Jul 15, 2022 Energy Rate Proceedings

UM, MR. BROOKE CATO, WHENEVER YOU'RE READY.

YES, WE ALREADY, AT THIS TIME, AUSTIN WILL BEGIN THEIR REBUTTAL PRESENTATION.

WE HAVE THE PANEL, UH, NUMBER ONE, UH, WHICH HAS MR. MARTIN DOMBROSKI RUSSELL MANUS, MONICA CATHOLICISM, AND, UM, JARED GALVON.

UM, WE WOULD TINDER THE WITNESSES OF CROSS EXAMINATION.

HOWEVER, BEFORE I DO THAT, I DON'T BELIEVE ANYONE HAS ANY CHANGES TO THEIR REBUTTAL TESTIMONY, BUT I WANT TO CONFIRM THAT THERE ARE ANY CHANGES THAT NEED TO BE MADE.

HEARING NONE WE TINDER FOR CROSS-EXAMINATION.

AND ONE HOUSEKEEPING MATTER, MR. HALLMARK, I DON'T THINK WE HAVE 24 TIC 24.

WE HAVE, YOU COULD JUST BRING A COUPLE OF COPIES WHEN YOU GET A CHANCE.

AND, UH, FOR CROSS-EXAMINATION WE START WITH TWO WR.

UH, MR. MURPHY IS GOING TO BE IN THE SECOND PANEL.

OKAY, WELL, I'LL JUST HAVE TO SCRATCH A WHOLE BUNCH OFF RIGHT NOW.

UM, WELL, WE ENDED YESTERDAY, AT LEAST WITH MR. EPHRON'S TESTIMONY, TALKING ABOUT BIOMASS, AND I, I DIDN'T THINK WE WOULD HAVE TO TALK ABOUT IT.

CAUSE EVERY TIME I TALKED ABOUT IT, IT WAS SUPPOSED TO BE OUT OF THE RATE CASE, BUT I DID WANT TO ASK A COUPLE OF QUESTIONS TO KIND OF UNDERSTAND, UH, THE RECORD.

UH, THERE WERE SOME QUESTIONS ABOUT DECOMMISSIONING AND WHAT IS AUSTIN ENERGY'S PLANS FOR DECOMMISSIONING, THE BIOPLAN MASS PLANT WORK DOBROSKY UM, THE BIOMASS PLANT NACADOCIOUS WAS ACQUIRED IN JUNE OF 2019, AND THE PLANT, UH, BECAME SERVICE IN 2012.

SO IT'S A FAIRLY NEW PLANT.

AT THIS TIME WE DON'T HAVE A DECOMMISSIONING HORIZON YET, UH, FOR THAT PLANT, AS YOU KNOW, IT'S QUITE UNIQUE.

SO, UH, WE, UM, WE WILL MAKE THOSE CALLS AS THE MARKET DEVELOPS.

AND, UH, IT'S, IT'S MY UNDERSTANDING FROM THE LAST RATE CASE, UH, THAT, UH, THE POLICY THAT AUSTIN ENERGY HAS, OR THE COUNCIL'S FINANCIAL POLICIES, WHATEVER SAYS THAT YOU WANT A FOUR YEAR LEAD TIME ON YOUR DECOMMISSIONING RESERVES BEFORE YOU ACTUALLY DECOMMISSION IT, YOU'D LIKE TO START THE FUND FOUR YEARS BEFORE THE DECOMMISSIONING.

HAS THAT CHANGED? NO, THAT'S THE, THAT IS THE CURRENT POLICY.

WELL, THANK YOU SO MUCH.

I DO HAVE ONE QUESTION ABOUT THE RATE CASE, UH, THAT, THAT THE BIOMASS PLANT WAS TALKED ABOUT, AND THAT IS IN THE KNOWN AND MEASURABLE CHANGES.

THAT'S IT'S PAGE 39 OF, UH, THE RIGHT FALLING PACKAGE.

Y'ALL HAD REMOVED, UH, $111.8 MILLION IN DEPRECIATION FROM THE TEST YEAR AND IT, AND I UNDERSTOOD IT TO BE ACCELERATED DEPRECIATION, BUT I NEVER FOUND OUT HOW THAT ACCELERATED DEPRECIATION WAS UTILIZED IN FISCAL YEAR 2021.

HI.

SO, UM, SINCE THE, SORRY, THE DEPRECIATION FOR NACADOCIOUS IS NOT INCLUDED IN THE BASE RATES AND SO THAT ANY OF THAT AMOUNT WOULD HAVE BEEN OUTSIDE OF THIS.

BUT I WANT TO, UH, IT'S MY UNDERSTANDING THAT THERE'S BEEN SOME DECLINING REVENUES IN 20, 20 AND 2021, AND THEN THERE'S THIS BIG ACCELERATED DEPRECIATION EXPENSE IN 20, 21 FISCAL YEAR.

SO WHAT I WANT TO KNOW IS WHAT WAS IT USED FOR SURE.

SO IT'S, IT'S A NON-CASH ENTRY, BUT IT'S JUST A REFLECTION OF THE INITIAL LIFE FOR THE PLANT, UM, THAT WE

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WERE DEPRECIATING IT AT.

AND WHAT IS THE REMAINING LIFE OF THE PLANT? UM, SO THAT MAY CHANGE, BUT THE INITIAL LIFE WAS THREE YEARS, 3.5 YEARS, THE LIFE OF THE PLANT, WE'RE NOT FINISHED PAYING FOR IT FOR UNTIL 32.

ISN'T THAT CORRECT? UH, I DON'T KNOW.

THE YEAR OFF THE TOP OF MY HEAD.

IT'S MORE THAN THREE YEARS.

NOW, UH, SO YOU'RE GOING TO HAVE IT PAID OFF IN THREE YEARS.

IS THAT YOUR NO, THAT'S NOT THE CURRENT PLAN.

I DON'T UNDERSTAND THE THREE YEARS.

AND THIS WILL BE THE LAST QUESTION.

CAUSE I DO HAVE TO ASK A BUNCH OF OTHER QUESTIONS.

THEY'RE JUST TWO SEPARATE SITUATIONS THAT THE DEBT THAT PAID FOR THE PLANT HAS A PAYMENT SCHEDULE AND THEN THE LIFE OF THE PLANT HAS A SEPARATE SCHEDULE.

SO YOU HAD KIND OF TWO DIFFERENT DEBTS.

IS THAT WHAT YOU'RE SAYING? NO.

WE PURCHASED THE PLANT WITH DEBT AND THE DEBT ITSELF HAS, UH, I BELIEVE A 13 YEAR PAYMENT SCHEDULE.

AND THEN THE PLANT HAD ABOUT A THREE AND A HALF YEAR ESTIMATED LIFE.

WELL, THAT'S ENOUGH OF THE BIOMASS.

UM, I WANTED TO TALK A LITTLE BIT ABOUT, UH, THE NUMBER OF CUSTOMERS AND IF YOU COULD, AND I'VE, I'VE LEFT, Y'ALL A PACKET OF, OF T TWO WRS EXHIBITS UP THERE.

AND IF Y'ALL COULD PULL EXHIBIT 10 AND I DON'T KNOW WHO'S GOING TO ANSWER IT, BUT, UH, THAT'S NOT, IT THAT'S THE REBUTTAL TESTIMONY FOR OTHER WITNESSES.

MS. COOPER, DID YOU PLACE THOSE ON THE TABLE HERE? AROUND AND THE TABLE? I TRIED TO MAKE IT AS EASY AS PIE.

MAY I APPROACH THE WITNESS, YOUR HONOR? YES, OF COURSE.

HAVE YOU, HAVE YOU GOT THE EXHIBIT AND IF YOU COULD TURN TO PAGE FOUR OF THAT EXHIBIT AND YOU WOULD AGREE THAT THE, UH, EXHIBIT 10 WAS AN RFI REQUEST FROM, UH, FROM ONE OF THE PARTIES ASKING FOR THE CUSTOMER COUNT BY CUSTOMER CLASS FOR SEVERAL YEARS AND THAT, AND YOU PROVIDED THE ANSWER.

AND ON PAGE FOUR, WHAT WE'RE LOOKING AT IS BASICALLY FISCAL YEAR 2020 AND FISCAL YEAR 2021.

IS THAT CORRECT? YES.

NOW I WAS LOOKING AT THE NUMBERS AND IT APPEARS TO ME THAT IF WE LOOK AT THE COMMERCIAL CLASSES, SECONDARY TWO AND SECONDARY THREE, UH, THEY LOST CUSTOMERS THAT THOSE TWO CLASSES LOST CUSTOMERS AND FISCAL YEAR 2020 .

AND THESE ARE THE IT'S ALREADY 3, 8 35 YEAH.

SO THE INFORMATION THAT, THAT YOU POINTED US TO DOES SHOW THAT THERE WAS A DECLINE IN S TWO CLASS, RIGHT.

AND COULD YOU TELL US, I DON'T WANT TO NAME OF A SPECIFIC BUSINESS, BUT CAN YOU TELL ME WHAT TYPE OF BUSINESSES SECTION SECONDARY TO CLASS REPRESENTS? SO, UH, SEC, OUR S TWO CLASSES, A RANGE FROM 10 KW, THOSE, THOSE CUSTOMERS TAKING A SECONDARY SERVICE WITH A LOAD OF 10, BASICALLY 10 KW TO 300.

SO IT'S PRETTY BROAD, UH, CAN BE OFFICE BUILDINGS, UM, SO FORTH AND SO ON.

UH, GROCERIES.

ARE THE LARGEST SECONDARY CLASSES, THOSE OVER 300 KW.

CAUSE I REALLY WANTED TO UNDERSTAND THE PEOPLE BEHIND THE BUSINESSES BEHIND THE NUMBERS HERE AND THEN SECONDARY THREE, UH, WHAT KIND OF BUSINESSES WOULD THOSE BE? OKAY, S3, UH, CLASSES ARE THE LARGER, UM,

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UH, THOSE COULD BE LARGE MULTI-USE COMPLEXES, UM, UH, THAT HAVE MAYBE COMMERCIAL AND RESIDENTIAL.

UM, OH, LIKE A COMBINATION.

LIKE THE DOMAIN WOULD BE AN EXAMPLE.

MAYBE I CAN'T SPEAK TO D TO, TO THE DOMAIN HOW BIG IT IS, BUT THAT'S AN EXAMPLE.

AND THEN, UH, BUT NOW IF WE GO DOWN TO FISCAL YEAR 20, 21, IT LOOKS LIKE, UH, THE NUMBERS OF CUSTOMERS FOR THE SECONDARY TWO AND THREE FURTHER DECLINED SO, OKAY.

SO EXCUSE ME.

YOUR FIRST PART OF YOUR QUESTION WAS, WAS JUST LIMITED TO FISCAL YEAR 2020, IS THAT CORRECT? YES, SIR.

AND THEN I SAID, AND THEN FOR FISCAL YEAR 2021, DOESN'T IT SHOW THAT THE NUMBER OF COMMERCIAL CUSTOMERS FURTHER DECLINED WITHIN THE YEAR? MA'AM YES, SIR.

SO THE S ONE CLASS DID NOT DECLINE THE S TWO CLASS DID DECLINE, UH, S THREE DID DECLINE.

AND THEN, UH, IT LOOKS LIKE THE PRIMARY ONE DECLINED AS WELL FOR, UH, FISCAL YEAR 2021.

YES, THAT'S CORRECT.

AND, UH, YES, SIR.

THAT'S ALL I'VE GOT IS THE NUMBERS I'M HOPING Y'ALL HELPED ME ON THAT.

UH, THE PRIMARY ONE.

UH, CAN YOU TELL ME WHAT TYPE OF CUSTOMER THAT IS JUST GENERALLY, UH, YOU KNOW, UH, IT, A SMALL PRIMARY LOAD.

I NOTHING THAT'S OKAY.

IF YOU DON'T, IF YOU, I KNOW I'M HITTING YOU, THERE WAS UNEXPECTED.

I FOLLOWED THAT SO, WELL, WAIT, CAN WE WAIT JUST TO SAY I DID, I DID NOT HEAR YOUR ANSWER.

THERE'S SOME STEPPING ON ANSWERS IN THE Q AND A HERE.

SO WHAT WAS YOUR ANSWER? UH, I'M I'M I COULDN'T, I COULDN'T SITE A TYPE OF CUSTOMER IN THE P ONE CLASS, ZERO TO THREE MEGAWATTS.

IT'S A SMALL PRIMARY CUSTOMER.

AND I APPRECIATE YOU HELPING ME, UH, GET A VISION ON SOME OF THESE.

UH, AND SO IF WE COULD TURN TO PAGE 80, ONE OF THE RATE FALLING PACKAGE ARE YOU THERE, SIR? YES, MA'AM.

I AM.

THANK YOU SO MUCH.

UH, IF WE LOOK AT FIGURE SEVEN DASH FOUR, IT SHOWS GRAPHICALLY THE DECLINE AND SALES, BUT IT'S NOT JUST FOR THE RESIDENTIAL, UH, CUSTOMER CLASSES.

IT'S ALSO FOR THE NON-RESIDENTIAL CLASSES AS WELL.

IS THAT CORRECT? I'M SORRY, WHAT PAGE AGAIN? MA'AM PAGE 81.

AND IN FACT, IF WE COMPARE THE NON-RESIDENTIAL SALES PER CUSTOMER WITH THE RESIDENTIAL SALES PER, PER HOUSEHOLD, IT LOOKS LIKE THAT IN 20, 20 20, THE RESIDENTIAL SALES STARTED RISING AND THE NON-RESIDENTIAL SALES CONTINUED TO GO DOWN.

IS THAT CORRECT? IS THAT WHAT THESE GRAPHS REPRESENT? WELL, THIS REPRESENTS AVERAGE, UM, AVERAGE CUSTOMER CONSUMPTION, UM, IT'S SALES, IT SAYS SALES SEVEN DASH FOUR HAS SALES.

YES MA'AM.

SO THE AVERAGE, AVERAGE CUSTOMER SALE OR CONSUMPTION OF THAT CUSTOMER, SAME THING.

WOULD IT BE REVENUES? NO SALES OR KWH? YES.

WHICH IS LIKE RESTAURANTS.

AND WHAT WOULD YOU ATTRIBUTE TO THE LOSS OF A COMMERCIAL CUSTOMER CLASSES FOR, DO YOU HAVE ANY OPINION AS TO WHY IN FISCAL YEAR 2020 AND FISCAL YEAR 2021, THE NON-RESIDENTIAL CLASSES THAT WE TALKED ABOUT EARLIER DECLINED, YOU HAVE AN OPINION AS TO THAT.

I DO NOT.

YOU DON'T HAVE AN OPINION AS TO WHETHER COVID INFLUENCED THE DECLINE IN CUSTOMERS, PARTICULARLY WITH THE SECONDARY TOO,

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I, I CANNOT ATTEST TO, TO WHY THOSE BUSINESSES CLOSED OR WENT AWAY OR IF THEY DID.

SO, BUT IF YOU, IF YOU LOSE A COMMERCIAL CUSTOMER, IT HAS A BIGGER IMPACT ON YOUR REVENUES THAN IF YOU LOSE A RESIDENTIAL CUSTOMERS AND THAT CORRECT.

ALL THINGS BEING EQUAL.

I, UNDER CERTAIN PARAMETERS, I SUSPECT THAT'S A TRUE STATEMENT.

I'M SURE THAT SOMEBODY LIKE MR. DELL'S HOUSE MIGHT CHALLENGE SOME OF THESE COMMERCIAL CLASS SALES I'M SURE.

BUT IN GENERAL, THE AVERAGE HASSLE.

DID YOU ALL, UH, IN TERMS OF COMING UP WITH THE RATE FILING PACKAGE AND TRYING TO DETERMINE, UH, THE NEED FOR, UH, CHANGES IN RATES, DID YOU LOOK AT THE, UH, ECONOMY TO DETERMINE WHETHER THERE WAS SOME EFFECT ON THE REVENUES OF, OF, UH, OF THE RESIDENTIAL CLASS OR THE COMMERCIAL CLASSES? DID ANYBODY IN AUSTIN ENERGY TO YOUR KNOWLEDGE CONSIDER THAT IN TERMS OF MAKING A DECISION OF, UH, USING LIKE FISCAL YEAR 20, 21 AS A TEST YEAR? YOUR HONOR, I'VE LET THIS GO A LITTLE BIT.

UM, CAUSE I WASN'T EXACTLY SURE WHAT IT WAS GOING, BUT IT SEEMS LIKE THESE QUESTIONS ARE ALL DIRECTED TOWARDS THE DIRECT CASE AND CROSS AT THIS MOMENT, IT'S EXPECTED TO BE DIRECTED TOWARDS THE REBUTTAL TESTIMONY.

SO I WOULD OBJECT TO THE EXTENT THAT THESE QUESTIONS ARE NOT ABOUT THE REBUTTAL TESTIMONY, UM, AND YOUR RESPONSE TO THE OBJECTION.

WELL, THE ONLY POINT I CAN MAKE YOUR HONOR IS THAT THEY WERE CHALLENGING SOME OF THE, UH, SINCE I DON'T FILE DIRECT TESTIMONY, PER SE, UH, THEY DID CHALLENGE.

I SEE A DISCUSSION OF THE EFFECT OF THE WINTER STORM AND AF COVID.

AND TO THAT EXTENT THEY DID COVER THIS SUBJECT AREA, WHICH IS WHAT I'M COVERING, WHICH IS COVID AND WINTER STORM URI.

I'LL ALLOW IT.

OVERRULED.

UM, I'M SORRY, WHAT WAS YOUR QUESTION? I'M JUST SAYING, AS IN PREPARATION OF DETERMINING WHICH TEST YEAR YOU SHOULD USE, AND I'M SORRY THAT THIS MASK I'M JUST SUCH PARANOID, UH, TEST HERE, DO YOU USE WHAT TEST YEAR TO USE AND WHAT ADJUSTMENTS, IF ANY, YOU SHOULD MAKE FOR, UH, DID YOU THE ECONOMY AND WHAT HAS HAPPENED IN THE CITY OF AUSTIN ECONOMY AS A RESULT OF COVID AND WINTER STORM URI, UH, I'LL DEFER THAT QUESTIONING TO, UM, UH, WITNESS MURPHY.

FOUR, THREE, ONE, ONE CALL CENTER.

ENOUGH OF THE ECONOMY.

SO I'D LIKE TO TALK A LITTLE BIT ABOUT THE THREE 11 CALL CENTER AND MR. GALVIN, AND ANYBODY CAN ANSWER, BUT I KNOW MR. GALVIN PROBABLY HAS THE ANSWER.

UH, IF YOU COULD PULL A TEED UP TO D TWO W WR EXHIBIT TWO AND FOUR, PLEASE, BECAUSE I WANT TO TALK WITH YOU ABOUT IT A LITTLE BIT TOO, AND ALSO EXHIBIT FIVE WHILE WE'RE ON IT.

ANY SPECIFIC PAGE? WELL, I HAVE NO IDEA WHY I SAID SCRATCH TWO AND JUST MAKE IT FOUR.

AND ALSO I THINK EXHIBIT THINK IT'S EXHIBIT IT'S ONE OF THE NEW ONES THAT I GOT FROM THAT THE EXHIBIT 20 AS WELL, SIR.

DID YOU WANT TO START WITH FOUR AND THEN GO FROM THERE? THAT'S ACTUALLY A GOOD, GOOD IDEA.

YOU WOULD AGREE, SIR, THAT TWO W OUR EXHIBIT NUMBER FOUR IS A RESPONSE TO A TECHNICAL CONFERENCE IN WHICH YOU ALL WERE ASKED TO IDENTIFY THE COST ALLOCATION OF THE THREE 11 CENTER.

IS THAT CORRECT? YES, MA'AM.

AND COULD YOU, UH, EXPLAIN TO ME THIS GRAPH THAT WE APPEARS ON, LIKE PAGE TWO OF THE EXHIBIT? YEP.

SO, SO THIS PAGE TWO, UH, WE PROVIDED THE MOST RECENT AND AVAILABLE

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DATA.

UM, PAGE TWO IS BASICALLY HOW WE ALLOCATED COST IN 2020, WE WOULD ALLOCATE COST IN 2021, BUT KEEP IN MIND THAT FOR THE 20, 21 BASE RATE YEAR, WE DID NOT HAVE THE 20, 21 DATA FOR THAT.

SO WE USE, UH, THE MOST AVAILABLE DATA, WHICH WAS 2019, BUT THE POINT IS, THIS IS PRETTY MUCH THE MODEL.

SO BASICALLY YOU TAKE THE NUMBER OF CALLS AND YOU ALLOCATE IT AND PROPORTION TO THE NUMBER OF CALLS.

IS THAT CORRECT? YES.

UH, THE ONLY CLARIFICATION I'LL ADD IS WE TAKE THE MINUTES, UH, BUT IT'S THE SAME CONCEPT.

YES, NO, I'M GLAD YOU CLARIFIED THAT.

THAT'S ACTUALLY GOOD TO KNOW.

SO IF WE LOOK AT THIS, THIS DATA THAT Y'ALL USED FOR THE, FOR THE TEST YEAR, IT SHOWS THAT AUSTIN ENERGY HAD SIX POINT 14% OF THE CALLS.

IS THAT CORRECT? YES MA'AM BUT THEY WERE ALLOCATED 7.2, 5% OF THE CORRECT.

WHY WAS THAT? THANK YOU.

AND IS THE SAME TRUE, NOT JUST FOR AUSTIN ENERGY, BUT IF YOU SEE ALL THE OTHER CD DEPARTMENTS, ESPECIALLY THOSE IN THE UPPER SECTION OF THE GRAPH, UH, IT'S THE SAME FOR ALL OF THEM, BECAUSE UNFORTUNATELY WHEN YOU HAVE A CONTACT CENTER, ESPECIALLY A, UH, EASILY RECOGNIZED NUMBER, LIKE THREE, ONE, ONE PEOPLE CALL IT THAT DID NOT MEAN TO CALL, UH, OR, OR, YOU KNOW, THEY WERE TRYING TO CALL 4, 1, 1, AND THEY DIAL 3, 1, 1 OR 2, 1, 1, ET CETERA.

UH, AND WE STILL HAVE TO TAKE THE CALLS AND WE STILL HAVE TO PAY FOR THE CALLS.

SO WHAT WE DO IS WE TAKE ALL THAT AND JUST SPREAD IT OUT ACROSS EVENLY, AS YOU SAID, BASED ON THE DISTRIBUTION.

SO, SO THAT'S OUR FAIR SHARE OF THE COST OF DOING BUSINESS.

THAT MAKES PERFECT SENSE.

SO THEN WE GO DOWN HERE AT THE VERY BOTTOM AND THIS KIND OF LIKE TRIED TO SUM IT UP FOR AUSTIN ENERGY'S COST ALLOCATION.

IS THAT CORRECT? YES.

SO IF WE LOOK AT THE DEPARTMENT ALLOCATION, AUSTIN ENERGY RECEIVED ABOUT $9.4 MILLION.

IS THAT CORRECT? BUT THEN AUSTIN ENERGY WAS CHARGED AN EXTRA AMOUNT OF $3.1 MILLION.

SO THAT'S LIKE 30% INCREASE ABOUT THIS.

OF, UH, IT'S NOT CLEAR THERE IS A PREMIUM FOR THAT CAPACITY.

AND, UH, DID, DID THE THREE, ONE, ONE CALL CENTER ACT ANY DIFFERENT IN REGARDS TO QUALIFY, QUANTIFYING, UH, TO GIVING THIS VALUE, THIS CHAR EXTRA CHARGE TO AUSTIN ENERGY? UM, SO I THINK IN MY TESTIMONY, I ALSO INCLUDED SOMEWHERE ELSE.

I CAN'T THINK EXACTLY WHERE, BUT I MENTIONED THAT, UM, THE UTILITY CONTEXT CENTER IT'S RESPONSIBLE AND THAT'S NOT 3, 1, 1, RIGHT.

IS THE UTILITY AUSTIN ENERGY IS RESPONSIBLE TO HANDLE OUTAGE CALLS, RIGHT? UH, OUTAGE, UM, CALL HANDLING.

IT'S ONE OF OUR BREAD AND BUTTER FOR LACK OF A BETTER TERM IN THE, IN THE CONTACT CENTER.

SINCE WE HAVE AN AUSTIN THREE ONE-ON-ONE CONTACT CENTER, WE CLOSE THE UTILITY CONTACT CENTER AT 9:00 PM, MONDAY THROUGH FRIDAY, AND FROM 9:00 PM TO 7:00 AM EVERY DAY, UH, THE OUTAGE CALL HANDLING IS DONE BY, UH, 3, 1, 1.

IT IS UNIQUE TO AUSTIN ENERGY BECAUSE OTHER CITY OF AUSTIN DEPARTMENTS DON'T TAKE THEIR CORE FUNCTIONS AND SEND THEM TO 3, 1, 1 OVERNIGHT, OR ON WEEKENDS.

THAT'S AN EXAMPLE.

APD DOES NOT SEND THEIR NINE ONE ONE CALL CENTER OVER TO THREE, ONE, ONE AT NIGHT.

WE COULDN'T HANDLE EMERGENCY, UH, LIFE-OR-DEATH SITUATIONS.

WE'RE NOT CERTIFIED FOR THAT.

UM, THE OTHER PIECE THAT I'LL ADD, UM, PERHAPS JUST TO, UH, AS AN EXAMPLE TO CLARIFY OUTAGE CALLS ARE NOT PLANNED OUTAGES FOR THE MOST PART THEY'RE MOTHER NATURE, WEATHER RELATED.

UM, SO WE HAVE TO HAVE CAPACITY KIND OF LIKE AN AIRPORT HAS CAPACITY TO LAND PLANES, RIGHT? THEY KNOW THE ONES THAT ARE SCHEDULED AND THEY KNOW THAT THE PLANE IS GOING TO BE ON THE LANDING STRIP FOR X AMOUNT OF MINUTES ON THE CONCOURSE FOR X AMOUNT OF MINUTES.

AND THEY'VE GOT TO HAVE STAFF TO MAKE SURE THAT EVERYTHING MOVES ALONG THE PLANE LANDS SAFELY AND TAKES OFF.

IF THERE'S AN EMERGENCY LANDING AND YOU DON'T HAVE THE CAPACITY TO HANDLE THE EMERGENCY LANDING.

THAT'S A PROBLEM.

IF YOU WAIT UNTIL YOU SEE THE, THE AIRPLANE IN THE AIR TO CALL PEOPLE OVER, TO COME AND DO THEIR JOB, YOU HAVE A PROBLEM.

UH, SO THANK YOU TO THEM.

UH, BUT, UM, AND I THINK I GOT YOUR POINT AND I DON'T, I'M NOT TRYING TO BE RUDE, BUT WE WERE ON A TIME CLOCK.

I WISH I WOULD.

SO, SO LET ME JUST CLOSE OUT THE POINT THOUGH, BECAUSE I WANT TO MAKE SURE THAT IT'S NOT LEFT THERE, SITTING THERE WITHOUT ANY KIND

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IF YOU GO TO AN AIRPORT TO ANY BUSINESS AND YOU ASK THEM TO BE OPEN OVERNIGHT, TO HAVE THE FLEXIBILITY, TO STRETCH FROM ZERO TO THOUSANDS EVERY NIGHT AND DELIVER CERTAIN SERVICE LEVEL EXPECTATIONS, THERE IS A PREMIUM FOR THAT.

AND WHETHER 3, 1, 1 DOES IT FOR ME, OR I KEEP MY UTILITY CONTACT CENTER OPEN 24 7, THAT WOULD BE LESS EFFICIENT BECAUSE I WOULD HAVE TO CALL CENTERS WORKING TWENTY FOUR SEVEN INSTEAD OF THE ECONOMIES OF SCALE OF JUST ONE.

SO SYSTEM WIDE, I WOULD SPEND MORE.

GO AHEAD.

I APPRECIATE IT.

AND HOPEFULLY I CAN TALK TO YOU AGAIN AFTER THE HEARING ABOUT THIS, BUT, UH, BUT EVEN DURING THESE TIMES, WHEN THE 3 11, 11 IS SUPPOSEDLY CLOSED FOR THE NORMAL TRAFFIC, PEOPLE CAN CALL FOR THEIR, FOR THEIR GARBAGE, WHEN TRASH PICKUP IS DURING THIS TIME, IT'S NOT LIKE 3 11, 11 IS CLOSE TO ANYBODY EXCEPT AUSTIN ENERGY CUSTOMERS CALLING ON AN AUSTIN ENERGY PROBLEM.

ISN'T THAT CORRECT? YES, BUT THERE'S A BUTTON AND THAT, BUT IS THAT, AS I MENTIONED EARLIER, WE TAKE A PROCESS THAT IS OWNED BY THE UTILITY AND IS THE RESPONSIBILITY OF THE UTILITY.

AND WE'VE EMBEDDED IT ON 3, 1, 1 WITH THE SAME PROCESS, THE SAME TRAINING.

AND, AND THEY DO THAT FOR US.

AND I WAS STILL HAVE TO INCUR THE COSTS IF I STAY IN IT.

I HEAR YOU.

BUT THE FACT IS YOU DO TAKE OTHER, OTHER CALLS INVOLVING OTHER DEPARTMENTS AND OTHER SERVICES.

IS THAT CORRECT? YEAH, ABSOLUTELY.

SO NOW IF WE COULD TURN TO PAGE THREE OF EXHIBIT FOUR, PLEASE, ARE YOU THERE, SIR? ALL RIGHT.

YES, MA'AM UH, AND IT SAYS, IT SAYS, PLEASE IDENTIFY THE AMOUNT OF AUSTIN ENERGY'S CALL CENTER COSTS AND THE SCHEDULES, WHICH CONTAIN THE COST.

WELL, IF WE COMPARE THE NUMB AND, AND, AND AUSTIN ENERGY AND ANSWERED THAT, CORRECT? YES.

AND IF WE COMPARE THE COST TOTAL THAT THEY PUT DOWN THERE FOR AUSTIN ENERGY, WITH THE COST ALLOCATION THAT WE SAW ON PAGE TWO OF THE EXHIBIT, WE SEE THAT THEY'VE ADDED, OH, ABOUT $3 MILLION.

LET ME JUST CLARIFY THAT.

UH, THIS IS THE UTILITY CONTEXT CENTER, AUSTIN ENERGY'S CALL CENTER.

THE ONE ON PAGE TWO IS AUSTIN 3 1, 1, 2 SEPARATE CONTEXT.

SO YOU HAVE TWO DIFFERENT CALL CENTERS YOU SPENT EXCEPT THAT NIGHT SO THEN I WANT YOU TO TURN TO PAGE FOUR AND KIND OF LIKE THE REST UP TO LIKE PAGE NINE.

AND YOU WOULD AGREE THAT THIS PART OF THE EXHIBIT IS TALKING ABOUT SMART METERS.

IS THAT CORRECT? AND THIS IS JUST A PORTION OF, OF, OF THE, UH, ATTACHMENT.

THAT WAS AN ANSWER TO AN RFI ASKING ABOUT SMART METERS.

SO IF WE TURN TO THE PAGES AND WE LOOK AT PAGE SIX, AND YOU WOULD AGREE THAT ONE OF THE LISTINGS ON THIS IS, UH, ENHANCED OUTAGE COMMUNICATION, THAT'S THE NUMBER ONE THING LISTED, ISN'T THAT CORRECT? CORRECT.

AND THEN IF WE, UH, AND ALSO SMART METERS ARE USED IN LOAD RESEARCH, YOU LOOK AT PAGE SEVEN.

IS THAT CORRECT? I BELIEVE SO.

I KNOW THAT'S THE, I AM NOT THE EXPERT IN THIS SPACE, BUT I THINK I CAN, YEAH, I, I I'M WITH YOU I'M WITH, BUT I HEAR YOU.

UM, AND THEN IF WE TURN TO PAGE NINE AND THIS ACTUALLY SHOWS AN EXAMPLE OF HOW A CUSTOMER CAN COMMUNICATE ABOUT CUSTOMER OUTAGES, IS THAT CORRECT? THAT'S CORRECT.

THAT'S ACTUALLY, UH, I'M PROUD ABOUT THAT FANCY TOOL FOR OUR CUSTOMERS.

AND THAT THE USE OF, UH, THE MEDIA, THE TELEPHONE IS YOU CAN EVEN CHANGE YOUR OUTAGE ALERT PREFERENCES.

YOU CAN HAVE OTHER PEOPLE NOTIFIED YOUR FAMILY AND STUFF, AND THAT'S REFLECTED ON PAGE 10.

IS THAT CORRECT? UM, YOU, YOU, YOU CAN SET UP YOUR NOTIFICATIONS PREFERENCE.

ABSOLUTELY.

I WOULDN'T SAY JUST THE WAY YOU DID, BUT, BUT I HEAR YOU I DON'T THINK I'M GOING TO HAVE YOU TALK ABOUT, UH, EXHIBIT 20.

LET ME, I THINK WE'VE KIND OF ALREADY TALKED ABOUT IT, SO, OKAY.

UH, ALSO I WANTED YOU TO LOOK AT EXHIBIT FIVE.

YOU JUST GET A LOT OF EXHIBITS, MR. GALVIN, IF I CAN HELP I'M HERE FOR YOU.

I APPRECIATE

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IT VERY MUCH.

AND I WANTED TO TALK A LITTLE BIT ABOUT WHAT, WHAT PAGE IS THAT? IT'S EXHIBIT FIVE, IF AND WHEN I REFER TO EXHIBITS, YOUR HONOR, AND FOR THE RECORD, I'M REFERRING TO TWO W OUR EXHIBITS, IF I DEVIATE FROM THAT, I WILL MAKE A REFERENCE TO ANOTHER EXHIBIT IF THAT'S OKAY.

UM, ARE YOU THERE, SIR? YES, MA'AM.

AND SO BASICALLY, UH, THIS EXHIBIT REALLY FOCUSES IN, ON, UH, STORM YURI, IS THAT CORRECT? YES.

AND THE FIRST PART IS, UH, APPARENTLY A PRESENTATION THAT WAS GIVEN TO THE COUNCIL TO KIND OF TELL WHAT THE, UH, THE STORM DOES.

AND LIKE, WE, WE LOOK AT PAGE FOUR IT'S GRAPHICALLY SHOWS THE OUTAGES THAT OCCURRED.

AND THEN IF WE THEN WAS YOUR THREE 11 WAS ALSO AFFECTED BY HURRICANE YURI, IS THAT CORRECT? YES.

MA'AM, UH, YOU KINDA GOT FROZE OUT OF YOUR, OF YOUR HOUSE DIDN'T YOU TH THERE WERE, UM, THERE, THE CDY, THERE WERE A LOT OF OTHER ISSUES THAT IMPACT THAT THE ENTIRE CITY OF AUSTIN, NOT JUST AUSTIN ENERGY.

ABSOLUTELY.

BUT RIGHT NOW WE'RE TRYING TO LOOK AT AUSTIN ENERGY COSTS WHERE THEY AFFECTED BECAUSE OF STORM YURI, OTHER THAN JUST THROUGH OVERTIME.

I'LL, I'LL ON THE COST.

IT'S PROBABLY FINANCED A BETTER ABLE TO ADDRESS IT.

WHAT I WILL TELL YOU IS THAT WE DID HAVE, UH, OVER OVERTIME IN THE CONTEXT CENTER.

I MEAN, THAT'S IN MY SPACE, BUT I DON'T KNOW, BECAUSE I HAVEN'T DONE THE ANALYSIS.

IF YOU LOOK AT ONE BIG STORM, LIKE EARLY VERSUS THE WHOLE YEAR OF 21 VERSUS PREVIOUS YEARS, I DON'T KNOW THAT I SPENT MORE, UH, IN A YEAR.

AND SO I DON'T KNOW HOW IMPORTANT I HEAR WHAT YOU'RE SAYING, AND WE CAN TALK ABOUT THAT LATER.

I REALLY WANTED TO FOCUS IN, ON JUST HURRICANE HER, LISTENING TO ME ONCE AGAIN, I'M ON THE HURRICANES ON WINTER STORM URI.

UH, AND SO, UH, BUT YOU DID HAVE OVERTIME BECAUSE OF YOUR, IS THAT CORRECT? IN MOST ARMS AND ALSO YOUR BUILDING, UH, HAD TO BE MAYBE NOT REPAIRED? WAS IT JUST THE ELECTRICITY WAS OFF AND THEY HAD TO RETURN? UH SO I, IN MY REBUTTAL TESTIMONY, I ADDRESSED, UH, STORM COSTS FOR WINTER STORM URI.

AND, AND, UM, I THINK THE ISSUE WAS, UM, UH, FROM ICA, FROM A RECOMMENDATION WAS TO AMORTIZE THOSE COSTS.

UM, I DON'T THINK THAT'S THE QUESTION, MR. OKAY.

I DON'T MEAN TO BE RUDE.

UH IT'S THE QUESTION IS THE, UH, WAS THREE 11, THE CALL CENTER AFFECTED.

AND AT THE FIRST QUESTION I ASKED WAS THEY GOT FROZE OUT.

THE BUILDING GOT FROZE OUT.

SO I WAS ASKING WHAT KIND OF REPAIRS TO THE BUILDING, IF ANY, WERE MADE FOR THE THREE 11 CENTER? YEAH.

I, I KNOW WHAT YOU'RE TALKING.

I THINK THAT THERE IS A, UM, I DON'T KNOW THAT, UH, THE, THE TERM WOULD BE FROZE OUT THERE.

THERE WAS AN ISSUE WHERE THERE WAS A MOMENTARY OUTAGE, UH, AND THAT WAS RELATED TO TECHNOLOGY, UH, 4, 3, 1, 1.

UM, BUT THAT WAS NO DIFFERENT THAN ANY OTHER THAN ANY OTHER, UM, OUTAGE THAT WE MAY EXPERIENCE.

AND SO THEN THE NEXT QUESTION, WHICH, UH, I WANT TO KNOW THEY HAD OVERTIME AND WAS THAT OVERTIME INCLUDED IN THE RESPONSE Y'ALL PROVIDED, UH, THE CONSUMER PEOPLE, WHAT DO THEY CALL INDEPENDENT CONSUMER ADVOCATES? THAT IS CORRECT.

AND THEN, UH, THERE WAS ALSO, AND MAYBE YOU DON'T KNOW THIS, BUT MAYBE MR. MANIS WOULD KNOW, UH, THERE WAS A, UM, IT'S GOT TO THINK OF THAT FANCY NAME HERE, INCIDENT COMMAND TEAM.

THERE WAS, THERE WAS OVER TIME IN THE INCIDENT COMMAND TEAM.

IS THAT CORRECT? THAT THAT'S A, THE UTILITY SIDE, I THINK.

IT IS.

KEEP, KEEP IN MIND THOUGH THAT THERE'S INCIDENT COMMANDS FOR THE UTILITY.

AND THEN THERE'S 3, 1, 1 INCIDENT ON THE CITY OF AUSTIN.

I'M ASKING ABOUT THE INCIDENT COMMAND TEAM REGARDING THE STORM URI.

THE CHALLENGE.

I THINK THAT IS NOT, I MEAN, I REALLY WANT THAT ANSWER AND IF YOU DON'T HAVE IT, THAT'S OKAY.

BUT MR. MARTINEZ SOUNDS LIKE HE MIGHT KNOW THIS.

THAT HAD OVERTIME THAT WAS ASSOCIATED WITH URI, BUT IN MY RESPONSE, ACCORDING TO THE WORK ORDER, THAT TRACK, THOSE COSTS, ANYONE THAT HAD OVERTIME WAS INCLUDED THAT WAS ASSOCIATED WITH URI.

I, I'M NOT SO SURE THAT I CAN QUOTE EXACTLY EVERY UNIT THAT CONTRIBUTED

[00:35:02]

AND THEN THE LAST PAGE OF EXHIBIT FIVE.

WELL, LET ME BACK UP.

WE WERE, I CHASED A RABBIT TRAIL AND I APOLOGIZE TO Y'ALL, WE'RE GOING TO GO BACK TO THE WINTER STORM JURY DATA THAT WE KNOW OF.

AND, UH, IF WE LOOK BACK AT EXHIBIT FIVE, UH, AND WE TURN TO PAGES 11 THROUGH 13, YOU WOULD AGREE THAT'S A REPORT THAT AUSTIN ENERGY MADE TO THE PUC REGARDING INFORMATION ABOUT STORM URI.

IF IT'S FIVE, PAGE 13 WOULD PROBABLY BE THE BEST PLACE TO LOOK.

NOW THIS, THIS BASICALLY IDENTIFIES THE NUMBER OF CUSTOMERS INVOLVED AND THE AMOUNT OF TIME THAT SERVICE WAS INTERRUPTED BECAUSE OF THE STORMS AND THAT CORRECT.

I'M NOT FAMILIAR WITH IT.

YOU'RE NOT WHO, WHO WOULD BE THE PERSON I WOULD TALK WITH ABOUT THIS IT'S PAGE 13.

MR. DOMBROWSKI.

CAN YOU CLARIFY, CAN YOU CLARIFY FOR ME, WHICH EXHIBIT EXHIBIT FIVE, PAGE 13, 13, IT'S THE ACTUAL REPORT AUSTIN ENERGY MADE TO THE PUBLIC UTILITY COMMISSION OF TEXAS.

YOU GOT IT.

SO THIS WAS SPONSORED BY, UH, MR. MURPHY IT'LL WILL BE ON THE SECOND PANEL.

YOU WANT ME TO DEFER TO HIM ON THAT? IS THAT WHAT YOU'RE SAYING? IT'S OKAY.

I DON'T MIND.

I'LL I'LL I CAN TRY TO ANSWER YOUR QUESTION AS AN EXECUTIVE, BUT I MAY NOT HAVE SPECIFIC.

WELL, THE ONLY QUESTION I HAVE IS DID YOU EVER QUANTIFY THESE LAST MINUTES OF INTERRUPTION INTO REVENUES? NO.

WELL, THAT'S A GOOD, THANK YOU SO MUCH.

AND THEN ON PAGE 19 OF THE SAME EXHIBIT THAT'S EXHIBIT FIVE, PAGE 19, YOU WOULD AGREE THIS IS A PRESS RELEASE FROM AUSTIN ENERGY, TALKING ABOUT THE REOPENING OF THE UTILITY CUSTOMER SERVICE CENTERS.

IS THAT CORRECT? YES, MA'AM ALL RIGHT.

YOU'RE THE MAN NOW, MR. GAVIN.

UH, YOU WOULD AGREE THAT THE NEW SERVICE SAYS THAT IT IT'S DATED OCTOBER 29TH, 2021, IS THAT CORRECT? CORRECT.

AND THAT THE REASON WHY IT WAS CLOSED, AT LEAST IN PART WAS BECAUSE THERE WAS DAMAGE FOR WINTER STORM URI.

IS THAT CORRECT? CORRECT.

NOW, DO YOU KNOW WHETHER THAT COSTS WAS REMOVED FROM THE COST OF SERVICE FOR THE TEST HERE, BUT THAT PROBABLY BE A QUESTION FOR THE SECOND PANEL OR THE, DO YOU HAVE, WHICH, UM, ADDRESS THAT IS? IT IS THE SOUTH BRANCH SOUTH BRANCH.

SO THAT IS A LEASED PROPERTY.

UM, SO WE WOULD NOT HAVE COSTS ASSOCIATED WITH, WITH REPAIRING IT.

THAT WOULD BE THE LANDLORD WHO WOULD DO THAT.

WERE THERE ANY AUSTIN ENERGY BUILDINGS OR, UH, ASSETS, LIKE EQUIPMENT THAT WERE DAMAGED BECAUSE OF WINTER STORM URI THAT HAD TO BE REPAIRED OR REPLACED? I KNOW THAT AT THE, UH, UH, TOWN LAKE CENTER TLC, UH, OUR FORMER CORPORATE OFFICE, THERE WAS A, UH, STANDPIPE THAT ON THE FIFTH FLOOR THAT FROZEN RUPTURED AND WE REPAIRED THAT THOSE COSTS WERE REMOVED FROM THE COST OF SERVICE.

ALL COSTS ASSOCIATED WITH TLC WERE REMOVED.

AND THERE WERE PROBABLY SOME, UH, COSTS ASSOCIATED ON A REGENERATION SIDE, UH, WITH, UH, ELECTRICAL, UH, ISSUES AND THINGS LIKE THAT.

BUT THERE WERE NOT SIGNIFICANT.

SO NO OTHER BUILDING, EXCEPT FOR THE ONE THAT Y'ALL LEASE WAS DAMAGED BECAUSE OF WINTER STORM.

CAUSE THERE'S ANOTHER BUILDING THAT THEY MENTIONED.

THAT'S GOING TO BE OPEN LATER ANOTHER CALL CENTER.

I'M NOT AWARE OF ANY OTHER DAMAGE TO ANY OF OUR BUILDINGS THAT WE

[00:40:01]

OWN.

IS THERE SOMEBODY ELSE ON THE PANEL THAT MIGHT BE MORE KNOWLEDGEABLE, UH, CONCERNING FACILITIES? NOT LIKELY I'M RESPONSIBLE FOR FACILITIES THAT AUSTIN ENERGY AS WELL, AND YOU'RE THE MAN.

NONE OF THE, UH, ASSETS LIKE TRUCKS, SERVICE TRUCKS, AND SERVICE CARS THAT AUSTIN ENERGY OWNS OR LEASES, UH, WERE DAMAGED AND NEEDED TO BE REPAIRED OR REPLACED AS A CONSEQUENCE OF THE STORM.

IS THAT WHAT YOU'RE SAYING? I DON'T RECALL ANY DAMAGE SPECIFIC, SIGNIFICANT DAMAGE TO THE VEHICLES THAT A RESULT OF WINTER STORM A URI IS WITH ANY SORT OF SERVICE CALL.

THERE'S ALWAYS AN OPPORTUNITY FOR SOME DAMAGE TO VEHICLES, BUT I DON'T RECALL ANY.

AND THEN I KNOW THAT SEVERAL FEEDERS OR SUBSTATIONS, THEY WENT DOWN AND YOU USUALLY HAVE TO HAVE MATERIAL TO, UH, REPAIR THAT, UH, UH, DID Y'ALL ACCOUNT FOR ALL OF THE, UH, MATERIAL THAT WAS USED IN THE REPAIRS OF, UH, THE AUSTIN ENERGY INFRASTRUCTURE THAT ALLOWED PEOPLE TO GET BACK ON FROM WINTER STORM URI, RIGHT.

THERE WERE, THERE WERE NO ADJUSTMENTS TO COSTS FOR WINTER STORM DURING, I MEAN, THAT WAS, THAT WAS ASKED AND ANSWERED.

UM, I WOULD LIKE TO TAKE THE OPPORTUNITY SINCE YOU ASKED THAT, UM, UH, THERE'S BEEN A LOT SAID THAT WINTER STORM YURI HAS BEEN A SIGNIFICANT EVENT AND CERTAINLY WAS, UH, CERTAINLY DON'T WANT TO UNDERPLAY THE SERIOUSNESS OF, OF WINTER STORM EARRING, UH, AND SUBSEQUENT CONSEQUENCES OF THOSE, BUT WINTER STORM YURI, UH, WHILE IT WAS A SIGNIFICANT EVENT, WAS NOT LIKE AN EVENT SUCH AS HURRICANES COMING THROUGH AND SWAMPING SUBSTATIONS OR TEARING DOWN LINES, OR, UH, SAY A HURRICANE, A TORNADO COMING THROUGH AND DISRUPTING, UH, THE DISTRIBUTION SYSTEM, WINTER STORM URI.

AND THOSE OUTAGES WERE RESULT OF ERCOT GENERATION, NOT BEING SUFFICIENT TO SERVE THE LOAD.

AND I FIND IT INTERESTING, UH, THAT THE ADJUSTMENT TO AMORTIZE THAT, UM, BECAUSE IT WAS SOME TYPE OF SIGNIFICANT, YEAH, I DON'T MEAN TO BE RUDE, BUT I DIDN'T ASK YOU ABOUT THAT ISSUE.

AND I WISH I HAD MORE TIME TO YOUR POINT.

PLEASE MAKE IT QUICK TIP TOP FOR ME, UH, OF THOSE STORM COSTS, RIGHT.

OF THOSE STORM COSTS THE MAJORITY, WELL OF THE 6.8.

IF YOU LOOK AT THE STORM COSTS THEIR REGULAR WAGES OVER TIME AND CONTRACTOR SERVICES, WHAT IF YOU'LL NOTICE WHAT WASN'T IN THERE? POLES, MATERIALS, TRANSFORMERS, BECAUSE THEY WERE NOT OF SIGNIFICANT CONSEQUENCE IN THIS STORM BECAUSE IT DIDN'T DAMAGE THE SYSTEM.

DID THAT ANSWER YOUR QUESTION? MA'AM IT DID.

UH, BUT I RECALL I, I READ THIS REPORT, SKIM, READ IT.

THAT'S WHY I CAN'T RECALL IT VERY WELL, UH, THAT THERE WERE SOME THINGS ON THE LINE THAT AS A RESULT OF COLD START GOT DAMAGED AGAIN AND GOT DAMAGED AGAIN.

AND, UH, I GUESS I'D LIKE YOUR HONOR TO, UH, TAKE OFFICIAL NOTICE.

I DON'T KNOW IF YOU NEED A COPY OF THIS IN THE, IN THE BOX IT'S, IT'S THE AUSTIN ENERGY, FEBRUARY WINTER STORMS AFTER ACTION REPORT.

I CANNOT TAKE NOTICE OF SOMETHING THAT WE DON'T HAVE OVER HERE, UNLESS UNLESS IT'S SOMETHING THAT'S ONLINE THAT I CAN DO.

IT'S ONLINE, IT'S ON THE AUSTIN ENERGY WEBSITE.

I DON'T HAVE AN OBJECTION, UH, WITH MS. COOPER ASKING QUESTIONS ABOUT THIS DOCUMENT.

UM, BUT AGAIN, I'M SORRY, GO AHEAD, MR. BARRETT.

I WAS JUST GOING TO ASK IF SHE HAD A COPY OF WHAT SHE'S LOOKING AT.

I'M NOT SURE WHAT SHE IS.

MY ONLY COPY.

JUST, COULD YOU PLEASE THAT DOCUMENT, GET IT LIKE A BIG DINNER TABLE, HUH? ALRIGHT.

THANK YOU, THOMAS.

I DON'T HAVE AN,

[00:45:01]

IT IS AN AUSTIN ENERGY DOCUMENT.

I DON'T THINK IT'S OF THE SORT OF, UM, MATERIAL THAT YOU WOULD TAKE JUDICIAL NOTICE OF.

UM, BUT I DON'T HAVE HER, I DON'T HAVE A PROBLEM WITH HER ASKING QUESTIONS ABOUT IT.

I DON'T KNOW WHAT THE WITNESSES KNOW ABOUT THIS, BUT, UM, BUT IT IS OUR DOCUMENT.

LET ME JUST SAY A COUPLE OF THINGS ABOUT THAT, BUT I DON'T EVEN, IT'S NOT JUDICIAL NOTICE.

IT'S OFFICIAL NOTICE.

I'M NOT EVEN SURE IT'S ADMINISTRATIVE NOTICE.

UH, I COULD TAKE NOTICE IN QUOTES OF IT, UH, BUT IF, IF YOU'RE GOING TO REFER TO IT AND I WILL TAKE NOTICE OF IT, IF IT'S ON AUSTIN ENERGY'S WEBSITE AND PUBLICLY AVAILABLE, BUT IF YOU'RE GOING TO REFER TO IT IN BRIEFING, PLEASE PROVIDE, UH, A WEB LINK SO THAT WE CAN.

AND IS THAT, IS I SAID, YOUR HONOR, I DON'T MIND HER ASKING QUESTIONS ABOUT IT AGAIN.

I DON'T KNOW WHAT THEY MAY OR MAY NOT KNOW, BUT AS FAR AS ADMISSIBILITY, I MEAN, THAT'S A DIFFERENT QUESTION, UM, THROUGH ASKING QUESTIONS, RONALD, LET'S MAKE IT QUICK THERE.

SO, UH, I'D LIKE TO TURN NOW TO, UH, THE DEBT SERVICE OR THE GENERAL FUND TRANSFER AND I WON'T BELABOR IT.

I KNOW Y'ALL TALKED ABOUT IT YESTERDAY AND WE CAN KEEP CONTINUING TO TALK ABOUT IT, BUT IF YOU COULD TELL ME WHAT IS AUSTIN ENERGY'S FINANCIAL POLICIES ON THE GENERAL FUND TRANSFER, PLEASE? AND AGAIN, YOUR HONOR, IS THERE A PLACE IN THE REBUTTAL TESTIMONY THAT THIS IS PETER SAID, MISS COOPER'S FOCUSING ON THE REBUTTAL TESTIMONY, UH, ADDRESSED.

I THINK BOTH OF THE FINANCIAL WITNESSES OF THE T I E C AND NXP ADDRESSING THE GENERAL FUND TRANSFER, THEY DISAGREED WITH THE ADJUSTMENT THAT WAS MADE FOR THE GENERAL FUND TRANSFER.

SO TO THAT EXTENT, IT'S WITHIN THE SUBJECT AREA OF RECROSS ESTABROOK CATO.

IS THERE, THERE IS SOME DISCUSSION ABOUT GFT AND SOME OF THE REBUTTAL TESTIMONY THAT THAT'S TRUE.

CAN WE KEEP IT FOCUSED MS. COOPER ON WHAT WAS DISCUSSED IN REBUTTAL? YES.

IN OTHER WORDS, G WELL, GFT IS A RATHER LARGE TOPIC, SO TRY TO KEEP IT FUN TRANSFER.

UH IT'S IT'S THE CALCULATION.

AND THAT'S WHY I WANTED TO ASK ABOUT THE FINANCIAL POLICY, BECAUSE I THINK THAT SHOULD, IS THERE A CALCULATION INCLUDED IN THE FINANCIAL POLICY FOR THE GENERAL FUND TRANSFER OF AUSTIN ENERGY'S FINANCIAL POLICIES? YES.

AUSTIN ENTITY GENERAL, UM, EXCUSE ME, AUSTIN ENERGY'S FINANCIAL POLICY NUMBER 13 STATES.

THE GENERAL FUND TRANSFER SHALL NOT EXCEED 12% OF AUSTIN.

ENERGY'S THREE-YEAR AVERAGE REVENUES, LESS POWER SUPPLY COST AND ONSITE ENERGY RESOURCE REVENUE CALCULATED USING THE CURRENT YEAR ESTIMATE IN THE PREVIOUS TWO YEARS, ACTUAL REVENUE, LESS POWER SUPPLY COST AND ONSITE ENERGY RESOURCE FOR REVENUE FROM THE CITY IS COMPREHENSIVE ANNUAL FINANCIAL REPORT.

AND IF YOU COULD, UH, THANK YOU MR. JEREMY BASKET.

I DIDN'T MEAN TO, UH, IF YOU COULD PULL UP EXHIBIT 18, PLEASE.

ARE YOU THERE? OKAY.

NO, I'M DOING IT FOR FISCAL YEAR 2021.

AND WHAT I'D LIKE TO DO IS TAKE THAT POLICY AND APPLY IT TO FISCAL YEAR 2021.

SO DO YOU HAVE A CALCULATOR UP THERE? IT SHOULD BE A QUICK MATH THING FOR YOU.

SORRY.

I DO NOT.

CAN I APPROACH THE WITNESS, YOUR HONOR? IT'S A BIG ONE, BUT I NEED IT FOR MY AGE.

YES ALL RIGHT.

SO HOW LET'S GO THROUGH IT? SO IT'S YOU TAKE THE AVERAGE OF, I GUESS IT WOULD BE 20 19, 20, 20 AND 2021.

IS THAT CORRECT REVENUES? SO WHAT ARE YOU REFERRING TO UP ON PAGE ON EXHIBIT 18? ARE YOU TRYING TO RECALCULATE THE GFT IN THE COST OF SERVICE?

[00:50:01]

UM, YEAH, I'M NOT SURE THIS WOULDN'T INCLUDE THE INFORMATION THAT YOU WOULD NEED TO CALCULATE THE GFT FOR 2021.

THIS IS A QUESTION ASK MR. ROBBINS SAID THAT HER CALCULATIONS DIDN'T WERE INCORRECT BECAUSE THEY USE THE WRONG REVENUES AS THE BASIS.

THE, THE ORIGINAL QUESTION I WAS, WHAT IS YOUR GFT, YOUR ANNUAL GFT AS A PERCENT OF YOUR ANNUAL ACTUAL REVENUE, WHICH IS NOT HOW THE REVENUE, I'M SORRY, NOT HOW THE GFT IS CALCULATED.

IT'S JUST THE RESULTS OF OUR GFT ON OUR ACTUAL REVENUE.

WHAT THIS SAYS IS PLEASE PROVIDE THE REVENUES.

MR. RAVIN BELIEVES ARE THE CORRECT REVENUES FOR FISCAL YEAR 20 18, 20 19, 20, 20, AND 2021.

THAT SHOULD HAVE BEEN USED TO APPLY THE 12% I UNDERSTAND.

BUT THAT, THAT WAS JUST SAYING THE REVENUES THAT ARE CONSIDERED.

SO, UM, WE CONSIDER OPERATING REVENUE, LESS POWER SUPPLY REVENUE, LESS DISTRICT COOLING, BUT THE ORIGINAL REQUEST WAS MY UNDERSTANDING OF IT WAS PROVIDE ME YOUR ANNUAL GFT AND YOUR ANNUAL REVENUE.

THAT IS NOT WHAT THIS SAYS.

DOES IT, CAN YOU LOOK AT THE, CAN YOU LOOK AT PAGE TWO AND DOES IT SAY, PLEASE PROVIDE THE REVENUES.

MR. RAVEN BELIEVES ARE THE CORRECT REVENUES FOR FISCAL YEAR 20 18, 20 19, 20, 20, AND 2021.

THAT SHOULD HAVE BEEN USED TO APPLY THE 12%.

THEN THIS IS THAT WHAT THAT SAYS.

THAT IS WHAT THAT SAYS.

AND IF THAT'S WHAT YOU'RE CONTENDING, THEN I THINK THERE WAS SOME MISUNDERSTANDING ON THE INTERPRETATION.

YEAH, IT SEEMS TO ME THAT, WHY ISN'T THIS A QUESTION FOR MR. RAY? I WILL WAIT FOR MR. ROBIN.

I'LL MOVE ON.

THAT'S A GOOD POINT, YOUR HONOR.

OKAY, SO YOU'RE, YOU'RE DISAGREEING.

LOOK.

JUST ONE MORE QUESTION ON IT, JUST TO BE CLEAR FOR THE RECORD.

YOU'RE SAYING THAT THESE REVENUES THAT ARE LISTED HERE ARE NOT THE REVENUES THAT AUSTIN ENERGY RELIED ON AS BASED TO MULTIPLY THE 12%.

IS THAT WHAT YOU'RE SAYING? THAT'S CORRECT.

THESE ARE THE ACTUAL REVENUES FOR THE YEAR ON THE INDIVIDUAL YEAR.

THE, WHAT WE WOULD APPLY AT 12% ON WOULD BE THE TWO YEARS PRIOR AND THE ESTIMATE FOR EACH ONE OF THOSE YEARS.

SO WHAT YOU'RE TELLING ME IS THAT IT'S NOT RESPONSIVE TO MY QUESTION.

IT LOOKS LIKE NOT YOUR HONOR, MR. RAVEN'S GOING TO BE ON, ON REBUTTAL.

I WOULD APPRECIATE IT IF THEY WOULD PROVIDE US THE CORRECT REVENUES THAT WE ASKED FOR IN THE RFI.

SO I DID RESPOND TO THE RFI AND IT WAS JUST MY INTERPRETATION OF THE QUESTION THAT WAS INCORRECT, SO I CAN PROVIDE UPDATED NUMBERS IF IT'S NECESSARY.

UM, WE WOULD APPRECIATE IT, YOUR HONOR.

UM, IF YOU COULD PROVIDE UPDATED NUMBERS, WHAT W HOW, HOW QUICKLY COULD YOU HAVE THOSE TODAY'S THE LAST DAY OF THE HEARING AS SHOULD BE ABLE TO GET THEM QUICKLY? THE ACTUALS ARE CORRECT.

IT'S JUST GETTING THE ESTIMATES FOR EACH OF THOSE YEARS.

UM, RIGHT.

YOU'VE GOT THE ACTUALS FOR THE TWO YEARS PRIOR.

YOU NEED THE ESTIMATES.

MS. GONZALEZ FOR 2020, IF WE'RE DOING FISCAL, I ASKED YOU TO CALCULATE FISCAL YEAR 2021, AND YOU WOULD USE THE ACTUAL REVENUES FOR FISCAL YEAR 20, 19 AND 2020S.

AND THAT CORRECT? THAT'S CORRECT.

SO THE ONLY ONE YOU'RE LOOKING AT WOULD BE THE ESTIMATE FOR FISCAL YEAR 2021.

IS THAT CORRECT? THAT'S CORRECT.

I JUST WANTED THAT TO BE CLEAR, YOUR HONOR.

THANK YOU, MS. GONZALEZ? YES.

SO THE DEBT SERVICE TRANSFER, Y'ALL TALKED ABOUT THE DEBT SERVICE COVERAGE, AND IT'S SOMETHING THAT'S IN CONTROVERSY FROM THE, UH, REBUTTAL TESTIMONY.

AND IF YOU COULD LOOK AT, LET ME SEE WHERE IT IS HERE.

JUST BE PATIENT.

DO YOU HAVE EXHIBIT TWO IN FRONT OF YOU, MS. GONZALEZ? UH, YES.

I TRY TO BE ORDERLY, BUT THAT'S NOT MY NATURE.

I THINK IT'S, I THINK THE EXHIBIT EXHIBIT TWO.

SO LET'S LOOK AND SEE IF THAT'S IT HERE.

[00:55:05]

UH, EXHIBIT TWO IS HERE.

WE HAVE IT.

AND WHAT THIS EXHIBIT TALKS ABOUT, AND WE LOOK AT PAGE THREE.

ARE YOU THERE? YES, MA'AM ALL RIGHT.

UH, THAT SETS OUT HOW AUSTIN ENERGY EXPLAINED HOW YOU ESTABLISH THE DEBT SERVICE COVERAGE.

IS THAT CORRECT? TH THIS CALCULATION WAS PERFORMED, UH, BY WITNESS GRANT, RAVEN.

SO I SHOULD WAIT FOR HIM.

I JUST WANTED TO CLEAR, CLEAR THE BASE.

I'D HATE TO HAVE MR. RAVEN SAID, GOD, YOU SHOULD TALK TO THOSE GUYS AHEAD OF IN FRONT OF US.

WHAT IS YOUR, SO PERHAPS I COULD STREAMLINE IT.

WHAT IS YOUR, YOUR BOTTOM LINE QUESTION? PERHAPS? I CAN ANSWER THAT IF IT'S ABOUT THE EXHIBIT ITSELF, THAT WOULD BE MR. RAVEN.

NO, NO.

I'M NOT ASKING FOR THE CORRECTNESS OF THE EXHIBIT OR WHAT IT SPECIFICALLY SAYS, PER SE, CHALLENGING IT, UM, UH, WHAT WAS IN AND WHAT YOU CAN, WHAT IS IDENTIFIED HERE ARE THE COMPONENTS, AND YOU WOULD AGREE OF THE NON-UTILITY BUSINESS THAT WOULD BE USED IF YOU USE THOSE COMPONENTS TO CREATE A DEBT SERVICE COVERAGE JUST FOR THAT NON UTILITY BUSINESSES AND THAT CORRECT.

WE HAVE THE NON ELECTRIC REVENUE AND WE HAVE THE NON ELECTRIC EXPENSES AND WE HAVE THE NON ELECTRIC DEBT SERVICE.

AND WHAT WOULD BE THE NON-ELECTRIC DEBT SERVICE? IT IS ANY OF OUR LONG-TERM DEBT THAT'S ASSOCIATED WITH DEBT ISSUED FOR NON ELECTRIC SERVICE, MOSTLY, UH, DISTRICT COOLING.

I THOUGHT, I'M SORRY.

MAYBE I MISSTATED IT.

LET ME REPHRASE IT.

WHAT WOULD BE THE USING THESE FORMULAS? WHAT WOULD BE THE DEBT SERVICE COVERAGE FOR THE NON UTILITY BUSINESS? I BELIEVE IT'S A 0.67.

AND THAT DOESN'T EVEN COVER THE DEBT SERVICE THAT NEEDS TO BE, UH, A SERVICE.

IS THAT CORRECT FOR THAT TEST YEAR? THAT IS CORRECT.

IT'S IN DEBT.

SURFACE IS KIND OF LIKE A MORTGAGE.

AND SO IT'S LIKE A DEBT AND THE INTEREST AND WHATEVER ELSE.

AND SO, DO YOU KNOW WHAT AMOUNT OF MONEY WOULD BE NEEDED TO HAVE THE NON-ELECTRIC UTILITY? UH, OR YOU COULD TELL ME HOW I COULD CALCULATE WHAT AMOUNT OF MONEY WOULD BE NEEDED TO MAKE, UH, THE NON-ELECTRIC UTILITIES, DEBT, SERVICE, COVERAGE, BE JUST ONE WHERE THEY'RE ACTUALLY PAYING THEIR WAY.

IT WOULD BE 15 MILLION, $400,861.

WELL, THAT'S, THAT'S THE, THAT'S THE, THAT'S THE DEBT, CORRECT? I'M TALKING ABOUT THE DEBT SERVICE COVERAGE OF ONE.

HOW WOULD WE, HOW WOULD WE GET THAT NUMBER? WOULDN'T THAT JUST BE LIKE A MATH THING? YES.

SO WE WOULD, UH, AND WHAT, HOW WOULD YOU CALCULATE IT? YOU DON'T NEED TO DO IT, BUT HOW WOULD YOU CALCULATE IT TO COME UP WITH A DEBT SERVICE COVERAGE OF ONE YOU'VE GOT THE REVENUE HERE, CORRECT? YOU WOULD HAVE TO HAVE MORE REVENUE.

AND SO YOU HAD YOU TAKE YOUR REVENUE, YOU SUBTRACT YOUR EXPENSES, IT GETS YOU NET INCOME.

THAT NET INCOME WOULD NEED TO BE EQUAL TO THE DEBT SERVICE OF 15 MILLION, $400,861.

AND THAT WOULD GIVE YOU A DEBT SERVICE COVERAGE ONE.

I ASKED YOU ABOUT A QUESTION ABOUT AN $8 MILLION BILLING COST THAT I COULDN'T FIND.

WELL, THANK YOU SO MUCH.

I'M NOT GOOD AT MATH I MIGHT ADD JUST, JUST TO CLARIFY THAT ALL NON ELECTRIC COSTS HAVE BEEN REMOVED FROM THE, FROM THE REVENUE REQUIREMENT AND THAT THE COST OF SERVICE IS NOT SEEKING TO RECOVER ANY COSTS ASSOCIATED WITH NON UTILITY OPERATIONS.

I UNDERSTAND MR. MANUS, BUT DIDN'T YOU USE THE PROPOSED REVENUES TO FORM THE CALCULATION FOR THE DEBT SERVICE COVERAGE.

WE'RE GOING TO DEFER TO MR. RAVEN ON THAT.

THAT SOUNDS GOOD.

AND IF WE COULD LOOK AT, WELL, ACTUALLY, I DON'T THINK YOU REMEMBER.

I DON'T KNOW IF YOU REMEMBER THERE'S SO MUCH HAS HAPPENED, BUT

[01:00:01]

AND I THINK YOU DEFERRED IT TO SOMEBODY IN THE SECOND PANEL, BUT JUST TO BE DOUBLY SURE.

IF YOU WANT IT TO LOOK AT EXHIBIT 19 TO REFRESH YOUR MEMORY, I DON'T WANT, YES.

MA'AM CERTAINLY WE'LL LOOK AT EXHIBIT 19.

AND THAT SHOULD BE THE ONE WHERE ON, ON 19 MA'AM I'M FIXING, I'M LOOKING FOR HERE.

I SHOULD HAVE BEEN LOOKING AT AS QUICK AS YOU MS. GONZALEZ, GO AHEAD.

UH, LET ME FINISH THIS.

I DON'T WANT TO MUDDY THE RECORD.

I APOLOGIZE ON PAGE NINE ON EXHIBIT 19.

DO YOU HAVE IT IN FRONT OF YOU, SIR? YES, MA'AM.

AND IF YOU LOOK AT G IT SAYS THE ANNUAL COST FOR O AND M OF THE BILLING SYSTEM IS APPROXIMATELY 8.2 MILLION.

DO YOU RECALL THIS QUESTION NOW? I THINK YOU'RE THE ONE WHO ANSWERED, WHO ASKED HIM, UH, AND DIDN'T YOU TELL ME THAT SOMEBODY IN THE SECOND PANEL WOULD BE A BETTER PERSON TO ANSWER THAT.

AND WHAT WAS, WHAT WAS, CAN YOU REMIND ME WHAT THE QUESTION WAS ASKED? WHERE WOULD IT BE IN THE RATE FILING PACKAGE? WOULD IT BE MR. RAVEN? YES, MA'AM.

I BELIEVE I DID DEFER THAT TO MR. RAVEN.

ALL RIGHT, WELL, I'LL MOVE ON THEN.

AND ONE LAST CLARIFYING QUESTION ON THE, UH, THE GENERAL FUND TRANSFER, UH, WILL SOMEBODY IN THE SECOND PANEL BE ABLE TO ANSWER SOME QUESTIONS? IF THE ESTIMATED REVENUES ARE SUBSTANTIALLY HIGHER THAN THE ACTUAL REVENUES FROM FEBRUARY, 2021.

I'M NOT TRYING TO GIVE YOU A HARD TIME.

I JUST WANNA, I THINK I CAN TRY TO ANSWER YOUR QUESTION IF YOU, CAN YOU TELL ME WHAT THE QUESTION IS AGAIN? WELL, WE DON'T KNOW WHAT THE ESTIMATED REVENUES ARE FOR FISCAL YEAR 2021.

AND YOU'RE GOING TO PROVIDE THAT BEFORE THE SECOND PANEL COMES, BUT I DON'T KNOW IF THERE'S GOING TO BE ANYBODY IN THE SECOND PANEL.

WE'LL BE ABLE TO ANSWER SOME FURTHER QUESTIONS BASED ON THE INFORMATION.

SO CAN YOU TELL ME YOUR HYPOTHETICAL? WELL, I WOULD VENTURE TO SAY AN ON THAT THE ESTIMATED REVENUES WERE HIGHER THAN, THAN, THAN THE ACTUAL REVENUES THAT OCCURRED.

AND IN THAT CASE, IF WE HAD TWO YEARS ACTUAL AND ONE-YEAR ESTIMATE, AND WE MULTIPLIED THAT BY 12%, OUR GFT REQUIREMENT WOULD BE WHATEVER IT IS, WHETHER IT COMES OUT MORE OR LESS THAN ACTUALS.

AND THAT'S WHAT THE, THE PRESENTATION THAT WE DID PROVIDE SHOWED THAT THERE WERE TWO OR THREE YEARS.

I BELIEVE THAT OUR PERCENTAGE WAS LOWER.

AND THEN A YEAR WHERE OUR PERCENTAGE WAS HIGHER THAN ACTUAL, I DON'T MEAN TO INTERRUPT, BUT I DON'T THINK THAT'S RESPONSIVE.

AND I, I DON'T THINK I CARE ABOUT THE ANSWER ANYMORE.

I THINK THAT THE FACT, THE THING WILL SPEAK FOR ITSELF, BUT I APPRECIATE YOU TRYING TO HELP ME UNDERSTAND THAT.

AND I APPRECIATE ALL OF Y'ALL'S HELP.

AND I'M SORRY THAT I HAD TO KEEP INTERRUPTING YOU.

AND TO THAT END, YOUR HONOR, UH, WE HAVE NO FURTHER QUESTIONS.

DATA FOUNDRY.

UH, YOUR HONOR, MATT, JUST POINT OF CLARIFICATION, UM, FROM, FROM MY PERSPECTIVE, IF MS. GONZALES IS GOING TO PRODUCE NEW NUMBERS DURING THIS DAY, THEN PARTIES NEED TO HAVE THE OPPORTUNITY TO REVIEW THEM AND CROSS EXAMINE HER REGARDLESS OF THE PANEL STRUCTURE.

AND I DON'T KNOW THAT THAT'S GOING TO BE NECESSARY.

I DIDN'T FOLLOW ALL OF THAT.

I JUST WANTED TO THROW THAT OUT THERE.

I WAS ALREADY THINKING WE MIGHT NEED TO DO THAT.

LET'S TAKE A LOOK AT IT AND TAKE IT UP IN A BIT ITCH, BUT IT'S GOING TO BE LIMITED TO, UH, THIS ESTIMATE FOR 21.

UM, DATA FOUNDRY, NO QUESTIONS, YOUR HONOR.

HERFF YES, YOUR HONOR.

UH, MR. YOU TESTIFIED IN THE 2016 RATE HEARING, IS THAT CORRECT? THAT'S CORRECT.

AND IN THAT HEARING, UH, YOU TESTIFIED THAT THE REASON FOR THE RATE DIFFERENTIAL BETWEEN INSIDE AND OUTSIDE CITY CUSTOMERS WAS A MATTER OF PUBLIC POLICY.

DO YOU RECALL THAT? I DON'T RECALL THAT SPECIFIC TESTIMONY.

OR REFERENDUM THAT WOULD CHANGE THE POLICY AS TO ELECTRIC RATES FOR OUTSIDE CITY CUSTOMERS SO EACH YEAR THEY ADOPT A BUDGET ORDINANCE THAT HAS, UM, RATES FOR OUTSIDE CITY CUSTOMERS THAT EXCLUDES THE, UH, AREAS, UH, STREET LIGHTING.

WELL, WILL YOU TAKE IT SINCE I HAVE THE RECORD THAT YOU TESTIFIED THAT IT WAS A MATTER OF PUBLIC POLICY? DO YOU HAVE ANY REASON TO DISPUTE THAT? I DON'T THINK I CAN DISPUTE IT CAUSE I DON'T RECALL IT PERHAPS I DID.

IF YOU HAVE THE RECORD, UH, HAS THE CITY COUNCIL SINCE 2016, UH, ADOPTED ANY ORDINANCE

[01:05:01]

AND SO TO THAT EXTENT, IT WOULD CHANGE THE RATES PAID BY OUTSIDE CITY CUSTOMERS.

THAT WOULD BE A CHANGE IN POLICY, I ASSUME, IN REGARDS TO BASE RATES, NO, WE HAVE NOT ADOPTED A NEW BASE RATES IN YOUR REBUTTAL TESTIMONY AT PAGE 17, YOU STATE THAT, UH, THE REDUCTION FOR OUTSIDE CITY CUSTOMERS WAS THROUGH A GENERAL REDUCTION IN THEIR REVENUE REQUIREMENT, NOT THROUGH A REDUCTION IN GENERAL FUND TRANSFERS.

THAT CORRECT? THAT IS CORRECT.

BUT WOULD YOU AGREE WITH ME THAT THE REDUCTION IN THE REVENUE REQUIREMENT IS FUNCTIONALLY EQUIVALENT TO THE OUTSIDE CITY CUSTOMERS SHARE OF THE GENERAL FUND TRANSFER? THAT WAS A NUMBER I BELIEVE DERIVED IN THE 2012, UM, RAPE RATE REVIEW.

AND I WAS NOT WITH AUSTIN ENERGY AT THAT TIME.

SO I, I CAN'T MAKE THAT DIRECT ASSOCIATION, BUT THE 2016 RAPE CASE, THE CITY ATTEMPTED DID IT NOT TO KEEP THE RATES FOR OUTSIDE CITY CUSTOMERS, FUNCTIONALLY EQUIVALENT TO IN THE 2012, RIGHT CASE.

I RECALL CORRECTLY THAT THAT SAME AMOUNT OF, UM, AGREEMENT THROUGH THE BLACK BOX AGREEMENT WAS, UH, INCLUDED FOR OUTSIDE CITY CUSTOMERS.

WE MAINTAIN THAT DIFFERENTIAL.

AND IN YOUR REBUTTAL TESTIMONY, YOU DIDN'T PROVIDE ANY EVIDENCE THAT OUTSIDE CITY CUSTOMERS DERIVE ANY BENEFIT FROM THE CITY'S GENERAL FUND TRANSFERS THAT CORRECT.

CAN YOU STATE THAT QUESTION AGAIN IN YOUR REBUTTAL TESTIMONY, YOU PROVIDED NO EVIDENCE TO SUPPORT THE IDEA THAT OUTSIDE CITY CUSTOMERS DERIVE ANY BENEFIT FROM THE CITY'S EXPENDITURES FROM THE GENERAL FUND? NO, AND I DON'T BELIEVE I WAS REQUIRED TO PASS THE WITNESS.

THANK YOU VERY MUCH.

UM, SSC, NO QUESTIONS.

AND, UH, MR. BRAZELLE, HOW MUCH TIME DO YOU HAVE? I'M WONDERING IF NOW ISN'T A GOOD TIME TO TAKE A QUICK BREAK AND THEN I THINK A BREAK WOULD BE, IT'D BE HELPFUL.

AND I THINK IT'S A GOOD TIME FOR IT.

UH, I'M GOING TO TRY TO KEEP IT BELOW 30 MINUTES.

LET'S TAKE, YES.

LET'S TAKE 10, THEN 10 TO 15.

OFF THE RECORD.

WE READY? LET'S GO BACK ON THE RECORD, MR. BRAZELLE, WHENEVER YOU'RE READY.

GOOD MORNING PANEL.

UH, GOOD TO SEE Y'ALL AGAIN.

I LAID OUT SOME EXHIBITS FOR YOU, IF YOU CAN JUST MAKE SURE YOU'VE GOT THOSE IN FRONT OF YOU, MR. MARTINEZ, UH, IN FRONT OF YOU.

I THINK I PUT, UH, OUR EXHIBIT NUMBER SEVEN AND 11 AND GOT THOSE.

AND, UH, MR. DABROWSKI, I'VE PUT IN FRONT OF YOU.

I BELIEVE OUR EXHIBITS NUMBERS 12, 13, 14.

WE'LL GET TO THOSE LATER.

I'M GOING TO TRY TO JUST GO KIND OF FOLLOWS YOUR TESTIMONY FOR THIS, UH, FOR THIS, UH, CROSS.

UM, I MAY JUMP AROUND JUST BECAUSE IN SOME OF YOUR TESTIMONY, YOU YOU'VE DISCUSSED THE SAME ISSUE IN THE BAR, IN THE FRONT PART AND IN THE BACK AS WELL.

IT SEEMS LIKE.

SO I'LL COVER THOSE AT THE SAME TIME.

UM, BUT LET ME START WITH YOU, MR. MARTINEZ.

UH, FIRST OF ALL, ON PAGE TWO, FOUR OF YOUR TESTIMONY, YOU'VE NOTED THAT YOU ARE, UH, THE SUBJECT OF YOUR REBUTTAL INCLUDES MR. TESTIMONY AND ALSO SOME TESTIMONY OF CYRUS READ, CORRECT? THAT'S UP THERE ON ABOUT LINE TIM OR SO? YES, IT SAYS, UH, I ALSO ADDRESS THE CHANGES TO THE METHODOLOGY TO IMPUTE THE VALUE OF SELLER DISCUSSED BY SIERRA CUB, PUBLIC CITIZEN, SOLAR UNITED WITNESS WITNESSES, CYRUS READING, CARL RABAGO AND PROPOSALS MADE BY SOLAR AND STORAGE COALITION.

DON'T HAVE IN FRONT OF YOU HIS TESTIMONY, BUT, WELL, LET ME ASK YOU, IF YOU DO, DO YOU HAVE MR. REED'S TESTIMONY IN FRONT OF YOU? NO, NOT THAT I'M AWARE OF.

AND THEN ON PAGE NINE, UM, AROUND LINE NINE, YOU ALSO AGAIN SAY THAT YOU'RE ADDRESSING WITNESSES, CYRUS REED AND CARL RABAGO CORRECT.

UH, YES.

I BELIEVE THE QUESTION WAS, DID ANY INTERVENERS OBJECT AND THE ANSWER WAS YES, UH, WITNESSES, CYRUS REED, AND CARL RABAGO AS WELL AS THE S S RIGHT.

SO THE FIRST AREA I WANT TO TALK ABOUT JUST BRIEFLY IS CYRUS REED'S TESTIMONY THAT YOU'RE REBUTTING AND HIS CONCERNS.

UH, AND I DON'T THINK YOU PROBABLY

[01:10:01]

THAT'S FINE.

IF YOU DON'T.

I JUST WANTED TO SEE IF YOU DID.

UM, BUT DO YOU RECALL THAT ON PAGE 10 OR IN CYRUS REED'S TESTIMONY, HE HAD TWO KIND OF PRINCIPAL CONCERNS ABOUT THE EES.

ONE OF THEM WAS THAT IF YOU CHANGED THE VOS RECOVERY METHODOLOGY, YOU FOR PART OF IT, THAT THAT WOULD THEN REQUIRE YOU TO RECOVER COSTS OUT OF THE EXISTING EES, MAYBE EVEN AS MUCH AS $4 MILLION THAT ARE NOT ALREADY BEING COLLECTED.

AND THAT, THAT WOULD PUT PRESSURE ON ALL THE OTHER EES PROGRAMS THAT, THAT FEE SUPPORTS.

DO YOU RECALL THAT GENERALLY? YES.

AND DO YOU ALSO RECALL THAT HIS KIND OF FOLLOW-UP CONCERN ONE OF THE QUICK QUESTION THOUGH, AND YOU HAD Y'ALL THE COMPANY ADDRESSED THAT CONCERN, AT LEAST IN PART BY POINTING OUT THAT, UM, THE EES WAS KEY BECAUSE IT WAS NOT SET IN THE RIGHT CASE, IT WAS SET IN THE BUDGET PROCESS AND THE SOLUTION WAS JUST AT THE BUDGET COULD BE EXPANDED TO ALLOW FOR THE, FOR THE NEW CHARGES.

I, I DON'T KNOW THAT I, THOSE RESPONSES, BUT I DO REMEMBER, BUT IS THAT CORRECT? TO THE BEST OF MY KNOWLEDGE.

OKAY, GOOD.

AND DO YOU THEN RECALL THAT MR. REED'S NEXT CONCERN WAS WELL? OKAY.

IF THAT'S FINE.

IF, SO HIS CONCERN THEN WAS THAT THE BUDGET PROCESS WAS VERY COMPRESSED, UNFAIRLY, COMPRESSED, AND IS ALSO SO CLUTTERED WITH ISSUES THAT IT'S A GOOD PLACE FOR THE ISSUE TO GO AND GET LOST.

YOU RECALL THAT IN HIS TESTIMONY? NO, I DON'T.

UH, DO YOU DISPUTE THAT IT'S IN HIS TESTIMONY AND I'LL JUST REPRESENT IT AS ON PAGE 11 OF HIS TESTIMONY? I, I DON'T KNOW.

WHAT'S IN THE TESTIMONY.

I DON'T RECALL.

SO JUST LET'S TALK ABOUT THE BUDGET PROCESS BRIEFLY.

YOU'RE FAMILIAR WITH THE BUDGET PROCESS, CORRECT? YES.

AND THE BUDGET PROCESS, UH, THE BUDGET IS ONLY COMES OUT FOR PUBLIC REVIEW AND FOR REVIEW BY THE COMMITTEES, THE RMC IN THE EEC ON OR ON OR AROUND JULY 15TH OF EACH YEAR, CORRECT? UH, I BELIEVE THAT'S RIGHT.

AND THEN THERE ARE POTENTIALLY, MAYBE THERE'S POTENTIALLY, MAY BE ONE MEETING OF COUNCIL AND OF THESE COMMITTEES.

AND THEN THE COUNCIL DECIDES THE BUDGET BY, UM, AUGUST, CORRECT? I BELIEVE THAT'S CORRECT.

DO YOU RECOGNIZE THE BASIS OF MR. REED'S CONCERN THAT THIS IS COMPLICATED STUFF? IT'S IMPORTANT IT'S AND YET THERE'S REALLY NOT AN OPPORTUNITY TO REVIEW IT FAIRLY IN THIS BUDGET PROCESS.

DO YOU UNDERSTAND HIS CONCERN? I, I CERTAINLY THINK THAT THERE ARE AMPLE OPPORTUNITIES THROUGHOUT THE YEAR THAT DOESN'T NECESSARILY NEED, IF YOU WANT TO TALK ABOUT THE PROGRAM AND HOW THE PROGRAM IS FUNDED THAT CAN, THAT CAN OCCUR THROUGHOUT THE YEAR THROUGH MULTIPLE EUC, MULTIPLE RMC.

AND THEN EVENTUALLY ONCE IT GETS TO CITY COUNCIL, CERTAINLY THAT IS AN EXTENDED PROCESS WHERE ANY PUBLIC CITIZEN CAN COME FORWARD AND ADDRESS THE BUDGETS.

BUT YOU'D AGREE WITH ME THAT, TO THE EXTENT THAT WE'RE TALKING ABOUT THE BUDGET PROCESS ITSELF, THAT'S GOING TO BE USED TO FIX THE PROBLEM OF NOT ENOUGH FUNDS CAUSED BY CHANGING THE VALUE OF SERVICE VALUE OF SOLAR, UH, UH, COMPENSATION THAT THE BUDGET PROCESS IS VERY TIGHT.

NO, I, I, I DISAGREE.

I THINK THERE'S PLENTY OF OPPORTUNITY TO, TO SET EXPECTATIONS FOR OUR PROGRAM TO GET IT INTO THE BUDGET, IF THAT'S THE, THE, UM, UH, METHODOLOGY OR THE, UM, UM, UH, THE PROTOCOL TO, TO, TO MOVE FORWARD WITH, UH, CAPTURING ALL THE APPROPRIATE COSTS.

UH, AND, AND THEN CERTAINLY GOING THROUGH THE APPROVAL PROCESS WELL FOR THE COMPANY, MAYBE, BUT FOR THE PUBLIC, IT ONLY, WE ONLY LEARN OF THESE, UH, CHANGES ON JULY 15TH AND THEN BY AUGUST, IT'S DECIDED, BUT THROUGHOUT THE YEAR, THE SCOPE OF THOSE PROGRAMS CAN BE ADDRESSED.

IT IS NOT, UH, UP UNTIL THE MO THE, THE VERY MOMENT IS HOW MUCH HAS NEEDS TO BE IN THERE AS YOU MOVE THROUGH THE, THE, THE BUDGET PROCESS, UH, WHICH, AND CERTAINLY THE EUC, UH, COMMISSION, UH, CERTAINLY CAN, CAN ATTEST TO THROUGHOUT THE YEAR, THEY, THEY CAN CERTAINLY PULL UP ANY IES PROGRAM AND SAY, LET'S TALK ABOUT THE SCOPE AND, AND HAVE THOSE DISCUSSIONS.

THERE'S AMPLE OPPORTUNITY TO SHAPE THOSE PROGRAMS. AND THEN THE CONSEQUENT, UH, EXPENSES, UH, UH, WE WOULD FOLLOW UP THROUGH THE BUDGET PROCESS, BUT THE PUBLIC DOESN'T KNOW WHAT'S IN THE BUDGET THAT'S BEING PROPOSED UNTIL JULY 15TH, CORRECT.

THAT I BELIEVE THAT'S CORRECT.

ONE MAIN ISSUE TO TALK TO YOU ABOUT, UH, LEFT IN YOUR TESTIMONY.

SO LET'S MOVE ON NOW TO THE NEXT ISSUE.

AND I DON'T, I THINK I'VE REALLY KIND OF GOT

[01:15:01]

YOU TALKED ABOUT MR. ROBERT GO'S TESTIMONY, OR AT LEAST YOU REBUT HIS TESTIMONY.

TELL ME, DO YOU AGREE WITH ME THAT WHAT YOU'VE DONE IN YOUR REBUTTAL TESTIMONY IS KIND OF ADDRESSED THAT ARE FAIRLY HIGH LEVEL, SOME OF THE ISSUES THAT RELATE TO THE VALUE OF SOLAR PROPOSED CHANGE OF THE VALUE OF SOLAR PROGRAM? THAT'S EXACTLY RIGHT.

IS THAT A HIGH LEVEL, RIGHT.

AND YOU ACTUALLY EVEN SAY THAT TO THE EXTENT THAT YOU NEED TO DETAIL GO TALK TO MR. JEANETTE, HOW DO YOU SAY HIS NAME? GENESEE GENESEE AND MR. BURNHAM, CORRECT? CORRECT.

SO YOUR T YOUR REBUTTAL TESTIMONY THEN DOES OFFER AN OPPORTUNITY FOR US TO KIND OF LOOK AT THIS FOR JUST A FEW MINUTES AT A HIGH LEVEL, AND KIND OF BE SURE WE KNOW WHERE THE GOALPOSTS ARE.

YOU AGREE WITH ME? YES.

OR YOU'RE WILLING TO DO THAT, WILLING TO DO THAT.

SO WHAT YOU'VE MENTIONED IN YOUR TESTIMONY IS YOU'VE MENTIONED THE CHANGE IN METHODOLOGY FOR RECOVERY, FROM PSA TO EDS, RIGHT? YES.

CAN YOU TELL ME WHAT PAGE YOU'RE? I THINK YOU ACTUALLY MENTIONED IT A COUPLE OF TIMES.

THAT'S WHY I WASN'T FOCUSING ON A PARTICULAR PAGE.

UH, YOU ALSO ADDRESS, UH, THE, THE NEW METHODOLOGY THAT THE COMPANY IS GOING TO PROPOSE, WHICH YOU CALL A, UM, UH, AN EMBEDDED COST METHODOLOGY, CORRECT? YES.

TO DETERMINE THE AVOIDED COST POOR PART OF IT.

AND YOU TALK ABOUT THE THREE PILLARS, THE THREE NEW PILLARS, AND THOSE PILLARS ARE, AS WE'VE TALKED ABOUT BEFORE THE QUOTE AVOIDED COST PART, WHICH HAS WITHIN IT, THE ELECTRIC ENERGY TRANSMISSION AND ANCILLARY SERVICE DETERMINATIONS, CORRECT? YES.

AND THEN YOU HAVE THE SOCIETAL BENEFITS PILLAR, WHICH HAS THE, THE, THE ENVIRONMENTAL PIECE OR THE EMISSIONS PIECE THAT IN WHICH YOU LOOK AT CO2, CORRECT.

I'LL DEFER TO WITNESS JENSIE ON THAT.

AND MY INTENT IS NOT TO GET INTO THE DETAILS OF THOSE FOR THE MOMENT.

UH, AND THEN THERE'S THE PERFORMANCE INCENTIVES ARE BASED PERFORMANCE BASED INCENTIVES, PILLAR, CORRECT? CORRECT.

NOW FROM A HIGH LEVEL, DO YOU AGREE WITH ME THAT MR. ROBERT GO'S POSITION IS THAT THAT METHOD IS WRONG? MR. ABACO HAS HIS OWN POSITION.

I DON'T ATTEST TO WHETHER I, UH, MY TESTIMONY IS, UH, UH, SUPPORTS THE METHODOLOGY THAT HE IS LAYING OUT.

BUT YOU'RE REBUTTING, MR. ROBERT GOES TESTIMONY, CORRECT.

I'M REBUTTING SPECIFIC PIECES OF IT, WHICH I BELIEVE.

UM, WELL, I ACTUALLY, I MIGHT BE ABLE TO HELP YOU A LITTLE BIT, IF YOU JUST, CAUSE WE DON'T NEED YOU TO GET BOGGED DOWN IN IT ON PAGE NINE OF YOUR TESTIMONY, UM, ON LINES 11 THROUGH 13, FOR EXAMPLE, YOU SAY, YOU ASKED YOURSELF THE QUESTION, WHAT WAS WISDOM WITNESSES? ROBIN GOES RECOMMENDATION, AND YOU ANSWER WITNESS ROBERT GO RECOMMENDS THAT THE AUSTIN ENERGY VALUE SOLAR PROPOSAL BE SUSPENDED AND THAT THE VIET VALUE SOLAR PROGRAM BE TOTALLY RE-EVALUATED.

NOW THAT IS INDICATIVE.

AND A KIND OF A SUMMARY OF MR. ROBERT GOES DETERMINATION OR CONCLUSION, AND YOU DON'T HAVE TO AGREE WITH HIS CONCLUSION.

I'M JUST ASKING YOU IF THAT'S, WHAT HE'S YOU UNDERSTAND HIS POSITION.

THAT WAS HIS RECOMMENDATION, RIGHT.

SO HIS RE HIS CONCLUSION IS THAT WHAT YOU'RE PROPOSING TO DO IS JUST NOT, NOT THE WAY TO DO IT.

I SUSPECT THAT'S WHAT HIS POSITION IS.

I THINK HE SAID THAT SEVERAL TIMES.

WITH THESE DOCUMENTS HERE.

SO, YES.

SO IF YOU LOOK IN FRONT OF YOU FOR THOSE EXHIBITS THAT I HANDED OUT JUST BRIEFLY, WHILE WE'RE, BEFORE WE MOVE ON TO THE NEXT PIECE, UH, YOU'LL SEE, IN FRONT OF YOU, THIS, UH, UH, FAIRLY THICK EXHIBIT SEVEN, WHICH IS A COPY OF THE NATIONAL STANDARDS, PRACTICE MANUAL FOR BENEFIT COST ANALYSIS OF DISTRIBUTED ENERGY RESOURCES, MARCH, 2022.

AND THEN THE 11 EXHIBIT 11 IS A MAP OF STATES THAT USE THAT USE.

AND THOSE THAT DON'T USE THIS METHOD FOR DETERMINING VALUE OF SOLAR.

DO YOU SEE THOSE IN FRONT OF YOU? I DO.

DO YOU AGREE WITH ME THAT THIS METHODOLOGY THAT'S REPRESENTED BY THIS THERE'S ACTUALLY A MUCH LARGER NOTEBOOK THAT IS ALSO IN THE RECORD AS EXHIBIT NUMBER, SORRY, EIGHT, UH, THAT, THAT'S WHAT THESE ARE THE METHODOLOGIES THAT MR. RABAGO SAYS SHOULD BE USED.

AND I'M NOT ASKING YOU, IF YOU AGREE WITH THEM, JUST SAYING, DO YOU RECOGNIZE GEOX, DO YOU AGREE WITH ME THAT MR. RABAGO PROPOSED THAT THIS METHODOLOGY BE USED TO DETERMINE THE VALUE OF SOLAR, UM, UH, COMPONENT OR PIECE? YEAH, I, I'M NOT NECESSARILY INTIMATELY FAMILIAR.

IN FACT, I'M NOT FAMILIAR AT ALL WITH,

[01:20:01]

UH, AND, AND CONSEQUENTLY, UM, I, I TELL YOU CONCLUSIVELY IF THAT'S HIS PROPOSAL, BUT DO YOU ACKNOWLEDGE WHEN YOU W YOU DID READ HIS TESTIMONY? I DID READ IT, YES.

AND DO YOU RECALL THAT HE CITED THIS AND HIS TESTIMONY IN ONE OF THE FOOTNOTES AFTER HE STATED THAT THIS IS THE METHODOLOGY THAT SHOULD BE USED? I DON'T RECALL THAT.

BUT DO YOU DISPUTE THAT, THAT HE DID? I DON'T.

I JUST DON'T RECALL IT.

THAT'S FINE.

THANKS.

SO, UM, LET ME THEN JUST END, YOU DON'T HAVE THIS IN FRONT OF YOU, BUT FOR PURPOSES OF, UH, KIND OF LAYING OUT THIS HIGH LEVEL SUMMARY OF WHERE WE ARE, I'D LIKE TO REFER YOU TO OUR EXHIBIT NUMBER FOUR, AND I'LL BE GLAD TO LET YOU LOOK AT A COPY OF IT, AND I SHOULD HAVE GIVEN YOU A COPY.

AND I APOLOGIZE, I DIDN'T, BUT FOR THE RECORD, AND FOR THOSE THAT ARE HERE, THIS IS SA, UH, SIERRA CLUBS AND PUBLIC CITIZENS, SUMMARY OF THE TESTIMONIES.

IT'S A FOUR PAGE SUMMARY OF THE TESTIMONIES OF THE WITNESSES.

AND LET ME JUST LET YOU TAKE AWAY.

WELL, BEFORE YOU SHOWED THIS TO THE WITNESS, BEFORE YOU SHOWED THIS TO THE WITNESS, CAN I GET A COPY? I DON'T RECALL THIS.

IT'S AN EXHIBIT.

THAT'S A SUMMARY.

IT'S IN THE BOX.

UM, BUT YEAH, HERE I HAVE NOT SEEN THIS.

I MEAN, I HESITATE TO ASK IF THIS WAS OFFERED AND WHO WERE ADMITTED, IT WAS OFFERED, ADMITTED, PUT IN THE BOX.

IT WAS FALLING ON LINE.

UH, IT'S IN THE RECORD, BUT I MEAN, IT WASN'T GIVEN TO ME AS I'VE GOT ALL THE OTHERS, BUT NOT THIS.

I THOUGHT, I MEAN, MY CONCERN IS SIMPLY IT'S.

I MEAN, IF HE JUST PRODUCED A SUMMARY OF, I, IT LOOKS LIKE WHAT THE, ALL THE WITNESSES ARE TESTIFYING TO.

IT WE'LL GET THE WEIGHT THAT IT DESERVES, YOUR HONOR, TRUST.

THAT'S NOT MUCH WHITE.

MS. RATHER THAN GO THROUGH THE FIGHT OVER THIS ISSUE, WHICH IS NOT REALLY WORTH, UM, FOR PURPOSES OF THE HIGH LEVEL DISCUSSION.

I, IF I REFER THE PARTIES TO THIS EXHIBIT TO LOOK AT, TO SEE WHAT THE HIGH LEVEL FACTS ARE, THEN THEY CAN GO TAKE A LOOK AT IT AND DETERMINE WHAT THEY ARE AS, AS FROM THE EXHIBIT ITSELF.

MR. AND YOU, YOU SAY YOU DID READ HIS TESTIMONY? I DID.

AND DID YOU REVIEW HIS, UH, ATTACHMENTS AND BIO AND ALL OF THOSE ISSUES? UM, I DON'T BELIEVE I READ HIS BIO.

ARE YOU AWARE THAT MR RABAGO WAS, UM, COMMISSIONER AT THE PUBLIC UTILITY COMMISSION? YES.

AND ARE YOU AWARE THAT MR WAS THE VICE-PRESIDENT OF DISTRIBUTED ENERGY SERVICES FOR THE CITY OF AUSTIN, AUSTIN ENERGY FROM APRIL, 2009 TO JUNE, 2012? YES.

ARE YOU AWARE THAT HE INVOLVED AND WAS LEADING THE EFFORT TO PUT IN PLACE THE FIRST VALUE OF SOLAR, UM, A TARIFF OR RATE? I AM NOT.

YOU'RE NOT AWARE OF THAT.

UM, NOW GOING BACK TO SOME OF THE POINTS IN YOUR TESTIMONY, AT A HIGH LEVEL, NOT AT A LOW LEVEL OR IN ANY OF THE DETAILS, THE PROPOSAL THAT AUSTIN ENERGY IS MAKING IS TO REVIEW OR TO INCLUDE IN THE DETERMINATION OR THE CALCULATION OF THE COST OF THE VALUE OF SOLAR CREDIT, THREE ISH, THREE ITEMS THAT WE'VE TALKED ABOUT, UH, ENERGY TRANSMISSION AND ANCILLARY SERVICES AND ONE, UM, UH, EMISSION, CARBON, OR CO2, CORRECT? I, YES, I BELIEVE THE EMISSION IS PART OF THE, THE, UH, ONE OF THE PILLARS.

AND THE RE THE REVIEW OF THOSE COSTS IS DONE IN A BACKWARDS LOOK, A BACKWARDS LOOKING REVIEW, CORRECT? WELL, THE, UH, I, I WON'T, I WON'T SPEAK TO, UH, THE, THE CARBON PIECE, BUT THE AVOIDED COST PIECE YES.

DOES USE, UH, AN EMBEDDED COST BASIS.

AND THAT IS DIFFERENT FROM WHAT MR. ROBERT GOES PROPOSING IN THAT MR. RAVIGO LIKE WHEN THE VALUE OF SOLAR TARIFF WAS, OR TARIFF WAS PUT IN PLACE PROPOSES TO LOOK FORWARD IN TIME 25 YEARS, 30 YEARS, AS LONG AS THE LIFE OF THESE, UH, UH, UNITS WOULD BE TO DETERMINE A DIFFERENT AND BROADER SET OF COSTS.

THAT'S WHAT I UNDERSTAND

[01:25:01]

HIS PROPOSAL DOES.

SO AT A HIGH LEVEL, AND ALSO BEFORE I GO TO THE NEXT QUESTION, HE'S ALSO INCLUDING A BROADER SUITE OF EMISSIONS ARE ENVIRONMENTAL POLLUTANTS.

CORRECT? I BELIEVE I DO RECALL THAT, RIGHT.

HE'S INCLUDING NOT ONLY CO2, BUT METHANE, NOX, SULFUR DIOXIDE.

AND I THINK THAT'S IT FOR THE MOMENT.

UM, I'M NOT, I CAN'T TOTALLY RECALL EVERY, EVERY, UM, UM, ITEM THAT YOU LISTED, BUT I KNOW THAT THERE WAS, WHAT I RECALL IS THERE WAS MORE THAN CARBON AND FROM A HIGH LEVEL, DO YOU UNDERSTAND HIS KIND OF TWO MAIN CONCERNS TO BE AS FAR AS WHY THAT NEEDS TO BE DONE TO DO IT CORRECTLY? HIS TWO MAIN CONCERNS ARE, ARE W W WOULD YOU AGREE THAT THEY ARE ONE TO MAKE SURE THAT THIS CUSTOMER THAT HAS A HOUSE OR BUILDING THAT THEY'RE GONNA PUT, UM, SOLAR ON THAT THEY GET AN ACCURATE AND FULL DETERMINATION OF THE COST OF THOSE, UH, OF THAT EFFORT OF THAT INVESTMENT? CORRECT.

WELL, I TH I THINK THAT AUSTIN ENERGY'S PROPOSAL, UH, BY USING AN EMBEDDED, UH, COST BASIS, ACCURATELY DETERMINES WHAT THE VALUE OF THAT SOLAR IS, UH, UM, ON A HISTORICAL BASIS AND THAT THE SOCIETAL AND, UM, UM, UH, INCENTIVE, UH, UH, OTHER PILLARS MOVE TO ACCOMMODATE, UH, THE REMAINDER OF THE COSTS.

RIGHT? I UNDERSTAND THAT'S YOUR POSITION, BUT I GUESS THE QUESTION WAS, YOU UNDERSTAND THAT MR. ROBERT GOES CONCERN IS THAT THAT IS NOT GETTING FULL COST.

AND THAT INSTEAD YOU NEED TO LOOK FORWARD TO, IF YOU'RE GOING TO OWN THE PLANT, THIS, THIS, THIS, THESE, UH, PANELS FOR 25 YEARS AND PUT THEM ON YOUR BUILDING, THEN YOU NEED TO LOOK FORWARD TO SEE WHAT THE COST OF GAS ARE GOING TO BE THE COST.

HOW MANY OTHER PANELS ARE YOU GOING TO BE COMPETING WITH? WHAT KIND OF A COST YOU'RE GOING TO HAVE FOR CAPITAL AND ALL OF THESE KINDS OF ISSUES, UM, LOOKING FORWARD IS WHAT, THAT'S, WHAT HE BELIEVES NEEDS TO NEEDS TO BE DONE, TO BE SURE THAT THERE'S A FULL VALUATION OF THE COST, AS OPPOSED TO ONLY PARTIAL.

I CAN'T ATTEST TO, YOU KNOW, WHAT MR. RABAGO WAS, WAS WHAT ALL COSTS HE'S TRYING TO CAPTURE, BUT YOU READ HIS TESTIMONY.

I DID READ HIS TESTIMONY.

AND DO, WOULD YOU AGREE WITH ME THAT ONE OF THE OTHER MAIN CONCERNS THAT HE'S MENTIONED A COUPLE OF TIMES IS THAT YOUR PROPOSAL TREATS THE VALUE OF SOLAR CUSTOMERS WHO ARE PRIMARILY RESIDENTIAL CUSTOMERS OR SMALL BUSINESS CUSTOMERS.

IT TREATS THEM, OR IT REQUIRES THEM TO BE TREATED AS IF THEY WERE A WHOLESALE GENERATOR, LIKE WHOLESALE GENERATORS GENERATORS THAT ACTUALLY BUY AND SELL POWER IN THE ERCOT MARKET.

DO YOU RECALL HIS BEING CONCERNED ABOUT THAT? I DO REMEMBER SOME TESTIMONY ON THAT, BUT ONCE AGAIN, THAT IS WHAT, UM, UH, THE, THE EMBEDDED VALUE, THE EMBEDDED COST, UH, UH, THE, THE, THE AVOIDED COST THAT'S BASED ON AN EMBEDDED BASIS, ACCURATELY DETERMINES WHAT THE VALUE OF THAT SOLAR IS.

IF YOU'RE BUYING AND SELLING IN THE ERCOT MARKET, IT IS BASED ON WHAT THE ACTUAL VALUE OF THAT SOLAR, WHICH WE'RE ASKING ALL OUR RIGHT PAIRS TO PAY.

BUT YOU WOULD AGREE WITH ME THAT THESE VALUE, THESE VALUE OF SOLAR CUSTOMERS, THESE ROOFTOP, SOLAR CUSTOMERS, THEY'RE NOT PLAYING IN THE ERCOT MARKET.

THEY'RE NOT BUYING AND SELLING IN THE ERCOT MARKET.

ARE THEY, UH, I KNOW THERE THEY ARE.

UM, UH, THEY ARE MAKING A FINANCIAL DECISION TO, UM, UH, INSTALL ROOFTOP, SOLAR, AUSTIN ENERGY IS SAYING THAT THE VALUE OF THAT GENERATION IS X BASED ON EMBEDDED COSTS.

AND, AND THEN THE DECISION IS THEIRS.

OH, ARE YOU KIDDING? OKAY.

UTILITY SCALE SOLAR PLANT AND OR OTHER GENERATORS IN THE ARCOT MARKET? I CAN'T SPEAK TO THAT.

SORRY.

I'M ALREADY TAKING MORE TIME THAN I WANTED TO.

UH, ONE LAST QUESTION ABOUT MR. RODRIGO'S THOUGHTS.

UM, HE'S ALSO CONCERNED ABOUT THE NEW GEN STUDY ABOUT ONE IN PARTICULAR POINT ABOUT THE NEW GEN STUDY.

AND THAT IS THAT NEW GEN SEEMS TO MENTION AN ALMOST SEEMS TO BE HINTING AND EXPRESSING EXPRESSLY STATING THAT THEY ARE IN FACT MORE IN FAVOR OF UTILITY SCALE, SOLAR THAN ROOFTOP SOLAR.

DID YOU RECALL MR. RABAGO MENTIONING THAT? UM, I DON'T RECALL THAT, BUT WOULD YOU, WOULD YOU ACKNOWLEDGE THAT REQUIRING THE ROOFTOP SOLAR PARTIES OR CUSTOMERS TO BUY AND SELL TO, OR TAKE THEIR POWER BASED ON ERCOT PRICING THAT THEY'RE ESSENTIALLY BEING PUT INTO COMPETITION WITH

[01:30:01]

SO I'M JUST LOOKING AT SOME OF THE LAST THINGS THAT I WANTED TO COVER IN YOUR TESTIMONY.

AND I BELIEVE MOST OF THIS WILL PROBABLY BE COVERED WITH THE NEXT PANEL.

SO IF I COULD JUST HAVE ONE SECOND YOU ON PAGE 12 ON AROUND LINE SIX THROUGH EIGHT, YOU SAY THAT YOU'RE YOU ASK YOURSELF, IS AUSTIN ENERGY PROPOSING TO REDUCE THE VALUE OF SOLAR AND YOU ANSWER, NO, THE RATE IS ACTUALLY INCREASING.

AND WE TALKED ABOUT THIS BEFORE, BUT I JUST WANT TO COVER IT AGAIN TO MAKE SURE IT'S, IT'S NOT LEFT UNDONE, BUT, UH, YOU ARE PROPOSING TO INCREASE THAT RATE FOR 9.70 CENTS TO 9.91 CENTS.

SO I'LL DEFER TO MR. JENSEN.

WE DON'T NEED TO GET INTO THE CALCULATION AT ALL, TO THE EXTENT THAT 9.91 CENTS DOESN'T INCLUDE ALL THE FULL COSTS.

THEN EVEN THOUGH IT MAY BE AN INCREASE, IT STILL COULD BE TOO LOW, CORRECT? NO, NO.

I DO NOT AGREE WITH THAT.

NO, I'M NOT ASKING YOU IF IT IS TOO LOW.

I'LL I'LL I GOOD ASK YOU THAT.

I'M ASKING IF, TO THE EXTENT THAT IT DOESN'T INCLUDE ALL THE COSTS, EVEN IF IT'S AN INCREASE, IT COULD STILL BE TOO LOW.

SO I, YOU KNOW, I DON'T KNOW WHAT THE PARAMETERS, SO ONCE I'M GOING TO ASK IT AGAIN, THIS IS NO, I'M JUST ASKING YOU IF 9.91 STANCE.

IF IT'S, IF IT DOESN'T INCLUDE ALL THE COSTS THAT IT SHOULD, IT SHOULD INCLUDE, IT COULD STILL BE TOO LOW, EVEN THOUGH IT'S AN INCREASE.

OH, I, I THINK IT DOES REPRESENT A FAIR VALUE.

I KNOW YOU THINK THAT, BUT ANYWAY, NO, I WILL MOVE ON.

MR. RABAGO HAS PROPOSED USING SOME, UH, PROXY, UH, VALUES IN THE CALCULATION OF THIS RATE.

IF THE RATE IS LEFT IN PLACE OR IF YOURS IS ADOPTED.

DO YOU RECALL THOSE? SAY THAT, REPEAT THAT ONE MORE TIME, SIR.

MR. ROBERT HAS INCLUDED SOME PROXY COSTS IN THE RATE CALCULATION.

DO YOU RE THAT MAY ACTUALLY BE FOR THE OTHER PANTS? I DON'T RECALL.

MS. MANIA, THAT'S ALL I HAVE FOR YOU.

SO THANK YOU.

UM, MR. DON ROSS, BRIAN DOMBROWSKI.

UM, IF YOU CAN, UM, TURN TO THOSE, UM, EXHIBITS THAT ARE IN FRONT OF YOU.

AND I THINK WHAT I WILL DO, MR. DOMBROWSKI IS IT SEEMS TO ME LIKE THE, THE ISSUES THAT I WANT TO TALK TO YOU ABOUT THAT ARE, ARE KIND OF IN THE FRONT AND THE BACK OF YOUR TESTIMONY WITH THE FAYETTE POWER PLANT ISSUES SANDWICHED IN BETWEEN.

SO I THINK I'LL GET THE FAYETTE ISSUES OUT OF THE WAY FIRST AND THEN COME BACK AND JUST TALK ABOUT THE REST OF THAT KIND OF TOGETHER, IF THAT'S ALL RIGHT.

SO ON THE FAYETTE, UH, POWER PLANT ISSUES, AND YOU'VE ADDRESSED THIS ON PAGE 22 OF YOUR TESTIMONY, CORRECT? THAT IS CORRECT.

AND MR. DOMBROWSKI, WE'VE ALREADY TALKED ABOUT THIS BEFORE, SO I'LL TRY NOT TO GET BOGGED DOWN IN IT TOO MUCH, BUT AS YOU RECALL THAT WE TALKED ABOUT THE FACT THAT THE 2030 PLAN, THE AUSTIN ENERGY CITY OF AUSTIN, 2030 PLAN, WHICH IS CORRECTLY CALLED THE AUSTIN ENERGY RESOURCE GENERATION AND CLIMATE PROTECTION PLAN TO 2030, WHICH I BELIEVE WAS ADOPTED BY THE CITY COUNCIL ON MARCH 26TH, 2020.

THAT, THAT ON PAGE, UM, THREE INCLUDES A SECTION TITLED FAYETTE POWER PROJECT.

AND THAT SECTION SAYS THAT AUSTIN ENERGY WILL MAINTAIN ITS CURRENT TARGET TO CEASE OPERATION OF AUSTIN ENERGY'S PORTION OF THE FAYETTE POWER PROJECT, COAL PLANT BY YEAR END 2022.

AND THE NEXT SENTENCE IS AUSTIN ENERGY WILL CONTINUE TO RECOMMEND TO THE CITY COUNCIL, THE ESTABLISHMENT OF ANY CASH RESERVES NECESSARY TO PROVIDE FOR THAT SCHEDULE.

SO THE, THE, THIS IS A POLICY OF THE CITY AND A POLICY OF AUSTIN ENERGY, CORRECT? THAT'S CORRECT.

IN THAT, UH, THE RESOURCE GENERATION AHEAD WOULD BE A PART OF OUR POLICY AND IT HASN'T BEEN RESCINDED OR CHANGED.

WAS CALLING THE RIGHT FILING PACKAGE, BOTH THE NARRATIVE PART AND THE SCHEDULES AND WORK PAPERS, BUT MAYBE IT'S MORE APPROPRIATELY TECHNICALLY CALLED THE RAID FILING PACKAGES.

AND WE'VE TALKED ABOUT THIS BEFORE, AS WELL IN YOUR RATE FILING PACKAGE, WHICH I

[01:35:01]

THE NARRATIVE PART IN THE SCHEDULES ARE SEPARATE, BUT, UH, IN, IN, IN YOUR, IN THE NARRATIVE PART OF YOUR FILING, YOU HAVE NOT INCLUDED ANYTHING ABOUT FAYETTE PROJECT IN ANY OF THAT DISCUSSION, CORRECT? WE DID NOT HAVE A, UM, A SUBSECTION DISCUSSING FAYETTE, UM, IN THAT NOR ANY OTHER, OTHER GENERATING RESOURCES THAT I RECALL, RIGHT.

IT IS INCLUDED IN.

AND WE TALKED ABOUT THIS BEFORE.

IT IS INCLUDED IN CERTAIN LINE ITEMS IN THE SCHEDULES AND WORK PAPERS.

IT'S A USED AND USEFUL ASSET, BUT THERE'S NO DISCUSSION OF IT OR EXPLANATION OR, UM, ANY KIND OF SUPPORT FOR THOSE NUMBERS AND KIND OF TEXTUAL SUPPORT, CORRECT.

AGAIN, UH, NO, WE DON'T HAVE SECTION SPECIFIC DRESSING USED IN USEFUL ASSETS.

SO, UM, WE'VE ALSO TALKED ABOUT HOW LONG HAVE YOU BEEN DOING UTILITY WORK? I'VE BEEN IN A POWER AND UTILITY SECTOR SINCE 1992.

I DON'T KNOW HOW LONG THAT IS.

AND WE MAY GET INTO THIS ISSUE OF WHETHER THIS IS A LEGAL QUESTION AGAIN OR NOT, BUT THE SAME QUESTION AS BEFORE, IS IT IN YOUR EXPERIENCE A FACT THAT THE UTILITY, AND IN THIS CASE, THE AUSTIN UTILITY, OUR AUSTIN ENERGY BEARS THE BURDEN OF PROOF ON ITS ISSUES IN THE RIGHT CASE.

UH, YOUR HONOR, I OBJECT FOR THE SAME REASON I OBJECTED TWO DAYS AGO.

I MEAN, I THINK WE UNDERSTAND THE RESPONSIBILITIES OF THE PARTIES AND THAT, BUT THAT DOESN'T MEAN THIS WITNESS.

WHO'S NOT A LAWYER DOES.

THAT'S FINE.

I'LL JUST MOVE ON.

UM, AND USUALLY, OR AT LEAST IN, IN, UH, MANY RATE PROCEEDINGS, THE WAY THAT YOU MEET THAT BURDEN OF PROOF IS BY PUTTING ON NUMERICAL CALCULATIONS, BUT ALSO TEXTUAL SUPPORT.

THAT EXPLAINS WHY, UM, SOMETHINGS SHOULD BE FOUND TO BE REASONABLE AND NECESSARY, CORRECT? SAME OBJECTION, YOUR HONOR.

I MEAN, THE SUSTAINED AND MY CONCERN, MR. BRAZIL IS THIS IS, THIS IS TRACKING TERRITORY THAT WE TRACKED ON.

I YOU'RE RIGHT, YOUR HONOR.

I THINK I'LL JUST LET, LET IT GO.

AND WE'LL MOVE ON TO THE NEXT ISSUE LIKE MR. DOMBROWSKI OR THE SAME ISSUE, BUT NEXT AREAS, MR. DOMBROWSKI IN AT LEAST JUST TO BE CLEAR, UM, FAYETTE POWER PLANT IS NOT MENTIONED ONCE IN ANY FORM OR FASHION IN THE T IN THE, IN THE TEXTUAL PART OF THE RATE FILING PACKAGE.

I, I CAN'T STATE THAT CAUSE I, I DON'T KNOW EVERY WORD OF THAT DOCUMENT.

I DON'T KNOW WHETHER IT'S MENTIONED OR NOT.

UM, WE DON'T HAVE A SUBSECTION ON AND USEFUL ASSETS.

NOW, IF YOU'D LOOK AT THOSE EXHIBITS IN FRONT OF YOU, UM, AND FIRST, IF YOU COULD LOOK AT, UH, AUSTIN ENERGY'S RESPONSE TO SHARE A CLUB, A PUBLIC CITIZEN, TWO DASH THREE, THIS IS AN RFI RESPONSE.

IT'S UH, EXHIBIT 12.

I HAVE THAT IN FRONT OF ME.

IT'S YOUR, YOU HAVE NOT A AUSTIN ENERGY HAS NOT CONDUCTED ANY RESOURCE PLANNING STUDIES ON FAYETTE SINCE 2018.

AND THERE ARE NO CURRENT STUDIES ON ENVIRONMENTAL COMPLIANCE, RISKS AND COSTS.

UM, I DID NOT RESPOND TO THIS.

I CAN ONLY TELL YOU WHAT WHAT'S WRITTEN IN HERE.

AND, UM, IT STATES THAT, UM, AUSTIN ENERGY PERFORMED ANALYSIS OF THE PURPOSES OF RESOURCE PLANNING AND POTENTIAL RATE IMPACTS USING SCENARIOS THAT INCLUDED THE ASSUMPTIONS OF DISCONTINUED OPERATIONS AT FAYETTE FINANCIAL FORECAST BETWEEN 2019 AND 2022 HAVE BEEN BASED ON AUSTIN ENERGY, RETIRING UNITS AT FAYETTE, AUSTIN ENERGY HAS NO OTHER AVAILABLE STUDIES OR ANALYSIS RELATED TO THE ECONOMICS OF THE CONTINUED OPERATIONS OF FAYETTE POWER PLANT THAT HAD BEEN CONDUCTED SINCE 2018.

SO LISTEN, SOME ATTACHMENTS FOR YOU TO REVIEW.

SO NO STUDIES SINCE 2018, CORRECT.

THAT'S WHAT IT SAYS.

SO NOW IF WE COULD TURN TO THE NEXT ONE, WHICH IS, UH, SIERRA CLUB, UH, 13, THE RESPONSE TO AES RESPONSE TO RFI TWO DASH EIGHT.

I HAVE IT IN FRONT OF ME.

UM, SIERRA CLUB ASKED FOR ANALYSES OF EXPENDITURES OVER $1 MILLION.

AND THAT REQUEST, CORRECT?

[01:40:04]

AND THOSE WERE NOT PROVIDED, CORRECT? THAT'S CORRECT.

THERE WAS AN OBJECTION FILED BY AUSTIN ENERGY AND, UM, CITY OF AUSTIN LAW DEPARTMENT DETERMINED, RESPONSIVE AUSTIN, ANY INFORMATION THAT'S CONSIDERED, EITHER CONFIDENTIAL, COMPETITIVE INFORMATION, CONFIDENTIAL, CRITICAL INFRASTRUCTURE INFORMATION, OR CONFIDENTIAL CUSTOMER INFORMATION.

AND THEN IF YOU COULD LOOK AT EXHIBIT NUMBER 14, WHICH IS, UH, THE RESPONSE TO RFI THREE DASH THREE, I HAVE THAT IN FRONT OF ME.

AND DO YOU AGREE WITH ME THAT AUSTIN ENERGY HAS NOT EVALUATED THE IMPACTS OF IMPENDING GOOD NEIGHBOR OF THE IMPENDING EPA GOOD NEIGHBOR RULE, WHICH COULD REQUIRE THE INSTALLATION OF STR I BELIEVE THAT'S A SELECTIVE CATALYTIC REDUCTION, UH, EQUIPMENT AND YOUR RESPONSE IS NO, WE HAVE NOT CORRECT.

EXCUSE ME, PLEASE PROVIDE ALL ECONOMIC ANALYSES AND PROJECTIONS OF THE COST OF TUNING OR UPGRADING FAYETTE POLLUTION CONTROLS TO COMPLY WITH THE EPA PROPOSED GOOD NEIGHBOR RULE.

IF THE COMPANY HAS NOT PERFORMED SUCH ANALYSIS, WHY NOT? AND IT SAYS NO RESPONSIVE DOCUMENTS EXIST BECAUSE THE PROPOSED RULE HAS NOT BEEN ADOPTED.

SO ALL OF THOSE WERE ISSUES THAT RELATED TO THE QUESTION OF WHETHER OR NOT CONTINUING TO OPERATE FAYETTE PAST 20, 22 IS PRUDENT, REASONABLE AND NECESSARY.

AND THOSE INDICATE THAT THERE'S BEEN NOTHING PROVIDED UNDER THOSE THAT WOULD SUPPORT A FINDING THAT, UM, THE OPERATE CONTINUED OPERATION IS REASONABLE AND NECESSARY.

COULD YOU ASK YOUR QUESTION AGAIN? I'M NOT QUITE MAKING THE ASSOCIATION TEST YOUR IN THESE REQUEST, THE COUNCIL, THE IMPORTANCE OF THIS ISSUE IS ESTABLISHED BY THE INCLUSION OF IT IN THE 2030 PLAN, BUT IN SPITE OF ITS IMPORTANCE, THE COMPANY IS NOT PROVIDING, NOT CONDUCTED ANY STUDIES SINCE 2018 HAS NOT PROVIDED INFORMATION ABOUT $1 MILLION IN, UH, UH, INCREASES OR EARLY INVESTMENT, AND ALSO HAS NOT PROVIDED, UH, ANY KIND OF INFORMATION THAT INDICATES PLANNING FOR ANY KIND OF ENVIRONMENTAL, UH, ISSUES THAT MAY COME UP IN THE FUTURE.

IN SPOT BECAUSE OF THE POLICY THAT'S IN PLACE UNDER THE 2030 PLAN, IT'S A MATTER THAT'S WAS SCHEDULED TO BE ADDRESSED IN A DIFFERENT MANNER THAN APPEARS TO HAVE BEEN DONE BY THIS YEAR.

I, I CAN'T AGREE WITH THAT STATEMENT.

NO, I THINK JUST TO WRAP THIS ISSUE UP IN LIGHT OF THE IMPORTANCE PLACED ON C DIFF OR TERMINATING SERVICE OR, UH, EXITING, UH, BEING SERVED BY FAYETTE BY THE, BY THE END OF 2022, AND HERE WE ARE AT JULY, 2022, CORRECT.

DO YOU NOT RECOGNIZE THAT THE PUBLIC AND THE RATE PAYERS HAVE AN INTEREST IN EXPLANATION AS TO WHAT YOU'VE DONE TO TRY TO EXIT WHY YOU'VE NOT BEEN ABLE TO EXIT AND WHAT THE PLAN IS TO EXIT IN THE FUTURE? YES, I DO.

WE HAVE A RESPONSIBILITY TO THE PUBLIC AND TO OUR CUSTOMERS, AND WE'VE HAD MULTIPLE CONVERSATIONS ABOUT THIS WITH OUR CITY COUNCIL, WITH THE UTILITY EXECUTIVE COMMISSION, UH, ON A ROUTINE BASIS ABOUT FAYETTE OUR EFFORTS TO NEGOTIATE AN EXIT.

HOWEVER, FOR THIS TEST HERE IS A USED AND USEFUL ASSET, AND THERE'S NO PLACE TO DISCUSS CLOSING USING A USEFUL ASSET WITHIN A TEST YEAR.

WELL, THERE'S NO PLACE TO DISCUSS IT BECAUSE YOU DIDN'T PUT IT IN THERE.

YOU COULD HAVE PUT IT IN WRITING CHAPTER FOUR, RIGHT? YOUR HONOR, I'M GOING TO OBJECT.

I REALLY FAIL TO SEE THE RELEVANCE OF ANY OF THIS DISCUSSION ABOUT FAYETTE NOT BEING RETIRED.

I MEAN, WE DON'T HAVE A DISCUSSION ABOUT ANY OF OUR UNITS THAT HAVE NOT BEEN RETARD OUR, I MEAN, RIGHT.

YOUR TEST HERE WAS 21 AND I MEAN, THE PLANT IS, IS OPERATING.

SO WE INCLUDED THE COST IF THEY, IF IT WASN'T, WE WOULD'VE TAKEN IT OUT THE RELEVANCE, YOUR HONOR.

AND I THINK THE, THE MAIN CONCERN IS JUST WHETHER OR NOT WE'RE GOING OVER THE SAME ISSUE THAT WE'VE GONE OVER BEFORE.

NO, IT'S BEYOND THAT.

IT'S THAT IT'S, I MEAN, THERE IS THAT AS WELL, BUT ALSO JUST THE RELEVANCE EVEN OF, OF IT AT ALL.

THE RELEVANCE OF IT IS OF COURSE IS THE FACT THAT FAYETTE IS IN THE COST OF SERVICE STUDY COSTS ARE INCLUDED.

AND THE RELEVANCE IS THAT

[01:45:01]

THAT, AND HERE'S THE RATE CASE FILED IN 2022 THAT THE YEAR THAT, UM, UH, THE POLICY ANTICIPATED WOULD BE THE DATE BY WHICH A FATE WOULD BE EXITED.

SO IT'S, IT'S RELEVANT BOTH BECAUSE IT'S INCLUDED IN RIGHTS AND BECAUSE IT'S INCLUDED IN RIGHTS, EVEN THOUGH THE POLICY WAS THAT IT WOULD BE SHUT DOWN OR NO LONGER ONE THAT WOULD BE SERVING THE CITY.

SO IT'S, IT'S CLEARLY RELEVANT.

WELL FROM A POLICY STANDPOINT AND FROM A, YOUR CLIENT'S PERSPECTIVE, I UNDERSTAND FROM, FROM A RATE MAKING PRINCIPLE IT'S USED IN USEFUL.

I MEAN, IT, IT WAS USED IN USEFUL DURING THE TEST YEAR.

AND SO WE'RE, WE'RE THERE ON THAT, BUT LET ME SAY THIS, MR. BRAZIL.

UM, JUST, JUST REAL QUICK, YOU DID GET INTO THIS, UM, FOR THE DIRECT CASE, AND I'M HAVING A PROBLEM, SEEING A BIG DISTINCTION HERE, UH, BETWEEN, UH, YOUR CROSS DURING DIRECT AND YOUR CROSS, YOUR OWN REBUTTAL.

UM, THE OTHER THING IS LET'S GO OFF THERE.

NO, NOT OFF THE RECORD, BUT I'M GOING TO STOP YOUR TIME FOR A SECOND BECAUSE I'M TALKING, BUT YESTERDAY YOU PUBLISHED ABOUT 30 MINUTES AND WE'RE AT LIKE 36 OR 37 MINUTES, AND WE'VE GOT TO STOP IN ABOUT 12 TO 13 MINUTES.

I'M NOT FUSSING AT YOU.

I'M JUST REMINDING YOU, UH, THAT YOU PUBLISHED ABOUT HALF AN HOUR YESTERDAY, YOUR HONOR.

I THINK IT'S A FAIR OBSERVATION.

WE DID BRING THIS UP DURING THE DIRECT, UH, WE'RE S WE REMAIN CONCERNED ABOUT IT.

WE THINK THE COMMISSION, I'M NOT THE COMMISSION, THE CITY COUNCIL WILL BE CONCERNED ABOUT IT.

THE PUBLIC WILL BE CONCERNED ABOUT IT, BUT IN ORDER TO, I THINK YOU'RE RIGHT.

WE DO NEED TO MOVE ON.

SO AT THIS POINT, I'LL SWITCH TO MY NEXT AND LAST SUBJECT WITH MR. DOMBROWSKI.

AND IF, IF I CAN GO AHEAD.

YES, VERY, VERY BRIEFLY.

I UNDERSTAND.

FROM YOUR CLIENT'S PERSPECTIVE AND YES, FROM A PUBLIC PERSPECTIVE, I UNDERSTAND THE POLICY ISSUES AND, AND I, BUT I ACTUALLY THINK YOU'VE LAID A FAIR BASIS TO GO INTO THAT AND BRIEFING AND, AND, UM, YOU KNOW, PROVIDE US A PICTURE OF YOUR CLIENT'S POSITION ON THIS.

SO I FEEL PRETTY COMPETENT.

YOU'D DONE THAT.

SO MR. DOMBROWSKI, THANK YOU FOR GOING DOWN THAT ROAD WITH ME.

UM, NOW LET'S TALK ABOUT ONE LAST ISSUE AND THAT'S THE ISSUES THAT HAVE TO DO WITH THE, UM, UH, ISSUES THAT YOU'VE ADDRESSED IN YOUR REBUTTAL THAT HAVE TO DO WITH THE TIERED PRICING, UH, THAT THE COMPANY HAS RECOMMENDED.

AND THOSE, I BELIEVE SHOW UP BOTH AT THE FRONT OF YOUR TESTIMONY AROUND PAGES NINE THROUGH 12 OR SO, I BELIEVE.

AND THEN ALSO BACK IN THE BACK PARTY WHERE YOUR TESTIMONY PAGES 29, 30, 31, I'M SORRY, ACTUALLY MORE REALLY PAGES 39, 30, 40 AND 41, I THINK.

UM, AND THIS IS THE SAME ISSUE WE'VE TALKED ABOUT BEFORE THE ISSUE OF THE, UM, COMPANY'S PROPOSAL TO, UH, CHANGE THE FIVE TIERED, UM, DECLINING BLOCK RATE DESIGN TO A THREE TIERED BLOCK OR THREE TIER TO DECLINING BLOCK RATE DESIGN.

MY FIRST QUESTION IS, REMEMBER THAT WE TALKED DURING THE DIRECT ABOUT THE ISSUE OF WHETHER OR NOT COST ALLOCATION WAS ACTUALLY BEING MADE IN THE COMPANY'S APPLICATION ALL THE WAY DOWN TO THE TIER LEVEL.

AND WE AGREED, I BELIEVE THAT IT WAS NOT THE COST ALLOCATION AND THE DETERMINATION OF COSTS GOES DOWN TO THE, TO THE CLASS LEVEL.

AND THAT THEN THE TIERS HAVE BEEN CREATED AFTER THAT LEVEL OF COST ALLOCATION.

IS THAT CORRECT? THAT IS CORRECT.

SO IN YOUR TESTIMONY, IF YOU SAY THAT THERE'S A, UH, THAT THE TEARS ARE NOT AT COST, THAT MAY BE SLIGHTLY INCORRECT BECAUSE THERE'S REALLY NOT A DETERMINATION OF THE COST OF EACH TIER, CORRECT? THAT IS INCORRECT.

AND WE'LL LET YOU COME BACK AND EXPLAIN IT ON A REDIRECT.

UM, NOT THAT I DON'T WANT TO HEAR A BIT ON REDIRECT, IF YOU DON'T MIND, UM, YOU, YOU, WE ALSO DISCUSSED THE FACT THAT AUSTIN ENERGY IS HAVING AN INSUFFICIENT OR CLAIMS IT HAS AN IN RECOVERY FROM THE RESIDENTIAL CLASS.

CLASS BECAUSE OF THE SHIFT IN THE, UH, THE NUMBER OF CUSTOMERS WITH HIGH AND LOW, UH, CONSUMPTION PATTERNS.

UM, I'M NOT GOING TO BE ABLE TO GET THE AUSTIN ENERGY AS A REVENUE RE UH, INSUFFICIENCY FROM THE, UH, RESIDENTIAL

[01:50:01]

I THINK OUR POSITION IS THAT WITHIN THE FIVE TIERS, WE HAD A GROWTH OF CONSUMPTION IN TIERS, ONE AND TWO, WHICH ARE BELOW COST OF SERVICE WITHOUT AN OFFSET AND THE INCREASE IN TEARS, UH, FOUR AND FIVE, WHICH ARE ABOVE THE COST OF SERVICE.

SO YES, THAT MAKES IT INSUFFICIENT.

AND WE ALSO DISCUSSED THAT IN A SCHEDULE OR WORK PAPER, UH, H DASH 5.1, THAT THE COMPANY HAD ACTUALLY CREATED FIVE NEW TEARS, BUT THEN HAD USED THE SAME RATE FOR THE THREE MIDDLE TIERS.

I BELIEVE THAT WAS A SCHEDULE WITHIN THE COST OF SERVICE STUDY, WHICH COULD BE ADDRESSED BY MR. EYMAN, BUT GENERALLY IT'S BECAUSE WE HAD FIVE LINES.

WE DIDN'T HAVE FIVE TIERS TO MAKE THE MODEL WORK.

UM, MR. RAVEN CAN TALK A LITTLE BIT MORE ABOUT THAT, BUT WE DID NOT CREATE FIVE TIERS.

THAT WOULD BE CORRECT, EXCEPT FOR THE FACT THAT YOU ACTUALLY CHANGED THE TEAR CUTOFFS, YOU ACT THEY'RE NOT THE SAME AS THE TIER CUTOFFS AS THEY CURRENTLY EXIST.

DO YOU RECOGNIZE THAT I WILL DEFER TO MR. RAVEN TO TALK ABOUT THAT SPECIFIC SCHEDULE WITHIN THE COST OF SERVICE.

SO LET ME GET TO THE PART THAT I NEED TO TALK TO YOU ABOUT, AND THEN WRAP IT UP.

THE COMPANY HAS MOVED COSTS FROM THE TEAR RECOVERY METHOD, FROM THE TIERED, UH, KWH OR ENERGY BASED METHOD OR PORTION OF THE RATE DESIGN OVER INTO THIS NEW TWENTY-FIVE DOLLAR, UH, CUSTOMER CHARGE, CORRECT.

THAT'S CORRECT COSTS THAT UNDER OUR EXISTING RATES WERE RECOVERED ON AN ENERGY BASIS OR A KWH OR MOVE TO THE FIXED CUSTOMER CHART.

AND, AND, AND THE COMPANY SAYS CLAIMS THAT THE REASON FOR THAT WAS TO RECOVER THE INSUFFICIENCY IN THE RECOVERY OF REVENUES IN THE, IN THE CLASS, CORRECT.

IT WAS TO BETTER ALIGN THE, UM, THE FIXED COSTS WITH THE FIXED COST RECOVERY.

DO YOU UNDERSTAND THAT THERE IS SOME THAT ARE ALARMED ABOUT THAT CHANGE? YES.

I'VE HEARD THAT.

NOW TO THE EXTENT THAT THE COMPANY HAD DECIDED LET'S FIND ANOTHER WAY TO DO THIS, THE COMPANY COULD HAVE TAKEN THOSE NEW FA THOSE FIVE NEW TIERS THAT YOU CREATED AND SCHEDULE AND WORK PAPER, H DASH 5.1, AND IT COULD HAVE CHANGED THE RATES THAT EACH ONE RAISED THEM AND RAISED SOME LOWERED SOME SO THAT THE, WITHOUT, SO THAT YOU COULD RECOVER THE FULL REVENUE REQUIREMENT THAT YOU REQUIRED FROM THE RESIDENTIAL CLASS WITHOUT MOVING COSTS TO THE CUSTOMER CHARGE.

A LOT OF PRICE SEPARATION BETWEEN THAT FIRST AND FIFTH TIER.

I DISAGREE WITH THAT STATEMENT AND I'LL DEFER TO, UH, MR. MURPHY ON THE RIGHT DESIGN COMPONENT OF THE RESIDENTIAL RATES.

WELL, THE QUESTION IS NOT WHETHER OR NOT YOU DID, OR WHETHER YOU AGREE WITH IT, THE QUESTION IS JUST WHETHER YOU COULD HAVE DONE IT AND YOU COULD HAVE COULDN'T YOU, AGAIN, I'M GOING TO DEFER TO MR. MURPHY ON THE RATE DESIGN COMPONENT WITHIN THE RESIDENTIAL RATER AND THE PROPOSED RATES.

BUT YOU'VE TALKED ABOUT THIS EXTENT.

THIS IS YOU'RE THE SUBJECT OF YOUR TESTIMONY, MR. DOMBROWSKI.

YOU'RE ASKING ME THAT I DID NOT RUN THE MODEL, RIGHT.

OR THEORETICALLY, WHAT I CAN MAKE THE MATH WORK WITH A LOWER FIXED CHARGE AND FIVE CHEERS.

I'M TESTIFYING THAT I CAN'T ANSWER THAT QUESTION.

LET'S SEE.

FIVE MINUTES MR. MR. BRAZIL, BEFORE LUNCH.

THANKS, YOUR HONOR.

I THINK I'M ABOUT TO THINK I'M ABOUT TO BE, YEAH.

MR. DOMBROWSKI, IF YOU HAD CHANGED THE REV OR THE RATES OF EACH OF THOSE FIVE NEW TIERS, YOU COULD HAVE CHANGED THE TOTAL RECOVERY OF REVENUE IN THE CUSTOMER, A RESIDENTIAL CUSTOMER CLASS.

COULD YOU NOT HAVE AGAIN, I'M GOING TO DEFER TO MR. MURRAY, BUT I WILL TELL YOU THE CHALLENGE, JUST FROM MY PERSONAL KNOWLEDGE, IF YOU HAVE FIVE TIERS AND YOU WANT AN INCLINING BLOCK, YOU HAVE TO HAVE A DIFFERENCE BETWEEN EACH OF THESE TIERS.

AND SO IN ORDER TO HAVE REVENUE ASSURETY, MEANING THAT YOU WILL COLLECT THAT REVENUE, YOU CAN'T PUT SO MUCH, UM, REVENUE ON THOSE OUTER TIERS, AND THAT BECOMES THE CHALLENGE WITH THE INCLINED BLOCKS.

AND THAT'S WHY MANY UTILITIES DON'T HAVE FIVE TIERS.

I KNOW OF NO UTILITY.

THEY USE TWO TIERS, PERHAPS THREE, SOMETIMES, BUT FIVE TIERS CREATES

[01:55:01]

AND SO YOU'RE NOT ASSURED OF THAT REVENUE SURETY, YOU WOULD HAVE A REALLY STRANGE LOOKING SHAPE IF YOU TRIED TO COLLECT ALL OF THAT IN A FIRST TIER AND STILL HAVE FIVE TIERS.

I THINK THAT'S THE CHALLENGE, BUT THE COMPANIES HAD A FIVE TIER SYSTEM SINCE WHEN, UH, THIS WAS THE 2012 RATE CASE AND THE RATES BECAME EFFECTIVE IN JANUARY OF 2013.

AND CURRENTLY YOU HAVE A WEBSITE FOR RESIDENTIAL CUSTOMER CLAP FOR THE RESIDENTIAL CUSTOMER CLASS THAT SHOWS THOSE TIERS AND DESCRIBES THE REASON FOR THEM AS BEING TO DIFFERENTIATE BETWEEN OR TO GIVE CUSTOMERS PRICE SIGNALS ABOUT THEIR CONSUMPTION AND THE VALUE BEING, UM, CONSERVATIVE.

THAT WAS THE REASONING AT 2012 AND IN OUR NARRATIVE.

AND WE PROVIDED EXTENSIVE ANALYSIS ON WHY THAT REASONING WAS INCORRECT.

PASS THE WITNESS, YOUR HONOR.

THANK YOU, MR. BRAZIL.

THANKS.

UM, LET'S GO ON THE RECORD OFF THE RECORD RATHER.

LET'S GO ON THE RECORD.

AUSTIN ENERGY EXHIBIT 11 IS ADMITTED WITHOUT OBJECTION.

SO WE WERE GOING TO START OFF, UM, WITH MR. ROBBINS, YOU HAD A, UH, A STATEMENT OR PRESENTATION THAT YOU WANTED TO MAKE WHENEVER YOU'RE READY, SIR.

UH, I HAVE 33 MINUTES, I THINK THAT'S CORRECT.

UH, YOU ADVISED ME TO SAVE MY TIME AND I TOOK YOUR ADVICE.

UH, I, UH, SENT MY PRESENTATION TO THE JUDGE AND THE PARTIES THIS MORNING, AND I'M GOING TO TRY TO ABBREVIATE IT.

UH, UH, CAN YOU, UH, I HAVE NINE BASIC POINTS OR ISSUES I WANT TO BRING UP.

UH, WOULD YOU, UH, PLEASE, UH, BRING UP THE FIRST SLIDE OR MAYBE THE SECOND SLIDE YEAH.

UH, THIS IS AN EXHIBIT FROM AUSTIN ENERGY'S PRESENTATION TO STAKEHOLDERS WHERE THE UTILITY ATTEMPTS TO EXPLAIN THAT THE IMPACT ON LOW INCOME CUSTOMERS, UH, WILL NOT BE SEVERE BECAUSE LOW INCOME CUSTOMERS ACTUALLY USE MORE, UH, CONSUMPTION THAN HIGHER INCOME CUSTOMERS.

THIS CHART IS TO REPRESENT THE PARTICIPANTS IN THE CUSTOMER ASSISTANCE PROGRAM.

UH, AND, UH, THESE CAP PARTICIPANTS, UH, ARE MEASURED TO USE SLIGHTLY MORE THAN AVERAGE.

HOWEVER, THEY ONLY REPRESENT 7% OF TOTAL CUSTOMERS.

UH, ACTUALLY, UH, I HAVE AN EXHIBIT WHICH I HAVE SENT ALL THE PARTIES THAT DOCUMENTS THAT LOW INCOME HOUSEHOLDS THAT IS ABOVE THAT IS AT 200% OF POVERTY OR BELOW, UH, IS ACTUALLY AROUND 28% OF HOUSEHOLDS IN TRAVIS COUNTY, BUT EVEN MORE CONTRADICTORY.

UH, NEXT SLIDE IS THAT AUSTIN ENERGY ITSELF PROVIDED ME WITH DATA THAT QUANTIFIES HOW MUCH AVERAGE ELECTRICITY IS CONSUMED BY ZIP CODE AND BY HOUSE TYPE IN THE ZIP CODE FOR ALL RESIDENTIAL CUSTOMERS IN 2020.

AND WHEN I MATCHED IT TO THE CENSUS INCOME DATA, UH, THIS IS WHAT I FOUND, WHICH IS BASICALLY THAT INCOME, UH, IS HIGHER.

UH, AND WHEN CONSUMPTION IS HIGHER, WHEN INCOME IS HIGHER NOW, WHEN I ASKED, UH, THE AUSTIN ENERGY, UH, OFFICIAL, UH, RESPONSIBLE FOR THIS DATA, UH, MARK IN BROSKI, UH, WHY THEY DIDN'T USE, UH, CAP DATA, UH, WHY THEY DIDN'T USE THIS INSTEAD OF CAP DATA, UH, HE REPLIED THAT, UH, THE ZIP CODE DATA NEEDED TO CORRECT.

MY TESTIMONY WAS NOT GRANULAR ENOUGH, UH, SINCE IT DID NOT INCLUDE HOUSE TYPE, UH, WHEN I INFORMED HIM THAT THIS WAS ERRONEOUS, UH, DURING QUESTIONING

[02:00:01]

ON JUNE 13TH.

AND, UH, AGAIN, ASKS WHY A LARGER DATASET OF CONSUMPTION WAS NOT USED.

HE HAD NO COGENT RESPONSE.

WHEN I ASKED DURING REBUTTAL DISCOVERY, WHAT EFFECT THIS RADICAL RESTRUCTURING OF RATES WOULD HAVE ON LOW INCOME PEOPLE.

UM, MR. DOMBROWSKI REFERRED ME TO TABLE A, B AND A D AND THE BASE RATE FILING, SHOWING A RANGE OF VERY SMALL INCREASES FOR CUSTOMERS IN CAP, UH, UH, TO ACTUAL RATE DECREASES, YOUR HONOR, DURING MR. ROBINSON'S PRESENTATION, PERHAPS I SHOULD HAVE SAID THIS AT THE OUTSET.

UM, YOU KNOW, THE W I HAVE NOT SEEN WHAT MR. ROBINSON'S PRESENTING.

I KNOW HE SAID HE EMAILED IT, BUT OF COURSE WE'VE BEEN HERE.

THE GUIDELINES DID PROVIDE FOR HIM TO FILE A POSITION STATEMENT, WHICH HE DID LIKE OTHER PARTIES.

UH, THEY DO PROVIDE FOR HIM TO DO A PRESENTATION AND ORAL ARGUMENT TYPE, UH, UH, PRESENTATION.

I JUST WANT TO BRING THIS TO EVERYONE'S ATTENTION.

I'M NOT SURE WHAT WE'RE ABOUT TO SEE, BUT WE'VE NOT SEEN IT, AND WE'VE NOT HAD AN OPPORTUNITY TO RESPOND TO IT.

UM, I DON'T WANT TO SLOW THIS DOWN.

WE CAN ADDRESS IT PERHAPS IN BRIEFING, BUT JUST PLEASE BE AWARE THAT WE HAVEN'T HAD AN OPPORTUNITY TO, TO RESPOND TO ANY OF IT.

SO I'LL JUST MAKE YOU AWARE OF THAT.

UH, AND TO MY KNOWLEDGE, NONE OF THE UTILITIES HERE ARE FACING BANKRUPTCY OR CREDIT DOWN RAIDS BECAUSE THEY HAVE A LOWER MONTHLY CHARGES THAN AUSTIN'S PROPOSED RATES.

THANK YOU, MR. BROOKEDALE.

WE UNDERSTAND, AND I DID SEND THIS SEVERAL HOURS AGO, UH, KNOWING THAT YOU MIGHT HAVE SUCH CONCERNS.

I'M SURE YOU'VE BEEN WORKING HARD, BUT I DID THE BEST I COULD.

UM, I WILL, UM, CORRECT A COUPLE OF SMALL, UH, ERRORS HERE, BUT MY, UH, STATEMENT ON THE RECORD IS THAT, UH, MR. DOMBROSKI FAILED TO NOTE, UH, THAT THE REDUCTIONS IN CUSTOMER ASSISTANCE PROGRAM, UH, BILLS WERE ALMOST ENTIRELY DUE TO INCREASED DISCOUNTS, WHICH HAVE NOT BEEN RULED ON HAVE NOT BEEN APPROVED.

UH, MY SECOND POINT IS THAT CONTINUING PROBLEMS, UH, WITH ENROLLING LARGE HOMES IN THE CUSTOMER ASSISTANCE PROGRAM, UH, DILUTE THE CHART THAT I SHOWED AT THE BEGINNING.

IF YOU HAVE HIGH INCOME HOMES THAT LIKE THE ONE IN THE NEXT SLIDE THAT ARE, UH, IF YOU COULD GO TO THE NEXT SLIDE, UH, IF YOU HAVE A HIGH INCOME HOMES LIKE THIS ONE THAT ARE ENROLLED, IT BRINGS UP THE AVERAGE OF THE CUSTOMER ASSISTANCE PROGRAM PARTICIPANTS.

UM, SO IT'S NOT AN ENTIRELY CLEAN DATABASE TO CREATE A GRAPH FROM, UH, THE ADDRESS OF THAT PARTICULAR HOME, UH, IS FROM A PUBLIC INFORMATION REQUESTS THAT I MADE TO THE CITY OF AUSTIN IN 2020 AUSTIN ENERGY REFUSED TO PROVIDE AN UPDATED VERSION OF THIS RATE CASE FOR THIS RATE CASE.

HENCE MY SPECIAL MOTION DATED JULY 18, THIRD POINT AUSTIN ENERGY IS USING MISLEADING BENCHMARKS.

NEXT SLIDE, PLEASE.

UH, IT, FOR INSTANCE, UH, TRIED TO SAY THAT THESE PARTICULAR LOCAL UTILITIES HAD A HIGH, UM, RESIDENTIAL FIXED CHARGE, AND THEREFORE IT IMPLIES THAT AUSTIN ENERGY IS OUT OF THE NORM.

HOWEVER, WHEN I CHECKED THE BILLS AND RATES OF THE LARGER MUNICIPAL UTILITIES IN TEXAS, UH, NEXT SLIDE, IT APPEARS THAT AUSTIN WAS RIGHT THERE IN THE MIDDLE, AND THAT THERE IS NO MUNICIPAL UTILITY, BUT GEORGETOWN THAT COMES ANYWHERE CLOSE, UH, IN THE MONTHLY BILL THAT AUSTIN ENERGY'S PROPOSING.

[02:05:01]

UH, MY FOURTH POINT IS THAT AUSTIN ENERGY IS INCREASING, UH, CAP SUBSIDY TO COMPENSATE FOR A RADICAL RATE RESTRUCTURING.

THE UTILITY PROPOSES A $6.1 MILLION 73% INCREASE IN OVERALL IN THE OVERALL DISCOUNT, WHICH COMES OUT TO ABOUT $11 AND 15 CENTS FOR THE 93% OF AUSTIN ENERGY CUSTOMERS WHO ARE NOT CAP RECIPIENTS ON THIS IS TANTAMOUNT TO A HIDDEN RATE INCREASE.

BUT SINCE IT'S NOT PAID FOR AS A RATE, IT DOES NOT SHOW UP AS ONE, BUT AS STATED IN 0.1, MANY CUSTOMERS ABSORBING THIS CAP INCREASE ARE IRONICALLY ALSO OF LOW OR MODERATE INCOME, EVEN THOUGH THEY ARE POOR, THEY ARE NOT RECEIVING A CAP DISCOUNT.

MY FIFTH POINT AUSTIN ENERGY USES A FAULTY ANALYSIS MORE THAN ONE REALLY COULD JUSTIFY A RADICAL RATE RESTRUCTURING.

UH, NEXT SLIDE.

THIS IS A GRAPH FROM A STUDY THAT WAS SENT TO ME.

UM, IT WAS DONE BY AUSTIN ENERGY DURING DISCOVERY TO SHOW THAT YEAR BY YEAR, UH, ENERGY EFFICIENCY IS INCREASING AND CONSUMPTION IS GOING DOWN.

AND THE, UH, CONCLUSION WAS THAT, UH, THE, THIS IS GOING DOWN NOT BECAUSE OF PRICE ELASTICITY AND PROGRESSIVE RIGHT STRUCTURES, BUT BECAUSE OF INCREASED ENERGY EFFICIENCY, I LOOKED VERY CLOSELY AT THE ANALYSIS.

I HAVE SOME BACKGROUND IN ENERGY EFFICIENCY AND, UM, THE ANALYSIS DIDN'T ACCOUNT FOR AT LEAST THREE THINGS.

IT DIDN'T ACCOUNT FOR THE HVAC NEEDS OF CUSTOMERS IN DOWNTOWN CONDOS AND HOMES WITH SHARED GEOTHERMAL LOOPS.

UH, IT DIDN'T CONSIDER THE FACT THAT OLDER DWELLINGS WILL EVENTUALLY LOWER THEIR USE AS WELL BECAUSE THEY WILL RE REPLACE THEIR OLD REFRIGERATORS AND AIR CONDITIONERS AND OTHER EQUIPMENT WITH MORE EFFICIENT APPLIANCES.

WHEREAS THE NEW HOMES DO THAT ALL AT ONCE.

AND THIRD THAT AUSTIN ENERGY, UH, HAS NOT DISCUSSED HOW CONSUMPTION, UH, IN RENTAL UNITS ON THE CONTINUOUS SERVICE PROGRAM THAT NEVER UNHOOKS A CUSTOMER, UH, HOW THAT WILL AFFECT THEIR CONCLUSIONS.

MY SIXTH POINT IS THAT, HOW AM I DOING ON TIME? YOU'RE ABOUT 10 MINUTES IN A GREAT, UM, I'M SUCCEEDING AT BEING BRIEF.

UH, THE, UH, CITY OF AUSTIN, UH, SIX POINT THE CITY OF BOSTON HAS ENCOURAGED A CULTURE OF ENERGY CONSERVATION SINCE THE 1980S, BETWEEN 1982 AND 97, A SEPARATE CITY DEPARTMENT WAS IN CHARGE OF PROGRAMS RELATED TO ENERGY RETROFITS, THE ENERGY CODE AND THE GREEN BUILDING PROGRAM IN 1997.

THESE PROGRAMS, UH, MANAGEMENT WAS MERGED INTO AUSTIN ENERGY.

UH, THESE PROGRAMS COMBINED WITH PROGRESSIVE ELECTRIC RATES THAT DISCOURAGE USE HAVE RESULTED IN REALLY THE LOWEST RESIDENTIAL CONSUMPTION OF ANY MAJOR UTILITY IN AIR CAUGHT SLIDE.

THIS IS FROM THE, UH, EIH 61 STUDY FOR 2020, UH, BENCHMARKING AUSTIN TO THE TOP 10 UTILITIES IN TEXAS.

AND IT SHOWS THAT WE ARE THE LOWEST.

UH, WE HAVE A CONSUMPTION THAT'S ABOUT 25% BELOW THE AIR CAUGHT RESIDENTIAL AVERAGE, ONLY 1% OF AIR COTS, 9.6 MILLION RESIDENTIAL CUSTOMERS HAD LOWER AVERAGE CONSUMPTION.

[02:10:01]

UH, AND SINCE AUSTIN ENERGY IMPLEMENTED ITS PEER RATE SYSTEM IN 2013, UH, THERE HAS BEEN A PROFOUND DROP NEXT SLIDE OF GROSS DROP OF 13%.

AND WHILE SOME OF THIS IS DEFINITELY ATTRIBUTED TO, UH, THE OTHER THREE CONSERVATION, UH, PROGRAMS, AS WELL AS FEDERAL APPLIANCE STANDARDS, SOME OF IT CAN BE ATTRIBUTED TO PRICE ELASTICITY OF ELECTRIC COSTS THAT DRIVE CONSUMPTION DOWN ELIM ELIMINATING THE PROGRESSIVE RIGHTS STRUCTURE THAT AUSTIN ENERGY, UH, CURRENTLY EMPLOYEES WILL DISCOURAGE ENERGY CONSERVATION, UH, PRICE ELASTICITY IS AN ESTABLISHED PRINCIPLE IN RIGHT MAKING ANY NUMBER OF NATIONAL AND INTERNATIONAL STUDIES CONFIRM ITS MERITS.

NEXT SLIDE.

THIS IS, UH, THIS IS A CHART FROM A RECENT ENERGY INFORMATION ADMINISTRATION REPORT.

UH, NOTE THAT THE LONGER INELASTICITY CONTINUES, THE MORE ENERGY SAVINGS THAT ACCRUE FROM IT.

UH, THIS IS BECAUSE INSTEAD OF JUST A SHORT-TERM LOWERING FOR MODIFIED BEHAVIOR, STRUCTURAL ENERGY, RETROFITS AND EFFICIENT APPLIANCES ARE ALSO LIKELY TO OCCUR.

AUSTIN ENERGY HAS DISSED.

I LOVE THIS PHRASE.

AUSTIN ENERGY HAS DISPARAGED PROGRESSIVE RATES AS, AND I QUOTE A BRUTAL PRICE SIGNAL TO FOCUS ON CONSERVATION UNQUOTE BECAUSE IT ALLEGEDLY PREVENTS IT FROM COLLECTING RATE REVENUE.

I WONDER HOW MANY NIGHTS THEY STAYED UP COMING UP WITH THAT.

UH, AUSTIN ENERGY HAS TRIED TO DISMISS PRICE ELASTICITY IN ITS BAIT, RACE FILING AND, UH, TABLE SEVEN 14 ON PAGE 92.

NEXT SLIDE, AUSTIN ENERGY DISPLAYS GRAPH ATTEMPTING TO SHOW PRICE.

ELASTICITY IS ALMOST IRRELEVANT TO AUSTIN SITUATION.

HOWEVER, IN RESPONSE TO A DIRECTED QUESTION TO MARK DOMBROSKI ON JULY 13TH, HE ADMITTED THAT THIS CHART DID NOT INCLUDE MONTHLY FEES, FUEL COSTS, REGULATORY CHARGES, AND COMMUNITY BENEFIT FUND CHARGES.

SINCE THESE COSTS PROFOUNDLY ALTER WHAT CUSTOMERS REALLY PAY, THEY WOULD ALTER THE CONCLUSIONS, HAD THE METHODOLOGY BEEN ADJUSTED.

UH, THE NEXT POINT I WANT TO MAKE IS GROWTH.

UH, IN 2014, THE AUSTIN CITY COUNCIL PASSED AN ORDINANCE MANDATING THAT AUSTIN ENERGY COLLECT 100% OF ITS COSTS FOR SERVING NEW CUSTOMERS.

THE ORDINANCE ACTUALLY LED TO A RATE DECREASE IN 2016.

HOWEVER, AUSTIN ENERGY IS PARTIALLY JUSTIFYING ITS RATE INCREASE BECAUSE OF INCREASED EXPENDITURES FOR GROWTH FOR THE SYSTEM DURING REBUTTAL.

UH, MARK STATED THAT WELL, UH, NEW CUSTOMERS WERE BEING CHARGED FOR COSTS FOR CONNECTING TO THE SYSTEM.

UM, NEW CUSTOMERS WERE EXEMPT FROM LARGER IMPROVEMENTS TO THE GENERAL ELECTRIC SYSTEM.

IF THIS IS CORRECT, THEN IT SHOWS A DOUBLE STANDARD BETWEEN AUSTIN'S WATER AND ELECTRIC UTILITIES.

I HAVE, UH, SENT INTO EVIDENCE, UH, AN ATTACHMENT FROM THE LATEST REPORT FROM 2018 OF AUSTIN'S WATER AND WASTEWATER IMPACT FEES FROM THE AUSTIN WATER UTILITY.

UM, AND PLEASE NOTE THAT THIS STUDY ARE THE EVIDENCE SHOWS, PUMP STATIONS, TRANSMISSION, MAINS, RESERVOIRS, AND EVEN WATER TREATMENT PLANTS, UH, ARE COMMON TO ALL THAT ARE COMMON TO ALL WATER CUSTOMERS ARE PART OF THE CAPITAL RECOVERY FEE, SIMILAR TO WHAT CELIAC IS IN ELECTRIC SYSTEMS. NOW AA COULD PROTEST NOT THE SAME, BUT I COUNTER THAT AUSTIN ENERGY COULD HAVE TAKEN THE INITIATIVE SIMILAR.

THEY, THE WAY TO THE WAY THAT IT DID WITH RESTRUCTURING RESIDENTIAL RATES TO SAY, YOU KNOW, WE'RE GOING TO INCLUDE ALL THESE, UH, OTHER COSTS COMMON TO, UH,

[02:15:01]

ALL CUSTOMERS IN OUR, UH, INCREASED FEES FOR NEW CUSTOMERS.

THEY CHOSE NOT TO MY EIGHTH POINT IS ABOUT THE BIOMASS PLANT.

IT HAS YET TO BE DETERMINED IF IT WILL BE INCLUDED IN THE RATE BASE, UH, NEXT SLIDE.

HM.

PROTECTIONS TO CONTINUE TO ADMINISTER THIS PROGRAM IN A CLUMSY AND INEFFICIENT MANNER.

UH, IT HAS, UH, YET TO BE INCLUDED, UH, TO BE DETERMINED IF IT'S GOING TO BE INCLUDED, THERE ARE TWO POTENTIAL POINTS OF SAVINGS THAT THIS INTERVENER HAS IDENTIFIED.

THE FIRST IS LONGER TERM AMORTIZATION.

THE NACADOCIOUS POWER PLANT, UH, WILL BE AMORTIZED FOR A 20 YEAR LIFE, INCLUDING 10 POINT ON A QUARTER MORE YEARS WITH AUSTIN ENERGY AS ITS OWNER POWER PLANTS ARE TYPICALLY DESIGNED FOR 30 YEARS, EXTENDING THE AMORTIZATION BY ANOTHER FIVE YEARS TO A TOTAL 25 YEAR LIFE.

WE'LL SAVE ABOUT $15.2 MILLION A YEAR.

UM, THIS ASSUMES, UH, THAT CURRENT INTEREST RATE AND IT DOES NOT TAKE INTO ACCOUNT TIMES' COVERAGE.

UH, AND THE SECOND WAY WOULD BE TO REDUCE TAXES, PAY TOGETHER TO LOCAL GOVERNMENTS.

AUSTIN ENERGY IS TAX EXEMPT TAXES IN 2021 UP UNTIL LOCAL GOVERNMENTS WERE OVER ONE POINT MILLION DOLLARS.

MY NINTH AND FINAL POINT IS THAT AUSTIN ENERGY HAS EXPERIENCED CHRONIC AND LONGSTANDING PROBLEMS WITH THE CUSTOMER ASSISTANCE PROGRAM FOR DISCOUNTS TO THE POOR THAT WAS IMPLEMENTED IN 2013, UH, SOME AMOUNT OF RATE PAYER MONEY IS BEING MISSPENT BY AWARDING DISCOUNTS TO THE WRONG CUSTOMERS IN ITS PROFOUNDLY FLAWED AUTOMATIC ENROLLMENT PROGRAM.

UH, THIS HAS LED TO REPEATED, DOCUMENTED EMBARRASSING ALLEGATIONS OF CUSTOMERS WITH HIGH PROPERTY WEALTH, AUSTIN UTILITY SPEND ABOUT $2.8 MILLION A YEAR, UH, ADMINISTERING THIS PROGRAM AND THESE ADMINISTRATION FUNDS COME OUT OF THE RIGHT BASE.

AUSTIN ENERGY SHARE IS ABOUT 1.3 MILLION.

UH, IF SOME PERCENTAGE OF THIS IS PROVEN GOING TO PEOPLE WHO ARE NOT POOR, THEN THE BASE REVENUE EXPENDITURES ARE IMPRUDENT.

CURRENT BASE EXPENDITURES SHOULD BE REPAID BY THE UTILITY TO RATE PAYERS AND FUTURE EXPENDITURES SHOULD BE DISALLOWED IN BASE RATES.

AUSTIN ENERGY HAS HIDDEN INFORMATION FROM ME THAT CAN ASSIST IN DOCUMENTING THESE CONTINUED PROBLEMS. IT IS MY UNDERSTANDING JUDGE VICKERY THAT THE PUBLIC UTILITY COMMISSION, UH, OFFERS WHAT ARE CALLED QUOTE PROTECTIVE ORDERS, WHERE, UH, CONFIDENTIAL INFORMATION THAT WILL NOT BE MADE PUBLIC CAN BE USED IN SUMMARY FORM, UH, FOR EVIDENCE.

UH, BUT THE UTILITY WILL NOT ALLOW ME TO DO TO COLLECT IT THIS WAY NOW, BY MY OWN ADMISSION, THIS IS NOT THE MOST EXPENSIVE ITEM IN THIS RATE CASE.

UH, THERE ARE TWO REASONS WHY I CONTINUE TO WORK ON THIS ISSUE.

FIRST.

IT IS TAKING AWAY MONEY FROM THE POOR.

I'M NOT POOR, BUT I HAVE BEEN, AND I KNOW THE FEELING TOO WELL.

THERE COULD BE THOUSANDS AND I AM NOT EXAGGERATING OF CUSTOMERS ABOVE 200% OF POVERTY THAT ARE RECEIVING THESE DISCOUNTS.

THIS ISN'T JUST ABOUT THEM.

THE PEOPLE I FIND THAT LIVE OR OWN LIVE IN OUR OWN MANSIONS.

THIS IS MORE ABOUT THE PEOPLE WHO LIVE IN MORE MODEST HOMES, BUT MAKE LARGER INCOMES THAN WOULD BE JUSTIFIED, UH, IN GIVING THEM A DISCOUNT.

UH, IF 10% OF THESE EXPENDITURES WERE FOUND TO BE INVALID, THAT WOULD BE $830,000 IN TAKEN AWAY FROM THE PEOPLE WHO NEED THEM AS WELL AS $130,000 IN WASTED ELECTRIC UTILITY ADMINISTRATIVE COSTS.

THE OTHER REASON IS FRANKLY, I EXPECT MORE FROM PUBLIC SERVANTS THAN ACTING LIKE BUREAUCRATS.

AFTER EIGHT YEARS, AUSTIN ENERGY WILL NOT CORRECT THE PROBLEMS IN THIS PROGRAM.

THE RIGHT CASE HAS PROVIDED SOME LATITUDE IN GETTING CORRECTIONS, AUSTIN ENERGY EMPLOYEES WHO ARE MISAPPLYING FUNDS ARE HIDING BEHIND CIVIL SERVICE

[02:20:01]

AND AS AN ACTOR AND AS AN ACTIVIST, I REFUSE TO VALIDATE THIS KIND OF BEHAVIOR.

THE JUDGE CAN ASSIST IN THIS ENDEAVOR.

IF HE WILL GRANT THE SPECIAL MOTION I MADE ON JULY 11TH.

UH, UM, IF I CAN SEND THIS INFORMATION TO A DATA FIRM THAT COLLECTS INFORMATION ON INCOME AND HOUSEHOLD SIZE, IT WILL BE AN EASY AND INEXPENSIVE WAY TO LEARN.

IF CUSTOMER ASSISTANCE PROGRAM IS SENDING MONEY TO PEOPLE WITH HIGHER INCOME LEVELS, THE INFORMATION WILL NOT BE MADE PUBLIC ONLY THE SUMMARIES AUSTIN ENERGY COULD HAVE DONE THIS ON ITS OWN, BUT REMAINS REMARKABLY DISINTERESTED.

THIS INCLUDES, THIS CONCLUDES AND INCLUDES ALL OF MY REMARKS.

UH, I APPRECIATE YOUR ATTENTION.

I HAVE NOTICED A FEW ERRORS.

I HAVE MADE DUE TO MY SLEEP DEPRIVED STATE IN CREATING THIS TESTIMONY.

I WILL, UH, SEND, UH, SLIGHTLY AMENDED TESTIMONY TO ALL THE PARTIES WHEN, UH, WHEN, UH, AS SOON AS POSSIBLE, UH, NOW, UM, IF AUSTIN ENERGY OR ANY OF THE OTHER PARTIES WISH TO CROSS ME, I AM FAIR GAME.

THANK YOU, MR. ROBBINS.

UM, DOES ANYONE WISH TO CROSS EXAMINE MR. ROBBINS REGARDING HIS PRESENTATION? ALL RIGHT.

AND MR. ROBINS, JUST, JUST ONE, ONE ISSUE TO ADDRESS, UM, OUT OF THE PROCEDURAL GUIDELINES AT, UH, .

I HAVE NOT BEEN GRANTED THE POWER TO, UH, ISSUE PROTECTIVE ORDERS.

I I'M SURE YOU'RE PROBABLY FAMILIAR WITH THAT, BUT I JUST WANTED TO POINT THAT OUT ON THE RECORD THAT I DON'T HAVE THE POWER TO ISSUE A PROTECTIVE ORDER AS JUST AS I DON'T HAVE THE POWER TO SWEAR IN WITNESSES.

AND IN FACT, I'M NOT SURE THAT THE CITY COULD CREATE THAT POWER NECESSARILY, BUT WHO KNOWS? UM, JUDGE, UM, THANK YOU FOR THE CLARIFICATION.

I'M DISAPPOINTED, BUT I'VE GOT TO TRY.

OH NO, IT'S IT'S I AGREE.

AND YOU KNOW, EVERYONE'S HERE TOO, AND DON'T, YOU KNOW, YOU'VE MADE IT THE POINT THAT MAYBE, UH, YOUR ISSUES REGARDING, I THINK YOU WERE SPEAKING FOR CAP ARE NOT THE BIGGEST DOLLAR FIGURE THAT WE'RE, THAT WE'RE LOOKING AT HERE, BUT, YOU KNOW, EVERYONE BRINGS THEIR OWN ISSUES TO THE TABLE.

AND IN DOING THAT, YOU GET A FULLER PICTURE OF WHAT THE PARTY'S PRESENTATIONS ARE.

SO IF YOU GIVE ME THAT $130,000, I PROMISE YOU I WILL SPEND IT BETTER THAN AUSTIN ENERGY DOES.

WELL, I DON'T, I DON'T HAVE THAT POWER EITHER.

UM, BUT, UH, THANK YOU FOR YOUR PRESENTATION.

AND, UH, I THINK WE'RE, WE'RE ACTUALLY READY TO GO BACK TO THE PANEL FOR AUSTIN ENERGY PANEL ONE, IF THAT'S RIGHT.

AND WE'RE PREPARED TO DO THAT.

SO I WOULD HAVE JUST ASKED THAT MR. DOMBROSKI, MR. MAINTENANCE, MS. GONZALEZ AND MR. GALVIN RETURNED TO THE WITNESS TABLE.

LET'S GO OFF THE RECORD FOR JUST A SECOND.

UM, ON THE RECORD, HE'S NOT ALONE.

UH, THANK YOU, YOUR HONOR.

AND SO, UM, YOU WERE ASKED SOME QUESTIONS, UH, MR. DOMBROSKI, MS. GONZALES ABOUT, UM, OUR RESPONSE TO TWR W UH, FOUR DASH TWO, UH, AND INDICATED THAT THERE WERE SOME ADDITIONAL, UM, INFORMATION THAT NEEDED TO BE PROVIDED, UH, IN ORDER TO GIVE A FULL AND ACCURATE RESPONSE TO THIS RFI.

YOU'VE GOT AUSTIN ENERGY 11, WHICH IS A SUPPLEMENTAL RESPONSE TO THAT.

UM, QUESTION, COULD YOU JUST, FOR THE SAKE OF THE AUDIENCE HERE TODAY, KIND OF BRIEFLY EXPLAIN WHAT THEY'RE SAYING AND HOW THAT RELATES TO WHAT WAS PROVIDED BEFORE, JUST SO THEY CAN UNDERSTAND AND ASK QUESTIONS ABOUT IT.

SO, UM, THE NUMBERS YOU HAVE IN FRONT OF YOU HERE ARE THE CALCULATION THAT WAS USED TO DEVELOP THE 20, 21, UM, GENERAL FUND TRANSFER, UM, WHICH IS PROVED BY COUNSEL FOR THE 114 MILLION.

AND SO AT THE TIME OF THEM DEVELOPING, UM, THE ESTIMATED REVENUE THAT THE 12% SHOULD BE, UM, APPLIED TO, WE HAD FISCAL YEARS, 18, 19 ACTUALS WITH A, UH, CURRENT YEAR ESTIMATE OF 2020.

AND THOSE THREE WERE USED FOR THE, TO COME UP WITH AN AVERAGE OF 950 ISH MILLION.

AND THAT THEN THE 12% WAS APPLIED ON THAT, WHICH GETS YOU TO ABOUT 114,000,001 ROUNDED.

AND THAT ROUNDING CAN GO UP OR DOWN, DEPENDING ON OBVIOUSLY OVER UNDER

[02:25:01]

500,000.

IS THERE ANYTHING YOU NEED TO ADD TO HELP EXPLAIN AND, UH, THIS CHANGE AND FOR FOLKS AROUND THIS TABLE TO UNDERSTAND WHAT YOU PROVIDED WITH THE UNDERSTANDING, OBVIOUSLY THAT THEY'RE GOING TO BE ABLE TO ASK YOU QUESTIONS ABOUT THIS AS WELL.

SO, UM, THERE, THESE NUMBERS, THE 18 AND 19, UM, YOU MAY NOTICE ARE SLIGHTLY DIFFERENT THAN WHAT YOU HAD PREVIOUSLY.

THESE ARE BASED ON OUR ACTUALS FOR OUR BUDGETED FINANCIAL STATEMENTS, WHICH IS WHAT WE USE FOR COUNCIL TO APPROVE THE REVENUE ON.

AND SO LASTLY THEN JUST TO CLARIFY THEN THE NUMBERS ON THE, ON EIGHT 11, ARE THOSE THE ONES UPON WHICH COUNCIL APPROVED, UM, THE GFT? YES, THAT'S CORRECT.

THAT COMPLETES OUR DISCUSSION OR PRESENTATION ABOUT THIS EXHIBIT, AS I'VE SAID, WE'RE CERTAINLY UNDERSTAND PARTIES, UM, DESIGNED TO ASK ADDITIONAL QUESTIONS, UM, ON CROSS.

W UH, BEFORE WE BROKE FOR LUNCH, I THINK WE WERE AT NXP.

HOWEVER, HOWEVER, ON THIS LIMITED ISSUE, DID TWO WR HAVE ANY QUESTIONS JUST ON THIS, THIS, UH, EXHIBIT 11 AND WHAT, WHAT HER TESTIMONY WAS? JUST KNOW HER STATEMENT.

YES, YOUR HONOR.

I JUST WANT TO JUST A LITTLE CLARIFICATION, BECAUSE I OBVIOUSLY MISUNDERSTOOD THE WRITTEN EXPLANATION.

AND SO NOW I'VE GOT THESE NUMBERS AND I JUST, I JUST WANT IT TO BE CLEAR FOR, FOR ME, UH, AND THE RECORD, BUT FOR ME PERSONALLY, I'M BEING SELFISH HERE.

UM, SO FOR FISCAL YEAR 20, 21 YEAR ENDING FISCAL YEAR 2020, AND TO COME UP WITH THE, AND JUST CORRECT ME IF I'M WRONG AND TO COME UP WITH THE GENERAL FUND TRANSFER FOR FISCAL YEAR 2021, YOU, YOUR CURRENT YEAR IS FISCAL YEAR 2020.

THAT'S WHAT YOU'RE TELLING ME.

RIGHT, RIGHT.

WHEN THE BUDGET'S BEING DEVELOPED, WE'RE IN THE FISCAL YEAR 2020.

AND, AND WHEN YOU SAY THE ESTIMATED REVENUES, THAT WOULD BE FOR FISCAL YEAR 2020? YES.

THAT'S IT, YOUR HONOR.

I WAS, UH, AND THANK YOU SO MUCH FOR YOUR EXPLANATION AND THE TIME IT TOOK FOR YOU TO DO THIS.

NO PROBLEM.

UH, BEFORE WE GET TO NXP, ANYONE ELSE WHO WAS EARLIER ON THE LIST, HAVE ANY QUESTIONS JUST ABOUT WHAT SHE JUST SAID ABOUT EXHIBIT 11 E EXHIBIT 11.

IN XP MR. READER.

I HAVE A FEW QUESTIONS FOR MR. DOMBROWSKI.

AND SO, UM, MR. DOMBROWSKI, UM, IF WE COULD TURN TO PAGE SIX OF YOUR REBUTTAL TESTIMONY, I HAVE A FEW QUESTIONS ABOUT THE CHANGES, A FEW MORE QUESTIONS ABOUT THE CHANGES TO THE REVENUE REQUIREMENT.

UM, THE OVERALL REVENUE INCREASE THAT THE CITY IS REQUESTING IN THIS PROCEEDING.

I'M ON PAGE SIX.

UM, YOU RECOUNT HERE SOME ADJUSTMENTS TO, UM, THE REQUESTED REVENUE REQUIREMENT AND YOU LISTED THOSE AND, UH, A COUPLE OF COUPLE, TWO AND A HALF PAGES OR SO.

UM, AND THOSE IN THEIR TOTALITY, I UNDERSTAND THAT AUSTIN ENERGY PROJECTS TO REDUCE THE REVENUE REQUIREMENT, UH, DOWN TO THE $35.7 MILLION FIGURE, CORRECT.

FROM 48.2 TO 35.7.

AND THIS IS NOT A, LIKE AN ACROSS THE BOARD, UM, REDUCTION TO TOTAL REVENUE REQUIREMENT.

IT'S, IT'S A FALLOUT OF MAKING ADJUSTMENTS TO INDIVIDUAL COST CATEGORIES.

IS THAT CORRECT? THAT'S CORRECT.

EACH OF THESE WOULD BE IN A DIFFERENT FERC CODES WILL IMPACT THE COST OF SERVICE DIFFERENT.

AND IS IT A FAIR ASSUMPTION THAT EACH OF THESE COST CATEGORIES ARE ALLOCATED TO A CUSTOMER CLASSES IN A DIFFERENT WAY FROM ONE ANOTHER.

I'M GOING TO DEFER TO MR. RAVEN ON THAT, ABOUT WHERE THEY FALL IN NEW TO THE COST ALLOCATION, THE FUNCTIONALIZATION AND CLASSICAL.

WELL, LET ME TRY IT THIS WAY.

ARE YOU ABLE TO SAY WHETHER THE REDUCTION IN EACH OF THESE CATEGORIES, WHEN TAKEN AS A WHOLE WILL IMPACT THE CLASS COST OF SERVICE, UH, IN A UNIFORM MANNER, OR WILL SOME CLASSES HAVE A DIFFERENT IMPACT THAN OTHERS? IT WOULD NOT BE UNIFORM.

CAUSE SOME WOULD BE IN GENERATION AND SOME WILL BE IN CUSTOMER SO THAT IT WOULD IMPACT DIFFERENTLY.

AND AS WE COVERED THE OTHER DAY, UH, AUSTIN ENERGY, HASN'T MADE THOSE CALCULATIONS AS OF YET.

M D TWO, WHICH ARE THE AUSTIN ENERGY FINANCIAL POLICIES.

UM, I'D LIKE TO NOW TURN TO, UM, YOUR EXHIBIT

[02:30:01]

AND I JUST WANT TO ASK A FEW KIND OF OVERALL TYPE QUESTIONS ABOUT THOSE I'M THERE.

NOW, ARE YOU THE OFFICER AT AUSTIN ENERGY THAT HAS THE PRIMARY RESPONSIBILITY FOR, UM, IMPLEMENTING THESE POLICIES? I'VE BEEN CHIEF FINANCIAL OFFICER, SO I'M RESPONSIBLE FOR ALL FINANCIAL OPERATIONS AND COMPLIANCE WITH THESE POLICIES.

SO BACK TO MY QUESTION, WOULD YOU BE THE OFFICER THAT, YOU KNOW, HAS KIND OF THE ULTIMATE RESPONSIBILITY TO ENSURE THEIR, UM, ADHERENCE THEIR, THEIR APPLICATION GENERAL STATEMENT? I ALSO SHARE IT WITH THE CITY TREASURER.

UM, AS I UNDERSTAND THESE ARE DEVELOPED AS PART OF THE AUSTIN ENERGY BUDGET PROCESS, IS THAT CORRECT? UH, CORRECT.

VERY CONTAINED AND THE BUDGET.

UM, THAT'S ADOPTED WITHIN THE ORDINANCE.

AND SO, UM, PERIODICALLY THEY'RE THEY'RE UPDATED OR, BUT THAT'S, THAT'S HOW THE BUDGET IS ADOPTED WITH THESE ATTACKS.

SO I THINK YOU'VE ANTICIPATED MY NEXT QUESTION, WHICH IS THAT THE COUNCIL, UM, ULTIMATELY APPROVES OR MODIFIES OR DISAPPROVES THE AUSTIN ENERGY BUDGET, WHICH WILL INCLUDE THE AUSTIN ENERGY FINANCIAL POLICIES? IS THAT CORRECT? THAT'S CORRECT.

SO ULTIMATELY THE COUNCIL HAS AUTHORITY, UH, TO ACCEPT REJECT, MODIFIED THESE FINANCIAL POLICIES, NOT ASKING AS A LEGAL OPINION, BUT AS A, FROM YOUR EXPERIENCE AS THE OFFICER AT AUSTIN ENERGY, THAT'S CHARGED WITH IMPLEMENTING THESE.

YES, GENERALLY THEY WOULD BE, UM, THEY WOULD HAVE THE AUTHORITY TO MODIFY ONE OF THEIR POLICIES.

AND, UM, I TAKE IT THAT THESE POLICIES OR, OR PREDECESSORS TO THESE HAVE BEEN IN EFFECT FOR MANY, MANY YEARS, IS THAT RIGHT? SOME LONGER THAN OTHERS, SOME ARE, UM, WITHIN THE LAST FIVE YEARS, SIX YEARS.

SO LIKE, LET'S JUST TAKE, TAKE A ROUND NUMBER 10 YEARS.

AUSTIN ENERGY HAS HAD FINANCIAL POLICIES SIMILAR TO THESE AT LEAST FOR AT LEAST 10 YEARS GENERALLY.

BUT AS YOU SAY, THEY EVOLVE AND CHANGE OVER TIME.

NOW WHAT I WANT TO DISCUSS WITH YOU IS, UM, THE EXTENT TO WHICH THESE ARE, UH, NOT LEGAL TERMS, BUT, UH, KIND OF SET IN STONE OR WHETHER THERE'S SOME, YOU KNOW, ROOM FOR EXCEPTIONS OR WAIVERS LEEWAY APPLICATION, THAT KIND OF THING.

LET ME TRY AND BREAK IT DOWN A LITTLE BIT.

ARE THE FINANCIAL POLICIES KIND OF IMMUTABLE CANNOT BE VIOLATED, CANNOT HAVE ANYTHING HAPPENED THAT IS CONTRARY TO THEM, OR DOES AUSTIN ENERGY HAVE SOME DISCRETION TO DEPART FROM THEM IN SOME REASONABLE MANNER WHEN CIRCUMSTANCES MIGHT WARRANT? SURE.

IF WE FIND OUT WE ARE IN NOT COMPLIANCE WITH ONE OF THE POLICIES WE, UH, WE INFORMED COUNSEL, AND THEN WE JOINTLY PUT TOGETHER A PLAN ON HOW TO GET BACK INTO COMPLIANCE WITH THAT POLICY.

WELL, THAT, WASN'T QUITE MY QUESTION.

MY QUESTION WAS MORE ALONG THE LINES OF IF YOU FIND THAT ANY OF THESE POLICIES OR SEVERAL OF THESE POLICIES, UM, IN A PARTICULAR INSTANCE MAY STAND IN THE WAY OF SOMETHING THAT IS REGARDED AS A REASONABLE, UH, ACTION.

DOES, UH, AUSTIN ENERGY HAVE THE AUTHORITY TO, UM, DISREGARD OR, OR TRY AND, UH, ACT IN A WAY THAT IS MORE PRUDENT FOR THE CIRCUMSTANCES RATHER THAN, YOU KNOW, KIND OF 100% ADHERENCE TO WHAT'S WRITTEN DOWN HERE.

IF I'M UNDERSTANDING YOUR QUESTION.

I, UM, I WOULD SAY I DON'T, UM, I DON'T THINK I HAVE DISCRETION TO, UM, IGNORE A POLICY SET BY MY CITY COUNCIL.

UM, IN MY, MY OPERATIONS, MY, MY OBLIGATION IS TO ADHERE TO THE, UM, THE ORDINANCES THAT THE COUNCIL PASSES.

WELL, LET'S LOOK AT A FEW OF THE TERMS IN HERE, UM, THAT GO TO THIS BUSINESS OF JUST EXACTLY HOW, UM, MANDATORY THEY ARE.

UM, YOU, WE CAN GIVE SOME EXAMPLES, BUT IN SOME INSTANCES, A POLICY WILL SAY SOMETHING LIKE, UM, YOU KNOW, AUSTIN ENERGY SHALL DO

[02:35:01]

SOMETHING.

I MEAN, AN EXAMPLE OF THAT MIGHT BE, LET'S SAY NUMBER SEVEN, UH, SHORT-TERM DEBT, INCLUDING COMMERCIAL PAPERS SHALL BE USED WHEN AUTHORIZED FOR INTERIM FINANCING.

AND THEN IN OTHER INSTANCES, IT SAYS SOMETHING ALONG THE LINES OF MAY, LIKE THE NEXT ONE COMMERCIAL PAPER MAY BE USED.

UM, THERE'S INSTANCES SUCH AS NUMBER SIX, THAT TALK ABOUT DEBT SERVICE COVERAGE OF A MINIMUM OF 2.0 X SHALL BE TARGETED THERE.

DO YOU AGREE WITH ME THAT THERE APPEARS TO BE IN A VARIETY OF, UM, PRESCRIPTIVE LANGUAGE, SOME OF WHICH APPEARS TO BE MORE MANDATORY THAN OTHERS? I WOULD AGREE WITH THAT CHARACTERIZATION.

AND SO IN THOSE INSTANCES WHERE, UM, THE, THE POLICIES SPEAK IN TERMS OF SHALL, UH, OR, UH, THE, LIKE, WOULD YOU REGARD THOSE AS BEING, UM, MORE PRESCRIPTIVE THAN OTHER POLICIES THAT USE WHAT I WILL CALL MORE PERMISSIVE WORDS SUCH AS DESIRABLE OR TARGETED? YES, I INTERPRET SHALL AS BEING DIRECTIVE OR MAY IS MORE PERMISSIVE.

NOW, IF THERE ARE INSTANCES THAT ARISE IN WHICH THE APPLICATION OF THESE POLICIES WOULD APPEAR TO BE IN CONFLICT WITH ONE ANOTHER.

UM, AND WHAT I HAVE IN MIND IS INSTANCES WHERE MORE THAN ONE POLICY IS APPLICABLE TO WHATEVER YOU'RE DEALING WITH AND THEY SEEM TO BE IN CONFLICT WITH ONE ANOTHER.

UM, IS IT KIND OF YOUR RESPONSIBILITY TO TRY AND, AND WORK OUT HOW TO APPLY THOSE IN A WAY THAT THAT IS NOT IN CONFLICT? YES.

THAT WOULD BE MY RESPONSIBILITY.

AND HAVE YOU DONE THAT AS PART OF YOUR, UM, UH, EXPERIENCE WORKING AT AUSTIN ENERGY IN THE PAST? YES.

THERE ARE FINANCIAL POLICIES THAT WE ARE IN, NOT FULL COMPLIANCE WITH, AND I REPORT THAT TO COUNCIL AND WE TRY TO DEVELOP A PLAN OF ACTION TO GET BACK INTO COMPLIANCE.

COULD ONE ALTERNATIVE BE THOUGH THAT IF YOU FIND THAT THERE'S SOME SORT OF CONFLICT THAT IN THE NEXT BUDGET CYCLE, YOU WOULD SEEK TO AMEND THE POLICIES.

I COULD MAKE A RECOMMENDATION AND WE DO THAT FROM TIME TO TIME WHERE WE RED LINE THE FINANCIAL POLICIES, AND IT'S UP TO COUNCIL TO DETERMINE WHETHER THEY WANT TO ACCEPT THAT, THAT CHANGE AND INSTANCES THAT YOU'VE MENTIONED WHERE YOU FIND THAT AUSTIN ENERGY IS NOT IN COMPLIANCE WITH THE POLICY, UM, IS THE, THE REMEDY MAY BE THE WRONG WORD, BUT IT'S THE, THE ORDINARY COURSE OF ACTION TO ADOPT SOME SORT OF PLAN TO, TO COME BACK INTO COMPLIANCE.

IS THAT THE CONSEQUENCE OF BEING OUT OF COMPLIANCE AS FAR AS, AS FAR AS YOU'RE CONCERNED IN TERMS OF COMPLIANCE? YES.

UH, ARE THERE OTHER ASPECTS OF THAT OTHER THAN COMPLIANCE? SOME OF THESE ARE RELATED TO A BOND COVENANTS OF WHICH WE HAVE GREATER CONSEQUENCES IN, IN VIOLATION, UM, THAN JUST SIMPLY BEING OUT OF COMPLIANCE.

THOSE WOULD RELATE TO OTHER OBLIGATIONS OUTSIDE OF JUST THE POLICIES THOUGH, CORRECT.

SUCH AS THE TERMS OF A BOND ISSUANCE.

SO SOME OF THE, THESE POLICIES HAVE, UM, UTILIZED THE BOND COVENANT LANGUAGE IN THOSE POLICIES.

THANK YOU, MR. DOMBROWSKI.

I DON'T HAVE ANY FURTHER QUESTIONS, YOUR HONOR.

THANK YOU, MR. READER.

OH, MR. HALLMARK.

UH, GOOD AFTERNOON.

UM, I'D LIKE TO START WITH SOME QUESTIONS FOR MS. GONZALEZ REGARDING, UH, AUSTIN ENERGY EXHIBIT 11.

SO IF I UNDERSTAND CORRECTLY, WHAT WE HAVE HERE ARE THE NUMBERS THAT WERE USED TO CALCULATE THE GENERAL FUNDS TRANSFER FOR 2021.

IS THAT RIGHT? YES, THAT'S CORRECT.

AND THIS IS THE SOURCE OF THE $114 MILLION THAT SHOWS UP IN THE RATE FILING PACKAGE AS THE TEST YEAR AMOUNT, WHICH WAS THEN ADJUSTED TO 121.

UM, I, I'M NOT FAMILIAR.

THAT WOULD BE, UM, MR. RAVEN.

BUT THIS IS THE NUMBER FOR FISCAL YEAR 20 21, 100 14 MILLION IS? YES, THAT'S RIGHT.

THE REVENUE NUMBERS ARE ALL ESTIMATED NUMBERS OR I'M SORRY THAT, THAT CAN'T BE THE CASE, BUT LET'S START WITH 2018.

SOME CLARIFYING QUESTIONS FOR YOU.

UH, DO YOU HAVE, UH, THE TWO WR EXHIBIT UP THERE STILL? I THINK IT WAS 18.

YES, I DO.

SO R IS THE ISSUE WITH TWO WR 18 THAT

[02:40:01]

IS, IS 2018 IN TWO WR, UH, EXHIBIT, IS THAT AN ESTIMATED NUMBER FOR REVENUE? NO.

SO WHEN I, UH, WHEN I FIRST RECEIVED THIS, I ASSUMED THAT THEY WERE WANTING TO KNOW OUR GAP RESULTS AND OUR ACTUAL GFT, AND TO SEE THE PERCENT OF, UM, PERCENT OF REVENUE THAT OUR GFT IS ON OUR GAP RESULTS.

UM, SO IT'S THE DIFFERENCE BETWEEN GAP AND OUR ACTUALS FROM OUR BUDGET BASE THAT'S USED FOR THE COUNCIL APPROVED NUMBER.

I SEE.

SO LET ME SAY, SEE IF I UNDERSTAND IT.

YOU CAN TELL ME IF I'M CORRECT.

THE, THE CATEGORY OF DOLLARS THAT WENT INTO THE REVENUE NUMBERS IN THE TWO WR EXHIBIT ARE NOT, IS THERE NOT THE CORRECT CATEGORY FOR CALCULATING THE GFT? CORRECT? THE CORRECT ONES ARE ON A 11.

I UNDERSTAND.

UM, I THINK THESE NEXT QUESTIONS MAY BE FOR MR. DOMBROSKI, BUT IF ANYBODY ELSE WANTS TO JUMP IN, FEEL FREE, UM, MR. DOMBROWSKI, YOU ADDRESS THE, UH, GENERAL FUNDS TRANSFER IN YOUR REBUTTAL TESTIMONY, CORRECT? CORRECT.

AND, AND WE SPOKE, UH, I GUESS IT WAS TWO DAYS AGO NOW, UH, ABOUT THE GENERAL FUNDS TRANSFER CALCULATION, REPRESENTING A KNOWN AND MEASURABLE ADJUSTMENT, RIGHT.

THE GENERAL FUND TRANSFER IN YOUR REVENUE REQUIREMENT.

CAN YOU REPEAT THE QUESTION? SURE.

DO YOU HAVE YOUR, UM, APPENDICES TO THE RIGHT FILING PACKAGE UP THERE? FINALLY PACKAGE.

OH, THERE IT IS RIGHT THERE.

I BELIEVE SO.

IT'S A THICK BINDER, BUT I'LL TRY TO FIND IT.

I HEAR YOU.

IT'S THE SAME WORK PAPER THAT WE WENT OVER BEFORE.

IT'S NUMBER 91 OR SORRY, PAGE 91, UH, IN THE APPENDICES.

WHAT'S THE SCHEDULE.

IT'S GOING TO BE IN THE DEPENDENCIES.

THAT'LL BE FURTHER BACK.

I BELIEVE.

MAYBE NOT.

IS IT A WORK TYPE? YEAH, THIS IS THE SAME ONE WE WENT OVER BEFORE WORK PAPER, C-THREE.TWO.ONE.

ONE MORE TIME.

C3.

WHAT? IT'S C3.TWO.ONE, TWO.

I CAN BRING MY COFFEE UP.

SO THE, THE WORK PAPER YOU'RE LOOKING AT, IT SAYS IN THE TOP LEFT GENERAL FUND TRANSFER, K AND M ADJUSTMENT.

IS THAT THE ONE YOU'RE LOOKING AT? THAT'S CORRECT.

AND SO AGAIN, IT SHOWS THAT THERE WAS A TEST YEAR AMOUNT FOR THE GFT OF 114 MILLION AND THEN A $7 MILLION KNOWN AND MEASURABLE ADJUSTMENT TO GET TO THE 121 MILLION, RIGHT.

UM, WILL YOU TURN WITH ME TO, WHAT'S BEEN MARKED AS TIBC EXHIBIT 25, WHICH WAS ACTUALLY IN THE BINDER SLEEVE, I THINK IN THE BACK FLEET.

AND YOUR HONOR, THIS IS A NEW EXHIBIT THAT WE'VE PASSED OUT TO THE PARTIES.

IT HASN'T BEEN ADMITTED YET.

UM, AND WE WE'VE PASSED IT OUT AND EMAILED IT.

AND I THINK MY PARALEGAL IS BRINGING YOU A COPY.

JUST LET ME KNOW WHEN YOU FOUND IT, SIR.

EXTRA FROM OUR CITY BUDGET.

THE CITY OF AUSTIN PROPOSED 2223 BUDGET, RIGHT? THAT IS CORRECT.

AND IS IT YOUR UNDERSTANDING THAT THIS WAS MADE PUBLIC TODAY? I KNOW THAT THE CITY MANAGER PRESENTED HIS BUDGET IN A BRIEFING TODAY.

I AM NOT SURE WHAT HAS BEEN RELEASED PUBLICLY.

AS I STATED, IT'S NOT PUBLIC RELEASED.

BUT IT WAS LAID OUT TO BRIEFING TODAY, RIGHT? CORRECT.

AND THAT WAS JUST BY WAY OF EXPLANATION OF WHY I JUST NOW PROVIDED TO THE PARTIES.

UH, YOUR HONOR, I'D OFFER EXHIBIT NUMBER 25.

ANY OBJECTIONS? YES.

THE QUESTION FOR THE RECORD WAS, WAS MR. DOMBROWSKI ABLE TO IDENTIFY THE DOCUMENT AND MR. HALLMARK TESTIFIED.

YES,

[02:45:06]

I DON'T HAVE ACCESS TO IT.

I HAVE NOT SEEN IT.

I KNOW HE RELEASED HAS MADE A STATEMENT TODAY.

SO, UM, BUT I CAN ATTEST TO THE DOCUMENTS THAT ARE SHOWN, UM, ON PAGE 3 84, UM, APPEAR TO BE THE TYPE OF DOCUMENT THAT WOULD BE RELEASED IN A BUDGET.

BUT I HAVE NOT SEEN THE ACTUAL BUDGET SUBMISSION.

UM, MR. RICARDO, HOW ABOUT SUBJECT TO CHECK? OF COURSE, ALLOW HIM TO ASK A FEW QUESTIONS ABOUT, AND THEN OF COURSE IT HASN'T BEEN RELEASED IT.

RIGHT NOW IT'S MY UNDERSTANDING THAT HAS BEEN RELEASED TO THE PUBLIC.

IT WAS, IT WAS LAID OUT TODAY BY THE CITY MANAGER AND MY UNDERSTANDING IT'S ON, WE GOT IT OFF THE WEBSITE.

I'VE BEEN BUSY TODAY.

I HAVE IT.

UH, SO I WOULD OFFER THAT EXHIBIT T I C 25 IS ADMITTED SUBJECT TO OPTIONAL COMPLETENESS AND SUBJECT CHECK.

UM, SO MR. DOMBROVSKIS, I BELIEVE YOU INDICATED THIS IS THE PROPOSAL THAT COMES OUT OF THE CITY MANAGER'S OFFICE, RIGHT? THAT'S CORRECT.

AND THIS PROPOSAL THEN I SUPPOSE, GOES TO COUNCIL LATER, MAYBE THIS SUMMER AND THEY, UH, YOU KNOW, POTENTIALLY ADOPTED OR MAKE CHANGES TO IT AND ADOPT IT.

I'LL ADOPT SOME, SOME BUDGET, UM, USUALLY IN THE LATTER PART OF AUGUST OR EARLY SEPTEMBER.

AND IF YOU'LL TURN TO THE FIRST, THE SECOND PAGE OF THE DOCUMENT, UH, NUMBER 1 46 AT THE BOTTOM AND NATIVE PAGINATION.

I SEE THAT.

AND AT THE TOP LAST SENTENCE, BEFORE THE CHART, IT SAYS IN FISCAL YEAR 22, 22 AND 23, THESE TRANSFERS ARE 115 MILLION FROM AUSTIN ENERGY AND 47.0 MILLION FROM AUSTIN WATER.

DO YOU SEE THAT? YES, THAT'S WHAT I READ.

SO THE, THE PROPOSED BUDGET, AT LEAST FOR THE NEXT FISCAL YEAR CONTEMPLATES A GENERAL FUNDS TRANSFER OF $115 MILLION.

THAT IS WHAT APPEARS IN THIS DOCUMENT.

AND MR. JOHN BRESCHI, DOES AUSTIN ENERGY PROVIDE THE CITY MANAGER WITH ITS ESTIMATE OF WHAT THE FUNDS TRANSFER WILL BE, UH, FOR PURPOSES OF THIS PROPOSED BUDGET? YES.

OUR BUDGET OFFICE WOULD PERFORM THE CALCULATION THAT MS. GONZALEZ WENT OVER EARLIER AND WOULD PUT THAT INTO OUR BUDGETING SYSTEM.

AND THAT'S THE CALCULATION THAT WE'VE GONE OVER FROM YOUR FISCAL POLICIES, RIGHT? THAT'S CORRECT.

SO MR. DOMBROWSKI, YOUR PROPOSED KNOWN AND MEASURABLE ADJUSTMENT TO THE TEST YEAR GFT WAS TO TAKE IT TO $121 MILLION, BUT THE ACTUAL PROPOSED BUDGET AT LEAST CONTEMPLATES A $115 MILLION GFT.

WELL, SORRY.

IT DOESN'T SOUND VERY KNOWN AND MEASURABLE TO ME.

DOES IT TO YOU, THE NUMBERS DON'T MATCH? I AGREE.

ONE 15 DOES NOT MATCH 1 21.

UH, AND THE ONE 15, IF WE WERE TO ASSUME THAT THIS DOES GET ADOPTED IS WHAT WOULD ACTUALLY BE TRANSFERRED OUT OF AUSTIN ENERGY'S BUDGET AND INTO THE GENERAL FUND, RIGHT.

FOR FYI 2223.

AND THEN IN EACH SUBSEQUENT YEAR IT WOULD BE RECALCULATED BASED ON YOUR FINANCIAL POLICIES.

UM, IN YOUR REBUTTAL TESTIMONY, UM, YOU TESTIFY TO THE FACT THAT AUSTIN ENERGY WAS DOWNGRADED BY FITCH FROM, I BELIEVE IT WAS AA TO AA MINUS, IS THAT RIGHT? THAT IS CORRECT.

IF YOU TURN WITH ME TO TIBC EXHIBIT 21, I'M AT THE EXHIBIT.

THE, THE AUDITS OF FITCH'S OR I'M SORRY, DISCUSSING FITCH'S ANALYSIS OF YOUR AUDIT DATA.

AND THIS IS A TIC, UH, DISCOVERY REQUESTS, SEVEN FIVE, UH, REGARDING AUSTIN ENERGY'S COMMUNICATIONS WITH FITCH, RIGHT? CORRECT.

AND ON THIS PAGE, UH, IT INDICATES THAT YOU HAD A PHONE CALL, UM, WITH FITCH, UH, FRIDAY, JUNE 17, I'M IN THE SECOND TO BOTTOM ONE THERE DISCUSSING

[02:50:01]

THAT'S, IT'S, FITCH'S AS ANALYSIS THAT WAS USING OUR AUDITED DATA AND FORECASTED DATA, THEY DO, WHAT'S CALLED A STRESS TEST, SO THAT THAT'S, IT'S THEIR ANALYSIS USING OUR DATA.

ALRIGHT, THANK YOU.

AND, AND SO I TAKE IT DURING THIS PHONE CONVERSATION THAT, UM, AUSTIN ENERGY AND FITCH, UH, DISCUSS THE POTENTIAL FOR A DOWNGRADE.

NOW WE WOULD NOT DISCUSS IT AT THAT TIME.

YOU DID NOT DISCUSS IT AT THAT TIME.

UH, WHAT DID YOU DISCUSS? SO EACH YEAR, UM, AND THIS IS RELATIVELY NEW IN THE LAST, UH, TWO YEARS, I BELIEVE FITCH, UH, AS A CREDIT RATING AGENCY, WE'LL TAKE OUR, OUR AUDITED DATA AS WELL AS OUR, OUR MOST RECENT FORECAST AND PERFORM A STRESS TEST.

ASSUMING CERTAIN CHANGES IN THE ASSUMPTIONS IN THE FUTURE, DETERMINE HOW WELL AUSTIN ENERGY CAN PERFORM AND LIKE EXTREME, UM, SAY EXTREME DOWNTURN IN THE MARKET OR EXTREMELY HIGH INFLATION, UM, THOSE TYPES OF SCENARIOS.

AND THEY MEASURE THOSE, UM, KEY FINANCIAL INDICATORS AGAINST THAT, THAT TEST, THAT SCENARIO AND TO SEE HOW WELL WE WOULD BE ABLE TO PERFORM.

UM, AND THEN THE NEXT, THE NEXT, UH, DESCRIPTION DOWN, UH, COMMUNICATION.

UM, I'M JUST NOTICING NOW IT SAYS MONDAY, JUNE 17 AND THE LAST ONE SAID FRIDAY, JUNE 17.

UM, SO, UH, WOULD, WOULD THIS BE MONDAY, JUNE 20TH, OR DO YOU, DO YOU KNOW WHAT THE CORRECT DATE WAS? I BELIEVE THAT SHOULD HAVE BEEN THE 27TH.

I BELIEVE THAT THAT IS A TYPO, THERE WERE TWO SEPARATE MEETINGS.

IT WOULD BE MONDAY.

UM, THEY DON'T HAVE, IF IT HELPS.

UH, I CAN TELL FROM MY PHONE THAT THE 20TH AND 27TH, WHERE MONDAYS IT'D BE THE 27TH, 27TH.

AND SO THIS WAS A PHONE CALL, IT SAYS DISCUSSED RATING ACTION.

SO AT THAT POINT, FITCH INFORMS YOU THAT THEY'RE GOING TO DOWNGRADE AUSTIN ENERGY.

THAT'S WHEN WE WERE INFORMED THAT WE WERE GETTING THE DOWNGRADE.

AND SO CONSISTENT WITH IT BEING THE 27TH, I GUESS THAT'S ONE DAY BEFORE THEY PUBLISHED THEIR REPORT.

UM, IF YOU'LL TURN WITH ME TO TIBC EXHIBIT 24, JUST LET ME KNOW WHEN YOU'RE THERE, I'M THERE.

AND IF YOU SEE IN THE TOP RIGHT CORNER, THIS IS AN ATTACHMENT FROM TIC SEVEN FIVE, WHICH IS THE SAME DOCUMENT OR THE SAME DISCOVERY RESPONSE.

WE WERE JUST LOOKING AT, UM, PAGE 2 43 OF TWO 70.

DO YOU SEE THAT? THAT'S CORRECT.

AND, AND FIRST OF ALL, I DO WANT TO THANK YOU, SIR, FOR YOUR EFFORTS TO GET US THIS DISCOVERY RESPONSE IN THE MIDDLE OF THE HEARING.

I APPRECIATE THAT.

UM, SO WHAT WE HAVE HERE IS AN EMAIL BETWEEN, UH, UM, AND I'M GOING TO THE, TO THE BOTTOM EMAIL HERE BETWEEN A, UH, TIM MORIA WITH FITCH AND A STEPHANIE CODELCO CODELCO, UH, WITH AUSTIN ENERGY.

AND IT APPEARS THAT, UH, MR. MORIA IS INDICATING THAT THE CHART HERE AT THE BOTTOM, THERE'S A DEBT SERVICE COVERAGE LISTED FOR AUSTIN.

UM, AND IT'S AT 0.72, AND HE'S INDICATING IT SHOULD BE 1.5.

WELL, I GUESS ONE THRESHOLD CLARIFICATION WOULD BE IT'S LISTED AS AUSTIN, TEXAS, IT'S JUST FOR THE CITY OR IS THIS FOR AUSTIN ENERGY? SO THEY USE R SO AUSTIN ENERGY, OURS ARE DOING BUSINESS AS NAME, RIGHT.

WE ARE THE ELECTRIC UTILITY OF THE CITY OF AUSTIN, AND THAT'S HOW OUR SECURITIES ARE ISSUED.

SO IT'S AGAINST THE NAME OF OUR SECURITIES.

SO THIS, THE, THE, TO PUT IT IN LAYMAN'S TERMS IS AUSTIN, TEXAS, AND THE BOTTOM LEFT THAT WE SHOULD THINK OF THAT AS BEING AUSTIN ENERGY.

THANK YOU FOR THAT.

AND, AND, UH, YOU KNOW, WE SEE IF WE GO TO THAT BOTTOM LINE, THE RATING IS A, AND IT'S NEGATIVE.

SO I ASSUME THAT WHEN THIS CHART WAS ORIGINALLY PRODUCED, IT WAS BEFORE THE DOWNGRADE.

SO THIS IS OUR 2021 RESULTS, I BELIEVE.

IT PUBLISHED IN 2022, I GUESS.

A 0.72, AND THEY'RE SAYING, IN FACT IT SHOULD BE 1.5 X, RIGHT? THE DEBT SERVICE COVERAGE.

AND SO FITCH AT, WHEN THEY ORIGINALLY PUBLISHED THIS HEADED

[02:55:01]

AND I GUESS WE SHOULD STEP BACK AND SAY THAT FITCH HAS THEIR OWN METHODOLOGY FOR CALCULATING DEBT SERVICE COVERAGE, RIGHT? THAT IS CORRECT.

SO THEY MAKE ADJUSTMENTS, FOR EXAMPLE, UH, TO TAKE LIKE A PURCHASE POWER AGREEMENT AND THEY'LL TREAT SOME OF THAT AS A DEBT OBLIGATION.

THEY DO.

AND THAT, YOU KNOW, THERE'S A SLIGHTLY DIFFERENT METHODOLOGY THAN YOU USE, FOR EXAMPLE, IN, IN CALCULATING YOUR, THE TARGET 2.0 IN YOUR FINANCIAL POLICIES.

WE DO NOT USE THE POWER PURCHASE AGREEMENTS.

UM, SO DOES, DOES THIS CHANGE IN THE DEBT SERVICE COVERAGE HERE HAVE ANY, UH, UH, YOU KNOW, DOES THIS IS GOING TO CAUSE FITCH TO REVISIT THEIR DECISION TO DOWNGRADE IF YOU'VE HEARD ANY INDICATION OF THAT? NO, THEY'RE NOT.

AND I WANTED TO ASK YOU IF YOU GO TO THE, WELL, FIRST, LET ME ASK YOU, DO YOU KNOW IF THEY'VE REPUBLISHED THIS YET WITH THE CORRECTED NUMBER? I'M NOT AWARE OF IF THEY HAVE NOT YET.

IF YOU GO, DO YOU KNOW IF THEY USE THE INCORRECT NUMBER WHEN THEY PERFORM THEIR DOWNGRADE? NO.

SO THEY WOULD HAVE USED, UM, THE INFORMATION ON THAT STRESS TEST THAT, THAT WE REVIEWED, UM, IN PREPARING THIS, WE IDENTIFIED THAT THIS DISCREPANCY, WHEN WE WERE COMPARING OUR DEBT SERVICE COVERAGE TO OTHER UTILITIES AND WE INFORMED FITCH, UH, AND THEY SAID THAT THEY WOULD REPUBLISH IT, BUT THE INFORMATION USED FOR THE DOWNGRADE THAT WAS, UM, FROM THEIR STRESS.

THAT WAS THE, THEY USE THE CORRECT ONE IN THAT THAT'S CORRECT.

UM, IF WE GO OVER TO THE COLUMN ON THE FAR, RIGHT, WE SEE TRANSFERS SLASH OPERATING REVENUE PERCENTAGE.

DO YOU SEE THAT? YES, I DO.

IS THAT, IS THAT TALKING ABOUT ITEMS SUCH AS, UH, GENERAL FUNDS TRANSFER? CORRECT.

SO THAT'S THEIR INTERPRETATION IS THAT WAY TO STANDARDIZE THAT.

SO THAT'S OUR GENERAL FUND TRANSFER AGAINST OUR TOTAL REVENUES.

AND SO IF WE GO TO THE BOTTOM, WE SEE AUSTIN ENERGY IS AT 9.62%.

UM, WHEREAS IT SEEMS LIKE ALL OF THE OTHER LISTINGS HERE ARE, ARE FAR LOWER.

IS THAT RIGHT ON THIS PAGE? THAT IS CORRECT.

AND SO THAT MEANS, AM I INTERPRETING THAT CORRECTLY? DOES THAT MEAN THAT AUSTIN ENERGY SENDS OUT A LARGER TRANSFER THAN, THAN THE OTHER, UH, UTILITIES LISTED ON THIS PAGE? AT LEAST THAT'S A CORRECT ANSWER, BUT I WOULD LIKE TO EXPLAIN THAT GENERAL FUND TRANSFER UNDER TEXAS LAWS IS DIFFERENT THAN OTHER STATE LAWS.

AND SO IT COULD BE THAT THOSE OTHER UTILITIES MAY PAY SOME TAXES, UH, INFORM, UH, TO THEIR LOCAL GOVERNMENTS AS OPPOSED TO GENERAL FUND TRANSFER.

SO THAT'S NOT AN ABSOLUTE COMPARISON.

ALL RIGHT, FAIR ENOUGH.

BUT IT'S ALSO TRUE THAT THE STATUTE IN THAT ALLOWS GENERAL FUND TRANSFERS DOESN'T MANDATE A PARTICULAR PERCENTAGE OF OPERATING REVENUE, RIGHT? NO, IT DOES NOT RUN METHODOLOGY.

AND, AND IN FACT, EVEN YOUR OWN FINANCIAL POLICY, JUST AS IT SHOULD NOT EXCEED 12%, RIGHT.

YOU'RE CORRECT.

UM, YOU TURN WITH ME TO YOUR REBUTTAL TESTIMONY AT PAGE 25.

JUST LET ME KNOW WHEN YOU'RE THERE.

AND WHEN I ASK YOU A QUESTION ABOUT MS. TESTIMONY, SO PLEASE THE COURT, I WILL BRING THAT A COPY OF THAT UP.

ARE YOU, UH, THERE ON PAGE 25, SIR? I AM.

AND DO YOU SEE THE Q AND A, UH, THE FIRST ONE ON THE PAGE YOU ASKED, DO YOU AGREE WITH WITNESS LECONTES ARGUMENT THAT IS NOT PRUDENT FOR AUSTIN ENERGY TO HAVE A DOUBLE A RATING? UH, YOUR ANSWER IS NO CORRECT.

AND IF YOU TURN TO THE COPY OF MS. TESTIMONY THAT I JUST HANDED YOU ON PAGE SEVEN, WHICH I BELIEVE IS WHAT YOU REFERENCED HERE, ARE YOU THERE? YES.

AND YOU SEE THE QUESTION THAT MS ASKED HERSELF WAS, IS IT PRUDENT FOR UTILITY TO PURSUE THE HIGHEST CREDIT RATING POSSIBLE REGARDLESS OF THE COST TO RATE PAYERS, RIGHT? YES.

SO THAT'S A LITTLE DIFFERENT THAN THE QUESTION THAT, THAT YOU FRAMED HER AS HAVING ASKED.

WOULD YOU AGREE?

[03:00:07]

I AGREE.

IT'S NOT WORD FOR WORD AND I CAN UNDERSTAND YOUR POINT.

YOU'RE MAKING.

UH, WELL, LET ME JUST ASK YOU, DO YOU THINK IT'S PRUDENT FOR UTILITY TO PURSUE THE HIGHEST CREDIT RATING POSSIBLE REGARDLESS OF THE COST OF RATE PAYERS? NO, I DON'T.

UM, AND IN FACT, YOU HAVEN'T REQUESTED IN THIS CASE, A REVENUE REQUIREMENT THAT WOULD GIVE YOU THE HIGHEST CREDIT RATING POSSIBLE, RIGHT? NO.

AND I, I DON'T KNOW IF I, I WOULD KNOW THAT.

SO YOU WOULDN'T KNOW THE ANSWER TO THAT.

IS THAT WHAT YOU SAID? THAT'S CORRECT.

CREDIT AGENCIES USE A LOT OF DIFFERENT METRICS AND THEY USE A COMMITTEE GROUP THAT QUITE FRANKLY MEETS BEHIND CLOSED DOORS.

SO I DON'T KNOW ALL THE THINGS THAT ARE GOING TO EVALUATE, AND IT'S CERTAINLY MORE THAN JUST A REVENUE REQUIREMENT.

BUT I GUESS IT'S, IT'S FAIR TO SAY THAT WHEN YOU ESTABLISHED YOUR PROPOSED REVENUE REQUIREMENT, YOU WERE NOT TARGETING GETTING UPGRADED THE WAY TO THE HIGHEST CREDIT RATING POSSIBLE, RIGHT? NO, IT WAS NOT RIGHT.

UM, BUT HAVE YOU PERFORMED A COST BENEFIT ANALYSIS OF THE VALUE OF MAINTAINING ANY PARTICULAR CREDIT RATING VERSUS THE COST OF RATE PAYERS? NO, I HAVE NOT.

ALRIGHT, THANK YOU.

UH, THANK YOU FOR YOUR TIME, SIR.

I PASS THE WITNESS.

I SEE NO QUESTIONS, YOUR HONOR.

UM, MR. MERCADO, DO YOU HAVE JUST A BALLPARK IDEA OF REDIRECT? JUST HOW LONG? OH, THAT'S OKAY.

ALRIGHT, I'M SORRY, MR. DOMBROSKI WILL YOU LOOK AT THE FINANCIAL POLICIES THAT YOU WERE REVIEWING AND ONE OF THE APPENDICES TO YOUR TESTIMONY A MOMENT AGO, I'M AT, UH, EXHIBIT MD TO THE FINANCIAL POLICIES, RIGHT? AND SO SO EARLIER THIS MORNING, MS. COOPER ASKED YOU ABOUT THE, UM, PERIOD OVER WHICH TO COLLECT, UM, DECOMMISSIONING FUNDS.

AND I BELIEVE YOU REFERRED TO, UM, FINANCIAL POLICY AND NUMBER 21.

UM, DO YOU SEE THAT FINANCIAL POLICY? YES, I DO.

LOOKING OVER THAT, UM, AND FOR REFRESHING YOUR MEMORY, DOES THAT CAUSE YOU TO, UM, CHANGE ANYTHING THAT YOU SAID IN RESPONSE TO OUR QUESTIONS THIS MORNING? I SHOULD HAVE CLARIFIED MY ANSWER.

IT SAYS OVER A MINIMUM OF FOUR YEARS PRIOR TO THE EXPECTED PLANT CLOSURE, NOT FOUR YEARS EXPECTED CLOSURE.

AND IF, UM, AUSTIN ENERGY, WHERE TO COLLECT THE DECOMMISSIONING FUNDING FOR A PLANT, UM, FOR FOUR YEARS OR, OR EVEN CLOSE TO THAT, WOULD THAT CREATE SOME ADDITIONAL ISSUES OR COMPLICATIONS? YES, YOU WOULD HAVE TO COLLECT MORE PER YEAR, THEREFORE MORE PER CUSTOMER AND OUR SHORTER PERIOD OF TIME, THAT FOUR YEARS.

AND IF YOU DID IT OVER 10 YEARS OR 15 YEARS, IS THERE ANY ISSUE WITH RESPECT TO WHOM YOU WOULD BE COLLECTING THOSE DECOMMISSIONING FUNDS FROM IF YOU'RE COLLECTING THE DECOMMISSIONING FUNDS FROM YOUR CURRENT CUSTOMER BASE WHILE THE PLANT IS RUNNING, YOU'RE COLLECTING IT FROM THE CUSTOMERS WHO ARE BENEFITING FROM THAT PLANT? UH, THEREFORE IT'S CALLED A GENERATIONAL.

ACTUAL AMOUNT GIVEN? IT DOES NOT.

UM, MR. MANUS, UM, IS THE REVENUE INCREASED PROPOSED BY AUSTIN ENERGY IN THIS CASE BASED ON ACTUAL REVENUES? NO.

UH, THE, UM, THE TEST, YOUR REVENUE THAT IS CALCULATED UNDER THE CURRENT RATES, UM, IS, IS, UH, CALCULATED BY TAKING NORMALIZED BILLING UNITS, SUCH AS CUSTOMER COUNT KW H K W AND APPLYING THE CURRENT TARIFFS TO THEM.

IT DOES NOT, IT IS NOT BASED ON HISTORICAL, UH, FISCAL YEAR 2021 REVENUE.

ALL RIGHT, THANKS.

LET ME CALL IT BASE REVENUES.

ALL RIGHT, MR. DOMBROSKI, DOES IT, OR DOES IT NOT MAKE SENSE TO SET THE TEST, YOUR GFT TO THE FISCAL YEAR 2023

[03:05:02]

WAS THAT BECAUSE WE ARE UTILIZING A TEST YEAR AND NOT THE ACTUAL, CAN YOU EXPLAIN, UM, FURTHER ON THAT? SO THE TEST YOUR HAS, UM, A SINGLE 12 MONTH PERIOD WITH KNOWN A MEASURABLE CHANGES.

UM, WE ONLY USE A SINGLE TEST YEAR AND NOT A THREE-YEAR TEST YEAR, UM, WHICH IS WHAT OUR GENERAL FUND TRANSFER POLICIES BASED ON.

AND SO DOES THAT EXPLANATION, UM, TOUCH ON THIS ISSUE THAT YOU WERE SPEAKING WITH MR. HALLMARK ABOUT A MOMENT AGO WITH RESPECT TO THE 20 22, 20 23 BUDGET? THAT IS CORRECT.

AND, AND HOW DOES IT RELATE TO THAT? UH, MR. RAVING CAN TALK A LITTLE BIT MORE ABOUT THAT SCHEDULE, BUT WE'RE USING THE TESTS, YOUR DATA AND TAKING 12% AND APPLYING IT TO THE, UM, REVENUE'S LESS, UH, POWER SUPPLY, ADJUSTMENT, LESS DISTRICT COOLING.

THANK YOU, MR. DOMBROSKI.

I HAVE NO FURTHER QUESTIONS, YOUR HONOR.

ANY QUESTIONS BASED ON THOSE LIMITED QUESTIONS, LET'S SEE TO WR YES.

OR JUST ON THE BILE TLAC, JUST ON THE BIOMASS.

I THOUGHT WE WERE THROUGH WITH THIS.

UH, BUT, UH, YOU DON'T KNOW WHEN YOU'RE GOING TO, UH, TO DIG DECOMMISSION THAT PLANT THE BIOMASS PLANT, IS THAT CORRECT? SOMEBODY PROBABLY NEEDS TO TURN THEIR PHONE OFF.

WE HAVE NOT YET SET A DATE FOR DECOMMISSIONING OF THE BIOMASS PLANT.

SO, AND YOU HAVE NOT REALLY LOOKED AND YOU DON'T EVEN KNOW WHAT THE COSTS WOULD BE FOR DECOMMISSIONING.

I DON'T KNOW.

AND IT'S MY UNDERSTANDING THAT THERE'S QUITE A BIG PIECE OF, OF LAND ASSOCIATED WITH THIS PLANT IN NORTHEAST TEXAS.

IS THAT CORRECT? IT'S IT'S CORRECT.

I, I DON'T KNOW THE EXACT ACREAGE OF THE LAND.

IT'S OVER 200 ACRES, I BELIEVE YOU'RE CORRECT.

AND SO WHETHER, UH, AUSTIN ENERGY DECIDED TO KEEP THAT PROPERTY AND USE THE PROPERTY AND MAYBE EVEN THE PLANT FOR SOMETHING ELSE THAT WOULD FACTOR INTO THE COST OF DECOMMISSIONING, IS THAT CORRECT? SO THERE WAS WHAT IT'S CALLED SALVAGE VALUE WHEN YOU CALCULATE THESE THINGS, UM, CLEANING THE SALE OF THE LAND THAT I WOULD GO INTO THE TERMINATION IF, IF WE WERE TO DISPOSE OF THE LAND.

AND, UM, THAT WOULD BE AN OFFSET.

BUT WE DON'T KNOW WHAT THE SALVAGE VALUE IS.

ANY MORE THAN WE KNOW WHEN YOU'RE GOING TO RETIRE THE PLAN OR, OR THE COSTS, THE SALVAGE VALUE OF THE PLANT, THE, THE, YOU KNOW, THE, UH, YOU KNOW, THE SA YOU KNOW, WHAT YOU, IF YOU SELL THE PROPERTY, WHAT WOULD YOU BE ABLE TO GET THE OFFSETTING CREDITS TO ANY COST OF DECOMMISSIONING? YEAH.

I, I DON'T KNOW WHAT, WHEN OR WHERE WE WOULD SELL THE LAND, SO I DON'T KNOW WHAT THE VALUE WOULD BE.

SO LET'S ALL RIGHT.

THANK YOU, MR. .

UH, MR. HALLMARK, THANK YOU, YOUR HONOR.

UH, MR. DOMBROWSKI, YOU WERE ASKED SOME QUESTIONS ABOUT WHETHER IT MADE SENSE TO, TO CALCULATE THE GFT, UM, BASED ON THE REVENUE REQUIREMENT.

DO YOU RECALL THAT, JUST ASK THAT QUESTION BY, FROM HOME, UH, BY YOUR COUNSEL, JUST, YOU WERE, YOU WERE ASKED QUESTIONS BY YOUR COUNSEL ABOUT THE WAY TO PROPERLY CALCULATE THE GFT, RIGHT? YES.

UM, THE MANNER IN WHICH THE GFT IS CALCULATED IN THIS CASE, WELL, STRIKE THAT THE MANNER IN WHICH YOU CALCULATED THE GFT FOR PURPOSES OF THIS CASE IS DIFFERENT THAN THE MANNER IN WHICH YOU'RE SUPPOSED TO CALCULATE IT FOR THE FINANCIAL POLICIES.

AND THE RESULTS OF THAT CALCULATION FOR THIS CASE WAS A GFT THAT'S $6 MILLION HIGHER THAN FISCAL YEAR 2023.

IS THAT RIGHT? THE DIFFERENCE BETWEEN THOUGH 115 MILLION, 121 MILLION THAT'S $6 MILLION, RIGHT.

AND 7 MILLION FOR FISCAL YEAR 22, RIGHT? YES.

ANY, UH, FOLLOWUP REDIRECT ON THAT.

TO MAKE WHATEVER CHANGES YOU NEED TO MAKE.

THANK YOU VERY MUCH PANEL YOU'RE EXCUSED.

UM, BEFORE WE GO OFF THE RECORD FOR THE BOOTH, THIS MIGHT BE A GOOD TIME

[03:10:01]

IS THIS GOOD TIMING? GREAT.

SO LET'S GO OFF THE RECORD AND WE'LL COME BACK ON AND HAVE PANEL TWO.

LET'S TAKE A 10 TO 15 MINUTE BREAK AND GET PANEL TWO UP AND CARRY ON.

ARE WE READY FOR PANEL NUMBER TWO? UH, YES, YOUR HONOR.

AT THIS TIME, AUSTIN ENERGY, UH, WOULD PRESENT A REBUTTAL PANEL.

NUMBER TWO WITH MR. RICHARD GENESEE GRANT, RAVEN, BRIAN MURPHY AND SCOTT BURNHAM.

WE HAVE TWO CHANGES, MINOR EDITS TO THE TESTIMONY.

LET, LET, CAN WE ROLL BACK GOING ON A RECORD TOO, OR WE'RE ON THE RECORD? LET'S GO ON THE RECORD, BUT COULD, COULD YOU GO THROUGH THAT AGAIN? UH, AT THIS TIME, YOUR HONOR, ALL SYNERGY WOULD PRESENT REBUTTAL PANEL NUMBER TWO, MR. RICHARD GENESEE, MR. GRANT, RAVEN, MR. BRIAN MURPHY AND MR. SCOTT BURNHAM, WE DO HAVE TWO CHANGES EDITS TO THE TESTIMONY, UH, THAT I'M AWARE OF.

UM, AND IF I MAY, WE'LL JUST GO THROUGH THOSE QUICKLY.

I DON'T, I'M JUST GONNA DIRECT YOU ALL THROUGH THEM IF THAT'S ALL RIGHT.

UM, MR. RAVEN, DO YOU HAVE A CHANGE AT PAGE 16 OF YOUR TESTIMONY? UH, YES, I DO.

WELL, YOU IDENTIFY IT AND MAKE THE CHANGE? UH, YES.

UH, AFTER THE ANSWER, YES.

AT THE VERY TOP OF THE FIRST Q AND A AT THE TOP OF PAGE 16 OF MY REBUTTAL TESTIMONY, STRIKE EVERYTHING DOWN TO, I RECOMMEND MR. F RON SUGGESTED ADJUSTMENTS BE REJECTED, AND THIS HAS BEEN, UH, PERFORMED IN THE VERSION THAT IS IN, UH, YOUR HONORS BOX BACK THERE.

THAT WAS GOING TO BE MY QUESTION.

I APPRECIATE THAT.

THANK YOU, MR. RAVEN, ANY OTHER CHANGES THAT NEED TO BE MADE TO YOUR TESTIMONY? NO.

THANK YOU, MR. MURPHY, WILL YOU, UM, LOOK AT PAGE 23 OF YOUR REBUTTAL TESTIMONY, UM, THERE, DO YOU NEED TO MAKE ANY CHANGE TO YOUR CUSTODY? YES, SIR.

SO, UH, BEGINNING ON LINE 20, THERE'S A SENTENCE THAT STARTS THERE, ALL THE PASS THROUGHS.

SO YOU, SO THE, UH, THE REST OF LINE 20 THEY'RE ALL OF LINE 21, AND THEN ALL OF LINE 22 SHOULD BE STRICKEN SO THAT THE STUFF TO BE STRICKEN READS, ALL THE PASTORS WOULD BE ASSESSED ON A CUSTOMER BASIS.

HYPHEN, THE COMMUNITY BENEFIT, CHARGE, THE POWER SUPPLY ADJUSTMENT AND THE REGULATORY CHARGES.

THANK YOU, MR. MURPHY, ARE THERE ANY OTHER EDITS THAT YOU NEED TO MAKE YOUR TESTIMONY? NO, SIR.

UH, AND WE WILL MAKE SURE THAT YOUR, UH, COPY YOUR HONOR, UH, REFLECTS THIS AS WELL.

UH, WE'VE ACTUALLY KIND OF PACKED THINGS UP, BUT WAS IT WHERE THE HAS ALREADY MADE OR IT WE'LL WE'LL DEAL WITH IT.

I DON'T BELIEVE THERE'S ANY OTHER EDITS AND WITH THAT, THEN WE WILL TINDER THIS PANEL FOR CROSS EXAMINATION.

THANK YOU TO WR MS. COOPER.

UH, Y'ALL WERE REFERRED TO ME BY THE FIRST PANEL, SO YOU KNOW WHO TO BLAME, NOT ME.

SO, UH, IF YOU COULD LOOK AT EXHIBIT 19, I THINK IT'S 19.

LET ME JUST DOUBLE-CHECK HERE FOR YOU.

NO WORRIES.

DID YOU FIND IT? HERE WE GO.

WE'RE ALMOST THERE.

I BELIEVE SO.

AND THAT IS A RESPONSE THAT Y'ALL PROVIDED FROM S P S C.

IS THAT CORRECT? UH, YEAH.

S S C ONE DASH FIVE.

AND, AND ONE OF THE QUESTIONS IN SUBPART AND SHE IS THAT, UH, AUSTIN ENERGY WAS ASKED ABOUT WHAT WAS THE OPERATING AND MAINTENANCE COSTS OF BILLING AND COLLECTING.

IS THAT CORRECT? I'M SORRY, ASK YOUR QUESTION AGAIN.

G OF THE QUESTION WAS THAT, UH, THE, UH, REQUESTER WAS ASKING FOR THE OPERATION AND MAINTENANCE EXPENSE OF, UH, BILLING AND COLLECTING.

IS THAT CORRECT? WELL, AND, AND TO BE CLEAR, I BELIEVE YOU COULD DEFINITELY CORRECT ME, BUT I THINK THE QUESTION IS REGARDING WHERE THE COST OF THE BILLING AND INVOICING SYSTEM, NOT THE ACTUAL COST OF, OF WHERE THE SYSTEM RESIDES, IF I'M MISTAKEN.

UH, EXPLAIN WHAT YOU MEAN BY BELMONT, HOW THAT'S DIFFERENT THAN BILLING AND COLLECTING? YEAH.

SO COULD YOU,

[03:15:01]

UM, SO I GUESS I'M JUST MAKING CLEAR, UH, AUSTIN ENERGY HAS A, UH, A BILLING SYSTEM, UH, IT'S REFERRED TO A CCNB, UM, AND, AND THE COSTS OF THAT BILLING SYSTEM, UH, I BELIEVE ARE WHAT ARE BEING RESPONDED TO HERE, UH, IN THIS, IN THIS ANSWER.

AND HOW DOES THE BILLING SYSTEM FIT INTO BILLING AND COLLECTIONS AT AUSTIN ENERGY, THIS SPECIFIC BILLING SYSTEM? UH, SURE.

AND I, AND I'M PROBABLY NOT THE EXPERT ON, ON THEIR BILLING SYSTEM, UH, BUT PERHAPS YOUR, YOUR, YOUR REAL PURPOSE I CAN SPEAK TO.

UH, BUT, BUT THAT IS THE SYSTEM THAT IS BEING UTILIZED BY ALL THIS ENERGY IN PART TO BE ABLE TO, TO BILL.

SO IT'S NOT COMPLETELY UNRELATED.

I JUST WANT TO BE CLEAR THAT IT'S, IT'S THE CSUMB B CCNB SYSTEM THAT I THINK IS BEING REFERRED TO HERE IN THE, IN THIS ANSWER.

AND IS THERE ANOTHER BILLING SYSTEM, OR IS THIS THE BILLING SYSTEM? OH, I AM NOT AWARE.

SO AS FAR AS, YOU KNOW, THIS IS THE BILLING SYSTEM, RIGHT.

SO COULD YOU HELP ME AND IDENTIFY IT HERE IN THE RATE FILING PACKAGE? BECAUSE I LOOKED AND I COULDN'T FIND IT, UH, SURE.

AND SO, AND THIS IS WHERE I SUSPECTED PERHAPS YOUR, YOUR REQUEST FOR REASON TO LIE, WHICH IN WHICH CASE THIS WILL BE HELPFUL.

UM, THE, UH, THE COST OF THAT, THAT SYSTEM, IT RESIDES WITHIN FERC ACCOUNT, UH, 9 23.

SO IF IN THE RIGHT FILING PACKAGE, IT'S WITHIN INCLUDED WITHIN THE COSTS THAT ARE IN THAT, THAT FARC ACCOUNT.

AND DOES THAT, AND IS ALL THE FERC ACCOUNT 9 23 CALLED A CUSTOMER COSTS? UH, NO.

UM, I DON'T RECALL AT THE TOP OF MY HEAD, THE, THE LABEL FOR THAT PARTICULAR FOR ACCOUNT, BUT, BUT, BUT NOT EVERYTHING IN 9 23 IS RELATED TO THIS, THIS BILLING SYSTEM, BUT, BUT THIS IS ONE OF THE COSTS WITHIN THERE THAT THAT IS INCLUDED.

AND, AND JUST FOR THE RECORD, A FERC ACCOUNT IS AN ACCOUNTING KIND OF ACCOUNT SYSTEM THAT SPECIALIZED BY WHAT THE FEDERAL ENERGY WHAT'S IT CALLED? REGULATORY COMMISSION.

SO THE FORK ACCOUNTS DO OFTEN GET USED BY ELECTRIC UTILITIES IN THE INDUSTRY TO HELP, UH, CATEGORIZE EXPENSES INTO DIFFERENT GROUPS THAT ARE BEEN SIMILAR ACROSS THE, THE INDUSTRY.

UM, AND IT DOES FACILITATE AND HELP IN, UM, SOME CONTINUITY BETWEEN ONE UTILITY, ANOTHER, WHEN YOU'RE LOOKING AT ONE UTILITIES COSTS AND ANOTHER UTILITIES COSTS, THERE'S SOME BASIS UPON WHICH YOU CAN, YOU KNOW, UNDERSTAND WHERE DIFFERENT TYPES OF COSTS MIGHT BE CAPTURED.

AND THEN FOR EXHIBIT FOUR, WE'RE GOING TO TALK ABOUT THE CALL CENTER.

I, I THOUGHT I WAS THROUGH WITH IT, BUT APPARENTLY I WASN'T.

SO I APOLOGIZE.

IT'S EXHIBIT FOUR.

I DON'T KNOW IF I MENTIONED THAT.

WHEN I SAY EXHIBIT A Y'ALL, I MEAN, TO, UH, TO W AS EXHIBITS, UNLESS I OTHERWISE STATE.

SO IF WE COULD LOOK AT PAGE TWO, AND IT'S THE, UM, ALLOCATION BETWEEN THE DEPARTMENTS AND YOU'RE REFERRING TO, UH, A HANDWRITTEN TWO IN THE BOTTOM RIGHT-HAND CORNER OF THE PAGE.

SERVICE IS THE 9,000 THE AMOUNT THAT WAS ALLOCATED BETWEEN THE DEPARTMENTS.

YOU'RE HELPING ME MAKE THE RECORD VERY CLEAR.

THANK YOU SO MUCH.

UH, WHERE WOULD THIS, WHERE WOULD I FIND THIS AMOUNT, THIS ALLOCATED MOUNT THIS THREE 11 AMOUNT AND IN THE COST OF SERVICE, I'M NOT POSITIVE, SO I DON'T WANT TO HAZARD A GUESS, BUT I IT'S SOMETHING THAT WE CAN CERTAINLY IDENTIFY, BUT I, I WOULD, I WOULD HATE TO, TO, TO ANSWER WITH A, I GUESS, AND, AND BE AN ERROR.

I APPRECIATE, I APPRECIATE THAT NOW.

UH, I DON'T KNOW IF YOU KNOW THIS AND I PROBABLY SHOULD'VE ASKED MR. GALVIN, BUT, UH, IS THE TOTAL AMOUNT FROM WHAT YOU CAN SEE HERE AND YOUR EXPERIENCE AND KNOWLEDGE OF AUSTIN ENERGY'S, UH, BUSINESS AFFAIRS FOR PURPOSE OF COST OF

[03:20:01]

UNFORTUNATELY I DO NOT KNOW THE ANSWER TO THAT.

NOW, UH, WE'VE GOT THIS, UH, AMOUNT, UH, OF 12, $12.6 MILLION.

THAT'S BEEN ALLOCATED TO AUSTIN ENERGY.

UM, DO YOU KNOW WHETHER THE, THE OTHER DEPARTMENTS RECEIVED, UH, WERE, UH, THE $3 MILLION, WAS A JUDGE, UH, JUDGED AGAINST AUSTIN ENERGY? WAS THAT 3 MILLION KIND OF, UH, IN ADDITION TO THE 9 MILLION? I'M NOT, I'M NOT REALLY SURE.

NEVERMIND.

CAUSE YOU DON'T KNOW THE ANSWER AND I APOLOGIZE NOW, DID AUSTIN ENERGY PUT ANY ADDITIONAL, INCLUDE ANY ADDITIONAL COSTS OTHER THAN JEN, THIS ALLOCATED COST STUDY, UH, AND MAKE IT, UH, FOR THE THREE 11 FOR PURPOSES OF COMING UP WITH THE CUSTOMER COSTS? LIKE, IS THERE ANY OVERHEAD IN ADDITION TO THIS COST, I DON'T KNOW THE ANSWER TO THAT QUESTION.

YOU DON'T AND WELL, MAYBE YOU CAN HELP US BY TELLING US HOW, HOW WE COULD FIND IT IN THE RIGHT FILING PACKAGE.

IF WE WANTED TO LOOK WELL WITHIN THE RIGHT FUNDING PACKAGE, THIS EXPENSE IS CAPTURED IN ONE OF THE FORK ACCOUNTS TO WHICH I, I, I, I, I'M NOT GOING TO GUESS.

AND, AND ONE COULD LOOK AT THAT AND IT'S NOT CLEAR TO ME WHETHER YOUR QUESTION IS, WERE ANY ADJUSTMENTS MADE TO THIS STORAGE WILL ACTUAL EXPENSE OR, OR WHETHER OR NOT THE HISTORICAL ACTUAL EXPENSE ITSELF, UM, HAD ANYTHING IN ADDITION, BUT REGARDLESS, UH, IF YOU WERE TO LOOK IN THE RIGHT FALLING PACKAGE, UH, WHERE THIS EXPENSE RESIDES, UM, YOU COULD LOOK THROUGH THE VARIOUS ADJUSTMENTS THAT WERE IDENTIFIED AND THE RIGHT FINALLY PACKAGE TO SEE IF ANY ARE TIED TO A RELATED TO THIS, THIS, THIS COST ITEM.

OH, NOW, UH, YOU ARE AWARE THAT MANY OF THE COSTS LIKE BILLING AND COLLECTION HAVE, INCLUDING NOT ONLY THE ACTUAL, LIKE IN THE CASE OF THE BILLING OPERATING AND MAINTENANCE COSTS, IT INCLUDES, UH, ADDITIONAL COSTS SUCH AS COST IS AS ADMINISTRATION.

AND IT'S WHAT SOME PEOPLE REFER TO AS LOADED COSTS.

THE ACTUAL COSTS ARE LOADED WITH OVERHEAD.

ARE YOU AWARE OF THAT? UH, I, I'M NOT POSITIVE WHAT YOU'RE REFERRING TO, BUT, BUT MAYBE ASK YOU A QUESTION AND I MIGHT BE ABLE TO ANSWER IT.

LET'S LOOK AT, UH, LET'S LOOK AT THE, FOR EXAMPLE, IF YOU LOOK AT PAGE THREE, THIS IS NOT THE THREE 11.

WE LEARNED THAT EARLIER THIS MORNING, IT'S THE CALL CENTER COST NOW, DO YOU KNOW? UH, AND THESE ARE THE VARIOUS FERC ACCOUNTS.

DO YOU KNOW IF THESE ARE THE ACTUAL OPERATING COSTS OR DO THEY INCLUDE COSTS OF LIKE THE GENERAL MANAGER OF AUSTIN ENERGY OR SOMETHING THAT'S NOT DIRECTLY RELATED TO THE DIRECT OPERATING COSTS? DO YOU KNOW THAT? YEAH, SO TO BE CLEAR, I'M LOOKING AT A PAGE NUMBER THAT HAS A HANDWRITTEN THREE IN THE BOTTOM RIGHT HAND CORNER.

I'M NOT FAMILIAR WITH THIS CUTE QUESTION OR ANSWER, SO I'M NOT SURE.

THEM ACROSS THE VARIOUS FUNCTIONS IN SOME COST CAUSAL RATIONAL MANNER.

YOUR KNOWLEDGE OF THE RATE FILING PACKAGE TO YOUR KNOWLEDGE, DO YOU KNOW WHETHER ANY OF THE CUSTOMER CUSTOMER COSTS SUCH AS BILLING AND COLLECTION NEATER READING HAVE ADDITIONAL COST ADDED TO IT UNDER THAT CATEGORY FOR PURPOSES OF ESTABLISHING CUSTOMER COST CLASSIFICATION? UM, AND SO, AND SO MAYBE I CAN ANSWER YOUR QUESTION THIS WAY AND IF IT HELPS GREAT, IF NOT, YOU CAN, RE-ASK THE QUESTION IF, UM, I'M NOT REALLY GETTING TO WHAT YOU'RE TRYING TO DO.

SO, UM, THERE ARE CUSTOMER RELATED COSTS, UM, THAT ARE IN, UH, FOLK ACCOUNTS THAT ARE GENERALLY ASSOCIATED WITH THE CUSTOMER FUNCTION, UM, AND THE THREE ONE ONE CALL CENTER AND THE CCNB SYSTEM AND THE OTHER, UH, RELATED COSTS RELATED TO THE CUSTOMER FUNCTION ARE, ARE CAPTURING THOSE COSTS THAT ARE ALSO, UM, SEPARATE FERC ACCOUNTS THAT, THAT OUTLINED THAT, THAT THE TRANSMISSION COSTS, THE DISTRIBUTION COSTS, THE PRODUCTION COSTS.

THERE'S ALSO A GROUP OF COSTS FOR GENERAL AND ADMINISTRATIVE COSTS.

AND THOSE COSTS INCLUDE SOME OF THE THINGS THAT I BELIEVE YOU, YOU REFERRED TO SUCH AS THE GENERAL MANAGER AND THINGS OF THAT NATURE, BECAUSE THOSE COSTS IN THE CATEGORY OF GENERAL AND ADMINISTRATIVE ARE NOT DIRECTLY TIED TO AN INDIVIDUAL FUNCTION IS APPROPRIATE TO, UH, ALLOCATE

[03:25:01]

AND SO I BELIEVE THAT MAY BE WHAT YOUR WHAT'S YOUR, UH, I THINK THAT THAT'S A VERY GOOD RESPONSE.

THANK YOU SO MUCH.

THE NEXT QUESTION I HAVE, AND THIS IS THE ONE THAT'S THAT CAUSES ME A LOT OF, UH, OF CONCERN.

AND THAT IS WHEN YOU ALLOCATE THINGS LIKE THE CALL CENTER OR CUSTOMER BILLING AND COLLECTION, WHICH IS A COST THAT AUSTIN ENERGY AND CURVES FOR THE BENEFIT, NOT ONLY OF ITSELF, BUT FOR SOLID WASTE FOR WATER WASTEWATER, MANY OTHER DEPARTMENTS, DO YOU ALLOCATE ALL OF THOSE COSTS, INCLUDING THE OVERHEAD COSTS, WHICH YOU ARE IDENTIFYING AS A CUSTOMER COST.

AND WHEN I SAY YOU, I MEAN, AUSTIN ENERGY, NOT, NOT YOU, MR. RAVEN.

FAIR, FAIR ENOUGH HERE AGAIN.

UM, I BELIEVE I CAN GIVE YOU AN ANSWER THAT'S HELPFUL.

AND IF IT PROVES TO NOT ANSWER THE QUESTION BY ALL MEANS, ASK IT, ASK ME AGAIN, AND PERHAPS I'M I'M I WILL GET TO IT.

UM, I THINK ONE OF YOUR EXAMPLES WAS, UM, CUSTOMER BILLING AND COLLECTING, RIGHT? UM, I'M SORRY.

I HAD A, I HAD A THREAD OF WHERE, WHERE YOU WERE HEADED WITH THIS AND I LOST IT SOMEHOW.

SO I APOLOGIZE.

TRY REFRAMING THE QUESTION FOR ME AGAIN, CUSTOMER BILLING AND COLLECTING IS, IS DONE BY AUSTIN ENERGY BENEFIT.

JUST NEEDED YOU TO START THE QUESTION FOR ME TO REMEMBER.

THANKS SO MUCH FOR THAT.

UM, SO, UM, YOU KNOW, I, AND I THINK YOU MAY HAVE ASKED SOME QUESTIONS RELATED TO THREE, ONE, ONE CALL CENTER.

I THINK THIS IS A GOOD EXAMPLE.

UM, IT, IT IS NOT THE, ALTHOUGH, UM, THE, THE TOTAL COSTS OF THE 3 1, 1 CALLS CENTER ARE WITHIN THE OVERALL COSTS THAT AUSTIN ENERGY HAS BECAUSE IT'S ADMINISTERING THE THREE, ONE, ONE CALL CENTER.

WE ARE NOT ALLOCATING THE TOTAL COSTS OF THE THREE ONE, ONE CALL CENTER TO THE ELECTRIC CUSTOMERS.

WE'RE JUST LOOKING AT THE PORTION OF THOSE THREE, ONE CALL CENTER COSTS THAT ARE ATTRIBUTABLE AND RELATED TO THE ELECTRIC UTILITY.

SO IT IS NOT THE TOTAL THREE, ONE, ONE CALL CENTER COSTS THAT WE'RE ALLOCATING.

WE WERE ALLOCATING THE COST SPECIFICALLY TIED TO THE ELECTRIC UTILITY, WHICH THEN IS BEING, UM, ASSIGNED APPROPRIATELY TO THE, THE VARIOUS CUSTOMER GROUPS AT AUSTIN ENERGY.

AND LET ME JUST SEE IF I UNDERSTAND WHAT YOU'RE SAYING.

SO LIKE FOR BILLING COLLECTION, IF WE WERE TO IDENTIFY THE COST ALLOCATION OF THE ACTUAL COST OF THE ACCOUNTANTS THAT ARE DOING IT AND ALL THIS STUFF, THAT THOSE ARE THE COSTS THAT GET ALLOCATED AMONG THE VARIOUS DEPARTMENTS, BUT THE OVERHEAD LIKE THE EXECUTIVE SALARIES ARE NOT, IS THAT CORRECT? I'M NOT SURE.

I UNDERSTOOD THE QUESTION.

LET'S BACK UP EARLIER.

YOU TOLD ME THAT, UH, WHEN WE TALKED THAT, UH, THE COSTS GET LOADED AS A CUSTOMER CLOCK CLOCK, UH, COSTS SUCH AS EXECUTIVE SALARIES, IS THAT CORRECT? OKAY, WELL, IS THAT WHAT YOU RECALL? YOU CAN CORRECT ME.

I'M NOT TRYING TO PUT WORDS IN YOUR MOUTH.

UM, THE, THE, THE TERM LOADING, I JUST WANT TO MAKE, I DON'T WANT TO BE, AND LOADED MEANS ADDED ON TO THE UNDERLYING ACTIVITY.

I'M CONCERNED THAT DIFFERENT PEOPLE WILL HEAR THAT DIFFERENTLY.

SO ANYWAY, BUT I THINK, I BELIEVE I UNDERSTAND WHAT YOU'RE REFERRING TO MY PREVIOUS STATEMENTS.

IS THAT CORRECT? I, I, I WILL, I WILL, UH, AGREE WITH YOUR DESCRIPTION.

BUT WHAT YOU'RE TELLING US HERE TODAY IS THAT ONLY THE DIRECT COSTS GETS ALLOCATED AMONG THE VARIOUS DEPARTMENTS FOR THAT SERVICE THAT WE'VE, THAT WE JOINTLY PROVIDE.

SO I GUESS WHAT I'M SUGGESTING, OR I'M TRYING TO EXPLAIN IS THAT ONLY THE, THE COST RELATED TO AUSTIN ENERGY DIRECTLY, RIGHT, ARE, ARE IN, UM, THE, THE COSTS THAT ARE BEING FUNCTIONALIZED TO CUSTOMER, AND THEN ONLY THOSE COSTS ARE BEING ATTRIBUTED, OR, UH, I THINK YOUR TERM WAS LOADED, BUT, YOU KNOW, ARE HAVING SOME, UH, PROPORTIONAL, UH, PIECE OF THE GENERAL ADMINISTRATIVE COSTS OF THE UTILITY APPLIED TO THEM.

BUT THEN MY NEXT QUESTION, WHICH, UH, AND I'M GLAD WE GOT THROUGH

[03:30:01]

THAT ONE.

MY NEXT QUESTION IS WHEN YOU ALLOCATE TO THE DEPARTMENT'S COSTS, DO YOU ALLOCATE ONLY THE DIRECT COST OF PROVIDING THAT SERVICE SO ARE YOU ASKING WHETHER OR NOT THE, THE, THE, THE, THE COSTS, UM, FOR LET'S JUST FOR CONVENIENCE, USE 3, 1, 1, ARE YOU ASKING WHETHER OR NOT THE COST FOR 3, 1, 1 THAT WE ARE INCLUDING IN THE REVENUE REQUIREMENT ARE JUST THE COSTS RELATED TO AUSTIN ENERGY'S PORTION OF THAT RESPONSIBILITY FOR THAT OVERALL PROGRAM? NO, SIR.

I'M ASKING YOU, WE'VE ALREADY TALKED ABOUT THE QUESTION I'M HAVING WHEN YOU, WHEN YOU, AND I MEAN, AUSTIN ENERGY ALLOCATES, THE COMMON COSTS THAT WE INCUR TO LIKE DO BILLING AND COLLECTION, UH, CUSTOMER SERVICE, OR 3, 1, 1 IS THE COST THAT GETS ALLOCATED AMONG THE DEPARTMENTS, THE DIRECT COST OF THAT SERVICE, OR IS IT THE DIRECT COSTS THAT'S BEEN ALSO FOR AUSTIN, ENERGY'S CUT CUSTOMER COSTS IN THE RATE, FILING PACKAGE INCLUDE COSTS OF ADMINISTRATION AND THESE OTHER EXPENSES.

SO WHEN YOU SAY OTHER DEPARTMENTS, DO YOU MEAN OTHER CITY DEPARTMENTS? YES, SIR.

LIKE WATER.

I DON'T KNOW THE ANSWER TO THAT QUESTION THAT YOU'RE ASKING.

WHAT INFORMATION ARE YOU GIVEN WHEN YOU ARE PREPARING THE RATE FILING PACKAGE? UH, W WE ARE PROVIDED WITH A, QUITE A BIT OF INFORMATION, UM, FOR THE, FOR THE, FOR THE BILLING AND COLLECTION, FOR INSTANCE, ARE YOU, YOU'RE NOT GIVEN A, LIKE, YOU YOU'VE NEVER, HAVE YOU EVER SEEN, LET ME BACK UP, LET'S TALK ABOUT 3, 1, 1, SINCE WE DO HAVE THIS COST STUDY WHERE YOU PROVIDED THIS COST STUDY, LIKE ON PAGE TWO, AS PART OF YOUR WORK TO SEE WHAT THE COST, THE ACTUAL COST WORK FOR US AND ENERGY ON THE 3, 1, 1, UH, I DID NOT SEE THAT PARTICULAR WORKSHEET, UH, BEFORE, BUT, BUT, BUT WE DID, UM, RECEIVE INFORMATION ABOUT THE OVERALL COST AND THEN THE PROPORTION THAT WAS RELATED TO THE ELECTRIC UTILITY AS COMPARED TO ALL THE OTHER DIFFERENT BENEFICIARIES OF THE 3, 1, 1 SERVICE.

AND SO, BUT YOU DID NOT INCLUDE THAT ALLOCATION AS PART OF YOUR RATE FILING PACKAGE, BECAUSE I LOOKED AND I COULDN'T FIND, WELL, HOW MUCH WAS SENT TO WATER, HOW MUCH WAS SENT TO, UH, TRANSPORTATION, UH, THAT, UH, YOU WERE GIVEN THAT INFORMATION, BUT IT DIDN'T GET REFLECTED IN THE RIGHT FALLING PACKAGE DIRECTLY.

UH, THAT'S A FAIR WAY OF SAYING THAT THAT DETAIL IS NOT CONTAINED WITHIN THE RAY FALLING PACKAGE.

ALRIGHT, THANK YOU VERY MUCH.

UH, MR. MURPHY, I WANTED TO TALK TO YOU ABOUT PAGE 39 OF YOUR REBUTTAL TESTIMONY.

I'M THERE.

OTHER, THEY DON'T GENERALLY, THEY DON'T GENERALLY HAVE A CUSTOMER CHARGE THE, THE RETAIL ELECTRICAL PROVIDERS, BUT NOW THAT DOESN'T MEAN THAT THEY DON'T INCUR CUSTOMER RELATED COSTS, I GUESS.

AND, UH, YOU WERE RE AND, AND WE START ON YOUR Q AND A, ON 12TH LINES, 12 THROUGH 19, YOU WERE, UH, RESPONDING TO MR. JOHNSON'S, UH, INVESTED INVESTOR ON UTILITY CHARACTERIZATION OF, UH, THE CUSTOMER CHARGE.

IS THAT CORRECT? I'M RESPONDING TO HIS, UH, BENCHMARKING OF AUSTIN ENERGY'S PROPOSAL TO IOU TD USE, WHO ARE WIRES AND POSEY UTILITIES, AS YOU KNOW, AND, UH, AND YOU, UH, AND MS, CORRECT ME IF I MISSTATE YOUR, YOUR ANSWER, BASICALLY YOUR ANSWER IS, WELL, IF WE REALLY WANTED TO LOOK AT CUSTOMER COSTS, WE'D LOOK AT THE RETAIL ELECTRIC PROVIDERS IN THE COMPETITIVE MARKET.

IS THAT CORRECT? UH, NOT QUITE.

MA'AM WHAT MY POINT IS THAT IT'S NOT REALLY A FAIR COMPARISON BECAUSE YOU'RE, YOU'RE COMPARING DIFFERENT UTILITIES AND THE WAY IN WHICH, UH, THE WIRES AND POLES UTILITIES DIFFER FROM AUSTIN ENERGY, THAT'S MEANINGFUL IS THAT THE ENTIRE RETAIL FUNCTION, UH, AT AUSTIN ENERGY IS NOT PERFORMED BY THE WIRES AND POLES UTILITIES, AND THE RETAIL FUNCTION IS A CUSTOMER RELATED FUNCTION.

SO YOU'RE REALLY LOBBING OFF, YOU KNOW, A REALLY HEALTHY SHARE OF WHAT CUSTOMER RELATED ACTIVITIES ARE INVOLVED IN AUSTIN ENERGY, SERVING ITS CUSTOMERS.

WELL, DID YOU SURVEY THE RETAIL ELECTRIC MARTIN, THE COMPETITIVE RETAIL ELECTRIC MARKET AND SEE WHAT REPS CHARGE FOR CUSTOMER CHARGE? YOU KNOW, I HAVE LOOKED A LITTLE BIT, UM, AND I I'VE NOTICED THAT THE

[03:35:01]

OH, I UNDERSTAND WHAT YOU'RE SAYING, BUT THE FACT OF THE MATTER IS IN THE RETAIL AND THE COMPETITIVE MARKET IN GENERAL, IT'S NOT TRUE IN EVERY CASE AND WITH EVERY ONE OF THEIR LITTLE PRODUCTS, THEY GENERALLY DON'T CHARGE A SEPARATE CUSTOMER CHARGE IN THEIR SERVICE.

I THINK YOU'RE CORRECT.

ALTHOUGH I'M NOT AN EXPERT IN THAT AREA EITHER.

I JUST LOOKED, BUT TO FULLY ANSWER YOUR QUESTION, THAT WAS ONLY JUST PART OF MY RESPONSE.

THE OTHER PART OF MY RESPONSE.

THAT WAS, THAT WAS MY, THAT WAS MY QUESTION, BUT NO, THANK YOU FOR, FOR CHECKING TO MAKE SURE I APPRECIATE THAT.

UH, NOW IN MY STATEMENT, I REFERRED TO SEVERAL UTILITIES LIKE CPS AND ENERGY AND EL PASO.

AND YOU WOULD AGREE THAT THOSE UTILITIES, UH, CUSTOMER CHARGES ARE AROUND THE AMOUNT THAT WE CURRENTLY CHARGE FOR CUSTOMER CHARGE.

IS THAT CORRECT? HAVE YOU VERIFIED THAT I'VE GOT THESE HERE IN FRONT OF ME? IF YOU'D LIKE TO LOOK, I HAVE, I HAVE TO ADMIT, I AM NOT COMPLETELY UP TO SPEED ON THE TARIFFS OF THOSE UTILITIES.

WELL, LET ME FIND THESE THINGS.

HERE WE GO.

MAY I APPROACH, WELL, ACTUALLY I'VE LEFT, UH, SOME TARIFF SHEETS OF CPS ENERGY, EL PASO, AND I THINK THERE'S ANOTHER ONE SPS, BUT THEY CALL SOMETHING ELSE EXCEL.

EXCELLENT.

AND IT SHOULD BE STAPLED TOGETHER.

AND I'VE GIVEN ONE TO YOUR COUNCIL TOO.

SO, SO IS THIS NOT WITHIN THE PAST? IT CAME IN, I BROUGHT IT IN THIS, PLOP IT DOWN THIS MORNING.

IT'S STAPLED.

YOU WANT ME TO COME AND FIND IT FOR YOU? CAN I HELP YOU LOOK, PLEASE? ALL RIGHT.

MAY I APPROACH THE WITNESS, YOUR HONOR, ACTUALLY, IF I'M A, HAVE YOU MARKED THESE AS EXHIBIT OR YOU'RE NOT GOING TO ADMIT THEM, I'M NOT GOING TO ADMIT THEM.

I DON'T REALLY, AS I UNDERSTAND IT, AND I WOULD ASK THAT YOU NOT SHOW IT TO THE WITNESSES YET, AS I UNDERSTAND IT, HE'S GOT JUST WAIT A MINUTE.

MS. COOPER THERE'S APPEARS TO BE SOMETHING FROM EL PASO ELECTRIC AND SOMETHING FROM TXU ENERGY.

AGAIN, I DON'T KNOW WHAT SHE'S PLANNING ON DOING.

AND THEY MAY OR MAY NOT BE FAMILIAR WITH THESE ITEMS, BUT I MEAN, CERTAINLY THEY'RE HEARSAY AS TO THEM.

AND IF SHE WANTS TO ADMIT THEM, THAT WOULD BE A PROBLEM.

BUT YEAH, SO THAT DOESN'T MAKE ANY DIFFERENCE TO ME, BUT I DON'T SEE ANYTHING FROM SPS HERE.

OH, WELL MAYBE THERE IS ON THE BACK.

I DON'T, I DON'T SEE ANYTHING FROM SPS BECAUSE I SAID I DON'T WANT TO SEE EL PASO.

OH, I MEAN, MY TESTIMONY, UH, SAYS THAT WE'VE GOT THREE OR FOUR, UH, LISTED THREE OR FOUR UTILITIES, INCLUDING EL PASO ENERGY AND CBS WHOSE CUSTOMER CHARGES.

AGAIN, IF YOU, IF YOU WANT TO ASK THEM QUESTIONS THAT, OH, I DIDN'T REALIZE YOU WERE 'CAUSE BECAUSE YOU DON'T WANT US TO LOOK AT THE TARIFF SHEETS.

I'LL REFER TO MY TESTIMONY, WHICH IS ON, WHICH IS EXHIBIT ONE.

SO, UH, SO ARE YOU TELLING US THAT CPS IS $9 CUSTOMER CHARGE, WHICH YOU CAN LOOK AT MY EXHIBIT ONE, WHICH INCLUDES MY PRE-FILED TESTIMONY.

IT LOOKS LIKE WE ONLY HAVE EXHIBIT TWO.

IT STARTS WITH EXHIBIT TWO.

YOU APPROACHED YOUR WITNESS, YOUR HONOR.

I DON'T KNOW WHY THEY DON'T HAVE EXHIBIT.

YOU'RE TAKING THEM EXHIBIT ONE.

WE ARE LET'S GO OFF THE RECORD.

LET'S GO BACK ON THE RECORD.

UH, DID YOU SAY SPS OR CPS? CPS.

SO MR. MURPHY, UH, CPS HAS A CUSTOMER CHARGE OF 9 25.

YOU WOULD AGREE THAT THAT CUSTOMER CHARGE IS LESS THAN, UH, AUSTIN ENERGY.

IS THAT CORRECT? CURRENT CURRENT CUSTOMER CHARGE.

[03:40:02]

YEAH, IT SAYS $9 AND 10 CENTS HERE, WHICH IS LESS THAN OUR CURRENT CUSTOMER CHARGE.

ISN'T THAT CORRECT? THAT'S RIGHT.

AND YOU WOULD AGREE THAT WE INCREASED THE CUSTOMER CHARGE IN THE LAST RATE CASE THAT CORRECT? I'M NOT SURE IF THAT'S CORRECT.

UH HUH.

AND THEN THAT, I BELIEVE IT WAS SET TO $10 IN THE 2012 CASE AND THAT IT WAS LEFT AT THAT LEVEL AND THE 2016 CASE.

BUT I'M NOT SURE I WAS NOT HERE.

WELL, NO, THAT'S OKAY.

THAT'S OKAY.

UH, ART.

SO BASED ON YOUR KNOWLEDGE OF THE UTILITY INDUSTRY, ARE, ARE YOU, WOULD YOU CONTEND THAT CPS IS CUSTOMER CHARGE IS BELOW COST OF SERVICE? I DON'T KNOW.

I WOULD HAVE TO LOOK AT THEIR COST STUDY AND ANALYZE IT.

SO YOU THINK IT IS WITHIN THE RANGE OF REASONABLE REASONABLENESS THAT THAT COST, THAT CUSTOMER CHARGE OF $9 COULD BE COST-BASED FOR CPS? I REALLY HAVE NO IDEA.

NOW ENERGY ENLISTED ENERGY.

COULD YOU TELL US WHAT THE ENERGY, UH, CUSTOMER CHARGES? IT SAYS $10 HERE.

AND CAN YOU TELL US WHERE IN YOUR OPINION, WHETHER THAT COST IS COST BASED OR BELOW COST? I DO NOT KNOW.

I DID PARTICIPATE IN SOME ENTERGY DOCKETS, BUT I DO NOT REMEMBER HOW CLOSE THERE AT THAT TIME, HOW CLOSE THEIR CUSTOMER CHARGE WAS TO THE UNIT COST.

NOW CPS IS, UH, IS, IS A MUNICIPALLY OWNED UTILITY ALSO.

ISN'T THAT TRUE? THAT'S RIGHT.

AND IT HAS ROUGHLY, IT'S S IT'S THE CLOSEST, UH, MUNICIPALLY OWNED UTILITY.

THAT'S CLOSEST TO SIZE TO AUSTIN ENERGY WHEN YOU SAY, I DON'T KNOW FOR SURE.

I KNOW IT'S LARGER.

ARE, DO YOU KNOW OF ANY OTHER MUNICIPALLY-OWNED UTILITY THAT IS AS LARGE AS AUSTIN ENERGY OR, OR CPS YOU MEAN IN TEXAS AND T YES, SIR.

IN TEXAS.

YOU'RE RIGHT.

I THINK IT'S TRUE.

THAT CPS ENERGY IS THE LARGEST AND THAT AUSTIN AND ARCHIE IS PROBABLY THE SECOND LARGEST.

THEY'RE ALL FLOATING TOGETHER.

THANK YOU SO MUCH, MR. BURNHAM.

I YESTERDAY THINK IT WAS YESTERDAY.

UM, YOU, UH, SAID THAT AUSTIN ENERGY IS A SUMMER PEAKING UTILITY.

IS THAT CORRECT? DO YOU RECALL? I BELIEVE I STATED THAT IN A RESPONSE TO A QUESTION.

WOULD IT BE FAIR TO STATE THAT A SUMMER PEAKING YOUR UNDERSTANDING OF A SUMMER PEAKING UTILITY WOULD NEED MORE CAPACITY AVAILABLE IN THE SUMMER TO SERVE ITS CUSTOMERS ASSUMING THAT THE PEAK WAS IN THE SUMMER? YES, YES, SIR.

WE'RE ASSUMING SUMMER PEAK AND THAT UNDER THIS SCENARIO, MORE CAPACITY IS NEEDED IN THE SUMMER BECAUSE IT'S CUSTOMERS ARE USING MORE ELECTRICITY, WHETHER IT'S COST RECOVERY IS THROUGH DEMAND CHARGES OR THROUGH KILOWATT HOURS.

IS THAT CORRECT? TH TH THE QUESTION OF HOW MUCH CAPACITY THEY HAVE IS A QUESTION OF HOW MUCH RESOURCES THEY'VE INVESTED IN.

THEY CAN MAKE AN OBTAIN CAPACITY, YOU KNOW, IN OTHER OTHER MANNER.

BUT THE QUESTION I HAD WAS, AND FOR THE FACT THAT WE HAVE MORE CAPACITY THAT IS NEEDED TO SERVE THE CUSTOMERS, UH IT'S BECAUSE ITS CUSTOMERS ARE USING MORE ELECTRICITY, WHETHER THEY RECOVER THAT COST THROUGH DEMAND CHARGES OR THROUGH KILOWATT HOURS.

SORRY.

UH, I THINK I MISINTERPRETED YOUR QUESTION ORIGINALLY.

UM, TH THE, THE CAPACITY THAT AUSTIN ENERGY HAS, IS DISPATCHED INTO THE ERCOT MARKET.

RIGHT? RIGHT.

SO IT'S REGARDLESS OF THEIR LOAD.

SO THEY, THEY COULD AND CHOOSE TO INVEST IN MORE CAPACITY TO MEET THEIR LOAD, OR THEY COULD GO TO THE MARKET TO BUY THE LOAD, BUT THEY ARE DISPATCHING THEIR RESOURCES TO MEET THE ERCOT LOAD, NOT THEIR LOAD.

BUT WHATEVER CAPACITY, AUSTIN ENERGY UTILIZES TO SERVE ITS CUSTOMERS TO SERVE ERCOT.

WELL, DOESN'T AUSTIN ENERGY, MAKE SURE THAT ITS CUSTOMERS HAVE A, LIKE IT'S AUSTIN ENERGY THAT MAKES SURE IT CUSTOMER HAS ELECTRICITY.

AND THE ERCOT MAKES SURE THAT THAT AUSTIN ENERGY IS SERVED.

SO HER CUTS THE MARKET, RIGHT, RIGHT.

AUSTIN ENERGY DISPATCHES THEIR RESOURCES INTO THE MARKET.

AUSTIN ENERGY THEN BUYS ENERGY FROM THE MARKET

[03:45:01]

NOW.

SO YOU'RE SAYING THAT WHEN THEY BUY ENERGY, THEY'RE NOT BUYING CAPACITY.

WELL, THEY'RE BUYING POWER, WELL BUYING BOTH, BUT THEY'RE BUYING BOTH CAPACITY AND ENERGY.

SO TO THE EXTENT THEY'RE BUYING BOTH CAPACITY AND ENERGY, REGARDLESS OF, OF HOW, HOW THEY RECOVER THAT COST BACK FROM THEIR CUSTOMERS, WHETHER IT'S THROUGH DEMAND CHARGES OR KILOWATT HOURS, IT'S BECAUSE CUSTOMERS ARE USING MORE ELECTRICITY.

CUT, CUT.

THE USE OF ELECTRICITY BY THEIR CUSTOMER IS DRIVING THEIR COSTS.

AND THIS ADDITIONAL USAGE IS THE CAUSE FOR THIS INCREASED COST.

IS THAT CORRECT? ONE INCREASED COSTS.

WELL, LET ME HAVE YOU TURN TO PAGES ONE 18 AND ONE 19 OF THE RATE FALLING PACKAGE.

UM, THAT'S NOT, SO I DIDN'T, I DID NOT PREPARE THE RE FILING PACKAGE.

THAT'S OKAY.

I THINK I WANT TO SHOW YOU WHERE I'M GOING WITH THAT, YOUR HONOR, ONCE AGAIN, IS THERE A WAY THAT MS. COOPER CAN, UM, TIE THIS TO ANYTHING AND MR. BURNHAM'S REBUTTAL TESTIMONY, UM, CAN YOU, CAN YOU TIE IT TO YES, SIR.

UH, MR. BURNHAM WAS DISCUSSING, UH, THE COST ALLOCATION PROCEDURES.

AND SO THIS HAS THE EFFECT OF TALKING ABOUT COST ALLOCATION.

DO YOU KNOW SPECIFICALLY WHERE, WHERE IN THE REBUTTAL, UM, THIS COST ALLOCATION ISSUE CAME UP AS FAR AS WHAT THAT'S, WHEN THEY'RE TALKING ABOUT THE VARIOUS, UH, ALLOCATION METHODOLOGIES FOR WHAT COSTS PARDON FOR CAPACITY COSTS.

WELL, I SEE WHAT YOU MEAN.

WELL, I WILL DIRECT THESE QUESTIONS INTO MR. RAVEN.

I MEAN, NOT MR. RAVEN, MR. WRIGHT, MR. MURPHY IS YOU'RE THE RIGHT DESIGN GUY, RIGHT? YOU'RE ONE OF THEM YOU WERE REFERRED TO THAT BY THE FIRST PANEL.

SO ON PAGES ONE, I DEFINITELY SUPPORT PART OF THE RATE DESIGN CASE.

I'M NOT SURE IF I WOULD SAY I'M A RATE DESIGN GUY.

WELL, NO, THAT'S OKAY.

I ASPIRE TO BE A RATE DESIGN GUY, I GUESS YOU WANT TO GROW UP AND BE ONE.

SO, UH, LET'S LOOK AT ONE 18 AND ONE 19, ARE YOU THERE? SORRY OF WHICH DOCUMENT MA'AM OTHER RIGHT FILING PACKAGE.

I ACTUALLY DO NOT HAVE THAT BEFORE ME.

WELL, YOUR COUNSEL'S GONNA FETCH IT FOR YOU.

YOU SAY 1 18, 1 18 AND ONE 19, BUT I DO HAVE ONE MORE QUESTION FOR YOU.

UH, BERMAN, VERN BUMP.

JUST ONE MORE QUESTION.

AND IT'S DEALING WITH, UH, THE COST CAUSATION AND IT'S, YOU KNOW, WHETHER WE'RE TALKING AVERAGE AND EXCESS FOR CP OR BIP OR AVERAGE CP, WHAT WE'RE TALKING ABOUT IS WHAT THE COINCIDENT PEAK MEANS AND IS, AND BASICALLY A REASON WHY WE ARE A SUMMER PEAKING UTILITY IS WE NEED MORE ELECTRICITY.

WE'VE ALREADY TALKED ABOUT THAT, BUT THE REASON WHY WE NEED MORE ELECTRICITY IS WE KEEP PEOPLE ARE USING IT MORE IN THE SUMMER THAN IN THE WINTER.

IS THAT CORRECT? I WOULD AGREE WITH THAT.

THEY WOULD.

YOU WOULD SAY THAT'S TRUE.

THAT'S TRUE.

WELL, YOU KNOW, I, I THINK WITH THAT, OTHER THAN THAT I'D HAVE, LET ME JUST MAKE SURE MAYBE I'VE MADE YOU DO SOMETHING FOR NOTHING, MR. MURPHY.

UM, WELL, AND THAT INCREASED CA AND EITHER ONE OF Y'ALL CAN ANSWER CAUSE IT'S A PANEL AND, UH, AND THAT INCREASED COST, UH, CAN BE EVEN STEEPER BECAUSE OF LIKE THE HEAT.

I THINK Y'ALL, I THINK THAT'S, UH, THAT WHEN YOU'RE MOVING INTO A PEAK AND YOU'VE GOT HEAT THAT CAN EVEN CAUSE MORE ELECTRIC USAGE.

MORE ELECTRIC USAGE.

DID YOU HEAR ME? YES.

I HEARD YOU.

AFFECTS THE EFFICIENCY OF THE OPERATION.

SO CAN YOU REPEAT THE QUESTION THOUGH? I'M SORRY.

UH, AND THE FACT THAT IF WE HAVE A SUMMER PEAKING, THE, THE SUMMER WEATHER COULD ALSO INCREASE THE COST BECAUSE, UH, THE WEATHER

[03:50:01]

ISN'T THAT CORRECT? UM, MARKET PRICES MOVE HIGHER, RIGHT? WHEN THE TEMPERATURE GOES HIGHER, THAT'S CORRECT.

BECAUSE THERE'S MORE DEMAND ON THE SYSTEM.

AND ARE YOU AWARE, AND ANY OF YOU GUYS, ARE YOU AWARE OF A UTILITIES PRACTICE FOR RATE DESIGN PURPOSES OF, OF USING SUMMER RATES TO, TO, TO SHOW THAT ADDITIONAL COSTS THAT, THAT UTILITY INCURS IN THE SUMMER FOR RESIDENTIAL? NOT, NOT, I DON'T KNOW ANYTHING ABOUT COMMERCIAL.

MA'AM THAT THE ANSWER IS YES.

AND THEN THERE ARE SOME RATE DESIGNS THAT, UH, USE A FIRST BLOCK.

LIKE, LET'S JUST CALL IT THE WINTER RATE OR THE AVERAGE RATE, BUT THEY HAVE A SECOND BLOCK THAT THEY CALL MAYBE PEAK CAPACITY CHARGE, OR JUST THE SUMMER CHARGE.

HAVE YOU, ARE YOU FAMILIAR WITH THOSE RATE DESIGNS? I THINK I'VE SEEN SOMETHING LIKE THAT.

I WANT TO SEE CPS ENERGY'S TARIFF WORK, SOMETHING LIKE THAT.

WELL, YOU KNOW, I WOULD HAVE HAD THE TERROR FOR YOU TO, TO SHARE THAT WITH YOU, BUT I CAN'T.

SO I THANK YOU GUYS SO MUCH FOR TALKING WITH ME.

I REALLY APPRECIATE IT.

I HAVE NO MORE QUESTIONS, YOUR HONOR.

THANK YOU, MS. COOPER.

UM, NEXT UP, UH, MR. KIMBRO, HE'S NOT PRESENT.

I DON'T THINK THEY, I DON'T THINK THAT IF I'D EVER HAD ANY QUESTIONS, HER NO QUESTIONS, YOUR HONOR.

SO MS. COOPER HAD ABOUT 10 MINUTES LEFT, UM, ACCORDING TO THE AGREEMENT OF THE PARTIES, WHAT THE PARTIES AGREED TO FOR TIME.

AND WHAT I'VE GOT FOR AAICPC IS 32 MINUTES.

UM, THE LAST THING I WANT TO DO IS CUT ANYONE'S QUESTIONING OFF.

BUT JUST TRY TO KEEP IT WITHIN A RANGE.

WHENEVER YOU'RE READY.

THIS IS A FEW QUESTIONS.

UM, MR. GENESSEE, YES.

YOU STATED IN YOUR REBUTTAL TESTIMONY THAT DR.

ROBERT GO'S POSITION ASSUMES THAT THERE ARE ADDITIONAL AVOIDED DISTRIBUTION COSTS, WHICH ARE HYPOTHETICAL.

WHAT, WHAT PAGE ARE YOU REFERRING TO? UM, ONE SECOND.

PAGE 10.

BUT BASED ON CURRENT AND HISTORIC, UH, CURRENT AND BACKWARDS LOOKING APPROACH VERSUS A FORWARD-LOOKING APPROACH.

UM, AND SO REPEAT THE QUESTION, PLEASE.

YOU STATED THAT DR.

ROBERT GOES POSITION ASSUMES THAT THERE ARE ADDITIONAL AVOIDED DISTRIBUTION COSTS, WHICH ARE HYPOTHETICAL, CORRECT.

I HAVE, I HAVE A LITTLE TROUBLE LOCATING THAT PARTICULAR QUESTION TYPE OF THING.

SO IT SHOULD BE WHAT I HAVE ON MY PAGE 10 IS, UM, A QUESTION REGARDING MR. ROBERT GO'S STATEMENT THAT REAL-WORLD DATA SHOULD BE USED TO ESTABLISH RATES, INCLUDING THE VALUE.

SO OVER TARIFF, UM, ON NINE 18 OF PAGE 10, IT SAYS, IT SHOULD SAY, MR. ROBERT GOES POSITION.

OH, YES, I SEE IT.

MR. ROBERT GOES POSITION ASSUMES THAT THERE ARE, FOR EXAMPLE, ADDITIONAL AVOIDED DISTRIBUTION COSTS, WHICH ARE HYPOTHETICAL AND WHICH ARE NOT CONSISTENT WITH US.

AND ENERGY'S ACTUAL DATA REGARDING DISTRIBUTION COSTS, NO, RELATIVE OF HOW SOLAR CUSTOMERS USE THE DISTRIBUTION SYSTEM.

AND I THINK THAT THE OTHER PART OF THE ANSWER IS THAT, UM, UH, ALL THE VALUE OF SOLAR TARIFF, UH, IS BASED ON A FAIR AND EQUITABLE, UH, MEASUREMENT OF WHAT THE COSTS ARE.

I WAS WONDERING IF YOU COULD GIVE AN EXAMPLE OF WHICH ADDITIONAL COSTS THAT DR.

RABAGO WAS, SPEAKING OF THAT YOU THOUGHT WERE HYPOTHETICAL.

I CAN'T, CAN YOU EXPLAIN WHY YOU THOUGHT THEY WERE IN CON WHY YOU THOUGHT THEY WERE INCONSISTENT WITH AUSTIN ENERGY'S ACTUAL DATA? YEAH, I THINK THAT MY ANSWER WAS PREDICATED ON, UH, DR.

RABAGO OR MR. ROBERT GOES, UH, UH, ASSESSMENT BEING BASED ON A FORWARD-LOOKING METHODOLOGY AND AUSTIN ENERGY'S, UH, METHODOLOGY BEING, UH, NOT,

[03:55:01]

SO, UM, I THINK THAT, YOU KNOW, MY ANSWER IN TERMS OF AUSTIN ENERGY'S PROPOSAL IS BASED ON REAL DATA AND NOT ON FORWARD-LOOKING DATA.

AND THE FORWARD LOOKING DATA IS, WAS CONSIDERED HYPOTHETICAL.

WELL, YEAH, MA WHEN I, WHEN YOU SAY HYPOTHETICAL, UM, VERY DIFFICULT TO MEASURE AND DIFFICULT TO REACH CONSENSUS ON, AND IS IT THE POSITION OF AUSTIN ENERGY THAT HIGH LOAD CUSTOMERS WHO DO NOT PAY INTO THE EES UNDER THIS PROPOSAL COULD NOT RECEIVE THE BENEFITS OF A COMMERCIAL VTLS YEAH.

OTHER POSITION IS THAT, UH, CUSTOMERS THAT DO NOT PAY INTO THE VOS, I'M SORRY, CUSTOMERS THAT DO NOT PAY INTO THE EES WOULD NOT BE ELIGIBLE FOR THE VALUE OF SOLAR CREDIT.

AND DO YOU THINK THAT EXCLUDING SOME CUSTOMERS FROM BEING ELIGIBLE FOR BOS PAYMENTS WOULD DISCOURAGE THEM FROM INSTALLING SOLAR? NO, BECAUSE I THINK THE CUSTOMERS THAT WE'RE TALKING ABOUT NOT BEING IN, NOT PAYING INTO THE EES ARE THESE P TWO HIGH LOAD FACTOR CUSTOMERS THAT WE'VE ALREADY DISCUSSED A LOT, HAVE THEIR OWN, UM, MUCH LARGER ENERGY EFFICIENCY PROGRAMS. AND SO, UM, THEY ACTUALLY, UM, YOU KNOW, THE VALUE OF SOLAR CREDIT THAT THEY WOULDN'T BE, OR THE EES, UH, THAT THEY WOULD NOT BE ELIGIBLE FOR.

YOU KNOW, THEY'RE ACTUALLY DOING MORE ENERGY EFFICIENCY ON THEIR OWN, UM, WITHOUT THE VALUE OF THE EES PAYMENT.

AND DO YOU HAVE IN FRONT OF YOU AS CPC EXHIBIT NUMBER 15? WE HAVE A, WE HAVE A COPY HERE IF YOU DON'T HAVE IT.

OH, YES.

I HAVE A COPY IN FOR THAT.

THANK YOU FOR THE COPY.

EES, UH, PROGRAMS AND PAYMENTS.

AND THIS, THIS RELATES TO AN ANSWER FROM AUSTIN ENERGY RELATED TO THE DIRECT ENERGY EFFICIENCY REBATES GIVEN TO FACILITIES OVER THE LAST SEVERAL YEARS THAT COULD QUALIFY FOR THE PROPOSED NEW RATE CLASS, UM, AND WOULD ANSWER INDICATE THAT AUSTIN ENERGY HAS GIVEN REBATES TO ABOUT HALF OF THE CUSTOMERS THAT ARE ELIGIBLE FOR THE PRIMARY TO HIGH LOAD FACTOR RATE.

UH, IN THE PAST, BEFORE THIS PROPOSAL WAS SUBMITTED, YOU KNOW, IT'S POSSIBLE THAT AUSTIN ENERGY WOULD HAVE PAID OR IT'S POSSIBLE THAT CUSTOMERS THAT WOULD BE ELIGIBLE TO QUALIFY FOR THE P TWO HIGH LOAD FACTOR RATE CLASS WOULD HAVE TAKEN ADVANTAGE OF, UH, CURRENT THAN ENERGY EFFICIENCY PROGRAMS. THIS IS A CONTRACTUAL AGREEMENT THAT A CUSTOMER WOULD HAVE TO ENTER INTO AND BY DOING SO, THEY WOULD ELECT NOT TO PARTICIPATE IN ENERGY EFFICIENCY PROGRAMS AND THEREFORE NOT RECEIVE THE BENEFIT BECAUSE THEY'RE DOING MORE ENERGY EFFICIENCY INVESTMENTS ON THEIR OWN.

AND DO YOU THINK THOSE CUSTOMERS WOULD BE LIKELY TO INSTALL SOLAR AS OPPOSED TO OTHER ENERGY EFFICIENCY PROGRAMS? I THINK THOSE CUSTOMERS WOULD BE LIKELY TO DO WHATEVER'S IN THEIR BEST INTEREST, INCLUDING SOLAR, IF IT'S GOING TO MEET THEIR OBJECTIVES, UH, OF BEING CARBON FREE, OR THERE ARE OTHER OBJECTIVES AS STATED, UH, PUBLICLY, MOST OF THESE ARE PRETTY LARGE CUSTOMERS.

SO THEY WOULD HAVE A SUSTAINABILITY GOALS, UH, ENERGY EFFICIENCY GOALS THAT, YOU KNOW, MAY REQUIRE SOLAR OR MAY, UH, ELECT TO DO SOLAR COMPLETELY ON THEIR OWN.

AND COULD YOU PLEASE CONFIRM THAT THE ANSWER ALSO STATES THAT THOSE CUSTOMERS HAVE COMPLETED PROJECTS WITH AUSTIN ENERGY IN THE LAST FIVE YEARS AND DELIVERED 3.335 MEGAWATTS AND 14,948 MEGAWATTS OF ENERGY AND PEAK DEMAND SAVINGS? YES, I CAN CONFIRM THAT'S WHAT THE ANSWER STATES.

UH, BUT AS I, AS I STATED, UM, YOU KNOW, THAT DOESN'T TH TH THIS IS A CONTRACTUAL ARRANGEMENT, SO THOSE CUSTOMERS WOULD THEN ELECT TO, UH, TAKE ADVANTAGE OF THE NEW P TO HLF RATE.

AND WOULD IT BE FAIR TO SAY THAT GIVEN THAT THOSE CUSTOMERS LISTEN TO THIS ANSWER HAVE UTILIZED E PROGRAM SPONSORED BY AUSTIN ENERGY, USING FUNDS GENERATED FROM THE EES THAT EVEN THOSE HIGH LOAD FACTOR CUSTOMERS COULD HAVE A NEED FOR SUCH PROGRAMS AS AN INCENTIVE FOR ENERGY EFFICIENCY? NO.

I THINK THOSE CUSTOMERS WOULD MAKE A BUSINESS DECISION, UM, WHEN PRESENTED WITH THE OPPORTUNITY TO ENTER INTO A CONTRACT, WHETHER IT IS BENEFICIAL TO THEM OR NOT.

AND IF IT IS BENEFICIAL, THEY WOULD L IT'S MEMBER.

IT'S NOT A MANDATORY THING.

IT'S AN ELECTIVE THING.

THEY WOULD ENTER INTO THE CONTRACT AND THEN THEY WOULD NOT BE ELIGIBLE FOR THOSE

[04:00:01]

UH, MR. MURPHY, YOU HAVE A FEW QUESTIONS.

YES MA'AM.

CAN YOU PLEASE GO TO PAGE 22 LINE NINE OF YOUR REBUTTAL TESTIMONY? OKAY.

I'M HERE YOU STATE THAT NOT A SINGLE DOLLAR IN AUSTIN ENERGY'S BASE RATE COST IS DRIVEN BY ENERGY CONCEPTION, CORRECT? THAT'S CORRECT.

CAN YOU EXPLAIN WHAT YOU MEANT BY THAT STATEMENT? SURE.

UM, SO THE COSTS THAT ARE INCLUDED IN BASE RATES ARE CLASSIFIED AS PART OF THE COST STUDY.

AND ONE OF THE PURPOSES OF THE COST CLASSIFICATION IS TO IDENTIFY WHAT, UH, ACTIVITY GENERAL TYPE OF ACTIVITY ON THE SYSTEM CAUSES.

THOSE COSTS.

THE TWO COST CLASSIFICATIONS THAT ARE REQUIRED TO ENCOMPASS THE ENTIRETY OF AUSTIN ENERGY'S BASE RATE COSTS ARE THE CUSTOMER CLASSIFICATION AND THE DEMAND CLASSIFICATION.

WHAT THAT MEANS IS THAT, UH, AUSTIN ENERGY INCURS, A CERTAIN BUNDLE OF COSTS WHENEVER A CUSTOMER JOINS THE SYSTEM AND REMAINS ON THE SYSTEM HAD BE LIKE THE METER AND, YOU KNOW, METER READING, BILL RENDERING, CUSTOMER ACCOUNTS, CUSTOMER SERVICE, UM, ALL THAT KIND OF STUFF, RIGHT? AND THEN THE OTHER CATEGORY WOULD BE A CUSTOMER JOINS THIS SYSTEM, AND THEY'RE GOING TO CONNECT A CERTAIN AMOUNT OF LOAD TO THE SYSTEM.

AND ALSO THE ENERGY HAS TO MAKE A CERTAIN AMOUNT OF CAPACITY AVAILABLE AT THAT POINT.

AND AS MR BURNHAM STATED, WE NO LONGER THINK OF OUR PRODUCTION CAPACITY AS, AS BEING A NECESSARY AT A CERTAIN LEVEL TO DIRECTLY SERVE NATIVE LOAD ON THE SYSTEM.

BUT WE DO SIZE THE DISTRIBUTION SYSTEM, THE ENTIRETY OF IT BASED ON THE CUSTOMER'S CONNECTED LOAD.

AND WHEN THE CUSTOMER IMPOSES DEMAND ON THE SYSTEM, THEN AUSTIN ENERGY AND CURVES DEMAND COSTS.

THAT'S IT.

SO IT, ONCE, ONCE AUSTIN ENERGY INCURS, A CERTAIN LEVEL OF DEMAND RELATED COSTS, THE CUSTOMER'S ENERGY CONSUMPTION IS IRRELEVANT TO US AND ENERGIES, UH, PACE RATE COSTS.

AND WOULD YOU SAY THAT THE COST DRIVEN BY DEMAND IS ANOTHER WAY ANOTHER WAY OF SAYING THAT WOULD BE THAT THE BASE RATE COSTS ARE THE MINIMUM SYSTEM COSTS? NO, MA'AM OUR TRANSFORMERS INCLUDED IN THE BASE RATES.

HOW DO YOU DETERMINE THE SIZE OF A TRANSFORMER TO INSTALL? UH, WELL, R I DON'T DO THAT AT AUSTIN ENERGY.

UM, BUT THE WAY I UNDERSTAND IT IS, UM, WHAT HAPPENS IS WHEN, YOU KNOW, THERE'S AN ENGINEERING TEAM AND THERE'S DESIGN AND PLANNING GROUPS WITHIN ENGINEERING, AND THEY, UM, THEY, UH, GIVE SURVEYS TO THE CUSTOMERS AND THE CUSTOMERS IDENTIFY WHAT KINDS OF CONNECTED LOADS ARE GOING TO BE DOWNSTREAM FROM THAT TRANSFORMER.

AND THEN THEY MAY APPLY SOME LOW DIVERSITY FACTOR IF THERE'S GOING TO BE A LOT OF CUSTOMERS DOWNSTREAM, WHERE THEY MAY SIZE THE TRANSFORMER TO HANDLE THE MAXIMUM LOAD OF ALL THE CUSTOMERS WITHOUT ASSUMING ANY DIVERSITY.

BUT, YOU KNOW, THAT WOULD BE KIND OF THE GENERAL SPEAKING GENERALLY, SINCE I, THAT'S NOT MY AREA AT US AND ENERGY, THAT'S THE KIND OF PROCESS THEY WOULD GO THROUGH.

AND OUR CONDUCTOR IS ALSO INCLUDED IN BASE RATES.

DID YOU SAY CONDUCTOR? YES.

MA'AM.

UM, WOULD YOU AGREE THAT AUSTIN ENERGY IS IN THE BUSINESS OF DELIVERING ENERGY FOR CONSUMPTION? THAT IS PART OF WHAT AUSTIN ENERGY DOES HE HAS.

THAT IS NOT THE, THAT WOULDN'T BE FULL ELECTRIC SERVICE.

THAT'S PART OF THE SERVICE.

AND WOULD THE COST INCURRED THAT THE COST INCURRED BY AUSTIN ENERGY ARE FOR THE DELIVERY OF ENERGY AND THE BASE RATE? NO.

UH, THE BASE RATE COSTS ENCOMPASS THE PRODUCTION OF ELECTRICITY.

UH, THEY ENCOMPASS, UH, ALL LEVELS OF THE DISTRIBUTION SYSTEM THAT ARE INVOLVED IN SERVING THE CUSTOMER.

SO IT, DEPENDING ON THE VOLTAGE LEVEL, IT'S GOING TO BE A DIFFERENT CATEGORY OF STUFF ON THE SYSTEM, AND THAT IT WOULD INCLUDE ALL OF THE, UM, RETAIL SERVICES THAT OUR SENATOR SHE PROVIDES.

WE FIRST, SOME TESTIMONY DURING THIS HEARING ABOUT, UH, AUSTIN ENERGY'S LEADERSHIP POSITION AND, YOU KNOW, CUSTOMER RELATED SERVICES AND ONE PLANNING INVESTMENTS IN THE DISTRIBUTION SYSTEM.

DOES AUSTIN ENERGY USE A DEMAND FORECAST?

[04:05:04]

I DO NOT KNOW.

I'M NOT INVOLVED IN, UH, YOU KNOW, THE ENGINEERING DESIGN AND PLANNING FUNCTION.

UM, WOULD YOU OR ANYONE ELSE ON THE PANEL AGREE THAT ENERGY EFFICIENCY OR DECREASING THE USE OF ELECTRICITY HAS BENEFITS THAT ARE NOT REFLECTED IN THE COST CAUSATION CALCULATIONS? I MEAN, I WOULD ANSWER THAT THE BENEFITS OF ENERGY EFFICIENCY ARE BROADENED WIDESPREAD.

SO, I MEAN, I THINK THAT WHEN YOU SAY, COULD YOU REPEAT, YOU WOULD LIKE THE BENEFITS OF ENERGY EFFICIENCY ARE NOT REFLECTED OR NOT ALL REFLECTED IN THE COST CAUSATION CALCULATIONS? WELL, I, I, I, I'M NOT SURE I KNOW EVERYTHING THAT'S REFLECTED IN THEIR COST COST CALCULATION, BUT I WILL SAY THAT THERE ARE LOTS OF BENEFITS TO ENERGY EFFICIENCY, UM, ACROSS THE BOARD.

AND WOULD YOU OR ANYONE ELSE ON THE PANEL AGREE THAT UNDER THE COMPANY'S PROPOSED PROPOSAL BUILDS WILL INCREASE FOR LOW USAGE CUSTOMERS AND DECREASE FOR HIGH USAGE CUSTOMERS? I BELIEVE MR. MURPHY, YOU TOUCH ON THAT IN YOUR REBUTTAL.

I WOULD SAY THAT BILLS FOR LOW USAGE CUSTOMERS WHO ARE NOT ON THE CAP PROGRAM WILL INCREASE RESIDENTIAL BILLS, RIGHT.

FOR RESIDENTIAL CUSTOMERS, AS FAR AS HIGHER USAGE CUSTOMERS.

I WOULD SAY THAT, UH, THOSE THAT ARE NOT ON THE CAP PROGRAM, SOME WILL SEE BILL DECREASES.

SOME WILL STILL SEE INCREASES BECAUSE YOU KNOW, THE CLASS AS A WHOLE IS, UH, REQUIRES AN INCREASE, UH, TO CLOSE THE GAP TO COST OF SERVICE.

AND ONE LAST QUESTION, UM, IS IT CORRECT THAT THE PROPOSED RATE CHANGE WOULD SHIFT A SIGNIFICANT SHARE OF THE COST FROM HIGH USAGE CUSTOMERS TO LOW USE CUSTOMERS COMPARED TO THE PRESENT RATE STRUCTURE? NO, MAN, THAT IS NOT A CORRECT STATEMENT.

THOSE ARE ALL MY QUESTIONS.

UM, AN XP MR. READER.

UM, BEFORE I GET STARTED, I HAVE QUESTIONS FOR MR. RAVEN, IS THAT CORRECT PRONUNCIATION? I WAS HOPING IT WAS MORE LIKE A GRAY BALL, HOWEVER YOU'D LIKE TO PRONOUNCE IT.

I'LL ANSWER.

I THINK RAY VAUGHN IS A BETTER WAY TO PRONOUNCE IT.

UM, MR. MURPHY AND MR. BURNHAM.

SO, UM, I HAVE PUT MOST OF THE EXHIBITS AND OTHER DOCUMENTS IN THAT, UH, RED BINDER THAT MR. RAY MALA IS, UH, IS PULLING UP KIND OF IN ORDER.

SO I'M SURE Y'ALL ARE GONNA DO A LITTLE BIT OF SHUFFLING, BUT, UM, THAT'S THE PILE OF PARTY FAVORS, AT LEAST FOR MY PORTION OF THE SHOW.

UM, LET ME START OFF, AS I SAID WITH MR. MURPHY, UM, BEFORE I KIND OF GET INTO THE DISCUSSION OF, OF, UH, REVENUE ALLOCATION, I'D LIKE TO ASK YOU ABOUT TABLE ONE AND TABLE TWO IN YOUR REBUTTAL TESTIMONY, THOSE SHOW, UM, AND A COUPLE OF DIFFERENT PERMUTATIONS, THAT MOVEMENT OF CLASSES TOWARDS THEIR ALLOCATED COST OF SERVICE UNDER THE REVENUE ALLOCATION THAT, UH, AUSTIN ENERGY IS PROPOSING.

ARE YOU THERE, YOU KNOW, TABLES WANTING TO ACTUALLY, UM, ARE, ARE, UH, RELATED TO OTHER PARTIES PROPOSE, OH, NO, I GUESS TABLE ONE DOES, YEAH.

IS A SUMMARY OF AUSTIN ENERGY'S PROPOSAL ON.

AND THEN TABLE TWO TALKS ABOUT MR. POLLOCK'S RECOMMENDATIONS.

UH, WHAT HAVE YOU, I DON'T INTEND TO GET INTO ANY DETAILS ABOUT THAT.

WHAT I ASKED TO INTEND TO ASK YOU IS, UM, THESE ARE BASED UPON THE INITIAL FILED BASE RATE REVENUE REQUEST, A $48.7 MILLION INCREASE.

IS THAT CORRECT? THAT'S CORRECT.

SO, UM, I DUNNO IF YOU WERE HERE FOR THE DISCUSSION FROM THE LAST PANEL, UM, JUST, UH, LET ME JUST ASK THAT QUESTION.

WERE YOU HERE FOR THE DISCUSSION, THE LAST PANEL? YES, I REALLY ENJOYED IT.

THAT THAT WILL HAVE SOME IMPACT ON THE PERCENTAGE, UH, UH, MOVEMENT TOWARDS COST OF SERVICE THAT'S REFLECTED IN YOUR TABLES? YES.

WELL, I ENJOYED IT A LOT TOO, SO WE CAN SHARE STORIES ABOUT THAT LATER, BUT, UM, MR. DOMBROSKI HAD PARAPHRASING INDICATED THAT WITH THE RE WITH THE REVISED REVENUE REQUIREMENT, PROBABLY NOT ALL TO BE ALLOCATED IN EACH INSTANCE IN THE SAME WAY.

SO THERE'D BE SOME IMPACT ON ALLOCATED COST OF SERVICE.

WOULD YOU EXPECT THAT AS A CONSEQUENCE OF THAT? I MEAN, JUST SORT OF TAKING ON FAITH, MY SUMMARY OF WHAT HE SAID IS TRUE.

WOULD YOU EXPECT

[04:10:01]

EVERY SINGLE CLASS WILL BE AFFECTED.

AND I UNDERSTAND THAT YOU'RE, YOU KNOW, RETAINED BY AUSTIN ENERGY, BUT IF THEY ASK YOU TO REVISE THESE TABLES, ARE YOU ABLE TO DO THAT? YES, SIR.

WELL, WE WILL DO THAT.

WELL, THAT'S UP TO THOMAS.

UH, VERY GOOD.

SO LET'S NOW GET INTO, UM, YOUR METHODOLOGY ON, UH, THE REVENUE ALLOCATION.

SO JUST TO BE CLEAR, THIS IS NOT THE CLASS COST OF SERVICE STUDY THAT ALLOCATES COSTS TO THE VARIOUS CUSTOMER CLASSES.

YOU'RE TALKING ABOUT HOW TO GO ABOUT COLLECTING THE REVENUES FROM THE CLASSES THAT ARE THE CONSEQUENCES OF THE OVERALL REVENUE REQUIREMENT NUMBER, CORRECT.

OH, RIGHT.

THAT'S ONE WAY TO PUT IT.

I WOULD SAY IT'S, THAT'S THE LEVEL OF REVENUES THAT YOU NEED TO, TO DESIGN RATES, TO COLLECT, AND YOU TAKE THAT AND YOU ASSIGN IT TO THE VARIOUS CUSTOMER CLASSES THAT ARE INVOLVED, UH, THAT AUSTIN ENERGY SERVES, CORRECT.

THE TOTAL, UH, REVENUE REQUIREMENT, RE BASE RATE REVENUE REQUIREMENT IS ALLOCATED AMONG ALL THE CLASSES.

AND, BUT THAT EXERCISE IS WHAT YOUR TESTIMONY ADDRESSES AND RIGHT.

THAT'S PART OF MY TESTIMONY.

I UNDERSTAND THERE'S VARIOUS OTHER PARTS, BUT THE PART WE'RE TALKING ABOUT DEALS WITH THAT.

VERY GOOD.

SO, UM, I KNOW THAT A NUMBER OF AUSTIN ENERGY WITNESSES, AND PERHAPS NOT, YOU HAVE CITED THIS 2012, UH, CITY OF AUSTIN RATE ORDINANCE.

ARE YOU FAMILIAR WITH THAT AT ALL? I'M NOT SURE WHICH ORDINANCE YOU'RE REFERRING TO, SIR.

WOW.

IT LOOKS LIKE MR. RAVEN IS, UH, PULLING IT UP.

IT'S BEEN MARKED AS NXP EXHIBIT THREE.

UH, WE MAY NOT NEED TO GET INTO THIS, BUT IS THAT SOMETHING THAT YOU REVIEWED AND IN PREPARING YOUR WELL AND DOING THE WORK THAT YOU DID ON THIS PARTICULAR ASSIGNMENT? NO, SIR.

UM, I GUESS WE DON'T NEED TO GET INTO THAT, BUT I WILL ASK, UM, IS IT THE POLICY OF THE CITY OF AUSTIN THAT RATES SHOULD ASSIGN A REVENUE RESPONSIBILITY TO EACH OF THE CLASSES EQUAL TO, OR, YOU KNOW, RELATIVELY REASONABLY EQUAL TO THEIR ALLOCATED COST OF SERVICE? YES.

I WOULD SAY THAT'S TRUE AS A GENERAL RULE.

AND TO YOUR KNOWLEDGE, HAS THAT BEEN A AUSTIN ENERGY POLICY FOR, UH, YEARS AND YEARS AND YEARS? OR IS THAT A RELATIVELY NEW THING? I CAN SAY THAT THAT WAS AMONG THE RATE DESIGN POLICY OBJECTIVES THAT I THINK WERE ADOPTED BY THE CITY COUNCIL IN THE 2012 CASE.

THEY WERE PRESENTED IN THE TESTIMONY OF MARK DREYFUS.

AND ONE OF THEM HAD TO DO WITH, UM, YOU KNOW, COST-BASED RATES.

SAME NUMBER OF 20.4% ABOVE, UH, ALLOCATED COST OF SERVICE FOR THE LARGE TRANSMISSION VOLTAGE CUSTOMERS? I WOULD SAY FROM A TECHNICAL STANDPOINT, UH, IT WOULD NOT BE DESIRABLE TO MAINTAIN THAT KIND OF A DISPARITY FROM COST, BUT I UNDERSTAND THAT THE ULTIMATE DECISION ON MATTERS LIKE THAT, THAT COMES FROM THE CITY COUNCIL AND THEY ARE GOING TO CONSIDER VARIOUS OTHER FACTORS THAT AREN'T TECHNICAL.

WELL, TO THE EXTENT THAT THAT'S THE CASE.

AND WE SEE IN YOUR TABLE ONE, FOR EXAMPLE, SO MANY CLASSES THAT ARE SO FAR AWAY FROM THEIR ALLOCATED COST OF SERVICE.

I MEAN, IS IT FAIR TO SAY THAT THAT POLICY MAY NOT HAVE, UH, BEEN SUCCEEDING WELL IN VERY RECENTLY? YOU KNOW, I DON'T KNOW IF I WOULD CHARACTERIZE IT THAT WAY, FRANKLY.

UM, I DON'T THINK IT'S IN MY EXPERIENCE.

I WOULDN'T SAY THIS IS REALLY OUTSIDE THE NORM IN TERMS OF WHENEVER THE SYSTEM NEEDS AN INCREASE, THESE KINDS OF DISPARITIES FROM, FROM COSTS AREN'T OUT OF THE NORM.

SO, I MEAN, THIS IS THE MOST EXTREME CASE, BUT SAY A 43% DIFFERENCE BETWEEN, UH, A CLASSES, UH, REVENUE RESPONSIBILITY, AS OPPOSED TO IT'S ALLOCATED COST OF SERVICE.

YOU FIND THAT THAT'S RELATIVELY, YOU KNOW, KIND OF ACCEPTABLE, YOU KNOW, PARTICULARLY FOR A LIGHTING CLASS, WHICH THE ONE YOU'RE REFERRING TO IS CITY OWNED, PRIVATE OUTDOOR LIGHTING.

THAT'S THE KIND OF A CLASS WHERE BETWEEN COST STUDIES, A LOT OF COSTS CAN BE SHIFTED AROUND, UH, YOU KNOW, BASED, BASED ON ONE TEST YEAR OR THE NEXT.

SO NOT, ISN'T INCREDIBLE AS IT SOUNDS THAT IS NOT PARTICULARLY UNUSUAL FOR A LIGHTING CLASS.

WELL, LET'S, LET'S THEN TAKE RESIDENTIAL, UM, BEING 20.4%, UM, BELOW ITS ALLOCATED COST OF SERVICE.

IS THAT SOMETHING THAT IS, YOU KNOW, KIND OF, UH, UNREASONABLE TO, TO MAINTAIN IN YOUR OPINION OR, OR, YOU KNOW, REALLY THE

[04:15:01]

I'D LIKE TO ASK YOU A COUPLE OF GENERAL METHODOLOGICAL TYPE QUESTIONS ABOUT HOW DO YOU, YOU A UTILITY, UM, BRING A CLASS CLOSER TO, OR EVEN EQUAL TO ITS COST OF SERVICE.

I'M JUST, I'M THINKING THERE'S WELL, LET ME SUGGEST THE THREE WAYS THAT I KNOW OF.

AND IF YOU CAN, IF YOU'RE GOING TO TELL ME THERE'S FOUR OR FIVE AND SIX OTHER WAYS, THAT'S GREAT, BUT YOU CAN EITHER INCREASE THEIR RATES.

THAT'D BE ONE WAY, CORRECT.

IF THEY'RE BELOW COST INCREASING THE RATES WOULD HAVE THE EFFECT OF BRINGING THEM CLOSER TO COSTS OR LIKEWISE, IF THERE ARE ABOVE, THEN YOU WOULD REDUCE THEIR RATES, RIGHT? AS LONG AS YOU DON'T GO TOO FAR.

RIGHT? SO ANOTHER WAY WOULD BE TO REVISE THEIR ALLOCATED COST OF SERVICE.

IN OTHER WORDS, ALLOCATE A DIFFERENT AMOUNT TO THAT CUSTOMER CLASS.

WOULD THAT BE ANOTHER WAY? WELL, YOU KNOW, I'M GOING TO, I'M GOING TO SAY NO TO THAT, BECAUSE TO ME THERE'S ONLY ONE WAY TO GO ABOUT A COST STUDY.

AND THAT IS YOU, YOU, YOU GO ABOUT IT SERIOUSLY AND DILIGENTLY TO TRY TO IDENTIFY FOR EVERY TYPE OF COST AND THE COST STUDY, THE FACTORS THAT DRIVE THOSE COSTS, AND YOU, YOU APPLY THOSE METHODOLOGIES TO DISTRIBUTE THE COSTS AND YOU, YOU WOULDN'T SAY, WELL, LET ME CHOOSE A DIFFERENT METHOD BECAUSE I WANT TO REDISTRIBUTE COSTS, YOU KNOW, TO, TO CHANGE THE, UH, THE DISPARITIES.

THAT'S JUST, IT'S NOT, IT'S JUST SORT OF NOT HOW YOU GO ABOUT IT.

I APPRECIATE THAT'S NOT HOW YOU GO ABOUT IT, BUT ONE COULD REVISE OR ADOPT DIFFERENT ALLOCATION FACTORS OR DIRECT ASSIGN OR, OR DO SOMETHING TO REVISE THE AMOUNT OF COSTS ALLOCATED TO A CLASS AND HOLD THEIR REVENUES CONSTANT.

AND THAT WOULD HAVE, THAT COULD HAVE THE EFFECT OF BRINGING THEM CLOSER TO THEIR COST OF SERVICE, THOUGH.

IF YOU CHANGE A COST ALLOCATION, A CLOUD'S COST ALLOCATION METHODOLOGY, THAT'S GOING TO CHANGE EVERY CLASS'S RELATIVE POSITION TO COST.

AND THEN I GUESS A THIRD MEANS OF BRINGING A CLASS CLOSER TO ITS COST OF SERVICE WOULD BE A COMBINATION OF THE TWO THINGS I MENTIONED, RIGHT? WITH THE CAVEAT THAT YOU WOULDN'T DO, THE, UM, ADJUST THE ALLOCATED COST OF SERVICE METHOD.

WELL, A THIRD WAY, I CAN IMAGINE IT WOULD BE YOU, YOU COULD, UH, YOU KNOW, YOU COULD REVISIT THE WAY IN WHICH YOU'RE ADJUSTING THE TEST TO YOUR BILLING UNITS AND MAKE SURE THAT YOU'RE DOING ALL THE APPROPRIATE ADJUSTMENTS.

AND THAT IS ALSO GOING TO AFFECT, UH, EACH CLASS IS DISTANCE FROM COSTS, ALRIGHT, TO GET CUSTOMERS CLOSER TO THEIR ALLOCATED COST OF SERVICE.

UM, AS I UNDERSTAND IT, THE, THE SOLE METHOD THAT AUSTIN ENERGY USED WAS IN THE REVENUE ALLOCATION, CORRECT? I'M NOT SURE I FOLLOW THAT.

THE SOLE METHOD FOR US ADJUSTING THEIR RATES TO TRACK A DIFFERENT REVENUE ALLOCATION FROM EACH CUSTOMER CLASS.

THAT WAS THE METHOD USED TO BRING THEM CLOSER TO THEIR COST OF SERVICE.

TO DEVELOP CURRENT RATES, CORRECT.

YOUR, I THINK WE DIDN'T.

WELL, I HAD TO CHECK AND SEE, CAUSE I DIDN'T, I DON'T SPONSOR THE COST ALLOCATION GRANT SPONSORS THE FUNCTIONAL SEPARATION OF COST AND THE COST CLASSIFICATION MR. BURNHAM IN.

SO TO THE FIRST WAY, OR THE SECOND WAY, YOU MENTIONED CHANGING A COST ALLOCATION METHODOLOGY.

I HAD TO CHECK WITH THE OTHER WITNESSES.

AND THE ANSWER IS YES, WE DID.

NOT TO MY KNOWLEDGE, WE DIDN'T ADJUST ANY COST ALLOCATION TREATMENTS THAT ARE IN THE COST STUDY.

SO THAT SECOND WAY THAT THE POSITIONS COULD CHANGE DOESN'T APPLY ONLY THE FIRST ONE.

WELL, WE ALSO HAVE ADJUSTMENTS TO THE, UH, BILLING UNITS, THE WEATHER NORMALIZATION AND THE CUSTOMER ANNUALIZATION ADJUSTMENTS THAT WOULD AFFECT RELATIVE POSITION.

UM, IF YOU'RE NOT THE COST OF SERVICE WITNESS, MAYBE I SHOULD ASK MR. RAYMOND, I WAS GOING TO ASK HOW TO DETERMINE HOW TO VERIFY THAT THE PROPORTION OF COST OF SERVICE ALLOCATED TO EACH OF THESE CLASSES IS MATERIALLY THE SAME AS FROM CURRENT RATES ARE BASED UPON.

IN OTHER WORDS, LET ME, LET ME JUST TRY AND RESTATE THIS QUESTION.

YOU'VE GOT COST OF SERVICE ALLOCATIONS THAT WERE USED

[04:20:01]

A COST OF SERVICE STUDY.

WELL, THE CURRENT RATES WERE BASED ON A SETTLEMENT AGREEMENT WHERE I DON'T THINK THERE WERE ANY COST ALLOCATION TREATMENTS, A STIPULATED.

HAVE YOU READ THE RIGHT FILING PACKAGE? THERE'S A WORK PAPER THAT SPEAKS TO, UM, COMPARISON OF COST OF SERVICE, CURRENT BASE RATES AND PROPOSED BASE RATES.

THERE'S A WORK PAPER.

ARE YOU FAMILIAR WITH THAT? YES, SIR.

I SPONSOR THAT WORK PAPER.

IT'S A G DASH 10.2.

I AM LOOKING AT THAT.

I DON'T THINK I PUT THAT IN YOUR PACKET, BUT THAT, TO ME, I'M KIND OF LOOKING AT IT ON MY SCREEN HERE.

IT SHOWS BASE RATE COST OF SERVICE, TOTAL COMPANY, AND THEN IT'S BROKEN OUT INTO THE VARIOUS CUSTOMER CLASSES AND THAT'S FOR CURRENT RATES, RIGHT? YES, SIR.

BUT THAT, THAT'S NOT THE RESULT OF ANY COST ALLOCATION.

THAT IS A FUNCTION OF FULLY JUST TO TEST YOUR BILLING UNITS AND CURRENT RATES.

WELL, RIGHT.

THAT'S WHAT I'M ASKING YOU ABOUT IS THE CURRENT RATES THAT, THAT REFLECTS THE ALLOCATION OF, OF COST OF SERVICE THAT'S INCLUDED IN THE CURRENT RATES.

AS I UNDERSTAND IT, THAT'S A QUESTION.

DO YOU HAVE AN ANSWER? I'M SORRY, WHAT WAS THE QUESTION? THE QUESTION IS ON G DASH 10.2, THAT WORK PAPER WHERE IT SHOWS BASE RATE COST OF SERVICE, TOTAL COMPANY, AND THEN BROKEN INTO EACH CUSTOMER CLASS.

DOESN'T THAT SHOW THE ALLOCATED BASE COST OF SERVICE FOR EACH CUSTOMER CLASS FOR CURRENT RATES? NO, SIR.

WELL, THAT'S WHAT IT SAYS IN THE WORK PAPER.

DO I NEED TO SHOW YOU THAT YES.

MAY BE IN ARTFULLY LABELED.

OH, AND WHICH CASE I APOLOGIZE, WHAT THAT, WHAT THOSE FIGURES WOULD REPRESENT IS THE AMOUNT OF REVENUES THAT EACH CLASS WOULD GENERATE UNDER NORMALIZED BILLING UNITS UNDER CURRENT RATES.

SO SINCE WE CAN'T USE THIS WORK PAPER, HOW CAN WE VERIFY THAT THE ALLOCATED COST OF SERVICE TO CUSTOMER CLASSES BETWEEN CURRENT RATES, CURRENT RATES, STRUCTURE AND PROPOSED RATE STRUCTURE IS APPROXIMATELY THE SAME THAT THERE HASN'T BEEN ANY ADJUSTMENTS TO COST OF SERVICE, AS YOU'VE REPRESENTED TO GET CLASSES CLOSER TO THEIR COST OF SERVICE.

WELL, THE WAY THAT YOU COULD DO THAT WOULD BE TO EXAMINE OF THE SCHEDULES WHERE THE FUNCTIONAL SEPARATION OF COSTS IS BEING PERFORMED.

AND SO THAT WOULD INVOLVE THE BE SCHEDULES FOR RATE BASE ITEMS. THIS CCC SCHEDULES FOR FINANCING COSTS, THE D SERIES OF SCHEDULES FOR O AND M COSTS, THE SERIES OF SCHEDULES FOR OTHER REVENUES AND MISCELLANEOUS EXPENSES.

UM, AND IF YOU GO TO THE F SERIES OF SCHEDULES, YOU WILL FIND IN THERE THAT THE DEVELOPMENT OF THE FUNCTIONALIZATION FACTORS THAT ARE APPLIED TO THE LINE ITEMS AND THOSE OTHER SERIES OF SCHEDULES THAT I JUST ITEMIZED, AND YOU COULD COMPARE THAT TO THE 2016 AND THE 2012 COST STUDIES.

AND YOU COULD VERIFY THAT THE METHODOLOGIES THAT ARE BEING USED TO ALLOCATE THE COST HAVE NOT CHANGED, UH, YOU KNOW, BETWEEN THOSE COST STUDIES.

YOU HAVE NO TESTIMONY THAT OUTLINES THAT KIND OF DOCUMENTATION THOUGH.

IT'S JUST ALL KIND OF VARIED IN THE, IN THESE SCHEDULES, CORRECT? WELL, I'M NOT THERE I'M THERE.

I MAY NOT BE THE RIGHT WORD.

I'D HAVE TO READ THROUGH HUNDREDS OF PAGES OF SCHEDULES TO, TO REACH THE CONCLUSION THAT YOU'RE REPRESENTING RIGHT NOW IS TRUE.

YOU WOULD HAVE, YOU WOULD HAVE TO KNOW WHERE TO LOOK IN THE COST STUDY.

I, WE CERTAINLY DIDN'T TRY TO HIDE ANYTHING.

AND I WOULD ALSO SAY THAT OUR, THE STRUCTURE OF OUR COST STUDY FOLLOWS SORT OF A STANDARD FORMAT OF THE COMMISSION.

WE USE THE, UH, THE FAULTY COSTS, THE NON IO, UT COST FILING SCHEDULES FORMAT.

SO HOPEFULLY PEOPLE ARE SOMEWHAT FAMILIAR WITH THAT, UM, TO NAVIGATE THE STUDY.

I WANT TO TRY AND MOVE ON.

I'M MINDFUL OF OUR TIME HERE AND TALK ABOUT YOUR, UM, CRITIQUE OF MR. DANIELS, UH, DISCUSSION OF YOUR ALLOCATION METHODOLOGY.

IT LOOKS TO ME LIKE YOUR MAIN CRITICISM MYTH HIM WAS THAT HIS RECOMMENDATION DID NOT INCLUDE ENOUGH MOVEMENT TOWARDS COST OF SERVICE FOR THE RESIDENTIAL CLASS.

THAT YOU'RE RIGHT.

SO IN OTHER WORDS, NOT HIGH ENOUGH OF A RESIDENTIAL RATE INCREASE.

AND IF YOU DON'T HAVE IT THERE, I CAN BRING IT.

HE DESCRIBED YOUR ALLOCATION METHODOLOGY IS HAVING THREE STEPS, AND I UNDERSTAND THAT YOU DISAGREE WITH HIS PROPOSALS, BUT FROM YOUR RECOLLECTION OF HIS TESTIMONY,

[04:25:01]

DID HE ACCURATELY DESCRIBE YOUR METHODOLOGY, YOUR THREE STEPS? NO, I THINK HE MIS-CHARACTERIZED, IT, HE, I THINK HE GOT A LITTLE CONFUSED.

IT SEEMED LIKE HE GOT A LITTLE CONFUSED AND THAT HE THOUGHT THAT WE WERE DOING A STEP ONE AND THEN WE WERE IGNORING IT WHEN ACTUALLY STEP ONE, WHICH WAS SYSTEM-WIDE MOVEMENT FOR EVERYBODY.

SO THAT'S THE 7.6% INCREASE AT THE SYSTEM REQUIRED TO GET TO FULL COST, APPLY TO ALL THE CLASSES THAT ACTUALLY RECEIVED 50% WEIGHT IN THE RESULT INSTEAD OF BEING TOTALLY DISREGARDED, WHICH IS, I THINK WHAT JIM DANIELSON.

OKAY, WELL SUMMARIZING, AND AGAIN, I CAN BRING YOU THE TESTIMONY.

HIS DESCRIPTION WAS YOU RAISE EVERYONE.

EVERY CLASS IS ALLOCATION BY THE SYSTEM, AVERAGE INCREASE.

STEP ONE, STEP TWO WOULD BE TO COUNT UP THE SURPLUSES AND THE DEFICITS, AND THEN STEP THREE, REDUCE THAT BY HALF AND THEN ALLOCATE, I GUESS, STEP FOUR, MAYBE ALLOCATE THE 20% UNIVERSITY IN MILITARY DISCOUNT.

PRO-RATA WHA WHAT DOES HE LEAVE OUT? I THINK YOUR DESCRIPTION IS ALMOST GOOD.

I WOULD SAY THAT IT'S NOT JUST THAT IN STEP TWO, THAT THE ABOVE COST CLASSES GO HALFWAY DOWN.

IT'S ALSO THAT THE BELOW CAUSE CLASSES GO HALFWAY UP.

UH, I SAID, REDUCE IT BY HALF.

I SHOULD'VE SAID ADJUSTED BY HALF, EITHER WAY.

SO, UM, HE HAD INDICATED THAT THAT WAS A KIND OF, NOT A STANDARD UTILITY METHODOLOGY.

AND YOU INDICATED, WELL, MAYBE IT'S NOT A STANDARD UTILITY METHODOLOGY, BUT IT SETS A STANDARD.

IS THAT WHAT YOU MEANT? NO, IT'S A, IT'S MORE LIKE, UM, YOU KNOW, W WE'VE DISCUSSED THIS INTERNALLY AND DECIDED THAT IT WOULD BE AN AUSTIN ENERGY'S INTERESTS THAT WHEN WE DECIDE THAT GRADUALISM IS NECESSARY TO HAVE A STANDARD APPROACH SO THAT WE'RE NOT GETTING INVOLVED IN SORT OF THE FREE FOR ALL THAT THIS REVENUE DISTRIBUTION PHASE CAN TURN INTO AND IN RATE CASES.

SO MY RECOLLECTION OF YOUR TESTIMONY IS THAT YOU, UM, PROPOSE IT TO BE THE FUTURE STANDARD SO THAT IT CAN AVOID DISPUTES OVER THE METHODOLOGY, RIGHT.

BUT HERE WE ARE DISPUTING IT.

SO, UH, WHEN IS THAT GOING TO KICK IN THE NEXT RATE CASE? THE FUNCTION OF AVOIDING DISPUTES ABOUT REVENUE ALLOCATION? I DON'T KNOW.

I DON'T KNOW, SIR.

SO, UM, AND, AND JUST BECAUSE SOMEBODY HAS DISPUTED A METHODOLOGY DOESN'T MEAN THE PARTIES CAN'T SETTLE THE RIGHT CASE, DOES IT WE'RE SETTLED THOSE DISPUTES THAT'S RIGHT.

AND I MEAN, OUR DISPUTES REALLY SUCH A BAD THING.

ISN'T THAT JUST ANOTHER WAY OF SAYING PARTIES EXPRESSING THEIR OWN INTERESTS.

I WOULD SAY THAT, UH, YOU KNOW, ANYTHING AUSTIN ENERGY CAN DO TO MINIMIZE DISPUTE COULD POTENTIALLY, UH, LOWER THE AMOUNT OF RATE CASE EXPENSES THAT OUR CUSTOMERS ARE GOING TO HAVE TO BEAR AND RATES.

WELL, I SUPPOSE THEY COULD NOT HAVE A RIGHT CASE AT ALL.

AND JUST ANNOUNCED THE NEW RATES.

I MEAN, IS THAT THE ROLE THAT YOU'RE ADVANCING HERE? JUST AVOID ANY AND ALL DISPUTES? NO, SIR.

YOU JUST WANT TO MINIMIZE THOSE DISPUTES.

IN FACT, YOU, IN ANSWERING THE ICA TESTIMONY SAID IN RESPONSE TO THEIR CHARGE THAT YOUR METHODOLOGY WAS SUBJECTIVE, THAT NO, IT'S NOT SUBJECTIVE BECAUSE IT IS SUBJECT TO DISPUTE IN THIS CASE.

I THINK HE MAY BE REFERRING TO SOMETHING I SAID ABOUT, UM, COST ALLOCATION.

I THINK THERE WAS A WITNESS THAT SAID THAT, UH, THE CHOICE OF COST ALLOCATION TREATMENTS IS SUBJECTIVE.

AND I DISAGREED WITH THAT CHARACTERIZATION BECAUSE I THINK THAT, YOU KNOW, THAT THE HEARING PROCESS PRODUCES THE MOST RATIONAL AND REASONABLE ALLOCATION TREATMENT AMONG THE ALTERNATIVES THAT ARE PRESENTED IN THE CASE.

AND I DON'T THINK THAT IT'S REASONABLE TO CHARACTERIZE THAT AS A SUBJECTIVE PROCESS.

BECAUSE IT IS SUBJECT TO REVIEW AND DISPUTE IN THE RATE CASE.

IN PART, YES.

AND YOUR METHODOLOGY ISN'T BASED ON ANY OF THE SPECIFIC NUMBERS IN THIS CASE, IS IT, IT WASN'T DERIVED FROM LOOKING AT THE, THE NUMBERS HERE.

IT'S JUST A METHODOLOGY THAT YOU HAVE THEN APPLIED TO THE COST OF SERVICE NUMBERS.

TO PRODUCE AND THE ACCURATE MEASUREMENTS OF CLASS PRESENT REVENUES THAT WE PRODUCED AS WELL, INCLUDING ALL THE ADJUSTMENTS THAT WE DID TO TEST YOUR BILLING UNITS, TO MAKE SURE THAT THEY WERE REPRESENTATIVE OF TEST HERE, NORMAL TEST TO YOUR CONDITIONS.

AND NO, SORRY.

THE METHODOLOGY IS 100% BASED ON FIGURES IN THE COST STUDY.

WHAT WAS IT ABOUT THE COST STUDY THAT DICTATED THIS METHODOLOGY, AS OPPOSED TO SOME OTHER METHODOLOGY, THE, UH, ACCURATE MEASUREMENTS OF CLASS COST OF SERVICE THAT WE ENDEAVORED TO,

[04:30:01]

DOESN'T EVERY UTILITY DO THAT IN EVERY CASE.

UH, YES, BUT I WOULD SAY NOT ALL UTILITIES USE THAT INFORMATION TO DEVELOP A, A REVENUE DISTRIBUTION METHODOLOGY.

THAT'S STRICTLY BASED ON THAT INFORMATION.

THANK YOU, MR. MURPHY.

LET'S MOVE ON.

I HAVE SOME QUESTIONS FOR MR. RAVEN.

NOW I'D LIKE TO START BY TALKING ABOUT SURFACE AREA LIGHTING AND IN PARTICULAR, THIS ISSUE OF WHETHER THE CITY OF AUSTIN IS BILLED FOR ITS SERVICE AREA LIGHTING, ARE YOU WITH ME? OKAY.

THAT'S ON, I BELIEVE THAT'S ON PAGE 19 OF YOUR TESTIMONY THAT THE PROPOSED TARIFFS DON'T BILL, THE CITY OF AUSTIN FOR ITS OWN STREET LIGHTING, IS THAT CORRECT? THERE, THERE IS A LIGHTING SURFACE AREA LIGHTING TARIFF, AND IT, IT GETS USED IN ORDER FOR AUSTIN ENERGY TO BE ABLE TO APPROPRIATELY BILL FOR SURFACE AREA LIGHTING IN AREAS THAT ARE OUTSIDE OF THE CITY LIMITS OF LAW.

THAT'S NOT MY QUESTION, SIR.

MY QUESTION IS THE TARIFF DOES NOT BUILD THE CITY OF AUSTIN FOR THE CITY OF AUSTIN'S SERVICE AREA LIGHTING.

UH, AND THE TARIFF DOESN'T BUILD ANYTHING.

AND THE TARIFF IS THE STATED RATES THAT ARE USED TO BE ABLE TO FACILITATE A BILL.

BUT IF YOU'D LET ME FINISH, I THINK THE ANSWER YOU'RE SEARCHING FOR, I THINK I CAN GIVE YOU, WHICH IS THAT UNDER THE CITY OF AUSTIN'S POLICY, THE COST OF SERVICE AIR LIGHTING WITHIN THE CITY IS RECOVERED THROUGH A PASS THROUGH CHARGE.

YES, TARIFFS DON'T BILL, ANYTHING TARIFFS, RECOUNT THE RATES THAT ARE TO BE APPLIED AND THE CITY DOESN'T PROPOSE TO APPLY A RATE OR TO CHARGE, EXCUSE ME, AUSTIN ENERGY.

DOESN'T PROPOSE TO CHARGE THE CITY OF AUSTIN FOR SERVICE AREA LIGHTING EXPENSE, RIGHT? THE CITY, THIS AUSTIN ENERGY'S PROPOSAL IS CONSISTENT WITH THE AUSTIN, THE NEWSIES PAUL, OR THE CITY BOSTON'S POLICY TO RECOVER THAT COST THEIR SURFACE OR LIGHTING.

THAT'S NOT WHAT I ASKED YOU.

WHAT I ASKED YOU WAS TO CONFIRM AUSTIN ENERGY DOES NOT PROPOSE TO BILL OR CHARGE THE CITY OF AUSTIN FOR ITS SERVICE FOR ITS STREET LIGHTING EXPENSE, WHETHER IT'S CONSISTENT WITH ITS POLICY OR NOT.

I'M NOT AWARE OF THE AUSTIN ENERGY SENDING THE CITY, A BILL FOR SURFACE AREA LIGHTING.

IS THAT WHAT YOU'RE GETTING AT? NO, THERE'S NO BILL SENT.

IT'S NOT GOING TO BE UNDER THE PROPOSED RATES.

UH, THERE WILL BE NO CHANGE TO THAT UNDER THE PROPOSAL.

LIGHTING COSTS AS $19.3 MILLION.

UM, THE FIGURE HAS BEEN IDENTIFIED FOR THE TOTAL AMOUNT OF SERVICE AREA.

ARE YOU FAMILIAR WITH THAT FIGURE? THAT THAT SOUNDS ACCURATE.

UH, I'M NOT LOOKING AT IT, BUT THAT SOUNDS RIGHT.

WELL, IT'S ON SCHEDULE G DASH SIX.

IF YOU'D LIKE TO LOOK AT THAT, I BELIEVE THAT IS IN THE PACKET.

I'M LOOKING AT THAT'S PAGE 2 31 IF THE, A RIGHT FILING PACKAGE.

UM, THIS ONE SAYS PAGE 2 51, BUT, BUT THIS IS SCHEDULED SO I THINK, I THINK I'M IN THE RIGHT PLACE.

I PROBABLY WROTE IT DOWN WRONG.

UH, IS THAT FIGURE FOR THE TOTAL, UM, 19.3 MILLION? UH, NO, IT'S, IT'S IT'S 19.2, BUT VERY CLOSE.

I MEAN, ROUNDING IT'S 19.2 BY MY MATH.

UH, WELL, I, I ALWAYS SAY THIS, THERE IS NOT A MEANINGFUL INCREASE TO THE, UH, THE TARIFF FOR SURFACE AREA LIGHTING, THE GETS BILLED TO THE OTHER CITIES OUTSIDE OF THE CITY, AUSTIN IN THIS PROPOSAL, THE COST OF SERVICE IDENTIFIED IS, IS NOT MEANINGFULLY ON THAT ORDER OF MAGNITUDE HIGHER FOR THOSE, THOSE OUTSIDE CITY.

THAT'S THE TOTAL AMOUNT.

AND HOW MUCH OF THAT IS ATTRIBUTED TO THE CITY OF AUSTIN? UM, THAT'S NOT ON THIS SCHEDULE.

UM, SO I DON'T KNOW THAT NUMBER OFF THE TOP OF MY HEAD, BUT IT'S, IT'S THE MAJORITY OF IT BECAUSE THE, THE, THE OTHER CITIES THAT ARE SERVED BY AUSTIN ENERGY ARE RELATIVELY SMALL IN COMPARISON TO AUSTIN.

THERE'S A WORK PAPER IN THERE, BUT IT'S GOT KIND OF EXCEDRIN, HE LOOKING FONT.

AND LET ME JUST REPRESENT TO YOU TO TRY AND SAVE A LITTLE TIME FOR THE TOTAL AMOUNT BILLED TO THE, OR INCURRED FOR THE OTHER.

CITIES IS $90,000 AND SEVEN $90,792.

THAT SOUND ABOUT RIGHT.

IT ACTUALLY SOUNDS LOW, BUT, BUT IF IT'S NOT IMPORTANT TO YOUR QUESTION, I'LL, I'LL GO ALONG WITH YOUR REPRESENTATION.

UM, WELL, THE WORKPAPERS IS GOING TO SHOW WHAT THE WORKPAPERS GONNA SHOW.

UM, ALSO IT, IT DOES INDICATE THAT THERE'S A 74.6% INCREASE IN SERVICE AREA, LIGHTING COSTS IT'S PROJECTED.

IS THAT YOUR UNDERSTANDING AS WELL? OH, WELL,

[04:35:01]

BUT FOR THE CITY OF AUSTIN, HOWEVER, IT'S GOING TO BE THAT KIND OF INCREASE.

AND I DON'T, I DON'T HAVE THAT NUMBER IN FRONT OF ME, BUT IT IS A MEANINGFUL INCREASE.

I WILL AGREE WITH YOU THERE, BUT I DON'T HAVE THE NUMBER IN FRONT OF ME.

THE CITY IS AUSTIN ENERGY PROPOSING TO CHARGE OTHER CITIES.

UH, THE SERVICE AREA LIGHTING CHARGE TO RECOVER COSTS INCURRED IN PROVIDING THE CITY OF AUSTIN WITH STREET LIGHTING.

IF I UNDERSTAND YOUR QUESTION, YOU'RE ASKING IS THE AUSTIN ENERGY PROPOSING TO CHARGE OTHER CITIES FOR THE COST OF BEING SERVICED AREA LIGHTING BEING PROVIDED INSIDE THE CITY OF AUSTIN? UH, NO, THAT'S NOT THE INTENT.

UM, SO THE EFFECT OF THERE NOT BEING A CHARGE TO THE CITY OF AUSTIN IS THAT THE CITY GETS TO SAVE THE $19 MILLION THAT'S INCURRED TO, UH, PROVIDE THAT SERVICE.

UH, WELL, FIRST OF ALL, I GUESS I'M NOT POSITIVE.

THE $19 BILLION IS THE RIGHT NUMBER, BUT EH, BUT THE COST OF SERVICE AREA LIGHTING BEING PROVIDED INSIDE THE CITY IS NOT BEING SENT TO THE CITY OF AUSTIN AT ANY BILL.

IT IS BEING RECOVERED THROUGH THE, UH, COMMUNITY BENEFIT CHARTER IT'S BORNE BY ELECTRIC CUSTOMERS, CORRECT? TRUE INSIDE THE CITY LIMITS, ELECTRIC CUSTOMERS TRUE.

AND NOT ALL ELECTRIC CUSTOMERS ARE TAXPAYERS OF THE CITY OF AUSTIN.

AND LIKEWISE, NOT ALL TAXPAYERS OF THE CITY OF AUSTIN OR ELECTRIC CUSTOMERS.

ARE THEY, UH, CERTAINLY THE FIRST IS TRUE.

LET ME THINK.

BUT THE SECOND WAY, WHAT WAS THE SECOND WAY AROUND THAT TAXPAYERS ARE ELECTRIC CUSTOMERS? I CAN'T THINK OF AN EXAMPLE OF THAT, BUT I'LL ACCEPT YOUR REPRESENTATION.

THERE MIGHT BE AN EXAMPLE OF THAT.

AND AS TO THOSE THAT ARE BOTH THERE, THEIR COST BURDEN IS DIFFERENT BASED UPON IT BEING COLLECTED FROM THEM OUT OF ELECTRIC RATES THAN IF IT, IF THIS COSTS WERE INCLUDED IN THE CITY OF AUSTIN'S, UM, TAXES THAT ARE IMPOSED TO FUND ITS BUDGET.

I DON'T KNOW THAT THAT'S TRUE.

UM, IF I CHARGE SOMETHING AS AN ELECTRIC CHARGE, THAT'S PROBABLY DIFFERENT THAN IF THE SAME COST WAS PUT INTO THE OVERALL CITY TAXES.

I THINK THAT'S PROBABLY A REASONABLE PRESUMPTION, BUT, BUT IT'S, IT'S CERTAINLY NOTHING THAT I CAN CONFIRM FOR YOU.

UM, I THINK IN THE INTEREST OF TIME, LET'S, LET'S GET OFF OF SERVICE LIGHTING AND LET'S GO ONTO THE CASHFLOW, UH, METHOD OF RETURN.

UM, WHICH IS THE RATE OF RETURN METHOD THAT AUSTIN ENERGY HAS SELECTED, UM, IN THIS PARTICULAR INSTANCE, CORRECT.

UH, AUSTIN ENERGY HAS UTILIZED THE CASHFLOW METHOD TO DEVELOP ITS REVENUE REQUIREMENT.

THAT'S THAT'S IT? THAT'S TRUE.

AND, UH, THERE ARE SEVERAL OTHER WAYS IT COULD HAVE DONE THAT, BUT IT'S SELECTED CASHFLOW METHOD, RIGHT? THERE'S MORE THAN ONE WAY TO DEVELOP A REVEREND REQUIREMENT.

UH, YES, THERE IS MORE THAN ONE WAY TO DO IT.

AND THIS CASHFLOW METHOD IS THE SAME ONE THAT IS REFLECTED IN THE NON IOU T COSTS, RIGHT? FILING PACKAGE INSTRUCTIONS THAT YOUR UNDERSTANDING THERE IS AN ALLOWANCE FOR THIS METHOD WITHIN THE INSTRUCTIONS FOR NANO USE.

NOT WHEN I ASKED YOU MR. RAVEN, I ASKED YOU, ARE THEY USING THE CASHFLOW METHOD AS REFLECTED IN THE NON IOU T COSTS, RIGHT? FILING PACKAGE INSTRUCTIONS.

THE METHODOLOGY THAT AUSTIN ENERGY IS USING IS CONSISTENT WITH WHAT IS REPRESENTED IN THE NON IOU RAPE VIOLENCE PACKAGE.

AND IF YOU LOOK AT THAT, IT SHOULD BE IN YOUR PACKAGE THERE.

THAT'S UM, NXP EXHIBIT EIGHT, I BELIEVE.

[04:40:04]

NUMBER EIGHT IS, IS THE BREAK FROM PACKETS OR INSTRUCTIONS IF I THINK OF THEM? YEP.

LET'S SEE IF YOU CAN YEP.

FOUND IT.

IF YOU'LL LOOK AT A SCHEDULE C OR THE INSTRUCTIONS FOR SCHEDULE C, WHICH I THINK IT'S BATES STAMPED IN XP 1, 5, 4, PERHAPS.

UH, IF NOT, IT'S, UH, DON'T HAVE THE NATIVE PAGE NUMBER.

UM, I HAVE A, UM, UM, UH, PA PAGE 16 OF THE, UH, NINE O U UM, INSTRUCTIONS HAS A, UH, WHAT LOOKS TO BE A BAIT STAMP OF 0 0 0 0 5.

UM, IT SHOULD SAY SCHEDULE C DASH THREE CASHFLOW METHOD.

I SEE THAT.

IS THAT THE CASHFLOW METHOD THAT YOU UTILIZED IN PREPARING THE RETURN COMPONENT OF THE PROPOSED RIGHTS? YEAH, THE, YES.

THE CASHFLOW METHOD THAT IS USED BY AUSTIN ENERGY IS CONSISTENT, UH, W WITH, WITH THESE, THIS METHODOLOGY, ALL RIGHT.

YOU KEEP SAYING IT IS CONSISTENT.

IS THERE SOME DIFFERENT CASHFLOW METHODOLOGY THAT YOU UTILIZE THAT ISN'T EXACTLY WHAT'S DESCRIBED IN HERE? NO, I'M NOT AWARE OF A DIFFERENCE.

UH, SO WE CAN TREAT THIS AS A GOOD DESCRIPTION OF THE CASHFLOW METHODOLOGY THAT YOU UTILIZED.

IF WE CAN'T, THEN WE CAN'T.

BUT, BUT I'M JUST ASKING WHETHER THIS IS A FAIR REPRESENTATION OF THE CASHFLOW METHOD AS APPLIED BY YOU IN PREPARING THE RETURN.

AND THEY, AND THEY SHOULD BE CONSISTENT.

I, I'M NOT AWARE OF ANY DIFFERENCES.

THIS REFLECT THIS, BEING, THIS CASHFLOW METHOD REFLECTS THE, THE METHOD TO DETERMINE THE APPROPRIATE RETURN FOR THIS MUNICIPAL UTILITY, RIGHT.

AND THIS OUTLINES, THE CASHFLOW METHODOLOGY, WHICH IS CONSISTENT WITH THE WAY THAT WE, WE DEVELOPED THE RETURN FOR AUSTIN ENERGY IN THIS RE IN THIS REVEREND REQUIREMENT.

AND UNLIKE AN IOU WHERE YOU WOULD COME UP WITH SOME, YOU KNOW, NUMBER THAT'S NEEDED TO ATTRACT INVESTMENT FOR A MUNICIPAL, SUCH AS AUSTIN ENERGY, THAT'S MORE OF A FALLOUT NUMBER OF THE, SOME OF THESE DIFFERENT TYPE OF CASH OUTLAY EXPENSES THAT ARE DESCRIBED UNDER THE DESCRIPTION FOR C3.

I THINK THAT'S ACCURATE.

WOW.

FINALLY GOT ONE THAT'S ACCURATE.

AWESOME.

UM, AND SO WE CAN READ THE SCHEDULE TO SEE WHAT THESE EXPENSES ARE, BUT JUST TO BE CLEAR, YOU SUM THOSE AND THEN THAT'S THE RETURN.

AND THEN YOU DIVIDE THE, UM, WAS IT THE REVENUE REQUIREMENT INTO THAT, AND THAT IS SORT OF THE FALLOUT RATE OF RETURN, CORRECT.

UH, SO THE ONLY WAY I'LL JUST QUIBBLE, YOU WOULD TAKE THE RETURN DIVIDED BY RATE BASE, AND THAT WOULD BE THE FALLOUT RATE OF RETURN.

YEAH, SURE.

THE ISSUE THAT'S BEEN RAISED IS WHETHER IT'S AND MR. LEWIS SAID THIS YESTERDAY, THIS DOESN'T CHANGE THE REVENUE REQUIREMENT.

THIS IS THE REVENUE, THE RATE OF RETURN.

IT'S KIND OF A FALLOUT NUMBER THAT REFLECTS RETURN EXPENSES THAT ARE GOING TO BE INCLUDED.

IT, THE RATE OF RETURN REALLY JUST REFLECTS WHAT KIND OF RETURN IS INCLUDED WITHIN THE EXPENSES BEING RECOVERED.

IN THAT RETURN CALCULATION.

AND I WAS HERE FOR, I AGREE WITH THE STATEMENT THAT, UM, YEAH, AND I CAN'T RE CALL WHAT MR. LAWYER, UH, I STATED YESTERDAY, BUT SAY, ASK YOUR QUESTION AGAIN, BECAUSE I THINK I AGREE WITH IT.

I JUST WANT TO MAKE SURE I UNDERSTOOD IT'S, UH, THE RATE OF RETURN IS A FALLOUT NUMBER, RIGHT? IT REFLECTS THE, UM, CALCULATION THAT'S MADE OF TWO DIFFERENT TYPES OF EXPENSES, AS OPPOSED TO THE RIGHT AS COMPARED TO THE RATE BASE.

IT IS, IT IS NOT A REFLECTION OF SOME ADDITIONAL INCREMENT THAT'S NEEDED TO ATTRACT CAPITAL.

SO I GUESS THE FIRST WAY YOU SAY THAT, LET ME STATE THIS AND SEE IF THIS IS WHAT CONSISTS OF WHAT YOU'RE SAYING, THAT THE, THE RATE OF RETURN HAS NO IMPACT ON THE REVEREND REQUIREMENT.

THE FALLOUT RATE OF RETURN PERCENTAGE IS NOT USED TO DEVELOP THE REVEREND REQUIREMENT.

SO IT IS, IT IS NOT A INPUT TO DEVELOPING THE REVENUE REQUIREMENT, UNLIKE FOR AN IOU.

EXACTLY.

SO THE, THE ISSUE THAT NXP HAS RAISED IS WHETHER TO INCLUDE DEPRECIATION AND AMORTIZATION

[04:45:01]

I UNDERSTAND THAT TO BE MR. LEWIS' TESTIMONY AND THAT'S WHAT YOUR TESTIMONY ROBOT'S CORRECT.

DEPRECIATION AND AMORTIZATION, WITHOUT GETTING INTO A BIG ACCOUNTING DISCUSSION, THOSE ARE EXPENSES THAT ARE REFLECTED ON THE UTILITIES BOOKS, RIGHT? IT IS AN EXPENSE.

IT IS INEXPENSIVE THE UTILITY, BUT IT'S NOT LIKE A CASH OUTLAY.

BUT RIGHT.

IT IS A NON-CASH EXPENSE.

YOU'RE EXACTLY RIGHT.

BUT THESE OTHER EXPENSE ITEMS UNDER C3, THOSE ARE CASH OUTLAYS FOR THE MOST PART, RIGHT.

LIKE THAT, THESE PAYMENTS.

SO YOU CITE A COUPLE OF FACTORS TO INDICATE YOUR VIEW THAT DEPRECIATION AND AMORTIZATION, UM, SHOULD BE INCLUDED.

AND ONE OF THEM IS IN C DASH THREE OF THESE INSTRUCTIONS SAYS THAT IT'S REQUIRED.

IS THAT YOUR TESTIMONY? UH, THE, THE, THE INSTRUCTIONS THAT WE WERE REFERRING TO EARLIER AS EXHIBIT EIGHT, DO INCLUDE A SCHEDULE FOR DEPRECIATION TO BE FILED AS PART OF THE PACKAGE FOR A NON IOU, EVEN UNDER THE CASHFLOW METHOD.

AND TO BE PROVIDED UNDER SCHEDULE E FOR OTHER ITEMS, RIGHT.

IT IS AN E THAT'S TRUE SCHEDULE II, I BELIEVE.

BUT UNDER SCHEDULE C DASH THREE, IT SAYS NOTHING ABOUT THE TREATMENT OF DEPRECIATION OR AMORTIZATION DOESN'T.

I DON'T BELIEVE THAT DEPRECIATION IS MENTIONED IN THE PORTION OF THE, THE, THE CASHFLOW METHODS SCHEDULE, C3 INSTRUCTIONS.

I COULD CHECK AND READ IT TO MAKE SURE, BUT I DON'T BELIEVE IT'S THERE.

UH, I THINK YOU'RE RIGHT.

BUT IN THE INTEREST OF TIME, I WOULD PROPOSE THAT WE MOVE ON, UNLESS YOU FEEL LIKE THERE'S SOME REASON THAT'S IN FACT, SCHEDULE C TWO SAYS TO REMOVE DEPRECIATION UNDER THE DEBT SERVICE COVERAGE METHOD.

I'M NOT, I'M NOT SURE ABOUT THAT.

I HEAR AGAIN, I CAN LOOK AT IT IF IT'S IMPORTANT, BUT I'M NOT SURE THAT THAT'S TRUE.

I THINK IN THE INTEREST OF TIME, LET'S NOT HAVE YOU DO THAT.

UM, YOU ALSO STATE THAT YOUR INCLUSION OF DEPRECIATION AND AMORTIZATION IS CONSISTENT WITH EVERY NON IOU FILING AT THE COMMISSION ART.

AND WE'VE, I'VE ASKED YOU ABOUT THIS WORD CONSISTENT IS YOUR TESTIMONY THAT EVERY SINGLE NON IO YOU FILING AT THE PUC HAD DEPRECIATION AND AMORTIZATION INCLUDED WHEN USING THE CASH FLOW METHOD.

THAT WAS MY TESTIMONY BASED ON MY UNDERSTANDING.

SO, UH, IF YOU'LL LOOK IN THE PACKET FOR NXP SIX AND NXP SEVEN, WHICH WERE ADMITTED, UH, KIND OF ONLY FOR THE, THE FACT OF THEIR FILING, NOT FOR THE TRUTH OF WHAT'S CONTAINED IN IT.

IT SHOULD SAY, UH, BROWNSVILLE AND LCRA FILINGS.

YEAH, I THINK I GOT IT.

ARE YOU FAMILIAR WITH THOSE, UH, FILINGS WITH THE PUC? I WAS NOT FAMILIAR WITH THEM UNTIL, UH, THEY WERE BROUGHT TO MY ATTENTION BY BUYER.

AND IF YOU HAD IT HERE, HAVE YOU HAD A CHANCE TO SEE THAT IN THOSE PARTICULAR FILINGS, THOSE WERE, UH, NON IOU UTILITIES THAT DELETED, UH, DEPRECIATED, DEPRECIATION AND AMORTIZATION FROM THEIR RETURN EXPENSE WHEN USING THE CASHFLOW METHOD? UH, I DID SEE THAT FOR BROWNSVILLE.

I DIDN'T, I, I CAN'T CONFIRM FOR LCRA, BUT, BUT FOR BROWNSVILLE, I DID SEE THAT MR. LLOYD DID IT IN THAT FASHION AND ON THE LCRA ONE ON PAGE TWO LINE SEVEN, I THINK YOU'LL SEE THE SAME THING.

ACTUALLY, I DON'T SEE LCRA RIGHT HERE, BUT I, I UNDERSTAND THAT YOU HAD SOME DOCUMENT THAT HAD L SERIES NAME ON IT.

WE CAN USE BROWNSVILLE.

CAUSE I, I DID SEE THIS ONE.

NO, W WE'RE IN A RUSH, SO LET'S, LET'S NOT TAKE THE TIME TO DO THAT.

IT'S IN THE RECORD.

UM, YOU SAW, HOWEVER, WERE MR. LLOYD MADE AN ALTERNATIVE CALCULATION OF RATE OF RETURN THAT TOOK DEPRECIATION AND AMORTIZATION OUT OF THE RETURN COMPONENT? CORRECT? HE DID THAT FOR AUSTIN ENERGY IN HIS TESTIMONY.

I CORRECT.

I DID SEE THAT.

I'M NOT ASKING YOU TO AGREE THAT THAT'S APPROPRIATE.

IS THAT WAS HIS CALCULATION CORRECT? IN SO FAR AS IF YOU WERE TO TAKE THOSE EXPENSES OUT OF RETURN, THAT THAT WOULD BE THE RESULTING, UH, RATE OF RETURN 13.8%.

UH, I DON'T KNOW.

I MEAN, I'M NOT SURE THAT THAT'S

[04:50:01]

TRUE.

IF YOU DELETED DEPRECIATION AND AMORTIZATION, INSTEAD OF INCLUDING IT, IT WOULD IMPACT THE REPORTED RATE OF RETURN THOUGH.

WOULDN'T IT? THE, THE FALLOUT RATE OF RETURN THAT WE WERE DESCRIBING EARLIER, IT WOULD HAVE AN IMPACT.

THAT'S TRUE.

AND I BELIEVE THAT THAT NUMBER YOU PRESENTED TO ME IS WHAT I RECALL BEING IN MR. LEWIS' TESTIMONY.

LET'S MOVE ON TO INTERNALLY GENERATED FUNDS FOR CONSTRUCTION.

UH, THAT'S AROUND PAGE 22 AND 23 OF YOUR TESTIMONY.

NOW THAT'S THE ISSUE OF HOW MUCH INTERNAL CAPITAL AS OPPOSED TO DEBT TO BE USED ON CAPITAL CONSTRUCTION PROJECTS, CORRECT.

IT IS THE REPRESENTATIVE OF THE AMOUNT OF CASH FUNDING TOWARDS THE CAPITAL OBLIGATIONS OF THE UTILITIES THAT I'M PART OF.

IS THAT WHAT YOU SAID? THE CAPITAL CONSTRUCTION, UH, EXPENSES OF THE UTILITY, HOW MUCH TO FUND WITH INTERNAL CAPITAL, HOW MUCH TO FUND FROM DEBT THAT'S THAT'S A GOOD DESCRIPTION.

AND THE DISPUTE HERE IS, IS TO HOW MUCH INTERNAL CAPITAL IS APPROPRIATE.

YOU'RE ADVOCATING FOR USING A 50% AS THE NORMAL AMOUNT FOR CAPITAL CONSTRUCTION PROJECTS WHILE MR. LOYA ADVOCATES FOR 35%.

I, I KNOW, I KNOW THAT OUR SUGGESTION WAS TO UTILIZE THE CITY OF BOSTON'S, UH, GUIDANCE FROM CITY COUNCIL OF 50%.

I BELIEVE YOU'RE RIGHT ABOUT MR. LAWYER.

ALTHOUGH I DON'T REMEMBER IT FOR SURE, BUT I'LL TAKE A REPRESENTATION THAT HE SUGGESTED 35%.

AND YOU CITED AT LEAST TWO THINGS.

ONE WAS THE, UH, AUSTIN ENERGY, FINANCIAL POLICY SIX.

DO YOU HAVE THAT HANDY? I, I REMEMBER IT, BUT I, DON'T NOT SURE THAT I HAVE IT UP HERE.

IT'S SHOULD BE.

AND IF IT'S NOT IT'S APPENDIX B TO THE RIGHT FILING PACKAGE.

I BELIEVE I HAVE IT.

WHICH NUMBER WAS IT AGAIN? WELL, YOU'RE YOU CITED AUSTIN ENERGY.

FINANCIAL POLICY SIX.

CAN YOU READ THAT AND TELL ME HOW THAT WARRANTS USE OF A 50% INTERNAL CAPITAL AS OPPOSED TO 35% OR SOME OTHER NUMBER? NO.

UH, COULD YOU POINT TO ME WHERE MY TESTIMONY THAT I SAID IT WAS SICK? I BELIEVE THAT'S ON PAGE 23 LINES.

12 THROUGH 17.

23 OKAY.

I SEE THAT IN MY TESTIMONY, ALTHOUGH THAT'S NOT WHAT MY TESTIMONY WAS REFERRING TO, BUT THAT MAY NOT BE REAL QUESTIONS.

THE RANGE OF POTENTIALLY ACCEPTABLE FUNDING AND THE FINANCIAL POLICY HAS TO BE BALANCED WITH THE OTHER FINANCIAL POLICIES SUCH AS AUSTIN ENERGY, FINANCIAL POLICY SIX.

HOW DOES AUSTIN ENERGY FINANCIAL POLICY SIX DICTATE USE OF A 50%, UH, INTERNALLY GENERATED CAPITAL NUMBER? SURE.

UM, SO FINANCIAL, MOSTLY SIX DEALS WITH THE, UM, DEBT SERVICE COVERAGE, UM, OBLIGATIONS OF, UH, DIRECTION FROM CITY COUNCIL TO AUSTIN ENERGY.

AND IT'S THE ONE THAT SUGGESTS THAT, THAT A DEBT SERVICE COVERAGE OF A MINIMUM OF TWO TIMES SHALL BE TARGETED BY THE UTILITY.

UM, THE MORE DEBT THE UTILITY HAS, THE MORE LEVERAGED IT IS THE MORE, UM, THE MORE DIFFICULT IT IS TO REMAIN IN COMPLIANCE WITH THIS POLICY.

SO LEVERAGE UTILITY WE'LL WE'LL NECESSARILY HAVE MORE DEBT SERVICE, WHICH WOULD THEN IMPLY THAT THEY NEED MORE COVERAGE.

AND SURE, SORRY.

DID YOU DO A CALCULATION, UH, THE DIFFERENT PROPOSED, UH, PERCENTAGES OF INTERNALLY GENERATED CAPITAL TO DETERMINE WHETHER THAT WOULD HAVE AUSTIN ENERGY CROSSOVER AND BE OUT OF COMPLIANCE WITH FINANCIAL POLICY SIX? I DID NOT MAKE THAT CALL IT THAT CALCULATION.

I'M JUST REFERRING TO IT AS AMONGST THE FACTORS THAT ARE IMPORTANT.

UNDERSTOOD.

ANOTHER ONE THAT YOU MENTIONED IN YOUR TESTIMONY.

IN FACT, THE ONLY OTHER ONE THAT I COULD SELL WAS THE, UM, 2012 BASE RATE REVIEW.

THAT'S ON YOUR LINE.

15 AUSTIN ENERGY WAS INSTRUCTED AT THE CONCLUSION OF THE BASE RATE REVIEW TO PROSPECTIVELY IMPLEMENT A POLICY OF 50% FUNDING FOR IGF FC, THE 2012 BASE RATE ORDINANCES UP THERE.

AND I BELIEVE Y'ALL DID FIND IT AT ONE POINT.

IT'S HERE.

I KNOW

[04:55:01]

IT WAS BECAUSE I SAW IT.

WE SHOULD HAVE CAFES IN BETTER ORDER.

DID YOU PUT THEM ON MAYBE IT'S WELL, IT STARTS WITH THREE, SO THREE, FOUR, I THINK IT WAS ON TOP.

WELL MAYBE SINCE YOU'RE HAVING TROUBLE FINDING IT, CAN I JUST ASK YOU SURE.

IS IT THE PORTION THAT YOU'RE REFERRING TO THAT SAYS THAT AUSTIN ENERGY SHOULD TARGET A 60, 40 DEBT TO EQUITY RATIO AND A ALONG AND TARGET A LONG-TERM POLICY OF MAINTAINING A 50, 50, UM, DEBT TO EQUITY RATIO? IS THAT WHAT YOU'RE REFERRING TO THAT DOES SOUND LIKE THE LANGUAGE THAT I'M REFERRING TO AND, UH, YOU SPONSOR WORKPAPERS C DASH 3.3 0.1, I BELIEVE.

ON HISTORICAL CAPITAL SPENDING.

IS THAT CORRECT? BUT THAT SOUNDS CORRECT.

AND, UH, THAT SHOULD BE UP THERE AS WELL, BUT AGAIN, IT'S IN SUPER ET CETERA, ANY FONT.

I UNDERSTAND THAT IT REFLECTS THE THREE YEARS, 29, 20, 19, 20, 20, 20 21.

OF HISTORICAL CAPITAL SPENDING.

DO YOU REMEMBER WHICH, WHICH EXHIBIT NUMBER IT WAS? IT'S NOT AN EXHIBIT.

IT'S THE RIGHT FILING PACKAGE.

I JUST COPIED IT.

GOT IT.

I PICK UP FOUND IT.

OH, THAT'S OUTSTANDING.

SO THE THREE YEARS FROM 20 19, 20, 20 AND 2021, THE AVERAGE OF CAPITAL SPENDING WAS 67.2% OF DEBT, CORRECT.

OVER THOSE THREE YEARS.

THAT WHAT THAT REFLECTS.

I SEE THAT.

SO AUSTIN ENERGY, AT LEAST FOR THE PAST THREE YEAR AVERAGE HAS NOT MET THE 50 50 REQUIREMENT THAT YOU'VE ADVOCATED FOR.

UH, CORRECT.

OVER THE COURSE OF THESE THREE YEARS, THE LEVEL OF DEBT FUNDING HAS BEEN MORE THAN WHAT THAT 50 50 POLICY WITH, WHICH SUGGESTS.

AND TO THE EXTENT THAT THAT REQUIREMENT FLOWS OUT OF THAT RATE ORDINANCE, UM, THE COUNCIL WOULD HAVE PURVIEW OVER IT, RIGHT.

COUNCIL COULD DECIDE TO ADOPT SOMETHING DIFFERENT.

COULDN'T IT.

IF YOUR QUESTION IS, IS IT IN THE COUNCIL CITY COUNCIL'S PURVIEW TO CHANGE THE POLICY AND DIRECTION OF, UH, TARGETING 50 50? YES.

IT'S MY UNDERSTANDING THAT IS IN THE PURVIEW OF CITY COUNCIL TO DO SO.

ALTHOUGH THERE WOULD OBVIOUSLY BE OTHER RAMIFICATIONS THAT THAT WOULD BE IMPINGING UPON THAT.

AND I ASKED YOU ABOUT THE THREE-YEAR AVERAGES.

HAVE YOU PREVIOUSLY TESTIFIED THAT IT'S APPROPRIATE TO USE A THREE-YEAR AVERAGE IN DETERMINING THE INTERNALLY GENERATED CAPITAL NUMBER, AS OPPOSED TO SAY THE SINGLE TEST YEAR? IT CAN BE, IT JUST DEPENDS.

WELL, I'M ASKING, HAVE YOU TESTIFIED THAT THAT IS THE APPROPRIATE WAY TO DO IT? UH, AND I'M, I AM REPRESENTED TO YOU THAT IT, THAT THAT CAN BE THE APPROPRIATE, UH, METHOD.

AGAIN, IN THE INTEREST OF TIME.

WE'LL MOVE ON.

UM, THANK YOU, MR. RAVEN.

I'LL GO AHEAD AND MOVE ON TO MR. BURNHAM NOW.

MR. READER, JUST REAL QUICK BALLPARK.

CAUSE THIS SEEMS LIKE A DECENT STOPPING BALL.

IF YOU WANT TO STOP HERE, THAT'S FINE.

I'VE PROBABLY GOT ABOUT 10 OR 15 MINUTES, BUT THEN AGAIN, I THOUGHT I HAD 30 FOR ALL.

SO, UH, LET'S TAKE A BREAK.

I'M ACCOUNTABLE FOR MY QUESTIONS.

AND YOU AND XP RESERVE TIME FOR REBUTTAL.

YOU SPECIFICALLY RESERVE TIME FOR REBUTTAL.

SO, BUT LET'S TAKE A 10 MINUTE BREAK AND THEN COME BACK.

THANKS.

WHENEVER YOU'RE READY.

WE'RE BACK ON THE RECORD, MR. BURNHAM.

I HAVE SOME QUESTIONS FOR YOU AND THE DOCUMENTS THAT I THINK MAY BE RELEVANT.

I TOOK HIM OUT OF THE PILE AND PUT THEM CLOSE TO WHERE YOU ARE.

SO IF YOU SCOOTED THEM BACK DOWN, CAN YOU SCOOT THEM BACK YOUR WAY? OKAY.

AFTERNOON, IT SELLS ITS GENERATION INTO THE ERCOT WHOLESALE MARKET.

UM, I WANT TO VISIT WITH YOU ABOUT THIS, UH, 12 CP PRODUCTION DEMAND ALLOCATION ISSUE THAT STARTS ON PAGE 14 OF YOUR TESTIMONY.

UM, ACTUALLY IT STARTS BEFORE THERE, BUT THE PORTION THAT'S RELEVANT, MR. DANIEL STARTS A LITTLE BIT LATER THAN THAT.

BUT ANYWAY, THIS IS KIND OF THAT GENERAL ISSUE.

YOU HAVE A PRETTY ROBUST DISCUSSION OF HOW AUSTIN ENERGY USES ITS GENERATION CAPACITY AS A HEDGE.

AND YOU EXPLAINED THAT IN PRETTY GOOD DETAIL.

AND AS I UNDERSTAND IT, AND YOU EVEN TESTIFIED EARLIER THIS

[05:00:01]

AND THEN IT BUYS BACK AN EQUIVALENT AMOUNT OF GENERATION TO COVER IT'S ITS OWN SYSTEM DEMAND.

IS THAT CORRECT? THAT IS CORRECT.

AND THAT YOU'VE CHARACTERIZED THAT AS A HEDGE, MEANING THAT AUSTIN ENERGY IS NOT EXPOSED TO THE, UH, PRICING SWINGS OR POTENTIAL HIGH PRICES OF THE ERCOT WHOLESALE MARKET, ASSUMING THAT THEIR UNITS ARE AVAILABLE.

UM, AND SO THAT'S, THAT IS CERTAINLY THE CASE YOU INDICATE WHEN A WHOLESALE MARKET PRICES ARE HIGH, THAT IT SELLS ALL ITS GENERATION AND BUYS AN EQUIVALENT AMOUNT BACK, CORRECT? CORRECT.

YOU CAN'T NOT SORRY, OUR, OUR TRANSCRIPTS OR WHAT IS IT? OUR TRANSCRIPT DISH DOESN'T RECORD NODDING OF THE HEAD.

DO YOU AGREE WITH ME THAT IN THE ERCOT ENERGY ONLY WHOLESALE MARKET PRICES ARE GENERALLY HIGHER DURING TIMES OF SCARCITY AND HIGH DEMAND? YES.

AND THAT, THAT IS, UH, KIND OF THE INTENT OR THE OVERALL DESIGN IN THE ERCOT WHOLESALE MARKET IS THAT AS A SCARCITY CONDITIONS, DEVELOP PRICES ARE EXPECTED TO GO HIGHER AND THAT INCENSE MORE GENERATION TO COME INTO THE MARKET.

UH, BUT THEN YOU INDICATE THAT IN TIMES OF LOW PRICES, UM, THAT AUSTIN ENERGY WOULDN'T NECESSARILY SELL ALL OF ITS GENERATION INTO THE MARKET.

IT MIGHT SELL LESS THAN THAT AND BUY SOME, UH, BUY THAT INCREMENT FROM THE WHOLESALE MARKET, TO THE EXTENT THAT THAT IS MORE CHEAPLY PRICED THAN ITS OWN EMBEDDED GENERATION COST.

AND SO WE COULD EXPECT TO SEE THAT DURING TIMES OF, OF, OF LOWER DEMAND AND THAT'S USUALLY SPRING AND FALL.

GENERALLY SPEAKING.

BUT THE KEY AND YOU ESTABLISHED THIS VERY CLEARLY IN YOUR TESTIMONY IN MANY PLACES, THE KEY TO THIS STRATEGY IS THAT AUSTIN ENERGY HAS TO HAVE ENOUGH GENERATION CAPACITY TO MEET ITS SYSTEM PEAK.

AND THAT'S ALL THROUGH THE YEAR.

AND AGAIN, BECAUSE IF IT, IF IT DOES NOT HAVE ENOUGH GENERATION CAPACITY, IT'S EXPOSED TO MARKET PRICING RISK, THAT IS CORRECT.

WOULD YOU AGREE WITH ME THAT IN THE, UM, IN THE ERCOT SYSTEM, AT LEAST THE SYSTEM PEAK IS GENERALLY BETWEEN JUNE AND SEPTEMBER.

AND THE SAME IS TRUE OF AUSTIN ENERGY'S OWN SYSTEM, GENERALLY SPEAKING.

AND, UH, DO YOU HAVE, I HOPE YOU DO HAVE WHAT'S MARKED AS NXP EXHIBIT 16.

WHICH IS THE RESPONSE TO NXP RFI ONE DASH THREE.

ARE YOU FAMILIAR WITH THAT RESPONSE? I DID NOT CREATE THIS RESPONSE.

SO, UM, ARE YOU FAMILIAR WITH THE, UM, VALUES OF AUSTIN ENERGY SYSTEM PEAK DEMANDS? UH, OVER THE PAST FEW YEARS, I AM NOT FAMILIAR WITH NOT TREMENDOUSLY FAMILIAR WITH THEIR PEAK DEMANDS OVER THE LAST YEAR.

IS THAT SOMETHING THAT YOU'VE READ, NOT THIS PARTICULAR EXHIBIT, BUT IS THAT INFORMATION SOMETHING THAT YOU REVIEWED IN PREPARING YOUR TESTIMONY OR YOUR RECOMMENDATIONS FOR THIS CASE? I LOOKED AT THE BED.

SOME OF THE HISTORIC DISPATCH OF AUSTIN ENERGY'S RESOURCES.

SUBJECT TO CHECK.

WOULD YOU AGREE WITH ME THAT DURING THE PAST FIVE YEARS, THE AUSTIN ENERGY SYSTEM HAS HAD PEAKS THAT OCCUR BETWEEN JUNE AND SEPTEMBER SUBJECT TO CHECK.

UM, AND THAT'S, THOSE ARE THE, THE QUOTE UNQUOTE FOR CP MONTHS, AT LEAST IN THE ERCOT REGION, CORRECT? YES.

AS I UNDERSTAND THE POINT OF YOUR, YOUR REBUTTAL THAT 12 CP OR ALLOCATING THIS PRODUCTION COSTS, UM, AT THE AVERAGE OF THE PEAKS DURING ALL 12 MONTHS IS BECAUSE THAT IS A WAY TO RECOGNIZE THAT THE AUSTIN ENERGY GENERATION CAPACITY HAS VALUE ALL THROUGHOUT THE YEAR, NOT JUST IN THE SUMMER MONTHS.

AND 12 CP IN YOUR OPINION, BETTER RECOGNIZES THAT VALUE.

FOR, FOR PAYING COSTS ASSOCIATED WITH KEEPING THAT CAPACITY, UM, OPERATIONAL, EVEN WHEN IT'S NOT REALLY BEING USED FOR THE MOST PART AVAILABLE YES.

NOW, UH, DURING THE, THE NON-SUMMER MONTHS, THE NON FOR CP MONTHS, AUSTIN ENERGY STILL HAS TO MAINTAIN ITS ENTIRE GENERATION CAPACITY.

RIGHT? THAT IS CORRECT.

AND IN FACT, I THINK YOU MAY HAVE EVEN MENTIONED IN YOUR TESTIMONY THAT AUSTIN ENERGY CUSTOMERS ARE STILL RESPONSIBLE

[05:05:01]

AND OPERATIONAL.

IN OTHER WORDS, IT'S NOT LIKE THEY MOTHBALL HALF THEIR PLANTS DURING MARCH AND LIKEWISE IN ITS CAPITAL PLANS, AUSTIN ENERGY HAS TO PLAN TO HAVE ENOUGH GENERATION RESOURCES TO COVER AGAIN, SYSTEM PEAKS.

AND THAT'S HOW IT DESIGNS AND BUILDS IT SYSTEM.

CORRECT? CORRECT.

SO IS YOUR RECOMMENDATION THAT THIS VALUE, UM, THROUGHOUT THE YEAR, THAT THAT SHOULD BE THE PRIMARY DETERMINANT OF, OF THE COST ALLOCATION AS OPPOSED TO COST CAUSATION? OKAY.

I WOULD CHARACTERIZE THAT MY, MY RECOMMENDATION IS THAT THE, THAT IS BOTH THE, THE COSTS AND THE BENEFITS, UM, SHOULD BE INCORPORATED INTO THE DEMAND COST ALLOCATION METHODOLOGY.

AND THAT IF I MAY, UM, OCCURS THROUGHOUT THE YEAR, ALL RIGHT.

AUSTIN ENERGY AND CURVES THE COST TO BUILD THAT SYSTEM IN ORDER TO MAKE SURE THAT DURING THOSE FOUR CP MONTHS IT HAS ENOUGH GENERATION CAPACITY.

I MEAN, TO BE AN EFFECTIVE HEDGE, I WOULD SAY THAT, YES, IT NEEDS TO HAVE AN INSTALLED CAPACITY TO MEET THE SYSTEM PEAK, THE W THE ONE CP.

SO THE COSTS THAT IT INCURS TO, TO DO THAT ARE DRIVEN BY IT'S NEED TO HAVE THAT AMOUNT OF CAPACITY.

I WOULD AGREE WITH THAT.

UH, YOUR, YOUR FURTHER ASSERTION THOUGH, IS THAT THE BENEFITS THAT RESULT THROUGHOUT THE YEAR, THOSE SHOULD BE CAPTURED AND REFLECTED IN THE, UH, COST ALLOCATION? THAT IS CORRECT.

YOU MENTIONED THE 2016 AUSTIN, UH, RATE ORDINANCE.

NOW THAT'S SOMETHING I'VE PUT AT YOUR TABLE.

AND IS THAT SOMETHING THAT YOU HAVE REVIEWED IN ANY KIND OF, UM, ANY KIND OF DETAIL OR WOULD YOU BE ABLE TO ANSWER QUESTIONS TO WHERE THAT IS? WELL, AGAIN, IT WAS IN THE NEXT ONE.

I TRIED TO PUT THEM IN ORDER TO THANK YOU VERY MUCH, APPRECIATE THAT Y'ALL HAVE NOT BEEN DOING GOOD AT KEEPING THINGS.

IT'S NXP EXHIBIT 15, 15.

SO YOU MENTIONED THAT THAT IS, UM, WELL, LET ME NOT PARAPHRASE YOU, YOU MENTIONED ON PAGE 15 LINE ONE THROUGH 19, YOU TALKED ABOUT KIND OF THE DEVELOPMENT OF, OF THE PRODUCTION COST ALLOCATOR FROM, FOR CP AND THEN ON TO 12 CP, AND THEN KIND OF CONCLUDE ON, UH, PAGE, UH, LINE 17 ON THAT AFTER THE 2016 CASE AUSTIN ENERGY CHANGES, DEMAND, COST ALLOCATION, RIGHT.

THEY CHANGED THEIR DEMAND, COST ALLOCATION FOR, WELL, YEAH.

AT THE, WITH THE 2016 CASE.

I'M JUST TRYING TO REFER TO THAT TEST.

YES, YES.

IF I GARBLED IT, IT'S, WHAT'S WRITTEN DOWN THAT THE FAIR SHOULD CONTROL.

UH, BACK TO THE QUESTION, I ASKED US A COUPLE OF SECONDS AGO, WHICH IS, DID YOU REVIEW THE 2016 RATE ORDINANCE? I DID NOT SPECIFICALLY REWARD THE REVIEW OF THE 2016 RATE ORDINANCE.

YOU ALSO REFERENCED THE 2012 COST OF SERVICE STUDY.

AND THEN, UM, DID YOU REVIEW THE 2012 RATE ORDINANCE? I DID NOT REVIEW THE 2012 RADAR ORDINANCE.

ARE YOU FAMILIAR THAT THE 2012 RATE ORDINANCE, UM, REQUIRES USE OF THE A AND E FOR CP PRODUCTION DEMAND ALLOCATION METHOD? I UNDERSTAND THAT THAT IS THE CASE.

DO YOU, UH, IF YOU HAVEN'T REVIEWED, IF YOU HAVE ANY OPINION OR UNDERSTANDING AS TO WHETHER THE 2012 RATE ORDINANCE IS STILL IN EFFECT, I DO NOT HAVE AN OPINION ON THAT.

SO LIKEWISE, YOU DON'T KNOW WHETHER THE 2016 RATE ORDINANCE WOULD HAVE REPEALED THAT PROVISION OF THE 2012 ORDINANCE.

I DO NOT HAVE AN OPINION ON THAT.

NOW, UM, THE 2012 RATE CASE WAS APPEALED TO THE PUBLIC UTILITY COMMISSION.

DO YOU KNOW MY UNDERSTANDING? YES.

AND, UH, YOU, ONE OF YOUR COLLEAGUES AT NEW GEN STRATEGIES, UH, TESTIFIED IN THE PUC PROCEEDING, IS THAT YOUR UNDERSTANDING? I BELIEVE THAT IS THE CASE.

AND MR. MANSON, ELLIE, UM, ARE YOU FAMILIAR WITH HIS TESTIMONY TO THE PUC? I HAVE NOT READ HIS TESTIMONY TO THE PUC.

MR. MANSON, ELLIE, I KNOW OF MR. MANSON, LES, WHO IS MR. MANSON HOME.

MR. MANSON, ELLIE IS A COLLEAGUE OF MINE AT NEW GEN AND NEW GIN AS IT IS HERE WAS THE CONSULTANT TO AUSTIN ENERGY IN THE 2012 RATE CASE, CORRECT? THAT IS CORRECT.

[05:10:01]

SO IF I WERE TO ASK YOU QUESTIONS ABOUT IT, EVEN IF YOU HAD IT UP THERE TO REVIEW AS YOU DO, UM, WOULD YOU BE ABLE TO SPEAK TO THAT OR IS THAT SOMETHING THAT YOU'RE NOT ABLE TO SPEAK? I'M NOT ABLE TO SPEAK TO THAT YET.

I'VE ASKED MR. MANSON, ELLIE.

WHO'S NOT HERE MR. MANSON L BUT NEW JEN IS HERE AND YOU'RE GOING TO GEN DIANE.

UH, SO YOU'RE JUST NOT ABLE TO GIVE US ANY, UM, UH, INFORMATION ON THAT.

UH, IF I WERE TO REPRESENT TO YOU THOUGH, THAT MR. MANSON ELLIE TESTIFIED TO THE PUC THAT THE USE OF THE A AND E FOR CP METHOD WAS APPROPRIATE, EVEN IN THE ERCOT NODAL MARKET, WOULD YOU DISPUTE THAT? THAT WAS HIS TESTIMONY.

IF THAT'S WHAT HIS TESTIMONY SAYS, I HAVEN'T READ IT.

IS IT YOUR VIEW THAT THE USE OF, AND FOR CP IS INAPPROPRIATE IN THE ERCOT NODAL MARKET? MY VIEW IS THAT THE USE OF THE, UH, ANNIE FOR CP IS NOT UNREASONABLE AS IT IS USED IN THE ERCOT NODAL MARKET.

IT'S THAT THE, UH, 12 CP IS A BETTER, UH, DEMAND, COST ALLOCATOR, AND IS IN ALIGNMENT WITH AUSTIN ENERGY, HOW AUSTIN ENERGY VIEWS, THEIR RESOURCES IN THAT MARKET.

YOU TESTIFIED ON PAGE 15, LINE 15, UH, ON, THROUGH TO THE NEXT PAGE ON LINE 12 AND SUMMARIZING THAT IT WOULD BE, UH, WRONG TO CHANGE BACK WRONG, TO CHANGE BACK TO FOUR CP, IT WOULD CREATE, UM, CONFUSING PRICE SIGNALS TO CUSTOMERS, LIMIT THE ABILITY OF CUSTOMERS TO MAKE OPTIONAL INVESTMENTS IN ELECTRICITY, USAGE DECISIONS.

IS IT YOUR EXPERIENCE THAT CUSTOMERS MAKE OPTIMAL INVESTMENTS AND ELECTRICITY USAGE DECISIONS BASED ON WHAT PRODUCTION DEMAND ALLOCATOR THE MUNICIPAL UTILITY USES? IT'S MY OPINION THAT THAT CUSTOMERS MAKE OPTIMAL INVESTMENT DECISIONS BASED ON WHAT THEIR BILLS ARE AND TO THE EXTENT THAT THEIR BILLS AND THE COMPONENTS OF THOSE BILLS, THE RATES BE, THEY DEMAND RATES, ENERGY RATES, OR, OR WHAT HAVE YOU, UM, ARE REFLECTIVE OF THE COST OF SERVICE.

THEN THERE IS AN INHERENT PRICE SIGNAL THAT COULD BE A REASONABLE AND ACCEPTABLE USING THE AME FOR CP METHOD.

BASED UPON THE DESIGN OF THE RATES.

I BELIEVE I ALREADY SPOKE TO THE REASONABLENESS OF THE FOUR AND FOUR CP CHANGING COST ALLOCATION METHODS SENDS A CONFUSING PRICE SIGNAL.

WOULDN'T THAT HAVE BEEN TRUE WHEN AUSTIN ENERGY DECIDED TO MOVE FROM 84 CP TO 12 CP IT'S POSSIBLE.

UM, CAUSE YOU, YOU STAYED AT THIS IN KIND OF A CATEGORICAL WAY.

IT WOULD SEEM LIKE BASED UPON THIS, ANYTIME YOU CHANGE FROM ONE METHODOLOGY TO ANOTHER, THAT'S THE RISK THAT'S IN THERE, THERE IS A RISK.

LET'S MOVE ON TO A DIFFERENT SUBJECT NOW, WHICH IS THE, UM, ALLOCATION OF DISTRIBUTION PLANT THE 12 NCP VERSUS THE ONE NCP, UM, DISCUSSION.

AND THAT'S A LITTLE FURTHER AHEAD IN YOUR TESTIMONY ON PAGE 21, I'M THERE.

WELL, I GUESS IT STARTS BEFORE PAGE 21, BUT THE PORTION I'M GOING TO ASK YOU ABOUT IS THERE YOUR TESTIMONY, UM, INDICATES THAT 12 NCP IS MORE EQUITABLE THAN ONE NCP, AND YOU TALK ABOUT HOW IT, IT RECOGNIZES THAT DISTRIBUTION CAPACITY PROVIDES VALUE TO CUSTOMERS THROUGH THE YEAR.

IS THAT KIND OF THE SAME CONSIDERATION WE WERE TALKING ABOUT EARLIER WITH THE, THE GENERATION PLANT THAT IT SERVES TO TWO, IT SERVES CUSTOMERS ALL THROUGH THE YEAR.

AND SO THAT, THAT VALUE SHOULD BE SOMETHING THAT DETERMINES THE COST ALLOCATION.

UM, NOT EXACTLY.

I WOULD SAY THAT IT'S MORE ABOUT THE DIVERSITY OF THE LOAD AND THE IDEA THAT THERE IS VARIABILITY WITHIN THE NCP FROM MONTH TO MONTH.

AND SO YOU'RE TRYING TO CAPTURE THAT VARIABILITY TO ASSIGN COSTS.

THE COST OF THE SYSTEM IS OBVIOUSLY DRIVEN BY THE, THE PEAK, RIGHT.

BUT AS FAR AS THE, THE VARIABILITY EVEN, UM, IS THAT A COST DRIVER OR IS THAT A NON-COST, UH, CONSIDERATION THE DESIGN OF THE, OF THE SYSTEM THAT

[05:15:01]

BUT THE FACT THAT THERE ARE SUBCLASSES OF CUSTOMERS WITHIN EACH CLASS THAT MAY USE THE SYSTEM DIFFERENTLY, THAT'S WHAT THE 12 CP IS TRYING TO CAPTURE.

SO THAT'S THE DIVERSITY OF WHICH I SPOKE EARLIER.

BUT GETTING BACK TO THE COST, IF YOU, IF AUSTIN ENERGY WERE TO HAVE DESIGNED THAT SYSTEM TO SERVE THE 12 NCP LEVEL, UM, THEN THAT MEANS BY DEFINITION THAT IT WILL NOT SERVE AT THE SYSTEM PEAK, CORRECT? TH THE, THE DESIGN OF THE SYSTEM NEEDS TO BE THAT THE SYSTEM NEEDS TO BE DESIGNED, I SHOULD SAY, TO MEET THE ONE NCP THAT IS CORRECT.

AND AUSTIN ENERGY, THE COST IT INCURS IS TO BUILD A DISTRIBUTION NETWORK THAT SERVES AT THAT PEAK, RIGHT? THE, THE ONE NCP REPRESENTS THE, THE, THE IT'S REALLY A PROXY FOR SORT OF THE REGIONAL AND LOCAL DIVERSITY OF THE SYSTEM.

SO, SO TO THE EXTENT THAT EACH SYSTEM IS UNIQUE, EACH, EACH CIRCUIT IS DESIGNED TO MEET THE, THE DEMANDS OF THAT ARE PLACED ON THAT CIRCUIT AND THE PEAK DEMANDS.

YOU'RE CORRECT ABOUT THAT.

BUT THE, THE NCP METHODOLOGY RIGHT.

IS REALLY FOR THE CLASS.

SO, UM, SO WHAT WE'RE, WE'RE TRYING TO DO WITH THE N WITH THE 12 NCP IS CAPTURE SOME OF THE DIVERSITY IN THAT CLASS RELATIVE TO ASSIGNING THAT COST.

UM, NOW PAGE 22, YOU INDICATE THAT BRYAN, TEXAS UTILITIES AND GREENVILLE ELECTRIC UTILITIES UTILIZE THE 12 NCP METHOD, UM, NEW GEN IS THE CONSULTANT FOR THOSE UTILITIES, CORRECT? THAT IS CORRECT.

SO THIS IS SORT OF A NEW GEN ACROSS THE BOARD RECOMMENDATION.

BOTH OF THOSE UTILITIES HAVE INDEPENDENT, UH, CITY COUNCILS THAT APPROVE THE RATES AND REVIEW THE RATES, AS WELL AS STAFF, WE MAKE RECOMMENDATIONS IS 12 NCP, A NEW GEN KIND OF, I WOULD NOT SAY IT'S A NEW GEN KIND OF ANYTHING.

I MEAN, IT'S A STANDARD NEW GEN RECOMMENDATION.

I WOULD NOT SAY THAT THAT IS A STANDARD NEW GEN.

HAVE THERE BEEN INSTANCES WHERE NEW GEN HAS RECOMMENDED USING A ONE NCP METHOD FOR ALLOCATION OF DISTRIBUTION PLANT? NOT THAT I'M AWARE OF IT.

HAD THERE BEEN, UH, RECOMMENDATIONS TO YOU, SOME OTHER KINDS OF METHODOLOGY THAN 12 NCP THAT NEW GEN HAS MADE TO MUNICIPAL UTILITIES THERE, THERE HAVE BEEN OTHER OTHER METHODOLOGIES.

UM, AND WHAT ARE THOSE? SO LOOKING AT SOME OF MAC'S DEMANDS, I MEAN, EVEN TO THE EXTENT THAT WE'RE DOING THAT HERE RELATIVE TO THE DIFFERENT PARTS OF THE DISTRIBUTION SYSTEM.

SO IF YOU ASKED TO, YOU KNOW, IS IT THE, UH, 12 NCP ACROSS THE BOARD? YOU MAY LOOK AT DIFFERENT ASPECTS OF THE SYSTEM DIFFERENTLY ON THE QUESTION OF HAVING A SUBSTATION SERVICE RATE CLASS, WHICH I THINK YOU ADDRESS ON PAGE 25 OF YOUR TESTIMONY THAT THE SUBSTATION RATE CLASS OR SUBSTATION SERVICE, IF YOU WILL.

UM, DID MR. DANIEL IN YOUR OPINION, RECOMMEND CREATING A SUBSTATION SERVICE RIGHT CLASS, OR JUST RECOVERING THE, UH, DISTRIBUTION, THE SHORT AMOUNT OF DISTRIBUTION THROUGH A FACILITIES CHARGE? I BELIEVE MR. DANIEL WAS SPEAKING TO THEIR FACILITY CHART.

I BELIEVE IT WAS MR. POLLOCK THAT WAS REFERRING TO A RIGHT CLASS.

UH, ARE YOU FAMILIAR WITH HOW MY CLIENT NXP IS SERVED ON THE AUSTIN ENERGY SYSTEM? UM, UM, YES, I BELIEVE SO.

NOT MAYBE, MAYBE NOT SPECIFICALLY HOW YOUR CLIENT, BUT THESE THREE CUSTOMERS THAT WE TALK ABOUT, THE THREE PRIMARY CUSTOMERS HERE.

AND IN FACT, I THINK THERE'S AN RFI RESPONSE DEALING WITH THAT, BUT UNFORTUNATELY I DON'T HAVE THAT.

THERE'S THREE CUSTOMERS.

AND DOES YOUR UNDERSTANDING THAT IN THOSE THREE INSTANCES, THEY ARE SERVED AT A DELIVERY POINT THAT IS OUTSIDE OF THE SUBSTATION, BUT JUST A VERY SHORT DISTANCE OUTSIDE THE SUBSTATION.

MY UNDERSTANDING IS THAT THEY ARE SERVED OUTSIDE THE SUBSTATION, BUT THAT, THAT DISTANCE VARIES IN THE CASE OF NXP.

IF I WERE TO REPRESENT THAT IN ONE INSTANCE, IT'S A HUNDRED TO 200 FEET AND THE OTHER IT'S 1200 FEET.

DOES THAT SOUND LIKE SOMETHING YOU'RE FAMILIAR WITH? I DON'T KNOW THOSE NUMBERS.

BE ON A RATE CLASS, BUT INSTEAD OF IMPOSING THE ALLOCATED, UM, THE CUSTOMER CLASS ALLOCATED SHARE FOR THIS COST TO INSTEAD APPLY A FACILITIES CHARGE IN LIEU OF THAT IMPOSSIBLE? NO, I MEAN, ANYTHING'S POSSIBLE, SO IT'D BE WORKABLE IN OTHER WORDS.

WOULD IT BE ADMINISTRATIVELY IMPOSSIBLE FOR AUSTIN ENERGY TO IMPLEMENT MR. DANIEL'S RECOMMENDATION TO HAVE THEM

[05:20:01]

WELL, NOT ANYTHING IS POSSIBLE, RIGHT? LIKE ENDING HEARING.

I THINK I'LL STAND DOWN.

THANK YOU VERY MUCH.

THANK YOU, MR. READER.

UM, MR. HALLMARK, UH, YES, YOUR HONOR.

UH, MR. BURNHAM, I HAVE JUST A FEW QUESTIONS FOR YOU, AND I THINK THAT MIGHT ACTUALLY BE SOMEWHAT ACCURATE.

SO LET'S SEE WHAT WE CAN DO HERE.

UM, COULD YOU TURN TO PAGE 26 OF YOUR TESTIMONY? I'M GOING TO STAY ON THE SAME TOPIC THAT MR. REEDER WAS JUST ASKING YOU ABOUT, UM, THERE.

AND THERE'S A Q AND A HERE WHERE YOU DISCUSS MR. DANIEL AND MR. POLLOCK'S POSITION THAT, THAT HIGH LOAD, CERTAIN CUSTOMERS ARE DIRECTLY CONNECTED TO AN AUSTIN ENERGY DISTRIBUTION SUBSTATION THROUGH DEDICATED FEEDERS.

AND YOU TESTIFIED THAT THAT'S INACCURATE, RIGHT.

THAT THEY ARE NOT DIRECTLY CONNECTED.

I THINK THAT WAS WHAT THAT, OKAY.

I, YEAH.

AND I JUST WANTED TO CLARIFY, CAUSE I KNOW, I KNOW WE DISAGREE ABOUT WHAT THIS SITUATION SHOULD MEAN, BUT I, I WANT TO CLARIFY THAT WE AT LEAST HAVE, I THINK A COMMON UNDERSTANDING OF THE FACTS, YOUR CONCERN IS THAT THEY DON'T OWN THE FEEDERS AND THEREFORE IT'S NOT A DIRECT CONNECTION.

IS THAT A FAIR CHARACTERIZATION? THE DIRECT CONNECTION WAS MORE ABOUT THE LOCATION INSIDE THE SUBSTATION.

WELL IT'S D IT SAYS DIRECTLY CONNECTED THROUGH FEEDERS.

SO I GUESS, SO THEY ARE DIRECTLY CONNECTED THROUGH FEEDERS, RIGHT? IS THAT FAIR? THE, THE, THE POINT OF INTERCONNECTION IS TO A FEEDER THAT COMES OUT OF THE SUBSTATION AT A CERTAIN LENGTH.

WELL, LET'S TURN TO TIC EXHIBIT 23.

CAN SOMEBODY FIND THAT FOR ME? SORRY.

THERE'S THERE SHOULD BE A BINDER UP THERE.

AND DO YOU, CAN YOU IDENTIFY THAT AS A NXP OR NX YOUR RESPONSE TO NXP ONE DASH FIVE ARE? YES.

UH, YOUR HONOR, THIS IS THE EXHIBIT THAT I MENTIONED EARLIER THAT I ACCIDENTALLY PUT ONE DASH FIVE IN EARLIER AND NOT ONE DASH FIVE R, WHICH IS WHAT I INTENDED.

SO FOR THAT REASON, I'LL JUST TO MAKE SURE THE RECORD IS CLEAR.

I'D LIKE TO OFFER TIC EXHIBIT 23, WHICH IS AUSTIN ENERGY'S RESPONSE TO NXP ONE DASH FIVE ARE.

AND LET ME JUST ASK THIS, UM, WE HAVE ONE DASH FIVE ARE IN OUR BINDERS PACK HERE.

THANK YOU BOTH.

ANY OBJECTION? IT'S ADMITTED.

UH, MR. BURNHAM, THIS QUESTION ASKS YOU, UH, TO PROVIDE THE NUMBER OF FEET OF PRIMARY LINES TO THE CUSTOMER'S POINT OF DELIVERY FROM THE PRIMARY SUBSTATION SERVING THE CUSTOMER.

BETWEEN TWO, THREE AND FOUR, BUT I'M NOT ENTIRELY SURE WHAT THAT'S A MEASURE OF.

COULD YOU REPEAT THAT? YOU'RE ASKING, DOES THIS YOU'RE TALKING ABOUT THE LINK FROM THE I'M SORRY.

YEAH, SURE.

LET ME, LET, LET ME START OVER.

I'M JUST ASKING WHAT, WHAT THIS DISCOVERY REQUEST ASKED WAS TO PROVIDE THE NUMBER OF FEET OF A PRIMARY LINES TO THE CUSTOMER'S POINT OF DELIVERY FROM THE PRIMARY SUBSTATION, SERVING THE CUSTOMER AND FROM THE BACKUP SUBSTATION, SERVING THE CUSTOMER AND FOR EACH FEEDER INDICATE IF OTHER CUSTOMERS ARE SERVED BY THE FEEDER, RIGHT? YES.

THAT'S GREAT.

AND SO WHAT YOU'VE PROVIDED US HERE, ARE YOU BROKEN IT DOWN BY THE THREE CUSTOMERS IN THE PRIMARY ABOVE 20 HIGH LOAD FACTOR CLASS, RIGHT? CORRECT.

AND YOU'VE IDENTIFIED THE FEEDERS AND THE FEET, UH, FOR EACH ONE, RIGHT? THAT'S CORRECT.

WHILE I'VE GOT YOU, WHAT, IN THE SECOND COLUMN, WHAT DOES MCM STAND FOR? IF ANYBODY ELSE UP THERE HAPPENS TO KNOW THAT'S FINE.

I BELIEVE THAT'S A, THAT'S A CHARACTERIZATION OF THE, WELL, IT SAYS FEEDER CABLE TYPE.

SO IT, IT, IT, I DON'T KNOW IF THAT'S A, UH, A SIZE OF, OF CONDUIT.

UM, IT LOOKS LIKE THAT THERE'S VARIOUS

[05:25:01]

IT IS JUST A CLARIFY.

DOES ANYBODY ELSE HAPPEN TO KNOW UP THERE WHEN SPARKY'S OUT THERE? OKAY.

SO ANYWAYS, YOU'VE IDENTIFIED THESE BY FEET NOTE ONE BELOW YOU SAY EACH FEEDER DOES NOT SERVE OTHER CUSTOMERS, RIGHT? THAT'S CORRECT.

AND I JUST WANTED TO ASK YOU IF WE, THIS WOULD NOT BE TRUE.

FOR EXAMPLE, IF WE WERE LOOKING AT A LARGE DOWNTOWN OFFICE BUILDING THAT THERE WERE FEEDERS THAT SERVE NO OTHER OFFICE BUILDING THAT WE COULD IDENTIFY LIKE THIS, RIGHT.

IF THERE WAS A LARGE DOWNTOWN OFFICE BUILDING THAT WAS BEING SERVED ON A DEDICATED FEEDER, YOU'RE ASKING, I'M ASKING, WOULD AN OFFICE BUILDING LARGE OFFICE BUILDING DOWNTOWN BE SERVED ON A DEDICATED FEEDER FROM A SUBSTATION LIKE THIS MOST LIKELY NOT, BUT YOU'D HAVE TO ASK A LOGICAL ENGINEER.

BUT TYPICALLY A LARGE OFFICE BUILDING DOWNTOWN WOULD BE SERVED ON THE LOOPED FAIR ENOUGH DISTRIBUTION NETWORK.

UM, SO, UH, MR. BURNHAM, WOULD YOU AGREE WITH ME THAT SINCE WE'VE IDENTIFIED THESE FEEDERS, THEY, THEY COULD BE SUSCEPTIBLE TO SOME SORT OF FACILITIES TYPE OF CHARGE LIKE, UH, MR. REEDER WAS ASKING YOU EARLIER.

I THINK I, TO THAT IS IT'S POSSIBLE.

AND, AND YEAH.

AND IN FACT, IT'S, WE'VE ALREADY IDENTIFIED THEM HERE.

WE'VE IDENTIFIED THE FEET, THE FEEDERS, THE INDIVIDUAL FEEDERS AND THE INDIVIDUAL FEEDER LINKS.

WELL, UH, TRY TO BE PRETTY ACCURATE AND PASS THE WITNESS.

UM, THANK YOU, MR. HALLMARK.

UM, BUT MR. REEDER JUST LEFT, SO HE DIDN'T CATCH HER YOUR, UM, COMMENT.

UM, ALL RIGHT.

I SEE A MR. COPPIN.

THANK YOU FOR HANDLING.

AND I EXPECT TO BE IN THIS POSITION OF STARTING MY FIRST QUESTION AT FIVE, BUT I WILL TRY TO BE AS QUICK AS I CAN.

AND, UM, I HAD SEVERAL QUESTIONS ON, UH, NON-NUCLEAR DECOMMISSIONING, BUT I I'M, I'M GOING TO TRY TO REALLY SHORTEN THIS.

UH, COULD YOU HELP ME, MR. ROBIN, UH, ABOUT, UH, WHAT IS YOUR RECOMMENDATION FOR THE REVENUE REQUIREMENT, UH, AFTER YEAR AFTER THE CHANGES YOU MADE TO YOUR TESTIMONY? WHAT IS THE, WHAT IS THE NUMBER FOR NON-NUCLEAR DECOMMISSIONING THAT YOU'RE SUPPORTING? UH, I SUPPORT THE USE OF $8 MILLION, UH, AND AS THE COST PER NON-NUCLEAR DECOMMISSIONING IN THE REVEREND REQUIREMENT.

AMONGST THE OTHER OBSERVATIONS.

AND WHAT, WHAT WAS THE CHANGE THAT YOU MADE IN YOUR TESTIMONY THEN? OH, YES.

UM, SO THERE WAS A Q AND A IN MY TESTIMONY, UH, ON THIS ISSUE OF NON-EQUITY DECOMMISSIONING AND, UM, UH, PART OF MY TESTIMONY INDICATED, UH, THAT, UH, WHEN I APPLY, UM, MR. UH, EFRONT THANK YOU, MR. EPHRON'S METHODOLOGY THAT I CAME UP WITH A NUMBER I WAS ASKED BY ICA AND INTERROGATORY, UH, TO PROVIDE MY MATH AND IN DOING SO REALIZED THAT I HAD NOT CORRECTLY DONE THE MATH, THE SAME METHODOLOGY, THE WAY THAT MR. EFREN HAD.

SO I STRUCK THAT PORTION OF MY ANSWER FROM THE RECORD, UH, AS AN ACCURATE, BUT YOU, UM, BUT HAVE YOU ATTEMPTED TO CALCULATE IT THE SAME WAY THAT HE DID? I DIDN'T KNOW.

I JUST REALIZED THAT I HAD NOT CONSISTENTLY APPLIED AS METHODOLOGY, AND SO I JUST STRUCK THAT PORTION, BUT, BUT THE OTHER POINTS I MADE REGARDING THE APPROPRIATE LEVEL OF FUNDING FOR THE NON NUCLEAR DECOMMISSIONING, UM, STILL HOLD.

AND SO MY RECOMMENDATION IS THE SAME, UH, NOTWITHSTANDING THAT CORRECTION.

WELL, COULD WE, CAN WE CUT THROUGH ABOUT A DOZEN QUESTIONS AND, UM, ASSUME THAT IF YOU WERE TO APPLY MR. EPHRON'S METHODOLOGY, UH, BUT CHANGE THE BASIS OF THE DECOMMISSIONING EXPENSE TO THE MIDPOINT DEVELOPED BY MR. EFREN, THAT IT WOULD RESULT IN AN ANNUAL NON-NUCLEAR DECOMMISSIONING AMOUNT OF APPROXIMATELY 3.4 MILLION.

I DON'T KNOW THE ANSWER, BUT EVEN IF IT DID, I STILL WOULD, IT WAS AN EXAMPLE, BUT IT WAS NOT, UM, UM, IMPORTANT AND CRITICAL TO MY DETERMINATION THAT THE APPROPRIATE LEVEL OF FUNDING IS $8 MILLION.

SO EVEN IF THAT WERE TRUE, WHICH I'LL BELIEVE YOU, I WOULDN'T CHANGE MY, OKAY.

MY RECOMMENDATION.

UM, ON PAGE 14 OF YOUR REBUTTAL TESTIMONY, YOU CITE A NUMBER OF FACTORS TO SUGGEST THAT, UM, THE DECOMMISSIONING STUDY THAT, THAT, UH, AUSTIN ENERGY HAS, UM, SUBMITTED IN SUPPORT, UH, MIGHT ACTUALLY UNDERSTATE THE AMOUNT OF NON NUCLEAR DECOMMISSIONING COST.

IS THAT RIGHT? YES, IT COULD.

AND W IS, UH, ONE OF THE MAJOR ONES, IS THAT THE EXPERIENCE THAT HAD BEEN, UM, UH, HAD WITH THE HOLLY POWER PLANT DECOMMISSIONING, IS THAT I THINK THAT'S INSTRUCTIVE

[05:30:01]

YEAH, BUT ISN'T IT TRUE THAT, UM, IN, IN THE STUDY, UH, THAT EXPERIENCE HAS ACTUALLY BEEN INCORPORATED INTO THE COST OF THE FIAT FAYETTE POWER PLAN AND THE SAND HILL ENERGY CENTER.

I DON'T KNOW THAT THAT'S TRUE.

DO YOU HAVE THE STUDY WITH YOU, UM, AND MAYBE UP HERE, UH, DO YOU BELIEVE IT WAS, UM, UH, EXHIBITS IT WASN'T IN THE, THE, THE TWO, 2015 NON NUCLEAR DECOMMISSIONING STUDY? NO, I KNOW WHAT IT LOOKS LIKE.

I JUST DON'T KNOW THAT IT'S UP HERE, TO BE HONEST.

I DON'T THINK WE HAVE IT, BUT IF HE WAS ATTACHED TO MR. EPHRON'S TESTIMONY, IF YOU HAPPEN TO HAVE THAT, I AFRAID I DON'T HAVE THAT'S THAT'S THAT'S, UH, LYNETTE IS OKAY.

I DON'T HAVE IT, BUT I GUESS MAYBE IF THERE'S A QUESTION, I MEAN, I DON'T KNOW THE ANSWER TO YOUR QUESTION, BUT, BUT I DON'T KNOW IF THAT'S IMPORTANT TO YOUR POINT.

WELL, I'M REPRESENTING DO YOU THAT, THAT THE STUDY DID TAKE THAT INTO ACCOUNT AND, UH, IN HIS CALCULATION OF THE OTHER POWER PLANTS THAT ARE STILL IN THE DECOMMISSIONING STUDY, UM, WELL, AND, AND, AND LET ME, MAYBE THIS'LL BE HELPFUL.

UM, YOU KNOW, THE, THE, THE 2015 DECOMMISSIONING STUDY LOOKED AT, UH, YOU KNOW, ALL OF THE NON NUCLEAR GENERATION UNITS OF BOSTON ENERGY THAT THEY OWNED AT THE TIME, WHICH OF COURSE DIDN'T INCLUDE NACADOCIOUS CAUSE AT THE TIME THEY DIDN'T KNOW IN IT.

UM, BUT THE, THE, THE ONE, THE STEAM UNITS AT DECKER WERE THE ONES THAT WERE MOST PROXIMATE TO BEING DECOMMISSIONED.

UM, AND SO A MORE, UH, YOU KNOW, A DEEPER DIVE ON, ON THOSE UNITS WERE CONDUCTED AS PART OF THE, UH, THE DEVELOPMENT OF THE, UH, OF THE OBLIGATION.

THE OTHER UNITS BEING FURTHER AWAY WERE, WERE NOT DONE ON THE SAME LEVEL OF RIGOR.

THEY WERE ESTIMATES BASED UPON SOME OTHER, UM, REASONABLE ESTIMATES OF OTHER EXPERIENCES IN, FOR SIMILAR TYPE FACILITIES IN THE COUNTRY.

UM, AND SO, UH, YOU KNOW, I, I GUESS WHAT I'M SUGGESTING TO YOU IS NOT ALL OF THE UNITS WERE, UH, NOT ALL THE UNITS WERE EVALUATED AS CAREFULLY AS, AS THE PARTICULAR DECKER STEAM UNITS, UH, IN THAT STUDY, YOU HAPPENED TO RECALL WHAT IS, WHAT CONTINGENCY IS IN THE STUDY FOR DECKER THAT I DON'T RECALL, UM, THE 16% SOUND IN THE BALLPARK.

I DON'T, I WOULD, I WOULD BELIEVE THAT THAT WOULD BE, I WOULD CERTAINLY BELIEVE THAT NUMBER IF YOU REPRESENTED IT TO ME.

AND, UH, WOULD, WOULD YOU BELIEVE IF I MAY, IF I TOLD YOU THAT THE STUDY ALSO INCLUDES A 30% CONTINGENCY FOR THE FAYETTE POWER PLANT, IT VERY WELL MAY AND A 30% CONTINGENCY FOR THE SANDHILL ENERGY CENTER IN VERY WELL MAY.

UM, AND, UH, DO YOU USE, DO YOU DISPUTE THE FACT THAT, THAT, UH, AUSTIN ENERGY WILL HAVE RECOVERED AND FUNDED 48 MILLION OF THE DECOMMISSIONING, UM, COSTS AS OF THE, UM, AS OF THE END OF THIS YEAR? YEAH.

I DON'T KNOW WHAT THE NUMBER IS.

UM, BUT, BUT I, I ORDER OF MAGNITUDE THAT SEEMS LIKE IT'S A PLAUSIBLE NUMBER, 8 MILLION MILLION DOLLARS IS THE CURRENT AMOUNT ANNUAL AMOUNT TIMES, SIX YEARS SURE.

IS 48 MILLION.

AND IF IT'S, IF IT'S IN EFFECT FOR, UH, IF THE RATES IN THIS, IN THIS CASE ARE FOR ANOTHER FIVE YEARS, THAT WOULD BE ANOTHER $40 MILLION, RIGHT.

FIVE TIMES 8 MILLION.

I MEAN, THOSE ARE, THAT IS THE MATH, BUT I JUST CAN'T PROMISE YOU THAT, THAT I, I JUST DON'T KNOW FOR SURE THAT THAT'S WHAT THEY'VE COLLECTED.

UM, BUT IF THAT'S IMPORTANT WE COULD DIG INTO IT, BUT I'M NOT SURE THAT'S CRITICAL TO THE, TO THE POINT.

WELL, THE, THE, THE POINT WOULD BE TO TAKE THE, THE, THE, UM, TH THE TOTAL COST TO, YOU KNOW, SUBTRACT THE 48 MILLION THEN.

AND, UH, YEP.

AND YOU'D BE LEFT WITH 32 MILLION.

SO BASICALLY OUTLINING MR. EPHRON'S APPROACH TO THIS.

IF THIS WERE THE ONLY UNITS THAT AUSTIN ENERGY HAD THAT NEEDED DECOMMISSIONING.

AND I, I GUESS I, I SEE WHAT MISREPRESENT DID.

MY CONCLUSION IS FOR THE VARIOUS REASONS OUTLINED IN MY REBUTTAL.

I STILL BELIEVE THAT 8 MILLION IS THE APPROPRIATE NUMBER IN PART, BECAUSE IF IT PROVES TO BE THE CASE, UM, THAT WHEN AUSTIN ENERGY GOES TO DECOMMISSION, UH, THE DECKER STEAM, YOU KNOW, LET'S SAY, AND IT SPENDS, YOU KNOW, LESS THAN WHAT WE, WE ESTIMATE RIGHT NOW, WE THINK IT'S GOING TO THE COST.

YOU KNOW, THOSE LEFTOVER FUNDS CAN THEN BE APPLIED TO DECOMMISSIONING THE NEXT NON-NUCLEAR UNIT THEREAFTER.

UM, SO IT WOULD BE, UM, MORE IMPORTANT TO GET IT, NAIL IT DOWN TO THE, UH, A REAL CLOSE NUMBER

[05:35:01]

BUT AS WE'VE DISCUSSED THERE, THERE'S, THERE'S MANY COMING THEREAFTER THAT WE'LL HAVE THAT OBLIGATION.

AND, AND, AND TO BE ABLE TO RECOVER THOSE COSTS FROM CUSTOMERS THAT ARE GETTING THE BENEFIT OF THAT GENERATION SEEMS TO BETTER LINE UP, UH, THE RECOVERY OF THOSE COSTS FROM THOSE CUSTOMERS.

WOULDN'T IT BE MORE REASONABLE TO GET IT AS CLOSE AS YOU CAN TO THE RIGHT NUMBER, UH, RATHER THAN JUST, UM, UH, YOU KNOW, ASSUME THAT IT'S GOING TO BE HIGHER THAN THAT? OH, WELL, I, I WOULD REPRESENT TO YOU THAT W W WHAT, WHAT WE THINK IS WE BELIEVE THAT THE $8 MILLION NUMBER IS OUR BEST ESTIMATE OF WHAT THIS OBLIGATION SHOULD BE FUNDED AT.

AND, UH, YOU DON'T HAVE ANY, UM, UM, OKAY.

BUT IS THERE, DO YOU HAVE ANY REASON TO BELIEVE THAT THE, THE COSTS IN THE 2015 STUDY ARE LIKELY TO BE HIGHER OR LOWER THAN THE, THAN THE, UH, AMOUNTS IN THAT STUDY? UM, MY GENERAL ASSUMPTION IS THAT THEY PRICES ARE LIKELY TO BE HIGHER FOR, FOR NO OTHER REASON THAN JUST INFLATION, UH, BECAUSE THAT STUDY WAS DONE IN 2015.

AND, UH, GENERALLY SPEAKING A NUMBER OF THE INPOINT INPUT COMPONENTS TO THAT COST HAVE INCREASED IN COST SINCE THAT TIME HAVING SAID THAT I HAVE NOT QUANTIFIED THAT AT ALL.

IS IT LIKELY THAT AUSTIN ENERGY WILL TRY TO, UM, DO A NEW DECOMMISSIONING, NON NUCLEAR DECOMMISSIONING STUDY IN THE NEAR FUTURE? YOU COULD, YOU COULD DEFINITELY ASK US ENERGY THAT I CAN'T REPRESENT, UH, UH, WHAT I CAN'T REPRESENT TO YOU, WHAT THEIR INTENTIONS ARE.

I, TO MY KNOWLEDGE, THEY HAVE NOT DONE THAT YET.

THAT'S AND T UNTIL THAT'S DONE, ISN'T THE BEST INFORMATION THAT WE HAVE FOR EVIDENCE IN THIS, IN THIS PROCEEDING AS THE 2015 STUDY.

WELL, AND, AND, AND REMEMBER IN THE 2015 STUDY, THE INDICATED LEVEL OF FUNDING THAT CAME OUT OF THAT STUDY WAS IN EXCESS OF $19 MILLION PER YEAR.

IT WAS MY, MY RECOLLECTION, UH, OFF THE TOP OF MY HEAD.

AND SO AUSTIN ENERGY, YOU KNOW, SETTLED FOR A LESSER AMOUNT.

AND SO WE'RE CONTINUING TO REQUEST THAT LEVEL OF FUNDING TOWARDS THESE OBLIGATIONS BASED UPON THAT, THAT HISTORICAL, UH, ACCEPTANCE OF THAT LEVEL AS SETTLED BY THE PARTIES IN THAT LAST CASE.

WELL, IN THE INTEREST OF TIME, I'M GOING TO MOVE ON, UM, MR. BURNHAM, UH, DO YOU HAVE A COPY OF THE, UM, THE ICA EXHIBITS I PLACED ON THE TABLE THERE? I THINK YOU SEE ICA 13, WHICH IS ANOTHER EXCERPT FROM THE 1992 NEIGHBORHOOD ELECTRIC UTILITY COST ALLOCATION MANUAL.

AND WOULD YOU CONSIDER THIS MANUAL TO BE AN AUTHORITATIVE SOURCE ON THE SUBJECT? IT IS AN AUTHORITATIVE SOURCE FROM 1992.

AND, UM, IF YOU'LL LOOK IN THERE, YOU'LL SEE THAT, UM, WE'VE EXCERPTED, UH, PAGES 38 AND 39.

I SAY THAT.

AND, UM, AND, UH, PARTICULARLY I WAS GOING TO ASK YOU TO REVIEW, UH, THE PARAGRAPHS.

THERE ARE THE ON COST CAUSATION, WHICH CARRIES OVER FROM PAGE 38 TO 39.

AND I WAS GOING TO ASK YOU TO LOOK AT THAT AND, AND, UM, ASK YOU IF THAT IS AN APPROPRIATE DEFINITION OF COST CAUSATION, AS IT IS APPLIED TO GENERATION PLANT.

AND AGAIN, THIS IS ICA 13.

CAN YOU ASK ME THE QUESTION ONE MORE TIME? YES.

UM, IT IS THE, UM, THE STATEMENT ON COST CAUSATION IN THE NAVY ROUTE MANUAL.

IS THAT AN APPROPRIATE DEFINITION OF COST CAUSATION AS APPLIED TO GENERATION PLAN? YES.

I'M GOING TO NOW TURN TO YOUR REBUTTAL TESTIMONY WHERE ONLINE SIX, UH, YOU STATE THAT THE BIP METHOD IS NOT RELEVANT TO THE ERCOT NODAL MARKET.

IS THAT, THAT YOUR TESTIMONY? I SAY THE BIP METHOD, ALLOCATION METHOD IS NOT APPROPRIATE FOR AUSTIN ENERGY.

UM, I BELIEVE, I BELIEVE THAT'S CORRECT, BUT I DON'T SEE THAT EXACT LANGUAGE, BUT THAT THAT'S GENERALLY THE GIST OF IT.

BUT THERE'S A, THERE'S A DIFFERENCE OF OPINION ON THAT.

THE HEARING.

AND, UM, I WAS GONNA, I'M GOING TO TURN YOUR ATTENTION TO ICA EXHIBIT 15, WHICH IS, UM, EXCERPTS FROM AN RW BECK REPORT.

DO YOU SEE THAT? I HAVE IT.

RESPONSE FROM AUSTIN ENERGY.

UH, THIS, UM, FOR YOUR INFORMATION, THIS CAME FROM AN, UH, NXP RFI

[05:40:01]

AND, UM, DO YOU LOOKING AT THE TABLE OF CONTENTS AND THE COVER PAGE THERE? DO YOU, UH, DO YOU RECALL THIS PARTICULAR REPORT? I DO NOT RECALL THIS REPORT.

UM, DO YOU RECALL THAT THERE WAS AN RW BECK REPORT THAT WAS PART OF THE 2012 RATE PROCEEDING? THAT IS MY UNDERSTANDING, YES.

UM, COULD I TURN YOU TO THE NEXT PAGE THERE, WHICH IS, HAS A BATES NUMBER OF PAGE 1 98 OR NATIVE NUMBER? YES.

UM, DO YOU SEE THE TITLE VALIDATION OF THE BIP METHOD AS THE RECOMMENDED APPROACH? I SEE THAT TITLE AND, UM, UNDER THAT HEADING, DOES IT SAY THAT BIP IS RECOMMENDED IN LIEU OF PROBABILITY OF DISPATCH METHOD DUE TO CHANGES IN THE ERCOT MARKET? I SEE THOSE WORDS, YES.

AND IF YOU TURN TO A COUPLE OF PAGES THERE TO BATES NUMBER 200, UM, I WOULD TURN YOUR ATTENTION TO THE FIRST FULL PARAGRAPH, WHICH IS IN THE MIDDLE OF THE PAGE THERE.

AND, UM, UH, LET ME JUST, UH, I'LL JUST READ IT AND HAVE YOU TELL ME IF I'M READING THIS ACCURATELY OF THE THREE METHODS EXAMINED PEAK DEMAND FOR CP AED AND BIP? THE BIP METHOD IS THE MOST SIMILAR TO THE POD METHOD AS THE BIP METHOD CONSIDERS THE TIMING USE AND COST OF DIFFERENT GENERATION RESOURCES AND ALLOCATE SUCH COSTS TO CUSTOMER CLASSES BASED ON EACH CLASS'S ELECTRIC USAGE CHARACTERISTICS.

THIS METHOD REPRESENTS THE VARYING USE AND VALUE OF AUSTIN ENERGY RESOURCES IN A NODAL MARKET.

DID I READ THAT CORRECTLY? I SEE THOSE WORDS, YES.

AND THEN I WOULD TURN YOU TO THE LAST PAGE IN THAT EXHIBIT, WHICH IS AN EXCERPT THAT LOOKS LIKE THIS WITH THE CHART.

I SEE THAT BACKPAGE.

UH, IT'S TITLED A TABLE 13 FROM THE RW BECK REPORT.

UM, UNDER THE COLUMN OF PRELIMINARY RECOMMENDATION, UH, WHAT DOES IT SAY? UM, WITH REGARD TO PRODUCTION COST ALLOCATION, IT SAYS DEMAND ALLOCATION METHOD.

UM, AND THEN AS A BASELOAD, INTERMEDIATE AND BEING, SO I RECOMMENDS THE BIP METHOD AND IT LOOKS LIKE THAT'S THE ULTIMATE THAT WASN'T THE ULTIMATE DECISION IN THAT PROCEEDING THOUGH.

THAT IS MY UNDERSTANDING, BUT IT WAS THE RECOMMENDATION OF RW BECKETT AT ONE POINT IN THAT PROCEEDING THAT APPEARS TO BE THE CASE.

OH, I FORGOT TO DO THESE.

I SKIPPED OVER SOMETHING.

LET ME JUST A SECOND CLOSE THE TOO EARLY.

I'M GOING TO, I'M NOT SURE, I GUESS, UH, MR. MURPHY, THE EXHIBIT 14, WHICH IS THERE'S TWO PAGES, TWO DIFFERENT, UM, RFI RESPONSES FROM AUSTIN ENERGY.

UM, FIRST COULD I, UM, I, IT SAYS, UH, THE FIRST ONE, THERE IS THE RESPONSE TO ICA EIGHT DASH FOUR AS SPONSORED BY MR. MURPHY AND MR. ROBIN ROBIN.

UM, DO YOU AGREE THAT ONLY COSTS WHICH DIRECTLY VARY WITH THE NUMBER OF CUSTOMERS SHOULD BE INCLUDED IN THE CUSTOMER CHARGE? IS THAT A FAIR READING OF THE ANSWER ON THAT FIRST PAGE? AND THIS IS EXHIBIT ICA 14.

ARE YOU ASKING ME IF THAT'S A FAIR READING OF THE REQUEST OR THE RESPONSE, THE RESPONSE? I WOULDN'T SAY SO.

I MEAN, I'M, I MEAN, I'M INCLUDING, I'M SAYING THAT COSTS THAT VARY WITH NUMBER OF CUSTOMERS ARE PROPERLY INCLUDED IN THE, IN THE CUSTOMER COSTS.

I'M NOT USING THE, UH, THE ADVERB DIRECTLY THERE.

UM, BECAUSE I DO THINK THERE, YOU KNOW, THERE'S SOME INDIRECTNESS TO SAY ANGIE EXPENSES, THINGS LIKE THAT, BUT CAREFULLY REMOVE THE WORD DIRECTLY IN YOUR RESPONSE.

[05:45:01]

I CAREFULLY REMOVED IT.

YOU'RE RIGHT.

AND, UH, THIS, THIS RFI REFERENCES, UM, GFT ACCOUNT NINE 20 AND ACCOUNT NINE 30.

IS THAT RIGHT? THE REQUEST? YES, SIR.

AND ALSO A YOU DEFINE WHAT THOSE, WHAT THOSE ACCOUNTS WILL REFER TO.

UM, THE ACCOUNTANT AT 20 IS ANGIE SALARY'S ACCOUNT NINE 30 IS, UH, IS GENERAL EXPENSES OF BOTH OF THOSE WOULD BE UNDER THE, A AND G EXPENSE HEADING PART OF O AND M EXPENSES.

WOULD YOU DESCRIBE THESE AS INDIRECT COSTS? UH, WELL, THEY'RE DIRECTLY INCURRED BY THE UTILITY.

DO YOU MEAN, I THINK YOU HAVE PROBABLY HAVE TO SAY RELATIVE TO SOMETHING ELSE.

WAS IT YOUR POSITION THAT THESE, THE COST IN THESE ACCOUNT VARY WITH THE NUMBER OF CUSTOMERS BECAUSE THE COST OF SERVICE STUDY CLASSIFIES THEM AS CUSTOMER RELATED? NOT EXACTLY.

IT'S, IT'S MORE LIKE, AS I SAY HERE IN THE RESPONSE THAT THERE ARE THE, THAT IT'S APPROPRIATE TO ASSIGN EACH, UH, FUNCTION AND COST CLASSIFICATION IT'S APPROPRIATE SHARE OF COMMON COSTS.

AND THAT IT'S REASONABLE TO SAY THAT THOSE VARY, UH, THAT THE SHARE THAT'S ASSIGNED TO THE CUSTOMER FUNCTION AND THE CUSTOMER CLASSIFICATION VARY WITH THE NUMBER OF CUSTOMERS.

SO TO SAY, SINGLE ONE OUT AND CHERRY PICK IT FOR EXCLUSION FROM THOSE COMMON COSTS IS ISN'T CORRECT THAT THEY ARE CAUSED IN SOME SENSE BY ALL OF THE ACTIVITIES OF THE UTILITY.

SO YOU'RE QUIBBLING WITH THE, WITH, UM, A SHARP DEFINITION BETWEEN DIRECT AND INDIRECT COSTS, RIGHT.

I, I THINK IT'S UNREASONABLE TO EXCLUDE AN APPROPRIATE SHARE OF COMMON COSTS BY ATTEMPTING TO SAY THAT THEY'RE NOT DIRECT ENOUGH TO BE PROPERLY CALLED CUSTOMER COSTS.

UM, I'M GOING TO TURN YOUR ATTENTION NOW.

AND I THINK THIS, THIS WILL BE HELPFUL IN MY LAST LINE OF QUESTIONING, UM, UH, ICA EXHIBIT 12, WHICH IS THE SCHEDULE FROM THE RATE FILING PACKET.

I, I DON'T, I HAVE A COPY OF THAT, OR, I MEAN, OR YOU CAN REFER TO THE IT'S A LITTLE, IT, THE, THE FONT'S A LITTLE SMALL IN THE PRINT OUT THE PDF PRINT OUT HERE, BUT, UM, YOU CAN REFER TO IT'S 10 PAGES, WHICH COMPRISE SCHEDULE TO THE, UM, THE APPENDIX OR THE, I GUESS THE, UM, THE MODEL.

ARE YOU ABLE TO READ THAT? I THINK I CAN SQUINT AND MAKE IT OUT.

I'M BARELY.

UM, DOES THIS SHOW, DOES THIS, DOES THIS SCHEDULE G DASH FIVE, UM, FROM THE INITIAL RATE FILING PACKAGE, DOES IT SHOW THAT CUSTOMER CLASSIFIED COSTS ARE SEPARATED INTO THESE VARIOUS COLUMNS AT THE TOP CUSTOMER ACCOUNTING, CUSTOMER SERVICE, METER READING AND KEY ACCOUNTS? UH, YOU MISSED UNCOLLECTABLE AND, UM, YOU CONOMIC DEVELOPMENT AND R AND R THE M R ARE THE FOUR COLUMNS THAT I MENTIONED.

ARE THOSE THE COST CATEGORIES THAT YOU INCLUDE IN THE CUSTOMER CHARGE? NO, SIR.

WHICH ARE THE, WHICH ARE THE, THE, UM, THE CATEGORIES THAT YOU INCLUDE IN THE RESIDENTIAL CUSTOMERS, THE CUSTOMER UNIT COST WOULD INCLUDE COSTS, UH, FROM ALL OF THESE, UM, SUB-FUNCTIONS YOU COULD CALL THEM RECLASSIFIED SUB-FUNCTIONS.

SO THAT'S, UH, CUSTOMER ACCOUNTING, CUSTOMER SERVICE, METER READING UNCOLLECTABLE KEY ACCOUNTS.

AND WHAT ALSO INCLUDE THE METER COSTS, WHICH ARE PART OF THE DISTRIBUTION FUNCTIONAL CAUSE, BUT ARE THEN CLASSIFIED AS CUSTOMER RELATED.

IF YOU TURN TO THE SECOND PAGE AT LINE 1 34, THANK YOU WILL FIND THAT THAT IS THEIRS.

WELL, I WANT TO TALK TO YOU ABOUT SOME OF THE COSTS THAT, THAT YOU, THAT YOU ALLOCATED TO THE CUSTOMER CHARGE HERE.

UM,

[05:50:01]

WELL, THAT'S A TOTAL CUSTOMER AND INFORMATION EXPENSES.

UM, DOES IT SHOW THE CUSTOMER COUNTING HAS A DIRECT COST OF 5.6 MILLION PLUS I THINK IT'S 5 MILLION, $626,000 OF DIRECT COST.

I'M LOOKING AT LINE 1 34.

HE ASKED LINE 34 SAYS, UM, THE CUSTOMER ACCOUNTING FUNCTION, AND IT IS TOTAL CUSTOMER AND INFORMATION EXPENSES, 5.6 MILLION.

DOES THIS REFLECT THE CUSTOMER ACCOUNTING O AND M EXPENSES? I APOLOGIZE.

I'M SQUINTING TO MAKE OUT WHAT, WHAT LINE ITEMS ARE CALLED THAT HAVE DOLLAR AMOUNTS, CUSTOMER RECORDS AND COLLECTIONS EXPENSES, AND THE AMOUNT OF 34 MILLION OFFSET BY MISCELLANEOUS CUSTOMER ACCOUNTS EXPENSE, A CREDIT OF 28 MILLION.

BUT WOULD YOU, WOULD YOU CONSIDER THAT $5.6 MILLION TO BE THE, UM, THE DIRECT COSTS FOR CUSTOMER COUNTING AND WHERE I'M GOING WITH THIS IS THAT I'M GOING TO ASK YOU ABOUT WHAT FOLLOWS THIS AND ASK YOU IF, IF THERE ARE MORE INDIRECT COSTS THAT ARE ADDED TO THE 5.6, I THINK I WOULD INCLUDE VARIOUS OTHER ITEMS. AND, YOU KNOW, IT'S REALLY HARD TO READ THIS, SO, BUT I WOULD WANT TO GO CAREFULLY AND THOUGHTFULLY THROUGH THE, ALL THESE LINE ITEMS HERE THAT ARE PART OF THE TOTAL WELL FOR THAT CLASSIFIED FUNCTION.

AND THEN TELL YOU, IN MY OPINION, IF THEY WOULD BE OKAY, WELL, I'M TRYING TO TAKE DIRECT OR RIGHT.

I CAN TAKE ONE EXAMPLE HERE.

SO I'M JUST LOOKING AT CUSTOMER AND COUNTY.

I'M NOT ASKING IF THAT'S ALL THE ONLY DIRECT COSTS, BUT AS FAR AS CUSTOMER ACCOUNTING, IS THAT, WOULD THAT BE THE DIRECT COST AND WHAT FOLLOWS WOULD BE INDIRECT COSTS? UH, NO, I CAN'T AGREE WITH THAT.

LIKE I SAID, CAUSE I, I REALLY I'D HAVE TO GO LINE BY LINE THROUGH THIS AND THINK ABOUT IT.

LET ME ASK YOU ABOUT A COUPLE MORE LINES THAN A LINE 1 48, WHICH IS ON PAGE THREE, THERE IS A $44 MILLION AMOUNT FOR CUSTOMER ACCOUNTING AND THAT'S LISTED AS, UM, ADMINISTRATIVE AND GENERAL EXPENSE.

RIGHT? UH, I DON'T SEE ADMINISTRATIVE IN GENERAL EXPENSE HERE, BUT DO YOU MEAN THAT THAT'S THE SERIES OF ACCOUNTS? THE HEADING IS BACK ON PAGE TWO.

OH, OKAY.

UNDERSTAND EXACTLY WHAT THOSE DOLLARS REPRESENT.

I SEE THE HEAD ON PAGE THREE.

SO THESE ARE THE A AND G EXPENSE ACCOUNTS.

SO WOULD YOU CONSIDER THE A AND G EXPENSES TO BE DIRECTOR INDIRECT? I'M GOING TO SAY THERE, THERE COSTS THAT ARE APPROPRIATELY ASSIGNED TO THE CUSTOMER FUNCTION.

I MEAN, I GUESS YOU COULD SAY THEY ARE RESTAURANT THEY'RE LESS DIRECT THAN THE ONES ABOVE THAT WE JUST TALKED ABOUT DIRECT.

ARE THEY ANYWAY, LET, LET ME TAKE YOU TO, UM, LINE ONE 60 ON THAT SAME PAGE.

THAT'S LESS THAN IT'S UNDER THE HEADING OF OTHER EXPENSES AND LINE ONE 60 IS EXPENSES NON-UTILITY OPERATIONS.

SO HERE WE HAVE $650,000 OF NON-UTILITY OPERATIONS THAT HAVE BEEN ADDED TO CUSTOMER ACCOUNTING.

IS THAT RIGHT? THAT, UH, FIGURE IS THERE.

AND WHY WOULD YOU HAVE NON UTILITY OPERATIONS EXPENSE IN THE, IN THE RESIDENTIAL CUSTOMER CHARGE? WELL, AS YOU PROBABLY KNOW, WHEN COST STUDIES, THERE'S ALL SORTS OF NAMES GIVEN FOR THINGS, AND YOU REALLY HAVE TO DIG INTO THE SUPPORTING SCHEDULES TO

[05:55:01]

AND USUALLY ONCE YOU DO THAT, THERE'S A VERY GOOD REASON WHY YOU'RE SEEING WHAT YOU'RE SEEING.

OH, ARE YOU TELLING ME THE NON-UTILITY ACTUALLY MEANS UTILITY? I'M TELLING YOU I, WITHOUT DIGGING INTO THE WORKPAPERS, I WOULDN'T BE COMFORTABLE MAKING A JUDGMENT AS TO WHETHER OR NOT IT'S APPROPRIATE TO HAVE THAT NUMBER THERE.

I MEAN, I, I KNOW THAT MY TEAM AND I REVIEWED THE COST STUDY AND WE DID NOT IDENTIFY THIS AS SOMETHING THAT WAS INAPPROPRIATE.

WELL, STARTING AT LINE 1 61, DOES A SCHEDULE, NOT SHOW RETURN COMPONENTS SUCH AS THE GENERAL FUND TRANSFER AND INTERNAL CASH GENERATION ADDED TO THIS CUSTOMER ACCOUNTING COLUMN.

AS YOU PROBABLY KNOW, THE GFT IS AS A DIRECT FUNCTION OF REVENUES AND THE CUSTOMER CHARGE GENERATES REVENUES, AND THEREFORE WHAT DIRECTLY CAUSED GFT TO BE INCURRED BY THE UTILITY.

YOU COULD ALSO LOOK AT IT AS A RETURN.

COULD YOU NOT? I'M SORRY.

I MEAN, I KNOW FROM, FROM YOUR PERSPECTIVE, YOU LOOK AT THE GFT AS AN, AS A, AS AN EXPENSE, BUT IT'S ALSO, UM, A RETURN COMPONENT.

IS IT NOT, I THINK YOU WERE ASKING ABOUT DIRECT VERSUS INDIRECT AND I WOULD DEFINITELY PUT THIS IN THAT DIRECT CATEGORY.

LET ME TAKE YOU DOWN TO LINE 180 6, WHICH IS THE TOTAL REVENUE ACCOUNT FOR CUSTOMER ACCOUNTING.

AND WE, THAT NUMBER HAS NOW GOTTEN UP TO $58 MILLION, RIGHT? YES, SIR.

THAT'S WHAT IT SHOULD.

THAT IS ALL THAT HAS ALL BEEN APPLIED TO THE CUSTOMER, THE RESIDENTIAL CUSTOMER CHARGE.

AND YOU'RE IN YOUR STUDY THAT RIGHT? UH, THIS IS THE TOTAL ACROSS ALL CLASSES, SIR.

NOT JUST RESIDENTIAL.

WELL, FAIR ENOUGH.

SO WE DON'T, AND WE DON'T HAVE, WE DON'T HAVE THAT BREAKDOWN ON THIS CHART IN THIS SCHEDULE.

THE CLOUD CELL OCCASION OCCURS DOWNSTREAM AND SCHEDULE THREE SIX, BUT IT IS CORRECT THAT WE STARTED WITH A DIRECT AMOUNT OF 5.6 MILLION, AND THEN WE SLOWLY ADDED LESS DIRECT COSTS UNTIL WE GOT UP TO OVER 10 TIMES THAT AMOUNT.

I CAN'T AGREE WITH THAT SYRUP BECAUSE I HAD, LIKE I SAID, I DIDN'T HAVE A CHANCE TO REVIEW ALL THE OTHER LINE ITEMS HERE TO, TO MAKE A DETERMINATION AS TO WHETHER I WOULD CONSIDER THEM DIRECT OR LESS DIRECT.

WELL, I GUESS WE'LL JUST LEAVE IT AT THAT.

AND, UM, THAT'S ALL MY QUESTIONS.

THANK YOU, MR. KAUFMAN.

UH, AUSTRIA ENERGY.

THE, UH, REP THE RETAIL ELECTRIC PROVIDER, AND TO ASK ANY QUESTIONS ABOUT THE SURVEY, IF HE HAD SURVEYED THE, THE RETAIL ELECTRIC, THE COMPETITIVE RETAIL ELECTRIC PROVIDER MARKET.

JUST A FEW QUESTIONS ON REDIRECT.

UM, MR. MURPHY, YOU WERE ASKED SOME QUESTIONS.

IT SEEMS LIKE LONG, LONG AGO BY MRS. COOPER ABOUT, UH, THE CUSTOMER CHARGE AND SPECIFICALLY A RESPONSE THAT YOU GAVE, UH, TO, UH, ONE OF MR. JOHNSON'S RECOMMENDATIONS.

AND I BELIEVE THAT YOU, UH, WERE ALLOWED TO COMPLETE YOUR ANSWER.

UM, DO YOU RECALL THAT DISCUSSION AND THAT Q AND A YES, I DO.

DO YOU MIND, UM, KIND OF RE UH, REFRESH OUR MEMORY, WHAT THAT WAS ABOUT, AND THEN COMPLETING YOUR ANSWER.

I'M TRYING TO FIND HER I'M GOING TO OBJECT.

I DON'T THINK THAT, UH, I ASKED HIM A PRETTY SPECIFIC QUESTION ABOUT THE RES THE REPS.

I MEAN, I THINK IT'S BEYOND THE SCOPE OF MY CROSS.

NO, NO, NO.

IT'S, IT'S, IT'S DIRECTLY IN RESPONSE TO A QUESTION THAT SHE ASKS WHERE SHE CUT HIM OFF WHEN HE WAS TRYING TO, UH, TRY TO ANSWER IT.

HE EVEN COACHED HIS ATTORNEY TO, TO REMIND HIM SAYING THERE, WELL, I GUESS THE QUESTION, I MEAN, WAS IT A QUESTION I ASKED HER, WAS IT A QUESTION HE WANTED ME TO? NO, NO, NO.

IT WAS THE QUESTION YOU ASKED AND ACTUALLY THAT'S WHY THE QUESTION, THAT'S WHY I SAID, WELL, COULD YOU REFRESH OUR MEMORY AS TO THE Q AND A, YOU KNOW, I'M HAVING TROUBLE FINDING IT, BUT IT WAS THE Q AND A IN WHICH WAS RESPONDING TO THE BENCHMARKING THAT MR. JOHNSON DID COMPARING AUSTIN ENERGY'S CUSTOMER CHARGED PROPOSAL TO IOU T TO USE, WHICH ARE WIRES AND POLES UTILITIES.

AND I STARTED TO SAY THAT ONE REASON WHY I DIDN'T THINK IT WAS AN APPROPRIATE BENCHMARK WAS THAT IT NEGLECTED THE, TO RECOGNIZE THE FACT THAT AUSTIN ENERGY PROVIDES THE, ALL THE RETAIL SERVICES THAT ARE PROVIDED BY THE REP.

THEN IN ADDITION TO THAT, THERE WAS SOMETHING ELSE IN MY RESPONSE, WHICH IS THAT, UH, THE IO FOR THE IOT TO USE AS, AS, AS SOME PEOPLE HERE MAY KNOW, THE COMMISSIONER ADOPTED A GENERIC RATE DESIGN DURING UN-BUNDLING RIGHT, THERE WAS A DOCKET, IT WAS DOCKET NUMBER 2, 2, 3, 4, 4, AS GENERIC ON BUNDLING DOCKET, AND WHICH A UNIFORM RATE DESIGN WAS ADOPTED.

TRY IT ON YOUR T TO USE.

UM, ONCE AGAIN, I'M GOING TO OBJECT IT'S BEYOND THE SCOPE OF CROSS.

I MEAN, HE'S BASICALLY SUMMARIZING TESTIMONY THAT HE PUT HIS AUTHORITY IN THE RECORD.

AND I WAS ASKING SPECIFICALLY ABOUT

[06:00:01]

OVERRULED.

AND SO THE COMMISSION'S DECISION WAS THAT THE CUSTOMER RELATED, UH, CHARGES FOR THE IOT TO USE SHOULD BE SET DIRECTLY TO COST OF SERVICE.

AND THAT IS EXACTLY WHAT AUSTIN ENERGY IS PROPOSING IN THIS CASE, JUST SO HAPPENS THAT FOR THE IOT TO USE IT'S LOWER DOLLAR AMOUNTS SINCE THEY DON'T HAVE THE RETAIL FUNCTION AND OTHER THINGS THAT ALLSTON ENERGY DOES FOR ITS CUSTOMERS, BUT SOME IN MY OPINION AND ACCURATE APPLICATION OF THAT PRECEDENT WOULD BE EXACTLY WHAT AUSTIN ENERGY IS PROPOSING.

THANK YOU, MR. MURPHY, WOULD YOU TURN TO PAGE 152 OF THE AUSTIN EXHIBIT ONE, WHICH IS THE NARRATIVE OR RIGHT FILING PACKAGE? JUST LET ME KNOW WHEN YOU'RE THERE.

I THINK I'M THERE.

MS. COOPER ASKED YOU A NUMBER OF QUESTIONS, COMPARING THE CUSTOMER CHARGE PROPOSED BY AUSTIN ENERGY IN THIS CASE TO OTHER UTILITIES.

UM, DID YOU INCLUDE SOME, UH, ADDITIONAL UTILITIES CUSTOMER CHARGES, UM, AT THIS LOCATION IN THE RIGHT FILING PACKAGE.

AND WHAT WERE THOSE, UM, UTILITIES? THE CURRENT CUSTOMER CHARGE AT PERKINELMER SELECTRIC CO-OP IS $22 AND 50 CENTS PER MONTH.

THE CURRENT CUSTOMER CHARGE FOR BLUE BONNET IS $22 AND 50 CENTS PER MONTH.

THE CURRENT CUSTOMER CHARGE FOR THE CITY OF GEORGETOWN IS $24 AND 80 CENTS PER MONTH.

AND, UH, THAT IS SOME OF OUR TOSS AND ENERGY'S PROPOSAL OF $25 PER MONTH.

AND W OR WHERE ARE THOSE THREE UTILITIES LOCATED? THEY'RE ALL ADJACENT TO AUSTIN ENERGY SERVICE TERRITORY.

DO YOU KNOW, UH, WHETHER ANY OF THE UTILITIES THAT MRS. COOPER ASKED YOU ABOUT HAVE INCLINING BLOCK OR DECLINING BLOCK STRUCTURES? NO, I DON'T.

AND THAT'S A VERY GOOD POINT.

UM, AND THINKING ABOUT THE LEVEL OF THE CUSTOMER CHARGE, IN ADDITION TO THE OTHER CONSIDERATIONS THAT YOU KNOW, THAT I'VE ALREADY ADDRESSED IN MY REBUTTAL, ANOTHER THING TO THINK ABOUT WOULD BE, UM, THE EXTENT TO WHICH THESE OTHER UTILITIES HAVE DESIGNED THEIR ENERGY RATES TO DEAL WITH THE REVENUE STABILITY PROBLEMS THAT THE UTILITY MAY BE EXPERIENCING.

FOR EXAMPLE, AUSTIN ENERGY HAS THIS DEEPLY INCLINED ENERGY RATES WHERE ALL THE COST RECOVERY, THE REVENUE, UH, ASSIGNMENT IS SKEWED TO THE HIGHER TIERS, RIGHT? AND THEREFORE AUSTIN ENERGY NEEDS TO, UH, SEEK HIGHER LEVELS OF COST RECOVERY FROM THE LITERAL USERS, CUSTOMERS, WHERE ALL THE, UH, THE USAGE IS OCCURRING AND ALL THE BILLS ARE GENERATED.

SOME OF THESE OTHER UTILITIES MAY BE ENTERED AT DIFFERENT SITUATION WITH RESPECT TO THEIR ENERGY CHARGES, RIGHT.

THEY COULD HAVE A FLAT ENERGY RATE IN WHICH THEY'RE GETTING A LOT MORE, UH, COST RECOVERY IN THE LOWER TIERS CHECKED BECAUSE IN HIS TESTIMONY WITH MY CROSS EXAMINATION, HE SAID HE HAD DONE A STUDY OF CPS.

AND SO WE'RE ENGAGING IN SPECULATION.

UM, NOW YOU ARE PROVIDING A NARRATIVE IN RESPONSE TO THE QUESTION, BUT HERE'S THE, HERE'S THE PROBLEM, UH, WITH CUTTING OFF A WITNESS IS THAT WHEN THEY, WHEN YOU COME BACK UP ON REDIRECT, THEY'RE GOING TO GET TO GO INTO IT ANYWAY.

SO IT'S SIX AND ONE, HALF A DOZEN OF ANOTHER.

IF HE GIVES YOU A LONG ANSWER, YOU CAN GO BACK IN AND ASK THEM QUESTIONS ABOUT IT.

BUT NOW WANT TO SAY, LET ME, LET ME FINISH, LET ME FINISH.

BUT NOW WE'RE IN A SITUATION WHERE WE'RE TRYING TO WRAP UP.

THIS IS SUPPOSED TO BE A FULL HEARING.

I WANT TO HAVE AS MUCH INFORMATION AS POSSIBLE BECAUSE THERE'S A PUBLIC POLICY ISSUE AT STAKE IN EVERYTHING THAT WE'RE DOING IN AUSTIN ENERGY RIGHTS.

SO LET ME FINISH, I'M SORRY.

I THOUGHT YOU HAD, I'M NOT DONE TALKING YET.

WHAT I'M GETTING AT IS YES, THE WITNESS IS PROVIDING A RATHER EXTENDED NARRATIVE RESPONSE TO THE QUESTION, BUT THIS IS PART OF THE PROBLEM WITH CUTTING OFF A WITNESS, AS OPPOSED TO JUST LETTING THEM ANSWER, SAY, NON-RESPONSIVE

[06:05:01]

TRY AGAIN.

THIS IS THE PROBLEM WITH CUTTING OFF A WITNESS.

MR. ROBERTO HAS A RIGHT TO GO IN AND ASK HIS WITNESS QUESTIONS THAT THEY DIDN'T PROVIDE THE COMPLETE ANSWER TO THAT THEY WANTED TO PROVIDE A COMPLETE ANSWER TO.

SO THAT'S WHERE WE ARE.

WELL, ARE YOU FINISHED YOUR HONOR? I DON'T MEAN TANNER UP.

UH, IT IS SPECULATION THAT THE WITNESS IS TALKING ABOUT.

HE HAD TESTIFIED ON CROSS THAT HE HAD NOT STUDIED THE AUSTIN ENERGY'S COSTS.

SO HE DOES NOT KNOW HE CAN'T.

I MEAN, I'M NOT AUSTIN ENERGY.

CPS HAS COST.

HE COULD NOT TESTIFY AS TO WHETHER THESE CUSTOMER CHARGE WAS COST, COST BASED OR NOT.

THAT WAS THE CROSS EXAMINATION, YOUR HONOR.

LET'S, LET'S START OVER.

MR. BURRITO.

COULD YOU, COULD YOU ASK YOUR QUESTION AGAIN? YES, YOUR HONOR, MR. MURPHY, UH, MS. COOPER ASKED YOU A NUMBER OF QUESTIONS ABOUT THE, UH, CUSTOMER CHARGES THAT OTHER UTILITIES CHARGE AND, UH, THE IMPLICATION BEING THAT AUSTIN ENERGY'S, UM, PROPOSED CUSTOMER CHARGE FOR RESIDENTIAL CUSTOMERS IS SIGNIFICANTLY HIGHER THAN THESE OTHER UTILITIES.

AND I'M ASKING YOU, DO WE KNOW, UH, IF THOSE ARE FAIR APPLES TO APPLES COMPARISONS, IF YOU'LL JUST START BY ASKING THAT, ANSWERING THAT QUESTION, WE DON'T KNOW IF THEY ARE A FAIR APPLES TO APPLES COMPARISONS AND WHAT I WAS, UH, BEGINNING TO, UH, TO EXPLAIN IS THAT, UH, ONE OF THE THINGS YOU WOULD HAVE TO LOOK AT IS THE RELATIONSHIP BETWEEN THE LEVEL OF A CUSTOMER CHARGE AND THE STRUCTURE OF THE ENERGY RATES, BECAUSE THE STRUCTURE OF THE ENERGY RATES HAS AN IMPORTANT BEARING ON THE OVERALL OBJECTIVES OF THE RATE DESIGN.

AND IF YOU, FOR EXAMPLE, HAD A DIFFERENT STRUCTURE OF TEARS OR NO TEARS AT ALL FLAT ENERGY RATE OR DECLINING ENERGY BLOCKS, OR, OR YOU HAD A DIFFERENT USAGE PATTERNS AND BILL DISTRIBUTIONS AMONG CPS, AS CUSTOMERS COMPARED TO AUSTIN ENERGIES, THEN MAYBE LESS NEED AT CPS ENERGY TO SEEK MORE COST RECOVERY FROM LOWER USAGE CUSTOMERS TO THE CUSTOMER CHARGE.

AND WITHOUT KNOWING THAT ADDITIONAL INFORMATION, IF YOU REALLY CAN'T KNOW IF, UH, YOU KNOW, IF, UH, CPS ENERGY OR ANY OF THOSE OTHER UTILITIES ARE, UM, CAN BE COMPARED TO AUSTIN ENERGY IN TERMS OF ITS NEED TO INCREASE THE CUSTOMER CHARGE TO ENHANCE SO COST RECOVERY FROM LOW USAGE CUSTOMERS.

AND I'M NOT ASKING YOU TO SPECULATE, BUT DO WE KNOW IF ANY OF THE UTILITIES THAT MS. COOPER WAS COMPARING AUTHOR ENERGY TO HAVE TIERED GRADES SUCH AS A, I DO NOT KNOW.

DO WE KNOW, UH, WHAT THE BREAK POINTS WOULD BE FOR THOSE TIERS? UH, IF THEY HAVE THEM? NO, I DON'T.

DO WE KNOW THAT THE AVERAGE CONSUMPTION OF A RESIDENTIAL CUSTOMERS FOR ANY OF THOSE UTILITIES? NO.

ARE ANY OF THESE FACTORS, UM, IMPORTANT IN DETERMINING THE RELATIVE, UH, THE RELATIVE, UM, CUSTOMER CHARGE? YES.

I THINK WE'VE DONE A GOOD JOB IN THE FILING PACKAGE AND ALSO IN REBUTTAL EXPLAINING, UH, THE, THE FACTORS THAT AUSTIN ENERGY THAT ARE UNIQUE TO AUSTIN ENERGY, AS FAR AS I KNOW, AND THAT, UM, THERE ARE FACTORS THAT WOULD HA THAT ARE, UH, SERVE AS A FOUNDATION FOR THE PROPOSAL.

DID AUSTIN ENERGY DETERMINE ITS CUSTOMER CHARGE PROPOSAL IN THIS CASE, BY BASING IT ON THE FIXED COST OF OTHER UTILITIES? NO, IT'S BASED ON AUSTIN, ENERGY'S A FIXED CUSTOMER COSTS.

DO YOU KNOW HOW OFTEN ENERGIES OVERALL RESIDENTIAL RATES COMPARE TO THE OTHER UTILITIES THAT MS. COOPER REFERRED YOU TO? UH, WELL, UH, WE, WE DID INCLUDE IN THE RAID FINALLY PACKAGE PAGE 1 52, RIGHT? THE COMPARISONS THAT SHOW THAT THE BILLS ARE THE LOWEST, UH, UH, AMONG PEER UTILITIES THAT, THAT CONCLUDED THE COMPARISON.

UH, MR. MURPHY, UH, MR. RAVEN, DO A HIGH LOAD FACTOR, PRIMARY VOLTAGE CUSTOMERS OVER 20 MEGAWATTS PAY SERVICE AREA LIGHTING.

UH, NOT, NO, THEY, THEY, IT'S NOT ONE OF THE COST ELEMENTS THAT'S IN THEIR RATE DESIGN.

LEWIS, UH, USE OF THAT METHODOLOGY, I GUESS A COUPLE OF THINGS THAT I THINK ARE REALLY IMPORTANT, UH, ABOUT THAT, UH, ONE, UH, THE RESOLUTION OF THAT CASE WAS NOT FULLY LITIGATED.

SO THAT WOULD BE TRUE OF MR. BREEDER'S CLIENT THAT'S.

THAT'S TRUE.

UM, YOU ARE ASKED ALSO ABOUT MR. READER, A QUESTION ABOUT, UH, MR. LLOYD IS TAKING OUT OR REMOVING DEPRECIATION EXPENSE AND THE BROWNSVILLE T COST FILING CASE.

DO YOU REMEMBER THAT DISCUSSION? I DO YOU HAVE SOME ADDITIONAL COMMENTS ABOUT THAT? YEAH, AND I, AS I SAID, I WAS UNAWARE OF, OF MR.

[06:10:01]

IT WAS A SETTLEMENT.

UM, BUT, BUT PERHAPS THE MOST IMPORTANT, UH, UM, YOU KNOW, IMPORTANT THING FROM THAT, UH, FROM THAT EXAMPLE IS, UM, BECAUSE OF MR. LLOYD, UH, ITS TREATMENT OF DEPRECIATION EXPENSE IN THAT FILING IT INHERENTLY MEANT THAT THE RETURN THAT HE CALCULATED, UH, FOR BROWNSVILLE WAS NOT ONLY REFLECTIVE OF A RETURN ON THE INVESTMENT, BUT ALSO RETURN OF THE INVESTMENT.

SO HE HAD TWO PIECES EMBEDDED IN HIS RETURN, WHICH IS WHY THE RETURN PERCENTAGE IN A, IN A FALLOUT CALCULATION ENDS UP BEING HIGHER.

BUT BECAUSE YOU'VE DONE THAT NOW, THAT IS NOW NO LONGER COMPARABLE TO ANY OTHER MUNICIPAL UTILITY OR, OR ANY OTHER TRANSMISSION PROVIDER IN, IN, IN ERCOT FOR COMPARISON.

SO YOU CAN NO LONGER USE THAT FALLOUT RATE OF RETURN AND USE THAT AS A COMPARISON TO ANY OTHER UTILITY THAT HASN'T DONE, THE MATH, THE EXACT SAME WAY THAT MR. LLOYD HAS DONE, UH, WHICH AGAIN AT MY EXPERIENCES IS UNIQUE.

UM, MR. REEDER ALSO ASKED A QUESTION ABOUT WHETHER REVENUES FROM COST OF SERVICE UNDER THE CURRENT RATES.

DO YOU REMEMBER THAT QUESTION? OH, YES.

AND, UM, IS THERE ANYTHING THAT YOU WOULD LIKE TO ADD TO YOUR RESPONSE THERE? I GUESS I'M UNDER THE IMPRESSION, UH, THAT THE, THE WAY IN WHICH, UH, MR. REEDER WAS CHARACTERIZING THE NUMBERS ON THE PAGE AND THE LABELING ON THE PAGE.

AND I DON'T REMEMBER THE EXACT SCHEDULE, BUT I THINK IT WAS G 10 DOT A NUMBER, UM, WAS THAT HE WAS, UH, THE WAY HE WAS DESCRIBING.

IT WAS, IT SAID, UH, COST OF SERVICE UNDER CURRENT, UH, RATES.

AND I BELIEVE HE MAY HAVE BELIEVED THAT THAT NUMBER MEANT THAT IT WAS REPRESENTATIVE OF THE REVENUE UNDER CURRENT RATES.

WHEN IN FACT, I BELIEVE IT WAS COST OF SERVICE.

I OBJECT, HE'S JUST, HE'S SPECULATING AS TO WHAT HE THOUGHT THE QUESTION WAS, WELL, WE'D ASK HIM TO READ BACK THE TRANSCRIPT, BUT WE DON'T HAVE THE TRANSCRIPT, BUT I DO KNOW THAT THE TRANSCRIPT THING, BUT I WANT, I DO KNOW THERE WAS A QUESTION ABOUT THAT, THAT WORK PAPER THAT I BELIEVE IT MAY HAVE JUST BEEN THIS POORLY, UH, MISUNDERSTANDING OF LABELING POTENTIALLY.

UH, OKAY.

WE'LL JUST ADDRESS IT AND BRIEFING.

THANK YOU, MR. RAVEN.

UH, THOSE ARE ALL THE QUESTIONS I HAVE, YOUR HONOR.

RECROSS TO WR IT'S YOUR HONOR, IF WE COULD, YOU STILL HAVE PAGE 1 52 OPEN AND THE BREAK FILING PACKAGE, THERE MAY BE TOO MANY PEOPLE ONLINE.

THAT'S WHAT I'M GOING TO DO.

JUST GOT IT.

UH, I NEED TO TURN BACK TO IT IF YOU CAN JUST GIVE ME A SECOND.

I'M THERE.

AND, UH, YOU SHOW US THAT AUSTIN HAS SOME OF THE CHEAPEST BILLS, THE CHEAPEST BILL ON YOUR LIST OF, OF, UH, UTILITIES THAT, WELL, THEY'RE NOT JUST NECESSARILY UTILITIES.

THEY'RE ALSO RETAIL ELECTRIC PROVIDERS.

IS THAT CORRECT? UH, YES, THERE ARE SOME, THERE ARE SOME, UM, VERTICAL INTEGRATED UTILITIES HERE AND THERE ARE SOME, UH, RETAIL ELECTRIC PROVIDERS LISTED.

IT LOOKS LIKE AMIGO ENERGY OR ALLIANT.

AND SO AN AVERAGE BILL IS DIFFERENT THAN AN AVERAGE RATE.

YOU WOULD AGREE.

I THINK IT'S RESIDENTIAL REVENUES DIVIDED BY RESIDENTIAL BILLS.

NOW, DID YOU CHECK THESE UTILITIES TO SEE IF AUSTIN ENERGY HAS THE LOWEST AVERAGE RATE AMONG THESE UTILITIES? UM, WELL, I DON'T, I DIDN'T, I DON'T SPONSOR THIS SECTION OF THE RATE FILING PACKAGE.

I THINK THAT WHAT ANALYSIS WAS DONE AND THEN WHEN HE Y'ALL KNOW IF THAT WAS ALRIGHT, SO THE QUESTION IS, DO WE HAVE A SIMILAR, DO WE HAVE A SIMILAR INFORMATION, BUT INSTEAD OF BEING ON A BILL BASE, IT'S ON A SYSTEM, AVERAGE RATE BASIS, ACTUALLY, IT'S MY UNDERSTANDING THAT YOU TAKE THE, THE AVERAGE BILL USAGE AND, UH, AND THEN MULTIPLY IT BY THE, BY THE AVERAGE RATE.

BUT DO YOU KNOW HOW THIS IS CALCULATED?

[06:15:04]

WELL, ARE YOU KILOWATT HOURS? I DON'T THINK THAT HAS ANY BEARING ON THE INFORMATION IN THIS CHART.

UH, BUT YOU DON'T, YOU DID NOT CHECK TO SEE WHAT THE AVERAGE RATE IS FOR EACH OF THESE BILLS? NO.

AND YOU DON'T KNOW WHETHER AUSTIN ENERGY HAD ALSO LOOKED AT THAT TO SEE IF AUSTIN ENERGIES HAS THE LOWEST, LOWEST AVERAGE RATE AMONG THESE, THESE, UH, UTILITIES.

IS THAT CORRECT? I'LL SAY I'M PRETTY SURE I'VE SEEN THAT.

UM, I DON'T THINK WE'VE INCLUDED IT, BUT, EH, BUT THAT WILL SAY THAT I DIDN'T GENERATE IT.

WELL, THANK YOU SO MUCH FOR YOUR CANDOR AND YOUR PARTICIPATION.

I HAVE NO MORE QUESTIONS.

UM, PERF NO, YOUR HONOR.

ALRIGHT, SSC, ISN'T PRESENT, UM, A CPC.

NO, MR. BRAZIL.

AND P A FEW, YOUR HONOR.

NOT, OH, THAT MAKES IT EASY.

THAT'S THAT'S ALL RIGHT.

I UNDERSTAND MR. READER'S NOT HERE.

THAT'S BUT STILL I WOULD, I WOULD ALLOW HIM A TIC.

WE'LL ADDRESS IT AND BREAK IT.

YOU'RE WELCOME.

UM, AND, UH, ICA, THANK YOU.

UM, MR. MURPHY, DO YOU HAVE A COPY OF MR. JOHNSON'S DIRECT TESTIMONY THERE WITH YOU? I DON'T BELIEVE I DO IT WELL IN HIS TESTIMONY, HE LISTED, UM, A VARIETY OF ALL THE TEXAS INVESTOR OWNED ELECTRIC UTILITIES, AND I BELIEVE YOU TOOK, AND YOU WERE CRITICAL AS YOU SAID ABOUT THE, UH, INCLUDING THE UNBUNDLED, UH, ELECTRIC UTILITIES IN THAT LIST.

IS THAT RIGHT? YES, SIR.

SO IF WE ONLY LOOK AT THE FOUR BUNDLED UTILITIES, THOUGH, UM, DO YOU, UM, DO YOU RECALL WHAT THOSE CUSTOMER CHARGES WERE OR IF I, WELL, IF THEY'RE THE SAME ONES THAT, UH, THAT MS. COOPER THAT SHE SHOWED ME THEN HAVE SEEN THEM RECENTLY.

UH, WELL, THIS IS FROM SCHEDULE C J DASH FIVE, MR. JOHNSON'S INITIAL PRESENTATION, AND I'LL JUST LIST THEM.

AND YOU TELL ME IF THESE SOUND FAMILIAR, SOUTHWESTERN PUBLIC SERVICE, $11 AND 40 CENTS.

DOES THAT SOUND RIGHT? SURE.

I'LL ACCEPT THAT.

SWEPCO $9 AND 42 CENTS.

INTERGY TEXAS INC.

$10, JUST LIKE AUSTIN ENERGY AND EL PASO ELECTRIC COMPANY, $8 AND 24 CENTS 25 CENTS, $8 25 CENTS.

THAT'S NOT RIGHT.

AND WOULD YOU, AND SO IF WE AVERAGED JUST THOSE FOUR BUNDLED ELECTRIC UTILITIES, THE AVERAGE WOULD BE UNDER THE $10 THAT AUSTIN ENERGY CURRENTLY USES FOR A CUSTOMER CHART.

OH YEAH.

HOW ARE YOU GOING TO AVERAGE THEM? ARE YOU GOING TO WEIGH THEM IN ANY WAY? JUST GOING TO TAKE THE STRAIGHT AVERAGE OF THOSE RATES.

THAT WAS JUST A STRAIGHT OUT.

I'M NOT, I'M NOT SURE.

BUT WOULDN'T, YOU AGREE THAT $25 IS WAY OUT OF LINE WITH TEXAS INVESTOR OWNED, BUNDLED UTILITIES FOR THEIR CUSTOMER CHARGE? DID YOU SAY TEXAS INVESTOR OWNED BUNDLED UTILITIES? YES.

WAY OUT OF LINE.

WELL, YOU KNOW, I'M NOT GOING TO AGREE WITH THAT BECAUSE I THINK THAT COMPARING THE UNIT COST TO, TO THE CUSTOMER CHARGE IS MORE INFORMATIVE THAN JUST DOING AN ABSOLUTE COMPARISON OF ONE UTILITY TO THE NEXT.

AND THEN I'LL SEND HER IF SHE DOES A LOT FOR ITS CUSTOMERS.

SO A LOT OF INVESTOR-OWNED UTILITIES, FRANKLY PROBABLY COULDN'T GET AWAY WITH IT HAS JUST TO THE CUSTOMER CHARGE.

AND I, AND, UH, OKAY.

WITH THE CAVEAT THAT THAT'S NOT THAT THAT'S TAKING IT OUT OF CONTEXT, IN YOUR OPINION, BECAUSE YOU'RE NOT LOOKING AT THE RELATIONSHIP TO THE OTHER, BUT THAT THAT'S STILL $25 WOULD BE WELL OVER TWICE.

WHAT IT'S HIGHER THAN THAT GROUP YOU MENTIONED.

I GUESS THAT'S THE BEST I'M GOING TO GET, SO THANK YOU VERY MUCH.

ANYTHING FROM AUSTIN ENERGY, I'M THE ONLY THING STANDING BETWEEN US AND GETTING DONE? OH, NO, I HAVE A BUNCH OF STUFF.

YEAH, NO, NO QUESTION.

UM, LET'S GO OFF THE RECORD AND SEE WHAT WE NEED TO WRAP UP

[06:20:01]

OFF THE RECORD, PLEASE.

SO, OKAY.

WE ARE BACK ON THE RECORD.

UM, WE HAVE DISCUSSED, UM, EXHIBITS, UH, TRANSCRIPTS BRIEFING AND MR. ROBBINS MOTION.

I REQUESTED AUSTIN ENERGY TO, UH, FILE A RESPONSE TO MR. ROBBINS, A SPECIAL MOTION.

UH, THERE ARE SOME CONCERNS EXPRESSED BY SOME OF THE PARTIES ABOUT HOW QUICKLY THE TRANSCRIPT WILL BE TURNED AROUND.

MY UNDERSTANDING FROM TALKING TO THE TECHNICAL FOLKS BACK IN THE BOOTH IS THAT THE, THE VIDEO ITSELF MAY BE, UH, AVAILABLE ON MONDAY.

UM, AND FOR SOME OF THE QUESTIONING, I ACTUALLY THINK THE VIDEO MIGHT, MIGHT PROVE MORE HELPFUL THAN THE TRANSCRIPT, WHICH WON'T BE CREATED BY HUMAN, UM, FOR THE BRIEFING ALICIA ORDER ON MONDAY.

AND, UH, JUST KIND OF OUTLINE WHAT WE'VE ALREADY TALKED ABOUT.

IF YOU HAVE ISSUES THAT FALL OUTSIDE THE BRIEFING OUTLINE THAT HAS BEEN CIRCULATED BY AUSTIN ENERGY, UH, JUST ADD THEM TO THE END OF, OF, OF YOUR BRIEF.

AND, UH, I DON'T SEE THAT AUSTIN ENERGY NEEDS TO, I'M NOT ASKING YOU TO CHANGE ANYTHING IN YOUR BRIEFING.

OUTLINE TO A QUESTION.

I THINK I UNDERSTAND THE ISSUES ENOUGH AND THAT'S WHAT I'M GOING TO BE USING WHEN WE WRITE UP THE, UH, THE FINAL REPORT.

IF THERE'S NOTHING ELSE, THANK YOU, EVERYONE.

AND THIS PORTION OF THIS PROCEEDINGS CLOSE.