Apr 05, 2022 Austin Energy Utility Oversight Committee

LET'S MOVE QUICKLY THROUGH HOUSEKEEPING ITEMS WITH THE MINUTES AND THE DIRECTOR'S REPORT, AND THEN WE WILL TAKE UP THE BASE RATE REVIEW PROCESS.

THAT'S ITEM NUMBER THREE.

WE HAVE TWO UPDATES AFTER THAT DECKER CREEK POWER STATION UPDATE, WHICH IS ITEM NUMBER FIVE.

UH, ITEM NUMBER THREE IS WINTER STORM URI AFTER ACTION REPORT UPDATE.

AND THEN OUR LAST, UM, UPDATE IS ON THE REACH PROGRAM, WHICH IS ITEM FOUR.

THIS ONE'S A VERY IMPORTANT PROGRAM THAT WILL HELP US REACH OUR CLIMATE GOALS.

SO WHILE WE HAVE A BRIEF UPDATE, UH, SCHEDULED FOR TODAY, I WOULD LIKE TO HAVE, UM, TO INDICATE THAT I'D LIKE TO SCHEDULE A MORE EXPANSIVE UPDATE AT OUR JUNE MEETING, UH, WITH THE OPPORTUNITY FOR A BOARD DISCUSSION.

SO, UM, FOR THE GENERAL MANAGER AND THE CITY MANAGER.

[1. Approve the minutes ofthe February 1,2022 meeting of the Austin Energy Utility Oversight Committee.]

UH, IS THERE A MOTION TO APPROVE THE MINUTES FROM OUR LAST MEETING? AND I SEE THE MAYOR PRO TEM MAKE THAT MOTION AND COUNCIL MEMBER KELLY IS SECONDING ANY DISCUSSION OR AMENDMENTS TO THESE MINUTES, ALL IN FAVOR, PLEASE RAISE YOUR HAND.

AND IT LOOKS LIKE MAYOR, ARE YOU VOTING? YES.

ON THE MINUTES? YEP.

IT LOOKS LIKE IT'S UNANIMOUS FOR THOSE WHO

[00:05:01]

ARE WITH US.

AND I SEE THAT COUNCIL MEMBER RENTERIA HAS ALSO JOINED US.

GOOD TO SEE YOU ALL.

ITEM NUMBER TWO, THE GENERAL MANAGERS REPORT WELCOME GENERAL MANAGER SERGEANT.

UM,

[2. General Manager's Report -Upcoming Recommendations for Council Action -Innovations, events, awards.]

GOOD AFTERNOON.

MADAM CHAIR, UH, VICE CHAIR AND COMMITTEE MEMBERS.

I'M JACKIE SERGEANT AUSTIN ENERGY GENERAL MANAGER.

THANK YOU FOR OUTLINING THE AGENDA FOR TODAY.

IF YOU COULD GO TO THE NEXT SLIDE, PLEASE, AS TYPICAL I'LL BEGIN TODAY WITH A BRIEFING ON UPCOMING REQUESTS FOR COUNCIL ACTION.

I HAVE SIX TO REVIEW WITH YOU TODAY.

THE FIRST ITEM IS TO AUTHORIZE A $2.75 MILLION CONTRACT INCREASE WITH BRACE INTEGRATED SERVICES, INC.

THIS AMENDMENT IS FOR CONTINUED INSULATION AND HEAT TRACED SERVICES AT SANDHILL ENERGY CENTER AND THE DECKER CREEK POWER STATION COMBUSTION TURBINES, AND INCLUDES THE ADDITION OF THREE NEW DISTRICT COOLING PLANTS THAT HAVE BEEN ADDED SINCE THE ORIGINAL FUNDING REQUEST IN OCTOBER OF 2019 HEAT TRACING HELPS US TO PROTECT PIPES FROM FREEZING CONDITIONS.

THE NEXT ITEM IS TO AUTHORIZE NEGOTIATION AND EXECUTION OF A $200,000 CONTRACT WITH JOHN B. KAUFMAN LLC TO PROVIDE INDEPENDENT CONSUMER ADVOCATE SERVICES FOR THE UPCOMING BASE RATE REVIEW PROCESS.

THE NEXT ITEM IS TO AUTHORIZE NEGOTIATION AND EXECUTION OF A $325,000 CONTRACT WITH MCGUINNESS LOCKRIDGE TO PROVIDE HEARING EXAMINER SERVICES FOR THE UPCOMING BASE RATE REVIEW PROCESS.

THE NEXT ITEM IS TO AUTHORIZE NEGOTIATION AND EXECUTION OF A $6 MILLION MULTITERM COOPERATIVE CONTRACT WITH INC TO PROVIDE VERITAS NETWORK, OUR NET BACKUP PRODUCTS AND SERVICES, INCLUDING MAINTENANCE TRAINING AND SUPPORT SERVICES.

FOR UP TO FIVE YEARS, THESE PRODUCTS ARE SERVICES, SUPPORT AND RECOVERABILITY AND INTEGRITY OF CORPORATE DATA.

IT ENSURES THAT DATA CAN BE BACKED UP AND RESTORED TO MEET RETENTION POLICIES FOR CRITICAL DATA SERVICE LEVEL AGREEMENTS AND COMPLIANCE MANDATES.

THE NEXT ITEM IS TO AUTHORIZE NEGOTIATION AND EXECUTION OF A FIVE-YEAR CONTRACT WITH CROWN TEXAS, INC, TO PROVIDE PREFABRICATED SUBSTATION CONTROL HOUSES ON AN AS-NEEDED BASIS IN THE AMOUNT NOT TO EXCEED $10 MILLION SUBSTATION CONTROL HOUSES, PROVIDE WEATHERPROOF AND CONTROLLED ENVIRONMENT TO PROTECT VITAL UTILITY EQUIPMENT THINGS SUCH AS RELAYS, COMMUNICATION, EQUIPMENT AND BATTERIES.

AND THE FINAL ITEM IS TO AUTHORIZE A SEVEN MONTH EXTENSION AND A $4.8 MILLION INCREASE IN THE EXISTING CONTRACTS WITH PRO SERVE INDUSTRIAL CONTRACTORS, LLC, AND ENGINEERING INC FOR CONTINUED POWER PLANT AND CHILLER MAINTENANCE SERVICES FOR REVISED CONTRACT AMOUNT, NOT TO EXCEED $21.2 MILLION.

THE ORIGINAL FUNDING WAS BASED ON THE NEED FOR EXISTING LOCATIONS AND SERVICE OVER SIX YEARS.

AND SINCE THEN WE'VE ADDED THREE NEW DISTRICT COOLING PLANTS, WHICH HAS RESULTED IN THE NEED FOR THIS INCREASE IN FUNDING.

I WANT TO TAKE A MOMENT JUST TO TALK ABOUT SUPPLY CHAIN AFTER TWO YEARS OF NEWS ABOUT MANUFACTURING CHALLENGES AND CARGO SHIPS, UNABLE TO DOCK FOR UNLOADING.

IT'S NO SURPRISE THAT SUPPLIES, CHAINS SHORTAGES ARE NOW IMPACTING THE POWER SECTOR NATIONWIDE.

THE WEIGHT FOR EQUIPMENT VARIES DEPENDING ON THE LOCATION AND SIZE OF THE UTILITY AND ON THE ITEMS THAT ARE BEING ORDERED.

UNFORTUNATELY, AUSTIN ENERGY IS NOT EXEMPTED.

WE ARE SEEING IMPACTS TO OUR OPERATIONS IN BOTH INCREASES IN LEAD TIMES FOR SUPPLIES AND EQUIPMENT, ALONG WITH SIGNIFICANT PRICE INCREASES, AUSTIN ENERGY STRIVES TO WORK ON TIME AND ON BUDGET.

WE ARE INCREASING OUR PLANNING TO HELP OFFSET THE SUPPLY CHAIN PROBLEMS, BUT STILL TIMELINES AND BUDGETS FOR PROJECTS MAY BE AFFECTED.

THIS IS AN ISSUE THAT WE CAN'T SOLVE ALONE BECAUSE IT'S A NATIONWIDE ISSUE.

SO WE ARE WORKING WITH THE NATIONAL PARTNERS, SUCH AS THE LARGE PUBLIC POWER COUNCIL AND THE AMERICAN PUBLIC POWER ASSOCIATION TO LEVERAGE INDUSTRY-WIDE MITIGATION STRATEGIES DURING THIS TIME.

AND WE WERE LOOKING FORWARD TO THINGS RETURNING MORE TO NORMAL, AND HOPEFULLY THAT'LL BE SOONER RATHER THAN LATER.

NOW I WOULD LIKE TO MENTION THE ANNUAL AUSTIN ENERGY REGIONAL SCIENCE FESTIVAL, THAT ONCE AGAIN WAS HELD VIRTUALLY IT ENCOURAGES AND REWARDS INNOVATIVE STUDENT RESEARCH, AND IT ALSO PROVIDES SCIENTISTS, ENGINEERS, AND OTHER PROFESSIONALS, A CHANCE TO VOLUNTEER IN THE COMMUNITY.

THIS YEAR 1080 STUDENTS PARTICIPATED IN THE ELEMENTARY DIVISION, 278 IN THE JUNIOR DIVISION AND 232 IN THE SENIOR DIVISION.

SIX PROJECTS WERE SELECTED TO ADVANCE DIRECTLY TO THE REGENERON INTERNATIONAL SCIENCE AND ENGINEERING FAIR, WHICH WILL TAKE PLACE IN MAY.

I'D LIKE TO SAY THANK YOU TO ALL THE SPONSORS AND THE VOLUNTEERS FOR THEIR SUPPORT AS ALWAYS.

IT'S GREAT TO CELEBRATE THE YOUNG SCIENTISTS OF AUSTIN AND THE SURROUNDING

[00:10:01]

AREA.

LASTLY, I'D LIKE TO HIGHLIGHT THAT AUSTIN REESE AUSTIN RECENTLY HOSTED THE 20TH ANNIVERSARY OF THE AMERICAN PUBLIC POWER ASSOCIATIONS LINEWORKERS RODEO.

I HAD THE HONOR TO WELCOME 55 LINE WORKER TEAMS PLUS 100 APPRENTICES COMPETING FROM 47 UTILITIES IN 18 STATES ALL THE WAY FROM MASSACHUSETTS TO CALIFORNIA AND ALL ACROSS THE COUNTRY RIGHT HERE IN AUSTIN.

THE LAST TIME THE RODEO WAS HELD WAS THREE YEARS AGO IN SNOWY, COLORADO SPRINGS.

IT WAS SO WONDERFUL TO SEE THE COMRADERY, THE SMILES COMPETITION, AND OUR FOLKS SIMPLY OUT THERE HAVING A GOOD TIME.

AUSTIN ENERGY HAD FIVE JOURNEYMEN TEAMS AND SIX APPRENTICES COMPLETE COMPETE.

I COULDN'T BE PROUDER OF HOW THEY, HOW WELL THEY HAVE REPRESENTED ALL OF US.

THIS WAS AN INCREDIBLE EVENT AND TRULY A SUCCESS I HEARD FROM COMPETITORS AND THEIR EXECUTIVES, THAT IT WAS A GREAT RODEO, FANTASTIC VENUE, AND HOW GRATEFUL PEOPLE WERE TO BE BACK TOGETHER.

MOST IMPORTANTLY, THIS WAS DONE SAFELY AND WITHOUT INJURY.

NEXT SLIDE, PLEASE, WITH THAT, I'LL PAUSE TO ANSWER ANY QUESTIONS.

YOU MAY HAVE ANY QUESTIONS FOR OUR GENERAL MANAGER.

COUNCIL MEMBER KELLY.

UM, AND THANK YOU FOR THAT GREAT REPORT.

UM, I WANT TO THANK THE MEMBERS OF AUSTIN ENERGY FOR GIVING ME AN EXCELLENT TOUR AT THE LINE WORKER RODEO EVENT THAT WAS HIGHLIGHTED HERE TODAY IN YOUR REPORT, IT WAS ABLE TO GET A VERY COMPREHENSIVE TOUR OF THE GROUNDS AND LEARN ALL ABOUT WHAT OUR LINE WORKERS DO ON A REGULAR BASIS.

THE SKILL PRECISION AND INTRICATE DETAILS OF THE WORK THAT IS REQUIRED OF OUR LINE WORKERS IS NOT ONLY IMPRESSIVE.

IT'S UNMATCHED OUR GENERAL MANAGERS, RIGHT? THE SMILES AND COMRADERY WERE WONDERFUL TO OBSERVE.

I HOPE TO ATTEND FUTURE EVENTS AND I'D LIKE THE AUSTIN ENERGY EMPLOYEES TO KNOW THAT I APPRECIATE THEIR TIME AND ANSWERING ALL OF MY QUESTIONS WHILE I WAS THERE.

AND THANK YOU.

THANK YOU FOR JOINING US.

ANYONE ELSE? ALL RIGHT, THANKS.

SO LET'S SAY I DID ONE QUICK.

YOU DO YOUR SURE.

MAYOR PROTON.

UM, I WAS JUST WONDERING, UM, YOU TALKED ABOUT THE SUPPLY SHORTAGES.

I WAS CURIOUS IF YOU COULD UPDATE US ON LABOR ISSUES THAT YOU MIGHT BE HAVING IN TERMS OF RECRUITMENT AND RETENTION.

UM, WE ARE FACING SOME OF THE SAME CHALLENGES THAT, UH, OTHERS IN THE CITY ARE FACING.

UM, WE HAVE SOME VERY TECHNICAL, HIGHLY SKILLED POSITIONS THAT WE NEED TO FILL.

WE HAVE, UM, ENGINEERS, WE HAVE, UH, IT POSITIONS, UM, BUT WE'RE ALSO STRUGGLING WITH OUR, UM, UH, CSRS, OUR CALL TAKERS IN THE, UM, CALL CENTER.

UH, WHEN WE SEE OTHER ENTITIES IN OUR REGION PAYING STARTING WAGES OF $24 AN HOUR, IT'S REALLY HARD TO, UH, COMPETE.

SO, UM, THOSE ARE THINGS THAT WE ARE FACING.

UM, AND WE ARE BROADENING OUR, UH, OUR RECRUITING STRATEGIES AND, UH, WORKING WITH HRD, UH, TO TRY TO FIND SOME CREATIVE SOLUTIONS, UM, SUCH THINGS AS CAN WE USE SIGN-ON BONUSES.

UM, AND ARE THERE OPPORTUNITIES TO, UH, BROADEN THAT SEARCH, UH, FOR, UH, WORKERS.

NOW WE HAVE BEEN SUCCESSFUL IN HOSTING SOME EVENTS, UH, OPEN HOUSES AND WE HAVE, UH, UH, A GROUP THAT IS NOW GOING THROUGH OUR CLIMBING SCHOOL AND THEIR, THEIR GRADUATION IS SCHEDULED FOR THE END END OF THIS MONTH.

SO, SO THAT'S HELPING.

UM, AND THEN WE'RE ALSO REACHING OUT TO SOME OF THE LOCAL SCHOOL DISTRICTS TO GET PEOPLE INTERESTED IN OUR BUSINESSES, BUT IT'S BECOME A REAL CHALLENGE.

AND AS I TALKED TO MY COUNTERPARTS ACROSS THE COUNTRY, UM, IN EVERY MAJOR CITY, THEY'RE EXPERIENCING THE SAME, THE SAME STRESSORS.

BUT FIRST, JUST TO GET ONE CONCERN OUT OF EVERYONE'S MIND, I WANT TO LET YOU KNOW THAT THIS IS NOT BECAUSE OF WINTER STORM YURI, WHILE SOME UTILITIES HAD TO ADD CHARGES IN THE WAKE OF THE WINTER STORM, THAT NOT THE CASE HERE INSTEAD, THIS IS ABOUT CONTINUED CHANGING LANDSCAPE FOR ELECTRIC UTILITIES OVERALL, AS WELL AS SOME SPECIFIC CHALLENGES, UNIQUE TO AUSTIN.

IF YOU COULD, PLEASE LET US KNOW IF THERE ARE STEPS THAT WE NEED TO TAKE TO SUPPORT YOU IN THOSE EFFORTS.

THANK YOU, TRIPLE YOU BET.

[3. Briefing on upcoming 2022 base rate review process.]

ALL RIGHT.

WE'RE MOVING TO ITEM THREE, WHICH IS THE BASE RATE REVIEW PROCESS AND THEN AFTER THAT WE'LL HAVE TWO UPDATES, DECKER CREEK POWER STATION, AND THE AFTER ACTION REPORT ON WINTER STORM, URI OF STAFF COULD KIND OF COME DOWN TO THE FRONT OF THE ROOM.

WHOEVER IS GOING TO BE MAKING THOSE PRESENTATIONS.

THEN WE CAN MOVE QUICKLY THROUGH FROM ONE ITEM TO THE NEXT.

YES, SIR.

GOOD AFTERNOON.

UH, CHAIR, VICE CHAIR, COMMITTEE MEMBERS.

MY NAME IS RUSTY .

I AM THE VICE PRESIDENT OF FINANCE AT AUSTIN ENERGY.

I WANT TO THANK YOU FOR THE OPPORTUNITY TODAY TO PRESENT TO YOU.

AS JACKIE SHARED AT OUR LAST AEU O C MEETING, AUSTIN ENERGY WILL BE CONDUCTING A RIGHT REVIEW PROCESS YEAR, AND IT'S NO SECRET THAT REVENUES ARE DOWN AND COSTS ARE UP.

AND WE'D LIKE TO GIVE YOU A SENSE OF WHAT'S DRIVING THAT NEED FOR A BASE RATE ADJUSTMENT AND THE PROCESS AHEAD.

[00:15:01]

AS I DISCUSS IN DEPTH, PLEASE KNOW THAT OUR GOAL IS TO CONTINUE TO OFFER SOME OF THE MOST AFFORDABLE CUSTOMER BILLS IN THE STATE WITH THE BEST CUSTOMER ASSISTANCE PROGRAMS IN THE NATION.

WE HOPE TO DO THAT WHILE ALSO MAKING SURE THAT AUSTIN ENERGY IS FISCALLY SOUND MEETS ITS FINANCIAL POLICIES AND CONTINUES TO PROVIDE SIGNIFICANT BENEFIT TO THE COMMUNITY AND THE CITY'S GENERAL FUND.

WE ARE IN THE FINAL STAGES OF SCRUBBING NUMBERS.

AND SO THIS PRESENTATION TODAY WILL NOT INCLUDE, UH, ANY NUMBERS ABOUT, UM, HOW MUCH THE BASE RATE REVIEW, UH, WILL IMPACT CUSTOMERS.

UM, BUT IT WILL SPEAK TO THE NEED OF WHY WE NEED A BASE RATE INCREASE AND ALSO THE BASE REVIEW BASE RATE REVIEW PROCESS.

THIS IS A DISCLAIMER THAT SAYS THAT IN THIS REPORT, THERE MIGHT BE, UM, ESTIMATED OR, UH, FORECASTED FINANCIAL INFORMATION AND THAT THE ACTUAL RESULTS WILL VARY FROM THIS FORECAST.

ALSO OUR AUDITED FINANCIAL STATEMENTS FOR FISCAL YEAR 2021 WERE PUBLISHED ON MARCH 14TH, 2022, AND CAN BE FOUND ON THE LINK LISTED HERE.

SO THIS IS THE AGENDA.

UH, I'LL HAVE A QUICK ONE PAGE SUMMARY.

I'LL TALK ABOUT THE FINANCIAL NEEDS OF THE, OF THE UTILITY, AND THEN I'LL PASS THE BATON IF YOU WILL, TO TAMMY COOPER.

AND SHE WILL TALK TO YOU ABOUT THE REBASE RATE REVIEW PROCESS AND THE RIGHT REVIEW SCHEDULE.

OVER THE LAST TWO YEARS, AUSTIN ENERGY HAS HAD COMBINED NET LOSSES OF OVER $90 MILLION AND THROUGH THAT SAME PERIOD, AND THROUGH JANUARY OF 2022, WE'VE LOST OVER $130 MILLION IN CASH.

AND THE RIGHT FILING PACKAGE WILL GO PUBLIC IN MID APRIL.

WE'LL HAVE PUBLIC MEETINGS, UH, IN, FROM MID APRIL TO MID MAY PARTICIPANT CONFERENCES AND REVIEWS FROM JUNE THROUGH SEPTEMBER.

IT WILL BE IN FRONT OF THE CITY COUNCIL ON NOVEMBER 17TH FOR REVIEW AND APPROVAL, AND HOPEFULLY HAVE BASE RATE CHANGES GO INTO EFFECT IN JANUARY OF 2023, AUSTIN.

AND OUR NEW ENERGY LOOKS FOR YOUR SUPPORT IN THIS SPACE RATE, REVIEW PROCESS TO ENSURE FINANCIAL STABILITY.

SO AS WE GO ABOUT IN THIS RIGHT MAKING BUSINESS, WE LOOK TO CERTAIN GUIDING PRINCIPLES FOR ESTABLISHING RATES.

FIRST THAT THEY'RE EQUITABLE AND FAIR THAT THE RATES ARE STABLE, THAT WE DON'T WHIPS OUR CUSTOMERS, AND THAT THE RIGHTS ARE SIMPLE SO THAT A CUSTOMER CAN COME IN, READ A TARIFF SHEET AND UNDERSTAND HOW HE'S BEING BUILT.

WE WANT TO PROTECT OUR VULNERABLE CUSTOMERS AND WE WANT TO PRESERVE ENERGY EFFICIENCY AND CONSERVATION.

HISTORICALLY, ONCE BASE RATES GO INTO EFFECT, THEY TYPICALLY STAY IN EFFECT FOR A FAIRLY STABLE PERIOD, FOUR OR FIVE, SIX YEARS.

IN FACT, THIS SLIDE SPEAKS TO THE BASE RATE CHANGES THAT WE'VE HAD SINCE 1994.

AND AS YOU CAN SEE, THE US BASE RATE CHANGE WE HAD WAS AN ACTUAL REDUCTION AND AUSTIN ENERGY HAS NOT HAD A BASE RATE INCREASE IN NEARLY 10 YEARS.

AS I SAID, THIS IS A BASE RATE REVIEW.

I'LL DRAW YOUR ATTENTION TO THE PIE CHART THAT AFFECTS ABOUT HALF OF THE CUSTOMERS.

UH, BILL, UH, THESE BASE RATES WILL GO TO COVER COST TO OWN AND OPERATE THE ELECTRIC SYSTEM.

THIS BASE RATE REVIEW WILL NOT ADDRESS, UH, POWER SUPPLY COSTS OR TRANSMISSION COSTS OR OTHER PASS THROUGHS, SUCH AS REGULATORY COSTS.

THIS IS NOT AN EXHAUSTIVE LIST, BUT SHOWS A VARIETY OF THE COSTS THAT BASE REVENUES PAY FOR THINGS LIKE SUPPLIES AND EQUIPMENT, TREE TRIMMING, DEBT, SERVICE EMPLOYEES, INFORMATION TECHNOLOGY, AND GENERAL FUND.

AND AS I SAID EARLIER, IT WILL AS ENCAPSULATED IN THE ORANGE BLOCK, IT DOESN'T INCLUDE, UH, THINGS SUCH AS THE CUSTOMER ASSISTANCE PROGRAM, ENERGY EFFICIENCY PROGRAM, OR POWER SUPPLY COSTS.

SO AUSTIN ENERGY DELIVERS CLEAN, AFFORDABLE, RELIABLE ENERGY AND EXCELLENT CUSTOMER SERVICE, BUT WE ARE MUCH MORE THAN JUST YOUR ELECTRIC UTILITY BUSINESS.

WE PROVIDE NUMEROUS COMMUNITY BENEFITS, THINGS LIKE ENERGY EFFICIENCY PROGRAMS, RENEWABLE ENERGY PORTFOLIO, AND A PREMIER CUSTOMER ASSISTANCE PROGRAM.

AND YOU GET ALL OF THAT AT A BARGAIN BASEMENT PRICE.

THIS SLIDE SHOWS, UH, OUR RESIDENTIAL BILLS COMPARED TO OUR PEER UTILITIES.

AND YOU SEE WHERE WE'RE CIRCLED AT THE TOP, SOME OF THE LOWEST IN THE STATE.

NEXT SLIDE,

[00:20:01]

PLEASE.

THIS SLIDE DOES A GOOD JOB SHOWING THE COSTS, SHOWING THAT COSTS ARE OUTPACING REVENUES AND DRAW YOUR ATTENTION TO THE BAR CHART.

SO THE YELLOW BARS, OUR REVENUE, THE ORANGE LINE REPRESENTS COST, AND YOU CAN SEE THAT COMMENCING IN 2018 COSTS START RISING IN A FAIRLY STEEP SLOPE AND THEY EXCEED REVENUES IN 20 AND 21.

AND WHEN WE DON'T GENERATE ENOUGH REVENUE TO PAY COSTS, WE HAVE TO RELY ON OUR CASH BALANCES TO DO THAT.

YOU CAN FOLLOW THE RED ARROW AROUND AND LOOK AT THE BAR AT THE LINE GRAPH IN THE FAR RIGHT.

YOU CAN SEE, UH, WHERE WE'VE HAD TO DIP INTO CASH RESERVES TO MEET OUR, OUR NEEDS AND THAT AT THE END OF JANUARY, 2022, WE HAVE $550 MILLION OF CASH IN RESERVES.

NOW PART OF THAT CASH IS ALREADY CLAIMED BY THINGS SUCH AS UNREFINED AT POWER SUPPLY CASTS THAT WILL BE PASSED BACK TO OUR CUSTOMERS.

BUT IF YOU LOOK AT THAT $558 MILLION AND LONG WITH THE TRENDS ON THE YELLOW BARS, THAT IF THOSE THINGS CONTINUE, THAT WILL SOON BE TO THIS RED DOTTED LINE.

AND SO WHAT DOES THAT MEAN? SO IT SAYS MINIMUM BALANCE NEEDED IS $480 MILLION.

SO AUSTIN ENERGY HAS FINANCIAL POLICY THAT SAYS WE WILL KEEP A MINIMUM OF 150 DAYS OF CASH ON HAND.

THAT'S WHAT THAT $480 MILLION REPRESENTS AS WE GET CLOSE TO THAT.

AND TO PUT THINGS INTO PERSPECTIVE IN 2021, FITCH PEER REVIEW, PUT OUT A STUDY THAT SAYS, IF YOU'RE A AA RATED UTILITY, YOU SHOULD HAVE ON HAND ABOUT 275 DAYS.

AND SO, AS YOU SEE, AS WE GET CLOSE, CLOSER AND CLOSER TO THAT RED LINE, WE'RE ONLY ABOUT HALF OF THE CASH THAT OUR PEER AA UTILITIES CURRENTLY HAVE.

AND AT THAT TIME YOU CAN SEE THE ORANGE DOT WHEREABOUTS HALF THOSE CUSTOMERS USED 1,149 KWH OR LESS.

SO THE TITLE OF THIS SLIDE IS WIRE COSTS, OUTPACING REVENUES, TWO REASONS COSTS ARE GOING UP REVENUES.

AREN'T A LOT OF OUR COSTS ARE DRIVEN BY CUSTOMER GIRLS AND, YOU KNOW, AS AUSTIN, AS A POPULAR PLACE IN AUSTIN ENERGY, AS AN ELECTRIC UTILITY HAS AN OBLIGATION TO SERVE.

SO AS CUSTOMERS MOVE INTO OUR SERVICE TERRITORY, WE ARE OBLIGATED TO PROVIDE SERVICE.

SO I DRAW YOUR ATTENTION TO THE ORANGE LINE.

PARDON ME? 2014 IS OUR LAST TEST YEAR 2021 IS OUR MOST IS THE CURRENT TEST YEAR FOR THIS RATE CASE.

IT'S THE SEVEN YEAR PERIOD.

AND OVER THAT SEVEN YEAR PERIOD, OUR CUSTOMERS HAVE GROWN 18%.

NOW, WHAT DOES THAT MEAN? THAT MEANS OVER THAT SEVEN YEAR PERIOD, WE HAVE ADDED OVER 80,000 CUSTOMERS AND INVESTED ALMOST $2 BILLION IN NEW INFRASTRUCTURE.

NOW CUSTOMER GROWTH DOES PAY FOR PART OF THAT.

YOU ASSUME ABOUT $40 MILLION IN CONTRIBUTIONS IN H CONSTRUCTION, WHICH IS ABOUT WHAT WE'RE AT NOW OVER SEVEN YEARS, PERIOD, YOU CAN SEE THAT CONTRIBUTION SAY CONSTRUCTION CUMULATIVELY OVER THAT SEVEN YEAR PERIOD.

IT'S ABOUT $300 MILLION.

KEEP IN MIND THOUGH THAT WE SPENT ABOUT 2 BILLION.

SO THERE'S A LOT OF MONEY THAT, UH, AUSTIN ENERGY HAS TO RELY ON BASE RATES TO PAY FOR.

NOW, LET'S LOOK AT REVENUES, WHY HADN'T REVENUE KEPT UP? WELL, THAT COIN HAS TWO SIDES.

AND THE FIRST IS THE GOOD NEWS STORY, RIGHT? FOR A MYRIAD OF REASONS, OUR CUSTOMERS HAVE BECOME MORE ENERGY EFFICIENT AND NOT JUST HERE IN AUSTIN, BUT NATIONWIDE, BUT THAT'S NOT WHY REVENUES HAVEN'T KEPT UP.

YESTERYEAR RATE DESIGN IS NOT EFFECTIVE UNDER THIS NEW PARADIGM OF ENERGY EFFICIENCY.

WE'RE USING OUTDATED RATES THAT RELY TOO HEAVILY ON KWH SALES FOR JEN TO GENERATE REVENUE.

YOU SEE OUR CUSTOMERS HAVE EVOLVED, THEY'VE BECOME MORE EFFICIENT, BUT OUR RIGHT DESIGN HASN'T AND THAT HAS TO BE FIXED.

THIS NEXT SLIDE WILL DEMONSTRATE THAT.

SO IF YOU LOOK AT THIS SLIDE HAS GOT A LOT OF INFORMATION AND I'LL LAY THE GROUNDWORK FROM JUST A SECOND, BUT WHAT, THIS IS A SUMMER CONSUMPTION IN 2009, COMPARED TO 2021.

SO LOOKING AT THIS SLIDE, IF YOU LOOK ALONG THE X AXIS, THOSE ARE KWH IN 50 KWH BUCKETS ON THE Y AXIS IS THE PERCENT NUMBER OF BILLS.

AND IF YOU LOOK AT THE VERY TOP OF THAT GRAPH, YOU'LL SEE TIER ONE, TIER TWO, TIER THREE, TIER FOUR, TIER FIVE, THOSE ARE REPRESENTATIVE OF OUR FIVE TIER RESIDENTIAL STRUCTURE.

ALSO DRAW YOUR ATTENTION TO TIER THREE.

IF YOU DRAW A LINE ABOUT RIGHT DOWN TO THE MIDDLE OF IT, EVERYTHING TO THE LEFT IS BELOW COST.

EVERYTHING TO THE RIGHT IS ABOVE COST IN OUR, IN OUR RATE STRUCTURE.

SO LET'S LOOK AT THE ORANGE LINE.

SO WHY 2009, 2009 WAS THE TEST YEAR WHEN WE DEVELOPED THIS CURRENT RESIDENTIAL RATES STRETCHER.

[00:25:01]

THE OTHER HALF USED MORE.

AND WE JUST TALKED ABOUT THIS NEW PARADIGM OF ENERGY EFFICIENCY.

SO AS WE MOVE FORWARD TO 2021, THAT ORANGE.NOW BECOMES THE YELLOW DOT IF YOU WILL.

RIGHT? SO NOW INSTEAD OF A LEBANON 49 KWH, THE MEDIAN IS 900 KWH WITH ABOUT HALF USING, UH, LESS THAN 900 AND ABOUT HALF USING MORE.

SO THAT'S A 22% DECREASE IN CONSUMPTION.

SO THAT, THAT SPEAKS TO THE ISSUE ABOUT, ABOUT ENERGY EFFICIENCY.

NOW, I WANT TO TALK A LITTLE BIT ABOUT HOW OUR OLD RATE STRUCTURE DOESN'T ACCOMMODATE THIS NEW PARADIGM.

SEE BACK IN 2009, IF YOU LOOK AT THE ORANGE LINE ABOUT HALF, THOSE KWH FELL TO THE RIGHT OF THE TIER THREE AND ABOUT HALF FELL TO THE LEFT.

SO WE RELIED ON KWH SOLD IN SECOND HALF OF TIER THREE AND TIER FOUR AND TIER FIVE TO HELP PAY FOR NOT ONLY THEMSELVES, BUT THOSE KWH, SO THAT WERE BELOW COST AND TIER ONE AND TIER TWO, AS THE, AS WE MOVE FROM THE ORANGE LINE TO THE YELLOW LINE, WHAT YOU START TO SEE IS MORE KWH BEING CONGREGATED IN TIER ONE AND TIER TWO, WHICH ARE BELOW COST AND LESS KWH OUT IN THE HIGH VALUE TIERS IN TIER FOUR AND TIER FIVE.

AND IN FACT, YOU CAN SEE THE LITTLE BIT OF A SWAG IN TIER FOUR, WHERE WE SAY LOSS, KWH SALES, THOSE KWH SALES AREN'T AROUND ANYMORE FOR ONE OR TWO REASONS.

THEY EITHER HAVE MIGRATED TO TIER ONE OR TWO, OR WE'VE SIMPLY LOST THEM.

SO WE HAVE ABOUT $1.8 BILLION IN DEBT OUTSTANDING, AND WE HAVE A FIDUCIARY RESPONSIBILITY TO OUR BOND HOLDERS.

AND SO WHEN REVENUES DON'T COVER A COST, OUR MASTER BOND ORDINANCE REQUIRES US TO FIX THAT INSPECT.

SECTION FOUR SPEAKS TO THAT.

IT SAYS, REQUIRES THE CITY TO FIX RATES, TO PAY ALL OUR CURRENT OPERATING EXPENSES.

WE ALSO HAVE A FINANCIAL POLICY THAT 17 THAT SAYS WE'LL CONDUCT, UM, RIGHT REVIEW ADEQUACY STUDIES, UH, AT A MINIMUM OF EVERY FIVE YEARS.

AND THAT WHEN WE FIND THAT WE'RE DEFICIENT THAT WE MOVE FORWARD WITH THE RIGHT CASE.

AND THEN OF COURSE, WE'RE ALWAYS CONCERNED ABOUT OUR CREDIT RATING.

AND WE LOOK TO WHAT THE CREDIT RATING AGENCIES SAY ABOUT RATE INCREASES.

AND YOU NEED TO LOOK NO FARTHER THAN WHAT MOODY SAID, AND IT'S OCTOBER, 2020 CREDIT REPORT THAT SAYS FACTORS THAT COULD LEAD TO A DOWNGRADE, INCLUDE FAILURE TO IMPLEMENT A NEEDED RATE, INCREASE IN A TIMELY MANNER.

SO AS A RECAP OF WHY WE NEED THIS BASE RATE REVIEW, YOU KNOW, WE'VE TALKED ABOUT CUSTOMER GROWTH AND AN OBLIGATION TO SERVE, RIGHT? AND SO WE GET THIS SIGNIFICANT CUSTOMER GROW.

WE HAVE TO BUILD PLANT, UH, TO PROVIDE, UH, TO SERVE THOSE CUSTOMERS PLUS MAINTAIN RELIABILITY.

UH, WE TALKED A LITTLE BIT ABOUT, UH, ENERGY EFFICIENCY AND THAT WE NEED TO IMPROVE FIXED COST RECOVERY BECAUSE WE HAVE THIS OUTDATED, UH, RATE DESIGN, UH, HIGHER ONM COSTS, A SODIUM ASSOCIATED WITH THE ADDITIONAL ONM AND OUR BOND RATING HEALTH.

SO AT THIS TIME, I'M GOING TO TURN IT OVER TO TAMMY COOPER AND SHE WILL TALK TO YOU ABOUT THE RATE REVIEW PROCESS.

AS RUSTY MENTIONED, THE FORMAL PROCESS TO REVIEW AUSTIN ENERGY'S BASE RATE PROPOSAL IS MUCH LIKE THE PROCESS USED IN THE 2016.

GREAT REVIEW.

THIS PROCESS IS BASED ON THE PUBLIC UTILITY COMMISSIONS PROCEDURAL RULES.

AS WE DID IN 2016, WE WILL RETAIN AN IMPARTIAL HEARING EXAMINER TO OVERSEE THE RATE REVIEW PROCESS WHO WILL PROVIDE COUNSEL A RECOMMENDATION ON AUSTIN ENERGY'S BASE RATE PROPOSAL.

WE WILL ALSO RETAIN AN INDEPENDENT CONSUMER ADVOCATE WHO WILL SPECIFICALLY REPRESENT THE INTERESTS OF RESIDENTIAL AND SMALL COMMERCIAL CUSTOMERS.

AND AS JACKIE MENTIONED EARLIER, BOTH OF THOSE RCAS ARE UP FOR COUNCIL APPROVAL.

ON THURSDAY, SINCE 2016, WE HAVE ENHANCED THE PROCESS TO MAKE IT MORE FLEXIBLE AND MORE ACCESSIBLE TO THE PUBLIC.

ALL OF THE SAME PROCEDURAL PROTECTIONS ARE THERE INCLUDING DISCOVERY AND AN OPPORTUNITY FOR EACH OF THE PARTIES TO MAKE A PRESENTATION TO THE HEARING EXAMINER.

THE ENHANCED PROCESS ALSO PROVIDES ADDITIONAL OPPORTUNITIES FOR PARTICIPANTS TO ASK QUESTIONS IN PERSON OF AUSTIN ENERGY STAFF, THROUGH TECHNICAL CONFERENCES, BUT WE HAVE STREAMLINED MUCH OF THE FORMAL PROCESSES AND REWORDED SOME OF THE LEGAL EASE SO THAT THE PROCESS IS MORE EASILY UNDERSTANDABLE BY THE PUBLIC NEXT SLIDE.

OH, THAT SHOULD HAVE BEEN THAT SLIDE.

AND VIRTUAL MEETINGS SCHEDULED FOR ALL CUSTOMER CLASSES, RESIDENTIAL SMALL TO MID-SIZED BUSINESSES AND LARGE CUSTOMERS.

WE WILL ENGAGE IN AN EXTENSIVE COMMUNITY OUTREACH TO OUR CUSTOMERS AND EDUCATE THEM ON THE NEED FOR RATE REVIEW AND INFORM THEM AS TO HOW THEY CAN GET INVOLVED.

IN THE PROCESS.

WE HAVE A COMBINATION OF IN-PERSON

[00:30:01]

WE WILL HAVE A DEDICATED WEBPAGE EXPLAINING HOW CUSTOMERS CAN PARTICIPATE IN THE FORMAL PROCESS OR HOW THEY CAN SUBMIT COMMENTS IF THEY WISH TO PARTICIPATE.

INFORMALLY, ALL FEEDBACK FROM THE COMMUNITY IS VALUED AND WILL BE PROVIDED TO THE IMPARTIAL HEARING EXAMINER AND THE INDEPENDENT CONSUMER ADVOCATE.

NEXT SLIDE, THIS TIMELINE SHOWS THAT WE WILL BE PUBLICLY FILING THE BASE RATE REVIEW FILING PACKAGE WITH THE CITY CLERK ON APRIL 18TH, CUSTOMERS WILL THEN BE ABLE TO REQUEST FORMAL PARTICIPATION IN THE PROCESS AND ENGAGE IN DISCOVERY.

WE PLAN TO HAVE A HEARING, WHICH WE ARE NOW CALLING A FINAL CONFERENCE IN MID JULY, FOLLOWING PARTIES, BRIEFING THE IMPARTIAL HEARING EXAMINER WE'LL DRAFT A RECOMMENDATION FOR COUNCIL'S CONSIDERATION.

FOLLOWING ISSUANCE OF THAT RECOMMENDATION PARTICIPANTS WILL HAVE THE OPPORTUNITY TO RESPOND THROUGH THE SUBMISSION OF EXCEPTIONS.

THEN THE RECOMMENDATION AND THE EXCEPTIONS WILL BE PROVIDED TO THE ELECTRIC UTILITY COMMISSION FOR THEIR REVIEW.

ON NOVEMBER 3RD, COUNCIL WILL SET A PUBLIC HEARING AND ON NOVEMBER 17TH, WE'LL CONSIDER THE RECOMMENDATION FOR FINAL APPROVAL OF NEW RATES TO BE EFFECTIVE JANUARY 1ST, 2023.

SO IN CONCLUSION, UH, GOING BACK TO WHAT RUSTY SAID, UM, AUSTIN ENERGY IS SEEKING RECOVERY OF BASE RATES COSTS, IMPROVED FINANCIAL METRICS AND COMPLIANCE WITH BOND COVENANTS, FINANCIAL POLICIES, AND THE DOUBLE A RATING CREDIT EXPECTATIONS, A REVISED RESIDENTIAL RATE STRUCTURE THAT BETTER RECOVERS COSTS WHILE ENHANCING FAIRNESS, A GRADUAL MOVE FOR EACH CUSTOMER CLASS TO PAY THEIR SHARE OF COSTS AND GREATER EQUITY FOR OUR MORE VULNERABLE CUSTOMERS THROUGH BETTER RATE DESIGN.

AND THAT'S OUR PRESENTATION.

WE'RE HAPPY TO ANSWER ANY QUESTIONS YOU MAY HAVE.

THAT'S GREAT.

MS. COOPER, ANY SPECIFIC QUESTIONS HERE BEFORE WE PROCEED? YES.

COUNCIL MEMBER TOVA.

YEAH, I HAVE, UM, I HAVE SOME QUESTIONS.

SO I'D LIKE TO GET BACK TO, UM, WHEN, I GUESS I WOULD JUST SAY MANAGER, I HOPE THAT WE'LL HAVE A CONSIDERABLE TIME EITHER WITHIN THIS MEETING OR WITHIN OUR OTHER COUNCIL SESSIONS TO REALLY TALK ABOUT THIS AS IT MOVES FORWARD.

I KNOW LAST TIME WE HAD A MAJOR RATE REVIEW AND INCREASE PROPOSED INCREASE.

IT TOOK QUITE A WHILE, UM, FOR COUNCIL TO SORT THROUGH.

AND, AND THAT WAS REALLY HELPFUL FOR THE REPAIRS BECAUSE I THINK THE FIRST PROPOSAL THAT CAME FORWARD WAS IN THE NEIGHBORHOOD OF AROUND 12% AND WE WERE ABLE TO CUT IT DOWN ALMOST IN HALF.

SO I THINK IT'S REALLY IMPORTANT THAT WE TAKE THE TIME WE NEED TO REALLY UNDERSTAND SO THAT WE CAN TALK TO OUR RATE PAYERS ABOUT, ABOUT THESE ELEMENTS.

SO I WANT TO BE SURE I'M UNDERSTANDING, UM, UNDERSTANDING THE RATIONALE FOR IT.

AND, AND I, AND I WANT TO BE SURE FOR TODAY THAT I'M UNDERSTANDING YOUR CHARTS CORRECTLY.

SO BACK ON PAGE 10, WHY THE BASE RATE REVIEW IS NEEDED AS PROPOSED IT'S, THAT COSTS ARE EXCEEDING REVENUE.

AND I AM SEEING IF I'M READING YOUR CHART ON THE LEFT CORRECTLY, IT'S REALLY JUST THE LAST TWO YEARS WHERE THE COSTS EXCEEDED THE REVENUE.

IS THAT ACCURATE? SO UNTIL THEN THE REVENUE WAS INDEED EXCEEDING THE COSTS.

BARS, UM, WE JUST, HAVEN'T SEEN A LOT OF GROWTH IN REVENUE.

MA'AM THAT THOSE ARE BASE RATE REVENUE COSTS AND BASE RATE REVENUE EXPENSES.

AND YOU'RE CORRECT.

UM, THAT THE BAR CHART REFLECTS THAT.

YES MA'AM SO IT WASN'T UNTIL 20 AND 21, BUT, OKAY.

SO, AND I KNOW THAT WE HAVE A COUNCIL POLICY TO REEVALUATE EVERY FIVE YEARS, WHICH I THINK SINCE THE LAST ONE WAS IN 2017, I KNOW THAT THIS IS, I MEAN, AS I, I ASSUME THAT'S PART OF WHY WE'RE BEING ASKED TO CONSIDER IT NOW, NOT BECAUSE OF TWO YEARS WHERE THE COSTS EXCEEDED THE REVENUE, BUT BECAUSE IT'S TIME TO LOOK AT IT AGAIN, AS PART OF THAT COMMITMENT TO LOOK AT IT EVERY FIVE YEARS, I THINK IT'S A COMBINATION OF BOTH, RIGHT? WE'RE EXPERIENCING, YOU KNOW, FINANCIAL RATIOS ARE DETERIORATING.

I MEAN, THERE'S, THERE'S REAL LOSS.

WE'VE HAD, AS I SAID, $90 MILLION IN NET LOSSES IN THE LAST TWO YEARS AND OUR CASH BALANCES ARE GOING DOWN, RIGHT.

WE'VE HAD DETERIORATION AND THINGS LIKE OUR DEBT SERVICE COVERAGE, OUR DEBT TO EQUITY COVERAGE, OUR DAYS OF CASH ON HAND IS GOING DOWN.

SO WE'VE HAD JUST A GENERAL DECLINE AND OUR OVERALL FINANCIAL HEALTH.

I DON'T DISPUTE THAT.

I GUESS THOUGH, AS I'M LOOKING FROM 2014, WE S YOU KNOW, MOST OF THOSE YEARS, EVERY ONE OF THOSE YEARS, IN FACT, THE REVENUE THAT WE BROUGHT IN WAS MORE THAN THE COSTS.

SO, I MEAN, THERE IS, THERE ARE SOME YEARS AND I WOULD HAVE TO SIT AND REALLY FIGURE IT OUT, BUT IT, THERE WERE SOME YEARS THE CUMULATIVE IMPACT OF THAT, MAYBE THAT THE REVENUES WE TOOK IN FROM 2014 EXCEED THE COST THAT THAT GAP MAKE UP FOR THOSE LAST TWO YEARS.

I, I, WELL, I CERTAINLY CAN'T SPEAK TO WHAT'S GOING TO HAPPEN IN THE FUTURE, BUT I WILL TELL YOU THAT LOOKING AT THE TRENDS IS THAT THAT COST, UH, COST LINE IS CERTAINLY A STEEP SLOPE, UH, AND THAT YOU CAN SEE SINCE 2018, OUR REVENUES HAVE BEEN RELATIVELY FLAT.

IF YOU LOOK AT THE TOP OF THOSE YELLOW

[00:35:01]

I MEAN, THEY LOOK LIKE THEY'RE PRETTY FLAT SINCE 2015 ON, AND IT GOES BACK TO THIS PHENOMENON THAT I, THAT I SPOKE OF RECENTLY IS THAT OUR OUTDATED RIGHT DESIGN BUILT BACK ON 2009 DATA NO LONGER REFLECTS HOW OUR CONSUMERS USE ENERGY.

RIGHT.

I MEAN, I KNOW, I REMEMBER THAT CONVERSATION THAT VERY, VERY CONVERSATION TAKING PLACE, YOU KNOW, BEFORE I JOINED THE COUNCIL AND THEN WHICH WAS IN 20 11, 20 11, BUT WHEN WE HAD OUR FIRST RATE REVIEW THAT CAME UP AGAIN, THAT, YOU KNOW, AUSTIN ENERGY NEEDS TO ADDRESS THIS ISSUE BECAUSE WE WANT, AS A MATTER OF POLICY, WE WANT OUR CUSTOMERS TO USE LESS ENERGY.

WE WANT THEM TO CONSIDER.

AND SO, SO WHILE THIS, I UNDERSTAND WHAT YOU'RE SAYING, AND YES, IT IS AN OUTDATED MODEL, BUT IT'S BEEN OUTDATED NOW AND AN A CAUSE FOR CONCERN AND SOMETHING WE'VE BEEN TALKING ABOUT FOR A LONG WHILE.

SO IT'S NOT REALLY A NEW PHENOMENON.

RIGHT? AND, AND, AND LET ME BE ABSOLUTELY CLEAR.

THIS IS NOT ABOUT ENERGY EFFICIENCY.

THAT IS, THAT IS A GOOD THING.

AUSTIN ENERGY AND THE CITY OF AUSTIN HAS ALWAYS PROMOTED ENERGY EFFICIENCY AND CONSERVATION, RIGHT.

AND THAT'S NOT THE ISSUE.

THE ISSUE IS, IS THAT WE NEED TO BRING OUR RIGHT DESIGN CURRENT WELL, AND IT'S AN ABSOLUTE, AND I'M GLAD YOU SAID THAT, CAUSE I, IT'S ABSOLUTELY THE POLICY OF THE COUNCIL AND YOUR UTILITY TO, TO, UM, MAKE SURE THAT WE'RE MAKING THE INVESTMENTS IN ENERGY EFFICIENCY AND CONSERVATION THAT WE NEED TO.

AND WE, WE HOPE THAT THE USE WILL DECREASE COMMENSURATE TO THAT.

UM, AND I KNOW THAT MEMBERS OF OUR COMMUNITY, AND I SEE MR. NAZER HERE, HE AND OTHERS, YOU KNOW, VARIOUS OTHERS HAVE BEEN SAYING FOR A LONG WHILE THAT AUSTIN ENERGY NEEDS TO, NEEDS TO LOOK AT, UM, YOU KNOW, WHAT IS THE LONGTERM TRAJECTORY HERE? IT'S THE SAME, IT'S THE SAME ISSUE THAT COMES UP WHEN WE TALK ABOUT OUR WATER UTILITY, WE WANT, WE WANT FOLKS TO CONSERVE MORE.

AND SO, YOU KNOW, HOW, WHAT IS THAT LONG-TERM SUSTAINABLE FINANCIAL MODEL BECAUSE WE DON'T WANT TO BE, WE NEED TO BE ABLE TO BALANCE IT WITH OUR POLICY AND OUR CLIMATE GOALS.

SO, UM, OUR, THE RESER, UH, THEIR CASH IN RESERVE BALANCES, UH, AS CITED ON NUMBER 10, ARE THOSE ARE TOTAL, UH, OH, THE CASH IN RESERVE BALANCE.

YES, MA'AM OKAY.

500.

THAT'S JUST BECAUSE I KNOW IN THE PAST, SOMETIMES THERE ARE MULTIPLE DIFFERENT FUNDS CALLED DIFFERENT THINGS AND I JUST WANT TOTAL.

UM, AND SO JUST SO, UM, AGAIN, SOME OF THAT, I'M SURE I'M UNDERSTANDING THIS CORRECTLY.

THE MINIMUM BALANCE NEEDED IS 480, AND WE ARE, WE HAVE BEEN ABOVE IT.

WE ARE, WE HAVE MET OR EXCEEDED THAT SINCE 2015 ON, CORRECT.

SO I THINK WHAT I'M INTERESTED IN SEEING IS, UM, A LITTLE BIT MORE INFORMATION ABOUT THOSE COSTS THAT YOU'RE TALKING ABOUT, THE COSTS THAT HAVE ESPECIALLY ACCRUED IN 2020 AND 2021.

YOU STARTED THIS BY SAYING YOU WANTED TO ADDRESS UPFRONT THE QUESTION OF WHETHER ANY OF THIS WAS ATTRIBUTABLE TO THE WINTER STORM.

AND, AND I APPRECIATE THAT YOU SAID, NO, I THINK THAT IT WOULD HELP THE PUBLIC IF THEY COULD ACTUALLY SEE WHAT SOME OF THOSE COSTS, SINCE THE BIGGEST GAP BETWEEN COST AND REVENUE OCCURRED IN 2021, WHICH WAS THE VERY SAME YEAR.

I THINK WE DO NEED TO SEE WHAT THOSE COSTS, WHAT THOSE COSTS WERE BY CATEGORY SO THAT WE CAN ASSURE THE PUBLIC.

IT WASN'T, IT WASN'T ABOUT WINTERIZATION.

IT WASN'T ABOUT SOME OF THE OTHER THINGS THAT I ASSUME, YOU KNOW, ARE REAL CAPITAL COSTS.

UM, ABSOLUTELY.

AND THE RIGHT, THE RIGHT FILING PACKAGE THAT WERE RELEASED IN MID IN MID APRIL WE'LL SHOW, UH, THE TEST, YOUR COSTS.

SO ALL THAT INFORMATION WILL BE AVAILABLE IS THE TEST HERE IT IS 2021.

UM, YEAH, THAT WOULD BE HELPFUL.

AND I KNOW, YOU KNOW, JUST BASED ON OUR FIRST TIME THROUGH THIS, THAT PEOPLE WILL WANT TO KNOW WHETHER THAT'S THE MOST APPROPRIATE YEAR.

SO THAT WILL HELP US DETERMINE WHETHER THERE WERE UNUSUAL COSTS THAT YEAR, THAT WE WOULDN'T EXPERIENCE IN ANOTHER YEAR AND WHETHER THAT'S THE APPROPRIATE TEST YEAR, BUT FROM WHAT YOU'RE SAYING, THE COSTS, EVEN THOUGH THAT WAS AN UNUSUAL YEAR WITH AN EXTREME WEATHER EVENT.

AND I WOULD ASSUME SOME REALLY, UM, I WOULD ASSUME SOME, SOME NECESSARY EXPENSES.

YOU KNOW, ONE OF THE THINGS THAT WE'VE BEEN TALKING ABOUT WITH REGARD TO THE AFTER ACTION REPORT ARE SOME OF THE REPAIRS THAT AUSTIN ENERGY HAS DONE LOOKING FORWARD.

AND SO I WOULD EXPECT THOSE TO BE REFLECTED IN THE COSTS ARE RIGHT.

ARE OUR TESTS, YOUR COSTS ARE ADJUSTED FOR KNOWN IMMEASURABLES.

SO THOSE ARE ADJUSTED OUT OF THE INFORMATION THAT WE'RE COMING IN, ANYTHING THAT, THAT WOULDN'T REPRESENT A NORMAL YEAR.

UM, SO THAT'S WHAT PARDON ME THAT WE CAN MAKE AN ADJUSTMENT ON.

RIGHT.

THEY HAVE TO MEET THAT CRITERIA BEING KNOWN AND MEASURABLE.

SO, YES.

STRETCHER FOR RESIDENTIAL? YES.

AND THEN IN TERMS OF THE PROPOSAL THAT YOU'RE BRINGING FORWARD, DOES IT PROPOSE ANY CHANGES TO THE TIERS? WE ARE PROPOSING A DIFFERENT RIGHT.

AND IS IT GOING TO BE KIND OF ALIGNED WITH OUR POLICY GOALS OF REALLY SHIFTING AND HAVING HIGHER, UM, YOU KNOW, REALLY SENDING PRICING

[00:40:01]

SIGNALS SO THAT WE HAVE, WE HAVE LOWER TOTAL COSTS FOR THOSE, SORRY, THAT'S NOT THE RIGHT.

THAT'S NOT THE SLIDE I WAS THINKING OF FOR THOSE USERS WHO ARE USING LESS ENERGY.

I THINK WHAT WE WILL BE PUTTING FORTH, UH, IN MID APRIL IS REALLY REASONABLE IN THAT REGARD, REASONABLE IN THAT IT'S KIND OF SHIFTING, SHIFTING THE BURDEN OF THE INCREASE TO THOSE WHO ARE HIGHER USERS, HIGHER RESIDENTIAL USERS.

WELL, AS I SHOWED YOU RECENTLY, THERE ARE NO MORE QUOTE UNQUOTE, HIGHER USERS.

EVERYBODY HAS SHIFTED DOWN.

AS I SHOWED IT, HAD THE ORANGE LINE IN THE YELLOW LINE, OUR CUSTOMERS THAT ARE REDUCING ON 22% LESS THAN THEY WERE IN 2009, THOSE CUSTOMERS OUT THERE AND TIER FOUR AND TIER FIVE, THEY'RE GOING AWAY.

IN FACT, ALMOST IF YOU LOOK AT ALL OF OUR RESIDENTIAL CUSTOMERS IN AGGREGATE OVER A THIRD USE, LESS THAN OVER A THIRD OF THE BILLS ARE, ARE LESS THAN 500 KWH.

IF YOU LOOK AT 500 TO A THOUSAND OR THAT, THAT THOUSAND K OVER THREE OUT OF FOUR BILLS LIE THERE, THERE'S NOT A LOT OF NUMBERS.

THERE'S NOT A LOT OF BILLS PASSED THAT 1000 MARK TO PAY, TO MAKE UP ANY DIFFERENCE.

WELL, THAT'LL BE INTERESTING TO SEE, AND I KNOW THAT WE DID MAKE SOME CHANGES TO THE TIERS DURING THE PANDEMIC, AND THEN I THINK UNDID THEM OR MADE SOME ADDITIONAL CHANGES LAST YEAR.

SO I'M, I'M NOT RECOLLECTING SOME OF THE HISTORY THERE, BUT THAT WOULD ALSO BE, I THINK, BACKUP INFORMATION TO HAVE WHEN YOU BRING FORWARD YOUR, YOUR PROPOSAL, UM, ARE THE LARGE INDUSTRIAL CUSTOMERS, ARE YOU PROPOSING ANY CHANGES TO THE LARGE INDUSTRIAL TARIFF CUSTOMERS? YES.

THERE, THERE, IT WILL STRETCH ACROSS THE, ACROSS THE BOARD SAVING EXCEPT, UM, UH, SOME OF THE COMMERCIAL CLASSES THAT ARE, THAT ARE PAYING ABOVE COST OF SERVICE AND THAT INFORMATION IS AVAILABLE IN THE LAST, UH, IN THE LAST COST OF SERVICE WHERE WE SHOWED CUSTOMER CLASS TWO UNITY.

SO I DON'T WANT TO TIP MY HAND TOO MUCH BECAUSE THESE THINGS NEED TO BE TAKEN IN TOTALITY AS OPPOSED TO JUST ONE-OFFS, BUT RIGHT.

WE ARE PROPOSING, UH, UH, INCREASES ACROSS ALL CUSTOMER CLASSES WITH THE EXCEPTION OF SOME SECONDARY CLASSES.

BUT THE, BUT THE LARGE INDUSTRIALS WILL BE CONSIDERED WITHIN THAT.

AND I, ARE YOU ABLE TO SAY ANYTHING ELSE AT THIS POINT ABOUT HOW THOSE TIERS, THOSE RESIDENTIAL TIERS MIGHT BE ADJUSTED? I'D JUST RATHER NOT AT THIS STAGE OF THE GAME, IT'LL GO PUBLIC.

AND LIKE I SAID, BY THE 18TH OF APRIL.

AGAIN, I THINK IT'S GOING TO TAKE US ALONG.

SOMETIMES SOME CONSIDERABLE TIME TO SORT THROUGH THESE ISSUES.

SO I HOPE WE'LL, I HOPE WE'LL, UM, DEVOTE THE TIME THAT WE NEED ON THIS.

I THINK.

THANKS VERY MUCH.

THANKS COUNCIL MEMBER, UH, TOW.

I JUST WANT TO MAKE SURE THAT EVERYBODY KNOWS I'LL, UM, WE WILL BE HAVING AN UPDATE ON THIS AT OUR JUNE SEVEN MEETING.

UM, SO WE CAN REMIND OURSELVES IN THE PUBLIC ABOUT THE PROCESS AND THE TIMELINE.

SO WE'LL MAKE SURE THAT'S ON OUR JUNE AGENDA.

I THINK I SAW A HAND UP THERE, COUNCIL MEMBER RENTERIA, AND THEN COUNCIL A MAYOR PRETEND.

WHAT I REALLY WANT TO KNOW IS, YOU KNOW, WE WE'VE BEEN DISCUSSING RATES AND, AND HOW THE STATE HAS TREATED US IN THE PAST, ESPECIALLY WHEN THEY'RE BIG, HIGH COMMERCIAL USERS AND THE THREATS THEY HAVE.

AND, UH, UH, I'M VERY CONCERNED ABOUT THAT.

YOU KNOW, UH, UH, I ALSO WANT TO KNOW WHERE THE COST IS COMING FROM.

IS IT SOME OF THE BIG INVESTMENTS THAT WE DID BY, UH, DECOMMISSIONING SOME OF THE PLANTS AND THAT WE MADE SOME BIG, HIGH UPFRONT PAYMENTS? UH, I JUST WANTED TO MAKE SURE THAT, YOU KNOW, WE, WE GET ALL THAT INFORMATION OUT SO THAT WE CAN TELL THE TAXPAYER EXACTLY THAT SUPPOSEDLY INVESTMENTS WE MADE WITH BOTH TO SAVE US A LOT IN THE FUTURE.

AND, UH, I REALLY WANT TO KNOW, OR IF THIS, THIS IS JUST GOING TO BE A TEMPORARY UP, OR IS IT BECAUSE OF THE WAGES OR ARE BEING DEMANDED BY THE INDUSTRY NOW WHERE IT'S GOING TO COST US BECAUSE WE'RE HAVING TO PAY MORE, PAY MORE FOR SUPPLIES BECAUSE THE INFLATION THAT HAVE HIT US.

AND I WANT TO MAKE SURE THAT WE GET ALL THAT INFORMATION UP FRONT BECAUSE WE NEED TO REALLY JUSTIFY A RATE INCREASE, AND WE NEED TO BE HONEST WITH OUR, WITH OUR CUSTOMERS.

AND, AND, AND I JUST WANT TO MAKE SURE THAT YOU REALIZE THAT WE'RE GOING TO HAVE TO BE DISCUSSING A RATE INCREASE IN THE FUTURE.

IT SEEMS LIKE IT, AND I JUST WANT TO MAKE SURE THAT THE PUBLIC REALLY KNOWS WHAT'S GOING ON.

SO I COULDN'T AGREE WITH YOU MORE.

AND THE RIGHT FILING PACKAGE WILL BE VERY DETAILED WHEN IT'S RELEASED, HAVE IT'LL LAY OUT EVERY DOLLAR THAT WE'RE TRYING TO RECOVER AND HOW WE'RE GOING TO RECOVER IT.

THAT'S GREAT.

THANKS ANY OTHER, OH YES.

COUNCIL MEMBER.

THANK

[00:45:01]

YOU.

UM, I WANTED TO ECHO THEIR REQUEST TO MAKE SURE THAT WE HAVE A LOT MORE CLARITY ON THE, THE COSTS.

UM, YOU KNOW, WE DID MAKE THE BIG PURCHASE OF NACADOCIOUS PLANT, WHICH SEEMS TO HAVE PAID OFF FINANCIALLY IN OTHER WAYS, UM, THIS WINTER, UM, GIVEN WHERE THE ENERGY MARKET WAS.

UM, BUT I THINK IT WOULD BE, IT WOULD BE GOOD TO HAVE THAT, THAT CLARITY THAT MY COLLEAGUES HAVE HAVE MENTIONED, UM, WHEN WE TALK ABOUT THE BASE RATE.

SO SLIDE EIGHT, UM, IT SAYS A BASE RATE REVENUE DOES NOT INCLUDE THE CUSTOMER ASSISTANCE PROGRAM, ENERGY EFFICIENCY, PROGRAMS, TRANSMISSION RELATED COSTS, POWER PURCHASES FROM AIR CAUGHT, DISTRICT ENERGY AND COOLING AND STREETLIGHTS.

UM, I THINK THAT'S REALLY IMPORTANT THAT WE ARE VERY TRANSPARENT ABOUT WHAT THIS RATE, YOU KNOW, COVERS OR DOESN'T, IT DOESN'T CONCLUDE ANY WHAT WE TRADITIONALLY THINK OF AS PASTORS, UH, AND ONLY COVERS THOSE COSTS TO PROVIDE ELECTRICITY.

SO THINGS LIKE DISTRICT COOLING ARE NOT INCLUDING, RIGHT.

UM, YOU KNOW, AND THEN THERE ARE THERE, I THINK THE OTHER THING WOULD BE A SENSE OF SOME OF THE INVESTMENTS THAT WE'RE MAKING THAT SHOULD ALSO BE REDUCING OUR COSTS.

SO FOR INSTANCE, WHEN WE INVEST IN VEGETATION MANAGEMENT AND WE MANAGE OUR LINES PROPERLY, THAT, YOU KNOW, REDUCES OTHER COSTS THAT WE HAVE, BECAUSE WE'RE NOT HAVING THE RELIABILITY ISSUES, WE'RE NOT HAVING TO SEND FOLKS OUT, ET CETERA.

AND SO I THINK IT WOULD BE HELPFUL ALSO TO SEE NOT JUST THE COST, BUT, YOU KNOW, SOME OF THOSE ARE DESIGNED TO MAKE US MORE EFFICIENT, UM, AND HAVING A BETTER, BETTER SENSE OF THOSE, I THINK, UM, WOULD BE, WOULD BE HELPFUL.

UM, HOW MUCH OF THE DROP IN THE REVENUE AND THE STEADINESS IS DUE TO COVID AND A LOT OF OFFICES NOT USING ENERGY, UM, IS DURING THE PERIOD WHERE WE HAD, UM, THIS GAP, NOT ONLY WERE THERE HIGHER COSTS BECAUSE OF SUPPLY CHAIN ISSUES, THERE WERE ALSO SOME, SOME SHIFTS IN HOW ENERGY WAS USED AND IT MAY HAVE WASHED OUT.

SO THAT, THAT'S A REALLY GOOD QUESTION.

AND, AND WE HAVE DEBATED THAT BACK AND FORTH, BUT AT THE END OF THE DAY, WE CAN, CAN'T, CAN'T DEFINE, WHAT'S ATTRIBUTABLE TO COVID NECESSARILY PEOPLE USE ELECTRICITY OR DON'T USE ELECTRICITY FOR A VARIETY OF REASONS.

UH, AND WE CAN'T PINPOINT WELL, THIS SLIVER IS BECAUSE OF COVID ALL I CAN TELL YOU IS THAT, UM, UH, THAT, THOSE, THOSE, UM, UH, THAT, THOSE, THOSE THAT CONSUMPTION THE ENERGY SALES HAVE BEEN RELATIVELY FLAT.

I THINK IT WOULD BE HELPFUL TO GET A SENSE.

I MEAN, WE EVEN KNOW WHAT OUR OWN ENERGY SAVINGS WERE, YOU KNOW, FOR OUR BUILDINGS THAT WERE NOT BEING USED AS MUCH, THAT PERHAPS IT GIVE US, BUT KEEP IN MIND, YOU KNOW, WHEN WE REDUCE ELECTRICITY, JUST, JUST IN GENERAL, WHEN YOU DO REDUCE ELECTRICITY, YOU DON'T NECESSARILY REDUCE BASE RATE COSTS WHEN YOU REDUCE ELECTRICITY, WHAT YOU IMPACT IS YOUR POWER SUPPLY ADJUSTMENT.

SO IF YOU SAY I'VE REDUCED THE NUMBER OF KWH CONSUMED, WHERE'S MY SAVINGS, IT'S IN THE POWER SUPPLY ADJUSTMENT, AND IT'S NOT IN THESE SPACE RATE COSTS.

ALL RIGHT.

UM, AND THEN IN TERMS OF THE BUSINESS MODEL QUESTION THAT COUNCIL MEMBER TOVO RAISED, UM, I THINK IT'D BE HELPFUL FOR US TO HAVE SOME ANALYSIS OF THE ROLE THAT EVS COULD PLAY IN THAT FUTURE BUSINESS MODEL.

IF WE SHIFT CARS FROM GAS TO ELECTRIC, DOES THAT HAVE ANY APPRECIABLE IMPACT ON THE UTILITY, UM, AND ITS MODEL, IF PEOPLE ARE SUPPLYING THEIR CARS FROM THE GRID INSTEAD OF FROM GAS AND, AND I DON'T, I DON'T KNOW THAT IF IT HAS, UH, ENOUGH OF A, OF AN IMPACT THAT THAT CAN HELP AND THAT WOULD BE, YOU KNOW, USEFUL TO KNOW FOR OUR FURTHER EFFORTS.

SURE.

ELECTRIC.

WE'RE MAKING INVESTMENTS THAT IMPACT THAT BUSINESS MODEL IMPACT OUR EFFICIENCY IMPACT THE COST PORTION OF IT OVER TIME.

AND TH THAT'S A REALLY GOOD POINT.

I WILL TELL YOU THOUGH, THAT THESE BASE, THESE RATES ARE BASED ON A, ON A HISTORICAL TEST YEAR.

AND SO ANYTHING THAT MY COME IN THE FUTURE IS NOT, NOT CAPTURED IN THIS INSTANCE, UH, THIS ONLY RE UH, AT THIS BASE RATE, UH, ONLY DEALS WITH COSTS INCURRED IN TEST YOUR 2021, PLUS SOME KNOWN AND MEASURABLE SINCE.

SO WE DON'T PROJECT OUT ABOUT WHAT THE IMPACT MAY BE WHEN THOSE, WHEN THOSE IMPACTS OCCUR, WE'LL EVENTUALLY HAVE A WRITE CASE THAT'LL BE CAPTURED AND IT'LL BE REFLECTED IN RIGHTS THEN IF THAT'S WHAT YOU WERE SAYING.

SO I I'M, I'M SORT OF CONCERNED ABOUT THE BROADER MODEL, UM, FOR HOW WE FUND AUSTIN ENERGY.

AND, AND, AND, YOU KNOW, WE HAVE THE SAME THING AS COUNCIL MEMBER TOVA MENTIONED IN OUR, IN OUR, WITH OUR WATER UTILITY, AS WE PUSH CONSERVATION, THEN WE HAVE DIFFERENT REVENUES, BUT WE STILL HAVE TO, UM, YOU KNOW, PROVIDE THE BASIC SERVICE.

AND IT SEEMS TO ME THAT EVEN AS WE'RE DOING THIS RATES STUDY,

[00:50:01]

AND YES, IT IS TRUE THAT THE RATE WILL ADJUST OVER TIME AND WE CAN ALWAYS GO BACK.

UM, BUT I WANT TO BE ABLE TO, TO DEMONSTRATE TO OUR RATE PAYERS THAT WE'RE MAKING THOSE KINDS OF INVESTMENTS AND THAT WE'RE THINKING FORWARD TO UNDERSTAND HOW OUR MODEL HAS IMPACTED, UM, BY THESE SHIFTS, UM, THESE UNDERLYING SHIFTS EITHER IN CONSERVATION OR, OR USE OF EVS OR OTHER, OTHER KINDS OF KINDS OF THINGS THAT HELP.

SO IT'S NOT, IT'S SORT OF, I'M SORT OF SEEING BOTH OF THOSE GOING AND IN TANDEM, UM, AND BEING INTERRELATED, EVEN IF THE DISCUSSIONS ARE NOT EXACTLY OVERLAPPING.

UM, AND THEN, THEN FINALLY, CAN YOU SPEAK TO, UM, JUST SO THAT THE PUBLIC IS AWARE, WE HAVE AN ITEM I BELIEVE TO PAY FOR, AND I FORGET THE WORDING, BUT, BUT SOMEONE TO REPRESENT THE RATE PAYERS IN THE PROCESS ON OUR AGENDA, UM, CAN YOU SPEAK TO THAT, UM, PROCESS A LITTLE BIT? I'M SORRY, I DIDN'T UNDERSTAND THE QUESTION ONE MORE TIME, PLEASE.

WE HAVE, UM, LEGAL REPRESENTATION OR AS PART OF THIS PROCESS FOR RATE PAYERS THAT IS INDEPENDENT FROM THE CITY.

AND I JUST WANTED YOU TO EXPLAIN HOW THAT, HOW THAT FUNCTIONS AND, AND WHY THAT'S A PART OF THIS PROCESS.

I'LL LET TAMMY, SO YES, WE WILL BE, UH, RETAINING AN IMPARTIAL HEARING EXAMINER WHO SORT OF SERVES LIKE AN ADMINISTRATIVE LAW JUDGE.

AND, UH, HE WILL BE, UH, RENDERING A RECOMMENDATION TO COUNCIL, AGAIN, BASED ON, ON, UM, YOU KNOW, HEARING ALL OF THE PARTIES, UH, POSITIONS AND MAY, AND MAKE A RECOMMENDATION TO COUNCIL.

AND THEN THERE'S AN INDEPENDENT CONSUMER ADVOCATE, AND THAT IS BASED ON THE PUBLIC COUNCIL MODEL.

AGAIN, THAT'S USED AT THE STATE, UM, BEFORE THE PUBLIC UTILITY COMMISSION.

AND, UH, THAT INDIVIDUAL WILL SPECIFICALLY REPRESENT RESIDENTIAL AND SMALL COMMERCIAL INTERESTS AND TAKE THOSE INTO ACCOUNT AND ADVOCATE THOSE INTERESTS BEFORE THE IMPARTIAL HEARING EXAMINER, BECAUSE OFTEN IT IS DIFFICULT FOR THOSE CUSTOMERS TO PARTICIPATE INDIVIDUALLY IN THESE TYPE OF PROCESSES.

AND THIS IS THE SAME MODEL THAT WAS USED IN THE 2016 RATE REVIEW.

THANK YOU, RIGHT.

UH, COUNCIL MEMBER ELLIS.

AND I THINK YOU'LL BE CLOSING OUT THIS LINE OF QUESTIONING.

THANK YOU, JAY.

I APPRECIATE THE LINE OF QUESTIONING THAT WE'VE BEEN ABLE TO HEAR SO FAR.

I THINK A LOT OF US ARE THINKING IN VERY SIMILAR DIRECTIONS.

UM, WHAT I WOULD REALLY WANT TO MAKE SURE THAT WE KNOW MOVING FORWARD IS JUST THE IMPACTS TO PEOPLE IN DIFFERENT TIERS.

UM, CAUSE I KNOW THAT THERE'S A LOT OF FOLKS THAT HAVE PUT A LOT OF EFFORT INTO MAKING SURE THEIR HOMES ARE ENERGY EFFICIENT AND TRYING TO BRING DOWN, YOU KNOW, THEIR IMPACTS ON ENERGY USAGE HERE LOCALLY.

AND SO I WANT TO MAKE SURE THAT THOSE INDIVIDUALS UNDERSTAND WHAT THE IMPACTS TO THEIR BILLS ARE GOING TO BE AND HOW WE CAN ENSURE THAT THE FOLKS TAKING THOSE MEASURED APPROACHES TO CONSERVATION ARE NOT ENDING UP CARRYING THE BRUNT OF, OF THE INCREASE OF COSTS.

JUST KNOWING THAT, YOU KNOW, UM, SALARIES SOMETIMES HAVE TO GO UP THERE, THERE'S A COST INCREASED COST TO EQUIPMENT AND JUST TIMELINES AND SUPPLY CHAIN ISSUES THAT WE KNOW IS HAPPENING ALL OVER THE COUNTRY.

SO I REALLY WANNA MAKE SURE WE, HOW THIS IS IMPACTING, YOU KNOW, RESIDENTIAL CUSTOMERS AND SMALL BUSINESSES, LIKE YOU SAID, BUT ALSO UNDERSTANDING FOLKS THAT HAVE TAKEN THAT MEASURED APPROACH TO CONSERVATION, HOW ARE, HOW ARE THEY GOING TO BE ABLE TO CONTINUE SEEING BENEFITS FROM THEIR INVESTMENTS AND THE RIGHT FINAL PACKAGE WILL, IT WILL LIKE ALL OF THOSE THINGS THAT YOU SPOKE ABOUT OUT AND YOU'LL BE ABLE TO SEE BILL IMPACTS, IF YOU WILL.

I WILL TELL YOU THIS, UH, FOR THOSE PEOPLE THAT HAVE MADE ENERGY EFFICIENCY INVESTMENTS, THE ONES THAT YOU'RE SPEAKING TO WHO HAVE REDUCED THEIR REDUCTIONS, THEY ALREADY SEE A BENEFIT.

AND IT'S A REDUCTION ONCE AGAIN, INTO THE POWER SUPPLY COSTS, WHICH IS ABOUT A THIRD OF THEIR BILL.

SO EVERY TIME THEY USE LESS ENERGY AT THIRD OF THEIR BILL COMES DOWN.

PERFECT.

AND THEN WHAT KIND OF OUTREACH IS GOING TO BE DONE? HOW DO PEOPLE KNOW WHEN TO PARTICIPATE AND HOW TO PARTICIPATE TO MAKE SURE THAT THEIR VOICES ARE INCLUDED IN THIS PROCESS? SO RIGHT NOW WE HAVE ON OUR WEBSITE, PUBLISHED A SCHEDULE OF COMMUNITY MEETINGS.

WE WILL HAVE SEVERAL THAT WILL BE VIRTUAL AND SEVERAL THAT WILL BE IN PERSON.

AND SO, UM, WE WILL BE PROVIDING COUNCIL OFFICES, UH, INFORMATION AND WEBSITE LINKS SO THAT WE WOULD REALLY ASK FOR YOUR HELP AND HELPING US, UH, GET THE MESSAGE OUT AND MAKING SURE THAT YOUR CONSTITUENTS ATTEND THESE MEETINGS.

AND SO WE WILL BE, UH, CERTAINLY DOING A LOT OF, OF, OF MESSAGING TO MAKE SURE THAT THE CUSTOMERS KNOW, UH, THAT, THAT THEY ARE VERY WELCOME TO ATTEND THOSE MEETINGS THAT ARE COMING UP, THAT I BELIEVE THE FIRST ONE STARTS, UH, APRIL 19TH AND THEY WILL RUN FOR ABOUT A MONTH.

AND I THINK COUNCIL MEMBER, TOBO HAD ONE LAST QUESTION.

NOPE.

[00:55:01]

OH, OKAY.

JUST, I CAN GET INFORMATION OUTSIDE THIS PROCESS, BUT YOU HAD, UH, THERE WAS A QUESTION I ASKED AND YOU SAID THAT INFORMATION WAS AVAILABLE FROM THE LAST RATE REVIEW.

AND I JUST WANTED TO SAY THAT I THINK THE LAST RATE REVIEW WAS, WAS REALLY A BLACK BOX SETTLEMENT.

I'M NOT SURE HOW MANY OF THOSE DETAILS WERE ACTUALLY MADE PUBLIC.

SO I DON'T KNOW IF THOSE ARE, IF THAT'S INFORMATION THAT WE WOULD NEED TO GET AN EXECUTIVE SESSION.

SO CERTAINLY IN THE RIGHT FILING PACKAGE THAT WAS RE UH, RELEASED IN THAT PROCESS, THERE WAS, UM, UM, A GRAPHIC, IF YOU WILL, THAT SHOWED CLASSES TO WHAT WE CALL UNITY.

SO IF A CLASS WAS FULLY PAYING ITS FAIR SHARE OF COSTS, IT WAS AT UNITY, WHICH MEANS IT DIDN'T OVERPAY OR UNDERPAY.

UH, AND SO IT'S A, BASICALLY A HORIZONTAL LINE AND THE CLASSES EITHER GO UP OR DOWN RELATIVE TO, TO THAT UNITY.

SO WE HAVE TWO UPDATES COMING UP NOW WE'VE GOT THE DECKER CREEK CREEK POWER STATION UPDATE.

UM, AND AGAIN, I THINK TO THE EXTENT THAT WE NEED THAT LEVEL OF DETAIL, PERHAPS WE CAN GET IT IN EXECUTIVE SESSION IF NEEDED AND THAT THAT INFORMATION HAS BEEN DEVELOPED.

YES MA'AM.

THANKS.

ALL RIGHT, EVERYBODY, THANKS FOR THE PRESENTATION AND FOR ALL THE INFORMATION THAT YOU ALL PROVIDED TO US TODAY, THE TIMELINE ON THE BASE RATE REVIEW IS, IS A LONG PERIOD OVER THE NEXT SEVERAL MONTHS.

SO WE'LL LOOK FORWARD TO THE UPDATE ON, UH, JUNE 7TH AND PLEASE ANYBODY ON THE STYLISTS WHO NEEDS, OR HAS ADDITIONAL QUESTIONS, PLEASE TAKE ADVANTAGE OF YOUR ACCESS TO STAFF.

UH, DURING THE INTERIM, BEFORE WE GET TO JUNE SEVEN,

[5. Update on Decker Creek Power Station workforce planning.]

AND THEN AFTER THAT WINTER STORM URI AFTER ACTION REPORT UPDATE.

SO ITEM NUMBER TWO, DECKER CREEK POWER STATION UPDATE.

GOOD AFTERNOON, GOOD AFTERNOON.

UM, CHAIR AND COMMITTEE MEMBERS AND CITY MANAGER.

UH, MY NAME IS PAT SWAM VICE PRESIDENT FOR POWER PRODUCTION WITH AUSTIN ENERGY.

AND I'M HERE TO GIVE YOU A BRIEF AND PROBABLY FINAL UPDATE ON THE TRANSITION OF OUR DECKER WORKFORCE.

UH, WE BEGAN THIS JOURNEY ABOUT A LITTLE OVER THREE YEARS AGO AND, UH, THE PLAN WAS TO ADJUST OUR WORKFORCE, UH, IN ANTICIPATION OF THE RETIREMENTS OF DECKER UNITS.

ONE AND TWO DECKER.

ONE WAS RETIRED IN THE FALL OF 2020, AND DECKER TWO WAS RETIRED JUST LAST WEEK ON MARCH 31ST.

AND BOTH OF THOSE WERE AS PLANNED IN MY LAST FEW UPDATES.

I INDICATED THAT WE WERE ON TRACK TO MEET OUR GOALS.

AND I'M PLEASED TO TELL YOU THAT WE'VE MET THOSE, UH, THAT ALLOWS US TO AVOID THE NEED FOR ANY STAFF LAYOFFS.

AT THIS POINT, UH, THIS WAS ACHIEVED THROUGH A FOCUSED EFFORT OF COMMUNICATION AND PROVIDING AND PREPARING STAFF OPPORTUNITIES, UH, ELSEWHERE IN THE ORGANIZATION.

UH, THAT EFFORT PAID OFF WITH A NUMBER OF TEAM MEMBERS, TEAM MEMBERS, TAKING NEW ROLES, AS WELL AS TAKING OPPORTUNITY TO RETIRE.

I WANT TO TAKE THIS A MOMENT TO THANK, UH, THE TEAM AT DECKER, THE ENGINEERING TEAM THAT SUPPORTED IT, UH, DECKER ONE AND TWO FOR THE WORK THEY DID TO PROVIDE FOR A SUCCESSFUL MANY SUCCESSFUL, UH, DECADES OF OPERATION BY THOSE TWO UNITS, AS WELL AS ALL THOSE MEMBERS OF THE TEAM WHO SUPPORTED GETTING US WHERE WE ARE TODAY IN TRANSITIONING THE WORKFORCE, UH, WITH THAT, UH, THAT CONCLUDES MY REMARKS.

AND I'LL TAKE ANY QUESTIONS.

YOU MIND, ANY QUESTIONS FOR MR. SWEENEY ON THE DECKER LAKE, UM, RE STAFFING? YES.

COUNCIL MEMBER TAVA.

JUST WANT TO MAKE SURE I HEARD YOU CORRECTLY, THAT THERE ARE NO LAYOFFS THAT ARE GOING TO BE NECESSARY.

EVERYBODY HAS FOUND WELL, I JUST WANT TO THANK YOU AND YOUR TEAM AND THOSE BEFORE YOU IN YOUR ROLE, UM, FOR THE ONGOING UPDATES, I KNOW THAT THAT WASN'T ALWAYS THAT, THAT REQUIRED EXTRA TIME AT EACH ONE OF THESE MEETINGS.

AND I APPRECIATE YOU TAKING THAT EXTRA TIME.

I THINK IT WAS REALLY IMPORTANT FOR THE PUBLIC TO SEE THAT ONGOING WORK.

UM, BUT, BUT YOU KNOW, REALLY MORE THAN THAT, I JUST APPRECIATE AUSTIN ENERGY FOR WORKING HARD WITH ALL OF THOSE EMPLOYEES TO MAKE SURE THAT THEY LANDED WELL, UM, EITHER WITHIN THE ORGANIZATION OR, UM, ELSEWHERE.

SO THANKS AGAIN.

THANK YOU VERY MUCH.

A TEAM EFFORT AND PLEASED TO BE WHERE WE ARE TODAY.

YEAH, I AGREE.

THANKS COUNCIL MEMBER TOVO AND THE WINTER STORM YURI AFTER ACTION REPORT.

SO ONE MORE QUESTION.

THIS COUNCIL MEMBER VELA, DID YOU WANT TO ASK MR. SWEENEY SOMETHING DECKER WILL, ONE UNIT IS BEING RETIRED, BUT IT, AND PLEASE CORRECT ME IF I'M WRONG.

I'M JUST TRYING TO UNDERSTAND, UH, ASSETS.

UH, ONE WILL CONTINUE OPERATING THERE, UH, AT DECKER.

SO AS A GENERAL MANAGER, SERGEANT SAID EARLIER, WE HAVE, WE STILL HAVE FOUR GAS TURBINE UNITS THAT REMAIN IN OPERATION.

THE TWO OLDEST UNITS THERE, WHICH ARE VERY LARGE STEAM BOILER UNITS BUILT IN THE SEVENTIES, BASICALLY.

UH, THOSE WERE THE TWO UNITS THAT WERE RETIRED.

AND THEN THE OTHER TWO, UH, THE, AND JUST OUT OF CURIOSITY AND I'M SORRY, BUT WHEN WERE THOSE UNITS BUILT? UH, THOSE CAME ALONG IN THE LATE EIGHTIES.

SO THEY STILL HAVE A SUBSTANTIAL OPERATING LIFE LEFT IN THEM.

[01:00:01]

[6. Update on Winter Storm URI after-action report.]

WINTER STORM URI.

OKAY, THANK YOU.

GOOD AFTERNOON.

CHAIR, VICE CHAIR, COMMITTEE MEMBERS, AND CITY MANAGER.

I'M THOMAS PEERPOINT, VICE PRESIDENT OF ELECTRIC SYSTEM ENGINEERING AT AUSTIN ENERGY.

I'M HERE TO DISCUSS THE STATUS OF THE 2021 WINTER STORMS, UH, AFTER ACTION REPORT.

UM, THE TOPICS WE'RE GOING TO COVER IS JUST A QUICK OVERVIEW OF THE AFTER-ACTION REPORT, A STATUS OF FOLLOW-UP ACTIONS AND, UH, SOME QUESTIONS AND COMMENTS.

REGION EMPLOYEES, A CRITICAL SERVICE ORGANIZATIONS LIKE AUSTIN ENERGY HAD TO ALSO ENDURE THIS YET CONTINUE TO PERFORM THEIR CRITICAL SERVICE ROLE OVER THE ENTIRE 11 DAY EVENT ITEMS THAT HAVE BEEN COMPLETED AND CONTINUE INCLUDE CONTINUED LEADERSHIP CHECK-INS WITH EMPLOYEES, REINFORCEMENT OF THE EMPLOYEE ASSISTANCE PROGRAM AND REVIEW OF SUPPORT PROCEDURES FOR FRONTLINE EMPLOYEES.

IN FEBRUARY, 2021, THE POLAR VORTEX ABOVE THE NORTH POLE WAS DISRUPTED AND DESCENDED INTO CENTRAL CANADA.

THE CENTRAL US REACHING AS FAR SOUTH, AS TEXAS AND NORTHERN MEXICO FOR CENTRAL TEXAS.

THIS EVENT LASTED FROM FEBRUARY 11TH TO FEBRUARY 21ST, 2021, AND INCLUDED PERIODS WITH SNOW TORRENTIAL, RAIN, MULTIPLE ICE STORMS, UH, LOCALIZED HIGH WINDS THAT WERE COUPLED WITH THE FREEZING TEMPERATURES PORTIONS OF THIS EVENT RESULTED IN WEATHER RELATED OUTAGES.

SOMETHING THAT UTILITIES IN TEXAS HAVE MANY, MANY DECADES OF EXPERIENCE DEALING WITH.

UNFORTUNATELY, THE SITUATION GREATLY WORSENED WHEN ELECTRIC DEMAND EXCEEDED GENERATION SUPPLIES.

THIS RESULTED IN OUR COTTON MANDATED LOAD SHEDS TO PREVENT GRID COLLAPSE IN THE ERCOT FOOTPRINT OF TEXAS OR COTTON MEMBER UTILITIES INCLUDED AUSTIN ENERGY.

WE'RE REQUIRED TO FOLLOW THE ERCOT MANDATED LOAD SHEDS, WHICH OCCURRED FROM FEBRUARY 11TH TO FEBRUARY 18TH, 2021.

FOLLOWING THESE EVENTS, AUSTIN ENERGY STARTED DEVELOPMENT OF AN EXTRA ACTION.

UH, EXCUSE ME.

AFTER ACTIONS REPORT COVERING THE PERIOD OF FEBRUARY 11TH, THE FEBRUARY 21ST, 2021 INTERNAL STAFF LEADERSHIP AT ALL LEVELS AND EXECUTIVES WORKED OPENLY COLLABORATIVELY AND ENERGETICALLY TO DEVOTE MANY HOURS ON A DETAILED AND COMPREHENSIVE AFTER ACTIONS REPORT.

THE EXPERTISE OF APPRE THE ELECTRICAL POWER RESEARCH INSTITUTE WAS LEVERAGED AS PART OF THE LONGSTANDING AND STRONG RELATIONSHIP BETWEEN AUSTIN ENERGY.

APPRE.

THIS REPORT FOLLOWS A FRAMEWORK USED BY FEMA, THE FEDERAL EMERGENCY MANAGEMENT AGENCY.

THE AFTER ACTIONS REPORT ADDRESSES 19 MAJOR OBSERVATION AREAS AND INCLUDES 116 INDIVIDUAL ITEMS. THIS REPORT WAS DELIVERED IN OCTOBER, 2021 AND IS POSTED ON THE AUSTIN ENERGY WEBSITE.

THERE'S FOUR AREAS I'D LIKE TO HIGHLIGHT TODAY.

OBSERVATION FIVE FOCUSES ON OUR COT MANDATED LOAD SHEDS STAFF AT AUSTIN ENERGY HAVE WORKED TO INCREASE THE LOAD SHED PORTFOLIO.

THIS INCLUDES FORMALIZING PROGRAMS TO CURTAIL LARGE INDUSTRIAL AND COMMERCIAL CUSTOMERS.

MANY OF THESE CUSTOMERS CAN PROVIDE SIGNIFICANT REDUCTIONS THAT CAN BE SUSTAINED OVER A LONG DURATION, THUS PROVIDING SOME RELIEF, UH, WITH THE CYCLING OF OTHER CIRCUITS, TWO LARGE INDUSTRIAL CUSTOMERS HAVE AGREED TO PARTICIPATE AND THE PROGRAM IS BEING EXPANDED TO OTHERS, INCLUDING DOWNTOWN COMMERCIAL CUSTOMERS.

ANOTHER AREA IS OBSERVATION EIGHT, WHICH FOCUSES ON VEGETATION AROUND POWER LINES.

THE AUSTIN ENERGY SYSTEM IS STRONG AND RESILIENT.

IN FACT, IT IS AMONG THE BEST PERFORMING ELECTRIC SYSTEMS IN NORTH AMERICA AS, UM, FOLLOWING A THOROUGH AND INDEPENDENT ANALYSIS BY TWO BENCHMARKING ORGANIZATIONS IN THE INDUSTRY.

DESPITE THIS NO ELECTRIC SYSTEM CAN WITHSTAND STRIKES FROM HEAVY BRANCHES AND FALLING TREES, AUSTIN ENERGY VERY MUCH APPRECIATES THE ONGOING AND CONTINUED SUPPORT FOR THE ACTIVITY OF TREE TREE BURNING.

IT IS GRATIFYING TO SEE THE PERFORMANCE IMPROVEMENTS, UM, ON RECENTLY PRINTED CIRCUITS.

ANOTHER AREA IS OBSERVATION NINE, WHICH FOCUSES ON SUBSTATIONS.

THERE WAS A GREAT DEAL OF CIRCUIT BREAKER ACTIVITY.

DURING THE WINTER STORMS AS CIRCUIT BREAKERS WERE USED TO ENERGIZE AND DE-ENERGIZE ELECTRIC CIRCUITS, AUSTIN ENERGY STAFF WORKING WITH EMERY WAS ABLE TO DEVELOP AN EXECUTE QUICK AND AFFORDABLE PRACTICES PRACTICES TO IMPROVE BREAKER PERFORMANCE SKILLED IN HOUSE STAFF AT AUSTIN ENERGY WERE ABLE TO PERFORM NECESSARY ACTIVITIES IN THE FIELD AT THIS TIME, IMPROVEMENTS HAVE BEEN MADE TO 87 TRANSMISSION BREAKERS AND 178 DISTRIBUTION CIRCUIT BREAKERS BY IN-HOUSE STAFF GOING TO OUTSIDE CONTRACTORS WOULD HAVE COST APPROXIMATELY $2 MILLION AND INCLUDED DELAYS FROM MULTI A MULTI-YEAR PROCUREMENT CYCLE.

AND LASTLY, OBSERVATION, 15 FOCUSES ON EMPLOYEE AND HEALTH EMPLOYEE HEALTH AND WELLBEING.

THIS HAS BEEN VERY MUCH IMPACTED EVERYBODY IN TEXAS, ESPECIALLY THOSE IN THE ERCOT

[01:05:01]

AUSTIN ENERGY HAS HAD A QUARTERLY QUARTERLY SCHEDULE FOR EACH OF THE 116 ITEMS, ALL ITEMS THAT WERE DUE IN Q2 Q3 AND Q4 OF 2021 HAVE BEEN COMPLETED AS WELL AS THE RECENT ITEMS IN QUARTER 1, 20 22.

ALL OF THESE ITEMS HAVE BEEN CLOSED OUT ON TIME.

AT THIS TIME.

AUSTIN ENERGY STAFF HAS COMPLETED APPROXIMATELY 70% OF THE 116 ITEMS, UM, AND ESPECIALLY FOCUSED ON EVENTS THAT WERE IMPACTFUL ON GETTING PREPARED FOR POTENTIAL WINTER STORMS THIS YEAR.

UH, THANK YOU VERY MUCH.

UH, SEE IF THERE'S ANY QUESTIONS OR COMMENTS, ANY QUESTIONS FOR MR. PEERPOINT? UH, YES.

MAY I PRETEND? UM, I DON'T REALLY HAVE A QUESTION AND I JUST WANTED TO MAKE A COMMENT AND I HAD AN OPPORTUNITY TO SIT DOWN, UM, WITH, WITH ELTON AND TALK ABOUT THE VEGETATION MANAGEMENT PROCESS SPECIFICALLY, UM, IN MY DISTRICT.

AND JUST WANT TO UNDERSCORE HOW IMPORTANT THAT WORK IS.

UM, IF YOU ACTUALLY LOOK AT THE NUMBERS OF OUTAGES ON THOSE HIGH, WILD FIRE, LOW RELIABILITY LINES, WHERE WE'VE BEEN ABLE TO FINISH THE FULL CIRCUIT, UM, YOU HAVE CIRCUMSTANCES WHERE YOU HAD SOMETHING LIKE 30 OUTAGES A YEAR DOWN TO ZERO.

UM, EVEN THROUGH THE WEATHER THAT WE EXPERIENCED, UM, IN FEBRUARY AND IN THE WIND STORMS. UM, SO THAT WORK REALLY DOES MATTER.

UM, AND YOU KNOW, WE NEED THE CONTINUED COOPERATION OF THE NEIGHBORS WHO ARE WORKING WITH OUR AUSTIN ENERGY ARBORISTS, WHO ARE COMING THROUGH, UM, TO TAKE THESE STEPS.

UM, THIS IS REALLY IMPORTANT FOR THE RELIABILITY.

IT'S REALLY IMPORTANT FOR THE WILDFIRE RISK.

IT IS A HIGH WILDFIRE RISK DAY TODAY.

SO JUST WANT TO FLAG THAT.

UM, I WANT TO ENCOURAGE, UM, YOU AND YOUR STAFF TO CONTINUE TO FIND WAYS TO ACCELERATE THE VEGETATION MANAGEMENT PROCESS.

I KNOW THERE ARE CHALLENGES WITH, UM, FINDING, UH, FOLKS TO WORK IN THAT I'VE, I'VE CONNECTED UP, UM, OUT IN WITH THE AUSTIN SPELLING CONSERVATION CORPS, WHICH IS ACTUALLY DOING WILDFIRE MITIGATION.

SO THOSE FOLKS WOULD BE REALLY GOOD CANDIDATES, UM, TO WORK WITH YOU.

UM, BUT WE REALLY DO NEED TO BE, UM, INVESTING IN THAT.

IT REALLY MAKES A HUGE DIFFERENCE FOR OUR ABILITY TO WEATHER THE STORM.

AND I SAY THAT BECAUSE, UM, YOU KNOW, FOR THOSE OF US WHO WERE ON THE DAYAS WHEN, WHEN THIS HAPPENED IN MY DISTRICT, EVERYTHING HAPPENED FOUR OR FIVE DAYS EARLIER, UM, BECAUSE THE VEGETATION WASN'T CLEARED IN A LOT OF THE PLACES AND THE ICE JUST SAT THERE AND, AND, AND CREATED A LOT OF HAVOC EVEN BEFORE, UM, THE AIR CAUGHT INITIATED CHALLENGES.

UM, SO WE REALLY DO NEED TO BE MAKING THIS.

WE ARE MAKING REAL PROGRESS.

UM, I WOUND UP JUST RECOGNIZE THAT AND UNDERSCORE THE NEED TO CONTINUE THAT, UM, THROUGHOUT THE CITY.

GREAT.

THANKS ANYBODY ELSE, MR. PUREPOINT, WE REALLY APPRECIATE THE ADDITIONAL DETAILS AND THE DILIGENCE IN THE FOLLOW-UP.

THANK YOU SO MUCH.

SO YES, COUNCIL MEMBER VELA.

SO WE ALSO DO HAVE THAT TOO.

OFF OF A MIRROR PRETENSE, UH, COMMENTS, WHAT ABOUT, UH, THE BEARING OF UTILITY LINES IN ORDER TO PREVENT, YOU KNOW, FUTURE OUTAGES? I KNOW WE HAVE, UH, UH, I HAVE THE TRIMMING, UH, PROGRAM, UH, BUT, UH, IN TERMS OF JUST KIND OF AN ANALYSIS AND COST BENEFIT, W WHAT, WHAT IF AN ENERGY THINK WITH REGARDS TO THAT? UM, IN, IN GENERAL AND THE U S THE PRACTICE IN THE UNITED STATES IS TO HIS LINES AND, UH, MANY NEIGHBORHOODS ARE BURIED, UM, UH, THAT PROBABLY STARTED IN THE 1970S.

UM, HOWEVER, THE FEEDS, THE FEEDS INTO NEIGHBORHOODS ARE USUALLY OVERHEAD.

UM, ALL INDUSTRY STUDIES THAT HAVE BEEN DONE, UNFORTUNATELY, UM, SHOW A COST BENEFITS IT'S PROHIBITIVELY EXPENSIVE TO, TO, TO BURY ALL THE LINES.

UM, SO AT THIS CURRENT TIME THERE'S NO PLAN OR, YOU KNOW, NOTHING, UH, FROM AUSTIN ENERGY POINT OF VIEW TO, YOU KNOW, BEGIN BEARING PROBLEMATIC, UH, POWER LINES, ANYTHING LIKE THAT, NOT ON A WHOLESALE BASIS.

IS IT DONE JUST ON A PARTICULAR BASIS, IF, AND WHEN IT, YOU KNOW, ONE PARTICULAR SEGMENT IS IDENTIFIED AS PROBLEMATIC W UH, AUSTIN ENERGY WE'LL LOOK FOR REROUTING OPPORTUNITIES OR RECONFIGURATION OF THE ELECTRIC SYSTEM, UH, OPPORTUNITIES.

ABSOLUTELY.

AND THERE ARE SOME CUSTOMERS THAT, THAT WANT THE, UM, AND THEY PAY FOR IT WITH CAC, UM, TO BURY THE LINES THAT RUN ALONG THE FRONT OF THEIR ESTABLISHMENT.

[01:10:01]

BUT, BUT NO WHOLESCALE PLANS FOR DIRECT BURIAL.

WELL, THANK YOU.

I JUST, I LIVE, UH, JUST NORTH OF THE MUELLER SUBDIVISION AND, UH, I KNOW THAT WAS OBVIOUSLY A GREEN FIELD DEVELOPMENT, SO WE HAD THE OPPORTUNITY TO NOT RETROFIT THAT, BUT I JUST VISUALLY IT IS SO NICE TO BE IN A NEIGHBORHOOD LIKE THAT WITHOUT THE POWER LINES OVERHEAD.

IT'S JUST A, I MEAN, I KNOW THAT THERE ARE BENEFITS BEYOND JUST THE AESTHETICS, BUT THE AESTHETICS ARE JUST TREMENDOUS WHEN YOU HAVE THAT UNOBSTRUCTED VIEW, UH, OF THE CITY AND YOUR NEIGHBORHOOD AND THE TREES AND SO ON AND SO FORTH.

BUT ABSOLUTELY.

YEAH, YEAH.

I WOULD JUST, I WOULD JUST SAY COUNCIL, MY REBEL, I THINK ALL OF US ASK THAT QUESTION WHEN WE JOINED THE DIOCESE AND, UM, BECAUSE IT'S UNIVERSALLY UNDERSTOOD THAT IT IS MUCH MORE, UH, IT'S, IT'S JUST MUCH NICER FOR NEIGHBORHOODS NOT TO HAVE THOSE OVERHEAD LINES.

AND MY UNDERSTANDING IT IS, IT IS EXTREMELY COSTLY AND THEN THERE'S THE DISRUPTION TO THE NEIGHBORHOODS TO DO IT.

AND, UM, BECAUSE I THINK IF WE COULD HAVE AFFORDED IT, WE WOULD'VE DONE IT MORE BROADLY AROUND THE CITY, BUT TO RETROFIT, UM, WOULD BE PROHIBITIVE.

BUT, UM, BUT I REALLY APPRECIATE THE QUESTION THAT YOU'RE ASKING.

I THINK, LIKE I SAID, I THINK A LOT OF US FEEL, FEEL THAT EVERYBODY FEELS THAT SAME WAY.

AND I SEE THE MAYOR HAS HIS HAND UP.

MAYOR ADLER.

THANK YOU, CHAIR.

HAVE, HAS THERE BEEN ANY MOVEMENT OR ANY NEW IDEAS ASSOCIATED WITH HOW IN THE EVENT WE HAVE TO, UH, UH, SHED LOAD OTHER, WE MIGHT BE ABLE TO DO IT IN A WAY THAT DOESN'T SHUT DOWN AS MUCH OF THE CITY OR THAT WE CAN ROTATE THAT, UH, OBLIGATION.

THAT'S A GREAT QUESTION.

AS PART OF THE, UM, LOAD, SHED, UH, PORTION OF THE AFTER-ACTION REPORT.

UM, AND, UM, W UH, WE HAVE LOOKED AT, UM, BUILDING UP THE PORTFOLIO OF LOAD SHED, UM, UH, DIFFERENT TYPES OF LOAD SHED THAT WE CAN DO.

SO THE ONE THAT I MENTIONED THAT WE'RE, WE'RE REALLY AGGRESSIVELY PURSUING, UM, IS AROUND CURTAILMENTS AND TRYING TO BRING LARGE COMMERCIAL CUSTOMERS DOWN TO PRE-AGREED LEVELS.

SO THE LARGER CUSTOMERS CAN REDUCE SIGNIFICANTLY AND HOLD THAT REDUCTION FOR A LONG PERIOD OF TIME.

AND IF WE CAN, THE MORE WE CAN GET THERE, THE LESS, UH, THE, THE LESS DISRUPTIVE WE CAN BE IN THE CYCLING OF CIRCUITS, WAS THERE A WAY FOR US TO PUT SMALLER SERVICE AREA ON CIRCUITS SO THAT WE COULD SHUT DOWN MORE CIRCUITS, BUT SMALLER IMPACTS OF SMALLER AREAS RECONFIGURING THE ELECTRIC SYSTEM COULD GET PRETTY PRICEY TO IN ESSENCE, MAKE IT SMALLER CHUNKS OF AN ELECTRIC SYSTEM.

UM, AND, UH, AND TO DO THAT JUST FOR A LOAD SHED THAT MIGHT HAPPEN IN THE FUTURE.

SO THERE THERE'S, THERE'S KIND OF TRADE OFFS WITH IT, AND IT WOULD ALSO, IT WOULD RESULT IN MORE, MORE LINES RUNNING THROUGH THE CITY, AS WELL AS WE BROKE IT INTO SMALLER CHUNKS.

I THINK THAT HELPS.

ANYTHING ELSE ON THIS ITEM? THANK YOU SO MUCH, SIR.

SO OUR LAST ITEM, WELL, OUR NEXT LAST ITEM IS NUMBER FOUR, WHICH IS THE REACH PROGRAM.

[4. Update on REACH program to reduce carbon emissions from generation assets.]

HI, MS. SPEER RESPONDING GOOD AFTERNOON, AND A CHAIR, VICE CHAIR AND COMMITTEE MEMBERS.

MY NAME IS ERICA , AND I'M A VICE PRESIDENT OF ENERGY MARKET OPERATIONS AND RESOURCE PLANNING AT AUSTIN ENERGY.

AND TODAY, UM, I WILL SHARE WITH YOU WHAT REACH IS, UH, OUR PERFORMANCE TO DATE AND HOW WE CAN REACH, UH, USE REACH MORE FULLY NEXT YEAR.

IN THE YEARS TO COME ON THE LEFT.

REACH MEANS REDUCE EMISSIONS AFFORDABLY FOR CLIMATE HEALTH.

THIS STRATEGY IS DESIGNED TO PROTECT OUR CUSTOMERS FROM VOLATILE ELECTRIC PRICES IN ERCOT MARKET, HELPING OUR CUSTOMERS, UH, POWER SUPPLY ADJUSTMENT, OR PSA, STAY STABLE AND AFFORDABLE.

IT'S DESIGNED TO BE FLEXIBLE, ALLOWING US TO GENERATE AT THOSE HIGH LEVELS WHEN NEEDED FOR PRICE PROTECTION, AND THEN REDUCING OUR GENERATION DOWN TO LOWER LEVELS AND EMITTING LESS CARBON.

WHEN PRICES ARE LOWER IN 2020 AND 21 SINCE INTRODUCING REACH, WE HAVE REDUCED CARBON EMISSIONS BY 2.7 MILLION TONS, WHICH IS ROUGHLY, UH, 30% OF THE FORECAST AND EMISSIONS FOR THOSE YEARS.

EXCELLENT.

THESE BARS SHOW THE EMISSION REDUCTIONS.

UH, WE ACHIEVED IN EACH YEAR VERSUS OUR TARGETS IN 2020.

WE SLIGHTLY EXCEEDED OUR TARGETS LAST YEAR, DUE TO CONDITIONS LIKE URI AND HIGH NATURAL GAS PRICES.

UH, WE CAME IN SLIGHTLY UNDER TARGET.

A KEY TAKEAWAY HERE IS THAT REACHES AN EFFECTIVE TOOL IN REDUCING CARBON EMISSIONS.

THANKS LASTLY, UM, I'D LIKE TO SHARE HOW WE MIGHT APPLY REACH, UH,

[01:15:01]

UH, YOU WILL SEE THAT WE'RE COMMUNICATING THAT OUR PORTION OF FAYETTE CAN SIT AT LSL FOR MANY HOURS OF THE YEAR.

AND WHEN I SAY LSL, UM, THAT MEANS LOW, SUSTAINABLE LIMIT, UH, OR ANOTHER WAY YOU MAY HEAR THIS LIMIT OR A LEVEL REFERRED TO IT'S, IT'S SITTING AT THE BOTTOM, UH, COAL PLANTS CAN'T BE TURNED ON AND OFF EACH DAY.

SO, UM, THEY HAVE TO SIT AT THE BOTTOM UNTIL MORE, UH, OF THEIR OUTPUT IS, IS NEEDED ON THE RIGHT I'M SHOWING HOW WE CAN APPLY, REACH TO OUR PORTION OF FATE, UH, UNITS ONE AND TWO, WHILE LCRA MANAGES THEIR SHARE OF EACH UNIT, AS THEY SEE FIT EACH UNITS LOW, SUSTAINABLE LIMIT, UH, IS 150 MEGAWATTS.

AND WHEN THE UNITS SIT AT THE BOTTOM, OUR SHARE IS 75 MEGAWATTS AND LCRA SHARES 75 MEGAWATTS.

YOU CAN SEE THAT ON THE LEFT-HAND SIDE OF THOSE TWO BARS ON THE RIGHT-HAND SIDE, CONSEQUENTLY, IF LCRA WANTS TO GENERATE AT THEIR FULL CAPACITY OR AT THEIR TOP, UH, WHICH IS, UH, THEIR HSL OR HIGH SUSTAINABLE LIMIT, THEN THEY CAN DO SO WHILE WE STAY AT OUR BOTTOM AND YOU CAN SEE THAT REFLECTED ALL THE WAY TO THE RIGHT THERE.

SO ONE OF THE THINGS I'D LIKE TO NOTE HERE, ONE OF THE THINGS THAT'S IMPORTANT TO NOTE IS THAT OVER THE LAST THREE YEARS, THE MARKET SUSTAINED PRICES OVER A HUNDRED DOLLARS, 2% OF THE TIME.

AND DURING THOSE 2% OF OUR, OF THE HOURS, UM, IN THE LAST THREE YEARS, FAYETTE GENERATED 90% OF ITS PLANT REVENUE.

WHAT THIS MEANS IS THAT WE CAN PROTECT OUR CUSTOMERS AND STILL CONSIDERABLY REDUCE OUR CARBON FOOTPRINT USING THIS STRATEGY.

SO ALTHOUGH AN EXIT FROM FAYETTE HAS NOT YET BEEN ACHIEVED, THIS VALUABLE IS BEING UTILIZED TO ACHIEVE AS MUCH OF AN EXIT RESULT AS POSSIBLE, ALL THE WHILE BEING AVAILABLE FOR GRID, RELIABILITY, UH, AND GRID SUPPORT, AND THAT'S WHAT SCHOOL.

SO IF YOU'LL HAVE ANY QUESTIONS FOR ME, I'LL BE HAPPY TO ENTERTAIN.

THANK YOU, MISS SPEAR SPOCK.

ARE THERE ANY QUESTIONS HERE? AND WE WILL HAVE ADDITIONAL CONVERSATIONS ABOUT THE REACH PROGRAM.

UM, UH, A MORE EXPANSIVE UPDATE WILL BE ON OUR JUNE 7TH AGENDA.

ARE THERE ANY ADDITIONAL QUESTIONS FOR OUR STAFF HERE TODAY? THANK YOU, MAYOR.

OKAY, GREAT.