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[00:00:02]

SO

[CALL MEETING TO ORDER]

I WILL CALL TO ORDER THIS VIRTUAL MEETING OF THE ELECTRIC UTILITY COMMISSION.

IT'S APRIL 19TH, 2021 AT 5:34 PM.

AND FIRST I'D JUST LIKE TO WELCOME OUR NEWEST COMMISSIONER.

UH, RANDY CHAPMAN.

WHO'S BEEN APPOINTED BY A COUNCIL MEMBER POOL.

UM, RANDY, IF YOU WANT TO TAKE JUST FIVE SECONDS, UH, INTRODUCE YOURSELF AND SAY HELLO TO THE GROUP.

ABSOLUTELY.

AND, UH, IT'S GOOD TO BE BACK BEFORE THE COMMISSION, UH, SPOKEN THERE THREE OR FOUR TIMES, SORRY, WORKED ON THE LOW-INCOME TASKFORCE YEARS AGO THAT, UH, HELPED, UH, ESTABLISH THE DISCOUNT PROGRAM.

UH, 43 YEARS, UH, WORKING FOR CIVIL LAKE OF WHITE FOR THE, FOR, UH, RECENTLY RETIRED AND, UH, IN MY SPARE TIME, OTHER SPARE TIME I'M, UH, I SERVE ON THE BOARD OF DIRECTORS CHAIR, THE NATIONAL CENTER ON APPROPRIATE TECHNOLOGY THAT WORKS ON ENERGY EFFICIENCY AND, UM, OPERATES THE LOCKHEED CLEARING HOUSE ANYWAY, THAT SUIT.

AND I'M NOT SURE NUTSHELL.

IT'S GOOD.

GOOD TO BE PART OF THE, UH, COMMISSION.

THANK YOU.

GREAT.

THANK YOU.

AND WELCOME.

WE'RE HAPPY TO HAVE YOU AND YOUR EXPERTISE ON OUR BOARD.

APPRECIATE IT.

OH, GO AHEAD AND DO A ROLL CALL JUST QUICKLY FOR QUORUM PURPOSES AND RECORD KEEPING.

I SEE A COMMISSIONER FOR CHIL COMMISSIONER FUNKHOUSER, COMMISSIONER, TRO COMMISSIONER CHAPMAN, AND COMMISSIONER THAT ALREADY SAY FUNKHOUSER AND COMMISSIONER HOPKINS.

UH, I THINK I GOT, I THINK I GOT EVERYBODY THERE.

OH, I SEE.

COMMISSIONER STONE LOOKS LIKE COMMISSIONER STONE JUST JOINED US AS WELL.

UM, BUT I'M OH, AND COMMISSIONER WELDON.

HAVEN'T FORGOTTEN YOU, MATT.

I APPRECIATE THAT EVEN.

I CAN'T SEE YOU.

UM, BUT OKAY.

UH, DID I MISS ANYBODY ON THE ROLL CALL THERE? OKAY.

NO, MADAM CHAIR.

THAT'S THE SEVEN THAT WE HAVE PRESENT.

OKAY, GREAT.

ALL RIGHT.

UM,

[CITIZEN COMMUNICATION: GENERAL]

THEN MOVING ON TO OUR FIRST ITEM HERE, UH, CITIZEN'S COMMUNICATION.

UH, DID WE HAVE ANY CITIZEN COMMUNICATION? SIGN-UPS MR. VICE? YES, WE DO.

WE HAVE PAUL ROBBINS, PAUL, UH, YOU KNOW THE DRILL YOU'LL HAVE THREE MINUTES.

THANK YOU.

THANK YOU.

GOOD EVENING.

COMMISSIONERS.

I'M PAUL ROBBINS, AN ENVIRONMENTAL ACTIVIST AND CONSUMER ADVOCATE.

I'M FOLLOWING UP ON THE LAST MEETING ABOUT PROBLEMS WITH CUSTOMER ASSISTANCE PROGRAM.

FIRST I WAS BLUNT.

I'M SORRY.

CAN YOU ALL HEAR ME? YES, YES, WE CAN HEAR YOU.

OKAY.

FORGIVE ME FIRST.

I WAS BLINDSIDED BY A MEMO THAT AUSTIN ENERGY WROTE FOR YOUR MARCH MEETING, ATTEMPTING TO DEFEND THE PROGRAM'S PROBLEMS. THIS MEMO WAS NOT SENT TO ME, WAS NOT EVEN MADE PUBLIC UNTIL THE DAY OF THE MEETING AND DID NOT EVEN DEAL WITH MOST OF THE POINTS IN MY COMPLAINT THAT WERE SENT TO THE AUDITOR'S OFFICE TO SAY THAT THIS IS BAD FORM IS AN UNDERSTATEMENT.

SECOND, SOME OF THIS MEMO WAS NOT ACCURATE.

IT STATES THAT SINCE THERE WERE ALREADY AUDITS DONE TO ANALYZE CUSTOMER ASSISTANCE PROGRAMS, EFFECTIVENESS, THERE WAS NOT A NEED FOR ANOTHER.

I HAVE SENT COMMISSIONERS A LETTER WITH A WEB LINK SHOWING THAT THERE WERE NO SUCH AUDITS POSTED ON THE AUDITOR'S WEBSITE.

IF AUSTIN ENERGY HAS OUTSIDE AUDIT AUDITS CONDUCTED BY OTHER GOVERNMENTAL DEPARTMENTS OR PRIVATE COMPANIES, I ASKED THAT THEY BE MADE PUBLIC.

ANOTHER POINT I NEED TO ADDRESS IS A MEME THAT AUSTIN ENERGY STAFF HAS, UH, SUGGESTED THAT SINCE THERE WERE ONLY A FEW PARTICIPANTS SUSPECTED OF BEING TOO WEALTHY TO RECEIVE MONEY MEANT FOR THE POOR, IT'S NOT WORTH THE TIME AND COST TO DEAL WITH THEM.

THE FACT IS SINCE MOST PARTICIPANTS IN CAP ARE NOT INCOME QUALIFIED, THERE COULD LITERALLY BE THOUSANDS OF PARTICIPANTS WHO ARE UNJUSTIFIED, MOREOVER WITH CURRENT INSUFFICIENT SCREENS FOR HIGH REAL ESTATE WEALTH, AUSTIN ENERGY IS LARGELY UNTRANSPARENT IN ITS INFORMATION.

I AM NOT EVEN ALLOWED TO SEE WHO MORE THAN HALF OF CAP PARTICIPANTS ARE, AND I'M NOT ALLOWED TO SEE WHY PARTICIPANTS WITH HIGH REAL ESTATE ASSETS MIGHT BE INCOME QUALIFIED.

ANOTHER UNDISCUSSED POINT IS WHY PROPERTY RICH PARTICIPANTS CANNOT BE EASILY ELIMINATED VIA COMPUTERS.

HOW HARD CAN IT BE TO PROGRAM A COMPUTER

[00:05:01]

TO REJECT PARTICIPANTS WHO OWN SWIMMING POOLS AND TENNIS COURTS AT THE LAST MEETING COMMISSIONER STONE SUGGESTED THAT INSTEAD OF AN OUTSIDE AUDIT, IT WOULD BE MORE CONSTRUCTIVE FOR THE COMMISSION ITSELF TO PURSUE ITS OWN INVESTIGATIONS FOR A BETTER FUNCTIONING PROGRAM.

AND I'LL BE HAPPY TO WORK WITH THIS COMMISSION, IF THAT IS YOUR PREFERENCE.

BUT I ASKED HOW THIS WILL WORK WHEN SUCH MEETINGS OR SUBCOMMITTEE MEETINGS MIGHT BE HELD AND HOW I CAN PARTICIPATE.

THANK YOU.

THANK YOU, MR. ROBBINS.

THAT'S ALL THE SPEAKERS.

OKAY.

THANK YOU.

WE'LL MOVE ON TO NEW BUSINESS.

YEAH, THIS IS, THIS IS CARRIE ERIC.

I JUST WANTED TO WELCOME YOU BACK AS WELL AND SHOW YOU IN LIGHT OF MR. UM, UH, ROBBINS, UH, STATEMENTS.

YOU CAN SEE, WE DIDN'T MOVE ALONG VERY FAR ON THIS ISSUE WHILE YOU WERE GONE.

I SEEM TO RECALL THIS WAS THE LAST THING THAT WE DISCUSSED AT THE LAST MEETING YOU ATTENDED.

I THINK SO.

YEAH.

TO, TO, THROUGH, UM,

[NEW BUSINESS – CONSENT (Part 1 of 2)]

MOVING ON TO NEW BUSINESS, WE, ARE THERE ANY ITEMS THAT COMMISSIONERS WOULD LIKE PULLED FOR DISCUSSION HEARING? NONE.

I WILL ENTERTAIN A MOTION TO APPROVE ITEMS TWO THROUGH ACTUALLY, NO, I DON'T NEED A MOTION.

UM, ITEMS TWO THROUGH NINE ARE CONSENTED.

UM, MOVING ON TO STAFF BRIEFINGS AND REPORTS.

THIS IS ITEM NUMBER 10 IS NEXT UP.

THIS IS THE AUSTIN ENERGY FISCAL YEAR 22 FORECAST AND BUDGET PLANNING DISCUSSION.

YES MA'AM AS WE, UH, MAKE SURE THAT THAT PRESENTATION GETS PULLED UP.

[1. APPROVAL OF MINUTES – Approve minutes of the March 8, 2021 regular meeting.]

COULD I ASK THE CHAIR TO ALSO TAKE A VOTE ON THE MARCH MINUTES? OKAY.

OH, YES.

SORRY ABOUT THAT.

I MISSED IT.

MY LIKE, TO, UH, ENTERTAIN A MOTION TO APPROVE THE MARCH MEETING MINUTES THAT WERE CIRCULATED WITH OUR MATERIALS PRIOR TO THE MEETING.

I'D SO MOVE.

THANK YOU.

UH, ALL THOSE IN FAVOR? AYE.

ALL RIGHT.

AND COULD I GET A VERBAL VOTE FROM COMMISSIONER WELDON? OKAY.

CAN YOU HEAR ME NOW? THERE WE GO.

OH, I, SO THERE WAS SOMETHING THAT PREVENTED ME FROM SPEAKING UNTIL YOU ASKED THAT QUESTION.

I HAD LOST CONTROL OF THE MICROPHONE.

I ACTUALLY WAS INTERESTED IN REVIEWING ITEM FOUR JUST FOR SCOPE.

OH, WOW.

OKAY, GREAT.

I'M SORRY ABOUT THAT COMMISSIONER WELDON.

I DIDN'T ASK FOR, UM, YOUR PARTICIPATION SPECIFICALLY ON THAT.

UM, SO, UH, YOUR VOTE ON THE MEETING APPROVAL AND WE'LL GO BACK TO ITEM FOUR.

YES.

OKAY.

AND COMMISSIONER STONE ON MEETING MINUTES, SHE'S INDICATING A THUMBS UP CHAIR.

OKAY.

OKAY.

OKAY, GREAT.

THANK YOU.

THERE WE GO.

I SEE YOU NOW.

UM, OKAY, GREAT.

OKAY.

I THINK THAT'S EVERYBODY THE MEETING, THE MARCH MEETING MINUTES PASSED UNANIMOUSLY.

OKAY.

MOVING BACK

[NEW BUSINESS – CONSENT (Part 2 of 2)]

TO OUR, UH, CONSENT AGENDA.

I DON'T KNOW HOW TO, WE NEED TO DO THIS PROCEDURALLY JEFF, BUT I'D LIKE TO TAKE OFF ITEM NUMBER FOUR.

CAN WE STILL MOVE FORWARD WITH TWO, THREE, FIVE, SIX, SEVEN, EIGHT AND NINE AS CONSENTED? YES, LET'S DO THAT.

AND WE'LL JUST ADDRESS THE QUESTION ON NUMBER FOUR AND THEN TAKE A VOTE.

OKAY, GREAT.

SO W

[4. (4/22) [Purchasing] Authorize an amendment to an existing contract with Pike Enterprises Inc, to provide continued transmission and distribution electrical services, for an increase in the amount of $4,000,000, for a revised contract amount not to exceed $93,000,000.]

ITEM NUMBER FOUR.

NOW, COMMISSIONER WELDON.

GO AHEAD.

I WAS JUST HOPING THAT SOMEBODY WAS PRESENT WITH STAFF TOO, TO COMMENT ON THE EXPANSION AND WHAT THE SCOPE OF THE CONTRACT IS.

UH, MY QUESTION IS MORE ON THE CONTEXT OF, UH, AMBITIONS IN DISTRIBUTION, GIVEN THE TOPICAL NATURE AND THE ISSUES THAT WE EXPERIENCED IN FEBRUARY.

AND IF SOMEONE ISN'T PRESENT, YOU KNOW, THAT WE CAN TELL ME THAT WE HAVE ELTON, THIS IS ELTON RICHARD.

YEAH.

ELTON RICHARD VICE PRESIDENT OF FIELD OPERATIONS.

UH, THIS IS ACTUALLY A CONTINUATION OF THE FIVE-YEAR CONTRACT, UH, PIKE ENTERPRISES DOES, UH, UH, JUST ABOUT ANY CONTRACT WORK ON BOTH THE TRANSMISSION AND THE DISTRIBUTION

[00:10:01]

SIDE.

THIS CONTRACT WAS ACTUALLY DUE TO COME TO AN END IN THIS MONTH, BUT THERE'S A LARGER CONTRACT THAT THEY'RE PUSHING IN JULY.

SO THE PROCUREMENT WANTED TO DO IT IN ONE LARGE CONTRACT.

SO THIS IS JUST A CONTINUATION OF THE NORMAL SERVICES THAT PIPE DOES FOR US IN A CONTRACTING ON BOTH THE TRANSMISSION DISTRIBUTION.

AND THIS GOES FROM NEW INSTALLATION TO REPAIR OR CORRECTIVE MAINTENANCE ITEM AND A MERCHANT REPAIR.

IF OUR CREWS CAN NOT DO IT.

DOES THAT ANSWER YOUR QUESTION, SIR? UH, IT DOES TO A LARGE EXTENT, CAUSE I HEARD YOU SAY THAT WE'RE GOING TO BE REVISITING THIS AS A LARGER CONTRACT, UH, IN THE SUMMER.

AND I WAS JUST CURIOUS IF, UH, IN THE CONTEXT OF THE EVENTS OF FEBRUARY, AT WHAT POINT IN TIME, WE MIGHT EXPECT TO SEE THAT THE ISSUE OF CHANGING THE CAPABILITIES, UH, FOR, UH, LOAD SHED IN CHANGING THE GEOGRAPHY AND THE CAPACITY OF THAT SYSTEM.

I PRESUME THAT THAT'S GOING TO BECOME AN URGENT MATTER.

I WAS JUST WONDERING IN THE CONTEXT OF THE KIND OF A CONTRACT, WHEN THAT DISCUSSION MIGHT OCCUR, THAT THAT WOULD NOT BE IN THE CONTEXT OF THIS DISCUSSION.

THAT WOULD JUST BE JUST WORK THAT WOULD BE, UH, PROVIDED THROUGH THE ENGINEERING DEPARTMENT IF THEY SO CHOSE TO CHANGE THE CONFIGURATION.

BUT IT WOULD BE WITHIN THE NORMAL CONTRACT OF THE HYPE ENTERPRISE ON PERFORMING WORK EITHER A DISTRIBUTION OR TRANSMISSION LEVEL.

OKAY.

THANK YOU.

SO THE FEBRUARY WOULDN'T CHANGE ANYTHING ON THIS CONTRACT, SIR.

RIGHT? RIGHT.

OKAY.

YOU ANSWERED MY QUESTION.

SO THAT WAS WHAT I WAS AFTER.

THANK YOU.

THANK YOU, SIR.

ANY OTHER QUESTIONS ON ITEM, NUMBER FOUR, HEARING NONE.

I'LL ENTERTAIN A MOTION.

APPROVE ITEM NUMBER FOUR.

ALL SECOND.

THANK YOU.

ALL THOSE IN FAVOR.

AYE.

AYE.

AYE.

MR. CHAPMAN, IF YOU WOULDN'T MIND RAISING YOUR HAND, IT'S A LITTLE EASIER FOR ME TO SEE ON THAT.

PERFECT.

THANK YOU.

UH, AND THEN I WILL CALL ON COMMISSIONER WELDON.

COULD I GET A VERBAL FROM YOU? GREAT.

AND COMMISSIONER STONE.

I SEE YOU.

THANK YOU.

UH, THAT MEANS ITEM NUMBER FOUR PASSES UNANIMOUSLY.

OKAY.

NOW

[10. Austin Energy FY22 Forecast and Budget Planning.]

MOVING ON TO ITEM NUMBER 10.

UM, THE FORECAST AND BUDGET PLANNING PRESENTATION.

GOOD EVENING.

THIS IS MARK DEBRASKI.

CAN YOU HEAR ME? YES, SIR.

ALL RIGHT.

THANK YOU.

SO, UM, PRESENTING OUR DECEIT, UH, THE SAME THING, THE FYI 22, THAT OUR FIVE-YEAR FORECAST IN OUR PRELIMINARY BUDGET PLANNING TO YOU WHILE I DO IT, I'M GOING TO TURN OFF MY VIDEO.

UM, LET'S SAY YOU DON'T SEE A SIDE OF MY FACE ALL EVENING WHILE I READ.

UM, BUT I DID WANT TO MAKE AN ANNOUNCEMENT.

UH, CAN'T INTRODUCE HIM HERE RIGHT NOW, THE WAY, UH, WE'RE WE'RE CONFIGURED, BUT, UM, UH, UH, JOHN DAVIS HAS JOINED US.

HE IS THE NEW AUSTIN ENERGY FINANCE DIRECTOR AND RESPONSIBLE FOR OUR BUDGET.

UH, JOHN BRINGS SOME SIGNIFICANT UNTIL YOU EXPERIENCE.

HE'S A FORMER CFO OF PRONOUNCED ELECTRIC COOPERATIVE.

UM, AS WELL AS ASSISTANT CONTROLLER AT LCRA, WE HAVE A LONG, UM, UH, LONG STINT AT SOUTHERN NEWTON AS A CONTROLLER THERE, UM, NATURAL GAS PROVIDER, NOT AS A CPA AND HAS BOTH AN UNDERGRADUATE AND ACCOUNTING AND AN MBA FROM THE UNIVERSITY OF TEXAS.

SO WE'RE EXCITED FOR HIM TO BE JOINING US AND HOPEFULLY IN THE FUTURE, YOU'LL BE HEARING FROM HIM ON THE BUDGET.

RIGHT.

WELCOME TO MR. DAVIS.

IS, IS, DID YOU SAY HE WAS ON THE CALL OR NO.

OKAY.

I BELIEVE HE'S LISTENING IN, WE, UM, JUST THE PRESENTERS ARE ON THE CALL.

THANK YOU.

THANKS FOR THAT INTRODUCTION.

AND I'M HAPPY TO HAVE YOU ON BOARD MR. DAVIS.

UM, SO I WILL BE SAYING NEXT, UH, TO ADVANCE THE SLIDE.

SO, UM, SO TONIGHT I'M GOING TO BE COVERING OUR, OUR BUDGET SCHEDULE OF THE FORECAST INPUTS, ASSUMPTIONS AND PROCESS, AS WELL AS THE SUMMARY OF THAT FORECAST AND OUR BUDGET PLANNING, UH, WHICH INCLUDES THE SUMMARY OF THE F Y UH, 21 BUDGET.

NEXT SLIDE PLEASE.

NEXT SLIDE SCHEDULE.

[00:15:02]

SO, UM, THE TIMELINE HERE LAYS OUT SOME KEY DATES FOR US IN THE COMING BUDGET CYCLE.

UM, SO WE COMPLETED OUR FORECAST, UH, LATE FEBRUARY, EARLY MARCH, AND SUBMITTED THAT TO, UH, THE CITY OF AUSTIN FINANCE FOR THEIR INITIAL UPCOMING PLANNING.

AND TONIGHT WE'RE GOING TO COVER THAT FIVE-YEAR FORECAST AND HOW THAT PLAYS INTO THE FYI 22 BUDGET.

UM, WE'VE ALREADY KICKED OFF OUR TERM PLANNING FOR THAT BUDGET AND THAT PROCESS WILL CONTINUE.

UM, THE BEGINNING OF MAY, WHEN WE SUBMIT OUR BUDGET TO THE CITY OF AUSTIN, UH, FOR THEIR CONSIDERATION, AND THEN IN EARLY JUNE, FOR THE END OF JULY, THE CITY WORKS ON THAT BUDGET.

UM, AND THEN CITY MANAGERS EXPECTED TO DELIVER THE PROPOSED BUDGET ON JULY 9TH, SUMMER THAT I AM.

THE OTHER EXECUTIVES WILL BE JOINING YOU ON JULY 12TH, PRESENT THAT BUDGET TO THE EUC, UH, FOR THE FY 22 YEAR, THE CITY COUNCIL, YOU CAN SEE AS A NUMBER OF, UH, WORKSHOPS AND PUBLIC HEARINGS AND WHY IN AUGUST.

AND, UM, THIS YEAR YOU WILL HAVE A SECOND EUC MEETING ON AUGUST NIGHT PRIOR TO THE VOTE BY THE CITY COUNCIL THAT ADOPTS IT, UH, SOMEWHERE BETWEEN THE 11TH AND 13TH OF AUGUST THERE.

AND THEN FINALLY WE'LL BE UPDATING THE POWER SUPPLY JUDGMENT REGULATORY CHARGE, OR A COMMUNITY BENEFITS CHARGE IN SEPTEMBER.

AND WE'LL PRESENT THOSE TO THE CITY COUNCIL, THEIR CONSIDERATION PRIOR TO THE FISCAL YEAR.

THEN OF COURSE, OUR FISCAL YEAR, FY 22 BEGINS ON OCTOBER 1ST.

THOSE PASS-THROUGH CHARGES WILL BECOME EFFECTIVE ONE.

YEAH.

UH, IN ATLANTA, YOU KNOW, MR. CHAPMAN, I THINK, UH, YOU MAY HAVE YOUR MIC ON MUTED.

OKAY.

GOT IT.

EXCELLENT.

THE CITY PRODUCES, UM, UH, A LOT OF INFORMATION REGARDING OUR FINANCES, AS WELL AS THE REST OF THE STATE'S FINANCES AND PERFORMANCE.

UM, AND THAT CAN BE A FINDING THAT CAN, CAN BE A CHALLENGE.

SO I'VE PROVIDED A COUPLE OF LOCATIONS FOR SOME USEFUL SITES THAT THE PUBLIC CAN ACQUIRE THAT INFORMATION.

IT'S OF THE NEXT SLIDE, PLEASE.

THERE YOU GO.

UM, OF COURSE, THERE YOU GO.

SO THESE ARE SITES THAT YOU CAN GET, UM, AUSTIN ENERGY INFORMATION THAT THE PUBLIC HAS HAS ACCESS TO THERE.

UM, AND WE'RE CONSTANTLY IMPROVING THIS DATA OVER TIME.

SO YOU MAKE PERIODIC CHECKS BACK.

YOU MAY SEE THAT DATA CHANGE AND HOPEFULLY ACCESS.

YOU CAN ACTUALLY DOWNLOAD, DOWNLOAD MAJORITY OF THAT DATA.

WE CAN GO TO THE NEXT SLIDE, PLEASE.

SO THE FOCUS TONIGHT, UM, IS ON OUR FORECAST AND, UM, AND HOW THAT'S DEVELOPED AND HOW IT'S USED.

SO THE FORECAST WHERE IT KICKS OFF OUR BUDGET SEASON.

AND SO WE HAVE SORT OF VICE STEP PROCESS IN THAT.

THE FIRST STEP IS THIS FORECAST, WHICH IS A TOP-DOWN ANALYSIS USED TO ESTABLISH THE THRESHOLDS FOR THE, UH, FURTHER BUDGET AND TO GAUGE FUTURE FINANCIAL COMPLIANCE AND RATE IMPACTS.

UM, WE'LL, WE'LL TAKE THESE AND GIVE THEM TO OUR BUSINESS UNITS AS TARGETS, AND THEN THEY USE THOSE TO HELP PREPARE THEIR BUDGET.

AND WE USE A BOTTOM UP APPROACH TO DEVELOP THE ORGANIZATIONAL BUDGET ACROSS THE UTILITY, UM, USING SOME PROPRIETARY SOFTWARE THERE IN POWER PLAN.

UM, AND THEN, UM, PRIOR TO SUBMISSION TO THE CITY, WE'LL REVISE THAT FORECAST AS WE GET MORE INFORMATION ABOUT WHAT'S GOING ON THIS YEAR, PLANS AND PROGRAMS, AS SOME OF THOSE ASSUMPTIONS BECOME BACKS, ADJUST OUR FORECAST.

AND THEN FINALLY WE'LL SUBMIT THAT OVER TO THE CITY, UH, SENIOR MANAGERS CONSIDERATION, OR THEY WILL COMPILE IT, REVIEW IT.

UM, AND THEN FINALLY THE SAME MANAGER WILL PRESENT THAT TO THE CITY COUNCIL EXCEPT NEXT PAGE.

SO NEXT I WANT TO COVER A LITTLE BIT MORE ABOUT INPUTS ASSUMPTION PROCESS.

YES, IT EARLIER THE FORECAST IS REALLY A TOP-DOWN ANALYSIS.

SO USE INPUTS FROM A MULTIPLE SOURCES.

THIS IS NOT A COMPREHENSIVE LIST, BUT INCLUDE SOME OF THE MOST IMPORTANT SOURCES AND USED THE CURRENT BUDGET ESTIMATE, EXISTING FINANCIAL POLICIES, ESTABLISHED PROGRAMS AND PLANS LIKE THE RESOURCE PLAN, UM, LATEST MARKET FORECAST ALONG WITH OUR APPROVED RATES AND FEEDS REALLY, UH, FORM THIS SPORT CAST NEXT PAGE.

SO AS IN ANY FORECASTING MODEL, YOU HAVE TO MAKE CERTAIN ASSUMPTIONS ABOUT WHAT MIGHT HAPPEN IN THE FUTURE.

SO HERE'S SOME KEY ASSUMPTIONS THAT WE'VE MADE AND SOME OF THESE HAVE SIGNIFICANT IMPACTS ON OUR FORECAST.

SO WE KNOW THERE'S A SIGNIFICANT DISCUSSION

[00:20:01]

AND PLANNING FOR POTENTIAL GROWTH OF SOME KEY INDUSTRIAL SITES WITHIN OUR SERVICE TERRITORY.

WE DO NOT MAKE PROVISIONS FOR DISCRETE PROJECTS, BUT WE USE A PYRAMID REGIONAL FORECASTING MODEL THAT DOES FORECAST THAT EXPECTED GROWTH.

WE ARE FORECASTING THAT THE COVID PANDEMIC SEASONS STOPS JANUARY, JANUARY, 2022.

UM, SO WE'RE ASSUMING THOSE ENERGY SALES WILL CONTINUE FORWARD WITH A 0.8%, UH, RATE OF GROWTH ANNUALLY, UM, AS IT HAS IN THE PAST SEVERAL YEARS.

HOWEVER, THE FORECAST FOR IS ABOUT 200 GIGAWATTS LOWER THAN THE 22 FORECAST THAT WE PRESENTED TO YOU LAST YEAR.

SO THAT FUTURE GROWTH CAN BE STARTING FROM A LOWER BASE AND PREVIOUS FORECAST LABOR ESCALATIONS, AND ABOUT 3% PER YEAR IN 0.7, 5% FOR NON LABOR COSTS.

SO IT'S PRETTY, PRETTY LOW INFLATION WITH FORECASTING.

UM, WE'VE ALSO ASSUMED A BASE RATE CHANGE AT PAIRED WITH THE PSA CHANGE AND THAT'S TO REFLECT A GENERATION OF REQUIREMENTS AND OUR RESOURCE PLAN AND TO ENSURE COMPLIANCE WITH OUR FINANCIAL POLICIES, FIND THE PASS-THROUGH REVENUES THEY'RE SET TO EQUAL COSTS.

AND THE IMPACT OF THE WINTER STORM URI IS NOT INCLUDED IN THIS FORECAST BECAUSE IT WAS ACTUALLY DONE ABOUT THE TIME OF THE STORM HIT, BUT THAT IS PRIMARILY CONTAINED WITHIN THE PSA.

AND SO WHEN WE SET THAT PSA THE SUMMER, WE WILL HAVE ALL THOSE IMPACTS KNOWN AT THAT TIME NEXT PAGE.

SO THIS IS A LITTLE BIT ABOUT OUR FORECASTING PROCESS.

SO, UM, WE START WITH A LOAD FORECAST AND WE USE, I TRONS STATISTICALLY ADJUSTED END-USE MODEL FOR BOTH RESIDENTIAL WORLDS OR COMMERCIAL INDUSTRIAL.

UM, IT'S A WELL-DEVELOPED NATIONAL MODEL THAT WE ADJUST USING LOCAL ECONOMIC DRIVERS, HISTORICAL WEATHER PATTERNS IN OUR SYSTEM CHARACTERISTICS.

WE TAKE THAT AND WE PRODUCE A REVENUE FORECAST BASED UPON OUR LOAD OR EXISTING TARIFFS AND RATE CLASSES.

AND FINALLY, WE USE THAT REVENUE FORECAST TO DEVELOP THE FINANCIAL FORECAST, WHICH INCLUDES THE INPUTS AND ASSUMPTIONS I JUST DISCUSSED WITH YOU WE'LL COVER THOSE OUTPUTS OF THAT FINANCIAL FORECAST FOR THE PERIOD 2022 THROUGH 2026, NEXT PAGE.

SO A LITTLE BIT ABOUT THAT SUMMARY.

THIS SCHEDULE PRESENTS THE SUMMARY OF OUR FINANCIAL FORECAST IN THE FUND SUMMARY FORMAT ON THIS, THE NEXT FEW SLIDES I'VE CIRCLED SOME ITEMS I'D LIKE TO BRING TO YOUR ATTENTION.

SO FYI 22 TO 23 CHANGES IN OPERATING AND POWER SUPPLY EXPENSES REALLY REFLECT THE CHANGES PROGRAMMED INTO OUR RESOURCE PLAN.

SO YOU'LL SEE THE EXIT OF A FE POWER PLANT IN DECEMBER OF 22 PAIRED WITH A RETIREMENT OF DECKER UNIT NUMBER TWO IN DECEMBER OF 22 OR 21, EXCUSE ME.

UM, AND WE'RE ALSO MOVING NACADOCIOUS DEBT SERVICE ON THE POWER SUPPLY ADJUSTMENT OVER TO OP EX IN 2023 WITH A REDUCTION IN ITS OP EX.

SO WE'RE ALSO FORECASTING ADDITIONAL TRANSMISSION REVENUE AT $1 MILLION IN AND 2 MILLION PER YEAR FOR EACH YEAR AFTER THAT.

AND THAT'S REALLY BASED UPON OUR EXPECTED INTERIM T COST FILINGS THAT WE WILL BE DOING THE TEXAS PVC IN 2022 WE'RE FORECASTING, A BASE RATE CHANGE IN FY 24 AT WILL IMPROVE OUR MARGINS AND ENSURE WE ARE MEETING OUR FINANCIAL POLICIES AND SOME LONGER TERM TRENDS.

WE'RE STILL LOOKING IN ANALYZING, WHICH IS INCREASE IN OUR POWER SUPPLY COSTS AND OUR DEBT SERVICE WILL CONTINUE TO EVALUATE THOSE COSTS BEFORE NEXT PAGE, OUR FORECAST USES THE ADOPTED FIVE-YEAR CIP PLAN FROM FYI 22 WITH A FEW ADJUSTMENTS.

SO THIS PLAN WAS APPROVED IN 21.

UM, AND WE DID UPDATE BOTH STP AND FPP BASED UPON THOSE BUSINESS PLANS, CIP FUNDING IS 36% DEBT, 64% CASH.

WE EXPECT TO SEE DECREASES IN OUR POWER PRODUCTION AND JOINT PROJECTS.

AS OUR RESOURCE PLAN IS IMPLEMENTED.

DISTRICT COOLING IS SEEING AN INCREASE IN SPENDING FOR 21 AND 22, AND THAT'S REALLY A RESULT OF SOME NEW PLANT CONSTRUCTION GOING ON THERE.

AND FINALLY, OUR GENERAL CIP THAT YOU SEE THERE AND, UM, UH, FLIGHT 21, THAT'S OUR NEW HEADQUARTERS.

UM, AND WE ALSO HAVE A NEW WAREHOUSE UNDER, UM, UNDER CONSIDERATION THAT WE'LL BE LOOKING AT IN 22 AND 23, BUT WE DID TAKE POSSESSION OF OUR NEW CORPORATE OFFICE ON APRIL 8TH.

UH, IT WAS ON SCHEDULE AND SLIGHTLY BELOW BUDGET PENDING THE COMMISSIONING

[00:25:01]

ON THAT BUILDING.

AND WE'LL BE MOVING OUR OPERATIONS OVER THE SUMMER, OBVIOUSLY DEPENDENT UPON OUR COVID POSTURE AND WORKPLACE SAFETY PROTOCOLS.

FINALLY, WE'RE WATCHING A NUMBER OF POTENTIAL CUSTOMER DRIVEN PROJECTS IN BOTH THE TRANSMISSION AND DISTRIBUTION, WHICH IF THEY BECOME REALITY WILL REQUIRE US TO MODIFY THIS FORECAST NEXT PAGE.

SO AN IMPORTANT PART OF OUR FINANCIAL FORECAST, OBVIOUSLY AS THE TRENDS REGARDING OUR KEY METRICS AND SOME OF THE POLICIES OF AUSTIN ENERGY.

SO THESE METRICS ARE ONLY AS GOOD AS THE MODEL AND THE ASSUMPTIONS, BUT THEY DO PROVIDE US WITH A USEFUL GUIDE.

FOR SOME LONG-TERM PLANNING.

OUR FORECAST SEES A SIGNIFICANT LOSS IN PROJECTED NET INCOME IN FYI 2023.

THIS IS DUE TO THE RECOGNITION OF THE IMPAIRMENT OF THE ASSETS THAT A POWER PLANT AND ITS EXIT.

AT THE END OF THE YEAR, THERE ARE DEBT SERVICE COVERAGE, AND OUR DEBT TO CAPITAL ARE SLIGHTLY OFF OF OUR TARGETS.

AND THAT'S REALLY DUE TO THE ACQUISITION OF BIOMASS PLANT IN 2019, AS WELL AS OUR GROWTH IN CIP SPENDING IN THE FUTURE, WE HAVE INCREASED THE USE OF CASH TO ALMOST 65% FOR CAPITAL PROJECTS AND THIS ALL REDUCED PRESSURE, FUTURE RETAIL RATES.

NEXT PAGE, OUR FORECAST UTILIZED OUR EXISTING TARIFFS AND RETAIL RATES.

THOSE RATES DO CHANGE PERIODICALLY, BUT HAVE BEEN TRENDING DOWNWARD THE LAST FEW YEARS.

SO THIS CHART SUMMARIZES OUR CURRENT RETAIL RATES, OTHER REVENUES COLLECTED ARE USED AND HOW WE ESTABLISH THOSE RATES WITH THE LAST, WHAT THE LAST CHANGE WAS IN TERMS OF A PERCENTAGE OF A RESIDENTIAL TYPICAL RESIDENTIAL BILL IN AUSTIN.

ALL THOSE COMPONENTS OF THE RATES HAVE DECREASED EXCEPT FOR THE REGULATORY CHARGE IN APRIL OF 2020, THE CITY COUNCIL APPROVED A BILL RELIEF PACKAGE FOR CUSTOMERS, UM, AS A RESULT OF THE COVID PANDEMIC.

AND THAT REGULATORY CHARGE WAS REDUCED TO RETURN $25 MILLION TO THE CUSTOMERS THAT OVERCOLLECTION WAS RETURNED.

UM, AND THEN WE MOVED THAT REGULATORY CHARGE CLOSER TO ITS COST OF SERVICE.

IN NOVEMBER OF 2020, WE ARE FORECASTING AN INCREASE IN THAT REGULATORY COSTS FROM ERCOT, BUT WE EXPECT TO OFFSET POTENTIAL IMPACTS ON OUR CUSTOMER'S BILLS WITH REDUCTIONS IN THE PSA AS WELL.

THOSE PASS THROUGH RATES, WHICH ARE SUBJECT TO REGULATORY.

ACCOUNTING IS ONE WAY WE HELP PROVIDE BETTER STABILITY FOR OUR CUSTOMERS RATES OVER THE LONGTERM X SLIDE.

THIS IS FAMILIAR CHART TO YOU.

SO IT SHOWS THE HISTORY FROM 1995 THROUGH 2020, ALONG WITH OUR FORECAST PERIOD OF 21 THROUGH 26, THE FART IS INDEX COMPARING OUR AVERAGE SYSTEM RATES TO THE CONSUMER PRICE INDEX FOR URBAN ELECTRICITY AND THE 2% AFFORDABILITY LINE THAT WE, UH, WE TRY TO MEET THAT METRIC BEGAN IN 2013.

IT WAS BASED UPON THAT TREND FROM 95 TO 2009.

AND AS YOU CAN SEE, WE'RE WELL BELOW BOTH INFLATION, AS WELL AS OUR 2% GROWTH.

NEXT PAGE.

THIS CHART SHOWS THE RESULTS OF OUR ANALYSIS FOR AFFORDABILITY METRIC AND ACTUAL COST.

UM, WITH THE COMPONENTS OF THOSE RETAIL RATES, BOTH HISTORICALLY AS WELL AS OUR FORECASTED PERIOD, WE EXPECT TO REMAIN COMPLIANT WITH THIS METRIC YOU'LL BENSON, WINTER STORM ARRAY WILL HAVE AN IMPACT ON THE CHART IN THAT WE HAVE AN OVERCOLLECTION TO THAT PSA AS A RESULT OF OUR STATUS, THAT NET GENERATOR BRAINSTORM.

IT SHOULD ALLOW US TO REDUCE FUTURE COSTS, BUT WE'RE CAREFULLY WATCHING REGULATORY AND LEGISLATIVE ACTIONS, WHICH COULD HAVE AN IMPACT ON THAT PSA BALANCE.

SO WE EXPECT TO HAVE SOME GREATER CLARITY, UH, LATER IN THE SUMMER, UM, AS WE EVALUATE BSA AND BRING FORWARD A PSA RATE CHANGE IN NEPAL.

EXCELLENT.

YOU MAY REMEMBER THIS FROM OUR FOURTH QUARTER REPORT, BUT WE OFTEN COMPARE OUR RATES TO OTHER TEXAS UTILITIES.

IT'S CALLED OUR COMPETITIVENESS METRIC, WHICH WE SEEK TO KEEP OUR RATES BELOW 50% OF THE TEXAS ELECTRIC UTILITY AVERAGE.

SO THIS GRAPH SHOWS THAT AUSTIN ENERGY'S RATES AVERAGE RATE IS ABOUT 97.5% OF THE TEXAS AVERAGE OR SLIGHTLY BELOW AVERAGE.

AND THIS IS AN IMPROVEMENT FROM CALORIE YEAR 2018 WITH AUSTRALIA ENERGY.

IT WAS JUST SLIGHTLY HIGHER, RIGHT? THE AVERAGE, YEAH.

IN 61 DATA, WE USE TO COMPILE THIS.

UM, WE DO FILTER IT FOR UTILITIES THAT SERVE

[00:30:01]

RESIDENTIAL COMMERCIAL, INDUSTRIAL CUSTOMERS, AND IT'S ABOUT A ONE-YEAR LAG.

IT USUALLY COMES OUT IN OCTOBER OF THE PRECEDING YEAR FOR THE PREVIOUS CALENDAR YEAR.

I'VE ALSO EDITED THE AVERAGE FOR THE PROVIDERS WITHIN ERCOT, THE COMPETITIVE ELECTRIC MARKET IN TEXAS THERE.

SO YOU CAN SEE AS COMPARED TO ERCOT, UH, WE'RE DOING A LITTLE BIT BETTER, EVEN BETTER THAN, THAN THE ERCOT AVERAGE THERE.

AND WE'VE CALCULATED SINCE 2001 AUSTIN ENERGY CUSTOMERS HAVE RECEIVED A NET BENEFIT OF ABOUT 1.7, 6 BILLION COMPARED TO THE TEXAS AVERAGE RATE.

SO ONE OF THE THINGS THAT WE WERE ALWAYS WATCHING HERE IN AUSTIN IS THE WEATHER AND IT HAS THE LARGEST IMPACT ON OUR, UM, WE TELL REVENUES.

AND SO AUSTIN ENERGY'S BASE REVENUES RECOVERED PRIMARILY FIXED COSTS, BUT IT USES A VARIABLE UNIT, A KILOWATT HOUR TO RECOVER.

MOST OF THOSE COSTS.

SO AS A RESULT AND UNDER RECOVERY OF BASE REVENUES RESULTS, WHEN THE WEATHER IS MILDER THAN EXPECTED AN OVER RECOVERY RESULTS, WHEN THE WEATHER IS MORE EXTREME, OUR FORECAST USES A NORMAL WEATHER HERE, WHICH IS BASED UPON A 20 YEAR HISTORY ON THE NUMBER OF COOLING DEGREE DAYS AND HEATING DEGREE DAYS.

BUT WE KNOW WHETHER IT CAN BE VERY DIFFERENT FROM YEAR TO YEAR.

AND THAT DIFFERENCE BETWEEN A MILE AND EXTREME YEAR IS ABOUT $80 MILLION IN ANY SINGLE YEAR.

SO THAT'S WHERE OUR, OUR ACTUAL RESULTS MIGHT ACTUALLY FALL.

NEXT SLIDE.

ANOTHER TREND WE LIKE TO HIGHLIGHT IS THE DECLINE OF CONSUMPTION, WHICH HAS CONTINUED HERE AT AUSTIN ENERGY.

SO THIS IS A TREND WE'RE SEEING INDUSTRY-WIDE IN FOLLOWS ADVANCES IN ENERGY EFFICIENCY, BUILDING CODES, HOUSING STOCK, DISTRIBUTED GENERATION, JUST OVERALL AWARENESS, ENERGY CONSERVATION CUSTOMERS.

SO EACH CUSTOMER USING LESS AND LESS ENERGY, WHICH IS A GOOD THING.

UM, BUT IT DOES HAVE IMPACT ON THE UTILITY AND ITS REVENUES.

NEXT SLIDE.

ONE OF THE CHALLENGES THAT IS OUR FIVE TIERED RATES.

SO ABOUT 76% OF OUR SALES, THE RESIDENTIAL SIDE IS BELOW THE COST OF SERVICE.

SO OUR FIVE TIERED STRUCTURE IN CONCERT WITH THAT ENERGY EFFICIENCY BUILDING CODES AND THE SMALLER HOUSING, ALL COMBINED TO DRIVE CONSUMPTION DOWN INTO THOSE LOWER TIERS.

SINCE 2012, WE'VE CREATED THE FIVE TIERS.

WE'VE SEEN A 14% REDUCTION IN TEARS FORM FIVE.

OUR EXPERIENCE WITH THE FIVES YEARS OVER THE LAST NINE YEARS HAS HAD AN IMPACT ON BOTH CUSTOMER BILL STABILITY, AS WELL AS OUR REVENUES.

SO FOR THE CUSTOMER HIGHER THAN NORMAL SUMMER CAN CAUSE HIGHER THAN NORMAL BILLS.

AND AS A CLIENT INTO THOSE HIGHER TIERS IN THE SUMMER, AND FOR THE UTILITY, ONCE WE SEE WHEN WE SEE A MILD OR SUMMER OR A MILD WINTER, IT CAUSES A REDUCTION IN REVENUE WHICH CAN REPRESENTED UNDER RECOVERY OF OUR OPERATING EXPENSES FOR US, WE'RE GOING TO BE ANALYZING THE IMPACT ON THESE TIERED RATES OR THE IMPACT PRICING LING AS WELL AS ENERGY CONSERVATION IN AN EFFORT TO IMPROVE OUR BILLS, STABILITY AND COST RECOVERY IN THE FUTURE.

NEXT SLIDE.

SO THE ALSO METROPLEX, AS YOU KNOW, CONTINUES TO SEE AGGRESSIVE GROWTH, THE NUMBER OF CUSTOMERS JOINING OUR SERVICE TERRITORY, THAT GROWTH TO NEW CUSTOMERS, PARTIALLY OFFSETS THE DECLINE IN CONSUMPTION PER CUSTOMER.

AND THE NET RESULT IS ABOUT RELATIVELY FLAT FORECASTED 0.8% LOW GROWTH.

THE REAL CHALLENGE FOR US AT AUSTIN ENERGY IS MEETING THAT GROWTH IN CUSTOMERS, FIXED COSTS ASSOCIATED WITH ALL THOSE NEW CUSTOMERS.

SO THE USE OF CONTRIBUTIONS AND NATIVE CONSTRUCTION OR THE LINE EXTENSION POLICY CERTAINLY HELPS THE FRAY, THE COST OF THE CAPITAL INVESTMENT NEEDED, BUT IT'S OUR BASE RATES THAT ARE STRAYING TO RECOVER THE INCREASE IN FIXED OPERATING COSTS FOR THOSE NEW CUSTOMERS.

SO HISTORICALLY LOW GROWTH OR UTILITY LAUDER TO RECOVER ESCALATING COSTS.

AND THAT WAS TRUE FOR AUSTIN ENERGY AND ALLOWED US TO GO NEARLY 18 YEARS WITHOUT JUSTIN BASE RATES.

AND IN 2012, WE BEGAN TO EVALUATE RATES ON A REGULAR BASIS.

EVERY FIVE YEARS WE IMPLEMENTED THE PAST RECHARGES AND BOTH OF THOSE HAVE HELPED US TO BETTER ALIGN OUR REVENUES WITH OUR COST.

WE'LL BE LOOKING AT WAYS TO ADDRESS THIS NEW NORMAL SORT OF A FLAT ENERGY SALES X-RAYED REVIEW.

SO IN SUMMARY FOR OUR FORECAST, UH, I WOULD HIGHLIGHT

[00:35:01]

IT AS AREN'T POSITIONED TO STABLE BUT VULNERABLE.

SO WE'RE IN YEAR FIVE OF OUR CURRENT BASE RATES, WHICH WERE LOWERED 6.7% BACK IN JANUARY OF 2017.

AND WE'VE REDUCED MOST OF OUR PASS THROUGH RATES OVER THE LAST FEW YEARS, AS I SHOWED YOU EARLIER, INFLATION HAS BEEN LOW AND OUR CUSTOMER GROWTH HAS PROVIDED A FLAT, PREDICTABLE CONSUMPTION PATTERN FOR US.

THIS HAS PUT AUSTIN ENERGY IN A STABLE FINANCIAL POSITION.

HOWEVER, WE DO SEE A NUMBER OF MAJOR DECISIONS, STILL A PLAY, WHICH CAN HAVE A SIGNIFICANT IMPACT ON FINANCIAL PERFORMANCE, OPERATIONALLY EXITING FPP DECKER.

THE FUTURE OF NACODOCHES WILL IMPACT US LEGISLATIVELY.

THERE'S A HOST OF BILLS REGARDING BOTH AUSTIN ENERGY PARTICULAR, AS WELL AS THE INDUSTRY IN GENERAL THAT'S BEFORE OUR STATE LEGISLATURES, I COULD HAVE AN IMPACT REGULATORY THERE'S CHANGES GOING ON AT THE PUC AND ERCOT THAT MAY HAVE A RESULT.

AND THIS IS REALLY AS A FALLOUT FROM WINTER STORM URI.

AND FINALLY OUR CUSTOMERS.

THERE'S LOTS OF PLANS FOR EXPANSION AND GROWTH, ESPECIALLY IN OUR COMMERCIAL INDUSTRIAL AREAS, UH, THAT WE WILL HAVE TO ACCOUNT FOR THE FUTURE.

AS A RESULT, ALL OF THIS UNCERTAINTY COMES INTO PLAY AS WE WORK TO MAINTAIN OUR SUPERIOR CREDIT RATINGS, ESTABLISH A FRAMEWORK FOR OUR NEXT RATE REVIEW, NEXT SLIDE.

BUT I WANT TO COVER A LITTLE BIT ABOUT OUR BUDGET PLANNING HERE.

UM, SO WE CONTINUE TO DEVELOP THAT BUDGET PROCESSING UTILITY.

UM, AS A RESULT, I CAN'T COVER, I'LL TELL YOU WHAT EXACTLY WILL IT LOOK LIKE TONIGHT? UH, BUT WE DO KNOW THAT MUCH OF OUR ANNUAL BUDGET IS COMPRISED OF THE COSTS THAT CANNOT BE SIGNIFICANTLY CHANGED IN THE SHORT RUN.

AND OUR EXPECTED REVENUES ARE RELATIVELY FLAT.

MEANING OUR FYI 22 BUDGET IS GOING TO LOOK PRETTY SIMILAR TO HER FYI 21 BUDGET.

SO THEY GIVE YOU A SENSE OF WHAT TO EXPECT.

I THOUGHT I'D QUICKLY REVIEW WHAT'S IN OUR CURRENT BUDGET.

EACH OF YOU SHOULD HAVE GOTTEN IN OUR PACKAGE, A COUPLE OF HANDOUTS.

AND SO I ALWAYS LIKE TO POINT OUT THAT WE ROUTINELY REPORT OUR FINANCIAL REFORM USING TWO VERY DIFFERENT FORMATS.

UM, THOSE ARE THOSE HANDOUTS I'VE GIVEN YOU TONIGHT.

SO, UM, BOTH OF THOSE REFLECT OUR AUDITED FYI 20 RESULTS IN FIRST IS THE FUND SUMMARY.

UM, IT'S BUDGET BASED AND IT USES A MODIFIED CASH BASIS.

MOST OF WHAT WE PRESENT TO YOU TONIGHT, IT'S BASED UPON A FUND SUMMARY POWER.

SOME OF THE METRICS USE DATA DEVELOP FROM OUR GAP GAP, FINANCIAL STATEMENTS.

YOU USE A FULL MEAL CRUEL BASIS, AND THOSE APPEAR IN OUR COMPREHENSIVE ANNUAL FINANCIAL REPORT.

THOSE ARE ALL OUR AUDITED FINANCIAL STATEMENTS.

SHE'S SORT OF GOTTEN IN YOUR HANDOUT AS WELL.

NEXT PAGE.

SO MOST OF THE ENERGY'S REVENUES COME FROM A NUMBER OF DIFFERENT SOURCES, BUT THE VAST MAJORITY OF THEM COME FROM OUR RETAIL ELECTRIC CUSTOMERS, TOTAL REVENUES FOR FYI 21 INCREASED BY 0.09% OR ABOUT 1.3 MILLION, OR AGAIN, RELATIVELY FLAT.

BUT WE DID SEE SOME INCREASES IN POWER SUPPLY, TRANSMISSION AND DISTRICT COOLING AND INTEREST REVENUES.

AND THOSE WERE PARTIALLY OFFSET BY REDUCTIONS IN BASE RATE REVENUE, COMMUNITY BENEFITS OR REGULATORY REVENUES FROM LOWER.

SO THIS DONUT CHART IDENTIFIES ALL THOSE SOURCES OF REVENUE FOR US NEXT PAGE.

AND OUR, OUR BUDGET OF 1.4 BILLION IS USED TO MEET MANY DIFFERENT REQUIREMENTS.

SOME OF THOSE REQUIREMENTS ARE NON-DISCRETIONARY DISCRETIONARY, SUCH AS DEBT SERVICE OR GENERAL FUND TRANSFER, AND OTHERS HAVE SLEPT ME MORE DISCRETIONARY OVER A LONGER PERIOD, SUCH AS A JOINT PROJECTS OR A POWER SUPPLY.

AND THE PORTION THAT HAS THE HIGHEST DISCRETIONARY IS IN OUR OWN M WHICH IS ABOUT 434.5 MILLION IN FYI 21.

AND THAT'S COMPRISED OF LABOR BENEFITS, CONTRACTUALS, AND THE PURCHASE OF COMMODITIES.

THE NEXT FEW SIDES ON I'M GONNA SHOW YOU, UM, THOSE ELEMENTS OF OUR OVERALL BUDGET DEVELOPMENT AND HOW YOU'RE USED EXCI.

SO OUR BUDGET INCLUDES ABOUT $620 MILLION IN SPENDING, WHICH IS REALLY NON-DISCRETIONARY IN NATURE.

AUSTIN ENERGY HAS LITTLE OR NO CONTROL OVER THE REQUIRED SPENDING LEVELS.

THE SHORTER MID RANGE TO THIS OVER THE HORIZON.

MOST OF THESE COSTS ARE RECOVERING OUR BASE RATES AND INCREASES IN THESE COST.

DRIVERS HAVE TO BE OFFSET WITH EITHER LOAD GROWTH REDUCTION.

IN OTHER COST CATEGORIES, YOU CAN HIGHLIGHT THEM TRANSMISSION OR CAUGHT AT SERVICE GFT

[00:40:01]

OR TRANSFERS, JOINT PROJECTS, CITY SERVICES, WHICH ARE ALLOCATED TO US BASED UPON HOW WE USE SERVICES FROM THE CITY, APPLY OUR ECONOMIC DEVELOPMENT FUND TRANSFER.

NEXT PAGE, OUR BUDGET INCLUDES THE RECOVERY OF POWER SUPPLY COSTS.

THESE PRESENT THE NET COST OF ELECTRICITY NEEDED TO SERVE OUR RETAIL CUSTOMERS.

AND THESE COSTS ARE LARGELY NON-DISCRETIONARY IS THAT THEY ARE DRIVEN BY MARKET PRICING RESPONSE TO CUSTOMER LOAD AND THE REQUIREMENTS OF OUR RESOURCE PLAN POSITIVE WHOLESALE REVENUE REDUCES RETAIL, CUSTOMER RATES PROPERLY MANAGED GENERATION ACTS AS A PHYSICAL HEDGE FOR SERVING OUR CUSTOMERS LOAD.

THESE COSTS AND REVENUES ARE RECOVERED IN OUR POWER SUPPLY ADJUSTMENT RATE, WHICH IS CALCULATED DURING THE MONTH OF AUGUST FOR THE PROCEEDING YEAR.

THESE COSTS REPRESENTED MOST VARIABILITY FOR OUR CUSTOMERS FROM YEAR TO YEAR.

AND OUR RESPONSIBILITY AT AUSTIN ENERGY IS TO MINIMIZE THAT VOLATILITY WITH EFFECTIVE HEDGING AND PROPER PLANNING.

THOSE TOTAL ABOUT 360 MILLION EXCHANGE.

SO OUR BUDGET EXPENDITURE INCLUDES OPERATION AND MAINTENANCE COSTS.

HE'S REPRESENTED CONTRACTUALS, COMMODITIES AND PERSONNEL, AND A PORTION OF HIS BUDGETS ARE CONTROLLABLE OR DISCRETIONARY, BUT MOST OF IT IS NECESSARY FOR US TO OPERATE IN EFFICIENT AND SAFE UTILITY REDUCTIONS AND PROPER MAINTENANCE OFTEN LEADS TO INCREASE FUTURE CAPITAL COSTS.

EAST COSTS, ALSO RECOVERY, MOSTLY BASE RATES, BUT SOME ARE RECOVERED THE TRANSMISSION RATES AND OUR DISTRICT LOADING CHARGES AS WELL.

OUR PERSONNEL COSTS REPRESENT THE COST ASSOCIATED WITH AUSTIN ENERGY'S EMPLOYEES OR AUTHORIZED 1,813 FTES OR FULL-TIME EQUIVALENTS.

AND WE HAVE 112 TEMPORARY EMPLOYEES THAT WORK AT AUSTIN ENERGY.

THERE'S AN ASSUMPTION IN OUR FORECAST AT 6% OF OUR POSITIONS WILL BE VACANT AT ANY ONE TIME TO THE TUITION AND TURNOVER.

SO THE TOTAL OR OUR BUDGET REPRESENTS 94% OF THE COST OF SALARIES, PAYROLL TAXES, BENEFITS.

HOWEVER, WE DO ASSUME A HUNDRED PERCENT OF THE COST OF OUR HEALTH INSURANCE AS REQUIRED BY ADULT INSURANCE, THOSE TOTAL, UM, $246 MILLION OF THE $434 MILLION OF OUR OVER THEIR BUDGET.

NEXT SLIDE OR CONTRACTUALS, OKAY.

OR 2021 WAS 266 AND A HALF MILLION DOLLARS.

AND THAT IS OFFSET WITH $93.2 MILLION INTERDEPARTMENTAL REIMBURSEMENTS AND REFUNDS.

MOSTLY FROM OUR SERVICES THAT WE PROVIDE.

WE ARE THE BILLING AND CUSTOMER CARE ENTITY FOR ALL OF CITY OF AUSTIN UTILITIES.

SO THAT'S THE OTHER UTILITIES REFUNDING US THAT THE COST OF THAT YOU CAN SEE THAT THE TOP TONIGHT IS FOR THE CONTRACTUAL REPRESENT 135 MILLION ABOUT 51% OF THE TOTAL BUDGET.

SO THAT GIVES YOU A GOOD SENSE OF WHAT IS IT, THOSE, THOSE CONTRACTUAL BUDGET ITEMS, EVERYTHING FROM OUR CONSERVATION AND SOLAR REBATES, THE COMPUTER HARDWARE AND SOFTWARE, A LOT OF IT COSTS OR BAD DEBT EXPENSE AS WELL AS LIABILITY AND WE'LL STATE BASIS.

NEXT SLIDE MARTY'S BUDGET 21 WAS ABOUT 15.1 MILLION, THE TOP 10 ITEMS WHERE THE COMMODITIES REPRESENTS 10 LATER, ABOUT 67% OF THE TOTAL.

AND YOU CAN SEE IT'S A LOT OF PURCHASE OF, UH, MINOR EQUIPMENT TOOLS, UM, CHEMICALS, UH, FOR OUR PLANTS, LEARNING MATERIALS, UH, HARDWARE, EDUCATION MATERIALS.

UM, YOU CAN SEE IT, THE BUCKETS GET PRETTY SMALL AFTER YOU GET BELOW THAT, THAT TOP 10% THERE.

SO THIS REALLY CONCLUDES MY FIVE-YEAR FORECAST AND SUN RIVER 21 BUDGET, UH, LEADING INTO OUR BUDGET SEASON.

AND OF COURSE, WE'LL FOLLOW UP WITH OUR ACTUAL 21 BUDGET IN MUCH MORE DETAIL, OUR JULY MEETING WITH YOU.

SO THAT POINT I CAN TAKE ANY QUESTIONS IF YOU HAVE ANY, THANK YOU, MR. DOMBROWSKI.

I JUST WANT TO, I HAVE A QUICK QUESTION ABOUT SOMETHING.

I THINK I HEARD YOU SAY, I JUST WANT TO CONFIRM, CLARIFY, UH, DID YOU SAY THAT WE HAVE A SURPLUS OR OVERCOLLECTION FROM THE PSA CURRENTLY AND THAT WE'RE HANGING ON TO IT UNTIL WE HAVE MORE CERTAINTY AROUND WHAT HAPPENS WITH THE WINTER STORM YURI REPRICING? IS THAT, IS THAT WHAT I HEARD YOU CORRECT? THAT'S THAT'S ONE OF THE, UH, UH, REGULATORY AND LEGISLATIVE ISSUES WE'RE LOOKING AT.

WE'RE ALSO LOOKING AT A NUMBER OF BILLS COMING THROUGH THE LEGISLATURE REGARDING SECURITIZATION HAS SOME COMPONENTS, UM, THE CORE C UPLIFTS, UH, THROUGH ERCOT, UH,

[00:45:01]

WHAT PERIOD THOSE MIGHT OCCUR, ALL THAT IMPACTS THAT PSA BALANCE.

SO AS A RESULT, WE THINK IT'S PRUDENT THAT WE LET THOSE, UM, MY OUT BEFORE WE ADJUST OUR PSA.

OKAY.

MAKES SENSE.

OKAY.

THANK YOU.

YOU'RE WELCOME.

UH, COMMISSIONER CHAPMAN, YOU CAN, I'M NOT SURE IF THIS IS FOR MARK OR SOMEONE ELSE, BUT IT'S, TO ME, THIS IS AN IMPORTANT DOCUMENT.

THERE'S A LOT LOT IN HERE AND Y'ALL ARE DOING A GREAT JOB, UH, BUT I DO HAVE A COUPLE CONCERNS.

AND TO THE EXTENT THAT THE BUDGET REPRESENTS CUSTOMER VALUES, OUR INPUT, UH, AND INPUT TO THE CITY COUNCIL, UH, I HAVE TWO QUICK, JUST TWO QUESTION QUESTIONS, UH, FIRST HAS TO DO WITH, UH, THE ASSUMPTION, AND I'M NOT SURE HOW THIS WAS GENERATED, BUT THE ASSUMPTION ON PAGE CAN, UH, WE ARE AT A POINT RIGHT NOW WHERE UNEMPLOYMENT IS ALMOST DOUBLE ITS LAST YEAR BEFORE THE PANDEMIC.

IT WAS, UH, ABOUT 3%, RIGHT? WHICH WAS GREAT NEWS.

IT'S NOW A FIVE AND A HALF, 6%.

AND, UH, THERE'S A LOT OF PEOPLE WHO ARE, UH, WHO ARE UNEMPLOYED RECEIVING WORK, WORKFORCE COMMISSION BENEFITS.

UH, THIS SHOWS THAT INSTEAD OF MAINTAINING THE CURRENT, UH, APP PROGRAM AT ITS ENHANCED LEVELS, UH, THERE'S AN INTENT TO SLASH IT BACK TO, UH, BACK TO ITS HISTORICAL BASIS.

UH, HOW WAS THIS POSITION MADE AND, AND IS THERE ANY WAY TO RECONSIDER RECONSIDER I'M I DON'T KNOW, UH, AGAIN, BECAUSE I'M NEW AT THE UC, I, I THINK, I THINK THIS IS A POLICY MATTER AND NOT, YOU KNOW, SIMPLY NUMBER CRUTCHING, RIGHT? WELL, YOUR, YOUR EXECUTIVE WIFE IS CHAPMAN.

IT IS A, A POLICY MATTER.

AND SO, UM, HISTORICALLY WE KEPT THOSE DISCOUNTS AT 10%.

UM, AND WHEN WE, UM, BRING IN THE, THE, UM, THE BILL REDUCTION PROGRAM LAST MARCH IN 20, AS A RESULT OF THE COVID, WE INCREASED, WE INCREASED THAT, UM, THAT DISCOUNT FROM 10 TO 15%, UM, IT, IT HAD BEEN SET TO EXPIRE AT THE END OF THE FISCAL YEAR.

UM, WE, UH, UH, THE CITY COUNCIL ARE DIRECTED US TO EXTEND THAT 15% DISCOUNT THROUGH , WHICH WE HAVE, AND WE HAVEN'T BEEN, WE HAVEN'T RECEIVED FURTHER INFORMATION FROM COUNCIL.

HOWEVER, AGAIN, IT'S AN ASSUMPTION AND THAT, THAT MAY CHANGE UP BEFORE WE IMPLEMENT THAT.

UM, SO THAT'S CERTAINLY A POLICY POLICY FOR THE CITY COUNCIL.

FINE.

THANK YOU FOR THAT BACKGROUND.

AND TO THE EXTENT, UH, THE AUC HAS, UH, UH, INPUT WITH THE COUNCIL, I'D CERTAINLY MAKE THAT RECOMMENDATION BE OTHER A QUESTION I HAD, UH, UH, DEALS WITH, UH, AGE 16, WHICH IF I READ IT RIGHT, UH, WE ARE DOING SO MUCH GOOD, GOOD ON SAVING ENERGY.

OUR ENERGY EFFICIENCY PROGRAMS, UH, HAVE BEEN SPECTACULAR WITH, WITH AT LEAST AS I'VE READ HISTORICAL DATA.

THERE HAVE BEEN PROBLEMS WITH THE LOW INCOME WEATHERIZATION PROGRAM, UH, SPENDING ITS MONEY, UH, AND, UH, ALL OF WHICH IS, I DON'T KNOW IF IT CHANGES HAVE BEEN MADE, BUT, UH, THEY THEY'VE HAD DIFFICULTIES.

AND IT SAYS HERE LAST ADJUSTMENT IN THE, UH, COMMUNITY BENEFIT CHARGE IS THAT THAT HAS BEEN DECREASED, UH, BY EIGHT BY 11%.

UH, ALL OF WHICH IS I CERTAINLY COMMEND AWSP AND ENERGY OR FOR IT'S, UH, GREAT WORK THAT HAS SHOWN ON THAT SLIDE, THAT WE'RE, WE'RE USING LESS, LESS ENERGY.

UH, I DON'T KNOW IF THE, UH, PROBLEMS WITH THE WEATHERIZATION ASSISTANCE PROGRAM THAT HELPS SUPPORT US TO THE POOR HAVE BEEN, UH, REALLY MIXED, UH, DURING THE PANDEMIC.

UM, PEOPLE SOMETIMES DON'T WANT FOLKS COMING IN THEIR HOUSE, BUT, UH, BUT TO THE EXTENT, AGAIN, TO THE EXTENT WE HAVE INPUT, OR IF THERE ARE EXPLANATIONS

[00:50:01]

FOR SLASHING THAT FUNDING, I'D LIKE TO KNOW NOW WHAT THE BACKGROUND IS.

SURE.

SO WE CURRENTLY HAVE AN OVERCOLLECTION MEAN WE'VE COLLECTED, UH, UH, MORE CASH FOR THAT PROGRAM.

THEN THE PROGRAM IS EXPANDING.

I CAN'T ADDRESS PROGRAMMATIC ISSUES AS BEST ADDRESS FOR CUSTOMER ENERGY SOLUTIONS GROUPS THAT THE EXECUTE THOSE PROGRAMS. IT CAN TALK MORE ABOUT, UH, THOSE PROGRAM OPERATIONS.

UM, BUT BECAUSE WE HAD THAT OVER REFLECTION, UM, WE DID, UH, DAMON RESPONSIBLE TO RETURN THOSE OVER COLLECTIONS TO OUR CUSTOMERS.

THAT'S NORMALLY WHAT WE DO WITH THE PASSENGER CHARGES, THE POWER SUPPLY ADJUSTMENT, THE REGULATORY CHARGE AND THE COMMUNITY BENEFITS CHARGE.

SO WE BALANCED THOSE, UM, BUT PERHAPS, UH, ELAINE TO SELL QUITE A FUTURE PRESENTATION.

AND CERTAINLY DURING THE BUDGET PRESENTATION, SHE WILL TALK ABOUT THOSE, THOSE, UH, UH, PROGRAMMATIC ISSUES WITHIN THE WEATHERIZATION PROGRAMS, INCLUDING OUR LOW INCOME WEATHERIZATION PROGRAM.

OKAY.

AND THEN APPRECIATE IT, MARK COMMISSIONER TRUSSELL.

YES.

THANK YOU.

UM, I HAVE A COUPLE OF QUESTIONS, UH, STARTING ON YOUR SLIDE, 22, ABOUT YOUR INCLINING BLOCK RATES.

UM, IT LOOKS TO ME LIKE, UM, THE, UH, THE, UM, I'M A PROPONENT OF INCLINING BLOCK RATES.

UM, AND, UH, SO IT LOOKS TO ME LIKE THEY, UM, THEY'VE ACCOMPLISHED, UH, THE PURPOSE OF REDUCING CONSUMPTION, WHICH I ASSUME WAS THE GOAL.

ONE OF THE GOALS, UM, OF, UH, UH, CHARGING MORE FOR THE HIGHER CONSUMPTION.

BUT, UM, TH THAT SHE SEEMS TO ME IS JEOPARDIZING AUSTIN ENERGY'S ABILITY TO RECOVER ITS COST.

SO WHAT'S THE SOLUTION.

WELL, I'M NOT PROPOSING A SOLUTION RIGHT NOW, WHAT WE'RE SAYING IS WE'RE ANALYZING THIS.

AND SO WE'RE STAYING TO THE EXTENT, WHAT DO THE TIERS TELL US ABOUT, YOU KNOW, THERE'S AN ASSUMPTION THAT IT SENDS PRICE SIGNALS TO CUSTOMERS, AND WE HAVE SOME WAYS OF LOOKING AT SAYING, DOES THAT, IS THAT REALLY WHAT THEY'RE RESPONDING TO? UM, AND CERTAINLY FIVE TIERS, UM, IS A LOT BECAUSE HAVING FIVE, THAT MEANS YOU HAVE TO HAVE A REALLY UNDER PRICED FIRST TIER IN ORDER TO HAVE A FIFTH TIER.

AND SO PERHAPS, UM, LOOKING AT FOUR OR THREE OR TWO TIERS AND SEEING HOW THAT MIGHT DRIVE, UM, AND ENERGY EFFICIENCY AND CONSERVATION AS WELL.

BUT THOSE ARE THINGS THAT WE ARE LOOKING AT.

UM, WE HAVE A GREAT DATA SET WITH AN AUSTIN ENERGY.

WE HAVE A MIX OF CUSTOMERS BOTH INSIDE AND OUTSIDE THE CITY MULTI-FAMILY HOMES.

WE HAVE LARGE SINGLE FAMILY HOMES, OLDER HOMES, A LOT OF NEWER STOCK.

SO WE'RE USING ALL OF THAT DATA AT THIS TIME TO BETTER UNDERSTAND HOW, UH, TIERS AND PRICING PRICING SIGNALS ARE USED BY OUR CUSTOMERS.

OKAY.

SO, UM, I ASSUME THAT, UH, WEATHER, UH, ESPECIALLY WINTER, I MEAN, SORRY, SUMMER WEATHER HAS A LOT TO DO WITH, UM, THE REVENUES THAT ARE GENERATED.

IN OTHER WORDS, MILD, MILD SUMMERS.

YOU'RE NOT GOING TO GET AS MUCH OF THAT TIER FIVE REVENUE.

THAT'S CORRECT.

YOU KNOW, I POINTED OUT THAT OUR AVERAGE CUSTOMER ON AVERAGE, MONTHLY BASIS USES ABOUT 840 KILOWATT HOURS.

AND SO THAT TOPS OUT THEY'RE A TIER TWO.

AND SO THE MAJORITY OF THE YEAR, OUR RESIDENTIAL CUSTOMERS ARE TIER ONES AND TWOS, UM, WHICH IS A LOW COST OF SERVICE THERE.

AND SO, UM, USING A NORMALIZED WEATHER YEAR, UH, IF THEY HAVE MORE MILD SUMMER, YOU'RE ABSOLUTELY CORRECT, BUT UNDER COLLECT REVENUES TO PAY OUR COSTS, AND IT WAS A REALLY HOT YEAR, IT'LL PUSH MORE CUSTOMERS IN THOSE MUCH HIGHER PRICE TIERS, AND THAT CAUSES THE BILL INSTABILITY FOR THEM AS WELL.

OKAY.

UM, I, UH, SO I WAS INTERESTED IN YOUR, UH, SLIDE 31 ABOUT THE PSA REVENUES, AND I UNDERSTAND THAT YOU'VE GOT TO WAIT FOR THE FINAL SETTLEMENT WITH ERCOT, UM, TO ANALYZE THAT, BUT I HAVE A COUPLE OF QUESTIONS, ONE I'M A S WHAT, HOW DID THE ACTUAL REVENUES, UM, OF 40 443 MILLION, UH, ROUNDED COMPARE WITH WHAT YOU HAD FORECASTED? AND, AND I S I'M ASSUMING IT WAS HIGHER, AND I'M ASSUMING IT'S ATTRIBUTABLE TO REVENUES GENERATED AS A RESULT OF THE WINTER STORM, IS THAT CORRECT? SO THESE WERE WHAT WE HAD FORECASTED FOR FYI 21.

SO IT, IT ASSUMED A NORMAL WEATHER YEAR.

[00:55:01]

UM, OBVIOUSLY BOTH THAT LINE, THE REVENUE THAT WE GENERATED OUR CLOCK, UM, IS PROBABLY CLOSER TO 1.4 BILLION.

UM, AND OF COURSE OUR COST OF SERVICE BUYING THE ENERGY FROM OUR COCK WAS MUCH HIGHER, CLOSER TO THE 1.4 BILLION.

SO THE NET DIFFERENCE IS STILL IN LINE WITH HIS BUDGET, BUT THE COST, THE REVENUE THAT WE PRODUCED THROUGH ARE CAUGHT IN THE CLASSROOM OR CLOUD WHERE MULTITUDE HIGHER THAN WHAT YOU'RE SEEING ON THIS CHART.

RIGHT.

OKAY.

THAT'S UM, THANK YOU FOR THAT CLARIFICATION.

AND SO, UM, YOU KNOW, I'M AWARE THAT THERE HAS BEEN SOME PRESS IN WHICH CUSTOMERS FEEL LIKE, UH, WHILE THEY WERE WITHOUT, UH, HOW OR THAT AUSTIN ENERGY WAS MAKING MONEY.

CAN YOU ADDRESS THAT? I MEAN, THAT SEEMS TO ME TO BE NOT A WELL THOUGHT OUT, UM, ANALYSIS OF, OF WHAT THE RESULT IS, IF YOU, UM, WERE ABLE TO SELL MORE GENERATION, UM, DURING THE BLACKOUTS.

AND COULD YOU JUST ADDRESS THAT, THAT, UH, POTENTIAL COMPLIANCE? YEAH, SO WE, WE PRODUCED, UM, IN TERMS OF REVENUE, ABOUT 105%, NOT FOR REVENUE TO COVER OUR COSTS.

SO THERE'S ABOUT A 5% MARGIN, SO IT'S NOT A HUGE AMOUNT, BUT, UM, AS ALWAYS, WE PRODUCE ENERGY, UM, AND THAT ENERGY GOES TO FEED THE ERCOT GRID, UH, SERVING ALL OF TEXAS, UM, AND ALL LOAD SERVING ENTITIES WAS WE WERE ALSO A LOAD SERVING ENTITY, PULLS THE POWER OFF OF THE GRID.

AND SO WE DON'T DIRECTLY PRODUCE THE ENERGY THAT OUR CUSTOMERS DEMAND THAT BALANCING AUTHORITIES, THE REST WITH ERCOT.

UM, AND THAT'S TRUE, WHETHER WE'RE, UM, IN AN OUTAGE OCCURRENCE LIKE YOUR WINTER STORM MARRIED, OR JUST ON A NORMAL DAY LIKE TODAY.

AND SO THERE ARE TIMES WHEN PRICES GET SO LOW IN HER COT THAT WE TURN OUR GENERATION OFF, AND WE JUST ENJOY THAT, THAT LOW MARKET PRICE, USUALLY AS A BENEFIT OF WIND IN TEXAS.

SO OUR ERCOT BALANCES OF THAT AND OUR RESPONSIBILITY IS TO PRODUCE POWER WITH OUR GENERATIONAL ERCOT CALLS ON IT.

WE DO BID THOSE PRICES IN THE ERCOT THEY'RE ACCEPTED.

WE DO PRODUCE ENERGY.

OF COURSE, WE BUY THAT ENERGY FROM ERCOT OFF THE GRID AS WELL.

AND SO DURING THAT STORM WHERE WE HAD THE OUTAGES, WE WERE RESPONDING TO ERCOT DEMAND FOR MORE POWER, AND WE WERE PRODUCING EVERYTHING THAT WE CAN, THAT WE COULD FROM OUR GENERATORS TO HELP TEXAS OUT.

RIGHT.

UM, SO ON THE, UM, UH, POWER SUPPLY REVENUE THAT NET, THAT AUSTIN RECEIVES THAT IS NOT SUBJECT TO THE GENERAL FUND TRANSFER, IS THAT CORRECT? THAT'S CORRECT.

NOTHING IN, UM, POWER SUPPLY OR DISTRICT COOLING IS SUBJECT TO, UM, GENERAL FUND TRANSFER.

OKAY.

THEN I JUST HAVE A COMPLETELY DIFFERENT SUBJECT ON SLIDE 33, WHERE YOU'RE SHOWING YOUR TOP 10 CONTRACTUAL, UH, BUDGET ITEMS. I HAVE A QUESTION ABOUT THE THIRD LINE, THE LINE CLEARANCE SERVICES FOR DISTRIBUTION AND TRANSMISSION.

I'M ASSUMING THAT THAT IS THAT THAT COVERS THE CONTRACTS, UH, THAT WE REVIEWED FOR, UM, UH, VEGETATION MANAGEMENT FOR BOTH DISTRIBUTION AND TRANSMISSION.

IS THAT CORRECT? THAT'S CORRECT.

THAT IS VEGETATION MANAGEMENT, AND THAT WAS, WE INCREASED IT BY $10 MILLION FROM 20 TO 21.

RIGHT.

AND SO, UM, I, THAT, THAT IS FROM 20 TO 21.

HAVE YOU INCREASED IT FURTHER FOR, ARE YOU ANTICIPATING IT WILL BE INCREASED FURTHER FOR 2022? AND THE REASON I ASK IS THAT I'M VERY CONCERNED THAT, UH, WE NEED TO GET, UM, MORE, MUCH MORE AGGRESSIVE AND ON TOP OF VEGETATION MANAGEMENT TO AVOID THE KIND OF OUTAGES, NOT THE, NOT THE MANDATED LOAD SHED, THAT THE OUTAGES THAT WERE EXPERIENCED LEADING INTO THE, UM, THE, UH, OUTAGES MANDATED BY ERCOT.

AND SO D CAN YOU TALK, TALK TO ME ABOUT THAT PLEASE.

SO I DON'T YET KNOW WHERE OUR VEGETATION MANAGEMENT BUDGET WILL REST ONCE WE FINISHED THE 22, I DO KNOW THAT WE HAVE A LOT OF FOLKS ARE USUALLY WORKING ON BOTH VEGETATION MANAGEMENT IN TERMS OF RELIABILITY, BUT ALSO WILDFIRE MITIGATION.

AND SO WE'RE KIND OF A CITY-WIDE TEAM TO ADDRESS THAT.

AND SO I'M SURE THAT BUDGET WILL REFLECT OUR BEST EFFORTS TO, TO MANAGE THAT.

RIGHT.

I JUST THINK THAT IT'S VERY IMPORTANT THAT WE, THAT THE BUDGET FOR 2020 TO REFLECT THE REALITY, THAT SOME PORTION OF THE, UM, OUTAGES THAT OCCURRED LEADING INTO, UM, UH, FEBRUARY THE FEBRUARY 15TH, UH, EVENT, UM, IS MADE PRETTY

[01:00:01]

PUBLIC SO THAT PEOPLE UNDERSTAND THAT PART OF THE PROBLEM IS YOU GOTTA, WE HAVE TO DO VEGETATION MANAGEMENT TO AVOID THIS KIND OF OUTAGES GOING FORWARD.

IT'S GONNA COST MONEY.

IT DOES ICE WEIGHS A LOT MORE.

IT GETS ON TREE LIMBS AND THEY FALL ON HER CONDUCTORS.

AND, OKAY.

THANK YOU.

THANK YOU, COMMISSIONER TRUSSELL.

UH, ANY OTHER QUESTIONS FROM COMMISSIONERS OR MR. DOMBROWSKI? I'LL CALL ON COMMISSIONER WELDON SPECIFICALLY, IF YOU HAVE A QUESTION, WE'RE FINE.

NOPE.

THANK YOU.

OKAY.

ALL RIGHT.

IT SOUNDS LIKE NO MORE QUESTIONS FROM COMMISSIONERS.

THANK YOU, MR. DOMBROVSKIS FOR THE PRESENTATION, ALWAYS EDUCATIONAL.

UM,

[11. Energy Market Economics, the Texas Regulatory Framework, Customer Costs for Power Supply and Circuit Segmentation.]

MOVING ON TO ITEM NUMBER 11.

UH, THIS IS ENERGY MARKET ECONOMICS, ET CETERA.

UM, I THINK THIS IS GOING TO BE PACKED WITH A LOT OF INTERESTING, GOOD INFORMATION LOOKING FORWARD TO IT.

WHO DO WE HAVE FROM AMY? THAT'S PRESENTING THIS.

HEY, HEY.

HEY ANDY.

SORRY.

WE'LL START OFF WITH, UH, UH, ERICA BEER SPOCK, OUR VICE-PRESIDENT FOR MARKET OPERATIONS, AND THEN WE'LL HAVE TWO OTHER PRESENTERS AND THEY'LL INTRODUCE THEMSELVES AS THE PRESENTATION GOES ALONG.

AND WE'LL PULL THAT UP NOW.

THANK YOU.

OKAY, GREAT.

THANK YOU.

GOOD EVENING, COMMISSIONERS.

I'M ERICA.

VICE PRESIDENT OF ENERGY MARKET OPERATIONS AND RESOURCE PLANNING, AND I WANT TO WALK THROUGH SOME SLIDES ON OUR ENERGY MARKET ECONOMICS.

AND, UH, I LIKE MARK.

WE'LL JUST TURN OFF MY VIDEO.

IT HELPS WITH BANDWIDTH, SO THINGS DON'T GET, UH, KIND OF CHOPPY, UH, AND THEN JUMP BACK ON FOR ANY QUESTIONS YOU MAY HAVE.

OKAY.

NEXT SLIDE PLEASE.

SO IN 2002, THE STATE DEREGULATED THE ELECTRIC INDUSTRY IN TEXAS, EXCEPT FOR TRANSMISSION PUBLIC UTILITY COMMISSION, OR A PC FOR SHORT, UH, OVERSEES THE ELECTRIC MARKET STRUCTURE.

IT ADOPTS RULES ADDRESSING THE MARKET AND CAN REVERSE RULES ADOPTED BY THE ERCOT BOARD.

THE PUC HAS AUTHORITY OVER OR CUTS, FINANCES, BUDGET, AND OPERATIONS WITH TEXAS LEGISLATURE OVERSIGHT.

YOUR CUP BOARD IS COMPRISED OF 16 MEMBERS ESTABLISHED BY LAW, AND THIS COMPOSITION IS CURRENTLY UNDER REVIEW BY THE STATE LEGISLATURE.

CAN YOU GO TO THE NEXT SLIDE PLEASE? THANK YOU.

UH, SO WHAT ABOUT ERCOT? IT'S UH, THE ELECTRIC RELIABILITY COUNCIL OF TEXAS.

IT WAS FOUNDED IN 1970 WITH THE LEGISLATURE ENACTING LAWS GOVERNING OR CUT ACTIVITIES, OR COD IS A NONPROFIT WITH MEMBERS FROM SEVEN MARKET SEGMENTS.

THEY ARE LISTED HERE BEFORE YOU CONSUMERS.

CO-OPS INDEPENDENT GENERATORS, INDEPENDENT REPS, IOUS, AND THEN OUR SEGMENT, WHICH IS THE MUNICIPALS OR THE MOU.

NEXT SLIDE, PLEASE.

SO PURPOSE REALLY COMES DOWN TO FOUR RESPONSIBILITIES.

THE PRIMARY RESPONSIBILITY IS RELIABILITY SYSTEM RELIABILITY OR BALANCING SUPPLY AND DEMAND OR GENERATION AND LOAD IS DONE.

UM, BY, AMONG OTHER THINGS, MAINTAINING THE GRID AT 60 HERTZ CONTINUOUSLY EVERY MINUTE OF EVERY DAY IN ADDITION OR ERCOT IS THE FINANCIAL CONDUIT THAT SETTLES ALL WHOLESALE MARKET ACTIVITY FOR ALL MARKET PARTICIPANTS AND FOR ALL WHOLESALE PRODUCTS, SETTLING PRICES FOR THOUSANDS OF NODES ACROSS THE STATE, IN ORDER TO PRICE, SUPPLY, AND DEMAND ON THE SYSTEM EVERY FIVE MINUTES OR CARTS RESPONSIBLE FOR, OR FACILITATING THE RETAIL SWITCHING PROCESS THAT GIVES CUSTOMER CHOICE IN DEREGULATED RETAIL MARKETS.

AND THEY ALSO PROVIDE OPEN ACCESS TO TRANSMISSION FOR DEVELOPMENT.

NEXT SLIDE PLEASE.

SO LET'S LOOK AT IT.

ERCOT MECHANICS, AUSTIN ENERGY'S CUSTOMERS HAVE INVESTED IN GENERATION AUSTIN ENERGY MUST OFFER THAT GENERATION INTO THE ERCOT MARKET FOR IT TO DISPATCH THE CITY'S GENERATION COMPETES WITH ALL THE OTHER GENERATION IN THE WHOLESALE MARKET.

OUR GENERATION DOES NOT SUPPLY OUR LOAD.

THE POWER OUR CUSTOMERS USE IS PURCHASED FROM ERCOT AT OUR AUSTIN LOAD ZONE.

NEXT SLIDE PLEASE.

SO HOW DO MARKET PARTICIPANTS LIKE AEI TAKE PART IN ERCOT? AAE DOES NOT SELF-SUPPLY ITS GENERATION TO ITS CUSTOMERS.

IT CANNOT DO SO.

ERCOT MARKET IS A NODAL MARKET WHICH REQUIRES SUPPLY OR GENERATION AND DEMAND OR LOAD TO BE EITHER INJECTED OR PULLED FROM THE GRID AT SPECIFIC NODES FOR THAT ENERGY TO BE VALUED OR PRICED ACCORDINGLY.

AES PER PARTICIPATION IN THE ERCOT MARKET IS NOT OPTIONAL TO SERVE OUR LOAD AND UTILIZE OUR GENERATION ASSETS.

[01:05:01]

WE MUST ENGAGE IN ARCATA INFRASTRUCTURE.

OUR CUSTOMERS GENERATION COMPETES IN ARCATA DEREGULATED WHOLESALE MARKET, ALONG WITH ALL THE OTHER GENERATION IN THE MARKET AUSTIN'S MARKET SEGMENT IS THE MUNICIPAL SEGMENT.

WE ARE A NON-OPTION ENTITY OR A NOEY, WHICH MEANS WE HAVE NOT OPTED INTO RETAIL COMPETITION.

WE COMPETE IN THE WHOLESALE MARKET, BUT NOT IN THE RETAIL MARKET.

WE ARE A LOAD SERVING ENTITY.

WE HAVE AN OBLIGATION TO SERVE OUR CUSTOMERS.

AND IN ORDER TO FULFILL THAT COMMITMENT, WE MUST PURCHASE ALL OUR CUSTOMERS POWER FROM THE GRID OR CO MARKET, WHICH IS THE ERCOT MARKET.

AND WE PURCHASE THAT POWER AT AUSTIN'S LOAD ZONE AT OUR LOAD ZONE PRICE, WHICH SETTLES EVERY 15 MINUTES AUSTIN'S CUSTOMERS HAVE INVESTED IN GENERATION.

THEREFORE AUSTIN ENERGY IS A GENERATOR IN ARCADA WHOLESALE MARKET.

WE OFFER OUR UNITS IN THESE UNITS, ALL TYPES, RENEWABLES, CONVENTIONAL GENERATION COMPETE AGAINST EACH OTHER AGAINST EACH OTHER, THROUGH A PROCESS OF OFFER CURVES AND ECONOMIC DISPATCH.

IF, AND WHEN WE ARE SELECTED, WE ARE TOLD HOW MUCH THE MARKET WILL BUY AND WHAT VALUE THE MARKET IS PLACING ON THAT ENERGY.

THROUGH THE SETTLEMENT PRICE, IT RECEIVES AT ITS LOCATION.

OUR GENERATION DOES NOT SERVE OUR LOAD, BUT IT DOES BENEFIT OUR LOAD BY PROVIDING A PHYSICAL HEDGE IN THE WHOLESALE MARKET.

SO HOW DID THIS, UH, SERVE US DURING THE WINTER EVENT AND HOW WAS OUR PORTFOLIO PREPARED FOR IT? NEXT SLIDE PLEASE.

SO THIS GRAPH REPRESENTS ALL THE AVAILABLE GENERATION AUSTIN ENERGY HAD FOR THE MARKET FROM FEBRUARY 11TH TO FEBRUARY 19TH, AS WELL AS A FEW PURCHASES WE MADE IN THE COLOR BROWN FOR FURTHER PROTECTION.

PLEASE NOTE THAT THIS SLIDE IS DIFFERENT THAN A PREVIOUS SLIDE SHOWN TO COUNCIL.

UH, EARLIER THIS YEAR, LAST MONTH, I THINK AT THE BEGINNING OF MARCH, WHICH LOOKS SIMILAR TO THIS ONE, THE GRAPH SHOWN PREVIOUSLY ONLY DEPICTED THE AMOUNT OF GENERATION THAT WAS PRODUCED FROM AUSTIN.

ENERGY'S GENERATING ASSETS.

THIS GRAPH SHOWS THE ENTIRE AMOUNT OF GENERATION WE HAD AVAILABLE DURING THE EVENT.

IN OTHER WORDS, THE GRAPH SHOWS YOU THE PORTFOLIO SUPPLY OR CAPACITY DURING THE EVENT, THE GRAPH SHOWS GENERATION IN EXCESS OF FORECASTED LOAD.

IT ALSO SHOWS THAT THE EXCESS GENERATION WAS NOT DUE TO LOAD SHED.

THERE WAS GENERATION IN OUR