WEBVTT

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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.

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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

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 to add for future consideration, let us know.

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 I have an item for future consideration.

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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.

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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.

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 Okay.

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 Yeah.

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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.

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 Let me get this here.

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 Hang on a second.

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 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

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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.

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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.

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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.

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

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

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 to be updated.

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 Given those things that are still outstanding and coming into the summer months, we are

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 currently not recommending a rate increase.

00:14:08.220 --> 00:14:10.740
 Now, a couple things I want to say, right?

00:14:10.740 --> 00:14:11.740
 Yes, sir.

00:14:11.740 --> 00:14:12.740
 >> Yes.

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 >> When do you anticipate those updates will be made in the forecast here?

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 >> So we had that debate, Terry and I actually had the debate for a couple hours, I was joking,

00:14:21.460 --> 00:14:23.540
 but it was a while, right?

00:14:23.540 --> 00:14:26.300
 It is premature now to make that update.

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.

00:14:31.860 --> 00:14:35.660
 So starting, I'm looking at Danielle here, I think the first conversation we have is

00:14:35.660 --> 00:14:40.940
 in May, so in May, those updates will be included in the forecast, yeah.

00:14:40.940 --> 00:14:42.740
 >> I have a question also.

00:14:42.740 --> 00:14:45.620
 We just approved that insurance policy last month, too.

00:14:45.620 --> 00:14:51.860
 So what impact would having that mechanism have to maybe not needing as much working

00:14:51.860 --> 00:14:55.680
 capital for the minimum reserves, or is it not at all?

00:14:55.680 --> 00:14:58.100
 >> So I think it is the outage insurance?

00:14:58.100 --> 00:14:59.100
 >> The outage insurance, yes.

00:14:59.100 --> 00:15:00.500
 >> Do you want to speak to that, Tony?

00:15:00.500 --> 00:15:03.180
 I don't know when it kicks in?

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.

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

00:15:16.700 --> 00:15:21.020
 you approved once we settled that contract.

00:15:21.020 --> 00:15:29.740
 So I think the impact is pretty minimal on this fund, yes, ma'am.

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,

00:15:34.700 --> 00:15:36.340
 wave at me or yell.

00:15:36.340 --> 00:15:39.940
 So 0% is what we're currently forecasting for this year.

00:15:39.940 --> 00:15:43.800
 Now if things change, right, we can come back to the Public Utility Board, come back to

00:15:43.800 --> 00:15:47.140
 City Council when we get there, talk about those rate increases.

00:15:47.140 --> 00:15:52.060
 Moving into the future years, right, I think Ms. Russell had asked this question earlier,

00:15:52.060 --> 00:15:55.140
 are we contemplating rate increases, and the answer is yes.

00:15:55.140 --> 00:15:59.980
 Starting in fiscal year '24 through fiscal year 2026, you can see we have rate increases

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 plugged in.

00:16:01.400 --> 00:16:06.820
 This rate increase is just to the ECA rate, right, so the energy cost adjustment rate

00:16:06.820 --> 00:16:09.260
 is what this is to currently.

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

00:16:13.460 --> 00:16:15.300
 utility right now.

00:16:15.300 --> 00:16:19.820
 We do anticipate finishing that within the next couple of months and bringing those recommendations

00:16:19.820 --> 00:16:22.420
 forward to you as part of the budgeting process.

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

00:16:25.940 --> 00:16:30.620
 Public Utility Board about the ECA rate fluctuating, moving forward.

00:16:30.620 --> 00:16:34.340
 Currently it is flat, it does not adjust year to year with energy prices.

00:16:34.340 --> 00:16:37.940
 That is something that needs to be addressed in this fund, right, it has vulnerability,

00:16:37.940 --> 00:16:40.800
 it creates risk for this fund.

00:16:40.800 --> 00:16:44.880
 So we do anticipate to talk to you about that here in the coming months.

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

00:16:48.140 --> 00:16:51.380
 dips down to about 91.7 million.

00:16:51.380 --> 00:16:55.580
 So these rate increases may change, but our rate recommendation going forward to get that

00:16:55.580 --> 00:16:58.940
 reserve above the reserve requirement in the fifth year.

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.

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

00:17:09.320 --> 00:17:10.840
 else.

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

00:17:14.820 --> 00:17:16.500
 currently.

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

00:17:21.260 --> 00:17:26.940
 one I got a note here, coming forward to you in March.

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.

00:17:32.360 --> 00:17:36.740
 We will continue to update the purchase power forecast, we mentioned that earlier, look

00:17:36.740 --> 00:17:41.660
 at the retail sales forecast, and then the timing of potential data center completion,

00:17:41.660 --> 00:17:46.380
 and then reevaluating those future rate increases.

00:17:46.380 --> 00:17:49.940
 So upcoming discussions, this starts the budget calendar, we are in that time of the year

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.

00:17:55.860 --> 00:17:58.460
 So May 22nd is the first conversation.

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

00:18:02.140 --> 00:18:08.140
 about the preliminary 2024 budget and this takes us all the way through budget and rate

00:18:08.140 --> 00:18:17.100
 approval which is on July 24th for the public utility board.

00:18:17.100 --> 00:18:18.100
 Yes sir.

00:18:18.100 --> 00:18:25.900
 I'm just curious, the bond issuance, what kinds of projects or expenses is that bond

00:18:25.900 --> 00:18:28.760
 issuance looking to cover just at a high level?

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

00:18:34.380 --> 00:18:40.140
 in projects for the electric utility, it includes transmission, distribution, new construction

00:18:40.140 --> 00:18:46.380
 for new developments, hopefully that answers your question, Tony did I miss something?

00:18:46.380 --> 00:18:50.820
 I think the largest project for this year that we actually started and awarded contract

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

00:18:56.780 --> 00:19:03.340
 plus dollar construction project, but that's probably the single largest project that we

00:19:03.340 --> 00:19:05.340
 have in the CIP.

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

00:19:09.980 --> 00:19:14.760
 those now, but probably a couple of other substations within that next five year to

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

00:19:20.700 --> 00:19:22.780
 phase of that CIP.

00:19:22.780 --> 00:19:27.340
 Thank you.

00:19:27.340 --> 00:19:28.580
 Mr. Taylor go ahead.

00:19:28.580 --> 00:19:29.580
 Thank you.

00:19:29.580 --> 00:19:37.740
 Regarding DME's rates, the current residential retail rate is it approximately 10.8 cents?

00:19:37.740 --> 00:19:42.900
 It's about 10.5, but then once you build in the fixed rates about 11.

00:19:42.900 --> 00:19:51.100
 Okay, and the current ERCOT wide retail rate, like is, my understanding is like something

00:19:51.100 --> 00:19:53.020
 like 15 or 16 cents?

00:19:53.020 --> 00:19:55.660
 North of 17 cents.

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

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

00:20:12.780 --> 00:20:16.140
 or ERCOT or the rest of the grid.

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

00:20:21.860 --> 00:20:32.220
 whenever I see a lot of electrical invoices in my job from six different electrical providers,

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

00:20:38.580 --> 00:20:39.820
 year and a half.

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

00:20:46.100 --> 00:20:50.940
 in operations to keep that efficiency, but it's pretty amazing that DME has been able

00:20:50.940 --> 00:20:58.660
 to keep those rates level when everybody around us has been forced to increase their rates

00:20:58.660 --> 00:21:03.620
 by 20 to 40 percent often in a year or less.

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

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

00:21:19.860 --> 00:21:25.340
 went up three cents last year, which I've experienced with other utilities.

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

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

00:21:40.740 --> 00:21:48.420
 our rates steady this year, and a five percent rate increase next year is pretty amazing

00:21:48.420 --> 00:21:51.000
 compared to what's been going on in ERCOT.

00:21:51.000 --> 00:21:56.260
 And we haven't had a rate increase for, what did you say Tony, six years?

00:21:56.260 --> 00:21:58.580
 At the end of this year will be six years.

00:21:58.580 --> 00:22:03.500
 We've actually decreased rates four and a half percent in that time frame.

00:22:03.500 --> 00:22:07.220
 That's not just for the electric utility, all utilities, right, and some utilities actually

00:22:07.220 --> 00:22:12.220
 had rate decreases like solid waste, yeah, exactly.

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

00:22:20.280 --> 00:22:26.260
 at that estimate column down in the ending fund balance, you know, $111 million and then,

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

00:22:30.780 --> 00:22:34.140
 of the, you know, that's the floor.

00:22:34.140 --> 00:22:39.740
 If you remember in the previous slide, Nick showed that our sales, you know, our revenue

00:22:39.740 --> 00:22:43.140
 increased $10 million, right, just from increased usage.

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

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

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

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

00:23:02.380 --> 00:23:05.300
 to probably still a little premature.

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.

00:23:11.740 --> 00:23:18.820
 Yeah, it certainly has and certainly surprised us, although I think we still have maybe another

00:23:18.820 --> 00:23:25.260
 one or two cold spells predicted here before it's all said and done.

00:23:25.260 --> 00:23:27.500
 Okay, that's it.

00:23:27.500 --> 00:23:29.500
 No more questions.

00:23:29.500 --> 00:23:30.500
 Thank you.

00:23:30.500 --> 00:23:32.500
 All right, the next item.

00:23:32.500 --> 00:23:37.020
 That wasn't 30 minutes, wait a minute.

00:23:37.020 --> 00:23:41.780
 Nick wins the bet.

00:23:41.780 --> 00:23:45.380
 Receive a presentation, hold a discussion, and give staff direction regarding proposed

00:23:45.380 --> 00:23:50.060
 rates to the Green Sense Incentive Program and rates related to distributive generation

00:23:50.060 --> 00:23:57.020
 from renewable sources interconnected with DME service territory.

00:23:57.020 --> 00:24:11.620
 Good morning, Madam Chair, PV members, I'm Bill Shepard with DME.

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

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

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

00:24:28.860 --> 00:24:33.140
 that we're seeing.

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

00:24:40.140 --> 00:24:44.920
 Programs on the left and the solar rebate programs on the right.

00:24:44.920 --> 00:24:49.860
 From a dollar effectiveness, a dollar effectiveness per kilowatt hour, you can see that the Green

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

00:24:54.580 --> 00:24:58.940
 of energy that they reduce from our system versus solar.

00:24:58.940 --> 00:25:04.060
 Maybe you said this already, what length of time is this?

00:25:04.060 --> 00:25:07.140
 This is since 2009, thank you.

00:25:07.140 --> 00:25:12.260
 So yeah, the Green Sense Programs came on board a little bit earlier than the solar

00:25:12.260 --> 00:25:16.340
 program, so bringing them back to parity at 2009.

00:25:16.340 --> 00:25:19.460
 So another point of distinction I want to make, too, is that three kilowatt hours that

00:25:19.460 --> 00:25:24.980
 you're seeing on the dollar spent on the solar rebate program, those are offsetting dollars.

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

00:25:29.660 --> 00:25:34.980
 other, which is solar rooftop, which as you know, DME being 100% renewable, it's really

00:25:34.980 --> 00:25:38.100
 replacing one renewable for another.

00:25:38.100 --> 00:25:43.860
 Also those amount of dollars spent on the Green Sense Programs have impacted 5,700 customers

00:25:43.860 --> 00:25:46.780
 versus about 600 customers on the solar.

00:25:46.780 --> 00:25:56.940
 So from a dollar standpoint, the Green Sense we feel is a much more effective program.

00:25:56.940 --> 00:26:01.780
 So some of the financial impacts that we see, there's two primary impacts.

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

00:26:06.620 --> 00:26:07.820
 per year.

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

00:26:13.380 --> 00:26:19.620
 versus a few hundred in rebates across many, many more customers.

00:26:19.620 --> 00:26:26.340
 But those rebate dollars could also be better spent sending those or redirecting those to

00:26:26.340 --> 00:26:33.180
 the Green Sense Program and funding a little bit more of those more cost-effective programs.

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

00:26:37.460 --> 00:26:40.100
 that we're spending on the energy coming back to us.

00:26:40.100 --> 00:26:45.660
 We're spending retail plus that we're giving those customers for energy they send back

00:26:45.660 --> 00:26:46.920
 to us.

00:26:46.920 --> 00:26:50.620
 So this past year, it was $1.7 million.

00:26:50.620 --> 00:26:53.340
 That's a year ending FY22.

00:26:53.340 --> 00:26:56.940
 That's since program inception of 2007.

00:26:56.940 --> 00:27:01.300
 But also we're seeing that amount doubling each year.

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

00:27:04.460 --> 00:27:09.500
 to be sending back to customers for the energy that they're giving us.

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

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

00:27:18.540 --> 00:27:23.040
 provide energy regardless of how much they're using.

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

00:27:29.300 --> 00:27:35.520
 DME side, it provides about a 1 percent impact upward pressure on rates.

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

00:27:40.420 --> 00:27:43.840
 show that out in the future years.

00:27:43.840 --> 00:27:48.780
 It's pretty scary, but that'll definitely start having some direct impact on the rates

00:27:48.780 --> 00:27:53.700
 that our other customers are seeing.

00:27:53.700 --> 00:27:57.380
 So in that sense, I'm going to give you a comparison here.

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

00:28:02.140 --> 00:28:04.760
 the right is a solar customer.

00:28:04.760 --> 00:28:08.420
 You can see that they pay -- there's three primary components of their bill.

00:28:08.420 --> 00:28:09.660
 There's the facility charge.

00:28:09.660 --> 00:28:10.660
 It's a fixed cost.

00:28:10.660 --> 00:28:15.300
 There's a consumption charge, which is based on the energy that they're using.

00:28:15.300 --> 00:28:18.620
 And then there's also the energy charge, which is a direct pass through.

00:28:18.620 --> 00:28:24.140
 So it's what DME spends in the market to get them energy to their meter.

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.

00:28:28.920 --> 00:28:33.540
 Now again, one more point of distinction is these customers have the identical impact

00:28:33.540 --> 00:28:34.960
 to our system.

00:28:34.960 --> 00:28:42.500
 So in terms of poles, wires, equipment, customer service, billing, all that kind of stuff,

00:28:42.500 --> 00:28:48.780
 no matter what energy they use, they have the identical impact to our system in terms

00:28:48.780 --> 00:28:51.020
 of fixed costs.

00:28:51.020 --> 00:28:53.180
 So that bill on the left is $111.

00:28:53.180 --> 00:28:56.020
 Same customer on the right has a solar system.

00:28:56.020 --> 00:28:59.700
 They're sending 1,000 kilowatt hours back to us.

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

00:29:04.260 --> 00:29:05.260
 us.

00:29:05.260 --> 00:29:08.300
 So the 6840 offsets the 6840 we just billed.

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

00:29:15.140 --> 00:29:18.100
 cost adjustment, going back to that customer.

00:29:18.100 --> 00:29:21.020
 So their net bill is about $5.

00:29:21.020 --> 00:29:27.100
 Obviously they're not paying anywhere near their fixed cost contribution because the fixed

00:29:27.100 --> 00:29:32.780
 cost contribution for our typical residential customer is about $62.55 a month.

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

00:29:37.580 --> 00:29:39.580
 is going towards that fixed cost.

00:29:39.580 --> 00:29:41.820
 The one on the left is short.

00:29:41.820 --> 00:29:47.700
 And quite honestly, the one on the -- our normal solar -- or our normal non-solar customers

00:29:47.700 --> 00:29:53.540
 are subsidizing our PV customers because it's going to result in further and further rate

00:29:53.540 --> 00:29:55.940
 pressure on their rates.

00:29:55.940 --> 00:29:58.980
 So there's two main ways to address that.

00:29:58.980 --> 00:30:02.540
 One is by paying a more appropriate cost for that energy coming back to us.

00:30:02.540 --> 00:30:06.660
 So instead of -- let's see, can you see my -- yeah.

00:30:06.660 --> 00:30:12.140
 Instead of paying this amount, just pay an energy equivalent amount for that energy coming

00:30:12.140 --> 00:30:13.140
 back to us.

00:30:13.140 --> 00:30:16.940
 Not a premium, but just like an ECA type amount.

00:30:16.940 --> 00:30:18.980
 And then the other -- I'm sorry.

00:30:18.980 --> 00:30:23.700
 Where does that go on your income statement, the return?

00:30:23.700 --> 00:30:27.620
 The return -- the credit that we're paying back?

00:30:27.620 --> 00:30:28.620
 >> Yeah.

00:30:28.620 --> 00:30:31.420
 It's just an expense.

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,

00:30:36.420 --> 00:30:37.420
 right?

00:30:37.420 --> 00:30:40.580
 But if there is a credit, it goes into their bill and it just carries over.

00:30:40.580 --> 00:30:43.180
 If in that particular month it generated excess power.

00:30:43.180 --> 00:30:51.260
 >> And that -- on the income statement of ours, of the cities, it's an expense?

00:30:51.260 --> 00:30:52.260
 >> Yeah.

00:30:52.260 --> 00:30:54.180
 >> Just an offsetting expense?

00:30:54.180 --> 00:30:55.180
 >> Yes.

00:30:55.180 --> 00:30:56.660
 It's actually a reduction in revenue.

00:30:56.660 --> 00:30:57.660
 >> Reduction in revenue.

00:30:57.660 --> 00:30:58.660
 >> Yeah.

00:30:58.660 --> 00:30:59.660
 >> Yeah.

00:30:59.660 --> 00:31:00.660
 Okay.

00:31:00.660 --> 00:31:01.660
 >> Yes.

00:31:01.660 --> 00:31:02.660
 Member Ryback.

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

00:31:09.180 --> 00:31:10.180
 a credit?

00:31:10.180 --> 00:31:13.540
 The meters don't spin both ways, do they?

00:31:13.540 --> 00:31:18.220
 >> So we're issuing a credit, but essentially that energy is flowing into our system.

00:31:18.220 --> 00:31:23.100
 It goes into the big bucket of energy that we provide for our customers.

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

00:31:28.100 --> 00:31:29.100
 our system.

00:31:29.100 --> 00:31:31.560
 We're essentially the battery for that customer.

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,

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

00:31:40.140 --> 00:31:41.620
 to be there to provide their load.

00:31:41.620 --> 00:31:42.620
 >> Okay.

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

00:31:47.140 --> 00:31:51.960
 more than they're consuming, we're actually consuming some of their excess power?

00:31:51.960 --> 00:31:53.300
 >> It's going in the bucket.

00:31:53.300 --> 00:31:54.300
 Yep.

00:31:54.300 --> 00:31:55.300
 >> It's going right there.

00:31:55.300 --> 00:31:56.300
 Into the bucket.

00:31:56.300 --> 00:31:57.300
 >> That's right.

00:31:57.300 --> 00:31:58.300
 That's right.

00:31:58.300 --> 00:31:59.300
 >> Yeah.

00:31:59.300 --> 00:32:00.300
 Okay.

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,

00:32:03.340 --> 00:32:06.620
 I think in plain language that's correct.

00:32:06.620 --> 00:32:11.460
 It's about one megawatt, maybe a little bit more right now total.

00:32:11.460 --> 00:32:18.700
 That does interplay into our forecast on what we purchase, but because this is intermittent

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,

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

00:32:30.420 --> 00:32:32.420
 still expect DME to be there, right?

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

00:32:37.680 --> 00:32:41.180
 of whether it's the customer on the right or the customer on the left.

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

00:32:47.420 --> 00:32:49.860
 to the meter, right?

00:32:49.860 --> 00:32:50.860
 >> Yes, correct.

00:32:50.860 --> 00:32:58.300
 And so if this customer generated one kilowatt above the thousand that they consumed, then

00:32:58.300 --> 00:33:01.740
 we see that, and that's the credit that we then give them.

00:33:01.740 --> 00:33:02.740
 >> Okay.

00:33:02.740 --> 00:33:03.740
 Okay.

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,

00:33:10.060 --> 00:33:12.580
 but not all the customers.

00:33:12.580 --> 00:33:16.020
 >> So we're giving them money back.

00:33:16.020 --> 00:33:19.360
 Is that the incentive to have solar power?

00:33:19.360 --> 00:33:22.500
 >> So there's a couple ways to incentivize solar.

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

00:33:26.940 --> 00:33:27.940
 structure.

00:33:27.940 --> 00:33:30.740
 And then another way is through rebates.

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.

00:33:34.060 --> 00:33:36.300
 But yes, it is a very good incentive.

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

00:33:42.320 --> 00:33:45.500
 paying utilities back to PV customers.

00:33:45.500 --> 00:33:51.120
 >> Do they get any incentive to use solar panels when they purchase?

00:33:51.120 --> 00:33:52.120
 Is there --

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

00:33:56.500 --> 00:33:57.500
 their system.

00:33:57.500 --> 00:33:59.820
 Right now, it's 30%.

00:33:59.820 --> 00:34:03.420
 And also, systems have been coming down in price substantially.

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

00:34:08.780 --> 00:34:10.580
 some of our options moving forward.

00:34:10.580 --> 00:34:11.580
 >> Okay.

00:34:11.580 --> 00:34:12.580
 Thank you.

00:34:12.580 --> 00:34:13.580
 >> All right.

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.

00:34:20.460 --> 00:34:24.800
 Option one is pretty much status quo, just leave everything the same.

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

00:34:29.980 --> 00:34:36.860
 seeing year and year as more and more systems get brought on to our service territory.

00:34:36.860 --> 00:34:41.460
 Option two is to sunset the solar rebate, leave everything else the same, but sunset

00:34:41.460 --> 00:34:46.860
 the solar rebate and instead redirect those funds to our Greensense programs, and we have

00:34:46.860 --> 00:34:53.520
 Michael Gagne and Catherine Barnett here from our sustainability group, and they can give

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

00:34:57.980 --> 00:35:02.980
 increase their funding from $500,000 a year to a million dollars a year for those.

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

00:35:09.420 --> 00:35:12.560
 dollars more appropriately.

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

00:35:17.580 --> 00:35:23.180
 rebate, but option three addresses that fixed cost through paying a lower amount for the

00:35:23.180 --> 00:35:24.420
 energy coming back to us.

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

00:35:30.260 --> 00:35:32.780
 or 3.41 cents a kilowatt hour.

00:35:32.780 --> 00:35:37.680
 So that would help because then we would be paying appropriate amount for the energy coming

00:35:37.680 --> 00:35:39.640
 back to us.

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

00:35:44.860 --> 00:35:45.860
 it a different way.

00:35:45.860 --> 00:35:47.500
 It addresses it through the facility charge.

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.

00:35:54.160 --> 00:35:59.380
 We will get rid of the renewable cost adjustment and make it an energy cost adjustment.

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.

00:36:06.260 --> 00:36:10.460
 But instead ratchets up the facility charge and starts recovering those fixed costs through

00:36:10.460 --> 00:36:11.460
 the facility charge.

00:36:11.460 --> 00:36:17.500
 So if I may go to the next slide, you can see that last bullet there.

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

00:36:27.420 --> 00:36:34.940
 get us up to our equivalent fixed cost recovery in FY28 of $62.55.

00:36:34.940 --> 00:36:41.020
 So regardless of the energy that PV customer uses, that facility charge is going to kick

00:36:41.020 --> 00:36:47.500
 in and we'll be more apt to recover those fixed costs.

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

00:36:52.460 --> 00:36:59.980
 not paying for the system, basically, that's there to support them when it's cloudy.

00:36:59.980 --> 00:37:00.980
 Exactly.

00:37:00.980 --> 00:37:01.980
 Exactly.

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

00:37:06.580 --> 00:37:11.540
 the customers that typically use energy, the PV customers, that oddity out there that is

00:37:11.540 --> 00:37:13.660
 actually selling energy back to us.

00:37:13.660 --> 00:37:17.100
 So they're not paying their fair share.

00:37:17.100 --> 00:37:22.300
 So Madam Chair, just really quick on the $500,000, a couple of things.

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.

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.

00:37:38.140 --> 00:37:42.300
 And then the federal government has also increased its credit.

00:37:42.300 --> 00:37:45.100
 This $500,000 is an annual expenditure to DME.

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

00:37:52.900 --> 00:37:55.660
 we believe are more effective programs.

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

00:38:00.860 --> 00:38:05.620
 rooftop solar without the rebate as we do with the rebate.

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

00:38:10.420 --> 00:38:15.860
 us and complains about the fact that they didn't get the rebate, which is understandable.

00:38:15.860 --> 00:38:22.780
 But again, I think that the market coupled with what the federal government has done has

00:38:22.780 --> 00:38:28.220
 certainly had a much bigger impact in people being able to install rooftop solar.

00:38:28.220 --> 00:38:34.860
 Obviously our very generous payment of that power has also been a huge incentive.

00:38:34.860 --> 00:38:41.540
 And that's why we're proposing to step into that over a period of time.

00:38:41.540 --> 00:38:46.300
 And certainly those will be decision points going forward.

00:38:46.300 --> 00:38:52.540
 We looked at solar energy for a long time because it was so expensive.

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.

00:39:05.700 --> 00:39:11.580
 What amount of non-solar energy rebates are issued every year?

00:39:11.580 --> 00:39:14.900
 Do we max out that fund every year?

00:39:14.900 --> 00:39:15.900
 The green sense.

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

00:39:22.500 --> 00:39:27.540
 on some of the programs that are more readily taken up by customers.

00:39:27.540 --> 00:39:33.420
 But Mr. Gagne is here and he can answer anything specifically if you'd like.

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

00:39:39.060 --> 00:39:48.380
 efficiency, if we're only giving out $400,000 in green sense rebates, then increasing the

00:39:48.380 --> 00:39:53.700
 budget line doesn't increase uptake of energy efficiency?

00:39:53.700 --> 00:39:56.700
 Well I think he has some ideas in mind.

00:39:56.700 --> 00:40:02.820
 One is making a bigger impact on low income customers through some new programs.

00:40:02.820 --> 00:40:06.980
 So but I don't want to steal any of Michael's thunder.

00:40:06.980 --> 00:40:08.700
 Could you tell us a little bit about that?

00:40:08.700 --> 00:40:09.700
 Is that another slide?

00:40:09.700 --> 00:40:10.700
 Yes.

00:40:10.700 --> 00:40:11.700
 Yeah, I've got some backup slides here.

00:40:11.700 --> 00:40:12.700
 Okay.

00:40:12.700 --> 00:40:13.700
 I'll let you get to it.

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

00:40:17.100 --> 00:40:18.100
 up.

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

00:40:24.780 --> 00:40:30.500
 for environmental service and sustainability to have that renewed focus on that.

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

00:40:34.700 --> 00:40:40.700
 worked with Catherine and those folks, the idea here is to shift all of that responsibility

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

00:40:44.660 --> 00:40:48.140
 that it needs because frankly, I think it'd be in a DME.

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

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

00:40:55.860 --> 00:40:59.060
 level of attention and I think that's what they're proposing so.

00:40:59.060 --> 00:41:02.100
 I've got three of your slides loaded.

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

00:41:08.340 --> 00:41:09.340
 something?

00:41:09.340 --> 00:41:10.340
 I believe so.

00:41:10.340 --> 00:41:11.340
 Probably not in the last 20 years.

00:41:11.340 --> 00:41:14.940
 I don't think I've presented in the last 20 years maybe.

00:41:14.940 --> 00:41:15.940
 Maybe 15.

00:41:15.940 --> 00:41:16.940
 We all know you, of course.

00:41:16.940 --> 00:41:19.460
 I managed to stay away from it for that long.

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.

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,

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

00:41:35.100 --> 00:41:36.100
 of inflation.

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

00:41:40.740 --> 00:41:42.820
 we were four years ago.

00:41:42.820 --> 00:41:46.820
 With the new energy efficiency ratings on the HVAC systems that have just gone into

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.

00:41:51.300 --> 00:42:02.480
 So expanding the HVAC, offering a higher level for a heat pump rebate, windows, insulation.

00:42:02.480 --> 00:42:08.380
 We were looking at the electric hot water heaters, adding some more rebates that we

00:42:08.380 --> 00:42:12.780
 haven't had in the past so that we can expend those dollars.

00:42:12.780 --> 00:42:15.240
 So I'm trying to read that over there.

00:42:15.240 --> 00:42:17.140
 That's not in the slide deck that I have.

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

00:42:24.980 --> 00:42:30.020
 30% up to $600, or am I seeing that correctly?

00:42:30.020 --> 00:42:35.060
 So the energy efficiency is really great.

00:42:35.060 --> 00:42:39.780
 The cheapest kilowatt is the kilowatt you never have to buy, right?

00:42:39.780 --> 00:42:47.020
 Lowers our demand, lowers our transmission charges, lowers the median and 90th percentile

00:42:47.020 --> 00:42:51.020
 load on our distribution transmission equipment, et cetera.

00:42:51.020 --> 00:42:54.260
 So it's really, really great.

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

00:43:00.900 --> 00:43:04.100
 for 250 a watt, they're getting 50 cents back or something like that.

00:43:04.100 --> 00:43:10.900
 They were getting 25% of the value up to a pretty big dollar amount.

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.

00:43:18.860 --> 00:43:20.500
 My house has 23 windows.

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

00:43:28.900 --> 00:43:30.120
 a window.

00:43:30.120 --> 00:43:36.620
 So if I replace two windows, I have more than maxed out the rebate.

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

00:43:45.260 --> 00:43:50.900
 I get about a 3% discount on my $16,000 window upgrade.

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

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.

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.

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,

00:44:20.380 --> 00:44:21.620
 because it's such a tiny amount.

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

00:44:26.620 --> 00:44:31.980
 five years, my power bill will be lower, and this rebate will help offset it, especially

00:44:31.980 --> 00:44:34.240
 lower income.

00:44:34.240 --> 00:44:38.380
 If you can afford the efficiency, you are going to buy the efficiency anyway.

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

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%

00:44:52.980 --> 00:44:59.380
 of these efficiency projects that are the best thing possible for DME and for Denton.

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

00:45:03.460 --> 00:45:05.460
 if we increase those.

00:45:05.460 --> 00:45:12.180
 And was there, you mentioned, I believe you mentioned targeting for lower income folks

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

00:45:17.180 --> 00:45:21.700
 better benefit, or if that's too hard to prove and audit?

00:45:21.700 --> 00:45:28.060
 Well, we've had some success working with some multifamily properties and doing full

00:45:28.060 --> 00:45:36.540
 scale insulation, maybe solar screens, not windows, insulation, HVAC rebates, and we've

00:45:36.540 --> 00:45:41.580
 been earmarking some for multifamily, and we've been expending most of that through

00:45:41.580 --> 00:45:42.580
 the years.

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

00:45:49.100 --> 00:45:54.500
 at the tiered program based on income, we just have to have staff to verify income,

00:45:54.500 --> 00:45:58.220
 and that's the hard part, is building those programs and being able to administer every

00:45:58.220 --> 00:46:00.500
 step of it.

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

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.

00:46:11.460 --> 00:46:17.220
 We know the areas where we have more inefficient housing in town through our audit program.

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

00:46:22.980 --> 00:46:25.940
 folks know that these programs exist.

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

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

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

00:46:41.740 --> 00:46:45.940
 to those landlords and, you know, make the program available.

00:46:45.940 --> 00:46:48.060
 I think a couple of things.

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

00:46:54.380 --> 00:47:00.420
 ideas that this group has, certainly between now and October 1st, when the budget goes

00:47:00.420 --> 00:47:04.340
 into effect, they would bring forward kind of the specifics about what these programs

00:47:04.340 --> 00:47:05.340
 may be.

00:47:05.340 --> 00:47:09.120
 You would have an opportunity to make those kind of, you know, recommendations and changes

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

00:47:15.780 --> 00:47:22.780
 number of customers that will have access to this versus somebody being able to install

00:47:22.780 --> 00:47:27.940
 a $20,000 or $30,000 system on their home.

00:47:27.940 --> 00:47:33.660
 And let's be honest, some homes in Denton without modifications to their roof are not

00:47:33.660 --> 00:47:38.100
 going to be able to install a $20,000 or $30,000 system.

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

00:47:41.940 --> 00:47:46.020
 are doing these solar systems, I mean, they're issuing a second mortgage, right?

00:47:46.020 --> 00:47:50.540
 I mean, they're financing these systems for 20 or 30 years, right?

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

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.

00:48:04.060 --> 00:48:08.980
 And so from a subsidy standpoint, it kind of takes that subsidy issue away because, again,

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

00:48:12.460 --> 00:48:14.060
 the system versus what we have today.

00:48:14.060 --> 00:48:15.060
 Yeah.

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

00:48:19.940 --> 00:48:22.960
 sells itself already.

00:48:22.960 --> 00:48:29.340
 The challenge is on the energy efficiency, $300 back on a $10,000 upgrade, which probably

00:48:29.340 --> 00:48:33.940
 requires a home improvement loan, is not really an incentive.

00:48:33.940 --> 00:48:35.340
 The people are already making that decision.

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

00:48:39.700 --> 00:48:41.280
 to do that upgrade.

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

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.

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

00:48:55.900 --> 00:48:58.140
 doing air conditioning, you're doing whatever.

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

00:49:02.980 --> 00:49:06.240
 for CER 18 or something like that.

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

00:49:11.580 --> 00:49:13.940
 it needed whenever it was $8 a lot.

00:49:13.940 --> 00:49:14.940
 Right.

00:49:14.940 --> 00:49:15.940
 Right.

00:49:15.940 --> 00:49:16.940
 So do you have a question?

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

00:49:24.260 --> 00:49:29.260
 costs so much today is that we can't use the old refrigerants anymore.

00:49:29.260 --> 00:49:35.140
 So the indoor and the outdoor unit and all the interconnecting piping all out of go.

00:49:35.140 --> 00:49:38.780
 So it's not an apples and oranges thing.

00:49:38.780 --> 00:49:39.780
 You're replacing your windows.

00:49:39.780 --> 00:49:40.780
 It's just the windows.

00:49:40.780 --> 00:49:44.060
 Well, when you replace your air conditioning system, you have to replace everything having

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

00:49:49.620 --> 00:49:53.100
 upstairs of the bedroom or, you know, whatever permutation, but you're going to replace the

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

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.

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.

00:50:12.300 --> 00:50:13.300
 Whereas the windows, you've got some flexibility.

00:50:13.300 --> 00:50:17.540
 You could say, well, I'll just do the windows here or the windows there.

00:50:17.540 --> 00:50:18.540
 That's right.

00:50:18.540 --> 00:50:23.580
 The HVAC system, you're kind of -- you're stuck, so it's a real problem.

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

00:50:27.700 --> 00:50:33.300
 insulation or whatnot, but I know with the units that the cost of replacement has gone

00:50:33.300 --> 00:50:36.860
 way up because of the requirement to come change out the refrigerants.

00:50:36.860 --> 00:50:38.500
 So it's had a huge impact.

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

00:50:43.940 --> 00:50:47.780
 personally recommend you look at something a little more financially beneficial, maybe

00:50:47.780 --> 00:50:50.440
 based on Asian sear difference or something.

00:50:50.440 --> 00:50:53.380
 Like a swimming pool?

00:50:53.380 --> 00:50:54.380
 Swimming pool.

00:50:54.380 --> 00:50:55.380
 That'll cool you down.

00:50:55.380 --> 00:50:56.380
 Oh, yes, sir.

00:50:56.380 --> 00:50:57.380
 It will.

00:50:57.380 --> 00:51:02.620
 But if it's a heat pump replacement, it won't heat me up.

00:51:02.620 --> 00:51:05.260
 And you mentioned about the income verification.

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

00:51:11.340 --> 00:51:17.700
 bills and they're doing the income -- is there another partnership that we could do there?

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

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.

00:51:28.340 --> 00:51:35.380
 So yes, definitely partnership and crossover there.

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.

00:51:38.740 --> 00:51:39.740
 Right.

00:51:39.740 --> 00:51:40.740
 Exactly.

00:51:40.740 --> 00:51:45.660
 If we could somehow get a little balance to that, that would be wonderful.

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

00:51:48.220 --> 00:51:54.580
 mention to the PAB is that we are also taking this same item through the Sustainability

00:51:54.580 --> 00:51:56.140
 Framework Advisory Committee.

00:51:56.140 --> 00:51:57.220
 We had one meeting with them.

00:51:57.220 --> 00:52:01.500
 They asked us questions and we're scheduled to go back to them with this.

00:52:01.500 --> 00:52:02.860
 So we're kind of running a parallel.

00:52:02.860 --> 00:52:07.180
 Obviously, these are two independent bodies and so ultimately, whatever recommendation

00:52:07.180 --> 00:52:11.060
 comes from the PAB, the Sustainability Committee, we will take those and let the council know

00:52:11.060 --> 00:52:12.540
 what you recommended.

00:52:12.540 --> 00:52:13.540
 Okay.

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

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

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

00:52:34.880 --> 00:52:38.980
 efficient decision by a few hundred bucks or $1,000.

00:52:38.980 --> 00:52:43.180
 So it's a tough one because you don't technically want to pay free riders.

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

00:52:48.580 --> 00:52:52.860
 group will come back with some really good options for those added dollars if they were

00:52:52.860 --> 00:52:53.860
 to get them.

00:52:53.860 --> 00:53:00.820
 So with that, you see staff's recommendation as option four is that phased in facility

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

00:53:06.540 --> 00:53:12.300
 like us to bring forward to City Council and have I answered all your questions?

00:53:12.300 --> 00:53:13.300
 I think so.

00:53:13.300 --> 00:53:14.740
 Do you have any other questions?

00:53:14.740 --> 00:53:15.740
 Yeah.

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

00:53:24.460 --> 00:53:25.460
 purchase value.

00:53:25.460 --> 00:53:26.460
 What is it?

00:53:26.460 --> 00:53:30.300
 Offset value or whatever you want to call it for solar arrays.

00:53:30.300 --> 00:53:34.480
 I think I have two big concerns about that.

00:53:34.480 --> 00:53:37.780
 First is some people have taken out 10 or 20 year loans.

00:53:37.780 --> 00:53:47.180
 They made large financial decisions based on these rates and an expectation of being

00:53:47.180 --> 00:53:49.140
 able to cover their cost.

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

00:53:55.700 --> 00:54:00.800
 and balanced their electric bill and their loan payment to be the same or five percent

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

00:54:09.140 --> 00:54:11.140
 were going to give you in credit.

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

00:54:16.880 --> 00:54:18.260
 out for existing customers.

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

00:54:24.480 --> 00:54:30.160
 everybody is a wealthy individual in Forest Ridge putting a 20kW array up.

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

00:54:36.020 --> 00:54:38.020
 would lower their electric bill.

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%.

00:54:46.580 --> 00:54:48.300
 That smacks of unfairness to me.

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

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

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

00:55:14.620 --> 00:55:20.380
 our West Texas wind power and our coastal wind power and solar and that we purchased

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

00:55:30.220 --> 00:55:38.140
 online average output average monthly output for Denton 76201 you know south facing and

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

00:55:47.320 --> 00:55:54.540
 cents a kilowatt hour last year just in what somebody's south-facing rooftop array would

00:55:54.540 --> 00:55:57.800
 have sold for in the real-time.

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

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

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

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

00:56:30.740 --> 00:56:37.700
 real-time market for that price additionally you mentioned like you don't design for the

00:56:37.700 --> 00:56:43.860
 for the production of solar in the distribution you design for the maximum load that that

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

00:56:49.220 --> 00:56:55.820
 of distributed generation and that does lower distribution costs that doesn't mean you have

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

00:57:02.140 --> 00:57:07.780
 does mean the median the average the 90th percentile hour the 99th percentile hour those

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

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

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

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

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

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

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

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

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

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

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

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

00:58:24.780 --> 00:58:29.900
 that have already made the investment so there was no guarantee when they made that investment

00:58:29.900 --> 00:58:33.740
 that rate structure would be the same as a matter of fact their interconnection agreement

00:58:33.740 --> 00:58:43.060
 does state something to that effect but to to look at grandfathering is essentially what

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

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

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

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

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

00:59:20.020 --> 00:59:25.620
 I your your rate ratcheting and you're doing so you know successor generation charge so

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

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

00:59:36.380 --> 00:59:42.460
 gonna sunset that and shift that money over a different direction you know over time whatever

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

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

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

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

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

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

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

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

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

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

01:00:39.940 --> 01:00:46.940
 costs is that correct right we're talking about how many customers there's a little

01:00:46.940 --> 01:00:50.740
 over a thousand customers that have solar some have varying degrees of what they send

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

01:00:57.940 --> 01:01:06.180
 bills are subsidizing that because they're not paying the fixed costs of the system correct

01:01:06.180 --> 01:01:11.460
 correct and I think Terry still wants to address member Taylor's comments about the market

01:01:11.460 --> 01:01:23.780
 yes Terry Nalti assistant general manager so mr. Taylor your your I don't quibble with

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

01:01:31.300 --> 01:01:38.360
 rooftop solar system on my home I'm installing it primarily to offset the utility expense

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

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

01:01:54.020 --> 01:02:00.200
 peak demands then the benefits still accrues to the to the homeowner because they're offsetting

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

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

01:02:15.740 --> 01:02:21.900
 also trying to recover the losses that we that we experience from the off-peak wind

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

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

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

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

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

01:03:01.080 --> 01:03:06.380
 hours that are high-priced and our studies have shown that and I think Bill included

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

01:03:15.300 --> 01:03:22.060
 those high price periods people are pulling energy to support their their home use air

01:03:22.060 --> 01:03:28.060
 conditioner cycling on refrigerators whatever and despite the fact that they size the units

01:03:28.060 --> 01:03:36.180
 to to meet an average household demand during those peak periods they're pulling energy

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

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

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

01:03:58.440 --> 01:04:04.520
 from a billing perspective and number two it doesn't really reflect what our true costs

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

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

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

01:04:26.900 --> 01:04:34.280
 two honestly but threes well my comment would be on the difference thing like option four

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

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

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

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

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

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

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

01:05:14.820 --> 01:05:21.100
 fact option three was the option we went forward to the sustainability framework advisory committee

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

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

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

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

01:05:49.220 --> 01:05:55.420
 to happen over the next several years and those are substantial dollars and if we did

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

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

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

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

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

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

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

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

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

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

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

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

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

01:07:14.940 --> 01:07:20.800
 our financial processes the reality is by 2028 when it's seven million dollars or potentially

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

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

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

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

01:07:42.620 --> 01:07:47.620
 and the rate increase would be to everybody that does not have rooftop solar under the

01:07:47.620 --> 01:07:52.260
 current configuration right because any increase that I do yes they're paying more for the

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

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

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

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

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

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

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

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

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

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

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

01:09:10.940 --> 01:09:17.860
 monthly like they can take their power bill to zero their their energy charge to zero

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

01:09:22.820 --> 01:09:27.580
 charge which will stage up and so this is another interesting question if it costs sixty

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

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

01:09:43.940 --> 01:09:48.660
 no insulation where they've got a three dollar a month electric bill they're subsidizing

01:09:48.660 --> 01:09:53.860
 the very nice brand-new efficient home on the facility charges because that efficient

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

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

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

01:10:11.620 --> 01:10:18.620
 dollars and four cents or whatever whatever that number is would also be like instead

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

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

01:10:30.140 --> 01:10:37.340
 cover all of our infrastructure and then you know incremental incremental energy use is

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

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

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

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

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

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

01:11:11.820 --> 01:11:17.020
 facility property taxes than you do right so there's there's cross subsidies that happen

01:11:17.020 --> 01:11:21.460
 everywhere I mean of course our our business customers are subsidizing our residential

01:11:21.460 --> 01:11:25.780
 customers they're not quite paying their cost of service either so but those are things

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

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

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

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

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

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

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

01:12:03.580 --> 01:12:07.820
 discussion regarding all the other customers again we're not picking on solar customers

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

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

01:12:19.260 --> 01:12:26.860
 comparative to other utilities but certainly compared to what our cost of service is did

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

01:12:32.220 --> 01:12:38.260
 essentially trying to address the fixed cost shortfall that we're seeing and in those two

01:12:38.260 --> 01:12:44.420
 helped to do that and I anticipate I mean obviously we have a another presentation to

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

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

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

01:13:12.180 --> 01:13:26.980
 not here I don't get to do