I, I would, you know,

01:20:22.918 --> 01:20:25.298
say with that if you kind of feel like you've got everything

01:20:25.310 --> 01:20:27.949
you need from the discussion and the green light to

01:20:27.958 --> 01:20:30.250
move forward and keep going. I think so. Thank you

01:20:30.270 --> 01:20:33.890
very much. Can I ask one quick question on page 19.

01:20:33.899 --> 01:20:38.869
You talk about uh uh Load shedding shapes and everyone

01:20:38.878 --> 01:20:41.149
has a numerical number except for CenterPoint. It

01:20:41.159 --> 01:20:44.220
says depends. Sounds like an engineering answer

01:20:44.229 --> 01:20:48.088
but uh any parameters on that. On the, on the CenterPoint?

01:20:48.100 --> 01:20:51.529
Yes. I think it, it actually depends on the

01:20:51.539 --> 01:20:54.114
circumstances that the event occurs. And they've got

01:20:54.125 --> 01:20:58.884
clear rules but it depends. For, for the purpose of

01:20:58.895 --> 01:21:02.384
this chart, it didn't fit to put it in there. Okay. So

01:21:02.395 --> 01:21:05.244
that's not, that's not contingent upon the water congestion

01:21:05.253 --> 01:21:08.055
constraint or anything like that. No. I think it's, it's dependent

01:21:08.064 --> 01:21:12.149
on season and things like that. Okay, thank you. Welcome. 

01:21:12.759 --> 01:21:14.020
Woody, thanks for being here today.

01:21:20.979 --> 01:21:23.909
(item:22:5444, Chairwoman Jackson lays the bridging solutions topic) The next topic to take up is um bridging solutions.

01:21:24.949 --> 01:21:27.649
Um This is just a general discussion. We don't plan

01:21:27.659 --> 01:21:31.640
on taking any formal action today. Kannan with ERCOT is here

01:21:32.000 --> 01:21:34.890
and um available. Should we have any questions? And

01:21:34.899 --> 01:21:36.458
I'd like to ask him to kindly come up.

01:21:42.350 --> 01:21:45.270
Commissioner McAdams, you have a memo. Would you please lay

01:21:45.279 --> 01:21:47.819
out this for our discussion? Thank you Madam Chair.

01:21:47.829 --> 01:21:49.930
(item:22:5444, Commissioner McAdams’ lays out his memo) Um and, and just for the room and the, the broader

01:21:49.939 --> 01:21:53.989
public. Uh I filed the memo um in this docket to give

01:21:54.000 --> 01:21:56.939
us the opportunity to refocus and redouble our efforts

01:21:56.949 --> 01:21:59.529
after the hard work of the Legislative Session. I also

01:21:59.539 --> 01:22:03.100
believe it helps serve the purpose of uh resetting

01:22:03.109 --> 01:22:07.859
um as uh the Session has concluded. As we now know what

01:22:07.869 --> 01:22:11.229
tools we have available uh in our toolbox. And also

01:22:11.239 --> 01:22:16.319
to bring forward um previously filed a suggested frameworks

01:22:16.329 --> 01:22:22.520
on reliability standards. Uh as well as um the problem

01:22:22.529 --> 01:22:25.319
that we are attempting to solve for in both the near

01:22:25.329 --> 01:22:29.699
and long term. And as such a Staff filed a memo in

01:22:29.708 --> 01:22:33.229
January 5, 2023. Which did an excellent job in my opinion

01:22:33.239 --> 01:22:37.020
of defining the two problems before us. Um and, and

01:22:37.029 --> 01:22:42.350
how we consider next steps. First, they identified a

01:22:42.359 --> 01:22:46.039
problem of operational flexibility, the current

01:22:46.048 --> 01:22:49.869
energy only market design uh with the ORDC retains

01:22:49.878 --> 01:22:53.649
and attracts sufficient installed capacity in the ERCOT

01:22:53.729 --> 01:22:56.430
Power region, our IMM has repeatedly pointed this

01:22:56.439 --> 01:23:00.500
out. However, increased penetration by intermittent

01:23:00.509 --> 01:23:05.140
resources, necessitate more operational flexibility

01:23:05.149 --> 01:23:09.390
on the part of the grid. And second, they identified

01:23:09.399 --> 01:23:12.329
appropriately, we have a resource adequacy problem

01:23:12.338 --> 01:23:16.259
in the long term. For which Staff has consistently said

01:23:16.270 --> 01:23:21.979
PCM could be designed to address. But the primary objective

01:23:21.989 --> 01:23:25.548
of my memo is to outline and accurately identify the

01:23:25.560 --> 01:23:28.409
near term problem that we are trying to address. And

01:23:28.418 --> 01:23:33.208
that is that presently, ERCOT often lacks sufficient

01:23:33.220 --> 01:23:37.020
flexible dispatch generation in real time. To cover

01:23:37.029 --> 01:23:40.020
the inherent variability of a high intermittent resource

01:23:40.029 --> 01:23:44.020
mix. Increasingly, ERCOT has relied on out of market

01:23:44.029 --> 01:23:48.168
actions through reliability unit commitments or RUC

01:23:48.180 --> 01:23:52.079
to meet this shortage. And RUCing is not in my view

01:23:52.088 --> 01:23:55.859
a tenable long term solution. It is an out of market

01:23:55.869 --> 01:24:00.770
action that distorts uh pricing and unnecessarily increases

01:24:00.779 --> 01:24:05.060
the wear and tear on aging and existing units. Now

01:24:05.069 --> 01:24:08.119
in my view, to address this problem. I would support

01:24:08.128 --> 01:24:11.418
the ORDC multi step floor. Which has been recommended

01:24:11.430 --> 01:24:14.399
by the ERCOT Board of Directors uh as well as recommended

01:24:14.409 --> 01:24:19.199
by TAC. Um in the as a short term solution, the 

01:24:19.208 --> 01:24:22.579
ORDC operates in, as I said in the memo. As an

01:24:22.588 --> 01:24:25.869
economic reserve margin rather than a physical reserve

01:24:25.878 --> 01:24:31.479
margin by adding a multi step floor one at 7000 megawatts

01:24:31.489 --> 01:24:33.739
as you're working your way down the reserve cadence

01:24:33.750 --> 01:24:37.600
of remaining reserves and another at 6500 megawatts

01:24:37.729 --> 01:24:40.600
I believe that we are addressing the disconnect between

01:24:40.609 --> 01:24:45.168
conservative market operations. Which we are obligated

01:24:45.239 --> 01:24:49.520
to maintain in the, in the near term, at least. For

01:24:49.529 --> 01:24:53.378
market operations and, and send price signals to generators.

01:24:53.899 --> 01:24:56.409
It would establish a clear signal for generators to

01:24:56.418 --> 01:24:59.798
self commit and would mitigate risk to those units

01:24:59.810 --> 01:25:01.930
that choose to commit for the reasons I highlighted

01:25:01.939 --> 01:25:05.939
in the memo. Which are uh fuel variability, fuel usage

01:25:05.949 --> 01:25:08.838
variability as a part of existing contracts with their

01:25:08.850 --> 01:25:11.680
suppliers. And wear and tear on those facilities, they're

01:25:11.689 --> 01:25:13.958
going to be compensated for lighting that thing up

01:25:13.970 --> 01:25:18.329
and ramping into the operating day. Ultimately, I believe

01:25:18.338 --> 01:25:21.819
that this would reduce rucking once implemented. And

01:25:21.829 --> 01:25:25.069
crucially, we are setting the market up to value duration

01:25:25.539 --> 01:25:28.529
uh and to further enhance the value of flexibility.

01:25:28.838 --> 01:25:32.720
The energy only market has been exceptionally efficient

01:25:32.729 --> 01:25:37.479
at uh valuing flexibility. ORDC was a major step

01:25:37.489 --> 01:25:41.520
in in that effort um almost 10 years ago, gosh 10

01:25:41.529 --> 01:25:46.829
years ago now. Um but the problem that we will face

01:25:46.838 --> 01:25:49.869
in the near future. As we just talked about is Winter.

01:25:50.479 --> 01:25:54.588
And Winter in a high intermittent environment um with

01:25:54.600 --> 01:25:57.708
batteries and their state of charge limitations.

01:25:57.720 --> 01:26:00.208
Duration is going to be an important capability that

01:26:00.220 --> 01:26:02.819
we have to have in the resource mix moving forward.

01:26:02.829 --> 01:26:05.770
To cover that area of darkness, that cold winter night.

01:26:06.088 --> 01:26:10.250
As Hannah uh highlighted in their comments under this

01:26:10.259 --> 01:26:11.750
uh under this project.

01:26:13.588 --> 01:26:14.208
Um

01:26:17.708 --> 01:26:21.199
I do not believe that this policy works in isolation.

01:26:22.378 --> 01:26:28.548
I believe um that in order to take a step on this

01:26:28.659 --> 01:26:33.729
uh component works in tandem with other components

01:26:33.739 --> 01:26:37.439
of a broader uh reliability framework that now exist

01:26:37.449 --> 01:26:42.819
especially with passage of house Bill 1500 which requires

01:26:42.829 --> 01:26:47.418
us to build a uh D R R S program in some

01:26:47.430 --> 01:26:50.899
form or fashion. It also works with the Load program

01:26:50.909 --> 01:26:54.000
that we will have to build. Uh and ultimately, the

01:26:54.009 --> 01:26:57.088
PCM will set us up to succeed in addressing the problems

01:26:57.100 --> 01:27:00.548
of operational flexibility and resource adequacy. But

01:27:00.560 --> 01:27:05.939
given the uh the conditions of statute. PCM will act

01:27:05.949 --> 01:27:11.909
as a capstone uh revenue stream in a revenue stack.

01:27:11.918 --> 01:27:16.509
Associated with dispatchable and long duration facilities.

01:27:16.979 --> 01:27:21.239
I also believe that um I believe ERCOT is currently

01:27:21.250 --> 01:27:24.489
looking at and, and I believe we should look at.

01:27:24.899 --> 01:27:30.149
Uh expeditiously deploying, deploying the DRRS required

01:27:30.159 --> 01:27:33.168
under statute. Which works hand in glove with this bridge

01:27:33.180 --> 01:27:38.500
mechanism. To further incent older more economically

01:27:38.509 --> 01:27:42.319
marginal generation to bid into a program to ramp in

01:27:42.329 --> 01:27:45.759
as needed. Into an operating day after called upon by

01:27:46.029 --> 01:27:50.548
ERCOT. Um I believe we could potentially repurpose

01:27:50.560 --> 01:27:53.720
an existing ancillary service such as nonspin. Once

01:27:53.729 --> 01:27:56.878
we know more about how ECRS, the new ancillary

01:27:56.890 --> 01:28:00.720
service which has just gone live. Um attracts the more

01:28:00.729 --> 01:28:03.979
flexible generation into that service, thus leaving

01:28:03.989 --> 01:28:08.350
available a tool that we could use um and meet the

01:28:08.359 --> 01:28:11.939
legislatures of intent of rapidly deploying such a

01:28:11.949 --> 01:28:15.829
service that will have no other effect in helping improve

01:28:15.838 --> 01:28:19.539
reliability. So I, I hope I set the table with that.

01:28:19.548 --> 01:28:21.829
and would value any thoughts from my colleagues. I

01:28:21.838 --> 01:28:24.069
think you did a great job in kind of laying everything

01:28:24.079 --> 01:28:26.789
out. And again, just a general discussion today. I

01:28:26.798 --> 01:28:28.939
don't think we're planning on taking any kind of formal

01:28:28.949 --> 01:28:32.659
action. But um I would really welcome, you know, thoughts

01:28:32.668 --> 01:28:35.588
and ideas on this and more going forward. Sure. Um

01:28:35.600 --> 01:28:38.128
(item:22:5444, Commissioner Cobos’ thoughts on bridging solutions) I'd like to, you know, just sort of echo some of the

01:28:38.140 --> 01:28:40.168
statements that Commissioner McAdams made. I think

01:28:40.180 --> 01:28:42.779
you're beating the drum that I've been beaten since

01:28:42.789 --> 01:28:45.338
um you know, the beginning of the year, if not before.

01:28:45.350 --> 01:28:48.208
And I think you know the, the introduction of the

01:28:48.220 --> 01:28:51.458
bridge solution was very important. Um And, and I,

01:28:51.470 --> 01:28:54.039
you know, appreciate ERCOT hard work in evaluating

01:28:54.168 --> 01:28:58.899
a robust menu of bridging options. And um ultimately

01:28:58.909 --> 01:29:01.470
I think from my perspective the, the main goal of

01:29:01.479 --> 01:29:05.560
a bridging solution is to help reduce RUC and reliability

01:29:05.569 --> 01:29:08.810
unit commitment. The solution should improve generation

01:29:08.819 --> 01:29:11.128
self commitment, thereby reducing the need for ERCOT

01:29:11.239 --> 01:29:13.939
to have to RUC units. To meet expected electricity

01:29:13.949 --> 01:29:17.279
demand and the solution should rely on a market driven

01:29:17.289 --> 01:29:20.418
mechanism that can be implemented in an efficient expeditious

01:29:20.430 --> 01:29:24.220
manner. Um The reduction of RUC is important as you

01:29:24.229 --> 01:29:26.779
as you've highlighted. Um And I've highlighted in prior

01:29:26.789 --> 01:29:30.259
memos, um that RUC is an out of market action that

01:29:30.270 --> 01:29:33.418
has a distortion impact on the market. And has a physical

01:29:33.430 --> 01:29:36.259
impact on our older long duration generation assets.

01:29:36.548 --> 01:29:39.048
That are needed to ensure reliability during multiday

01:29:39.060 --> 01:29:45.020
extreme winter weather events. Secondly, um the bridge

01:29:45.029 --> 01:29:48.088
um by driving generation self commitment in the real

01:29:48.100 --> 01:29:51.088
time market. Uh self committed generation units will

01:29:51.100 --> 01:29:53.259
receive revenues. That will help cover their marginal

01:29:53.270 --> 01:29:56.310
costs, thereby providing revenue stability to help

01:29:56.319 --> 01:29:58.759
retain existing generation and incent investment in

01:29:58.770 --> 01:30:01.579
new generation. While we await a long term resource

01:30:01.588 --> 01:30:05.759
adequacy solution that will be provided by the various

01:30:05.770 --> 01:30:10.739
provisions of House Bill 1500. Summarily a bridge solution

01:30:10.750 --> 01:30:12.939
should fulfill the objective of stabilizing the market

01:30:12.949 --> 01:30:16.259
by sending a stronger market signal to self 10 cent

01:30:16.270 --> 01:30:18.560
self commitment by generators in the real time market

01:30:18.569 --> 01:30:22.958
and reduce RUC. And I think ultimately, um you know

01:30:23.060 --> 01:30:27.439
we have a proposed solution. And um I look forward to

01:30:27.449 --> 01:30:30.039
further evaluating in open meeting and taking action

01:30:30.569 --> 01:30:30.918
then.

01:30:32.509 --> 01:30:36.359
(item:22:5444, Commissioner Glotfelty's thoughts on bridging solutions) Um I, I appreciate the fact that, you know, you put

01:30:36.369 --> 01:30:40.470
so much in here. I think I can speak for myself that

01:30:40.479 --> 01:30:44.289
I'm still trying to digest what the Legislature has

01:30:44.298 --> 01:30:47.310
done the direction they've given us and how that puzzle

01:30:47.319 --> 01:30:50.390
fits together. I think it's some of it fits pretty

01:30:50.399 --> 01:30:52.850
well together. Some of it has some outliers that we

01:30:52.859 --> 01:30:56.890
have to gonna have to figure out. And I think my discussions

01:30:56.899 --> 01:31:00.039
with many stakeholders since that time. They raised

01:31:00.048 --> 01:31:03.509
some good questions and I'm eager to pose those and

01:31:03.668 --> 01:31:06.500
figure out how we can make the market work. Clearly

01:31:06.509 --> 01:31:10.909
market, I'm a believer in these markets more, more

01:31:10.918 --> 01:31:15.039
out of action, out of market actions. That are corrected

01:31:15.048 --> 01:31:18.668
by other, out of market actions are not the way I want

01:31:18.680 --> 01:31:22.668
to go. But I think we in this time of uncertainty and

01:31:22.680 --> 01:31:25.939
transition, we have to create certainty as best we

01:31:25.949 --> 01:31:31.020
can. We've got to lay down that. We think, you know

01:31:31.029 --> 01:31:35.079
if RUCing is not the best out of market action. Let's

01:31:35.259 --> 01:31:39.208
be specific about how we think we're getting uh that

01:31:39.220 --> 01:31:41.539
number to go down. What are the tools we're giving

01:31:41.609 --> 01:31:46.869
ERCOT in the market to uh to incent this early um uh

01:31:46.890 --> 01:31:50.859
commitment in the day head market. Um these are things

01:31:50.869 --> 01:31:54.779
that we have to do for investment. Uh You know, these

01:31:54.789 --> 01:31:57.640
are, I'm not saying anything you don't know. But um

01:31:57.838 --> 01:32:00.930
I, I'm just I'm eager to get into this discussion.

01:32:00.939 --> 01:32:06.289
I think we've got a lot of uh runway here to um

01:32:06.399 --> 01:32:09.390
to work on. And uh we got a lot of work that

01:32:09.399 --> 01:32:11.949
we have to do. So, uh I look forward to getting into

01:32:11.958 --> 01:32:14.619
all these discussions. You know, here in the, in the

01:32:14.628 --> 01:32:18.270
coming months. You, you know, (item:22:5444, Commissioner McAdams’ follow-up thoughts on his memo) Madam Chair before, uh

01:32:18.409 --> 01:32:21.350
you probably lend your thoughts. I, I would also like

01:32:21.359 --> 01:32:26.560
to point out one point. Um we engage uh to a great

01:32:26.569 --> 01:32:31.810
deal with the financial and capital market. To try

01:32:31.819 --> 01:32:35.750
to understand what we as regulators are thinking. And

01:32:35.759 --> 01:32:39.189
what they are thinking in terms of good investments

01:32:39.199 --> 01:32:45.529
and return on investment. And um I wrote the memo in

01:32:45.539 --> 01:32:48.909
the way that I did. So that it, it can speak to

01:32:48.918 --> 01:32:51.548
a broad audience and trying to understand what is happening

01:32:51.798 --> 01:32:55.668
here in ERCOT. And we are at the forefront of a major

01:32:55.680 --> 01:33:00.189
energy transition. Uh renewables are here and they

01:33:00.199 --> 01:33:04.088
are more are coming. And so the effect that that is

01:33:04.100 --> 01:33:10.128
having is that the driven operator, ERCOT is having

01:33:10.140 --> 01:33:16.699
to do more. To harmonize the flow of power with a what

01:33:16.708 --> 01:33:21.168
is increasingly becoming a dominant variable uh a

01:33:21.180 --> 01:33:23.829
resource mix. That is dominated by variable resources.

01:33:24.560 --> 01:33:28.409
And so I'd like to point out that costs associated

01:33:28.418 --> 01:33:33.489
with each uh component of this framework, um ancillary

01:33:33.500 --> 01:33:37.869
services. And uh well frankly, right now RUCing. But

01:33:38.149 --> 01:33:43.239
those are certain to uh remain in the future. And when

01:33:43.250 --> 01:33:45.729
I say costs, I mean, revenues for specific types of

01:33:45.739 --> 01:33:50.149
generators to help meet that need um to help address

01:33:50.159 --> 01:33:53.668
the variability of, of a renewable heavy uh resource

01:33:53.680 --> 01:34:00.890
mix. That that is the new target. Um that is the new

01:34:00.899 --> 01:34:04.500
signal to financial markets that investment is needed.

01:34:04.798 --> 01:34:07.930
Because and it, and they're unavoidable, we can't get

01:34:07.939 --> 01:34:10.569
get around them. They are the new reliability standard

01:34:10.579 --> 01:34:14.189
which capacity markets have so often debated. We don't

01:34:14.199 --> 01:34:16.458
have a capacity market in Texas, but we've got a heck

01:34:16.470 --> 01:34:19.439
of a lot of renewables. And so revenues associated with

01:34:19.449 --> 01:34:22.430
managing this are only going to increase into the future.

01:34:23.029 --> 01:34:26.539
And uh and the duration limitations of batteries are

01:34:26.548 --> 01:34:31.250
a major constraint on their ability to provide the

01:34:31.259 --> 01:34:35.319
the answer to the overall problem. And uh and that's

01:34:35.329 --> 01:34:39.659
why this is uh this framework is a problem of the sum

01:34:39.668 --> 01:34:43.989
of all parts. Uh solving for that reliability standard

01:34:44.000 --> 01:34:47.048
which we're going to settle upon. I think that's right.

01:34:47.060 --> 01:34:49.569
(item:22:5444, Commissioner Cobos’ follow-up thoughts on the memo) The operational flexibility issue that we're facing

01:34:49.579 --> 01:34:52.470
with more renewables, especially solar coming on the

01:34:52.479 --> 01:34:56.569
system. Is the more is a very near term issue we've

01:34:56.579 --> 01:35:00.369
got to solve for. And filling that gap as the solar

01:35:00.378 --> 01:35:03.628
duck curve becomes more of a canyon as I've read in

01:35:03.930 --> 01:35:07.958
various um thought institutes putting out analysis.

01:35:08.189 --> 01:35:11.189
And that canyon is going to be filled by quick starts

01:35:11.199 --> 01:35:14.239
and batteries and and hopefully we'll send the signal

01:35:14.250 --> 01:35:18.338
not only for quick start investment, but also for additional

01:35:18.350 --> 01:35:21.659
battery investment and technological innovation. To

01:35:21.668 --> 01:35:24.673
increase from two hours to, you know, four hours.

01:35:24.685 --> 01:35:27.923
And filling in that gap and, and hopefully send a signal

01:35:27.935 --> 01:35:30.173
not only to quick starts and batteries, but also to

01:35:30.185 --> 01:35:34.274
solar to show up with batteries. In a collocated fashion,

01:35:34.284 --> 01:35:37.673
where they can participate in ECRS and other ancillary

01:35:37.685 --> 01:35:40.244
services that ERCOT has to offer. And I think ultimately

01:35:40.253 --> 01:35:45.239
as you're saying. As we send us, as we invite the investment

01:35:45.250 --> 01:35:48.259
community to look at our market. There are a series

01:35:48.270 --> 01:35:51.208
of revenue streams that are not going to go away. Um

01:35:51.220 --> 01:35:54.838
our real time market energy streams that we're in bolstering

01:35:54.850 --> 01:35:58.899
with ORDC at this time. Um and are going to

01:35:58.909 --> 01:36:01.720
evaluate a bridging solution that could potentially

01:36:01.729 --> 01:36:04.149
bolster the ORDC in the real time market. So real

01:36:04.159 --> 01:36:08.600
time energy um revenue streams, but also the consistent

01:36:08.979 --> 01:36:13.949
um and expanded and optimized ERCOT ancillary service

01:36:13.958 --> 01:36:18.979
portfolio and other market design and market revenue

01:36:18.989 --> 01:36:21.168
stream offerings from House Bill 1500.

01:36:23.600 --> 01:36:26.819
Thanks for agreeing. I appreciate it Lori. That in a very

01:36:26.829 --> 01:36:28.878
long winded way. I just told you I, I'm in agreement.

01:36:30.439 --> 01:36:33.409
I think this has been a very robust discussion. And

01:36:33.798 --> 01:36:36.359
you know, our North Star continues to be reliability.

01:36:37.619 --> 01:36:40.399
I like to tell folks whether you are a consumer, whether

01:36:40.409 --> 01:36:43.838
you're residential, whether you are industrial or business

01:36:43.869 --> 01:36:48.500
reliability is key. And I think there's no doubt that

01:36:48.509 --> 01:36:52.869
um Texas has the talent, the resources, the spirit

01:36:52.878 --> 01:36:56.418
um engagement. I mean, I'm from Beaumont. I think back

01:36:56.430 --> 01:37:01.119
to January 10, 1901, when Spindletop flew in and

01:37:01.128 --> 01:37:04.649
provided at that time, more oil than the world had

01:37:04.659 --> 01:37:08.878
ever seen. And really changed the face of, of the nation

01:37:08.890 --> 01:37:12.560
and the world. And you know, Texas was at the forefront

01:37:12.569 --> 01:37:15.819
then has continued to be since then. And I am very

01:37:15.829 --> 01:37:18.208
encouraged by what we've heard today. The resources

01:37:18.220 --> 01:37:23.189
that we have uh from um from ERCOT, from our Staff

01:37:23.199 --> 01:37:26.899
uh from the talent of my fellow Commissioners, from

01:37:26.909 --> 01:37:30.168
the stakeholders. Everyone that is uh keyed up ready

01:37:30.180 --> 01:37:34.100
to go. Um we've heard from the Legislature and to,

01:37:34.449 --> 01:37:37.649
you know, start moving forward with um with bridging

01:37:37.659 --> 01:37:39.668
with reliability. And all the many things that we need

01:37:39.680 --> 01:37:43.029
to do. And recognizing again that they all work together

01:37:43.159 --> 01:37:46.270
and that working together collaboratively. Drawing all

01:37:46.279 --> 01:37:48.668
of the on the talents and the resources. You know,

01:37:48.680 --> 01:37:51.770
not just that physical capital, but that human capital.

01:37:51.899 --> 01:37:55.708
Which I think is um is, is so unique to Texans and

01:37:55.720 --> 01:37:59.199
um so great discussion. Uh I know uh

01:38:00.930 --> 01:38:04.229
uh Kannan is here from ERCOT. And I didn't want to kind of leave

01:38:04.239 --> 01:38:07.100
this topic until maybe I ask you the question. Is there

01:38:07.109 --> 01:38:09.479
anything else from maybe your perspective that you

01:38:09.489 --> 01:38:12.100
think we might be needing to think to think about?

01:38:12.470 --> 01:38:16.329
Um so before I came here, I was trying to think of

01:38:16.338 --> 01:38:19.520
what would be the one main point I would want to share

01:38:19.569 --> 01:38:24.159
with you. And um you've all kind of covered it. So,

01:38:24.168 --> 01:38:28.180
uh you made my life really easy. Um and that is that

01:38:28.668 --> 01:38:33.168
this is gonna be a complex uh problem to solve with

01:38:33.180 --> 01:38:38.500
lots of interactive dynamics. Um and uh if, if you

01:38:38.509 --> 01:38:42.739
try and just kind of do one thing, it might tie your

01:38:42.750 --> 01:38:46.168
hands as far as other uh other measures, you want to

01:38:46.180 --> 01:38:51.000
take. So I really appreciate the leadership about wanting

01:38:51.009 --> 01:38:57.890
to tackle this as a multifaceted problem. And Commissioner

01:38:57.899 --> 01:39:02.489
Glotfelty comments of trying to avoid stacking up things

01:39:02.500 --> 01:39:07.699
to fix what the first item did poorly, but it did other

01:39:07.708 --> 01:39:11.899
things. Well, that would be, I think a really good

01:39:11.909 --> 01:39:15.430
approach to try to avoid that, that type of activity.

01:39:15.649 --> 01:39:18.979
So um you're gonna get bombarded in the next few months

01:39:18.989 --> 01:39:23.128
with lots of data around the reliability standard.

01:39:23.329 --> 01:39:27.958
Um how best to reduce RUC? How best to attract new investment

01:39:27.970 --> 01:39:31.909
into the state? And you need to contemplate all of

01:39:31.918 --> 01:39:36.140
the elements that are in the Legislation. As well as

01:39:36.500 --> 01:39:39.869
um the feedback that you get from our analysis to come

01:39:39.878 --> 01:39:43.310
up with an optimal solution. I think uh Commissioner

01:39:43.319 --> 01:39:47.390
McAdams memo captured that perfectly. Yeah,

01:39:49.000 --> 01:39:53.750
thank you. Um, with that, are we ready to take up Item

01:39:53.759 --> 01:39:56.918
No. uh 15? May I suggest that we go to closed session

01:39:56.930 --> 01:40:02.060
first? Yes. Ok. Um (item:33:Chairwoman Jackson pauses Open Meeting, to hold Closed Session) this brings us to Item No. 33

01:40:02.069 --> 01:40:05.489
closed session. Uh having convened in a duly noticed

01:40:05.500 --> 01:40:10.588
open meeting. The Commission will now at 11:12 on June

01:40:10.600 --> 01:40:14.039
15, 2023, hold a closed session pursuant to Chapter

01:40:14.048 --> 01:40:20.250
551 of Texas government code sections 551.071, 551.

01:40:20.259 --> 01:40:24.458
074 and 551.076. And we'll be back in a few minutes.

01:40:29.500 --> 01:40:34.609
(item:33:Chairwoman Jackson concludes Closed Session, Public Meeting resumed) Closed Session is hereby concluded at 11:44am on June 15,

01:40:34.619 --> 01:40:38.449
2023. And the Commission will resume its public meeting.

01:40:38.798 --> 01:40:41.289
(item:33:Motion to request Attorney General file a petition to TX Supreme Court of Appeals) Having met in closed session. I'll entertain a motion

01:40:41.298 --> 01:40:44.168
to request the Attorney General file a petition for

01:40:44.180 --> 01:40:47.520
review with the Texas Supreme Court of the 3rd Court

01:40:47.529 --> 01:40:52.104
of Appeals decision in RWE renewables, America's LLC

01:40:52.384 --> 01:40:57.515
and TX Herford Nguyen, LLC versus Public Utility Commission

01:40:57.524 --> 01:41:04.444
Case No. 032100356CV. So moved. Second. I have a,

01:41:04.475 --> 01:41:07.185
I have a motion and a second. All in favor, say aye.

01:41:07.265 --> 01:41:09.583
Aye. Motion passes.

01:41:12.119 --> 01:41:15.869
Next up is Item 15. Mr. Journeay, will you please lay

01:41:15.878 --> 01:41:16.909
out this item?

01:41:21.810 --> 01:41:25.708
(item:15:53601, Application for Oncor Electric Delivery Co. to change rates) Item 15 is Docket 53601. Application Oncor Electric

01:41:25.720 --> 01:41:29.329
Delivery Company to change rates. Uh motion was for

01:41:29.338 --> 01:41:33.048
rehearing was filed by multiple parties, multiple parties.

01:41:33.060 --> 01:41:36.939
Excuse me. And Commissioner Cobos had a memo. Commissioner Cobos,

01:41:36.949 --> 01:41:40.470
will you please um walk us through your memo? Thank

01:41:40.479 --> 01:41:43.548
you. Yes. (item:15:53601, Commissioner Cobos’ lays out her memo) So um my memo provides proposed changes that

01:41:43.560 --> 01:41:46.048
would make the Commission's order on rehearing more

01:41:46.060 --> 01:41:49.619
accurate, clear and consistent with prior Commission

01:41:49.628 --> 01:41:54.878
orders. I will note that um based on a late morning

01:41:54.890 --> 01:42:00.088
um identification of, of um some language um for finding

01:42:00.100 --> 01:42:05.680
a fact 282. In my memo on page 5, I would

01:42:05.689 --> 01:42:11.449
like to make a um clarifying question and that is um

01:42:11.458 --> 01:42:16.939
where the fact say states. Oncor's FERC account 368 capacitor

01:42:16.949 --> 01:42:21.449
cost should be allocated on the basis of NCP demand.

01:42:21.458 --> 01:42:27.500
To um I would replace its retail delivery with to all

01:42:27.509 --> 01:42:32.229
rate classes. That is a, a change I'd like to make,

01:42:32.239 --> 01:42:34.390
to make it consistent with the rest of the order.

01:42:36.369 --> 01:42:39.298
I thought you had just gone OPAC on us. You know,

01:42:39.989 --> 01:42:44.168
like there's always a part of OPAC in me Will.

01:42:46.060 --> 01:42:49.180
I'll entertain a motion to grant rehearing. (item:15:53601, Commissioner Glotfelty's thoughts on remand) Can I talk about

01:42:49.189 --> 01:42:52.020
one thing real quick about this, about the, the remand

01:42:52.029 --> 01:42:56.189
issue. And the um so there are two parts of this, these

01:42:56.199 --> 01:42:59.319
remand requests that I think are really right for us

01:42:59.329 --> 01:43:03.128
to discuss, discuss. And, but they're not in this docket.

01:43:03.779 --> 01:43:06.708
Um I think the proposed interconnection timelines that

01:43:06.720 --> 01:43:09.229
Pioneer and TARGA have proposed are really important.

01:43:09.239 --> 01:43:13.819
As we continue to grow the system. Um I do not think

01:43:13.829 --> 01:43:17.750
they should be specifically targeted towards, to Oncor.

01:43:18.020 --> 01:43:20.579
We ought to have that broader discussion on a statewide

01:43:20.588 --> 01:43:23.628
basis about how we ensure that interconnection process

01:43:23.640 --> 01:43:27.729
facilities are paid for in an open and transparent

01:43:27.739 --> 01:43:32.810
way. So similarly, with the DESR provisions that

01:43:32.819 --> 01:43:37.149
Hunt had requested. Um it would be great in my opinion

01:43:37.159 --> 01:43:41.289
for us to adopt this remand. Um but it would only apply

01:43:41.298 --> 01:43:44.319
to one utility and that doesn't solve the problem throughout

01:43:44.329 --> 01:43:47.449
the state. So as we continue to work down this effort

01:43:47.458 --> 01:43:51.149
with our DESR rulemaking. I think it's important

01:43:51.159 --> 01:43:54.909
that we take that up expeditiously that it doesn't

01:43:54.918 --> 01:43:57.289
apply to just one utility as it would if we had have

01:43:57.298 --> 01:44:01.458
modified it here. But that we address that for statewide

01:44:01.509 --> 01:44:05.409
issues and uh try to create clarity. So and one

01:44:05.418 --> 01:44:07.739
thing that I, I meant to say on the, the Pioneer

01:44:07.750 --> 01:44:13.449
and TARGA remand. Is that um, uh the Hunt Energy, we do have

01:44:13.458 --> 01:44:16.979
a docket already. Uh going down the road discussing

01:44:16.989 --> 01:44:19.750
DESRs, uh where this can be addressed. At

01:44:19.759 --> 01:44:24.689
some point in time here, um towards uh we, we're

01:44:24.699 --> 01:44:29.168
gonna open up Section 25 of our code to um uh to address

01:44:29.180 --> 01:44:31.109
transmission issues. That's where their interconnection

01:44:31.119 --> 01:44:33.899
timelines and things would be addressed. So, uh I'm

01:44:33.909 --> 01:44:37.009
hopeful that uh we can address some of those uh this

01:44:37.020 --> 01:44:40.100
year. Uh in a rulemaking when we open up Section 25.

01:44:40.109 --> 01:44:42.100
And, and my understanding is that is moving forward.

01:44:42.109 --> 01:44:45.259
So, so we, we should be able to see something soon

01:44:45.958 --> 01:44:48.390
produced from that. So I, I don't think Commissioner

01:44:48.399 --> 01:44:51.390
Cobos has to worry about any changes to her proposal.

01:44:51.479 --> 01:44:54.470
Absolutely not, I am fully in support of your proposal. I appreciate

01:44:54.479 --> 01:44:57.338
the comments, Commissioner Glotfelty. Um with that,

01:44:57.350 --> 01:45:00.329
(item:15:53601, Motion grant the party's hearing & make changes to the order) um I would move to grant the party's motion for a hearing

01:45:00.338 --> 01:45:02.770
and make changes to the order, the Commission's order

01:45:02.779 --> 01:45:05.088
on rehearing, consistent with my memo. And your discussion.

01:45:05.100 --> 01:45:09.259
And my discussion. Second. My 2nd changes there. Including

01:45:09.270 --> 01:45:12.668
the changes you. Yes, including the changes. And we have a motion

01:45:12.680 --> 01:45:17.029
and a second. All in favor, say aye. Aye. Motion passes.

01:45:19.369 --> 01:45:21.649
(item:33:Chairwoman Jackson adjourns meeting) There being no further business to come before the

01:45:21.659 --> 01:45:24.390
Commission. This meeting of the Public Utility Commission

01:45:24.399 --> 01:45:28.359
of Texas is hereby adjourned at 11:49am.