Meeting Summary - 01/31/2025 Open Meeting

▶️ 0 - Chairman Gleeson calls meeting to order

• Next meeting scheduled for February 13th will start no earlier than 11 AM due to a legislative hearing.

▶️ 0.1 - Commission Counsel Shelah Cisneros lays out Consent Agenda

• Commissioner Hjaltman recused from items 5, 14, and 15.
• Items placed on consent agenda through individual ballot: 3, 6, 7, 10 through 15, 17, 18, 20, and 36
• Item 4 will not be removed from the consent agenda.

• Chairman Gleeson requested a motion to approve the consent agenda.
• The motion to approve the consent agenda with unanimous approval.

▶️ 1 - Public comment for matters that are under the Commission’s jurisdiction, but not specifically posted on this agenda

▶️ Cyrus Reed - Lone Star Chapter, Sierra Club - Petition to Governor Abbott

• The petition has over 1100 signatures from Texans across the state since its launch in October.
• The petition outlines four demands for a clean, reliable, resilient, and affordable energy grid.
• Invest in a modern electric grid, including the development of regional microgrids, local clean energy, energy storage, and strengthening transmission systems.
• Pay Texans the same as wealthy corporations for using less electricity during energy conservation calls.
• Increase funding and efficiencies for energy savings programs to lower electric bills and reduce stress on the grid.
• Remove anti-renewable policies that hinder solar energy and energy storage development.
• Reed reminded the Commissioners about the need for rulemaking on backup power packages and energy efficiency programs, which are within ERCOT's purview.

▶️ Joe Jimenez - Former President of Windermere Oaks WSC

• Judges acknowledged Texas Business Code requirements for financial defense of volunteers, contrasting with PUC commissioners and staff.
• A rate payer representative's comment was discussed regarding acceptance of a rate increase under 25%, which was not offered as a resolution during the rate process.
• On April 11, 2023, a PUC staff attorney expressed a subjective preference for finite financial limits on legal debts incurred by Windermere, though no legal basis for such limits exists.
• Jimenez suggested considering financial limits on plaintiff attorney fees to balance legal costs, questioning how this would be received by Texas plaintiff attorneys.
• Highlighted inconsistency between PUC actions and Texas legislature's goals for public utility financial solvency.

▶️ 2 - Docket No. 52370; SOAH Docket No. 473-22-07686.WS – Application of East Houston Utilities, Inc. for Authority to Change Rates

• No corrections or exceptions were filed in the docket.
• The Chairman filed a memo expressing concerns over the lack of record support for the settlement, especially concerning affiliate expenses.
• The recommendation was made to deny the application due to insufficient evidence supporting the settlement.
• Guidance was provided for future base rate cases for East Houston Utilities.
• The case has been ongoing for three and a half years, attributed not to staff error but to challenges in settlement.

• A motion was introduced to deny the application of East Houston Utilities for the reasons cited in the memo and previous discussion.
• Document management was directed to draft an order in line with the Commission's decision.
• The motion to deny the application was with unanimous approval.

4 

• Not Discussed

▶️ 5 - Docket No. 55577; SOAH Docket No. 473-24-15740.WS – Application of Aqua Texas, Inc. to Amend Its System Improvement Charges under 16 TAC § 24.76

• A proposal for decision (PFD) was presented by the State Office of Administrative Hearings (SOAH).
• Aqua Texas filed exceptions to the PFD.
• The Administrative Law Judge (ALJ) declined to make changes to the PFD.
• The Chairman filed a memo disagreeing with the burden of proof met by Aqua Texas.
• The Chairman agrees with the ALJ's conclusions and provided modifications and clarifications.
• Lack of sufficient documentation by Aqua Texas was a key issue.
• One participant was recused from the discussion.

• Motion to adopt the PFD with changes outlined in the memo and discussion.
• Motion was approved with unanimous approval.

▶️ 8 - Docket No. 56350 – Application of Quadvest, LP to Amend Its Certificates of Convenience and Necessity in Harris County

• The meeting discussed Quadvest's application to amend its certificates in Harris County, specifically regarding the appeal of Order No. 8.
• The Chairman recommended granting the appeal and lifting the abatement on the case.
• The Chairman filed a memo to clarify differences between this case and a previous case involving Crescent MUD.

• A motion was entertained to grant the appeal of Order No. 8 as discussed in the preceding memo and discussion.
• Motion was approved with unanimous approval.

▶️ 9 - Docket No. 56535 – Petition of Maurice Williams, Kimberly Williams Barnett, and Kristi Williams Neyes to Amend City of Royse City’s Certificates of Convenience and Necessity in Collin County by Stream

• A proposed order was presented with no corrections or exceptions filed.
• The Chairman filed a memo to address a finding of fact and propose delegation to the Office of Docket Management.
• Acknowledgment of the usefulness of the memo in clarifying considerations in similar cases.

• Motion to approve the proposed order was introduced.
• Motion was approved with unanimous approval.

▶️ 19 - Docket No. 57244; SOAH Docket No. 473-25-04144 – Application of Southwestern Public Service Company for Approval of a Purchased Power Agreement with Wildcat Ranch Energy Storage, LLC and for Related Relief Severed from PUC Docket No. 55849

• A SOAH proposal for decision (PFD) was presented.
• SPS filed exceptions to the PFD.
• The SOAH Administrative Law Judge (ALJ) declined to make changes to the PFD.
• The Chairman filed a memo proposing changes to the findings of fact.
• The recommendation is to adopt the PFD with the Chairman's proposed changes.
• The recommendation includes denying SPS's request for approval of the PPA.

• Motion to approve PFD with the outlined modifications was moved and seconded.
• Motion was approved with unanimous approval.
• Permission granted to defer Item 16 to a future meeting.

21-22

• Not Discussed

▶️ 23 - Project No. 55999 – Reports of the Electric Reliability Council of Texas

▶️Chad Seely – ERCOT Sr. VP of Regulatory Policy - Update on work with CPS Energy

• Continued collaboration with CPS Energy on finalizing the unit 3 RMR agreement, which has not yet been executed.
• Budget costs for unit 3 increased by $8 million, and overall costs for all three units increased by $11 million, due to inspection, equipment, and compliance costs.
• Despite increased costs, unit 3's benefits outweigh the value of loss load from potential rotating outages.
• Finalizing RMR agreement with CPS by addressing inspection process, communications, and emissions issues.
• Plan to execute the RMR agreement with CPS in February to begin outage inspections in March.
• For units 1 and 2, working with partners to relocate mobile generation units from Houston to San Antonio with a cost estimate of $50 to $55 million.
• Scrutinizing costs for relocating mobile generation assets to ensure high service levels for ERCOT in San Antonio.
• Seeking a special board meeting in late February or early March for final analysis on units 1 and 2 versus mobile generation solutions.
• RFP for competing solutions mostly unsuccessful due to eligibility or cost issues.
• Ongoing efforts to accelerate South Texas Project No. 2 transmission projects anticipated completion in 2029.
• Obligation to provide an exit solution within 90 days after entering an RMR agreement.
• Mobile generation units are targeted to be available by early summer, potentially in stages.

▶️Kristi Hobbs – ERCOT VP - Release of Capacity Demand & Reserve Report, 55999

• The release of the capacity demand and reserve report was delayed last December due to new rule changes.
• The report presentation is being revamped to meet the new reporting requirements.
• ERCOT plans to come out with a market notice announcing a release date for the report.
• Expected time frame for the report release is the week of February 10th, with an exact date provided in the market notice.

24

• Not Discussed

▶️ 25 - Project No. 55718 – Reliability Plan for the Permian Basin under PURA §39.167

▶️ Kristi Hobbs – ERCOT VP of System Planning & Weatherization - Study & Cost Comparison Filed Document

• Emphasis on the importance of transmission planning due to increasing renewable energy penetration, generation retirements, and substantial load growth in Texas.
• Historical context of Texas' voltage system changes, noting the last change from 138 kV to 345 kV in the 1960s.
• Permian Basin study initiated in December 2023 showed a 43% increase in energy needs compared to major urban areas, signifying significant transmission investment requirements.
• Comparison between 345 kV and 765 kV transmission plans: the 765 kV requires fewer upgrades, offers greater efficiency, and projects lower energy costs in the long term.
• Discussion of live/hot work for transmission upgrades and its increased cost and difficulty due to system dependency and limited outages.
• Cost estimates for new construction: approximately $31 billion for the 345 plan and $33 billion for the 765 plan, narrowing to a $1 billion difference with live work considerations.
• Economic analysis highlights: the 765 kV plan promises annual energy cost savings of approximately $229 million and $28 million in production cost savings.
• Line loss reductions with the 765 kV plan are significant, equating to reduced energy loss equivalent to a 128 MW generation resource, saving $16.2 million annually.
• The 765 kV plan increases transfer capability and improves system stability, especially in regions like West Texas, with a noted 13% improvement.
• Sensitivity study on load forecasts shows 765 kV as optimal even with lower-than-expected load materialization, continuing to provide substantial benefits.
• Discussions on flexibility of 765 kV in adapting to unknown future load and generation locations, acting as a 'power highway'.
• Considerations of supply chain issues highlighted, with 765 kV supply ramp-ups in line with industry trends and anticipations for Texas.

▶️Barksdale English – PUC Deputy Executive Director - Stakeholders Workshop, 55718

• Staff plans to hold a workshop with stakeholders focusing on supply chain discussions.
• Discussion on using MISO for cost comparisons and whether different data is needed.
• Feedback from stakeholders indicates some TSPs believe costs could be lower than estimated.
• Exploration of lessons learned from MISO's 765 kV preparations and potential adoption of procedures.
• Importance of setting standards for higher voltage utilities to ensure efficiency and interconnectivity.
• Comparisons between the prior CREZ project and the current statewide plan to highlight differences and benefits.
• Advantages of a 765 kV system over a 345 kV system regarding efficiency in moving power to regions like the Permian Basin.
• The 765 kV system may have faster build-out potential compared to 345 kV due to fewer required new miles.
• Clarification on the size and structure of 765 kV towers compared to 345 kV towers.
• Discussed reaching out to other regions with 765 kV systems for insights on system resiliency and benefits.
• The necessity of building a comprehensive 765 kV loop instead of piecemeal sections for optimal power transfer and future scalability.
• Urgency highlighted due to current system capacity limitations and rising congestion costs, suggesting immediate action is ideal.

▶️Prabhu Gnanam – ERCOT Grid Planning Director - Building transmission for system demand, 55178

• Building transmission now at 345 kV is crucial to meet current system demand and avoiding higher costs later.
• Delaying the construction of 765 kV lines will result in added expenses in the future.
• Investing in infrastructure today is both for current and future system capabilities.
• Early construction is akin to building a larger highway initially, preventing future congestion and additional costs.
• The approach involves balancing immediate needs with long-term infrastructure planning.

▶️Harika Basaran – Commission Staff - Update on ERCOT analysis

• Staff compiled questions for ERCOT based on the draft and meeting discussions.
• Questions will be posted this afternoon with responses requested by February 14.
• A workshop is planned for March 7 to discuss responses.
• Recommendations will be made for the April Open Meeting, with potentially two meetings in April.
• Discussion included considerations for supply chain impacts, scheduling factors, and examples of system resiliency.
• Stakeholder feedback on immediate vs. future implementation of 765 kV systems was also highlighted.

▶️Chairman confirms Commissioner Jackson as point of contact for Permian Basin, 55178

• Commissioner Cobos is leaving, creating a need for a new point of contact.
• Commissioner Jackson has been confirmed as the new point of contact for the Permian Basin.
• The focus is on ensuring Texas has adequate generation and transmission capacity for the future.

26

• Not Discussed

▶️ 27 - Project No. 56022 – Reports of Texas Reliability Entity, Inc

▶️Joseph Younger – Texas RE VP & COO - Priority risk areas, 56022

• Strong communication with PUCT is crucial for Texas RE's activities, with quarterly meetings being instrumental.
• NERC and Texas RE identified eight risk priorities for 2025, split between energy and security issues.
• Energy risk priorities focus on transmission planning, inverter-based resources, and validating generator model data.
• Emphasis is on extreme weather preparations, including new federal winterization requirements.
• Focus continues on facility ratings and ensuring entities have robust programs.
• Security priorities include cybersecurity vulnerabilities, remote connectivity, and supply chain security.
• Low impact resources have become a focal point due to potential security threats.
• White House’s energy modernization plan highlights supply chain risk for new energy technologies.
• Increased attention to physical security of critical infrastructure due to uptick in events.

▶️ Mark Henry – Texas RE Chief Engineer & Director of Reliability Outreach - Long term reliability assessment

• The LTRA is a cooperative effort conducted since the early 1990s.
• Distinction between the LTRA and ERCOT's capacity demand reserve (CDR) report, with LTRA having a broader scope and using older data.
• The LTRA highlights elevated risk for ERCOT in 2026 due to increasing demand growth.
• Observations include a national upward trend in demand growth and shifts from dispatchable generation to solar, batteries, and wind.
• Concerns about supply chain issues affecting transmission and construction outside ERCOT.
• Growth in transmission nationally with an addition of 9,000 miles reported.
• ERCOT is experiencing significant demand growth, projecting 4.6% growth from 2025 to 2029.
• ERCOT's generation mix heavily reliant on solar and batteries, necessitating awareness of limitations.
• Emphasis on planning methods, demand response, and use of batteries in ERCOT.
• Recommendations focus on policy changes for retirement management, streamlining generation and transmission permits, and coordination between gas and electric industries.
• Importance of maintaining essential reliability services amid changes in the resource mix.
• NERC's ongoing efforts in reliability standards development, monitoring, and enforcing activities.

▶️ 28 - Project No. 57004 – Texas Energy Fund Grants for Facilities Outside of the ERCOT Region

▶️ Allison Fink – Commission Staff - Recommendation of adoption for TX Energy Fund, 57004

• The staff recommends that the program should not allow new generation projects as eligible types.
• The program will only cover capital investments, excluding operations or maintenance costs.
• Subcategories under subsection b 3 (a through d) are defined as exclusive lists, not examples.
• The legislative authorization focuses on modernization, weatherization, reliability and resiliency enhancements.
• New generation is not included as an objective in the statutory language.
• A $1,000,000,000 allocation was made to this program, less than amounts allocated for new generation in other programs.
• Battery projects are considered eligible if they support transmission and distribution rather than act as stand-alone new generation assets.

▶️ David Smeltzer – Commission Staff - Standards on Existing Facilities, 57004

• Emphasis on using existing facilities and enhancements like storage for resiliency without high costs or creating new facilities.
• Proposal to rework the draft for fair and consistent application to technologies like small generators.
• Clarification that small generators or batteries shouldn't be used for backup in non-grid assets like town halls or hospitals.
• Intent to use technologies in ways that support grid resiliency in accordance with the statute.
• Consideration of wording adjustments to ensure clear guidelines for funding applications related to these technologies.

▶️ Barksdale English – Commission Staff - Reporting measurements & metrics, 57004

• Discussion on implementing reporting measurements and metrics for grant recipients to ensure funds for energy storage and mobile generation are used appropriately for resiliency.
• Clarification that grant funds are intended only for backup, resiliency, and reliability, not for ERCOT market activities.
• Suggestion to add further clarification on the CCN applicability in the language of the rules for the benefit of future program participants.
• Maximum amount per applicant for funding capped at $200 million, regardless of the number of projects.
• Discussion on ensuring that smaller entities have access to funding by not carving out specific funds for them but relying on the distribution of available funds after larger entities.
• The subcategories of grant programs are exclusive, driven by legislative intent to prioritize quick implementation for mitigation and enhanced resiliency.

29-32

• Not Discussed

▶️ 33 - Project No. 56000 – Firm Fuel Supply Service

▶️Matthew Arth – ERCOT Electric Regulatory Attorney - Update on firm fuel supply service project, 56000

• ERCOT conducted a recent survey to understand resources available for firm fuel supply service.
• Survey included two additional questions aimed at increasing market liquidity.
• Questions targeted natural gas resource entities regarding qualifying pipeline definitions.
• Survey results suggested up to 57 additional generation resources could participate if new definitions were adopted.
• The goal was to inform about the potential changes before the 2025-2026 supply service season's RFP release in late July or early August.
• ERCOT is ready to sponsor an NPRR to expedite changes if desired.

▶️ Tyler Nicholson – Commission Staff - Expanding program & increased risk, 56000

• The expansion could lead to increased risk when comparing on-site fuel oil usage to utility-owned pipelines, though the risk is considered marginal.
• Three criteria from the TAC-approved NPRR help ensure minimal risk, particularly regarding past performance during the event Uri.
• Staff will collaborate with ERCOT and IMM in NPRR development, with further input when presented to the commission.
• Current limitations on FFSS procurement will be evaluated, potentially resulting in separate offer caps for fuel oil versus gas.
• Expansion is expected to increase competition, moving from low thirties to roughly 90 resources, thus improving resiliency cost-effectively.
• There was confirmation that no providers curtailed during Uri are included in the current expansion proposal.
• The approach taken fits the conservative strategy initiated earlier, ensuring adequate services reach generators.

▶️ Harika Basaran – Commission Staff - Budget & Caps, 56000

• Process will involve stakeholder engagement including IMM, ERCOT, and others.
• Commitment to brief attendees if any issues arise.

34-35, 37-43

• Not Discussed

▶️ 43 - Chairman Gleeson adjourns meeting