TPPA Update. TPPA Annual Meeting July 24, Walt Baum, Executive Director, TPPA

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1 TPPA Update TPPA Annual Meeting July 24, 2018 Walt Baum, Executive Director, TPPA

2 Mission Statement To provide service to the members by facilitating cooperation among the member systems (municipal utilities, joint action agencies, river authorities and electric cooperatives), assisting in the solution of mutual problems, promoting the exchange of ideas and experiences, providing spokespersons for the Association concerning state and national issues, and operating a resource center for research and technical assistance and promoting a general understanding of public power.

3 Community Owned and Locally Driven The public power business model is locally governed, serves the interests of its customers and is dedicated to delivering the highest quality of service to its community. MISSION: Reasonable rates and community value. Utility policies that are responsive to community priorities. GOVERNANCE: Local governance by elected city councils and also citizen boards, both accountable to citizen/ratepayers. Extensive public participation in the local utility governance process. Limited PUC regulation (for transmission costs, appeals, statewide market and reliability matters via ERCOT) INFRASTRUCTURE-BASED: MOUs own and operate utility infrastructure, including power plants and/or electric lines. RATES: Set locally, stable and more predictable due to diverse fuel sources (gas, coal, nuclear, wind, solar) SERVICE QUALITY: Reliable, local, and consumer-friendly FINANCE: Funded by utility revenues, not taxes. UTILITY PROCEEDS: Proceeds stay in the community. A portion of MOU revenues support general municipal services like public safety, roads, parks, and libraries community services.

4 Hurricane Harvey 4

5 Harvey Recovery efforts Municipally owned systems did not suffer the worst impacts of the storm. Overall we had about 160,000 customers affected, and had service restored to nearly everyone within three days. TPPA coordinated mutual aid and assistance calls with APPA and communicated with statewide officials After dealing with their outages TPPA members went to go help other MOUs, Coops and IOUs as well. PUC, Legislature are looking are recovery efforts and ways to improve 5

6 Legislative Storm-- Interim Charge on Competition Senate Business and Commerce Free Market Electricity Examine the competitive nature of the Texas retail electric system and what government competitive intrusions in the free energy markets may have in distorting those markets. Review the impact of competitive versus noncompetitive retail electricity markets across the state in terms of price and reliability. Consider the projected impact of establishing competitive electric retail markets statewide. Impacts Co-ops, MOUs Members of Committee: Sen. Kelly Hancock, Sen. Brandon Creighton, Sen. Donna Campbell, Sen. Craig Estes, Sen. Robert Nichols, Sen. Charles Schwertner, Sen. Larry Taylor, Sen. John Whitmire, Sen. Judith Zaffirini

7 We told the story of Public Power in Texas TPPA, AE, CPS Energy, Georgetown and LP&L (along with Coops) testified on May 1 MOUs are essential in providing stability and reliability to the Texas electricity market. MOUs provide reliability because they can enter into long term contracts that enable them to develop generation resources. MOUs provide stability to the ERCOT market due to its known customer base and resulting long term purchase power with generators. MOU rates have been, and continue to be, among the most stable in the industry. MOUs play a strong role in a competitive ERCOT Wholesale Market MOUs maintain an obligation to serve all customers MOUs invest in Texas, including power plants, because of known customer base and strong bond ratings. MOUs provide resources that assist with the reliability of the ERCOT grid

8 Electric Rates Track Fuel Prices -Gas Is Key Driver $ p e r 1, MOU Avg Oncor - Avg (DFW) CNP - Avg (Houston) AEP TC - Avg (Corpus Christi) Gas (Henry Hub) k W h Jun-06 Dec-06 Jun-07 Dec-07 Jun-08 Dec-08 Jun-09 Dec-09 Jun-10 Dec-10 Jun-11 Dec-11 Jun-12 Dec-12 Jun-13 Dec-13 Jun-14 Dec-14 Jun-15 Dec-15 Jun-16 Dec-16 Jun-17 Dec-17 -

9 Competitive Market Issues It pays to switch power plans but few Houstonians do (Houston Chronicle, 7/5) Think shopping for electric rates is confusing? So does the chair of the PUC (FWST, 6/29) Texas to scrutinize 'misleading' electricity plans on Power to Choose website (DMN, 6/29) NRG drops power plans after tough talk from Texas regulators (Houston Chronicle, 6/29) Regulators blast electricity providers for deception (Houston Chronicle, 6/28) Trying to hold electricity deregulation to its promise (Houston Chronicle, 6/22) When the Breeze stops: Retail default hits as summer arrives (E&E, 6/15) Electricity prices expected to skyrocket this summer in Texas (Houston Chronicle, 6/11) PUCT Chair: Electric contracts should be squared away before summer begins (Victoria Advocate, 6/3) Breeze Energy shutdown leaves nearly 10K customers in limbo (KPRC-NBC Houston, 6/1) Here's how to avoid higher electric bills when prices go up this summer (KPRC-NBC, 5/30) Want Cheap Electricity? Move to San Antonio or Austin (Houston Chronicle, 5/29)

10 Competitive Market Issues

11 Lubbock moving to ERCOT Lubbock moving to Competition? The PUC has determined that it is in the public interest for LP&L to transition 70% of their load into ERCOT. There will be transmission built to physically connect them into ERCOT grid. The key benefit for LP&L is access to economical and reliable wholesale power options that are not available to them in the SPP. Lubbock is unique for several reasons History of competition in their service territory Will be entering into ERCOT with no long term power supply contracts or obligations We believe that the existing statute is appropriate. It allows the governing body of the MOU to transition into competition if they feel it is best for their community. Decision should be left at local level.

12 Telling the public power story Public Power Systems = Low Rates & Community Value Local decisions are best way to serve our communities Tell the story the value of public power community control, innovation, customer choices, local economic development. Let TPPA be a Resource for you and make sure you are a resource for your customers

13 Questions? 13