Aug 30, 2022 Austin Energy Utility Oversight Committee

AND NOW WE'LL MOVE TO THE BRIEFINGS AND LEAD OFF WITH OUR GENERAL MANAGER'S REPORT.

UM, COUNSEL AUSTIN ENERGY IS BLATANTLY HIDING INFORMATION.

ACTIVIST REPORTERS AND CITY COMMISSIONERS HAVE TIME TO RESEARCH PROBLEMS AND EXPOSE THEM TO COUNCIL AND THE PUBLIC.

IF YOU ALLOW AUSTIN ENERGY TO CONTINUE TO CONSTRICT INFORMATION, YOUR WATCHDOGS ARE BEING INTENTIONALLY MUZZLED.

I'VE BEEN A WATCHDOG OF AUSTIN AND THEIR ENERGY SINCE 1977, IN 2001, COUNCIL APPROVED A RATHER DRACONIAN ITEM THAT ALLOWED AUSTIN ENERGY TO KEEP VAST AMOUNTS OF INFORMATION, UH, THAT WAS FORMERLY PUBLIC SECRET UNDER THE GUISE THAT IT WAS COMPETITIVE.

I PROTESTED AT THE TIME AND THE RESOLUTION ONLY RECEIVED A BARE MAJORITY FOR ITS PASSAGE.

THE FORMAL NAME FOR THIS SUBJECT IS COMPETITIVE MATTERS IN 2011, AUSTIN ENERGY RELENTED, SOMEWHAT FROM ITS DIRECT KONIJN SECRECY THROUGH STAKEHOLDERS MEETINGS WITH ACTIVISTS, INCLUDING MYSELF, WE DEVISED A SET OF RULES.

WE COULD BETTER LIVE WITH IT WAS PASSED BY COUNCIL AS A RESOLUTION, BUT AUSTIN ENERGY HAS LET THE RESOLUTION EXPIRE HAS NOT BROUGHT IT BACK FOR AN UPDATE AND HAS BROKEN PROMISES THAT IT MADE IN THE PAST.

AND LET ME GIVE YOU A COUPLE EXAMPLES OF THE LACK OF TRANSPARENCY CORRESPONDENCE RELATED TO THE RECENT DOWNGRADING OF AUSTIN'S CREDIT IS BEING WITHHELD FITCH.

PUBLICLY STATED THAT THE AUSTIN CITY, THAT IF THE AUSTIN CITY COUNCIL WERE TO PASS A $48 MILLION RATE INCREASE, IT WOULD PRESUMABLY, UH, SECURE ITS CREDIT RATING.

MY SUSPICION IS THAT THIS WAS A BLATANT ATTEMPT TO PRESSURE CITY COUNCIL.

I ASKED FOR AUSTIN ENERGY'S COMMUNICATION WITH FITCH UNDER OPEN RECORDS.

MY RATHER TAME REQUEST WAS REFERRED TO THE ATTORNEY GENERAL FOR REVIEW THE AGING PROCESS AT THE LEAST WE'LL DELAY DISCLOSURE BY SEVERAL MONTHS.

IN ANOTHER INSTANCE, I ASKED AUSTIN ENERGY FOR AUSTIN ENERGY'S FUEL COSTS BY FUEL TYPE, SUCH AS NATURAL GAS, COAL AND SOLAR.

AGAIN, THIS INFORMATION HAS BEEN WITHHELD PENDING REVIEW BY THE AG.

THIS IS PECULIAR SINCE AUSTIN ENERGY HAS RELEASED THIS INFORMATION IN THE PUBLIC IN THE PAST, IT ALSO GOES AGAINST PROMISES UTILITY MADE TO ME AND OTHER ACTIVISTS.

AND IN SOME CASES IT DEFIES COMMON SENSE IN THE CASE OF GAS AND COAL.

THE INFORMATION THAT I SOUGHT IS POSTED ON THE INTERNET BY THE FEDERAL GOVERNMENT IN CONCLUSION, A NEW COMPETITIVE MATTERS POLICY IS REQUIRED.

A TRANSPARENT UTILITY IS ONE DIFFERENCE BETWEEN A TRUSTED INSTITUTION AND A ROGUE AGENCY.

[1. Approve the minutes of the June 7, 2022 meeting of the Austin Energy Utility Oversight Committee.]

THANK YOU, MR. ROBBINS.

UM, WE'LL MOVE TO ITEM ONE, WHICH IS APPROVAL OF MINUTES.

IS THERE SOMEBODY WHO WOULD LIKE TO MAKE A MOTION COUNCIL MEMBER ELLIS MAKES THAT MOTION AND A SECOND FROM COUNCIL MEMBER OF ELA, ALL IN FAVOR LOOKS LIKE THAT IS UNANIMOUS.

THANK YOU SO MUCH.

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

AND THIS IS UPCOMING RECOMMENDATIONS FOR COUNCIL ACTION, INCLUDING INNOVATIONS, EVENTS, AND AWARDS.

GOOD TO SEE YOU HERE AT GENERAL

[00:05:01]

MANAGER.

THANK YOU, CHAIR, VICE CHAIR AND COMMITTEE MEMBERS.

I'M JACKIE SERGEANT AUSTIN ENERGY'S GENERAL MANAGER.

AND IN ADDITION TO MY REPORT TODAY, SENIOR VICE PRESIDENT OF REGULATORY AFFAIRS COMPLIANCE AND COMMUNICATIONS, TAMMY COOPER, AND OUR OUTSIDE COUNSEL THOMAS BROCADES WILL PROVIDE AN UPDATE ON THE BASE RATE REVIEW PROCESS.

DIRECTOR OF FINANCE, ADAM MCINROY WILL PRESENT HIGHLIGHTS OF OUR SECOND QUARTER FINANCIAL BRIEFING, THEN ACTING CHIEF OPERATING OFFERS.

OFFICER STEWART RILEY WILL PROVIDE AN OVERVIEW OF THE SECOND QUARTER OPERATIONS BRIEFING, AND FINALLY VICE-PRESIDENT OF MARKET OPERATIONS AND RESOURCE PLANNING.

ERICA BEARD BACH WILL PROVIDE A BRIEFING ON RESILIENCY AS A SERVICE PROGRAM AND THE DEVELOPMENT OF THAT PROGRAM.

I WILL BEGIN TODAY WITH A SPECIAL ANNOUNCEMENT AND SOME OF OUR STAFFING CHANGES THAT WE MADE RECENTLY.

FIRST, I WANT TO THANK STUART RILEY FOR ACCEPTING THE CHALLENGE TO STEP INTO THE ROLE AS ACTING DEPUTY GENERAL MANAGER AND CHIEF OPERATING OFFICER WHILE SYDNEY JACKSON IS OUT ON EXTENDED LEAVE FOR A FAMILY EMERGENCY STUART HAS BEEN WITH THE CITY FOR MORE THAN 15 YEARS, STARTING IN THE LAW DEPARTMENT AND JOINING AUSTIN ENERGY AS CHIEF OF STAFF IN 2019 SECOND, I'M PROUD TO HAVE APPOINTED CASSANDRA RAGLIN AS ACTING CHIEF OF STAFF.

CASSANDRA HAS BEEN WITH AUSTIN ENERGY FOR 29 YEARS, AND MOST RECENTLY SERVED AS A PROGRAM MANAGER IN OUR CUSTOMER COUNT MANAGEMENT QUALITY AND COMPLIANCE DIVISION.

AND THIRD I'D LIKE TO CONGRATULATE LISA MARTIN ON HER NEW ROLE AS VICE PRESIDENT OF ELECTRIC SYSTEM ENGINEERING AND TECHNICAL SERVICES, A LICENSED ENGINEERS, LISA JOINED AUSTIN ENERGY IN 2010 AND HAS SERVED IN SEVERAL COMPLIANCE AND ENGINEERING POSITIONS.

MOST RECENTLY, SHE HELPED NAVIGATE OUR ORGANIZATION THROUGH SEVERAL NEW RELIABILITY COMPLIANCE OBLIGATIONS AS THE DIRECTOR OF CARPET CORPORATE COMPLIANCE PROGRAMS. AGAIN, A BIG CONGRATULATIONS AND THANK YOU TO STEWART, LISA AND CASSANDRA.

NEXT I'D LIKE TO PREVIEW SEVERAL UPCOMING REQUESTS FOR COUNCIL ACTION.

UM, THERE ARE ALMOST OVER TWO DOZEN ITEMS ON YOUR WAY IN SEPTEMBER AND OCTOBER.

SO I WON'T GO THROUGH ALL OF THEM INSTEAD.

I'LL JUST HIT A FEW OF THE HIGHLIGHTS.

THERE'S AN ITEM FOR FIVE AND A HALF MILLION DOLLARS, A MULTITERM CONTRACT TO PROVIDE MAINTENANCE INSPECTION, RESTORATION, AND REPAIR OF AUSTIN'S ICONIC AND HISTORIC MOON MOONLIGHT TOWERS.

UH, WITH TECH RESOURCES, THERE IS AN ITEM FOR $10 MILLION, A FIVE-YEAR CONTRACT FOR SUBSTATION MAINTENANCE WITH PRIMORIS T AND D SERVICES AND AN ITEM TO AMEND OUR PROFESSIONAL SERVICE AGREEMENT TO ADD HDR AND ALLEGIANCE GROUP, ALONG WITH THE 22 AND A HALF MILLION DOLLARS OF ADDITIONAL SPENDING AUTHORITY FOR ENGINEERING SUPPORT SERVICES, ROTATION LIST.

THESE FIRMS HELP AUGMENT OUR ELECTRIC SYSTEM ENGINEERING AND TECHNICAL SERVICES GROUPS CHANGE FOR ME.

I LOOK AT THE CHANGE, THE SLIDE.

OKAY, NEXT, WE HAVE AN ITEM TO AUTHORIZE CONTRACTS WITH ELK ELECTRIC AND SMART CHARGE RESIDENTIAL FOR ELECTRIC VEHICLE CHARGING STATION MAINTENANCE AND REPAIR IN THE AMOUNT OF 1.375 MILLION.

THERE'S A CONTRACT AMENDMENT IN THE AMOUNT OF 3 MILLION WITH ALTEC TO CONTINUE THE EXISTING LEASE AGREEMENT FOR CUSTOMIZED UTILITY VEHICLES THAT WILL PROVIDE A BRIDGE TO THE NEXT ITEM.

THIS BRIDGE IS NEEDED SO THAT WE CAN CONTINUE UTILIZING VEHICLES UNDER THE EXISTING AGREEMENT UNTIL SUCH TIME.

ALLTECH CAN DELIVER NEW VEHICLES UNDER THE NEW AGREEMENT.

THE NEW CONTRACT IS A MULTITERM AGREEMENT WITH ALLTECH TO LEASE AND MAINTAIN CUSTOMIZED UTILITY VEHICLES, SUCH AS BUCKET TRUCKS FOR OUR FIELD CREWS.

THE NEW CONTRACT IS FOR 10 YEARS AND NOT TO EXCEED $65.6 MILLION.

WE ALSO HAVE A CONTRACT AMENDMENT WITH CYRUS COMPUTING SOFTWARE IN THE AMOUNT OF APPROXIMATELY 1.8 MILLION COMING FORWARD FOR CONTINUED PALO ALTO NETWORK HARDWARE AND SOFTWARE PRODUCTS AND SERVICES.

THESE PRODUCTS ARE NECESSARY TO SUPPORT OUR NEW HYBRID WORK MODEL.

NEXT SLIDE, PLEASE.

THE NEXT ITEM IS A MULTITERM CONTRACT WITH SMS, LLC, DOING BUSINESS AS SECURITY MANAGEMENT FOR AN AMOUNT NOT TO EXCEED 20 MILLION SECURITY MANAGEMENT WOULD PROVIDE INSPECTIONS, MAINTENANCE, SMALL PROJECT INSTALLATIONS, AND HOSTING OUR INTEGRATED SECURITY MANAGEMENT SYSTEM.

THIS CONTRACT IS NECESSARY TO HELP ENSURE OUR COMPLIANCE WITH THE NERC OR NORTH AMERICAN ELECTRIC RELIABILITY CORPORATION, CRITICAL INFRASTRUCTURE OR SIP STANDARDS.

AND FINALLY, WE WILL BE ASKING COUNCIL TO SET A PUBLIC HEARING, TO ADOPT NEW PASS THROUGH CHARGES, WHICH INCLUDE THE POWER SUPPLY ADJUSTMENT COMMUNITY BENEFITS CHARGE, AND THE REGULATORY CHARGE.

THE PROPOSED HEARING DATE IS SEPTEMBER 29TH, 2022 WITH NEW CHARGES GOING INTO EFFECT ON NOVEMBER.

FIRST.

THESE PATHS PASS THROUGH RATES ARE UPDATED ANNUALLY AND ARE SEPARATE AND APART FROM THE BASE RATE REVIEW PROCESS, WHICH TAMMY COOPER AND THOMAS BROCADED WILL BE SPEAKING TO LATER NEXT, UH, IT IS MY PLEASURE TO SHARE THAT A FEW WEEKS AGO, THE TEXAS PUBLIC POWER ASSOCIATION HELD ITS ANNUAL CONFERENCE HERE IN AUSTIN.

TPA IS MADE UP OF MORE THAN 70 COMMUNITY OWNED ELECTRIC UTILITIES AND ALLIES ACROSS THE STATE OF TEXAS

[00:10:01]

AT THE CONFERENCE.

TPA RECOGNIZED OUR VERY OWN UTILITY OVERSIGHT COMMITTEE CHAIR, AUSTIN CITY COUNCIL MEMBER, LESLIE POOL WITH THE ASSOCIATIONS PUBLIC SERVICE AWARD COUNCIL MEMBER POOLS LEADERSHIP ALONG WITH THE SUPPORT OF THE ENTIRE COUNCIL HAS ENABLED AUSTIN ENERGY TO BE INNOVATIVE, RESILIENT, AND RESPONSIVE TO CUSTOMER NEEDS WHILE MAINTAINING FINANCIAL HEALTH AND ENSURING THE UTILITY CAN SERVE THE COMMUNITY FOR GENERATIONS TO COME CONGRATULATIONS TO OUR CHAIR COUNCIL MEMBER POOL, AND TO WRAP UP LAST MONDAY, AUGUST 22ND, AUSTIN ENERGY HOSTED THE AFFORDABLE ENERGY SUMMIT FOR COMMUNITY SERVICE PROVIDERS WHO SUPPORT LOW TO MIDDLE INCOME FAMILIES.

THIS STARTED IN 2008.

THE ANNUAL EVENT PROVIDES AN OPPORTUNITY TO LEARN ABOUT THE CITY'S CUSTOMER ASSISTANCE PROGRAMS NETWORK WITH OTHER SERVICE PROVIDERS AND PROVIDE INPUT ON HOW PROGRAMS CAN BE IMPROVED NEARLY 150 PEOPLE REPRESENTING 58 AGENCIES ATTENDED THIS YEAR'S EVENT, WHICH OFFERED PANEL DISCUSSIONS AND SPECIALIZED TRAINING ON RECOGNIZING AND MANAGING THE EMOTIONAL IMPACTS OF WORKING WITH VULNERABLE POPULATIONS, EVENTS LIKE THE AFFORDABLE ENERGY SUMMIT, HELP AREA AGENCIES LEARN HOW THEIR CLIENTS CAN ACCESS THESE AND OTHER PROGRAMS OFFERED BY CITY OF UTILITIES OR CITY OF AUSTIN UTILITIES IN FISCAL YEAR 2021, NEARLY 35,000 CUSTOMERS QUALIFIED FOR THE CUSTOMER ASSISTANCE PROGRAM DISCOUNT FOR UTILITY BILL SAVINGS OF AROUND $18 MILLION.

IN ADDITION, MORE THAN 15,800 CUSTOMERS RECEIVED EMERGENCY FINANCIAL ASSISTANCE THROUGH THE PLUS ONE PROGRAM FOR OVER 13 MILLION IN AID, THIS REPRESENTS A TOTAL OF OVER 31 MILLION IN CUSTOMER BILL ASSISTANT.

AND WE HAVE MR. BOCCATO AND MS. COOPER ON OUR BASE RATE REVIEW PROCESS UPDATE ITEM NUMBER THREE.

THANK YOU ALL FOR SUPPORTING OUR CUSTOMER'S NEEDS.

AND WITH THAT, I'LL PAUSE AND ANSWER ANY QUESTIONS YOU MAY HAVE ANYBODY HAVE ANY QUESTIONS, CONGRATULATIONS ON THE ADDITIONAL, UM, ELECTRIC CARS, ESPECIALLY IN THE, UH, BUCKET TRUCKS AND THE RENOVATIONS ON THE MOON TOWERS.

THEY REALLY ARE ICONIC AND THEY MEAN A LOT TO OUR CITY AND, UH, THE AFFORDABLE ENERGY SUMMIT.

AND I DO VERY MUCH APPRECIATE THE HONOR FROM TPA.

THAT WAS VERY KIND.

THANK YOU

[3. Base Rate Review Process Update.]

WELCOME.

OKAY, THANK YOU.

GOOD AFTERNOON.

UH, COMMITTEE CHAIR, POOL, UH, AND COMMITTEE MEMBERS.

MY NAME IS TAMMY COOPER.

I'M THE SENIOR VICE PRESIDENT OF REGULATORY COMMUNICATIONS AND COMPLIANCE AT AUSTIN ENERGY.

TODAY, WE WILL PROVIDE YOU AN UPDATE ON WHERE WE ARE IN THE BASE RATE REVIEW PROCESS, HOW IT HAS WORKED IN THE PAST AND HOW, AND WHEN COUNCIL WILL CONSIDER THE PROPOSAL.

THERE WE GO.

I'M JOINED TODAY BY THOMAS , WHO SERVES AS AUSTIN ENERGY'S OUTSIDE COUNSEL, AND WAS PART OF BOTH THE 2011 AND 2016 AUSTIN ENERGY BASED RATE REVIEW PROCESSES, BECAUSE SEVERAL OF YOU HAVE NOT BEEN THROUGH THIS PROCESS BEFORE THOMAS WILL PROVIDE SOME HISTORICAL CONTEXT AND EXPLAIN THE SIMILARITIES AND DIFFERENCES BETWEEN THIS YEAR'S PROCESS AND THE PROCESS IN PRIOR YEARS.

SO THIS SLIDE PROVIDES A DETAILED TIMELINE OF WHERE WE ARE IN THE PROCESS.

I KNOW YOU'VE SEEN THIS SLIDE BEFORE WE KEEP MOVING OUR LITTLE LINE, UH, CLOSER TO THE END.

SO, UH, AS YOU CAN SEE, UH, THIS PROCESS, UM, OUTLINES A LOT OF THE, THE KEY DATES, AND WHAT'S IMPORTANT TO REMEMBER AS YOU LOOK AT ALL OF ALL OF THESE DIFFERENT DATES THAT ARE GOING ON, UH, THE PROCESS TO REVIEW AUSTIN ENERGY'S, UH, BASE RATE PROPOSAL IS UNIQUE AMONG THIS MUNICIPALLY OWNED UTILITIES AND AFFORDS PARTICIPANTS, THE ABILITY TO THOROUGHLY ANALYZE THE PROPOSAL.

AND AS YOU'LL HEAR LATER FROM MR BURRITO, THE CURRENT PROCESS IS BUILT ON EXPERIENCES FROM BOTH THE 2011 AND 2016 RATE REVIEW PROCESSES.

AND AS OF TODAY, AS YOU CAN SEE ON THIS TIMELINE, WE'VE CONCLUDED THE HEARING PROCESS AND ARE WAITING THE IMPARTIAL HEARING EXAMINERS RECOMMENDATION.

SO FOLLOWING OUR LAST BRIEFING TO YOU IN JUNE, WE CONCLUDED THE PUBLIC OUTREACH AND PARTICIPATION PROCESS.

WE HAD VERY GOOD PARTICIPATION BY ALL OF THE CUSTOMER SEGMENTS, AS PART OF THE DISCOVERY PROCESS.

AUSTIN ENERGY RESPONDED TO MORE THAN 500 QUESTIONS FROM THE FORMAL PARTICIPANTS IN THE CASE.

AND YOU CAN SEE THE NAMES OF THOSE FORMAL PARTICIPANTS LISTED ON THE RIGHT OF THE SLIDE.

THE FINAL CONFERENCE, OR HEARING ON THE MERITS TOOK PLACE IN JULY BEFORE THE IMPARTIAL HEARING EXAMINER AND LASTED FOR THREE FULL DAYS.

THE PROCESS WAS MUCH LIKE ANY OTHER LEGAL CASE WITH OPENING STATEMENTS, CROSS EXAMINATION, THE VIDEOS OF THE PROCEEDING ARE AVAILABLE ON ATX N SO ANYONE WHO WAS NOT ABLE TO ATTEND IN PERSON CAN WATCH ONLINE AT THEIR CONVENIENCE SINCE JULY THE PARTIES HAVE POST-HEARING BRIEFS, WHICH ARE AVAILABLE ON THE CITY CLERK'S WEBSITE.

SO NOW I'D LIKE TO PREVIEW OVER WHAT TO EXPECT FOR THE NEXT FEW MONTHS ON

[00:15:01]

SEPTEMBER 9TH, THE IMPARTIAL HEARING EXAMINER WILL RELEASE HIS RECOMMENDATION TO COUNCIL AFTER HAVING CONSIDERED ALL OF THE TESTIMONY, REBUTTAL, TESTIMONY, AND STATEMENTS THAT THE PARTICIPANTS PROVIDED DURING THE HEARINGS ON SEPTEMBER 12TH, THE ELECTRIC UTILITY COMMISSION WILL HOLD A MEETING AND IS DIVIDED ALL FORMAL PARTICIPANTS TO BRIEFLY PRESENT THEIR POSITIONS.

IN THE CASE THAT YOU SEE AS THE ONLY COMMISSION THAT MAKES A FORMAL RECOMMENDATION TO COUNCIL ON THE PROPOSAL, WHICH THEY ARE EXPECTED TO CONSIDER AT THEIR OCTOBER 17TH MEETING AFTER THE EUC WAYS IN THE PROPOSAL WILL COME TO COUNCIL AND CITY COUNCIL IS CURRENTLY SCHEDULED TO SET THE PUBLIC HEARING ON NOVEMBER 3RD AND VOTE ON THE RATE PROPOSAL NOVEMBER 17TH.

UH, NOW I'LL HAND IT OVER TO MR. TO DISCUSS HOW THE CURRENT BASE RATE REVIEW PROCESS COMPARES TO YEARS PAST GOOD AFTERNOON, MAYOR COUNCIL MEMBERS, THOMAS POQUITO, OUTSIDE COUNCIL.

UH, I WAS ASKED AS MS. COOPER NOTED TO GIVE A LITTLE BIT OF BACKGROUND CONTEXT ABOUT, UH, PRIOR RAPE CASES.

UM, THIS IS THE THIRD BASE RATE CASE THAT AUSTIN ENERGY HAS HAD SINCE 1994.

WE HAD CASES IN 20 12, 20 16, AND NOW IN 2022.

AND I WANT TO START BY TALKING A LITTLE BIT ABOUT THE PROCESS THAT WAS FOLLOWED BACK IN 2012.

AS YOU CAN SEE ON THE SLIDE HERE, THAT WAS A LENGTHY PROCESS.

IT WAS A CHALLENGING PROCESS.

THERE WAS A ONE-YEAR ENGAGEMENT, UH, WITH BOTH THE COMMUNITY, UH, AND THE ELECTRIC UTILITY COMMISSION THAT COUNCIL, UM, HELD 13 MEETINGS OVER SIX MONTHS, INCLUDING PUBLIC HEARINGS WITH OVER A HUNDRED PUBLIC SPEAKERS IN TOTAL CITY COUNCIL MET 20 TIMES OVER 20 TIMES TO DELIBERATE ON THE 2012 CASE.

I WANT TO SPEND JUST A MOMENT KIND OF DIVING INTO THAT SLIDE A LITTLE BIT DEEPER.

IN 2012, WE DECIDED TO BREAK THE CASE INTO THREE COMPONENTS.

THERE WAS A PUBLIC INVOLVEMENT COMMITTEE, THEN THERE WAS THE EEC PROCESS.

AND THEN FINALLY THERE WAS A CITY COUNCIL PROCESS.

IT BEGAN IN JANUARY OF 2011 AND OVER A SIX MONTH PERIOD, THERE WERE MONTHLY MEETINGS WITH A 14 MEMBER, PUBLIC INVOLVEMENT OR PIC COMMITTEE.

THERE WERE WHITE PAPERS FOR EACH MEETING.

THERE WERE DIFFERENT TOPICS OF RIGHT MAKING THAT WERE DISCUSSED AT EACH OF THOSE SIX MEETINGS.

AND THERE WAS A PROFESSIONAL FACILITATOR HIRED TO HELP FACILITATE DIALOGUE AT THOSE MEETINGS.

IN SEPTEMBER OF 2011, FOLLOWING THE COMPLETION OF THE PICK PROCESS, WE MOVED INTO PHASE TWO, WHICH WAS THE EEC PROCESS.

THE EEC HELD FIVE PUBLIC HEARINGS, UM, AND THEY MADE A SET OF RECOMMENDATIONS THAT WERE SUBMITTED TO COUNCIL.

UM, THAT, THAT PROCESS BEFORE THE EDC WAS CREATED THROUGH A RESOLUTION THAT CITY COUNCIL ADOPTED.

AND THEN THE THIRD PIECE OF THE PROCESS BEGAN IN DECEMBER OF 2011, AND THAT WAS THE CITY COUNCIL PROCESS.

AND AS I MENTIONED, THERE WERE OVER 20, UM, TOTAL WORK SESSIONS.

THERE WAS, UM, NUMEROUS, UM, PUBLIC SPEAKERS WHO GAVE INPUT THAT WAS ULTIMATELY INCORPORATED INTO THE COUNCIL'S FINAL DECISION, WHICH WAS MADE ON JUNE THE SEVENTH OF 2012.

FOLLOWING THAT DECISION, THERE WAS AN APPEAL BY OUTSIDE RATE PAYERS TO THE PUBLIC UTILITY COMMISSION IN AUGUST OF 2012.

UH, ULTIMATELY THAT CASE WAS SETTLED BEFORE THE PUC, UH, IN THE BEGINNING OF 2013.

SO THAT'S WHAT TRANSPIRED IN 2012.

FOLLOWING THE 2012 RATE CASE, THERE WAS A DECISION MADE BY COUNCIL TO CHANGE THE PROCESS AND TO TRACK WHAT IS DONE MORE COMMONLY AT THE PC.

UH, AND SO WE ADOPTED RULES THAT ARE SIMILAR TO THE PROCEDURAL RULES OVER AT THE PC, AND IT'S THE STATE OFFICE OF ADMINISTRATIVE HEARINGS.

AND INSTEAD OF A YEAR LONG PROCESS, WE HAD ABOUT A SEVEN AND A HALF MONTH PROCESS, NOTABLY THE CITY ENGAGED IN INDEPENDENT HEARINGS EXAMINER AS AN INDEPENDENT INDIVIDUAL WHO COULD EXAMINE AND RECEIVE EVIDENCE AND THEN MAKE RECOMMENDATIONS TO COUNCIL.

THAT CASE BEGAN IN JANUARY OF 2016 WITH THE FILING OF THE APPLICATION.

I WOULD ALSO NOTE THAT THAT WAS A RATE DECREASE, DECREASE CASE, UM, FOLLOWING A PERIOD OF DISCOVERY AND THE FALLING OF TESTIMONY AND REBUTTAL TESTIMONY.

THERE WAS A HEARING IN LATE MAY AND EARLY JUNE OF 2016, THE EXAMINER THEN, OR THE INDEPENDENT HEARING EXAMINER ISSUED A 299 PAGE REPORT IN THE SUMMER OF 2016 COUNSEL HAD ESTABLISHED A PROCESS WHERE THERE WAS GOING TO BE THREE WORK SESSIONS IN AUGUST, AND THEN, UH, SOME PUBLIC HEARINGS, BUT ON AUGUST THE 15TH OF 2016, THE PARTIES ANNOUNCED A SETTLEMENT ADDRESSING ALL THE ISSUES IN THE CASE THAT SETTLEMENT WAS ULTIMATELY ADOPTED BY COUNCIL AFTER PUBLIC HEARINGS IN LATE AUGUST OF 2016.

AND THE RATES WENT INTO EFFECT IN OCTOBER 1ST, 2016.

[00:20:02]

AND SO IT'S THAT, THAT'S A BRIEF SUMMARY OF THE PRIOR CASES THAT WE'VE HAD SINCE 2012, THE CURRENT CASE, UH, THAT MS. COOPER KIND OF LAID OUT SOME OF THE TIMELINE JUST A MOMENT AGO, WAS DESIGNED IN PART TO FOLLOW THE PROCESS THAT WE USED IN 2016.

AND BY THAT, I MEAN, THE CITY ENGAGED IN INDEPENDENT HEARING EXAMINER, THEY ENGAGED A, UH, INDEPENDENT CONSUMER ADVOCATE.

UH, THERE WAS A HEARING, AS SHE NOTED, WE ARE EXPECTING A PROPOSAL FOR DECISION OR A RECOMMENDATION FROM THE ICE, UH, EXCUSE ME, IHG IN EARLY SEPTEMBER, CURRENTLY ON THE CALENDAR CURRENTLY ON THE CALENDAR, YOU ALL HAVE SCHEDULED NOVEMBER 17TH AS A DATE, AS A DATE, UH, TO CONSIDER THE IGS RECOMMENDATION, UH, SO THAT RATES CAN GO INTO EFFECT ON NOVEMBER.

EXCUSE ME.

ON JANUARY THE FIRST THIS PROCESS WAS DESIGNED TO AGAIN, ALLOW AN EXPERIENCED HEARINGS EXAMINER TO HEAR THE POSITIONS OF THE PARTIES, TO CONDUCT A HEARING, TO SUMMARIZE THE POSITIONS AND MAKE RECOMMENDATIONS TO COUNCIL.

AS I NOTED, IT'S SIMILAR TO THE PROCESS FOLLOWED BY OTHER STATE AGENCIES, INCLUDING THE PUBLIC UTILITY COMMISSION, AND IT WILL DEMONSTRATE TO OBSERVERS INCLUDING THE LEGISLATURE THAT THE CITY IS ENGAGED IN A TRANSPARENT, INCLUSIVE, AND FAIR PROCESS.

I'M HAPPY TO ANSWER IT.

OH, WELL, I GUESS I'LL TURN IT BACK OVER TO MS. COOPER TO FINISH THE PRESENTATION.

JUST WRAP IT UP REAL QUICKLY.

UM, YOU KNOW, WE HAVE A LOT OF INFORMATION AND RESOURCES THAT ARE AVAILABLE TO HELP YOU AS YOU CONTEMPLATE.

UH, THE, THE FINAL DECISION OF WE HAVE ALL OF THE, UH, DOCUMENTS RELATED TO THE CASE ARE FILED ON THE CITY CLERK'S WEBSITE.

CURRENTLY THERE ARE 240 DOCUMENTS POSTED, AS I MENTIONED, THE VIDEO IS AVAILABLE AND, UH, FINALLY, YOU KNOW, THERE'S INFORMATION AVAILABLE ON OUR WEBSITE AND CERTAINLY WE CAN PROVIDE YOU ADDITIONAL INFORMATION FOR ANYTHING YOU MIGHT WANT TO PROVIDE TO YOUR CONSTITUENTS.

SHOULD THEY HAVE ANY QUESTIONS? THAT'S OUR PRESENTATION.

HAPPY TO TAKE ANY QUESTIONS YOU MAY HAVE.

CAN YOU REMIND ME WHAT THE DATE WAS FOR THE RATE CASE HEARING? IF WE GO TO ATX AND TO FIND IT? OH YEAH, IT WAS, IT WAS JULY, UH, 13TH, 14TH AND 15TH.

RIGHT? ANY QUESTIONS? YES.

COUNCIL, MAYOR PRO TEM.

UM, SO I WASN'T HERE FOR THE LAST RATE CASE, UM, UNDERSTAND THERE WERE COUNCIL AMENDMENTS THAT, UM, WERE MADE AT THE LAST MINUTE THAT HAD POTENTIALLY BIG IMPACTS ON WHERE WE ARE NOW.

CAN YOU SPEAK TO A LITTLE BIT ABOUT WHAT THOSE AMENDMENTS WERE AND WHAT THEIR IMPACT WAS, AND IF YOU'RE NOT PREPARED TO DO THAT TODAY, IF YOU CAN GET US THAT YEAH, I WOULD HAVE TO DEFER.

I WAS, I WAS NOT HERE AT THAT TIME.

UM, I, I DON'T, I THINK WE MIGHT HAVE BEEN LOOKING INTO THAT AND CONDUCTING SOME RESEARCH, BUT I DON'T HAVE THAT INFORMATION RIGHT NOW.

UM, IT WOULD BE REALLY HELPFUL, UM, TO UNDERSTAND HOW THAT PLAYED OUT.

AND THEN IF THERE WERE PARTICULAR CONSEQUENCES OF THOSE DECISIONS SO THAT WE UNDERSTAND THE CONTEXT, THAT WAS A, YOU KNOW, A DECREASE THINK, I DON'T KNOW IF THE DECISIONS OR CONSEQUENCES OR IN THE 2016 OR THE 2012 RATE CASE.

UM, BUT I, I THINK IT WOULD BE REALLY HELPFUL TO UNDERSTAND THAT, UM, BECAUSE THEY DON'T THINK AMENDMENTS THAT WE MAKE AT THE LAST MINUTE AFTER THERE'S BEEN THIS VERY LENGTHY PROCESS AND THEY CAN BE CHALLENGING AND WE HAVE TO BE ABLE TO UNDERSTAND THE CONSEQUENCES.

AND BEFORE WE GET INTO THAT POSITION, I THINK WE NEED TO KNOW THAT HISTORY, UM, AND UNDERSTAND IT SO THAT WE CAN AVOID ANY NAV REPEATS IF THERE WAS A PROBLEM.

I DON'T, I THINK A REALLY GOOD POINT.

AND, UM, LET'S SEE WHAT STAFF COMES UP WITH, AND THEN WE CAN DECIDE WHAT'S THE BEST METHOD TO GET THAT INFORMATION TO US.

I'M THINKING MAYBE IT COULD BE AN AGENDA ITEM ON A WORK SESSION, UM, IN THE NEXT SHORT TERM.

THANKS FOR BRINGING THAT UP.

MAYOR PRO TEM.

I THINK THERE'S SOME QUESTIONS OVER HERE.

COUNCIL MEMBER WENT S THANK YOU WITH THE RECOMMENDATION BEING ISSUED ON SEPTEMBER 9TH, WILL THAT, UH, WILL THAT COME TO US IN THE FORM OF A MEMO, OR HOW WILL WE FIND OUT ABOUT THAT ONE? UH, IT WILL BE POSTED ON THE CITY CLERK'S WEBSITE, UM, AND WE CAN PROVIDE LINKS TO THAT AS WELL AND PROVIDE EACH OF YOUR OFFICES WITH, UM, INFORMATION ON HOW TO ACCESS THAT DOCUMENT.

SO IT WILL BE PUBLICLY AVAILABLE TO ALL OF THE COMMUNITY.

INSIGHT ON, ON THAT? UH, YEAH, I THINK WE'RE ALL, WE'RE ALL KIND OF JUST SITTING AND WAITING AND SEEING AND SEEING, UH, YOU KNOW, WHAT THE INDEPENDENT HEARING EXAMINER RECOMMENDS AFTER WEIGHING ALL THE EVIDENCE AND THAT'LL DECISION SHOULD BE ISSUED SEPTEMBER NINE.

AND TYPICALLY, I MEAN, BASED ON THE PUBLIC PARTICIPATION PHASE THAT WE'RE NEAR THE CONCLUSION OF, YOU KNOW, I'M JUST TRYING TO GET A GAUGE OF WHETHER OR NOT WE SHOULD EXPECT A SIGNIFICANT DIFFERENCE OF WHAT THE INDEPENDENT EXAMINER RECOMMENDS VERSUS WHAT WAS PROPOSED DURING THE BUDGET PROCESS.

I MEAN, ANY

[00:25:01]

IS THAT CORRECT? OKAY.

SO NOT TOO LONG TO WAIT.

I'M NOT SURE OF COUNCIL MEMBER TOBO, UM, CAN BE ON.

SO I'M GOING TO CHANNEL HERE AND CHANNEL HERE.

I'LL LET YOU SPEAK THEN FOR YOURSELF.

I WAS JUST GOING TO SUGGEST THAT WE NEEDED MORE TIME AS A COUNCIL ON THE ITEM, BUT GO AHEAD.

YEAH, NO, I TOTALLY AGREE.

THANK YOU FOR CHANNELING THAT, THAT, UM, PERSPECTIVE.

AND I, I DIDN'T UNDERSTAND, REMEMBER TIME, I'M, I'M REALLY INTRIGUED BY WHAT YOU WERE SAYING ABOUT THE AMENDMENTS AT THE LAST MINUTE.

I JUST, I'M NOT, I'M NOT SURE WHERE THAT CONVERSATION IS COMING FROM.

UM, I MEAN THE TWO RATE PROCESSES THAT I'VE BEEN INVOLVED WITH FOR VERY DIFFERENT, THE LAST ONE REALLY CAME TO THE COUNCIL AS PART OF A SETTLEMENT.

I DON'T RECALL THERE BEING ANY AMENDMENTS AT ALL.

UM, SO I MAYBE FISHERMEN THAT, AND THEN THE ONE BEFORE IT, THERE WERE VERY SIGNIFICANT AMENDMENTS, BUT THEY WERE, YOU KNOW, THEY WEREN'T REALLY LAST MINUTE AND THEY DID HAVE A BIG IMPACT.

AND I WOULD SAY A VERY POSITIVE IMPACT, INCLUDING SETTING UP THE HEARINGS, EXAMINER PROCESS AND THE CONSUMER ADVOCATE AND REALLY SUBSTANTIALLY CUTTING, UM, THE IMPACT ON RATE PAYERS.

SO CAN YOU GIVE, CAN YOU HELP ME OUT, I KNOW THAT YOU'VE ASKED THE STAFF TO LOOK INTO IT, BUT I'M JUST WONDERING WHAT ADDITIONAL INFORMATION, I MEAN, WHAT DID PEOPLE SAY ABOUT THOSE IMPACTS AND WERE THEY NEGATIVE OR POSITIVE, OR JUST I'D HAVE NO IDEA WHAT, WHERE THAT'S COMING FROM MORE CONTEXT FROM YOU, IF YOU COULD, IF YOU HAVE ANY.

SURE.

UM, AS I RECALL, AND THIS IS SEVERAL MONTHS AGO IN CONVERSATIONS EARLY ON THAT I HAD ABOUT THE RAPE PROCESS, UM, ONE OF THE CHALLENGES AS TO WHY WE NEED TO REJIGGER THINGS TO, UH, OR ONE OF THE, ONE OF THE RATIONALES THAT'S GIVEN AS TO WHY WE NEED TO, UM, REJIGGER THE BASE RATES, UM, GOES BACK TO SOME OF THOSE CONSOLE DECISIONS.

AND I DON'T HAVE THE BACKGROUND TO KNOW WHETHER IT WAS 2016 OR 2012, OR TO ASSESS THAT, OR TO HAVE, UM, FURTHER PERSPECTIVE ON, ON WHAT HAPPENED.

UM, BUT I, BUT I THINK THAT I DON'T WANT TO BE GOING INTO THESE RATE CASES WITHOUT THAT HISTORY.

AND I DON'T KNOW HOW ELSE TO GET THAT HISTORY, BUT THEN TO ASK STAFF TO PROVIDE US WITH SOME INFORMATION AND, AND I WOULD WELCOME YOUR INSIGHT AS SOMEONE WHO WENT THROUGH IT AS WELL.

BUT, UM, THERE WAS AN IMPLICATION THAT THERE WERE SOME CHALLENGES THAT WERE CREATED FROM DECISIONS AND, AND I DON'T UNDERSTAND WHAT THOSE CHALLENGES WERE OR WHAT THEIR SOURCES ARE, BUT, BUT I THINK THAT IF THAT IS A PART OF THE RATIONALE FOR WHAT WE ARE, WE ARE TRYING TO DO THIS TIME, I THINK THAT WE NEED TO HAVE THAT DISCUSSION AND UNDERSTAND, UM, HOW, WHEN DECISIONS ARE MADE THINGS HAPPEN, UM, THAT MAYBE INTENDED OR UNINTENDED, AND, AND I COULD BE TOTALLY, I COULD BE TOTALLY WRONG.

I JUST KNOW THAT THERE ARE THESE DECISIONS THAT HAPPENED THAT I FEEL LIKE WOULD BE SUPER HELPFUL, UM, TO HAVE A BETTER PERSPECTIVE ON, THANK YOU.

WE ARE GOING TO NEED TO GO INTO WHEN WE DO HAVE THAT DISCUSSION WITH A NEED TO GO INTO EXECUTIVE SESSION TO HAVE THAT DISCUSSION, BECAUSE THERE WAS A LOT OF THINGS THAT WERE GOING ON AT THE STATE LEVEL ALSO AT THAT TIME.

SO I DON'T KNOW IF WE COULD BE REALLY SAFE THINGS THAT WE, THAT SOME OF THE THINGS THAT WE WERE FORCED TO DO, I DON'T REALLY KNOW.

SO WE CAN DEFINITELY SET AN EXECUTIVE SESSION TO HAVE THOSE CONVERSATIONS.

IF THAT, IF THAT IS, IS HELPFUL, UM, YES, IT'S GOING TO DEPEND ON, IT'S GOING TO BE, DEPENDING ON THE LIMITED ISSUES.

I MEAN, THE, THE OVERALL SCOPE RETAIL RATES GENERALLY WOULDN'T BE SUBJECT TO COMPETITIVE MATTERS EXCEPTION.

SO IT'S JUST GOING TO DEPEND ON WHAT THE PARTICULAR, PARTICULAR QUESTIONS AND ISSUES.

CAUSE I, I KNEW THAT WE WERE UNDER THREAT OF HAVING IT.

ARE YOU TOKI TAKEN OVER BY THE STATE AT THAT TIME? I MEAN, WE WERE BEING THREATENED AND AT THE STATE LEVEL, AND THAT THERE WAS A CERTAIN PERCENTAGE THAT WE COULDN'T GO OVER CHARGING LARGER INDUSTRIAL USERS.

SO, UH, THAT WAS, UH, A LOT, A LOT OF BAD.

A LOT OF THAT HAD TO DO WAS A LOT OF THOSE KIND OF ISSUES AT THAT TIME.

I CAN'T REMEMBER ALL THE DETAIL.

UM, MAYBE WE CAN GET SOMEONE TO SPEAK ON THAT, UH, UH, NEXT MEETING, BUT, UH, IT WAS, UH, SOME VERY DIFFICULT DECISIONS THAT WE HAVE TO MAKE AT THAT TIME.

THAT SOUNDS GREAT.

[00:30:01]

AND THANK YOU FOR THAT.

UM, ANY OTHER QUESTIONS, MR. BOCCATO THANK YOU SO MUCH FOR BEING HERE AND FOR WAITING MS. COOPER.

AND LET'S SEE, OUR NEXT ITEM IS THE THIRD QUARTER FINANCIAL BRIEFING.

[4. Third Quarter Financial Briefing.]

GOOD AFTERNOON.

WELCOME.

AND THIS IS ADAM MECH AND ROY THAT'S RIGHT.

GOOD TO SEE YOU.

PERFECT.

GOOD AFTERNOON.

COUNCIL MEMBERS AND MAYOR.

MY NAME IS ADAM MCINROY I'M AUSTIN.

ENERGY'S FINANCE DIRECTOR FOR RISK MANAGEMENT.

IT'S MY PLEASURE.

THIS AFTERNOON TO WALK YOU THROUGH AUSTIN.

ENERGY'S QUARTERLY FINANCIAL REPORT FOR THE THIRD QUARTER COVERING THE MONTHS OF APRIL, MAY AND JUNE.

SO WITHIN THE WRITTEN MATERIALS WE PROVIDED, WE PROVIDED AN EXECUTIVE SUMMARY AS WELL AS UPDATES ON FINANCIAL POLICY COMPLIANCE, FINANCIAL POLICY COMPLIANCE, FINANCIAL PERFORMANCE MEASURES, SOME ACTUAL TO BUDGET ANALYSIS, FINANCIAL STATEMENTS, AS WELL AS SOME MARKET AND INDUSTRY ANALYSIS IN THE INTEREST OF YOUR TIME.

I'LL PLAN TO PRESENT THAT EXECUTIVE SUMMARY AND THEN PAUSE FOR QUESTIONS OR DIRECTION ON ANY FURTHER DISCUSSION SO AT THE HIGHEST LEVELS, AUSTIN ENERGY IS IN PARTIAL COMPLIANCE WITH ITS FINANCIAL POLICIES.

AT THIS TIME, OUR DEBT SERVICE COVERAGE IS BELOW ITS POLICY TARGET OF 2.0 TIMES AND CONTINGENCY AND CAPITAL RESERVE BALANCES ARE ALSO BELOW THEIR POLICY MINIMUMS, BUT THE TOTAL CASH BALANCE OF WHICH THEY PARTICIPATE IS ABOVE ITS MINIMUM OF $480 MILLION.

OUR WORKING CAPITAL HAS DECREASED YEAR OVER YEAR BY $159 MILLION.

THIS IS PRIMARILY DUE TO DECREASED MARGINS, SCHEDULED FUNDING OF CIP AND THE REDUCTION IN THE RECOVERED POWER SUPPLY ADJUSTMENT BALANCE DUE TO WINTER STORM UREA IN TERMS OF REVENUES AND EXPENSES.

UH, WE SEE $1.1 BILLION OF OPERATING REVENUE IN THE FISCAL YEAR TO DATE.

THAT'S ABOUT 11% OVER BUDGET FOR THAT TIME.

AND WE WOULD ATTRIBUTE THIS LARGELY TO VERY HOT WEATHER, WHICH RESULTS IN INCREASED USAGE, INCREASED BASE REVENUE AND INCREASED POWER SUPPLY REVENUE.

ON THE EXPENSE SIDE, WE DO SEE $1.2 BILLION OF OPERATING EXPENSES, UH, FOR FISCAL YEAR TO DATE.

AND THIS ALSO IS ABOUT 10% OVER BUDGET.

AND THIS ALSO, WE WOULD ATTRIBUTE LARGELY TO HOT WEATHER AS WELL AS CERTAIN ERCOT MARKET CHANGES.

AND WE'LL HAVE A BIT MORE TO SAY ABOUT THE POWER SUPPLY ADJUSTMENT, UH, IN JUST A MINUTE IN TERMS OF FINANCIAL STRENGTH AND RATINGS, THERE HAS BEEN A CHANGE SINCE THESE MATERIALS WENT TO PRINT.

SO, UH, LAST WEEK, UH, THE S AND P RATING AGENCY CHANGE ITS RATING OF AUSTIN ENERGY'S CREDIT.

UH, IT DOWNGRADED AUSTIN ENERGY FROM AA TO AA MINUS.

AND SO THAT'S HOT OFF THE PRESSES.

UH, WE DO NOW HAVE A STABLE OUTLOOK FROM THAT ORGANIZATION AND THIS MIMICS A JUNE ACTION BY FITCH RATING AGENCY.

ONE OF THE, OTHER OF THE BIG THREE AND BOTH AGENCIES CITED, DECREASED MARGINS, INCREASED LEVERAGE AND DECREASED CASH BALANCES IN THEIR MOVES OF AUSTIN.

ENERGY'S CREDIT DOWNWARD.

THEY DO BOTH HAVE US WITH STABLE OUTLOOKS NOW AND, UH, BOTH CITED, UH, THE RATE REVIEW THAT IS UNDERWAY AS A POTENTIAL IMPROVEMENT IN ECONOMICS, WHICH IS IMPORTANT FOR THAT STABLE OUTLOOK.

UH, IF I CAN DRAW YOUR ATTENTION TO ONE OTHER, UH, ITEM WITHIN THE DECK HERE, I'LL TRY TO MOVE FORWARD TO, UH, SLIDE NUMBER 13, BUT JUST TO GIVE YOU A PREVIEW OF WHAT'S HAPPENING WITH THE POWER SUPPLY ADJUSTMENT COSTS.

WE HAD THAT IN THIS DECK IN ACTUAL TO BUDGET ANALYSIS, WHERE WE HAVE QUITE A BIT OF INFORMATION ABOUT HOW THINGS ARE WORKING OUT VERSUS PLAN.

AND IN OUR ACTUAL TO BUDGET ANALYSIS HERE, WE HAVE A VIEW OF THE POWER SUPPLY ADJUSTMENT COSTS AS REALIZED FISCAL YEAR TO DATE VERSUS BUDGET, AND ALSO VERSUS REVENUE.

SO THE GRAY LINE BARS ON THIS CHART REPRESENT BUDGETED POWER SUPPLY ADJUSTMENTS.

THEY TEND TO BE BUDGETED FOR A WEATHER NORMALIZED YEAR, AND YOU MIGHT EXPECT WITH THE EXTRAORDINARY WEATHER WE'VE HAD THIS YEAR, WHAT WE'VE ACTUALLY REALIZED AS SHOWN IN THE GOLDEN ROD BARS HERE AND ARE QUITE A BIT HIGHER THAN BUDGETED.

THE OTHER THING I'D POINT OUT IS THAT THE BLUE LINE HERE REPRESENTS THE OFFSET IN AUSTIN.

ENERGY'S CUSTOMERS FINANCES TO THOSE EXPENSES, WHICH IS THE PSA REVENUE.

AND THIS IS COLLECTED IN EVERY BILL AS THE POWER SUPPLY ADJUSTMENT PASS THROUGH CHARGE.

SO THESE CHARGES ARE NOT WITHIN THE BASE RATE REVIEW, BUT WE'LL BE COMING TO YOUR ATTENTION THROUGH THE PSA RE RATE SETTING PROCESS IN THE COMING MONTHS THAT WE'LL HAVE UPDATED INFORMATION, BUT WE DID WANT TO POINT OUT THAT IN THE FISCAL YEAR ENDING IN A FISCAL YEAR TO DATE, ENDING IN JUNE EXPENSES WERE RUNNING QUITE HIGH VERSUS REVENUES FOR THAT TIME.

SO WITH THAT, I'LL PAUSE THERE.

I'M HAPPY TO TAKE ANY QUESTIONS, ANY QUESTIONS? YES.

MAYOR PRO TEM.

CAN YOU GO THROUGH IT A LITTLE BIT MORE SLOWLY, THE RATIONALES THAT WERE GIVEN FOR THE RATE ADJUSTMENTS, THE RATINGS ADJUSTMENTS? YEAH, ABSOLUTELY.

UM, SO WE HAVE A COUPLE OF SLIDES THAT MIGHT BE HELPFUL.

UM, I SEE THEY'VE, UH, MAYBE DISAPPEARED.

UH, THE WRITTEN MATERIALS DO DO CONTAIN SOME INFORMATION.

UM, FITCH HAS GIVEN US MORE INFORMATION THAT WE'VE DIGESTED MORE THOROUGHLY THAT'S ON SLIDE 24,

[00:35:01]

WHICH I'LL MOVE TO AND THE COMMENTS WERE VERY SIMILAR FROM BOTH AGENCIES.

THEY LOOK AT VERY SIMILAR FINANCIAL METRICS FOR AUSTIN ENERGY.

UH, THEY LOOK AT THE INDUSTRY AS A WHOLE, INCLUDING ERCOT AS A REGION.

AND THAT'S A FACTOR IN BOTH OF THESE, UH, ADJUSTMENTS AS WELL.

AND THEY LOOK AT QUALITATIVE FACTORS AS WELL.

BUT WHAT WE HAVE FOR EXAMPLE, ON PAGE 24, CONTAINS A LOT OF, UH, THE, UH, QUOTED INFORMATION FROM FITCH.

UH, SO THEY DID DOWNGRADE AUSTIN ENERGY FROM AA TO AA MINUS.

UM, THEY USED, UH, MANY ASSUMPTIONS ON POTENTIAL IMPROVEMENTS TO CURRENT CASH FLOWS.

AND IN PARTICULAR FITCH'S ANALYSIS WAS DONE USING A $48 MILLION INPUT FOR THE BASE RATE INCREASE.

UM, AND THAT'S AN OLDER NUMBER, UH, WHICH IS BEING UPDATED IN YOUR PROCESSES NOW, UH, THEY ASSUMED A 0.6% ANNUAL GROWTH IN SALES.

AND SO THAT'S A NUMBER THAT WE'VE BEEN FAMILIAR WITH FOR SOME TIME ABOUT A HALF A PERCENT IN LOAD GROWTH, WHICH WAS ACTUALLY BENEFICIAL TO OUR UTILITY VERSUS SOME OTHERS WHO HAVE FEWER NEW INBOUND CUSTOMERS.

UH, SO LOAD GROWTH KIND OF HELPS THE ECONOMICS AND THE RATE CASES HERE.

AND THEY DID, UH, HAVE AN INPUT OF $1.1 BILLION IN CAPITAL INVESTMENT THAT IS FUNDED BY DEBT.

AND ONE OF THE THINGS THAT THEY'RE HIGHLIGHTING IS THAT OUR DEBT SERVICE COVERAGE RATIOS ARE LOWER THAN THEY'D LIKE THERE.

THEY SORT OF HAVE A HANDLE OF ONE, IF YOU LIKE A 1.8 TIMES KIND OF THING.

THEY'D LIKE TO SEE THAT NUMBER ABOVE TWO, MEANING THAT OPERATING REVENUE IS COVERING OUR FIXED DEBT EXPENSES BY, BY A GOOD MARGIN.

AND WE'RE SEEING THAT DECAY.

AND SO THOSE ARE A LOT OF THE, UH, ANALYSIS THAT THEY DO.

SO THOSE METRICS GO BY VARIOUS NAMES, ELEVATED LEVERAGE, CAN BE ON THAT DEBT SERVICE COVERAGE, OR AS A BALANCE SHEET ITEM IN TERMS OF TOTAL DEBT VERSUS OUR REVENUES.

UM, AND THEN WEAKER, UH, OPERATING CASH FLOWS DRIVEN BY THE BASE REVENUES.

AND THEN A LOT OF THIS REALLY IS, UH, REGIONAL AS WELL.

UH, ALL OF THESE AGENCIES DID QUITE A BIT OF A DEEP DIVE AFTER URI.

AND THEN AFTER THIS SUMMER, THIS SUMMER IS PRESENTING NUMEROUS CHALLENGES IN ERCOT THAT ARE UNRELATED TO YOUR AID, BUT ARE RELATED TO, UH, ALL KINDS OF OTHER FACTORS.

AND SO SOME OF THIS IS NOT AUSTIN ENERGY SPECIFIC, BUT AS INDUSTRY SPECIFIC AND OR ERCOT SPECIFIC, AND THERE'S NO WAY TO SEPARATE OUT WHAT'S REGIONAL AIRCRAFT SPECIFIC.

UH, IT'S MOSTLY QUALITATIVE.

UH, WE HAVE, WE HAVE DISCUSSIONS, THEY MAKE SOME OF THEIR THINKING TRANSPARENT TO US, BUT AT THE END OF THE DAY, UM, UH, SOME OF THAT HAPPENS BEHIND THEIR COMMITTEE'S DOORS.

UH, IT IS INTERESTING THAT IT'S HAPPENED FOR BOTH, UH, FITCH AND S AND P UM, WHEN WE HAVE THAT ADDITIONAL INFORMATION FROM M I WOULD BE INTERESTED IN HEARING THAT.

THANK YOU, MAYOR.

A SIMILAR QUESTION, JUST FOLLOWING UP.

UH, IT APPEARS AS IF ONE OF THE SIGNIFICANT REASONS WHY WE HAVE THE RATING, UH, DOWNGRADED IN WIND AND MAYBE MOVING IN THE OTHER ARE POINTING TO SOME OF THE ISSUES THAT YOU SAID WERE GOING TO BE, UH, UH, RESOLVED OR SET OR REMEDIED IN OUR RATE CASE.

IS THAT CORRECT? THAT WILL BE A MITIGANT.

AND, AND WHEN THEY DOWNGRADED US WHERE THEY, I COULDN'T TELL IF THEY WERE ALREADY ASSUMING THAT WE HAD TAKEN THOSE STEPS AND EVEN HAVING TAKEN THOSE STEPS, THEY STILL DECIDED TO DOWNGRADE US, OR IS THERE A POSSIBILITY THAT HAVING TAKEN THOSE STEPS WHEN THEY DO THE CALCULATION, OUR RATING COULD GO UP, RIGHT? MOSTLY THE FORMER, MOSTLY THEY KNEW ABOUT THE RATE, UH, REVIEW, THEY FACTORED IT IN.

THEY ACTUALLY FACTORED IN, AS YOU SEE ON THIS SLIDE, A LARGER ONE THAN IT SEEMS TO BE CURRENTLY ON THE TABLE WITH THE $48 MILLION IMPROVEMENT.

I WOULD SAY THAT THE DOWNGRADE IS KIND OF ABOUT WHERE WE ARE AND WHAT THEY SEE GOING FORWARD.

THE STABLE OUTLOOK IS ACTUALLY, UH, YOU KNOW, A NICE TO HAVE AND THAT IN LARGE PART ENCAPSULATES THAT IMPROVEMENT IN ECONOMICS THAT THEY FORESEE IN THE BASE RATE REVIEW.

TABLE AT S AND P AT LEAST I DON'T HAVE SIMILAR INFORMATION FROM FITCH.

SO, SO IF WE HAVE SOME ISSUES THAT WE NEED TO RECALIBRATE AND WE'RE TAKING CARE OF THOSE IN THE RAPE CASE, BUT IF THE BOND AGENCY HAS ALREADY TAKEN THOSE THINGS INTO ACCOUNT AND STONE DOWNGRADED US, WHAT HAS TO HAPPEN IN OUR SYSTEM FOR US TO BE ABLE TO, TO RETURN TO THE HIGHER POD RATING.

SO A LOT OF IT IS ABOUT IMPROVEMENT IN THOSE QUANTITATIVE METRICS THAT THEY DO USE.

UM, THEY, THE, THEY APPEAR ELSEWHERE IN THIS REPORT AS THINGS LIKE DEBT, SERVICE, COVERAGE, UM, CASH BALANCES, ET CETERA.

SOME OF THE AGENCIES DO PROVIDE SOME DETAIL ON THEIR THINKING ABOUT THE OPPORTUNITY FOR UPGRADE.

AND SO IN S AND P MATERIALS, UH, WHICH THEY DID FILE, THEY SORT OF, UH, LEAD THE MARKET TO UNDERSTAND THAT THEY DON'T ANTICIPATE AN UPGRADE SOON, UH, EVEN WITH A SUCCESSFUL RATE REVIEW.

SO THESE THINGS ARE SORT OF SLOWER MOVING.

THEY'RE SORT OF ABOUT LONG-TERM FINANCIAL HEALTH.

UM, THEY HAD A LOT OF THE IMPROVEMENT FROM THE RATE REVIEW FACTORED IN.

AND SO THE THINGS THAT COULD MOVE THAT ARE, I THINK, ARE STEADY ACCUMULATION OF BETTER ECONOMICS AFTER THE RATE REVIEW AND IMPLEMENTATION, OR PERHAPS LOWER RISK THROUGHOUT ERCOT.

UM, BUT IT'S HARD TO SAY, BUT THEY DO GIVE SOME GUIDANCE THAT THEY DON'T SEE SORT OF A SNAP BACK IS NOT REALLY ON THE

[00:40:01]

SO TO, TO UNDERSTAND PART OF THE REASON THAT WE NEED ARE DOING THE RATE CASE NOW, THE WAY WE'RE DOING IT IS BECAUSE WE WEREN'T PAYING FOR THE COST OF SERVICE UNDER OUR EXISTING RATES, WHICH MEANT THAT WE HAD TO GO INTO RESERVES IN ORDER TO PAY OPERATING EXPENSES.

BUT NOW WE'RE CORRECTING THAT.

I WOULD IMAGINE AT THE RATE CASE IT'S DESIGNED SO THAT WE'RE NOT GOING INTO OPERATING RESERVES ANYMORE.

SO WE'RE NOT GOING TO OPERATING RESERVES ANYMORE.

ARE WE INSUFFICIENTLY RAISING MONEY TO PAY BACK THE DEBT THAT WE'D ALREADY TAKEN? IS THAT THE PART OF THE ISSUE THAT WE BORROWED AND BOULWARE WON'T HAVE TO BORROW ANYMORE? WE'RE NOT RAISING ENOUGH TO, TO PAY OURSELVES BACK.

AND THAT JUST HAS TO ACCUMULATE OVER TIME.

IS THAT THE ISSUE? I THINK IT'S, IT'S, UH, IT IS THE ISSUE AND IT'S ALL ABOUT BALANCES.

I THINK, YOU KNOW, THE, THE AA AND THE AA MINUS RATING ARE BOTH VERY GOOD RATINGS IN TERMS OF BOND MARKETS.

AND SO THAT INDICATES TO INVESTORS IN OUR DEBT, THAT THERE'S A VERY HIGH PROBABILITY THAT AUSTIN ENERGY MAKES GOOD WITH ITS REVENUES ON THOSE DEBTS.

AND SO IT'S, IT'S LESS ABOUT, UM, THIS DECISION IS, IS A LITTLE LESS ABOUT COST RECOVERY AS CUSHIONS AND MARGINS.

AND SO TO THE EXTENT THAT WE, UM, THOUGHTFULLY AND RESPONSIBLY SET BASE RATES IN THE, IN THE RATE REVIEW, YOU KNOW, UM, WE'RE SORT OF LESS LIKE A PUBLIC UTILITY THAT BUILDS MARGINS ON PURPOSE TO HAVE, UH, CUSHIONS AND, AND COLLECT, COLLECT A LITTLE MORE, UH, IN THIS RAINY DAY TO PAY OUT IN THAT RAINY DAY.

UM, AND SO I THINK THAT'S WHY, UH, WITH THOUGHTFUL AND RESPONSIBLE RATE DESIGN, WE'LL HAVE MORE OF A SLOW AND STEADY IMPROVEMENT THAN, UH, A SUDDEN INFLOW OF CASH FROM OUR CUSTOMERS, WHICH SERVES AS BUFFERS TO OUR DEBT HOLDERS.

IT'S JUST SORT OF NOT HOW WE DESIGN RATES.

UH, AND SO TH THE PROGRESS WILL BE ANTICIPATED TO BE SLOW AND STEADY OVER TIME, RATHER THAN RIGHT.

IF IT'S AN ISSUE OTHER THAN IT'S GOT TO, WE HAVE TO SLOW AND STEADY BUILD BACK UP THE RESERVES THAT WE DEPLETED IN ORDER TO COMPENSATE FOR RATES.

THE LAST COUPLE OF YEARS THAT HAVEN'T BEEN PAYING FOR THE ACTUAL COST OF SERVICE.

CAN YOU LET US KNOW AND LET US KNOW WHAT THOSE OTHER THINGS MIGHT BE? OTHER THAN THAT, I'M JUST TRYING TO IDENTIFY WHAT ARE THE THINGS THAT WE SIT AT THIS DAY SHOULD BE FOCUSING ON IS AREAS THAT ARE AREAS THAT WE NEED TO WATCH THAT JUST LIKE THEY'RE WATCHING THEM.

SO I'D APPRECIATE IT IF YOU'D FOLLOW UP ON THAT.

WITH RESPECT TO AUSTIN ENERGY, BUT THEY MAY HAVE PUBLISHED, UH, ABOUT THE REGION IN GENERAL.

AND THEN THE SECOND QUESTION GOES TO THE THINGS THAT ARE OUTSIDE OF OUR CONTROL.

AND YOU SAID THAT ONE OF THE REASONS THAT, UH, WE WERE DOWNGRADED WAS BECAUSE WE PARTICIPATE IN THE, UH, UH, IN, IN THE BROADER ERCOT SYSTEM, ARE WE SEEING OTHER UTILITIES THAT PARTICIPATE IN THE ERCOT SYSTEM ALSO SEE THEMSELVES BEING DOWNGRADED FOR THE SAME REASON? I DON'T HAVE THAT INFORMATION AT MY FINGERTIPS.

I DO KNOW THAT MANY ARE UNDER REVIEW.

UH, SO I'M NOT SURE, YOU KNOW, A LOT OF THESE ARE COMING OUT SORT OF IN REAL TIME.

S AND P WAS LATE LAST WEEK.

UH, I BELIEVE OTHERS ARE UNDER REVIEW.

I'M NOT AWARE OF DECISIONS YET.

UH, WE CAN FOLLOW WITH WHAT'D YOU FOLLOW UP AND LET ME KNOW THAT TOO, WHEN OUR RATE GOES DOWN AND THE AA MIDAS IS STILL, UH, IS STILL A REALLY GOOD RATE, AND I DON'T WANT TO, YOU KNOW, SUGGEST TO OTHERWISE, IT'S A REALLY GOOD RATE.

THAT WAY MURDERS IS NOT AS GOOD AS AA, UH, WHICH IS WHERE WE WERE.

AND AS THE RATE GOES DOWN, THAT OUR COST OF BORROWING GOES, GOES UP.

AND IF OUR RATE IS GOING DOWN, I MEAN, IF OUR COSTS ARE GOING UP THE OPERATOR SYSTEM IN PART, BECAUSE WE JUST PARTICIPATE IN NEW YORK HOT SYSTEM, AND OTHER PARTICIPANTS IN THE ERCOT SYSTEM ARE SEEING SIMILARLY THAT THEIR COST OF DOING BUSINESS ARE GOING UP JUST BECAUSE THEY PARTICIPATE IN THE ERCOT SYSTEM.

THAT'S PROBABLY SOMETHING WE WOULDN'T BE ABLE TO POINT OUT TO OUR STATE LEGISLATIVE DELEGATION AND, AND TO OTHERS, SO THAT THEY CAN BE LOOKING AT THIS, RECOGNIZING THAT JUST THE MIRROR PARTICIPATION IN OR ERCOT IS HAVING THAT, THAT, THAT PREJUDICIAL, UH, IMPACT ON OUR OPERATING SYSTEM.

SO HE COULD LOOK AT THAT TOO.

THANKS FOR MAYOR FOR BRINGING THAT UP.

THAT WAS WHERE I WAS GOING AS WELL.

AND I WAS ACTUALLY, YOU SAID IT VERY DIPLOMATICALLY.

I WAS JUST GOING TO SAY, ARE WE SEEING THE EFFECTS OF ERCOT, UM, ACTIVITY AND HOW THEY PROSECUTED WINTER STORM URI? UM, THE STATE LEADERSHIP'S ROLE IN THAT? SO I DO THINK THAT WOULD BE OF INTEREST.

AND THAT COULD BE PART OF THE CONVERSATION THAT WE HAVE TO, WHEN WE GET SOME ADDITIONAL INFORMATION ON COMING BACK FROM THE INDEPENDENT HEARING EXAMINER.

AND I THINK COUNCIL MEMBER OF ELLA HAD HIS HAND UP AND, UM, MAYOR ADLER PRETTY MUCH COVERED IT AS WELL.

UH, THAT SAID, WAS THERE ANY, UH, ADDITIONAL DETAIL GIVEN BY FITCH WITH REGARD TO THE ERCOT, UH, ELEMENT, UH, NOT MUCH IN THE, IN THEIR ACTUAL ACTION

[00:45:01]

AND WE CAN LOOK FOR THAT.

ALL RIGHT.

THAT AGAIN, VERY CURIOUS ABOUT THAT AS WELL.

OBVIOUSLY WE CAN CONTROL INTERNAL FACTORS TO A CERTAIN EXTENT, BUT NOTHING WE CAN DO ABOUT THE BROADER GRID.

WELL, NOT WE AS A CITY COUNCIL OF THAT IS YEAH, IT'LL BE, IT'LL BE GOOD TO GET, TO GET AN ASSESSMENT ON THAT IMPACT.

ANY OTHER QUESTIONS HERE ON OUR THIRD QUARTER? FINANCIAL, THANK YOU SO MUCH.

THAT WAS REALLY, REALLY GOOD INFORMATION.

[5. Third Quarter Operations Briefing.]

LET'S SEE.

UM, ONE LAST ITEM RESILIENCY AS A SERVICE PROGRAM DEVELOPMENT.

DID I MISS THE OPERATING REPORT? OH, THERE IT IS.

I ALMOST BLEW RIGHT PAST THE QUARTERLY OPERATIONS FACING ENEMIES.

DON'T WANT TO DO THAT.

HI, STEWART.

WELCOME.

GOOD AFTERNOON CHAIR, VICE CHAIR AND COMMITTEE MEMBERS.

I'M STEWART RILEY, AS JACKIE MENTIONED, I'M CURRENTLY SERVING AS ACTING DEPUTY GENERAL MANAGER AND CHIEF OPERATING OFFICER.

AND AS IS CUSTOMARY FOR AUC MEETINGS, I'LL JUST PROVIDE THE EXECUTIVE SUMMARY AND THE FULL REPORT WAS PRESENTED TO THE ELECTRIC UTILITY COMMISSION AND WAS PRESENTED AND WAS PROVIDED AS BACKUP, UH, FOR YOUR REFERENCE.

SO I'LL JUST HIT THE HIGHLIGHTS HERE.

UM, JUST AS A REMINDER, AS ADAM MENTIONED, OUR FISCAL YEAR, THIRD QUARTER COVERS THE MONTHS OF APRIL, MAY AND JUNE, I HAVE OVERALL GOOD NEWS TO REPORT.

WE HAD 100% AVAILABILITY STARTING IN THE TOP LEFT CORNER ON A HUNDRED PERCENT AVAILABILITY AND START SUCCESS ON ALL OF OUR GENERATING UNITS WITH THE EXCEPTION OF ONE UNIT AT FPP, WHICH WAS DOWN FOR A PORTION OF THE THIRD QUARTER BEFORE THE SUMMER FOR SOME STANDARD PRE-SUMMER MAINTENANCE.

I ALSO WANT TO POINT OUT THAT THIS WAS THE FIRST QUARTER IN WHICH BOTH THE DECKER STEAM UNITS HAD BEEN RETIRED.

SO THEY SHOW AS 0% AVAILABILITY ON THIS REPORT.

SO SINCE THEY HAVE BEEN RETIRED, THEY WILL ROLL OFF THIS REPORT GOING FORWARD.

UM, AND THE TOP, RIGHT, IN TERMS OF ELECTRIC SERVICE, RELIABILITY, WE'RE STILL HOVERING RIGHT AROUND THAT TOP CORE TILE BENCHMARK AND TRENDING UPWARD.

OUR TEAM KEEPS A VERY CLOSE EYE ON THIS DATA AND TO LOOK AT, UH, WHERE IMPROVEMENTS CAN BE MADE OUR PROJECTS TO ADDRESS VEGETATION AND UNDERPERFORMING FEEDERS ARE AIMED AT MAKING RELIABILITY IMPROVEMENTS THAT START WITH ANY PROBLEM AREAS IN THE BOTTOM LEFT.

UM, QUARTER OF THIS SLIDE, YOU CAN SEE OUR RENEWABLE ENERGY PRODUCTION AS A PERCENTAGE OF CUSTOMER CONSUMPTION WAS AT 61% FOR THE QUARTER.

AND WE NORMALLY TRACK THAT NOW AS, AS CARBON-FREE PRODUCTION.

SO IN THE BOTTOM RIGHT QUADRANT, WE HAVE OUR CARBON FREE GENERATION AS A PERCENTAGE OF CUSTOMER CONSUMPTION.

AND I WANT TO HIGHLIGHT THAT IN APRIL, THAT WAS AT 97% CARBON-FREE GENERATION AS A PERCENTAGE OF LOAD IN MAY.

IT WAS 89%.

AND IN JUNE 71% CARBON-FREE SO OUR MOST RECENT 12 MONTH ROLLING AVERAGE THROUGH JUNE BRINGS US TO AN ENERGY TO AN OVERALL NUMBER OF 78% CARBON-FREE ENERGY, AS A PERCENTAGE OF OUR CUSTOMERS CONSUMPTION, UM, IN THE HOTTER MONTHS AS DEMAND INCREASES, MORE DISPATCHABLE, THERMAL GENERATION IS CALLED UPON TO MEET DEMAND IN OUR CUT.

AND HOWEVER, EVEN DURING AUSTEN'S HOTTEST MAY AND JUNE ON RECORD, WE'RE STILL ACHIEVING A HIGH AMOUNT OF CARBON FREE GENERATION TO OFFSET OUR CUSTOMER'S NEEDS.

AND WITH THAT, I WILL STOP AND ANSWER ANY QUESTIONS YOU MAY HAVE.

THAT'S A VERY GOOD REPORT.

ANY QUESTIONS? YES.

MAY HAVE PRETEND.

I JUST WANTED TO GET A LITTLE MORE INFORMATION ON THE VEGETATION MANAGEMENT PROGRAM.

AND, UM, WE'RE STILL MAKING PROGRESS THERE.

SO RIGHT NOW WE'RE IN THE MIDDLE OF, WE'RE STILL IN THE MIDDLE OF, UM, BIRD HABITAT AND OAK WILT SEASON THAT THAT COMES OFF THIS NEXT MONTH IN SEPTEMBER.

AND SO WE CAN RESUME MORE OF THAT, UH, VEGETATION MANAGEMENT WORK, AND WE'LL BE MAKING HAY AT THAT POINT.

WE'RE STARTING WITH WE'VE RANKED ALL OF OUR FEEDERS IN TERMS OF UNDER-PERFORMANCE FROM WORST TO BEST, AS WELL AS ALL OF OUR FEEDERS FROM HIGHEST WILDFIRE RISK TO LOWEST WILDFIRE RISK.

AND SO WE'RE GOING IN ORDER AND WE'RE, WE'RE MAKING PROGRESS.

UM, SOME OF OUR VEGETATION CONTRACTORS HAVE HAD SOME TROUBLE, UM, WITH STAFFING AND RETENTION OF STAFFING.

SO WE HAVEN'T BEEN SPENDING QUITE AS MUCH, UH, ON, ON THAT AS WE'D LIKE, BUT WE'RE STILL MAKING GOOD PROGRESS AND WE'RE, AND WE'RE GOING DOWN THAT WILDFIRE RISK, UM, LIST IN ORDER OF HIGHEST RISK DOWNWARD.

AND HOW ARE YOU WORKING WITH THOSE CONTRACTORS TO HELP THEM RESOLVE THOSE ISSUES? SO WE CAN GET THIS WORK DONE.

W WELL, WE'VE, WE WE'RE, WE'RE CURRENTLY LOOKING AT WHETHER WE CAN, IF THERE'S ANY, ANY WORK WE CAN TAKE OUT OF THE, THE HIGH VOLTAGE WORK IN, INTO ANOTHER BUCKET TO WHERE WE CAN FIND SOME OTHER SMALLER CONTRACTORS TO FILL IN SOME OF THE GAPS ON SOME OF THE OTHER WORK.

THAT'S SOMETHING THAT HAS BEEN AN ONGOING EFFORT ON OUR PART TO FIND CONTRACTORS, UM, WITH THE INSURANCE CAPABILITY

[00:50:01]

THAT WOULD BE REQUIRED.

SO WE'RE STILL WORKING ON THAT.

UM, AND I KNOW THAT THOSE VEGETATION MANAGEMENT CONTRACTORS ARE ALSO, UH, WORKING TO, TO GET STAFFING FILLED IN, AND I CAN GET MORE DETAILS ABOUT WHAT THOSE STRATEGIES ARE PARTICULARLY AND GET BACK TO YOU.

THAT'D BE GREAT.

CAUSE I THINK THIS IS A REALLY HIGH, HIGH PRIORITY.

WE HAPPEN TO HAVE A LITTLE BIT OF RAIN, BUT ABSENT THAT RAIN, UM, AND EVEN PERHAPS WITH THAT RAIN WILDFIRES ARE REAL SERIOUS CONCERN.

AND AS YOU'RE AWARE, WE HAD AN INCIDENT IN MY DISTRICT AND I'M VERY CONCERNED ABOUT THESE CONNECTIONS.

AND OUR LAST ITEM RESILIENCY AS A SERVICE PROGRAM DEVELOPMENT.

ANY OTHER QUESTIONS? THANK YOU, MR. RILEY,

[6. Resiliency as a Service (RaaS) Program Development.]

GOOD AFTERNOON CHAIR, VICE CHAIR, COMMITTEE MEMBERS.

MY NAME IS ERICA AND I AM VICE PRESIDENT OF ENERGY MARKET OPERATIONS AND RESOURCE PLANNING.

I'M HERE TO TALK TO YOU ABOUT RESILIENCY AS A SERVICE.

I'M GOING TO PROVIDE SOME BACKGROUND, UH, WITH REGARDS TO THE DEVELOPMENT OF THE PROGRAM, UH, THE PROGRAM ITSELF, AND THEN SOME KEY TAKEAWAYS.

FIRST SLIDE.

OH, THERE WE GO.

UM, SO GROCERY STORES, UM, PARTNER WITH GENERATORS TO INSTALL BACKUP GENERATION AT THEIR GROCERY STORES.

UH, THEY'VE BEEN DOING IT ACROSS THE STATE OF TEXAS FOR, UH, OVER FIVE, SIX YEARS, IF NOT MORE, UH, GROCERS NEED DISTRIBUTED GENERATION TO PROTECT THEMSELVES FROM NATURAL DISASTERS, YOU KNOW, HURRICANE STORMS AND ANY OTHER OUTAGES THAT MAY OCCUR, UH, THAT REQUIRE RESILIENCY THAT THESE GENERATORS PROVIDE GROCERY STORES WITH BACKUP GENERATORS, MAINTAINED POWER THROUGHOUT THE WINTER STORM.

AND, UM, DUE TO THAT, UH, YOU KNOW, ONE OF THE THINGS THAT CAME OUT OF URI IS, UH, LEGISLATION THAT WAS PASSED IN LAST YEAR'S LEGISLATIVE SESSION, UH, THAT ALLOWED GROCERS TO CONTRACT WITH GENERATORS TO INSTALL BACKUP GENERATION IN NON OPT-IN TERRITORIES.

UM, AND NON-OP OPT IN ENTITY SERVICE TERRITORIES, WHICH, UH, WE ARE AN OPT-IN NON-OPEN ENTITY OR A NOEY YOU'LL HEAR THEM, UH, REFERRED TO, UM, IN THE ERCOT MARKET.

SO THE BILL REQUIRES NO TO ALLOW INTERCONNECTION AND PROVIDE ACCESS TO THE TRANSMISSION SYSTEM ON A NON-DISCRIMINATORY BASIS AND, UH, REQUIRES, UM, THAT SERVICE PROVIDER TO PROCESS, UH, DISTRIBUTED GENERATION INTERCONNECTION APPLICATIONS WITHIN A SPECIFIED TIMEFRAME.

UM, SO THE RESILIENCY AS A SERVICE PROGRAM OR RAZ, UH, ESTABLISHES A WORKING RELATIONSHIP BETWEEN OUR CUSTOMERS, THE UTILITY AND THE GENERATING COMPANY, OUR CUSTOMERS WILL HAVE THE RESILIENCY THAT THEY SEEK, THE GENERATORS WHO OWN THE ASSETS WILL LEASE THEM TO OUR CUSTOMERS AND MAINTAIN THEM.

AND AUSTIN ENERGY WILL ACCESS THE DISTRIBUTED GENERATION, UM, TO PROTECT OUR CUSTOMER'S POWER PORTFOLIO.

SO WHAT ARE SOME OF THE KEY TAKEAWAYS? THIS PROGRAM PROVIDES RESILIENCY AND SAFETY FOR OUR CUSTOMERS AND OUR COMMUNITY.

THESE DISTRIBUTED GENERATION FACILITIES WILL BE INSTALLED IN OUR SERVICE TOURED IN OUR TERRITORY WITH, OR WITHOUT, UH, THE RAZ PROGRAM BY THE CITY MAINTAINING CONTROL OF THE PROGRAM.

WE WILL MANAGE THESE ASSETS ALIGNED IN AN ALIGNMENT WITH OUR DECARBONIZATION STRATEGY AND BY MAINTAINING CONTROL AND NOT ALLOWING THIRD PARTIES TO MANAGE THESE ASSETS AT OUR CUSTOMER SITES, IT WILL HELP THE CITY, UH, WITH OUR SUSTAINABILITY GOALS.

AND I'LL ANSWER ANY QUESTIONS, ANY QUESTIONS? YES.

COUNCIL MEMBER ENTER YET.

UH, YEAH.

AND THIS IS NOT, UH, IT'S NOT REGULATED BY ERCOT OR ANYTHING.

WE DON'T HAVE TO PROVIDE THAT ENERGY BACK TO THE STATE.

IS THAT CORRECT? SO THESE WILL BE, UH, THESE ASSETS, THESE, UH, GENERATORS, UM, CAN SIT BEHIND THE CUSTOMER'S METER AND CAN ALSO BE IN WHAT WE CALL IN FRONT OF THE METER OR CONNECTED TO THE GRID.

SO THEY, THEY DO PARTICIPATE IN THE MARKET MARKET.

UH, W WILL THEY BE REQUIRED? LIKE IF WE'RE, YOU KNOW, WE WOULD BE REQUIRED TO DO THE BLACKOUT AND JUST, AND, AND BEEF PLAY FITS HERE LOCATIONS, WE'LL BE ABLE TO KEEP THEIR LIGHTS ON.

ANYTHING ELSE? GREAT.

I'M SURE I HAVE A QUESTION ABOUT THAT LAST PROGRAM.

GREAT COUNCIL MEMBER.

TOVO WE CAN'T SEE HERE, BUT WE CAN HEAR YOU THERE YOU ARE.

I DON'T KNOW HOW TO ASK THIS QUESTION EXCEPT TO JUST STRAIGHT OUT ASK IT, IS THIS GOING TO BE KIND OF A REVENUE GENERATOR FOR AUSTIN ENERGY? SO IT IS, UH, REALLY A COST IT'S A COST NEUTRAL.

UM, SO APOLOGIES IF I MISSED THIS, BUT IS THIS GOING TO BE,

[00:55:01]

SO, UM, WE, UH, IT PROVIDES PROTECTION.

IT PROVIDES A HEDGE, UH, FOR THE POWER PORTFOLIO.

UM, AND, UH, WE, UM, ARE, UM, PAYING FOR THAT ACCESS.

SO THEN WE CAN PROVIDE THAT HEDGE AND, UM, GENERATE THAT REVENUE IN THE PORTFOLIO.

DO WE HAVE MORE INFORMATION SOMEWHERE SHOWING WHAT KIND OF AN INVESTMENT IT WILL TAKE FROM AUSTIN ENERGY AND WHAT ARE THEY EXPECTED? UM, WHAT ARE THE EXPECTED BENEFITS, FINANCIAL AND OTHERWISE, THERE, THERE IS INFORMATION AROUND IT.

UM, THERE IS, UM, UH, AN RCA THAT'S GOING TO BE COMING, UH, TO CITY COUNCIL AND WE CAN PROVIDE MORE INFORMATION.

UH, SO CITY COUNCIL CAN REVIEW IT.

IT SOUNDS LIKE THIS ONE, GENERALLY, WHAT KIND OF INVESTMENT ARE WE LOOKING AT? SO WE CAN PROVIDE THAT INFORMATION.

UM, I DON'T HAVE THAT INFORMATION RIGHT NOW AT MY FINGERTIPS.

WHERE DOES THE TIMEFRAME FOR COUNTY COUNCIL? APPROXIMATELY 30 DAYS.

I HOPE I'M GOOD.

I WILL, I LOOK FORWARD TO GETTING THE FULLER INFORMATION.

THAT SOUNDS LIKE AN INTERESTING, AN INTERESTING AND IMPORTANT INVESTMENT.

I WANT TO REALLY BETTER UNDERSTAND THE LEVEL OF IT AND, AND WHAT THAT, UM, WHAT THE EXPECTED COST RECOVERY IS.

I THINK WE'RE DONE WITH OUR AGENDA.

I SHARE THAT INTEREST AND IT MAY BE THAT THAT'D BE SOMETHING, ANOTHER ITEM FOR A WORK SESSION, JUST TO GET A LITTLE DEEPER EXPLANATION AND, AND EXPECTATIONS SOUNDS GOOD.

AND IT WOULD HELP AMPLIFY THE PROGRAM TO THE COMMUNITY AS WELL.

ANYTHING ELSE FROM ANYBODY? I THINK THAT'S IT.

THANK YOU, MS. PIERMONT GENERAL MANAGER.

[7. Identify items to discuss at future meetings.]

AND THE ONLY THING LEFT IS TO IDENTIFY ITEMS FOR FUTURE MEETINGS.

ANYBODY HAVE ANYTHING OFF THE TOP? I KNOW WE HAD A COUPLE OF ASSIGNMENTS THAT ROLLED OUT FROM OUR CONVERSATIONS HERE TODAY.

ALL RIGHT.

SEEING NONE AND ASSUMING THAT OUR COLLEAGUES ON REMOTE DON'T HAVE ANYTHING, I WILL ADJOURN THIS MEETING OF THE AUSTIN ENERGY UTILITY OVERSIGHT COMMITTEE MEETING AT FOUR 30.