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[00:00:03]

OKAY.

GREAT.

UM, AND I THINK, IS THERE ANYONE WE ARE WAITING ON JEFF? THAT'S NOT ON, I THINK WE'VE GOT EVERYBODY.

I THINK IF YOU WOULD DO A ROLL CALL, THAT WOULD BE HELPFUL, BUT I AM SCANNING THE PARTICIPANT LIST AS WELL ON THAT.

CERTAINLY WE HAVE A QUORUM, BUT JUST IN CASE FOR THE RECORD.

OKAY.

OKAY.

GREAT.

ALL RIGHT THEN, UM,

[CALL MEETING TO ORDER]

WITH THAT, I WILL CALL THIS VIRTUAL MEETING OF THE ELECTRIC UTILITY COMMISSION TO ORDER IT'S JULY 17TH, 2020, UH, AT 1:00 PM.

AND WE HAVE AN ATTENDANCE FOR THE RECORD, UM, COMMISSIONER COMMISSIONER, UH, REED COMMISSIONER TUTTLE, COMMISSIONER BOIL, COMMISSIONER HATTON, AND COMMISSIONER TRUSSELL, AND MR. WELDON THAT I MISS ANYBODY.

OKAY, GREAT.

UM, OKAY.

I'VE GIVEN SOME THOUGHT TO POSSIBLE PROCESS IMPROVEMENTS, UH, SINCE OUR LAST MEETING AND FIRST I'M GOING TO TRY TO DO A MUCH BETTER JOB OF TIME MANAGEMENT.

UH, SINCE WE ARE STRICTLY LIMITED TO OUR HOUR AND A HALF.

AND AS YOU KNOW, WE HAVE THE BUDGET PRESENTATION TODAY, WHICH HAS ALWAYS, UM, YOU KNOW, A HEAVY MEATY PRESENTATION AND, AND THERE ARE OFTEN LOTS OF QUESTIONS.

SO I THINK, UM, MR. GONZALES WAS SAYING THAT HE EXPECTS TO PRESENT FOR APPROXIMATELY 35 MINUTES AND THEN WE'LL HAVE TIME FOR QUESTIONS AFTER THAT AS WELL.

OF COURSE.

SO JUST KEEPING THAT IN MIND AS WE GO THROUGH THE REST OF THE AGENDA.

UM, AND THEN, UH, THE SECOND THING I THOUGHT WE MIGHT DO THIS TIME IS SINCE MOST OF US ARE VISIBLE, UM, I THOUGHT RATHER THAN CALLING THE ROLL FOR EACH VOTE, WE COULD RAISE OUR HAND AND PHYSICALLY COUNT, UH, THE EYES OR NAYS AS WE VOTE.

UM, AND THEN I WILL CALL SPECIFICALLY FOR THOSE WHO ARE NOT ON VIDEO.

SO COMMISSIONER HAD AN, UH, COMMISSIONER TROSTLE, IT LOOKS LIKE, UM, I WILL JUST CALL FOR YOUR VOTE, UH, VERBALLY.

UH, SO THAT'S SOUNDS GOOD WITH EVERYBODY.

WE'LL WE'LL GIVE THAT A TRY.

AND, UM, JEFF, IF THAT, IF THAT'S NOT WORKING FOR YOU AND YOU CAN'T COUNT THE VOTES THAT WAY, THEN LET ME KNOW.

SOUNDS GOOD.

AND WE CAN JUST RECAP, YOU KNOW, THE VOTE WAS, AND THEN WE'RE GOOD TO GO.

OKAY, GREAT.

UM, LET'S SEE.

OKAY.

WITH THAT, UH, MOVING ON TO CITIZENS COMMUNICATIONS, DO WE HAVE ANY CITIZEN COMMUNICATIONS TODAY? WE DO NOT.

THANK YOU.

UM, MOVING ON TO APPROVAL

[1. APPROVAL OF MINUTES – Approve minutes of the June 8, 2020 regular meeting.]

OF THE MINUTES, UH, FROM THE MINUTES FROM THE JUNE 8TH MEETING WERE INCLUDED IN OUR MEETING MATERIALS.

UH, DOES ANYONE HAVE ANY EDITS OR COMMENTS TO THOSE MINUTES HEARING NONE.

I'LL ENTERTAIN A MOTION TO APPROVE THE JUNE EIGHT MINUTES.

AND IS THERE A SECOND COMMISSIONER WELDON? THANK YOU FOR THAT SECOND.

UH, ALL THOSE IN FAVOR, SAY AYE.

AYE.

UH, ANYONE OPPOSED AND COMMISSIONER TROSTLE.

COULD I GET A VERBAL RESPONSE FROM YOU? CAN WE SURE.

TRUFFLE, DID YOU VOTE ON THE APPROVAL OF THE MINUTES? OKAY.

IT'S TRUE.

SO IF YOU'RE ON A PHONE, IT MAY BE A STAR SIX TO UNMUTE.

I'M NOT SURE.

JUST A SUGGESTION.

HI, CAN YOU HEAR ME NOW? I JUST GOT AUDIO FROM YOU.

YES MA'AM.

THERE WE GO.

WE CAN HEAR YOU NOW.

THANK YOU SO MUCH.

OKAY, GREAT.

UM, COMMISSIONER TRUSSELL, WE JUST TOOK A VOTE ON THE JUNE EIGHT MINUTES, UH, FOR APPROVAL.

UM, OR ARE YOU IN FAVOR OF THAT MOTION? YES.

THANK YOU.

OKAY, GREAT.

UH, SO THE MINUTES PASS, UH, ARE APPROVED, UM, UNANIMOUSLY.

OKAY.

[Consent Agenda]

MOVING ON TO THE CONSENT AGENDA.

UM, THERE ARE FIVE ITEMS ON THE CONSENT AGENDA.

UH, WOULD ANY COMMISSIONER LIKE ANY OF THESE ITEMS FOLD HEARING NONE.

OH, CARRIE, DID I, DID I SEE YOU RAISE YOUR HAND? I MOVE APPROVAL OF THE CONSENT ITEMS. PERFECT.

IS THERE A SECOND?

[00:05:01]

AWESOME.

OKAY.

UH, AND SO ALL THOSE IN FAVOR, PLEASE SAY, AYE.

HI, ALL THOSE OPPOSED.

OKAY.

OKAY.

GREAT.

ALL OF THE CONSENT AGENDA ITEMS ARE APPROVED.

UH, THAT WAS, THAT WAS VERY QUICK.

WE WERE VERY EFFICIENT WITH OUR, THE REST OF OUR AGENDA.

NOW WE'LL MOVE ON TO, UM, OUR STAFF BRIEFINGS ON THE FIRST

[7. Presentation, discussion and possible action on Austin Energy’s Proposed FY21 Budget.]

ONE AS DISCUSSED IS THE BUDGET PRESENTATION FISCAL YEAR 21, UH, FROM, I BELIEVE JOSEPH GONZALEZ.

OH, EXCUSE ME.

UH, COMMISSIONER TRUFFLE.

YOU, ARE YOU RAISING YOUR HAND? NO, IT'S A DELAY IN MY CASE.

OKAY.

SORRY ABOUT THAT.

OKAY, PLEASE GO AHEAD, MR. GONZALES.

OKAY.

UM, IF WE COULD PULL UP THE PRESENTATION.

ALL RIGHT, SO GOOD, GOOD AFTERNOON, COMMISSIONERS.

MY NAME IS JOSEPH .

I AM A FINANCE DIRECTOR WITH AUSTIN ENERGY OVER FINANCIAL PLANNING AND BUDGET.

AND, UH, THIS AFTERNOON I'LL BE PROVIDING AN UPDATE ON AUSTIN.

ENTITY'S PROPOSED BUDGET.

NEXT TIME PLEASE.

UH, TODAY WE'LL COVER THE BUDGET ADOPTION SCHEDULE, UH, PROVIDE A HIGH LEVEL OVERVIEW OF THE PROPOSED BUDGET.

UM, THEN WE'LL, UH, UH, GO OVER THE FINANCIAL HEALTH CONDITION OF AUSTIN ENERGY, UH, FOLLOWED BY MORE DETAILED INFORMATION AND HIGHLIGHTS FOR THE MAJOR BUSINESS UNITS AND THEN CONCLUDE WITH, UH, YOU KNOW, TEAR UP AND FEED CHANGE, UH, UPDATES.

UH, NEXT SLIDE.

THESE ACTUALLY ONE MORE.

NEXT SLIDE PLEASE.

ALRIGHT.

UM, HERE'S THE, UH, THE BUDGET ADOPTION SCHEDULE.

UM, NOW GENERALLY WE WOULD PROVIDE THIS AT THE END OF OUR BUDGET PRESENTATION TO JUST GO OVER THE TIMELINE, BUT WE WANTED TO START WITH THE FISH YEAR BECAUSE WE'RE WORKING, UM, AND WITH AN ACCELERATED SCHEDULE, UH, THIS YEAR, THAT SIGNIFICANTLY IMPACTS OUR RATE SETTING PROCESS.

SO AS YOU MAY BE AWARE, UH, DURING THE LAST LEGISLATIVE SESSION, UM, THE, THE LEGISLATURE PASSED A PROPERTY TAX CAP THAT REQUIRES, UH, BOULDER APPROVAL BEFORE A LOCAL GOVERNMENT CAN RAISE PROPERTY TAXES, PROPERTY TAX REVENUES, BY MORE THAN THREE AND A HALF PERCENT.

NOW, PREVIOUSLY LOCAL GOVERNMENTS WERE ALLOWED TO INCREASE PROPERTY TAX REVENUES BY 8%, UH, WITHOUT TRIGGERING AN ELECTION.

SO IN RESPONSE, THE CITY HAS MOVED THE BUDGET TIMELINE UP MONTH, UH, TO ALLOW TIME TO CALL FOR AN ELECTION IF NECESSARY TO SEEK APPROVAL FOR THE PROPOSED RATE INCREASE ABOVE THAT, THAT THREE AND A HALF PERCENT.

SO AS A RESULT, OUR RATE SETTING PROCESS WILL, UH, WILL, WILL BE IMPACTED.

WE'LL ACTUALLY PUSH OUR RATE SETTING PROCESS AFTER THE CITY'S BUDGET ADOPTION SCHEDULE.

UH, SO AS YOU CAN SEE THAT CITY, UH, WE'LL BE CONSIDERING AND HOPEFULLY PROVING, UH, THE BUDGET ON AUGUST 12TH.

UM, BUT IN ORDER FOR US TO, YOU KNOW, HAVE ENOUGH TIME TO, UH, TO CALCULATE THAT, YOU KNOW, SOME OF OUR PASS THROUGH, RIGHT.

UM, AND THEN TO ENSURE THAT WE CAN FULLY INCORPORATE CAUSE SUMMER DEMAND AND MARKET INFORMATION INTO THAT RATE PROCESS.

UM, AND WE'LL, WE'LL BE FINALIZING THOSE RATES IN SEPTEMBER WITH, WITH AN EARLY OCTOBER, UM, COUNCIL APPROVAL DATE.

UM, SO, UM, SO AS WE GO THROUGH THE BUDGET PROCESS AND, UM, YOU KNOW, THE CITY MANAGER, UH, PRESENTED THE PROPOSED BUDGET TO COUNCIL EARLIER THIS WEEK ON MONDAY, THE, YOU KNOW, THE 13TH AND MADE THE PROPOSED BUDGET AVAILABLE TO THE PUBLIC, UH, THE FOLLOWING DAY, TUESDAY, THE 14TH, YOU SHOULD HAVE RECEIVED, UH, PROPOSED YOUR PAGES FROM THE POSTDOC BUDGET DOCUMENT RELEVANT TO AUSTIN ENERGY.

UM, AND THEN OVER THE COURSE OF THE NEXT FEW WEEKS, THERE'LL BE SEVERAL HEARINGS, PUBLIC HEARINGS AND BUDGET WORK SESSION, BUT WE DON'T ANTICIPATE TO BE A BIG FOCUS FOR, UH, THROUGHOUT THIS YEAR'S BUDGET PROCESS, UM, IN PART, BECAUSE OUR BUDGET IS NOT REALLY CHANGING YEAR OVER YEAR.

UM, BUT SO IT BE A SIGNIFICANT CHANGE FROM A, A RATE SETTING PERSPECTIVE AND,

[00:10:01]

UH, BUT IT ALLOWS MORE TIME TO FULLY INCORPORATE IT WITH SUMMER MONTH, UH, LOAD AND MARKET ACTIVITY INTO THAT RATE SETTING PROCESS.

NEXT SLIDE PLEASE.

QUICK QUESTION.

YES.

FOR THE PUBLIC.

UM, DO WE KNOW THE SPECIFIC DATE WHEN THERE'LL BE A BUDGET HEARING ON AUSTIN ENERGY? IF PEOPLE HAD SPECIFIC, I'M NOT CLEAR FROM THAT SLIDE, WHICH, WHICH OF THOSE DAYS WOULD BE THE DEDICATED DATA COVER AUSTIN ENERGY THINGS.

SO IN, IN TERMS OF THE, CAN WE GO BACK ONE SLIDE PLEASE? UM, SO HISTORICALLY, UM, YOU KNOW, IT WOULD BE AUGUST 4TH IS WHEN, UH, THERE WOULD BE A PUBLIC HEARING ON AUSTIN ENERGY'S RATE SETTING PROCESS, AS I SAID, UH, WE DON'T ANTICIPATE CHANGING ANY RATES UNTIL AFTER THE BUDGET PROCESS.

UM, RIGHT NOW WE'RE, WE'RE LOOKING AT, UM, YOU KNOW, DAILY ON OCTOBER 3RD ADOPTION.

UH, SO IT WOULD BE THE MEETING PRIOR TO THAT, WHICH I DON'T HAVE THAT DATE IN FRONT OF ME, UH, THAT WE WOULD EXPECT TO HAVE, UM, PUBLIC HEARINGS ON, UH, THE RATE SETTING PROCESS, A PUBLIC HEARINGS ARE REQUIRED.

YOU HAVE ANY TIME WE CHANGE, UH, SERVICE RATES AND BECAUSE WE'RE NOT CHANGING THEM, UM, AS PART OF THE BUDGET PROCESS, THERE WON'T BE.

I UNDERSTAND THAT MY QUESTION IS IF MEMBERS OF THE PUBLIC NOT HAVING TO DO WITH THE RATES JUST HAD COMMENTS ON PARTICULARS WITHIN AUSTIN ENERGY'S BUDGET, SO THAT HOW YOU'RE RAISING THE MONEY, BUT HOW IT'S BEING ALLOCATED.

IS THERE A SPECIFIC DATE THAT WOULD BE DEDICATED TO THAT, OR IS THAT JUST A GENERAL PUBLIC COMMENT? UH, THERE'LL BE GENERAL PUBLIC COMMENT ON, ON JULY 30TH.

UM, SO THE PUBLIC COULD COMMENT ON THE BUDGET AS A WHOLE OR ANY PART OF THE BUDGET, INCLUDING AUSTIN ENERGY'S BUDGET.

ANY OTHER QUESTIONS? 19 NINE, COULD YOU ADVANCE TWO SLIDES PLEASE? ALL RIGHT.

THIS FINE SHOWS THE CITY'S OVERALL BUDGET AS, AS PRESENTED OR HAVE SHOT IN CITY'S OVERALL BUDGET AS PRESENTED IN, IN THE CITY MANAGER'S BUDGET PRESENTATION EARLIER THIS WEEK.

UM, AND AS YOU CAN SEE, THE, THE OVERALL CITY BUDGET IS 4.2 BILLION, WHICH IS ESSENTIALLY FLAT FROM LAST YEAR.

UM, AND THAT MONSTER ENERGY MAKES UP 31% OF THAT TOTAL BUDGET.

UM, AND, AND, AND THAT'S KEY FOR US, UM, BECAUSE SOME OF OUR, UM, TRANSFERS FOR INDIRECT SERVICES ARE ALLOCATED BASED ON THE PERCENTAGE OF CITY BUDGET.

UM, NOW WHILE 31% IS THE SAME PERCENTAGE AS WE WERE LAST YEAR, UM, OVER THE LAST SEVERAL YEARS, WE'VE, WE'VE, UH, WE'VE BECOME A SMALLER PIECE OF THE OVERALL CITY BUDGET, UH, DROPPING FROM 41% IN 2015 DOWN TO THE CURRENT 31%.

AND SO THAT'S HELPING US, UM, REDUCE, UH, THE, THE LEVEL OF INCREASE THAT WE MIGHT HAVE OTHERWISE SEEN IN TERMS OF SOME OF THOSE ALLOCATIONS FOR INDIRECT SERVICES.

AND WE'LL GET MORE INTO DETAIL INTO THOSE DETAILS LATER.

THE NEXT SLIDE, PLEASE.

NOW OUR BUDGET DOCUMENT IS PRESENTED IN A, IN A FUND SUMMARY FORMAT, AND THIS IS OUR PROPOSED FUND SUMMARY FOR , WHICH SHOWS THAT A HIGH LEVEL, YOU KNOW, REVENUES AND, AND, AND THE MAJOR EXPENDITURE CATEGORY.

UM, NOW, AS I MENTIONED EARLIER, REVENUES ARE ESSENTIALLY FLAT AND, AND TOTAL EXPENDITURES ARE ESSENTIALLY FLAT WITH, UM, IT WAS JUST A, YOU KNOW, FIVE POINT $7 MILLION INCREASE, BUT ON THE, ON THE REVENUE SIDE, UM, AND WHERE, UH, WE EXPECT TO ADJUST BASE RATES BACK TO PRE COVID RELEASE LEVEL.

UM, AND AS I MENTIONED EARLIER, WE'LL, WE'LL LOOK TO FINALIZE ALL OF OUR RATES AND IN PARTICULAR, OUR PASS THROUGH RATE IN SEPTEMBER FOR AN EARLY OCTOBER, UH, APPROVAL ON THE EXPENDITURE SIDE, WE'RE PROPOSING A 34 POINT $8 BILLION INCREASE IN, UM, OPERATING EXPENSES.

NOW THAT INCREASES IS MORE THAN OFFSET BY A REDUCTION IN, UM, IN TRANSFERS, PARTICULARLY RELATED TO CIP TRANSFERS, WHICH ARE, UH, WHICH ARE DECREASING BY ABOUT 40 AND A HALF MILLION.

AND THAT'S RELATED TO, UM, TO THE EXPECTED DISPOSITION

[00:15:01]

OF THE TOWN LAKE CENTER FACILITY, AS A, AS YOU KNOW, THE NEW HEADQUARTERS IS EXPECTED TO, UM, TO BE COMPLETED AND WE'LL BE MOVING IN NEXT SUMMER.

UM, NOW, YOU KNOW, IN TERMS OF, UH, YOU KNOW, EXPENDITURES AS COMPARED TO REVENUES, WE, WE ARE PROPOSING A DEFICIENCY OF 5.1 MILLION, UM, AND THAT'S EFFICIENCY IS RELATED TO, UH, YOU KNOW, A RESERVE TRANSFER OF $5 MILLION TO OUR CAPITAL RESERVE ON, UM, OUR CAPITAL RESERVE FUND IS THE ONLY RESERVE FUND THAT'S NOT FULLY FUNDED.

SO WE FELT LIKE IT WAS IMPORTANT, UH, TO, UH, ADD TO THAT PRESERVE ON, UM, THROUGH THE USE OF FUND BALANCE.

SO OTHERWISE, YOU KNOW, THE, THE, THE BALANCE IS A STRUCTURALLY A BALANCED BUDGET, UM, WHICH WAS SLIGHTLY NEGATIVE AS AT ABOUT, UM, AT ABOUT A 100,000.

NEXT SLIDE, PLEASE.

ALL RIGHT.

THIS IS FIVE SHOWS ARE OUR SOURCES OF REVENUE.

UM, AND AS I MENTIONED EARLIER, OUR TOTAL REVENUES ARE ESSENTIALLY FLAT AT 1.4 BILLION.

UM, ALMOST 90% OF OUR REVENUES COME FROM RETAIL RATES, WHICH INCLUDE, UH, BASE RATES THAT ACCOUNT FOR ABOUT 45% OF OUR REVENUES, UH, POWER SUPPLY, UH, REVENUES AT 30%.

UM, AND THEN REGULATORY REVENUE THAT 10%, UH, COMMUNITY BENEFIT, UH, REVENUES AT 4%.

UM, AS YOU, AS YOU MAY KNOW, WE FORECAST REVENUES BASED ON A NORMALIZE OR TYPICAL, UH, WHETHER A YEAR.

SO OUR REVENUES ARE SIGNIFICANTLY OR CAN BE SIGNIFICANTLY IMPACTED IF WE EXPERIENCE A HOTTER THAN NORMAL OR, UM, A MILDER THAN NORMAL YEAR.

UM, AND THEN FINALLY, AS A REMINDER, YOU KNOW, UH, PASS THROUGH AS TO REVENUES, UH, OUR, OUR SUPPLY REVENUES, REGULATORY REVENUE AND, AND COMMUNITY BENEFIT CHARGE REVENUES, UH, THOSE RATES ARE GOVERNED BY REGULATORY ACCOUNTING, AND WE, UH, YOU KNOW, WE TRACK ESSENTIALLY AN OVER OR UNDER RECOVERY BALANCE FOR THOSE REVENUES AND WE REVIEW THEM ANNUALLY AND TRUE UP AS NECESSARY.

SO QUICK QUESTION, SIR.

OKAY.

SO TRANSMISSION OR REVENUE, THAT'S WHERE A OWNS TRANSMISSION THAT GETS MONEY FROM ERCOT, I GUESS TRANSMISSION REVENUE IS, UH, WHEN, WHEN OTHER PROVIDERS, UH, YOU KNOW, THROUGHOUT THE STATE USE, UH, OUR TRANSMISSION SYSTEM, UM, WITH ACTUALLY REVENUE FROM, FROM OTHER UTILITIES.

AND SO THE REGULATORY 140 MILLION, THAT'S PAYING FOR HER COT AND PAYING FOR OUR AIR OF USING OTHER TRANSMISSION, UH, THAT'S PAYING FOR, FOR ACCESS TO THE GRID.

AND, AND, UH, THAT'S BASED ON OUR, OUR, OUR PERCENTAGE OF THE LOAD ON THE GRID FOR CP.

AND THEN GOING DOWN TO THE STAR, THE CONGESTION REVENUE 20.5, IS THAT FROM SORT OF INHERITED CRR IS FROM WHEN THE MARKET WAS RESTRUCTURED OR IS THAT JUST WELL EXECUTED, HEDGES ON CRR IS, OR CAN YOU EXPLAIN THE CONGESTION REVENUE OF 20 MILLION? UM, I'M ACTUALLY, UH, I'M NOT SURE.

I THINK I I'D HAVE TO CHECK WITH OUR RATES FOLKS AND GET BACK TO YOU, UH, MORE INFORMATION REGARDING THE CRR REVENUES.

OKAY.

UM, YEAH, PLEASE DO.

AND WE'LL MOVE FORWARD.

THIS MARK AND BRAS WERE CORRECT IN THE DRAWER THAT REVENUE COMES FROM, OR JUSTIN, REVEREND WRIGHT FROM CRE NO MARKET FROM OUR ASSETS.

HMM.

SO IF YOU'D LIKE ME TO JUST ADD A LITTLE COLOR TO THAT, THIS IS ERICA BEER SPOCK WITH ENERGY MARKET OPERATIONS MARKET, TALKING ABOUT THE PRE, UH, ASSIGNED CONGESTION REVENUE RIGHTS, UM, THAT, UH, WE'RE ABLE TO, UH, MONETIZE, UM, WITH THE ASSETS THAT WE HAD, UH, GOING INTO.

UM, SO WHAT'S THAT INSTEAD OF GOING FROM ZONAL TO NODAL AND DOES SOME OF THAT GOES PLAY AND SAY IT CLOSED DOWN THAT'S CORRECT.

AND THESE WERE ACTUALLY ASSIGNED BACK IN, UH, WHEN, UH, THE WHOLESALE MARKET DIRECT.

OKAY.

THANK YOU.

ANY OTHER QUESTIONS ON SOURCES OF REVENUE? THIS IS CYRUS.

I NOTICED THAT THE COMMUNITY BENEFIT

[00:20:02]

CHARGE, EVEN THOUGH IT'S STAYING THE SAME, I BELIEVE IS, IS BRINGING IN SLIGHTLY LESS MONEY.

I, I CAN'T FIND THE CHART NOW, BUT THAT'S WHEN I REMEMBERED ABOUT HALF A MILLION LESS.

DO YOU KNOW WHY THAT IS? ARE WE, ARE WE PROJECTING LESS ENERGY USE OR, UM, AGAIN, I HAVE TO PROBABLY FOLLOW UP WITH, WITH OUR REVENUE FOLKS.

UM, BUT, BUT, YOU KNOW, OVERALL WE'RE, UH, AGAIN, WE ARE SEEING, UM, DECLINING DEMAND PER HER ACCOUNT.

UM, AND I'M NOT, AND WE HAVEN'T SEEN A SIGNIFICANT IMPACT ON REVENUES IN TERMS OF OVERALL REVENUES.

WE EXCHANGED SHIFTS IN, IN, IN REVENUES AND SAY FROM, UH, FROM RESIDENTIAL VERSUS COMMERCIAL, WITH RESIDENTIAL BEING HIGHER, SLIGHTLY HIGHER AND COMMERCIAL BEING SLIGHTLY LOWER.

UM, BUT IN TERMS OF, UH, YOU KNOW, THE COMMUNITY BENEFIT CHARGE REVENUE SPECIFICALLY, I'M NOT SURE WHAT'S DRIVING THAT, BUT WE CAN CERTAINLY LOOK INTO IT.

THERE YOU GO.

UM, SO FOR , YOU KNOW, IN TERMS OF REVENUE, UH, BUDGET HIGHLIGHT, UH, YOU KNOW, ALTHOUGH WE EXPECT TO SEE CUSTOMER GROWTH AT 1.7%, WE DON'T EXPECT TO SEE ANY CORRESPONDING LOAD GROWTH, UH, AGAIN, DUE TO A CONTINUED DECLINE IN DEMAND PER ACCOUNT.

AND, UH, YOU KNOW, CUSTOMERS ARE GONNA HAVE MORE EFFICIENT APPLIANCES AND CONSTRUCTION BECOMES MORE EFFICIENT.

UM, THE, THE, UH, AVERAGE LEVEL OF DEMAND PER PER ACCOUNT, UH, HAS BEEN DROPPING INDUSTRY WIDE.

AND WE'VE BEEN FORTUNATE THAT, UH, YOU KNOW, OUR CUSTOMER GROWTH HAS GENERALLY OFFSET THAT, BUT WE DON'T SEE, UM, YOU KNOW, MUCH IN THE WAY OF LOAD GROWTH IN TERMS OF REVENUES.

UM, AS I MENTIONED EARLIER, UH, WE EXPECT, UH, FOR, UH, BASE RATES TO REVERT RETURNED TO PRE COVID LEVEL.

YOU MAY RECALL THAT AS PART OF OUR COVERED RELIEF EFFORTS, UH, EARLIER THIS YEAR, WE DROPPED, UM, THE, THE RATES FOR TIERS FOUR AND FIVE, THE RESIDENTIAL RATES TIERS FOUR AND FIVE TO, UH, TO THE TIER THREE LEVEL, UH, FOR CONSUMPTION OVER 1000 KILOWATT POWERS PER MONTH.

UM, AND SO WE EXPECT, UH, THOSE RATES TO REVERT BACK TO, UH, THE, UM, RATES THAT HAVE BEEN IN EFFECT SINCE JANUARY OF 2017.

UM, THAT'S WHY 21 IS THE FIFTH YEAR OF A FIVE YEAR RATE CYCLE THAT STARTED IN, UM, IN 2017.

AND, UM, YOU KNOW, SO WE'RE, WE'RE LOOKING TOWARDS A RATE REVIEW AND MARK WILL BE PROVIDING AN UPDATE ON THE NEXT AGENDA ITEM, UH, REGARDING THE RATE AND REVIEW, UM, YOU KNOW, IN TERMS OF OUR CORPORATE PASS THROUGH CHARGES, UH, AGAIN, THOSE WILL BE REVIEWED AND FINALIZED IN SEPTEMBER.

UH, WE DO EXPECT THAT THERE, THERE MIGHT BE A CHANGE IN THE POWER SUPPLY ADJUSTMENT, AND YOU MAY RECALL THAT, UH, LAST YEAR THE POWER SUPPLY ADJUSTMENT WAS RESET TO MARKET LEVELS, UM, TO, UH, TO RECOVER THE 20.9 MILLION UNDER RECOVERY THAT WE ENDED THE YEAR WITH.

AND, UM, YOU KNOW, AS OF JUNE, THEN UNDER RECOVERY IS BELOW SIX.

UM, I WOULD SPECULATE AS TO, YOU KNOW, UH, WHAT THE CHANGE MIGHT BE GIVEN THAT IT WE'RE STILL DON'T HAVE ALL THE INFORMATION REGARDING A SUMMER LOAD AND MARKET CONDITIONS.

UM, AND AGAIN, WE DO EXPECT THE REGULATORY CHARGE TO, UM, TO REVERT BACK TO PRE COVID LEVELS.

IT WAS REDUCED AS PART OF OUR COVID RELIEF EFFORTS, UH, TO REFUND, UM, OVERCOLLECTION IN REGULATORY CHARGE.

UM, BUT WE EXPECT IT TO REVERT, UH, YOU KNOW, AT, OR NEAR PRE COVID LEVEL.

AND WE CURRENTLY DON'T ANTICIPATE ANY CHANGES TO A COMMUNITY BENEFIT CHARGE NEXT, FINE.

NOW ON THE EXPENDITURE SIDE, AGAIN, THE TOTAL BUDGET IS I THINK THAT SURE.

HADN'T MAY HAVE HAD A QUESTION.

I DON'T THINK YOU WERE.

I THINK YOU MAY BE.

CAN YOU HEAR ME NOW? THERE WE GO.

OKAY.

THANK YOU.

UM, YES, I DID HAVE A QUESTION ABOUT THE PRE COVID RATES.

WHEN WOULD THAT CHANGE

[00:25:01]

GO INTO EFFECT, UM, WITH THE NEW BUDGET? WOULD IT, I MEAN, WHAT'S THE TIMING ON THAT? WELL, GENERALLY SPEAKING, EVEN WITH THE SEPTEMBER BUDGET ADOPTION, UH, OUR, OUR NEW RATES, UH, W NORMALLY GO INTO EFFECT AT THE BEGINNING OF NOVEMBER, UM, WHICH IS WHY WE'RE PUSHING TO, UM, TO GET BEFORE COUNCIL AT THAT FIRST MEETING IN OCTOBER, SO THAT WE CAN STILL MEET THAT, THAT, UH, NOVEMBER TIMELINE IN TERMS OF, UH, THOSE RATES GOING INTO EFFECT.

SO NOVEMBER ONE, UH, IMPLEMENTATION DATE.

YEAH.

AND THAT'S A LITTLE BIT CONCERNING, UM, TO ME BECAUSE, YOU KNOW, CERTAINLY WE'RE STILL DEEP IN THE MIDST OF DEALING WITH COVID HERE.

SO ANYWAY, THAT'S AN ISSUE THAT I THINK WE MIGHT NEED TO PURSUE A LITTLE BIT, A LITTLE BIT LATER DOWN THE LINE UNDERSTAND, UM, AND CERTAINLY, YOU KNOW, WE FELT IT WAS IMPORTANT TO, UH, PROVIDE THAT RELIEF, PARTICULARLY AS WE HEADED INTO THE SUMMER MONTHS.

UM, YOU KNOW, UH, WHEN WE GET TO NOVEMBER, WE EXPECT DEMAND TO BE REDUCED AND, AND, AND THE, THE IMPACT OF THOSE RATES CAN BE SIGNIFICANTLY REDUCED, BUT IT'S CERTAINLY SOMETHING THAT WE'LL BE LOOKING AT AS WE GO TO FINALIZE THOSE RATES.

THANK YOU.

YOU'RE HONOR.

RIGHT.

SO ON THE EXPENDITURE SIDE, AS I SAID, THE TOTAL BUDGET IS 1.4, UH, BUILT IN WITH THE LARGEST PORTION OF THAT BUDGET BEING, UH, FOR OPERATIONS AND MAINTENANCE AT 434.5 MILLION OR 31% OF THE TOTAL BUDGET, UM, FOLLOWED BY POWER SUPPLY, WHICH MAKES UP 25% FOR 359 MILLION.

AND, UM, THE, THE REMAINS ARE THE REMAINING CATEGORIES.

UM, YOU KNOW, NUCLEAR CALL, DEATH SERVICE, UH, TRANSFERS AND TRANSMISSION COSTS.

UH, AND WE CONSIDER THOSE TO BE, UH, EITHER NON-DISCRETIONARY OR, OR, OR NON CONTROLLABLE KNOW, CERTAINLY IN THE SHORT RUNS, BUT THERE'S VERY LITTLE OF OUR BUDGET THAT WE WOULD, WE WOULD DEEM AS, AS DISCRETIONARY.

AND EVEN WHEN YOU BREAK DOWN, UM, OUR OPERATIONS AND MAINTENANCE BUDGET, WHICH AGAIN IS BORN AT 34.5 MILLION, UM, YOU KNOW, 57% OF THAT IS PERSONNEL RELATED TO YOUR SALARIES AND BENEFITS, AND THEN ANOTHER 38%, UH, FOR, FOR CONTENT CONTRACTUAL SERVICES.

UM, SO ON A ONE POINT $4 BILLION BUDGET, YOU KNOW, UM, THERE, THERE'S VERY LITTLE OF THAT, THAT WE WOULD CONSIDER A DISCRETIONARY IN THE NEXT SLIDE, PLEASE, UH, KNOW IN TERMS OF OUR OPERATING EXPENSE HIGHLIGHT GOING INTO THIS BUDGET PROCESS, WE, WE CHARACTERIZE IT AS A WHOLE, THE LYME BUDGET WITH, UM, MINIMAL INCREASES EXPECTED.

HOWEVER, ONE AREA, UH, WHERE WE, UH, HAD PLANNED ON A STRATEGIC INCREASE WAS, UH, RELATED TO OUR, OUR, OUR LINE CLEARANCE BUDGET.

UH, YOU CAN SAY THAT WE INCREASED THE LINE CLEARANCE BUDGET BY 9.7 MILLION, WHICH EFFECTIVELY DOUBLED THAT AND BUDGET TO ABOUT 20 MILLION.

UM, AND THAT WAS DONE TO, UM, ALLOW THE UTILITY TO GET CAUGHT UP IN LINE CLEARANCE CYCLE TIMES, WHICH, YOU KNOW, HELPS ENSURE SYSTEM RELIABILITY AND REDUCE OUTAGES.

UM, IN ADDITION, THAT LINE CLEARS PROGRAM, YOU KNOW, SUPPORTS THE CITY'S WILDFIRE MITIGATION EFFORT.

UM, YOU KNOW, IN ADDITION, UM, ANOTHER, UM, ANOTHER ANALYSIS THAT WE UNDERTOOK DURING THE BUDGET OFFICE WAS A REVIEW OF OUR TEMPORARY AND CONTRACT POSITION, UH, TO TRY AND IDENTIFY MAYBE ROLES THAT, UM, WERE BETTER SUITED, UH, AS, AS PERMANENT FULL TIME POSITIONS, YOU KNOW, BOTH ORGANIZATIONALLY AND FISCALLY.

IN OTHER WORDS, THEY WERE A GOOD FIT, UH, TO BRING THOSE IN HOUSE.

UM, AND ALTHOUGH WE'RE PROPOSING 29 NEW FTES, WHICH IS SIGNIFICANTLY HIGHER THAN, UH, YOU KNOW, WHAT WE'VE BEEN PROPOSING OVER THE LAST SEVERAL YEARS, UH, 15 OF THOSE POSITIONS ARE, UH, EITHER TEMPORARY OR, UM, CONTRACTOR CONVERSION THAT NO, UH, NET INCREASE TO THE UTILITY AND THE REMAINING 14 ESSENTIALLY ACCOUNT FOR THAT, THAT ONE POINT $9 MILLION OF INCREASED, UH, YOU KNOW, OVERALL FOR THE UTILITY, HEY, JOSEPH, YOU CAN ANSWER THERE, OR MAYBE ERICA CAN, UM, IN THE GENERATION PLAN THAT WE, UH, THAT THE CITY COUNCIL APPROVED EARLIER THIS YEAR, UM, THERE ARE A COUPLE OF ACTIONS WHICH MIGHT HAVE A FISCAL IMPACT

[00:30:01]

OR BUDGET IMPACT.

UH, ONE WAS, UM, THE RETIREMENT OF, OF DECKER, UH, THE FIRST UNIT, WHICH COMES OFF LATER THIS YEAR.

AND SO MY QUESTION IS IN THIS BUDGET, ARE THERE ANY DECOMMISSIONING COSTS ASSOCIATED WITH THAT, OR IS THAT SORT OF IN THE FUTURE? THAT'S THE FIRST QUESTION.

THE SECOND QUESTION WAS IN THAT GENERATION PLAN, WE ALSO TALKED ABOUT THE NEED FOR KIND OF AN UPGRADED TRANSMUTE MISSION STUDY TO LOOK AT A NUMBER OF FACTORS.

AND I GUESS MY QUESTION IS, IS DOES THIS BUDGET INCLUDE THAT TRANSMISSION STUDY OR IS THAT AGAIN, YOU KNOW, A YEAR FROM NOW? I'M NOT SURE THE TIMING, SO I THINK THOSE QUESTIONS ARE FOR ERIC.

I'M NOT REALLY SURE.

WELL, I CAN ANSWER THE QUESTION ABOUT THE TRANSMISSION STUDY.

UH, WE DO HAVE FUNDING, UM, YOU KNOW, WHEN WE GET TO THE ELECTRIC SERVICE AND DELIVERY, UH, BUSINESS UNIT, UH, WE DO HAVE FUNDING AT POINT 21 BUDGET FOR THE TRANSMISSION STUDY.

UM, AND, AND, YOU KNOW, UM, BUT YEAH, AND I'M NOT SURE IF IT'S ERICA OR, OR PAT THAT CAN BEST ANSWER THE DECKER QUESTION.

I'M GOING TO DEFER TO PAT ON, UH, THE DECKER.

I KNOW THAT WE HAVE, I BELIEVE WE HAVE SOME IN THIS, IN THIS ONE COMING UP, BUT HE'D BE ABLE TO SPEAK TO THE DOLLAR EVENT.

SO WAS PAT SWEENEY AT MALARIA? YES.

SO, UM, THERE, THERE, WHILE THERE'S A BUILDUP OF FUNDS IN PREPARATION FOR DECOMMISSIONING, WE'RE NOT, WE'RE NOT ACTUALLY GOING TO BE DOING ANY KISSES, THERE'LL BE COMMISSIONING IN THE UPCOMING PERIOD.

SO, UM, I THINK THAT WAS CYRUS, THAT, THAT, SO THAT TYPE OF ACTIVITY IS STILL OUT IN THE FUTURE.

THANKS.

THAT'S ALL I WANT TO KNOW.

THANKS AND COMMISSIONERS, ESPECIALLY IN STAFF, IF YOU WOULD, THE FIRST TIME YOU'RE SPEAKING, PLEASE INTRODUCE YOURSELF, BUT WE DO HAVE NEW COMMISSIONERS.

PAT SWEENEY IS VICE PRESIDENT OF OUR POWER PRODUCTION.

ANY OTHER QUESTIONS ON OPERATING EXPENSE HIGHLIGHTS? I KNOW WE'RE DOING THE STUDY TO SEE, BUT DO WE ANTICIPATE A LOT OF NEW, ADDITIONAL TRANSMISSION GIVEN IF FAYETTE GETS CLOSED DOWN, DOES THAT MAKE IT TO WHERE WE HAVE TO IMPORT MORE FROM OTHER PLACES? AND COULD WE A BIG UPTICK IN OUR NEED TO HAVE IMPORT CAPABILITY? UM, YOU KNOW, AGAIN, I, UM, I THINK THAT'S PROBABLY MORE OF A PROGRAMMATIC QUESTION.

AND, AND AS A REMINDER WITH, UM, OUR, OUR GOAL IS TO, IF WE NEED TO GO THROUGH THE MID A BUTTON AND A BUDGET AND PRESENTATION, AND THEN, UH, THE, THE EXECUTIVES WOULD, WOULD BE AVAILABLE EITHER TO ANSWER QUESTIONS.

UM, YOU KNOW, WE, WE RAN HIS PAINTING AT THE END, YOU KNOW, CERTAINLY IF IT'S SOMETHING WE CAN ANSWER QUICKLY, WE CAN, WE CAN PROBABLY ADDRESS IT.

UM, I'M NOT SURE WHAT YOUR PREFERENCE IS.

WELL, PAT OR ERICA PROBABLY COULD ANSWER IT IN A SHORTER AMOUNT OF TIME.

YEAH.

SO, UH, MR. TUTTLE, UH, THIS ERICA PIER PARK, UH, IT'S, IT'S STILL, UH, RATHER SOON TO BE ABLE TO PROVIDE A VERY CONCRETE ANSWER TO THAT.

I WILL, UH, COMMUNICATE THAT WE ARE ACTIVELY, UH, TOM PEERPOINT IS LEADING THAT EFFORT AND HE HAS ALREADY BEGUN, UH, ORGANIZING INTERNALLY, UH, TO BE ABLE TO PREPARE THAT, UM, STATEMENT OF WORK, UH, WHICH IS GOING TO GO OUT.

UM, I DON'T HAVE A TIMEFRAME AT MY DISPOSAL, BUT I, UM, YOU KNOW, THAT, THAT SHOULD, THAT SHOULD BE MAKING ITSELF AVAILABLE SHORTLY, BUT, UM, IT'S, IT'S, UH, IT'S NOT JUST A CLEAR CUT, UH, ANSWER.

UM, THERE'S A LOT OF VARIABLES THAT THEY'RE LOOKING AT TO SEE, UH, HOW WE WOULD MOST EFFICIENTLY MANAGE, UM, YOU KNOW, THE ASKS OR THE CONDITIONS THAT SOME OF THESE STUDIES ARE GOING TO BE, UH, PUTTING IN PLACE TO SEE, UM, WHAT ARE, YOU KNOW, WHAT, WHAT OUR GRID WILL BE LOOKING LIKE.

UM, POST FAYETTE, POST DECKER, UH, HI, THIS IS CARRIE FOR CHIL.

UM, I HAVE A COMMENT IT'S NOT PARTICULARLY APPROPRIATE RIGHT HERE, I SUPPOSE, BUT, UH, UH, SOME OF THE STUFF ON THIS SLIDE REMINDED ME OF IT, AND I GUESS IT'S REALLY TARGETED TO MY KEY.

UH, I'M JUST REMEMBERING THAT LAST YEAR WHEN WE HAD OUR $20, UH, PSA, UM, UH, INCREASE, UM, THAT, UH, SOME OF OUR LARGEST CUSTOMERS,

[00:35:01]

UH, FOUND THAT TO BE SOME KIND OF A SURPRISE.

AND, UH, UH, IT DOESN'T LOOK LIKE WE'RE GOING TO HAVE, I MEAN, BASICALLY WHAT I'VE SEEN HERE, IT DOESN'T LOOK LIKE WE'RE GOING TO HAVE ANYTHING LIKE THAT, BUT I JUST THINK RATHER, UH, IT'D BE A RATHER GOOD IDEA TO, UH, REACH OUT, UH, TO OUR CUSTOMERS IF WE HAVEN'T DONE IT ALREADY AND LET THEM KNOW KIND OF WHAT THE W THE PSA IS SHAPING UP FOR NEXT YEAR.

YEAH.

I THINK JOSEPH KIND OF TOUCHED HER SET THE PSA.

WE HAD A $30 MILLION UNDER THE PROGRAM HAS THE END OF JUNE.

IT'S ABOUT FIVE AND FIVE AND A HALF MILLION.

SO WE'RE CERTAINLY GOING IN THE RIGHT DIRECTION OF THE SHOW REDUCTION, BUT WE REALLY WON'T KNOW UNTIL WE GET THROUGH THE MOST VULNERABLE PART OF THE SUMMER, WHICH IS JULY AND AUGUST.

SO TRENDING DIRECTION, PSA REDUCTION, YOU HAD SAY WITH THE SIZE OF THAT ONE.

YEAH, I UNDERSTAND.

AND THAT'S OKAY.

I'M, I'M READING THIS, I JUST THINK, UH, OUTREACH, I DON'T HAVE TO REMIND YOU.

THEY WERE VERY, UH, EXERCISE BECAUSE THEY THOUGHT THAT THAT CAME AS A SURPRISE.

SO, UH, I'M JUST SUGGESTING THAT WE, UH, IT HAS A BIG IMPACT ON THEIR BUDGET.

SO, UH, I THINK WE, UH, UH, OUTREACH AS SOON AS POSSIBLE.

IT'S PROBABLY A GOOD IDEA.

THANKS.

WE REPORT DOWN ON EACH QUARTER, QUARTERLY BASIS.

BOTH WE USE THE COUNCIL.

WE'VE ALSO MET WITH KEY ACCOUNT PRICING.

YEAH.

YOU'VE DONE A PRETTY GOOD JOB OF GETTING THE WORD OUT PRETTY WELL.

MAKE SURE.

THANKS, MARK.

SO I'VE GOT A QUESTION AS WELL.

UM, THIS SLIDE HAS THEIR BUDGET INCREASE FOR LINE CLEARANCE, AND I THINK, YOU KNOW, THAT'S REALLY, REALLY IMPORTANT.

I WOULD LIKE TO ASK WHENEVER IT'S APPROPRIATE ABOUT WHAT TECHNIQUES ARE BEING USED, BECAUSE IT APPEARS THAT CHEMICAL METHODS WERE USED RECENTLY IN ONE CASE THAT I KNOW OF.

AND I THOUGHT IT WAS MORE LIKE PHYSICALLY REMOVING, UH, VINES OR BRUSH AS NECESSARY.

AND I WOULD LIKE TO KNOW ABOUT THAT AND WHAT CHEMICALS ARE BEING USED.

OKAY.

UM, OKAY.

WE CAN ADDRESS THAT.

UH, UM, YOU KNOW, WHEN WE GET INTO A DIFFERENT BUSINESS UNIT.

YEAH.

GOTCHA.

UM, ANY OTHER QUESTIONS ON OPERATING? IT'S BEEN SILENT.

NEXT SLIDE PLEASE.

RIGHT.

I MENTIONED EARLIER, UH, CITY TRANSFERS AND, UH, YOU KNOW, PAYMENTS, PRINT, DIRECT SERVICES.

THE TOTAL, UH, CITY TRANSFERS, UH, ARE 181.5 MILLION A YEAR INCREASE A 5.6 MILLION YEAR OVER A YEAR.

NOW, UH, THE GENERAL PUN TRANSFER ACCOUNTS FOR, UH, THE MAJORITY OF THE, YOU KNOW, 181 MILLION, 114 WERE 63%.

UM, YOU KNOW, IN ADDITION, WE, UM, WE HAVE TRANSFERS TO THE CITY EITHER THROUGH THE ADMINISTRATIVE TRANSFER OR DIRECT TRANSFER, UH, FOR BOTH INDIRECT SERVICES AND DIRECT SERVICES, UH, DIRECT SERVICES, TOTAL 18.9 MILLION, UH, FOR SERVICES PROVIDED BY, UH, YOU KNOW, OTHER DEPARTMENTS, INCLUDING FLEET, UH, PURCHASING AND LEGAL SUPPORT IN TERMS OF INDIRECT SERVICES, UH, YELLOWS TOTAL 48, 3 MILLION FOR THE YEAR.

UM, AND THAT'S BASED ON AN ALLOCATION, UH, FOR, FOR THOSE SERVICES, UM, INCLUDING, FOR EXAMPLE, CITY MANAGER'S OFFICE, UH, CITY FINANCE, VHR, UH, CITY COMMUNICATION AND TECHNOLOGY MANAGEMENT, AND, AND THOSE COSTS ARE ALLOCATED USING ENVIRONMENT FOR IDEAS, UM, EXCUSE ME, ALLOCATION METHOD.

UM, BUT ABOUT 50 TO 55 TO 60% OF THOSE COSTS ARE ALLOCATED BASED ON AUSTIN ENERGY'S PERCENTAGE OF THE TOTAL CITY BUDGET.

AND SO I MENTIONED EARLIER THAT, UH, OUR PERCENTAGE OF OVERALL CITY BUDGET HAS DROPPED BY ABOUT 10% SINCE 2015.

AND JUST TO GIVE YOU THE KIND OF A SENSE OF WHAT THAT MEANS TO US.

SO INDIRECT TRANSFERS INCREASED BY ABOUT 2.8 MILLION, UH, AS COMPARED TO .

HOWEVER, IF WE WERE STILL AT,

[00:40:01]

UH, AROUND 41%, THAT INCREASE WOULD HAVE LIKELY BEEN A $4 MILLION HIGHER.

UM, AND SO RATHER THAN 48.3, WE WOULD HAVE BEEN LOOKING AT ABOUT 52 MILLION.

SO, UM, YOU CAN SEE THE IMPACT OF, YOU KNOW, MANAGING OUR BUDGET FOR, AS IT COMPARES TO THE CITY AS A WHOLE, ANY QUESTIONS, ONCE IT GOES OFF, DO YOU HAVE ANY INSIGHT INTO WHY THAT PERCENTAGE IS, HAS, I GUESS SHRINKS SO DRAMATICALLY IN THE LAST FIVE YEARS? IS THAT JUST BECAUSE OTHER DEPARTMENTS AT THE CITY, THEIR BUDGETS ARE GROWING THAT, THAT SIGNIFICANTLY, OR WHY IS OUR PORTION SHRINKING? WELL, SO REMEMBER WE, WE ARE, UM, IN, IN THE FIFTH YEAR OF A FIVE-YEAR RATE CYCLE AND, UM, GO OVER THAT TIME, OUR, OUR, OUR BUDGET HASN'T GROWN, UM, SIGNIFICANTLY.

SO IT'S REALLY JUST A MATTER OF OUR BUDGET GROWING AT A SLOWER RATE THAN IN THE CITY AS A WHOLE.

UM, SO, SO OTHER BUDGETS ARE GROWING FASTER THAN IN OURS HAS BEEN.

AND, AND SO, UM, THAT'S CONTRIBUTED TO, TO THAT DROP.

DO YOU EXPECT, UM, AFTER, UH, WE HAVE A NEW RATE CASE, DO YOU EXPECT THAT THE PERCENTAGE WOULD, WOULD GO UP AGAIN SIGNIFICANTLY AND THEN CONTINUE TO SHRINK OVER TIME? OR, OR DO YOU SEE THAT TREND CONTINUING, I GUESS, DOES THAT MAKE SENSE? UM, WELL ACTUALLY I THINK GIVEN THE, THE GENERAL FUND, UM, THE PROPERTY TAX REVENUE TAX CAP, UM, YOU KNOW, WHERE HISTORICALLY THE GENERAL FUND, UM, TAX REVENUES COULD BE INCREASED BY 8% ANNUALLY.

AND GENERALLY THEY WERE, UM, TH THE GENERAL FUND HAS GROWN AT A FASTER RATE.

AND, UM, THEN AUSTIN ENERGY HAS, UM, GIVEN THE TAX CAP, I WOULD THINK THAT PROBABLY OUR GROWTH, UH, RATES WILL PROBABLY BE MUCH MORE SIMILAR.

AND SO I WOULD EXPECT US TO STAY, YOU KNOW, 30, 31%.

I W I DON'T EXPECT KNOW SIGNIFICANT CONTINUED DECLINE, UM, YOU KNOW, PARTICULARLY BECAUSE OF THE, THE PROPERTY TAX CAP.

THANK YOU.

YOU'RE WELCOME.

UH, NEXT SLIDE PLEASE.

RIGHT.

UH, SO THIS IS A SUMMARY OF OUR FIVE YEAR CAPITAL SPENDING PLAN.

UH, NOW OUR FIVE YEAR SPENDING PLAN FOCUSES HEAVILY ON AIDING CONTINUED CUSTOMER GROWTH WITH ABOUT 57% OF THE PLANTS BEING RELATED TO OUR ELECTRIC SERVICE DELIVERY SYSTEM, 592, ALMOST 593 MILLION OF THE BILLION 45 OVER, OVER THE FIVE YEAR PERIOD.

UH, BUT WE'RE ALSO SEEING INCREASED CAPITAL SPENDING RELATED TO OUR DISTRICT COOLING PROJECTS, UH, WITH THREE NEW DISTRICTS, UH, CALLING PLANT, UM, AND, UM, UH, COMING ONLINE AND AT POINT 21.

AND THEN ALSO, UM, YOU KNOW, I MENTIONED THE NEW HEADQUARTERS, SO, AND IF BY 21, YOU'RE SEEING A SIGNIFICANT INCREASE IN, UH, GENERAL CAPITAL PROJECT SPENDING RELATED TO, UH, NEW HEADQUARTERS, WHICH IS EXPECTED TO BE COMPLETED NEXT SUMMER.

NOW WE'D LIKE TO NOTE THAT, UM, THE RECOVERY FOR TRANSMISSION AND DISTRICT COOLING PROJECT, UH, IS NOT INCLUDED IN RETAIL RATES WHEN WE RECOVER TRANSMISSION COSTS FROM, FROM OTHER UTILITY, UH, THROUGHOUT THE STATE THAT USE OUR TRANSMISSION SYSTEM, UM, DIRECTLY.

AND, UH, YOU KNOW, THE DISTRICT COOLING PROJECT COSTS ARE RECOVERED THROUGH A DISTRICT COOLING CUSTOMER, YOUR CONTRACT RATE.

UM, BUT, YOU KNOW, IN TOTAL, WE GOT, UM, YOU KNOW, A FIVE YEAR PLAN IN 45, WHICH IS SLIGHTLY LOWER THAN, THAN LAST YEAR FIVE YEAR PLAN, WHICH WAS ABOUT 1.1 BILLION CLEAR THAT THEY RAISE A QUESTION SO ON THE CAP X.

SO I UNDERSTAND THE TRANSMISSION COSTS FROM SORT OF ALLOCATION BACK TO US.

UM, HOW IS DISTRIBUTION THE CAP X RECOVERED IF IT'S NOT THROUGH RATES, DISTRIBUTION IS COVERED OR COVERED THROUGH RETAIL RATE, CONSENT TRANSMISSION AND DISTRICT COLON, UM, THAT ARE NOT RECOVERED THROUGH, UH, THROUGH RETAIL RATE.

UM, SO DISTRICT COOLING IS RECOVERED THROUGH, UH, THROUGH THE CUSTOMER CONTRACTED RATES WITH OUR DISTRICT CALLING CUSTOMERS, JOSEPH FROM THE PHONE CYRUS REED, QUICK QUESTION, UM, THE INCREASE ON, UH, POWER PRODUCTION.

[00:45:01]

IS THAT JUST SORT OF OPERATION AND MAINTENANCE OF OUR PLANTS, OR IS THAT THERE'S NOT A, IS THERE SOME NEW SPECIFIC THING HAPPENING IN THAT, THAT RAISED THAT, UM, ANNUAL SPENDING BY 6 MILLION OR SO, OR IS IT JUST SORT OF NORMAL OPERATION MAINTENANCE? UH, MY, MY UNDERSTANDING IS THAT, YOU KNOW, THE, THE TIMING OF THE OPERATIONS MAINTENANCE, I DON'T BELIEVE THERE'S ANY, UH, SIGNIFICANT, UH, YOU KNOW, NEW PROJECTS OR EXPANSION, UH, RELATED TO POWER PRODUCTION.

UM, I BELIEVE ALMOST ENTIRETY OF THAT IS, IS RELATED TO MAINTENANCE OF BOTH, UH, YOU KNOW, OUR, OUR OWN PLANTS, AS WELL AS, UM, YOU KNOW, OUR JOINT PROJECTS.

THIS IS CHARLOTTE DICKERSON, CHIEF OPERATING OFFICER TO JOSEPH ANSWERS.

CORRECT.

I DON'T KNOW IF PAT'S, WHEN HE WAS ABLE TO JOIN US TO TALK ABOUT ANY MORE DETAIL, BUT TO THE EXTENT, UM, TO THE GREATEST EXTENT POSSIBLE MOST OF THOSE JUST MAINTENANCE AND OPERATIONAL COSTS AND TOMMY, THANKS.

SO, SO THIS IS, THIS IS PAT, UM, JUST TO CHIME IN ON THAT.

YES.

UH, IT WAS REALLY NOTHING, UH, I DON'T KNOW, ESPECIALLY NOTABLE OR STAND OUT, AND YOU CAN SEE THE NUMBERS KIND OF BOUNCE AROUND A LITTLE BIT.

AND, AND THAT GENERALLY JUST TRACKS WITH, WE HAVE UP AND DOWN YEARS WITH, UH, YOU KNOW, CYCLICAL WRITTEN MAINTENANCE.

AND SO, UM, YOU KNOW, WE DON'T DO THE SAME LEVEL OF MAINTENANCE, UH, HEAVIER MAINTENANCE MIGHT BE A YEAR, YOU KNOW, EVERY OTHER YEAR TYPE OF THING.

AND SO, UH, THAT'S, THAT'S REALLY ALL IT IS.

ALL RIGHT, NEXT SLIDE PLEASE.

SO WHEN YOU HAVE A BILLION DOLLAR FIVE-YEAR CAPITAL SPENDING PLAN, YOU HAVE TO HAVE A PLAN TO PAY FOR IT.

AND THIS IS HOW WE EXPECT TO FINANCE THE FIVE-YEAR SPENDING PLAN.

UM, FIRST OF ALL, WE, WE STRIVE FOR, YOU KNOW, A 50 50 SPLIT, UM, YOU KNOW, IN TERMS OF, ARE YOU FINANCING THE PLAN 50% DEBT AND, AND 50% CASH.

NOW ON THE, ON THE DEBT SIDE, WE, WE USE SHORT TERM COMMERCIAL PAPER TO, UH, YOU KNOW, FINANCE PENDING AS IT OCCURS.

AND THEN EVERY, EVERY, YOU KNOW, TWO YEARS OR EVERY FEW YEARS, WE WILL, UM, REFUND OR PAY OFF THAT COMMERCIAL PAPER, UM, AND CONVERT IT TO, TO, UH, YOU KNOW, 30 YEAR REVENUE BONDS WILL ISSUE BONDS TO, UM, TO REFUND COMMERCIAL PAPER.

UM, AND, UM, AND THEN WE'LL START THAT CYCLE OVER AGAIN.

UM, YOU KNOW, AS WE PUSHED THAT COMMERCIAL PAPER BALANCE BACK DOWN, UM, YOU KNOW, IN TERMS OF OUR CASH THAT COMES IN LARGELY IN THE FORM OF TWO COMPONENTS, YOU KNOW, DIRECT CASH.

I MENTIONED OUR CASH TRANSFER, UH, FOR CAPITAL PROJECTS, UH, YOU KNOW, EARLIER, AND, YOU KNOW, THAT CASH TRANSFER COMBINED WITH A CONTRIBUTION IN AID OF CONSTRUCTION OR HAYAK AS WE REFERRED TO IT.

UM, AND YOU KNOW, THOSE, THOSE CONTRIBUTIONS ARE FOR, FROM CUSTOMERS REQUESTING, YOU KNOW, UH, LINE EXTENSIONS OR SERVICE EXTENSIONS, UH, THAT, THAT ONLY BENEFIT THEM.

SO THEY FOUND A HUNDRED PERCENT OF THOSE PROJECTS.

UM, AND SO THOSE TWO COMPONENTS MAKE UP THE CASH PIECE OF, YOU KNOW, OUR FINANCING, THE CAPITAL PROGRAM.

AND AS YOU CAN SEE, YOU KNOW, IN TERMS OF OUR, OUR DEBT PERCENTAGE, UM, YOU KNOW, THROUGHOUT THE PLAN, IT FLUCTUATES FROM A LOW AND FYI 25 OF AROUND 34%, UH, TOO HIGH.

AND YOU IN FYI 21 OF, OF OVER 60%, UM, THAT 60% IS RELATED AGAIN TO, UH, THE NEW HEADQUARTERS, WHICH, UM, YOU KNOW, PORTION OF THE ESCROW HAS ALREADY BEEN TASKED FUNDED.

SO, UH, THE MANGER OF THE, UH, BUILDING COSTS WILL BE FINANCED IN, UH, YOU KNOW, IN FYI 21 OR, OR, YOU KNOW, WHEN WE TAKE OUT OUR, OUR NEXT, UM, YOUR REVENUE BOND ISSUE.

UM, BUT OVER THE FIVE YEAR PERIOD, YOU CAN SEE THAT WE AVERAGE UP 45% DEBT FUNDING, UM, AND IN ROUGHLY 55%, UH, HASH OR KAYAK FUNDING.

UM, AND THAT'S RIGHT IN LINE WITH, WITH OUR TARGET.

THIS IS KATE, THIS IS KETO.

SO CAN YOU HEAR ME? YES.

MA'AM YES.

UM, WHAT IS YOUR COST OF DEBT FOR NEXT YEAR? GENERALLY IN THE BUDGET, WE WE'VE ASSUMED AROUND FOUR, FOUR AND A HALF PERCENT.

UH, YOU KNOW, THAT VARIES DEPENDING ON, UM,

[00:50:01]

THE TYPE OF ISSUE, UM, YOU KNOW, FOR EXAMPLE, MOST WHAT MOST OF OUR DEBT REISSUES IS TAX EXEMPT DEBT.

UH, BUT FOR CERTAIN, UH, CERTAIN PROJECTS, PARTICULARLY, UM, OUR DISTRICT CALLING PROJECTS, WE ISSUE TAX EXEMPT DEBT.

AND SO THERE WAS ABOUT, UH, UH, YOU KNOW, HALF CHOSE, 2% OF THE DIFFERENCE IN TERMS OF THOSE RATES.

BUT THE GENERALLY WE ANTICIPATE, UH, YOU KNOW, HISTORICALLY WE WE'VE KIND OF USED 5%, BUT, BUT RATES ARE EXTREMELY LOW.

AND SO, SO WE'VE PULLED THAT DOWN SLIGHTLY.

ANY OTHER QUESTIONS? SO THIS IS KIND OF WEIRD, I MEAN, SO WHEN YOU SAY IT FOUR TO FOUR AND A HALF PERCENT, AND ARE THESE LIKE 20 TO 30 YEAR BONDS, OR YES, I'M ON 30 YEAR DEBT, 30 YEAR DEBT, 48%.

AND SO THE SPREAD FOR US TO GET INVESTMENT BANKERS TO TAKE US TO THE MARKET AND SUCH NOT, I MEAN, IF YOU'RE AN INVESTOR AND YOU, YOU ONLY GET THREE OR SO THE SPREAD BETWEEN WHAT INVESTORS REALLY GET AND WHAT YOU ALL PAY IS ONE AND A HALF PERCENT.

WELL, FIRST OF ALL, UM, I WOULD SAY THAT, UM, YOU KNOW, WE, WE USE KNOW WE WANT TO BE CONSERVATIVE IN TERMS OF FORECASTING.

UM, IT CERTAINLY, UM, WE DON'T HAVE A CRYSTAL BALL IN TERMS OF WHERE RATES ARE GOING TO GO, BUT REMEMBER WHEN YOU'RE ISSUING 30 YEAR DEBT, UM, YOU KNOW, TH TH THE CURRENT RATE IS ONLY A SMALL PIECE OF IT.

YOU KNOW, THERE'S, THERE'S SOME EXPECTATION IN TERMS OF WHERE RATES WILL BE, UH, FIVE YEARS IN 10 YEARS IN 20 YEARS.

SO, UM, SO TO COMPARE, UH, FOR AN INTEREST RATE ON A 30 YEAR DEBT INSTRUMENT, UM, TO CURRENT INTEREST RATES ON SHORT TERM INVESTMENT, UM, YOU KNOW, IT'S REALLY APPLES AND ORANGES.

NO, I WASN'T TALKING ABOUT SHORT VERSUS LONG.

I WAS TALKING ABOUT YOU ISSUED THE DEBT, YOU LOCK IN YOUR RATE FOR 30 YEARS.

YOU MAY, IF THE RATES GO DOWN, I GUESS YOU COULD REFINANCE AND REFUND, BUT ASSUMING THAT THEY STAY ABOUT THE SAME IT'S, IT'S 30 YEAR DEBT MORTGAGE, RIGHT? YEAH, ABSOLUTELY.

AND, YOU KNOW, AUSTIN ENERGY, AS WE'LL SEE LATER IS AN AA RATED, UM, UTILITY, WHICH IS, WHICH IS A GOOD RATING FOR A CHAIR, A GOOD RATING FOR, UH, YOU KNOW, AN ELECTRIC UTILITY.

AND, UM, YOU KNOW, OVER, OVER THE LAST FEW YEARS, WE'VE GENERALLY DONE A MUCH BETTER THAN, UH, YOU KNOW, THE MARKET AS A WHOLE.

UH, WE GOT VERY GOOD RATES ON OUR, YOU KNOW, OUR TWO ISSUES LAST YEAR, BUT, YOU KNOW, IN, IN, IN TERMS OF PUTTING TOGETHER A BUDGET AND FORECASTING, WE'RE ALWAYS A LITTLE MORE CONSERVATIVE THAN, THAN WHAT WE THINK WE ACTUALLY WOULD GET.

YOU KNOW, IF, IF RATES WERE TO TURN, IF WE WERE MORE AGGRESSIVE IN TERMS OF, UH, UH, THOSE ASSUMPTIONS AND, AND RATES TURNED ON US THEN, AND WE MIGHT BE IN A POSITION WHERE WE DIDN'T BUDGET ENOUGH.

SO AGAIN, WE'RE CONSERVATIVE TO TRY AND ENSURE THERE'S ADEQUATE FUNDING.

UH, BUT WE, WE GENERALLY EXPECT TO DO BETTER THAN THAT.

YEAH, DAVE, THIS IS KAREN, JUST FOR WHAT IT'S WORTH.

THIS REALLY, ISN'T A BIG ITEM BECAUSE THE ONLY THING THAT FITS IN THIS BUDGET IS THE CURRENT YEARS THAT SERVICE.

AND WHEN THEY ACTUALLY GO OUT AND ISSUE DEBT, YOU'RE GOING TO GET WHATEVER THE MARKET RATE IS ON THE DATE.

YOU SEE THE DEBT.

SO IF THEY'RE PROJECTING FOUR AND THEY GET THREE, UH, THE CURRENT YEAR IMPACT OF THAT IS, IS NEGLIGIBLE.

JUST FYI YOU, HI, THIS IS MARTY.

UM, I, THIS IS ALL REALLY INTERESTING DISCUSSION AND I AM VERY APPRECIATIVE AND LEARNING A LOT, BUT I AM CONSCIOUS OF TIME.

UM, AND SO WE'RE COMING UP ON TWO O'CLOCK AND WE'VE STILL GOT, I THINK, LIKE MORE THAN HALF OF MR. GONZALES'S PRESENTATION.

SO, UM, I THINK FROM THIS POINT FORWARD, WHY DON'T WE TRY TO HOLD OUR QUESTIONS TO THE END? UM, AND THEN WE WILL THAT WAY, HOPEFULLY WE CAN GET DONE ABOUT TWO 15 AND WE'LL STILL HAVE TIME FOR THE RATE PRESENTATION QUICKLY AND, AND, UH, ADDITIONAL QUESTIONS, IF ANY, THANK YOU.

AND I'LL BE BRIEF.

UH, NEXT SLIDE PLEASE.

AND ONE MORE, UH, ADVANCED PLEASE.

RIGHT.

WHEN WE LOOK AT FINANCIAL HEALTH, WE LOOK AT IT FROM A, UH, YOU KNOW, A NUMBER OF PERSPECTIVES.

AND FIRST OF ALL, WE LOOK AT IT FOR, FROM AN AFFORDABILITY PERSPECTIVE.

UM, THIS IS, UM, THE, WHAT WE REFER TO AS OUR TYPICAL, UH, CUSTOMER BILL, AND THEN YOU'RE LOOKING AT THE IMPACT OF A TYPICAL CUSTOMER BILL, AND YOU'LL SEE TWO COLUMN,

[00:55:01]

UH, YOU KNOW, WHAT WAS ADOPTED, UH, YOU KNOW, PRE COVERED RELIEF AS PART OF THE APPLIED 20 BUDGET ADOPTION PROCESS, AND THEN THE POSTCODE, UH, RELIEF COLUMN.

UM, YOU CAN SEE THAT, UH, BOTH FOR, UH, YOU KNOW, CAP AND NON CAP CUSTOMERS, UH, THAT, UH, THE TYPICAL CUSTOMER BILL BASED ON, UH, YOU KNOW, 860 KILOWATT HOURS PER MONTH, UH, HAVE GONE FROM 88 OH FIVE TO 84 60 FOR NON-CASH CUSTOMER, AND 69 WAS SIX TO 62, 29.

UM, AGAIN, WE, WE AREN'T ANTICIPATING ANY CHANGES, UH, TO A CUSTOMER CHARGE.

WE ARE EXPECTING, UM, AS I MENTIONED EARLIER, BASE RATES FOR TIERS FOUR AND FIVE TO REVERT, UH, BUT BECAUSE THAT'S FOR, UH, CONSUMPTION OVER A THOUSAND KILOWATT HOURS, THAT DON'T, IF IT DOESN'T IMPACT OUR TYPICAL CUSTOMER BILL, UM, AND THEN WITH REGARD TO THE PASS THROUGH RATES AGAIN, WHERE, UH, WE'LL BE REVIEWING THOSE, FINALIZING THOSE IN SEPTEMBER AND MAKING ANY NECESSARY ADJUSTMENTS, UM, QUESTIONS, NO, SORRY.

NEXT SLIDE PLEASE.

UM, AND THEN, UH, YOUR DAD'S SERVICE THAT, UH, UH, A KEY, UM, THE KEY COMPONENT OF HOW YOU LOOK AT, UH, AN ORGANIZATION'S FINANCIAL HEALTH, YOU KNOW, AN ORGANIZATION THAT HAS, YOU KNOW, A SIGNIFICANT AMOUNT OF DEBT MIGHT BE WHAT'S CALLED OVER LEVERAGED AND, UH, YOU KNOW, UH, PUSHING OFF COSTS, UH, INTO THE FUTURE.

UH, AND THAT'S A BIG PART OF WHY WE STRIVE FOR THAT 50 50 SPLIT, UM, YOU KNOW, IN TERMS OF CASH AND DEBT FINANCING, BUT YOU CAN SEE THAT, UH, YOU KNOW, IN 2019, UM, AND THEN CARRYING FORWARD TO, TO 20, 20 AND 21, WE, WE HAD, UH, SIGNIFICANT INCREASES AS COMPARED TO PRIOR YEARS.

AND THAT'S, UH, UH, YOU KNOW, ATTRIBUTABLE TO THE ACQUISITION ACQUISITION OF NACADOCIOUS POWER LLC LAST YEAR.

UH, YOU KNOW, WHEN WE ISSUED 465 MILLION IN TEXTBOOK REVENUE BOND LAST MAY FOR, FOR THAT ACQUISITION.

UM, AND SO AS A RESULT, WE SAW A $34 MILLION INCREASE YEAR OVER YEAR FROM 2018 TO 2019.

UM, AND THEN, YOU KNOW, THE FULL IMPACT IS REALIZED IN FYI 20 AND 21.

UM, UH, WE EXPECT, UH, YOU KNOW, ANNUAL DEBT SERVICE TO REMAIN IN THAT ONE 50 TO ONE 60 RANGE, UH, YOU KNOW, FOR THE NEXT FEW YEARS.

AND, UM, YOU KNOW, WE DON'T ANTICIPATE, YOU KNOW, OTHER THAN, UH, THE NEW HEADQUARTERS, YOU KNOW, ANY, ANYTHING KIND OF OUT OF THE ORDINARY IN TERMS OF, YOU KNOW, NEW DEBT THAT WE'RE UNDERTAKING.

UM, BUT WE, UH, YOU KNOW, AT THESE LEVELS, WE'RE STILL, UM, ALTHOUGH NOT QUITE AS WE'LL SEE IN THE NEXT COUPLE OF SLIDES, WE'RE NOT QUITE WHERE WE WANT TO BE FROM, UH, YOU KNOW, SOME OF OUR FINANCIAL METRIC WE'RE STILL IN A COMFORTABLE RANGE.

AND THE NEXT SLIDE, PLEASE.

YES.

SO WHEN WE LOOK AT AUSTIN ENERGY'S FINANCIAL HEALTH, THESE ARE THE KEY METRICS THAT WE LOOK AT.

AND JUST AS A FRAME OF REFERENCE, ANYTHING IN GREEN IS, UM, AN AREA IN WHICH, UH, WE'RE EITHER MEETING OR EXCEEDING, UH, THE TARGETS BASED ON OUR STRATEGIC PLAN.

UM, NOW THOSE TARGETS MAY AND DO DIFFER, UH, FROM, YOU KNOW, OUR, OUR, OUR BOND COVENANTS OR OUR FINANCIAL POLICY MINIMUM.

UM, BUT YOU CAN SEE THAT DEBT SERVICE, COVERAGE AND DEBT TO CAPITALIZATION WAS IMPACTED BY OUR NACADOCIOUS ACQUISITION, ALTHOUGH THERE WERE STILL WELL WITHIN YOUR BOND COVENANT LEVELS AND OUR COMMENSAL POLICY MINIMUM, AND WE'RE STILL IN A HEALTHY POSITION.

UM, IN ADDITION FROM AN ED INCOME PERSPECTIVE, UM, YOU KNOW, WE'RE NOT QUITE WHERE WE WANT TO BE.

UM, YOU KNOW, FOR A COUPLE OF REASONS I MENTIONED EARLIER DECLINING DEMAND PER COUNT.

SO A LACK OF REVENUE GROWTH, UM, COUPLED WITH, YOU KNOW, OF COURSE, UM, YOU KNOW, FIXED, UH, INFLATIONARY TYPE INCREASES IN OUR FIXED COSTS.

UH, BUT FORTUNATELY WHERE WE'RE STRONGLY POSITIONED TO WEATHER, UH, TEMPORARY INCOME CHALLENGES SINCE OUR CASH RESERVES ARE SO STRONG.

UM, YOU KNOW, PARTICULARLY WITH OUR, OUR, YOU KNOW, OPERATING OR RESERVES OR WORKING CAPITAL, UM, AT 376 MILLION, UM, YOU KNOW, UH, THAT GOES A LONG WAY TOWARDS, UH, HELPING US, WHETHER, YOU KNOW, GETTING ANY TEMPORARY CHALLENGES THAT, THAT WE EXPERIENCED.

AND THE NEXT SLIDE, PLEASE.

SO SPEAKING OF RESERVES AGAIN, OUR WORKING CAPITAL IS, IS, IS QUITE STRONG WELL ABOVE OUR MINIMUM, UH, LEVEL OF 117 MILLION.

OUR CONTINGENCY RESERVE

[01:00:01]

IS, IS RIGHT AT, UM, OUR MINIMUM TARGET LEVEL.

AND WE'RE ABOVE, UM, THE POWER SUPPLY, UM, STABILIZATION IS OUR TARGET.

UM, SO WITH THOSE BEING AT, OR ABOVE OUR MINIMUM TARGET LEVELS, WE FEEL COMFORTABLE WITH WHERE WE'RE AT OVERALL, UM, SINCE, UH, YOU, OUR, OUR TOTAL RESERVE BALANCE IS X HUNDRED TURRET, 664 MILLION AS COMPARED TO, UH, YOU KNOW, 414 MILLION MINIMUM BALANCE.

AND THAT BRINGS US TO OUR MAJOR BUSINESS UNIT DISCUSSIONS.

UM, THAT ONE NEXT SLIDE, PLEASE.

SO WE'LL START WITH POWER GENERATION AND DISTRICT CALLING, BUT BEFORE WE GET STARTED, YEAH, THERE'S A LOT HAPPENING ON THESE SLIDES.

UH, SO TO ORIENT YOU, UH, THE CHART ON THE UPPER LEFT, IT SHOWS OUR ONM BUDGET TRENDS, INCLUDING THE NUMBER OF FTES FOR THE BUSINESS UNIT WHILE THE CHART ON THE UPPER RIGHT SHOWS OUR, OUR CAPITAL SPENDING TRENDS OVER THE SAME TIMEFRAME.

UM, AND SHIFTING DOWN TO THE CHART ON THE LOWER LEFT THAT BREAKS DOWN OUR ONM BUDGET BY CATEGORY CATEGORIES THAT WE GENERALLY TRACK, YOU KNOW, UH, LABOR AND BENEFITS, UM, CONTRACTUALS, UH, IN COMMODITIES, UM, AND THEN ON THE LOWER, RIGHT? SO YOU'LL SEE, UM, BOTH O AND M AND, AND CAPITAL SPENDING HIGHLIGHT.

SO FOR, UM, FOR POWER GENERATION AND DISTRICT COOLING, THE PROPOSED BUDGET TOTAL IS 173 MILLION, WHICH IS A 5.9 MILLION, UH, OR I'M SORRY, 5.9% DECREASE AS COMPARED TO THE PRIOR YEAR.

AND THAT DECREASES, YOU KNOW, UH, DUE TO, UM, TO DECREASE HIS CYCLICAL PLAN OUTAGE AND MAINTENANCE EXPENSE.

UM, HOWEVER, ON THE OWN IMPLANT, UM, YOU KNOW, THERE WAS A SLIGHT INCREASE IN TERMS OF ONM COSTS RELATED TO THE THREE NEW PLANTS COMING ONLINE IN, IN .

AND, UH, FROM A CAPITAL PROJECT PERSPECTIVE.

THESE ARE SOME OF THE MAJOR CAPITAL PROJECTS, UM, THAT ARE IN THE PIPELINE.

AND WE'VE GOT A LITTLE BIT MORE DETAIL ABOUT THOSE ON THE NEXT SLIDE YOU COULD ADVANCE ON FIVE PLEASE.

SO, UH, AGAIN, THIS IS THE FIVE YEAR SPEND PLAN FOR, FOR THOSE PROJECTS THAT WERE LISTED ON THE PREVIOUS SLIDE.

UH, THE FIRST THREE ARE RELATED TO DISTRICT COOLING.

UM, THE DISTRICT QUEENSLAND THREE, THE ACC SATELLITE PLANT, AND THE SAN ANTONIO STREET WATER LINE.

UM, AND THEN, UM, FOR SANDHILL, UH, YOU ENERGY CENTER, UH, YOU SEE IT'S 8.7 MILLION OVER FIVE YEAR PERIOD.

AND AS PAT INDICATED, THAT'S ALL RELATED TO, UH, YOUR ROUTINE MAINTENANCE FOR, UM, ELECTRIC SYSTEMS DELIVERY.

UM, THIS IS COMBINED, BUT YOU'RE DURING THE CURRENT YEAR, WE, UH, WE SPLIT OUT, UM, ELECTRIC SYSTEM DELIVERY OR ESD INTO, UM, ELECTRIC, UH, SYSTEM ENGINEERING AND ELECTRIC FIELD OPERATIONS.

UM, BUT BECAUSE WE DON'T HAVE, UM, BECAUSE THAT'S SPLIT IN THE CURVE, YOU CLEANLY SAY DOWN OUR, OUR REPORTING STRUCTURE LINE, UM, YOU KNOW, SOME, SOME UNITS WERE SPLIT BETWEEN EACH OF THE ORGANIZATIONS.

WE DON'T HAVE A GOOD HISTORICAL THAT FRAMEWORK.

UM, SO FOR THE , WE CONTINUE TO LEAVE IT COMBINED, UH, GOING FORWARD.

WE'LL HAVE THE NEXT YEAR, WE'LL HAVE ONE YEAR OF HISTORY AS A YEAR TO COMPARE IT TO, AND WE'LL START TO PRESENT, UH, THOSE BUDGETS SEPARATELY.

UM, BUT, UH, FOR, FOR NEXT YEAR, WE'LL LOOK AT THEM COMBINED.

AND, UM, PER SE, THE, THE TOTAL, UM, ONM BUDGET IS ABOUT 129 MILLION.

UH, NOW I THINK $25 MILLION INCREASE YEAR OVER YEAR.

AND THEN AS I SAID, THE BIGGEST PART OF THAT IS THE INCREASE IN, IN OUR LINE PARENTS PROGRAM.

UM, THERE ARE ALSO SOME OTHER INCREASES FOR, UM, VEHICLE LEASES AND MAINTENANCE.

AND AGAIN, THE, THE TRANSMISSION PLANNING ANALYSIS IS INCLUDED IN THAT AMOUNT.

UH, BUT IN ADDITION, WE HAVE 21 NEW FTE.

SO 21, UH, ON THE 29 NEW, UH, PROPOSED FTES ARE FOR THE, THE TWO BUSINESS UNITS THAT MAKE UP A WITNESS TO BE CALLED ELECTRIC SYSTEM DELIVERY.

AND, UM, ON THE ENGINEERING SIDE,

[01:05:01]

UH, THERE'S 15 NEW POSITIONS WITH 10 OF THOSE BEING, UM, TEMPORARY OR CONTRACTOR CONVERSIONS.

UM, AND THEN ON THE FIELD OPERATION SIDE, THERE'S SIX NEW FTES.

AND THE NEXT SLIDE, PLEASE, FROM A CIP PERSPECTIVE, UM, YEAH, THE MAJOR PROJECTS ARE, UM, THE SINGLE BIGGEST PROJECTS THAT ARE RELATED TO MAJOR REPLACEMENTS TO REPLACE, UH, THE RESIDENTIAL AND COMMERCIAL SMART METERS.

UM, IN ADDITION, WE'VE GOT, YOU KNOW, RAINY STREET AND BLUFF SPRINGS, UM, SUBSTATIONS TO SUPPORT GROWTH IN BOTH OUR DOWNTOWN AND SOUTHEAST AREA NETWORKS.

AND, UM, AND WE'VE ALSO GOT, UH, UM, 9 MILLION OVER THE NEXT TWO YEARS TO, UM, TO REPLACE OUR WORK, THAT ASSET MANAGEMENT FISCAL, NEXT SLIDE, PLEASE.

SO THAT BRINGS US TO CUSTOMER CARE.

CUSTOMER CARE IS ESSENTIALLY FLAT YEAR OVER YEAR AND ABOUT, UH, ALMOST 46 MILLION.

UM, AND THERE IS A SLIGHT INCREASE WITH ATTRIBUTABLE TO, UM, TO NEW DIGITAL SELF SERVICE PORTAL, AS WELL AS, UH, TO NEW FTES, UH, TO STAFF THE SOUTH BRANCH UTILITY, UH, CONTACT CENTER OPEN THE SUMMER.

UM, AND THEN ON THE CIP SIDE, THERE'S 10.7 MILLION IN FIVE YEARS, IT'S BEEN PLANNED, UM, OR A NEW TELEPHONY SYSTEM.

NEXT SLIDE, PLEASE.

ALL RIGHT.

THAT BRINGS US TO CUSTOMER ENERGY SOLUTIONS.

UM, THAT'S IMPORTANT TO NOTE THAT AS MUCH OUR, OUR OVERALL BUDGET, UH, THE CDES BUDGET WAS DEVELOPED PRIOR TO, UM, THE, THE PANDEMIC AND WE DIDN'T MAKE ANY SIGNIFICANT ADJUSTMENTS, UM, IN ANY AREA IS CERTAINLY AT THE TIME.

UM, YOU KNOW, WE WEREN'T SURE WHAT THE DURATION OF THE PANDEMIC WAS, AND I THINK IT'S LESS AS LONGER THAN, THAN I HAD CERTAINLY ANTICIPATED, BUT THE PANDEMIC HAS IMPACTED, YOU KNOW, OUR, OUR ABILITY TO DELIVER, UM, THE, THE CUSTOMER HAD JUST FINISHED HIS PROGRAM AND , AND DEPENDING ON THE DURATION WILL LIKELY IMPACT, UH, TO VARYING DEGREES.

NOW, THE COMBINED OWNING BUDGET FOR C IT WAS A 44 MILLION, UH, OF THIS 33 MILLION IS ALLOCATED TO A DEMAND PLAN MANAGEMENT PROGRAMS, WHICH TARGET AROUND 73 MILLION IN ANNUAL SAVINGS.

NOW, YOU KNOW, BASED ON YEAR TO DATE PERFORMANCE IS LIKELY TO BE A STRETCH GOAL.

UM, YOU KNOW, LOOKING AT SOLAR INCENTIVES AND BUDGET, UH, FOR 21 AT TOTAL IS 5.2, 5 MILLION, UH, FOR 12 MILLION FOR 12 MEGAWATT, UH, SAVINGS.

UM, AND THAT'S ROUGHLY EQUIVALENT TO OUR EXPECTED , UH, PERFORMANCE.

AND THEN FINALLY OUR GREEN BUDGETING, UH, TWO PROPOSED FTAS.

UH, THOSE ARE BOTH CONVERSIONS TO, UH, CONVERT CONTRACT EMPLOYEES TO PERMANENT FULL TIME POSITION, UH, TO HANDLE OUR COMMERCIAL GREEN BUILDING, UH, RATING SUPPORT AND, UH, ELECTRIC TRANSPORTATION FOR, UM, LIMITED INCOME COMMUNITIES.

AND THEN FINALLY THE CAPITAL SPENDING PLAN INCLUDES, UM, HALF A MILLION FOR, UH, DC FAST CHARGING STATIONS IN AND 3.2 MILLION FOR, UH, YOU KNOW, OVER THE FIVE YEAR PERIOD FOR DC FAST CHARGING STATIONS.

AND THE NEXT SLIDE, PLEASE.

SO THIS SLIDE SHOWS THE BUDGET INDEPENDENT LEVELS, WHICH ARE FUNDED BY, UM, THE ENERGY EFFICIENCY SERVICES, TERROR, UM, AND THE CAPTERRA FOR LOW INCOME WEATHERIZATION, YOU KNOW, UH, NOTE, UM, IF I MAKE FOR LOW INCOME WEATHERIZATION, THEY MADE THEM CHANGED AT AROUND 2.3 MILLION, UH, BUT AN ADDITIONAL 740,000 HAS BEEN ALLOCATED TO THE REDESIGNED, UH, LIMITED INCOME, WELL, FIVE FAMILY, A WEATHERIZATION PROGRAM, UM, WHICH YOU SAY SIGNIFICANT, UH, SORRY THAT WE'RE RUNNING LOW ON TIME.

UM, I DO HAVE A COUPLE OF QUESTIONS ON THIS, ON THIS BUDGET.

I DON'T KNOW IF IT'S APPROPRIATE TO ASK IT, OR YOU WANT TO WAIT TILL THE VERY END ON THE ENERGY EFFICIENCY PROGRAM SPECIFICALLY.

YES.

YEAH.

UM, LET'S, LET'S TRY TO LET HIM GET THROUGH AND WE'LL COME BACK TO THIS

[01:10:01]

SLIDE IF YOU DON'T MIND.

THANKS.

OKAY.

THANKS.

ALL RIGHT.

UM, SO WITH SOLAR INCENTIVES, UM, YOU KNOW, IT'S BEING REDUCED BY 250,000 AND PREPARED TO ASK WHY 20, HOWEVER, YOU KNOW, WE DON'T FEEL LIKE THAT NECESSARILY CONSTRAINTS, PROGRAM GROWTH.

UM, IN FACT, FOR , UM, STAFF ESTIMATE THAT SPENDING WELL, UM, THE ABOVE 6 MILLION, UM, AND INCENTIVES AS COMPARED TO A BUDGETED AMOUNT, A FIVE AND A HALF MILLION.

AND, UM, YOU KNOW, AGAIN, WE'LL COME BACK TO THIS, BUT, UH, NEXT SLIDE PLEASE.

WELL, THAT BRINGS US TO SUPPORT SERVICES, BUDGET SUPPORT SERVICES, BUDGET IS RELATIVELY FLAT.

UM, WE WE'RE SEEING INCREASES IN SECURITY CONTRACTS, SO THERE'S ABOUT A $6 MILLION INCREASE, UM, NOTE THAT THIS SUPPORT SERVICES BUDGET, WHICH COVERS, UM, YOU KNOW, ALL OF THE UTILITIES SUPPORT FUNCTIONS, INCLUDING, UH, GENERAL MANAGER'S OFFICE, CORPORATE COMMUNICATIONS FACILITIES, LEAD FINANCE, UM, UH, HR PURGATORY AND GOVERNMENT AFFAIRS.

AND IT, UM, SO THIS DOES INCLUDE IT, BUT WE ALSO HAVE A BREAKOUT FOR IT ON THE NEXT SLIDE.

UM, NOW IT MAKES UP ABOUT 3.8 MILLION, UM, THE OVERALL ABOUT 6 MILLION INCREASE, AND THEN WE'VE GOT INCREASES AGAIN IN SECURITY CONTRACT AND ANOTHER 1.6, 5 MILLION INCREASE FOR RATE REVIEW, UM, THAT