1 00:00:00,000 --> 00:00:07,240 Good morning. I'd like to welcome you and call to order the Public Utility Board meeting 2 00:00:07,240 --> 00:00:13,720 for the City of Denton of Monday, May 19th, 2025. Are there any presentation for members 3 00:00:13,720 --> 00:00:18,800 of the public? There does not appear to be any. We'll move straight on to the consent 4 00:00:18,800 --> 00:00:23,240 agenda. Would any member like to pull one of these items? 5 00:00:23,240 --> 00:00:25,120 I have a quick question on item A. 6 00:00:25,120 --> 00:00:33,040 Okay, let's pull item A, please. Any others? No. Then we'll entertain a motion for items 7 00:00:33,040 --> 00:00:35,160 B and C of the consent agenda. 8 00:00:35,160 --> 00:00:36,160 So moved. 9 00:00:36,160 --> 00:00:37,160 We have a motion. 10 00:00:37,160 --> 00:00:38,160 Second. 11 00:00:38,160 --> 00:00:41,040 We have a second. All those in favor, please say aye. 12 00:00:41,040 --> 00:00:42,040 Aye. 13 00:00:42,040 --> 00:00:48,480 Any opposed, sign the same. All right, it passes unanimously. Item A. What is your question, 14 00:00:48,480 --> 00:00:49,480 Mr. Taylor? 15 00:00:49,480 --> 00:00:54,440 So notice the majority of this contract is for that initial study, and then it has a 16 00:00:54,440 --> 00:01:01,600 small amount kind of for maintenance on the study. Does that mean that it'll provide 17 00:01:01,600 --> 00:01:07,160 annual cost of service updates for the five-year period? 18 00:01:07,160 --> 00:01:12,520 That's correct. The additional amount is for maintaining the model. So the upfront cost 19 00:01:12,520 --> 00:01:16,960 is to develop the model, and then the ongoing contract is for the maintenance. 20 00:01:16,960 --> 00:01:21,560 Okay. So then basically every year we'll have a new cost of service. Okay. Thank you. 21 00:01:21,560 --> 00:01:24,960 The update refreshed. Yeah. 22 00:01:24,960 --> 00:01:25,960 Move approval on item A. 23 00:01:25,960 --> 00:01:30,600 We have a motion to approve item A. Do we have a second? 24 00:01:30,600 --> 00:01:31,600 Second. 25 00:01:31,600 --> 00:01:35,240 Second. We got a second. All those in favor, please say aye. 26 00:01:35,240 --> 00:01:36,240 Aye. 27 00:01:36,240 --> 00:01:42,920 Any opposed, sign the same. It passes unanimously. Moving on to items for individual consideration. 28 00:01:42,920 --> 00:01:45,880 Consider approval of the minutes of April 28th. 29 00:01:45,880 --> 00:01:47,640 So moved. 30 00:01:47,640 --> 00:01:48,640 Move approval. 31 00:01:48,640 --> 00:01:49,640 Second. 32 00:01:49,640 --> 00:01:52,360 Second. All those in favor, please say aye. 33 00:01:52,360 --> 00:01:53,360 Aye. 34 00:01:53,360 --> 00:01:58,200 Passes unanimously. Item B. Consider approval of the May 5th minutes. 35 00:01:58,200 --> 00:01:59,200 So moved. 36 00:01:59,200 --> 00:02:02,680 We got a motion. Mr. Rainer, we got a second. 37 00:02:02,680 --> 00:02:03,680 Yes. 38 00:02:03,680 --> 00:02:07,120 Mr. Vermeer and over here, Newquist. All those in favor, please say aye. 39 00:02:07,120 --> 00:02:08,120 Aye. 40 00:02:08,120 --> 00:02:13,840 Any opposed, sign the same. Passes unanimously. Item C. Consider recommending adoption of an 41 00:02:13,840 --> 00:02:20,320 ordinance directing the publication of notice of intention to issue $46,535,000 in principal 42 00:02:20,320 --> 00:02:23,120 amounts of COs for the City of Denton. 43 00:02:23,120 --> 00:02:26,320 Good morning. I also need the next item called. I have one presentation. 44 00:02:26,320 --> 00:02:29,200 Oh, these two go together. It says that here. I'm sorry. 45 00:02:29,200 --> 00:02:30,200 No problem. 46 00:02:30,200 --> 00:02:39,120 This is items C and D also. So the items are PUB 25-039 and PUB 25-040. 47 00:02:39,120 --> 00:02:44,600 Good morning, Randy Klingle, Treasury Manager. I'm here for the Notice of Intent for this 48 00:02:44,600 --> 00:02:50,280 year's Certificates of Obligation, which as mentioned are both items for one presentation, 49 00:02:50,280 --> 00:02:53,840 but will be voted on separately, please. 50 00:02:53,840 --> 00:02:59,240 The Notice of Intent is required by state law for Certificates of Obligation only, and 51 00:02:59,240 --> 00:03:05,160 we will post the notices in the Denton Record Chronicle, which is required to be in a printed 52 00:03:05,160 --> 00:03:10,800 paper of local variety in your municipal government. I will also post it on the city's website 53 00:03:10,800 --> 00:03:16,160 for the length of the duration until the bond sale actually happens in the late summer. 54 00:03:16,160 --> 00:03:22,000 And then the bond ordinance cannot come to you or to the council until 46 days after 55 00:03:22,000 --> 00:03:27,560 that first posting in the local paper. So the majority of the information I have is 56 00:03:27,560 --> 00:03:31,800 also in your backup. It's in your AIS. It's a list of the projects, and I will not be 57 00:03:31,800 --> 00:03:34,880 going over the list of those projects, but if you have any questions, we probably have 58 00:03:34,880 --> 00:03:39,000 some friends here in the audience that will help us out on those details. But I will just 59 00:03:39,000 --> 00:03:47,480 go through the funds themselves and show you the totals that will be on the Notice of Intent. 60 00:03:47,480 --> 00:03:53,440 So the first fund is the Solid Waste Fund, which the Notice of Intent is at their reimbursement 61 00:03:53,440 --> 00:04:00,960 status, the same, nothing has changed, with $11.1 million. 62 00:04:00,960 --> 00:04:08,160 The water utility has a long list of projects, very detailed, as is normal for the utilities. 63 00:04:08,160 --> 00:04:13,520 And again, like I said, it's in the backup, and I won't go through all of these, but you 64 00:04:13,520 --> 00:04:20,960 will see the changes from the reimbursement ordinance that was in October. So for your 65 00:04:20,960 --> 00:04:32,960 water fund, we have $80,614,615. $80,614,615, I think I said that right. Wastewater, we 66 00:04:32,960 --> 00:04:42,160 also have two slides for this fund. The $77.1 million for the wastewater fund. And last, 67 00:04:42,160 --> 00:04:52,000 we have electric utility, $47,900,000 for the utility. For the solid waste, you have 68 00:04:52,000 --> 00:04:58,840 $11.1, you have the total utility system there at the $207,515, and some of those totals 69 00:04:58,840 --> 00:05:05,000 include the issuing cost and some price flexibility once we get to the bond sale in July. 70 00:05:05,000 --> 00:05:10,800 Our next steps is we'll go to council tomorrow for them to review this Notice of Intent after 71 00:05:10,800 --> 00:05:15,760 your recommendation today, and then we'll come back to PUB on June 23rd for the full 72 00:05:15,760 --> 00:05:22,000 bond ordinance. And July 15th, council members will review that as well. And then July 23rd, 73 00:05:22,000 --> 00:05:29,280 we'll have the bond sale and we should expect the funds in late August. Any questions? 74 00:05:29,280 --> 00:05:47,160 It doesn't appear to be any. Okay. Fantastic. I guess that's it. Go ahead. 75 00:05:47,160 --> 00:05:55,240 This is a substantial amount of debt, $250 million approximately. And of course, it represents 76 00:05:55,240 --> 00:06:00,540 a lot of necessary growth, you know, or necessary infrastructure to support the growth that 77 00:06:00,540 --> 00:06:10,920 is occurring in Denton. I have the Ray Roberts Water Treatment Plant expansion, up rate. 78 00:06:10,920 --> 00:06:17,880 That's I think if you total all of those $30 or $40 million total, the Milam Creek Wastewater 79 00:06:17,880 --> 00:06:25,280 Lift Station, you know, lots of expansion of landfill cells, you know, so these are 80 00:06:25,280 --> 00:06:31,040 all, a lot of this is related to the continued growth that we're experiencing as a city. 81 00:06:31,040 --> 00:06:36,320 And then there's also kind of mixed in just the maintenance, the replacing water lines 82 00:06:36,320 --> 00:06:43,440 that are 30 or 40 years old, replacing wastewater lines, you know, so it is a significant list 83 00:06:43,440 --> 00:06:50,880 of projects here, but, you know, I think we all know that they're all necessary. So with 84 00:06:50,880 --> 00:06:57,120 that, I will, do we need to call them? Do we need a motion yet for the note to publish 85 00:06:57,120 --> 00:07:01,880 the notice of intent? Each one. Yes. Yes. I guess I'll wait to see if there's any further 86 00:07:01,880 --> 00:07:12,120 discussion. Okay. I'll call it. Anybody? Doesn't appear to be any others, any other discussion. 87 00:07:12,120 --> 00:07:24,520 So we'll entertain a motion for item C for the notice of intent for $46,535,000 and COs. 88 00:07:24,520 --> 00:07:29,520 I move we recommend adoption of the ordinance for the COs. We have a motion for item C. 89 00:07:29,520 --> 00:07:36,880 Second. We have a second. All those in favor, please say aye. Aye. Any opposed, sign the 90 00:07:36,880 --> 00:07:47,920 same. Passes unanimously. Now entertain a motion for item D. I move. I have a motion. 91 00:07:47,920 --> 00:07:52,800 Second. We have a second. All those in favor, please say aye. Aye. Any opposed, sign the 92 00:07:52,800 --> 00:08:00,240 same. They both pass unanimously. Moving on to management reports. Good morning. Members 93 00:08:00,240 --> 00:08:05,440 of PEB, Stephen Gay, General Manager, Water Utilities and Street Operations. You have been 94 00:08:05,440 --> 00:08:11,340 provided in your packets the three memos. We have staff here if you have any questions. 95 00:08:11,340 --> 00:08:17,320 And then beyond that, I don't believe there's any future items and/or any new business. I 96 00:08:17,320 --> 00:08:24,400 think those were Lee questions. Yeah. But thank you for the memos. Thank you for the 97 00:08:24,400 --> 00:08:33,200 research. You're welcome. Anything else you got there? Future agenda items? No, sir. No. 98 00:08:33,200 --> 00:08:38,120 Anybody else got any future agenda items? Doesn't appear to be. New business action 99 00:08:38,120 --> 00:08:44,960 items? I guess you're passing on that, too. Yes, sir. We will move on to the work session. 100 00:08:44,960 --> 00:08:48,520 Item A. Receive a report, hold a discussion, give staff direction regarding updates to 101 00:08:48,520 --> 00:09:05,800 the Denton Renewable Resource Plan. Would you please ask someone who knows something 102 00:09:05,800 --> 00:09:14,480 to get up there and make the presentation, please? I'll try to find you someone. We've 103 00:09:14,480 --> 00:09:18,960 been knocking him down all morning. We should continue, I think. We'll let everybody clear 104 00:09:18,960 --> 00:09:29,680 out. So Mr. Chair, members of the PEB, Tony Puente, the DME General Manager. Appreciate 105 00:09:29,680 --> 00:09:33,800 your time this morning. I'm going to try to run through this presentation as efficiently 106 00:09:33,800 --> 00:09:38,640 as I can. I do want to kind of open up with a couple of things real quick for you. First 107 00:09:38,640 --> 00:09:44,240 of all, legislative session is still in the session. They still got about two more weeks. 108 00:09:44,240 --> 00:09:49,880 There are a number of bills that are under consideration that we're tracking. Certainly 109 00:09:49,880 --> 00:09:57,600 I referenced some of those within the confines of this presentation. Know that some of the 110 00:09:57,600 --> 00:10:06,320 requirements that may be coming down the pike may dictate for our community, for our utility, 111 00:10:06,320 --> 00:10:14,840 what must be done. So we certainly try to put this together within the context of what's 112 00:10:14,840 --> 00:10:20,320 happening at the state level, but also at the federal level as well. So we'll talk a 113 00:10:20,320 --> 00:10:27,680 little bit about that and about the availability of new renewable resources going forward in 114 00:10:27,680 --> 00:10:35,640 the state of Texas and frankly probably across the country. And then finally, locally, we 115 00:10:35,640 --> 00:10:41,480 continue to have some challenges that are related to our purchase power agreements, 116 00:10:41,480 --> 00:10:48,240 delivery of projects, uncertainty that's there as well. So we'll talk about that. The presentation 117 00:10:48,240 --> 00:10:57,160 overall recommends preservation of the 100 percent renewable goal that has been our mandate 118 00:10:57,160 --> 00:11:04,000 for a number of years now. We just try to define that, which based on an internal audit 119 00:11:04,000 --> 00:11:08,360 that was done, we found that there was not a very good definition of what that 100 percent 120 00:11:08,360 --> 00:11:13,080 renewable goal was. And so we try to define that here. I think going forward, it would 121 00:11:13,080 --> 00:11:17,360 be the definition that we certainly would recommend for our community going forward. 122 00:11:17,360 --> 00:11:23,400 So with that, this is a two-part presentation. The first part will be really an update to 123 00:11:23,400 --> 00:11:28,160 the renewable resource plan. I've outlined out here for you the objectives. We'll provide 124 00:11:28,160 --> 00:11:32,280 a staff recommendation in part one. Part two is related to what's called an integrated 125 00:11:32,280 --> 00:11:37,280 resource plan that is part of our recommendation. We'll cover regulatory market, some of our 126 00:11:37,280 --> 00:11:43,520 load forecasts, also provide recommendations. And then I'll wrap that up with a recap of 127 00:11:43,520 --> 00:11:49,800 the two recommendations that we're making today and would appreciate your direction. 128 00:11:49,800 --> 00:11:54,480 We do plan to present this to the Council on June 3rd. And so certainly, we want to 129 00:11:54,480 --> 00:12:00,840 be able to have enough time to provide them your feedback on these recommendations. So 130 00:12:00,840 --> 00:12:08,040 with that, the renewable resource plan, the current plan was adopted back in 2018. That 131 00:12:08,040 --> 00:12:15,280 goal was done through a study. And so some of the things that I'll kind of touch on 132 00:12:15,280 --> 00:12:23,880 here is that obtaining the goal really depended on how we accounted for certain resources 133 00:12:23,880 --> 00:12:31,600 that would have reached that goal by 2020 or 2024. The acquisition of diversified set 134 00:12:31,600 --> 00:12:37,000 of power purchase agreements, that was really the goal, right, is to not necessarily build 135 00:12:37,000 --> 00:12:46,000 our own renewable energy plant, but to acquire those two power purchase agreements. It did 136 00:12:46,000 --> 00:12:51,600 list out a number of objectives, one of those being the fact that always cognizant of the 137 00:12:51,600 --> 00:12:56,640 least cost supplies, right? And so certainly always be cognizant of what the ultimate impact 138 00:12:56,640 --> 00:13:02,480 is to rate payers. It did recognize that the debt and energy center was a cost hedge. And 139 00:13:02,480 --> 00:13:06,720 I think that is consistent with what we've communicated, certainly since I've been the 140 00:13:06,720 --> 00:13:12,400 general manager, but even before that time, of what the debt was intended to do. And we 141 00:13:12,400 --> 00:13:17,160 certainly believe that it's been successful in that. And acknowledge that the greatest 142 00:13:17,160 --> 00:13:21,120 challenge is balancing the supply portfolio around intermittent resources. And that's 143 00:13:21,120 --> 00:13:25,960 something that continues to be seen across the states, certainly in California. The infamous 144 00:13:25,960 --> 00:13:30,320 duck curve, if you're familiar with that, in that in the evening hours, between the 145 00:13:30,320 --> 00:13:36,520 hours of 6 and 10 during the summers, when you tend to see scarcity, right, when the 146 00:13:36,520 --> 00:13:44,320 wind doesn't show up and the sun is gone, that tends to be those hours of uncertainty 147 00:13:44,320 --> 00:13:50,520 or scarcity. In a winter, it's actually a double situation, because you also have the 148 00:13:50,520 --> 00:13:57,320 morning hours, around 8 o'clock to about 10 o'clock as well. And then finally, and 149 00:13:57,320 --> 00:14:03,520 we have implemented some hedge plan and strategies that have gone into trying to manage this 150 00:14:03,520 --> 00:14:09,480 portfolio. Do share with you here the current resources that we have. So we do have one 151 00:14:09,480 --> 00:14:16,080 resource at 150 megawatts, and then the remaining resources that we have under contract currently 152 00:14:16,080 --> 00:14:22,400 are solar. We have a total of 455 megawatts of capacity. I will just mention that the 153 00:14:22,400 --> 00:14:28,760 Yellow Viking, that is still not online. And we continue to work with them on that particular 154 00:14:28,760 --> 00:14:34,320 contract. And it just goes to some of the PPA challenges that we're seeing. In addition 155 00:14:34,320 --> 00:14:40,480 to that, we also have issued an RFP that we're currently evaluating for up to 300 megawatts 156 00:14:40,480 --> 00:14:47,760 of solar, wind, and battery. We are working through those proposals now and do plan to 157 00:14:47,760 --> 00:14:55,080 be in front of you in the coming weeks with some recommendations regarding some additional 158 00:14:55,080 --> 00:15:03,800 resources for your consideration. So this provides you just a timeline and some history 159 00:15:03,800 --> 00:15:11,080 of the evolution of this goal. I went back to 2009. 2009, the goal was 40 percent. And 160 00:15:11,080 --> 00:15:19,240 you can see here that in 2021, we achieved that goal. I do have an asterisk here for 161 00:15:19,240 --> 00:15:25,720 you because I do want to make sure that you understand how we've attained that. So back 162 00:15:25,720 --> 00:15:32,920 in 2021, we served a little bit over 1.5 million megawatt hours to our customers. The contracts 163 00:15:32,920 --> 00:15:40,680 that we had in place at the time actually generated 1.3 million megawatt hours of power. 164 00:15:40,680 --> 00:15:49,520 And then we were able to utilize 262,000 megawatt hours. So it's equivalent of 30 megawatts 165 00:15:49,520 --> 00:15:55,120 that was tied to one contract called the Whitetail contract. We did go to the Council at the 166 00:15:55,120 --> 00:16:01,400 time, also the PUB, and recommended that while the dead renewable resource plan and discussions 167 00:16:01,400 --> 00:16:06,760 at the time was that we were not to count recs towards this goal, we certainly believe 168 00:16:06,760 --> 00:16:10,680 that there was a misunderstanding of what a rec is. And certainly, I'll try to touch 169 00:16:10,680 --> 00:16:16,520 base a little bit today on what that is. So the Council did give us direction in 2020 170 00:16:16,520 --> 00:16:23,860 to begin counting those 30 megawatts of recs towards our goal. And so in 2021, we actually 171 00:16:23,860 --> 00:16:29,280 were able to achieve that goal, actually exceeded it a little bit by 1 percent, 101 percent. 172 00:16:29,280 --> 00:16:35,160 And I've given you here, kind of since that time, what we've done. Certainly, in '22 173 00:16:35,160 --> 00:16:42,320 and '23, we counted the 30 megawatts of renewable -- or recs from the Whitetail contract, but 174 00:16:42,320 --> 00:16:48,080 we actually had to buy additional recs out in the open market to attain that goal. And 175 00:16:48,080 --> 00:16:56,080 in 2024, the Whitetail contract did expire December 31st of 2023. And so in 2024, we 176 00:16:56,080 --> 00:17:02,800 bought 400 -- a little bit over 400,000 megawatt hours of recs in the open market to round 177 00:17:02,800 --> 00:17:09,960 out our goal of 100 percent. Just to rehash a little bit of what we communicated 178 00:17:09,960 --> 00:17:15,960 to the PV and the Council at the time was not counting the Whitetail recs would have 179 00:17:15,960 --> 00:17:22,120 cost the city an additional, you know, $5 million -- $5.1 million to go out there and 180 00:17:22,120 --> 00:17:29,320 acquire that renewable energy out in the open market with short-term contracts, along with 181 00:17:29,320 --> 00:17:36,440 recs, right? And so the Council decided, since we had already used -- had already paid for 182 00:17:36,440 --> 00:17:41,360 the 30 megawatts within the PPA contract that we had, to not spend that money, instead go 183 00:17:41,360 --> 00:17:49,880 ahead and utilize those recs. In 2024, again, you know, we anticipate that that energy that 184 00:17:49,880 --> 00:17:54,160 would have been equivalent to the 400,000 megawatts would have cost us about $2 million, 185 00:17:54,160 --> 00:18:03,840 right? Instead, we bought 400,000 megawatt hours of recs at about $1.50 a megawatt hour. 186 00:18:03,840 --> 00:18:09,440 So we spent about $600,000, right? So $600,000 versus $2.5 million is really a differential, 187 00:18:09,440 --> 00:18:17,200 right? And ultimately, what we did not spend on behalf of our ratepayers. 188 00:18:17,200 --> 00:18:23,840 Some of the challenges associated with the current plan, and certainly some of the findings 189 00:18:23,840 --> 00:18:28,760 that I'll cover from an internal audit that was done. We worked very closely with the 190 00:18:28,760 --> 00:18:33,600 city's internal auditor on this. But some of the challenges, right, is, you know, associated 191 00:18:33,600 --> 00:18:37,520 with counting a rec, right? So let me talk to you just a little bit about what's called 192 00:18:37,520 --> 00:18:45,080 the Texas Renewable Portfolio Standard. So that standard, RPS -- understand that RPSs 193 00:18:45,080 --> 00:18:49,560 exist throughout various states across the country, so this isn't anything that's new 194 00:18:49,560 --> 00:18:58,240 to just the state of Texas or DME. But that RPS program was established back in 1999, 195 00:18:58,240 --> 00:19:03,960 after deregulation, you know, the infamous SB7 that you may be familiar with. And it 196 00:19:03,960 --> 00:19:09,960 created this renewable energy credit program. The intent was to identify resources. So the 197 00:19:09,960 --> 00:19:15,880 plan identified a specific number of resources -- solar, wind, geothermal, hydroelectric, 198 00:19:15,880 --> 00:19:22,580 wind, tidal, and biomass -- as the types of facilities that would be counted as renewable 199 00:19:22,580 --> 00:19:29,600 in the state, and that would be awarded recs, right? And so the rec became kind of the supporting 200 00:19:29,600 --> 00:19:36,380 evidence or the evidentiary document that a megawatt hour of renewable energy from these 201 00:19:36,380 --> 00:19:43,240 resources was actually produced and generated. And the goals was to incentivize renewables 202 00:19:43,240 --> 00:19:49,040 in the state of Texas, and the goals were, at the time, you know, very high, lofty goals, 203 00:19:49,040 --> 00:19:56,560 right? 5,000 megawatts by 2015, 10,000 by 2025. And I'll tell you, the state has certainly 204 00:19:56,560 --> 00:20:01,400 built far more, right? So today -- and this is a little bit dated because I put this presentation 205 00:20:01,400 --> 00:20:07,640 in a couple months ago -- but at the time, wind -- there was over 39,000 megawatt hours 206 00:20:07,640 --> 00:20:14,920 of installed capacity, making Texas the leader in the nation for wind resources. Solar was 207 00:20:14,920 --> 00:20:22,720 at over 25,000 megawatts of installed capacity. And while Texas was slightly behind California 208 00:20:22,720 --> 00:20:28,000 from installed capacity, actually, instead of Texas, those resources actually generated 209 00:20:28,000 --> 00:20:33,920 more power than in California. And so certainly, Texas became a leader. For retail electric 210 00:20:33,920 --> 00:20:41,080 providers -- and understand that there's retail electric providers in the -- and the investor-owned 211 00:20:41,080 --> 00:20:47,560 and so the private -- the private utilities, DME, and all MOUs are also REPs, and then 212 00:20:47,560 --> 00:20:53,880 you have your cooperatives that are also REPs. But this particular standard and the requirements 213 00:20:53,880 --> 00:21:00,180 spelled out in the standard that mandated, right, that REPs, right, buy a certain amount 214 00:21:00,180 --> 00:21:04,560 of renewable energy credits, right? The state would tell them and allocate to them, this 215 00:21:04,560 --> 00:21:10,440 is the number that you have to go out there and buy to continue to incentivize renewable 216 00:21:10,440 --> 00:21:16,040 energy in the state. Again, DME was exempt from those requirements, along with all other 217 00:21:16,040 --> 00:21:22,200 MOUs that have not opted in, right? There's a fancy acronym called a NOE, right? It's 218 00:21:22,200 --> 00:21:29,480 a non-opt-in entity, right, and that describes DME and a lot of other 72 counterparts that 219 00:21:29,480 --> 00:21:35,720 we have across the state. And then, again, whether or not we count RECs towards our goal 220 00:21:35,720 --> 00:21:43,320 is certainly a local decision, but the RPS certainly provides some guidance as to how 221 00:21:43,320 --> 00:21:47,960 RECs are viewed, not just in the state of Texas, but really across the country. 222 00:21:47,960 --> 00:21:54,160 So what is a REC? So a REC is simply a title document, right, if you think about it like 223 00:21:54,160 --> 00:21:59,120 that. It's a property rights document that gives the owner of that document, whether 224 00:21:59,120 --> 00:22:06,880 or not you own the energy, the right to claim that you are renewable by that evidence, right? 225 00:22:06,880 --> 00:22:14,520 And so one REC is awarded for every one megawatt hour of energy that's actually generated from 226 00:22:14,520 --> 00:22:21,800 just those resources that I outlined for you in the RPS. And so, for example, rooftop solar 227 00:22:21,800 --> 00:22:27,720 locally does not get RECs, right, primarily because those tend to be behind the meter, 228 00:22:27,720 --> 00:22:32,480 right? So they're tied into our distribution system. There is no way for ARCOT to track 229 00:22:32,480 --> 00:22:37,120 that. Same thing with, to a large extent, from community solar. So if there was a community 230 00:22:37,120 --> 00:22:41,480 solar one megawatt installation, generally we would be looking at tying that into our 231 00:22:41,480 --> 00:22:46,720 distribution system, not into transmission. So it wouldn't necessarily be seen as a statewide 232 00:22:46,720 --> 00:22:53,520 resource. And so that would not also be, would not be eligible and receive a REC. RECs do 233 00:22:53,520 --> 00:23:00,080 have a three-year life. So whether they're produced on January 1st or December 31st, 234 00:23:00,080 --> 00:23:05,020 that's considered year one, and then it has two more years, right? And so RECs will either 235 00:23:05,020 --> 00:23:09,860 be retired, which is something that DME has not done, and it'll be part of our recommendations 236 00:23:09,860 --> 00:23:16,320 here today, or they just simply mature out, right? And so, but they do have a three-year 237 00:23:16,320 --> 00:23:22,360 life and there is a market in the wholesale market for those, something that we've tried 238 00:23:22,360 --> 00:23:31,080 to do. And it was part of the internal audit discussion was that when we buy RECs, we only 239 00:23:31,080 --> 00:23:37,080 buy RECs in the year, that are produced in the year in which we're going to count them, 240 00:23:37,080 --> 00:23:43,720 and so if we're 2024, we only bought RECs that were generated in 2024. We didn't buy 241 00:23:43,720 --> 00:23:50,120 RECs that were produced in 2022 or 2023, right? And I think that's just part of, part of my 242 00:23:50,120 --> 00:23:53,640 training, right? If you're familiar on the treasury side, there's, you know, new treasury 243 00:23:53,640 --> 00:23:57,640 issues, right, that are, that you don't have to go out and buy from broker. You can go 244 00:23:57,640 --> 00:24:03,720 to the treasury window, or you used to. I don't know if that's still even around, but 245 00:24:03,720 --> 00:24:08,840 that's what we kind of equated this to, right? And, and I think, I think it just holds more 246 00:24:08,840 --> 00:24:14,480 true to, I think what ultimately the community's goal has been. And then finally, I will also 247 00:24:14,480 --> 00:24:20,040 mention that certain solar resources actually also receive what's called compliance premiums, 248 00:24:20,040 --> 00:24:26,160 right? And that's just, that's just another document, another instrument that, that, that, 249 00:24:26,160 --> 00:24:32,240 that shows that that particular resource met certain requirements. In our view, for renewable 250 00:24:32,240 --> 00:24:38,440 resource that we have, if we get RECs and CP, while there is a CP market as well, we 251 00:24:38,440 --> 00:24:41,520 won't uncouple those, right? That's part of our recommendation that if, if we're going 252 00:24:41,520 --> 00:24:47,160 to retire the REC and we have a CP, a corresponding CP, we will retire that as well, right? And, 253 00:24:47,160 --> 00:24:52,040 and then finally, there is a guiding document that I provided to you in your backup that 254 00:24:52,040 --> 00:24:57,800 was produced by the, by the EPA and the Green Power Partnership that also explains what 255 00:24:57,800 --> 00:25:02,520 a REC is, right? And so much of the information that I'm providing to you, Dan, and I know 256 00:25:02,520 --> 00:25:07,840 I'm summarizing quite a bit, but you do, you did receive this particular document. I will 257 00:25:07,840 --> 00:25:12,740 mention to you that in this document, it does recognize that the RECs are legal property 258 00:25:12,740 --> 00:25:20,840 rights to the renewableness of a resource. It also verifies, I think, what the RPS said 259 00:25:20,840 --> 00:25:28,040 in that one REC equals one megawatt hour of renewable energy. And then electricity cannot be considered 260 00:25:28,040 --> 00:25:36,120 renewable without a REC to substantiate the renewableness of that, of that energy. Yes, sir. 261 00:25:36,120 --> 00:25:44,120 I'm curious with all of the discussions and votes and changes in Washington on the Green 262 00:25:44,120 --> 00:25:54,520 Power and such, is the EPA Green Power Partnership, is it affected by the ways and, and views 263 00:25:54,520 --> 00:26:00,320 and voting of Congress in Washington or is this, I'm just curious, is our guidelines 264 00:26:00,320 --> 00:26:06,360 stable all the way through regardless of what, who's in the offices? 265 00:26:06,360 --> 00:26:10,120 Yeah, I think, I think the way, what I would catch that with is it's, it's uncertain, 266 00:26:10,120 --> 00:26:17,400 you know, and so, yeah, and I mean, everything from, you know, 3000 percent tariffs on certain 267 00:26:17,400 --> 00:26:21,920 solar panels that are coming from, from Asia are certainly, and that goes to, to what's 268 00:26:21,920 --> 00:26:28,400 happening at the federal level that's, that's trickling down and, and frankly, already straining 269 00:26:28,400 --> 00:26:36,240 a supply chain that's, that's already, you know, several years behind in providing, you 270 00:26:36,240 --> 00:26:42,320 know, everything from, from raw materials to engines, right, that, that is also impacting 271 00:26:42,320 --> 00:26:50,440 development of new renewable resources across the country. 272 00:26:50,440 --> 00:26:55,920 So some of the other, you know, challenges, as I mentioned back in 2021, the internal 273 00:26:55,920 --> 00:27:01,040 auditor came in and some of the recommendations she made, some findings she had was one that 274 00:27:01,040 --> 00:27:08,120 the goal, the goal calculation was not defined within that 2018 study. 275 00:27:08,120 --> 00:27:15,360 We did work with her, and so how we count, how we account for that goal at the end of 276 00:27:15,360 --> 00:27:19,620 the year is something that was done in concert with the internal auditor. 277 00:27:19,620 --> 00:27:25,000 We provide annually an ISR, I think, I think we already provided, we're getting ready to 278 00:27:25,000 --> 00:27:30,180 send out the one for 2024 that spells out exactly how we do that. 279 00:27:30,180 --> 00:27:35,080 Basically it's an end of year calculation, right, what was our total load that was served, 280 00:27:35,080 --> 00:27:41,960 what was the total number of RECs that we had in our REC account at ERCOT, and then 281 00:27:41,960 --> 00:27:46,400 if we are, if we are short, then we try to then, then we go out in the open market and 282 00:27:46,400 --> 00:27:51,180 we acquire the differential and RECs to meet that gap. 283 00:27:51,180 --> 00:27:53,120 And that's basically the, the accounting. 284 00:27:53,120 --> 00:27:57,000 We certainly believe that that needs to be memorialized. 285 00:27:57,000 --> 00:28:04,880 And then no formal reporting of that goal, and so, so immediately after 2021 and 2022, 286 00:28:04,880 --> 00:28:09,520 we began to send out that ISR and we plan to continue to do that annual reporting back 287 00:28:09,520 --> 00:28:15,040 to the Council and the community of where we are with that goal. 288 00:28:15,040 --> 00:28:19,960 Certainly the need to update load increases and regulatory changes, we'll go through that 289 00:28:19,960 --> 00:28:24,460 and evaluate the cost benefits of RECs and CP retirements. 290 00:28:24,460 --> 00:28:29,240 And that there is a market for these RECs and these CPs. 291 00:28:29,240 --> 00:28:35,880 And so while we could monetize every single REC that we had, after we've counted it, we 292 00:28:35,880 --> 00:28:38,980 don't think that that certainly meets the spirit of what the community would want. 293 00:28:38,980 --> 00:28:43,360 And so part of our recommendation will be that once we count a REC towards that hundred 294 00:28:43,360 --> 00:28:46,000 percent renewable goal, that we retire it. 295 00:28:46,000 --> 00:28:49,040 Now if there are excess RECs, again, there is a market. 296 00:28:49,040 --> 00:28:54,600 And so if there is a situation where we have more, more RECs than we needed, then our recommendation 297 00:28:54,600 --> 00:28:59,160 would be to go out and monetize those on behalf of our ratepayers. 298 00:28:59,160 --> 00:29:09,160 And then finally, the large load issue, SB6 is currently at the legislature that will 299 00:29:09,160 --> 00:29:12,480 try to address a lot of issues regarding large loads. 300 00:29:12,480 --> 00:29:18,520 We're certainly working on some strategies and once SB6 is determined, whether it passes 301 00:29:18,520 --> 00:29:23,580 or not, then we're going to be brushing up some of the requirements and strategies for 302 00:29:23,580 --> 00:29:25,280 large loads. 303 00:29:25,280 --> 00:29:29,680 Currently we've targeted 5 megawatts as a large load. 304 00:29:29,680 --> 00:29:33,320 SB6, I think, has it a little bit higher, right? 305 00:29:33,320 --> 00:29:38,840 So we certainly want to make sure that we're in concert with SB6. 306 00:29:38,840 --> 00:29:48,500 But large loads do pose a risk to our ratepayers when it comes to not just potential bankruptcy 307 00:29:48,500 --> 00:29:53,740 and failures, but certainly when you've entered into a long-term contract, like a winter solar 308 00:29:53,740 --> 00:30:02,120 contract for 15 or 20 years, it does expose you to additional challenges, right, and that 309 00:30:02,120 --> 00:30:05,960 you may end up with very long position, more than you need. 310 00:30:05,960 --> 00:30:11,600 And so you're familiar with the City of Georgetown, that's part of the challenges that they had. 311 00:30:11,600 --> 00:30:17,240 They went out and procured over 200% more in renewable energy than they needed. 312 00:30:17,240 --> 00:30:21,000 Their forecast did not come in, so they were very long energy, and they're still trying 313 00:30:21,000 --> 00:30:23,280 to uncouple many of those contracts. 314 00:30:23,280 --> 00:30:26,040 And certainly we'd like to avoid that. 315 00:30:26,040 --> 00:30:30,120 And so taking a reasonable and prudent strategy when it comes to large loads is also part 316 00:30:30,120 --> 00:30:34,000 of the recommendation that we're going to make today. 317 00:30:34,000 --> 00:30:39,040 And so again, to kind of staff recommendations for part one, and then I'll certainly stop 318 00:30:39,040 --> 00:30:47,940 after that, see if you have any questions, we certainly believe that having a city policy 319 00:30:47,940 --> 00:30:52,680 that we'd like to call the renewable energy policy, that really outlines what the purpose 320 00:30:52,680 --> 00:30:54,760 is here. 321 00:30:54,760 --> 00:30:58,080 One that this is really an offset goal, right? 322 00:30:58,080 --> 00:31:04,080 Again, those resources, whether it's a winter solar resource or it's a thermal resource 323 00:31:04,080 --> 00:31:08,800 or whatever, all of those are interconnected into the ERCA grid. 324 00:31:08,800 --> 00:31:14,760 And so that power doesn't necessarily flow directly into our homes here in Denton, right? 325 00:31:14,760 --> 00:31:18,160 We're all part of one large pool. 326 00:31:18,160 --> 00:31:24,960 And so now if we have a local resource, community solar project, I think we can certainly make 327 00:31:24,960 --> 00:31:29,520 that argument that those just physically, right, that that energy flows to our homes 328 00:31:29,520 --> 00:31:34,720 just like rooftop solar on a business or a residence. 329 00:31:34,720 --> 00:31:40,800 And then we would also recommend that we tie the allowable resources that can be recognized 330 00:31:40,800 --> 00:31:45,400 within the city policy to those that are outlined within the RPS. 331 00:31:45,400 --> 00:31:50,880 And then we would like to also then outline the treatment of renewable energy credits, 332 00:31:50,880 --> 00:31:52,920 one that we will retire them, right? 333 00:31:52,920 --> 00:31:54,720 We're not going to be holding those to maturity. 334 00:31:54,720 --> 00:31:58,240 We'll not be monetizing those up to our 100% goal. 335 00:31:58,240 --> 00:32:06,600 Now, I understand that the possibility of that happening where we end up with excess 336 00:32:06,600 --> 00:32:13,640 recs from our PPAs and renewable resources is very unlikely unless we adopt a strategy 337 00:32:13,640 --> 00:32:21,760 like Georgetown where we're now going to have more than 100% or 200% more renewable energy 338 00:32:21,760 --> 00:32:25,160 than what we actually anticipate that we would need. 339 00:32:25,160 --> 00:32:30,560 But that if we are in a situation where we do have excess recs, that we'd be allowed 340 00:32:30,560 --> 00:32:36,440 to sell those on the open market and not to necessarily let those roll over, right? 341 00:32:36,440 --> 00:32:41,880 Again, our recommendation here is that we count recs that are generated in the same 342 00:32:41,880 --> 00:32:45,400 year in which we're counting it towards our goal. 343 00:32:45,400 --> 00:32:51,320 So now if I have a rollover rec from 2024 to 2025, now I've kind of violated that particular 344 00:32:51,320 --> 00:32:52,320 principle. 345 00:32:52,320 --> 00:32:55,760 But certainly, again, that is our recommendation. 346 00:32:55,760 --> 00:32:59,760 And then when needed to meet the 100% renewable goal that we go out there and we purchase 347 00:32:59,760 --> 00:33:05,040 recs with CP, depending on the resource, and only those that are generated in the same 348 00:33:05,040 --> 00:33:06,920 year that were counted. 349 00:33:06,920 --> 00:33:11,520 And then for large loads, our recommendation is that we take a reasonable, prudent approach, 350 00:33:11,520 --> 00:33:12,520 right? 351 00:33:12,520 --> 00:33:18,600 Not all these resources or these loads, certainly those that we're seeing and we continue to 352 00:33:18,600 --> 00:33:23,680 see interest in large loads wanting to come into the city. 353 00:33:23,680 --> 00:33:26,600 Some may be real, some may not be real. 354 00:33:26,600 --> 00:33:34,040 Some may be legitimate and backed by very large corporations, whether they be financial 355 00:33:34,040 --> 00:33:38,960 or business entities, they have very high ratings, or they may be very speculative, 356 00:33:38,960 --> 00:33:39,960 right? 357 00:33:39,960 --> 00:33:45,560 Let me kind of equate them to the wildcatters, if you're familiar with the oil and gas industry. 358 00:33:45,560 --> 00:33:50,720 There's a number of speculators that go out there and enter into contracts for mineral 359 00:33:50,720 --> 00:33:53,280 rights with the hope that they're going to hit something, right? 360 00:33:53,280 --> 00:33:57,840 And so the same thing here, we're seeing data centers that want to come to Denton, want 361 00:33:57,840 --> 00:34:03,440 to build 100 megawatts, 300 megawatts, get me energized, and then I'll market it to people 362 00:34:03,440 --> 00:34:04,440 that may be interested. 363 00:34:04,440 --> 00:34:06,120 Those are very speculative. 364 00:34:06,120 --> 00:34:11,600 For us to go out there and enter into a 15-, 20-year contract on a speculative type of data 365 00:34:11,600 --> 00:34:16,820 center really poses a very big risk to the utility and to our ratepayers. 366 00:34:16,820 --> 00:34:21,920 And so our recommendation is to kind of take a prudent approach, let us evaluate each resource, 367 00:34:21,920 --> 00:34:27,560 and even if they're legitimate, maybe we don't do a long-term 15-, 20-year PPA. 368 00:34:27,560 --> 00:34:32,320 Maybe we do a short-term two- or three-year deal out in the open market that's also tied 369 00:34:32,320 --> 00:34:34,400 with renewable energy credits. 370 00:34:34,400 --> 00:34:39,480 And then within this policy, we would anticipate that we would spell out how that goal is supposed 371 00:34:39,480 --> 00:34:44,880 to be calculated, that there would be an annual reporting requirement back to the PAB and 372 00:34:44,880 --> 00:34:49,440 the council, and of course, a glossary of all the wonderful acronyms that we use in 373 00:34:49,440 --> 00:34:50,440 the industry. 374 00:34:50,440 --> 00:35:06,800 So I'm going to stop here and see if you have any questions on part one. 375 00:35:06,800 --> 00:35:24,280 So just want to review, could we go back to the slide that showed the 2021 to 2024? 376 00:35:24,280 --> 00:35:32,320 So we had 262,800 RECs coming from the Whitetail Wind Project, which we were buying physical 377 00:35:32,320 --> 00:35:42,040 power from, and then we were also buying RECs, additional RECs, tied to that physical facility. 378 00:35:42,040 --> 00:35:48,600 When did we buy the additional RECs in '22, '23, '24? 379 00:35:48,600 --> 00:35:50,840 We bought them in that particular year. 380 00:35:50,840 --> 00:35:56,800 Actually, we tend to buy them after the calendar year once we've reconciled, and if we're short, 381 00:35:56,800 --> 00:36:00,900 we go out in the open market and we buy those RECs, but we're making sure that they're RECs 382 00:36:00,900 --> 00:36:02,640 that were generated in that same year. 383 00:36:02,640 --> 00:36:06,760 So kind of like spring 2023, we would have bought the RECs in '24, '23? 384 00:36:06,760 --> 00:36:07,760 That's correct. 385 00:36:07,760 --> 00:36:08,760 That's correct. 386 00:36:08,760 --> 00:36:09,760 Okay. 387 00:36:09,760 --> 00:36:18,800 So in 2016, we had this 70% goal, and there was public outcry that it was a 70% goal and 388 00:36:18,800 --> 00:36:24,320 not 100% goal, and so in two years, less than two years, there was enough political will 389 00:36:24,320 --> 00:36:27,400 to change to 100% goal. 390 00:36:27,400 --> 00:36:34,760 And at the time, there were lots of concerns because solar was basically non-existent. 391 00:36:34,760 --> 00:36:43,440 We were looking at wind farms, and the discussion then was of buying RECs, and Denton actually 392 00:36:43,440 --> 00:36:49,600 had the Green Sense energy program where you could pay an extra 0.3 cents per kilowatt 393 00:36:49,600 --> 00:36:56,800 hour, and DME would green up that energy just like Green Mountain did or some of those other 394 00:36:56,800 --> 00:36:59,840 providers by purchasing RECs. 395 00:36:59,840 --> 00:37:07,280 And at the 100% goal discussions, the concept of just buying RECs was offered, and the alternative 396 00:37:07,280 --> 00:37:15,000 was that DME was going to have to generate 120% or 130% of the power needed for the city 397 00:37:15,000 --> 00:37:24,920 and then still run the deck or purchase from real-time market another 10% or 15%. 398 00:37:24,920 --> 00:37:30,360 And it was going to cost about one cent per kilowatt hour, that was 2018 discussions. 399 00:37:30,360 --> 00:37:38,720 And the city approved it, the voters elected council members who supported it and councils 400 00:37:38,720 --> 00:37:41,440 targeted that goal. 401 00:37:41,440 --> 00:37:48,680 When we get to 2021, 2020, the whitetail wind resources was just seen as like, oh, they've 402 00:37:48,680 --> 00:37:52,160 offered this opportunity to buy these RECs at a pretty low cost. 403 00:37:52,160 --> 00:37:59,960 And it was maybe the camel's nose in the tent on using RECs because up until that point, 404 00:37:59,960 --> 00:38:02,080 none of that 100% goal was REC-based. 405 00:38:02,080 --> 00:38:06,440 It was, we're going to overbuy power and we're going to have to sell some of that power back 406 00:38:06,440 --> 00:38:12,080 onto the system, and we're still going to have to have fossil fuels support us because 407 00:38:12,080 --> 00:38:18,600 there isn't yet long-term storage in our cot, but the city was committed to it. 408 00:38:18,600 --> 00:38:23,280 And then we started with, well, we have physical RECs tied to a physical generator that we're 409 00:38:23,280 --> 00:38:27,840 already buying power from, so we're still supporting this wind farm that we're also 410 00:38:27,840 --> 00:38:31,640 buying power from, and that was the camel's nose. 411 00:38:31,640 --> 00:38:35,320 And then it's like, oh, well, we need another 70,000 megawatts of RECs. 412 00:38:35,320 --> 00:38:40,880 We can buy them for a buck 50 on the market, and so we'll do that. 413 00:38:40,880 --> 00:38:47,360 And I feel like now we're, this document seems to be veering more and more toward, well, 414 00:38:47,360 --> 00:38:54,480 we can just spend a buck 50 a megawatt and buy RECs for everything, and large loads do 415 00:38:54,480 --> 00:38:55,600 present a risk. 416 00:38:55,600 --> 00:39:02,840 If we have a 300 megawatt load and that company closes up shop for any reason, moves down 417 00:39:02,840 --> 00:39:09,080 the road, ceases to exist, changes their technology and doesn't need the power, if we've bought 418 00:39:09,080 --> 00:39:14,360 20 years of power for them, then we have to sell that power on the market and hope that 419 00:39:14,360 --> 00:39:19,520 prices stay at the level we purchased that power from. 420 00:39:19,520 --> 00:39:28,240 But what we found with our renewables is our renewables are cheaper than market prices. 421 00:39:28,240 --> 00:39:33,320 And I don't know if that's true this year, but I know last year y'all presented that 422 00:39:33,320 --> 00:39:40,680 our wind farm, our PPA, our solar PPAs were so-called in the money. 423 00:39:40,680 --> 00:39:47,680 They were cheaper than, on an annual basis, than buying real-time or long-term power. 424 00:39:47,680 --> 00:39:54,580 So I feel the same pessimism that was brought up in 2018 about how we're going to overbuy 425 00:39:54,580 --> 00:40:01,960 and we're going to be selling at a loss, and so it would be simpler if we just buy RECs. 426 00:40:01,960 --> 00:40:03,920 But that isn't what we've experienced. 427 00:40:03,920 --> 00:40:06,040 Now I know it's a lot harder to plan. 428 00:40:06,040 --> 00:40:12,120 It's much more complicated because you have to predict, and wind and solar, wind especially 429 00:40:12,120 --> 00:40:20,200 is not accurate until you're maybe 72 to 48 hours ahead, so you have to either purchase 430 00:40:20,200 --> 00:40:25,640 way too much energy and try and sell back the excess, or you have to be very responsive 431 00:40:25,640 --> 00:40:29,520 in your planning. 432 00:40:29,520 --> 00:40:42,080 And I would gladly support expanding an energy office to do that work, do that hard work 433 00:40:42,080 --> 00:40:49,360 above just buying RECs, because RECs are, every solar and wind project and hydro project 434 00:40:49,360 --> 00:40:54,400 in Texas just kind of dumps their excess RECs from last year. 435 00:40:54,400 --> 00:41:03,120 And they're $1.50 a megawatt, which is a tiny, tiny fraction of the value of the energy. 436 00:41:03,120 --> 00:41:06,720 You mentioned buying, if we hadn't bought $600,000 in RECs, we would have had to buy 437 00:41:06,720 --> 00:41:08,280 $5 million in energy. 438 00:41:08,280 --> 00:41:09,280 $2 million. 439 00:41:09,280 --> 00:41:10,360 Or $2 million, I'm sorry. 440 00:41:10,360 --> 00:41:14,200 But then we would have had $2 million in energy that we may not have needed to consume, but 441 00:41:14,200 --> 00:41:18,280 we then could have also, it would have had a value because it would have been sold. 442 00:41:18,280 --> 00:41:22,900 So maybe it wouldn't have netted out a profit, but it might have broken even. 443 00:41:22,900 --> 00:41:29,320 And so we could have been supporting, I think sticking with the citizen goal of supporting 444 00:41:29,320 --> 00:41:39,840 renewable energy in Texas by directly supporting a solar farm, a wind farm, a battery or hybrid 445 00:41:39,840 --> 00:41:42,080 or hydro installation. 446 00:41:42,080 --> 00:41:51,020 Yeah, so certainly a lot there, board member. 447 00:41:51,020 --> 00:41:57,560 We acknowledge that since 2018, a lot of things have evolved, right? 448 00:41:57,560 --> 00:42:06,480 And so while yes, you're right in that our current PPAs may very well be in the money. 449 00:42:06,480 --> 00:42:13,720 The reality is that when we're looking to serve our load and we're looking and planning 450 00:42:13,720 --> 00:42:20,880 for when do we need to mitigate the most risk to our repairs, the renewables just aren't 451 00:42:20,880 --> 00:42:26,920 sufficient and that's why they're considered intermittent resources. 452 00:42:26,920 --> 00:42:27,920 You don't control them. 453 00:42:27,920 --> 00:42:28,920 You don't push a button. 454 00:42:28,920 --> 00:42:32,640 You don't turn on an engine when you need it. 455 00:42:32,640 --> 00:42:36,040 It produces when it produces and you get what you get. 456 00:42:36,040 --> 00:42:40,440 The other thing, too, that I will tell you is that while those resources that we executed 457 00:42:40,440 --> 00:42:49,080 10 years ago may be in the money, where we're seeing them today, where they're being priced, 458 00:42:49,080 --> 00:42:51,120 they're out of the money, right? 459 00:42:51,120 --> 00:42:57,320 And so to enter into a 15, 20 year wind and solar contract today means you're going to 460 00:42:57,320 --> 00:42:59,640 pay more, right? 461 00:42:59,640 --> 00:43:06,400 And again, I can't go into the proposals that we're seeing, but I can tell you that's what 462 00:43:06,400 --> 00:43:07,400 you're going to see, right? 463 00:43:07,400 --> 00:43:12,120 And so what the council, what the POB is going to have to decide is are we willing to pay 464 00:43:12,120 --> 00:43:20,200 more for those resources that may be in the money 10 years from today, but today we're 465 00:43:20,200 --> 00:43:22,720 paying more, right? 466 00:43:22,720 --> 00:43:28,800 In light of the fact that we've already raised rates for our customers, right, 25%, right, 467 00:43:28,800 --> 00:43:29,800 for the energy. 468 00:43:29,800 --> 00:43:34,100 So now you're going to be adding additional cost to our repairs. 469 00:43:34,100 --> 00:43:38,880 So the other thing, too, that I'll mention to you is that while we certainly understand 470 00:43:38,880 --> 00:43:45,600 and we've certainly been supportive of this renewable, 100% renewable goal, if the resources 471 00:43:45,600 --> 00:43:53,200 aren't there to contract with them, then the goal isn't, I mean, it's just a goal on paper, 472 00:43:53,200 --> 00:43:54,200 right? 473 00:43:54,200 --> 00:43:55,200 And we'll continue to not meet that goal. 474 00:43:55,200 --> 00:44:03,040 And that's what we're seeing today, both with PPAs that we already had in place that have 475 00:44:03,040 --> 00:44:07,520 been subjected to things like force majeure because they can't get panels or they can't 476 00:44:07,520 --> 00:44:08,520 get engines, right? 477 00:44:08,520 --> 00:44:14,640 So we're having to work with those resources, and in many cases they're looking to pass 478 00:44:14,640 --> 00:44:22,100 on additional costs back to us that then makes that PPA out of the money as well, right? 479 00:44:22,100 --> 00:44:24,680 And then the other thing that I'll mention to you is that, and I'll talk a little bit 480 00:44:24,680 --> 00:44:30,560 about it in a little bit when it comes to things like firming requirements, right? 481 00:44:30,560 --> 00:44:38,400 And so if these renewable resources are required to firm their energy, that additional cost 482 00:44:38,400 --> 00:44:40,480 will come back to us in a PPA. 483 00:44:40,480 --> 00:44:44,240 I mean, we're looking at a PPA today that's already telling us that we're going to be 484 00:44:44,240 --> 00:44:50,600 looking at probably an additional seven cents on top of the PPA contract that we had, right? 485 00:44:50,600 --> 00:44:56,360 That seven cents potentially makes that resource, takes that resource out of the money, right? 486 00:44:56,360 --> 00:45:00,040 And so that's also the reality, right, of what we're seeing. 487 00:45:00,040 --> 00:45:06,800 And we certainly understand kind of your position and what others are saying in the community, 488 00:45:06,800 --> 00:45:11,160 but if I can't go get those resources, then I'm never going to be at 100% renewable. 489 00:45:11,160 --> 00:45:16,960 Even if I tried to go out there and contract for 200% more, which I'll just be honest with 490 00:45:16,960 --> 00:45:21,160 you, that's not something that myself and my staff will be recommending to you. 491 00:45:21,160 --> 00:45:24,960 So we would have to get that direction from you and the council to go out there and contract 492 00:45:24,960 --> 00:45:31,200 for more than 200% because that is going to be additional price risk, right, on our countries. 493 00:45:31,200 --> 00:45:34,160 Are you done? 494 00:45:34,160 --> 00:45:36,360 No, when you're done. 495 00:45:36,360 --> 00:45:45,960 So a question, as you talked about the renewable versus the rec, and we're buying these recs, 496 00:45:45,960 --> 00:45:50,480 and there's a concern you have on some of these renewables are lagging, whatever the 497 00:45:50,480 --> 00:45:57,160 reason is, is there a percentage that's in your head or on paper that if the renewables 498 00:45:57,160 --> 00:46:02,280 go to a certain level, then we're going to be buying these recs regardless? 499 00:46:02,280 --> 00:46:09,640 Because if we've made a commitment to the citizens, we need to, I think I need a little 500 00:46:09,640 --> 00:46:14,760 bit more verbiage to defend the recs versus the amount of recs that we're going to be 501 00:46:14,760 --> 00:46:20,320 buying, realizing there's just so much that you can pull on the renewables. 502 00:46:20,320 --> 00:46:30,200 But are the renewables in a situation that gives you grave concern that we need to be 503 00:46:30,200 --> 00:46:34,240 looking at additional recs than what we've been doing? 504 00:46:34,240 --> 00:46:35,540 Yeah, absolutely. 505 00:46:35,540 --> 00:46:41,600 I think across the state, the issue of reliability is a real issue, right? 506 00:46:41,600 --> 00:46:48,680 And so the ERCOT grid has to maintain a certain level of energy, right, 60 hertz, right? 507 00:46:48,680 --> 00:46:53,920 And so for you to be able to maintain that, you have to have resources that are not necessarily 508 00:46:53,920 --> 00:46:56,900 intermittent, but that you know you're going to be able to count on, right? 509 00:46:56,900 --> 00:47:02,800 And so as more and more of these resources have come into the market, that then has posed 510 00:47:02,800 --> 00:47:03,960 just physical, right? 511 00:47:03,960 --> 00:47:07,280 But I've got two engineers that are sitting right there that can come explain to you better 512 00:47:07,280 --> 00:47:09,000 than I can, right? 513 00:47:09,000 --> 00:47:13,280 But being able to maintain those 60 hertz and be able to keep the power on for all the 514 00:47:13,280 --> 00:47:18,340 state of Texas, right, is something that is very, very critical, right, and why the state 515 00:47:18,340 --> 00:47:22,280 is actually looking, right, one of the bills that they're looking at, as capping the amount 516 00:47:22,280 --> 00:47:27,840 of new generation going forward, right, that they would cap renewable resources to more 517 00:47:27,840 --> 00:47:32,200 than 50 percent of the total resources that come into, that are allowed to come into the 518 00:47:32,200 --> 00:47:33,880 market going forward, right? 519 00:47:33,880 --> 00:47:38,680 So there is a natural cap, because again, what the state is looking at and seeing is 520 00:47:38,680 --> 00:47:43,360 that these resources are, from a reliability standpoint, are making it difficult to continue 521 00:47:43,360 --> 00:47:47,440 to manage and maintain that grid at the 60 hertz, right? 522 00:47:47,440 --> 00:47:54,000 And so the other thing, too, is that as these resources continue to come into play -- and, 523 00:47:54,000 --> 00:47:58,840 Mr. Taylor, I -- you know, listen, we think storage is important, and we think there's 524 00:47:58,840 --> 00:48:04,680 a place for storage, and I think storage can certainly provide some of that reliability, 525 00:48:04,680 --> 00:48:06,320 some of that stability. 526 00:48:06,320 --> 00:48:11,280 But what's in the market today, really, and what's economical, is two-hour batteries. 527 00:48:11,280 --> 00:48:14,520 There are some four hours and there's some six hours, but, you know, the economics on 528 00:48:14,520 --> 00:48:17,600 those are just not there quite yet, right? 529 00:48:17,600 --> 00:48:23,660 And so two-hour battery, you know, for summer of '23, when we saw price spikes that lasted 530 00:48:23,660 --> 00:48:28,600 for four hours and we incurred, you know, $31 million, right, a two-hour battery would 531 00:48:28,600 --> 00:48:30,280 have cut that in half, right? 532 00:48:30,280 --> 00:48:35,600 And it's something that we're looking at, right, but again, those resources are just 533 00:48:35,600 --> 00:48:41,000 not fully developed and they continue to pose challenges. 534 00:48:41,000 --> 00:48:45,000 What I would tell you is that, you know, our recommendation is to really separate these 535 00:48:45,000 --> 00:48:46,000 goals out, right? 536 00:48:46,000 --> 00:48:53,160 So you have the 100 percent renewable goal that is predicated on renewable energy if 537 00:48:53,160 --> 00:48:59,240 it's available, if it's there, right, and then you meet the gap with RECs, but then there's 538 00:48:59,240 --> 00:49:04,960 this other conversation of, right, what is the right generation mix for our utility, 539 00:49:04,960 --> 00:49:05,960 right? 540 00:49:05,960 --> 00:49:11,260 And what I would tell you is I equate it to taking your entire life savings and putting 541 00:49:11,260 --> 00:49:14,520 it all in Coca-Cola stock, right? 542 00:49:14,520 --> 00:49:18,480 It poses a huge risk, right, to your future well-being, right? 543 00:49:18,480 --> 00:49:24,760 And what we've done here, right, what we tried to do here is to place our entire generation 544 00:49:24,760 --> 00:49:28,780 in one type, and that's all intermittent, it's all renewable, right? 545 00:49:28,780 --> 00:49:34,720 And so, yes, we have a power plant, 225 megawatts, that is woefully insufficient. 546 00:49:34,720 --> 00:49:39,680 And so looking at, you know, what is the right mix, right, to your point, you know, what 547 00:49:39,680 --> 00:49:45,200 is the right mix of renewable energy within our total portfolio, you know? 548 00:49:45,200 --> 00:49:48,480 I would tell you today, I don't believe it's 100 percent. 549 00:49:48,480 --> 00:49:50,920 You know, I also don't believe it's zero, right? 550 00:49:50,920 --> 00:49:55,360 And so part of the recommendation will be to go out there and do an integrated resource 551 00:49:55,360 --> 00:50:00,520 plan that will do that, will tell us what should that percentage be and what other resources 552 00:50:00,520 --> 00:50:02,240 should you have, right? 553 00:50:02,240 --> 00:50:07,200 And within those additional resources, there's an abundant number of resources, right? 554 00:50:07,200 --> 00:50:12,520 There's geothermal, you know, there's small modular reactors that are currently being 555 00:50:12,520 --> 00:50:15,760 prototyped, you know, there's nuclear as well, you know? 556 00:50:15,760 --> 00:50:18,760 And so there's a number of other resources out there that we really should be looking 557 00:50:18,760 --> 00:50:26,960 at and looking at how do we manage the generation needs, right, for this utility, not for the 558 00:50:26,960 --> 00:50:31,760 next five years, but for the next 20 or 30 years, right? 559 00:50:31,760 --> 00:50:35,760 A nuclear facility today, whether it's an – whether it's an SMR or it's a traditional 560 00:50:35,760 --> 00:50:41,400 nuke, right, a 10-year permitting process, right, just to get it permitted, and then 561 00:50:41,400 --> 00:50:44,680 you're looking at another 10 years to develop that, right? 562 00:50:44,680 --> 00:50:49,120 And let me tell you, nobody builds a traditional nuke by themselves, right? 563 00:50:49,120 --> 00:50:54,520 And so you generally have to be party with other people on a project like that, on top 564 00:50:54,520 --> 00:50:59,400 of the fact that today we don't have, even with our projected load, we don't have the 565 00:50:59,400 --> 00:51:03,720 load to substantiate a nuclear facility by ourselves, right? 566 00:51:03,720 --> 00:51:07,520 So it would – it would require us to partner with someone to do that. 567 00:51:07,520 --> 00:51:13,000 And let me tell you, today, while there's growing interest in nuclear in the state, 568 00:51:13,000 --> 00:51:16,840 there's nobody out there that said, "Yeah, we want to be the first ones out the gate," 569 00:51:16,840 --> 00:51:17,840 right? 570 00:51:17,840 --> 00:51:21,600 But looking for those opportunities is certainly something that we think we'll continue to 571 00:51:21,600 --> 00:51:22,600 need. 572 00:51:22,600 --> 00:51:25,560 And the other thing that I'll mention to you is that, you know, while we have a quickstart 573 00:51:25,560 --> 00:51:31,000 generation facility, and we think that that facility has been great for backing up when 574 00:51:31,000 --> 00:51:33,560 the wind doesn't – you know, blowing, the sun doesn't shine – I said I would 575 00:51:33,560 --> 00:51:38,720 never say that, but I just did – you know, the reality is that as our load continues 576 00:51:38,720 --> 00:51:42,800 to grow, even a quickstart generation facility will not be sufficient. 577 00:51:42,800 --> 00:51:47,880 We will be looking at and needing a base load unit, right, something that is on all the 578 00:51:47,880 --> 00:51:58,240 time, so. 579 00:51:58,240 --> 00:52:11,040 I don't know the rules. 580 00:52:11,040 --> 00:52:12,040 Sounds interesting. 581 00:52:12,040 --> 00:52:16,320 So does that fall in line with what you had mentioned earlier about having an electric 582 00:52:16,320 --> 00:52:19,840 oversee type office or administrators? 583 00:52:19,840 --> 00:52:30,520 It sounds like that that would create that type of need, or am I – have I missed that? 584 00:52:30,520 --> 00:52:31,520 Yeah. 585 00:52:31,520 --> 00:52:36,960 So we currently, I believe, have a – I don't know the exact name – Energy Trade – 586 00:52:36,960 --> 00:52:38,960 Energy Management Organization. 587 00:52:38,960 --> 00:52:43,840 Energy Management Organization, which has a group of folks that are – they're balancing 588 00:52:43,840 --> 00:52:49,220 the next three years and the next three months and the next, you know, week. 589 00:52:49,220 --> 00:52:55,460 And so, you know, and then three-year planning, one-year planning, you know, they're using 590 00:52:55,460 --> 00:53:02,280 different tools at all those depths, you know, and I think – and I don't know if they 591 00:53:02,280 --> 00:53:05,280 schedule the deck or if the deck is strictly ERCOT scheduled. 592 00:53:05,280 --> 00:53:10,520 No, the deck is scheduled by us, based on market signals. 593 00:53:10,520 --> 00:53:16,480 Yeah, so then – so they do everything from forecasting, you know, what all the intermittents 594 00:53:16,480 --> 00:53:21,640 are going to do to buying short and medium term, you know, in between and then turning 595 00:53:21,640 --> 00:53:23,920 on the power plant. 596 00:53:23,920 --> 00:53:29,480 You know, I think there's – there were a lot of ifs in what you brought up. 597 00:53:29,480 --> 00:53:33,840 If the legislature passes a bill, you know, and honestly, if the legislature passes a 598 00:53:33,840 --> 00:53:38,320 bill that makes it harder to build renewable, it'll – you know, a recent study came 599 00:53:38,320 --> 00:53:43,400 out of UT that said it's going to increase power costs by 50% to 70% in Texas, and anybody 600 00:53:43,400 --> 00:53:48,680 that owns a long-term PPA with renewables is going to be printing money, because they 601 00:53:48,680 --> 00:53:54,120 bought it at 30% and they're going to sell it at 50% to 70% higher than it is now. 602 00:53:54,120 --> 00:54:00,240 So until that law passes, you know, we won't know the impacts, but it won't actually 603 00:54:00,240 --> 00:54:03,720 – it wouldn't be a negative for owning renewable, it would be a negative for building 604 00:54:03,720 --> 00:54:04,720 future renewable. 605 00:54:04,720 --> 00:54:09,880 Well, I would just say it could be a negative, Mr. Taylor, in that, you know, the current 606 00:54:09,880 --> 00:54:14,720 iteration of that particular bill doesn't grandfather existing resources, and so even 607 00:54:14,720 --> 00:54:19,320 existing resources would have to firm up, right, and if they have to firm up, they will 608 00:54:19,320 --> 00:54:20,680 not be in the money any longer. 609 00:54:20,680 --> 00:54:24,960 Yeah, and I think there are, you know, a lot of other ifs about, like, if renewables are 610 00:54:24,960 --> 00:54:25,960 available. 611 00:54:25,960 --> 00:54:30,640 Well, there are 40,000 megawatts of wind and there's 25,000 megawatts of solar and there's 612 00:54:30,640 --> 00:54:33,800 10,000 megawatts of battery. 613 00:54:33,800 --> 00:54:38,320 And you know, we're – well, we've got, like, 500 or something, 500 megawatts. 614 00:54:38,320 --> 00:54:42,680 And so now I think it's if they're available at a price we're willing to pay, you know, 615 00:54:42,680 --> 00:54:47,960 or if we think that's a competitive rate, you know, more than – like, I completely 616 00:54:47,960 --> 00:54:53,200 agree with we set a goal and then we try and execute the goal and we adjust as that goal 617 00:54:53,200 --> 00:54:55,040 goes forward. 618 00:54:55,040 --> 00:55:02,720 On the goal, I – you know, my understanding was 100% renewable was the goal and 100% renewable 619 00:55:02,720 --> 00:55:06,520 meant we were going to overpurchase and we still needed a quick start plan for financial 620 00:55:06,520 --> 00:55:10,280 backstop and we still – like, this was the 2018 goal. 621 00:55:10,280 --> 00:55:15,360 I don't know if the will of the people has changed or, you know, if council no longer 622 00:55:15,360 --> 00:55:18,080 thinks that's the goal. 623 00:55:18,080 --> 00:55:25,800 So I think if whatever we bring forward, moving forward, you know, we might need, you know, 624 00:55:25,800 --> 00:55:36,040 resident input or, you know, some way to make sure that if we think that they're like – that 625 00:55:36,040 --> 00:55:41,060 the goal has shifted that, you know, then we need to make sure that that's correct. 626 00:55:41,060 --> 00:55:46,240 Now I do agree separating the goal from – because then there's this tactical thing of, well, 627 00:55:46,240 --> 00:55:50,040 this year there's some crazy, you know, thing at the legislature. 628 00:55:50,040 --> 00:55:57,400 This year solar panels from wherever have, you know, a tariff or this year gas turbines, 629 00:55:57,400 --> 00:56:01,840 you know, plant shut down in Brazil or whatever. 630 00:56:01,840 --> 00:56:05,240 So I think we separate the goal from the implementation. 631 00:56:05,240 --> 00:56:07,960 I think that actually is your next part of your presentation. 632 00:56:07,960 --> 00:56:13,200 So the 2018 plan actually had three options. 633 00:56:13,200 --> 00:56:19,860 The first option was to go out there and secure additional solar contracts, right, immediately 634 00:56:19,860 --> 00:56:22,120 to reach that goal by 2020, right? 635 00:56:22,120 --> 00:56:23,920 That was kind of option one. 636 00:56:23,920 --> 00:56:30,120 Option two was to reach the goal by 2024 with what the plan identified as coastal wind, 637 00:56:30,120 --> 00:56:31,120 right? 638 00:56:31,120 --> 00:56:32,120 And we attempted to do that. 639 00:56:32,120 --> 00:56:34,440 It just was not available, right? 640 00:56:34,440 --> 00:56:41,920 And so you could have gotten coastal wind and reached that goal by 2024 or option two 641 00:56:41,920 --> 00:56:46,080 B was utilize the recs, right? 642 00:56:46,080 --> 00:56:52,200 Now in a final decision by this board, obviously a different board, and by the council was 643 00:56:52,200 --> 00:56:56,720 to not count those recs, right? 644 00:56:56,720 --> 00:57:02,800 As myself and Terry Nolte at the time, you know, came to DME and started looking at that 645 00:57:02,800 --> 00:57:03,800 entire discussion. 646 00:57:03,800 --> 00:57:09,200 We had a discussion with the consultants and they agreed that maybe the information that 647 00:57:09,200 --> 00:57:13,440 had gone to the council, to the PAV hadn't been 100 percent accurate, right, or as clear, 648 00:57:13,440 --> 00:57:14,440 right? 649 00:57:14,440 --> 00:57:18,680 That's why I've attached to you a letter, right, that I attached in your backup from 650 00:57:18,680 --> 00:57:25,440 the consultants, right, making clear that counting recs is a viable option, right? 651 00:57:25,440 --> 00:57:31,440 And it is a standard option, right, that companies out there, entities utilize, right? 652 00:57:31,440 --> 00:57:38,120 So counting, using recs to count towards 100 percent renewable goals is actually the standard 653 00:57:38,120 --> 00:57:41,960 and not the exception, right? 654 00:57:41,960 --> 00:57:47,440 There was, I think, within some in our community, that the goal was going to be achieved with 655 00:57:47,440 --> 00:57:49,960 energy only, right? 656 00:57:49,960 --> 00:57:54,840 But there was still a misunderstanding that those energy contracts, the evidence behind 657 00:57:54,840 --> 00:57:58,920 that energy isn't the energy, it is the rec, right? 658 00:57:58,920 --> 00:58:03,160 It is the rec that we count, right, as the evidence that that was produced, right? 659 00:58:03,160 --> 00:58:11,160 And so if a rec is the evidence for the energy for our PPAs, it's also the evidence for other 660 00:58:11,160 --> 00:58:15,960 generation of renewable energy in other places where we don't have PPAs, right? 661 00:58:15,960 --> 00:58:17,840 So it's the same thing, right? 662 00:58:17,840 --> 00:58:21,680 You just don't own the energy and you're not paying for the energy you're paying for 663 00:58:21,680 --> 00:58:22,680 the recs. 664 00:58:22,680 --> 00:58:29,760 I appreciate the education for the explanation because it, sometimes I look at this almost 665 00:58:29,760 --> 00:58:35,920 as in recs are credit cards and cash is what we're getting from the renewables and we just 666 00:58:35,920 --> 00:58:42,000 have a balance which you have a good grasp on and I appreciate that and, you know, Las 667 00:58:42,000 --> 00:58:46,240 Vegas is our next stop because, like you say, everything is uncertain, isn't it? 668 00:58:46,240 --> 00:58:50,600 I think if we were able to buy all renewables, we'd be buying all renewables. 669 00:58:50,600 --> 00:58:52,960 When we're able, like what does able mean? 670 00:58:52,960 --> 00:58:54,480 I mean, they're for sale. 671 00:58:54,480 --> 00:58:59,480 Yeah, but, okay, just give me two million, I'm only going to use a million. 672 00:58:59,480 --> 00:59:06,240 Right, so, and that's the balance, it's a cost risk balance. 673 00:59:06,240 --> 00:59:10,960 It's not like they're unavailable at any cost, you know, it's more like it is a cost risk 674 00:59:10,960 --> 00:59:11,960 balance. 675 00:59:11,960 --> 00:59:12,960 Absolutely. 676 00:59:12,960 --> 00:59:13,960 Yeah. 677 00:59:13,960 --> 00:59:15,400 Yeah, that's, I think that's... 678 00:59:15,400 --> 00:59:20,280 So sometimes when you say they're not available, that makes it sound like you can't buy, like 679 00:59:20,280 --> 00:59:25,000 nuclear is not available, like we can't buy nuclear at any dollar amount. 680 00:59:25,000 --> 00:59:29,120 Yeah, we don't have the psychic ability to make them available at the time that we need 681 00:59:29,120 --> 00:59:30,120 them. 682 00:59:30,120 --> 00:59:31,120 Okay. 683 00:59:31,120 --> 00:59:32,120 And then cut it off. 684 00:59:32,120 --> 00:59:33,120 Yeah. 685 00:59:33,120 --> 00:59:39,480 That may be better for the, and I'm, you know, remember, I'm all about renewable, I think 686 00:59:39,480 --> 00:59:45,760 most people are, it's just the reality of trying to get it exact is just, is the difficult 687 00:59:45,760 --> 00:59:46,760 part, right? 688 00:59:46,760 --> 00:59:47,760 I mean... 689 00:59:47,760 --> 00:59:49,600 And here's the other reality, right? 690 00:59:49,600 --> 00:59:55,680 The other reality is that, and again, I don't want to over dramatize this, but this is the 691 00:59:55,680 --> 01:00:02,720 reality, this was certainly our experience during Winter Storm Uri when there was few 692 01:00:02,720 --> 01:00:05,600 little renewables, right? 693 01:00:05,600 --> 01:00:11,480 The phone calls that I got in my cell phone, right, at home at night, nobody ever said 694 01:00:11,480 --> 01:00:15,360 I want the power, but only if it's wind and solar, right? 695 01:00:15,360 --> 01:00:20,520 And so certainly I think that Winter Storm Uri, I'll talk a little about the Texas Energy 696 01:00:20,520 --> 01:00:24,760 Fund that was overwhelmingly approved across the state and even here, right, is that people 697 01:00:24,760 --> 01:00:31,020 recognize that while we might want renewables, we also need reliability, right, and we need 698 01:00:31,020 --> 01:00:36,240 that power to be there when we need it, whether I'm a, you know, a homeowner or whether I'm 699 01:00:36,240 --> 01:00:37,360 a business, right? 700 01:00:37,360 --> 01:00:41,320 I need that power there to continue to operate and to continue to live. 701 01:00:41,320 --> 01:00:46,240 And so, unfortunately, renewables have introduced this intermittency, right, that you don't 702 01:00:46,240 --> 01:00:47,240 know when it's going to hit you. 703 01:00:47,240 --> 01:00:48,240 Yep. 704 01:00:48,240 --> 01:00:51,000 I mean, we have some very, you know, we have some very good people in the EMO that have 705 01:00:51,000 --> 01:00:55,080 some very good predictive models, right, on everything from weather to cloud cover to, 706 01:00:55,080 --> 01:01:01,000 you know, is there going to be a solar flutter day or not, right, that could have an impact 707 01:01:01,000 --> 01:01:04,240 on the market, right, and they're trying to react to it. 708 01:01:04,240 --> 01:01:10,320 What I will tell you, Mr. Kelly, too, is that we currently have five vacancies in that particular 709 01:01:10,320 --> 01:01:12,360 EMO. 710 01:01:12,360 --> 01:01:16,240 It continues to be a challenge, right, with all the different uncertainty and changes 711 01:01:16,240 --> 01:01:23,200 in the market, individuals that do that work are in high, high demand, right? 712 01:01:23,200 --> 01:01:30,520 And so, certainly, recruitment and even retention of these individuals is a challenge as well, 713 01:01:30,520 --> 01:01:31,520 right? 714 01:01:31,520 --> 01:01:32,520 I think they do a fantastic job. 715 01:01:32,520 --> 01:01:37,360 You know, we're moving forward with filling those five FTEs. 716 01:01:37,360 --> 01:01:41,960 We're hopeful that we're going to be able to attract some good people, maybe some people 717 01:01:41,960 --> 01:01:45,120 internally into the operation. 718 01:01:45,120 --> 01:01:49,520 We think that that gets us what we need for the time being, but remember, I will point 719 01:01:49,520 --> 01:01:55,680 out that the QSE, right, this Qualifying Scheduling Entity, which is what the EMO is officially 720 01:01:55,680 --> 01:01:58,040 known as, was started in 2013. 721 01:01:58,040 --> 01:02:02,000 In 2013, they were managing about $50 million of power. 722 01:02:02,000 --> 01:02:09,320 Today, actually, let me say, in three years, they're going to be managing $400 million 723 01:02:09,320 --> 01:02:14,840 of power, pretty much the same number of people, right? 724 01:02:14,840 --> 01:02:19,960 So, again, so creativity is not something that those individuals lack. 725 01:02:19,960 --> 01:02:20,960 They do. 726 01:02:20,960 --> 01:02:21,960 They're professional. 727 01:02:21,960 --> 01:02:22,960 They're creative. 728 01:02:22,960 --> 01:02:24,280 They're doing a fantastic job for us. 729 01:02:24,280 --> 01:02:28,960 What I'm hearing from them is, "Hey, it's going to get very, very hard here, and you're 730 01:02:28,960 --> 01:02:32,960 going to continue to see a bump up in your energy costs," right? 731 01:02:32,960 --> 01:02:33,960 We're at $0.046. 732 01:02:33,960 --> 01:02:37,960 Let's call it $0.05 is our ECA today. 733 01:02:37,960 --> 01:02:46,840 We're looking at power prices in the future, and we're looking at $0.06, $0.07, right? 734 01:02:46,840 --> 01:02:54,160 So yeah, that's one component of three components within a customer's bill, but it could easily 735 01:02:54,160 --> 01:02:57,560 be the largest component before too long. 736 01:02:57,560 --> 01:03:03,240 So, unless you have any questions, can I move to part two? 737 01:03:03,240 --> 01:03:13,040 Okay, so part two is, you know, our recommendation here is going to be to create what's called 738 01:03:13,040 --> 01:03:14,480 an integrated resource plan. 739 01:03:14,480 --> 01:03:21,640 Actually, in 2018, we had a consultant, did a management study, and actually made that 740 01:03:21,640 --> 01:03:22,640 recommendation. 741 01:03:22,640 --> 01:03:26,880 At the time, we felt that the debt and renewable resource plan, again, given the context of 742 01:03:26,880 --> 01:03:30,380 everything at the time, really kind of met that definition. 743 01:03:30,380 --> 01:03:36,160 We don't believe it meets that today, and certainly our recommendation, right, is to 744 01:03:36,160 --> 01:03:38,060 create an integrated resource plan. 745 01:03:38,060 --> 01:03:39,060 So what is it? 746 01:03:39,060 --> 01:03:45,820 It's basically just a strategy document that considers your total future electric demand, 747 01:03:45,820 --> 01:03:48,120 and also looks at the supply side, right? 748 01:03:48,120 --> 01:03:54,280 And options like potentially building new generation resources, and it could be a variety 749 01:03:54,280 --> 01:03:56,160 of those resources. 750 01:03:56,160 --> 01:04:02,000 There's not just natural gas, there's geothermal, certainly there's nuclear, hydrogen is probably 751 01:04:02,000 --> 01:04:06,880 not too far off, there's small modular reactors, there's a number of things that we can look 752 01:04:06,880 --> 01:04:07,880 at. 753 01:04:07,880 --> 01:04:12,940 For some context, Austin Energy just did this very thing. 754 01:04:12,940 --> 01:04:21,840 And they opted to build a geothermal facility. 755 01:04:21,840 --> 01:04:23,640 It is five megawatts. 756 01:04:23,640 --> 01:04:27,280 Their peak load is 2,000 megawatts, right? 757 01:04:27,280 --> 01:04:30,160 So it's a very, very small portion. 758 01:04:30,160 --> 01:04:32,760 Their plan is to build that in Nacogdoches, Texas. 759 01:04:32,760 --> 01:04:37,080 And I'll tell you, there's folks in Nacogdoches today that aren't very supportive, because 760 01:04:37,080 --> 01:04:41,800 they think that that facility is going to create earthquakes in their community, right? 761 01:04:41,800 --> 01:04:48,280 And so again, no resource is going to be without its detractors, or folks that may not be 762 01:04:48,280 --> 01:04:50,840 supportive of it. 763 01:04:50,840 --> 01:04:56,040 Really this plan is really a longitudinal plan that will look at what are the needs 764 01:04:56,040 --> 01:04:57,720 at 15 to 20 years. 765 01:04:57,720 --> 01:05:02,440 I will tell you, I woke up one morning, I was here now 25 years with the city, it goes 766 01:05:02,440 --> 01:05:03,960 by quick, right? 767 01:05:03,960 --> 01:05:07,480 15, 20 years will go by quick, right? 768 01:05:07,480 --> 01:05:12,460 And so that is a 15 or 20 year plan that you set the day, and then every five years you're 769 01:05:12,460 --> 01:05:15,520 revamping it, you're adding additional timeframes, right? 770 01:05:15,520 --> 01:05:22,040 And it's just a living document that continues to set your generation needs going forward 771 01:05:22,040 --> 01:05:24,840 as the community continues to evolve, right? 772 01:05:24,840 --> 01:05:29,660 And so whether it's data centers, or it's additional residential, or commercial development, 773 01:05:29,660 --> 01:05:34,640 that will continue to put pressure on their utility. 774 01:05:34,640 --> 01:05:38,080 So let me go through a little bit of the regulatory market, and we've kind of peppered through 775 01:05:38,080 --> 01:05:39,080 this. 776 01:05:39,080 --> 01:05:40,520 But here's the good news, right? 777 01:05:40,520 --> 01:05:44,080 We have not had any forced outages in ERCOT since 2021, right? 778 01:05:44,080 --> 01:05:45,960 Have we gotten close? 779 01:05:45,960 --> 01:05:46,960 Yeah, absolutely. 780 01:05:46,960 --> 01:05:51,080 There's been a few days in the winter and summer that I've been sweating bullets, right? 781 01:05:51,080 --> 01:05:56,080 Because I'm not sure if we're going to have to start doing rolling brownouts, right? 782 01:05:56,080 --> 01:06:01,720 And so certainly I would categorize the market as uncertain. 783 01:06:01,720 --> 01:06:08,280 Since yearly, the scarcity cap, the highest price at which energy could go was basically 784 01:06:08,280 --> 01:06:09,280 cut in half. 785 01:06:09,280 --> 01:06:11,600 It went from 9,000 to 5,000. 786 01:06:11,600 --> 01:06:15,760 And even though my AMO guys tell me, well, Tony, that's not exactly right, here's the 787 01:06:15,760 --> 01:06:17,480 way I look at it. 788 01:06:17,480 --> 01:06:23,440 Had the scarcity price has been 5,000 during winter storm Uri, instead of $140 million worth 789 01:06:23,440 --> 01:06:27,280 the debt, it would have been 70 million, right? 790 01:06:27,280 --> 01:06:29,760 And that's the difference, right? 791 01:06:29,760 --> 01:06:37,080 Likewise, in 2023, when the cap was 5,000, and we incurred $31 million in the summer 792 01:06:37,080 --> 01:06:40,840 of '23, had it been 9,000, we would have been looking at $60 million, right? 793 01:06:40,840 --> 01:06:45,560 And so certainly we think that reducing the cap has been a good thing. 794 01:06:45,560 --> 01:06:48,800 I would tell you there's some in the market, some especially on the private side, private 795 01:06:48,800 --> 01:06:54,120 generators that are saying, hey, that scarcity cap really needs to go back up to 9,000. 796 01:06:54,120 --> 01:06:57,240 And there's some generators that are saying it should be completely uncapped. 797 01:06:57,240 --> 01:07:02,920 And that will then send the right signals to the market on the private equity side to 798 01:07:02,920 --> 01:07:06,320 come into the state of Texas and build the generation that's needed. 799 01:07:06,320 --> 01:07:09,440 And what we're talking about, the generation that they would build, right, it would not 800 01:07:09,440 --> 01:07:11,000 be renewable resources. 801 01:07:11,000 --> 01:07:15,980 It would be dispatchable generation, very likely natural gas, right? 802 01:07:15,980 --> 01:07:21,560 Since that time, there's now been a fifth ANSLE service, and I could probably talk to 803 01:07:21,560 --> 01:07:24,680 you for a couple hours about ANSLE services. 804 01:07:24,680 --> 01:07:32,040 But certainly ANSLE services, you know, number six was this ERCOT contingency reserve. 805 01:07:32,040 --> 01:07:36,120 There's an independent market monitor that monitors what ERCOT does and reports back 806 01:07:36,120 --> 01:07:37,440 to the PUCT. 807 01:07:37,440 --> 01:07:43,280 And they estimated that that ANSLE service alone added an additional $8 to $10 billion 808 01:07:43,280 --> 01:07:46,320 of cost to rate payers in the state of Texas. 809 01:07:46,320 --> 01:07:49,760 Now, the DEC is eligible for that ANSLE services. 810 01:07:49,760 --> 01:07:54,400 We're eligible for all five ANSLE services today, and we are active in the market in 811 01:07:54,400 --> 01:07:58,600 selling those services and making ourselves available. 812 01:07:58,600 --> 01:08:03,800 One interesting thing about the ECRS that's been reported is that the ECRS has actually 813 01:08:03,800 --> 01:08:10,440 sidelined the newer, more efficient generation, and so now the market is even more dependent 814 01:08:10,440 --> 01:08:13,920 on some of the older, dirtier generation, right? 815 01:08:13,920 --> 01:08:20,080 And again, because it's far more lucrative for these newer generators to stand the sidelines 816 01:08:20,080 --> 01:08:26,360 and collect ANSLE service dollars and preserve their facility, right, and extend the life 817 01:08:26,360 --> 01:08:28,360 of their facility. 818 01:08:28,360 --> 01:08:37,400 FFFSS, that is a real acronym, Firm Fuel Supply Service is another one that's added $51 million 819 01:08:37,400 --> 01:08:38,400 into the market. 820 01:08:38,400 --> 01:08:39,400 The DEC is not eligible. 821 01:08:39,400 --> 01:08:43,640 As you guys know, we don't have a firm fuel contract for the DEC, so we're not eligible 822 01:08:43,640 --> 01:08:44,720 for that. 823 01:08:44,720 --> 01:08:51,920 And then in November of '23, voters approved, I think it was Proposition 7 or 9, but they 824 01:08:51,920 --> 01:08:57,480 approved a proposition to create what's called the Texas Energy Fund. 825 01:08:57,480 --> 01:09:04,520 This fund allocated $7.2 billion in ERCOT for loans and completion bonus grants to build 826 01:09:04,520 --> 01:09:12,600 10,000 megawatts of dispatchable generation, with 100 megawatts as the minimum. 827 01:09:12,600 --> 01:09:18,200 A number of projects submitted in its first tranche of applications, DME did not submit 828 01:09:18,200 --> 01:09:23,360 an application, and we did not submit an application because the primary requirement is that you 829 01:09:23,360 --> 01:09:27,600 had to have a shovel-ready project to submit. 830 01:09:27,600 --> 01:09:31,000 And so those are being reviewed today. 831 01:09:31,000 --> 01:09:35,700 Only two have been awarded up to this point. 832 01:09:35,700 --> 01:09:40,840 A large number of them have actually dropped out of the program, but there is growing interest 833 01:09:40,840 --> 01:09:46,840 in the completion bonus, again, because there is no red tape for -- red tape, I'm probably 834 01:09:46,840 --> 01:09:51,160 sorry about this, red tape, but there's a lot of requirements, right? 835 01:09:51,160 --> 01:09:56,880 What I will tell you is that the interest cost of that loan that's backed by the state 836 01:09:56,880 --> 01:10:01,800 is about 3%, you know, and I think based on our credit ratings, I think we're pretty competitive 837 01:10:01,800 --> 01:10:02,800 to that. 838 01:10:02,800 --> 01:10:08,360 I think a lot of MOUs -- there's only one MOU, that's Kerrville, that submitted an application, 839 01:10:08,360 --> 01:10:13,200 and they're still going through the process -- excuse me -- there was a legal issue that 840 01:10:13,200 --> 01:10:16,900 came up, and we think the legislature is going to solve that particular issue when it comes 841 01:10:16,900 --> 01:10:22,200 to MOUs being eligible for this loan program. 842 01:10:22,200 --> 01:10:25,480 Had to do with subordinate liens and a whole bunch of other stuff that we probably don't 843 01:10:25,480 --> 01:10:27,840 have time to talk about today. 844 01:10:27,840 --> 01:10:34,340 And then the other issue is that 10,000 megawatts is actually -- it's actually 20,000 megawatts, 845 01:10:34,340 --> 01:10:40,520 so it's up to 10,000 megawatts on the loan program and 10,000 megawatts on the grant 846 01:10:40,520 --> 01:10:41,520 program. 847 01:10:41,520 --> 01:10:47,560 I'm hopeful that that particular legislation will get through to make that clarification, 848 01:10:47,560 --> 01:10:54,520 because under the current guidelines from the PECT, it's 10,000 megawatts total between 849 01:10:54,520 --> 01:10:56,280 loans and grants, right? 850 01:10:56,280 --> 01:11:01,960 And so, again, it certainly would expand the availability of those. 851 01:11:01,960 --> 01:11:07,520 There was another billion dollars for -- believe it or not, ERCAD does not cover all of the 852 01:11:07,520 --> 01:11:13,840 state of Texas, and so there's a billion dollars for outside of the state of Texas. 853 01:11:13,840 --> 01:11:18,120 Outside of ERCAD, you have two additional ISOs. 854 01:11:18,120 --> 01:11:19,120 One is SPP. 855 01:11:19,120 --> 01:11:23,880 Don't ask me what that means today, because I've forgotten. 856 01:11:23,880 --> 01:11:29,920 And then there's MISO, as well, on the east side, SPP, Southwest Power Pool, excuse me, 857 01:11:29,920 --> 01:11:36,800 on the west side, and then MISO, mid something or other, on the east side. 858 01:11:36,800 --> 01:11:40,620 And then -- a lot of information here. 859 01:11:40,620 --> 01:11:48,000 And then $1.8 billion is available, PECT still going through all the requirements for backup 860 01:11:48,000 --> 01:11:49,000 power package. 861 01:11:49,000 --> 01:11:52,880 Matter of fact, that's something that Stephen and I have had a lot of conversation about, 862 01:11:52,880 --> 01:11:56,360 especially for his water plants and some of his other critical infrastructure, that I 863 01:11:56,360 --> 01:11:57,720 think he would be certainly eligible. 864 01:11:57,720 --> 01:12:04,640 I were hopeful that he would be eligible for those. 865 01:12:04,640 --> 01:12:07,000 And it just keeps going and going, right? 866 01:12:07,000 --> 01:12:13,240 So again, proliferation of renewables, you know, more and more renewables continues to 867 01:12:13,240 --> 01:12:19,720 create additional scarcity periods, both in the summer evening hours, winter, morning 868 01:12:19,720 --> 01:12:21,480 and evening hours. 869 01:12:21,480 --> 01:12:26,080 One phenomena that we're certainly looking at and our EMOs is paying close attention 870 01:12:26,080 --> 01:12:33,680 to is as some of these very large loads are coming online that are 24/7, right, they are 871 01:12:33,680 --> 01:12:39,720 soaking up a lot of the cheap energy during the day, which is mainly solar, and at night, 872 01:12:39,720 --> 01:12:40,720 which is mainly wind. 873 01:12:40,720 --> 01:12:46,320 And so what we're seeing, future prices, those prices are now starting to climb up, right? 874 01:12:46,320 --> 01:12:51,440 And so additional risk to the entire market from those large loads. 875 01:12:51,440 --> 01:12:52,440 Yes, sir. 876 01:12:52,440 --> 01:12:55,680 Could you give me an example of the 24-hour, which you just referred to? 877 01:12:55,680 --> 01:13:01,760 Yeah, an AI data center, like the one we have that's being constructed here and then. 878 01:13:01,760 --> 01:13:07,080 So those will continue to soak up some of those low-cost power hours, and again, it's 879 01:13:07,080 --> 01:13:12,040 a supply and demand, so we're going to see those prices continue to climb up. 880 01:13:12,040 --> 01:13:19,320 So a specialty type of use versus like a university or something of that magnitude, they're the 881 01:13:19,320 --> 01:13:22,320 ones that draw the great deal of the power then? 882 01:13:22,320 --> 01:13:26,560 Yeah, by and large, what we call our native load, right, you know, our non-data center 883 01:13:26,560 --> 01:13:34,540 load is pretty variable, you know, but yeah, but these data centers, they're 24/7. 884 01:13:34,540 --> 01:13:38,440 That's why they have backup generation, because they cannot go down. 885 01:13:38,440 --> 01:13:42,640 So while power can be cut to them, they have to have a backup source to at least keep them 886 01:13:42,640 --> 01:13:44,240 on for a couple hours. 887 01:13:44,240 --> 01:13:45,240 Yes, thank you. 888 01:13:45,240 --> 01:13:46,240 Yes, sir. 889 01:13:46,240 --> 01:13:52,040 And then a number of other items that I won't necessarily go through, but everything from 890 01:13:52,040 --> 01:13:58,200 a sixth answerly service, this DRRS, to real-time co-optimization, Jose could probably spend 891 01:13:58,200 --> 01:14:03,480 three hours talking to you about that, how that interplays with batteries and renewable 892 01:14:03,480 --> 01:14:04,480 resources. 893 01:14:04,480 --> 01:14:07,680 Just so long as you have more pages of acronyms, I would... 894 01:14:07,680 --> 01:14:08,680 You would like some more? 895 01:14:08,680 --> 01:14:09,680 You've gone all day. 896 01:14:09,680 --> 01:14:10,680 Yeah, yeah, yeah. 897 01:14:10,680 --> 01:14:11,680 I can do these all day. 898 01:14:11,680 --> 01:14:12,680 Yeah. 899 01:14:12,680 --> 01:14:13,680 So I'll go with other, right? 900 01:14:13,680 --> 01:14:21,200 So there's, again, both at the state and federal level, lots of regulatory market issues. 901 01:14:21,200 --> 01:14:23,320 And then let me talk to you a little bit about our load. 902 01:14:23,320 --> 01:14:26,960 And so this is something that you've seen now a couple of times. 903 01:14:26,960 --> 01:14:29,040 And so currently, our load is... 904 01:14:29,040 --> 01:14:36,000 Our peak load, which we achieved in the summer of '23, was 408 megawatts, right? 905 01:14:36,000 --> 01:14:45,820 That is, in essence, backed up by 225 megawatts from our deck, leaving a shortage of 183. 906 01:14:45,820 --> 01:14:51,840 So in a situation where the state requires that we firm our load, right? 907 01:14:51,840 --> 01:15:00,600 We believe that this 183 megawatts today is what we would either have to, one, build, 908 01:15:00,600 --> 01:15:07,200 two, contract for, or three, what's being discussed is buying some type of credit, whether 909 01:15:07,200 --> 01:15:11,320 it's a dispatchable credit or it's a performance credit. 910 01:15:11,320 --> 01:15:15,920 So if you remember, the PCT was looking at creating what's called a performance credit 911 01:15:15,920 --> 01:15:18,520 mechanism that has been shelled, right? 912 01:15:18,520 --> 01:15:24,900 They're waiting to see what the legislature does with the dispatchable credit system. 913 01:15:24,900 --> 01:15:30,440 If that doesn't happen, likelihood the PCT is gonna go back and revive the PCM, right? 914 01:15:30,440 --> 01:15:37,120 And so based on our load, what we're seeing here, as you can see, our load growth, right? 915 01:15:37,120 --> 01:15:43,900 We anticipate our native load to continue to grow from 400 to 500, getting near to 600 916 01:15:43,900 --> 01:15:46,100 by 2044. 917 01:15:46,100 --> 01:15:52,400 This large load is a number of projects that we have out there. 918 01:15:52,400 --> 01:15:58,840 And so the total load, we believe, that by 2044, we will be in excess of 900 megawatts. 919 01:15:58,840 --> 01:16:07,320 And so, again, to look at long-term basis, certainly what we're looking at somewhere 920 01:16:07,320 --> 01:16:14,760 in the 600 to 700 megawatts of additional generation, and let me just be clear, that 921 01:16:14,760 --> 01:16:20,280 is dispatchable generation, not renewable generation, again, that will continue to meet 922 01:16:20,280 --> 01:16:25,000 requirements if they come through fruition. 923 01:16:25,000 --> 01:16:31,720 Please understand that this forecast does not assume any additional large loads. 924 01:16:31,720 --> 01:16:36,800 And just like others across the state, we continue to have interest. 925 01:16:36,800 --> 01:16:43,080 One of the challenges that we have from a transmission system is that we've identified 926 01:16:43,080 --> 01:16:45,080 these overloads, right? 927 01:16:45,080 --> 01:16:49,800 And we believe it's gonna take us two to three years to resolve those system overloads. 928 01:16:49,800 --> 01:16:56,240 Once that's done, then we will have plenty of transmission capacity to support just about 929 01:16:56,240 --> 01:17:00,600 any large load that would be interested in coming into our service territory. 930 01:17:00,600 --> 01:17:04,920 But that is the one barrier that we have today. 931 01:17:04,920 --> 01:17:12,560 But I will tell you that the prospects that we're talking to are not at all afraid of 932 01:17:12,560 --> 01:17:13,560 two to three years. 933 01:17:13,560 --> 01:17:16,120 They're saying, "Hey, what can you give me today? 934 01:17:16,120 --> 01:17:17,560 Can you give me five megawatts? 935 01:17:17,560 --> 01:17:18,560 Let me get started. 936 01:17:18,560 --> 01:17:21,920 Give me 20 megawatts, let me get started, and I'll wait two to three years for you to 937 01:17:21,920 --> 01:17:22,920 build it," right? 938 01:17:22,920 --> 01:17:25,320 And again, they're all across the spectrum, right? 939 01:17:25,320 --> 01:17:30,480 Some that I would categorize as very sophisticated, well-backed, and others that are more speculative. 940 01:17:30,480 --> 01:17:36,160 But we are having...continue to have those conversations, none of that is forecasted 941 01:17:36,160 --> 01:17:37,160 within this. 942 01:17:37,160 --> 01:17:42,900 Again, it's not real until we have...frankly, we have a PPA with them or some type of negotiated 943 01:17:42,900 --> 01:17:45,680 contract with them. 944 01:17:45,680 --> 01:17:50,200 So our staff recommendation when it comes to this is that we go out and we create integrated 945 01:17:50,200 --> 01:17:56,760 resource plan, preferably for 20 years, that would evaluate a number of different resources 946 01:17:56,760 --> 01:18:04,720 out there to create what we need within the context of that policy that we've outlined 947 01:18:04,720 --> 01:18:12,440 for you on the renewable side that looks at what the short-term needs might be and risks, 948 01:18:12,440 --> 01:18:17,280 incorporate as well any local demand-side management programs. 949 01:18:17,280 --> 01:18:21,320 I know we've been talking about that for some time, and there's certainly been a number 950 01:18:21,320 --> 01:18:26,000 of challenges for us to be able to bring that to fruition. 951 01:18:26,000 --> 01:18:30,120 Understand too that I just participated in a webinar on Friday, the state is actually 952 01:18:30,120 --> 01:18:37,760 looking at a residential demand-side program, and we're certainly advocating that our customers 953 01:18:37,760 --> 01:18:40,520 be eligible and be able to participate in that. 954 01:18:40,520 --> 01:18:47,280 Again, it's still in its infancy, but we certainly believe that ERCOT is interested in rolling 955 01:18:47,280 --> 01:18:55,720 out additional demand-side programs to continue to manage that load for the entire ERCOT grid. 956 01:18:55,720 --> 01:19:00,840 And also that this plan be cognizant of the climate action plan goals that the council 957 01:19:00,840 --> 01:19:03,160 has approved. 958 01:19:03,160 --> 01:19:08,280 And then we would recommend that we hire an external firm to help us do this. 959 01:19:08,280 --> 01:19:14,200 Again, the two models that we have, both CPS Energy in San Antonio and Austin Energy in 960 01:19:14,200 --> 01:19:19,820 Austin followed these processes and we like them. 961 01:19:19,820 --> 01:19:27,680 One of the things that's central to this process is that there be a stakeholder engagement process 962 01:19:27,680 --> 01:19:28,680 as well. 963 01:19:28,680 --> 01:19:33,780 So that we go out there and talk to the community, hear their concerns, share information with 964 01:19:33,780 --> 01:19:38,860 them as best we can, certainly there's confidential information that we won't be able to share 965 01:19:38,860 --> 01:19:39,860 with them. 966 01:19:39,860 --> 01:19:43,280 But again, to try to be as transparent as possible, get their feedback, be able to come 967 01:19:43,280 --> 01:19:48,120 back to the PB with that feedback and to the council and enroll out that program. 968 01:19:48,120 --> 01:19:55,360 We anticipate that that would take us 18 to 24 months to do that. 969 01:19:55,360 --> 01:20:02,400 Understand that even if the council, even the PB recommended that we go forward to build 970 01:20:02,400 --> 01:20:07,160 another generation facility, and let's say it's a natural gas facility, we're looking 971 01:20:07,160 --> 01:20:15,000 at probably 2030, 2031 based on the supply chain for engines and other material. 972 01:20:15,000 --> 01:20:19,800 Certainly we continue to have supply chain challenges on the transformer side. 973 01:20:19,800 --> 01:20:27,360 And so again, at best we think if we got started today, it would be 2030, 2031 before we got 974 01:20:27,360 --> 01:20:28,360 to build anything. 975 01:20:28,360 --> 01:20:34,000 If you add an additional 18 to 24 months there, now you're talking probably seven years from 976 01:20:34,000 --> 01:20:43,140 today that we would actually have some type of dispatchable generation on the ground operational. 977 01:20:43,140 --> 01:20:47,680 So during that time, we're going to continue to have to manage our portfolio the best we 978 01:20:47,680 --> 01:20:49,040 can. 979 01:20:49,040 --> 01:20:53,520 And if there is need for price increases, rate increases, then we'll certainly be coming 980 01:20:53,520 --> 01:20:55,320 to you with that. 981 01:20:55,320 --> 01:21:01,680 So and then just to recap here, again, our recommendation is to create a city renewable 982 01:21:01,680 --> 01:21:03,440 energy policy. 983 01:21:03,440 --> 01:21:07,720 Anticipate that would take us six to nine months as our internal process for that, and 984 01:21:07,720 --> 01:21:13,280 then create a long-term integrated resource plan that would take 18 to 24 months. 985 01:21:13,280 --> 01:21:15,400 So with that, that is my presentation. 986 01:21:15,400 --> 01:21:24,440 Happy to answer any other questions you may have. 987 01:21:24,440 --> 01:21:29,400 This was getting good there for a while, and now you guys are not doing it. 988 01:21:29,400 --> 01:21:34,560 Mr. Chair, I would say too that the plan is that we would make this same presentation 989 01:21:34,560 --> 01:21:45,840 to the council on June 3rd, and so I'm asking for your recommendation to submit to the council. 990 01:21:45,840 --> 01:21:53,480 So I think splitting these two, the goal, the city renewable energy policy, which would 991 01:21:53,480 --> 01:21:59,520 be probably our stated goals and defining those well and making them like Audit pointed 992 01:21:59,520 --> 01:22:05,960 out, they weren't well defined, and we weren't necessarily measuring them, at least not until 993 01:22:05,960 --> 01:22:06,960 2020. 994 01:22:06,960 --> 01:22:12,560 We waited four years to start measuring them, and even then the definitions were always, 995 01:22:12,560 --> 01:22:15,600 were not super precise. 996 01:22:15,600 --> 01:22:17,860 So I think that makes sense. 997 01:22:17,860 --> 01:22:27,120 I noticed the IRP, you do have community engagement to get citizen input and stakeholder input. 998 01:22:27,120 --> 01:22:34,280 I think that we need the same in the goal part in the renewable energy policy as well. 999 01:22:34,280 --> 01:22:40,600 This is, it's complicated, you're talking about wind and solar driving down energy prices 1000 01:22:40,600 --> 01:22:46,400 and data centers are soaking up and driving up the prices, and which one's going to win 1001 01:22:46,400 --> 01:22:53,960 out who's like, renewable energy projects cost more than they did, and they look like 1002 01:22:53,960 --> 01:22:59,800 they wouldn't be in the money now, but then future power prices are going from an average 1003 01:22:59,800 --> 01:23:08,200 of $40 a megawatt to an average of $70 a megawatt, and there are a whole lot of REPs in the deregulated 1004 01:23:08,200 --> 01:23:16,840 areas that are 30 or 40 or 50% more expensive than DME right now, because they have no long 1005 01:23:16,840 --> 01:23:21,120 term power, they maybe have two years worth of power purchased, and they've been facing 1006 01:23:21,120 --> 01:23:29,400 those higher prices now for a few years, and balancing it all, it's big and complicated 1007 01:23:29,400 --> 01:23:31,720 and ever changing. 1008 01:23:31,720 --> 01:23:38,800 I think these two plans, these are a good way to do it, and I think the key is community 1009 01:23:38,800 --> 01:23:39,800 buy-in. 1010 01:23:39,800 --> 01:23:40,800 Yeah? 1011 01:23:40,800 --> 01:23:41,800 Yeah. 1012 01:23:41,800 --> 01:23:42,800 Very good. 1013 01:23:42,800 --> 01:23:43,800 All right. 1014 01:23:43,800 --> 01:23:57,040 Do you need anything from us other than just the conversation and actual-- 1015 01:23:57,040 --> 01:24:04,860 I mean, I know Mr. Taylor introduced the possibility of some type of community engagement with 1016 01:24:04,860 --> 01:24:11,360 the policy, if the recommendation is to move forward with these two, do we add, because 1017 01:24:11,360 --> 01:24:15,880 it's not-- I mean, it's contemplated there in the sense that it's going to come here 1018 01:24:15,880 --> 01:24:20,920 to the PUB for consideration, and certainly the public is eligible to come here. 1019 01:24:20,920 --> 01:24:23,440 Same thing with the council. 1020 01:24:23,440 --> 01:24:29,680 If there's any other recommendation that you would want, I would anticipate that both for 1021 01:24:29,680 --> 01:24:34,120 the PUB and for the council, likely that policy will be put on the agenda as an individual 1022 01:24:34,120 --> 01:24:39,920 consideration item, and not necessarily consent agenda item, so again, that would afford the 1023 01:24:39,920 --> 01:24:44,960 public additional opportunities to provide feedback, but if there's more than that, certainly 1024 01:24:44,960 --> 01:24:50,720 we need that direction from you today as a recommendation to the council. 1025 01:24:50,720 --> 01:24:51,720 I like the idea. 1026 01:24:51,720 --> 01:24:58,960 I know you guys don't, it's okay, but I mean, if the people that want to have a discussion 1027 01:24:58,960 --> 01:25:12,560 about this in a public format, and that might be me too, I think you might invite the PUB 1028 01:25:12,560 --> 01:25:16,520 members to something like that. 1029 01:25:16,520 --> 01:25:23,240 I mean, I know it's the deciding vote in this city, but if we're going to bring up the discussion, 1030 01:25:23,240 --> 01:25:27,080 and we would like a discussion amongst our neighbors, then we could get involved with 1031 01:25:27,080 --> 01:25:28,080 that. 1032 01:25:28,080 --> 01:25:30,080 I bet Devin would. 1033 01:25:30,080 --> 01:25:34,320 I think the magnitude of it would require it, and I appreciate you volunteering, Mr. 1034 01:25:34,320 --> 01:25:35,320 Chairman. 1035 01:25:35,320 --> 01:25:42,920 Well, I think I just said that Devin would do it. 1036 01:25:42,920 --> 01:25:52,880 So hear that, and if you want to have more discussion of this on where to go with that, 1037 01:25:52,880 --> 01:25:54,600 I think that's fine. 1038 01:25:54,600 --> 01:25:56,920 Yeah, I think I would. 1039 01:25:56,920 --> 01:25:59,800 Are you talking about some type of town hall meeting? 1040 01:25:59,800 --> 01:26:04,360 Are you talking about, hey, we're okay with you putting in an IC, or are you talking about 1041 01:26:04,360 --> 01:26:07,720 a public hearing that the council would have? 1042 01:26:07,720 --> 01:26:12,400 Yeah, help me flesh that out a little bit more. 1043 01:26:12,400 --> 01:26:14,640 So the six months process. 1044 01:26:14,640 --> 01:26:19,440 So first, I mean, this is the plan to make a plan right now, it's what we had today. 1045 01:26:19,440 --> 01:26:20,440 Yes. 1046 01:26:20,440 --> 01:26:26,440 Yeah, so taking that to city council, obviously, but then in that six month period, it would 1047 01:26:26,440 --> 01:26:32,880 seem like town hall would be, if you bring a final recommendation to a public hearing 1048 01:26:32,880 --> 01:26:41,840 without any citizen input along the way, some views may get overlooked, and you also might 1049 01:26:41,840 --> 01:26:46,840 lead to a really contentious hearing where a lot of people don't feel heard and show 1050 01:26:46,840 --> 01:26:51,920 up angry at a public hearing when that isn't necessarily the intent. 1051 01:26:51,920 --> 01:26:59,120 So if it was possible in the six to nine month period to have some kind of town hall or some 1052 01:26:59,120 --> 01:27:05,400 kind of meeting, and city council might have a stronger opinion about the format of it, 1053 01:27:05,400 --> 01:27:12,800 to get that input early and get those options early, you know, bringing a menu of options 1054 01:27:12,800 --> 01:27:18,280 and what's supported and what's not, and what the likely risk and cost of each of those 1055 01:27:18,280 --> 01:27:22,400 would be to council might be a better way to go. 1056 01:27:22,400 --> 01:27:28,520 I know that complicates when you're writing a plan, writing 10 sections of a plan and 1057 01:27:28,520 --> 01:27:33,560 trying to piece together how they would interact, I don't know, or maybe that's not appropriate, 1058 01:27:33,560 --> 01:27:38,520 but I think somewhere in that six month process, having citizen input as opposed to just at 1059 01:27:38,520 --> 01:27:41,920 the end in a public hearing. 1060 01:27:41,920 --> 01:27:43,920 Okay. 1061 01:27:43,920 --> 01:27:49,960 So I think the important thing to get across is that we, I think some of us would like 1062 01:27:49,960 --> 01:27:57,120 to see some more public discussion about this and love to be invited, I guess everybody 1063 01:27:57,120 --> 01:28:00,040 would be, if every citizen would be, red payer. 1064 01:28:00,040 --> 01:28:04,720 We can try to communicate with the council and get their direction. 1065 01:28:04,720 --> 01:28:05,720 Yeah. 1066 01:28:05,720 --> 01:28:07,320 I mean, that's all we can do. 1067 01:28:07,320 --> 01:28:13,880 You know, a few years ago we did that, and council asked PUB members to show up because 1068 01:28:13,880 --> 01:28:19,600 we had the long discussions about it, but anyway, I think, I think that's good. 1069 01:28:19,600 --> 01:28:20,600 Anybody got anything else? 1070 01:28:20,600 --> 01:28:21,600 Do you need a motion? 1071 01:28:21,600 --> 01:28:22,600 No. 1072 01:28:22,600 --> 01:28:23,600 I think I have direction. 1073 01:28:23,600 --> 01:28:24,600 Yeah, I was just discussing. 1074 01:28:24,600 --> 01:28:25,600 I didn't quite catch that. 1075 01:28:25,600 --> 01:28:26,600 Yeah. 1076 01:28:26,600 --> 01:28:27,600 Thank you. 1077 01:28:27,600 --> 01:28:28,600 Yeah. 1078 01:28:28,600 --> 01:28:29,600 Okay. 1079 01:28:29,600 --> 01:28:30,600 All right. 1080 01:28:30,600 --> 01:28:31,600 Next we stand adjourned. 1081 01:28:31,600 --> 01:28:32,600 All right. 1082 01:28:32,600 --> 01:28:33,600 Thank you, Tony. 1083 01:28:33,600 --> 01:28:33,600 Thank you.