Y'all are just so obedient.

I'm not used to that.

You've got 30 seconds, you can still talk to each other.

No.

All right.

Welcome everyone.

It's 1130, and we are convened in the chambers of the Huntsville City Council in Huntsville, Alabama, for this work session, which will feature a presentation of Huntsville Utilities CERP presentation, and that will be followed by City Council discussion of the CERP presentation.

No action will be taken at this meeting.

The meeting is being televised.

And we it is open to the public and we have members of the public here.

There will, however, be no public comments.

So we the only purpose of our meeting today is the CERT presentation, and we look forward to having uh Huntsville City Utilities CEO Wes Kelly present that for us.

And so, Mr.

Kelly, if he'll approach the diast uh the podium there, we will let you get started, introduce the members of your team, and um walk us through the presentation.

Thank you very much.

Wes Kelly with Huntsville Utilities, and it's a pleasure to be here today.

Usually we are here at night.

The sun is shining.

I don't it's uh nice day.

So, yes, there's a good number from the Huntsville Utility team.

I want to start by uh recognizing the board members that are present, both of the electric board and the gas board.

So if the Huntsville Utility Board members will please stand.

Welcome and thank you for your service.

Thank you very much.

And then we have several members of the Energy Task Force that was appointed by this council, the mayor and the utility boards.

If the uh task force members that are present would please stand.

Thank you.

Thank you.

Appreciate y'all's uh attendance.

And then uh we have several uh HU uh employees that are here, Chris Jones, our Chief Operating Officer, Daniel Kaufman, our General Counsel, uh a number of other Huntsville utility leaders are in the room, and I appreciate their presence so that uh they can correct me if I say something amiss.

Thank you all for being here, and thank you for your contributions.

All right.

Well, our agenda today is um, as you said, is is single topic, uh, but it is actually a fairly broad topic.

The community energy resource plan was something that was a uh a brainchild of of Mayor Battles as uh I I I well remember the meeting.

Uh, Mayor Battle and I and Shane Davis and Chip Cherry and Joe Rich and others were sitting around a table at the chamber thinking about all of the issues that are in front of us and the complicated energy environment that is coming and how our community is going to respond to that.

And uh the mayor had the foresight to say, you know what we probably need to do.

We need to get a group of people together that will spend the time to deep dive and analyze these issues and then come forward with a set of recommendations.

So that's what you see uh uh being the fruit of of this labor.

So um we're gonna go through the sort of the the bottom line recommendations.

Uh we're gonna talk about some of the growth analysis that was used throughout this uh um process.

We're gonna talk briefly about TVA energy plans, and uh I see Robbie is here from TVA, so we do have a representative from TBA with us today.

We'll talk about the preliminary findings and obviously the most important part discussions and next steps.

So the purpose of the community energy resource plan was to help Huntsville utilities respond to a rapidly changing energy landscape.

It wasn't that long ago.

Electricity seemed about as straightforward as turning on the faucet or firing up the range.

But over the last especially 10 years, this has gotten far more complicated.

If you read any major national publication or magazine, you will now see that energy has its own section and often it is energy and environment, because those two things are inextricably linked now.

And um national policy has shifted from uh where utilities were something that was a boring issue to now it's front of mind.

And uh that has created transition in the marketplace, uh meaning the way that we buy our power.

And we needed to know how does Huntsville position itself for its ongoing advancement, growth, development, so that we're not in the backseat waiting to just be led somewhere.

We're leaning forward and trying to figure out what is the right path for us, or at least at the very least, we are a good co-pilot along in that process.

So we work with the City of Huntsville to initiate this strategic planning effort to ensure long-term reliability, affordability, and sustainability in our electric system delivery.

That led to the formation of the Energy Task Force, which each council member had an appointee.

The mayor had three appointees, the utility electric utility board had three appointees, and then Chip Cherry was an emeritus member, if you will, although a full member of the task force representing our Chamber of Commerce.

So I appreciate their service.

And you'll see in a minute, this was not light duty.

This was a significant amount of work and they spent a significant amount of time.

So this chart, a little hard to read, but just illustrates we had a series of seven workshops, and these were extensive workshops.

The very first one was just a bit of a level setting of how does Huntsville utilities work, how does TVA work, how does electricity get from the power plant to the home, and then what are some of the issues associated with that?

Each one of these is these workshops that I'm uh going to be walking you through here for a moment uh were all day affairs.

They started at 9 o'clock.

The earliest one got over, I think was 2.30, the latest was about 4.30.

So this was an all-day situation up here on the seventh floor of City Hall.

And I appreciate the time and commitment that uh so many of the task force members meant spent to deep dive into these issues.

We followed a fairly consistent format.

It started with our um consultant Black and Veach, which is one of the largest electric uh engineering consulting firms in the country.

Uh Black and Veach who served as facilitator and helped us pull the report together.

They would give a national perspective of this is what's going on writ large in these various areas.

And then we had folks from TVA, various subject matter experts from TVA that would come and talk about how it impacts our region, and then Huntsville Utilities would have a presentation relevant to what we're doing locally.

And then it would have discussions and follow-ups.

And we did have outside guests and visitors come.

I saw Doc Holiday, I think Doc, you're in the room somewhere.

Yeah, Doc?

Doc was one of our guests.

Uh Daniel, good to see you.

Uh Daniel is one of our task force members as well.

Um we had uh uh peers, uh the my my counterpart from Chattanooga came down and talked about advances that they've made on their system.

So again, we would bring in uh a cadre of people that had expertise.

That second workshop was probably the most foundational, and it was economic development and community growth.

The star of that show was none other than our own Shane Davis, who walked us through the city's growth plans and what that looks like.

Now we also got information from TVA and in terms of some of their forecasts, and that became the basis of saying if we're looking at how to secure the energy needs for Huntsville for 20 years into the future, what does the load 20 years in the future look like?

So we're gonna spend a few minutes uh looking at that in just a minute.

The uh next workshop was demand side management, energy efficiency.

What can we do on the customer side?

Instead of talking about having to generate another KW, what can we get do to get customers to use less KWs or KWHs?

What we came through in that was there's, I think, good opportunities when it comes to reducing demand, which is the KW side of the house.

We have really strong programs now on the energy efficiency side, not a lot left to squeeze out of that, but there are opportunities to reduce that peak usage during critical periods of time.

So I'll touch on that in just a minute.

Grid modernization, that workshop, and you see the work, the flow, that's getting our grid up to speed.

I'll talk more about that in a minute.

Local generation, we spent quite a bit of time talking about governance, and then finally a workshop spent on finalizing the report, getting feedback, getting recommendations in.

In the end, uh the task force had two bites of the Apple.

They we held both an in-person meeting to review the draft report, changes were made based on that feedback, and then we did a uh uh a Teams call where everyone had a chance to go through it again.

There was no uh it was it was unanimously supported for those that were present to say, yes, we're all in agreement, let's go forward, this looks good in terms of the recommendations provided.

So, bottom line up front.

Um we identified some risk.

Uncertainty with TVA is first on that list.

And this is not because TVA is is is somehow fragile, but I think any of us that have looked at the news recently have seen that TVA has been in the news more than perhaps it has been of late.

Um its board positions continue to have churn and um and it and its leadership continues to change.

Um it has struggled uh to lay out its long-term generation plan.

I think they've largely come up with a good plan moving forward.

It has been challenged to keep up with a transmission system to support growing communities such as Huntsville.

So there has just been some reason to say that the good old days may not be the same moving forward.

There's opportunities for improvement.

There's the data center loads that's coming to the valley's added complexity to TVA's already laid-out generation plans.

So we needed to again think through how is Huntsville going to respond to this environment, because the days of just saying TVA will work it out, TVA will work it out, but will they work it out at a timetable and a priority level that aligns with the City of Huntsville's interest?

That's where we spend our time.

We looked at some of the governance challenges, which certainly for this council we will spend some time talking about.

And we looked at the potential for high load growth, especially on the West side of Huntsville, that Greenbrier side of Huntsville, and how do we continue to manage that?

So as mentioned, this was a community-driven process.

The appointed members, the seven workshops and Black and Beach did the uh the modeling work and some of the technical heavy lifting.

I appreciate their support on that.

The recommendations were work towards negotiating a new power contract with TVA.

This is not news to TVA.

Matter of fact, I spent all day yesterday at a meeting where TVA is starting to roll out new opportunities related to rates and future changes in the wholesale power contract.

So what the conversations we are having are dovetailing in with future conversations with TVA on new arrangements between its utilities and itself.

So I think we're coming at this at the right time.

We need to de-risk the HU grid and modernization investments.

There are clearly some things that we can do on the HU system to upgrade our transmission and distribution capabilities to keep up with modern technology.

And then the recommendation is consider adoption of public Act 175, which we'll spend more time talking about here in just a minute.

So next steps is yes, let's continue working with TVA.

Let's develop some implementation plans on these sections that I'm about to go through, and then yes, uh, let's spend some time talking to Council about the pros and cons of PA 175.

So drilling into the risk identified just a little bit more, TVA uncertainty, no matter how it works out, and whether we're talking about the White House or we're just talking about regular old uh how do you how do you get a massive transmission and generation plan put into action?

The potential impacts of that uncertainty turns into higher energy costs.

So what steps can Huntsville Utilities take with its customers to try to lower the impact of those higher utility costs?

I don't uh TVA has not been particularly bashful to say that rate increases are coming.

They have already had other rate increases recently and there's none imminent.

I don't think there are necessarily be any necessarily even this year, but I think that future rate increases when you look at the generation plan, when you look at the transmission plan, we would be foolish to think that that can be funded uh out of existing revenues.

So we we just need to be cognizant of that.

And again, what steps can we take and work with customers to try to lower that impact?

And those steps are demand side management and local generation scenarios to see if we can lower that impact to Huntsville U Huntsville customers in particular.

The risk associated with HU load growth, if we don't get that right, it reduces our economic development opportunities, and it creates system reliability challenges.

We got to get that right.

That's been core to what Huntsville has been for the last 15 years is growth and stability.

We have to make sure that that stays in place.

And demand time management, grid modernization, and local generation all have a role to play in that.

And then finally, the governance structure.

As things get more complicated in the broader energy market, how do we position Huntsville to be able to respond quickly if need be?

And then there's just some ongoing oddities and ambiguities that perhaps be cleaned up in the State has provided a vehicle to do that, and that's what I want to bring forward to you as a recommendation uh today.

All right.

Well, we started the SERP with um the city's mission.

The City of Huntsville remains committed in strategic land use planning, critical infrastructure investments to assure continued economic growth for both Huntsville and the North Alabama region.

So that was kind of a guiding star throughout the process and uh continued to be very important uh in our discussions.

So when we talk about growth, you will see here the uh the chart on the left is the Huntsville metro area population growth, and you see that is uh an impressive chart for 25 years.

I'm not showing you anything you have not seen before, and you all manage the complications associated with that every day here at City Hall, whether it be roads or schools or et cetera.

Well, we need to manage the complications of that from the utility infrastructure perspective.

The chart on the right breaks down what the energy growth has been during that same time period.

So the top bar, these are on two different scales, because you know we like to combine things, which creates confusion, but anyway, it helps for simplicity.

So the blue or the teal color up on the top is actual kilowatt hours.

And kilowatt hours are what most people think about when they think about their electricity, right?

Because when you get your residential bill, you are billed based on how many electrons flowed past that meter over the billing period, which is usually about 28 to 32 days, somewhere in that range, how many electrons flowed past that meter.

When you look at that chart, okay, there's been some ups and downs.

Obviously, it is weather dependent a bit, but um it's not super steep.

The one below it, that purplish mauve color, whatever that is, is a little bit steeper.

And that is the bar that is over on the right hand side where it's gone from under a thousand megawatts to over 1,500 megawatts on the trend line.

Uh matter of fact, last year we hit over 1,600 megawatts.

This is critically important to the way we do our business, but our customers don't seem to they they don't have as much daily impact.

This is a representation of demand.

How much energy did we have to provide within an hour on the Huntsville utility system?

How much infrastructure in terms of wires, um, transformers, all of the equipment has to be able to take that amount of energy and shove it through the pipes and deliver it to the customers.

Because while you may use that power over the course of the month, you might use relatively little except during two or three days, and you use a whole whole bunch.

We can't build the system on your average usage.

If we built the system on your average usage, then on those high days, lights would go out.

We have to build the system for the highest usage on the coldest day, on the hottest summer day.

When something unusual is happening, we have to build the system to support that peak number.

So in our business, we spend a lot of time focused on the peak because that drives cost.

So we have to put transformers in that are larger than are needed 90 plus percent of the time.

We have to put wires up that are needed larger than are needed 90 plus percent of the time.

And all the way back, TVA has to build power plants to meet that peak demand.

And I will tell you many of those power plants only run a few hours a year.

So they will spend hundreds of millions of dollars to build a power plant that runs a few hours a year.

But they obviously that's necessary to meet that load, and we all have to pay for that.

So demand is a very critical part of the way that we do our system planning.

We used these numbers to guide our conversations going forward.

We also did get some numbers from TVA.

This became part of the basis of our analysis as well.

TVA looked at what they saw growth continuing to come to the Huntsville area.

This is in kilowatt hours, so this is on the energy side, not the demand side.

This is on the energy side.

And you notice that scale, whereas our charts were zero to whatever, because that's the way I like to present things, because I think otherwise it can skew the results a little bit.

This doesn't.

This is a TVA chart.

It starts at at uh at 5.1 million and goes to 5.7 million megawatt hours.

Essentially, TVA's forecast for our region is that we will grow at 0.2 percent.

Over the last 20 years, we have grown at 2 percent averaged out.

That is a big delta.

So this became the basis of our low-end demand forecast, our low-end energy forecast.

TVA's uh decisions related to this, was they felt that limestone and Madison County had reached its growth and was going to start slowing in growth moving forward.

I disagree.

I think we need to prepare for an energy system that is going to continue to grow and is not stopping its growth.

So Shane was good enough to share with us specifics.

So I really appreciate this information because it really helps my engineering team think about the future.

The uh chart on the left says uh shows areas of expected future residential growth.

The chart on the right is expected future business and industrial growth.

And I appreciate all of the thought and effort that city planning puts into this and the fact that they are willing to engage with us so that we can make sure that we're providing the infrastructure to feed this.

And of course, there's other areas of growth as well, but these are just things that are on the radar.

Things that are expected over time.

So all that distilled out into some growth charts, and the low growth chart is the orange bar.

And I apologize, Excel picks these colors.

I don't mean to talk about Auburn, but they happen to be orange and blue.

That's just the way it is.

The orange is uh your low load growth, which again is following the TVA low forecast, and then the high is honestly it's pretty high.

What it does is it says that the last 20 years of energy growth match the next 20 years of energy growth.

That part doesn't sound too crazy.

But then we also added 50 megawatt hits.

We added large economic development projects about every four years on top of that, to just goose it just a little bit to understand what are the boundaries between low and high.

We'll probably be somewhere in the middle between that, right?

But we needed to know what are the upper bounds and what are the lower bounds.

So I'll spend just a minute talking about uh TVA power supply.

The uh chart on the left is TVA's peak load.

Again, how much power needs to be delivered at any moment in time to support the energy needs of the Tennessee Valley.

And what you see is that from 2020 to 2026, that line has been going up.

Chunk, chunk, chunk, chunk, chunk, chunk.

Every year it's going up.

That was not the case before.

And if you look at it on the energy basis, again, how much power is used over time, you would see that usage dropped for about 10 years when energy efficiency standards took over.

And then coming out of COVID, that energy usage rose as well.

So there was a period of time that there was flat load growth in the valley, but now it's changing.

We see it changing in the Huntsville area.

It's definitely changing as well in the Nashville area.

So these are the regions that are seeing that growth, the I-65 corridor.

And then TVA is continuing or are increasingly seeing demand from data centers, and we'll touch on that in just a minute as well.

The chart on the right shows where TVA is getting its power from.

And you see that that dark red that was up at 55 percent in 2006.

The reason I pulled this out of a of a news publication that was looking at what changes have been in store for TVA since they went to its current board structure, which took place in 2006.

So that's why it starts here in 2006.

But in 2006, you see that top was coal.

Coal has dropped significantly until you get down to about 2020 and then it's stabilized.

TVA board in its last board meeting, which was just about two weeks ago, um, there were two plants that were slated to be retired.

They have now decided not to retire those plants and to maintain those plants.

So you're gonna see that coal line stay pretty stable.

It's not, it was gonna fall off again by 2030, and I think maybe leave TBA with gallatin, a single coal plant.

But I think now I think they have three moving forward, and so that coal line is going to be fairly stable.

Uh you see the nuclear has been growing as TVA has they've not, they did add Watts Bar Unit 2 throughout there.

2006, that might have been when they fired up the third unit at Browns Ferry.

It was around that time.

It dipped in 2025.

That was due to maintenance issues.

Those have now been corrected so that nuclear line looks more stable moving forward.

The big growth has been on natural gas, that yellow, gold or whatever it is.

That's that has been the increase has been so as coal has declined, they have been able to increase nuclear, but they have also increased gas.

And then they've also added solar, although you see TBA solar is still a pretty I mean it's down at the bottom, right?

Hydro is pretty stable.

Hydro is obviously somewhat weather dependent, but it's it's a very stable resource.

You'd be amazed how many members of the public think that TVA gets all of its power from the dams.

TVA gets about 5 to 10 percent of its power from the dams.

It generates all the rest of the power through other means.

There was uh a moment in time in the 1930s and 1940s where that was true.

But from the 1950s on, it has been TVA became king of coal for a while.

They built the largest coal plants in the world.

Many of those, and that's why people say, oh, shutting down coal is due to environmental issues.

Well, of course that had a uh a hand to play in it.

They also had really old coal plants.

These plants were not designed to run 70, 80 years.

So some of these coal retirements have just been the plant lived its useful life.

It's time to let it go.

So I just wanted you to see that mix and and how that mix has changed over time.

The next slide is some information that TVA has released publicly.

Um I'll actually draw your attention to the one on the right with the cute little transmission towers.

This shows TVA's current generation that they have available that TVA owned and operated generation, 32,000 megawatts.

They have another 3,500 megawatts that is currently under construction, meaning they got active plans, you know, environmental studies are underway, or dirt's already been turned, steel is going in the ground.

Then they've got about another 3,000 megawatts that is in more long-range planning that is they see as being needed.

And then they have this 440 megawatts in terms of efficiencies and things they can think they can do that will that will help in this situation.

So TVA has a plan and they're working that plan.

One of the things that's driving that plan is the is the ring chart over on the left, and that shows the rise of data centers.

That's something, again, if you look at energy news, you're going to hear people talk about data centers.

Just five years ago, or maybe barely six years ago now, in 2019, data centers or data-driven loads, including crypto mining and other things, represented about 1 percent of TVA's load.

They now believe that represents about 16 percent of TVA's industrial load.

So you see that changing.

And that will continue to change, and that's a phenomenon that's happening nationwide.

Okay.

Well, let's get into our actual community injury resource plan and the findings of the plan.

We'll come back to this again at the end, but this is the actual list of of projects that flowed out of the community energy resource plan and breaking it up into phases.

Um we're going to spend just a minute in future in in the next slides going through the demand side management, grid mod, uh local generation governance.

And then you see phase one, phase two, phase three.

There's a lot of back and forth with the task force about which should go in which phase.

Uh for instance, the task force really thought we should spend time on time of use rates sooner rather than later.

I recognize that's a complicated political subject.

So I wanted a little more time to talk about that.

So maybe we needed to uh you know have a little air gap and then and talk about how time of use rates how time use rates would work.

Um, excuse me one second.

Yes, ma'am.

Where in this packet can I find this?

Because I I I don't see it.

The digital AP sent us.

So you sent us a digital of the report.

And I guess Ms.

Watkins is asking.

She is following and gotcha.

Just maybe a culmination of several different charts added together.

I'll tell you what.

So what we can do is we can get this presentation printed out and given to you now, if that's okay with you.

Yes, I would like that.

Mr.

Hamilton, can you do that?

Could you do two copies?

Should be pretty obvious.

Most recently.

I think we'll just get copies for everyone.

Yeah, I apologize for that, certainly.

So the um of these are projects that are already underway, some of these are new projects.

And so we'll spend just a minute, a little bit of time talking about that.

Okay, demand side management.

Again, this is what we can do to work with our customers to help them lower their peak usage during uh times that saves Huntsville utilities money, saves TVA money, and it needs to save them money at the same time.

TVA has some programs underway already for our large industrial customers.

What we want to do is to roll this down to our more commercial mid-size customers.

We think there's some opportunities here to reduce that peak demand in businesses more than just industrial customers.

Huntsville Utilities does not have very many industrial customers.

It's about 12 percent of our electric load is industrial.

That may surprise you, considering all the growth in industrial activity in Greenbrier, I'll remind you that's not served by Huntsville Utilities, it's served by Athens utilities.

So Huntsville, about 50 percent of our load is residential, 50 percent is business, but only out of that 50 percent, like I said, total about 12 percent is industrial.

The rest is office buildings and strip malls and commercial establishments of various kinds.

So we think there is an opportunity to build demand side management resources that will help us lower that peak demand with our commercial customers.

So we've got some programs in here that we have identified that I think we can move out on.

Then there are other things that affect the customer.

Battery storage, in this case, we're talking about customer battery storage, which is something that's growing, rooftop solar, which we have a program ready to roll out on that.

Water heater controls, that's where we shift when your water heater is operating to see if we can uh um have it not running during those peak periods, but still make sure you have some hot water.

That's as you can imagine customers are sensitive to that, right?

Well, they turn on that hot water they want it there, so there's good technology.

There's actually a company in Huntsville, which is one of the pioneers in water heater control.

Um they're a Huntsville-based company.

So it seems like something we ought to be spending a little bit of time on.

Thermal energy storage impacts your larger commercial businesses, and then time of use rates, which would be an issue for this council to consider is right now, due to the TVA rate structure, all of our large industrial customers are already on time of use rates.

Huntsville Utilities is billed by TVA as uh on a time of use basis.

But do we want to start um rolling that out on the commercial customers and then potentially, this is up to y'all, have an optional rate or even a mandatory rate with residential time of use.

So that's a subject for it will absolutely help lower those peak demands and lower costs, but obviously customers have a there's a tolerance issue associated with that.

Similarly, in here is uh TVA is rolling out a smart thermostat program that Huntsville Utilities is participating in.

We have got a few thousand people that have voluntarily signed up to uh let TVA and and Huntsville Utilities help manage their thermostat during peak periods.

And uh that program is actually generating a surprising amount of results already.

And that's happening at it, it's not been broadly communicated, but if you have a smart thermostat, you may have gotten an email or it may have popped up on your thermostat that you can participate in that program.

And so it's voluntary, customers can do it if they want.

They don't have to do it if they don't want.

Grid modernization is a um big subject, and it has to do with the the grid that serves Huntsville.

And so our grid is functional, uh, but it does have it does lack flexibility during peak periods of time.

During cold winter mornings, during hot summer days, we have to make sure that the uh our 46 KV transmission system is adequate to move load around the system.

It's been on Huntsville Utilities radar for many years to talk about moving to 161, which is the next higher level of transmission capacity.

That comes with additional um infrastructure, obviously associated with that.

So we're gonna need to move off the dime and and and get going on that.

And when I was here before council earlier, we spent some time touching on it.

Huntsville is already larger than Nashville was when it started building out its 161 system, so we're I think we're just sort of at that place.

Flizzer has to do with all these new advanced technologies that monitor and measure and control the system dynamically.

Um to this point, our electric system is still operating pretty much the way it did in the 90s.

I think we have the opportunity to make it better.

There is great technology, instant resources, tie into our fiber network and get those devices communicating and coordinating in real time.

Uh DER forecasting, that is uh where we have a more elaborate process.

If customers start to have solar on their uh behind their meter, storage behind their meter, other resources that they can bring to bear that impacts our local grid, we need to know what that is and then plan for that accordingly so we understand how to get as much value out of the existing infrastructure as possible.

We don't want to just overbuild and gold plate the system.

But that also means if you don't do that, it means you always have to have very good situational awareness to make sure that the system is in balance.

And then there's there's other technologies that the engineers love to talk about, but I'll sort of skip through that in the interest of time.

Local generation, yes.

Uh we spent quite a bit of time talking about the local generation issue, and I will sum this up very briefly.

This is really dependent on future conversations with TVA.

But I will tell you, this conversation, the CERP, is activating and motivating conversations with TVA right now.

So TVA is rolling out um future rate changes that are reactions to and follow up from this work.

So I'm very support I'm very appreciative of the support we have received from TVA because the work that we put into this so far is turning into improvements that are helping all of the Tennessee Valley.

So we need to continue to work with TVA on what they were calling co-supply, which was their new rate structure that they were looking at rolling out.

It is now called MPRO, which is marginal, marginal pricing rate option.

We need to look for utility scale solar where it is efficient.

We already have 30 megawatts of solar installed currently at the Toyota facility.

We're working now, the city and the county is working to get the land deal finalized so that we could look at building out another 45 megawatts of solar in the Triana area, giving us 75 megawatts of solar on our local grid that maxes out what we are allowed to do contractually with TBA.

We need to look at expanding gas pipeline capabilities.

If we want to have an option in the future for peaking gas generation, we have to have a fuel supply to meet that, and current pipeline capacity is not sufficient to do that.

Honestly, we could run it all day long in the summer, but if you wanted that gas generation to run on a cold winter morning, we could not run that generation with current pipeline constraints.

So that's clearly a problem that has to be addressed if we want that option in our tool belt.

Utility scale battery storage, we have our first little foray into that.

We have got a two-megawatt hour battery that we have secured, and uh a lot of our peers are moving out on that with uh plans to install hundreds of megawatts of battery storage.

We're starting with two.

We're starting at a very methodical pace.

But our friends in Chattanooga, our friends in Nashville, our friends in Memphis are well ahead of us in that game, as are uh systems around the country.

Uh but anyway, that's something we should spend some time learning about and understanding and figuring out the use case.

And then finally, evaluate waste to energy.

Doc is here, he's done incredibly innovative things with the incinerator.

That is currently generating power that feeds Redstone Arsenal.

That is one of the best kept secrets in Huntsville.

We have local generation in Huntsville right now, and it's run by our solid waste disposal authority, and it's supporting Redstone Arsenal.

So we're working with Doc now on a program to get some of his methane gas into our gas system, clean that and put it into our gas system as renewable natural gas, which is uh very impressive.

But then there's also the should we have further conversations about power generation flowing from his operations.

Okay.

Now finally we get to the governance subject, which obviously is center of uh this uh council's mind because this is your responsibility.

So HU's governance and board structure is complex, involving some ambiguous historical practices, some unclear multi-utility decision-making authority, and other legal and contractual complexities.

That's how I language this.

So there are uh several options aligned uh that are aligned, and we're gonna step through them here in just a minute.

Yeah, and I think we are on slide 19.

Now that um thank you very much, Mr.

Hamilton and Zach.

Appreciate that.

Um the Community Energy Resource Plan recommends uh the consolidation of HU's three boards into one board.

As this council well knows, you appoint a member to the electric board, you appoint a member to the gas board, and you will appoint a member to the waterworks board.

Um it would be real nice to have one board.

It would also be nice to point B, establish HU as a defined single legal entity for contracting financial and operational requirements.

We'll get into this more in just a moment.

But there is no there is no Huntsville utilities.

There is the City of Huntsville Electric Board, there is the City of Huntsville Natural Gas Board, there is the City of Huntsville Waterworks Board.

We issue contracts jointly as the City of Huntsville doing business as Huntsville utilities.

Seems like there is an opportunity to clean that up.

And the State has provided such an opportunity because all the other utilities have moved to that model.

Uh C is ensure authority to build, own, and operate generation and transmission assets.

The statute under which we are organized, which I've checked twice with my peers in the State, and I can, and I'm not saying there's not a small system somewhere that just hasn't responded, but I can find no other municipal utility system that serves multi-utilities that remains in this statute.

I think we're the only one.

It says that on the electric side, we have the power, we have the authority to distribute power.

Well, if we wanted to start creating generation assets, and I needed to go borrow money, Rod Canner is in the audience with us.

He will say, your statute doesn't say you can generate power.

You can't go borrow money to do something your statute says you don't have the authority to do.

Similarly, it might be open to interpretation.

Is transmission the same as distributing power or is transmission different?

Different lawyers might draw different conclusions.

So that took us to this chart right here, where we're looking at these four major objectives that were identified in the CERP.

Let's have a single legal entity as a multi-utility provider.

Let's have a single board that's making decisions for that utility.

Let's make sure we have clear authority to generate.

Let's make sure we have clear ability for transmission.

And I want to say at the outset here that when we talk about a single legal entity, that does not mean that you throw all the electric money and the gas money and the water money in the same bucket.

That doesn't work that way.

TVA requires electric to be fully separate.

We would still have accounting wise, the electric system, the water system, and the gas system.

But we can issue contracts, we can operate legally as one thing, we can have one board who meets at one time in the same room together.

Today we have most of the members of our electric board and most of the members of our gas and water board here with us today.

This happens once or twice a year that these people see each other because they have separate meetings to discuss an organization they collectively govern.

So again, it seems like there's an opportunity to do better on that.

So we looked at some alternatives here.

We could amend our current statutes.

We could adopt public Act 175.

We could go to the legislature and draft a private act, or we could enact the city could enact ordinances.

Our general counsel's opinion is that the green check marks are possible, the red X's are not possible to address these issues.

So the little asterisk there is require action of the State Leglature.

So if we wanted to amend the ordinances, it could make clear generation and transmission.

We need to go to Montgomery to get that done.

If we wanted to draft a private act that honestly, this council could craft however you desired, that's fine.

We could craft that, but it would still need to go to Montgomery to be uh adopted by the State Legislature.

Enacting ordinances does not obviously require any acting in the State Legislature.

Also, and lawyers can get in their room and talk about this.

Maybe there's some creative thoughts that we just haven't thought of yet.

It doesn't address the issue.

And then Public Act 175 is an existing public act that's already been passed by the State Legislature that involves this council passing a resolution adopting it.

But there are some provisions of the Public Act 175 that you might not like so much, but that's that's that's just the lay of the land.

The ambition here is to address these four things.

Now we have some other things that add just complexity to the way that we do business.

And I'll spend just a minute breaking those down.

One I'm going to reiterate up at the top, there's no framework exists for contracts that are not tied to a single utility.

So we have, I think last time I looked in our contract management system, 600 contracts.

Again, they're issued as the City of Huntsville doing business as Huntsville utilities.

When we're doing a complex business deal, we often get asked, well, show me your enabling statute, show me your bylaws, show me your articles of incorporation.

Well, we have no articles of incorporation, we have no bylaws.

In terms of enabling statutes, I send them three.

And I thought, wait a minute.

You sent me three for three different things, none of which are called Huntsville Utility.

That's right.

That's what we are.

And it's worked for 80 years.

And usually everybody just sort of gets on board and goes along with it.

It works as long as everyone agrees that it works.

And it has.

So kudos.

But as the world gets more complicated, again, there's an opportunity to make clear.

I'm not saying that any of this is illegal or improper.

I'm saying it's not clear.

It takes explanation.

It takes zigs and zags and ups and downs.

There's an opportunity to make it clear.

No provision for joint board meetings, policies, actions, fifty percent of Huntsville utility employees are joint, meaning they're paid a little by electric, a little by gas, and a little by water.

We have the same HR policies, you know, we have the same customer service policies, and these boards sync up.

So I take it to like right now, the gas and water board meets first, I take it to the gas and water board, they either approve it, change it, deny it, I take it the next day to the electric board, they either approve it, change it to deny it.

If they change it, then I need to work through the changes and then take it back the next month and we go through the same dance again.

Honestly, there are some, I can think of a policy right now I took to them recently.

One board adopted it, one board did not, so clearly we didn't do it.

That's just that's just the way we've done business.

Again, there's an opportunity to make it clear.

Um we have separate pension plans.

We have an electric pension plan, a water pension plan, a gas pension plan through RSA, just like the city has its pension plan.

Um that's okay.

We have different actuarial amounts, so they're funded at different levels, but that's all worked through with RSA.

The issue is the one below it.

All of our joint employees are in the gas pension.

They've been that way for decades.

They've just, if you're a joint employee, you get put in a gas pension.

RSA rules is they don't want to keep up with our silliness.

If an employee starts working in water and then moves to gas, RSA is not interested in changing their pension.

So you stay in whatever pension you started with at Huntsville Utilities.

So we have a large number of our workforce that's in the gas pension.

They were originally put in the gas pension because it had the lowest actuarial cost.

It was the cheapest pension to fund.

So from a rate stayers of ratepayer standpoint, and don't get me wrong, it's not like the gas system is carrying all that cost.

The electric has to pay the gas system and the water has to pay the gas system to cover those pension costs.

But we're getting to a point that when you look at the gas system's balance sheets, it has hundreds of millions of dollars worth of pension liabilities.

And we're not there yet, but we could get to a place that our gas system is the smallest utility.

The assets may not outweigh the pension liability.

That's an issue that if we had to go bar right now, we have no debt in the gas system.

If we had to go issue debt on the gas system, we'd have to address that.

We'd have to explain how can you have a pension liability higher than your fixed asset value?

And it's because we've tried to we've made it work.

We have made it work, and it's worked well.

And I'm proud of all the people before that have come up with the right solutions that have made these things work.

Again, there's an opportunity to make it clear.

Have a single pension system.

And RSA says if you adopt public Act 175, or you theoretically had a private act that actuated that, that they would just merge all three pensions into one.

Joint personal property ownership is ambiguous.

The desk in my office, 40 percent of it is paid for by electric.

I don't know, 25 percent of it or so is paid for by water, 20 percent is paid for by gas.

If somebody came in and said stick an asset tag on that desk, whose desk is it?

Again, there are three different things.

But again, this has just been this way for a long time.

Um taking us to real property is titled inconsistently.

That's just different lawyers over the years have done it different ways.

I won't bore you with that, but real property is different from personal property.

Some of the properties just held in the name of City of Huntsville, some of it's held in the City of Huntsville for its electric system, some for it it's just a little bit all over the place.

Again, we can make it clear.

The next item here is unclear authority uh to issue contract quote outside of normal business without City Council approval.

This has nothing to do with our statutes.

This language isn't nowhere in our statutes.

This language is in other municipal statutes.

But as the legislature makes changes to various municipal order um various municipal laws, it's not taking into account the strange statute under which we're organized and how we interact with that.

So again, no one's really tweaking our legislation when they make other adjustments.

Uh so that's just creates some confusion.

All debt must be issued on the name of City of Huntsville, not a problem.

If we were in a situation, let's say, God forbid TVA went away, and we needed to start building large assets to replace what we currently get from TVA, that will have a significant impact to the City of Huntsville.

We're not there, hopefully we never will be there, but we need to be prepared to think about that.

There's structural limitations that complicate uh business transactions.

Again, we our general counsel does a really good job trying to help people understand our unique governance structure.

It's not always easy.

And some people just walk away and say, I don't understand what you are, I don't want to do business with you.

And we go to the next person and we figure it out.

Um this one is sort of silly, but it's true.

Our current statute prohibits us using the same auditors two years in a row.

So we have an even year auditor and an odd year auditor.

Okay, I mean it's worked, it's been that way for a long time, but every other year we're switching auditors, which I mean, maybe maybe you like that.

That's good, but it is unusual.

I don't believe the city operates its audits that way.

I think you have one auditor that you work with over a period of time and then you go out for bid and you get another auditor.

Our State statute says we need to have a different auditor every year.

So that's what we do.

Okay.

Just about done.

So this takes us back to that other chart in case there was any of these that you wanted to talk about in particular.

The next slide is related to just opening up city discussion.

And then I do have some backup slides if if we end up going that direction, and you have some questions, and I need some graphical support.

So I appreciate y'all's patience letting me walk through that information.

Wes, you and I talked about possibly having any of your committee members who would like to make some comments.

Sure.

Would you like to do that next?

Are there any members of the energy task force that would like to share any thoughts or observations?

Mr.

Bryant?

Mr.

Hobbes, Mr.

Brian, if you'll come to the microphone right there.

First, I want to thank you for putting me on the board.

Second, I'd like to tell you that you've got a wonderful utility.

Your general manager is the best.

And I sat through about 50 hours of making soup.

And it was like they were putting the ingredients in every time.

I didn't know what kind of soup we were going to have.

But listen to Mr.

Kelly's presentation.

We have finally made the soup.

And it's good.

But that was one heck of a presentation.

And I want to tell you that you've got a wonderful utilities.

You've got one that you need to trust, but like in everything else, you need to verify.

So trust and verify.

The third thing is the best thing that I think you all have done prior to this was okay that gas line.

That's the biggest thing for this whole area is that gas line.

It gives us another source.

We need it now.

The questions couldn't be answered then, but they can be answered now.

We needed it, it's coming, it's going to be a thing.

And I want to thank the administration.

Administration put this thing together from the black and bitch.

It was a great presentation.

It was long.

It was boring, but it had a lot of good things.

But like we said, we have made the soup, verify, trust your utilities, trust your administration.

They're on top of it.

Thank you.

Thank you, Mr.

Bryan.

Any other members of the task force that would like to make any comments as part of this presentation?

Mr.

Bowles.

Yes, ma'am, thank you.

I want to congratulate the City Council and the mayor for coming up with this idea.

You're going to see we found a lot of things hidden back in corners.

You had to you pick the right people to get in the room, and they all had something different to uh uh offer.

You'll see things coming in the arsenal from Doc's outfit to the uh the steam plant.

But the main thing I wanted to say was I've watched the CEO of hustle utilities for a few decades.

And involved in the hiring a few of them.

I'm not so sure that we're going to continue to be able to find somebody if we tell them in advance what you just heard for 15 minutes about how what he's got to do.

I mean, electric industry is very complicated.

So is the gas, so is the water.

You got to run that and do uh work the political loops, but don't spend half of your time having to go through a maze to make a decision and get something done.

That's just my recommendation.

Thank you very much for the work you do.

Thanks, Mr.

Bowles.

It doesn't look like there's anyone else that uh of our task force members who want to uh to make comments.

So, council members, uh let's have our discussion.

What questions or thoughts do you have?

Questions from Mr.

Kelly, thoughts you would like to share?

Mr.

Kling.

Well, obviously, this is a lot of information to digest, and we've you know got a lot of reading to do.

So I'm just kind of grabbing at a couple of things, and there's nothing um you know particularly organized about it.

Uh I've heard off and on, and this is more my perspective, quasi layperson, whatever, about how data centers are coming into the fold, and they are literally just like sponges, just soaking up energy all over the place.

And I guess one concern I have, or trying to figure out how to balance it is that when we get into the future and we start looking at, you know, capital expenditures, which of course means it's going to come back on the ratepayers.

Is there a way to balance where when we have to expand our capacity?

Because I understand about that uh that day when it's 108 degrees and you know we need to have as much energy as possible.

But is there a way to kind of balance out where we're paying all this extra money because we need to have that capacity for these data centers, but at the same time, not saddle the uh consumer, the residential customers that we all you know in this room are representing, but not saddled them too much where they are literally subsidizing the data centers.

Uh I think there's some places that up at Three Mile Island up in the Northeast where I think there's is it Google's Microsoft.

Microsoft's data center basically has their own nuclear power plant.

Which I guess gives a perspective about how much energy they're going to have to draw.

But I guess where we go with this, you are up to 16 percent, and I'm assuming it's going to go up and not down.

How do we move forward with that capacity issue, but at the same time not saddle the you know the day in, day out ratepayers that are going to see increases anyway, you know, beyond what is reasonable.

Very timely question.

And one that is being asked across the country right now.

And I mentioned yesterday I was at a meeting with TVA talking looking at rate changes that are coming.

And TVA, now that it has a board, has a quorum on its board, which it hasn't had for a while, it is gearing up to make changes to its rate schedule that will help address this problem.

Currently, there as data centers get built and infrastructure has to get built, sort of those data centers, they are treated just like a manufacturing customer is today.

Everyone is starting to realize these customers are different than a manufacturing customer.

And so TVA is starting to, it's a it's there's a 180-day process that they have to go through before they can take it to their board for a decision.

But Councilman Kling, I would expect that by the end of this year, TVA will start moving to change its rate structure for those large data centers where they are handled differently than they've been handled up to this point to address your concern.

Now that's good for all of us that buy power from TVA, because otherwise, as they build that infrastructure, it just increases costs.

It's subsidized, it's not subsidizing the right word.

It's socialized.

It's spread across all of the customers.

And if those customers are causing a unique burden to the system, they ought to pay a unique price associated with that.

So I am in agreement with you.

So there was a in the SERP report, I I noticed and put a big old circle and a star around it that said that data centers are not a target for City of Huntsville's economic development.

Mayor Battle, I would just ask you to confirm that.

That is true.

We have looked at them and we have uh jointly come come to the conclusion that they are um they eat up a lot of your potential power, a lot of your um uh a lot of a lot of the source of the power that you have and um the number of employees you get back are are not that great.

They have a great capex, so they put a lot of capital into the ground.

But um uh but for us, you know, the uh you could uh you could have uh 10 Toyota Mazdas for one uh uh one data center.

So uh you know that's 40,000 people have the opportunity to be employed versus uh uh uh 450.

So uh you know there's there's a there's a weighing that I think that every community does right now and looks at it, and that weighing is very important for us to make sure that we uh we provide for the future for the power of the future.

So we just need to work on making sure that, as you said with TVA, that those communities that are have it that do have data centers, that they are paying the cost of that we are not.

Well, that's so key because if one community goes all in on data centers and those costs are basically socialized across the TVA rate base, then we're still paying more.

Now, our share, which uh just for context, Huntsville Utilities is I think right now I think we just became the fourth largest system.

So TVA serves 153 utilities.

We're now the fourth largest, Nashville, Memphis, Middle Tennessee co-op that surrounds Nashville, and then Huntsville.

I think we're we just I think surpassed Knoxville in Chattanooga.

Mr.

Barron.

Still on that subject matter of the data centers.

Um west is different.

You kind of mentioned that.

If a data center is put in the City of Huntsville in Limestone County, what effect is that have on Huntsville Utilities?

Limestone, so you right.

It's one thing to talk about when you said out west, I was thinking you were talking about California.

Oh.

You meant like RIS.

So yes, I got you.

It has a direct impact on Huntsville utilities.

Huntsville Utilities transmission network is interwoven.

Well, let me rephrase that.

TVA's transmission network is interwoven.

So there are two large 500 KV stations, which are the main ways that power gets routed big picture around the valley.

500 KV is a big station.

There's one north of the Maza Toyota plant, out on Bronze Ferry Road, and it's called the Limestone 500 Station.

We do not have unique names.

The other one is in the Chase Industrial Park, sort of up south of Winchester Road, that's the you want to guess it?

Madison 500 Station.

In between those are a bunch of 161 circuits.

There are constraints and issues that we share with Athens, so that as Athens system continues to grow, there's less going down that pipe that comes into Huntsville.

It's sort of like if you think about it like a creek.

If somebody dams the creek up in front of you, you're not getting much out of it, we've got the same situation there.

Also, um, the technology as I understand it, and uh you know way more than I do about it, but the technology behind the cooling can provide significant uh decrease in in cost, meaning the liquid immersion versus the air-cooled uh ways of doing it.

Could you address the home data centers?

Oh, data centers.

Yeah, I I'm I'm no expert in that space, but you are right.

I think obviously some of the smartest people in the world, if not probably the most well-paid and smartest people in the world are hired by the tech companies right now to solve this problem.

I kind of believe that over the next five, ten years, we'll look back and say that was a solved problem.

That that technology will have matured, and right now everyone and their brother is building gas plants to either put at a data center or to support a data center.

Councilman McCling mentioned nuclear, that's happening as well.

Kairos has already done a partnership with TVA to look at it at helping spur innovation in the nuclear space.

I tend to be optimistic.

I think that down the road, this land rush that's happening towards gas will start to subside.

But Huntsville isn't following that land rush.

Huntsville just has steady organic growth that is moving.

Obviously, if we just annualize it out at 2 percent growth a year, obviously at 10 years, that's 20 plus percent because it compounds.

And at 20 years, that's 40 plus percent.

And with the way it compounds, that's almost 50 percent bigger.

That's just normal what's happening in Huntsville.

So we have to think through there's those are those big uh one guy at TVA refers to them as chunky loads due to these data centers.

A lot of these data centers have loads larger than our entire electric utility.

Um, but then Huntsville, we're just focused on those steady organic growth.

Thank you.

Thank you, Madam President.

Ms.

Watkins, did you have questions?

Mr.

Little.

Um looking at first of all, thanks for the great presentation and all the task force for all your work.

Um I see Mr.

Green has joined us.

He's another member of the task force.

Thank you for being here, Sam.

I think that's everybody on the other.

Stepping up for your community.

Um looking at the list of recommendations, you know, grid modernization and uh self-generation, et cetera.

Based on what I just watched, I would say getting the governance in order would be probably the first thing we would want to tackle.

And then that would make all the other things a lot more easy to do.

Is that would that be?

Yes.

Thank you.

I agree in terms of it clarifies.

It simplifies.

Is it is it necessary for each and every part of that?

No.

I mean, we've cobbled this together for 80 years and it can keep working, and it's okay.

And like I said, I don't think there is anything immoral illegal and ethical going on with that.

It is just awkward and unclear and complicated, and it takes time.

And I don't mean to throw any aspersions at the legal profession, but lawyers aren't getting cheaper.

And when you are paying them by the hour and it takes longer and longer to explain these things, it just adds cost and complexity.

A lot of complication.

Um trying to think.

Uh and then and then the uh the self-generation, the pipeline, the naped figures into that discussion, correct?

Yeah, that's right.

Let me give you a little brief update on that.

So the North Alabama Public Energy District has contracted with Volkert, which is a large engineering company.

I think the City of Huntsville works with Volkert on various things.

Vulcard is completing the corridor study now.

And by this summer, they'll have the 30 percent engineering design done, which gives us pretty firm numbers with which to talk about go no go.

So this spring summer, expect me to come back and give you a full update on that with the Volcard study in hand with uh with with good firm numbers, where we can start making some strategic decisions.

Right.

Okay, thank you.

And then as far as like just getting electricity out, is it trying to figure out the way to put this?

Having electricity or available isn't the issue.

It's getting it from the point of generation, like from the nuclear power plant from a dam.

Or is there issues on that end too, like where they they might not be generating enough?

Just trying to understand as far as grid optimization and modernization.

Yeah.

It's really about getting it to the house, getting it to the factory, getting into the store.

Yeah.

So let me uh let me touch just a minute on the broad TVA side of that, but then I'm gonna your question is really about Huntsville, so I hold it but on the TVA side of that.

You know, they had that what they call decade of decline where there was just relatively flat usage, and they retired a bunch of assets associated with that.

And then coming out of COVID, I think everyone was surprised at the rate of growth.

Winterstorm Elliott happened, sort of put everybody back on their heels, right, with rolling blackouts.

TVA stepped up to that.

I think they have a good generation plan, or they it well, they have a generation plan.

Some people like it, some people don't, but they have a generation plan of how to deal with that.

Transmission is where I am continuing to put pressure on TVA every week.

Where are we at with transmission?

Because getting it from those generating assets efficiently into utilities like Huntsville Utilities where I see concern.

So but that's my job, and that is what we are doing to work with TVA on that.

Now I have those conversations with TVA, I tell them I am having the same issue in Huntsville Utilities.

So our 46 system, so we get the power from TV.

I talked about the two Big 500 stations, and then it feeds into the 161 lines.

Those 161 lines drop power into our system at I think it's 13 locations, and then it feeds into some of it goes directly into the power lines that go down the street, and then some of it goes to our 46 KV system.

That system is what we need to expand and upgrade and replace.

Because you might have half a dozen substations that feed neighborhoods off of a single 46 circuit.

Well, right now we are in the very uncomfortable position that if there if a car hits a pole at the beginning of that circuit, all six of those substations go out.

And ordinarily the system is looped, and you would say, well, that's no big deal.

I will isolate that outage and I will loop power from another part of the system, and we'll get power back on to maybe five of those six stations.

During the summer and during the winter, that system is taxed.

I can't loop it around.

So all those stations are going to stay out until that single poll gets replaced.

That Huntsville deserves better than that.

So we need to have a system that is scaled up.

We need to move past the 46 system.

Talk about building the 1616 system so that we have that grid resilience that we need.

Okay.

Thank you.

That's all I have.

That's all I have, Madam President.

Thank you.

David and told me it wasn't close enough.

Okay.

I have a few concerns, and I wrote notes.

Yes, ma'am.

Um I'm not for combining those boards.

And I'll tell you why.

You're going to lose specialized expertise.

Each utility operates under different regulatory frameworks.

Electric operates under GRIET and Federal Energy compliance.

Gas operates under pipeline safety.

And water addresses treatment standards, environmental compliances, and stormwater management.

Combining this into a single board will dilute the expertise and as well as running into risk.

Then who is going to be the leader?

File three of those.

Who is going to be the subject matter expert?

I am concerned about that.

It reduces the checks and balances.

Separate boards will create oversight and accountability.

I mean, you are going to put three major boards into one.

That's some serious concern.

Not only that, it um reduces transparency.

I don't feel that it would be transparent.

Then a single board will be making decisions for everything.

Whereas you had three boards and you had three different bases going on, but now you're going to combine it into one.

That's a concern.

Not only that.

Consolidation.

And maintaining separate utility boards would definitely have some impact on financial transparency.

I'm concerned about the financial transparency aspect.

Risk.

I'm concerned about the risk.

They're going to be making decisions.

One board is going to make decisions for all three.

That's that's some risk that's going to be taken.

And I don't know if you've done a SWOT analysis to determine if this is the best way to do this.

Have you identified your strengths, your weaknesses?

Have you done any of that to identify putting this into one board?

Then state law separates them for legal protection.

You can't sue.

If you one board, how I'm going to sue water if for gas.

All three of them combined together.

It doesn't make sense to me.

My last thing is you're going to be possibly electron rates if they increase from the water treatment plants.

Will TVA object to that?

Oh, yeah.

No, ma'am, those would have to be, yeah.

TVA would not do, even in a merged board environment, which by the way.

Um, most other multi-service utilities, both in Alabama, Tennessee, Kentucky, and Mississippi, are merge boards.

So TVA is familiar with that process.

But TVA will not allow us to take money from the electric system and give it to the water system or give it to the gas system.

No, that's not allowed.

Just like we can't take money from the electric system and give it to the city outside of the payment in lieu of tax structure.

Tell me the main reason why you want to combine these three boards.

Single body that makes decisions together.

A single body making decisions for three separate entities.

Yes, ma'am.

And as I said, that is the norm in a multi-use or multi-utility environment.

That's the norm.

I don't think we need to do that.

Um, transparency sometimes is not given right here in this council chamber.

Because House of Utilities came here and presented a battery in District 1.

Yes, ma'am.

But I went back because I knew.

See, one thing about me, I got a memory like elephant.

I don't forget nothing.

And Dr.

Summer said stays on my heels.

She called me this week.

She said, Michelle, you voted for 83,000 pound TELSA battery.

I was like, what are you talking about?

I never voted for that.

She said, yes, you did.

And I was like, no, I never did.

So I dug to figure out, because I've never heard of a TELSA 83-pound battery because I would have had questions.

Uh-huh.

And I went through my notes while I pulled the transcript from the meeting.

Yes, ma'am.

Nothing was mentioned about an 83,000 pound Telsa battery.

It was presented as a four megawatt battery.

Which is what it is.

Yeah, but you didn't say 83,000 pounds.

You didn't say TELSA.

You see the transparency.

See, I'm the type of person that I want to know up front.

Give it to me.

No, no, no.

You did not.

It was deceptive.

It was definitely deceptive, my perspective.

Okay.

Maybe not no one else's.

But you didn't come in here and say it was going to be an 83,000 pound TELSA battery.

You didn't come in here and tell me that, or even other council members.

You just told us it was going to help the grid.

You didn't tell us the impact.

83,000 pound battery going in in my community.

I want to know the economic, I want to know the environmental impact.

I want to know what's going to happen if that battery catches on fire in my community.

Yes, ma'am.

It wasn't presented that way.

I have the notes.

Yes, ma'am.

And I assure you know that we go out for bid, we write a bid spec and we go out for bid.

After the council approval, we went out for bid, and the Tesla battery was selected through the bid process.

We didn't we didn't already have a Tesla battery.

We had to go out and purchase the battery through the bid procurement process after your approval.

I almost brought a tomato in here today to give an example.

Tomato, tomato.

Okay.

You say it one way, but it really means another way.

All you need to do is come in here and be transparent and open.

And I I ask this all the time, and this is why people think I'm difficult, but I'm really not.

I expect you to be transparent at all times, especially when it comes to my community, because I am their voice.

And if I don't know, and someone comes and asks me, then I look like I got egg on my face because I voted for something that I thought was this, but it turned out to be that.

I don't like that.

I I don't like it, I despise it.

It literally irks me that someone would come in here and present something and present it totally different from what it was in the beginning.

And all I'm saying is when you come into this council chamber and you are presenting something, I want you to be open and honest and transparent with me at all times.

Then we don't have to have this discussion that we are having now.

Because if you would have told me on the front end, I wouldn't have to run behind and find out.

Because I'm really confused.

And that whole day, I'm just sitting up there like, when did I vote for a Tesla battery?

When did I vote for an 83,000-pound battery in my community?

Anyone that knows me know I would ask questions about that.

There are some serious concerns to be addressed when you talk about bringing a battery of that magnitude into a community.

And that was not expressed.

That was not told.

You know how I found out?

When Dr.

Sumzick got me, and I'm like, eight, three thousand pounds.

And and it really like it really took me aback that I thought I voted for a four megaw, whatever it was.

And you you came here and presented it.

Yes, sir.

And you asked me a question about the string filled.

But you never told me that what you were going to do.

Grid battery stored, four megawatt hour battery.

No.

We developed the bid spec.

Listen, I'm not a specialist when it comes to that.

So I I expect you, the subject matter expert, to educate me on it.

And when you bring it in here to present it to council, I expect you to give us the information.

Now, if I got to do your job, we got a serious problem.

I understand.

I hear you loud and clear.

Ms.

Robson, hold on.

Because I'm this just my time.

Okay.

All I am saying is I plan on having a meeting in my community.

Yes.

You and your staff are going to come there and present.

Yes, ma'am.

You're going to bring a you are going to bring an environmental impact study back that tells the good and the bad of what it is going to do into this community.

And you're going to do it before you install it in the community.

Sure thing.

I am glad you are having a community.

That's all I was going to say was you are going to have a community meeting, and all of this will be laid out at that community meeting.

So that's the one way it's going to go forward.

Thank you.

Mr.

Meredith, I believe you had a another comment.

And then I have some questions to ask as well.

Yeah, I have got a few actually.

Going back to the data center thing, can the City of Huntsville stop some entity from putting a data center in our community?

I know in the Planning Commission, you can't stop anything.

So how are we going to stop a data center?

I don't think you can stop one.

You can just not incentivize it or recruit it.

Yeah.

And there may be a data center that comes to Huntsville, but it won't be incentivized or recruited per the mayor's directive.

Okay.

Thank you.

Now generically speaking, out west, you specifically mention out West having issues concerns.

What are those concerns about power for the West?

Transmission constraints are something we need to address, and we are addressing with TVA.

I can have a more detailed conversation with you about that.

But expecting this question could come up, I would suggest that conversation either be had an executive session due to potential potential economic development impact, or we have that conversation individually.

We can certainly have it individually any time you want.

Okay.

Well, most any time you want.

On the battery storage thing.

Oh, yeah.

That's right.

What is the energy loss for batteries that aren't continually in use?

Yeah, I mean, it is certainly present.

And one of the things about these uh systems, and of course Huntsville Utilities doesn't have any yet, so we don't have any hands-on experience.

But in looking at our peer groups and uh the type that that won the bid, the Tesla megapack has they have uh 10,000 uh gigawatts that are in operation today.

So Huntsville's portion is quite a small bit of that.

So there is quite a bit of data associated with that.

But I I can't give you I can tell you solar panels tend to degrade at about one and a half percent per year.

I actually don't know what the degradation of the cells are.

That's not my jam, so I'm not familiar with that.

But um one of the technologies is is you can replace sell by sell so that they keep working, sort of like picture a big bank of uh double-A's and you just sort of slowly replace them over time.

But uh we weren't planning on doing that with this particular uh the pilot project that was discussed earlier.

We intended to get this and then understand its operating characteristics.

In terms of life cycle.

Thank you.

But there was, and and I should say that there is um on that project, uh we did get a planning grant for it.

Planning grants nice, it's not going to move the day.

But while the Trump administration has canceled the investment tax credit for solar, the investment tax credits for uh BESS, as it's called, battery energy storage systems remains in place.

Even though Huntsville Utilities is a tax-exempt entity, um, luckily they wrote into the law direct pay provisions.

So about 30 percent of the cost is coming back through the form of investment tax credits.

Obviously, the whole point of the project is to lower that peak demand, which we talked about earlier, that that demand and how we can shave that peak demand because it costs us real money.

And so the early numbers look very good that that just as our friends in Memphis and Nashville and Chattanooga and others around the country have done, they're looking at this as a money-saving opportunity to lower that peak demand charge from the wholesale power rate.

That is the purpose of the project.

With the increase of electric vehicles in our community and the charging stations at homes.

How much of that has uh what is the effect of that been?

Yeah, we have seen no, you know, early on when electric vehicles started, people started to say, oh my goodness, it's going to melt down the power grid.

And if everyone had an electric vehicle, there is no question that would happen.

But we're far, far from that.

We get a couple of times a year, we'll get reports from the county tax office because electric vehicles have to pay a special use tax, and we'll get that list so that we understand how many electric vehicles are in the community.

I think last time it was around maybe 2,000.

Yeah, it was about 2,000 electric vehicles in Madison County.

It's not enough that it has presented any operational impacts to us.

Now, if that increases by tenfold or a hundredfold, then we would have a different conversation.

Okay.

Can you tell me more about the rooftop solar that you have?

Yeah.

So uh we're calling it Solar Connect.

Uh it's been drawn out way too long.

We're finally getting it going.

Um, and we have got two customers that are pilot customers now.

And it uh allows customers that have their own solar generation under a single meter from Huntsville Utilities, uh, that any power that flows back onto the Huntsville utility system, I will pay them the same thing I pay TVA for that power.

So no customer is getting special treatment.

I could either buy those electrons from TVA or I could buy them from that customer.

And so um and we true up that rate every year based on our last year's cost to TVA.

So um that that program, like I said, we have two customers in pilot now.

We'll start marketing and communicating that pilot soon.

Or that program soon.

Thank you.

Umone mentioned earlier that um trust and verify.

Yes, sir.

When it came to the pipeline discussion that was had I am not going to even comment about my colleagues, but every single question I asked, there was no answer given.

Yes, sir.

How can I verify if you don't give me an answer to my question?

Not specifically.

That's very fair.

Now just Yeah.

Uh sure.

So as I ask questions, and if our questions can't be answered, how are we supposed to verify?

I I understand, sir.

Yes, sir.

And uh with that, again, there's been uh before any long-term commitments are made, this council will be fully appraised of that.

The engineering work had to be done, and the engineering work I believe was best done in a collaborative effort between the three anchor communities so that we were selecting the engineer, setting the criteria, making the determinations as a regional group rather than one utility deciding it and dictating it to the other communities.

Yeah, I understand what you are saying, but the three you and the other two guys could have sat down and kind of vetted this stuff before coming here.

So what pushed the timeline is we needed to reach out to the pipeline companies, the large interstate pipeline companies to find out if we built a pipeline to them is their capacity.

That had to be done through nondisclosure agreements.

I am sorry, through what nondisclosure agreements.

We needed a legal entity to issue a nondisclosure agreement.

And it was also certainly helpful to contract with an engineer with one entity contracting with the engineer and contracting with the lawyer rather than again like we are talking about Huntsville utilities getting an invoice and he an invoice here and an invoice here and it it it just simplified the matters.

It was a planning process what you formed through the North Alabama Public Energy District at this point has been a planning board.

They have not done anything it is just a planning board it can turn into more but it hasn't I was just about to ask that and how does it turn into more once that engineering analysis is done then it is going to be capacity agreements will have to be drafted and this Council will be aware of those commitments before they are authorized.

Okay.

I know sometimes it is perceived that Councilwoman Watkins and I how do I word this properly can be antagonistic it doesn't mean that we don't respect you.

Oh no sir it doesn't mean that I think this is my job and socialize with you.

Of course it just means that I I I am in a position and I'm trying to do the best job I can in it and for me I got to have that information you are doing your job and I got to do my job responding to you doing your job.

Yes.

So it's not a matter I mean every for those that are married I I don't know anybody that's been married any length of time that hasn't had an argument with their spouse.

So it doesn't mean that we don't like you it doesn't mean that we don't respect you.

Of course I understand and appreciate that.

Thank you, sir.

Thank you.

Any more questions?

No ma'am thank you.

For our time is up let me ask a couple of questions.

First of all the demand side management self-generation and grid moderniz proposals are all to me seem excellent and very forward thinking and would be a great boon to the community if we could move forward on them.

Like Mr.

Little though I think that that will be facilitated more efficiently with the consolidated board.

So you have mentioned Public Act 175 a number of times I have tried to find a copy of it would I I can't find one that deals with consolidation of boards that their other public act 175 is out there.

Could you provide a link for 115310?

Title 11, Chapter 50, Section 310 I think I am saying that properly they are often referred to in the State nomenclature as 310 boards because they're 115310.

There's some other 310 boards and that I know I know that is also confusing because there are only 310 boards.

So 115 if you have a link to it and just send it to me and I will send it to the other Council members that would be really helpful.

Now with regard to public act 175 if we were to we were to use it to consolidate boards how would that impact pilot funding?

My attitude is it doesn't impact it at all.

But I can I can appreciate the City wanting some belt and suspenders on that and I think that's easily done.

I I I talked to the second largest municipal utility in the State is Riviera Utilities which is down in Foley.

They're a 310 board they are organized under Public Act 175.

They have an agreement related to pilot but you're in a different situation because the city's pilot is controlled by the Tennessee Valley Authority wholesale power contract.

Okay.

So it dictates how the pilot works and how much you get paid is set through the TVA power contract.

So my friends down in Foley aren't under the TVA power contract.

Now that is electric pilot so it is set by the terms of the TVA wholesale power contract.

Gas and water is set by ordinance.

Okay.

How would it impact rate setting?

And right now we have rate setting power that is the big change.

Okay.

Could you comment on that the State statute in its language says the utility board would set the rates and that is because the utility board is also issuing the debt the party that issues the debt and is responsible for the debt is also the party that controls the rates.

Those two things are linked together.

So right now when we issue debt it is in the name of the City of Huntsville under a 310 board structure or a public act 175 structure that entity issues its own debt and so it also sets the rates because the rates are there to pay the debt service.

And I understand why Council doesn't like that which is why it would be nice to do a private act or something else that you can customize and make how you would like it, but again that requires a trip to Montgomery.

But again, that requires a trip to Montgomery.

And that was my next question.

So a private act that would permit us to consolidate boards and also retain rate-setting authority would simply be involved in getting local legislation?

Correct.

That's correct.

Jessica.

And what would be the we would still be accomplishing the same end of consolidating?

You could, depending on what you wrote, absolutely.

Like I put on the slide earlier on, there's the potential to address every one of those issues through the private act.

It has I wrote potential to resolve, depending on what you wrote.

But then of course you have to think through.

When you get to Montgomery, what's the next step?

So as I'll say, sort of tongue-in-cheek, Alabama power gets a vote.

Insofar as when you take it to the State Legislature, you are asking the entire State Legislature to vote on the minor.

But that private act, though, would potentially permit us, and it is a potential, to consolidate boards, retain rate setting authority with the Council.

Yes, I can I can and the lawyers can correct me, but I think we could draft a private act that allows the Council to continue to have rate setting authority, yes.

And I see Mr.

Mr.

Cantor coming forward to help us with that.

I wasn't called, but hopefully I'm not getting over my skis.

Mr.

Kelly said Rod Cantor bond counsel to the city and bond council on all the utility revenue debt.

Well, Mr.

Kelly said is exactly correct.

But you have to remember one thing, which is we have an existing gas and existing electric and an existing water indenture.

And under that indenture, we have rate covenants.

And therefore the holder of the asset has to be able to effectuate the rate covenant.

We can't we can't change that by act.

We could potentially change it down the road by contract with our bondholders.

But at the end of the day, we would have that.

The good news is that there's a lot you can do in the existing Act 175 Board Act under the Articles of Incorporation.

In the Articles of Incorporation, this city, for example, oversight.

Any concerns can be addressed in the Articles when you create the entity.

Now, I realize you are asking about separate private act, and I don't want to get off that discussion.

But I did want to say that sometimes you can have the best of both worlds by proceeding under established authority and therefore not risk putting what you are going for in the hands of all kinds of groups that can, you know, you go out for a cheeseburger and you you come back with a fish sandwich, and that's not what you would want.

So you remove that off the table while at the same time being able to tailor what is ultimately created to suit the needs of what your interests are.

So Public Act 175 does provide sufficient flexibility to permit us to to deal with any concerns that might that we might have about.

Yes, ma'am.

Anything that doesn't go against your covenants in your existing indenture, because those are in place.

Those are in place to your debt holders.

But yes, there's a lot of creativity that can be included in what you actually create under 175.

Your articles can do things within reason.

A lot of the things that have been candidly addressed today.

So for whatever that is worth.

And I hope I hope that is helpful.

Thank you so much.

That's very helpful.

Appreciate that.

That concludes I had a number of other questions that are trying to do that.

I have uh Madam President, sorry.

I know you asked me earlier if I was done, but I would like to make mention of one thing based on what you uh said.

I have been approached by citizens of Huntsville who are I I don't know if it's a done deal yet, but they are talking about and making steps towards reaching out to the local delegation with complaints, uh things like the billing cycles and the access charges and the double building with the uh computer switch over, things like that.

So if we're gonna go for a uh you know, state uh what the second private act acts.

And we go in there saying we want this, and you've got citizens that have already gotten to our people with complaints, it's it's going to get really murky down there.

Yeah.

Any other comments?

If I could, Ma'am.

Yes.

I would I will just share one thing just while I have you just to make sure, because affordability remains top of mind.

The chart here, we we update every month.

This is Huntsville Utilities electric rates for an average consumer, uh average residential customer, which is 1,200 kilowatt hours, compared to the other systems nearby.

So you see, we are there in the green, so Athens Indicator, a little bit lower than us.

And then it goes Fayetteville, Scottsburgh, Gunnersville, North Alabama Co-op, Pulaski Electric, Joe Wheeler, and then Alabama Power, way up there at $20.62, whereas we are at $146.90.

This is something we look at annually when TVA releases its reports.

This is all 153 utilities that pay the same rate to TVA.

We're all getting the same power from TVA at the same rate.

And this is where they fall in line in terms of the cost of that, the retail rate to their customers based again on 1,200 kilowatt hours.

And you see Huntsville Utilities there is in the green.

The purple bar is the top quartile.

Those yellow bars are the other large utilities over 100,000 meters.

Because you might think, well, the bigger utilities have a natural advantage.

They're going to be cheaper.

You will see that all of the large communities served by TBA have higher residential rates at an average usage than Huntsville does.

And then finally, I just wanted to, this is a chart that our board looks at every month.

This looks at the cost of power that we pay TVA and the average revenue.

Now to make it apples and oranges, we just averaged every we we divided everything by kilowatt hours.

So the orange, again, sorry about the Auburn colors.

The orange is your non-fuel cost to TVA, which means the base energy and the base demand charges.

The blue is the fuel cost adjustment.

And that is something which has been part of the TVA rate structure for 15 years.

Up until our rate change, we buried that inside the Huntsville Utility energy charge.

With the with the new bills, we broke it out as a separate line item and decrease the energy charge by the same amount because only this board can change our rates.

We just took that TVA charge, which was inside the HU rate and listed it separately.

Why do we do that?

Because customers, we have a lot of engineers in this town, and they want to be able to calculate their bill manually.

And they are like, why does the energy charge keep changing every month?

The energy charge that this council approves doesn't change every month.

The TVA fuel cost adjustment does.

So we broke it out separately so people could track it separately and calculate their bills.

Now that bar that is on top is Huntsville Utilities revenue.

Huntsville Utilities margin, what we pay our 900, well, obviously I am talking electric water and gas here, 900 employees, four or five hundred trucks we have on the road, all of our assets on the electric side is paid for out of the gap between the bar and the line, which comes out to be about 20 percent.

So about 20 percent of the retail customers bill is kept by Huntsville Utilities, 80 percent goes to TVA.

That fuel cost adjustment throws people off because it can be a quarter or more of your utility bill, and it is not in the rate, it is because it is a separate writer that TVA changes every month.

So I just wanted to make that clear because you you you took me there when you talked about that separate bill item, so I wanted to mention that.

Thank you, sir.

One last year, Mr.

Clay.

Uh going back, well, you don't have to bring it back up, but if you know the uh Okay, the chart that you had before this showing Huntsville versus all the others, that.

Yes, sir.

Does that include the availability fees, whatever the equivalent of the separate chart where we look at availability fees as well to see how we fall in that category?

I can certainly I know that is an item near and dear to your heart.

I can certainly get you that.

This is the total residential bill for 1,200 kilowatt hours.

Okay.

This is completely apples for everybody, okay.

All inclusive.

Okay.

And every year, everyone who is regulated by TVA like Huntsville Utilities has to submit all their information.

And so we use that data that is submitted to generate this report.

Um I am going to extend a final thank you to everybody who was involved in the energy task force for the time they committed to studying some very challenging issues and some very technical issues of Black and Beach for the work that uh that was contributed as our consultants and the board members.

This was a very um this was this was a discussion that simply deserved more depth than we could give at a regular council meeting, so thank you to everybody for making themselves available to make this happen.

And um we look forward to going forward.

Uh again, we have some great recommendations here that will ensure energy sustainability for our community, and uh we're just gonna find the right way forward and we look forward to continuing to work with you in the future, Mr.

Kelly.

Thank you for the work you and your team do.

Thank you, ma'am.

Appreciate your time today.

Appreciate uh the attention of counsel to this matter.

We are adjourned.