[CPS Energy Utility Briefing]
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I'M VERY APPRECIATIVE OF THE TIME TO DO OUR BIMONTHLY UTILITY BRIEFING.
I END UP WITH A LOT OF STUFF, BUT I WILL BE THANKFUL OF YOUR TIME AND MOVE THROUGH IT FAIRLY SWIFTLY.
I DO WANT TO POINT OUT THAT YOU DO HAVE SOMETHING IN FRONT OF YOU.
FOR ANYONE IN THE AUDIENCE WHO WANT SOME OF THE MATERIALS.
IF WE RUN OUT WE'LL GET YOUR INFORMATION AND SEND IT TO YOU.
BUT WE HAVE, IN ADDITION TO THE PRESENTATION SOME OUTREACH MATERIALS.
WE'RE DOING A SUMMER CONSERVATION CAMPAIGN AND WE WANTED YOU TO SEE THEM.
THEY HAVE BEEN TAILORED TO BE IDENTIFIED FOR A SPECIFIC LOCATIONS AT YOUR OFFICES, HAVE SPECIFIED, AND SO WE ARE GOING THERE BUT BUT WE CAN ALSO MOVE OR EXPAND AND HAVE MORE THAN ONE OF THEM IN OUR AREA.
WE JUST WANT TO DO AS MUCH OUTREACH AS POSSIBLE TO REALLY TALK ABOUT HOW PERFORM CONSERVATION IS AND WHAT THEY CAN DO TO BOTH CONSERVE AND SAVE MONEY.
ADDITIONALLY, I'M GOING TO HAVE MY TEAM DO SOMETHING REALLY QUICK.
WE STARTED A NEWSLETTER FROM CPS ENERGY.
I AM GOING TO HAVE THEM COME AROUND AND GIVE YOU A COPY OF THE SECOND NEWSLETTER.
WE'RE GOING TO END UP ADDING THIS TO CUSTOMERS.
ANYONE WHO WANTS TO BE ON THE NEWSLETTER, IT'S ABOUT HOW WE ARE OUTREACHING AND SOME OF THE MAJOR THINGS WE'RE DOING.
AND SO, I WILL, WITH THAT, GET STARTED.
FIRST SLIDE? SO, ON TODAY'S AGENDA, I WILL, AS BRIEFLY AS POSSIBLE, TRY TO COVER SOME INITIATIVES.
>> MAYOR NIRENBERG: PAULA, IF I CAN ASK FOR YOUR COURTESY ONE SECOND.
I WANT TO ANNOUNCE THE COUNCIL RECONVENED FROM THE EXECUTIVE SESSION AND NO ACTION WAS TAKEN JUST TO FORMALLY SHUT OUR EXECUTIVE SITUATION
WE'RE GOING TO TALK A LITTLE ABOUT NEW VEHICLES WE ADDED AND TECHNOLOGY WE'RE IMPLEMENTING IN OUR COMMUNITY.
I WILL TALK ABOUT A SENATE TESTIMONY AND HEARING -- THE TESTIMONY I GAVE AND HEARING I HAD AT TEXAS SENATE COMMITTEE.
I WILL TALK ABOUT THE ERCOT MARKET AND WHAT WE THINK WE HAVE UP IN STORE FOR THE SUMMER.
WE'VE HAD AN UPDATE RELATIVE TO THE ERCOT MARKET GOOD STUFF.
LOTS OF FOCUS FROM ERCOT AND PUC.
WE WILL TALK ABOUT AGAIN OUR PREPAREDNESS.
HOW DO WE MAKE SURE WE SHOW UP WITH OUR GENERATION.
HOW WE'RE GOING TO MOVE INTO A CAMPAIGN THAT WE'RE GOING TO USE TO TALK ABOUT CONSERVATION TO ALL OF OUR CUSTOMERS AND I WANT TO GIVE AN UPDATE ABOUT THE FLEXIBLE PATH PLAN AND OUR OUTREACH ON THAT.
SO, WE HAVE BEEN IMPLEMENTING NEW TECHNOLOGIES.
ONE, I TALKED ABOUT IT FIRST BUT WE HAD NOT LAUNCHED BUT WE ACTUALLY DID A LAUNCH OF WHAT WE CALL THE SMART SFIFER.
IT'S A RETROFITTED CAR THAT HAS METHANE DETECTION EQUIPMENT ON IT.
THE SIGNIFICANCE OF IT IT WILL HELP US DO SCANS AROUND THE COMMUNITY IN PLACES WHERE WE CAN DO PREVENTATIVE MAINTENANCE BEFORE IT GETS TO BE A PROBLEM AND CAN HELP US DETERMINE AFTER WE DO MAINTENANCE EFFECTIVENESS REMEDIATING ANY ISSUES WHERE THERE MIGHT HAVE BEEN A LEAK.
THAT'S SOMETHING WOMAN SANDOVAL AND MARIO SANDOVAL -- BRAVO, I'M OTHER, BRAVO.
>> SANDOVAL: HE'S ENLIGHTENED.
>> I'M GOING TO TELL THEM I CAN'T SEE THAT FAR.
MARIO IS HEADING UP OUR ENVIRONMENTAL STAKEHOLDERS GROUP.
YOU'LL SEE HIM LATER IN THE PRESENTATION AS WELL.
WE'RE REALLY EXCITED ABOUT THE SMART SNIFFER TECHNOLOGY AND INTRODUCTION.
ADDITIONALLY WE INTRODUCED 34 SPECIFICALLY HYBRID ELECTRIC VEHICLES FOR OUR FLEET.
WE'VE DONE SOME BEFORE IN OUR OUTREACH AND CREW VEHICLES.
WE ARE GOING TO USE THEM IN THE FIELD.
IT WILL HELP US REDUCE EMISSIONS.
THE BIGGEST PILOT IN THE UNITED STATES.
WE'LL GIVE YOU AN UPDATE HOW WELL THAT GOES.
SO, ACTUALLY LET'S GO TO THE NEXT CHART.
THE SENATE BUSINESS AND COMMERCE COMMITTEE IS ONE OF THE MANY COMMITTEES.
THIS ONE HAS BEEN VERY FOCUSED ON THE ERCOT MARKET POWER.
HOW DIFFERENT PROVIDERS ARE MEETING THE NEEDS OF CUSTOMERS, AND SO THAT WAS THE PRIMARY DRIVER.
I BEGIN, I WILL TALK ABOUT THIS WHOLE CHALLENGE THAT THE STATE
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HAS, CAPACITY HAS BEEN LEAVING OUR MARKET.SOME HAS COME BACK IN AND IT'S A TIGHTER MARKET.
THIS COMMUNITY IS VERY FOCUSED ON WHETHER OR NOT WE ARE READY.
WE WERE THERE FOR ABOUT SIX HOURS.
THE PREDOMINANT AMOUNT OF TIME WAS SPENT ON THIS.
WE HAD EVERYONE FROM ERCOT TO TEXAS PUBLIC POWER ASSOCIATION THAT WE'RE A MEMBER OF PARTICIPATE PUC.
MANY OPERATORS, DISTRIBUTION COMPANIES FROM ALL PARTS OF COMPETITIVE MARKET THE AS WELL AS MUNICIPAL.
WE TESTIFIED AS THEY ASKED US MANY QUESTIONS.
VERY HELPFUL, VERY V INFORMATIONAL.
NEXT CHART? THIS IS JUST A PICTURE SNAPSHOT OF WHEN WE CAME UP.
WHEN WE CAME UP, WE TALKED ABOUT OUR PARTICIPATION IN THE ERCOT MARKET.
WHAT DOES PUBLIC YOPOWER DO, HO DOES IT WORK AND BENEFITS WHETHER OR NOT YOU'RE IN A COMPETITIVE MARKET, OR MARKET CLOSE TO COMPETITION, YOU GET THE SAME ESTIMATES.
SAME EFFORTS, SAME PROGRAM APPROACH.
SO THERE'S A LOT OF COMPARABILITY BETWEEN THE TWO MARKETS.
WHAT WAS A FOCAL POINT WHEN I TALKED IN PRIOR MEETINGS THERE WAS A FOCUS OF RESERVE MARGIN.
WHEAT THE TOTAL AMOUNT OF MEGA WATTS THAT CAN BE PRODUCED THAT CAN COVER ALL OF THE DEMAND THAT ALL CUSTOMERS HAVE.
SO IT IS A BASIS OF PRODUCING THINGS THAT SUPPLY AND WHAT CUSTOMERS REALLY NEED WHICH IS DEMAND, AND SO THE ELEMENT OF STAYING IN A PLACE WHERE YOU HAVE WHAT WE CALL A HEALTHY RESERVE MARGIN, THAT DIFFERENCE, EVERYTHING MORE ABILITY TO SUPPLY THAN CUSTOMERS WOULD DEMAND IS IMPORTANT.
THE THE ERCOT THRESHOLD HAS BEEN STATED AS WANTING TO HAVE BEEN 1.75 PERCENT OF A RESERVE MARGIN.
EARLIER IN THE LATE FALL, PROBABLY IN THE DECEMBER TIME FRAME, THEY FIRMED UP THAT THEY THOUGHT THIS WAS GOING TO BE THE FIRST TIME IN MANY YEARS, WHERE THE RESERVE MARGIN WAS NOT GOING TO BE 13.75.
IT WAS GOING TO BE BELOW 10 PERCENT.
THAT COURSED A TREMENDOUS AMOUNT OF FOCUS AND EFFORT.
ALSO TELL YOU WHEN THE MARKET RESPONDED WHEN THERE'S LESS RESERVE MARKET AND LESS SUPPLY THAT DRIVES PRICES UP.
THE BIGGER ISSUE, MORE THAN PRICING.
BECAUSE I THINK IT WILL BE MANAGEABLE OVER THE SUMMER.
THE BIGGER THING IS NOT OVERTAX THE SYSTEM TO WHERE WE WOULD RUN SHORT ON POWER AND ULTIMATELY CAUSE INSTABILITY, ROLLING BURNOUTS, THOSE THINGS.
SO IT IS A BIGGER POINT ABOUT RELIABILITY.
RESILIENCY OF THE SYSTEM AND THEN ULTIMATELY HOW DOES IT AFFECT EVERY CUSTOMER IN THE AREA.
WHAT HAPPENED JUST APRIL 30TH, THEY DID A REVISION.
AGAIN, SOME POWER PLANTS THOUGHT THEY MIGHT COME BACK IN, AND HELP IN THE SUMMER AND PARTICIPATE IN THE MARKET, SO THE RESERVE MARGIN WENT FROM BELOW 10 PERCENT TO, WHERE YOU CAN SEE, ABOUT 11 PERCENT.
INTERESTING THING I'LL POINT OUT, IF YOU LOOK, THE -- STATS KEEP INCREASING BECAUSE OUR STATE KEEPS BRINGING IN CUSTOMERS.
THERE'S INCREASINGLY MORE PEOPLE COMING IN.
WHAT IS HAPPENING THE RESERVE MARGIN IS MOVING.
WE THINK WE'LL KEEP 11 PERCENT FOR THIS YEAR AND NEXT YEAR.
WE THINK WE'LL HAVE MORE KICK-UP IN THE YEAR AFTER BUT THAT'S STILL GETTING BACK TO THE MORE HEALTHY LEVELS THAT WE'RE GETTING TO AND WE HAVE TO WATCH IT GOING FORWARD.
WHAT THIS CHART DOES, I'D ASK YOU TO LOOK AT THE FAR RIGHT OF THE SLIDE, FIRST, REALLY, BECAUSE THAT'S THE ERCOT MARKET AND IT BASICALLY SHOWS THAT WE HAVE A TOTAL RESERVE MARGIN OF 7.7 -- 7,700 MEGA WATTS OF EXCESS CAPACITY FOR ALL OF ERCOT.
THAT'S HOW YOU GET 11 PERCENT OF THE TOTAL.
IF YOU LOOK ON THE LEFT SIDE OF THE PAPER, THAT'S CPS ENERGY.
AND OUR DEMAND IS EVERYTHING IN BLUE THAT GOES TO OUR COMMUNITY.
OF THE GRAY ARE WHERE WE HAVE WHOLESALE CONTRACTS.
WE HAVE A HONDO AND FLORESVILLE AND CASTROVILLE THAT HAVE BEEN OUR CUSTOMERS FOR A VERY LONG TIME AND WE DO SOME SELLING TO OTHER CUSTOMERS OF THAT CAPACITY.
THAT GRAY REPRESENTS COMMITMENTS THAT WE HAVE ABOVE RESIDENTIAL CUSTOMERS, THEN WHEN YOU SEE THE ORANGE THAT'S THE LEFTOVER EXCESS CAPACITY THAT HELPS US, IF WE HAVE TO TAKE A PLANT DOWN FOR MAINTENANCE, WE ARE ABLE TO USE THAT EXCESS CAPACITY.
AGAIN IT HELPS US CONTROL OUR DESTINY AND PRESENTS US FROM BEING EXPOSED TO PRICE SPIKES.
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THE MOST IMPORTANT THING TO POINT OUT IS FOR OUR LOAD, AND WE HAVE ABOUT 5,000 MEGA WATTS OF LOAD THAT COMES FROM THIS COMMUNITY, AND THEN A LITTLE BIT MORE IN CONTRACTS, FOR OUR LOAD AND WHAT WE'RE DOING, WE REPRESENT ABOUT 7 PERCENT OF ALL ERCOT ACTIVITY.BUT, RELATIVE TO THE RESERVE MARGIN.
RELATIVE TO THE INSURANCE OF HAVING INVESTED MORE IN GENERATION, WE REPRESENT ABOUT 18 PERCENT OF THE RESERVE MARGIN.
SO WE ARE BY FAR CONTRIBUTING ALMOST TWICE, MORE THAN TWICE, LEVELS OF OUR OVERALL GENERATION WHICH SUPPORTS RELIABILITY FOR THE ENTIRE MARKET.
THIS IS ONE OF THES OUR SENATORS FOUND INTERESTING AND IN PARTICULAR WE WERE BENEFITTED BECAUSE SENATOR CAMPBELL, HER DISTRICT, WE COVER PART OF HER DISTRICT.
SHE WAS VERY FASCINATED TO UNDER THE TRICKS DONE BY THE CITY OF SAN ANTONIO NOT JUST HELP OUR CUSTOMERS BUT HELP THE STATE AND I THINK THAT REALLY HELPED IN TERMS OF VALUE PROPOSITION THAT THE SENATORS SAW WITH OUR MARKET.
THIS IS JUST A SMALL ILLUSTRATION, TOO, THOUGH.
WHEN THERE IS A REDUCTION IN SUPPLY.
SO, AS I TALKED TO YOU BEFORE, THREE LARGE COAL PLANTS DECIDED TO CLOSE.
THERE WASN'T ENOUGH ECONOMIC INCENTIVE FOR THEM TO STAY ONLINE.
IT A BIT MORE EXPENSIVE FOR THEM TO OPERATE.
GAS IS REALLY THE PRODUCTION FUEL ON THE MARGIN THAT SETS THE PRICING AND COAL TYPICALLY OPERATES HIGER THAN THAT.
I WOULD TELL YOU, THOUGH, THE PRICE OF THE TRANSPORTATION IN THE COAL BUSINESS IS MORE THAN THE COAL SUPERINTENDENT UNITS.
IT'S A COMPLEX WAY TO DELIVER.
WHEN THOSE PLANTS WENT OFF, THE PLY WILL GO DOWN, AND THAT REALLY EVERY MEGA WATT IN THE MARKET GETS MORE VALUABLE.
WHAT HAPPENED WAS THE MARKET PRICES.
THAT BLUE LINE, THAT'S WHERE THE FORECAST WAS, AND RED LINE IS WHAT HAPPENED AFTER PEOPLE STARTED LOOKING AT WHAT WAS HAPPENING TO THE CAPACITY.
WHAT IT ALSO MEANS, WHEN YOU CAN'T COVER ALL OF YOUR DEMAND FOR YOUR CUSTOMERS, YOU'RE GOING TO BE EXPOSED TO ANY EXTRA VOLATILITY IN THE MARKET.
THAT'S WHY IT'S IMPORTANT WE HAVE THE ABILITY TO COVER OUR LOAD, PLUS SOME AND MANAGE OUR PRODUCTION COSTS HERE AND NOT BE EXPOSED TO THE VOLATILITY IN THE MARKET.
NEXT SLIDE? THIS SLIDE REALLY SHOWS KIND OF A SUMMARY OF OUR PORTFOLIO AND THE EFFECTIVENESS OF IT.
THERE'S MULTIPLE THINGS TO POINT OUT.
IF YOU LOOK TO THE LEFT, YOU HAVE FOSSIL FUEL.
WE START WITH THAT, COAL, GAS, PEAKERS AND STEAM UNITS AND THOSE ARE VERY EFFICIENT, VERY EFFECTIVE.
DOESN'T MATTER WHAT THE WEATHER IS, THEY ARE PRODUCING.
IT IS GOOD THAT YOU IF YOU LOOK ON THE RIGHT SIDE OF IT, FAR RIGHT, WIND DOESN'T NECESSARILY SHOW UP AS MUCH AS PEAK.
WHEN WIND IS BLOWING, WIND BLOWS MORE AT NIGHT THAT'S WHY THE CAPACITY FACTOR IS LOWER.
SOLAR GETS CLOSER AGAIN BECAUSE ULTIMATELY SUN IS SHINING NOW, IT DOES NOT OPTIMIZE, RIGHT AT 5:00 WHEN DEMAND GOES UP.
THAT'S WHY IT'S CAPACITY FACTOR AND EFFICIENCY IS A BIT LOWER BUT IT'S GOOD.
INCREASINGLY, YOU LOOK AT ALL OF THE PRODUCTION OUT OF OUR PORTFOLIO, WE HAVE A HIGH PERFORMING PORTFOLIO OVERALL.
OKAY? THIS NEXT SLIDE, THERE'S A LOT OF STUFF HIRE BUT IT BASINGLY SAYS WE HAVE TO DO A LOT OF WORK, A LOST PREVENTATIVE MAINTENANCE, A LOT OF CHECKING, A LOT OF ACTIVITIES TO MAKE SURE THAT WE ARE GETTING EVERYTHING READY.
WE DO THAT, WE CERTIFICATE TO THOR RCOTH MARKET THAT WE'RE ATOP OUR MAINTENANCE AND THEY HAVED EVERY OPERATOR TO DO THAT.
OUR COO SIGNS UP TO ALL RELEVANT, OUR DELIVERY SYSTEMS AND GAS SYSTEMS AS WELL.
IT'S IMPORTANT HOW THE PORTFOLIO PERFORMS. BUT IT'S ALSO IMPORTANT WHAT WE DO RELATIVE TO OUR PROGRAMS. I ALWAYS WANT TO REMIND EVERYONE THIS IS SOMETHING APPROVED BY OUR BOARD AND ULTIMATELY APPROVED BY COUNCIL FOR US TO INVEST IN THE PROGRAM.
WE HAVE STEP PROGRAM THAT DOES A LOT OF THINGS.
STARTED OUT WITH L.E.D.S AND INVESTMENTS IN THAT AND HAS WEATHERIZATION COMPONENT.
COMMUNITY SOLAR, ALL OF THESE THINGS THAT ARE IMPORTANT, PLUS WHATEVER ELSE WE CAN PUT IN THERE.
THINGS THAT REALLY ULTIMATELY BRING CONSERVATION LEVELS DOWN.
THE SIGNIFICANCE, I THINK I REALLY WANT TO POINT OUT TO YOU, WE PUT THIS IN SO WE WOULDN'T HAVE TO MAKE AN IMMEDIATE DECISION TO MAKE UP FOR THOSE MEGA WATTS.
IF YOU LOOK RIGHT NOW, IT'S REALLY PRODUCING SAVINGS,
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CONSERVATION OF 626 MEGA WATTS.IF WE HAD BEEN ON THE SAME COURSE OF HOW WE SOLVE PROBLEMS IN THE FUTURE, WE WOULDN'T HAVE SPENT THE MONEY ON CONSERVATION, WE WOULD HAVE BEEN IN THE MIDDLE OF INVESTING IN A NEW PLANT.
BY THE TIME WE WOULD HAVE KNOWN THIS, WE WOULD HAVE PROBABLY -- THIS IS WELL BEFORE THE GAS PRICE CHANGE AND ABUNDANCE OF ALL OF THE VOLUMES OF GAS WE HAVE, SO, AT THE TIME.
WE WOULD HAVE REALLY STARTED WITH ANOTHER COAL PLANT, SO, WHAT THIS HAS DONE IS LET US NOT INVEST IN ANOTHER 40 TO 60-YEAR ASSET.
DEFER THAT COST, USE CONSERVATION, LET TECHNOLOGY TAKE OUT.
LET THE MARKET PRICES SETTLE IN AND ALLOW US TO MAKE MORE EDUCATED DECISIONS LATER.
WHEN YOU DO A COAL PLANT, YOU HAVE ABOUT A FOUR-YEAR LICENSING, PERMITTING PLAN THAT YOU HAVE TO DO EVEN BEFORE YOU GET STARTED.
AIR QUALITY PERMITS AND ALL OF THOSE THINGS, SO THE LONG-TERM NATURE OF MAKING INVESTMENTS THAT ARE THIS SIGNIFICANT, A BILLION DOLLARS IN INVESTMENT IS TREMENDOUS.
BOTTOM OF THE CHART BASICALLY SAYS THAT WE BELIEVE AND WE'VE DONE THE CALCULATION THAT OUR INVESTMENTS IN CONSERVATION WHERE WE ARE REALLY HELPING PEOPLE CONSERVE AND REDUCE DEMAND AND KEEP OUR PEAK LOWER HAS BEEN A BETTER INVESTMENT THAN PUTTING A BILLION DOLLARS IN THE PLANT, THAN OPERATING AND MAINTAINING THAT PLANT OVER 30, 40 YEAR.
THIS IS KIND OF OUR BEGINNING THOUGHTS HOW DO WE KEEP OURSELVES FLEXIBLE AND BEING ABLE TO MOVE IN THE FUTURE.
WHAT YOU HAVE IN FRONT OF YOU, THIS IS JUST A HIGHLIGHT.
THAT SAID PART OF OUR CONSERVATION PLAN IS TO TALK TO PEOPLE ABOUT CONTROLLING THEIR THERMOSTATS.
HOW DO THEY DO IT, HOW DO THEY MAKE SURE THEIR BILLS COME DOWN AND COP SUMS COMES DOWN AT THE SAME TIME.
WE ARE LAUNCHING THAT AS WE SPEAK TO THE COMMUNITY.
THESE ARE SCHEDULED LOCATIONS.
AND WE ARE ALSO OFFERING IT TO THE SUBURBAN COMMUNITIES AND TO THE COUNTIES, WHOEVER WOULD LIKE ONE.
WE STAND READY TO WORK WITH YOUR OFFICES TO TALK TO THEM ABOUT THE CONSERVATION THAT CAN BE DONE.
I THINK THE LAST TIME I WAS HERE THERE WAS A LOT OF QUESTIONS ABOUT THE FLEXIBLE PASS AND WHY WE'RE DOING IT AND SOME ISSUES.
WHAT WHY WERE ASKED BY THE STAKEHOLDER COMMUNITY.
WE MEET WITH THE COMMUNITY QUARTERLY.
WE'VE DONE THAT FOR SEVERAL YEARS.
THEY ASKED FOR MORE INFORMATION HOW WE DEVELOP THE FLEXIBLE PLAN, WE BROUGHT THEM IN AND GAVE THEM MORE STATS.
THEY ASKED GREAT QUESTION AND THEY CONTINUE TO ASK US.
THE FLEXIONABLE PATH IS FLEXIBLE.
AND ACCORDINGLY WE'LL TAKE INTO A LOT OF DIFFERENT CONSIDERATIONS EVERYTHING IN CONSERVATION AND THE BEST WAY TO SUPPLY POWER HERE.
WE'RE GOING OUT AND MOVING OUT THROUGHOUT THE COMMUNITY.
TO DIFFERENT LOCATIONS, ANYBODY THAT YOU WOULD LIKE TO TALK TO TO EXPLAIN WHAT THE FLEXIBLE PATH IS AND ANSWER QUESTIONS.
THESE ARE THE NEXT SCHEDULED DATES.
WE ARE HAVING A BIG DATE ON LAVILLITA AND OUR BOARD MEMBERS WILL BE THERE.
IN SUMMARY IT WILL BE A TIGHT SUMMER.
WE'VE DONE PREVENTATIVE MAINTENANCE CHECKS.
WE CAN ALSO ASK CUSTOMERS TO UNDERSTAND THE STRESS IS ON THE STATE AND REALLY MAKE SURE WE ARE ASKING FOR THEIR PARTICIPATION AND THE GOOD THING ABOUT IT IS ALONG THE WAY IT HELPS OUR CUSTOMERS SAVE MONEY.
SO, THAT IS MY PRIMARY POINT, AND I WOULD BE GLAD TO ANSWER ANY QUESTIONS.
>> PELAEZ: PAULA, I WANT TO TALK ABOUT THE MAKE TIME TO UNPLUG SUMMER EVENT THAT YOU HAVE ON THE FLYER.
MY TEAM IS REALLY PUMPED UP ABOUT THIS AND WILL BE ATTENDING THE EVENT.
IF YOU HAVE NOT -- THIS IS TO MY FELLOW COUNCIL MEMBERS.
IF YOU HAVE NOT HAD AN OPPORTUNITY TO INVITE CPS TO ACTUALLY GIVE ONE OF THESE PRESENTATION, YOU'RE MISSING OUT.
YOU HAVE A FELLOW WHO WORKS FOR YOU NAMED RONNY GUEST WHO IS JUST A ROCK STAR AND HE REALLY GETS THE CROWD INVOLVED AND THEY REALLY TAKE TO HIM.
IT'S SO MUCH MORE THAN JUST A, HEY, IT'S A GOOD IDEA TO UNPLUG YOUR KEURIG MACHINE AND PHONE CHARGER BEFORE YOU LEAVE THE HOUSE.
IT'S A VERY ROBUST PRESENTATION.
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>> PELAEZ: HOW DO YOU RESPOND TO CONSTITUENTS.
WE GET A DULL EVERY ONCE IN A WHILE.
THEY SEE THIS AND SAY, GREAT, THANKS, CPS TELLING ME HOW TO SAVE ENERGY.
HOW ABOUT YOU CHARGE ME LESS FOR THE ENERGY I USE AND STOP TELLING ME HOW TO LIVE MY LIFE.
WHAT IS THE RESPONSE TO THAT FROM CPS?
>> I THINK WE ALWAYS SAY, THANK YOU FOR BEING A CUSTOMER AND WE APPRECIATE THE FEEDBACK IS THE FIRST PART.
WE MANAGE THE ASSETS THAT THE COMMUNITY IN FACT OWNS, AND IT'S A COMPLICATED THING.
WE ARE -- WE UNDER THE PRICE SENSITIVITY IS IMPORTANT, SO WE ARE CONSTANTLY LOOKING FOR WAYS FOR US TO CUT COSTS WHICH, MATTER OF FACT, I THINK I'LL JUST HAND THIS OUT AND WE'LL MAKE THIS MORE PUBLIC IN THE FUTURE.
WE HAVE -- WE HAVE EFFORTS TO SHOW OUR CUSTOMERS THAT WE BUCKLE OUR BELTS AND WE'RE KEEPING THE COVERS LOWER.
WE HAVE OUR GENERATION WORKING FOR THEM, SO, THEY ARE NOT AS EXPOSED.
SOME PEOPLE FORGET ALL OF THE UNITS THAT THEY HAVE, THAT THEY PLUG IN, I PLUG IN IN TERMS OF MY CABLE UNIT OR MY PHONES OR ALL OF THOSE THINGS, THERE WAS ACTUALLY MORE POOL, SO IT JUST HELPS US TO WORK TOGETHER AND BE PARTNERS AND BE INFORMATIONAL.
WE ARE OFFERING THAT KNOWLEDGE.
BY FAR, WE HAVE CUSTOMERS ON THE OTHER SIDE THAT TELL US, THANK YOU FOR TELLING ME THAT.
I HADN'T THOUGHT ABOUT IT THAT WAY.
THEY IN FACT GET THE BENEFIT BECAUSE THEIR BILLS DO GO DOWN AND CUSTOMERS GET WHAT THEY WANT.
>> PELAEZ: THANK YOU TORE THAT ANSWER.
SO WHEN CAN WE EXPECT THIS EFFORT THAT YOU'RE DESCRIBING WHICH IS TELLING OUR CUSTOMERS HOW WE CUT COSTS AT CPS?
>> TO YOUR POINT, RONNY GUEST AND CREW HAVE BEEN DOING THIS.
BUT OUR BIG PUSH, STARTING RIGHT NOW, WE'RE STARTING TO GO OUT AND EXPLAIN THAT.
OUR CORPORATE COMMUNICATIONS PLAN IS ACTUALLY PUTTING OUT SOCIAL MEDIA, WHERE WE'RE GOING TO RUN SOME ARTICLES.
WE'RE GOING TO GIVE SOME INTERVIEWS.
WE'RE GOING TO TRY TO DO AS MANY THINGS TO MAKE THAT INFORMATION AS CLEAR TO CUSTOMERS AS POSSIBLE.
>> PELAEZ: THANK YOU VERY MUCH.
>> MAYOR NIRENBERG: THANK YOU COUNCILMAN PELAEZ.
PAULA, HOW WOULD CPS CONTINUE TO OPERATE AND FUNCTION IF YOU CLOSED DOWN OUR CURRENT COAL PLANTS?
>> WELL, IF WE CLOSED DOWN THOSE COAL PLANTS WE WOULD PRETTY MUCH BE WHAT WE CALL SHORT IN THE MARKET.
WE COULDN'T HAVE THAT RESERVE MARGIN.
SO, FOR THE PLANTS THAT WE CURRENTLY HAVE, WE WOULD CONTINUE TO RUN ALL OF THOSE THAT WE HAVE.
THEN WE HAVE TO GO OUT TO THE ERCOT MARKET AND BUY POWER THERE.
USUALLY, WE SEE RIGHT AWAY WE HAVE AN INCREASE BECAUSE PRICES DOUBLE FOR THE SUMMER, SO THAT STARTS TO HAVE THAT TURN OF MORE MARKET EXPOSURE, SO THAT'S WHAT WE WOULD DO AND WE THINK, IS THAT WHERE WE NEED TO BE? SHOULD WE JUST RIDE THE MARKET AND HAVE MORE VOLATILITY OR WAIT FOR NEW TECHNOLOGY, SO WE WOULD KEEP THE COMMUNITY INFORMED AND THINK, MAYBE WE WANT TO DO MORE OR LESS OF THAT.
>> COURAGE: SO THE BIGGEST IMPACT WOULD BE TO THE CONSUMER THAT THEIR COST OF FUEL AND THEIR BILL IS GOING TO BE SOMEWHAT HIGHER WHETHER IT'S TWICE OR WHATEVER THE MARKET MIGHT BE.
>> COURAGE: COMPARED TO WHAT WE GENERATE OURSELVES AND CHARGE THE CUSTOMER WHICH MIGHT BE LESS THAN THE MARKET RATE
>> THE ONLY OTHER THING I HIGHLIGHT TO YOU, I TRY TO CREATE EXAMPLES THAT MAKE SENSE.
AGAIN, WE MANAGE ASSETS THAT THE COMMUNITY HAS BOUGHT.
THESE ASSETS WE MANAGE THEM, BUT THEY ARE OWNED BY EVERYONE.
WE WOULD SHUT DOWN, PROBABLY REDUCE OUR WORKFORCE.
THERE WOULD BE COST TORS DO THAT.
IF IT HAPPENED VERY ABRUPTLY -- OUR GOAL IS KEEP ALL OF OUR EMPLOYEES AND MOVE THEM INTO NEW JOB, NEW TECHNOLOGIES, BUT IF WE'RE STRUCK DOING AN IMMEDIATE CLOSURE, THEN WE WOULD BE FACED WITH THOSE COSTS AND THOSE CHALLENGES BACK TO OUR MARKET.
PUTTING PEOPLE WHO HAVE VERY GREAT SKILLS OUT THERE, THAT THEY SHOULDN'T BE EXPOSED TO THAT.
THE OTHER THING IS, ANY COSTS WE HAVE WITH DUCT DON'T GO AWAY AUTOMATICALLY BECAUSE WE SHUT THE UNIT DOWN.
THE COMMUNITY WOULD STILL BE PAYING FOR ALL OF THOSE FIXED COST ON THE UNIT AND THEN WE STILL GO OUT AND BUY THE POWER TO REPLACE IT AND BASICALLY TO SOME DEGREE DOUBLE SOME OF OUR COSTS.
>>> THANK YOU COUNCILMAN COURAGE? ANY OTHER QUESTIONS FROM OUR COLLEAGUES? WOMAN SANDOVAL.
>> SANDOVAL: THANK YOU FOR YOUR PRESENTATION, PAULA AND BEING SO ENGAGING WITH US DEVELOPING THE
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FLEXIBLE ENERGY PLAN.WE DIDN'T HAVE TO GO THROUGH A RATE INCREASE THIS YEAR.
>> SANDOVAL: CAN YOU TELL BUS THAT PROCESS AND HOW YOU CAME TO THAT CONCLUSION?
WE TALK ABOUT WHETHER WE'LL NEED A RATE INCREASE EVERY YEAR, A COUPLE TIME HAVING YEAR.
IT'S A VERY INDEPTH PROCESS BECAUSE IT HAS TO TIE BACK TO STRATEGIC VIEW OF CUSTOMER GROWTH AND ULTIMATELY HOW OUR PLANTS ARE DOING.
WE LOOK AT FORECAST OF PLANT PRODUCTION, MEGA WATTS.
WE TAKE IN ALL TYPES OF CONSIDERATIONS.
MERGE IT ALL TOGETHER AND IT TAKES A SIGNIFICANT EFFORT TO DO IT.
WE CALL IT OUR DUE DILIGENCE EFFORT AND THEN WE BOIL IT DOWN TO, CAN WE KEEP FULFILLING THE NEEDS OF A GROWING COMMUNITY, INCREASING INVESTMENTS IN INFRASTRUCTURE, WE MAKE ALL TYPES OF INVESTMENT, TRYING TO IMPROVE OUR INVESTMENTS AND OUR TRANSMISSION SYSTEM, OUR DISTRIBUTION SYSTEM AND CERTAIN AREAS, AS ASSETS GET OLDER, AS LINES GET OLDER, THEY NEED TO BE UPGRADED AND REPLACED.
SO WE DO ALL OF THAT AT THE SAME TIME WE KEEP LAUNCHING MORE INVESTMENTS IN NEW TECHNOLOGIES, SUCH AS METERERING, AUTOMATION AND ALL OF THAT.
TEST IT AND FORECAST WHAT IT LOOKS LIKE FOR THE NEXT 25 YEARS AND WE LOOK TO SEE WHEN WE HIT PRESSURE AND CAN WE MAKE IT THROUGH AND ARE WE MAINTAINING OUR FINANCIAL METRICS WITH ALL OF THOSE THINGS THAT HAPPENED.
SO, WE -- JUST LIKE ALWAYS, WE DID A MAJOR INTENSIVE EFFORT AND WE CULMINATED AND AT THE FIRST BLUSH, FOR EVERYTHING THAT WE WERE THINKING ABOUT WE WANTED TO DO AND WHERE WE THOUGHT THE MARKET WAS, WE THOUGHT MIGHT BE THE TIME.
AND SOMETIMES THE MEDIA SAY, ARE YOU -- ARE YOU FAILING? TR YOU KNOW, ARE YOU ABOUT TO GO BANKRUPT? ONE OF THOSE THINGS.
WE'RE A AA CREDIT RIGHT UNDER THE CITY'S AAA CREDIT.
YOU MAKE SURE THAT YOU KEEP THE RIGHT LEVEL OF CASH RESERVES.
YOU MAKE SURE YOU CAN SERVICE ALL OF YOUR DEBT.
YOU MAKE SURE YOU CAN MEET ALL OF YOUR OBJECT GAKS AND LOOK TO MAKE SURE THAT YOU DON'T HAVE THAT TYPE OF DIRE PRESSURE.
IF YOU HAVE THAT TYPE OF DIRE PRESSURE, YOU'RE LOWERING YOUR CREDIT RATING TO MAYBE EVEN NOT CREDIT WORTHY.
WE LOOK AT ALL OF THAT TO MAKE SURE WE CAN MAINTAIN THOSE METRICS.
JUST LIKE THE EXAMPLE OF THE LETTER WE PUT OUT THERE, WE ARE LOOKING FOR NEW WAYS TO CUT COSTS, NEW WAYS TO BE MORE EFFICIENT.
WHEN WE START WE'RE STILL TRYING TO DO COST SAVING THINGS ALONG THE WAY AND MERGE IT TOGETHER ALL IN ONE VIEW.
WE REFRESHED IT AGAIN IN LATE 2017.
WHEN WE GOT TO THE BEGINNING OF 2018, AROUND THE FEBRUARY TIME FRAIM, WE FOUND MORE COST SAVINGS, AS AN EXAMPLE, SOME OF THOSE THINGS.
THAT HELPED US NOT HAVE AS MUCH PRESSURE.
WE THOUGHT ABOUT WHETHER OR NOT WE CAN HAVE A MORE EXTENDED IMPLEMENTATION OF SOME OF OUR PROJECTS.
WE DID SOME OF THAT AND WE ALSO SAID LET'S TAKE A LOOK AT AND TAKE A DEEPER DIVE OF SOME PROGRAMS WE HAVE.
WE ARE LIGHTENING OUR BELT AS MUCH AS POSSIBLE.
WHEN WE GOT TO THIS YEAR WE DECIDED 2018 WILL BE THE ANOTHER YEAR WE DOESN'T DO A RATE INCREASE.
BUT IT'S GETTING TIGHTER AND TIGHTER.
THERE'S NOT A SCENARIO THAT WE'VE RUN THAT SAYS WE WILL NEVER DO A RATE INCREASE AGAIN.
IT'S LIKE SAYING, YOU GOT A JOB AND NEVER GET A RAISE EVER AGAIN.
EVERYTHING ELSE IS GOING OUT AROUND YOU.
WE JUST LOOK REALLY HARD EVERY YEAR TRYING TO PRESENT IT AND WE'VE BEEN SUCCESSFUL, BUT RM THE FUTURE HOLDS A RATE INCREASE.
>> SANDOVAL: THANK YOU FOR BEING VERY FRANK ABOUT THAT BUT ALSO FOR HOLDING IT OFF FOR THIS COMING YEAR.
WHEN WE DO SEE A RATE INCREASE IN THE FUTURE, WHAT KIND OF SCALE MIGHT BE ANTICIPATE? AND I WON'T HOLD YOU TO IT.
>> SANDOVAL: I'M JUST TRYING TO GET A SENSE IF IT'S LIKE --
I'M IN TROUBLE WITH YOU MULTIPLE TIMES ALREADY, SO --
>> WE TRY TO KEEP IT AS LOW AS POSSIBLE.
WE HAVE DONE -- WE HAVE DONE 8.5 PERCENT HISTORICALLY.
ACTUALLY MORE THAN -- ACTUALLY MORE THAN TEN YEARS AGO WE DID 8.5 PERCENT AND 7.5 PERCENT FOR
[00:30:02]
GAS SYSTEMS. THE LAST ONE I THINK WAS 4 PANT 25.WE THINK TRYING TO KEEP BILL INCREASES BELOW 5 PERCENT.
IF YOU PUSH IT OVER 5 YEARS, IT'S MUCH LOWER BUT WE TRY TO NOT GO OVER IF WE CAN -- IF IT'S GOING TO PUSH US TO BE MORE THAN THAT, WE GOT TO TELL YOU EXACTLY WHY.
BECAUSE WE'RE TRYING TO NEVER LET IT BE AT UNREASONABLE LEVEL.
IF WE GO LOWER THAN 5 PERCENT WE GIVE OUR CUSTOMERS LOWER HER THAN THAT.
>> SANDOVAL: THANK YOU VERY MUCH.
>> MAYOR NIRENBERG: THANK YOU, WOMAN SANDOVAL.
PAULA, I ASSUME YOU GOT ENOUGH TIPS FROM YOUR LEGISLATIVE TEAM WHAT WE NEED TO BE AWARE OF MOVING INTO THE 2019 LEGISLATURE.
IS THERE ANYTHING AT THIS POINT YOU WANT TO SHARE WITH US?
SO, I WILL SAY -- WHERE IS KATHY GARCIA.
KATHY IS VICE PRESIDENT OF EXTERNAL AFFAIRS.
SHE PAYS ATTENTION TO EVERYTHING AT THE FEDERAL, STATE AND LOCAL LEVEL.
SHE'S CONSTANTLY ON TOP OF IT.
SHE AND HER TEAM HERE, AND SO WE WILL CONTINUE TO BE ABLE TO GIVE YOU MORE UPDATES.
THE THINGS I HEARD CLEARLY, THERE IS SOME PRESSURE THAT CONNECT THE US WITH THE LOCAL CONTROL AND HOME RULE PERSPECTIVE.
AND I THINK THERE IS SOME INTEREST AT THE STATE LEVEL TO TAKE SOME AUTHORITIES AWAY FROM CITIES.
AND SOME DECISION, AND THINKING THEY CAN CREATE SOME THINGS THAT ARE BETTER FOR THE STATE OVERALL.
IT MANIFESTED IN A DISCUSSION TO SOME DEGREE ABOUT, OUR MUNICIPAL MARKETS AS GOOD AS COMPETITIVE MARKETS.
OF COURSE, WE DO EVERYTHING FOR OUR CUSTOMERS THAT UTILITY AND ENERGY COMPANIES DO IN YOUR COMPETITIVE MARKETS.
WE THINK WE'RE MARK CONNECTED.
WE THINK WE RESPOND DIFFERENTLY.
WE HAVE THE MOST INVESTMENT IN CONSERVATION THAN ANYONE IN THE STATE.
LATER ON WE MAY DECIDE WE DON'T NEED TO DO THAT.
MAYBE OUR INVESTMENTS OR GOOD AND WE CAN TIE THOSE DOWN.
THE WAY WE'RE CONNECTED AND TIED TO THE COUNCIL AND NOT TO A SEPARATE REGULATORY BODY.
WE MAKE THOSE DECISIONS BUT THE SENATE WAS VERY MUCH ON, WELL, MAYBE THEY SHOULD TOLE THAT FOR AN ENTITY, MAYBE THAT SHOULDN'T BE THAT WAY.
THERE WERE SOME DISCUSSIONS ABOUT CITY PAYMENT.
THEY HAD A LOT OF SENSITIVITIES ABOUT CITY PAYMENT.
THEY DID HAVE SENSITIVITIES THAT WERE NOT PAR GETTED AT US.
SOME WIND COMPANY AND DIFFERENT ORGANIZATIONS THAT DON'T -- THEY SAY THEY ARE FOCUSED ON EDUCATION, BUT THE SENATE HAD A LOT OF QUESTIONS FOR THEM, TOO.
THEY ARE JUST CHALLENGING EVERYTHING THEY CAN RIGHT NOW TO GET A LOT OF CONTEXT.
I DO EXPECT SOME TYPES OF LEGISLATION TO BE ACTIVE IN THE LEGISLATIVE SESSION NEXT YEAR, AND I THINK IT WILL GO BETWEEN HOME RULE AND WHETHER OR NOT WE SHOULD ALLOW MUNICIPAL MARKETS AND COMMUNITIES TO OWN THEIR OWN UTILITIES.
I THINK IT WILL BE A DISCUSSION.
I THINK WE FARED WELL IN THE HEARING, TO EXPRESS AGAIN WHAT WE DO AND HOW WE DO IT.
I THINK IT MADE A HUGE POINT THAT ONLY IN THE MUNICIPAL MARKET DO YOU GET THE TYPE OF INCENTIVE TO INVEST MORE IN LONG-TERM SOLUTIONS.
I WORK FOR PUBLICLY TRADED COMPANIES IN THE FUTURE.
THEY HAVE TO BE COMFORTABLE EVERY QUARTERLY TURN.
OUR COMMUNITY EXPECTS US TO TAKE A VERY LONG-TERM VIEW ON THOSE INVESTMENTS AND ID THINK THEY ACCEPTED IT BECAUSE THEY SAW THE BENEFITS IN THE RESERVE MARGIN.
THEY WILL COME AT IT BUT I THINK THEY WILL ALSO LISTEN TO THE BENEFITS THAT WE'RE ABLE TO SHARE.
>> MAYOR NIRENBERG: I GUESS I WANT TO RE-EMPHASIZE THAT WE'LL NEED AS MUCH AS POSSIBLE, CONDENSED INFORMATION THAT CAN BE COMMUNICATED TO OUR DELEGATION AND OTHER DELEGATIONS THAT SHOW THAT BENEFIT AND THE RESERVE AS WELL AS OUR COMPETITIVENESS IN TERMS OF RATES TO THE RATE PAYER THAT ALSO RESULTS IN ENERGY UTILITY THAT'S RELIABLE FOR STOP YO, BUT ALSO THE BACKBONE OF TEXAS, SO, THANK YOU VERY MUCH, PAULA, I THINK THAT'S EVERYONE.
I WILL REACH OUT WITH ANY OTHER QUESTIONS AND FOLLOW-UP THAT I ALREADY OWE YOU.
THANK YOU.
* This transcript was compiled from uncorrected Closed Captioning.