It's 4 p.m.

and we will call the Rochester Public Utilities Board Meeting to order.

As a quick reminder, this is going to be a recorded session.

A recording will be available on the city's website.

And the first item on the agenda is the approval of the agenda.

May I have a motion to approve the agenda as presented?

I'll make a motion.

Second.

We have a motion, a second.

All in favor, please signify by saying aye.

Aye.

Aye.

Any opposed.

The agenda is approved.

I'm going to switch spots quickly for this uh second portion here.

Well, sadly, and happily for him and sadly for us.

Um, the next item number two recognition of service for safety manager Bob Cook.

Throughout his tenure, Mr.

Cook has demonstrated a strong commitment to fostering a culture of safety and accountability across the organization.

His leadership and expertise have left a lasting impact on the safety and well-being of our employees and the community.

This meeting marks his final day of full-time service and his last safety moment presentation to the board.

We extend our sincere appreciation for his contribution and wish him all the best in his retirement.

Bob, would you come up for two items?

One, we have a certificate from Rochester Public Utilities.

Thank you.

And second, we have recognition from the city of Rochester.

Okay, good for all your time.

Thank you, sir.

I had to write this down because I wasn't sure I'd get through it.

So in uh May of 1979, I graduated from college with a degree in occupational safety.

Two weeks later, I began my first full-time job.

Grateful of to have found something in the field I'd chosen.

Now nearly 47 years and six employers later, I'm thankful to be moving into the next chapter, retirement, but I'll admit it's a little scary.

Looking back on my career, one idea about safety stands out above all others.

No matter how much training we provide, how much we invest in protective equipment, or how vigorously the safety guy waves his arms on a job site.

Injuries are only truly prevented when safety happens in the moment.

I learned this firsthand.

At one point, I conducted week-long detailed safety audits and large high production iron foundries.

As a side note, if you've never been in a foundry in South Carolina in July, you've not lived.

During one audit, as I walked down an aisle focused on my work, a plant safety employee suddenly shoved me out of the way.

In that instant, he saved me from being struck by a massive ladle of molten iron hanging from an overhead conveyor system.

Several tons of molten iron.

Had I been hit, I would have become another workplace fatality statistic.

For him, safety happened in a moment.

For me, it had not.

That individual and I didn't know it was C eye to eye, but that didn't stop him from putting safety first, my safety in that moment.

He quite literally saved my life.

Without him, I wouldn't be here today reaching retirement.

That experience changed me and made me a better safety professional by reinforcing just how vital it is that safety lives in the moment.

And so with that story, I share my final safety moment.

Thank you to the RPU board for the opportunity to stand here over the past several years and emphasize the importance of safety in the moment.

Thank you.

Thank you so much, Bob.

We're gonna miss the uh safety moments from you here.

Well, after that.

The next item is item number four in our consent agenda.

We have items 4A, 4B, 4C, 4D, E, F, and G on the agenda.

The minutes from February 17th, review of accounts payable, fleet vehicle purchases V776 and V777.

Budget amendment for le relocation of RPU Duct Bank for the Link BRT project.

CINTAS Uniform Rental Laundering Service Five Year Agreement through 2031.

Distributed energy resources annual report and distributed energy resource tariff schedule updates.

May I have a motion to approve the consent agenda as presented?

I'll move approval of the consent agenda.

We have a motion.

Do we have a second?

Second.

Second, thank you.

It's been moved and seconded.

Is there any further discussion?

Councilmember Keene.

Yeah, I just want to say it's it's amazing the amount of business we're moving on the consent agenda.

There's a lot on here.

Putting things on a consent agenda doesn't mean they're not important.

It just means that they've been thoroughly reviewed.

Um and again, that it probably doesn't need to be gone over again.

But um I guess I do want to just comment that um I don't feel like we're doing this because it's not, it's like on secondary business.

This is critical things we're approving on consent.

Oh, thanks for pointing that out.

Any other discussion?

Hearing none, it's been moved and seconded.

Um all in favor of approving the consent agenda items 4A through 4G, please signify by saying aye.

Aye.

Aye.

Any opposed.

The consent agenda is approved.

Next, we're moving to the open public comment period of the meeting.

Total comment period is limited to 20 minutes.

Each person has two minutes to speak, and any speakers not having the opportunity to be heard tonight will be the first to present at the next board meeting.

Is there anyone signed up to speak tonight?

There isn't anyone signed up.

Thank you so much.

Moving to the irregular agenda section of the meeting, there are no items on the regular agenda at this time.

And we will move now to the informational items on the agenda, of which there are several.

First on the agenda is informational item 6A, which is a 2026 to 2030 bond rating analysis, which will be presented by assistant general manager of administration Peter Hogan, as well as Rachel Westerveld and Chris Hogan from Baker Tilly.

And Rachel will be joining us remotely today.

So most of the real work here today is going to be done by Chris and Rachel, but I wanted to introduce them.

This bond rating analysis really stems out of our 2030 uh resource plan and the work that we've done in uh full costing that.

And then in the budget that was just approved this last year, there's a there's about a 241 million dollar anticipated bond issuance in 2027.

So as part of that, um, just from a prudent management standpoint, we want to step back and have this analysis done to look at what are the potential impacts to the uh rating for the utility.

But uh one of the writing agencies we use uh Moody's in about 2022 also changed, and they they look at the city and the uh funds that are issuing as well.

And so in doing that, we also felt it was important to uh look at the city writing agency impacts as well.

Uh so with that, I'll turn it over to Chris, and I I think you'll all appreciate the uh and the indications that the the report will talk to us about.

Thank you, Peter.

Thank you, board president and members of the the board.

I'm happy to be here tonight.

Um again, like Peter said, I'm Chris Hogan, uh, my coworker.

Rachel is online.

I um and the municipal advisor from Baker Tilly.

I work with RPU and the city of Rochester.

Rachel is our expert in rating analysis and due diligence.

So I will do a lot of the high level.

Um, and Rachel is the one who gets down into all the numbers.

And so we're excited to be at the finish line here to go through the presentation with all of you.

Um let's see if I can figure this out.

Yes.

So like uh Peter said, um, we are gonna go through a presentation that is um we've been asked basically to look at the potential impact on the RPU's rating and also the city with the potential debt issuance or the debt issuance that they're gonna do in the next year.

So um that was our analysis that you'll see as you go forward.

Um, with debt and any liabilities, they play an important role in the rating agency's credit and assessment.

And a high debt burden can impact the rating of issuers.

Um Baker Tilly was engaged to assess these these pieces here that we talked about here.

Rochester is funding to issue up to 240.7 million of debt in 2027.

So we are going to be looking at how will this additional debt will it impact RPU's rating?

How does RPU's forecasted financial trends impact the rating?

Could increases in lecturer customer rates impact RPU's rating.

And then we're also looking at potential impact that RPU's issuance could have on the city's general obligation debt as well.

And then we're going to do a little bit just a slide on how potentially rating agencies or how rating agencies view prepaid energy contracts.

Both reports were received.

Well, Moody's gave affirm the RPU's rating in November of last year, and FITCH affirmed their rating last September.

So the Moody's rating that RPU holds right now on their debt is a double A3.

Just pieces from that report.

They identify that the RPU benefits from the current long-term take and pay contract with SMMPA.

They have a well-defined plan to secure capacity upon the current expiration of SMMPA in 2030.

They have ability to have a strong rate setting authority without state oversight.

They have strong service area economy.

They have a heavy reliance on one primary generation fuel source for capacity.

But they do have a stable financial operations and prudent management.

Some highlights from the FITCH report, which they have a RPU has a double A.

They have they identified very low leverage, very strong revenue, defensible assessment anchored by RPU's independent independent ability to adjust rates as needed, favorable service area characteristics, low operating cost driven by the purchase power contract with SMPA.

So the next slide, I will hand over to Rachel.

Hi everyone, thank you for having me here.

So our assumptions for creating these rating scorecards for RPU.

We started with the electric methodologies from both Moody's and Fitch.

They have different methodologies, so their metrics are different, and we created scorecards to really focus in on each individual methodology.

For the city's Moody scorecard, we used Moody's U.S.

cities and counties rating methodology.

And we started these scorecards with a base year of 2024 using the most recent annual report for both RPU and the city.

From there, we used financial data and estimates for the scorecards from years 2025 through 2020 or 2030 that are based on RPU's adopted 2026-2027 and your operating plan and electric utility operating budget.

There are pieces of the scorecards that we kept constant based on 2024 economic trends, and I can reference those when we kind of dive into the scorecards.

And then our debt metrics and calculations for leverage are inclusive of the preliminary debt plans that are anticipated to come on in 2027.

So this is a high-level overview of kind of the scorecard results for both Moody's and FITG for RPU's rating based on the debt issuance.

So we first looked at if RPU were to issue 240.7 million dollars in 2027.

How would that impact the current rating scorecards for both Fitch and Moody's?

Here we just have the rating scorecard outcome.

So we're seeing that there is no impact.

So we're not seeing a negative impact with the large debt issuance coming on in 2027.

And we went, we then went back and looked at if that debt issuance were to be 180 million.

Would this have any impact similar to 20 or similar to the larger debt issuance?

No, we're still seeing that RPU is able to maintain their current ratings with both Moody's and Fitch, despite the debt issuance that could potentially come on in 2027.

And this is kind of where we get into a little more detail regarding the scorecards and what the rating agencies are really looking at.

So here we're focused on Moody's RPU scorecard, and we're focused on the larger potential debt issuance, as that would likely be the one to have the biggest impact.

So first, Moody's breaks up their methodology into five different categories.

The first one being cost recovery framework within the service area, and that makes up 25% of the scorecard.

This is really evaluating the utility's regulatory status and ability to recover costs timely, the local economy strengths, diversity within the customer base.

So here we kept this a double A, which is where RPU has historically been rated in this category.

So conservatively, we kept that same rating going forward.

Similar, the willingness and ability to recover costs with sound financial metrics, that makes up another 25% of the rating scorecard.

And this is evaluating how effectively and promptly an electric utility can recover costs through rates.

And it considers the legal ability to set your rates, rate setting independence, and predictability and stability of rate adjustments.

So again, this is another one that we kept constant based on where you've historically been rated with Moody's at the AA.

And then moving into generation and power procurement risk.

This makes up 10% of that scorecard.

And that's assessing the exposure to power supplies, power supply cost, the diversity of the generation portfolio, any environmental or regulatory exposure, and any presence of a carbon mitigation strategy.

This has been rated A B A with Moody's, and we kept that constant as well.

Competitiveness, this is a makes up 10% of the scorecard.

This is really evaluating the utilities' rates compared to other regional providers and looking at the state's average.

So we did look at potential rate increases that were forecasted to occur.

We've included that in the analysis.

We're still seeing that that rating for that category will be a BAA, as you can see here throughout 2024 through 2030.

And then the financial strength and liquidity factor, this makes up 30% of the rating.

And this is really the meat of our analysis where we really get into the detail of how that additional debt issuance can impact these factors.

And this is based on all three of these.

So the adjusted days liquidity, so days cash on hand, the adjusted debt ratio, and the adjusted debt service coverage are all based on a three-year average.

So looking at that, you can kind of see in 2027 there is an increase in some of these metrics.

So the debt ratio increases due to the larger debt issuance that will occur, and the coverage decreases a little bit.

And then you'll see that average kind of play out into years 2028 and 2029.

But despite those changes and the debt issuance, we're still anticipating the scorecard indicated outcome.

So that bottom row is still indicating that RPU will be able to maintain the scorecard rating of a double A3.

And so the estimated individual credit profile score is your score within the rating categories.

So a double A3 can go from 3.5 to 4.49.

And you have a lot of room within that AA3 where we're not seeing concern for any negative rating impact based on the scorecard outcomes.

So then moving into Fitch's scorecard, Fitch is a little different.

Fitch uses key rating drivers rather than a weighted scorecard like Moody's.

But all three rating drivers matter.

However, their influence varies from issuer to issuer.

And it really depends on the utility's characteristics and the final rating outcome really reflects more analytical judgment, not a mathematical formula like Moody's.

So we don't get kind of this nice score at the bottom where we can identify it to a specific rating.

It's more subjective and quality or quantitative, qualitative.

And that makes it a little tough to completely know where Fitch will end up, and it's a little less transparent to assign a rating, but we can look at the trends of where you are at now versus where you could be with potential that potential debt issuance coming on in 2027.

So looking at revenue defensibility, this is assessing the utilities exposure to demand and revenue volatility, as well as flexibility to adjust rates.

Operating revenue from service lines is really looking at the revenue source characteristics and how much revenue comes from essential services.

There's service area characteristics included in this factor.

That includes annual growth as well as median household income, which we've kept constant, and unemployment rate, which we've also kept constant.

And then this section also looks at the rate flexibility.

Similar to Moody's, they're going to look at the legal authority to set rates, how competitive your rates are compared to peers, and the affordability on the customers.

And then operating risk, this is evaluating a utility's cost burden, the capital spending requirements and resource mix and kind of the diversification and clean energy transition exposure.

The cost burden, kind of looking at operating cost, especially fuel purchase power and depreciation and if those are higher or lower relative to unit sales.

And then capital planning and management, this is focused on the average age of the plant.

So then the last section or the last key rating driver that Fitch looks at is the financial profile.

Again, this is where a bulk of our analysis really took place because this is where that 240.7 million dollar debt issuance comes into play, and that will be impacting that leverage ratio as well as the coverage of full obligations ratio.

So here, if you're looking at year 2027, when we've included that 240.7 million, you see those ratios adjust, the leverage ratio increases and the coverage ratio decreases just a bit.

But these increase and decreases are not substantial enough within Fitch's methodology to really make a movement within the suggested analytical rating outcome.

So we're still seeing that RPE would be able to maintain maintain the current AA rating.

So then we took a look at some sensitivity analysis, and this is focused on the purchase power agreement cost.

If there's a higher PPA cost, resulting in higher retail rates for customers versus a lower PPA cost and lower rates to customers.

If one of those, how could that impact the current rating?

Again, we're focused on the 240.7 million in these scorecards and in this schedule here.

And we know that rates and competitiveness impact both Fitch and Moody's rating outcome.

And so we wanted to look at that competitiveness assessment for both and see if just the customer rates could have an impact on the overall rating.

And based on what we saw in the information that we were provided from Peter and Judy, who were very helpful in helping us put all this information together, we saw that even with higher PPA cost and higher rates to customers, there's unlikely to be a scorecard rating adjustment.

So in 2030, you can kind of see the competitiveness score, which again for Moody's is only 10% of the rating, drops from the B A category to the BA category.

But it's not enough to push the scorecard indicated rating outcome to downgrade it.

So you're still at that AA3.

But you can see the indicated scorecard is 4.35 there.

So you are pushing slightly the edge of the top of that AA3 range, but you're still within the range.

And then for Fitch, if there's higher PPA cost and higher retail costs to customers in 2030, we could see that rating assessment adjust to a triple B, but not the complete scorecard.

So not the overall rating.

And then with the lower PPA costs, there's really no change in any of the scorecards based on what we first looked at before.

So then we really wanted to dive in to see well, how much would customer rates have to increase to really cause an impact to the rating.

And so we could do this with Moody's again because it's a weighted average and we know it's 10% of the rating is that your customer rate compared to regional peers or the state average.

So we were looking at this and we saw that if the competitive competitiveness score of that scorecard were to be a B, which is the lowest it can be in Moody's, which means that your average system rates is above 35% of the state average.

In year 2029, the scorecard outcome was an A1.

So that's indicating a potential downgrade.

Again, that is if your rates are above 35% of the state average based on the information we were provided.

We didn't see your rates getting to that point.

We saw them again within the BAA, or if that higher PPA costs were to occur at BA at the very highest.

Okay.

So as Rachel said, our focus has been primarily on financials.

But we did want to touch on a couple other things that Moody's this slide is particular to Moody's other credit considerations that they look at and that are relevant to RPU.

So they do look at pilot payments.

They consider them a mandatory payment viewed like a fixed operating expense.

So Moody's considers those as when they consider those, they look at policies that govern pilot payments from the utility to the government, in this case to the city, and the political environment in which those decisions are made within the willingness and ability to recover cost and sound financial metrics.

So that was one of the five metrics that Moody's uses in the scorecard.

If transfers are governed by a well-defined and prudent policy, it could positively impact the rating factor assessment.

A lack of a policy can increase uncertainty and could have a negative impact.

And dependence on transfers can become more important for governments that have weak credit quality.

These are good to look at.

They have the impact risk and exposure.

So Moody's looks at it currently the reliance of one primary fuel source for capacity use, could be a credit challenge.

Moving forward, adding more renewable resources could benefit the generation and power procurement risk exposure, which is again one of the five factors that we've looked at at the rating scorecard.

This slide gives some uh other credit considerations.

Um, and we do have some Moody's.

Moody's or Fitch comments on this one.

Again, Fitch is a little bit harder, they're not as quite as transparent.

Um we looked at customer concentration uh for Moody's.

They've identified that it can have an impact on again the cost recovery framework within service territory.

The metric, if a large portion of the revenues come from a single so that if the revenues come from a single source customer industry, can also impact the competitiveness metric since a large industrial customer can have greater negotiating leverage and risk of relocating, and they look at customer concentration can uh create revenue volatility.

Fitch comments in this area uh could can potentially impact the revenue defensibility metric, which measures how stable and predictable revenues are.

Uh, key considerations include percentage of load from the largest customer and contractual obligations of power supply agreements with those customers.

So I'll hand it over to Rachel.

But like we said, we did take this analysis and the finances in one and to see what potential impact it could have on cities, Moody's rating.

City doesn't have a the city of Rochester doesn't have a Fitch rating, so this is um Moody's.

So I'll hand it over to Rachel.

Thank you.

So we did want to look at the Moody's rating because, like Peter mentioned before, Moody's did update its methodology recently for cities and counties, and they are now including enterprise funds and enterprise debt within their rating scorecard.

So they're looking at the city kind of holistically rather than how they used to, which was separating out enterprise funds and enterprise debt and really looking only at city funds and governmental funds.

They're now incorporating everything into the city scorecard when they rate the city.

They highlighted credit strengths similar to RPU, healthy and growing regional economic center, um, healthy financials and balanced operations.

Currently, there's modest leverage and fixed costs, those are those debt ratios that we'll talk about.

Um and then the credit challenge they highlighted, which is really out of anyone's control, here's just residential income levels and full capita per full value per capita lag compared to other triple A rated peers.

And then when we looked at the downside for the city's current rating, so these are things that could potentially trigger a negative outlook or a rating downgrade.

They mentioned if there was any reduction in Mayo clinic activity, which it doesn't seem like there has been, it seems like a lot of investment is going on there.

If available fund balances began to approach 50%, that seems unlikely.

Fund balances have been closer to the 95% range for a while.

Or if long-term liabilities ratio, which is Moody's debt ratio, increases over 250%.

So that's really the ratio we're focused on, especially with the additional issuance of debt.

Similar to RPU scorecards, we have some assumptions for the city's rating scorecard, looking at the scorecard based on the new methodology that includes enterprise funds and enterprise debt.

We based the 2024, we based our 2024 scorecard on most recent audited financials.

And then we used estimates for 2025 through 2030 on RPU's budget book that we received, as well as the city's 2026 through 2031 forecast summary.

And similar to RPU scorecard, there are some economic calculations that have been kept constant based on 2024 levels.

And then the debt metrics and calculations for years 2026 through 2030 are inclusive of both RPU's debt plans as well as city's projected debt plans.

So first we'll look at uh the rate impact if RPU were to issue 180 million dollars of bonds.

Um again, our focus here is more on that leverage factor, which makes up 30% of the city's scorecard.

Um here you'll see the long-term liabilities ratio is increasing.

This is not only RPU's debt, this is um multiple debt issuance by the city as well.

And we have those foot noted under here, but I think we have them issuing bonds in each year.

Um we just want to point out that we are including 180 million of RPU debt in 2027.

So you'll see the long-term liabilities ratio increase.

However, if we look back to what Moody said in their credit opinion of their watching for if this ratio were to be over 250%, that ratio is not over 250%, um, despite all the issuance of debt that could occur.

Um, so we also included the triple A medians, the last column there, just to see how those ratios compare to other triple A rated medians.

And it's still well below those median levels.

So we still anticipate that the city would be able to maintain their triple A, even with the issuance of 180 million dollars of bonds from RPU.

And then looking at if RPU were to issue 240.7 million, similar outcome here.

Um, we see the long-term liabilities ratio increasing.

Um, you can see it increasing a little bit more here as well as that fixed cost ratio increasing.

However, we're not seeing it increase to a level that would push the rating outcome based on the scorecard outcome downward.

We're still seeing that scorecard maintain the AAA.

Um, this is a slide that's uh just an overview of prepaid energy contracts.

I know that's something that RPU has been interested in uh looking at, or maybe they've already done some.

I don't I think they might know.

Okay, so a prepaid energy contract, just to summary is a long-term agreement where RPU would pay up front for a future supply of electricity or natural gas at um discounted price.

Uh the purpose of a prepaid energy contract, it helps you it help utilities manage their cash flow, reduces credit risk, and it can lock an energy cost for customers and suppliers.

So uh benefit if you do it through a conduit borrower, uh, they a conduit borrow can issue tax exempt bonds, would result in lower energy cost, and the debt may not show up.

But well, the debt does not show up on the city's RPU's balance sheet, but there is um things that both Moody's and FUCH look at as far as determining if it's a debt-like instrument.

So both rating agencies, we we did uh talk to both of them, uh, Moody's input.

There isn't anything in their methodology that speaks specifically to this.

So we had some discussions with them.

Um their perspective was that uh they didn't see that a entering entering into a prepaid energy contract would have a negative impact.

They've they said it would be they felt it would be neutral or credit positive.

So in summary, um we did the analysis like Rachel went through, uh looking at two different financial debt models, basically with two different debt issuance, 240.7 million, 180 million of debt issued by RP in 2027.

We looked primarily focus on the financial metrics of Moody's and Fitch uh with that debt issuance coming on in 2027.

Our analysis shows that we don't see any impact on the Moody's rating, current rating double A3.

We don't see any impact on Fitch rating that's currently double A.

Um, likewise, the additional debt that we looked at for both RPU and the city and the impact that could potentially have on the city.

Uh again, focusing on the leverage metrics within the Moody scorecard.

We anticipate that the city will maintain their current triple A rating from from Moody's.

And with that, Rachel and I will be happy to take any questions.

Well, thank you so much for that comprehensive presentation.

Are there any questions or comments from the board?

Councilmember Keene.

Yeah, I just want to see if I could understand.

I mean, it it appears to me that one of the reasons we're taking on debt is the is the uh going away from the power purchase agreements.

How does Moody or anybody else um assess a power purchase agreement?

Or do they just do that against an organization like Simpa because they're the ones taking on the debt?

Um, Rachel, can you take that one?

I mean, yes.

Did Rachel did you hear the question?

Um yeah, I'm sorry, can you repeat it?

Yeah, I again I'm I'm looking at this as we are taking on this debt because of a combination of like basically going away from our power purchase agreements.

And I'm trying to understand how the rating agencies or the assessments view a long-term commitment to a power purchase agreement different than taking on debt yourself.

So I think it's similar in a way.

They are looking at the power purchase agreement.

They can look at that as almost debt in itself, um, like a debt service payment that you're paying.

So they are considering it when they're analyzing your debt metrics.

Um it is similar.

They I think the power purchase agreement with Simpa, just the civility of it and you know when kind of those what those payments are, they found that to be positive.

But the issuing the debt yourself, that's just gonna come on as a liability, similar to how they're probably looking at the power purchase agreement you have now as a liability because you're paying for it, if that makes sense.

So it's like a debt obligation.

It's a debt-like obligation.

I think it is a debt-like obligation to sign a power purchase.

They do look at it that way.

There's uh Fitch in particular has a calculation where they essentially capitalize that that um power purchase agreement.

So they can look at it in their analysis.

So yes.

So I'm I'm trying to understand is it's almost in my view, we're getting away from power purchase, not not totally, but we are getting away from them and basically owning and controlling and therefore having debt on our own.

And I'm I is that why we're not seeing a shift in this?

Because what I was watching for, and and it just doesn't exist, is looking at the amount of the value of our assets and the amount of debt we have against them, but that doesn't seem to come into play at all.

The value of the do look at our uh debt to equity ratio types of things, but I think the ability to service the debt and some of those items are kind of the key ones that we were looking up at their your liquidity, you know, cash on hand, some of those kinds of things.

So there's there's multiple factors that they're looking at on that debt side.

So but you you're correct to point to the, you know, because we have a power purchase agreement.

We've always had some assets that we've owned and had, you know, we've got roughly 150 million in debt right now.

Uh so we've we've always kind of had this combination with the sample contract and without debt.

And it's going to be realigned a little bit, but ultimately we're replacing some of those sample contracts with wind power purchase agreements.

So the, you know, the the combination really isn't changing that much.

So I just want to note that recent learnings with Moody's cities, the city view of that total leverage ratio or your liabilities ratio.

I don't think that ratio considers debt that Simpa has on the books or debt that's borrowed against power purchase agreements.

So that's one area where how much debt the city in the enterprise funds takes on would be different because we're borrowing directly for it.

And I don't think that liabilities ratio looks at imputed debt like somebody else has that we have an obligation towards in the CIPA contract.

Does that make sense what I'm saying?

It does.

Yeah, it would show it would show why this looks like new debt on the city's books.

Yeah, I do want to go back too because you made the comment about it.

The city that um that combination of they didn't look at enterprise before because those were almost considered standalone businesses, but now we are looking at those.

Um and then you also made the comment about general obligation versus I'm not sure if any of our enterprise debt is not general obligation.

I believe it's all general obligation.

Probably has storm and enterprises.

They they do, but their debt.

Well, if you're uh I'll just take that a little bit farther if you don't mind, Peter.

Yeah.

Um, the debt that we looked at that was footnote, I know it's a little hard to see for the city.

So the city is anticipating issuing um 65 million and another 50 million potentially for the recreation center.

Again, sales that is sales tax, but it is a general obligation backing.

But regardless, um it it you know is debt of the city.

And even though it's going to be paid with sales tax revenue, it has the general obligation pledge of the city.

Yeah, I I the point was you could say there's different backing for how you get how you pay that back.

But whenever you issue the bonds, I believe they're general obligation bonds.

What no matter what the source of repayment is.

Um it doesn't have to be set up that way.

I realize, but I don't think anyone's doing much debt that isn't general obligation for municipalities anymore.

So none of the the utility funds are general obligation, they're all revenue bonds.

They're all revenue backed bonds.

You can do water, but not in the case of RPU, you can do water debt as general obligation because a lot of cities have that as an enterprise fund, but it under RPU guys have a combined electric water.

So any water debt that RPU would issue, I believe would be street revenue.

But electric's always revenue.

There's no geo backing to that.

Okay.

So it almost is that that's the firewall between the city and the utility.

Is that it's is revenue-backed uh debt.

Um if I'm understanding your question correctly, the metrics that change for Moody's, and Rachel, you can chime in, that changed is they they looked at enterprise funds separately.

Yep.

And and general obligation.

Now it's holistic.

So it's not just only the debt that comes on, but they look at the revenue as well.

So it's both sides of the okay of the balance sheet, you might say.

Okay.

Um so Patrick, to your point of being a firewall, I think, you know, could the city actually do a geo backing?

I I suspect they could, but I don't think there's a uh need to do that, you know, and and to keep those separate so that we're not encumbering the city's uh general application and is kind of the history and what we would I anticipate would continue to do.

Yep.

Well, I I assume some of the uh motivation for doing the study was to see if this new debt would affect the city's rating.

Um now, so so that that's why I'm asking this.

And I'm uh um I I again it's good, it's good to see it.

It's good to see that mostly right now it does not, it looks like at these sort of debt levels, it doesn't have those um thing.

And it's it's probably really it's good for us to get a view of how the rating agencies view these things as opposed to you know just the general, like saying what your debt equity ratios are.

It doesn't seem like that's those are the things that come that are are driving the the rating agencies.

And we did look at them both separately and together for the city, so that you know to see if there was any adverse impact on the utility issuance and there was not.

So and the I think if you look at the utility ones, if you saw that trend going in the wrong direction, that has more likelihood that it would impact the city too.

So it's it's important that we maintain our financials well so that we don't have adverse impact downstream.

Very good.

Thank you.

And another point of learning that I want to emphasize is now that Moody's has a combined holistic view across the enterprises and the general fund, we as the city inclusive of RPU needs to be coordinating on debt issuance so that we understand that total liabilities ratio because it could in the future have impact on the city's overall bond rating, depending on what's happening in the enterprise funds as well.

So as we assess future debt needs, um, this is going to be a commonplace thing for us to look across all city inclusive of RPU on future debt issuances.

We work very closely with administration on this analysis because of that coupling now that exists in the Moody's analysis.

Any other questions or comments?

If I might just note the reason that we looked at the 180 million case, the board may recognize the difference of those two numbers is 60 million.

That's really the decision if GT1 needs to be replaced or not.

So if the gas turbine one is recoverable and covered under insurance claim, we likely would not need to borrow that 180 or the 240.

And so that would be a likely outcome if GT1's salvageable.

If that capacity needs to be replaced, our estimates are an additional 60 million of capital to replace that unit that would need to be replaced to fill our capacity portfolio.

So that's the one big sensitivity that we did there.

Um and the PPA sensitivities there.

If you remember back to last year when we were looking at the wind contracts, there was these cases of tax credits disappear, PPA costs could go up.

And if natural gas prices stay low over the next four years, the market of those renewables will be soft and we'll be paying more in the short term.

That's a double worst case scenario there, high PPA cost and low gas price.

And so we wanted to look at the edge cases of if we're going into the next few years with high wholesale power costs due to that, those factors, would we be in safe territory?

And the analysis showed that even in the double worst case, we're we're still within the range of safe uh bond ratings for the electric enterprises, the electric enterprise there.

So any other questions or comments?

I have one if no one else does, real quick.

Um is it fair to ask if you can characterize what the biggest risk is to the analysis?

I know you had to hold the economic assumptions constant and you know, there's no good way to do it, or is it just spin the roulette wheel of risk and see where it lands?

Uh, the are you talking about like what metrics might have the biggest risk?

Yeah, yeah.

Where do where you see the biggest risk to the assumptions?

I mean, it's assumption, but Rachel, can you take that one?

I mean, we did focus on the financials, which is 30% for Moody's.

Um, it's not a percentage per se for um fit that is one of the categories that would could have the highest risk and the potential potential um for changing um a rating.

But the other ones, Rachel, you still Yeah.

And are you speaking specifically to RPU scorecard or the city scorecard?

RPU, I I leave the city to the competent hands of council member Keene.

So just RPU.

Yes.

Um, like Chris said, the financials make up a heavy load of the scorecards and the heavy analysis.

Um and the financials we used um were based on kind of those what we were given the 2026 or 2025 through 2030.

So maintaining positive financials um just at levels that both rating agencies consider strong.

And it looked like that was what was included, at least in the forecast.

Um that makes up a lot of the rating.

So if things were to change and there was a significant amount of spend down, or those financial trends didn't end up going that way, that can really impact a lot of the ratios that are included within the scorecard.

Um, so as well as that debt issuance coming on, that's really where we focused a lot of attention on because we know that leverage plays a role.

But those are ratios made up of um other financial metrics as well.

Um so keeping stable and growing if possible, financial metrics is really important.

Of course, there can be times where finances dip or there's a year, some deficits.

Um, both rating agencies are pretty understanding if there's a plan in place.

So if there is something that's coming on and you're aware of it, and you have a plan to recover financial trends and balances, um, they're more likely to kind of be more open to that, not open, but just understanding, okay, the utility has a plan in place to recover their financials.

They saw this coming, they knew this might occur, but this is their plan, and we believe it's a good plan that will sustain, end up sustaining financials back to where they were.

So, like Chris said, I think financials is kind of the biggest factor to always be focused on.

Um, there's a lot of there's some pieces within the economy, but again, not a lot of those are really controllable by you, um, like maybe in household income.

It's not really something that the city or utility can control.

Um then I guess the other part is the rates, um, just the competitiveness.

But again, looking at that, it still seems like there's your rates are competitive enough.

Um, looking at those different sensitivities where you could maintain it.

Um that is something that both rating agencies have mentioned that the competitiveness of the rates are a little um on the weaker side compared to peers.

No, that's really good to point out.

Thank you for that.

That answers the uh question.

Oh, we have one more.

Two of them that popped in.

One, I just because I know the wastewater world, and I I don't remember how much their loan, that PFA loan is, but it's like 75 million, maybe, or maybe it's less.

I don't know.

Anyway, I forgot.

Um, but I wondered where that played into here in the city's rating.

And then I wondered you talked about the pilot a little bit.

And um I you said that as long as there was a good um policy, it was okay.

And I just sort of was I wasn't sure what you know, assumption that the policy does is adequate.

Um I can't talk in depth with that because I'm not sure what the policy was.

I was just citing what um how Moody's and Fitch looks at at pilot payments.

Um, and I don't know if that was something, and I don't know if you have it in front of you, Rachel, that they had any kind of comments in the current ready rating that they had.

If they said anything about the pilot programs, I'll let you look at that.

Um, as far as the PFA loan, yes, the city just did a 76 million uh 25, I think.

25.

That is part of the debt.

That's always counted its debt.

Yeah.

So that would be in our debt analysis for the city.

And that is a general obligation backing.

Yeah.

Yeah, Chris, I'll have to look back at the current or the previous rating reports.

I don't believe they mentioned a policy within those rating reports for pilot payments.

Um, I know they know there are pilot payments to the city being made.

Um, I think for them their focus is on how predictable are these payments.

Um, is there kind of an agreement or a calculation in place to almost protect RPU from not having a year of an outlier year of additional pilot payments to the city, um, just to make it more transparent and kind of um just so you're forward looking, you're not taken off guard.

Um, but I don't remember there being a reference to RPU and the city having an agreement or a policy in place, where your scorecard rating is for that, you are following, falling in the category as if you have some type of formal or informal way practice of identifying the pilot payments.

Um, but it doesn't reference if you have the policy in place for pilot payments.

Rachel, I could shed a little light on that.

The um the comment came out about um bundle review uh last year with um it actually I was expecting to get it from Moody's, but it actually came out of Fitch this last time.

Uh Moody's in the past has quite often pointed at competitiveness of rates, uh, and a concentration of generation being a um the SEMBA contract on coal.

But this last year we kind of got the question because of the increase in pilot over the last couple of years.

Uh, and like we're asking the question about you know kind of what's going on there.

Historically, we've been able to point to the ratio and just basically say, you know, it's it's based on volumetrics, and uh that's been a big plus in both um analyses.

And so it's it's just a sensitivity that we need to be aware of going forward at present.

Thank you.

Any other questions?

If not, thank you so much, uh Chris and Rachel and Peter.

Appreciate it.

Yeah, it was a pleasure working with thank you, Judy on this project.

So thank you.

Awesome.

Next, we'll move uh quickly to information item 6B, which is a 2025 customer relations operations report.

And it will be presented by not one but the entire customer relations team.

In the person of Patty, okay.

Awesome.

I have the pleasure of doing so.

Um, so thank you for this opportunity this afternoon to once again to present our 2025 customer relations operations report.

Um, we're as a team always excited to present what we've done in the past year.

We've got a lot of great things to report on, which we'll uh present through this presentation today.

Um customer relations division, just as a reminder, is made up of three different departments.

We've got manage our excuse me, marketing and energy services managed by uh Josh Mason.

We've got customer care that is led by Mickey Villaire, our manager of customer care, and then communications, which is led by uh Tom Jorgensen, our newest member to the team.

Um you may ask what is it that we deliver?

Well, we deliver communications, which includes internal, external communications, outage communications, digital media, and more.

We deliver energy services, which includes conservation programs that helps reduce energy and water use for our customers, and also supports city sustainability goals.

We deliver customer care that is responsive, compassionate support across all and every customer interaction that we we deal with.

We deliver programs and engagement, um, building strong and lasting community relationships and connections, and ultimately, everything we do is centered on delivering an exceptional customer experience, supporting our community with local service, compassion, and care.

And I'm going to share that over the past year, nothing showcases this more than the 15,000 community connections made through the marketing and energy services team and their events, or the handling of over 101,000 direct customer interactions through customer care, as well as the delivery of nearly over 600,000 external touch points through communications.

Across all of these areas, we continue to uphold RPU's strategic five Rs.

You can look at them in reliability right up to communications, rates right up to energy services, and so forth.

We remain committed to strengthening our community engagement and fostering a sustainable future.

Wanted to throw this slide in here.

This slide is dedicated to recognizing the entire customer relations team by name.

Not everybody is here to be able to join us.

Um, so just wanted to make sure that we acknowledge everyone and thank each of our team members for their contributions to all of our collective success here at RPU.

At this point, I would introduce you to Mickey Valer and have her come up and speak on behalf of the customer care team.

She is sitting in North Carolina enjoying a week of spring break with her family, so um I will be presenting on her behalf.

Customer care.

Customer care consists of 11 employees in the department.

They deliver and deliver and are committed to delivering accurate, timely, and dependable service, providing clear and helpful information on billing and other imaginable questions that might pop up, and there's a lot of them.

Customers are creative.

The most um excuse me, they deliver in terms of managing accounts with integrity, and most importantly, they build trust and care into every interaction to the metrics.

They handled over 72,000 inbound calls last year.

They conducted more than 13,000 outreach calls to those customers that were struggling and were in need.

They did that with the support of the credit and collections department and finance and accounting.

We welcomed over 8700 customers to our community.

We assisted more than 18,000 customers with relocations.

There's a lot of stats here, sorry.

Um, processed over 43,000 payment transactions, totaling a whopping 20 plus million dollars, and served over 15,000 customers in our lobby.

We've noticed a trend over the last five years, um, a consistent trend of walk-ins within our service center growing.

Last year we had over um an well, excuse me, an additional 1,700 customers uh come into the lobby, which just shows that it reinforces the continued importance of the and value of in-person engagement.

Our payment kiosk, which is located in the service center as well, saw an increase as compared to last year.

This is a 24-7 option, so customers can come in over the weekend and make payments if they so choose.

Compared to last year, our kiosk payments increased by more than 145,000, and transactions increased by 487.

Reoccurring payment types.

Reoccurring payments remain the most popular payment method.

And when I say reoccurring, we're talking about auto pay and ACH payments, so like credit card payments.

They account for 41% of our payment type.

We had over 20 or 288,000 reoccurring payments.

So quite a few that averages over 24,000 reoccurring payments in a month.

One-time portal payments have continued to grow.

They increased from 26% last year to 29%, or excuse me, 26% in 2024, 29% in 2025.

And then the third highest was mailed payments, which are checks that are in the mail that go to our lockbox at Wells Fargo.

10%.

So as shared at our December board meeting, we went live with our customer portal.

Since Go Live in November, we've had over 3,000 new registry registrations on the portal.

And we've had over 81,000 logins.

But more importantly, we're really encouraged to see that customers are using the self-service options.

We had in the three months since we've gone live, 260 move in requests that they completed through the portal.

426 final account requests were completed.

We had over nearly 500 accounts where they went in and updated their account information, such as mailing addresses and phone numbers, which is really important.

You wouldn't think that that is as important as it is, because it does impact like in finance and accounting when we have checks and we mail checks to customers, they don't give us a forwarding address when they move out, or there's a forced move out.

They're doing it on their own.

So that really helps on the back end for us.

On the digital side, we have over 42,000 enrolled in auto pay through the customer portal as well as enrolled in eBill.

I do want to make a clarifying point for Tim because you can't have 42,000 auto pays.

When a customer or tenant moves out and they're on the leave on, it automatically reverts back to the landlord.

And if the landlord is set up on an auto pay, that information carries with it.

So it's not every time we have to, you know, uh call them to get that information.

It's it stays there.

So it can be a snapshot on time in that how many are active, how many are inactive.

And then we have customers too that move within the city of Rochester that may not be active again for maybe a year or two.

Um sometimes their information is still current and sometimes it's not.

So that's why that number is a little bit bigger than the 24,000 that reoccurring.

So just wanted to clear that.

One bill, um, one customer portal, um great value for RPU and public works.

We had over 709,000 bills, touch points that went out to our customers.

Um, bringing together multiple city services such as electric water, wastewater, and store water onto a single bill simplifies the payment process and makes it easier for our customers to track and manage their accounts.

This unified approach enhances the customer experience by providing a single point of contact and convenient access to our online portal for uh account management.

It drives cost efficiency by leveraging a shared billing infrastructure to lower administrative printing, mailing, and processing expenses while supporting sustainability efforts through reduced paper use and overall resource consumption.

In 2025, we identified a process improvement opportunity following the adoption of the updated life support 30 life support designation back in September.

We aligned our life support process with our existing collections procedures by reinforcing payment arrangement requirements, updating customer communications and messaging, and really refining the notification timing of when customers received a notice that said, hey, your life support paper needs to be updated.

We've now given them several months to do that.

As a result, the life support designations have actually decreased from 126 when you guys all looked up updated the board policy in September.

As of last month, we're at 79.

So we continue to expand our access through enhanced language support and uh service offerings.

The usage of the language line increased by more than 2,700 minutes in 2025, rising from 91 hours in 2024 to over 137 hours in 2025.

We also did some creative marketing this year and developed some materials that we included in Spanish and Somalia.

And we continue to grow our bilingual capabilities within the department and the customer care area.

We have a fluent speaker in Arabic as well as in Spanish.

So with that, that's customer care.

And I'm going to go and are now turn it over to Josh.

You're very welcome, sir.

My name is Josh Mason.

I'm the manager of marketing and energy services here at RPU.

Just to start out, so our department we're customer focused and deliverable measurable community value.

We have nine full-time employees on our team.

Many of them are actually in the room with us here today.

This team supports our 60 plus residential customers and 5,000 plus commercial customers, 43 of which are largest energy users, so our key accounts that we service as well.

We deliver 50 plus cost effective electric and water savings programs that only benefit customers with bill savings, but also defer future RPU investments.

We're very active in the community with 20 plus annual community events and customer touch points.

Patty talked about some of those in the beginning.

And we support our low-income community through five dedicated low-income programs.

So how we align with the five R's in terms of reliability, customer facing support.

This is the group of people that are meeting with our key accounts, meeting with our commercial customers, our residential customers, and having those technical type conversations about rebates and qualifying equipment.

In terms of rates, we ensure accurate billing and rates by doing rate analysis on our customers and making sure that they're on the appropriate rate based on their energy usage.

And really at the core of what we do, responsibility.

So the conserve and save program, the rebates and programs that I mentioned, delivering reduction in energy usage and cost savings of customers.

And relationships are obviously key to what we do as well.

So strong collaboration with our community, our local trade allies and our regional partners is important.

And reputation.

This is the highly engaged, highly motivated results-driven team with trusted delivery and measurable results and strong community outcomes.

On the electric and water side through our conservance rebate programs, we on the water side, we achieved our water savings goal by saving 3.7 million gallons of water.

A couple highlights here.

Since 2010, we've saved 103 million gallons of water, which is the equivalent to about 200 of our water towers.

So large amounts of water.

And then on the electric side, we do have a 1.5% annual KWH savings goal through the Energy Conservation Optimization Act.

We achieved that goal again in 2025 by saving 17.2 million KWH.

This is a big program for us, $2.1 million returned back to our customers.

And we had almost 4,000 customers participating in the programs.

This is the 20th consecutive year that RP has met its conservation goal.

So big highlight there.

On the energy side, the KWH.

We see the chart on the left shows our actual energy sales going back to 2009.

And here we show relatively flat energy sales.

So we know we're in a growing community, but our conservation programs have really helped keep our energy sales flat over that period of time.

And then on the demand side, the peak demand savings.

So since our program started in 2002, we've saved about 90 megawatts in demand, which is the equivalent of about two of our West Side or Mount Simon energy stations.

So had we not had these programs, we could be looking at building not one but three power plants right now.

So big impact there.

So to do so, we look at our sales by the commercial and residential sector.

So in 2025, we see 66% of our sales from came from the commercial side with 73% of our savings.

And on the residential side, 34% of sales, 29% of savings.

So really good match there.

Tells us our programs are designed as intended.

If you look at the five year average, not always the case, a little bit of misalignment there.

Traditionally, commercial had made up a bigger portion of our energy savings.

And a lot of that is attributed to the LED projects that many of our commercial customers have already done.

So we're starting to get kind of on the tail end of that LED lighting boom for savings and starting to see some of our savings shift back to the residential side.

And a big part of that is from what is referred to as efficient fuel switching.

What this is is any time a customer replaces fossil fuel equipment with an electrified options.

So common technologies include geothermal heat pumps with some of our downtown energy systems, electric vehicles, air source heat pumps, and e-bikes and battery powered lawn equipment.

So if you go back to when we started our programs back in 2023 to where we are today, last year, efficient fuel switching made up nearly 30% of our energy savings.

We're capped out at 40% per state statute.

So we're starting to get up against that limit.

Um something we we pay attention to, but no concern as of now.

I mentioned serving our low income community.

We have a low income spending requirement of 0.2% of our annual gross operating revenue.

In 2025, that number was 120,000.

We achieved that goal with the programs you see listed there.

And just to highlight a couple the neighborhood energy challenge program, which offers free energy audits to low income customers, and then our neighbors chipping in program.

We have over, well, right at 100 participants right now, and we've distributed $8,000 to 27 families last year.

We talked about community events and the number of touch points, just to highlight a couple.

Our annual Arbor Day celebration.

It's taking place April 24th this year.

So everyone is invited to that.

It's open to the public as well as our schools.

We participated in all four of those last year.

And then the downtown Dazzle.

So we had a really successful year.

All of our lights worked last year, I think I reported.

We had some failures.

So we upped our game thanks to Shay's design talents in the back there.

Uh we decorated our line truck to look like Rudolph the Red Nose Reindeer and had some nice LED lights on there.

So that turned out really well for us.

So shifting to distributed energy resource support.

This is actually part of the consent agenda, but I pulled out a couple key stats here.

We had 149 distributed energy resource systems interconnected in 2025.

Our total nameplate capacity right now is 18,480.

That doesn't include Valley High Solar, which is 10,000 of that.

And then an important note here the residential tax credit did expire at the end of 2025.

So a little unsure what the future will hold in terms of this year with number of interconnections.

We expect there to be a bit of a decrease.

Reporting on electric vehicles, we continue to see steady growth in Rochester.

We had a 27% increase in 2025 relative to 2024.

We do have a 10% participation rate in our time of use program, which sounds like it's not very good, but really that's on par with what other utilities are experiencing as well.

We're hoping advanced metering data paired with the rate comparison tool in our customer portal will help give customers that visibility they need to make those informed energy choices.

And then again, here on the federal level, the clean car tax credit did end in September of 2025.

So we expect EV sales to maybe kind of flatten out a little bit there as well.

Smart Thermostat program, this is another success story here, sometimes referred to as bring your own device or BYOD.

Our enrollments here continue to exceed our forecast.

We're adding about 500 devices each year.

We did open up this program to small general service customers last year.

In 2025, we ended our partners' load management program.

That was the AC switch program that we would call upon.

We were hopeful we'd get a big bump from those customers transitioning to the Smart Thermostat program.

We had some, but not like we had hoped for.

And in terms of demand response capacity.

So demand response, these are the tools that we use when we experience high demand in our city.

So when we have those really cold days, really hot days.

Load management, like I mentioned, we ended that program in 2025.

That's represented by the gold bars in the chart.

We've seen a little bit of decline in our interruptoral program over the past couple of years.

But we're making up for it with growth in our BYOD program, steady growth in our EV time of use program, and steady growth in our non-EV time and use program.

So if you look back over the course of the past six years of this program, we've had some changes, but our overall uh portfolio remains largely unchanged at about seven megawatts.

So with that, I am gonna hand it off now to Tom Jorgensen.

Hello everyone.

All right.

Oh, use the clicker.

Got it.

Okay.

So Tom Jorgensen, uh communications coordinator here at RPU with the goal of keeping customers informed.

And uh mainly just trying to ensure that you know we have reliability uh within our customers from a communication standpoint.

We have one full-time employee right here.

Uh supporting our our 60,000 customers.

We have uh five core uh communication platforms, which I'll discuss below.

Our direct outreach is 324,000, which comes from our plugged in magazine.

So it's our mailed out.

So it's that that's a communication accumulation of our annual um plugged in mailers that that went out uh throughout the year, and then a social engagement of 122,000.

As far as what we deliver, um, as Patty had mentioned, communications.

We have an internal communications, which includes our employee internal newsletter that goes out on a monthly basis, as far as other communication initiatives just within the walls of RPU to just make sure our staff are aware of all the things that are going on.

Externally, we have our plugged in magazine that again had touched on that.

That goes out on a bi-monthly basis to all of our customers, uh, social media and our website.

Uh we have outage communications, so that's we do that via Facebook, and that's our real-time service disruption alerts and restoration updates.

We also will throw on events and other initiatives and programs that we have uh going on throughout the year on there.

Media relations, so that's responding to uh inquiries, uh, media releases, issuing statements, and coordinating interviews uh with our subject matter experts and the media.

Crisis communications.

So I also serve as the public information officer uh during emergencies and managing any kind of briefings and drafting messages in a timely manner.

And then our community engagement.

So our public outreach and the education initiatives.

So a lot of our events uh coming up again.

We have Arbor Day, Safe City Nights, uh drinking water week.

Uh those are all those things coming up that uh we do to engage with our customers.

So going into our communication engagement, as mentioned, our uh plugged in newsletter.

This is a bi-monthly uh newsletter that goes out and mailed to all of our customers.

So we have six issues per year, which we had sent out approximately 324,000 mailings in 2025.

We have a small digital um presence with 176 subscribers who had opted out of the mailer and have gone through our e-newsletter.

We did um add 59 subscribers since January 2025.

And then as far as our website goes, uh total views for our website of 2025 was just under half a million, and then active users was at 148,000.

The active users accounts for anyone who has viewed our website, whether they viewed it one time or 30 times, it's still it just counts as one active user.

So we had 148 active users as of 2025.

Um website uh traffic remains strong with with our high engagement on those key resources, like our outage reporting and rebate programs.

And then as far as social media goes, we utilize Facebook for again our events and things like our outages.

Um, as far as this data goes, it reflects the most recent 90 days due to some of the platform uh reporting limitations on Facebook.

So uh moving forward in this role, I'll be looking at this on a 90-day basis and ensuring that over the course of 2026, we're able to reflect the metrics for the full annual year.

Uh, but we had a total of 122,000 views, and that's the number of times our content was displayed or shared or seen on Facebook.

Um a growth of a 210 followers within the last 90 days.

So moving into our customer satisfaction survey, uh, this goal here was to gather residential customer feedback on our satisfaction with RPU services and communicate uh communication and community engagement.

So we had 593 who um customers who filled out the survey.

The overall utility provider um stats was 6.25 out of seven, which is is very high with overall satisfaction at 90% and net satisfaction score of 79.1%.

Then we have our net promoter score, and this is an indicator of our customers' loyalty and advocacy.

And so this number came in at 49.2 on average uh for 2025, which is in the consider the high good range with an average US utility NPA score at just eight.

And you can see if you kind of look at this graph here, you'll see historically that number kind of goes down in that uh Q4 range of of the years, and that's usually due to when we're discussing rates.

But we've gotten our Q1 2026 report back, and then that number has gone back up past 50.

Then we have our value enhancement score.

Uh, this measures our customer satisfaction while uh interacting with RPU, and we still remain in that consistently good range with 45% of customers uh communicating with RPU staff in the last 12 months.

And we have our awareness of our community outreach uh initiative.

So the programs that we offer, the efficiency rebates, including our commercial and residential remates remain very high.

Customers know about these, uh use them, and then on the lower side, our low income programs.

It looks like we have some opportunity for growth and education there.

So something that will take in a factor here in 2026.

Then our satisfaction with water quality.

This is a new initiative that we started tracking in Q4 of 2025.

So customers were asked to rate the taste, color, and clarity of the water.

The average response rate was 7.9 out of a 1 to 10 um rating, where 10 being very satisfied with 72% of that uh rating being within or their satisfaction within the 8, 9 or 10 range, as you can see from the graph.

And then our great blue uh research survey.

This was uh something that was reported and presented at the September 2025 board meeting.

Um, but this went out to commercial and residential customers just to base uh their customer satisfaction with RPU services.

We had just over 1,800 customers complete this study along these five initiatives.

Uh customer satisfaction, about 70 seven and seven out of 10 customers uh reported being satisfied with RPU and within uh strategic priorities, the rates and reliability remain the top priorities for um our our customers and renewable energy 70% of customers support the 2020 30 uh 100% net renewable energy goal.

And roughly one in three customers are interested in participating in our carbon offset program.

And then our rates and understanding about half of our customers view RPU rates as reasonable.

And this is something that again in 2026, we kind of looked at this, and since then we've added or we've we've had some articles in the media just going over the transparency of our rates as well in our as our last plugged-in newsletter went over transparency of our rates, how to view your bill so customers are aware and hopefully can understand a little bit more and what they're getting charged for.

And with that, I will turn it back over to Patty to go over our 2026 initiatives.

Just gonna do a quick recap of 2026 of what we've got coming up.

Um big project going on right now with our website.

We just updated the website.

Um we need to meet accessibility requirements by April 24th of uh 2026.

That's coming up.

Um, so Tom's really busy on that with the whole group internally.

Our benchmarking grant that we received a couple years ago is going to be ending in June of this year.

Um, this year, our goal is or the requirement is any buildings that are 50,000 and greater are now required to upload their data into the Energy Star portfolio manager.

Um and that will be an ongoing goal for any buildings, 50,000 on up, uh reoccurring every year going forward.

So our customer portal um advanced metering data is coming.

Um it should be here within I don't know, a week or two.

I tried to find out from the guy that was is who's handling it right now, but he's on vacation, I think.

Um so I couldn't track him down, but that's gonna that's definitely coming.

And then also we're gonna be looking at the vConnect transition.

Um more than likely next year at this point in time.

We've got a uh Tom inherited a communications communications plan or crisis communications plan that was in flux.

So one of his goals is to get that completed and tuned up.

And then of course, um, the demand side management meeting our goals there, but also with us moving and transitioning away from SEMPA.

We've got a couple of databases that we use that are coming to well, they're on their last legs, at least on the residential side.

Um, so um requirements building for um a database on the uh DSM side.

So with that, um, I'll open it up if there's any questions.

Thank you so much for that.

Those are some incredibly good numbers and interesting to see.

Thanks.

I was very grateful that the board member page was not in your top engagement uh web pages.

So that was a really next year.

Make a note.

Any other any other constructive questions or comments from first off, thanks?

Good report, lots of positive things.

I just have two questions that popped in my head.

Um why are there more walk-ins?

I you know, to be honest, it was interesting because um, you know, with the whole uh ice thing rising up at this this earlier this year, um, Mickey and I sat down and we compared our walk-ins in January as compared to last year.

We're actually higher this year.

And I just customers love to come in and talk.

I mean, it's a it's a social engagement, especially.

We have a lot of elderly customers that come in.

Um, and um I what can I say?

Okay, no, they've got great customer service.

Just curious.

I I thought maybe you're locked into that theory there.

Um, and then the other one was um Tim had in his report something about that there's been an ongoing increase in what was it, late payments.

I mean, I think it's after the end of winter or something like that.

I'm not sure if I'm ver use, and I'm just wondering if that's anything your team is looking at.

Uh that's actually in finance and accounting.

Okay, so forget it.

I would I would defer to those two over there.

Okay, thank you.

We can get that information to you later.

Thank you.

I have a question about logins for the portal.

Did you have an idea of what that would look like?

And is it on track?

I'm just curious for the you said um you gave a number of how many people have logged in.

We had through over 3,000 that are brand new that set up new accounts.

And logins is just anybody going in there and logging in and using the system.

In terms of people that are using it, I guess that's more of my question.

Is it more or less?

It's a little misleading because you can have people that um uh we could be in there because so we can mirror when a customer calls, and if they're looking at their portal and they have questions, the customer rep service reps can go in and look at what they're looking at.

So it could be that, it could be potentially the testing of the AMI data.

Um, so it's a little misleading, but still share.

About how about users in terms of uh people that can you track?

I guess the number I'd have to look at it again, but logins is one thing, but like number of households or customers that are using it.

Is that defined users?

Yeah.

Um, I believe um I'd have to go back.

This is a Mickey question.

Um there's different metrics in terms of the type of users.

Yeah, I think we can get to that data.

Um curious if yeah, the amount of people you thought would be using it are using it.

Uh it's it from what the feedback we're getting, people are using it.

Um, but uh and I would have to you know rely on Mickey for the actual numbers on she deals with the back end admin side.

So sorry.

I can't thank you.

Based only on my own anecdote from having launched a portal previously, overwhelmingly positive uh amount of logins here.

Um 84,000 was just at the end of 2025.

And it's pushed well beyond 100,000 unique users now.

If you consider the population of Rochester, that's nearly one and yeah.

That's like nine out of ten.

Nine out of ten customers potentially have at least logged in once over this last four months.

So yeah.

So awesome.

And council member Keene.

Yeah, let's try to again.

I my my can my comments or my uh um clarifications are in the marketing and energy services.

And I notice on the electric uh services that we're trying to do that reduction, but then we do a separate thing for distributed energy.

Do we merge those in any way?

The amount of um local generation has reduced the amount of services that RPU needs to provide.

And do I have any way to give credit for that?

So on every conservation side, each contract has an assigned associated.

Oh, I'm sorry.

Okay.

I'm not sure if you caught that first one.

Um the KWH is tracked independently through a calculated number.

The uh solar production would show up on the sale side.

I I guess what I'm looking for here is that when we you're showing these things and you use comments like, hey, we're generally we don't have to build a west side now because we had this stuff.

Yeah, do the idea of the solar get credit for helping us do those things, or does it get no credit because it's driving other costs to us?

So in the chart that I showed, solar is not tied into that.

That is just energy conservation projects alone.

And and I can understand that because it's not really it's just coming from a different source, but when you go and make statements like the value of this is we don't need to produce it, I don't know how we capture that.

Um I'll take a shot at maybe trying to answer that as well.

Um so our net metering and the Valley High Solar are both uh interplay with our Simpa contract currently.

So the output of those are are technically sold to Simpa and come back to us through that because of our load serving obligations.

So there's a little bit of reduction for the solar that is self-consumed inside of a home, but the the balance of that still is reflected in our kilowatt hour sales.

It's just being generated locally from those solar arrays on the net metered houses.

So let me let me just I think that's what's happening here, and I'm questioning whether that is a good like um presentation of is that conserve and that we don't have to produce it.

That's com conservation.

It really isn't conservation if you say the demand went away.

It didn't, but I'm trying to I I guess I'm bothered by how we're not giving credit for that reducing the amount of generation RPU has to do.

It's a fair point that you're making.

Part of why we display it in the way we do is because it does have contract implications through our SIMPA contract.

We will be able to change the way that we account for that beyond 2030.

And it's about 2% of our overall energy in a year that's self-produced from that 18 and a half megawatts of solar on rooftops and valley high solar.

So it's about a 2% reduction of what we would otherwise have to procure through Simpa or in the open market.

It's just accounted for as if it's load through that uh simpa contract right now.

I know it's complex, but it's a it's a requirement of our contract.

Yeah, let me just leave it at this.

It's not the complexity that's bothering me or even the our simpa contract requirements.

We're trying to say we have a responsibility to reduce the amount thing, and we're taking credit for it, but we don't take credit for that.

And I should say we don't take credit for it, but that should get credit for reducing the amount of demand.

If we are if now that we're an energy producer, we have to produce less because of that.

And I don't see anywhere where we're crediting that.

I only see where we're um talking about how the cost it drives to us.

So uh I'm gonna leave it at that and see if somebody needs to explain to me that I'm reading it wrong.

But when I see the conservation and the things we do take for conservation, um, I mean, the bulbs and things like that.

I think those are getting rid of things, but I think we're undervaluing what these residents are doing to reduce RPU costs, especially in those peak times when theoretically the solar would be producing really well, and we're not hitting those peak numbers because of that.

And I don't see where they're I can't see in the the way we measure how we get credit where where there's credit given to those uh assets.

Um, Tim, I can I think I can respond to that.

Um the conservation program is covered under a state statute.

So it's very defined.

Um, and it excludes solar.

So that's the reason that we track it separately.

Um, but we are trying to take credit for the recs that are produced by the customer solar so that we can offset some of our uh uh our renewable needs.

So that will contribute to our net renewable goal.

And we're trying to get track get um uh to own all of the recs that are produced by all of the customers in our territory through another uh maybe legal um avenue.

That's good to hear.

I know it's complicated.

I'm not trying to oversimplify it, but I'm also looking at it going like we just went through this driving more fees to the people doing this.

But when I think of things like max day power and think of what solar is offsetting for us, I I don't see where we show the credit for that, and I'd like to see it.

It's a fair point there.

Uh in the summer, about 20% of uh solar's output contributes to the peak in the late afternoon in the winter at zero because our peak happens afterwards, and we can show we we account for that demand in the rates and give credit for that demand in the rates.

Um overall, it's a large energy savings more than it's a demand savings.

Um of that 18 megawatts at 20%, about three megawatt reduction is what we would see in our afternoon peaks, and we can consider adding that to the demand reduction um view at your suggestion next year.

Thank you.

Thank you for that.

Thank you, everyone.

That was a great update.

Moving uh next quickly to the board policy review, and I'm gonna turn this uh item 7A over to General Manager McCullough.

Uh no update other than we are making progress towards the review of the new draft financial policies.

We've had one meeting, we're breaking it off into chunks since it's a pretty extensive policy.

We have another one tomorrow.

We do have a goal of trying to bring that back for the first board's consideration uh as soon as the April board meeting.

So we're making progress there.

Um, and the rest of the schedule will fall after that um throughout the rest of the year.

Perfect.

And then we'll transition uh quickly to item number eight, which is the general manager's report.

I will read my report.

Um just kidding.

Um I would be happy to answer any questions if anyone has uh any questions on the eight pages I sent you all.

Any comments or questions for the general manager?

It was exceptionally well well written.

I really enjoyed reading it and it was well done.

Hearing none, we'll move next to uh item number nine, uh division reports and metrics from March 2026.

Are there any questions or discussions from the board on division reports and metrics?

Hearing none, we will move to other business.

Do we have any other business to come before the board this evening?

And hearing none, I will now entertain a motion to adjourn.

Uh so moved.

We have a motion.

Do we have a second?

Oh, second.

Motion second.

All in favor say aye.

Aye.

Aye.

This meeting of the RPU board is adjourned.