* This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting. [00:00:10] NAME. GOOD EVENING EVERYONE. MAYOR RHODE IS NOT PRESENT CURRENTLY, SO I'LL GET THE MEETING STARTED. UM, IF I COULD ASK EVERYBODY TO RISE FOR THE OF, OF THE UNITED STATES OF AMERICA AND TO THE REPUBLIC FOR WHICH IT STANDS, ONE NATION OF GOD, INDIVISIBLE, WITH LIBERTY AND JUSTICE FOR ALL. ADAM CLARK, COULD YOU TAKE THE ROLL CALL, PLEASE? YES, MAYOR PRO. TIM PRI PRESENT, ALDERMAN ROYAL PRESENT, ALDERMAN ASTOR. HERE. ALDERMAN KENZIE ALDERMAN. BEST PRESENT, MAYOR ODOM. [1. Discussion of Electric Rates] THE ONE ITEM ON OUR AGENDA THIS AFTERNOON IS THE DISCUSSION OF OUR ELECTRIC RATES. UM, FOSTER, DID YOU HAVE ANY, UH, COMMENTS BEFORE WE ASKED MR. BOUCHARD TO, I APPRECIATE EVERYONE SHOWING UP TODAY FOR THIS MEETING, AND WE'LL GO AHEAD AND CALL CHARLIE UP NOW SO HE CAN JUMP RIGHT INTO THE PRESENTATION. GOOD AFTERNOON, MAYOR PROAM RELL, BOARD OF ALDERMAN. GOOD AFTERNOON. THIS IS A LITTLE BIT IN MY FACE. IF YOU CAN'T HEAR ME, JUST LEMME KNOW. I'LL ADJUST IT SOME MORE. UH, THIS EVENING, UH, BEFORE YOU, YOU HAVE, UH, AN OPPORTUNITY TO CONSIDER SETTING A PUBLIC HEARING, UM, TO ADJUST AND AMEND ELECTRIC RATES IN JULY. SO I'M HERE IN SUPPORT OF THAT, UM, AND TO DISCUSS THE ISSUES THAT ARE PRESSURING THE UTILITY. UM, JUST AS A RECAP, UH, MOST OF WHAT I HAVE TO PRESENT TO YOU THIS AFTERNOON, WE COVERED IN THE APRIL, UH, 2025 WORKSHOP. AND I HAVE ALL OF THOSE SLIDES IN AN APPENDIX. IF THERE'S SOMETHING THAT YOU WANT TO SEE OR GO BACK FOR, WE CAN, WE CAN GO THROUGH THOSE AGAIN. BUT I, I DON'T HAVE A PLAN ON GOING THROUGH ALL OF THAT AGAIN. SO, BASICALLY, AS YOU MAY RECALL, UTILITY FINANCIAL SERVICES, FINANCIAL SOLUTIONS PERFORMED AN ELECTRIC FINANCIAL STUDY FOR US. THEY REPORTED THE RESULTS OF THEIR STUDY TO US AND THEY MADE RECOMMENDATIONS ON A RATE ADJUSTMENT FOR US TO US, AND THEY ALSO RECOMMENDED THAT WE MODERNIZE OUR RATE DESIGNS. UM, ALSO DURING THAT MEETING, YOU MAY RECALL THAT I PRESENTED A VARIETY OF DIFFERENT OPERATIONAL BUDGET UPDATES, UM, COMMENTED AND PRESENTED ON, UM, OUR OPERATING BUDGET FOR FISCAL YEAR 2026. OUR FIVE YEAR CAPITAL PLAN. I PRESENTED ON OUR WHOLESALE POWER SUPPLY, UM, FORECAST AND OUR RATE PLAN. AND IT'S A FIVE YEAR PLAN. UM, I MADE RECOMMENDATIONS FOR A RATE ADJUSTMENT OF 3% WITH AN UNRESTRICTED PCA, UM, FOLLOWED BY CONSECUTIVE YEARS OF 3% INCREASES ALWAYS TO BE UPDATED ANNUALLY AS THIS IS A VARYING ISSUE. AND I ALSO, UH, RECOMMENDED MODERNIZED RATE DESIGNS. SO CONSIDERING OUR RATE PATH GOING FORWARD, UM, THIS IS WHAT I CALL THE NO RATE INCREASE PLAN WITH CHARLIE CHARLIE'S CAPITAL PLAN. SO YOU DON'T HAVE ANY RATE INCREASES PLANNED AND CHARLIE STILL IS ASKING FOR HIS CAPITAL 'CAUSE HE THINKS IT'S IMPORTANT. UM, AND AS A RESULT OF THAT, YOU CAN SEE THAT OUR DEBT COVERAGE RATIO CONTINUES TO GO NEGATIVE. UH, THE AGE OF THE SYSTEM, UM, STAYS IN RELATIVELY DECENT SHAPE, 40 TO 50% DEPRECIATED. THAT'S BECAUSE THE CAPITAL, UM, ADJUSTED OPERATING INCOME GOES NEGATIVE IN 2027. AND OUR CASH BALANCE IS ALSO PREDICTED TO GO NEGATIVE IN 2029. AND THE DAYS OF CASH ON HAND GOES NEGATIVE. SO THAT DOESN'T WORK, AT LEAST IN MY OPINION, AND PROBABLY MOST OF YOUR OPINION, THAT'S NOT A GOOD PLAN. THIS IS WHAT I CALL THE DO NOTHING PLAN AND NO RATE INCREASES. CHARLIE DOESN'T KNOW WHAT HE'S TALKING ABOUT. HE'S MAKING UP STUFF ON CAPITAL. WE DON'T NEED HIS CAPITAL, LET'S LIVE WITHOUT IT AND SEE HOW WE GET BY. UM, SO THE DEBT COVERAGE RATIO STILL GOES NEGATIVE IN 2030. UH, SYSTEM IS NOW DEPRECIATED SEVEN FIVE UP TO 75%. UM, OUR ADJUSTED OPERATING INCOME [00:05:01] STILL GOES NEGATIVE. AND OUR DAYS OF CASH ON HAND, UH, APPROACH NEAR POLICY REQUIREMENTS AND, UH, OUR CASH BALANCES, UM, ARE, ARE GROWING. BUT I CALL THAT AN ARTIFICIAL CASH PLAN. UM, WE'RE BUILDING SOME CASH, UM, BUT THAT DOESN'T CHANGE. WE HAVE A NEED TO SPEND IT AND THAT DOESN'T GO AWAY. SO AT SOME POINT IN TIME, WE HAVE TO GET BACK INTO THAT CASH AND SPEND IT AGAIN, AND WE'RE GONNA BE BACK TO THE SAME SITUATION. IF I COULD ILLUSTRATE AN EXAMPLE, IT WOULD BE LIKE, I NEED NEW TIRES ON, ON MY CAR AND I'M GONNA POSTPONE THAT PURCHASE 'CAUSE I'M GONNA SAVE MONEY. I'M GONNA SAVE THE, THE MONEY THAT THE TIRES COST, YAY FOR ME. AND THEN I LOSE TRACTION AND RUN INTO A GUARDRAIL. NOW I NEED NEW TIRES AND I NEED BODY WORK. SO WHAT DID I SAY? PROBABLY NOTHING. UM, SO WHAT I THINK IS A REASONABLE PLAN, NOT MY FAVORITE, UH, BUT THIS INCLUDES A FOUR POINT A HALF PERCENT RATE INCREASE, UM, A RATE PATH. I, IT PROVIDES US A FINANCIALLY HEALTHY, UM, PLAN AND THE REVENUE AND THE CAPITAL REQUIREMENTS TO MOVE ON WITH OUR OPERATING EXPENSES AS WELL AS OUR CAPITAL. AND YOU CAN SEE THAT DEBT DEBT COVERAGE RATIO STAYS ABOVE ONE. OUR SYSTEM DEPRECIATION IMPROVES TO 40 TO 50%. AGAIN, BECAUSE WE'RE SPENDING CAPITAL, OUR ADJUSTED OPERATING INCOME CAN NOW PAY FOR OUR OPERATING EXPENSES AND OUR CAPITAL EXPENSES AND OUR DAYS CAST ON HAND, REDUCE OUR POLICY REQUIREMENTS AND STARTS TO GROW A LITTLE BIT TOWARDS WHAT THE INDUSTRY WOULD RECOMMEND THAT WE HAVE THE 3%. UM, I LEMME BACK UP THAT 4.5%. I'M OFF TRACK. GO THE OTHER WAY, I'M GOING THE WRONG WAY. MM-HMM. SHOULD BE ANOTHER BUTTON FOR YOU, CHARLIE. THANK YOU. THE FOUR POINT A 5% GRADE INCREASE IN INCLUDES THE PCA, THE POWER COST ADJUSTMENT CHARGE THAT WE APPROVED, UM, LAST DECEMBER. AND THAT HAS SOME RESTRICTIONS ON IT, INCLUDING A CAP. SO THAT'S 4.5% INCREASE WITH OUR CURRENT PCA IN, IN THE WAY IT'S STRUCTURED TODAY. THE PLAN I LIKE A LITTLE BETTER AND AND RECOMMENDING IS A 3% RATE INCREASE OVER A FIVE YEAR TRACK. AND THIS ACHIEVES VERY SIMILAR TO WHAT THE FOUR POINT A HALF PERCENT, UH, ACHIEVES. UM, HOWEVER, THE BASE CHARGES ARE 1.5% LOWER TO THE CUSTOMER, UH, BECAUSE OF THE 3% RATE INCREASE IN UP TO FOUR POINT A HALF. UM, IT ALSO IS EASIER ON THE CUSTOMER BECAUSE FUTURE RATE CHANGES WILL THEN COMPOUND MORE, UM, BY ONE POINT A HALF PERCENT MORE, UM, COMPOUNDING EFFECT. AND YOU'LL SEE LATER WHERE, WHERE I'LL SHOW YOU SOME COMPARISONS WHERE I THINK IT'S BETTER OVERALL FOR THE CUSTOMER, UM, AND THE UTILITY. UM, AND THIS 3% PLAN INCLUDES REMOVING THE RESTRICTIONS ON OUR PCA, SO TAKING OFF THE ONE AND A HALF CENT CAP AND ALLOWING THE PCA TO BE ADJUSTED ON A MONTHLY BASIS. AND WHAT I MEAN BY ADJUSTED ON A MONTHLY BASIS, I GOTTA BACK UP JUST A LITTLE BIT AND, AND TALK ABOUT CURRENTLY SINCE OUR PCA WENT INTO EFFECT IN DECEMBER, WE'VE UN UNDER COLLECTED $1.6 MILLION IN POWER SUPPLY COSTS. UM, BY THE END OF THE YEAR IT'LL BE 2 MILLION AND IT WOULD BE $2 MILLION PLUS EVERY SINGLE YEAR BECAUSE WE'RE NOT ABLE TO BALANCE THE UNDER COLLECTION, UM, AND OUR SUPPLY COSTS. SO WE NEED TO HAVE THAT BALANCING TOOL IN THE PCA AND UM, THAT'S WHAT THIS RATE PLAN SHOWS, AND THAT'S WHAT I'M PROPOSING IN THE 3% RATE INCREASE WITH THE, WITH, BY REMOVING THE BALANCING RESTRICTIONS. OH, I'M BEING A LITTLE REDUNDANT HERE, BUT I HAD A SLIDE TOWARDS ANYHOW, JUST TO TALK ABOUT MY, YOU KNOW, BE CLEAR ON. MY RECOMMENDATION IS 43% RATE INCREASE WITH AN UNRESTRICTED PCA AND THAT MEANS 12 MONTH ADJUSTMENT FACTOR WHERE WE'RE BALANCING THE PCA EVERY SINGLE [00:10:01] MONTH, BUT WE'RE LOOKING 12 MONTHS ON A ROLLING AVERAGE, 12 MONTHS IN THE, IN THE REAR AND BALANCING OR UNDER COLLECTIVE COSTS AND RECOVERING IT IN THE NEXT MONTH AS AN ALTERNATIVE TO THAT IS THE 4.5% RATE INCREASE WITH OUR CURRENT RESTRICTIONS. UM, AND THAT WOULD BE FOR ALL NEEDED UNMETERED GRADES. TAKING A QUICK, UH, COMPARATIVE LOOK GRAPHICALLY, UM, THE 4% RATE INCREASED METHOD, YOU CAN SEE THAT PRESENTLY WE'RE AT 14 CENTS PER KILOWATT HOUR. UM, THIS ADJUSTMENT WOULD TAKE US TO 15 CENTS AND BY 2028 WOULD BE UP TO ABOUT 16 PER 16 CENTS PER KILOWATT HOUR. STILL LAGGING DUE ON A DOLLAR VALUE. UH, WE'RE ABOUT $143 FOR OUR AVERAGE RESIDENTIAL CUSTOMER. AND WHAT THE 4% RATE INCREASE, UM, THAT COST EXPERIENCE WOULD BE TO THEM ABOUT $6 AND 15 CENTS THIS YEAR. AND IF WE DID ANOTHER ADJUSTMENT THE FOLLOWING YEAR, ANOTHER 6 56 76 ROUGHLY, UM, IN 2028 USING THE 3% METHODOLOGY. HERE'S WHERE THINGS GET A LITTLE, UM, NOT DIFFICULT TO EXPLAIN, BUT I WANT TO TRY TO ADD SOME CLARITY. SO, UM, I ADDED A NEW SLIDE, A COUPLE NEW SLIDES THAT YOU MAY NOT HAVE IN YOUR, IN YOUR PRINTED PACKAGE TO HELP CLARIFY THIS. BUT I TALKED BRIEFLY ABOUT A 12 MONTH ROLLING AVERAGE. I WANTED TO SHOW YOU WHAT WE DID. A 24 MONTH ROLLING AVERAGE AND WENT BACK AND TRIED TO COLLECT, UN TRIED TO COLLECT UNDERCOVERED POWER SUPPLY COSTS OVER THE LAST 12 MONTHS, AND THAT WOULD BE A 14%, UM, OR 15 CENTS PER KILOWATT HOUR THIS YEAR, 16 CENTS NEXT YEAR. AND HOVERING RIGHT AROUND THE 16 CENTS, UH, MARK IN THE YEAR 2028 AS FAR AS DOLLARS GO AND THE CUSTOMER EXPERIENCE, THEY'D GO FROM $143 ON THEIR AVERAGE BILL TO $156 TO $13 A MONTH JUMP. AND THEN THE NEXT YEAR, $4 INCREASE TO $161. AND THEN FINALLY THE NEXT YEAR, ANOTHER $4 INCREASE TO $165. SO IF WE SLOW THAT ADJUSTMENT FACTOR DOWN TO 12 MONTHS AND ALLOW US TO BALANCE THAT UNCOLLECTED POWER SUPPLY COSTS OVER 12 MONTH PERIOD, UH, IT'S ABOUT 15 CENTS ROUGHLY. UM, IN PER KILOWATT HOUR THIS YEAR GOES UP TO ABOUT 15 POINT A HALF CENTS PER KILOWATT HOUR THE NEXT YEAR, AND ABOUT 15.90 CENTS PER KILOWATT OF THE FOLLOWING YEAR AS FAR AS DOLLARS GO. AND THE CUSTOMER'S EXPERIENCE, THEY'D BE GOING FROM A $143 FOR AN AVERAGE RESIDENTIAL BILL THIS YEAR TO $150 AS SOON AS THIS WAS APPROVED. AND THEN 154 AND 158. UM, FOLLOWING. SO LOOKING AT THIS IN A LITTLE BIT OF A DIFFERENT FORMAT, THE 4% RATE INCREASE WITH A RESTRICTED PCA, YOU CAN SEE THAT THE FIRST ADJUSTMENT THIS YEAR, WHAT I'M ASKING FOR IS A $6 15 CENTS AVERAGE COST INCREASE FOR A CUSTOMER, UM, OVER THE COURSE OF THREE YEARS. AND IF WE CONTINUED WITH, UM, THAT FOUR AND A HALF PERCENT RATE INCREASE WOULD BE 19, ALMOST $19 AND 41 CENTS, ALMOST $20 OVER THE COURSE OF THREE YEARS THAT THEY WERE EXPERIENCING PRIVATE COST INCREASE. LOOKING AT THE 3% METHOD WITH THE UNRESTRICTED PCA, BUT USING THE 24 MONTH ADJUSTMENT FACTOR, YOU CAN SEE THAT THIS FIRST YEAR IS A $13, UM, AND 30 CENTS INCREASE TO THE COST, THEN IT LEVELS OFF BECAUSE WE'VE BEEN ABLE TO COLLECT, UH, SOME OF THAT UNDERCOVER OF POWER SUPPLY COST, $4 AND 26 CENTS THE FOLLOWING YEAR, AND $4 AND 33 CENTS THE NEXT YEAR TOTAL OVER THREE YEARS. THE CUSTOMER EXPERIENCE WOULD BE ABOUT ALMOST $22 COST INCREASE OVER THREE YEARS. THE 3% RATE INCREASE USING THE 12 MONTH ADJUSTMENT METHODOLOGY, THEY'D GO FROM A HUNDRED FORTY THREE FORTY NINE TO 150 10, THE AVERAGE CUSTOMER, [00:15:01] AVERAGE RESIDENTIAL CUSTOMER TO $6 AND 61 CENTS, UM, INCREASE THAT'S LESS THAN ONE BIG MAC. UM, AND THEN THE NEXT YEAR, $4 26 CENTS FOLLOWING YEAR, $4 AND 37 CENTS OVER THE COURSE OF THREE YEARS. TOTAL ADJUSTMENTS ONLY $15 AND 24 CENTS. THAT'S THE LEAST OF ALL THREE OPTIONS, AND IT ALLOWS US TO RECOVER UNDER COLLECTIVE POWER SUPPLY COSTS. AS FAR AS RATE MODERNIZATION GOES, UM, I'D LIKE TO TAKE THE TIME TO TALK ABOUT OUR SOLAR RATES BRIEFLY AND, UM, RECOGNIZE THE FACT THAT, UM, OUR SOLAR CREDITS TO OUR SOLAR PRODUCING CUSTOMERS IS, IS UNDERVALUED. WE HAVEN'T, UM, ADJUSTED THAT CREDIT IN QUITE SOME TIME. SO I'M RECOGNIZING THAT, UM, VALUE FOR SOLAR BE ADJUSTED. UM, AT THE SAME TIME I'M ALSO RECOGNIZING THAT SOLAR COMMUNITY AND OUR SOLAR COME UP CUSTOMERS, UM, THEY WANT TO DO, THEY WANT TO PRODUCE THEIR OWN SOLAR, THEY WANT TO CONSUME IT, AND THEY WANT TO SELL BACK ANY EXCESS TO THE UTILITY. OUR CURRENT RATE DOESN'T ALLOW THEM TO DO THAT. IT ONLY ALLOWS THEM TO PRODUCE AND SELL IT ALL BACK TO US. SO WHAT I'M PROPOSING IS IN THE INDUSTRY IS WHAT WE CALL NET BILLING SOLUTION. IT'S ONE METER AND WE HAVE TWO REGISTERS IN THE METER AND EVERYTHING THAT THEY, THEY BUY FROM US, THEY GET CHARGED FOR, AND EVERYTHING THAT THEY SELL BACK TO US, THEY GET CREDIT FOR. AND ANYTHING IN BETWEEN THEY'RE CONSUMING AND THEY CAN HAVE THEMSELVES. UM, SO THAT INVOLVES AN ENERGY CREDIT, UH, ROUGHLY RIGHT TODAY. UM, IF I WERE TO CALCULATED OR YESTERDAY, IT'S ABOUT 5.70 CENTS. UM, WE'VE ADJUST THAT MONTHLY AND RECOGNIZING, AS I'VE BEEN SAYING, A POWER SUPPLY COSTS CHANGE ALL THE TIME. SO I ONLY THINK IT'S FAIR FOR SOLAR CUSTOMERS TO ADJUST IT, UM, AS OFTEN AS WE CAN. AND THEN PART OF THAT RATE WOULD BE A GRID ACCESS FEE OF $6 AND 31 CENTS, UM, PER KW BASED ON THE SIZE OF OUR SYSTEM. I'M STILL A LITTLE BIT IN THE DESIGN PROCESS OF THIS. MY GOAL, UM, IS TO GET THIS ALL WRAPPED UP. SO IT WOULD BE IN FRONT OF YOU SHOULD YOU LIKE TO HAVE THE PUBLIC HEARING IN JULY. IT WOULD ALL BE READY FOR YOU TO ADOPT, BUT I STILL, IT'S NOT QUITE ALL FINISHED AND SETTLED, UM, ON THE NET BILLING SOLAR OFFERING IN ORDER TO DO THAT. WHAT I'M THINKING RIGHT NOW, AND THIS IS STILL KIND OF, UM, IN THE WORKS OUR, WE HAVE CURRENT SCHEDULE 60, WHICH IS OUR RENEWABLE RESOURCE FACILITY CREDIT, AND THAT'S IN WHAT WE CALL IN THE INDUSTRY IS BUY ALL SELL OFF. WE HAVE TWO METERS. ONE METER IS CONNECTED TO YOUR HOUSE AND YOU BUY ALL OF YOUR ELECTRIC ELECTRICITY FROM US. THE OTHER METER MEASURES ALL OF THE SOLAR THAT THEY PRODUCE AND THEY PUT BACK ONTO THE GRID. THEY DON'T CONSUME ANY OF IT. AND THAT'S WHERE THE NET BILLING SOLUTION PROVIDES THEM, UH, THE SERVICE THAT THEY'RE ASKING FOR. UM, SO RIGHT NOW I'M THINKING WE WOULD MAKE THE SCHEDULE 60, THE BUY ALL SELL ALL RATE OBSOLETE LIMITED TO YOUR EXISTING CUSTOMERS, RECOGNIZE THAT ENERGY CREDIT IS STILL UNDERVALUED. SO WE INCREASE THAT ENERGY CREDIT TO THE CURRENT VALUE AND UPDATE IT MONTHLY, UM, AND THEN OFFER THOSE THAT WANT TO SWITCH FROM OUR SCHEDULE 60 TO OUR NEW RIGHT PROPOSED RIDER. NUMBER TWO, THAT THEY WOULD PAY FOR THAT AT THEIR OWN EXPENSE AND THE COST OF CONVERTING ALL THOSE WIRES AND, AND CHANGING THAT SYSTEM OUT. SO I HOPE TO HAVE THAT ALL WRAPPED UP. UM, SHOULD YOU LEFT TO HAVE THE PUBLIC HEARING AND, UH, READY FOR YOU IN JULY. SO IN CONCLUSION, I'M ASKING YOU FOR YOUR CONSIDERATION AND MAKING A RECOMMENDATION THAT YOU CALL FOR PUBLIC HEARING TO AMEND THE ELECTRIC RATE ORDINANCE, UM, TO OCCUR ON JULY 8TH, 2025. AND THAT WILL BE BEFORE YOU TONIGHT ON THE CONSENT AGENDA. AND THOSE AMENDMENTS INCLUDE A 3% RATE INCREASE, AN UNRESTRICTED PCA 12 MONTH ADJUSTMENT FACTOR, ADOPT RIDER NUMBER TWO, WHICH IS OUR RENEWABLE ENERGY PROVIDER, UM, RIDER, AND THEN MAKE OBSOLETE OUR EXISTING SCHEDULE 60 RENEWABLE RESOURCE FACILITY CREDIT. ANY QUESTIONS? I KNOW THERE'S A LOT TO DIGEST AND GO THROUGH, BUT, UH, SOME OF IT WE COVERED BEFORE AND I DIDN'T KNOW HOW DEEP YOU WANTED TO GO. MY QUESTION, UM, TO USE THAT WITH THE SOLAR, DO YOU, DO YOU SEE THAT FORTHCOMING AS A GREAT BENEFIT TO THE CITY OR, YOU KNOW, WE SHOULD BE INDIFFERENT. OKAY. AND WE'RE NOT QUITE INDIFFERENT TODAY, BUT [00:20:01] IF WE ARE ABLE TO CONTINUE WITH, UM, PLANS TO MODERNIZE OUR RATES, UM, IT SHOULDN'T MAKE A DIFFERENCE TO US WHETHER I'M BUYING SOLAR OR BUYING POWER FROM NE KEMBA AT THE COST VALUE OF NE KEMBA, OR I'M BUYING SOLAR FROM YOUR NEIGHBOR AT OUR COST VALUE. I DON'T WANNA BUY IT FOR ANYMORE AND I WANNA BE FAIR TO THEM, SO I DON'T WANNA BUY IT FOR ANY LESS. AND THE SAME THING WOULD GO WITH BATTERIES. THEY SHOULD BE INDIFFERENT. UM, OUR RATES SHOULD BE STRUCTURED SO THAT WE CAN, UM, FAIRLY, UM, UM, ACCOUNT FOR THEIR, UM, USE OF THE SYSTEM AND THEIR PURCHASE OF ENERGY AND, BUT WE NEED TO MAKE SOME OTHER ADJUSTMENTS IN OUR RATES AND THAT'S WHAT I HAVE PLANNED GOING FORWARD WITH RATE MODERNIZATION. BUT AT THE END OF THE DAY, WE SHOULD BE INDIFFERENT. OKAY. SO ARE YOU HAVING A LOT OF REQUESTS FROM CITIZENS THAT, NOT A LOT. NOT A LOT. NOT A LOT, BUT WE'RE TRYING TO BE, UM, THOUGHTFUL AND ON THE FOREFRONT. UM, WE PROBABLY LAGGED BEHIND QUITE FRANKLY. AND, UM, I'M JUST NOW GETTING TO THE POINT WHERE , YOU KNOW, WE CAN WORK ON SOME OF THIS STUFF, RIGHT? UM, WE FIRST HAD TO PUT IN AN A MI SYSTEM, UM, THEN WE, UM, ELIMINATED OLD ARCHAIC, UH, STREET LIGHTING RATES AND INCANDESCENT TYPE OF BULBS AND GOT THOSE RATES MODERNIZED. WE'VE, UM, PURCHASED A NEW BILLING SYSTEM. UM, THERE'S A LOT OF STEPS THAT WE'VE TAKEN TO GET US TO THIS POINT, TRYING TO KEEP ON MOVING. DID I ANSWER YOUR QUESTION? THAT ANSWERS MY QUESTION. UM, CHARLIE, WOULD YOU LIKE TO COVER HOW MANY SOLAR CUSTOMERS WE CURRENTLY HAVE AROUND 40? AND WHEN IT COMES TO THE UNRESTRICTED PCA, WHAT ALL COULD BE INCLUDED IN THAT? AND I'M, AND I'M CURIOUS, WOULD THAT INCLUDE A TRUE UP FROM FROM ELECTRIC CITIES, THE, THE PCA FUNCTIONS TO RECOVER, TO MAKE THE ASSUMPTION THAT OUR BASE RATES ARE DESIGNED CORRECTLY AND THEY'RE RECOVERING ALL OF OUR POWER COSTS AND WE KNOW THEY'RE NOT, BUT LET'S JUST MAKE THAT ASSUMPTION AND LET'S MAKE THE ASSUMPTION THAT IN 2020 THEY WERE RECOVERING ALL OF OUR COSTS, ALL THE COSTS OF OUR POWER THAT WE BUY, THE COST OF THIS CONVERSATION, THE COST OF THE LINES, THE COST OF THIS DEVICE THAT I'M HOLDING IN MY, ALL OF OUR COSTS WAS BEING RECOVERED BY OUR BASE RATES. UM, THAT'S NOT THE CASE. UH, WE BELIEVE, UM, THAT THAT WAS HAPPENING IN 2020 AND AT THAT TIME ON A POWER COST WHERE, DON'T HOLD ME TO THIS NUMBER, I BELIEVE 8.41 CENTS. SO THE WAY THE PCA IS DESIGNED IS EVERY MONTH WHEN OUR COSTS ARE ABOVE 8.41 CENTS, THE DIFFERENCE BETWEEN 8.41 AND OUR COST OF POWER THIS MONTH IS WHAT THE PCA COLLECTS. AND IT ALL LAGS. IT ALL LAGS BECAUSE AS YOU WELL KNOW, YOU DON'T GET YOUR UTILITY BILLS UNTIL A MONTH AFTER YOU CONSUME IT. AND THE SAME THING GOES WITH ME. I DON'T GET MY POWER COSTS AND FOUR A MONTH LATER, I DON'T HAVE MY POWER COSTS YET FOR, FOR MAY. AND IT'S THE 10TH OF JUNE. UM, SO I DON'T KNOW FOR A MONTH AFTER THE FACT HOW MUCH I'VE OVER RECOVERED OR UNDERCOVERED AND IT'S ALL UNDER RECOVERED RIGHT NOW. SO THAT PIECE, AM I ANSWERING YOUR QUESTION? YES. UM, AND WHAT THE RESTRICTIONS WE HAVE ON IT NOW IS THAT WE CAN'T BALANCE IT. SO, UM, IT JUST TRIES TO COLLECT, BUT IF THERE'S AN UNDER RECOVERY, IT DOESN'T GO BACK AND SAY ADD THIS UNDER RECOVERY TO THIS, TO THE NEXT MONTH'S BILL. AND THAT'S WHAT WE WANT TO DO. BUT WE, WE TALKED ABOUT IT EARLY ON ABOUT GOING BACK TO 2022 AND COLLECTING $3 MILLION OF UNDER COLLECTED, UH, POWER COSTS SINCE THAT TIME. I THINK THE BOARD'S, UM, THOUGHTS WERE, WE DON'T WANT TO GO BACK THAT FAR AND COLLECT ON, ON OUR OWN UNDER RECOVERY EFFORTS. THIS METHODOLOGY KEEPS IT WITH ALL IN THE SAME YEAR. SO WE'RE JUST GOING BACK 12 MONTHS AND, UM, TRYING TO COLLECT THAT IN THE NEXT MONTH GOING FORWARD. DOES THAT MAKE ANY SENSE? [00:25:01] I DON'T KNOW IF I MISSED, UH, YOU MAKING THE STATEMENT THAT FLUCTUATION WOULD TRANSLATE INTO WHAT COSTS ON THE CONSUMER. THE CURRENT PCA HAS BEEN AVER SINCE DECEMBER HAS BEEN AVERAGING 0.5 TENTHS OF A CENT 0.0050. THAT'S THE AVERAGE MONTHLY PCA SINCE THE TIME IT WENT EFFECT IN DECEMBER. UNDER THE METHODOLOGY THAT I'M PROPOSING AND THE, THE EXAMPLES THAT I PUT IN FRONT OF YOU USING THE 12 MONTH METHODOLOGY, WE WOULD IN AUGUST FIX AN ADJUSTMENT FACTOR THAT LOOKED AT THE LAST 12 MONTHS, AVERAGE THAT OUT FOR THE NEXT TWO 12 MONTHS. IT WOULD BE A FIXED NUMBER AND THAT FIXED NUMBER BASED ON YESTERDAY'S POWER COST IS 0 CENTS. SO 3.3 TENTHS OF A CENT PER KILOWATT HOUR. SO ADD THAT TO THE 0.005. AND NOW YOUR PCA WOULD WOULD LOCK IN AT 0.003 PLUS THE OTHER PART WOULD FLUCTUATE A LITTLE BIT. YOUR AVERAGE IS GONNA BE PROBABLY SOMEWHERE AROUND 0.8 0.08 TENTHS OF A CENT FOR YOUR POWER COST ADJUSTMENT CHARGE. AND WE CURRENTLY HAVE A CAP ON IT RIGHT NOW OF ONE AND A HALF CENTS. SO YOUR AVERAGE IS GONNA BE LOWER THAN YOUR CURRENT CAP. BUT I DO, WHEN I FORECASTED THIS OUT AND I RAN MODELS ON IT, THERE ARE GONNA BE SOME MONTHS THAT YOU'RE SLIGHTLY OVER THE CAP THAT WE HAVE NOW, BUT OTHER MONTHS IT'LL AVERAGE OUT THAT YOU'LL BE AROUND EIGHT TENTHS OF A CENT. SO YOU TALKED ABOUT OVER A YEAR'S TIME, BUT WE ARE TALKING ABOUT MONTHLY, OVER EVERY MONTH IT WOULD BE ADDED TO THE BILL, BUT WHAT WE'RE TRYING TO RECOVER IS WHAT HAPPENED OVER THE COURSE OF THE CURRENT YEAR. DOES THAT MAKE SENSE? MM-HMM . IT'S, IT'S TOUGH TO EXPLAIN. I KNOW IT'S, UM, AND I'D BE HAPPY TO SIT DOWN WITH NU ONE-ON-ONE AND TALK ABOUT IT ALL DAY LONG AND SHOW YOU THE MATH AND UM, AND TRY TO DO A BETTER JOB EXPLAINING IT. BUT, UH, THAT'S, THAT'S MY RECOMMENDATION. SO SEAN, I HAVE ANOTHER QUESTION. SO WITH BALANCING THE PCA MONTHLY YOU COULD KEEP THAT WOULD ALLOW YOU TO USE THE 3% INCREASE INSTEAD OF THE 4.5? CORRECT. OKAY. ALRIGHT. ALRIGHT. I JUST WANNA MAKE SURE WHAT, WHAT HAPPENS IF I'M NOT RECOVERING IT IN THE PCA? WE HAVE TO BUILD IT, IT'S GONNA HAVE TO GET COLLECTED BY THE RATES. SO RATES ARE JUST GONNA HAVE TO GO UP AND UP AND UP AND UP. RIGHT. IN THIS 12 MONTH METHODOLOGY UNDER RECOVERING THE LAST YEAR'S UNDER RECOVERING LAST YEARS UNDER RECOVERED AMOUNT BASED ON A 12 MONTH ROLLING AVERAGE, AFTER WE GET THROUGH THIS A YEAR, THE UNDER COLLECTION IS GONNA BE BALANCED OUT. OH, OKAY. OKAY. OKAY. SO, AND, AND I DO THINK IT'S EASIER ON THE CUSTOMER. RIGHT. OKAY. AND AND YOU ARE WANTING THIS FOR A FIVE YEAR PERIOD? NO, I'M JUST ASKING THIS YEAR FOR THIS YEAR. OKAY. 3% RATE INCREASE WITH THE UNRESTRICTED PCAI DO WANT TO COME BACK EVERY SINGLE YEAR AND HAVE THE SAME CONVERSATION. IT'S A MOVING TARGET. LAST DECEMBER WHEN WE HAD THIS CONVERSATION, I WAS FORECASTING A 0% RATE INCREASE ON A WHOLESALE POWER COST AND BETWEEN DECEMBER AND APRIL IT WENT FROM SIX POINT A HALF TO THREE POINT A HALF PERCENT AND THEY FINALLY LOCKED IN AND AT THREE POINT A HALF PERCENT AND THEY DIDN'T LOCK IN AT THREE POINT A HALF PERCENT UNTIL THE WEDNESDAY BEFORE OUR BOARD MEETING OR A WORKSHOP THAT WE HAD IN APRIL. SO I THINK I NEED TO COME BACK AND LOOK AT A RATE PLAN AND ADJUST IT EVERY SINGLE YEAR WITH YOU FOLKS. RIGHT NOW TODAY, BASED ON WHAT I KNOW, I THINK THE PLAN LOOKS LIKE 3% RATE INCREASES FOR THE FORESEEABLE FUTURE WITH AN UNRESTRICTED PCA. SO ALLOWING YOU TO DO THAT, I MEAN IT WOULD FOR FUTURE, I MEAN IT WOULD PRETTY MUCH KEEP YOU AT A POINT WHERE WHEN INFLATION HITS CORRECT. WITH COST IF YOU COME BACK, I MEAN, IF YOU CORRECT. CORRECT. YEAH, YEAH. WE CAN ADJUST FOR ALL OF THAT. OKAY. UM, I THINK WE, YOU KNOW, MY RECOMMENDATION IS THAT A HEALTHY, FINANCIALLY HEALTHY UTILITY, UM, IS CONSTANTLY MAKING REGULAR SMALL SINGLE DIGIT ADJUSTMENTS IN RESPONSE TO OPERATING [00:30:01] EXPENSES, WHETHER IT BE POWER SUPPLY COSTS OR UM, OR OPERATING EXPENSES. LEMME ASK YOU THIS QUESTION FOR MY, YEAH. SO IF, IF WE HAVE BEEN KEEPING UP, AND ACTUALLY I THINK IT'S FOR THE LAST NINE YEARS, RATES WEREN'T INCREASED, WE WOULDN'T BE AT THIS POINT, CORRECT? SOMEWHAT AT THIS POINT. I KNOW THERE'S A LOT OF FACTORS INVOLVED. YEAH, A LOT, A LOT OF VARIABLES, RIGHT. UM, YOU KNOW, WE, WE WENT THROUGH A LOT OF, A LOT OF DIFFERENT THINGS WITH, UH, UM, COVID AND THE GOVERNOR SUSPENDED, RIGHT? UM, BILLING AND COLLECTION ON CUSTOMERS TO, UM, POWER COSTS WERE A LITTLE MORE STABLE. UM, AND FUEL PRICES HAVE NOT NOW GONE UP. INFLATION WENT RAMPANT ON US. UM, THAT'S WHY I THINK IT'S PROBABLY, REGARDLESS OF WHAT'S GOING ON, LIKE I SAID IN THE PAST, THE UTILITY, YOU KNOW, IT'S SUBJECTED TO, UM, FEDERAL POLICY, STATE POLICY, WEATHER SALES, THE COST OF FUEL, THERE'S SO MANY DIFFERENT FACTORS, TEMPERATURE OUTSIDE THAT IMPACT OUR BUSINESS AND OUR RESPONSE TO TO THAT. UM, RIGHT NOW WHAT WE, MY FORECAST ON WHOLESALE POWER SUPPLY COSTS, DUKE ENERGY PROGRESS AND DUKE ENERGY CAROLINAS ARE TRYING TO MERGE. THEY'RE SAYING THAT'S GONNA HAPPEN IN 2027. POWER, POWER COSTS IN THE WEST. DUKE, CAROLINAS IS LESS THAN IT IS HERE IN DUKE ENERGY PROGRESS IN THE EAST. WE WANT THEIR PRICES. THE WEST DOESN'T WANT OUR PRICES. SO HOW'S THIS GONNA SHAKE OUT? DON'T KNOW THAT. THAT'S WHY I JUST THINK WE NEED TO COME BACK EVERY SINGLE YEAR ON A REGULAR BASIS AND JUST ALWAYS TALK ABOUT WHAT'S A FIVE YEAR CAPITAL PLAN? WHAT'S OUR FINANCIAL SITUATION LOOK, UH, LOOK LIKE, WHAT DOES A RATE PATH LOOK LIKE? AND THEN MAKE THOSE SOUND DECISIONS. UM, AND IF I CAN DIVE A LITTLE BIT DEEPER BACK INTO RATE MODERNIZATION, THE WHOLE GOAL THERE, RIGHT? RIGHT NOW OUR RATES ARE ARCHAIC AND THEY'RE BASED ON WHAT I CALL VOLUMETRIC RATES. SO ALL OF OUR COSTS ARE BUNDLED INTO THE PRICE OF POWER, ENERGY, UM, AND THEY'RE SPREAD OUT TO ALL OF THE CONSUMERS. I THINK WHAT GREAT MODERNIZATION LOOKS LIKE IS PASSING ON WHOLESALE COSTS DIRECTLY TO THE CUSTOMER. WE DON'T NEED TO MARK THOSE UP. WE DON'T NEED TO MAKE MONEY ON IT. BUT I HAVE TO DESIGN A RATE THAT WILL LINE UP WITH HOW I'M BUYING POWER PASS THAT COST ON DIRECTLY TO OUR CUSTOMERS. SO THOSE ENERGY PRICES AND THOSE POWER PRICES ON THEIR BILL GO DOWN. SO WHERE DO I COLLECT THE REST OF IT? THAT'S WHAT I WOULD CALL FIXED COSTS. AND THAT'S THE COST OF MY TRUCKS, MY LINES, THIS CONVERSATION. AND THAT GOES INTO YOUR BASE CHARGE AND IT BECOMES A FIXED CHARGE AND CUSTOMERS CAN THEN COUNT ON THAT. AND THOSE USING LOWER AMOUNTS OF ENERGY, THEIR BILL IS GONNA DECREASE BECAUSE THEY'RE JUST GETTING PASSED THROUGH THE WHOLESALE COST. BUT I'M NOT QUITE THERE YET. I THANK YOU FOR INFORMATION AND UM, EACH TIME YOU COME BEFORE ME, I, I GRASP A LITTLE MORE . UM, I TILT MY HAT TO YOU AND YOUR STAFF. UM, WELL THANK YOU. THEY DO . WOW. ANY OTHER QUESTIONS, CHARLIE, ON, UM, IN YOUR, YOUR CAPITAL PROGRAM AND, AND I, I NEED A LITTLE HELP, UH, IN TERMS OF TERMINOLOGY, I KNOW WE HAVE, UM, SOME EQUIPMENT IN THE SYSTEM THAT IS OLD, UM, VERY EXPENSIVE TO REPLACE. UH, WHAT AM I TALKING ABOUT? I MEAN, I, I DON'T WANT, YOU KNOW, COMPRESSORS, CONDENSERS, THERE'S SOME, UH, ALL THE, WELL NOT CON DIFFERENT WORDS, BUT ALL OF THE ABOVE. SO, UM, SUBSTATION, WHICH IS CAPACITY, UH, WE NEED A NEW SUBSTATION, UM, TO SUPPORT OUR CURRENT LOAD AS WELL AS, UH, FORECASTED LOAD GROWTH IN ADDITION TO SUPPORTING THOSE, THE SUBSTATION WILL ALSO, UM, SUPPORT, UM, RELIABILITY AND RESILIENCY 'CAUSE WE'LL BE ABLE TO REROUTE POWER TO DISTRESS THE AREAS, UM, THAT WE CAN'T DO NOW BECAUSE I DON'T HAVE ENOUGH CAPACITY. UM, IN ADDITION TO THAT, THAT'S WHAT I CALL THE SUBSTATION PROJECT. THAT'S THE COUNTY LINE ROAD PROJECT. CURRENTLY OUR GLEN BURNIE SUBSTATION, UM, IS OUR OLDEST SUBSTATION HAS THREE TRANSFORMERS IN IT. UH, THEY'RE ALL OVER 50 YEARS OLD. UH, THAT, THAT'S WHAT [00:35:01] I WAS MISSING. THE, THE, THE TRANSFORMER PIECE OF THAT. CORRECT. THEN WHAT, WHAT ARE WE DOING TO ADDRESS? I'M ASKING FOR MONEY, THE ULTIMATE REPLACEMENT OF THESE TRANSFORMERS. I'M ASKING FOR A RATE INCREASE AND I'M ASKING FOR, UH, REVENUE BONDS. SO YOU'RE BUILDING IN, UM, CORRECT. IF YOU, WE GO BACK SOME MONEY THAT CAN BE SET ASIDE FOR THE EVENTUAL REPLACEMENT, NOT SET ASIDE PAY THE DEBT SERVICE ON IT. OKAY. SO WE CAN GET STARTED RIGHT AWAY. I'M NOT TRYING TO SAVE, WE'RE NOT, WE'RE NOT PRESENTLY, WE'RE NOT IN A POSITION WHERE WE WOULD BE ALLOWED TO GO OUT AND BORROW MONEY. I DON'T THINK ANYBODY WOULD LEND US MONEY RIGHT NOW BASED ON WHAT I JUST TOLD YOU IN OUR DEBT COVERAGE RATIO AND A CASH ON HAND. I THINK THEY WOULD LAUGH AT US. SO WHEN WOULD YOU ANTICIPATE THAT THE UTILITY IS GOING TO BE IN A POSITION THAT WE COULD THEN LOOK AT GOING OUT AND BORROWING THE NECESSARY FUNDS TO START REPLACING? I'LL ASK THE FINANCIAL DIRECTOR TO HELP ME WITH THIS THE DAY AFTER YOU APPROVE IT. I'VE HAD CONVERSATION WITH, UM, OUR FINANCIAL ADVISORS AND WE'VE DONE SOMETHING AND WE'VE BEEN WORKING ON THIS FOR QUITE SOME TIME AND WE NEED TO, THESE, WE NEED TO GET THE, UM, THE REVENUES COMING IN AND BUILDING THAT, THAT, UH, CASH RESERVE UP SO THAT, AND THEN WHEN THEY SEE THAT THESE HAVE BEEN INCREASED, EVEN THOUGH WE MAY NOT BE IN THE PERFECT POSITION, WE WILL BE ABLE TO SHOW THAT, UM, WE HAVE THE REVENUES COMING IN TO BE ABLE TO AFFORD IT DOWN THE LINE. SO, UM, THIS IS REALLY IMPORTANT TO GET MOVING ALONG NOW, OTHERWISE IT'S JUST GOING TO KEEP HOLDING US BACK. RIGHT NOW I END OF MAY, WE WERE AT 39 DAYS CASH ON HAND, SO WE'RE NOT MOVING THE NEEDLE THAT MUCH. UM, WITH THE INCREASES THAT WE HAD THIS PAST YEAR. KIM, WHAT IS THE, AND CHARLIE YOU CAN ANSWER THIS AS WELL. UM, OUR, OUR POLICY STATES HOW MANY DAYS OF CASH ON HAND IS RECOMMENDED? 90, 90 DAYS. AND THEN I BELIEVE IT'S A WORKSHOP. CHARLIE, YOUR GOAL WAS TO GET THAT DAYS OF CASH ON END TO WHAT? NINE I BELIEVE IT. OH, 128. IT, YEAH. END, I MEAN, I'D LIKE TO GO HIGHER THAN THAT, BUT I THINK MINIMUM INDUSTRY RECOMMENDATION 120 AND, AND SO WE HAVE TO GO THROUGH THE LOCAL GOVERNMENT COMMISSION FOR REVENUE BONDS AND SO THEY'RE GONNA LOOK AT, AT THE FINANCIAL HELP, SEE IF WE CAN ACTUALLY AFFORD THIS. RIGHT NOW WE CANNOT. THAT'S WHY WHEN WE WENT THROUGH THE BUDGET PROCESS AND THE BUDGET WORKSHOP COULD NOT RECOMMEND AT THAT TIME, UH, HARDLY ANY OF THE CAPITAL. 'CAUSE WE COULD NOT, WE DID NOT SEE THE REVENUES COMING IN TO COVER THAT. SO OBVIOUSLY WE DO HAVE TO LOOK AT RATE INCREASES TO BE ABLE TO GET TO A POINT. 'CAUSE ELECTRIC UTILITY, AS CHARLIE HAS SAID, TIME AND TIME AGAIN, WE HAVE AN INFRASTRUCTURE THAT WE HAVE GOT TO, UM, TAKE CARE OF AND THERE ARE SOME REPLACEMENTS THAT ARE COMING. AND UM, I WOULD LOVE TO SAY THAT WE, ONCE THE BOARD APPROVES SOMETHING, WE COULD GET STARTED ON, UM, CAPITAL PROJECTS IMMEDIATELY, BUT IT'S GONNA TAKE A LITTLE BIT MORE TIME. WE NEED TO START GETTING IN THAT RIGHT DIRECTION AND, AND JUST USING THE, THE TRANSFORMERS AS AN EXAMPLE. UM, WHAT'S THE COST TODAY? I I'M BUDGETING 6 MILLION FOR ONE OR NO, TO DO THAT WHOLE JOB TO REPLACE ALL THREE AND WE'LL GO, WE'RE GONNA GO FROM A A THREE TRANSFORMER DESIGN TO TWO TRANSFORMER DESIGN. OKAY. UM, AND, AND THE TIMEFRAME THAT YOU WOULD THINK IT WOULD TAKE FROM PLACING AN ORDER BEFORE IT'S RECEIVED FROM, FROM, UH, SOLICITING BIDS TO TIME OF BEING ENERGIZED? NO LESS THAN A YEAR AND A HALF. I PUSHED REAL HARD AND I, AND I, I, UM, ASKED REAL NICELY THE MANUFACTURERS TO GET OUR TRANSFORMERS FIRST IN LINE MIGHT HAVE A LEVEL LEVERAGE. IF I CAN ORDER TWO AT A TIME, MIGHT HAVE A LITTLE MORE LEVERAGE. IF I COULD ORDER FOUR 'CAUSE I WANT TO DO THE COUNTY LAND ROAD SUBSTATION TOO, THAT MIGHT GIVE ME SOME PRIORITY. AND THERE'S ONLY SO MUCH MANUFACTURING SPACE FOR THESE TYPE OF TRANSFORMERS. UM, BUT IN, AND THE TRANSFORMERS WILL BE ORDERED AND THE REST OF THE MAJOR EQUIPMENT WILL BE ORDERED VERY EARLY ON, HAS LONG LEAD TIMES. THE REST OF THE SITE WORK IS GONNA TAKE PLACE [00:40:01] AND THINGS WILL BE MADE READY. SO WHEN THE TRANSFORMERS COME IN A YEAR AND YEAR AND A HALF, WHENEVER THAT DELIVERY TIME IS, THEY'RE READY TO BE SET, TAKEN OFF THE TRAILER UP AND CRANED UP AND PUT IN PLACE. AND THEN IT'S JUST A MATTER OF COMMISSIONING THEM AND UH, CONNECTING THEM AND UH, GETTING THE SERVICE, GETTING THE SUBSTATION IN SERVICE. SO WE'RE NOT, THAT'S NOT LOST TIME IF WE'RE, IF WE'RE MANAGING IT CORRECTLY. UM, ON, ON YOUR ISSUE WITH, WITH CAPITAL COSTS. ANOTHER, ANOTHER PRESSURE THAT'S WORKING ON US IS OUR, IT GOES BACK TO THIS POWER COST ADJUSTMENT CHARGE IS, UM, LOAD MANAGEMENT. AND FOR EVERY ONE MEGAWATT THAT WE CAN SH LOWER DURING THE PEAK HOUR OF THE MONTH, WE SAVE $22,000 PER MEGAWATT PER MONTH. I'M ALLOCATED 19 MEGAWATTS A GENERATION. SO IF I RAN 19 MEGAWATTS A GENERATION, I CAN LOWER MY POWER SUPPLY COSTS BY 19 TIMES 22,000 A MONTH. I DON'T HAVE 19 MEGAWATTS, I HAVE 12 AND OF THE 12 IT'S ALL AT LEAST 20 YEARS OLD AND I CAN MAYBE GET FIVE TO SEVEN MEGAWATTS RUNNING ON ANY PARTICULAR MONTH. AND IT'S GETTING WORSE 'CAUSE IT'S GETTING OLDER. AND THE, THE LESS IS MY ABILITY TO DISPATCH THE, THAT GENERATION AND PUT IT ONLINE. OUR POWER COSTS GO UP $22,000 PER MEGAWATT EVERY MONTH, WHICH THE PCA WILL RECOVER. SO WE CAN PLAY THIS GAME A COUPLE DIFFERENT WAYS. , WE CAN INVEST IN NEW GENERATION AND I WOULD ESTIMATE THAT AT A MILLION DOLLARS A MEGAWATTS, SO I NEED ABOUT $20 MILLION TO REPLACE OUR GENERATION FLEET, UM, OR CAN HOLD BACK ON THAT $20 MILLION INVESTMENT AND JUST LET OUR PCA COLLECT IT. AND IT IS WHAT IT IS ON THE, UM, THE SUBSTATION. UM, YOU ARE PURSUING, UM, UH, THAT, THAT GRANT OR NO, WE LOST THAT GRANT. WE WERE DENIED. BUT THAT WAS LAST YEAR, WASN'T IT? CORRECT. I I APPLIED TWO YEARS IN A ROW AND WE WERE DENIED BOTH YEARS AND IT'S NOT BEING OFFERED RIGHT NOW. OH, IT'S NOT BEING OFFERED? CORRECT. OKAY. YEAH, I'M NOT PURSUING ANYTHING OTHER THAN DEBT SERVICE. WE NOW WE HAVE, SO WITHOUT, WITHOUT THAT KIND OF A PROGRAM AVAILABLE TO AT LEAST APPLY FOR, UM, WE'RE WE'RE LOOKING AT HAVING TO TO FOOT THE FULL BILL FOR, UM, CONSTRUCTION OF THE SUBSTATION SOMEWHERE. CORRECT. NOW WE'VE MADE PROGRESS ON IT. WE'VE, UH, WE'VE PURCHASED THE, UM, THE LAND, UH, WE'VE, WE'VE PURCHASED THE EASEMENTS THAT WE NEED. UM, WE HAVE AN AGREEMENT AND HAVE A LOT OF THE ENGINEERING DONE ON THE INTERCONNECTION TO THE TRANSMISSION SYSTEM WITH DUKE. UM, THIS IS ALL BECAUSE OF CAPACITY. UM, AND WHEN THE SUBSTATION ISS ALL FINISHED, THERE'S SUPPOSED TO BE A FEEDER AND INTERCONNECT BETWEEN THE NEW SUBSTATION AND THE BRYCE'S CREEK AREA, WHICH WE CALL THE COUNTRY CLUB ROAD FEEDER. UM, HOWEVER, CURRENTLY WE'VE EXPEDITED THAT CONSTRUCTION OF THAT FEEDER BECAUSE THE LEWIS FARM SUBSTATION IS OVERLOADED AND BLUE WATER RISE CONTINUES TO GROW AND I'M OUT OF CAPACITY. SO I'M TRYING TO BUILD THREE MILES WORTH OF POWER LINES DOWN COUNTY LINE ROAD AND THROUGH THE STATE FORESTS TO SERVE THE BACKSIDE OF BLUE WATER RISE. UM, AND RIGHT NOW I'M HELD UP ON A STATE OR ON A, ON A, UH, US FORESTRY PERMIT. I'VE GOT IT ALL THE WAY DOWN TO THE FOREST STREET APARTMENT. AS SOON AS I GET THAT PERMIT, THEN I'M READY TO GO IN AND I'LL PICK UP THE BACKSIDE OF BLUE WATER RISE. SO CHARLIE, I I'M GONNA THROW A MONKEY WRENCH INTO THIS , WHAT'S THAT? I'M GONNA THROW A MONKEY WRENCH INTO OH, SHE DON'T . SO IF A CATASTROPHIC EVENT HAPPENED RIGHT NOW AND THE LECTURE DEPARTMENT BE IN TROUBLE, WE'RE WE'RE, WE'RE GONNA WORK. OKAY. UM, I'M JUST OUT OF CONTINGENCIES. [00:45:01] OKAY. WHY I'M BILLING AN EMERGENCY. WHY LINE FROM BRYCE'S CREEK TO BLUE WATER RISE AND ULTIMATELY THAT CI THAT CIRCUIT IS FED FROM LOWS BOULEVARD SUBSTATION TRENT ROAD. OKAY. I'M TAKING IT ALL THE WAY UP TO BLUE WATER RISE BECAUSE THE CIRCUIT THAT'S FEEDING IT AND THE SUBSTATION THAT IT'S ON CAN'T HANDLE ANYMORE. THAT'S BECAUSE YOU SAID OF THE AMOUNT OF KILOWATTS IS SUPPLY DURING PEAK CONDITIONS. YES. OKAY. AND LAST DECEMBER, LAST DECEMBER TRIPPED OFF AND I HAD TO MOVE CUSTOMERS AND I'VE GOT MORE HOUSES BEING BUILT IN BLUE WATER RISE AND I'VE GOT THRIVE MORE COMING IN TO CAROLINA COLORS. I'VE GOT A LOT OF DENSITY THAT'S FILLING IN. IT'S IN NEED CAPACITY. WELL, , I JUST, I I I DON'T WANT A RATE INCREASE, BUT I KNOW IT'S NEEDED. 'CAUSE I DON'T WANT MY OUR CITIZENS TO BE LEFT IN THE DARK. I MEAN, JUST LOOK AT THIS PAST SATURDAY, THE STORM HAD COME THROUGH HERE AND I THINK IT WAS LIKE 2200 PEOPLE GOT KNOCKED OUT. I MEAN, AND THIS, WE ALL KNOW THAT THIS IS A DIRE NEED. SO I JUST, YOU KNOW, FEEL THAT WE, AS A BOARD, I HOPE THAT WE ARE LISTENING TO YOU AND, UM, COME TO SOME PLAN OF RECONCILIATION AND I'LL GET ON BOARD WITH THIS AND LET'S GET THESE, THESE RATE INCREASES. DO WE NEED TO SLOW DOWN CONSTRUCTION OVER IN THAT AREA? I DON'T, I I DON'T WANT TO GIVE IT UP. I DON'T WANT TO GIVE IT UP EITHER, BUT I DON'T WANT EVERYBODY TO LOSE POWER BECAUSE WE DON'T HAVE ENOUGH TO SUPPLY ALL THE HOUSES. WE HAVE AN OBLIGATION. OKAY. I ASSUME WE DO. I I I'M NOT STOPPING UNTIL SOMEBODY'S TELLING ME TO STOP. WHAT'S YOUR THOUGHTS? WELL, CHARLIE AND I HAVE HAD A CONVERSATION ON, ON WHERE DUKE PROVIDES ENERGY, COULD THEY PROVIDE TO, TO BLUE WATER RISE IF NEEDED. AND SO WE'VE HAD OUR CONVERSATION ABOUT THAT. UM, IT'S GOOD LOAD FOR US. WE DON'T HAVE TO GO VERY FAR AND DUKE'S NOT THERE. IT'S UM, IT, IT'S GOOD LOAD, BUT THEN AGAIN WE'VE GOTTA BUILD A SUBSTATION. IF WE GIVE IT ALL UP RIGHT NOW, IT STILL DOESN'T CHANGE. THE LEWIS FARM SUBSTATION IS OVERLOADED. OKAY. I STILL HAVE AREAS WITHIN THAT FOOTPRINT WITHIN CAROLINA COLLEGE THAT I HAVE TO SERVE THAT, THAT HAVEN'T BEEN BUILT ON YET. ALL THE WAY UP AND DOWN THROUGH JAMES CITY. SO JUST GIVING UP ONE AREA, IT JUST DOESN'T SOLVE THE PROBLEM. AND, AND CHARLIE, TO BUILD THE SUBSTATION TIMING FOR THAT, HOW LONG WOULD IT TAKE? YOU MENTIONED TO UH, ABOUT, ABOUT A YEAR AND A HALF TO TWO YEARS TO GET IT ONLINE AND APPROXIMATELY TWO YEARS FOR A SUBSTATION, APPROXIMATELY A YEAR AND A HALF TO CHANGE OUT TRANSFORMS IN OUR EXISTING SUBSTATION PER PER PROJECT. CAN WE DO 'EM BOTH CONCURRENTLY? I SURE WOULD TRY AND, AND THE TOTAL COST FOR THAT, IF IT WAS DONE CONCURRENTLY, UM, I HAVE TO DOUBLE CHECK MY CAPITAL PLAN, BUT IF YOU LOOK ON THIS SLIDE AND YOU SEE THE BONDING, INCLUDING ISSUING FEES, THAT'S THE CAPITAL PLAN. UM, 28,000. I THINK I HAVE TO DOUBLE CHECK MY CAPITAL CLAIM, BUT I THINK IT IS BOTH THE SUBSTATION AND THE GLEN BURNIE TRANSFORMERS, THE NUMBER OF ACTUALLY LOOKS RIGHT IN THE FIRST YEAR AND THEN THE FOLLOWING YEAR IS GENERATION, UM, CHANGING A SUBSTATION AT TRENT ROAD, UM, RELOCATING AN EXTRA TRANSFORMER TRENT ROAD TO LEWIS FARM. AND THEN A THIRD YEAR IS SOME IMPROVEMENTS ON UNDERGROUNDING CRITICAL CONDUCTORS. AND THEN SOME CONDUCTORS THAT WE HAVE OUT THERE, SOME FEEDERS ARE UNDERSIZED. SO I THEY WEREN'T ONCE WERE FEEDERS THAT I COULD MOVE POWER AROUND NOW I CAN'T. THEY'RE TOO SMALL. SO CORRECTING THAT AS WELL, THAT'S IN THE THIRD GRID. AND THAT SLIDE THAT WE HAVE BEFORE US, IF WE WERE TO GET THIS, THIS RATE PLAN THE FIRST YEAR OF THE RATE PLAN APPROVED, UM, I THINK IT PROVES, UM, THE, I THINK THE FINANCIAL STUDY WILL PROVE THAT, THAT WE COULD AFFORD THE DEBT SERVICE ON BOTH, [00:50:01] UM, THE OPERATING BUDGET AS WELL AS THE DEBT SERVICE ON THAT $28.9 MILLION. WHEN DO YOU PROJECT WE CAN DO THAT. AS YOU SAY, WE NEED THE RATE AS SOON AS WE GET THE RATE INCREASE, UM, KIM'S BEEN WORKING ON IT, SHE SAYS. AND, AND, UH, UM, I THINK EVERYBODY IN THE LENDING COMMUNITY NEEDS TO BE REASSURED THAT WE, ARE WE DOING A RATE INCREASE OR WE NOT. OKAY. WE'RE HELD RIGHT NOW, WE'RE ON HOLD RIGHT NOW, UM, WAITING TO SEE WHAT WE CAN PROJECT FOR REVENUES BEFORE WE EVEN THINK ABOUT FILLING OUT AN APPLICATION FOR THE REVENUE BOND. SO WE HAVE TO KIND OF LAY THAT OUT, DO SOME FINANCIAL PLANNING WITH OR WITHOUT THIS JUST TO SEE WHERE WE'RE AT. I'M, I'M LIKE BARBARA, YOU KNOW, WE, NO ONE WANTS TO HAVE RATE INCREASES, BUT WE ALL WANT ELECTRICITY SO WE, WE'VE GOTTA MOVE TO DO SOMETHING. I DON'T WANNA BE INSENSITIVE TOWARDS IT, BUT, UM, FOR THE AVERAGE CUSTOMER USING 998 KILOWATTS PER HOUR, THE AVERAGE RESIDENTIAL CUSTOMER LESS THAN A BIG MAC, BIG MAC, $8 AND 70 CENTS THESE DAYS. YEAH, BUT THAT'S FOR THE VALUE MEAL, CHARLIE. NO IT'S NOT. THAT'S THE BIG MAC. I'M, SO ANY OTHER QUESTIONS, UH, OF TRIAL? WE HAVE US TONIGHT. WHAT'S THAT? THEY NEED US TO DO ANYTHING. SO THIS, THIS IS FOR INFORMATION. OKAY. UH, SO TONIGHT OF COURSE ON, ON THE, UH, CONSENT AGENDA, THERE IS A CALL FOR A PUBLIC HEARING TO DISCUSS THIS, TO MOVE FORWARD. OKAY. SO ACTION WILL BE TAKEN IN JULY'S MEETING THAT'S CORRECT. AFTER A PUBLIC HEARING? THAT'S CORRECT. ALRIGHT, THANK YOU. YEAH, IF YOU, IF YOU VOTE TO HAVE THE PUBLIC HEAR HEARING, THEN I HAVE TO, UH, PUBLISH UH, WHAT THOSE AMENDMENTS WOULD LOOK LIKE. OKAY. AND, UM, THEN WAIT UNTIL THE DATE OF THE PUBLIC HEARING, THEN WE CAN DISCUSS IT AGAIN. SO WE HAVE TO VOTE TONIGHT TO HAVE THE PUBLIC HEARING, CORRECT? YES. AND THAT IS ON THE CONSENT AGENDA FOR, FOR TONIGHT'S MEETING. OKAY. IN, IN THE MEANTIME, IF ANYBODY WANTS TO SIT DOWN WITH ME AND GO THROUGH THIS IN MORE GRANULAR DETAIL, UM, I WOULD LOVE TO DO IT. I TALK ABOUT IT ALL DAY LONG. WELL, I RELY ON YOU SUPPLIES FOR WHAT WE NEED IN KIM WITH THE DOLLARS AND WE ALL KNOW IT'S, THIS IS A NO BRAINER. WE GOTTA DO SOMETHING. I MEAN, WE CAN'T JUST KEEP ON AS A FAMOUS MAYOR PRO TEM SAY KICK THE CAN DOWN THE ROAD ON THIS. WE GOTTA DO SOMETHING, YOU KNOW, AND WE NEED TO DO IT SOON. CONSIDERING YOU SAID IT'S GONNA TAKE TWO YEARS FOR EVERYTHING TO BE COMPLETE AND IN PLACE FOR, FOR THE SUBSTATION, CORRECT? YEAH. I I THINK IF I CAN SAY JUST TO REMEMBER THAT CASH IS AT 8.8 MILLION ON A $66 MILLION BUDGET. WE HAD TO CUT CAPITAL BECAUSE WE DON'T HAVE THE THE MEANS TO, TO PAY FOR IT NEXT YEAR IF WE DON'T SEE SOMETHING CHANGE. WE HAD A WRITE UP, UM, A FINDING AT AUDIT LAST YEAR BECAUSE THE ELECTRIC FUND HAD SUCH, UM, I THINK THEY ESTIMATED 16 DAYS ON HAND AT THE TIME, CASH ON HAND. SO WE, WE DO HAVE TO START SEEING SOME CHANGE, SOME REVENUE COMING IN. AND DID ANYTHING ELSE, CHARLIE? THERE WAS SOME MENTION IN THE PAST ABOUT, UM, I DIDN'T RECEIVE THE DIRECTION TO, TO, UM, TO GIVE A RATE DESIGN FOR, TO MATCH DUKE, BUT WE DID A LITTLE BIT OF WORK. UM, AND IF WE WERE TO MATCH DUKE'S RATE FOR THIS YEAR, IT WOULD BE A 14% RATE INCREASE WITH AN UNRESTRICTED PCA. THAT'S WHAT I WOULD NEED TO GET YOU TO DUKE. SAY THAT AGAIN. I'D NEED A 14% RATE INCREASE THIS YEAR WITH AN UNRESTRICTED PCA TO MATCH DUES. I'M PROPOSING 3% WITH AN UNRESTRICTED PCA. LEMME ASK YOU ONE, ONE MORE QUESTION. WHY DID I KNOW AT THE BUDGET SESSION YOU WAS ASKED, YOU WERE SPEAKING ON I THINK IT WAS FOUR AND A HALF PERCENT. CORRECT. OKAY. SO WHAT, SO WHAT MADE YOU GO BACK TO THREE? BECAUSE LE CII WAS [00:55:01] ALWAYS THE THREE. OKAY. THE CONSULTANT, UM, RECOMMENDED HE PROPO THEY LAID OUT BOTH OPTIONS FOR US. RIGHT, RIGHT. THEY, UM, AND MYSELF, I I, YOU KNOW, YOU, YOU FOLKS WEREN'T CRAZY ABOUT THE PCA WHEN I FIRST ROLLED IT OUT. NO, DON'T SAY US FOLKS. 'CAUSE I'M ON FOUR DESKS. OKAY. , LET ME MAKE THAT CORRECTION. OKAY. I CORRECT MYSELF THERE. THERE WAS, UM, SOME CONCERN, UM, ABOUT THE PCA MM-HMM AND THAT'S WHY WE WENT IN WITH THE RESTRICTIONS. WE GOT IT STARTED. AND, UM, I STILL DON'T KNOW IF THIS UNRESTRICTED IS, IS HAS CONCERNS OR NOT. I WON'T KNOW THAT UNTIL WE VOTE, UM, OR UNTIL THERE'S A DISCUSSION ABOUT IT. SO, BUT THAT'S, YOU KNOW, WHEN YOU LOOK AT THIS, THIS LAYOUT HERE ON THIS SCREEN, I, I CAN'T HELP BUT FAVOR THE 3% UNRESTRICTED WITH, WITH THE 12 MONTH ADJUSTMENT. IT'S EASIER ON THE CUSTOMER AND IT MEETS OUR NEEDS. AND, AND, AND, AND IF WITH THAT 3% UNRESTRICTED PTA, WOULD THAT PUT YOU BACK AT WHAT, HOW WITH GAINING THAT FOR THAT FOR A YEAR, WHATEVER, OR MONTHLY OR YEARLY, WOULD THAT PUT YOU BACK, UM, AT THE NUMBER OF DAYS THAT'S KIND OF REQUIRED OR WOULD THAT PUT YOU AT 60 OR WOULD THAT PUT YOU AT 90 OR WHAT, WHAT WOULD THAT PUT YOU AT? I REMEMBER HOW TO GO BACK. I UNDERSTAND. I WOULD, I BELIEVE WE BACK THIS YEAR UP TO ABOUT NINE, FOUR DAYS. WOW. AND YOU DIDN'T, YOU SAY WE'RE CURRENTLY AT 36 KIM? UM, YES. 39 DAYS. 39 DAYS. ALRIGHT. OKAY. THAT'S ALL I I HAVE, REMEMBER WE'RE UNDER COLLECTING $2 MILLION A YEAR NOW CURRENTLY ON PARK SUPPLY COSTS. SO IF THERE ARE NO OTHER QUESTIONS OR COMMENTS, CAN I GET A MOTION TO ADJOURN? I'D MAKE A MOTION TO ADJOURN THE WORKS STATION. I SECOND. SECOND. ALL IN FAVOR? AYE. THANK YOU CHARLIE. * This transcript was created by voice-to-text technology. The transcript has not been edited for errors or omissions, it is for reference only and is not the official minutes of the meeting.