Mar 21, 2022 Electric Utility Commission

GREAT.

THEN, UH, LET ME ASK IF STAFF IS READY AND OUR, UM, ATX THEN FOLKS.

GREAT.

THIS MEETING OF THE ELECTRIC UTILITY COMMISSION.

SO I'LL CALL TO ORDER

[CALL MEETING TO ORDER]

IT'S MARCH 21ST, 2020 TO 6:00 PM.

AND A FEW OF US ARE HERE AT THE SHUDI FATH CONFERENCE CENTER AT THE AUSTIN ENERGY HEADQUARTERS, AND THE REST ARE APPEARING VIRTUALLY, UH, IN ATTENDANCE FOR THE RECORD, OUR COMMISSIONER TRUSSELL COMMISSIONER YONKER, COMMISSIONER, VIRTUAL COMMISSIONER, TUTTLE, COMMISSIONER REED, AND COMMISSIONER HOPKINS.

WE I'LL JUST START THE MEETING BY NOTING THAT WE ARE UNDER A SEVERE, UH, WEATHER AND TORNADO WARNINGS THROUGHOUT THE AREA.

AND SO IF FOLKS NEED TO DROP AT ANY POINT, JUST PLEASE DO SO AND STAY SAFE.

AND, UM, MY UNDERSTANDING IS THAT PER THE RULES, WE CAN CONTINUE THE MEETING WITHOUT A QUORUM THAT WE CAN NOT TAKE ACTIONS.

SO IF ANYBODY NEEDS TO GO, PLEASE FEEL FREE TO JUST DROP OFF AND, UM, WE WILL ADJUST ACCORDINGLY.

AND SO FIRST ON THE AGENDA IS, UH, PUBLIC COMMENT.

DO WE HAVE ANYONE SIGNED UP FOR PUBLIC COMMENT? WE DON'T HAVE ANY SPEAKERS REGISTERED TO COLLIN.

I'M NOT IN THE ROOM, SO I CAN'T SEE IF THERE'S ANYONE IN THE ROOM TO SPEAK.

OF THE MINUTES WE HAVE NOVEMBER 8TH, 2021 AND FEBRUARY 14TH, 2022 MEETING MINUTES.

AND THERE'S NO ONE IN THE ROOM TO SPEAK.

MOVING ON TO THE NEXT ITEMS APPROVAL

[1. APPROVAL OF MINUTES – Approve minutes of the November 8, 2021 and February 14, 2022 meetings.]

AND THOSE SHOULD HAVE BEEN CIRCULATED WITH YOUR MEETING MATERIAL.

ARE THERE ANY CORRECTIONS TO EITHER OF THESE MEETING MINUTES? HEARING NONE.

I'LL ENTERTAIN A MOTION TO, OH, DID I HEAR SORRY, NATASHA, GO AHEAD.

AND KAREN IS ON THE PHONE.

GOT IT.

COMMISSIONER HADDON HAS JOINED US ON THE PHONE.

UH, SO HEARING, HEARING NO CORRECTIONS TO THE MEETING MINUTES, I'LL ENTERTAIN A MOTION TO APPROVE THE NOVEMBER 8TH, 2021 AND FEBRUARY 14TH, 2022 MEETING MINUTES.

I'LL MAKE A MOTION.

UH, I HEARD COMMISSIONER REED.

IS THERE A SECOND? THANK YOU, COMMISSIONER VIRTUAL.

ALL THOSE IN FAVOR.

AYE.

AYE, AYE.

AND ALL THE, ALL THOSE OPPOSED, THE MEETING MINUTES ARE APPROVED.

MOVING ON TO THE NEXT ITEM.

AND THIS IS

[NEW BUSINESS – CONSENT]

NEW BUSINESS.

ARE THERE ANY COMMISSIONERS WHO WOULD LIKE TO TAKE UP OR ANY ITEMS THAT THE COMMISSIONERS WOULD LIKE TO TAKE UP FOR DISCUSSION? I HAD A VERY QUICK QUESTION ON 14 AND 15.

ANYONE ELSE? ALL RIGHT.

UP ITEM NUMBER 14 AND THEN COMMISSIONER READ.

I WILL ENTERTAIN A MOTION TO APPROVE ITEMS. NUMBER TWO THROUGH 13 AND ITEMS 16 THROUGH 19.

SO MOVED.

I'M SORRY.

I COULDN'T HEAR OR SEE THANK YOU, COMMISSIONER TRUSSELL.

IS THERE A SECOND? THANK YOU, COMMISSIONER YONKER.

UH, ALL THOSE IN FAVOR.

AYE.

ALL THOSE OPPOSED.

AND WITH THAT ITEMS, NUMBER, ITEM NUMBERS, TWO THROUGH 13, 16 THROUGH 19 ARE APPROVED, UH, FOR RECOMMENDATION.

UH, NOW WE'LL TAKE

[Items 14 & 15]

YEAH, IT'S REALLY THE SAME QUESTION FOR 14 AND 15, JUST TO CONFIRM, UM, THESE CONTRACTS ARE ESSENTIALLY TO DO THE SAME THING WE DID WITH THE RIGHT CASE IN 2016 AND HAVE BOTH AN INDEPENDENT CONTRACTOR TO REPRESENT RESIDENTIAL CONSUMERS, INCLUDING LOW INCOME ISSUES.

AND THEN ALSO TO HIRE A INDEPENDENT LEGAL PERSON WHO WOULD RUN BASICALLY LIKE A HEARINGS EXAMINER FOR A RATE CASE.

SO THAT IS THAT WHAT THESE TWO THINGS DO.

YES, TAMMY COOPER, SENIOR VICE PRESIDENT REGULATORY COMMUNICATIONS AND COMPLIANCE CONSISTENT WITH CITY CODE, WHICH REQUIRES US TO HIRE AN INDEPENDENT

[00:05:01]

CONSUMER ADVOCATE FOR A RATE CASE OR RATE REVIEW PROCESS.

THAT IS WHAT, UH, ITEM NUMBER 14 IS FOR.

AND EXCUSE ME, THE, UH, THE CITY CODE GIVES US THE OPTION OF HIRING AN IMPARTIAL HEARING EXAMINER, WHICH OF COURSE IS WHAT WE DID IN 2016 IN WHICH WE PLAN TO DO AGAIN TO PRESIDE OVER THE FORMAL PORTION OF THE RATE REVIEW PROCESS.

SO, UH, IT'S VERY SIMILAR TO, TO WHAT WAS DONE THE LAST TIME.

AND WOULD 14, THE PERSON HIRED TO DO 14 WOULD ALSO SPECIFICALLY REPRESENT, UM, CUSTOMERS THAT ARE CONSIDERED, UH, LOW INCOME OR CAP CUSTOMERS THAT WOULD BE REPRESENTED BY THE, BUT THOSE ARE PART OF THE RESIDENTIAL AND SMALL COMMERCIAL CUSTOMERS THAT THEY ARE INSTRUCTED TO REPRESENT AN ADVOCATE FOR.

WELL THEN I HAVE NO FURTHER QUESTIONS.

I HAVE A QUESTION.

UM, I'D LIKE TO KNOW MS. COOPER CAN TELL ME WHO IT IS AT MCGINNIS THAT IS, UM, APPOINTED AS HEARING EXAMINER.

MY UNDERSTANDING THAT THE SPECIFIC RESPONDENT IDENTIFIED IN THE RFP WAS TRAVIS VICKERY.

OH, OKAY.

ANY OTHER, HEY, IF YOU DON'T KNOW THAT HE WAS A FORMER JUDGE AT THE STATE OFFICE OF ADMINISTRATIVE HEARING.

GREAT.

ARE THERE ANY OTHER QUESTIONS ON ITEMS NUMBER? I KEEP SAYING THAT ITEM NUMBERS 14 AND 15.

WE'LL TAKE THOSE UP TOGETHER.

I'LL ENTERTAIN A MOTION TO APPROVE ITEM NUMBERS, 14 AND 15.

YES.

AND THANKS FOR DOING THAT.

IT'S A, IT'S A REALLY GOOD PROCESS AND I APPRECIATE ALL OF THE ENERGY AND THE CITY OF AUSTIN DOING IT.

SO YES.

IS THAT, IS THAT A MOTION? THANK YOU.

AND IS THERE A SECOND, SECOND? THANK YOU.

UM, ALL THOSE IN FAVOR? AYE.

AYE.

ALL THOSE OPPOSED.

TAKE UP ITEM NUMBER 20, AND THIS IS THE 2022 BASE RATE REVIEW PROCESS BRIEFING FROM STAFF.

ITEM NUMBERS, 14 AND 15 ARE ALSO APPROVED FOR RECOMMENDATION.

MOVING ON TO STAFF BRIEFINGS AND REPORTS.

WE'LL

[20. 2022 Rate Review Process Briefing]

GOOD EVENING.

UH, WHILE THEY PULL UP THE PRESENTATION I'D UM, LET ME JUST START WITH THIS FEW COMMENTS AT OUR LAST MEETING, WE SHARED THAT AUSTIN ENERGY WOULD BE DOING A BASE RATE REVIEW PROCESS THIS YEAR, AND IT'S NO SECRET THAT AUSTIN ENERGY'S REVENUES ARE DOWN AND OUR COSTS ARE UP.

AND WE'RE MEETING WITH YOU TODAY TO GIVE YOU A SENSE OF WHAT'S DRIVING THE NEED FOR THE RIGHT BASE ADJUSTMENT AND THE PROCESS AHEAD FIRST, JUST TO GET ONE CONCERN OUT OF EVERYONE'S MIND AND WANT TO LET YOU KNOW THAT THIS IS NOT BECAUSE OF WINTER STORM URI.

INSTEAD, THIS IS ABOUT CONTINUED CHANGING LANDSCAPE FOR ELECTRIC UTILITIES OVERALL, AND SOME SPECIFIC CHALLENGES UNIQUE TO AUSTIN.

WE'RE SEEING CONTINUED CUSTOMER GROWTH IN OUR SERVICE AREA SERVICE AREA.

AND THIS REQUIRES US TO INCUR MORE COSTS, MORE INFRASTRUCTURE AND SUPPORT.

AND MEANWHILE, THE COST OF MATERIALS SUCH AS TRANSFORMERS, POLES, AND LABOR, CONTINUE TO RISE AT THE SAME TIME, OUR CUSTOMERS ARE USING LESS AND LESS ENERGY.

AND THAT'S A GOOD THING.

NEW TECHNOLOGY, NEW BUILDINGS AND ENERGY EFFICIENCY PROGRAMS HAVE BEEN EXTREMELY SUCCESSFUL.

AND WE WANT TO CONTINUE THIS TREND WITH RATES THAT CAN WITHSTAND CONTINUED EFFICIENCY AND STILL ALLOW US TO PROVIDE RESILIENT SERVICE FOR OUR CUSTOMERS.

IN ADDITION, WE'RE SEEING REDUCED DEMAND FOR COMMERCIAL CUSTOMERS AS WELL.

AND THIS ALSO NEGATIVELY IMPACTS OUR FINANCIAL POSITION.

WHAT WE'RE LEFT WITH IS AN URGENT NEED TO ADDRESS A SIGNIFICANT SHORTFALL.

WE'RE SPENDING DOWN OUR CASH RESERVES IN ORDER TO MAKE UP THE GAP BETWEEN REVENUES AND COSTS, BUT WE CAN NO LONGER CONTINUE TO DO SO.

OUR GOAL IS TO CONTINUE TO OFFER SOME OF THE MOST AFFORDABLE BILLS IN THE STATE WITH THE BEST CUSTOMER ASSISTANT PROGRAMS IN THE NATION.

MANY PEOPLE IN OUR COMMUNITY ARE HURTING FINANCIALLY AND WE WANT THEIR ELECTRIC BILL TO BE THE LEAST OF THEIR BURDENS.

AND I THINK WE CAN DO THIS WHILE MAKING AUSTIN ENERGY FISCALLY SOUND AND MEET OUR FINANCIAL POLICIES AND CONTINUE TO PROVIDE SIGNIFICANT BENEFITS TO OUR CUSTOMERS.

SO WHEN WE TALK ABOUT BASE RATE REVIEWS, ONE OF THE FIRST QUESTIONS PEOPLE ASK IS HOW BIG IS THE RATE REVIEW? I BIGGEST RATE INCREASE.

WHAT'S THE BILL IMPACT GOING TO BE? WELL, THE SHORT ANSWER IS, IS WE'RE STILL DEVELOPING THAT WE'RE AT THE TAIL END OF THAT PROCESS, BUT THE INFORMATION IS NOT QUITE READY YET.

WHAT THIS PRESENTATION WILL SPEAK

[00:10:01]

TO IS A WHY WE NEED A BASE RATE INCREASE.

AND THEN THE PROCESS WILL FOLLOW IN DOING THAT.

AND THESE ARE THE SAME THINGS THAT WE BRIEFED CITY COUNCILS OFFICES ON.

SO THIS IS OUR TYPICAL DISCLAIMER.

UM, THE DATA PRESENTED THIS EVENING MAY INCLUDE SOME ESTIMATES OR FINANCIAL, UH, OR FORECASTED FINANCIAL INFORMATION THAT WERE BASED ON REASONABLE INPUTS OR ASSUMPTIONS, BUT LET YOU KNOW THAT ACTUAL RESULTS WILL VARY FROM THIS FORECAST OR ESTIMATES.

ALSO, UM, OUR AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR 2021 WERE PUBLISHED ON MARCH 14TH, 2022, AND CAN BE FOUND AT THIS LINK.

NEXT SLIDE, PLEASE.

SO WANT TO TALK A LITTLE BIT, UH, UH, WE'LL START OFF WITH SUMMARY OF WHAT'S DRY OR WHY WE NEED A RATE INCREASE.

WE'LL TALK A LITTLE BIT ABOUT FINANCIAL NEEDS.

UH, THEN FINALLY THE BASE RATE REVIEW PROCESS AND A REVIEW OF THE BASE RATES, UH, SCHEDULE NEXT SLIDE PLEASE.

SO OVER THE LAST TWO YEARS, AUSTIN ENERGY HAS, UM, OPERATIONS HAVE RESULTED IN A COMBINED NET LOSS OF OVER $90 MILLION OR CASH POSITION.

THROUGH THE END OF JANUARY 22 HAS DECREASED OVER $130 MILLION OVER THAT SAME TIME PERIOD.

WE'VE HAD A DECLINE IN OUR FINANCIAL METRICS AND ALL OF THESE THINGS COMBINED THREATEN OUR AA CREDIT RATING, UH, AND PUSH US UP AGAINST FINANCIAL POLICIES AND BOND COVENANTS THAT REQUIRE BASE RATE INCREASES.

SO WE WILL, WE WILL RELEASE THE BASE RATE REVIEW, UH, IN MID APRIL, APRIL 18TH.

THAT'LL BE THE FIRST, UH, OPPORTUNITY FOR THE PUBLIC TO SEE OUR PROPOSAL.

UH, THE, THE REVIEW PROCESS WILL BE OPEN PUBLIC AND TRANSPARENT MUCH LIKE IT WAS IN 2016 AS IN 2016.

AND WE JUST BROUGHT TO YOU WE'LL WE'LL, UH, EMPLOY, UH, AND INDEPENDENT, UH, CONSUMER AND IMPARTIAL AND INDEPENDENT CONSUMER ADVOCATE AND AN IMPARTIAL HEARING EXAMINER AS YOU KNOW, AUSTIN CITY COUNCIL, APPROVES RATES.

HOWEVER, THOSE CUSTOMERS THAT LIES OUTSIDE THE CITY LIMITS CAN APPEAL TO THE PUBLIC UTILITY COMMISSION.

THEY DID THAT BACK IN 2012, WE WERE LOOKING TO HAVE THIS SPACE BASE RATE CHANGE EFFECTIVE IN JANUARY OF 2023.

AND THAT WE LOOK FOR YOUR SUPPORT IN THIS PROCESS TO ENSURE OUR FINANCIAL STABILITY.

SO WE'RE GOING TO MOVE NOW ONTO TALKING A LITTLE BIT ABOUT WHO AUSTIN ENERGY IS, WHAT THEY PROVIDE AND WHY WE NEED A RATE INCREASE.

ONE MORE SLIDE PLEASE.

SO AUSTIN ENERGY IS AN OLD UTILITY, RIGHT? WE'RE FOUNDED IN 1895.

WE'RE THE THIRD LARGEST MUNICIPAL UTILITY IN THE NATION WITH OVER HALF A MILLION CUSTOMERS.

WE'RE AA RATED.

WE HAVE 437 SQUARE MILE SERVICE TERRITORY THAT WAS SET OUT BY THE PUC IN THE 1970S.

ABOUT HALF OF THAT SERVICE TERRITORY LIES WITHIN THE CITY LIMITS AND ABOUT HALF LIES OUTSIDE THE CITY LIMITS.

UH, BUT ABOUT 85% OF OUR CUSTOMERS, UH, UH, RESIDE INSIDE THE CITY LIMITS.

SO AUSTIN ENERGY DELIVERS A CLEAN, AFFORDABLE, RELIABLE ENERGY AND EXCELLENT CUSTOMER SERVICE, BUT WE'RE SO MUCH MORE THAN JUST AN ELECTRIC UTILITY.

HE BRINGS INCREDIBLE VALUE TO COMMUNITY, THINGS LIKE ENERGY AND EFFICIENCY AND VALUE OF SOLAR PROGRAMS, UH, SERVICE AREA LIGHTING, UH, GENERAL FUND TRANSFER.

WE HAVE A PREMIER CUSTOMER ASSISTANCE PROGRAM AND WE'RE ABLE TO OFFER STATE SCHOOL AND MILITARY DISCOUNTS.

AND WE'RE ABLE TO DO ALL OF THESE THINGS IN ADDITION TO PROVIDING RELIABLE SERVICE AT BARGAIN BASEMENT PRICES.

AND I'LL DRAW YOUR ATTENTION TO THE HORIZONTAL BAR CHART TO THE RIGHT.

YOU CAN SEE THAT AUSTIN ENERGY IS SECOND FROM THE TOP AND CIRCLED AND THAT OUR AVERAGE RESIDENTIAL BILLS ARE SOME OF THE LOWEST IN THE STATE.

NEXT SLIDE, PLEASE.

THIS SLIDE SHOWS ANOTHER PERSPECTIVE OF HOW COMPETITIVE AUSTIN ENERGY IS.

WE HAVE AN AFFORDABILITY GOAL THAT KEEPS OUR, THAT AIMS TO KEEP OUR RATES IN THE LOWER 50% OF TEXAS RETAIL RATES.

AND AS YOU CAN SEE, AUSTIN ENERGY IS AT 97 AND A HALF PERCENT OF THE TEXAS AVERAGE.

NEXT SLIDE, PLEASE, ON THIS SIDE, THE ORANGE LINE IS OUR ACTUAL SYSTEM, RIGHT? AND IF THAT ACTUAL SYSTEM RATE IS ADJUSTED FOR INFLATION, YOU GET THE YELLOW LINE OR AUSTIN'S REAL SYSTEM RATE.

AND THE REAL RATE REFLECTS HOW AUSTIN ENERGY HAS MANAGED ITS COSTS OVER TIME SINCE IT ACCOUNTS FOR CHANGES OTHER THAN INFLATION.

AND AS YOU CAN SEE OVER THE LAST 25 YEARS, THAT'S BEEN TRENDING DOWN AND IT'S TODAY, IT'S 60 OF WHAT IT WAS IN 1995.

WHAT THIS, THIS IS SAYING.

ONE SECOND.

CAN WE PAUSE ON THIS SLIDE? UM, I'M NOT SURE I'M FOLLOWING

[00:15:01]

CAN YOU, WHAT DOES SYSTEM, WHAT DOES SYSTEM RATE? OKAY.

THAT IS OUR AVERAGE.

SO WE TAKE ALL OUR ELECTRIC REVENUE DIVIDED BY ALL OUR KWH.

SO IT'S AN AVERAGE RIGHT? FOR THE UTILITY FOR THE YEAR ACROSS ALL THE CLAIMS. OKAY.

AND THEN, AND THEN TELL ME WHAT THE LINES ARE DOING AGAIN.

SO THE ORANGE LINE IS OUR, IS OUR ACTUAL SYSTEM, RIGHT? JUST CALCULATE, GO TO THE FINANCIAL STATEMENTS, A DIVIDED BY B, HOWEVER, EMBEDDED IN THERE IS INFLATION.

AND SO WHEN YOU BACK INFLATION OUT, YOU GET THE YELLOW LINE AND IT REALLY TELLS YOU THAT OUR COSTS HAVE BEEN DECREASING.

THE ONLY REASON THEY'RE UP IS BECAUSE OF GENERAL INFLATION, IT GOES TO MEASURE THAT WE'VE BEEN EFFICIENT IN MANAGING OUR COSTS, AND HAVEN'T HAD TO RAISE OUR RATES BEFORE ANYTHING OTHER THAN INFLATION.

THANK YOU VERY MUCH.

AND CAN I CLARIFY ALSO, THIS IS COMMISSIONER TROSTLE, THAT IS INCLUDES ALL RIGHTS.

IT'S IN A TINY FOOTNOTE AT THE BOTTOM.

IT SAYS IT BASE RATES AND PASS THROUGH RIGHTS.

SO THIS IS NOT JUST BASE RATES IT'S REFLECTED ON THIS CHART, RIGHT? THAT IS CORRECT.

SO AS YOU CAN SEE IN THE PIE CHART, THIS IS A BASE RATE REVIEW AND BASE RATES ARE ABOUT HALF OF WHAT OUR CUSTOMERS PAY, RIGHT? AND ONCE BASE RATES ARE ESTABLISHED, UH, HISTORICALLY THEY'VE REMAINED STABLE FOR A FAIRLY LONG PERIOD OF TIME.

I DRAW YOUR ATTENTION TO THE BOX AT THE BOTTOM.

THAT'S OUTLINED IN ORANGE OVER THE LAST THREE DECADES, WE'VE HAD THREE BASE RATE CHANGES.

THIS WOULD BE OUR FOURTH.

IN FACT, THE LAST BASE RATE CHANGE WE HAD WAS ACTUALLY A 6.7% DECREASE.

AND WE HAVEN'T HAD A BASE RATE INCREASE SINCE 2013, NEARLY 10 YEARS AGO.

SO WHAT ARE BASE RATES? REVENUES PAY, UH, THINGS LIKE VEHICLE EXPENSE, VEGETATION MANAGEMENT, DEBT SERVICE, UH, INFORMATION TECHNOLOGY, GENERAL FUND TRANSFERS.

UH, THEY DON'T PAY FOR THINGS LIKE CUSTOMER ASSISTANCE, PROGRAM, ENERGY EFFICIENCY PROGRAMS, ANY TRANSPORT MISSION-RELATED COSTS NOR, UH, POWER SUPPLY COSTS THAT RECOVERED THROUGH THE POWER SUPPLY ADJUSTMENT.

NOW THIS IS NOT AN EXHAUSTIVE LIST.

IT'S THERE TOO TO SHOW YOU THE VARIETY OF COSTS, UH, THAT BASE RATE REVENUES PAY FOR.

UM, BUT I GUESS I'D LIKE TO MAKE A POINT BEFORE WE MOVE ON TO THE NEXT SLIDE.

THESE COSTS ARE WHAT I REFER TO AS FIXED COSTS.

NOW THAT DOESN'T MEAN THEY GO UP AND DOWN, BUT THEY REMAIN FIXED REGARDLESS OF HOW MANY KWH WE SELL.

I ALWAYS LIKE TO USE THE PRINCIPAL AND INTEREST PAYMENTS AS AN EXAMPLE, OUR DEBT SERVICE.

SO WE PAY ABOUT 140, $150 MILLION, PARDON ME, 140, 150 MILLION IN DEBT SERVICE.

UM, AND THAT, THAT SERVICE IS DUE AND PAYABLE WHETHER WE SELL ONE KWH OR A BILLION.

SO WHEN I TALK ABOUT FIXED THAT'S, THAT'S KINDA WHAT I MEAN, CAN WE GO TO THE NEXT SLIDE PLEASE? SO VERY, VERY QUICK QUESTION.

WOULD BASE RATES INCLUDE, UH, DECOMMISSIONING COSTS? YES, SIR.

IN KWH SALES WERE MERELY 4% HIGHER THAN THEY WERE IN 2014.

SO WHY ARE COSTS OUTPACING REVENUES? TWO REASONS COSTS ARE GOING UP AND REVENUES.

AREN'T, IT'S THAT SIMPLE? A LOT OF OUR COSTS ARE DRIVEN BY CUSTOMER GROWTH.

AS YOU CAN SEE, THAT'S THE ORANGE LINE CUT TRACKS, CUSTOMER GROWTH.

ALSO, AS YOU KNOW, AUSTIN IS A POPULAR PLACE AND AS A UTILITY, WE HAVE AN OBLIGATION TO SERVE.

SO THAT MEANS THAT AS CUSTOMERS COME INTO OUR SERVICE TERRITORY, WE ARE OBLIGATED TO, TO PROVIDE THIS, PROVIDE THEM SERVICE.

AND IF THAT MEANS BUILDING INFRASTRUCTURE, THEN THAT'S WHAT WE HAVE TO DO.

AND AS MORE AND MORE CUSTOMERS COME IN, THERE'S MORE AND MORE INFRASTRUCTURE.

THAT MEANS THERE'S MORE DEBT SERVICE.

THERE'S MORE CASH CONTRIBUTIONS TO BUILD THAT INFRASTRUCTURE CUMULATIVELY OVER A PERIOD OF TIME, THAT AMOUNTS TO A LOT OF INFRASTRUCTURE.

SO THAT MEANS THERE'S MORE OPERATING COSTS ASSOCIATED WITH IT.

AND SO, AS YOU CAN SEE THAT, THAT THIS ORANGE LINE, UM, WHAT WE CALL A CUSTOMER GROWTH HAS INCREASED 18% SINCE 2014.

NOW 2014 IS THE TEST YEAR FOR OUR CURRENT, UH, RATES THAT REPRESENTS ABOUT 80,000 CUSTOMERS THAT HAVE COME ON TO OUR SYSTEM SINCE THE LAST TEST YEAR.

NOW, I SAID, THERE'S TWO REASONS WHY COSTS ARE OUT-PATIENT REVENUES.

ONE IS THAT COSTS WERE INCREASING AND THAT REVENUES WEREN'T OUR CURRENT RATE STRUCTURES OVERLY RELY ON KWH SALES FOR REVENUE.

AND AS YOU CAN SEE IN THE YELLOW LINE, THAT THOSE SALES HAVEN'T MATERIALIZED AT THE SAME RATE THAT CUSTOMER GROWTH HAS.

UM, AND, AND CONSEQUENTLY, IF YOU LOOK AT 2021, SO WE'VE ADDED 80,000 CUSTOMERS AND ALL THAT INFRASTRUCTURE AND ALL THOSE OPERATING COSTS

[00:20:01]

SO YOU REMEMBER ON THE PREVIOUS SLIDE, I TALKED ABOUT FIXED COSTS THAT DEBT SERVICE, THAT 140 50 MILLION, WELL, THAT COST DOESN'T VARY WITH KWH SALES, BUT THE REVENUE TO PAY FOR IT DOES NOW HISTORICALLY ENERGY SALES SUBTRACT CUSTOMER GROWTH.

SO THE QUESTION BECOMES, WHY HAVE KWH SALES DECOUPLED FROM CUSTOMER GROWTH? WELL, THE ANSWER IS THAT OUR CUSTOMERS HAVE BECOME MUCH MORE ENERGY EFFICIENT, AND THAT IS A GOOD THING.

SO THIS IS A PROBLEM THAT WE HAVE TO ADDRESS, BUT IT'S NOT A BAD PROBLEM.

SO ENERGY EFFICIENCY COMES IN MANY, MANY PACKAGES, RIGHT? SO THERE'S IMPROVEMENTS, UH, IN LIGHTING, HPAC, APPLIANCES, MOTORS, REFRIGERATION, UH, BUILDING MATERIALS AND HOUSING STOCK COUPLED WITH, UH, AUSTIN ENERGY'S, UH, ENERGY EFFICIENCY PROGRAMS THAT THEY'VE BEEN INVESTING IN FOR OUR RESIDENTIAL CUSTOMERS, ALL OF THIS CULMINATES IN HOUSING COSTS AND HOUSING USE, UH, IN, IN, IN HOME CONSUMPTION.

AND THIS SLIDE SHOWS THAT I REALLY LIKED THIS SLIDE BECAUSE IT SHOWS TWO THINGS.

IT SHOWS THAT NEW HOMES ARE NEARLY TWICE AS EFFICIENT AS OLD HOMES AND MULTI-FAMILY HOMES ARE NEARLY TWICE AS EFFICIENT, A SINGLE FAMILY HOMES.

NOW LET ME POINT THIS OUT.

SO WE START HERE AT THIS FIRST GRAPH, THIS KIND OF, UH, UH, LIGHT RED SLIDE.

IF YOU WILL.

NOW, THAT'S ALL RESIDENTS THAT THAT'S SINGLE FAMILY AND MULTIFAMILY AND, AND WHAT THIS TRACKS IS 2021 CONSUMPTION.

SO FOR EXAMPLE, IF YOU LOOK AT THIS FIRST SET OF GRAPHS AND YOU LOOK UNDER THE YEAR 2021, WHAT THAT MEANS IS THAT THE AVERAGE BILL IN 2021 FOR A CUSTOMER THAT LIVES IN A HOME THAT WAS BUILT IN 2021 WAS 380 KWH.

SOMETHING LIKE THAT, COMPARE THAT TO SOMEBODY THAT LIVED IN A HOME.

AND THAT SAME YEAR IN 2021 WAS BUILT IN PRE 2012.

THAT NUMBER IS 866 KWH.

SO YOU CAN SEE IT'S ABOUT HALF, RIGHT? AND IF YOU LOOK AT SINGLE FAMILY AND MULTIFAMILY, THAT TREND IS, IS CONSISTENT WITH THAT.

NOW LOOK AT THE GRAPH AT THE VERY END, THE, UH, THE ORANGE, THE DEEP ORANGE GRAPH, THE MULTIFAMILY.

ONCE AGAIN, LOOK AT 2021.

UH, IF I MOVED INTO SAY A NEW MULTI-FAMILY APARTMENT OR CONDO, UH, IN 2021, MY 2021 CONSUMPTION AVERAGE WAS 339 KWH.

NOW, IF I MOVED INTO A BRAND NEW SINGLE FAMILY HOME IN 2021, LOOK AT THE YELLOW BARS, RIGHT? FOR 2021, YOU CAN SEE THAT THAT NUMBER IS 642 ONCE AGAIN, ABOUT HALF ROUGHLY.

SO THIS NOTION OF, UM, NEWER IS TWICE AS EFFICIENT, AS OLDER AND MULTI-FAMILY IS TWICE AS EFFICIENT, A SINGLE FAMILY RESIDENCE.

SO WITH THAT BEING SAID, WHAT'S THE FUTURE HOLD? WHAT ARE PEOPLE MOVING INTO NEXT SLIDE, PLEASE.

SO THE ANSWER BECOMES PRETTY OBVIOUS AT THE END OF THE GRAPH, RIGHT? AND SEE THE BLACK LINE THAT'S MULTI-FAMILY.

SO WE'RE BUILDING A LOT MORE MULTI-FAMILY COMPARED TO SINGLE FAMILY HOMES.

NOW LOOK AT THIS SECOND CIRCLE.

THAT'S CLOSER TO THE MIDDLE THAT'S 2009.

THAT'S WHEN OUR CURRENT RE RESIDENTIAL RIGHTS STRUCTURE, UH, WAS BUILT ON.

AND IF YOU LOOK IN THAT SITUATION, ACTUALLY SINGLE FAMILY HOMES WERE LEADING THE CHARGE INSTEAD OF MULTI-FAMILY.

SO YOU HAVE ALL THESE EFFICIENCIES IN THIS CHANGE IN, IN HOUSING STOCK THAT HELPS DRIVE EFFICIENCIES IN OUR CUSTOMER BASE.

WHICH MEANS THAT IF I WAS A CUSTOMER IN 2009, THAT YOU THIS MUCH, WHAT EFFICIENCIES ARE NOW THIS MUCH.

SO I REALLY LIKED THIS SLIDE.

THIS SLIDE SHOWS THE IMPACT OF ENERGY EFFICIENCY ON RESIDENTIAL CONSUMPTION.

IT ALSO SHOWS WHY OUR CURRENT RESIDENTIAL RATE STRUCTURE HAS BECOME SO INEFFECTIVE.

SO THE TWO LINES REPRESENT A SUMMER RESIDENTIAL CONSUMPTION IN 2009 VERSUS 2021.

BUT THIS SLIDE HAS GOT A TON OF INFORMATION ON IT.

SO IF YOU'LL ALLOW ME TO KIND OF LET ME SET THE STAGE.

SO YOU'LL SEE ON THE X AXIS, THOSE ARE BUCKETS OF KWH, RIGHT? MOVING FROM ZERO TO A 3,500 KWH.

AND THEN THIS IS THE PERCENT OF BILLS ON THE Y-AXIS.

ALSO AT THE VERY TOP, YOU CAN LOOK THERE'S TIER ONE, TIER TWO, TIER THREE, THOSE REPRESENT THE RESIDENTIAL TIER BREAKS OF OUR INSIDE RESIDENTIAL CUSTOMERS.

SO WHAT HAPPENS AS CUSTOMERS BECOME MORE ENERGY EFFICIENCY AND MORE ENERGY EFFICIENT, THEY DO TWO THINGS, RIGHT? THEY USE LESS ELECTRICITY,

[00:25:02]

SO I MOVED WELL RIGHT TO LEFT.

AND IF I BRING MY APARTMENT, AND IF I BRING MY 10 NEIGHBORS WITH ME, THAT'S MORE BILLS THAT ACCUMULATE HERE.

AND SO WHAT HAPPENS WHEN, WHEN THAT, WHEN THAT PHENOMENON EXISTS, THE ORANGE LINE, RIGHT? THE 2009 SHIFTS UP AND TO THE LEFT, BECAUSE WE HAVE MORE PEOPLE, MORE, MORE BILLS USING LESS KWH ON THE AVERAGE, RIGHT? AND THAT'S A GOOD THING.

WE'RE BECOMING MORE ENERGY EFFICIENCY AND EFFICIENT.

WE'RE HAVING CUSTOMERS CONGREGATE IN THIS AREA RIGHT HERE, BUT IT IMPACTS OUR RIGHTS.

TWO WAYS.

IF YOU LOOK AT THE TOP TIERS ONE AND TWO, YOU'RE GETTING MORE OF THOSE KWH SALES CONGREGATING AND TIER ONE AND TIER TWO, WHICH ARE SIGNIFICANTLY BELOW COST OF SERVICE.

AND WHAT'S HAPPENING OUT HERE IN TIERS FOUR AND TWO YEAR FIVE IS TWO THINGS.

EITHER YOU'RE LOSING SALES BECAUSE WE DON'T USE AS MUCH, WHICH IS NOT A BAD THING.

IT'S JUST FACT, OR I'M USING LESS AND I'M SHIFTING TO TIERS ONE AND TWO.

THAT'S WHY OUR CURRENT RESIDENTIAL RATE STRUCTURE DOESN'T WORK FOR US ANYMORE.

WE DON'T HAVE ANY OF THE HIGH USE CUSTOMERS OUT THERE BEING ABLE TO SUBSIDIZE THE LOWER TIERS.

THEY'RE ALL USING LEFT.

AND SO EVERYBODY HAS SHIFTED IN THE TIERS UP INTO THE LEFT.

SO THIS SLIDE SHOWS DOES A GOOD JOB SHOWING THAT COSTS ARE OUTPACING REVENUES.

UH, THE YELLOW BARS REPRESENT REVENUES.

THE ORANGE LINE REPRESENTS COST, AND THESE ARE BASE RATE REVENUES AND BASE RATE COSTS.

IF YOU WILL.

AND YOU CAN SEE THAT BEGINNING IN 2018, THE ORANGE LINE, OR THE COSTS BEGAN TO TRACK UPWARD AT A FAIRLY STEEP SLOPE.

BUT IF YOU LOOK AT THE TOP OF THE YELLOW BARS AND THOSE IN THAT SAME TIME PERIOD, THEY REMAINED RELATIVELY FLAT.

SO BY 2021, THERE'S A GAP, RIGHT? AND I MENTIONED EARLIER THAT WE HAD A COMBINED NET, $90 MILLION LOSSES IN THOSE TWO YEARS.

WELL, WHAT HAPPENS WHEN YOU DON'T HAVE ENOUGH REVENUE TO PAY COSTS? WE HAVE TO GO TO OUR CASH RESERVES TO PAY FOR IT, RIGHT? LOOK TO THE LINE, GRAPH TO THE BOTTOM, RIGHT? SO TO FILL THAT GAP, WE'VE HAD TO SPEND OUR CASH DOWN AND YOU CAN SEE THAT OUR CASH POSITION HAS FALLEN FROM $690 MILLION IN 2020 TO 558 MILLION.

NOW KEEP IN MIND THAT $558 MILLION HAS ABOUT $70 MILLION OF UNREFINED AT POWER SUPPLY COSTS THAT ARE GOING BACK TO OUR CUSTOMERS OVER THE NEXT EIGHT MONTHS.

ALL THINGS BEING EQUAL, THE RED LINE, THE DOTTED RED LINE WITH A MINIMUM BALANCE NEEDED A 480 MILLION.

WE HAVE A FINANCIAL POLICY THAT SAYS YOU WILL KEEP AT A MINIMUM, 150 DAYS OF CASH ON HAND.

THAT'S WHAT THAT DOTTED RED LINE MEANS.

SO AFTER WE PAY THOSE UNREFINED POWER SUPPLY COSTS, WE WILL BE VERY CLOSE TO THAT 150 DAYS OF CASH ON HAND.

SO I LOOKED AT A 20, 21 FITCH PEER REVIEW STUDY TO KIND OF LEND PERSPECTIVE TO THAT.

SO I LOOKED AT ALL OUR PEERS THAT ARE AA RATED THE AVERAGE DAYS OF CASH ON HAND FOR THOSE UTILITIES FOR AA RATED UTILITIES, 275 DAYS.

SO BY THE TIME ALL THINGS BEING EQUAL, WE GET THROUGH REFUNDING THIS MONEY.

MOST OF OUR PEERS WILL HAVE TWICE THE CASH ON HAND THAT WE WILL.

NEXT SLIDE, PLEASE.

SO TALK ABOUT CASH AND HAVING TO ACCUMULATE CASH.

SO HOW DO WE ACTUALLY BUILD CASH? NOW? WE'RE NOT AN INVESTOR OWNED UTILITY.

WE ARE NOT A FOR PROFIT COMPANY.

WE DON'T HAVE INVESTORS AND WE CAN'T SELL STOCK.

SO WE HAVE TO RELY ON OUR OPERATIONS TO GENERATE CASH.

AND MOST OF THAT'S ENCAPSULATED IN AN INCOME STATEMENT IF YOU LOOK AT IT, RIGHT? SO WE RELY ON THINGS LIKE, UH, OUR NON-CASH EXPENSES LIKE DEPRECIATION AND AMORTIZATION EXPENSE TO HELP FUND THOSE COSTS THAT ARE NOT INCLUDED IN THE INCOME STATEMENT.

THINGS LIKE THE PRINCIPAL PORTION OF OUR DEBT PAYMENT AND CASH CONSTRUCTION.

AND SO WE NET THOSE THINGS THAT DEPRECIATION AND THOSE OTHER CASH CLAIMS ALONG WITH, UH, ANY NET MARGINS THAT WE MIGHT HAVE.

AND THEY ALL GO TO CONTRIBUTE TO OUR WORKING CAPITAL.

NOW 2017 WAS A LITTLE BIT OF AN ANOMALY, BUT THE RATES, UH, THAT WERE IN EFFECT PRIOR TO JANUARY OF 2017, HAD SOME RESERVES

[00:30:01]

BUILT INTO IT.

UM, UH, THAT, AND WHEN WE PUT NEW RATES INTO EFFECT IN 2017, THAT WENT AWAY, THOSE RATES WENT AWAY AND THAT, THAT PORTION DEDICATED TO RATES FOR A RESERVE, UM, FORMATION, UH, WENT AWAY.

SO CASH BALANCES ARE CRITICAL TO AUSTIN ENERGY.

FIRST OF ALL, WE HAVE A FINANCIAL POLICY THAT SAYS YOU NEED 150 DAYS OF CASH ON HAND, RIGHT? WE'RE ALMOST RIGHT AT OUR $480 MILLION MINIMUM.

ONCE WE REFUND THE UNRESPONDED, UH, UH, POWER SUPPLY COSTS, WE NEED LIQUIDITY BECAUSE OUR REVENUES AREN'T STABLE.

THEY'RE SEASONAL, OBVIOUSLY THAT, AND IF YOU DON'T HAVE KWH TO SUPPORT THE APPROPRIATE AMOUNT, YOU HAVE TO FUND THAT GAP WITH CASH.

AND THEN OF COURSE, WHEN WE BUILD STUFF, WE DON'T BUILD ANYTHING THAT IS A HUNDRED PERCENT DEBT FUNDED, UH, FOR, FOR THE, UH, ELECTRIC UTILITY.

UH, AND SO THAT REQUIRES CASH CONTRIBUTIONS INTO THAT.

AND EVEN THE CASH THAT WE HAVE, IF YOU LOOK AT THE BAR CHART OFF TO THE RIGHT, NOT ALL THAT CASH IS ALL READILY ACCESSIBLE.

SO IF YOU LOOK AT THE, AT THE, THE YELLOW AND THE GRAY AND THE BLUE OFF TO THE FAR, RIGHT, THOSE ARE RESERVES.

THAT MEANS WE CAN'T SPEND THOSE WITHOUT CITY COUNCIL AUTHORIZATION, BUT THE REMAINING OF THE CASH, RIGHT, WE DO HAVE ACCESS TO, BUT THERE'S ALREADY CLAIMS ON SOME OF THAT.

AND ESPECIALLY IF YOU LOOK AT THE 12 31, 20 21, THE BOTTOM ONE, THE HASH MARK, UH, OUR CLAIMS ON OUR READILY AVAILABLE CASH THAT ARE ALREADY EMBEDDED ON OUR BALANCE SHEET.

THINGS LIKE ACCOUNTS PAYABLE, BUT MORE SPECIFICALLY.

AND THAT'S WHY I USE THIS.

FOR EXAMPLE, THAT'S THOSE AN UNFUNDED, UM, POWER SUPPLY COSTS THAT GO BACK TO OUR CUSTOMERS, THINK OF IT THIS WAY.

SO HE SPENDS MONEY ON MONDAY TO BUILD, MAINTAIN, AND OPERATE PLAN ON TUESDAY, TO HOOK UP AND PROVIDE SERVICE TO NEW AND EXISTING CUSTOMERS ON WEDNESDAY TO BUILD THOSE CUSTOMERS ON THURSDAY, AND THEN FINALLY GET THE REVENUE IN ON FRIDAY.

SO THERE IS A LAG, AND THAT'S WHY CASH IS IMPORTANT TOO, TO FILL THOSE GAPS.

AND WHEN DO YOU KNOW WHEN YOU NEED A BASE RATE INCREASE WHEN YOUR FINANCIAL METRICS DECLINE OVER SUSTAINED BASIS, AND THAT'S WHAT'S HAPPENING HERE.

SO YOU CAN SEE OUR OPERATING MARGIN, OUR TARGET'S 10%.

UM, AND, UH, WE HAVEN'T MET THAT SINCE 2018.

WE'VE HAD NET LOSSES IN 20 AND 21, WHICH WE'VE ALREADY TALKED ABOUT OUR DAYS OF CASH ON HAND AS DECLINING.

OUR DEBT SERVICE COVERAGE IS BELOW 2.0 AND OUR DEBT TO CAPITAL IS ABOVE 50%.

SO WHEN ALL OF THOSE METRICS COMBINED OVER A SUSTAINED BASIS, UM, WE BUMPED INTO, UH, OUR, OUR MASTER BOND ORDINANCE.

NOW AUSTIN ENERGY, UM, HAS A FIDUCIARY RESPONSIBILITY TO OUR BOND HOLDERS.

AND WE HAVE ABOUT 1.8 BILLION OUTSTANDING IN BONDS.

SO WHEN REVENUES DON'T COVER COSTS, OUR MASTER BOND ORDINANCE REQUIRES US TO FIX THAT.

AND IN SECTION FOUR, UH, THE ORDINANCE RAGE REQUIRES THE CITY TO FIX RATES, TO PAY ALL CURRENT OPERATING EXPENSES.

AND IF NET REVENUES ARE INSUFFICIENT, THE CITY SHALL, SHALL CAUSE THEM, UH, CAUSE RATES TO BE REVISED AND ADJUSTED TO COMPLY WITH A RIGHT COVENANT.

AND THEN OF COURSE WE HAVE FINANCIAL POLICIES THAT SAY, HEY, YOU'RE GOING TO DO A RATE REVIEW AT LEAST EVERY FIVE YEARS.

AND WHEN YOU DO IT, IF YOU NEED A RATE INCREASE, YOU NEED TO MOVE FORWARD WITH IT.

AND OF COURSE, WE'RE ALWAYS CONCERNED ABOUT OUR CREDIT RATING.

AND SO WE LOOK TO THE RATING AGENCIES ABOUT WHAT THEY THINK IS IMPORTANT WHEN THEY MOVE THROUGH, UH, FOR RIGHT REVIEWS.

SO WE DON'T HAVE TO LOOK ANY FARTHER THAN MOODY'S OCTOBER 20, 20 CREDIT REPORT THAT SAYS, THAT SAYS FACTORS THAT COULD LEAD TO A DOWNGRADE ALMOST IMMEDIATELY OUT OF THE BLOCK.

WHAT DID THEY SAY? FAILURE TO IMPLEMENT A NEEDED RATE INCREASE IN A TIMELY MANNER.

SO, SO FAR, YOU KNOW, WE TALKED A LITTLE BIT ABOUT AUSTIN ENERGY AND WHY WE NEED A BASE RATE.

SO NOW I'M READY TO KIND OF CHANGE GEARS AND LET'S TALK ABOUT THE PROCESS, IF YOU WILL.

AND JUST ONE QUICK QUESTION FOR YOU BEFORE YOU SWITCH TOPICS.

UM, CAN YOU EXPLAIN FOR OUR BENEFIT WHY IT'S SO IMPORTANT FOR US AND ENERGY TO KEEP THE AA, UH, BOND RATING, OUR CREDIT RATING, EXCUSE ME.

SURE.

AND YOU, AND, AND YOU CURE WHATEVER AILS IT, IT DOESN'T MEAN THAT IT'LL COME BACK.

BOND RATING STRIVE A, UM, A NUMBER OF COSTS PROBABLY THE MOST EVIDENT IS, UM, THE INTEREST EXPENSE THAT WE PAY ON OUR BOND DEBT.

SO I JUST SAID, YOU KNOW, WE'VE GOT ABOUT 2 BILLION OUTSTANDING IN, IN BOND DEBT.

AND, UH, AS YOU'LL KNOW, WHEN WE MOVE FORWARD WITH, UH, WITH A BUDGET PROCESS, OUR FIVE-YEAR CIP PLAN IS ABOUT A BILLION DOLLARS.

AND SO THOSE CREDIT MARKETS ARE IMPORTANT TO US.

AND FOR EVERY DOLLAR THAT WE BORROW AND WE'RE AT A, AT A LESSER CREDIT RATING, THE HIGHER, THE INTEREST RATE WILL BE ON SIGNIFICANT CHUNKS OF DEBT.

MORE IMPORTANTLY, ONCE YOU LOSE THAT CREDIT RATING

[00:35:01]

SO IF WE NEEDED, YOU KNOW, $5 OF A BASE RATE INCREASE, AND WE GOT TO, IF THERE'S A DOWNGRADE, IF WE COME BACK AND SAY, HERE'S THREE MORE, THAT DOESN'T IMMEDIATELY CURE IT.

IT GOES FOR A YEAR OR TWO, THREE, MAYBE EVEN THREE YEARS BEFORE IT'S FIXED.

ONCE WE CURE THE DEFICIENCY.

SO WHEN WE SET RATES, WE HAVE CERTAIN GUIDING PRINCIPLES THAT ESTABLISH THOSE SPACE RIGHTS, RIGHT? WE WANT OUR RATES TO BE EQUITABLE AND FAIR.

WE WANT THE BILLS TO BE STABLE.

WE WANT OUR RATES TO BE SIMPLE SO THAT A CUSTOMER CAN PICK UP OUR TARIFFS, READ IT AND UNDERSTAND HOW THEY'RE BEING BUILT.

WE WANT TO PROTECT OUR VULNERABLE CUSTOMERS, AND WHEN WE PRESERVE OUR ENERGY EFFICIENCY AND CONSERVATION, NEXT SLIDE PLEASE.

QUICK QUESTION REAL QUICK.

SURE.

UM, IT'S NOT GOING TO SAVE US AND YOU'RE JUST BEING PRUDE AND WE APPRECIATE THAT.

HOW MUCH DID COVID REALLY REDUCE REVENUES AND OR INCREASED COST AND HOW MUCH DO YOU THINK WILL BE BENEFITING OF THE SITUATION WHEN WE GET PAST COVID AND WE GET BACK TO MAYBE SOME MORE PRE COVID, UM, LEVELS OF SALES PER SALES OR COSTS.

IS THERE ANYTHING YOU CAN QUANTIFY THERE THAT MAY I DON'T.

I JUST WANT TO MAKE SURE THAT WE DON'T OVERSHOOT AND RECOVERY BECAUSE WE'VE GONE THROUGH OVER TWO YEARS OF COVID IMPACTS, RIGHT.

THAT THAT'S A REALLY GOOD QUESTION.

AND WE'VE, WE'VE KICKED THAT AROUND THE, UNFORTUNATELY THE SHORT ANSWERS, THERE'S A LOT OF THINGS THAT CONTRIBUTE TO CONSUMPTION DURING THE COVID YEARS, UH, ENERGY EFFICIENCY, UH, SOME BUSINESSES MAY GO AWAY AND NOT COME BACK.

UH, THERE COULD BE A FUNDAMENTAL SHIFT IN HOW BUSINESSES DO CONDUCT THEIR OPERATIONS, RIGHT? UH, FOR EXAMPLE, UM, UH, SAY YOUR LOCAL MCDONALD'S, IF THEY CAN'T GET ENOUGH HELP TO SERVE THEIR INSIDE THE CUSTOMERS, UH, INSIDE DINING AREA, THEY MIGHT REVERT FULL-TIME TO A DRIVE THROUGH, OR THEY MIGHT FIND A BETTER WAY.

SO THAT DYNAMIC IS CHANGING AND THERE'S A TON OF, UH, VARIABLES THAT DRIVE THAT.

AND I GUESS THE SECOND QUESTION IS, IS I'M NOT SO SURE THAT WE KNOW WHAT POST COVID LOOKS LIKE.

I MEAN, WE CAN ASSUME THAT IT MIGHT BOUNCE BACK, BUT WE REALLY DON'T KNOW.

I MEAN, IF THAT'S WHY TYPICALLY IN THESE COSTS SERVICE, YOU USE TEST YEAR AND YOU SET RATES BASED ON WHAT YOU KNOW, AND IF, IF IN FACT, UH, ENERGY SALES OR, OR LOAD DOES BOUNCE BACK, YOU'LL CATCH IT IN THE NEXT RIGHT REVIEW.

DOES THAT, I'M SORRY, I COULDN'T GIVE YOU A, IT'S A DOLLAR FOR THIS OR A DOLLAR FOR THAT, BUT THAT'S, THAT'S THE BEST ANSWER I CAN PROVIDE YOU.

YUP.

I HAVE A QUESTION ALSO, THIS COMMISSIONER TROSTLE YES.

MA'AM BUT WHEN YOU, WHEN YOU SHOWED US THE BASE RIGHT REVENUES, UM, IN YOUR EARLIER SLIDES, IT WAS YOUR SLIDE 16.

I HAVEN'T HAPPENED TO BE LOOKING AT, IS THAT, DOES THAT INCLUDES ALL CUSTOMER CLASSES? YES, MA'AM, IT'S ALL BASED REVENUE, BECAUSE, I MEAN, I'M NOT GOING TO SAY THAT THE FACT THAT 90% OF OUR CUSTOMERS ARE RESIDENTIAL, BUT 65% OF THE ENERGY'S SOLD TO BUSINESS CUSTOMERS, THAT I'M VERY INTERESTED IN SEEING WHAT THE PROPOSAL IS GOING TO BE TO TRY TO BALANCE THIS OUT ON BASE REVENUES.

THAT IS, UH, YOU KNOW, I MEAN, I, I THIN THAT BASED REVENUES DON'T INCLUDE THE ENERGY COST, BUT, UH, IT, IT CAN SUN'S ME WHAT THE IMPACT IS GOING TO BE ON RESIDENTIAL VERSUS COMMERCIAL.

AND I CERTAINLY UNDERSTAND, AND THOSE ARE GOOD STATS THAT YOU'RE QUOTING.

I MIGHT ADD THAT WHILE RESIDENTIAL CUSTOMERS, UH, ONLY CONSUME 35% OF THE, UM, KWH THAT WE SELL, THEY ALSO PRODUCE 45% OF THE BASE RATE REVENUES.

I HAD A QUESTION AS WELL.

UM, SIMILAR TO COMMISSIONER TUTTLES.

I WAS JUST WONDERING IF YOU COULD ELABORATE ON WHAT LED TO THE BASE RATE DECREASE BACK IN 2017, BECAUSE I GUESS I JUST AM HESITANT TO GET INTO A CYCLE WHERE WE OVERCHARGE AND UNDERCHARGE AND OVERCHARGE, AND WE'RE JUST CUSSED, LIKE RESIDENTIAL CUSTOMERS ARE JUST BEING AFFLICTED BY A LOT OF CHANGES.

BY 2014, THE TEST YEAR, THAT THAT WAS THE BASIS FOR THE 2017 RATES THAT HAD FALLEN TO ABOUT 110 HUNDRED AND 20 MILLION.

SO I GUESS I CAN ANSWER THAT QUESTION.

UH, PRIMARILY WHAT LED TO THE BASE RATE DECREASE AND, UH, 2017 WAS THAT THE PRIOR RATES WERE SET ON A MUCH HIGHER DEBT SERVICE AND THAT THE NATURAL PAY DOWN OF THAT DEBT OCCURRED IN THAT INTERIM.

SO I THINK THE RATES THAT WE SET IN 20 12, 20 13, DON'T QUOTE ME ON THAT EXACT NUMBER, BUT THEY'RE AROUND 170, $180 MILLION WORTH OF DEBT, UH, DEBT SERVICE THAT YEAR, UH,

[00:40:01]

SO WE JUST HAD BASICALLY PAID STUFF OFF.

NOW THAT'S THAT CYCLE IS, IS REVERSING ITSELF AND, AND DEBT SERVICES IS HIGHER AGAIN.

UH, AND I'LL RE UH, JUST, JUST A REMINDER THAT, YOU KNOW, WE'VE HAD THREE BASE RATE CHANGES IN THE LAST 30 YEARS.

SO I UNDERSTAND YOUR QUESTION ABOUT CYCLES, BUT, BUT WE DON'T CHANGE THEM ALL THAT OFTEN.

CAN WE GO TO SLIDE 23 PLEASE? SO THE BASE RATE REVIEW PROCESS, RIGHT? IT NEEDS, IT'S GOING TO BE PUBLIC.

IT'S GOING TO BE TRANSPARENT MUCH LIKE, UH, IT WAS IN 2016, WE ALREADY TALKED ABOUT THE IMPARTIAL HEARING EXAMINER AND THE INDEPENDENT, UH, CONSUMER ADVOCATE.

THIS WHOLE PROCESS, UH, WILL BE ESTABLISHED AROUND ARE, ARE GUIDED BY ESTABLISHED GUIDELINES AND ROLES AND RESPONSIBILITIES.

UH, WE ARE, HAVE DEVELOPED A COMMUNITY OUTREACH OUTREACH PROGRAM, AND WE WANT TO MAKE SURE THAT THIS PROCESS IS OPENED TO ALL OF OUR CUSTOMERS.

NOW, THE FIRST THREE ORANGE BOXES, YOU SEE A REVENUE REQUIREMENT, COST OF SERVICE AND RATE DESIGN.

UH, THOSE ARE THOSE BACK BACK ROOM FUNCTIONS.

WE'RE FIGURING OUT HOW MUCH OF AN INCREASE AS NEEDED.

HOW ARE WE GOING TO ADJUST RATES? AND THEY ALL COMBINED TO THIS RATE FILING PACKAGE HERE IN MIDDLE THAT'S, WHAT WILL BE RELEASED IN MID APRIL, APRIL 18TH.

THAT'S WHEN, WHEN THE CUSTOMERS GET THE FIRST LOOK AND THEN THEY'LL HAVE AN OPPORTUNITY TO REVIEW IT.

AND BY JUNE AND JULY WILL BE THE PUBLIC PROCESS PART.

THAT'S WHERE THE PARTIES, UM, THAT WANT TO PARTICIPATE IN THIS RAINMAKING PROCESS, GET TO MOLD THE ULTIMATE OUTCOME.

THEN IT'LL PASS TO YOU GUYS, THE ELECTRIC UTILITY COMMISSION, I THINK IN OCTOBER, MOVE TO CITY COUNCIL IN NOVEMBER, AND THEN THE YELLOW BOX, NEW RATES BY JANUARY OF 2023.

THROUGH BREAD OR RATE DESIGN.

SO THIS IS A HIGH LEVEL, UM, UH, UH, DEPICTION OF WHAT ARE OUR OUTREACH LOOKS LIKE.

WE'LL REACH OUT TO ALL THREE, UH, BRANCHES, OUR CUSTOMERS, RESIDENTIAL SMALL TO MEDIUM SIZE AND LARGE KEY ACCOUNTS.

AND WE'LL DO IT EITHER IN PERSON OR VIRTUALLY OR BOTH, RIGHT? THEY'LL HAVE, THEY HAVE DIFFERENT CONCERNS IS WHY WE BREAK THEM UP INTO THE GROUPS.

UM, UH, WE WILL GET THEIR FEEDBACKS AND EXPLAIN TO THEM HOW TO PARTICIPATE IN THE PROCESS.

AND THAT WILL START APRIL AND MAY.

SO WHEN GO TO THE NEXT SLIDE, PLEASE.

SO HERE'S A MORE, UH, DEFINED, UM, TIMELINE, IF YOU WILL, WE'RE HERE, RIGHT? AND YOU SEE PRESENTATION, WE'LL GIVE THE SAME PRESENTATION TO THE, UH, UTILITY OVERSIGHT COMMITTEE IN APRIL RULE WE'LL RELEASE.

UM, THE TARIFF PACKAGE ON APRIL 18TH, UM, SAID JUNE AND JULY IS WHEN WE'LL START THE PUBLIC PARTICIPATION PROCESS.

THE IMPARTIAL HEARING EXAMINER WILL ISSUE HIS REPORT.

AND LET ME BACK UP.

SO THE ROLE, THE IMPARTIAL HEARING EXAMINER WILL PLAY.

HE'LL BE THE JUDGE, IF YOU WILL, RIGHT? HE'S GOING TO LISTEN TO ALL THE PARTIES AND HE'S STEEPED IN RATE MAKING AND UNDERSTANDS THE CONCEPTS AND THE PRINCIPLES THAT GO INTO IT.

HE'S GOING TO LISTEN TO EVERYBODY ARGUE THEIR CASE, IF YOU WILL.

AND THEN HE'S GOING TO COME UP WITH A PROPOSAL, AN INDEPENDENT THIRD PARTY REVIEW, AND A PROPOSAL, AND AN RECOMMENDATIONS THAT GOES TO THE AUC AND OCTOBER COUNCIL IN NOVEMBER.

AND THEN FINALLY THE LAST EFFECTIVE DATE IS IN JANUARY 1ST, 2023.

THERE'S A DELTA BETWEEN THE TIME IT GOES TO CITY COUNCIL.

AND, UH, THE RIGHTS GET IMPLEMENT.

PART OF IT IS TO HAVE ALLOW CITY COUNCIL TIME TO DELIBERATE, BUT IT ALSO ALLOWS US TO, UH, CHANGE OUR BILLING SYSTEM FOR THE NEW RATES.

AND SO WE CAN TEST IT NEXT SLIDE, PLEASE.

AND THIS IS MY LAST SLIDE.

SO THIS IS WHAT WE'RE LOOKING FOR, THAT WE GET FULL RECOVERY OF OUR BASE RATE COSTS THAT WE IMPROVE OUR FINANCIAL METRICS THAT WE BECOME, THAT WE BECOME COMPLIANT WITH OUR BOND COVENANTS AND OUR FINANCIAL POLICIES, UH, THAT WE, THAT WE PROTECT OUR AA CREDIT RATING.

WE ARE PROPOSING A REVISED RESIDENTIAL STRUCTURE.

WE'VE TALKED AT LENGTH ABOUT HOW CUSTOMERS USE LESS, AND THEY'RE MOVING MORE TO THESE, TO THE UNDER RECOVERED OR UNDER COST TIERS.

WE ALSO ARE PROPOSING A GRADUAL MOVE FOR EACH CUSTOMER TO WHAT WE CALL UNITY OR SO THAT EACH CUSTOMER CLASS PAYS MORE OF THEIR FAIR SHARE.

AND THEN FINALLY, BUT NOT LEAST A GREATER EQUITY FOR OUR MORE VULNERABLE CUSTOMERS

[00:45:01]

AND THE NEXT SLIDE IS I BELIEVE SAYS, HEY, THANK YOU FOR YOUR TIME.

THIS CONCLUDES MY PRESENTATION.

AND I'D BE HAPPY TO ANSWER ANY OTHER QUESTIONS THAT YOU MIGHT HAVE.

A FAIR RESIDENTIAL RATE DESIGN.

UM, WE, I DON'T KNOW IF YOU'RE ABLE TO ANSWER THIS CAUSE I KNOW YOU'RE STILL DEVELOPING, BUT, UM, AS AN EXAMPLE, WE CURRENTLY HAVE A RATE DESIGN, WHICH WE THOUGHT WAS A GOOD IDEA.

UM, IT TURNS OUT MAYBE WORK TOO WELL, UH, OF HAVING, YOU KNOW, FIVE DIFFERENT TARIFFS DEPENDING ON YOUR ENERGY USE WOULD A FAIR RESIDENTIAL RATE DESIGN STILL HAVE TARIFFS, BUT MAYBE HAVE LESS LIKE THREE RATHER THAN FIVE OR SORT OF SIMPLER TEARS, TEARS.

SORRY.

I THINK THAT'S PROBABLY A FAIR OBSERVATION, BUT WE'LL SEE THAT IN MID APRIL.

THIS IS CARRIE I'M, I'M SURE YOU'RE GOING TO HAVE THE SAME ANSWER FOR ME.

UH, LOOK, THERE'S, YOU KNOW, THIS IS MY THIRD TIME TO GO THROUGH, UH, THIS RATE REVIEW PROCESS AND IT SEEMS THAT WE HAVE, UH, HEDGED AWAY FROM THE THIRD RAILS, UH, IN THE PAST.

AND NOW WE'RE A LITTLE BIT BECOMING THE VICTIM OF OUR OWN SUCCESS.

UM, AND IN THAT OUR FIXED REVENUES AREN'T MATCHING OUR FIXED COSTS.

UM, AND, UH, ONE OF THE THIRD RAILS, UM, UH, WAS JUST MENTIONED IN THAT IS, YOU KNOW, REDUCING THE NUMBER OF, UH, TIERS.

UH, IT SEEMS TO ME THAT THAT MAKES PERFECT SENSE BECAUSE, UH, YOU'RE NOT HAVING TO DO AS MUCH THROUGH YOUR RIGHTS STRUCTURE TO GET PEOPLE TO BE EFFICIENT, THEY'RE BEING EFFICIENT BECAUSE THAT'S WHAT THE MARKET DRIVES THEM TO DO THESE DAYS.

UH, ANOTHER, ANOTHER ITEM THAT WE'VE, YOU KNOW, ADDRESS TWICE BEFORE AND, AND NO ONE'S EVER DEALT WITH IT IS TRYING TO MATCH UP THE CUSTOMER CHARGE WITH, UH, UH, WITH FIXED COSTS.

UH, AND YOU KNOW, EACH TIME THAT'S BEEN RAISED, IT'S BEEN, UH, SHOT DOWN AND IT WAS JUST TOO MUCH AGONY, UH, TO TRY TO DEAL WITH IT.

UH, CAN YOU PREVIEW FOR US WHETHER WE'RE GOING TO BE ADDRESSING THAT ISSUE? WELL, SO, SO THAT I WOULD RESPOND IN THIS WAY, I THINK YOU'RE SPOT ON THAT OUR FIXED COST RECOVERY THAT DOES NOT MATCH WELL WITH OUR FIXED COSTS.

AND THERE IS AN, UH, WE WILL BE TALKING, ADDRESSING THAT ISSUE IN THIS RIGHT CASE.

ABOUT THE PROCESS, WHAT'S YOUR TEST YEAR AND WHO HAS PERFORMED THE COST OF SERVICE, I ASSUME IT'S OUTSOURCED TO A CONSULTANT.

YES, MA'AM.

IT WAS THE TEST YEAR IS OUR 2021 A TEST YEAR THAT RUNS FROM OCTOBER 1ST, 2020 THROUGH SEPTEMBER 30TH, 2021.

AND WE, UH, HAVE RETAINED NEW GEN SOLUTIONS, UH, AS OUR CONSULTANT TO HELP PREPARE THE COST OF SERVICE.

ONE MORE QUESTION, IF I MAY, UM, YOU MENTIONED EARLIER THAT, THAT THIS IS LOOKING AT BASE RATES AND THINGS LIKE VALUE OF SOLAR AREN'T COVERED, BUT I REMEMBER IN THE LAST RATE CASE, THERE WERE DECISIONS MADE ABOUT A VALUE OF SOLAR TARIFF.

IS THE VALUE OF SOLAR GOING TO BE ADDRESSED IN THIS RATE CASE? YES.

YES.

OUR CURRENT TARIFFS REQUIRE THAT VALUE OF SOLAR BE REVIEWED AT, AT BASE RATE WHEN WE CHANGE THE BASE RATES.

AND SO IT'S BUILT IN THE TARIFFS AS A TRIGGER TO EVALUATE IT, AND WE WILL BE ADDRESSING THAT TOPIC AS WELL.

ANY OTHER QUESTIONS? YEAH.

I HAVE ONE OTHER QUESTION AND THAT IS, UM, UM, ALL OF THE REPORTS, UH, IF YOU GO, UM, IT'S NOT TOO INCONVENIENT.

COULD YOU GO BACK TO THAT TIMELINE FOR THE PROCESS? SURE.

DO YOU, DO YOU HAVE A SLIDE NUMBER YOU WANT LET'S LET'S JUST, CAN YOU PULL IT BACK UP AND CAN WE START? SO THE TIMELINE IS ON PAGE 25, OUR SIDE 25.

IS THIS THE ONE YOU WERE REFERRING TO? OKAY.

YEP.

SO, UH, TODAY IS OUR EUC PRESENTATION AND YOU'VE JUST GIVEN THAT TO US AND WE HAVE ALL THESE NEAT SLIDES.

UH, I ASSUME THE, UH, UTILITY OVERSIGHT COMMITTEE PRESENTATION IS GOING TO BE ESSENTIALLY THE SAME THING THAT YOU'VE JUST GIVEN TO US, CORRECT? YES, SIR.

ON APRIL 18TH, CORRECT? YES, SIR.

THE TARIFF PACKAGE IS GOING TO COME OUT

[00:50:01]

THE WHOLE, THE WHOLE RATE REVIEW PACKAGE.

SO THAT'LL THAT INCLUDE THE COST OF SERVICE MODEL, UH, SOME, UM, UH, A WORD DOCUMENT, IF YOU WILL, THAT LAYS OUT AUSTIN ENERGY'S POSITIONS, UM, AND, AND A FORMAL SET OF PROPOSED TARIFFS THAT GO, GO WITH IT MUCH LIKE YOU WOULD FIND ON OUR WEBSITE, IF YOU LOOK AT TARIFFS, RIGHT.

SO FOR THE BENEFIT OF THE OTHER COMMISSIONERS, THAT'S, I JUST WANT TO MAKE SURE EVERYBODY UNDERSTANDS THAT THAT'S GOING TO BE THE AUSTIN ENERGY PROPOSAL AS TO WHAT THEY'RE PROPOSING TO DO AND HAVE THE, UH, THE PUBLIC PARTICIPATION IN, UM, AND INDEPENDENT EXAMINER, BASICALLY REVIEW THAT PROPOSAL AND TAKE IT IN, YOU KNOW, TAKE INTO CONSIDERATION PUBLIC COMMENTS ON THAT.

UH, EVERYONE THAT'S INTERESTED IN THIS TOPIC, WHICH I ASSUME IS EVERYONE ON THIS COMMISSION NEEDS TO LOOK AT THAT STUFF, UH, AND DO YOUR BEST TO GET YOUR ARMS AROUND IT AND UNDERSTAND WHAT THAT IS.

UM, MY QUESTION IS, UM, WILL, WILL IT ALL JUST BE AN ONLINE LINK THAT WE GO TO DEFINE THAT I, WELL, YES, I, IN SHORT IT'LL, IT'LL BE A LINK.

ABSOLUTELY.

I JUST WANT TO MAKE SURE THAT THAT GETS, THAT THAT LINK GETS SENT OUT SPECIAL TO ALL OF THE AUC COMMISSIONERS, UH, BECAUSE WE'VE HAD A DIFFICULTY IN THE PAST THAT PEOPLE DIDN'T DIDN'T OWN THEIR OWN MOTION, UNDERSTAND THAT THEY NEEDED TO GO PULL THAT UP AND START LEARNING ABOUT IT.

I ALSO HAVE A FOLLOW-UP REGARDING THE PROCESS.

IT'S MY RECOLLECTION, UM, THAT THE, UH, PROCESS BEFORE THE INDEPENDENT HEARING EXAMINER WILL ALLOW FOR, UM, CUSTOMERS TO INTERVENE AND PARTICIPATE AS PARTIES TO THE CASE.

AND IT WILL BE MORE THAN JUST PUBLIC COMMENT.

IT'LL BE ACTUAL EVIDENCE PRESENTED.

IS THAT YOUR UNDERSTANDING? I'LL SAY SOMETHING AND THEN TAMMY WILL SAY, I SCREWED THAT UP.

SO I'LL JUST TAKE A HALF STEP BACK AND LET TAMMY ANSWER THAT.

UH, YES, ESSENTIALLY, AND, AND THE PROCESS GUIDELINES OR RULES THAT WERE FOLLOWED THE LAST TIME WERE VERY LEGALISTIC AND THEY WERE VERY SIMILAR TO THE PUC, UM, PROCESS AND THE PROCEDURAL RULES AND, AND WHAT WE'VE KIND OF HAD LESSONS LEARNED AND FEEDBACK FROM THE LAST TIME IS THAT TO ALLOW FOR MORE OF OUR CUSTOMERS TO PARTICIPATE IN WHAT IS STILL GOING TO BE A VERY FORMAL PROCESS, UM, WE'VE UPDATED THE GUIDELINES TO, UM, YOU KNOW, BE A LITTLE MORE FLEXIBLE IN THAT REGARD.

UM, SO, YOU KNOW, WE'RE, WE'RE TRYING NOT TO USE TERMS LIKE INTERVENE AND EVIDENCE AND THINGS LIKE THAT.

WE'RE, WE'RE TRYING TO ALLOW THE JUDGE TO HAVE A LITTLE MORE FLEXIBILITY.

SO YES, IT IS STRUCTURED AROUND THERE.

THEY STILL NEED TO BE AN OFFICIAL PARTICIPANT AND THEY'RE GOING TO PRESENT, YOU KNOW, THEIR CASE OR THEIR, THEIR PRESENTATION, BUT WE'RE TRYING TO, UM, AGAIN, MAKE IT SOMETHING THAT WOULD BE EASIER FOR, YOU KNOW, AN AVERAGE CUSTOMER TO PARTICIPATE IN AND, AND WALK THAT LINE BETWEEN RECOGNIZING THAT THIS IS, THIS IS A, UH, UH, SOMEWHAT STRICT PROCESS, BUT ALSO THAT THE CUSTOMERS NEED TO BE ABLE TO JUST READ THESE GUIDELINES AND UNDERSTAND WHAT THEY'RE SUPPOSED TO BE DOING IS THAT YOU GET US A LINK TO THOSE GUIDELINES THAT WOULD BE HELPFUL.

AND THE OTHER QUESTION, TAMMY IS, UH, IF, UM, UH, WILL THE HEARINGS OR WHATEVER, YOU'RE GOING TO CALL THEM CONFERENCES.

WE'RE CALLING THEM CONFERENCES NOW, REALLY? OKAY.

ARE THE CONFERENCES IN THE SPRING? UM, WELL, I DON'T KNOW THAT WE CAN GUARANTEE LIVE STREAM JUST SIMPLY BECAUSE OF, WE'RE NOT LIVE STREAMING THIS MEETING, FOR EXAMPLE, JUST SIMPLY BECAUSE OF THE ATX AND TECHNOLOGY, IT WILL, THEY WILL BE RECORDED AND AVAILABLE, AND YES, WE WILL PROVIDE YOU THE LINK TO THE PROCEDURAL GUIDELINES WHEN WE PROVIDE YOU THE LINK TO THE, UH, RATE FILING PACKAGE.

AND SO WE'RE HEARING THE CONFERENCES, THE, I MEAN, WE'RE PLANNING TO USE THIS ROOM, THE ROOM HERE.

RATE FILING PACKAGE WILL BE RELEASED ON APRIL 18TH.

WELL, JAMIE, THIS IS CARRIE.

I, I DO WANT TO SAY, UM, I'M REALLY GLAD TO HEAR THAT BECAUSE MANY PEOPLE WHO WANTED TO INTERVENE OR HAVE A, OR PARTICIPATE, UH, LAST TIME FELT LIKE IT WAS NOT FEASIBLE FOR THEM TO DO IT WITHOUT GOING OUT AND HIRING A LAWYER TO HANDLE IT FOR THEM.

AND SO I'LL JUST NOTE, I THINK THIS IS A FOLLOW ON TO BOTH COMMISSIONER OF CHURCHILL AND COMMISSIONER TRUSSELL'S COMMENTS OR QUESTIONS IS THAT, YOU KNOW, OUR, OUR NEXT MEETING IS I THINK APRIL 11TH.

AND, AND SO THEN THE

[00:55:01]

AND THEN YOU'LL, YOU'LL SEE, YOU KNOW, THE NEXT TIME THIS IS SLATED TO COME TO US FOR ANY TYPE OF REVIEW IS ONCE THE, UM, INDEPENDENT, NOT HEARING EXAMINER, BUT WHATEVER WE'RE CALLING HIM IS IT IT'S IMPARTIAL HEARING, EXAMINE IMPARTIAL HEARING EXAMINER, UM, RELEASES HIS PROPOSAL IN OCTOBER.

AND SO, UH, YOU KNOW, THAT, THAT JUST TO FLAG THAT FOR FOLKS, WE, WE NEED TO BE, UM, DILIGENT IN GETTING THE INFORMATION WHEN IT'S CIRCULATED TO US AND, YOU KNOW, ACTUALLY FOLLOWING THOSE LINKS AND REVIEWING THAT MATERIAL.

AND, AND IF YOU WANT TO PARTICIPATE IN THE RATE REVIEW, THEN THERE ARE WAYS TO DO THAT, AND IT WILL BE OUTLINED THERE, BUT WE'RE NOT GOING TO ACTUALLY BE AS A COMMISSION SITTING AND PARTICIPATING AS A COMMISSION IN THE RATE REVIEW PROCESS.

SO JUST FLAGGING THAT FOR FOLKS.

ONE, ONE QUESTION ABOUT THAT, UM, THE PROCEDURE, SO YOU'VE GOT APRIL 18TH, THE TARIFF COMES OUT AND BASICALLY THE END OF BRIEFING FOR THOSE CUSTOMERS OR PARTIES YOU WANNA GET INVOLVED AS AUGUST 1ST.

WE USED ROUGHLY ROUGHLY AT A TIMELINE.

THAT'S A LOT OF WORK IN A FEW MONTHS.

YEAH, IT IS.

THESE, THESE, THESE DO GO QUICKLY, BUT OKAY.

ANY OTHER QUESTIONS BEFORE WE MOVE ON FROM THE SIDE ITEM? ALL RIGHT.

THANK YOU SO MUCH.

IT WAS VERY DETAILED, VERY HELPFUL PRESENTATION.

LOOK FORWARD TO IT.

FIRST ONE IS ITEM NUMBER 21.

THAT, THAT TAKES US TO DISCUSSION AND POSSIBLE ACTION ITEMS. THAT'S OUR

[21. Discussion and possible action regarding the 2022-2023 City of Austin Budget recommendations.]

THIS IS DISCUSSION AND POSSIBLE ACTION REGARDING THE 20 22 23 BUDGET RECOMMENDATIONS.

UM, AND I ASKED STAFF IF THEY WOULD MIND PRESENTING JUST VERY BRIEFLY ON THE BUDGET TIMELINE FROM CITY.

I THINK LAST TIME WE HAD A LOT OF QUESTIONS ABOUT WHEN WERE THINGS HAPPENING AND, AND SO I ASKED STAFF IF THEY COULD PUT TOGETHER JUST A SLIDE OR TWO AND PROVIDE US THAT TIMELINE, JUST SO EVERYONE IS AWARE.

GIVE ME ONE MINUTE.

UH, MY MOVE, JOHN DAVIS OVER, AND I'M GOING TO SHARE MY SCREEN AND HE'S GOING TO WALK YOU THROUGH ALL THE SLIDES THAT HE PREPARED.

AWESOME.

LIKE WORKING.

YES, WE CAN HEAR YOU.

I'M JOHN DAVIS, DIRECTOR OF FINANCE FOR AUSTIN ENERGY.

UM, AS MARTY ALLUDED TO OR COMMISSIONER HOPKINS IN THE LAST EBC MEETING, BOTH COMMISSIONERS REED AND CHAPMAN, I THINK ASKED QUESTIONS ABOUT HOW THE EEC PROVIDES INPUT INTO THE UPCOMING BUDGET PROCESS.

SO WE'VE PREPARED A QUICK SET OF SLIDES TO WALK YOU THROUGH THE 2023 BUDGET TIMELINE AND HOW THE BOARDS AND COMMISSIONS THROUGHOUT THE CITY WILL ENGAGE IN THE BUDGET PROCESS.

THE 11TH WHEN YOU RETURN, UH, FOR THE APRIL UC, UM, UH, MEETING.

WE'LL SPEND MOST OF OUR TIME ON THIS SLIDE AND JUST TO BE CLEAR, UM, AUSTIN ENERGY PROVIDES BOTH A FORECAST AND A BUDGET.

SO BOTH THOSE PROCESSES ARE ILLUSTRATED ON THIS SLIDE IN THE TIMELINE.

FIRST LET'S DISCUSS THE BUDGET PROCESS.

I STARTED THE FORECAST PROCESS, ALL SYNERGY COMPLETED THE FORECAST, UM, AND EARLY MARCH AND SUBMITTED IT TO THE CITY ON MARCH THE 11TH.

UH, WE'RE GOING TO BE PRESENTING THAT SAME FORECAST, UH, TO YOU ON APRIL THE 11TH AS INDICATED THERE ON THE SLIDE.

UM, THE CITY COUNCIL IS EXPECTED TO RECEIVE THE FORECAST PRESENTATION FROM THE CITY MANAGER ON APRIL THE 15TH.

UM, NOW LET'S TALK A LITTLE BIT ABOUT THE BUDGET PROCESS.

UM, WE'VE KICKED OFF THE INTERNAL PLANNING FOR THE 2023 BUDGET.

THAT PROCESS IS GOING TO INTENSIFY FROM EARLY MARCH THROUGH MAY 6TH WHEN WE ACTUALLY HAVE TO FILE THAT BUDGET WITH THE CITY.

UM, AND TO SPEAK TO THE QUESTIONS ASKED LAST TIME ABOUT HOW DOES THE EEC PROVIDE INPUT TO THAT PROCESS? UH, THE ECC HAS AN OPPORTUNITIES TO SUBMIT INPUT TO THE COMMISSION STAFF, WHICH IS ROBIN AUTO.

UH, THE DEADLINE FOR THAT SUBMISSION IS MARCH THE 31ST.

UM, THE, UH, THE PROCESS REQUIRES THAT THE EEC ACTUALLY VOTE ON THE MATTER, UH, BUT IT'S SET UP TO WHERE YOU CAN ACTUALLY SUBMIT IT THROUGH OB, UH, ROBYN BY MARCH THE 31ST.

AND, UH, YOU CAN VOTE ON IT ON APRIL

[01:00:01]

SO YOU'VE GOT TIME IN THERE TO DO THAT.

AND, UM, BY MAY THE SIXTH, UM, ON MAY THE SIXTH, WE ACTUALLY, UM, WE'LL BE PROVIDING OUR RESPONSES FROM AAE TO THOSE QUESTIONS THAT UC HAS, UM, SUBMITTED.

AND I BELIEVE THERE'S ACTUALLY SOME SLIDES LATER IN MATERIALS THAT YOU'LL SEE, UH, THAT ACTUALLY SPEAK TO THE PROCESS.

BUT REALLY THE POINT IS SUBMIT THOSE REQUESTS THROUGH ROBIN ROBIN TO MAKE SURE THAT THEY'RE ENTERED INTO THE PORTAL.

AND THEN BY THE TIME WE GET TOGETHER AGAIN ON APRIL THE 11TH, UH, UC WILL ACTUALLY VOTE ON THOSE MATTERS TO BE SUBMITTED.

AND THEN HE WILL ACTUALLY RESPOND TO THOSE BY MAY THE SIXTH.

UM, ALL RIGHT, FROM JUNE THROUGH JULY, THE CITY FINANCE TEAM WILL INCORPORATE THE BUDGET INTO THE OVERALL CITY OF AUSTIN BUDGET.

AND THE CITY MANAGER IS GOING TO PRESENT THAT TO THE CITY COUNCIL ON JULY THE 15TH, THE CITY COUNCIL IS GOING TO CONDUCT PUBLIC INPUT SESSIONS IN JULY THE 27TH, AND ALSO HOLD WORKING SESSIONS ON AUGUST 9TH AND 11TH, AS WELL AS DURING THE BUDGET APPROVAL WINDOW CURRENTLY SCHEDULED FOR AUGUST THE 17TH THROUGH THE 19TH IS SHOWN THERE ON THE SLIDE.

UM, HE HAS A MEETING ON AUGUST THE EIGHTH PRIOR TO THE PLAN BUDGET ADOPTION BY CITY COUNCIL ON THE 17TH OR THE 19TH, AND THEN OUR FISCAL YEAR 2023, UH, BEGINS IN OCTOBER THE FIRST, ANY CHANGES IN THE PAST, THEIR RACE BECOME EFFECTIVE ON NOVEMBER.

THE FIRST THAT'S REALLY PRETTY MUCH THE LONG AND SHORT OF THE FORECAST AND THE BUDGET TIMELINE.

SO HOPEFULLY THAT ANSWERS THE QUESTION THAT CAME UP LAST TIME, UH, DURING THE FEBRUARY MEETING ABOUT HOW THE PROCESS WILL WORK FOR HOW SEE, UH, ENGAGES IN THE PROCESS.

OKAY, SO THIS IS CARRIE.

I JUST, I'M GOING TO OBSERVE THE OBVIOUS HERE, WHICH MEANS WE'VE GOT 10 DAYS AS A, AS A, HE, YOU SEE THE, GET ANY, UH, RECOMMENDATIONS IN WHICH, YOU KNOW, MARTY, I REALLY APPRECIATE THAT YOU, THAT YOU'VE DONE THIS BEFORE DONE THIS BECAUSE EVERY YEAR WHEN IT COMES TIME FOR US TO APPROVE THE BUDGET, EOC COMMISSIONERS, LOOK UP AT LEAST SOME OF US AND SAY, HEY, UH, HOW DO WE, HOW DO WE GO ABOUT GETTING ANY INPUT OR CHANGE TO THIS? AND THE ANSWER IS, WELL, YOU START SIX MONTHS AGO.

UM, AND, UH, SO FOR KIND OF THE FIRST TIME OR ANYONE WHO IS A BUDGET MAVEN AND WANTS TO TRY TO ADDRESS THIS, IF YOU'RE GOING TO HAVE ANY INPUT FORMALLY THROUGH THE EUC, IT'S GOT TO HAPPEN IN THE NEXT 10 DAYS, JUST FYI.

SECONDLY, UM, YOU DON'T HAVE TO DO, IF YOU'RE INTERESTED IN THIS TOPIC, YOU DON'T HAVE TO DO IT THROUGH THE EUC.

EVERY ONE OF YOU IS A CITIZEN, AND YOU CAN USE THE CITIZEN INPUT PROCESS, UH, AND FOLLOW THE REST OF THIS, UH, THIS HEARING OUT THIS, UH, WELL, NOT HEARING THIS PROCESS OUT.

UM, BUT, UM, IN THE FUTURE, ONE OF THE THINGS WE SHOULD DO IS HAVE, UH, A TICKLER WHERE PEOPLE WHO ARE INTERESTED IN THIS TOPIC START THINKING ABOUT IT AND TALKING ABOUT IT IN JANUARY OR FEBRUARY, NOT 10 DAYS BEFORE OUR LAST OPPORTUNITY TO GET ANY FORMAL INPUT.

IS IT REALLY TRUE THAT WE ONLY HAVE 10 DAYS? I MEAN, ISN'T, ISN'T THERE.

SO THERE IS A JULY 11TH BUDGET PRESENTATION.

UM, THERE'S NO OPPORTUNITY AT THAT BUDGET PRESENTATION TO MAKE SUGGESTIONS ABOUT CHANGES.

I'M NOT SAYING IT'S A REALISTIC, THERE'LL BE CHANGES, BUT THERE IS THAT OPPORTUNITY TO CORRECT.

WE STILL DO.

WE ACTUALLY APPROVE OR RECOMMEND APPROVAL OF THE BUDGET ON JULY 11TH? UM, WELL, ONE OF THE THINGS I'D LIKE TO POINT OUT IS, UH, AUSTIN ENERGY HAS TO SUBMIT THE BUDGET TO THE CITY BY MAY THE SIXTH.

NOW I'M SURE THERE'S, YOU KNOW, OTHER OPPORTUNITIES TO CHANGE UNTIL THE BUDGET ACTUALLY GETS APPROVED.

BUT OF COURSE, YOU KNOW, AUSTIN ENERGY WOULD PREFER THAT WE HAVE ANY INPUT PART OF THAT MAY SIX SUBMISSION.

SO BY MARCH 31ST, UM, YOU KNOW, SUBMIT THE ITEMS AND THEN BY APRIL 11TH, IT COULD BE VOTED ON.

UM, AND, UH, THEN BY MAY SIX, WE'VE GOT TO RESPOND TO THOSE.

AND I WOULD JUST NOTE TOO.

AND, AND THANK YOU FOR THOSE COMMENTS, CARRIE.

I, I ALSO FOUND THAT OVER THE LAST COUPLE OF YEARS, IT, IT SEEMS TO SNEAK UP ON US EVERY YEAR AND WE'RE, WE'RE REVIEWING THE, YOU KNOW,

[01:05:01]

FINAL BUDGET, UH, FOR RECOMMENDATION TO COUNCIL THAT, YOU KNOW, FIVE DAYS BEFORE COUNCIL'S GONNA VOTE ON IT.

UM, AND SO THE, AND THE, IT ALWAYS SEEMS TO TAKE, UH, SEVERAL COMMISSIONERS BY SURPRISE, INCLUDING ME.

AND SO I WANTED TO BE REALLY EXPLICIT ABOUT WHAT THE TIMELINE IS AND WHERE OUR OPPORTUNITIES FOR INPUT.

AND, AND I WOULD JUST NOTE THAT THE MARCH 31ST DEADLINE IS, IS ACROSS THE BOARD.

SO ALL BOARDS AND COMMISSIONS, THAT'S THE DEADLINE FOR ALL BOARDS INTO COMMISSION AND COMMISSIONS TO PROVIDE RECOMMENDATIONS TO THEIR DEPARTMENTS ABOUT THE BUDGET.

AND SO, YOU KNOW, THAT'S, YOU KNOW, THAT THAT'S WHAT EVERYONE ELSE IS DOING.

THAT'S THE EXPECTATION FOR US AS WELL.

AND THEN WE DO OF COURSE HAVE THE PR PRESENTATIONS, UM, YOU KNOW, FROM A E IN JULY.

AND THEN I THINK THERE'LL BE ANOTHER ONE PRESENTING THE FINAL, UH, RIGHT BEFORE IT GOES TO COUNCIL.

IF I'M, IF I'M NOT WRONG, I DON'T SEE IT ON THIS CALENDAR, BUT I THOUGHT THERE WAS TWO, BUT REGARDLESS, UM, CYRUS, I THINK, YOU KNOW, WE'LL OBVIOUSLY HAVE, UH, AN OPPORTUNITY AT THOSE MEETINGS TO ASK QUESTIONS AND, AND, YOU KNOW, STATE OUR, UH, YOU KNOW, PREFERENCES.

BUT AT THAT POINT, I THINK WE'LL FEEL, UH, THE SAME.

I DON'T, I DON'T KNOW, UM, UH, PUSHBACK THAT WE HAVE IN THE PAST, UH, WHERE, YOU KNOW, THESE, THIS HAS GONE THROUGH AN MONTHS LONG PROCESS AND WE'RE VERY FAR ALONG AND MAKING MAJOR REVISIONS AT THAT POINT IS NOT VERY REALISTIC.

AND SO I THINK, YOU KNOW, WE PUT COMMISSIONER CHAPMAN ASKED FOR A BUDGET COMMITTEE WORKING GROUP.

UM, AND I DON'T THINK THAT THERE WAS ANOTHER PERSON WHO EXPRESSED INTEREST IN JOINING THAT WORKING GROUP.

UM, AND, UH, BUT NOW'S THE TIME IF WE, IF WE HAVE SOME THOUGHTS OR RECOMMENDATIONS, UH, THAT WE WOULD LIKE AUSTIN ENERGY TO CONSIDER AND RESPOND TO IN THE CITY'S PROCESS, WE SHOULD, YOU KNOW, PUT THOSE TOGETHER NOW AND RE REVIEW ON APRIL 11TH.

SO I HAVE ONE RECOMMENDATION ON THAT IF YOU'RE OPEN TO IT, UM, GIVEN THAT WE ONLY HAVE 10 DAYS, PEOPLE WHO ARE PARTICULARLY FOCUSED ON BUDGET ISSUES AND, AND WANT TO ADDRESS THIS, UH, IF WE CAN, UH, HAVE THEM INDIVIDUALLY SEND TO YOU, UH, THEIR RECOMMENDATIONS.

UM, UH, WELL NOW I'M SURE I JUST REALIZED THIS WON'T WORK, BECAUSE IF I, IF I UNDERSTOOD CORRECTLY, WE ACTUALLY HAVE TO VOTE ON THOSE RECOMMENDATIONS.

CORRECT.

BUT I THINK MR. DAVIS SAID THAT WE CAN, WE COULD SEND THOSE ON THE 31ST WE'LL VOTE ON THEM ON THE 11TH.

AND THEN I GUESS IF WE, IF ANYONE, IF SOMEHOW ONE OF THE RECOMMENDATIONS WAS VOTED DOWN, THEN WE COULD JUST MAKE THAT CLARIFICATION LATER, TELL AUSTIN ENERGY, NEVERMIND ABOUT THAT ONE.

GOOD.

THEN I RECOMMEND THAT ANYBODY WHO HAS A RECOMMENDATION THAT THEY WOULD LIKE CONSIDERED AND VOTED ON AT THE NEXT MEETING TO PASS THOSE ALONG TO MARTY AND, AND WITH HER ENDORSEMENT, WHICH I'M SURE SHE WILL LIBERALLY GIVE, UH, SHE CAN FORWARD THOSE AND THEN WE CAN ADDRESS IT AT THE NEXT MEETING.

I THINK THAT'D BE GREAT.

SO IT'S HARD TO RECOMMEND THINGS, NOT KNOWING WHAT'S IN THE BUDGET, BUT, UM, ONE OF THE ISSUES I'LL JUST RAISE IT BECAUSE MAYBE SOMEBODY WOULD ALL SYNERGY CAN, CAN ADDRESS IT.

UM, I THINK IT'S ALREADY COVERED, BUT ONE OF THE ISSUES WE, WE WANTED TO MAKE SURE HAPPEN IN THE RESOURCE PLAN WAS THE FULL TRANSMISSION STUDY TO LOOK AT, YOU KNOW, WHAT POTENTIAL DO WE HAVE TO, UM, INCORPORATE MORE LOCAL SOURCES OF ENERGY OR IMPORT MORE ENERGY TO NOT BE SO DEPENDENT ON, ON, ON THE GAS PLANTS THAT WE OWN.

I BELIEVE ALL THOSE COSTS ARE ALREADY COVERED IN THE PRESENT BUDGET, BUT IF THERE ARE NOT, IF THERE ARE ADDITIONAL EXPENSES NEEDED FOR THAT TRANSMISSION STUDY, THAT WOULD BE A RECOMMENDATION THAT WOULD MAKE.

BUT I DON'T KNOW IF ANYONE, I THINK IT'S COVERED IN THE CURRENT BUDGET, BUT I'M NOT SURE.

SO, YOU KNOW, SUBJECT TO THE NEED FOR MORE MONEY.

I THINK THAT'S SOMETHING THAT WE WOULD WANT TO SUPPORT BECAUSE IT'S REALLY IN LINE WITH THE RESOURCE PLAN.

SOME, SOME UNDERSTANDING OF THE DECOMMISSIONING COSTS NEEDS, UM, WHETHER THERE ARE ADDITIONAL NEEDS AS WE, YOU KNOW, WE'RE, WE PHASED OUT OF ONE UNIT OF DECKER LAST YEAR, WE'RE PHASING OUT OF THE OTHER, OR ABOUT TWO THIS YEAR.

I'LL I TOOK SOME NOTES HERE, BUT LET'S JUST TOUCH BASE ON THE LANGUAGE AND THEN WE CAN, UM, I'D ASK AUSTIN ENERGY TO BE PREPARED ON APRIL 11TH TO ANSWER THAT QUESTION DIRECTLY SO THAT, UH, IF WE DON'T NEED TO MAKE THAT RECOMMENDATION, WE WON'T HAVE TO, OR WE WON'T SIMILARLY IT'S, AS LONG AS I HAVE THE FLOOR, UM, ANOTHER ISSUE.

AND AGAIN, I DON'T KNOW THAT IT'S A MONEY ISSUE, BUT, UM,

[01:10:01]

IF I'VE GOT MY YEARS, RIGHT.

ARE THE, ALL THOSE DECOMMISSIONING COSTS ALREADY COVERED, AND THEN ARE THERE ANY OTHER DECOMMISSIONING COSTS? VIS-A-VIS AGAIN COMPLICATED BECAUSE OF WHAT'S HAPPENING WITH FAYETTE, BUT ARE THERE ADDITIONAL COSTS WE WOULD WANT TO MAKE SURE THAT IN THE BUDGET, AUSTIN ENERGY HAS ALL THOSE NEEDS COVERED.

THEY MAY HAVE THEM, BUT THAT WOULD BE ANOTHER AREA.

UM, AND THEN I'M GOING TO MENTION A THIRD.

THIS IS MY LAST ONE.

UM, THE THIRD ONE THAT'S COME UP IN THE, IN THE FAT DISCUSSIONS IS JUST, DO WE HAVE ADEQUATE FUNDING FOR, UM, ANY, ANY TESTS RELATED TO ENVIRONMENTAL COMPLIANCE? LIKE THE, THE FINAL RULES ON THE COMBUSTION, THE CCR WE'LL CALL IT COMBUSTION RESIDUES.

THERE ARE NEW RULES COMING OUT ON, UM, YOU KNOW, THE, UH, EFFLUENT LIMITATIONS, ANY COST RELATED TO ENVIRONMENTAL TESTING AND COMPLIANCE, MAKING SURE THOSE ARE IN THE BUDGET, I THINK ARE IMPORTANT AS WELL.

BUT AGAIN, WITHOUT KNOWING WHAT'S IN THE BUDGET, I CAN'T REALLY RECOMMEND ANYTHING, BUT THOSE WOULD BE THREE AREAS THAT I THINK WE SHOULD LOOK AT.

OKAY, GREAT.

THANKS.

I'VE I'VE NOTED ALL THOSE DOWN AND LET'S YOU AND I CONNECT OVER EMAIL FLYERS.

ANYONE ELSE CARE TO ADD ANY ADDITIONAL COMMENTS TO THIS DISCUSSION? ALL RIGHT.

THANKS VERY MUCH, MR. DAVIS, FOR THAT PRESENTATION.

I APPRECIATE THE CLARIFICATION ON THE TIMELINE AND YOU KNOW, MAYBE, HOPEFULLY THIS YEAR WE'RE GOING TO GET IT RIGHT.

WE'LL DO BETTER.

UH, SO MOVING ON TO ITEM NUMBER 22, THIS IS, UH, WE NEED TO APPROVE A REPRESENTATIVE AND ALTERNATE TO THE JOINT SUSTAINABILITY COMMITTEE.

[22. Approve a representative and an alternate to serve on the Joint Sustainability Committee.]

AND I BELIEVE KAREN WHO, I'M NOT SURE IF KAREN IS STILL ON THE LINE, BUT KAREN IS EITHER OUR CURRENT REPRESENTATIVE.

I BELIEVE KAREN IS OUR CURRENT REPRESENTATIVE.

AND SO WE NEED TO EITHER REAPPOINT KAREN, IF SHE'S WILLING AND, UM, AN ALTERNATE OR, UH, ELECT AN, UH, A REPRESENTATIVE AND AN ALTERNATE IS KAREN STILL ON THE LINE? I DON'T HEAR.

SO, UM, ROBIN DROPPED OFF.

DO YOU KNOW IF, UH, IF WE MOVE THIS TO, IF WE TABLE THIS FOR THE NEXT MEETING, IS THAT CAUSING ANY KIND OF PROBLEM? NO, I CAN LET THE CLERK'S OFFICE NOW THAT WE'RE GOING TO TAKE IT UP IN APRIL.

THIS IS ITEM NUMBER 23, UPDATE FROM FAYETTE TOWER PLANT RESOURCE PLAN WORKING GROUP.

LET'S JUST DO THAT BECAUSE I HAVEN'T HAD A CHANCE TO TALK TO KAREN TO SEE IF SHE'S WILLING OR ABLE TO CONTINUE SERVING IN THAT ROLE.

UM, BUT SO FOR NEXT MEETING, I GUESS, THINK ABOUT IF YOU'RE WILLING TO SERVE AS THE EITHER REPRESENTATIVE OR ALTERNATE AND, AND LET US KNOW NEXT MEETING.

UH, THIS IS NOW WE'RE MOVING ON TO ITEMS FROM COMMISSIONERS.

[23. Update from Fayette Power Plant Resource Plan Working Group. (Sponsors: Tuttle; Reed)]

AND I BELIEVE COMMISSIONER REED IS GOING TO PROVIDE US AN UPDATE.

YES.

THANK YOU SO MUCH IN, FIRST OF ALL, WE'RE NOT, UH, WE'RE NOT ON THE AGENDA FOR ACTION TONIGHT, JUST FOR DISCUSSION.

UM, THE, BUT I DID ASK ROBIN TO SEND OUT A, WHAT I'LL CALL VERY DRAFT RECOMMENDATIONS, WHICH ARE A SERIES OF EIGHT RECOMMENDATIONS, UM, GOING TO CITY COUNCIL ON THE FAYETTE POWER PROJECT.

UM, I'LL SAY THOSE RECOMMENDATIONS ARE FI ARE NOT FINAL BECAUSE WE WOULD LIKE TO HAVE SOME ADDITIONAL DISCUSSION WITH AUSTIN ENERGY ON SOME OF THE LANGUAGE.

UH, BUT ROUGHLY THEY'RE IN, UM, SEVERAL, SEVERAL CATEGORIES.

UH, ONE DOES INVOLVE THE TRANSPARENCY AND APPROVAL OF BUDGETS RELATED TO FAYETTE.

CURRENTLY THE BUDGETS RELATED TO THE SHARED FAYETTE PROJECT, UM, GO THROUGH AN SORT OF AN INTERNAL MANAGEMENT COMMISSION BETWEEN LCRA AND AUSTIN ENERGY.

WE'D LIKE TO LOOK AT, UM, HOW DO WE MAKE, UH, HAVE CITY COUNCIL HAVE MORE OF AN OVERSIGHT ROLE SO THAT WE'RE NOT SPENDING, UM, A LOT OF MONEY ON A PLANT THAT WE WANT TO GET OUT OF TO PUT IT SIMPLY SO WE NEED, SO WE'VE GOT TWO RECOMMENDATIONS RELATED TO THAT, AND I'LL ALL THE COMMISSIONERS HAVE SEEN THIS LANGUAGE.

WE NEED TO CONTINUE TO LOOK AT THAT LANGUAGE.

I THINK, MAKE SURE IT'S, YOU KNOW, LEGALLY SOUND, UM, ANOTHER RECOMMENDATION

[01:15:01]

REALLY, WE'RE GOING TO GET A PRESENTATION NEXT MONTH ON THE REACH STRATEGY, BUT IT'S AROUND TO THE EXTENT WE, WE CAN'T CLOSE OUR PORTION OF THE PLANT, HOW DO WE CONTINUE TO USE, REACH TO LOWER EMISSIONS DOWN TO THE, THE, THE LOW, THE LSL THE LOW SUSTAINING LIMIT? SO THAT, THAT WOULD BE ANOTHER RECOMMENDATION AT AGAIN.

WE WANT TO LOOK AT THE LANGUAGE AND BE CAREFUL ABOUT IT, BUT IT'S ESSENTIALLY TELLING US ENERGY TO CONTINUE THAT, THAT PROGRAM.

AND, UH, WE CAN, ANY OF THESE THINGS WE CAN DISCUSS BY THE WAY, I'M JUST SORT OF LAYING THEM OUT.

UM, UH, ANOTHER RECOMMENDATION, UM, WOULD BE TO CONTINUE NEGOTIATIONS, REALLY TELL CITY COUNCIL, YOU KNOW, TELL AUSTIN ENERGY TO CONTINUE THESE NEGOTIATIONS.

AND IF YOU CAN'T, IF WE CAN'T MAKE IT WORK IN 2022, AS THE RESOURCE PLAN SAYS, AIM FOR 23, LIKE IF IT NEEDS MORE TIME AS NEEDED TO NEGOTIATE WITH LCR, USE ALL, ALL STRATEGIES YOU NEED TO, BUT CONTINUE THOSE NEGOTIATIONS, WHICH I THINK IS THEIR INTENT, BUT WE JUST WANTED TO MAKE THAT CLEAR.

UM, ANOTHER ONE IS TO LOOK AT WHAT THE, WHAT THE ACTUAL COSTS OF DECOMMISSIONINGS AUSTIN ENERGY TO SHARE A FAYETTE WOULD BE, UH, AND MAKING SURE THAT THOSE COSTS ARE PART OF THE RATE THAT UPCOMING RATE STUDY.

SO WE'RE AGAIN, SO WE KNOW THE TRUE COSTS, UH, AND THEY'RE INCORPORATED INTO OUR PLANNING.

UM, AND THEN WE DO HAVE TWO RECOMMENDATIONS THAT HAVE TO DO WITH ENVIRONMENTAL COMPLIANCE, BOTH.

WHAT ARE THE, WHAT ARE THE CURRENT COSTS AND WHAT ARE FUTURE COSTS LIKELY TO BE AS THE NEW ADMINISTRATION COMES OUT WITH, YOU KNOW, NEW PROPOSALS, JUST UNDERSTANDING THAT WE THOUGHT THAT WOULD BE HELPFUL IN THE NEGOTIATIONS, UH, TO LOOK AT THOSE ISSUES.

AND I BELIEVE THAT'S ALL EIGHT.

I MIGHT'VE MISSED ONE.

UM, BUT IF ANYONE WOULD LIKE TO, YOU KNOW, GET INTO THE, THE, THE DETAILED LANGUAGE, I'M HAPPY TO, BUT KNOW THAT THESE WILL, YOU KNOW, WE'LL PROBABLY SOME OF THIS LANGUAGE WILL LIKELY CHANGE AS WE CONTINUE TO DISCUSS IT AND COME BACK NEXT MONTH.

SO, UM, CYRUS, I, I HAVE A QUESTION.

SURE.

YOU KNOW, HAVING BEEN INVOLVED IN THIS PROJECT FOR QUITE A WHILE, I THINK I HAVE A HANDLE ON WHERE THE, UH, WHERE THE RECOMMENDATIONS ARE COMING FROM AND WHERE THEY'RE HEADED.

UH, WHAT I, I HAVEN'T SEEN IS ANY KIND OF FINANCIAL OR OPERATIONAL, UH, ANALYSIS OF THE IMPACT OF THESE RECOMMENDATIONS.

AND I'M JUST INTERESTED TO KNOW, DOES THE GROUP HAVE ANY, UH, ANALYSIS LIKE THAT OR ARE YOU EXPECTING TO PRESENT SOMETHING? CAUSE I'M, UH, I MEAN, I SEE AT LEAST A COUPLE OF THEM THAT I THINK COULD HAVE SOME SERIOUS UNINTENDED CONSEQUENCES AND, AND I'M WANTING TO KNOW, YOU KNOW, WHAT KIND OF RESOURCES ARE GOING TO BE ALLOCATED TO, YOU KNOW, PROJECT THE IMPACT OF THESE, UH, RECOMMENDATIONS.

I MEAN, THE WAY AT FIRST DANCER, THAT IS OUR, YOU KNOW, OUR, WE HAVE A RESOURCE PLAN THAT'S ADOPTED BY CITY COUNCIL THAT CONTEMPLATED ENDING OUR USE OF COAL AT THE END OF THIS YEAR.

AND THAT WAS, YOU KNOW, FULLY BAKED INTO AUSTIN ENERGY'S OWN PLANS AND ANALYSIS.

SO I'M, I'M STARTING WITH THE ASSUMPTION THAT, YOU KNOW, CITY COUNCIL AND AUSTIN ENERGY WE'RE PREPARED TO GO THAT ROUTE IF THEY COULDN'T NEGOTIATE, UH, YOU KNOW, SUCCESSFULLY WITH LCRA.

UM, SO MY ANSWER IS NO, WE DON'T REALLY HAVE ANY SORT OF FINANCIAL ANALYSIS.

UM, SOME OF THESE RECOMMENDATIONS WOULD INVOLVE CITY COUNCIL MAKING DECISIONS ABOUT, UH, YOU KNOW, TO WHAT EXTENT THEY WOULD CONTINUE TO INVEST IN THE PLANT GOING FORWARD.

UM, AND THAT COULD HAVE SOME CONSEQUENCES AND RAMIFICATIONS, BUT AGAIN, THESE AREN'T FINAL, THAT'S WHY WE'RE GOING TO CONTINUE TO TALK TO AUSTIN ENERGY, UH, AND COME BACK WITH SOMETHING NEXT MONTH.

I GET YOU.

I JUST, ALL I'M GETTING AT IS SOME OF THIS ISN'T.

WELL, I AGREE WITH YOU, THE PLAN WAS TO DO THIS AND ABSORB THE COST.

UM, MY QUESTION IS, YOU KNOW, WE HAVEN'T BEEN ABLE TO DO WHAT WE HAD PLANNED, AND THIS IS KIND OF A PLAN B A LOT OF WHICH IS SAYING FINE.

IF WE CAN'T DO PLAN A, THEN WE'RE GOING TO CHANGE THE WAY WE OPERATE AND, AND THAT'S GOING TO HAVE A DIFFERENT SET OF CONSEQUENCES.

AND I'M JUST TRYING TO, YOU KNOW, UNDERSTAND COST BENEFIT HERE.

YOU KNOW, IS IN LINE WITH, WITH, WITH RATES AND AFFORDABILITY, AND WE DO RUN THE COAL PLANT IN A DIFFERENT WAY, YOU KNOW, WE'LL HAVE TO LOOK AT THAT AND THAT WE WILL BE GETTING, UM, ANALYSIS I THINK, ON, ON THE REACH, UH, NEXT MONTH AS WELL, SO THAT I THINK THAT'LL HELP IN THAT DISCUSSION.

AND CERTAINLY IF THERE ISN'T, YOU KNOW, IF WE AREN'T ABLE TO CONTINUE NEGOTIATIONS AND REACH A SETTLEMENT THAT

[01:20:01]

ALL RIGHT, THANKS.

AND, YOU KNOW, D DAVE WAS A MEMBER OF THE, UH, OF THE COMMITTEE OF THE WORKING GROUP COMMITTEE, UH, AS WAS KAREN WHO I GUESS IS NOT ON THE LINE.

I DON'T KNOW IF YOU'VE GOT ANYTHING TO ADD AND RMC IS TAKING UP THE SAME DOCUMENT I SENT YOU OR WAS SENT TO YOU EARLIER TODAY.

UH, RMC IS GOING TO BE DISCUSSING THAT TOMORROW.

YOU KNOW, THEY MAY TAKE ACTION TOMORROW.

I'M NOT SURE IF THEY WILL OR NOT.

DAVE, DO YOU HAVE ANYTHING TO ADD? NO, I THINK YOU ARTICULATED IT WELL.

OKAY, GREAT.

THANK YOU FOR THAT REPORT.

COMMISSIONER REED,

[24. Report regarding City Council action on items previously reviewed by the EUC.]

MOVING ON TO OTHER BUSINESS ITEM NUMBER 24 REPORT REGARDING CITY COUNCIL ACTION ON ITEMS PREVIOUSLY REVIEWED BY THE EUC THAT WAS CIRCULATED WITH YOUR MATERIAL.

UH, ANYONE HAVE ANY COMMENTS CHANGES TO THAT REPORT?

[25. Future agenda items.]

HEARING NONE, MOVE ON TO ITEM NUMBER 25 FUTURE AGENDA ITEMS. AND JUST FOR THE COMMISSION'S NOTE HERE, UM, WE'VE GOT, UH, THE FISCAL YEAR OF 2023, UH, ROBIN AM I, I HOPE I GET THIS RIGHT.

IS IT THE 20 FISCAL YEAR, 2023 BUDGET PRESENTATION? SORRY TO UNMUTE MYSELF.

IT IS THE, UM, FINANCIAL, UM, FORECAST AND BUDGET PLANNING PRESENTATION.

ALRIGHT, THANKS.

AND THEN WE ALSO HAVE THE REACH UPDATE THAT COMMISSIONER REED MENTIONED, AND WE ALSO NEED TO HAVE OFFICER ELECTIONS IN APRIL AS WELL.

UM, AND SO, UH, DAVE AND I WILL, WE'LL NEED TO DISCUSS WHETHER WE'RE, UH, WOULD LIKE TO CONTINUE SERVING IN THIS CAPACITY OR IF OTHERS ARE INTERESTED IN SERVING AS THE CHAIR VICE-CHAIR PLEASE LET ME KNOW.

UM, AND, UH, I THINK THAT'S, THAT'S ALL THAT I HAVE.

THAT'S DEFINITELY SLATED FOR APRIL.

SO, UM, ANYBODY ELSE HAVE A FUTURE AGENDA ITEMS THEY'D LIKE TO DISCUSS OR ADD TO THE LIST? IS IT POSSIBLE TO ADD THE, UM, FAYETTE POWER PLANT ISSUES JUST AS A STANDING ITEM FOR THE, UNTIL IT GETS RESOLVED SO THAT WE COULD, I MEAN, I KNOW YOU HAVE TO POST IT.

IF YOU'RE GOING TO TAKE ACTION, YOU HAVE TO INDICATE ACTION WHO WOULD BE TAKEN.

BUT I THINK NEXT FOR APRIL, WE HAVE, WE WILL INCLUDE ON THE APRIL AGENDA, UH, DISCUSSION AND POSSIBLE ACTION FOR THE FAYETTE, UM, WORKING GROUP RECOMMENDATIONS THAT CYRUS JUST LISTED.

SO THAT'LL BE ON APRIL'S AGENDA.

AND SO I DIDN'T SEE, BUT DO WE HAVE ALSO, UH, AN OPERATIONAL REVIEW NEXT TIME TO, I'M GOING TO DEFER TO ROBIN ON THAT ROBIN, DO YOU KNOW IF WHEN'S OUR NEXT OPERATIONAL REVIEW, QUARTERLY REPORTS, THE QUARTERLY UPDATE? I BELIEVE THAT'S SCHEDULED FOR THE MAY MEETING.

WELL, YOU KNOW, FUNDAMENTALLY, IT JUST WANT TO MAKE SURE WE'RE UNDERSTANDING WHERE THE VEGETATION MANAGEMENT AND IMPROVEMENTS AND SAFETY AND SAFETY AND THE DISTRIBUTION SYSTEM ARE, AND THAT SHOULD BE THAT QUARTERLY, BUT I JUST WANT TO MAKE SURE WE'RE DIVING INTO ENOUGH DETAIL ON THAT.

PRESENTATION ON, YOU KNOW, WHAT THEY FOUND OUT WHEN THEY DID THAT.

ANYBODY ELSE MAKES SURE WE HAVE SOME INFORMATION IN THERE? MARTY? I DON'T KNOW WHAT THE TIMING WAS, BUT I KNOW AUSTIN ENERGY PUT OUT A SPECIFIC RFP, UH, TO LOOK AT THE STORAGE GOALS.

UM, BUT AGAIN, I DON'T KNOW WHAT THE, YOU KNOW, I DON'T KNOW WHEN THOSE COME BACK AND WHEN THEY WOULD BE PREPARED, BUT WE DO, WE DEFINITELY WANT TO GET AT LEAST A

[01:25:01]

I, I JUST CAN'T REMEMBER THE TIMING OF IT.

RIGHT.