Meeting Summary – 08/15/24 Open Meeting

Order in which items were taken up: 3, 6, 19, 23, 17, 20, 22, 28, 33, 35, 36, 37, 38, 41, 49, 47, 57 

0.1 – Chairman Gleeson asks for motion to approve items on Consent Agenda

• Commissioners’ recusal memos filed in Project No. 527611.
• Chairman Gleeson recused from Items 8, 17, 20, 22, 28.
• Commissioner Hjaltman recused from Items 5, 20, 21, 22.
• Items placed on the consent agenda by individual ballot: 2, 4, 5, 7-16, 18, 21, 24-27.
• Additional items on the consent agenda where no one signed up to speak: 30, 31, 56.

• Chairman Gleeson requests a motion to approve consent items.
• Motion is approved unanimously.

3 – Docket No. 53063; SOAH Docket No. 473-22-2236.WS – Petition by Outside City Ratepayers Appealing the Water Rates Established by the City of Leander.

• Commissioner Gleeson filed a memo in this docket.
• Motion passed to adopt PFD with modifications & deny appeal, 53063

6 – Docket No. 54820 – Application of Onalaska Water Supply Corporation to Amend Its Certificate of Convenience and Necessity in Polk County.

• Commissioner Gleeson filed a memo in this docket.

• Motion to approve the good cause exception as discussed in the memo.
• All members in favor; motion approved.

17 – Docket No. 56273 – Rate-Case Expense Issues Severed from Docket No. 50788 (Ratepayers Appeal of the Decision by Windermere Oaks Water Supply Corporation to Change Water and Sewer Rates)

• The Commission approved a proposal modified to grant Windermere’s request to recover zero in rate case expenses, following Commissioner Cobos’ memo. 
• The motion passed unanimously.

19 – Docket No. 56589 – Petition by Residents of Grand Lakes Municipal Utility District No. 2, Appealing the Water Rates Established by the District’s Board of Directors

• Motion to modify the PFD consistent with Chairman Gleeson’s memo to appeal water rates established by board for residents of Grand Lakes Municipal Utility District No. 2 .
• Motion passed without opposition.

20 – Docket No. 54657; SOAH Docket No. 473-24-04313 – Application of the City of Lubbock Acting by and through Lubbock Power & Light (LP&L) to Change Rates for Wholesale Transmission Service.

• Motion made to adopt in part and reject in part the ALJ’s PFD, consistent with recommendations made Commissioner Cobos’ memo. 
• Approval of 1.5 debt service coverage ratio
• Approval of the recovery of the franchise fee
• Rejection of ALJ’s recommendation to include LP&L’s payment in lieu of property taxes in costs, based on PURA 35.009.
• Motion passed.

22 – Docket No. 56125 – Commission Staff’s Petition for Declaratory Order Regarding OptOut of Securitization Uplift Charges by Transmission-Voltage Customers.

• Commissioner Cobos’ memo recommends approving the proposed declaratory order with modifications.
• The modifications involve removing the conclusion on whether TIEC’s issue should be addressed in the declaratory order.
• The determination clarifies that the opt-out by transmission voltage customers is non-transferable to another entity.
• No decision will be made regarding TIEC’s issue at this time.

• Commissioner Glotfelty found the issue of uplift charges confusing and sought additional time to understand it.
• The decision was paused and deferred to the next meeting.

23 – Docket No. 56142 – Joint Application of Southwestern Public Service Company and City of Lubbock, Acting by and through Lubbock Power and Light to Transfer Certificate of Convenience and Necessity Rights

• Chairman Gleeson’s memo expressed concerns about the record being light and unclear
• Recommends remanding the application back to OPDM as the applicant bears the burden of proof for compliance with the statute.
• Motion passed to remand the proceeding to OPDM

28 – Docket No. 56651 – Application of Energywell Texas, LLC for a Retail Electric Provider Certificate.

Commissioner Cobos lays out her memo

• Commissioner Cobo’s memo suggests a denial of the appeal stating that the rule language does not allow a good cause exemption.

Commissioner Glotfelty’s thoughts on the memo

• Commissioner Glotfelty questioned whether rules in 25.107 were made following legislation that prevented companies like Gritty from forming, related to Winter Storm Uri.
• Glotfelty noted that many Gritty customers were pleased with the service before the storm and questioned the necessity of prohibiting participation of similar companies.
• Discussion on whether to reconsider rules that prohibit re-entry of principals under specific circumstances, originally set post-Uri.
• Emphasis on need for more retail electric market competition.
• Counterpoint that post-Uri actions were focused on fixing issues which led to stricter rules against market re-entry by principals of problematic companies.
• Mention that ERCOT also updated protocols to enforce these prohibitions.
• Acknowledgment that original strict prohibitions were placed for specific reasons, suggesting possible future amendments.

Barksdale English with clarification on memo

• Barksdale English noted that the wholesale index rule came about following Winter Storm Uri.
• Prior to Winter Storm Uri, retail electric provider rule 25.107 already prohibited principals with revoked rep certificates from serving as principals or controlling members of new representatives.
• Amendments to rule 25.107 included clarifications on the definition of control.
• The principle that revoked certificate holders should not return to the market existed before Winter Storm Uri.
• This is the first instance post-Uri where these specific rules are being applied to a new rep application.
• No other company principals who had faced such revocations have reapplied for rep certificates.

Motion to deny Energywell’s Appeal of Order No. 2

• Motion to deny Energywell’s Appeal of Order No. 2 was made. None opposed.

33 – Project No. 55999 – Reports of the Electric Reliability Council of Texas.

Davita Dwyer, ERCOT’s Sr. Corporate Counsel on the RMR process & ERCOT workshop 

• Specific concern with CPS Energy’s Braunig Units 1 through 3, planned for retirement on March 31 of next year.
• Retirement poses timing issues; units need inspection and potential repair if operated post-retirement date.
• ERCOT planning for next Spring, Summer, and subsequent seasons regarding potential RMR service.
• Consideration of contracting CPS Energy for earlier outages to prepare units for potential RMR service.
• Cost considerations highlighted; CPS Energy provided estimates included in filings.
• ERCOT hosting a workshop on must-run alternatives process to explore lower-cost options.
• Seeking active participation and engagement to drive down costs, including demand response and smaller resource entities.

Carolyn Shellman, Law Firm of Enoch Kever, Lawyer for CPS Energy concerning RMRs

• CPS commits to coordinate with ERCOT if the plants are selected for a Reliability Must-Run (RMR) contract.
• Additional inspections and maintenance would be required if the plants are to operate beyond the planned retirement date. An estimate of costs associated have been shared with ERCOT.

Chairman Gleeson’s question concerning notice of suspension of operations

• Notice of suspension of operations was provided to ERCOT in March of this year (March 13).
• The decision to stop certain maintenance was part of a long-term plan to retire the plants and not expected to affect reliability and safety.
• Five years ago, an investment was made to extend the life of the plants through March 31, 2025.
• Discussion on the necessity of risk mitigation and the need to improve processes to handle notices of suspension of operations cost-effectively.
• Acknowledgment of potential future increases in suspension notices due to an aging and dispatchable fleet.

Commissioner Jackson’s question on management of risk

• Commissioner Jackson suggested a cursory inspection starting with the newest unit  to quickly assess major issues and make informed decisions sooner.
• ERCOT needs to weigh the cost of early inspection against the benefits, and consider alternative plans if major issues are found.
• Considerations were expressed about the high cost and lost opportunity costs during the plant’s downtime.
• Ensuring safety while minimizing downtime and associated costs was emphasized.

Commissioner Hjaltman’s question on outages

• Questioned if fewer outages were taken due to potential plant retirements, leading to possible increased damage.
• Response indicated that maintenance has been conducted as usual and planned, ensuring operational and employee safety. No essential maintenance has been avoided.
• Mentioned unplanned outages were due to unit age, which is expected.

Woody Rickerson, ERCOT’s SVP & COO on RMR analysis

• Woody questioned the total cost of the RMR package, including future potential maintenance, estimated at $150 million.
• Discussion on the impact of new solar and battery resources on the transmission issue.
• New resources already factored into the RMR analysis, yet IROL overloads on the Pawnee to Spruce line still anticipated.
• Potential for new unaccounted generation that may affect the system.
• Avoidance of cascading outages caused by line overloads.
• No final decisions made; the issue will come up at the ERCOT board meeting next week and possibly at the August 29 open meeting.

Gabriel Garcia, CPS Energy’s Regulatory Counsel on costs

• Discussing pre RMR (Reliability Must-Run) costs
• Estimated costs for outages and inspections: $22 million for unit three, $15.8 million for unit two, and $17.3 million for unit one
• Includes outage opportunity cost and repairs to extend unit life
• Clarified that repairs and inspection costs will be more accurate post-inspection
• Commissioner Cobos suggested considering the MRA process to mitigate costs and emphasized the importance of fair calculation of opportunity costs and load costs
• Commissioner Glotfelty asked if the IROL limit considers all 8760 hours of the year or specific times?
• Woody Rickerson answered that calculations are done in real-time, analysis considers 8760 hours with separate summer and winter ratings.

35 – Project No. 54584 – Reliability Standard for the ERCOT Market

Commission Staff’s Werner Roth on changes to final rule and memo

• Staff identified several key issues from comments on the proposal for adoption to be reviewed at the August 29 meeting.
• Primary topic of concern was the application of the reliability standard, with conflicting views on whether it should be a target or require mandatory action. Commenters are looking for clarity on how this standard would be applied in the PFP.
• Current rule requires ERCOT to assess reliability every two or five years but does not compel the Commission to act on recommendations.
• Requests to establish a standard for reliability metrics through either Expected Unserved Energy (EUE) or Normalized Expected Unserved Energy (MEUE), with preference for a three-metric reliability standard.
• Consideration of whether explicit exceedance tolerances should be mandated in the rule; staff recommends maintaining them for clear policy goals.
• Acknowledged need to formalize public comment periods in the rule, proposing 30-day windows after key ERCOT assessments.
• Proposed increasing the frequency of reliability assessments from every five years to every two years.
• Addressed concerns about the magnitude metric’s clarity and proposed relaxing the tolerance level from 0.25% to 1%.
• Highlighted the importance of cost estimates in the results of the assessment, adding a requirement for ERCOT to include these estimates and allow public commentary on them.

Commissioners thoughts and questions on memo

• Support for the target but openness to flexibility in market mechanisms for adding capacity.
• Discussion about NERC moving away from the one-in-ten standard and including EUE in reliability standards.
• Need for a more robust process to periodically review market health and resource adequacy.
• Differentiation between current practices and proposed new target review every two years.
• Potential mandatory actions if target is not met, including increased ancillary services.
• Discussion about not tying the commission’s hands with rigid language.
• Need for flexibility and realistic outcomes in energy vs. capacity markets.
• Commissioner Cobos agrees with Commissioner Glotfelty on using EUE as an additional metric for reliability standards. 
• Commentary on the limitations of market adjustments without guaranteed increase in capacity.
• Description of the new, more robust standard aiming to avoid past market fluctuations.
• Suggestion to clarify the final step in the process for taking action if required.

David Smeltzer gives clarification on memo

• Clarification that the Commission uses ‘will’ to indicate definite action, and does not use ‘must’ or ‘shall’ for its own requirements.
• The Commission will proactively determine whether market changes are needed based on recommendations.
• Commission staff to review and potentially update language by the next session or open meeting.
• Discussion on the importance of including a cost benefit analysis conducted jointly by ERCOT and Independent Market Monitor (IMM).
• Concern about the frequency and cadence of the resource adequacy studies, with a possibility of settling on a two-year evaluation cycle.
• Question on the duration of these studies and their completion timeline each year, with an expectation of completing within one year.

Barksdale English on PCM Cost Benefit Analysis, 54584

• Clarification that ERCOT and IMM will conduct cost benefit analyses in parallel, producing two separate analyses.
• Further discussions with IMM will take place before the next meeting to finalize the approach.
• The team confirmed they have sufficient information to draft a PGRR.

36 – Project No. 55837 – Review of Value of Lost Load in the ERCOT Market.

Commission Staff’s Chris Brown with update on VOLL study

• The customer survey in the ERCOT region was completed earlier this summer.
• Brattle is working on the report and results of the survey.
• A draft of the report has been received by the staff, and they are currently reviewing it.
• A memo will be filed next week for the August 29 open meeting.
• Memo will review the survey results and provide recommendations for ongoing studies and cost benefit analyses.
• Initial review shows no surprising results; a more detailed review will be available at the next open meeting.

37 – Project No. 55000 – Performance Credit Mechanism (PCM).

Werner Roth on PCM design parameters

• Staff filed recommendations on PCM design parameters.
• Initial recommendations provided on final values for design parameters, focusing on parameter 20: framework for complying with the net cost cap.
• Current method calculates net cost by comparing a PCM world to a non-PCM world with added/retired capacity.
• Staff believes ensuring compliance with the $1 billion annual net cost cap is only possible by capping compensation for performance credits at $1 billion, with adjustments for peak and inflation.
• Two downsides of this cap: potential unaccounted savings from PCM, and PCM’s limited ability to achieve reliability standards independently.
• Commission must decide on the 37 design parameters at the next open meeting.
• ERCOT and E3 to file reports with recommendations soon; staff to file final recommendations before August 29 meeting.
• Discussion on the challenges of counterfactual scenarios and assumptions impacting compliance assessments.
• Will discuss the recommendation and any necessary changes at the next meeting.
• Two concerns raised: allocation of hours between Winter and Spring, and metric for determining PC hours based on lowest surplus of total available generation capacity relative to load.

38 – Project No. 56896 – Texas Energy Fund In-ERCOT Loan Program Reports and Filings.

Barksdale English with update on Texas Energy Fund

• Staff filed a memo outlining the process for the next open meeting.
• ERCOT has received over 70 applications seeking more than $24 billion, with 38,000 MW potential new generation.
• Applications are evaluated based on four categories: project technical and regional attributes, project financial attributes, application sponsor history, and application sponsor financial characteristics.
• Five policy priorities include diversity of applicant types and siting location, speed to market, ability to relieve transmission constraints, and diversity of generation technology types.
• Assessment binders, either in paper or electronic format, will be provided to Commissioners next week.
• On August 29, the recommended portfolio will be consolidated and presented for consideration.
• The portfolio will include applicant name, MWs, project location, ranking criteria, and policy priorities satisfaction.
• Commissioners will approve an order delegating to Connie the ability to enter into loan agreements post due diligence.
• Action taken at the August 29th meeting will not make a formal declaration on any of the applicants that will not be invited to due diligence.
• Legislature has appropriated $5 billion out of $10 billion.
• Approval and fund allocation need to be completed by the end of February or beginning of March due to an 8-month due diligence process and 60-day loan agreement execution.

41 – Project No. 53911 – Aggregate Distributed Energy Resource (ADER) ERCOT Pilot Project.

Commissioner Glotfelty lays out his memo on ADER ERCOT pilot project

• Commissioner Glotfelty’s memo aims to maintain the progress of the project without establishing specific completion times.
• The memo does not serve as a directive for staff but a guideline for the task force to continue work.
• Questions raised in the memo are not for immediate resolution but for future discussion by the task force.
• The goal is to determine how to continue utilizing the pilot project or integrate it into the official market.

47 – Project No. 41210 – Information Related to the Southwest Power Pool Regional State

Committee.

Commissioner Cobos provides update on SPP RSC

• SPP RSC met on August 5 and approved increasing the summer Planning Reserve Margin (PRM) from 15% to 16%, effective summer 2026.
• A winter PRM of 36% was established, effective winter 2026-2027 and applying to 2027-2028 winter seasons.
• These PRM changes were passed with a majority in favor, Texas and Oklahoma opposed.
• SPP staff is expected to discuss further increasing the summer PRM to 17% and establishing a 44% winter PRM by the end of this year or early next year.
• Concerns exist about the ability of Load Serving Entities (LSEs) in SPP to comply with these new PRMs due to the need for investments in generation capacity.
• Options to meet PRM requirements include investing in existing generation, building new capacity, or purchasing excess capacity from other LSEs or merchant generators.
• Failure to meet PRM requirements results in deficiency payments, though SPP has a sliding scale for these payments based on the actual deficiency amount.
• The PRM changes will put pressure on LREs operating in SPP within Texas and may impact the switchability of generation units between ERCOT and SPP.

49 – Discussion and possible action on electric reliability; electric market development; power to-choose website; ERCOT oversight; transmission planning, construction, and cost recovery; and electric reliability standards and organizations arising under federal law

• Reminder of workshop on August 22, plan for the Permian basin will be reviewed.

57 – Discussion and possible action regarding agency review by Sunset Advisory Commission, operating budget, strategic plan, appropriations request, project assignments, correspondence, staff reports, agency administrative issues, agency organization, fiscal matters and personnel policy.

Hayley Hall, Commission Staff’s COO on Legislative appropriations request for FY ’26-’27

• Hayley Hall presented the legislative appropriations request for FY ’26-’27, starting next September.
• The baseline budget remains the same as FY ’25, with no across-the-board cuts asked by the legislature.
• Five exceptional items requested in addition to the baseline budget:
  1. Additional staffing focused on the contested case process due to demand for services and caseload growth.
  2. Development of a case management system to gather better data, automate processes, and analyze data efficiently per the Sunset Commission’s recommendation.
  3. Staffing for infrastructure, reliability, and resiliency, including additional CCN volumes relating to Permian Basin reliability plans and other reliability plans, and a Texas version of the federal eagle eye outage tracking database.
  4. Expansion of TEF with a few additional staff due to higher than anticipated response volumes, preparing for the monitoring phase of all four programs.
  5. Replacement of the Power to Choose system with a modern architecture and user interface, last updated significantly in 2015.
• Current FTE cap is 283, with an additional request for 53 FTEs, taking the total to approximately 330.
• Currently, about 253 FTEs are filled, with an additional 50 FTEs being added from the last legislative session.
• Recognition of substantial workload in the Permian Basin CCN proceedings and other expedited contested cases.
• Acknowledgement of Commissioner Jackson’s early advocacy for a case management system.
• Expected joint budget hearings or other hearings to be scheduled in the fall.

57 – Chairman Gleeson adjourns meeting

• Chairman Gleeson officially adjourned the meeting of the Public Utility Commission of Texas.

Click here for the Grid Monitor Summary on this meeting’s agenda items 51, 52, 58, 43, and 44, CenterPoint Energy and Storm Response related items.