* This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting. [00:00:02] AND WE'RE ACTUALLY [Energy Rate Proceedings] ON THE RECORD NOW. OKAY. WE WENT ON THE RECORD. THANK YOU. SORRY. OH, THAT'S FINE. IT'S FINE TO HAVE THIS ON THE RECORD. UM, NOW WE DON'T NEED ANY OF THEM FOR MS. . OKAY. SO IT SOUNDS LIKE, UH, THE PARTIES WANT A LITTLE BIT MORE TIME TO REVIEW S CPC 12 THROUGH 16. THAT'S FINE. AND MR. BRAZIL, IF YOU'LL JUST REMIND ME WHEN YOU'RE READY, WE'LL ADDRESS THEM VERY WELL. ALL RIGHT. THANK YOU. ALSO, I RECEIVED A PACKET FROM YOU ALL OF 13, 14, 15, 16, BUT NOT 12. YOU HAVE TO HAVE A COPY OF 12. I TRUST THAT IT'S A DISCOVERY RESPONSE FROM US. I'M LIKELY UNLIKELY TO OBJECT, BUT I DON'T WANT TO HAVE IT. LET ME SEE IF I CAN FIND A COPY OF IT. I THOUGHT I PUT ONE UP THERE, BUT I'LL FIND YOU ONE RIGHT AT SEE RESPONSE TO TWO DASH THREE, BUT I'LL SEE IF I CAN FIND A COPY OF THEIR, YOUR HONOR. UM, ICA HAS ONE MORE CROSS EXHIBIT IF YOU'RE TRYING TO ADDRESS EXHIBITS. YES. I ALWAYS LIKE TO DO THOSE IN THE MORNING BEFORE WE GET STARTED. SO THEY'LL SLOW DOWN AND WE'LL SEE, WE HAVE ONE, IT IT'S ICA 11. IT WAS DISTRIBUTED LAST NIGHT. IT'S AN EXCERPT FROM THE 1992 NAVY ROUTE MANUAL. ALL RIGHT. HAVE FOLKS HAD AN OPPORTUNITY TO TAKE A LOOK AT ICA 11? OKAY. DOES ANYONE HAVE AN OBJECTION TO THE ADMISSION OF ICA 11? ICA 11 IS ADMITTED. YES, YOUR HONOR. YES. UH, I'VE HAD A MOMENT TO LOOK AT CPC, UH, 16, AND I WOULD OBJECT TO IT JUST ON RELEVANCE GROUNDS. IF YOU LOOK AT THE DOCUMENT IT'S REFERENCING, UM, A YEAR BUILT ON A 27 20 17 FACILITY. AND SO I JUST DON'T SEE THAT BEING WITHIN THE SCOPE OF THIS RATE CASE. RIGHT. DO YOU HAVE ANY OBJECT? DOES ANYONE HAVE OBJECTIONS THROUGH 12 TO 12 THROUGH 15? AGAIN, YOUR HONOR. I HAVEN'T SEEN 12 THROUGH 15, SO I'D LIKE TO HOLD BACK ON THAT ONE. I DO AT LEAST HAVE A COPY OF 16 JUST TO RAISE THE OBJECTION ON IT NOW. OKAY. AND MR. BRAZELLE, THERE'S BEEN AN OBJECTION TO 16. ANYONE ELSE HAVE AN OBJECTION TO 16? SO WE CAN AT LEAST DEAL WITH THAT ONE, BUT DO YOU NEED MORE TIME? WE, WE JOINED THEIR DATA BOUNDARIES. OBJECTION. ALL RIGHT. I'LL TELL YOU WHAT, LET'S DEAL WITH THIS AT THE BREAK. I'D LIKE TO GET MR. CONTE GOING AND GET OUR WITNESSES ROLLING. SO, UM, JUST TO REITERATE C 19 THROUGH 23 HAD BEEN ADMITTED TO WR, PARDON ME? 23, 22 ARE ADMITTED. ICA 11 IS ADMITTED AND THEN WE'LL TAKE UP AAICPC, UH, 12, 3 16 LATER. UM, MR. HALLMARK, ARE YOU READY TO BEGIN YOUR PRESENTATION ACTUALLY, YOUR HONOR, WE HAD AN EXHIBIT AS WELL. YES, I E 10. OKAY. UM, WHICH WE'VE PROVIDED TO PARTIES AND PUT UP THE FRONT, BUT PERHAPS YOU DON'T HAVE A CAR. YEAH, I DON'T, I DON'T HAVE A COPY SITTING UP HERE, BUT UNLESS, UNLESS THERE'S AN OBJECTION, WE JUST GET THEM ADMITTED. DOES ANYONE HAVE AN OBJECTION TO ? NO, YOUR HONOR. MR. BRAZIL, WHAT IS IT? IT'S MR. JOHNSON'S RESPONSE TO ONE OF OUR DISCOVERY REQUESTS. UH, YOU SHUT HER OUT WITH MR. BRAZIL. OKAY. THANK YOU THERE, MR. BRAZIL INDICATED THAT HE HAS NO OBJECTION, AUSTIN ENERGY 10 IS ADMITTED. THANK YOU. IT WAS ALL RIGHT. ANY OTHER EXHIBITS BEFORE WE GET STARTED WITH TESTIMONY OR HOUSEKEEPING MATTERS. OKAY. MR. HALLMARK, WHENEVER YOU'RE READY. THANK YOU, YOUR HONOR. UP IN HALLMARK FOR TIC, UH, JUST TO MOVE THIS PROCESS ALONG, I'LL SIMPLY STAY THE TIBC IS SUBMITTED TESTIMONY IN THIS PROCEEDING FROM MS AND MR. POLLOCK ADDRESSES REVENUE REQUIREMENT ISSUES. MR. POLLOCK ADDRESSES REVENUE REQUIREMENT ISSUES AS WELL, BUT MOSTLY COST ALLOCATION RATE DESIGN ISSUES. UH, AND WE REQUEST THAT THEIR RECOMMENDATIONS BE ADOPTED. AND WITH THAT, I WILL TEND TO MISS LACONTE FOR CROSS-EXAMINATION. ALRIGHT, GOOD MORNING, MR. . CAN YOU HEAR, UH, CAN YOU HEAR US OKAY. UH, GOOD MORNING. YES, I HEAR EVERYONE JUST FINE. GREAT, GOOD. UM, LET'S SEE. TWO W R [00:05:02] QUESTIONS FROM MS. . OKAY. NOPE. LET THE RECORD REFLECT NO QUESTIONS FROM TWO WR. IS MR. ROBBINS PRESENT? NO, HE'S NOT GOING TO BE HERE TODAY. THAT'S RIGHT. UH, DATA FOUNDRY, NO QUESTIONS, YOUR HONOR. HER NO QUESTIONS, YOUR HONOR. SSC, UH, S CPC, NO QUESTIONS AND XP. NO QUESTIONS, YOUR HONOR. ICA. NO QUESTIONS BELOW MISSOULA COUNTY. YEAH, NO QUESTIONS THOUGH. IS THAT, IS THAT CORRECT FROM ICA? THAT IS CORRECT. OKAY, THANK YOU. SORRY ABOUT THAT. UM, AUSTIN ENERGY. THANK YOU, YOUR HONOR. I HAVE SOME QUESTIONS. GOOD MORNING, MISSILE CONTACT. GOOD MORNING. YOU CAN HEAR ME ADEQUATELY. ALL RIGHT. NOW, AS I UNDERSTAND IT, AND YOUR TESTIMONY, YOU RECOMMENDED AUSTIN ENERGY REDUCED THE GENERAL FUND TRANSFER BY $11 MILLION TO 110 MILLION. IS THAT CORRECT? THAT'S CORRECT. AND YOU ALSO RECOMMEND THAT THERE'LL BE AN INCREASE IN DEBT FUNDING TO 60%. IS THAT ALSO CORRECT? YES, THAT'S CORRECT. AND THESE ADJUSTMENTS RESULT IN A DEBT SERVICE COVERAGE RATIO OF ONE, 2.3 AND THEY WERE, THAT WOULD, AND THEN THEY WOULD CUMULATIVELY REDUCE AUSTIN ENERGY'S REVENUE REQUIREMENT BY ABOUT $20 MILLION. IS THAT RIGHT? THAT'S RIGHT. COULD YOU TELL ME HOW THE GENERAL FUND TRANSFERS SET FOR OFTEN ENERGY? UH, IT'S MY UNDERSTANDING THAT THE GENERAL FUND TRANSFER IS BASED ON THREE YEAR AVERAGE OF, UH, OPERATING REVENUES AND THEN UP TO 12% OF THAT IS HOW YOU CALCULATE THE GFP. AND SO, UH, AND WHAT IS THE BASIS OF THAT UNDERSTANDING, UH, A FINANCIAL POLICIES. ALL RIGHT. UH, AND IT'S CITY COUNCIL THAT, UH, APPROVES HOW THE GFT IS GOING TO BE SET THROUGH THE ADOPTION OF THAT POLICY. IS THAT CORRECT? UH, THAT'S MY UNDERSTANDING, YES. ALL RIGHT. AND THAT POLICY IS CONTAINED IN A FINANCIAL POLICY 13. IS THAT RIGHT? UM, IT'S CONTAINED IN THE FINANCIAL POLICY THAT WAS PROVIDED IN YOUR RATE FUNDING PACKAGE. I DON'T KNOW THE NUMBER OF IT. I THINK IT WAS APPENDIX A, B, B AS IN BOY. YES. OKAY. UH, AND THE GENERAL FUND TRANSFER IS AN EXPENSE THAT AUSTIN ENERGY PAYS TO THE CITY. IS THAT RIGHT? YES. THAT'S MY UNDERSTANDING. AND YOU CALCULATED THE GFT AS A PERCENT OF OPERATING REVENUES FOR FISCAL YEARS, 18, 19 AND 20. IS THAT RIGHT? THAT'S RIGHT. AND, UH, APPLYING THAT, UH, METHOD YOU, UH, CALCULATE THE, THE GFT AVERAGE 7.8% OF OPERATING REVENUES OVER THESE THREE YEARS. IS THAT ALSO CORRECT? UM, YES I DID. AND THAT WAS BASED ON A RESPONSE I RECEIVED FROM AA THAT SHOWED THE TOTAL OPERATING REVENUE AND THE HISTORICAL GFP. AND IN YOUR CALCULATION INCLUDED THE POWER SUPPLY ADJUSTMENT COSTS AND NON ELECTRIC COSTS. IS THAT RIGHT? YES. THAT WAS INCLUDED IN THE DISCOVERY RESPONSE I RECEIVED. ALL RIGHT. BUT, UH, FINANCIAL POLICY THAT YOU REFERENCED EARLIER, THE GFT IS BASED ON REVENUES AND IT EXPRESSIVELY EXCLUDES POWER SUPPLY, ADJUSTMENT COSTS AND NON ELECTRIC COST. DOES IT NOT? YES, THAT'S CORRECT. WE ASKED HER TO FOLLOW UP QUESTION AND, UH, A PROVIDER THAT, AND PROVIDED WHAT THE PERCENTAGE OF THE GMT IS OF THAT EXCAVATING POWER SUPPLY COSTS. AND IT'S HIGHER THAN THE 7.8% THEN THAT YOU CALCULATED. OF COURSE, THAT'S CORRECT. OKAY. NOW YOU TESTIFIED THAT THE AMOUNT OF THE INTERNALLY GENERATED FUNDS SHOULD BE REDUCED TO REFLECT A 60% DEBT AND 40% CASH FUNDING. IS THAT RIGHT? THAT'S RIGHT. AND I BELIEVE YOU SAY THAT THAT WOULD ALLOW A, TO TAKE ADVANTAGE OF MORE DEBT, WHICH WOULD REDUCE COSTS TO CUSTOMERS IN YOUR OPINION. THAT'S RIGHT. IT WOULD RESULT IN AN ADDITIONAL $15 MILLION OF DEBT THAT A, WE NEED TO ISSUE THE COVER. IT'S A CONSTRUCT AND FUNDS NOW, CITY COUNCIL APPROVED, UH, A POLICY THAT DICTATES OFTEN ENERGY TO IMPLEMENT A POLICY OF 50% FUNDING OF, UH, IGF FC. RIGHT? UH THAT'S YES. THAT'S MY UNDERSTANDING. AND SO TO ADOPT YOUR RECOMMENDATION COUNCIL WOULD HAVE TO EITHER REJECT OR OVERTURN THAT POLICY IN SOME FASHION. IS THAT RIGHT? YES. MY UNDERSTANDING THAT THE COUNCIL HAS [00:10:01] THE DISCRETION TO DO THAT. ALL RIGHT. AND DID YOU HEAR MR. DOMBROSKI TESTIFY YESTERDAY ON THESE ISSUES? I DID. AND YOU HEARD HIM TESTIFY THAT THERE WOULD BE OTHER RAMIFICATIONS ASSOCIATED WITH INCREASING DEBT AS WELL? UH, YES. YOU'LL HAVE TO REFRESH MY MEMORY ON EXACTLY WHAT HE STATED. UH, YOU'RE AWARE THAT TWO WEEKS AGO, A FITCH CREDITING RATING, FITCH CREDIT RATINGS, DOWNGRADED A E FROM AA TO AA MINUS, ARE YOU NOT? YES, I AM AWARE OF THAT. AND HAVE YOU HAD A CHANCE TO READ THE PUBLIC STATEMENTS ASSOCIATED WITH THAT DOWNGRADE? UH, I WAS ABLE TO READ, UH, THE FITCH REPORT THAT YOU PROVIDED AND REBUTTAL TESTIMONY. ALL RIGHT. AND SO YOU'RE AWARE THEN THAT FITCH AND, UH, ISSUING ITS DOWNGRADE STATED THAT, UH, THE, THE BASIS AMONG OTHER REASONS WAS THE AUSTIN ENERGY'S ELEVATED LEVERAGE. YEAH, THAT'S MY UNDERSTANDING, BUT THAT $15 MILLION THAT I'M PROPOSING IS DIMINIMOUS COMPARED TO AUSTIN ENERGY'S TOTAL, UH, OUTSTANDING DEBT THAT YOU HAVE NOW, WHICH IS ABOUT $2.1 BILLION. AND I UNDERSTAND THAT THAT'S YOUR OPINION, BUT, BUT, UH, THE CREDIT RATING, UH, WAS ALREADY CONCERNED ABOUT THE ELEVATED, UH, LEVERAGE THAT ALL ENERGY HAS AND YOUR RECOMMENDATION WOULD INCREASE THAT EVEN FURTHER. SO IT'S SLIGHTLY INCREASE IT. ALL RIGHT. UM, AND FITCH ALSO NOTED THAT THAT ONE OF THE CONSEQUENCES OF THAT INCREASE LEVERAGE WAS THAT IT HAS STEADILY INCREASED IN THE PAST THREE YEARS AND THAT THERE WERE WEAKER OPERATING CASH FLOWS, PRIMARILY DRIVEN BY LOWER BASE RATE REVENUES, UH, THAT ALSO CONTRIBUTED TO THE UTILITY FOR RISING LEVERAGE. UH, YOU REVIEWED THAT AS WELL. YES, I SAW THAT. UH, AND THAT ASSUMED THAT THE FULL AMOUNT THAT IS BEING REQUESTED BY AA IN THIS CASE IS ADOPTED, RIGHT. THAT'S MY UNDERSTANDING. YES. AND THAT, UH, THAT DOWNGRADE WAS ASSUMING A $48 MILLION INCREASE, WHICH IS THE AMOUNT AUSTIN ENERGY WAS REQUESTING AND ITS DIRECT CASE. CORRECT? YES. UH, AND ARE YOU AWARE THAT THAT'S NOT GOING TO OCCUR? YES. IT'S MY UNDERSTANDING OF REBUTTAL TESTIMONY. YOU REDUCED YOUR REVENUE REQUIREMENT INCREASE. ALRIGHT. NOW YOU ARE YOU THAT REDUCING THE GFT AND CASH FUNDING TO 40% WILL RESULT IN A DSE OF, I BELIEVE YOU SAID EARLIER 2.3, IS THAT RIGHT? YES. AND YOU STATE THAT THAT'S ABOVE A TARGET, CORRECT? YES. AND YOUR FINANCIAL POLICY. IT'S MY UNDERSTANDING THAT EACH TARGET A MINIMUM OF 2.0 DEBT SERVICE COVERAGE RATIO AND WHAT IS DEBT SERVICE, COVERAGE RATIO, UH, IT'S AMOUNT OF FUNDS THAT ARE AVAILABLE TO FUND YOUR DEBT SERVICE. SO IT'S THE FUNDS AVAILABLE, DIVIDED BY THE DEBT SERVICE COSTS AND DOES AUSTIN ENERGY, UH, USE THE DEBT SERVICE COVERAGE TO SET RATES? UH, IT'S MY UNDERSTANDING THAT AUSTIN ENERGY SETS ITS RAYS AND THEN THE DEBT SERVICE COVERAGE, AS A RESULT OF THE RATES THAT YOU SAID, IT'S NOT A TARGET THAT YOU SET AND THEN DETERMINE WHAT YOUR REVENUE REQUIREMENT WOULD BE, WHAT BE BASED ON THAT TARGET. ALL RIGHT. SO I'M SORRY. WERE YOU SAYING SOMETHING ELSE? NO. EXCUSE ME. UM, SO THEY SET RATES USING THE CASH FLOW METHOD. IS THAT RIGHT? YES. THAT'S MY UNDERSTANDING, YES. ALL RIGHT. AND SO I THINK YOU JUST MAY HAVE SAID THIS, BUT JUST TO CLARIFY THE RECORD. AND SO THE DEBT SERVICE COVERAGE, ISN'T, UH, A DRIVER OF RATES, UH, FOR OFTEN ENERGY, THE CASHFLOW METHOD IS NO, IT DOES NOT. OKAY. NOW YOUR SUGGESTION IS TO REMOVE NON-ELECTRIC REVENUES AND EXPENSES FROM THE CALCULATION OF THE DSE, RIGHT? YES, THAT'S CORRECT. AND YOU ARGUE THAT AES RETAIL, ELECTRIC CUSTOMERS SHOULD NOT BE RESPONSIBLE FOR PROVIDING A RETURN ON ITS, I BELIEVE DISTRICT COOLING AND WHOLESALE TRANSMISSION BUSINESSES. ISN'T THAT RIGHT? THAT'S RIGHT. IT'S MY UNDERSTANDING THAT THE REVENUE REQUIREMENTS SET IN THIS HEARING IS FOR BOSTON ENERGIES, ELECT CUSTOMERS ONLY. SO IT'S MY RECOMMENDATION THAT THE AUSTIN ENERGY ELECTRIC CUSTOMERS SHOULD NOT SUBSIDIZE A AS OTHER, UH, CUSTOMERS FOR ITS BUSINESSES THAT IT PROVIDES. AND LIKE MOST, UH, MUNICIPALITIES OFTEN USES BONDS FOR ITS CAPITAL FINANCING. ISN'T THAT CORRECT? YES. AND, UH, THOSE BONDS ARE SECURED BY ALL AUSTIN ENERGY'S REVENUES, RIGHT? YES. I UNDERSTAND THAT. BUT IT'S, IT'S MY RECOMMENDATION THAT YOU SET RATES TO RECOVER [00:15:01] PROPER REVENUES. UNDERSTAND THAT? I'M SORRY. THAT'S MY PHONE FOR SOME REASONS. I'M SORRY. I APOLOGIZE. TOTALLY UNDERSTAND. IT'S MY UNDERSTANDING THAT BOSTON ENERGY SETS ITS RATES OR MY RECOMMENDATION THAT THEY SET ITS RATES TO ACHIEVE A CERTAIN DEBT SERVICE COVERAGE RATIO. AND THEN ALSO SAID REVENUES FOR IT'S NOT ELECTRIC SERVICES TO ACHIEVE A CERTAIN DEBT SERVICE COVERAGE RATIO. AND BASED ON MY CALCULATIONS FOR THE DSCR EXCLUDING NON ELECTRIC, THAT'S 2.5. AND WHEN WE CALCULATE THE DSCR INCLUDING NON-ELECTRIC IT'S READINGS TO 2.32, WHICH INDICATES THAT AUSTIN ENERGY ELECTRIC CUSTOMERS ARE SUBSIDIZING YOUR NON ELECTRIC CUSTOMERS. BUT AGAIN, WHEN, WHEN THE CITY ISSUES, BONDS, WHICH ARE REFERRED TO AS REVENUE BONDS, THOSE ARE SECURED WITH ALL OF THE REVENUES OF THE UTILITY, REGARDLESS OF THE SOURCE. ISN'T THAT RIGHT? YES. I UNDERSTAND THAT. I'M JUST SAYING THAT THE NOT ELECTRIC REVENUE SHOULD BE SET TO MAINTAIN A HIGHER DSCR AND THEN WHEN IT IS, AND YOU COMPARE THAT 2.5 DSE TO FITCH'S RANGE OF 0.9 TO 3.96, IS THAT RIGHT? AND FITCH MAKES ADJUSTMENTS TO ITS DEBT SERVICE COVERAGE RATIO THAT INCLUDE ITEMS SUCH AS PURCHASE POWER AGREEMENTS AND TRANSFERS. CORRECT? YES, THAT'S CORRECT. BUT YOU DIDN'T, YOU DID NOT DO THAT. NO, I DID NOT. THEN THE INFORMATION THAT WAS PROVIDED TO ME BY AUSTIN ENERGY AND A DISCOVERY RESPONSE, UH, DID NOT MAKE THOSE ADJUSTMENTS EITHER, BUT IN ORDER TO DO A FAIR COMPARISON, YOU WOULD AGREE THAT, UH, THAT YOU WOULD HAVE TO MAKE THOSE ADJUSTMENTS CORRECT. OTHERWISE YOU'RE COMPARING TWO DIFFERENT THINGS. THE CREDIT RATING AGENCY WOULD MAKE THOSE ADJUSTMENTS. YES. BUT YOU DIDN'T ANSWER MY QUESTION IN ORDER TO DO A FAIR COMPARISON TO THE CREDIT AGENCIES CALCULATION, YOU WOULD ALSO HAVE TO MAKE THOSE SAME ADJUSTMENTS OR ASSUMPTIONS. YES, THAT'S CORRECT. NOW YOU ALSO STATE THAT THE 2.3 DFC IS WITHIN THE RANGE FOR PUBLIC POWER UTILITIES WITH THE AA RATED DEBT, UH, AND THAT YOUR RECOMMENDATION WOULD ALLOW A E TO MAINTAIN ITS BOND RATING, CORRECT? YES. ALTHOUGH I DID DEMONSTRATE AS WELL IN MY TESTIMONY THAT IF THEY WAS REDUCED TO AN, A RATED AND, UM, THAT THE DEBT COSTS THAT IT FIT WITH IT AND CURVE FOR ANY DEBT THAT IT ISSUES GOING FORWARD WOULD STILL ALLOW IT TO MAINTAIN, UM, AN AA RATING. BUT THE COST WAS REDUCED. EXCUSE ME, I DIDN'T MAKE THIS INCREASE. I'M SORRY. IT'S OKAY. IT'S ONE OF THE CONSTRAINTS OF THE TECHNOLOGY. UM, BUT, BUT EVEN SITTING HERE TODAY IS NO LONGER A AA RATED COMPANY, RIGHT? NO, IT WAS REDUCED ONE NOTCH, A MINE IS, WHICH IS STILL A VERY GOOD CREDIT RATING. ALL RIGHT. WE'LL TALK ABOUT THAT IN A MOMENT, BUT DO YOU AGREE THAT A LOWER CRA CRA CREDIT RATING, I MEAN, IT WILL INCREASE THE CASH COLLATERAL REQUIREMENTS, UH, ON A E FROM ITS ENERGY TRADING COUNTERPARTIES, UH, AT SOME POINT IN THE FUTURE. YES. THAT'S MY UNDERSTANDING THAT IT WILL, I DO NOT KNOW WHAT THE AMOUNT WOULD BE UNDERSTOOD AND IT COULD ALSO IMPACT, UH, THE TERMS AND CONDITIONS, UH, THAT THEY WERE RECEIVING VENDOR CONTRACTS. UM, I CANNOT SAY DEFINITIVELY THAT THAT WOULD OCCUR NOW IN YOUR TESTIMONY, YOU SAID THAT THERE ARE NO INVESTOR OWNED VERTICALLY INTEGRATED, REGULATED ELECTRIC PUBLIC UTILITIES IN TEXAS THAT HAVE A RATING AS HIGH AS OFTEN ENERGY. IS THAT RIGHT? THAT'S CORRECT. BUT YOU WOULD AGREE, WOULD YOU NOT THAT MOU IS AN IOUS, UH, HAVE DISTINCT CA UH, CAPITAL STRUCTURES? UM, CORRECT. YES, THAT'S CORRECT. FOR EXAMPLE, OFTEN ENERGY DOESN'T HAVE ACCESS TO EQUITY INVESTMENTS THAT, THAT I USE CAN AVAIL THEMSELVES OF WELL, AUSTIN ENERGY HAS A CASH FUNDING THAT I'VE SENT HER SIMILAR TO EQUITY FUNDING. WELL, ACTUALLY THERE THERE'S, THERE'S A DIFFERENCE, RIGHT? THAT I'LL USE CAN ENGAGE IN, UH, TYPES OF EQUITY INVESTMENTS THAT MOU IS HAVE TO RELY UPON, OR YOU HAVE TO USE CASH FOR THAT'S CORRECT. YOU DO HAVE TO USE CASH FOR THAT. OKAY. WHEREAS AN YOU DOESN'T NECESSARILY HAVE TO DO THAT THAT'S RIGHT. BUT THEY ALSO WISH YOU DEAD SIMILAR TO AUSTIN AND ENERGY. THEY DON'T ISSUE REVENUE, BONDS, DO THEY? NO. IN REVENUE BONDS. SO THEY'RE NOT [00:20:01] ISSUING DEBT IN THE SAME MANNER AS AN MOU HONOR, I'D ASK THAT THE WITNESS BE ALLOWED TO ANSWER THAT THAT'S OKAY. UH, YES. I WOULD SAY THAT MOU IS ISSUE REVENUE BONDS, WHICH ARE SEEN AS A LOWER END RISK AND THEN THE CORPORATE DEBT THAT I OWE USE ISSUE, BUT IT ALSO MEANS THAT THE CREDIT RATING ON DEBT IS MUCH MORE CRITICAL FOR AN MOU, UH, THAN AN IOU. RIGHT. I WOULDN'T NECESSARILY AGREE WITH THAT. WELL, THEY'RE IMPORTANT TO BOTH OF THEM. I'M SORRY. CAN YOU REPEAT THAT? TH THE, I WAS SIMPLY SAYING THAT THAT THE, UH, CREDIT RATING IS, IS IMPORTANT TO, TO BOTH I'LL USE AN MOU IS THAT'S CORRECT. ALL RIGHT. NOW YOU CALCULATE IT AS A HYPOTHETICAL THAT AES ROE IS EQUIVALENT TO 12%. IS THAT RIGHT? YES. I BASE THAT ON YOUR, UH, OVERALL RETURN OF 7.9%. I'VE LOOKED AT YOUR WEDDING COST OF DEBT AND YOUR CAPITAL STRUCTURE, AND WAS ABLE TO DETERMINE THAT THE ROE WOULD BE 12%. AND THEN YOU COMPARE THAT HYPOTHETICAL ROE TO REGULATE IT I'LL USE. YES, I DID. AND SPECIFICALLY YOU CALCULATED A 12% ROE VERSUS THIS BENCHMARK OF 9.38% THAT YOU COME UP WITH. YES. THAT'S BASED ON, UM, REGULATED UTILITIES, ROE HAS BEEN APPROVED, UH, ACROSS THE COUNTRY, I THINK IN THE FIRST QUARTER OF 2022. AND I THINK THEN YOU ANSWERED MY NEXT QUESTION, WHICH IS THAT YOU, SO YOU USED A METHODOLOGY THAT WAS BASED UPON AN IOU, UH, RATE OF RETURN CALCULATION METHODOLOGY THAT'S CORRECT. DOES OFTEN ENERGY EARN A RETURN ON IT TO EQUITY? NO, IT DOES NOT. IT WAS JUST FOR ILLUSTRATIVE PURPOSES THAT I CALCULATED THE RETURN ON EQUITY FOR AUSTIN ENERGY. ALL RIGHT. THANK YOU, MS. LAKANTO. THOSE ARE ALL THE QUESTIONS THAT I HAVE FOR YOU THIS MORNING. APPRECIATE YOUR TIME, YOUR TIME. THANK YOU. THANK YOU, MR. . UM, MR. HALLMARK. YES, YOUR HONOR. THANK YOU. UH, MR. CONTI, YOU WERE ASKED SOME QUESTIONS ABOUT THE AMOUNT OF THE GENERAL FUNDS TRANSFER IN RECENT YEARS. DO YOU RECALL THAT? YES, I DO. AND HOW DID YOU COME UP WITH YOUR CALCULATION OF WHAT PERCENT WENT INTO THOSE TRANSFERS? UH, INITIALLY I USE THE TOTAL OPERATING REVENUES, WHICH WAS PROVIDED IN A DISCOVERY RESPONSE, STRATEGIC IAC TO COME UP WITH THOSE PERCENTAGES, BUT I WAS INFORMED AND REBUTTAL TESTIMONY FROM AUSTIN ENERGY THAT THOSE NUMBERS WERE INCORRECT AND SHOULD, UH, REMOVE THE, THE PSAR FROM THOSE REVENUES. SO THAT WAS PROVIDED IN, UH, AN ADDITIONAL DEBRA DISCOVERY RESPONSE FROM US AND THE ENERGY. OKAY. AND DOES THAT CHANGE IN THE DISCOVERY RESPONSE AFFECT THE AMOUNT OF THE GENERAL FUND TRANSFERS THAT WERE ACTUALLY MADE? IT DOES NOT CHANGE THE AMOUNT AND ONLY CHANGES THE PERCENTAGE. SO DOES THAT CHANGE YOUR RECOMMENDATION IN THIS CASE? NO. MY RECOMMENDATION WAS, UM, MAINLY BASED ON THE AMOUNT OF THE GFT, IT WAS NOT BASED ON THE PERCENTAGE. AND DO YOU HAVE AN UNDERSTANDING WHETHER, UH, AUSTIN ENERGY'S PROPOSED GFT IN THIS CASE COMPLIES WITH THEIR FINANCIAL POLICIES FOR CALCULATING THE GFT? UH, IT'S MY UNDERSTANDING THAN IT IS. AND ACCORDING TO THE FINANCIAL POLICIES, THE GMT SHOULD BE BASED ON AN AVERAGE OF THREE YEARS OF OPERATING REVENUES. AND IN THIS CASE, UH, A DETERMINE THE GFT BASED ON ONLY THE TEST YEARS OPERATING REVENUES. AND WHAT PERCENT DID THEY USE FOR THAT, UH, THAT THEY USE THE MAXIMUM PERCENTAGE OF 12%. OKAY. UM, YOU WERE ASKED SOME QUESTIONS ABOUT THE PERCENTAGE OF INTERNALLY GENERATED CASH CONTRIBUTIONS. DO YOU RECALL THAT? YES. WHAT IS THAT? AND YOU WERE ASKED SOME QUESTIONS ABOUT THE CITY OF AUSTIN'S POLICY ON, ON THAT. DO YOU RECALL THAT? UM, YES, I WAS. WHAT IS THE CITY OF AUSTIN? I'M SORRY, WHAT IS AUSTIN ENERGY'S FINANCIAL POLICY ON THE USE OF CASH VERSUS DEBT? UH, IT'S MY UNDERSTANDING THAT THE DEBT [00:25:01] BRAINS COULD GO FROM 35 TO 60%. SO IT IN AUSTIN ENERGY'S FINANCIAL POLICIES. IT'S NOT 50 50. THAT'S RIGHT. ARRANGED CAN BE SAID THAT IT'S NOT ONLY 50 50. OKAY. AND YOU WERE ASKED SOME QUESTIONS ABOUT AUSTIN ENERGY'S CREDIT RATING. DO YOU RECALL THAT? YES. AND WHAT IS AUSTIN ENERGY'S CURRENT CREDIT RATING AFTER THE DOWNGRADE AA MINUS. AND HOW DOES THAT COMPARE TO OTHER VERTICALLY INTEGRATED UTILITIES IN TEXAS? UH, AT SIGNIFICANTLY ABOVE, I WOULD SAY IT'S ABOUT SIX NOTCHES ABOVE THE CREDIT RATINGS FOR IOUS AND TEXAS. OKAY. AND YOU WERE ASKED SOME QUESTIONS? WELL, WELL, LET ME BACK UP. UM, MR. CONTI, DID YOU HAVE THE OPPORTUNITY TO VISIT WITH FITCH ABOUT YOUR RECOMMENDATIONS IN THIS RATE CASE? UH, NO. I DID NOT. AND JUDGING BY THE TIMING OF FITCH'S, UH, DOWNGRADE, DO YOU HAVE AN OPINION ABOUT WHETHER FITCH EVALUATED THE PROPOSALS OF INTERVENORS IN THIS CASE? UH, IT'S NOT. I CAN NOT SAY DEFENDANT LEAVE AT FITCH DID THAT, I KNOW THAT THE TESTIMONY THAT WAS PROVIDED WAS PRIOR TO FITCH'S REPORT, BUT THAT WAS JUST THE PUBLISHING, UH, DATE OF THE REPORT. IT'S NOT CERTAIN WHEN THEY ACTUALLY DETERMINE THOSE METRICS. SURE. UM, WHILE WE'RE ON TOPIC, YOU WERE ASKED SOME QUESTIONS ABOUT WHETHER AUSTIN ENERGY HAS, UH, AN EQUITY INVESTMENTS, RIGHT? YES. DO YOU HAVE AN OPINION ABOUT WHETHER THE INTERNALLY GENERATED CASH, UH, IS EQUIVALENT TO EQUITY OR SIMILAR TO IT? I WOULD SAY IT'S SIMILAR TO IT, YOU KNOW, UH, IOUS USE EQUITY FUNDING, BUT FOR MOU THAT WOULD USE, UH, CASH FUNDING TO FUND THEIR CAPITAL PROGRAMS. SO IN A SENSE, THE CASH FUNDING IS SIMILAR TO THE EQUITY FUNDING. DO YOU KNOW WHETHER AUSTIN ENERGY'S FINANCIAL POLICIES REFERRED TO THE CASH AS EQUITY? UH, IT'S MY UNDERSTANDING THAT WHEN FINANCIAL POLICY MAKES THE RECOMMENDATION ON THE DEBT TO EQUITY STRUCTURE, SPECIFICALLY REFERENCES EQUITY, ALL RIGHT. YOU WERE ASKED SOME QUESTIONS ABOUT DEBT, SERVICE, COVERAGE, UH, AND ITS ROLE IN THE RATE SETTING PROCESS. DO YOU RECALL THAT YES. DOES THE DEBT SERVICE COVERAGE THAT WOULD RESULT FROM RATES BEING SET HAVE, HAVE RELEVANCE IN YOUR MIND? WELL, THE DEBT SERVICE COVERAGE, UM, YOU WANT TO SET IT SO THAT IT MEETS THE FINANCIAL POLICIES OF A MINIMUM OF 2.0, RIGHT. UM, AND YOU WERE ASKED SOME QUESTIONS ABOUT WHETHER NON-ELECTRIC REVENUES SHOULD BE INCLUDED, REVENUES AND EXPENSES SHOULD BE INCLUDED IN THE DEBT SERVICE COVERAGE CALCULATION, RIGHT? YES. AND MR. CONTENT IN YOUR VIEW, WHY SHOULD THOSE REVENUES AND EXPENSES FOR NON-ELECTRIC, UH, NOT BE INCLUDED BECAUSE IN THIS PROCEEDING WE'RE DETERMINING THE RATES FOR AUSTIN ELECTRIC CUSTOMERS ONLY. AND IF YOU SET THE DSCR INCLUDING NON ELECTRIC, THEN ESSENTIALLY BECAUSE THE DSR INCLUDING NON ELECTRIC IS LOWER THAN EXCLUDING NON ELECTRIC, THE AUSTIN ENERGY, UH, ELECTRIC CUSTOMERS ARE SUBSIDIZING, UM, NON-ELECTRIC AND IT'S MY RECOMMENDATION THAT BOSTON ENERGY SHOULD REVIEW THE REVENUES THAT'S RECEIVED FROM THEM ELECTRIC CUSTOMERS TO MAKE SURE THAT THEY WILL MAINTAIN A SICK, UH, AN EFFICIENT DNC ARE. RIGHT. SO YOUR RECOMMENDATION IS NOT THAT THAT AUSTIN ENERGY SHOULD WELL STRIKE THAT. UM, HAVE YOU CALCULATED THE EXTENT TO WHICH, UH, THE NON-ELECTRIC, UH, CUSTOMERS ARE BEING SUBSIDIZED BY AUSTIN ENERGY'S ELECTRIC CUSTOMERS WITH RESPECT TO THE DEBT SERVICE COVERAGE? YES, I DID. I CALCULATED, UH, DRCR EXCLUDING NON-ELECTRIC. I HAVE THE DSCR INCLUDING NON ELECTRIC FROM A E AND THEN I ALSO DID A DSR ANALYSIS FOR NON ELECTRIC OPERATIONS. AND DO YOU HAVE THAT CALCULATION? [00:30:02] UH, YES, I DO. I, UH, CALCULATED THE DATA USING THE RATE FILING PACKAGE, UH, WORK PAPERS THAT THEY PROVIDED AND BASED ON MY CALCULATIONS, THE DSCR I HAVE FOR NON ELECTRIC, YOUR HONOR, I'M GOING TO OBJECT. UM, I DON'T KNOW WHAT MR IS LOOKING AT, BUT IF IT'S HER TESTIMONY OR IN HER TESTIMONY, PLEASE APPRISE ME IF IT IS THAT THAT'S FINE. BUT IF SHE'S GONE AND PREPARED SOME ADDITIONAL SOMETHING THAT SHE'S LOOKING AT ON HER COMPUTER, UM, WE'D LIKE TO GIVE YOU AN OBJECTION ABOUT THAT. IF YOU JUST MAYBE JUST KIND OF EXPLAIN WHAT SHE'S DOING. SORRY. IT'S JUST HARD TO KNOW. UH, WELL, YOUR HONOR, FIRST OF ALL, THIS GOES TO THE QUESTION OF SUBSIDIZING FROM THE ELECTRIC REVENUE, THE ELECTRIC CUSTOMERS FOR THE NON ELECTRIC, AND WHY MS. THINKS THAT YOU SHOULD REMOVE THE NON-ELECTRIC FROM THE CALCULATION. UH, YEAH, I, I COULD JUST ASK HER TO GO THROUGH IT. UH, AND MAYBE THAT WOULD, WOULD HELP, UH, LET ME ASK THIS IS, IS THIS, UM, IN, UH, MR. TESTIMONY ALREADY, IS THIS SOMETHING THAT, WHEREAS A SUPPLEMENTAL, THIS PARTICULAR CALCULATION IS NOT IN HER TESTIMONY? ALL RIGHT. HERE'S WHAT I PREFER TO DO, MR. PICADO YOUR OBJECTION IS A GOOD ONE. UM, HOWEVER, I'D LIKE TO HAVE AS FULL AND COMPLETE A HEARING AS POSSIBLE. UM, I WILL OVERRULE THE OBJECTION. HOWEVER, ON REBUTTAL, YOU CAN GO INTO THIS AS MUCH AS YOU, LIKE WHEN YOU SAY REBUTTAL THAT YOU MEAN WHEN YOUR REBUTTAL WITNESSES GET UP, THEY CAN ADDRESS THIS ISSUE. AGAIN, YOU'RE GOING OUT. IF YOU'RE GOING OUTSIDE THE SCOPE OF YOUR DIRECT, THAT'S GENERALLY A PROBLEM, RIGHT? AND THAT'S EXACTLY WHAT YOUR OBJECTION IS, CORRECT. HOWEVER, I WANT TO HAVE AS, AS COMPLETED HEARING AS POSSIBLE SO THAT WHEN WE ISSUE THE REPORT, WE CAN GIVE THE CITY, UH, POSITION AND ADDRESS IT. SO MY PREFERENCE IS TO OVERRULE THE OBJECTION, BUT ALLOW YOU TO, UH, YOU CAN ASK QUESTIONS, YOU CAN GO INTO IT AND REBUTTAL, IF YOU HAVE TO HAVE SUPPLEMENTAL REBUTTAL, IN OTHER WORDS, AN EXHIBIT, WHATEVER IT IS, YOU CAN GO INTO THAT. AND I KNOW IT'S MORE WORK FOR YOU. I REALIZE THAT, BUT I WOULD PREFER TO HEAR THIS AND ADDRESS IT THAT EXCLUDED. TOTALLY UNDERSTAND. AND WHEN WE CERTAINLY WANT TO BE COOPERATIVE, UM, ALL I WOULD ASK IF I MAY IS THAT IF MR. HAS, UH, SOME TYPE OF NEW CALCULATION, WHICH IT SOUNDS LIKE SHE DOES, IF WE COULD JUST SIMPLY, UH, GET A COPY OF IT AND SOME MASHER MAN OR A SEE HOW IT WAS CALCULATED SO THAT WE COULD KIND OF TEST IT FOR REBUTTAL. YEAH. IT'S MY UNDERSTANDING THAT, UH, WE'VE GOT THAT ON THE WAY. OKAY. ONE OTHER THING IS MISS AVAILABLE TOMORROW FOR SOME TYPE OF SUPPLEMENTAL CROSS ON THAT EXHIBIT. SHE IS NOT, SHE HAD TO GO THIS MORNING CAUSE SHE'S LEAVING TOWN. UM, CAN WE GO OFF THE RECORD FOR A SECOND? LET'S GO OFF THE RECORD. UH, SOUNDS LIKE THIS ISSUE HAS BEEN RESOLVED AND TIC IS GOING TO MOVE, MOVE ON. YEAH. THAT'S THAT'S ALL I HAVE, YOUR HONOR. THANK YOU. OKAY. ANY FOLLOW-UP QUESTIONS? ANYONE BEFORE WE GET TO AUSTIN ENERGY? MS. COOPER, IS IT ON NOW? YES, NOW IT IS. OKAY. ALL RIGHT. UH, GOOD MORNING, MS. LACAN. I DON'T WANT TO, I WANT TO START WHERE A TIC ENDED. AND, UH, ARE YOU FAMILIAR WITH, UH, YOU REFERRED TO IT IN YOUR TESTIMONY? A AUSTIN ENERGY'S ANSWERED TO A T I E C S THIRD RFI THREE DASH THREE. YES. AND DO YOU HAVE THE SUPPLEMENTAL IN FRONT OF YOU? THE SUPPLEMENTAL RESPONSE? IF YOU COULD HOLD ON ONE THAT'S OKAY. YEAH. THERE'S SUPPLEMENTAL RESPONSE TO WHAT EXHIBIT OR WHAT EXHIBIT I'VE BEEN? ENERGY'S RESPONSE TO T I E C S THIRD RFI THREE DASH THREE. I THINK THAT'S TREC EXHIBIT SEVEN. UH, BEN, YOU CAN CORRECT ME IF I'M WRONG. UM, WELL, I, I, I AM NOT IN THE ELECTRONIC AGE, SO I DO NOT HAVE THAT YET, BUT IT'S IN MY COMPUTER AT HOME, SO I APOLOGIZE. BUT, UM, SO, UH, DO YOU HAVE THE SUPPLEMENTAL ONE? YES, I DO. THANK YOU SO MUCH FOR OKAY. IF SOMEONE COULD TELL ME, CAUSE TELL YOU SEE SEVEN IS NOT A SUPPLEMENTAL RESPONSE. IT LOOKS LIKE THERE WERE AUNTS FROM GRANT RAVEN TO TIC THREE. IF YOU LOOK AT THE TOP RIGHT-HAND CORNER DOES SUPPLEMENTAL. [00:35:01] YEAH. AND THANK YOU, MR. HALLMARK. ALRIGHT. SO IF WE LOOK AT, AT, AT T I SEE EXHIBIT SEVEN, WHAT IT DOES IS IT, IT LAYS OUT THE CALCULATION, NOT JUST NUMERICALLY, BUT ALSO IT GIVES YOU THE INSTRUCTIONS ON HOW TO DO IT. IS THAT RIGHT? THAT'S CORRECT. NOW, CAN WE, UH, TAKE THE NON-ELECTRIC UTILITY DATA THAT IS REPRESENTED IN THIS EXHIBIT AND COME UP WITH ITS OWN DEBT SERVICE COVERAGE? YOUR HONOR, I'M GOING TO OBJECT TO FRIENDLY CROSS HERE BY MRS. COOPER, TRYING TO GET THE CALCULATION DONE THAT SHE COULDN'T DO BEFORE, BUT MS. COOPER, THIS IS GETTING INTO FRIENDLY CROSS. IT SURE. SOUNDS LIKE IT. I WAS THINKING THAT BEFORE HE MADE THE OBJECTION. CAN YOU EXPLAIN TO ME HOW THIS IS NOT FRIENDLY CROSS? WELL, I'M JUST TRYING TO PROVE MY CASE, YOUR HONOR. I MEAN, THAT'S JUST, THAT'S JUST IT. YOU DO IT THROUGH CROSS. WELL, THAT'S NOT NECESSARILY, I MEAN, I TRY TO PROVE MY CASE THROUGH AUSTIN ENERGY. I MEAN, I, I HAVE A HARD TIME WITH FRIENDLY CROSS. I UNDERSTAND THAT THAT'S SUPPOSEDLY SOME KIND OF RULE, BUT, UH, YES, IT'S NOT A RULE OF EVIDENCE, BUT, BUT I UNDERSTAND AND, UM, UH, I'LL, I'LL MOVE ON. OKAY. THANK YOU. FRIENDLY CROSS I SET UP. OKAY. UH, AND THEN LASTLY, I WANT THIS TO CLARIFY THE RECORD, UH, AND THAT IS, UH, YOU TALKED ABOUT THE GENERAL FUND TRANSFER TRANSFER, IS THAT CORRECT? YES. CAN YOU, CAN YOU TELL ME AGAIN, YOU SAID THAT, UH, AUSTIN ENERGY HAD NOT DONE THE, UH, THE PROPER CALCULATION TO COME UP WITH THE, WITH THE DEBT SERVICE. I MEAN THE GENERAL FUND TRANSFER THAT'S INCLUDED IN THE RATES AND OBJECTION, YOUR HONOR, I'M ASKING FOR A CLARIFICATION, ARE YOU REFERENCING? YEAH, BUT THE CLARIFICATION IS AS YOU WOULD PUT IT IN AND FURTHER. AND SO OF YOUR CASE, WHICH IS A LIE. NOW GIVE ME BUDDY TO, TO ASK HIM QUESTIONS. ISN'T FURTHER IT'S OTHER CASE NOT IN ALIGNED IN ALIGNMENT WITH THE WITNESS. I'M ASKING FOR A CLARIFICATION OF THE RECORD TO MAKE IT CLEAR. WHAT'S IN THE RECORD, YOUR HONOR. IT'S EXPLAIN. EXPLAIN TO ME WHAT, WHAT IS UNCLEAR BEFORE WE GET AN ANSWER FROM THE WITNESS? UM, NOW I CAN'T EVEN REMEMBER MY QUESTION. WE'RE GETTING TO SO MUCH QUIBBLING HERE. UH, WELL, WHAT I WANTED TO UNDERSTAND IS, UH, SHE SAID THAT SHE SAID SOMETHING ABOUT THE CALCULATION WAS, WAS NOT CORRECT. AND I WANTED TO KNOW WHAT CALCULATIONS SHE WAS TALKING ABOUT. OKAY. CAN YOU ANSWER THAT, MR. CONTE, WHAT CALCULATION, WHERE YOU TALKING ABOUT WHEN YOU SAID THE CALCULATION IS INCORRECT? WELL, THE FIRST CALCULATION THAT I SAID WAS INCORRECT IS THE GFT THAT'S INCLUDED IN THE TEST HERE, WHICH IS BASED ON 12% OF THE TESTS. YOUR REVENUE GOES ACCORDING TO AES FINANCIAL POLICY, THE GFT SHOULD BASED ON BE BASED ON, UM, THREE YEARS OF OPERATING REVENUES. AND THEN YOU APPLIED THE PERCENTAGE. AND IF THAT WAS, IF, IF THEY HAD DONE THAT AND IT'S FILING THEM, THE GFT WOULD BE SIGNIFICANTLY LOWER, A LOT, 114 MILLION. OKAY. I RECALL THAT TESTIMONY, UH, EARLIER, AND I THINK I UNDERSTAND WHAT YOU WERE SAYING. NO, THANK YOU, MR. AND THANK YOU, JUDGE. AND I WILL TRY TO, MY HEART IS NOT TO ASK FRIENDLY CROSS. I JUST GET CURIOUS. SO I APOLOGIZE, YOUR HONOR. ARE THERE ANY OTHER, ANY OTHER QUESTIONS I HAVE A COUPLE OF YOUR YEARS? OH, SORRY FROM THEM. YEP. THAT'S OKAY. MR. BROOKLINEN. THANK YOU. UH, HELLO. SO DO YOU KNOW WHAT FITCH PEER REVIEW IS? YES. I'M FAMILIAR WITH IT. AND YOU REVIEW THAT FROM TIME TO TIME. UH, I REVIEWED WHAT WAS PROVIDED IN THIS CASE IS RIGHT. AND SO, UH, THEN YOU'RE AWARE, UH, THAT IT'S IN THE RECORD THAT THE FITCH 2021 PEER REVIEW, UM, SAMPLES, 80 TOTAL RETAIL, PUBLIC, UM, POWER PROVIDERS AND OF THOSE 80 51 OR 64% ARE RATED BETWEEN AA PLUS AND AA MINUS I'LL OBJECT THAT THIS GOES OUTSIDE THE SCOPE OF MY REDIRECT. I DIDN'T ASK HER ABOUT FITCH, UH, REPORTS IN 2020, ACTUALLY. HE DID. HE ASKED SPECIFICALLY ABOUT, UM, UTILITIES, CREDIT RATINGS. OVERRULED. I SEE IT RIGHT HERE. UH, AND SO YOU'VE SEEN THAT IN THE REBUTTAL TESTIMONY, IT'S A CONTACT, UM, [00:40:01] I'M SORRY, YOU'RE SAYING THAT I SAW IN THE REBUTTAL TESTIMONY, THE NUMBER OF RETAIL, UH, UTILITIES THAT ARE RATED FROM A TRIPLE EIGHT, A MINUS AA PLUS TO AA MINUS. YES. OH YES. I DID SEE THAT. OKAY. OKAY. AND 21 OF THOSE 80 ARE AT AA. I CAN'T SPECIFICALLY, WELL, SUBJECT TO CHECK IF IT FEEL SAME, THAT I'M CORRECT. THEN, UH, THEN THERE ARE QUITE A FEW, UM, PUBLIC POWER PROVIDERS, UM, THAT ARE AT, ARE HIGHER THAN A AES, UM, CREDIT RATING. ISN'T THAT CORRECT? SUBJECT TO SUBJECT TO CHECK. UH, I WOULD AGREE WITH THAT. ALL RIGHT. AND SO WHEN, WHEN AN IOU GOES OUT AND GETS EQUITY, HOW DO THEY DO THAT? WELL, THEY ISSUE STOCK MARKET. AND WHEN I, UH, WHEN OFTEN ENERGY WANTS TO USE CASH ON HAND, HOW DID THEY GET THOSE FUNDS THREE-YEAR REVENUES FOR YOUR RATES THAT YOU APPLY TO YOUR CUSTOMERS? AND AUSTIN ENERGY CANNOT ISSUE STOCK IN ORDER TO GET EQUITY LIKE YOU, RIGHT? NO AUSTIN ENERGY RECOVERS REVENUES FROM ITS CUSTOMERS. WHAT SHOULD USE A PROPORTION OF CASH FUNDING, BUT SIMILAR TO IOU IS, UM, BOSTON ENERGY ALSO PAYS A GMT, WHICH COULD BE SEEN AS A DIVIDEND TO THE CITY CITY, WHICH IS SIMILAR TO THE IOU. BUT THAT'S REALLY, WASN'T THE QUESTION THAT YOU WERE ASKED BY EITHER YOUR ATTORNEY OR BY ME, WHICH IS WHETHER CASH FUNDING IS THE SAME AS EQUITY FUNDING FOR AN OWL, YOU, THOSE THINGS, THANK YOU. AES FINANCIAL POLICIES, THE CASH FUNDING, AS I UNDERSTAND IT IS REFERRED TO AS EQUITY, BUT THEY'RE DIFFERENT REGARDLESS, REGARDLESS OF HOW THERE, IT MIGHT BE, REGARDLESS OF THE NOMENCLATURE CASH THAT YOU HAVE TO COLLECT FROM RE PAYER THROUGH RATES IS DIFFERENT FROM ISSUING STOCKS FOR NOW YOU, IN TERMS OF THEIR CAPITAL STRUCTURE. YES. THAT'S DIFFERENT. ALL RIGHT. AND, UH, AND JUST TO SORT OF CLOSE THE LOOP ON THIS, IN YOUR DISCUSSION WITH MR. HALLMARK, THE DFC IS A CHECK ON, BUT NOT A DRIVER OF REVENUE REQUIREMENTS IN THIS CASE. UH, THAT'S THE WAY A KIND OF TRADES. YEAH. SOME OF THE DSE IS A CHECKOFF. ALL RIGHT. THANK YOU, MR. . THOSE ARE ALL THE QUESTIONS. UM, MR. HALLMARK, JUST NOTHING MORE FROM ME. OKAY. I JUST, I JUST HAVE ONE VERY BASIC QUESTION THAT EVERYONE KNOWS THE ANSWER TO FROM MS. JUST TO FOLLOW UP REAL QUICK ON, UM, MR. LAST SERIES OF QUESTIONS, UH, I'LL USE ALSO ARE IN CASH FROM RATES. IS THAT CORRECT? I'M SORRY. CAN YOU REPEAT THAT? DO IOUS ALSO EARN CASH FROM RATES? ALL RIGHT. ANYTHING FOLLOWING UP ON THAT? UH, YES, YOUR HONOR. IF I MAY, UM, MS. LACAN, IN YOUR OPINION, DO IOUS HAVE THEIR RATES SET SPECIFICALLY TO GENERATE EXTRA CASH TO USE IN CONSTRUCTION PROGRAMS? UH, I WOULD SAY YES. I WOULD SAY IF THEY DO SET RATES TO PREP CASH, ADDITIONAL CASH TO FUND THEIR CAPITAL PROGRAMS, AS WELL AS EQUITY AND DEBT THROUGH ROE. WELL, YES, ROE ROE HAS SAID TO RECOVER A SUFFICIENT RATES, WHICH COULD BE APPLIED TO THEIR CASH FUNDING. OKAY. AND THEN THE IOU WOULD, I GUESS, DECIDE WHETHER TO RETAIN THE CASH OR TO SEND IT TO THE PARENT. RIGHT. THAT'S RIGHT. THEY CAN RETAIN IT OR THEY COULD PAY A DIVIDEND TO THE PARENT COMPANY. ALL RIGHT. UH, THANK YOU, MR. CONTI. ALL RIGHT. THANK YOU, MS. . UM, IF THERE'S NOTHING FURTHER, MR. CONTE IS EXCUSED. THANK YOU. YOU'RE WELCOME. THANK YOU. UH, LET'S GO OFF THE RECORD FOUR MINUTES. UM, MR. HALLMARK INDICATED THAT MR. POLLOCK IS, IS AVAILABLE AND READY TO GO. UM, I REALIZED IT'S BEEN A SHORT BREAK, BUT HAS, HAVE YOU ALL HAD A CHANCE TO LOOK AT SEPC 16? I THINK WAS REALLY THE ONE THAT WAS AN ISSUE. UH, YES, YOUR HONOR. I WOULD MAINTAIN THIS TOD KIMBRO FOR DATA FOUNDRY. UM, IT WOULD MAINTAIN THE OBJECTION ON SEPC 16. NO OBJECTION ON 12, 3 15. OKAY. MR. HALLMARK JOIN. YEAH, SAME PLACE. ALL RIGHT, SO LET'S GO AHEAD AND ADMIT, SE LET'S GO ON THE RECORD, PLEASE. [00:45:03] LET'S GO AHEAD AND ADMIT, UH, CPC 12 THROUGH 15, AND THEN ON SEPC 16, LET'S VISIT ABOUT IT. I, I NEED TO TAKE A LOOK AT IT AND LET'S SEE WHAT THE ISSUE IS WITH THAT. WHAT WAS 16 AGAIN? AND WE HAVE IT UP HERE, RIGHT? IT'S PROBABLY BEHIND ME. 16 IS AN AUSTIN ENERGY DOCUMENT FROM 2018. THAT RELATES TO REBATES THAT WERE PROVIDED TO DATA FOUNDRY IT'S RELEVANT, IT'S DIRECTLY RELEVANT TO ISSUES IN THE CASE, WITHIN THE SCOPE OF THE CASE. FIRST OF ALL, BECAUSE OF THE FACT THAT IT RELATES TO THE FACT OR RELATES TO THE FACT THAT THE MEMBERS OF THE PRI TWO HIGH LOAD FACTOR RATE CLASS ARE RECEIVING BENEFITS UNDER THE EES, WHICH IS AN ISSUE THAT'S FRONT AND CENTER IN THE CASE. ALSO IT DIRECTLY RELATES TO STATEMENTS THAT WERE MADE YESTERDAY ON THE RECORD BY THE DATA FOUNDRY WITNESS. SO IS 16 GOING TO BE USED IN CROSS-EXAMINATION? IS THAT THE POINT OF 16? IT MAY BE USED IN CROSS EXAMINATION. IT MIGHT COME UP AS AN EXHIBIT DISCUSSED DURING MR. REED'S TESTIMONY THOUGH. AGAIN, WE WOULDN'T BE ABLE, WE WOULDN'T HAVE THE RIGHT TO RAISE IT. IT WOULD HAVE TO BE SOMETHING THAT CAME UP AS PART OF THE DISCUSSION. WELL, WHERE I'M GOING WITH THIS IS IF YOU, IF YOU'RE USING IT AND CROSS IT'S CROSS. SO EVEN IF IT'S BEYOND THE TEST YEAR, IT DOESN'T MEAN YOU CAN'T GET INTO SOMETHING THAT'S RELEVANT. UM, AND YOU HAVE RAISED THESE ISSUES IN THIS CASE. THEY'RE VERY MUCH IN THE MIDDLE OF THE CASE. YES. SO, UM, I'M INCLINED TO, TO ALLOW YOU TO USE IT, BUT LET'S GET INTO CROSS RAISE IT, SPLAIN IT TO ME AND I'LL MAKE A RULING. OKAY. THANK YOU. ALL RIGHT. BUT 12 THROUGH 15 ARE ADMITTED 16. WE'RE JUST WAITING TO SEE. ALL RIGHT. UM, ALL RIGHT. ANYTHING ELSE BEFORE WE START WITH MR. POLLOCK? OKAY, MR. HALLMARK, WHENEVER YOU'RE READY. UH, GOOD MORNING, MR. POLLOCK. GOOD MORNING. CAN YOU HEAR ME OKAY. CAN I HEAR YOU? OKAY. UH, YOU FILED DIRECT TESTIMONY IN THIS CASE AND ALSO CROSS REBUTTAL, RIGHT? YES. AND YOU HAVE THOSE TESTIMONIES IN FRONT OF YOU? YES. UH, I'M REALIZING, I FORGOT TO ASK MR. CONTI THIS, BUT DO YOU HAVE ANY CHANGES THAT YOU NEED TO MAKE TO YOUR TESTIMONY? NO. ALL RIGHT. WELL, I'LL TENDER MR. POLLOCK, HER CROSS EXAMINATION. OKAY. ONE OTHER THING I NEED THAT I SHOULD HAVE DONE FIRST THING THIS MORNING, NOW THAT I THINK ABOUT IT IS YESTERDAY. WE DID NOT HAVE APPEARANCES FROM AN ON TUESDAY FOR THE PRELIM. WE DID NOT HAVE APPEARANCES FROM VICTOR MARTINEZ, NATIONAL INSTRUMENTS, ARMA, OR C CARE. I JUST WANT TO ASK AGAIN, IS THERE ANYONE HERE FOR ANY OF THOSE PARTIES, PARTICIPANTS? ALL RIGHT. HEARING NOTHING. I ASSUME THAT NO ONE IS HERE ON THEIR BEHALF, UH, TO WR OR QUESTIONS. YES. MA'AM MORNING, MR. POLLOCK. GOOD MORNING. UM, I JUST, HAVE YOU HAD GIVEN SOME TESTIMONY REGARDING, UH, REVENUE ADJUSTMENTS FOR, UH, HURRICANE URI? IS THAT CORRECT? WINTER STORM, YOUR YES. YES. I'M SORRY, NOT HURRICANE IT'S IT'S ON MY MIND, I GUESS, BUT WINTER STORM URI. I APOLOGIZE. THANK YOU FOR HELPING ME ON THAT HURRICANE. I KNOW, I KNOW, BUT THE QUESTION I HAVE FOR YOU IS, DO YOU KNOW, UH, HOW MANY, UH, COMMERCIAL CUSTOMERS WERE, UH, SERVICES WAS, WAS INTERRUPTED AND FOR HOW LONG? UH, NOT SPECIFICALLY. I'M GENERALLY AWARE THAT A LOT OF CUSTOMERS, INCLUDING TIC MEMBERS WERE, WERE AFFECTED BY IT SEVERELY. OH, RIGHT. OKAY. SO YOU, UH, YOU DID NOT DO ANY KIND OF SURVEY AMONG YOUR MEMBERSHIP IN TERMS OF THE NUMBER OF DAYS OF INTERRUPTION AND THE LENGTH OF INTERRUPTION DID NOT KNOW. ALL RIGHT. THAT'S ALL YOUR HONOR. THANK YOU. AND THANK YOU, MR. POLLOCK. THANK YOU. UM, THANK YOU, MS. COOPER. UM, NEXT UP, MR. ROBBINS IS NOT HERE. A DATA FOUNDRY, NO QUESTIONS, YOUR HONOR. HERFF NO QUESTIONS, YOUR HONOR. S C S C P S. SORRY. I'M SORRY. AS CPC. THIS A FEW QUESTIONS, YOUR HONOR. YES, MA'AM GOOD MORNING, MR. POLLACK. GOOD MORNING. T IEC HAS NOT PROVIDED ANY SPECIFIC EXAMPLES IN THIS PROCEEDING OF THE ENERGY EFFICIENCY MEASURES THAT LARGE INDUSTRIAL CUSTOMERS USE, CORRECT? I'M NOT SURE WHAT YOU MEAN BY SPECIFIC EXAMPLES. I THINK WE'VE IDENTIFIED OUTLINED SOME GENERAL THINGS THAT GIC MEMBERS HAVE DONE TO IMPROVE ENERGY EFFICIENCY AND SAN ENERGY [00:50:01] EFFICIENCY MEASURES, BUT, BUT NOT, NOT AS JUST SPECIFIC NUTS AND BOLTS AND TIBC DOES NOT COLLECT SPECIFIC DATA REGARDING THE ENERGY EFFICIENCY AND DEMAND RESPONSE INVESTMENTS OF ITS MEMBERS. CORRECT. UM, I'M NOT AWARE WHAT TIC DOES. I HAVE NOT COLLECTED ANY INFORMATION. AND DO YOU KNOW IF IAC HAS ANY WAY TO MEASURE THE EFFICIENCY OF ITS MEMBERS, ENERGY EFFICIENCY AND DEMAND RESPONSE INVESTMENTS? T I C WOULDN'T DO THAT. UM, IF THEY MEMBERS WANTED US TO DO THAT ANALYSIS, THEY WOULD REQUEST THAT WE DO SO OVER. USUALLY THOSE, THOSE INITIATIVES ARE PRETTY CONFIDENTIAL AND, AND WE'RE USUALLY NOT PRIVY TO THE SPECIFICS BECAUSE IT'S PROPRIETARY INFORMATION. WOULD YOU AGREE THAT REPORTING NON-CONFIDENTIAL INFORMATION WOULD ALLOW THE PUBLIC AWESOME ENERGY AND THE COMPANIES TO DETERMINE THE BENEFITS OF THE CURRENT INVESTMENTS AND THE NEED FOR ADDITIONAL ENERGY EFFICIENCY PROGRAMS FOR WHOM THE ENERGY EFFICIENCY PROGRAMS WOULD BENEFIT? I'M SORRY, I DON'T UNDERSTAND YOUR QUESTION. WHO, WHO, FOR WHOM ONE THIS STUDY BE DONE? OH, FOR, TO ALLOW THE GENERAL PUBLIC TO UNDERSTAND THE BENEFITS OF THE PROGRAMS AND, AND WHICH PROGRAMS WE'RE TALKING ABOUT. THE PROGRAMS THAT THE INDIVIDUAL CUSTOMERS THAT HAVE IMPLEMENTED ON THEIR OWN, OR THE PROGRAM SAYS AUSTIN ENERGY HAS IMPLEMENTED, AND HE WANTS TO KNOW THE REPORTING WOULD BE FOR THEM BASICALLY. OH, SORRY. ARE YOU ASKING IF THE REPORTING WOULD BE FOR TIC YES. FOR TIC AND WHETHER OR NOT TIC MEMBERS SHOULD REPORT WHAT THEIR ENERGY EFFICIENCY PROGRAMS ARE TO THE PUBLIC? YEAH. I'M NOT SURE THEY COULD DO THAT. GIVEN THAT A LOT OF THE PROCESSES WITHIN THEIR PLANTS ARE PROPRIETARY. HOWEVER, IF YOU LOOK AT, FOR EXAMPLE, UH, WEBSITES OF VARIOUS TIC MEMBERS, YOU WILL FIND IN JUST ABOUT EVERY WEBSITE, TIC MEMBERS DO DISCUSS THE FACT THAT THEY TAKE ENERGY AND ENVIRONMENT THIS SERIOUSLY, AND HAVE INVESTED IN PROJECTS THAT ADDRESS AND TRY TO MINIMIZE ENERGY USAGE BECAUSE IT'S AN EFFICIENT WAY. AND COST-EFFECTIVE WAY TO, FOR THEM TO REMAIN COMPETITIVE. DO YOU THINK THAT T IUC AND ITS MEMBERS COMPANY AND ITS MEMBER COMPANIES OPERATING IN THE AUSTIN ENERGY SERVICE TERRITORY WOULD BE WILLING TO CONSIDER A REPORTING REQUIREMENT FOR ENERGY DEMAND OR PEAK DEMAND SAVINGS? I DON'T KNOW THAT, UM, I THINK YOU'D HAVE TO TALK TO THE COMPANIES INDIVIDUALLY. UM, BUT, BUT UNLESS THERE'S, YOU KNOW, SOME, SOME INITIATIVE THAT WOULD SOMEHOW COMPENSATE THEM FOR THE COSTS THAT THEY'VE ALREADY INVESTED, I'M NOT SURE WHAT VALUE THAT REPORTING WOULD HAVE. THOSE ARE ALL OF OUR QUESTIONS. THANK YOU. ALL RIGHT. THANK YOU VERY MUCH. UM, IN XP, NO QUESTIONS, YOUR HONOR, RIGHT. THANK YOU, MR. HUGHES, MR. KAUFMAN, ICA EIC HAS NO QUESTIONS. THANK YOU, AUSTIN ENERGY. THANK YOU, YOUR HONOR. GOOD MORNING, MR. POLLOCK, MR. ROCHA, HOW ARE YOU? GOOD. IT'S BEEN A WHILE. GOOD TO SEE YOU. LIKEWISE. I CAN'T REALLY SEE. I HAVEN'T, I HAVEN'T AGED AT ALL EITHER. UH, BUT YOU CAN HEAR ME CLEARLY. YES. OKAY. SO IN YOUR LET'S START WITH BILLING DETERMINANTS. SO IN YOUR TESTIMONY, YOU RECOMMENDED THAT THE FUTURE BILLING, THE FUTURE BILLING DETERMINANTS FOR F Y 2023, BE UTILIZED TO SET BASE RATES FOR ALL SYNERGIES THAT, RIGHT? NO, YOU'RE NOT. YOU'RE NOT RECOMMENDING FUTURE USE OF FUTURE BILLING DETERMINANTS. NO. TH THE TESTIMONY THAT I REFERENCED ABOUT FUTURE BILLING DETERMINED, THIS IS JUST VAGUE POINT THAT IF YOU UNDERSTATE THE BILLING DETERMINANTS FOR PROTEST YEAR, BECAUSE RATES WILL ACTUALLY BE AN EFFECT AFTER THE TEST HERE, YOU'RE GOING TO OVER COLLECT THAT BASE REVENUE REQUIREMENT. THAT WAS THE ONLY REASON FOR MY REFERENCE TO, TO POST-TEST YOUR BILLING DETERMINANTS, BUT I'M NOT PROPOSING TO USE THOSE. POST-TEST YOUR BILLING DETERMINANTS. ALL RIGHT, GOOD. CAUSE THAT WOULD HAVE BEEN A PROBLEM. SO YOU, YOU RECOMMEND USING THE AVERAGE ENERGY CONSUMPTION FOR CUSTOMERS OVER THE FOUR YEARS FROM FYI 2017 THROUGH . IS THAT RIGHT? SO TO ADJUST THE REV BASE REVENUES TO REFLECT, UM, TO ELIMINATE THE EFFECTS [00:55:01] OF WINTER STORM AREA, THAT'S WHAT I DID. YES. AND EXHIBIT J PEOPLE ON SPECIFIC, I LOOKED AT THE AVERAGE USE PER CUSTOMER FOR THE PERIOD PRIOR FOUR YEARS, AND THEN MADE AN ADJUSTMENT TO TEST YOUR SALES, TO ACHIEVE THE, ROUGHLY THE AVERAGE OF THE LAST FOUR. AND YOU MAY HAVE JUST SAID THIS, BUT THOSE HISTORICAL ENERGY SALES FROM 17 THROUGH 20, I MEAN, THEY'RE NOT WHAT WEATHER NORMALIZE, RIGHT? THAT'S RIGHT. THAT'S WHY I TOOK A LONGER PERIOD BECAUSE THEY AREN'T WEATHER NORMALIZED. AND SO THAT, AGAIN, TRYING TO AVERAGE THE DIFFERENT DIFFERENT YEARS WOULD TEND TO SMOOTH THOSE WEATHER VARIATIONS. AND YOU UNDERSTAND THAT WHILE WINTER STORM YURI WAS, UH, DRAMATIC, IT WAS NOT, UM, THE ONLY WEATHER EVENT THAT AUSTIN ENERGY, UH, EXPERIENCES. WELL, I DON'T KNOW. I SOUNDED PRETTY DIRECT TO ME FROM CERTAINLY FROM MY VANTAGE POINT. IT CERTAINLY IT'S VERY DRAMATIC FOR OUR CLIENT THAT WAS OUT FOR A LONG TIME, BUT I THOUGHT YOU JUST TESTIFIED WITH MS. COOPER, THAT YOU DIDN'T KNOW HOW LONG THAT, THAT, UH, THAT THEY WERE OUT. I DON'T KNOW HOW LONG THEY ARE OUT. I KNOW THEY WERE OUT. AND I KNOW THAT JUST BY LOOKING AT THE KILOWATT HOUR USAGE OF THE CLASS, I THINK IT'S VERY OBVIOUS THAT THEY ARE OUT FOR QUITE SOME TIME. AND YOU ADMIT THOUGH THAT ALL SYNERGY DOES EXPERIENCE OTHER TYPES OF WEATHER EVENTS, ICE STORMS, HURRICANES, THINGS OF THAT NATURE FROM TIME TO TIME. YES. AND USUALLY THE PRACTICE IS THAT WHEN YOU HAVE SOME EVENTS THAT, THAT ARE RECURRING, LIKE LET HER STORM URINE MAJOR EYE STORMS OR MAJOR HEAT WAVES, YOU KNOW, FOR EXAMPLE, WEATHER TEMPERATURE, YOU NORMALIZE IT IN SOME RELATION, ALSO REMOVE THE EFFECTS OF NON-RECURRING EVENTS LIKE WINTER STORM, URI, MAJOR ICE STORMS. BUT YOU DID NOT DO THAT FOR 20 17, 20 18, 20 19, OR 2020. NO, THAT'S WHY I TOOK AN AVERAGE OF THE FOUR YEARS, BECAUSE YEAH. STUFF THAT'S GOING TO HAPPEN OVER THOSE FOUR YEARS, BUT, BUT, YOU KNOW, OVERALL, THEY SHOULD EVEN OUT. SO YOU SH YOU CAN EITHER NORMALIZE BY, UH, REMOVING, UH, UNIQUE OR EXTREME EVENTS, OR YOU CAN EXTEND, YOU CAN NOT NORMALIZE AND JUST EXTEND YOUR AVERAGE OVER A LONGER PERIOD OF TIME. YEAH. JUST USE IT, USE AN AVERAGE THAT'S REFLECTIVE OF RECENT HISTORY. AND THAT SHOULD AVERAGE OUT THESE, THESE ANOMALOUS EVENTS. OBVIOUSLY IT WOULD BE BETTER TO TAKE THE TEST HERE AND DO A FORENSIC ANALYSIS AND ADJUST THE TEST YEAR. BUT IF YOU DON'T HAVE THAT INFORMATION, THEN YOU HAVE TO HERE'S WHAT'S AVAILABLE. ALL RIGHT. LET'S TALK ABOUT PASS-THROUGH COSTS FOR A MOMENT. NOW YOU CONTEND THAT PASS THROUGH COSTS TO NOT BE INCLUDED IN THE BASE COST OF SERVICE ANALYSIS, RIGHT? YES. AND AM I RIGHT? THAT YOU SUGGEST THAT HAVING THE PASS-THROUGH COSTS REPRESENTED IN THE COST OF SERVICE IMPACTS THE ALLOCATION OF SERVICE AREA LIGHTING? IS THAT YOUR TESTIMONY? YES. CAUSE SERVICE ERA LIGHTING IS A, IS A SPECIFIC CLASS. SO YOU'RE ACTUALLY DETERMINING IN THE COST OF SERVICE STUDY, WHAT THE REVENUE REQUIREMENT IS THAT YOU THEN INTEND TO RECOVER FROM EVERYBODY ELSE. SO IT'S, IT'S, IT'S IMPORTANT TO DO THE COST OF SERVICE STUDY INCLUDE THE SERVICE AREA, LIGHTING CLASS. YOU SEE WHAT THE OWNER REQUIREMENT IS, AND THEN IF YOU'RE GOING TO PASS THROUGH THOSE COSTS TO EVERYBODY ELSE, THEN YOU AT LEAST HAVE THE AMOUNT OF MONEY THAT SHOULD BE PASSED THROUGH EVERYBODY. YEAH. NOW YOU UNDERSTAND THAT THAT SERVICE AREA LIGHTING, WHAT IS YOUR UNDERSTANDING OF WHAT SERVICE AREA LIGHTING IS FOR AUSTIN ENERGY? I DON'T REALLY HAVE A VERY GOOD UNDERSTANDING OF THAT. SO OTHER THAN IT'S TREATED AS A PASS THROUGH COST, BUT DO YOU KNOW WHAT IT'S COLLECTING? UM, I CAN SAY ALL RIGHT, BUT YOU KNOW THAT IT'S NOT COLLECTED AS A PART OF BASE RATES. WELL, TH TH YOU'VE MADE IT THE ASTA ENERGY'S MADE A DECISION NOT TO RECOVER IT IN BASE RATES. THAT DOESN'T MEAN THAT IT'S NOT A SERVICE THAT AUSTIN ENERGY PROVIDES AND THAT, THAT THEY, THE COST OF WHICH SHOULD BE DETERMINED IN A COST OF SERVICE STUDY. SO IT IS A SEPARATE CLASS OF CUSTOMERS TO BE SURE. AND IT SHOULD BE TREATED THE SAME AS ALL OTHER CUSTOMER CLASSES, BUT YOU HAVEN'T, THE DECISION WAS DECISION TO WHAT TO DO WITH THE REMEDIES AS A POLICY ONE, LIKE, DO WE LET THEM PAY FOR IT DIRECTLY? OR DO WE SPREAD THOSE COSTS AMONG ALL THE OTHER CLASSES, WHICH IS WHAT THE POLICY THAT AUSTIN ENERGY GET SELECTED, BUT YOU DON'T KNOW IF AUSTIN ENERGY HAS REMOVED ALL OF THOSE COSTS AND ASSOCIATE WITH SERVICE AREA LIGHTING SERVICE AND COLLECTED THOSE SEPARATELY THROUGH SOME OTHER CHARGE OF PASS THROUGH OR SOMETHING OF THAT NATURE. YES. I, I DO KNOW THAT, I MEAN, THERE, THERE IS A, ON EACH OF THE DIFFERENT TARIFFS, UH, NOT, NOT EVERY TERROR, BUT CERTAINLY ON SOME OF THE TARIFFS IS PART OF THE, PART OF THE OTHER CHARGES INCLUDES A CHARGE FOR SERVICE AREA STREET LINING. AND IN FACT, THE AUSTIN ENERGY SPREADS THOSE COSTS TO, TO CUSTOMER CLASSES. BUT AGAIN, THOSE ARE NOT PART OF BASE RATES. THEY'RE NOT COLLECTED [01:00:01] AS PART OF BASE RATES AS, AS AUSTIN ENERGY HAS SAY TO POLICY, NOT TO COLLECT THOSE AS PART OF BASE RATES. HOWEVER, AS I SAID BEFORE, THE AMOUNT OF THAT COST IS STILL A FUNCTION OF THE COST OF SERVICE STUDY, OR SHOULD STILL BE A FUNCTION OF THE COST OF SERVICE STUDY. ALRIGHT, LET'S TALK ABOUT PRODUCTION DEMAND COSTS FOR A FEW MOMENTS, UM, UH, AND SHORT A, HE SAYS THAT THEY SHOULD BE ALLOCATED USING A 12 CP METHOD, RIGHT? YES. AND TO BE CLEAR, NOT 12 CP BASED ON AUSTIN, ENERGY'S 12 CP BASED ON ERCOT PEAKS. CORRECT. AND THERE'S A, THERE'S A, THERE'S A WIDE DIFFERENCE BETWEEN THE, I UNDERSTAND MS. PAULA, BUT IF YOU WOULD JUST ANSWER MY QUESTIONS. YES. I AGREE WITH YOU. IT'S BASED UPON AN ARCHIVE 12 CP, AND YOU SAY INSTEAD THAT AN A AND E FOR CP METHOD SHOULD BE USED, RIGHT? YES. AND MR. JOHNSON SAYS THAT A BIP OR BIT METHODS SHOULD BE USED. THAT'S WHAT HE SAYS. ALL RIGHT. LET'S TALK ABOUT THE OUTCOMES OF THESE METHODS FOR A MOMENT. AND THEN WE CAN DISCUSS THE DETAILS. NOW, ADOPTION OF MR. JOHNSON'S PROPOSAL WOULD SHIFT MORE COST AWAY FROM THE RESIDENTIAL CLASS AND MORE COST TO COMMERCIAL CUSTOMERS AND YOUR CLIENTS, IS THAT RIGHT? WELL, IF APPLIED CORRECTLY, IT MIGHT NOT, BUT, BUT HE DIDN'T APPLY IT CORRECTLY. OKAY. BUT THAT'S ANOTHER ISSUE FOR YOU AND YOUR LAWYERS, I SUPPOSE, BUT, BUT, UH, AS HE'S PROPOSED IT, THAT WOULD BE THE EFFECT, RIGHT. THAT'S RIGHT. WHEN YOU ONLY APPLY HALF OF A THEORY, YOU'RE GOING TO GET A DIFFERENT ANSWER THAN IF YOU APPLY THE ENTIRE THEORY UNDERSTOOD. AND YOUR PROPOSAL WOULD SHIFT MORE COSTS RELATIVE TO THESE OTHER PROPOSALS AWAY FROM COMMERCIAL CUSTOMERS AND TOWARDS THE RESIDENTIAL CLASS. WELL, LET ME ALSO CLARIFY WHEN I SAY SHIFT, WE'RE NOT SHIFTING ANYTHING, WE'RE JUST SIMPLY TRYING TO FIGURE OUT WHAT THE COSTS ARE AND THAT DECISION IS WHAT REVENUES DO YOU WANT TO RECOVER FROM EACH CLASS? ALL RIGHT. SO IF, IF YOU, UH, IF YOU CHANGE THE WORD FROM SHIFT TO, IT WILL ALLOCATE MORE TO, UH, UH, RESIDENTIAL CLASS RATHER THAN TO THE COMMERCIAL CUSTOMERS RATHER. YEAH, THAT'S RIGHT. ALL RIGHT. AND THEN AES PROPOSAL IS SOMEWHERE IN THE MIDDLE BETWEEN MR. JOHNSON'S PROPOSAL AND THE YOU'RE A FORCE EPA APPROACH. WELL, IT'S DEFINITELY NOT IN THE MIDDLE, BUT IT'S, IT'S I THINK FOR CLOSE, IT'S CLOSER TO ANY FOUR CP THAT MR. JOHNSON, I SAY IT'S IN BETWEEN. OKAY. I, THAT'S WHY I USED THE WORD SOMEWHERE IN THE MIDDLE. THAT WAS, THAT WAS THE INTENT OF THAT. UM, ALRIGHT. SO, UM, SO FOR PURPOSES OF THIS DISCUSSION, WHAT ARE THE SUMMER MONTHS? JUNE, JULY, AUGUST, SEPTEMBER. ALL RIGHT. UH, AND YOU'VE SEEN, UH, MR. DANIEL'S TESTIMONY. YES. AND IN THAT TESTIMONY, DID YOU SEE THAT HE HAS, UH, A CHART? I BELIEVE IT'S FIGURE ONE ON PAGE 23, WHERE HE SHOWS THE AMOUNT OF AUSTIN ENERGY, UH, GENERATION THAT'S THAT WAS DISPATCHED DURING 2021. YES. I'VE SEEN THAT CHART. ALL RIGHT. AND, AND IT'S CORRECT. IS IT NOT THAT OFTEN ENERGY GENERATION RESOURCES WERE DISPATCHED TO MEET ERCOT LOAD AND, AND, UH, THE SUMMER MONTHS, SORRY, REPEAT THAT, PLEASE. IT'S UH, THAT CHART DEMONSTRATES OR, UH, REFLECTS THAT AUSTIN ENERGY'S, UM, GENERATION RESOURCES WERE DISPATCHED TO MEET ERCOT LOAD DURING THE SUMMER MONTHS. IS THAT RIGHT? YES. UH, IT ALSO SHOWS THAT ALL SYNERGIES RESOURCES WERE DISPATCHED TO MEET ERCOT LOAD DURING JANUARY. IS THAT RIGHT? OH, ABSOLUTELY. I MEAN, GENERATION IS GOING TO ALWAYS BE DISPATCHED TO AROUND. THAT'S NOT, THAT'S NOT THE ISSUE THOUGH. ALL RIGHT. BUT, UH, BUT YOU AGREE THEN THAT, THAT IT WAS, UM, THEIR GENERATION UNITS. WEREN'T WHERE DISPATCH REALLY THIN THROUGHOUT THE YEAR. YEAH. BECAUSE PEOPLE USE ELECTRICITY THROUGHOUT THE YEAR THAT THAT'S, THAT'S, THAT'S OBVIOUS, BUT THAT'S NOT, BUT THAT'S NOT THE QUESTION. RIGHT. IT'S NOT RELEVANT. THE RELEVANT POINT IS THAT AUSTIN ENERGY'S GENERATION DISPATCHED, UH, GENERATION DIRT THROUGHOUT THE YEAR. JUST TO ANSWER THE QUESTION, IF YOU WOULD, MR. POLLOCK. YES. YES. THE DEGENERATION IS DISPATCHED EVERY HOUR OF THE YEAR, BUT OFTEN ENERGIES GENERATION. THAT WAS MY QUESTION. YES. ALL RIGHT. UM, AND INDEED WINTER STORM YURI, WHICH WE WERE TALKING ABOUT A MOMENT AGO, IT OCCURRED WHEN [01:05:01] FEBRUARY OF 20, 21 21. YES. ALL RIGHT. AND THAT'S AN EXAMPLE THAT SHOWS THAT ALL SYNERGY WAS ABLE TO PROVIDE GENERATION, UH, OUTSIDE THE SUMMER MONTHS, ALONG WITH THE OTHER MASS. OKAY. YES. I'M NOT, THERE'S NOT DISPUTING THAT THE OSS ENERGY CAN PROVIDE GENERATION OUTSIDE OF THE SUMMER MONTHS. IT ALWAYS DOES. AND IT DOES EVERY UTILITY PROVIDES GENERATION OUTSIDE THE SUMMER MONTHS. AND THAT HAS, UH, WELL, NOT EVERY UTILITY NECESSARILY IN ARCHIVE. NO, NOT EVERY UTILITY, BUT IF THEY HAVE GENERATION AND YOU CAN OPERATE IT AND IT'S DISPATCHED BY OUR CUT, THEN THEY'RE GOING TO JUST, YOU'RE GOING TO DISPATCH IT. OTHERWISE YOU'RE GOING TO BUY THE ENERGY. YOU'RE GOING TO BUY ALL THE ENERGY IN THE MARKET. ANYWAY, THE QUESTION IS, HOW MUCH ARE YOU GOING TO OFFSET THAT'S PURCHASES BY DISPATCHING YOUR OWN GENERATION UNDERSTOOD. AND SO IT'S, IT'S A, I GUESS IT'S AN OBVIOUS, UH, POINT THEN IT OFTEN ENERGIES, GENERATION RESOURCES PROVIDED VALUE TO AES CUSTOMERS DURING THOSE PERIODS. WHEN, WHEN THE GENERATIONS DISPATCH, THERE'S CERTAINLY VALUED, BUT YOU HAVE TO LOOK AT WHEN THIS IS VALUE THE GREATEST. AND THAT'S, THAT'S, THAT'S HOW DEMAND ALLOCATION WORKS AS YOU LOOK AT WHEN THE MOST VALUE OCCURS, BECAUSE ONCE YOU HAVE THAT VALUE CREATED FOR A CERTAIN PERIOD IN THIS CASE, THE SUMMER MONTHS, THEN THAT VALUE IS THERE TO MEET THE NEEDS ALL YEAR ROUND. UH, MR. POLLOCK, LOOK, I WOULD JUST ASK THAT YOU, UH, ANSWER MY QUESTIONS. YOU'LL HAVE PLENTY OF TIME ON REDIRECT TO EXPAND AND STATE YOUR, UH, VIEW OF THE, THE ISSUE. UM, BUT MY QUESTION WAS A PRETTY SIMPLE ONE, AND THAT IS THAT, UH, THAT GENERATION PROVIDES VALUE TO AES CUSTOMERS THROUGHOUT THE YEAR, RIGHT? YES. OKAY. UM, AND YOU WOULD AGREE THAT CONSISTENCY AND COST ALLOCATION IS AN IMPORTANT ELEMENT IN, IN RATE DESIGN AS A GENERAL PRINCIPLE. WHAT DO YOU MEAN BY CONSISTENCY AND COST ALLOCATION? WELL, UH, JUST WHAT THE PLAIN MEANING OF THE WORDS THAT IT'S IMPORTANT THAT CUSTOMERS DON'T SEE A CONTINUING CHANGE IN, IN, UH, THE, THE MANNER IN WHICH COSTS ARE ALLOCATED. WELL, IT'S NOT CLEAR AS A CUSTOMERS EVER SEE HOW IT COSTS ARE ALLOCATED. IT'S WHAT THEY SAY IS WHAT THEY PAY IN THE RATES. AND SO IF YOU'RE ASKING, SHOULD RATE MAKING, YOU KNOW, TRY TO RECOGNIZE, UH, RATES STABILITY OR, OR GRADUALISM, I CERTAINLY AGREE WITH THAT, BUT THAT HAS VERY LITTLE TO DO WITH THE COST ALLOCATION STUDY. ALL RIGHT. SO YOU DON'T BELIEVE THAT IT'S IMPORTANT FOR THERE TO BE CONSISTENCY AND COST ALLOCATION? I BELIEVE THAT YOU SHOULD PARDON ME? I BELIEVE YOU SHOULD USE CONSISTENT METHODOLOGIES THAT REFLECT COST CAUSATION AND NOT TRY TO CHANGE THOSE METHODOLOGIES FROM, FROM TIME TO TIME, IF YOU CAN, UH, HOWEVER, HOW YOU SET UP THE RATES IS, IS REALLY KIND OF A SEPARATE ISSUE. OKAY. FAIR ENOUGH. BUT WE WERE TALKING ABOUT THE ALLOCATION METHODOLOGY THAT'S RIGHT. EXCUSE ME. OKAY. NOW, IN YOUR TESTIMONY, YOU STARTED AT AUSTIN ENERGY'S REVENUE DISTRIBUTION DOES NOT FOLLOW THE COST OF SERVICE STUDIES THAT, RIGHT? YES. AND I THINK YOU JUST SAID A SECOND AGO THAT, UH, THAT YOU'RE FAMILIAR WITH THE, UH, THE CONCEPT OF GRADUALISM, RIGHT? YES. AND LET ME, LET ME BACK UP A MINUTE. YEAH. I SAID IT DOESN'T FALL. I, I THINK WHAT I ALSO SAID WAS THAT THE REVENUE ALLOCATION WITH A COUPLE OF EXCEPTIONS DIRECTLY FOLLOW THE COST OF SERVICE STUDY. BUT OTHER THAN THAT, IT'S, IF IT WILL MAKE FOLLOW IT. YEAH. CAUSE HE SPENT MUCH OF YOUR CAREER OPPOSING G GRADUAL LITHIUM, I BELIEVE. IS THAT RIGHT? NO, I, I NEVER REALLY POSED GRADUALISM. I MEAN, SOME COMMISSIONS TEND TO BE A LITTLE MORE AGGRESSIVE AND WANT TO GO IMMEDIATELY TO COST, BUT EVERY COMMISSION RECOGNIZES THE NEED FOR GRADUALISM, IF IT MEANS THAT A HUGE INCREASE FOR CLASS. AND WE RESPECT THAT TOO. AND YOU UNDERSTAND THAT IN THIS CASE, AUSTIN ENERGIES, UH, HAS TAKEN A POSITION THAT, UM, REFLECTS THEIR CONCERNS ABOUT GRADUALISM AND RATE SHOCK. YES. I, I ACKNOWLEDGED THAT AND I, I AGREE. THAT'S A VALID CONCERN, I BELIEVE HE DID ON PAGE 40 OF YOUR TESTIMONY. UM, YES. ALL RIGHT. LET'S TALK BRIEFLY ABOUT PRODUCTION DEMAND COSTS. I MISSPOKE. I MEANT DISTRIBUTION DEMAND RELATED COSTS. [01:10:01] THOUGHT WE WERE HAVING A DEJA A LITTLE MOMENT FOR A MINUTE. WE WERE. SO YOU RECOMMEND USING THE ONE IN CPE ALLOCATION METHOD FOR SUBSTATIONS, POLES AND CONDUCTORS RATHER THAN THE 12 NCP METHODOLOGY PROPOSED BY A, IS THAT RIGHT? YES. AND YOU TIE THAT BACK IN WITH YOUR INITIAL RECOMMENDATION T TO THE USE OF THE ONE NCP COST ALLOCATOR, UM, BECAUSE IT WOULD, UM, USING A 12 NCP WOULD RESULT IN A SHIFT IN COST RESPONSIBILITY FOR DISTRIBUTION COSTS. NOW, MY RATIONALE IS THAT SAME FOR, YOU KNOW, A FOR CPS, IT IS FOR 12 NCP VERSUS ONE NCP IT'S TO REFLECT COST CAUSATION. AND THE FACT THAT THE REALITY THAT, THAT AUSTIN ENERGY IS EVERY UTILITY HAS TO SIZE ITS DISTRIBUTION COMPONENTS TO MEET THE EXPECTED DEMAND ON THEM. AND THAT NCP IS A PROPER MEASURE FOR THAT, BECAUSE AS YOU GET CLOSER TO THE CUSTOMER, THE CUSTOMER'S DEMANDS BECOME MORE RELEVANT THAN THE SYSTEM DEMANDS. AND IS IT TRUE THAT THE NCP CALCULATION IS DONE AT THE CLASS LEVEL? RIGHT? SO OFF PEAK OR SEASONAL CUSTOMERS THAT THEY'RE NOT, UM, TAKING OVER AN ACCOUNT IN A ONE NCP ALLOCATION? WELL, I'M NOT SURE WHAT THAT MEANS. I MEAN, WHEN, WHEN YOU SAY NOT TAKING INTO ACCOUNT, HOW BASICALLY THEY, IF THEY'RE IN A CLASS THAT IS CONTRIBUTING TO, YOU KNOW, TO, TO, TO THE CLASS PEAK, THEN THEY'RE GOING TO PREPARE, PRESUMABLY WOULD BEAR A PORTION OF THOSE COSTS UNLESS THE RATE WAS DESIGNED FOR OFF FORGIVENESS, IN WHICH CASE THEY WOULDN'T, BUT IT WOULDN'T CAPTURE, UH, OR REFLECT ANY VARIABILITY IN LOAD, WOULD IT, BECAUSE YOU'RE ONLY LOOKING AT IT ONCE? WELL, THE VARIABILITY DOESN'T MATTER, AMY, YOU'RE LOOKING AT THE HIGHEST LOAD, WHICH IS WHAT THE EQUIPMENT IS DESIGNED TO, TO SERVE. IF YOU, IF YOU DIDN'T SIZE THE EQUIPMENT TO MEET THE HIGHEST LOAD OF THE CUSTOMERS, THEN, UH, IT WOULD FAIL. THE CUSTOMERS WOULD BE OUT OF POWER AND YOU HAVE TO REPLACE THE EQUIPMENT, WHICH WOULD COST A LOT OF MONEY, BUT THE 12 TWELVES NCP, AS OPPOSED TO YOUR ONE, AND CP WOULD RECOGNIZE THAT, I MEAN, DISTRIBUTION CAPACITY PROVIDES VALUE TO CUSTOMERS REALLY THROUGHOUT THE YEAR, NOT JUST AT THE HIGHEST POINT. I DON'T THINK CUSTOMERS, I THINK, WELL, CUSTOMERS VALUE HAVING UNINTERRUPTED SERVICE. I THINK THEY VALUE IT MORE AT TIMES WHEN THEY'RE USING IT MORE. AND THAT'S USUALLY DURING THE SUMMER MONTHS, BUT YOU WOULD AGREE THAT CLASS, THAT CLASS CONTRIBUTIONS TO THE NCP, UH, DO VARY THROUGHOUT THE YEAR, THE NCPS VARY THROUGHOUT THE YEAR. THAT'S, THAT'S A FACT JUST, JUST LIKE EVERY OTHER, YOU KNOW, COINCIDENCE, DEMAND, EVERY EVERYTHING, VERY SIR OUT THERE, BUT THAT'S NOT A REASON TO USE THOSE VARIATIONS TO DETERMINE HOW YOU ALLOCATE COSTS. I UNDERSTAND THAT YOU HAVE A DIFFERENT POSITION MR. PALETTE, BUT YOU WOULD AGREE WITH YOU, NOT THAT THE 12 NCP APPROACH ALSO WOULD CAPTURE MORE OF THE DIVERSITY IN, IN, UH, IN A LOAD FOR THE CUSTOMER CLASSES. WELL, AGAIN, DIVERSITY IS NOT RELEVANT AT THE DISTRIBUTION OR AS RELEVANT AT THE DISTRIBUTION LEVEL. ARE YOU AWARE OF OTHER MLUS IN TEXAS UTILIZE THE 12 AND CP METHOD ALLOCATE DISTRIBUTION COSTS? UM, I'M NOT DIRECTLY AWARE OF THAT. I OBVIOUSLY SAW THAT INFORMATION AND A'S REBUTTAL TESTIMONY. DID YOU ALSO SEE IN MR. JOHNSON'S CROSS REBUTTAL THAT, UH, HIS TESTIMONY THAT THE 12 NCP, UH, METHODOLOGY IS WITH WITHIN THE RANGE OF REASONABLENESS? I DON'T RECALL EXACTLY, BUT I WOULDN'T BE SURPRISED THAT HE SAID THAT ONE MOMENT. ALL RIGHT. LET'S TALK FOR A FEW MOMENTS ABOUT PRIMARY DISTRIBUTION CUSTOMERS. YOU RECOMMEND REMOVING THE ALLOCATION OF PRIMARY DISTRIBUTION POLES AND LINES FOR PRIMARY VOLTAGE CUSTOMERS ABOVE 20,000 KW AND CREATE A SEPARATE CLASS. IS THAT RIGHT? WELL, NO, IT'S ACTUALLY TO JUST DEFINE THE CLASS DIFFERENTLY. WE'RE NOT REALLY CREATING A SEPARATE CLASS, BUT IT HAS THE SAME. YES. IT WOULD BE TRADED. THE DISTRIBUTION COSTS WILL BE TREATED DIFFERENTLY FOR, FOR THAT CLASS. RIGHT. SO IT HAD THE SAME EFFECT THOUGH, RIGHT? MAYBE NOT AS SEPARATE THE SAME EFFECT. WELL, IT WOULD, UM, ALLOCATE, UH, ACTUALLY WOULD STOP ALLOCATING CERTAIN COSTS TO THESE CUSTOMERS THAT, UH, UNDER THE CURRENT TARIFF ARE BEING ALLOCATED TO THEM. YES. [01:15:01] THAT WOULD CHANGE THE ALLOCATION AND DISTRIBUTION COSTS FOR THAT CLASS. THAT'S WHAT I MEANT WHEN I SAID THE SAME EFFECT. YES. THEN, THEN WE AGREE. ARE ANY OF THE CUSTOMERS, WELL, FIRST OF ALL, DO YOU KNOW HOW MANY CUSTOMERS, AUSTIN ENERGY SERVES THAT? UH, OUR PRIMARY VOLTAGE, UH, GREATER THAN 20,000 KW THREE. ALRIGHT. AND NONE OF THOSE CUSTOMERS ARE SERVED DIRECTLY FROM ANY SUBSTATION ON A SYSTEM. ISN'T THAT CORRECT? I WOULD DISAGREE WITH THE CHARACTERIZATION OF DIRECTLY. UM, WELL, THERE'S A NUMBER OF BAR. NONE OF THEM TAKE NONE OF THEM ACTUALLY OWN EQUIPMENT WITHIN THE SUBSTATION, BUT THAT, OF COURSE, NO UTILITY ALLOWS CUSTOMERS TO PUT THEIR OWN EQUIPMENT IN THE UTILITY SUBSTATION. SO THAT'S, THAT'S NOT THE ISSUE AND THEY DON'T OWN ALL OF THE EQUIPMENT OUTSIDE OF THE SUBSTATION EITHER. THAT'S TRUE. AND THAT'S, THAT'S BEEN RECOGNIZED TO EVEN, EVEN IN CASES WHERE A PRIMARY SUBSTATION CLASS HAS BEEN DEVELOPED, WHAT FLAGGED THE FACT THAT THIS SERVICE IS DIFFERENT AND WHAT CASES BESIDES THE ENCORE CASE, WHICH YOU'VE OBVIOUSLY MENTIONED, UH, ARE YOU REFERRING TO, SO I THINK SWEPCO ALSO HAS A PRIMARY SUBSTATION, UM, UH, CHARGE AND THEIR FUEL DIFFERENCE IN THEIR FUEL FACTOR TO REFLECT THE FACT THAT THERE ARE DIFFERENT LOSSES ENCOURAGED TO PROVIDE PRIVATE PRIMARY SUBSTATION SERVICE, THEN PRIMARY DISTRIBUTION SERVICE, BUT THE CRITERIA ARE ESSENTIALLY THE SAME. IT'S ESSENTIALLY A CUSTOMER IS SERVED DIRECTLY OUT OF SUBSTATION THROUGH PROOF THEATERS THAT ONLY PROVIDE SERVICES TO THAT CUSTOMER. AND AGAIN, I UNDERSTAND THAT THAT'S YOUR POSITION, MR. POLLOCK, BUT THE FACT IS THAT THE POINT OF INTERCONNECTION FOR ALL OF THE CUSTOMERS THAT ARE IN THIS GROUP, OR ARE YOU, UH, YOU NOTED OUTSIDE THE SUB STATION, CORRECT? YES. THEY DON'T OWN THE SUBSTATION, CORRECT? CORRECT. AND THEY DON'T OWN, UH, AT LEAST SOME ADDITIONAL INFRASTRUCTURE OR FEEDER THAT GOES FROM THE SUBSTATION TO THEIR FACILITY. CORRECT? CORRECT. NOW YOU DID MENTION IT'S LIKE THE DIAPHRAGM AND DEPENDENCY OF MY TESTIMONY IS EXACTLY WHERE WE'RE SAYING EXACTLY THE SAME THINGS. OKAY. FAIR ENOUGH. I JUST WANT TO MAKE SURE THAT WE'RE, UM, WE ARE SAYING THE SAME THING. UM, AND, AND AUSTIN ENERGY MAINTAINS THE, THOSE, UH, THOSE FACILITIES AS WELL. CORRECT FACILITIES. ARE YOU TALKING ABOUT THE SUBS, THE FACILITY, THE SUBSTATIONS IN QUESTION AS WELL AS THE FEEDER THAT PROVIDES SERVICE TO THESE THREE CUSTOMERS? YEAH. SO ALL, ALL OF THE SUBSTATIONS ARE OF COURSE MAINTAINED BY A SAFE BY AUSTIN ENERGY. UM, I'M PRESUMING THEY LOST THE ENERGY, MAINTAINS THE FEEDERS, ALTHOUGH I'M NOT SURE WHAT MAIN MAINTENANCE THEY DO WITH FEEDERS THAT ARE UNDERGROUND, BUT IN THEORY, THEY WOULD BE OBLIGATED TO MAINTAIN THOSE FEATURES IF SOMETHING WERE TO HAPPEN. ALL RIGHT. AND INDEED, WHEN THINGS HAVE HAPPENED, THOSE CUSTOMERS HAVE REACHED OUT TO AUSTIN ENERGY AND EXPECTED THEM TO TAKE APPROPRIATE ACTIONS TO MAKE SURE THAT THEY WERE OPERATING APPROPRIATELY. YEAH. I, I DON'T KNOW THE HISTORY OF WHAT HAS OR HAS NOT HAPPENED, BUT, BUT PRESUMABLY IF SOMETHING HAPPENED THAT WOULD BE AUSTIN ENERGY'S RESPONSIBILITY TO, UH, ADDRESS THE PROBLEM. ALL RIGHT. AND THAT'S REALLY, MY QUESTION IS WHERE THE RESPONSIBILITIES LIE. AND I THINK WE'RE IN AGREEMENT ON THAT. SO YOU, YOU DO, UH, UM, YOU WOULD AGREE THEN ALSO, RIGHT. THAT DISTRIBUTION FEEDERS CAN BE DIRECT OR SHARED, UH, CORRECT. YES, YES I WOULD. AND AS YOU NOTED, THEY CAN BE OVERHEAD OR UNDERGROUND AS IN THE CASE OF YES. IT COULD BE EITHER ONE. ALL RIGHT. NOW, AS I UNDERSTAND IT FROM YOUR TESTIMONY, UM, YOUR CONCERN IS THAT THE CLIENTS ARE, OR THE CUSTOMERS IN QUESTION ARE, ARE RELATIVELY CLOSE TO A SUBSTATION. AND SO IN YOUR OPINION, UH, THEY, THEY DON'T, UH, UTILIZE, UH, MUCH OF THE PRIMARY SYSTEM. AND SO THEREFORE THEY SHOULDN'T BE ALLOCATED COSTS ASSOCIATED WITH THE PRIMARY SYSTEM. IT'S NOT A QUESTION OF RELATIVELY CLOSE. YOU LOOK AT PHOTOGRAPHS, YOU CAN SEE THE SUBSTATIONS, RIGHT. REALLY JASON TO THEIR PLANT SITE, SOME CASES IT'S, IT'S ACTUALLY ON THE PROPERTY THAT USED TO BE OWNED BY THE CLIENT BY THE CUSTOMER AND SEE IT TO THE UTILITY SO THEY CAN BUILD A SUBSTATION. THAT'S A FAIRLY, AND THAT'S A FAIRLY COMMON PRACTICE THAT IS RELATIVELY CLOSE. IT'S NOT AS RELATIVELY IT'S RIGHT THERE. OKAY. I DIDN'T MEAN TO QUIBBLE OVER THAT POINT, SO, OKAY. SO THERE, THERE, CLOSE TO IT. UM, AND BECAUSE OF THAT, IT'S YOUR OPINION THAT THEY SHOULDN'T HAVE TO PAY FOR ALL THAT OTHER PRIMARY SYSTEM COSTS, [01:20:02] UH, THAT SERVE OTHER CUSTOMERS AT PRIMARY, THAT THEY DON'T CAUSE THE OSS ENERGY TO BUILD A NETWORK THAT SERVES OTHER PRIMARY CUSTOMERS THAT, THAT THE COSTS OF THE FEEDERS THAT WE'RE TALKING ABOUT, THAT AUSTIN ENERGY OWNS LOGICALLY SHOULDN'T BE DIRECTLY ASSIGNED TO THOSE CUSTOMERS. AND THAT'S THE ONLY DISTRIBUTION PRIMARY COSTS THAT THESE CUSTOMERS SHOULD EVER PAY. BUT YOU WOULD AGREE THAT SYSTEM COSTS ARE RECOVERED BY UTILITIES, UH, ON A CLASS AVERAGE BASIS, REALLY, REGARDLESS OF THE PHYSICAL LOCATION OF THE INTERCONNECTION, I COMPLETELY DISAGREE WITH THAT IN THIS INSTANCE, IN PARTICULAR, I DISAGREE WITH THAT. YOU DISAGREE THAT THAT'S HOW UTILITIES ACROSS THIS NATION GENERALLY SET RIGHTS. OH, OKAY. WELL, YOU'RE GOING TO SAY GENERALLY, BUT I'M TALKING ABOUT FOR THIS SPECIFIC CIRCUMSTANCE AND YOU CAN'T JUST TAKE IT AND SAY, WELL, EVERYBODY ASSIGNS COST TO CUSTOMER CLASSES. WELL, THAT'S NOT COMPLETELY TRUE, BUT LET'S TAKE IT ONE STEP AT A TIME IN TEXAS WITH THE EXCEPTION OF THE ENCORE CASE FOR THOSE 50 CUSTOMERS. AND DID YOU SAY SWEPCO? YES. OKAY. EXCEPT FOR THAT IN TEXAS UTILITIES RECOVER THEIR SYSTEM COSTS ON A CLASS AVERAGE BASIS. IS THAT NOT TRUE? YES. OKAY. CAN YOU THINK OF ANY OTHER EXCEPTION IN THIS STATE? UH, YES. UM, ENTERGY, TEXAS, FOR EXAMPLE, UM, THEY HAVE A FACILITY CHARGE WRITER AND FOR CUSTOMERS LIKE THE ONES WE'RE TALKING ABOUT HERE, THOSE CUSTOMERS ARE ABLE TO PAY FOR THE DISTRIBUTION FACILITIES, UH, THAT, THAT, UH, ENTRY TEXAS OWNS AND MAINTAINS, BUT THAT'S NOT A PRIMARY RESULT AS A RESULT. THOSE CUSTOMERS ARE NOT ASSIGNED TO ANY DISTRIBUTION, PRIMARY COSTS. THEY'RE CONFESSED, THEY'RE CONSIDERED TO BE TRANSMISSION LEVEL CUSTOMERS. OKAY. BUT AGAIN, I MEAN THAT, THAT'S, THAT'S NOT THE SENSE, THE SAME SITUATION AS YOU'RE PROPOSING HERE. IT'S VERY MUCH THE SAME SITUATION I'M PROPOSING HERE BECAUSE I'M PROPOSING THAT BOSTON ENERGY IMPLEMENT A FACILITY CHARGE SO THAT THE CUSTOMERS THAT ARE SITUATED, YOU KNOW, WHERE THE SUBSTATION IS AT THE PLANT SITE, THAT, THAT ANY, ANY, ANY AUSTIN ENERGY ON EQUIPMENT CUSTOMER COULD OPT TO BUY OR LEASE THAT EQUIPMENT AND BECOME BASICALLY A DIRECT SERVE CUSTOMER FROM THE SUBSTATION. UM, BUT YOU KNOW, YOUR, YOUR CLIENTS ARE THE CUSTOMERS THAT ARE PROPOSING, UH, ARE MAKING THIS PROPOSAL HAVE, HAVE DONE THAT. NONE OF THEM HAVE PURCHASED THEIR FACILITIES, THE RIGHT DEVON I'M OFFERING, I'M OFFERING THAT ABILITY SO THAT THE CUSTOMERS, IF THEY CHOOSE TO DO SO, CAN UPGRADE THE LEVEL OF SERVICE AND PAY A LOWER RATE. THEY SHOULDN'T BE FORCED TO SUBSIDIZE OTHER PRIMARY CUSTOMERS JUST BECAUSE THAT OPPORTUNITY HAS NOT BEEN AFFORDED THEM IN THE PAST. I THINK IT SHOULD BE AFFORDED THEM AND THEY SHOULD HAVE THE OPPORTUNITY TO CHOOSE THE LEVEL OF SERVICE THAT THEY PREFER. ALL RIGHT. AND, AND, AND THAT'S A DIFFERENT FACT PATTERN THAN WHAT WE CURRENTLY HAVE. YES. BUT THEN WHEN HE SAY DIFFERENT FACT PATTERNS, THAT OPPORTUNITY DOESN'T EXIST TODAY. ALL RIGHT. BUT WHAT I'M REFERRING TO IS THAT YOUR PR YOUR PROPOSAL IS TO, UM, IT'S TO HAVE THIS RECOMMENDATION ADOPTED, UH, WITH THE CURRENT STATE OF AFFAIRS WHERE AUSTIN ENERGY OWNS THE SUBSTATION AND THE FEEDERS AND SO FORTH. YES OR YES. AND THEN GIVE IT TO THE CUSTOMERS COULD BUY BY THE FEEDERS. THE CUSTOMERS MAY DECIDE TO BUY THE SUBSTATION AND TAKE TRANSMISSION SERVICE. THOSE, ALL THOSE OPPORTUNITIES SHOULD BE AFFORDED TO THOSE CUSTOMERS, WHETHER THEY CHOOSE IT OR NOT, THAT'S UP TO THEM, BUT IT SHOULD STILL BE AFFORDED THAT SAID THAT DOESN'T CHANGE THE FACT THAT, THAT THE COSTS ARE NOT A COST TO PROVIDE THAT SERVICE ARE DIFFERENT THAN THE COST TO PROVIDE PRIMARY DISTRIBUTION SERVICE. AND AGAIN, I UNDERSTAND THAT THAT'S YOUR POSITION, BUT THAT, UM, BUT YOU'RE SAYING THAT THIS SHOULD BE APPROVED. UH, IT SHOULD NOT BE CONTINGENT UPON THE CUSTOMER'S CONSTRUCTING AND MAINTAINING THE DISTRIBUTION FACILITIES THEMSELVES. NO, IT HASN'T. I MEAN, LIKE I CITED ENTERGY, TEXAS, AS AN EXAMPLE, THE CUSTOMERS DIDN'T BUILD UP FACILITIES, UTILITY DID, BUT THE UTILITY WAS WILLING TO LET THE CUSTOMER LEASE IT. SO THAT, THAT ACTIVELY THEIR SERVICES EQUIVALENT TO SUBSTATION OR TRANSMISSION SERVICE. ALL RIGHT. SO IN YOUR TESTIMONY, YOU REFERENCED DAWN COURT IS CORRECT. YES. ALL RIGHT. NOW HERE TODAY, YOU BROUGHT UP A SWEPCO EXAMPLE, WHICH WE'RE NOT REALLY SURE OF ALL THE DETAILS AND WE'VE GOT, NOW THIS INTERGY EXAMPLE THAT YOU'VE SORT OF LAID OUT, BUT THAT'S INTERESTING EMPLOYEES IN MY TESTIMONY. ALRIGHT, FAIR ENOUGH. SO IN THE ENCORE CASE, UH, THOSE CUSTOMERS CONSTRUCTED AND MAINTAINED THE DISTRIBUTION FACILITIES THEMSELVES. ISN'T THAT RIGHT? THEY, THEY, EVERY, EVERY LARGE CUSTOMER MAINTAINS THEIR OWN DISTRIBUTION FACILITIES. THE QUESTION [01:25:01] IS WHERE IS THE PLANE OF AIR CONNECTION? AND, AND IT'S TRUE THAT THAT UTILITIES WILL NOW ALLOW CUSTOMERS TO OWN EQUIPMENT WITHIN THEIR SUBSTATIONS. NO UTILITY DOES THAT. WE'RE NOT TALKING ABOUT SAFETY, THAT'S A SAFETY ISSUE. ALL RIGHT. SO, SO NOBODY DOES THAT. SO, BUT THEY CAN, THEY CAN OWN THE FACILITIES OR AT LEAST THE FACILITIES UP TO THE POINT OF INTERCONNECTION. UH, LET ME ASK THIS, HOW HAS THE TRANSCRIPT BEING CREATED? BIG METHOD? YEAH. YOU KNOW, ME, I DON'T LIKE MESSY TRANSCRIPTS AT ALL. SO THIS IS IF WE WERE IN A DIFFERENT SETTING, I MIGHT BE SUSTAINING NON-RESPONSIVE OBJECTIONS, BUT MR. BROCADE, I WOULD PREFER TO JUST LET HIM ANSWER. YOU HAVE A PROBLEM WITH HIS, WITH HIS ANSWER. YES. THEY'RE. LONG-WINDED I ADMITTED, UM, SHIT, YOUR HONOR. IT'S NOT THAT COMPLICATED. IT'S NOT THAT I DON'T, I'M NOT, I'M NOT CONFUSED YET. YOU MIGHT GET IN THERE. UM, SO I WOULD, BUT I UNDERSTAND YOUR CONCERN. EVERY LAWYER IN THIS ROOM UNDERSTANDS WHAT'S HAPPENING HERE, BUT WE'VE GOT TO SEPARATE THE TESTIMONY FROM THE QUESTIONS A LITTLE BETTER, PLEASE. SO HAVING SAID THAT YOU CAN OBJECT AS NONRESPONSIVE IF YOU WANT TO, AND WE CAN DEAL WITH IT THAT WAY, OR WE CAN JUST LET MR. POLLOCK SAY WHAT HE WANTS TO SAY AND PICK IT APART. THANK YOU, YOUR HONOR. THANK YOU. THANK YOU. THANK YOU, MR. POLLOCK. THOSE ARE ALL THE QUESTIONS THAT I HAVE FOR YOU THIS MORNING. THANK YOU. GOOD. GOOD CHATTING WITH YOU. YOU AS WELL AS ALWAYS AS ALWAYS. UM, YOU GUYS, UM, ALL RIGHT. UH, MR. HALLMARK, YOU READY? ALRIGHT. RIGHT. THANK YOU. UH, MR. POLLOCK, YOU WERE ASKED SOME QUESTIONS BY THE SIERRA CLUB REGARDING ENERGY EFFICIENCY. UH, DO YOU RECALL THAT YES. IN YOUR VIEW, UH, DO LARGE INDUSTRIAL CUSTOMERS HAVE AN INCENTIVE TO INVEST IN THEIR OWN ENERGY EFFICIENCY PRODUCT PROJECTS? ABSOLUTELY. AND THEY DO ALL, ALL THE TIME. WHY DO THEY HAVE THAT INCENTIVE COMPETITION, ENERGY EFFICIENCY HOUSE, EXCUSE ME, ENERGY EFFICIENCY HELPS TO NOT ONLY LOWER THEIR ENERGY COSTS AND IMPROVE THEIR PRODUCTION PROCESSES. THEREFORE IT HELPS THEM TO SUSTAIN THEIR PRACTICES OVER THE LONGTERM BECAUSE EVERYBODY ELSE IS COMPETING WITH THEM. ALL RIGHT. UM, AND MR. POLLOCK, DO YOU HAVE AN UNDERSTANDING, WELL, LET ME BACK UP, YOU WERE ASKED WHETHER TIC PROVIDED ANY INFORMATION IN THIS CASE ABOUT SPECIFIC ENERGY EFFICIENCY MEASURES. DO YOU RECALL THAT? YES. AND DO YOU HAVE ACCESS TO, WHAT'S BEEN MARKED AS SIERRA CLUB EXHIBIT SIX, WHICH IS DISCOVERED TIC DISCOVERY RESPONSES. YES. AND IN RESPONSE TO THE FIRST QUESTION, ONE DASH ONE DID TIC PROVIDES SPECIFICS. SO TIC DID LIST A NUMBER OF THINGS THAT THE CUSTOMERS ARE DOING. ALL RIGHT. UM, WHEN A LARGE INDUSTRIAL CUSTOMER DECIDES TO MAKE ENERGY EFFICIENCY, UH, INVESTMENTS WHO PAYS FOR THEM WELL, THE CUSTOMER DOES, BUT THERE'S, THEY'RE SELF FUNDING, THEIR OWN ENERGY EFFICIENCY PROGRAM. SO IN YOUR VIEW, SHOULD THAT CUSTOMER HAVE SOME SORT OF OBLIGATION TO PUBLICLY DISCLOSE THE ENERGY EFFICIENCY MEASURES THAT IT TAKES? NO. NO. IT SEEMS TO ME THAT OBLIGATION WOULD BE MORE TIED TO IF THEY WERE RECEIVING PUBLIC FUNDING. AND MR. POLLOCK, UH, DO YOU HAVE AN UNDERSTANDING OF WHETHER THAT TYPE OF INFORMATION, UH, WOULD BE, MIGHT BE CONSIDERED CONFIDENTIAL? I WOULD THINK THAT MOST COMPANIES WOULD REGARD THAT INFORMATION AS HIGHLY CONFIDENTIAL TRADE SECRET, AND BECAUSE IT POTENTIALLY EXPOSES THE INTERNAL WORKINGS OF THEIR PROCESSES, WHICH ARE HIGHLY PROPRIETARY. AND MR. POLLOCK, [01:30:01] DO YOU HAVE AN UNDERSTANDING OF WHETHER IT'S WITH RESPECT TO THIS SPECIFIC PROCEEDING, WHETHER IT'S EVEN POSSIBLE TO PROVIDE CONFIDENTIAL INFORMATION AND KEEP IT OUT OF THE PUBLIC DOMAIN? UH, NO. THERE'S, THERE'S NO RE NO PROVISION FOR COMFORT, UM, DISCLOSING ANY KIND OF CONFIDENTIAL INFORMATION AS WE'VE FOUND OUT. ALL RIGHT. UM, YOU WERE ASKED SOME QUESTIONS ABOUT PRODUCTION, DEMAND COSTS. DO YOU RECALL THAT? YES. CAN YOU EXPLAIN WHY YOU SUPPORT THE USE OF A AND E FOR CP FOR THESE COSTS? YES, I FIRST AND FOREMOST, IT RECOGNIZES THE REALITY OF THE FACT THAT AUSTIN ENERGY AND ERCOT OR SUMMER PICKING UTILITIES, SACKED, SACKING IS CONSISTENT WITH PRACTICES USED BY OTHER VERTICALLY INTEGRATED UTILITIES, BOTH WITHIN WELL, MAINLY OUTSIDE OF OUR COD NOW, BUT ALSO IN PARTICIPATE IN, IN NARROW MARKETS. UH, IT'S ALSO REFLECTIVE OF COST CAUSATION BECAUSE AGAIN, THE SUMMER PEAK IS A DRIVER, BUT PART OF THE AVERAGE ACCESS METHOD IS THE TERM AVERAGE DEMAND, WHICH, YOU KNOW, AVERAGE DEMAND IS ESSENTIALLY ENERGY USAGE THROUGHOUT THE YEAR, BUT ON AN AVERAGE BASIS. AND IT'S WEIGHTED BY THE SYSTEM AUDIT FACTOR. SO IT DOES REFLECT THE REALITY THAT GENERATION OPERATES YEAR ROUND, WHICH ALL UTILITIES PROVIDE GENERATION YEAR-ROUND, BUT IT ALSO REFLECTS THE FACT THAT GENERATORS HAVE TO ALSO FOLLOW THE LOAD, PARTICULARLY DURING THE PEAK AND DURING FLUCTUATIONS OF, OF DIFFERENT SUPPLY. AND SO IT REFLECTS BOTH THE BASE ENERGY, AS WELL AS THE LOAD FALLING AND PICKING CAPACITY NEEDED TO PROVIDE A RELIABLE SYSTEM. ANY FORCED CP IS ALSO A PRETTY LARGE ACCESS IN GENERAL, WHICH ANNIE FOR CP IS A PART OF, IS ALSO A PRETTY, PRETTY WIDELY ACCEPTED METHODOLOGY. ALL RIGHT. THANK YOU. AND YOU WERE ASKED SOME QUESTIONS ABOUT MR. PROPOSAL, WHICH I BELIEVE IS CALLED BASE. OBJECTION. I'M SORRY, YOUR HONOR. THERE WAS ONLY A TANGENTIAL REFERENCE TO MR. JOHNSON'S TESTIMONY AND I BELIEVE MR. POLLOCK'S RESPONSE WAS THAT HE DIDN'T, HE WASN'T AWARE, BUT HE WASN'T SURPRISED IF HE'D SAID IT. SO THAT'S NOT ACCURATE AS TO PRODUCTION DEMAND COSTS. MR. POLLOCK WAS CROSS-EXAMINED ON MR. JOHNSON'S PROPOSAL AND HOW IT RELATES TO OTHER PROPOSALS. AND IT'S CERTAINLY FAIR GAME FOR REDIRECT. OVERRULED, MR. POLLOCK, YOU WERE ASKED SOME QUESTIONS ABOUT MR. JOHNSON'S PROPOSAL FOR PRODUCTION DEMAND CAUSED, UH, WHICH I BELIEVE IS CALLED BASE INTERMEDIATE PEAKING. DID I GET THAT RIGHT? YOU KNOW, BASE INTERMEDIATE PEAK METHOD. OKAY. HOW, WHAT PERCENTAGE OF, OF PRODUCTION PLANT COSTS ARE ALLOCATED ON ENERGY UNDER THAT PROPOSAL? YEAH, AS I STAYED IN MY CROSS REBUTTAL TESTIMONY ABOUT 83% OF THE COSTS ARE ALLOCATED ON SHORE ENERGY BASIS. UH, ARE YOU AWARE OF ANY, ANY UTILITY IN TEXAS THAT HAS, UH, HAD THAT METHOD APPROVED? UM, NOT IN FACT, I, I, SOMETHING LIKE THAT HAS BEEN REJECTED. IT WASN'T CALLED THE BASE INTERMEDIATE PAID METHOD, BUT IT WAS A SIMILAR ATTEMPT TO TWO SEPARATE LOADS BETWEEN DIFFERENT RATING PERIODS AND, AND KIND OF, KIND OF ACCOMPLISH THE SAME THING, BUT NOT IN THE SAME WAY. ALL RIGHT. AND ARE YOU AWARE OF ANY VERTICALLY, ANY NON ERCOT UTILITY IN TEXAS THAT USES THE ERCOT 12 CP METHOD THAT AUSTIN ENERGY PROPOSES? NO. SO MR. PAUL, IN YOUR OPINION, IS THIS ERCOT 12 CP METHOD, REALLY SOME SORT OF MODERATE APPROACH? UH, NO. I DON'T THINK IT'S A MODERATE APPROACH AT ALL. I THINK IT'S JUST VERY INCONSISTENT WITH THE REALITIES OF THE UTILITY INDUSTRY IN TEXAS. ALL RIGHT. YOU WERE ASKED SOME QUESTIONS, MR. POLLOCK ABOUT WHETHER AUSTIN ENERGY'S PLANTS ARE DISPATCHED, UH, ALL THE TIME. RIGHT? I THINK THEY WERE JUST FAST THROUGHOUT THE YEAR. YES. IS THAT A DRIVER OF HOW WE SHOULD ALLOCATE PRODUCTION DEMAND COSTS? NO, IT'S NOT. YEAH. I MEAN, IT'S A REALITY THAT PLANTS ARE DISPATCHED WHEN ARCOT DISPATCHES THEM OR WHEN THEY ARE, THEY'RE TOLD THAT THEY CAN OPERATE, BUT THAT HAS VERY LITTLE TO DO WITH THE, THE DETERMINING WHAT FACTORS CAUSE THE UTILITY TO INCUR THAT INVESTMENT IN THE FIRST PLACE. ALL RIGHT. I MEAN, IS IT A TRUE STATEMENT THAT, UH, ELECTRIC UTILITIES PROVIDE ELECTRICITY EVERY HOUR OF EVERY DAY? WE HOPE. YES. THAT'S, THAT'S THAT'S WE HOPE THAT'S THE CASE. SO DOES THAT MEAN THAT WE SHOULD ALLOCATE ALL ELECTRIC COSTS BASED ON KWH USAGE? NO. WHY NOT? [01:35:02] BECAUSE AS I MENTIONED EARLIER IN THE GARDEN, THE CROSS CUSTOMERS VALUE ELECTRICITY MORE WHEN THEY NEED IT THE MOST, THEY NEED IT THE MOST SUMMER MONTHS AND THE UTILITIES HAVE A HARDER TIME PROVIDING IT IN THE SUMMER MONTHS BECAUSE THAT'S WHEN DEMAND AND CAPACITY ARE VERY TIGHT. AND SO IN ORDER TO MAKE THAT OBLIGATION TO SERVE, THEY HAVE TO HAVE AT LEAST AN AMOUNT OF CAPACITY, ENOUGH CAPACITY TO MEET THE SUMMER PEAK PLUS PROVIDE A RESERVE. NOW, ONCE THEY'VE ACCOMPLISHED THAT OBJECTIVE, THAT SAME CAPACITY, IT CAN BE USED TO MEET THE LOAD THROUGHOUT THE YEAR. SO THE COST CAUSER IS THE SUMMER PEAK. EVERYTHING ELSE IS REALLY A BY-PRODUCT OF THAT SUMMER PEAK. ALL RIGHT. THANK YOU. ARE YOU, UH, DOES THE ERCOT TRANSMISSION SYSTEM GET USED EVERY DAY? YES. HOW ARE ERCOT TRANSMISSION COST ALLOCATED AFTER LONG CONSIDERATION? THE COMMISSION DECIDED TO ALLOCATE COSTS ON A FOUR CP BASIS, AND THIS WAS INSPIRED OF PROPOSALS TO ALLOCATE IT TO 12 CP BASIS, WHICH THE COMMISSION REJECTED. ALL RIGHT. THANK YOU, MR. POLLOCK, YOU WERE ASKED SOME QUESTIONS ABOUT DISTRIBUTION DEMAND COSTS. DO YOU RECALL THAT? YES. AND ARE YOU AWARE HOW DO UTILITIES WITHIN ERCOT, UH, REGULATED BY THE PUC ALLOCATE DISTRIBUTION DEMAND COSTS? THE COMMISSION IS CONSISTENTLY HE'S THE ONE NCP METHOD. UM, THERE'VE BEEN A FEW UTILITIES THAT ARE TRYING TO PROPOSE A 12 NCP LIKE AUSTIN ENERGY IS DOING, I THINK AP TRIED THAT IN THEIR LAST RATE CASE AND IT WAS REJECTED. OKAY. UH, MOVING ON, YOU WERE ASKED SOME QUESTIONS, UH, ABOUT PRIMARY DISTRIBUTION CUSTOMERS OR I'M SORRY, PRIMARY SUBSTATION ISSUES. DO YOU RECALL THAT? YES. AND YOU WERE ASKED SOME QUESTIONS ABOUT OWNERSHIP OF THE FEEDER LINE, RIGHT? YES. AND MR. POLLOCK, IN YOUR VIEW, DOES WHO THE, WHO OWNS THAT FEEDER LINE, THE PRIMARY CONSIDERATION WITH RESPECT TO THIS ISSUE? NO, IT'S NOT. IT'S, IT'S, IT'S, IT'S ALL ABOUT THE PHYSICAL NATURE OF HOW ELECTRIC SERVICE IS DELIVERED TO THE CUSTOMER. THAT THAT IS THE IMPORTANT MATTER. AS I SAID, WE CAN, WE CAN DEAL WITH THE OWNERSHIP ISSUE. THAT'S THAT'S NOT REALLY THE ISSUE. IT'S, IT'S THE FACT THAT ON A PHYSICAL BASIS, THE CUSTOMER THAT HAS A SUBSTATION LEARY ON ITS SITE AND APPOINT AN INNER CONNECTION JUST OUTSIDE OF THAT SOUTH STATION MAY BE ONE OR TWO SPAN OUTSIDE OF THE SUBSTATION. BUT NONETHELESS, IT'S RIGHT THERE. THAT'S A DIFFERENT TYPE OF SERVICE THEN THAN A PRIMARY DISTRIBUTION CUSTOMER THAT, UH, YOU KNOW, IS SERVED FROM A EXTENSIVE NETWORK. ALL RIGHT, ONE SECOND. THAT'S ALL THE QUESTIONS I HAVE. THANK YOU, YOUR HONOR. ALL RIGHT. THANK YOU, MR. HALLMARK, UM, TO WR NO QUESTIONS, YOUR HONOR, UH, DATA FOUNDRY, NO QUESTIONS, YOUR HONOR. HER SSC, NO QUESTIONS. A CPC, NO QUESTIONS, YOUR HONOR. NXP. NO QUESTIONS, YOUR HONOR. ICA. YES, YOUR HONOR. YES, WE GOT US LOW, MR. POLLOCK, HOW ARE YOU? UM, I'M JOHN KAUFMAN FOR THE ICA TODAY. AND YOU WERE ASKED ABOUT THE, UH, AVERAGE IN EXCESS FOR CP METHOD WHEN SHE YES. AND, UM, YOU'RE ALSO AWARE I'M SURE OF THE NAME ROOT COST ALLOCATION MANUAL. YES. AND DOES NOT THAT MANUAL ADVISE AGAINST USING COINCIDENCE PEAK DEMAND IN THE AVERAGE AND EXCESS METHOD. IT DOES ONLY IN ONE CONTEXT. AND THE CONTEXT IS IF YOU DON'T TAKE INTO ACCOUNT THE FACT THAT SOME CLASSES WILL HAVE AN AVERAGE DEMAND OR HOURS DEMAND, THAT'S GREATER THAN THEIR PAINT DEMAND, THEN THAT'S A REAL PROBLEM. AND THEY, AND THEY SAY THAT YOU SHOULDN'T OBVIOUSLY DO THAT, BUT THAT'S NOT WHAT ANNIE FOR CP DOES. [01:40:03] UM, BUT DOESN'T THE MANUAL ARGUE THAT IF YOU USE COINCIDENT PEAK DEMAND, THAT YOU WILL NOT ACTUALLY REFLECT AVERAGE AN EXCESS, IF YOU, IF YOU USE IT AND DON'T REFLECT THE FACT THAT, THAT IN THOSE CASES, YOU COULD END UP, FOR EXAMPLE, ALLOCATING NEGATIVE PRODUCTION PLANT TO STREET LIGHTING, THEN THAT'S A PROBLEM. AND I AGREE WITH THAT, BUT DANNY FOR CP DOESN'T DO THEM. THAT'S ALL I HAVE. OKAY. THANK YOU, MR. COMPLIN. MR. HALLMARK, ANY FOLLOW UP ON THAT? OH, I ACTUALLY, I'M SORRY. I'M SORRY. I'M SORRY, MR. NO, THAT'S QUITE ALL RIGHT. UM, UH, I HAVE JUST A COUPLE OF QUESTIONS ON THAT FINAL POINT THAT YOU BROUGHT UP WITH MR. UM, HALLMARK. AND IT WAS THAT COMMENT ABOUT THE PHYSICAL NATURE IS THE IMPORTANT THING IN YOUR MIND. DO YOU REMEMBER ANSWERING THAT, SAYING THAT JUST A MOMENT AGO? YES, SIR. ALL RIGHT. AND SO THEN YOU, I BELIEVE YOU SAID IT'S PROXIMITY, RIGHT? THAT'S THE PROXIMITY, IT'S THE BEING ADJACENT TO THE SUBSTATION, CLOSE TO THE SUBSTATION. I THINK THAT WITH YOUR SO STATION IS RIGHT THERE. SO YES, I AGREE. PROXIMITY IS, IS, IS CORRECT. IT'S IT'S VERY APPROXIMATE. OKAY. THEN THAT'S THE KEY POINT NOT OWNERSHIP IS WHAT I BELIEVE YOU SAID IN RESPONSE TO IT'S BOTH. YEAH. OWNERSHIP IS NOT THE DETERMINING FACTOR PROXIMITY. AND THE FACT THAT YOU HAVE FEEDER LINES THAT GO FROM THAT SUBSTATION DIRECTLY TO POINTING OR CONNECTION THAT ONLY SERVE THAT CUSTOMER. AND THAT'S CONVENIENT BECAUSE YOU DON'T HAVE OWNERSHIP. SO YOU'VE GOT TO HAVE PROXIMITY. YOU GOT TO HAVE PROXIMITY, BUT EVEN IF IT'S NOT APPROXIMATE, IT'S STILL POSSIBLE. A CUSTOMER COULD OWN MOST OF THE RADIAL LINE THAT GOES FROM THE PLANET OR CONNECTION TO THE CUSTOMER'S FACILITY. UNDERSTOOD. BUT THAT'S NOT THE FACT PATTERN THAT WE'VE BEEN DISCUSSING HERE, YOUR CUSTOMER THAT'S RIGHT. THE FACT PATTERN IS, AND IN MOST CASES IS THE UTILITY OWNS A PORTION OF THE FEAR THAT IS OUTSIDE OF THE SUBSTATION. THAT'S, THAT'S NOT A DIFFERENT FACT PATTERN HERE THAN IT WAS A NON-CORE THE PROXIMITY'S NOT, UH, IT MAY BE SIMILAR, BUT THE OWNERSHIP IS DIFFERENT, CORRECT? THE OWNERSHIP IS NOT DIFFERENT AT ALL. WHAT I'M SAYING IS THAT THAT EVEN ENCORE CAN OWN ONE SPAN OF, OF, OF A FEEDER. AND THAT CUSTOMER WOULD STILL BE A DISTRIBUTION IS CONSIDERED A PRIMARY SUBSTATION CUSTOMER, THE, UH, DISTRIBUTION FACILITIES AND THE ENCORE CASE WERE, WERE CONSTRUCTED AND MAINTAINED AND OWNED BY THOSE 50 OR SO CUSTOMERS. CORRECT. BUT NOT ALL, NOT ALL THE FACILITIES BACK TO THE SUBSTATION. WHAT'D YOU JUST ANSWER MY QUESTION? NO, NO, YOU ACTUALLY WASN'T. OKAY. EVERYONE IS GOING TO HAVE TO SEPARATE OUT YOUR COMMENTS AND OBJECTIONS. UM, MR. , WOULD YOU REPEAT THE QUESTION? LET'S START ON IN THE ENCORE CASE, THE 50 OR SO CUSTOMERS CONSTRUCTED, MAINTAINED AND OWNED THE DISTRIBUTION FACILITIES THEMSELVES, CORRECT. UH, I'LL OBJECT GIVEN THE NATURE OF THE OBJECTIONS, WE'RE DRAWING THAT. THAT'S A VAGUE QUESTION. WHAT DISTRIBUTION FACILITIES IT OVERRULED. LET'S SEE IF MR. MR. POLLOCK CAN, CAN ANSWER. HE, HE REFERENCED THE ENCORE CASE. UM, MR. POLLOCK, IF YOU COULD TRY TO LIMIT WHEN HE'S ASKING YOU WHETHER OR NOT SOMETHING'S CORRECT. TRY TO LIMIT IT TO YES OR NO, IF YOU ABSOLUTELY HAVE TO QUALIFY, GO AHEAD. UM, OR LET MR. HALLMARK GET BACK INTO IT, WHICH IS WHAT I WOULD DO. I APOLOGIZE, YOUR HONOR. BE HAPPY. HAPPY TO, UH, I THINK THE QUESTION IS VAGUE. I WOULDN'T SAY NO. I SAY IN THE CASE OF ENCORE, YOU KNOW, THE CUSTOMER WILL OWN AS MUCH OF THE DISTRIBUTION OF FACILITIES AS THEY HAVE TO THEIR POINT OR MIRROR CONNECTION. BUT THAT DOES NOT MEAN THAT THE POINT OF YOUR CONNECTION IS RIGHT OUTSIDE THE SUBSTATION, WHICH MEANS THAT ENCORE OWNS A PORTION OF THE FEAR, UH, TO THE CUSTOMER'S POINT OF INTERCONNECTION. SO IT'S THE SAME FACT PATTERN THAT EXISTS HERE. UM, I'VE GOT A COPY OF THE ORDER ON RAY HEARING FROM THE ENCORE CASE. I WASN'T SURE THAT WE WERE GOING TO USE IT OR NOT. I THINK WE CAN HANDLE IT, UH, WITHOUT SHOWING IT TO HIM. I DO HAVE A COPY FOR YOU AND MR. HALLMARK. OH, YEAH. SORRY. EXCUSE ME. LET'S GO OFF THE RECORD FOR JUST A SECOND. WE'RE BACK ON THE RECORD. SO MR. POLLOCK, AND I APOLOGIZE, THIS IS THE NATURE OF THE WORLD THAT WE ARE IN. UH, I'VE GOT THE ORDER ON REHEARING IN THE, UH, ENCORE CASE DOCKET 3, 5, 7 1 7. AND THERE WAS A SECTION IN THAT ORDER ON RAY HEARING THAT, THAT, UH, DISCUSSES THE CREATION OF THE PRIMARY [01:45:01] SUBSTATION CLASS THAT WE'VE BEEN TALKING ABOUT. I'M JUST GOING TO READ YOU, UM, THREE SENTENCES FROM THAT, UH, ORDER ON REHEARING. AND THEN I ASK YOU A QUESTION ABOUT IT, AS IT RELATES TO THIS, THIS NEW SERVICE AFFECTS ABOUT 50 PRIMARY SUBSTATION CUSTOMERS, MOSTLY INDUSTRIAL CUSTOMERS RECEIVING VOLTAGE FROM OR NEAR A SUBSTATION. THESE CUSTOMERS CONSTRUCT AND MAINTAIN THE DISTRIBUTION FACILITIES THEMSELVES, THE ONLY DISTRIBUTION FACILITIES REQUIRED BY ENCORE TO PROVIDE THIS SERVICE OR THE DISTRIBUTION SUBSTATION FACILITY. DID YOU HEAR ALL OF THAT? CLEARLY? I DID. YES. AND SO, UH, SO THE FACT PATTERN THAT EXISTED IN ENCORE WITH NOT THE SAME AS WHAT YOU JUST DESCRIBED A MOMENT AGO YEAH. APPEARS ON THE SURFACE THAT, THAT HE WOULD, HE WOULD THINK THAT, BUT I KNOW JUST FROM DOING THE ANALYSIS AND UNDERSTANDING WHAT THE DISTRIBUTION FACILITIES ARE THEMSELVES, THAT IN FACT, AS LONG AS THEY WERE WITHIN ONE SPAN OF A SUBSTATION, THAT THEY WERE CONSIDERED TO BE A MEMORY SUBSTATION CUSTOMER. IN OTHER WORDS, THEY DIDN'T ALL, ALL THE FACILITIES UP TO THE SUBSTATION THE CUSTOMER DID. SO THE COMMISSION MISUNDERSTOOD WHAT THE FACTS ARE WHEN THEY APPROVE THIS. THEY WEREN'T SAYING, YEAH, JUST THE FACTS. I DON'T THINK THEY NECESSARILY, IN AN ORDER LIKE THIS, THAT THEY, THEY PERFECTLY DESCRIBED THE ACTUAL DETAILS BEHIND THE FACTS, BUT THE FACTS ARE ESSENTIALLY ACCURATE. THE ONLY QUESTION IS, DO YOU CONSIDER THOSE FEEDER LINES PART OF THE SUBSTATION OR NOT? OKAY. AND SO IF I LIVE NEXT DOOR TO A SUBSTATION AND MY NEIGHBOR LIVES THREE BLOCKS AWAY, I MEAN, WE PAY THE SAME RATE, RIGHT? YES. AND THAT, UM, STATION'S NOT BUILT FULLY. AND THAT WAS, THOSE FEEDERS ARE NOT BUILT FOR YOUR SOUL YEARS. ALL RIGHT. SO THAT'S ANOTHER CONDITION THAT SUBSTATION HAS TO BE ENTIRELY DEDICATED TO THAT INDIVIDUAL CUSTOMER? NO, THE, THE PORTION OF THE SUBSTATIONS FEEDERS THAT ARE USED AS SORT OF THE SUBSTATION ESSENTIALLY WOULD BE USED BY THAT CUSTOMER AND NOBODY ELSE THAT'S, THAT'S THE DISTINGUISHING FACTOR. ALL RIGHT. AND SO, BUT AGAIN, IF I LIVE RIGHT NEXT TO THAT SUBSTATION AND THAT FEEDER ONLY SERVES ME AND THERE'S OTHER FEEDERS THAT GO TO OTHER CUSTOMERS, WE'RE GOING TO PAY THE SAME PRIMARY COST AND THE SAME DISTRIBUTION COSTS AND SAME RATE. CORRECT. UM, UNDER THE CURRENT TARIFF, THAT WOULD BE CORRECT. OKAY. THE CURRENT CHAIR FOR EVERY UTILITY IN THIS STATE, RIGHT? NO, IT'S NOT, NOT EVERY, UH, OTHER THAN, UH, THE ENCORE AND ENTERGY SITUATIONS AND SWEPT CODE SITUATIONS THAT WE TALKED ABOUT. GOT IT. OKAY. THANK YOU, MS. PAULA. THOSE ARE THE QUESTIONS. THAT'S ALL I HAVE. OKAY, MR. HALLMARK. YEP. I'M GOING TO TRY TO BE EXTREMELY BRIEF. I KNOW WE'VE GONE A LONG TIME. UH, JUST, I THINK IT'S TWO QUESTIONS, MR. POLLOCK, TO CLARIFY THE RECORD. FIRST, YOU REFERRED TO THE ANALYSIS IN THE ENCORE CASE, JUST FOR CLARITY, ARE YOU REFERRING TO AN ANALYSIS THAT YOU PERFORMED IN THAT CASE? IT'S, UM, AN ANALYSIS BASED ON MY UNDERSTANDING OF HOW ENCORE DEFINED, WHAT COSTS WERE PART OF THE SUBSTATION AND WHAT CIRCUMSTANCES QUALIFIED THE CUSTOMER TO BE IN THE PRIMARY SUBSTATION RATE. RIGHT. WELL, I I'M JUST TRYING TO CLARIFY YOU WERE THE, YOU WERE A WITNESS IN THIS ENCORE CASE, RIGHT? YES. OKAY. UH, YOU WERE ASKED SOME QUESTIONS ABOUT FACTORS HERE, PHYSICAL NATURE, PROXIMITY OWNERSHIP. CAN YOU JUST VERY SUCCINCTLY EXPLAIN THE FACTORS THAT YOU BELIEVE CALL FOR THE CREATION OF THIS PRIMARY SUBSTATION CLASS? SO CLEARLY APPROXIMATELY THE SUBSTATION IS, IS LITERALLY ON THE SIDE OF THE CUSTOMER AND TO THE FEEDERS, TO, FROM THE SUBSTATION TO THE POINTER CONNECTION SERVE ONLY THAT CUSTOMER. THAT'S ALL I HAVE. THANK YOU. OKAY. THANK YOU, MR. HALLMARK. UM, THANK YOU, MR. POLLOCK. THANK YOU FOR YOUR PATIENCE AND FOR YOUR TIME, SIR. THANK YOU VERY MUCH. UM, AND, UH, YOU'RE EXCUSED. ALL RIGHT. ALL RIGHT, LET'S GO OFF THE RECORD IN CHAT JUST A MINUTE. WE'RE STILL GONNA BREAK. ALL RIGHT. THAT SOUNDS GREAT. SO LET, LET'S GO BACK ON THE RECORD AND PERHAPS LATER WE SHOULD TALK ABOUT SOME OTHERS MAYBE AS WELL, THAT FIT INTO THAT CATEGORY. ABSOLUTELY. WE'RE STARTING TO WAVE CROSS. I LIKE IT. UM, SO, AND WE'VE BEEN DOING THAT ALL THE WAY THROUGH, SO, UH, FOR HER, LET'S GO BACK ON THE RECORD PLEASE. UM, HERFF YOU HAVE, UH, AN OPENING STATEMENT. GOOD MORNING, YOUR HONOR. UH, ROGER BORGELT FOR HOMEOWNERS UNITED FOR RATE FAIRNESS, ALSO KNOWN AS HER F UH, WE, UH, HAVE PARTICIPATED IN, IN FACT INITIATED THE FIRST OF THE LAST TWO RATE CASES, [01:50:01] DOCKET 4 0 6, 2 7 AT THE PUC AND PARTICIPATED AS WELL IN THE 2016 RATE CASE. UH, AS IN THOSE PREVIOUS RATE CASES, UH, HER REPRESENTS CUSTOMERS OUTSIDE THE CITY OF AUSTIN. WE OBJECT TO CUSTOMERS OUTSIDE THE CITY OF AUSTIN BEING CHARGED THEIR PROPORTIONATE SHARE OF THE GENERAL FUND TRANSFER TO THE CITY OF AUSTIN, WHICH IN THIS CASE IS PROPOSED TO BE $121 MILLION. AS IN PREVIOUS CASES, CUSTOMERS OUTSIDE THE CITY DO NOT DERIVE ANY BENEFIT FROM THE CITY OF AUSTIN'S EXPENDITURES OF THOSE FUNDS, UH, IN THE LAST TWO CASES, UH, ALTHOUGH THEY WERE BLACK BOX SETTLEMENTS, AS HAS BEEN STATED REPEATEDLY, UH, DIFFERENTIAL RATES WERE SET REFLECTING APPROXIMATELY THE AMOUNT OF THE GENERAL FUND TRANSFER REDUCTION IN OUTSIDE OF CITY CUSTOMER RATES. UH, WE ARE ASKING FOR THE SAME THING IN THIS CASE AS WAS STATED, UH, MORE EXPLICITLY IN OUR STATEMENT OF POSITION BECAUSE THE S THE, UH, RATE DESIGN HAS CHANGED. UH, MR. MARVIN MORGAN WAS HIRED AS OUR RATE CONSULTANT TO ASSIST ME IN PREPARING THE STATEMENT OF POSITION AND PREPARED, UH, A SET OF RATES, UH, SHOWING, REFLECTING THE REDUCTION OR REMOVAL OF THE GENERAL FUND TRANSFER FROM OUTSIDE CITY CUSTOMER RATES. AND THAT IS MY PRESENTATION. WE'RE HERE TO ANSWER QUESTIONS IF THERE ARE ANY, ALL RIGHT. WELL, I HAVE NONE, I THINK I UNDERSTAND YOUR POSITION PRETTY CLEARLY. UM, AND NO ONE HAS INDICATED CROSS HAS ANYTHING CHANGED AS A RESULT OF THAT OPENING. ALL RIGHT. THANK YOU VERY MUCH. SO MOVING ON. UM, NEXT UP IS SSC, UH, WAIT, WE HAVE AN AFTERNOON REQUEST, RIGHT? FOR SSC. YES. AND MY COLLEAGUES ON HIS WAY, I THINK WE COULD DO RIGHT AFTER LUNCH, IF THAT FITS INTO THE SCHEDULE. YES. THAT THAT SHOULD BE GOOD. OH, UM, AND YOUR HONOR, AGAIN, UH, WE DON'T HAVE TESTIMONY. IS THIS MR. GOLF? WE DON'T HAVE, UH, EXCUSE ME, CROSS EXAMINATION FOR MR. GOLF. I DON'T AGAIN KNOW IF OTHERS DO AND, UM, I'M FINE. STIPULATING TO, I MEAN, I DON'T KNOW IF YOU'RE GOING TO DO A SEPARATE PRESENTATION OF SOME SORT. IT WAS, HAD A BRIEF PRESENTATION, JUST A BRIEF OPENING. UM, DOES ANYONE HAVE QUESTIONS FOR MR. GOLF? BECAUSE IF NOT, WE CAN DO THE OPENING AND KEEP MOVING. ARE YOU PREPARED TO DO YOUR OPENING AT THIS TIME OR DO YOU, WOULD YOU PREFER THE WAY HE'S ON HIS WAY AND WE'LL DO IT WHEN HE GETS HERE WHEN HE GETS OKAY. ALL RIGHT. WE'LL DO THAT. UM, NEXT IS, UH, S CPC. I'M TRYING TO THINK, HOW ARE WE READY TO, LET'S SEE. IT'S 11, 11. WE COULD GET THROUGH 30 MINUTES. UM, ARE WE READY TO HAVE ANY OF YOUR WITNESSES? WE ARE READY TO GO FORWARD WITH A CYRUS READ AND IT PROBABLY BE JUST ABOUT THE RIGHT AMOUNT OF TIME AND A BRIEF OPENING STATEMENT. VERY BRIEF. OKAY. AND, AND JUST, JUST KEEP IN MIND, I'LL REMIND YOU AT ABOUT 1135 THAT WE'VE GOT ABOUT 10 MINUTES. I'M SORRY, BUT I'LL, I'LL INTERRUPT RIGHT AROUND THEN. SO, UH, YES, MAYBE A LITTLE DIFFERENT THAN THAT. AND I'M FINE WITH OPTIMISM. WE CAN COME RIGHT UP AGAINST REALITY AND WE'LL JUST DEAL WITH IT THEN THAT'S FINE. BUT AGAIN, THAT, THAT'S WHY I'M SAYING, I'M GOING TO GIVE YOU A WARNING ABOUT 10 MINUTES OUT SO THAT WE CAN FOLKS CAN GET OUT OF HERE AT 1145 AND GET BACK BY 1245. RIGHT. UM, ARE YOU READY WITH YOUR, YOUR OPENING? YES. YES, YOUR HONOR. UH, GIVE ME JUST A SECOND. OKAY, YOUR HONOR. I THINK THE BEST WORDS ARE AUSTIN ENERGY'S OWN WORDS ON A WEBPAGE, AN AUSTIN ENERGY WEB PAGE TITLED ENVIRONMENTAL EXCELLENCE, A CLAIMS. IT LEADS THE CHARGE TO ACHIEVE CARBON FREE ELECTRIC POWER. IT DESCRIBES ITSELF AS A PIONEER INNOVATOR NEIGHBOR, ADOPTER INVESTOR, PROTECTOR, COMMUNITY PARTNER LEADER, WITH A COMMITMENT TO ENVIRONMENTAL EXCELLENCE. I DON'T THINK THERE'S ANY DOUBT THAT AUSTIN ENERGY IS TRULY A LEADER WHEN IT COMES TO ENVIRONMENTAL ACTIVISM, BOLD, PROGRESSIVE POLICY, AND REAL EXCELLENCE IN ENERGY EFFICIENCY, DISTRIBUTED GENERATION AND SOLAR POWER. BUT ODDLY, IN THIS CASE, YOUR HONOR, [01:55:01] AUSTIN ENERGY STEPS BACK FROM THE, FROM THAT LEADERSHIP ROLE, EITHER BECAUSE OF WALL STREET OR FUNDS THAT ARE, OR THAT ARE TIED BECAUSE OF TEMPORAL ISSUES, UH, AUSTIN ENERGY HAS PUT THE BRAKES ON, AND IT'S TRIED TO STEP BACK FROM ISSUES WHERE IT IS ALL IN WHICH IT'S ALREADY BEEN IN THE LEAD IN THE FIVE FOLLOWING WAYS FIRST. AND WE'VE TALKED ABOUT THESE BEFORE FIRST HAS PROPOSED A REALLY OUTRAGEOUS INCREASE IN THE RESIDENTIAL CUSTOMER CHARGE IN THE FACE OF CLEAR POLICIES THAT OF AFFORDABILITY AND ALSO OF THE BALANCE BETWEEN, UH, USER, UH, BETWEEN, UM, UH, UH, USAGE, UH, CHARGES THAT DO ACHIEVE ENVIRONMENTAL EFFICIENT RESULTS. UH, IT VIOLATES POLICIES, AFFORDABILITY. IT SHIFTS THE RECOVERY AWAY FROM USAGE BASED CHARGES AND SENDS A MESSAGE THAT IN THIS, AT THIS POINT DOLLARS ARE MORE IMPORTANT THAN THE ENVIRONMENT. SECONDLY, IT'S WEAKENING ITS FIVE TIER INVERTED BLOCK THAT'S BEEN IN PLACE FOR YEARS, IGNORING IT AND OR WORSE TRYING TO ACTUALLY DISCOUNT OR NEGATE ITS SUCCESS AND ITS EFFECTIVENESS. AND INSTEAD PROPOSES TO LOWER THE NUMBER OF BLOCKS, LOWER THE BLOCKS, FLATTEN THE MIDDLE AND REDUCE THE NUMBER OF THEM. THIRD, IT PROPOSES TO ABANDON THE EXISTING FORWARD-LOOKING SOLAR CREDIT CALCULATION METHOD FOR THE VALUE OF SOLAR, A PROGRAM PROPOSES TO SCUTTLE THE EXISTING FORWARD-LOOKING BENEFIT COSTS, MARGINAL COSTS, LONG RANGE, 30 YEAR ROBUST AND ENVIRONMENTAL ANALYSIS THAT HAS BEEN THE BASIS FOR THE CHARGES FOR THAT, UH, SERVICE. AND THAT HAS MADE IT ONE OF AUSTIN ENERGY'S CROWN JEWELS, UM, FOR, UH, IT'S UH, OF THE FIRST SUPPORTING ITS POLICIES. FOURTH, IT'S PROPOSING TO DEGRADE THE EES BY CROWDING IT BY ADDING RECOVERY OF SOCIETAL BENEFITS FROM THE VALUE OF SERVICE, INTO RECOVERY OF THAT FROM THE EES, INSTEAD OF THE PSA WHERE IT'S ALWAYS BEEN, UM, AA SAYS THE EXTRA CAN BE RECOVERED IN THE BUDGET PROCESS, BUT THE BUDGET PROCESS IS A GOOD PLACE FOR THINGS TO GO TO BE LOST AND TO DIE. FINALLY, IT HAS FAILED TO EXIT FA THE FA COAL-FIRED POWER PLANT BY THE 2022 DAYS THAT IT, UH, IS PART OF ITS POLICY PART OF THE CITY'S POLICY. AND EVEN THOUGH NOT EXITING HAS, UH, IGNORED THE ISSUE IN ITS RATE FILING, UM, YOUR HONOR, THE SIERRA CLUB, PUBLIC CITIZEN, AND SON THAT OUR WITNESSES REJECT THIS, THESE ATTEMPTS TO PUT THE BRAKES ON THE ENERGY EFFICIENCY, ENVIRONMENTAL LEADERSHIP THAT AUSTIN ENERGY'S EXHIBITED OVER THE LAST MANY YEARS, OUR WITNESSES CYRUS READ CARL RABAGO AS A HOUSEMAN WILL BE PRESENTED TO SUPPORT OUR POSITION. UH, FIRST WE CALL A CYPRESS READ EXHIBIT NUMBER ONE, AND, UH, WE'VE ALREADY PROVIDED HIS TESTIMONY. WE'D GO AHEAD AND MAKE HIM AVAILABLE AT THIS TIME FOR QUESTIONS BY THE PARTIES. THANK YOU, YOUR HONOR. UH, THANK YOU, MR. BRAZIL. UM, SO WE HAVE MR. REED ON THE STAND AND FIRST UP FOR CROSSES TO WR NO QUESTIONS, YOUR HONOR. ALL RIGHT. DATA FOUNDRY. THANK YOU, YOUR HONOR. AND IF I MIGHT APPROACH, I'VE GOT A PACKET OF THE CROSS EXHIBITS THAT I THOUGHT WE'D HAND OUT AFTER LUNCH, BUT WE'RE MOVING AHEAD OF SCHEDULE. NO PROBLEM HAVE, UM, HELP ME HA HAVE THOSE EXHIBITS BEEN ADMITTED, I GUESS. OKAY, GOOD. THANK YOU. PARDON ME, BUT MR. KIMBRO, YOU WOULDN'T HAPPEN TO HAVE A COPY WITH YOU, OR EVEN IF THE ONES UP THERE, I STILL THERE'S STILL AT LEAST ONE AT THE TABLE. UM, AND THEN THERE WAS EMAILED COPIES SENT TO EVERYBODY. IF YOU'VE GOT IT ELECTRONICALLY. GOOD, MR. BRAZIL, A CHANCE TO GET BACK TO HIS CHAIR. OH, THANKS. IF YOU DON'T MIND, [02:00:10] YOU'RE READY TO PROCEED. GOOD MORNING. NICE TO READ. GOOD MORNING. UH, PROBABLY WON'T SURPRISE YOU TOO MUCH, BUT I'VE GOT A FEW QUESTIONS FOR YOU ABOUT PRI TWO AND ENERGY EFFICIENCY. SURE. GO FOR, UM, AS A STARTING POINT, I, IN READING YOUR TESTIMONY, YOU DON'T OPPOSE THE PRI TWO PER SE, RIGHT? YOU DON'T OPPOSE THE RATE DESIGN OF IT. FOR EXAMPLE, OUR CONCERN, OUR CONCERN HAS TO DO WITH, UM, LOWERING THE AMOUNT OF MONEY THAT'S AVAILABLE TO THE ENERGY EFFICIENCY PROGRAMS BECAUSE YOU, THAT NEW CLASS WOULD BE EXEMPTED FROM PAYING THAT FEE. RIGHT. AND THEN THAT'S YOUR SOLE CONCERN THOUGH, AS TO PRI TO THAT'S THE ONLY CONCERN WE RAISED IN THIS CASE. RIGHT. AND I THINK IT PROBABLY GOES WITHOUT SAYING, BUT WE CAN AGREE THAT PRI TWO DOESN'T EXIST TODAY AND AUSTIN ENERGY'S RATES SHEETS AND ITS TARIFFS, THAT'S CORRECT. ONLY, UM, FACILITIES THAT ARE LARGER THAN, UH, 20 MEGAWATTS AND DEMAND WOULD RECEIVE A SIMILAR TYPE OF A RATE, UH, ADVANTAGES. RIGHT. AND SO NECESSARILY AS WE'RE LOOKING AT THIS, IT'S, YOU KNOW, IT'S, FORWARD-LOOKING, I GUESS IS A FAIR CHARACTERIZATION, AS WE'RE THINKING ABOUT THIS NEW TARIFF ONLY IF THE CITY COUNCIL APPROVED THESE, THAT RIGHT. DESIGN, WOULD IT GO INTO EFFECT? RIGHT. SO DO YOU HAVE A COPY OF YOUR TESTIMONY THERE WITH YOU? I DO. SO I'D ASK YOU TO, AND I'M USING YOUR NATIVE PAGE NUMBERING. I CAN SWAP TO THE BATES NUMBERS, WHICHEVER YOU PREFER, BUT I'M, I'M LOOKING AT NATIVE PAGE SEVEN. SO THAT'S THE NUMBERING IN THE BOTTOM CENTER OF YOUR, UH, YOUR DOCUMENT? CORRECT. ALL RIGHT. AND YOU'VE GOT A Q AND A, THERE IT STARTS, WELL, LET'S SAY ABOUT A THIRD OF THE WAY DOWN THE PAGE, UM, WHERE YOU, UM, YOU'RE, YOU'RE ASKING ABOUT, OR, UH, I'LL PUT IT THIS WAY. UM, THAT QUESTION, IS IT FAIR TO SAY IN REGARDS TO THE REPORTING OF ENERGY EFFICIENCY EFFORTS BY WHOLE HIGH LOAD FACTOR CUSTOMERS, YOU SEE THAT QUESTION? UM, SO ARE YOU TALKING ABOUT THE, THE PAGE NUMBER SEVEN IN THE MIDDLE OF THE PAGE? YES, I AM. AND SO THE QUESTION READS, DOES AUSTIN ENERGY PROVIDE ANY PROOF THAT YOU SEE THAT QUESTION, AND MORE SPECIFICALLY YOU COMMENT THAT A SIERRA CLUB WAS NOT PROVIDED ANY INFORMATION ABOUT ENERGY EFFICIENCY EFFORTS OF THESE HIGH LOAD FACTOR CUSTOMERS, CORRECT? CORRECT. AND THEN IF I LOOK, UM, YOU'VE GOT A LARGE BLOCK QUOTE FOR THE SECOND HALF OF THE PAGE THERE, YOU SEE THAT CORRECT FROM AUSTIN ENERGY. RIGHT. RIGHT. I LIKE TO SPEND A MINUTE ON THAT FIRST PARAGRAPH OF THE BLOCK QUOTE, UM, YOU SEE WHERE IT SAYS AUSTIN ENERGY DOESN'T REQUIRE SUBMISSION OF ENERGY EFFICIENCY, CUSTOMER PER PROJECT INFORMATION. CORRECT. AND W WE CAN AGREE JUST AS A, WHAT I HOPE WOULD BE KIND OF OBVIOUS IF I GO AND REPLACE THE WINDOWS ON MY HOUSE, THAT THAT'S POTENTIALLY AN ENERGY EFFICIENCY MEASURE. RIGHT? CORRECT. I HAVE NO OBLIGATION IF I GO TO HOME DEPOT AND BUY THOSE WINDOWS TO TELL AUSTIN ENERGY I'VE DONE IT. RIGHT. CORRECT IT NOW, UM, TO PUT A LITTLE ASTERISKS ON THAT, IF YOU WERE GETTING A REBATE FOR THOSE WINDOWS AS PART OF AN AUSTIN ENERGY PROGRAM, THAT WOULD BE IN SOME WAY REPORTED TO AUSTIN ENERGY, IT WOULDN'T BE PART OF THEIR ANNUAL REPORTS. RIGHT. BUT IF IT'S MY OWN PRIVATE INVESTMENT, I'VE PULLED OUT MY OWN, YOU KNOW, VISA CARD. I DON'T DO THAT. DO I? CORRECT. ALL RIGHT. DO YOU UNDERSTAND THAT DATA CENTERS, UH, THE INFORMATION THAT DATA CENTERS HAVE ON THEIR ENERGY EFFICIENCY AND ENERGY COST SAVINGS CAN BE HIGHLY COMMERCIALLY SENSITIVE FOR THOSE DATA CENTERS? YES. I UNDERSTAND THAT. AND GIVEN WHAT WE JUST SPOKE ABOUT BEFORE WE CAN AGREE WHEN THEY WRITE THEIR OWN CHECK, THEY HAVE NO OBLIGATION TO TELL AUSTIN ENERGY ABOUT THEIR EFFORTS. RIGHT. THAT'S CORRECT. BUT AGAIN, TO THE EXTENT THEY RECEIVE A REBATE FROM AUSTIN ENERGY, THEN THEY WERE TALKING ABOUT THEIR OWN MONEY HERE. IN THAT CASE CURRENTLY THEY WOULD NOT HAVE ANY REQUIREMENT. OKAY. YOU USED THE WORD CURRENTLY, ARE YOU PROPOSING THAT, THAT CHANGE? UM, WE, WE HAVE MADE THE SUGGESTION THAT SOME SORT OF ANNUAL REPORT THAT, UH, GRANT'S INFORMATION, UH, TO THE PUBLIC AND HONEST ENERGY ON THOSE EFFORTS, I THINK WOULD BE A BENEFIT. AND, AND THOSE, THOSE EFFORTS THAT YOU'RE TALKING ABOUT ARE PRIVATE INVESTMENTS. CORRECT. AND YOU'RE, ARE YOU SAYING THAT THAT WOULD APPLY TO ALL CUSTOMER CLASSES? SO GOING BACK TO THE EXAMPLE OF, WHEN I GO TO HOME DEPOT AND PUT WINDOWS ON MY HOUSE, AM I KNOWING I'M GOING TO BE OBLIGED TO TELL AUSTIN ENERGY ABOUT WHAT I'VE DONE? [02:05:01] NO. OKAY. SO WHICH RATE CLASSES ARE YOU SAYING ARE GOING TO BE SUBJECT TO THIS? WELL, WE HAVEN'T MADE A FORMAL PROPOSAL, UH, IN THIS REGARD. UM, I'M SIMPLY OUR PROPOSAL TO BE CLEAR IS THAT EVERYONE SHOULD PAY ANY S AND YEAH, THAT'S NOT AT ALL RESPONSIVE TO THE QUESTION, THE QUESTION, AS IT RELATES TO THE REPORTING REQUIREMENT, AND MR. REGIS SAID THAT HE IT'S SIERRA CLUB'S BELIEF, THAT THERE SHOULD BE A REQUIREMENT OF REPORTING, EVEN PRIVATE INVESTMENT BY A HIGH LOAD FACTOR. CUSTOMERS ASKED THE QUESTION OF WHICH OTHER CUSTOMER CLASSES WOULD BE SUBJECT TO THE REPORTING. THIS HAS NOTHING TO DO WITH THE CONTRIBUTION STORES, THE ENERGY EFFICIENCY ACCOUNT, THE MONIES. THIS IS A REPORTING QUESTION. YEAH. I JUST WANTED TO MAKE OUR CLEAR, OUR ACTUAL POSITION THAT'S IN THIS TESTIMONY IS THAT ALL CUSTOMERS INCLUDE INCLUDING HIGH, LOW LOAD FACTOR CUSTOMERS SHOULD PAY AN YES, THAT'S ACTUALLY OUR POSITION. WE DID NOT ACTUALLY TAKE A POSITION IN THIS TESTIMONY ON REPORTING. OKAY. SO AS YOU SIT HERE NOW, DO YOU HAVE A POSITION REGARDING WHETHER HIGH LOAD FACTOR CUSTOMERS SHOULD BE REQUIRED TO DISCLOSE THEIR PRIVATE INVESTMENT IN ENERGY EFFICIENCY? UH I'LL I'LL SAY WE HAVE NO CURRENT PROPOSAL ON, ON THAT ISSUE. OKAY. AND YOU'RE NOT SEEKING ANYTHING TO THAT EFFECT. IN THIS CASE, HE HAS SOME QUESTIONS ABOUT IT. UH, YOU KNOW, TO THE PREVIOUS WIT TO TX WITNESS, WE DID ASK SOME QUESTIONS ABOUT WHETHER THERE WAS OPENNESS TO THAT IDEA. RIGHT. WELL, I'M SORRY. IT WAS, YOU ASKED QUESTIONS AND THEN YOU ALSO HAD AN RFI TO, TO TIC, CORRECT? CORRECT. YEAH. AND IN FACT, I I'VE GOT IT MARKED AS I BELIEVE THAT IT WOULD BE A DATA FOUNDRY EXHIBIT NUMBER TWO. UH, YOU SHOULD HAVE A COPY THERE WITH YOU. I HAVEN'T. RIGHT. AND SO IF I LOOK TO THE QUESTION AND DATA FOUNDRY TOO, IT'S NOT SIMPLY THE QUESTION OF, ARE YOU OPEN TO TELLING, DID I, YOU KNOW, SIERRA CLUB AND WHOMEVER ELSE, WHAT'S YOUR, YOU KNOW, ENERGY EFFICIENCY EFFORTS ARE YOU'RE ASKING FOR THE ACTUAL DATA ITSELF. AREN'T YOU, CAN YOU REFER ME TO THE EXACT QUESTION? SO I'M LOOKING AT ONE, ONE A WHERE YOU ASKED FOR SPECIFIC EXAMPLES OF ENERGY EFFICIENCY INVESTMENTS. THAT'S NOT JUST ASKING THE QUESTION OF WHETHER YOU'RE AMENABLE TO PROVIDING THE INFORMATION YOU'RE ASKING FOR THE INFORMATION. CORRECT. WE ASKED FOR, UM, INFORMATION ABOUT, UH, WHETHER TEAC MEMBERS HAVE MADE ENERGY EFFICIENCY INVESTMENTS AND WHETHER, UH, AND TO PROVIDE THAT INFORMATION. RIGHT. AND SO, PRESUMABLY, AND I DON'T WANT TO READ TOO MUCH INTO THIS. UM, SO I WANT TO ADD, MAYBE GO A LITTLE, LITTLE BIT SLOW AND ONE QUESTION AT A TIME HERE, BUT PRESUMABLY IF YOU ASKED THAT QUESTION, THEN THERE WOULD HAVE BEEN AN, UH, AN AMOUNT OF ENERGY EFFICIENCY INVESTMENT THAT YOU WOULD HAVE DEEMED ENOUGH. RIGHT. THAT'S WHY YOU'RE ASKING THE QUESTION. OKAY. I THINK WE'RE ASKING THE QUESTION, UM, IN IT, IN BECAUSE OF A DIFFERENT REASON. UM, I THINK HE MIGHT BE READING TOO MUCH UNDER OUR QUESTION. UM, UH, YOU GUYS, I'M SAYING YOU GUYS BROADLY DATA FOUNDRY, TEAC, THE INDUSTRIAL CUSTOMERS MADE A BROAD STATEMENT THAT THE REASON YOU SHOULDN'T PAY AN E S FEE IS BECAUSE YOU ALREADY DO ENERGY EFFICIENCY INVESTMENTS BECAUSE IT'S IN YOUR OWN INTEREST TO DO SO. SO WE'RE SEEKING SOME SORT OF PROOF THAT YOU ACTUALLY DO THOSE KINDS OF INVESTMENTS. THAT'S WHY WE ASK THE QUESTION. I DON'T KNOW IF THAT MADE SENSE. WELL, YES AND NO. SO IF, IF YOU KNOW, LET'S SAY, AND WE CAN HEAR IN A LITTLE BIT, WE CAN SPEND A LITTLE TIME TALKING ABOUT WHAT DATA FOUNDRY HAS DONE AT LEAST WITH THE PUBLICLY AVAILABLE INFORMATION. BUT IF YOU HAD GOTTEN AN ANSWER FOR THE SAKE OF ARGUMENT THAT SIMPLY SAID, NO, WE ACTUALLY HAVEN'T SPENT A PLUG NICKEL ON ENERGY EFFICIENCY. WHAT DOES THAT MEAN? THAT BOLSTERS OUR ARGUMENT, THAT YOU SHOULD BE PART OF THE IES PROGRAM. YOU SHOULD PAY INTO IT. AND THERE SHOULD BE PROGRAMS FOR INDUSTRIAL CUSTOMERS THAT HELP YOU GUYS, UH, WITH A LITTLE BIT OF PUBLIC MONEY, LOWER THOSE, UM, DEMAND AND ENERGY USES THAT WOULD BE IN EVERYBODY'S INTEREST. AND THEN ON THE FLIP SIDE, IF YOU HAD GOTTEN AN ANSWER BACK AND PICK A NUMBER, RATHER ARBITRARILY, BUT LET'S SAY IT'S SOMETHING EXTREMELY HIGH. LET'S SAY IT'S $50 MILLION. WHAT'S YOUR ANSWER TO US THEN? UH, I'M, I'M LESS CONCERNED ABOUT THE DOLLAR AMOUNT AS THE EFFORTS TO REDUCE OVERALL DEMAND AND, AND, AND OVERALL ENERGY USE. SO I THINK IF WE GOT AN ANSWER BACK THAT YES, OUR COMPANIES ARE COLLECTIVELY, UH, INVESTING IN PROJECTS THAT REDUCE, UM, DEMAND AND ENERGY. I THINK THAT'S, THAT BOLSTERS [02:10:01] YOUR OWN CASE, THAT YOU SHOULDN'T BE PART OF THE EES BECAUSE YOU'RE, YOU'RE ALREADY REDUCING DEMAND AND ENERGY, BUT WE DON'T KNOW THAT WE DON'T HAVE THAT TYPE OF INFORMATION. SO YOU GOT A RESPONSE FROM TIC TO, UH, TO YOUR, UH, YOUR RFI HERE, RIGHT? YOU GOT TO ANSWERS, I BELIEVE, SPONSORED BY MR. POLLOCK. I'M NOT QUITE CERTAIN ON SPONSOR, CORRECT? CORRECT. ALL RIGHT. NOW THAT YOU'VE GOTTEN INFORMATION FROM THEM, ARE YOU ALL APPEASED? NO, WE, WE, WE FELT LIKE THE ANSWERS WE GOT WERE VERY GENERAL AND DIDN'T PROVIDE THE, REALLY WHAT WE'RE LOOKING FOR, WHICH WAS, YOU KNOW, MORE SPECIFICITY ON, ON THE TYPES OF REDUCTIONS THAT HAVE OCCURRED BECAUSE OF INVESTMENTS Y'ALL HAVE MADE. OKAY. THEN NOW BRINGS ME BACK TO THE QUESTION. I THINK I WAS ASKING BEFORE, WHICH IS WHO GETS TO BE THE DECISION MAKER ON WHAT'S ENOUGH? I MEAN, ULTIMATELY IT MAY BE A POLICY DECISION BY CITY COUNCIL OF, UM, WHEN YOU'RE PROVIDED SERVICE BY AUSTIN ENERGY, UH, YOU KNOW, WHAT CONTRIBUTIONS ARE YOU MAKING TO KEEP THE OVERALL COSTS DOWN THROUGH ENERGY EFFICIENCY, DEMAND RESPONSE? OKAY. I MEAN, I WILL SAY, UM, AS A CITY, UM, THROUGH THE 2030 RESOURCE PLAN, WE'VE MADE A COMMITMENT BOTH TO AN OVERALL REDUCTION IN PEAK DEMAND, ACCUMULATIVE, AND WE'VE ALSO MADE AN ANNUAL OBLIGATION OF GETTING A 1% SAVINGS, UM, YOU KNOW, AS, AS A CITY. SO THOSE ARE, THOSE ARE COMMON PUBLIC GOALS. UH, I'D LOVE IT IF INDUSTRIAL CONSUMERS WERE PART OF THOSE GOALS. I THINK YOU PROBABLY ARE. WE JUST DON'T KNOW THAT. OKAY. AGAIN, PROBABLY RATHER ELEMENTARY QUESTION, BUT YOU WOULD AGREE THAT ONE OF THE WAYS TO ACHIEVE ENERGY EFFICIENCY IS THROUGH HVAC SYSTEMS. OH, CERTAINLY IT'S A PRIME DRIVER, RIGHT? ASK YOU TO TURN NOW TO, I BELIEVE IT WILL BE, UM, EXHIBIT NUMBER THREE, AND I APOLOGIZE FOR THE SMALL FONT. UM, IT IS TINY. UM, THIS IS THE SWITCH. IT IS AN IN FACT, I GUESS, AS A, AS A FOUNDATIONAL MATTER, DO YOU UNDERSTAND THAT DATA FOUNDRY WAS ACQUIRED BY SWITCH? UM, ABOUT A YEAR AGO, JUNE OF 2021, I FOUND THAT OUT YESTERDAY DURING YOUR TESTIMONY. ALL RIGHT. SO W WITH, WITH THAT AS, AS A PRODUCT KIT, UM, SUBJECT TO CHECK, WOULD YOU AGREE WITH ME THAT SWITCHED CURRENTLY OWNS DATA FOUNDRY? I WILL TAKE YOUR WORD FOR IT. OKAY. ASK YOU TO LOOK AT THE PAGE THAT, UM, IT'S BATES PAGE TWO. UM, AGAIN, I APOLOGIZE FOR THE TINY FONT WE WERE HAVING CHALLENGES WITH FORMATTING. UM, BUT AS BEST YOU CAN READ IT, DO YOU SEE THAT THIS, UM, LISTS A SERIES OF PATENT NUMBERS, CORRECT. LOOKS LIKE ABOUT, UM, 12 PEN NUMBERS. RIGHT. AND I THAT'S ROUGHLY MY ACCOUNT AS WELL. AND LOOKING JUST ABOVE THE PATENT NUMBERS THEMSELVES, DO YOU SEE THAT THOSE RELATE TO HVAC UNITS? CORRECT. RIGHT. AND IF, TO THE EXTENT YOU NEED TIME TO FLIP THROUGH EXHIBIT THREE, BOWMAN'S TAKE IT. BUT DO YOU UNDERSTAND THAT? AND DATA FOUNDRY ACTUALLY HAVE INTELLECTUAL PROPERTY RELATED TO HVAC SYSTEMS AND THEREFORE TO THE ENERGY EFFICIENCY SYSTEMS THAT THEY USE THEMSELVES THAT APPEARS TO BE THE CASE BASED ON THESE PATENTS. RIGHT? I MEAN, OBVIOUSLY YOU DON'T KNOW WHAT THE, THE ACTUAL INVESTMENT DOLLAR AMOUNT OR HOURS OR ANYTHING LIKE THAT MIGHT BE, BUT YOU CAN AGREE THAT AS A GENERAL MATTER, UM, ACQUIRING AND DEVELOPING PATENTS IS, CAN BE A VERY EXPENSIVE, UH, ECONOMICALLY INTENSIVE THING TO DO. RIGHT. CORRECT. AND, UM, WOULD THAT MIND, IT MIGHT MAKE SENSE THAT SWITCH AND DATA FOUNDRY NEED TO KEEP THOSE ITEMS AND THEIR AFFECTS EVEN CONFIDENTIAL. WE MAY HAVE A DISAGREEMENT. I DON'T SEE WHY, UM, WHY THE PROCESS AND THE TECHNOLOGY. I CERTAINLY UNDERSTAND. YOU'D WANT TO KEEP THAT CONFIDENTIAL REPORTING ON THE RESULTS. FOR EXAMPLE, BY IMPLEMENTING THIS NEW HVAC SYSTEM, WE REDUCED OVERALL ENERGY USE BY X AMOUNT OR PEAK DEMAND. I DON'T SEE WHY THAT WOULD BE PROBLEMATIC. DO YOU UNDERSTAND THAT DATA CENTERS LIKE SWITCHING DATA FOUNDRY COMPETE WITH OTHER DATA CENTERS? YES. AND DO YOU UNDERSTAND THE ELECTRICITY IS A MAJOR COST INPUT INTO THE OPERATIONS OF A DATA CENTER SEEMS TO BE GETTING MORE EXPENSIVE ALL THE TIME. WELL, THAT'S WHAT WE'RE TRYING TO AVOID. ISN'T IT? WE'RE ALIGNED WITH YOU THERE. ALL RIGHT. BUT, BUT YOU DO UNDERSTAND THAT IT'S A, [02:15:01] IT'S A MAJOR COST INPUT. CORRECT. RIGHT. AND SO GIVEN THAT IT'S A MAJOR COST INPUT, IT'S ALSO A MAJOR DRIVER IN THE PRICING OF THESE PRODUCTS FROM DATA CENTERS. DO YOU UNDERSTAND THAT? YES. DO YOU UNDERSTAND THE NEXUS BETWEEN ENERGY EFFICIENCY MEASURES AND THE INTELLECTUAL PROPERTY THAT GOES WITH IT AND THE PRICING THAT THE DATA CENTERS MIGHT CHARGE? UH, I'M NOT, I'M NOT IN THE BUSINESS WORLD, SO I'M NOT SURE THAT I REALLY UNDERSTAND IT, BUT I GET YOUR POINT. RIGHT. NO. AND I THINK THAT'S RIGHT. AND ASK YOU TO SWITCH NOW TO EXHIBIT FOUR AND MR. KIMBROUGH JUST WE'RE AT ABOUT 1135 GETTING THERE. I'LL TRY TO GO FAST, BUT I MAY NEED TO SPILL AFTER LAUNCH. NO, THAT'S FINE. THAT'S FINE. I'M JUST KIND OF LETTING YOU KNOW. NO, I APPRECIATE THAT. YOU'RE I DON'T WANT TO BREAK UP A GOOD LINE OF QUESTIONING. NO, I APPRECIATE THAT. DO YOU HAVE EXHIBIT FOUR THERE, MR. REED? I DO. OKAY. UM, PERHAPS A SILLY QUESTION, BUT ARE YOU FAMILIAR WITH GREENPEACE? I AM. CAN YOU DESCRIBE GREENPEACE FOR ME? OKAY. SAY, UH, I'D CALL IT AN ACTIVIST ENVIRONMENTAL ORGANIZATION. UH, THEY DO BOTH RESEARCH AND SORT OF DIRECT ACTION, UM, FOCUSED ON CLIMATE CHANGE, ENDANGERED SPECIES, OTHER OTHER ISSUES. A LOT OF THEIR ISSUES HAVE, YOU KNOW, AT LEAST ORIGINALLY HAD TO DO WITH, UM, MARINE SPECIES, THINGS LIKE THAT, BUT THEY THEY'RE ACTIVE AROUND THE WORLD. ALL RIGHT. AND IF I WERE TO COMPARE IT TO SIERRA CLUB, WOULD YOU AGREE THAT YOU ARE SIMILARLY AN ACTIVIST ENVIRONMENTAL ORGANIZATION THAT IS SEEKING GOALS THAT AT LEAST OVERLAP WITH THOSE OF GREENPEACE? YEAH, WE HAVE DIFFERENT STRATEGIES I'D SAY, BUT, BUT YES, UH, SIMILAR GOALS, RIGHT? AND TO THE EXTENT THAT YOU NEED A MINUTE OR TWO BY ALL MEANS, TAKE IT LOOKING AT EXHIBIT FOUR, BUT DO YOU SEE THAT GREENPEACE HAS ACTUALLY OPINED ON THE EFFORTS, THE ENERGY EFFICIENCY AND SUSTAINABILITY EFFORTS OF SWITCH. ALRIGHT. ARE YOU REFERRING TO THE SECOND PAGE? UH, WELL, YOU, YOU, YOU, YOU CAN USE WHICHEVER PAGES YOU WANT TO. UM, BUT I MEAN, THE, THE HEADING WAS CERTAINLY THE ONE THAT WAS JUMPING OUT TO ME BECAUSE IT HAD THE BIG FONT KNOW GREENPEACE SWITCHED SCORES, THE HIGHEST AMONG ANY CLASS OF IT'S COMP OF COMPANY. DO YOU SEE THAT? YEAH, AGAIN, I HAVEN'T ACTUALLY SEEN THE REPORT ITSELF UNTIL NOW, BUT IF THIS IS ACCURATE OF WHAT'S IN THE REPORT, THEN I SAY, THEN I WOULD AGREE WITH THAT. RIGHT NOW WE FLIPPED A PAGE FOUR. IT TALKS ABOUT SUSTAINABILITY INITIATIVES, BUS SWITCH TALKS ABOUT HOW ALL OF IT'S NORTH AMERICAN FACILITIES. AND I'LL SAY THAT INCLUDES DATA. FOUNDRY ARE RUN A HUNDRED PERCENT RENEWABLE ENERGY. YOU SEE THAT CORRECT. AND YOU SEE, IT TALKS AGAIN ABOUT THE SWITCH ISSUED AND PENDING PATENTS. YOU SEE THAT? CORRECT. ALL RIGHT. AND IN FACT, IF YOU GO AND FLIP TO PAGE FIVE, YOU EVEN START GETTING INFORMATION ABOUT THE ELECTRICITY USE AND RESULTING GREENHOUSE EMISSIONS THAT RELATE TO SWITCH. YOU SEE THAT? YEAH. THAT'S EXACTLY THE TYPE OF REPORTING AND INFORMATION. UH, WE'D LOVE TO HAVE WITHIN THE AUSTIN ENERGY SERVICE AREA FROM INDUSTRIAL CONSUMERS DID, Y'ALL ASK US FOR ANY INFORMATION WE DID NOT. AND I APOLOGIZE FOR THAT. WE SHOULD HAVE YOU REALIZE THAT THIS INFORMATION I JUST PULLED HER NEVER HAD SHOWED YOU AN EXHIBIT FOUR IS ACTUALLY JUST THE PRODUCT OF A GOOGLE SEARCH. YOU COULD GRAB THIS OFF THE SWITCH WEBSITE RIGHT NOW. DO YOU UNDERSTAND THAT? WHAT'S GOOGLE. JUST KIDDING. ALL RIGHT, YOUR HONOR, THIS MAY BE A GOOD POINT TO BREAK. UM, I WAS GOING TO GO DOWN A DIFFERENT LINE, UM, AND RATHER THAN BREAK IT IN PIECES. THIS SEEMS LIKE A LOGICAL PLACE. YES, THAT'S, THAT'S EXACTLY WHAT I WANTED TO AVOID DOING IS BREAKING UP YOUR QUESTIONING? UM, YES, WE CAN. UH, IT'S 1138. UM, WE CAN BREAK DOWN AND LET'S JUST COME BACK AT 1245. HOW DOES THAT SOUND? SOUNDS GREAT. THANK YOU YOUR HONOR. OKAY. RIGHT. THANK YOU EVERYONE. WE'RE OFF THE RECORD. OKAY, LET'S GO ON THE RECORD PLEASE. OH, YOUR HONOR. AS WE DO, UH, I JUST WANTED TO REMIND YOU THAT, UH, [02:20:01] SP I'M SORRY. SCPC EXHIBIT 16 IS STILL OUTSTANDING. AS FAR AS BEING AN ISSUE. IT MAY RELATE TO MR. REED'S TESTIMONY. SO I GUESS WE COULD JUST TAKE IT UP IF IT COMES UP, UH, DURING THE TESTIMONY, OR WE COULD GO AHEAD AND ADDRESS IT AS YOU'RE AS YOU CHOOSE. I TH I THINK BECAUSE OF THE OBJECTIONS TO IT, I'D LIKE YOU TO BE ABLE TO GET INTO IT WHEN YOU'RE READY. AND THEN, AND THEN JUST, JUST TEE IT UP AND TELL ME WHERE WE'RE GOING AND THE REASON WHY IT'S RELEVANT AND WE'LL TAKE IT. IT'S PROBABLY GOING TO END UP GETTING ADMITTED, BUT I WANT TO, I WANTED TO SEE THE CONTEXT FOR IT. OKAY. OKAY. YEAH. TO JUST ADDRESS IT TYPICALLY, I DON'T DO THAT, BUT LET'S, YOU HAVE OBJECTIONS TO IT. SO I WANT TO SEE HOW IT WORKS IN, UM, ALL RIGHT. IT'S MY UNDERSTANDING THAT THERE ARE NO OBJECTIONS TO NXP 18, WHICH IS A DEMONSTRATIVE, AND IT IS ADMITTED FOR THAT PURPOSE. UM, MR. REED, ARE YOU READY? I'M READY. ALL RIGHT. THANK YOU VERY MUCH, MR. KIMBRO, WHENEVER YOU'RE READY. THANK YOU, YOUR HONOR. UH, HAD ONE LAST QUESTION ON THE TOPICS WE WERE TALKING ABOUT BEFORE THE LUNCH BREAK YOU'LL RECALL, WE WERE TALKING ABOUT AMONGST OTHER THINGS THAT HVAC SYSTEMS AND THINGS LIKE THAT, THAT A SWITCH AND DATA FOUNDRY HAD INVESTED IN RECALL THE KIND OF THE GENERAL CONVERSATION. YES, I DO. OKAY. CAN YOU AGREE WITH ME THAT, TO THE EXTENT THAT THERE'S ALREADY BEEN AN INVESTMENT MADE IN THOSE HVAC SYSTEMS THERE'S NECESSARILY NO NEED FOR A REDUNDANT, UM, ENERGY EFFICIENCY MEASURE ON THOSE, THOSE INSTALLATIONS IT'S ALREADY BEEN DONE ONCE IN GENERAL? YES. THERE ARE SOME TIMES MAINTENANCE ISSUES AS AN EXAMPLE, AND I'M GETTING INTO THE RESIDENTIAL SPACE, UH, YOU KNOW, RECENTLY AUSTIN ENERGY TO THEIR WEATHERIZATION PROGRAM ADDED, UM, SORT OF ANNUAL REVIEWS TO SEE THAT THEY WERE WORKING. RIGHT. SO YOU HAVE AN HVAC SYSTEM, HOPEFULLY IT WORKS WELL, BUT YOU MAY WANT TO DO A MAINTENANCE CHECK EVERY YEAR TO MAKE SURE IT'S CLEAN AND RUNNING EFFICIENTLY. SO, RIGHT. AND FOR CLARIFICATION THOUGH, THAT'S, IT'S PART OF A PARTICIPATION IN AN AUSTIN ENERGY PROGRAM, NOT IN THE PRIVATE INVESTMENT CONTEXT, CORRECT. OKAY. ALL RIGHT. I'D LIKE TO SWITCH NOW. UM, I ASSUME YOU STILL HAVE A COPY OF YOUR TESTIMONY THERE HANDY. I DO. UH, AND I'M USING THE NATIVE PAGES, THE PAGE NUMBERING, WHICH IS THE BOTTOM CENTER. AGAIN, I'M LOOKING AT PAGE 10 OF YOUR TESTIMONY AND THE TOP OF PAGE 10 IN PARTICULAR. AND YOU CAN LET ME KNOW WHEN YOU GET THERE. I'M HERE. OKAY. YOU ASKED SOME QUESTION OR GIVE YOURSELF A Q AND A, THAT'S TALKING ABOUT, UM, THE INDUSTRIAL COACH AND CUSTOMERS' PARTICIPATION IN ENERGY EFFICIENCY PROGRAMS IN DEREGULATED RETAIL MARKETS. CORRECT. AND, UM, AND YOU ACKNOWLEDGE THAT IF WE WERE IN THE COMPETITIVE RETAIL SPACE, UM, INDUSTRIAL CUSTOMERS DON'T ACTUALLY HAVE TO PAY INTO FUNDS FOR ENERGY EFFICIENCY AND DEMAND REDUCTION. YEAH. THAT WAS A LEGISLATIVE CHANGE MADE, I BELIEVE IN 2007. AND, AND, AND THAT'S EXACTLY WHERE MY QUESTIONS WERE, WERE GOING TO GO WITH YOU IS, UM, W SPECIFICALLY THE, THE STATUTE YOU'RE TALKING ABOUT, IT WAS HB 36 93, RIGHT? CORRECT. REPRESENTATIVE STRAUSS WHO HAD BECOME SPEAKER, BUT TH THAT'S RIGHT. AND, UM, ASK YOU TO TURN TO DATA FOUNDRY, EXHIBIT NUMBER FIVE. OKAY. AND YOU WOULD AGREE WITH ME THAT THIS IS A COPY OF THE WITNESS LIST FOR, UM, IN THIS CASE, I GUESS, REGULATED INDUSTRIES, COMMITTEE OF THE HOUSE, UH, RELATED TO HB 36 93 REPRESENTATIVE KING'S COMMITTEE. YES. AND DO YOU SEE YOUR NAME LISTED THERE? YES, WE WERE FOR THE BILL HB 36 93, WHICH WAS A COMPREHENSIVE ENERGY EFFICIENCY BILL, LOTS OF PAGES, LOTS OF PROVISIONS. EXACTLY. AND WHEN YOU TESTIFIED FOR IT ON MARCH THE 27TH AND ON APRIL 10TH IN FRONT OF THAT COMMITTEE, CORRECT? WELL, ACTUALLY LET ME CORRECT MYSELF. YOU TESTIFIED FOR IT ON MARCH 27TH, AND THEN WE'RE STILL FOR IT, BUT NOT TESTIFYING ON APRIL 10TH, CORRECT? CORRECT. AND THEN IF I TURN NOW TO DAT EXHIBIT OR DATA FOUNDRY, EXHIBIT NUMBER SIX, THIS IS GOING TO BE THE SENATE BUSINESS AND COMMERCE COMMITTEES WITNESS LIST, SIMILAR TO THE HOUSE ONE. AND AGAIN, WE SEE YOUR NAME THERE TESTIFYING IN FAVOR OF 36 93. YES, WE WERE. W WELL, I THINK IT WAS REGISTERING. WE WERE TOLD BY, I BELIEVE SENATOR FRAZIER DON'T TESTIFY. WE'RE GOING TO MOVE THIS BILL. OH, NO. AND YOU'RE CORRECT. IT SAYS REGISTERING FOR IT, BUT NOT TESTIFYING. I STAND CORRECTED THERE. AND THEN THERE IS OBVIOUSLY A COMMISSIONED RULEMAKING PROCESS IS RELATED TO THE ENERGY EFFICIENCY ISSUE AS WELL. CORRECT. UM, [02:25:01] I BELIEVE IT WAS IN MR. POLLOCK'S TESTIMONY, MAYBE NOT YOURS, THE REFERENCE SPECIFICALLY TO PROJECT NUMBER 39, 6 74. UM, YOU FAMILIAR WITH THAT PROJECT, WOULD THIS BE THE PROJECT TO IMPLEMENT HB 36 93? THIS WOULD BE IN BEAR WITH ME. CAUSE THERE WERE TWO, REMEMBER THERE WERE TWO BILLS, THERE WAS A BILL LATER ON, SO I'M NOT SURE WHICH THIS WOULD BE THE SUBSEQUENT ONE. THIS WOULD BE THE MORE RECENT ONE AND I WILL READ THE STYLE ON IT, LESS THERE BE CONFUSION. UH, THIS IS GOING TO SAY RULEMAKING PROCEEDING TO AMEND ENERGY EFFICIENCY RULES. AND IT'S 39, 6 74. UM, THE ORDER WAS DATED OCTOBER 11TH, 2012. OKAY. SO THIS WOULD BE AFTER THE PASSAGE OF SB 1125 AND 2011 RULEMAKING SUBSEQUENT TO THAT. CORRECT. DID YOU PARTICIPATE IN 39, 6 74 IF THAT'S THE RIGHT NUMBER FOR THE RULEMAKING? YES. I THINK I HAD SUBSTANTIAL COMMENTS. RIGHT. AND, AND IN FACT, I THINK WE CAN PROBABLY HELP REFRESH YOUR MEMORY A LITTLE BIT. IF YOU TAKE A LOOK AT, UH, WE CAN START WITH DATA FOUNDRY, EXHIBIT NUMBER SEVEN. GOT IT. AND THIS IS AN EXCERPT FROM THAT, UM, RULE-MAKING ORDER, CORRECT? CORRECT. AND JUST TO, JUST SO I'M SURE. SO THIS, THIS PROJECT NUMBER 39, 6 74 IS THE RULEMAKING ASSOCIATED WITH THE 2011 BILL. THIS IS THE RULEMAKING THAT HAS THE RULE THAT'S IN PLACE TODAY. OKAY. SO I THINK WE'RE SAYING ONE IN THE SAME. OKAY. YEAH. AND IF I LOOK, UM, LOOK AT THIS XR, I SEE SIERRA CLUB MENTIONED IN THE SUMMARY OF THE COMMENTS. YOU SEE THAT AS WELL. YEAH. AND, AND IN PARTICULAR LOOKING ABOUT A THIRD OF THE WAY DOWN THE PAGE, UM, YOU SEE WHERE THE COMMISSION SAYS THAT IT AGREES WITH CITIES IN SIERRA CLUB, THAT LOAD MANAGEMENT PROGRAMS APPEAL TO SMALLER, LESS SOPHISTICATED CUSTOMERS. YOU SEE THAT CORRECT. ALL RIGHT. AND, AND YOU ALSO SEE THAT THE COMMISSION IDENTIFIES THAT THE SMALLER, LESS SOPHISTICATED CUSTOMERS MIGHT NEVER HAVE THE EXPERTISE NEEDED TO PARTICIPATE IN THE ERCOT MARKET LOAD MANAGEMENT PROGRAM. PRO PROGRAMS, LOAD MANAGEMENT PROGRAMS ARE REALLY, UM, YOU KNOW, LIKE THE ANCILLARY SERVICES ARE, ARE MORE SET UP FOR, YOU KNOW, LARGE INDUSTRIAL CUSTOMERS THAN THEY ARE FOR RESIDENTIAL OR COMMERCIAL REALIZING YOU'RE IN NO PLACE TO KNOW WHETHER DATA FOUNDRY ITSELF PARTICIPATES IN THESE PROGRAMS. WOULD YOU THINK THAT A, A LOAD, THE SIZE THAT WOULD FIT IN PRI TWO MIGHT PARTICIPATE IN THE ERCOT PROGRAMS? IT'S VERY POSSIBLE THEY COULD, THEY COULD PARTICIPATE IN RESPONSE OF RESERVES, UM, OR EVEN NOW UNDER CHANGES MAY BE EVEN NON SPIN RESERVES. AND THEY, THEY CERTAINLY COULD PARTICIPATE IN ERS, WHICH HAS A MORE OF AN EMERGENCY SERVICE. RIGHT. AND THERE'S COMPENSATION THAT COMES TO THOSE CUSTOMERS AS A RESULT OF THAT PARTICIPATION. YEAH. THAT, THAT IS OUTSIDE. AGAIN, THOSE ARE OUTSIDE OF WHAT HAPPENS IN ASA ENERGY. THOSE ARE, YOU KNOW, ERCOT WIDE PROCESSES. RIGHT. BUT THEY WOULD NONETHELESS BE ECONOMIC POTENTIAL ECONOMIC INCENTIVES FOR THOSE CUSTOMERS. AND IN TERMS OF THEIR DEMAND, REDUCTIONS, DEMAND, RESPONSE, AND SO ON. YEAH. OKAY. AND PROBABLY A LITTLE REDUNDANT, BUT THE COMMISSION ORDERS AND THE EXCERPTS I'VE GIVEN YOU HERE, THERE ARE SIMILAR STATEMENTS FROM REGARDING SIERRA CLUB'S POSITION REGARDING THE, THE, UM, ENERGY EFFICIENCY AND DEMAND PROGRAMS THAT THEY ARE REALLY MORE CATERED TO THE SMALL, LESS SOPHISTICATED CUSTOMERS. AND THAT, THAT ACTUALLY SHOWS UP A COUPLE OF TIMES IN THIS ORDER. RIGHT. YEAH. AND AGAIN, THE CONTEXT IS THE COMMISSION, UM, WAS IMPLEMENTING RULES BASED ON LEGISLATION THAT TOOK INDUSTRIAL CUSTOMERS OUT. AND SO THEREFORE THE UTILITY LOAD MANAGEMENT PROGRAMS THAT THEY'RE TALKING ABOUT WERE SPECIFICALLY FOR RESIDENTIAL AND COMMERCIAL. UM, AND SO THEREFORE THE COMMENTS THAT WE MADE WERE ABOUT RESIDENTIAL AND COMMERCIAL, BECAUSE THAT'S WHAT THESE PROGRAMS ARE DESIGNED, THAT'S WHO THEY'RE SERVING. RIGHT. AND THAT WOULD BE CONSISTENT WITH DATA FOUNDRY, EXHIBIT NINE, THE EXCERPT THERE, THAT, THAT HIGHLIGHTS EXACTLY WHAT YOU'RE TALKING ABOUT, UH, DESCRIBING THE, THE IMPACTS OF HOUSE BILL 36 93 AND, YOU KNOW, THE, THE IMPORT INTO PURA AND SO ON. YES. CORRECT. AND I, I THINK EVEN IN MY TESTIMONY, I STATED CLEARLY THAT IN THE COMPETITIVE MARKET, UM, THE UTILITY PROGRAMS AND THE ECRF DO NOT APPLY TO, UH, INDUSTRIAL CUSTOMERS. THAT'S RIGHT. AND THEN IF WE COULD LOOK AT DATA FOUNDRY, EXHIBIT NUMBER 10, [02:30:03] IN ADDITION TO THE ISSUES WITH THE STATUTE THAT YOU WERE JUST ALLUDING TO COMMISSIONS TALKS A LITTLE BIT ABOUT THE DIRECT ASSIGNMENT OF ENERGY EFFICIENCY EXPENDITURES TO PARTICULAR RATE CLASSES, YOU SEE THAT, UM, W C CAN YOU, CAN YOU POINT ME TO THE, THE BIG PARAGRAPH RIGHT IN THE MIDDLE? OKAY. OKAY. SO THEY'RE BASICALLY MAKING THE CASE THAT YOU CHARGE A RESIDENTIAL RATE CONSUMERS. YOU CAN CHARGE THEM ONE RATE BASED ON THEIR RATE CLASS AND DIFFERENT COMMERCIAL CLASSES, A DIFFERENT RATE. AND THEY'RE SAYING THAT SPECIFICALLY IN THE CONTEXT OF ENERGY EFFICIENCY CHARGES EXPENDITURES, RIGHT. CORRECT. THAT'S WHAT THIS RULEMAKINGS RIGHT. AND SO IF WE APPLY THOSE PRINCIPLES THAT WE LEARNED FROM THE COMMISSION HERE, WOULD, WOULD YOU NOT AGREE THAT THAT NECESSARILY WOULD MEAN THAT THE ENERGY EFFICIENCY CHARGE THAT'S ASSESSED THE RESIDENTIAL CLASS SHOULD NOT, UM, OVERLAP WITH THAT OF, LET'S SAY PRI TWO, THAT THOSE TWO SHOULD IN FACT BE SEPARATE AND DISTINCT. YEAH. AS AN EXAMPLE IN THE TESTIMONY, UM, WHILE I SAID, I STATED, AND I'M PARAPHRASING THAT IN GENERAL, THE ENERGY EFFICIENCY SHOULD BE THE SAME FOR ALL CUSTOMER CLASSES. WE DID ACKNOWLEDGE THAT, YOU KNOW, SOMEBODY, UM, TH THERE'S LESS LOSS, RIGHT. AND ENERGY, IF YOU'RE, IF YOU'RE TAKING IT AT THE PRIMARY OR TRANSMISSION LEVEL, AND IT MAKES SENSE TO HAVE SLIGHTLY DIFFERENT RATES BECAUSE OF THAT. SO I, I THINK WE DO ACKNOWLEDGE THAT THERE CAN BE, UH, THAT IT'S APPROPRIATE TO HAVE SLIGHTLY DIFFERENT RATES ON ENERGY EFFICIENCY FEES BASED ON CUSTOMER CLASS, AND TO KIND OF FOLLOW ALONG WITH THAT. IT WOULD ALSO BE YOUR THOUGHT THEN THAT THE ENERGY EFFICIENCY ASSESSMENTS THAT, UM, LET'S SAY WERE ACQUIRED FROM A PRI TO CUSTOMER, IF YOU GOT THE POLICY THAT YOU'RE ADVOCATING, THOSE MONIES WOULD NOT BE AVAILABLE TO RESIDENTIAL SMALL COMMERCIAL AND IN OTHER CLASSES. YEAH. I'M, I'M GENERALLY SUPPORTIVE OF THE IDEA THAT IN A BUDGETER BUDGETARY PROCESS, UM, THAT THE MONEY COLLECTED FROM DIFFERENT RATE CLASSES SHOULD GO TO THOSE RATE CLASSES. UM, SO AS AN EXAMPLE IN THE CURRENT AUSTRIAN ENERGY BUDGET, UH, WHICH I THINK IS, AND I WON'T REMEMBER ALL THE SPECIFICS IT'S, IT'S, IT'S ROUGHLY ABOUT $20 MILLION A YEAR. THEY GIVEN INCENTIVES AND IT'S SPLIT, UM, CURRENTLY BETWEEN RESIDENTIAL AND COMMERCIAL. AND SO I THINK THE IDEAS, YOU KNOW, WE'RE NOT TRYING TO SUBSIDIZE ONE OR THE OTHER WITH THOSE FEES. WE'RE TRYING TO MAKE SURE THERE'S PROGRAMS FOR ALL OF THEM. RIGHT. BUT DOESN'T THAT PRESUPPOSE THAT THERE IS IN FACT A NEED FOR THE PROGRAM AS TO PRI TO CUSTOMERS. YES. AND, AND SPEAKING, FRANKLY, CURRENT PRI CUSTOMERS, I MEAN, CUSTOMERS WHO COULD QUALIFY FOR THE , UH, AS WE'VE SEEN IN A RESPONSE FROM AUSTIN ENERGY HAVE TAKEN ADVANTAGE OF THESE PROGRAMS IN THE PAST, WE GOT A CLEAR RESPONSE THAT'S IN THE RECORD, UM, FROM AUSTIN ENERGY THAT THERE INDEED HAVE BEEN ENERGY EFFICIENCY, INCENTIVES, AND REBATES THAT HAVE GONE TO FOLKS THAT WOULD QUALIFY FOR THIS NEW PROPOSED CLASS. SO IT'S ALREADY HAPPENING RIGHT NOW. SO JUST, JUST FOR CLARITY HERE AND, AND RECOGNIZE THAT YOUR HONOR'S ALREADY INDICATED HE MAY ALLOW THE ADMISSION OF THIS. I'M NOT TALKING ABOUT THAT LAST ONE. I'M TALKING ABOUT THE ONE BEFORE THAT'S ALREADY ADMITTED IN THE AUSTIN ENERGY'S OH, I'M SORRY. I DON'T REMEMBER WHAT NUMBER IT IS. 15, 16, 6. NOT, NOT, NOT THE ONE THAT HASN'T BEEN ADMITTED. THE ONE THAT WAS IN THE MOVIE FOR IS THAT 15. 15. OKAY. BUT THAT SAID, NONETHELESS, THAT WAS IN A CONTEXT PRIOR TO THE PRI TWO CLASS EXISTING AT ALL. RIGHT. SO I THINK OUR QUESTION, I DON'T HAVE IT BEFORE ME, BUT I THINK OUR, OUR QUESTION ON ENERGY WAS OUR, UM, DO YOU HAVE INFORMATION ABOUT ENERGY EFFICIENCY AND DEMAND RESPONSE INVESTMENT? YEAH, YOUR HONOR, THAT'S NOT RESPONSIVE TO THE TIMING QUESTION I'M ASKING, I'M ASKING DID PRI TO EXIST AT THE TIME THAT, OKAY. YEAH. ALL RIGHT. SO PRI TWO DID NOT EXIST AT THE TIME OF THAT, WHICH NECESSARILY MEANS THAT THESE CUSTOMERS WERE FOR LACK OF A BETTER WORD, UM, CONSOLIDATED WITH, UM, CUSTOMERS THAT MAY NOT ACTUALLY HAVE SIMILAR OPERATING CHARACTERISTICS TO THE, THE HIGH LOAD FACTOR CUSTOMERS. TRUE. TRUE. OKAY. NOW, AGAIN, LOOKING AT PAGE 10 OF YOUR TESTIMONY, UM, YOU'D NOTE THAT IF YOU, IF WE WERE LOOKING AT A CUSTOMER IN A COMPETITIVE RETAIL AREA, THAT THE, THE INDUSTRIAL CUSTOMER WOULDN'T PARTICIPATE IN THE ENERGY EFFICIENCY PROGRAMS, UM, I ASSUME THAT YOU HEARD YESTERDAY [02:35:01] AND PERHAPS NEW PRIOR, UM, THAT DATA FOUNDRY HAS, UH, FACILITIES IN ROUND ROCK. UH, I'M AWARE THAT YOU HAVE FACILITIES MORE THAN MORE THAN JUST A FACILITY ON SMITH SMITH STREET OR WHEREVER YOU HAVE IT HERE. RIGHT. AND IN FACT, THERE, THEIR FACILITIES SCATTERED ACROSS THE UNITED STATES. ONCE YOU COUNT OUT A FOUNDRY IN COMBINATION WITH THE SWITCH YOU WEAR THAT, UH, I'M, I'M GENERALLY AWARE THAT YOU HAVE MULTIPLE FACILITIES THAT CAN TELL YOU WHERE THEY ARE. AND YOU RECOGNIZE THAT AT LEAST FOR PURPOSES OF THE LOCATION, WE'RE TALKING ABOUT, WE'RE TALKING ABOUT A PORTION OF BROWN ROCK THAT'S ACTUALLY SERVED BY ENCORE. CORRECT. RIGHT. AND THAT NECESSARILY MEANS THAT IT'S OPEN TO RETAIL COMPETITION. CORRECT. AND SO THAT FACILITY WOULD NOT PARTICIPATE IN AN INDUSTRIAL ENERGY EFFICIENCY PROGRAM OF THE SEARCHER PER COME ADVOCATE. UH, I BELIEVE THAT'S TRUE. THERE IS, AS YOU KNOW, UM, THERE ARE CERTAIN INDUSTRIAL FACILITIES THAT ARE, DO PARTICIPATE BECAUSE THEY HAVEN'T OPTED OUT. SO I DON'T ASSUMING THAT YOUR, THAT PARTICULAR FACILITY HAS OPTED OUT OF THE PROGRAM, THEN YES. THEY WOULDN'T PASS TH THERE WOULD BE AN AVENUE BY WHICH TO OPT OUT. WELL, YOU CAN AGREE WITH THAT. CORRECT. RIGHT. AND, AND SO THAT NECESSARILY MEANS THAT THERE'S SOME MONEY SAVINGS THAT GOES ALONG WITH OPTING OUT AND NOT PAYING TOWARDS AN ENERGY EFFICIENCY PROGRAM. RIGHT. CORRECT. NOW, KEEP IN MIND THE, THE ENCORE, I MEAN, THEY'RE PRETTY SMALL, IT'S A PRETTY SMALL FEE THAT FOLKS ARE PAYING, BUT THE ORDER OF MAGNITUDE ASIDE, UM, BECAUSE I ASSUME YOU, YOU CAN'T SPEAK TO THE PROFIT MARGINS OF A DATA CENTER. NO, I'M CLEARLY UNQUALIFIED TO DO THAT. RIGHT. SO GIVEN THAT, AND, UM, AND, AND YOU ACKNOWLEDGE THAT THE IMPACTS ON THE, THE COST FOR THE, THE, UM, DATA CENTER, ONE SITE VERSUS ANOTHER, DO YOU RECOGNIZE THAT IF AUSTIN ENERGY WERE TO APPLY THE POLICY, YOU'RE ADVOCATING THAT IT WOULDN'T POTENTIALLY BECOME LESS ECONOMICALLY COMPETITIVE WITH ITS NEIGHBORS ROUND ROCK, FOR EXAMPLE, DO YOU RECOGNIZE THAT THAT COULD HAPPEN? WELL, MY RESPONSE WOULD BE IF THE FACILITY IS CURRENTLY PAYING THE FEE NOW, WHICH I BELIEVE THEY'RE DOING THE ESP, UM, THEN THAT'S ALREADY TRUE NOW. SO LET'S TALK ABOUT EXPANSION. DATA CENTERS ARE ACTUALLY, YOU KNOW, INCREASING IN TERMS OF THE DEMAND FOR THEIR SERVICES. SO WHEN IT COMES TIME FOR SWITCH OR DATA FOUNDRY OR ANY OTHER DATA CENTER FOR THAT MATTER, AND THEY LOOK TO POTENTIALLY EXPAND, DO YOU THINK THAT THOSE ECONOMIC CONSIDERATIONS ARE GOING TO COME INTO PLAY? UH, I'M SURE MANY, MANY ISSUES COME INTO PLAY, INCLUDING ELECTRIC COST. YEAH. RIGHT. AND THEN IF I'M LOOKING AT IT, YOU KNOW, IF YOU CAN TRY TO PUT YOURSELF IN THE SHOES OF THE CITY COUNCIL, I SHOULD BE LOOKING NOT ONLY AT THE REVENUES OF AUSTIN ENERGY, BUT I SHOULD BE CONSIDERING PROPERTY TAXES, JOBS HOLISTICALLY LOOKING AT THE EFFECTS OF THE AUSTIN ENERGY RATE STRUCTURE. RIGHT. CORRECT. BUT AGAIN, ALSO LOOKING AT THE BENEFITS OF A ROBUST ENERGY EFFICIENCY PROGRAMS THAT CAN OVERALL LOWER SYSTEM COSTS FOR EVERYBODY. SO HAVING LARGER COMMERCIAL AND INDUSTRIAL FACILITIES PARTICIPATE IN THOSE PROGRAMS, NOT ONLY DOES IT ADD REVENUE TO THOSE PROGRAMS, BUT POTENTIALLY BENEFIT DIRECT BENEFITS TO THEM, TO THE EXTENT THEY PARTICIPATE. OKAY. DO YOU FIND IT PECULIAR THAT THE INDUSTRIAL CUSTOMERS THAT ARE SITTING HERE TODAY ARE ACTUALLY NOT ON BOARD WITH YOUR IDEA AS THEY, THEY THEMSELVES ARE TRYING TO MAKE THESE DECISIONS FOR THEMSELVES AS CUSTOMERS? UH, NO. I THINK IT'S BEEN A CLEAR, UM, POLICY OF, OF, YOU KNOW, AT LEAST AT THE LEGISLATURE OF AND OTHERS TO, TO NOT PARTICIPATE DIRECTLY IN THE ENERGY EFFICIENCY PROGRAM. SO IT DOESN'T SURPRISE ME. OKAY. I DON'T KNOW THAT I HAVE ANY OTHER QUESTIONS. THANK YOU, MR. REED. THANK YOU. OKAY. THANK YOU, MR. KIMBRO. UM, HERFF NO QUESTIONS, YOUR HONOR. SSC, NO QUESTIONS, YOUR HONOR. NXP. NO QUESTIONS, YOUR HONOR. T I C YES, YOUR HONOR. DR. REED FALLING UP ON, ON ONE OF THE QUESTIONS, UH, UH, THIS IS JOHN RUSS HUBBARD WITH TIC, UH, FOLLOWING UP WITH ONE OF THE QUESTIONS THAT WAS ASKED, UM, WOULD INDUSTRIAL CUSTOMERS, TA WOULD TEC MEMBERS BE PUT AT A DISADVANTAGE, THOSE WITHIN AUSTIN COMPARED TO THOSE OUTSIDE OF AUSTIN, BECAUSE WE CURRENTLY DO NOT RECEIVE, OR WE CURRENTLY DO NOT PAY INTO THE EES PROGRAM. SO YOU'RE, YOU'RE TALKING ABOUT MEMBERS THAT ARE AT THE TRANSMISSION LEVEL THAT CURRENTLY DON'T PAY THE S FEE OR THAT ARE OVER 20 MEGAWATTS. YEAH. SO, UM, SHORT TERM, IF WE WERE TO APPLY AN N E S T TO ALL OF YOU, UM, IT WOULD BE A DISADVANTAGE BECAUSE IT WOULD BE AN ADDED COST. UM, AGAIN, I'M THINKING LONG-TERM IN TERMS [02:40:01] OF THE BENEFITS OF HAVING A LARGER PROGRAM AND THEN BEING ABLE TO ACTUALLY HELP YOU GUYS WITH INCENTIVES TO DO, TO DO THINGS THAT BENEFITS EVERYBODY. SO, YEAH, SHORT TERM YOU'RE YOU'RE CORRECT. THANK YOU. UH, AND GOING BACK TO THE, THE, THE PASSAGE OF SB 1125 AND THE IMPLEMENTATION AT THE PUC, UM, YOU PARTICIPATED IN IT, YOU PURCHASED IN THAT IMPLEMENTATION, CORRECT? YEAH. I BELIEVE I HAD LENGTHY COMMENTS THAT WERE PROBABLY TOO LONG. DIDN'T LISTEN ANYWAY. UH, AND IN THAT RULEMAKING, YOU SPECIFICALLY ADVOCATED TO REMOVE THE OPT-OUT THAT CERTAIN INDUSTRIAL FACILITIES COULD MAKE, UH, TO THE ENERGY EFFICIENCY. AND TO BE CLEAR, OUR VIEW WAS THAT THAT OPT-OUT WAS NOT IN THE LEGISLATION, UM, BECAUSE THE PUC ADDED SOME LANGUAGE HAVING TO DO WITH TAX CODES AND HOW SOMEBODY WAS CONSIDERED. AND WE FELT LIKE IT WAS GOING BEYOND WHAT THE LEGISLATION SAID TO INCLUDE THOSE, YOU KNOW, WHAT YOU COULD CONSIDER COMMERCIAL CUSTOMERS THAT ARE TIED TO AN INDUSTRIAL CUSTOMER. SO THAT WAS THE, THAT WAS THE OPPOSITION. OKAY. AND THEN THE COMMISSION THEN DECLINED TO REMOVE THAT DOUBT, CORRECT? THAT'S TRUE. OKAY. THANK YOU. AND THEN, UH, THE LEGISLATURE, AGAIN, SPECIFICALLY DID NOT INCLUDE INDUSTRIAL CUSTOMERS WHEN TRYING TO DETERMINE WHO WOULD PAY INTO THE ENERGY EFFICIENCY PROGRAMS. WHEN YOU SAY AGAIN, YOU MEAN AS PART OF 1125 AS PART OF 1125 AND HOUSE BILL 36 93, W PER THE PREVIOUS BILL. YEAH. IN BOTH CASES, UM, IN BOTH CASES, THEY SPECIFICALLY SAID THIS APPLIES ONLY TO RESIDENTIAL AND COMMERCIAL. I THINK THE ORIGINAL VERSION OF SB 1125, CAUSE I LOOKED IT UP LAST NIGHT, UH, DID TRY TO SPECIFY THAT IT WOULD ONLY BE TRANSMISSION LEVEL INDUSTRIAL CUSTOMERS, BUT THAT WAS CHANGED DURING THE COURSE OF THE LEGISLATION. OKAY. THANK YOU. UH, AND THEN THIS IS THE SAME APPROACH THAT AUSTIN ENERGY HAS BEEN TAKEN AT TO EXEMPT INDUSTRIAL CUSTOMERS FROM THE EES PROGRAM, BECAUSE THEY HAVE SOPHISTICATED ENERGY MANAGEMENT PROGRAMS AND HAVE INCENTIVES TO MAKE ENERGY EFFICIENCY MEASURES, AUSTIN ENERGY. AND THE 2016 RATE CASE TOOK A SIMILAR VIEW AND, UM, DID NOT INCLUDE EITHER PRIMARY OR TRANSMIT TRANSMISSION LEVEL CUSTOMERS AND PRIMARY ABOVE 20 MEGAWATTS, OR HOWEVER YOU WANT TO SAY THAT. AND TH THAT'S THE SAME APPROACH THAT'S BEING TAKEN TODAY. I, IN ADDITION TO THE INCLUSION OF PRI TO, YEAH, AGAIN, THE PRI TWO IS AN ADDITION BECAUSE IT'S FROM THREE TO 20, SO IT'S SORT OF AN EXPANSION OF THAT POLICY, BUT THEY STILL HAVE THE SAME PHILOSOPHY BEHIND THAT POLICY. THEY DO. OKAY. THANK YOU. THAT'S ALL I HAVE YOUR HONOR. OKAY. THANK YOU VERY MUCH. UM, MR. KAUFMAN, NO QUESTIONS. ALL RIGHT. AUSTIN IMAGING, NO QUESTIONS FOR MR. RAY. ALL RIGHT. REDIRECT. WE HAVE JUST ONE SECOND. YES, LET'S GO OFF THE RECORD OR BACK ON THE RECORD. UM, REDIRECT, UM, MR. REED, COULD YOU JUST GO BACK AND LIGHT KIND OF, KIND OF REGROUP AND CLEAR THE AIR BY CLARIFYING YOUR POSITION POSITION, UH, WHETHER IT'S RELATING TO ALL THE CUSTOMERS PAYING THE EES REPORTING IN ORDER TO SECURE AN EXEMPTION AND JUST KIND OF BRING US BACK TO, UH, TOUCH BASE ON WHAT IT IS THAT YOUR CLAIM IS IN LIGHT OF WHAT WE'VE JUST DISCUSSED. YEAH. SO I THINK THE POSITION THAT WE, WE PUT FORWARD IN THE TESTIMONY IN OUR EXHIBIT, UM, IS THAT WE BELIEVE THAT ALL CUSTOMER CLASSES SHOULD PAY AN EQUIVALENT E S FEE. THAT DOESN'T MEAN IT'S EQUAL, BUT IT'S YOU SORT OF DEPENDING ON THEIR, THEIR SIZE. UM, BUT BASED ON KILOWATT HOUR USE AND THAT ALL CUSTOMERS THERE SHOULD BE PROGRAMS FOR ALL CUSTOMERS, THERE SHOULD BE OPPORTUNITY FOR ALL CUSTOMERS TO THEN TAKE ADVANTAGE OF THOSE FUNDS THAT HAVE BEEN CREATED TO MAKE INVESTMENTS IN ENERGY EFFICIENCY, DEMAND, RESPONSE, LOCAL GENERATION THAT WILL HELP ULTIMATELY EVERYBODY IN THE CITY. YEAH. THERE'S BEEN DISCUSSION IN SOME, UM, QUESTIONS ABOUT REPORTING. CAN YOU CLARIFY WHAT THE POSITION IS ON REPORTING AT THIS POINT? YEAH. RIGHT NOW, UM, AUSTIN ENERGY, UH, ALREADY DOES AN ANNUAL REPORT, UH, BASED ON THEIR PROGRAMS. UM, IN FACT, THEY DO AN ANNUAL REPORT, BUT EVERY, EVERY SINGLE REBATE OR INCENTIVE THEY GIVE THAT GOES TO CITY COUNCIL FOR APPROVAL HAS A REPORT THAT DISCUSSES, YOU KNOW, THE AMOUNT OF THE REBATE, THE AMOUNT OF ENERGY AND DEMAND SAVINGS, UM, AND THAT ALL GOES INTO AN ANNUAL REPORT. UM, AND SO WE HAVE NOT ACTUALLY FORMALLY, UM, SAID IN OUR TESTIMONY THAT THERE'S SOMETHING ADDITIONAL WE WANT TO DO WITH REPORTING. UM, BUT TO THE EXTENT WE'RE SAYING CERTAIN CUSTOMERS, UM, DON'T HAVE TO PAY AN ESV, THEN IT SEEMS [02:45:01] LOGICAL TO ME THAT SOME SORT OF REPORT WITHOUT REVEALING CONFIDENTIAL INFORMATION, UM, THAT LISTS THE TYPES OF INVESTMENTS THAT ARE BEING MADE AND THE TYPES OF SAVINGS THAT RESULT, UH, WOULD BE A BENEFIT TO EVERYBODY. UM, AT, AT THE HEART OF YOUR CONCERN IS, OR IS THE HEART OF YOUR CONCERN, A, AN ISSUE ABOUT, UH, DISCRIMINATION AND PREFERENTIAL TREATMENT? YEAH, EXACTLY. WHERE, WHERE, WHERE, OR UTILITY THAT AS A, YOU, AS A CITY, WE HAVE ADOPTED A POLICY THAT WE WANT TO BE LEADERS ON ENERGY EFFICIENCY, DEMAND, RESPONSE, LOCAL GENERATION. UM, AND MY, MY BELIEF, THE BELIEF THAT SIERRA CLUB AND PUBLIC CITIZEN SUN PUT FORWARD IN THIS TESTIMONY IS THAT, UM, ALL RATE PAYERS SHOULD PARTICIPATE IN THAT EFFORT, UM, BOTH BY A SMALL AMOUNT OF MONEY ON THEIR, ON THEIR MONTHLY BILL. UM, BUT ALSO TO THE EXTENT THEY CAN ACTUALLY PARTICIPATING IN THE PROGRAMS. AND THERE'S BEEN SOME DISCUSSION, YOU ASKED SOME QUESTIONS, OR AT LEAST THERE WAS SOME TALK ABOUT OPTING OUT. IS IT YOUR THOUGHT THAT THERE COULD BE AN APPROACH? IT COULD BE APPROPRIATE TO HAVE SOME SORT OF OPTING OUT PROCEDURE PROVISION? SURE. AND, AND THE IDEA THAT WE'VE BEEN MENTIONING IS, UH, MAY BEEN RETURNED FOR NOT HAVING, UH, TO PAY THE ESV OR PARTICIPANT IN THOSE PROGRAMS. THERE COULD BE SOME SORT OF REPORTING MECHANISM TO SHOW THE TYPES OF, UH, INVESTMENTS THAT ARE BEING MADE. SO IS YOUR FUNDAMENTAL CONCERN THAT MOST CUSTOMERS, RESIDENTIAL CUSTOMERS, COMMERCIAL CUSTOMERS, THEY HAVE TO PAY THE FEE, CORRECT? CORRECT. AND WE SUPPORT THAT FEE, BUT YEAH, THEY HAVE TO PAY IT. BUT THE OTHER SIDE OF THAT ON THE OTHER SIDE OF THE COIN, THE HIGH LOAD FACTOR CUSTOMERS, DON'T CORRECT. AND WE'RE, WE'RE ADDING AN ADDITIONAL CLASS OF CUSTOMERS WHO IF THEY CHOSE TO GO INTO THAT CLASS WOULD NO LONGER PAY IT. AND THAT CAUSES A LOSS OF REVENUE POTENTIALLY. WELL, AUSTIN ENERGY TOLD US THAT, UM, IF ALL THOSE CUSTOMERS THAT COULD QUALIFY DID THAT'D BE OVER A MILLION DOLLARS A YEAR TO THE BUDGET. AND PART OF THE CONCERN IS, IS IT, IS IT PART OF YOUR CONCERN THAT IF THESE CUSTOMERS DON'T HAVE TO PAY IT, THEY SHOULD DO SOMETHING TO SHOW THAT THEY'RE ENTITLED NOT TO PAY IT. THEY SHOULD SHOW HOW THEY'RE CONTRIBUTING TO OUR OVERALL GOALS AS A CITY. UM, THERE'S BEEN SOME DISCUSSION REGARDING, UM, S CPC EXHIBIT 16. ARE YOU FAMILIAR WITH THAT? YES. CAN YOU PLEASE EXPLAIN WHAT THAT, HOW THAT RELATES TO THE DISCUSSION YOU HAD WITH COUNCIL? UM, JUDGE, AM I ALLOWED, I DON'T KNOW IF THIS HAS BEEN ADMITTED YET, SO I HAVEN'T YET BEEN INTERVIEWED IT HASN'T BEEN ADMITTED, BUT I WANTED TO HEAR HOW YOU SEE. OKAY. CAN YOU REPEAT THE QUESTION? COULD YOU EXPLAIN IF AND HOW, UH, THIS DOCUMENT, THIS EXHIBIT RELATES TO OUR ELUCIDATES ISSUES THAT YOU DISCUSSED WITH COUNSEL AND CROSS-EXAMINATION, IT SHOWS AN EXAMPLE OF A REBATE THAT WAS GIVEN IN 2018 BY CITY COUNCIL TO A CUSTOMER THAT COULD QUALIFY FOR THE NEW CLASS. AND AS PART OF THAT RE REBATE, IT CLEARLY SHOWS HOW THAT REBATE HELPED SAVE DEMAND AND ENERGY. SO DOES THAT THEN SHOW THAT THAT CUSTOMER WAS RECEIVING THE BENEFITS OF THE EES PROGRAM? THEY GOT A DIRECT BENEFIT FROM THAT PROGRAM, WHICH I'M I VOTED FOR IT. I WAS ON THE RMC AT THE TIME. I WAS HAPPY TO VOTE FOR IT. UH, AND SO TH THEN DOES THAT POINT OUT YOUR CONCERN ABOUT NOT PARTICIPATING AND NOT PAYING WHEN AN ENTITY OF A HIGH LOAD FACTOR CUSTOMER GETS A BENEFIT FROM THE PROGRAM? EXACTLY. AND THEN ON THE OTHER SIDE OF THE TA ON THE OTHER SIDE OF THE PAGE, ARE THESE THE KINDS OF ISSUES THAT YOU'RE THINKING MIGHT BE SUBJECT TO REPORTING OR AN OPTING OUT REQUEST? EXACTLY. THERE'S IS ON THIS SHEET OF PAPER. THERE'S NO CONFIDENTIAL INFORMATION. IT'S JUST, HERE'S A LIST OF THE TYPES OF PROJECTS, LIGHTING, AIR CONDITIONING, AIR COOLED, CHILLERS TRANSFORMERS, UH, WHERE THE ENTITY IS SEEKING SOME REBATE. UM, AND HERE'S THE ESTIMATED SAVINGS THAT RESULTS. AND JUST TO BE VERY CLEAR, ARE YOU TRYING TO FORCE ANY OF THESE ENTITIES TO DISCLOSE CONFIDENTIAL INFORMATION? NO. AND IN FACT, I'D BE HAPPY, UH, EVEN AGGREGATING THE INFORMATION BY CUSTOMER CLASS. I DON'T THINK WE NECESSARILY NEED TO KNOW EXACTLY WHAT EACH FACILITY IS DOING. AND JUST TO BE CLEAR, YOU'RE NOT SAYING ARE YOU THAT THESE ENTITIES DO NOT PROVIDE ENERGY ARE NOT ENGAGED IN VALID, VERY, VERY IMPORTANT ENERGY EFFICIENCY. I HOPE THEY ARE. THE ANSWERS WE GOT WERE KIND OF VAGUE, BUT YEAH, I BELIEVE THEY ARE. I HOPE THEY ARE. IT'D BE NICE TO HAVE MORE INFORMATION TO KIND OF GET TO THE END OF THIS DISCUSSION. YOUR CONCERN IS THAT IF ALL OTHER CUSTOMERS HAVE TO PAY IT, THESE CUSTOMERS TO GET RELEASED SHOULD DO SOMETHING. EXACTLY. AND I AM CONCERNED THE SLIPPERY SLOPE, YOU KNOW, IT WAS JUST 20 MEGAWATTS ABOVE. NOW. IT LOOKS LIKE WE'RE GOING TO THREE MEGAWATTS. UM, AND [02:50:01] YOU KNOW, IF WE SAY ANYBODY WHO, WHO DOESN'T WANT TO PAY IT, BECAUSE THEY'RE DOING IT ON THEIR OWN, THAT'S, THAT'S A SLIPPERY SLOPE. AND SUDDENLY YOU DON'T HAVE A PROGRAM, YOUR HONOR, WE RETURN TO, UH, OFFERING OUR, UH, TO OUR OFFER OF AAICPC 16. ARE THERE STILL ANY OBJECTIONS TO SEPC 16? YES, YOUR HONOR. UM, WORDING THOUGH, UM, IT'S NOT LIT UP. UM, THERE IT IS, THERE IT GOES, RIGHT. UM, MUCH THE SAME AS BEFORE IT RELATES TO, UH, UM, UH, UH, DEVELOPMENT THAT OCCURRED FIVE YEARS AGO, UM, WITH PREVIOUS OWNERSHIP OF DATA FOUNDRY. SO IT'S NOT EVEN THE SAME, SAME PEOPLE. UH, IT'S ALSO NOT CLEAR HOW MUCH OF THAT WAS ACTUALLY TIED TO ECONOMIC DEVELOPMENT INCENTIVES AS OPPOSED TO ENERGY EFFICIENCY PROGRAMS SPECIFICALLY. UM, AND SO I, I WOULD JUST RAISE THAT AS A QUESTION. AND THEN ALSO WOULD POINT OUT THAT IN THE CONTEXT OF THE PRI TO, AS MR. REED INDICATED IT HAS NO RELEVANCE TO THAT NEW TARIFF, UH, THE NEW TARIFF DOESN'T EXIST TODAY, AND IT WAS NOT THE TARIFF IN PLACE AT THE TIME OF THE DOCUMENT. AND I ASSUME TIC JOINS IN THE OBJECTION WE DO YOUR HONOR, BUT WE HAVE NOTHING, GOD. AND IN RESPONSE, YOUR HONOR, IT'S CLEARLY RELEVANT BECAUSE IT TENDS TO PROVE OR TO MAKE A, A FACT THAT IT'S AN ISSUE IN THIS CASE, MORE LIKELY RATHER THAN LESS LIKELY. AND THAT FACT IS THAT, UM, THIS KIND OF INFORMATION CAN BE PROVIDED THAT'S ON ONE, ONE SIDE OF THE SHEET AND ALSO THAT THE E S PAYMENTS AND BENEFITS ARE AN ISSUE WITH THE LARGER CUSTOMERS. YES, I W HERE'S HOW I SEE IT. IT ILLUSTRATES YOUR POSITION. UH, I'M GOING TO ALLOW IT IN, UM, AND WE'LL, WE'LL GIVE IT THE WEIGHT THAT, THAT IT'S ENTITLED TO OVER THE OBJECTIONS OF, UH, DATA FOUNDRY AND TIC, HOWEVER, UH, DATA FOUNDRY AND TIC FEEL FREE TO GO INTO IT ON RECROSS. NO PROBLEM. OKAY. ALTHOUGH I'VE, I I'M KEEPING TRACK OF YOUR ARGUMENTS, MR. KIMBRO. ALL RIGHT. PASS THE WITNESS. OKAY. UM, WHO HAS RECROSS? ALL RIGHT. LET'S START OUT WITH DATA FOUNDRY, PLEASE. THANK YOU, YOUR HONOR. NOW, MR. REED, A MOMENT AGO, YOUR COUNSEL ASKED YOU SOME QUESTIONS ABOUT THE, UM, I GUESS THE TRADE OFF, UM, AND THAT I CAN HELP YOU GAIN AN AGREED TO USE IN THE DOOR TRADE-OFF, BUT THE TRADE-OFF PROPOSAL THAT SIERRA CLUB'S MAKING, THAT YOU WOULD ALLOW INDUSTRIAL CUSTOMERS, INCLUDING THOSE IN PRI TO, TO OPT OUT IF, AND ONLY IF THEY GAVE REPORTING, YOU RECALL THOSE QUESTIONS, CORRECT. IT AGAIN, WE HAVEN'T MADE A FORMAL PROPOSAL, YOU KNOW, WRITTEN DOWN, BUT IT'S SORT OF AN IDEA THAT'S EMERGING. SO IS IT HERE TODAY THOUGH? THAT WOULD BE SOMETHING THAT Y'ALL WOULD BE A MINIMAL TO. YES. ALL RIGHT. AND AGAIN, YOUR, YOUR COUNSEL ASKS YOU QUESTIONS ABOUT THE POTENTIAL OF, UH, NON, OR I GUESS, PUBLICLY AVAILABLE INFORMATION AS BEING THE TOOL, AS OPPOSED TO CONFIDENTIAL INFORMATION, YOU RECALL THOSE QUESTIONS, CORRECT. RIGHT. AND, AND YOU MAY REMEMBER FROM OUR ACROSS OUR DISCUSSION, UH, THERE WAS QUITE A LOT OF DATA IN, LET ME FIND THE EXACT NUMBERS ON THESE EXHIBITS. MY MEMORY IS SOMETHING ON THE ORDER, OR MAYBE THREE AND FOUR, WE WERE TALKING ABOUT THE GREEN PEACE, UM, DISCUSSION AND THE, THE, UM, PATENTS AND ALL OF THAT YOU RECALLED, UH, CORRECT. HAVING LOOKED AT THAT INFORMATION, WOULD THAT SUFFICE WELL, THIS INFORMATION THOUGH IS FOR YOUR WHOLE COMPANY VERSUS FACILITIES THAT ARE WITHIN THE AUSTIN ENERGY SERVICE. SO WE'D BE LOOKING FOR INFORMATION ON FACILITIES WITHIN DOS ENERGY SERVICE AREA. OTHERWISE IT DOESN'T REALLY MAKE SENSE, RIGHT. W WHAT YOU DO IN SINGAPORE AROUND ROCK ISN'T REALLY MATERIAL TO THE, TO THE PROGRAMS HERE. OKAY. SO DO YOU HAVE ANY ESTIMATION OF WHAT KIND OF COSTS A CUSTOMER MPRI TWO MIGHT INCUR TO TRY TO DRILL DOWN AND DO LOCATION SPECIFIC DATA REPORTING OF THE SORTS YOU'RE TALKING ABOUT AS OPPOSED TO SOMETHING THEY'RE ALREADY DOING TODAY? YEAH. I, I AM. I HAVE NO EXPERTISE ON WHAT WOULD COST YOUR ENERGY MANAGER TO PUT TOGETHER AN ANNUAL REPORT THAT LISTS, UM, WITHOUT CONFIDENTIAL INFORMATION, THE TYPE OF INVESTMENTS YOU MADE AND THE RESULTING SAVINGS. BUT I DON'T, I DON'T, I CAN'T IMAGINE IT WOULD BE THAT HARD, BUT YOU DON'T KNOW. I DON'T KNOW. OKAY. YEAH. NOW A MOMENT AGO, YOUR COUNSEL WAS ALSO ASKING YOU ABOUT, I THINK WHAT'S NOW LABELED YOUR EXHIBIT NUMBER 16. YOU RECALL THOSE QUESTIONS? CORRECT. DO YOU HAVE ANY SENSE OF, EVEN AT THE TIME, UM, HOW THE PROCEEDS OF THOSE OF THAT PROGRAM, UM, RELATED TO THE AMOUNT OF OUTLAY THAT DATA FOUNDRY WOULD HAVE HAD TO HAVE PAID TO BE PARTICIPATE IN THE PROGRAM? SO LET ME BREAK IT INTO A COUPLE OF PIECES. I THINK IT'LL BE EASIER AT THE TIME OF THE PROGRAM. WE CAN AGREE THAT DATA FOUNDRY HAD TO PAY A FEE, AN ENERGY EFFICIENCY [02:55:01] FEE OF SOME SORT, CORRECT? YES. DO YOU HAVE A SENSE FOR HOW MUCH THEY PAID IN THAT FEE AS COMPARED TO THE AMOUNT THAT THEY RECEIVED IN THAT PROGRAM AND IN THE SHEET THAT YOU HAVE THERE? EXHIBIT 16? YEAH. I CAN ONLY TELL YOU WHAT THE TOTAL COST OF YOUR NEW FACILITY WAS AND HOW MUCH THE COST OF THE REBATE IS. I CAN'T TELL YOU HOW MUCH YOU WERE PAYING AND OR WOULD BE PAYING IN THE S FEES. RIGHT. AND SO, AND, AND TO BE FAIR, I ACTUALLY DON'T KNOW THE NUMBER EITHER, BUT TO THE EXTENT THAT THAT NUMBER THAT WAS PAID IN AND FEES EXCEEDED THE AMOUNT GAINED AND PROCEEDS, WOULD YOU NOT AGREE THAT THAT PROVES TO NOT BE A PARTICULARLY COST-EFFECTIVE TOOL WHEN COMPARED TO PRIVATE INVESTMENT, BY DATA FOUNDRY FROM THE, FROM THE EYES OF THE DATA FOUNDRY CUSTOMER? WELL, DATA FOUNDRY CLEARLY APPLIED FOR THIS MONEY, WHICH MEANS IT WAS IN THEIR INTEREST TO DO SO. AND THEN THEY DID GET A REBATE OF APPROXIMATELY A HUNDRED THOUSAND DOLLARS, A SMALL GRANTED, JUST A SMALL PERCENTAGE OF THEIR OVERALL PROJECT, BUT STILL, THEY MUST'VE THOUGHT IT WAS IMPORTANT. LET'S WALK THROUGH THE MATH. SO, AND AGAIN, I'M GOING TO MAKE UP NUMBERS BECAUSE TO BE FAIR, I ACTUALLY DON'T KNOW THE NUMBERS FROM FIVE YEARS AGO WITH PREVIOUS OWNERS AND, AND ALL THAT GOES WITH IT. BUT LET'S SAY FOR THE SAKE OF ARGUMENT, THAT THEY PAID $500,000 INTO THE ENERGY EFFICIENCY FEE PROGRAM. AND THEN THEY, YOU KNOW, ONE OF THE, THE UPSIDES, I GUESS, IS THAT THEY WERE ELIGIBLE TO RECEIVE PROCEEDS, BUT THEY ONLY GOT PROCEEDS FOR A HUNDRED THOUSAND. YOU RECOGNIZE THAT AS A POSSIBILITY, WE WOULDN'T HAVE TO DO THE MATH OF WHAT THE SIERRA, WHAT THE IES WAS AT THE TIME, WHAT YOUR TOTAL KILOWATT HOURS WERE. I WAS WORKING WITH A HYPOTHETICAL. I'M NOT ASKING YOU TO GIVE ME ACTUAL NUMBERS, BUT LET'S JUST FOR PURPOSES OF HYPOTHETICAL. I GOT TO STOP YOU FOR A MINUTE. THERE Y'ALL STEP ON EACH OTHER. CONSTANTLY TRY TO HOLD OFF UNTIL THE END OF THE QUESTION, MR. REED. IT'S NOT JUST YOU, BUT, UH, MR. KIMBRO ALSO, I'LL BE MINDFUL. THANK YOU. THANK YOU. SO AGAIN, THIS IS A HYPOTHETICAL, I'M NOT ASKING YOU TO GO INTO ACTUAL DATA AND DO RESEARCH. THIS IS JUST A HYPOTHETICAL, LET'S SAY THAT THE AMOUNT ASSESSED WAS 500,000 AND THEN THE PROCEEDS AS DESCRIBED BY EXHIBIT 16 THERE, WHERE THERE'S ABOUT A HUNDRED THOUSAND. THAT MEANS NECESSARILY THAT DATA FOUNDRY IN THAT EXAMPLE WAS PAYING $400,000 NET OVER THE, YOU KNOW, THERE, THERE WAS, THEY WERE PAYING MORE THAN THEY GAINED IN BENEFIT FROM THE PROGRAM. CORRECT. IF YOUR HYPOTHETICAL IT'S TRUE AND I'M NOT SURE IT IS, THEN YES, THAT WOULD BE CORRECT. RIGHT. WHERE CONVERSELY, IF THEY HAD BEEN ALLOWED THE OPPORTUNITY TO OPT OUT AND THEY COULD HAVE POTENTIALLY MADE THE A HUNDRED THOUSAND DOLLAR INVESTMENT, AND IT JUST SIMPLY WOULD HAVE BEEN A HUNDRED THOUSAND DOLLAR INVESTMENT OR CONVERSELY, THEY COULD'VE MADE A $500,000 INVESTMENT ON THEIR OWN FACILITIES AND THEY WOULD HAVE KNOWN THAT THAT WORKED FROM A COST BENEFIT PERSPECTIVE. CORRECT? SURE. BUT YEAH. THANK YOU, YOUR HONOR. UM, DR. REED QUICKLY, UH, HIGH LOAD CUSTOMERS OVER 20 MEGAWATTS CAN'T PARTICIPATE IN IES PROGRAMS, CORRECT? THAT'S CORRECT. AND AT THE TIME IN XP WAS NOT CONSIDERED AN INDUSTRIAL CUSTOMER, OR I'M SORRY, DATA FOUNDRY WAS NOT CONSIDERED AN INDUSTRIAL CUSTOMER AT THE TIME OF THIS. OH, YES, THAT'S CORRECT. THANK YOU. AND, UM, AND AUSTIN ENERGY HAS STATED THAT LARGE INDUSTRIAL CUSTOMERS DON'T RECEIVE ANY REBATE OR INCENTIVE FOR THEIR ENERGY EFFICIENCY IMPROVEMENTS, CORRECT? I, I, I'M ALMOST TOTALLY SURE. THAT'S CORRECT. AND UNDER THE PRESENT POLICY. PERFECT. UM, AND THEN GOING BACK TO SOMETHING THAT YOUR COUNSEL SAID ABOUT YOU BEING CONCERNED ABOUT DISCRIMINATION AND PREFERENTIAL TREATMENT, UH, IF LARGE INDUSTRIAL CUSTOMERS HAD PAID FOR THEIR OWN ENERGY EFFICIENCY MEASURES, AND THERE WAS ALSO AN ENERGY EFFICIENCY CHARGE, WOULDN'T THEY BE CHARGED TWICE FOR THOSE ENERGY EFFICIENCY CORRECTIONS. YEAH. TO THE EXTENT THAT THEY, THAT THEY DID MAKE INVESTMENTS AND WE'RE ALSO PAYING THE FEE THAT'S CORRECT. BUT IF WE GO TO A RESIDENTIAL OR COMMERCIAL CUSTOMER, FOR EXAMPLE, WE ALL PAY THOSE FEES AND SOME PEOPLE TAKE ADVANTAGE OF THEM DIRECTLY AND OTHERS DO INVESTMENT ON THEIR OWN. AND I THINK THAT'S OKAY. OKAY. THANK YOU. NO FURTHER QUESTIONS. OKAY. ANY FOLLOW-UP ON THAT? ALL RIGHT. THANK YOU, MR. REED. LET'S GO. THANK YOU. LET'S GO OFF THE RECORD FOR JUST A SECOND. ALL RIGHT. WE'RE BACK ON THE RECORD AND, UH, MR. GOFF, UH, ON BEHALF OF SSC, WHENEVER YOU'RE READY. THANK YOU, YOUR HONOR. UH, FOR THE RECORD, ERIC GOFF FROM HALF OF THE SOLAR, SOLAR AND STORAGE [03:00:01] COALITION, UH, THE SOLAR STORAGE COALITION IS MADE UP OF A REAL ESTATE DEVELOPERS AND MICRO GRIDS, AS WELL AS SONOVA SUNRUN AND TESLA. I'M ALSO A MEMBER OF THE COALITION AND A AUSTIN ENERGY RESIDENT AND CUSTOMER. UM, THE COMPANIES INVOLVED IN THE COALITION, UM, SHARE A GOAL OF EXPANDING THE ABILITY TO USE STORAGE AS PART OF THE SOLAR VALUE OF SOLAR TARIFF TO OFFER FLEXIBILITY TO AUSTIN ENERGY CUSTOMERS AND EXPANDING THE USE OF SOLAR AND STORAGE, UH, BENEFITS, AUSTIN ENERGY, AUSTIN RESIDENTS, AND ALSO THE CITY'S GOALS TO FIGHT CLIMATE CHANGE. UH, WE DON'T PROPOSE SPECIFIC, UH, RATE CHANGES TO THE VALUE OF SOLAR TARIFF, BUT RATHER MODIFICATIONS TO THE VALUE OF SOLAR TARIFF TO INCLUDE ADDITIONAL, UM, METHODOLOGICAL CHANGES, UH, AND INPUTS TO THE PROGRAM. UM, SPECIFICALLY WE'RE ASKING, UM, THAT, UM, THERE'D BE A STORAGE COMPONENT, UM, THAT COULD BE, UM, UH, FIXED OR VARIABLE, UM, AS PART OF THE VALUE OF SOLAR. UM, AND, AND WE'RE ASKING AUSTIN ENERGY TO COMMIT TO CREATING PROCESSES, UH, TO CREATE RATES FOR SOLAR PLUS STORAGE. UM, AND TO THE EXTENT THAT VALUE OF SOLAR IS, UM, TAKEN OUT OF THIS RATE CASE PROCESS, WE'RE ASKING THAT THEIR COMMITMENTS TO INCLUDE SOLAR PLUS STORAGE AND THE ITEMS HERE, UM, EITHER WITH THE VALUE OF SOLAR, UM, CHANGES ARE CURRENTLY WITH, UM, THAT, THOSE DISCUSSIONS. UM, SO SPECIFICALLY, UM, ON MICRO GRIDS, UM, WE'RE LOOKING FOR A MICRO GRIDS FOR EITHER AN ENTIRE NEIGHBORHOOD, A DEVELOPMENT OR COMMON PROPERTY SUCH AS A MULTIFAMILY OR CONDO DEVELOPMENT, SO THAT, UM, THE RESIDENTS IN THAT AREA THAT ARE INCLUDED IN THAT MICRO GRID CAN SHARE, UM, SOLAR AND STORAGE FACILITIES AND HAVE THAT BE REFLECTED IN THEIR RELATIONSHIP WITH AUSTIN ENERGY, UM, AND THEN BE ABLE TO SHARE EXCESS SOLAR AND STORAGE PAYMENTS OR CHARGES, UM, ACROSS THE, THE, THE DIFFERENT AUSTIN ENERGY CUSTOMERS IN THAT MICRO GRID. SO, FOR EXAMPLE, UM, IF THERE'S A W A SHARED ROOF, THEN THAT BENEFITS ALL OF THE PEOPLE THAT ARE LIVING UNDER THAT ROOF, UM, OF COURSE, MICRO GRIDS THAT ARE DEVELOPED IN THIS WAY CAN ALSO TEMPORARILY SELF POWER. SO IN THE EVENT OF AN OUTAGE, SOLAR PLUS STORAGE CAN KEEP THE LIGHTS ON FOR THAT FACILITY OR THAT NEIGHBORHOOD AND THE MICRO GRID, WHICH WE THINK IS A BENEFIT TO AUSTIN ENERGY AND TO THE PEOPLE THAT ARE THE MICRO GRID. UM, IN ADDITION TO THOSE ITEMS, WE'RE ASKING FOR A CONSIDERATION FOR THE REBATE STRUCTURE FOR THE VALUE OF SOLAR TARIFF. UM, ONE IS TO LOOK AT AN ADDITIONAL STORAGE REBATE, UM, THAT REFLECTS THE VALUE THAT STORAGE GIVES TO THE UTILITY AND, UM, IS DEVELOPED IN A SIMILAR MANNER TO THE WAY THAT THE, THE SOLAR ONLY REBATE EXISTS. WE'RE ASKING THAT THE, THE AUSTIN ENERGY AND THE CITY OF AUSTIN CONSIDER A LOW-INCOME DISCOUNT, UM, OR A LOW-INCOME REBATE THAT COVERS BOTH SOLAR AND STORAGE. UM, AND, UH, ASIDE FROM REBATES, WE'RE ALSO ASKING THAT AUSTIN ENERGY EXPLICITLY, UM, MAKE PUBLIC, UH, AN ALLOWANCE FOR SOLAR LEASING WITHIN THE AUSTIN ENERGY SERVICE TERRITORY. UM, THIS PUBLIC ALLOWANCE CAN BE USED FOR FINANCIAL REPORTING PURPOSES, SO THAT PEOPLE THAT ARE OFFERING LEASING IN THE AUSTIN ENERGY SERVICE TERRITORY, UM, CAN SHOW THAT TO THEIR FINANCE YEARS. UM, SPECIFICALLY WHAT LEASING IS. IT'S AN EQUIPMENT AND FACILITIES LEASING AND NOT A KILOWATT HOUR CHARGE OR PAYMENT. SO WE'RE NOT TRYING TO PROVIDE A RETAIL SERVICE WITHIN THE AUSTIN LABOR SERVICE TERRITORY, BUT RATHER A, A LEASING ARRANGEMENT FOR THE EQUIPMENT ON THE ROOF OR IN THE GARAGE. UH, WE FOUND THAT THESE LEASING ARRANGEMENTS CAN OFFER, UM, SOLAR AND STORAGE TO, UM, PEOPLE OF MODERATE AND LOWER INCOME THAN YOU CAN ON A PURCHASE OF, OF THE FACILITY. AND SO WE THINK THAT'S A BENEFIT TO THE CITY, AS WELL AS AUSTIN ENERGY AND TO STRESS EVENTS. ANOTHER THING WE'D LIKE TO INCLUDE IN THE VALUE OF SOLAR TARIFF IS EXPECTATIONS FOR, UM, SOLAR PERMIT PROCESSING AND STORAGE PROCESSING, UM, AND THE LIVED EXPERIENCE OF THE SOLAR INSTALLERS. SOMETIMES, UM, [03:05:01] THESE INSTALLATIONS CAN TAKE MANY, MANY MONTHS, AND THAT'S A DIFFICULT PROPOSITION FOR AUSTIN ENERGY CUSTOMERS THAT ARE TRYING TO MAKE A DECISION ABOUT INSTALLING A SOLAR OR SOLAR PLUS STORAGE. SO WE'RE ASKING THAT AN INTERCONNECTION REQUESTS BELOW 15 K W HAVE A GUARANTEED NOT TO EXCEED SIX WEEKS, UNLESS SOMETHING IN PARTICULAR WENT WRONG WITH THAT INTERCONNECTION REQUEST AND WAYS TO INCORPORATE THIS WOULD BE TO ALLOW FOR THIRD-PARTY INSPECTORS AND ELECTRICIANS. IF THERE ARE ISSUES RELATED TO AVAILABILITY OF PERSONNEL, AS WELL AS TO USE THE STANDARDIZED DEPARTMENT OF ENERGY SOLAR APP ONLINE PERMITTING TOOLS, UM, IN RESPONSE TO AN RFI FOR INFORMATION RELATED TO THIS AUSTIN ENERGY, UM, SAID THAT THIS INFORMATION RELATED TO HOW LONG IT TAKES TO GET A SOLAR PERMIT IS NOT SOMETHING THAT THEY CAN PROVIDE BECAUSE PROVIDED BY A DIFFERENT CITY DEPARTMENT, THE DEVELOPMENT SERVICES DEPARTMENT, WHILE WE APPRECIATE THAT THERE ARE DIFFERENT DEPARTMENTS IN THE CITY, UM, IT'S DIFFICULT, UH, FOR TWO DIFFERENT CITY DEPARTMENTS TO BE ABLE TO POINT FINGERS AT EACH OTHER AND SAY WHY, UM, YOU KNOW, AN AUSTIN ENERGY CUSTOMER CAN EXPECT A CERTAIN LEVEL OF SERVICE WHEN IT COMES TO SOLAR INSTALLATION. UM, AND THEN ALSO ANGIE MENTIONED THAT THEY'RE LOOKING AT A STANDARD OFFER PROGRAM FOR COMMUNITY SOLAR PLUS STORAGE. UM, WE WOULD LIKE TO INCLUDE THAT, UH, SPECIFICALLY WITHIN THE VALUE OF SOLAR TARIFF THAT CAN CREATE EXPECTATIONS FOR SOLAR INSTALLERS AND PARTICULARLY HELP WITH, UM, MULTI-FAMILY INSTALLATIONS. AND SO WE LOOK FORWARD TO THAT BEING SOMETHING THAT RATHER THIS DISCUSSED AS COMMITTED TO, UM, UM, IN OUR EXPERIENCE WITH, UM, SEEKING THESE CHANGES OUTSIDE OF THIS RATE MAKING, UM, AND OUTSIDE THE VALUE OF SOLAR AMENDMENTS. AND MANY TIMES WE'VE DISCOVERED THAT AUSTIN ENERGY SAYS THAT THEY'RE UNABLE TO MAKE A PARTICULAR CHANGE BECAUSE OF CONSTRAINTS WITHIN THE AUSTIN ENERGY BILLING AND INVOICING SYSTEM. UM, AND SO WE'RE ASKING THAT AUSTIN ENERGY DO AN RFQ AND RFP TO SEEK MODIFICATIONS OR REPLACEMENT OF THE BILLING SYSTEM THEY USE THAT WE BELIEVE IS OUTDATED AND IS STANDING IN THE WAY OF ACHIEVING THE, THE UTILITY'S OWN GOALS. UM, I'M PERSONALLY AWARE THAT MANY BILLING SYSTEMS ALLOW KIND OF PLUG AND PLAY FUNCTIONALITY FOR, UH, NEW PRODUCTS, UM, AND EXCHANGE OF DATA IN WAYS THAT ARE APPARENTLY NOT POSSIBLE WITH THE EXISTING BILLING SYSTEM. SO, UM, WE'VE ALSO ASKED THAT THE CITY CONSIDER A 24 7 CARBON-FREE RATE AS AN, AS AN OPTION FOR ITS CUSTOMERS, SIMILAR TO THE GREEN CHOICE PROGRAM, UH, 24 7 CARPENTRY RATE. THAT'S WHERE WITHIN THE HOUR OF CONSUMPTION, THE CONSUMPTION IS MATCHED WITH A CARBON-FREE SOURCE OR STORED ENERGY THAT WAS STORED FROM A CARBON-FREE SOURCE. UM, THIS OPTIONAL PROGRAM COULD BE BENEFICIAL TO THE CITY AND ADVANCING ITS, UM, CLIMATE CHANGE GOALS. UM, WHAT WOULD PROBABLY REQUIRE AN UPDATED BILLING SYSTEM, UM, AND THIS COULD PROVIDE BENEFITS TO CUSTOMERS THAT ARE, UM, PROVIDING EXCESS SOLAR TO THE CITY, AND THEREFORE IS DIRECTLY INTERACTING WITH THE VALUE OF SOLAR TARIFF BECAUSE THE CITY COULD USE THE EXCESS SOLAR OR STORED SOLAR IN ORDER TO MEET DEMAND FROM OTHER CUSTOMERS FOR 24 7 CARPENTRY RATE IN REGARDS TO PERIODIC CHANGES IN THE VALUE OF SOLAR, UM, THAT THIS AUSTIN ENERGY HAS PROPOSED. THERE'S A CONCERN THAT WE HAVE THAT IT'S POSSIBLE FOR THE VALUE OF SOLAR TO DIP BELOW THE RETAIL RATE, UH, THE VARIOUS DIFFERENT COMPONENTS OR THE SUM OF ALL THE DIFFERENT COMPONENTS WE'D LIKE FOR THERE TO BE SOME GUARANTEE OR FLOOR TO THE VALUE OF SOLAR, SO THAT IT WON'T EVER BE A DISCOUNT TO THE RETAIL RATE AND THEREFORE BE A HARM FROM THE SEPARATE METERING OF SOLAR VERSUS THE CONSUMPTION OF THE PREMISE. UM, AND THEN FINALLY WE SUGGEST THAT, UM, THE AUSTIN ENERGY CONSIDERED AN AMENDMENT TO THE, UM, CUSTOMER ASSISTANCE PROGRAM. UM, WE BELIEVE THAT IT'S POSSIBLE THAT IN SOME VERY LOW INCOME CENSUS TRACKS, THERE ARE RESIDENTS THAT ARE NOT SIGNED UP BECAUSE OF A LACK OF INFORMATION OR LACK OF TIME TO SIGN UP FOR THE PROGRAM. AND SO WE'VE ASKED THAT AUSTIN ENERGY CONSIDERED PROGRAM THAT CAREFULLY IDENTIFY CENSUS TRACKS THAT MIGHT BENEFIT FROM THIS PROGRAM. UM, AND, UH, WE BELIEVE THAT A PROGRAM CAN BE CAREFULLY DESIGNED TO, UH, CONSIDER WHERE THESE CUSTOMERS MIGHT BE. UM, AND HAVE [03:10:01] A LIMITED NUMBER OF CENSUS TRACKS HAVE AUTOMATIC ENROLLMENT FOR CAP. SO IN SUMMARY, WE'RE ASKING FOR THE VALUE OF SOLAR TARIFF TO INCLUDE A STORAGE COMPONENT THAT INCLUDES MICRO GRIDS, UM, AND THE MICROGRIDS ARE FROM NEIGHBORHOODS OR FOR MULTIFAMILY CONSIDERED NEW REBATES FOR STORAGE LOW-INCOME CUSTOMERS, AND BE CLEAR THAT, UH, SOLAR LEASING OF EQUIPMENT IS ALLOWED A STANDARD OFFER FOR COMMUNITY SOLAR AND STORAGE, UM, A COMMANDMENT TO GO OUT FOR AN RFP AND RFQ FOR A REPLACEMENT OF THE BILLING SYSTEM, 24 7 CARBON FREE RATE, UM, THE GUARD RAIL FOR VALUE OF SOLAR AND CONSIDER AUTOMATIC ENROLLMENT AND CAP IN CERTAIN CENSUS TRACKS. THANK YOU SO MUCH. ALL RIGHT. THANK YOU, MR. GOLF. OKAY. UM, IT LOOKS LIKE WE ARE BACK TO CPC AND, UM, WHICH WITNESS WOULD, SCPC LIKE TO, UM, PRESENT NEXT? UM, DR. H DR. HOUSEMAN, DR. HOUSEMAN. ALL RIGHT, DR. HOUSEMAN'S VIRTUAL AND BEFORE IT GETS STARTED, DR. HOUSEMAN HAS SOME CORRECTIONS TO MAKE TO HIS DIRECT TESTIMONY. OKAY. REMEMBER CORRECTIONS TO, THEY, THEY'VE GOT TO MAKE IT IN THE, IN THE RECORD COFFEE BACK HERE. UM, YOU CAN GO OVER THEM ON THE RECORD IF YOU WANT, BUT REALLY THE MOST IMPORTANT, I MEAN, FOLKS NEED TO HEAR IT, I SUPPOSE. ARE THERE A LOT OF CORRECTIONS OR JUST A FEW? JUST A FEW. YEAH. THE THING IS IF Y'ALL COULD CORRECT. HOUSEMAN'S TESTIMONY BEHIND US. UM, OTHERWISE IT'S GOING TO HAVE THE OLD, UM, SO, AND WE CAN MAKE TIME LATER ON, UH, FOR Y'ALL TO DO THAT. UM, ALL RIGHT. MR. HALL, UH, DR. HOUSEMAN, I'M SORRY. DR. HOUSEMAN, CAN YOU HEAR US OKAY. CAN, CAN YOU HEAR ME OKAY? YEP. GREAT. EXCELLENT. ALL RIGHT. GOOD AFTERNOON. GOOD AFTERNOON. UM, AS CPC, WHENEVER YOU'RE READY. OKAY. GOOD AFTERNOON, DR. HOUSEMAN. UM, GOOD AFTERNOON. CAN YOU PLEASE EXPLAIN THE CHANGES THAT YOU'RE MAKING TO YOUR TESTIMONY? YES. UM, THE CHANGES ARE BASED ON INFORMATION THAT WAS RECEIVED IN, UH, REBUTTAL BY THE COMPANY. UM, THE FIRST CHANGE IS ON PAGE 13, UH, LINES, UH, 15 AND 16, WHERE I STATE, UH, THAT, UH, AFTER THE WORD, UH, AFTER, IN GENERAL, IT SAYS FOR THAT THE PROPOSAL WOULD BENEFIT LOW OR VULNERABLE CUSTOMERS IN ANY WAY I WOULD STRIKE THAT. I DON'T BELIEVE THAT'S THE CASE BASED ON THE NEW INFORMATION I THOUGHT. UH, AND THE SECOND CHANGE. UM, I LEARNED THAT I HAD INTERPRETED SOME DATA THAT THE COMPANY HAD PROVIDED INCORRECTLY. THAT IS THE BASIS OF THE NUMBERS THAT APPEAR ON PAGE 16 AS THE, AS, UH, NUMBERED IN THE DOCUMENT BY TESTIMONY. UM, AND SO THAT AGE PRETTY MUCH, UM, I HAVE NOT HAD AN OPPORTUNITY TO RECALCULATE THOSE NUMBERS, BUT I THINK PROBABLY THE MOST EFFICIENT THING TO DO WOULD BE TO ESSENTIALLY STRIKE THAT PAGE IN ITS ENTIRETY. UM, AND THEN I GUESS I WOULD REWORD THE FIRST QUESTION ON PAGE 17, JUST BECAUSE IT DOESN'T MAKE SENSE SINCE IT FOLLOWS UP ON THE, UH, THE TEXTS ON PAGE 16. AND I WOULD BE HAPPY TO, UM, PROVIDE, UH, BY THE END OF THE DAY, UM, I CAN, UH, REVISED VERSION OF THIS. OKAY. AND WITH THAT, WE WOULD LIKE TO TENDER DR. HAUSMAN FOR QUESTIONING. OKAY. THANK YOU VERY MUCH. UM, TO WR NO, YOUR HONOR. I HAVE NO THANK YOU. DATA FOUNDRY. NO QUESTIONS, YOUR HONOR. HERFF NO QUESTIONS, YOUR HONOR. SSC. NO QUESTIONS, YOUR HONOR. NXP. NO QUESTION. NO QUESTIONS, YOUR HONOR. T I U C NO QUESTIONS, YOUR HONOR. ICA, NO QUESTIONS, YOUR HONOR. AUSTIN ENERGY. NO QUESTIONS, YOUR HONOR. OKAY. WELL, DR. HUSBAND, THANK YOU VERY MUCH. UM, THAT CONCLUDES YOUR, UH, CROSS EXAMINATION, WHICH WAS REMARKABLY LIGHT. AND, UH, AND THANK YOU FOR APPEARING AND EXPLAINING THAT. [03:15:01] AND IF YOU COULD, IF YOU WANT TO PROVIDE THOSE UPDATED FIGURES OR WHATEVER IT IS THAT YOU WANT TO PROVIDE IN TERMS OF CORRECTIONS TO YOUR TESTIMONY, THAT YOU JUST WENT OVER, UH, WE LOOK FORWARD TO HAVING THAT RECORD. I'LL DO THAT, AND I APPRECIATE THE OPPORTUNITY TO, TO, UH, TO TESTIFY REMOTELY, ESPECIALLY GIVEN THE EXTENT OF THE CROSS. THANK YOU. BET. YOU BET. THANK YOU. UM, ALL RIGHT. ARE WE READY TO MOVE ON TO, UH, MR. RABAGO YOUR HONOR, WE ARE NOT BECAUSE WE HAD DISCUSSED HAVING MR. RABAGO START AT THREE 30. I DID NOT IN MY ESTIMATION AT THE TIME CONTEMPLATE THAT THERE WOULD BE NO CROSS FOR DR. HAUSMAN. SO, UH, WE'RE WE WON'T BE READY TO BRING ON DR. R MR. RABAGO GO UNTIL THREE 30. UH, IF THERE'S A WAY TO ACCOMMODATE THAT OR MOVE ON TO THE NEXT, WE'RE GOING TO ACCOMMODATE THAT, BECAUSE IF HE'S NOT READY, WE'RE GOING TO, WE HAVE A, UH, MR. DANIEL, MR. LAWYER, I THINK THAT ARE HERE. UM, FOR NXP. NOW, NXP MAY NEED A FEW MINUTES, UM, UNLESS NXP IS READY TO PUT THEM UP AND WE CAN GET STARTED JUST A COUPLE OF MINUTES TO MOVE AROUND AND GET EVERYTHING SITUATED. YES, SIR. MR. HUGHES OFF THE RECORD. OKAY. WE ARE BACK ON THE RECORD. UM, ICA IS OFFERING ICA 12. AND COULD YOU PLEASE JUST DESCRIBE THAT ONE MORE TIME? UM, ICA 12 WILL BE, UM, 10 PAGES PRINTED OFF OF THE ORIGINAL RATE PICKING RAINMAKING FILING IN THIS CASE, WHICH IS AUSTIN ENERGY'S EXHIBIT ONE, AND IT IS SCHEDULED TO APPENDIX C TO THAT ORIGINAL RATE FILING AS 10 PAGES. AND, UM, I HA I'VE DISTRIBUTED TO THE PARTIES. I THINK THAT NEED TO SEE IT. I'VE GOT ONE MORE COPY IF SOMEONE NEEDS IT, BUT IT IS, I DIDN'T ORIGINALLY DISTRIBUTED BECAUSE I FIGURED IT WAS ALREADY IN THE RECORD, BUT SUBJECT TO CHECK, DOES ANYONE HAVE A PROBLEM OR ANY OBJECTION TO ICA 12? IT'S ADMITTED. THANK YOU, YOUR HONOR. ANY OTHER HOUSEKEEPING MATTERS BEFORE, UH, MR. DANIEL, UM, GET STARTED WITH THE CROSS, YOUR HONOR, JUST TO ACKNOWLEDGE THAT NXP DID EARLIER TODAY, SUBMIT TO THE PARTIES VIA EMAIL AND TO THE IAGS EMAIL ADDRESS, THE UPDATED AND XP ONE, AND , WHICH ARE OUR STATEMENT OF POSITION AND CROSS REBUTTAL STATEMENT OF POSITION WITH EXHIBITS. UM, WE'VE ALSO PROVIDED TO COUNSEL FOR AUSTIN ENERGY, A RED LINE OF THE CHANGES, AS WELL AS THE SUMMARY OF THE CHANGES. AND I BELIEVE WE ALSO EMAILED TO THE PARTIES, A SUMMARY OF THOSE CHANGES. SO WE DON'T HAVE ANY INTENTION TO HAVE MR. DANIEL WALKED THROUGH ALL OF THEM ON THE RECORD, IN THE INTEREST OF KEEPING TIME. UM, BUT WE DO HAVE A COUPLE OF PAPER COPIES IN FULL OF THE UPDATED VERSIONS IF ANYBODY NEEDS TO SEE THEM. RIGHT. AND IT'S MY UNDERSTANDING WHILE WE WERE OFF THE RECORD, THAT NXP IS BASICALLY SWAPPING OUT, UH, IN THE BINDERS, THE INFORMATION THAT YOU JUST DESCRIBED. THAT'S CORRECT. WE'LL DO THAT AND RETURN THOSE BINDERS TO YOU BY CLOSE UP TODAY. GREAT. THANK YOU VERY MUCH. ALL RIGHT, WE'RE ON THE RECORD. UM, AND XP, ARE YOU READY TO BEGIN THE PRESENTATION THEN WE'RE READY TO PROCEED. OKAY, GREAT. THANK YOU AGAIN, IN THE INTEREST OF BREVITY AND KEEPING THINGS MOVING, WE DON'T HAVE A SIGNIFICANTLY LONG STATEMENT OF POSITION STATEMENT TO MAKE, BUT WE'LL JUST SAY WE DID PROVIDE, I'M GOING TO SAY TESTIMONY. I REALIZE IT'S A POSITION STATEMENT. FORGIVE ME. UM, WE DID PROVIDE TESTIMONY AND CROSS REBUTTAL TESTIMONY. MR. DANIEL PROVIDED TESTIMONY ON VARIOUS ISSUES, UM, LARGELY WITH RESPECT TO THE CUSTOMER CLASS COST OF SERVICE STUDIES, ALLOCATION OF PRODUCTION DEMAND RELATED COSTS, ALLOCATION OF PRIMARY DISTRIBUTION DEMAND RELATED COSTS, THE ISSUE OF TAKING SUBSTATION SERVICE AND SOME OTHER ISSUES RELATED TO WINTER STORM, JURY ADJUSTMENTS, SERVICE AREAS, STREET LIGHTING ADJUSTMENT FOR DEMAND, LOSSES, AND CUSTOMER CLASS REVENUE DISTRIBUTION, UM, ON CROSS REBUTTAL. HE ALSO ADDRESSED ADJUSTMENTS TO AUSTIN ENERGY'S CASHFLOW METHOD RETURN REQUEST. UM, I'M SORRY. THAT WOULD ACTUALLY BE MR. MR. LLOYD, AND HE IS NOT UP YET. SO WE'LL COME BACK TO THAT LATER. UM, SO WE WOULD JUST ASK THAT NXP XPS RECOMMENDATIONS AS REFLECTED IN OUR STATEMENT OF POSITION AND CROSS REBUTTAL STATEMENT OF POSITION BE ADOPTED. AND WITH THAT, WE WILL TENDER MR. DANIEL FOR CROSS-EXAMINATION. THANK YOU VERY MUCH. AND, UH, GOOD AFTERNOON, MR. DANIEL. GOOD AFTERNOON. UM, TO WR ANY QUESTIONS FOR MR. DANIEL? NO, SIR. I DON'T HAVE ANY PROBLEMS. [03:20:01] OKAY. UM, THANK YOU. UH, DATA FOUNDRY HERFF NO, YOUR HONOR. SSC. NO, YOUR HONOR. S CPC, NO QUESTIONS, YOUR HONOR. T I SEE NO QUESTIONS, YOUR HONOR. I A YES, YOUR HONOR. I HAVE SOME QUESTIONS. GOOD AFTERNOON, MR. DANIEL. GOOD AFTERNOON. I'M JOHN KAUFMAN WITH THE INDEPENDENT CONSUMER ADVOCATE. AND, UM, IN YOUR CROSS REBUTTAL TESTIMONY, UM, YOU, YOU DISAGREED WITH, UM, WITH OUR WITNESS, MR. CLARENCE JOHNSON REGARDING THE ALLOCATION OF CUSTOMER SERVICE EXPENSE. IS THAT RIGHT? YES, THAT'S CORRECT. AND, UH, IS IT YOUR UNDERSTANDING THAT MR. JOHNSON PROPOSED TO ALLOCATE CUSTOMER SERVICE ACCOUNTS, UH, NINE 11 THROUGH NINE 16 ON THE BASIS OF CLASS REVENUE REQUIREMENT? UM, A PORTION OF THAT, YES. OKAY. AND, AND DOES HE CALCULATE THOSE, UH, THAT THOSE ACCOUNTS COMPOSE 61% OF AUSTIN ENERGY'S, UH, CUSTOMER SERVICE EXPENSE THAT, THAT, THAT IS THE, THE ACCOUNTS NINE 11 THROUGH NINE 16, MAKE UP 61% OF THE CUSTOMERS SERVICE EXPENSE. I BELIEVE THAT 61% IS THE PORTION HE'S PROPOSING TO ALLOCATE ON REVENUE REQUIREMENTS. RIGHT. AND THEN ON PAGE 16 OF THAT CROSSROAD BOTTLE, YOU SAY MR. JOHNSON'S PROPOSAL FAILS TO RECOGNIZE THAT A SIGNIFICANT PORTION OF AES CUSTOMER SERVICE EXPENSES ARE IDENTIFIED AS KEY ACCOUNTS EXPENSE. IS THAT RIGHT? YES. OKAY. SO, UH, DID YOU REVIEW MR. JOHNSON'S, UM, CALCULATIONS IN HIS WORK PAPERS ON THAT ADJUSTMENT? I DON'T RECALL SPECIFICALLY, BUT, UH, UH, PRIMARILY LOOKED AT HIS TESTIMONY. WELL, ARE YOU, UM, ARE YOU FAMILIAR WITH A SCHEDULE G FIVE OF AUSTIN ENERGY'S INITIAL RATE FILING PACKAGE, WHICH SETS OUT THE COSTS OF CUSTOMER CLASSIFIED COSTS? I HAVE LOOKED AT AND YOU'VE BEEN SUPPLIED A COPY OF THAT. YES. WHICH HAS BEEN, UH, UH, ADMITTED AS A, UH, ICA EXHIBIT 12. UM, LOOKING AT THOSE, THE 10 PAGES THAT COMPRISE SCHEDULE , UM, DOES AUSTIN ENERGY CLASSIFY CUSTOMER SERVICE EXPENSES AND KEY ACCOUNT EXPENSES AS SEPARATE CATEGORIES OF COSTS. YOU CAN SEE THAT ON THE, YOU KNOW, THE COLUMNS THERE, UH, CUSTOMER COUNTING, CUSTOMER SERVICE, METER READINGS, AND COLLECTIBLES KEY ACCOUNTS, AS WELL AS ECONOMIC DEVELOPMENT. AND YOU SEE THAT, YES. IT APPEARS THAT THEY SEPARATE CUSTOMER RELATED COSTS INTO THOSE CATEGORIES. OKAY. WELL, UM, I'LL REPRESENT TO YOU, MR. JOHNSON USED THE COLUMN UNDER CUSTOMER SERVICE TO CALCULATE THAT 61% FIGURE. UM, AND, UM, IF YOU LOOK, UM, IF YOU REFER TO PAGE TWO OF THIS DOCUMENT, YOU'LL SEE ONLINE 1 32, THERE IS, UM, THERE IS A BREAKOUT OF THOSE, UM, THOSE SUBTOTALS. ARE YOU FOLLOWING ME? I'M ON PAGE TWO, A LINE. I THINK IT'S 1 32. OKAY. I'VE GOT YOU. OKAY. WILL YOU ACCEPT, UM, SUBJECT TO CHECK IF YOU HAVE TO THAT THE SUM OF ACCOUNTS NINE, 11 TO NINE 16 IS IN THE CUSTOMER SERVICE COLUMN AND THAT THE RESULT IS 61% OF THE $21.1 MILLION SUM FOR CUSTOMER SERVICE. THAT LINE 1 32. NO, IT APPEARS ON THIS PAGE THAT, UM, OTHER PORTIONS OF THOSE ACCOUNTS ARE ASSIGNED TO OTHER CATEGORIES, INCLUDING KEY ACCOUNTS. OKAY. AND, UM, MR. DANIEL, YOU'RE, YOU'RE AWARE OF THE 1992 NEIGHBORHOOD ELECTRIC UTILITY COST ALLOCATION MANUAL. I ASSUME I'M AWARE OF THAT. YES. UM, AND YOU, AND YOU WOULD AGREE WITH ME THAT THAT COST ALLOCATION EXPERTS FREQUENTLY RELIED ON THAT MANUAL. YES. I THINK IT'S REFERRED TO AND, AND REGULATORY PROCEEDINGS. OKAY. UM, UH, SHOULD I, I, I WAS GOING TO HAVE YOU REFER TO ICA EXHIBIT 11, WHICH IS SOME EXCERPTS FROM THAT MANUAL. UH, IF YOU DON'T HAVE THAT WITH YOU, I'LL BE HAPPY TO [03:25:03] SO EVERYONE SHOULD HAVE A COPY OF ICA EXHIBIT 11, AND THAT INCLUDES AN EXCERPT OF THAT MANUAL PAGES. UH, AND, AND THE, UH, ELECTRONIC COPY MAY BE MISLABELED AS FAR AS THE, THE PAGE NUMBERS WHERE THE PAGE NUMBER FOR THE PDF, BUT THE PAGE NUMBERS IN THE MANUAL ARE PAGES 1 0 3 AND 1 0 4 AS IT RELATES TO, UM, THESE COUNTS CAN EYE CUSTOMERS. IT SHOULD BE HERE. YES. SALES EXPENSE. OKAY. AND, UH, WOULD YOU AGREE WITH ME THAT THE REFERENCE IN THAT MANUAL, UH, ON PAGE 1 0 3, CARRYING OVER TO PAGE 1 0 4 IS, UM, RECOMMENDATIONS AS TO SALES EXPENSES ACCOUNTS NINE 11 TO NINE 17. YES. IT LOOKS LIKE SECTION C OF THE PAGES YOU HANDED ME, UH, DISCUSS THAT. GOOD. COULD YOU READ THE THREE SENTENCES ON PAGE 1 0 4, STARTING WITH THE WORD ALLOCATION ALLOCATION OF THESE COSTS, HOWEVER, SHOULD BE BASED UPON SOME GENERAL ALLOCATION SCHEME, NOT NUMBERS OF CUSTOMERS. ALTHOUGH THESE COSTS ARE INCURRED TO INFLUENCE THE USAGE DECISIONS OF CUSTOMERS, THEY CANNOT BE PROPERLY P SAID TO VARY WITH THE NUMBER OF CUSTOMERS YOU WANT. THE NEXT SENTENCE TO EAT. THESE COSTS SHOULD BE EITHER DIRECTLY ASSIGNED TO EACH CUSTOMER CLASS WHEN DATA ARE AVAILABLE OR ALLOCATED BASED UPON THE OVERALL OVERALL REVENUES RESPONSIBILITY OF EACH CLASS. AND THEN MY POINT WAS AN ENCOUNTER NINE 12. PART OF THAT IS DIRECTLY ASSIGNED TO KEY ACCOUNTS BUT, UH, THAT, THAT SUBPART YOU MENTIONED WAS NOT PART OF MR. JOHNSON'S, UM, CALCULATION. WAS IT? WELL, IT'S PART OF MY TESTIMONY. OKAY. THAT'S ALL I HAVE. THAT'S ALL THE QUESTIONS. THANK YOU, MR. DANIEL. OKAY. THANK YOU VERY MUCH, MR. KAUFMAN, UH, FOR AUSTIN ENERGY. THANK YOU, YOUR HONOR. GOOD AFTERNOON, MR. DANIEL. GOOD AFTERNOON, MR. MERCATO. SO YOU MAKE A NUMBER OF RECOMMENDATIONS IN YOUR TESTIMONY AND THERE'S AT LEAST THREE OF THEM THAT ARE, I BELIEVE SHARED WITH MR. POLLOCK, UM, PRODUCTION DEMAND, COST DISTRIBUTION, DEMAND RELATED COSTS AND THE ALLOCATION FOR PRIMARY DISTRIBUTION CUSTOMERS. IS THAT CORRECT? YES. AND DID YOU, UH, WORK WITH MR. POLLOCK OR TALKED TO HIM IN ANY WAY IN THE DEVELOPMENT OF YOUR TESTIMONY? WE DID HAVE A DISCUSSION PRIOR TO FILING THE POSITION STATEMENTS AND IN THAT DISCUSSION THAT YOU ALL MADE SURE THAT YOU WERE ON THE SAME PAGE WITH RESPECT TO, UH, YOUR TESTIMONY ON THESE POSITIONS NO, WE TALKED ABOUT THE, UH, SUBSTATION, UH, ISSUE, NOT SURE THAT WE TALKED ABOUT THE OTHER TAIL THEY'RE TOO. AND WHO CAME UP WITH THE SUBSTATION PROPOSAL, WAS THAT YOU AND MR. DANIEL OR SOMEONE, EXCUSE ME, A YOU OR MR. POLLOCK OR SOMEONE ELSE? I THINK WE WERE BOTH ALREADY ON THE SAME PAGE. ALL RIGHT. UM, AND WERE YOU HERE THIS MORNING TO HEAR, UH, MR. POLLOCK'S PRESENTATION? YES, I WAS. ALL RIGHT. WELL, WE'LL COME BACK TO SOME OF THOSE ISSUES. WHY DON'T WE START, UH, ON SOME OF THE OTHER ISSUES THAT MR. POLLOCK DID NOT ADDRESS. UM, AND ONE OF THOSE RELATES TO SERVICE AREA LIGHTING. AND AS I UNDERSTAND YOUR TESTIMONY, YOU ASSERTED THAT ALTHOUGH OFTEN ENERGY PROVIDES SERVICE LIGHTING, THERE IS NOT A SERVICE, EXCUSE ME, A STREET LIGHTING RATE CLASS, BECAUSE A, HE PROVIDES THIS SERVICE FOR FREE. IS THAT RIGHT? YES, THAT'S WHAT MY TESTIMONY SAYS. ALL RIGHT. AND YOU CONTEND THAT THE COST OF STREET LIGHTING IS RECOVERED THROUGH THE SERVICE AREA, LIGHTING OF THE CBC OR COMMUNITY BENEFITS CHARGE, WHICH IS, UH, UH, REFERRED TO AS A PASS THROUGH CHARGE, CORRECT? YES. ALL RIGHT. ARE YOU AWARE OR NOT THAT AUSTIN OR WHETHER AUSTIN ENERGY SERVES A NUMBER OF CITIES OUTSIDE THE CITY OF AUSTIN? I BELIEVE MR. MURPHY, UH, TO DISCUSS THAT [03:30:01] IN HIS REBUTTAL. AND SO DOES THAT MEAN, UH, YOU'VE NOW BEEN INFORMED THAT THE CITY OF AUSTIN, OR EXCUSE ME, THE AUSTIN ENERGY SERVE CITIES OTHER THAN AUSTIN? YES. IT SOUNDS LIKE THERE'S A MINOR PORTION OF THAT COST. THAT IS NOT, THAT IS, UH, CHARGED TO CITIES OUTSIDE OF AUSTIN. ALL RIGHT. AND IT'S A NUMBER OF CITIES? UH, CORRECT. I'M NOT, I'M NOT SURE OF THE NUMBER, BUT THERE ARE SOME CITIES. YES. AND THEY HAVE STREET LIGHTS. CORRECT. ALL RIGHT. AND, UH, THE, AND AUSTIN ENERGY CO COLLECTS, UH, REVENUES FROM THOSE CUSTOMERS ASSOCIATED WITH THE PROVISION OF THAT SERVICE TO THOSE COMMUNITIES. ISN'T THAT CORRECT? THAT'S MY UNDERSTANDING, YES. ALL RIGHT. AND THOSE ARE BILLED SEPARATELY TO THOSE, UM, INDIVIDUAL CUSTOMERS? YES. AND THAT'S MY PROPOSAL THAT IT SHOULD BE BILLED TO AUSTIN ENERGY. I MEAN, TO THE CITY OF AUSTIN. ALL RIGHT. I WAS SPEAKING OF ONLY THOSE CITIES, OTHER THAN THE CITY OF AUSTIN, THAT ALL SYNERGY, UM, SERVICE. DO YOU UNDERSTAND THAT? YES, I WAS JUST SAYING THAT MY PROPOSAL IS THAT CITY OF AUSTIN SHOULD BE ALSO CHARGED FOR UNDERSTOOD. AND WE'RE GOING TO GET TO THAT NOW. I JUST WANTED TO MAKE SURE YOU UNDERSTOOD. MY EARLIER QUESTION WAS, UH, RELATED TO THOSE CITIES OTHER THAN THE CITY OF AUSTIN. YES. OKAY. UM, AND THAT, WITH RESPECT TO, UM, SERVER THEORY OF LIGHTING WITHIN THE CITY OF AUSTIN, THAT'S RECOVERED THROUGH THE SURFACE AREA LIGHTING COMPONENT OF THE CBC, AS WE MENTIONED, IS THAT YOUR UNDERSTANDING? YES. THE OTHER CUSTOMERS PAY FOR THAT SERVICE TO THE CITY, THROUGH THE COMMUNITY BENEFIT CHARGE, RIGHT. AND ALL SERVICES PROVIDED BY AUSTIN ENERGY HAVE AN ASSOCIATED COST. AND THE RECOVERY OF THESE COSTS IS, IS ULTIMATELY DECIDED ABOUT CITY COUNCIL FOR THE CITY OF AUSTIN. ISN'T THAT RIGHT? YES. CITY COUNCIL HAS JURISDICTION. ALL RIGHT. AND, AND SO WHEN A IS SIMPLY RECOVERING THE COST OF PROVIDING A SERVICE AREA, LIGHTING INSIDE THE CITY AS DIRECTED BY THE AUSTIN CITY COUNCIL, I'M NOT SURE HOW, IF, IF THAT'S AT THE DIRECTION OF THE CITY COUNCIL, I JUST, I'M NOT SURE ABOUT THAT. WELL, Y YOU WOULD AGREE, WOULD YOU, NOT THAT THE RATES AND TARIFFS THAT ALL SYNERGY CHARGES NOW HAVE BEEN APPROVED BY CITY COUNCIL? YES. THAT'S UH, THAT WOULD BE TRUE. YEAH. OKAY. AND THAT INCLUDED THE CREATION OF THE SERVICE AREA LIGHTING COMPONENT OF THE CBC AS A RESULT OF THE 2012 RIGHT. CASE. OKAY. YES. I AGREE WITH THAT. OKAY. UH, ALL RIGHT. UM, YOU ALSO HAVE, UH, A PROPOSAL WITH RESPECT TO A WINTER STORM URI. ISN'T THAT RIGHT? YES. AND LET ME START BY ASKING YOU, UM, WHAT DOES IT MEAN TO, UH, FOR A CUSTOMER TO HAVE A HIGH LOAD FACTOR MEANS IT'S THE ENERGY USE IN RELATION TO ITS DEMAND ON THE SYSTEM IS HIGH, BUT THEY USE EASE THE SAME DEMAND, UH, FAIRLY CONSTANT THROUGHOUT THE YEAR. SO THAT WOULD RESULT IN A HIGH LOAD FACTOR CUSTOMER. AND SO FOR LARGER INDUSTRIAL CUSTOMERS WITH HIGH LOAD FACTORS THAT ARE ON THE, EITHER THE PRI TWO OR PRI FOUR TRANSMISSION TARIFFS, THOSE ARE CONSIDERED NON WEATHER SENSITIVE CLASSES, IS THAT RIGHT? AUSTIN ENERGY CONSIDERS THEM AS NON WEATHER SYSTEMS SENSITIVE IN THEIR WEATHER NORMALIZATION ANALYSIS. AND SO THAT SORT OF GOES HAND IN HAND WITH THIS IDEA THAT THEY'RE HIGH LOAD FACTOR CUSTOMERS AS WELL. RIGHT. WELL, YOU COULD STILL HAVE A PORTION OF YOUR USAGE, THAT'S WEATHER SENSITIVE AND STILL BE A HIGH LOAD FACTOR. CUSTOMER JUST WOULDN'T BE AS, AS PRONOUNCED AS MAYBE A RESIDENTIAL CUSTOMER. FAIR ENOUGH. AND YOU RECOMMEND MAKING ADJUSTMENTS TO TEST YOUR REVENUES, ENERGY AND DEMAND TO ACCOUNT FOR WINTER STORM YEAR. IS THAT RIGHT? YES. LET'S FOCUS FIRST ON THE ENERGY PORTION, THE PRI FOUR AND, UH, TRA IN TWO CLASSES, THEY DO NOT PAY ENERGY RATES, DO THEY? YES. I DON'T THINK THAT STATEMENT WAS SPECIFIC TO, TO THOSE CLASSES, BUT YOU'RE CORRECT THAT, UH, AT LEAST THE [03:35:01] PRIMARY CLASS, THAT NXP IS A PART OF, THERE IS NO ENERGY CHARGE. ALL RIGHT. BUT THE, IN THE PRI TO CLASS, THEY DO PAY ENERGY RATES. UH, BUT IT'S AT A VERY LOW, UH, RIGHT. ISN'T THAT TRUE? I'M NOT FAMILIAR WITH THE LEVEL OF THE RIGHT, BUT, UH, THERE ARE OTHER CLASSES OF COURSE HAVE ENERGY ENERGY RATES, BUT I'M NOT SURE ABOUT THAT PARTICULAR CLASS. OKAY. SO YOU DON'T KNOW IF IT'S, WELL, YOU DON'T KNOW. ALL RIGHT. THAT'S FAIR. UM, AND SO REGARDING DEMAND REVENUES FOR THESE, UH, CUSTOMER CLASSES, THOSE ARE BASED ON A CUSTOMER'S MONTHLY, MAXIMUM PEAK DEMANDS. ISN'T THAT RIGHT? YES. ALL RIGHT. AND HAVE YOU BEEN ABLE TO REVIEW THE, UM, INFORMATION AND MR. MURPHY'S REBUTTAL TESTIMONY ON THIS ISSUE? I DID REVIEW HIS REBUTTAL TESTIMONY AND I BELIEVE HE HAS A GRAPH IN THERE THAT I'VE LOOKED AT AS WELL. OKAY. UM, AND IN REVIEWING THE SUMMER PEAK DEMANDS FOR THIS GROUP OF CUSTOMERS, UM, THERE'S NOT A, UH, AN IDENTIFIABLE IMPACT FROM THE ERCOT MANDATED, UH, LOAD SHED EVENT, UH, IS, UH, THAT WAS MR. MURPHY'S CONCLUSION. AND YOU DON'T HAVE ANY EVIDENCE TO, TO DISAGREE WITH THAT D WELL, I DID REVIEW, UH, AN XPS, UH, DEMANDS DURING THAT PERIOD. ALL RIGHT. UH, AND, BUT, BUT YOU DIDN'T REALLY ANSWER THE QUESTION. YOU DON'T HAVE ANY, UH, EVIDENCE, UM, TO, TO DISAGREE WITH THAT. WELL, WHAT I LOOKED AT FOR NXP, UM, WOULD LEAD ME TO DISAGREE WITH THAT, BUT YOU PRESENTED NO EVIDENCE THAT WINTER STORM URI HAD AN EFFECT ON THE CUSTOMER'S BILLABLE DEMANDS OR DEMAND REVENUES DURING THE MONTHS WHEN LOAD WAS DISRUPTED ABOUT WINTER STORM URI. NO, I DID NOT HAVE ANY INFORMATION TO DO THAT. YES. AND YOU DIDN'T PRESENT ANY EVIDENCE TO THE CONTRARY, JUST WHAT, UH, MY STATEMENTS AND THE TESTIMONY THERE ARE, THERE ARE NO DATA. ALL RIGHT. UM, AND YOUR TESTIMONY WAS SHIFTING NOW, UH, TO TALK ABOUT, UM, LOSS FACTORS YOU RECOMMENDED THE USE OF DEMAND LOSSES FOR CP COST ALLOCATION. IS THAT RIGHT? YES. THAT'S FAIRLY STANDARD. UH, AND IN CONTRAST, AUSTIN ENERGY USES, UH, THE AVERAGE ENERGY LOSSES AS A PROXY FOR THE 12 NCP DEMAND LOSS. ISN'T THAT RIGHT? THAT'S CORRECT. AND THE REASON THAT THEY DID THAT IT'S BECAUSE, UM, AUSTIN ENERGY ONLY HAS DEMAND LOSS MEASURED FOR THE PEAK HOUR OF THE YEAR. ISN'T THAT RIGHT? THE RFI RESPONSE I RECALL IS JUST THAT THEY DIDN'T DID NOT DEVELOP A DEMAND LOSS FACTORS. SO SINCE THEY DIDN'T, UM, HAVE DEMAND LOSS MEASURED FOR EACH PEAK HOUR OF THE YEAR, UH, APPLICABLE TO THEIR 12 CP COST ALLOCATION, CATION, UM, THEY, THEY APPLY TO A PROXY ISN'T THAT RIGHT? AND HAD A COUPLE OF PARTS THERE. I, I'M NOT A LOSS STUDY EXPERT, BUT I DON'T KNOW THAT YOU NEED TO MEASURE DEMAND LOSSES FOR EVERY HOUR OF THE YEAR IN ORDER TO COME UP WITH A DEMAND LOSS FACTOR THAT THE PROXY THAT AUSTIN ENERGY USES IS THE ENERGY LOSS FACTOR. AND TYPICALLY YOU DEVELOP A DEMAND LOSS FACTOR TO DO THAT UNDERSTOOD. UM, AND WOULDN'T LOSSES BE EXPECTED TO BE DIFFERENT AT DIFFERENT LOADS AND DIFFERENT, DIFFERENT AMBIENT TEMPERATURES THROUGHOUT THE YEAR. WELL, THEY, THEY DO VARY, UH, BY THOSE FACTORS, BUT THE BIGGEST, UH, DIFFERENCE IS BY VOLTAGE LEVEL. ALL RIGHT. BUT THE NCP HAVE A CUSTOMER CLASSMATE. I MEAN, IT MAY OCCUR AT ANY TIME DURING THE YEAR. ISN'T THAT RIGHT? YES. OKAY. AND THE LOSS IS ASSOCIATED WITH THE PEAK FOR THE CLASS WOULD PROVE DIFFICULT TO MEASURE ON A CONSISTENT AND REGULAR BASIS. ISN'T THAT ALSO TRUE? COULD YOU REPEAT THAT QUESTION? SURE. AND THE LOSS IS ASSOCIATED WITH THE PEAK FOR THE CLASS WOULD PROVE DIFFICULT TO MEASURE ON A CONSISTENT AND REGULAR BASIS BECAUSE I MAY OCCUR AT ANY TIME DURING THE MONTH, THE, THE LOSSES WOODBURY, UM, [03:40:01] AND TYPICALLY UTILITIES UPDATE THEIR DEMAND LOSS STUDIES, UH, FOR EVERY RATE CASE. SO THEY, THEY, BECAUSE THEY DO HERE, UH, ALL RIGHT. UM, LET'S TALK FOR A FEW MOMENTS ABOUT THE, UH, PRIMARY DISTRIBUTION, UH, RECOMMENDATION THAT YOU HAVE. NOW, YOU HEARD MR. POLLOCK SAY THIS MORNING THAT THE, UM, THE KEY REQUIREMENT, UH, FOR, UH, KIND OF UNDERLYING HIS RECOMMENDATION WAS THE PHYSICAL NATURE OF THE WAY THAT THE CUSTOMERS TAKE ELECTRICITY. DID YOU HEAR THAT? YES, I WAS HERE. AND, UH, DO YOU AGREE THAT, THAT, UH, THE PHYSICAL NATURE OF THE, UM, THE, UH, SERVICES RECEIVED IS IN FACT, THE, THE KEY BASIS FOR THIS PROPOSAL IN YOUR TESTIMONY AS WELL? YES. I THINK I CAN GENERALLY GENERALLY AGREE WITH THAT. IS IT IMPORTANT, UH, WHETHER THE CUSTOMER OWNS EITHER THE SUBSTATION OR THE FEEDERS OR ANY PORTION OF THE PRIMARY OR SECONDARY SYSTEM IT'S NOT IMPORTANT, UH, THE WAY I PROPOSE TO DO IT, WHICH WOULD, UH, IF, IF THEY DON'T OWN THE FACILITIES, THEN THERE SHOULD BE A FACILITIES CHARGE THAT ALLOWS THEM TO TAKE THE SERVICE AND PAY A FACILITIES CHARGE. ALL RIGHT. SO THE UTILITY IN THAT SITUATION WOULD OWN THE FACILITIES, BUT THERE WOULD BE SOME TYPE OF FACILITIES CHARGE. THEY WOULD GO TO THE CUSTOMER, BUT THEY WOULDN'T BE ALLOCATED ANY OF THE COSTS OF THE PRIMARY SYSTEM. IS THAT YOUR RECOMMENDATION? YES, IT IS. OKAY. UM, AND SO THAT'S A LITTLE BIT DIFFERENT THAN MR. POLLOCK'S RECOMMENDATION, IS THAT RIGHT? I THINK HE ALSO TALKED ABOUT A LEASE ARRANGEMENT AND MAYBE A FACILITIES CHARGE. I DON'T THINK WE'RE THAT DIFFERENT. DOES IT MATTER TO YOU IF THE CUSTOMER IS, UM, ON THE SUBSTATION FACILITY TAKING A SERVICE, IF THE, IF THE POINT OF INTERCONNECTION IS, IS AT THE SUBSTATION? NO. HOW ABOUT IF IT'S OUTSIDE THE SUBSTATION STILL QUALIFY? YES. UNDER MY PROPOSAL. OKAY. HOW ABOUT IF THERE'S A ONE DISTRIBUTION POLE BETWEEN THE SUBSTATION AND THE CUSTOMER STILL QUALIFY? TH IF THE FACILITIES CHARGE, IF THEY DON'T OWN IT AND THE FACILITIES CHARGE REIMBURSES THE UTILITY THEN YES. OKAY. AND SO, UH, AS LONG AS THEY PAY A FACILITIES CHARGE, UM, DOES IT MATTER IN YOUR OPINION HOW FAR THEY ARE FROM THE SUBSTATION? WELL, IF I UNDERSTOOD MR. POLLOCK, I THINK IS IF THE SUBSTATIONS ON THE CUSTOMER'S PREMISES AND THE DISTRIBUTION FEEDER IS ALSO ON THE CUSTOMER'S PREMISES AND NOT USE TO SERVE OTHER CUSTOMERS, THEN I DON'T THINK THE DISTANCES IS A CRITICAL FACTOR. AND, UH, I MEAN, ISN'T THAT TRUE? IT WOULDN'T THAT BE TRUE FOR, FOR ANY CUSTOMERS, UH, UNDER YOUR PROPOSAL? THEY COULD SAY, YOU KNOW, IF YOU PAY ME FOR, UH, UH, FACILITIES CHARGE FOR THE FACILITIES THAT, UM, GO FROM YOUR SUBSTATION TO ME, THEN YOU SHOULDN'T ALLOCATE, OR IT WOULDN'T BE APPROPRIATE TO ALLOCATE ANY OF THOSE OTHER PRIMARY DISTRIBUTION, EXCUSE ME, OR SECONDARY, UM, COSTS TO THE CUSTOMER. WE TALKING ABOUT JUST LARGE PRIMARY CUSTOMERS. DOES IT MATTER? I WOULD THINK YOU WOULD. SO THIS IS ONLY AVAILABLE TO THE, TO THE BIGGEST CUSTOMERS. WELL, I'M NOT, I DON'T KNOW OF ANY SMALLER CUSTOMERS THAT WOULD BE SIMILARLY SITUATED, BUT IF THEY WERE, THEN YOU WOULD BE FINE WITH TREATING THEM IN THE SAME MANNER UNDER YOUR HYPOTHETICAL. UM, I WOULDN'T HAVE A PROBLEM WITH THAT. I SEE. ALL RIGHT. UM, LET'S TALK FOR A MOMENT ABOUT PRODUCTION DEMAND COSTS AND LIKE MR. POLLOCK, YOU'RE, YOU'RE RECOMMENDING ADOPTION OF THE, UH, AND FOR CP, UM, METHODOLOGY, UH, AS THE APPROPRIATE, UM, ALLOCATOR ISN'T THAT, RIGHT? YES. AND YOU, UM, INCLUDED I'VE CHART IN YOUR [03:45:01] TESTIMONY THAT SHOWED THE MONTHS IN WHICH OFTEN ENERGY'S GENERATION IS DISPATCHED, UH, INTO THE ERCOT MARKET, CORRECT? YES. AND, UM, AND WE, WE DISCUSSED THIS WITH MR. POLLOCK AS WELL, THAT CHART DEMONSTRATES THAT AT LEAST IN 2021, THAT OFTEN ENERGY'S GENERATION WAS PROVIDING VALUE, UH, TO ITS CUSTOMERS REALLY ALL MONTHS OF THE YEAR. ISN'T THAT RIGHT? WELL, THE WAY WE VIEW THAT CHART IS IN SOME MONTHS, MAYBE THERE MAY BE ONLY THREE OF THE GENERATORS PROVIDING SERVICE IN THE SUMMER MONTHS. ALMOST ALL OF THEM ARE. SO THERE IS A NOT SURE I CAN, EXCEPT THE WAY YOU PHRASE THE QUESTION, BUT I THINK THERE IS SOME DISTINCTION FROM MONTH TO MONTH. WELL, IF YOU LOOK AT THE CHART GRAPH THREE ON PAGE 23 OF YOUR TESTIMONY, I MEAN, IT SHOWS THAT, UH, IN EVERY MONTH OF 2021, THERE WAS A SIGNIFICANT AMOUNT OF GENERATION OUTPUT FROM MULTIPLE GENERATING UNITS OWNED AND OPERATED BALLS OF ENERGY. ISN'T THAT RIGHT? AND IN SOME MONTHS IT'S VERY, VERY LITTLE, BUT THEY'RE IN EVERY MONTH, AT LEAST THREE GENERATORS ARE OPERATING, CORRECT. UH, IT, UH, THERE'S AT LEAST THREE AND IN MANY MONTHS THERE'S BEEN MORE THAN THAT. CORRECT. AND THAT'S USUALLY THE SUMMER MONTHS. UM, BUT THERE'S ALSO A NUMBER OF OTHER, UH, MONTHS SUCH AS APRIL AND MAY AND OCTOBER AND FEBRUARY AND JANUARY THAT ARE, UH, THAT ARE ALSO VERY HIGH OR ISN'T THAT CORRECT? THERE ARE, THEY'RE HIGHER THAN DECEMBER AND MARCH AND LOWER THAN THE SUMMER. YEP. UH, AND ACTUALLY, UH, FEBRUARY WAS HIGHER THAN, THAN ANY OF THEM. AND I'LL ALSO SAY IN MY TESTIMONY THAT THAT'S AN OUTLIER BECAUSE OF URI, ALL RIGHT. IN JANUARY, WAS HIGHER THAN, UH, ANY OTHER MONTH, UH, OR CLOSE TO IT TO THE, TO THE PEAKING MONTHS IN THE SUMMER. ISN'T THAT TRUE? IT'S CLOSER TO THE SUMMER THEN ANY OF THE OTHER MONTHS, OTHER THAN FEBRUARY. UH, CORRECT. AND IT'S, UM, AND AGAIN, IT'S JUST ONE OF, UH, 12 MONTHS IN WHICH AGAIN, A GENERATION, UM, OUTPUT, UH, WAS DISPATCHED INTO THE CURRENT MARKET. ISN'T THAT RIGHT? YES. OKAY. ARE YOU AWARE, UH, OR NOT? UH, UM, HOLD ON, JUST A MOMENT. YOU'RE YOU, ARE YOU FAMILIAR WITH THE 2016 BASE RATE REVIEW? NOT, NOT REALLY. JUST, JUST FROM WHAT I'VE REVIEWED IN THIS CASE. ALL RIGHT. I WAS GOING TO ASK YOU IF YOU WERE PARTICIPANT, I COULDN'T REMEMBER. SO YOU, YOU WEREN'T. NO, I SAY, OKAY. AND SO, UH, ARE YOU AWARE OF WHETHER THE 12 CP ALLOCATOR WAS ADOPTED, UH, IN THAT CASE? I DON'T RECALL IF I SAW THAT OR NOT. ALL RIGHT. SO DO YOU KNOW IF THE IAG RECOMMENDED ADOPTION OF THE 12TH, UH, CP ALLOCATOR IN THAT CASE? I DON'T RECALL RIGHT NOW, NO. ALRIGHT. UM, THANK YOU, MR. DANIEL, THOSE ARE ALL THE QUESTIONS THAT I HAVE FOR YOU TODAY. THANK YOU. ALL RIGHT, MR. BURKE, PARDON ME? ALL RIGHT, MR. MERCADO. THANK YOU VERY MUCH. UM, REDIRECT JUST A SECOND, YOUR HONOR. SURE. LET'S GO OFF THE RECORD FOR JUST A SECOND. ALL RIGHT. WE'RE BACK ON THE RECORD, WHENEVER YOU'RE READY. MR. DANIEL, REGARDING THE CROSS EXAMINATION FROM THE INDEPENDENT CONSUMER ADVOCATE, IF KEY ACCOUNT EXPENSES ARE IN FACT SEPARATE AND APART [03:50:01] FROM CUSTOMER SERVICE EXPENSES, ASSUMING THAT THAT'S TRUE. DOES THAT CHANGE YOUR OVERALL OPINION WITH RESPECT TO WHETHER THE ICA HAS PROPOSED ALLOCATION OF CUSTOMER EXPENSES IS APPROPRIATE IN THIS CASE? NO, IT DOES NOT. IN REGARDING MR. RICOTTA'S QUESTIONING ABOUT THE 2016 RATE CASE. I UNDERSTAND YOU'VE TESTIFIED THAT YOU'RE NOT NECESSARILY FAMILIAR WITH THE RECOMMENDATIONS IN THAT CASE, BUT ASSUMING IT'S TRUE THAT THE IAG RECOMMENDED ADOPTION OF THE 12 CP ALLOCATOR IN THAT SPECIFIC CASE, IS IT YOUR TESTIMONY THAT THAT SHOULD BE A GUIDING PRINCIPLE OR PRECEDENT FOR THIS CASE NECESSARILY? NO. MY UNDERSTANDING IS THAT CASE WAS SETTLED AND IT WAS A BLACK BOX SETTLEMENT. SO THERE WOULD BE NO, UH, PRECEDENCE THAT IN THAT CASE. THANK YOU, MR. DANIEL. THAT'S ALL I HAVE. ALL RIGHT. ANY FOLLOW UP ON THOSE, UH, TWO SETS OF QUESTIONS FROM THE ICA AUSTRIA ENERGY. ALL RIGHT, DANIEL. THANK YOU VERY MUCH. I GAVE THE LEAST, THANK YOU. LET'S GO OFF THE RECORD FOR JUST A SECOND. AND, UM, ARE WE READY FOR MR. LLOYD? ALL RIGHT. BACK ON THE RECORD. UM, GOOD AFTERNOON, MR. LAWYER, HOWEVER NOON. GOOD. GOOD. THANK YOU. ARE WE READY TO GET STARTED WITH THE PRESENTING MR. LEE? YES, WE'RE READY. ALL RIGHT. THANK YOU, MR. LLOYD, YOU PROVIDED TESTIMONY AS PART OF NXP STATEMENT OF POSITION IN THIS CASE, CORRECT? CORRECT. AND DO YOU HAVE ANY CHANGES TO THAT STATEMENT OF POSITION? THANK YOU. WE TENDER MR. LLOYD FOR CROSS-EXAMINATION. ALL RIGHT. THANK YOU VERY MUCH TO W R NO, YOUR HONOR. WE HAVE NO CROSS EXAMINATION DATA FOUNDRY, NO QUESTIONS, YOUR HONOR. HERFF NO QUESTIONS, YOUR HONOR, SSC. THANK YOU. S CPC, NO QUESTIONS, YOUR HONOR. UH, T I SEE NO QUESTIONS, YOUR HONOR. I CA AND I HAVE NO QUESTIONS. OH, OKAY. MR. BROOKE CATO. ANY QUESTIONS FOR MR. LLOYD? THANK YOU, YOUR HONOR. YES, I HAVE JUST A FEW QUESTIONS. GOOD AFTERNOON, MR. MOYA. GOOD AFTERNOON. IF WE MET BEFORE WE'VE MET BEFORE. OKAY. I THINK IT WAS IN THE, UH, AUSTIN WATER CASE. AH, YES, THAT'S RIGHT. OKAY. I KNOW YOU LOOK FAMILIAR. MY APOLOGIES. UM, SO AUSTIN ENERGY OF COURSE, IS A MUNICIPALLY-OWNED UTILITY, RIGHT? CORRECT. AND THEY USE THE CASH FLOW METHOD, CORRECT? RIGHT. AND, UH, THERE'S A RETURN COMPONENT, UM, FOR A, UH, MUNICIPALLY-OWNED UTILITY THAT USES THE CASH FLOW METHOD. UH ISN'T THAT RIGHT? WELL, IN THE, YEAH, AS THE PUC, TEXAS PUC HAS FOR DON IOU THE T COST. YES. THAT'S WHAT THEY HAVE. RIGHT. AND JUST SO WE'RE CLEAR THAT, SO TH THAT RETURN OR IMPLIED RETURN, I THINK IT'S REFERRED TO SOMETIMES, UM, IT, IT DOESN'T IMPACT THE OVERALL REVENUE REQUIREMENT FOR, UH, UH, CASH FLOW, UH, METHOD UTILITY. RIGHT. WELL, IT'S PART OF THE, THE REVENUE REQUIREMENT. IT'S, IT'S, IT'S JUST NOT A RETURN, LIKE WE THINK OF, UH, AN IOU, BUT IT'S A, IT'S A NON-CASH EXPENSES AND THAT RIGHT. THE RETURN I'M SORRY. THE DEPRECIATION IS A NON-CASH APPRECIATION IS A NON-CASH EXPENSE. YES. OKAY. AND THE, SO LET ME JUMP BACK THEN. SO, IN YOUR TESTIMONY, UH, IN, IN REGARDS TO AES DEVELOPMENT OF THE RETURN, YOU CONTEND THAT AES INCLUSION, DEPRECIATION, AMORTIZATION WAS AN ERROR, IS THAT RIGHT? NO, I DON'T. I DON'T SAY IT'S AN ERROR. I JUST THINK IT'S, UH, WELL, FIRST OF ALL, I DON'T THINK THEY REALLY FOLLOWED THE INSTRUCTIONS IF WE'RE FOLLOWING C3, BUT REALLY, I WOULD SAY MY OVERALL CONCERN WAS THAT, UM, IT DIDN'T REALLY REFLECT THE TOTAL REVENUE REQUIREMENT. I THINK IT, IT WAS CONFUSING TO HAVE IT. I WAS, MY, MY RECOMMENDATION WAS JUST TO HAVE IT MORE, TO LOOK MORE LIKE WHAT YOU WOULD SEE IN A, UH, ELECTRIC BASE CASE RATE STUDY RATHER THAN HAVE THE DEPRECIATION, UM, TAKEN OUT. AND TYPICALLY, YOU KNOW, YOU HAVE WITH MUNICIPALITIES, THERE'S A, THERE WAS A CASH BASIS AND THERE'S A UTILITY BASIS. AND TYPICALLY THE UTILITY BASIS HAS THE DEPRECIATION AND IT, AND THE CASH BASIS HAS THE DEBT SERVICE, BUT [03:55:01] YOU DON'T HAVE TO, BUT AUSTIN ENERGY'S IS THE CASHFLOW METHOD. RIGHT. THE CASHFLOW METHOD THAT OF COURSE THE PUC. UH, OKAY. AND SO WHEN YOU, WHEN YOU REFER TO THE PC AND YOU REFER TO SCHEDULE C3, YOU'RE TALKING ABOUT A SCHEDULE FROM THE PCS T COST, RIGHT. FALLING PACKAGE. ALL RIGHT. AND SO THAT RATE FILING PACKAGE ALSO HAS A SCHEDULE E ONE ISN'T THAT, RIGHT? YES. AND THAT'S FOR DEPRECIATION EXPENSE. ISN'T THAT TRUE? THAT'S CORRECT. OKAY. AND BOTH OF THOSE SCHEDULES, UM, ARE REQUIREMENTS OF THE RIGHT FILING PACKAGE AGAIN FOR NON INVESTOR OWNED UTILITIES SUCH AS AUSTIN ENERGY. ISN'T THAT RIGHT? YES. AND SO THEN DEPRECIATION IS, IS A PART OF THE EXPENSES INCLUDED BY THE UTILITY, UM, AND HAS TO RECOGNIZE THIS NON-CASH EXPENSE WHEN DEVELOPING THE CASHFLOW RETURN. ISN'T THAT RIGHT? YES, THAT'S CORRECT. AND THAT'S WHAT AUSTIN ENERGY DID. ISN'T THAT TRUE? RIGHT. THAT'S WHAT THEY DID, BUT, OKAY. AND THAT'S, IF I MAY ASK THE QUESTION, YOU ANSWERED MY QUESTION AND THAT'S THE APPROACH, AND THAT APPROACH IS CONSISTENT WITH EVERY NON INVESTOR OWNED UTILITY TRANSMISSION RATE FILING AT THE PC. THAT'S UTILIZE THE CASH FLOW METHOD. ISN'T THAT TRUE? THERE'S SOME, YEAH. IT'S, IT'S CONSISTENT WITH MANY. YES, THAT'S CORRECT. OKAY. AND YOU'VE BEEN INVOLVED IN A NUMBER OF INTERIM T COST CASES, I NOTE, IN YOUR RESUME. OKAY. AND SO, AND THE COMMISSION HAS, UH, AUTHORIZED THE CASHFLOW PROBE APPROACH AS AN APPROPRIATE METHOD FOR MOU. RIGHT. IN FACT, IT'S MENTIONED IN THE, IN THE RIGHT FILING PACKAGE, UM, SCHEDULES ISN'T CORRECT. SEPARABLE METHODS. OKAY. AND THEY'VE ACTUALLY APPROVED IT SPECIFICALLY FOR AUSTIN ENERGY, UH, IN THEIR MOST RECENT, FULL TECOS CASE. DID THEY NOT? I WOULD AGREE WITH THAT. YES. ALL RIGHT. SO LET ME JUST TALK TO YOU THEN FOR A MOMENT ABOUT INTERNALLY GENERATED FUNDS FOR CONSTRUCTION, AND IN YOUR TESTIMONY, YOU RECOMMEND THAT ALL THE ENERGY CHANGE, THE LEVEL OF, UH, INTERNALLY GENERATED FUNDS SO THAT IT TARGETS 35% RATHER THAN 50% USED BY AND ENERGY. IS THAT RIGHT? CORRECT. AND, UM, WERE YOU HERE THIS MORNING FOR THE, UM, THE PRESENTATION OF MISSILE CONTENT? YES. ALL RIGHT. AND SO SHE HAD INDICATED THAT SHE, SHE WAS AWARE THAT THE CITY HAS CERTAIN FINANCIAL POLICIES THAT KIND OF GUIDE THESE ISSUES, AND I BELIEVE YOU REFERENCED THEM IN YOUR TESTIMONY AS WELL. IS THAT RIGHT? CORRECT. AND IT'S SPECIFICALLY, I THINK, DID YOU REFERENCE REFERENCE FINANCIAL POLICY 14? I CAN'T REMEMBER. ALL RIGHT, BUT IT'S, BUT IT'S, UH, ARE YOU AWARE OF FINANCIAL POLICY SIX? CAN YOU, AND THAT RELATES TO, UH, MAINTAINING, UH, A PARTICULAR CREDIT WRITING THE UGLY? YES. RIGHT. WELL, LET ME ASK YOU THIS. ARE YOU AWARE THAT AT THE CONCLUSION OF THE 2012 RATE CASE THAT AUSTIN ENERGY WAS INSTRUCTED TO PROSPECTIVELY IMPLEMENT A POLICY OF 50% FUNDING FOR INTERNALLY GENERATED FROM IT? IT SAID IT AS A TARGET. YEAH. ALL RIGHT. AND SO I GUESS IT'S YOUR POSITION THAT THE COUNCIL SHOULD CHANGE THAT IN THIS CASE? YEAH. WELL, I THINK WHAT I, WHAT I, WHAT I PROPOSED WAS BASED ON THE EVIDENCE THAT I HAD BEFORE ME. OKAY. AND THAT WAS THE CALCULATION THAT WAS DEVELOPED. AND, UM, I LOOKED AT WHAT, HISTORICALLY WHAT HAD GONE ON, I LOOK AT THAT WE WANTED TO MOVE IT HIGHER, BUT I, I BELIEVED THAT IF YOU INCLUDED, CIAC CASH THAT WITH THE 35% YOU DO FIND OUT. SO THAT'S WHAT I RECOMMENDED, I THINK, THINK WE'RE OKAY WITH 35%, I THINK THAT'S A REASONABLE RECOMMENDATION. UNDERSTOOD THAT'S YOUR POSITION, BUT THAT IT'S GOING TO HAVE SOME CONSEQUENCES, UM, WOULD IT NOT? AND ONE OF THOSE CONSEQUENCES MEANS INHERENTLY UTILITY IS GOING TO HAVE TO TAKE ON MORE DEBT. THAT'S WHAT I UNDERSTAND NOW, BUT AT THE TIME THAT I PROPOSE THAT, UH, THERE WILL BE THERE WASN'T REALLY ANY EVIDENCE TO TELL ME THAT. ALL RIGHT. AND YOU WOULD AGREE THAT, UM, WHILE IT MIGHT NOT BE QUANTIFIABLE HERE TODAY, THAT TAKING ON MORE DEBT, DOES THAT COME AT SOME COST? YEAH. IT COMES OUT AT COST. YES. ALL RIGHT. AND, UM, YOU'RE ALSO AWARE, UH, NO DOUBT THAT, UM, A COUPLE OF WEEKS AGO, FITCH CREDIT RATING DOWNGRADED AUSTIN ENERGY. I HEARD THAT TODAY IN THE, IN THE DISCUSSION. OKAY. DO YOU, HAVE YOU READ, REVIEWED THE REBUTTAL TESTIMONY AT ALL? NO. WELL, SOME OF IT, YES, BUT I DON'T RECALL THE DOWNGRADE. NO. ALL RIGHT. UM, AND IF SUBJECT TO CHECK, AND THIS IS IN THE RECORD, UH, IN THE REBUTTAL TESTIMONY, BUT, UM, IF ARE ONE OF THE, THE UNDERLYING REASONS FOR THE DOWNGRADE, ACCORDING TO FITCH WAS BECAUSE OF CONCERNS OVER THE LEVEL [04:00:01] OF DEBT OR LEVERAGE THAT AUSTIN ENERGY HAD INCURRED, UM, YOUR RECOMMENDATION WOULD, UM, EXACERBATE THAT SITUATION. ISN'T THAT TRUE? I DON'T KNOW. I DON'T KNOW FOR SURE IF THAT WOULD REALLY, BUT YOU DID AGREE THAT, I MEAN, TO THE EXTENT THAT YOU ARE, UM, CHANGING THE TARGET, THAT THAT MEANS THERE'S GOING TO BE LESS CASH FUNDED, UH, CAPITAL PROJECTS AND MORE, UM, DEADISH ISSUANCE. I JUST, I THINK IT WAS A MORE REASONABLE, UH, ADJUSTMENT. I, I WAS A BETTER NORMALIZATION OF THE DATA THAT WAS PRESENTED. I SEE. UH, ALL RIGHT, MR. LEE, THOSE ARE ALL THE QUESTIONS I HAVE. THANK YOU FOR YOUR TIME TODAY. OKAY. ANY REDIRECT? DO YOU NEED A MINUTE? WE'RE BLINKING. OKAY. UH, MR. LEE, I JUST WANTED TO GIVE YOU AN OPPORTUNITY WHEN WE WERE DISCUSSING WITH MR. DEPRECIATION AND AMORTIZATION, IT SEEMED LIKE YOU WERE DISCUSSING WHETHER OR NOT AUSTIN ENERGY FOLLOWED THE T COST RATE, FILING PACKAGE INSTRUCTIONS, AND INCLUDING THE DEPRECIATION AND AMORTIZATION INFORMATION. AND IT SEEMED LIKE YOU MAYBE HAD A, A QUALIFIER OF YES, THEY DID, BUT, AND I DON'T THINK YOU GOT THE OPPORTUNITY TO FINISH YOUR THOUGHTS. SO I JUST WANTED TO GIVE YOU THAT OPPORTUNITY. WELL, THE, WELL, THE SPECIFIC INSTRUCTIONS FOR C3 DON'T SPECIFIED THAT DEPRECIATION EMIRATISATION SHOULD BE REMOVED IN THAT SCHEDULE. NOW IT DOES. SO IN, I THINK THE DEBT SERVICE, ONE OF THE OTHER PREVIOUS METHODS, I CAN'T REMEMBER WHICH ONE, IT DOES SPECIFY THE REMOVAL OF THE DEPRECIATION. SO IT WOULD ONLY MAKE SENSE TO ME THAT THEY WOULD SPECIFY THE REMOVAL OF THAT. AND TYPICALLY, LIKE I WAS EXPLAINING THERE'S TWO METHODOLOGIES, THERE'S THE CASH METHODOLOGY. AND THEN THERE WAS UTILITY METHODOLOGY. YOU EITHER INCREASE, YOU INCLUDE DEPRECIATION, OR YOU INCLUDE THE TOTAL DEBT SERVICE. YOU DON'T INCLUDE BOTH AND THEN TAKE OUT ONE EITHER. OR THAT'S HOW IT'S TYPICALLY DONE IN A MUNICIPAL, UH, A RATE STUDY FROM MY, FROM MY EXPERIENCE. THAT'S ALL. SO I JUST THINK THAT THE WAY ARE PRESENTED, IT JUST GIVES IT A CLEARER PICTURE. IT DOESN'T CHANGE. THE REVENUE REQUIREMENT HAS NO IMPACT ON ANYTHING OTHER THAN JUST THE PRESENTATION OF IT. THANK YOU, MR. LEE. THAT'S ALL. I HAD JUST A COUPLE OF QUESTIONS THAT MR. LLOYD, ARE YOU AWARE OF, UH, THE CURRENT, UM, DISCUSSION DEBATE GOING ON OVER AT THE COMMISSION AND MUNICIPAL T COST CASES INVOLVING THE INTERPRETATION OF SCHEDULE C3 AND IWAN? NO, I'M NOT AWARE OF THAT. SO YOU, YOU ARE NOT AWARE OF WHETHER, OR DO YOU KNOW IF, IF, UH, THERE ARE DISAGREEMENTS ABOUT THOSE SCHEDULES AND THE REQUIREMENTS FOR, FOR A MUNICIPALLY-OWNED UTILITY TAKE ON FAMILIAR WITH THE DISAGREEMENTS, BUT IT DOESN'T SURPRISE ME. FAIR ENOUGH. THAT'S ALL I HAVE ANY UP ON THAT. ALL RIGHT. THANK YOU, MR. LLOYD. THANK YOU. UM, WHY DON'T WE TAKE A 15 MINUTE BREAK, COME BACK A LITTLE BIT AFTER THREE. UM, LET'S GO OFF THE RECORD FOR A MINUTE. UM, MS. ON THE RECORD, UM, S CPC HAS REPRESENTED THAT, UM, THERE, UH, I MEAN, FIRST OF ALL, CROSS HAS BEEN WAIVED FOR MR. ROBERT, IS THAT CORRECT? NO ONE IS INDICATING THAT THEY WANT CROSS, SO CROSS HIS WAY FOR HIM. AND, UM, IT LOOKS LIKE A CPC IS READY TO CLOSE OUT THEIR CASE. IS THAT RIGHT? WE WILL NOT BE ASKING TO FROM MR. ROBERT GO TO MAKE A STATEMENT OR TO BE EXAMINED. UH, SO WE HAVE CONCLUDED OUR PRESENTATION, YOUR HONOR. THANK YOU. THANK YOU, MR. BRAZELLE. UM, FOR ICA. YEAH. SO YOU READY FOR OUR CASE? YES, SIR. OKAY. UM, GOOD AFTERNOON AGAIN, JOHN KAUFMAN ON BEHALF OF THE INDEPENDENT CONSUMER ADVOCATE, UM, OUR, OUR TEAM FOR THE ICA INCLUDES MYSELF, MR. EFRON, AND, UM, CLARENCE JOHNSON HERE. AND WE, UM, ARE, ARE HAPPY TO PROVIDE, UM, OUR, OUR PERSPECTIVE ON THIS CASE AND AN ALTERNATIVE TO WHAT AUSTIN ENERGY HAS PROPOSED. UH, FRANKLY, WE, UM, COLLECTIVELY FIND THAT THIS IS, UH, QUITE A RADICAL AND DRAMATIC PROPOSAL BY AUSTIN ENERGY. UH, WE'VE BEEN INVOLVED IN, UH, [04:05:01] THE PREVIOUS CASE IN THIS CASE. UH, WE FIND THAT THE IMPACT HERE PRIMARILY THE IMPACT ON THE SMALL USERS IS, IS DRAMATIC. I DON'T THINK YOU CAN DESCRIBE IT AS ANY OTHER WAY. IT, IT INVOLVES, YOU KNOW, I WOULD SAY THAT IT'S MOVING AWAY FROM COST FROM OUR PERSPECTIVE, BUT TO USE MORE, I GUESS, GENERIC LANGUAGE, IT IS, UH, IT IS A HUGE SHIFT, UH, IN THIS PROPOSAL, HUGE SHIFT FROM THE LARGEST INDUSTRIAL USERS TO THE RESIDENTIAL CLASS AND A HUGE SHIFT FROM THE HIGHEST, UH, USING RESIDENTIAL CUSTOMERS TO THE LOWEST USING RESIDENTIAL CUSTOMERS. UH, IT'S SO MUCH SO THAT I'M NOT SURE THAT THE ORIGINAL INFORMATION THAT AUSTIN ENERGY, UH, SENT OUT AND PROVIDED TO THE PUBLIC WAS, WAS, UH, QUITE PREPARED THE PUBLIC FOR WHAT IS BEING PROPOSED. THE IMPACT ON THE RESIDENTIAL CLASS AS PROPOSED WOULD BE 60 17.6%, NOT THE SEVEN, UH, PERCENT, UH, UH, OVERALL TO THE SYSTEM. IN FACT, THERE IS SO MUCH BEING REQUESTED THAT $4.1 MILLION IN EXCESS OF THE TOTAL REVENUE REQUIREMENT INCREASE IS BEING REQUESTED FROM THE RESIDENTIAL CLASS. SO THE RESIDENTIAL CLASS IS BEING ASKED TO BEAR THE ENTIRE REVENUE REQUIREMENT TO PLUS $4 MILLION. IN FACT, ALL THE WAY DOWN THE LINE, THE IMPACT IS, IS LIKE THIS. I MEAN, IT'S THE, THE LESS YOU USE THE LARGER, THE PERCENTAGE IMPACT IS ON YOUR, UH, ON, ON THESE CUSTOMERS. AND YOU CAN SEE THAT IN THE CHART THAT WAS REPRODUCED IN THE POSITION STATEMENT OF OURS ON, ON PAGE FOUR, IT'S ALSO INCLUDED IN MR. JOHNSON'S, UM, UH, TESTIMONY, UH, SHOWING THAT, UH, AT, YOU KNOW, FIVE DIFFERENT USAGE LEVELS, WHAT THE PERCENTAGE IMPACT IS IF YOU ARE ONLY USING 375 KILOWATT HOURS, THIS IS A 50% RATE INCREASE AT 625, A KILOWATT HOUR. YOU'RE LOOKING AT A 31.9% RATE INCREASE. THIS IS, THIS IS RATE SHOCK. AND IN FACT, THE, THE, THE PREPONDERANCE OF, OF RESIDENTIAL CUSTOMERS, 62% OF THE RESIDENTIAL CUSTOMERS OF AUSTIN ENERGY, UM, ARE, ARE ABOVE OR BELOW 750 KILOWATT HOURS. SO IF THE AVERAGE CUSTOMER IS LOOKING AT A 17%, THE MAJORITY OF CUSTOMERS ARE LOOKING AT LIKE A 30 TO 50% RATE INCREASE OUT OF THIS CASE. UH, ANOTHER WAY TO LOOK AT HOW SKEWED AND SLANTED THE PROPOSAL IS, IS TO LOOK AT PAGE 11 OF DR. HOSKINS TESTIMONY. HE HAS THE BILL FREQUENCY AND, AND BREAK DOWNS. AND I KNOW ALL THESE NUMBERS HAVE SORT OF SOMEWHAT CHANGED, BUT THE RELATIONSHIPS HAVE NOT. AND SO THAT IS THE MOST CONCERNING PART OF THIS ENTIRE CASE. AND WE DO HOPE THAT, UH, YOUR HONOR WILL, UM, UH, TAKE THAT INTO ACCOUNT. UH, AS FAR AS THE REVENUE REQUIREMENT, ICA HAS PROPOSED, UM, UH, EIGHT OR NINE, DEPENDING HOW YOU LOOK AT IT, ADJUSTMENTS TO THE REVENUE REQUIREMENT. WE THINK THE REVENUE REQUIREMENT IS TOO HIGH. IT'S, IT'S, IT'S A BLOATED. AND THESE, THESE ISSUES THAT WE HAVE RAISED A NON-NUCLEAR DECOMMISSIONING HAS BEEN, UH, GENERALLY, UM, AGREED TO, UH, THE, THE O AND M EXPENSE FOR SOUTHWEST PROJECT, THE RATE CASE EXPENSE, HEAVY EQUIPMENT CALL CENTER, STAFFING CONTRACT, NOT BEING FULLY STAFFED, UH, AND, AND VARIOUS ISSUES. THE ISSUES THAT WE HAVE RAISED ARE NOT STRETCHES. THESE ARE NOT PIE IN THE SKY, UH, YOU KNOW, ISSUES THAT WE'RE, WE'RE STRETCHING FOR. THESE ARE SOLID RATE MAKING ISSUES THAT ARE EASY TO UNDERSTAND. THEY ARE CLEARLY SET OUT IN MR. EPHRON'S TESTIMONY AND A COUPLE OF THEM IN, UM, MR. JOHNSON'S TESTIMONY. AND, UH, WE, WE THINK THAT THEY ARE, UH, VERY SOLID, NORMAL, AND, UH, EASY TO UNDERSTAND. AND YOU'LL GET TO HEAR FROM MR. F RON HERE IN A SECOND, UH, AS TO THE COST ALLOCATION AND RATE DESIGN, UH, MR. JOHNSON PROPOSES AS AN ALTERNATIVE, THE BIP METHOD WE'VE ALREADY ABOUT THAT SOMEWHAT THE BIP METHOD IS DISTINCTIVE IN THAT IT'S SEPARATES, UM, A BASE LOAD INTERMEDIATE AND PEAK PERIODS AND DEVELOPS ALLOCATION FACTORS FOR EACH OF THEM. UM, WE DO NOT BELIEVE THAT THE 12 CP, UH, RECOGNIZES ENERGY USE AT ALL IN AN ACCURATE WAY. THE AVERAGE AND EXCESS METHOD DOES NOT EFFECTIVELY, UH, RECOGNIZE ENERGY USE AS IT IS APPLIED. AND, AND AS IT IS, UH, EXPERIENCED HERE WITH THE, WITHIN THE ERCOT MARKET, THE BIP METHOD BALANCES, WHY ALL THE WILDLY DIFFERENT INTERESTS IN THIS CASE, IT PROVIDES RELIABILITY AND ECONOMICS, AND IT IS THE BEST METHOD FOR REFLECTING THE URQUHART METHOD. IN THE, AT LEAST THE SHORT AND MEDIUM TERM RANGE. UM, AUSTIN ENERGY'S FORMER, [04:10:01] UH, COST OF SERVICE CONSULTANT RW BACK, UH, BACK IN 2011, 2012, UH, AT LEAST IN THE PUBLIC PROCESS LEADING UP TO THAT CASE, UH, RECOMMENDED BIP, UH, IN THAT CASE, IT IS, UH, IT IS REGULARLY PROPOSED IN THE TEXAS PUC. AND IN OTHER COMMISSIONS, I KNOW IT WAS NOT ADOPTED IN THE LAST, UH, GO AROUND IN 2016, 2017. UH, BUT WE BELIEVE THAT IT IS SOLID. WE BELIEVE IT IS THE BEST METHOD, BUT AFTER YOU HAVE LOOKED AT THE VARIOUS COST AT ALL, ALL FOUR OF THE COST STUDIES IN THIS CASE, IT IS TIME TO APPLY THE NON-COST FACTORS. SO THAT'S, THAT'S THE NEXT STEP. AND I THINK THAT, THAT, THAT HAS BEEN ACKNOWLEDGED BY MOST OF THE PARTIES IN THIS CASE, THAT THERE ARE A VARIETY OF THEM, AND I WOULD HIGHLIGHT THREE PARTICULAR ONES THAT SHOULD BE TAKEN INTO ACCOUNT. IN THIS CASE, PARTICULARLY GIVEN THE DRAMATIC, UH, SHIFTING OF COSTS THAT IS BEING PROPOSED. ONE IS GRADUALISM AND THE AVOIDANCE OF RATE SHOCK. THIS IS ENTIRELY APPROPRIATE FOR YOUR HONOR, AND FOR THE CITY COUNCIL TO CONSIDER THAT EVEN IF YOU BELIEVE THAT ONE OF THESE COST STUDIES THAT WOULD REALLY HAMMER THE LOW USE RESIDENTIAL CUSTOMERS, YOU DON'T HAVE TO GO ALL THE WAY. IN FACT, ROUTINELY PUBLIC UTILITY COMMISSIONS APPLY THINGS THAT MAY NOT BE ESTABLISHED CRITERIA, BUT ARE COMMON SENSE APPROACHES. DON'T GO MORE THAN HALF WAY TO ANY PARTICULAR DIRECTION. DON'T PROVIDE A RATE DECREASE IF OTHER TO ONE CUSTOMER CLASS FOR ANOTHER CUSTOMER CLASSES GETTING AN INCREASE. UM, THE SECOND NON-COST CRITERIA THAT I WOULD HIGHLIGHT IS PUBLIC ACCEPTANCE. UH, THERE HAS TO BE SOME PRACTICAL, UH, RECOGNITION OF WHAT THE PEOPLE WHO ARE ACTUALLY PAYING MOST OF THESE BILLS, UH, WOULD LIKE TO SEE THEIR BILLS. AND, UH, YOU KNOW, TH THE PUBLIC SENTIMENT HAS TO BE TAKEN INTO ACCOUNT TO SOME DEGREE. AND WE HAVE QUITE A FEW INFORMED COMMENTS, UH, IN THE REFORMS THAT HAVE BEEN SENT OUT, UH, AND, AND ARE, UH, AND ARE PART OF ICA EXHIBIT FIVE. AND THE THIRD NON-COST CRITERIA THAT I THINK IS, IS WHAT THE IMPACT OF, OF THE RATE DESIGN APPROVED IN THIS CASE WILL HAVE ON ENERGY CONSERVATION AND ENERGY EFFICIENCY. UM, W UH, WE THINK, AND I'M NOT HERE NECESSARILY PROMOTING ANY PARTICULAR ENVIRONMENTAL INTERESTS, BUT I THINK THAT IF, UM, IF THERE IS SUCH A DRAMATIC CHANGE IN THE STRUCTURE WITH 150% INCREASE IN THE FIXED UNAVOIDABLE CHARGE AND THE ADJUSTMENTS THAT WERE WOULD BE MADE TO THE, THE FIRST TWO TIERS, UH, THERE WOULD BE MUCH LESS INCENTIVE TO ENGAGE IN ENERGY CONSERVATION AND ENERGY EFFICIENCY. SURE. THEY WILL STILL BE AN INCENTIVE. YOU'LL STILL BE SOME PAYBACK, BUT IT WILL BE LESS, AND THERE WILL BE LESS INHIBITION TO WASTEFUL SPENDING. AND, UH, SEEMS TO GO CONTRARY TO MANY STATEMENTS ON THE UTILITIES WEBSITE AND AMONGST THE CITY OF AUSTIN GOVERNMENT, GENERALLY, AS FAR AS HOW AGGRESSIVE IT HAS BEEN IN THE PAST AND POSSIBLY HAS LED TO THIS PARTICULAR SITUATION. SO ANOTHER REASON NOT TO GO SO DRAMATICALLY IN ONE DIRECTION, ANOTHER REASON TO CONSIDER THIS IS THE, THE ABNORMAL NATURE OF THE TEST, YOUR IN THIS CASE, WE HAD, UH, A, YOU KNOW, NOT ONLY STORM URI, BUT, UH, BUT A PANDEMIC. UH, I THINK THAT IT'S FAIR TO SAY THAT THIS TEST YEAR IS, IS ABERRATIONAL AT LEAST COMPARED TO THE YEARS LEADING UP TO IT. AND, UM, I, I'VE SEEN LITTLE INDICATION THAT THIS WOULD BE A YEAR THAT WOULD BE REPEATED THAT WE WOULD HAVE, UM, THAT KIND OF, UH, YOU KNOW, UH, DRAMATIC CHANGES IN JUST THE SOCIETY GENERALLY AS, AS WE SAW IN 2021. SO, UH, PLEASE TAKE THAT INTO ACCOUNT AND BE CAUTIOUS IN THE WAY THAT YOU ADDRESS THIS AND KEEP INTO MIND THE FOLKS THAT, THAT WE ARE CHARGED WITH REPRESENTING, AND THIS IS THE RESIDENTIAL AND THE SMALL BUSINESS CLASS. THERE HASN'T BEEN MUCH TALK ABOUT SMALL BUSINESS CUSTOMERS. THEY AREN'T OTHERWISE REP REPRESENTED HERE, BUT THERE ARE MANY FOLKS SAY, UH, YOU KNOW, SENIOR CITIZEN LIVING ALONE, SOMEONE IN A VERY SMALL APARTMENT BECAUSE THEY CAN'T AFFORD THE COST OF LIVING HERE IN AUSTIN, UH, ANY MORE THAN, YOU KNOW, A ONE-ROOM APARTMENT, UH, FAMILIES THAT ARE TRYING TO PAY THEIR BILLS AROUND THE KITCHEN TABLE EVERY YEAR. AND THEY ARE BARELY PAYING THE BILLS AS THEY ARE NOW, ENERGY INFLATION IS THE NUMBER ONE WORRY OF MOST FOLKS, ACCORDING TO THE POLLS TODAY. AND, UH, WE HOPE THAT, UH, THIS CASE ISN'T GOING TO EXACERBATE THAT ANY FURTHER. AND SO, UM, WE, WE TAKE OUR ROLE VERY SERIOUSLY, AND WE HOPE THAT YOUR HONOR WILL ALSO, [04:15:01] UH, TAKE INTO ACCOUNT THE OTHER SIDE OF THE EQUATION AND, UH, AND NOT APPROVE A RATE INCREASE. THAT IS, THAT IS TOO SLANTED. WE HAVE TRIED TO PUT TOGETHER A PROPOSAL THAT BALANCES TRIES TO BALANCE ALL THE INTERESTS, AND WE BELIEVE THAT, UH, WE CAN MOVE IN THE DIRECTION THAT AUSTIN ENERGY WANTS TO MOVE. MAKE SOME OF THE POLICY CHANGES THAT THEY WANT TO MAKE, PROVIDE RELIABLE SERVICE, BUT NOT, UH, NOT HAVE SUCH ADVERSE IMPACTS. AND, UH, WITH REGARD TO THE CUSTOMER CHARGE SPECIFICALLY, UH, WE THINK THAT, UH, 150% INCREASE IS TOO MUCH. AT ONE TIME WE WOULD PROPOSE A, A SMALL INCREASE AND, AND NO CA NO CIRCUMSTANCE MORE THAN $13, UH, THAT WOULD PLACE IT HIGHER THAN ANY OTHER LARGE MUNICIPAL ELECTRIC UTILITY. WE THINK THAT IF YOU'RE LOOKING FOR COMPARABLES, YOU HAVE SAN ANTONIO AND YOU HAVE LUBBOCK, UH, THE ELECTRIC CO-OPS, WE DO NOT THINK AS ARE, ARE FAIR, COMPARABLE TO COMPARE THEM TO, THEY HAVE MUCH MORE RURAL SERVICE AREAS, MUCH DIFFERENT DISTANCES. AND AT $25, YOU WOULD HAVE A CUSTOMER CHARGE, AN UNAVOIDABLE CUSTOMER CHARGE. THAT'S 2.7 TIMES HIGHER THAN THE AVERAGE OF ALL TEXAS IOUS. AND SO, UH, THESE ARE JUST FURTHER INDICATIONS THAT THIS IS GOING TOO FAR TOO FAST AND IS NOT REASONABLE. UM, THE, UH, MR. JOHNSON'S CALCULATION OF THE ACTUAL CUSTOMER RELATED COSTS, THE CUSTOMER SPECIFIC COSTS WOULD ONLY SET IT, THIS, UH, CUSTOMER CHARGE AT $6 AND 11 CENTS. SO I'M INTO, AT $13, YOU'RE ALREADY TWICE, TWICE THAT AMOUNT. SO WE DO, WE DO FEEL THAT AUSTIN ENERGY HAS, HAS OVERSTATED TO A LARGE DEGREE. UM, THE RESIDENTIAL RATE STRUCTURE, AS, AS A CONCERN FOR ITS REVENUE PROBLEMS, IGNORE AUSTIN ENERGY, ALSO IGNORES ANY POTENTIAL LONG RUN REDUCTIONS IN UTILITY COSTS THAT WOULD ACCOMPANY REDUCTIONS IN ENERGY CONSUMPTION IF THIS WAS GOING TO CONTINUE TO BE THE CASE. UM, SO JUST IN CONCLUSION, I WOULD SAY, UH, THAT WE HOPE THAT THE RESULT IN THIS CASE WE'LL AVOID WILDLY DIVERGENT RATE IMPACTS, UH, NOT PIT CUSTOMERS AGAINST EACH OTHER, AND THAT WE WOULD, UH, W WE WOULD SUGGEST THAT, UH, OUR PROPOSALS BE ADOPTED IN ORDER TO ADDRESS AUSTIN ENERGY'S CONCERNS ABOUT INCREASED REVENUE STABILITY, BUT WITHOUT PRODUCING, UH, THE, THESE IMPACTS THAT WE'VE TALKED ABOUT ARE NOR DIVERGE TOO FAR FROM ITS ENERGY CONSERVATION OBJECTIVES. UH, WE ARE PROPOSING, UH, SOMEWHAT, WE AGREE THAT, UH, UH, WE SHOULD HAVE LESS TIERS WE PROPOSE FOR, UH, BUT WE WOULD, WE HAVE QUITE A DIFFERENT PERSPECTIVE ON WHERE THOSE BOTTOM TWO TIERS, UH, SHOULD BE PRICED. UM, DR. J OR MR. JOHNSON PUT A LOT OF EFFORT INTO TRYING TO BALANCE THESE INTERESTS AND NOT, YOU KNOW, PARTICULARLY DRIVE IT TO THE BENEFIT OF ANY PARTICULAR CLASS OR SUBSET OF ANY PARTICULAR CLASS. SO, UH, WE ARE URGING MODERATION AND BALANCE REASONABLE RATES. THAT'S ALL, THAT'S CONCLUDES MY STATEMENT. AND I WOULD, UM, UH, WE, WE WILL, WOULD FIRST LIKE TO OFFER DAVID RON AS, AS OUR FIRST WITNESS. OKAY. THANK YOU, MR. KAUFMAN. UH, MR. HEFFRON, CAN YOU, CAN YOU HEAR US OKAY? I CAN HEAR YOU. YES. ALL RIGHT. UM, AND CAN YOU HEAR ME? YES. YES. GOOD, GOOD. AND MR. KAUFMAN, DID YOU HAVE ANY PRELIMINARIES WITH MR. EFRON? YES. JUST A COUPLE OF, ARE YOU THE SAME DAVID J F RON, THAT CAUSED TO BE FILED A INITIAL, AN INITIAL PRESENTATION ON JUNE 22ND? YES. OKAY. AND, AND DO YOU HAVE ANY CHANGES THAT YOU NEED TO MAKE, OR WOULD LIKE TO HAVE IN THAT TESTIMONY? I DO NOT HAVE ANY CHANGES. OKAY. AND, AND, UH, IF YOU WERE ASKED THESE SAME QUESTIONS, UH, TODAY THAT YOU PUT IN THE Q AND A, UH, WOULD YOUR ANSWERS BE THE SAME TODAY? YES. OKAY. UH, I WOULD OFFER MR. EFREN FOR CROSS EXAMINATION, RIGHT? THANK YOU, MR. KAUFMAN, UH, TO WR NO QUESTIONS, YOUR HONOR. THANK YOU. DATA FOUNDRY, NO QUESTIONS, YOUR HONOR. HER NO QUESTIONS, YOUR HONOR. S S C NO QUESTIONS, YOUR HONOR. CPC. NO QUESTIONS, YOUR HONOR. NXP. NO QUESTIONS, YOUR HONOR. TRUC NO QUESTIONS, YOUR HONOR, AUSTIN ENERGY. THANK YOU, YOUR HONOR. GOOD AFTERNOON, MR. [04:20:01] RON. GOOD AFTERNOON, MR. GOOD TO SEE YOU AGAIN. IT'S BEEN AWHILE. IT'S BEEN AWHILE. UM, LET'S START BY TALKING ABOUT NON NUCLEAR DECOMMISSIONING. NOW AUSTIN ENERGY IS PROPOSING TO INCLUDE $8 MILLION TO DECOMMISSION IT'S NON NUCLEAR POWER PLANTS. AND THE RIGHTS IS THAT RIGHT? YES. AND CAN YOU IDENTIFY THE UNITS THAT THEY ARE SEEKING TO COLLECT FUNDS IN ORDER TO DECOMMISSION? UM, I HAVE THEM HERE. THERE'S THE, UH, DECKER UNIT, UH, SAND HILL AND, UH, ONE SECOND NAMES OF THEM FAYETTE. AND DO YOU MIND ME ASKING WHAT YOU WERE LOOKING AT? UH, I, WELL, WHAT I HAD IN FRONT OF ME, I WAS LOOKING AT THE, UH, DECOMMISSIONING STUDY FROM THE LAST CASE, BUT IT'S IN MY SCHEDULE IS ALSO UNDERSTOOD. AND DO YOU KNOW WHAT TYPE OF GENERATION, UH, UNITS, UM, SANDHILL, DECKER AND FAYETTE ARE? UH, YEAH, THE, UM, FAYETTE AND BAKKER RIPE WEAVERS ARE STEAM UNITS AND A SAND HELL IF I RECALL CORRECTLY IS, UH, INTERNAL COMBUSTION. ALL RIGHT. AND, AND IF YOU WOULD, UH, SUBJECT TO CHECK, JUST ASSUME WITH ME THAT FE IT'S ACTUALLY A COAL UNIT, NOT A GAS UNIT. ALL RIGHT. UH, AND YOU'RE PROPOSING TO INCLUDE $2 MILLION ANNUALLY INTO RATES TO COLLECT FOR, UH, DECOMMISSIONING. IS THAT YOUR RECOMMENDATION? YES. AND THE BASIS OF YOUR RECOMMENDATION IS THE 2015 DECOMMISSIONING STUDY PERFORMED FOR AUSTIN ENERGY. IS THAT RIGHT? YES. ALL RIGHT. AND YOUR ANALYSIS ASSUMES A MID POINT ESTIMATE OF THE COST OF DECOMMISSIONING EACH GENERATION UNIT BASED ON THE LOW RANGE AND THE HIGH RANGE ESTIMATES OF THAT STUDY IS THAT RIGHT? I TOOK THE MIDPOINT OF THE LOW IN THE HIGH RANGE YET. ALL RIGHT. AND, AND SO YOU DIDN'T UPDATE THOSE NUMBERS IN ANY WAY OR, UH, TAKE, UH, ADDITIONAL EVIDENCE OR DO ANY ADDITIONAL ANALYSIS, UH, BEYOND THAT, IS THAT RIGHT? UH, THAT WAS THE STUDY. WE ASKED, UH, AUSTIN ENERGY FOR THE BASIS FOR THE 8 MILLION AND THEY PROVIDED THE STUDY. THAT'S WHAT I USED. ALL RIGHT. AND SO, UH, IF THERE'S BEEN INFLATION OR OTHER COSTS INCREASES, UM, RELATED TO DECOMMISSIONING A POWER PLANT SINCE 2015, YOU WOULD NOT HAVE TAKEN THAT INTO ACCOUNT. I DIDN'T TAKE INTO ACCOUNT, UH, ANY CHANGES THAT WOULD HAVE AFFECTED THE COST SINCE THE LAST STUDY. UH, THAT WAS THE STUDY THAT WE HAD. UH, THERE'S BEEN INFLATION THERE'S I, I'M NOT AN ENGINEER MYSELF, I GUESS THERE COULD BE OTHER PROCESS CHANGES, THINGS LIKE THAT SINCE THEN, BUT THIS WAS A, THIS WAS WHAT THEY HAD AS THE BASIS. THAT'S WHAT I USE. AND SO YOU DIDN'T DO ANY INDEPENDENT ANALYSIS OF THE PLANTS OR WHAT IT MAY COST TO DECOMMISSION THEM? I, I DID NOT KNOW. I, I DO NOT DO THAT KIND OF ANALYSIS. ALRIGHT. AND YOU WOULD AGREE THAT THE DECOMMISSIONING COST BEING PLANNED FOR ARE IN FACT ESTIMATES AND THUS THE ACTUAL COST OF DECOMMISSIONING OF A PLANT COULD BE SIGNIFICANTLY HIGHER? UH, IT COULD, IT COULD BE HIGHER, UH, AS FAR AS THE MIDPOINT GOES, I SUPPOSE IT COULD BE LOWER AS WELL. THAT'S, THAT'S WHY I USE THE MIDPOINT. ALL RIGHT. SO, UH, DO YOU KNOW WHAT THE HOLLY PLANT IS? I'VE SEEN REFERENCE TO IT THAT THAT'S A PLANT THAT HAD BEEN DECOMMISSIONED DOES SOME YEARS AGO. UH, AND, UH, ARE YOU, ARE YOU AWARE THAT THE ORIGINAL ESTIMATE TO DECOMMISSION HOLLY WAS, UH, ABOUT $19? I'LL ACCEPT THAT SUBJECT TO CHECK? I, I DON'T RECALL THE NUMBERS, BUT I CAN ACCEPT THAT REPRESENTS. ALRIGHT. AND I BELIEVE IT'S IN THE RECORD, UH, IN THE REBUTTAL TESTIMONY AS WELL, ANYHOW. AND, AND, UH, WOULD IT SURPRISE YOU THAT THE ACTUAL COST OF DECOMMISSIONING HOLLY, UH, WAS ABOUT $32 MILLION? UH, I UNDERSTAND THE COST WAS HIGHER THAN THE EARLIER ESTIMATE. IT'S ALSO MY UNDERSTANDING THAT THE DECOMMISSIONING STUDY TOOK INTO ACCOUNT, UH, THE ACTUAL EXPERIENCE WITH THE DECOMMISSIONING, THE HOLLY PLAN. DO YOU KNOW WHEN HOLLY WAS DECOMMISSIONED? UM, AS I, AS I SIT HERE, I CAN'T GIVE YOU THE DATE. I, I, I DON'T REMEMBER AS I SIT HERE. ALL RIGHT. ARE YOU AWARE THAT AUSTIN ENERGY ACQUIRED THE NACADOCIOUS GENERATING FACILITY IN JUNE OF 2019? I SEEN REFERENCE TO THAT, YES. AND SO THAT WOULD BE AFTER [04:25:01] THE 2015 STUDY, WOULD IT NOT? ALL RIGHT. AND DO YOU KNOW WHAT TYPE OF FACILITY NACADOCIOUS IS A NOTIFICATION HERE THOUGH? ALL RIGHT. SO YOU DON'T KNOW HOW MANY MEGAWATTS THAT PLANT IS OR, UH, WHERE IT IS LOCATED OR ANYTHING ALONG THOSE LINES? UH, NO. ALL RIGHT. IF YOU'LL ACCEPT WITH ME THAT IT IS 150 MEGAWATT BIOMASS PLANT LOCATED IN, UH, IN OR AROUND NACADOCIOUS TEXAS. UM, DO YOU KNOW IF THERE'S, UH, IF THERE ARE EXTENUATING CIRCUMSTANCES WITH RESPECT TO DECOMMISSIONING A BIO MASS PLANT, AS OPPOSED TO OTHER TYPES OF FACILITIES? I DO NOT. ALL RIGHT, BUT YOU WOULD AGREE THAT THERE W THERE WILL BE A COST TO DECOMMISSION NACADOCIOUS? UH, I, I, I JUST, I JUST DON'T KNOW MUCH ABOUT IT. IT'S POSSIBLE. THERE MIGHT BE SOME SALVAGE VALUE ASSOCIATED WITH IT AS WELL. I JUST DON'T KNOW. ALRIGHT. AND SO, TO THE EXTENT THAT THAT, UH, FACILITY ALSO NEEDS TO BE DECOMMISSIONED, AND IT IS INCLUDED IN THE $8 MILLION, YOU SIMPLY WOULDN'T BE ABLE TO BE AWARE OR NOT. RIGHT? UH, I'M SORRY, CAN I HAVE THAT QUESTION BACK AGAIN? SO, UH, IF THERE WAS, IF NACADOCIOUS ALSO HAD TO BE, UH, DECOMMISSIONED, UH, AS PART OF THE MONEY THAT'S BEING SET ASIDE BY AUSTIN ENERGY, UH, YOU WOULDN'T BE AWARE OF THAT OR NOT. WOULD YOU, UH, THAT WASN'T INCLUDED IN THE DECOMMISSIONING STUDY FROM THE LAST CASE? ALL RIGHT. AND IT FITS, UH, NECESSARY THOUGH TO DECOMMISSION NACADOCIOUS ALONG WITH SANDHILL, FAYETTE AND DECKER. UH, I MEAN, THAT WOULD IMPACT THE AMOUNT THAT'S REASONABLE TO BE COLLECTED FROM RIGHT. PAYERS, WOULD IT NOT? UH, I DON'T KNOW WHETHER THE DECOMMISSIONING COSTS ASSOCIATED WITH THAT WHENEVER THAT WOULD TAKE PLACE. AND I DON'T KNOW WHEN IT WOULD BE COMMISSIONED. I, AGAIN, I, I, MY NUMBER CAME OUT TO 1.5 MILLION. I ROUNDED THAT UP TO 2 MILLION, WHETHER THE NACADOCIOUS INCLUDING THAT IN THE, IN THE ESTIMATE WOULD, WOULD BRING A TOTAL UP ABOVE $2 MILLION A YEAR. I DON'T KNOW. DO YOU KNOW HOW MUCH HAS BEEN COLLECTED THUS FAR? HOW MUCH IS IN THE DECOMMISSIONING NON-NUCLEAR DECOMMISSIONING RESERVE? UH, WELL, IT'S BEEN $8 MILLION A YEAR. UH, SO BY THE TIME THE RATES IN THIS CASE GO INTO EFFECT BY MY CARE CALCULATION, IT'LL BE A $48 MILLION. AND, UH, THERE'S SINCE IT'S A FUNDED, UH, RESERVE. YEAH. IT WOULD BE A INTEREST ON THAT AS WELL. I DON'T KNOW HOW MUCH INTEREST IS IT, UH, BEEN EARNED AND ACCUMULATED IN THE FUND. DO YOU KNOW, UM, THAT, THAT, UH, THE AMOUNT IS 48 MILLION? OR ARE YOU JUST DOING MATH MULTIPLYING THE YEARS, TIMES 8 MILLION? WELL, BASED ON WHAT, UH, UH, HE SAID THEY'VE RECOVERED THAT THEY WILL HAVE RECOVERED 8 MILLION FROM, FROM CUSTOMERS. I ASSUME THEY'RE, THEY'RE FUNDING THAT ACCORDINGLY. ALL RIGHT. AND SO, D ARE YOU AWARE OF WHEN AUSTIN ENERGY'S LAST BASE RATE CASE WAS? UH, I BELIEVE THE RATES WENT INTO EFFECT, UH, BEGINNING OF 2017. ALL RIGHT. AND SO, ARE YOU AWARE THAT AUSTIN ENERGY ORIGINALLY REQUESTED 19.4 MILLION PER YEAR FOR NON NUCLEAR DECOMMISSIONING IN THAT 2016 BASE RATE CASE? YES. AND, UM, ARE YOU ALSO AWARE THAT MR. KAUFFMAN WAS THE, UH, ICA IN THE 2016 CASE? OH, CHECK YOUR REPRESENTATION ON THERE. ALL RIGHT. SO, WELL, LET ME ASK YOU, ARE YOU AWARE THAT IN THAT CASE, THE ICA PROPOSED TOTAL DECOMMISSIONING EXPENSE OF 9.89 MILLION? UH, I DON'T RECALL THAT NUMBER SPECIFICALLY. I KNOW IT WAS SOMETHING LESS THAT WHAT, AND WHAT, UH, AUSTIN ENERGY HAD PROPOSED, BUT IT'S ALSO FIVE TIMES WHAT YOU'RE PROPOSING IN THIS CASE. UH, THEY PROPOSE WHAT THEY PROPOSED. I DID MY OWN CALCULATIONS, UM, BUT IT WAS BASED UPON THE SAME, SAME 2015 REPORT. WAS IT NOT? UH, IT WAS THE SAME REPORT THEN? UM, IT WAS WHAT IT WAS, I, I, WELL, IT'S NOT JUST A, WAS WHAT IT WAS, WELL, I MEAN, IT'S NOT SIMPLY, IT WAS WHAT IT WAS. I MEAN, IT WAS THE SAME POWER. IT WAS THE SAME ICA [04:30:01] IN THE PREVIOUS CASE USING THE SAME REPORT, PROPOSING A RECOMMENDATION ON THE APPROPRIATE LEVEL OF NON NUCLEAR DECOMMISSIONING. AND IT JUST HAPPENED TO BE ALMOST FIVE TIMES YOUR RECOMMENDATION. THAT WOULD SEEM TO BE KIND OF AN IMPORTANT POINT. WOULDN'T IT? UH, I, SOME PEOPLE MIGHT SAY IT'S IMPORTANT. SOME MIGHT NOT. I, UH, THIS IS WHAT THEY PROPOSE. I HAVE DONE WHAT I'VE DONE. I WASN'T PART OF THAT. UH, UNDERSTOOD. BUT UNDERSTOOD. UH, AND SINCE THAT TIME, SO IT'S NOW SEVEN YEARS LATER, RIGHT? YES. ALL RIGHT. AND, AND THE HOLLY PLANT, AS WE'VE TALKED ABOUT WAS SIGNIFICANTLY MORE EXPENSIVE TO DECOMMISSION THAN, THAN WAS EXPECTED, CORRECT? YES. ALL RIGHT. AND WE NOW HAVE AN ADDITIONAL, 150 MEGAWATT BIOMASS PLANT THAT HAS TO BE DECOMMISSIONED AT SOME POINT AS WELL. RIGHT. AND THERE'S BEEN INFLATION. I THINK YOU TESTIFIED A MOMENT AGO SINCE 2015, RIGHT? YES. AND AA HAS KEPT THE FUNDING LEVEL THAT THEY'RE PROPOSING IN THIS CASE, THE SAME AS WHAT IT PROPOSED IN 2016, RIGHT? 8 MILLION. NO, NO, NOT TO SAY, I'M SORRY, WHAT THEY SETTLED UPON. THEY SETTLED UPON, THEY SETTLED UPON 8 MILLION IN 2016 AND THEY'RE PROPOSING 8 MILLION NOW, RIGHT? YES. ALL RIGHT. AND THE ICA WAS A PARTY TO THAT SETTLEMENT, WEREN'T THEY? IN 2016, THAT'S MY UNDERSTANDING. ALL RIGHT. AND IF THE $8 MILLION PER YEAR PROVES TO BE TOO HIGH, OFTEN ENERGY CAN HOLD THOSE FUNDS TO DECOMMISSION THE NEXT NON-NUCLEAR UNIT TO BE DECOMMISSIONED IN THAT. RIGHT. UH, IF IT WERE NECESSARY, UH, WELL, THEY, THEY, IT, IT WOULD DEPEND, I GUESS, I GUESS, UH, AND HOW, HOW LONG IT WOULD, UH, TAKE TILL THAT OTHER UNIT, UH, HAD TO BE DECOMMISSIONED AND HOW MUCH WAS EXCESS. UH, SO, UH, IT WOULD DEPEND W W I MEAN, BUT THEY COULD, IF THEY OVER COLLECTED FOR ONE UNIT, THEN THEY COULD KEEP THOSE FUNDS AND APPLY THEM TO THE NEXT UNIT. RIGHT. I MEAN, THAT WHAT YOU'D WANT THEM TO DO. YEAH. YEAH. OKAY. OKAY. UH, AND SIMILARLY, UH, IF THEY OVER COLLECT OR IT APPEARS THAT THEY'RE GOING TO OVER COLLECT, I MEAN, THEY COULD REDUCE THAT $8 MILLION GOING FORWARD AT SOME POINT AS WELL. RIGHT. THIS IS GETTING KIND OF HYPOTHETICAL NOW. UH, BUT IT'S AN IMPORTANT, DEPENDS ON HOW MUCH IT WAS OVER COLLECTED. UH, I DUNNO AT SOME POINT IT MIGHT BE SO MUCH OVER COLLECTED THAT THEY WOULD HAVE TO REFUND THE MONEY AS WELL. AND THAT'S A POSSIBILITY AS WELL. TRUE. UM, LET ME ASK YOU THIS, YOU WOULD AGREE, WOULD YOU, NOT THAT IT'S APPROPRIATE TO COLLECT DECOMMISSIONING COSTS FROM A POWER PLANT, FROM A FOREIGN POWER PLANT FROM THOSE CUSTOMERS WHO ARE GENERALLY ARE ON THE SYSTEM DURING THE TIME THAT THE UNIT IS IN SERVICE, RIGHT? YEAH. THAT WAS THE, UH, YES, THAT'S THE INTENT OF, UH, MY PROPOSAL. I UNDERSTOOD THAT'S YOUR INTENT, BUT LET ME, LET ME JUST ASK, UM, IN THE EVENT, HOWEVER, THAT, UM, THAT THERE'S UNDERFUNDING, THEN THE UTILITY WOULD HAVE TO COLLECT THE, THE COST OF DECOMMISSIONING FROM CUSTOMERS WHO ARE ON THE SYSTEM AT THAT TIME WHEN THE PLAN IS ACTUALLY DECOMMISSIONED, AND THAT WOULD CREATE WHAT'S CALLED INTERGENERATIONAL INEQUITIES. WOULD IT NOT? I THINK AT THAT, AT THIS POINT, THAT'S, THAT'S INESCAPABLE. THERE HAD BEEN NO, UH, AS FAR AS I KNOW, NO RECOVERIES FOR THE NUN WOULD BE DECOMMISSIONING PRIOR TO THE LAST CASE. SO, UH, THE CUSTOMERS BEFORE THAT THE FACT GOT A FREE RIDE, AS FAR AS THIS GOES, UH, IF YOU WILL, UH, IT IS POSSIBLE THAT THE POSSIBLE, I DON'T KNOW HOW LIKELY THAT THE CUSTOMER IS SOMETIME IN THE FUTURE, UH, WOULD HAVE TO MAKE UP FOR THEM, BUT THAT'S NOT THE CASE. THEY CAN'T GET, YOU CAN'T GET AROUND. YOU'RE NOT GOING TO HAVE PERFECT INTERGENERATIONAL EQUITY, [04:35:01] WHATEVER YOU DO WITH, AND UNLESS YOU'RE A CLAIRVOYANCE, FAIR ENOUGH, I'M TRYING TO MATCH IT UP AS BEST I CAN. THE INFORMATION THAT WE HAVE, OH, FAIR ENOUGH. IT'S DIFFICULT TO HAVE A PERFECT MATCH OF DOLLARS COLLECTED VERSUS, UH, DOLLARS THAT ARE NECESSARY TO DECOMMISSION A PLAN AT THE TIME THAT IT'S SHUT DOWN, BUT YOU CAN REDUCE THE LIKELIHOOD OF AN INTERGENERATIONAL INEQUITY BY APPROPRIATELY FUNDING, UH, THE, THE DECOMMISSIONING FUND, RIGHT? I MEAN, THAT'S THE WHOLE POINT OF IF GENERAL INTERGENERATIONAL EQUITY HAS TO COME BOTH WAYS THAT BY THE SAME TOKEN, THE CUSTOMERS NOW SHOULDN'T BE PAYING MORE THAN IS NECESSARY TO PAY FOR THE DECOMMISSION. I WOULD AGREE WITH YOU ON THAT POINT. UM, ALL RIGHT. LET'S MOVE ON AND TALK ABOUT HEAVY EQUIPMENT LEASES. NOW YOU PROPOSE A DOWNWARD ADJUSTMENT OF 7.3 MILLION TO THE REVENUE REQUIREMENT BASED ON THE HEAVY EQUIPMENT LEASE WITH ALTEC. IS THAT RIGHT? AND ARE YOU AWARE THAT, YOU KNOW, THAT CONTRACT IS A FULLY EXECUTED LEASE AGREEMENT WITH ALL TECH? UH, IT'S, IT'S MY UNDERSTANDING THAT THE AMOUNTS FOR THE YEARS, UH, AFTER 2022 ARE NOT FROM COVID. UH, SO IT'S A CONTRACT, BUT, UH, CONSERVATION THAT I'VE SEEN, UH, AUSTIN ENERGY IS NOT BOUND TO, UH, ACTUALLY OBLIGATED TO, UH, INCUR THAT SPENDING, UH, AFTER YEARS 2022. OKAY. BUT LET'S TAKE IT ONE PIECE AT A TIME. YOU AGREE THAT THAT IS A SIGNED CONTRACT AND ENFORCEABLE CONTRACT, CORRECT? OH, I'M, I'M AN ATTORNEY. IT'S A, IT, IT'S A KIND OF, OKAY. BUT IT'S NOT JUST ONE THAT'S CURRENTLY IN NEGOTIATIONS OR ONE THAT SOMEBODY HAS MADE AN OFFER TO SOMEONE ELSE. I MEAN, IT'S A DONE DEAL. I, AGAIN, IT'S A CONTRACTING, UH, WHAT THE AMOUNTS AFTER 2022 ARE NOT FROM COMMITMENT. ALL RIGHT. SO LET'S TALK ABOUT THAT AS WELL. SO THE, THE, THE AMOUNTS, THE EXTENSIONS, I BELIEVE IS WHERE DO YOU USE THOSE ARE FOR EACH YEAR OF THE CONTRACT, RIGHT? UM, I'M NOT FOLLOWING THE QUESTION. WELL, YOU, YOU, YOU MENTIONED THAT DESPITE THERE BEING AN ASSIGNED CONTRACT THAT THERE'S THESE ANNUAL, UH, AMOUNTS OR EXTENSIONS, IS THAT THE WORD YOU USED? W WHAT WERE YOU REFERRING TO, UH, THAT THAT IS SUPPOSED TO HAPPEN IN SUBSEQUENT YEARS? WELL, THESE WERE, THESE WERE ESTIMATES, UH, IN, IN THE, UH, DOCUMENT THAT THE COMPANY PROVIDED TO US ESTIMATES OF WHAT OH. OF, UH, WHAT THE SPENDING WOULD BE FOR THE HEAVY EQUIPMENT LEASES ARE ALL RIGHT. SO, BUT, BUT THERE ARE AMOUNTS IN THE CONTRACT ARE, THEY'RE NOT TH TH THERE, THERE ARE AMOUNTS IN THE CONTRACT. IF THOSE PROJECTS TAKE PLACE AS FORECAST, THAT, THAT, THAT'S MY UNDERSTANDING. W WELL, I WOULD AGREE WITH YOU THAT THE, THE CITY HAS AN OPERATING BUDGET THAT'S APPROVED BY COUNCIL EACH YEAR. IS THAT YOUR, THAT'S YOUR UNDERSTANDING AS WELL, RIGHT. WITH THE WHOLE PROCESS. I CAN ACCEPT THAT REPRESENTATION. SORRY, I DIDN'T MEAN TO CUT YOU OFF. SO, BUT, SO YOU'RE NOT AWARE OF WHETHER THESE EXTENSIONS OR, UH, FUTURE YEARS, UM, GO INTO EFFECT AUTOMATICALLY UNDER THE TERMS OF THE CONTRACT OR WHETHER THEY REQUIRE SOME, UH, ANNUAL APPROVAL OR NOT. ARE YOU NO. UH, WHAT I KNOW IS, AGAIN, BASED ON WHAT THEY COME FROM, YOU SAID IN RESPONSE TO OUR INFORMATION REQUEST THAT THEY'RE NOT, THEY'RE NOT FIXED COMMITMENTS. OKAY. AND WHERE DID THE, WHERE DID IT AUTHOR ENERGY SITE? THIS IS NOT A FIXED COMMITMENT. UH, YOU, CAN YOU GIVE ME A MINUTE AGAIN? I JUST, ARE YOU LOOKING AT YOUR TESTIMONY, SIR? I'M NOT EVEN PARAPHRASING THERE, BUT, BUT, BUT, UH, YEAH, [04:40:05] I'LL, I'LL, I'LL, UH, ONE SECOND HERE. DID HE SAY, GIVE ME A SECOND HERE. OKAY. LISA . OKAY. THE RESPONSE TO, I SEE A FOUR DASH FOUR, UH, QUESTION IS WHAT RESPONDENTS TO ICA FOUR DASH FOUR NAT REQUEST, REGARD TO THE HEAVY EQUIPMENT. THESE PCAS ARE THE AMOUNTS FOR FISCAL YEAR 20 23, 20 25. THE TRACTIONAL OBLIGATIONS, THE RESPONSE WAS ENOUGH. CONTRACTUAL OBLIGATIONS ARE STRICTLY RELIEF VEHICLES TO THE ALPAC LEASE AGREEMENT FOR PHASES ONE THROUGH SIX, WHICH WERE THE YEARS PRIOR TO 2023. THAT'S ABOUT AS WHY. ALL RIGHT. SO EVEN RELYING UPON THIS DISCOVERY RESPONSE, UH, COUNCIL WOULD APPROVE THAT THOSE, THOSE, UH, EXTENSIONS, UH, IN SEPTEMBER OF THIS YEAR, THAT WOULD THIS, UH, STATES, UH, UH SO I, I JUST, I JUST MOVED TO SOMETHING ELSE JUST A SECOND HERE. SURE. THAT'S WHAT IT SAYS. AUSTIN ENERGY HAS TWO AMENDMENTS TO THE ALPAC LEASE CONTRACT THAT ARE PENDING WITH THE AUSTIN CITY COUNCIL FOR ACTION IN SEPTEMBER, 2022 WASHINGTON ENERGY BELIEVES THAT BOTH AMENDMENTS WILL PASS AND WILL BE IN EFFECT WHEN NEW RATES BECOME EFFECTIVE. AND THE, AND THE EXACT NUMBERS THAT WE ARE TALKING ABOUT CAN BE FOUND ON THE NEXT THREE PAGES OF THAT RESPONSE. BUT YOU ALSO HAVE IN YOUR TESTIMONY, ISN'T THAT RIGHT? UH, W WHAT I, WHAT I HAD IN MY TESTIMONY WAS, UH, WASN'T, UH, ACTUALLY BASED ON, UH, EARLIER RESPONSE, UH, THE NUMBERS, ERR, THERE A DIFFERENT FORM FROM WHAT I HAD IN MY, UH, WHEN I HAVE THE TIME OF MY TESTIMONY. I'M SORRY. I'M NOT SURE. I UNDERSTAND YOU, YOU ARE READING FROM, UH, AUTHOR ENERGY'S RESPONSE TO ICA FOUR DASH FOUR, BUT BEHIND THE, UM, THE WRITTEN ANSWER, THERE'S ALSO THREE PAGES THAT YOU'VE INCLUDED IN YOUR TESTIMONY THAT, UH, AREN'T ATTACHMENT TO THAT RESPONSE. DO YOU SEE THOSE? AND I WOULD SIMPLY CONFIRMING THAT THOSE ARE THE PRECISE DOLLAR AMOUNTS THAT, UH, WE'RE TALKING ABOUT HERE, UM, IN PHASES SIX AND SEVEN. YEAH. I HAD A LIED ON THE RESPONSE TO ICA TWO DASH EIGHT IN MY TESTIMONY OR DATA IN THEIR RESPONSE WERE DIFFERENT FORM FROM THE ATTACHMENT TO ICA FOUR DASH FOUR. AND SO WHERE I DID NOT KNOW ANY DISCREPANCY STALL WITH THAT ADDS TO THE QUESTION. AND SO THEN LOOKING AT THE RESPONSE TO TWO DASH EIGHT, THAT ALSO DETAILS THE, THE CALCULATION AND THE FIGURES THAT ARE [04:45:01] IN THE CONTRACT, THE AMOUNTS, RIGHT? YES. ALL RIGHT. LET'S TALK THEN FOR A MOMENT ABOUT CALL CENTER STAFFING AND IN YOUR TESTIMONY, UH, YOU RAISED CONCERNS WITH THE ADJUSTMENT THAT AUSTIN ENERGY MADE FOR NEW CALL CENTER STAFFING PURSUANT TO THE 2020 PURSUANT TO THE MOST RECENT CONTRACT. IS THAT RIGHT? YES. NOW AGAIN, THE CONTRACT THAT WE'RE TALKING TO IS, IS A SIGNED CONTRACT, ISN'T IT? YES. AND AS I UNDERSTAND IT, YOUR POSITION IS THAT THIS CONTRACT OR THE, THE, UH, THE, UH, STAFFING MAY NOT BE COMPLETED AT THIS TIME. AND THEREFORE YOU MADE A REDUCTION TO ALL SYNERGIES KNOWN AND MEASURABLE ADJUSTMENT FROM 5.3 MILLION TO ABOUT 2.8, 8 MILLION. UH, WELL, THAT, THAT WAS PART OF THE REASON FOR THE ADJUSTMENT. UH, I THINK THEY, THE CONTRACT CLEARLY SPECIFIED THEN THAT, UH, THE AMOUNTS SET OUT THERE WERE, WERE FIXED AMOUNTS. UM, AND SO, SO THE ESTIMATE WASN'T A KNOWN AND MEASURABLE, I BASED BY ADJUSTMENT, UH, ON WHAT WAS THE LATEST INFORMATION AVAILABLE AT THE TIME OF MY TESTIMONY. ALL RIGHT. DID YOU, UH, HEAR MR. GALVIN TESTIFIED YESTERDAY ON THIS ISSUE? UH, I DID NOT. UM, THEN SUBJECT TO CHECK THE RECORD, UM, AND IF HE STATED THAT THE CALL CENTER WOULD BE FULLY STAFFED, UH, THIS FALL, UM, THAT WOULD BE BEFORE THE BEGINNING OF THE RATE YEAR, WOULD IT NOT? UH, HYPOTHETICALLY IF THAT WERE TO HAPPEN, I GUESS THAT WOULD BE BEFORE THE BEGINNING OF THE RATE HERE. ALL RIGHT. AND IT WOULD BE ACTUALLY BEFORE COUNCIL MAKES A DECISION ON THIS CASE IN NOVEMBER AS WELL. WOULDN'T IT? UH, I, I HAVEN'T CHECKED THE SCHEDULE FOR THAT RECENTLY, BUT I, I CAN ACCEPT THAT. ALL RIGHT. SO WE'VE GOT A SIGNED CONTRACT, I BELIEVE YOU AGREED TO, CORRECT? YEAH. HE, IT'S A SIGNED CONTRACT THAT SPECIFIES THAT THE AMOUNTS CAN BE DIFFERENT FROM WHAT'S IN THE CONTRACT. ACTUALLY, I THOUGHT YOU JUST SAID A MOMENT AGO THAT WERE FIXED AMOUNTS. YOUR STATEMENT WAS THAT OUR FIXED AMOUNTS, I NO LONGER HAVE. THAT'S WHAT I SAID. IF I DID SAY THAT I MISSPOKEN APPARENTLY PRETTY CLEARLY STATES OF IT IN THERE THAT THE CITY RESERVES THE RIGHT TO PURCHASE MORE OR LESS OF THESE QUANTITIES AS MAY BE REQUIRED. QUANTITIES OF WHAT MR. NEPHRON THE NUMBER OF EMPLOYEES. I INTERPRET THAT TO ME NOW, LET'S TALK ABOUT OTHER REVENUES. UH, AMY MADE A DOWNWARD ADJUSTMENT OF ABOUT 1.8 MILLION TO OTHER REVENUES FOR FACILITIES RENTALS. IS THAT YOUR UNDERSTANDING? YES. AND AM I RIGHT THAT OTHER REVENUES SERVE AS A REDUCTION TO THE REVENUE REQUIREMENT? IT'S A CREDIT TO THE, TO THE COST. YES. ALL RIGHT. AND SO, UH, AUTHOR ENERGY DOES NOT EXPECT TO COLLECT THOSE DOLLARS. ISN'T THAT RIGHT? UH, THAT'S WHAT THEY SAID. YES. UH, BUT YOU PROPOSED THAT NO OTHER, NO ADJUSTMENT BE MADE TO OTHER REVENUES FOR FACILITY RENTALS, RIGHT? UH, YEAH. I, I REVERSED OUR JUSTIN. YES. AND THAT ADJUSTMENT IS RELATED TO AN AMOUNT THAT AUSTIN ENERGY SAYS IS DUE FROM A CUSTOMER WHO HAS BEEN DISPUTING THEIR BILL. ISN'T THAT RIGHT? YES. AND THEY'VE BEEN DISPUTING THAT BILL FOR WELL OVER A YEAR, HAVEN'T THEY FOR OVER A YEAR AND OFTEN ENERGY DOES NOT EXPECT TO COLLECT THAT AMOUNT. RIGHT. UH, THAT'S WHAT THEY SAID. AS I UNDERSTAND, THERE'S STILL THE, YOU'RE STILL NEGOTIATING WITH THEM TO, TO, TO SEE WHAT THEY CAN COLLECT. UH, AND UNDER GAP, A UTILITY IS REQUIRED TO REDUCE RECEIVABLES, NOT EXPECTED TO BE COLLECTED AREN'T THEY, UH, IT'S NOT QUITE THAT SIMPLE. UH, USUALLY UNDER A GENERALLY ACCEPTED ACCOUNTING [04:50:01] PRINCIPLES. UH THEY'RE THERE THEY'LL BE, UH, AN ALLOWANCE FOR REVENUES THAT WON'T BE COLLECTED. AND WHEN THE, WHEN THE, UH, COLLECTION OR WHEN YOUR RECEIVABLE IS WRITTEN OFF AND THAT'LL BE CHARGED AGAINST THE RESERVE. OKAY. BUT HERE WE HAVE, WE HAVE UNCOLLECTABLE EXPENSE AND AUSTIN ENERGY MADE AN ADJUSTMENT TO THAT AS WELL. DID THEY NOT TO REFLECT THIS, TO REFLECT THEIR EXPECTATION OF THAT? THEY'RE NOT GOING TO COLLECT THIS AMOUNT? UM, WELL, THE ADJUSTMENT ON COLLECTIBLES WAS IT WAS A SEPARATE ADJUSTMENT, BUT DIRECTLY TO REVENUES. AND, UH, THE, THE DISPUTED AMOUNT WAS NEGATED IN ALL SYNERGIES, FINANCIAL STATEMENTS AS UNCOLLECTABLE WAS IT NOT? UH, IT'S MY UNDERSTANDING THAT FOR FINANCIAL REPORTING PURPOSES, THEY, UH, THEY, THEY WROTE THE AMOUNTS OFF NOW. I MEAN, IS IT YOUR BELIEF THAT AUSTIN ENERGY'S ACTUALLY GOING TO COLLECT THIS MONEY? IT'S MY UNDERSTANDING THAT THEY'RE STILL IN NEGOTIATIONS TO, TO, TO RECOVER IT. AND, UH, BASED ON THE RESPONSES WE GOT FAIRLY RECENTLY, UH, IT APPEARS THAT, UH, THE DISPUTE MIGHT BE MORE ABOUT HOW MUCH HAS ALL THE, WHETHER THEY'RE GOING TO GET ANY OF IT. OKAY. BUT BY TAKING THIS ACTION, ISN'T THAT CONFIRMATION THAT THEY NO LONGER EXPECT TO COLLECT THIS MONEY. AND IN ORDER TO COMPLY WITH GAP, THEY MADE THIS ADJUSTMENT AS THEY'RE REQUIRED TO DO. UH, THEY, THEY, THEY MADE AN ADJUSTMENT, UH, TO THEIR, TO THEIR FINANCIAL STATEMENTS, TO, TO, UH, RIGHT OFF THE BAT RECEIVABLE. UH, IF THEY DO COLLECT IT, THEN NOW THEY'LL JUST RE IN EFFECT, REVERSE THAT AND THE WRITE THAT AMOUNT BACK INTO REVENUES. AND SO IN THAT EVENT, HOW CUSTOMERS WOULD NOT BE HARMED WITH THEY? YES, THEY WOULD, BUT IT'S NOT. AND THEN FRIDAY, THEY WOULD WRITE BACK INTO FOR FINANCIAL PURPOSES AND THEY GET THE MONEY, BUT THE CUSTOMERS WHO PAYING RATES IT AS IF IT HADN'T BEEN COLLECTED AND THAT WOULD HAVE TO BE REFLECTED IN THEIR FINANCIAL STATEMENTS AS WELL. YEAH. BUT THAT WILL DO THE CUSTOMERS THAT NEED GOOD AGAIN, MR. NEPHRON. SO AUSTIN ENERGY HAS INDICATED THAT THEY DO NOT EXPECT TO COLLECT THIS, THE MONEY FROM THIS CUSTOMER, AND THEY HAVE MADE AN ADJUSTMENT, UH, PURSUANT TO GAP RULES. CORRECT. WELL, THERE'S TWO SEPARATE THINGS. ONE, THEY MADE AN ADJUSTMENT IN THE RIGHT CASE FOR THE PURPOSE OF DETERMINING THEIR REVENUE REQUIREMENTS. THAT'S ONE SIDE OF IT. THEY ALSO, AGAIN, UH, BASED ON THE, YOUR RESPONSES, WE GOT, THEY, THEY, THEY WROTE THIS OFF FOR OUR FINANCIAL REPORTING PURPOSES. UH, BUT THAT'S SEPARATE FROM WHAT HAPPENS IN THE RIGHT CASE. AGAIN, YOU MAKE THESE ADJUSTMENTS FOR FINANCIAL REPORTING AND SUBSEQUENTLY THEY CAN BE MODIFIED AS WELL. ALL RIGHT. AND SO YOU HAVE SOME INSIDE INFORMATION OR BELIEF OR EXPECTATION OR CONFIDENCE. I DON'T KNOW THE RIGHT WORD, THAT ALL SYNERGY IS GOING TO ACTUALLY COLLECT THIS WHEN THEY'RE THERE. UH OKAY. AND, AND, UH, ICA INFORMATION AT EIGHT DASH THREE, UM, BOSTON AREA, SHE WAS, UH, REQUESTED TO DESCRIBE, UH, EFFORTS TO RECOVER, TO BE DISPUTED, RATHER HEALED. UM, HERE'S WHAT THEY SAID. OH, I'LL JUST READ IT. WATSON ENERGY HAS BEEN ATTEMPTING TO RESOLVE THE DISPUTE WITH THE CUSTOMER IN ORDER TO RECEIVE WHOLE ATTACHMENT RENTAL REVENUE. THIS INCLUDES HAVING MULTIPLE MEETINGS WITH THE CUSTOMER. IN ADDITION, WESTERN ENERGY AS CONDUCTED AT AN INTERNAL COUNT OF POLES WITH CUSTOMER ATTACHMENTS TO SUPPORT CONTRACT DISCUSSIONS. WHAT I INFER FROM THIS IS THAT, UH, AUSTIN ENERGY STILL, UH, ASSIGN SOME PROBABILITY TO RECOVERING [04:55:01] THESE REVENUES. OTHERWISE THEY WOULDN'T BE HAVING ONGOING DISCUSSIONS. AND WHEN THEY SAY THEY THOUGHT THAT IN ENTITLE COW POLES WITH CUSTOMER ATTACHMENTS TO SUPPORT CONTRACT DISCUSSIONS, I INTERPRET THAT TO MEAN THAT THERE'S A DISPUTE ABOUT HOW MUCH IS ALL. ALL RIGHT. SO, BUT THE, THE CA THE NEGOTIATIONS ARE FOR FUTURE FINANCIAL, UH, RESPONSIBILITIES, NOT THE 1.8, RIGHT? YOUR HONOR. UH, NO, THAT'S NOT WHAT IT SAYS. BE DISPUTED REVENUE. WHAT RESPONSE ARE YOU LOOKING AT HERE, YOUR HONOR, MR. MERCADO IS DOING A LOT OF TESTIFYING. HE GET DISAGREED. OKAY. WAIT EVERYBODY, WAIT, WE HAVE AN OBJECTION OR A STATEMENT FROM ICA COUNCILMAN. I MEAN, IT MAY BE TOO LATE NOW, BUT I, I JUST FEEL THAT MR. MERCADO IS DOING A LOT OF TESTIFYING PUTTING OUT FACTS OUT THERE WHEN, YOU KNOW, IT COULD COME UP AND REBUTTAL. IT DOESN'T HAPPEN. YOU KNOW, IT'S, SOME OF HIS QUESTIONS ARE NOT EXACTLY QUESTIONS OTHER THAN STATEMENTS. I, I AM HEARING QUESTIONS FROM MR. VOLCANO. THE ONLY ISSUE THAT I HAVE MR. POLKA-DOT IS YOU'RE NOT GOING TO GET HIM TO AGREE WITH YOU ON THESE THINGS. FAIR ENOUGH. YOU KNOW? UM, AND THE REALITY IS I UNDERSTAND YOU GOT IT IN THE RECORD, WHAT YOU NEED, AND THEY'VE GOT WHAT THEY NEED. UH, BUT, BUT I, I DON'T WANT TO STEP ON YOUR CAR. NO, TOTALLY UNDERSTAND. BUT I BELIEVE THAT'S ALL I HAVE. LET ME JUST CONFIRM IT IS IN FACT, UM, THOSE ARE ALL I HAVE FOR YOU. THANK YOU, MR. NEPHRON. THANK YOU, RIGHT. THANK YOU, MR. MERCADO. UH, MR. COFFIN, REDIRECT. I HAVE NO REDIRECT. ALL RIGHT. WELL NOW, UM, MR. EFREN, THANK YOU VERY MUCH. WE APPRECIATE IT. AND YOU'RE RELEASED. THANK YOU. AND THANK YOU, UH, FOR ACCOMMODATING ANYBODY HAVING THE, UH, THE REMOTE SET UP HERE. OH, SURE. NO PROBLEM. OKAY. UM, ALL RIGHT, SO NEXT UP IS MR. JOHNSON, DO YOU NEED SOME TIME OR ARE WE READY TO CARRY ON? I THINK WE CAN GO. RIGHT. UM, AND MR. COPPIN, ANY PRELIMINARIES WITH MR. JOHNSON? SURE. THANK YOU. UH, JUST, I GUESS, PLEASE STATE YOUR NAME AND WHAT YOUR GO AHEAD. MY NAME IS CLARENCE JOHNSON. I RESIDE IN AUSTIN, TEXAS. I'M A CONSULTANT WHO SPECIALIZES IN UTILITY REGULATION. AND, UM, WHAT IS THE SUBJECT OF YOUR TESTIMONY HERE TODAY? UM, I HAVE AN INITIAL PRESENTATION, UH, ON BOTH REVENUE REQUIREMENT AND COST ALLOCATION RATE DESIGN, AND A CROSS REBUTTAL PRESENTATION. OKAY. DO YOU NEED TO MAKE ANY CORRECTIONS TO THOSE TESTIMONIES PRESENTATIONS? NO. OKAY. AND IF I ASK YOU THE SAME QUESTIONS, AS WE'RE ASKING THE Q AND A, IN THOSE PRESENTATIONS, WOULD YOUR ANSWERS BE THE SAME TODAY? YES. OKAY. UH, I OFFER MR. JOHNSON FOR CROSS EXAMINATION. ALL RIGHT. THANK YOU, MR. KAUFMAN, DOES ANYONE OTHER THAN AUSTIN ENERGY HAVE QUESTIONS FOR MR. THOMPSON? IT'S A I THE C OKAY. HER. ALL RIGHT. SO LET ME, I DIDN'T SEE DATA FOUNDRY DOES TWO WR HAVE ANY QUESTIONS? OKAY. SO I THINK DATA FOUNDRY. DID YOU HAVE ANY QUESTIONS? NO. ON HANDS OVER HERE. NO, I THINK THAT WAS MR. HUGHES. OKAY. MR. HUGHES, SORRY ABOUT THAT. UM, HER GOOD AFTERNOON, MR. JOHNSON, UH, ROGER WORK OUT FOR HER, UH, AS I UNDERSTAND YOUR TESTIMONY THAT YOU FILED, UH, YOUR SUGGESTING, UH, KEEPING THE OUT OF CITY RATES THE SAME AS THEY WERE SET IN THE LAST RATE CASE FOR THE TIME BEING. YES, BUT AS I UNDERSTAND IT, THE BASIS OF THAT IS SIMPLY THAT YOU'VE NOT DONE ANY ANALYSIS, NOR DO YOU KNOW OF ANY ANALYSIS THAT'S BEEN DONE THAT WOULD SUPPORT SETTING DIFFERENT RATES. AND SO THIS WOULD BE CONSIDERED KIND OF A PLACE HOLDER AS OPPOSED TO RATE SET ON ANY KIND OF A COST OF BASIS BASED ON AUSTIN ENERGY'S PROPOSAL. YES. UH, I BELIEVE THAT, UH, THERE WOULD NEED TO BE THAT THERE NEEDS TO BE A COST ANALYSIS IN ORDER TO SUPPORT, UH, A SEPARATE RATE SCHEDULE FOR, UH, THE OUTSIDE CITY RESIDENTIAL RATE. BUT YOU HAVEN'T DONE THAT COST ANALYSIS NOR DO YOU KNOW OF ANYONE WHO HAS NO, THE, THERE WERE, IT WOULD REQUIRE LOAD RESEARCH, UH, REGARDING [05:00:01] THE DEMANDS OF A PARTICULAR CUSTOMERS, UH, OUTSIDE THE CITY. SO NO BASIS, OTHER THAN THAT, THEY'RE JUST THE EXISTING RATES. YES. UH, IN, IN MY VIEW, UH, THE MOST PRUDENT COURSE OF ACTION IN A SITUATION WHERE, UH, THERE IS LITTLE TO NO COST INFORMATION, UH, IS TO MAINTAIN THE EXISTING RATE LEVEL, PASS THE WITNESS. ALL RIGHT. THANK YOU VERY MUCH. UM, SSC, ANYTHING? NO QUESTIONS, YOUR HONOR. ALL RIGHT. THANK YOU. SEPC NO QUESTIONS, YOUR HONOR. ALL RIGHT, NXP. YES, YOUR HONOR. MAY HAVE QUESTIONS. I'M GOING TO HAND THESE, UH, THESE ARE COPIES OF THE EXHIBITS THAT ARE ALREADY IN THE RECORD, BUT I WANT TO GIVE THEM TO HIM. SO HE, THEY'RE EASIER FOR HIM TO GET TO CERTAINLY THANK YOU. WELL, MR. JOHNSON, HELLO? UM, SAME, YOU GOT A COPY OF YOUR CROSS REBUTTAL TESTIMONY? YES. OKAY. UM, ON PAGE THREE, LINE 11 OF YOUR CROSS REBUTTAL, UM, YOU REFERENCE THE IMPACT, WHAT YOU BELIEVE TO BE THE IMPACT OF ERCOT DISPATCH ON CAUSE EIGHT ON COST CAUSATION IN OPPOSING THE AAE FOR CP THAT'S RECOMMENDED BY NXP AND T IEC, CORRECT? YES. OKAY. SO CAN I THEN ASSUME THAT IN YOUR OPINION, COST CAUSATION IS A KEY COMPONENT TO ALLOCATING PRODUCTION COSTS? YES. OKAY. AND IS THE GOAL USUALLY TO ASSIGN THOSE COSTS BASED ON HOW THE COSTS ARE CAUSED AND WHO'S CAUSING THEM? UH, I WOULD SAY IT WOULD, IT'S A IT'S BASED UPON, UH, THE CHARACTERISTICS OF THE COSTS AND, UH, WHAT MECHANISMS GO INTO CAUSING, UH, THE COST TO BE INCURRED TO VARY, BUT IT'S, IT'S A VALUE TO IDENTIFY HOW THEY'RE CAUSED. YEAH. OKAY. SO IN YOUR INITIAL PRESENTATION, YOU WERE PROPOSED USING THE BASELOAD AND INTERMEDIATE PEAKING METHOD OF ALLOCATING COSTS, CORRECT? YES. HAS THE, I'M GOING TO CALL IT, THE BIP HAS THE BIT METHOD OF PRODUCTION, COST ALLOCATION BEEN APPROVED FOR USE BY ANY ELECTRIC UTILITY IN THE STATE OF TEXAS? UH, NOT THAT I'M AWARE OF, BUT I'M, HAVEN'T REALLY PERFORMED A SURVEY TO DETERMINE OKAY. THAT QUESTION, BUT, UH, OKAY. THANK YOU. UM, HAS THE FORT E AS THE, A AND E FOR CP METHOD OF PRODUCTION, COST ALLOCATION BEEN APPROVED FOR USE BY UTILITIES IN TEXAS? YES. OKAY. ON PAGE THREE, LINE 15 OF YOUR CROSS REBUTTAL. THERE'S A QUESTION THERE ARE, YOU ARE TEXAS PUC DECISIONS ADOPTING THE AME FOR CP DISPOSITIVE OF THE APPROPRIATE ALLOCATION METHOD IN THIS PROCEEDING. UM, YOUR ANSWER ON PAGE ONLINE, 17 BEGINS P TEXAS PUC DECISIONS ARE RELEVANT TO SHOWING HOW THE TEXAS PUC HAS DECIDED OTHER ELECTRIC UTILITY CASES BASED ON THE FACTS OF THOSE CASES. YOU GO ON TO SAY ON LINE 21, THAT THE CITY OF AUSTIN HAS ORIGINAL JURISDICTION OVER THE RETAIL RATES SET IN THIS CASE. IS THAT CORRECT? YES. OKAY. UM, THERE WAS A CONVERSATION ABOUT THIS YESTERDAY, SO I'D BE SURPRISED IF YOU'RE NOT AWARE OF THIS, BUT YOU'RE. ARE YOU AWARE OF WHO HAS APPELLATE JURISDICTION OVER THE AUSTIN ENERGY RATE REVIEW DECISIONS MADE BY MADE BY THE CITY OF AUSTIN OR BY AUSTIN ENTERED BY THE CITY OF AUSTIN? WELL, TO THE EXTENT, UH, THERE IS AN APPEAL, UH, THE TEXAS PUBLIC UTILITY COMMISSION. UH I'M. I WOULD HAVE TO LOOK AT THE LAW TO BE CLEAR AS TO, UH, EXACTLY WHAT IS APPEALABLE AND BY WHOM, BUT, UH, IT IS THE PUBLIC UTILITY COMMISSION OF TEXAS CITIZEN. UM, I'M NOT, I'M NOT WORRIED ABOUT WHO HAS STANDING. I'M JUST SAYING IF, IF THERE IS AN APPEAL IT'S TO THE PUC, SO, YES. OKAY. THANK YOU. UM, AND I GUESS BASED ON YESTERDAY'S CONVERSATION, YOU'RE AWARE THAT IN 2012, AUSTIN ENTERED THE AUSTIN ENERGY RATE REVIEW WAS APPEALED TO THE PO THE PC. I BELIEVE THAT'S THE CASE. YES. OKAY. UM, SO I WANT TO REFER YOU NOW AND IT SHOULD BE IN FRONT OF YOU TO NXP EXHIBIT J W D FOR [05:05:04] YES. UM, BUT YOU LOOK AT PART SIX ON PAGE TWO OF THAT. THIS IS, UH, A COPY OF THE ORDINANCE PASSED IN 2012 BY THE CITY OF AUSTIN, BY THE AUSTIN CITY COUNCIL, WITH REGARDS TO THAT RATE CASE ON PART SIX. UM, WE READ PART SIX TO ME. THE COUNCIL OF OPS HAS POLICY, THE USE OF THE AA FOR CP METHODOLOGY TO ALLOCATE DEMAND COST AMONG CUSTOMER RIGHT CLASSES. OKAY. UM, ARE YOU AWARE OF WHETHER THE AUSTIN CITY COUNCIL HAS TO DATE REPEALED THIS 2012 ORDINANCE MAKING THE ALLOCATION METHOD, THE POLICY OF THE CITY COUNCIL? UH, I'M NOT AWARE OF ONE WAY OR THE OTHER, THE COUNCIL DID APPROVE A, ANOTHER RATE CASE IN 2006 SEVEN, IF YOU'RE NOT AWARE OF THIS PARTICULAR ORDINANCE BEING REPEALED. THAT'S MY QUESTION. THAT'S ALL I NEED TO KNOW. OKAY. THANK YOU. UM, AND NOW I WANT TO REFER YOU TO NXP EXHIBIT J W D R ONE. YOU'RE PROBABLY FAMILIAR WITH THIS ONE, TOO. IT GOT A LOT OF AIRTIME YESTERDAY. UM, AND I'D LIKE TO DIRECT YOU TO THE TOP OF PAGE 23. THIS EXHIBIT IS, UH, IS THE REBUTTAL TESTIMONY OF JOSEPH MANSON, NELLY ON BEHALF OF AUSTIN ENERGY IN THE AFOREMENTIONED, UH, APPEAL OF THE 2012 AG RATE CASE, WHERE YOU LOOK AT THE TOP OF 23 AND READ WHAT IT, READ THE QUESTION AND READ THE FIRST SENTENCE OF THE ANSWER. UM, ASSUMING I'VE GOT THE RIGHT PAGE HERE. UH, DIDN'T UH, A, UH, EXCUSE ME, DIDN'T H HE SERIOUSLY CONSIDERED USING THE BIP METHOD IN THE ALLOCATION OF GENERATION COSTS? YES. THE BIP METHOD HAS ALREADY BEEN THOROUGHLY VETTED AND REJECTED IN A LENGTHY PUBLIC PROCESS. IT'S DESCRIBED TO MY DIRECT TESTIMONY AS WELL AS THE DIRECT TESTIMONY OF MR. DREYFUS. OKAY. THANK YOU. SO LET'S GO ON NOW TO, WILL YOU GO TO PAGE FOUR LINE 10 OF YOUR CROSS REBUTTAL? YES. YOU ASKED THE QUESTION, IS IT REASONABLE TO MAKE A FACTUAL DISTINCTION BASED ON ERCOT SERVING AS THE REGIONAL TRANSMISSION ORGANIZATION? UM, AND IN YOUR ANSWER IN PART IS, UH, YES, PEC DECISIONS AND OTHER UNBUTTONED AND OTHER BUNDLED UTILITY CASES INVOLVE ELECTRIC UTILITIES WITHIN THE SOUTHWEST POWER POOL OR WESTERN ELECTRIC COORDINATING COUNCIL WEC, UH, ERCOT DIFFERS FROM THOSE REGIONS IN THAT IT OPERATES AN ENERGY ONLY MARKET IN WHICH THE VAST MAJORITY OF CONSUMPTION IS SUBJECT TO RETAIL COMPETITION. YOU SEE THAT PART? YES, YES. OKAY. YOU AWARE OF WHAT TYPE OF PRODUCTION DEMAND ALLOCATION METHODS ARE USED FOR TEXAS UTILITY IN SPP OR WIC? UM, YOU KNOW, I THINK YOU HAVE TO LOOK AT LITIGATED CASES. AND SO, UH, I THINK, UH, THERE, I KNOW THERE IS A LITIGATED CASE WHERE E A FOUR CP WAS ADOPTED FOR, UH, SOUTHWESTERN POWER POOL. UH, I AM NOT AWARE OF A LITIGATED CASE FOR WESTERN ELECTRIC COORDINATING COUNCIL BECAUSE THE EL PASO ELECTRIC COMPANY CASES, UH, HAVE ALL BEEN, UH, SETTLED CASES. OKAY, WE'LL GET TO THAT IN LATER. UM, AND THAT SAME ANSWER. YOU GO ON TO SAY SPP AND WEC INVOLVES MOSTLY STATE REGULATED BUNDLED ELECTRIC UTILITIES, WHICH PROVIDE RATE REGULATED RETAIL SERVICE AS A RATE REGULATED ENTITY. THESE RETAIL ELECTRIC UTILITIES HAVE RESPONSIBILITY TO PRUDENTLY MEET RESERVE MARGIN, RELIABILITY REQUIREMENTS FOR THEIR SERVICE AREAS WITHIN AN ERCOT. THE UNREGULATED ENERGY MARKET ENERGY MARKET IS SUPPOSED TO PRODUCE THAT PRODUCE PRICES THAT ENSURE SUFFICIENT GENERATION CAPACITY IS INSTALLED IN THE REGION. THEREFORE, HE CAN LOOK TO THE OVERALL ERCOT MARKET IN DECIDING HOW TO MEET ITS CAPACITY NEEDS RATHER THAN FOCUSING SOLELY ON THE AMOUNT OF CAPACITY IT OWNS TO MEET [05:10:01] SERVICE AREA DEMAND. IS THAT CORRECT? IS THAT SET YOUR ANSWER? YES. IS THAT YOUR QUESTION? UH, OR THAT THE ANSWER TO YOUR QUESTION? UM, OKAY. IN ERCOT, AUSTIN ENERGY IS CLASSIFIED AS A NON-OPTION ENTITY AND NOEY BECAUSE IT HAS CHOSEN NOT TO OPEN ITS SERVICE TERRITORY TO RETAIL COMPETITION AS ALLOWED BY PURA. IS THAT CORRECT? YES. AS A NOEY AUSTIN ENERGY IS ESSENTIALLY A RATE REGULATED BUNDLED ELECTRIC UTILITY, CORRECT? CORRECT. OKAY. DOES ERCOT CONTINUE TO MA DOES ERCOT CONTINUE TO MEASURE AUSTIN ENERGY'S CUSTOMERS LOAD REQUIREMENTS AT, AT ITS AT ITS WHOLESALE DELIVERY POINTS OR SUBSTATIONS? I'M NOT SURE I'M FOLLOWING WHAT YOU MEAN BY THAT QUESTION. WELL, W AT THE MS. IF YOU COULD REPHRASE IT YEAH. IS ERCOT DESPITE THE FACT THAT THERE ARE NO WAYS OR CUT STILL MEASURING THE LOAD REQUIREMENTS OF AUSTIN ENERGY'S CUSTOMERS AT ITS AT THE, AT ITS WHOLESALE DELIVERY POINTS OR SUBSTATIONS. OKAY. FROM MY KNOWLEDGE ERCOT, UH, DOES, UH, PREPARE A LOAD FORECAST AND, UH, YOU KNOW, UH, GENERATION SUPPLY TABLES AND STUDIES AND THEY INCLUDE THE CITY OF AUSTIN'S LOADS IN THERE. OKAY. SO, WELL, WE'LL TRY IT THIS WAY. AS A NOEY, DOES AUSTIN ENERGY HABITS OWN ERCOT WHOLESALE NOEY LOAD ZONE METERED AT ITS WHOLESALE DELIVERY POINTS OR SUBSTATIONS? UM, I'M NOT SURE THAT THAT MAY BE THE CASE. OKAY. W WOULD YOU AGREE THAT AUSTIN ENERGY SYSTEM PLANNERS ARE INCENTED IN THE ERCOT MARKET TO HAVE AMPLE CAPACITY ITS OWN AMPLE CAPACITY TO HEDGE ITS PEAK LOAD REQUIREMENTS AND OPERATING RESERVE COSTS? WELL, I'M SURE THAT'S A CONSIDERATION. UH, IT'S ULTIMATELY, UH, GOING TO INVOLVE, UH, AN ANALYSIS OF THE MARKET AND HOW THAT COMPARES TO, UH, THE EXPECTATION OF OWNING GENERATION AND THE COST OF THAT GENERATION. OKAY. WELL, WE'LL GET, WE'LL GET TO THAT. WOULD YOU AGREE TO THE TWO, WOULD YOU AGREE THAT TO THE EXTENT THAT I, AUSTIN ENERGY CAN OFFER ITS OWN GENERATION RESOURCES TO THE ERCOT DAY AHEAD MARKET TO PROVIDE ENERGY AND ANCILLARY SERVICES FOR OPERATING RESERVES, IT CAN HEDGE, THEN IT CAN HEDGE THE COST OF ITS PEAK LOAD REQUIREMENTS. UM, I, I AGREE THAT, UH, THE AUSTIN ENERGY GENERATION CAN, UH, ACT AS A PHYSICAL HEDGE. OKAY. SO HAVE YOU READ, UH, I'M ASSUMING YOU'VE READ AUSTIN ENERGY'S RATE FILING PACKAGE AND THEN THEIR REBUTTAL TESTIMONY AS WELL. OKAY. SO BASED ON THE TESTIMONY THAT'S BEEN PRESENTED FOR AUSTIN ENERGY IN THIS CASE, IS IT AUSTIN ENERGY STRATEGY TO HEDGE ITS PEAK LOAD REQUIREMENTS IN THE ERCOT MARKET? UM, THAT'S WHAT, UH, MR. BURNHAM, UH, I, I BELIEVE THAT'S HIS NAME, SAM. HE, HE S HE ALLUDED TO THAT AS WELL YESTERDAY. SOME TOO, I BELIEVE. YEAH. OKAY. IF A WAS TO LOOK TO THE OVERALL ERCOT MARKET TO MEET ITS CAPACITY NEEDS THAT YOU SUGGEST IS, UH, IS POSSIBLE FOR THEM SUCH AS CHOOSING TO PURCHASE ENERGY AND ANCILLARY SERVICES FROM THE MARKET DAY AHEAD, MARKET WOULD, AND THEN BE HEDGED FOR ITS PEAK LOAD REQUIREMENTS RATHER THAN USING ITS OWN. UM, UH, I'M NOT SURE OF THAT, THAT THAT'S, UH, UH, SOMETHING I'D HAVE TO THINK ABOUT. I'M NOT SURE. OKAY. UM, IF HE WAS NOT HEDGED, WOULD IT PAY THE ERCOT MARKET PRICES FOR THAT PORTION OF THEIR PEAK LOAD REQUIREMENTS FOR ENERGY AND ANCILLARY SERVICES? UH, YES. AND THOSE PRICES COULD BE PRETTY HIGH DEPENDING ON RESOURCE SCARCITY AT THE TIME. YEAH. THEY COULD BE HIGHER, THEY COULD BE LOW. OKAY. HAS AAE LOOKED TO THE OVERALL MARKET TO MEET ITS CAPACITY NEEDS OR HAS IT CHOSEN TO HEDGE ITS PEAK LOAD CAPACITY REQUIREMENTS BASED ON THEIR TESTIMONY IN THIS CASE? UM, I UNDERSTAND, UH, UH, THAT IS THEIR TESTIMONY. YES. UH, I WOULD NOTE THAT IT'S ACTUALLY TWO SEPARATE PROCESSES HERE. ONE OF WHICH IS SELLING THE GENERATION INTO THE MARKET AND THAT'S AN ECONOMIC DECISION. AND, UH, UH, OF COURSE THE, UH, SECOND [05:15:01] STEP IS, UH, BUYING POWER OFF THE MARKET. AND THOSE ARE TWO SEPARATE STEPS, BUT I'M ADDRESSING WHAT AUSTIN ENERGY'S CURRENT STRATEGY IS. I MEAN, THEY CORRECT. UH, ALL I, ALL I CAN SAY IS THAT, UH, I THINK MR. BURNHAM STATED SOMETHING TO THAT EFFECT. I, I'M NOT SURE IT WAS VERY SPECIFIC, BUT YES THAT'S. OKAY. I UNDERSTAND SOMETHING TO THAT EFFECT. OH, I THINK THERE WAS ALSO WRITTEN TESTIMONY, BUT OKAY. WE'LL MOVE ON. SO IF AUSTIN ENERGY IS A BOLDED ELECTRIC UTILITY, WHICH YOU HAVE CONFIRMED, WHICH PROVIDES RATE REGULATED RETAIL SERVICE OPERATING WITHIN AN RTO MARKET, AND THEY'RE DOING SO TO HEDGE ITS P THEIR PEAK LOAD AND ANCILLARY SERVICE REQUIREMENTS IS AN AUSTIN ENERGY. SIMILARLY, SITUATED TO THE STATE REGULATED BUNDLED UTILITIES AND WEC AND SPP AND MISO FOR THAT MATTER, WHICH PROVIDE RATE REGULATED RETAIL SERVICE. UH, NO, BECAUSE THE MARKETS IN MY SOUL, UH, SPP, UH, AND MAYBE SOME DEGREE WECC ARE, UH, MARKETS THAT ARE BASED UPON, UH, UTILITIES THAT OWN GENERATION AND ARE, UH, UH, SELLING GENERATION IN THE MARKET TO SERVE THEIR OWN LOADS. AND THAT MARKETS STRUCTURE IN THE MARKET PRICES ARE GONNA BE QUITE DIFFERENT THAN A MARKET LIKE ERCOT, WHERE THE VAST MAJORITY OF GENERATION THAT IS OWNED IN THE MARKET IS NOT TIED DIRECTLY TO RETAIL, UH, SERVING ENTITIES, DO THOSE UTILITIES OWN THEIR OWN GENERATION, AND DO THEY OWN THEIR OWN GENERATION? WHICH UTILITIES ARE YOU TALKING ABOUT? THOSE THAT ARE IN WEC SPP, AND I'LL EVEN LEAVE MY SO OUT. UH, AS FAR AS I KNOW, MOST OF THEM DO, OBVIOUSLY THERE, THEY MAY PURCHASE POWER, UH, JUST THEY CALL UTILITIES, PURCHASE POWER, BUT THEY'RE ALSO, THEY ALSO BUY POWER FROM THE REST OF THE MARKET AS WELL. UH, YES. OKAY. SIMILAR TO WHAT, WHAT AUSTIN ENERGY DOES. THEY HAVE THEIR OWN GENERATION AND THEY SELL INTO IT AND THEY BUY OUT OF IT. WOULD THAT BE, WOULD THAT BE CORRECT? ON A SURFACE LEVEL? IT MAY HAVE IT THAT'S A CORRECT STATEMENT. I, I DISAGREE IN TERMS OF THE EXTENT THAT THE MARKETS ARE SIMILAR OR THE SAME. OKAY. I'LL GRANT YOU THAT YOU DISAGREE. UM, SO EL PASO ELECTRIC, YOU MENTIONED THEM EARLIER, THEY'RE, THEY'RE A STATE REGULATED, BUNDLED UTILITY, AND THEY'RE IN WEC, IS THAT CORRECT? YES. AND YOU RECENTLY SERVED AS AN EXPERT WITNESS IN THAT AND THEIR EL PASO ELECTRIC'S MOST RECENT RATE CASE, CORRECT? YES. IN THOSE, IN THAT CASE, IN YOUR TESTIMONY, DID YOU OPPOSE THE USE OF THE A AND E FOR CPE ALLOCATION METHOD? I, UH, STATED FIRST THAT MY PREFERENCE WAS TO USE AN ENERGY BASED METHOD, BUT IN ORDER TO REDUCE THE AREAS OF DISPUTE IN THE CASE THAT I WAS, I WAS IN SUPPORT OF THE, A AND D FOR CP IS CALCULATED BY ALL PASO ELECTRIC. OKAY. UM, WE TALKED A LITTLE EARLIER AND THERE WAS A LONG BACK AND FORTH YESTERDAY WITH REGARDS TO AUSTIN ENERGY'S USAGE. UM, AND WE HAVE A, THERE'S A NXP CROSS EXHIBIT NUMBER 16, WHICH IS, UH, AUSTIN ENERGY'S RESPONSES TO NXP RFI ONE DASH THREE. UM, I'VE MADE A DEMONSTRATIVE, UH, CHART FOR YOUR USE, UH, MR. JOHNSON, JUST TO MAKE IT SIMPLER. SO WE DON'T HAVE TO LOOK AT A BUNCH OF LINES. UM, AND I WILL NOTE THAT IN THE I'VE TALKED TO A AUSTIN ENERGY AND, AND, UH, THE, THE ACTUAL EXHIBIT, THE ACTUAL RFI RESPONSE, UM, IF YOU LOOK AT PAGES TWO THROUGH FOUR, UH IT'S, UH, ONE OF THOSE COLUMNS SAYS AG NET LOAD AN HOUR OF PEAK AND DEMAND, AND IT HAS AN IN PARENTHESES MEGAWATT HOURS THAT SHOULD BE MEGAWATTS. AND I BELIEVE THAT, UH, AUSTIN ENERGY HAS CONFIRMED THAT. SO, BUT THE, THE DEMONSTRATIVE TABLE YOU HAVE ACTUALLY USES MEGAWATTS. SO I JUST WANTED TO MAKE THAT CLARIFICATION. DO YOU, DO YOU HAVE THAT IN YOUR HAND? YES. OKAY. UM, SO WHAT THIS CHART SHOWS IS ESSENTIALLY WHICH MONTHS ARE THE PEAK DEMAND MONTHS IN AUSTIN ENERGY SERVICE TERRITORY. AND I THINK THAT IT'S, WOULD YOU AGREE THAT IT'S THAT BASED ON THIS CHART IT'S, UH, MONTHS SIX THROUGH NINE, BASICALLY JUNE THROUGH SEPTEMBER. [05:20:01] UH, THAT'S WHAT THE CHART INDICATES, UH, UM, WERE YOU HERE FOR THE DISCUSSION YESTERDAY AS WELL, BACK AND FORTH BETWEEN MR. HALLMARK AND MR. BURNHAM WITH REGARDS TO AUSTIN ENERGY'S LOAD? YEAH, I WAS HERE. I DON'T KNOW IF I SPECIFICALLY REMEMBER THAT CONVERSATION, BUT, UH, UH, OKAY. UM, IT WAS ROBUST. UM, BUT WOULD YOU AGREE THAT AT LEAST FOR BASED ON THIS HISTORICAL DATA AND AUSTIN ENERGY'S OWN TESTIMONY THAT THEY VIEW THEMSELVES AS A SUMMER PEAKING TERRITORY SERVICE TERRITORY, OR SOME SUMMER PEAKING SYSTEM? UH, WHAT'S THE QUESTION, WOULD YOU AGREE WITH THAT? WOULD YOU, I AGREE THAT THIS CHART WOULD INDICATE THAT I DO HAVE A CONCERN ABOUT THAT STATEMENT WITH RESPECT TO 2021, UM, THE FEBRUARY YES. WHICH IS STILL BELOW THE SUMMER MONTHS. YES. BUT THE M IF THERE HAD NOT BEEN OUTAGES, UH, THAT COULD WELL HAVE BEEN THE PEAK MONTH, UH, ERCOT HAS ESTIMATED THAT, UH, BECAUSE OF THE OUTAGES IN FEBRUARY OF 2021, THE PEAK IN THAT MONTH WOULD HAVE BEEN 77,000 MEGAWATTS. LET ME, LET ME, LET ME, WHICH IS, UH, WHICH WOULD HAVE BEEN, LET ME TALK ABOUT THAT. LET ME TALK ABOUT THAT FOR JUST A SECOND. OKAY. SO IF THAT'S THE CASE, IF HYPOTHETICALLY, IF AUSTIN ENERGY WAS BUILDING ITS SYSTEM AND SUPPLYING AND CR UH, PROCURING ITS SUPPLY BASED ON FEBRUARY, UH, FEBRUARY LOAD, UM, DO YOU THINK THAT THEY WOULD HAVE MET THE PEAK AT THAT THEY WOULD HAVE HAD ENOUGH POWER IN FEBRUARY OF 2021, OR IS IT A GOOD THING THAT THEY HAD USED THE SUMMER MONTHS TO BUILD THEIR SYSTEM AS THE, FOR, AND BASED IT ON SUMMER PEAKING SO THAT THEY ACTUALLY HAD ENOUGH SUPPLY AT THE TIME? SO YOUR QUESTION IS, UH, IF THEY HAD USED A FORECAST OF MY QUESTION, IS, IS IT FORTUNATE THAT THEY ARE USING SUMMER PEAKS TO DETERMINE WHAT THEIR ACTUAL PEAKS ARE SO THAT THEY CAN MEET THE NEEDS OF THOSE ANOMALIES, LIKE WINTER STORM ERIE? UH, I CANNOT SAY THAT, NO. OKAY. UM, SO TO THAT EXTENT, HAVE THE AUSTIN ENERGY SYSTEM PLANNERS, HAVE THEY SELECTED AND BUILT OR PURCHASED, UH, THEIR PORTFOLIO OF GENERATION CAPACITY TO HEDGE FOR THE ULTIMATE CEASED SYSTEM PEAK DURING THE SUMMER MONTHS WITH THE RESERVE CUSHION FOR CONDITIONS THAT MEET THAT MAY EXCEED THE FORECASTED SUMMER PEAK KIND OF GOES ALONG WITH WHAT WE JUST TALKED ABOUT. UM, YOU KNOW, I WOULD SAY THAT, UH, I WOULD DEFER TO AUSTIN ENERGY TO STATE WHAT THEIR POSITION IS AS TO HOW THEY DO IT. I, UH, I AGREE WITH YOU THAT THAT IS, SEEMS TO BE CONSISTENT WITH WHAT WE HAVE BEEN SAYING. OKAY. UM, IS THAT SAME ENERGY PORTFOLIO OF GENERATION CAPACITY THAT IS SIZED TO MEET THE ULTIMATE SYSTEM PEAK DURING SUMMER MONTHS? IS THAT ALSO THE SAME PORTFOLIO OF GENERATION CAPACITY THEY USE TO HEDGE FOR OTHER MONTHS OF THE YEAR? YES. OKAY. WOULD IT BE TRUE THAT THE HEDGE BENEFITS THROUGHOUT THE YEAR FROM A EASE CAPACITY PORTFOLIO APPROPRIATELY FLOW TO THE CUSTOMER CLASSES THROUGH AUSTIN ENERGY'S PSA ON AN ENERGY BASIJ BASIS, WHICH IS NOT A PART OF THIS, THIS PARTICULAR RATE REVIEW? THE, WOULD YOU REPEAT THAT QUESTION? I SAID, WOULD IT BE TRUE THAT THE HEDGE BENEFITS THROUGHOUT THE YEAR FOR A CAPACITY PORTFOLIO APPROPRIATELY FLOW TO THE CUSTOMER CLASSES THROUGH AUSTIN AND ENERGIES PSA ON AN ENERGY BASIS, WHICH IS NOT PART OF THE 20, 21 BASE RATE REVIEW? YES. OKAY. SO IF THE AUSTIN ENERGY PORTFOLIO OF GENERATION CAPACITY SIZE TO HEDGE FOR THE ULTIMATE AUSTIN ENERGY SYSTEM PEAK DURING SUMMER MONTHS, ISN'T IT TRUE THAT THE COST CAUSATION OF THE AUSTIN ENERGY PORTFOLIO OF GENERATION CAPACITY IS THE AEA SYSTEM PEAK THAT HISTORICALLY OCCURS DURING THE SUMMER MONTHS? UH, NO, I WOULD NOT AGREE WITH THAT BECAUSE COST CAUSATION WOULD, WOULD INCLUDE A DETERMINATION OF WHAT PLANTS YOU ACQUIRE, WHAT POWER YOU ACQUIRE, AND THAT'S AN ECONOMIC ISSUE, [05:25:01] AS WELL AS A, YOU KNOW, PURE PHYSICAL MEGAWATT ISSUE. WELL, IT SEEMS TO, IT SEEMS TO HAVE AN IMPACT ON AUSTIN ENERGIES ON HOW THEY PROCURE THEIR POWER, HOW THEY DETERMINE WHAT ASSETS THEY WANT TO BUY, WHAT ASSETS THEY WANT TO BUILD. SO IT DOES SEEM TO HAVE, HAVE, HAVE A DIRECT IMPACT ON THEIR PLANNING, WHICH WOULD YOU NOT AGREE WITH THAT? WELL, I HAVEN'T SAID THAT, UH, UH, THE EX YOU KNOW, THE FORECAST OF, UH, PEAK DEMAND DOESN'T AFFECT THEIR DECISION. I'M JUST SAYING THAT THE, THAT IN TERMS OF COST CAUSATION, THE TOTAL SCOPE OF COST CAUSATION INCLUDES, UH, THE ECONOMICS OF THE PLANTS THAT YOU ACQUIRE. OKAY. NUMBER FOUR, THE QUESTIONS, YOUR HONOR. ALL RIGHT. THANK YOU VERY MUCH. UM, MS. COLEMAN, UH, YOU'RE UP NEXT? DO WE NEED TO TAKE A SHORT BREAK OR ARE WE READY TO GET STARTED? IT MIGHT BE HELPFUL JUST CAUSE MR. HUGHES COVERED A FEW OF MY QUESTIONS. I COULD PROBABLY CUT BACK SOME, LET'S TAKE FIVE TO 10 OR OFF THE RECORD BACK ON THE RECORD. UH, MS. COLEMAN, ARE YOU READY? YES, I AM. THANK YOU. UM, MR. JOHNSON, I SHOULD HAVE CHECKED THIS ON THE BREAK. I APOLOGIZE. BUT DO YOU HAVE A BINDER RIGHT TO YOU? THAT'S T I SEATS EXHIBITS. OKAY. I MIGHT REFERENCE THAT. OKAY. SO I'M GOING TO PICK UP ON THE SAME TOPIC MR. HUGHES WAS TALKING TO YOU ABOUT, WHICH IS YOUR PROPOSED ALLOCATION METHODOLOGY FOR PRODUCTION PLANT. UM, AND IS IT A FAIR CHARACTERIZATION THAT THE MAIN DIFFERENCE BETWEEN WHAT YOU'RE PROPOSING AND WHAT MR. POLLOCK IS PROPOSING IS THE WEIGHT THAT'S GIVEN TO YEAR ROUND ENERGY USAGE IN THAT ALLOCATION AS COMPARED TO PEAK DEMAND USAGE, CLARENCE, WILL YOU TOTALLY IN YOUR MIND, UM, AT A HIGH LEVEL, I THINK THAT'S CORRECT. OKAY. AND YOU'RE PROPOSING ESSENTIALLY THAT TO WAIT YEAR-ROUND ENERGY USAGE MUCH MORE HEAVILY THAN PEAK DEMAND USAGE, SO FAIR. UH, IT ENDS UP BEING WEIGHTED, UH, MORE BECAUSE OF, UH, UH, THE AMOUNT OF BASELOAD CAPACITY THAT IS OWNED BY, UH, AUSTIN ENERGY. AND TO THAT POINT, LOOKING AT, UM, PAGE 27 OF YOUR DIRECT, YOU'VE GOTTEN NEARLY 80% OF AUSTIN ENERGY'S TOTAL GENERATION INVESTMENT ALLOCATED AS BASE PLANT. IS THAT RIGHT? YES. OKAY. AND THAT'S ALL THAT YOU'RE PROPOSING TO ALLOCATE ALL OF THAT ON A PURE ENERGY BASIS, AVERAGE DEMAND. YES. WHICH IS THE SAME AS ENERGY MATHEMATICALLY. YES. OKAY. UM, AND IS IT ALSO TRUE THAT SOME PORTION OF THE PLANT THAT YOU CATEGORIZE AS INTERMEDIATE IS ALSO ALLOCATED BASED ON ENERGY? UM, YES. BASED ON THE ACTUAL USE TEACHER CAPACITY FACTOR OF THE INTERMEDIATE PLANTS. OKAY. SO SOMEWHERE NORTH OF 80% WOULD BE ALLOCATED ON YEAR-ROUND ENERGY USAGE. YES. WOULD YOU AGREE THAT IF A UTILITY HAS ENOUGH INSTALLED GENERATING CAPACITY TO SERVE ITS ABSOLUTE PEAK DEMAND, THAT IT WILL NECESSARILY HAVE ENOUGH GENERATION TO SERVE AVERAGE DEMAND? UH, AS A GENERAL STATEMENT? THAT'S TRUE. I'M SURE THERE COULD BE SITUATIONS WHERE, UH, YOU KNOW, YOU HAVE, UH, OUTAGES AT PLANTS AND SO FORTH AND IT COULD TURN OUT TO BE SOMETHING DIFFERENT, BUT YEAH, I, AS A GENERAL STATEMENT, THAT'S CORRECT. OKAY. I'LL CAVEAT IT WITH ASSUMING EVERYTHING'S OPERATING. OKAY. AND CONVERSELY, IF A UTILITY HAS ONLY ENOUGH GENERATION TO SERVE AVERAGE DEMAND, YOU WOULD AGREE THEY WOULD NOT HAVE SUFFICIENT GENERATION TO SERVE PEAK DEMAND. UM, AGAIN, YEAH, AGAIN, THAT WOULD DEPEND ON IF THE UTILITY CAN GO TO THE MARKET AND ACQUIRE, UH, CAPACITY, UH, AND ACQUIRE ENERGY IN THE MARKETPLACE. UH, I'M NOT SURE THAT STATEMENT'S CORRECT. OKAY. I'LL CLARIFY WITH, WITH ONLY THE GENERATION THEY OWN, IS THAT STATEMENT CORRECT? OH, YES. OKAY. UM, IF YOU CAN LOOK AT, UH, WHAT SPARKED AND ADMITTED AS TIC EXHIBIT 17, WHICH IS YOUR RESPONSE TO OUR RFI ONE DASH ONE TO ICA OKAY. I [05:30:01] MUST HAVE THE WRONG ONE HERE. WHAT WOULD YOU REPEAT AGAIN? WHAT IT IS? IT'S EXHIBIT NUMBER 17 AND IT'S ICA RESPONSE TO TIC FIRST REQUESTS FOR INFORMATION ONE DASH ONE. YOU SEE THAT? YES. OKAY. AND, UM, THE QUESTION THAT WE HAD ASKED YOU WAS IDENTIFY ALL REGULATORY DECISIONS IN A TEXAS ELECTRIC UTILITY REGULATORY PROCEEDING WHERE YOUR BASE INTERMEDIATE PEAK METHOD WAS ADOPTED. DO YOU SEE THAT? YES. OKAY. AND YOU ANSWERED, UM, YOU'RE NOT AWARE THAT IT'S EVER BEEN ADOPTED IN A TEXAS PUC PROCEEDING. DO YOU SEE THAT? WHICH, WHICH IS A LITTLE NARROW OR ANSWER THAN WHAT WE WERE ASKING. AND SO I'M HOPING THAT YOU CAN CLARIFY, ARE YOU AWARE OF ANY NON PUC PROCEEDINGS WHERE THIS WAS ADOPTED FOR A TEXAS UTILITY? I'M NOT AWARE OF IT. OKAY. THANK YOU. IS THE MAIN DIFFERENCE BETWEEN THE, UM, YOU YOU'VE NEVER ACTUALLY PROPOSED THIS SPECIFIC VERSION OF THE BASE INTERMEDIATE PEAK METHODOLOGY BEFORE, IS THAT CORRECT? UH, I HAVE PROPOSED IT IN THE PREVIOUS. I PROPOSED A BIP METHOD IN THE PREVIOUS, UH, AUSTIN ENERGY RATE REVIEW. OKAY. WAS IT THIS EXACT METHOD? NO. OKAY. UM, AND YOU'VE PROPOSED SOME OTHER METHODS IN PUC PROCEEDINGS WHERE YOU CATEGORIZE, UM, PRODUCTION PLANT BY THIS BASE, INTERMEDIATE AND PEAK CATEGORY. IS THAT RIGHT? UM, NOT EXACTLY. NOT THAT I CAN RECALL. OKAY. WELL, IT IS THE DIFFERENCE BETWEEN THIS ALLOCATION METHODOLOGY AND WHAT YOU'VE PROPOSED BEFORE THAT HERE YOU'RE ACTUALLY YOU'RE ALLOCATING THE PLANT ITSELF. AND IN PRIOR CASES YOU WERE ACTUALLY CATEGORIZING THE DEMAND IN THOSE THREE CATEGORIES? UM, NO, NOT THAT I, NOT THAT I CAN THINK OF. I CAN'T THINK OF, I HAVE PROPOSED A NUMBER OF METHODS, BUT I CAN'T THINK OF ONE THAT WOULD MEET THAT DESCRIPTION. OKAY. LET ME, UM, CAN YOU LOOK AT ITS TIC EXHIBIT NUMBER 20? OKAY. AND, UM, THIS IS AN EXAMINERS REPORT FROM AN EL PASO ELECTRIC CASE, UH, BEFORE THE PUC, DO YOU RECOGNIZE IT AS THAT? UM, I MAY BE ABLE TO SHORT CIRCUIT THIS A LITTLE BIT. UH, I AM NOT THE MR. JOHNSON THAT'S REFERENCED IN THIS, THIS EXAMINERS REPORT THAT IT HAS BEEN JOHNSON, WHO IS, WAS A FLORIDA CONSULTANT. OKAY. UM, WELL, I'M NOT SURE IT MATTERS, BUT THANK YOU FOR THAT CLARIFICATION. UM, OKAY. IN THIS PROCEEDING, UM, UH, DIFFERENT MR. JOHNSON, UM, I'LL POINT YOU TO, UM, LET ME SEE WHERE THE PARTICULAR OKAY. UM, SORRY, LET ME FIND MY REFERENCE POINT HERE. OKAY. ON PAGE THREE, BAITS OF THAT DOCUMENT, WHICH IS 1 93 INTERNALLY, ARE YOU THERE? YES. OKAY. THE SECOND FULL PARAGRAPH THERE DESCRIBING THE DIFFERENT MR. JOHNSON'S ALLOCATION METHODOLOGY. AND DO YOU SEE WHERE THEY DESCRIBE IT AS AN UNNAMED THREE TIERED METHODOLOGY? UM, THAT DIVIDES PEAK DEMAND INTO THREE TIERS BASE, MID RANGE AND PEAK. DO YOU SEE THAT? YES. OKAY. DOES THAT SOUND SIMILAR TO WHAT YOU'RE PROPOSING? UM, I SUPPOSE SO I, WITHOUT SEEING DR. JOHNSON'S TESTIMONY, I HAVE A LOT OF DIFFICULTY ANSWERING THE QUESTION THOUGH. HE MAY MEAN SOMETHING TOTALLY DIFFERENT THAN THE WAY I'M THINKING OF IT, BUT, OKAY. AND DO YOU AGREE THAT THERE IS OFTEN A RELATIONSHIP BETWEEN, UM, CAPITAL COSTS AND FUEL COSTS FOR A GENERATION PLAN INVESTMENT? THERE'S A DIFFERENCE. I'M SORRY. I MISSED THE FIRST PART OF THAT QUESTION. OKAY. LET ME, LET ME RESTATE IT A DIFFERENT WAY. UM, DO YOU AGREE THAT WHEN A UTILITY IS MAKING A GENERATION INVESTMENT, THEY LOOK AT THE TOTAL EXPECTED COST TO CUSTOMERS BASED ON THE EXPECTED CAPACITY FACTOR FOR THE PLANT? [05:35:03] UH THAT'S ONE WAY THEY CAN LOOK AT IT. YES. SO FOR EXAMPLE, A BASELOAD PLANT, UM, THAT'S A PLANT THAT'S EXPECTED TO RUN QUITE OFTEN AND HAVE A HIGH CAPACITY FACTOR, CORRECT? YES. OKAY. AND IT'S OFTEN THE CASE THAT THOSE PLANTS MIGHT HAVE A HIGHER UPFRONT CAPITAL COST BECAUSE THEY'RE GOING TO HAVE A LOWER FUEL COST AND THEY'RE GOING TO RUN VERY OFTEN AT THAT LOWER FUEL COST. IS THAT CORRECT? CORRECT. OKAY. AND CONVERSELY PEAKING PLANTS OFTEN HAVE A LOWER CAPITAL COST, UM, AND THAT JUSTIFIES A HIGHER OPERATING COST. OKAY. DO YOU AGREE THAT, UM, A PLANT THAT MIGHT INITIALLY BE, LET'S SAY AN INTERMEDIATE PLANT, UM, LIKE A, LIKE A GAS PLANT OVER TIME THAT PLANT MAY RUN LESS OFTEN AS IT BECOMES LESS EFFICIENT? YES. AND SO IT COULD, IT COULD OVER THE LIFE OF THE PLANT BE USED PRIMARILY TO SERVE, BE USED LATER, PRIMARILY TO SERVE PEAK DEMAND AS OPPOSED TO BASED DEMAND. YES. AND TO, I GUESS, ADD TO MY PREVIOUS STATEMENT, IT'S NOT JUST AT THE PLANT ITSELF BECOMES LESS EFFICIENT, BUT MORE THAT OTHER PLANTS THAT ARE MORE EFFICIENT, UH, COME ON. SURE. THANK YOU FOR THAT CLARIFICATION. UM, BUT YOUR, YOUR METHODOLOGY ALLOCATES COST JUST BASED ON THE CATEGORIZATION OF THE PLANT WHEN THE INVESTMENT IS MADE, IS THAT CORRECT? UM, IT'S BASED ON, UH, THE T IT'S BASED ON THE TYPE OF PLANT IT IS AND WHAT THE EXPECTED USE OF THOSE TYPES OF PLANTS ARE. AND IN THIS CASE, UH, IT'S HELPFUL THAT, UH, AUSTIN ENERGY HAS PREVIOUSLY, UH, IDENTIFIED, UH, QUICK START PLANTS, UH, WHICH CAN BE DIFFERENTIATED FROM, UH, THE COMBINED CYCLE GAS PLANTS, STEAM GAS PLANTS, WHICH THEY DON'T HAVE A STEAM GAS PLANT ANYMORE. BUT, UH, UH, BECAUSE YOU CAN, THOSE, YOU CAN IDENTIFY THOSE PLANTS IN THAT MANNER, QUICK START VERSUS, UH, THE COMBINED CYCLE OR STEAM GAS PLANT, YOU CAN DELINEATE BETWEEN PEAK AND, AND, UH, INTERMEDIATE. OKAY. BUT WHEN YOU DO YOUR APPLICATION, YOU JUST LOOK AT THE ORIGINAL UNDEPRECIATED PLANT BALANCE OF THE ORIGINAL INVESTMENT, CORRECT? YES. OKAY. UM, SO I'M GOING TO POINT YOU BACK TO WHERE WE WERE JUST LOOKING AND DOCK AT 7 4 6 OH. UM, THAT SAME PAGE. AND THIS IS THE FOURTH PARAGRAPH DOWN AND HEAR THE HEARING EXAMINER. I'LL READ IT, UM, AGAIN, CRITICIZING A DIFFERENT DR. JOHNSON'S APPROACH, BUT THAT HAS THE SAME THREE TIERED, UM, THREE TIER CHARACTER THAT THE DR. JOHNSON'S PROPOSALS HAVE BEEN ATTACKED ON THE BASIS THAT HIS GENERAL APPROACH WHILE ALLOCATING THE HIGH CAPITAL COSTS ASSOCIATED WITH BASE LOAD UNITS, BASED ON KILOWATT HOUR SALES ENERGY DID NOT THEN ALLOCATE THE HIGH FUEL COSTS ASSOCIATED WITH PEAKER UNITS BASED ON KILOWATT DEMAND. DO YOU SEE THAT? ARE YOU STILL ON OH, 3:00 AM ON BETA OH THREE. YES. THE FOURTH FULL PARAGRAPH DOWN. OKAY. YES, I SEE THAT. OKAY. AND IS, IS THAT ALSO TRUE OF THE METHODOLOGY THAT YOU'RE PROPOSING THAT THE FUEL COSTS OF BASELOAD PLANTS AS WE JUST DISCUSSED, TEND TO BE LOWER, AND THE FUEL COSTS OF PEAKING PLANTS TEND TO BE HIGHER, BUT YOU'VE NOT, YOU'VE NOT PROPOSED ANY ADJUSTMENT TO HOW FUEL COSTS ARE ALLOCATED. I HAVE NOT PROPOSED. AND IT JUST, BUT, BUT, UH, IN PART, BECAUSE THAT ADJUSTMENT IN TERMS OF FUEL COSTS WOULD BE MADE IN THE, UH, PSA, WHICH IS OUTSIDE THE SCOPE OF THIS PROCEEDING. BUT, UH, I DO BELIEVE IF MY METHOD WERE ADOPTED THAT, UH, AUSTIN ENERGY COULD CONDUCT ITS RECONCILIATION AND THE PSA IN A WAY THAT ADDRESSES THIS ISSUE. OKAY. SO YOU AGREE THAT SOME ADJUSTMENT TO THE FUEL ALLOCATION WOULD BE NECESSARY? YES. AND BASICALLY IF THE FUEL RECONCILIATION, THE RECONCILIATION OF THE PSA IS CONDUCTED IN THE SAME MANNER THAT THE PUC CONDUCTS ITS FUEL [05:40:01] RECONCILIATIONS, UH, IT SHOULD ADDRESS THAT PROBLEM. SO YOU'RE PROPOSING THAT BETWEEN NOW AND THE NEXT FUEL RECONCILIATION, THE FUEL TREATMENT WOULD STAY THE SAME, BUT THIS ALLOCATION, THIS PRODUCTION PLAN ALLOCATION WOULD BE IN PLACE, CORRECT? YES. I HAVE NO WAY OF KNOWING WHEN THEIR NEXT RECONCILIATION IS PLANNED. UH, I, I HAVE TRIED TO GET THE TARIFFS, BUT, UH, UH, I S I ASSUME IT'S WITHIN THE NEXT YEAR, BUT OKAY. AND I THINK WE DISCUSSED EARLIER, UM, THAT FOR ALLOCATING BOTH BASE, WHAT YOU CATEGORIZE AS BASE PLANT AND INTERMEDIATE PLANT, BOTH OF THOSE CATEGORIES INVOLVE IN AN ENERGY ALLOCATOR, IS THAT CORRECT? YES. OKAY. AND CAN YOU LOOK NOW AT IT'S BATES? OH, OH, SEVEN OF THAT SAME HEARING EXAMINERS PROPOSAL. ARE YOU THERE? YES. OKAY. UM, AND I'M LOOKING AT THE SECOND FULL PARAGRAPH THAT HAS THE STAR 2 36. DO YOU SEE THAT? YES. OKAY. AND THIS SAYS, UM, I'LL JUST READ IT AS TO DOUBLE COUNTING ENERGY. THE FLAW IN DR. JOHNSON'S PROPOSAL IS THE FACT THAT THE ALLOCATOR BEING USED TO ALLOCATE PEAK DEMAND AND 50% OF THE INTERMEDIATE DEMAND INCLUDES WITH IT AN ENERGY COMPONENT. UM, DR. JOHNSON HAS ELECTED TO USE A FOUR CP DEMAND ALLOCATOR, BUT SUCH AN ALLOCATOR BECAUSE IT LOOKS AT PEAK USAGE NECESSARILY INCLUDES WHAT THAT PEAK USAGE AVERAGE OR ENERGY USAGE. DO YOU SEE THAT? YES. OKAY. AND DO YOU UNDERSTAND THAT TO MEAN THAT THE ENERGY USAGE IS BASICALLY BEING COUNTED TWICE IN YOUR ALLOCATION? UM, IT COULD BE. I, AGAIN, I WAS NOT IN THIS CASE AND I HAVE NOT SEEN DR. JOHNSON'S TESTIMONY, SO, UH, IT, TO SOME DEGREE IT'S SPECULATION ON MY PART. I MEAN, I KNOW WHAT IN GENERAL, THE TERM DOUBLE COUNTING, UH, MEANS, BUT, UH, UH, AND MAYBE IT MEANS WHAT YOU DESCRIBED, BUT I, I AM RELUCTANT TO REALLY DESCRIBE THAT TO WHAT HAPPENED IN THIS DOCKET, BECAUSE, UH, IT, I HAVE NO WAY OF SEEING WHAT DR. JOHNSON'S ACTUAL METHODOLOGY WAS. OKAY. IF YOU THINK ABOUT LIKE AN A E FOR CP METHODOLOGY, YOU'RE FAMILIAR WITH THAT, I ASSUME. UM, SO THERE'S A COMPONENT THAT'S BASED ON AVERAGE DEMAND, CORRECT? YES. AND THEN THERE'S A COMPONENT THAT'S BASED ONLY ON EXCESS DEMAND, WHICH IS THE AMOUNT THAT'S ABOVE THAT AVERAGE. AND IT DOESN'T INCLUDE THEN AGAIN, THE AVERAGE DEMAND, AVERAGE DEMAND, ONLY THE EXCESS. YES. THE, THE IT'S THE EXISTENCE OF THE EXCESS DEMAND COMPONENT THAT MATHEMATICALLY MAKES THE AVERAGE AND EXCESS METHOD, ESSENTIALLY THE SAME THING AS A PEAK DEMAND METHOD. RIGHT. AND WHAT I'M TRYING TO GET AT IS THAT YOUR METHODOLOGY COUNTS ENERGY. IT DOESN'T, IT DOESN'T HAVE THAT EXCLUSION IN THE EXCESS CALCULATION. IT COUNTS ENERGY IN THE BASE ALLOCATION, THE INTERMEDIATE ALLOCATION AND THE PEAK ALLOCATION UH, MAYBE IT WOULD BE JUST BE SIMPLER TO SAY, I, I DID NOT USE EXCESS DEMAND IN MY FORMULA. FAIR ENOUGH. OKAY. ON YOUR, IN YOUR DIRECT TESTIMONY AT PAGE 21, UM, YOU'RE TALKING ABOUT THE, THE WHOLESALE MARKET DESIGN 21. UM, AND IS THERE A PARTICULAR QA YOU'RE LOOKING AT, OR, WELL, I'M TRYING TO FIND IT NOW, GIVE ME ONE MOMENT [05:45:09] THAT REFERENCE MIGHT ACTUALLY BE WRONG, BUT I DON'T THINK THAT IT MATTERS. UM, YOU WOULD AGREE THAT OR CUT, HAS THAT WHAT YOU DESCRIBED AS AN ENERGY ONLY MARKET DESIGN? YES. OKAY. AND YOU USE THAT AS A JUSTIFICATION FOR, UM, WHY GREATER EMPHASIS SHOULD BE PLACED ON ENERGY IN THE ALLOCATION, IS THAT CORRECT? IT'S ONE OF THE CHARACTERISTICS THAT GOES INTO IT. THERE'S NO, UH, IT'S, IT'S NOT THE ONLY DESCRIPTION OF THE ERCOT MARKET THAT IS, YOU KNOW, RELEVANT, BUT, UH, TO MY, TO MY DECISION. OKAY. GIVE ME ONE MOMENT TO FIND THIS QUOTE, BECAUSE NOW I DO NEED IT GO OFF THE RECORD FOR A MINUTE. I'M READY BACK ON THE RECORD. OKAY. APOLOGIES. IT'S ACTUALLY PAGE 22. SO PAGE 22, LINE TWO, YOU STATE THE CURRENT ARCOP PARADIGM AND ENERGY ONLY MARKET SHOULD LEAD TO A GREATER EMPHASIS ON ENERGY. IS THAT YOUR TESTIMONY? YES. UH, THAT'S. THAT'S WHAT MY TESTIMONY SAYS, AND THEN THE SENATE'S AFTER THAT ADDS TO IT, BUT, OKAY. UM, AND DO YOU UNDERSTAND THAT THAT CHARACTERIZATION, THE ENERGY ONLY MARKET, UM, THAT ESSENTIALLY JUST MEANS THERE'S NO CAPACITY MANDATE IN OUR COT? YES. IF BY CAPACITY MANDATE, YOU MEAN THERE'S NO CAPACITY MARKET AND ALSO MEANS THAT THERE'S NO, UH, REQUIREMENT THAT, UH, RETAIL, UH, ENTITIES, UH, HAVE A CERTAIN AMOUNT OF CAPACITY OR RESERVE MARGIN. RIGHT. AND SO, UM, ANOTHER WAY OF SAYING THAT IS GENERATION INVESTMENT IN ARCATA IS DETERMINED PRIMARILY BY ENERGY PRICES AND THERE'S NO DIRECT CAPACITY PAYMENT. YES. OKAY. AND DO YOU UNDERSTAND THAT IN THE ERCOT MARKET, THE WHOLESALE MARKET IS DESIGNED, SO THAT PRICES GET PROGRESSIVELY HIGHER AS DEMAND IS HIGHER? UH, I DON'T KNOW IF THE MARKET IS DESIGNED THAT WAY. I THINK IT'S PROBABLY A DESCRIPTION OF A, UH, OF A, UH, OF A MARKET THAT IS FUNCTIONING PROPERLY. OKAY. IN THE AIRCRAFT MARKET AS DEMAND GETS HIGHER, DO PRICES GET HIGHER? UH, SOMETIMES, UH, I MEAN MAYBE, YEAH, USUALLY PROBABLY, BUT, UH, THAT'S NOT ALWAYS THE CASE. AND OBVIOUSLY YOU ALSO HAVE TO LOOK AT THE SUPPLY SIDE TO, UH, DETERMINED PRICE. IT'S JUST NOT BASED ON DEMAND. IT'S BASED ON THE SUPPLY SIDE, HOW MUCH, UH, CAPACITY IS ONLINE, HOW MUCH CAPACITY HAS BEEN BID INTO THE MARKET. OKAY. UM, WOULD YOU ASSUME THAT GENERALLY, OR WOULD YOU AGREE THAT GENERALLY, UM, WHEN DEMAND IS HIGHER, THERE'S A GREATER LIKELIHOOD OF SCARCE SUPPLY UM, ASSUMING THAT OR THAT THE SUPPLY LEVEL OF OUR SUPPLY OF CAPACITY IS FAIRLY CLOSE TO, YOU KNOW, UH, THE EXPECTED DEMAND. AND THAT WOULD BE TRUE. UM, IF THERE'S A LOT OF EXCESS CAPACITY IN THE MARKET, IT MAY NOT BE TRUE. OKAY. WOULD YOU AGREE THAT TO THE EXTENT THAT AUSTIN OWNS GENERATION TO SERVE ITS OWN CUSTOMERS, UM, THAT IN PERIODS WHERE THERE IS SCARCITY PRICING IN THE ERCOT MARKET, THAT'S WHEN THAT GENERATION WOULD BE MOST VALUABLE AS A PHYSICAL HEDGE UH, IT WOULD, UH, IF PRICES ARE HIGHER, AS IT WILL LIKELY PRODUCE, YOU KNOW, MORE, A HIGHER MARGIN OR PROFIT FOR, YOU KNOW, OFF THE UNIT UM, OKAY. LOOKING AT PAGE SEVEN OF YOUR REBUTTAL, YOU HAVE A STATEMENT HERE I'M ONLINE 20, THE UNPRECEDENTED OUTAGES IN ERCOT IN FEBRUARY, 2021 [05:50:01] PROVIDE COMPELLING EVIDENCE AGAINST TIC POSITION. THAT GENERATION RELIABILITY IS DRIVEN ONLY BY THE FOUR SUMMER MONTH PEAK DEMANDS. DO YOU SEE THAT? YES. UM, IS IT YOUR UNDERSTANDING THAT MR. POLLOCK'S TESTIMONY ADDRESSED GENERATION INVESTMENT AND NOT RELIABILITY? YEAH, I, I REALLY DON'T KNOW. I MEAN, UH, MAYBE IF YOU WANT TO REWORD THIS TH THE QUESTION I, UH, I'M NOT SURE WHAT THAT MEANS TO SAY IT ADDRESSES ONLY INVESTMENT AND NOT RELIABILITY. MR. POLLOCK'S TESTIMONY IS ADDRESSING HOW GENERATION INVESTMENT SHOULD BE ALLOCATED BASED ON COST CAUSATION. IS THAT YOUR UNDERSTANDING? YES. OKAY. AND SO YOU'RE USING FEBRUARY, 2021 AND THEN LOWER DOWN, YOU ALSO TALK ABOUT FEBRUARY, 2011 AND JANUARY, 2014. UM, WHEN WE HAD RELIABILITY EVENTS IN ERCOT, DO YOU REMEMBER THAT? YES. OKAY. AND DO YOU AGREE THAT ALL THREE OF THOSE EVENTS WERE, UH, THOSE RELIABILITY EVENTS WERE DRIVEN BY SIGNIFICANT OUTAGES OF THE, THE GENERATION THAT EXISTS? YES. OKAY. SO IT WASN'T A MATTER NECESSARILY OF HOW MUCH GENERATION HAD BEEN BUILT, BUT HOW MUCH OF THAT GENERATION WAS AVAILABLE AND NOT ON OUTAGE? UH, WELL, I'M NOT SAYING THAT WAS THE SOLE CAUSE OF THOSE EVENTS, BUT TAKING, YOU KNOW, UNDERSTANDING THAT CAVEAT. UH, REALLY, IT SEEMS TO ME IT'S STILL PART OF COST CAUSATION BECAUSE THE UTILITY AND, OR THE GENERATOR, UH, HAS TO BUILD, UH, CAPACITY, UH, THAT INCLUDES, UH, CONSIDERATION OF, UH, POTENTIAL OUTAGES, YOU KNOW, UH, HOW, UH, HOW OFTEN THE UNIT IS GOING TO BE AVAILABLE TO PRODUCE POWER. I MEAN, THAT'S PART OF THE CONSIDERATION IN THE CAPACITY PLANNING PROCESS. SO THEY LOOK AT EXPECTED FORCED OUTAGE RATES WHEN THEY INVEST IN GENERATION OR UTILITY. YES. OKAY. AND WOULD YOU AGREE THAT THESE THREE EVENTS THAT YOU'RE CITING HAD EXCESSIVE FORCED OUTAGE RATES COMPARED TO NORMAL EXPECTATIONS? YES. OKAY. THANK YOU. I'LL PASS THE WITNESS. AUSTIN ENERGY. THANK YOU, YOUR HONOR. GOOD AFTERNOON, MR. JOHNSON. THERE'S BEEN A LOT OF DISCUSSION ABOUT BEV, SO I'M NOT GOING TO COVER THAT SAME GROUND. I DID WANT TO ASK YOU A COUPLE OF QUESTIONS ABOUT IT. UM, YOU WERE A PARTICIPANT IN THE 2016 CASE, IS THAT RIGHT? YES. AND YOU WORKED WITH THE ICA AT THAT TIME? YES. AND YOU PROPOSE THE, UM, UH, THE, UM, ALLOCATION METHODOLOGY IN THAT CASE. YES. AND WHILE THAT WAS A SETTLED CASE, THE HD DID ISSUE A PROPOSAL FOR DECISION OR RECOMMENDATION TO COUNCIL, RIGHT? YES. AND HE REJECTED THE USE OF, OF THE BIT METHODOLOGY BECAUSE HE DETERMINED THAT IT IGNORED THE REALITY OF THE MARKET IN WHICH HE OPERATES. UM, I HAVEN'T LOOKED AT THAT CASE IN A WHILE, BUT THAT SOUNDS LIKE SOMETHING HE SAID AT THE, IN ANY REPORT. YEAH. ALL RIGHT. AND, UM, LET ME JUST ASK YOU THIS. IF YOUR RECOMMENDATION ON THIS ISSUE IS NOT ADOPTED, UM, IT, WOULD YOU AGREE THAT THE 12 CP METHODOLOGY, UH, IS AN ACCEPTABLE AND PREFERABLE, UM, ALLOCATION METHOD OVER THE FOUR CP METHOD PROPOSED BY AN XP AND TIC? UM, I BELIEVE, UH, 12 CP IS PREFERABLE TO AVERAGE AN EXCESS OR CPU, YOUR HONOR, IT'S ACTUALLY NOT FRIENDLY. UM, I DON'T KNOW WHAT THE ANSWER IS FRIENDLY TO ME. UH, HE COULD, HE COULD EASILY SAY NO THAT THE, I DON'T KNOW WHAT HE'S GOING TO. I SAY, WE, WE HAVE DIFFERENT POSITIONS THAN ON THIS VERY ISSUE. AND SO LET'S SAY, YES, WE HAVE DIFFERENT POSITIONS ON THIS ISSUE. I BELIEVE HE'S ALREADY HASN'T. HE ALREADY RESPONDED IN AN RFI OR IN, UH, THAT HE, THAT 12 CP WAS WITHIN THE RANGE OF ACCEPTABLE. SO IT'S IN HIS RECORD. AND SO BY BRINGING IT UP, IT SEEMS TO ME TO BE FRIENDLY CROSS, THAT'S [05:55:01] ACTUALLY A DIFFERENT STATEMENT THAN THE ONE I ASKED HIM. HE MAY FEEL LIKE FOR CP IS, IS AN APPROPRIATE METHOD AS WELL. AND I, AGAIN, I'M JUST TRYING TO FIND OUT IF HIS POSITION IS NOT ADOPTED THERE'S OTHER RECOMMENDATIONS IN THE CASE AND WHAT HIS OPINION IS OF THEM. I JUST, I, MY MIC IS DEAD. YOU CAN HEAR ME. SO I DON'T SEE ICA BEING FRIENDLY TO AUSTIN ENERGY. AND TO ASK, HE COULD ASK THE QUESTION, WHICH IS YOUR METHODOLOGY IS ACCEPTED, WHICH ONE IS MOST ACCEPTABLE AND WHO KNOWS WHAT HE WOULD SAY, OR MAYBE, YOU KNOW, WHAT YOU CAN SAY. UM, I'LL ALLOW IT OVERRULED. UM, DID I ANSWER THE QUESTION ALREADY OR IS THAT I THINK YOU DID, BUT I DIDN'T HEAR IT. UM, THE 12TH CP METHOD IS PREFERABLE TO AVERAGE IN, FOR CPN PREFERABLE TO, FOR CP AND, UH, YOU KNOW, THOSE ARE, I SUPPOSE, BASICALLY THE ALTERNATIVES BESIDES BIP THAT ARE AVAILABLE IN THE DOCKET RIGHT NOW, I SAY, ALL RIGHT, THANK YOU, MR. JOHNSON. UM, NOW I WANT TO TALK ABOUT, UM, A COUPLE OF OTHER ISSUES, UM, LATE PAYMENT FEES, YOU PROPOSE AN UPWARD ADJUSTMENT OF 2.2 MILLION. IS THAT RIGHT? TWO LATE PAYMENT FEES? UH, THAT SOUNDS CORRECT. I, UH, IF I CAN FIND IT A GOOD ADJUSTMENT OF OTHER REVENUES, 2.2 MILLION. YES. AND YOU PROPOSE USING AN AVERAGE OF 2018 AND A FISCAL YEAR 2018 AND 2019 FOR THE LATE PAYMENT FEE ADJUSTMENT. IS THAT RIGHT? YES. MY, UH, INTENT WAS TO AVOID, UH, ANY YEAR THAT'S EFFECTED BY THE PANDEMIC. ALL RIGHT. AND, AND I BELIEVE IT WAS YOU WHO MAY HAVE STATED THAT THE PANDEMIC, UH, AND ITS EFFECTS, UM, UH, CONTINUE, IS THAT RIGHT? UM, AS YOU KNOW, THERE ARE CONTINUING EFFECTS, I WOULD SAY, UH, IT'S NOT THE SAME AS IT WAS, AND, UH, YOU KNOW, MARCH OF 2020, AND EVEN, UH, INTO, YOU KNOW, JANUARY OF 20, 20, 20, 21. UH, BUT, UH, OBVIOUSLY, YOU KNOW, IT'S, WE DON'T KNOW FOR SURE WHAT THE ULTIMATELY IS GOING TO HAPPEN WITH THE COVID. UH, BUT, UH, I THINK MOST PEOPLE ARE, ARE UNDER THE VIEW THAT, UH, UH, WE'VE PROBABLY SEEN THE WORST PART OF IT DURING, UH, 20, 20 AND 2021. AND SO YOU'VE GONE BACK TWO ADDITIONAL YEARS TO 18 AND 19. IS THAT RIGHT? YES. ALL RIGHT. AND, UH, HAVE YOU HAD AN OPPORTUNITY TO REVIEW AUSTIN ENERGY'S REBUTTAL TESTIMONY WITH RESPECT TO THIS ISSUE, AND YOU'RE AWARE THAT THEY WERE BUYS THE RECOMMENDATION ON THIS POINT? YES. AND, UM, PART OF THE REASON FOR THAT, UM, NEW RECOMMENDATION OR REVISED RECOMMENDATION IS BECAUSE, UH, UH, EIGHT MONTHS DURING THE TEST YEAR LATE FEES HAD BEEN WAIVED. YES. ALL RIGHT. AND SO INSTEAD, UH, MS. GONZALEZ, UM, IS PROPOSING TO USE, UH, THE, THE MOST RECENT 12 MONTHS OF INFORMATION FROM MAY OF 21, APRIL 22. DID YOU SEE THAT? YES. ALL RIGHT. AND SO, UM, NOW LET'S TALK ABOUT UNCOLLECTABLE EXPENSE. YOU PROPOSE TO REDUCE UNCOLLECTABLE EXPENSE BY ABOUT $1.4 MILLION. IS THAT RIGHT? I THINK WE'RE LOOKING AT A PAGE 15, BUT WE MIGHT TALK ABOUT IT LATER AS WELL. UH, OKAY. UH, THE ADJUSTMENT IS 1.4 MILLION. YES. ALL RIGHT. AND AGAIN, IT'S YOUR RECOMMENDATION THAT THAT BE MADE BECAUSE, UH, THE UNCOLLECTABLE EXPENSE BALANCE WAS INFLUENCED BY THE IMPACT OF COVID AND WINTER STORM URI, RIGHT? YES BUT AS YOU NOTED A MINUTE AGO, THE, UH, IMPACT OF THE PANDEMIC IS ONGOING. [06:00:01] AND I BELIEVE YOU SAID THAT, UH, IT'S IMPOSSIBLE TO PREDICT THE, YOU KNOW, WHEN THE PANDEMIC AND ITS EFFECTS WILL BE, UM, COMPLETELY FINALIZED OR OVER. YES. I SAID THAT. ALL RIGHT. LET ME ASK YOU NOW ABOUT, UM, YOUR OTHER RECOMMENDATION WITH RESPECT TO WINTER STORM. YOU'RE YOU RECOMMENDED AMORTIZING THE 6.8 MILLION, UH, IN WINTER, YOUR WINTER STORM, YURI EXPENSE OVER FIVE YEARS. IS THAT RIGHT? YES. ALL RIGHT. AND IN SUPPORT OF THAT PROPOSAL, AS I UNDERSTAND IT, YOU STATED THAT WINTER STORM YURI WAS NOT A ROUTINE OR NORMAL STORM. YES. UM, I THINK WE WOULD ALL AGREE THAT THE STORM WAS EXCEPTIONAL A, UM, AN EXCEPTIONAL EVENT, BUT THAT DOESN'T MEAN THAT THE STORM COSTS ASSOCIATED WITH IT WERE EXCEPTIONAL OR ABNORMAL, UM, IN TERMS OF THE MONETARY IMPACT ON AUSTIN ENERGY, CORRECT? NO, I WOULDN'T AGREE WITH THAT. UH, UH, I DON'T THINK WE EXPECT A WINTER STORM URI TO RECUR EVERY YEAR, SO, AND, UH, SO THEREFORE I THINK THIS IS A, YOU KNOW, EXTRAORDINARY AND RATE MAKING TERMS, MEANING THAT IT'S NOT AN RECURRING. UM, BUT TH BUT THAT, WASN'T MY QUESTION, MR. JOHNSON, HAVE YOU LOOKED AT THE COST IMPACT TO AUTHENTIC ENERGY OF OTHER WEATHER EVENTS, ICE STORMS, HURRICANES, THINGS OF THAT NATURE? NO, I DON'T HAVE THAT INFORMATION. SO YOU DON'T KNOW IF THE $6.8 MILLION IS, IS UNUSUALLY HIGH OR ARE, UH, OR NOT? UM, OH, THE INFORMATION, THE INFORMATION I HAVE IS WHAT'S CONTAINED IN THE REBUTTAL BY THE AUSTIN ENERGY, WHICH ENCOMPASSES ONLY TWO OF THE ITEMS, WHICH IS, UH, UH, THE CONTRACT LABOR AND OVERTIME. AND, UH, BY MY REVIEW OF THOSE NUMBERS, IT WOULD APPEAR THAT IN FACT, THE PREVIOUS YEAR'S, UH, OUTSIDE LABOR CONTRACT LABOR AND OVERTIME, UH, IS HIGHER, UH, FOR THE TEST YEAR IN AN AMOUNT THAT IS PRETTY CLOSE TO THE SAME AS WHAT IS REPORTED IS THE COST FOR A WINTER STORM URI. BUT IN FACT, CONTRACT LABOR WAS ACTUALLY LOWER LAST YEAR. NO, I'M TALKING ABOUT FOR THE PREVIOUS YEARS AND BECAUSE THE AUSTIN ENERGY REBUTTAL TESTIMONY LAYS OUT MORE THAN JUST THE PREVIOUS YEAR LAYS OUT, I BELIEVE, FOUR YEARS. I SEE. BUT AUSTIN ENERGY REGULARLY ENCOURAGED LABOR OVERTIME AND CONTRACTUAL LABOR COSTS DURING THE COURSE OF THE YEAR IN THAT. RIGHT. UH, YEAH, THOSE ARE CATEGORIES OF COSTS THEY INCUR, INCLUDING DURING THOSE PERIODS OF STORM RESTORATION. YES. I AGREE THAT IF, UH, THAT OTHER TYPES OF STORMS CAN CAUSE RESTORATION AND THE 4.3 MILLION IN LABOR AND BENEFITS WERE REGULAR WAGES AND BENEFITS PAID TO COST SYNERGY EMPLOYEES WHO WOULD HAVE BEEN PAID DURING THE PERIOD THAT WINTER STORM OCCURRED, REGARDLESS OF WHETHER THE STORM HAD HAPPENED OR NOT IN THAT. RIGHT. UH, WELL, I DON'T KNOW FOR SURE ON THAT. UH, I WOULD SAY THAT IN TERMS OF, UH, YOU KNOW, REGULATORY PRACTICE OF, YOU KNOW, UH, SUMMING UP A EXTRAORDINARY EVENT COSTS, I DO SEE UTILITIES INCLUDE THEIR REGULAR, UH, PAY IF IT CAN BE IDENTIFIED TO THE EVENT. SO, UH, UH, I WOULD NOT, I MEAN, I WOULD NOT SAY THAT THAT IN ITSELF IS REASON FOR EXCLUDING, UH, THAT COST ELEMENT. SO IF THOSE COSTS, UM, ARE PART OF THE REGULAR SALARIES AND WAGES THAT ARE PAID AND INCLUDING RATES, THEN YOU STILL BELIEVE THAT IT WOULD BE INAPPROPRIATE TO MAKE AN ADJUSTMENT. YES, I WOULD STILL MAKE THE ADJUSTMENT, UH, UH, PRESUMABLY IF, UH, THE WORKERS WHO ARE BEING PAID TO WORK ON URI, UH, THAT THOSE, THAT MEANS THEY ARE NOT AVAILABLE TO DO OTHER WORK. AND AT SOME POINT, UH, YOU KNOW, YOU, YOU COULD BE CAUSING OVERTIME TO BE INCURRED IN ANOTHER MONTH. IT WASN'T EVEN RELATED TO HURRICANE URI WINTER STORM, BUT THERE WAS NO EVIDENCE OF THAT HAVING OCCURRED HERE. UM, I, I'M JUST, I'M JUST STATING WHAT I THINK IS THE RATIONALE FOR WHY UTILITIES WHEN THEY ACCUMULATE THESE COSTS FOR A SPECIFIC STORM DO INCLUDE THOSE COSTS. OKAY. UH, WEATHER, I MEAN, I UNDERSTAND THAT, UH, MAYBE ONE COULD DISAGREE WITH THAT, BUT THAT, THAT IS UNUSUAL PRACTICE, BUT OVERTIME IS A SEPARATE COMPONENT OF YOUR ADJUSTMENT. ISN'T THAT RIGHT. [06:05:05] OVERTIME. OH, EXCUSE ME. YEAH. OVERTIME IS A SEPARATE COMPONENT YET, RIGHT? IT'S ABOUT 1.2 MILLION, CORRECT? YES. IT'S THE OVERTIME ASSOCIATED WITH DIRECTLY WITH A WINTER STORM URI, BUT, BUT AUSTIN ENERGY REGULARLY AND CARS OVERTIME COSTS DURING NORMAL OPERATIONS AND ANNUAL STORM OUTAGES. ISN'T THAT RIGHT? UH, YES. EVEN DURING WINTER, DURING NORMAL OPERATIONS, THEY WILL, THEY INCUR, UH, OVERTIME. THESE ARE THE OVERTIME COSTS THAT AUSTIN ENERGY AND ITS REQUESTS AND ITS RESPONSE TO A REQUEST FOR INFORMATION IDENTIFIED AS SPECIFICALLY CAUSED BY WINTER STORM DURING, BUT ISN'T IT TRUE THAT THE OVERTIME COSTS INCURRED BY ALL SYNERGY DURING THE TEST HERE ARE CONSISTENT WITH THE HISTORICAL OVERTIME TRENDS? UH, I DON'T AGREE WITH THAT. ALRIGHT. UM, I MEAN, I, AS I REFERRED TO EARLIER, I DID LOOK AT THE NUMBERS THAT WERE PROVIDED IN THE REBUTTAL TESTIMONY. AND, UH, IT APPEARED TO ME TO, UH, UH, SUBSTANTIATE USING THE OVERTIME NUMBER, UH, AS PART OF THIS EXTRAORDINARY COST COMPONENT. BUT THE TEST, YOUR NUMBER FOR OVERTIME WAS 10.8 MILLION. IS THAT RIGHT? WELL, I DON'T HAVE THE REBUTTAL HERE IN FRONT OF ME. UH, OKAY. UM, BUT ISN'T IT TRUE THAT, THAT, THAT AMOUNT IS ACTUALLY IN LINE WITH PREVIOUS YEARS, ESPECIALLY WHEN YOU TAKE INTO ACCOUNT? WELL, ANSWER THAT QUESTION FIRST, IF YOU WOULD. UH, IN MY VIEW, IT IS NOT IN LINE WITH PREVIOUS YEARS, IT'S, UH, UH, YOU KNOW, UH, ONE AND A HALF MILLION MORE, UH, IT'S SOMETHING ALONG THOSE LINES. I'D HAVE TO LOOK AT THE REBUTTAL TESTIMONY, UH, TABLE AND, UH, BE ABLE TO, YOU KNOW, BE MORE EXACT ON THAT. BUT MY REVIEW OF THE O OF THE REBUTTAL TESTIMONY INDICATED THAT GENERALLY SPEAKING, THE OVERTIME THAT WAS INCURRED IN THE TEST YEAR FOR URI, UH, IS APPROXIMATELY EQUAL TO THE EXCESS FOR THE, FOR THE TEST YEAR, OUR, FOR THE FISCAL YEAR 21 TOTAL OVER TIME VERSUS THE PREVIOUS FISCAL YEARS DID THAT. IN OTHER WORDS, IF YOU AVERAGE THOSE PREVIOUS FISCAL YEARS, COMPARED THEM TO, UH, UH, FISCAL YEAR 21 TOTAL OVERTIME, THAT FISCAL YEAR 21 WAS HIGHER AND ABOUT THE SAME AMOUNT AS A WINTER STORM URI, UH, OVERTIME COSTS AND FIGHT. I BELIEVE THAT REBUTTAL TESTIMONY, UH, UH, MR. MANE HAS SHOWS THAT, UH, IN 2019, IT WAS 9.7 MILLION COMPARED TO THE 10.8 MILLION. UH, AND, AND, AND IN 2020 9 MILLION. OKAY. YEAH, I I'M HAVING DIFFICULTY RESPONDING TO THIS BECAUSE I DO NOT HAVE THE REBUTTAL TESTIMONY UP HERE. COPY OF IT. AND, UH, UH, YOU KNOW, IF YOU, IF YOU WANT ME TO, I CAN TRY TO LOOK ON MY COMPUTER FOR THE SPREADSHEET, BRING IT TO YOU. I HAVE A SPREADSHEET WHERE I AVERAGED THE PREVIOUS YEAR AND YOU WOULD ALSO EXPECT THAT THERE WOULD BE A YEARLY WAGE INCREASES AND RISING JOB VACANCIES THAT IMPACT THESE NUMBERS AS WELL. IS THAT RIGHT? UM, I DID NOT SAY THAT. I'M NOT SURE WHAT YOU'RE REFERRING TO. I'M JUST SAYING WOULDN'T WHY WOULDN'T IT BE FAIR TO ASSUME THAT YOU WOULD SEE OVER TIME INCREASES DUE TO THINGS SUCH AS, UH, WAGE INCREASES, UH, THAT CAN OCCUR, BUT IT ALSO WOULD BE AFFECTED BY WHAT EVENTS OCCUR IN EACH YEAR. ALL RIGHT. BUT AGAIN, YOU DIDN'T EXAMINE TO SEE IF THERE WERE OTHER, UH, STORMS THAT, UH, IMPACTED THESE NUMBERS, UH, AND MADE THEM OUT OF LINE OR NOT. I DID NOT DO THAT KIND OF COMPARISON. OKAY. UH, BUT AGAIN, LOOKING AT THE, UH, YOU KNOW, CHART THAT YOU HANDED ME, THE, UH, FYI 2021, UH, OVERTIME, TOTAL OVERTIME FOR THE YEAR WAS 10.8 MILLION. [06:10:02] AND IN, UH, FISCAL YEAR 2020, UH, IT WAS 9 MILLION. UH, AND THEN YOU GO BACK IN TIME AND IT'S LOWER THAN THAT, BUT EVEN AT 1.8 MILLION, THAT'S NOT, UH, THAT'S VERY SIMILAR TO, UH, THE OVERTIME THAT WAS INCURRED FOR SPECIFICALLY FOR WINTER STORM YURI, WHICH WOULD SEEM TO ME TO CONFIRM, UH, THAT IT'S APPROPRIATE TO INCLUDE THE WINTER STORM URI OVERTIME COSTS. WELL, LET'S LOOK AT, AT CONTRACT LABOR, UH, THE, UH, A LITTLE BIT LOWER ON THAT PAGE THAT I HANDED YOU, UM, AUSTIN ENERGY PAIN. I THINK MR. F RON IS UNNEEDED, PERHAPS MR. JOHNSON, AUSTIN ENERGY. PAID THAT HIM AGAIN. SEE, YEAH, I WAS GONNA SAY, IS THAT MR. RON? THAT'S IT? I MEAN, YOU HAVE TO, YOU KNOW, MINE, I JUST TELLING HIM HE NEEDS TO PUT ON ME. THAT'S GOING TO WORK. I'LL TELL THEM TO DO THAT. CAN YOU HEAR ME, MR. EFREN? CAN YOU HEAR US WHAT ABOUT, UH, THE FOLKS IN THE CONTROL ROOM? CAN YOU JUST MUTE EVERYONE? WHO'S NOT IN THIS ROOM RIGHT NOW? LET'S GO OFF THE RECORD FOR A MINUTE BACK ON THE RECORD, WE'RE BACK AND MR. JOHNSON, WITH RESPECT TO THE CONTRACT LABOR PORTION, AUSTIN ENERGY PAID LESS TO THESE CONTRACTORS IN TOTAL DURING THE TEST YEAR THAN IN THE PREVIOUS YEAR. ISN'T THAT RIGHT DURING THE PREVIOUS SINGLE YEAR OF FYI 2020, BUT THAT'S NOT THE CASE IF YOU CONSIDER THE OTHER YEARS THAT ARE SHOWN ON HERE, BUT IT DOES, UH, THE 2021 DID NOT STAND OUT. IT WAS NOT AS, AS NORMALLY HIGH ISN'T THAT CORRECT? I MEAN, THE PRIOR YEAR IS, IS OVER $2 MILLION MORE OR $2 MILLION MORE, EXCUSE ME. UH, AS I HAVE DONE IN ANOTHER SPREADSHEET THAT I DON'T HAVE UP HERE, BUT I, I HAVE AVERAGE, UH, THOSE FOUR YEARS PRIOR TO 21. AND AGAIN, THE DIFFERENCE OF 21 VERSUS THE AVERAGE FOR THE PERIOD 2017 TO 2020, UH, IS ABOUT THE SAME AS THE WINTER STORM URI, UM, UH, UH, CONTRACT LABOR COSTS, BUT THERE'S NO REASON TO EVEN HAVE CONDUCTED THAT CALCULATION. UH, IF THE EXPENSES IN 2021 DURING THE TEST HERE WERE NOT ABNORMAL, ISN'T THAT RIGHT? UM, WELL, UH, AND IT'S, IT'S A SUBJECTIVE QUESTION AS TO WHAT YOU WANT TO CALL ABNORMAL W IN LOOKING AT THESE NUMBERS IT'S LOWER THAN THE PRIOR YEAR. YES. BUT IT'S SIGNIFICANTLY HIGHER THAN THE THREE YEARS PRIOR TO, CAN YOU SAY SIGNIFICANTLY 14 MILLION VERSUS 15.6, TWO YEARS LATER? OKAY. SO IT'S, UH, A SUBJECTIVE ISSUE, BUT, UH, THE CONTRACT LABOR COSTS FOR WINTER STORM YURI IS 1.3 MILLION. SO, UH, YOU CAN SEE THAT WHEN EVEN IF YOU JUST, YOU KNOW, LOOK AT THESE NUMBERS WITHOUT MATHEMATICALLY DOING AN AVERAGE, YOU CAN SEE THAT THAT IS, IS PRETTY CLOSE TO WHAT IS LIKELY AVERAGE OF THE PREVIOUS, UH, COSTS INCURRED IN THAT FOUR YEAR PERIOD FOR CONTRACT LABOR ON A TOTAL BASIS, WHICH WOULD LEAD ME TO CONCLUDE THAT, UH, THE 1.3 MILLION LABOR FOR WINTER STORM URI, UH, UH, SHOULD BE INCLUDED IN THE AD AS AN ABNORMAL EXPENSE. [06:15:02] UH, ALL RIGHT. THANK YOU, MR. JOHNSON. THOSE ARE ALL THE QUESTIONS I HAVE. OKAY. REDIRECT. YES. UM, UH, MR. JOHNSON, YOU WERE, UM, YOU WERE SHOWN A CHART BY, UM, UM, I GUESS BY, UM, NXP, AND, BUT I BELIEVE THE CHART WAS, UH, LABELED AS A TIC 16. YOU RECALL THAT CHART? I THINK IT'S LABELED GIC 18 O T I C 18. AND IT WAS ATTEMPTING TO SHOW WHEN CERTAIN PEAKS OCCUR. THAT IS THAT THE DOCUMENT? YES. AND, UM, I, I FEEL LIKE YOU WERE CUT OFF AND, AND, UM, YOU HAD SOME OTHER CONCERNS ABOUT AT LEAST THE TEST YEAR AND, AND, UH, IF YOU DID, COULD, UH, WOULD YOU PLEASE ELABORATE ON WHAT YOU WERE TRYING TO SAY? YES. UM, MY CONCERN IS THAT IT'S POSSIBLE, UH, THAT THE FEBRUARY, UH, PEAK COULD IN FACT BE, UH, AND IT COULD IN FACT BE THE PEAK FOR, FOR THE, FOR THE TEST YEAR. UH, BECAUSE FIRST OF ALL, THE WINTER PEAK IT'S THE FEBRUARY PEAK GETS REPORTED HERE. 2, 5, 8, OH, IS, UH, RELATIVELY CLOSE, UH, TO THE 2 6, 4, 4, UH, THAT IS REPORTED AS THE PEAK FOR THE YEAR ON THIS CHART YET IN FEBRUARY, UH, THE OUTAGES AMONG CUSTOMERS AND, UH, YOU KNOW, APPROXIMATELY A 200,000 AUSTIN ENERGY CUSTOMERS, UH, WOULD REDUCE W ESSENTIALLY ELIMINATE THEIR ABILITY TO ADD TO THE PEAK THAT THAT WOULD HAVE OCCURRED IF THERE HAD BEEN NO OUTAGE. AND AS I THINK, UH, I WAS STATING TO, UH, PEACE COUNCIL, UH, ERCOT, UH, HAS EVALUATED THAT TYPE OF ISSUE WITH RESPECT TO ERCOT SLOWED AND DETERMINED THAT IN FEBRUARY OF 2021, THE LIKELY PEAK LOAD WAS 77,000 MEGAWATTS. UH, UH, IF THE OUTAGES HAD NOT OCCURRED, THAT IS TO SAY IF PEOPLE HAD BEEN USING POWER AND COULD HAVE ADDED TO THE PEAK THAT IT WOULD HAVE BEEN SEVEN 77,000, WHICH WOULD BE A RECORD FOR ERCOT. SO THAT, THAT LEADS ME TO CONCLUDE. THERE'S PROBABLY A PRETTY GOOD LIKELIHOOD THAT FEBRUARY OF 21 IS AT, OR NEAR THE, UH, UH, PEAK FOR, FOR THE TEST YEAR. OKAY. UM, THAT'S ALL THE REDIRECT THAT I HAVE, YOUR HONOR, YOUR HONOR. CAN I CLARIFY ONE? THIS IS NOT RECROSS, BUT, UM, MR. JOHNSON SAID HE WAS REFERENCING TIC EXHIBIT 18. WE'VE GOT DIFFERENT EXHIBIT 18. SO I'M TRYING TO CLARIFY WHAT HE WAS LOOKING AT. YEAH, THAT'S, WHAT'S, THAT'S, WHAT'S WRITTEN ON HERE. I, I, I DON'T KNOW IF IT'S CORRECT. IT WAS LABELED AS TO, UH, 16, PERHAPS IS THAT WE CAN GO OFF THE RECORD AND THEN WE'LL FIGURE IT OUT CORRECTLY. IT'S CLEAR WHAT'S BEING REFERENCED. ABSOLUTELY. LET'S DO THAT. SO LET'S GO OFF THE RECORD FOR A MINUTE. TAKE A LOOK, LET'S GO BACK ON THE RECORD, LET THE RECORD REFLECT THAT, UM, WHAT WAS REFERRED TO IN REDIRECT, AT LEAST AS TIC 18 WAS ACTUALLY NXP 18. UM, AND THEN ANY ADDITIONAL QUESTIONS BASED ON THAT LIMITED REDIRECT MR. POQUITO? NOTHING. OKAY. ALL RIGHT. UM, THANK YOU. I'VE GOT, WELL, I'VE GOT ONE. WELL, WHERE'S THE OTHER ONE. I GOT ONE QUESTION. YES, SIR. UM, IT'S ALONG THESE LINES BACK TO WHAT HIS REFERENCE TO FEBRUARY, THIS IS IN REFERENCE TO A TIC EXHIBIT NUMBER 10, UM, AND IT'S AUSTIN ENERGY'S RESPONSE TO TAC FIFTH RFI. AND THE QUESTION IS, DOES AUSTIN ENERGY PREDICT PROJECT THAT IT WILL NOT BE A SUMMER PEAKING SYSTEM WITHIN THE NEXT FIVE YEARS? IF SO, PROVIDING PROVIDE SUPPORTING DOCUMENTS. DID HAVE YOU SEEN THIS RFI REQUESTS? AND CAN I READ THE ANSWER? YES. THROUGHOUT THE IT'S 10 YEAR PLANNING, HORIZON AUSTIN ENERGY PROJECTS, THAT IT WILL STILL PEAK IN THE SUMMER, INCLUDING WITHIN THE NEXT FIVE YEARS. SO I THINK IT JUST HIGHLIGHTS THAT FEBRUARY, 2021 WAS AN ANOMALY AND STILL NOT WITHIN THE DID NOT REACH THE SUMMER PEAK. THANK YOU, YOUR HONOR. ANYTHING FURTHER? NO, [06:20:01] YOUR HONOR. ALL RIGHT. THANK YOU, MR. COPLAN. UM, ALL RIGHT, MR. JOHNSON, THANK YOU. YOU'RE EXCUSED. UM, I THINK LET'S SEE, LET'S GO OFF THE RECORD FOR A MINUTE. YEAH. IT'S TINTED YOUR POINT ABOUT, UH, THE BRIEFING GAMES. IT IS ONLY 30 PAGES, WHICH FOR SOME OF US WHO RAISED A LOT OF ISSUES, THAT'S PRETTY TIGHT. UH, WE HAVE A SHORT TIME. * This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting.