Meeting Summary – 09/12/24 Open Meeting

0 – Chairman Gleeson calls meeting to order

0.1 – Commission Counsel Shelah Cisneros lays out Consent Agenda

• Items 2, 5 to 13, 18 to 21, and 23 to 26
• Item number 31 from the rules and projects portion of the agenda was also placed on the consent agenda.

1 – Shelah Cisneros confirms there are no Public Comments

• No one signed up to speak on any of the rules and projects.

3 – Docket No. 54147 – Application of Rolling V Ranch Water Control and Improvement District No. 3 of Wise County for a Certificate of Convenience and Necessity and for Dual Certification with the City of Rhome in Wise County.

• Commission Staff filed exceptions to the proposed order.
• ALJ filed a memo declining to make changes to the order.
• Commission Counsel filed a memo recommending changes to the order.
• The Chairman filed a memo in relation to this docket.
• The Chairman recommended approval of the proposed order with modifications from their memo, including a good cause exception for demonstrating certain financial resources and adding an ordering paragraph.

Motion to approve proposed order, 54147

• Motion to approve the proposed order consistent with the memos from the Commissioner and Commission Counsel passed unanimously.

14 – Docket No. 48205; SOAH Docket No. 473-18-3823 – Complaints of Multiple Tenants Against Palm Shadows Resort, LLC, Palm Shadows MH & RV Park, and Affordable Housing Communities, LLC Regarding Electric and Water Service Billings

• Chairman filed a memo regarding this issue.
• Recommendation to remand the docket to docket management.
• Objective is to assess the complainant’s position and decision on proceeding 

Motion to direct OPDM to draft order and remand proceeding to docket      management, 48205

• Motion to direct OPDM to draft an order to remand the proceeding to docket management passed unanimously. 

15 – Docket No. 52218; SOAH Docket No. 473-21-3273 – Complaint of O. Onumah, Ph.D. and N. Onumah Ph.D. Against CenterPoint Energy Houston Electric, LLC.

• SOAH proposal for decision is before the council.
• The Onumah’s filed exceptions.
• CenterPoint filed a correction.
• SOAH ALJ filed a letter recommending one correction to the PFD.
• The Chairman filed a memo in this docket.

Motion to adopt PFD consistent with the changes within Chairman’s memo, 52218

• Motion to adopt PFD as per Chairman’s memo passed unanimously.

16 – Docket No. 53377; SOAH Docket No. 473-23-04518 – Complaint of Engie Energy Marketing NA, Inc. and Viridity Energy Solutions, Inc. Against the Electric Reliability Council of Texas, Inc

• SOAH proposal for decision presented.
• Parties filed exceptions and replies.
• SOAH ALJ recommended one change to the PFD.
• Oral argument was requested and granted.
• Commissioner Cobos filed a memo.
• Decision deferred to the next or subsequent open meeting after hearing oral arguments.

Stephen Mack on behalf of Engie Energy Marketing & Viridity Energy Resources, 53377

• Engie and Viridity provided RRS continuously for five days, as instructed by ERCOT.
• Because the load resources were deployed they lost their capacity, preventing them from being scheduled in the next day-ahead market.
• Engie and Viridity sought remedial relief to receive $47.5 million for the service they provided during Winter Storm Uri.
• ERCOT credited Engie for deployment on February 15 but charged them $47.5 million for the service from February 16 to 19.
• Stephen Mack argued that not receiving credit sends a negative signal to the market, discouraging future participation.
• The case highlighted the complexity of protocols and the need for a good cause exception to be granted by the Commission.
• Stephen Mack emphasized the importance of fair compensation for provided services in emergency situations to ensure customer confidence and participation.

Elliot Clark on behalf of ERCOT, 53377

• Elliot Clark stated that the complainants failed to meet their burden of proof, showing no violations of ERCOT protocols.
• ALJs found that ERCOT adhered to protocols correctly.
• The proposal for decision spans 113 pages, detailing two years of litigation, includes depositions, subpoenas, discovery fights, and extensive testimony.
• ALJs rejected every argument presented by the complainants.
• A handout with key quotes from the proposal for decision was distributed to commissioners.
• Evidence showed that Viridity benefited by not participating in the day-ahead market, avoiding $65 million in ancillary service imbalance charges.
• Viridity made a conscious business decision and emails show clear intent to avoid confirming trades.
• ALJs found no actual confusion by the complainants during the storm.
• The day-ahead market was functioning properly, with most QSEs participating as required.
• ALJs found alternatives for Engie to recover losses via contracts with Viridity and load resources.
• Complaints raised by the complainants pose serious reliability concerns, such as arguing against the importance of accurate telemetry during emergencies.
• Telemetry showed zero responsibility from complainants, leading ALJs to conclude that the claimants did not provide required ancillary services.
• Resource status codes were misreported, leading to dangerous grid reliability issues.

Floyd Walker with Commission Staff, 53377

• Commission Staff agrees with ERCOT’s positions but wishes to address key points.
• Complainants did not provide RRS during the disputed period (February 16-19 ending at 09:00).
• Evidence includes schedules and real-time telemetry indicating non-provision of RRS.
• The PFD’s conclusion that RRS cannot be provided by deployment was not disputed.
• Complainants’ assertion that Viridity provided RRS is incorrect.
• Discussion on capacity for interruption is irrelevant as it is not an ancillary service and cannot be scheduled, traded, or offered in the day-ahead market.
• The claim that Viridity was prohibited from indicating its low resources had capacity for interruption is disregarded as there’s no way for QSE to make this kind of indication.
• A load resource can provide RRS without having capacity for interruption.
• Capacity argument based on the false premise that capacity for interruption is an ancillary service. 
• There is no entitlement to compensation for deployment as per ERCOT nodal protocols.
• Viridity received no compensation for deployment on February 15, 2021, despite partial deployment of load resources.

Stephen Mack’s reply to ERCOT and Commission Staff’s opening statements, 53377

• Stephen Mack offered to address questions on email communications, intent, telemetry, or resource status codes.
• Stephen highlighted that a load resource cannot be offered or traded in the DAM without capacity.
• ERCOT and staff’s arguments depend on a definition of capacity that is not in the protocols.
• Protocols define capacity for non-controllable load resources as load that can be curtailed.
• Since deployed load resources were reduced to zero, their capacity was zero, thus they could not be offered in the day-ahead market.
• Engie and Viridity did not offer and request compensation due to the defined capacity issue.

Commissioner Glotfelty’s questions to ERCOT and Commission Staff, 53377

• Commissioner Glotfelty questioned whether Viridity and Engie’s customers would have been penalized for ramping back up without dispatch instruction.
• ERCOT indicated that the customers were unable to ramp back up as they were frozen and unaware of a penalty for such actions.
• Discussion on changing ancillary service positions during an emergency.
• Clarification provided on the protocols, stating that obligations can only change in emergencies with proper scheduling and telemetry.
• Viridity was found to not have provided the required services due to business decisions and risks associated with contracts.
• Stephen Mack responds, referencing emails that indicated concerns over credit risks and capacity issues in scheduling.
• Stephen Mack states that the issue of the ability to schedule into the day ahead market was key, stressing the importance of telemetry and proper scheduling.
• Staff argued that there is no requirement to have capacity to schedule RRS.
• Discussion on how RRS provision and scheduling operate without the need for actual capacity.
• Clarification that dispatch instructions were provided up until Viridity indicated unavailability.
• Viridity’s status change to OUTL meant they were not providing RRS and ceased to receive dispatch instructions.
• Commissioner Glotfelty raised concerns about ERCOT’s accountability in emergency situations regarding protocol adherence.
• Discussion on the potential penalty structures for violating ancillary service obligations.
• The possibility of protocol changes to address these issues in the future was mentioned.

17 – Docket No. 55255; SOAH Docket No. 473-24-02691 – Application of Southwestern Public Service Company to Amend Its Certificate of Convenience and Necessity to Construct Generation Facilities in Lamb County, Texas and Lea County, New Mexico; for Good-Cause Exceptions; and for Related Relief

• Commission considered SOAH proposal for decision at the July 25 meeting.
• Commission voted to adopt the PFD in part with certain litigated conditions.
• Authority delegated to OPDM to request additional information about hiring a third-party consultant for a prudence review of solar facility costs.
• Review to occur if actual costs exceed estimated costs by more than 10%.
• Two responses filed by Commission Staff and interveners, and SPS.
• Chairman filed a memo in the docket.
• Commissioners agreed SPS should have a role and supported the memo.

Commissioner Cobos’ question on payments to ratepayers

• Commissioner Cobos inquired about the cost of a third-party consultant.
• There was a concern that passing the cost to ratepayers defeats the purpose of a prudence review.
• Discussion acknowledged the importance of ensuring assets are prudent for the best interest of the ratepayer.

Commissioners thoughts on prudence review, 55255

• A third party consultant will be employed if expenditures exceed 10% over budget.
• Inclusion of the AFUDC in the actual cost was clarified and deemed important.
• Consumers may incur slight cost increases due to this process.
• General agreement on the approach of employing third party reviews and additional prudence measures.

Shelah Cisneros addresses Commissioner Cobos’ ratepayer question, 55255

• The draft order attached to the memo includes language specifying that SPS will bear the cost of the consultant.
• Mr. Schifler was noted to have more detailed knowledge on the language proposal by the parties.

Motion to approve, 55255

• Motion passed unanimously. 

22 – Docket No. 56211; SOAH Docket No. 473-24-13232 – Application of CenterPoint Energy Houston Electric, LLC for Authority to Change Rates

• CenterPoint’s appeal of SOAH Order No. 14 is under consideration.
• The Commission voted to extend the time to act on the appeal.
• A hearing in Houston is scheduled for October to gather input from Houstonians.
• The decision on the appeal will be delayed until the October 24 open meeting.

Motion to adopt order to extend time on proceeding, 56211

• Motion to adopt the order to extend time on proceeding 56211 passed unanimously. 

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

Commissioner Glotfelty’s thoughts on ADER, 53911

• A memo was requested to identify potential parties for task force expansion.
• All meetings and participation opportunities remain open to everyone, even if not named in the memo.
• There was a clarification about the phases of the project, involving achieving 80 MW and upgrading ERCOT’s EMS system.
• Monthly meetings are planned for the task force.
• The aim is for the ADER initiative to transition into a market mechanism fully integrated into the ERCOT market.

33 – Project No. 53385 – Project to Submit Emergency Operations Plans and Related Documents Under 16 TAC § 25.53.

• Staff and consultant staff filed a memo.

Commission Staff’s Sherryhan Ghanem on Weather Emergency Preparedness Report, 53385

• Report due to lieutenant governor, speaker of the Texas House, and legislature by September 30, 2024.
• Requirement from Senate Bill 3, section 24, enacted by the 87th Texas Legislature.
• SB3 requires the Commission to analyze EOPs from various electric entities and prepare weather preparedness report.
• Guide House contracted for baseline assessment of EOPs.
• Guide House incorporated ERCOT’s information on seasonal weather preparedness and forecasts.
• Guide House’s findings shown in the Weather Emergency Preparedness Report.
• Staff recommends adopting the report for distribution to state officials.

Guidehouse’s Brent Reed on Emergency Preparedness Report

• The report started in April, focusing on TAC adherence to 25.53.
• Created a risk framework identifying high, medium, and low-risk entities.
• Developed a maturity model that goes beyond just 25.53 requirements.
• Reviewed 693 EOPs out of 990 submitted for 2024.
• High compliance with TAC; few instances of non-adherence.
• Non-filers were reviewed and all but 5 were categorized as low risk.
• 12 maturity indicators were analyzed; most entities rated around medium maturity level. The same result was found for non-ERCOT power regions.
• Weather analysis included performance analysis and operational analysis for winter 2024-2025 and summer 2025.
• High preparedness for upcoming weather events; significant chance of above-normal temperatures and low precipitation for winter and summer.
• 70% response rate of applicable entities for EOPs, indicating Texas’s readiness for extreme weather events.
• Report includes 19 recommendations focused on outreach, process improvement, and TAC modifications, including templates for uniformity.
• Recommendations include specific annexes for floods and tornadoes.
• Suggestions for overall improvements surrounding submitting EOPs and improving tracking by providing a list of assets.

Guidehouse’s Matt Moore on Emergency Preparedness Report, 53385

• Texas entities are largely prepared for weather emergencies.
• Review only included EOPs and did not cover resource adequacy, spare equipment, critical inventory tracking, or ongoing weatherization resilience efforts.
• Develop a plan to address the report’s recommendations for submission to the legislature and governor.
• A plan is needed to contact entities that did not respond to the survey to ensure compliance with the statute.

Commissioner Glotfelty’s Questions on report

• Highlighted that many plans are confidential and high level, which only confirm compliance without providing details.
• Questioned the logic behind applying the statute equally to REPs and TDUs, given their different roles and facilities.
• Asked if tailoring requirements to specific types of entities could be considered.
• Inquired about alignment between ERCOT requirements and NERC standards.

Responses:

• ERCOT representative acknowledged better differentiation needed between REPs and IOUs due to the nature of their resources.
• ERCOT currently prioritizes review based on risk levels.
• ERCOT reviewed all 693 EOPs, with deeper reviews on higher risk ones.
• Indicated possibility for ERCOT to enhance requirements further beyond current NERC standards.

Deputy Executive Director Barksdale English with clarification for Commissioner Glotfelty, 53385

• Different requirements exist for an EOP based on entity type.
• Representatives do not have the same requirements as TDUs.
• All entities are required to file an EOP plan even though the specifics differ.

Commissioners comments on report, 53385

• Discussion focused on EOP post-Winter Storm Uri and the importance of complying with Senate Bill 3 in preparing for extreme weather conditions.
• Recognition of the inclusion of Hurricane Beryl in the assessment and independent investigation projects.
• Question raised about the potential for voluntary audits by more experienced entities to drive continuous improvement.
• Suggestion to use workshops for companies to share best practices.
• Noted variety in EOP responses, ranging from best practices to lower maturity, indicating opportunities for peer sharing.
• Concern about standardization leading to minimal compliance and missing the needs of larger, complex entities.

Motion to approve report, 53385

• Motion to approve the report for distribution and authorize staff to make non-substantive and conforming changes passed unanimously.

34 – Project No. 55718 – Reliability Plan for the Permian Basin under PURA §39.167

• Filings were made by Staff, ERCOT, and Commissioner Cobos.

Commission Staff’s Julia Wagner with update on Permian Basin Reliability Study

Recommendations:

• Approve common local upgrade projects on September 26. These projects are actionable immediately and independent of import path selection.
• Adopt the import path for the 2038 case year. 90% of the load forecast for 2038 is present in 2030.
• Allow time to analyze voltage options for import paths. More information is needed on the 765 kV option.

Primary Recommendation:

• Postpone import path voltage approval until after the December EHV study is published and approve it no later than March 15, 2025. ERCOT to host a workshop and compare costs, benefits, and risks between 345 kV and 765 kV.

Alternate Recommendation:

• Approve 345 kV and 765 kV import plans for 2038 now, allowing transmission service providers to develop CCN applications. Final voltage decision to be made before submission of CCN applications, with recovery of application costs for paths not chosen.

ERCOT’s Kristi Hobbs with update on Permian Basin Reliability Study, 55718

• Kristi Hobbs discussed an amendment addendum that was filed to their initial filing as part of the Permian Basin Reliability Study.
• The amendment involved shifting the endpoint of a 345 kV import path to align with ERCOT’s RTP analysis, aiming to provide better optionality.
• The change supports ERCOT’s approach to handling increased load growth and enhancing system reliability.

Commissioner Cobos lays out her memo, 55718

• Commissioner Cobo’s memo.
• Recommendation to approve a single complete plan through 2038, including common local projects.
• Ensure robust decisions on crucial import paths necessary to serve the Permian Basin.
• Balance between ERCOT completing their EHV statewide analysis and moving forward with preparations for CCNs.
• Authorize TSPs to start preparing CCNs, prioritize three import paths with commonality.
• Proposal to get a commission order to start work while ERCOT continues their study.
• Discussion required on a specific date for final analysis completion and import path finalization.
• Recommendation for approving the common local projects and authorizing TSPs for all five imports, prioritizing three with optionality for 345 and 765 kV.
• Implementation process based on prior frameworks with project ownership determination being crucial.
• Proposal for a Permian Basin reliability plan monitor to oversee the large scale transmission plan build out.

ERCOT’s Kristi Hobbs on Commissioner Cobos’ memo, 55718

• Staff recommendations can be supported with the alternatives in the memo.
• Importance of using the 2038 forecast due to statewide system growth.
• TSPs need to start working on CCNs early due to lengthy contracting periods.
• Optionality plan enables ongoing due diligence for statewide planning.
• Plan options to be finalized by the end of the year: a 345 build-out and a 765 backbone with supporting 345.

TXOGA’s Shana Joyce on Commissioner Cobos’ memo, 55718

• Shana Joyce from TXOGA expressed agreement with Commissioner Cobos’ memo.
• TXOGA supports approving a single complete plan to serve the Permian through 2038, including local projects.
• Appreciation for the optionality for the three of the 5 345 kv lines was expressed.
• The importance of a specific decision date was highlighted, referencing concerns that legislative sessions might delay the project if a decision isn’t made by the suggested timeframe of April to June.

PBPA’s Meghan Griffiths on Commissioner Cobos’ memo, 55718

• PBPA’s goal is to have a fully actionable plan approved by the fall.
• Discussion on preferred timeline for the plan, favoring a date around March 15 and caution against delaying to June.
• Request for input from transmission service providers on practical timelines for preparing CCNs, recognizing a six to eight month preparation period.
• ERCOT has filed an initial backbone for the 765 plan and there will be a workshop on September 18 discussing various aspects of the high voltage lines.

Commissioners thoughts on Commissioner Cobos’ memo, 55718

• Need for reaching a consensus before the next meeting; stakeholders encouraged to bring up any objections or issues.
• Suggested timeline for finalizing the order is between April and June; flexibility in setting a date that suits everyone.

36 –  Project No. 55421 – Texas Advanced Nuclear Reactor Working Group

Commissioner Glotfelty’s update on TX Advanced Nuclear Reactor Working Group

• Final meeting of the working group is planned.
• Draft report is completed and in the final formatting stages.
• Ongoing collaboration with the governor’s office to meet their requirements.
• Expected to release the draft report ASAP.

43 – Project No. 56793 – Issues Related to the Disaster Resulting from Hurricane Beryl

Executive Director Connie Corona on PUC’s Houston public workshop, 56793

• Public workshop scheduled for October 5 at Harris County Department of Education’s Ronald Reagan building.

44 – Project No. 56822 – Investigation of Emergency Preparedness and Response by Utilities in Houston and Surrounding Communities

Executive Director Connie Corona with status update on investigation, 56822

• Filed a memo providing an update on the status of the investigation.
• Received over 16,000 responses to the public questionnaire, which will remain open until after the Houston workshop in October.
• Received almost 120 responsive filings from electric, water, and telecom service providers, cities, trade associations, REPs, and power generation companies.
• A large team led by JB Laser is reviewing the responsive information and preparing the investigation report.
• The report will be presented at the November 21 open meeting and sent to the governor by December 1.

48 – 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.

• Final decisions on meeting cancellations will be communicated to stakeholders, and they should keep an eye on the calendar.

48 – Chairman Gleeson adjourns meeting

• • No further business was discussed.