Nov 19, 2024 City Council Special Meeting

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>> MAYOR NIRENBERG: THANK YOU VERY MUCH FOR YOUR PATIENCE.

TIME IS 1:14 P.M. ONOFF 19, 2024. WE'LL CALL OUR SPECIAL SESSION TO ORDER. MADAM CLERK, COULD YOU READ THE ROLL.

>> MAYOR NIRENBERG: ALL RIGHT. WELCOME, EVERYONE, TO OUR SPECIAL SESSION. FOR ANYBODY THAT'S COUNTING, THIS IS OUR THIRD OF EIGHT OR NINE MEETINGS IN THE NEXT 72 HOURS SO THANK YOU FOR YOUR ATTENTION.

TODAY'S MEETING IS ABOUT OUR HORIZON 2050 PLAN AND THE FINANCIAL POLICIES RELATING TO CPS ENERGY. AND SO I'LL HAVE ALL CITY STAFF START US OUT, BUT FIRST LET ME ACKNOWLEDGE THE PRESENCE OF OUR CPS STAFF. SORRY WITH OUR CO -- STARTING ABOUT OUR CEO, THANK YOU FOR BEING HERE. ALSO CHAIR OF THE BOARD JANIE GONZALES. THANK YOU VERY MUCH FOR BEING HERE.

DID YOU ALREADY SET A CADENCE WITH ERIK? HE'S ON HIS WAY DOWN.

>>

[ EXECUTIVE SESSION At any time during the meeting, The City Council may recess into executive session in the Presidio Conference Room to consult with the City Attorney's Office (Texas Government Code Section 551.071) and deliberate or discuss any of the following:  ]

AT THIS TIME THE CITY COUNCIL WILL RECESS INTO EXECUTIVE SESSION TO CONSULT WITH THE CITY ATTORNEY PURSUANT TO TEXAS GOVERNMENT CODE SECTION 551.071 TO DELIBERATE OR DISCUSS ANY OF THE FOLLOWING. ECONOMIC DEVELOPMENT NEGOTIATIONS PURSUANT TO TEXAS GOVERNMENT CODE SECTION 551.087.

THE PURCHASE, EXCHANGE, LEASE OR VALUE OF REAL PROPERTY PURSUANT TO TEXAS GOVERNMENT CODE SECTION 551.072. LEGAL ISSUES RELATED TO LITIGATION INVOLVING THE

>> MAYOR NIRENBERG: GOOD AFTERNOON, EVERYONE. THANKS FOR YOUR PATIENCE.

THE TIME IS 2:35 P.M. ON NOVEMBER 19, 2024. CITY COUNCIL HAS RECONVENED FROM ITS EXECUTIVE SESSION. NO OFFICIAL ACTION WAS TAKEN IN EXECUTIVE SESSION SO WE WILL

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>> WALSH: THANK YOU, MAYOR. TODAY WE WILL PROVIDE BRIEFINGS ON A COUPLE ITEMS. THE FIRST IS ON THE FINANCIAL POLICIES RELATED TO THE CITY PAYMENT FROM CPS ENERGY AND AS WELL AS PRESENTATION FROM CPS ON THEIR HORIZON 2050 PLAN. THE FINANCIAL POLICIES THAT WE'LL TALK ABOUT TODAY WERE IMPLEMENTED IN FISCAL YEAR '24 AND MEMORIALIZED WITHIN THE 2025 ADOPTED BUDGET RELATING TO THE CPS PAYMENT OR THE CITY PAYMENT FROM CPS.

SO BEN'S GOING TO WALK THROUGH THIS BUT JUST HIGH LEVEL, THE CITY PAYMENT FROM ALL SYSTEM SALES IS, AS UNDER THE POLICY, CAPPED AT $10 MILLION ANNUALLY AND THAT WAS IN ACCORDANCE WITH THE HISTORICAL ASPECT OF THAT REVENUE STREAM, AND ANY AMOUNT OVER THE $10 MILLION ACCORDING TO THE POLICY IS RESERVED IN A CAPITAL RESERVE FUND. ONE OF THE ASPECTS OF THE FINANCIAL POLICY IS THAT ANY SHORTFALL OR OFFSET IN OUR CITY PAYMENT BASE BUDGET AT THE END OF THE CITY'S FISCAL YEAR WOULD BE MADE WHOLE OUT OF THAT CAPITAL RESERVE FUND BALANCE AND THEN DETERMINE ANY ELIGIBLE AMOUNT, THE REMAINING ELIGIBLE AMOUNT TO BE TRANSFERRED TO CPS ENERGY SPECIFICALLY FOR RELIABILITY AND RESILIENCY INITIATIVES.

AND SO THE CITY PAYMENT, WE ALSO HAVE A FINANCIAL POLICY THAT THE COUNCIL SET WHEN OUR CITY REVENUE EXCEEDS 10% OF OUR ADOPTED BUDGET. THAT DID NOT HAPPEN LAST YEAR.

IT HAPPENED SEVERAL YEARS AGO AND THAT POLICY AUTHORIZES THAT AMOUNT OVER 10% TO BE BROUGHT FORWARD TO THE CITY COUNCIL FOR CONVERSATION AND THE TWO SPECIFIC AREAS THAT ARE IDENTIFIED IN THE COUNCIL CONVERSATION AT THE TIME AND IN THE FINANCIAL POLICY IS IF CPS ENERGY RESILIENCY AND RELIABILITY PROJECTS AS WELL AS OUR OWN RESILIENCY ENERGY

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SO WE WILL START OFF WITH BEN ON THE FINANCIAL POLICIES. HE WILL GIVE YOU A LITTLE BIT MORE OF A HISTORICAL PERSPECTIVE OF HOW WE GOT TO THOSE FINANCIAL POLICIES THE LAST 15 MONTHS, AND THEN WE WILL GO INTO THE RECOMMENDATION FROM SAWS ON THE USE OF THOSE

FUNDS, THEN TO ELENA ON THE HORIZON 2050 PLAN. >> GORZELL: GOOD AFTERNOON.

I WILL START WITH AN UPDATE ON OUR CITY FINANCIAL POLICY RELATED TO OUR CITY PAYMENT FROM CPS ENERGY. THESE ARE THE TWO POLICIES THAT ERIK MENTIONED.

LET ME SPEND JUST A LITTLE TIME TALKING ABOUT HOW WE GOT HERE. WE HAVE SPENT A LOT OF TIME TALKING ABOUT AND DEBATING OUR CITY PAYMENT FROM CPS ENERGY WHICH AS YOU ALL KNOW, CAN FLUCTUATE A LOT FROM YEAR TO YEAR, FOR A NUMBER OF DIFFERENT REASONS.

I'M GOING TO GO BACK TO FY '22 AS WE GOT INTO THE SUMMER OF '22, YOU RECALL WE HAD VERY HIGH GAS PRICES, COUPLED WITH REALLY HIGH HEAT AND THAT GENERATED A PRETTY LARGE VARIANCE AGAINST OUR ADOPTED BUDGET. THAT WAS A YEAR THAT WE AS STAFF RECOMMENDED RETURNING $50 MILLION TO CPS ENERGY RATE PAYERS THROUGH A CREDIT AND THROUGH AN INVESTMENT IN THE RESIDENTIAL OR THE REAP FUND, LOW INCOME ASSISTANCE FUND. WE HAD SOME DIALOGUE AFTER THAT PROPOSED BUDGET ABOUT, YOU KNOW, WHAT CAN WE DO FROM WHEN WE HAVE THESE LARGE VARIANCES TO MORE FORMALIZE THE PRACTICE THAT WE WERE ALREADY DOING OF NOT RELYING ON ONE-TIME REVENUES, REALLY BEING STRATEGIC ABOUT HOW WE DEPLOY THOSE IN OUR BUDGET PROCESS.

AFTER WE HAD THOSE CONVERSATIONS, WE ACTUALLY FORMALIZED, WE ALREADY DO IT IN PRACTICE, AND THAT WAS NOT RELYING ON ONE-TIME REVENUES. WE FORMALIZED A POLICY THAT BASICALLY SAID IF WE EXCEEDED THE ADOPTED BUDGET FOR CITY PAYMENT FROM CPS BY MORE THAN 10%, WE WOULD SET THAT DOLLAR AMOUNT ASIDE AND WE WOULD HAVE ADDITIONAL CONVERSATION WITH YOU ALL, GET YOUR FEEDBACK ON WHAT WE SHOULD DO WITH THOSE ADDITIONAL DOLLARS.

SO THAT WAS ROUGHLY I THINK IN THE SPRING OF '23, THAT WE HAD THOSE CONVERSATIONS.

WE ALSO HAD CONVERSATIONS AROUND CPS ENERGY RATE CASES AND THE FACT THAT THEY HAD PROJECTED TO COME IN ABOUT EVERY TWO YEARS, SUPPORT A VERY LARGE CAPITAL PLAN, VERY LARGE PERIOD OF CAPITAL INVESTMENT THEY WERE GOING THROUGH. SO WE HAVE HAD A CCR THAT WAS FILED LAST YEAR THAT TALKED ABOUT TAKING PART OF OUR CITY PAYMENT, REDUCING IT AND USING IT TO HELP OFFSET OR TRY TO LOWER THOSE RATE INCREASES, AND WE HAD DIALOGUE ABOUT THAT IN GOVERNANCE, AND THEN WE ALSO HAD THAT DIALOGUE WHEN DWE DID THE RATE CASE LAST FALL.

THERE WAS ACTUALLY A MOTION MADE TO REDUCE OUR CITY PAYMENT AND REDUCE THE RATE, AND USE AGAIN THOSE DOLLARS TO REDUCE THE RATE REQ REQUEST.

THAT MOTION DID NOT PASS, BUT IT WAS VERY CLOSE DISCUSSION, A LOT OF DIALOGUE AND DEBATE, AND THAT CONVERSATION COUPLED WITH, I'M GOING TO FAST FORWARD TO THIS PAST SPRING, WHERE OUR CPS ENERGY HAD THE ABILITY AND THE POSSIBILITY OF ACQUIRING SOME NATURAL GAS PLANTS THAT WERE GOING TO INCREASE THE AMOUNT OF GENERATION CAPACITY THAT THEY HAD AVAILABLE.

WE KNEW BASED ON WHAT WE HAD SEEN THE PREVIOUS SUMMER IN 2023, WHERE WE SAW A LARGE SPIKE IN CITY PAYMENT FROM ALL SYSTEM SALES, SALE OF POWER INTO THE ERCOT GRID, WITH THE EXCESS GENERATION T SCARCITY OF GENERATION WITHIN THE ERCOT MARKET, WE WERE LIKELY GOING TO SEE MORE VOLATILITY IN OUR CITY PAYMENT FROM OFF SYSTEM SALES. THAT LED TO REALLY TRYING TO I THINK FIND THE RIGHT BALANCE OF HOW CAN WE DO SOMETHING THAT HELPS SUPPORT THIS PERIOD OF CAPITAL INVESTMENT THAT CPS ENERGY IS GOING THROUGH BUT ALSO NOT DIRECTLY IMPACT OUR RECURRING BASE BUDGET. THAT REALLY LED TO THE POLICY ON THE RIGHT SIDE OF THIS SLIDE WHICH SAID IF YOU LOOK AT IT HISTORICALLY, WE GENERALLY WERE RUNNING IN THE $5 MILLION TO $10 MILLION A YEAR ON A TYPICAL YEAR OF CITY PAYMENT FROM OFF SYSTEM SALES.

WE SEE A FEW SPIKES BUT THAT'S GENERALLY WHAT WE ARE BUILDING OUR RECURRING BASE BUDGET ON.

WE SAID WE WILL TAKE THE FIRST $10 MILLION, IF THEY DO BETTER THAN THAT, AND WE EARN CITY

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FROM OUR STANDPOINT, IT'S ONE-TIME FUNDING IN NATURE BECAUSE OVER THE NEXT SEVERAL YEARS IT WILL DECLINE. WE WILL GROW INTO THAT LOAD. THE ERCOT MARKET WILL CHANGE.

PROBABILITY OF CONTINUING AT THAT LEVEL IS JUST NOT THERE. WE DON'T WANT TO DO AND RELY ON THAT TO FUND RECURRING EXPENSES AND CREATE OUR OWN FISCAL CLIFF OUT IN THE FUTURE.

WE WANT TO BE REALLY THOUGHTFUL ABOUT HOW WE USE THESE DOLLARS. SO THAT'S THE POLICY ON THE RIGHT SIDE. THE POLICY ON THE LEFT SIDE IS JUST KIND OF A VERSION OF WHAT WE PUT IN PLACE IN 2023. IT JUST NOW SAYS IN THE EVENT WE EARN DOLLARS OR CITY PAYMENT ABOVE 10% OF THE ADOPTED BUDGET, THAT THOSE GET ALLOCATED TO CPS ENERGY FOR RESILIENCY AND RELIABILITY PROJECTS AND OUR RESILIENCY ENERGY EFFICIENCY AND SUSTAINABILITY FUND, BASED ON AN ALLOCATION TO BE DETERMINED BY THE COUNCIL. THESE ARE THE TWO FINANCIAL POLICIES WE HAVE IN PLACE. THIS SLIDE, I THINK, KIND OF ILLUSTRATES WHEN YOU LOOK AT IT ON A FISCAL YEAR BASIS GOING BACK TO 2008, THIS SLIDE REPRESENTS OUR CITY PAYMENT FROM OFF SYSTEM SALES. YOU CAN SEE IT RANGES FROM A LOW OF 4.3 MILLION IN 2012 TO A HIGH OF $46.1 MILLION IN 2024. YOU CAN SEE HOW FAR OFF THE CHART THAT IS.

I THINK IT KIND OF MAKES THE CASE WHY WE SHOULDN'T RELY ON THIS TO MAKE THE CITY BUDGET, ESPECIALLY FOR RECURRING EXPENSES. IT'S WHERE WE DERIVE THE $10 MILLION FROM IN TERMS OF WHAT WE HAVE BUILT IN OUR RECURRING BASE BUDGET, AND WHY THAT'S IMPORTANT GOING FORWARD. AGAIN, I THINK THAT FOR THE NEXT SEVERAL YEARS, THERE'S AN OPPORTUNITY TO SEE MORE CITY PAYMENT FROM OFF SYSTEM SALES BUT OVER TIME, THAT IS GOING TO DECLINE. WE ARE GOING TO GROW INTO THAT LOAD.

THERE WILL NOT BE AS MUCH EXCESS POWER AVAILABLE TO SELL INTO THE MARKET.

THIS SLIDE TAKES THOSE SAME TWO FINANCIAL POLICIES AND AGAIN, JUST KIND OF SHOWS YOU ON THE LEFT-HAND SIDE WE DID NOT EXCEED 110% OF OUR BUDGET REESTIMATE AND IT'S FOOTNOTED WE USED THE REESTIMATE BECAUSE WE IMPLEMENTED THESE FINANCIAL POLICIES IN THE MIDDLE OF OUR FISCAL YEAR. WE HAD ALREADY DONE THE FIVE-YEAR FORECAST.

IN THE FUTURE IT WILL BE AGAINST THE ADOPTED BUDGET. BUT WHETHER WE USE THE ADOPTED BUDGET OR THE REESTIMATE, DWE DD NOT EXCEED 10%. THERE ARE NO DOLLARS AVAILABLE ON THAT FIRST POLICY. ON THE OFF SYSTEM SALES POLICY WHERE WE GET CITY PAYMENT FROM OFF SYSTEM SALES, SALE OF POWER INTO THE ERCOT MARKET, THERE'S 46.1 MILLION IN THAT TABLE OF ACTUAL OFF SYSTEM SALES CITY PAYMENT. WE KEPT OUR $10 MILLION IN THAT FIRST COLUMN, OUR REESTIMATE I MENTIONED WE WILL KEEP THE FIRST 10.

WE DID THAT. SO THAT LEAVES US $36.1 MILLION IN THE CAPITAL RESERVE FUND.

THE OTHER PART OF THAT POLICY IS WE GO BACK AND LOOK AT OUR BASE PAYMENT BUDGET AGAINST OUR REESTIMATE. WE CONTINUE TO MISS THAT ALL THE WAY THROUGH THE SUMMER, ACTUALLY SPRING AND SUMMER, AND SO WE WERE SHORT $10.2 MILLION. YOU NET OUT THAT $10.2 MILLION AND WE HAVE $25.9 MILLION THAT IS ELIGIBLE TO BE TRANSFERRED TO CPS ENERGY.

AGAIN, TO FUND RESILIENCY AND RELIABILITY PROJECTS WITHIN THEIR CAPITAL PLAN AND WE ARE RECOMMENDING THAT DWE DO THAT A PART OF OUR ADOPTED FINANCIAL POLICY.

I'M ACTUALLY GOING TO TURN IT OVER AT THIS POINT TO COREY, THE CHIEF FINANCIAL OFFICER FOR CPS ENERGY, WHO WILL WALK THROUGH HOW THEY WOULD UTILIZE THIS $25.9 MILLION.

COREY? >> THANK YOU, BEN. GOOD AFTERNOON, COUNCIL MEMBERS.

APPRECIATE THE OPPORTUNITY TO BE HERE. ALSO APPRECIATE COUNCIL BEING THOUGHTFUL IN THIS DISCUSSION. THANKS TO ERIK AND BEN'S TEAM FOR PARTNERING WITH US AND WORKING ON THE MEMORANDUM OF UNDERSTANDING THAT COMPRISES THOSE POLICIES.

SO I WILL BE BRIEF. I JUST HAVE ONE SLIDE TO TALK THROUGH.

AS BEN DISCUSSED AND AS YOU ALL KNOW, THE POLICY, THE MOU THAT WE HAVE WITH THE CITY DISCUSSES UTILIZING A PORTION OF THE GENERAL FUND TO SUPPORT THE RELIABILITY AND RESILIENCY AS

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SO ON THIS SLIDE HERE, AND IN THE CASE OF TODAY, THERE ARE A COUPLE OF AREAS THAT WE THINK KIND OF FIT THE DESCRIPTION FOR RELIABILITY TYPE INVESTMENTS, WHERE THESE FUNDS CAN HAVE A MEANINGFUL IMPACT. SO THE FIRST ONE, AS YOU KNOW, WE HAVE BEEN WORKING FOR SEVERAL YEARS TO INSTALL RECLOSERS ACROSS OUR SERVICE TERRITORY. WE HAVE INSTALLED OVER 130 PER YEAR SINCE '21, FISCAL '21. WE STILL HAVE A SIGNIFICANT PORTION OF OUR SERVICE TERRITORY TO GET THROUGH, AT LEAST DOUBLE WHAT WE HAVE DONE ALREADY. THIS INVESTMENT THAT WE HAVE TALKED ABOUT IN YEARS PAST HAS REALLY SIGNIFICANT IMPACT IN MINIMIZING THE NUMBER OF CUSTOMERS THAT ARE OUT DURING AN OUTAGE AND THE DURATION AT WHICH THEY ARE OUT.

SPECIFICALLY, THIS IS A PIECE OF EQUIPMENT THAT HELPS WHEN A CIRCUIT MAY FAIL.

AN EXAMPLE COULD BE A TREE BRANCH, YOU KNOW, HITTING A LINE TEMPORARILY.

THESE HAVE BEEN PROVEN TO BE VERY HELPFUL IN IMPROVING THE RESILIENCY OF OUR LOCAL DISTRIBUTION SYSTEM. SO WE THINK THAT AN ADDITIONAL ONE-TIME INVESTMENT THAT'S BEING DISCUSSED, THIS MAKES A GOOD EXAMPLE OF WHERE WE CAN DEPLOY DOLLARS THAT MAKE A MEANINGFUL IMPACT IN OUR COMMUNITY AND TO ALL OF OUR CONSTITUENTS. SECONDLY, AS YOU ARE AWARE, OUR POWER PLANTS HAVE BEEN OUR WORKHORSES FOR THE LAST COUPLE OF SUMMERS.

THEY HAVE BEEN RUNNING LONGER, WE HAVE BEEN RUNNING THEM HARDER THAN WE HAD PLANNED.

YOU KNOW, SEVERAL YEARS AGO, SO ADDITIONAL ONE-TIME FUNDING COULD BE A GOOD CANDIDATE TO INVEST IN OUR PLANTS. WE THINK THAT FITS THE BILL IN TERMS OF SERVING RELIABILITY AND ENSURES THAT WE GET THE MOST VALUE OUT OF THESE ASSETS AND IN THE CONTEXT OF BEN'S COMMENTS, YOU KNOW, GETTING THE VALUE OUT OF THEM FROM THE WHOLESALE SALES AS WELL.

SPECIFICALLY, SPRUCE 2 WAS A VERY VALUABLE ASSET TO OUR COMMUNITY THIS SUMMER AND IN PREVIOUS SUMMERS, OF COURSE. IT NOW REQUIRES INVESTMENT IN THE BOILER TO ADDRESS TUBE LEAKS WHICH WE HAVE SEEN UNEXPECTEDLY OVER THE PAST SUMMER. THE BOILER'S A CRITICAL COMPONENT OF THE GENERATING ASSET. IT SERVES TO HEAT UP WATER WHICH WILL TURN INTO STEAM AND THESE TUBES, THERE ARE THOUSANDS OF THEM IN THE GENERATOR, WHEN THERE'S AN ISSUE WITH THEM, IT CAN EITHER DAMAGE PERFORMANCE OR TAKE THE PLANT OFFLINE TOTALLY, AND THAT HAS HAPPENED TO US A FEW TIMES THIS SUMMER. SO GIVEN THAT, WE THINK THAT THIS IS ANOTHER INVESTMENT IN THE BOILERS AT SPRUCE 2 THAT WE CAN WORK ON NEXT YEAR THAT KIND OF FITS THE DESCRIPTION OF WHAT IS STATED IN THE MOU. SO YOU KNOW, JUST IN SUMMARY, WE THINK THESE TWO PROPOSED PROJECTS REPRESENT THE SPIRIT THAT WAS ENVISIONED IN THE MEMORANDUM OF UNDERSTANDING AND DIRECTLY SUPPORT THE STATED GOAL IN THAT MOU OF SUPPORTING THE RESILIENCY AND RELIABILITY OF THE SYSTEM FOR THE CUSTOMERS' BENEFIT.

SO I WILL END MY COMMENTS THERE. BEN, I'M NOT SURE IF YOU WANT TO KEEP ROLLING TO THE NEXT TOPIC.

I WILL TURN IT OVER TO ELENA THEN TO PIVOT ON THE HORIZON 2015.

>> GOOD AFTERNOON, MAYOR AND COUNCIL. I'M THE CHIEF STRATEGY OFFICER FOR CPS ENERGY. TODAY, I'M GOING TO BRIEF YOU ALL ON THE STRATEGIC FRAMEWORK WE ARE DEVELOPING AT CPS ENERGY CALLED HORIZON 2050. I JUST HAVE A FEW SLIDES TODAY AND CERTAINLY WELCOME QUESTIONS AND FEEDBACK. TODAY, I WANT TO DISCUSS THE ROAD MAP THAT WE HAVE BEEN ON IN DEVELOPING THIS FRAMEWORK. WE WILL GO OVER THE FRAMEWORK.

I ALSO WOULD LIKE TO SHARE STAKEHOLDER FEEDBACK THAT WE HAVE RECEIVED TODAY.

WE HAVE BEEN ACTIVE IN EVERY COUNCIL DISTRICT AND HAVE HAD A VARIETY OF INTAKE METHODS FOR FEEDBACK ON OUR PLANNING FOR 2050. WE WILL SHARE SOME OF THE FEEDBACK TRENDS AND THEN IF YOU WILL INDULGE THE OPPORTUNITY, I WANT TO FLASH THE 2050 SURVEY SO THAT ANYONE WHO IS LISTENING, IF THEY HAVE NOT YET GIVEN US THEIR FEEDBACK, THEY CAN GO ONLINE AND

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WE TOOK THIS OPPORTUNITY TO PARTNER WITH A CONSULTING COMPANY WHO WORKS WITH A NUMBER OF THE LARGEST UTILITIES IN THE UNITED STATES AND IN THE ENERGY SECTOR IN GENERAL TO HELP US BEGIN THINKING ABOUT GLOBAL INDUSTRY TRENDS AND DISRUPTORS THAT ARE IN PLACE.

WE HAVE BEEN UTILIZING A FRAMEWORK THAT THIS CONSULTING FIRM USES FOR PLANNING FOR LONG-RANGE RISK, AND SO THROUGH A SERIES OF WORKSHOPS AND EMPLOYEE ENGAGEMENT, WE BOILED DOWN A BRAINSTORMED LIST OF ROUGHLY 70 TO -- BETWEEN 70 AND 80 DISRUPTORS AND RISKS DOWN TO TWO KEY RISKS THAT WE WANT TO PLAN AROUND FOR THE FUTURE. SO IN THE BALANCE OF THE YEAR, WE WORKED TOGETHER TO BUILD THIS FRAMEWORK AND FOR THE LAST APPROXIMATE THREE MONTHS, WE HAVE BEEN OUT IN THE COMMUNITY SHARING THE FRAMEWORK AND ULTIMATELY THE GOAL FOR HORIZON 2050 IS TO GIVE US A FRAMEWORK FOR PLANNING, WHETHER THAT IS PLANNING WHERE WE INVEST BETWEEN OUR ELECTRIC AND GAS SYSTEMS TO THE TYPES OF TECHNOLOGY WE WILL DEPLOY TO MEET THE GROWING NEED FOR ENERGY IN OUR COMMUNITY THAT YOU JUST HEARD ABOUT. SO THIS BRINGS US TO TODAY.

TODAY, WE ARE ENGAGING WITH YOU ALL. WE HAVE BEEN ACTIVE WITH YOUR OFFICES AND CERTAINLY WELCOME FEEDBACK FROM THE COUNCIL AND CERTAINLY WOULD BE HAPPY TO MEET WITH YOU INDIVIDUALLY AS WELL. OUR PLAN IS EARLY IN 2025 TO BRING FORTH A RESOLUTION THAT WILL ADOPT THE HORIZON 2050 FRAMEWORK AND THEN WE WILL BEGIN THE DETAILED STEPS OF STRATEGIC PLANNING FOR MILESTONES IN 2030 AND 2040. SO THIS IS THE HORIZON 2050 FRAMEWORK. CURRENTLY, CPS ENERGY HAS A VISION 2027.

THE INTENT BEHIND HORIZON 2050 IS TO LOOK UP AND PLAN MUCH LONGER.

THERE ARE VERY FEW DECISIONS THAT WE MAKE IN THE ENERGY SPACE THAT AREN'T MULTI-DECADE.

SO THE INTENT IS TO HAVE A GUIDE PATH FOR US RELATIVE TO ULTIMATELY WHAT WE WANT TO ACHIEVE AS A UTILITY. WE ARE PROPOSING A NEW VISION. WE CURRENTLY DON'T HAVE A VISION STATEMENT, BUT THROUGH A SERIES OF WORKSHOPS, WE HAVE ARRIVED AT A COMMUNITY-EMPOWERED FOR GENERATIONS. WE HAVE RECEIVED SOME FEEDBACK. WE ARE PROBABLY GOING TO TWEAK IT A LITTLE BIT BUT THOSE COMPONENTS ARE GOING TO BE PART OF OUR VISION AND THE INTENT HERE IS WE HAVE SUCH A UNIQUE RELATIONSHIP AS A MUNICIPALLY OWNED UTILITY IN THAT AS THE UTILITY GOES, WE REINVEST IN THE COMMUNITY AND SO WE HAVE THE LITERAL POWER POWERING OUR COMMUNITY, BUT ALSO, THE KEY RELATIONSHIP THAT WE HAVE WITH THE CITY OF SAN ANTONIO AS WELL AS THE OTHER COMMUNITIES THAT WE SERVE IN THAT WE'RE OWNED BY THE COMMUNITY, WE LIVE AND WORK IN THE COMMUNITY, AND WE FEEL LIKE THIS VISION REALLY RESONATED WITH THAT RELATIONSHIP.

OUR MISSION STATEMENT IS PRETTY SIMILAR TO WHAT WE HAVE TODAY, TO SAFELY POWER OUR COMMUNITY WITH RELIABLE, SUSTAINABLE ENERGY AT A COMPETITIVE PRICE. AND THEN SIMILARLY, YOU KNOW, IN SUPPORT OF THE MISSION, WE HAVE GOT FIVE KEY AREAS FOR OUR GOALS.

WE HAVE YET TO SET GOALS. WE HAVE BEEN HAVING WORKSHOPS AROUND MEASURES AND LOOKING AT WHAT GOALS WE WANT TO HAVE AS A UTILITY. RELIABILITY IS OBVIOUSLY KEY.

OUR CUSTOMERS EXPECT US TO BE ALWAYS ON. SUSTAINABILITY, YOU KNOW, WE ARE IN THE PROCESS OF RETIRING OLDER UNITS THAT ARE LESS EFFICIENT, DATED TECHNOLOGY, AND REPLACING THOSE UNITS WITH MORE ENERGY-EFFICIENT AS WELL AS CLEANER TECHNOLOGIES.

COMPETITIVE PRICING IS REALLY THE THIRD PIECE OF THE STOOL. SO RELIABILITY, SUSTAINABILITY AND COMPETITIVE PRICING ARE SOMETHING CALLED THE ENERGYTRILEMMA.

MOST UTILITIES THAT ARE PLANNING IN THE 2050 RANGE HAVE HIGHLIGHTED THESE THREE KEY AREAS TO GUIDE THE UTILITY. SO FOR US, AGAIN, WE ARE WORKING ON MEASURES BUT WE RECOGNIZE THAT WE SERVE A COMMUNITY THAT HAS A SIGNIFICANT PORTION OF OUR POPULATION THAT LIVE AT OR BELOW THE POVERTY LINE, SO ENSURING THAT WE MAKE OUR TRANSITION AND SUPPORT OUR GROWTH AND OUR RELIABILITY OBJECTIVES IN A MANNER THAT KEEPS OUR COSTS AFFORDABLE.

THE FOURTH ELEMENT OF THE FRAMEWORK IS FINANCIAL RESILIENCY.

WE MAY LAND ON FINANCIAL STRENGTH. BUT THE INTENT IS TO ULTIMATELY REPRESENT THAT IN ORDER FOR US TO KEEP OUR COSTS LOW AS A COMPANION, KEEP RATES LOW, WE NEED TO HAVE A FINANCIALLY STRONG UTILITY. SO YOU KNOW, WE HAVE TALKED

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WE WERE ABLE TO EXECUTE THAT TRANSACTION ADEPTLY AND SO AS A RESULT, WE WERE ABLE TO OUT-COMPETE OTHERS INTERESTED IN THOSE ASSETS. THAT'S JUST AN EXAMPLE OF WHY FINANCIAL RESILIENCY IS SO IMPORTANT. AND THEN OF COURSE, WE CAN'T DO ANYTHING WITHOUT OPERATING WITH EXCELLENCE, BOTH IN OUR TEAM AND HOW WE CONDUCT OUR BUSINESS.

SO I WILL SHARE SOME FEEDBACK THAT WE HAVE RECEIVED TO DATE. I DO HAVE A FEW MORE UPDATED NUMBERS THAT I GOT THIS MORNING. WE HAVE HAD ABOUT 2500 TOTAL ENGAGEMENTS WITH OUR HORIZON 2050 SURVEY AS WELL AS FOCUS GROUPS. OUR FOCUS GROUP PARTICIPATION WAS JUST SHY OF 600 AND WE HAVE HAD ALL GAMUTS OF OUR CUSTOMERS AND STAKEHOLDERS IN THOSE FOCUS GROUPS. SO WE HAVE HAD VERY LARGE COMPLEX CUSTOMERS ALL THE WAY TO RESIDENTIAL CUSTOMERS. WE ALSO CONDUCTED A QUALITATIVE SURVEY THROUGH ONE OF OUR SURVEY ORGANIZATIONS AND RECEIVED 500 SURVEY RESULTS THROUGH THAT. WE HAVE HAD OVER 17,000 WEB PAGE VISITS. WE HAVE HAD 116,000 SOCIAL MEDIA IMPRESSIONS.

WE HAVE BEEN VERY THANKFUL FOR OUR LOCAL MEDIA, WHO HAVE CONDUCTED 11 NEWS STORIES FOR US. AND AS I MENTIONED, WE HAVE BEEN IN EVERY DISTRICT AND HAD COMMUNITY EVENTS THAT COVERED HORIZON 2050 AS WELL AS A NUMBER OF OTHER CPS TOPICS.

I THINK SOMETHING THAT WAS REALLY FUN AND NEW THAT WE HADN'T DONE, WE DID SOME COMMUNITY POP-UPS AT SOME OF OUR LOCAL PARKS, AND THOSE WERE WELL-ATTENDED.

OVERALL, WE HAVE RECEIVED BOTH FROM OUR EMPLOYEES AND THE COMMUNITY A FAVORABLE RATING ON OUR VISION. PEOPLE SEEMED TO LIKE IT. IT RESONATES WITH THEM.

ADDITIONALLY, WE HAVE GOTTEN QUITE A BIT OF FEEDBACK RELATIVE TO THE GOALS.

SO WE FORCED, YOU KNOW, WE ASKED OUR CUSTOMERS AND AS WE HAVE WORKED IN FOCUS GROUPS AND OTHER OUTLETS, WE ASKED FOLKS TO RATE WHAT IS THE MOST IMPORTANT THING TO YOU THAT CPS ENERGY PROVIDES.

CLEARLY, HEAD AND SHOULDERS ABOVE THE REST, RELIABILITY SURFACED AS THE MOST IMPORTANT PRIORITY. COMPETITIVE PRICING WAS A CLOSE SECOND AND SUSTAINABILITY WAS A THIRD. SO THE REASON THAT'S IMPORTANT IS THAT WE REALLY WANT TO UNDERSTAND ULTIMATELY, IF WE HAVE DISCRETIONARY DOLLARS AS A UTILITY, WHERE WE INVEST THIS ADDITIONAL FUNDING. WE RECOGNIZE THAT FINDING WAYS TO OPERATE OUR SYSTEM MORE RELIABLY, BRING OUR COSTS DOWN AND CERTAINLY DIVERSIFY OUR ENERGY SOURCES WILL HAVE A BETTER UNDERSTANDING OF HOW WE CAN PRIORITIZE THAT SPEND OVER A LONGER PERIOD OF TIME.

THERE WERE SOME MORE CLEARLY IT WAS TOP PRIORITY AMONG STAKEHOLDERS AND CLEAR FEEDBACK AROUND MAJOR EVENT RESTORATION AND OUR NEED TO MAKE THE SYSTEM EVEN MORE RESILIENT. AFFORDABILITY AND COST WAS THE SECOND MOST IMPORTANT PRIORITY. INTERESTINGLY, SOME LARGE CUSTOMERS STATED THEY WOULD BE WILLING TO PAY HIGHER FOR --R HIGHER LIABILITY. THERE'S ALSO QUITE A BIT OF FEEDBACK AROUND PARTNERSHIP AND TRANSPARENCY. LARGE CUSTOMERS STRESSED WE HAVE A VERY CAPABLE TEAM, BUT WE ARE SEEKING MORE WAYS TO PARTNER, INNOVATE AND HAVE EVEN MORE TRANSPARENCY FOR GROWING POWER NEEDS. THAT WAS PARTICULARLY STRESSED AMONG OUR LARGE LOADS AND DATA CENTER CUSTOMERS.

THEY HAVE A DESIRE FOR MORE FLEXIBILITY AND OPTIONS. IN THE COMING MONTHS WE'LL BE COMING TO BRIEF YOU ON NEW CUSTOMER OPTIONS FOR ALL OF OUR CUSTOMERS.

ON SUSTAINABILITY, THERE WERE VARYING LEVELS OF SUPPORT.

WHAT WE HEARD LOUD AND CLEAR WAS OUR CUSTOMERS NEED RELIABILITY AND AFFORDABILITY AND WE SHOULD BALANCE THAT WITH SUSTAINABILITY.

SURVEYS INDICATE IT IS NOT THEIR TOP PRIORITY, BUT IT IS SOMETHING THAT THEY DO WANT, BUT WE NEED TO MAKE SURE WE FOCUS ON RELIABILITY, COST AND SERVICE. THERE WERE SOME DEMOGRAPHIC AND GEOGRAPHIC TRENDS.

YOUNGER PEOPLE TENDED TO RATE SUSTAINABILITY HIGHER AND THE NORTHERN PARTS OF OUR COMMUNITY TEND TO DO ALSO RATE SUSTAINABILITY HIGHER ON THE LIST.

CUSTOMERS ACROSS THE BOARD ARE SEEKING MORE TOOLS AND TIPS TO CONSERVE ENERGY.

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AND THEN INNOVATION IN LEADERSHIP. WE HEARD QUITE A BIT ABOUT A DESIRE TO HELP -- FOR THE UTILITY TO HELP INNOVATE WITH OUR CUSTOMERS TO HELP WITH ENERGY NEEDS. AND THEN, OF COURSE, AS WITH ANY STRATEGIC PLAN THERE IS A STRONG FEEDBACK ABOUT LET'S KEEP IT AS SIMPLE AS POSSIBLE.

TRY TO USE SIMPLIFIED TERMS SO EVERYONE CAN UNDERSTAND WHAT WE'RE HEADED TO.

AND SO I'LL FLASH UP THE QR CODE FOR OUR SURVEY AND WE WELCOME EACH OF YOU AND EVERYONE WHO IS LISTENING TO PLEASE TAKE THE SURVEY. WE ARE EAGERLY WRAPPING UP THE SURVEY IN A FEW DAYS SO WE REALLY WANT TO HEAR FROM EVERYONE, BUT I'LL ENTERTAIN

ANY QUESTIONS THAT YOU HAVE. >> MAYOR NIRENBERG: THANK YOU VERY MUCH FOR THE PRESENTATIONS. WE'LL GO INTO DISCUSSION NOW AND AGAIN ON ALL THE TOPICS YOU HEARD ABOUT. WE'LL START WITH COUNCILMEMBER ROCHA GARCIA.

>> GARCIA: THANK YOU, MAYOR. THANK YOU SO MUCH TO ALL OF THE PRESENTERS TODAY FOR BEING HERE. I'LL START WITH BEN, AND YOU MENTIONED THAT THE LAST TIME WE HAD A CLOSE DISCUSSION AND REMIND ME BECAUSE THE REASON THAT WE ULTIMATELY DECIDED THE WAY WE DID IS WE COULDN'T BE GUARANTEED THAT THERE WOULD BE NO RATE INCREASE. IS THAT CORRECT?

>> GORZELL: COUNCILWOMAN, REMIND ME WHICH -- >> GARCIA: IT WAS A CONVERSATION YOU PREFERENCED IN YOUR PRESENTATION WHERE WE WERE TALKING ABOUT THE INVESTMENT TO -- IN CPS ENERGY, HOW SHOULD I SAY EQUIPMENT, ET CETERA SO THAT WE COULD HOLD OFF ON POTENTIAL RATE INCREASES LATER.

>> GORZELL: SO MY RECOLLECTION IS WE HAD A COUPLE OF CONVERSATION ON

CITY PAYMENT. >> GARCIA: THE ONE YOU REFERENCED TODAY THAT YOU SAID THERE WAS A REALLY CLOSE DISCUSSION AND WE ENDED UP TAKING A VOTE AND

ULTIMATELY IT FAILED. BUT IT FAILED WAS IT BECAUSE -- >> GORZELL: WHAT I WAS REFERRING TO WAS THE COUNCIL VOTE -- THERE WAS AN AMENDMENT MADE DURING THE REQUEST TO INCREASE RATES LAST FALL, LAST PROBABLY NOVEMBER, AND THAT MOTION INCLUDED REDUCING CITY PAYMENT, AND I CAN'T REMEMBER THE EXACT MOTION, BUT IT WAS TENS OF MILLIONS OF DOLLARS IN ORDER TO REDUCE THE CPS REQUEST.

THAT MOTION WAS MADE AND FAILED, BUT IT WAS A PRETTY CLOSE VOTE.

WE'VE HAD A LOT OF CONVERSATION AS WE LISTENED TO YOU ALL IN TERMS OF HOW DO WE HELP CPS ENERGY. WHEN WE HEARD THE OPTION THAT CPS ENERGY WAS LOOKING AT TO BUY THE NATURAL GAS PLANTS, THAT WAS KIND OF LIKE WOW, THIS IS A GREAT OPPORTUNITY TO BALANCE BOTH OF THESE THINGS. HOW CAN WE HELP USE GENERAL FUND DOLLARS ON CPS ENERGY'S CAPITAL PLAN, BUT AT THE SAME TIME NOT IMPACT OUR RECURRING BUDGET. OUR CONCERN FROM A STAFF PERSPECTIVE LAST FALL WAS THAT CUT IN THE RATE WOULD HAVE HAD A RECURRING BUDGET IMPACT ON US.

THIS PIECE DOES NOT. >> GARCIA: THANK YOU. AND THEN CORY, I KNOW THAT YOU PRESENTED ON WHAT YOU ALL ARE GOING TO DO WITH THE PORTION IF WE CHOOSE TO GIVE IT BACK. HOW MUCH DOES CPS MAKE IN OFF-SYSTEM SALES AND WHAT

ARE YOU DOING WITH THAT PORTION? >> YEAH, SO AS BEN ALLUDED TO EVERY YEAR WE MAKE A DIFFERENT AMOUNT. AT THIS POINT THIS YEAR WE ARE CLOSE TO ABOUT 200 MILLION, LAST WE REPORTED TO OUR BOARD NET OF FUEL. THAT IS OVER OUR FORECAST BY ABOUT 170ISH MILLION, GIVE OR TAKE. BACK TO THIS CONVERSATION WE HAD LAST YEAR WHEN WE HAD ADDITIONAL REVENUE WITH WHOLESALE SALES, THAT HAS A POSITIVE IMPACT ON OUR FINANCIAL FORECAST. TO THE EXTENT WE CAN IMPROVE UPON THE PLAN WHETHER IT BE TIMING OF WE'RE IN THAT PLANNING PROCESS, ABOUT OUT THE DOLLARS WE ARE BRINGING IN TODAY, WE'LL BE USING THAT SAME KIND OF CHARACTERISTIC IF THAT MAKES SENSE.

IT'S ALL POSITIVE FROM A DO-FORWARD BASIS BLOG SO THE $200 MILLION ARE GOING TO BE

VESTED AS PART OF ONE OF THE PLANS THAT YOU ALREADY HAVE? >> THE $200 MILLION IS UNEXPECTED, RIGHT? RIGHT NOW IT'S IMPROVING OUR FINANCIAL METRICS.

BUT AS YOU GO THROUGH THE YEAR, WE'RE A LITTLE PAST HALFWAY FOR US SO TIMING IS DIFFERENT, BUT AS WE GO THROUGH THE PLANNING AND GET TO THE BUDGET CYCLE, WE'LL

[00:35:07]

>> GARCIA: SURE. AND COREY, THAT WAS GOING TO BE MY NEXT QUESTION ABOUT THE MOU. IF YOU CAN GET ME A COPY OF THE MOU TO REFRESH MY

MEMORY. >> SURE. >> GARCIA: THE REASON THAT I WAS ASKING IS YOU ALL IS A SPECIFIC PROJECTS THAT YOU ALL ARE COMING TO AND SO I'M UNDER THE ASSUMPTION YOU ALL HAVE SPECIFIC PROJECTS FOR THAT OVERAGE AS WELL.

I WAS JUST TRYING TO SEE WHERE ARE WE HELPING OUT AND WHERE YOU ALL ARE ALREADY

INHAVEESING THAT ADDITIONAL AMOUNT. >> WE PROPOSED A CAPITAL PLAN. REGARDLESS OF THE REVENUE COMING IN.

BUT AS WE DO OUR REFRESH EVERY YEAR, WE'LL REFRESH THOSE PROJECTS.

ONE OF THE BIG THINGS THAT POPPED UP THAT DIDN'T EXIST WAS BUYING 1700 MEGAWATTS EXTRA OF ADDITIONAL CAPACITY. THERE WAS O&M WITH THAT.

RIGHT NOW IT'S A PUSH AND PULL OF ITEMS AND WE'RE JUST COMING OUT OF OUR SUMMER MONTHS. I THINK THAT'S WHY I GO BACK TO WE LAID OUT THE CAPITAL PLANS, THOSE WERE THE THINGS WE COULD SEE AND ANTICIPATE, BUT EVERY YEAR THERE'S GOING TO CHANGE PRIORITIES. WHAT WILL HAPPEN, WE'LL FINISH OUT THE PROCESS THIS YEAR AND GET WITH OUR BOARD AND THE BUDGET WE TAKE TO THE BOARD, THAT WILL HAVE A REFRESH OF ALL THE PROJECTS. IF WE GO THROUGH WITH ALL THIS, THOSE TWO PROJECTS WOULD BE A SUBSET OF OTHER THINGS WE'RE DOING. DOES THAT HELP?

>> GARCIA: THAT HELPS. I'LL GO ON TO ELENA AND HORIZON 2050.

CAN YOU TELL ME A LITTLE ABOUT THE OUTREACH TO THE COMMUNITY? I KNOW THAT YOU HAD SEVERAL TOWN HALLS, BUT SPECIFICALLY DID WE HAVE ONE IN EACH COUNCIL DISTRICT? YOU SAID YES, RIGHT? SO THE SURVEY HAS 1,038 EMPLOYEES AND THEN 711 COMMUNITY MEMBERS. YOU DON'T HAVE A BREAKDOWN ON THE SLIDE ON THE FOCUS GROUP, LIKE HOW MANY FOCUS GROUPS WERE HELD, WHO WAS INVOLVED IN THE FOCUS GROUPS SO I WOULD LOVE TO SEE THAT. JUST LIKE WITH YOUR SOCIAL MEDIA POSTINGS, I SEE UNDER 60 PEOPLE THAT, YOU KNOW, EITHER SHARED OR LOTS OF COMMENTS FROM THOSE 60 PEOPLE ON WHAT COULD AND COULDN'T HAPPEN.

BUT IF I COULD A LITTLE MORE OF THAT BREAK DOWN, THAT WOULD BE WONDERFUL.

I DID SEE THAT THE FARES YOU WERE ADVERTISING THEM IN ENGLISH AND SPANISH, SO I'M ASSUMING THE SURVEYS WERE IN ENGLISH AND SPANISH AS WELL. OKAY, THANK YOU.

WHEN I'M LOOKING IN GENERAL THE DECISION FOR ME TODAY IS HUGE AND I HAVE -- PETER SITS ON THE CIAC OR WHATEVER. AND SO ONE OF THE THINGS THAT HE BROUGHT UP TO ME WAS A RECOMMENDATION TO SET A STRATEGIC COMMUNITY RESILIENCY PLAN. HE HAD BROUGHT THIS UP A YEAR AGO.

HE HAD ALSO BROUGHT THIS UP AT THE POWER AND TECHNOLOGY SUBCOMMITTEE.

HE BROUGHT THIS UP AGAIN AT THE CIC MEETING WHERE THE HORIZON 2050 WAS PRESENTED.

BUT IT HASN'T BEEN INCLUDED. AND SO FROM HIS PERSPECTIVE AND MY COMMUNITY'S PERSPECTIVE BECAUSE HE TALKS TO A LOT OF OUR RESIDENTS, WE DON'T SEE THERE'S STRATEGIC PLAN TO MEASURE OR MINIMIZE THE EFFECT TO THE MUST VULNERABLE IN THE CURRENT PLANNING PROCESS, EVEN IN THE 2050. I WOULD LOVE TO SEE IF WE COULD GET A COMMUNITY RESILIENCY PROGRAM GOING. I KNOW WITH THE GRID RESILIENCE AND INNOVATIONS PROM THAT WE GOT FUNDING FROM THE DEPARTMENT OF ENERGY THERE'S SOME SORT OF A PLAN THAT'S NEEDED AND I'M WONDERING IF WE COULD EXPAND IT A LITTLE BIT MORE. AND SO ANYTHING THAT YOU CAN DO TO HELP ME OUT THERE.

AND SO AGAIN, HE FULLY BRIEFS ME ON EVERYTHING SO I WOULD LOVE TO LEARN A LITTLE MORE ABOUT THAT. THE OTHER THING THAT I WANTED TO TALK IN REGARDS TO MY DISTRICT IN SPECIFIC IS RECENTLY I WAS PRESENTED FROM U.T. HEALTH AT LACKLAND A SPECIAL WARFARE UNIT IS TRYING TO SEE IF CPS WILL HELP WITH A POWER MODULE ADAPTATION BUILDOUT THAT THEY NEED SPECIFICALLY FOR -- ESSENTIALLY IT'S A HUMAN PERFORMANCE. WE HAVE 700 FOLKS WHO ARE THERE AT ANY GIVEN TIME IN THE SPECIAL WARFARE UNIT AND SO THEY WOULD BE ABLE TO -- TO CREATE A MODEL

[00:40:04]

AND SO I LIKE THE IDEA AND IT SOUNDS LIKE -- NOT JUST FOR THAT ONE.

AND I UNDERSTAND IT COSTS ABOUT $100,000. BUT WHEN I HEARD ABOUT THAT, I THOUGHT WAIT A SECOND, COULD WE BE DOING THAT WITH PERHAPS OUR FIRE STATIONS.

DURING URI I MAIDS THE ASSUMPTION I COULD GO TO A FIRE STATION AND PLUG IN MY LAPTOP SO I COULD PARTICIPATE ON COUNCIL AND THEY DIDN'T HAVE ELECTRICITY AT THAT TIME. WHEN THEY BROUGHT THIS UP TO ME THROUGH U.T. HEALTH AND IT'S ONLY $100,000 INVESTMENT, WHAT KIND OF INVESTMENT ARE WE MAKING IN THINGS LIKE THIS OR MICRO GRIDS THAT GET INTO THE NEIGHBORHOODS.

THE REBYE BUILT PROGRAM THAT YOU ARE JUST PRESENTING ALWAYS SEEMS SO GENERAL, BUT IT DOESN'T GO INTO SPECIFICS AS HOW IT'S GOING TO AFFECT OUR NEIGHBORHOODS AND OUR RATEPAYERS. CAN YOU HELP ME UNDERSTAND HOW WE GET THERE?

>> THANKING YOU FOR THE INPUT AND THE QUESTIONS. HOPEFULLY I'M GOING 20 KEEP ALL THE QUESTIONS IN MY HEAD. A LOT OF GOOD INFORMATION.

SO RELATIVE TO -- I'M GOING BACK TO THE FOCUS GROUPS. SO WE HAD A TOTAL PARTICIPATION OF 576 PEOPLE IN THE FOCUS GROUP. THAT'S THE NUMBER AS OF TODAY. WE HAD 21 FOCUS GROUPS THAT WERE EMPLOYEES, 14 THAT WERE LARGE CUSTOMERS SHE AND WE HELD 41 FOCUS GROUPS THAT WERE RESIDENTIAL SMALL BUSINESS. AND THEN JUST TO CONFIRM, YES, WE DID HAVE QUITE A BIT OF ACTIVITY ON SOCIAL. WE HAVE HAD COMMUNITY EVENTS IN EVERY DISTRICT.

AND THEN AS I MENTIONED WE HAD TOWN HALLS AS WELL AS COMMUNITY POP-UPS.

THE SURVEY HAS BEEN LIVE AND WE'RE CONTINUING TO PUSH TO GET FEEDBACK.

I WANTED TO HIT ON THAT. RELATIVE TO THE FEEDBACK ON INCLUDING RESILIENCY OR COMMUNITY RESILIENCY, THANK YOU FOR THAT. WE HAVE RECEIVED QUITE A BIT ON THE FRAMEWORK. WE HAVEN'T MADE ANY CHANGES. WE DID HEAR PETER'S FEEDBACK AND THANK HIM FOR THAT AND WE'VE GOT A NUMBER OF OTHER FOLKS THAT PROVIDED THAT.

THIS IS THE INITIAL FOCUS ON WHERE WE'RE HEADED. HOW WE GET THERE, WHICH AS YOU TALK ABOUT RELIABILITY AND RESILIENCY, WE ALREADY HAVE A NUMBER OF PROGRAMS, BUT WE ARE GOING TO BE PUTTING IN MORE AND MORE RELIABILITY PROGRAMS SPECIFICALLY TO ULTIMATELY ON OUR PATH TO BEING OUTAGE FREE.

THAT'S GOING TO TAKE CREW SOURCES ACROSS OUR VALUE CHAIN FROM LARGE GENERATORS, WE'VE TALKED WITH YOU ALL ABOUT OUR NEED TO INVEST SUBSTANTIALLY IN TRANSMISSION AND DISTRIBUTION NETWORKS. BUT ALSO PUTTING IN RESOURCES WITH OUR CUSTOMERS TO ALLOW FOLKS TO RIDE THROUGH.

DO APPRECIATE THE IDEA AROUND U.T. HEALTH AND BEING ABLE TO POTENTIALLY OFFER ADDITIONAL RESILIENCY SERVICES IN THE COMMUNITY. SO THANK YOU.

>> GARCIA: THANK YOU. THANK YOU, MAYOR. >> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER ROCHA GARCIA. COUNCILMEMBER ALDERETE

GAVITO. >> GAVITO: THANK YOU, MAYOR.

THANK YOU FOR THE PRESENTATION. WE ALL KNOW IT'S A FACT THAT CPS ENERGY IS GOING TO COME BACK TO COUNCIL FOR ANOTHER RIGHT HIKE AND THAT THE $25 MILLION THAT WE'RE TALKING ABOUT TODAY DID NOT COME FROM THE POCKET OF SAN ANTONIANS. THOUGH WE GET BACK TO CPS ENERGY TODAY IS THE DOLLAR CPS ENERGY CANNOT AND SHOULD NOT COME BACK TO US -- COME BACK AND ASK FOR IN THE FORM OF A RATE HIKE IN THE FUTURE. TODAY'S MONEY CAME FROM THE POCKETS OF RESIDENTS ALL ACROSS TEXAS WHO DO NOT LIVE IN SAN ANTONIO, AND SO WITH THAT BEING SAID, I'M IN FAVOR OF GIVING IT BACK TO CPS ENERGY TODAY.

SO THAT WHEN CPS COMES KNOCKING ON OUR DOORS FOR A RATE HIKE SOMETIME IN THE FUTURE, WE AS A CITY COUNCIL CAN SAY THAT WE DID WHAT WE COULD IN OUR POWER TO MINIMIZE THEIR ASK AND KEEP AS MUCH MONEY AS POSSIBLE IN THE POCKETS OF OUR RESIDENTS. SO ON THAT SAME SUBJECT BUT A DIFFERENT THREAD, I KNOW THAT CPS ENERGY HAS GREAT LEADERSHIP, I'M FULLY CONFIDENT IN THEIR LEADERSHIP. I THINK AS A COUNCIL IT'S INCUMBENT ON US TO ASK TOUGH QUESTIONS AND SO I WOULD LIKE TO SEE A FULL AUDIT OF CPS ENERGY, OF A FULL FINANCIAL AUDIT, BUT ALSO TO SEE THE PROJECTIONS THAT YOU ALL HAVE FOR THE NEXT UPCOMING TWO, FIVE, TEN YEARS SO THAT WAY WE KNOW WHAT TO EXPECT DOWN THE

ROAD. >> YEAH, I'LL TELL YOU FROM AUDIT PERSPECTIVE, THOSE

[00:45:03]

ON A GOOD-FORWARD BASIS, IT WILL LOOK SIMILAR WHAT WE SURED, THE FIVE-YEAR VIEW.

I THINK -- SHARED THE FIVE-YEAR VIEW. WE CAN OBVIOUSLY MEET WITH

YOU TO TALK MORE ABOUT IT. >> GAVITO: THANK YOU. >> I'LL ADD QUICKLY, AFTER THES LAST RATE REQUEST, WE HAD A CONVERSATION, OUR BOARD ENGAGED IN AN OPERATION EFFICIENCY REVIEW. THAT WAS COMPLETED IN A TIMELY MANNER AND THERE WERE 92 RECOMMENDATIONS. THE PIECES ARE CONTINGENT ON TECHNOLOGY THAT WE'VE TALKED ABOUT IN OUR ERP RECOMMENDATION. SO THAT DOCUMENTS 170-SOME PAGES IS AVAILABLE ONLINE THAT ANYBODY CAN VIEW. WE WERE ACCOUNTABLE IN

EXECUTING THAT AND THAT WORK WAS COMPLETED. >> GAVITO: THAN I THINK ALL OF THAT IS GREAT AND WE PROBABLY NEED TO KEEP THAT GOING, YOU KNOW, GOING SO THAT WE AS A COUNCIL AND A COUNCIL THAT'S ALSO GOING TO TURN OVER SOON ALSO HAS THAT INSIGHT AND THAT WE CAN SAYING WE KNOW THAT CPS IS GOING TO NEED THIS IN THE NEXT TWO YEARS, THIS IN THE NEXT FIVE YEARS, THIS IN THE NEXT TEN YEARS.

WE'RE TALKING ABOUT BIG DOLLARS HERE. I THINK THAT WE NEED TO HAVE THAT THOROUGH UNDERSTANDING SO THAT WE'RE FEELING CONFIDENT THAT CPS IS DOING WHAT THEY CAN TO PUSH OFF A RATE HIKE INCREASE AND THAT WE'RE ALSO DOING OUR JOB FOR OUR RESIDENTS IN ORDER TO PUSH THAT OFF AS WELL. THAT'S ALL I HAVE.

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

GAVITO. COUNCILMEMBER CABELLO HAVRDA >> HAVRDA: THANKS, MAYOR PRO TEM. RUDY, -- THANKS, MAYOR. THAT'S THE AUDIT I ASKED FOR. LIKE HOW ARE YOU BENCHMARKING THAT?

HOW ARE YOU LOOKING AT THAT AUDIT AND IMPROVING? >> ALL OF THOSE ITEMS THAT CAME OUT OF THAT THAT WERE ACTIONABLE, SOME WERE JUST OBSERVATIONS, ACTUALLY WE BUILT THOSE IN OUR BUSINESS PLANS. YOU KNOW, AGAIN, EVERY PART OF THE BUSINESS THAT HAD SOMETHING THAT THEY COULD ACT UPON, YOU KNOW, WORK THAT INTO OUR BUSINESS PLANS. WE FLOW THAT THROUGH OUR BUDGETS. THERE WERE TWO ITERATIONS OF WORK.

THE COMMITTEE ON EMERGENCY PREPAREDNESS HAD 10-SOME ACTION ITEMS THAT -- 130-SOME ACTION ITEMS. A LOT OF IT HAD TO DO WITH THE WORK WITH THE CITY.

THAT WAS ONE BUCKET OF ACTION AND THEN THE SECOND BUCKET OF ACTION CAME OUT OF THE CONVERSATION WE HAD DURING THE LAST RATE INCREASE.

>> HAVRDA: I AGREE ON THE AUDIT ISSUE. I THINK IT NEEDS A LITTLE MORE FOCUSED 10 WE'RE -- FOCUSED SO WE'RE NOT IN THE SAME PLACE TWO YEARS AGO.

I JUST -- THE 26 MILLION THAT'S GOING BACK TO CPS TO MAKE OUR INFRASTRUCTURE SOLID AND MAKE SURE THAT WE'RE READY TO HANDLE WHAT COMES OUR WAY, I ALWAYS THINK OF THE WINTER STORM. WE'RE ALL HOPING THAT DOESN'T HAPPEN AGAIN, BUT WE WEREN'T EXPECTING THAT ONE EITHER. EVERY PERSON IN THE CITY WILL BENEFIT FROM THIS, FROM REDUCING THE HOUSEHOLDS OUT OF POWER, REDUCING THE AMOUNT OF TIME OF THOSE THAT ARE OUT OF POWER AND GETTING THE MOST VALUE OUT OF OUR ASSETS. IT'S A BENEFIT FOR EVERY PERSON THAT LIVES IN THE CITY. MORE THAN A YEAR AGO WHEN I FIRST ASKED FOR THE 2% TO GO BACK TO CPS, THE GOAL WAS SIMPLE, GIVE CPS THE TOOLS THEY NEEDED TO MAKE SURE OUR CITY WAS RUNNING AND WE WERE TAKING CARE OF OUR RESIDENTS.

THERE'S BEEN SOME ITERATIONS AND I'M THANKFUL TO COUNCIL FOR ESTABLISHING THE POLICY, BUT I THINK THAT'S WHAT SMART PLANNING LOOKS LIKE AND IN ITERATION IS HOW WE'RE MOVING FORWARD TO HELP OUR RESIDENTS. I DO AGREE THAT ANYTHING THAT WE'VE DONE HERE TODAY HAS TO GO TOWARDS MITIGATING A FUTURE RATE INCREASE.

SO I'LL ASK YOU WITH THE SPECIFIC RESILIENCE AND INFRASTRUCTURE IMPROVEMENTS CORY MENTIONED, WERE ANY OF THOSE UPGRADES ORIGINALLY PLANNED TO BE FUNDED THROUGH

A PROJECTED RATE INCREASE? >> SO I MEAN THE BOILER ISSUE IS NEW.

[00:50:06]

THIS ONGOING EFFORT, THIS ABILITY TO DO MORE QUICKER IS A GREAT OPPORTUNITY, TO YOUR POINT SPECIFICALLY, HELPS MORE CUSTOMERS FASTER. SO I THINK THAT'S A REAL BENEFIT. STRATEGICALLY, EVERYTHING WE'RE EXECUTING ON IS EITHER CONSISTENT WITH OUR GENERATION PLAN APPROVED BY OUR BOARD OR CONSISTENT WITH A LOT OF THINGS RUDY JUST MENTIONED. I THINK THE BENEFIT IS GOING

TO BE REALLY STRONG FOR THE COMMUNITY. >> HAVRDA: OKAY.

>> COUNCILWOMAN, I JUST WANT TO CLARIFY ONE FEES OF THAT SO WHEN WE'RE THINKING ABOUT WAS IT IN THE LAST RATE CASE OR NOT, THOSE RATE CASES WHEN WE SEE THEM, THEY UPDATE. SO THAT CAPITAL PLAN CHANGES ALL THE TIME.

THEY RUN A HUGE GENERATION PLANT INFRASTRUCTURE. THIS ISSUE WITH SPRUCE 2, WE WOULD EXPECT TO SEE THAT IN THE NEXT RATE CASE. OTHER DIFFERENCES, THE RATE PLAN FROM LAST TIME, YOU'LL RECALL THERE WERE GENERATION ASSETS, I THINK THEY WERE IN '4, '5, '6, THEY HAD THE OPPORTUNITY TO ACQUIRE THOSE LAST SPRING, THEY DID THAT.

THAT PLAN COMPLETELY CHANGES, WE'RE NO LONGER GOING TO BUILD THAT, SOME OF THE PEAKERS WON'T HAPPEN. IT'S A CONSTANT UPDATE. WE ALSO LOOK TO SEE WHAT CHANGED AND WHY DID IT CHANGE AND WE LITERALLY GO THROUGH ALL OF THAT DETAIL TO UNDERSTAND WHAT IS CHANGING AND WHY. I JUST WANT TO GIVE THAT

CONTEXT. >> YEAH LET ME GET RIGHT TO THE POINT WHICH I THINK EVERY COUNCILMEMBER PROBABLY HAS THIS QUESTION, EVERY -- YOU KNOW, EVERY DOLLAR WE BRING IN FROM WHOLESALE SALES, WHATEVER DECISION YOU MAKE TO RETURN FUNDS BACK TO US OR KEEP THEM AND DO WHATEVER YOU WANT TO DO WITH THEM, THAT CREATES FLEXIBILITY IN OUR FINANCIAL PLAN. IT EXACTS THE TIMING WHICH WE MIGHT COME IN FOR A RATE CASE AND WHAT WE ASK FOR. I HAVE TO COME IN, WHEN OUR FINANCIALS SUGGEST THAT IT'S TIME, I GOT TO COME IN BECAUSE I'M RESPONSIBLE FOR YOUR ASSET AT THE END OF THE DAY. WE'VE GOT TO STAY IN FINANCIAL HEALTH. BUT EVERY DOLLAR COUNTS. AND SO MAYBE IT PUSHES US OFF A LITTLE BIT, MAYBE IT BRINGS THAT AMOUNT WE'RE ASKING FOR DOWN.

THE NEXT RATE WILL BE TO POWER THE COMMUNITY FOR THE NEXT 20, 30 YEARS.

WE'RE GOING TO HAVE A PRETTY SPECIFIC ASK WHEN WE BELIEVE WE NEED IT, BUT EVERY DOLLAR COUNTS. AND IT DOES CREATE FLEXIBILITY FOR US FOR WHEN WE'RE GOING TO COME IN AND ASK FOR IT AND WHAT THAT ASK IS GOING TO BE.

>> HAVRDA: THANK YOU, RUDY. OUR RESIDENTS SHOULDN'T HAVE TO CHOOSE BETWEEN STAYING WARM OR KEEPING THE POWER ON AND FILLING THE FRIDGE AND THEIR GAS TANK. IT'S OUR JOB TO BE PROACTIVE IN TAKING STEPS FORWARD FOR IMPROVING THE QUALITY OF LIFE FOR OUR CITIZENS. I HAVE A QUICK QUESTION.

SOMETHING MAYBE AKIN TO WHAT COUNCILWOMAN DR. ROCHA GARCIA MENTIONED ABOUT PUBLIC INPUT TO TALK ABOUT THOSE THINGS. TO TALK ABOUT THOSE SPECIFIC THINGS.

>> THANK YOU FOR THE QUESTION. WE HAVE A NEWLY FORMED CIC WHICH IS ONE OF THE COMMUNITY INPUT GROUPS THAT WE LEVERAGE WHERE WE THANK EVERYONE WHO IS SERVING ON THE CIC. WE HAVE AN OPPORTUNITY FOR INPUT, HOLDING DEDICATED INPUT SESSIONS. I SHARED NUMBERS AROUND HORIZON 2050, BUT OUR TEAMS ARE ALSO OUT IN THE COMMUNITY AT ALL TIMES.

AND SO -- BUT IT IS THE INTENT THAT ON THE THINGS YOU JIBED THAT THE CI --

DESCRIBED THAT THE CIC WILL BE A KEY INPUT BODY. >> HAVRDA: AND THE CIC IS

AN ONGOING COMMITTEE. >> YES, MA'AM. THE CHARGES THE RAC HAD HAVE PRETTY MUCH CHANGED OVER TO THE CIC. BUT LIKE WE ALWAYS DO, WHEN THE TIME COMES FOR A COMMUNITY CONVERSATION ABOUT OUR NEEDS, WE WILL DO THAT AND MORE. YOU KNOW, THAT PLUS. SO WE'VE GOT A PRETTY GOOD REPEATABLE PROCESS FOR ENGAGING THE COMMUNITY WHEN THE TIME COMES.

>> HAVRDA: OKAY. I WANT TO TALK A LITTLE ABOUT THE DATA CENTERS.

THAT'S HAD A BIG IMPACT ON OUR CITY, A BIG IMPACT ON MY DISTRICT.

CAN YOU TALK ABOUT HOW YOU PLAN TO REOR TIES ENERGY ALLOCATIONS BETWEEN THE

[00:55:04]

RESIDENTIAL CENTER NEEDS AND THE DATA CENTER NEEDS? >> THANK YOU FOR THE QUESTION. AS A UTILITY SERVING ELECTRIC AND GAS CUSTOMERS, WE DON'T -- WE DON'T DISCRIMINATE AT ALL. WE HAVE AN OBLIGATION TO SERVE. OUR INTENT IS TO ENSURE THAT WE'VE GOT ADEQUATE SUPPLY AND THAT WE'VE GOT ADEQUATE TRANSMISSION AND DISTRIBUTION TO BE ABLE TO SERVE CUSTOMERS. IT'S A REALLY GREAT QUESTION ABOUT ALLOCATION BETWEEN CUSTOMERS, BUT WE'RE NOT MAKING DECISIONS OF, WELL, THIS CUSTOMER GETS POWER AND THIS DOESN'T. WE WANT TO SERVE EVERYONE. THAT IS INCREASING CHALLENGING ARE THE NATURE OF THE CUSTOMERS AROUND DATA CENTERS ARE COMING IN WITH VERY LARGE ENERGY USAGE NEEDS AND THEY ARE ALSO COMING IN WITH VERY ACCELERATED TIME LINES, TIME LINES THAT QUITE HONESTLY IN SOME CASES WE CAN'T SECURE MATERIAL IN ORDER TO CONNECT THEM IN THE TIMES THEY ARE NEEDING.

SO IT IS CHALLENGING. BUT WE ARE -- YOU KNOW, OUR INTENT IS TO WORK WITH EACH CUSTOMER, REDESIGN OUR THE SAME TIME WE ARE SUNSETTING POWER GENERATION PLANTS THAT ARE AT END OF LIFE. AND THAT IN ITSELF IS CREATING COMPETITION FOR CAPITAL IN ORDER TO GET RESOURCES TO JUST KIND OF TREAD WATER.

AND SO FROM REPLACING, RENEWING OUR GENERATION TO EXPANDING OUR TRANSMISSION SYSTEM AND THEN THE PROCESS ASSOCIATED WITH INTERCONNECTING THESE LARGE CUSTOMERS, SOME MUCH WHICH MAY REQUIRE THE OUTPUT OF AN ENTIRE POWER PLANT ARE HOW WE ARE APPROACHING THIS BURGEONING INDUSTRY WE'RE SEEING ACROSS THE WORLD.

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

COUNCILMEMBER WHYTE. >> WHYTE: THANKS, MAYOR. SO I THINK IT'S IMPORTANT TO REMEMBER WHY WE'RE HERE AND HOW WE GOT TO THIS POLICY, THIS NEW CITY POLICY IN THE FIRST PLACE. AND IT DOES GO BACK, AS BEN MENTIONED, TO THAT RATE HIKE DISCUSSION LAST YEAR WHERE FOR THE SECOND TIME IN THREE YEARS, CPS ENERGY CAME TO CITY COUNCIL AND ASKED COUNCIL TO RAISE RATES ON OUR CITIZENS.

AND WE'LL REMEMBER WHEN WE HAD THAT DISCUSSION ON THE DAIS THAT DAY, SOME THINGS THAT WERE BROUGHT UP, NUMBER ONE, WHEN YOU LOOK AT HOUSEHOLD INCOME OF OUR CITIZENS IN SAN ANTONIO VERSUS WHAT THEY ARE PAYING ON ENERGY COSTS, OUR CITIZENS ARE PAYING A LARGER PORTION OF THEIR INCOME TOWARDS ENERGY THAN MANY, MANY OTHER CITIES IN THE STATE. NUMBER ONE.

REALLY HASN'T CHANGED FOR A DECADE, IS SOMEWHERE BETWEEN 17 AND 18% OF THE POPULATION. AND FINALLY, ONE/FIFTH OF OUR CPS ENERGYRG CUSTOMERS BY THE LAST ESTIMATE ARE PAST DUE ON THEIR ENERGY BILLS. WE HAVE AN ISSUE HERE IN OUR CITY WHERE A LARGE PORTION OF SAN ANTONIANS ARE STRUGGLING TO PAY THESE BILLS. AND IT IS SIMPLY NOT FAIR TO CONTINUE TO ASK THEM TO PAY MORE. WE'VE DONE IT TWICE NOW IN THE LAST THREE YEARS, AND CPS HAS BEEN HONEST AND SAID THAT NEXT YEAR OR THE YEAR AFTER THEY ARE GOING TO COME BACK FOR ADDITIONAL RATE HIKES. WITH THAT AS THE BACKDROP, IN THE SPRING OF THIS YEAR WITH THE EXPRESS PURPOSE OF RATE MITIGATION, WE PUT THIS NEW POLICY INTO PLACE WHERE WE SAID WE'RE GOING TO GIVE SOME OF THIS MONEY BACK TO CPS TO OFF SET OR MITIGATE FUTURE RATE HIKES. AND AS I'VE SAID BEFORE, TO DO ANYTHING BUT WHOLEHEARTEDLY STICK WITH THAT POLICY TODAY WOULD SIMPLY BE UNDISCIPLINED AND FOOLISH. WE NEED TO SEND THIS MONEY BACK TO CPS, AND THE REASON IS THAT YES, WE DO NEED A VIBRANT, HEALTHY CPS ENERGY MOVING FORWARD. AND CPS ENERGY DOES NEED MONEY TO DO THIS AND THERE'S

[01:00:01]

AND THE THIRD OPTION AND WHAT'S BEEN USED IN THE LAST --T THREE YEARS IS TO RAISE RATES ON OUR CITIZENS AND I'M SIMPLY TIRED OF US DOING THAT.

OPTION 3 SHOULD NO LONGER BE AN OPTION. AND SO MY POSITION IS CLEAR, THE MONEY SHOULD GO BACK TO CPS. IN TERMS OF AN AUDIT AND LOOKING AT CPS AND HOW IT SPENDS ITS MONEY, I THINK IT IS AN ISSUE, RUDY.

AND I THINK BY LAST COUNT CPS IS $7 BILLION IN DEBT. IS THAT ABOUT RIGHT?

>> WE HAVE 8 BILLION IN OUTSTANDING DEBT, BUT I WOULDN'T CALL IT IN DEBT.

IT'S IN REFERENCE OF $16 BILLION IN ASSETS. >> WHYTE: SO $8 BILLION IN OUTSTANDING DEBT. AND IT DOES RAISE THE CONCERN WITH ME THAT IS CPS

PERHAPS GETTING OVERLEVERAGED. >> CAN I COMMENT TO THAT.

I WANTED TO CLARIFY FROM A BENCHMARK PERSPECTIVE, WE'RE IN LINE WITH THE INDUSTRY AND HAVE REVIEWED THAT WITH OUR RATING AGENCIES AND STILL MAINTAIN OUR DOUBLE A

STATEWIDE. >> AND LET ME JUST ADD THERE ARE OTHER UTILITIES AROUND THIS COUNTRY THAT ARE HARD LIMITS ON THE AMOUNT THEY CAN INCUR TO MAKE INVESTMENTS THAT THEY NEED TO MAKE. IN THOSE INSTANCES WHERE THERE'S DEBT CAPS, MOST OF THOSE UTILITIES ARE SEEING 6% PLUS ANNUAL RATE INCREASE FOR MULTIPLE YEARS. IF YOU ARE LIMITED ON YOUR ABILITY TO USE LEVERAGE TO BALANCE THE AFFORDABILITY FOR CUSTOMERS, YOU GOT NOWHERE ELSE TO GO BUT YOUR CUSTOMERS. I JUST WANT TO -- OUR PLAN IS A WELL THOUGHT-OUT PLAN WITH OUR FINANCIAL ADVISERS THAT TAKES AFFORDABILITY INTO CONSIDERATION.

IT'S NOT JUST TAKING ON DEBT. THIS IS OUR FINANCIAL PLAN.

>> WHYTE: I UNDERSTAND, AND IT'S OUR JOB I THINK HERE ON COUNCIL TO ASK THE QUESTIONS BECAUSE WE ALL WANT THE SAME THING. WE ALL WANT CPS TO THRIVE AND SUCCEED MOVING FORWARD. BUT AGAIN, $8 BILLION IS $8 BILLION.

AND I WORRY ABOUT THINGS LIKE THE CLOSING OF THE SPRUCE PLANT EARLY.

THERE'S STILL DEBT REMAINING THERE THAT'S GOING TO HAVE TO BE PAID.

RIGHT? >> THERE'S APPROXIMATELY MAYBE $100 MILLION OR SO REMAINING A SPRUCE 1, WHICH IS RELATIVELY SMALL. WHEN I THINK ABOUT THE 300 MILLION WE HAD TO PUT INTO THE PLANT, THE PAYBACK WASN'T THERE.

WHEN YOU LOOK AT THE INVESTMENT NEED TO DO MAINTAIN ENVIRONMENTAL STANDARDS VERSUS THE PAYBACK, IT WASN'T THERE. SPRUCE 2, AS YOU KNOW, WE HAVEN'T PLANNED TO CONVERT TO NATURAL GAS SO MOST OF THAT WE'LL BE ABLE TO

CONTINUE ON. >> WHYTE: IS THERE ANY CONCERN THAT ERCOT COULD GET

INVOLVED IN TERMS OF OUR POTENTIAL PLANT CLOSURE? >> I THINK YOU ARE SEEING THAT HEADLINE RIGHT NOW. WE'RE IN THE PROCESS TO RETIRE THAT AND THEY'VE ACTIVELY BEGUN THE PROCESS TO POTENTIALLY KEEP THAT RUNNING.

LIKE WE'VE SAID PUBLICLY TO THE EXTENT ERCOT DOES HAVE THAT REQUIREMENT, IT WOULD NOT BE ON THE BURDEN OF LOCAL CUSTOMERS TO CONTINUE THOSE COSTS OF CONTINUE

RUNNING IT. >> THE TIMING IS IMPORTANT BECAUSE WE'RE NOT TALKING ABOUT DOING THAT UNTIL 2028. WE EXPECT SOME OF THE CONSTRAINTS AROUND THE SAN ANTONIO TRANSITION SYSTEM TO BE ALLEVIATED BY 2027.

THEY ARE NOT JUST LOOKING AT THE TYPE OF PLANT IT IS, WHERE THE PLANT IS AND THE SITUATION OF THE TRANSMISSION LINES AROUND IT ARE ALSO A FACTOR WHEN ERCOT

DECIDES TO ASK US TO KEEP THE PLANT RUNNING. >> WHYTE: AND I APPRECIATE THAT. AND SO, YOU KNOW, I WOULD BE IN FAVOR AS HAS BEEN MENTIONED EARLIER, I THINK YOU CALLED IT AN OPERATIONAL EFFICIENCY REVIEW.

I WOULD CERTAINLY WANT TO SEE ANOTHER ONE OF THOSE PERFORMED PRIOR TO ANY FUTURE RATE HIKE REQUESTS. AND THEN IN TERMS OF GIVING THIS MONEY BACK TO CPS, I'VE HEARD SOME OF MY COLLEAGUES OFTEN SAY WE'RE GOING TO GIVE THIS MONEY BACK, BUT HOW CAN WE GUARANTEE THAT CPS THEN IS GOING TO ASK FOR, YOU KNOW, A LESSER RATE HIKE OR WHATEVER IT MIGHT BE. OF COURSE, THE ANSWER IS WE CAN'T. RIGHT? WE CAN'T GUARANTEE OR ASSURE OURSELVES OF WHAT YOU GUYS ARE GOING TO ASK FOR, BUT I WILL SAY IT'S GOING TO BE

[01:05:02]

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

>> KAUR: THANK YOU, MAYOR. THANK YOU ALL FOR THIS PRESENTATION.

I UNDERSTAND WHAT COUNCILMEMBER WHYTE AND SOME OF MY COLLEAGUES HAVE BEEN SAYING AND I DO BELIEVE IT'S IMPORTANT FOR US TO UNDERSTAND THE ASSUMPTIONS IN THE BUDGET YOU PRESENTED LAST TIME. DID YOU ALL EXPECT TO HAVE THIS $25 MILLION FROM THE LAST PRESENTATION THAT WE HAD?

>> THERE ARE A LOT OF THINGS WE DIDN'T EXPECT. WE ALSO DIDN'T EXPECT TO HAVE THESE 1700 MEGAWATTS THAT WE PERFORMED. THE YEAR GOES ON AND THERE

ARE A NUMBER OF THINGS THAT HAVE KIND OF MOVED. >> KAUR: I THINK IT WOULD BE GREAT IF WE COULD SEE AN UPDATED FIVE-YEAR PROFORMA THAT YOU SHOWED US THE LAST TIME FOR THE RATE HIKE AND WHAT HAS CHANGED ALREADY. I UNDERSTAND ASSUMPTIONS CAN CHANGE. WHEN YOU COME BACK WITH A DIFFERENT NUMBER, WE HAVEN'T SEEN WHAT IS CHANGING. WE ALSO HAVEN'T SEEN THE PROGRESS THAT'S ALREADY BEEN MADE. IT WOULD BE GREAT TO SEE HOW MUCH -- I REMEMBER ONE OF THE THINGS I REMEMBER DISTINCTLY WAS THE TECHNOLOGY INFRASTRUCTURE FOR THE WEBSITE. SO HOW MUCH PROGRESS HAVE WE MADE ON THAT COMPONENT WOULD

BE HELPFUL TO SEE AS WELL. >> WE CAN ABSOLUTELY DO. THAT WE MEET WITH CITY STAFF ONCE A MONTH TO GO OVER THE BUDGET ACTUAL AND I THINK IT'S A GREAT VIEW AND WE

ALSO MEET WITH THE BOARD QUARTERLY. >> KAUR: I DON'T THINK WE NEED IT MONTHLY, BUT IF WE WERE ABLE TO SEE THE QUARTERLY SO WE GET A BETTER UNDERSTANDING WHAT'S HAPPENING. WE DON'T SIT ON THE BOARD, BUT WE STILL HAVE A RIGHT, LIKE HAS BEEN SAID BY COUNCIL COLLEAGUES, TO MAKE SURE WE'RE DOING RIGHT FOR OUR RESIDENTS. AND YES, DEBT IS NOT -- DEBT IS NOT A SCARY THING AND I WANT TO SAY THAT BECAUSE SOMETIMES OUR RESIDENTS DON'T -- THAT'S A HARD CONCEPT TO UNDERSTAND. DEBT IS ONLY SCARY WHEN YOU ARE TAKING IT OUT IRRESPONSIBLY AND THE PLAN FOR PAYING THAT IS INCREASING RATEPAYER DOLLARS. AND SO I JUST WANT TO MAKE SURE YOU GUYS ARE THINKING STRATEGICALLY ABOUT WHEN WE ARE TAKING THAT, HOW WE'RE GOING TO BE SPENDING IT. ANOTHER WAY YOU COULD ALSO SPEND A PORTION OF THIS MONEY IS TO MAKE SURE YOU KNOW EXACTLY WHERE YOUR UTILITY LINES ARE UNDERGROUND AND RUDY, YOU COULD ALSO SIGN THAT MOU FOR --R WAY THAT OUR RATEPAYERS WOULD APPRECIATE HAVING CONSTRUCTION PROJECTS ON TIME.

IT'S IMPORTANT WORK AND WE NEED THAT MOU SIGNED. THANKS, MAYOR.

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

>> CASTILLO: I SECOND COUNCILMEMBER KAUR. THANK YOU FOR THE PRESENTATION. DURING YESTERDAY'S BOARD MEETING, THE BOARD DISCUSSED THE NEED FOR ROUGHLY $1.3 BILLION IN TRANSMISSION INFRASTRUCTURE LARGELY DUE TO RAPID GROWTH AND EXPANSION OF DATA CENTERS. I UNDERSTAND THE FINANCIAL POLICY AND THE CITY COUNCIL HAS PUT FORTH AND THE GOAL AND SPENT WITH OFF-SYSTEM SALES IS TO POTENTIALLY STAVE OFF THE NEED FOR A RATE INCREASE.

BUT LOOKING AT THE MEETING NOTES AND THE CONVERSATIONS, IT ALMOST SEEMS UNATTAINABLE TO KEEP UP WITH THE REQUEST, EXPANSION, THE GROWTH AND NEEDS TO SUSTAIN ALL OF THE INFRASTRUCTURE. I UNDERSTAND THOSE INVESTMENTS ARE VERY MUCH NEEDED, BUT I RESONATE WITH THE COMMENTS MADE BY MY COLLEAGUE WITH MY CONSTITUENTS WANT TO UNDERSTAND WHAT IS SUSTAINABILITY LOOK LIKE IN MY NEIGHBORHOOD. WHAT IN THE CASE OF ROLLING BROWNOUTS OR WHATEVER THE CASE MAY BE. A CLEAR MESSAGE ON WHAT THEIR EXPECTATIONS SHOULD BE WOULD BE HELPFUL TO COMMUNICATE TO MY RESIDENTS. THAT'S WHY WITH THIS FINANCIAL POLICY I HAVE NOT AGREED WITH IT BECAUSE I THINK THERE'S OPPORTUNITY TO INVEST IN THE CITY'S MITIGATION PLAN AND INVEST IN THAT INFRASTRUCTURE AND RESILIENCY HUBS. I UNDERSTAND THIS REVENUE IS UNCERTAIN AND IT'S ONE-TIME FUNDING, BUT I THINK CITY STAFF HAS EXPERIENCE THROUGH ARPA ON HOW WE CAN USE THOSE DOLLARS TO INVEST IN INFRASTRUCTURE AND/OR FACILITIES.

THE EXPECTATION MY CONSTITUENTS HAVE IS THERE'S A PLAN ESTABLISHED IN CASE

[01:10:01]

WHAT IS THE PLAN, CAN YOU WALK ME THROUGH ONE MORE TIME?

I DIDN'T CATCH WHAT YOU SAID. >> WE DON'T HAVE IT EARMARKED. IT WAS UNANTICIPATED, NOT IN OUR BUDGET.

WHAT WE HAVE LAID OUT IS OUR CAPITAL PLAN AT THE BEGINNING OF THE YEAR AND WE'VE BEEN EXECUTING TO THAT AND WE'VE MADE CHANGES JUST THIS YEAR, BUYING ADDITIONAL ASSETS. THAT'S COMING WITH ADDITIONAL CAPITAL AND O&M.

THAT 200 MILLION IS ONE OF MULTIPLE THINGS EBBING AND FLOWING THROUGH OUR BUDGET.

IT IMPROVES THE FINANCIAL IN THE NEAR TERM. WE'RE TALKING ABOUT DEBT, WHAT WE'VE ACTUALLY SEEN THROUGH OUR FORECAST AND OUR DUE DILIGENCE, OUR DEBT TO CAPITALIZATION RATIO IS LOWER BECAUSE SOME OF THIS ADDITIONAL REVENUE ENABLES US TO CASH FUND SOME OF THE PROJECTS IN THE AGGREGATE. I WOULDN'T TELL YOU THAT I GOT $200 MILLION FOR LINE ITEMS NECESSARILY, THEY GO TO BROADER CATEGORIES IN THE

BUDGET. >> CASTILLO: THAT'S HELPFUL AND THAT'S WHY WE SUPPORTED MY COLLEAGUES' REQUESTS, THAT WE WE COULD CONNECT THE DOTS ON WHERE THE SURPLUS FUNDING WAS GOING AND CHECKING ON OF THE LIST OF ITEMS WE WERE ASKED TO SUPPORT A RATE INCREASE. THE SOFTWARE WAS ONE EXAMPLE, BUT WE CAN SEE WHAT ARE WE CHECKING OFF THE LIST OF IMPROVEMENT AND INVESTMENT.

>> COUNCILWOMAN, I'M A LITTLE SENSITIVE TO THE USE OF THE TERM AUDIT.

WE HAVE UTILITIES, YOU KNOW, ORGANIZATION WITHIN THE CITY THAT WE RECONCILE OUR BUDGET TO WHAT OUR PLAN IS. WHEN WE GET EXCESS FUNDS THROUGH WHOLESALE THAT MAYBE WE WEREN'T BUDGETED WHICH LET ME SAY THAT'S A GOOD THING.

IT'S A GOOD CHANGE FOR YOU ALL, GOOD THING FOR US, GOOD FOR OUR COMMUNITY.

ALL OF THOSE FLOW THROUGH OUR FUND PROCESS THE WAY 6% GOES TO OUR SAVINGS ACCOUNT, 14% GOES TO THE CITY, AND THE REST GOES TO SUPPORT OPERATIONS.

SO THERE'S NOTHING TRICKY, YOU KNOW, ABOUT WHERE THE MONEY GOES.

THE MONEY GOES WHERE IT ALWAYS GOES AND AS CORY HAS STATED IN THIS INSTANCE WE'VE GOT 1710 MORE MEGAWATTS THAT WE'RE GOING TO OPERATE, HAVING TO MAKE CAPITAL INVESTMENT IN THAT WE'RE JUST LEARNING ONCE WE GOT CONTROL OF THE ASSETS.

SO ALL THESE FUNDS ARE GOING EXACTLY WHERE THEY SHOULD BE GOING.

THERE'S NOTHING NEW OTHER THAN THE ASSETS THAT WE BROUGHT THAT REALLY ARE THE

REASON WE HAVE THESE FUNDS. >> CASTILLO: I HEAR YOU AND I TRUST YOU AND YOUR LEADERSHIP, BUT I HAVE RESPONSIBILITY TO SEE THE LINE ITEM BREAKDOWN AND THAT'S WHAT I'M LOOKING FOR. THAT'S SOMETHING I WOULD HOPE WE CAN GET A BRIEFING ON SO THAT WAY WHEN CPS COMES BACK ON A POTENTIAL RATE INCREASE I'M ABLE TO PRESENT TO MY CONSTITUENTS WHERE IMPROVEMENTS HAVE BEEN MADE AND WHERE WE'RE FARING AND MAKE MY ARGUMENT TO WHY OR WHY NOT IT IS SOMETHING WE SHOULD BE SUPPORTIVE OF.

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

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

THANK YOU FOR THE PRESENTATION. ALWAYS REAL INSIGHTFUL.

WHEN I THINK ABOUT WHY WE'RE HERE AND HOW WE GOT HERE, I GO BACK WAY FURTHER IN THE FACT THAT BECAUSE SAN ANTONIO IS PRIMARILY -- WAS PRIMARILY MEXICAN AMERICAN, THE CITY NEED TO DO STEP IN AND HAVE THEIR OWN ENERGY COMPANY.

BECAUSE WE WERE DIVIDED INTO SECTIONS, INTO LINES, THE WEST SIDE, SOUTH SIDE, THE EAST SIDE, AND BIG BUSINESS AND COMPANIES WERE PREPARED TO JUST DIVIDE US BY COLOR AND PROVIDE SUBSTANDARD SERVICES FOR PEOPLE THAT LIVED IN CERTAIN PARTS OF TOWN. SO I THANK THE CITY LEADERS THAT HAD THE FORESIGHT TO PURCHASE BOTH THE UTILITY COMPANIES TO MAKE SURE WE GOT SERVICE ACROSS THE BOARD. GENERATIONALLY WE ARE LOOKING AT THESE ANNEXED AREAS AND HOW DO WE ADDRESS THAT. WE'RE HERE AGAIN BECAUSE WHEN THE WINTER STORM CAME, WE LEARNED ERCOT DIDN'T KNOW HOW TO DO ROLLING BLACKOUTS.

WE LEARNED THAT. AND NOW WE ARE LIVING IN THAT EFFECT.

YOU CAME AND ASKED US AND WE KNEW WE NEEDED TO PAY FOR THESE BILLS AND WE'VE DONE THE RATE INCREASE TWICE. THE HESITATION YOU HEAR RIGHT NOW IS WE DO WANT

[01:15:02]

THAT'S WHY I THINK -- I'M NOT -- I DON'T WANT AN AUDIT, BUT WHAT I DO WANT TO KNOW IS HOW WE HAVE PUT OUR MONEY IN BUCKETS, WHEN YOU GET YOUR OFF SALES 200 MILLION, THAT GOES TO OUR INNOVATION BUCKET, THIS GOES TO OUR GENERATIONAL BUCKET, THAT WOULD HELP IMMENSELY. I WANT A NUMBER IN TERMS OF IF I HAD BY SOME MIRACLE ANOTHER $100 MILLION, COULD YOU PUSH OFF A RATE INCREASE FOR A YEAR OR TWO YEARS OR FOUR YEARS. SO THAT'S THE DOLLAR AMOUNT I NEED TO KNOW. WHAT DOLLAR AMOUNT WILL WE NEED SO WHEN CPS COMES AND SAYS I NEED A RATE INCREASE, WE'RE LIKE NO, HERE'S THE $100 MILLION OR $25 MILLION

YOU NEED. >> COUNCILWOMAN, THAT QUESTION IS HARDER TO ANSWER BECAUSE WHAT WE'RE TALKING ABOUT HERE -- AND I WANT TO PUT MY UTILITY HAT ON AND NOT MY CFO, SO WHAT THEY ARE LOOKING FOR, THEY ARE LOOKING FOR RECURRING REVENUE. CORY TALKED ABOUT TAKING ON ADDITIONAL DEBT.

THE CASH FUND CAPITAL, THEY GOT TO MAINTAIN THAT RATIO. THE FORECAST IN TERMS OF WHERE THEY WERE LOOKING FOUR RECURRING REVENUE FOR NEXT FALL WAS 5%, IF I REMEMBER RIGHT, OR FIVE AND A HALF. ABOUT $120 MILLION IN RECURRING REVENUE.

HE MENTIONED THE ADDITIONAL OFFSETS, REVENUE THEY HAVE FOR THIS YEAR, WELL, I'M -- LAST YEAR, THEIR LAST FISCAL YEAR, THEIR CURRENT FISCAL YEAR AND LIKELY WHAT THEY WILL GET NEXT FISCAL YEAR. THEY ARE DEPLOYING IT, TRYING TO BE STRATEGIC ABOUT HOW THEY DRIVE DOWN OR DEFER RATE INCREASES. THE MORE CAPITAL HE CAN FUND WITH CASH, MAYBE TAKE OUT LESS DEBT, THAT HELPS. IF HE HAS OPPORTUNITIES TO RESTRUCTURE DEBT, THAT HELPS. IT IS A DYNAMIC MODEL THAT HAS A LOT OF MOVING PARTS AND

A RECURRING REVENUE IMPACT. >> VIAGRAN: THAT'S WHERE MY PROBLEM COMES WITH IS BECAUSE 25 POINT MILLION IN THE BIG PICTURE IS WHAT, 10% OF WHAT THEY NEED?

>> IT WOULD BE ABOUT -- AGAIN, WE'RE TALKING ABOUT ONE-TIME DOLLARS VERSUS RECURRING. I WOULDN'T EQUATE THOSE AS A PERCENTAGE.

>> VIAGRAN: THEN I DON'T KNOW WHY WE'RE TALKING LIKE THIS IS GOING TO HELP US WITH THE RATE INCREASE OR NOT GETTING -- A RATE INCREASE IS GOING TO COME.

AND UNLESS WE'RE HONEST AND SAY THIS IS HOW MUCH I WILL GIVE YOU, I WILL GIVE YOU 1% A YEAR FOR THE NEXT FIVE YEARS, WHICH IS WHAT THIS COUNCIL NEEDS TO TALK ABOUT, GIVING 25 POINT MILLION BACK TO CPS ENERGY, AS COUNCILMEMBER CASTILLO MENTIONED, WE COULD USE IT FOR OUR PROGRAMS THAT HELPS WITH WEATHERIZATION THAT HELPS PEOPLE KEEP THEIR HOMES SO THEY COULD PAY THEIR UTILITY BILLS IS WHAT I WOULD MUCH RATHER SEE. WE'RE -- I'D RATHER SAY LET'S GET TO THE TIME WHEN YOU ARE COMING TO ASK THE RATE INCREASE. IF WE GIVE YOU THE 40 MILLION OR 50 MILLION WE HAVE THAT WE WERE GOING TO GIVE BACK TO YOU FROM OFF-SYSTEM SALES, CAN YOU MAKE IT NOT 5% BUT 4.5%. I THINK THAT'S WHERE WE HAVE TO HAVE A CONVERSATION ABOUT ENERGY AND THE GENERATIONAL PLAN IN TERMS OF WHAT WE NEED TO DO TO GET MORE ENERGY HERE AND TO BE AN ENERGY PRODUCER.

I THINK WE'RE HAVING TWO DIFFERENT CONVERSATIONS AND THE HOPE THAT YOU'RE NOT GOING TO COME BACK TO ME AND ASK ME FOR A RATE INCREASE, I JUST -- THAT'S NOT GOING TO HAPPEN. YOU'RE GOING TO COME BECAUSE THE NEEDS ARE GREAT BECAUSE THIS CITY IS GROWING. WHAT I NEED TO KNOW, CAN I GET 1% SHAVED OFF OR CAN I GET HALF A PERCENT SHAVED OFF OF THIS. SO -- AND I DON'T -- I LIKE THE BUCKETS. I DON'T NEED AN AUDIT. BUT WHAT I NEED IS MORE HONESTY IN TERMS OF AND IF YOU GIVE US THIS 25 MILLION OR IF WE DO OFF SALES AT THIS RATE, IT COULD POSSIBLY BE 4%. THAT MAKES IT EASIER FOR ME TO GO OUT TO MY RESIDENTS

AND TELL THEM THIS IS WHAT'S HAPPENING. >> I'LL JUST POINT OUT, I

[01:20:05]

>> VIAGRAN: BUT CORY, YOU CAN'T TELL ME IT'S GOING TO BE 1% LESS IF I GIVE YOU --

>> WE CAN'T GET THAT SPECIFIC BECAUSE -- YOU KNOW, IT -- WHEN CORY RUNS FIVE-YEAR PROJECTIONS, WE'RE LOOKING AT FINANCIAL RHETORICS, IT IS A DYNAMIC MODEL BASED ON WHAT IS HAPPENING, WHAT CONDITIONS ARE IN THE MARKET, WHAT OUR GENERATION IS WORTH. WE ARE TRYING TO MAXIMIZE THE OPPORTUNITIES WE HAVE IN THE MARKET TODAY TO EXECUTE OUR GENERATION PLAN AT A LOWER COST.

THAT HAS THE MOST IMPACT ON WHAT THE NEEDS OF THE FUTURE ARE GOING TO BE.

WE'VE COME IN UNDER PERCENTAGE -- AT LEAST UNPERCENTAGE WHERE WE STARTED EVERY TIME WE'VE COME IN THE LAST COUPLE OF TIMES.

THAT IS MY GOAL. >> VIAGRAN: AND I HEAR THAT.

THE OTHER GOAL IS IF I'M GOING TO GIVE YOU BACK 25 MILLION FOR THE SLIDE NUMBER 6 AND THE PROGRAMS ON RESILIENCY, POWER PLANT RELIABILITY AND RECESS PROGRAMMING, I'M GOING TO NEED TO KNOW WHO YOU ARE HIRING AND IF THAT MATCHES UP WITH THE -- THE GOALS THAT THIS COUNCIL INITIALLY SET UP FOR.

BECAUSE I'D WANT TO MAKE SURE THAT IT'S CPS EMPLOYEES AND NOT CONTRACT EMPLOYEES AND I'D WANT TO MAKE SURE THAT THEY ARE GETTING FAIR WAGES, WELL ABOVE MINIMUM WAGE. AND THAT'S THE THING IS IF I'M GOING TO GIVE 25.9 MILLION TO A PROGRAM, I WANT TO KNOW THAT THE PROGRAM ALIGNS WITH WHAT WE'RE DOING HERE IN THE CITY. AND SO AT THIS POINT AS PRESENTED, AND YOU DON'T NEED TO ANSWER, RUDY, I CANNOT SUPPORT THIS BECAUSE I DON'T HAVE THE DETAILS THAT I NEED. AND I JUST REALLY THINK I'D MUCH RATHER HOLD ON TO THIS 25.9 MILLION AND WAIT UNTIL THEY COME AND ASK FOR THE RATE INCREASE NEXT YEAR AND THEN SEE WHAT WE CAN DO THEN.

SO THAT'S ALL I HAVE TO SAY ON THIS ISSUE. AGAIN, CPS DOES AN EXCELLENT JOB. I DON'T THINK WE NEED ANOTHER AUDIT.

I THINK WE JUST NEED TO ASK BETTER QUESTIONS. THANK YOU.

>> MAYOR NIRENBERG: THANK YOU, COUNCILMEMBER VIAGRAN. ANY ADDITIONAL DISCUSSION? JUST A FEW CLARIFYING POINTS FROM ME, ERIK. WHAT IS OUR ADOPTED POLICY

IN LIEU OF ANY ADDITIONAL DECISIONS BY THE COUNCIL? >> WALSH: THE CURRENT

FINANCIAL POLICY? >> MAYOR NIRENBERG: YES. >> WALSH: BASED ON THIS CONVERSATION OR BASED ON THE COUNCIL CONVERSATION, THEN WE WOULD EXECUTE A CHANGE.

IS THAT WHAT YOUR QUESTION WAS? >> MAYOR NIRENBERG: SO OUR ADOPTED CITY COUNCIL POLICY RELATED TO EXCESS CPS ENERGY IS.

>> WALSH: WHAT'S ON THE SLIDE. >> MAYOR NIRENBERG: ARE

YOU ASKING FOR ADDITIONAL DECISIONS? >> WALSH: COUNCIL FEEDBACK ON OFF-SYSTEM SALES ABOUT REINVESTMENT IN RELIABILITY AND RESILIENCY PROJECTS,

WHICH WE PRESENTED TO YOU TODAY. >> MAYOR NIRENBERG: OKAY.

AND SO I GUESS MY QUESTION IS BACK TO YOU. WHAT ARE YOU GLEANING FROM THIS CONVERSATION? I WILL TELL YOU THAT -- ACTUALLY, HOLD ON TO THAT.

LET ME ASK RUDY A FEW QUESTIONS. YOU KNOW, AGAIN WE'RE TALKING ONE-TIME REVENUE, WE CAN'T REALLY FORECAST IT WITH ANY GREAT PRECISION.

WHAT IS THE TOTAL NET ASSETS OF CPS ENERGY IN TERMS OF YOUR POLES, YOUR PLANTS,

WEARS, WHAT IS THE ESTIMATED VALUE OF THOSE ASSETS. >> $10 BILLION.

>> MAYOR NIRENBERG: OF EQUIPMENT. >> POLES, WIRES, YOU KNOW.

>> MAYOR NIRENBERG: AND I WOULD GATHER MOST OF THAT $10 BILLION REQUIRES SOME

LEVEL OF MAINTENANCE. >> ABSOLUTELY. AND IT'S GROWING.

EVERY YEAR AS OUR SYSTEM GROWS, THOSE ASSETS GROW WITH IT.

>> MAYOR NIRENBERG: AND SOME OF THOSE MAINTENANCE ISSUES REQUIRE LARGE CAPITAL

INVESTMENTS. >> IT'S HARD TO TURN A SPADE OF DIRT WITHOUT SPENDING A

MILLION DOLLARS. >> MAYOR NIRENBERG: CAN YOU GIVE

>> BECAUSE OF THE AMOUNT OF -- THE NUMBER OF REALLY DIFFICULT SUMMERS OVER THE

[01:25:05]

WHEN THAT HAPPENS, WHEN YOU PUT MORE PRESSURE ASSETS, YOU HAVE MORE PROBLEMS. THIS SUMMER WE SAW SIGNIFICANT PROBLEMS WITH SPRUCE UNITS AND SOME OF THE OLDER GAS STEAM UNITS BUT WE HAD THE ASSETS TO BUY CORPUS CHRISTI AND LADDER.

THE SPRUCE UNITS IN PARTICULAR WHERE WE'RE HAVING TUBE LEAK ISSUES WITH THE WAY THAT PLANT WAS ENGINEERED, THOSE HAVE GOTTEN A BIT MORE FREQUENT.

SO THE AMOUNT WE'RE HAVING TO REINVEST IN THOSE ASSETS HAS ABSOLUTELY GROWN.

>> MAYOR NIRENBERG: OKAY. I WAS ASKING FOR ONE, BUT YOU GAVE ME A FEW.

DO YOU HAVE A LARGE SUM THAT'S KIND OF UNUSUAL? >> YEAH, I MEAN WE SPENT $785 MILLION ON THE CORPUS AND LAREDO ASSETS. THAT WOULD PROBABLY BE ONE OF THE BIGGEST IN OUR HISTORY WAS THAT ACQUISITION.

YEAH, PLUS THE EXTRA HUNDRED MILLION IN CAPITAL. >> MAYOR NIRENBERG: I DON'T MEAN TO BELABOR THE POINT. THERE'S GOING TO BE A NUMBER OF EXPENSES, SOME OF WHICH WE CAN PREDICT, SOME OF WHICH WE CAN'T, THAT THIS POLICY IS GOING TO HELP US OFF SET SOME OF THOSE COSTS. IF WE DON'T OFF SET THOSE COSTS, THE FULL AMOUNT IS GOING TO BE BORNE ON ALL OTHER REVENUE STREAMS IN THE CITY INCLUDING THE RATES THAT RATEPAYERS PAY. ANY AMOUNT WE'RE ABLE TO DENT INTO LARGER EXPENSES WHETHER IT'S THE BIG CAPITAL EXPENDITURES WE'RE NOT FORESEEING OR THE ONES WE CAN FAIRLY WELL PREDICT OR THE POLICIES THAT WE ADOPT SUCH AS WANTING BETTER VEGETATION CONTROL. AND I JUST READ THE HEADLINE SOME 8600 PEOPLE WERE OUT OF POWER YESTERDAY BECAUSE OF THAT STORM.

I TAKE IT SOME WERE DOWNED POWER LINES BECAUSE OF TREES.

>> IT'S ALWAYS TREES, MAYOR. >> MAYOR NIRENBERG: SO I HEAR THE DESIRE TO HAVE A GUARANTEE FROM YOU THAT IF WE, YOU KNOW, CONTINUE ON WITH THIS POLICY, WHICH I THINK IS A SOUND, PRUDENT THING TO DO, THAT WE'RE NEVER GOING TO HAVE ANOTHER RATE INCREASE. THAT'S JUST UNREALISTIC. WE KNOW THERE WILL BE ONE.

I DON'T THINK ANYONE IS UNDER THE ASSUMPTION YOU ARE GOING TO BE ABLE TO GIVE US THAT GUARANTEE. WHAT I'M HEARING THERE'S MORE DESIRE TO HAVE A LITTLE MORE SPECIFICITY IN US BEING ABLE TO TELL RESIDENTS IF WE PROVIDE FOR THIS POLICY, THIS IS HOW MUCH IT'S GOING TO KNOCK IT DOWN EVERY YEAR, THIS IS HOW MUCH WE'RE NOT HAVING TO ASK YOU FOR NOD TO DO ALL THE THINGS CPS NEEDS TO DO.

AND I UNDERSTAND WHY YOU'RE NOT GIVING A PRECISE ANSWER TO THAT BECAUSE YOU JUST CAN'T PREDICT WHAT THOSE LARGE EXPENDITURES ARE GOING TO BE.

BOTTOM LINE ME FOR, I THINK IT'S A SOUND POLICY, A PRUDENT ONE.

BUT ALSO THE REALITY WE ARE ANSWERING TO OTHER ENTITIES INCLUDING THE PUC AND ERCOT.

THAT WE HAVE RESPONSIBILITIES THROUGH THOSE LARGER ASSETS TO OTHER AREAS OF TEXAS TO BE PRUDENT. WHAT I WOULD ASK IN LIEU OF SOME OF THOSE QUESTIONS ABOUT WANT TO GO SEE HOW WE'VE SPENT THIS MONEY IS THAT WE BRING BACK THAT INFORMATION ABOUT HOW ALL OF THESE CAPITAL EXPENDITURES ARE BEING MADE TO HELP US ADVANCE THOSE GOALS OF RESILIENCY NOT ONLY WITHIN OUR OWN SYSTEM BUT ALSO ENHANCING RESIDENTS WITHIN OUR TRANSMISSION AREA.

>> I'LL HAVE CORY GET WITH BEN. I THINK THERE ARE INSIGHTS AS TO HOW MUCH OF THE STUFF WE HAVE TO DO MORE WE'RE DOING THAT I THINK WILL

ANSWER A LOT OF QUESTIONS THAT CAME UP TODAY. >> MAYOR NIRENBERG: AT THE END OF THE DAY FOR ME, I THINK THERE'S GREAT REASON WHY 90 YEARS AGO WE PURCHASED CPS ENERGY. IT ALLOWS US TO DO A LOT OF THINGS AT THE COST OF SERVICE RATHER THAN US HAVING TO PAY A PRIOR TO ENTITY AND GETTING NO BENEFIT. WITH THAT COMES GREAT RESPONSIBILITY OF THE FACT WE'VE GOT TO PROVIDE YOU WITH THE RESOURCES AND TOOLS NECESSARY TO MAINTAIN THE ASSETS, THE 1 BILLION-PLUS ASSETS WHICH WILL -- 10 BILLION-PLUS ASSETS.

THAT'S WHY WE GET PAID THE BIG BUCKS. WITH THAT, GREAT

CONVERSATION. >> WALSH: DO YOU WANT TO LAY OUT THE NEXT STEPS FROM

[01:30:01]

AHEAD. >> MCKEE-RODRIGUEZ: SOMETHING THAT I DON'T KNOW WAS MENTIONED, I KNOW PREVIOUSLY MAYBE A FEW YEARS AGO IN '21 OR '22 WHENEVER COUNCIL APPROVED ONE OF THE RECENT RATE INCREASES, THERE WAS A FORECAST FOR FUTURE YEARS AND WHAT RATE INCREASES WOULD LOOK LIKE. HOW WAS THAT CALCULATED?

>> I THINK BEN ALLUDED IT TO. WE HAVE A FINANCIAL MODEL THAT LOOKS OUT 25 YEARS. SO WE PUT EVERY YEAR. THE FIVE AND A HALF REFERENCING ON OUR SLIDES FROM LAST TIME AND TWO YEARS PRIOR WHEN WE SHOWED THAT IS ALL RUN THROUGH IS THAT MODEL. IT'S VERY COMPLICATED. IT'S A LOT OF INPUT FROM THE DEMAND EXPECTATIONS WHICH CHANGE EVERY YEAR, A LOT OF INPUTS FROM SUPPLY CHAIN.

>> MCKEE-RODRIGUEZ: HOW LONG HAVE WE BEEN USING THAT MODEL?

>> WE'VE HAD A MODEL MY ENTIRE CAREER. WE CONTINUE TO ITER RATE ON IT AND IMPROVE OUT. WE GET WITH THEM AND WALK THROUGH THE DETAILS.

>> MCKEE-RODRIGUEZ: SO IT'S PRETTY RELIABLE? >> I THINK SO.

WE'VE TALKED TO PEERS AND IT'S DONE SIMILARLY. >> MCKEE-RODRIGUEZ: KNOWING THAT AND KNOWING THE PERCENTAGE WE HAD INTENDED ON INCREASING RATES THE PAST COUPLE OF YEARS, I FEEL LIKE WE SHOULD KNOW WHEW A DOLLAR AMOUNT SHOULD LOOK LIKE FOR

A RATE INCREASE OR TOTAL -- FROM A RATE INCREASE. >> I CAN TELL YOU FROM A RATE INCREASE WHAT ONE PERCENT OF CONTINUAL REVENUE DOES AND ONE PERCENT IS ABOUT $20 MILLION OF CONTINUOUS REVENUE. BUT THAT EQUATION FALLS APART WHEN YOU LOOK AT A ONE-TIME PERSPECTIVE. YOU CAN BALANCE BETWEEN NET AND CASH AND THE STRATEGY IS LEVERAGE THE BALANCE SHEET AND BORROW A LITTLE MORE TO HELP MANAGE THE OTHER SIDE OF THE EQUATION WHICH IS HOW MUCH REVENUE YOU NEED TO COLLECT. AND THE OTHER INJECTS WE TALKED ABOUT TODAY, WHOLESALE REVENUE, THAT'S NOT SOMETHING WE CAN PREDICT IN A MANNER THAT WE CAN OUR LOCAL LOAD GROWTH BECAUSE THAT IS SUBJECT TO ERCOT, THE PRICING FUNCTIONS AND THINGS OF THAT NATURE. THAT'S AN ELEMENT OF PREDICTABILITY THAT WORKS TO OUR NATURE. THE EQUATION FOR ONE PERCENT EQUALS 20 MILLION IS ONLY RELEVANT WHEN YOU LOOK AT IT IN A MODEL THAT SHOWS THAT REVENUE COMING IN EVERY

YEAR. >> MCKEE-RODRIGUEZ: FOR SURE.

I'LL TELL YOU WHAT I UNDERSTAND, THEN I'LL TELL YOU WHAT I BELIEVE I DON'T UNDERSTAND AND HOPEFULLY YOU CAN FILL THE GAP. I UNDERSTAND THAT THE RATE INCREASE THE MEANT TO BUILD -- IT'S SUPPOSED TO SET US UP FOR A PERIOD -- RECURRING EXPENSES. IT'S OUR BUDGET, SOMETHING WE CAN EXPECT AS A BASE.

ANYTHING WE GET SUCH AS OFF-SYSTEM SALES ONE TIME, WE'RE NOT ANTICIPATING THAT.

IT CAN MAYBE GO TO EXPENSES. THAT'S WHY IT'S RIGHT NOW FLEXIBLE.

WHAT NO UNDERSTAND IS IF WE KNOW HOW MUCH WE WOULD NEED OVER A FIVE-YEAR PERIOD OR THAT WE'RE GOING TO BE ASKING FOR A RATE INCREASE IN A YEAR, WHY DO WE NOT KNOW HOW MUCH IT WOULD TAKE TO OFF SET THAT FOR ANOTHER YEAR? WHY DO WE NOT KNOW -- LIKE WHAT IT WOULD DO IF WE WERE TO SPREAD THAT MONEY OR A

PERIOD OF YEARS WHAT THAT WOULD LOOK LIKE. >> IT GOES BACK TO THE CHARACTERISTIC MUCH BEING ONE TIME IN NATURE. OUR PROJECTS ARE MULTI-YEAR PROJECTS. IN ORDER FOR US TO PLAN, THERE NEEDS TO BE CERTAINTY.

I WOULDN'T PUT REVENUE IN THERE THAT ISN'T CERTAIN. I THINK YOU CAN GO BLACK TO LAST TIME JUST AS AN EXAMPLE, AND I THINK EVERYTHING WE SAID TODAY IS TRUE. IS THERE WILL BE A POSITIVE IMPACT BOTH ON DURATION AND THE AMOUNT. THAT'S WHERE THE BENEFIT HELPS BOTH THE WHOLESALE REVENUE AND POTENTIALLY THIS 25 MILLION. WE WILL RUN IT THROUGH OUR MODELS AND WE WILL LOOK AT FINANCIAL METRICS AND SEE WHERE WE CAN FLEX THEM.

I CAN GIVE YOU AN ANSWER IF I SAID I'M GOING TO HOLD MY DEBT -- FIRM AT THESE NUMBERS. I ALLOW THOSE TO HAVE SOME FLEX.

TO MANAGE THE RATE REQUEST NUMBER. SO IT CAN'T BE A SIMPLE ANSWER AND I WISH I COULD GIVE IT MORE SIMPLICITY, BUT THERE'S SO MUCH LEVERS.

THE ULTIMATE GOAL IS DO OUR BEST TO MINIMIZE WHAT THAT IS FROM A RATE REQUEST.

IT DOES HAVE A POSITIVE IMPACT FROM A PERCENT AMOUNT AND WOULD ■HAVEA POSITIVE IMPACT TO THE EXTENT WE CAN MODIFY TIMING, BUT IT'S NOT ONE FOR ONE BECAUSE OF THE

[01:35:02]

ONE-TIME NATURE ASSOCIATED WITH IT. >> MCKEE-RODRIGUEZ: I HEAR YOU. I'M GOING TO REFLECT ON THAT FOR A LITTLE BIT AND DETERMINE WHETHER OR NOT THAT MAKES SENSE TO ME AND WE'LL HAVE A FOLLOW-UP CONVERSATION POTENTIALLY, MAYBE NOT. SOMETHING THAT HAS BEEN IMPORTANT TO ME FOR A LITTLE WHILE HAS BEEN THE POWER LINES THAT EXIST IN OUR INNERCITY AND THE AGING INFRASTRUCTURE THAT WE HAVE, AND IT WAS JUST MENTIONED TREES ARE THE CAUSE OF MANY OF THE OUTAGES BECAUSE THEY HIT THE POWER LINES AND WE HAVE SO MANY IN OUR MOST MARGINALIZED NEIGHBORHOODS IN THE CITY AND UNDER INVESTED NEIGHBORHOODS IN THE CITY. I REMEMBER WE FILED A CCR ASKING FOR A PLAN FOR THE BURIAL OF POWER LINES AND HAD THE SIGNATURES NECESSARY TO GO TO GOVERNANCE. THEN IT JUST KIND OF DISAPPEARED.

AND WE NEVER TALKED ABOUT BURIAL OF POWER LINES AGAIN. >> SO WE'VE GOT A PROGRAM, I DON'T KNOW, IT'S 20 MILLION, 10, 15, 20 MILLION A YEAR TO STRATEGICALLY UNDERGROUND LINES WHERE THERE'S A RELIABILITY BENEFIT FROM DOING SO.

AGAIN, PART OF THAT PRESENTATION WE GAVE YOU WAS JUST TO SHOW YOU THE SCALE OF THE TWO OR THREE OR FOUR X MULTIPLE IT TAKES TO BURY A POWER LINE VERSUS OVERHEAD. SOMETIMES THAT BEING A POSITIVE AND SOMETIMES IT NOT BEING THE MOST PRUDENT INVESTMENT. WE DO BURY POWER LINES WHEN OUR SYSTEM PLANNING FOLKS DETERMINE IT WILL IMPROVE RELIABILITY.

>> MCKEE-RODRIGUEZ: HOW MANY CAN YOU DO WITH, SAY, $20 MILLION?

>> WE'LL HAVE TO GET BACK WITH YOU ON THE AMOUNT OF MILES.

IT'S NOT A LOT. $2.5 MILLION A MILE. >> MCKEE-RODRIGUEZ: A MILE. THAT'S PRETTY COMPARABLE TO A [INAUDIBLE].

WHAT HAPPENS -- I SAY ALL OF THIS SO SAY THAT THE ISSUE IS STILL VERY IMPORTANT.

THERE IS STILL NOT ENOUGH BEING DONE AND THE ISSUE STILL STANDS AS UNRESOLVED.

AND SO I THINK WE NEED A CONVERSATION ABOUT FEASIBILITY OF INCORPORATING BURIAL OF POWER LINES WHEN WE REDO F STREET. I THINK THAT'S A REASONABLE ASK. IF THE ANSWER -- WE FIND SOME OTHER MEANS.

I'M ASKING FOR THAT TO BE A TOPIC. MOVING A LITTLE AWAY FROM CPS ON THAT, IT'S A PRIORITY FOR ME AT THE CITY AND I KNOW IT WOULD HAVE REQUIRE COORDINATION WITH CPS. THAT'S A CONCERN OF MINE AND WOULD LOVE TO SEE IT

REUPPED. THANK YOU. >> MAYOR NIRENBERG: ERIK,

CLOSING IT. >> WALSH: JUST A COUPLE OF FOLLOW-UP ITEMS AND I'LL GIVE YOU MY THOUGHTS ON THE FOLLOW-UP NEEDED AND MAYBE THE POTENTIAL AVENUES.

SO ONE, WE WILL PROCEED WITH THE $25.9 MILLION TO CPS FOR THE TWO PROJECTS THAT WERE DISCUSSED TODAY, THE RECLOSURES AND THE POWER PLANT RELIABILITY IMPROVEMENTS. WITH A TIE TO THOSE TWO PROJECTS, SECONDLY, I THINK WE WILL WORK WITH CPS TO FIGURE OUT A SCHEDULE AN UPDATE ON THE PROGRESS OF THOSE TWO PROJECTS SPECIFICALLY TO THE MUC COMMITTEE.

AND WE'LL FIGURE OUT, WE'LL WORK WITH CPS AND FIGURE OUT WHAT'S THE PROJECT TIME LINE AND FIGURE OUT THOSE POINTS SO WE KEEP THE MUC COMMITTEE UPDATED.

I THINK THE LARGER ISSUE AND SEVERAL OF YOU HAVE BROUGHT IT UP ABOUT FOLLOW-UP ON REQUESTS FOR UPDATED PROFORMAS OR ALIGNING RATE CASE ASSUMPTIONS, WHAT HAPPENS, YOU HEARD CENTER CPS AND BEN THAT THINGS CHANGE ALL THE TIME, BUT WHAT IS THAT FEEDBACK MECHANISM. THAT'S PROBABLY A LARGER COUNCIL CONVERSATION, SO WE'LL DISCUSS WITH CPS WHAT MAKES SENSE AND THAT COULD MEAN MUC, IT COULD ALSO MEAN A DIFFERENT TEMPO AT THE FULL COUNCIL LEVEL ABOUT HOW THINGS CHANGE. AND THAT PROFORMA THAT THE COUNCIL LOOKED AT THEIR -- LOOKED AT A YEAR AGO HAS CHANGED A LOT. BUT FOR A DETAILED CONVERSATION, YOU WON'T SEE IT AGAIN UNTIL PRESUMABLY IN THE FUTURE WITH ANOTHER RATE

[01:40:04]

>> MAYOR NIRENBERG: ALL RIGHT. ANYTHING ELSE?

>>

>> CASTILLO: I APOLOGIZE. I JUST WANTED TO CHIME IN BECAUSE COUNCILMEMBER VIAGRAN BROUGHT UP A FAIR POINT REGARDING THE PROPOSED LIABILITY PROJECTS AND ASSURING THE FUNDING BEING RETURNED TO CPS IS IN ALIGNMENT WITH OUR CLIMATE PLANS. AND I THINK WHAT'S LISTED HERE IS A BIT VAGUE AND I THINK HAVING MORE DETAIL, LIKE ONE A COST ASSOCIATED WITH THE POWER PLANT RELIABILITY RATE, IS THERE A SPECIFIC INFRASTRUCTURE IMPROVEMENT WHERE A COST CAN BE LISTED ON THE LINE ITEM THAT'S BEING PRESENTED TO US.

AND, OF COURSE, IT'S IN ALIGNMENT WITH THE CAP. I WOULD NOT LIKE TO SEE THESE FUNDS GO TOWARDS COAL AND/OR GAS WHEN THAT'S OUT OF ASSIGNMENT WITH THE GOALS PUT FORTH. TRYING TO EMPHASIZE THAT POINT.

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

WITH THAT, IT'S 4:14 P.M. ON NOVEMBER 19, 2024, A

* This transcript was compiled from uncorrected Closed Captioning.