Meeting Summary - 02/13/2025 Open Meeting

▶️0 - Chairman Gleeson calls meeting to order

▶️0.1 - Commission Counsel Shelah Cisneros lays out Consent Agenda

• Commissioners placed Items 4, 8, 10, 11, 12, 13, 14, 15 on the consent agenda.

• Chairman Gleeson called for a motion to approve the consent agenda.
• The motion to approve the consent agenda was passed unanimously.
• No one signed up for public comment.
• The decision was made to proceed out of order and discuss ERCOT matters first.

▶️2 - Docket No. 56954; SOAH Docket No. 473-24-25125 – Application of Texas-New Mexico Power Company for Approval of a System Resiliency Plan

• An unopposed agreement was addressed within the docket.
• The Chairman filed a memo similar to those for previous resiliency plans.
• Consideration for taking additional time to brief, think through responses, and decide on approval, denial, or modification of the plan.

▶️2 - Stacy Whitehurst – VP of Regulatory Affairs - overview of System Resiliency Plan - 56954

• TNMP covers diverse geographic areas in Texas, each with unique resiliency challenges, such as severe weather conditions like thunderstorms, tornadoes, and hurricanes.
• The system resiliency plan (SRP) for TNMP is tailored to each service area's specific needs.
• The development of the SRP involved hardening, modernization, vegetation management, operational technology enhancements, and flood mitigation components.
• TNMP collaborated with 1898 and company, utilizing major event data, covering 170 years for tropical cyclones and 25 years for other extreme weather events.
• The SRP includes eight key resiliency measures: distribution system resiliency, distribution system protection modernization, vegetation management, wildfire mitigation, flood mitigation, enhanced operation system technology, cybersecurity, and physical security.

▶️2 - Chris Gerety – VP of Technical Services & System Reliability - Distribution System Resiliency Measure - 56954

• Introduction of four programs aimed at improving system resiliency, including hardening full circuits or protection zones backed by a benefit cost analysis.
• Circuit overhead inspections and hardening program focusing on critical elements of circuits not meeting BCR thresholds.
• Mention of a strategic undergrounding pilot program to gather data for informed decisions on future SRP filings.
• Discussion on the distribution system protection and modernization programs, including mainline automated reclosing deployment and lateral recloser deployment.
• Mainline automated reclosing deployment involves modern reclosers for advanced and remote switching during resiliency events.
• Lateral recloser deployment entails installation of reclosing fuse devices to minimize outages and restore service more quickly without the need for truck deployment.

▶️2 - Keith Nix – VP of Operations - Vegetation Management - 56954

• Keith Nix discussed TNMP's transition from reactive to cycle-based vegetation management, with faster cycles in the Gulf Coast area.
• TNMP is enhancing its tree risk assessment by adopting an advanced level two assessment focusing on tree health and the impact of trees outside the right of way.
• The implementation of remote sensing technologies such as LIDAR and aerial enhancements will be used for data collection and program development.
• Under wildfire mitigation, TNMP is focusing on asset hardening, including replacing wooden cross arms and retrofitting poles, and fuels management by clearing defensible space.
• Situational awareness program includes gathering real-time data from weather stations and cameras, shared with first responders to improve fire response.
• Ignition mitigation efforts include replacing spark-emitting equipment and installing fast tripping reclosing to prevent sparks.
• Flood mitigation focuses on enhancing substations to prevent flood damage and ensure quick recovery.
• Enhanced operations systems technology will deploy new technology for a fully functioning outage management system and field area network.
• Project and portfolio management strategies are in place to ensure effective execution of the plan.
• Cybersecurity enhancements include centralizing monitoring capabilities with five dedicated programs.
• Physical security plans involve strengthening fencing and deploying surveillance technology at critical substations.

▶️2 - Commissioner Hjaltman's questions for TNMP - 56954

• Commissioner Hjaltman questioned the pilot project for undergrounding, asking why it's still in the pilot phase and what lessons are expected.
• TNMP has some underground portions mainly in subdivisions, where developers paid for the undergrounding.
• Challenges in undergrounding projects include potential increases in time and costs.
• TNMP seeks experience in undergrounding before establishing firm guidelines for when to justify such projects.
• Future reporting to the Commission will focus on understanding costs, difficulties, and benefit-to-cost analysis.
• Discussion shifted to vegetation management, highlighting the need for proactivity.
• The proposed amount for vegetation management is a third of what a study suggested, intended to cover a shorter timeframe.
• The plan involves a 3-year timeline, with a future filing for additional resources required to complete the work in 5 to 6 years across service territories.
• The discrepancy between a suggested 20-year budget and the planned 3-year execution was questioned.

▶️2 - Jason De Stigter - 1898 - Benefit Cost Analysis - 56954

• The benefit cost analysis considers a 20-year time horizon.
• Vegetation management requires ongoing attention and investment.
• Investments in projects like overhead hardening can provide benefits for up to 40 years.
• The analysis assumes continued operation and maintenance over the entire time horizon to justify the overall program.
• The analysis aims to determine if investment in such projects is worthwhile.

▶️2 - Commissioner Hjaltman's questions on vegetation for TNMP - 56954

• Hiring for vegetation management. Combination of outsourcing labor and hiring internal experts; collaboration with a third party for systems development.
• Wildfire mitigation measures. Collection of data on wildfires originating from and potentially affecting TNMP facilities, including ignitions from outside TNMP's area.
• Safety and regional data management. Need for separating and tracking safety data regionally to provide clear data for consumers.
• Clarification on metric inclusion. Confusion over which metrics were included in the report and if they aligned with the settlement agreement; clarification needed.

▶️2 - Commissioner Jackson's questions for TNMP - 56954

• Discussion on whether wildfire mitigation metrics should include wildfires not started by TNMP facilities.
• TNMP focuses on fires they are responsible for to measure asset protection and ignition mitigation.
• Post-fire analysis for outside ignition sources will track impacts on TNMP facilities.
• Consideration of adding metrics for external ignition sources in the future.
• Variable ability to monitor all wildfires across TNMP service territory.
• Initial plans had higher costs for a situational awareness program within wildfire mitigation.
• Cost reduction achieved by finding alternate suppliers for situational awareness technology.
• Potential to add common metrics like customer minutes interrupted and avoided system restoration costs.
• TNMP's current metrics are tailored to their specific plan costs and capabilities.
• Discussion of financial implications to add system restoration cost modeling.
• Impact of proposed application on residential ratepayers estimated at around $10, down from $13.51 initially.
• Main driver for residential rate impact is O&M costs, specifically vegetation management.
• Rate allocation changes are anticipated due to system growth, possibly shifting more cost to other customer classes.

▶️2 - Chairman Gleeson's questions for TNMP - 56954

• Settlement reached on a benefit-cost ratio of 0.9 for a program; TIEC argued for 1.2.
• Qualitative benefits not included in initial calculation, settled on 0.9 considering these.
• Discussion on programs without performance metrics or cost-benefit analysis.
• Challenges in cost-benefit analysis for low frequency, high impact events.
• Difficulty in quantifying safety and public safety elements in benefits analysis.
• Argument for 0.9 ratio as a prudent investment threshold due to qualitative benefits.
• Consideration of efficiency by completing all necessary investment in a circuit at once.
• Acknowledgment of potentially justifying lower thresholds for specific safety risks.
• TNMP discussed uniqueness of their service territory in resiliency planning.

3 & 5

• Not Discussed

▶️6 - Project No. 55999 – Reports of the Electric Reliability Council of Texas

• Focus on the CDR (Capacity, Demand, and Reserves) report.

▶️6 - Pablo Vegas – ERCOT President & CEO - CDR Cycle - 55999

• Presented significant changes in the structure of the CDR cycle due to legislative impacts and market trends.
• CDR is published biannually in May and December but was delayed to review substantive changes.
• Observed a trend of downward pressure on planning reserves due to rapid load growth.
• Incorporated a larger load forecast and effective load carrying capabilities for wind and solar in the report.
• For the first time, included battery storage contributions in planning reserve margins.
• Introduced reporting of peak net loads and updated criteria for resource inclusion and planned retirements.
• Explained construction of load forecasts using existing loads, customer agreements, and anticipated growth factors.
• Showed a range of scenarios in the CDR to reflect uncertainties in load and supply projections.
• Discussed potential legislative changes affecting large load flexibility requirements.
• Highlighted importance of demand response and policy changes for large load flexibility for immediate reliability benefits.
• Outlined longer-term focus on infrastructure investment and battery optimization.
• Provided insights on potential impacts of market operations not modeled in the CDR economic forecast.

▶️6 - Commissioner Hjaltman's Questions for Pablo Vegas - 55999

• Discussion on federal policies impacting resource adequacy in Texas, including EPA rules affecting the coal and gas fleet and potential future restrictions on building new gas resources.
• Mention of tariffs affecting supply chains and electric power exchanges, potentially increasing costs and slowing down infrastructure development.
• Consideration of modeling different types of load, such as firm and flexible, for better forecasting and reliability benefit to the grid.
• Modeling currently includes loads with an obligation to respond, such as participation in ancillary services.
• Discussion of adding new load classes with defined operating parameters to improve grid reliability and forecasting.

▶️6 - Commissioner Jackson's questions for Pablo Vegas - 55999

• ERCOT is not only an operational entity but also provides crucial data for managing change.
• Real-time co-optimization is a key upcoming initiative aimed at improving resource dispatch efficiency.
• This initiative will help in lowering wholesale costs by optimizing energy dispatch and carrying higher-cost resources in reserve.
• For the first time, batteries will be included in the co-optimization to enhance efficiency.
• The primary focus is on market efficiency without compromising grid reliability.
• Long-term reliability requires attention to load responsiveness and investment incentives in the energy market.
• There is a need to balance efficiency improvements with long-term reliability planning.
• ERCOT is unique due to Texas's growth and requires tailored solutions for efficiency and reliability.

▶️6 - Chairman Gleeson's questions for Pablo Vegas

• ERCOT has limited data for verifying loads provided by TSP officer tested load letters, lacking a standardized process.
• Inconsistencies in TSPs' load counting could pose data accuracy issues.
• There's a need for consistent and transparent criteria for load data verification.
• Load forecasts are key for transmission planning but could benefit from being divided into long-term transmission and reliability views.
• Debate on whether to have separate processes for long-range transmission planning and reliability metrics.
• Recent legislative changes influenced CDR changes with significant adjustments in wind, solar, and storage contributions.
• Increase in reported load forecasts is expected, emphasizing the need for improved understanding of load criteria.
• Concerns were raised on timeline discrepancies in forecast reporting, impacting reliability and operational modeling.
• Upcoming load forecasts might show significant increases, raising questions on how best to utilize the data for planning and reliability.
• Ensuring accurate timing and staging of load activation is critical for quality analysis and reporting.

▶️6 - Matthew Arth - ERCOT - ERCOT's report on proposed magnitude methodology - 55999

• The methodology aligns with the reliability standard rule 25.508, focusing on frequency, duration, and magnitude.
• Magnitude value is not explicitly defined in the rule; ERCOT is tasked with determining it in consultation with transmission operators and commission staff.
• ERCOT issued RFIs in September and November to gather data on load shed rotation programs and determine feasible load shedding magnitudes.
• ERCOT proposes a methodology using 20% of the forecasted winter load, based on the 75th percentile, which equates to 16,000 MW for winter 2024-2025.
• The proposed magnitude implicitly excludes critical public safety, industrial, and natural gas facilities while ensuring compliance with under-frequency load shed requirements.
• Transmission-connected customers not registered as critical are included in the shedtable amount.
• The methodology is not a compliance standard; it offers guidance for evaluating ERCOT's regional reliability and load shed rotation considerations.
• ERCOT seeks commission agreement to implement the proposed methodology for annual reports starting on December 1.
• Overall, the methodology assists in balancing public reliability and health impacts during load shedding.

▶️6 - Werner Roth - Commission Staff - Staff's recommendation on ERCOT's report for proposed magnitude methodology - 55999

• Staff recommended ongoing consultation with ERCOT and transmission operators as required by the rule.
• A methodology has been established but there is an emphasis on continued discussion to adapt if the system changes.
• The methodology is based on the low forecast in the Capacity, Demand, and Reserves (CDR) report, providing more certainty for the upcoming year's values.

▶️6 - Commissioner's Jackson's questions to ERCOT - 55999

• The planning purpose is emphasized, not intended for operational purposes.
• Revisitation of the methodology is planned through consultation between staff and ERCOT by December 1 every year.
• Discussion prior to December 1 will determine if any significant changes require revisiting the methodology.
• ERCOT plans to consult with Commission Staff and transmission operators well in advance, at least one to two months before the filing.
• Assessment of advancements in segmentation or rotation method technologies will be done to consider different approaches.
• Consistent magnitude methodology provides certainty for planning.
• Current understanding indicates that the magnitude amount is not the limiting factor, its reliability standard is determined by frequency, the one in ten component.

7

• Not Discussed

▶️9 - Project No. 53911 – Aggregate Distributed Energy Resource (ADER) ERCOT Pilot Project

▶️9 - Ramya Ramaswamy - Commission Staff - Moving ADER Pilot Project to ERCOT - 53911

• The ADER Pilot Project allows households and commercial customers to participate in ERCOT's real-time and ancillary services market.
• Initial skepticism existed, but pilot stakeholders and ERCOT pursued innovative solutions.
• Regulatory and policy issues were cleared to support pilot success.
• Recommendation made to move the ADER Pilot Project to ERCOT for further growth.
• A larger stakeholder group at ERCOT can benefit the pilot's growth.
• Continued monitoring of the project will be similar to other ERCOT projects.
• ERCOT should report project progress to the Commission every six months.

16-27

• Not Discussed

▶️28 - Chairman Gleeson pauses Open Meeting, to hold Closed Session

• No action will be taken regarding matters discussed in Closed Session.

▶️ 28 - Chairman Gleeson adjourns meeting