[00:00:01]
I'M GONNA CONVENE THE AUSTIN ENERGY UTILITY OVERSIGHT COMMITTEE MEETING.IT IS 1:38 PM IT IS TUESDAY, NOVEMBER 29, AND WE ARE IN BOARDS AND COMMISSIONS ROOM.
I'M LESLIE POOL AND I CHAIR THIS AUGUST BODY AND WE HAVE A QUORUM.
I THINK THAT A QUORUM JUST WALKED OUT THE DOOR BRIEFLY, BUT SHE
[CALL TO ORDER]
WILL BE RIGHT BACK.OH, AND WE HAVE SOMEBODY ON VIRTUAL.
SO I WAS IN THE MIDDLE OF SOME OTHER THINGS, AND THE FIRST ITEM
[Public Communication: General]
IS PUBLIC COMMUNICATIONS.EACH WILL HAVE THREE MINUTES IF OUR TIMER COULD, COULD BEGIN RUNNING WHEN OUR SPEAKERS BEGIN TO SPEAK.
AND PAUL ROBBINS IS IN PERSON AND HE WILL GO SECOND.
MR. OKIE, ARE YOU ONLINE? YEAH.
YOU HAVE THREE MINUTES, MR. OKIE, AND YOU'LL HEAR THE TIMER BEEP WHEN YOUR TIME IS UP.
WELL, THANK YOU FOR THIS OPPORTUNITY.
I'VE BEEN WORKING ON THIS FOR A LONG TIME, AND I'VE BOIL YOU DOWN INTO SOME FAIRLY SIMPLE STEPS.
I SUGGEST THAT EVERYBODY JUST STEPPED BACK FROM ALL THE DETAILS AS A MATTER OF LOOKING AT THE FLOOR RATHER THAN THE TREES TO BEGIN WITH.
AUSTIN ENERGY RATE INCREASED BACK IN APRIL, AND THEY ASKED OUR CONSERVATION, UH, ESTABLISHED IN 1981 THAT, UH, HAS HELPED US CONSERVATION.
SO WHY WOULD WE WANT TO CHANGE THAT? WHY WOULD WE EVEN WANT TO COMPROMISE OF THAT, INTRODUCE OUR CONSERVATION STATE BY 20 OR SO BY GOING TO A FEW NUMBER OF, THAT'S WHY THE, OF OUR CLIMATE EQUITY PLAN.
UM, THIS YEAR WE HAVE A HISTORIC SUMMER HEAT WAVE WHERE AUSTIN ENERGY MADE MORE MONEY THAN THEY EVER HAVE IN THEIR ENTIRE HISTORY FROM MID MAY TO MID-SEPTEMBER.
SO THERE'S NO REASON FOR A RATE INCREASE AT ALL.
YOU DON'T EVEN NEED A COMPROMISE RATE INCREASE.
IF AUSTIN ENERGY ACTUALLY SPENT THAT MONEY FROM THE SUMMER HEAT WAVE, THEN THEY VIOLATED THE CITY'S POLICY OF REQUESTING A BUDGET AMENDMENT AHEAD OF TIME BECAUSE OBVIOUSLY IT WAS NEVER BUDGETED BECAUSE, UH, THEY DIDN'T EVEN KNOW SURPLUS WAS COMING.
SO THERE'S A WHOLE LOT OF THINGS THAT ARE WRONG WITH THIS RIGHT CASE.
RATHER THAN DEALING WITH ALL THE DETAILS AND TRYING TO REACH A COMPROMISE, PLEASE READ WHAT I HAVE SENT YOU, BUT THEN THE HANDOUT SHEET, TAKE IT HOME AND READ IT TONIGHT BEFORE YOU GO TO BED AND YOU WAKE UP TOMORROW MORNING, DO THE RIGHT THING FOR THE HARD WORKING CITIZENS AND SMALL BUSINESS ORDERS, OTHERS AND OFFICE AND REJECT THIS WAY INCREASE FINE THE REVENUE OPPORTUNITIES THAT, THAT THE, UH, PARTICIPANTS HAS GIVEN YOU AND, UH, WIPE OUT THE RUNNING INCREASED COMPLETELY.
OUR NEXT SPEAKER IS MR. ROBBINS AND HE IS WITH US HERE TODAY.
YOU WILL HAVE THREE MINUTES AND IF THE TIMER WILL START WHEN MR. ROBINS BEGINS SPEAKING.
COUNSEL, UH, I HAVE TWO SUBJECTS I WISH TO DISCUSS.
FIRST, THERE'S A PROFOUND LACK OF PROGRESS IN NEGOTIATIONS BETWEEN THE INTERVENERS IN THE AUSTIN RATE CASE AND THE UTILITY.
IT IS MY INFERENCE THAT THE UTILITY IS PRETENDING TO NEGOTIATE FOR THE SAKE OF APPEARANCE.
IF MY PRESUMPTION IS CORRECT, IT IS A WASTE OF EVERYONE'S TIME, AND I'M ASKING FOR THIS PRETENSE TO STOP.
SECOND, UH, SUBJECT IS THE PROPOSAL TO EXPAND CUSTOMER ASSISTANCE.
UH, I REALIZE THAT THE COUNCIL HAS A DEEP COMMITMENT TO THE UNDERPRIVILEGED, BUT WHAT AUSTIN ENERGY HAS PROPOSED IS NOT WELL THOUGHT OUT, AND TO THE DEGREE THAT IT GIVES MONEY TO UNDESERVING PEOPLE.
UH, SINCE THE FALL OF 2014, I'VE BEEN REPEATED.
I HAVE REPEATEDLY PROVED THAT THE UTILITY IS GIVING MONEY MEANT FOR THE POOR TO PEOPLE WITH HIGH REAL ESTATE ASSETS AND SAVED MILLIONS OF DOLLARS HELP SAVE MILLIONS OF DOLLARS
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FROM BEING SENT TO THE WRONG PEOPLE.SO I'M ASKING YOU TO CONSIDER THE FOLLOWING THINGS WHEN YOU VOTE TO EXPAND THIS PROGRAM.
THIS IS A PICTURE, UH, OF A HOME, A BLOCK FROM MOUNT BONNELL.
UH, FIRST REJECT THE PROPOSAL TO LIFT INCOME QUALIFICATIONS TO CUSTOMERS WITH $450,000 IN IMPROVEMENT VALUE.
UH, THIS HOME DUE TO QUIRKS IN THE APPRAISAL SYSTEM, THE IMPROVEMENT VALUE IS $294,000.
BUT IN 2018, IT RECEIVED CUSTOMER SISTANCE.
IT, UH, THE HOME IS APPRAISED TOTALLY AT 2 MILLION.
IT IS COMMON SENSE NOT TO GIVE DISCOUNTS LIKE THIS, UH, TO, TO CUSTOMERS LIKE THIS.
MAKE SURE IT IS WELL SPENT IN 2022, ABOUT 1.6% OF A RESIDENTIAL CUSTOMER'S BILL RESULTED FROM THIS PROGRAM.
IF YOU DOUBLE PARTICIPATION, IT WILL GO UP THREE TO 3.2%.
MANY PEOPLE WHO ARE POOR OR WORKING POOR WHO DO NOT RECEIVE THE DISCOUNTS WILL BE PAYING THIS FEE.
I REMIND YOU THAT IN THE SACRAMENTO MUNICIPAL UTILITY DISTRICT, THEY INCOME QUALIFY ALL DISCOUNT PARTICIPANTS, AND THAT UTILITY HAS A PERCENTAGE OF PARTICIPATION TWICE WHAT AUSTIN'S IS.
FINALLY, AUTO ENROLLMENT IS PROBABLY LOSING ITS EFFECTIVENESS DUE TO AUSTIN'S GENTRIFICATION.
THERE ARE SIMPLY FEWER PEOPLE ON SOCIAL SERVICE PROGRAMS. IF YOU WANT TO EXPAND PARTICIPATION, YOU SHOULD CONSIDER ASKING CUSTOMERS TO APPLY WHEN THEY GET NEW SERVICE, TRY SOMETHING NEW.
UM, DO WE HAVE OUR ONLINE COUNCIL MEMBER AVAILABLE SO THAT WE CAN TAKE A VOTE, UM, TO PASS THE MINUTES? THERE WE GO.
[1. Approve the minutes of the October 11, 2022 meeting of the Austin Energy Utility Oversight Committee and the November 9, 2022 Special Called meeting of the Austin Energy Utility Oversight Committee.]
UM, DO I HAVE A MOTION TO APPROVE THE MINUTES OF THE OCTOBER 11TH, 2022 MEETING OF THE OVERSIGHT COMMITTEE, UH, AND THE NOVEMBER 9TH, 2022 SPECIAL CALLED MEETING OF THE OVERSIGHT COMMITTEE, THE AMERI PROTON MIX, THAT MOTION AND COUNCIL MEMBER ELLIS SECONDS.ALL IN FAVOR, PLEASE INDICATE THAT LOOKS LIKE IT IS UNANIMOUS WITH THE 1, 2, 3, 5, 6 OF US HERE WITH COUNCIL MEMBERS KITCHEN, KELLY TOVO RENTERIA AND HARPER MADISON.
OFF THE DIAS, THERE'S SEVEN OF US.
COUNCIL MEMBER KELLY, I MISSED, I MISSED ADDING IN MR. VELA OVER THERE AT THE END OF THAT TABLE.
[2. Approve the 2023 Austin Energy Utility Oversight Committee meeting calendar.]
UH, ITEM TWO, DISCUSSION AND POSSIBLE ACTION APPROVE THE 2023 AUSTIN ENERGY UTILITY OVERSIGHT COMMITTEE MEETING CALENDAR.THIS WILL BE REALLY IMPORTANT FOR THOSE OF US WHO COME BACK NEXT YEAR.
YOU WILL SEE THE DATES, UM, THAT ARE LISTED THERE.
UH, LET ME PULL THAT UP SO I CAN READ THEM OUT TO MAKE IT, UM, EASY.
FEBRUARY 14, APRIL FOUR, MAY NINE, JUNE 13, SEPTEMBER 12TH, OCTOBER 24, AND DECEMBER FIVE.
ALL THE MEETINGS WILL BE ON TUESDAYS, UH, BEGINNING AT ONE 30 WITH THE EXCEPTION OF THE JUNE AND SEPTEMBER MEETINGS, WHICH WILL, UH, WHICH ARE PROPOSED TO BEGIN AT 10 IN THE MORNING BECAUSE OF OTHER MEETINGS THAT AFTERNOON.
UH, DO I HAVE, UM, ANY COMMENTS OR A MOTION TO APPROVE THIS, UH, THIS AGENDA.
COUNCIL MEMBER KELLY MOVES WITH COUNCIL MEMBER FUENTES SECONDING.
ANY COMMENTS? I WILL LIKELY MISS THE SEPTEMBER 12TH MEETING.
ALL IN FAVOR, PLEASE INDICATE RAISE YOUR HAND AND THAT, UH, THE SEVEN OF US IN.
[3. General Manager’s Report -Upcoming Recommendations for Council Action -Innovations, events, awards]
IS THE GENERAL MANAGER'S REPORT.GENERAL MANAGER'S SERGEANT, GOOD TO SEE YOU AND, UH, OUR MANAGER WILL GIVE US A REPORT ON UPCOMING RECOMMENDATIONS FOR COUNCIL ACTION INNOVATIONS, EVENTS AND AWARDS.
GOOD AFTERNOON CHAIR, VICE CHAIR, AND, UH, COMMITTEE MEMBERS.
I'M JACKIE, SERGEANT AUSTIN, ENERGY GENERAL MANAGER.
IN ADDITION TO MY REPORT TODAY, OUR DIRECTOR OF FINANCE, STEPHANIE ULKA, WILL PROVIDE YOU WITH OUR FOURTH QUARTER FINANCIAL UPDATE.
AND THEN INTERIM CHIEF OPERATING OFFICER STUART WEICH WILL PROVIDE YOU WITH OUR, AN OVERVIEW OF OUR FOURTH QUARTER OPERATIONS BRIEFING.
AND THEN, UH, DEPUTY GENERAL MANAGER AND CHIEF FINANCIAL OFFICER MARK DOMBROSKI AND I WILL RETURN AND, UH, PRESENT
[00:10:01]
ON THE AUSTIN ENERGY BASE RATE REVIEW.WHILE THEY'RE WORKING TO BRING THAT UP, I'LL GO AHEAD AND, AND CONTINUE ON.
UM, I'M GONNA TALK TODAY ABOUT FIVE UPCOMING REQUESTS FOR COUNCIL ACTION.
UH, THE FIRST ITEM, THERE WE GO.
THE FIRST ITEM IS TO AUTHORIZE UP TO 2.4 MILLION IN COST REIMBURSEMENTS TO THE WALLER CREEK OWNER LLC FOR SERVICE PIPE CONNECTIONS OF THE WALLER BUILDING TO THE AUSTIN ENERGY DOWNTOWN DISTRICT COOLING SYSTEM.
THE NEXT ITEM IS TO AUTHORIZE NEGOTIATION AND EXECUTION OF A MULTI-TERM CONTRACT, NOT TO EXCEED 8.45 MILLION WITH GRID SOLUTIONS TO UPGRADE THE EXISTING GIS SOFTWARE AND TO PROVIDE CONTINUOUS MAINTENANCE AND SUPPORT SERVICES.
THIS CRITICAL MAPPING SOFTWARE ALLOWS AUSTIN ENERGY SYSTEM OPERATORS TO MONITOR OUTAGE LOCATIONS, FIELD CREWS, AND MAINTAIN DAILY ELECTRIC DISTRIBUTION CIRCUIT CONFIGURATION.
THE NEXT ITEM IS TO AUTHORIZE NEGOTIATION AND EXECUTION OF A FIVE YEAR CONTRACT, NOT TO EXCEED 125 MILLION AMONG SIX QUALIFYING COMPANIES TO PROVIDE CRITICAL ELECTRIC UTILITY SUPPLIES.
THESE CONTRACTS WILL PROVIDE ELECTRIC UTILITY EQUIPMENT AND MATERIALS SUCH AS SINGLE PHASE TRANSFORMERS, POWER CABLES, COPPER WIRE, POLE LINE, HARDWARE, AND FUSES.
THE NEXT ITEM IS TO AUTHORIZE NEGOTIATION AND EXECUTION OF A 2.6 MILLION CONTRACT WITH GENERAL ELECTRIC INTERNATIONAL INC.
FOR UPDATES TO THE CONTROL SYSTEM ON UNIT FIVE AT THE SANDHILL ENERGY CENTER.
THE UPDATED SYSTEM WILL ENSURE ONGOING, SAFE AND RELIABLE OPERATIONS AND IMPROVE CYBER SECURITY WITH THE LATEST VERSIONS OF FIRMWARE AND SOFTWARE.
THE FINAL ITEM IS TO AUTHORIZE A 3.4 MILLION INCREASE TO CONTRACT WITH SIEMENS ENERGY INC.
FOR CONTINUED SUPPLY OF HIGH VOLTAGE CIRCUIT BREAKERS FOR A RISE TOTAL CONTRACT AMOUNT NOT TO EXCEED $9.65 MILLION.
CIRCUIT BREAKERS PROTECT HIGH VOLTAGE TRANSMISSION LINES AND SUBSTATION EQUIPMENT.
THEY, THEY'RE ESSENTIAL TO MAINTAIN THE SAFETY AND RELIABILITY OF THE ELECTRICAL SYSTEM.
NOW I'M PROUD TO ANNOUNCE THAT AUSTIN ENERGY RECEIVED THE AMERICAN PUBLIC POWER ASSOCIATION'S 2022 EXCELLENCE IN PUBLIC POWER COMMUNICATIONS AWARD FOR OUR BASE RATE REVIEW VIDEO.
THIS PAST YEAR, THE AUSTIN ENERGY CORPORATE COMMUNICATIONS TEAM CREATED A SUITE OF RESOURCES TO EDUCATE OUR COMMUNITY ON OUR BASE RATE REVIEW WITH A LARGE AMOUNT OF TECHNICAL INFORMATION TO CONVEY THE TEAM CREATED ELEMENTS THAT COULD APPEAL TO WIDE AUDIENCES.
WE RECOGNIZE THE NEED FOR QUICK DIGESTIBLE MESSAGING AND DETERMINE AN ORIGINAL OVERVIEW VIDEO WAS ESSENTIAL.
THE VIDEO IS AVAILABLE IN BOTH ENGLISH AND SPANISH TO MAKE THE CONTENT MORE ACCESSIBLE FOR OUR COMMUNITY.
IN ADDITION TO SHARING THE VIDEO AT OUR COMMUNITY MEETINGS, WE FEATURE IT PROMINENTLY ON OUR UTILITY WEBSITE, OUR, OUR COMMUNITY ENGAGEMENT WEBSITE, AND OUR SOCIAL MEDIA CHANNELS.
THE VIDEO HAS HAD MORE THAN 7,700 PAGE VIEWS WITH ADDITIONAL VIEWS ON SOCIAL MEDIA.
IT'S HARD TO BELIEVE IT'S NEARLY DECEMBER AND THE HOLIDAY SEASON IS HERE.
EARLIER THIS MONTH, AUSTIN ENERGY CRUISE STRUNG THE 3,309 LIGHTS ON THE ICONIC MOONLIGHT TOWER IN ZILKER PARK TO CREATE THE ZILKER HOLIDAY TREE.
JUST THIS PAST SUNDAY, THE COMMUNITY CAME TOGETHER FOR THE 56 ANNUAL ZILKER HOLIDAY TREE LIGHTING CEREMONY.
THANK YOU TO OUR CREW MEMBERS WHO SAFELY INSTALLED THE LIGHTS AND WHO PLAY SUCH AN INTEGRAL ROLE IN OUR AUSTIN TRADITION.
THE ZILKER TREE WILL BE LIT UP NIGHTLY THROUGH JANUARY 1ST, AND I ALSO WANNA THANK THE MAYOR AND THE COUNCIL MEMBERS WHO ARE ABLE TO JOIN US ON SUNDAY EVENING FOR THE OFFICIAL LIGHTING OF THE TREE.
AND WITH THAT I WILL PAUSE AND ANSWER ANY QUESTIONS YOU MAY HAVE QUESTIONS FOR OUR GENERAL MANAGER COUNCIL MEMBER.
AND IT KIND OF BRIDGES INTO OUR RATE CASE CONVERSATION, BUT, UM, I HAVE A QUESTION ABOUT THE REGIONAL SCIENCE FAIR.
SO I, I BELIEVE I'D HEARD THAT THE REGIONAL SCIENCE FAIR, WHICH HAS BEEN SPONSORED BY AUSTIN ENERGY FOR MANY YEARS, IS, UM, THAT AUSTIN ENERGY IS GOING TO PULL BACK ON ITS SPONSORSHIP OF THAT IN THE NEXT YEAR OR TWO.
CAN YOU, UM, LET ME KNOW WHAT THAT, WHAT THE DATA IS THERE, WHAT THE INFORMATION WHEN THAT'S HAPPENING? SO I CAN, UM, TURN THIS OVER TO OUR VICE PRESIDENT OF COMMUNICATIONS, UM, COMPLIANCE AND REGULATORY AFFAIRS.
UH, YES, WE HAVE BEEN WORKING WITH THE AUSTIN SCIENCE
[00:15:01]
AND EDUCATION FOUNDATION, WHICH HAS BEEN THE CO-PARTNER WITH AUSTIN ENERGY, UH, IN THE SCIENCE FEST FOR, GOSH, PROBABLY A DECADE NOW THAT WE'VE BEEN WORKING TOGETHER.AND WE'VE BEEN WORKING WITH THEM, UH, TO TRANSFER WHAT WE CALL, UM, UH, THE, UH, SPONSOR OWNER OF THE SCIENCE FAIR THAT HAS BEEN AUSTIN ENERGY FOR THE LAST 20 YEARS OR SO.
AND, UM, IT'S JUST COME TO A POINT WHERE, UH, I THINK THE, THE FOUNDATION HAS MATURED AND AUSTIN ENERGY HAS A LOT OF, UH, DIFFERENT INTERESTS THAT, THAT, UM, IT IS LOOKING AT.
AND SO WE'VE BEEN WORKING WITH THEM TO TRANSITION SO THAT THEY WOULD BE THE TITLE, UH, SPONSOR FOR THE SCIENCE FEST.
IT DOESN'T MEAN THAT AUSTIN ENERGY WILL NOT BE INVOLVED WITH THE SCIENCE FEST OR PARTNERING AND, AND PROVIDING SOME, UH, SPONSORSHIP OPPORTUNITIES.
IT'S JUST THEY WILL BECOME WHAT WE CALL THE OWNER AND MANAGER OF THE SCIENCE FEST, BEGINNING WITH THE 24 SCIENCE FEST.
SO FOR THE YEAR 2023, THE SCIENCE FEST IS SCHEDULED, UH, FOR FEBRUARY.
AUSTIN ENERGY WILL STILL CONDUCT THE SAME ROLE THAT IT HAS IN THE PAST, BUT WE'VE BEEN WORKING ON A TRANSITION.
SO HOW MUCH, UM, DOES AUSTIN ENERGY CONTRIBUTE TOWARD THE SCIENCE? IT WAS KIND OF A SIGNATURE PROJECT OF, OF AUSTIN ENERGY IN THE COMMUNITY, AND SO I WAS SURPRISED TO HEAR THAT NEWS AND THAT THERE WAS, UM, A SUGGESTION ABOUT TRANSFERRING IT OR THAT AN INTENT TO TRANSFER IT.
I ASSUME THAT PART OF THAT IS REFLECTED IN OUR RATE, IN OUR RATE CASE.
AND SO CAN YOU TELL ME HOW MUCH, UM, AUSTIN ENERGY USUALLY CONTRIBUTES TOWARD THE SCIENCE FAIR? WELL, THERE'S, THERE'S TWO DIFFERENT, UH, CONTRIBUTIONS THAT WE GIVE.
WE GIVE, UH, AN IN KIND AND THEN WE GIVE A FINANCIAL, UH, CONTRIBUTION.
SO TYPICALLY WE HAVE, UH, GIVEN A FINANCIAL CONTRIBUTION OF AROUND $80,000 AND IN AND WITH KIND OF INKIN SUPPORT THAT WE HAVE WITH RESPECT TO FTES THAT ARE DEDICATED TO SUPPORTING SCIENCE FAIR AND ALL OF THE DIFFERENT RESOURCES, WE'VE ESTIMATED THAT TO BE ROUGHLY IN THE $250,000 RANGE.
AND, AND THEY USUALLY ARE IN THE PALMER EVENT CENTER, WHICH, FOR WHICH THERE'S NOT A CHARGE THAT, WELL, THAT'S NOT THE CASE ANYMORE.
UH, PALMER EVENTS, UH, DOES CHARGE FOR USE OF THE FACILITY FOR SCIENCE FAIR.
AND SO THAT IS ROUGHLY, I, I'M, I'M ESTIMATING HERE, BUT I WANNA SAY PROBABLY $40,000.
AND IS THAT COST TYPICALLY COVERED BY AUSTIN ENERGY? YES.
SO THAT WOULD BE ABOUT $120,000, UM, THAT THE NONPROFIT WOULD HAVE TO RAISE TO CONTINUE THE SCIENCE FAIR.
WELL, I THINK THAT, UM, IN ADDITION TO THE IN KIND, WHICH, FOR WHICH THERE'S NOT, WELL, I, I I THINK THERE, THERE'S, THERE'S, LOOK, THEY'RE ACTUALLY LOOKING AT MAYBE, MAYBE ANOTHER OPTION TO PALMER.
SO I DON'T KNOW THAT THAT SPECIFIC COST WILL CONTINUE.
YOU KNOW, WE HAD BEEN DOING IT IN THE PAST BECAUSE IT WAS OBVIOUSLY A CONVENIENT LOCATION FOR OUR OLD BUILDING AS WELL AS HAVING THE ABILITY, UM, TO USE IT AS A CITY FACILITY.
AND IN TERMS OF, UM, I'M, I'M NOT SURE, SO THE 80,000, YOU WERE ADDING THE 80 AND THE 40 TO GET ONE 20? RIGHT.
WELL, AGAIN, WE HAVEN'T DETERMINED HOW MUCH, UM, OUR FINANCIAL CONTRIBUTION WILL BE GOING FORWARD, BUT THE FOUNDATION HAD ALREADY BEEN RAISING, UH, CERTAINLY MONEY FOR ADDITIONAL SPONSORSHIPS AND, UM, YOU KNOW, I HAVEN'T SEEN THEIR ACTUAL BUDGETS SPECIFICALLY OF WHAT THEY'RE LOOKING AT WHAT THEY NEED GOING FORWARD.
YEAH, I THINK, I THINK THOUGH IT'S FAIR TO SAY AUSTIN ENERGY WAS THE MAIN SPOT, WAS ONE OF THE, CERTAINLY ONE OF THE BIGGEST SPONSORS OF THAT.
AND I, AND I'D LOVE TO SEE IT CONTINUE.
I THINK IT'S A REALLY IMPORTANT, YOU KNOW, A SUPER IMPORTANT, UM, WAY TO ENCOURAGE KIDS TO LOVE SCIENCE.
AND SO I HOPE THAT THE, THE CITY WILL CONTINUE TO HAVE A, A ROLE IN IT AND, YOU KNOW, TO MORE ON THAT LATER.
BUT I, I DO THINK THIS IS AN OPPORTUNITY POTENTIALLY AT LEAST MANAGER, UM, IF WE ARE MOVING AWAY FROM SPONSORING IT AT AUSTIN ENERGY, AT LEAST TO MAKE IT A CO-SPONSORED EVENT SO THAT IT'S SO THAT IT CAN OPERATE FREE OF, FREE OF CHARGE AT OUR PALMER EVENT CENTER.
I THINK THAT'S A REALLY IMPORTANT WAY TO HELP.
I THINK IT WOULD, I THINK IT'S GOING TO BE CHALLENGING FOR THE NONPROFIT TO RECOUP ALL OF THAT, CERTAINLY IN, IN THE NEXT YEAR.
IS THAT, AND THEN JUST BRIDGING IT TO THE RATE CASE, UM, FORMERLY SOME OF THOSE COSTS, SOME OF THOSE SPONSORSHIPS, COMMUNITY THINGS.
UM, I THINK THE UTILITIES FOR THE LONG CENTER, FOR EXAMPLE, THERE'S A CONTRIBUTION FROM AUSTIN ENERGY, AT LEAST THERE HAD BEEN IN THE PAST TO THE LONG CENTER UTILITIES CAME OUT OF SOMETHING CALLED A COMMUNITY FUND.
I CAN'T SPEAK TO THAT SPECIFICALLY.
I DO KNOW THAT WE DO HAVE, YOU KNOW, CERTAIN, UH, AMOUNT OF FUNDS SET ASIDE FOR VARIOUS MEMBERSHIPS AND, AND SPONSORSHIPS.
I DON'T BELIEVE WE'VE DONE A, A LONG CENTER SPONSORSHIP WITHIN THE LAST COUPLE OF YEARS SINCE I'VE BEEN ON BOARD WITH AUSTIN ENERGY.
BUT, YOU KNOW, FOR EXAMPLE, WE ARE MEMBERS OF THE CHAMBER OF COMMERCE AND A VARIETY OF, OF
[00:20:01]
OTHER ORGANIZATIONS, SEEDLING FOUNDATION, THINGS LIKE THAT, WHERE, WHERE WE PROVIDE, UM, SOME MEMBERSHIP AND SOME FINANCIAL SUPPORT THAT IS SPECIFICALLY WITHIN, UH, THE GOVERNMENT RELATIONS BUDGET REGARDING SPONSORSHIPS.I THINK THERE MAY BE, UM, OR IN THE PAST HAVE BEEN SOME OTHER, UH, MEANS, AND, AND MAYBE THE ACCOUNTING FOLKS CAN SPEAK TO THAT MORE, SOME, SOME OTHER BUCKETS OF MONEY, SO TO SPEAK, THAT WERE, UM, DIRECTED TOWARDS OTHER CITY DEPARTMENTS FOR SOME SPECIFIC FINANCIAL, UH, SPONSORSHIPS IN THE COMMUNITY.
BUT I BELIEVE THAT MIGHT HAVE BEEN, UH, REWORKED IN THE LAST FEW YEARS.
AND WHEN WE SHIFT TO THE RATE CASE, UM, CONVERSATION, I WOULD LIKE, I WOULD LIKE TO PURSUE THAT A LITTLE FURTHER CUZ AT ONE POINT I KNOW THERE WERE, YOU KNOW, IT AMOUNTED TO A FAIR, IT, IT HAD A FAIR AMOUNT OF DOLLARS IN IT AND I WANNA UNDERSTAND WHETHER WE STILL HAVE THAT FUND AND IF SO, WHETHER THAT'S, UM, WHETHER THAT'S SOMETHING THAT WE'RE MAKING DECISIONS ABOUT WITH REGARD TO THE RIGHT CASE.
SO ANYWAY, THANK YOU FOR THE INFORMATION ABOUT THE SCIENCE FAIR.
[4. Fourth Quarter Financial Briefing]
WILL MOVE NOW TO ITEM FOUR, FOURTH QUARTER FINANCIAL BRIEFING.I'M DIRECTOR OF FINANCE FOR AUSTIN ENERGY, PRESENTING TO YOU THIS AFTERNOON A SUMMARY OF OUR PRELIMINARY UNAUDITED FINANCIAL RESULTS FOR THE FOURTH QUARTER OF FY 22.
SORRY, I DIDN'T REALIZE IT WAS, WASN'T UP.
UH, THIS IS JUST OUR TYPICAL DIS UH, DISCLAIMER SLIDE THAT LETS YOU KNOW THAT THE INFORMATION IS, UH, VERY PRELIMINARY FOR FY 22 AND UNAUDITED, AND WE EXPECT OUR FINANCIAL STATEMENTS FOR FY 22 TO BE AUDITED, AUDITED, AND RELEASED IN THE MARCH, 2023 TIMEFRAME.
I'LL ALSO JUST BE PROVIDING AN EXECUTIVE SUMMARY FOR YOU THIS AFTERNOON, BUT YOUR PACKET DOES INCLUDE OUR STANDARD AGENDA, WHICH INCLUDES POLICY COMPLIANCE AND KPIS, UH, FINANCIAL REPORTING, UM, MARKET AND INDUSTRY SECTION, UM, THAT I'LL TOUCH A LITTLE BIT MORE ON IN THE EXECUTIVE SUMMARY.
SO AT THE END OF THE FOURTH QUARTER FOR F Y 22, WE ARE IMPARTIAL COMPLIANCE WITH OUR FINANCIAL POLICIES.
WE DO HAVE TWO INDIVIDUAL RESERVE BALANCES THAT ARE NOT MEETING MINIMUMS, THAT'S OUR CONTINGENCY AND CAPITAL RESERVES.
IN ADDITION, DURING THE FY 22, UH, BUDGET PROCESS, WE SET A MINIMUM FOR TOTAL CASH AND RESERVES.
UM, THAT MINIMUM IS 480 MILLION AT SEPTEMBER, WE'RE SITTING AT 444 MILLION TOTAL.
AT THE END OF SEPTEMBER, OUR CASH BALANCE WAS 165 MILLION, WHICH IS JUST COINCIDENTALLY THE SAME AMOUNT THAT IT DECREASED OVER THE FISCAL YEAR.
UM, THAT'S PRIMARILY DUE TO THOSE INCREASED POWER SUPPLY COSTS THAT WE SAW THIS SUMMER, UM, DUE TO HIGHER NATURAL GAS PRICES AS WELL AS CONGESTION COST.
WE DID ALSO RETURN THAT WHOLESALE, UM, OVER RECOVERY THAT WE RECEIVE RECOVERY THAT WE RECEIVED RELATED TO WINTER STORM URIE.
UH, THE MIDDLE TWO UH, SECTIONS HERE ARE, ARE RESULTS FOR OPERATING REVENUE AND EXPENSE.
OUR OPERATING REVENUE FOR THE FOURTH QUARTER LANDED AT 1.7 BILLION, WHICH WAS ABOUT 13% MORE THAN BUDGET.
WHILE OUR OPERATING COST, INCLUDING TRANSFERS WERE 1.7 AS WELL, THEY SAW UNFAVORABLE RESULTS OF 10% MORE THAN BUDGET.
SO THE REASON THE INCREASE, UM, FOR THE INCREASE IN BOTH IS MOSTLY DUE TO POWER, SUPPLY, COST AND REVENUES.
THE REASON WHY OUR REVENUE HAS MORE FAVORABLE RESULTS THAN EXPENSE HAD UNFAVORABLE IS BECAUSE OF THE INCREASED USAGE DUE TO THE RECORD HEAT THAT WE ALL SAW IN F Y 22.
WE SAW A 9% INCREASE IN USAGE OVER THE YEAR, WHICH OF COURSE TRANSLATES TO HIGHER BILLS FOR OUR CUSTOMERS ON A NORMALIZED WEATHER YEAR.
UM, WE'D SEE MATERIAL OPERATING LOSSES FOR THE FISCAL YEAR.
ALSO, WANNA NOTE THAT THE NUMBERS IN THE PACKET, AGAIN, ARE VERY PRELIMINARY.
AS WE, UM, WORK TO FINALIZE OUR AUDIT, WE'LL LIKELY SEE INCREASED COST AS WE, UH, CONTINUE TO ACCRUE COST TO THE FISCAL YEAR.
AND THAT WILL OF COURSE CONTRIBUTE TO EVEN LOWER MARGINS THAN WE'RE PRESENTING IN THE PACKET.
[00:25:01]
AS A BASELINE, OUR BASE REVENUE WAS $40 MILLION OVER BUDGET BECAUSE OF THAT EXTREME HEAT.UM, WHILE OUR FIXED COSTS REMAINED, UH, RELATIVELY FLAT OVER THE FISCAL YEAR.
I'LL MOVE ON TO THE BOND RATING IN AUGUST STANDARD.
AND POS DID, UM, DOWNGRADE OUR BONDS FROM AA TO AA MINUS THAT'S FOLLOWING FIT'S ACTION IN JUNE OF THE FISCAL YEAR.
SOME OF THE FACTORS THEY MENTIONED IN OUR, UH, DOWNGRADE REPORT AND UM, INCLUDE WEEKEND FINANCIAL PERFORMANCE THAT WE'VE SEEN IN FISCAL 20 AND 21, AS WELL AS SOME PROJECTED LOWER LIQUIDITY AND COVERAGE METRICS THAN THE UTILITY HAS SEEN IN HISTORICAL LEVELS.
AND THAT'S REALLY BASE RATES DRIVEN.
GIVEN THAT REVENUE IS SHORT TO RECOVER COST, WE'RE SEEING HIGH HIGHER DEBT SERVICE PAYMENTS AND FLAT REVENUES OTHER THAN INCREASES THAT WE SEE DUE TO EXTREME WEATHER, WE DID MOVE FROM NEGATIVE TO STABLE OUTLOOK, UM, DUE TO OUR PLANS TO RAISE THOSE BASE RATES AS WELL AS THEIR VIEW OF OUR DIVERSE POWER PORTFOLIO.
AND THEN INCLUDED IN THE PACKET IS OUR MARKET AND INDUSTRY ANALYSIS SECTION.
UM, THIS QUARTER WE FOCUSED ON OUR COMPETITIVENESS METRIC FOR CALENDAR YEAR 21, WHICH INCLUDES INFORMATION FROM THE ENERGY ENERGY INFORMATION ADMINISTRATION.
UM, THE RESULTS THERE SHOW THAT AUSTIN ENERGY'S AVERAGE SYSTEM RATE WAS AROUND 13% BELOW THE STATE AVERAGE.
UM, JUST AS A COMPARISON FOR CALENDAR YEAR 20, WE WERE AT ABOUT 3% BELOW AND FOR 21, THAT'S MOSTLY DRIVEN BY YURI, WHICH LOWERED REVENUE AND, UH, REVENUES AND COSTS FOR OUR CUSTOMERS.
SO THAT CONCLUDES THE EXECUTIVE SUMMARY FOR MY PRESENTATION.
HAPPY TO TAKE ANY QUESTIONS YOU HAVE.
NOW I HAVE ONE QUICK QUESTION FOR YOU.
ON THAT LAST ITEM, YOU WERE TALKING ABOUT THE 12.6% BELOW THE STATE AVERAGE FROM LAST YEAR.
UM, CAN YOU GIVE ME A A DOLLAR FIGURE FOR THAT? SURE.
SO AT THE BACK OF THE PACKET, LET'S SEE, AND THEN AS YOU'RE LOOKING FOR THAT, A FOLLOW ON IS DO YOU HAVE A, A CHART THAT SHOWS HOW WE HAVE, UM, UH, PERFORMED IN THIS SAME AREA OVER THE LAST FIVE TO SIX YEARS ISH? YES.
SO WE HAVE IN THE PACKET THE RESIDENTIAL, COMMERCIAL AND INDUSTRIAL, UM, COMPARED TO THE AVERAGE, UM, WITH, UM, KIND OF A, I THINK IT'S ABOUT A 15 YEAR VIEW.
WHAT PAGE THAT YOU'LL SEE THAT IS ON PAGE, UH, STARTS PROBABLY ON 25, 27 IS THE CNI, 26 IS THE RESIDENTIAL COMPARISON.
I'M LOOKING AT THE PDF AND THE NUMBERING'S DIFFERENT, SO I'LL HAVE TO, I APOLOGIZE FOR THAT.
I'LL JUST DO A LITTLE BIT OF BRAVE MATH HERE.
AND DID YOU GET A DOLLAR FIGURE? SO FOR, UM, I'M LOOKING AT PAGE 28.
I'M NOT SURE IF THAT'S EXACTLY THE SAME, BUT IT'LL SHOW AUSTIN ENERGY'S SYSTEM.
AVERAGE RATE FOR CALENDAR 21 WAS 8.56 CENTS PER KILOWATT HOUR AND A YELLOW BAR.
GO TO THAT SLIDE FOR ME PLEASE.
LET'S SEE IF IT LINES UP AND I SEE, AM I LOOKING AT THE RIGHT CHART WHERE IT SAYS 9.80 CENTS FOR TEXAS ON AVERAGE? THAT'S RIGHT.
AND HOW MANY ON THIS LIST, UM, ARE SINGLE TIER THAT AUSTIN ENERGY IS KIND OF UNUSUAL IN THE STATE OF TEXAS FOR HAVING THE PRICE BREAKS BASED ON USAGE? RIGHT.
I DON'T HAVE THAT INFORMATION AT MY FINGERTIPS.
WHAT I CAN SAY IS THAT WE FILTER THE DATA DOWN QUITE A BIT, UM, OF THE RESULTS OF TEXAS JUST SO THAT WE CAN BENCHMARK OURSELVES AGAINST SIMILAR TYPE UTILITIES.
UM, BUT I DON'T HAVE THE TIER STRUCTURE FOR EACH OF THEM, UM, AT MY FINGERTIPS.
UM, IF THAT IS AVAILABLE TO ME, I WILL CERTAINLY GET BACK TO YOU.
THAT'S IMPORTANT BECAUSE SOME OF THE DATA THAT PEOPLE ARE LOOKING AT LOOK AT THE COST PER KILOWATT HOUR OF DIFFERENT UTILITIES AND THEY SAY IT'S LOWER THAN WHAT WE ARE CHARGING, BUT THEY ALSO, UM, ARE EVERYBODY IS PAYING THAT SAME RATE ALL THE, ALL THE WAY ACROSS THE BOARD, RIGHT? YEAH.
AND WE ARE GIVING SOME BREAKS FOR, UM, THE LOWER AMOUNT OF USAGE.
MARI PROTON, WILL YOU FINISH? SURE.
I CAN ALWAYS JUMP IN ANOTHER TIME.
UM, SO I HAD A COUPLE OF QUESTIONS ON SLIDE 12.
UM, THIS COMPARES ACTUAL TO BUDGET ANALYSIS WITH THE RETAIL SALES MM-HMM.
UM, AND, AND I DON'T HAVE A QUESTION ON THIS ONE, I JUST WANNA GO THROUGH IT BEFORE I MOVE TO A DIFFERENT SLIDE.
SO THIS IS ESSENTIALLY SHOWING THAT OUR ACTUAL REVENUE WAS ABOVE BUDGET PRETTY MUCH EVERY MONTH.
IT WASN'T JUST THE SUMMER MONTHS.
[00:30:01]
YEAR, BUT RIGHT.SO THIS, THIS IS A CONSUMPTION SLIDE, SO NOT DOLLAR, EVEN THOUGH IT SAYS SALES, IT'S BASED ON, UH, KW H AND SO THAT IS CORRECT THOUGH WE WERE ABOVE FOR THE FISCAL YEAR, UM, AND 9% IN TOTAL.
SO THEN IF WE GO TO SLIDE 15, UM, OUR REVENUES EXCEED EXPENSES BY 42 MILLION.
UM, AND THEN LATER IN THAT SAME COLUMN OF THE AMOUNTS WE ARE SUBTRACTING INTERNAL TRANSFER, C I P FROM THAT TO GET TO, UH, 21 MILLION OF EXCESS OF REVENUES.
UM, CAN YOU FIRST OF ALL, UM, CLARIFY THE, WHAT GOVERNS THE CHOICE OF THE INTERNAL TRANSFERS IN C I P AMOUNT? SURE.
SO FIRST, FOR CIP P THAT 40 MILLION THAT YOU SEE IN THE BUDGET COLUMN IS, UM, LOWER THAN IT SHOULD BE ON A NORMAL FISCAL YEAR.
SO IN 22, WE HAD ANTICIPATED FUNDS COMING IN FOR THE TRANSFER OF OUR TLC BUILDING.
SO THAT IS ARTIFICIALLY LOW, WHICH IS WHY YOU'RE SEEING THAT WE ACTUALLY HAD TO TRANSFER THE 62 AND THE ACTUAL COLUMN.
SO THAT IS BASED ON OUR CAPITAL SPENDING PLAN, UM, DEPENDING ON OBVIOUSLY WHAT WE'LL SPEND FOR CAPITAL, HOW MUCH WE WILL, UM, FUND WITH DEBT AND HOW MUCH WE WILL RECEIVE IN CONTRIBUTIONS FROM OUR CUSTOMERS AND TRYING TO STAY AT THAT, UH, STRATEGY OF ABOUT 50 50.
SO YOU DIDN'T SELL THE TOWN LAKE CENTER AND SO YOU DIDN'T WE DIDN'T TRANSFER THAT TO C I P WELL, WE DID NOT RECEIVE THE FUNDS FOR THE SALE OF THE BUILDING IN 22 AS WE ANTICIPATED.
SO THE BUDGET WAS JUST SET, UH, A LITTLE BIT LOWER BECAUSE WE HAD ANTICIPATED THOSE FUNDS COMING IN TO HELP FUND CONSTRUCTION.
SO WE HAD APPROPRIATED THE ABILITY TO PUT THAT MONEY INTO C I P.
SO YOU TOOK THE EXTRA REVENUE AND PUT THAT INTO C I P? WELL, NOT NECESSARILY EXTRA REVENUE.
IT, IT, I GUESS WE HAD TO TAKE IT FROM SOMEWHERE BECAUSE IT DID NOT COME FROM THE SALE OF THE BUILDING AND WE NEEDED TO FUND OUR CAPITAL PLAN.
SO WE DID USE OPERATING REVENUE TO FUND THE PLAN RATHER THAN THE PROCEEDS FROM THE SALE.
SO FOR THE MOMENT, LET'S JUST SAY I WON'T TAKE THAT OUT FACE VALUE.
I MAY HAVE SOME QUESTIONS ON THAT WHEN I OBSERVE IT.
WE HAVE A $21 MILLION EXTRA REVENUE FOR FISCAL YEAR 22.
SO THE 21 MILLION REPRESENTS, UM, PRE-AUDIT, PRE-AUDIT ALSO, THIS IS BUDGET BASED.
I WANNA, UH, QUALIFY THAT OUR, OUR TEST YEAR IS BASED ON A GAP BASIS.
UM, THEY'RE, THEY'RE SIMILAR IN NATURE, BUT THIS IS MORE OF A CASH BASIS VIEW OF OUR FINANCIAL POSITION.
LIKE I SAID, THERE'S A, THERE'S AN INCOME STATEMENT IN THE PACKET TOO THAT I CAN COMPARE TO IF YOU'D LIKE, BUT THE, THE AMOUNT THAT'S FAVORABLE TO BUDGET IS, UM, ONLY FAVORABLE BECAUSE IT'S BETTER THAN A 19 PER 19 MILLION BUDGETED DEFICIENCY.
SO IF YOU LOOK AT THE ACTUAL COLUMN AND SEE THAT WE HAD A 2 MILLION, UM, AMOUNT OF EXCESS FOR THE YEAR ON AN ACTUAL BASIS THAT IS DRIVEN BY THAT 40 MILLION OF OVER BUDGET OF BASE REVENUE.
SO 21 MILLION IS JUST BETTER THAN A BUDGETED DEFICIENCY OF 19 MILLION, UM, THAT WE HAD ORIGINALLY EXPECTED.
SO YOU ORIGINALLY EXPECTED A BUDGET DEFICIENCY OF 19 MILLION, AND SO YOU'RE SAYING YOUR REVENUES ABOVE THAT ARE 2 MILLION REV.
UH, ACTUAL RESULTS WERE A POSITIVE OF TWO COMPARED TO A DEFICIENCY, UH, BUDGET OF 19.
BUT WHEN WE ARE TRYING TO DO, AND THIS IS JUMPING TO THE NEXT, UM, ISSUE, BUT I THINK IT'S REALLY RELEVANT HERE WHEN WE ARE BUDGETING FOR THE REVENUE REQUIREMENT YOU'RE TRYING TO GET, YOU'VE BUDGETED TO GET OUT OF THAT 19 MILLION BUDGETED TO GET OUT OF THE 19, THE REASON WHY 19 IS BUDGETED LOWER THAN THE REVENUE REQUIREMENT IS BECAUSE OF THAT C I P TYPICALLY YOU'D SEE A CIP TRANSFER OF 60 70 MILLION.
UM, IT WAS THE, THE SALE OF THE BUILDING THAT DIDN'T COME TO FRUITION.
THAT REALLY, UM, GAVE US A LITTLE BIT OF A BETTER VIEW OF WHAT THE BUDGET WOULD LOOK LIKE FOR 22.
WITHOUT THAT, IN A NORMAL YEAR, YOU'D TRANSFER 60 TO 70, MAYBE EVEN MORE TO C I P TO TO PAY FOR THE ASSETS.
UM, AND THE, THE 40 MILLION OF BASE REVENUE THAT WE RECEIVED WAS FROM THE EXTRAORDINARY WEATHER THIS SUMMER.
SO 2 MILLION AGAINST A 19 MILLION BUDGETED DEFICIENCY, 2 MILLION INCLUDING THE, THE WEATHER FOR THE FISCAL YEAR.
BUT IN THE FUTURE YOU WOULD'VE BUDGETED, I MEAN, IN, IN YOUR, IN YOUR REVENUE REQUIREMENT, YOU'VE ALREADY BUDGETED THE CAPITAL EXPENSE.
SO THE REVENUE, I'M TRYING TO UNDERSTAND THE EXCESS REVENUE,
[00:35:02]
WHAT THAT COULD MEAN FOR THE REVENUE REQUIREMENT MOVING FORWARD, EITHER ABOUT THE ASSUMPTIONS, RECOGNIZING IT'S WHETHER OR RECOGNIZING WHERE WE ARE AT NOW AND WHETHER THAT EXTRA REVENUE COULD BE, YOU KNOW, PER CREATED, FOR LACK OF A BETTER WORD, ACROSS THE NEXT FIVE YEARS.SO THE EXCESS REVENUE VERY PRELIMINARY BUDGET BASIS IS, IS JUST THE TWO, NOT THE 20.
UM, AND CONSIDERING THAT THE BASE REVENUE WAS BUDGETED 40 MILLION LESS THAN THAT, THE RESULTS ARE, ARE ON A TYPICAL NORMAL WEATHER YEAR WOULD BE ABOUT A NEGATIVE, NEGATIVE 38 MILLION BECAUSE OF THAT 40 MILLION OVERAGE.
AND THE BUDGET, OF COURSE IS ON A NORMALIZED WEATHER YEAR.
UM, SO THAT CONTRIBUTED TO THE 2 MILLION, WHICH IS A NET TWO, UM, TO THE UTILITY FOR THE FISCAL YEAR.
SO I, I HEAR WHAT YOU'RE SAYING.
I I'M GONNA HAVE TO THINK THROUGH THOSE CALCULATIONS AND WHAT THEY MEAN, UM, FOR WHAT WE ASSUME FROM THE REVENUE REQUIREMENT.
UM, I KNOW IT WAS A HOT YEAR, BUT I'M NOT EXACTLY SURE THAT I'M WILLING TO SUGGEST THAT IT'S GONNA GET A WHOLE LOT COOLER HERE.
UM, SO I WANT, I WANNA THINK ABOUT, I WANNA THINK ABOUT THAT.
UH, LET ME JUST SEE IF I HAVE OTHER QUESTIONS IN THIS SECTION.
ANYBODY ELSE? AND VICE CHAIR TOVO ANOTHER QUESTION.
I THINK WHAT, WHAT I WANNA HIGHLIGHT ABOUT THE QUESTIONS THAT YOU JUST ASKED MIRA PROTE, IS THAT WE'VE HAD A FEW INTERVENERS, INCLUDING TWO WR LEONARDA COOPER, WHO HAS ASKED US TO TAKE A LOOK AT THE 2022 REVENUES FOR, FOR JUST THIS POINT IN THAT IT'S COMING IN HIGHER THAN ANTICIPATED.
AND SO, YOU KNOW, AS I WEIGH, WEIGH AND BALANCE ALL THE DIFFERENT CONSIDERATIONS BEFORE US, ONE IS AN INTEREST IN REALLY MITIGATING THE RATE SHOCK.
AND SO I AM REALLY GLAD TO SEE THESE NUMBERS BECAUSE IT SHOWS THAT THAT, UM, CONTRARY TO WHAT THE RATE CASE WOULD SUGGEST, WE DON'T HAVE, WE ARE MEETING OUR EXPENSES AND IN FACT, WE'RE A LITTLE BIT AHEAD.
AND SO I APPRECIATE THAT IT WAS A HOT YEAR AND THAT THOSE REVENUES WERE HIGHER THAN NORMAL.
BUT I, I DO SEE, I DO SEE, UM, ENOUGH IN HERE TO SUGGEST THAT WE COULD BE A LITTLE BIT, WE COULD TAKE THAT INTO ACCOUNT AS WE'RE LOOKING AT, AT OUR RATE CASE, UH, IN LIGHT OF OUR RECENT REVENUE.
I UNDERSTAND WE HAVE TO USE THE TEST YEAR, BUT IF WE DECIDED TO GO A BIT BEYOND, IF WE DECIDED TO, TO DO LESS THAN WHAT AUSTIN ENERGY IS, IS REQUESTING, UM, WE DO HAVE THIS TO HELP SUPPORT AND BOLSTER POTENTIALLY THAT, THAT, UM, CHOICE.
YOU HAD MENTIONED AN INCOME STATEMENT THAT YOU THOUGHT WE SHOULD LOOK AT IN ADDITION, COULD YOU POINT US TO WHICH ONE THAT IS PLEASE? SURE.
SO IT'S 21 FROM, SORRY, WHAT PAGE? 21.
I THINK THAT'S THE SAME ONE YOU'LL HAVE.
SO THIS IS, UM, WHAT WE CALL A GAP BASED INCOME STATEMENT, WHICH IS THE AUDITED RESULTS UNAUDITED AT THIS POINT IN THE FISCAL YEAR.
BUT THIS IS THE TYPE OF INCOME STATEMENT WE'LL USE FOR A TEST YEAR.
AND SO AS YOU CAN SEE AT 9 30 22, WE LANDED AT A 3 MILLION, UM, NET LOSS.
AND AGAIN, THAT'S VERY PRELIMINARY.
WE'RE STILL ACCRUING COST TO THE FISCAL YEAR, UM, LIKELY TO SEE A, A MORE MATERIAL LOSS, UM, FOR 22.
UM, IT'S, IT'S COMPARABLE TO 21 OTHER THAN THE WEATHER, YOU KNOW, WE SAW THE 57 MILLION LOSS IN 21 WITHOUT THE WEATHER.
WE'D BE AT ABOUT 40 MILLION AGAIN FOR 22
I'M SORRY, I'M NOT, THE OTHER ONE WAS ON PAGE 15, IS THAT RIGHT? UM, YEAH.
LET'S SEE, CAN I ASK ONE QUESTION ON THAT SHEET FOR 21? MM-HMM.
UM, SO THERE'S A, A LOSS OF 3 MILLION, BUT WE HAVE JUST DONE A RATE INCREASE FOR THE PSA THAT MAKES UP FOR THE LOSSES THAT ARE COMING FROM THE POWER SUPPLY.
SO HOW SHOULD WE BE READING THIS? SO, UH, SIMILAR TO THE BUDGET BASED FUND SUMMARY THAT WE LOOKED AT IN THE EARLIER SLIDE, PASS THROUGHS HAVE NO IMPACT TO INCOME ON THE INCOME STATEMENT AND THE FUND SUMMARY.
SO, UM, IN THE PASS THROUGH RATES WORLD, WE MATCH REVENUES TO COST.
AND DEPENDING ON IF YOU'RE OVER OR UNDERCOVERED, YOU DEFER THAT CASH THAT, THAT YOU HAVE TO EITHER RECEIVE OR PAY BACK TO THE CUSTOMER.
SO PASS THROUGHS DO NOT IMPACT, UM, NET INCOME OR LOSS ON EITHER STATEMENT.
AND SO WHY IS THERE A 3 MILLION LOSS ON THIS ONE? AND A, BECAUSE THEY'RE DIFFERENT BASIS OF ACCOUNTING.
SO THE BUDGET BASED IS MORE OF KIND OF A CASH LOOK THAT INCLUDES ENCUMBRANCES, THIS IS A TRUE INCOME STATEMENT.
[00:40:01]
OKAY.I'M SORRY, I'M STILL, CAN I CONTINUE TO ASK A QUESTION ABOUT THIS? I'M STILL NOT FOLLOWING WHY THE REVENUES ARE SO VASTLY DIFFERENT ON THESE TWO DIFFERENT SLIDES BETWEEN EACH AND, UH, BECAUSE THEY'RE DIFFERENT BASIS OF ACCOUNTING AND SO ON.
ON THIS SLIDE, UH, 21, WE HAVE OPERATING REVENUES SPLIT FROM POWER SUPPLY REVENUES.
AND THEN ON SLIDE, WHAT IS IT? 15, LET ME GRAB IT.
UM, THE 1 0 3 9 PLUS THE 6 35 IS TOTAL OPERATING REVENUE.
SO, BUT, BUT AT THE END OF THE DAY, THE DIFFERENCE IS THAT IT'S TWO DIFFERENT BASIS OF ACCOUNTING.
ONE IS BASED ON THE BUDGET, THE OTHER IS A TRUE INCOME STATEMENT THAT GETS AUDITED BY A THIRD PARTY, AND THAT'S THE BASIS FOR THE TEST YEAR, THE INCOME STATEMENT SLIDE.
I THINK COUNCIL MEMBER VELA HAD A QUESTION GOING BACK TO GOING BACK TO SLIDE 21.
SO I JUST WANNA CLARIFY IF IT WASN'T FOR THE EXTRAORDINARY HEAT AND THE EXTRAORDINARY SALES AND REVENUE THAT WE GOT, YOU'RE SAYING THAT THE NET LOSS WOULD'VE BEEN CLOSER TO 40 MILLION, IS THAT THE NET LOSS WOULD BE CLOSER TO 40? I, I DON'T HAVE AN EXACT FIGURE JUST BECAUSE WE'RE STILL CLOSING THE BOOKS, BUT WITHOUT THE 40 MILLION EMBEDDED EMBEDDED IN THAT NEGATIVE THREE, YOU'D BE MORE LIKE IT NEGATIVE 43.
AND THEN IN TERMS OF THE DROPPING RESERVES, IS THAT LINKED TO THE UNDERCHARGING OF THE PSA RESERVES AS WELL? NO, IT'S NOT LINKED, BUT IT IS LINKED TO JUST BASE RATES AND RATES OVERALL GIVEN OUR, UM, CASH POSITION, UM, BEING PRETTY VULNERABLE RIGHT NOW, UM, IN THE POSITION THAT IT'S IN, UM, IS IS ALL RATES DRIVEN, BUT IT'S NOT PARTICULAR TO THE PSA.
AND THEN GOING TO SLIDE, UM, HONESTLY 28, 29, THAT'S SERIES OF SLIDES WHERE WE'RE COMPARING AUSTIN ENERGY TO OTHER TEXAS PROVIDERS.
WHICH CHART IS THAT COMPARISON? SO THE, THE INFORMATION PRESENTED IS TOTAL RETAIL REVENUE FROM EACH OF THOSE UTILITIES DIVIDED BY TOTAL KILOWATT HOUR.
SO IT'S, IT'S A WEIGHTED AVERAGE RATE TO GET THE STATE.
UM, I'M NOT SURE THAT'S ANSWERING YOUR QUESTION.
SO IN OTHER WORDS, SO THE SYSTEM AVERAGE RATE AND THE RESIDENTIAL AVERAGE RATE SHOULD ADJUST FOR YOUR MONTHLY, YOU KNOW, FEE VERSUS YOUR, YOU KNOW, HIGHER KILOWATT PER HOUR FEE.
IN OTHER WORDS, IT SHOULD BE FACTORING IN ALL THOSE FACT ALL THOSE ITEMS. YES.
SO ON A JUST APPLES TO APPLES COMPARISON, LOOKING AT AUSTIN ENERGY VERSUS MOST EVERY OTHER, UH, ELECTRIC, UH, PROVIDER, WE ARE WELL TOWARD THE BOTTOM IN TERMS OF AVERAGE RESIDENTIAL RATES.
IS IS THAT, IS THAT A TRUE AND CORRECT STATEMENT? THAT IS SO FOR 2021, UM, THAT REPRESENTS THE LOWER COSTS THAT OUR CUSTOMERS SAW MOSTLY DUE TO URI.
AND SO I, I WOULD EXPECT, AND I DON'T OBVIOUSLY HAVE THOSE RESULTS YET, BUT IN CALENDAR YEAR 21, MOST OF THESE ARE GONNA MOVE HIGHER JUST GIVEN SOME OF THE HIGHER PRICES THAT WE'VE SEEN IN THE MARKET THAT WERE, UM, SEEN STATEWIDE.
UH, AND THEN AGAIN, ON THE AVERAGE, A MONTHLY CONSUMPTION ON PAGE 30, UH, WE ARE WELL UNDER THE CONSUMPTION, UH, OF JUST ABOUT EVERY OTHER PROVIDER.
UH, AND I WOULD SAY DESPITE, I MEAN, I'M, I'M JUST EYEBALLING SOME OF THESE, BUT, UM, YOU KNOW, UM, DESPITE OUR HEAT AND I'M JUST TRYING TO KIND OF LIKE, YOU KNOW, PUT IT BY GEOGRAPHY, YOU KNOW, OBVIOUSLY A LITTLE COOLER IN THE NORTH, A LITTLE HOTTER IN THE SOUTH, BUT, UH, ALRIGHT, THAT'S, I JUST WANTED TO GET THAT CLARIFICATION.
LAST QUESTION, ACTUALLY, 31 I GUESS WOULD BE THE BEST.
AGAIN, ACCOUNTING FOR 2021 BEING A, YOU KNOW, VERY STRANGE YEAR FROM A ELECTRIC PRICING PERSPECTIVE.
ALL RIGHT, THANK YOU VERY MUCH.
UH, YES, MAYOR PER TOWN, UM, ON SLIDE 21,
[00:45:01]
UM, IT HAS THE PARCEL BY REVENUES EXCEEDING THE EXPENSES, GET BACK TO THAT ONE.AND, UM, IN ON SLIDE 16, WHICH LOOKS AT THE POWER SUPPLY, IT'S REVERSED.
SO WHY ON THE INCOME STATEMENT IS THAT REVERSED? SO THE REASON WHY THOSE DON'T MATCH EXACTLY, AND I GUESS I'LL JUST TAKE 22 AS AN EXAMPLE, IS THAT POWER SUPPLY REVENUES ARE RECOVERING, UM, MORE THAN JUST THE POWER SUPPLY COST GIVEN THAT WE'VE GOT THE NACADOCIOUS PNI INSIDE OF, UH, THE RATE AS WELL, WHICH IS SEEN IN A DIFFERENT SECTION OF THE INCOME STATEMENT.
BUT, UM, AS A WHOLE, POWER SUPPLY COSTS DO EQUAL WHAT IT RECOVERS IN THE INCOME STATEMENT.
UM, AND YOU SAID IN 21 YOU SAW, SORRY, I MISSED THE SECOND QUESTION.
SO WHAT I'M TRYING, I'M NOT SURE I FOLLOWED YOU.
WE HAVE BEEN SAYING THAT WE HAD PSA COSTS THAT EXCEEDED OUR REVENUES FOR PSA, AND THAT'S WHAT IT SHOWS ON CHART 16 IN THE INCOME STATEMENT.
WE HAVE MORE REVENUE THAN EXPENSES, SO, AND SO I WANNA UNDERSTAND WHY IN THE INCOME STATEMENT THAT WAY, YOU KNOW, YOU SAID SOMETHING ABOUT AN NACADOCIOUS, BUT WE HAVE SWITCH IN NACADOCIOUS, WHICH MAKES THAT, I I THOUGHT WE WERE SWITCHING WHERE WE WERE ACCOUNTING FOR IT, WHICH MAY NOT HAVE HAPPENED YET, BUT, BUT I, BUT I'M NOT UNDERSTANDING WHY THIS IS NOT REFLECTING THAT IMBALANCE FOR THE POWER SUPPLY.
SO THE REVENUES AND THE INCOME STATEMENT ARE BASED ON COST FOR POWER SUPPLY.
AND SO THE BEST WAY TO LOOK AT POWER SUPPLY EXPENSES, JUST TO SEE THAT IN 21 THEY WERE VERY LOW AND WE KNOW THAT'S BECAUSE OF ERIE.
SO THEY WERE AROUND 275 MILLION.
THE EXPENSES DON'T MATCH EXACTLY BECAUSE THE RECOVERY IS PICKING UP COSTS THAT AREN'T IN THAT POWER SUPPLY EXPENSE LINE AT THE, AT THE END OF THE DAY, IT DOES MATCH DOLLAR FOR DOLLAR IN THE INCOME STATEMENT.
UM, AND THEN THE REASON WHY THE EXPENSE IS UP IN 22 IS BECAUSE OF ALL THE, THE FACTORS THAT, THAT YOU WELL KNOW ABOUT.
UM, AND THE REASON WHY WE NEEDED TO RAISE THE PSA IN 22.
I I UNDERSTAND THE DIFFERENCE ACROSS 21 AND 22.
WHAT I DON'T UNDERSTAND IS THE DIFFERENCE BETWEEN THE FOR 22, WHY IS IT 6 35 FOR THE REVENUES AND 5 78 FOR THE EXPENSES? BECAUSE THAT, YES, EXCUSE ME, SORRY.
THAT NET DIFFERENCE OF 60 MILLION IF I HAVE THAT MATH RIGHT, IS BECAUSE THERE, THERE ARE ADDITIONAL COSTS IN THE INCOME STATEMENT THAT ARE NOT PICKED UP IN THAT POWER POWER SUPPLY EXPENSE LINE.
SO THINGS LIKE NADOS ON AND M AND P AND I ARE RECOVERED BY THE PSA AND THEY ARE NOT LISTED IN THE POWER SUPPLY EXPENSE LINE BECAUSE THEY'RE OTHER ON M AND DEBT SERVICE COST.
SO WHERE, WHERE DO THEY APPEAR IF THEY DON'T APPEAR IN THE INCOME STATEMENT? SORRY, THE, UM, NACADOCIOUS ON AND M IS IN THE NON POWER SUPPLY EXPENSE LINE, AND THEN DEPRECIATION IS THE GAP BASIS FOR, UH, PRINCIPAL AND INTEREST.
SO THEY'RE EMBEDDED IN THOSE, UH, TWO.
SO THERE ARE ADDITIONAL PSA EXPENSES THAT ARE NOT CAPTURED IN THE POWER SUPPLY EXPENSE LINE IN THE STATEMENT THAT ARE CAPTURED IN THE NEXT TWO EXPENSE CORRECT LISTS? YES.
[5. Fourth Quarter Operations Briefing]
NEXT, UH, BRIEFING IS THE FOURTH QUARTER OPERATIONS.GOOD AFTERNOON CHAIR, VICE CHAIR COMMITTEE MEMBERS.
I'M STUART RILEY, INTERIM DEPUTY GENERAL MANAGER AND CHIEF OPERATING OFFICER FOR AUSTIN ENERGY.
ON THIS FOURTH CORPORATIONS UPDATE, I WILL COVER THE MONTHS OF JULY, AUGUST, AND SEPTEMBER.
YOU HAVE THE FULL PRESENTATION AVAILABLE FOR YOUR REFERENCE, BUT I'LL JUST HIT THE HIGHLIGHTS AND ANSWER ANY QUESTIONS YOU HAVE.
ALL RIGHT, ONCE YOU GET THAT UP, COULD YOU GO TO SLIDE THREE, THE SUMMARY PAGE.
SO I'LL COVER THIS EXECUTIVE SUMMARY, FOLLOWED BY A COUPLE OF QUICK SLIDES TO BETTER DEMONSTRATE SOME OF THESE POINTS.
FIRST OF ALL, IN THE TOP LEFT QUADRANT YOU'LL SEE THAT OUR GENERATOR AVAILABILITY WAS ON TARGET OR EXCEEDED OUR TARGETS.
I'LL SHOW A CHART THAT SPEAKS TO THIS IN A MOMENT.
MOVING TO THE TOP RIGHT, WE DON'T HAVE ANY CHANGE TO REPORT IN TERMS OF OUR SYSTEM AVERAGES FOR INTERRUPTIONS.
WE'RE STILL CONSISTENT WITH TOP QUARTILE INDUSTRY BENCHMARKS.
I WOULD HOWEVER, LIKE TO POINT OUT THAT OUR SYSTEM PERFORMED VERY WELL THROUGH OUR HOTTEST JULY EVER AND OUR SECOND HOTTEST SUMMER EVER IN AUSTIN.
WE SET A NEW AUSTIN ENERGY PEAK DEMAND RECORD ON JULY 12TH WHEN TEMPERATURES WERE 108 DEGREES.
AND I'D LIKE TO RECOGNIZE THE AUSTIN ENERGY TEAMS, PARTICULARLY OUR ENERGY CONTROL CENTER STAFF AND FIELD OPERATIONS TEAMS WHO GOT CUSTOMERS THROUGH THE HEAT.
[00:50:01]
HIGHLIGHTED THE FACT THAT IN, EVEN IN THAT HOTTEST JULY ON RECORD, WE REMAINED AT A HIGH LEVEL OF CARBON-FREE ENERGY AT 69% CARBON-FREE AS A PERCENT OF LOAD.AND OUR ROLLING 12 MONTH AVERAGE IS 78% CARBON FREE.
AND THEN LASTLY, MOVING TO THE BOTTOM RIGHT, I'M PLEASED TO REPORT THAT AUSTIN ENERGY'S FINAL UPDATE, UM, SHOWING, UH, FOLLOW UP ACTIONS IDENTIFIED IN OUR FEBRUARY, 2021, UM, WINTER STORMS AFTER ACTION REVIEW HAS BEEN RELEASED.
AS A REMINDER, OUR AFTER ACTION REVIEW, DETAILED 116 SPECIFIC FOLLOW UP ACTIONS FOR ALL 116 FOLLOW UP ACTIONS WE HAVE COMPLETED EVERY ACTION OR OPERATIONALIZED THOSE ACTIONS THAT ARE ONGOING IN NATURE.
AN EXPLANATION FOR EACH OF THOSE 116 ITEMS IS AVAILABLE IN THE REPORT.
THIS IS ON OUR WEBSITE AND THERE'S A LINK IN THE PDF.
IT'S THE CULMINATION OF A GREAT DEAL OF WORK FROM AUSTIN ENERGY TEAM MEMBERS TO MAKE SURE WE'RE BETTER PREPARED TO SERVE OUR CUSTOMERS IN THESE TYPES OF EVENTS GOING FORWARD.
AND I'M JUST GONNA HIT A COUPLE OF QUICK SLIDES.
UM, COULD YOU GO TO SLIDE SEVEN? THIS SLIDE JUST SHOWS COMMERCIAL AVAILABILITY OF OUR GENERATING UNITS WHEN ECONOMIC, UH, THIS GOES BACK A LITTLE BIT, UH, EARLIER THAN THE FOURTH QUARTER, BUT, UM, DURING THE POWER SUPPLY ADJUSTMENT CONVERSATIONS THAT WE'RE HAVING, SOME OF OUR CUSTOMERS WERE WORRIED THAT OUR GENERATING UNITS WEREN'T AVAILABLE OR WEREN'T MANAGED PROPERLY TO BE AVAILABLE AS A PHYSICAL HEDGE AGAINST OUR CO MARKET PRICES.
AND I JUST WANTED TO POINT OUT, YOU CAN SEE IN THIS CHART THAT JULY, AUGUST AND SEPTEMBER, YOU CAN SEE NEARLY 100% COMMERCIAL AVAILABILITY ACROSS THE BOARD FOR OUR GENERATING UNITS.
UM, AND YOU KNOW, OUR, OUR POWER PRODUCTION TEAMS DID A GREAT JOB TO SUPPORT THE ERCOT GRID, UH, IN A SUMMER IN WHICH ERCOT LOAD EXCEEDED THE PREVIOUS HOURLY RECORD 163 TIMES AND EVEN EXCEEDED THE ERCOT PEAK FORECAST FOR THE SEASONAL ASSESSMENT 53 TIMES.
AND I WANTED TO SHOW SLIDE 12 REALLY QUICKLY.
UM, I MENTIONED THESE NUMBERS IN THE SUMMARY, BUT I JUST WANNA SHOW THIS GRAPH VERY QUICKLY.
THIS DISPLAYS OUR CARBON FREE ENERGY AS A PERCENT OF LOAD ON A MONTH TO MONTH BASIS AND AS A ROLLING 12 MONTH AVERAGE.
YOU CAN SEE THAT TREND LINE GOING UP, UH, THAT SHOWS THAT WE ARE OVERALL AT 78% CARBON FREE AS A, AS A UM, PERCENT OF LOAD BASED ON THAT ROLLING 12 MONTH AVERAGE.
AND THEN, UM, WILL YOU GO TO SLIDE 15? UM, THIS IS JUST THE CLOSING SLIDE.
I DON'T HAVE THIS AS A, AS A AS A GRAPHIC, BUT I WOULD LIKE TO MENTION FOR YOUR AWARENESS, UH, THE SUPPLY CHAIN CHALLENGES THAT ARE IMPACTING ELECTRIC UTILITIES NATIONWIDE.
UM, THERE'S CURRENTLY A SHORTAGE IN THE PRODUCTION OF DISTRIBUTION TRANSFORMERS AND OTHER DISTRIBUTION EQUIPMENT.
UM, OUR NEED FOR TRANSFORMERS REALLY COMES IN THREE VARIETIES, ONGOING MAINTENANCE, UM, EMERGENT WORK FOR STORMS AND THEN NEW DEVELOPMENT.
UM, WE WERE FORTUNATE FOR SOME TIME NOT TO HAVE THIS IMPACT FELT KIND OF, UH, AS AS SEVERELY AS A LOT OF OTHER ELECTRIC UTILITIES, BUT WE ARE SEEING DELAYS NOW, LONG LEAD TIMES FOR TRANSFORMERS.
UM, VERY LITTLE INFORMATION FROM OUR SUPPLIERS IN TERMS OF WHEN THOSE LEAD TIMES ARE GOING TO IMPROVE.
UM, AND THIS WAS EXACERBATED BY HURRICANE IAN THIS SUMMER.
UM, THE BIDEN ADMINISTRATION HAS AUTHORIZED THE, UH, DEPARTMENT OF ENERGY TO EXPLORE USING THE DEFENSE PRODUCTION ACT, UH, TO MAKE THIS SITUATION A LITTLE BIT BETTER.
AND SO WHILE THEY'RE WORKING OUT THE DETAILS THERE, AUSTIN ENERGY'S DOING EVERYTHING THAT WE HAVE WITHIN OUR CONTROL TO MAKE THE SITUATION BETTER.
THAT INCLUDES, UH, MORE REFURBISHMENT OF OLD TRANSFORMERS, A REPAIR AND PLACE CONTRACT, AMENDING OUR STANDARDS TO ALIGN WITH THE MOST GENERIC SPECS, UH, THAT MIGHT BE EASIER TO PROCURE.
AND WE'RE ALSO ALLOWING DEVELOPERS TO PURSUE PROCUREMENT OF THEIR OWN TRANSFORMERS IF THEY'RE ABLE TO DO SO.
AND THEN THOSE TRANSFORMERS BECOME PART OF OUR SYSTEM.
UM, SO THAT'S JUST SOMETHING THAT I WANTED TO MENTION FOR YOUR AWARENESS.
UM, THAT'S A NATIONWIDE CHALLENGE.
UH, DOESN'T REALLY HAVE ANY, UM, END IN SIGHT, BUT WE'RE MANAGING IT THE BEST WE CAN.
UM, BUT IT IS IMPACTING THE TIMELINES THAT WE'RE SEEING FOR OUR DEVELOPERS.
SO I WANTED TO MENTION THAT AND UM, THAT'S ALL I'VE GOT FOR YOU.
ANY QUESTIONS? WHAT QUESTIONS DO WE HAVE? YES, SMA PROTON.
UM, ON SLIDE SIX, YOU UM, LIST THE GENERATOR COMMERCIAL AVAILABILITY AND START SUCCESS IN THE FAYETTE UNITS.
IS THAT A FUNCTION OF BEING DOWN? IS THAT A FUNCTION OF OUR REACH PROGRAM? WHAT? I'M NOT, I'M NOT SAYING THAT I WANT THEM RIGHT.
I JUST WANNA UNDERSTAND THE NUMBER.
THAT NUMBER IS FOR THE THIRD QUARTER OF FISCAL YEAR 22 AND THAT I REPORTED THAT LAST TIME, UM, THAT WAS A SEASONAL OUTAGE, JUST A PLAN, MAINTENANCE OUTAGE IN TERMS OF IT WAS GETTING THE PLANT READY TO OPERATE IN THE SUMMER JUST TO BE AVAILABLE IF NEEDED DURING THE, DURING THE SUMMER MONTHS.
AND SO THIS DOESN'T MEAN IT WAS USED THAT MANY PERCENTAGE, IT'S JUST IT WAS AVAILABLE AVAILABILITY, CORRECT.
UM, DO WE HAVE THE PERCENTAGE OF LIKE, I MEAN WE'RE NOT REALLY BEING PRESENTED WITH THE USAGE AT FAYETTE AND WHEN IT WAS USED.
IS THAT IN ONE OF THE SLIDES? YES,
[00:55:01]
I UM, COULD, WE COULD GO TO SLIDE EIGHT.UM, WHAT THIS SLIDE SHOWS IS, UH, THIS IS OUR STANDARD QUARTERLY GRAPHIC SHOWING GENERATION AND CONSUMPTION.
AND SO ON SLIDE EIGHT YOU CAN SEE SORT OF OUR GENERATION STACK THAT SHOWS, UM, BASED ON THE DIFFERENT, UH, FUEL TYPES, HOW MUCH GENERATION, UH, WAS PRODUCED, UH, RELATIVE TO OUR CUSTOMER'S CONSUMPTION.
SO, UM, THERE YOU'LL SEE COAL THERE IN THE BLACK AND THE AMOUNT RELATIVE TO THE OTHER FORMS OF GENERATION.
AND THEN YOU'LL SEE THE ORANGE IS THE RENEWABLE AND THE YELLOW IS NUCLEAR ON THE TOP RIGHT.
CAN WE AT SOME POINT GET, UM, SOMETHING THAT TELLS US LIKE OVER TIME WHETHER THAT CONSUMPTION SURE, YEAH.
HOW THAT IS TRENDING FOR THAT WOULD BE GREAT.
UM, AND THEN ON THE RELIABILITY SLIDE ON SLIDE NINE, UM, SO IT LOOKS LIKE THE AVERAGE TIME TO RESTORE SERVICE, THE, THE CADDY IS GOING DOWN OR STAYING, YOU KNOW, AT AVERAGE, UM, ARE THE TOP QUARTER BENCHMARK.
AND THEN THE OTHER ONES THOUGH, HOWEVER, ARE GOING UP FOR THE SYSTEM AVERAGES RELATED TO THE INTERRUPTION DURATION AND THE FREQUENCY.
DO WE HAVE A SENSE WHY BY THOSE TWO MEASURES WE'RE WE'RE NOT DOING AS WELL? YOU KNOW, UM, YEAH, WE, WE HAVE TALKED ABOUT THIS, UM, AND HOW TO KIND OF DISPLAY THIS, UH, INFORMATION IN A WAY THAT'S A LITTLE BIT MORE USEFUL FOR YOU GOING FORWARD.
SO WHAT I THINK WE'LL WE'LL TRY TO DO IS, IS PROVIDE A LITTLE BIT MORE CONTEXT AROUND, OUT AROUND OUTAGE CAUSES.
UM, JUST GIVING YOU AN EXAMPLE, YOU KNOW, IT'S JUST ABOUT EVERY OTHER DAY THERE'S A CAR THAT RUNS INTO A, A POLE THAT TAKES A CIRCUIT DOWN.
UM, YOU KNOW, WE, WE SEE A LOT OF THAT IN TERMS OF CAR ACCIDENTS, UM, YOU KNOW, ANIMALS, VEGETATION, THOSE KINDS OF THINGS.
SO, UM, PERHAPS IT WOULD BE A LITTLE BIT MORE USEFUL, A LITTLE BIT MORE ACTIONABLE IF, IF I, IF I COME BACK WITH A LITTLE MORE CONTEXT ABOUT WHAT'S, WHAT'S THE SOURCE OF THESE NUMBERS RATHER THAN JUST THE KATIE SADIE SAFETY NUMBERS, THE, THE, THE DURATION NUMBERS IS IS THAT YEAH, THAT WOULD BE HELPFUL CUZ I'VE BEEN LOOKING AT THE RELIABILITY ISSUES PARTICULARLY WITH RESPECT TO THE VEGETATION MANAGEMENT AND I WILL SAY THAT WE'RE, WE'RE HEARING A WHOLE LOT LESS COMPLAINTS ABOUT, UM, RELIABILITY ISSUES IN MY DISTRICT SINCE WE'VE HAD THE VEGETATION MANAGEMENT HAPPEN.
AND SO I WAS JUST A LITTLE SURPRISED TO SEE THESE NUMBERS AND WANTED TO UNDERSTAND WHAT WAS CAUSING IT.
SO IF YOU CAN FIGURE OUT A WAY TO HELP HELP US UNDERSTAND THAT BETTER, I'D APPRECIATE THAT.
I DON'T HAVE AN ANSWER OF WHAT'S UNDERLYING THEM, SO I CAN'T TELL YOU WHAT I NEED, BUT, BUT THAT'S THE CONTEXT THAT I'M TRYING TO, TO UNDERSTAND IS, OKAY, SO MAYBE WE ARE ADDRESSING A LOT OF THE VEGETATION MANAGEMENT NOW WHAT'S THE NEXT THING WE HAVE TO DO FOR, FOR RELIABILITY AND, AND THINK DIFFERENTLY ABOUT AND YOU KNOW, PART, PART OF WHAT MAKES IT A LITTLE BIT EVEN MORE CHALLENGING THAN THAT IS THAT THESE NUMBERS TAKE OUT, UH, WHAT ARE TERMED AS MAJOR EVENT DAYS AND WINTER STORM YURI REALLY RAISED THE THRESHOLD FOR WHAT COUNTS AS A MAJOR EVENT DAY.
SO WHAT MIGHT HAVE BEEN EXCLUDED FROM THESE NUMBERS WOULD NOW BE COUNTED IN THESE.
SO, SO THAT'S WHY WE'RE TRYING TO KIND OF BETTER PROVIDE SOME, SOME METRIC THAT MIGHT BE A LITTLE BIT MORE ACCURATE GLIMPSE INTO WHAT'S REALLY GOING ON OUT THERE.
SO I THINK THAT WOULD BE, THAT WOULD BE HELPFUL.
AND THEN MY LAST QUESTION ON THE SLIDE 14, UM, FOR IMPROVING THE DISTRIBUTION SYSTEM RELIABILITY, THE, THE INITIATIVE OF ADDRESSING THE TOP FEEDERS IN BOTH PERFORMANCE AND WILDFIRE CRITICALITY.
OBVIOUSLY WHEN YOU FINISH SOME CIRCUITS THEN THERE'S NEW ONES COMING UP, CORRECT.
BUT CAN YOU PROVIDE SOME STATUS UPDATE FOR THAT? RIGHT.
AND UM, THE STATUS UPDATE ON, UM, I KNOW OFF THE TOP OF MY HEAD THAT UH, YOU KNOW, THE WILDFIRE CRITICALITY CIRCUITS THAT YOU'VE BEEN VERY FOCUSED ON, UM, WE HAVE NOT GOTTEN THROUGH THAT FULL LIST OF 10 CIRCUITS THIS YEAR.
SO ONCE WE DO MAKE IT THROUGH THAT LIST, THEN WE WILL PICK UP A NEW BATCH.
UM, BUT WE HAVE HAD DIFFICULTY, AS I MENTIONED LAST TIME WITH OUR, WITH CONTRACTORS HAVING ENOUGH LABOR, SO WE'RE EXPLORING, UM, HAVING A STANDALONE CONTRACT WITH A, WITH ANOTHER CONTRACTOR TO ADD TO THAT MIX THAT WOULD SOLELY ADDRESS THESE WILDFIRE CRITICALITY CIRCUITS BECAUSE QUITE FRANKLY WE'RE NOT SEEING ENOUGH, UH, ABILITY FOR THE EXISTING CONTRACTORS TO, TO DO ENOUGH OF THE WORK ON A RAPID ENOUGH BASIS.
UM, MAYBE WE CAN HAVE A FOLLOW UP CONVERSATION ABOUT THAT ISSUE AND THE CIRCUITS IN MY DISTRICT IF THEY'RE NOT OKAY.
OKAY, ANY MORE QUESTIONS? YES, COUNCIL ELLO.
AND UM, JUST A SIMPLE BASIC QUESTION, BUT ARE WE STILL GENERATING HYDROPOWER FROM THE HIGHLAND LAKES ANYMORE? NO, NO, THOSE, ALL THOSE, UH OKAY.
I JUST, YOU HEAR SO MUCH ABOUT THAT JUST IN TERMS OF THE REGION AND ITS HISTORY AND THE CONSTRUCTION OF THE DAMS. I WASN'T SURE IF ANY OF THOSE.
BUT NOT AUSTIN ENERGY ITSELF? CORRECT.
ANYTHING ELSE? YES, COUNCIL MEMBER FUENTES?
[01:00:02]
NOT A QUESTION, BUT A COMMENT.I JUST WANNA THANK, UM, MR. RILEY FOR HIGHLIGHTING THE SUPPLY CHAIN ISSUE WITH TRANSFORMERS AND HOW THAT'S IMPACTING HOUSING.
I HAVE HOUSING IN MY DISTRICT THAT IS BUILT AND READY TO GO BUT IS WAITING TO GET POWERED UP AND I KNOW YOU'VE BEEN SUPER HELPFUL IN WORKING WITH THE DEVELOPER AND PEERING OUT SOME INTERIM SOLUTIONS, BUT THIS IS A NATIONAL ISSUE THAT'S, UM, THAT COMMUNITIES ARE FACING AND IT'S HAVING A REAL, REAL IMPACT HERE IN AUSTIN AS WELL.
WE'LL GO TO ITEM SIX, WHICH IS THE BRIEFING
[6. Briefing from staff regarding proposed revisions to Austin Energy’s base electric rates]
FROM STAFF ON PROPOSED REVISIONS TO AUSTIN ENERGY'S BASE ELECTRIC RATES.AND IT LOOKS LIKE WE HAVE MR. DON BROSKI AND MS. SERGEANT.
COMMITTEE, CHAIR AND COMMITTEE MEMBERS THANK YOU FOR TAKING TIME TO ENGAGE IN THE AUSTIN ENERGY BASE RATE REVIEW PROCESS.
DUST ENERGY TEAM HAS BEEN WORKING ON THIS BASE RATE REVIEW FOR OVER A YEAR NOW.
WHEN WE STARTED THIS PROCESS, I INSTRUCTED THE TEAM TO ASK ONLY FOR OUR NEEDED REVENUE REQUIREMENTS AND NOTHING MORE.
THROUGHOUT THE LENGTHY ENGAGEMENT PROCESS, LENGTHY AND ENGAGING PROCESS, WE HAVE REDUCED OUR REVENUE REQUIREMENT TO 35.7 MILLION AND THIS WILL RECOVER OUR ACTUAL COST TO SERVE CUSTOMERS AND IMPROVE THE OVERALL FINANCIAL STABILITY OF THE UTILITY.
WE HAVE PROPOSED ADJUSTING RESIDENTIAL BASE RATE STRUCTURES TO REFLECT CUSTOMERS ACTUAL CONSUMPTION, CONSUMPTION PATTERNS, AND TO ADDRESS SIGNIFICANT SHORTCOMINGS OF OUR CURRENT FIVE TIERED RATE DESIGN.
SPECIFICALLY, WE NEED TO ADDRESS THE PROBLEM THAT 77% OF RESIDENTIAL CUSTOMERS BASE RATE REVENUE ARE BELOW COST OF SERVICE.
ADDITIONALLY, OUR PROPOSAL MOVES BOTH RESIDENTIAL AND COMMERCIAL CUSTOMERS CLOSER TO THEIR COST OF SERVICE.
THIS IS IMPORTANT BECAUSE IT REDUCES THE AMOUNT OF INTERCLASS SUBSIDIES AND BETTER POSITIONS, OUR ABILITY TO PROVIDE MORE UNIFORMITY IN FUTURE RATE CHANGES.
AS YOU KNOW, THE IMPARTIAL HEARING EXAMINER RECOMMENDED THAT WE REDUCE OUR 35.7 MILLION REVENUE REQUIREMENT TO 31.3 MILLION BY DECREASING THE TEST YEAR GENERAL FUND TRANSFER FROM 120 MILLION TO 115 MILLION.
TO REDUCE THE REVENUE REQUIREMENT ANY FURTHER MEANS THAT WE NEED MATCHING REDUCTIONS IN EXPENSES SUCH AS PROGRAM COSTS, TRANSFERS, OR SERVICE LEVELS.
SINCE THE FISCAL YEAR 2021, TEST YEAR REVENUE REQUIREMENT OF 35.7 MILLION WAS DETERMINED, WE CONTINUE TO EXPERIENCE INCREASING COSTS.
AS NOTED ON THIS SLIDE, I WOULD LIKE TO HIGHLIGHT THAT DUE TO SUPPLY CHAIN SHORTAGES THAT, UM, IN TERM DEPUTY GENERAL MANAGER RILEY TALKED ABOUT, AND INFLATION, OUR INDUSTRY HAS SEEN AN 84% INCREASE IN THE COST OF EQUIPMENT AND MATERIALS.
ALSO, WITH THE FORTHCOMING IFFC TO EXPAND OUR CUSTOMER ASSISTANCE PROGRAM, WE WILL INCUR INCREASED ADMINISTRATIVE AND CONTRACTUAL COST.
BEFORE I TURN THE PRESENTATION OVER TO MR. DOMBROSKI TO DISCUSS CONSIDERATIONS FOR RESIDENTIAL, UH, RATE DESIGN, I WOULD LIKE TO POINT OUT THAT RESIDENTIAL RATE DESIGN IS NOT THE ONLY ITEM THAT NEEDS TO BE ADDRESSED IN THIS RATE REVIEW.
ADDITIONAL OUT ADDITIONAL ITEMS ARE OUTLINED ON THE DECISION POINT LIST THAT WAS PROVIDED TO YOU AND POSTED ON THE CITY CLERK'S WEBSITE AND INCLUDE SUCH THINGS AS THE TOTAL REVENUE REQUIREMENT, COST ALLOCATION, PRESENT REVENUES AND BILLING DETERMINANTS VALUE OF SOLAR PRIMARY SUBSTATION RATE, PRIMARY TWO, HIGH LOAD FACTOR TARIFF TRANSMISSION SERVICE AND LINE LOSS STUDY.
AND WITH THAT, I'LL TURN IT OVER TO MR. DOMBROSKI.
I'M SORRY, WHEN DID YOU SEND THIS ONE? IT WAS RESENT TO DATE.
GOOD AFTERNOON, MARK AND BROSKI, THE CHIEF FINANCIAL OFFICER FOR AUSTIN ENERGY.
AND, UM, WE HAVE A COUPLE OF, UM, OPTIONS TO DISCUSS WITH YOU BASED UPON WHAT WE HEARD FROM COUNCIL MEMBERS, AS WELL AS SOME OF THE INTERVENERS AND THE INDEPENDENT, UH, IMPARTIAL HEARING EXAMINER.
BUT BEFORE THAT, I WANTED TO TALK A LITTLE BIT ABOUT RESIDENTIAL RATE DESIGN.
AND UM, FIRST I WANNA CLARIFY THAT, UH, THE NOTION OF CUSTOMERS BEING IN TIER, AND THAT IS THAT ALL CUSTOMERS ARE SOLD ENERGY.
IN TIER ONE, WE OFTEN TALK ABOUT WHICH CUSTOMERS ARE IN TIER ONE OR WHO'S IN TIER ONE.
IT'S ALL CUSTOMERS, REGARDLESS OF INCOME LEVEL, REGARDLESS OF
[01:05:01]
THE AMOUNT OF ENERGY THEY USE.SO ALL CUSTOMERS RECEIVE SUBSIDIZED, UH, FIRST TIER RATES, UM, AND THAT REALLY REPRESENTS, UM, KWA RATHER THAN CUSTOMERS.
UM, THE NEXT IS THAT, UH, TIERED BASE RATES ARE NOT COST BASED.
AND SO, SO THESE BASE RATES, ALTHOUGH WE CALL THEM ENERGY RATES, IT'S BASED UPON KWH, IT'S REALLY RECOVERING FIXED COSTS.
IT DON'T VARY WITH THE AMOUNT OF KWH SOMEONE.
AND THE NEXT THING IS THAT, YOU KNOW, CHARGING DIFFERENT CUSTOMERS DIFFERENT RATES FOR THE SAME PRODUCT.
SO HOW STEEP OF A PRICE CURVE WE PUT IN, OR WHERE WE BREAK THE, UH, TIERS, THAT'S ALL POLICY.
IT COSTS US THE SAME FOR THE FIRST KWH.
SAME FOR THE THE 1000 KWH THAT THE CUSTOMER USES.
AND THE NEXT IS, UM, HOW CUSTOMERS RESPOND TO THESE, UH, TIERED RATES.
AND SO, UH, WE DID THREE ANALYSIS TO SEE HOW OUR CUSTOMERS RESPONDED.
AND YOU KNOW, WHAT WE FOUND OUT WAS THE CUSTOMERS DON'T RESPOND TO THOSE TIERED RATES TO OPTIMIZE THEIR, THEIR USAGE.
I, THEY'RE NOT CHANGING BEHAVIOR FOR CONSERVATION AND THEY'RE NOT MAKING INVESTMENTS FOR EFFICIENCY.
HOWEVER, WE DO BELIEVE CUSTOMERS RESPOND TO AVERAGE RATES.
AND SO WHEN YOU GET HIGHER POWER BILLS FOR SEVERAL MONTHS, YOU DO SOMETHING ABOUT IT.
YOU, YOU CHANGE YOUR HABITS OR YOU PUT IN INSULATION OR YOU CHANGE YOUR WINDOWS, OR NEXT TIME YOU SAW A AIR CONDITIONING BY A HIGHER SEA RATING.
BUT WE THINK THEY'RE DOING ON AVERAGE RATES, UH, IN BILLS RATHER THAN THESE, THESE TIERED RATES.
WE'RE TALKING ABOUT SENDING SIGNALS IS WHAT ARE CUSTOMERS RESPONDING TO? AND SO WITH THAT, YOU'VE HEARD US LOT TALK A LOT ABOUT, UM, THE RESIDENTIAL RATE DESIGN AND THE CHANGES WE'RE MAKING AND, UM, SOME OF THE CONCERNS ABOUT THAT.
SO I WANNA TALK A LITTLE BIT ABOUT BACK IN.
SO THESE RATES WERE DESIGNED IN 2012.
UM, I BELIEVE COUNCIL MEMBER TOVA WAS THE ONLY COUNCIL MEMBER AT THE TIME.
UM, BUT THOSE RIGHTS WERE DEVELOPED THERE.
SO WE'VE HAD 'EM IN PLACE FOR, FOR ABOUT A DECADE.
UH, PRIOR TO THAT WE HAD, I BELIEVE IT WAS TWO TIERS AT LEAST FOR SOME TIME BEFORE THEN.
UH, BUT IN 12 WE ADOPTED TO FIVE TIERS FOR INSIDE CITY AND THREE TIERS FOR OUTSIDE THE CITY.
AND THEN WHEN WE, UH, LOOKED AT CHANGING RATES IN 2016, IT WAS ACTUALLY A RATE REDUCTION THAT WAS REALLY DRIVEN BY, WE HAD, UM, IN 2012 ACCUMULATED CASH FOR RESERVES.
SO THERE WAS A COMPONENT BUILT INTO THE BASE RATES TO COLLECT CASH, TO PUT IN RESERVES.
WE HAD ADEQUATE RESERVES IN SIXTEENS AND WE STOPPED THAT.
WE HAVEN'T DONE IT SINCE THEN.
WE ALSO HAD, UH, SOME OF THE LOWEST DEBT SERVICE AT THAT POINT.
I THINK IT, UH, HAD ABOUT 40, 50 MILLION LOWER DEBT SERVICE BETWEEN 16 AND WHAT WE SET RATES ON.
UM, SO WE WERE ABLE TO GIVE A DECREASE.
UM, BUT AT THAT TIME WE RECOGNIZED THAT THAT FIRST TIER WAS REALLY PRICED BELOW THE COST OF SERVICE.
AND WE SAW A LOT OF GROWTH IN SALES IN THAT FIRST TIER.
SO WE MOVED TO, UM, INCREASE THE COST, UH, IN THAT FIRST TIER AND LOWER THE OUTER TIERS.
AND, UH, THAT WAS OUR ORIGINAL PROPOSAL AS HIGHLIGHTED HERE IN THE ORANGE BAR.
UM, AS WE WORK THROUGH, AS MANY OF YOU KNOW, WE REACHED A SETTLEMENT WITH THE INTERVENERS IN THE 2006 RATE CASE.
AND AS A PART OF THAT SETTLEMENT, WE AGREED TO TAKE, UH, $5 MILLION, UM, AND APPLY THAT TO THE FIRST TIER CUSTOMER ONLY.
SO WE, WE BOUGHT DOWN THAT TIER.
UM, AND THAT WAS THE SETTLEMENT OFFER THAT WE BROUGHT TO, UM, CITY COUNCIL.
AND THEN AT THAT TIME THERE WERE A HANDFUL OF CUSTOMERS THAT WERE STILL SHOWING A BILL INCREASE, UM, VERY LOW, UM, 460 KW H UM, UH, BILL IMPACT TABLE.
AND COUNCIL INSTRUCTED US TO MAKE SURE THAT THAT CUSTOMER RECEIVED A, UH, NO, NO, NO INCREASE.
AND SO IN ORDER TO DO THAT, WE HAD TO APPLY ANOTHER 3.4 MILLION TO THE FIRST TIER.
SO AGAIN, THAT BROUGHT DOWN THAT FIRST TIER.
WHILE WE MADE SOME PROGRESS, UH, GETTING THAT TIER ONE RATE MORE ALIGNED WITH ITS COST, UH, WE DIDN'T MAKE AS MUCH PROGRESS AND WE HAD HOPED, UM, IN THAT MANEUVER WE DID NOT ATTEMPT TO CHANGE WHERE THE TEARS BREAK IN THE 2006 CASE.
THAT WAS NOT ONE OF THE ISSUES.
AND LATER ON WE HAD A, A LONG DISCUSSION THAT THE OVERSIGHT COMMITTEE ON NOVEMBER 30TH, 2016 COUNCIL REALLY RECOGNIZED, UM, WELL WAS TERMS TRADE OFFS, UM, UH, AT THAT TIME THAT WE KNEW, UH, FOR VARIOUS REASONS WHY IT WAS IMPORTANT FOR US TO SETTLE WITH THOSE INTERVENERS AT THAT TIME.
UM, AND THAT WE WERE GIVING A RATE DECREASE.
AND SO, UM, WE ALL KNEW THAT WE HAVE TO COME BACK AT SOME POINT IN TIME AND, AND ADDRESS THIS ISSUE.
AND BRINGING ATTENTION TO THE CHART ON THE LOWER RIGHT, JUST, UH, YOU'LL SEE IN THAT FIRST TIER WE HAD ABOUT 47% OF THE SALES IN THAT TIER ONE.
[01:10:01]
UM, AND YOU HAD ABOUT 8.7 IN TIER FOUR AND ABOUT 4.7 IN TIER FIVE.I'M JUST CALLING YOU OUT CAUSE I'M ABOUT TO SHOW YOU THE CHART OF WHERE WE ARE NOW AND HOW THAT'S CHANGED.
SO BACK IN THE 16, WE RECOGNIZE THAT WE WOULD'VE TO ADDRESS THIS ISSUE.
AND THAT WAS ONE OF OUR MAIN EFFORTS IN, IN THIS UH, RATE REVIEW WAS TO, UH, REALIGN THOSE RESIDENTIAL RATE STRUCTURES.
AND SO THIS IS WHERE WE STAND TODAY IN TERMS OF OUR TIERS.
UH, SO RIGHT NOW, UM, FOR ACTUAL SALES IN 2021, ABOUT 52% OF ALL THE K H WE SOLD WERE PRICED IN TIER ONE, WHICH IS ABOUT 2.80 CENTS.
UM, AND YOU CAN SEE THAT ORANGE BAR, THAT'S HOW MUCH GROWTH WE'VE HAD BETWEEN 2009 AND 21 AND TIER ONE, UM, TIER TWO HAS ALSO SEEN SOME GROWTH, UH, A LITTLE BIT SMALLER AND THAT REPRESENTS ABOUT 26%.
SO COMBINED THOSE FIRST TWO TIERS ARE ABOUT 77% OF OUR SALES, UH, IN ACTUAL, UH, 21 SALES BY BRINGING ATTENTION TO TIERS.
UM, THREE, FOUR, AND FIVE, YOU CAN SEE THAT WE'VE ACTUALLY SEEN REDUCED SALES IN THOSE TIERS.
AND SO WE'RE SELLING FEWER KWH AT THOSE HIGHER RATES.
UH, OVER THE YEARS AND I I POINTED OUT, UM, TIER FOUR, I BELIEVE IT WAS 8.7 AND HERE IT'S 7% AND UH, TIER FOUR IS AT 4%.
SO WE'RE SEEING A CONCENTRATION OF SALES THERE.
LOWER PRICE TIERS AT A COST MUCH BELOW THE COST OF SERVICE.
AND THAT'S OUR QUANDARY OF WHAT WE'RE TRYING TO, UH, ADDRESS, WHICH IS HOW DO WE COLLECT ENOUGH MONEY TO PAY THE BILLS BASED UPON THE ENERGY USE SALES.
AND THAT'S REALLY FROM, UM, NEW CUSTOMERS COMING ONLINE THAT ARE TAKING SALES MOSTLY IN THAT FIRST TIER.
AND THIS IS A GRAPH I WANNA SPEND A LITTLE TIME EXPLAINING TO YOU CAUSE I'M GONNA USE THE, THE SAME FORMAT, UH, IN THE OPTIONS I I DESCRIBED.
SO THIS IS A, OUR CURRENT SITUATION AND THIS IS, UH, OUR TEST YEAR, UH, 2021.
AND THE ORANGE BAR THERE REPRESENTS THE KILOWATT HOURS IN THE TEST YEAR THAT ARE SOLD.
AND SO YOU CAN SEE IT'S A LITTLE BIT HIGHER THAN THE, THE 21, UH, IT'S ALMOST 57%.
UM, AND THEN THE YELLOW BAR REPRESENTS THE AMOUNT OF REVENUE THAT WE GENERATE IN THAT TIER.
SO IT'S SIMPLY THOSE K H TIMES THAT PRICE I IN WITH THE TRIANGLE THERE.
SO IT'S 2.81 CENTS AND THAT GENERATES THE GOLD BAR.
UM, AND YOU CAN SEE AS YOU MOVE THROUGH THE TIERS, UM, HOW THE CONSUMPTION GETS SLOWER, CUZ SOME CUSTOMERS WILL TAKE SALES IN TIER ONE AND THEN SOME OF THOSE WILL GO INTO TIER TWO, THE FEW ARE GOING TO THREE AND FOUR AND FIVE.
UM, AND OF COURSE, SINCE THOSE TIERS ARE PRICED HIGHER, YOU START TO SEE THIS, UM, UH, SHIFTING OF KWH AND REVENUE IN IN EACH TIER.
AND THAT'S BY DESIGN BECAUSE RATES GO FROM 2.80 CENTS UP TO ABOUT 10.80 CENTS.
UM, AND SO THOSE ARE THE FIVE TIERS FOR OUR, UM, INSIDE CITY.
UM, AND CURRENTLY WITH OUR CURRENT PASS DUES THAT WE, UM, ADOPTED ON A NOVEMBER 1ST, UM, BILL AT 860 KWH, WE USE SORT OF A BENCHMARK OR A TYPICAL THAT'S $99 AND 86 CENTS.
AND FOR A CAP CUSTOMER USING 86, THEIR BILL WOULD BE $79 AND 69 CENTS.
SO THAT'S OUR BENCHMARK, THAT'S WHERE WE'RE STARTING FROM.
UM, AND I'LL SHOW THIS CHART WITH YOU EACH OPTION THAT WE GO THROUGH SO YOU CAN SORT OF COMPARE THAT.
SO THE FIRST OPTION I WERE TO GO THROUGH WAS WHAT WE CALL OUR REBUTTAL CASE, OR THIS IS WHAT WE PRESENTED TO THE, UM, UM, IMPARTIAL HEARING EXAMINER AND SPACED UPON, UM, THE REPORT THAT WE DRAFTED ON ON APRIL 18TH.
UM, AND IT HAS, UH, INCREASED FOR EVERY REQUIREMENTS OF 35.7 MILLION REMOVING CUSTOMER'S CLASSES TO 50% OF UNITY.
AND WHAT THAT MEANS IS HOW FAR THEY ARE FROM THE COST OF SERVICE.
AND REALLY WHAT THAT IS, THE RESIDENTIAL CUSTOMERS ARE SIGNIFICANTLY BELOW THEIR COST OF SERVICE.
AND SECONDARY TWO AND SECONDARY THREE COMMERCIAL CUSTOMERS ARE ABOVE THEIR COST OF SERVICE.
SO OUR APPROACH IS TO BRING THEM HALFWAY TO THEIR COST OF SERVICE.
UM, AS A STEP, WE DEVELOPED A SINGLE RATE STRUCTURE FOR ALL RESIDENTIAL CUSTOMERS.
SO RATHER THAN HAVING INSIDE AND OUTSIDE RATES AND THREE TIERS VERSUS FIVE TIERS, WE COMBINED THEM INTO A SINGLE RATE CLASS.
WE PROPOSED THREE TIERS AND A $25 CUSTOMER CHARGE.
AND THIS IS A TABLE THAT SHOWS, UH, ON THE TOP IN THE ORANGE BOX, UH, THE EXISTING INSIDE CITY, UH, CUSTOMERS, UM, THE FIVE TIERS, THE NOUN OF K H IN EACH TIER AND THE PRICE OF THE TIER.
UM, AND THEN AS A PERCENT YOU CAN SEE WHAT PERCENTAGE OF SALES, UH, ARE EACH OF THOSE TIERS.
AND AGAIN, THE 56.9 THAT I SHOWED YOU ON THAT GRAPH EARLIER.
[01:15:01]
AS YOU GET HIGHER IN THE TIERS, IT'S IT'S FEWER AND FEWER KWH.AND THEN WHERE WE WOULD MOVE THEM TO, WHICH IS THE, THE BLUE BOX.
SO WE GO FROM A $10 CHARGE TO A $25 CUSTOMER CHARGE, THREE TIERS WITH HALF A PENNY IN BETWEEN EACH TIER.
AND RATHER THAN BREAKING 500, UH, THEY WOULD BREAK AT 300 AND THEN AT 1200, AND THEN EVERYTHING OVER 1200 KW H UM, AND YOU CAN SEE THAT IS A LITTLE BIT MORE PROPORTIONAL WHERE YOU HAVE ABOUT HALF OF YOUR SALES IN THAT, IN THAT MIDDLE TIER, WHICH IS ABOUT COST OF SERVICE AND THEN ABOUT 37% IN THAT FIRST TIER AND ABOUT, UH, 11% IN THE HIGHER TIER.
SO IT'S MORE PROPORTIONAL, MORE BALANCED IN THE FIVE TIER STRUCTURE WHERE YOU'RE HAVING ABOUT 57% OF THE SALES IN THE FIRST TIER AT SIGNIFICANTLY BELOW COST OF SERVICE.
AND THE NEXT CHART IS THE, UM, OUTSIDE CITY OF AUSTIN.
SO AS I MENTIONED, THEY HAVE THREE TIERS NOW.
UM, UM, AND SO THEY WOULD, UM, SEE A CHANGE IN HOW THEY BREAK FROM ZERO TO FIVE TO ZERO TO 300, UM, AND THEN THEIR, UM, THEIR COST, THEIR FIRST TIERS AT 3, 3 7, THAT WOULD GO TO THREE SIX.
THE SECOND TIER AT FIVE SIX WOULD GO TO 4.10 CENTS, AND THE THIRD TIER FROM 7.868 TO 4.60 CENTS.
UM, AND UNLIKE INSIDE CITY CUSTOMERS, IF YOU LOOK AT THE OUTSIDE CITY EXISTING RATES AND WHERE THEY ARE IN THE TIERS, IT'S FAIRLY PROPORTIONAL.
YOU'VE GOT ABOUT 35% IN FIRST TIER, ABOUT 25% IN SECOND TIER, AND JUST UNDER 40% IN A FOURTH TIER, OR EXCUSE ME, THE THIRD TIER.
UM, WHEN YOU'RE DESIGNING RATES, AND YOU'LL SEE THE STRUCTURE HERE THAT, UM, IT'S MORE PROPORTIONAL SO THAT THE NUMBER OF SALES AND THE AMOUNT OF REVENUE YOU GET IN EACH OF THOSE TIERS IS MORE SUSTAINABLE.
UH, SO YOU DON'T HAVE TO CHANGE RATES AS FREQUENTLY.
AND THIS IS A REPEAT OF THAT CHART I SHOWED YOU EARLIER USING THE OUR, OUR REBUTTAL CASE OR, OR OPTION ONE.
UH, SO AGAIN, THIS IS THE 35.7 MILLION REVENUE REQUIREMENT, 50% TO UNITY, 25 DESKER CUSTOMER CHARGE, AND ALL RESIDENTIAL CUSTOMERS ON A SINGLE, UH, RATE STRUCTURE.
AND YOU CAN SEE THE THREE TIERS HERE.
YOU CAN SEE HOW THE ORANGE BAR AND THE YELLOW BAR ARE MUCH MORE, UM, EQUAL, UH, PROPORTIONAL.
SO WHAT THAT TELLS YOU THAT AS CUSTOMER GROWTH, UM, INCREASES AND YOU GET MORE SALES IN, IN, IN TIER ONE, THAT THAT RATE SHOULD KEEP UP AND WOULDN'T HAVE TO CHANGE 'EM AS OFTEN.
YOU STILL HAVE AN INCLINE BLOCK, UM, STRUCTURE FROM 3.6 TO 4.6, ALBEIT AS A MUCH MORE GRADUAL SLOPE THAN WE, WHAT WE CURRENTLY HAVE.
UM, AND THIS PRODUCES A, UM, EIGHT 60 BILL AT $114 AND 36 CENTS.
AND IF YOU'RE A CAP CUSTOMER, IT'S $78 AND 81 CENTS.
ONE REASON WHY IT'S SO MUCH LOWER IS BECAUSE UNDER THE CAP PROGRAM WE WAIVE THE CUSTOMER CHARGE.
SO BEFORE WE WERE WAVING A $10 CUSTOMER CHARGE AND THIS SCENARIO WE WAIVING A $25 CUSTOMER CHARGE, AND THEN THOSE CUSTOMERS ARE ALSO GIVEN A 10% DISCOUNT ON THE REMAINDER OF THE BILL AND THEY DON'T PAY THE CAP PORTION OF THE BILL.
SO THAT'S WHY, UM, THAT BENEFIT INCREASES SO MUCH UNDER THIS SCENARIO.
AND WE FOUND THAT TO BE AN ATTRIBUTE, UM, OF THIS SCENARIO.
THE NEXT, NEXT OPTION, UH, OPTION TWO, UH, BASED UPON, UH, SOME DISCUSSIONS WITH SOME OF THE COUNCIL MEMBERS.
AND I THINK AT OUR LAST MEETING, COUNCIL MEMBER POOL ASKED WHETHER WE COULD, UM, USE SOME SORT OF GRADUATED APPROACH TO CHANGING THE CUSTOMER CHARGE.
SO WE INCREASED THE REVENUE HERE AT 31.3.
UM, AND THE WAY WE DID THAT WAS REDUCING THE GENERAL FUND TRANSFER FROM 120 MILLION TO 115 MILLION IN THE TEST YEAR.
AND THIS WAS A RECOMMENDATION OF THE, UH, IMPARTIAL HEARING EXAMINER.
SO THAT DECREASES THE REVENUE REQUIREMENT.
WE'RE STILL MOVING THE CUSTOMERS TO THE 50%, UH, UNITY OR CLOSER TO THE COST OF SERVICE.
WE STILL HAVE A SINGLE RATE STRUCTURE FOR INSIDE AND OUTSIDE, BUT WE ADOPTED FOUR TIERS.
UH, WE HEARD FROM, UH, BOTH COUNCIL MEMBERS AND SOME OF THE INTERVEN THAT, UH, FIVE WAS MAYBE TOO MUCH, BUT THREE WAS NOT ENOUGH.
SO WE FOUR WAS IN THE MIDDLE AND WE PICKED FOUR.
UM, AND THEN WE, WE DID A THREE STEP INCREASE WHERE THE CUSTOMER CHARGE IS SET AT $14 AND THEN $15 AND THEN $16, UM, OVER A THREE YEAR PERIOD WITH AN EQUAL OFFSET AND THE ENERGY RATE DECREASING OVER TIME.
AND SO, UM, AGAIN, HERE'S THE TABLE THAT SHOWS, UH, INSIDE CITY, UH, THE BEFORE AND AFTER, UM, OF THAT APPROACH THERE.
UM, AND YOU STILL SEE THAT, UH, WE'RE BREAKING THE TIER AT ZERO
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TO THREE, THEN THREE TO 15, 15 TO 3000, AND THEN OVER 3000, YOU STILL MAINTAIN THAT PROPORTIONALITY OF GETTING ABOUT HALF OF YOUR SALES AT THE COST OF SERVICE AND STILL, UM, UH, RECOGNIZING THAT FIRST TIER AT A COST BELOW THE COST OF SERVICE, UH, THERE.AND THEN THE OUTSIDE CITY WOULD GO FROM THREE TIERS TO FOUR TIERS, UM, FOR THEM.
AND, UM, AGAIN, THE, UM, IT'S FAIRLY PROPORTIONAL WITH, UH, ABOUT 53% OF THE SALES, UH, AT THE APPROXIMATE COST OF SERVICE, UM, AND A LOWER COST IN THAT, THAT FIRST TIER THERE, UM, TIERS BREAKING THE SAME PLACE.
CAN I JUST ASK REAL QUICK THERE, I'M FLIPPING BETWEEN THIS SLIDE AND THE ONE RIGHT BEFORE, IT LOOKS LIKE THE PRICE PER KILOWATT HOUR IS THE SAME WHETHER YOU'RE INSIDE OR OUTSIDE, THAT THAT'S CORRECT.
WE'RE PROPOSING THE SAME, UH, BREAKS IN THE TIERS AND THE SAME PRICE PER TIER FOR INSIDE AND OUTSIDE SINCE A SINGLE CLASS OF CUSTOMER ALL AS.
AND HERE IS THAT GRAPH I'VE, I'VE SHOWN YOU WITH THE EARLIER OPTIONS.
AND AGAIN, UH, I NOTE HOW IT'S PROPORTIONAL.
OBVIOUSLY IN THAT FIRST TIER, YOU HAVE A SLIGHTLY MORE SALES AND REVENUE BY DESIGN BECAUSE WE'VE LOWERED THAT PRICE.
UM, WE'VE INCREASED THE STEEPNESS OF THE, THE, THE PRICE CURVE.
SO IT GOES FROM 4.3 THEN UP A PENNY RATHER THAN HALF A PENNY, THEN IT GOES UP, UM, 2 CENTS IN THAT THIRD TIER, UH, AND THEN UP 3 CENTS INTO THE FOURTH TIER.
SO THAT GIVES YOU THAT, UH, WHAT PEOPLE REFER TO AS THE PRICE SIGNAL THERE STEEPNESS OF THE PRICE CURVE.
UM, AND AGAIN, IT'S, IT'S, IT'S PROPORTIONAL.
UM, AND SO WHAT THIS MEANS IS AS CUSTOMERS, UH, COME ONTO THE SYSTEM, REGARDLESS OF WHERE THEY TAKE, UH, THEIR ENERGY, THAT WITHOUT GETTING, UM, OUT OF BALANCE AS WE ARE NOW, AND I WON'T SPEND TOO MUCH ON TIME, BUT SO THE THE NEXT ONE, WHICH WOULD BE STEP TWO, WHICH WAS GOING TO A A $15 CUSTOMER CHARGE.
SO FROM 14 TO 15, UH, WE HAD ALSO SEE AN, UH, UM, A REDUCTION IN THE ENERGY RATE BECAUSE WE'RE COLLECTING THE SAME AMOUNT OF REVENUE.
UH, BUT BECAUSE WE GET A DOLLAR MORE IN THE CUSTOMER CHARGE, THE ENERGY RATE CAN COME, COME DOWN.
AND SO THAT'S TRUE BOTH INSIDE, UM, AND OUTSIDE.
AND HERE IS THE PRICE STRUCTURE THERE AND THE BAR NEARLY IDENTICAL.
UM, BUT YOU CAN SEE THAT THE ENERGY CHARGE NOW IS AT 4.2, THEN UP THE PENNY.
SO WE'VE KEPT THE SAME STEEPNESS OF THE CURVE.
THE ONLY THING HAS CHANGED HAS THE CUSTOMER CHARGE AND THE ENERGY RATE.
UM, POINT OUT THIS PRODUCES A BILL OF ABOUT $111 54 CENTS, UH, FOR NON CAP CUSTOMER AND $85 AND 72 CENTS.
UM, AND THAT'S BECAUSE WE'VE REDUCED, UM, THE CUSTOMER CHARGE SO THAT THAT REDUCTION TO THE CAP CUSTOMERS REDUCED.
AND, UH, THE THIRD STEP WOULD BE TO MOVE TO THE $16 CUSTOMER CHARGE, UM, IN YEAR THREE.
AND, UM, IT PRODUCES A VERY SIMILAR RESULT HERE.
UH, NOW THAT ENERGY RATE IS, UH, JUST OVER 4 CENTS, UH, 5 CENTS IN TIER TWO, SEVEN IN TIER THREE, AND, UH, JUST OVER 10 CENTS IN, UH, TIER FOUR.
UM, AND THIS PRODUCES, UM, A BILL PRETTY SIMILAR TO THE LAST ONE, $111 AND 63 CENTS AND A CAP CUSTOMER WOULD BE $84 AND 82 CENTS.
UM, WE WERE ALSO, UM, ASKED TO CONSIDER OTHER OPTIONS IN WHICH WE COULD, UM, REDUCE THE, UM, FURTHER REDUCED BILLS TO RESIDENTIAL CUSTOMERS.
AND SO, UM, THIS IS BUILT ON, UH, WHAT I JUST BRIEFED YOU.
SO THIS HAS THAT SAME REVENUE REQUIREMENT, 31.3, YOU KNOW, TAKING THAT REDUCTION IN THE GENERAL FUND TRANSFER, BUT RATHER THAN MOVING CUSTOMERS TO 50% UNITY, WE'RE ONLY GOING 40%.
SO THAT MEANS IS, UM, THE COMMERCIAL CUSTOMERS WON'T GET QUITE THE REDUCTION THEY GOT AND RESIDENTIAL CUSTOMERS WON'T GET QUITE THE INCREASE OF THE THEY HAD UNDER OTHER SCENARIOS.
UM, SO THAT, THAT HELPS OUT RESIDENTIAL IN, UM, REDUCES THAT COST.
IT STILL HAS A SINGLE RATE STRUCTURE WITH FOUR TIERS AND THIS ONE HAS A $15 CUSTOMER CHARGE CAN.
AND SO UNDER THAT SCENARIO HERE WE HAVE, UM, INSIDE CITY THE FIVE TIERS THAT HAS NOT CHANGED AND ALL THE SCENARIOS YOU'VE SEEN, BUT YOU CAN SEE
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THAT, UM, A SLIGHTLY LESS, UM, PRICE PER K H AND A SLIGHTLY LESS CUSTOMER CHARGE THAN WHERE WE ENDED ON NATIONAL, WHICH WAS $16.AND AGAIN, IT'S VERY PROPORTIONAL.
WE LEFT THE, THE BREAK IN THE TIER AT ZERO TO 300, UH, 300 TO 1500, UM, 15 TO 3000 AND OVER 3000.
UM, AND THEN OUTSIDE CITY CUSTOMER, AGAIN GOING ON THAT SAME STRUCTURE AGAIN, VERY, VERY PROPORTIONAL.
AND THIS IS THE DIAGRAM, AND AGAIN, IT LOOKS VERY SIMILAR, VERY PROPORTIONAL WHERE, UM, TIER ONE, UH, YOUR SALES ARE SLIGHTLY HIGHER, UH, THAN YOUR REVENUES BY DESIGN BECAUSE YOU HAVE SLIGHTLY BELOW COST OF SERVICE.
THAT TIER TWO IS A VERY, UH, WIDE TIER WITH ABOUT, UH, 55% OF THE SALES AT THE COST OF SERVICE AND THEN TIERS, UH, THREE AND FOUR, UM, WITH A MUCH STEEPER PRICE CURVE GOING UP TO 9.80 CENTS.
SO THIS PRODUCES A BILL OF A HUNDRED AND, UH, $10 AND 67 CENTS.
UM, AND FOR A CAP CUSTOMER IT WOULD BE $84 AND 90 CENTS.
UM, SO THOSE ARE THE OPTIONS, BUT I DO WANNA SHOW THERE'S BEEN A LOT OF TALK ABOUT THE PRICING, THE TIERS AND THE STEEPNESS OF THE PRICE CURVE.
UM, AND SO, UM, WE'VE PUT TOGETHER A DIAGRAM HERE THAT SHOWS THE VARIOUS PRICE CURVES.
SO, UM, THE CURRENT TIERS THAT, THAT LONG ORANGE LINE GOES INTO FIVE TIERS, UH, THAT'S WHAT WE CURRENTLY HAVE.
UH, INSIDE CITY IT'S GOT A 50% SLOPE, UM, INSIDE OR OUTSIDE CITY.
UH, IT'S, IT'S THE YELLOW LINE THERE.
UM, UM, GIVEN THE DISTANCE BETWEEN THE FIRST AND THE THIRD TIER, IT'S GOT ABOUT A HUNDRED OR A LITTLE OVER A HUNDRED PERCENT SLOPE.
UM, AND THEN OPTION ONE, UH, WHICH WAS OUR REBUTTAL CASE, HAS A $25 CUSTOMER CHARGE AND THREE TIERS.
UM, THE CRITICISM WAS THAT WAS NOT STEEP ENOUGH AND SO WE MOVED TO, UH, KINDA IN BETWEEN OUTSIDE AND INSIDE THE 67% SLOPE FOR OPTION TWO.
THIS IS THE ONE WITH THE THREE YEAR, UH, GRADUAL INCREASE IN CUSTOMER CHARGE OR OPTION THREE, WHICH WAS THE 40% MOVE TO UNITY, UH, WITH FOUR TIERS AND $15 CUSTOMER CHARGE.
AND SO YOU CAN SEE THE STEEPNESS OF THOSE PRICE CURVES, UH, IS MAINTAINED ON ON THOSE TWO OPTIONS.
AS I MENTIONED IN MY OPENING REMARKS, AUSTIN ENERGY HAS BEEN WORKING ON THIS BASE RATE REVIEW NOW FOR OVER A YEAR.
AND I WILL REMIND YOU THAT I SPECIFICALLY INSTRUCTED THE TEAM TO NOT OVERSTATE THE REQUESTED NEEDS.
IN OTHER WORDS, THERE'S NO FLUFF IN THE REVENUE REQUIREMENT.
WE APPRECIATE THAT IT'S NOT EASY TO RAISE RATES.
WE DON'T TAKE ASKING FOR EVERY INCREASED LIGHTLY BECAUSE WE UNDERSTAND IT AFFECTS OUR CUSTOMERS WHO, LIKE THE UTILITY ITSELF ARE DEALING WITH INFLATIONARY PRESSURES AT ALMOST EVERY TURN.
WE IN FACT HAVE NOT RAISED BASE RATES IN MORE THAN 10 YEARS AND ACTUALLY REDUCED BASE RATES OVER FIVE YEARS AGO.
THE REALITY IS THAT ALMOST EVERYTHING HAS INCREASED IN PRICE OVER THE PAST DECADE.
UNFORTUNATELY, WE'VE REACHED THAT POINT NOW WHERE WE CAN NO LONGER, UH, DELAY ADJUSTING OUR BASE RATES AND BASE RATE STRUCTURE.
MOVING CUSTOMERS CLOSER TO THEIR COST OF SERVICE IS IMPORTANT BECAUSE IT FOLLOWS SOUND RATE MAKING PRINCIPLES OF COST CAUSATION REDUCES INTER AND INTRA CLASS SUBSIDIES AND IS LESS DISCRIMINATORY, MORE FAIR AND EQUITABLE.
THROUGHOUT THIS OPEN AND TRANSPARENT PROCESS, WE HAVE HEARD LOUD AND CLEAR THE NEED TO PROTECT CUSTOMERS FROM RATE SHOCK WHILE IMPROVING THE UTILITIES FINANCIAL POSITION TO CONTINUE TO MEET COMMUNITY PRIORITIES FOR THE THE LONG TERM.
WITH THAT IN MIND, WE REQUESTED ONLY A REVENUE INCREASE THAT THE COST OF CITI OR THE COST OF SERVICE STUDY SHOWED WAS NECESSARY.
THE OPTIONS FOR RESIDENTIAL RATES PRESENTED TODAY REDUCE THE CUSTOMER CHARGE, INCREASE THE NUMBER OF TIERS, AND STEEPEN THE RATES FOR HIGHER CONSUMING TIERS.
FROM WHAT WE INITIALLY PROPOSED WITH THESE OPTIONS, RESIDENTIAL CUSTOMERS WOULD CONTINUE TO SEE SOMEWHAT SOME OF THE LOWEST BILLS IN THE STATE WHILE PAYING CLOSER TO THE COST OF SERVICE.
WE BELIEVE THIS IS A BALANCED AND FAIR APPROACH TO HELP BOTH OUR CUSTOMERS AND OUR UTILITIES LONG-TERM FINANCIAL HEALTH.
AND WITH THAT, WE'RE PREPARED TO ANSWER QUESTIONS YOU MAY HAVE.
I, I CAN UNDERSTAND WHY AUSTIN ENERGY FIRST CAME TO US WITH A, UH, THE FIXED RATE, THE FLAT RATE OF, UM, FOR THE CUSTOMER CHARGE AT AN ADDITIONAL 25 BECAUSE THAT PROVIDED AUSTIN ENERGY IN THE
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CITY AND, AND OUR, OUR, UM, OUR RIGHT PAYERS WITH MORE CERTAINTY ON THE INCOME.THAT WAS A MORE ST AND THEN THE COST OF THE ENERGY PER KILOWATT HOUR COULD BE LOWER, SIGNIFICANTLY LOWER, UM, SHIFTING MORE OF THE BURDEN TO THE FIXED COST.
I DO THINK THAT THAT HAS CAUSED REAL CONSTERNATION IN, UM, IN THE CITY AND CERTAINLY AROUND THE DIAS.
SO I THINK, UM, SO I REALLY APPRECIATE YOU MOVING OFF OF THE $25 ADDITIONAL AND LOOKING AT NEW SCENARIOS WITH A 14, YOU KNOW, A TWO THAT WOULD BE A $4 INCREASE OVER THE 10, 14, 15, 16 GRADUAL.
AND, AND THEN ALSO LOOKING AT, UH, JUST A FLAT $5 INCREASE AT $15 WITH THE VARIOUS, UM, BREAKS IN THE TIERS.
UM, I THINK WE HAVE MADE REAL PROGRESS IN, IN TRYING TO UNDERSTAND WHAT'S IN FRONT OF US AND I FEEL LIKE, UH, VERY CLOSE TO BEING ABLE TO ACHIEVE SOME RESOLUTION, UH, PRETTY SOON.
UH, DO YOU WANNA TELL US WHERE MAYBE THE NEGOTIATIONS ARE BEFORE WE OPEN UP TO THE CONVERSATION AND THE QUESTIONS AROUND THE DIAS? ANY, ANYTHING THAT YOU WOULD LIKE TO, I SEE MR. KATO HERE IN THE, PROBABLY NOW WOULD BE A TIME, WOULD BE A GOOD TIME TO KIND OF CATCH US UP.
THE PARTIES HAVE CONTINUED TO HAVE, UM, DISCUSSIONS AND HOPES OF RESOLVING THE CASE.
UM, WE MET, UM, YESTERDAY AFTERNOON AND MAY MEET, UM, TOMORROW AS WELL.
ALTHOUGH NOTHING IS, UM, FIRM ON THE CALENDAR AT THIS TIME.
UM, THUS FAR WE'VE NOT BEEN ABLE TO BRIDGE THE, THE GAP AND SO I DON'T HAVE ANY SETTLEMENT TO TO ANNOUNCE TO YOU TODAY.
UNFORTUNATELY, WE CONTINUE TO TO VISIT ON THESE ISSUES AND MY HOPE IS STILL THAT WE ARE ABLE TO BRIDGE THE GAP.
YOU HAVE SOME AGREEMENT ON SOME PIECES OF THE, OF THE NEGOTIATIONS, RIGHT? NOT ON THE BIG ITEMS, BUT ON SOME OF THE CONTINGENT.
I SHOULD PROBABLY NOT SPEAK TO THAT AT THIS POINT.
UM, THERE, THERE HAVE BEEN DISCUSSIONS ABOUT RESOLVING SOME ISSUES EVEN IF WE'RE NOT ABLE TO REACH A COMPREHENSIVE SETTLEMENT, BUT I DON'T KNOW IF PARTIES ARE WILLING TO DO THAT.
IT WOULD SEEM THAT IF THERE ARE SOME ISSUES THAT ARE, ARE OF LESS IMPORT THAN THE ACTUAL RATES AND THE DOLLARS THAT IT WOULD BE GREAT IF WE COULD GET SOME AGREEMENT THERE.
UH, I THINK THESE OPTIONS, UH, REFLECT, UH, UH, MOVEMENT IN THE RIGHT DIRECTION IN TERMS OF BOTH THE POLICY YOU'RE TRYING TO GET TO AND, AND THE POLITICAL REALITIES OF WHERE THE, OF WHERE THE COUNCIL IS.
I THINK IT IS IMPORTANT THAT WE GET TO THE PLACE WHERE THE DIFFERENT TIERS RATE STRUCTURES MORE REFLECT WHAT THE COST OF SERVICE IS.
UH, BECAUSE IF WE DON'T GET THERE, THERE'S ALWAYS GONNA BE ANOMALIES DEPENDING ON WHAT'S HAPPENING IN THE WEATHER.
AND WE'RE ALWAYS GONNA BE GOING THROUGH THE SAME DRILL OVER AND OVER AGAIN.
AND IF AT SOME POINT IN THE FUTURE YOU CAN GET TO THE PLACE WHERE IT'S MORE EQUALIZED, THEN THE ADJUSTMENTS ARE HAPPEN ACROSS THE BOARD AND WE GET TO A PLACE WHERE WE'RE NOT DOING THIS ANYMORE.
BUT I ALSO BELIEVE THAT WE, WE, WE MAY NOT BE ABLE TO GET THERE AS QUICKLY, UH, IN TERMS OF THE POLICY STUFF.
AND I THINK THAT GOES TO THE, TO THE RATE SHOCK ISSUE.
UH, I LIKE THE OPTION TWO OF THE ONES THAT YOU'VE PRESENTED, UH, BECAUSE THEY STILL TAKE THE TIER ONE AND TIER TWO RATE CLOSER TO THE ACTUAL COST OF SERVICE.
UH, BUT DO IT IN A WAY THAT, UH, UM, UH, DOES NOT HAVE THE SAME INCREASE.
I MEAN, LOOKING AT A $15 AN INCREASE IN THE FIXED RATE CHARGE, WHICH IS 150% INCREASE ON THE FIXED RATE CHARGE, UH, CAUSES EVERYBODY TO, TO RECOIL.
AND AN OPTION WHICH HAS THAT $15 BEING BROUGHT DOWN TO $4, I THINK IS BEING VERY RESPONSIVE TO WHAT YOU'VE HEARD FROM THE, FROM THE COUNCIL, UH, AS WELL AS SOME OF THE ADVOCATES.
SO I APPRECIATE THAT CONSIDERATION, THAT MOVEMENT.
OF COURSE, WHEN YOU DO THAT, SOMETHING HAS TO GIVE CAUSE IT'S LESS REVENUE, WHICH MEANS THAT YOU HAVE TO THEN LOOK AT THE RATE.
UM, I HEAR THE ARGUMENTS THAT, UH, THE ADDITIONAL TIERS, UH, DON'T, UH, AND DON'T PROVIDE, UH, A PRICE SIGNAL THAT PEOPLE USE.
I'M NOT SURE I'M CONVINCED OF THAT.
I'M NOT SURE I'VE SEEN DATA THAT THAT SHOWS US REALLY ONE WAY OR ANOTHER ON THAT.
SO COMING UP WITH AN INCREASED TIER STRUCTURE IN THE FOUR TIERS MAKES SENSE TO ME.
MOVING UP PAST THREE AND, AND HAVING
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A STEEPER, UH, ANGLE MAKES SENSE TO ME IN ORDER TO BE ABLE TO TAKE INTO ACCOUNT BOTH YOUR POLICY AS WELL AS THE, THE INTERVENERS, UH, INTERESTS AS WELL AS THE, THE POLITICAL REALITIES THAT WE HAVE AS A, AS A COUNCIL FOR DOING SOMETHING.UM, AND, AND, AND WHEN YOU LOOK AT EACH ONE OF THESE OPTIONS, HAVING A REVENUE THAT YOU SAY THAT YOU NEED, UM, YOU KNOW, NOTHING WOULD PLEASE ME FURTHER THAN, THAN DEFINE THAT THAT $40 MILLION WE GOT LAST YEAR WASN'T AN ANOMALY.
OBVIOUSLY IT'S AN ANOMALY IF YOU LOOK BACK OVER THE LAST 20 YEARS.
SO I, I DON'T THINK YOU CAN PLAN ON THAT YEAR BEING ANYTHING LESS THAN ANOMALY, CUZ HISTORICALLY SPEAKING IT WAS, UH, BUT IF WE SEE THAT SAME KIND OF REVENUE INCREASE IN THE NEXT YEAR OR TWO, THEN PROBABLY YOU NEED TO COME BACK, UH, IN A, IN A RATE THING AND SAY, WE HAVE A DIFFERENT WORLD BECAUSE THIS IS NO LONGER AN ANOMALY.
UH, BUT THEN YOU WOULD'VE BEEN GENERATING MORE REVENUE THAN THAN YOU NEED.
SO, UH, WE'RE GOING TO BE DOING SOMETHING AT THAT POINT, UH, ANYHOW.
BUT I THINK WE PROBABLY DO THAT IN THE FUTURE AND NOT ASSUME THAT IT WASN'T AN ANOMALY WHEN THE DATA WOULD SHOW US AT THIS POINT, UH, THAT IT, THAT IT, THAT IT WAS, I'M COMFORTABLE THAT THE BASIS THAT YOU USED WITH RESPECT TO THE YEARS USING THAT YEAR, UM, WHICH WE HAD THE, THE, THE WINTER STORM.
AS I DIVE INTO THOSE NUMBERS, IT LOOKS LIKE IF THERE WAS AN ANOMALY SITUATION THAT LASTED FOR A HUNDRED HOURS OUT OF 8,000, 9,000 HOURS OVER THE COURSE OF A OF A YEAR.
UH, SO IT'S JUST NOT ENOUGH TO REALLY THROW THINGS OFF.
SO I THINK THAT STILL IS AN APPROPRIATE YEAR TO USE AS YOU'VE BEEN USING IT.
UM, BUT WE HAVE TO, TO GET TO THAT PLACE.
WE, UM, UM, I WOULD LIKE FOR US AND THERE'S GONNA BE A RESOLUTION THAT WE'RE GONNA BE BRINGING TO, TO FOCUS, UH, ATTENTION ON THE CAP, UH, PROGRAM.
UH, CAUSE I REALLY THINK THAT THE BIGGEST THING THAT WE CAN BE DOING IN TERMS OF, OF EQUITY IN OUR CITY IS INCREASING.
THE NUMBER OF PEOPLE ARE PARTICIPATING IN THE CAP PROGRAM.
THAT'S WHAT WE, THAT'S WHAT WE NEED TO DO.
I ALSO RECOGNIZE THAT THE CURRENT TECHNOLOGIES THAT WE USE USE PROXIES TO IDENTIFY THOSE PEOPLE.
AND WHEN YOU USE PROXIES TO IDENTIFY THOSE PEOPLE, THERE WILL ALWAYS BE SOME, YOU CAN FIND WHERE PEOPLE ARE GETTING THE, THE DEDUCTION.
IT SHOULDN'T BE GETTING THE DEDUCTION.
I DON'T KNOW HOW YOU HANDLE THAT.
UH, BUT I, I WOULDN'T LET THAT STOP US FROM DRIVING TO GET DOUBLING THE NUMBER AND THE PERCENTAGE OF PEOPLE, EVEN IF IT DOUBLED THE NUMBER OF PEOPLE WHO ARE UNFAIRLY GETTING IT.
I WOULD STILL DO THAT IF THAT WAS THE NECESSARY COST OF GETTING IT TO DOUBLE THE NUMBER OF PEOPLE THAT ACTUALLY NEED IT.
I WOULD LIKE US TO FIND OUT THE ANSWER, UH, TO, TO BEING ABLE TO DO THAT SO THAT WE DON'T NECESSARILY HAVE THAT SAME THING HAPPENING.
WHEN I LOOK AT THE NUMBERS THAT YOU PROVIDED, IT LOOKS THAT THAT'S LIKE WHAT A TWO AND A HALF, $6 MILLION INCREASED EXPENSE THAT IS NOT REFLECTED, UH, IN THE PROPOSAL THAT YOU'RE GIVING US.
AND WE'LL CONSIDER THAT WE'RE NOT CONSIDERING ON TUESDAY, WE'RE JUST SETTING THE GOAL ON TUESDAY.
BUT IF THERE'S A WAY FOR US TO SET THIS RATE STRUCTURE THAT ACTUALLY INCREASES THE REVENUE NEED BY THAT TWO TO 6 MILLION SO THAT WE CAN ACTUALLY FUND THE CAP, UH, PROGRAM ADMINISTRATION SO THAT WE COULD REALLY DO THAT, I THINK THAT WOULD BE REAL SIGNIFICANT.
AND THEN OUR MESSAGE TO THE COMMUNITY WOULD BE, RATHER THAN DOING A $15 INCREASE, WE'RE DOING A $4 INCREASE.
UH, WE'RE STILL MAINTAINING TIERS, WE'RE STILL MAINTAINING PRICE SIGNALS, UH, BUT WE ARE ACTUALLY INVESTING IN INCREASING THE NUMBER OF PEOPLE PARTICIPATING IN THE CAP PROGRAM, WHICH IS THE MOST EQUITABLE THING WE CAN DO.
I HAVE SOME THOUGHTS OR SUGGESTIONS ON HOW THAT MIGHT ACTUALLY BE ACHIEVED.
I DON'T KNOW THAT YOU WANT ME TO GIVE YOU THOSE IN THIS PUBLIC SETTING IF YOU WANT TO.
IF NOT, I'D LIKE TO TALK TO YOU OUTSIDE OF THIS SETTING IN TERMS OF WAYS THAT THAT MIGHT UH, HAPPEN AS, AS YOU DO YOUR, YOUR, YOUR CONVERSATIONS.
UH, BUT I APPRECIATE THE, THE, THE RESPONSIVENESS TO THE, TO THE CONCERNS THAT, UH, UH, WE'VE, WE'VE HEARD.
UM, VICE TOVA, OH BY THE WAY, THE US MEN'S SOCCER TEAM WON THE GAME.
UM, I HAVE A COUPLE, A COUPLE SMALL QUESTIONS, BUT I WANTED TO ASK A COUPLE BIG ONES FIRST.
UM, FIRST OF ALL, THANK YOU FOR SHOWING US THE OPTIONS THAT YOU PRESENT.
I KNOW THAT, UM, SEVERAL OF US ASKED YOU TO RUN OTHER SCENARIOS AND I WOULD ASK IF YOU COULD MAKE THOSE AVAILABLE AND I'M NOT SURE WHAT THE BEST FORUM IS FOR DOING THAT, BUT I HAD ASKED FOR A COUPLE SCENARIOS TO BE RUN AT LOWER REVENUE REQUIREMENT NUMBERS, UM, BASED ON SOME OF THE INTERVENERS SUGGESTIONS AND ALSO AT
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BOTH A $12 AND A $13 CUSTOMER CHARGE.AND THANK YOU, I GOT THOSE THIS AFTERNOON AND I APPRECIATE THOSE AND I'M WORKING THROUGH THEM AND HAVE SOME QUESTIONS FOR YOU.
BUT, BUT I THINK THOSE WOULD BE USEFUL TO SHOW TO THE WHOLE COUNCIL AND PERHAPS WE CAN TALK ABOUT THEM.
AND I BELIEVE MAYOR PROTE ASKED FOR SOME DIFFERENT SCENARIOS TOO.
AND SO IF WE COULD, IF WE COULD ALL BE LOOKING AT ALL OF THOSE.
UM, A COUPLE QUICK SMALL QUESTION, SMALLER QUESTIONS.
THERE IS A REFERENCE TO AN UNCOLLECTABLE EXPENSE THAT WAS ADJUSTED FOR IN THE TEST YEAR FROM A SINGLE NON-RESIDENTIAL CUSTOMER.
CAN YOU TELL US MORE ABOUT THAT AND WHAT THE AMOUNT IS? I, I BELIEVE WHAT YOU'RE REFERRING TO IS, UM, PULL ATTACHMENTS IN WHICH, UM, I DON'T HAVE THE EXACT DOLLAR AMOUNT MY ACCOUNTANT DOES.
UM, SO, UM, WE ATTACH POLE UH, INFRASTRUCTURE TO EACH OTHER'S POLES AND NORMALLY WE, WE HAVE A, A CONTRACT IN PLACE, UM, AND FOR AN ELECTRIC UTILITY, UH, WHAT THOSE ATTACHMENTS ARE GOVERNED BY A, UM, A FORMULA, UM, THAT THE FEDERAL TRANSPORTATION OR FEDERAL COMMUNICATE FCC GOVERNS.
WHEREAS IF YOU'RE A PRIVATE ENTITY, UM, THERE, THERE IS NOT THAT REQUIREMENT.
AND SO, UM, WHEN WE DID A RECONCILIATION OF HOW MUCH WE HAVE ATTACHED TO AT AND T'S POLLS AND WHAT WE HAD AT AND HAD OUR POLLS, UM, THAT IS AT ADJUSTMENT BECAUSE WE DON'T HAVE A CONTRACT WITH AT AND T.
UM, AND SO IT'S NOT SOMETHING WE CAN COLLECT ON.
AND SO THE ACCOUNTANTS UH, BOOKED IT, UM, AS RECEIVABLE AND THEN WROTE THAT OFF.
WHAT WAS THE AMOUNT, DO YOU HAPPEN HAVE THE AMOUNT OF DS? IT'S $1,836,826 CAN'S.
WAS THAT AN, WAS THAT AN ACTUAL EXPENSE THAT AUSTIN ENERGY INCURRED? UH, WELL I GUESS IT DOESN'T MATTER CUZ IT WAS ADJUSTED OUT OF THE, OUT OF THE BASE.
YEAH, NO, IT'S, IT'S, IT'S, IT'S NOT AN EXPENSE.
WHAT IT IS IS, UM, IT'S REVENUE THAT WE WOULD'VE OTHERWISE RECEIVED HOW WE HAD A CONTRACT IN PLACE AND CHARGED THEM TO ATTACH TO OUR POLLS.
I GUESS IT WAS, IT WAS ELIMINATED.
ANYWAY, UM, I HAD ASKED A QUESTION THAT I'M NOT SURE I'VE GOTTEN AN ANSWER FROM.
DOES THE, DID YOU MAKE ADJUSTMENTS IN THE TEST YEAR FOR, WELL, LET ME BACK UP AND SAY, I ALSO READ THE CONVERSA, THE, THE BACK AND FORTH ABOUT THE WINTER STORM, THE WINTER STORM ADJUSTMENTS AND THE, THE SHORT NUMBER AND AGREE MOSTLY WITH, WITH WHAT YOU'RE SAYING, MAYOR, ABOUT THE SHORT NUMBER OF DAYS NOT, NOT REDUCING THE REVENUE CONSIDERABLY.
I DID ASK WHAT, WHAT IT DID TO THE COMMERCIAL.
WE HAD SOME MAJOR INDUSTRIAL CUSTOMERS WHO WERE OFFLINE AND I WONDERED IF YOU HAD MADE AN ADJUSTMENT FOR THEIR IMPACT FOR THAT LOST REVENUE.
AND IF SO, WHAT DID YOU QUANTIFY WHAT THE LOST REVENUE IMPACT WAS OF THOSE MAJOR INDUSTRIALS BEING OFFLINE FOR THAT PERIOD OF TIME? DID YOU QUANTIFY IT AND DID IT GET ADJUSTED FROM THE TEST YEAR? CUZ THAT MAY NOT BE INCONSIDERABLE, THAT MAY BE AN AMOUNT THAT, THAT WE WANT TO THINK ABOUT.
AND YOU CAN GET BACK TO ME, BUT I WOULD, YEAH, I I THINK BACK, I WOULD BACK TO YOU, I'M SURE WE DID ANALYSIS, I JUST DON'T RECALL IT RIGHT OFFHAND.
I KNOW THAT WHEN WE SET RATES, WE USE A WEATHER NORMALIZED YEAR.
AND SO, UH, THOSE THINGS ARE ADJUSTED OUT WHEN WE USE THE SET RATES.
UM, BUT I CAN GET BACK TO YOU WITH YOUR, WITH THE RESPONSE TO YOU.
YEAH, I THINK SO THERE'S A LINE IN THE, IN THE, IN THE IMPARTIAL HEARING EXAMINER THAT INSTEAD OF LOOKING TO THE PAST IN FUTURE TO RECONCILE THE TEST YEAR, THE IE SIMPLY PREFERS THAT A, THAT AE BETTER EXPLAIN HOW THE STORM HAD NO IMPACT ON TEST YEAR ENERGY SALES AND BASE REVENUES.
AND SO I'M NOT ASKING YOU TO EXPLAIN IT, I'M JUST SAYING, SAYING THAT'S THE SUBSTANCE OF MY QUESTION, THAT EVEN THE IMPARTIAL HEARING EXAMINER SEEMS TO BE SAYING THERE'S A NEED FOR SOME EXPLANATION.
AND I AGREE WITH YOU ABOUT THE RESIDENTIAL PIECE, BUT I'M NOT CONVINCED NECESSARILY ABOUT THE COMMERCIAL PIECE UNTIL, UNTIL WE GET THAT QUANTIFICATION OF THE INDUSTRIAL CUSTOM, WHAT THE GAP WAS FOR INDUSTRIAL CUSTOMERS AND WHETHER THAT WAS FACTORED INTO THE TEST YEAR.
WE DID DO ANALYSIS AND WE DID RESPOND TO THE IMPARTIAL HEARING EXAMINER AND THAT'S ONE OF OUR DOCUMENTS THAT WE CAN PROVIDE FOR YOU WITH THE THOROUGH ANALYSIS THAT SHOWS THAT WE'RE CONFIDENT IN OUR, UM, NUMBERS.
BUT DOES IT HAVE THAT PIECE THAT I JUST REQUESTED ABOUT THE INDUSTRIAL? UM, I WILL CHECK AND IF IT'S NOT, I WILL GET IT FOR YOU.
AND THEN, AND I HOPE THAT WE'LL HAVE AN OPPORTUNITY TO TALK A LITTLE BIT TO SEE IF WE HAVE AGREEMENT ON SOME OF THE REVENUE REQUIREMENT ADJUSTMENTS.
I DON'T KNOW IF THAT'S TODAY OR IF THAT'S SOMETHING ON THURSDAY, BUT I WANNA, I WASN'T SURE HOW, WHETHER I WAS QUANTIFYING PROPERLY THE AMORTIZATION OF THE WINTER STORM EXPENSES.
UM, ON PAGE 20 OF THE IMPARTIAL HEARING EXAMINERS, IT TALKS ABOUT
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THE CONSUMER ADVOCATE PROPOSED, UM, A REVENUE ADJUSTMENT BASED ON SOME OF THE STORM COSTS, THE COST ASSOCIATED WITH THE WINTER STORM.THE IMPARTIAL HEARING EXAMINER DIDN'T AGREE, BUT THE IMPARTIAL HEARING EXAMINER SAID THAT IF THERE, IF COUNSEL DOES MAKE AN ADJUSTMENT, IT WOULD SUGGEST JUST DOING IT BASED ON OVERTIME AND LABOR 1.2 MILLION RELATED TO OVERTIME, 1.3 MILLION RELATED TO CONTRACT.
IF WE, IF THE COUNCIL DOES DECIDE TO MAKE THOSE ADJUSTMENTS, SHOULD WE CONSIDER THOSE TO BE 2.5, WOULD WE WANT TO MAKE A REVENUE REQUIREMENT ADJUSTMENT OF 2.5 OR IS THAT 2.5 SPREAD OVER FIVE YEARS? I THINK WHEN, WHEN I, WHEN I SUGGESTED THOSE DIFFERENT REVENUE REQUIREMENTS, I WAS NOT, I WAS NOT, I THINK I FACTORED IT IN IT LIKE 300,000.
BUT I THINK IT, MR. BACCATO, DO YOU HAVE, I THINK YOU MAY UNDERSTAND WHAT ANOTHER, I UNDERSTAND WHAT I'M SAYING.
I'M NOT ARTICULATING MY QUESTION IN FRONT OF ME, LET US CHAT ABOUT IT, BUT I THINK I DID.
IN OTHER WORDS, I THINK I I THINK THE, I THINK THE FIGURE I PROVIDED WAS TOO LOW.
YEAH, SO THE ICA DIDN'T DISALLOW ANY OF THE OVERTIME OR CONTRACT LABOR.
HE JUST HAS SAID IT SHOULD BE AMORTIZED ADVERTISED OVER FIVE YEARS.
FIVE YEARS RATHER THAN INCLUDING THE FULL AMOUNT IN REV IN THE ANNUAL REVENUE REQUIREMENT.
AND SO IF WE AGREE, HOW MUCH SHOULD WE REDUCE THE REVENUE REQUIREMENT BY, AND YOU CAN GET BACK TO ME, BUT I THINK I CALCULATED IT WRONG IN THE SCENARIOS THAT I REQUESTED YOU TO RUN.
IT DEPEND ON HOW MANY YEARS YOU WANNA AMORTIZE OVER.
SO YOU DIVIDE IT BY THREE OR FOUR OR FIVE OR FIVE AND I, AND THAT'S, I BELIEVE WHAT I DID.
BUT ANYWAY, I DON'T WANNA GET IN THE WEEDS, BUT, UM, I THINK OKAY, WE CAN, WE CAN TOUCH BASE ON THAT LATER.
BUT, UM, I PROBABLY HAVE SOME OTHER QUESTIONS, BUT I'LL, I'LL BE QUIET FOR THE MOMENT.
I DO, I DO WANNA WANNA LOOK AT THE SCENARIOS THAT ARE 12 AND $13 AND SEE WHAT, WHAT THOSE LOOK LIKE.
AND AGAIN, IF IT'S THE ONES THAT I RAN THAT I ASKED TO BE RUN, WERE AT 12 AND $13.
SO THANKS FOR SHARING THOSE WITH MY COLLEAGUES.
AND, AND THANK YOU FOR THIS PRESENTATION THAT SHOWS US ADDITIONAL OPTIONS.
I THINK FOR ME, YOU KNOW, MY MAIN PRIORITY WAS TO ENSURE THAT OUR RESIDENTS DIDN'T FEEL LIKE THEY WERE GETTING SQUEEZED.
AND SO AVOIDING AN ALL AT ONCE RATE SHOCK WAS IMPORTANT.
AND SO HAVING THIS, THESE NEW OPTIONS COME BEFORE US THAT CHANGE IT FROM A $15 INCREASE ON, ON THE CUSTOMER CHARGE TO A FORD TO $5 INCREASE, I THINK IS MUCH MORE REASONABLE, UM, GIVEN THE SITUATION THAT WE'RE IN.
UM, YOU KNOW, BUT, BUT BOTH OPTIONS TWO AND OPTIONS THREE ASSUME A REVENUE REQUIREMENT OF 31 MILLION.
AND I THINK AS COUNCIL MEMBER TOVO JUST ALLUDED TO, THERE ARE SOME ADJUSTMENTS THAT, UM, THAT WE WOULD LIKE TO CONSIDER TO SEE IF THERE'S ANY, UM, FLEXIBILITY THERE ON THAT REVENUE REQUIREMENT BASED ON SOME, UM, REVENUE ADJUSTMENTS.
SO I THINK THAT THERE'S EVEN POTENTIAL FOR US TO HAVE THOSE CONVERSATIONS TO REDUCE THE REVENUE REQUIREMENT.
BUT JUST BASED ON WHAT IS PRESENTED TODAY, I WOULD BE LEADING TOWARDS OPTION TWO WITH THAT THREE YEAR PHASED APPROACH.
UM, THE QUESTION I HAVE, UH, FOR NOW IS AROUND THE, THE DIFFERENCES BETWEEN THE INSIDE THE CITY CUSTOMERS VERSUS OUTSIDE THE CITY CUSTOMERS.
UM, YOU KNOW, WE'RE TRYING, WE, I THINK EARLY ONE OF THE PREVIOUS WORK SESSIONS YOU MENTIONED THAT ARE OUTSIDE OF THE CITY, CUSTOMERS DO USE MORE ENERGY AND, AND, BUT THE RATES THAT YOU HAVE FOR THE TIERS ARE THE SAME AS INSIDE THE CITY CUSTOMERS.
AND SO HOW ARE WE GOING ABOUT TO ENCOURAGE CONSERVATION FOR OUTSIDE OF THE CITY CUSTOMERS? SHOULDN'T WE BE CONSIDERING A DIFFERENT, UH, PRICE STRUCTURE FOR THEIR TIERS? AS I MENTIONED THAT WHAT WE SEE IS CUSTOMERS REACT TO BILLS, WHETHER THEIR, THEIR AVERAGE RATE.
AND SO AS YOU USE MORE ENERGY, UM, YOUR, YOUR BILL GETS LARGER AND THAT'S TRUE WITH YOUR INSIDER OUTSIDE THE CITY.
AND SO, UH, WE DO HAVE, UH, WITH OPTION TWO, AS YOU MENTIONED, A MUCH STEEPER PRICE CURVE.
UM, IT'S UM, AND THEN WHEN YOU ADD IN THE PASS SUITS THAT ARE ALSO BASED UPON THE K H, SO AS YOU START GETTING ABOVE 1200 K H 1500, YOUR BILL STARTS GETTING QUITE LARGE.
AND SO WE THINK THAT'S WHAT CUSTOMERS REACT TO AS OPPOSED TO, CUZ VERY FEW CUSTOMERS KNOW WHEN THEY'RE IN A TIER OR WHEN THEY'RE CROSSING OVER.
UM, SO IT'S NOT IF THEY DO SOMETHING IN THEIR BEHAVIOR BUT WHEN THEY GET THEIR BILLING IN IT, LIKE WE ALL DO, WE'RE SHOCKED AND WE GO JUST A THERMOSTAT OR WE
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DO SOMETHING ABOUT IT.UM, SO WE THINK THAT UM, WE WILL CONTINUE TO SEE CONSERVATION, UH, FROM, FROM CUSTOMERS WITH THE WAY IT'S STRUCTURED NOW.
UM, BUT ONE OF THE BIG REASONS WHY WE'RE SEEING SO MANY SALES NOW IN THAT FIRST TIER IS NOT SO MUCH CUSTOMERS MIGRATING FROM TIERS THREE AND FOUR DOWN TO ONE IS BECAUSE OF ALL THE NEW CONSTRUCTION THAT'S GOING IN IS MOSTLY MULTIFAMILY, UH, HIGH EFFICIENCY TYPE UNITS.
AND SO THOSE, THOSE CUSTOMERS OR SALES NEVER GET OUT OF TIER ONE.
UM, AND THAT'S THE GROWTH WE'RE SEEING IN TIER ONE.
SO WE THINK OUR STRUCTURE MEETS BOTH THOSE CHALLENGES, BOTH THE PRICE SIGNAL, UH, FOR CUSTOMERS, UH, TO USE LESS CUZ THEY HAVE HIGHER BILLS AS WELL AS RECOVERING THE COST AND THOSE CUSTOMERS ARE COMING ONLINE.
IT'S KIND OF THE, THE GROWTH PACE PACES FOR GROWTH CONCEPT.
I GUESS I'M JUST NOT, YOU'RE SAYING THAT THE, THE BEHAVIORS ARE BASED ON THE AVERAGE OF THEIR CONSUMPTION, BUT YET THE TIERS THAT YOU'RE PROPOSING IN OPTION TWO FOR OUTSIDE OF THE CITY CUSTOMERS WHO WE KNOW USE MORE ENERGY IS THE SAME AS INSIDE OF THE CITY CUSTOMERS.
THERE'S NOT, THERE DOESN'T SEEM TO BE ANY CONSIDERATION IN TRYING TO ADJUST THE, THE PRICE POINT THERE.
UM, BECAUSE IF THEY'RE GONNA END UP IN TIER TWO OR TIER THREE, WOULDN'T WE WANT THAT TO BE AT A HIGHER PRICE POINT? AND THEN, AND JUST LOOKING AT, I'M LOOKING AT PAGE 15 ON THE SLIDE DECK.
IF UNDER THE CURRENT CUSTOMER CHARGE MAJORITY, THE BELOW COST, THERE'S 35% OF OUTSIDE OF THE CITY CUSTOMERS ARE CURRENTLY AT BELOW COST AT A 3.7 PRICE POINT.
AND THEN IF YOU MOVE, IF WE DID DO OPTION TWO, THEN THEY, YOU WOULD STILL HAVE 52% AT A 5.3 UH, CENT PER KILOWATT THAT'S STILL LOWER THAN THE COST OF SERVICE THAT YOU HAD AT THE $10 CHARGE OF 5.6.
CUZ AS YOU INCREASED THE CUSTOMER CHARGE YOUR COST OF SERVICE, UH, WHEN THE ENERGY RATE, UH, MOVES DOWN.
SO THESE TIERS, NOT EXACT COST OF SERVICE, THEY, THEY'RE APPROXIMATE.
UM, BUT AS YOU CHANGE, LIKE I SAID, THERE'S A RELATIONSHIP, A LINEAR RELATIONSHIP BETWEEN THE CUSTOMER CHARGE AND THE ENERGY RATE.
SO AS YOU INCREASE YOUR CUSTOMER CHARGE, YOUR ENERGY RATE DECREASES.
UM, SO I JUST WANNA POINT OUT THAT THERE'S REALLY NOT THAT MUCH DIFFERENCE ON THE, UH, CUSTOMER'S BILL FROM ANY OF THESE, THESE SCENARIOS.
WE'RE TALKING ABOUT A THREE OR $4 DIFFERENCE ACROSS THE WHOLE YEAR, UM, WHICH I'M NOT SURE THEY'RE GOING TO NOTICE WHEN THEY'RE LOOKING AT THE 110 PLUS DIFFERENCE COMING FOR THEIR BILL.
UM, AND SO I THINK AS WE, AS WE LOOK AT THE SCENARIOS, UM, WE MAY HAVE TO DECIDE THIS ONE IS REALLY GONNA BE FUNCTIONALLY BETTER FOR SOLVING THE PROBLEMS WE'RE TRYING TO SOLVE.
I DON'T WANNA, THAT'S NOT WHERE I WANNA LAND, BUT JUST LOOKING AT THE REALITY OF, OF THESE NUMBERS THAT'S REALITY AND, AND THE FACTS.
SO WE HAVE TO, WE HAVE TO KEEP THAT IN MIND.
I HAVE BEEN TRYING TO GET SOME SCENARIOS AND I'M FOR SOME REASON HAVING TROUBLE COMMUNICATING WHAT I'M TRYING TO GET AT IN THE, THE MATERIAL THAT YOU GAVE ME, YOU HAVE A BREAKDOWN BY THE NUMBER OF BILLS THAT FALL IN DIFFERENT CATEGORIES, UM, FROM LIKE ONE TO 2 50, 2 51 TO 500, 5 0 1 TO SEVEN 50.
UM, AND IN MOST OF THE SCENARIOS WHERE YOU'RE BREAKING THINGS, UM, BETWEEN THE TIERS, YOU HAVE A REALLY LARGE GAP BETWEEN THE END OF TIER ONE AND TIER THREE.
UM, AND AT THE SAME TIME WE, WE CAN SEE FROM ALL THE DATA THAT YOU'VE GIVEN US THAT OUR AVERAGE IS AT EIGHT 60, SO IT'S KIND OF SOMEWHERE IN THE MIDDLE OF THAT TIER TWO.
UM, THESE OTHER CITIES HAVE AVERAGE USAGE THAT ARE MUCH HIGHER.
THE OUT CITY HAS A MUCH HIGHER USAGE.
UM, AND I GUESS WHAT I'VE BEEN TRYING TO GET AT IS WHAT IF WE BROKE AT NARROWER TIERS AND STARTED CHARGING MORE AT EACH TIER? UM, SO THAT WE ARE INCENTIVIZING, I MEAN I, I DON'T, I'M NOT SURE THAT ANY OF THESE REALLY INCENTIVIZE A CHANGE WHEN YOU HAVE SUCH A WIDE TIER.
I MEAN YOU'RE ESSENTIALLY SAYING THAT PEOPLE ARE COMING IN ONLINE IN THESE NEW HOUSES AT 600 UM, KILOWATTS AND THERE'S NOTHING IN THIS STRUCTURE THAT'S INCENTIVIZING SOMEBODY WHO'S AT 900 TO GET DOWN THERE BECAUSE THEY'RE STILL AT THE SAME PRICE AS SOMEBODY WHO'S AT 600 OTHER THAN THE ADDITIONAL USAGE.
AND SO CAN WE DO A MOCKUP THAT HAS IT LIKE BREAKING LIKE YOUR FIRST, YOU KNOW, YOUR TAKES YOU, I DON'T KNOW, 300 WATTS JUST TO BE ON THE SYSTEM.
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WE HAVE ONE TIER THAT'S THAT AND THEN WE GO FROM 300 TO 500 AND THEN FROM 500 ON AND YOU, IT SEEMS LIKE YOU'D BE GETTING A LARGER PORTION CLOSER TO COST OF SERVICE IF YOU BROKE UP THE TIERS AND YOU WERE ABLE TO GO UP AND YOU'D BE ABLE TO DO, UM, THE TIER INCREASES.UM, BUT EVERY TIME I'VE ASKED FOR THE SCENARIO, I'M GETTING THESE GIANT TIER BREAKS.
UM, AND, AND I DON'T LIKE, I WANNA CHARGE MORE AS I GO UP, BUT I DON'T WANNA GO FROM 300 TO 1200 AND HAVE ALL OF THAT BE ONE PRICE CUZ THEN I HAVE NOTHING IN THERE THAT'S GOING TO MOVE THE NEEDLE ON ANY OF THESE PEOPLE.
IF WE, IF YOU BELIEVE, AS I THINK MANY OF US DO THAT THE TIERS MATTER, THERE'S NO POINT IN THE TIERS AT AT THAT POINT.
SO CAN WE GET A SCENARIO THAT DOES THAT AND DOESN'T HAVE TO BE AT OUR CURRENT RATES OF 2.818, YOU KNOW, WE CAN START HIGHER.
I'M I'M OKAY WITH THINKING ABOUT THAT, BUT CAN WE THINK ABOUT WHAT HAPPENS IF WE, IF WE CAN PRESS THAT SECOND TIER SUM, UM, AND THEN WE'RE, YOU KNOW, I I JUST THINK WE WOULD GET, I I NEED TO GO THROUGH THAT SCENARIO BEFORE I CAN DROP MY HANDS ON THE REST OF IT.
LIKE I SAID, IT'S UM, WHERE TEARS BREAK, UM, AND THE CUSTOMER CHARGE AND THE PRICE CURVE ARE ALL RELATED AND SO WE CAN BREAK THEM AT DIFFERENT PLACES AND WE'LL HAVE TO MAKE ADJUSTMENTS ON THAT PRICE CURVE TO, TO REFLECT THAT, BUT WE CAN BREAK THEM AT DIFFERENT PLACES.
UM, I, I DID SEE A REQUEST BUT I DID NOT REVIEW THE RESULTS AND SO I, I JUST, I DON'T RECALL WHAT YOU'RE SPEAKING, BUT WE'D BE GLAD TO FOLLOW UP WITH YOU AND, AND UM, YEAH, I JUST KEEP STILL GETTING RESULTS THAT ARE AT LIKE THE EXISTING TIER NUMBERS, JUST DIFFERENT BREAK POINTS AND THEN WE HAVE OTHER ONES THAT HAVE, THE OTHER SCENARIOS THAT PEOPLE ARE RUNNING ARE DIFFERENT PRICE POINTS AT THOSE BREAKS.
AND, AND IT'S NOT ADDRESSING MY CONCERN, WHICH IS IF YOU TAKE AS TRUE AND I KNOW UNDERSTAND THAT YOU DON'T, THAT WE WANT TO HAVE THIS TIERED STRUCTURE TO ENCOURAGE THE ENERGY CONSERVATION, HAVING THAT LARGE SECOND TIER IS NOT GOING TO ACHIEVE THAT.
UM, AND I THINK WE CAN SAY YES, WE WANT A TIER STRUCTURE AND IT DOESN'T HAVE TO LOOK EXACTLY LIKE AT IT.
UM, AND WE'RE AT A DIFFERENT POINT.
WE NEED TO BE USING OUR TIER TO ENCOURAGE PEOPLE TO GET LOWER AND WE HAVE TO DO THE COST OF SERVICE.
THEN IT HAS A DIFFERENT LOOK IF YOU'RE TAKING THAT AND, AND FOR SOME REASON YOU'RE NOT DOING THAT IN THE SCENARIO.
SO HOPEFULLY THAT MAKES MORE SENSE AND WE CAN RUN, RUN THEM.
IT DOES, I THINK PERHAPS IF WE HAVE A, UH, OFFLINE CONVERSATION, CUZ A LOT OF TIMES, UH, THE MODEL'S QUITE COMPLEX.
IF WE DON'T HAVE A SPECIFIC INSTRUCTION, WE DEFAULT TO SOMETHING AND I THINK THAT'S MAYBE WHAT'S HAPPENING.
BUT IF WE, UM, DO A LITTLE Q AND A WITH YOU, I THINK WE CAN PROBABLY DEVELOP A SCENARIO THAT IS MORE IN LINE WITH, WITH YOUR EXPECTATIONS.
AND, AND I WOULD JUST SUBMIT ALSO THAT THE DIFFERENCE BETWEEN THESE OPTIONS COMES FROM CHANGING THE REVENUE REQUIREMENT, NOT THE DESIGN OF THE RATE AND THAT, YOU KNOW, ALL OF THE CHANGES THAT WE'VE MADE TO THE DESIGN HAVE MADE THE COST FOR THE CAP CUSTOMERS GO UP.
UM, WHICH IS I THINK WHAT AE HAS BEEN TRYING TO TELL US ALL ALONG WITH THEIR, THEIR APPROACH.
UM, AND, AND SO I, I THINK IT'S REALLY IMPORTANT THAT WE SETTLE ON A REVENUE REQUIREMENT AND THEN WE CAN FIGURE OUT THE DESIGN PIECES, BUT WE DON'T, WE DON'T KNOW IF WE CAN MOVE ANY OF THE REVENUE THINGS.
WE'RE NOT GONNA MOVE THE NEEDLE AND, AND WE HAVE TO GET TO A POINT WHERE WE'VE EXHAUSTED THAT.
UM, OTHERWISE WE'RE JUST THROWING DARTS VICE CHAIR.
SO I KNOW WE'VE TALKED A LITTLE BIT ABOUT DIFFERENT REVENUE REQUIREMENT ADJUSTMENTS.
I DIDN'T KNOW IF ANYBODY WANTED TO AIR ANY OF ANY OF THEIR SUGGESTED ONES AT THE MOMENT.
UM, I WENT THROUGH AND, AND THE SCENARIOS THAT I HAD FORWARDED ASKED FOR STAFF TO, TO RUN THEM AT A REVENUE REQUIREMENT OF 27.4 MILLION, THOUGH I THINK IT SHOULD BE LOWER.
I THINK I DID SOMETHING WRONG.
AND THEN ALSO A REVENUE REQUIREMENT OF 22 MILLION AND I CAN TALK ABOUT WHAT THOSE REDUCTIONS WERE, BUT I WOULD, I'D WELCOME OTHER FOLKS TALKING ABOUT WHAT, UM, IF THERE WERE REVENUE REQUIREMENT ADJUSTMENTS THAT THEY HAD IN MIND.
I GUESS WHAT I'D LIKE TO KNOW IS WHETHER AUSTIN ENERGY HAD ALREADY RUN TRAPS ON THOSE ADJUSTMENTS AND HAD ANY SENSE OF WHICH ONES MIGHT BE ABLE TO WORK AND WHICH ONES THEY WOULD RECOMMEND ADOPTING AND WHICH ONES COULD NOT.
WELL, I ASSUME, I MEAN, CHAIR, I ASSUME AUSTIN ENERGY'S
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RESPONSE HASN'T CHANGED.I MEAN, THEY'VE MADE REDUCTIONS FROM, FROM THE ORIGINAL REVENUE REQUIREMENT DOWN TO 30 AND BEYOND THAT I THOUGHT THEY HAD RE YOU KNOW, ISSUED A REBUTTAL TO THE OTHER SUGGESTIONS FROM INTERVENERS.
UM, SOME OF THOSE THOUGH I THINK ARE JUST POLICY CONVERSATIONS FOR US.
SO IF WE'RE GONNA, IF IF YOU WANT TO BRING SOME ADDITIONAL ADJUSTMENTS, I, I WOULD LIKE TO HEAR AND JUST, UH, ESPECIALLY FOR THE PUBLIC, JUST TO HEAR AGAIN WHAT THE REASONS MIGHT HAVE BEEN, WHY AUSTIN ENERGY WOULD NOT HAVE ADOPTED THEM.
MAYBE MAYBE COUNCIL MEMBER TIVO CAN SAY WHICH ONES THAT SHE'S CONSIDERING AND THAT WE'VE BEEN TALKING ABOUT, AND THEN THEY CAN REBUT THOSE SPECIFIC ONES BECAUSE I THINK THERE'S, I THINK IT IS VERY MUCH TRUE THAT THEY WERE AS LEAN AS POSSIBLE AND I MEAN THERE'S PROBABLY A 10 MILLION AMOUNT OF MONEY THAT WE COULD EVEN HAVE A CONVERSATION ABOUT.
AND SO WE COULD BE FOCUSED ON THAT.
YEAH, I THINK THAT'S DEFINITELY A WAY TO GO.
UM, YEAH, I'M HAPPY TO DO THAT.
BUT I ALSO KNOW, I MEAN, I KNOW WHAT MY PROPOSALS WERE, BUT I WAS INTERESTED IN HEARING OTHER FOLKS IF THEY HAD, IF THEY HAD ANY THAT THEY HAD SUGGESTED.
UM, I CAN TELL YOU WHICH ONES, WHICH ONES I HAD PUT FORWARD.
UM, AND I'VE HAD AN OPPORTUNITY TO TALK WITH SEVERAL OF YOU ABOUT THIS, ASSUMING A GENERAL FUND TRANSFER, SAME CALCULATION, BUT ASSUMING A GENERAL FUND TRANSFER OF 115 MILLION, WHICH WAS MORE IN LINE WITH THE AVERAGE OF THE HISTORICAL DATA LEADING UP TO THE TEST YEAR, LATE PAYMENT REVENUE OF 2.2 MILLION.
UM, AND THAT WAS A SOURCE OF CONVERSATION WITH THE INTERVENERS WHO BELIEVED THAT BECAUSE WE HAD A MORATORIUM, THE LATE PAYMENT REVENUE FOR THAT TEST YEAR WAS LOW.
I THINK THAT'S A, A REASONABLE POINT.
AND THEN, AS I MENTIONED BEFORE, THE WINTER STORM OVER TIME AND CONTRACT LABOR COSTS AMORTIZED OVER FIVE YEARS RATHER THAN THREE.
AND FOR THAT, THAT WAS A REDUCTION OF 300,000, WHICH I MAY HAVE UNDERESTIMATED THAT REDUCTION AND THEN BAD DEBT CALCULATED ON THREE YEAR AVERAGES, UM, RATHER THAN AE METHOD OF, OF REDUCTION.
AND I NEED CLARIFICATION ON WHAT, UM, RATHER THAN, UH, SOME OF OUR INTERVENERS SUGGESTED THAT THE BAD DEBT BE CALCULATED ON THREE OR AVERAGES RATHER THAN THE WAY IN WHICH AE RE UM, CALCULATED IT.
BUT IT WASN'T CLEAR TO ME FROM THE MATERIALS HOW AE CALCULATED IT, BUT I THOUGHT CALCULATING IT BASED ON THREE OR AVERAGES, SINCE THAT'S THE CALCULATION THEY USED FOR OTHER THINGS, WAS ALSO A REASONABLE POINT.
AND THAT RESULTED IN A 1.4 MILLION.
SO THE GFT HISTORICAL, UM, WAS A REDUCTION OF ABOUT 4.4.
THE LATE PAYMENT REVENUE WAS 2.2.
THE WINTER STORM AGAIN WAS 300, BUT I THINK I UNDERESTIMATED THAT.
AND SO THAT BROUGHT ME TO 27.4 A REVENUE REQUIREMENT OF 27.4 MILLION.
AND THEN I WAS PERSUADED THAT IT'S WORTH CONSIDERING AT LEAST THE POINT THAT I MENTIONED EARLIER, WHICH LYA COOPER, UM, AS PART OF THE, THE TWO R INTERVENERS MADE THAT THE REVENUE FOR 2022 HAVE EXCEEDED EXPECTATIONS AND IS COMING IN HIGHER.
AND SO I ALSO ASKED THEM TO, TO DO A REVENUE REQUIREMENT, RUN A SCENARIO OVER A REVENUE REQUIREMENT OF 22 MILLION, UM, IN LOOKING BACK AT THE 2012 OR 2013 RATE PROPOSAL.
UM, AND THANK YOU MR. BOCATO FOR, FOR, UM, ANSWERING SOME OF MY QUESTIONS ABOUT THIS.
I THINK IT WOULD BE, THERE WAS A LINE, UM, THERE WERE SOME REVENUE.
THE COUNCIL AT THAT TIME PASSED AND WE DID LIKE 12 WORK REALLY IN DEPTH, MULTI HALF DAY WORK SESSIONS.
UM, AND WE ENDED UP COMING UP WITH A MUCH, A MUCH, UM, MUCH REDUCED REVENUE REQUIREMENT, BUT THERE WAS ALSO A CATEGORY OF JUST RATE MITIGATION, WHICH WENT BEYOND, IT REALLY WASN'T TIED TO ANY PARTICULAR REVENUE REQUIREMENTS.
IT WAS JUST REALLY AN ATTEMPT TO MITIGATE THE RATE SHOCK.
AND SO, UM, FOR ME THAT MOVING FROM 27.4 DOWN TO 22 MILLION, MAYBE EVEN 20 MILLION, IS AN ATTEMPT TO MITIGATE RATE SHOCK WITH AN UNDERSTANDING THAT WE WOULD COME BACK AND LOOK AT IT AGAIN IN A YEAR.
WE BEING Y'ALL WHO ARE STAYING ON WOULD COME BACK AND LOOK AT IT IN A YEAR.
SO, SO I THINK TO ANSWER YOUR QUESTION RIGHT OFF THE TOP ON THAT GENERAL FUND TRANSFER, THAT 5 MILLION, UM, I AGREE WITH THAT AND THAT IS WHY THAT, AND, AND SO DOES AUSTIN ENERGY, THEY'VE GOT THAT IN THEIR OPTIONS TWO AND THREE.
UM, AND THE OTHER 3.9 MILLION THAT YOU MENTIONED, THE LATE PAYMENT, 300,000 ON THE URIE OVERTIME AMORTIZING AND ONE POINT 0.4 MILLION IN BAD DEBT, UM, THAT'S ANOTHER ABOUT A 10% DECREASE IN IN THE REVENUE REQUIRED.
UM, WHICH AT THIS POINT, IF WE RAISE, IF WE RAISE, UM, JUST SHY A 6 MILLION FOR EVERY DOLLAR THAT WE ADD TO THE FIXED RATE IS, IS THAT CORRECT? ABOUT 5.7 MILLION.
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WHAT WAS THAT CALCULATION THAT YOU RAISE? THAT'S CORRECT.WE HAVE ABOUT 5.7 MILLION BILLS.
UM, SO FOR EVERY DOLLAR YOU RAISE THE CUSTOMER CHARGE, THAT'S ABOUT RIGHT.
UM, AND IF WE RAISE THE FIXED RATE BY THE $5 OR WELL THE $4, WHICH IS IN OPTION TWO, THEN THAT BRINGS US, UM, ABOUT 23 MILLION.
IS THAT RIGHT? IT'S MY, MY QUICK MATH ISN'T, ISN'T TOO GREAT.
SO IF I ROUND IT TO SIX TIMES FOUR IS 24, UM, WE'RE STILL LAGGING A LITTLE BIT UNLESS WE AGREE THAT WE'RE REALLY LOOKING FOR 27.4, THEN THERE'S STILL A 5 MILLION GAP THERE.
THE NEXT YEAR WE BRING IN AN ADDITIONAL DOLLAR ON THE GRADUAL APPROACH, WHICH, WHICH IS ANOTHER 5000005.7 MILLION.
SO THAT STARTS TO REDUCE THAT GAP.
AND THEN THE THIRD YEAR GETS US TO THE 31.3 MILLION, WHICH IS WHY THAT GRADUAL PROPOSAL WAS OFFERED.
AND AM I, AM I PRESENTING THAT PROPERLY NOT TO PLEASE? AND SO, SO THREE GRADUATE APPROACH, WHILE WE ARE INCREASING THE CUSTOMER CHARGE EACH YEAR, WE'RE ALSO DECREASING ENERGY RATE.
AND SO ALL THREE OF THOSE YEARS, THOSE RATE DESIGNS, UM, WHAT IMPACT THEN ON THE 5.7 MILLION DO WE SEE? RIGHT? SO THEY'RE ALL DESIGNED TO ACHIEVE THE SAME AMOUNT OF REVENUE REGARDLESS OF THE CUSTOMER CHARGE OR THE, THE ENERGY RATE.
AND SO, UM, YOU WOULD HAVE TO LEAVE, YOU COULD ADD A DOLLAR OR A DOLLAR TO GET THE, THE, THE REVENUE CHANGE.
UM, BUT IN AND ITSELF, THE WAY WE DESIGNED IT DOES NOT DO THAT.
IT CHANGES THE SAME AMOUNT OF REVENUE EVERY YEAR, BUT THE AMOUNT OF REVENUE THAT WE GET, IS IT THE 31.3 MILLION ADDITIONAL? I THINK FOR RESIDENTIAL WHOLE, IT'S ABOUT $344 MILLION ROUGHLY.
AND THAT'S HOW THOSE, THOSE ARE DESIGNED TO COLLECT THAT AMOUNT OF REVENUE.
AND THAT'S THE LARGER CALCULATION, RIGHT? WITH THE OVERARCHING PIECE, WHICH SOME OF THAT WE MISS WHEN WE LOOK DRILL DOWN JUST TO THESE INDIVIDUAL COMPONENTS THAT THAT'S CORRECT.
IT'S KIND OF, UM, WE CALL IT FRANKENSTEIN.
WE TAKE A LITTLE BIT OF THIS RATE DESIGN, A LITTLE OF THIS RATE DESIGN, BUT YOU COME UP AND IT DOESN'T ACHIEVE WITH WHAT YOU NEED.
SO, UM, AND THAT'S WHY OFTEN WHEN WE RUN THESE SCENARIOS, THE BILLS ALWAYS COME OUT THE SAME CUZ WE MAKE THE MATH WORK YEAH.
SO WHAT I WOULD SAY TO, TO VICE TOVO, WHY I THE 5 MILLION I THINK FEELS RIGHT, SPEAKING JUST TO MYSELF ABOUT MYSELF, NOT SO SURE ABOUT THE LATE PAYMENT PIECE, THE OVERTIME AMORTIZATION AND THE BAD DEBT, ALTHOUGH I'M WILLING TO HEAR MORE ABOUT THAT.
WHAT IS CLEAR TO ME THOUGH IS THAT, UM, WE ARE GOING TO HAVE TO LOOK, AND THIS IS GOING TO BE SOME DIRECTION THAT I BRING NO MATTER, YOU KNOW, WHEN WE VOTE THIS, I WANT US TO REVIEW THESE RATES DURING BUDGET EVERY YEAR GOING FORWARD.
SO WE DON'T HAVE SUCH A LONG RUNWAY BETWEEN SETTING THE BASE RATES AND THEN COMING BACK AND HAVING TO REVIEW THEM AGAIN.
AND SO I'M KIND OF LOOKING IF, IF YOU WILL, AT THE NEXT HALF YEAR, GIVE OR TAKE KIND OF AS A PILOT TO SEE HOW THE DECISIONS WE MAKE IN DECEMBER PLAY OUT BY THE TIME WE GET OUR FINAL FINANCIALS, WHICH I THINK WON'T ACTUALLY BE UNTIL MARCH WHEN WE GET ALL THE FINAL NUMBERS FOR THE, THAT'S APPROXIMATELY CORRECT.
BUT IT'LL STILL GIVE US SOME GOOD RUNWAY BEFORE WE GET TO BUDGET NEXT YEAR AND THEN WE CAN SEE WHERE WE'RE AT AND TRUE UP AT THAT POINT.
AND I THINK THAT THAT IS, WE WILL NEED TO DO THAT ANYWAY NO MATTER WHERE THESE NUMBERS FALL.
I'M TELLING YOU WHERE I STAND AND WHAT I THINK, UM, I WOULD LIKE TO SEE.
I LIKE THE GRADUATED APPROACH.
IT GIVES US ROOM TO MANEUVER AND ACCOMMODATE AND, AND RECONFIGURE THINGS IF WE NEED TO.
BUT THE, THE KEY PIECE FOR ME WILL BE OUR COMMITMENT TO LOOK AT IT AGAIN DURING BUDGET NEXT YEAR AND ONGOING SO THAT WE DON'T HAVE THIS RECUR SO WE DON'T FIND OURSELVES IN A HOLE LIKE THIS, UM, GOING, GOING INTO THE FUTURE.
CAN I JUST SAY ONE THING? I, I UNDERSTOOD THAT THE $5 MILLION REDUCTION IN GENERAL FUND ACTUALLY JUST FACTORS INTO THE REVENUE REQUIREMENT AT 4.4 FOR REASONS I CAN'T EXPLAIN, BUT I UNDERSTAND WHEN YOU EXPLAIN IT TO ME.
SO ANYWAY, IT'S A FOUR, IT'S A 4.4 BECAUSE THERE'S GENERAL FUND TRANSFER ON GENERAL FUND TRANSFER OR SOMETHING LIKE THAT.
CAN YOU, CAN YOU SPEAK TO THE ANYTHING ELSE? SM I MEAN AGAIN, WE, THERE'S NO MOVEMENT FORWARD UNTIL WE FIGURE OUT WHAT THIS REVENUE REQUIREMENT IS.
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WE, WHETHER IT'S TODAY OR ON THURSDAY, IF YOU'RE PREPARED, UM, YOU KNOW, I'VE HEARD IT SOUNDS LIKE THE GENERAL FUND DECIDED WE'RE GOING DOWN 4.4.I HAVEN'T HEARD ANYBODY ON COUNCIL OBJECT TO THAT REDUCTION IN THE REVENUE REQUIREMENT.
AND AS I UNDERSTAND THAT, THAT'S IN THE ASSUMPTION FOR THE REVENUE REQUIREMENT, BUT NOT IN THE CALCULATION OF THE TRANSFER.
UM, SO FOR THE LATE REVENUE, UM, DO YOU WANNA MAKE YOUR ARGUMENT AND THEN MAYBE AE CAN MAKE THEIR ARGUMENT AND THEN WE CAN SEE WHAT OTHER INFORMATION WE NEED? SURE.
I JUST, UM, I DON'T, I DON'T WANNA RUN OUT OF TIME.
WELL, IF I COULD SHIFT FOR JUST A SECOND, MAYOR, IF WE RUN OUT OF TIME FOR THE PUBLIC LAND PRESENTATION, UM, MAYBE LAW CAN TELL US WHETHER OR NOT THAT FITS IN CLOSELY ENOUGH TO THE, TO THE RESOLUTION THAT I BROUGHT RELATED TO THE ECONOMIC DEVELOPMENT CORPORATION WHERE WE COULD HAVE THAT PRESENTATION AS PART OF THAT CONVERSATION ON THURSDAY.
I JUST DON'T WANNA RUN OUTTA TIME FOR THE PRESENTATION THAT COUNCIL MEMBER KITCHEN AND I REQUESTED RELATED TO THOSE FOUR PROPERTIES BECAUSE IT RELATES TO THE EDC RESOLUTION THAT'S ON FOR THURSDAY.
PERHAPS IT RELATES SO CLOSELY THAT WE COULD DO THE PRESENTATION ON THURSDAY, BUT ANYWAY, THERE WE GO ON THAT.
MY PREFERENCE WOULD BE IF WE CAN TO GET THE PRESENTATION TODAY.
THURSDAY'S GONNA BE OUR PREFERENCE WOULD BE TO GET THE PRESENTATION.
THEN I CAN, I CAN CERTAINLY, UM, TALK US THROUGH THESE, THESE THINGS, UM, SUPER QUICKLY.
BUT, UM, PERHAPS IF THERE ARE OTHER IDEAS, I'LL GET TO THE PAGES ON THAT.
BUT IF THERE ARE OTHER REVENUE REQUIREMENT ADJUSTMENTS THAT OTHER FOLKS HAD, MAYBE THEY COULD AIR THOSE TOO AND WE COULD VERY QUICKLY GO POINT BY POINT.
UM, WE HAD ASKED FOR THE LATE PAYMENT FEES TO BE BASED ON THE YEAR 2022.
AND I THINK THAT INFORMATION THAT WAS SHARED FROM US TO US FROM STAFF, UM, SHOWED THAT THERE WAS, UM, A SAVINGS FAIR IF STAFF WANTS IT, WANTS TO SPEAK TO IT.
WHAT WAS IT? UM, IT LOOKS LIKE 1.1 MILLION AND STAFF CAN SPEAK TO IT.
THIS WAS, UM, INFORMATION THAT WAS SHARED WITH MY OFFICE.
CAN YOU JUST CLARIFY, WHEN WE LOOK AT THE LATE PAYMENT FEES, IS THAT A NET POSITIVE OR A NET NEGATIVE BECAUSE ARE THOSE FEES THAT WE ARE COLLECTING OR ARE THOSE FEES THAT WE'RE WAITING TO BE PAID? CUZ I THINK THERE'S A LITTLE, WE'RE GOING TO RECORD LATE PAYMENT FEES ON ACCRUAL BASIS.
SO WHEN WE SEND A BILL TO A CUSTOMER, WE GONNA RECORD THAT REVENUE UNTIL THAT CUSTOMER IS NO LONGER A CUSTOMER.
UM, THEN WE MAY WRITE OFF AS BAD DEBT.
SO IF THERE'S ADDITIONAL REVENUE FOR LATE, IF THERE'S ADDITIONAL LATE PAYMENT FEES IN FISCAL YEAR 22, THAT IS ADDITIONAL REVENUE THAT IS ACCRUED IN FISCAL YEAR 22.
AND THEY AND THE AND THE NET DIFFERENCE BETWEEN THOSE WAS THAT, THAT'S CORRECT.
AND THE INTERVENERS HAD SUGGESTED THAT, THAT THAT NUMBER FOR THE TEST YEAR WAS LOW AS IT WAS FACTORED INTO THE REVENUE REQUIREMENT.
I KNOW AE DISAGREED THE AMOUNT THAT THE INTERVENERS WAS SUGGESTING BE ADJUSTED FOR WAS 2.2.
AND THEN COUNCIL MEMBER FUENTES HAD ASKED FOR SOME, UM, RECENT INFORMATION ABOUT THAT, THAT I THINK SUPPORTS THE POINT THAT THE INTERVENERS WERE MAKING THAT THE AMOUNT IN THE REVENUE AMOUNT.
AND LET ME CLARIFY, UM, IT LOOKS LIKE WHAT WAS ACCOUNTED FOR, SO THE NUMBERS THAT WERE, THAT AE IS USING IS BASED ON A BUDGETED AMOUNT OF 4.5 MILLION.
AND WHEN WE ADJUSTED THOSE NUMBERS BASED ON THE DATA FROM 2022, IT WOULD BE 5.2 MILLION INSTEAD.
AND I, IT'S JUST A, A MEASURE OF CAUTION.
UM, THE WAY UTILITY SET RATES, THE REASON WHY WE CREATE A TEST HERE, IT'S, IT'S IT'S ACTUAL AND VERIFIED AND AUDITED, THEN WE MAKE KNOWN AND MEASURABLES AND THOSE KNOWN AND MEASURABLES ARE TO ACCOUNT FOR THINGS THAT WE KNOW ARE GONNA HAPPEN GOOD OR BAD, AND THAT WE CAN MEASURE AND CHANGE THE REVENUE REQUIREMENTS UP OR DOWN.
SINCE THAT TIME, WE'VE HAD QUITE A FEW DIFFERENT EVENTS THAT HAVE OCCURRED.
SO SOME THINGS MIGHT MOVE THE REVENUE REQUIREMENT DOWN, SOME MIGHT MOVE IT UP, THAT'S CALLED A ROLLING TEST YEAR AND IT'S GENERALLY FROWNED UPON.
SO I JUST CAUTION US TO SORT OF FIND ALL THOSE THINGS THAT MIGHT REDUCE THE REVENUE REQUIREMENT AND NOT LOOK AT EVERYTHING.
IF WE'RE GONNA LOOK AT EVERYTHING, THAT'S A WHOLE NEW TEST YEAR AND THAT TAKES ABOUT A YEAR TO DO.
BUT THE, THE, THE NOTION OF USING A TEST YEAR AND NO TO MEASURABLES IS PRETTY SOLID.
UH, AND IT'S LITERALLY RATE MAKING.
SO I'M JUST CAUTION ABOUT PICKING CERTAIN ITEMS THAT WE WANNA LOOK AT AND ADJUST JUST, JUST FOR THAT.
UM, I UNDERSTAND, BUT I MEAN THE OPTION YOU PRESENT, I, I GUESS MY CONCERN HERE IS THAT I WANNA UNDERSCORE WHAT THE MAYOR PROTE SHARED IS THAT OPTION TWO AND WHAT YOU PRESENTED STILL HAS OUR CAP CUSTOMERS PAYING $7
[02:15:01]
MORE THAN WHAT THEY ARE CURRENTLY.AND SO THAT TO ME IS DEEPLY CONCERNING.
UM, IT'S PART OF THE REASON WHY, YOU KNOW, SIGNED ONTO TO THE MAYOR'S, UM, IFC TO LOOK AT WAYS TO GET MORE PEOPLE PARTICIPATING IN THE PROGRAM.
SO I I'M TRYING TO FIGURE OUT, YOU KNOW, WHAT OTHER PATHWAYS DO WE HAVE TO ADJUST THE REVENUE REQUIREMENT? UM, AND IF THAT MEANS THAT WE ARE ADJUSTING THE RATE JUST FOR ONE YEAR SO THAT WE COME BACK A YEAR FROM NOW AND WE CONSIDER, YOU KNOW, ANOTHER ADJUSTMENT IF WE WAIT, YOU KNOW, WHEN WE SELL THE TOWN LAKE PROPERTY, PERHAPS THAT, YOU KNOW, THAT GIVES US, UM, A DIFFERENT SITUATION TO CONSIDER.
I MEAN, THERE ARE A LOT OF VARIABLES AND I THINK AT THIS POINT US TALKING ABOUT, UM, WAYS TO REDUCE OUR REVENUE REQUIREMENT, UM, IS WARRANTED.
WE, WE TRIED VERY HARD TO REDUCE OUR REVENUE REQUIREMENTS AND, AND LIMIT IT AS MY BOSS TOLD ME, NOTHING EXTRA.
UM, I JUST CAUTIONED US BECAUSE, UH, AS WE HIGHLIGHTED ON PAGE THREE, WE ALSO HAVE A NUMBER OF EXPENSES THAT HAVE INCREASED.
UM, OUR LABOR COSTS IN ORDER TO PAY OUR EMPLOYEES WENT UP, UM, 6.6 MILLION THAT'S NOT ACCOUNTED FOR REVENUE REQUIREMENTS.
UH, DEBT SERVICES INCREASED 3.8 MILLION AND IN PRIOR YEARS IF WE DID NOT HAVE ENOUGH CURRENT REVENUE TO MAKE CURRENT EXPENSES, WE USED OUR CASH IN, UH, THAT WE HAD ON HAND.
AND THAT CASH IS DOWN SEVERAL HUNDRED MILLION DOLLARS NOW.
AND SO I'M JUST, I'M CAUTIOUS AS THE CHIEF FINANCIAL OFFICER IS TO GIVE MY BOSS AND YOU ADVICE IS THAT WE DON'T, DON'T HAVE MUCH ROOM FOR MARGIN OF ERROR HERE.
IF WE WANNA CHANGE CAP PROGRAM, UM, WE SHOULD CHANGE ABOUT THE PROGRAM STRUCTURE AS OPPOSED TO REVENUE REQUIREMENTS.
AND I THINK THAT'S SOMETHING THAT WE HAVE IN, IN THE IFFC COMING AT US, WHICH IS, UM, UH, MAKE SURE THAT, UM, ENERGY IS AFFORDABLE FOR ALL OUR CUSTOMERS, BUT, UH, GETTING AWAY AT THE REVENUE REQUIREMENTS, A WAY OF DOING THAT SORT OF A VERY BLUNT TOOL.
UM, AND IT COULD HAVE, UM, CONSEQUENCES THAT ARE, ARE DIFFICULT TO CHANGE IN THE FUTURE.
I, I THINK THE POINT THAT YOU'RE MAKING MR. DON BROSKI ABOUT, IF WE'RE LOOKING FOR WAYS TO REDUCE THE REVENUE REQUIREMENT, WE HAVE TO BALANCE THAT OUT BY ALSO INTRODUCING THOSE ITEMS THAT WERE NOT IN THE TEST YEAR THAT HAVE INCREASED OUR COSTS BECAUSE OTHERWISE WE END UP WITH ANOTHER, UM, TORTURED, UH, PROFILE FOR WHAT OUR RATES ARE GOING TO LOOK LIKE.
AND IT DOESN'T, IT DOESN'T REALLY, IT DOESN'T FIX THE ISSUE THAT WE'RE FACING.
SO IF WE'RE GOING TO LOOK AT WAYS TO REDUCE, I WOULD LIKE TO SEE THE CONCOMITANT INCREASES SO THAT WE CAN, WHICH IS ESSENTIALLY LIKE LOOKING AT ANOTHER TEST CHAIR AND AND I, THAT THAT WASN'T THE HILL THAT I THOUGHT WE WERE GOING TO CLIMB, FRANKLY.
COUNCILMAN, IF I, IF I MAY ADD MR. BOCATO, I MEAN WHAT YOU'RE DOING, HE REFERRED TO IT AS ROLLING TESTER, WHICH IT IS IN FACT, BUT YOU'RE DOING PIECE, WHAT'S REFERRED TO IN A REGULATORY SETTING IS PIECE MILL RATE MAKING.
YOU'RE LOOKING AT INDIVIDUAL ITEMS OF THE UTILITIES, UM, FINANCES AND YOU'RE FOCUSING ON THOSE.
UM, YOU KNOW, OVER AT THE PC IT'S GENERALLY FROWNED UPON.
AND THAT'S WHY THE STATUTE, THE PUBLIC UTILITY REGULATORY ACTS GENERALLY REQUIRES YOU TO DO A COMPREHENSIVE REVIEW OF UTILITIES FINANCES INSTEAD OF PIECE MILL RATE MAKING BECAUSE YOU, YOU DO RUN INTO RUN THE RISK THAT BY FOCUSING ON ONLY SPECIFIC ITEMS THAT YOU'RE NOT TAKING INTO ACCOUNT THE ENTIRE FINANCIAL SITUATION OF THE UTILITY WHEN YOU SET RATES.
SO AS TO LATE FEES, I DON'T KNOW IF THEY'VE, IF THE REVENUES HAVE BEEN HIGHER IN 2022 THAN THEY WERE DURING THE TEST YEAR OR NOT, AND THEY MAY BE, YES, BUT GENERALLY WHEN YOU DO RATE MAKING, YOU WOULD WANT TO DO A MORE COMPREHENSIVE EVALUATION AND, AND LOOK AT WHAT ARE, WHAT ARE THE OTHER CIRCUMSTANCES FOR THE UTILITY BEFORE YOU, YOU MOVE FORWARD.
UM, BECAUSE, YOU KNOW, RATE MAKING IS NOT, UM, AN EXACT SCIENCE.
YOU DON'T TRUE UP THE REVENUE REQUIREMENT.
UM, GENERALLY YOU, AGAIN, YOU USE A HISTORICAL TEST, YOU'RE IN A RECENT PASS, YOU MAKE ADJUSTMENTS TO IT, YOU TAKE INTO ACCOUNT NON MEDICAL ADJUSTMENTS AND YOU SET RATES GOING FORWARD AND YOU BASICALLY SEE HOW THE UTILITY DOES AND IF THEY NEED MORE MONEY, THEY COME IN.
IF THEY'RE MAKING TOO MUCH MONEY, YOU GO GET 'EM.
AND WE HAVE POLICIES ALONG THOSE LINES THAT IF WE COLLECT TOO MUCH, WE DO REBATE IT BACK.
I, I DO THINK THAT AS UNCOMFORTABLE AS SOME OF THIS MAY LEAVE US FEELING, WE ARE GOING TO HAVE TO FIND OUR FOOTING IN, IN THIS YEAR WITHIN THE PARAMETERS THAT HAVE BEEN DRAWN HERE AND RECOGNIZING THAT WE WILL HAVE THE OPTION, UH, NEXT YEAR TO TRUE THINGS UP.
MAYOR, AND AND TO THE DEGREE THAT YOU'RE ASKING, WHAT ARE THE ISSUES ASSOCIATED WITH REVENUES? UH, I'VE SAID IT BEFORE, I'LL JUST TOUCH ON IT AGAIN.
I'D LIKE US TO HAVE REVENUE SUFFICIENT TO BE ABLE TO ACTUALLY OPERATE A CAP PROGRAM THAT COULD GET US UP FROM 23% PARTICIPATION AND THAT'S
[02:20:01]
OUR REVENUE MOVE IN THE OTHER DIRECTION.I WANNA, BEFORE WE MOVE ON FROM LATE PAYMENT, I JUST WANNA SAY I DON'T, I DIDN'T HEAR COUNCIL MEMBER FUENTES AS SUGGESTING WE USE A DIFFERENT YEAR.
UM, YOU KNOW, THE, THE INTERVENERS WERE SAYING THAT THEY DIDN'T FEEL THE TEST YEAR WAS AN ACCURATE ASSESSMENT OF WHAT OUR LATE PAYMENT REVENUE WAS, RIGHT? SO THEY SAID, UM, THE INDEPENDENT CONSUMER ADVOCATE AND ONE OF THE OTHER INTERVENERS SAID, HEY, USUALLY, YOU KNOW, IF YOU DON'T LOOK AT 2020 AND 2021, WHICH WERE PANDEMIC YEARS, BUT YOU LOOK INSTEAD AT 2018 AND 2019, THAT AVERAGE IS 5.55 MILLION.
AE IS USING AN AVERAGE OF THE TEST YEAR OR NOT, NOT AN AVERAGE.
THEY'RE USING THE TEST YEAR AT 3.34.
AND SO THE INTERVENERS I THINK ARE RAISING A GOOD POINT.
THEY'RE SAYING, HEY, YOU'RE LOOKING AT PANDEMIC YEARS WHERE LATE, WHERE ACCOUNTS WERE, YOU KNOW, THERE WAS A MORATORIUM AND THERE WASN'T, THERE WEREN'T LATE PAYMENTS BEING COLLECTED.
AND SO THEY FELT, AND I THINK IT'S REASONABLE THAT A MORE, THAT IT MAKES MORE SENSE TO LOOK AT 5.55 MILLION.
AND SO I THINK, I THINK THAT IS, I THINK THAT'S A PRETTY REASONABLE POINT.
AND I THINK THE INFORMATION THAT COUNCIL MEMBER FUENTES WAS MENTIONING ABOUT WHAT THOSE REVENUES LOOK LIKE IN A REGULAR YEAR, THIS ONE KIND OF SUPPORTS, UM, THE INTERVENER'S POINT.
SO I JUST WANNA MAKE SURE WE'RE TALKING ABOUT IT, UM, ACCURATELY.
YOU KNOW, THE, THE INTERVENERS WERE SAYING, WE DON'T THINK, WE DON'T THINK, UM, THE, WE DON'T, WE THINK YOU'RE GONNA GET MORE LATE PAYMENT REVENUE BASED ON LOOKING AT 2018 AND 2019.
AND I THINK OUR 20 22 82, 20 22 LATE PAYMENT SUGGESTS THAT'S PROBABLY TRUE.
THAT THE, THAT THE TEST YEAR WAS LOWER.
DOES, DOES THAT KIND OF MATCH WHAT YOU WERE SAYING? YES.
YEAH, I MEAN THAT, THAT'S BASICALLY WHAT I WAS INTENDING TO, TO SHARE, UM, IN TRYING TO MAKE THAT ADJUSTMENT.
UM, BUT, UH, CHAIR POOL, I, I GUESS I'M A LITTLE CONFUSED ON HOW TO APPROACH THIS BECAUSE WE NEED TO HAVE, I GUESS, SOME CONSENSUS IF THERE IS CONSENSUS ON THE DA DAUS ON WHETHER OR NOT TO ADJUST TO, FOR US TO CONSIDER A DIFFERENT REVENUE REQUIREMENT.
I MEAN, WHAT WE JUST SHARED JUST MOMENTARILY GOES LIKE WHEN WE GOES, LIKE WHEN WE CONSIDER A A BASE RATE, IT'S NEVER IN THE, YOU KNOW, IT'S, IT'S HARD TO SHORE UP EVERY SINGLE DOLLAR, BUT WE DO IT IN, IN WHAT IS, UM, IN THE BEST WAY AND THE BEST METHOD FORWARD TO GET US TO ENSURE THE FINANCIAL STABILITY OF OUR UTILITY.
SO IF THE INTENT, AS YOU'VE MENTIONED, FOR US TO COME BACK NEXT YEAR, DREAM BUDGET CYCLE, THEN SHOULD WE NOT BE APPROACHING THIS FROM A ONE YEAR OUTLOOK INSTEAD? UM, BECAUSE AT THAT POINT I WOULDN'T BE COMFORTABLE APPROVING AN OPTION TWO THAT HAS A SET A THREE YEAR COMMIT, UH, GRADUAL RATE INCREASE.
YEAH, I, I SEE WHAT YOU'RE SAYING THERE.
BUT WE ARE ABLE TO ADJUST THE, THE RATES AT ANY TIME.
WE DON'T HAVE TO WAIT FOR FIVE YEARS.
THERE, THERE AREN'T ANY BARS TO THAT IS MY UNDERSTANDING.
MR. BARCA, CAN YOU, I MEAN, CAN YOU HELP US UNDERSTAND IT? I MEAN, I THINK THE LOGIC THAT WE'RE USING IS THAT, YOU KNOW, WE'VE GONE THROUGH THE REVENUE REQUIREMENT AND YOU KNOW, COUNCIL MEMBER TOVO, UH, COUNCIL MEMBER FUN, JUST, AND I HAVE BEEN LOOKING AT THIS TOGETHER AND WE'VE IDENTIFIED THESE FOUR AREAS WHERE WE WANNA HAVE THAT CONVERSATION.
SO WE, WE TALKED ABOUT THE GENERAL FUND, WE'RE IN AGREEMENT THERE.
SO THAT LEAVES THREE MORE WITH THE LATE REVENUE.
THE ARGUMENT AS COUNCIL MEMBER TOVO JUST LAID IT OUT IS THE TEST YEAR WAS A COVID YEAR.
WE HAVE YEARS 2018 AND 2019 AND 2022 THAT ARE HIGHER BY ROUGHLY 2.2 MILLION IN TERMS OF THAT REVENUE.
IS THAT A REASONABLE THING BASIS TO REDUCE THE REVENUE REQUIREMENT BASED ON THAT? I UNDERSTAND THAT YOU WANNA BE CONSERVATIVE AND THAT THERE ARE OTHER, THERE ARE OTHER THINGS, BUT THERE'S ALSO, YOU KNOW, THE WHOLE SWING OF IF IT'S WARMER AS WELL, WHICH WAS A 40 MILLION CHANGE, WHICH, YOU KNOW, ALSO, YOU KNOW, WE, WE COULD SAY WE NEED TO, TO KEEP IN MIND AS WELL.
UH, BUT WE HAVE TO WORK WITH THE REVENUE REQUIREMENT.
WE ARE TRYING TO DO THAT WITH THE NUMBERS THAT YOU'VE GIVEN US AND LOOK AT THOSE PIECES THAT WERE INCLUDED AS OPPOSED TO BRINGING UP THINGS THAT ARE OUTSIDE OF CALCULATION.
SO, YOU KNOW, WE'RE, WE'RE, WE'VE BEEN TRYING TO LOOK VERY CAREFULLY AND, AND HAVE ARGUMENTS AND NOT ARBITRARILY DO IT, IT DOES NOT FEEL ARBITRARY TO US.
UM, SO CAN YOU GIVE US YOUR THOUGHTS ON IT? MY THOUGHTS ARE THAT REASONABLE MINDS CAN DIFFER AS TO THE APPROPRIATE AMOUNT OF LATE PAYMENT FEES TO
[02:25:01]
PUT INTO THE REVEREND REQUIREMENT.AND INDEED THAT'S WHAT'S HAPPENED HERE.
I THINK THAT LOOKING AT THE 2022 NUMBERS, WHICH I'VE NOT SEEN, AND I I'M NOT AWARE OF WHAT THOSE ARE, BUT THAT COULD, COULD, COULD BE A CHECK IN SOME WAY AS TO THE REASONABLENESS OF THE TESTS.
I THINK MR. DOMBROSKI OUGHT TO SPEAK TO THAT CUZ HE MAY HAVE NO MORE INFORMATION ABOUT IT THAN I DO.
UM, YOU KNOW, AS WE'VE TALKED ABOUT, THE ICA UH, PROPOSED A 2.2 MILLION UPWARD ADJUSTMENT, MEANING HE EXPECTS MORE LATE FEE REVENUE TO COME IN, WHICH PUSHES THE OVERALL, UH, REVENUE INSUFFICIENCY DOWN, MEANING A LOWER REVENUE REQUIREMENT.
OF COURSE, THE AE ARGUMENTS ARE THAT THE TEST YEAR IS A BETTER INDICATOR OF WHAT FUTURE REVENUES WILL BE.
UM, BUT IT SEEMS LIKE THAT'S UNDERMINED BY THE FISCAL YEAR 22 NUMBER, WHICH WE NOW HAVE, WHICH WE DIDN'T HAVE WHEN THE ICA WAS DEBATING IT.
AND I DON'T KNOW, AGAIN, I DON'T KNOW THE SPECIFICS AS TO THE 2022 NUMBERS.
I DON'T KNOW IF THERE'S A REASON, A NEED TO NORMALIZE THOSE IN SOME WAY.
UH, I DON'T KNOW WHAT THE 2017, YOU KNOW, OR 2020 YEARS LOOK LIKE.
UM, OF COURSE 2020 WOULD BE IMPACTED PERHAPS BY COVID.
UM, AGAIN, THESE ARE THE SORT OF THINGS THAT YOU DO IN A RATE CASE AND DECISION MAKERS HAVE TO COME UP WITH THE, YOU KNOW, THE BEST GUESS AS TO WHAT THE RIGHT NUMBER IS.
BUT, UM, WELL CAN WE, THAT WOULD BE MY REACTION TO IT.
SO I'VE HEARD NOTHING FROM YOU OR FROM AE THAT CHANGES MY MIND ON THIS.
CAN WE MAYBE DO A FIFTH TO FIVE OF WHERE WE'RE AT SO WE CAN START MOVING THROUGH THINGS HERE? I MEAN, AND I DON'T KNOW HOW ELSE TO DO THIS.
CAN YOU KNOW IF YOU'RE, IF YOU'RE COMFORTABLE REDUCING THE REVENUE REQUIREMENT BY THE TWO POINT, IF YOU HAVEN'T ANSWERED IT, IF YOU HAVE ADDITIONAL, I MEAN IF YOU HAVE ADDITIONAL INFORMATION, GO AHEAD.
BUT REASONABLE MINDS CAN DIFFER AND I'M, I'M NOT SAYING YOU'RE WRONG, I JUST, WE HAVE TO MAKE A POLICY DECISION.
I UNDERSTAND THAT REVENUE, I, I THINK THAT'S THE REASON WHY WE WENT TO THE EFFORT OF, UH, RETAINING AN IMPARTIAL HEARING EXAMINER WHO'S AN ADMINISTRATIVE LAW JUDGE FOR THE PUC TO HELP RENDER THOSE OPINIONS AS A, AS A OUTSIDER, UH, AND HIS PROFESSIONAL OPINION.
SO, UM, THAT'S THE BEST ADVICE I CAN GIVE YOU.
UM, I, WE, WE'VE LAID OUT OUR CASE, WE, WE'VE GIVEN OUR BEST EVIDENCE FOR ALL THE, UM, ISSUES ON, ON WHY WE'VE DECIDED ON THAT.
SO THEN I'M GONNA ASK FOR A FIST TO FIVE ON WHETHER YOU'RE COMFORTABLE REDUCING THE REVENUE REQUIREMENT BY THE 2.2.
YEAH, CUZ I, I THINK EVEN THE IMPARTIAL HEARING EXAMINER THOUGH AT SEVERAL POINTS ACKNOWLEDGES THAT SOME OF THESE ARE JUST POLICY CONVERSATIONS.
I MEAN, LOOK'S, KEEP IN MIND WE'RE TALKING ABOUT LIKE A 5 MILLION ADJUSTMENT MAX IF WE DID ALL OF THESE THINGS.
AND SO, YOU KNOW, WE'RE TALKING, IT'S NOT HUGE.
WE'RE NOT CUTTING IN HALF, YOU KNOW, THIS IS BEING FAIRLY CONSERVATIVE, BUT, BUT, BUT WE'RE TRYING TO BE TRUE TO THE PROCESS HERE AND WE, WE CAN'T SET ANY RATES UNLESS WE AGREE ON THE REVENUE REQUIREMENT.
SO IF WE'RE GONNA MOVE FORWARD, WE'VE, WE'VE, WE'VE GOT A GET AGREEMENT ON THAT.
SO I HEARD, I SAW AT LEAST FIVE OF US THAT WERE, WERE ABOVE A THREE.
WHO IS A TWO OR A ONE ON THAT? WHO DOESN'T? I MEAN, SO, SO MY VIEW ON THIS IS I APPRECIATE YOU IDENTIFYING THESE FOUR CAUSE THERE'S A LOT OF DIFFERENT REVENUE CHANGES THAT NOW THAT YOU FOCUSED ON THESE FOUR, I WILL MOVE FORWARD TO VET THESE FOUR.
UH, BUT I'M, AS I SIT HERE, I'M NOT IN A POSITION TO SAY WHETHER I AGREE OR AGREE TO THIS EXTENT, BUT I, BUT NOW AS YOU IDENTIFY, THAT'S REALLY HELPFUL AND WE'LL DO THAT.
BUT I WILL SAY THAT, THAT IF WE FOUND SOME ADDITIONAL REVENUE, I WOULD WANT THAT TO GO TO ACTUALLY ENSURING THAT WE CAN GET CAP PAYMENTS TO PEOPLE THAT, THAT NEED IT.
CAUSE I THINK THAT'S THE MOST IMPORTANT THING WE COULD DO.
SO I'M NOT SURE THAT FOR ME, IF WE FOUND REVENUE, THE CAP IS COVERED BY THE, THE CUSTOMER BENEFIT CHARGE.
SO IT'S, SO WE COULD, I I MIGHT ASK THAT YOU ALL HOLD ON FOR A MOMENT.
THERE MAY BE A CHA A DIFFERENCE IN THE NUMBERS.
THERE'S JUST TO RESPOND TO THE CUSTOMER ASSISTANCE PROGRAM.
SO ALL OF OUR STAFF, THE CONTRACTS THAT WE HAVE AND THE ADMINISTRATIVE COSTS THAT WE HAVE TO ADMINISTER THOSE PROGRAMS ARE IN BASE RATES.
AND SO IF WE ARE GOING TO INCREASE THE PROGRAM AND WE'RE GONNA HAVE TO INCREASE THE USE OF, YOU KNOW, ADD STAFF, INCREASE OUR CONTRACTUALS AND THINGS LIKE THAT, WE'RE GONNA NEED MORE ADDITIONAL MONEY TO ADMINISTER THE PROGRAM AND EXPAND IT TO BE ABLE TO ASSIST MORE CUSTOMERS.
AND THEN IF WE NEED MORE MONEY TO PROVIDE THE DISCOUNTS AND, AND THE, UM, CUSTOMER CHARGE WAIVER, THEN WE WOULD ADJUST THE CUSTOMER ASSISTANCE PROGRAM PORTION OF THE COMMUNITY BENEFITS
[02:30:01]
CHARGED DURING THE BUDGET CYCLE.SO THAT'S HOW THE PAYMENTS FLOW.
BUT THE ACTUAL COST TO ADMINISTER MAINTAIN, UM, QA, QC AND THE CONTRACTS THAT WE HAVE TO ASSIST US WITH AUTO ENROLL AND ALL OF THE DATA AGREEMENTS THAT WE HAVE AND MANAGE ARE COVERED IN BASE RATES.
BUT THAT'S NINE MONTHS OUT AT BEST GIVEN THE SCHEDULE THAT YOU'VE GIVEN US, WHICH COULD BE ADJUSTED AND MR. DON BROSKI, DO YOU WANNA DO IT? IT'S STILL A BAIT RACE CONSIDERATION.
I MEAN, THAT CHARGE WOULD BE, I UNDERSTAND, BUT IF WE'RE GONNA RAISE IT, IT'S NOT A DID YOU, WE'VE ALWAYS HANDLED THAT IN THE FUTURE.
IF WE COULD ALL COME BACK, WE'VE, WE'VE HANDLED THE COST IN THE FUTURE, BUT WE HAVEN'T HANDLED THE ADMINISTRATIVE COSTS SEPARATELY.
I MEAN, THEY, THEY'RE GONNA, IF THEY WILLING ASK TO DO THAT, THEY NEED THE COST TO BE ABLE TO DO THAT.
SO I, I'D LIKE STAFF TO RESPOND TO THIS POINT IN TIME ISSUE HERE.
COULD, COULD I ASK ABOUT THE CAP THING AND YES.
SO FIRST I HAVE A CLARIFICATION I'D ASK, UM, STEPHANIE TO EXPLAIN, UM, THAT IT'S NOT 1.4 MILLION ON THE LATE PAYMENT FEES.
SO THE, THE TEST YEAR WE STARTED WITH THE 3.4 MILLION, WHICH WAS OUR ACTUAL LATE FEES AND OUR GENERAL LEDGER, WE MADE A COST OF SERVICE ADJUSTMENT AND IT BECAME 4.5 MILLION.
SO THAT 1.1 WAS ALREADY A KNOWN AND MEASURABLE TO, AND, AND THE REVENUE REQUIREMENT INCLUDES 4.5.
SO IF YOU TAKE AN ADDITIONAL TWO TWO, YOU'D BE AT SEVEN SEVEN.
SO WE'RE ALREADY AT A BASE OF 1.1
SO BASICALLY AUSTIN ENERGY MADE AN UPWARD ADJUSTMENT OF 1.15 MILLION TO LATE FEES.
SO THAT THE ADJUSTMENT, THE ADJUSTMENT PROPOSED BY THE ICA DID NOT TAKE THAT INTO ACCOUNT.
AND IT, AND THE, BUT THE, I E DID RECOGNIZE THAT.
AND ON PAGE 42 OF HIS REPORT, HE NOTES IT AS AE SEEKS A KNOWN AND MEASURABLE ADJUSTMENT TO LATE PAY FEES OF 1.154 MILLION.
SO WHAT IS THE TOTAL THEN, IN THE LATE FEES? IT WOULD BE THE 3.34 PLUS THE 1.154 TO GET YOU TO ABOUT 4.545.
IS THAT WHAT YOU'RE SAYING IS IN THE REVENUE REQUIREMENT? ALL RIGHT.
PRODUCING THE REVENUE REQUIREMENT.
SO THE 2.2 MILLION THAT VICE CHAIR TOVO MENTIONED IS ACTUALLY 4.5.
NO, I THINK IT'S REALLY ONE OR SOMETHING LIKE THAT.
2.2 WOULD MAKE IT MORE LIKE 7 MILLION BECAUSE COST OF SERVICE IS ALREADY AT FOUR IN ADDITION TO THE 4.5.
SO ACTUALS IN 22, VERY PRELIMINARY OR 5.2 MILLION.
THAT WOULD ONLY BE A 700 K IF THAT WAS A DECIDED ADJUSTMENT.
AND WHEN ARE WE GOING TO GET THE TRUE UP FOR, FOR, UM, PROGRAM YEAR 2022 AS SOON AS THE AUDITED RESULTS ARE READY.
SO ANOTHER COUPLE MONTHS TO, TO FINALIZE THE NUMBER.
BUT IT, IT'S A, IT'S A DECENT ESTIMATE AT THIS POINT.
SO WE WON'T ACTUALLY KNOW WHAT THE TOTAL, THE TRUE UP NUMBERS ARE UNTIL NEXT YEAR.
IS THERE ANYTHING ELSE? UM, LET'S SEE.
COUNCIL MEMBER KITCHEN ON THE CAP.
YEAH, I JUST WANTED TO, TO CIRCLE BACK ON THE, THE CAP CONVERSATION WE HAD JUST A MINUTE AGO.
I MEAN, I THINK THAT THAT'S SOMETHING THAT CAN BE BROUGHT BACK TO US LATER, BUT, BUT I JUST WOULD CAUTION US NOT TO ASSUME THAT ENROLLING MORE PEOPLE AUTOMATICALLY MEANS MORE COST.
BECAUSE WHAT WE WANNA BE DOING IS A VERY COST EFFECTIVE WAY OF ENROLLING PEOPLE WHEN YOU AUTO ENROLL.
NOW, I UNDERSTAND THAT THERE'S MORE INVOLVED ADMINISTRATIVELY, BUT IT'S NOT A ONE TO ONE.
AND SO, UM, AT SOME POINT WE'LL NEED TO UNDERSTAND WHAT ADDITIONAL COSTS THERE MIGHT BE.
BUT I WOULD ALSO, THE OTHER THING I WOULD CAUTION ABOUT THIS PROGRAM IS THAT YES, WE HAVE TO DO SOME CHECKING AND STUFF, BUT I, I FALL WHERE THE MAYOR DOES, AND YOU MENTIONED A WHILE BACK IN OUR CONVERSATION, WHICH IS IT'S, YOU KNOW, I'D, I'D RATHER ERR ON THE SIDE OF INCLUDING MORE PEOPLE THAN, THAN PUT A WHOLE LOT OF EXPENSIVE CONTROLS IN PLACE TO KEEP OUT THE SMALL NUMBER OF PEOPLE WHO MAY NOT ACTUALLY QUALIFY.
SO ALL OF THAT NEEDS TO BE TAKEN INTO ACCOUNT WHEN WE THINK ABOUT THE COST OF ADMINISTERING A PROGRAM LIKE THAT.
SO, YOU KNOW, KNOW MORE ANALYSIS WOULD NEED TO BE DONE.
I JUST WANT A CAUTION TO SOLVE THAT, THAT MORE PEOPLE DOESN'T EQUAL MORE COST NECESSARILY.
I THINK IF I COULD SPEAK FOR, FOR WHAT I WAS UNDERSTANDING THE GENERAL MANAGER TALKING ABOUT THE ADDITIONAL STAFF THAT WOULD BE NECESSARY, ESPECIALLY IF YOU ARE DOING AUTO ENROLLMENT TO GO BACK AND, AND DO THE AUDITS TO MAKE SURE THAT WE ARE, YOU KNOW, INCLUDING APPROPRIATE FUNDS.
WHICH IS MY POINT THAT YOU CAN AUDIT THESE PROGRAMS TO DEATH.
I MEAN I KNOW YOU'RE NOT SAYING THAT, BUT YOU CAN, YOU CAN SPEND A LOT OF TIME AUDITING AND IT'S NOT WORTH THE MONEY.
SO ALL I'M SAYING IS THAT UNTIL WE HAVE A, YOU KNOW, SOME KIND OF ANALYSIS OF THE COST, I JUST DON'T WANT
[02:35:01]
US TO MAKE ASSUMPTIONS THAT ALL SURE, SURE.LEAVING ROOM FOR THE ACTUAL IMPLEMENTATION OF THE PROGRAM SHOULD THERE NEED TO BE ADDITIONAL STAFF.
I THINK THAT POINT IS WELL TAKEN AND YOUR POINT IS WELL TAKEN AS WELL THAT UM, WITH NEW FORMS OF UM, ONLINE TYPE ANALYTICS AND ASSESSMENTS AND STUFF, IT COULD REDUCE THE AMOUNT, THE NUMBER OF PEOPLE WHO ARE, WHO SHOULDN'T BE IN THE PROGRAM.
BUT IT DOESN'T ELIMINATE IT ENTIRELY.
AND WE WANNA MAKE SURE THAT, THAT WE'RE NOT INCLUDING PEOPLE THAT WE SHOULDN'T.
I WOULD JUST SUGGEST, AND I DON'T KNOW IF THIS IS, I CAN'T REMEMBER IF IT'S IN, IN THE UH, RESOLUTION OR NOT AT, AT SOME POINT THE STAFF WOULD NEED TO COME BACK AND EXPLAIN THE ADMINISTRATION AND THE COST.
SO BECAUSE I WOULD SUGGEST THAT THAT'S ALSO PART OF THE CAP PROGRAM IS, IS MAKING SURE IT'S BEING DONE THE MOST COST EFFECTIVE WAY AND USING THE BEST TECHNOLOGY THAT'S AVAILABLE AND ALL OF THOSE THINGS THAT SAVE COST.
AND I AGREE FROM, SO FROM WHERE I SIT ON THAT, I THINK THEIR RANGE FOR ADMINISTRATIVE COSTS IS LIKE TWO AND A HALF TO $6 MILLION.
YOU LOOK AT AND GO, I'M NOT SURE THAT'S ACTUALLY PROVIDING THE REEF, WE JUST TAKE $6 MILLION AND SEND OUT THE $6 MILLION SOMEHOW.
I DON'T KNOW HOW BUT PUTTING IN SOMETHING TO DO THAT, THAT THE TWO AND A HALF MILLION DOLLARS, WHICH IS WHAT I WOULD MAKE MOST SENSE TO ME CUZ THERE'S GONNA BE SOME ADMINISTRATIVE COSTS ASSOCIATED WITH CHANGING THAT PROGRAM THAT WAY.
BUT THE RESOLUTION IN THE IFFC I THINK ALLOWS FOR THE KIND OF THE FINE TUNING OF THAT.
AND IF NOT, LET'S TAKE A LOOK AT THE WORDING, MAKE SURE THAT IT DOES.
IS THERE ANYTHING ELSE THAT WE WANT TO KICK AROUND WITH REGARD TO THIS ITEM? MAY I PRETEND? UM, YES, I MEANT TO MENTION EARLIER THAT I'D LIKE TO BE ADDED AS A CO-SPONSOR FOR YOUR THANK YOU IFC.
UM, THE OTHER TWO ITEMS. SO IT SOUNDS LIKE WE COULD POTENTIALLY REDUCE IT BY 0.7 MILLION BY THE CALCULATIONS THAT I'VE HEARD IF WE WANTED TO.
UM, AND THEN THE, THE WINTER STORM AMATEURIZATION, DID YOU WANNA SPEAK TO THAT COUNCIL MEMBER TOVO AND THERE'S THE BAD DEBT.
WHAT WAS THE 5.7 THAT YOU HAD? CAUSE I THOUGHT WE HAD, THEY HAD CHANGED SOME OF THOSE NUMBERS.
I'M SORRY? I SAID IT WOULD BE SEVEN.
YOU HAD SAID THAT IF WE AMORTIZE.
YEAH, I WAS TRYING TO ACTUALLY SINCE I HAD UM, SOMEWHAT TALKED.
SO THIS, SO WHAT I WOULD SUGGEST AT THIS POINT, BECAUSE WE STILL WANNA DO THE OTHER, THE OTHER ITEM IS COULD CAN WE MOVE THIS OVER TO THE MESSAGE BOARD AND THEN STAFF WILL HAVE TIME TO RESPOND.
AND THEN WE CAN ALL THINK ABOUT I'LL DO MY BEST.
I'M TOTALLY, TOTALLY UNDERWATER, UM, FOR THURSDAY, BUT I WILL, I WILL DO MY BEST TO, I THINK IT WOULD BE HELPFUL IF STAFF RESPONDED TO THOSE FOUR THINGS.
AND YOU'VE LET 'EM SISTER'S ROOM, LET US KNOW WHAT ARE THE DISCRETIONARY DECISIONS INVOLVED IN THAT THAT ARE NOT POLICY, THAT ARE NOT NECESSARILY SET FOR REASONABLE WINES COULD DIFFER, UH, PUT IN YOUR DEFENSE IF YOU WANT TO.
BUT GIVE US ON THE FOUR ITEMS THAT, UH, COUNCIL MEMBER TOOK.
JUST TO BE CLEAR, WHAT I'LL TRY GENERAL FUND TRANSFER 4.4 MILLION, WE'RE IN AGREEMENT ON THAT AND DOING THE ADJUSTMENT TO THE, THE LATE PAYMENT ISSUE AND THEN THE LATE PAYMENT WE'LL LOOK AT RIGHT.
AND THEN THE WINTER STORM YEAR OVERTIME, UH, AND LOOKING AT FIVE YEARS VERSUS THREE YEARS AND THEN CALCULATING THREE YEAR AVERAGES.
WE'LL LOOK AT THOSE FOUR THINGS RIGHT? AND THEN GIVE US SOMETHING IN WRITING AS CAMP.
AND THEN IF YOU COULD ALSO, IN DOING THAT LAST ONE, THE BAD DEBT, IF YOU COULD ALSO TELL US WHAT, HOW AE CALCULATED IT.
DOES ANYBODY ELSE HAVE? AND IF YOU COULD ALSO ADD TO THAT THE QUESTION WITH RESPECT TO THE ADMINISTRATIVE COST FOR CAP AND WHETHER THAT'S APPROPRIATE FOR US TO PUT IN THE PACE RIGHT NOW AND IF WE'RE SERIOUS ABOUT IT, IF IT MAKES SENSE FOR US TO DO THAT A YEAR FROM NOW.
BUT IF WE'RE SERIOUS ABOUT WANTING TO DO THAT, IS THERE AN ADVANTAGE OF DOING IT NOW AS PART OF THIS PROCESS? AT LEAST AT THE TWO AND A HALF LEVEL, THE LOWER END OF THE RANGE YOU HAD GIVEN YOU ADDRESS THAT I'LL OH, SORRY, I DIDN'T MEAN TO STEP ON YOU AND IF I COULD SEE, SHOULD I CALL ON THE VICE CHAIR? I SEE THAT THE MAYOR PROTE ALSO HAD HER HAND UP.
IF I COULD, I, I WANNA UM, ALSO JUST NOTE THAT ONE OF THE OTHER ISSUES THAT I'M LOOKING AT WITH REGARD TO THE REVENUE REQUIREMENT IS THE ISSUE THAT PAUL ROBINSONS AND SOME OTHERS DID ABOUT THE CONSTRUCTION COSTS.
I JUST, I STILL DON'T TOTALLY HAVEN'T DELVED.
I'VE BEEN WORKING MY WAY THROUGH THE OTHER REVENUE REQUIREMENT ADJUSTMENTS THAT PEOPLE HAVE SUGGESTED AND THAT'S ONE I STILL HAVEN'T FINISHED WITH.
SO THAT'S, THAT'S SOMETHING I'M LOOKING AT MAYOR, JUST TO, COULD YOU CLARIFY THAT THAT IS THE C I A C ISSUE NOTED ON PAGE 26 OF THE IMPARTIAL HEARING EXAMINER.
THOSE ARE CONTRIBUTIONS, THE NATIVE CONSTRUCTION OR OUR LINE EXTENSION POLICY.
WHAT'S THE ISSUE THAT YOU WANT THEM TO LOOK AT? UM, I JUST HAVEN'T FULLY DECIDED WHERE I STAND ON
[02:40:01]
THAT SUGGESTED, UM, REVENUE REQUIREMENT ADJUSTMENT.SO I'M JUST NOTING THAT CUZ YOU SAID THAT YOU WERE GONNA LOOK AT THE ONES THAT PEOPLE ARE LOOKING AT AND THAT'S ONE I'M LOOKING AT.
ARE YOU, DO YOU UNDERSTAND WHAT THE REVENUE REQUIREMENT ADJUSTMENT IS? IS, DO YOU KNOW WHAT TO RESPOND TO? I, I BELIEVE I DO.
SO CONTRIBUTION AND CONSTRUCTION IS, IS ON OUR BOOKS.
IT'S WHAT, UH, CUSTOMERS PAY TO CONNECT TO OUR SYSTEM.
AND I BELIEVE THERE'S A MISUNDERSTANDING BY MR. ROBBINS THAT THAT'S INTENDED TO PAY FOR SYSTEM GROWTH, WHICH IS LIKE SUBSTATIONS AND CONDUCTORS AND POLLS.
UM, AND SOMEHOW THAT, THAT'S HOW GROWTH PAYS FOR GROWTH AND I THINK IT'S A, IT'S A MISUNDERSTANDING OF THAT POLICY AND HOW WE APPLY IT, BUT WE'RE A HUNDRED PERCENT COMPLIANT WITH CONTRIBUTION IN CONSTRUCTION.
I JUST, I WANNA RESPOND TO THAT AS PART OF THAT MEMO WITH THAT INFORMATION.
IT SOUNDED LIKE THERE MIGHT NEED TO BE SOME POLICY DIRECTION ON THAT AND I JUST WANT, WANNA ALSO SIGNAL THAT THAT MAY BE PART OF WHAT HAPPENS THAT I MIGHT BRING FORWARD.
AND THEN THE LAST ONE I JUST WANNA MENTION, MAYOR, ONE OF THE THINGS I'M STILL STRUGGLING WITH WITH THE CUSTOMER ASSISTANCE PROGRAM IS THAT IN THE PAST WHEN WE'VE HAD THAT CONVERSATION EITHER ABOUT ENERGY EFFICIENCY OR THE CUSTOMER ASSISTANCE PROGRAM AND WE'VE DONE THAT IN THE CONTEXT OF THE, THE AUSTIN ENERGY MEETINGS, UM, YOU KNOW, AT VARIOUS POINTS AE STAFF HAVE SAID, YOU KNOW, IF THERE NEEDS TO BE AN INCREASE YOU'LL COME BACK TO US AND SUGGEST AN INCREASE.
SO I THINK THAT'S ONE OF THE THINGS I'M STRUGGLING WITH IS, IS HOW MUCH TO TAKE REALLY TO COUNCIL MEMBER KITCHENS POINT.
I'M NOT SURE NECESSARILY THAT INCREASING OUR ENROLLMENT IS GOING TO COST A SUBSTANTIAL AMOUNT MORE.
UM, SO I'D LIKE THEM TO, SO, AND I ALSO DON'T KNOW WHEN THOSE COSTS, WHEN WE SHOULD ACCOUNT FOR THOSE COSTS.
IT WOULD SEEM LIKE AFTER THE ENROLLMENT EXCEEDS WHAT WE HAVE CURRENTLY BUDGETED IN OUR PROGRAM, WHICH IS WHY I'VE ASKED THOSE TWO QUESTIONS.
THOSE ARE THE TWO QUESTIONS I IDENTIFIED.
I JUST WANTED TO BE SERIOUS ABOUT IT.
THAT'S THE NUMBER THAT REALLY JUMPS OUT IS 23% OF THE PEOPLE IN NEED MM-HMM.
I JUST NEED TO SURFACE THEM SO WE CAN HAVE THE DISCUSSION.
UM, ONE OF THE OTHER THINGS THAT I'M GONNA WANT TO UNDERSTAND WHEN WE, ONCE WE LAND ON THE REVENUE REQUIREMENT AND WHAT WE THINK ARE THE APPROPRIATE TIERS IS WHAT WOULD HAPPEN IF WE ONLY TRIED TO GO FOR 33% TO COST FOR RESIDENTIAL.
UM, SO THE COST ALLOCATION METHODS IS ANOTHER WAY THAT YOU CAN CHANGE WHAT, UM, THE RESIDENTIAL FEES ARE.
AND THERE WAS A CLEAR ASSUMPTION FOR 50% UNITY.
I UNDERSTAND THAT ONE, BUT I THINK IT'S A POLICY DECISION THAT WE COULD SAY WE WANT TO GO ONE THIRD THERE INSTEAD.
AND I WOULD, I WILL PROBABLY WANNA SEE A RUN WITH THAT.
I WANNA POINT OUT TO MY COLLEAGUES WHO ARE FOCUSED IN ON THE CAP THAT THE CHOICES THAT WE MAKE ABOUT THE DOLLARS FOR THE CUSTOMER CHARGE, WHICH IS WHAT AE WAS TRYING TO SELL US ALL ALONG, HAVE AN IMPACT IN WHAT OUR CAP CUSTOMERS PAY.
SO THE CHOICE TO TAKE THINGS AWAY FROM THE CUSTOMER CHARGE AND REDUCE THAT FROM THE $15.
EVERY TIME YOU DO THAT, YOU'RE CHARGING MORE TO THE CAP CUSTOMERS.
UM, SO IF THAT IS YOUR PRIORITY, THEN WE NEED TO THINK ABOUT THE RIGHT BALANCE THERE AND WHETHER THINKING ABOUT THE, YOU KNOW, PEOPLE ARE PAYING THE INCREASE NO MATTER WHAT, WHICHEVER WAY YOU DO IT, BUT THE CAP CUSTOMERS ARE NOT, UM, YOU KNOW, THERE'S A CERTAIN NUMBER OF CUSTOMERS WHO, YOU KNOW, EVEN IF THEY'RE PAYING 300 KILOWATTS, THEY'RE PAYING THAT, THAT EXTRA AMOUNT NO MATTER WHERE WE PUT IT.
MAYBE NOT UP TO THE $15, BUT IF YOU, EVEN IF YOU CUT IT OFF AT $3, THEY'RE GONNA BE PAYING THE OTHER $5 OVER OVER THERE IN SOME WAY.
SO I JUST WANT YOU TO KEEP THAT IN MIND AS WE'RE MAKING THE DECISIONS IF THAT IS THE PRIORITY FOR YOU.
AND THEN, UM, I HAVE ASKED SOME QUESTIONS IN THE Q AND A ABOUT HOW THE, UM, CAPITAL RECOVERY IMPACT FEE, I DON'T KNOW WHAT THEY CALL IT FOR AE WORKS.
I'M WANNA UNDERSTAND THE DIFFERENCE BETWEEN WHAT AUSTIN WATER'S DOING, WHICH HAS PUT US IN A VERY GOOD FINANCIAL POSITION AND, UH, WHAT AE IS DOING WITH RESPECT TO THE CAPITAL RECOVERY AND HOW THOSE DIFFER.
AND THAT'S THE FEES THAT ARE PAID WHEN YOU DO COME ONLINE.
UM, AND I'M CONCERNED ABOUT THE DISCREPANCY IN THAT IMPACT ON OUR UTILITIES AND, AND I DON'T UNDERSTAND THE DIFFERENCE.
SO I'VE ASKED SOME QUESTIONS UNDER AN AUSTIN WATER ITEM I THINK IN THERE THAT HOPEFULLY AE IS CHIMING IN ON THAT CAN HELP US UNDERSTAND CUZ THAT MAY BE ANOTHER AREA WHERE WE CAN ADJUST THE REVENUE THAT'S COMING IN BY ADJUSTING THOSE FEES IF, IF APPROPRIATE.
BUT I THINK THERE'S A, THERE'S A DESIGN DIFFERENCE BETWEEN THOSE TWO THAT I THINK WE NEED TO GET INTO.
ANYTHING ELSE? UM, JACKIE AND MARK, IS THERE ANYTHING THAT YOU WANT TO SAY TO CLOSE OUT ITEM SIX? JUST THANK YOU FOR YOUR ENGAGEMENT.
THANKS MR. BDO FOR BEING HERE AS WELL.
[02:45:01]
UM, SO ITEM[7. Identify items to discuss at future meetings]
SEVEN IS FUTURE ITEMS, IDENTIFY ANYTHING TO DISCUSS AT FUTURE MEETINGS.UM, ANYBODY HAVE ANYTHING? I DID BUT I'VE CHANGED MY MIND.
IT BEING A UP CUSTOMER OR KITCHEN? I THINK IT'D JUST BE, UM, MAYBE NOT THE NEXT ONE, BUT I THINK IT'D BE USEFUL, UM, IF YOU'RE NOT ALREADY PLANNING ON DOING THIS, BUT, BUT JUST KEEP, UH, UPDATING ON THE PROGRESS ON THE CAP PROGRAM.
I THINK THAT THAT WOULD BE SOMETHING THAT'D BE IMPORTANT TO SEE ON A REGULAR BASIS.
I THINK EVERYTHING RELATED TO AUSTIN ENERGY CONTINUES TO BE REALLY IMPORTANT AND UPDATES THROUGHOUT.
AND SO I'M SURE CAP WILL BE ON THAT LIST.
UM, I'M NOT, I'M NOT SURE IF THIS IS THIS OVERSIGHT COMMITTEE OF THE WATER OVERSIGHT, BUT IN LIGHT OF HOUSTON'S WATER BOIL, UM, WE PROBABLY WANNA HAVE AN UPDATE ON THE POWER CONNECTIONS, UM, TO OUR WATER UTILITY.
UM, WHETHER THAT'S A MEMO OR WHETHER THAT'S HERE OR IN THE AUSTIN WATER COMMITTEE MEETING.
I KNOW WE'VE MADE A LOT OF PROGRESS ON THAT.
WE'LL BE GETTING THE, UM, AUSTIN WATER EVALUATION IN JANUARY.
UM, BUT I THINK THE PUBLIC WOULD PROBABLY LIKE TO KNOW THE STEPS THAT WE'VE TAKEN TO AVOID THE SAME PROBLEM.
IT IS 4 24 AND I ADJOURN THIS MEETING OF THE OVERSIGHT COMMITTEE.