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AWC ANNUAL MEETING 2004-05 Year In Review

TODAY'S PRESENTATION. BACKGROUND: AWC Members, Mission, Funding, and Administration.

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AWC ANNUAL MEETING 2004-05 Year In Review

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    1. AWC ANNUAL MEETING 2004-05 Year In Review May 12 – 13, 2005 Austin, Texas

    3. BACKGROUND AWC MEMBERSHIP AND MISSION 36 of the 42 municipal utilities and electric coops served by LCRA, representing about 48% of LCRA’s native electric sales. Successful record: AWC contributes to competitiveness and financial integrity of cities, coops, and LCRA. Facilitate cooperation and provide a forum for city/coop/LCRA discussion.

    4. BACKGROUND AWC FUNDING & ADMINISTRATION Since the late 1980s, the AWC has contracted with TPPA to provide staff and administrative services. LCRA funding phased-out in 2001-02. Now funded by city/coop dues based on system size/sales. Every single AWC system renewed in ‘04-05. Many voluntarily added 10% to their dues. Financial support for Power Supply and Transmission Planning (PSTP) Committee also provided by non-members (GVEC, BEC, PEC). Dues / financial structure to stay the same in 2005-06.

    5. 2004-05 Year in Review REVIEW OF WHOLESALE POWER COSTS: Again this year, the AWC, with its consultant CH Guernsey, conducted a comprehensive review of the revenue requirements of LCRA’s Wholesale Power Services (WPS) business unit. Over the past three years, this effort has provided more information and more cost certainty for wholesale customer systems. This year, the cooperative undertaking with LCRA staff resulted in eight key policy recommendations concerning cost stabilization, fuels hedging, capital, customer input on excess net revenue, reserve funds, contingency funds, measuring LCRA’s performance in risk management, and corporate accounting.

    6. 2004-05 Year in Review REFUNDS TO WHOLESALE CUSTOMERS: The AWC worked with LCRA to implement refunds: over $37 million in over-collected fuel revenue and over $7 million in excess net base revenue. The AWC continues to advocate for more frequent and smaller revenue adjustments and for additional customer input.

    7. 2004-05 Year in Review UTILITY OPERATIONS – EFFICIENCY AND ACCOUNTABILITY: The AWC’s PSTP Committee continues to regularly review LCRA transmission and substation operations and costs. The Committee emphasizes system reliability and cooperation, as evidenced in new agreements on mobile substations and under frequency load shedding policies. COMMUNICATION AND INFORMATION: In addition to facilitating communication among its members, the AWC continues to receive regular reports from LCRA and to make recommendations on operational, financial, regulatory, and other topics.

    8. More details on some of last year’s AWC activities... NOT AWC: Rates and contracts continue to be outside the scope of the AWC. CONTINUING AWC ACTIVITIES: Communications and information activities. Cost monitoring activities. Power Supply and Transmission Planning Committee.

    9. …more details… Rates & Contracts: Not AWC LCRA: NO COLLECTIVE DISCUSSION. In effect for the last three years. Due to LCRA’s interpretation of anti-trust laws and for business reasons. Example: discussions regarding Price$elect are with each system individually. AWC has stated its disagreement and has differing legal opinion. NO AWC ROLE ON RATES AND CONTRACTS. AWC not involved for three years due to LCRA policies. Formalized in 10/03 AWC resolution. No AWC discussion or role in current activity on contract. Letter to AWC members 3/05. Other value-added AWC activities continue.

    10. AWC Communications and Information Activities …more details… Forum for city/coop/LCRA discussion: AWC Board, AWC Committees, newsletter, website, Annual Meeting. Receive LCRA reports and provide customer input. General (04-05 examples - regional issues, deregulation, grid security, and regulatory activities) Operational (04-05 examples - plant status/outage reports, summer/winter peak outlook, in depth review of ancillary services) Financial (04-05 examples - monthly LCRA financial status reports, quarterly business plan updates) Fuel (04-05 example - monthly review of over/under status) Monitor industry-wide activities at the legislature, the PUC and ERCOT.

    11. …more details… AWC Cost Monitoring: Customers’ Fiduciary Responsibility Receive regular reports from LCRA and provide customer input on fuel and purchased power costs, the status of over/under collections, and risk management policies. Monitor overcollections and support refunds to wholesale customer systems. Regularly monitor Wholesale Power Services (WPS) and GenTex costs and provide customer input. Annual cooperative AWC/LCRA review of WPS revenue requirements. RECOMMENDED POLICY CHANGES PROVIDE MORE INFORMATION AND COST CERTAINTY.

    12. AWC TRANSMISSION AND OPERATIONS …more details… POWER SUPPLY AND TRANSMISSION PLANNING (PSTP) COMMITTEE Review/approve transmission system improvements (planning criteria, routing). Monitor LCRA and grid operations: regular review of outage reports, ERCOT congestion issues, etc. Review WPS capital plan - major power plant upgrades. Specific projects and operations coordination. Developed policy for under frequency load shedding and agreement for use of mobile substations.

    13. Next Year and the Future of the AWC. CONTINUING: Communications, monitoring, PSTP. MEMBER DRIVEN. FACILITATE COOPERATION: a forum for discussion among cities, coops, and the LCRA. Current AWC Board: John Adams, San Bernard EC Ron Bowman, Boerne Jim Briggs, Georgetown, AWC President Paula DiFonzo, New Braunfels Doug Faseler, Seguin Bob Loth, Central Texas EC Gary Nietsche, Fayette EC Bill Taylor, Kerrville Bobby Waid, Bandera EC

    14. Questions?

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