ERCOT Press Conference Transcript February 18: Remaining Power Outages Due to Weather, Not Forced

Leslie Sopko: (00:00) Good morning, everyone. I do think we are up and running now. I'm Leslie Sopko, our Communications Manager. Joining me today are faces you have been seeing over the past several days, our President and CEO, Bill Magness, and our Senior Director of System operations, Dan Woodfin. We are not out of the woods yet, but we did make a great amount of progress overnight and into the morning hours. So we're here to provide you an update on the latest grid conditions, and with that I'm going to turn it over to Bill. Bill Magness: (00:33) Thank you, Leslie, and good morning. As Leslie said, we did make a lot of progress last night, and what that progress was, was that as we've talked about, we needed in order to get all our customers back on, our demand, our load back on, more generation on the system so that we could maintain the balance of our frequency and keep the grid running in a safe and a reliable condition without these outages in place. In order to do that, we just needed more generation on the system to provide supply for the still increased demand. Yesterday we began to see steady increases and return of a lot of the generation that we were not able to use because of issues with the storm. Bill Magness: (01:18) As that grew, we were as quickly as practical and safe on the system, reducing the number of outages that we were requesting from our transmission operators who are the ones who implement those outages. By the end of the night, I don't know exactly what time, but we were able to allow the transmission owners to bring back any of the demand, the load, that was part of this original event. When we had to give the really large instruction of load shed, demand reduction, in order to keep the grid safe after the events of early Monday morning, we've been working since then to reduce the number of those outages. We got to a point where we could do that very effectively. So all of those were originally part of that load shed order. Bill Magness: (02:13) We were able to tell the companies, please go forward and restore those as you can. There's still a lot of work they have to do to get that to the customers. Restoring the outages in the field is a process that they have to undertake, but one that they're all very much interested and excited about doing just as we were excited about making it available since we don't have to have those outages at the same level. Now, as Leslie said, not out of the woods yet. What do we mean? We're still in very cold conditions, so we're still seeing much higher than normal winter demand, and we're obviously keeping a very close eye on that. Today we were able to get over our morning peak without taking additional actions, and so that was good news. Bill Magness: (03:00) We still expect a high cold-weather peak tomorrow, tomorrow morning, and so we really feel like we're in a glide path, we hope, where those customer restorations happen. If we do hit a bump and have some generation have to come back off, we may have to ask for outages. But if we do, we believe they'll be at the level where they could be rotating outages, not the larger numbers that we faced earlier this week. So again, very good progress to report. Still work to be done, but customers should be seeing the light and the heat coming on who haven't been seeing it since earlier this week on a regular basis as the transmission operators take on their process to put the power back in place. You want to add? Dan Woodfin: (03:54) I guess the one thing I would add is that there are a lot of areas where people should see their power coming back on, and should have since last night. There may be other areas where those outages will continue, and that might be due to a variety of reasons. In some areas you may still be on outage because of icing conditions on trees that brought down power lines. Those kinds of outages would be more localized, but it's going to require crews going out to actually do the normal things that happen during an ice storm to try to remove the branches and get service restored that way. Dan Woodfin: (04:38) There may also be areas that were taken out of service as a part of the energy emergency load shed that we've now allowed the transmission owners to bring back online as soon as they can, but they may have to go out in the field and do some manual switching and that kind of thing, and so it's going to require crews going out to do that as opposed to being able to do it through computer systems. So that may take a little more time as well. Dan Woodfin: (05:01) Then we've also just got some large industrial facilities that are still offline that voluntarily reduced their load, and so we're going to have to step those back in in an organized fashion to make sure we don't put the grid at risk as we do that, and prioritize those that are most necessary to keep the system stable and provide products back to say generating units to make sure those generating units stay online so we don't kind of work back into a problem, but instead get further out of it. Leslie Sopko: (05:39) Okay. Well, I already see the list of questions coming in. As a reminder, if you do have a question, please go ahead and submit them through the chat. Also, if you have my cell phone number, you're welcome to text me your questions. The first question from The Wall Street Journal, are there any penalties at all for generators who were unable to produce power? Does this depend on whether they bid into the market and agreed to deliver at a certain time? Bill Magness: (06:11) I guess there's maybe two answers. We're not an enforcement entity, so that's not part of what we do, is enforce those kinds of rules. There are rules from the North American Electric Reliability Corporation, the NERC, that apply to generation owners. If there's anything there, that's for the NERC to take a look at in compliance. But the other, when you talk about penalties, these are not penalties. But the way the ERCOT market works, the failure to supply when you have committed can have very serious financial consequences when our scarcity pricing mechanism is in effect. So there's a very strong financial incentive, and to the extent that generators are not able to deliver on their commitments, they'll face financial consequences in the marketplace, as well as any potential regulatory. Leslie Sopko: (07:17) Okay. Next question is from the Fort Worth Star-Telegram. Can you talk about measures ERCOT takes to prioritize critical facilities like water treatment plants and pump stations? Did ERCOT know Fort Worth treatment plants would be caught up in the rotating outages? Could that have been avoided, and what will be done to make sure that doesn't happen again? Bill Magness: (07:38) Well, we don't have a role in determining where the rotating outages are implemented. We tell the transmission owners, like in Fort Worth it would be Encore, we need a certain amount of demand reduced. We need load shed. Say that's a hundred megawatts. Then Encore has a plan that's developed which includes critical care designations where they want to try to avoid outages. So I don't know the circumstances of that situation at all, but that would be where to look. Whether something occurred in the implementation of the load shedding program that had that impact, but I'm not aware of that particular circumstance. Leslie Sopko: (08:23) Okay. Next up, NBC 5 in Dallas. Bill, five days before the storm you had a board meeting where you said you were ready for the cold weather and that the plant operators had been notified to get prepared. You seemed unconcerned. How was ERCOT's assessment of what was coming so far off? Bill Magness: (08:42) Well, I didn't mean to convey unconcerned. I think it was the first thing I mentioned when I started briefing the board. We were in the first stage of providing notice to the various market participants that we thought we were going to seek significant issues. And as the week progressed and the forecast sharpened on the weather, it looked increasingly like we were going to see something very, very significant, as we did. But we provided notices out to the market saying, be prepared, do what you need to do, on February 8th. The 10th and the 11th we worked with the governor's office and the State Operations Center to get the message out on Saturday in a press conference. Bill Magness: (09:23) So we sent out a conservation message on Sunday to tell people to start conserving Sunday night into Monday morning. So I think there were certainly a lot of communications from us. And if what I said indicated we weren't concerned, I really was just trying to notify the board that this is something we got to keep an eye on because it's coming at us. But we did all the technical notifications to the actual folks in the field doing the work I think several times, and with increasing urgency as we saw what was coming at us. Leslie Sopko: (09:58) Okay. Next question is from the Montgomery County Gazette, will customers be seeing an increase in their energy bills? Bill Magness: (10:08) You know, we're not in the retail energy business. We really can't speak to customer bills. We work in the wholesale market. We work with the transmission system, but really wouldn't want to speculate on what individual customers will see. Leslie Sopko: (10:31) Okay. The next question, in 2011 ERCOT released a list of those power plants that went offline. When will ERCOT be releasing a similar list? Dan Woodfin: (10:40) Yeah. I mean our primary focus at this point is to make sure that now that we've kind of started to get most of the load back on, we're still focused on making sure the grid remains stable, that we can step back in these remaining outages. That's really the focus at this point. We have in our computer systems the list of all those generators, when they went offline, when they came back online, if they tripped again, all of that kind of information is there. Dan Woodfin: (11:10) So in the coming weeks and perhaps months, we're going to be gathering all that data up and turning it into a fairly, what I expect to be, a fairly massive report and providing that information out to the public. So we will be doing that once we kind of get through the immediate problem, which is making sure that we get everybody back up and the system kind of working as normal again. Bill Magness: (11:35) Can I just add? We have a special board meeting next week. There are legislative hearings next week looking into the events this week. So I think we'll start to get a lot of requests for information and analysis, so people can assess the whole event. And as Dan's describing, I mean that's part of that, and I'm sure we'll have a lot of other issues that people want to address and data they need from us, so we'll be gathering that up as we get those requests. Leslie Sopko: (12:03) Okay. Next questions are from Steve in Dallas, you said yesterday you can't require weatherization. Who has that authority, and what is your opinion as to whether or not weatherization should be mandatory? Dan Woodfin: (12:19) Well, so I think I mentioned this on previous calls that the North American Electric Reliability Corporation is the standard-setting body for reliability with respect to the electric power system. They regulate transmission owners. They regulate generators and other entities that operate in the power system and under the auspices of the Federal Energy Regulatory Commission. That standard-setting group is working on a winterization standard, and that's an ongoing process. Dan Woodfin: (12:57) It's not completed yet, but that would be the most likely route for some kind of regulations like that. And they're a pretty substantial ... The regulatory capability through FERC is pretty substantial nationally. They can issue pretty severe fines of a million dollars per day per occurrence for things, and so I think that that's the most likely way that some kind of regulation like that might occur. Leslie Sopko: (13:28) Okay. The next question is from Rudy Koski at Fox 7 in Austin, Central Texas seems to have a larger percentage of outages compared to the Dallas and Houston areas. Why is that? Dan Woodfin: (13:42) Well, I think like we mentioned, there may be three categories of customers that are still out of service. The ones that are out, and one that I mentioned, was the ones that are out because of ice damage, ice storm damage on the distribution system, particularly the wires going out to the neighborhoods and everything. I think we've heard from some areas of Central Texas that that's maybe more severe in Central Texas than it is in some other parts of the state. You can just imagine oak trees, which live oak trees still have all the leaves on it, and you put a bunch of ice on it, and we've seen lots of pictures of that. Dan Woodfin: (14:17) If those fall on lines and crews have to go out and fix those lines, we don't have any specific information about that. But from what we've found that we've talked to the transmission owners about, there may be more in this area, and that may be part of the issue. Because as far as the restoration due to the load shed event, the restoration of that should be distributed evenly across the state. It wouldn't result in any kind of what your question was asking about. Leslie Sopko: (14:54) Okay. The next question is from Scott [Friedman 00:14:56], your winter preparedness assessment said you were ready to meet whatever winter peak the state would see- Leslie Sopko: (15:03) ... To meet whatever winter peak the state would see. In hindsight, what led to the mistakes that were made in those assumptions? Dan Woodfin: (15:12) Well, so I guess the seasonal assessment of resource adequacy on which we base that uses the winter of 2011, which has been the most severe winter in quite a while, as kind of the basis for the load forecast. The number of outages of generation plants that are assumed in that assessment are based on like a 95th percentile of the outages that occur over the last... I don't remember how many years it's based on, but it's the 95th percentile. And so, I think, because of the really unprecedented nature of this weather event, the load levels we saw were beyond kind of the 2011 level of load, for one thing, by several thousand megawatts. And then, on the outage side, we were probably well beyond 95th percentile of the outages of generating plants that had been experienced historically during a winter peak type situation. Bill Magness: (16:17) And, to that point, going forward, having seen the extent of this event, I mean, certainly it figures into what we think we'll see in history. This is we were measuring against the most severe system that we had seen in the winter in Texas before. This one changes the game because it was so much bigger, so much more severe, and we've seen the impact it's had. And so, I think, as we look at those assessments for the winter season in the future, what we saw with this storm is something... we haven't seen anything like this. That certainly goes into our consideration of what the risks are. Leslie Sopko: (16:56) Okay. The next question, I don't have a name, but when did ERCOT first tell Governor Abbott about the potential for rolling blackouts? And how did he respond? Bill Magness: (17:08) Well, I mean, we are in... the reason I hesitate is like we're in constant communication with the Public Utility Commission and is our liaison there. And so, we were providing... I think these notices we provided during the week, we let folks know, as we did with the Mark participants, about the OCN, OCN... operating condition notices that are sort of the warning that says get ready. So, we're providing that information. And then, we participated in the press conference with Governor Abbott, Chairman Walker and Craddick and chief Kidd Saturday and expressed our concern, particularly around Monday morning and Tuesday morning, that we could have rotating outages. Bill Magness: (17:56) So, I think that was a message that was put out in that press conference. And we tried to get the public attention to that, and also talked about the need for conservation, because we were concerned about the possibility of rotating outages. So, certainly, I mean, the governor was promoting caution, promoting preparedness on all fronts, not just for electricity, but for roads, for everything else, knowing that this storm was going to be pretty ferocious. Leslie Sopko: (18:27) Okay. The next questions are from the Dallas Morning News. I'll do one, and then the other. Why were blackouts not able to be rolled in the last few days? Is it because the state has too much critical infrastructure? And does this need to be scaled back? Bill Magness: (18:41) I guess... I wouldn't comment on the critical infrastructure, because again, those are determined by our transmission owners who have the local plans that they do. But the central problem, I think, about not being able to do rotating outages effectively was the amount of demand that we had to reduce was really unprecedented, just because of the challenge that we faced with the weather and with the generation. So, the transmission owners... and what they mean by rotating or rolling in an outage is it's in one neighborhood or area for one period, and then you lift that. And then, you apply it to another area or neighborhood, but you have to have some room. Right? And there weren't enough places to move it around in order to cover the amount that we were asking for. So, I think that was the central issue. I couldn't really comment on how the critical infrastructures are treated in various transmission owner plans. Leslie Sopko: (19:47) And the second question was, how much of this regulation falls to the Railroad Commission and not the PUC and ERCOT? Bill Magness: (20:00) Well, ERCOT is overseen by the Public Utility Commission. They have full authority over everything we do really, every decision we make. So, they're really the regulatory authority for us, and then for the electric industry, particularly the transmission owners. The Railroad Commission's bailiwick is more in the natural gas area. And the Railroad Commission took steps to assist getting ready for this storm, but assisting in how natural gas was prioritized during this period of the weather. And so, they were dealing with the natural gas aspects of this. And Chairman Craddick has been very involved in trying to make sure the gas supply is out there and can be used effectively by the electric generators in these times when we really, really need it. So, I don't know if it answers your question, but I think that's sort of the divide is natural gas is over at the Railroad Commission. Dan Woodfin: (20:56) I do think that one of the issues that we had, not initially in the event when the generators were kind of coming off line because of the cold weather, because fundamentally, the issue is, we had a high demand. We also lost a tremendous number of generators kind of around midnight on Sunday to Monday. We lost a tremendous number of generators. And a lot of those tripped offline because of the cold weather causing those generators to trip offline. And we've kind of talked about the winterization that would be required to fix those. But we also then, later in the day, we started having problems with having enough gas to get to some generators. There were pressure issues that were reported to us on gas and so forth. Dan Woodfin: (21:41) And fundamentally, it seems like the problem goes all the way back to the wellhead. We had a lot of wellheads freezing up. So, the gas wasn't able to come out of the ground and get into the pipes in order to make it to generation and also make it to heat houses and those kinds of things. And so, one potential path of regulation might be to make sure those wellheads that would help with this situation, from my perspective, is make sure those wellheads don't freeze up so that we have enough gas in these kinds of cold weather events. Leslie Sopko: (22:15) Okay. Next question from William Joy, "Is it accurate to say that, as of right now, no private customer is on a rotating outage?" Bill Magness: (22:25) No. The reason I say no is, there are still customers that need to be restored. So, what the question means is that there's no one without power due to an outage. The answer is no. Because, as we talked about at the top, the transmission owners, we've allowed the restoration of all the service that was part of the Monday rotating outage, the really large rotating outage, but that completion of that takes some time. And so, I don't think it's accurate to say that there are no customers that are still effected until that's fully executed. But they're working on it and have been. Every time we've released more load and demand side outages for them to restore their... add it, getting those done. Leslie Sopko: (23:20) Okay. The next question is from Mark Watson with [inaudible 00:23:22]. "Why do you continue to count virtually all of the wind and solar as accounting for about 12 gigawatts of generation on forced outage when you were only expecting to have about six and a half gigawatts of renewable generation to be online during this winter's peak?" Dan Woodfin: (23:41) I guess, from an accounting perspective, as we started into this, we were reporting installed capacity. And we've continued to do so. We did have some discussion early on in some of these calls that the amount of wind that was being produced at various points in time was actually, even though we had half of the installed capacity of the wind turbines that were out of service, the half that were in service were actually during the kind of worst part of the event. We're actually producing more output than what we counted upon in our seasonal assessment from hopefully during winter peak bad conditions. Bill Magness: (24:29) Hey, Leslie, can't hear you. Leslie Sopko: (24:35) Oops. I'm sorry. I was on mute. Okay. The next question, "If storm damage is the main reason for the outages, what is preventing moving us out of the EEA3?" Bill Magness: (24:50) Well, we're looking to make sure that we're fully stabilized. And there are still customers who are not yet restored, as we were saying. That progress in getting them restored isn't complete. And we feel like, as long as there are still those customers that are part of a rotating outage, we want to make sure that we maintain the emergency conditions. The other part is we really feel like, given the large nature of the effort to get the load restored, we want to be sure that we're not moving too quickly, moving too fast out of emergency conditions, which give us some authority opportunities to act. So, we still have that status in effect, and we want to be sure that we're clear of the weather today, the weather tomorrow morning peak before we move out of a too quickly. So, it's a conservative decision, but one, I think, given the still fluid nature of the weather and making sure we've got the generation we need and we keep it on, we feel like it's prudent to remain in that status. Leslie Sopko: (26:05) Yeah. Bill, coming off those comments, I'm going to give you this question from Ken [inaudible 00:26:09] in San Antonio. "Snow is falling again in many areas of Texas, how much should people be preparing for more potential outages?" Dan Woodfin: (26:21) So, I guess there's two things. There is the possibility that, as we've gotten all the customers kind of... not all the customers, but a lot of the customers turned back on overnight last night that, as their consumptions... people go back into their houses, businesses turn back on now that they've got power back and those kinds of things. We may see a lot of demand. And there's also the potential for generators to become unavailable. Right now, the generation availability is going up. And so, if the demand outstrips the supply again, like for the evening peak today or tomorrow morning, we could have to go back into rotating outages because of this power balance problem. But, as Bill said in his kind of the opening statement, we would expect that any outages like that would be limited. And we would be able to rotate them, as opposed to these more extended outages, if they're required. And we're certainly going to try to avoid that. Dan Woodfin: (27:26) The other thing that could happen with additional ice, and snow, and those kinds of things is that could lead to more outages from... I'll call it a normal ice storm, trees falling on power lines and those kinds of things. So, there could be additional outages like that from this, but hopefully not. Bill Magness: (27:47) Well, I mean, the continued weather conditions, like we said at the top, is why we feel like we're reporting a lot of success for customers in Texas, but we're not ready to say we're finished with this event because the weather drove the event. The weather could still drive events on the grid as, Dan explained. Leslie Sopko: (28:09) Okay. I'm going to circle back to weatherization plans because I keep receiving several questions. I think there's confusion about what is required versus what is voluntary regarding weatherization plans. Dan previously said these were voluntary, but we've also been told that generators are required to submit them. So, are there any requirements for what must be in these plans? Dan Woodfin: (28:39) I think the idea is that there are mandatory reporting requirements to have a plan and report that plan to the PUC. There are not specific requirements as to the extent of, you've got to have windbreaks of this type. You've got to have these kinds of boxes around your instruments. You've got to have this amount of heat trace on your equipment that needs that. So, they're not specific requirements, but those are more best practices that are voluntary, the specifics. But you do have to have a plan. And there are characteristics that have to be in that plan, as far as the things that you're reporting. That part is mandatory. Leslie Sopko: (29:27) Do you know how many states require weatherization? That was a follow-up question. Dan Woodfin: (29:34) I don't know. Leslie Sopko: (29:38) Okay. The next question is from Marcy de Luna. "Electricity was trading at the state max of $9,000 per megawatt hour in wholesale markets across the state Wednesday morning. What is the estimated immediate and long-term cost to wholesale and retail?" Bill Magness: (29:59) I don't think we're able to really provide an estimated cost at this point, particularly- Bill Magness: (30:03) ... Able to really provide an estimated cost at this point, particularly as the event isn't over. That's something I know will be analyzed in great detail and looked at by policymakers, as well as the folks in the market. So I don't really feel like I have an estimate to provide you. Certainly on the retail level, there are so many different plans and arrangements, particularly in the competitive retail areas that we really can't speak with any accuracy, certainty about dollars around that. Leslie Sopko: (30:32) Okay. Next question from Texas Public Radio, the feds warned that the Texas grid was vulnerable to a failure exactly like the one that happened, why was the grid not prepared? Bill Magness: (30:48) I'm not sure what federal report is being referenced specifically to that. And as we've been explaining as we go through the event this week, the fundamental thing we have to do to protect reliability is to ensure that there's not a catastrophic blackout, ensure that we don't get in a situation where we're starting the grid from scratch and power can be out for indeterminate amounts of time as those physical components of the grid have to be restarted and fixed. That is the disaster scenario that, it's our central job to avoid. Bill Magness: (31:26) As disastrous as this has been for a lot of people, and it has been because of the length of the outages and the intensity of the weather, the reason that we took this action was to prevent that kind of a blackout. So I think as far as ERCOT maintaining that level of reliability, we are going to walk away from this very soon we hope, and have an electric system that works just like it did last week. Because we were able to control the situation by using these outages, as difficult as they were, we are able to now... If we hadn't controlled them we couldn't go back and say, "Please put these people back on" if we'd have had a blackout. So I think at the fundamental level I think that's why we took the actions we took. And if we hadn't the consequences could have been much worse. Bill Magness: (32:17) And as far as the other preparations, I think as we've been discussing, the notices we provide, the information we give to our market participants as we see events like this, all the things we do in our control room to get ready for weather events like this, I think demonstrate a preparedness to deal with these issues. And that's what we have been up to throughout this event is executing on those procedures. And as hard as it is to have these outages out, work as hard as we can to eliminate them as quickly as we can. Dan Woodfin: (32:49) And one of the issues that, I've been reading some of the media reports on this, and one of the issues that I think we're is, regardless of what could have been in the past to make sure we have more gas supply, and the units were weatherized, and those kinds of things, once you got to the point that all these units are gone, that's the amount of load we can serve. And there's nothing ERCOT can do at that point except make sure that, I mean there's nothing that can be done from a laws of physics perspective, but you can't serve more demands than that. Dan Woodfin: (33:22) The actions that we took in the middle there to actually institute the rotating outages in a controlled way, as the generator stripped offline, preserved the integrity of the system as a whole, and allowed us to transition the load down to where it matched with the generation in a controlled way. But fundamentally even if we hadn't ordered those rotating outages, supply and demand were going to balance from a physics perspective. And so by us doing it, our operators taking the actions that they took, in the course of that transition as the units were tripping offline, they preserved the integrity of the system, and actually facilitated as long as these outages have been in, as hard as they've been for folks, they've allowed us to transition back. We're restoring this a lot quicker than, as Bill keeps saying, if we'd had this kind of catastrophic much longer term thing, if that transition has occurred in an uncontrolled way. Bill Magness: (34:22) Yeah. I think just to emphasize the point, if we had let physics do the job and it had been totally uncontrolled and we had a blackout, we wouldn't be sitting here talking about restoration today, tomorrow, we would be telling you that we're not sure when restoration would be done. Because it's such a disastrous event when it occurs and takes much, much, much longer, and people are out of power for even longer, much longer than what we're seeing here. So again, we feel like having control over the system and maintaining that is central to what we have to commit to as a grid operator. Leslie Sopko: (35:05) Okay. The next question is from Argus Media, to what extent is a lack of natural gas supply to gas fired plants still causing generator outages? Dan Woodfin: (35:21) I don't think I've looked at that this morning, and I apologize for that to see kind of how much is associated with that. We've been more working toward how do we preserve the ability for the plants that are online to continue generating? How do we make sure that additional generators don't trip offline or become unavailable because of different, a variety of things? And so that's been our focus at this point. And so I haven't actually looked to see what any kind of ratio or anything like that at this point. Leslie Sopko: (35:55) Okay. The next question is from Robert at KPRC, are you getting any more specific details as to what brought down various generators? Dan Woodfin: (36:07) It's almost the same answer as the other question. We got some limited information in as generators tripped offline, we've heard some more things about, we could be back online if this happened or that happened. We've been trying to facilitate that as much as we can for some of the generators that bring that up. But at this point after the fact we'll go in and do RFI's and that kind of thing to gather the specific information, as opposed to this kind of post critique of the entire event and the event analysis, to make sure that we learn from it and the same things don't happen again. Bill Magness: (36:46) And in the time when we're just trying to work on this priority of getting customers back, the central thing we need to know from the generators is not why but when. When are you going to come back? When is it we can get you back on the system? And diagnosing the cause, as Dan said, is something that I think comes in the post event analysis, but in the moment what we really need to know is when will we see you back on the grid, whatever your problem is. And so that's been the primary focus now and needed to be. Because if we had gotten bogged down in a lot of analysis of why someone tripped that doesn't matter as much to whether we can get them back on the grid and have them serving customers. Leslie Sopko: (37:33) Okay. This is from Jack Think at CBS Dallas regarding the NERC winter standard that is being developed, would state law have to change in order for ERCOT to require better winterization? Dan Woodfin: (37:47) So the NERC standards are, generators that participate or that are connected to any power system are what are, they have to register as generation operators with NERC, or with the regional entity that's part of NERC. And so they have to be registered, and by registering they become beholden to these standards and have to meet the standards. So if that standard passes that's the process that would cause them to be a part of that. And that's more under federal law than is state law from a reliability perspective. Leslie Sopko: (38:33) Okay. This is going back to the question that Mark Watson had about wind seeking clarification, is Dan saying the wind turbines overproduced on what was expected during this storm? Dan Woodfin: (38:50) So at the point in time that we were reporting it I think that's the case, that kind of during that peak. But it depends on what point during the event we're talking about. Right now wind is producing 6,500 megawatts or something like that with the turbines that are available. And even in, which I think is close to the seasonally expected amount during peak conditions. Even those they're still, I think the number was 16,000 megawatts of them that are forced out due to icing. Leslie Sopko: (39:30) Okay. The next question was could you provide an update on the numbers? How much a total generation is forced out and what's the makeup between thermal and wind/solar? Dan Woodfin: (39:43) Yeah, so the total outage as of when we issued the news release this morning was 40,000 megawatts of total generation, including the installed capacity of the wind. About 23,500 of that is thermal generation, and the rest is wind and solar. Leslie Sopko: (40:05) Okay. Next question is from West Rappaport at Nexstar Media Group, how close was the Texas grid to these catastrophic blackouts that you have been talking about? We talking seconds, minutes, hours, days? Bill Magness: (40:22) Certainly not days, and I don't think hours, no. When our frequency went to a level that if our operators had not acted very rapidly to change the situation and arrest it, it could've very quickly changed. And the reason I can't be specific about seconds or minutes is that what was driving this early Monday morning/Sunday night was seeing, starting around 11:00pm or midnight, generation units coming off and then more coming off in rapid succession as the storm blew through. So one of the reasons that operators have to act to arrest the frequency is if they say, "Well let's wait another minute and see what happens." What happens in that next minute might be three big units come off and then you're sunk. Bill Magness: (41:12) So we were at a level of frequency which was one that needed to be addressed immediately, and that's what the operators did. So I think if we hadn't taken action it wouldn't have been that we would have waited a few days and saw what happened, it was seconds and minutes, given the amount of generation that was coming off the system at the same time that the demand was still going up significantly. Dan Woodfin: (41:35) So there is a system in place where, it's called under frequency load shed, where there are what's called relays. There's devices out across the transmission system that if the power supply imbalance becomes so severe as the frequency drops really fast, really far, and there's different levels that these will automatically shed 5%. And then if it drops further they'll chip 10%. And then if they sheds further it'll shed an additional 10%. So it's kind of a safety net that if our operators and the transmission owner operators aren't able to shed load in a controlled way, which is what we did by choosing which circuits are taken out and rotating through them and those kinds of things, the safety net should protect us for at least up to 25% loss of generation. But that's much more of a blunt instrument. It's harder to get the load back faster, and it's not as controlled as what occurred. One way or the other, it's the law of physics, the load is going to match the generation. And it's better to do that in a controlled way like we did than just let the safety net take it. Leslie Sopko: (42:57) Okay. The next question is from Mark Chediak at Bloomberg News, how has ERCOT been able to bring power back so fast? Did wind pick up? Is this largely from the reactor coming back or did it finally get warm enough for the gas plants to work? Dan Woodfin: (43:16) So it's a variety of things. We've gotten more generation back online of different types. We had more, like during the afternoon yesterday, we had quite a bit of solar generation online. And so while the solar was generation was online we started trying to bring back a lot of the load. Once we started, in a very deliberate manner, started to bring back and tell the transmission owners, "Please restore 1,000 megawatts of load." They would go out and do the switching that it would take to do that and turn on different neighborhoods that matched up to their share of that 1,000 megawatts. And then once they were done we would issued a, if we still had enough generation at the time, we'd issue an order to go restore another 1,000 megawatts. And so we started to pick that up. Dan Woodfin: (44:11) After we'd done a few of those we recognized that we had more generation coming online, and the load that we were restoring per feeder was less than what we expected because businesses were shut down and those kinds of things. And we realized at that point that we could start to go much faster. And so that's really what happened. We started telling the transmission operators to restore pretty much as fast as you can, because we could keep up with it in terms of generation. And that's what we were able, I think this was a question earlier, that by midnight last night we had told the transmission owners basically restore what you can, the rest of what you can. So we had worked through that in steps, we started going a lot faster in the late afternoon. And then kept- Dan Woodfin: (45:03) Went a lot faster in the late afternoon and then kept going. And then by midnight, we had kind of released to the level that they're at, at this point. Leslie Sopko: (45:14) So at this point, how would ERCOT grade itself during this crisis? Please explain what grade and why? Texans would like to know. This is from Miya Shay at ABC 13. Bill Magness: (45:29) We're still in the event, we're still moving through the crisis that was caused by this. I just have to tell you it's a little early. I will give a good grade to the operators who took those actions we just discussed, to prevent a catastrophic blackout, much worse damage to our system. That was, I'd say, the most difficult decision that had to be made throughout this whole event, was to do that rapidly, and at the size they did. Because of the loss of the generation that we were seeing and the increase in the load. So that fundamental decision I think was certainly sound and had to be made. Bill Magness: (46:07) I think, going forward, there's going to be a lot of investigation assessment, examining every step in this process and how our response is. I really think there other people ought to grade us, and we'll provide the information that's needed to make those assessments and want to learn from it. I mean, in the business we're in, we need to constantly be learning from events that we've had, how to better utilize technology, how to better utilize other tools to make the job of the operators even better so they can have more options and take advantage of them. Bill Magness: (46:45) So I'll just say, let us get through the event, get customers back on, and then we can take a look at the details of our performance. Leslie Sopko: (46:57) Okay, next question. Moving forward, when or will ERCOT winterize the system? Was this the ultimate issue? This is from WFAA in Dallas. Bill Magness: (47:09) I guess I have to step back and say that ERCOT is the traffic cop on the grid where the air traffic controller managing the flow of the electricity. We don't own the generation units, we don't own the transmission. We're really just managing the overall transmission system and dispatching, putting generators on and off the grid. Bill Magness: (47:34) So winterization is an effort that's going to be needed to be undertaken by those entities that own the physical assets out in the field. So the reason I said this, when will we winterize? It's really the owners of the assets that have to look at winterization best practices and what are they going to do to prevent issues like they saw over the last few days. I mean, we're willing to work and help, and make sure that those are effective. And happy to work with any of the industry on that, but it's really not our role to do winterization. Leslie Sopko: (48:07) Okay. The next question is from Leticia Miranda with NBC News. Can you please address the issue of electricity surcharges? Some consumers have been charged high amounts for electricity. TPUC said this is a result of a quirk in ERCOT system that has been corrected. Can you please explain that and how will it be corrected? I haven't heard anything about that. Bill Magness: (48:37) Yeah. Customer surcharges, I haven't heard of customer surcharges related to this. And we can't really speak to the surcharges the end use customers get because we're working in the wholesale market and that's separate in the retail market. And we don't have visibility into that. Bill Magness: (48:58) The Public Utility Commission did issue an order a couple of days ago. They had an emergency meeting to adjust the wholesale scarcity pricing mechanism, to be sure that it was working effectively to deliver as much generation onto the system as possible during this event. And we were able to make just a fix in our software program and how it treated those scarcity prices to implement the change that the public utility commission thought was appropriate. Bill Magness: (49:28) So as soon as they said they wanted to make that policy change we got right to it and implemented in our system. So it's reflected in the wholesale price. That I know the Public Utility Commission did issue an order about this week, but again, the retail surcharges, I'm not sure about that issue. I'm just not familiar with it. Leslie Sopko: (49:49) Okay. The next question is Travis Bubenik with Courthouse News. Texas lawmaker, Dan Crenshaw made a claim widely shared on social media that every natural gas plant stayed online, the downed plants were due to schedule maintenance. Is that accurate? Dan Woodfin: (50:07) Well, I think, like we've talked about earlier, there were a few plants that were out on scheduled maintenance, but the majority of the plants that are at this number that we've been reporting are plants that went out either fairly soon before the event because of natural gas restriction, or some of the icing as determined, or that tripped off line in the morning and then the days afterward during the event. And those generators in the aggregate were of various fuel types. There was wind generation, there was nuclear generation, there was coal generation and there was gas fire generation. We have had units of each of those types and multiple units of each of those sites, I guess, except for nuclear, that tripped offline during the event. Leslie Sopko: (50:59) Okay. We have a little less than 10 minutes left, so I will try to get through as many more questions as I can. The next one is from Robert Arnold. How fragile is the grid right now? Are you concerned about plants going down when more people come back on? Dan Woodfin: (51:17) Yeah, so we're not worried about more plants going down because more consumption. Just like we did before, if more consumers, like tonight, if there's a lot more load as people start turning things back on, as businesses reopened, those kinds of things, if that exceeds the amount of available generation, we've said in the news release that it's possible that if that kind of situation occurred, we could have to reimplement rotating outages on a limited basis, and hopefully be able to rotate through those as opposed to having the longer term outages that have happened before. Dan Woodfin: (51:59) The generation, we didn't lose anywhere near as many plants tripping offline yesterday as what had happened for the previous few days. And so it seems to be, as far as the stability or the kind of stability in the availability of generation seems to be much better now. Dan Woodfin: (52:22) But one of the things we're really watching is making sure that those generators get what they need, make sure that we're restoring power back if because of icing or something like that, there's not power to natural gas compression stations, and those kinds of things. Make sure we've got plenty of pressure on the gas system to continue to provide gas to the electric generation. Make sure that we get chemicals back to the plants to make sure that they can use the chemicals they need to keep that electric generation online. Dan Woodfin: (52:56) And so that's really our focus right now, to make sure that we don't have additional problems occur that would take generation offline. But for what, this happened yesterday afternoon and today, we've seen much less plants kind of tripping for weather reasons or gas reasons or anything like that. So we've definitely seen an improvement. Leslie Sopko: (53:21) This was a followup from [Plats 00:53:24]. Would you say that the improvement in temperatures had as much or more to do with the elimination of widespread rolling outages than any increase in generation capacity? Dan Woodfin: (53:38) It probably had a bigger impact than the availability of generation in terms of megawatts, because like I said, it... But I'm not sure it was weather, or it was the fact that, as I mentioned earlier, as we had individual. As we started restoring load, there was less megawatts on each feeder than had occurred when those feeders were originally turned off. And that less load was a function of things being shut down, less consumption. And also to some extent, it was due to the less cold temperature. So it was a combination of the two. Leslie Sopko: (54:20) Okay. This is a follow-up from NBC News. Why did the board of directors list disappear from the ERCOT website? Looks like the link to it is gone. And does ERCOT have a response to the governor saying on a local ABC station that leadership should resign? Bill Magness: (54:41) On the website issue, the publicly available information for those board of directors' members was being used to send sometimes harassing communications. And threats were being made to the board members. So we were very concerned about both employee and board member safety basically, because of the things we've been receiving over the past few days. Bill Magness: (55:15) So the thought was, let's pull that contact information down. But I think on reflection, after we did that, I mean, this was something going on sort of in the background, because it's certainly not related to getting power back on the grid. But on reflection, we figured that information ought to be up there. And I think we've... Leslie, do you know if we've replaced it back or not? Leslie Sopko: (55:41) I know that the information will be back up before next week, so I'll check that. Bill Magness: (55:46) Yeah. Yeah. So it was a security safety idea, but I think as people observed, it was public information that has been on the website in the past. So we think it makes sense to go ahead and get that back up there. Leslie Sopko: (56:08) Okay. I think we've got time for some- Bill Magness: (56:12) I'm sorry. I didn't mean to leave out your second part. I think that the idea of changing the governance, changing the board of directors, the oversight of ERCOT, actually sort of the creation and purpose and what we're supposed to be doing, all of that is reflected in Texas statutes and Texas law. And as the energy markets have evolved, as the expectations of ERCOT have evolved and changed, that's addressed by the legislature and then by the Public Utility Commission. Bill Magness: (56:41) I think if there's dissatisfaction with how ERCOT board governance process works, it sounds like that will be part of the review that comes after we get the number one priority of getting people's lights back on, after that's done. And we welcome that discussion, but it's a discussion that however the legislature resolves it, that's what we'll do. That's how we operate because the composition of our board is defined in statute. And if the legislature thinks that needs to change, then that's certainly something we'll follow. Leslie Sopko: (57:17) Okay. And a final question from the Star Telegram. There's been policy debate about renewable versus thermal energy sources from Texas leaders in light of this weather event. What do you all think the Texas legislature should look at when it comes to energy policy and sources? Bill Magness: (57:34) Well, again, the policy debate is not one that we're focused on right now. I'm sure this event, which calls so much attention to the energy, to the electric system is going to be discussed, debated and analyzed starting next week. The legislature is going to start having hearings next week about that. So there was a robust debate about energy policy in a lot of quarters well before these events. And I think these events have really put a sharp focus on them. So I think you'll see legislative debate about that. Bill Magness: (58:13) And again, kind of back to ERCOT's role, the state asked us to implement state law and to implement measures to make sure that the grid is reliable and it doesn't have a blackout. And if there were changes in what the legislature wants ERCOT to do as part of that, again we need to follow the state statute because that's our governing document when it comes down to it. Leslie Sopko: (58:44) Okay. Well, I think we are just about at the top of the hour. So I am going to conclude this media call. But we will continue to bring you updates later in the day, and we appreciate you joining us. And thank you Bill. And thank you, Dan. I know you two are busy and tired and we do appreciate you communicating with the media. So thank you so much. Dan Woodfin: (59:05) Thank you all. Happy to be here.