Sep 22, 2026 Austin Energy Utility Oversight Committee

PRO TEAM.

THANK

[00:00:01]

I WILL CALL THE MEETING OF THE AUSTIN ENERGY UTILITY OVERSIGHT COMMITTEE TO ORDER.

IT IS 9 0 1 ON SEPTEMBER 22ND, 2026.

UH, AND WE HAVE A QUORUM PRESENT.

UH,

[Public Communication: General]

DO WE HAVE ANY SPEAKERS THIS MORNING? YES, SIR.

UH, MARY ELIZABETH AND PAUL ROBBINS.

ALRIGHT, MARY ELIZABETH.

MR. ROBBINS, YOU WANNA GO AHEAD AND START US OFF? GOOD MORNING TO YOU.

GOOD MORNING.

UH, AUSTIN ENERGY HAS BEEN OPERATING A DISTRICT, DISTRICT CHILLING STATION SINCE 2001, EXCUSE ME, A DISTRICT CHILLING SYSTEM.

SINCE 2001, THERE ARE NOW SIX FACILITIES, INCLUDING THREE DOWNTOWN, WHICH CHILL 73 BUILDINGS, INCLUDING THIS OVER CHILLED CITY HALL.

THESE FACILITIES SAVED 28 MEGAWATTS OF PEAK DEMAND.

THEIR INSURED VALUE IN 2025 WAS $274 MILLION.

YOU ALL MAY REMEMBER THAT IN THE SUMMER OF 2024, AUSTIN ENERGY PROPOSED THAT THE, THE SALE OF THE SYSTEM, THERE WAS A CLAIM THAT THE SYSTEM WAS LOSING MONEY SINCE IT SEEMED, IT SEEMED CONCERNING THAT A UTILITY WITH A GUARANTEED RATE OF RETURN WOULD BE UNDER WATER.

THE RESOURCE MANAGEMENT COMMISSION THAT I SERVE ON BEGAN INVESTIGATING.

WE ACTUALLY PREPARED A RESOLUTION ASKING COUNCIL TO CONDUCT AN AUDIT ON THE FINANCES OF THE DISTRICT CHILLING SYSTEM.

HOWEVER, UH, LISA MARTIN WITH AUSTIN ENERGY APPEARED AT OUR MAY, 2025 MEETING AND INFORMED US THE UTILITY WAS ALREADY WORKING ON THIS.

SHE STATED THAT COMPLETION OF THE AUDIT WOULD BE DELIVERED ON ABOUT OCTOBER 1ST, 2025, EIGHT DAYS FROM NOW.

IT WILL HAVE BEEN A YEAR SINCE THIS AUDIT WAS PROMISED.

A MONTH AGO.

AT OUR COMMISSION'S AUGUST MEETING, WE ASKED MARTIN WHY THE AUDIT WAS NOT COMPLETED.

WE WERE TOLD THE UTILITY HAD OTHER PRIORITIES AND IT WOULD BE DONE BEFORE THE END OF THE YEAR.

DESPITE THE SUBJECT BEING DISCUSSED THREE TIMES AT OUR MEETING, SHE WOULD NOT GIVE US A COMPLETION DATE.

OUR COMMISSION RELUCTANTLY HAS PASSED OUR ORIGINAL RESOLUTION ASKING COUNSEL FOR AN AUDIT OF THE DISTRICT CHILLING SYSTEM.

IF THE UTILITY DOES NOT CARE ABOUT THE FINANCIAL SUCCESS OF A $274 MILLION ASSET, I AM TRUSTING YOU WILL.

THE SYSTEM HAS A STIGMA HANGING OVER IT, AND SO DO THE EMPLOYEES WHO WORK THERE.

IT IS MY INTUITION THAT THE SYSTEM IS SOLVENT IN MAKING MONEY, BUT WE NEED PROOF.

MY LAST STATEMENT ON THIS IS THAT I THINK YOU ALL SHOULD ALLOW THE DISTRICT CHILLING SYSTEM TO OPERATE INDEPENDENTLY OF AUSTIN ENERGY.

IF YOU LOOK AT THE CITY CHARTER, IT IS COUNCIL'S PURVIEW AS TO WHICH CITY DEPARTMENT ADMINISTERS AUSTIN'S VARIOUS PROGRAMS. IF THE DISTRICT CHILLING SYSTEM IS NOT A PRIORITY TO AUSTIN ENERGY, THEN COUNCIL CAN MOVE IT TO A HOME THAT CARES MORE ABOUT ITS FUTURE.

THANK YOU.

THANK YOU.

MR. ROBS WAS MS. MARY ELIZABETH? YES, SIR.

MARY ELIZABETH.

MARY ELIZABETH.

I DON'T THINK SHE IS HERE.

AND IF SHE SHOWS UP, WE'LL, WE'LL GET HER, UH, COMMENTS IN, IN ORDER.

ALL RIGHT,

[Approval of Minutes]

UH, WE'VE SEEN THIS IN IN A COUPLE OF OTHER COMMITTEES, BUT THE CITY RECENTLY DID AN AUDIT OF ALL THE COMMITTEE MINI MINUTES AND CAUGHT SOME ERRORS THAT NEEDED TO BE, UH, CORRECTED.

AND SO WE ARE RE-APP APPROVING SOME OF THE PAST MINUTES.

UH, ITEM ONE IS TO APPROVE THE MINUTES FOR OUR JULY 20, 25 AND 2026 MEETINGS.

UH, IS THERE A MOTION, UH, MOTION FROM, UH, VICE CHAIR SIEGEL AND A SECOND FROM, UH, RYAN FROM COUNCIL MEMBER ALTER? UM, AND ALL THOSE IN FAVOR PLEASE INDICATE BY UNANIMOUS APPROVAL OF THE MINUTES.

UH, MOVING ON TO ITEM TWO IS TO APPROVE THE MINUTES FROM OUR MAY 20TH, 2025, OCTOBER 7TH, 2025, NOVEMBER 18TH, 2025, AND JANUARY 20TH, 2026 MEETINGS.

UH, AGAIN, I WOULD ASK FOR A MOTION AND A MOTION FROM COUNCIL MEMBER SIEGEL AND A SECOND FROM COUNCIL MEMBER, UH, UCHIN.

UH,

[00:05:01]

UM,

[3. General Manager’s Report - ERCOT Summer Peak Energy Usage and the Value of Public Power in the Texas Electric Market [Stuart Reilly, General Manager - Austin Energy]]

UH, MR. RILEY, IF YOU WANNA COME ON UP AND GIVE US A REPORT.

WE LOOK FORWARD TO IT.

THANK YOU CHAIR.

GOOD MORNING COMMITTEE.

I'M STUART RILEY, AUSTIN, ENERGY GENERAL MANAGER.

LET'S SEE HERE.

AND THIS MORNING, I'LL START WITH A QUICK UPDATE ON A NEW PEAK DEMAND RECORD FOR ERCOT.

THEN I'LL TALK ABOUT THE VALUE OF PUBLIC POWER.

SPECIFICALLY, THERE HAVE BEEN SOME NEWS REPORTS AND SOME OTHER TALK ABOUT HOW AUSTIN ENERGY AND MUNICIPALLY OWNED UTILITIES GENERALLY COMPARED TO THE RETAIL ELECTRIC MARKET, THAT COMPETITIVE MARKET IN TEXAS.

AND SO I'LL JUST LAY OUT SOME INFORMATION ABOUT THE VALUE THAT AUSTIN ENERGY PROVIDES AND HOW WE STACK UP.

SO FIRST OF ALL, I JUST WANTED TO UPDATE THIS COMMITTEE THAT, UM, ERCOT HIT A NEW ALL TIME PEAK DEMAND RECORD THIS JULY.

THE PEAK DEMAND RECORD WAS AN INCREASE OF ABOUT 5,500 MEGAWATTS MORE THAN JUST THREE YEARS AGO.

THIS IS THE EQUIVALENT OF OUR STATE'S ELECTRIC GRID, ADDING ABOUT THE EQUIVALENT OF TWO AUSTINS TO THE ELECTRIC GRID WITHIN A THREE YEAR SPAN OF TIME.

AND SO THAT NEW PEAK DEMAND RECORD HAS BEEN INCREASING IN RECENT YEARS.

YOU CAN SEE HERE THAT OVER THE LAST DECADE, IT HAS GONE UP ABOUT 20,000 MEGAWATTS, AND THAT'S A 28% INCREASE.

AND THE CURVE IS GETTING STEEPER AS IT'S INCREASING MORE SHARPLY SINCE 2021.

THIS IS PART OF WHY AUSTIN ENERGY IS SO FOCUSED ON OUR RESOURCE GENERATION PLAN IMPLEMENTATION, INCLUDING UTILITY SCALE BATTERIES, DEMAND RESPONSE, UM, TRANSMISSION IMPORT, CAPACITY IMPROVEMENTS, AND OTHER MEASURES, UH, THAT MAKE SURE OUR CUSTOMERS ARE PROTECTED FROM ANY FUTURE SUPPLY AND DEMAND CHALLENGES.

SO, MOVING INTO KIND OF THE MORE LENGTHY TOPIC OF THIS BRIEFING, UH, AND LOOKING AT THE VALUE OF PUBLIC POWER AND WHAT AUSTIN ENERGY PROVIDES TO OUR COMMUNITY, I THINK YOU ALL KNOW THAT AUSTIN ENERGY STARTED IN 1895 WHEN PRIVATE UTILITIES DID NOT WANT TO COME TO AUSTIN.

AND SO OUR CITY WENT, UH, FORTH AND, AND CREATED AN ELECTRIC UTILITY BY BUILDING A DAM THAT WAS THE LARGEST IN THE WORLD AT THAT TIME.

UM, SINCE THEN, WE'VE HAD THE WOR THE FIRST WIND CONTRACT IN TEXAS, THE FIRST UTILITY SCALE SOLAR IN TEXAS, THE ONLY BIOMASS IN TEXAS, A GREEN BUILDING PROGRAM.

THAT WAS THE MODEL FOR NATIONWIDE GREEN BUILDING PROGRAMS, ENERGY EFFICIENCY PROGRAMS, SOLAR PROGRAMS THAT HAVE BEEN, THAT ARE THE MODEL FOR, FOR OTHER UTILITIES NATIONALLY.

AND ALL OF THIS HAS BEEN POSSIBLE BECAUSE OF OUR STATUS AS A PUBLIC POWER UTILITY.

AND, UH, AND THE REST OF THIS PRESENTATION, I'LL SHOW YOU HOW EVERYTHING WE DO IS TO MAXIMIZE COMMUNITY VALUE, NOT TO MAXIMIZE PROFIT FOR DISTANT SHAREHOLDERS.

ALLOWING RETAIL COMPETITION IN OUR SERVICE TERRITORY WOULD BE VERY EXPENSIVE.

IT WOULD BE A VERY LONG TRANSITION WITH LOTS OF UNKNOWNS ON HOW IT WOULD EVEN WORK.

SO WHAT WE DO KNOW IS THAT IT WOULD LIKELY LEAD TO HIGHER RATES.

IT WOULD LIKELY LEAD TO WORSE SERVICE, FEWER IF ANY MONEY AND ENERGY SAVING PROGRAMS AND RETAIL COMPETITION FROM MUNICIPAL UTILITIES SEEMS TO BE A SOLUTION IN SEARCH OF A PROBLEM, BECAUSE AS I'LL SHOW YOU, WE'RE MORE AFFORDABLE, WE'RE MORE RELIABLE, AND WE'RE MORE SUSTAINABLE THAN THE REST OF THE STATE.

SO TAKING A STEP BACK A LITTLE BIT TO TALK ABOUT THE COMPETITIVE MARKET, THIS, THIS WILL JUST KIND OF, UH, FRAME THIS DISCUSSION A LITTLE BIT.

UH, FOR THOSE WHO AREN'T AWARE, IN 1999, THE TEXAS LEGISLATURE DEREGULATED AREAS THAT DID NOT HAVE A CO-OP OR AN MOU AND MUNICIPALLY OWNED UTILITY LIKE AUSTIN ENERGY AND ALMOST ALL OF THOSE CO-OPS AND MOUS DECIDED NOT TO ENTER OR OPT INTO COMPETITION.

THOUGH CURRENT LAW DOES PROVIDE THE GOVERNING BODY OF THESE, OF THESE ENTITIES TO OPT IN, DEREGULATION THEN BECAME EFFECTIVE IN 2002.

AND ABOUT 75% OF ERCOT IS SERVED BY COMPETITIVE PROVIDERS.

AND THIS LEGISLATION PROVIDED THREE CATEGORIES OF MARKET PARTICIPANTS THAT YOU SEE ON THIS SLIDE.

POWER GENERATION COMPANIES OR GENERATORS, TRANSMISSION DISTRIBUTION, UTILITIES OR TDS.

AND RETAIL ELECTRIC PROVIDERS ARE ALSO CALLED REPS.

SO THE POWER GENERATION COMPANIES OR GENERATORS, THEY OPERATE STRICTLY TO SELL POWER INTO THE ERCOT MARKET.

THEY GENERATE POWER AND THEY SELL POWER INTO THE ERCOT MARKET.

THAT'S HOW THEY MAKE MONEY.

TRANSMISSION AND DISTRIBUTION UTILITIES, TDS ARE OFTEN CALLED THE WIRES COMPANIES.

UM, THEY'RE MOSTLY FOR-PROFIT MONOPOLIES REGULATED, MONOPOLIES REGULATED BY THE PUC THAT ARE AWARDED A RETURN ON EQUITY.

THIS IS A PROFIT MARGIN THAT REGULATORS ALLOW THESE UTILITIES TO EARN.

BUT OBVIOUSLY BECAUSE THERE'S ONLY ONE SET OF WIRES RUNNING DOWN A STREET OR ONE SET OF WIRES RUNNING THROUGH A COMMUNITY, UM, CUSTOMERS DON'T GET TO CHOOSE THEIR TDU, THEIR TRANSMISSION DISTRIBUTION UTILITY THAT TDU IS BASED ON WHERE YOU LIVE.

UM, AND THE TDS.

UM,

[00:10:02]

THE REPS.

SO THE REPS ARE WHO CUSTOMERS SHOP FOR.

UM, THOSE REPS BUY ELECTRICITY FROM THE POWER GENERATION COMPANIES.

THEY PACKAGE THEM AND MARKET THEM TO CUSTOMERS, AND THEY CAN CHARGE WHATEVER THEY WANT FOR THAT SERVICE.

BUT THEY DO HAVE TO COVER THEIR COSTS TO THE POWER GENERATION COMPANIES, AND THEY DO HAVE TO PASS THROUGH THOSE COSTS FROM THE TDS.

SO THE MARKET SEPARATED THESE FUNCTIONS INTO THESE DISCREET AREAS WITH COMPANIES OPERATING IN EACH OF THESE SECTORS.

OF COURSE, AUSTIN ENERGY IS SOMEWHAT DIFFERENT WITHIN THE ERCOT MARKET BECAUSE UNLIKE IN DEREGULATED PORTIONS OF THE STATE, WE DO IT ALL AS A MUNICIPALLY OWNED UTILITY.

WE IN 71 OTHER MOUS REMAIN VERTICALLY INTEGRATED.

SO WE OPERATE THE MOST DIVERSE POWER GENERATION PORTFOLIO OF ANYBODY IN ERCOT.

WE THEN SEND THAT POWER ACROSS OUR 600 MILES OF TRANSMISSION LINES, OUR 12,000 MILES OF DISTRIBUTION LINES, AND THEN WE PROVIDE SERVICE TO THAT END CUSTOMER.

OUR SERVICE IS U UNIFIED AND ACCOUNTABLE AT EACH LEVEL TO OUR CUSTOMERS AND TO OUR COMMUNITY.

AND THIS MODEL PROVIDES A UNIQUE OPPORTUNITY FOR US BECAUSE IT ALLOWS US TO PROVIDE MORE VALUE TO OUR CUSTOMERS.

THAT'S BECAUSE THE END POINT OF THIS SLIDE WHERE YOU SEE THE CUSTOMER HOME, WHERE CAN PROVIDE VALUABLE REBATE PROGRAMS OR DEMAND RESPONSE PROGRAMS THAT COMPLIMENT OUR POWER GENERATION PORTFOLIO, AND THAT HELPS CUSTOMERS REDUCE.

SO HELPING REDUCE KILOWATT HOURS SOLD IS A BETTER OUTCOME FOR CUSTOMERS THAN SELLING MORE KILOWATT HOURS.

AND SO OUR CUSTOMERS USE BY, AS A RESULT OF THIS, OUR CUSTOMERS USE FAR LESS ENERGY THAN CUSTOMERS ACROSS THE REST OF THE STATE.

A DEREGULATED BROKEN UP MODEL DOES NOT HAVE THE SAME INCENTIVE BUILT IN TO HELP CUSTOMERS ACHIEVE BETTER OUTCOMES THE WAY THAT WE DO.

AND SO THIS SLIDE SHOWS JUST A FEW OF THOSE WAYS THAT WE DEMONSTRATE THE VALUE OF BEING ABLE TO LEVERAGE OUR ALL-IN-ONE MODEL TO HELP CUSTOMERS.

SO FIRST OF ALL, IN TERMS OF ACCOUNT MANAGEMENT, OUR RATES ARE MUCH MORE STRAIGHTFORWARD.

WE DON'T HAVE RATE GIMMICKS OR INTRO OFFERS THAT INCREASE BIG FEES FOR CANCELLATION, BIG FEES FOR CHANGING PROVIDERS.

WE HAVE STABLE RATES FOR EVERYONE THAT ARE THE SAME ACROSS THE BOARD, AND THEY'RE ACTUALLY LOWER IN THE COMING FISCAL YEAR THAN THEY WERE TWO YEARS AGO.

AND BECAUSE WE'RE HERE FOR THE LONG HAUL WITH CUSTOMERS, WE WORKED TO AVOID DISCONNECTIONS WITH FLEXIBLE PAYMENT ARRANGEMENTS AND CUSTOMER ASSISTANCE PROGRAMS. THERE WAS A RECENT NEWS REPORT.

THEY POINTED OUT THAT IN TWO 2024, THAT WAS THE LATEST YEAR THAT US ENERGY INFORMATION ADMINISTRATION DATA WAS AVAILABLE.

SO IN 2024, ALMOST 25% OF ALL TEXANS HAD BEEN DISCONNECTED BY THEIR, THEIR UTILITY FOR NON-PAYMENT.

WHEREAS HERE IN AUSTIN, THAT RATE WAS ONLY 5.5%.

AND THAT'S BECAUSE WE DO OUR BEST TO GET EVERYBODY ON A PAYMENT PLAN.

OUR UTILITY CONTACT CENTER IS A SINGLE POINT OF CONTACT FOR ALL OF YOUR, YOUR UTILITIES.

AND IN THE COMPETITIVE MARKET, NOT ONLY DO YOU NOT HAVE ONE UNIFIED BILL FOR UTILITIES, BUT WHEN YOU HAVE A PROBLEM, UH, LIKE AN OUTAGE OR OTHER WIRES PROBLEM, YOU'RE NOT EVEN CALLING YOUR YOUR REP, YOUR RETAIL ELECTRIC PROVIDER.

UH, THAT WOULD BE FOR THE TDU THAT'S OPERATING THERE.

AND WE SERVE EVERYONE WITH, WE HAVE CUSTOMER ASSISTANCE PROGRAMS WITH ABOUT 60 COMMUNITY PARTNERS THAT HELP PROVIDE WRAPAROUND SERVICES.

AND WE HAVE SPECIALIZED SERVICES FOR MEDICALLY VULNERABLE CUSTOMERS, INCLUDING EMERGENCY PLANNING FOR OUTAGES.

AND I MENTIONED ON THIS THE PRIOR SLIDE THAT BEING VERTICALLY INTEGRATED HAS ALLOWED US TO BE A LEADER IN CUSTOMER ENERGY SOLUTIONS.

AND AS ONE EXAMPLE, OUR THERMOSTAT DEMAND RESPONSE PROGRAM WAS ONE OF THE FIRST DEMAND RESPONSE PRO PROGRAMS ANYWHERE IN THE NATION, AGAIN, DOING THE THINGS THAT GET BETTER OUTCOMES FOR OUR CUSTOMERS.

AND YOU ALL HAVE SEEN A SLIDE LIKE THIS SLIDE OR, OR A SLIDE LIKE IT MANY TIMES.

UM, BUT IT'S, IT'S ALWAYS WORTH JUST TAKING A STEP BACK TO, TO ACKNOWLEDGE HOW FAR AHEAD WE ARE.

WE HAVE A LONG WAY TO GO IN TERMS OF OUR SUSTAINABILITY GOALS, BUT WE'RE ALSO FAR AHEAD OF THE REST OF THE PACK.

YOU CAN SEE HERE THAT AUSTIN ENERGY IS AT 30% CARBON FREE GENERATION, WHEREAS THE REST OF THE STATE IS AT 46% AND THE NATION IS AT 42%.

SO EVEN THOUGH OUR RELIABILITY ISN'T REALLY A COMPARISON STRICTLY TO THE COMPETITIVE ELECTRIC MARKET IN TEXAS, I DO NEED TO POINT OUT THAT WE'RE NOT ONLY SUSTAINABLE, BUT WE'RE MORE RELIABLE AS WELL.

UH, THIS SHOWS THAT OUR RELIABILITY METRICS OUTPERFORM THE TEXAS AVERAGES.

SO FOR EXAMPLE, WE'RE 30% MORE RELIABLE.

THIS MEANS FEWER OUTAGES PER CUSTOMER, AND WE'RE ALSO ABOUT TWICE AS RESILIENT.

THIS MEANS FEWER, FEWER MINUTES ON AVERAGE PER OUTAGE, AND AFFORDABILITY IS ON EVERYBODY'S MIND.

I THINK THAT'S WHAT LED TO THE CONVERSATION ABOUT MOUS VERSUS THE COMPETITIVE MARKET.

BUT, UH, AFFORDABILITY IS A PRIORITY FOR US AS WELL.

AND WE, WE WELCOME THE CONVERSATION ABOUT AFFORDABILITY.

THAT'S BECAUSE OUR BILLS COMPARE VERY FAVORABLY TO THE COMPETITIVE MARKET HERE IN TEXAS.

YOU CAN SEE THAT WE

[00:15:01]

THAT'S OVER $720 A YEAR THAT WE'RE SAVING FOR OUR CUSTOMERS COMPARED TO THE REST OF TEXAS.

WHAT'S EVEN MORE INTERESTING TO ME ABOUT THAT IS THAT ALL THE CUSTOMER BENEFITS AND REBATE PROGRAMS AND LOW INCOME DISCOUNTS AND SERVICE AREA LIGHTING AND SUPPORTIVE CITY SERVICES, AS WELL AS A LARGELY CARBON FREE PORTFOLIO, YET WE'RE STILL ABLE TO HAVE THE LOWER BILLS.

IT'S REALLY A TESTAMENT TO THE MUNICIPAL MODEL OF OPERATING NOT-FOR-PROFIT AND GETTING BEST OUT THE BEST OUTCOMES FOR OUR CUSTOMERS.

EARLIER I SAID THAT STATE LAW ALLOWS LOCALITIES TO OPT INTO DEREGULATION AND NO, ALMOST NOBODY HAS DONE THAT.

I THINK THIS SLIDE LAYS OUT JUST SOME OF THE REASONS WHY THAT IS.

THESE ARE SOME OF THE CONCERNS WE HAVE IN TERMS OF OUR CUSTOMER'S BILLS, FOR EXAMPLE, CREDIT BASED PRICING, UH, IN, UH, COMPETITIVE AREAS.

NOT ONLY DO WE SERVE EVERYBODY, REGARDLESS OF THEIR CREDIT, EVERYONE GETS THE SAME RATE.

AND THOSE WITH THE WORST CREDIT IN AUSTIN DON'T END UP AT A PROVIDER OF LAST RESORT WITH THE HIGHEST RATES.

ALSO, PROMOTIONAL RATES INCREASE AND THEY CAN BE CONFUSING OR NEXT TO IMPOSSIBLE TO DECIPHER BASED ON USAGE LEVELS THAT ARE REQUIRED AND THEIR FLUCTUATING CONTRACT LINKS AND EARLY TERMINATION FEES.

THE LOW RATES THAT ARE OFTEN CITED IN COMPARISONS BETWEEN MOUS AND RE IN COMPETITIVE MARKETS ARE OFTEN FOR SHORT-TERM CONTRACTS IN TERMS OF SERVICE AND DEREGULATION, CUSTOMERS WOULD U LOSE THAT UNIFIED SERVICE AND ACCOUNTABILITY WITH LESS INCENTIVE BY PROVIDERS FOR CONSERVATION.

THERE WOULD BE LIMITED CUSTOMER ASSISTANCE PROGRAMS, IF ANY, AND HIGHER DISCONNECTION RATES.

OUR COMMUNITY WOULD HAVE LIMITED INPUT INTO THE, UH, DECISION MAKING AND LITTLE FOCUS ON COMMUNITY PROGRAMS AS A FOR-PROFIT MODEL SEEKS TO OPTIMIZE PROFIT FOR SHAREHOLDERS AND NOT OPTIMIZE COMMUNITY VALUE.

AND EVERYTHING ON THIS SLIDE IS TO SAY NOTHING OF THE COMPLEXITY, TIME AND FINANCIAL BURDEN OF TRANSITIONING INTO A DEREGULATED MARKET AND WHAT THAT WOULD PUT ON CUSTOMERS AND THE COMMUNITIES.

WE SERVE THE TECHNICAL REQUIREMENTS TO ALLOW RETAIL ELECTRIC PROVIDERS TO SELL ELECTRIC PLANS TO OFFSET ENERGY, CUSTOMERS WOULD COST MANY MILLIONS OF DOLLARS AND LIKELY TAKE A DECADE.

JUST AS A A COMPARISON, LUBBOCK HAD ONLY ABOUT 60,000 CUSTOMERS AND ONLY ONE, UH, POWER PURCHASE AGREEMENT AS THEIR GENERATION PORTFOLIO.

AND IT TOOK THEM EIGHT YEARS AND $75 MILLION, UH, TO OPT INTO THE DEREGULATED MARKET.

SO FOR AUSTIN, CUSTOMERS WOULD POTENTIALLY HAVE TO PAY BILLIONS OF DOLLARS IN STRAIGHTED COSTS FOR DIVESTING GENERATION INFRASTRUCTURE AND POWER PURCHASE AGREEMENTS.

SO JUST TO SUMMARIZE, WE HAVE THE MOST DIVERSE GENERATION PORTFOLIO IN TEXAS.

WE'RE A CLEAN ENERGY LEADER, NOT ONLY IN TEXAS, BUT ACROSS THE NATION.

OUR RELIABILITY METRICS ARE SIGNIFICANTLY BETTER THAN THE TEXAS AVERAGE.

AND WE HAVE SOME OF THE LOWEST BILLS IN TEXAS.

WE HAVE NEARLY 40 PROGRAMS DESIGNED TO, UM, SAVE CUSTOMERS ENERGY AND MONEY.

OUR CUSTOMER ASSISTANCE PROGRAMS ARE NATIONALLY RECOGNIZED.

AND BECAUSE AUSTIN ENERGY IS NOT FOR PROFIT, NOT ONLY DO WE HAVE AFFORDABLE BILLS, BUT EVERY PENNY WE EARN IS REINVESTED LOCALLY IN OUR ELECTRIC SYSTEM, OUR ENERGY FUTURE.

AND IN OUR COMMUNITY.

ALL OF US AS AUSTIN ENERGY CUSTOMERS OR CUSTOMERS IN MUNICIPALLY OWNED AREAS OFTEN DON'T KNOW HOW GOOD WE HAVE IT.

AUSTIN ENERGY OUTPERFORMS THE REST OF TEXAS IN SO MANY WAYS, AND WE DO IT AFFORDABLY.

WE HAVE A GREAT STORY TO TELL IN TERMS OF HOW MUCH VALUE YOU GET FOR YOUR AUSTIN ENERGY BILL CHAIR.

THAT'S MY PRESENTATION THIS MORNING.

I'M HAPPY TO ANSWER ANY QUESTIONS.

THANK YOU, UH, VERY MUCH.

UH, MR. RILEY, REALLY GREAT, UH, PRESENTATION.

UH, COUNCIL MEMBER FUENTES.

THANK YOU.

THANK YOU MANAGER RILEY.

UM, WE'VE ALL GOTTEN OUR UTILITY BILLS FOR THE MONTH OF AUGUST, ONE OF THE HOTTEST MONTHS OF THE YEAR.

CERTAINLY HAVE SEEN, UH, A MUCH HIGHER BILL AMOUNT THAN WE'VE BEEN USED TO, AND ESPECIALLY COMPARED TO LAST SUMMER.

AND IT STRUCK ME THE CONVERSATION WE HAD DURING BUDGET ABOUT THE IMPACT OF THE REGULATORY CHARGE ON OUR UTILITY BILL, AND THAT HOW WE COULD HAVE ACTUALLY SAVED RATE PAYERS MONEY, UM, DURING THE BUDGET ADOPTION PROCESS.

HOWEVER, BECAUSE OF THE REGULATORY CHARGE DETERMINED BY THE STATE, THERE WAS GONNA BE A FEE INCREASE OVERALL.

CAN YOU SPEAK TO THAT PLEASE? SURE.

YEAH.

OUR, UM, THE LARGEST COMPONENT OF THE, OF OUR RATE INCREASES THIS YEAR.

AND I, I MENTIONED IN THE PRESENTATION THAT OUR RATES ARE STILL IN THE COMING FISCAL YEAR GOING TO BE CHEAPER, UH, IN THE END THAN THEY WERE TWO YEARS AGO.

UM, ALL IN, WHEN YOU LOOK AT ALL THE RATES ON THE BILLS, BUT, UM, REALLY OUR RATES WOULD'VE GONE DOWN AGAIN, HAD, HAD IT NOT BEEN FOR THE REGULATORY CHARGE.

THE REGULATORY CHARGE IS NOT SET BY AUSTIN ENERGY.

THAT IS OUR, OUR PROPORTIONATE SHARE OF WHAT WE ARE CHARGED FOR TRANSMISSION COSTS ACROSS THE STATE.

SO THOSE COSTS ARE SOCIALIZED TO ALL THE UTILITIES.

AND, UH, SO AS MORE AND MORE TRANSMISSION BUILD OUT GOES ON ACROSS ERCOT, WE ARE, UH, CHARGED OUR, UH, WE'RE ALLOCATED OUR PORTION OF THOSE CHARGES.

AND

[00:20:01]

UM, WHICH IS, WHICH IS GREATER THAN WHAT THE NET IMPACT WHAT WOULD'VE, UH, ULTIMATELY WAS FOR THE CUSTOMER BILL.

SO ULTIMATELY IT WOULD'VE GONE DOWN HAD IT NOT BEEN FOR THAT.

THAT'S RIGHT.

YEAH.

I THINK IT'S JUST IMPORTANT FOR US TO, UH, KEEP THAT TOP OF MIND IN THE CONVERSATIONS WE'RE HAVING WITH OUR COMMUNITY, ESPECIALLY GIVEN THE, THE LATEST UTILITY BILL THAT WE ALL RECEIVED.

THANK YOU.

THANK YOU.

COUNCIL MEMBER LANE.

THANK YOU.

UM, THANK YOU FOR THE PRESENTATION AS YOU KNOW, AND, AND ALSO MY COLLEAGUES KNOW, I CAME TO THE DAAS AFTER BEING SWORN IN WITH MANY, MANY QUESTIONS ABOUT RELIABILITY AND RESILIENCE AND AMONG OTHER TOPICS.

AND I JUST WANT TO THANK YOU FOR THIS VERY CLEAR AND HELPFUL AND USEFUL PRESENTATION ON ALL THE BENEFITS OF THE WAY THAT AUSTIN ENERGY HAS ADDRESSED THESE SORTS OF ISSUES.

UM, AND ALSO YOUR WILLINGNESS TO MEET WITH ME AND MY OFFICE AGAIN AND AGAIN UNTIL OUR QUESTIONS WERE RESOLVED.

I REALLY, AS SOMEONE WHO ARRIVED WITH A VOICE THAT WAS QUESTIONING, UM, HAVE BEEN VERY SATISFIED WITH THE PROBLEM SOLVING THAT I'VE SEEN.

AND I, I JUST WANNA THANK YOU FOR THIS PRESENTATION.

THANK YOU.

I DON'T HAVE ANY QUESTIONS.

THANK YOU.

THEY'VE BEEN ANSWERED.

.

IF, IF I, I, I DO NEED TO JUST TO POINT OUT THAT EVEN THOUGH I TALK ABOUT OUR RELIABILITY METRICS AND HOW THEY COMPARE TO TEXAS, OUR ELECTRIC SYSTEM RESILIENCY PLAN IS A BIG EFFORT.

WE KNOW THAT OUR CUSTOMERS EXPECT US TO DO BETTER.

WE'RE GOING TO DO BETTER FOR OUR CUSTOMERS.

IT'S A BIG PLAN.

IT'S A 10 YEAR, $735 MILLION PLAN.

SO WE'RE GOING TO BE INVESTING A LOT IN OUR SYSTEM TO MAKE IT MORE RELIABLE BECAUSE REALLY JUST COMPARING US TO THE REST OF THE STATE, IT STILL DOESN'T GET OUR CUSTOMERS TO THE OUTCOMES THAT WE WANT THEM TO BE AT.

AND WE KNOW THEY'VE BEEN THROUGH SOME REALLY CHALLENGING OUTAGE, UH, EXPERIENCES IN THE PAST, SO, SO WE'RE LOOKING TO DO BETTER.

BUT I APPRECIATE YOUR COMMENTS.

THANK YOU.

THANK YOU.

COUNCIL MEMBER WALTER, THANK YOU VERY MUCH.

I WANTED TO JUST KIND OF, UH, PIGGYBACK ON, ON SOMETHING YOU TALKED ABOUT AND, AND YOU KNOW, WE HAVE THIS DEREGULATED MARKET STATEWIDE, RIGHT? WE HAVE, UM, THE GENERATORS, THE TDU AND, AND THE REPS, AND JUST LOOKING AT EVEN JUST ONE OF THOSE, YOU KNOW, PEOPLE I'VE, I'VE TALKED TO WHEN THEY BRING UP THE AUSTIN ENERGY QUESTION, YOU KNOW, OFTEN IT GOES TO THE GENERAL FUND TRANSFER PART OF THAT CONVERSATION.

AND, UH, DO GENERATORS IN THE ERCOT MARKET, DO THEY MAKE A PROFIT? YES.

EACH, AT EACH OF THOSE LEVELS THAT I SHOWED ON THAT SLIDE, UM, EACH OF THOSE ENTITIES IS, IS MAKING A PROFIT AT EACH STEP IN THAT, IN THAT CHAIN.

YEAH.

SO I, I DON'T EXPECT YOU TO KNOW THIS NUMBER OFF THE TOP OF YOUR HEAD, BUT I LOOKED IT UP.

RA ONE OF THE BIGGEST GENERATORS IN TEXAS, THEIR PROFITS ARE ALMOST A BILLION DOLLARS LAST YEAR.

UH, AND THOSE PROFITS WENT TO, THEIR SHAREHOLDERS WENT TO THEIR CEO, WHO'S MAKING 19 OR $16 MILLION.

I KNOW YOU'RE NOT MAKING $16 MILLION.

UH, SORRY ABOUT THAT .

BUT, UM, WHEN, WHEN WE, AND, AND I KNOW IT'S NOT PROFIT BECAUSE WE ARE NOT-FOR-PROFIT, BUT, UH, SOME OF THOSE COSTS GO TO HELP PAY FOR THINGS THROUGH THE GENERAL FUND TRANSFER.

THOSE ARE NOT TO SOME CEO, THEY'RE, THEY'RE TO THE PUBLIC, RIGHT? LIKE THAT, THAT IS HOW OUR SYSTEM BENEFITS EVERYBODY.

UM, CAN YOU JUST KIND OF SPEAK TO WHY THAT, WHY IT'S STRUCTURED THE WAY IT IS? WELL, YEAH, UH, ABSOLUTELY.

SO, YOU KNOW, THE LAW PROVIDES THAT MUNICIPALLY OWNED UTILITIES, UM, CAN PROVIDE A, A, A, A BENEFIT BACK TO THEIR CITY FOR THE RISK THAT THEY TAKE ON FOR TAKING ON THIS, THIS ENTERPRISE.

AND IT'S A SIGNIFICANT RISK.

I MEAN, WE'VE TALKED TO THIS COMMITTEE, WE'VE TALKED TO CITY COUNCIL ABOUT THE RISKS OF OPERATING IN THIS MARKET, UM, THE FINANCIAL CHALLENGES THAT WE'VE HAD.

AND, UM, AND SO THERE IS A, A VALUE BACK TO THE COMMUNITY FOR OWNERSHIP.

UM, YOU KNOW, NOT ONLY DO WE NOT MAKE A, MAKE A PROFIT LIKE THOSE OTHER ENTITIES DO, WE, YOU KNOW, WE'RE NOT PAYING THE CITY TAXES FOR ALL OF OUR PROPERTIES FOR, WE'RE NOT PAYING A FRANCHISE FEE TO THE CITY OF AUSTIN.

SO IN TERMS OF ALL OF THE, THE DIFFERENT, UM, THE DIFFERENT FUNDING STREAMS THAT WOULD BE COMING TO A CITY, YOU KNOW, OUR OUR GENERAL FUND TRANSFER IS, IS QUITE MODEST WHEN YOU COMPARE IT TO WHAT'S GOING ON IN, IN A LOT OF OTHER PLACES.

GREAT.

WELL, THANK YOU VERY MUCH.

I APPRECIATE IT.

THANK YOU VERY MUCH, .

THANK YOU CHAIR, AND THANK YOU JIM RILEY FOR THIS, UH, VERY INFORMATIVE PRESENTATION AND REALLY FOR ESTABLISHING HOW IMPORTANT MUNICIPALLY OWNED UTILITIES ARE AND HOW THEY CAN BENEFIT A COMMUNITY.

UH, ONE AREA IN WHICH I SEE AUSTIN ENERGY AS A REAL LEADER AND WHICH BEING A PUBLIC UTILITY UNIQUELY HELPS US ACT ON IS DEMAND SIDE MANAGEMENT

[00:25:01]

SOME OF THESE ARE SMALLER SCALE, BUT IMPACTFUL FOR OUR RESIDENTS, LIKE OUR WEATHERIZATION PROGRAM.

OTHERS LIKE THE AUSTIN ENERGY GREEN BUILDING PROGRAM AND COMMERCIAL REBATES PROGRAM HAVE SIGNIFICANT IMPACTS ON THE AMOUNT OF ENERGY USED ACROSS THE COMMUNITY.

SO IT SEEMS LIKE FOR A FOR-PROFIT ENERGY COMPANY, WHETHER IT'S A RETAIL ELECTRIC PROVIDER OR A POWER GENERATION COMPANY, HELPING PEOPLE USE LESS ENERGY AND SPEND LESS MONEY ON THEIR ENERGY BILLS WOULD GO AGAINST THEIR FIDUCIARY DUTY TO MAXIMIZE PROFIT.

AND SO, CAN YOU TALK A LITTLE BIT ABOUT WHY AUSTIN ENERGY CONTINUES TO MAKE DEMAND SIDE MANAGEMENT A PRIORITY? YES, THANK YOU.

UM, AND THAT'S WHY WHAT IN MY PRESENTATION, I, I, I STATED A FEW TIMES THAT REALLY WE EXIST TO MAXIMIZE COMMUNITY VALUE, TO MAXIMIZE CUSTOMER BENEFIT, NOT TO MAXIMIZE PROFITS, BECAUSE IT, IT REALLY IS THE FUNDAMENTAL DIFFERENCE IN THE OPERATING MODELS BECAUSE IF, IF WE CAN SELL LESS OF THE THING THAT WE SELL, WE KNOW WE'RE DOING A, A BETTER JOB FOR OUR CUSTOMERS, WE'RE STAYING MORE AFFORDABLE, WE'RE ALSO AVOIDING COSTS, UM, IN THE ERCOT MARKET IN TERMS OF GENERATION PORTFOLIO ADDITIONS AND THINGS LIKE THAT.

SO WHEN WE LOOK TO OUR REBATE PROGRAMS, OUR DEMAND RESPONSE PROGRAMS, EVERYTHING WE'RE DOING, I SHOWED THAT ONE SLIDE THAT SHOWS OUR, OUR PORTFOLIO, THE WIRES AND GETTING TO THE CUSTOMER.

SO A LOT OF THE TIME WHEN I TALK TO PEOPLE, I'LL TALK ABOUT LIKE, THAT'S THE GRID.

EVERYTHING ON THAT SLIDE IS THE GRID, EVEN THAT CUSTOMER'S HOME, BECAUSE MORE AND MORE WITH SMART DEVICES THAT WE CAN LEVERAGE AND DEPLOY BATTERIES OR DEPLOY THERMOSTAT DEMAND RESPONSE, THEN WE ARE GETTING TO A BETTER OUTCOME OF USING LESS.

THAT'S THE SAME THING.

IT'S A VIRTUAL POWER PLANT THAT'S AVOIDING, UH, US HAVING TO BUILD MORE AND MORE AND SELL MORE AND MORE.

SO IT'S GETTING TO A BETTER OUTCOME FOR THE CUSTOMER AND FOR THE ENVIRONMENT, AND IT'S BETTER FOR AFFORDABILITY.

THANK YOU, JIM.

AND, UM, JUST ONE MORE COMMENT AND QUESTION, UM, SEPARATELY FROM, FROM AUSTIN ENERGY, WE'VE HAD A CONVERSATION ABOUT PRIVATE GAS PROVIDERS AND WE HEARD FROM THE COMMUNITY, YOU KNOW, NUMEROUS CONCERNS REGARDING THE INFRASTRUCTURE INVESTMENTS THEY MAKE, WHICH SOME THINK ARE MAYBE UNNECESSARY OR TOO EXPENSIVE.

AND I WONDER IF YOU COULD SPEAK TO HOW AUSTIN ENERGY MAKES INFRASTRUCTURE INVESTMENTS AND PRIORITIZES THOSE INVESTMENTS AND WHO FITS THE BILL? UM, SURE.

YEAH.

SO ONE THING REALLY KEEPING WITHIN THE ELECTRIC MARKET, I THINK, UM, THE, IN, IN WITH, WITH TD TRANSMISSION DISTRIBUTION, UTILITIES, I TALKED ABOUT THE RETURN ON EQUITY.

SO FOR, FOR THEIR INFRASTRUCTURE, THEY'RE GETTING A GUARANTEED RATE OF RETURN ON THAT, THAT INFRASTRUCTURE BUILD OUT.

AND, UM, AND SO THERE MIGHT BE AN INCENTIVE TO, TO BUILD MORE INFRASTRUCTURE, TO GET MORE OF THAT RATE OF THAT RETURN ON EQUITY.

UM, FOR US, WHEN WE HAVE NEW INFRASTRUCTURE BUILD OUT, IF WE'RE LOOKING FOR EXAMPLE, UH, AT, AT INFRASTRUCTURE THAT'S NEEDED TO SERVE A LARGE CUSTOMER, THAT CUSTOMER IS PAYING FOR THAT INFRASTRUCTURE TO SERVE THAT LARGE CUSTOMER.

AND IN THAT WAY, WE'RE PROTECTING OUR CUSTOMERS FROM THOSE INCREASES BECAUSE WE ARE NOT GETTING A RATE OF RETURN ON THAT INFRASTRUCTURE ANYWAY.

SO WE WOULD RATHER PROTECT OUR EXISTING CUSTOMERS FROM HAVING TO, UM, ABSORB THE RATE INCREASES FROM BUILDING THAT OUT.

AND SO THAT'S TYPICALLY THE MODEL OF WHAT WE WOULD, WE WOULD LOOK TO.

AND, UM, SURE THERE'S INFRASTRUCTURE THAT WE'RE HAVING TO BUILD ALL THE TIME WHERE I MENTIONED THE ELECTRIC SYSTEM RESILIENCY PLAN.

THERE IS INFRASTRUCTURE THAT WE'RE NEEDING TO BUILD OUT TO HELP CUSTOMERS THAT WILL COME THROUGH IN RATES, BUT ULTIMATELY WE'RE LOOKING TO DO THAT IN A REALLY PRUDENT MANNER THAT WILL SERVE CUSTOMERS WELL AND ISN'T AIMED AT OUR BOTTOM LINE BECAUSE WE'RE, WE'RE JUST NOT FINANCIALLY MOTIVATED, WE'RE MOTIVATED TO DO RIGHT BY THE CUSTOMER.

THANK YOU VERY MUCH.

AND THAT'S SOMETHING WE HEARD FROM MR. ROBBINS EARLIER, THIS MAYBE, UH, INCENTIVE TOWARDS GOLD PLATING INFRASTRUCTURE THAT DOESN'T EXIST IN THE CONTEXT OF OUR MOU.

UM, THANKS VERY MUCH, CHAIR.

THANK YOU.

UH, COUNCILMAN UCHIN.

THANK YOU, CHAIR.

THANK YOU FOR THE PRESENTATION, GM RILEY, I WANTED TO START AT THE BEGINNING THAT YOU STARTED OUT, WHICH IS THE NEW ERCOT SUMMER DEMAND PEAK WHERE WE, YOU'RE SHOWING THAT A DELTA OF ABOUT FIVE OR 6,000 NEW MEGAWATTS SINCE THE LAST PEAK MM-HMM .

FIRST, WHAT'S DRIVING THAT PEAK AND WHAT'S THE IMPLICATION FOR AUSTIN ENERGY AND ULTIMATELY THE COUNCIL IN SHARING THAT INFORMATION? YES.

SO THE, WHAT'S DRIVING THAT PEAK IS IT, IT'S A LOT OF THINGS.

IT'S POPULATION GROWTH.

UM, O OBVIOUSLY IT'S LOAD GROWTH COMES FROM A LOT OF THINGS.

SO LOAD GROWTH COMES FROM NEW RESIDENTS TO TEXAS.

IT COMES FROM ELECTRIC VEHICLES THAT MIGHT NOT BE CHARGING AT THE, AT THE APPROPRIATE TIME.

IT MIGHT BE CHARGING AT PEAK.

IT COMES FROM LARGE LOADS, WHICH COULD INCLUDE, UM, INDUSTRIAL MANUFACTURING, IT COULD INCLUDE DATA CENTERS.

SO THE IMPLICATIONS TO AUSTIN ENERGY IN TERMS OF AS ERCOT PEAK DEMAND KEEPS GOING UP, UM, THE IMPLICATION IS THAT THERE CAN BE MORE TRANSMISSION CONGESTION AND THERE CAN BE MORE SCARCITY AND MORE VOLATILITY IN THE ERCOT MARKET.

THIS SUMMER, WE

[00:30:01]

SO WE SAW THAT WHEN AS, AS THE SUN IS, IS RAMP, SOLAR ENERGY IS RAMPING DOWN, WE SAW NOT ONLY MORE BATTERY DEPLOYMENT, BUT WE ALSO SAW THE WIND FILLING IN THE GAP QUITE NICELY.

UM, BUT THERE HAVE BEEN OTHER YEARS WHERE THAT DIDN'T HAPPEN QUITE AS, AS SEAMLESSLY.

AND SO IT DOES CREATE MORE VOLATILITY, AND AS THIS LOAD GROWTH IS PICKING UP MORE AND MORE STEAM, THERE CAN BE MORE TRANSMISSION AND PORT CONGESTION THAT RAISES PRICES FOR OUR CUSTOMERS.

SO WE JUST WANNA MAKE SURE WE HAVE THE POWER GENERATION PORTFOLIO THAT CAN INSULATE OURSELVES FROM THAT.

SO THAT'S REALLY DRIVING OUR CONVERSATION AROUND LOCAL POWER GENERATION.

THAT'S RIGHT.

OKAY.

AND THEN WHAT'S YOUR, IF YOU HAD TO MAKE A PREDICTION OR YOU'VE GOT SOME DATA YOU CAN SHARE WITH US, WHAT ARE YOUR EXPECTATIONS FOR 27, 28 AND BEYOND AS FAR AS PEAK DEMAND? WELL, UM, AND, YOU KNOW, WE ARE SEEING MORE LOAD HERE, EVEN HERE IN AUSTIN.

WE DID NOT SEE A NEW PEAK DEMAND RECORD.

WE'RE, WE'RE, WE'RE MANAGING THAT QUITE WELL.

BUT, UM, AS LOAD OVERALL IS GROWING AND AS LOAD IS GOING UP ACROSS ERCOT, UM, I THINK EVERYBODY'S PREDICTION IS THAT IT'S GONNA GO UP.

IT'S JUST A QUESTION OF HOW FAST IS IT GOING UP? BECAUSE I'VE TALKED TO THIS COMMITTEE ABOUT SOME PREDICTIONS THAT IT'S, THAT, YOU KNOW, IN THE NEXT SIX YEARS, THE ERCOT LOAD IS, IS GONNA GO UP FIVE OR SIX TIMES, AND NOBODY THINKS THAT THAT'S EVEN POSSIBLE.

BUT EVEN IF IT ONLY GOES UP BY, YOU KNOW, 50% IN, IN SIX YEARS, OR IF IT DOUBLES IN SIX YEARS, IT'S STILL VERY, VERY SUBSTANTIAL.

AND ENSURING THAT WE HAVE ENOUGH RESOURCES ACROSS THE MARKET, ACROSS ERCOT, TRANSMISSION, BUILD OUT, GENERATION, BUILD OUT JUST TO PROTECT CUSTOMERS, I THINK IS REALLY GONNA BE REALLY IMPORTANT.

OKAY.

THAT'S ALL I'VE GOT.

THANK YOU.

THANK YOU, CHAIR.

UH, THANK YOU, UH, VERY MUCH.

UH, PIGGYBACKING OFF OF COUNCIL MEMBER DUCHESS QUESTION, WAS THERE, UH, HOW WAS THE STRESS ON THE GRID WITH REGARD TO THE NEW PEAK DEMAND? IN OTHER WORDS, FROM A STATEWIDE PERSPECTIVE, HOW IS, UH, HOW ARE WE HANDLING THAT, THAT THAT PEAK DEMAND? WELL, THERE WERE, THERE WERE, JUST TO COMPARE THIS SUMMER TO, FOR EXAMPLE, SUMMER OF 2023, UH, I THINK THERE WERE, YOU KNOW, SOMETHING LIKE A DOZEN CONSERVATION ALERTS OR, YOU KNOW, UH, OR CAUGHT ALERTS OF SOME KIND FOR CONSERVATION.

WE DIDN'T HAVE ANY CONSERVATION ALERTS OR ENERGY EMERGENCY ALERT LEVELS OR ANYTHING LIKE THAT THIS YEAR.

THERE WERE POCKETS OF, OF DIFFICULTY, YOU KNOW, JUST IN TERMS OF TRANSMISSION, UM, ISSUES.

THERE ARE POCKETS OF HIGH PRICING.

THERE ARE PERIODS OF VERY HIGH PRICING, BUT NOTHING LIKE WHAT WE'VE SEEN IN, UH, IN SOME OF THE RECENT YEARS.

UH, 2023, MOST NOTABLY, UM, IT WAS A LITTLE BIT HOTTER.

UM, THERE'S MORE BATTERIES ON THE, ON THE SYSTEM.

THERE'S MORE SOLAR.

SO, AND, AND AGAIN, JUST MOTHER NATURE HELPING OUT WITH THE WIND, KIND OF FILLING IN SOME OF THOSE GAPS.

SO THERE WEREN'T THE, THOSE PERIODS OF STRESS.

UM, WE USED TO TALK A LOT IN THE INDUSTRY ABOUT A SUMMER AFTERNOON.

WHAT ABOUT RESOURCE ADEQUACY FOR A SUMMER AFTERNOON? THAT'S THE ERCOT PEAK, YOU KNOW, AND MORE AND MORE IT'S, IT'S THE WINTERS THAT, THAT I THINK WILL BECOME AS, AS MORE SOLAR BUILD OUT AND MORE BATTERY BUILD OUT HAPPENS.

WE REALLY, THOSE HIGH PRICE, THE REALLY VOLATILE PERIODS, THE REALLY, UM, STRESSED GRID PERIODS WILL PROBABLY BE IN THOSE KIND OF FEBRUARY EVENTS MORE AND MORE.

BUT WE'LL, WE'LL, WE STILL SEE SOME VERY HIGH PRICES IN THE SUMMER.

MM-HMM .

IT'S BEEN THE, THE, THE GROWTH IN, UH, BATTERIES AND, UH, SOLAR ON THE TEXAS GRID, BROADLY SPEAKING AGAIN, WHICH WE'RE VERY MUCH A PART OF ABSOLUTELY, UH, HAS BEEN, UH, HAS BEEN TREMENDOUS.

UM, WELL, AGAIN, APPRECIATE THE PRESENTATION.

I, I JUST WANNA SAY, IT'S, IT'S PHENOMENAL THAT GIVEN WHAT WE DO OFFER, THAT THE PRIVATE SECTOR DOESN'T OFFER CUSTOMER ASSISTANCE PROGRAM, UH, VERY ENERGY EFFICIENCY REBATES, UH, VERY HIGH LEVEL OF RENEWABLE AND CARBON FREE ENERGY.

UH, YOU MENTIONED THE LOW DISCONNECT RATES, BUT I MEAN, THEY WERE VERY LOW WHEN YOU LOOK AT THE PRIVATE SECTOR DISCONNECT RATES COMPARED TO THE AUSTIN ENERGY DISCONNECT RATES, WHICH, UH, THAT'S A GREAT, GREAT VALUE TO THE WORKING CLASS FOLKS OF AUSTIN WHO MIGHT GET BEHIND ON AN ELECTRIC BILL, BUT THE UTILITY IS WILLING TO WORK WITH THEM, GET THEM ON A PAYMENT PLAN, AND NOT DISRUPT THEIR LIVES WITH A, A DISCONNECTION LIKE THAT.

SO, UH, IT, IT, IT'S, IT'S, AND WE DO ALL OF THAT, AND WE DO IT, AND WE SELL ELECTRICITY CHEAPER THAN VIRTUALLY ANYBODY ELSE IN, UH, THE STATE OF TEXAS.

SO I, I THINK THAT'S A PHENOMENAL ACHIEVEMENT.

UH, I DON'T REALLY WOULD, ESPECIALLY FROM A LOCAL LEVEL, I JUST DON'T SEE ANY BENEFITS WHATSOEVER TO THE AUSTIN ENERGY CUSTOMERS FROM ANY KIND OF, YOU KNOW, BREAK APART OF THE UTILITY OR PRIVATIZATION OR WHATEVER THE CASE MAY BE.

SO I JUST DON'T REALLY UNDERSTAND WHERE THE, THE PROPOSALS ARE, ARE, ARE COMING FROM THAT, THAT WE'VE, UH, SEEN OUT THERE.

UM, COUPLE OF JUST FINAL QUESTIONS.

IS IT, IS IT STANDARD PRACTICE FOR THE MUNICIPALLY OWNED UTILITIES TO DO A GENERAL TRANSFER? DO VIRTUALLY ALL THE, THE

[00:35:01]

YEAH.

AND THAT GOES BACK A HUNDRED YEARS.

I MEAN, HOW LONG HAVE, HAVE CITIES IN TEXAS BEEN DOING THAT? LIKELY, AS LONG AS THOSE UTILITIES HAVE BEEN AROUND, AND, AND LIKE I MENTIONED, IT IS SPECIFICALLY PERMITTED BY STATE LAW AND IT'S, IT'S BASICALLY THE VALUE PROPOSITION AND, AND COMPENSATES THESE CITIES FOR THE RISKS THAT THEY TAKE ON WITH THESE OPERATIONS.

YEAH, I, I JUST, I MEAN, THIS IS SOMETHING THAT IS ROOTED IN, UH, UH, TEXAS, UH, TRADITION.

UH, THIS IS SOMETHING THAT'S REALLY ROOTED IN, I KNOW IT NOWADAYS AS A REACTIONARY KIND OF POLITICS THAT WE'RE IN TODAY.

WE FORGET ABOUT TEXAS KIND OF POPULIST, UH, PAST, BUT THAT'S SOMETHING THAT I THINK IS ROOTED IN, IN TEXAS KIND OF HISTORICALLY POPULIST POLITICS.

UH, AND JUST A TREMENDOUS ADVANTAGE TO SO MANY PEOPLE.

AND THERE WAS A GREAT, UH, UH, STATESMAN ARTICLE ACTUALLY ON, I BELIEVE IT WAS A STATESMAN ON A SMALL TOWN, UH, AND WITH A TINY LITTLE UTILITY THAT THERE'S NO WAY THAT THEY HAVE THE POLICE DEPARTMENT OR THE FIRE DEPARTMENT THEY HAVE WITHOUT THAT, YOU KNOW, TINY LITTLE UTILITY THAT SERVES LIKE 800 PEOPLE OR SOMETHING LIKE THAT.

YEAH.

SO, UH, AGAIN, UH, APPRECIATE THE UPDATE, UH, KEEP UP, UH, THE, THE GOOD WORK AND WE WILL, UH, LOOK FORWARD TO HEARING FROM YOU AGAIN SOON.

MR. RILEY.

THANK YOU.

THANK YOU, CHAIR.

RIGHT

[4. Briefing on the Third Quarter Financial Highlights Report. [Stephanie Koudelka, Chief Financial Officer - Austin Energy]]

UH, COME ON UP, STEPHANIE.

GOOD MORNING, CHAIR AND COMMITTEE.

AGAIN, MY NAME IS STEPHANIE ALKA.

I'M AUSTIN ENERGY'S CHIEF FINANCIAL OFFICER.

I'M GONNA RUN THROUGH A BRIEFING ON OUR THIRD QUARTER FINANCIAL RESULTS FOR THE PERIOD ENDED JUNE OF FY 2026.

EXCUSE ME.

NEXT SLIDE, PLEASE.

YOUR PACKET HAS A FULL AGENDA FOR OUR FINANCIAL POSITION AS OF THE END OF JUNE.

I PROPOSE JUST TO HIT THE HIGHLIGHTS FOR YOU IN AN EXECUTIVE SUMMARY.

I'M HAPPY TO RUN THROUGH ANY OF THE PRESENTATION YOU'D LIKE ON THE NEXT SLIDE.

I'LL HIT THE HIGH POINTS FOR OUR FINANCIAL POSITION AT JUNE, STARTING WITH OUR OPERATING RESULTS.

UM, OUR OPERATING INCOME WAS UNDER BUDGET, UH, BY ABOUT 2% AS OF JUNE.

THAT'S PRIMARILY DRIVEN BY LOWER RESULTS IN OUR WHOLESALE TRANSMISSION REVENUE RATE.

UM, WE EXPECTED THAT RATE TO START A LITTLE BIT EARLIER ON AN INTERIM BASIS.

SO THAT'S WHY RESULTS ARE, UM, UNDER BUDGET OR UNFAVORABLE AS OF THE END OF THE QUARTER.

FOR OUR BOND RATING, WE ARE STILL SITTING AT A DOUBLE A MINUS PER STANDARD AND POS, THAT'S OUR FINANCIAL HEALTH TARGET AS A DOUBLE A RATING.

AND WE DO HAVE A STABLE OUTLOOK ISSUED BY STANDARD AND PORES, WHICH IS GOOD NEWS FOR THE UTILITY.

UM, WE PLAN TO GO TO THE BOND MARKET IN A COUPLE OF MONTHS AT THE END OF, UH, THIS CALENDAR YEAR.

SO THE UTILITY WILL BE, UH, RATED BY THREE RATING AGENCIES DURING THAT PERIOD.

MOVING ON TO FINANCIAL POLICIES, WE ARE IN SUBSTANTIAL COMPLIANCE WITH OUR FINANCIAL POLICIES.

UM, NOT MUCH HAS CHANGED HERE.

UM, WE'VE PRESENTED TO YOU IN THE LAST FEW QUARTERS THAT WE'VE HAD OUR RESERVE BALANCES NOT MEETING INDIVIDUAL TARGETS.

UM, AGAIN, NOT MUCH HAS CHANGED THERE.

WE ARE, UH, SITTING AT 188 DAYS CASH ON HAND.

UM, THAT DOES INCLUDE ABOUT 30 DAYS OF A POWER SUPPLY ADJUSTMENT OVER RECOVERY.

UM, WE CONTINUE TO MONITOR THAT OVER RECOVERY AND THAT RATE VERY CLOSELY.

WE LOOK AT THAT ON A MONTHLY BASIS TO MAKE SURE WE ARE, UM, MANAGING THAT ACCORDINGLY TO CREATE BILL STABILITY FOR OUR CUSTOMERS.

ON THE NEXT SLIDE, I'LL RUN THROUGH JUST AT A VERY HIGH LEVEL OUR, UM, METRICS, KEY FINANCIAL METRICS.

AND WE LOOK AT THESE AGAIN FOR AA RATING TO CONTINUE TO HAVE LOW, UM, DEBT COSTS FOR OUR CUSTOMERS.

I JUST WENT THROUGH DAY'S CASH ON HAND.

I'LL MOVE TO DEBT SERVICE COVERAGE.

WE'RE SITTING AT 2.5 TIMES, YOU CAN SEE WE'RE MEETING THE TARGET THERE, WHICH IS A POSITIVE FOR AUSTIN ENERGY.

BUT AS STUART MENTIONED, AND YOU JUST DISCUSSED, WE HAVE A RESILIENCY AND RELIABILITY INVESTMENTS ON THE HORIZON.

UM, WE JUST NEED TO MONITOR THAT CLOSELY AND MAKE SURE THAT RATES KEEP UP WITH THOSE COSTS TO SERVE OUR CUSTOMERS AND INVEST IN OUR SYSTEM FOR OUR OPERATING MARGIN.

AGAIN, A GOOD, GOOD RESULT AS OF THE END OF JUNE.

I DO WANNA POINT OUT THAT MARGIN, UM, NEEDS TO BE HIGHER THAN OUR TARGET AS WE MOVE TOWARDS FINANCIAL HEALTH AND STABILITY.

UM, SO THAT IS NOT NECESSARILY AN INDICATOR OF HEALTH, IT'S AN INDICATOR OF OUR, OUR PATH TO FINANCIAL HEALTH.

AND FINALLY, ON OUR DEBT TO CAPITALIZATION RATIO, THAT IS JUST HOW MUCH, UH, DEBT THE UTILITY IS ISSUING ON BEHALF OF OUR CUSTOMERS.

WE ARE HIGHER THAN TARGET.

TARGET.

AGAIN, UM, AS WE LOOK TO INVEST MORE IN OUR SYSTEM, WE NEED TO MAKE SURE WE'RE BALANCING HOW MUCH LIQUIDITY WE HAVE ON HAND WITH, UM, THE DEBT WE'RE ISSUING ON BEHALF OF OUR CUSTOMERS.

AND

[00:40:01]

HAPPY TO RUN THROUGH ANY OF THE PRESENTATION IN, IN MORE DETAIL OR ANSWER QUESTIONS.

CHAIR.

UH, THANK YOU, UH, VERY MUCH.

ANY, UH, QUESTIONS FROM THE COMMITTEE? UH, NO, UH, QUESTIONS.

AND THANK YOU VERY MUCH FOR THE FINANCIAL UPDATE.

THANK YOU.

AND

[5. Briefing on the Third Quarter Operations Highlights Report. [Lisa Martin, Deputy General Manager and Chief Operating Officer - Austin Energy]]

MS. MARTIN, WELCOME.

WELL, GOOD MORNING, CHAIR VELA, VICE CHAIR SIEGEL AND COMMITTEE MEMBERS.

I'M LISA MARTIN, AUSTIN ENERGY'S CHIEF OPERATING OFFICER.

AND FOLLOWING, UH, CFO CADE'S, UM, LEAD.

I WILL ALSO JUST FOCUS ON THE HIGHLIGHTS, UM, AND THEN BE AWARE, UH, HERE FOR ANY QUESTIONS YOU MAY HAVE.

I'M GONNA SHARE SOME HIGHLIGHTS FROM THE OPERATIONS UPDATE FOR APRIL, MAY, AND JUNE, UM, WHICH IS QUARTER THREE OF FY 26.

OUR EXECUTIVE SUMMARY SHOWS THAT WE HAD 44% RENEWABLE PRODUCTION AND 63% CARBON FREE PRODUCTION, BOTH AS A PERCENTAGE OF LOAD FOR QUARTER THREE.

AS A REMINDER, THAT MEANS THAT 44 AND 63% OF OUR, UH, CUSTOMERS ENERGY USAGE WAS OFFSET BY RENEWABLE AND CARBON FREE GENERATION PRODUCED BY AUSTIN ENERGY, OUR GENERATOR RESOURCE, UH, COMMERCIAL AVAILABILITIES IN LINE WITH EXPECTED SEASONAL MAINTENANCE WORK THIS QUARTER THAT IS IN PREPARATION FOR THE FOLLOWING SUMMER MONTHS.

AND THEN YOU'LL SEE THAT OUR DISTRIBUTION RELIABILITY METRICS SHOW IMPROVEMENTS IN OUTAGE DURATION AND FREQUENCY COMPARED TO, UM, RECENT QUARTERS.

AND I DO WANNA ZOOM IN A LITTLE BIT THERE FOR YOU, ESPECIALLY IN LIGHT OF THE CONVERSATION YOU HAD WITH GM RILEY A MOMENT AGO.

BUT ALL IN ALL, THERE'S GOOD NEWS THROUGHOUT THIS, UH, QUARTERLY UPDATE, UH, TO REPORT.

I'M GONNA JUMP TO SLIDE 12.

AND AGAIN, HERE YOU SEE OUR DISTRIBUTION RELIABILITY METRICS, UM, SHOWN ON THE SLIDE, THE BARS AT THE TOP.

UH, GM RE SPOKE, UH, AT LENGTH ABOUT HOW AUSTIN ENERGY COMPARES TO THE TEXAS AVERAGE.

THE BLUE AUSTIN ENERGY BARS BEING LOWER THAN THE GREEN TEXAS AVERAGE BARS MEANS THAT WE HAVE FEWER AND SHORTER OUTAGES WHEN OUR CUSTOMERS DO EXPERIENCE THEM.

I DON'T WANNA ZOOM IN A LITTLE BIT ON THE TREND LINES, WHICH ARE TELLING A POSITIVE STORY AS WELL.

THIS QUARTER'S DATA IS BETTER THAN THE PREVIOUS, AND YOU CAN SEE THAT IN THE DISTINCT TIP IN THE TAIL OF EACH TREND LINE, ESPECIALLY THE FIRST TWO.

THIS MEANS FEWER AND SHORTER OUTAGES.

OUR WORK ON THE ELECTRIC SYSTEM RESILIENCY PLAN IS STARTING TO SHOW UP HERE.

I BELIEVE A YEAR AGO, A CUSTOMER OUTAGE DURATION FOR AFFECTED CUSTOMERS WAS 86 MINUTES.

IF YOU LOOK AT THE FAR RIGHT BLUE BAR, YOU'LL SEE THAT NOW WE'RE UNDER 78 MINUTES.

THE EIGHT MINUTE REDUCTION DEMONSTRATES A NEAR 10% IMPROVEMENT IN JUST THE FIRST YEAR OF OUR ELECTRIC SYSTEM RESILIENCY PLAN.

AND OUR RESILIENCY WORK, INCLUDING REPLACING FUSES WITH TRIP SAVERS, WHICH ARE FUSES THAT CAN RECLOSE AUTOMATICALLY, ALONG WITH TREE TRIMMING RECONDUCTORING AND INSTALLING ANIMAL GUARDS TO PROVIDE SERVICE CONTINUITY ARE ALL STARTING TO SHOW OFF.

I BELIEVE IT'S ALSO NOTEWORTHY TO SHARE THAT 31% OF OUR OUTAGES THIS QUARTER WERE DUE TO SCHEDULED WORK, WHICH WILL BENEFIT OUR CUSTOMERS IN THE COMING MONTHS AND YEAR.

AND WITH CHAIR, I WILL KEEP THE HIGHLIGHTS THERE AND TAKE ANY QUESTIONS OR COMMENTS YOU HAVE.

UM, THANK YOU, UH, VERY MUCH.

ANY, UH, QUESTIONS OR COMMENTS FROM, UH, COUNCIL MEMBER? WALTER? I WANTED TO LOOK AT THE ELECTRIC VEHICLE CHARGING AND, AND IT LOOKS LIKE Y'ALL HAVE SOME GREAT METRICS THAT THEY'RE ALL WORKING AND WORKING WELL.

UM, I DON'T KNOW IF IN THE INITIAL ROLLOUT THERE WERE CHALLENGES, BUT I'VE JUST, I'VE TALKED TO A NUMBER OF PEOPLE WHO HAVE THIS PERCEPTION THAT THE CHARGING STATIONS AROUND THE CITY ARE NEVER WORKING AND THEY CAN'T RELY ON THEM.