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 Okay, it is nine o'clock and we do have a quorum.

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 So call to order the Public Utilities Board for the City of Denton from Monday, January

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 23rd, 2023.

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 The first item is presentations from members of the public.

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 Is there anybody from the public who wishes to speak?

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 Okay, I see none.

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 Before we go into consent agenda, we're going to change up the timing of the closed session.

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 We're moving it from the end to right before the work session.

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 So we'll go into closed session and we'll reconvene and do the work sessions.

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 Consent agenda, does any board member wish to pull anything from items A through F?

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 All right, I am going to pull C.

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 Do we have a motion to approve items A, B, D, E, and F?

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 So moved.

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 Moves.

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 Do we have a second?

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 Barbara seconds.

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 All in favor say aye.

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 Aye.

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 Okay, item C.

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 Billy had to recuse himself, so that's the reason why I pulled item C. So that's the

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 only reason.

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 Do we have a motion to approve item C?

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 Moves.

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 Do we have second?

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 Please seconds.

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 All in favor say aye.

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 Aye.

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 I will go and get -- Oh, thank you.

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 Thanks staff.

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 As we clear the room.

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 That was quick.

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 The next item is consider approval of the January 9th, 2023 minutes.

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 Do we have any changes or corrections?

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 All right.

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 Do we have a motion to approve?

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 Moves.

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 Billy moves, Devin seconds, all in favor say aye.

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 Aye.

39
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 Management reports.

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 Madam Chair, members of the PAB, in your management reports we did provide to you the deck reports

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 for the month of September.

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 The finance folks are here if you have any questions on that.

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 For future agenda items, the only item that we have listed currently is an item for today's

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 discussion, the finance will be doing a work session regarding DME's budget and rates.

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 And then on the new business action item, today we also have a presentation of Greensense

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 that we think will address items number one and number two regarding solar panels and

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 installations and rebates.

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 And if you recall, the last meeting we discussed the ERCOT lawsuit with you in closed session,

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 and so that's been completed as well.

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 So happy to answer any questions that you have, if there's anything that you'd like

51
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 to add for future consideration, let us know.

52
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 I have an item for future consideration.

53
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 In our consent agenda was another change order for the Hickory Creek station project, and

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 I wondered since we've had a number of them, it might be worthwhile for us to get an update

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 and summary of the status of the project and maybe some background about how we've arrived

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 at the project where we've required so many changes.

57
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 Yeah, we'll add it to the list and we'll let Becky, our city engineer, know so she can

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 get that back to you.

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 No, I don't think he's talking about the Hickory GIS station.

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 The sewer.

61
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 Okay.

62
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 Yeah.

63
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 I just think it would be useful to get kind of an overview because we keep getting change

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 orders on it.

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 It's obviously the project's difficult, it's had problems, issues, change of scope or change

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 of circumstances.

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 I think it might be good for us and for others to get an idea of how we arrived at this situation.

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 And don't get me wrong, I've worked on plenty of projects that have a lot of problems.

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 A lot of change orders.

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 Yes.

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 We'll let Becky and her staff know and they'll get something back on the agenda for you.

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 Thank you.

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 Thank you.

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 All right.

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 Then we're into concluding items.

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 You already added an item.

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 Does any other board member wish to add items or have anything to say to the public?

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 I would like to thank Ben Jumper for his service.

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 He has resigned and there is a candidate that's going to the city council tomorrow for approval.

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 He had conflicts with his work schedule that he just wasn't able to serve any longer.

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 All right.

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 So now it'll be time to go into closed session and the legal staff, our wonderful legal staff

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 gives me this to say, the Public Utilities Board will now at 9.05 a.m. convene into a

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 closed meeting to deliberate the closed meeting items set forth on the agenda, which include

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 the following, A, PUB 23017, deliberations regarding certain public power utilities competitive

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 matters under Texas government code section 551.086, consultation with attorneys under

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 Texas government code section 551.071, and B, PUB 23018, deliberations regarding certain

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 public power utilities competitive matters under Texas government code section 551.086,

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 consultation with attorneys under Texas government code section 551.071.

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 Thank you.

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 Thank you.

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 Thank you.

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 Thank you.

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 Thank you.

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 All right.

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 It is 9.48 and the Public Utilities Board has now reconvened from closed session and

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 no official action was taken.

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 We are on to our work session where we're going to receive a report, hold a discussion

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 and give direction regarding the electric fiscal year 2022-2023 budget and rates.

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 Good morning, Chair and PUB members, Nick Vincent, Interim Finance Director, let me

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 get this pulled up.

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 I like the way you put the estimated time in the discussion here.

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 Yeah, Tony was taking bets I can get through it in five minutes.

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 I said, okay, I'll see how fast I can get through it.

105
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 Let me get this here.

106
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 Hang on a second.

107
00:07:53,360 --> 00:07:56,120
 Okay, so really let's just talk about an overview of why we're here today.

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 We want to talk to you about the fiscal year 2022 end of year numbers, so the fiscal year

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 that ended last September, September 2022.

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 Talk to you about the financial assumptions included in the adopted budget.

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 Talk to you about the updated forecast for fiscal year 2023 and we'll talk about recommendations

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 and next steps.

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 So this slide here is just take some numbers from the pro forma, really focus some attention

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 to them.

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 We're looking at some numbers that changed in fiscal year 2022, quite a bit from budget.

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 So let me walk you through this really quick.

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 So you can see actual sales forecast or revenue exceeded budget by 10 million.

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 So there's two components to a residential customer's bill.

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 Of course, you have the base revenue and you have the ECA revenue.

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 We'll talk about that a little bit here in the forecast, but you can see base revenue

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 exceeded forecast about $10 million.

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 So we are continuing to see an increase in our sales of electricity in the community

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 as we continue to grow.

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 ECA about $1.5 million and then non-rate revenue actually increased about $50.9 million in the

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 fiscal year 2022.

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 There were a couple of big things that were included in that.

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 So the city did receive revenue from the sale of the TMPA facility as about $15 million

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 and we did have some increased revenue associated with the deck running more last fiscal year.

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 So did have some increased run times for that facility.

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 Purchase power, you can see down here we did purchase about $38 million more in purchase

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 power than we originally budgeted.

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 If you remember, we did take a budget amendment forward for electric last fiscal year to make

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 sure we had plenty of expense authority.

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 So it's a little bit higher energy prices and energy consumption.

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 Then I will go to the next slide.

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 If you have questions, just feel free to stop me.

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 I'm not going to try to rush through it too fast here.

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 So this slide really highlights at a really high level the assumptions that were included

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 in the adopted budget.

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 So you can see everything is based on megawatt hours.

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 So MWH, you can see that right here, our sales forecast for customers.

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 Return on investment, 6%.

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 We did discuss this with the PB and City Council of increasing that from the three and a half

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 to 6% and taking it forward.

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 TMRS, so Texas Municipal Retirement System, that contribution to the retirement plan for

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 city employees, increase from 17.65 to 18.15%.

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 Moving over to the revised assumptions column, what we've done in an effort to really summarize

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 what is updated in the forecast today is we've underlined the items that have changed.

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 So we've updated our non-rate revenue, I think the question was asked earlier, we revised

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 the data center revenue and then of course we revised the data center expenses and we'll

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 talk about that in the forecast here in just a second.

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 Okay, everybody has seen this before, I think everybody was here last budgeting cycle, but

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 this is the five-year forecast with electric utility.

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 So I'm going to take my time and go through it here and if you have any questions, definitely

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 ask them.

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 2021, so a couple of fiscal years ago, you can see how we finished the year, won't talk

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 too much about that, that's been a couple of years ago.

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 2022, so this is the fiscal year we just finished, right?

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 Here's the adopted budget and here's where the preliminary actuals are.

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 This does say preliminary actuals because we are still in the process of putting the

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 annual comprehensive report together, also referred to as the ACFIR.

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 So we don't anticipate these to change, but we did want to put that caveat in there.

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 So the adopted 2022 budget contemplated we had finished the year about $5 million positive,

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 you can see that number right here.

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 Where we ended up finishing the year was about $22.7 million positive, so we did have a better

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 fiscal year ending 2022.

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 And that's important to note, right, because that helps us play into our recommendation

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 today that we're fixing to talk to you about.

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 So this is very important to understand that.

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 2023 is circled here in this box, so you can see the adopted budget that was adopted last

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 fall contemplated using about $15.5 million in reserves.

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 What that did is it would leave us an ending fund balance about $125.2, as we originally

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 were forecasting.

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 So what's important, right, given the amount of money, the $22.7 million that DME brought

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 in in fiscal year 2022, the fund balance actually finished better at the end of the year than

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 we anticipated, right?

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 So we originally are anticipating $127.7, we finished the year about $140.7.

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 So we are anticipating using more reserves this fiscal year, so we have updated the non-rate

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 revenue.

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 What is included in non-rate revenue is just, it could be data center revenue, it could

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 be data center, T-cost revenue, and some miscellaneous revenues.

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 So I think even the DEC is included in there, so that has been updated.

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 Now, moving to the expenses, everything for the end of your estimate that we're currently

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 estimating is equal to budget, except data center expenses, T-cost, well, T-cost, I don't

185
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 mean expenses, but anything to do with the data center mostly.

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 So about $29 million in reserve usage.

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 Moving down the page, we're forecasting to finish the year at about $111.7 million in

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 reserves.

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 Now, you know, practicality, right, how does that align with the reserve targets that the

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 PV and City Council established a couple years ago?

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 That is below the reserve targets.

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 You may remember we set the reserve at 46 as a minimum and 69 as a max.

193
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 And this was in response to Winter Storm URI, right?

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 We realized that we needed to have more on hand, so we increased those reserve targets.

195
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 So we're still below the reserve target.

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 But, you know, one thing I want to note, right, there is a lot of uncertainty in this forecast.

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 This forecast has not been updated for electric sales projections, have not been updated.

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 So we do continue to see increased electric sales in the community.

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 That will modify this pro forma.

200
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 We have not updated our end of year estimate for O&M expenses, so operation and maintenance

201
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 expenses, purchase power forecast needs to be updated, so there's a lot of things yet

202
00:14:00,580 --> 00:14:02,540
 to be updated.

203
00:14:02,540 --> 00:14:05,900
 Given those things that are still outstanding and coming into the summer months, we are

204
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 currently not recommending a rate increase.

205
00:14:08,220 --> 00:14:10,740
 Now, a couple things I want to say, right?

206
00:14:10,740 --> 00:14:11,740
 Yes, sir.

207
00:14:11,740 --> 00:14:12,740
 >> Yes.

208
00:14:12,740 --> 00:14:17,220
 >> When do you anticipate those updates will be made in the forecast here?

209
00:14:17,220 --> 00:14:21,460
 >> So we had that debate, Terry and I actually had the debate for a couple hours, I was joking,

210
00:14:21,460 --> 00:14:23,540
 but it was a while, right?

211
00:14:23,540 --> 00:14:26,300
 It is premature now to make that update.

212
00:14:26,300 --> 00:14:31,860
 We do think those updates, or we know those updates will be included in the budget conversations.

213
00:14:31,860 --> 00:14:35,660
 So starting, I'm looking at Danielle here, I think the first conversation we have is

214
00:14:35,660 --> 00:14:40,940
 in May, so in May, those updates will be included in the forecast, yeah.

215
00:14:40,940 --> 00:14:42,740
 >> I have a question also.

216
00:14:42,740 --> 00:14:45,620
 We just approved that insurance policy last month, too.

217
00:14:45,620 --> 00:14:51,860
 So what impact would having that mechanism have to maybe not needing as much working

218
00:14:51,860 --> 00:14:55,680
 capital for the minimum reserves, or is it not at all?

219
00:14:55,680 --> 00:14:58,100
 >> So I think it is the outage insurance?

220
00:14:58,100 --> 00:14:59,100
 >> The outage insurance, yes.

221
00:14:59,100 --> 00:15:00,500
 >> Do you want to speak to that, Tony?

222
00:15:00,500 --> 00:15:03,180
 I don't know when it kicks in?

223
00:15:03,180 --> 00:15:09,020
 >> So the outage insurance is just to cover the winter months in the event of an outage.

224
00:15:09,020 --> 00:15:16,700
 So I think the new number is around 450,000, about 200,000, almost 200,000 less than what

225
00:15:16,700 --> 00:15:21,020
 you approved once we settled that contract.

226
00:15:21,020 --> 00:15:29,740
 So I think the impact is pretty minimal on this fund, yes, ma'am.

227
00:15:29,740 --> 00:15:34,700
 >> Okay, I'm going to look down just for a second here, and if you have any questions,

228
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 wave at me or yell.

229
00:15:36,340 --> 00:15:39,940
 So 0% is what we're currently forecasting for this year.

230
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 Now if things change, right, we can come back to the Public Utility Board, come back to

231
00:15:43,800 --> 00:15:47,140
 City Council when we get there, talk about those rate increases.

232
00:15:47,140 --> 00:15:52,060
 Moving into the future years, right, I think Ms. Russell had asked this question earlier,

233
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 are we contemplating rate increases, and the answer is yes.

234
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 Starting in fiscal year '24 through fiscal year 2026, you can see we have rate increases

235
00:15:59,980 --> 00:16:01,400
 plugged in.

236
00:16:01,400 --> 00:16:06,820
 This rate increase is just to the ECA rate, right, so the energy cost adjustment rate

237
00:16:06,820 --> 00:16:09,260
 is what this is to currently.

238
00:16:09,260 --> 00:16:13,460
 Our thought process is, right, is we have a cost of service study going on in the electric

239
00:16:13,460 --> 00:16:15,300
 utility right now.

240
00:16:15,300 --> 00:16:19,820
 We do anticipate finishing that within the next couple of months and bringing those recommendations

241
00:16:19,820 --> 00:16:22,420
 forward to you as part of the budgeting process.

242
00:16:22,420 --> 00:16:25,940
 So a couple of things need to happen, right, we do need to set the stage and talk to the

243
00:16:25,940 --> 00:16:30,620
 Public Utility Board about the ECA rate fluctuating, moving forward.

244
00:16:30,620 --> 00:16:34,340
 Currently it is flat, it does not adjust year to year with energy prices.

245
00:16:34,340 --> 00:16:37,940
 That is something that needs to be addressed in this fund, right, it has vulnerability,

246
00:16:37,940 --> 00:16:40,800
 it creates risk for this fund.

247
00:16:40,800 --> 00:16:44,880
 So we do anticipate to talk to you about that here in the coming months.

248
00:16:44,880 --> 00:16:48,140
 One other thing just really quick, so on the five-year forecast you can see the reserve

249
00:16:48,140 --> 00:16:51,380
 dips down to about 91.7 million.

250
00:16:51,380 --> 00:16:55,580
 So these rate increases may change, but our rate recommendation going forward to get that

251
00:16:55,580 --> 00:16:58,940
 reserve above the reserve requirement in the fifth year.

252
00:16:58,940 --> 00:17:03,820
 So it looks good from a bond rating agency perspective when we get ready to issue bonds.

253
00:17:03,820 --> 00:17:09,320
 There is a lot of information, feel free to tell me to back up if you think of something

254
00:17:09,320 --> 00:17:10,840
 else.

255
00:17:10,840 --> 00:17:14,820
 So I have already said this multiple times, no mid-year rate increases is staff's recommendation

256
00:17:14,820 --> 00:17:16,500
 currently.

257
00:17:16,500 --> 00:17:21,260
 We do have the notice of intent for bond issuance coming forward to you, I believe the first

258
00:17:21,260 --> 00:17:26,940
 one I got a note here, coming forward to you in March.

259
00:17:26,940 --> 00:17:32,360
 So you will see what bond issuance we plan to issue this June for the electric utility.

260
00:17:32,360 --> 00:17:36,740
 We will continue to update the purchase power forecast, we mentioned that earlier, look

261
00:17:36,740 --> 00:17:41,660
 at the retail sales forecast, and then the timing of potential data center completion,

262
00:17:41,660 --> 00:17:46,380
 and then reevaluating those future rate increases.

263
00:17:46,380 --> 00:17:49,940
 So upcoming discussions, this starts the budget calendar, we are in that time of the year

264
00:17:49,940 --> 00:17:55,860
 again so you will see these dates start to pop up on your future rate work session matrix.

265
00:17:55,860 --> 00:17:58,460
 So May 22nd is the first conversation.

266
00:17:58,460 --> 00:18:02,140
 At that meeting we will have an updated end of year forecast for you and start talking

267
00:18:02,140 --> 00:18:08,140
 about the preliminary 2024 budget and this takes us all the way through budget and rate

268
00:18:08,140 --> 00:18:17,100
 approval which is on July 24th for the public utility board.

269
00:18:17,100 --> 00:18:18,100
 Yes sir.

270
00:18:18,100 --> 00:18:25,900
 I'm just curious, the bond issuance, what kinds of projects or expenses is that bond

271
00:18:25,900 --> 00:18:28,760
 issuance looking to cover just at a high level?

272
00:18:28,760 --> 00:18:34,380
 So great question, I can't remember off the top of my head, but I want to say $60-70 million

273
00:18:34,380 --> 00:18:40,140
 in projects for the electric utility, it includes transmission, distribution, new construction

274
00:18:40,140 --> 00:18:46,380
 for new developments, hopefully that answers your question, Tony did I miss something?

275
00:18:46,380 --> 00:18:50,820
 I think the largest project for this year that we actually started and awarded contract

276
00:18:50,820 --> 00:18:56,780
 earlier in the year or late last year was the Hickory GIS substation, that's a $40 million

277
00:18:56,780 --> 00:19:03,340
 plus dollar construction project, but that's probably the single largest project that we

278
00:19:03,340 --> 00:19:05,340
 have in the CIP.

279
00:19:05,340 --> 00:19:09,980
 Going forward we're still looking at a couple of other needs, we're still kind of developing

280
00:19:09,980 --> 00:19:14,760
 those now, but probably a couple of other substations within that next five year to

281
00:19:14,760 --> 00:19:20,700
 ten year window, and so we'll be bringing that back to you, we're still in the development

282
00:19:20,700 --> 00:19:22,780
 phase of that CIP.

283
00:19:22,780 --> 00:19:27,340
 Thank you.

284
00:19:27,340 --> 00:19:28,580
 Mr. Taylor go ahead.

285
00:19:28,580 --> 00:19:29,580
 Thank you.

286
00:19:29,580 --> 00:19:37,740
 Regarding DME's rates, the current residential retail rate is it approximately 10.8 cents?

287
00:19:37,740 --> 00:19:42,900
 It's about 10.5, but then once you build in the fixed rates about 11.

288
00:19:42,900 --> 00:19:51,100
 Okay, and the current ERCOT wide retail rate, like is, my understanding is like something

289
00:19:51,100 --> 00:19:53,020
 like 15 or 16 cents?

290
00:19:53,020 --> 00:19:55,660
 North of 17 cents.

291
00:19:55,660 --> 00:20:03,180
 So I think we never want to raise rates, we want to have as efficient and cost effective

292
00:20:03,180 --> 00:20:12,780
 and low cost as possible rates, but we don't exist independent of the oil and gas market

293
00:20:12,780 --> 00:20:16,140
 or ERCOT or the rest of the grid.

294
00:20:16,140 --> 00:20:21,860
 So you know I think it's pretty amazing that we are looking at holding our rates at 10.8

295
00:20:21,860 --> 00:20:32,220
 whenever I see a lot of electrical invoices in my job from six different electrical providers,

296
00:20:32,220 --> 00:20:38,580
 and we've typically seen two to four cents per kilowatt hour rate increases in the last

297
00:20:38,580 --> 00:20:39,820
 year and a half.

298
00:20:39,820 --> 00:20:46,100
 So that we are still level and there are challenges in the budget to do that, and there's challenges

299
00:20:46,100 --> 00:20:50,940
 in operations to keep that efficiency, but it's pretty amazing that DME has been able

300
00:20:50,940 --> 00:20:58,660
 to keep those rates level when everybody around us has been forced to increase their rates

301
00:20:58,660 --> 00:21:03,620
 by 20 to 40 percent often in a year or less.

302
00:21:03,620 --> 00:21:11,020
 So I just want to commend DME's management foresight 10 years ago and five years ago

303
00:21:11,020 --> 00:21:19,860
 and last year that has allowed us to be in a position where we don't have an ECA that

304
00:21:19,860 --> 00:21:25,340
 went up three cents last year, which I've experienced with other utilities.

305
00:21:25,340 --> 00:21:35,540
 And so I think this is, and even with all of the challenges faced, T-costs and other

306
00:21:35,540 --> 00:21:40,740
 things we've covered in the closed session, it's really great to see that we can hold

307
00:21:40,740 --> 00:21:48,420
 our rates steady this year, and a five percent rate increase next year is pretty amazing

308
00:21:48,420 --> 00:21:51,000
 compared to what's been going on in ERCOT.

309
00:21:51,000 --> 00:21:56,260
 And we haven't had a rate increase for, what did you say Tony, six years?

310
00:21:56,260 --> 00:21:58,580
 At the end of this year will be six years.

311
00:21:58,580 --> 00:22:03,500
 We've actually decreased rates four and a half percent in that time frame.

312
00:22:03,500 --> 00:22:07,220
 That's not just for the electric utility, all utilities, right, and some utilities actually

313
00:22:07,220 --> 00:22:12,220
 had rate decreases like solid waste, yeah, exactly.

314
00:22:12,220 --> 00:22:20,280
 What I'll point out, Nick, if you'll go back to the forecast really quick, if you look

315
00:22:20,280 --> 00:22:26,260
 at that estimate column down in the ending fund balance, you know, $111 million and then,

316
00:22:26,260 --> 00:22:30,780
 you know, the bottom line reserve is, you know, $128 million where we need to be kind

317
00:22:30,780 --> 00:22:34,140
 of the, you know, that's the floor.

318
00:22:34,140 --> 00:22:39,740
 If you remember in the previous slide, Nick showed that our sales, you know, our revenue

319
00:22:39,740 --> 00:22:43,140
 increased $10 million, right, just from increased usage.

320
00:22:43,140 --> 00:22:47,900
 If that happens again this year, just that one factor alone could get us back to at least

321
00:22:47,900 --> 00:22:51,700
 the minimum, you know, and I think that's one of the reasons why we kind of want to

322
00:22:51,700 --> 00:22:56,220
 take a wait and see approach and see how things develop, but just that one little factor there

323
00:22:56,220 --> 00:23:02,380
 can change the picture to try to get out ahead of a mid-year rate increase at this point

324
00:23:02,380 --> 00:23:05,300
 to probably still a little premature.

325
00:23:05,300 --> 00:23:11,740
 Of course, that all comes in in the summertime when we're in the middle of budget, so.

326
00:23:11,740 --> 00:23:18,820
 Yeah, it certainly has and certainly surprised us, although I think we still have maybe another

327
00:23:18,820 --> 00:23:25,260
 one or two cold spells predicted here before it's all said and done.

328
00:23:25,260 --> 00:23:27,500
 Okay, that's it.

329
00:23:27,500 --> 00:23:29,500
 No more questions.

330
00:23:29,500 --> 00:23:30,500
 Thank you.

331
00:23:30,500 --> 00:23:32,500
 All right, the next item.

332
00:23:32,500 --> 00:23:37,020
 That wasn't 30 minutes, wait a minute.

333
00:23:37,020 --> 00:23:41,780
 Nick wins the bet.

334
00:23:41,780 --> 00:23:45,380
 Receive a presentation, hold a discussion, and give staff direction regarding proposed

335
00:23:45,380 --> 00:23:50,060
 rates to the Green Sense Incentive Program and rates related to distributive generation

336
00:23:50,060 --> 00:23:57,020
 from renewable sources interconnected with DME service territory.

337
00:23:57,020 --> 00:24:11,620
 Good morning, Madam Chair, PV members, I'm Bill Shepard with DME.

338
00:24:11,620 --> 00:24:17,980
 Today, I'm going to talk to you about our Green Sense Program, our rebate program, and

339
00:24:17,980 --> 00:24:22,820
 the relative impacts that we're seeing at DME from those, as well as talk about some

340
00:24:22,820 --> 00:24:28,860
 options towards the end on how we can move forward and maybe address some of the impacts

341
00:24:28,860 --> 00:24:33,140
 that we're seeing.

342
00:24:33,140 --> 00:24:40,140
 So from a relative standpoint, our cost comparison on the programs, you can see the Green Sense

343
00:24:40,140 --> 00:24:44,920
 Programs on the left and the solar rebate programs on the right.

344
00:24:44,920 --> 00:24:49,860
 From a dollar effectiveness, a dollar effectiveness per kilowatt hour, you can see that the Green

345
00:24:49,860 --> 00:24:54,580
 Sense Programs on the left are much more effective, about six times more effective on the amount

346
00:24:54,580 --> 00:24:58,940
 of energy that they reduce from our system versus solar.

347
00:24:58,940 --> 00:25:04,060
 Maybe you said this already, what length of time is this?

348
00:25:04,060 --> 00:25:07,140
 This is since 2009, thank you.

349
00:25:07,140 --> 00:25:12,260
 So yeah, the Green Sense Programs came on board a little bit earlier than the solar

350
00:25:12,260 --> 00:25:16,340
 program, so bringing them back to parity at 2009.

351
00:25:16,340 --> 00:25:19,460
 So another point of distinction I want to make, too, is that three kilowatt hours that

352
00:25:19,460 --> 00:25:24,980
 you're seeing on the dollar spent on the solar rebate program, those are offsetting dollars.

353
00:25:24,980 --> 00:25:29,660
 So those aren't reductions of energy, that's just replacing one form of energy with the

354
00:25:29,660 --> 00:25:34,980
 other, which is solar rooftop, which as you know, DME being 100% renewable, it's really

355
00:25:34,980 --> 00:25:38,100
 replacing one renewable for another.

356
00:25:38,100 --> 00:25:43,860
 Also those amount of dollars spent on the Green Sense Programs have impacted 5,700 customers

357
00:25:43,860 --> 00:25:46,780
 versus about 600 customers on the solar.

358
00:25:46,780 --> 00:25:56,940
 So from a dollar standpoint, the Green Sense we feel is a much more effective program.

359
00:25:56,940 --> 00:26:01,780
 So some of the financial impacts that we see, there's two primary impacts.

360
00:26:01,780 --> 00:26:06,620
 One is the direct costs that we're spending on the rebate dollars, which is about $500,000

361
00:26:06,620 --> 00:26:07,820
 per year.

362
00:26:07,820 --> 00:26:13,380
 You can see the average rebate per system is about $5,700, so that's $5,700 per customer

363
00:26:13,380 --> 00:26:19,620
 versus a few hundred in rebates across many, many more customers.

364
00:26:19,620 --> 00:26:26,340
 But those rebate dollars could also be better spent sending those or redirecting those to

365
00:26:26,340 --> 00:26:33,180
 the Green Sense Program and funding a little bit more of those more cost-effective programs.

366
00:26:33,180 --> 00:26:37,460
 The other impact, which is a little bit more disturbing for us, is the amount of money

367
00:26:37,460 --> 00:26:40,100
 that we're spending on the energy coming back to us.

368
00:26:40,100 --> 00:26:45,660
 We're spending retail plus that we're giving those customers for energy they send back

369
00:26:45,660 --> 00:26:46,920
 to us.

370
00:26:46,920 --> 00:26:50,620
 So this past year, it was $1.7 million.

371
00:26:50,620 --> 00:26:53,340
 That's a year ending FY22.

372
00:26:53,340 --> 00:26:56,940
 That's since program inception of 2007.

373
00:26:56,940 --> 00:27:01,300
 But also we're seeing that amount doubling each year.

374
00:27:01,300 --> 00:27:04,460
 So this year, we're anticipating a little bit over a million dollars that we're going

375
00:27:04,460 --> 00:27:09,500
 to be sending back to customers for the energy that they're giving us.

376
00:27:09,500 --> 00:27:14,300
 So why that's disturbing to us is it's directly offsetting their fixed cost contribution or

377
00:27:14,300 --> 00:27:18,540
 the fixed cost that they really should be paying for the system that's out there to

378
00:27:18,540 --> 00:27:23,040
 provide energy regardless of how much they're using.

379
00:27:23,040 --> 00:27:29,300
 So and just to put that also into context, for every $1.5 million of expenditures on

380
00:27:29,300 --> 00:27:35,520
 DME side, it provides about a 1 percent impact upward pressure on rates.

381
00:27:35,520 --> 00:27:40,420
 So again, with that compounding the way it is every year, and I do have a chart that'll

382
00:27:40,420 --> 00:27:43,840
 show that out in the future years.

383
00:27:43,840 --> 00:27:48,780
 It's pretty scary, but that'll definitely start having some direct impact on the rates

384
00:27:48,780 --> 00:27:53,700
 that our other customers are seeing.

385
00:27:53,700 --> 00:27:57,380
 So in that sense, I'm going to give you a comparison here.

386
00:27:57,380 --> 00:28:02,140
 So the customer on the left is just a regular DME customer with no solar, and the one on

387
00:28:02,140 --> 00:28:04,760
 the right is a solar customer.

388
00:28:04,760 --> 00:28:08,420
 You can see that they pay -- there's three primary components of their bill.

389
00:28:08,420 --> 00:28:09,660
 There's the facility charge.

390
00:28:09,660 --> 00:28:10,660
 It's a fixed cost.

391
00:28:10,660 --> 00:28:15,300
 There's a consumption charge, which is based on the energy that they're using.

392
00:28:15,300 --> 00:28:18,620
 And then there's also the energy charge, which is a direct pass through.

393
00:28:18,620 --> 00:28:24,140
 So it's what DME spends in the market to get them energy to their meter.

394
00:28:24,140 --> 00:28:28,920
 So that total bill on the customer on the left for 1,000 kilowatt hours is $111.

395
00:28:28,920 --> 00:28:33,540
 Now again, one more point of distinction is these customers have the identical impact

396
00:28:33,540 --> 00:28:34,960
 to our system.

397
00:28:34,960 --> 00:28:42,500
 So in terms of poles, wires, equipment, customer service, billing, all that kind of stuff,

398
00:28:42,500 --> 00:28:48,780
 no matter what energy they use, they have the identical impact to our system in terms

399
00:28:48,780 --> 00:28:51,020
 of fixed costs.

400
00:28:51,020 --> 00:28:53,180
 So that bill on the left is $111.

401
00:28:53,180 --> 00:28:56,020
 Same customer on the right has a solar system.

402
00:28:56,020 --> 00:28:59,700
 They're sending 1,000 kilowatt hours back to us.

403
00:28:59,700 --> 00:29:04,260
 You can see that we're paying them a full usage credit for that energy coming back to

404
00:29:04,260 --> 00:29:05,260
 us.

405
00:29:05,260 --> 00:29:08,300
 So the 6840 offsets the 6840 we just billed.

406
00:29:08,300 --> 00:29:15,140
 And we're also paying a premium on top of the energy, which we call an RCA, or renewable

407
00:29:15,140 --> 00:29:18,100
 cost adjustment, going back to that customer.

408
00:29:18,100 --> 00:29:21,020
 So their net bill is about $5.

409
00:29:21,020 --> 00:29:27,100
 Obviously they're not paying anywhere near their fixed cost contribution because the fixed

410
00:29:27,100 --> 00:29:32,780
 cost contribution for our typical residential customer is about $62.55 a month.

411
00:29:32,780 --> 00:29:37,580
 So a customer on the left offsetting, well, a little bit more than half of their bill

412
00:29:37,580 --> 00:29:39,580
 is going towards that fixed cost.

413
00:29:39,580 --> 00:29:41,820
 The one on the left is short.

414
00:29:41,820 --> 00:29:47,700
 And quite honestly, the one on the -- our normal solar -- or our normal non-solar customers

415
00:29:47,700 --> 00:29:53,540
 are subsidizing our PV customers because it's going to result in further and further rate

416
00:29:53,540 --> 00:29:55,940
 pressure on their rates.

417
00:29:55,940 --> 00:29:58,980
 So there's two main ways to address that.

418
00:29:58,980 --> 00:30:02,540
 One is by paying a more appropriate cost for that energy coming back to us.

419
00:30:02,540 --> 00:30:06,660
 So instead of -- let's see, can you see my -- yeah.

420
00:30:06,660 --> 00:30:12,140
 Instead of paying this amount, just pay an energy equivalent amount for that energy coming

421
00:30:12,140 --> 00:30:13,140
 back to us.

422
00:30:13,140 --> 00:30:16,940
 Not a premium, but just like an ECA type amount.

423
00:30:16,940 --> 00:30:18,980
 And then the other -- I'm sorry.

424
00:30:18,980 --> 00:30:23,700
 Where does that go on your income statement, the return?

425
00:30:23,700 --> 00:30:27,620
 The return -- the credit that we're paying back?

426
00:30:27,620 --> 00:30:28,620
 >> Yeah.

427
00:30:28,620 --> 00:30:31,420
 It's just an expense.

428
00:30:31,420 --> 00:30:36,420
 >> So that -- so that the credit, if there is one in this one, there wouldn't be a credit,

429
00:30:36,420 --> 00:30:37,420
 right?

430
00:30:37,420 --> 00:30:40,580
 But if there is a credit, it goes into their bill and it just carries over.

431
00:30:40,580 --> 00:30:43,180
 If in that particular month it generated excess power.

432
00:30:43,180 --> 00:30:51,260
 >> And that -- on the income statement of ours, of the cities, it's an expense?

433
00:30:51,260 --> 00:30:52,260
 >> Yeah.

434
00:30:52,260 --> 00:30:54,180
 >> Just an offsetting expense?

435
00:30:54,180 --> 00:30:55,180
 >> Yes.

436
00:30:55,180 --> 00:30:56,660
 It's actually a reduction in revenue.

437
00:30:56,660 --> 00:30:57,660
 >> Reduction in revenue.

438
00:30:57,660 --> 00:30:58,660
 >> Yeah.

439
00:30:58,660 --> 00:30:59,660
 >> Yeah.

440
00:30:59,660 --> 00:31:00,660
 Okay.

441
00:31:00,660 --> 00:31:01,660
 >> Yes.

442
00:31:01,660 --> 00:31:02,660
 Member Ryback.

443
00:31:02,660 --> 00:31:09,180
 >> So are we -- is DME actually getting the use of that power back or are we simply issuing

444
00:31:09,180 --> 00:31:10,180
 a credit?

445
00:31:10,180 --> 00:31:13,540
 The meters don't spin both ways, do they?

446
00:31:13,540 --> 00:31:18,220
 >> So we're issuing a credit, but essentially that energy is flowing into our system.

447
00:31:18,220 --> 00:31:23,100
 It goes into the big bucket of energy that we provide for our customers.

448
00:31:23,100 --> 00:31:28,100
 Obviously we can't track it from one customer to the next, but it is -- it is flowing into

449
00:31:28,100 --> 00:31:29,100
 our system.

450
00:31:29,100 --> 00:31:31,560
 We're essentially the battery for that customer.

451
00:31:31,560 --> 00:31:35,980
 So when it's nighttime, when it's raining, when it's cloudy, when their system's down,

452
00:31:35,980 --> 00:31:40,140
 when their house is using more than the capability of their system, DME is there and we have

453
00:31:40,140 --> 00:31:41,620
 to be there to provide their load.

454
00:31:41,620 --> 00:31:42,620
 >> Okay.

455
00:31:42,620 --> 00:31:47,140
 But technically, if my next door neighbor has solar and I don't, and they're producing

456
00:31:47,140 --> 00:31:51,960
 more than they're consuming, we're actually consuming some of their excess power?

457
00:31:51,960 --> 00:31:53,300
 >> It's going in the bucket.

458
00:31:53,300 --> 00:31:54,300
 Yep.

459
00:31:54,300 --> 00:31:55,300
 >> It's going right there.

460
00:31:55,300 --> 00:31:56,300
 Into the bucket.

461
00:31:56,300 --> 00:31:57,300
 >> That's right.

462
00:31:57,300 --> 00:31:58,300
 That's right.

463
00:31:58,300 --> 00:31:59,300
 >> Yeah.

464
00:31:59,300 --> 00:32:00,300
 Okay.

465
00:32:00,300 --> 00:32:03,340
 >> I'm not an engineer, so I'm not going to pretend to know the physics here, but yeah,

466
00:32:03,340 --> 00:32:06,620
 I think in plain language that's correct.

467
00:32:06,620 --> 00:32:11,460
 It's about one megawatt, maybe a little bit more right now total.

468
00:32:11,460 --> 00:32:18,700
 That does interplay into our forecast on what we purchase, but because this is intermittent

469
00:32:18,700 --> 00:32:24,740
 energy, the reality is we're filling the total load of the city, regardless of what happens,

470
00:32:24,740 --> 00:32:30,420
 because at the end of the day, if a customer's solar power does not generate anything, they

471
00:32:30,420 --> 00:32:32,420
 still expect DME to be there, right?

472
00:32:32,420 --> 00:32:37,680
 So we have to be able to purchase enough load to be able to meet everybody's needs, regardless

473
00:32:37,680 --> 00:32:41,180
 of whether it's the customer on the right or the customer on the left.

474
00:32:41,180 --> 00:32:47,420
 Do you do some -- I mean, you can put an educated guess together, I bet, of what they're consuming

475
00:32:47,420 --> 00:32:49,860
 to the meter, right?

476
00:32:49,860 --> 00:32:50,860
 >> Yes, correct.

477
00:32:50,860 --> 00:32:58,300
 And so if this customer generated one kilowatt above the thousand that they consumed, then

478
00:32:58,300 --> 00:33:01,740
 we see that, and that's the credit that we then give them.

479
00:33:01,740 --> 00:33:02,740
 >> Okay.

480
00:33:02,740 --> 00:33:03,740
 Okay.

481
00:33:03,740 --> 00:33:10,060
 >> And we have access to some customers' inverters where we can actually see how much they generated,

482
00:33:10,060 --> 00:33:12,580
 but not all the customers.

483
00:33:12,580 --> 00:33:16,020
 >> So we're giving them money back.

484
00:33:16,020 --> 00:33:19,360
 Is that the incentive to have solar power?

485
00:33:19,360 --> 00:33:22,500
 >> So there's a couple ways to incentivize solar.

486
00:33:22,500 --> 00:33:26,940
 One of them is through having a very generous net metering, or in our case, it's a net billing

487
00:33:26,940 --> 00:33:27,940
 structure.

488
00:33:27,940 --> 00:33:30,740
 And then another way is through rebates.

489
00:33:30,740 --> 00:33:34,060
 So we're going to try to address both of those with some of our options moving forward.

490
00:33:34,060 --> 00:33:36,300
 But yes, it is a very good incentive.

491
00:33:36,300 --> 00:33:42,320
 We're -- of our peer utilities across the state, we're probably one of the most generous

492
00:33:42,320 --> 00:33:45,500
 paying utilities back to PV customers.

493
00:33:45,500 --> 00:33:51,120
 >> Do they get any incentive to use solar panels when they purchase?

494
00:33:51,120 --> 00:33:52,120
 Is there --

495
00:33:52,120 --> 00:33:56,500
 >> So along with our rebate, they can get a solar -- I mean, a federal tax credit for

496
00:33:56,500 --> 00:33:57,500
 their system.

497
00:33:57,500 --> 00:33:59,820
 Right now, it's 30%.

498
00:33:59,820 --> 00:34:03,420
 And also, systems have been coming down in price substantially.

499
00:34:03,420 --> 00:34:08,780
 So that's one reason why we don't feel that rebates necessary, and you'll see that in

500
00:34:08,780 --> 00:34:10,580
 some of our options moving forward.

501
00:34:10,580 --> 00:34:11,580
 >> Okay.

502
00:34:11,580 --> 00:34:12,580
 Thank you.

503
00:34:12,580 --> 00:34:13,580
 >> All right.

504
00:34:13,580 --> 00:34:20,460
 So speaking of options, here's some of the options that we're looking at moving forward.

505
00:34:20,460 --> 00:34:24,800
 Option one is pretty much status quo, just leave everything the same.

506
00:34:24,800 --> 00:34:29,980
 It would be not a sustainable option for us because of the compounding effect that we're

507
00:34:29,980 --> 00:34:36,860
 seeing year and year as more and more systems get brought on to our service territory.

508
00:34:36,860 --> 00:34:41,460
 Option two is to sunset the solar rebate, leave everything else the same, but sunset

509
00:34:41,460 --> 00:34:46,860
 the solar rebate and instead redirect those funds to our Greensense programs, and we have

510
00:34:46,860 --> 00:34:53,520
 Michael Gagne and Catherine Barnett here from our sustainability group, and they can give

511
00:34:53,520 --> 00:34:57,980
 you more detail if you'd like on what they have in mind for those dollars, but it would

512
00:34:57,980 --> 00:35:02,980
 increase their funding from $500,000 a year to a million dollars a year for those.

513
00:35:02,980 --> 00:35:09,420
 Now, it would not address our fixed cost problem that we're having, but it would spend those

514
00:35:09,420 --> 00:35:12,560
 dollars more appropriately.

515
00:35:12,560 --> 00:35:17,580
 Option three and option four both do the same with the solar rebate, they sunset the solar

516
00:35:17,580 --> 00:35:23,180
 rebate, but option three addresses that fixed cost through paying a lower amount for the

517
00:35:23,180 --> 00:35:24,420
 energy coming back to us.

518
00:35:24,420 --> 00:35:30,260
 So instead of paying our retail 10.6 cents a kilowatt hour, we'd pay our ECA equivalent

519
00:35:30,260 --> 00:35:32,780
 or 3.41 cents a kilowatt hour.

520
00:35:32,780 --> 00:35:37,680
 So that would help because then we would be paying appropriate amount for the energy coming

521
00:35:37,680 --> 00:35:39,640
 back to us.

522
00:35:39,640 --> 00:35:44,860
 Option four, which we'll go into a little bit more detail in the next slide too, addresses

523
00:35:44,860 --> 00:35:45,860
 it a different way.

524
00:35:45,860 --> 00:35:47,500
 It addresses it through the facility charge.

525
00:35:47,500 --> 00:35:54,160
 So we'll leave the net billing structure the same, so we'll still pay that retail amount.

526
00:35:54,160 --> 00:35:59,380
 We will get rid of the renewable cost adjustment and make it an energy cost adjustment.

527
00:35:59,380 --> 00:36:06,260
 So it eliminates that premium that we used to pay or that we currently pay for solar.

528
00:36:06,260 --> 00:36:10,460
 But instead ratchets up the facility charge and starts recovering those fixed costs through

529
00:36:10,460 --> 00:36:11,460
 the facility charge.

530
00:36:11,460 --> 00:36:17,500
 So if I may go to the next slide, you can see that last bullet there.

531
00:36:17,500 --> 00:36:27,420
 So starting in FY24, we'll go from 867 to 1945, we'll go another bump in '25 and essentially

532
00:36:27,420 --> 00:36:34,940
 get us up to our equivalent fixed cost recovery in FY28 of $62.55.

533
00:36:34,940 --> 00:36:41,020
 So regardless of the energy that PV customer uses, that facility charge is going to kick

534
00:36:41,020 --> 00:36:47,500
 in and we'll be more apt to recover those fixed costs.

535
00:36:47,500 --> 00:36:52,460
 And again, that's paying for the fixed costs of our entire system that right now they're

536
00:36:52,460 --> 00:36:59,980
 not paying for the system, basically, that's there to support them when it's cloudy.

537
00:36:59,980 --> 00:37:00,980
 Exactly.

538
00:37:00,980 --> 00:37:01,980
 Exactly.

539
00:37:01,980 --> 00:37:06,580
 We have a fixed cost of our system that we spread across all of our customers, but it's

540
00:37:06,580 --> 00:37:11,540
 the customers that typically use energy, the PV customers, that oddity out there that is

541
00:37:11,540 --> 00:37:13,660
 actually selling energy back to us.

542
00:37:13,660 --> 00:37:17,100
 So they're not paying their fair share.

543
00:37:17,100 --> 00:37:22,300
 So Madam Chair, just really quick on the $500,000, a couple of things.

544
00:37:22,300 --> 00:37:30,620
 As you may know, the cost of solar panels in the last 10 years has drastically decreased.

545
00:37:30,620 --> 00:37:38,140
 So the free market out there has done a much better job than the $500,000 that we offer.

546
00:37:38,140 --> 00:37:42,300
 And then the federal government has also increased its credit.

547
00:37:42,300 --> 00:37:45,100
 This $500,000 is an annual expenditure to DME.

548
00:37:45,100 --> 00:37:52,900
 When we say sunset, all we mean is we discontinue the rebate and we shift those dollars to what

549
00:37:52,900 --> 00:37:55,660
 we believe are more effective programs.

550
00:37:55,660 --> 00:38:00,860
 The other thing too, roughly in the last two years, we have as many customers that install

551
00:38:00,860 --> 00:38:05,620
 rooftop solar without the rebate as we do with the rebate.

552
00:38:05,620 --> 00:38:10,420
 And I can tell you, every single one of those customers that does not get a rebate calls

553
00:38:10,420 --> 00:38:15,860
 us and complains about the fact that they didn't get the rebate, which is understandable.

554
00:38:15,860 --> 00:38:22,780
 But again, I think that the market coupled with what the federal government has done has

555
00:38:22,780 --> 00:38:28,220
 certainly had a much bigger impact in people being able to install rooftop solar.

556
00:38:28,220 --> 00:38:34,860
 Obviously our very generous payment of that power has also been a huge incentive.

557
00:38:34,860 --> 00:38:41,540
 And that's why we're proposing to step into that over a period of time.

558
00:38:41,540 --> 00:38:46,300
 And certainly those will be decision points going forward.

559
00:38:46,300 --> 00:38:52,540
 We looked at solar energy for a long time because it was so expensive.

560
00:38:52,540 --> 00:39:05,700
 And finally got to be what was deemed an acceptable price range when the city got into it.

561
00:39:05,700 --> 00:39:11,580
 What amount of non-solar energy rebates are issued every year?

562
00:39:11,580 --> 00:39:14,900
 Do we max out that fund every year?

563
00:39:14,900 --> 00:39:15,900
 The green sense.

564
00:39:15,900 --> 00:39:22,500
 So it's not quite maxed out every year, but I know that they're looking at focusing more

565
00:39:22,500 --> 00:39:27,540
 on some of the programs that are more readily taken up by customers.

566
00:39:27,540 --> 00:39:33,420
 But Mr. Gagne is here and he can answer anything specifically if you'd like.

567
00:39:33,420 --> 00:39:39,060
 So I'm just wondering if we move the half million dollars from solar to green sense

568
00:39:39,060 --> 00:39:48,380
 efficiency, if we're only giving out $400,000 in green sense rebates, then increasing the

569
00:39:48,380 --> 00:39:53,700
 budget line doesn't increase uptake of energy efficiency?

570
00:39:53,700 --> 00:39:56,700
 Well I think he has some ideas in mind.

571
00:39:56,700 --> 00:40:02,820
 One is making a bigger impact on low income customers through some new programs.

572
00:40:02,820 --> 00:40:06,980
 So but I don't want to steal any of Michael's thunder.

573
00:40:06,980 --> 00:40:08,700
 Could you tell us a little bit about that?

574
00:40:08,700 --> 00:40:09,700
 Is that another slide?

575
00:40:09,700 --> 00:40:10,700
 Yes.

576
00:40:10,700 --> 00:40:11,700
 Yeah, I've got some backup slides here.

577
00:40:11,700 --> 00:40:12,700
 Okay.

578
00:40:12,700 --> 00:40:13,700
 I'll let you get to it.

579
00:40:13,700 --> 00:40:17,100
 Well and as Michael's coming up, you know, remember too that, you know, Catherine's coming

580
00:40:17,100 --> 00:40:18,100
 up.

581
00:40:18,100 --> 00:40:24,780
 But if you remember, we, you know, the city purposely went out and hired a director specific

582
00:40:24,780 --> 00:40:30,500
 for environmental service and sustainability to have that renewed focus on that.

583
00:40:30,500 --> 00:40:34,700
 What we're planning to do, you know, the green sense, these incentives, even though we've

584
00:40:34,700 --> 00:40:40,700
 worked with Catherine and those folks, the idea here is to shift all of that responsibility

585
00:40:40,700 --> 00:40:44,660
 for the green sense program over to Michael's group so that they can give it the attention

586
00:40:44,660 --> 00:40:48,140
 that it needs because frankly, I think it'd be in a DME.

587
00:40:48,140 --> 00:40:51,260
 There's probably a little bit of incentive to not spend some of those dollars to get

588
00:40:51,260 --> 00:40:55,860
 the budgetary benefits and so again, we want to shift it to where there's the appropriate

589
00:40:55,860 --> 00:40:59,060
 level of attention and I think that's what they're proposing so.

590
00:40:59,060 --> 00:41:02,100
 I've got three of your slides loaded.

591
00:41:02,100 --> 00:41:08,340
 Catherine, is this your first time you've ever stood in front of the PUB and presented

592
00:41:08,340 --> 00:41:09,340
 something?

593
00:41:09,340 --> 00:41:10,340
 I believe so.

594
00:41:10,340 --> 00:41:11,340
 Probably not in the last 20 years.

595
00:41:11,340 --> 00:41:14,940
 I don't think I've presented in the last 20 years maybe.

596
00:41:14,940 --> 00:41:15,940
 Maybe 15.

597
00:41:15,940 --> 00:41:16,940
 We all know you, of course.

598
00:41:16,940 --> 00:41:19,460
 I managed to stay away from it for that long.

599
00:41:19,460 --> 00:41:25,180
 No, on the green sense program, we know that there's some room to increase our rebates.

600
00:41:25,180 --> 00:41:30,540
 We were expending all of the funds so we ratcheted down the dollar amounts several years ago,

601
00:41:30,540 --> 00:41:35,100
 probably four or five years ago now, but we know that we can make some gains there because

602
00:41:35,100 --> 00:41:36,100
 of inflation.

603
00:41:36,100 --> 00:41:40,740
 We need to increase those numbers so that we're paying a relative percent the same as

604
00:41:40,740 --> 00:41:42,820
 we were four years ago.

605
00:41:42,820 --> 00:41:46,820
 With the new energy efficiency ratings on the HVAC systems that have just gone into

606
00:41:46,820 --> 00:41:51,300
 effect in January, I think that we're going to see some increased costs there as well.

607
00:41:51,300 --> 00:42:02,480
 So expanding the HVAC, offering a higher level for a heat pump rebate, windows, insulation.

608
00:42:02,480 --> 00:42:08,380
 We were looking at the electric hot water heaters, adding some more rebates that we

609
00:42:08,380 --> 00:42:12,780
 haven't had in the past so that we can expend those dollars.

610
00:42:12,780 --> 00:42:15,240
 So I'm trying to read that over there.

611
00:42:15,240 --> 00:42:17,140
 That's not in the slide deck that I have.

612
00:42:17,140 --> 00:42:24,980
 So that's future, I guess, basically it goes up like $100, like 30% up to $500 now, like

613
00:42:24,980 --> 00:42:30,020
 30% up to $600, or am I seeing that correctly?

614
00:42:30,020 --> 00:42:35,060
 So the energy efficiency is really great.

615
00:42:35,060 --> 00:42:39,780
 The cheapest kilowatt is the kilowatt you never have to buy, right?

616
00:42:39,780 --> 00:42:47,020
 Lowers our demand, lowers our transmission charges, lowers the median and 90th percentile

617
00:42:47,020 --> 00:42:51,020
 load on our distribution transmission equipment, et cetera.

618
00:42:51,020 --> 00:42:54,260
 So it's really, really great.

619
00:42:54,260 --> 00:43:00,900
 I think my biggest mental challenge I'm having is, so in solar, people are installing systems

620
00:43:00,900 --> 00:43:04,100
 for 250 a watt, they're getting 50 cents back or something like that.

621
00:43:04,100 --> 00:43:10,900
 They were getting 25% of the value up to a pretty big dollar amount.

622
00:43:10,900 --> 00:43:18,860
 Like on windows, I did the arithmetic on the $500 figure, now looking at a $600 figure.

623
00:43:18,860 --> 00:43:20,500
 My house has 23 windows.

624
00:43:20,500 --> 00:43:28,900
 I got a quote to go to low-E vinyl, modern, efficient windows, and it was basically $800

625
00:43:28,900 --> 00:43:30,120
 a window.

626
00:43:30,120 --> 00:43:36,620
 So if I replace two windows, I have more than maxed out the rebate.

627
00:43:36,620 --> 00:43:45,260
 And so it would take me 11 years to get the full, take full advantage of the rebate, or

628
00:43:45,260 --> 00:43:50,900
 I get about a 3% discount on my $16,000 window upgrade.

629
00:43:50,900 --> 00:43:58,380
 Air conditioning system, if I'm looking at like an 18 sear heat pump to replace my three

630
00:43:58,380 --> 00:44:03,780
 ton, I have two, a three ton and a four ton, but like three tons is really old.

631
00:44:03,780 --> 00:44:10,700
 It's $11,000, and I get like a $300, or maybe it's a $400 rebate.

632
00:44:10,700 --> 00:44:20,380
 That's 2%, or it's not making me go, gee, I'm going to go from a 13 sear to an 18 sear,

633
00:44:20,380 --> 00:44:21,620
 because it's such a tiny amount.

634
00:44:21,620 --> 00:44:26,620
 And it's not a homeowner going, man, I can take advantage of this, and over the next

635
00:44:26,620 --> 00:44:31,980
 five years, my power bill will be lower, and this rebate will help offset it, especially

636
00:44:31,980 --> 00:44:34,240
 lower income.

637
00:44:34,240 --> 00:44:38,380
 If you can afford the efficiency, you are going to buy the efficiency anyway.

638
00:44:38,380 --> 00:44:45,380
 I wonder if there's, and I realize we don't want to run out of all of the funds in the

639
00:44:45,380 --> 00:44:52,980
 first month of the year, but make this more significant, where it might cover 10% or 15%

640
00:44:52,980 --> 00:44:59,380
 of these efficiency projects that are the best thing possible for DME and for Denton.

641
00:44:59,380 --> 00:45:03,460
 I think we can run some numbers and see what the budget looks like and what we would expend

642
00:45:03,460 --> 00:45:05,460
 if we increase those.

643
00:45:05,460 --> 00:45:12,180
 And was there, you mentioned, I believe you mentioned targeting for lower income folks

644
00:45:12,180 --> 00:45:17,180
 or maybe inefficient, I don't know if there's a way to say like inefficient homes get a

645
00:45:17,180 --> 00:45:21,700
 better benefit, or if that's too hard to prove and audit?

646
00:45:21,700 --> 00:45:28,060
 Well, we've had some success working with some multifamily properties and doing full

647
00:45:28,060 --> 00:45:36,540
 scale insulation, maybe solar screens, not windows, insulation, HVAC rebates, and we've

648
00:45:36,540 --> 00:45:41,580
 been earmarking some for multifamily, and we've been expending most of that through

649
00:45:41,580 --> 00:45:42,580
 the years.

650
00:45:42,580 --> 00:45:49,100
 So I think if we target some of those projects and some low income, and maybe we've looked

651
00:45:49,100 --> 00:45:54,500
 at the tiered program based on income, we just have to have staff to verify income,

652
00:45:54,500 --> 00:45:58,220
 and that's the hard part, is building those programs and being able to administer every

653
00:45:58,220 --> 00:46:00,500
 step of it.

654
00:46:00,500 --> 00:46:03,980
 Going forward, you know, if that's what the program looks like, if we have the additional

655
00:46:03,980 --> 00:46:11,460
 funding, then we're committed to making that work, but I think there's ways to do it.

656
00:46:11,460 --> 00:46:17,220
 We know the areas where we have more inefficient housing in town through our audit program.

657
00:46:17,220 --> 00:46:22,980
 We've identified a lot, so there's some communication we can do at the neighborhood level to let

658
00:46:22,980 --> 00:46:25,940
 folks know that these programs exist.

659
00:46:25,940 --> 00:46:30,620
 Maybe it's landlords that we're reaching out to and letting them know, you know, whenever

660
00:46:30,620 --> 00:46:37,420
 I go to a house that has no insulation and a nine sear four ton unit that's on its last

661
00:46:37,420 --> 00:46:41,740
 leg and has been for the last three years, you know, there's ways that we can reach out

662
00:46:41,740 --> 00:46:45,940
 to those landlords and, you know, make the program available.

663
00:46:45,940 --> 00:46:48,060
 I think a couple of things.

664
00:46:48,060 --> 00:46:54,380
 What this does is one, if in fact we go this direction, again, this is a summary of some

665
00:46:54,380 --> 00:47:00,420
 ideas that this group has, certainly between now and October 1st, when the budget goes

666
00:47:00,420 --> 00:47:04,340
 into effect, they would bring forward kind of the specifics about what these programs

667
00:47:04,340 --> 00:47:05,340
 may be.

668
00:47:05,340 --> 00:47:09,120
 You would have an opportunity to make those kind of, you know, recommendations and changes

669
00:47:09,120 --> 00:47:15,780
 to the program, but what this $500,000 does by shifting it here, there's a much broader

670
00:47:15,780 --> 00:47:22,780
 number of customers that will have access to this versus somebody being able to install

671
00:47:22,780 --> 00:47:27,940
 a $20,000 or $30,000 system on their home.

672
00:47:27,940 --> 00:47:33,660
 And let's be honest, some homes in Denton without modifications to their roof are not

673
00:47:33,660 --> 00:47:38,100
 going to be able to install a $20,000 or $30,000 system.

674
00:47:38,100 --> 00:47:41,940
 The other thing that I'll mention to you is that, you know, many of our customers that

675
00:47:41,940 --> 00:47:46,020
 are doing these solar systems, I mean, they're issuing a second mortgage, right?

676
00:47:46,020 --> 00:47:50,540
 I mean, they're financing these systems for 20 or 30 years, right?

677
00:47:50,540 --> 00:47:57,180
 And so you talk about a 10-year, 11-year payback, I mean, you know, so there's some issues with

678
00:47:57,180 --> 00:48:04,060
 that too, but again, by putting it here, it gives access to a much broader base of customers.

679
00:48:04,060 --> 00:48:08,980
 And so from a subsidy standpoint, it kind of takes that subsidy issue away because, again,

680
00:48:08,980 --> 00:48:12,460
 the same people that are paying for it are the same people that are now have access to

681
00:48:12,460 --> 00:48:14,060
 the system versus what we have today.

682
00:48:14,060 --> 00:48:15,060
 Yeah.

683
00:48:15,060 --> 00:48:19,940
 And I definitely think that this is more democratic and it does incentive, like you said, solar

684
00:48:19,940 --> 00:48:22,960
 sells itself already.

685
00:48:22,960 --> 00:48:29,340
 The challenge is on the energy efficiency, $300 back on a $10,000 upgrade, which probably

686
00:48:29,340 --> 00:48:33,940
 requires a home improvement loan, is not really an incentive.

687
00:48:33,940 --> 00:48:35,340
 The people are already making that decision.

688
00:48:35,340 --> 00:48:39,700
 So again, you're just giving a little bit of money to the person who's already willing

689
00:48:39,700 --> 00:48:41,280
 to do that upgrade.

690
00:48:41,280 --> 00:48:44,460
 So I think, I don't know what it would look like, but I would love to see something that

691
00:48:44,460 --> 00:48:52,620
 was 10% of, you know, this broad category, 15% up to a total cost of $5,000.

692
00:48:52,620 --> 00:48:55,900
 And so if you're, whether you're, or something along those lines, you're doing windows, you're

693
00:48:55,900 --> 00:48:58,140
 doing air conditioning, you're doing whatever.

694
00:48:58,140 --> 00:49:02,980
 And those have to be efficient, not CER 14, but I don't know, whatever the energy star

695
00:49:02,980 --> 00:49:06,240
 for CER 18 or something like that.

696
00:49:06,240 --> 00:49:11,580
 And I totally agree that solar has its own economics and doesn't need the subsidy that

697
00:49:11,580 --> 00:49:13,940
 it needed whenever it was $8 a lot.

698
00:49:13,940 --> 00:49:14,940
 Right.

699
00:49:14,940 --> 00:49:15,940
 Right.

700
00:49:15,940 --> 00:49:16,940
 So do you have a question?

701
00:49:16,940 --> 00:49:24,260
 Well, I don't have a question so much as a comment, but one of the reasons the HVAC

702
00:49:24,260 --> 00:49:29,260
 costs so much today is that we can't use the old refrigerants anymore.

703
00:49:29,260 --> 00:49:35,140
 So the indoor and the outdoor unit and all the interconnecting piping all out of go.

704
00:49:35,140 --> 00:49:38,780
 So it's not an apples and oranges thing.

705
00:49:38,780 --> 00:49:39,780
 You're replacing your windows.

706
00:49:39,780 --> 00:49:40,780
 It's just the windows.

707
00:49:40,780 --> 00:49:44,060
 Well, when you replace your air conditioning system, you have to replace everything having

708
00:49:44,060 --> 00:49:49,620
 to do with it, where you could choose to do two windows or seven windows or just the windows

709
00:49:49,620 --> 00:49:53,100
 upstairs of the bedroom or, you know, whatever permutation, but you're going to replace the

710
00:49:53,100 --> 00:50:00,500
 19-year-old seven and a half unit that's been on its last leg for three years, you're going

711
00:50:00,500 --> 00:50:04,020
 to spend $11,000 or $12,000 because you've got to do the whole shooting match.

712
00:50:04,020 --> 00:50:12,300
 So maybe the HVAC rebate really isn't much of an incentive, I think, to your point.

713
00:50:12,300 --> 00:50:13,300
 Whereas the windows, you've got some flexibility.

714
00:50:13,300 --> 00:50:17,540
 You could say, well, I'll just do the windows here or the windows there.

715
00:50:17,540 --> 00:50:18,540
 That's right.

716
00:50:18,540 --> 00:50:23,580
 The HVAC system, you're kind of -- you're stuck, so it's a real problem.

717
00:50:23,580 --> 00:50:27,700
 I don't know about the other programs, the radiant barrier and duct cleaning or duct work

718
00:50:27,700 --> 00:50:33,300
 insulation or whatnot, but I know with the units that the cost of replacement has gone

719
00:50:33,300 --> 00:50:36,860
 way up because of the requirement to come change out the refrigerants.

720
00:50:36,860 --> 00:50:38,500
 So it's had a huge impact.

721
00:50:38,500 --> 00:50:43,940
 So as you consider changes to the program and if this money gets shifted over, I would

722
00:50:43,940 --> 00:50:47,780
 personally recommend you look at something a little more financially beneficial, maybe

723
00:50:47,780 --> 00:50:50,440
 based on Asian sear difference or something.

724
00:50:50,440 --> 00:50:53,380
 Like a swimming pool?

725
00:50:53,380 --> 00:50:54,380
 Swimming pool.

726
00:50:54,380 --> 00:50:55,380
 That'll cool you down.

727
00:50:55,380 --> 00:50:56,380
 Oh, yes, sir.

728
00:50:56,380 --> 00:50:57,380
 It will.

729
00:50:57,380 --> 00:51:02,620
 But if it's a heat pump replacement, it won't heat me up.

730
00:51:02,620 --> 00:51:05,260
 And you mentioned about the income verification.

731
00:51:05,260 --> 00:51:11,340
 We're already using what's -- the name is escaping me for people who need help with their

732
00:51:11,340 --> 00:51:17,700
 bills and they're doing the income -- is there another partnership that we could do there?

733
00:51:17,700 --> 00:51:24,020
 There is and I've had talks with Krista Foster about borrowing her list of customers and

734
00:51:24,020 --> 00:51:28,340
 taking a look at those bills and seeing where we might be able to do energy efficiency improvements.

735
00:51:28,340 --> 00:51:35,380
 So yes, definitely partnership and crossover there.

736
00:51:35,380 --> 00:51:38,740
 It always seems like the people who need it the most are the ones who can't afford it.

737
00:51:38,740 --> 00:51:39,740
 Right.

738
00:51:39,740 --> 00:51:40,740
 Exactly.

739
00:51:40,740 --> 00:51:45,660
 If we could somehow get a little balance to that, that would be wonderful.

740
00:51:45,660 --> 00:51:48,220
 The other thing too -- Bill's going to come back up here, but the other thing that I'll

741
00:51:48,220 --> 00:51:54,580
 mention to the PAB is that we are also taking this same item through the Sustainability

742
00:51:54,580 --> 00:51:56,140
 Framework Advisory Committee.

743
00:51:56,140 --> 00:51:57,220
 We had one meeting with them.

744
00:51:57,220 --> 00:52:01,500
 They asked us questions and we're scheduled to go back to them with this.

745
00:52:01,500 --> 00:52:02,860
 So we're kind of running a parallel.

746
00:52:02,860 --> 00:52:07,180
 Obviously, these are two independent bodies and so ultimately, whatever recommendation

747
00:52:07,180 --> 00:52:11,060
 comes from the PAB, the Sustainability Committee, we will take those and let the council know

748
00:52:11,060 --> 00:52:12,540
 what you recommended.

749
00:52:12,540 --> 00:52:13,540
 Okay.

750
00:52:13,540 --> 00:52:24,260
 Yeah, but to Member Taylor's point, you know, the free ridership is always a tricky thing

751
00:52:24,260 --> 00:52:29,660
 to deal with when you're talking about incentives and folks, we have to walk the line between

752
00:52:29,660 --> 00:52:34,880
 who's really going to make that decision anyway or who is going to be steered into a more

753
00:52:34,880 --> 00:52:38,980
 efficient decision by a few hundred bucks or $1,000.

754
00:52:38,980 --> 00:52:43,180
 So it's a tough one because you don't technically want to pay free riders.

755
00:52:43,180 --> 00:52:48,580
 You want to pay the folks that are on the fence, so, but I have faith that the sustainability

756
00:52:48,580 --> 00:52:52,860
 group will come back with some really good options for those added dollars if they were

757
00:52:52,860 --> 00:52:53,860
 to get them.

758
00:52:53,860 --> 00:53:00,820
 So with that, you see staff's recommendation as option four is that phased in facility

759
00:53:00,820 --> 00:53:06,540
 charge approach and we'd love to get some direction from this board on what you would

760
00:53:06,540 --> 00:53:12,300
 like us to bring forward to City Council and have I answered all your questions?

761
00:53:12,300 --> 00:53:13,300
 I think so.

762
00:53:13,300 --> 00:53:14,740
 Do you have any other questions?

763
00:53:14,740 --> 00:53:15,740
 Yeah.

764
00:53:15,740 --> 00:53:24,460
 So I was going through the staff report and you were talking about moving to the ECA for

765
00:53:24,460 --> 00:53:25,460
 purchase value.

766
00:53:25,460 --> 00:53:26,460
 What is it?

767
00:53:26,460 --> 00:53:30,300
 Offset value or whatever you want to call it for solar arrays.

768
00:53:30,300 --> 00:53:34,480
 I think I have two big concerns about that.

769
00:53:34,480 --> 00:53:37,780
 First is some people have taken out 10 or 20 year loans.

770
00:53:37,780 --> 00:53:47,180
 They made large financial decisions based on these rates and an expectation of being

771
00:53:47,180 --> 00:53:49,140
 able to cover their cost.

772
00:53:49,140 --> 00:53:55,700
 So it's a huge shock to say to somebody who took out a home improvement loan last year

773
00:53:55,700 --> 00:54:00,800
 and balanced their electric bill and their loan payment to be the same or five percent

774
00:54:00,800 --> 00:54:09,140
 cheaper or whatever that okay now we're going to only give you a third of what we said we

775
00:54:09,140 --> 00:54:11,140
 were going to give you in credit.

776
00:54:11,140 --> 00:54:16,880
 So I think any program that does this would have to have a grace period and a long phase

777
00:54:16,880 --> 00:54:18,260
 out for existing customers.

778
00:54:18,260 --> 00:54:24,480
 I think maybe not 20 years but it has to be enough where they can see it coming and not

779
00:54:24,480 --> 00:54:30,160
 everybody is a wealthy individual in Forest Ridge putting a 20kW array up.

780
00:54:30,160 --> 00:54:36,020
 Some people are it was a stretch for them to get the loan and they did it because it

781
00:54:36,020 --> 00:54:38,020
 would lower their electric bill.

782
00:54:38,020 --> 00:54:46,580
 And so then to be like okay now your electric bill is going up by 30% or 50% or 60%.

783
00:54:46,580 --> 00:54:48,300
 That smacks of unfairness to me.

784
00:54:48,300 --> 00:54:58,860
 So if we phase out the RCA it has to have some kind of long phase out for existing customers

785
00:54:58,860 --> 00:55:05,820
 second on the ECA value is like three cents a kilowatt something like three and a half

786
00:55:05,820 --> 00:55:14,620
 or whatever 3.41 per kilowatt hour yeah 3.4 per kilowatt and I you know that that represents

787
00:55:14,620 --> 00:55:20,380
 our West Texas wind power and our coastal wind power and solar and that we purchased

788
00:55:20,380 --> 00:55:30,220
 and some transmission costs there but whenever I just took the what is it called PV watts

789
00:55:30,220 --> 00:55:38,140
 online average output average monthly output for Denton 76201 you know south facing and

790
00:55:38,140 --> 00:55:47,320
 I multiplied that times the real-time settlement price in our cot for 2022 and it it was seven

791
00:55:47,320 --> 00:55:54,540
 cents a kilowatt hour last year just in what somebody's south-facing rooftop array would

792
00:55:54,540 --> 00:55:57,800
 have sold for in the real-time.

793
00:55:57,800 --> 00:56:05,060
 So we are undervaluing now 2022 might be an expensive year but want to look at 2021 let's

794
00:56:05,060 --> 00:56:18,580
 look at all of 2021 and if we are moving to a paying the actual with the value we need

795
00:56:18,580 --> 00:56:26,340
 to pay the actual value so that RTSPP offset is one piece and it's like well maybe we we

796
00:56:26,340 --> 00:56:30,740
 already bought solar from West Texas for that house well now we can sell that solar on the

797
00:56:30,740 --> 00:56:37,700
 real-time market for that price additionally you mentioned like you don't design for the

798
00:56:37,700 --> 00:56:43,860
 for the production of solar in the distribution you design for the maximum load that that

799
00:56:43,860 --> 00:56:49,220
 house might have if that systems off but you're all already modeling for about a megawatt

800
00:56:49,220 --> 00:56:55,820
 of distributed generation and that does lower distribution costs that doesn't mean you have

801
00:56:55,820 --> 00:57:02,140
 less wires and poles and it doesn't mean the one-hour peak hour a year is lower but it

802
00:57:02,140 --> 00:57:07,780
 does mean the median the average the 90th percentile hour the 99th percentile hour those

803
00:57:07,780 --> 00:57:12,820
 are all lower load and lower wear and tear and less heat on your transformers and so

804
00:57:12,820 --> 00:57:19,660
 forth so and there is some t-cost benefit even though it might be minor so I don't feel

805
00:57:19,660 --> 00:57:25,940
 it's fair to just say we're going to go with this 3.4 cents because it wouldn't take a

806
00:57:25,940 --> 00:57:33,040
 lot of effort to come up with a more reasonable number that really does represent the benefit

807
00:57:33,040 --> 00:57:44,580
 to DME in the cost cost have to have a certain amount of remembering that it's a lot cheaper

808
00:57:44,580 --> 00:57:52,820
 to produce 400 megawatts than it is to produce one megawatt yeah just the cost of the major

809
00:57:52,820 --> 00:57:57,460
 production too I don't know how I don't know how to account for the difference of those

810
00:57:57,460 --> 00:58:03,060
 costs but I mean it's a lot like I said it's a lot cheaper you know in my business a lot

811
00:58:03,060 --> 00:58:09,300
 cheaper to produce 400,000 tons of hot mix than it is to produce 40,000 tons of hot mix

812
00:58:09,300 --> 00:58:15,380
 I had that argument with the city before. So before I before I let Terry come up here

813
00:58:15,380 --> 00:58:18,980
 because I think he's chomping at the bit to talk to you about the our renewable market

814
00:58:18,980 --> 00:58:24,780
 that we're seeing and how it relates to our customers rooftop so getting back to the customers

815
00:58:24,780 --> 00:58:29,900
 that have already made the investment so there was no guarantee when they made that investment

816
00:58:29,900 --> 00:58:33,740
 that rate structure would be the same as a matter of fact their interconnection agreement

817
00:58:33,740 --> 00:58:43,060
 does state something to that effect but to to look at grandfathering is essentially what

818
00:58:43,060 --> 00:58:48,960
 you're saying it's a very tricky thing to do from a billing standpoint and a consistency

819
00:58:48,960 --> 00:58:57,340
 standpoint across the the rest of the rate so it's it is something that we need to look

820
00:58:57,340 --> 00:59:05,140
 at but I could tell you from a technical standpoint it'd be very very tough to to do from a billing

821
00:59:05,140 --> 00:59:14,740
 standpoint. I just wanted to chime in that it might be easier to sell option three to

822
00:59:14,740 --> 00:59:20,020
 the general public in so much as it's a wee bit less confusing than option four because

823
00:59:20,020 --> 00:59:25,620
 I your your rate ratcheting and you're doing so you know successor generation charge so

824
00:59:25,620 --> 00:59:32,540
 forth I think that the phase three although it's less beneficial to DME you know overall

825
00:59:32,540 --> 00:59:36,380
 would be a lot easier sell to the public you're just saying okay we're gonna sunset this we're

826
00:59:36,380 --> 00:59:42,460
 gonna sunset that and shift that money over a different direction you know over time whatever

827
00:59:42,460 --> 00:59:48,300
 that time frame is you know 22 through 23 through 27 or whatever numbers you come up

828
00:59:48,300 --> 00:59:52,700
 with but if you tell people you're gonna sunset something and it's just going to end at a

829
00:59:52,700 --> 00:59:58,540
 given time or be phased out in a given ramped down rate I think that's a lot easier sell

830
00:59:58,540 --> 01:00:05,980
 than option four I think option four is shifting not only shifting burden cost burden but also

831
01:00:05,980 --> 01:00:11,100
 shifting it in a way that may be more difficult for average homeowner to understand the benefit

832
01:00:11,100 --> 01:00:17,660
 thereof so just suggestion on my part I mean there's a lot of details to this and not really

833
01:00:17,660 --> 01:00:22,380
 a bad idea shifting from where the money's going now to where you'd like it to go but

834
01:00:22,380 --> 01:00:26,440
 I think it would be an easier sell in option three than it is in option four so that'd

835
01:00:26,440 --> 01:00:31,460
 be my okay I have a question then on option four those people being impacted by the phased

836
01:00:31,460 --> 01:00:39,940
 in was just the people who have currently who have solar who are not paying their fixed

837
01:00:39,940 --> 01:00:46,940
 costs is that correct right we're talking about how many customers there's a little

838
01:00:46,940 --> 01:00:50,740
 over a thousand customers that have solar some have varying degrees of what they send

839
01:00:50,740 --> 01:00:57,940
 back to us so those thousand customers the low income people who still can't pay their

840
01:00:57,940 --> 01:01:06,180
 bills are subsidizing that because they're not paying the fixed costs of the system correct

841
01:01:06,180 --> 01:01:11,460
 correct and I think Terry still wants to address member Taylor's comments about the market

842
01:01:11,460 --> 01:01:23,780
 yes Terry Nalti assistant general manager so mr. Taylor your your I don't quibble with

843
01:01:23,780 --> 01:01:31,300
 your numbers but I do want to take a different perspective because if I were to install a

844
01:01:31,300 --> 01:01:38,360
 rooftop solar system on my home I'm installing it primarily to offset the utility expense

845
01:01:38,360 --> 01:01:47,740
 that I would pay DME which at 10.8 cents is more than the seven cents that you you stated

846
01:01:47,740 --> 01:01:54,020
 so if we're sizing these things correctly to meet our our home peak demands or average

847
01:01:54,020 --> 01:02:00,200
 peak demands then the benefits still accrues to the to the homeowner because they're offsetting

848
01:02:00,200 --> 01:02:09,740
 their utility bill the other point is that I would make is that in the ECA not only are

849
01:02:09,740 --> 01:02:15,740
 you paying the real are we trying to recover our real-time cost of purchase power but we're

850
01:02:15,740 --> 01:02:21,900
 also trying to recover the losses that we that we experience from the off-peak wind

851
01:02:21,900 --> 01:02:29,080
 energy that we're selling at a loss so if we're buying wind energy for thirty dollars

852
01:02:29,080 --> 01:02:34,780
 a megawatt hour under a long-term contract and at two o'clock in the morning the price

853
01:02:34,780 --> 01:02:41,300
 is negative five dollars and it's running that's $25 that we have to collect from someone

854
01:02:41,300 --> 01:02:50,900
 to cover that expense so the ECA itself is not a a true indicator of what the spot market

855
01:02:50,900 --> 01:03:01,080
 price is for electricity also that seven cents that you quoted includes a lot of you know

856
01:03:01,080 --> 01:03:06,380
 hours that are high-priced and our studies have shown that and I think Bill included

857
01:03:06,380 --> 01:03:15,300
 in in the backup of large long paper on how we see these things perform generally during

858
01:03:15,300 --> 01:03:22,060
 those high price periods people are pulling energy to support their their home use air

859
01:03:22,060 --> 01:03:28,060
 conditioner cycling on refrigerators whatever and despite the fact that they size the units

860
01:03:28,060 --> 01:03:36,180
 to to meet an average household demand during those peak periods they're pulling energy

861
01:03:36,180 --> 01:03:42,800
 and I think you know our cost to serve that customer to enable him to to pull that energy

862
01:03:42,800 --> 01:03:52,360
 is still sixty two fifty five per month for fixed costs and and so I'm not sure a program

863
01:03:52,360 --> 01:03:58,440
 as you had mentioned number one it'd be extremely difficult to administrate as Bill has mentioned

864
01:03:58,440 --> 01:04:04,520
 from a billing perspective and number two it doesn't really reflect what our true costs

865
01:04:04,520 --> 01:04:10,180
 are with the true value of that surplus energy that's being pushed back into the system really

866
01:04:10,180 --> 01:04:21,020
 is it you know theoretically on this side of the room yeah they're they're looking

867
01:04:21,020 --> 01:04:26,900
 for some direction oh yeah I don't like I like to that like the simplicity of number

868
01:04:26,900 --> 01:04:34,280
 two honestly but threes well my comment would be on the difference thing like option four

869
01:04:34,280 --> 01:04:39,660
 and option three if we get sunset out this net billing structure and sunset out the rebate

870
01:04:39,660 --> 01:04:46,260
 so we can ship the money we're going to stop having the if we're not paying the net billing

871
01:04:46,260 --> 01:04:51,100
 thing then we're going to get back a lot of that revenue we're currently losing if I understood

872
01:04:51,100 --> 01:04:58,140
 the thing correctly and that to me is a benefit of two ways one it's easy to understand and

873
01:04:58,140 --> 01:05:03,260
 two it's going to increase the revenue that DME receives which will help pay for some

874
01:05:03,260 --> 01:05:08,100
 of this fixed costs we're currently not recovering so to me it's a win-win but that's just my

875
01:05:08,100 --> 01:05:14,820
 viewpoint on the matter yeah I mean member Ryback makes a great point as a matter of

876
01:05:14,820 --> 01:05:21,100
 fact option three was the option we went forward to the sustainability framework advisory committee

877
01:05:21,100 --> 01:05:26,500
 to just pay a more appropriate rate for the energy coming back to us that is a rip the

878
01:05:26,500 --> 01:05:32,780
 band-aid off approach it ironically doesn't sound like that but it is because what it

879
01:05:32,780 --> 01:05:42,820
 does is it directly let me see if I can get to that slide so it directly reduces those

880
01:05:42,820 --> 01:05:49,220
 golden bars that you see those that's the net metering credits that we project are going

881
01:05:49,220 --> 01:05:55,420
 to happen over the next several years and those are substantial dollars and if we did

882
01:05:55,420 --> 01:06:02,520
 pay that 3.4 cents that would go down instantly we would think it's about a $700,000 a year

883
01:06:02,520 --> 01:06:08,300
 savings to DME now it's a savings that's that's not a redirecting of funds to green

884
01:06:08,300 --> 01:06:14,300
 cents or whatnot that's a savings so yes that is a very effective approach the only caveat

885
01:06:14,300 --> 01:06:20,180
 there is as these systems get cheaper as batteries get cheaper more and more folks are going

886
01:06:20,180 --> 01:06:24,820
 to go towards the Tesla walls and whatnot and then we won't see any energy coming back

887
01:06:24,820 --> 01:06:32,420
 to us so yeah well and again that's that's why we're here is to try to to try to impact

888
01:06:32,420 --> 01:06:39,620
 it where's my mouse down here instead of really having a big problem to worry about up there

889
01:06:39,620 --> 01:06:46,580
 but if we don't see any energy coming back to us or flowing from us if they get the batteries

890
01:06:46,580 --> 01:06:54,300
 then all we have to lean back on then is the facility charge so from a more long-term perspective

891
01:06:54,300 --> 01:07:00,780
 it might be a better move well we feel it is a better move to to start impacting that

892
01:07:00,780 --> 01:07:05,500
 facility charge and in a phased approach and and this is really you know one of the one

893
01:07:05,500 --> 01:07:09,820
 of the reasons why we're addressing this with you is that you know while a million dollars

894
01:07:09,820 --> 01:07:14,940
 a day you know you know we could we could probably you know work through that through

895
01:07:14,940 --> 01:07:20,800
 our financial processes the reality is by 2028 when it's seven million dollars or potentially

896
01:07:20,800 --> 01:07:27,220
 more depending on where this is if there is no change to to the program it'll it'll pose

897
01:07:27,220 --> 01:07:33,820
 a real significant financial impact to the fund and again if there is no change that's

898
01:07:33,820 --> 01:07:37,940
 okay we just want to make sure that the what the board and the council understand that

899
01:07:37,940 --> 01:07:42,620
 by 2028 you know we're talking a significant impact you know and we're talking a rate increase

900
01:07:42,620 --> 01:07:47,620
 and the rate increase would be to everybody that does not have rooftop solar under the

901
01:07:47,620 --> 01:07:52,260
 current configuration right because any increase that I do yes they're paying more for the

902
01:07:52,260 --> 01:07:57,060
 power but they're also getting rebated more as well right and so so if you have rooftop

903
01:07:57,060 --> 01:08:02,360
 solar you're you're naturally hedged right you're you're insulated for any rate increases

904
01:08:02,360 --> 01:08:14,580
 in the future the way that it's structured today right I could live with three or four

905
01:08:14,580 --> 01:08:26,460
 I'm good with that my opinion is four but I I'll live with three I just look at the

906
01:08:26,460 --> 01:08:33,500
 longer yeah and and I know the fixed costs of a utility right right now that impact to

907
01:08:33,500 --> 01:08:40,260
 the customers and yes it it does feel a little unfair to to your point but there's only a

908
01:08:40,260 --> 01:08:47,260
 handful of them now versus four or five years again from here if we kick the can it'll be

909
01:08:47,260 --> 01:08:52,300
 several thousand or more that we'll have to deal with pulling that band-aid or starting

910
01:08:52,300 --> 01:08:57,260
 a corrective measure yeah I think there's something needs to be done I think but I'm

911
01:08:57,260 --> 01:09:06,020
 curious is it a net real-time or net monthly on the it's a net monthly net monthly yeah

912
01:09:06,020 --> 01:09:10,940
 so it ebbs and flows throughout the month I mean so the phase four option four is a net

913
01:09:10,940 --> 01:09:17,860
 monthly like they can take their power bill to zero their their energy charge to zero

914
01:09:17,860 --> 01:09:22,820
 yes they're their energy charge can be zero but then we'll be recovering the facility

915
01:09:22,820 --> 01:09:27,580
 charge which will stage up and so this is another interesting question if it costs sixty

916
01:09:27,580 --> 01:09:37,460
 dollars sixty-two dollars whatever it was per house then why are the high-use houses subsidizing

917
01:09:37,460 --> 01:09:43,940
 the low-use houses like energy-efficient homes are more expensive so a cheap rent house with

918
01:09:43,940 --> 01:09:48,660
 no insulation where they've got a three dollar a month electric bill they're subsidizing

919
01:09:48,660 --> 01:09:53,860
 the very nice brand-new efficient home on the facility charges because that efficient

920
01:09:53,860 --> 01:09:58,460
 home is only paying fifty dollars a month eight nine months of the year all right so

921
01:09:58,460 --> 01:10:03,740
 I think if we if we look at if we want to make this fair then and if that is our facility

922
01:10:03,740 --> 01:10:11,620
 charge then perhaps our bill is not nine dollars and ten and a half cents it should be sixty

923
01:10:11,620 --> 01:10:18,620
 dollars and four cents or whatever whatever that number is would also be like instead

924
01:10:18,620 --> 01:10:23,500
 of just saying well solar has to pay all of their facility charges small use high-efficiency

925
01:10:23,500 --> 01:10:30,140
 homes you get a pass you know like if that if we want to make our our facility charges

926
01:10:30,140 --> 01:10:37,340
 cover all of our infrastructure and then you know incremental incremental energy use is

927
01:10:37,340 --> 01:10:44,700
 paid for it because energy is cheap most of the time you know that then that would also

928
01:10:44,700 --> 01:10:50,220
 be more fair than you know you did you made a decision five years ago to put solar two

929
01:10:50,220 --> 01:10:54,660
 years ago to put solar on your house well now we're gonna we're gonna add fifty dollars

930
01:10:54,660 --> 01:11:00,620
 a month to your bill and we're not gonna do the same financial thing that you made the

931
01:11:00,620 --> 01:11:05,660
 decision to put solar on your house like well you're touching on a rate maker's nirvana

932
01:11:05,660 --> 01:11:11,820
 is to you know actually charge true cost of service and it would be wonderful if if that

933
01:11:11,820 --> 01:11:17,020
 facility property taxes than you do right so there's there's cross subsidies that happen

934
01:11:17,020 --> 01:11:21,460
 everywhere I mean of course our our business customers are subsidizing our residential

935
01:11:21,460 --> 01:11:25,780
 customers they're not quite paying their cost of service either so but those are things

936
01:11:25,780 --> 01:11:32,620
 that as rate makers we try to to make little tweaks here and there and adjust but it's

937
01:11:32,620 --> 01:11:37,940
 the way the rate structures have been built along the years with utilities and I'm not

938
01:11:37,940 --> 01:11:42,980
 gonna I'm gonna say everything but it's the way it's always been done but it's sort of

939
01:11:42,980 --> 01:11:47,660
 the way it's always been done there's an assumed load factor by a residential customer class

940
01:11:47,660 --> 01:11:53,020
 that that's how we recover some of those fixed costs is through the energy assumptions that

941
01:11:53,020 --> 01:11:58,340
 they're gonna be using throughout the year so this is a way to true up the solar piece

942
01:11:58,340 --> 01:12:03,580
 but yeah there's still work to be done on the regular rates as well and that and that

943
01:12:03,580 --> 01:12:07,820
 discussion regarding all the other customers again we're not picking on solar customers

944
01:12:07,820 --> 01:12:13,380
 is this this is just the focus today will be part of that wider rates discussion that

945
01:12:13,380 --> 01:12:19,260
 Nick referred to earlier the reality is is that our fixed charge is is too low certainly

946
01:12:19,260 --> 01:12:26,860
 comparative to other utilities but certainly compared to what our cost of service is did

947
01:12:26,860 --> 01:12:32,220
 you get what you need I think so it sounds like you all are supportive of three or four

948
01:12:32,220 --> 01:12:38,260
 essentially trying to address the fixed cost shortfall that we're seeing and in those two

949
01:12:38,260 --> 01:12:44,420
 helped to do that and I anticipate I mean obviously we have a another presentation to

950
01:12:44,420 --> 01:12:52,020
 make to FSAC and let them know sort of where we're headed but then the ultimate discussion

951
01:12:52,020 --> 01:12:56,220
 and decisions could be made by the City Council and you know they'll probably see these same

952
01:12:56,220 --> 01:13:12,180
 options and and weigh in all right thank you all right 1054 we are adjourned see when you're

953
01:13:12,180 --> 01:13:26,980
 not here I don't get to do