Control Number : Item Number : 824. Addendum StartPage : 0

Transcription

1 Control Number : Item Number : 824 Addendum StartPage : 0

2 SOAH DOCKET NO PUC DOCKET NO APPLICATION OF CENTERPOINT ENERGY HOUSTON ELECTRIC, LLC TO AMEND A CERTIFICATE OF CONVENIENCE AND NECESSITY FOR A PROPOSED 345-KV TRANSMISSION LINE WITHIN GRIMES, HARRIS, AND WALLER COUNTIES ""'EP-1 PM2: 29 BEFORE TI#^3LI IC l.li ft.lty C044t.i1SSl01q FILING Cf.EM PUBLIC UTILITY COMMISSION OF TEXAS SOAH DOCKET NO. 473=1^ PUC DOCKET NO APP ATION OF CROSS TEXAS T SMISSION, LLC TO AMEND ITS ERTIFICATE OF CONVENIENCE AND NECESSITY FOR A PROPOSED 345-KV TRANSMISSION LINE IN RAZOS, FREESTONE, GRIMES L, STO AND ROBERTSON COUNTIES, TEXAS THE UTILITY COMMISSION OF TEXAS TIEC AND LUMINANT'S RESPONSE TO CALPINE AND NRG'S OBJECTIONS TO AND MOTION TO STRIKE PORTIONS OF THE CROSS-REBUTTAL TESTIMONY OF CHARLES GRIFFEY I. INTRODUCTION Texas Industrial Energy Consumers (TIEC), Luminant Energy Company LLC and Luminant Generation Company LLC (collectively, Luminant) submit the following response to Calpine Corporation (Calpine) and NRG Energy, Inc.'s (NRG) Objections to and Motion to Strike Portions of the Cross-Rebuttal Testimony of Charles Griffey (Objections).' This response is timely filed according to the agreement reached at the Joint Prehearing Conference.2 TIEC and Luminant first discuss Calpine and NRG's objections generally before addressing each passage individually. Calpine Corporation and NRG Energy, Inc.'s Objections to and Motion to Strike Portions of the Cross-Rebuttal Testimony of Charles Griffey (Objections) (Aug. 25, 2015). 2 SOAH Order No. 3 Memorializing Joint Prehearing Conference at 7(Jun. 11, 2015). i;

3 II. GENERAL RESPONSES AND ARGUMENT A. Mr. Griffey's Testimony Is Relevant NRG and Calpine seek to inappropriately expand the ALJ's prior relevance rulings on discovery as a basis to strike testimony that is relevant, directly responsive to issues that NRG and Calpine's witnesses have raised, and important for the ALJs and the Commission to review and consider in addressing the need for the transmission project at issue in this proceeding. The ALJ previously limited discovery on NRG and Calpine's future generation plans and information regarding financial impacts specific to NRG and Calpine. NRG and Calpine appear to have interpreted this ruling as broadly meaning that any information that relates in any way to NRG or Calpine-including statements and presentations these companies have made that directly contradict their own witnesses' testimony-is outside the scope of this case, This misperception is contrary to the rules of evidence, thwarts development of a complete record, and deprives the ALJs and Commission of important context for the need determination in this case. The scope of relevant evidence the ALJs and the Commission can consider is not limited by NRG and Calpine's decision to support their positions exclusively though testimony from outside witnesses. It is the opinions expressed, not the identity of the witnesses expressing them, that establish the issues in dispute and the scope of relevant evidence. After raising factual disputes regarding the effects of oil prices on load growth and the impacts of the Houston Import Project (HIP) on generation investment in ERCOT, for example, NRG and Calpine cannot unilaterally restrict the factual evidence other parties may rely on to rebut that testimony based on what NRG and Calpine chose to provide to their experts. On the contrary, expert witnesses such as Mr. Griffey are entitled to consider and opine on any relevant, responsive evidence, including presentations and statements NRG and Calpine have made to investors and in other forums-particularly when those statements and presentations directly conflict with the opinions expressed by their outside consultants. In fact, investor presentations by generators in the Houston region contradicting the statements made in NRG and Calpine's testimony would be relevant even if the statements and presentations were not made by NRG and Calpine. This information is even more relevant given that NRG and Calpine are the parties that made the statements and sponsored the contradictory testimony that Mr. Griffey is rebutting. Mr. Griffey's testimony is directly responsive to: (1) matters that NRG and Calpine have put into 2

4 dispute, such as the impact that oil prices will have on load growth, the savings the HIP will provide for customers, and the likelihood that new generation will be built to resolve the reliability issues the HIP is designed to address, and (2) the credibility of statements by NRG and Calpine's outside witnesses, which should be considered as the ALJs and the Commission weigh the evidence in this case. NRG and Calpine's objections are contrary to the rules of evidence, which are designed to facilitate the development of relevant, material facts, and should be denied. Further, evidence regarding ERCOT market impacts is directly relevant to this caseeven if that the evidence implicates potential financial losses to NRG and Calpine-because it supports the need for the HIP pursuant to PURA NRG and Calpine are the largest generators in the Houston region (owning up to 80% of the market in CenterPoint's service area),3 so cost savings to customers that would result from building transmission to increase competition and alleviate congestion in Houston will directly correlate to revenue losses for these two companies. These are two sides of the same coin. Parties who support the need for the HIP must have a full and fair opportunity to develop facts around the cost savings the HIP will provide for customers, and should not be precluded from developing this relevant evidence just because it implicates NRG and Calpine's portfolios. Excluding such testimony would directly conflict with the applicable law and the preliminary order in this case. PURA states explicitly that in considering whether to grant a certificate of convenience and necessity (CCN), the Commission shall consider "the probable improvement of service or lowering of cost to consumers in the area if the certificate is granted.i4 The HIP can be justified as "needed" based on such pricing impacts, and the Commission is legally bound to consider whether the project will lower costs to consumers in the Houston area. Consistent with this statutory directive, the Commission explicitly called out the following question in the "Need" section of its Preliminary Order: "Does the proposed facility facilitate robust wholesale competition?"5 TIEC and Luminant urge the ALJ not to further limit presentation of facts on these cost impacts, which are critical to customers in the Houston region, an important part of the need issues in this case, and required to be addressed by both PURA and the Commission's preliminary order. 3 Rebuttal Testimony of Wayne Kemper at 43:10-11 (Aug. 21, 2015). 4 PURA (c)(4)(E) (emphasis added). 5 Preliminary Order at 3. 3

5 Importantly, the statement of position submitted last week by Commission Staff relies heavily on portions of Mr. Griffey's testimony that NRG and Calpine now seek to strike. The ALJ should consider that Staff found this evidence significant and relevant to the issues in this case when ruling on NRG and Calpine's objections. Specifically, Staff relied on Mr. Griffey's testimony regarding the statements Calpine and NRG have made to investors about load growth in Houston, which is in conflict with the testimony of their hired outside witnesses;6 Mr. Griffey's expert opinions regarding the economics of rooftop solar;7 and Mr. Griffey's views regarding the difficulties of building new generation in Houston and the incentives of incumbent generators to block competition from low-cost resources outside the Houston area.8 NRG and Calpine inappropriately seek to strike all of this important testimony, which Staff found directly relevant to the need determination in this proceeding. Finally, the relevance standard that NRG and Calpine now urge is inaccurate-and more onerous than the standard they advocated when responding to motions to strike their witnesses' testimony. In moving to strike Mr. Griffey's cross-rebuttal, NRG and Calpine allege that, "(flestimony of witnesses in this case must therefore be `or consequence in determining the action' in order for it to be relevant."9 Unquestionably, the portions of Mr. Griffey's testimony that NRG and Calpine seek to strike satisfy this standard, but the actual burden to prove relevance is even lower. As NRG and Calpine argued less than a month ago, testimony must only have "any tendency to make the existence of any fact that is of consequence to the determination of the action more probable or less probable than it would be without the evidence,"10 Thus, Mr. Griffey's testimony must merely have some tendency to make the existence of some fact that is of consequence to the determination of this action more or less probable in order to be relevant. Mr. Griffey's testimony makes the facts submitted by NRG and Calpine less probable by: (1) presenting countervailing statements the parties themselves have made, (2) drawing into question the credibility of NRG and Calpine's witnesses, and (3) 6 Commission Staff Statement of Position at 20 (Aug. 27, 2015). ' 1d. at 'Id. at Objections at Calpine Corporation and NRG Energy, Inc.'s Response to Objections to and Motion to Strike Portions of the Direct Testimony of Calpine Corporation and NRG Energy, Inc. at 4(Aug, 5, 2015) (emphasis added). 4

6 developing relevant facts that disprove NRG and Calpine's assertions on market impacts, future generation development in the Houston region, and savings to customers. This easily passes the relevance standard NRG and Calpine previously articulated. NRG and Calpine also left out other critical elements from the relevance standard they used to support their testimony. For example, they argued that "[a]s a bright-line threshold matter, testimony responsive to another witness's testimony is by definition relevant."" Further, they asserted that "when, as here, a matter is injected into the proceeding, evidence to fully explain the matter is relevant and admissible, even though the evidence might not otherwise be admissible."12 Many portions of Mr. Griffey's testimony that NRG and Calpine have objected to are directly responsive to issues raised and positions taken by NRG and Calpine, so by their own admission, this testimony is relevant. According to the standard of relevance that NRG and Calpine advocated less than a month ago-and the ALJ adopted 13 -Mr. Griffey's testimony is relevant. B. Mr. Griffey is Testifying Within the Scope of His Expertise Mr. Griffey spent 20 years working for Reliant Energy, Inc. (Reliant) and its predecessor, Houston Lighting & Power (HL&P),34 including 11 years as a Vice President and Senior Vice President. A major component of Mr. Griffey's role during that period was generation planning in the Houston area. Notably, Reliant was one of the companies formed when HL&P unbundled during the deregulation of the electric market in 1999, and NRG later purchased the former HL&P generation and the Reliant retail business in separate transactions. As a result of his time at Reliant/HL&P, Mr. Griffey has deep knowledge of all aspects of generation planning and development in the Houston market, including environmental/emissions issues and the economic aspects of investment decisions. Many of NRG and Calpine's objections purport that Mr. Griffey is not an expert in some particular subject area that is encompassed within overall generation planning, such as environmental constraints, load growth, or economics. Analyzing " Id. 12 Id. at n.l l (citing Mestas v. State, 2007 Tex. App. LEXIS 6947, at *9 (Tex. App.-Dallas 2007, pet. ref d) (not designated for publication)). SOAH Order No. 17 Ruling on Objections to and Motions to Strike Testimony at 1(overruling CenterPoint's objections "[fjor the reasons stated in Calpine/NRG's response"). 14 Direct Testimony of Charles S. Griffey, Ex. CSG-l at 2 ( Statement of Qualifications) (July 22, 2015). 5

7 these categories of data and factoring them into generation investment decisions was squarely within the scope of Mr. Griffey's responsibilities as an executive at HL&P. Mr. Griffey is exceptionally qualified to review load forecasting methodologies, interpret data related. to environmental permitting and emissions limitations for generators in Houston, and evaluate economic indicators to opine on how this information will impact generation development in the Houston region. Mr. Griffey's background makes him much better suited to address these issues than the outside consultants retained by NRG and Calpine, who have little to no experience in the ERCOT market or, more specifically, the Houston region. Mr. Griffey's credentials, included as Exhibit CSG-1 to his Direct Testimony, unequivocally establish that Mr. Griffey is an expert in all aspects of generation planning and "power plant economics," including economic indicators, load forecasting, and environmental factors that play a role in investment decisions particularly in the Houston area. For example: At Reliant/HL&P, Mr. Griffey's responsibilities over his 20 years of experience, including his time as a Senior Vice President, included "evaluation and establishment of company's generation, resource planning, rate setting, and load forecasting, including power plants, energy efficiency and demand response," "analysis of capital investment and mothball decisions," and developing "risk adjusted wholesale price forecasting" to be used in "investment analysis to value real options in the generation fleet and the retail contract portfolio." + Mr. Griffey was retained and testified on behalf of the Public Utility Commission on mitigating generator market power in Docket No , specifically evaluating a proposal from Calpine to preemptively mitigate its opportunities to exercise market power. This engagement reflects that the PUC, having hired Mr. Griffey, plainly considers him to be an expert in generator market behavior and incentives. Mr. Griffey has testified before FERC on generator market power on six different occasions. Mr. Griffey testified before the PUC on the prudence of SWEPCO's decision to continue pursuing the Turk Coal Plant in Docket No , which involved economic, load growth, and environmental considerations. In his time at the PUC prior to joining Reliant/HL&P, Mr. Griffey testified on the need for various generation facilities (Docket Nos. 6992, 7195, 6755) and in his time at HL&P, Mr. Griffey testified on the company's decisions to pursue generation investments in Docket Nos , 11000, '$ 15 Direct Testimony of Charles S. Griffey, Ex. CSG-1 ( Statement of Qualifications) (July 22, 2015). 6

8 NRG and Calpine also allege that interpreting certain investor presentations made by these companies is outside Mr. Griffey's expertise. Again, as part of his duties while working for Reliant/HL&P, Mr. Griffey was privy to exactly the kinds of communications and presentations that he discusses in his cross-rebuttal testimony. Based on that experience, he is qualified to draw reasonable inferences and formulate opinions about the effects that the HIP would have on the Houston market. Mr. Griffey's experience also qualifies him to draw conclusions based on NRG and Calpine's public presentations to investors, as well as NRG and Calpine's internal communications regarding relevant considerations like future load growth and wholesale prices in the ERCOT market. As an expert witness, Mr. Griffey is allowed to base his testimony on reasonable inferences, provided his opinions and conclusions are rooted in fact. Here, his opinions and conclusions are rooted in the documents he discusses, and are based on reasonable inferences stemming from his experience dealing with transmission and generation planning on behalf of a large energy company in the Houston area for two decades. Claims that Mr. Griffey lacks expertise in matters related to generation investment decisions and economics are contrary to his clearly documented experience, frivolous, and should be rejected. C. Mr. Griffey's Testimony is Not SIDeculation NRG and Calpine object to certain portions of Mr. Griffey's testimony as "speculation," which appears to be premised on their meritless objections to Mr. Griffey's expertise to testify on certain aspects of generation planning. Mr. Griffey's extensive experience with generation planning and the issues addressed in his testimony is set forth above. Given Mr. Griffey's expertise, he is entitled to draw inferences and opine on the matters addressed in his testimony. Expert witnesses are given wide latitude to discuss matters that are within their experience or can be reasonably extrapolated from the facts they are presented. This is illustrated by the extreme facts of General Motors v. Iracheta, the case NRG and Calpine cited in their objections.' 6 In Iracheta, an expert's testimony was excluded as speculative only after 1) both he and the plaintiff's other expert agreed that he was not qualified to offer an opinion on the issue he discussed, 2) he based his opinion on nothing but his own assertion, 3) his testimony was "rather clearly unreliable" and "irreconcilably self-conflicting," and 4) "A fair view of his testimony is lb See 161 S.W.3d 462, (Tex. 2005). 7

9 that he was willing to say almost anything, directly contradicting himself."17 As shown by Iracheta, the bar to declare an expert's testimony speculative is extraordinarily high, and NRG and Calpine have failed to satisfy it. An expert opinion is just that: an opinion based on facts reviewed by the expert. To avoid speculation, "[ejxpert opinions must be supported by facts in evidence, not conjecture."18 Here, Mr. Griffey's testimony is supported by facts in evidence because all of his conclusions are rooted in his experience in the energy sector and documents produced in discovery that he personally reviewed. It is true that Mr. Griffey is drawing reasonable inferences from those documents regarding the positions of NRG and Calpine's witnesses, as well as the potential financial impact of the HIP on NRG, Calpine, and the Houston market as a whole, but drawing reasonable inferences is exactly the role of an expert witness.19 As discussed above, Mr. Griffey is an experienced energy executive who spent many years handling and managing transmission planning and generation resource issues in the Houston area. He has seen documents and information like that presented in his testimony many times before, and is able to interpret, explain, and draw conclusions about the significance of such material based on his extensive knowledge and experience. NRG and Calpine cannot credibly argue that Mr. Griffey's opinions are not anchored in fact. His testimony is not "speculation" but admissible expert opinion testimony. D. Mr. Griffey's Testimony is Within the Appropriate Scope-of-Rebuttal NRG and Calpine claim that certain documents and information from Docket No are outside the scope of rebuttal. This objection also has no basis. Notably, the issue in Docket No (whether ERCOT's study and review of the HIP complied with the protocols and other binding documents) was much narrower than the broad question of need presented in this case. Information deemed relevant in Docket No , including testimony on the same issues (for example, load forecasts for transmission planning) by the same witnesses (for example, Dr. "Id. ^s Marathon Corp. v. Pitzner, 106 S.W.3d 724, 729 (Tex. 2003); see also Tex. R. Evid. 703 ("An expert may base an opinion on facts or data in the case that the expert has been made aware of, reviewed, or personally observed."). t9 See Tex. R. Evid. 703, Comment to 2015 Restyling ("`[l]nference' is covered by the broader term `opinion.' Courts have not made substantive decisions on the basis of any distinction between an opinion and an inference."). 8

10 Baughman), is directly relevant to the issues in this case. So are documents obtained through discovery in Docket No when they relate to the issues in this case-particularly when those documents were admitted into evidence and previously found to be relevant by the Commission in Docket No , and when NRG and Calpine continue to rely on their filings from Docket No in response to discovery in this case.20 For example, the nonconfidential s discussed on pages of Mr. Griffey's testimony, which NRG and Calpine seek to strike, were previously admitted as CenterPoint exhibits in Docket No Those communications are certainly just as relevant and admissible here in the much broader "need" assessment for the HIP. NRG and Calpine are attempting to shield from evidence any materials that might undermine the credibility of their experts or contradict their litigation positions in this case by not providing that information to their "outside" witnesses. 21 But, that is not the evidentiary standard applicable to relevant information relied upon by an expert witness like Mr. Griffey. The deliberate choice by NRG and Calpine not to have their experts review these publicly available, non-privileged materials does not preclude Mr. Griffey, or any other witness in this case, from discussing relevant information in rebuttal that is contradictory to the positions advocated by NRG and Calpine's witnesses.22 Allowing this strategy to succeed would give every future litigant a roadmap for protecting information that is relevant, but harmful to the party's case, from being exposed to Commission scrutiny. It is the responsibility of the ALJs and the Commission to decide issues of credibility and the weight to be given to the evidence. NRG and Calpine cannot usurp this function by preventing other parties from addressing relevant information and rebutting the issues they themselves have injected into this proceeding simply because they elected not to have their witnesses review it. If the documents and information addressed in Mr. Griffey's testimony respond to a substantive issue or position raised in NRG and Calpine's direct testimony, that topic is open for rebuttal and any relevant documents to such positions are admissible, regardless of whether NRG and Calpine's witnesses 20 See, e.g., Calpine Corporation and NRG Energy, Inc.'s Response to CenterPoint Energy Houston Electric, LLC's First Set of Requests for Information at 61 (Aug. 3, 2015) (referring to Dr. Baughman's testimony in Docket No in response to a request for information regarding NRG and Calpine's position in this proceeding). 21 Objections at 3("None of these documents, of course, were discussed or relied upon by Calpine's and NRG's witnesses."). 22 Id 9

11 reviewed that information or testified to it. NRG and Calpine cannot cite to legal authority holding otherwise. Again, "when, as here, a matter is injected into the proceeding, evidence to fully explain the matter is relevant and admissible, even though the evidence might not otherwise be admissible."23 As discussed in Section II(A) above and laid out specifically in the chart below, Mr. Griffey's testimony is well within the scope of issues that NRG and Calpine have inserted into this case, so he is entitled to present that testimony on rebuttal. The relevance and admissibility of this evidence does not depend on whether NRG and Calpine's witnesses were provided with the information. III. SPECIFIC OBJECTION RESPONSES Page/Line Objection 6:11-19 Irrelevant Outside scope of rebuttal Relevance: Evidence of NRG and Calpine's incentives to protect basis differentials in a load pocket directly rebuts Mr. Cain24 and Dr. Baughman's25 testimony claiming that high locational marginal pricing in the Houston area will lead to the construction of new generation. As NRG and Calpine argued less than a month ago, "As a bright-line threshold matter, testimony responsive to another witness's testimony is by definition relevant." Dr. Baughman also discusses CenterPoint and Cross Texas Transmission's incentives to build the HIP,26 so Mr. Griffey's testimony is relevant to show NRG and Calpine's competing incentive to block transmission. This discussion about the incentive of existing generators within a load pocket to prevent new transmission is also relevant because 1) it impacts the weight to be given the evidence NRG and Calpine present in this case on reliability impacts, and 2) NRG and Calpine's opposition to the HIP indicates that they have a financial incentive to prevent new transmission from reaching Houston load pocket, which is evidence that they believe the HIP will decrease costs for 23 Calpine Corporation and NRG Energy, Inc.'s Response to Objections to and Motion to Strike Portions of the Direct Testimony of Calpine Corporation and NRG Energy, Inc. at 4 (Aug. 5, 2015). 24 Direct Testimony of Collin Cain at 8:10-8:19 (July 22, 2015) (Cain Direct). 25 Direct Testimony of Martin Baughman at 21:4-23:7 (July 22, 2015) (Baughman Direct). 2' Id. at 24:9-25:2. 10

12 consumers by collapsing the basis differential. As discussed above, PURA mandates that potential savings for consumers be considered in the need analysis. Speculation: The purpose of expert witnesses is to present expert opinions based on their expert knowledge and facts they have reviewed. As discussed above, opinion testimony is acceptable as long as the expert's opinions are grounded in fact. Here, Mr. Griffey's testimony is grounded in both the facts he examined in this case and his experience as an energy executive who has dealt extensively with transmission and generation resource planning in the Houston area. As such, his testimony does not constitute the sort of pure speculation that courts exclude as unreliable. Outside scope of rebuttal: As discussed above, this testimony is responsive to the testimony of Dr. Baughman and Mr. Cain. These witnesses both argued that generation will build in the Houston area and that the HIP undercuts incentives to build. Evidence of why incumbent Houston area generators would have incentives not to build is directly responsive to this testimony. 6:21-7:8 Outside scope of expertise Outside the scope of expertise: This section addresses the difficulties of building generation in Houston due to environmental constraints, which is again directly responsive to arguments by NRG and Calpine witnesses that the Commission should wait to see if additional generation is built before pursuing the HIP. Considering the impact of environmental regulations on a generation investment is exactly the kind of analysis that Mr. Griffey dealt with regularly during his years as an energy executive, overseeing generation development in the Houston area. Mr. Griffey does not have to be an expert in the stand-alone fields of NO,, credits or the petrochemical industry to have an intimate knowledge of how those items interact with the highlevel incentives and development plans of energy companies in the Houston market. Speculation: The purpose of expert witnesses is to present expert opinions based on their expert knowledge and facts they have reviewed. As discussed above, opinion testimony is acceptable as long as the expert's opinions are grounded in fact. Here, Mr. Griffey's testimony is grounded in both the facts he examined in this case and his experience as an energy executive who has dealt extensively with transmission planning in the Houston area. As such, his testimony does not constitute the sort of pure speculation that courts exclude as unreliable. 16:4-11 Irrelevant 11

13 Relevance: Evidence of NRG and Calpine's incentives to protect basis differentials in a load pocket directly rebuts Mr. Cain27 and Dr. Baughman's 28 claims that high locational marginal pricing in the Houston area will lead to the construction of new generation. As NRG and Calpine argued less than a month ago, "As a bright-line threshold matter, testimony responsive to another witness's testimony is by definition relevant." Dr. Bau hman also discusses CenterPoint and Cross Texas Transmission's incentives to build the HIP, 4 so Mr. Griffey's testimony is relevant to show NRG and Calpine's competing incentive to block transmission. This discussion about the incentive of existing generators within a load pocket to prevent new transmission is also relevant because 1) it impacts the weight given to the evidence NRG and Calpine present in this case on reliability impacts, and 2) NRG and Calpine's opposition to the HIP indicates that they have a financial incentive to prevent new transmission from reaching Houston load pocket, which is evidence that they believe the HIP is likely to decrease costs for consumers by collapsing the basis differential. As discussed above, PURA mandates that potential savings for consumers be considered in the need analysis. Speculation: The purpose of expert witnesses is to present expert opinions based on their expert knowledge and facts they have reviewed. As discussed above, opinion testimony is acceptable as long as the expert's opinions are grounded in fact. Here, Mr. Griffey's testimony is grounded in both the facts he examined in this case and his experience as an energy executive who has dealt extensively with transmission planning in the Houston area. As such, his testimony does not constitute the sort of pure speculation that courts exclude as unreliable. 16:19-18:12 Irrelevant Outside scope of rebuttal Relevance: This passage discusses the positions that NRG and Calpine and their witnesses have previously taken on the exact same topics being litigated in this case. In particular, this passage discusses prior positions by NRG, Calpine, and their witness Dr. Baughman on which load forecast is appropriate to use in transmission planning. NRG and Calpine's witnesses all testify on load forecasts for transmission planning at length. As NRG and Calpine argued less than a month ago, "As a bright-line threshold matter, testimony responsive to another witness's testimony is by definition relevant." Mr. Griffey is responding to Dr. Baughman's newfound,support for the ERCOT 90/10 forecast30 and Dr. Yang's assertion that the 90/10 forecast is 27 Cain Direct at 8:10-8:19. 2' Baughman Direct at 21:4-23:7. z91d. at 24:9-25:2. See Deposition of Martin Baughman at 11:6-12:3 (Aug. 11, 2015); Calpine Corporation and NRG Energy Inc.'s Responses to CenterPoint's Third Set of Requests for Information at 34 (Aug. 7, 2015). 12

14 appropriate. 31 Prior inconsistent positions are relevant to challenge credibility and demonstrate that NRG and Calpine's recommendations are self-serving and change to suit their purpose. This, again, is directly relevant to the weight that their positions should be given. Speculation: The majority of this passage is simply providing evidence from Docket No , so the "speculation" objection appears to have no basis. Mr. Griffey's testimony is grounded in both the facts he examined in this case and his experience as an energy executive who has dealt extensively with transmission and generation resource planning in the Houston area. As such, his testimony does not constitute the sort of pure speculation that courts exclude as unreliable. Outside the scope of rebuttal: This is not outside the scope of appropriate rebuttal because it is responsive to the testimony of Drs. Baughman and Yang's testimony on load forecasting for transmission planning, as discussed above. 19:1-19 Irrelevant Relevance: Evidence of NRG and Calpine's incentives to protect basis differentials in a load pocket contradicts Mr. Cain32 and Dr. Baughman's33 testimony claiming that high locational marginal pricing in the Houston area will lead to the construction of new generation. As NRG and Calpine argued less than a month ago, "As a bright-line threshold matter, testimony responsive to another witness's testimony is by definition relevant." Dr. Baughman also discusses CenterPoint and Cross Texas Transmission's incentives to build the HIP,34 so Mr. Griffey's testimony is relevant to show NRG and Calpine's competing incentive to block transmission. This discussion about the incentive of existing generators within a load pocket to prevent new transmission is also relevant because 1) it impacts the weight given to the evidence NRG and Calpine present in this case on reliability impacts, and 2) NRG and Calpine's opposition to the HIP indicates that they have a financial incentive to prevent new transmission from reaching Houston load pocket, which is evidence that they believe the HIP is likely to decrease costs for consumers by collapsing the basis differential. As discussed above, PURA mandates that potential savings for consumers be considered in the need analysis. Speculation: The purpose of expert witnesses is to present expert opinions based on their expert knowledge and facts they have reviewed. As discussed above, opinion testimony is acceptable as long as the expert's opinions are grounded in fact. Here, Mr. Griffey's testimony is grounded 31 Direct Testimony of Songhoon Yang, Ph.D. at 46:12-46:23 (July 22, 2015) (Yang Direct). 32 Cain Direct at 8:10-8: Baughman Direct at 21:4-23:7. 'A Id. at 24:9-25:2. 13

15 in both the facts he examined in this case and his experience as an energy executive who has dealt extensively with transmission and generation resource planning in the Houston area. As such, his testimony does not constitute the sort of pure speculation that courts exclude as unreliable. 21:12-23:2 Irrelevant Outside scope of expertise Outside scope of rebuttal Relevance: As NRG and Calpine argued less than a month ago, "As a bright-line threshold matter, testimony responsive to another witness's testimony is by definition relevant." This testimony is responsive to Mr. Cain's assertions that basis differential is how customer benefits should be assessed, that the customers' incentives are directly opposed to the generators',35 and to Mr. Cain's claims that the HIP will not have a net benefit.36 As noted previously, the Commission is required by statute to consider evidence of how the HIP will impact costs to consumers, and this is also an issue in the Preliminary Order. Financial losses to NRG and Calpine directly translate to savings for customers. The purpose of this portion of Mr. Griffey's testimony is not to reveal the impacts to NRG and Calpine, but to explain why NRG and Calpine's testimony, internal correspondence, and motives in this case strongly support the conclusion that the HIP will produce savings for customers. Again, this issue is required to be considered by statute and by the preliminary order in this case. Outside the scope of expertise: The discussion in this section is exactly the kind of information that Mr. Griffey dealt with regularly during his years as an energy company executive focusing on transmission and generation resource planning in the Houston area. Mr. Griffey certainly has sufficient substantive knowledge and expert background to estimate the amount of NRG and Calpine's losses (and hence, the expected savings to customers) within an order of magnitude. His intimate knowledge of the Houston energy market and his significant exposure to communications and financial projections of this type qualify him to present this opinion. Outside the scope of rebuttal: This is not outside the scope of appropriate rebuttal because it is responsive to Mr. Cain's testimony, as discussed above. 24:9-28:15 Irrelevant Outside scope of expertise Outside scope of rebuttal 'S Cain Direct at 19: !d. at 19:3-13, 21:18-23:7. 14

16 Relevance: This passage presents statements, slides, and presentations that NRG and Calpine have made regarding the impact of the drop in oil prices on demand in the Houston region. This evidence directly contradicts the testimony by their expert witnesses and is both relevant and critically important for the Commission to consider. As the biggest generators in Houston, significant weight should be given to the statements and presentations that NRG and Calpine have made publicly (including to investors) on the exact same issues their witnesses are addressing in this case. NRG and Calpine's contradictory statements are a direct challenge to the testimony of their witnesses, and this information is therefore relevant. As NRG and Calpine argued less than a month ago, "As a bright-line threshold matter, testimony responsive to another witness's testimony is by definition relevant." As Mr. Griffey made clear in footnote 32 of his testimony,37 this section is responsive to specific identified portions of testimony by Dr. Baughman,38 Mr. Cain,39 and Dr. Yang.AO This section also directly contradicts NRG and Calpine's response to CenterPoint's RFI 4-16, which claimed that neither company had made any statements regarding how crude oil prices would affect electricity demand.41 Outside the scope of expertise: The presentations discussed in this testimony are similar to those that Mr. Griffey dealt with regularly during his years as an energy company executive focusing on transmission and generation resource planning in the Houston area. As a former energy executive, Mr. Griffey inarguably has sufficient financial expertise to read about and understand a plain statement like "fundamentals remain strong - load growth of -2%". Mr. Griffey also knows from his experience as an energy executive that companies can face serious consequences for misleading investors and, therefore, statements to investors should generally be presumed honest and credible. Mr. Griffey's intimate knowledge of the Houston energy market and his significant exposure to communications and financial projections of this type qualify him to present these opinions. Outside the scope of rebuttal: This is not outside the scope of appropriate rebuttal because it is responsive to testimony by Dr. Baughman, Mr. Cain, and Dr. Yang as discussed above. 29:10-30:3 Outside scope of expertise Outside the scope of expertise: This passage is a slide NRG presented to investors, and related discussion, that directly contradicts the load growth projections presented by their witnesses based on the recent drop in oil prices. The information discussed in this passage requires no 37 Cross-Rebuttal Testimony of Charles S. Griffey at 24, n. 32 (Aug. 18, 2015) (Griffey Cross-Rebuttal), 38 Baughman Direct at 4-5, Cain Direct at ' Yang Direct at Griffey Cross-Rebuttal at 28:7-9 ("Additionally, in response to CNP 4-16, Calpine and NRG claimed that neither company had made any statements regarding how crude oil prices would affect electricity demand-but the slides that 1 have excerpted clearly show otherwise."). 15

17 particular expertise to interpret, as it is merely reading and reiterating the contents of a slide NRG developed for investors on a topic that NRG's witnesses testify to. Regardless, this is exactly the type of data Mr. Griffey dealt with regularly during his years as an energy executive focused on transmission and generation resource planning in the Houston area. Mr. Griffey's background includes forecasting load growth for generation planning purposes in the Houston area, which is exactly what this slide and related testimony addresses. Mr. Griffey's background certainly qualifies him to testify on the impact that reduced oil prices can have on downstream activity and corresponding load growth. Mr. Griffey's intimate knowledge of the Houston energy market and his significant exposure to communications and financial projections of this type qualify him to present this opinion. 31:6-7 Irrelevant Relevance: This passage summarizes statements that NRG and Calpine have made to investors that contradict the testimony of their witnesses. This conclusory statement is relevant for the same reason that the underlying passages are relevant, as discussed above. Speculation: Mr. Griffey is simply observing that NRG and Calpine's statements and presentations to investors contradict the testimony of their witnesses. His testimony contains no speculation. NRG and Calpine might prefer that Mr. Griffey not illustrate how their testimony in this case is patently inconsistent with their prior public statements, but that does not render Mr. Griffey's testimony speculative. 33:6-7 Irrelevant Relevance: This passage is a reference to an NRG slide on load growth discussed previously in Mr. Griffey's testimony. It is relevant for the same reasons as the underlying slide being referenced, which was addressed above in response to the objections to 24:9-28:15. Speculation: Mr. GrifEey merely observes that the load growth assumptions he believes are reasonable for the HIP analysis are within the range of the growth levels NRG previously presented to investors. There is nothing speculative about this testimony, which just compares Mr. Griffey's analysis to prior public representations made by NRG. 34:18 Irrelevant 16

18 Relevance: This passage is a reference to an NRG slide on load growth discussed previously in Mr. Griffey's testimony. It is relevant for the same reasons as the underlying slide being referenced, which was addressed above in response to the objections to 24:9-28:15. Speculation: Mr. Griffey merely observes that the load growth assumptions he believes are reasonable for the HIP analysis are within the range of the growth levels NRG previously presented to investors. There is nothing speculative about this testimony, which just compares Mr. Griffey's analysis to prior public representations by NRG. 35:15-36:5 1 Outside scope of expertise Irrelevant Relevance: As NRG and Calpine argued less than a month ago, "As a bright-line threshold matter, testimony responsive to another witness's testimony is by definition relevant." As explicitly stated in this section of the testimony, Mr. Griffey is responding to Dr. Yang's testimony on load growth assumptions in the Houston region, so there should be no question of relevance 42 The impact that rooftop solar, demand response, and energy efficiency could have on peak load in Houston and, correspondingly, on the need for new transmission, are core issues in this case raised by NRG. To the extent that the relevance objection is based on the information being NRG presentations, that is not a valid objection. NRG is one of the largest generators in Houston and NRG's views on load growth potential in Houston are relevant and important for the Commission to consider, particularly when they contradict the views presented by NRG and Calpine's witnesses. Outside the scope of expertise: The first portion of this passage provides Mr. Griffey's opinion that rooftop solar is not an economically viable technology at this time, and the facts forming the basis for that opinion. The topics discussed in this testimony are similar to those that Mr. Griffey dealt with regularly during his years as an energy company executive focusing on transmission and generation resource planning in the Houston area. Mr. Griffey has robust expertise in the economics of generation, as discussed previously, and is certainly qualified to apply that expertise and draw opinions about the current economic profile of rooftop solar. The second portion of this passage discusses NRG's statements to investors about the impacts of demand response and energy efficiency. As an energy executive with experience in transmission and generation resource planning in the Houston region, Mr. Griffey is qualified to testify to energy efficiency and demand response potential in that area. Further, his testimony on this latter topic requires little expertise as he is simply presenting a slide where NRG makes statements on this topic that are directly contrary to the testimony of NRG's witnesses in this case, "' Griffey Cross-Rebuttal at

19 36:8-9 Irrelevant Relevance: This passage is a reference to the NRG presentations on demand response and energy efficiency discussed above in the response to the objections to 35:15-36:5. It is relevant for the same reasons as the underlying slide. Speculation: There is nothing speculative in pointing out that NRG's presentations to investors conflict with the testimony of their witnesses in this case. This observation is based on reading NRG and Calpine's testimony and the NRG investor presentation, and simply comparing the contents. 46:10-47:2 Irrelevant Relevance: This passage presents a Calpine slide for investors on "Market Fundamentals," which presents Calpine's view on future reserve margins in ERCOT (meaning, the comparison of available generation compared to expected load). This slide and the testimony discussing it are directly responsive to testimony from Calpine and NRG witnesses claiming that the load growth projections relied on to support the HIP are exaggerated and unreliable, and that new generation will build to serve that load without a need for new transmission. As NRG and Calpine argued less than a month ago, "As a bright-line threshold matter, testimony responsive to another witness's testimony is by definition relevant." This testimony is responsive to Dr. Baughman's testimony43 because the factors Dr. Baughman found to be critical when making his assessment of the need for the HIP were discounted and downplayed by Calpine in its discussions of market fundamentals with investors. Speculation: Here, Mr. Griffey is again merely comparing statements made by Calpine to the testimony of its witnesses and pointing out the conflict. There is nothing speculative about such a comparison, and the facts Mr. Griffey relied on for this passage have been identified and provided-namely, the testimony of NRG and Calpine's witnesses, and the presentations Calpine made to investors, which are patently inconsistent. 49:5-52:15 Outside scope of expertise 43 Baughman Direct at 14:10-17:19,36:10-39:13. 18

20 Outside the scope of expertise: The first portion of this passage (p. 49) is a general discussion of the potential consequences for the market and for reliability if new import capacity into Houston is not constructed, and new generation is not built to obviate the reliability issues ERCOT, CenterPoint, Cross Texas and others have identified. Mr. Griffey is exceedingly competent to provide this testimony based on his years of experience and his extensive knowledge of supply and demand, power systems, and ERCOT market design. Mr. Griffey's time as an energy executive at Reliant/HL&P and his robust experience with the ERCOT market makes him well-qualified to present this testimony. The second portion of the passage (p ) is Mr. Griffey's expert opinion, including the facts he relied on to form this opinion, on why Houston is a "constrained" area and why it is more expensive and difficult to build generation in the Houston region compared to other areas. As discussed previously, Mr. Griffey is an expert in power plant economics, and was involved in generation investment decisions during his time at HL&P. In particular, Mr. Griffey regularly dealt with the economics of investing in new generation in the Houston region when he was at HL&P and Reliant, which included environmental permitting and emissions factors. Mr. Griffey also analyzed competitive market fundamentals and investment potential during his time at Reliant, and subsequently in multiple engagements as an expert witness. Mr. Griffey does not have to be an expert on standalone "emissions" or "environmental issues" to understand how permitting requirements and emission restrictions impact power plant economics. He is qualified to review publicly available information and draw conclusions about the impact that information will have on the ability to build generation in Houston. Speculation: Expert witnesses are categorically allowed to present opinions. As discussed above, an expert's opinion that is grounded in fact is admissible. Here, Mr. Griffey's testimony is grounded in both the facts he examined in this case and his experience as an energy executive who has dealt extensively with transmission and generation resource planning in the Houston area. His decades of experience with the ERCOT market in general, and Houston specifically, make him especially well-positioned to rebut the assertions of other outside consultants who lack the same familiarity with ERCOT and Houston. As such, his testimony does not constitute the sort of pure speculation that courts exclude as unreliable. The testimony regarding the additional costs and difficulties of building generation in Houston, in particular, is based on discrete facts that Mr. Griffey presents in his testimony and is not speculative. 52:20-53:22 Outside scope of expertise Outside Scope of Expertise: Similar to the prior passage, this portion of Mr. Griffey's testimony discusses the environmental permitting and emissions requirements that relate to building new generation in Houston. Mr. Griffey regularly dealt with the economics of investing in new generation in the Houston region when he was at HL&P and Reliant. In that capacity, he gained specific knowledge and expertise regarding environmental permitting and emissions factors, among other relevant considerations, that impacted generation citing decisions. Mr. Griffey need not have specific training on "emissions" or "environmental issues," in isolation, to 19

21 understand how permitting requirements and emission restrictions impact power plant economics. He is qualified to review publicly available information and draw conclusions about the impact that information will have on the ability to build generation in Houston. 59:5-6 Irrelevant Relevance: This testimony references Mr. Griffey's earlier presentation and discussion of various statements and slides made to investors by NRG and Calpine that contradict the testimony of their witnesses. This reference is relevant for the same reasons as the underlying materials, as discussed in the response to the objections to 24:9-28:15. In particular, this testimony is responsive to testimony by Dr. Baughman, Mr. Cain, and Dr. Yang.44 Also as discussed above, this section directly rebuts NRG and Calpine's response to CenterPoint's RFI 4-16, which asserted that neither co many had made any statements regarding how crude oil prices would affect electricity demand. S Speculation: This reference is not speculative for the same reasons the underlying passage being referenced is not speculative, discussed in the response to the objection to 24:9-28:15. IV. CONCLUSION As their Motion to Strike makes clear, NRG and Calpine are seeking to avoid being held to the same rules as other parties in this case. Their witnesses have injected a number of issues into this proceeding in an attempt to undermine the weight that must statutorily be given to ERCOT's recommendation that the HIP is needed. Yet when TIEC and Luminant's expert witness Mr. Griffey responded to these claims and challenged their validity, NRG and Calpine assert that the testimony is irrelevant and speculative. Likewise, NRG and Calpine seek to impose a more onerous relevance standard for TIEC and Luminant than what they advocated in response to motions to strike their own testimony just weeks ago. Their attempts to circumvent the rules that apply to every other party in this case should be rejected. TIEC and Luminant respectfully request the ALJ to overrule NRG and Calpine's objections and deny the Motion to Strike the cross-rebuttal testimony of Charles Griffey. 44 Griffey Cross-Rebuttal at 24, n. 32, S Id. at 28:7-9 ("Additionally, in response to CNP 4-16, Calpine and NRG claimed that neither company had made any statements regarding how crude oil prices would affect electricity demand--but the slides that I have excerpted clearly show otherwise."). 20