Nov 08, 2023 City Council B Session

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>> MAYOR NIRENBERG: I'LL TAKE ADVANTAGE OF THE QUIET AND DECLARE 2:06 P.M. TO BE OPEN FOR OUR B SESSION ON NOVEMBER 8TH, 2023.

MADAM CLERK, COULD YOU READ THE ROLL? >> CLERK:

[ ITEMS  ]

MAYOR, WE HAVE A QUORUM. >> MAYOR NIRENBERG: ALL RIGHT.

GOOD AFTERNOON, EVERYBODY. WELCOME TO OUR CITY COUNCIL B SESSION. TODAY WE HAVE A BRIEFING ON THE RATE CASE AND BUSINESS CASE IN THE ESTABLISHMENT OF A REGULATORY ASSET FROM CPS ENERGY. SO ERIK, I'LL TURN IT OVER TO YOU TO WELCOME

OUR GUESTS. >> WALSH: THANK YOU, MAYOR.

WE'RE GOING TO START OFF THIS AFTERNOON'S PRESENTATION WITH A QUICK CONTEXTUAL PRESENTATION FROM BEN GORZELL WHO IS OUR CHIEF FINANCIAL OFFICER, BUT ALSO OUR PUBLIC UTILITIES SUPERVISOR, WHICH IS A CHARTER-DESIGNATED POSITION, AND I WANTED BEN TO KIND OF WALK THROUGH ON THE FRONT END OF THIS CONVERSATION THE GOVERNANCE STRUCTURE, WHAT CPS IS, HOW -- WHAT IS THE CITY'S ROLE, TALK A LITTLE BIT ABILITY THE CHARTER REQUIREMENTS AND WHAT BEN'S ROLE IS AS HE REVIEWS THIS, AND THEN EXPLAIN WHAT THAT REVIEW ENTAILS. AND THEN WE'LL RECAP IT WITH A SCHEDULE THAT WE SHARED WITH COUNCIL LAST WEEK IN A MEMO, A PROPOSED SCHEDULE OF BRIEFINGS. AND THEN WE'LL TRANSITION OVER TO RUDY AND HIS TEAM TO WALK THROUGH THE PROPOSED RATE REQUEST.

SO THIS IS GOING TO BE THE FIRST OF MANY CONVERSATIONS, AND SO BEN'S PORTION HERE, I THINK, IS CRITICAL TO SETTING THE FRAMEWORK FOR

WHAT WE DO. BEN? >> GORZELL: SO GOOD AFTERNOON, MAYOR AND COUNCILMEMBERS. AS ERIK SAID, I'LL TRY TO GIVE A LITTLE BIT OF CONTEXT AND BACKGROUND. MAINLY MORE PROBABLY FOR SOME OF THE NEW COUNCILMEMBERS, AS YOU HAVEN'T BEEN THROUGH THIS PROCESS BEFORE. FOR THOSE OF YOU THAT HAVE, IT WILL LOOK VERY FAMILIAR. I'LL TALK A LITTLE BIT ABILITY THE RATE PROCESS AND WHAT WE GO THROUGH ON OUR SIDE AND GIVE YOU A SUMMARY TIMELINE.

SO JUST STARTING WITH THE GOVERNANCE STRUCTURE, THE CITY OF SAN ANTONIO OWNS CPS ENERGY. WE'VE OWNED THEM SINCE 1942.

THEY ARE A SEPARATE GOVERNMENTAL ENTITY, THEY ARE NOT A DEPARTMENT OF THE CITY. THEY HAVE THEIR OWN FIVE-MEMBER BOARD OF TRUSTEES THAT IS VESTED WITH THE SP RESPONSIBILITY FOR THE OPERATIONS OF THAT UTILITY. AND OUR MAYOR, BY POSITION UNDER THE BOND INDENTURE IS AN EXOFFICIO VOTING MEMBER OF THAT BOARD. THE BOARD IS RESPONSIBLE FOR FORWARDING RECOMMENDATIONS FOR THE ISSUANCE OF DEBT, CONDEMNATION AND ANY ADJUSTMENT IN RATES TO THE CITY AND TO YOU ALL AS THE GOVERNING BODY.

YOU HAVE FINAL AUTHORITY OVER THOSE AREAS AND WHILE YOU ARE THE CITY COUNCIL, IN THIS ROLE YOU ALSO FUNCTION AS THE REGULATORY AUTHORITY.

YOU HAVE, YOU KNOW, FINAL AUTHORITY OVER THESE AREAS AS THEY COME FORWARD FROM THE UTILITY. IN TERMS OF THE RATE PROCESS ON OUR SIDE, THE CITY'S SIDE, AS ERIK MENTIONED UNDER THE CHARTER, WE HAVE A POSITION CALLED THE SUPERVISOR OF PUBLIC UTILITIES. THAT'S CURRENTLY COMBINED WITH THE CITY'S CHIEF FINANCIAL OFFICER, SO THAT'S MY ROLE. THE SUPERVISOR PUBLIC UTILITIES IS RESPONSIBLE FOR SUBMITTING A RECOMMENDATION TO THE CITY MANAGER AND TO THE MAYOR AND COUNCIL FOR THOSE AREAS THAT I MENTIONED, THE ISSUANCE OF DEBT, RATE ADJUSTMENTS OR -- THOSE TWO PRIMARILY. WE ALSO HAVE A DIVISION WITHIN OUR FINANCE DEPARTMENT, THE PUBLIC UTILITIES DIVISION, THAT PROVIDES THE STAFF SUPPORT. AS WE GO THROUGH THESE PROCESSES, WE'VE GOT A TEAM THAT WORKS ON THEM AND HELPS DO THE ANALYSIS AND THE WORK TO FORMULATE OUR RECOMMENDATION. WHEN WE GET A REQUEST FOR AN ADJUSTMENT IN RATES OR FOR THE ISSUANCE OF DEBT, WE DO A COMPREHENSIVE REVIEW.

THAT REVIEW INCLUDES LOOKING AT A WHOLE BUNCH OF DIFFERENT AREAS.

I LISTED SOME OF THEM HERE, PROBABLY NOT AN ALL-INCLUSIVE LIST, BUT WE LOOK AT EVERYTHING FROM THE RATE MODEL ITSELF, WE LOOK AT -- AND MAKE SURE THAT THAT RATE MODEL IT STARTS WITH THEIR AUDITED FINANCIAL STATEMENTS, GOING TO GO THROUGH AND LOOK AT HOW THEY'RE PERFORMING IN THE

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IT'S GOING TO LOOK AT EVERYTHING FROM THEIR OPERATIONS AND MAINTENANCE BUDGET, THEIR CAPITAL BUDGET, THEIR FINANCING PLANS, ALL OF THE ASSUMPTIONS THAT UNDERLIE THAT PLAN GOING FORWARD.

WE'LL LOOK AT THINGS LIKE THE CREDIT CONSIDERATIONS, THE FINANCIAL METRICS AND GO THROUGH THOSE ASSUMPTIONS IN DETAIL WITH CPS BEFORE WE MAKE OUR RECOMMENDATION. IDEALLY WE WANT THIS PROCESS TO WORK IN TANDEM WHILE THE RATE PROCESS IS BEING DEVELOPED.

I'VE BEEN IN THIS ROLE FOR WHITE A NUMBER OF YEARS.

WE'VE USE THIS PROCESS. I THINK IT WORKS WELL. SO THAT WE'RE ACTUALLY WORKING WITH THEM AS THEY'RE PUTTING THE BUSINESS CASE TOGETHER.

IT REALLY ALLOWS US TO SEE WHAT ARE THE CHALLENGES, WHAT ARE THE ISSUES, WHAT DO WE HAVE QUESTIONS ON SOME OF THE ASSUMPTIONS, AND WE'RE PART OF THAT PROCESS. IT'S A COLLABORATIVE PROCESS.

WE WANT TO REACH A POINT WHERE HOPEFULLY WHEN WE'RE STARTING THE FORMAL RATE PROCESS THAT WE'RE IN ALIGNMENT BOTH FROM THE CPS ENERGY STAFF TEAM AND THE CITY TEAM ON WHAT THE RECOMMENDATION IS. THIS SLIDE SUMMARIZES FOR YOU THE RATE TIMELINE. IT'S REALLY JUST FOCUSING ON A COUPLE OF KEY DATES FOR THE GOVERNING BODIES. CPS BOARD OF TRUSTEES HAD A SPECIAL BOARD MEETING THIS MORNING WHERE THEY WERE BRIEFED ON THE RATE REQUEST AND THE REQUEST ESTABLISHED THE REGULATORY ASSET FOR PENSION EXPENSE, SO THAT INITIATED THE FORMAL PROCESS, THE BEGINNING OF THE RATE PROCESS. OF COURSE, WE'RE HERE THIS AFTERNOON, YOU'RE GOING TO HEAR FROM CPS ENERGY AND THEIR TEAM IN A MINUTE ABOUT THEIR BUSINESS CASE AND WHY THEY BELIEVE THIS RATE INCREASE IS NEEDED.

I'LL COME BACK ON NOVEMBER 30TH AND PRESENT THE CITY TEAM'S ANALYSIS OF THAT BUSINESS CASE THAT WOULD SUPPORT THAT RATE INCREASE AND THE ESTABLISHMENT OF THAT REGULATORY ASSET. THE CPS BOARD OF TRUSTEES HAS A MEETING SCHEDULED ON DECEMBER 4TH, WHERE THEY WOULD CONSIDER FORMAL APPROVAL OF THE RATE REQUEST. AND THEN YOU ALL, AT THIS POINT, WE HAVE CALENDAR DECEMBER 7TH AS AN A SESSION ITEM FOR CONSIDERATION OF THE ORDINANCES THAT WOULD SUPPORT BOTH OF THOSE ITEMS. JUST A LITTLE BIT OF CONTEXT, THE LAST TIME WE WERE DOING A RATE CASE FOR CPS ENERGY WAS IN JANUARY OF 2022 WAS THE LAST TIME IT GOT APPROVED. WE STARTED IN THE FALL OF 2021. IT INCLUDED WITH THE ADOPTION OF AN ORDINANCE IN JANUARY OF 2022. FOR THOSE OF YOU ON THE CITY COUNCIL AT THAT POINT IN TIME, YOU MAY RECALL THE FACT THAT WE NEEDED TO ADDRESS CPS ENERGY'S IMMEDIATE FINANCIAL PRESSURES AND ALLOW TIME FOR SOME AREAS OF UNCERTAINTY TO EVOLVE, AND FOR US TO GAIN MORE CLARITY IN THOSE AREAS.

AND WHILE THERE'S CERTAINLY UNCERTAINTIES STILL TODAY, THERE'S A LOT MORE CLARITY THAN WE HAD TWO YEARS AGO, AND TO SOME DEGREE, THERE WILL ALWAYS BE UNCERTAINTY. THINGS WILL CHANGE AROUND US, THE PLANS HAVE TO ADJUST TO THOSE CHANGES AND THEN WE MOVE FORWARD.

BUT I WANT TO HIGHLIGHT A COUPLE OF THINGS THAT WE TALKED ABOUT TWO YEARS AGO. ONE WAS THE GENERATION PLAN.

SO THE LAST RATE MODEL IN WHAT WE WERE LOOKING AT KIND OF ASSUMED, FOR LACK OF A BETTER WORD, STATUS QUO, WE WERE GOING TO CONTINUE TO RUN THE PLANTS WE HAD AND WE WERE GOING TO ALLOW THE RATES ADVISORY COMMITTEE TO GO THROUGH A PROCESS WITH THE BOARD OF TRUSTEES TO LOOK AT SOME GENERATION PLAN ALTERNATIVES. THAT PROCESS HAS BEEN COMPLETED.

SO THE RATE CASE THAT YOU HAVE BEFORE YOU TODAY IMPLEMENTS THAT GENERATION PLAN. SO IT TAKES ALL OF THE COSTS ASSOCIATED WITH THAT PREVIOUS PLAN, TO INCLUDE, FOR EXAMPLE, RUNNING SPRUCE 1 AND SPRUCE 2 OVER THE LONG TERM, REMOVES THOSE COSTS AND INSERTS THE COST OF THE GENERATION OVER THIS NEXT PERIOD OF TIME. WE TALKED A LOT ABOUT TECHNOLOGY SYSTEM UPGRADE THAT THEY NEED TO DO, LARGE SYSTEM UPGRADE.

THEY WERE KICKING THAT OFF TWO YEARS AGO. WE FUNDED THE FIRST TWO YEARS OF THAT PROJECT, WANTED TO GIVE THEM MORE TIME TO GO OUT, CONTINUE TO DO THEIR DUE DILIGENCE ON THAT, GET INTO AN RFP, GET SOME RESPONSES BACK AND THEN REFINE THOSE NUMBERS. THEY'VE DONE THAT, SO THOSE NUMBERS -- THIS BUSINESS CASE, THIS FORECAST NOW INCLUDES THE COMPLETION OF THAT LARGE ERP PROJECT TO INCLUDE THE SYSTEM THAT THEY CALL EVOLVE, WHICH IS GOING TO REPLACE A CORE SYSTEM AND A LOT OF SUBSIDIARY SYSTEMS AROUND IT. ANOTHER EXAMPLE OF A KEY AREA WE TALKED ABOUT WAS STAFFING. SO THIS IS FALL OF 2021, MUCH LIKE A LOT OF ENTITIES, INCLUDING US, THERE WERE A LOT OF CHALLENGES WITH GETTING STAFF AND HIRING EMPLOYEES, AND THEY'VE DONE A GREAT JOB OVER THE LAST COUPLE OF YEARS OF FILLING VACANCIES, GETTING THEMSELVES STAFFED BACK UP AND THEN LOOKING AT THE ORGANIZATION IN TERMS OF NEEDS THAT THEY HAVE FROM A PERSONNEL PERSPECTIVE. THEY GOT SOME FEEDBACK FROM THE DAY MARK OPERATIONAL REVIEW THAT WAS -- THEY WERE ASKED TO

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THEY'RE RELATED TO CHANGES IN MARKET VALUE OF INVESTMENTS.

AS YOU CAN IMAGINE, AS THE MARKET MOVES UP AND DOWN, IT CREATED A LITTLE BIT OF VOLATILITY WITHIN THE RATE MODEL. SO WE RECOMMENDED THAT THEY LOOK AT THAT, REMOVE THAT FROM THE RATE MODEL.

SO THE ACCOMPLISHMENT OF THIS REGULATORY ASSET DOES THAT.

IT'S REALLY MORE OF AN ACCOUNTING TREATMENT ISSUE.

IT DOESN'T AFFECT THE LEVEL OF PENSION BENEFITS OR ANYTHING THEY GET, IT'S A WAY TO REMOVE SOME OF THAT VOLATILITY FROM THE RATE CASE.

WE ARE RECOMMENDING SUPPORT FROM BOTH ITEMS. WE'VE CONCLUDED OUR REVIEW AND WE DO RECOMMEND SUPPORT FOR BOTH ITEMS. CPS ENERGY WILL, AGAIN, GO THROUGH THE BUSINESS CASE WITH YOU TODAY.

I'LL COME BACK NOVEMBER 30TH AND GO THROUGH MORE DETAIL ON THE CITY'S ANALYSIS OF THESE TWO ITEMS. AND THAT KIND OF WRAPS UP THE FORMAL PART OF MY PRESENTATION, BUT BEFORE I TURN IT OVER TO THE CPS ENERGY TEAM, I DO WANT TO THANK MY TEAM IN THE FINANCE DEPARTMENT.

THEY DO A LOT OF WORK IN A VERY SHORT PERIOD OF TIME.

THAT WORK IS ACTUALLY LED BY RUSSELL HUFF, ANN TORELSON RIGHT BEHIND ERIK HERE, I WANT TO THANK MANY OTHER PEOPLE, THE CPS TEAM.

WHEN WE DO THESE RATE REVIEWS WE GO THROUGH A LOT OF INFORMATION IN A VERY SHORT PERIOD OF TIME. I MENTION THE BUDGETS, THE ASSUMPTIONS, THE MODELS. WE MODEL DIFFERENT SCENARIOS, WE WORK WITH THEM VERY CLOSELY. IT'S BEEN A COLLABORATIVE APPROACH. THEY'VE BEEN VERY RESPONSIVE TO US.

I JUST WANT TO THANK THEM FOR THEIR EFFORTS ALONG THOSE LINES AND JUST THAT I APPRECIATE THE PARTNERSHIP THAT WE HAVE WITH THE TEAM OVER AT CPS ENERGY. AND WITH THAT, I WILL ACTUALLY TURN IT OVER TO

RUDY. SO RUDY, IT'S ALL YOURS. >> GOOD AFTERNOON, MAYOR AND COUNCIL. GOOD TO BE WITH YOU HERE AGAIN TODAY.

AND I APPRECIATE THE OPPORTUNITY TO COME BEFORE YOU TO START THE PROCESS OF LAYING OUT OUR JUSTIFICATION AND THE NEED FOR AN ADJUSTMENT TO THE CPS ENERGY, YOU KNOW, RATES. I DO WANT TO TAKE A MOMENT TO DO A COUPLE OF THINGS. I WANT TO THANK -- EQUALLY THANK ERIK. THE TYPE OF PARTNERSHIP ERIK AND I ENJOY IN TRYING TO BOTH DO OUR JOBS AND MAINTAIN AN OPEN LINE OF COMMUNICATION, I THINK, IS SOMETHING THAT THE COMMUNITY SHOULD BE PROUD OF.

SO ERIK, I APPRECIATE YOU ALWAYS BEING WILLING TO TAKE MY CALLS AT EIGHT TIME, 9:00, 10:00 AT NIGHT SOMETIMES. BEN AND THE TEAM, YOU KNOW, AGAIN, TWO YEARS AGO, WE STARTED THE PROCESS OF MEETING MONTHLY TO GO THROUGH OUR BUDGET SO THAT THERE WERE NO -- YOU KNOW, THERE WERE NEVER GOING TO BE ANY SURPRISES. AND, YOU KNOW, WE'VE ENJOYED A COUPLE OF YEARS WHERE, YOU KNOW, ONE OF MY PRIMARY RESPONSIBILITIES AS CEO OF CPS ENERGY IS TO ENSURE, YOU KNOW, A GOOD RATE OF RETURN FOR MY SHAREHOLDER, AND THAT'S YOU ALL AND THE CITIZENS OF THIS COMMUNITY. I WANT TO ACKNOWLEDGE MY BOSS, MY BOARD CHAIR JENNY GONZALES WHO'S BEHIND ME, JANIE IS USUALLY AT MOST COMMUNITY MEETINGS THAT I ATTEND AND SHE DOES A WHOLE BUNCH ON HER OWN.

IN MY TIME AT CPS ENERGY, THERE HAS NOT BEEN A MORE ENGAGED COMMUNITY TRUSTEE IN THE COMMUNITY THAN JANIE HAS BEEN, AND SO I JUST WANT TO ACKNOWLEDGE AND THANK HER FOR BEING HERE TO SUPPORT THE TEAM.

AND, OF COURSE, MY TEAM, WHO'S PUT IN EQUALLY AMOUNT OF TIME AND EFFORT. I'M GOING -- I WANT TO START BY JUST SETTING KIND OF THE TONE AND THE STAGE FOR WHAT'S TO COME.

WE'RE ALL PART OF THE SAME TEAM AT THE END OF THE DAY.

YOU KNOW, WE'VE GOT JOBS TO SERVE THIS COMMUNITY, AND I TALK A LOT ABOUT ONE TEAM. YOU KNOW, ONE TEAM AS CPS ENERGY TEAM, ONE TEAM WITH OUR CUSTOMERS, ONE TEAM WITH OUR POLICYMAKERS.

WE CANNOT BE SUCCESSFUL WITHOUT THE FOUR OR FIVE THINGS THAT YOU ALL DO, YOU KNOW, THAT WE HAVE TO GET YOUR BUY-IN TO DO. AND RATES IS ONE OF THEM. AND I NEVER STAND BEFORE YOU OR COME BEFORE YOU NOT RECOGNIZING THE DIFFICULTY IN ASKING FOR A RATE ADJUSTMENT.

I KNOW IT IS A TOUGH THING TO ASK FOR, BUT WE'VE -- YOU KNOW,

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AND YOU ALL ENJOY THE BENEFIT OF OWNING ONE OF THE BEST UTILITIES IN THE COUNTRY FROM A RELIABILITY STANDPOINT, FROM AN AFFORDABILITY STANDPOINT, WE'RE THE LOWEST RATE IN THE STATE OF TEXAS FOR RESIDENTIAL CUSTOMERS. WE TAKE VERY, VERY STRONG PRIDE IN THE CHARGE THAT'S BEEN PLACED ON US BY THIS COMMUNITY. I'M GOING TO TURN IT OVER TO CORY HERE IN A SECOND, WE'VE GOT A LONG AGENDA FOR YOU TODAY, AND WE WILL TRY TO BE AS CRISP IN OUR DELIVERY AS POSSIBLE, SO WE CAN GET TO YOUR COMMENTS AND QUESTIONS. AND I'LL JUST -- YOU KNOW, REITERATE, WE WANT TO MAKE SURE THAT YOU'RE GETTING YOUR QUESTIONS ANSWERED AS WE GO THROUGH THIS PROCESS, SO WHATEVER QUESTIONS COME UP AFTER TODAY, PLEASE LET US KNOW WHAT THOSE ARE. WE WILL RESPOND TO YOUR QUESTIONS AND ENSURE THAT THE ENTIRETY OF THE COUNCIL IS INFORMED, BUT WE WANT TO MAKE SURE ABOUT TIME, YOU'RE ASKED TO MAKE A DECISION ON THIS REQUEST, THAT YOU'VE HAD A CHANCE TO GET YOUR QUESTIONS ANSWERED.

SO THIS IS A CONTINUATION IN OUR JOURNEY, AND TWO YEARS AGO, I WOULD -- I WOULD CHARACTERIZE OUR RATE REQUEST AS A STABILIZATION OF THE UTILITY. WE WERE IN A TOUGH SPOT TWO YEARS AGO, AND YOU ALL DID WHAT LEADERS DO AND, YOU KNOW, YOU STEPPED UP IN THE TIME WHERE YOU RECOGNIZED THERE WAS A NEED. HOW I WOULD CHARACTERIZE THE -- THIS PARTICULAR CONVERSATION AND THE FUTURE, REALLY IS INVESTMENT IN THE KIND OF UTILITY COMPANY YOU HAVE TOLD US YOU WANT US TO BE, A MORE SUSTAINABLE UTILITY. YOU KNOW, MORE RELIABLE AND CONTINUE TO REMAIN -- TO MAINTAIN AFFORDABILITY, YOU WANT US TO BE CUSTOMER-CENTRIC AND COMMUNICATIVE, YOU KNOW, TO THE FULLEST EXTENT BETWEEN WHAT WE'VE DONE ON THE COMMITTEE FOR EMERGENCY PREPAREDNESS AND THOSE 130 PLUS ACTION ITEMS, AND THE ORGANIZATIONAL REVIEW THAT OUR BOARD JUST, YOU KNOW, FINALIZED. IT'S GOT ANOTHER 92 ACTION ITEMS ASSOCIATED WITH IT. THE PLAN THAT WE HAVE WILL CARRY US INTO THE FUTURE. SO THESE -- THESE REQUESTS THAT WE WILL MAKE. YOU KNOW, WE'LL COME TO YOU EVERY TWO YEARS, EVEN IF IT'S JUST TO RECONCILE WHERE WE ARE.

IT'S ABOUT THE FUTURE. AND I WILL TELL YOU AS MUCH -- AS MUCH TRANSITION AS HAPPENING IN OUR INDUSTRY TODAY. I'VE TOLD THE MAYOR THIS, YOU TAKE YOUR FOOT OFF THE GAS PEDAL FOR A SECOND, AND WE'RE BEHIND AND WE'LL NEVER CATCH UP. WE ARE TRYING TO BE THOUGHTFUL IN THE RESOURCES WE'RE ASKING YOU TO CONSIDER, BUT THIS IS A CONTINUATION AND WILL CONTINUE TO BE A CONTINUATION OF THE CONVERSATION WE STARTED TWO YEARS AGO. YOU ASK WHAT'S YOUR PLAN, RUDY? VISION 2027 IS OUR PLAN. WE'RE TRYING TO BE RELIABLE, COMPETITIVELY PRICED, SUSTAINABLE IN THE WAY THAT WE'RE SOURCING OUR POWER AND DO ALL THAT IN AN EQUITABLE MANNER.

WE HAVE DONE SO MUCH WORK, WHICH YOU'LL HEAR ABOUT TODAY, ON UTILITY BURDEN. AND THOSE WHO ARE IMPACTED BY 10% OR MORE OF THEIR DISCRETIONARY INCOME GOING TO ENERGY. WE'VE GOT TO DO SOMETHING ABOUT THAT AS A COMMUNITY. THAT'S UNACCEPTABLE, BUT I WILL TELL YOU THAT THE CONVERSATION ABOUT INVESTING IN AN ASSET AND HOW WE DEAL WITH AFFORDABILITY, THEY'RE ONE IN THE SAME, BUT THEY'RE ALSO SEPARATE. YOU KNOW, KEEPING AN EYE ON US BEING ONE OF THE LOWEST RATES IN THE STATE OF TEXAS IS HOW WE ENSURE WE'RE ALWAYS GOING TO BE AFFORDABLE FOR OUR CUSTOMERS, BUT WE DON'T OPERATE IN A BUBBLE.

ALL THE OTHER COST IMPLICATIONS THAT AFFECT EVERY UTILITY ACROSS THE COUNTRY AFFECT US, TOO. SO EQUALLY WE'VE GOT TO BE PAYING ATTENTION TO THE AFFORDABILITY PROGRAMS THAT WE F FOCUS ON AS PART OF OUR PROCESS THAT YOU'LL HEAR ABOUT TODAY. THIS IS OUR PLAN, A PLAN IS ONLY AS GOOD AS THE AMOUNT OF INVESTMENT YOU MAKE IN IT.

OTHERWISE, YOU MIGHT AS WELL TAKE THAT PLAN AND THROW IT IN THE TRASH.

STRATEGY WITHOUT FUNDING IS NOT A STRATEGY. SO IF YOU HAVE ANY THOUGHTS OR FEEDBACK ON VISION 2027, I COULD ENCOURAGE YOU TO SPEND WHATEVER AMOUNT OF TIME YOU MIGHT WANT TO SPEND REVIEWING THAT PLAN, WHICH IS ONLINE ON OUR WEBSITE. I WANT TO TALK ABOUT THE COMMUNITY INPUT WORKING GROUP WE PUT TOGETHER. AS YOU KNOW, OUR BOARD FELT LIKE THE RATE ADVISORY COMMITTEE HAD DONE THEIR JOB.

WE ASKED A LOT OF THEM OVER A THREE-YEAR PERIOD AND THEY DELIVERED.

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Y'ALL WILL HAVE APPOINTEES TO THAT, AND WE WILL -- WE WILL GET THAT IN PLACE HOPEFULLY IN THE MONTH OF FEBRUARY SO THAT WE CAN, YOU KNOW, HAVE A GOOD PROCESS GOING FORWARD. SO WE JUST NEEDED TO TAKE A LITTLE BIT OF A TRANSITION PERIOD TO TRY TO GET THAT COMMITTEE RIGHT. SO WITH THAT, I AM GOING TO TURN IT OVER TO CORY TO WALK YOU THROUGH OUR INFORMATION TODAY. THANK YOU.

>> ALL RIGHT. THANK YOU, RUDY, AND GOOD AFTERNOON, MAYOR, GOOD AFTERNOON, COUNCIL. I DO WANT TO ECHO THE SAME COMMENTS THAT BEN SHARED IN TERMS OF, YOU KNOW, APPRECIATION FOR THE TEAMS, BOTH THE CITY STAFF AND, OF COURSE, THE CPS ENERGY TEAMS. IT HAS BEEN A LOT OF WORK, AND WE'RE HAPPY TO PUT IN THE WORK. THIS IS WHAT BEING PUBLIC POWER IS ALL ABOUT. SO WITH THAT SAID, I'LL GO TO THE NEXT SLIDE HERE. REALLY THE POINT HERE IS TO STEP BACK AND TAKE A LIKE AT THE TIMELINE. I THINK BEN DID A GOOD JOB HIGHLIGHTING SOME OF THE KEY POINTS FROM A PROSPECT PERSPECTIVE. THE ONLY THING I MIGHT ADD RELATIVE TO US IS ABOUT THE ONGOING COMMUNITY OUTREACH WE PLAN ON DOING. WE'VE BEEN DOING THIS FOR YEARS, BUT WE DO MAKE SURE DURING THIS TIME PERIOD THAT WE'RE OUT IN THE COMMUNITY ANSWERING QUESTIONS, BEING AVAILABLE AND THINGS OF THAT NATURE.

AND THIS WAS TOUCHED ON EARLIER AS WELL IN TERMS OF THE COMMUNITY COMMITMENTS THAT WE'VE DELIVERED ON, WE DID SPEND THE LAST COUPLE OF YEARS REALLY FOCUSED ON THE THINGS WE SAID WE WOULD DO.

LONG LIST UPPER HOO, SOME OF THEM HAVE BEEN MENTIONED .

I'LL MENTION A FEW JUST TO REITERATE. AND FIRST AND FOREMOST IS REALLY THE APPROVAL BY OUR BOARD OF TRUSTEES EARLIER THIS YEAR AROUND OUR GENERATION PLAN. AND MEETING THE DEMAND OF THIS COMMUNITY THAT'S GROWING IS CRITICALLY IMPORTANT. MEETING THAT DEMAND IN THE FACE OF RETIRING ASSETS THAT HAVE BEEN AROUND FOR DECADES IS IMPORTANT, AND SO BEING ABLE TO HAVE THAT CONVERSATION WITH THE RATE ADVISORY COMMITTEE WITH THE INPUT FROM THE BROADER COMMUNITY WAS VERY IMPORTANT, AND, YOU KNOW, WE'RE PLEASED TO BE SETTING FORWARD ON THAT PATH. WE ALSO REUPED OUR SUSTAINABILITY TOMORROW ENERGY PLAN. THIS IS A VARIETY OF ENERGY EFFICIENCY PROGRAMS THAT WE MAKE AVAILABLE TO OUR COMMUNITY. AND RELATED TO THAT IS THE EXPANDED EQUITY FOCUSED PROGRAMS AND OUTREACH THAT WE HAD DONE. AND WE WORKED IN SOME OF THAT FEEDBACK, TOO, THAT PROGRAM AS WELL. AND YOU'LL HEAR MORE ABOUT THAT -- THOSE EFFORTS WHEN DEANNA SPEAKS. WE DID, AS HAS BEEN MENTIONED EARLIER TODAY, IDENTIFIED CUSTOMER LEVEL ENERGY BURDEN, RUDY TOUCHED ON THAT. THAT WAS GOOD FEEDBACK WE HAD THROUGH OUR CONVERSATION WITH THE RATE ADVISORY COMMITTEE, AND AS I MENTIONED, THAT IS WOVEN THROUGH A LOT OF THE PROGRAMS THAT WE'VE DONE.

LAST TIME THERE WAS TALK ABOUT AN ORGANIZATION AGRICULTURE ASSESSMENT AND WE HAVE DONE THAT. AN OPERATIONAL EFFICIENCY ASSESSMENT, AND WE'VE DONE THAT. AND THERE'S A LOT OF CONVERSATION AROUND THE IT INFRASTRUCTURE. AND WHEN WE TALK ABOUT REFINING OUR FUTURE STATE TECHNOLOGY PLATFORM ON THIS SLIDE, THAT'S REALLY THE CONVERSATION WE'RE HAVING. AND IT NOT JUST A COMPUTER SYSTEM.

IT'S THE BACKBONE OF ALL THE SYSTEMS THAT RUN THE ORGANIZATION FOR FOLKS IN THE FIELD, IN THEIR TRUCKS, THE THAT WE HAVE. AND IT'S ALSO IN LIGHT OF THE BROADER SECURITY THREATS, BOTH PHYSICAL AND CYBER, THAT WE'VE BEEN SEEING, YOU KNOW, FOR THE LAST DECADE, AND THERE'S NO TWO WAYS ABOUT IT. I MEAN, AS A IMENT, WE ARE A CRITICAL INFRASTRUCTURE, THOSE SECURITY THREATS WHETHER THEY BE CYBER OR PHYSICAL, THEY ARE REAL AND PRESENT. WE'VE BEEN MAKING A LARGE FOCUS ON INVESTING IN THAT THE LAST COUPLE OF YEARS AN GOING FORWARD AS WELL. SO THIS NEXT SLIDE IS TO TALK A LITTLE BIT ABOUT THE WHERE AND HOW THE DOLLARS FROM OUR LAST RATE REQUEST WERE APPLIED AND SPENT THROUGHOUT THE COMMUNITY. AND WHILE THERE'S A LOT OF ITEMS ON HERE, IN THE MIDDLE SECTION I THINK THE REAL POINT IS THESE ARE INVESTMENTS THAT ARE GOING TOWARDS ADDING VALUE TO OUR CUSTOMERS, GOING TOWARDS ENSURING THEY'VE GOT THE POWER AND THE RELIABILITY THAT THEY NEED, THAT THEY HAVE THE RESILIENCY THAT THEY NEED WHEN SOMETHING GOES OUT,

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YOU MIGHT NOT SEE OUR FOLKS DOING THAT WITH THAT WORK UNDERGROUND, SO THERE'S A LOT OF FOCUS AROUND THE RELIABILITY AND RESILIENCY WORK THAT IS TACTICAL THAT HELPS BROADLY WITH THE SERVICE LEVEL.

AS RUDY TALKED ABOUT, YOU KNOW, WE CONSTANTLY BENCHMARKED OURSELVES TO HAVE STRONG RELIABILITY FOR THE COMMUNITY AND FROM A BENCHMARK PERSPECTIVE. AND, OF COURSE, KEEPING UP WITH OUR COMMUNITY IN TERMS OF GROWTH, NOT JUST CUSTOMER GROWTH BUT BROADLY THE SYSTEM GROWTH. WE'RE GROWING AT 150 MEGAWATTS PER YEAR CAPACITY PERSPECTIVE, AND THAT'S A LOT. AND THAT CORRESPONDS WITH THE GROWTH WE SEE WITH THIS COMMUNITY. AND WE ALL BENEFIT FROM HAVING ENOUGH GENERATION RESOURCES, NO MATTER IF YOU'VE BEEN HERE FOR ONE YEAR OR 20 YEARS IN THE COMMUNITY. WE ALL BENEFIT FROM THE SMOOTH FLOW OF POWER ACROSS THE ENTIRE LOCAL GRID.

YOU KNOW, NO MATTER WHERE YOU ARE IN THE CITY. AND AS I MENTIONED JUST A MOMENT AGO, A LOT OF THE TECHNOLOGY INVESTMENT REALLY WILL CIRCLE BACK TO CUSTOMER VALUE AND ENHANCING THE CUSTOMER EXPERIENCE.

WE'VE GOT A LOT OF FEEDBACK OVER THE LAST COUPLE OF YEARS AND FROM THE RATE ADVISORY COMMITTEE ON DIFFERENT TYPES OF PRODUCTS AND SERVICES THAT OUR CUSTOMERS HAVE SEEN OTHER PLACES THAT THEY WANT HERE AND THE TECHNOLOGY AND INVESTMENTS WE'RE MAKING ARE GOING TO ENABLE THAT. SO A LOT OF FEEDBACK WAS GIVEN.

THE ONE THAT WE HAVE HONED IN ON WHERE WE DO HAVE THE ABILITY IS TO ADDRESS THE ENERGY BURDEN AND DEANNA WILL TALK MORE ABOUT THAT, BUT THE OTHER STEPS THAT WERE OUT THERE THAT WE TALKED ABOUT DO REQUIRE THE ENABLEMENT THROUGH TECHNOLOGY AND AS I MENTIONED EARLIER, THE APPROPRIATE SECURITY AROUND THOSE TECHNOLOGIES IN THE FACE OF ALL THE CURRENT THREATS.

AND THEN, OF COURSE, WE'RE A UTILITY. AND IT TAKES PEOPLE TO DO OUR BUSINESS. AND MEETING THE GROWTH IN THE COMMUNITY IS IMPORTANT FOR US, AND WE HAVE MADE THE INVESTMENTS IN OUR STAFFING OVER THE LAST COUPLE OF YEARS TO KEEP UP WITH THAT. WE HAVE BENCHMARKED OURSELVES AS WELL. WE ARE MIDDLE OF THE PACK WHEN IT COMES TO CUSTOMERS PER EMPLOYEES BUT WE ARE A COMMUNITY DIFFERENT THAN MANY THAT IS GROWING AT A RAPID CLIP. THAT IS ONE OF OUR DIFFERENTIATORS FROM OTHER CITIES ACROSS THE COUNTRY IS AT THE SPEED WE CONTINUE TO GROW. SO, YOU KNOW, A LONG LIST HERE, TRIED TO BE BRIEF ON THE TYPES OF PLACES WHERE YOU'VE SEEN THOSE INVESTMENTS.

AND THIS NEXT SLIDE IS REALLY JUST KIND OF A HISTORICAL LOOKBACK FROM A BROADER CONTEXT PERSPECTIVE. AND THERE'S A WHOLE LOT ON THIS SLIDE, BUT IT GOES BACK TO 1975. AND YOU'RE REALLY TRYING TO FOCUS ON ARE THE CIRCLED AREAS ON THAT SLIDE, AND WHAT WE'RE REALLY TRYING TO HIGHLIGHT IS THAT OUR COMMUNITY, NO DIFFERENT THAN MANY OTHER COMMUNITIES, IS GOING THROUGH A CYCLE OF GROWTH AND INVESTMENT. AND WHAT THIS SAYS TO YOU IS THOSE BARS ARE OUR CAPITAL SPEND. AND DURING PERIODS OF GROWTH TO MEET THE COMMUNITY'S DEMAND, YOU SEE THAT OUR SPEND INCREASES NOTABLY AND YOU CAN SEE THAT IN THE FIRST CIRCLE. CORRESPONDING WITH THAT ARE RATE INCREASES TO HELP SUPPORT THAT, AND THAT'S WHAT THOSE STARS REPRESENT ALONG THE BLUE LINE AS YOU KIND OF GO UP THE SCALE.

AND SO SAME MESSAGE AS YOU MOVE OVER INTO THE EARLY 2000S AROUND INVESTMENT IN SUPPORTING OUR COMMUNITY. AND THEN HERE WE ARE ON THE FAR RIGHT LOOKING AT THE SLIDE IN THE GREEN WITH THE FORECAST THAT WE'RE BRINGING WITH YOU TODAY. AND SO NOT ONLY IS THERE A GENERATION PLAN LAID ON TOP OF THAT, BUT THERE'S ONCE IN A GENERATION TECHNOLOGY INFRASTRUCTURE THAT WE'RE LAYING IN THERE THAT'S ALSO PUT IN PLACE TO FACE ONCE IN A LIFE TIME THREATS TO THAT INFRASTRUCTURE.

SO A LOT GOING ON THERE, BUT THE MOST -- THE MAIN POINT IS REALLY JUST TO RECOGNIZE KIND OF WHERE WE ARE IN THAT CYCLE. AND SO GOING FORWARD AS WE'VE TALKED ABOUT, WE STILL MAINTAIN THAT ONGOING ROUTINE RATE SUPPORT WILL BE NECESSARY TO MEET THE CUSTOMER NEEDS AND THE COMMUNITY EXPECTATIONS. HOWEVER, AS WE'VE TALKED ABOUT BEFORE, OUR STRONG PERFORMANCE IN THIS PARTICULAR YEAR HAS ALLOWED US TO COME FORWARD WITH A RECOMMENDATION OF A 4.25% BASE RATE INCREASE.

THIS EQUATES TO ABOUT $85 MILLION IN ANNUAL REVENUE FOR THE SYSTEM, AND THIS IS DOWN FROM THE PREVIOUS FORECAST THAT WE HAD FLASHED TO OUR BOARD AND CITY COUNCIL OF 5.5%. SO THE STRONG OPERATIONAL PERFORMANCE, WHICH IS ATTRIBUTED TO OUR -- OUR WHOLESALE REVENUE HAS NETTED APPROXIMATELY $130 MILLION, AND THAT'S NOTED HERE ON THE SLIDE. AND THAT IS IN PART

[00:30:03]

THIS SLIDE REALLY TRIES TO ANSWER SOME OF THE QUESTIONS OF WHERE THOSE DOLLARS ARE PLANNED TO BE APPLIED AND BROADLY THIS -- THIS SLIDE IS TO ATTEMPT TO ACHIEVE THAT. RECOGNITION OF WHAT WHOLESALE REVENUE IS, THESE ARE SALES TO ERCOT, BROADLY THE STATE OF TEXAS, SO NOT TO OUR LOCAL CUSTOMERS. THESE CAN BE VIEWED AS ONE-TIME REVENUE, AND FOR CONTEXT, THE DOLLARS THAT WE'VE SEEN THIS YEAR ARE NEAR ALL-TIME HIGHS.

THEY ARE ATYPICAL. WE WOULD NOT BUDGET SUCH HIGH ONE-TIME REVENUE BECAUSE IT IS NOT RECURRING AND IT IS VERY VOLATILE.

BUT GIVEN THAT, THERE IS BENEFIT THAT WE CAN APPLY TO THE SYSTEM AND WHAT WE'VE PUT HERE ON THE SCREEN IS OVER HALF OF THAT WOULD BE APPLIED TO REINVESTING INTO OUR BROADER SYSTEM. AND IT THE TYPES OF PROJECTS THAT YOU WOULD EXPECT GO TOWARDS SUPPORTING RELIABILITY AND RESILIENCY. WE TALKED ABOUT THIS SUMMER AND HOW HOT IT WAS, AND OUR GENERATION PLANTS WERE UP TO THE TEST.

THEY RAN AND RAN LONGER THAN ANTICIPATED, HARDER THAN ANTICIPATED, AND WHILE THEY PROVED TO BE BENEFICIAL FOR US, THEY NEED REINVESTMENT TO KEEP UP -- TO KEEP UP THAT PERFORMANCE GOING FORWARD.

YOU KNOW, THERE ARE ALSO A LOT OF RELIABILITY IMPROVEMENTS THAT WE CAN KIND OF BRING FORWARD IN OUR PLAN AND HELP PROMOTE, YOU KNOW, IMPROVED RELIABILITY. AND THAT'S, YOU KNOW, THROUGH THINGS LIKE CIRCUIT CONTROLS, YOU KNOW, PUT IN MORE POLES ACROSS THE SYSTEM SOONER THAN ANTICIPATED. AND BY HAVING THIS ONE-TIME CASH AVAILABLE, WHAT THIS DOES LONG TERM IS HELP ENABLE LESS BORROWING FOR OUR CAPITAL PLAN, AND THAT'S RELEVANT FOR TWO REASONS. ONE, IT'S IN PART, CAN HELP CONTRIBUTE TO THE RATE REQUEST THIS YEAR, BUT GOING FORWARD, AS YOU'LL SEE IN LATER SLIDES, OUR CAPITAL PLAN IS PRETTY HEAVY.

AND IT FOR THE BIG THINGS THAT WERE MENTIONED AT THE BEGINNING AROUND OUR GENERATION PLANT AND I.T. INFRASTRUCTURE. WE ALSO WANT TO DO SOMETHING FOR OUR CUSTOMERS, SO ON THE TABLE IS AN ADDITIONAL $10 MILLION TO OUR RESIDENTIAL ENERGY ASSISTANCE PARTNERSHIP, ALSO KNOWN AS REAP. A $10 MILLION FOR CONTEXT IS NEARLY DOUBLING THE AMOUNT OF DOLLARS CURRENTLY IN THAT PROGRAM WHICH HAS THE ABILITY TO HELP THOUSANDS MORE CUSTOMERS GET ASSISTANCE ON THEIR BILLS. AND, AGAIN, DEANNA WILL TALK MORE ABOUT THE VARIETY OF PROGRAMS WE HAVE ON OFFER. AND THE LAST ONE REALLY IS AROUND A NEW MARKET REQUIREMENT. AND I'D PUT THAT UNDER THE REGULATORY REQUIREMENT KIND OF UMBRELLA. AS YOU KNOW WE ARE GOVERNED BY MULTIPLE AGENCIES FOR A VARIETY OF DIFFERENT THINGS AND WUND OF THE ITEMS THAT CAME THROUGH THIS YEAR THAT WENT INTO EFFECT IN OCTOBER WAS SOMETHING THAT AT THE END OF THE DAY REQUIRED US TO CONTRIBUTE APPROXIMATELY $50 MILLION TOWARDS. NOW, BECAUSE THIS IS KIND OF A ONE-TIME COMMITMENT, AGAIN, IT SEEMED APPROPRIATE THAT THESE ONE-TIME REVENUE FROM WHOLESALE SALES COULD BE APPLIED TOWARD THAT, MEANING WE DON'T HAVE TO BUILD THAT REQUIREMENT INTO OUR PLAN GOING FORWARD AND DIDN'T HAVE TO BUILD THAT INTO AN ASK.

SO TRYING TO BE PREEF BRIEF HERE IN JUST KIND OF ANSWERING THE CURRENT POSITION OF THIS YEAR AND WHERE THAT WENT AND HOW THAT PERTAINS TO THE REQUEST THAT WE'VE PUT ON THE TABLE. SO THIS NEXT SLIDE IS A HIGH-LEVEL OVERVIEW OF OUR CAPITAL AND O & M BUDGET.

WE PUT THEM HERE ON ONE SLIDE. AND AS YOU STEP BACK, JUST RECOGNIZING KIND OF WHERE WE ARE TODAY, WHICH IS THE SHADED AREA IN THE MIDDLE WITH THE LIGHTER ORANGE AND THE LIGHTER BLUE, THIS TRACKS WITH THE STORY THAT I MENTIONED A FEW SLIDES EARLIER OF CAPITAL PLANS GROWING IN SIZE OVER THE NEXT FIVE YEARS AND BEYOND, BUT ALSO TRACKING WITH, AS RUDY SAID, THE COMMITMENTS AND THE ASKS OFS OUR COMMUNITY.

AND SO IN ORDER TO ACHIEVE THOSE, YOU KNOW, THOSE COMMITMENTS AND ACHIEVE THOSE GOALS, IT TAKES INVESTMENT. AND THERE'S NO TWO WAYS ABOUT THAT. THE TRANSITION FOR OUR FLEET AND THE TRANSITION FOR OUR COMMUNITY IS GOING TO TAKE SOME INVESTMENT.

WHAT WE'VE TRIED TO DO AS RUDY HAS TALKED ABOUT AS WELL IS TAKE ALL OF THAT IN BALANCE. AND THAT'S REALLY KIND OF THE TAKEAWAY HERE FROM A HIGH-LEVEL VIEW. THE BULLETS HERE KIND OF REITERATE KIND OF THE KEY THINGS OF INVESTMENT THAT I'VE ALREADY SAID A FEW TIMES, SO I WON'T REITERATE THAT. WHEN YOU BOIL DOWN -- SO THAT PREVIOUS VIEW WAS KIND OF A FULL HOLISTIC VIEW OF OUR CAPITAL PLAN AND O & M PLAN WHICH WERE LARGE DOLLARS. THE INCREMENTAL COMPONENT TO WHAT YOU SAW ON THE PREVIOUS SLIDE AS I MENTIONED EARLIER WAS $85 MILLION.

AND ALL THIS SLIDE HERE ATTEMPTS TO DO IS REALLY CATEGORIZE KIND OF THE KEY INCREMENTAL INVESTMENTS THAT WE NEED TO MAKE TO CONTINUE TO PROTECT OUR COMMUNITY AND ALLOWING CPS TO CONTINUE TO MOVE FORWARD IN ALL THE WAYS WE TALKED ABOUT. THEMATICALLY, THESE ARE

[00:35:03]

AND I SAID THIS EARLIER, IT'S NOT JUST CUSTOMER GROWTH, THERE'S SYSTEM GROWTH. AND SIMILARLY WITH PEOPLE.

YOU KNOW, THAT IS A COMPONENT OF OUR PROFILE, AND WITH THE CITY GROWING AND THE FORECAST THAT WE HAVE SEEN GOING ON TO THE NEXT DECADE OR SO, THIS WILL CONTINUE TO BE PART OF OUR INVESTMENT IN OUR ASSET.

SO ON THIS NEXT SLIDE HERE, IT'S REALLY OUR BIG THREE -- AUDIO] -- BO BOARD OF TRUSTEES WITH THE COMMUNITY AND WITH YOU, CITY COUNCIL. WITH THIS RECOMMENDED REQUEST, WE DO FORECAST ADEQUATE FINANCIAL HEALTH THAT WILL CONTINUE TO PROVIDE THE STABILITY FOR CPS ENERGY, THE COMMUNITY AND ULTIMATELY OUR CUSTOMERS.

YOU KNOW, WE'RE OFTEN ASKED KIND OF WHAT IS THE VIEW OF THE RATING AGENCIES ON THIS. WELL, AS BEN HAS SAID BEFORE, TOO, WE CAN NEVER SPEAK FOR THEM, BUT THE RATING AGENCIES DO LOOK AT THE TOTAL VIEW OF ALL OF OUR METRICS. AND IT IS TRUE AS I SAID EARLIER, WE WILL BE ENTERING A PERIOD OF HIGH INVESTMENT. THERE'S NO WAY TO SHY AWAY FROM THAT. AND EVEN WITH ROUTINE RATE INCREASES THAT WE'VE TALKED ABOUT OR RECONCILIATIONS EVERY TWO YEARS, WE'RE GOING TO SEE SOME ADDITIONAL IMPACT ON OUR DEBT METRICS, BUT WE RECOMMENDATION NEED THAT DEBT METRIC IS NOT THE ONLY METRIC. YOU KNOW, WE STILL FORECAST STABILITY IN OUR COVERAGE RATIOS AS NO NOTE ON THE SLIDES AND FORECAST STABILITY IN OUR LIQUIDITY RATIOS TO OFFSET PRESSURE FROM THE BORROWINGS THAT WE ANTICIPATE. SO THIS VIEW IS REALLY TO TAKE A BALANCED APPROACH, THE BALANCE IS FINANCIAL HEALTH, CUSTOMER NEEDS, AFFORDABILITY TO OUR COMMUNITY. WE ASKED A LOT ABOUT CUSTOMER BILL IMPACT, SO WITH THIS SLIDE, WE ACTUALLY TRIED TO SHOW ALL OF OUR CUSTOMER GROUPS ON ONE PAGE HERE. WHAT YOU CAN SEE IS THAT THE TOTAL BILL IMPACT FROM THIS RATE REQUEST RANGES FROM 2.7% TO 3.1%, DEPENDING ON THE GROUP THAT YOU'RE IN. YOU KNOW, FOCUSING ON A COMBINED RESIDENTIAL CUSTOMER AT THE VERY TOP LINE THERE, THEY'RE ON THE LOW END OF 2.7%. AND THAT CORRESPONDS TO A $4.45 PER MONTH INCREASE ON AVERAGE. OF COURSE, WE RECOGNIZE EVERY MONTH OF THE YEAR WITH THE CPS BILL IS A DIFFERENT BILL, BUT THE BEST WAY TO LOOK AT THAT IS OVER A 12-MONTH PERIOD AND THAT'S H HOW WE'RE REFLECTING THESE.

THE OTHER POINT I WANT TO MAKE ON THIS SLIDE THESE ARE THE BILL IMPACTS FOR CUSTOMERS NOT ON ANY AFFORDABILITY PROGRAMS. SO WHEN YOU LOOK AT THIS, TO THE EXTENT THE CUSTOMER DOES QUALIFY, THE BILL IMPACT FOR THEM CAN BE LESSENED, DEPENDING ON WHAT PROGRAM THEY'RE ON.

AND, AGAIN, I WILL DEFER TO DEANNA LATER IN THE PRESENTATION TO TALK ABOUT THOSE, BUT I WANTED TO MAKE THAT POINT. AND BEN DID A GOOD JOB ALLUDING TO THIS LAST ITEM IN TERMS OF A REGULATORY ASSET AND I THINK DID A GREAT JOB CHARACTERIZING IT. REGULATORY ASSET IS AN ACCOUNTING TERM AND IN TERMS OF THIS REQUEST, THIS IS AN ACCOUNTING-DRIVEN RECOMMENDATION HERE WITH THIS REGULATORY ASSET.

AND AS WE NOTED -- AS BEN MENTIONED, RIGHT, THIS IS NOT INCREASING CUSTOMER BILLS THROUGH THIS RECOMMENDATION, AND IT DOES HELP, AS BEN MENTIONED, TAKES SOME VOLATILITY OUT OF OUR FORECASTING AND WAS DISCUSSED TWO YEARS AGO AS WELL. SO I THINK WE'RE CLOSING THE LOOP ON THAT. AND THE VERY LAST SLIDE I HAVE HERE BEFORE I HAND IT OVER TO DEANNA IS REALLY JUST TALKING ABOUT TODAY AND THE FUTURE.

AND AS NOTED FOR FISCAL '25, WHICH IS CALENDAR '24 FOR MOST OF US, YOU KNOW THAT, IS OUR RECOMMENDATION. BUT THE KEY POINT ON THAT BULLET RIGHT BELOW THE TABLE IS, YOU KNOW, OUR PLAN IS TO KRU A RATE

[00:40:05]

SO I'M SURE YOU'RE TIRED OF HEARING MY VOICE, I WILL TURN IT OVER TO DEANNA WHO WILL TALK MORE ABOUT THE CUSTOMER ASSISTANCE AND OUTREACH.

>> THANK YOU, CORY, AND THANK YOU, COUNCILMEMBERS.

FIRST OFF, I WANT TO SAY THANK YOU FOR YOUR CONTINUED FEEDBACK AND ENGAGEMENT ON HOW WE CAN BETTER ENGAGE AND CONNECT WITH OUR CUSTOMERS.

AND I'LL BE TALKING A LITTLE BIT ABOUT WHAT WE'VE DONE SINCE THE LAST RATE INCREASE AND THEN WHAT WE'LL BE DOING MOVING FORWARD.

BUT FIRST, YOU KNOW, AS PART OF WHO WE ARE IN SAN ANTONIO, ONE THING THAT IS -- THAT I'M IMMENSELY PROUD TO BE FROM SAN ANTONIO AND AS PART OF CPS ENERGY, WE'RE PROUD TO HAVE THAT STRONG SENSE OF COMMUNITY HERE IN SAN ANTONIO AND THE COUNTY AND CONNECTING SUBURBAN CITIES THAT WE HAVE. AND WITH THE RESPONSIBILITY TO PROVIDE GAS AND ELECTRIC SERVICES TO OVER 900,000 HOMES AND BUSINESSES IN OUR GREATER SAN ANTONIO AREA, WE UNDERSTAND THE MAGNITUDE OF OUR ROLE.

AND OUR ROLE IS ULTIMATELY TO PROVIDE GAS AND ELECTRIC TO OUR CUSTOMER BASE. WE HAVE ABOUT 70% OF THE CUSTOMER BASE IS WITHIN THE SAN ANTONIO CITY LIMITS AND ABOUT 30% LIVE OUTSIDE OF SAN ANTONIO.

AND THAT INCLUDES EVERYONE FROM THE MOST VULNERABLE OF CUSTOMERS TO OUR -- TO INDIVIDUALS THAT LIVE AND WORK AT JOINT BASE SAN ANTONIO, WHO SERVE OUR COMMUNITY AND OUR COUNTRY. AND WE RECOGNIZE THE IMPORTANCE OF IMPROVING THE LIVES FOR ALL RESIDENTS AND ALL BUSINESSES, AND THAT'S THROUGH PROVIDING RELIABLE AND RESILIENT POWER. AND ALSO WE WANT TO REASSURE YOU THAT OUR COMMITMENT IS ALSO TO DO OUR PART IN SUPPORT OF COMMUNITY EQUITY.

WE HAVE LISTENED TO YOUR CONCERNS ABOUT UNDERSTANDING THE IMPACT OF THESE CHANGES TO OUR MANY COMMUNITY MEMBERS IN NEED.

YOU'VE ALSO ASKED HOW WILL WE ASSIST CUSTOMERS FACING DIFFICULTIES PAYING THEIR BILLS AND MANAGING PAST DUE BILLS? IN RESPONSE, WHAT WE ARE RECOMMENDING IS CHANGING TO OUR AFFORDABLE DISCOUNT PROGRAM.

THIS INCLUDES OFFSETTING -- ENROLLED IN AFFORDABILITY DISCOUNT PROGRAM. SO FOR OUR ELECTRIC-ONLY CUSTOMERS, THE DISCOUNT WILL NOW BE A TOTAL OF $13.48 AND FOR CUSTOMERS THAT HAVE BOTH GAS AND ELECTRIC THAT WILL BE A TOTAL OF $18.36.

ADDITIONALLY, WE ARE GOING TO EXPAND THE PROGRAM TO INCLUDE AN ADDITIONAL 15,000 CUSTOMERS. RIGHT NOW WE HAVE ABOUT 65,000 CUSTOMERS THAT ARE ENROLLED AND WE'RE GOING TO INCREASE THAT BY 15,000. AND THAT'S GOING TO REPRESENT CLOSE TO 10% OF OUR TOTAL RESIDENTIAL CUSTOMER BASE. WE ARE ALSO LOOKING AT EXPANDING THE QUALIFICATIONS TO THOSE THAT ARE EXPERIENCING A SEVERE ENERGY BURDEN AS RUDY HAS TALKED ABOUT. WE NOW ARE ABLE TO IDENTIFY CUSTOMERS WHO SPEND 10% OR MORE OF THEIR AVERAGE ANNUAL INCOME ON ENERGY. AND THIS IS A WAY FOR US TO HELP SUPPORT THEM.

SO THROUGH ENHANCED DATA ANALYSIS, AS WELL AS THROUGH THE MANY PARTNERS THAT WE HAVE, WE WILL WORK DILIGENTLY TO GET AS MANY CUSTOMERS SIGNED UP ON THIS PROGRAM AND BEGIN RECEIVING THE DISCOUNT AS SOON AS WE POSSIBLY CAN.

IMPORTANTLY, ONE THICK I WANT TO HIGHLIGHT IS THE IMPACT THIS IS GOING TO HAVE ON ALL OF OUR CUSTOMERS. EVERY ONE IN OUR CUSTOMER BASE HAS TO PAY FOR OUR AFFORDABILITY DISCOUNT PROGRAM AND REALLY FOR ALL OF OUR PROGRAMS AND SERVICES THAT WE OFFER. AND THAT INCLUDES OUR COMMERCIAL CUSTOMERS, BUT HERE WE HAVE HIGHLIGHTED THE RESIDENTIAL IMPACT TO OUR ELECTRIC AND GAS CUSTOMERS. PRIOR TO THIS CHANGE B, OR CURRENTLY CUSTOMERS PAY ABOUT 60% ON AVERAGE TO COVER THE AFFORDABILITY DISCOUNT PROGRAM. THESE CHANGES WILL INCREASE IT TO ABOUT 83 CENTS PER MONTH FOR OUR AVERAGE RESIDENTIAL CUSTOMERS. AND I WANT TO REASSURE YOU THAT OUR AFFORDABILITY DISCOUNT PROGRAM IS JUST ONE OF THE MANY PROGRAMS THAT WE OFFER TO SUPPORT OUR COMMUNITY. CORY MENTIONED REAP, AND WE APPRECIATE THE PARTNERSHIP WITH THE CITY AND THE COUNTY TO CONTINUE -- NEED IT MOST. WE ALSO HAVE REBATES TO HELP THOSE THAT ARE PARTICIPATING IN LESSENING THEIR IMPACT ON THE GRID AS WELL AS WAYS -- BY DOING THAT, THEY'RE ALSO REDUCING THEIR AVERAGE BILL.

WE HAVE BILLING PROGRAMS AVAILABLE FOR OUR SENIOR CITIZENS AND THOSE THAT LIVE ON DISABILITY WITH A FIXED INCOME, AND THAT MAY NEED ADDITIONAL TIME TO PAY THEIR BILL. WE CAN SIGN THEM UP ON A DIFFERENT PAYMENT

[00:45:02]

WE HAVE LONG-STANDING PARTNERS LIKE ACOG, THE FOOD BANK AS WELL AS UNITED WAY, BUT IT'S ALSO IMPORTANT TO FIND NEW PARTNERS IN THE COMMUNITY THAT COULD HELP FIND SOLUTIONS FOR OUR CUSTOMERS THAT WE DON'T HAVE AVAILABLE. SO LIKE ONE OF OUR NEWEST PARTNERS IS ALAMO WORKFORCE SOLUTIONS. AND TOGETHER, WE ALL WORK TOGETHER TO CONTRIBUTE RESOURCES AND CARE FOR THE PEOPLE OF SAN ANTONIO AND ALL THE SURROUNDING SUBURBAN CITIES AND COUNTIES THAT WE SUPPORT.

AND HERE IS WHERE, AGAIN, I JUST WANT TO SAY THANK YOU TO COUNCILMEMBERS.

SINCE OUR LAST RATE CASE AND THAT WE WERE IN FRONT OF YOU, WE'VE CONTINUED TO ACTIVELY BE OUT IN THE COMMUNITY. AND THAT INCLUDES BEING ABLE TO HAVE NEARLY 5,000 COMMUNITY ENGAGEMENTS, WE'VE PROVIDED CASE MANAGEMENT FOR NEARLY 3,000 HOMES AND SMALL BUSINESSES.

MANY OF THOSE WE GET THROUGH REFERRALS DIRECTLY FROM YOUR OFFICES. WE ALSO VISITED OVER 100 NEIGHBORHOODS AND THAT'S ALLOWED US TO DO BLOCK WALKING AND KNOCK ON ABOUT CLOSE TO 10,000 HOMES IN OUR COMMUNITY. SO THANK YOU FOR THAT RECOMMENDATION AND THANK YOU FOR PARTNERING AND BEING THERE WITH US. AND OUR GOAL IS NOT TO STOP. IT'S TO CONTINUE THAT MOMENTUM.

AND WE ARE DEDICATED TO TAKE IT TO CUSTOMERS WHERE THEY'RE OUT IN THE COMMUNITY SO THAT PEOPLE UNDERSTAND WHAT THE IMPACT'S GOING TO BE EITHER FOR THEM PERSONALLY OR WHAT IS GOING TO BE FOR THEM PROFESSIONALLY. AND NOT ONLY JUST TO SAY THIS IS WHAT THE RATE INCREASE WILL DO FOR YOU, IT'S ALSO TO SAY HOW CAN YOU HELP, WHAT PRODUCTS AND SERVICES DO WE HAVE AVAILABLE, WHAT OTHER PARTNERSHIPS CAN WE CONNECT YOU WITH. WE DO HAVE A A COMPREHENSIVE OUTREACH PLAN, AND THIS IS AN EXAMPLE OF A LIVING CALENDAR.

IT CHANGES BY DAY, SO THE MORE EVENTS THAT YOU HAVE OR IF YOU'D LIKE FOR US TO BE AT ANY SPECIFIC HOA OR EVENTS THAT YOU HAVE, PLEASE LET US KNOW.

IF YOU WANT TO JOIN US, I KNOW THERE'S A FEW OF US THAT ARE ALREADY SIGNED UP TO DO SOME BLOCK WALKING WITH US, AND WE GREATLY APPRECIATE THAT.

BUT IF THERE'S A PLACE YOU WANT US TO BE, WE WANT TO DO EVERYTHING WE CAN TO ENGAGE. AND YOU'LL ALSO BE GETTING A TOOLKIT THAT HAS A ONE-PAGER, BOTH IN ENGLISH AND SPANISH, THAT TALKS ABOUT THE REASON FOR THE NEED FOR THE RATE INCREASE. AND IT WILL HAVE OUR ONLINE WEBSITE STOOD UP. I KNOW THAT WAS A QUESTION LAST TIME ABOUT A RATE CALCULATOR SO PEOPLE COULD GO ON AND DO THE MATH TO SEE WHAT THE IMPACT'S GOING TO BE FOR THEM DIRECTLY. SO WE'LL HAVE THAT.

WE PEAL A ALSO MAKE SURE THAT SINCE WE KNOW THERE'S A DIGITAL DIVIDE, OUR ENERGY ADVISERS OVER THE PHONE OR THE FOLKS WE HAVE AT OUR COMMUNITY FAIRS CAN GO OVER THE INFORMATION WITH THEM ONE-ON-ONE.

AND, YOU KNOW, WE WANT TO MAKE SURE THAT WE ARE CONTINUING TO KEEP ALL OF OUR CUSTOMERS WELL INFORMED AS WELL AS ENGAGED IN THE PROCESS.

ONE THING -- THE ONE-PAGER THAT I MENTIONED TO YOU IS GOING TO BE BOTH IN ENGLISH AND SSPANISH, AND AS PART OF THAT, WE'RE GOING TO SEND THAT TO EACH AND EVERY CUSTOMER THAT WE HAVE BASED ON THEIR PREFERENCE OF COMMUNICATION. THE MAJORITY OF OUR CUSTOMERS DO TELL US THEY WANT TO HAVE COMMUNICATIONS E-MAILED BUT WE DO HAVE CUSTOMERS THAT WANT IT PRINTED AND MAILED THROUGH THE POST OFFICE. SO BASED ON HOW THEY WANT TO BE COMMUNICATED WITH, IS HOW THEY WILL GET A COPY OF THIS LETTER. ON TOP OF THAT, WE HAVE THE WEBSITE. WE'VE WORKED VERY HARD TO MAKE SURE IT IS USER FRIENDLY WEBSITE AND CONTINUE TO FIND WAYS TO ENHANCE IT.

YOU'LL SEE AN EXAMPLE OF WHAT THE RATE CALCULATOR LOOKS LIKE UP THERE.

AND IT WILL HAVE INFORMATION AS WELL AS WHAT WE'RE SENDING OUT.

AND AS I MENTIONED, RECOGNIZING THE IMPORTANCE OF REACHING ALL OF OUR CUSTOMERS, WE ARE MAKING SURE THAT WE HAVE TRANSLATED ALL MATERIALS INTO SPANISH. WE UNDERSTAND THAT ACCESSIBILITY IS CRYSTAL CRITICAL AND WANT TO MAKE SURE THAT EVERYBODY HAS ACCESS TO THE INFORMATION THAT THEY EITHER WANT OR NEED. AND WE CONTINUE TO VALUE YOUR INPUT, AND WE'VE MADE IT A PRIORITY TO GATHER FEEDBACK FROM YOU AND FROM THE COMMUNITY TO FACILITATE THIS, WE HAVE CAM APPROXIMATELY OF ONE OF OUR QR CODES. IT HAS WEBSITE LINKS SEANGSD STRIERS.

WE'LL ALSO MAKE SURE WE HAVE SURVEYS AT ALL OF OUR EVENTS AS WELL AS ALL

[00:50:02]

WE ALSO UNDERSTAND THAT SOME PEOPLE WANT UP TO DATE INFORMATION.

AND AS WE CONTINUE TO BE LIMITED ON THE TECHNOLOGY SIDE, WE DO HAVE SOME SOCIAL MEDIA CAPABILITIES AS WELL AS OUR WEBSITE, SO WE APPRECIATE EVERY TIME THAT YOU LIKE, SHARE INFORMATION THAT WE EXCEPSEND TO YOU AND WE'LL CONTINUE TO LOOK TO SIGN MORE PEOPLE UP AND GET PEOPLE TO ENGAGE IN INFORMATION REGARDING THEIR LOCAL UTILITY.

AND AS WE CLOSE, I JUST WANT TO REITERATE SOME O THE THINGS THAT WE TALKED ABOUT. FOR THE LAST -- THE NEEDS FOR THE INVESTMENT THAT WE HAVE. IT'S RELIABILITY AND RESILIENCY. IT'S FOR THE HOMES AND BUSINESSES HERE IN OUR SYSTEM, AND THAT'S NEW AND EXISTING HOMES. AS CORY MENTIONED, THE INVESTMENT FROM THE LAST INCREASE HAVE ALLOWED US TO DO THE REQUIRED MAINTENANCE OF OUR EXISTING POWER PLANTS SO THAT WE WERE ABLE TO HAVE A VERY SUCCESSFUL SUMMER. WE HAVE TO CONTINUE THOSE INVESTMENTS. IF NOT, THAT -- THOSE PLANTS COULD END UP BEING A LIABILITY NOT JUST CAUSING AN ISSUE FOR US NOT TO HAVE SUCH A PERFORMING -- A HIGH-PERFORMING YEAR. WE NEED TO REPLACE OUTDATED TECHNOLOGY. WE IMPLEMENTED OUR CURRENT SYSTEM AT THE TURN OF THE CENTURY, SO WE NEED TO FIND WAYS TO ENHANCE OUR TECHNOLOGY AND JUST THE FRAMEWORK SO THAT WE CAN PROVIDE THE DIFFERENT SOLUTIONS, THE DIFFERENT RATE STRUCTURES THAT CUSTOMERS IN THE COMMUNITY HAVE ASKED US FOR. AND ULTIMATELY, THESE INVESTMENTS WILL -- EMPLOYEES WHO ARE PROUD TO SERVE THE GREATER SAN ANTONIO AREA.

THESE ARE YOUR FRIENDS, YOUR FAMILY MEMBERS AND YOUR NEIGHBORS.

AND WE WANT TO DO WHAT WE CAN TO HELP ENGAGE OUR EMPLOYEES TO HELP THEM ENGAGE AND SUPPORT OUR CUSTOMERS. AND YOU HEAR RUDY TALK ABOUT ONE TEAM, AND INTERNALLY, WE TAKE THAT TO HEART.

AND WE ALSO UNDERSTAND THAT IT'S PART OF -- WE'RE PART OF A BIGGER PICTURE, AND WE KNOW THAT TOGETHER, WE ALL CAN ENSURE TO HAVE A BRIGHTER AND MORE SUSTAINABLE FUTURE HERE IN SAN ANTONIO.

THANK YOU FOR YOUR TIME. >> MAYOR NIRENBERG: THANK YOU VERY MUCH, DEANNE, FOR THE PRESENTATION, CORY, RUDY AND BEN ALSO FOR THE PRESENTATIONS.

I ALSO WANT TO THANK JANIE GONZALES, THE CHAIR OF THE BOARD OF TRUSTEES WHO IS HERE, FOR YOUR PRESENCE AS WELL. IT'S BEEN A LONG DAY OF JUST CPS FOR ME, BUT GLAD TO BE BACK HERE AND HAVE THIS DISCUSSION.

I APPRECIATE BEN OPENING UP WITH A LITTLE BIT OF CONTEXT ABOUT WHAT OUR RESPONSIBILITIES ARE AS A CITY COUNCIL AND BEING ON THE BOARD OF GOVERNORS OF THE ENTITY THAT OWNS CPS ENERGY. AND IN THAT ROLE, WE ARE THE PUBLIC'S WATCH DOG. SO COMING IN HERE, OUR MAIN OBLIGATION IS TO REALLY GO OVER YOUR NUMBERS AND YOUR JUSTIFICATIONS AND FIND OUT IF IT MAKES SENSE BECAUSE ULTIMATELY OUR -- OUR OBLIGATION TO THOSE CUSTOMERS WHO ARE OUR RESIDENTS, IS TO MAKE SURE THAT YOU ARE DOING YOUR VERY BASIC, WHICH IS TO KEEP THE LIGHTS ON AND TO MAKE SURE THAT PEOPLE CAN AFFORD THEIR BILLS. ON THAT NOTE, I'D LIKE TO JUST, AGAIN, REMARK ABOUT SOMETHING THAT I TALKED ABOUT LATHS TIME, WHICH IS IN 2021 POSTWINTER STORM URI WE WERE AROUND THE TABLE AND IT WAS A MUCH DIFFERENT SITUATION. WE TALKED A LITTLE BIT ABOUT THE FINANCIALS TODAY AT THE BOARD AND HOW SOME OF THOSE TREND LINES ARE STILL, YOU KNOW -- OUR DEBT TO CAPITALIZATION IS NOT REALLY WHERE WE WANT IT TO BE, WE'RE STILL ON NEGATIVE OUTLOOK, BUT WHEN WE CAME IN IN 2021, THE PATIENT WAS VERY SICK. WE WERE ASKED TO CONSIDER REVENUE NEEDS OF CPS ENERGY JUST TO START TO IMPROVE THAT SITUATION SO THAT WE COULD KEEP UP WITH THE CAPACITY DEMAND,S ALSO EMBARK ON THE AFFORDABILITY PROGRAMS ALONG WITH THE GENERATION REQUIREMENTS OF THIS COMMUNITY GUIDED BY THE CITY COUNCIL'S POLICY CONVERSATIONS AND ULTIMATELY THE GENERATION PLAN THAT THE BOARD OF TRUSTEES APPROVED A FEW MONTHS AGO. AND THANKS TO, AGAIN, THAT INITIAL BOOST OF REVENUE WE'RE STARTING TO SEE THOSE THINGS IMPROVE.

YOU CAN BE IN A SITUATION WHERE YOU'RE NOT WHERE YOU WANT TO BE, BUT ALSO THINGS ARE GETTING BETTER, AND THAT'S WHERE WE ARE.

BOTH OF THOSE THINGS ARE TRUE. WE'RE NOT WHERE WE WANT TO BE, BUT THINGS ARE IMPROVING AT CPS ENERGY AND IT'S AS A RESULT OF A LOT OF TEAMWORK, INCLUDING HERE AT THE TABLE WITH THE CITY COUNCIL. SO I WANT TO GO FIRST, AND RUDY, OR CORY IT MIGHT BE, EITHER ONE OF YOU, BUT I WANT TO GO ASK WHAT I ASKED YOU ABOUT THE FIRST TIME, WHICH IS I THINK IT'S ON SLIDE 13, MAYBE IT'S SLIDE 11, I

[00:55:04]

WE THOUGHT IT MIGHT BE DOUBLE DIGITS. YOU CAME IN AND ADJUSTED THAT WAY DOWN BECAUSE WE SAID, YOU'RE GOING WAY TOO FAST.

THAT'S A RATE SHOCK THAT I DON'T THINK OUR RESIDENTS OR ANY OF US FRANKLY CAN DEAL WITH WITH THE AMOUNT OF HOUSING COST BURDEN THAT WE'RE ALREADY EXPERIENCING IN OUR COMMUNITY, SO YOU ADJUSTED IT DOWN, BUT YOU ALSO TOLD US THAT, YOU KNOW, AS A NORMAL UTILITY WOULD HAVE TO DO, YOU'D START TO COME BACK PERIODICALLY, MORE REGULARLY, WHICH IS SOMETHING THAT PROBABLY SHOULD ARE BEEN DONE BEFORE. SO HERE YOU ARE, 2025 -- OR -- I'M SORRY, FY

2025. >> START IN FEBRUARY, RIGHT? SO IT WOULD BE FY 20:25 2025 WE'RE LOOKING AT. YOU'RE PROBABLY PLANNING TO COME BACK IN FY 2027 AND FY 2029. I WANT TO FOCUS ON THIS YEAR'S REQUEST BECAUSE WE DIDN'T WANT THAT RATE SHOCK.

HOW DID YOU -- WHY WERE YOU SUGGESTING THAT OUR FORECAST OR THE FORECAST SAID IT'S GOING TO BE 5.5, NOW IT'S 4.25? NOT ARGUING THAT 4.25 IS BETTER THAN 5.5, BUT HOW DID THAT GET BROUGHT DOWN?

>> SO I'LL START AND I'LL TURN IT OVER TO CORY TO KIND OF GET INTO THE NUMBERS A BIT. JUST FUNDAMENTALLY OUR STRATEGY, WHICH REALLY WAS THE DIRECTION OF THIS COUNCIL, YOU KNOW, WHEN WE CAME IN TWO YEARS AGO WAS YOU CAN'T BE COMING IN FOR A DOUBLE-DIGIT RAILT INCREASES, OUR RESIDENTS JUST WON'T STAND FOR IT. YOU KNOW, THERE MAY BE A TIME WHERE THAT'S UNAVOIDABLE, BUT WE CHANGE LD OUR STRATEGY IN THAT MOMENT AND HOW WE GOT TO 3.85 IS YOU KNOW WHAT? WE'RE GOING TO RECONCILE WHAT WE KNOW. WE KNOW THAT WE'VE GOT TO PUT AN RFP FOR OUR ERP SYSTEM, OUR TECHNOLOGY, YOU KNOW, SOLUTION, WHICH IS ALSO THE CITY'S BILLING SYSTEM, BY THE WAY.

ALL OF Y'ALL'S LINE ITEMS ARE ON THE CPS ENERGY BILL, SO THE HEALTH OF OUR SYSTEM IMPACTS CITY REVENUE IN ALL KINDS OF WAYS, BUT WE DIDN'T KNOW -- WE HADN'T GONE THROUGH THAT RFP PROCESS.

GOING TO BE ABOUT $304 MILLION, GIVE OR TAKE, AND WE'VE ALREADY PAID FOR ABOUT $50 MILLION OF THAT THROUGH THE LAST RATE CASE IMPLEMENTATION. SO NOW WE KNOW THE NUMBER.

YOU PUT IT IN -- INTO THE BUDGET. WE DID NOT HAVE A GENERATION PLAN DECIDED UPON AT THAT MOMENT. YOU TOLD US, YOU KNOW, GO BACK AND TALK TO YOUR BOARD ABOUT A GENERATION PLAN.

WE DID THAT WORK. NOW WE KNOW THAT WE'RE GOING TO HAVE TO INVEST A BILLION DOLLARS A YEAR CAPITAL PROGRAM TO THOUGHTFULLY STEP INTO THE FUTURE AND REPLACE OLD AGING GAS PLANTS WITH NEW TECHNOLOGY, CONVERT THE SPRUCE 2 UNIT TO NATURAL GAS, WHICH -- WHICH MAKES SENSE, AND A WHOLE BUNCH OF OTHER STUFF THAT MAY NOT EVEN BE ON THE TABLE YET THAT IS CHANGING AS, YOU KNOW, THE REGULATORY ENVIRONMENT CHANGES.

SO FUNDAMENTALLY, WE SHIFTED OUR STRATEGY TO SAY, YOU KNOW WHAT? WE'RE GOING TO FOCUS ON COSTS THAT WE KNOW AND WE'RE GOING TO COME IN MORE FREQUENTLY TO TRY TO KEEP THOSE RATE -- THAT RATE IMPACT DOWN TO A MINIMUM. AND THAT'S WHERE WE ARE, MAYOR.

SO, YOU KNOW, WE PUT A -- YOU KNOW, IF YOU LOOK AT OUR BUDGET PROJECTIONS, THEY'RE ALL BASED ON THESE FORECASTS. BUT EVERY TWO YEARS WHEN WE COME IN, YOU KNOW, IN THIS CASE, WE HAD A REALLY GOOD WHOLESALE YEAR, SO WE CAN BRING SOME OF THAT SPEND THAT WE HAD IN THE FUTURE YEARS UP TO THIS YEAR AND PAY FOR IT NOW WITH CASH.

RIGHT? SO THAT STARTS TO BRING DOWN SOME OF THE NEED IN THE FUTURE YEARS, WHICH ALLOWS US TO GET, YOU KNOW, TO A BETTER NUMBER. I WOULD ANTICIPATE -- I'M HOPEFUL THAT OUR PLANTS WILL CONTINUE TO RUN, THAT THE MARKET OPPORTUNITY WILL BE THERE AND THAT WE'LL HAVE GOOD YEARS IN THE YEARS AHEAD, BUT, YOU KNOW, IT'S INCONSISTENT. SO IT DOESN'T MAKE SENSE TO DROP $130 MILLION INTO OUR FINANCIAL FORECAST AS THOUGH THAT'S GUARANTEED REVENUE.

THE ONLY WAY WE BOUGHT -- WE PAY FOR THINGS IS TWO WAYS, MAYBE THREE.

REVENUE FROM OUR CUSTOMERS, DEBT. WHEN WE DON'T GET THE REVENUE FROM OUR CUS CUSTOMERS, GUESS WHAT, WE HAD TO GO TO THE MARKET TO ISSUE MORE DEBT BECAUSE WE HAD NO OTHER PLACE TO GO TO PAY FOR THE THINGS WE WERE NEEDING TO PAY FOR IN THAT MOMENT.

MAYBE GRANTS, MAYBE NONSYSTEM REVENUES ARE AN OPPORTUNITY, BUT THOSE

[01:00:04]

REQUEST. >> MAYOR NIRENBERG: AND, AGAIN, SOME OF THOSE INVESTMENTS, I ASSUME, WERE THE TREE TRIMMING INCREASES AND THE PLANT MAINTENANCE, BOTH OF WHICH WE RELIED ON HEAVILY TO MAKE IT THROUGH THIS PAST SUMMER. SO I WOULD SAY THAT, YOU KNOW, GENERALLY SPEAKING, IF WHICH LOOK BACK ON WHAT THE CITY COUNCIL DID, WHAT WE ALL DID AS A COMMUNITY , THAT WAS CRITICAL REVENUE WELL SPENT. NOW I'M WILLING TO GUESS, I'M WILLING TO ASSUME NOBODY AROUND HERE LIKES RATE INCREASES, LET'S JUST OPERATE WITH THAT ASSUMPTION. NOW, I'D LIKE TO GO TO SLIDE 16, IF YOU WOULD, BECAUSE THIS IS NOW -- I'M SORRY, THE ONE WHERE YOU'RE SHOWING '27.

>> IT'S THE NEXT SLIDE. ONE MORE. THERE YOU GO.

>> MAYOR NIRENBERG: THERE IT IS. ALL RIGHT.

SO THIS IS WHAT WE'RE LOOKING AT, FY 2025. YOU'RE P ANTICIPATING COMING BACK IN FY 2027 FOR WHAT IS ESTIMATED TO BE 5.5%.

MY VIEW, WE HAVE AN OBLIGATION TO JUSTIFY THOSE EXPENSES.

YOU'RE HAVING CONVERSATIONS WITH THE COUNCIL, YOU'RE HAVING CONVERSATIONS OUT IN THE COMMUNITY, WHAT ARE PEOPLE TALKING ABOUT THAT WE NEED TO DO FOR THE UTILITY? WHAT ARE PEOPLE ASKING

ABOUT? >> THE NUMBER ONE QUESTION I GET FROM PEOPLE IN THE COMMUNITY WHO DON'T WANT TO SEE US GO THROUGH ANOTHER WINTER STORM URI IS, RUDY, DO WE HAVE ENOUGH POWER FOR THE NEXT 25 YEARS? THAT IS THE ABSOLUTE -- OUR COMMUNITY'S CONDITIONED TO US BEING SO FAR AHEAD OF THE GAME ON THE PLANNING SIDE THAT WE'RE THINKING 20 YEARS OUT. BETWEEN WHAT'S GOING ON IN ERCOT AND THE FUNDAMENTAL CHALLENGES OUR STATE IS FACING WITH GENERATION PLANNING, I THINK WE'RE AHEAD OF THE CURVE RIGHT NOW IN OUR PLANNING PROCESS.

BUT THAT IS THE NUMBER ONE CONCERN, MAYOR, YOU KNOW, IS, RUDY, ARE WE GOING TO HAVE THE POWER FOR THIS GROWTH? ARE WE -- YOU KNOW, HOW RELIABLE ARE WE GOING TO BE? YOU KNOW, HOW AFFORDABLE ARE WE GOING TO BE ABLE TO DO THAT OVER THE YEARS? YOU DON'T JUST TURN ON A SWITCH AND, YOU KNOW, BUILD 1,000 OR BUILD 2,000 MEGAWATTS. WE'VE ACTUALLY GOT TO BUILD 3500 MEGAWATTS TO REPLACE 2500 MEGAWATTS OF OLD, YOU KNOW -- OF GENERATION THAT NEEDS TO COME OFFLINE. IT'S INEFFICIENT, AND IT'S EXPENSIVE TO RUN.

SO THAT -- THAT IS THE ANSWER TO THAT QUESTION, MAYOR, IS DO WE HAVE

ENOUGH POWER FOR THE NEXT 25 YEARS? >> MAYOR NIRENBERG: OKAY.

SO YOU ARE ASSUMING THAT COMING BACK IN HERE IN TWO YEARS, ASSUMING THAT YOU'RE SUCCESSFUL AND YOU HAVE APPROVAL FOR THE 4.25, YOU'RE BUILDING IN YOUR OPERATIONAL PLANS AND GENERATION INVESTMENTS AND MAINTENANCE AND ALL THAT STUFF INTO YOUR BUDGET ASSUMING THIS?

>> YES, SIR. >> MAYOR NIRENBERG: OKAY. SO LET'S SEE THE OTHER SIDE OF THIS CHART, SHOW ME YOUR EXPENSES GOING OUTWARD.

>> THAT WOULD BE THE CAPITAL -- >> YEAH, GO BACK A FEW

SLIDES. >> I DON'T KNOW IF I CAN CONTROL IT HERE.

KEEP >> YEP. THAT'S THE ONE.

>> MAYOR NIRENBERG: SO ALL THE THINGS YOU JUST TALKED ABOUT IN TERMS OF MAINTENANCE TO THE PLANTS, YOUR ERP, THE OPERATION OF CONTROL. I HAVE HEARD USE RATES AND THAT'S PART OF THE ERP. OBVIOUSLY KEEPING UP WITH CAPACITY.

SO EXECUTING ON THE GENERATION PLAN. WHAT ELSE AM I MISSING?

>> THOSE ARE THE MAIN THINGS IN ADDITION TO KEEPING UP WITH GROWTH AND -- PARDON? YEAH, YEAH. KEEPING UP WITH GROWTH THROUGH OUR STAFFING AND THROUGH OUR

PEOPLE. >> MAYOR NIRENBERG: ALL OF THOSE ARE BAKED INTO THAT BAR

CHART IN TERMS OF HOW YOU'RE SPENDING YOUR REVENUE? >> THAT'S RIGHT, SIR.

[01:05:01]

THE FORECAST THAT WE TALKED ABOUT. >> MAYOR NIRENBERG: AND SO WHEN YOU'RE GENERATING THIS FORECAST AND YOUR CAPITAL AND OPERATIONS AND MAINTENANCE, ARE YOU ALSO BAKING INTO YOUR REVENUE FORECAST WHAT WE JUST TALKED ABOUT ON THE RATE

ASSUMPTIONS? >> YES, SIR, WE ARE. >> MAYOR NIRENBERG: OKAY.

SO, AGAIN, THE QUESTION OF THE THINGS YOU'RE TALKING ABOUT SPENDING REVENUE ON JUSTIFID.

WHAT I WOULD LIKE TO MAKE SURE WE UNDERSTAND IS IF THERE'S ANYTHING THAT YOU LISTED THAT IS NOT VALUABLE FOR US, WE CAN START TALKING ABOUT TRIMMING BACK.

BUT IF THOSE ARE PRIORITIES, WE'RE GOING TO HAVE TO -- WE'RE GOING TO HAVE TO FIND THE REVENUE. WHAT WE DON'T WANT TO END UP DOING THOUGH IS GIVING PEOPLE RATE SHOCK. AND SO IF WE ARE COMMITTED TO THIS PLAN IN TERMS OF THE PHYSICAL AND CYBERSECURITY OF THE COMPANY, OF THE ABILITY TO KEEP PLANTS ON AND KEEP THE LIGHTS ON, GIVEN ALL THE CHALLENGES THAT WE HAVE, THE AFFORDABILITY PROGRAMS THAT WE INVEST IN TO MAKE SURE THAT THE RATE BURDEN FOR THE MOST VULNERABLE MEMBERS OF OUR COMMUNITY IS LESS, WE'RE GOING TO HAVE TO BE COMMITTED TO PROVIDING THAT REVENUE TO DO THAT. AND SO THIS IS ASSUMING THEN THAT WE ARE SUCCESSFUL -- OR YOU'RE SUCCESSFUL. WE'RE TOGETHER AS A COMMUNITY SUCCESSFUL IN GENERATING THAT REVENUE FROM ONE LEVEL TO THE NEXT. YOU KNOW, I THINK THAT'S THE CONVERSATION WE SHOULD BE HAVING ABOUT AUTHORITY FOR THE BOARD TO MOVE FORWARD WITH THE RATE ADJUSTMENT. BUT WE ALSO NEED TO BE TALKING ABOUT IF WE KNOW WHAT THE REVENUE REQUIREMENTS ARE GOING TO BE, GENERALLY, WE SHOULD HAVE THAT AUTHORITY SO YOU CAN KEEP PLANNING AND KEEP EXECUTING THE PLAN. BECAUSE I DON'T KNOW WHAT THE ALTERNATIVE IS. NOT MAINTAINING THE PLANTS. NOT INVESTING IN NEW CAPACITY TO MEET THE NEEDS OF THE COMMUNITY? NOT HAVING THE AFFORDABILITY PROGRAM? I MEAN, ALL THE THINGS THAT WE'RE TALKING ABOUT ARE NOT NICE TO HAVES FOR A COMMUNITY LIKE OURS. THE CHALLENGE IS WE ALSO HAVE ADDITIONAL BURDENS. THE CUSTOMERS WHO ARE ON ASSISTANCE DUE TO BILL PAYMENT ISSUES DURING THE WINTER STORM AND THE PANDEMIC, THAT'S STILL AN ISSUE WE'RE ADDRESSING.

WE ARE OWNED BY THE PUBLIC. EACH AND EVERY ONE OF US IS VESTED IN THIS AND UNLIKE IF WE WERE A PRIVATE UTILITY, WHICH COULD JUST CUT IT OFF, MAYBE EVEN FILE FOR BANKRUPTCY AND SAY YOU'RE ON YOUR OWN AND SEND A COLLECTION AGENCY AFTER YOU, WE HAVE TO FIGURE OUT HOW TO GET THIS UTILITY BACK ON ITS FEET. I GUESS WHAT I'LL CLOSE WITH IS THAT, AGAIN, THIS WAS A FAR DIFFERENT CONVERSATION TWO YEARS AGO.

WE ARE HEADED IN THE RIGHT DIRECTION. WE KNOW WHAT WE NEED TO DO.

WE'RE GOING TO DO IT IN A WAY THAT'S AS LEAST IMPACTFUL TO OUR COMMUNITY AS POSSIBLE.

IN MY MIND -- AND THIS IS WITH ALL DUE RESPECT TO YOU, CORY, YOU'RE GOOD AT YOUR JOB.

THE ONLY ONE BETTER IN THIS ROOM -- THE ONLY ONE WHO IS BETTER AT NUMBERS IN THIS ROOM THAN YOU, IN MY OPINION, IS BEN GORZELL. AND SO WHEN YOU TWO ARE ON THE SAME PAGE, IF I HEAR THE SAME THING FROM BEN, I'M READY TO SUPPORT THIS AND I'M ALSO READY TO TALK ABOUT THE AUTHORITY YOU NEED IN '27 TO GET THE JOB DONE.

BECAUSE THAT'S THE ONLY THING I'M CONCERNED ABOUT IS MAKING SURE THAT I DO WHAT IS NECESSARY TO KEEP THE LIGHTS ON AFFORDABLY AND IN A SUSTAINABLE WAY FOR OUR COMMUNITY.

SO, WITH THAT, I'LL TURN IT OVER TO COUNCILMEMBER CABELLO HAVRDA.

>> HAVRDA: THANK YOU, MAYOR. THANK YOU, CORY AND RUDY AND BEN, OF COURSE FOR THE PRESENTATION. THIS ISN'T ANY BIG SURPRISE TO US.

YOU HAVE BEEN VERY FORTHRIGHT FOR A LONG TIME TELLING US YOU WOULD BE COMING TO US WITH A RATE INCREASE PROPOSAL FOR 2025 AND YOU'RE BEING FORTHRIGHT ABOUT 2027.

WE TALKED ABOUT THIS A WEEK OR SO AGO BUT THIS REQUEST IS ABOUT RELIABILITY.

I THINK, RUDY, YOU SAID STABILIZATION OF OUR UTILITY, THAT'S DAUNTING IN MY WAYS.

IT'S A LITTLE SCARY BECAUSE SO MANY OF US ARE WORRIED ABOUT OUR COMMUNITY'S OTHER NEEDS.

BUT THIS IS A PRETTY BIG NEED. THOSE OF IN LEADERSHIP THAT WENT THROUGH THE WINTER STORM WILL NEVER FORGET SOME OF THOSE CALLS WE GOT FROM PEOPLE IN DESPERATE TIMES.

[01:10:02]

EVEN PEOPLE THAT CAN AFFORD TO. BUT OF COURSE ESPECIALLY THOSE THAT CAN'T. I KNOW THAT Y'ALL HAVE WORKED DILIGENTLY TO MAKE YOUR CASE.

I THANK CPS FOR ALL YOUR WORK. THANKS TO THE BOARD AND THE CHAIR, JANIE GONZALES, OUR CPS BOARD CHAIR. I DID MY BEST TO PROPOSE AN ALTERNATIVE TO THE RATE INCREASE BUT HERE WE ARE. THESE LAST YEARS HAVE DRIVEN HOME THE NEED TO BE PREPARED.

THAT IS A TOP PRIORITY. I KNOW IT'S EXPENSIVE TO MEET THAT NEED.

A COUPLE OF THINGS. WHEN I GO OUT INTO MY COMMUNITY AND I'M TALKING TO THEM ABOUT WHAT WE HEARD HERE TODAY, CAN SOMEBODY GIVE ME SORT OF A SUCCINCT TWO, THREE SENTENCE THIS IS WHY WE NEED A RATE INCREASE SO I CAN TELL ANYBODY WHO ASKS ME.

>> WELL, COUNCILWOMAN, I HAVE -- I'VE PROBABLY GONE TO 15 TO TO MEETINGS WITH ORGANIZATIONS AND CONSTITUENTS OF THE WORK THAT WE STARTED TWO YEARS AGO. YOU KNOW, WE HAVE SAT THROUGH HOURS AND HOURS AND HOURS OF FEEDBACK FROM THIS BODY, FROM YOUR CONSTITUENTS, FROM TOWN HALL MEETINGS THAT WE'VE HAD ON OUR OWN. AND WE'VE ASKED WHAT IS IT THAT YOU WANT FROM US? WHAT DOES A GOOD CPS ENERGY LOOK LIKE IF WE'RE DOING OUR JOB? THEY DON'T WANT TO HAVE TO WORRY ABOUT THEIR POWER OR GAS NEEDS ANYMORE AND THEY WANT US TO BE PLANNING FOR THE FUTURE. IF I HAD TO BREAK IT DOWN IN A VERY SUCCINCT STATEMENT, THE RATE REQUESTS THAT WE'RE ASKING FOR AND WILL BE TO COME ARE TO ENSURE WE REMAIN THE CPS ENERGY OUR COMMUNITY EXPECTS US TO BE.

>> HAVRDA: I THINK ON SLIDE 14, THOSE ARE THE SPECIFIC PROJECTS OR IMPROVEMENTS --

>> YES, MA'AM. EVERY ONE OF THEM BENEFITS THE CUSTOMER.

EVERY SINGLE ONE OF THEM. >> HAVRDA: I THINK ESPECIALLY THAT FIRST ONE, THE RELIABILITY AND RESILIENCY IS THE ONE THAT SPEAKS TO ME. ALMOST IN THAT RECORD, IN A WAY. TECHNOLOGY AND SECURITY. I THINK, CORY, YOU MAYBE MENTIONED PHYSICAL OR CYBER. I NEVER KIND OF UNDERSTOOD IT IN THAT CONTEXT.

I'M THINKING MORE CYBER BUT WE HAVE TO WORRY ABOUT PHYSICAL. >> FROM A PHYSICAL STANDPOINT, YOU KNOW, WE GOT CAMERAS THAT WE NEED TO PUT UP AT OUR SUBSTATIONS TO ENSURE THAT BAD ACTORS DON'T SHOW UP. WE CAN'T REACT QUICKLY ENOUGH. SO FENCING THAT WE HAVE TO PUT UP THAT'S MORE DURABLE. IN HELOTES A WHILE BACK WE HAD A CUSTOMER RUN OFF THE ROAD

RIGHT INTO OUR SUBSTATION. SO IT REALLY IS BOTH. >> HAVRDA: AND I THINK ANOTHER THING PEOPLE ASK ME IS -- AND I KNOW YOU TOUCHED ON IT TODAY.

BUT AGAIN, SUCCINCTLY, HAS A CPS ENERGY TEAM EXPLORED ALTERNATIVES TO A RATE INCREASE? THE MAYOR MENTIONED SOME THAT WE DON'T LIKE BUT WHAT COULD WE HAVE DONE INSTEAD OF ASKING FOR A RATE INCREASE AND WHY DID THEY FALL SHORT?

>> WE WENT EIGHT YEARS WITHOUT A RATE INCREASE AND PRETTY MUCH CUT DOWN TO THE BONE.

THE EFFICIENCY AS FAR AS OUR PROCESSES, WE'RE ABOUT AS EFFICIENT AS WE'RE GOING TO GET. THERE'S ALWAYS BETTER THINGS YOU CAN DO.

BUT THE TECHNOLOGY WILL ENABLE US TO MOVE FROM A LOT OF MANUAL PROCESSES, BECAUSE OF HOW OLD OUR SYSTEMS ARE, TO MORE EFFICIENT PROCESSES THAT WHERE THERE ARE SAVINGS ON THE OTHER SIDE OF OUR ERP IMPLEMENTATION. SO WE ARE CONSTANTLY LOOKING FOR ALTERNATIVES TO ASKING OUR CUSTOMERS, YOU KNOW, FOR REVENUE.

BUT THE SCALE OF THE AMOUNT OF INVESTMENT WE'VE GOT TO MAKE OVER THE NEXT 10 TO 15 YEARS, THERE'S NO OTHER ALTERNATIVE BUT TO TRY TO LAYER IT IN IN A WAY THAT'S ACCEPTABLE.

>> HAVRDA: AM I HEARING YOU YOU HAVE DONE THE ALTERNATIVES?

>> YES, MA'AM. >> HAVRDA: IT JUST DIDN'T GET YOU WHERE YOU NEEDED TO GO AS

FAR AS THE AMOUNT. >> BEN AND I COULD ARGUE ABOUT THIS BUT I COULD STAND UP HERE TODAY AND PROBABLY JUSTIFY DOUBLE-DIGIT RATE INCREASE BUT I'M NOT GOING TO DO THAT.

SO THE WAY WE'RE LAYERING IN THE REQUEST, THE TIMING OF HOW WE'RE GOING TO MAKE THE INVESTMENT SO THAT WE'RE FOCUSED ON WHAT'S A PRIORITY AND TAKING IT YEAR BY YEAR SO THAT WE'RE NOT TRYING TO DO IT ALL AT ONCE, THAT'S MY RESPONSE TO HOW I WOULD TELL YOU WE'RE

TRYING TO BE REASONABLE. >> HAVRDA: ARE THERE PLANS TO MITIGATE THE EFFECTS ON

VULNERABLE OR LOW-INCOME RESIDENTS? >> YES, MA'AM.

>> HAVRDA: I WANT YOU TO TELL ME MORE ABOUT THAT BUT I'M THINKING ABOUT PEOPLE THAT ARE ALREADY ON PLANS OR ON ALTERNATIVE RATE PLANS. DO YOU EXPECT THAT NUMBER TO

INCREASE? >> I'M GOING TO TURN IT OVER TO THE EXPERT HERE.

>> HAVRDA: THANK YOU. >> WE ACTUALLY BELIEVE, BASED ON WHAT WE'VE SEEN, ESPECIALLY FROM A PAST-DUE BALANCE PERSPECTIVE, THAT WE'RE ON THE RIGHT TRAJECTORY.

[01:15:04]

THE MAJORITY OF THAT IS BECAUSE OF PEOPLE WHO ARE ON INSTALLMENT PLANS.

SO WE HAVE BETWEEN 70 AND $80 MILLION ENROLLED IN INSTALLMENT PLANS COMMITTED OVER THE NEXT TWO OR THREE YEARS. IT'S GOING TO TAKE US A LONG TIME TO GET OUT SO THE BEST THING WE CAN DO IS CONTINUE WITH THE BUNDLED CARE APPROACH. THE MORE WE CAN GET CUSTOMERS SIGNED UP ON BEBAIT TO GET MONEY RETURNED, IT ALSO MAKES THEM EFFICIENT AS WELL AS THE BUDGET PAYMENT PLAN.

THE BUDGET PAYMENT PLAN, THE SENIOR AND DISABILITY PROGRAMS, CRITICAL CARE BILLING PROGRAMS, THOSE HELP MINIMIZE THE IMPACT FOR CUSTOMERS. THAT'S WHY YOU'LL SEE A BIG PUSH FROM SA COMMUNICATION STANDPOINT SO THAT NOT ONLY CAN WE HELP CUSTOMERS UNDERSTAND WHAT THE IMPACT IS BUT ALSO REDUCE THE IMPACT AS MUCH AS POSSIBLE IN WAYS TO SAVE AS

WELL AS WAYS TO GET MORE MONEY. >> HAVRDA: SO DO YOU EXPECT

THAT NUMBER WILL GO UP WITH A RATE INCREASE? >> THE DOLLAR AMOUNT PROBABLY WILL BUT THE CUSTOMERS THAT ARE CURRENTLY STRUGGLING, THE BEST WAY FOR THEM IS TO CONTINUING WORKING THROUGH THEIR INSTALLMENT PLAN. THAT'S WHERE THE OFFSET OF EXPANDING THE AFFORDABILITY DISCOUNT PROGRAM WILL HELP. SO THOSE CUSTOMERS, WHETHER THEY'RE ON DISABILITY, THEY'RE LOW INCOME, THEY HAVE THE ABILITY TO GET MORE ASSISTANCE

AND OFFSET THE RATE INCREASE. >> HAVRDA: OKAY. THIS IS PROBABLY FOR ANOTHER DAY BUT IS IT POSSIBLE TO GET LIKE A PROJECTION OF THE TRAJECTORY OF THOSE PROGRAMS? I KNOW THAT WE'RE SORT OF CRAWLING OUT OF NOT JUST A STORM BUT A PANDEMIC.

PEOPLE LOST JOBS AND THERE WAS A PRETTY DRAMATIC INCREASE IN THOSE NUMBERS.

I'M WONDERING IF ANOTHER DAY WE CAN GET THE TRAJECTORY OF WHERE YOU THINK IT'S GOING.

>> YES. WE ABSOLUTELY HAVE A VIEW OF THAT.

WE CAN SHARE THAT. >> HAVRDA: OKAY. THAT'S IT.

THANK YOU. THANK YOU, MAYOR. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER CABELLO HAVRDA. COUNCILMEMBER ALDERETE GAVITO.

>> GAVITO: THANK YOU, MAYOR. THANK YOU, RUDY, CORY, AND DEANNA FOR THIS PRESENTATION.

THIS IS GOOD. I ACTUALLY DID WANT TO PIGGYBACK ON COUNCILWOMAN CABELLO HAVRDA'S QUESTION. FOR DISTRICT 7, WE HAVE 2100 ENROLLED IN INCOME QUALIFIED PLANS. I'M CONCERNED ABOUT THE 26% OF THE 190,000 CUSTOMERS THAT ARE PAST DUE . I'M NERVOUS WITH A RATE INCREASE WE'RE GOING TO SEE THIS CONTINUING TO GROW. AND SO I WANTED TO GET A LITTLE BIT FURTHER ON CPS'S PLANS TO

MITIGATE THAT. >> WELL, I KIND OF GET IT FROM BOTH ENDS HERE, COUNCILWOMAN.

THERE ARE FOLKS IN THE COMMUNITY WHO WANT ME TO BE MORE AGGRESSIVE AT CUTTING CUSTOMERS OFF AND OTHER PEOPLE WHO DON'T WANT ME TO CUT ANY CUSTOMERS OFF.

AND I THINK THE BALANCE IS IN WORKING REALLY, REALLY HARD TO CONNECT WITH THE CUSTOMERS WHO NEED THE ASSISTANCE AND THEN GOING OUT AND FINDING THE ASSISTANCE THAT WILL HELP THEM GET CAUGHT UP. SO WE'VE GOT OVER 50% OF THE CUSTOMERS WHO ARE PAST DUE ARE ON A PAYMENT PLAN, WHICH IS A REALLY GOOD PLACE TO BE. WE WERE NOT DISCONNECTING CUSTOMERS FROM PROBABLY EARLY JUNE TO EARLY OCTOBER. YOU KNOW, WE WERE ABOVE 100 DEGREES HEAT INDEX FOR THAT ENTIRE TIME SO WE WEREN'T CUTTING CUSTOMERS OFF.

SO OUR ABILITY TO GET FOLKS CAUGHT UP WHO WON'T ENGAGE US TO GET ON A PAYMENT PLAN, EVENTUALLY THOSE CUSTOMERS ARE GOING TO GET CUT OFF. THAT'S KIND OF OUR INCENTIVE FOR THEM TO GET WITH US AND TO GET BACK ON A PAYMENT PLAN. SO I DON'T KNOW THAT THERE'S A UTILITY COMPANY IN THE COUNTRY THAT WORKS AS HARD TO CONNECT WITH OUR CUSTOMERS AS WE DO.

TO ENSURE THEY DON'T HAVE -- THEY DON'T HAVE TO GO TO THAT EXTREME.

WE CAN DEAL WITH THEM BEFORE THEY EVER GET CUT OFF BUT THEY HAVE TO DO THEIR PART BY CONNECTING WITH US. I CAN ONLY HELP CUSTOMERS THAT ARE WILLING TO ENGAGE ME.

>> GAVITO: I SEE. OKAY. THANK YOU.

AND THIS QUESTION IS FOR YOU, RUDY, OR CORY. WOULD IT BE CRAZY TO LOOK AT THE POSSIBILITY OF FREEZING THE RATES FOR OUR OLDER ADULT POPULATION WHO ARE ON FIXED INCOME OR HAVING THEM GRANDFATHERED INTO THE CURRENT RATE STRUCTURE?

IT'S A COIN FLIP WHO IS GOING TO ANSWER. >> WE CURRENTLY DO THAT -- I DON'T THINK WE DO. THAT'S SOMETHING WE CAN DO, PRESUMING IT IS LEGAL IN THE

STATE OF TEXAS FOR US TO DO. WHICH I WOULD DEFER TO YOU. >> I THINK WE COULD TALK ABOUT IT BUT, NO. I THINK THERE'S A LOT OF LEGAL OBSTACLES TO RATES.

THE GENERAL RULE IN TEXAS IS THAT YOU HAVE TO TREAT ALL OF YOUR CUSTOMERS IN THE SAME WAY

[01:20:06]

I DON'T THINK FREEZING RATES IS A REAL OPTION BUT I THINK THERE ARE A LOT OF ALTERNATIVES THAT MIGHT GET PEOPLE DISCOUNTS THAT HELP THEM GET TO A BETTER PLACE THAT MIGHT LOOK THE SAME WAY.

>> GAVITO: YEAH. I WAS LOOKING AT THE SENIOR CITIZEN BILLING PROGRAM AND WHILE I APPRECIATE THE DELAY IN THE DAYS -- THE INCREASE IN DAYS THAT THEY HAVE TO PAY, YOU KNOW, WE HAVE BEEN REALLY HEARING FROM ESPECIALLY OUR OLDER ADULTS WHO ARE ON FIXED INCOMES, HOW DETRIMENTAL THIS PROPOSED RATE INCREASE IS. I'M JUST TRYING TO FIGURE OUT

SOMETHING THAT WE COULD POTENTIALLY DO FOR THEM. >> I GUESS MY RESPONSE TO THAT WOULD BE OUR ELDERLY AND OUR POOR, OUR MOST VULNERABLE, THEY DESERVE RELIABLE SERVICE TOO.

AND SO WHEN I THINK ABOUT THESE ISSUES, YOU KNOW, AS PART OF RUNNING OUR BUSINESS, YOU GOT TO DEAL WITH THE INVESTMENT TO ENSURE YOU'RE MAINTAINING A RELIABLE SYSTEM AND DEAL WITH THE EQUITY ISSUES OF HOW YOU CAN HELP THE MOST VULNERABLE, ALMOST AS A SEPARATE POLICY ISSUE SO WE CAN GET THE INVESTMENT RIGHT. IF OUR SYSTEM ISN'T RELIABLE, I MEAN, IT DOESN'T MATTER ALL THE HELP WE CAN GIVE IN THE WORLD, THEY'RE STILL GOING TO BE UPSET BECAUSE THEIR LIGHTS AREN'T STAYING ON. EVERYBODY DESERVES RELIABLE POWER SO THAT'S WHY WE KIND OF GOT TO BALANCE THE TWO AND OFFER UP SOLUTIONS FOR BOTH.

>> GAVITO: OKAY. GO AHEAD. >> IF I COULD, IF YOU COULD BRING UP OUR BUNDLED CARE SLIDE. I DON'T KNOW HOW TO -- BUT THAT'S IMPORTANT -- 23. OKAY. SO THAT'S WHERE OUR BUNDLED CARE APPROACH IS SO IMPORTANT. THROUGH THIS PROGRAM AND SINCE THE LAST TIME THAT WE WERE IN FRONT OF THIS COUNCIL TALKING ABOUT A RATE INCREASE, BEING ABLE TO EXPAND OUR COMMUNITY PARTNERSHIPS HAS BEEN HUGE AND WE'VE BEEN ABLE TO CONNECT OUR CUSTOMERS WITH ABOUT $100 MILLION IN BILL ASSISTANCE. THAT'S JUST FOR THEIR ELECTRIC BILL ALONE. SO I MENTIONED THE ALAMO WORKFORCE SOLUTIONS.

THEY RECEIVE FUNDING TO GET DOLLARS TO HELP OFFSET THE BILLS FOR UTILITIES.

WE GOT THE $23 MILLION -- WE WERE ABLE TO GET AN ADDITIONAL $3 MILLION FROM THE CITY OF SAN ANTONIO. WE APPRECIATE THAT, FROM AN ARPA PERSPECTIVE.

AND WE WERE ABLE TO SPEND THOSE FUNDS FAIRLY QUICKLY. BEXAR COUNTY HAS COME TO US TWICE AND BEEN ABLE TO HAVE ADDITIONAL DOLLARS TO PUT FOR HEAT.

THEY SAID WE'VE GOT TWO WEEKS TO SPEND THESE DOLLARS. WE SEND TARGETED MESSAGES.

WE OPENED UP OUR HEADQUARTERS DOWNTOWN AND HAVE MORE THAN 700 PEOPLE PROCESSING APPLICATIONS AND DOING EVERYTHING WE CAN TO BE ABLE TO SPEND THAT MONEY. THE BEST THING WE CAN DO THE CONTINUE TO EXPAND OUR COMMUNITY PARTNERSHIPS, FIND THOSE DOLLARS, AND CONNECT THEM WITH SUPPORT. SO IF THERE'S A RELATIONSHIP OUT THERE THAT WE DON'T ALREADY HAVE, WE'RE HAPPY TO INVEST IN THEM AND WE'LL FIND WAYS AND WORK WITH THEM TO GET DOLLARS

TO THE PEOPLE WHO NEED IT THE MOST. >> GAVITO: THANK YOU.

AND I I APPRECIATE Y'ALL'S EFFORTS TO DO THAT. ONE OF THE THINGS THAT I WORRY ABOUT IS WHAT HAPPENED TO OUR NEIGHBORS IN AUSTIN LAST YEAR WITH THE DAMAGING ICE STORM THAT CAUSED THE TREE LIMBS TO FALL ON POWER LINES AND EXCEPT OVER $100,000 RESIDENTS WITHOUT POWER, SOME AS LONG AS TEN DAYS, SCHOOLS CLOSED. I WONDER HOW THAT SCENARIO WOULD PLAY OUT IN SAN ANTONIO AND OF THE POTENTIAL RATE INCREASE.

I'M CURIOUS HOW MUCH IS GOING TO GO TO RUNNING SOMETHING LIKE THAT, CLEARING POWER LINES FROM

TREES. >> I'M NOT GOING TO DISPARAGE MY BROTHER IN AUSTIN.

IT WAS A REALLY TOUGH STORM FOR THEM. I CAN TELL YOU IN SAN ANTONIO WE HAVE TRIMMED THIS YEAR THREE TIMES AS MANY MILES OF TREES THAN WE EVER HAVE BEFORE.

TYPICALLY IN AN YEAR WE'RE 350 MILES, WE'LL TRIM OVER 1,000 MILES THIS YEAR.

WE HAVE GOTTEN REALLY GOOD WITH DATA TO GO AND SPECIFICALLY TARGET AREAS WE KNOW ARE HAVING RELIABILITY CHALLENGES SO WE CAN MAKE THE BEST USE OF THE RESOURCES WE HAVE FOR TREE TRIMMING. IF YOU GO BACK TO THE SLIDE, YOU KNOW, ON HOW WE'RE SPENDING THE WHOLESALE REVENUE WE BROUGHT IN THIS YEAR, WE'RE PUTTING AS MUCH INTO TREE TRIMMING AS WE CAN POSSIBLY GET. YOU KNOW, THAT IS THE NUMBER ONE EFFORT TO IMPROVE RELIABILITY IS TO GET AHEAD OF THE TREE TRIMMING.

I FEEL LIKE THAT HAS BEEN A REALLY, REALLY SOLID FOCUS OF OURS OVER THE LAST COUPLE OF YEARS. SO I CAN TELL YOU I'LL NEVER SAY THAT WE WON'T BE IN THAT SITUATION BECAUSE WE'VE BEEN IN A SITUATION LIKE THAT BEFORE IN YOUR DISTRICT AROUND WOODLAWN

[01:25:06]

IMPACT ON OUR CUSTOMERS. >> GAVITO: OKAY. THAT'S HELPFUL.

AND I THINK WE PROBABLY -- OUR TEAM HAS SOME FEEDBACK ON SOME MORE POWER LINES THAT NEED TO BE CLEARED SO WE'LL MAKE SURE AND LET Y'ALL KNOW ABOUT THAT. I WAS INTERESTED IN THE COMMUNITY OUTREACH AND HOW CPS HAS MARKETED THE RATE INCREASE.

I SAW THAT Y'ALL, SPECIFICALLY FOR DISTRICT 7, WERE AT GARZA PARK ON THE 17TH AND Y'ALL BLOCK WALKED IN DISTRICT 7. WHERE IN DISTRICT 7 DID Y'ALL BLOCK WALK?

>> COUNCILWOMAN, WE CAN GET YOU SPECIFICALLY THE LOCATION. WE WORK WITH YOUR OFFICE IN AUDIO] HOW WE IDENTIFY WHICH HOMES, BUT WE CAN GET YOU SPECIFICALLY WHICH

NEIGHBORHOODS. >> GAVITO: LET ME KNOW NEXT TIME.

WE WOULD BE MORE THAN HAPPY TO JOIN AND CONNECT Y'ALL TO PEOPLE WHO ARE CALLING OUR OFFICE ON A DAILY BASIS, LETTING US KNOW THEY'RE STRUGGLING WITH THIS NEED AS

WELL. >> ABSOLUTELY. WE HAVE A CREW MEMBER, SO THAT'S OUR CUSTOMER RESPONSE UNIT THAT HAS OFFICE HOURS. WE'LL MAKE SURE THAT THEY FOLLOW UP WITH YOUR OFFICE SO YOU CAN REFER ANY CUSTOMERS THAT YOU HAVE TO US AND WE'LL

FIND ASSISTANCE FOR THEM. >> GAVITO: OKAY. THANK YOU.

ONE OF THE THINGS THAT I HEAR A LOT OF HEARTBURN FROM RESIDENTS ABOUT IS THEY JUST DON'T KNOW WHERE THE MONEY IS GOING. AND I THINK IT'S SLIDE 14, WITH THE FOUR BUCKETS -- YEAH.

THESE FOUR BUCKETS. DOES A REALLY GREAT JOB OF BREAKING THAT DOWN.

AND HOWEVER WE CAN SIMPLIFY THIS EVEN FURTHER AND SHARE THAT WITH OUR RESIDENTS, YOU KNOW, AND WE'RE TALKING OBVIOUSLY ABOUT DIFFERENT GENERATIONS AND I THINK THE BETTER. BECAUSE PEOPLE ARE SAYING WHY DOES CPS NEED THIS AND, YOU KNOW, I UNDERSTAND THE REASONS WHY. BUT IT'S JUST COMMUNICATING THAT AND MAKING PEOPLE FEEL COMFORTABLE. ONE OF THE OTHER QUESTIONS I HAD WAS KIND OF PIGGYBACKING OFF THE MAYOR'S EARLIER COMMENTS.

ACTUALLY KIND OF TIED TO SLIDES 13 AND 14. OF THE CAPITAL DOLLARS IN

Y'ALL'S CAPITAL PLAN -- I CAN ASK ON THE SECOND ROUND. >> MAYOR NIRENBERG: YOU CAN

FINISH YOUR COMMENTS. >> GAVITO: ON THE CAPITAL PLANS AND THE CAPITAL SPENT, HOW MUCH IS GOING INTO EACH BUCKET? HOW MUCH OF THE CAPITAL FUNDING IS GOING INTO RELIABILITY AND RESILIENCY? HOW MUCH IS GOING INTO

TECHNOLOGY AND SECURITY? >> 10% OF THE CAPITAL BUDGET IS JUST FOCUSED ON TECHNOLOGY ITSELF. YOU KNOW, RELIABILITY IS CLOSE TO 50-PLUS PERCENT OF OUR SPEND. THAT'S THE LION'S SHARE OF IT AND THAT'S WHERE YOU WOULD EXPECT IT TO BE BASED ON THE TYPES WE'RE TALKING ABOUT. WE COULD GO INTO OTHER DETAILS

BUT THOSE ARE KIND OF THE BIG HITTERS. >> GAVITO: SOUNDS GOOD.

THANK YOU. THANK YOU, MAYOR. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER ALDERETE GAVITO. COUNCILMEMBER CASTILLO.

>> CASTILLO: THANK YOU, MAYOR. THANK YOU, RUDY AND TEAM FOR THE PRESENTATION AND Y'ALL'S CONTINUED WORK, AS WELL AS YVONNE WHO SENT US DOCUMENTS ON DISTRICT 5-SPECIFIC INFORMATION. I WANTED TO LEAN INTO SOMETHING ONE OF MY COLLEAGUES MENTIONED AND I SHARED THAT CONCERN. I SAW IN FEBRUARY THERE WAS A CPS PRESENTATION ON THE LEGAL REVIEW OF LAWS AND GOVERNING RATES.

AND WITHIN THE PRESENTATION THERE'S BULLETS ON AFFORDABILITY DISCOUNTS AND IT STATES THAT COURTS HAVE UPHELD DISTINCTIONS IN RATES BASED ON CERTAIN PUBLIC BENEFITS.

EXAMPLE, DISCOUNTED RATES FOR LOW-INCOME RATEPAYERS. THESE RATES ARE UPHELD WHEN THERE'S AN OBJECTIVE CRITERIA SUCH AS POVERTY STATUS IN RELATION TO THE FEDERAL POVERTY LEVEL, ENERGY BURDEN, PERCENT OF CUSTOMERS AND INCOME SPENT ON ENERGY, AGE AND INCOME.

SO I WANTED TO THANK YOU AND YOUR TEAM FOR COVERING THAT AND GOING INTO DETAIL.

I THINK IT IS SOMETHING WORTH EXPLORING. Y'ALL CITE THOSE ACCOUNTS WERE UPHELD AND IT'S WORTH EXPLORING TO SEE HOW WE CAN PROVIDE ADDITIONAL RELIEF.

EVERY WEEK WE HAVE FOLKS COME INTO OUR OFFICE NEEDING UTILITY ASSISTANCE AND WE'RE REALLY GRATEFUL FOR ANDREW, WHO PROVIDES THAT RESOURCE, CONNECTING AND HELPING FOLKS DO THE APPLICATION. AND NO DOUBT WHETHER YOU'RE AT OR BELOW THE POVERTY LEVEL OR EVEN A DUAL-INCOME HOUSEHOLD, FAMILIES ARE RUNNING ON VERY TIGHT BUDGETS.

I HEAR IT ALL THE TIME. I HEAR IT AT MY NEIGHBORHOOD ASSOCIATION MEETINGS.

CAN YOU REMIND ME? I DIDN'T CATCH IT. FOR THE CPS AFFORDABILITY DISCOUNT PROGRAM, IT CURRENTLY COVERS 65,000 CUSTOMERS. DID I HEAR THAT THAT'S GOING TO EXPAND IN AMOUNT OF CUSTOMERS OR JUST EXPAND THE MENU OF WHAT MAKES SOMEONE QUALIFY?

>> BOTH. WE'RE LOOKING AT ADDING AN ADDITIONAL 15,000 CUSTOMERS TO

THE TOTAL -- TO THE 65. >> CASTILLO: THAT'S HELPFUL TO KNOW BECAUSE WE KNOW THAT

[01:30:05]

SO THAT'S ROUGHLY 5,250 DISCONNECTS PER MONTH OR 175 PER DAY.

AND I'M LOOKING AT THE AUGUST 31ST PRESENTATION WHERE THERE'S A BREAKDOWN OF DISTRICTS IN THE AMOUNT OF DISCONNECTIONS OR THOSE AT RISK OF DISCONNECTIONS.

FROM THE OCTOBER DATE IT WAS 190,000-PLUS PAST DUE ACCOUNTS.

26 ELIGIBLE FOR DISCONNECTION. 2,118 COMMERCIAL AT RISK OF DISCONNECTION.

CAN SOMEONE WALK ME THROUGH WHAT RESOURCES ARE AVAILABLE FOR COMMERCIAL USERS WHO ARE AT

RISK OF DISCONNECTION? >> SIMILAR TO -- THANK YOU FOR THIS QUESTION.

WE ACTUALLY ALSO HAVE -- LIKE OUR CREW TEAM, WE HAVE A SMALL-MEDIUM BUSINESS OUTREACH TEAM. THE BEST THING WE CAN DO FOR THE SMALL-MEDIUM BUSINESS CUSTOMERS IS ALSO PUT THEM ON A PAYMENT PLAN. SO WE ARE ABLE TO UPDATE -- IT'S A MANUAL PROCESS BUT WE ADDED THE ABILITY TO DO A BUDGET PLAN FOR OUR SMALL AND MEDIUM BUSINESSES AND WE CAN SPREAD THAT PAST-DUE AMOUNT ON TOP OF WHAT THEY OWE US MOVING FORWARD. EVERY NOW AND THEN WE'LL GET PARTNERSHIP INFORMATION.

WHEN WE WORKED FOR THE ARPA DOLLARS, BEING ABLE TO CONNECT WITH THE CITY.

ANY PARTNERS THAT HAVE RESOURCES. AND SOMETIMES VERY SIMILAR TO WHAT WE DO ON THE RESIDENTIAL SIDE, ON THE BUSINESS SIDE. SOMETIMES IT'S JUST ALLEVIATING THE OTHER BURDENS SO IT FREES UP SOME DOLLARS FOR THEM TO BE ABLE TO PAY FOR THEIR UTILITY SERVICE. IT'S A COMBINATION OF THE SAME SORT OF RESOURCES.

UNFORTUNATELY, THERE'S JUST NOT AS MANY FOR BUSINESSES. SO THE BEST THING WE CAN DO IS HELP GET THEM ON A PLAN AND CONNECT THEM WITH OTHER RESOURCES ACROSS TOWN.

>> CASTILLO: THANK YOU. THAT'S REALLY HELPFUL. I WANTED TO MOVE ON TO SLIDE 12. IT'S REALLY HELPFUL TO SEE THE BREAKDOWN OF THE $130 MILLION FROM THE NON-FUEL WHOLESALE PERFORMANCES. AND IN PREPARATION TODAY I HAD MY TEAM GO BACK TO SOME CPS MEETINGS, PAST CPS BRIEFINGS HERE AT CITY HALL.

AND FOR 2022 AND 2023, CITY COUNCIL MEMBERS REQUESTED A SIMILAR BREAKDOWN.

WOULD YOU ALL HAVE WHAT THAT LOOKS LIKE NOW OR CAN THAT BE SENT TO OUR TEAM OF WHAT THE

NON-FUEL WHOLESALE PERFORMANCE, WHAT THAT FUNDING WENT TO? >> YEAH.

WE CAN SHOW YOU WHAT THOSE HISTORIES WERE, COUNCILWOMAN. >> CASTILLO: THAT WOULD BE HELPFUL. AGAIN, IN CONVERSATION AT A NEIGHBORHOOD ASSOCIATION MEETING YESTERDAY WE WERE TALKING ABOUT THE RATE INCREASE AND IT WAS AN OPPORTUNITY TO TALK ABOUT THE REBATE. THEY'RE ASKING, OKAY, THEY DID THE REBATE.

THEY GOT SOME MONEY BACK. THEY WERE LIKE DIDN'T YOU JUST VOTE ON A RATE INCREASE? I SAID I DIDN'T BUT CITY COUNCIL DID. AND THERE'S CONVERSATION ABOUT GIVING THE MONEY BACK. MY CONSTITUENTS WANT TO SEE NUMBERS SIMILAR TO WHAT Y'ALL PROVIDED ON SLIDE 12 ON HOW MUCH IS GOING TOWARDS REINVESTMENT IN THE SYSTEM.

WITH THE CITY OF SAN ANTONIO I'M THINKING ABOUT THE SOLID WASTE INCREASE.

THERE WERE NUMBERS NEXT TO EVERY ASK. I THINK THAT WOULD BE HELPFUL FOR US TO HAVE BECAUSE I DO SEE EVERYTHING LISTED BUT I WOULD LIKE TO SEE AN ESTIMATION OF ITEM AND HOW MUCH YOU ALL ARE LOOKING TO ALLOCATE TOWARDS THAT AND/OR THE TOTAL AMOUNT.

SO FOR THE 2027 REQUEST, HOW MUCH ADDITIONAL ARE Y'ALL GOING TO NEED IN PREPARATION FOR

THAT. >> WE CAN PROVIDE THAT FOR YOU.

THERE'S A HIGH LEVEL DETAIL FOR YOU IN THE APPENDIX AROUND HIGH BUCKETS, BUT YOU MIGHT REQUIRE SOME ADDITIONAL DETAILS, SO WE CAN FOLLOW UP WITH YOUR OFFICE.

>> CASTILLO: THAT WOULD BE HELPFUL. SOME OF THE D5 RESIDENTS ARE ASKING ALL THE QUESTIONS. THAT'S REALLY HELPFUL. AGAIN LAST MONTH CPS SENT OVER TO MY OFFICE THE STATISTICS FOR DISTRICT 5 RESIDENTS. AS MY COLLEAGUE MENTIONED, THAT'S A GREAT CONCERN. WILL INCREASE IMPACT HAVING AN ADDITIONAL AMOUNT OF DISCONNECTIONS IN OUR COMMUNITY. BUT HEARING THAT THE PROGRAM IS GOING TO EXPAND, THAT EASES SOME OF THE CONCERN BUT STILL A GRAVE CONCERN BECAUSE THE CALLS ARE GUT WRENCHING WHEN FOLKS HAVE BEEN DISCONNECTED AND IT'S VERY MEANINGFUL WHEN THEY HAVE BEEN CONNECTED. LIKE ON MONDAY WE WERE DOING SOME PHONE BANKING AND SOMEONE CALLED BACK JUST TO THANK US. I WAS LIKE, NO, YOU NEED TO THANK ANDREW FOR COMPLETING THE APPLICATION. BECAUSE SHE DIDN'T KNOW WHAT SHE WAS GOING TO DO AND SHE HAD SO MANY PETS AS WELL SO SHE WAS VERY WORRIED. AGAIN, THANK Y'ALL FOR THE BLOCK WALKING. MY TEAM JOINED CPS YESTERDAY MORNING OUT IN THE FIELD.

SO REALLY GRATEFUL FOR THAT. ULTIMATELY WHAT WOULD BE REALLY HELPFUL FOR ME IS JUST HAVING THOSE LINE ITEM BREAKDOWNS. I KNOW YOU MENTIONED THE APPENDIX BUT JUST GETTING THE 2022 AND 2023 INFORMATION WOULD BE HELPFUL AS WELL. AGAIN, I KNOW THE PRESENTATION

[01:35:06]

HE'S A -- I BELIEVE A CAC MEMBER. WAS THAT SOMETHING THAT WAS

DISCUSSED AT THE BOARD? >> WE HAD OUR GENERAL CONVERSATION ABOUT RATE STRUCTURE AND SOME OF THE REASONS WHY, UNTIL WE GET OUR NEW ERP SYSTEM IN PLACE, WE'RE LIMITED IN CHANGING UP HOW WE BILL OUR CUSTOMERS. BUT OUR CUSTOMERS ARE ASKING US FOR ALL KINDS OF DIFFERENT WAYS TO BILL THEM. SOME OF THEM SOME OF THEM WANT A TIME OF USE PRODUCT. SO ON THE OTHER SIDE OF OUR TECHNOLOGY UPGRADES IS ALL THAT GREAT STUFF. WHAT I'VE TALKED TO PETER ABOUT, IN PARTICULAR, IS LET'S START GATHERING DATA THAT WILL INFORM HOW WE STRUCTURE RATES ONCE WE'RE ABLE TO START THAT RESTRUCTURING PROCESS. AND WE'RE ALL ON BOARD WITH THOSE TYPE OF PILOT PROJECTS. SO, YES, WE'VE HAD THAT CONVERSATION.

>> CASTILLO: LASTLY, I THINK I COULD GET IN IN TWO MINUTES. WHEN YOU ALL CAME AND REQUESTED THE RATE INCREASE, I AND SEVERAL OF MY COLLEAGUES ASKED THAT THE CPS BOARD REVIEW THE RATE STRUCTURE. I UNDERSTAND YOU ALL HAVE HAD A COUPLE OF MEETINGS BUT THEN THE AD HOC COMMITTEE ON OCTOBER 12TH JUST GOT DIFFERENT ILLUSTRATIVE SCENARIOS, ONE OF WHICH INCLUDED TIERED RATES. WITH THE TIERED RATE, WHAT TYPE OF RESOURCES WOULD YOU REQUIRE TO IMPLEMENT THAT TIERED RATE STRUCTURE?

>> THAT CAME UP AT THE BOARD MEETING AND THE RATE ADVISORY COMMITTEE, IT'S COME UP SEVERAL TIMES. I THINK IN CONCEPT WE UNDERSTAND IT.

I THINK WE'RE BEHIND AN IDEA LIKE THAT BUT IT REALLY IS GETTING THE INFRASTRUCTURE AND THE TECHNOLOGY SET UP TO DO THAT IN A REALTIME MANNER SO WE HAVE BILLING QUALITY TO DO THAT. THAT'S A REAL HANG UP BECAUSE WE DON'T WANT TO HAVE A PROGRAM LIKE THAT WHEN WE DON'T HAVE THE RIGHT BILLING QUALITY BEHIND.

A LOT OF DISCUSSIONS WERE HAD ON THAT. AND MESSAGE RECEIVED ON THAT

TOPIC. >> CASTILLO: WITH THE INVESTMENTS THAT ARE BEING MADE FOR REINVESTING IN THE SYSTEM, THE REGULATORY REQUIREMENTS AND SO ON, ARE THOSE INVESTMENTS THAT WOULD HELP CPS GET TO THAT TIERED RATE STRUCTURE? I UNDERSTAND IT WOULD REQUIRE

MUCH MORE BUT ARE THESE STEPS IN GETTING US THERE? >> ABSOLUTELY.

EVERY PIECE OF TECHNOLOGY WE PUT IN THAT IS MORE MODERN HELPS US HAVE BETTER VISIBILITY TO OUR CUSTOMERS AND IT'S THE VISIBILITY AND ACCURACY OF THEIR USAGE TO THEN BILL OFF OF

THAT IS IMPORTANT. IT'S ALL WORKING TOGETHER. >> CASTILLO: OKAY.

THANKS, CORY. THANK YOU, MAYOR. >> MAYOR NIRENBERG: THANK

YOU, COUNCILMEMBER CASTILLO. COUNCILMEMBER KAUR. >> KAUR: THANK YOU, MAYOR.

THANK YOU ALL FOR THE PRESENTATIONS TODAY. I WANTED TO FIRST START OFF TALKING ABOUT THE COMMUNITY INPUT PROCESS WITH THE NEW COMMUNITY INPUT WORKING GROUP.

COULD YOU TELL ME A LITTLE BIT ABOUT WHY IT CHANGED FROM THE RATE ADVISORY COMMITTEE TO THAT? I SAW IN THE TIMELINE YOU HAD A PRESENTATION DONE ON THE FIRST BY THE WORKING GROUP WITH RESULTS. CAN YOU SHARE A COUPLE OF

HIGH-LEVEL FEEDBACK THAT WAS PROVIDED TO Y'ALL? >> SO COMMUNITY INPUT IS ALWAYS ONE OF OUR PRIMARY PILLARS OF THE PROCESS. THE RATE ADVISORY COMMITTEE HAD DONE THE WORKED ASKED OF THEM OF THE BOARD AND THERE WERE A NUMBER OF MEMBERS WHO WERE READY TO MOVE ON AND DO SOMETHING ELSE. WITH INPUT FROM THE BOARD, CERTAINLY, YOU KNOW, WE STRUCTURED A PROCESS TO PULL FROM FOLKS WHO WERE FAMILIAR WITH OUR BUSINESS SO THAT WE DIDN'T HAVE TO DO AS MUCH CATCH UP AND EDUCATION WITH THAT COMMITTEE ON THE FRONT END ABOUT CPS ENERGY. SO EVERYBODY WHO CAME TO THE TABLE ON THAT WORKING GROUP HAS SERVED US IN SOME CAPACITY ON A COMMITTEE OF SOME KIND OR IS A REPRESENTATIVE OF A COMMUNITY ORGANIZATION THAT WE DEAL WITH ON A REGULAR BASIS.

SO, AGAIN, IT WAS TO ENSURE THAT WE GOT THE INPUT THAT THE BOARD EXPECTS US TO GET FROM PEOPLE WHO UNDERSTOOD OUR BUSINESS. BUT IT WAS A STOPGAP.

FROM HERE ON FORWARD WE'LL PUT THE NEW COMMITTEE TOGETHER THAT WILL BE A COMBINATION OF THE CAC AND THE RAC AND THEY WILL BE THE COMMITTEE TO PROVIDE US FEEDBACK ON RATES GOING

FORWARD. >> KAUR: I UNDERSTAND WHAT YOU'RE SAYING WHERE IT HELPS TO HAVE BASE-LEVEL KNOWLEDGE. I'M STILL LEARNING THAT BASE-LEVEL KNOWLEDGE TOO BUT IT MIGHT BE INTERESTING TO SEE WHAT WE CAN DO TO CREATE A BIGGER POPULATION OF COMMUNITY THAT HAS THAT SO WE HAVE A DIVERSE POOL TO ACTUALLY REPRESENT IN THAT WORKING GROUP. WAS THERE ANY HIGH-LEVEL FEEDBACK THAT THEY GAVE YOU ALL AT THE END OF THE PRESENTATION THAT YOU ALL INCORPORATED INTO THIS?

[01:40:01]

>> THEY GAVE US A LOT OF FEEDBACK ON MESSAGING. THEY GAVE US A LOT OF FEEDBACK ON THAT'S TOO UTILITY SOUNDING. WE EVEN GOT FEEDBACK THAT THE TRANSLATION IN SPANISH NEEDED SOME WORK. SO WE WENT BACK TO THE DRAWING BOARD TO TRY TO TRANSLATE IT IN A WAY TO WHERE SAN ANTONIO SPEAKS SPANISH, WHICH IS NOT NECESSARILY CASSTILLIAN SPANISH, WHICH IS HOW IT WAS TRANSLATED.

WE'LL SEND OVER THE NEXT WEEK OR TWO THE COMBINATION OF ALL THE FEEDBACK WE RECEIVED.

WE SURVEYED THEM BEFORE AND AFTER EVERY MEETING TO BE GETTING FEEDBACK AS WE WENT.

WE'LL PACKAGE THAT UP AND SEND IT TO COUNCIL SO Y'ALL CAN SEE IT.

>> KAUR: THAT WOULD BE GREAT. >> YES, MA'AM.

>> KAUR: THANK YOU. AND THEN ON SLIDE 10 I HAD A QUESTION ABOUT THE HISTORIC RATES. SO THIS WAS A FASCINATING CHART TO TAKE A LOOK AT.

I'M WONDERING. WE SEE STEP GROWTH AND STABILITY STEP GROWTH AND STABILITY. HOW FAR IN ADVANCE DO YOU ALL FORECAST AND HAVE YOU LOOKED AT THIS TO SEE WHAT IT WOULD LOOK LIKE TO DO A MORE LINEAR GROWTH VERSUS WHAT WE HAVE BEEN DOING

HISTORICALLY? >> YEAH, FROM A GO-FORWARD BASIS, WE LOOK OUT 25 YEARS BECAUSE THE PLANNING IS MULTIYEAR. I HAVE NOT BACKCASTED THAT TO SEE WHAT IT COULD LOOK LIKE IF THE TRAJECTORY WAS DIFFERENT.

PARTNERSHIP THAT WE WORKED WITH BEN AND HIS TEAM ON TO SHOW THE FORECAST.

AS RUDY ALSO MENTIONED, THE WAY THINGS WERE CHANGING, DOING THE EXERCISE EVERY COUPLE OF YEARS

TO REFRESH MAY SHOW SOMETHING DIFFERENT. >> KAUR: WHAT DOES THAT FORECAST LOOK LIKE IN INCREMENTAL GROWTH OVER THE NEXT 25 YEARS?

>> SIGNIFICANT. I MEAN, I'VE GOT THE FIRST FIVE IN MY HEAD.

YOU'RE LOOKING AT THE BALANCE SHEET GROWING BY $5 BILLION. YOU'RE LOOKING AT OUR DEBT PROFILE GROWING $3 BILLION IN THAT TIME. YOU'RE STILL LOOKING AT A TRAJECTORY, SHOULD ALL THINGS BE GIVEN COMPETITIVE PRICE RATES AGAINST THE OTHER MARKETS, BECAUSE THEY HAVE TO DO SIMILAR THINGS THAT WE HAVE TO DO.

THEY HAVE THE SAME COST INPUTS THAT WE DO SO IT'S ALL ABOUT THE BUSINESS MODEL AND THE STRUCTURE AND EFFICIENCY. I MEAN, THE TRAJECTORY IS UP AND I THINK WHAT'S DIFFERENT ABOUT THE FUTURE VIEW THAN WHAT YOU SEE HERE SPRINKYS THE SHIFT IN THE GENERATION TECHNOLOGY.

YOU'RE BUILDING FOSSIL FUEL AND FOSSIL FUEL AND NOW YOU'RE BUILDING NEW AND THAT LOOKS DIFFERENT THAN THE TWO HISTORICAL CYCLES WHICH IS A LITTLE BIT OF AN UNKNOWN FOR

ALL OF US AS WE TRANSITION. >> KAUR: THAT COULD CHANGE SOME ASSUMPTIONS SIGNIFICANTLY. I WAS TRYING TO THINK ABOUT WHETHER HAVING THAT LONG-TERM VIEW WOULD BE HELPFUL FOR A CONSUMER AND HOW MUCH IT HELPS TO KNOW WHAT THEY CAN EXPECT OVER THE NEXT FIVE YEARS IN TERMS OF PLANNING BUT I UNDERSTAND THE VOLATILITY IN

Y'ALL'S MARKET. >> COUNCILWOMAN, VERY QUICKLY, BECAUSE I DON'T WANT TO TAKE UP TOO MUCH OF YOUR TIME. WE COULD SHOW YOU WHAT THAT TRAJECTORY LOOKS LIKE FOR THE NEXT TEN YEARS BUT OUR GENERATION PLAN IS CHANGING DAILY AS THINGS ARE HAPPENING IN THE REGULATORY ENVIRONMENT. YOU KNOW, WE'RE SAYING WE MIGHT NEED MORE OF THIS OR WE MIGHT NEED LESS OF THAT. AND SO WE'RE GOING TO DO AN UPDATE TO OUR BOARD IN THE SPRING THAT SHOWS WHERE WE WERE A YEAR AGO AND WHERE WE ARE NOW.

BECAUSE I THINK WE'RE GOING TO HAVE SOME NEW OPTIONS THAT WE'RE GOING TO BE INTERESTED IN SO THAT WE'RE CONSTANTLY MAKING THE RIGHT DECISION. I DON'T WANT TO MAKE THE WRONG DECISION TODAY THAT COSTS A BILLION DOLLARS. TEN YEARS FROM NOW, WHOEVER IS THE CEO AND WHOEVER IS ON THIS BODY HAS TO DEAL WITH THE RAMIFICATIONS OF THAT.

WE'RE TRYING TO TAKE OUR VIEW -- WE'RE LOOKING AT A FIVE-YEAR WINDOW AND THEN OUR CHIEF STRATEGY OFFICER IS GOING TO HELP THE COMMUNITY TRANSLATE THAT INTO A 20-YEAR WINDOW THAT

WE WILL UPDATE ALMOST, YOU KNOW, EVERY YEAR. >> KAUR: OKAY.

AND THEN GOING TO SLIDE 14 WHERE YOU ALL TALK ABOUT HOW YOU'RE SPENDING THE CAPITAL HERE. SO I THINK WHAT WOULD BE HELPFUL TO SEE IS WHAT YOU EXPECT AS THE OUTCOMES. IF WE THINK OF SPENDING MONEY IN OUTPUTS AND OUTCOMES, I SEE A LOT OF OUTPUTS HERE. IF I'M A CUSTOMER, I DON'T KNOW WHAT GETTING A NEW SYSTEM IS GOING TO DO FOR ME. I THINK BEING ABLE TO TRANSLATE THAT INTO AN OUTCOME.

I WILL BE ABLE TO GET ON A PAYMENT PLAN THAT WILL BE EASILY TO TRANSFER ME -- DO WHAT I NEED TO DO TO MAKE MY LIFE EASIER, I THINK WOULD BE BENEFICIAL TO SEE.

EVEN FOR US. WHEN WE SEE PEOPLE, THOSE ARE YOUR PEOPLE.

WHAT ARE YOUR PEOPLE GOING TO DO FOR ME? AND SO I THINK MAYBE TRANSLATING THOSE OUTPUTS OF WHAT ARE THOSE 30% OF TEAM MEMBERS, WHAT DOES THAT MEAN.

JUST TRYING TO FOCUS MORE ON OUTCOMES WOULD BE HELPFUL. THE LAST THING I WOULD LIKE TO MAKE AS AN OVERALL COMMENT, HOW WE SUPPORT OUR UNDERSERVED COMMUNITIES.

[01:45:01]

AND THOSE THAT ENGAGE WITH US. I FEEL LIKE WE HAVE TO FIGURE OUT A WAY TOGETHER TO MAKE THIS EASIER WHERE I DON'T KNOW IF WE CAN TAG HOMES IN A SYSTEM THAT AUTOMATICALLY MAKES THEM ELIGIBLE FOR SUPPORT PROGRAMS. PARKING PASSES, WHATEVER IT MAY BE.

WE JUST HAVE TO FIGURE OUT A WAY WITH INNOVATION TO MAKE THIS EASIER FOR FOLKS TO BE ABLE TO ACCESS. BECAUSE WHEN YOU'RE WORKING THREE JOBS, TRYING TO RAISE KIDS, PUT FOOD ON THE TABLE, THE LAST THING YOU'RE THINKING ABOUT IS HAVE I SUBMITTED MY APPLICATION FOR A PAYMENT PLAN WITH CPS. JUST WANTING FOR US, AS A COMMUNITY, TO THINK ABOUT THAT. THANK YOU, MAYOR.

>> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER KAUR. COUNCICOUNCILMAN

PELAEZ. >> PELAEZ: THANKS, RUDY. IT'S ALMOST AS IF THE UNIVERSE WAS ON YOUR SIDE TODAY. I HAD BREAKFAST AT A GREAT PLACE ON THE NORTH SIDE.

NOT AS GOOD AS LOSOYA BUT WE WERE HAVING BREAKFAST AND THERE WAS A TABLE OF MOMS THERE.

ALL OF THEM EITHER WERE ON THEIR WAY TO A YOGA CLASS OR ON THEIR WAY BACK FROM A YOGA CLASS. THEY HAD THEIR BABIES THERE AND IT'S CRAZY TO SEE FOUR MOMS SHAKING STROLLERS WHILE EATING TACOS AND TALKING. ONE OF THEM RECOGNIZED ME AND CALLED ME OVER AND SHE SAYS, HEY, CAN I GIVE YOU MY TWO CENTS? SHE SAID THE FOUR MOMS AND I AGREE THAT NUMBER ONE PRIORITY FOR SAN ANTONIO IS -- AND I THOUGHT SHE WAS GOING TO SAY SAFETY. AND SHE SAID ENERGY.

I SAID WHAT ARE YOU TALKING ABOUT? SHE SAYS, YOU KNOW, ALL FOUR OF US ARE WORRIED ABOUT BLACKOUTS AND THE EXTREME HEAT AND, YOU KNOW, THAT WE'RE BURNING COAL AND THAT WE'RE NOT LEANING ON RENEWABLES AS MUCH AS WE SHOULD.

REALLY EYE OPENING. WE SPENT SOME TIME TALKING TO THESE MOMS ABOUT WHY THAT WAS IMPORTANT TO THEM AND, YOU KNOW, WHAT THEY THINK ABOUT YOUR RATE INCREASE PROPOSAL.

AND THEY ALL SAID, LOOK, IF RUDY'S GOING TO BE INVESTING IN MAKING SURE THAT BROWNOUTS AND BLACKOUTS ARE LESS LIKELY AND IF HE'S GOING TO BE INVESTING IN MAKE SURE THAT MY KIDS DON'T HAVE TO BREATHE AIR WITH COAL SMOKE IN IT, THEN, YEAH. I'M WILLING TO PAY A LITTLE BIT MORE TO GUARANTEE THAT FUTURE FOR THEM. THAT WAS POWERFUL AND IT'S SOMETHING THAT'S BEEN ON MY MIND ALL DAY LONG. AND SO I'VE BEEN, SINCE LAST YOU WERE HERE, I'VE HAD AN OPPORTUNITY TO TALK TO DIFFERENT CONSTITUENTS OF MINE AND HERE'S WHAT I'VE BEEN TELLING THEM. RUDY, I NEED TO MAKE SURE THAT YOU HELP VALIDATE FOR ME, JUST BY TELLING ME CORRECT OR INCORRECT, THAT WHAT I'M TELLING THEM IS ACCURATE. SO WHAT I'VE BEEN SAYING IS THAT CPS ENERGY NEEDS TO DO TWO THINGS. ONE, IT NEEDS TO PREPARE FOR THE MILLION-PLUS PEOPLE THAT ARE COMING. OUR GRADE IS GETTING BIGGER AND THE STRESS ON THAT IS GETTING HEAVIER WHILE, AT THE SAME TIME, MAINTAINING AN EXISTING GRID WHICH IS NOT GETTING ANY

YOUNGER. IS THAT ACCURATE? >> CORRECT.

>> PELAEZ: I REMIND THEM THAT ALL OF US, EVERYBODY IN THIS ROOM TOO, HAS PROBABLY HAD THAT CALL FROM YOUR BANK SAYING, HEY, YOUR CREDIT CARD NUMBER HAS BEEN USED TO BUY STEREO EQUIPMENT IN CHINA OR YOUR E-MAIL WAS HACKED OR SOMETHING LIKE THAT.

YOU KNOW, THERE'S NATION STATES, BAD ONES OUT THERE AND CRIMINAL ORGANIZATIONS WHO EVERY SINGLE DAY ARE TRYING TO HACK BIG COMPANIES AND THE UTILITIES ARE SWEET TARGETS.

AND THERE'S UTILITIES ALL OVER THE WORLD THAT HAVE BEEN HACKED AND BROUGHT TO THEIR KNEES AND THE RESULT FOR THE COMMUNITY IS CATASTROPHE. CPS IS PROBABLY NO DIFFERENT.

AND THAT IN ORDER TO KEEP UP WITH THE LEVEL OF AS SOPHISTICATION OF THESE ATTACKS, YOU GUYS HAVE TO HARDEN MORE AND THIS RATE INCREASE WOULD GO TOWARDS

PROTECTING US FROM A CATASTROPHE LIKE THAT. >> ABSOLUTELY.

CORRECT. >> PELAEZ: TWO WEEKS AGO I HAD TO GO WITH ELENA AND SOME OF YOUR TEAM TO KOREA WHERE WE PITCHED SOME PRETTY BIG MANUFACTURING.

SOME OF THESE BRANDS WERE PRETTY BIG. SAMSUNG AND OTHERS.

AND WE LED WITH A CONVERSATION ABOUT AFFORDABLE ON-DEMAND ENERGY.

[01:50:02]

>> CORRECT. >> PELAEZ: AND THEN DISTRICT 8 IS THE ENVY OF ALL DISTRICTS BECAUSE WE GOT THE MEDICAL CENTER. AND THE MEDICAL CENTER IS WHERE WE DO TRAUMA CARE, CANCER RESEARCH, WHERE WE DO, YOU KNOW, IMPORTANT SURGERIES, YOU KNOW, A LOT OF IMAGING SCIENCE HAPPENS OUT THERE. AND A BLACKOUT AND/OR A SHUTDOWN BECAUSE OF HACKING OR WHAT HAVE YOU ISN'T JUST AN INCONVENIENCE BUT IT'S A LIFE OR DEATH ISSUE FOR US IN A CITY THAT HAS ALMOST ALL OF ITS MEDICAL ASSETS IN ONE DISTRICT. THIS RATE INCREASE WOULD GO TOWARDS MAKING IT LESS LIKELY THAT MRI MACHINES, DIALYSIS MACHINES, VENTILATORS, ET CETERA WOULD BE SHUT DOWN IN

THE EVENT OF A STORM. >> CORRECT. BUT I WILL CAVEAT THAT WITH THIS RATE INCREASE WILL IMPACT ALL AREAS OF THE COMMUNITY THAT DESERVE AND DESIRE RESILIENCY,

INCLUDING THE MEDICAL CENTER. >> PELAEZ: AND LASTLY WE'RE MILITARY CITY, USA.

ANDY, YOU STOOD OUT FRONT WITH ME AND A BUNCH OF OTHER BIG MEN AND WOMEN OUT THERE WHO CALL SAN ANTONIO HOME. AND PRETTY MUCH EVERY BRANCH OF THE MILITARY IS HERE.

OUR ABILITY TO PROVIDE A STABLE GRID AND ON-DEMAND AFFORDABLE ENERGY BENEFITS OUR MILITARY MISSIONS AS WELL. I THINK, ERIK, THAT IT -- BEING ABLE TO MAINTAIN THE GRID THE WAY THAT WE WANT TO PREVENTS US FROM -- OR MAKES IT LESS LIKELY THAT WE'LL GET BRACED AT SOME POINT IN THE FUTURE BUT ALSO MAKE SURE OUR MILITARY MISSIONS HIT THE TARGETS THEY NEED TO HIT. IS THAT YOUR UNDERSTANDING TOO?

>> ABSOLUTELY. YES, SIR. >> PELAEZ: THANKS, RUDY.

PASS THE WITNESS, ANDY. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER PELAEZ.

COUNCILMEMBER COURAGE. >> COURAGE: THANK YOU, MAYOR.

I DON'T KNOW WHO MIGHT POP UP TO ANSWER THESE. COULD BE ANY ONE OF RUDY'S STAFF. BUT LET ME TRY AND GO THROUGH A COUPLE OF THINGS THAT ARE STILL OF CONCERN TO ME AND I THINK ARE OF CONCERN TO ALL OF US WHEN WE TALK ABOUT RATE INCREASES. AND THAT IS WHAT IS STILL OWED BY CPS CUSTOMERS WHO COULDN'T

PAY THEIR BILLS LONG TERM? HOW MUCH IS THAT? >> WE ARE DOWN $33 MILLION TO

$175 MILLION. >> COURAGE: AND WOULD IT EVER BE ADVISABLE TO WRITE THAT OFF

SOME DAY? >> COUNCILMAN COURAGE , NO. SO TO THE EXTENT THAT WE STILL HAVE OUTREACH AVAILABLE FOR THEM, YOU KNOW, WE'RE GOING TO DO THAT.

THERE ARE LEGAL REASONS AROUND NOT PROVIDING FREE SERVICE, NECESSARILY.

I'LL STOP THERE BEFORE I SAY ANYTHING I SHOULDN'T. >> COURAGE: IN OTHER WORDS IT COULD BE 5, 10, 15 YEARS PEOPLE WILL OWE MONEY BUT WE'LL TRY TO COLLECT.

>> AT THAT POINT WE WOULD WRITE OFF AN ACCOUNT. >> COURAGE: THAT'S WHAT I MEAN. WHEN WOULD THAT BE LIKELY? THREE YEARS, FIVE YEARS?

WHAT DOES THAT DO TO OUR BOTTOM LINE? >> IT'S ABOUT THREE QUARTERS OF A YEAR AS WE GO THROUGH A PROCESS TO RIGHT SOMEONE OFF BUT WE WILL GO THROUGH A WRITEOFF PROCESS. WHAT DEANNA HAS BEEN TALKING ABOUT IS IT IS EXTENDING THAT PROCESS BECAUSE FOLKS, BEFORE THEY'RE GETTING CUT OFF, THEY'RE ON PAYMENT PLANS WHICH RESETS THEIR TIME-FRAME. WE ARE WRITING OFF 5, $6 MILLION A MONTH WHERE THE

INDIVIDUAL IS NOT THERE, WHATEVER THE CASE MAY BE. >> COURAGE: WHEN WE KNOW A BUSINESS CLOSED OR SOMEBODY HAS MOVED AWAY OR SOMETHING LIKE THAT.

OKAY. >> SEGOVIA: COUNCILMAN, IF I MAY, THAT'S FROM AN ACCOUNTING

[01:55:01]

PERSPECTIVE. >> COURAGE: FROM AN ACCOUNTING.

THAT'S THE WAY I'M LOOKING AT IT TOO. WHAT WILL BE THE COST TO OUR CUSTOMERS IF WE LOSE OUR GAS SUPPLIER LAWSUITS AND HAVE TO PAY OFF $400,000 THAT'S UP FOR

GRABS IN THE TRIAL RIGHT NOW. WHAT WOULD THAT COST US? >> WE HAVE TALKED ABOUT -- TWO YEARS AGO WE TALKED ABOUT THE REGULATORY ASSET. WE HAVE ONLY EXECUTED UPON 415 SO FAR. THE REMAINING BALANCE IS NOWHERE CLOSE TO THAT FULL BILLION DOLLARS AND SO BACK THEN WE ESTIMATED APPROXIMATELY ANOTHER BUCK, BUCK 50 FOR THE BALANCE AT THE TIME. I WOULD IMAGINE IT'S LESS THAN THAT.

PROBABLY SOME NUMBER LESS THAN THAT BUT TBD. >> COURAGE: A BILL THAT WE ARE PAYING INTEREST ON AND IF WE LOSE THE CASE, MORE WILL BE ADDED TO THAT BILL THAT WE'LL

PAY INTEREST ON UNTIL WE PAY IT OFF, IS THAT RIGHT? >> WE'RE NOT PAYING ANYTHING.

THEY ARE CURRENTLY IN DISPUTE. >> COURAGE: BUT SOME DAY WE'LL HAVE TO PAY IT OFF,

RIGHT? >> COUNCILMAN, WE'VE GOT TO BE CAREFUL WITH HOW DEEP WE GO HERE BUT WE WILL NEVER GET TO THE FULL AMOUNT THAT THAT REGULATORY ASSET WAS APPROVED FOR. OUR LEGAL STRATEGY HAS ALREADY BENEFITED OUR CUSTOMERS.

>> COURAGE: YEAH, BUT I GUESS WHAT I'M SAYING IS WE CALL IT AN ASSET BUT IT'S A LIABILITY.

WE OWE MONEY THAT PEOPLE ARE TRYING TO COLLECT FROM US OR THAT WE'RE TRYING NOT TO PAY

AND SOMEHOW IT'S GOT TO GET PAID OFF, RIGHT? >> I FEEL COMPELLED TO SAY I FEEL REALLY GOOD ABOUT OUR CASE AND THAT WILL RESOLVE ITSELF OVER TIME.

>> COURAGE: OKAY. ALL RIGHT. LET ME MOVE ON THEN.

WE LOOKED AT $130 MILLION WORTH OF REVENUE THAT WAS EARNED BY CPS FROM OFF-SITE SALES OF ENERGY. AND WE BROKE THAT DOWN INTO THREE DIFFERENT WAYS OF USING THAT FUNDS. $70MILLION WAS REINVESTED IN THE SYSTEM.

$10MILLION CUSTOMERS ASSISTANCE. $30MILLION IT SAYS REGULATORY REQUIREMENTS OR NEW MARKET REQUIREMENTS. WHAT ARE THOSE?

>> YEAH, THAT LAST BUCKET THERE IS IN REFERENCE TO ERCOT. THERE'S A REGULATORY REQUIREMENT. EFFECTIVELY IT LENT ITSELF TO US PUTTING OVER $15 MILLION TOWARDS THEM IN ORDER TO PARTICIPATE IN WHAT'S CALLED THE DAY AHEAD MARKET.

BUT REALLY IS A MARKET THAT ALLOWS CPS ENERGY TO BUY AND SELL FOR A COMMUNITY THAT'S LESS VOLATILE THAN ANOTHER MARKET. OUR CUSTOMERS BENEFIT FROM THIS. THAT WAS JUST THE REGULATORY REQUIREMENT.

>> WALSH: THIS WAS A NEW REQUIREMENT. >> AS OF OCTOBER.

>> COURAGE: THAT'S GOOD TO KNOW. ON SLIDE 13, CAN YOU EXPLAIN WHAT THE CAPITAL IMPROVEMENTS ARE PROJECTED FOR EACH YEAR FROM 2025 TO 2029.

WE'VE GOT A LOT OF MONEY PROJECTED, INCREASING. FOR EXAMPLE, IN 2024 WE SAY $941,000 IN CAPITAL IMPROVEMENTS. BUT IT CONTINUES TO GO UP INTO ALMOST $1.5 BILLION AND WE'RE PROJECTING THESE AS EXPENDITURES FOR CONSTRUCTION.

AND THEN WE'RE SAYING TWO YEARS FROM NOW WE'RE GOING TO COME BACK AND ASK FOR MORE MONEY, I PRESUME, TO PAY FOR SOME OF THESE PROJECTED CAPITAL EXPENDITURES.

WHAT ARE THOSE? WE DON'T KNOW WHAT THEY ARE. COULD WE -- I'M NOT ASKING YOU TO TELL ME RIGHT NOW -- BUT COULD YOU LIST WHAT YOU ANTICIPATE THE NEARLY 5 OR $6 BILLION WORTH OF CAPITAL EXPENDITURES OVER THAT FIVE-YEAR PERIOD SO WE'LL HAVE AN IDEA OR I HAVE AN IDEA WHEN PEOPLE SAY WHY ARE THEY GOING TO ASK FOR ANOTHER 5.5% QC I CAN SAY THIS IS WHAT THEY NEED TO DO IN CAPITAL IMPROVEMENT CONSTRUCTION TWO YEARS FROM NOW. IF I DON'T KNOW IT'S HARD FOR ME TO EXPLAIN TO PEOPLE WHY WE MAY BE PROMOTING ANOTHER INCREASE TWO YEARS FROM NOW. SO IF IT'S PROJECTED THEN IT HAS TO BE BASED ON SOMETHING. I WOULD LIKE TO KNOW WHAT THOSE PROJECTIONS ARE BASED ON.

>> THAT IS THE DETAILED WORK THAT WE DO WITH BEN AND HIS STAFF.

WE GO THROUGH ALL THAT AND WE DO HAVE THE DETAILED. IN THE APPENDIX THERE ARE BUCKETS THAT SUMMARIZE IT AT A HIGH LEVEL. IT'S THE SAME KIND OF CONVERSATION WE HAD BEFORE. THE GENERATION PLAN. YOU'RE TALKING CLOSE TO $14 BILLION FROM A NOMINAL PERSPECTIVE LAID OUT OVER TIME.

THAT IS BAKED INTO THOSE NUMBERS TO ACHIEVE THOSE RESULTS.

THE ADDITIONAL $200 MILLION AROUND THE I.T. SYSTEM THAT WE TALKED ABOUT IS BAKED INTO '25, '26, AND '27. AND YOU LAYER ON TOP OF THAT KIND OF THE INCREMENTAL GROWTH THAT YOU SEE IN THIS COMMUNITY AND THAT'S WHAT YOU'RE LOOKING AT.

[02:00:01]

ONES WE CAN HELP YOU AND YOUR CONSTITUENTS WITH. >> COURAGE: I NOTICE ON ONE OF SLIDES YOU BROKE DOWN THE $85 MILLION. I THINK IT'S SLIDE 14.

AND THIS IS WHAT YOU ANTICIPATE THE INCREASED REVENUE WITH 4.25%.

AND IT SHOWS FOR RESILIENCY, TECHNOLOGY, ET CETERA, ET CETERA.

BECAUSE WE'RE GOING TO BE RAISING THOSE RATES AND GETTING AN $85 MILLION, NOT JUST NEXT YEAR BUT FOR THE YEAR AFTER, THE YEAR AFTER, THE YEAR AFTER FOREVER GOING FORWARD, ARE THESE PERPETUAL EXPENSES? IN OTHER WORDS, IT'S GOING TO TAKE US 10 OR 15 YEARS TO PAY FOR ALL OUR R RESILIENCY AT $25 MILLION A YEAR, ET CETERA, ET CETERA.

WHAT HAPPENS WHEN THESE PARTICULAR EXPENSES THAT YOU'RE OUTLINING GET PAID OFF?

BUT WE STILL HAVE THAT INCREASE OVER LONG TERM? >> COUNCILMAN, OUR BUSINESS IS PERPETUAL AND THUS THE REVENUE REQUIREMENTS NEED TO MIRROR THAT.

SO WHILE THESE ARE ACTIVITIES THAT ARE DONE AT A POINT IN TIME, THEY ARE REQUIRED TO BE DONE IN ANOTHER POINT OF TIME AND REDONE, THEN REPLACED. AND WITH THE SYSTEM GROWTH THEN YOU DO MORE OF THEM. SO ALL OF THAT GETS BAKED INTO KIND OF THE PERPETUAL NATURE OF

THESE RATE INCREASES. THAT'S THE HIGH LEVEL FOR YOU. >> COUNCILMAN, THE ONLY THING THAT I WOULD ADD TO THAT IS WE REPLACED OUR COMPUTER SYSTEM -- I WILL TELL YOU WE'VE GOT TO SPEND MONEY STAYING AHEAD OF THE BAD ACTORS ON THE SECURITY SIDE.

EVERY YEAR OUR COSTS GO UP TO DEFEND OUR SYSTEM AGAINST BAD ACTORS.

THAT'S WHY IT'S IMPORTANT TO DO A TWO-YEAR RECONCILIATION BECAUSE WHATEVER IS LEFT OVER, WHATEVER INVESTMENTS WE HAVE MADE IN A NEW POWER PLANT, FOR INSTANCE, CAN NOW GO TO OFFSET OTHER COSTS. WE RECONCILE THAT AND DETERMINE WHAT THE NEED IS IN THAT MOMENT. ALL OF IT GOES TOWARDS RUNNING OUR SYSTEM AT THE END OF THE DAY AND THAT'S WHY IT'S SO IMPORTANT NOT TO GO EIGHT YEARS.

WE HAVE TO COME IN EVERY TWO YEARS BECAUSE AS THINGS ARE GOING OFF AND COMING ON, YOU

CAN SEE FOR YOURSELF WHERE THAT INVESTMENT IS BEING MADE. >> COURAGE: I THINK IT'S IMPORTANT THAT YOU'RE SAYING THESE THINGS PUBLICLY AND IT'S ON AIR AND IT GIVES ME MORE OF WHAT I CAN TELL PEOPLE WHEN THEY START WONDERING ARE WE JUST DROPPING ALL THIS MONEY IN SOME BLACK HOLE AND WE DON'T KNOW WHERE IT GOES OR WHY IT'S BEING EXPENDED OR IF IT'S GOING TO PAY SOMETHING OFF IN THREE OR FOUR YEARS, WHY DO WE HAVE IT AS A LONG-TERM EXPENSE TO US? I HEAR WHAT YOU'RE SAYING AND I THINK THE COMMUNITY NEEDS TO UNDERSTAND MORE. THAT'S WHY I'VE ASKED SOME OF THESE QUESTIONS.

BECAUSE PEOPLE DON'T SEEM TO UNDERSTAND THE COMPLEXITY OF WHAT CPS ENERGY FACES FROM PAST AS WELL AS GOING FORWARD. I THINK ALL OF THAT NEEDS TO REALLY COME OUT MORE AND MORE

AS WE DISCUSS THIS RATE INCREASE. >> I USE THIS ANALOGY WITH THE BOARD EARLIER AND I'LL REITERATE IT HERE. AS OUR SYSTEM IS GROWING, IT'S LIKE HAVING ONE LIFEGUARD COVERING A STRETCH OF BEACH AND ALL OF A SUDDEN YOU ASKED THAT LIFEGUARD TO NOW COVER TWO STRETCHES OF THAT SAME BEACH AND IT PUTS THE PUBLIC AT RISK BECAUSE YOU CAN'T COVER IT ALL. OUR SYSTEM

MAINTAIN IT. >> COURAGE: THANK YOU, RUDY. THANK YOU, MAYOR.

>> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER COURAGE. COUNCILMEMBER WHYTE.

>> WHYTE: THANK YOU, RUDY AND YOUR TEAM. THANK YOU FOR THE PRESENTATION. I'M GOING TO TRY NOT TO BE REPETITIVE OF SOME OF THE OTHER QUESTIONS. THE 195,000 DELINQUENT ACCOUNTS WE HAVE, $172 MILLION I THINK IS OUTSTANDING, SOMETHING LIKE THAT. HOW EFFECTIVE HAVE WE BEEN

COLLECTING THAT MONEY THROUGH THESE PAYMENT PLANS? >> SO $175 MILLION -- WE HAD AN UPTICK. AGAIN, I WASN'T DISCONNECTING CUSTOMERS FROM JUNE TO EARLY OCTOBER. SO WHEN YOU DON'T HAVE THAT CONCERN OF BEING DISCONNECTED, CUSTOMERS ARE TYPICALLY GOING TO TAKE THAT MONEY AND GO DO SOMETHING ELSE WITH IT BECAUSE THEY KNOW THERE'S NO RAMIFICATIONS FOR THAT. WE HAVE FOUGHT REALLY HARD TO GAIN GROUND IN TERMS OF 33-ISH MILLION DOLLARS OF COLLECTIONS.

AND, YOU KNOW, WHEN YOU GET A CUSTOMER ON A PAYMENT PLAN, THAT STOPS THE BLEEDING.

THEY'VE GOT TO KEEP UP WITH THEIR BILL GOING FORWARD IN ORDER TO STAY ON THAT PAYMENT PLAN. I THINK WE HAVE DONE THE THINGS THAT NATURALLY WE CAN DO.

BUT, YOU KNOW, WHEN WE CAN'T DISCONNECT IT MAKES IT REALLY, REALLY HARD TO MAKE PROGRESS.

>> WHYTE: SO THIS $175 MILLION, HOW MUCH OF THAT DO WE REALLY ANTICIPATE

COLLECTING AND BY WHEN? >> I WOULD SAY, YOU KNOW, WELL OVER $100 MILLION.

WE WILL BRING THAT MONEY IN AT SOME POINT IN TIME, WHICH IS WHY YOU DON'T WRITE IT OFF.

[02:05:02]

>> WHYTE: ARE WE TALKING FIVE -- >> TWO TO THREE YEARS.

I THINK THAT'S A REASONABLE EXPECTATION. >> WHYTE: AND THAT EXTRA -- OR THAT $100 MILLION OR WHATEVER IT IS WE BRING IN, THAT'S FACTORED INTO THESE

NUMBERS? >> YES, SIR. >> WHYTE: ALL RIGHT.

THE SPRUCE ONE, I THINK I SAW SOMEWHERE IN HERE THAT THE EXPECTED LIFE ON THAT IS OUT UNTIL 2047 BUT WE'RE GOING TO TAKE THAT OFFLINE IN THE NEXT FEW YEARS.

IS THAT RIGHT? >> SPRUCE ONE IS THE OLDER OF OUR UNITS.

IT'S 23 YEARS OLD. WE WOULD HAVE TO INVEST ANOTHER $200 MILLION IN ENVIRONMENTAL CONTROLS IN THE TIME-FRAME WE'RE TALKING ABOUT SHUTTING IT DOWN.

THAT DOESN'T MAKE SENSE FOR A UNIT THAT OLD. ON SPRUCE ONE THE RIGHT DECISION IS TO MOVE AWAY FROM IT, JUST BASED ON THAT INVESTMENT YOU WOULD HAVE TO

MAKE TO BE IN COMPLIANCE. >> WHYTE: BUT THAT WILL BE 20 YEARS SHORT OF ITS EXPECTED

LIFE SPAN. IS THAT FAIR? >> THAT'S FAIR.

>> WHYTE: AND IS THAT NOT GOING TO CUT INTO OUR CAPACITY TO SELL?

>> WELL, WE'VE ALREADY STARTED TO REPLACE THAT CAPACITY. YOU KNOW, WE'VE GOT ANOTHER -- WE'RE UP TO ABOUT 600 MEGAWATTS, GIVE OR TAKE OF SOLAR.

WE'VE GOT PROBABLY ANOTHER 400 MEGAWATTS OF SOLAR IN WHICH WE'LL REPLACE THAT CAPACITY OF SPRUCE. WE'RE GOING TO CONVERT THE SPRUCE TWO UNIT, WHICH YOU LOSE ECONOMIES OF SCALE WITH YOUR COAL PILE AND ALL THE PROCESSES YOU USE TO GET FUEL TO TOWN.

IT MAKES SENSE IN THAT MOMENT TO CONVERT THE SPRUCE TWO UNIT TO NATURAL GAS WHICH WILL GIVE US THAT 800 MEGAWATTS THAT WE NEED FOR RELIABILITY PURPOSES. OUR PORTFOLIO IS DIVERSIFIED TO ENSURE WE'RE REPLACING THAT SPRUCE ONE CAPACITY AND THEN SOME IN THE TIME-FRAME WE'RE

GOING TO BE CLOSING IT DOWN. >> WHYTE: WE ARE REDUCING THE DIVERSITY BY CLOSING THE SPRUCE

ONE, RIGHT? >> NO. WE'RE MOVING TO OTHER THINGS.

WE'RE ALSO DOING 500 MEGAWATTS OF BATTERY STORAGE. THAT'S A DISPATCHABLE RESOURCE THAT IS ZERO EMISSIONS. SO WE'RE GOING TO REPLACE THAT CAPACITY, SIR.

>> WHYTE: SO NO CONCERNS ABOUT OUR ABILITY TO SELL WITH THE CLOSING OF SPRUCE ONE?

>> OUR GENERATION PLAN PRIMARILY. IT'S THE RELIABILITY HERE THAT DRIVES OUR DECISIONS.

BUT WE WILL ALWAYS MAINTAIN LENGTH THAT WILL BE AVAILABLE TO SELL IN THE MARKET WHEN THE

OPPORTUNITY IS THERE. >> WHYTE: OKAY. SO YOU WOULD SAY WE'RE PLANNING TO BUILD ENOUGH POWER TO COVER THE LOAD GROWTH OVER THE NEXT COUPLE OF DECADES OR ARE WE

GOING TO HAVE TO PURCHASE ELECTRICITY? >> WE'LL PURCHASE SOME BUT WE WILL BUILD MOST. WHEN I SAY PURCHASE SOME, WE EXECUTE OUR GENERATION PLAN IN A NUMBER OF WAYS. AS WE'RE BUILDING NEW RESOURCES, WE'LL GO OUT AND CONTRACT WITH ANOTHER MERCHANT PLANT. RIGHT NOW WE'RE BUYING 500 MEGAWATTS FROM A GAS PLANT THAT'S NOT OURS. WE CAN DO THAT AT ANY POINT IN TIME TO COVER WHATEVER GAP MIGHT EXIST AS WE'RE BUILDING NEW CAPACITY BUT IT'S ALL PART OF OUR GENERATION PLAN TO ENSURE THAT WE HAVE PLENTY OF RESOURCES FOR THE FUTURE.

I MEAN, OUR JOB IS TO PLAN. THAT'S OUR JOB AND, AGAIN, I HAVE TO BE ABLE TO ANSWER THAT QUESTION, DO YOU HAVE ENOUGH POWER FOR THE NEXT 25 YEARS. WE DON'T RIGHT NOW.

I'LL BE CRYSTAL CLEAR ABOUT THAT. THAT'S WHY THESE INVESTMENTS

ARE NECESSARY. >> WHYTE: SO THIS UPGRADE IN SOFTWARE, THIS NEW I.T. WE

NEED. WE HAVE TO HAVE IT, RIGHT? >> HAVE TO HAVE IT.

>> WHYTE: HAVE TO HAVE IT. LET'S SAY THIS RATE INCREASE DOESN'T PASS.

HOW ARE WE GOING TO GET IT? >> I'M ALREADY SPENDING THAT MONEY.

WE'RE ALREADY ON THE ROAD TO SELECTING A VENDOR AND GETTING GOING.

THE QUICKER I GET TO THAT OTHER SIDE OF THE PROCESS THE BETTER.

ALL THOSE CAPITAL PLANS THAT YOU SEE, IF AT ANY POINT THAT WE DON'T GET A RATE INCREASE, THAT PLAN WILL CHANGE AND WE'LL HAVE TO COME BACK AND REPRIORITIZE.

BUT THERE ARE CERTAIN THINGS WE ABSOLUTELY HAVE TO DO. LET ME GIVE YOU AN EXAMPLE OF THAT. IF I DON'T HAVE THE RESOURCES I NEED TO REPLACE THE POWER PLANTS THAT WILL COME OFFLINE BECAUSE THEY'RE OLD AND HAVE TO AT SOME POINT IN TIME, I'M BUYING THAT POWER ON THE MARKET. OUR CUSTOMERS ARE NOW SUBJECT TO WHATEVER RISK AND PRICE VOLATILITIES ASSOCIATED WITH THAT.

I CAN DO THIS IN A THOUGHTFUL WAY OR WE CAN GAMBLE AND TAKE A RISK.

[02:10:03]

>> WHYTE: RIGHT. ONE WAY OR ANOTHER YOU'RE GETTING THIS UPGRADED

SOFTWARE. >> ABSOLUTELY. >> WHYTE: OKAY.

IT'S $85 MILLION, RIGHT, THAT IF THE RATE INCREASES PASSES YOU'LL GET $85 MILLION MORE IN YEAR ONE. $85MILLION MORE IN YEAR TWO, RIGHT?

>> YES, SIR. >> WHYTE: IF SOMEBODY WERE TO HAND YOU THE $85 MILLION TOMORROW AND THE $85 MILLION IN THE NEXT YEAR, YOU WOULDN'T HAVE TO DO THE INCREASE, RIGHT? WE WOULDN'T HAVE TO DO THIS RATE INCREASE?

>> IT MAY TAKE CARE OF THE NEED IN THAT YEAR. BUT AS CORY MENTIONED, OUR INVESTMENTS ARE PERPETUAL. AS OUR SYSTEM GROWS, THE COSTS GO UP.

YOU HAVE TO HAVE THAT AMOUNT EVERY YEAR TO SUSTAIN YOURSELF.

THE UNCERTAINTY IT CREATES IN THE OUTER YEARS, WHEN CORY STARTS REFLECTING THAT UNCERTAINTY IN OUR FINANCIAL METRICS, THE BONDHOLDERS TAKE NOTE OF THAT AND IT AFFECTS NOT

ONLY OUR BOND RATING BUT THE CITY'S AS WELL. >> WHYTE: IT'S ABOUT

DOLLARS. >> IT'S ABOUT CERTAINTY IN THAT REVENUE PICTURE.

CERTAINTY. NOT JUST ABOUT THE DOLLARS. >> WHYTE: RIGHT.

ASSUME FOR ME, IF YOU WILL, THAT THE CITY DECIDED TO SPEND $42.5 MILLION LESS NEXT YEAR AND $42.5 MILLION LESS THE FOLLOWING YEAR. SO YOU WOULD HAVE 85 TOTAL RATHER THAN $170 MILLION. WOULD THIS 4.25% RATE INCREASE, WOULD WE BE ABLE TO CUT THAT IN

HALF? >> YOU BAKE THAT NUMBER INTO YOUR REVENUE PROJECTIONS AND YOU RERUN IT. IT'S NOT A STRAIGHT LINE OFFSET BECAUSE YOU'VE GOT THE REVENUE YOU NEED IN THE OUTER YEARS THAT ARE STILL GOING TO DRIVE THAT NUMBER CURRENTLY.

JUST LIKE BRINGING IN WHOLESALE REVENUE TOOK US FROM 5.5 TO 4.25 --

>> WHYTE: IT WILL BE LESS. >> IT WILL BE LESS. >> WHYTE: THIS IS HARD FOR ME, I'LL BE HONEST WITH YOU BECAUSE I JUST SAW SOMETHING THE OTHER DAY ON THE NATIONAL NEWS. 70% OF PEOPLE SAY THAT THEIR WAGES ARE NOT KEEPING UP WITH THE INCREASED COST OF LIVING. I MEAN, WAGES IN THE COUNTRY ARE STAGNANT.

INFLATION IS UP AND NOW WE'RE ASKING PEOPLE AGAIN TO PAY MORE.

I WAS TALKING WITH ONE OF MY STAFF MEMBERS THIS MORNING AND JUST THE SOLID WASTE INCREASE W DID WITH THE SIZE OF THE GARBAGE CAN AND THE ENVIRONMENTAL FEE IS COSTING HIM AN EXTRA $4 A MONTH. SO THAT'S 50 BUCKS A YEAR. AND NOW, YOU KNOW, THE AVERAGE RESIDENTIAL CUSTOMER, THIS WILL BE AN EXTRA 50 OR SO DOLLARS A YEAR.

AND ALL OF THAT WHILE WAGES ARE STAYING WHERE THEY ARE. I THINK THAT'S REALLY TOUGH TO ASK OUR FOLKS OUT THERE TO DO THAT. AND WE DIDN'T EVEN REALLY TOUCH ON THE COMMERCIAL USERS AS WELL. BECAUSE ON ONE OF THOSE SLIDES THERE WE SHOWED WHAT THIS RATE INCREASE WILL DO TO BUSINESSES.

AND WE ALL KNOW IF BUSINESSES' COSTS GO UP, THAT PASSES THROUGH TO THE CONSUMER.

THAT AFFECTS HOW MANY EMPLOYEES THOSE BUSINESSES CAN HIRE. AND SO I THINK IT'S CERTAINLY A TOUGH ASK AT THIS TIME. BUT I APPRECIATE ALL Y'ALL'S WORK.

>> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER WHYTE. COUNCILMEMBER MCKEE-RODRIGUEZ.

>> MCKEE-RODRIGUEZ: THANK YOU, MAYOR. THANK YOU FOR THE PRESENTATION. IS THERE A LIST OF THE 19 MEMBERS OF THE RATE REQUEST WORKING GROUP SOMEWHERE AND WHY EACH MEMBER WAS SELECTED OR THEIR EXPERTISE?

>> WE DO HAVE A LIST ON OUR WEBSITE THAT WE CAN FOLLOW UP WITH YOUR AND IT GIVES A SHORT BIO SO YOU'LL BE ABLE TO SEE WHAT THEY DO AND HOW THEY CONTRIBUTE.

>> MCKEE-RODRIGUEZ: WOULD YOU MIND IN THE NEXT 15 TO 20 MINUTES TRYING TO GET IT ON THE

SCREEN? I'LL LOOK OVER IT AS WELL. >> I DON'T KNOW IF WE CAN DO

THAT BUT WHATEVER WE CAN DO, WE'LL SEE. >> MCKEE-RODRIGUEZ: THANK YOU. THE REASON I ASK IS THERE ARE PEOPLE CPS MAY HAVE A RELATIONSHIP WITH IN THE GROUP WHO MAYBE DON'T HAVE ANY RELATIONSHIPS WITH MY CONSTITUENTS. SO GROUPS LIKE THAT I'M VERY COGNIZANT OF THAT IN THE BACK OF MY MIND AND HOW I PERCEIVE THEIR FEEDBACK. I ALSO SAW YOU -- OR HEARD THAT YOU KNOCKED ON 10,000 DOORS. ABOUT DOOR ANSWERS BUT WE CAN FOLLOW UP WITH THAT. THE BIGGEST THING WE GET WHEN PEOPLE ANSWER THEIR DOOR, NUMBER ONE, THEY'RE SURPRISED THAT WE'RE THERE.

[02:15:03]

SO THE CUSTOMERS, THE ONES ABLE TO ENGAGE WITH US, THEY ARE RELIEVED AND APPRECIATIVE OF US

BEING THERE. >> MCKEE-RODRIGUEZ: THANK YOU.

I'M GOING TO SAY SOMETHING THAT I THINK AT FACE VALUE ISN'T GOING TO NECESSARILY SOUND NICE, BUT I HOPE YOU HEAR IT IN MY VOICE AND YOU UNDERSTAND MY INTENTION.

GENERALLY -- I'M NOT SPEAKING SOLELY ABOUT THIS EFFORT -- BUT THERE'S A PROBLEM THAT I HAVE WITH EFFORTS THAT FEEL LIKE THEY'RE JUST CHECKING A BOX ON A COMMUNITY ENGAGEMENT.

AND SO I'LL USE THIS AS AN EXAMPLE. IF CPS IS MAKING A RATE INCREASE REQUEST, ONE THAT'S BEEN PREDETERMINED FOR GOING ON TWO YEARS NOW, AND CPS THEN APPOINTS A GROUP TO GIVE IMPACT ON THE FEEDBACK OVER THE COURSE OF THREE MEETINGS OCCURRING A SPAN OF JUST A FEW WEEKS. AND THEN COMES TO COUNCIL WITH THE SAME REQUEST THAT YOU'RE ALWAYS GOING TO MAKE, I DON'T FEEL CONFIDENT THAT THE WORK OF THIS COMMITTEE, OF WHICH I DIDN'T KNOW THE MEMBERSHIP UNTIL TODAY, WAS REALLY THAT IMPACTFUL.

ESPECIALLY IF THE FOCUS OF THEIR FEEDBACK WAS ON MARKETING.

AND THAT DOESN'T INSPIRE A LOT OF CONFIDENCE IN ME. AND IT FEELS LIKE A AUDIO] PR CAMPAIGN FOR A RATE INCREASE, WHICH IS NEITHER GOOD NOR BAD AND SOME WOULD ARGUE THAT IT'S GREAT, NECESSARY, IF YOU NEED A RATE INCREASE YOU SHOULD BE REACHING OUT TO PEOPLE AND EXPLAINING WHY YOU NEED IT. I'LL GIVE IT THAT.

I'M SURE THAT I COULD ASK A TON OF QUESTIONS BUT I'LL KEEP IT BRIEF.

I DON'T REALLY HAVE ANY QUESTIONS. I MAY BE A LOT OF THINGS BUT I AM NOTHING IF NOT CONSISTENT. THAT BEING SAID, I DON'T BELIEVE THAT I'LL BE ABLE TO SUPPORT A RATE INCREASE IN DECEMBER. LAST YEAR YOU'LL REMEMBER I WAS ONE OF TWO MEMBERS HERE TODAY TO VOTE NO AND MY FEELINGS ARE ROUGHLY THE SAME AS THEY WERE THEN. I'M MORE CONFLICTED NOW THAN I WAS AT THAT POINT.

IT'S HARD TO LOOK AT THIS REQUEST WITHOUT THE CONTEXT OF THE SERIES OF IMPENDING RATE HIKES THAT CUSTOMERS ARE NOT LOOKING FORWARD TO AT ALL AND WHETHER IT'S ONE BIG PUNCH OR A SERIES OF SMALLER PUNCHES, NO ONE WANTS TO GET HIT AND THAT'S WHAT THIS LOOKS AND FEELS LIKE. I'M SURE WE HAVE WORKED WITH RESIDENTS -- I HAVE HEARD SOME STORIES TODAY, RESIDENTS ON THE HOME REHAB APPLICATION AND WE WORK WITH RESIDENTS EVERY DAY EXPERIENCING HARDSHIP AND THE STORIES THEY SHARE ARE HEARTBREAKING.

SOME OF US HAVE RECOVERED SOMEWHAT FROM THE PANDEMIC AND FROM THIS PERIOD OF ECONOMIC UNCERTAINTY BUT MANY OF US HAVEN'T. IT'S MORE OF US THAN ANY OTHER ENTITY HAS RESOURCES FOR. THERE'S A NEW, I FEEL, COST BURDENED CLASS OF PEOPLE WHO WOULD ONCE CONSIDER THEMSELVES TO BE MIDDLE CLASS BUT DON'T QUALIFY FOR THE TYPE OF SUPPORT THEY NEED. WE HAVE MORE AND MORE RESIDENTS CHOOSING BETWEEN RENT, GROCERIES, MEDICATION, UTILITIES, AND OTHER BILLS. I HAVE RESIDENTS WHO HAVE STRUGGLED WITH HUNDREDS OF DOLLARS IN LATE FEES AND DISCONNECTIONS AND DENIAL FOR SERVICES AND I FIND IT REALLY CHALLENGING TO SUPPORT A RATE INCREASE RIGHT NOW.

SOME PEOPLE I WILL GIVE MAYBE SOLD BY THE BUSINESS CASE FOR THIS INCREASE BUT I WOULD FEEL MUCH MORE COMFORTABLE VOTING ON SOMETHING LIKE THIS IF CPS OR THE CITY HIRED A RESIDENTIAL CONSUMER ADVOCATE WHO CAN MAKE A HUMAN, ENVIRONMENTAL, AND COMPASSIONATE REQUEST FOR A RATE INCREASE. SOMEONE WHO COULD ASK QUESTIONS AND MAKE RECOMMENDATIONS INFORMED BY THEIR EXPERIENCE WITH RATEMAKING AND UTILITY FINANCE ACROSS THE COUNTRY THAT I WOULDN'T BE ABLE TO DO.

I THINK EVEN THE POINT OF THE CITY, WE HAVE ONLY RECENTLY STARTED USING THAT FOCUS.

WE HAVEN'T ALWAYS PLACED OUR MOST VULNERABLE FIRST AND SO THAT'S A CHANGE THAT WE'RE -- THAT'S SOMETHING WE'RE STILL STRUGGLING WITH. I WOULD ALSO LIKE TO SEE A TIERED RATE STRUCTURE THAT TILTS IN THE DIRECTION OF THOSE MOST MARGINALIZED.

THOSE WHO USE LESS ENERGY, LIKELY THE SAME CUSTOMERS MOST IMPACTED BY EXTREME WEATHER.

I BELIEVE THAT THEY SHOULD PAY LOWER RATES AND THEY SHOULD BE SIGNIFICANTLY LESS THAN THE LARGER INDUSTRIAL USERS. AND I WANT TO BE ABLE TO SAY THAT WE MADE EVERY EFFORT TO MINIMIZE THE RATE INCREASE BECAUSE WE KNOW THE IMPACT IT WILL HAVE ON FAMILIES AND SMALL BUSINESSES THAT ARE STRUGGLING. AND I DON'T THINK WE'RE THERE.

>> MCKEE-RODRIGUEZ: I ALSO HERE YOU MAYOR ON FINANCIAL STABILITY IN AUTHORIZING THE 2027 INCREASE. I'M NOT A NO VOTE NO MATTER WHAT, AND I UNDERSTAND HOW SOME WILL FIND THE REASONS THEY NEED TO SUPPORT THIS RATE HIKE, AT THE END OF THE DAY YOU MAY NOT NEED MY VOTE. BUT I HOPE THAT YOU WANT IT.

I WANT TO BE ON THE SAME PAGE AS THE CONSTITUENTS THAT SAID THEY'RE WILLING

[02:20:04]

THEY HAVE TIME -- OR CPS DOES AND THEY HAVE TIME TO EVALUATE IDEALLY BY MIDYEAR AND YOU COME BACK TO US WITH A NEW RECOMMENDATION FOR THE NEXT SEVERAL YEARS INCLUDING A PLAN TO GET A TIERED RATE STRUCTURE.

AND IF YOU WANT MY VOTE, THAT'S THE PATH I SEE. THANK YOU, MAYOR.

>> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER MCKEE-RODRIGUEZ.

ALL RIGHT. WE'RE GOING TO GO -- OH, COUNCILMEMBER VIAGRAN.

>> VIAGRAN: THANK YOU, MAYOR. THANK YOU FOR THE PRESENTATION. THIS HAS BEEN A LONG TIME IN THE MAKING.

I THINK AS YOU KNOW MY PRIORITY ARE THE RESIDENTS OF DISTRICT THREE AND I WANT TO THANK YVONNE AND THE TEAM FOR PROVIDING THE SAN ANTONIO CITY COUNCIL DISTRICT THREE INFO SHEET. CORY, WHAT I'M HEARING, AND CORRECT ME IF I'M WRONG, IS THE REASON WE CAN'T DO A TIER RATE IS BECAUSE WE DON'T HAVE THE TECHNOLOGY TO DO THE TIER RATE?

>> THAT'S CORRECT. >> VIAGRAN: OKAY. SO THIS IS WHERE I'M -- WE NEED TO DO SOMETHING BECAUSE CPS ACTED LIKE MANY HOMEOWNERS IN SAN ANTONIO DO AND DIDN'T INVEST IN PARTS OF THEIR BUSINESS LIKE SHAY SHOULD HAVE, AND WAITED UNTIL, YOU KNOW, TECHNOLOGY -- AND YOU CAN -- Y'ALL DID

NOT INVEST IN QUALITY TECHNOLOGY, RUDY. >> MA'AM, WHEN YOU GO EIGHT YEARS WITHOUT A RATE INCREASE YOU PUSH OFF THOSE TYPE OF INVESTMENTS FOR YEARS. SO IT WAS A -- IT WAS A LACK OF PLANNING ON THE REVENUE SIDE THAT DROVE US HAVING TO DELAY THIS INVESTMENT, BUT WE'RE --

SINCE I'VE COME ON, WE ARE FULL STEAM AHEAD. >> VIAGRAN: AND I UNDERSTAND. BECAUSE YOU ALMOST JUST GOT HERE, RUDY, BUT, YOU KNOW, I THINK IT'S BEEN SINCE WINTER STORM, BUT I KNOW.

WE HAVEN'T HAD A RATE INCREASE, SO WE HAVEN'T INVESTED IN TECHNOLOGY AND NOW WE'RE SEEING THAT WE'RE MIN BEHIND SO WE CANNOT OFFER WHAT THE PRIVATE INDUSTRY DOES, LIKE FREE WEEKENDS OR NIGHT FREES BECAUSE WE'VE ALL SEEN THOSE ADS. HOWEVER, WE LIVE IN THE CITY OF SAN ANTONIO WITH A 20% POVERTY RATE INCREASE. AND WHEN I LOOK AT THE STATS AND I HAVE 51,000 -- ABOUT 51,000 RESIDENTIAL CUSTOMERS, 6,000 COMMERCIAL CUSTOMERS, BUT ONLY 8,000 CUSTOMERS ENROLLED, AND I KNOW THAT I SIT AT THE 20% AND 21% POVERTY RATE, THERE'S AT LEAST TWO TO 3,000 CUSTOMERS OUT THERE NOT IN AN AFFORDABILITY PROGRAM.

AND I NEED TO FIGURE OUT WHY AS WE MOVE FORWARD. THE OTHER THING IS, I AM NOT GOING TO ARGUE -- DISCONNECTIONS ARE GOING TO HAPPEN.

THERE ARE JUST PEOPLE THAT WILL LET THIS BILL GO AND WHAT WE NEED TO DO IS PREVENT THOSE WHO DO PAY BILLS FROM JOINING THAT GROUP.

AND SO I'M VERY IMPRESSED WITH PETE'S, YOU KNOW, STRATEGIC PLAN AS WE LOOK AT OUR PROGRAMMING. BUT I THINK WE NEED TO LOOK AT -- BECAUSE WE'VE HEARD THE PHRASE -- AND IT'S TRUE, WE DO WANT TO PROTECT OUR MOST VULNERABLE. I DON'T DOUBT THAT CPS PROTECTS THE MOST VULNERABLE. WHAT MY CONCERN IS THOSE ON THE BUBBLE, THOSE ON THE EDGE, THOSE AT 80% THAT ARE GETTING ONE BILL AFTER ANOTHER AND HOW DO WE DO THIS? I AM INTERESTED IN THE CONVERSATION BECAUSE I'VE BEEN GETTING A LOT OF LETTERS IN TERMS OF A RESIDENTIAL CONSUMER ADVOCATE. I THINK THAT IS A CONVERSATION WE NEED TO HAVE. THE OTHER IS I AM -- I AM GETTING LETTERS CURRENTLY IN OPPOSITION TO A RATE INCREASE PROPOSAL, BUT I KNOW THAT MY TEAM IS GETTING OUT INTO THE NEIGHBORHOODS TO EXPLAIN TO THEM, IT'S BEEN EIGHT YEARS, SO WE DON'T HAVE THE TECHNOLOGY. WE DON'T HAVE APP TECHNOLOGY. WE'RE LIKE, WOW, LET ME JUST SWITCH TO WEEKENDS ONLY. WE DO NOT HAVE THE SECURITY THAT WE WOULD LIKE TO SEE, THAT WE NEED. AND WE UNDERSTAND THAT IF WE ASK THE VOTERS THEIR PRIORITY IS NOT TO HAVE ANOTHER WINTER STORM.

WE -- WE KNOW THAT THIS IS ALL THE CASE. I DON'T KNOW THAT WE CAN GET THIS EFFECTIVELY DONE BEFORE THE END OF THE YEAR.

I THINK WE NEED TO REALLY THINK ABOUT IF WE'RE GOING TO TALK TIERED

[02:25:03]

THE LIGHTS ARE OFF, I KNOW THEY'RE SAVING ENERGIES.

I SEE OTHER BUILDINGS WHERE I'M LIKE, WHY IS THAT LIGHT STILL ON? WHY -- WHY CAN'T THEY ALL HAVE THE AUTOMATIC LIGHTS WHERE THEY SHUT DOWN AS SOON AS THEY LEAVE THE ROOM? THIS IS -- THIS IS WHAT THE FRUSTRATING PART IS WHERE I THINK WE NEED TO EXPLORE.

IF YOU WERE GOING TO BE A COMMERCIAL USER, IF YOU ARE GOING TO BE A RESIDENTIAL USER AND NOT WORK ON CONSERVING, THEN YOU SHOULD PAY MORE.

AND IF YOU'RE HABITUAL AT THAT, YOU KNOW, IF YOU'RE ONE PERSON LIVING IN AN APARTMENT AND YOU KEEP YOUR ENERGY ON ALL THE TIME, YOU SHOULD PAY MORE. SO I THINK THE TIERED PROGRAM, I THINK LOOKING AT OUR POVERTY LEVELS AS WE MOVE FORWARD, LOOKING AT EXPANDING THESE PROGRAMS ARE THINGS THAT WE NEED TO DO. AND I DON'T KNOW HOW WE'RE -- IF WE DON'T HAVE A THIRD-PARTY PERSON -- BECAUSE I DO APPRECIATE THE WORKING GROUP YOU BROUGHT TOGETHER. I DO TRULY APPRECIATE THAT WORKING GROUP AND WHAT THEY'VE DONE IN THEIR IDEAS, BUT YET WHEN I TALK DISTRICT THREE AND I TALK ABOUT 40% OF MY HOMES BEING BUILT BEFORE 1960, WHICH MEANS PIER AND BEAM, FAMILY HOMES WHERE THEY CAN'T GET INTO THE PROGRAMS TO WEATHERIZE BECAUSE THE DEEDS AREN'T FULLY FLESHED OUT, WE'RE GOING TO HAVE ISSUES IN THE SOUTHERN SECTOR.

AND I THINK WE -- WE NEED TO TAKE THAT INTO CONSIDERATION AS WE MOVE FORWARD. SO I THANK YOU FOR THIS PRESENTATION.

I'M LOOKING -- I LOOK FORWARD WITH WORKING TO GETTING THE INFORMATION OUT. OUR DISTRICT OFFICE -- I KNOW I CAN GET MY 21% ON THE AFFORDABLE CONNECTIVITY PROGRAM BECAUSE CPS AND SAWS HOLD MONTHLY MEETINGS AT OUR OFFICE FOR WALK-INS, SO THEY ARE WORKING WITH THE SENIORS. AND WE'LL WALK INTO THE SENIOR CENTERS, BUT THIS IS JUST -- THAT'S ME AND MY DISTRICT. AND I JUST WANT TO MAKE SURE CITYWIDE WE HAVE THEM ON THEIR -- THE PROGRAM THAT THEY NEED AS WE CONTINUE TO HAVE THIS CONVERSATION ABOUT WE CANNOT GO EIGHT YEARS WITHOUT A RATE INCREASE, THAT'S JUST NOT -- BUT THAT'S SAN ANTONIO.

THAT'S WHAT WE DO. WE PUSH THINGS OFF. WE CANNOT PUSH THINGS OFF ANYMORE, BUT WE NEED TO HAVE A CONVERSATION THAT TAKES INTO CONSIDERATION OUR RESIDENTS, OUR RESIDENTIAL PAYERS AND THE FACT THAT WE HAVE 20% POVERTY LEVEL HERE IN SAN ANTONIO. THANK YOU.

>> MAYOR, CAN I JUST -- I WANT TO KIND OF PUNCTUATE SOMETHING.

>> MAYOR NIRENBERG: THANK YOU, COUNCILWOMAN VIAGRAN.

GO AHEAD. >> TIERED RATES ARE NOT HAPPENING UNTIL WE UPGRADE OUR SYSTEM. YOU CAN PUSH US OFF FOR A YEAR, AND TIERED RATES AREN'T GOING TO BECOME ANY MORE A POSSIBILITY UNTIL WE GET OUR SYSTEMS UPGRADED. YOU KNOW, AND THERE'S A SEPARATE POLICY ISSUE TO BE HAD ON TIERED RATES THAT WE'LL SAVE FOR ANOTHER TIME, BUT TIERED RATES ALSO HURT THOSE WHO ARE LEAST EFFICIENT IN THEIR USE OF ENERGY, SO YOU'RE NOT JUST GOING TO CATCH THE PEOPLE WHO CAN PAY WHO ARE BEING INEFFICIENT AND CHOOSE TO KEEP THEIR A/CS AT 69° IN THE SUMMER.

YOU'RE GOING TO CATCH A LOT OF POOR FOLKS WHOSE HOUSE LEAK LIKE SIEVES, THAT FUNDAMENTALLY IS WHY I'VE BEEN RESISTANT TO TIERED RATES, BECAUSE YOU'RE GOING TO CATCH -- THERE'S GOING TO BE SOME UNINTENDED CONSEQUENCES FOR POOR FOLKS THAT ARE GOING TO GET CAUGHT UP IN THOSE HIGHER TIERS, TOO.

I THINK WE NEED TO HAVE A CONVERSATION ABOUT THAT SEPARATELY, BUT TIERED RATES ARE NOT A POSSIBILITY UNTIL I UPGRADE MY SYSTEM.

I JUST WANTED TO MAKE THAT REALLY CLEAR. >> MAYOR NIRENBERG: THANK YOU, RUDY. AND LET ME JUST INTERJECT SOMETHING, BECAUSE IT'S COME UP A FEW TIMES IN CONVERSATION ABOUT MAKING SURE THAT WE'RE ADVOCATING FOR OUR RESIDENTS. THAT'S REALLY IMPORTANT.

THAT'S WHAT WE'RE DOING HERE. THIS IS NOT THE BOARD OF DIRECTORS OF CPS ENERGY BY DESIGN. WE'RE HERE TO TAKE THE WHOLE UNIVERSE OF ISSUES IN, ADVOCATE FOR OUR RESIDENTS WHO PUT US IN THIS POSITION, AND ULTIMATELY GIVE THE AUTHORITY, OR NOT, FOR THE RATE INCREASE. NOW, IF ANYBODY BELIEVES THAT ULTIMATELY AT THE END OF THE DAY GIVEN OUR POSITION TO ADVOCATE FOR RESIDENTS THAT OUR RESIDENTS DESERVE US TO SAY WE DON'T NEED TO MAKE THOSE INVESTMENTS, YOU ARE -- YOU HAVE THE AUTHORITY TO SAY THAT. YOU HAVE THE AUTHORITY TO VOTE THE WAY YOU WANT TO VOTE. BUT I WOULD SUGGEST THAT DESPITE THE CHALLENGING POSITION THAT WE WILL ALWAYS BE IN WITH REGARD

[02:30:04]

IF WE MAKE A DECISION THAT IMPAIRS CPS ENERGY UNDER OUR PURVIEW TO DO THAT, WE ARE NOT LIVING UP TO OUR OBLIGATION AS CONSUMER ADVOCATES NO MATTER HOW DIFFICULT OR POPULAR OR UNPOPULAR THE DECISION MAY BE.

THAT'S THE LENS AT WHICH I'M LOOKING AT THIS WITH MY VOTE FROM THIS DESK.

SO WE'LL CONTINUE ON NOW WITH -- WE'RE GOING TO GO INTO A SECOND ROUND, I THINK I NEED TO... COUNCILMEMBER ALDARETE GAVITO.

>> GAVITO: THANK YOU, MAYOR. I JUST HAD THREE ADDITIONAL QUESTIONS FROM MY FIRST ROUND. TO PIGGYBACK OFF THE EARLIER QUESTIONS REGARDING CAPITAL IMPROVEMENT, I DID ACTUALLY WANT TO ECHO THE MAYOR'S COMMENTS ABOUT FUTURE PLANNING.

I KNOW THAT THESE CONVERSATIONS ABOUT RATE INCREASES ARE UNCOMFORTABLE AND THEY ARE DIFFICULT. THEY PIT PUT ALL OF US IN VERY DIFFICULT POSITIONS, BUT I DO THINK THAT THERE'S VALUE IN ALLOWING CPS TO PLAN ACCORDINGLY FOR NOT ANY ONE OF OUR SINGLE DISTRICT'S FUTURE, BUT FOR THE CITY'S FUTURE AS A WHOLE.

AND ALSO, TOO, KIND OF TO THE MAYOR'S EARLIER POINTS, HAVING THE LIGHTS ON IS NOT NICE TO HAVE. IT'S A NEED. IS IT TRUE THAT CPS RATES

ARE THE LOWEST OR ONE OF THE LOWEST IN TEXAS? >> YES, COUNCILWOMAN.

THAT IS TRUE. WE CURRENTLY ARE THE LOWEST -- SECOND LOWEST IS AUSTIN. AND OVER THE LAST DECADE PLUS WE'VE TYPICALLY BEEN

IN THE ONE OR TWO. >> GAVITO: SOSA IS THE LOWEST.

>> CURRENTLY WE ARE THE LOWEST. .

>> GAVITO: AND CAN YOU DESCRIBE THE PROCESS CUSTOMERS HAVE TO GO THROUGH TO GET ELECTRICITY IN HOUSTON WHEN THEY DON'T HAVE A

MUNICIPAL UTILITY. >> YEAH. WHEN YOU'RE HERE IN SAN ANTONIO, WE'RE GIVING YOU TRANSPARENT PRICING, HERE IT IS.

YOU GO TO A DIFFERENT MARKET, IT'S LIKE SHOPPING FOR CABLE.

YOU CAN HAVE AN INTRODUCTORY RATE AND IT CHANGES NINE MONTHS LATER AND THERE'S DIFFERENT VARIETIES. THERE'S NO KIND OF BAIT AND SWITCH WITH YOUR BILL HERE IN CPS. IT'S DONE THROUGH THIS

PROCESS HERE IN FRONT OF COUNCIL. >> GAVITO: I THINK CPS RATES BEING THE LOWEST IN TEXAS, AND ALSO, TOO, THAT WE'RE NOT HAVING OUR RESIDENTS GO THROUGH SHOPPING FOR CABLE TO SHOP FOR ELECTRICITY, THOSE ARE TWO HUGE DATA POINTS THAT WE -- YOU KNOW, I'M HOPING THAT YOU ALL ARE SELLING TO OUR RESIDENTS, BECAUSE, YOU KNOW, THEY'RE NOT HAVING TO WORRY ABOUT, OH, I'M PAYING THIS RATE FOR 12 MONTHS AND THEN IT'S GOING TO JUMP UP ON ME. WE ALL KNOW HOW -- WHAT A MESS THAT IS.

SO I THINK THAT THOSE ARE GOOD TALKING POINTS FOR MY COLLEAGUES AND I AS

WELL. >> THANK YOU, COUNCILWOMAN.

>> MAYOR PRO TEM: THANK YOU, MAYOR. I'M NEXT IN THE CUE.

I WANTED TO CIRCLE BACK ON A COUPLE OF THINGS. WITH THE RATE INCREASE, IT'S GOING TO PROVIDE ROUGHLY 85 MILLION, RIGHT? THAT'S THE GOAL. I'M REFLECTING ON THE DEBATE -- THE REBATE DEBATE, RIGHT, AND THAT WAS ROUGHLY 28 TO $38 MILLION IN REBATE

THAT WAS BEING DEBATED, CORRECT? >> WALSH: YOU'RE TALKING ABOUT LAST YEAR, COUNCILWOMAN? IT WAS 42.

>> CASTILLO: AND THEN WITH THE EXCESS REVENUE, WAS 140 MILLION FOR

2024? >> DIFFERENT REVENUES. SO THAT REVENUE WAS THE CITY REVENUE -- THE REVENUE I TALKED ABOUT WAS CPS ENERGY WHOLESALE

REVENUE, YEAH. >> CASTILLO: AND THEN THE PREVIOUS YEAR WAS HOW

MUCH FROM THE SIMILAR MECHANISM? >> WHOLESALE SALES FROM LAST YEAR WERE ACTUALLY DOWN RELATIVE TO OUR BUDGET.

THAT DIDN'T EXIST. THAT WOULD BE MINUS 35 MILLION FOR LAST YEAR

AS OPPOSED TO POSITIVE 130. >> CASTILLO: OKAY.

>> SO THAT'S THE COMPARISON. >> CASTILLO: SO

115 MILLION? >> NO, IT WOULD HAVE BEEN NEGATIVE.

>> CASTILLO: NEGATIVE. >> SO WE LOST MONEY IN THE WHOLESALE MARKET, IF YOU WANT TO CALL IT THAT, RELATIVE TO OUR FORECAST.

IT WAS ACTUALLY A COMPLETELY DIFFERENT SCENARIO THAT OCCURRED

THIS YEAR. >> CASTILLO: I GUESS WHAT I'M ASKING OR WHAT I'M TRYING TO GET ACROSS IS THAT THERE HAS BEEN A DEBATE AROUND THE 42 MILLION AND WHAT TO DO WITH THAT, RIGHT? ULTIMATELY IT WENT TO REBATES WHERE I KNOW WE HAVEN'T BEEN PRESENTED ON HOW MANY FOLKS ACTUALLY

[02:35:03]

THAT WE'RE NOW DISCUSSING? >> SO FEW THINGS.

I THINK THERE'S DIFFERENT BUCKETS OF MONEY AND I WANT TO MAKE SURE I'M CLEAR ON IT. THE 50 MILLION FROM LAST YEAR WAS THE CITY'S MONEY. AND THAT DECISION MAKING ASSOCIATED WITH THAT WASN'T OURS. AND I WOULD DEFER TO ERIK AND BEN ON THAT.

>> CASTILLO: THAT'S CLEAR. >> AND THAT WAS DRIVEN BY FUEL COST LAST YEAR THAT WERE LIKE PASSTHROUGH COSTS. SO IF I HAD TO

PAY X AMOUNT, CITY PAYMENT ON TOP OF IT. >> CASTILLO: AND I GUESS MY POINT IS, NOT ONLY DID THE CITY OF SAN ANTONIO RECEIVE THAT --

AUDIO] -- ALSO RECEIVED -- >> NOT LAST YEAR.

>> CASTILLO: NO? >> NO, FUEL COSTS DO NOT WORK THAT WAY.

IT'S A GOOD QUESTION BECAUSE IT'S A CLARIFYING POINT.

LAST YEAR OUR CORE BUSINESS WAS BELOW FORECAST ON THAT WHOLESALE. FUEL COSTS ARE DIRECT PASSTHROUGH, IT'S A SEPARATE PART OF OUR BUDGET. SO IF WE PAY A BILLION DOLLARS, WE PAY A BILLION DOLLARS AND COLLECT IT, THEN WE TACK ON CITY PAYMENT TO THAT. SO IT DIDN'T DROP TO THE BOTTOM LINE.

SO HOPEFULLY THAT HELPS, BECAUSE WE DID NOT SEE ANY EXTRA ADDITIONAL FUNDS LAST YEAR. WE STRUGGLED TO HIT OUR FINANCIAL TARGETS, WE MISSED THREE OUT OF TWO OF THEM. THEY WERE STILL GOOD FOR RATING AGENCIES BUT THEY WERE DOWN. HOPEFULLY THAT HELPS.

>> CASTILLO: THANK YOU FOR THAT CLARIFICATION. I WAS LISTENING TO THE DISCUSSION FOLLOWING MY COMMENTS. MY OFFICE RECEIVED AN E-MAIL FROM A SENIOR, MY CPS BILLS ARE ALREADY HIGH.

I ONLY TURNEDDED ON THE WINDOW UNITS WHEN ABSOLUTELY NECESSARY AND THEY'RE STILL HIGH. WITH UPCOMING PREDICTED EXTREME WINTER, I ASK THAT YOU PLEASE REPRESENT US AND VOTE NO AGAINST THE PROPOSED CPS RATE HIKE. WITH THAT IN MIND, AND I KNOW THERE'S CONVERSATION AROUND, YOU KNOW -- I WAS WAITING TO HEAR THE CONVERSATION ABOUT, OH, MAKING TOUGH DECISIONS, RIGHT, AND WE'RE GOING TO HAVE TO SHOW OUR CONSTITUENTS THAT WE KNOW BETTER, BUT POINT BEING, YOU KNOW, MY CONSTITUENTS ARE ALREADY GETTING BY IN THESE EXTREME WEATHER CONDITIONS BECAUSE THEY CAN'T AFFORD TO TURN ON THE GAS OR THE HEAT. THEY CAN'T AFFORD TO TURN ON THE WINDOW UNIT. AND DURING LAST WEEK'S CONVERSATION, I SHARED ABOUT THE CONSTITUENT WHO HAS A HOME, BUT THERE WAS NOWHERE FOR US TO SEND HER BECAUSE THEY COULDN'T SLEEP INSIDE THE HOUSE BECAUSE IT WAS TOO HOT.

WE HAD TO OFFER HAVEN FOR HOPE. MY CONCERN IS WE'RE ASKING SO MUCH OF SAN ANTONIO RESIDENTS AND I KNOW THE CITY OF SAN ANTONIO, WE'RE DOING THE BEST WE CAN WITH INCREASING THE HOMESTEAD EXEMPTION FOR SENIORS AND FOR DISABLED INDIVIDUALS, BUT ULTIMATELY, THERE'S SO MANY COMPOUNDING THINGS ON OUR RESIDENTS, AND THIS INCREASE IS ONLY GOING TO ADD THAT BURDEN AND I'M CONCERNED THAT MY CONSTITUENTS WHO ARE ALREADY STRUGGLING WITH THEIR BILLS ARE GOING TO KEEP THE HEAT OFF OR KEEP THE A/C OFF BECAUSE THEY CAN'T GET BY. AND THEY'RE STRUGGLING AND WE ARE CONNECTING THEM TO SERVICES TO HELP ALLEVIATE SOME OF THAT BURDEN, BUT ULTIMATELY, THAT'S ONE-TIME ASSISTANCE, RIGHT? AND IT'S CONTINUAL, RIGHT? IT'S EVERY MONTH THAT THAT CPS BILL HITS. AND, YOU KNOW, THIS IS JUST SOMETHING THAT I JUST DON'T FEEL COMFORTABLE COMFORTING TO PUT THAT BURDEN ON MY CONSTITUENTS WHO, AGAIN, ARE JUST KEEPING IT OFF BECAUSE THEY CAN'T AFFORD TO KEEP IT ON NOW, AND THEN WITH AN ADDITIONAL RATE INCREASE, THEY'RE GOING TO LIKELY USE THEIR ENERGY LESS. BUT THANK YOU, CORY.

THANK YOU. >> MAYOR PRO TEM: AND NEXTS WE HAVE COMPANION

PELAEZ? >> PELAEZ: THANKS. RUDY, I WANT TO MAKE SURE THAT, YOU KNOW, AS YOU'RE TAKING OUR TEMPERATURE -- MORE OPEN THAN I WAS LAST WEEK TO THE TWO-STEP APPROACH.

AND I'M -- I DO HAVE A LOT MORE QUESTIONS THAT I'M GOING TO HAVE TO ASK YOU OFFLINE JUST BECAUSE TIME DOESN'T PERMIT. BUT I APPRECIATE YOU STANDING UP THERE AND TAKING THE TIME TO ANSWER OUR QUESTIONS.

>> IT'S MY JOB, SIR. >> PELAEZ: I DO WANT TO MAKE SURE THAT I UNDERSTAND A LITTLE BIT ABOUT WHAT YOU WON'T BE ABLE TO DO IF A RATE INCREASE IS NOT APPROVED BY THIS COUNCIL. I -- YOU THREW A LOT AT US AND I'M BEING ABLE TO REALLY KIND OF COMMUNICATE THAT.

RUDY WILL NOT BE ABLE DO THE FOLLOWING IF WE DON'T TAKE THIS STEP.

>> COUNCILMAN, I DOUBT VERY SERIOUSLY THE EXPECTATION CHANGES OF US, WHETHER WE GET WHAT WE NEED OR WE DON'T GET WHAT WE NEED.

IT BECOMES HARDER TO PLAN FOR THE FUTURE AND IT BECOMES MORE DIFFICULT TO PROVIDE THE LEVEL OF RELIABILITY THAT OUR CUSTOMERS EXPECT OF US

[02:40:05]

WHAT THEY'RE GOING TO SAY IS KEEP MY LIGHTS ON. THAT'S WHAT I EXPECT OUT OF YOU, ALL THE TIME. AND YOU KNOW WHAT? THAT'S WHAT I WANT TO GIVE THEM, YOU KNOW, WITHIN REASON. SO, YEAH, WE'VE GOT TO -- WE WOULD HAVE TO REALLY START TO COME BACK TO THE -- WE'VE GOT A GREAT PRIORITIZATION PROCESS AT CPS ENERGY. LET ME JUST START THERE.

HOW WE DECIDE WHAT GOES FIRST, RIGHT NOW WE'RE DOING IT BETTER THAN WE'VE EVER DONE IT BECAUSE WE'VE GOT A LEADERSHIP TEAM THAT IS ALIGNED AND WORKING EVERY -- HARD EVERY DAY TO GIVE THE COMMUNITY WHAT THEY'RE ASKING FOR. BUT THERE'S GOING TO BE SOME THINGS THAT WE'RE NOT GOING TO BE ABLE TO DO. THERE'S GOING TO BE SOME GIVES THAT, YOU KNOW, I MEAN, YOU KNOW, THE LEVEL OF CUSTOMER ENGAGEMENT THAT WE'RE DOING TODAY IS A DIRECT RESULT OF THE THINGS YOU HAVE TOLD US ARE IMPORTANT TO YOU. WE MAY HAVE TO BACK OFF OF SOME OF THAT.

WE DO MORE COMMUNITY ENGAGEMENT AND CUSTOMER ENGAGEMENT THAN ANY OTHER UTILITY COMPANY IN THE COUNTRY. MY COLLEAGUES, WHEN I GET INTO A BOARD ROOM WITH THEM ACROSS THE COUNTRY, YOU KNOW, CHUCKLE AT THE 1800 COMMUNITY ENGAGEMENT EVENTS THAT WE DID LAST YEAR.

YOU KNOW, WE'LL HAVE TO BACK OFF OF SOME OF THAT.

THE CREW RESOURCES THAT YOU GUYS ARE USED TO GETTING FROM US, IT MAY NOT BE AS FREQUENT AS IT CAN. SO THE EXPERIENCE WILL CHANGE BASED ON THE LEVEL OF SERVICE WE CAN PROVIDE AND WHAT WE CAN AFFORD, BUT I THINK WE'RE DOING A REALLY GOOD JOB OF MANAGING OUR COSTS AND GIVING THE COMMUNITY EVERYTHING THEY TOLD US IS IMPORTANT TO THEM, COUNCILMAN. SO, YES, THE EXPERIENCE WILL CHANGE.

YOU KNOW, WE WILL HAVE TO -- WE WILL HAVE TO REALLY PRIORITIZE WHAT IS MOST IMPORTANT AND THAT MAY OR MAY NOT BE THE CUSTOMER EXPERIENCE THAT

OUR CUSTOMERS ARE USED TO. >> PELAEZ: THANKS.

THE -- I DO WANT TO -- ONE PERSON I WAS THINKING ABOUT DURING THE CONVERSATION ABOUT WHO MAKES UP THE COMMUNITY INPUT PART.

JOHN KELLY, DISTRICT 8, HOMEOWNERS ASSOCIATION PRESIDENT, JUST A SWEET MAN, JUST A GENUINELY NICE MAN, I DON'T KNOW IF HE'S WATCHING OR NOT, BUT WE APPOINTED HIM NOT BECAUSE HE HAD ANY EXPERTISE, YOU KNOW, IN ENERGY OR RATES OR ANYTHING LIKE THAT, BUT HIS -- HIS EXPERTISE IS JUST WATCHING OUT FOR HIS NEIGHBORS. FORMER TXDOT ENGINEER AND, YOU KNOW, I WAS READING HIS B BIO THAT WE WERE DISPLAYING UP THERE ON THE SCREEN. JOHN WAS THE ONE WHO HEADED UP -- I DIDN'T KNOW THIS, THE LARGEST RELOCATION OF A POSTCIVIL WAR AFRICAN-AMERICAN CEMETERY PROJECT IN THE NATION APPARENTLY.

THAT'S A BIG DEAL. AND, YOU KNOW, SO I STARTED READING THE REST OF THE BIOS, AND, YOU KNOW, OUT OF 14 MEMBERS, THE PEOPLE THAT WE'VE ALL APPOINTED, ALL OF US APPOINTED, I THINK ARE PRETTY REPRESENTATIVE OF SAN ANTONIO. WE'VE GOT BRENDA PACHECO, SHE'S A NATIVE AMERICAN ADVOCATE AND A REPRESENTATIVE OF AMERICAN AMERICAN NATIVE BOARD. PETER ZERO NO FRAY HE'S A PASTOR, AND COUNCILWOMAN ROCHA GARCIA ACCOUNTING REP , A LOW INCOME RATEPAYER ADVOCATE AND SHE'S EMPLOYED BY CLIMATE JUSTICE ALLIANCE, WE'VE GOT MARY DENNIS, ALL OF YOU KNOW HER FROM LIVE OAK. SHE'S THE MAYOR.

STEADFAST ADVOCATE FOR HER COMMUNITY. ERIC COOPER FROM THE FOOD BANK, CANTU AND BELMARES. I MEAN, THOSE ARE US.

I THINK THOSE ARE PRETTY GOOD REPRESENTATIVES OF ALL OF OUR DISTRICTS.

AND CYME HA SO I'M HAPPY YOU GOT TO WORK WITH THEM.

THANKS, RUDY. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER

PELAEZ. COUNCILMEMBER COURAGE? >> COURAGE: THANK YOU, MAYOR. I'M GOING TO ASK FOR SOME INFORMATION TO BE CLARIFIED FOR ME. SLIDE 15, IT TALKS ABOUT FINANCIAL HEALTH AND IT TALKS ABOUT DEBT SERVICE, DEBT CAPITALIZATION, ET CETERA.

I'D LIKE TO HAVE JUST AN EXPLANATION, NOT NOW, BUT MAYBE IN WRITING, SO I WOULD UNDERSTAND HOW THOSE ARE IMPACTFUL ON THE RATE SITUATION.

>> YEAH. WE CAN DO THAT. >> COURAGE: ANOTHER ISSUE, SLIDE 16, I WANT US TO GO AHEAD AND BE ABLE TO SHOW NOT JUST WHAT THE CHANGE IS PER MONTH, BUT CAN YOU TELL ME WHAT IS THE AVERAGE RESIDENTIAL CUSTOMER BILL FOR GAS AND ELECTRIC SO THAT WHEN I SEE $4.45 AS

[02:45:05]

>> YES, SIR, WE WILL. >> COURAGE: ONE THING I DON'T THINK WE TALKED MUCH ABOUT WAS THE REGULATORY ASSET, THE PENSION ASSET.

COULD SOMEBODY EXPLAIN THAT TO ME? >> SURE.

ABSOLUTELY. AND I THINK BEN DID A GOOD JOB AT THE VERY BEGINNING. IT REALLY IS AN ACCOUNTING ADJUSTMENT.

IT RESULTS FROM HOW ACCOUNTANTS VIEW AND MEASURE MARKET VOLATILITY OF -- GETTING TOO COMPLICATED BUT THIS IS A WAY TO RECONCILE THAT IN A NONCASH MANNER THAT WAS MENTIONED THAT HELPS SMOOTH OUT THE BUDGETING FORECAST PROCESS. SO IT'S VERY SIMPLE, IT'S NIGHT AND DAY DIFFERENT FROM THE CONVERSATION WE HAD TWO YEARS AGO, BUT IT DOES MAKE SENSE TO FIT INTO THIS CONVERSATION BECAUSE IT DID COME UP THROUGH THE PROCESS WITH

THE CITY IN TERMS OF A RECOMMENDATION. >> COURAGE: OKAY.

I'LL GO PICK ON BEN AND HAVE HIM EXPLAIN IT TO ME.

>> HE'S NUMBER O ONE CFO KO. >> COURAGE: I HEARD ONE OF OUR FELLOW COUNCILMEMBERS TALK ABOUT ADVOCACY, AND I'VE RECEIVED A LOT OF NOTES FROM PEOPLE ASKING THAT WE APPOINT AN ADVOCATE.

ISN'T CPS SETTING UP A NEW COMMITTEE THAT'S GOING TO BE LOOKING AT RATES GOING FORWARD SOMEHOW, OR ARE THEY GOING TO BE RECALCULATING WHAT THE CAC DOES TO ADDRESS SOME OF THESE THINGS FROM THE PERSPECTIVE OF THE COMMUNITY LOOKING AT RATES OR GROWTH OR

SOMETHING? >> YES, SIR. WE'VE BEEN CHARGED BY OUR BOARD TO RECAST OUR COMMUNITY INPUT PROCESS TO BE BOTH, YOU KNOW -- OUR CAC HAS BEEN MEETING ON A MONTHLY BASIS. WE'LL PROBABLY MOVE TO QUARTERLY REGULAR MEETINGS. SO WHEN THERE'S A RATE CONVERSATION TO BE HAD, WE'LL SEND IT TO THAT COMMITTEE THE WAY WE HAVE IN THE PAST, AND WHATEVER ELSE THE BOIRD BOARD WANTS TO SEND TO THEM. I'D LIKE TO MAKE A COMMENT ABILITY SOME OF THE CONVERSATION ABOUT RATE ADVOCATES. NOBODY DOES MORE FOR OUR CUSTOMERS THAN CPS ENERGY. LET ME START THERE.

$85MILLION OF BILL ASSISTANCE, YOU KNOW, THE KEEPING OUR RATES AMONGST THE LOWEST IN THE STATE OF TEXAS. WE'VE GOT A CUSTOMER BOARD, YOU KNOW, WE'RE NOT AUSTIN ENERGY, WHICH IS KIND OF WHERE THIS RATE ADVOCATE STUFF STARTED. THEY'RE A CITY DEPARTMENT THAT'S A DIFFERENT, YOU KNOW, CONSTRUCT OVER THERE.

HERE, THE ADVOCATES FOR OUR CUSTOMERS ARE SITTING RIGHT BEHIND THEM AND THEY DEAL WITH THEM EVERY SINGLE DAY. JANIE MY BOARD CHAIR IS IN THE COMMUNITY EVERYWHERE TALKING TO CUSTOMERS AND SHE BRINGS THAT PERSPECTIVE TO THE FRONT AT OUR BOARD. YOU ALL, WE HAVE CONSUMER ADVOCATES THAT ARE TAKING CARE OF OUR CUSTOMERS, THE CITY STAFF.

NOBODY'S GOING TO UNDERSTAND OUR BUDGET BETTER THAN THE WORK THAT BEN AND HIS TEAM DO GOING LINE ITEM BY LINE ITEM BY OUR BUDGET, SO WE'RE GOING TO -- WE'RE GOING TO -- BLESS YOU, COUNCILWOMAN -- WE'RE GOING TO GET OUR CUSTOMER INPUT PROCESS REVISED IN A WAY THAT I THINK THIS COUNCIL IS GOING TO REALLY LIKE, AND THAT WILL MOVE US FORWARD INTO

THE FUTURE AND I THINK IN THE RIGHT WAY. >> COURAGE: OKAY.

THANK YOU. THAT'S ALL, MAYOR. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER COURAGE. COUNCILMEMBER WHYTE?

>> WHYTE: YEAH, I JUST WANT TO BE REAL QUICK AND COMPLETE MY THOUGHT FROM THE FIRST ROUND. RUDY, YOU MENTIONED WE'RE ALL ONE TEAM, RIGHT? AND I BELIEVE THAT. WE'VE TALKED ABOUT HOW CPS IS THE CITY'S ASSET, RIGHT? AND WE KNOW IT IS BECAUSE -- BECAUSE WE INVEST IN IT, WE GET OUR 14% HERE AND IT IS. WE'RE ALL ONE.

WE'VE TALKED ABOUT THE -- THE MAYOR MENTIONED A MINUTE AGO LOOKING AT ALL THE ISSUES, PRIORITIZING WHAT'S MOST IMPORTANT. AND -- AUDIO] -- THEY TALKED ABOUT KEEPING THE LIGHTS ON OR REDOING A SIDEWALK, THEY WOULD ALL SAY KEEPING THE LIGHTS ON IS MORE IMPORTANT.

PRIORITIZING WHAT'S MOST IMPORTANT IS -- IS -- I'M IN FULL AGREEMENT WITH THAT. AND I BELIEVE THAT CPS DOES NEED THIS MONEY.

THE QUESTION, THOUGH, IS HOW SHOULD YOU GET IT? HOW ARE WE GOING TO PAY FOR IT? AND FOR ME, RATE INCREASE IN '21, RATE INCREASE

[02:50:08]

AND COUNCILWOMAN HAVRDA PUT THAT PROPOSAL OUT THERE, AND, YOU KNOW, WE NEVER EVEN TOOK THE TIME TO LOOK AT WHAT IT WOULD LOOK LIKE IF WE DECIDED TO, LET'S SAY, SPEND $40 MILLION LESS. CUT OUT SOME OF THESE PROGRAMS THAT WE HAVE NO OVERSIGHT ON AND NO METRICS TO DETERMINE IF THEY ACTUALLY WORK. YOU KNOW, WE TALK ABOUT PRESERVING MORE STREET ART PIECES FOR $500, INVESTING IN THIS MUSEUM THERE FOR ANOTHER MILLION DOLLARS, RIGHT? ALL THESE THINGS THAT ARE NICE AND ARE WANTS, BUT I THINK WE WOULD ALL AGREE NOT AS IMPORTANT AS KEEPING THE LIGHTS ON.

WHY CAN'T WE TAKE A LOOK AT SPENDING LESS MONEY AND THEN INVESTING THAT IN CPS? TO ME, THAT'S WHAT OUR RATEPAYERS WOULD WANT.

I KNOW THAT'S WHAT MY CONSTITUENTS WOULD WANT RATHER THAN, ONCE AGAIN, BEING ASKED TO PAY MORE AND THEN IN TWO YEARS, ASKED TO PAY MORE AGAIN.

AND WHERE DOES IT STOP? SO MY REQUEST, AGAIN -- AND IT'S NOT OF YOU, RUDY, ALTHOUGH LIKE YOU SAID, YOU'RE SURE THERE'S SOME THINGS YOU GUYS CAN DO BETTER ON YOUR END AND BE MORE EFFICIENT AND GET LEANER, AND I WOULD CERTAINLY ASK THAT OF YOU GUYS, BUT I WOULD ALSO ASK OF MY COUNCIL COLLEAGUES TO LOOK AT WHERE CAN WE -- WHERE CAN WE CUT THE FAT AND GET BETTER AND THEN IF WE ALL AGREE THAT CPS NEEDS THE MONEY, THEN LET'S INVEST

IT THERE. THANKS, MAYOR. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER WHYTE. ANY FURTHER COMMENTS? I'LL JUST CLOSE WITH A FEW THOUGHTS. ALL OF US HAVE LIVED IN SAN ANTONIO FOR A LONG TIME, AND I THINK WE'VE ALL -- WELL, I GUESS WE ALL HAVE DIFFERENT PERSPECTIVES ON THIS, BUT WE'VE ALL HAD A FRONT ROW SEAT IN THIS CITY GETTING LEANER, CITY SERVICES FOR A NUMBER OF YEARS HAD A FRONT ROW SEAT OF CPS ENERGY GETTING LEANER OVER A NUMBER OF YEARS, AND I HAPPEN TO THINK THAT'S ONE OF THE REASONS WHY THERE'S SO MANY SIGNIFICANT INVESTMENTS HAPPENING, PARTICULARLY RELATED TO SERVICE PERSONNEL, FRONT-LINE PERSONNEL, THE FOLKS THAT ACTUALLY GO OUT IN THE STORMS AND KEEP THE LIGHTS ON, SO TO SPEAK. JUST TO COMPLETE THE THOUGHT, AND I DON'T WANT TO GO OUTSIDE OF THE BOUNDS, BEN, BUT IF WE WERE TO FIND $42 MILLION OF REVENUE AND RUDY COULD ADJUST HIS RATE REQUEST, WOULD THAT BE ONE-TIME MONEY OR WOULD WE HAVE TO FIND $42 MILLION EVERY

YEAR AD INFINITUM PERPETUALLY? >> SO, MAYOR, IF YOU WERE TO LOOK AT THAT, YOU WOULD HAVE TO -- FROM MY PERSPECTIVE, IT WOULD HAVE TO BE $42 MILLION RECURRING CUT. IT WOULD HAVE TO BE THERE

EVERY YEAR. >> MAYOR NIRENBERG: OKAY. AND SO WE WOULD ESSENTIALLY CUT IN HALF THE RATE REQUEST. WHAT WOULD THAT DO, JUST BACK OF THE ENVELOPE MATH, WHAT WOULD THAT DO FOR THE FUTURE RATE REQUESTS THAT WE'VE ALREADY SEEN ON THE PAGE?

>> GORZELL: SO THE -- IF THE 42 MILLION WERE A RECURRING CUT -- IN AUDIO] -- INCREASE IF '27, IT WOULD STAY ABOUT THE SAME.

>> MAYOR NIRENBERG: AS IT IS RIGHT NOW? >> GORZELL: RIGHT.

IF YOU DIDN'T -- SORRY. IF YOU DIDN'T DO A RECURRING CUT AND YOU JUST SIMPLY SAID, I WANT TO DO $42 MILLION, I'M GOING TO USE THEIR FISCAL YEAR -- THEIR '25, THEIR FY '26, EACH OF THOSE YEARS AND THEN SAY, OKAY,

[02:55:04]

TOP OF WHAT'S ALREADY THERE IN 2027. >> MAYOR NIRENBERG: OKAY.

>> GORZELL: THIS IS ALWAYS ABOUT RECURRING REVENUES, RECURRING

SUPPORT OVER THE LONG TERM. >> MAYOR NIRENBERG: WE DON'T HAVE TO GO ANY FURTHER THAN THAT. I JUST WANT TO MAKE SURE THAT WE UNDERSTAND. THIS MIGHT BE A CONVERSATION THAT COMES UP ABOUT ALTERNATIVESCH ALTERNATIVES. IF WE DO THAT, THE OTHER REVENUE PROJECTIONS IN TERMS OF RATE FORECAST IN IF '27 AND THE '29 THAT WE'RE TALKING ABOUT DON'T CHANGE UNLESS WE WERE TO FIND ADDITIONAL REVENUE AFTER THAT TO CUT EVERY SINGLE YEAR AD INFINITUM IN PERPETUITY.

NOW, CITY COUNCIL, WE HAVE THE ABILITY TO DO THAT.

EVERY BUDGET YEAR, IF YOU WANT TO FIND A PIECE OF A DEPARTMENT OR A WHOLE DEPARTMENT THAT YOU WOULD LIKE TO CUT PERMANENTLY FROM THE CITY, LET US KNOW, AND THEN WE CAN FIGURE OUT HOW WE GET THAT REVENUE SOMEWHERE ELSE, MAYBE IT STAYS WITH CPS. AND I'LL JUST TELL YOU FROM THE TIME I'VE BEEN HERE, THERE HAVE BEEN CONVERSATIONS THAT TALK ABOUT HOW MUCH MONEY WE WOULD LIKE TO CUT. IT GETS REAL QUIET WHEN PEOPLE START TO TALK ABOUT WHAT THAT MEANS IN TERMS OF SERVICES.

SO YOU'VE GOT TO COME WITH BOTH SIDES OF THE LEDGER IF YOU'RE GOING TO HAVE THAT CONVERSATION. NOW, JUST A FEW OTHER THINGS I'D LIKE TO JUST REALLY GO OVER AND LISTEN -- SINCE WE'RE ALREADY THERE, WE ALREADY KNOW, AGAIN, THAT WE'RE GOING TO BE HAVING THIS CONVERSATION -- IT'S NO SURPRISE, I THINK SOMEBODY SAID IT. THERE'S NO SURPRISE WE'RE HERE. SO, YOU KNOW, SOME FOLKS ARE WAKING UP TO A RUDE, YOU KNOW, TWEET OR SOMETHING THAT HERE THEY ARE AGAIN, ASKING FOR A RATE INCREASE. YOU KNOW, ALL OF US AROUND HERE, WE'RE NOT SURPRISED BECAUSE THAT'S WHAT WE SAID WAS GOING TO HAPPEN A COUPLE YEARS AGO. NOW, I AM OPEN TO HAVING THE CONVERSATION ABOUT AN AUTHORITY GIVEN TO THE BOARD FOR '27 BECAUSE WE KNOW WE'RE ALREADY GOING TO BE HERE NEXT -- IN TWO YEARS. SO LET'S TALK ABOUT WHAT THAT IS AND WHAT THAT MEANS FOR YOU GUYS IS YOU NEED JUSTIFICATIONS.

I KNOW IT'S NOT GOING TO BE EVENED IN ETCHED IN CONCRETE, BUT THAT'S WHAT YOU NEED IF YOU EXPECT IT FROM US. AND BEN, WHAT IS THE BENEFIT FOR US AUTHORIZING CPS ENERGY, IF WE ARE SAYING THAT THEY NEED TO SPEND MONEY AND INVEST IN THESE THINGS, IS THERE A BENEFIT TO CPS IN TERMS OF THE RATEPAYER FOR US TO GO AHEAD AND DO THAT?

>> GORZELL: SO IF YOU WERE TO APPROVE A RATE INCREASE NOW AND THEN THE SECOND YEAR WOULD BE AN UP TO RATE CAP, THE PROCESS IS STILL SIMILAR FROM THE PERSPECTIVE THAT WE WOULD STILL LOOK AT EVERYTHING THAT SUPPORTS WHATEVER THAT RATE INCREASE IS IN 2027. IT JUST YOU WOULDN'T HAVE TO GO THROUGH THIS FORMAL PROCESS WHERE YOU HAVE TO VOTE ON IT TO APPROVE

IT. >> MAYOR NIRENBERG: YOU WOULD DO ALL THE DUE DILIGENCE AS YOU ARE RIGHT NOW AND JUSTIFICATION?

>> GORZELL: EVERYTHING THAT HAS HAPPENED TO DATE WOULD STILL HAPPEN.

WE WOULD STILL GO THROUGH ALL OF THE DUE DILIGENCE, WE WOULD STILL GO THROUGH ALL OF THE PROCESS THAT WE DO. WE WOULD STILL MAKE A RECOMMENDATION TO YOU ALL ABOUT, YES, WE THINK THIS IS NUMBER THEY SHOULD GO WITH. THE GOAL WOULD OBVIOUSLY BE TO TRY TO GET UNDER 5.5% IF THAT'S POSSIBLE, BUT DEPENDS ON WHAT'S HAPPENING.

BUT EVERYTHING THAT'S HAPPENED TO DATE WOULD STILL HAPPEN.

YOU JUST -- AND YOU WOULD STILL GET BRIEFED. WE WOULD STILL COME IN, JOINTLY WITH CPS, WE WOULDN'T DO THIS MULTIPLE B SESSION, WE WOULD COME IN, WE WOULD TALK ABOUT THE FACT WE TOLD YOU TWO YEARS AGO THAT WE HAD A RATE CAP OF 5.5% THAT YOU APPROVED, HERE'S WHERE WE ARE COLLECTIVELY, BOTH OF US TOGETHER. THIS IS WHAT WE RECOMMEND WE MOVE FORWARD.

YOU WOULD HEAR ALL THE REASONS WHY THAT NUMBER IS WHAT IT IS AND ALL THE BUSINESS CASE JUSTIFICATION AROUND IT. IF THERE'S AGREEMENT, IT SIMPLY GOES INTO EFFECT BASED ON THE ORDINANCE THAT'S ALREADY IN PLACE.

AND THERE'S NO ADDITIONAL ACTION REQUIRED IN ORDER TO DO THAT.

>> MAYOR NIRENBERG: OKAY. I KNOW WE HAVE ANOTHER CONVERSATION HERE, SO I WOULD LIKE TO SAY WE SHOULD HAVE A CONVERSATION ABOUT THAT.

AND THE REASON WHY I'M SAYING THAT IS WE KNOW WHAT THE PLAN IS, WE KNOW WHAT THE INVESTMENTS ARE. ABOUT 20 YEARS AGO, THIS COMMUNITY WAS HAVING A REALLY SERIOUS TIME -- STARTED DOING WHAT I'M JUST DESCRIBING TO YOU AT THE WATER UTILITY, AND NOW IT'S STRONG POSITION IN TERMS OF WATER SECURITY, TAKING CARE OF THE CONSENT DECREE --

* This transcript was compiled from uncorrected Closed Captioning.